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Through the 10-year plan process council staff requested councillors consider increasing the amount of money in the festival and event grants budget by $50,000 a year.
The extra contestable funding would be spread across premier events ($10,000), major community events ($30,000) and local events ($10,000).
Events the council contributed to included the New Zealand Masters Games, the Dunedin Midwinter Carnival and graduation parades.
Council community development and events manager Joy Gunn said event organisers needed more financial support as the cost of wages, venue hire and technical expertise involved in running an event had increased in the past five years.
During that time the amount of money the council had set aside for grant funding had only increased in line with the consumer price index.
That was no longer enough to keep up with the increasing administration costs, Mrs Gunn said.
The increase was proposed by Cr Christine Garey who said events not only had an economic impact, they also added vibrancy to the city.
Events attracted people from both inside and outside the city, and meant many businesses were able to keep staff on during the slow periods of the year, Cr Garey said.