The Cayman Islands government will enter uncharted financial waters Wednesday as the planning document for the upcoming 18-month budget is released in the Legislative Assembly.
The discussion of the strategic policy statement for the 2016/17 fiscal year marks the first step in the process of multiyear budgeting for Cayman, shifting away from the current one-year budgets.
Here’s how the change is anticipated to work: As of Jan. 1, 2018, Cayman’s annual budgeting will switch to a two-year process, running from January 2018 to December 2019, and every two-year period thereafter.
In order to get to that point, when this year’s budget cycle ends on June 30, 2016, the next government budget cycle will run from July 1, 2016 to Dec. 31, 2017, a period of 18 months. After that, the two-year budgeting process will begin.
The proposed changes will also take Cayman’s current July through-June budget to a January-through-December process.
Both Premier Alden McLaughlin and Finance Minister Marco Archer have said they believe the change could address a number of issues currently facing the annual spending plan process.
First, moving the budget process from January to December takes budget planning away from the general election. Typically, Cayman’s general elections are held in May every four years. In the current budgeting process, a new government has only five weeks or so after its election to office to come up with a spending plan for the entire 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 it does now.
However, both Opposition Leader McKeeva Bush and independent North Side MLA Ezzard Miller object to the change, stating it does not allow for proper scrutiny of government accounts until it is “too late.”
Mr. Miller said in September that the proposed 18-month “interim budget,” between July 1, 2016 and Dec. 31, 2017, would allow the current government to effectively “skip” finance committee and strategic policy reporting requirements during its last 12 months in office prior to the May 2017 general election.
“This provides some opportunities for government to spend money in that period leading to the election that is not going to be scrutinized until long after the next election takes place,” he said.
Mr. Archer has denied that would be the case under the Progressives-led government. He explained that while the budget plan would be extended, first for 18 months and then to two years, annual audits and reviews of government spending would still take place as prescribed by the law.
However, Opposition Leader Bush pointed out that those audits have often lagged years behind the actual expenditure and that legislature members are not allowed to question those reports at the time they are made public, due to Legislative Assembly rules.
“That is a long period of time when there is no scrutiny,” Mr. Bush said.
Mr. Archer said the finance committee review of the 2016/17 budget would take place as normal next spring. The only change initially will be that the outgoing Progressives-led administration will not be required to produce another strategic policy statement in November 2016 – a few months before the election.