A draft strategy prepared by council staff would mean events like the id Dunedin Fashion Week and Dunedin Rhododendron Festival receive a greater slice of the annual $1.49 million budget.
The cash injection aimed to grow the events into national or international drawcards, council marketing and communications agency manager Debra Simes said.
She pointed to the success Wellington had enjoyed - through events like the sevens tournament - as an example of what could be achieved.
With no extra funds for the council's events budget, the shift meant organisers of small "community" events seen as having little potential for growth could have their funding reduced, or cut completely, she said.
They would be encouraged to apply to the council's $50,000 annual community grants scheme - scheduled to increase to $85,000 in 2010-11 - while the events budget would be channelled into supporting the larger events.
"There's no doubt that if we are going to stage more events at national and international level there need to be some events that either drop off the calendar or receive lower levels of funding.
"The money's got to come from somewhere", she said.
The changes were outlined in the council's draft Dunedin Festival and Events Strategy 2009-19, which was approved for public consultation at a meeting of the economic development committee this week.
Ms Simes, who prepared the report, said a new steering group - comprising councillors and key stakeholders including the Community Trust of Otago and tertiary sector - would also be established to assess funding applications and make recommendations.
The steering group would replace a previously "ad hoc" approach to funding through the council's annual plan process, under which funding decisions were often based on "historical" precedent, she believed.
"If an event has been getting funding for a number of years, that funding rolls over," she said.
"The aim of the strategy is to rationalise the funding of events."
Changes would be rolled out over the 10-year period covered by the draft strategy, but no cuts would be made for at least three years to give smaller groups the chance to source alternative funding, she said.
By 2017-18, funding for smaller groups would have reduced from 66% of the council's total events spend to just 11%, while funding for international-quality events would increase from just 1% to 17% of the total spend.
Spending on national events would increase from 22% to 44% and regional events would rise from 22% to 28%.
Ms Simes declined to name groups at risk of losing funding, saying she did not want to pre-empt decisions to be made by the new steering group, but acknowledged some people would be feeling "extremely concerned".
Mayor Peter Chin seemed to agree when he queried the apparent "huge reduction" in funding for smaller groups during Tuesday's committee meeting.
A six-week period of public consultation will begin shortly.
