The Council has been working with the Cuba Street Carnival and Fringe Arts trusts since last year on forming a new trust focused on delivering and developing events for emerging artists in Wellington.
Mayor Prendergast says the Council committed $75,000 toward helping establish the trust and has not received any formal funding request for the 2011 Cuba St Carnival.
"As far as the Council is concerned we are still working with the trust and a report detailing the steps to establish it is being finalised at the moment.
"We have always been supportive of the Cuba St Carnival and contributed approximately $300,000 last year. The suggested figure of $500,000 was taken out of context and included a much wider range of events that the Council and Cuba St Carnival Collective Trust had been discussing.
"The Rugby World Cup has been budgeted completely separately from community events and major events. It is absolutely not drawing Council funding from any other events in the city."
Nick Simcock, Chair of the Cuba St Carnival Collective, says a decision was made at the last board meeting that it was not feasible for the new trust to run an event of the Cuba Carnival's scale in its first year of operation.
"We decided the focus should be on identifying appropriate trustees, building relationships with stakeholders and engaging appropriately qualified staff instead.
"We think it is in the best interest of Wellington city, the performers and the 150,000 carnival attendees for us to plan for a successful carnival in the longer term rather than compromise its authenticity because we have committed to an unrealistic time frame in a very difficult financial environment."
The steering group for the new trust, made up of representatives from the Carnival and Fringe Trusts, is working with other creative interests, including Wellington City Council, on a long-term strategy to retain and build Wellington's status as New Zealand's leading centre for arts events and emerging artists.