Commission on the Reform of Ontario's Public Services

The province guarantees to cover any deficit for the Games and as such is responsible for any
cost overruns beyond the approved $1.4 billion budget. As the deficit guarantor, the province
has a major interest in ensuring that appropriate measures are in place to minimize risk to the
business plan and ensure the budget remains within the approved financial envelope.
Provincial consent/approval is required if any major areas of Pan Am expense (i.e., venue
operations, transportation, communication services) increase by five per cent or $5 million.
As well as ensuring that checks and balances are in place to spot potential increased
expenditures, the province must also be vigilant in holding the parties involved to account
for any overrun in expenditures.
Recommendation 19-15: Work with the municipal sector to mitigate risks to the Ontario fiscal
framework by ensuring that commitments are adhered to. Known risks at this time include
potential overruns in municipal infrastructure and the Pan Am Games.
Unknown Risks
It is naive to believe the seven years from 2010–11 to 2017–18 will unfold exactly as projected
by the government or the <strong>Commission</strong>, especially in light of the widespread uncertainties that
currently persist over the world economy and its financial system. As the province proceeds
along its course towards returning to fiscal balance, many of the risks already discussed
could certainly emerge. For the province to continue to meet its fiscal targets, sufficient
contingencies will need to be allocated. In an era where political, environmental, economic
and technological factors are constantly changing, the fiscal plan must also be prepared for
the unexpected and must provide contingencies and mitigation plans for any unknown
risks as well.
Consistent with this approach, an adequate contingency reserve should be included to protect
against forecast errors. The level of the contingency reserve should grow over time as the
budget projection is pushed further out into the future, to provide the government with a
degree of latitude for handling general risks that emerge.
Additionally, given the tight constraints that will be imposed on ministry operating budgets,
a centrally held operating reserve should continue to be maintained that can be accessed only
through a process involving Cabinet and Treasury Board. The operating reserve will be used
to address cases where health and safety might be compromised or services to the most
vulnerable are jeopardized. The operating and contingency reserves will be used to address
unknown risks that materialize.
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