Uncertain economic prospects have cast a cloud of paranoia over Audubon Street, the epicenter of New Haven’s arts scene.

Located off Whitney Avenue, Audubon Street claims to be New Haven’s arts district, home to the Neighborhood Music School, the Creative Arts Workshop and the Education Center for the Arts. With private donations drying up and enrollments dropping, directors of the three organizations said they now anxiously await the outcome of Gov. M. Jodi Rell’s proposal last month to cut entitlement funding in favor of a more competitive process — a move which has already doomed the International Festival of the Arts and the Arts Council of Greater New Haven by cutting expected funding.

“We have very little idea about how the changes will affect our funding,” said Alice Schilling, the principal of the Education Center for the Arts. “All we can do is to wait and see.”

The magnet school, which caters to 279 students from 16 school districts, relies almost entirely on state and district grants, Schilling said.

But for the nearby Neighborhood Music School — a nonprofit community arts school, located on 100 Audubon St. — the gloomy economic outlook has already taken its toll on revenue, enrollments and donations, NMS Executive Director Lawrence Zuckof said in an interview Wednesday.

“Our tuition revenue, which makes up for 80 percent of our $4.4-million operating revenue, has fallen as enrollments drop,” Zuckof said. “For the first time, we have failed to meet our enrollment requirements.”

The drop in donations has exacerbated the school’s funding problems. Zuckof said private donations, which make up around 50 percent of the money received, have seen a severe drop.

With the economic belt tightening, NMS may have to resort to cutting staff and programs, Zuckof said. The school currently has 13 administrative staff and 130 teaching staff and faculty, many of whom work on a part-time basis, serving a student body of around 2,500. If the school’s financial problems worsen, Zuckof said he will move to cut administrative positions and possibly the size of the teaching faculty.

Located next door to NMS, the Creative Arts Workshop, a center for visual arts which hosts various classes and exhibitions, is also facing a financial crunch, Executive Director Susan Smith said. The workshop, which draws around 2,000 adults and 1,000 children from around New Haven and its surrounding areas, has seen a drop in enrollments — a situation which may worsen as the recession wears on, Smith said.

“There has been a clear drop in parents enrolling their children in afterschool classes,” Smith said.

She added: “A number of our adults are retirees and as retirement funds and retirement grants fall, this may affect the number of retirees who attend our classes.”

Smith said the workshop’s annual winter fundraiser, the Celebration of American Crafts, saw a 30-35 percent drop in revenue and a 10 percent drop in net profits last year.

“The fall in the net profits was smaller because we cut expenditure and returned unsold works back to the artists,” Smith said.

Indeed, the Creative Arts Workshop has already eliminated one staff member this year, and Smith did not rule out making further cuts: “I like to keep the budget in the black as much as possible.”

Nevertheless, there remains hope among the doom and gloom on Audubon Street. Ron Baldwin, an employee at music bookstore Foundry Music, noted that business has remained pretty stable over the seven years he has worked there.

Abgail Rider, director of Yale University Properties, which owns many of the retail fronts along Audubon, did not return several phone requests for comment this week.

Rell’s proposed state budget for fiscal year 2010–’11 was presented Feb. 4 and is currently being finalized.