Government approves extra $51.8M in spending, as surplus shrinks

The government on Friday approved an additional $51.8 million in spending for this year, as it announced that its expected surplus for 2024 had fallen to $16.5 million, which is $28 million less than originally budgeted.

Premier Juliana O’Connor-Connolly, chairing the Finance Committee, gave an update on the government’s projected financial position as of the end of this year.

In December last year, when delivering the two-year budget for Cayman, she had stated that the surplus the government expected to have by 31 Dec. 2024 was $44.5 million, but with its operating expenditure forecast to be far more than budgeted, that number has been revised.

The operating expenditure of core government, which includes such items as payroll, insurance, rent and other costs, is expected to be $1.081 billion by the end of the year, $31 million more than the $1.052 billion budgeted, O’Connor-Connolly told fellow legislators Friday.

She said the total amount government is forecast to borrow in 2024 is $27 million.

Finance Secretary Kenneth Jefferson, speaking at the Finance Committee meeting, noted that, so far this year, government had not borrowed any money.

Questioned by opposition MP Chris Saunders on the potential impact of unexpected expenditure, such as the escalating costs of providing healthcare to indigent Caymanians, on the dwindling surplus, Jefferson said he felt the projected surplus figure reflected all projected expenditures, and was based on spending and revenues for the first eight months of the year.

He noted that statutory authorities and government-owned companies, which are not included in core government estimates, had a surplus of almost $14 million by the end of August, despite the original budget estimating they would have a loss of $2 million by 31 Dec. 2024.

He agreed with Saunders that a $16 million surplus did not leave “a lot of wiggle room”, but said he felt the projections were “realistic”.

Jefferson also noted that the largest expense in operating expenditure was personnel costs – salaries, pensions and healthcare – saying the government had started the year with the budget for those costs of around $501 million for 2024. The projected personnel costs were now $460 million, which was described as a “considerable underspend”.

Government expects its operating revenue for 2024 to be $1.098 billion, which is $3 million more than the $1.095 billion originally budgeted.

O’Connor-Connolly said the amount of money government plans to spend on capital projects by the end of the year is $125 million, which is $47.5 million less than the $172.5 million forecast.

Despite the smaller-than-forecast surplus, O’Connor-Connolly said the government remained in compliance with financial management principles and would have 96.94 days of cash reserves by the end of this year. Under the Framework of Fiscal Responsibility and the Public Management and Finance Act, Cayman must have sufficient cash reserves to cover 90 days of operating expenses.

Additional spending approved

The Finance Committee approved a total of $51.8 million in supplementary budgets for various departments and projects.

O’Connor-Connolly noted that $35.4 million of this additional funding would go towards operating expenses, while $16.4 million would be used for capital projects.

During the meeting, 29 requests for additional funding were considered and approved.

These were:

