Medicine Hat's Budget Assumptions: The Bill Comes Due Later
Sept 6 2024 Division Ave S between 6 and 7 St - Owl News
The City of Medicine Hat is preparing to pass a two-year budget that includes a long list of projects and maintenance items that administration has chosen not to recommend for funding right now. These deferred items carry a price tag that will come due at some point in the future.
This is the first public discussion of the 2027/2028 budget, most of the discussion has been behind closed door Budget Committee Meetings. This presentation is called
2027-2028 KEY ASSUMPTIONS - CAPITAL & OPERATING BUDGET
This presentation for information only identifies numerous projects under a "not recommended" heading, meaning staff reviewed the requests and determined they should not proceed at this time. Among the largest items:
$7.5 million for airport runway rehabilitation that has been deferred for multiple budget cycles,
a $50 million spare LM6000 gas turbine for the power plant,
a $4.1 million police training centre,
a $27.6 million food compost facility, and
$500,000 for Heights Pool demolition.
Some of these items are discretionary. Others are tied to infrastructure that is aging and will eventually require attention.
The Airport Runway
The runway rehabilitation project appears in the budget at $7.5 million and is marked as contingent on grant funding. The document notes it has been "deferred for multiple budget cycles." It does not state how many cycles or when the deferrals began.
The project qualifies for federal Airports Capital Assistance Program funding, but that program requires year round scheduled passenger service. WestJet ended service to Medicine Hat in June 2026.
The city has contacted other airlines in an effort to restore service and is awaiting results of a provincial call for proposals.
There is now a regular bus service between Medicine Hat and Calgary. FlixBus launched expanded service in April 2026 following WestJet's decision to suspend flights. A one-way trip takes nearly five hours. Medicine Hat hosted the Special Olympics this summer but if they want to host a similar event in the future, lack of a passenger air service will likely be a factor.
The Spare Turbine
The city operates LM6000 gas turbines to generate electricity. The budget includes a $50 million request for a new spare LM6000 turbine, which administration has not recommended for funding at this time.
The city currently has one spare turbine. City documents from December 2022 describe this spare as "essential to have it rebuilt and available on site in the event a failure occurs in one of the other LM6000 units," with wait times for parts and rebuilds ranging from four to twelve months.
The concern is what happens when that spare gets used. If a turbine fails, the spare is installed. The failed turbine is then sent away for refurbishing or rebuilding. During that period, the city has no spare. If another unit fails while the first is being repaired, there is no backup.
The budget proposes $10.4 million for gas turbine spare parts but does not recommend funding for a complete spare turbine. A complete spare turbine can be swapped in approximately four days. Parts require installation time and labour.
Supply chain conditions are a documented concern. Unit 10 has been at a repair facility for over 700 days awaiting parts. Councillor Ted Clugston stated in August 2026 that acquiring a new LM6000 "could take three, five, 10 years, it's so backed up."
Access to Information Requests and the Disclosure Clerk
The MHPS requested a Disclosure Clerk position to help manage access to information requests, but the position appears on the budget's "Not Recommended" list at a cost of $91,000 in 2027.
This is not a discretionary role. Under Alberta's access to information legislation, the police service has a legal obligation to respond to requests within 30 business days. The MHPS's own 2025 annual report acknowledges that "the information coordinator required the support of casual staff to manage the volume of requests" in both 2024 and 2025.
The volume has grown across the entire city organization. Before 2023, the city received a handful of access requests per year. By 2025, the city received about 80 requests, with 20 still outstanding as of January 2026. Processing time rose from 94 hours of staff time in 2021 to 470 hours in 2024, not including record searches in individual departments.
The increase began when power prices spiked in 2023. City explanations at the time were criticized, and more residents began filing access requests. Former city manager Ann Mitchell was opposed to releasing certain information, including salary details for top administration.
The city has also faced repeated rulings against it from the Office of the Information and Privacy Commissioner. In five separate rulings on December 2, 2025, the OIPC found the city violated access-to-information law.
Third Street Southeast
The budget document lists a "3rd St SE (Division Ave to 3rd Ave SE)" project at $1.2 million on the "Not Recommended" list.
The water and sewer pipes in that downtown corridor were originally installed in the early 1900s. A committee report from December 2025 confirms the project was deferred to 2027, and a later council document shows the sewer mains portion was specifically "deferred to 2028 as per direction from Council." The stated reason was to avoid a third consecutive year of construction disruption for downtown businesses.
