Birmingham City Councillors are being asked to approve a standstill culture budget of nearly £3m for 2022/23.
The local authority says smaller arts organisations will be commissioned to deliver projects for underserved communities as the sector builds back from Covid and prepares for the upcoming Commonwealth Games.
Funding for major organisations including City Of Birmingham Symphony Orchestra, Birmingham Royal Ballet; Birmingham Repertory Theatre, IKON Gallery and Ex Cathedra will be maintained.
While it wants to continue supporting its current portfolio, the council says it needs to allocate funding differently in light of Arts Council England's new priorities and a decrease in arts funding over the past decade.
"Whilst there are many excellent arts organisations in the city, the reduced arts budget has meant that it has been difficult enough to sustain the existing portfolio."