It also plans to give a 4 percent cost of living pay increase to civil servants and increase spending in a number of other areas, leading to a projected $16 million rise in operating expenses from the current year’s budget.
Meanwhile, a number of major legislative initiatives were unveiled for the upcoming year, including the planned adoption of a $6 per hour minimum wage that government plans to implement in March 2016, Premier Alden McLaughlin said Friday.
Despite the additional spending, Finance Minister Marco Archer said the government would produce an operating surplus of about $121 million and reduce central government’s overall debt to just above $500 million by June 30, 2016.
The results, barring any natural disasters or unforeseen expenses, should put Cayman back within legally mandated budgeting requirements, Mr. Archer said. That means the United Kingdom would no longer have to approve the overseas territory’s budget prior to its presentation to the Legislative Assembly as it has since the 2009/10 fiscal year.
However, the finance minister cautioned the public that the government was simply unable to start borrowing huge sums of money ahead of the 2016/17 budget year.
“We will only spend to the extent that we can afford to,” Mr. Archer said. “We do not plan to enter into any financial arrangements to pay for recurring expenditure.”
Mr. McLaughlin said the current import duty rate for diesel used by Caribbean Utilities Company, the monopoly supplier of electricity in the Cayman Islands, would be reduced from 50 cents per gallon imported now to 25 cents per gallon imported as of January 2016.
That rate cut, Mr. McLaughlin said, should further reduce consumer’s electric bills and will have taken the import rate from 75 cents per gallon in 2014 to 25 cents per gallon in 2016.
Once done, that will reduce a 45 cents per gallon increase in diesel duty rates charged to CUC by the previous government, Mr. McLaughlin said.
The reduction in duty will also cost the Cayman Islands government significant revenue, Mr. Archer said. If the rate reduction takes effect in January 2016, Cayman will have foregone a total of $16.8 million in revenues between January 2015 and June 2016, he said.
Central government’s operating expenses are expected to increase about $16 million – or about 3 percent – between this year and the upcoming budget year that starts in July.
The increase in costs is due to a number of areas, including a 4 percent cost of living pay increase that is set to take effect July 1 and which will add $7.5 million to government expenses in the coming year.
Other additional expenses included a $3.8 million boost to Cayman Islands Monetary Authority operations, which the government was forced to fund after a new directors licensing fee did not come in as expected. Paying for retirees’ healthcare is due to increase by another $1.8 million in the coming year.
Other costs included projected increases of $900,000 for the payment of seaman’s and veteran’s benefits, $700,000 to support the e-government initiative and $500,000 for salary “regrades” – essentially pay raises, during the upcoming year.
Mr. Archer said the civil service pay rise would be funded from current government cash and that no taxes would be increased to pay for it. The proposed budget included no new revenue measures, he said.
Premier McLaughlin said the Progressives-led administration would support recommendations from the recently-concluded Minimum Wage Advisory Committee, including the establishment of a minimum wage rate, which was recommended in the committee report at $6 per hour.
The implementation date for the minimum wage was set by the premier as March 1, 2016 – that presumes a law will be passed and that changes to other legislation related to the minimum wage could be effected by then.
The premier also said the Progressives-led government would seek to implement Daylight Saving Time by March 2016, a move that he said was supported by the majority of Caymanians and which he believed would assist both the local tourism and financial services industry.
Mr. McLaughlin said long-dormant Standards in Public Life legislation would be brought back to the Legislative Assembly after it passage in 2014 created a revolt among government-appointed board members.
The premier also said the government would attempt to reform the long-debated Legal Practitioners’ Law and that certain requirements would be set for all law firms regarding the recruitment, benefits and career development of Caymanians within the legislation.