An opposition senator has accused David Burt of “playing a shell game” with taxpayer money by dipping into the Government’s sinking fund to pay off a guarantee of almost $10 million for the Bermuda Gaming Commission.

The Premier and Minister of Finance, however, said the sinking funds were used to ensure that health insurance premiums could be frozen and so that further investments could be made into affordable housing.

Mr Burt revealed in his Budget Statement last month that $9.7 million had been taken from the fund to “repay the Bermuda Gaming Commission’s outstanding credit facility to a local bank, which the Government had guaranteed”.

He told Parliament on Monday that Butterfield Bank had decided against extending a loan to the regulator, so the Government would provide it with an $800,000 grant in 2024-25.

Shadow finance minister Douglas De Couto said: “The $800,000 grant is likely to fund the operations of the commission.

“In prior years’ budget debates, we stated that the prior guarantee would always have to be paid for by Bermudian taxpayers since there is no gaming in Bermuda and seemingly no prospect for gaming to fund the commission.

“By funding the commission via the guarantee, and then paying the guarantee out of the sinking fund, the Premier and Minister of Finance is playing a shell game with the people’s money.”

Dr De Couto claimed Mr Burt was trying to keep the “easily anticipated operating expenses” of the commission out of his “so-called balanced budget” to present a more appealing picture to taxpayers.

He added: “But moving the numbers around on paper doesn’t change the fact that Bermuda’s net debt continues to increase, by $38 million in this year’s budget.”

The senator said that the One Bermuda Alliance would “either shut down the gaming commission, or take meaningful action to relaunch gaming, such as removing political interference”.

The criticism followed remarks by the Leader of the Opposition, Jarion Richardson, in his Budget Reply. Mr Richardson argued that the 2024-25 budget was far from balanced since it used $40 million of borrowed money.

“As Bermudians with a loan or mortgage know, it doesn’t matter when the money was borrowed — last year, the year before or this year — it’s still spending borrowed money, and running up interest fees,” he said.

“This on top of pulling $10 million out of the sinking fund last year to pay off the gaming commission guarantee.”

The commission, set up in 2015 with a $3.8 million government grant, was meant to become self-funding through casino taxes and fees, but the lack of a gambling industry has prevented that from happening.

As well as the grant, it received interest-free, repayable loans totalling $2.1 million from the Government between 2017 and 2018, which it said would be repaid when it attained a balanced-budget position. That has yet to happen.

Its annual report for September 2015 to March 2017 said the Government had told it to “seek commercial funding going forward” and it had “discussed commercial funding with a local bank, with the intent for this funding to be supported by a government letter of guarantee”.

The first letter of guarantee was issued by the Ministry of Finance on March 29, 2018, allowing the commission to borrow up to $500,000.

The 2019-20 Budget listed the government guarantee for the gaming commission as being $1.2 million. That was in addition to a $500,000 grant from the Ministry of Finance.

In the 2022-23 Budget, the surety was $2.7 million.

Last year, the guarantee leapt up to $9.8 million. Neither Mr Burt nor commission chief executive Charmaine Smith would answer questions at the time about the reason for the steep increase.

With the Government now having paid out $9.7 million on the guarantee, the commission appears to have cost the public purse about $16 million in less than a decade. During that time, the betting-shop industry has disappeared and not a single casino has opened.

Money is set aside each year in the sinking fund for the repayment of government borrowing.

Dr De Couto said the guarantee meant that taxpayers had funded the commission in recent years, even though the Government had kept it “off the books through the sinking fund”.

“To pretend they are not spending their own money is quite ingenious,” said Dr De Couto, who added that the annual costs of running the commission should be factored into the budget as a line item for the finance ministry.

Mr Burt responded that the OBA had provided the commission with its initial grants and the first $1.6 million interest-free loan in 2017.

“This is important because any notion of the Government looking to keep the anticipated operating expenses out of the Budget was started under the former government,” he said.

“In January 2019, the Government signed a guarantee of $1.2 million in support of a Bermuda Gaming Commission overdraft facility. The overdraft was increased over time and in December 2022 stood at $9.8 million.

“In the first quarter of 2023, Butterfield Bank made the decision not to renew the credit facility and in the intervening period, given the fallout of the banking crisis, the commission was unable to refinance,” Mr Burt said.

“As the commission did not have the available funds, in June 2023, the Government repaid the commission’s outstanding balance in line with the terms of the guarantee.

“The change in net debt is simply a result of the Government choosing to use funds within the sinking fund to ensure government health insurance premiums are frozen for the third year in a row and to provide additional investment in affordable housing.

“We can do this, as we have balanced the Budget.”

Mr Burt noted that Bermuda’s interest expense will be reduced by $2.4 million in the upcoming fiscal year owing to the repayment of $50 million in debt last year.

“Despite the Opposition’s attempt to confuse voters, the shadow minister must admit that there is no new borrowing and gross debt remains the same,” he said.

“This government is committed to doing what it can to ensure we provide relief for Bermudians while exercising fiscal prudence and focusing on delivering the first balanced budget in over 20 years.

“We will not be distracted by an opposition that has no solutions for the future.”

A Butterfield spokeswoman said yesterday: “We never comment on specific relationships for reasons of client confidentiality.”

The gaming commission did not respond to requests for comment.

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• UPDATE: this article has been updated to correct that Douglas De Couto is a senator, not an MP as was stated in the first paragraph