The city acknowledged at the time that "there are still risks that could come with the deferral, such as failure with aging infrastructure." A water main break occurred in April 2025 in the 400 block alley between 3 Street and 4 Street SE downtown, in the same corridor.
The budget documents do not state when the deferred work must be completed.
The 0 Percent Inflation Assumption
The budget assumes zero percent inflation for expenses over both years. Administration stated in a public meeting that departments must absorb inflationary cost increases unless they submit a specific business case that receives approval. The budget includes $1.1 million in operational savings for 2027 and $2 million for 2028. Staff acknowledged these savings are "placeholders" and have not been assigned to specific areas yet, adding they will return to council to discuss "any potential impact that they would have on existing services."
Reserve Drawdown
The budget projects transferring $14.3 million from reserves over the two-year period to cover the municipal budget gap. Investment earnings are forecast at $16.9 million in 2027 and $17 million in 2028, up from $10.2 million in 2026. Staff noted investment earnings can be volatile and fluctuate with market conditions.
The Question of Timelines
The budget documents list what is being deferred and how much it costs. They do not state when those projects must be completed.
The airport runway has been deferred for multiple budget cycles without a scheduled completion date. Without year round passenger service, this is not eligible for federal grants at this time.
The spare turbine is listed as "not recommended" without a timeline for reconsideration.
The Third Street SE project was deferred to 2027 and 2028, but the documents do not say what happens if it is deferred again.
This is handled differently in other jurisdictions. Ontario Regulation 588/17 requires municipalities to have complete asset management plans covering a 10-year horizon with annual reviews. The city of Sarnia ON has their Corporate Asset Management Plan 2024 which can be found on this page. It goes into detail about each asset -
age
condition
life remaining
cost of replacement
risk of letting it slide…
Alberta does not have an equivalent regulation forcing that level of detail in public budgeting. The Municipal Government Act requires a three-year operating plan and a five-year capital plan, but Medicine Hat's budget documents do not connect the "not recommended" list to those plans in a way the public can see.
Debt and Future Commitments
The city's 2025 Annual Report states its provincial debt limit is $872.1 million, with actual total debt at $465.3 million, or 53% of the limit. The city adheres to a more stringent self-imposed target of 70% of the provincial limit.
The 2025-2026 budget briefing warns that between 2025 and 2032, the city's debt is anticipated to climb to that 70% threshold primarily due to rising debt levels to fund capital needs. The briefing states this projection is "before considering energy transition or facilities for the future."
The "facilities for the future" refers to the proposed South Outdoor Aquatics Project and related recreation facilities. The city's Shape Your City project page states that the estimated tax increase for the aquatics project, without third-party funding, "would exceed City debt limit threshold."
Long-Term Planning and the Two-Year Window
Alberta's Municipal Government Act requires municipalities to prepare a three-year operating plan and a five-year capital plan, updated annually. The City of Medicine Hat also produces a 10-year financial plan.
But these longer-term documents are not the same as the budget debate. The 2027-2028 budget being discussed by council is a two-year document. The 10-year financial plan exists as a cash flow forecast, but it does not list specific projects with completion deadlines.
The result is that decisions about what to defer and what to fund are made within a two-year window. Whether a deferred project needs to happen in three years or ten years is not part of the public discussion.
The Bottom Line
The budget presentation to council tonight is for information only and was approved by the Budget Committee, chaired by Councillor Phaff who campaigned on no tax increases and fiscal responsibility - the Budget Commitee was created at her suggestion.
No decisions have been made yet.
This is the starting point of the 2027-2028 budget process.
The document shows the direction administration is proposing. It assumes zero percent inflation, meaning departments must absorb rising costs without new money unless they submit a specific business case. It includes $1.1 million in operational savings for 2027 that staff have acknowledged are placeholders and have not been assigned to specific areas. It projects transferring $14.3 million from reserves over two years to cover the budget gap. And it lists millions in maintenance and capital projects as "not recommended," including a spare turbine for the power plant, airport runway rehabilitation, and downtown water main replacement.
Council will deliberate on these items and more in the coming months.
Final budget recommendations are expected in November, with approval scheduled for December 7.
