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During the presentation of the 2024 budget on January 29, 2024, the Director of Corporate Services informed us of changes in the budget since it was first presented in December. One very important change, that I’m sure most didn’t even notice, was the recommendation to fund the remaining balance of the Art Gallery’s 2017 debt from the 2023 budget surplus.

Few would have seen this as being a significant change since the actual money owed to suppliers was paid by taxpayers in 2017. The reality is that no money has ever changed hands. This debt repayment was always only symbolic. It was just a ledger entry – albeit a very embarrassing ledger entry for Art Gallery supporters.

The Art Gallery is a Cost Center and as such has no net earnings so it was always impossible for it to actually pay this debt. However, it stood as an example of how poor decisions can result in a significant cost to taxpayers. As such, it should remain on the books as a reminder to all and hopefully prompt future councils to exercise more effective oversight of financial matters.

However, staff is now recommending that we erase this lesson from history so we can move forward with the plan to build a new or expanded Art Gallery without this reminder of past mistakes. Note, they don't give any reason for forgiving this debt. They just recommend removing it.

This is particularly important for Owen Sound Taxpayers because many of the same conditions exist today, as those that led to the Art Gallery’s historic budget deficit and therefore it is quite possible that the mistakes of the past will be repeated.

Historical Review
City By-law No. 1999-013 established that the operations of the Tom Thomson Art Gallery would be managed by a Board of Directors.

On September 22, 2014 Council gives its approval in principle of having the Art Gallery becoming a private corporation.

“Moved by Councillor Boddy THAT in consideration of a report dated September 2, 2014 from the Tom Thomson Art Gallery ("TTAG") Board, City Council approves in principle having the TTAG move out of being a division of the City of Owen Sound into a new charitable corporation on the basis described in the report and with the willingness to proceed to negotiate the required agreements to make this happen." Councillor Ian Boddy September 22, 2014

On May 11, 2015 the chair of the Management Board asked Council to support the Gallery’s incorporation as a ‘Not-for-Profit’ corporation.

Among the reasons given for incorporation was that there would be new sources of Operational and Capital funding available if the Art Galley was incorporated that weren’t available as a city department. However there is no evidence that anyone verified this assertion. It was just accepted as fact without challenge. In addition, they cited a difficult three-pronged reporting structure for the Director who reported to the Board and the City Manager; while at the same time was required to be responsive to the needs of the membership.

In spite of the fact that the Art Gallery had not yet incorporated, They also started using their own budgetary software at this time as opposed to the city’s system. If you examine the budget presentation for 2017 you will see that the Art Gallery line item is left blank for this reason.

In 2016 Councillor Dodd represented Council on the Board and in 2017 Councillor Thomas was the representative. Council also received the minutes of all Art Gallery Board meetings where financial issues were discussed. However, in advance of incorporation, which was anticipated in March 2017, the Council pretty much had a ‘hands-off’ approach when it came to the Board’s management. They apparently delegated oversight of the Art Gallery’s finances and there were pretty much left on their own for budget years 2016 and 2017. This was later confirmed in a staff report, however I could not find any record of Council officially approving the Gallery’s financial management independence. There is no evidence that Council representatives ever raised financial management concerns or informed Council of the lax control of spending that the Board was exercising.

As a result, the Art Gallery overspent its 2016 budget by $85,000. Surprisingly, the Board did not take any steps to rein in spending for 2017. I could not find any record of Councillor Thomas, who represented Council on the Board in 2017, raising financial management concerns to the Board. Also I couldn’t find any record of a member of council insisting on changes to avoid another deficit in the future; however, I did find one record of Council asking for mid-year financial updates for all Boards. Adding to the confusion was the fact that the Art Gallery started using its own financial software, instead of the city system, in 2017 which virtually kept city staff in the dark.

As a direct result of the Board’s in-action and the failure of Council to adequately exercise its fiduciary responsibilities in regard to the management of this city department, the Art Gallery once again overspent it budget. This time the budget deficit was much greater at $530,000.