The Cayman Islands government has unveiled a $2 billion, two-year budget and outlined an additional $270 million in planned capital spending over the same period.
As part of our Cayman Compass budget briefing, we look at 10 key proposals contained in the policy speeches and documents.
1. Personnel costs soar past $500 million
The cost of the civil service continues to grow, with $500.7 million allocated in 2024 and $522.3 million budgeted for 2025 – amounting to an $85 million increase over the space of three years, from the $437 million budgeted in 2022.
Personnel costs make up almost exactly half of the government’s spending plan.
Pay increases for educators, recruitment for the new mental health facility and for border control and an increase in health insurance premiums payable to civil servants were cited as the key drivers of the increased costs.
Core government – not including statutory authorities and government companies like Cayman Airways and the Port Authority – currently employs around 4,500 people.
Prior to his ousting, former Premier and Finance Minister Wayne Panton had cautioned that those numbers could not continue to grow.
“We cannot continue to grow the civil service to a drastic extent. We have got to find ways of keeping government as lean as possible but remain effective,” he said in a Radio Cayman interview about the challenges of putting together a balanced budget, in November.
2. Stamp duty hike among new revenue measures
An increase in stamp duty for high-end properties was announced as part of a package of new revenue measures. Details were not given and legislation would likely be required to make this change but the Compass understands discussions have included the possibility of doubling stamp duty from 7.5% to 15% for certain categories of property.
The move is considered a ‘no lose’ as it would most likely impact wealthy overseas buyers. However construction and real estate industry sources have cautioned it would have a cooling impact on building and that the ripple-effect could impact properties in all sectors.
Other fee increases contemplated include work permit applications and administrative charges levied by commerce regulators. Premier Juliana O’Connor-Connolly indicated these were expected to net $130 million over two years and suggested they would be ‘non inflationary’ and have little to no impact on the “little man” suffering amid a cost-of-living crisis.
It is conceivable, however, that such increases, combined with a planned hike in the minimum wage, will impact the cost of doing business in Cayman and potentially lead to price increases.
3. New Brac high school the ‘marquee’ capital project
The big-ticket infrastructure project for the next two years appears to be a new high school on the Brac to replace the Layman E Scott buildings.
Of the $65 million allocated to school improvements, $54 million is earmarked for new schools on the Brac and in West Bay.
The West Bay project – still in its infancy – would require a strategic outline case and business case proposal before any funds could be directed towards construction. A previous plan to build the Beulah Smith High School in West Bay was shelved amid financial challenges in 2008, with government opting to increase capacity at John Gray and Clifton Hunter.
The Brac project is much further along and is already at the planning stage, with construction likely to begin next year.
Other major projects include a $3.2 million investment in new school halls and $3.7 million for the continued expansion of the new John Gray High School and CIFEC campuses,
4. New mental health unit and ’50 new hospital beds’ in HSA plans
The Health Services Authority budget outlines plans to “expand current facilities to meet current needs and projected growth in patient volumes” and includes an allocation of $7 million over two years to upgrade equipment “including 50 new hospital beds”.
The HSA currently provides care at the 127-bed Cayman Islands Hospital in George Town and at the 18-bed Faith Hospital on the Brac.
A separate allocation of $10 million over two years is included in the budget for the expansion of the new mental health facility, expected to open in East End next year.
5. Green light for North Sound runway extension
A massive expansion of Cayman’s three airports is slated to begin during this budget period, with $50 million allocated to the Cayman Islands Airports Authority to get the ball rolling on a multi-year project.
The biggest item is a $15 million allocation to expand the runway into the North Sound – a long-desired, but environmentally controversial, scheme that would allow larger, long-haul jets to land and take off from Owen Roberts International Airport, potentially facilitating a direct flight to the UK. An additional $5.6 million is allocated for a new apron in the North Sound, suggesting that project could take off in 2025. There’s significant funds, too, for tech upgrades at the airports.
The premier also indicated plans for a new general aviation terminal in her budget address, though there is no line item for this in the CIAA ‘major capital projects’ list suggesting that, if it happens, it could potentially be through some kind of public/private partnership.
