It is the first time in 10 years the festival has been denied tourism events and festivals funding.

Festival chairwoman Marion Matthews has written to Horsham Rural City Council asking the committee to reconsider its decision.

In her letter, Ms Matthews challenged the committee's claims the event did not bring significant day or overnight visitation to the municipality.

She said statistics collected this year showed up to 30 per cent of participants in key festival events were from outside Horsham.

"The Art is.. executive committee is perplexed at the Tourism Advisory Committee's decision not to grant the 2010 Art is... festival tourism events and festivals funding, particularly since the Art is... festival is marketed - including photographs - on Horsham Rural City Council's primary tourism website, `Visit Horsham', as a `must-see event for everyone'."

Ms Matthews acknowledged Horsham Rural City Council for awarding a $5000 community grant towards the 2010 festival but stated further support from council was integral to the outcome of funding applications to state and federal government departments.

She said funding bodies largely based their decision to grant funding to events on local government contributions.

"While funding is not granted on a dollar for dollar basis, the $5000 community grant contribution from local government would not be seen as adequate or significant in the eyes of external funding bodies," she wrote.

"However, with the appropriate support from council the festival has the potential to attract up to $150,000 in funding."

Council planning and promotion services manager Robin Neilson said the festival's tourism events and festivals funding application did not meet funding guidelines set by the Tourism Advisory Committee.

Mr Neilson said the committee would consider extending funding if the event format altered or grew and would invite Ms Matthews to a meeting next week to discuss the application.