The upcoming government budget incorporates aspects of a development agreement between the Cayman Islands public sector and the Dart group of companies, Premier Alden McLaughlin announced Monday.
Also, cash reserves in the current government spending year, which ends on June 30, are sufficient to provide a small gratuity or bonus to government workers. A one-time payment equalling 2.2 percent of annual salary will be given to all civil servants during the June pay period, the premier said.
The modest bonus can be achieved without any increase in taxes or fees collected by government or any borrowing, Mr. McLaughlin said.
During his budget policy address, presented Monday morning in the Legislative Assembly, Mr. McLaughlin read a letter from British MP James Duddridge, the Overseas Territories minister, who declared Cayman’s financing plan would effectively set the territory free from U.K. budget pre-approval requirements, which it has been operating under since 2009.
”This step you have taken … is important for sustaining economic growth for the Cayman Islands,” Mr. Duddridge wrote.
“This government has done what we were mandated to do,” Mr. McLaughlin said, speaking generally of the administration’s financial achievements. “The economy is moving again, people are investing in Cayman again … Caymanians are finding work again, government finances are back on track again.”
The government will report a much lower operating surplus in the 2016/17 budget than it had in each of the past three years. That is the result of government adopting a one-time 18-month budget plan between July 1, 2016 and Dec. 31, 2017, which contains two “lower earning” revenue periods (between July and December) and only one higher earning period between January and April. The government earns the vast majority of its revenues in the first four months of the calendar year.
The figures in the budget are also much higher generally in the expenses and revenues categories since they are being estimated over an 18-month period, rather than the standard 12 months, Finance Minister Marco Archer said.
Central government revenues in the new budget are anticipated at $908.5 million, while expenses are due to come in at $862.4 million. This leaves an operating surplus of an estimated at $46.4 million – about one-third of the current budget year’s projected surplus.
Increased costs driving the expenses include an additional $4.2 million for public education services, including implementing recommendations from a review of the school system; $3.2 million added to the Cayman Islands Monetary Authority budget to help prepare for various financial services and non-financial services industry reviews; a $2.1 million increase for public health programs; $1.4 million for the May 2017 general election; a $1 million increase expected in legal aid services; and $500,000 to implement the conditional release programs for offenders.
The 18-month capital spending budget proposed by government includes $103.3 million in various projects and debt repayments.
Those projects include $7.9 million earmarked for the construction of John Gray High School; $6.9 million for revitalization of central George Town; $6.5 million for various solid waste projects; $3.4 million for upgrades to roads; $2.5 million for construction of a mental health facility; and $500,000 for the cruise berthing project in George Town.
Another $6 million has been set aside to buy lands for conservation purposes. That money will come from the government’s environmental protection fund.
Mr. McLaughlin officially announced Monday that the long-awaited third amendment of the Dart-National Roads Authority agreement “had now been executed.”
The particular amendment of the sweeping land-swap/investment/development deal has been under review for several years since it was first proposed by the former United Democratic Party government in 2012.
The agreement mandates certain road improvements, including the widening of the Esterley Tibbetts Highway near Camana Bay “sooner rather than later,” and removes the hotel room tax concessions made earlier during construction of the Kimpton hotel on Seven Mile Beach.
The premier also noted that the Dart group of companies has a number of other projects in the works, including an additional hotel on Seven Mile Beach and the redevelopment of the old Hyatt hotel site.
Mr. McLaughlin said it is hoped that the various projects will increase construction industry jobs and, once the work is complete, provide additional jobs for Caymanians.
While civil servants will receive a 2.2 percent one-time bonus in June, Mr. McLaughlin did not state any plans for a corresponding cost-of-living salary increase across the service in the next budget year.
The pay bonuses in June were given to recognize “valuable contributions civil servants have made in the past year.” For a civil servant earning $40,000 per year, the 2.2 percent gratuity would be worth about $880.
Mr. McLaughlin said there would also be targeted salary raises in certain civil service departments – which he did not identify – to address historical pay inequity issues. These arise in situations where the annual pay for civil service employees who have been in jobs for a number of years has been “frozen” due to budget constraints. Meanwhile, new hires in the civil service are brought in at the “market rate.”
“Some civil servants have had their pay frozen for seven years, but new entrants can get pay increases,” Mr. McLaughlin said. Some $2 million has been set aside in the upcoming budget to address the pay for disparity issues, Mr. Archer said.
Governor Helen Kilpatrick, who presented the annual Throne Speech on the budget plan prior to Mr. McLaughlin’s policy address, set December as the date for the creation of a “super ombudsman” office.
The merger of the Information Commissioner’s Office and the Complaints Commissioner’s Office is the first recommendation from the 2014 Ernst & Young “Project Future” report to be slotted for implementation.
About $300,000 has been set aside in the upcoming budget for the new ombudsman’s office.
Mr. McLaughlin said he would address the plan to proceed with recommendations from the EY report later in the current meeting of the legislature. He suggested that both the National Roads Authority and the Cayman Islands Postal Service would have their operations reviewed as part of the process.
The premier also said Monday that he has received an “extensive report” on options for reforming the process regarding permanent residence applications – requests filed by non-Caymanians to remain in the islands for the rest of their lives, a step toward receiving Caymanian status.
In August 2015, a judgment from the Cayman Islands Grand Court noted that the processes government used to review permanent residence applications under the previous law and the current law raised questions of fairness and legality in light of the constitution’s Bill of Rights.
Premier McLaughlin said he would address changes in the consultant’s report, compiled by local law firm Ritch & Conolly, later in the meeting of the assembly.
“This is too important an issue for us not to get it right,” he said. The report was not released on Monday.
The premier also referenced the fact that his Progressives-led government had lost three members over the course of the past year.
While not making any direct statements about the potential for an early general election, Mr. McLaughlin said the remaining 10-member government would not be “distracted or intimidated” and would “complete the work we set out to do.”
The defections of backbench MLAs Anthony Eden, Alva Suckoo and Winston Connolly to the opposition benches had caused delays, “including the delay of this budget,” he said.
“We who still remain [in government] place the needs and ambitions of our people above personal needs and ambition,” Mr. McLaughlin said. “We will not gamble with the future of Cayman.
“Neither do we intend to fight the wearisome battles of yesterday. These times require a new kind of politics … there is too much at stake for mere entertainment.”