MONDAY, DECEMBER 12: Bermuda Government expenditure could hit $950 million by the end of the financial year - $43 million over the February Budget estimate.

Premier and Finance Minister Paula Cox said on Monday that current account expenditure by Government was $36 million over the estimates for the first six months of this year despite a package of cutbacks.

But the projected income for the current financial year could be as much as $20 million below the $940 million target set in February’s Budget.

Premier and Finance Minister Paula Cox said that more cutbacks, including a Civil Service hiring freeze, no replacements for non-essential staff who leave and reduced spending in many areas, would continue for the rest of the financial year.

Ms Cox added that extra expenditure on social and healthcare programmes as well as increased costs for the police force due to overtime and salary increases were the major contributors to the overspend.

Ms Cox said the figures for the first six months of the 2011-12 financial year, up to September, showed that revenue had dipped to $421 million – $45 million lower than the same period in the last financial year.

She said cuts in payroll tax designed to stimulate the economy were the main reason for the reduction.

She added: “Revenues are tracking slightly below budget estimates. The reason for this slippage relates to weakness in the collection of Customs duty, foreign currency purchase tax and stamp duty collections.

“Also, the recently announced payroll tax concession for the retail sector will reduce collections by approximately $9 million.”

Ms Cox said that spending for the six months to September was $480 million, down $29 million on the same period in the last financial year.

Capital expenditure – the cost of bricks and mortar – was $28 million, a reduction of $25.7 million in the first six months of the 2010-11 budget period.

Ms Cox said: “Total current and capital spending to date, excluding debt service, is $54.7 million lower than last year’s spend.”

The cost of Bermuda’s national debt over the six month period was $60.8 million - $35 million in interest payments and a $25.8 million transfer to the Government borrowing Sinking Fund. Debt service to the end of September was $7.7 million up on the same period in the last financial year.

Ms Cox said that Government had cut back a total of $31.5 million through spending less on things like professional services, material and supplies, advertising, travel, transport, and communications and training.

Ms Cox added that combined expenditure had been cut by $54.7 million compared to the same period last year.

Ms Cox said: “It should be pointed out that, with the projected reduction in both current and capital spending, the Government will still seek to meet its stated target of a $150 million reduction in current and capital spending as compared to the last fiscal year.”