Keeping Connecticut’s budget in the black means putting the New Haven’s Festival of Arts and Ideas into the red.

That was the message from Gov. M. Jodi Rell in delivering the state’s proposed budget for the coming year last Wednesday. The festival will be one of 19 cultural programs — which include the Shubert Theater and the Arts Council of Greater New Haven — to face cuts in state entitlement grants. Though the arts council has pledged to lobby against the proposed cuts, Rell’s budget as it stands poses a serious threat to the future solvency of many of the city’s arts initiatives, council leaders said Tuesday.

The festival and the arts council were previously earmarked under funding administered by the Commission on Culture and Tourism. Under Rell’s proposed plan, the festival’s organizers must compete to restore forgone funding from a $9 million grants pool. The grants pool was funded at $3 million last year.

“This organization remains eligible for a competitive grant. This cut is simply the elimination of an earmark,” Rell’s spokesman Adam Liegeot said Tuesday, noting that the cut was a “tough decision.”

The Festival of Arts and Ideas, a mostly free performance series held on the New Haven Green each June since 1996, has attracted over 1 million visitors, including musicians and artists from around the world, to the Elm City to date. Despite bringing an estimated $19 million into the local economy last year, the festival will lose the $1 million in state funding it receives each year. The event is otherwise supported by corporate sponsorships and ticket sales.

While the funding cuts amid the worsening economic downturn did not come as a surprise to Andrew Chatfield, director of marketing and communications for the festival, the funding cuts will pose a serious threat to the festival’s future.

“We are moving ahead with this year’s events, but we are hoping that the legislature will be responsive to our calls to keep the current funding,” Chatfield said. “Cancelling this year’s festivities will mean that we will lose funding from artists coming from countries like Ireland and Hungary who receive funds from their respective governments.”

But since state funding for the event is channeled in the form of reimbursements, Chatfield said the survival of the festival is uncertain.

Chatfield also noted the potential spillover effects from the budget cut: The local businesses he believes will be affected include hotels, restaurants, rental agencies, caterers and printing companies.

For New Haven’s Shubert Theater, another target of Rell’s funding cuts, the future remains equally unclear, Shubert Theater Public Relations Director Anthony Lupinacci said.

“We won’t know the full effect of this proposed cut until we have completed an evaluation,” he said. “It will be very challenging for us to make up the budget shortfall if the cuts are approved.”

Cynthia Clair, executive director of the Arts Council of Greater New Haven, said the proposed $125,000 funding cut could signal the end of her organization.

“This is a big hit for everybody — in two years’ time, our funding will be virtually eliminated, meaning that we will have to layoff staff,” Clair said.

The council currently employs a full-time staff of seven.

Clair said she hopes community pressure may help to sway legislators into reconsidering the funding cuts. A letter-writing campaign on behalf of the festival has already been mobilized, Chatfield said. Clair added that over 100 arts organizations, including Long Wharf, the Neighborhood Music School and the Creative Arts Workshop, will gather in Hartford next week to discuss how they can lobby the state.

In the meantime, Clair said she is optimistic: “We won’t know for certain until the final budget is passed,” she said. “There’s still a long way to go.”