• $597,000 requested by the Cabinet Office for new equipment and to hire 10 new staff members for Radio Cayman to meet current and future communication needs;
• $2 million requested by Cabinet Office for Radio Cayman studio refurbishment, modernisation and design;
• $350,000 requested by the Ministry of Finance and Economic Development as a contribution to the relocation costs of the Public Service Pensions Board from the Government Administration Building to Athena Tower;
• $200,000 requested by the Ministry of District Administration and Lands for land purchases to cover gazetted claims;
• $99,000 requested by the Ministry of Financial Services and Commerce to cover the costs associated with work to take place ahead of the fifth round mutual evaluation under the Financial Action Task Force (FATF) standard;
• $306,000 requested by the Ministry of Financial Services and Commerce to cover the cost associated with access and suppression teams, which will be required to carry out work associated with the implementation of the new Beneficial Ownership Transparency Act;
• $53,000 requested by the Ministry of Financial Services and Commerce to cover the costs of new staff required to meet international standards set by the Organization for Economic Cooperation and Development Global Forum;
• $128,000 requested by the Ministry of Financial Services and Commerce to cover the costs associated with compliance support and other work ahead of the fifth round mutual evaluation under the FATF standard;
• $1.15 million requested by the Ministry of Financial Services and Commerce to cover the costs associated with work to take place ahead of the fifth round mutual evaluation under the FATF standard and greater support for the reinsurance sector;
• $500,000 requested by the Ministry of Financial Services and Commerce to cover IT architectural changes and IT equipment to facilitate the implementation of the new Beneficial Ownership Transparency Act;
• $4.6 million requested by the Ministry of Investment, Innovation and Social Development to increase temporary and long-term financial assistance payments due to policy changes raising the amounts paid for accommodation, food and utilities; adding new services for rental deposits, as well as internet and transportation for recipients to reduce barriers for those seeking work;
• $2.2 million requested by the Ministry of Investment, Innovation and Social Development for payments to recipients of Seafarers and Veterans Ex-Gratia Benefits due to the fluctuating numbers of seafarers and veterans accessing this grant and additional funds provided to prepare for the arrival of Hurricane Beryl.
• $2.4 million requested by the Ministry of Border Control, Labour and Culture to build a new facility to house Cubans and others who land in Cayman illegally;
• $3.5 million requested by the Ministry for Sustainability and Climate to cover the value of work carried out in 2024 in anticipation that the Integrated Solid Waste Management System (ISWMS) project, also known as ReGen, which was scrapped earlier this year, would proceed;
• $550,000 requested by the Ministry of Planning, Agriculture, Housing, Infrastructure, Transport and Development to support improvements to the Cayman Islands’ public transport system, including a bus app that displays real-time information to enhance the reliability of services ($85,000), improvements to bus services to the eastern districts ($215,000), and to cover the costs associated with the ongoing human resources review ($250,000);
• $357,000 requested by the Ministry of Planning, Agriculture, Housing, Infrastructure, Transport and Development to address previously unfunded maintenance needs for the Recreation, Parks and Cemeteries Unit;
• $274,000 requested by the Ministry of Planning, Agriculture, Housing, Infrastructure, Transport and Development to procure and maintain the government’s vehicle fleet, specifically to address unforeseen increases in the price of fuel and elevated usage rates;
• $713,000 requested by the Ministry of Planning, Agriculture, Housing, Infrastructure, Transport and Development to cover unbudgeted legal expenses incurred due to litigation between the Department of Planning and the National Conservation Council.
• $313,000 requested by the Ministry of Planning, Agriculture, Housing, Infrastructure, Transport and Development for the procurement of licence plates and various software subscriptions;
• $2.4 million requested by the Ministry of Planning, Agriculture, Housing, Infrastructure, Transport and Development to cover the unanticipated surge in the overall demand and cost for agricultural supplies by farmers;
• $784,000 requested by the Ministry of Planning, Agriculture, Housing, Infrastructure, Transport and Development to cover higher costs associated with paper, printing, utilities, janitorial services and maintenance at the Government Administration Building and the Environmental Building;
• $500,000 requested by the Ministry of Planning, Agriculture, Housing, Infrastructure, Transport and Development for work on the Church of God hall and hurricane shelter in Bodden Town and disaster responses following Hurricane Beryl;
• $4 million requested by the Ministry of Planning, Agriculture, Housing, Infrastructure, Transport and Development for the cost of the environmental impact assessment of the East-West Arterial extension;
• $4.4 million requested by the Ministry of Planning, Agriculture, Housing, Infrastructure, Transport and Development to provide an alternative solution to Cayman’s ageing submarine cable infrastructure;
• $2.5 million requested by the Ministry of Planning, Agriculture, Housing, Infrastructure, Transport and Development to replenish the Kaibo Public Beach Park;
• $3.2 million requested by the Ministry of Health and Wellness to provide indigent patients with primary and secondary healthcare services, as well as dental and mental healthcare services;
• $13.2 million requested by the Ministry of Health and Wellness for the provision of non-Health Services Authority tertiary health care for indigent people, seamen and veterans who are referred for treatment locally and overseas;
• $125,000 requested by the premier on behalf of the Coast Guard for funding to establish a Domain Awareness System, a radar, around the Cayman Islands; and
• $410,000 requested by the premier on behalf of the Office of the Commissioner of Police for the purchase of assets for the RCIPS and Coast Guard.