City culture bosses have accused the council of dragging its feet over reform - then hitting them hard with a £1.7 million funding cut next year.
Culture Central, an umbrella group for 14 organisations including Birmingham Rep, the CBSO and Birmingham Royal Ballet, has issued a stinging attack on the council, saying that progress on radical reforms of the sector, designed to make them less reliant on grants, had slowed.
Earlier this year, the group revealed a series of proposals to help generate income to replace the traditional council grant subsidy.
This included the transfer of some city council-owned buildings to use as leverage for investment loans.
But now it claims talks with the council have stalled while the city's cultural organisations are still being hit with a major £1.7 million cut from the £4.9 million grants issued this year.
But Birmingham City Council deputy leader Coun Ian Ward, responsible for arts and culture, rebutted the criticism and said the council was working as fast as possible to help the sector secure new cash streams.
Details of the £1.7 million cuts remain confidential but last week the Birmingham Rep theatre announced it was losing £325,000, or 62 per cent, of its council grant, leaving it with just £200,000 next year - less than any comparable UK theatre.
According to official studies, every £1 invested in culture is worth £30 to the local economy through tourism and investment.
A thriving culture sector is also attractive to many business investors looking to locate in Birmingham.
Culture Central director Gary Topp said: "We have been making it clear for many months now that a radical new proposition for cultural investment in the city needs to be established and we are disappointed that the city council has not shown more appetite for this innovative approach to-date."
He said the organisations had themselves developed innovative ideas to raise income and grow.
"In effect, we are seeking the full backing of the council to create the necessary freedoms and flexibilities for the sector to thrive and to move to a more dynamic and contemporary approach," he added.
Paul Faulkner, chief executive of Greater Birmingham Chambers of Commerce, led the Birmingham cultural investment inquiry this summer, working with the council, arts organisations and universities to develop plans for the future.
He said: "Sadly, despite positive words around the inquiry's work back in the summer, progress in terms of exploring radical new approaches to funding for the cultural sector has slowed and the sector is now having to deal with this reality.
"It is imperative that we see action now and begin to look beyond the norm at ideas that do not just cover these expected cuts in funding but go further to implement a new model of funding culture - one that actually seeks to be ambitious and allows culture in the city to flourish."
But Coun Ward hit back, saying: "I am disappointed by Culture Central's comments regarding tighter funding for arts as they only have to read our budget consultation to see we're facing some very difficult decisions."
He said that, despite massive cuts, the council still planned to invest £3.2 million in culture grants next year.
He said: "We have been clear with the cultural sector over a prolonged period of the need for change and of our willingness to engage with them in debate to consider new approaches and business models.
"This has been exemplified in the work of the cultural investment inquiry which identified 47 possible routes for further investigation."
He added that the new arrangements would be needed from 2018 onwards, saying: "For Culture Central to suggest that the pace of change is slowing is disappointing."
He said the council was working "as quickly as practicable" on the inquiry proposals and remained open to new ideas to protect the arts.
"We must find a way to work together effectively to find some innovative answers in order to secure Birmingham's arts sector - this is something we all want, a rich, cultural heritage for our city."
