A full vote of council on whether to officially take the western Canadian city, which previously hosted the Olympics in 1988, out of the running will be held on Wednesday.
The recommendation also seeks to cancel the Nov. 13 non-binding plebiscite on whether to bid for the 2026 Olympics, with one councillor saying it would be unfair to ask residents to vote without a funding agreement in place.
"We do not have acceptable funding in place,” Councillor Evan Woolley, the chair of the Olympic assessment committee, told Calgary City Council. "I did not take this decision lightly.
"The clock has run out and it's time to move on."
Calgary's Olympic committee deliberated for nearly four hours on Tuesday following recent reports that the city and federal government were unable to reach a successful conclusion to funding talks.
The recommendation comes three weeks after Calgary, Stockholm and an Italian bid involving Cortina D'Ampezzo and Milan officially became candidates for the 2026 Winter Games after the International Olympic Committee ratified their bids.
The bid committee has estimated the cost to host the Games would be C$5.23 billion ($3.98 billion), with C$3 billion of that amount coming from the public purse.
The federal government announced last Friday its intention to spend as much as C$1.75 billion ($1.33 billion) to host the Olympics. But that figure was in 2026 dollars, meaning the real amount is about $1.5 billion in 2018 dollars.
To receive the full amount, however, the province and city would have to raise their combined spending to the equivalent of $1.5 billion in 2018 dollars.
The Alberta government has pledged $700 million if the city hosts the Games, meaning Calgary, which has said its share would not exceed that of the province's, would have to contribute $800 million to get the maximum federal contribution.
If the bid gets scrapped, Stockholm and Cortina D'Ampezzo/Milan would be the last of seven initial candidates, with Swiss city Sion, Japan’s Sapporo and Graz in Austria pulling out in recent months, scared off by the cost and size as well as local opposition to the event.
Turkey's Erzurum was eliminated from the final bidding process by the IOC earlier this month.
Italy twice launched bids with Rome for the 2020 and the 2024 Summer Games before pulling out midway through the process and the 2026 bid does not yet enjoy full government backing.
It also initially included Torino, which pulled out over project differences.
Stockholm can expect local opposition, as was the case when they briefly bid for the 2022 Olympics before pulling out following public pressure.
The Swedish bid has also yet to get full backing from the country’s main political parties.
The IOC will elect the winning bid in June 2019 at its session in Lausanne. (Additional reporting by Steve Keating; Editing by Pritha Sarkar)
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