Top-ranking civil servants and Cayman Islands’ Cabinet officials worked through the weekend on a series of budget cutting proposals being made in a last ditch effort to stave off public sector salary cuts.

According to a memo from Acting Deputy Governor Franz Manderson that was circulated Thursday, proposed pay reductions of between five and 15 per cent have been put off for this month.

“However, reductions to salaries and wages remain under active and urgent consideration,” the memo read.

All central government department managers, as well as statutory authorities and government-owned companies, were asked to present non-salary budget reductions of at least 15 per cent earlier in the month by Financial Secretary Kenneth Jefferson. Mr. Manderson’s memo – which was released the following week – stressed the importance of making those reductions as soon as possible.

“These reductions are utterly essential in order to reduce the projected net deficit for the year to 30 June (the end of government’s current fiscal year),” the memo read. “Any acute negative impacts which you feel such a reduction may cause should be reported.”

“These projected impacts must not simply be used as a basis of not offering up the reduction. Furthermore, any agency which is able to achieve more than the required 15 per cent should do so.”

In fact, the Caymanian Compass has learned that some government departments had already been asked to cut deeper than the 15 per cent figure upon presenting their proposed reductions to Cabinet representatives.

According to Mr. Manderson’s memo, civil service department heads and chief officers would be contacted Monday to be informed which of their budget cutting proposals had been accepted. Those reductions will then be considered by Cabinet on Tuesday.

“I appreciate that this is a tight timetable, but I feel it is attainable as you have been working towards this end for the past week,” Mr. Manderson wrote in the memo.

Cayman Islands Civil Service Association President James Watler said he knew of some discussion about civil servant salaries being cut by roughly three per cent – the amount they increased in the last cost of living adjustment government provided.

However, Mr. Watler said, as far as he was aware, any pay cut proposals remained at the discussion stage.

"It's better than what they had proposed," Mr. Watler said. "Things are extremely fluid right now."

He said civil servants could take heart that government had apparently abandoned proposals made earlier by Premier McKeeva Bush that would have required some public sector workers to contribute 50 per cent of their health insurance premiums from their own pay.

“The concept of civil servants contributing to health insurance costs….is not being pursued,” Mr. Manderson’s memo stated.

Also, a proposed “100 per cent pension holiday” – a suspension of statutorily required pension fund payments made to each government worker – was deferred. Currently, the law requires government to pay 12 per cent on top of an employees’ monthly salary toward a retirement fund.

Mr. Manderson’s memo was released while Premier Bush and Financial Secretary Jefferson were in the United Kingdom discussing the contents of an independent revenue study with the Foreign and Commonwealth Office.

Cayman is required to maintain six principles of responsible financial management in its yearly budget proposals. Right now, it is violation of three of those; including the total amount of debt government is allowed to incur, and operating in a deficit position.

If the situation is not righted, the UK government could restrict Cayman’s ability to borrow money to meet its expenses.  

The government will hold a press conference Monday morning to address the outcome of its meetings in the UK.