the Financial Impact

Taxpayer Funding of the Art Gallery 2011 - 2024

In 2017 the city’s funding of the Art Gallery was $282,000. Given Council’s direction that the Art Gallery Debt be recovered from city funding over ten years, the City funding for the Art Gallery in 2018 should have been $282,000 - $53,000 = $229,000. However, when we examine the 2018 budget we see that the City funding was actually $285,000. In other words not only did Council ignore the direction they gave to staff, they actually approved an increase city’s Art Gallery funding for 2018 and even worse, Council has allowed it to grow wildly ever since as shown in the graph above.
 

Art Gallery Net Operating Costs 2011 - 2024

The 2018 Art Gallery Budget that was prepared by city staff showed net operating costs to be $285,850. In the 2024 budget net operating costs were budgeted to be $546,023. Hence net operating costs grew by 91% since city staff resumed control of the budget in 2018 as shown above.

Contributing to this problem is that and salaries and benefits expense grew by 49.1% during this period from $425,636 in 2018 to $634,479 in 2024.

Another contributing factor is that the Art Gallery’s revenue from other sources, such as Grants, Membership and Gift Shop, significantly reduced during this time period. In 2015 and 2016 grants were budgeted to be $260,805 and $345,805 respectively. In the 2024 budget, grants are only budgeted to be on $139,105 or only 40% of what they were at their peak.

As well revenue from both membership and the Gift Shop are down significantly as shown in the graph below. This indicates that the activity at the Art Gallery has been declining over the past six years.

Think about that for a minute. There are fewer people visiting the Gallery but Council has approved several consultant studies over the past few years aimed at building a new or expanded Art Gallery. Why?
 

Art Gallery Revenue from Membership and Gift Shop Sales 2018 - 2024

SUMMARY
You can readily see from the above three graphs that in spite of the Art Gallery’s revenues from other sources declining, Council allowed expenses to grow at a rate that was well beyond inflation. This resulted in a growing dependency on funding from Taxpayers to cover the difference. Essentially Council buried, what should have been annual deficits, by steadily increasing city funding to cover increasing expenses and declining revenue from other sources.

Council’s direction to staff, in 2017, to recover the Art Gallery’s $530,000 overspending debt, by reducing the city’s contribution over ten years, never happened. In fact, what did happen was just the opposite – city funding grew by 91%.

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In Part 5 we will examine how it can happen again, not only with the Art Gallery but, the risk of a similar occurrence, with the Library and Police who both have management boards.