Wakefield Council is set to plough more than £6m into the Hepworth gallery during the next five years.
The council’s cabinet is set to approve an annual £1.24m payment to the Hepworth, but the gallery could still be left with a budget deficit and cuts to its exhibitions.
The cash would be paid on top of £6m in funding already provided for the Hepworth since it opened in 2011, despite the council itself facing £185m in funding cuts during the next five years.
Coun Les Shaw, the council’s cabinet member for culture, leisure and sport, said: “We believe that continuing to fund the Hepworth is the right decision because it brings tens of millions of pounds into the district’s economy.
“Since the Hepworth opened in 2011 it has attracted over one million visitors, many from outside the area.”
A report to Tuesday’s cabinet meeting said the Hepworth had attracted a million visitors since it opened, along with £22.8m to the local economy, and would generate another £15m in the next four years.
It said the funding settlement, part of a 25-year agreement between the council and the Hepworth Trust, could lead to a £150,000 shortfall for the Hepworth and its sister gallery The Calder.
But the report recommends that the councils’ annual payment to the Hepworth stays at £1.24m a year from 2015–16.
It said: “The trust believes this would result in a potential funding deficit of £150,000 in 2015–16 should the council funding remain at the current level of £1.24m.
“The trust has indicated that this level of management fee may impact on its digital investment, the development of the Calder site and the work to establish relationships with higher education institutions.
“It may also result in fewer exhibitions and collections displays being organised and a much-reduced learning programme.”
The report said £1.24m would actually be a year-on-year reduction in funding because it would not be adjusted to make up for inflation.
The Calder, a contemporary arts space at a former 19th century textiles mill, opened last August.
To cover its costs the Hepworth applied for an increase in its funding from the Arts Council, from the £921,000 it got in 2013–14 to £1.08m.
But after government cuts to the Arts Council budget, the funding was set at £906,101 a year for the next three years.
The cabinet report said the council and the Hepworth would work together to find new sources of cash to plug the £150,000 shortfall.
Council funding could also be cut further under a longer-term review of cash for cultural organisations.
The cabinet report said: “A review is to be undertaken to explore how to support the trust in building its longer-term sustainability, leading to a reduction, or the complete removal of any subsidy from the council.”
Under the 25-year agreement, the council funds the gallery on a four-year cycle and must either maintain the level of funding every four years or agree another amount with the gallery.
If funding is reduced, the gallery can provide fewer services. If the two parties fail to reach a settlement, the 25-year agreement would be terminated.
The cabinet report added: “This would trigger the payment of termination compensation to the trust.”
The Hepworth had not responded to requests for a comment when the Express went to print.