Council approves updates to Capital, Operating budgeting processes

Lethbridge City Council will return to having staggered years for its Capital and Operating Budget deliberations.

At its May 28 meeting, Lethbridge City Council voted unanimously to approve changes for the 2027-2030 Capital and the 2028- 2031 Operating budget process that includes the following:

1. In 2026, conduct Operating Budget deliberations and approval of the budget for 2027 (stub year)
2. In 2026, conduct Capital Budget deliberations for the 2027-2030 Capital Improvement Program (CIP) following by approval of the Capital Budget
3. In 2027, conduct Operating Budget deliberations for the 2028-2031 Operating Budget
4. For future budget processes, continue to stagger the Capital and Operating budget deliberations by one year
5. As part of the resolution, Council also rescinded item #6 from the City Council resolution on August 24, 2021, that was approved as: Direct the City Manager to start in 2026 the ongoing process to debate the four-year Operating Budget and the four-year Capital Improvement Program in the same year

“Having the capital and operating budget deliberations occur in two separate years will allow additional time to engage and communicate with the community,” says Mayor Blaine Hyggen. “It will also provide Administration adequate time to prepare and provide more opportunities to share information about both the capital and operating budgets.” 

“This additional approved year or “stub year” will stagger the operating and capital budgets so the same Council can approve both the capital and operating budgets in their term,” says Darrell Mathews, Chief Financial Officer and Treasurer. “The Capital budget is approved one year (2026) before implementation (2027). This will reduce inflationary risk associated with the projects and allows capital projects to begin sooner in the term of Council who approved the projects.”

The Economic and Finance Standing Policy Committee (SPC) is responsible for the development of the Operating and Capital Budgets. The budgets are provided through Economic & Finance SPC to City Council for consideration and approval. 

At the April 11 Economic and Finance SPC meeting, Administration provided a presentation in regard to the 2027-2030 Capital and Operating Budget process. That full committee report can be found here.

Staggering the two budgets will:

• Reduce the number of meetings in a one-year period due to staggering budget deliberations by one year
• Allow Council to complete orientation before entering budget deliberations in 2026
• Ensure the same Council’s capital budget decisions are integrated in the operating budget deliberations within their term

The previous budget process model, as approved in 2021 would have required conducting the Capital and Operating budget deliberations in the same year (2026) for the 2027-2030 Capital and Operating Budget. This model would have required an estimated $575,000 in additional staff resources (term or contract positions) to implement the budget process model. 

The current operating budget includes a four-year (2023-2026) approved budget and the capital budget includes a five-year (2022-2026) approved budget within a 10-year (2022-2031) financial plan.  Information on the currently approved City budgets can be found at: https://www.lethbridge.ca/City-Government/Financial-Documents/Pages/default.aspx.

Prior to 2023, the Capital and Operating Budgets were staggered. After staggering the capital and operating budgets between Council’s terms for multiple cycles, City Council wanted to explore different options for the budget process that would align the Capital and Operating budget deliberations to occur in the same term. 

In 2023, Council began ongoing annual reviews of the Operating and Capital budgets. Annual financial forecasts were reduced from twice per year to once per year in preparation for Council’s annual budget review. As always, administration will continue to report urgent or unusual financial information to Audit Standing Policy Committee, Economic Standing Policy Committee or City Council, as required. 

Leading into the next Capital and Operating budget cycle, the City of Lethbridge will conduct several communication and engagement activities designed to gather input from Lethbridge community members on their budget priorities. The budget engagement activities will take place starting sometime in 2026. The feedback collected during these activities will be summarized in a report that will be provided to City Council.