Cayman Islands legislators were expected to approve government’s budget for the upcoming 2015/16 fiscal year by Friday.
The $735 million spending plan, including costs for both central government and outside authorities, finished about three weeks of review in the Legislative Assembly’s Finance Committee on Wednesday. Lawmakers were expected to resume meeting in the full assembly to approve a third and final reading of the budget no later than Friday morning.
The financial plan is significant in that it is expected to represent the last government budget Cayman must have “pre-approved” by the United Kingdom, as it has done in every budget proposed since 2009.
Finance Minister Marco Archer projected that 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 end of the fiscal year.
Back within requirements
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.
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.”
The budget, which still has to be assented to by Cayman Islands Governor Helen Kilpatrick, includes a duty rate reduction for diesel fuel imported by Caribbean Utilities Company that is due to take effect in January. The rate cut will take the duty charged to CUC down from 50 cents per gallon to 25 cents per gallon and is expected to result in a modest savings on the average household electric bill.
Starting July 1, Cayman Islands civil servants will all receive a four percent “cost of living” pay increase. It will be the first permanent pay hike government workers have received since 2008.
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.
Additional expenses in the upcoming budget include 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.
In addition to the budget priorities, Premier Alden 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 its 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.