Festival organizers have asked the city council, the Scottish Arts Council, and the Scottish Executive for help, but the festival's plea comes too late to adjust the current city budget.
The city council is in "urgent negotiations" with the Executive about the crisis. The council would like the Executive to pay 50 percent of the funds.
"This situation is extremely unfortunate," Edinburgh city council leader Donald Anderson said, "and has been landed on us at the last minute. We're hopeful the Executive will pick up a share of the shortfall and that we'll be able to use 'quality of life' funding we've already been allocated by the Executive. It may mean money having to be diverted from other projects, but we weren't going to adjust our budget at such a late stage. However, without financial support, it is possible the festival may not go ahead."
The festival already receives Ô£2.5 million from the city council and Arts Council, but according to marketing director Joanna Baker, the festival has not been funded realistically for some time now.
"It's no great surprise that the funding for the festival is not high enough," she said. "There has been a long-standing and widespread realization about this and we've been talking to our funders for some time about this. We're quite simply getting less in real terms in public funding than we were ten years ago."
The festival's costs have escalated because it faces competition from so many other cities' festivals, as well as rising production, accommodation, and venue expenses.
A preliminary schedules for the 2005 festival, which takes place August 14-September 4, has already been announced; it includes performances from the Bamberg Symphony Orchestra and the Moscow Radio Symphony Orchestra.