The 2009 festival made a loss of $73,143 and owes $81,920 to creditors, acting festival committee chairman Tim Cadogan told 26 people who attended the committee's annual meeting in the town last night.
A public meeting will be held next week to decide whether the event should continue.
An appeal for funds will be launched in a bid to save the event, believed to be this country's longest-running festival.
"The patient is on the table, dead. But I believe it is capable of resuscitation, if that is what the community wishes," Mr Cadogan said.
It was the third consecutive red-ink result for the festival.
Former chairman Steve Battrick, who was chairman during the 2007, 2008 and 2009 festivals, resigned from the committee in January, as did Leo Hulme, who held the role of treasurer for almost three years.
Mr Battrick was present at last night's meeting.
Apologies were received from 2009 festival event manager Annetta Latham, of Innerwink Management Ltd, who was at an event in the North Island, and former treasurer Mr Hulme, recuperating after major surgery.
Mr Cadogan, who was a member of the 2009 festival committee, said that bringing the festival in on budget was the committee's main goal, after three straight losses.
A week before the festival, the committee was assured the treasurer was "comfortable" with the festival finances, Mr Cadogan said.
The books were not finalised before the committee's December meeting, and it was surprised to be told the "financial situation was dire, but survivable".
In January, the figures were almost finalised, the loss clarified "and was obviously unsurvivable".
Expenses in 2009 included $27,939 for event management (Innerwink Management Ltd), $76,237 for entertainers and related expenses, and $25,014 (hiring marquee for Pioneer Park).
Mr Cadogan identified three areas as causing the 2009 loss: the committee was about $6000 over budget on expenditure, there was about $12,000 in "unbudgeted items" not obvious until the festival occurred, and cash from trusts and sponsorships was below expectations.
It had budgeted to receive $174,650 from trusts and sponsorships, but actually received $101,450.
"A combination of optimism and recession led to that shortfall," Mr Cadogan said.
"The obvious question is: When did we know we were going to be short of this money and why did we not cut expenditure then to compensate? That is what I cannot give you a clear answer on, despite devoting a lot of time and effort in the past month to trying to find out."
Ibbotson Cooney accountants had completed a review of the committee's financial statements and confirmed the group was insolvent.
Mr Cadogan said the blame for the loss lay in an "extreme communication breakdown".
He emphasised committee members relied on the event manager and treasurer, overseen by the 2009 chairman Mr Battrick, to ensure the finances were under control, or at least advise the committee in good time if they were not.
Mark Tait, who has joined the committee as treasurer, listed 2009 income from grants, totalling $42,000.
Applications for funds were made to 10 trusts which declined requests.
Community groups that ran events during the festival were not required to make a donation to the festival, he said.
There was a "rainy day fund", the Blossom Festival Trust, but it was unable to help out because of the terms of the trust deed, Mr Tait said.
Former festival committee member Deirdre Jolly, of Alexandra, said in the past when there was a specific fundraising project for the festival, there seemed to be greater support for the event.
The only remaining source of funds seemed to be the community, led by the Vincent Community Board, Mr Cadogan said.
He is the board's representative on the festival committee and said that without overwhelming public support, it would not offer funds to make the festival solvent.
"That public support must come with the knowledge that it will likely impact directly on rates.
"So there we go. The good news and the bad news. Which one prevails is up to the people of Alexandra."
If they wanted the festival to survive, they needed to attend next week's meeting.
Contact Energy was "supportive" of plans to move forward with the festival, he said.
As well, the Blossom Festival Trust had agreed to loan "significant funds" as seed money for this year's festival.
If there was a festival this year, it would be carried out on a shoestring budget and the event manager would be Martin McPherson, Mr Cadogan said.
Mr McPherson was the festival co-ordinator for many years until being made redundant by the Alexandra District Promotions group in 2002, which no longer wanted to be involved in running the festival.
"No more will we be spending money on out-of-town bands and entertainers to try and draw out-of-town people in.
"The festival will be local, local, local," Mr Cadogan said.
"Locals having a great time in the best place in the world.
"If that isn't enough to attract our friends and neighbours from throughout New Zealand, then too bad."
Jan Belt, of Alexandra, said he had been involved in every festival.
It was important to remember the main focus of the event, the float procession, and to build on what the festival did well, he said.
Mr Battrick said the deficit for the 2009 event was concerning and "completely unacceptable".
His resignation was prompted by a decision made by the committee regarding the future management of the festival and other matters, he said.
The matters were discussed in private and remained confidential, but he considered it was untenable for him to continue in his role as chairman.
Mr McPherson's future involvement in the festival did not form any part of that discussion, he said.
Event manager, Ms Latham, could not be contacted for comment last night.
Elected on to the 2010 committee were Mr Cadogan, Peter Breen, Kylie Switalla and Jill Tosswill (all of whom served in 2009) and Robert Cooper. lynda.van.kempen@odt.co.nz
