The provincial government is changing the way its agencies do their accounting – and that change is going to cost local groups across the province a lot of money.
As of next year, it will cost Centre Wellington Township about $69,000. The Grand River Agricultural Society and the horse groups in the province will also see their share of slots cash diminished, as the Ontario government keeps more slots and casino profits.
OLG spokesman Tony Bitonti said in an interview on Monday the change will benefit the provincial Liberal government, which will be taking a bigger percentage of the profits. The province runs the OLG and uses a share of its profits.
He said the $340-million that would be lost would be OLG’s loss if it adopted the new practices this year. The loss to municipalities would be $10 to $11-million.
He added that the all the profits of OLG goes back to the province, about $2-billion per year, and that $1.5-billion goes to health care expenses, according to a letter the OLG sent to Centre Wellington Mayor Joanne Ross-Zuj on April 15.
Currently provincial agencies such as Ontario Power Generation, Hydro One, the Liquor Control Board of Ontario and Ontario Lottery Gaming use the Canadian Generally Accepted Accounting principles, but they are moving to International Financial Reporting Standards.
Bitonti said that means the OLG must now account for its promotional programs as a cost, and it will, in turn, deduct those costs from the recipients of the slots profits, including host municipalities, agricultural societies with casinos and slots facilities and horse groups.
Bitonti said the province is aware those groups have already set their budgets for this year, so they are providing an interim payment to the end of the year, and the cuts will start in 2012.
“The old systems were included as operating expenses,” he said, adding all government agencies are moving to those standards and the province cannot run “two sets of books.”
Ross-Zuj was not very happy with the News, and said township Treasurer Wes Snarr was looking into the issue with the OLG and other affected municipalities.
Snarr said it appears to be a simple tax grab by the province.
He agreed that if a township citizen decided to change his accounting practices, it would not be fair to force the municipality to pay that person’s property taxes – and that is essentially what the province has done; changed its accounting and making someone else pay for it.
“What they’ve done is they plan to replace the definition of net winnings with the definition of the IFRS,” Snarr said.
The township is currently exploring options with other host municipalities to prevent that.
Grand River Agricultural Society president Paul Walker said on Tuesday morning his group has also been informed of the alleged cash grab.
When asked if it is just that, Walker said, “Oh, yeah, it is. There’s no doubt about it.”
A letter to the township from OLG stated the municipality would receive “one time payments to accompany your regular payment calculated under IFRS for the first nine months of this fiscal year.”
Snarr agreed that sounds eerily similar to the provincial government’s HST payments when it harmonized the provincial sales tax with the federal GST. Families were to receive three payments totalling $1,000, and then be stuck with the increase in taxes for good.
Studies have indicated the provincial government, which claimed the tax is revenue neutral, will benefit from extra tax cash because of that change.
Snarr said when he was on a conference call last week with the OLG and other affected municipalities, “I asked that question point blank.”
The Advertiser was unable to reach Grand River Raceway’s general manager Ted Clarke for comment.
There were other media reports stating the province was also going to renege on its five per cent payoff to municipalities by cutting it back directly, but Bitoni said that is not the case.
Ross-Zuj said she is concerned about the OLG running its marketing programs such as Winner’s Circle and giveaways, because the township will now have to pay for those, with no say in what is done, or what the budget will be.
Bitoni said marketing at the facilities draws customers to slots and casinos, and there have been very few changes over the years to marketing plans, except for minor ones, and there are no plans to increase those budgets.
