12. Three-Year Financial Plan

The AGCO is an agency reporting to MAG, the AGCO’s annual spending authority comes from the Ministry’s printed estimates, as approved by the Legislature, and all revenues are remitted to the Consolidated Revenue Fund. The AGCO Board of Directors reviews the annual budget.

The recent expansion of the AGCO’s mandate has necessitated a strategic and comprehensive review of the AGCO’s funding framework in 2017–18.  AGCO’s funding framework has further expanded in 2018-19 to include licensing and regulation of Cannabis retail stores. The financial tables below reflect additional resources and fees.

AGCO Revenue – Key Explanations

AGCO Revenue ($ thousands)
Over / (Under)	2018–19 Budget	2018–19 YE Forecast	Variance $	2019–20 Budget	2020–21 Budget	2021–22 Budget
FEES & LEVIES
Liquor - related	14,713.00	14,482.98	(230.02)	15,101.80	15,300.98	15,300.98
Gaming - related	15,916.10	16,095.52	179.42	15,944.42	15,846.32	15,650.08
Cannabis - related	371.88	371.88	0.00	2,741.88	3,915.63	4,359.38
Total	31,000.98	30,950.37	(50.61)	33,788.10	35,062.93	35,310.43

• In 2018–19, a Liquor revenue decline of $0.23M (1.6%) is expected due to less grocers being authorized to sell beer, wine and cider in their stores. Gaming revenue growth of $0.16M (1.1%) is expected due to an increased number of registration fees received from service providers operating gaming sites, and more employee registrations as a result of new and expanded gaming sites across the province.
• As a whole, we are expecting a steady increase in revenue over the next three fiscal years mainly driven by the demand for new applications and renewals from the Cannabis retail implementation.

AGCO Expenditures – Key Explanations

To align with the Government-wide expenditure management strategy, the 2018–19 Gross Expenditures Forecast to Budget savings of $12.18M is a result of restrictions on spending and hiring for the Ontario Public Service (OPS).

AGCO Expenditures ($ thousands)
Savings / (Pressure)	2018–19 Budget (1)	2018–19 YE Forecast (1)	Variance $	2019–20 Budget	2020–21 Budget	2021–22 Budget
OPERATING
Salaries and Wages	67,257.60	64,255.90	3,001.70	69,263.73	67,962.48	68,015.35
Benefits	11,948.20	12,926.10	(977.90)	12,097.93	11,701.71	11,709.91
ODOE (OTHER DIRECT OPERATING EXPENSES)
Transportation and Communications (T&C)	2,997.10	2,459.80	537.30	2,995.20	3,003.10	2,988.60
Services (2)	25,530.70	16,619.70	8,911.00	22,829.84	13,068.01	12,899.34
Supplies & Equipment	1,721.80	1,012.20	709.60	1,698.30	1,698.30	1,698.30
Gross Expenditures	109,455.40	97,273.70	12,181.70	108,885.00	97,433.60	97,311.50
Recoveries (2)	(73,194.10)	(61,012.40)	(12,181.70)	(72,764.10)	(63,394.10)	(63,394.10)
Total	36,261.30	36,261.30	0.00	36,120.90	34,039.50	33,917.40

1. _{2018–19 Budget and Forecast includes Cannabis funding of $8.00M. The financial table above assumes costs related to the ongoing regulation of Cannabis.}
2. _{2018–19 Forecast includes due diligence costs to procure external service providers to assist in Eligibility Assessments (EA) of $0.63M for Gaming Modernization and $4.00M for Cannabis, which are fully recoverable. 2019-20 Budget includes $9.17M of EA for Gaming Modernization.  In 2019–20, 2020–21 and 2021–22, Cannabis EA is budgeted at $4.20M, $4.00M and $4.00M, respectively.}

AGCO Capital Assets – Key Explanations

The AGCO’s Capital Budget consists of the purchase of IT hardware and costs related to the implementation of the multi-year iAGCO IT business application project. With the addition of Cannabis, the implementation of iAGCO is now extended to 2020–21.

• AGCO IT hardware includes the purchase of personal computing devices, mainframes, data network equipment and storage devices.
• iAGCO capital assets include all build costs including hardware, software, licences and services.

 

 

1. _{2018–19 IT Hardware Budget and Forecast includes $93.80K for Cannabis.}
2. _{iAGCO Budget and Forecast includes $2.00M of Cannabis and as a result, the project timeline has been extended to 2020–21.}