Cents and sensibility: planning for a tight capital budget

City Council was provided an update from administration today on the limited funding available in the next Capital Improvement Program (CIP) and the planning challenges that lie ahead.

Although the next capital budget won’t be decided until late 2026, work is already underway to prepare projects for Council’s consideration. The CIP supports major capital needs, outside of day-to-day City operations. The majority of CIP funding comes from Provincial and Federal grants, some of which have recently been reduced.

“We know there are already many, many more projects than there is funding,” says Mayor Blaine Hyggen. “We want to be upfront with our residents and our community partners about this reality. Based on what we know today, the next City Council will be extremely limited in the CIP projects they can approve. Because of this, we won’t be going out looking for new projects but rather trying to address the things we already have in the queue.”

In 2024, the Alberta Government introduced the Local Fiscal Framework (LGFF) grant to replace the Municipal Sustainability Initiative (MSI). This change saw a reduction in the provincial funding to all municipalities of approximately 37 per cent. This reduced funding, along with other financial challenges, including needs at the Agri-food Hub and Trade Centre, have created financial pressures within the capital budget.

Between the unfunded projects identified in previous CIPs, projects in City Master Plans and projects in asset management plans, including both critical infrastructure needs and aspirational initiatives, the City is looking at upwards of $900 million in projects. The 2027-2030 CIP is estimated to have approximately $107 million in funding but once ongoing capital programs are considered, that drops to just $40 million.

To help prioritized projects for the next CIP, administration recommended a focus be put on maintaining current assets rather than building new infrastructure. The new LGFF also puts an emphasis on asset management.

“Although we are still about a year and half away from CIP deliberations, it takes a lot of planning to get projects ready,” says Darrell Mathews, Chief Financial Officer and Treasurer for the City of Lethbridge. “Having Council’s direction allows staff to put effort towards the projects that align with Council’s priorities and the available funding .”

City Council will deliberate on the next CIP in the fall of 2026 to approve funding for the four-year window from 2027-2030.

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