Much of Lethbridge’s financial strain is caused by the provincial government
By Lethbridge Herald on January 13, 2026.
For years, Lethbridge residents have been met with a recurring refrain: that ballooning municipal budgets, climbing property taxes, and the erosion of public services are the unfortunate but unavoidable byproduct of “economic realities.” A close look at our finances reveals that our city’s economic strain is not an act of nature; it is the calculated result of policy choices spearheaded by Danielle Smith’s UCP government.
The provincial government has framed its recent manoeuvres as “fiscal discipline,” but on the ground in Lethbridge, the reality is far more predatory. Local revenue streams have been chocked while the government has simultaneously offloaded costs onto the city. And the province has also effectively weakened the very institutions that anchor our local economy.
The dismantling of photo radar as a municipal revenue source is a prime example of this sleight of hand. Previously, Alberta municipalities captured tens of millions of dollars from unlawful speeders. These were funds that were legally mandated to support road safety, policing, and vital infrastructure. By stripping this away, the province hasn’t just removed a “cash cow”; it has left a massive hole in the local budget with no meaningful replacement. When the province unilaterally removes revenue while leaving the local responsibilities untouched, it is the property taxpayer who is forced to pick up the tab.
Provincial grants tell a similar story. For years, our city relied on predictable provincial transfers for capital projects such as roads, water systems, recreation facilities and other essential infrastructure. That stable funding came through the Municipal Sustainability Initiative (MSI). Those funds provided billions of dollars to municipalities across the province over nearly two decades. But in 2023 the MSI was ended and replaced with the Local Government Fiscal Framework (LGFF). For Lethbridge and many other Alberta communities, that shift has meant a nearly 37 % reduction in provincial capital funding, with far less available for core projects than under the old model. City council describes the new framework as “tight,” forcing them to freeze or delay infrastructure work and to prioritize only maintaining assets rather than building for the future.
It’s not just cuts in traditional grant programs. The Grants in Place of Taxes (GIPOT) program (a program which is designed to compensate municipalities for province-owned properties that don’t pay local taxes) was cut in half in recent years for Lethbridge. Between 2018 and 2024, GIPOT funding plummeted from about $1.2 million to roughly $586,000, a 50 % reduction that forced the city to make up more than half a million dollars annually from local taxpayers.
Only now, in the 2025 provincial budget, has that funding begun to be restored. This year it’s back to 75% of what the city would have collected in tax revenue in 2025, with full restoration to 100% expected next year. But (and this is a big BUT) there’s no compensation for the years of shortchanged revenues that already cost Lethbridge taxpayers hundreds of thousands of dollars.
Worse still is how the province structures education property taxes. In 2025–26, the education requisition rate rose by 13.8 %, after prior increases of 6.1 % and 3.2 % in previous years. This sharp increase isn’t due to any decision by Lethbridge City Council. It’s imposed by the province. And it shows up on your property tax bill. You see larger tax bills, and Lethbridge and all municipalities bear the administration cost and political blowback while the province collects and controls the funds.
We also feel the cost of provincial mandates that add expense but no revenue. A prime example was the recent municipal election, where the province’s insistence on manual vote counting instead of electronic counters added tens of thousands of dollars in staffing and overtime costs for Lethbridge.
The city just recently received an Award of Excellence from an association which represents public finance officials throughout the US and Canada for its strong financial management. The city’s finance department needs this financial stewardship to weather the strain imposed by the provincial government.
The pressure doesn’t stop at city hall. Lethbridge’s post-secondary institutions, the UofL and Lethbridge Polytechnic are among the city’s largest employers and economic drivers. They too have been hit hard by provincial funding decisions. Since 2019, Alberta universities have seen operating grants reduced by roughly 20 per cent in real terms. At the UofL, this has translated into tens of millions of dollars less each year compared to previous funding levels. The consequences are predictable: hiring freezes, fewer course offerings, larger classes, and reduced student support. And less money going into the community.
Lethbridge Polytechnic faces even greater vulnerability. Polytechnics rely more heavily on tuition revenue, particularly from international students, to offset insufficient operating grants. When funding is unstable and enrolment fluctuates, institutions are forced to cut programs and positions. Those job losses do not just affect campuses, they ripple through the local economy, reducing spending and weakening the city’s long-term growth prospects.
Strong cities and strong post-secondary institutions are investments, not liabilities. Lethbridge’s financial strain is not inevitable. It is the consequence of provincial choices, choices made by Danielle Smith and her UCP government. Until those choices change, and until local advocacy becomes more effective, Lethbridge will continue paying the price.
Ken Moore is a longtime resident of Stirling and retired news director at CFAC Television
14-13
Yet, despite the shenanigans of dumping costs to municipalities and families (with more and greater service fees), the Smith government was still able to run a $5+ billion dollar deficit. Even while enjoying good oil prices. Worse to come as Western Canadian Select oil futures turn down.
Maybe we’ll see fewer tax breaks to corporations, fossil subsidies, and coal company giveaways – though, to be fair, this government never did promise fiscal responsibility. They only promised social engineering.