6. Cayman Airways continues to suffer losses
Cayman Airways listed $10 million losses for 2023, in spite of an $18.6 million government grant and a $5 million equity injection. Similar funding is slated for the next two years with the airline cautioning that further allocations may be necessary.
The airline’s budget notes indicate its approximate $150 million annual value to the islands’ economy and state that, while it will seek to operate more efficiently, its value as an engine for tourism growth and employment should be taken into account.
“The Airline must therefore continue to balance its efforts to operate at peak efficiency with its efforts to create the maximum economic impact possible.”
It added that “years of historic losses” have left it with a deficit of working capital and that the government and the extra borrowing and equity injections may be needed to increase viability and efficiency.
7. Sister Islands to get multiple new projects
Having a premier and finance minister from Cayman Brac appears to be working out well for the Sister Islands.
As well as the new school, money is earmarked for improvements to government offices and motor vehicle centre, new fire trucks and a slaughterhouse. There’s also $2 million a year for improvements to the 18-bed Faith Hospital.
The Department of Agriculture’s new office and slaughterhouse on the Brac is expected to cost $1.8 million, there is $8 million allocated over two years toward the District Administration main building and a further $1.5 million for the motor vehicles section. There’s another $2.8 million allocated for two new fire trucks for Little Cayman and fire service equipment and infrastructure on the Brac.
8. Continued focus on home building
The budget includes significant funds to continue building new affordable homes for Caymanians. There is $33 million allocated to the National Housing Development Trust over two years, with projects slated in West Bay and North Side already under way.
O’Connor-Connolly said the ministry, led by Jay Ebanks, would also complete a “national public and affordable housing policy and a 10-year strategic plan” in the current budget cycle.
Cabinet recently approved a slew of recommendations from the ‘housing task force’ sessions held earlier this year, though it has yet to announce details on what those recommendations are.
9. New Olympic pool moves closer
Referencing the successes of Cayman’s athletes in the pool, the premier promised progress on a national aquatics centre, including a 50-metre pool adjacent to the Truman Bodden Sports Complex. Funding of $3.4 million is included in the budget for upgrades to sports facilities around the islands, the bulk of which is expected to be directed towards the pool.
The project, which is also scheduled to include a separate 25-metre pool, a gym and eventually an 1,800-seat grandstand and athletes’ accommodation for all sports, will be part funded by the Cayman Islands Amateur Swimming Association.
Association president Steve Broadbelt said the funds and the backing of Cabinet was a “huge milestone” that should allow the pools to be built in short order, with the other pieces of the project likely to come together over a number of years.
He said swimming was becoming one of the main national sports in Cayman.
“We have been working on this for so long and the planets are aligning and the pieces are falling into place. It is exciting,” he added.
The pool is expected to help facilitate further success for Cayman’s swimmers, who are among the islands’ most competitive athletes globally, and to allow for Cayman to host international events.
10. Borrowing balloons to $500 million
After a long period of financial restraint, the purse strings have been loosened in the last two budget cycles. O’Connor-Connolly announced plans to borrow another $150 million to help fund infrastructure projects over the next two years. That’s on top of the $349 million borrowed in the 2022/23 budget.
She said there was still $106 million left from that allocation to be added to the new borrowing, to create $256 million fund to spend on the government’s wish list of infrastructure projects, including the schools, runway extension and hospital expansion outlined in this article.
Government anticipates its total debt burden will be $495.1 million by the end of 2025.
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Govt personnel costs taking up half the budget is unacceptable. Can anyone in Govt justify their sky high remuneration – why does our Premier feature in the top 10 highest paid Heads of Govt worldwide when we have a population of only 70,000 odd?.
If you add $10 to the price of each airline ticket no one would notice it and it would bring in a lot of money.
I see there is no money to fix SMB which is what Cayman is famous for and is now only about 2 mile beach.
The West Bay dock is falling apart and someone is going to get seriously hurt. When is that going to be fixed.
Maybe the pools could have public lap swim hours, for a fee to cover lifeguard expenses? Even for just a few hours/day, a few days of the week.
It is so sad to see the amazing Brac pool with no public access. It is a lap swimmer’s dream pool, sitting unused most of the time….