If legislative proposals made public Wednesday are adopted, the current government budget will be Cayman’s last one-year public sector budget cycle.
Amendments to the government’s Public Management and Finance Law seek to change, as of Jan. 1, 2018, Cayman’s annual budgeting period to a two-year process, starting January 2018.
In order to get to that point, when the current budget year ends on June 30, 2016, the next government budget cycle would run from July 1, 2016 to Dec. 31, 2017, a period of 18 months. After that, the two-year budgeting process would begin.
The proposed changes will also change Cayman’s current July-June budget to a calendar year January-December process. Each government financial year would end on Dec. 31, but the “budget period” considered by the elected government would span two years.
The amendments were discussed at the start of the Progressives government administration around mid-2013 and initially were planned to begin in January 2016, but that was delayed.
Premier Alden McLaughlin and Finance Minister Marco Archer support the proposal, which they believe could address a number of issues facing the annual spending plan process.
First, moving the budget process from January to December takes budget planning away from the elections process. Typically, Cayman’s general elections are held every four years, in May. In the current budgeting process, a new government has only five weeks or so after the election to come up with a spending plan for the whole year.
In addition, multiyear budgeting could eliminate the need for government to spend eight or nine months out of 12 in the financial planning process, as Mr. McLaughlin said happens now.
“It also makes a tremendous amount of sense from the government’s financial position,” Mr. McLaughlin said during a debate in the Legislative Assembly on the issue. “Financial services-related revenue accounts for nearly 40 percent of the government’s total annual revenue.
“As most of these revenues are received in the January to March time frame, it means that, with the budget year starting on the first of July, the government can be as much as nine months down the track before it realizes that revenue is not tracking the way that it hoped and by then it is almost impossible to change course, at least in a way that materially affects expenditure.”
Also, while government presents its economic information on a July-through-June basis, the government Economics and Statistics Office presents that information for each calendar year, making it difficult to reconcile the various figures.
Cayman Islands Auditor General Alastair Swarbrick, due to depart the islands at the end of this month, indicated his office would be taking a look at government’s two-year budget plans once they are formalized. Mr. Swarbrick noted that the Public Management and Finance Law currently requires government to report its accounts annually.