The Cayman Islands has piled up $8.9 million in unpaid garbage fees and the vast majority of that amount is likely uncollectable.
Of the current outstanding balance, about $6.1 million relates to garbage collection charges owed before July 2010 when the government agreed to exempt house owners from paying for trash collection, according to figures provided by the Ministry of Health. Trash fees are still collected from businesses and condominium complexes.
The remaining unpaid balance, just under $2.8 million, has been amassed between mid-2011 and this year.
That means the government is, on average, not collecting more than $460,000 in garbage fees owed each year – about 18 percent of the full amount it is typically due.
Department of Environmental Health officials sent out a warning notice Aug. 1 urging businesses and condo strata to pay their outstanding fees or lose their operating licenses.
“Businesses or properties with accounts still in arrears, or that do not otherwise meet the department’s requirements, will not be recommended … for approval to either the Trade and Businesses Licensing Board, the Hotel Licensing Board, or the Liquor Licensing Board, during the upcoming scheduled board meetings, unless all fees and other department requirements are in compliance,” the notice read.
The Cayman Islands Auditor General’s Office has previously criticized government for not including large deficits in trash collection fees on its books, leaving auditors to disavow the accuracy of ministry financial statements.
“A significant portion of the garbage fees receivable balance dates back to 2004/05,” statements from earlier government financial years have noted. “The ministry continues to pursue these sums, albeit with minimal success.”
A disclaimer of opinion by auditors, as was given to the former Ministry of District Administration in 2013, indicates that the entity’s financial statements did not contain enough information for a proper audit to be conducted, essentially providing no outside assurance that the financial statements could be relied upon.
Revelations regarding the government’s unpaid trash fees, dating back a decade, were first revealed by the Cayman Compass in early 2013.
A report from February 2013 noted that more than two years after the Cayman Islands government stopped requiring the collection of garbage fees from local homeowners, the government admitted that some $1.76 million in unpaid garbage fees was still owed by various ratepayers.
As of this year, that figure has grown to the $2.8 million being reported by the Ministry of Health.
Some of the fees that predate 2011 for residential home collection are still considered payable to government, although auditors did note those collections seem unlikely at this stage. It was also revealed previously by the government’s Internal Audit Unit that hundreds of businesses and strata-governed condominium complexes did not pay government fees for trash collection in 2014, and may not have paid those fees dating back to 2010.
“During the January-June 2014 billing period, 289 customers categorized as ‘business’ customer[s] were not billed,” the Internal Audit report, made public through a Freedom of Information request, stated.
Trash fee collection
A private consultant review of the government, completed in 2014, recommended the outsourcing of waste collection and landfill services to the private sector. However, in order to do that it was proposed that waste disposal fees be reinstated for all system users.
“Current waste collection fee arrangements in the Cayman Islands are ineffective with most residents and many commercial entities not paying for services,” the consultant’s report by accounting firm Ernst & Young stated.
To realize the estimated $2 million cost savings it identified, the EY consultant report makes it clear that the initiative would require the enforced collection of waste disposal fees. “In order to successfully outsource waste collection, it is a necessary preceding step to implement a collection fee structure and system.”
In addition to fees for waste collection, the report states, charges should be introduced for those bringing waste to the landfill site “for both private garbage collection companies and private citizens.”