Construction of the Winnipeg zoo's major new attraction, Journey to Churchill, is $4.5 million over budget.
City councillors were presented on Thursday with a report outlining the budget.
CBC News has been told the extra costs are due to materials being brought in from the U.S. and heating expenses during the extremely cold winter.
The city has committed $50 million over 10 years to the Assiniboine Park Conservancy for its $200-million renewal of the 110-year-old park and zoo.
Coun. Brian Mayes said money may be diverted from that fund to pay for the Journey to Churchill cost overruns.
The four-hectare exhibit, scheduled to open July 3, will feature polar bears, Arctic foxes, musk oxen, snowy owls and seals in expansive new habitats.
There will be underwater and above-ground viewing opportunities for the bears and seals, which will be separated by thick, clear plastic walls.
Other elements in the exhibit include an aurora borealis 360-degree theatre, a new restaurant, gift shop and children's play area.
The zoo will be closed for 10 days starting June 23 to prepare for the opening of the exhibit. The zoo will re-open at noon on July 3.