The manager of troubled West Bromwich arts centre, the Public, has said Sandwell Metropolitan Borough Council, which is responsible for the project, will not increase the venue's £1.1m annual revenue funding, in spite of a recent audit report that said that the amount was insufficient.
Linda Saunders said: "We believe the council has made adequate provision for the running of the centre in the business case agreed between Sandwell council and Sandwell Arts Trust . . . we expect to operate within budget this year and next."
But a recent audit report by KPMG warned that there was no guarantee that the sum set aside would prove adequate, and said mothballing the site was an option the council may need to consider "if the economic pressure of running the Public becomes too great".
Saunders confirmed that the council was borrowing £1.4m to finish off the second and fourth levels of the building, but added that "money was previously agreed, and repaying those costs were already accounted for in the business plan".
Arts Council England granted a £3m one-off payment to the council on top of the £29.8m initially awarded to the project. The total cost of the building has exceeded £70m, compared with the original estimate of £39m in 2003.
Meanwhile, building work recommenced last month on another beleaguered project, the Visual Arts Facility (VAF) in Colchester.
Work ground to a halt on the Rafael Vinoly-designed building earlier this year after Colchester Borough Council decided to terminate the contract with the facilities management company Banner Holdings. Construction firm Mace Group has since taken over the site.
The budget for the gallery, which was scheduled to open in December 2007, has risen from £17.8m to more than £24.5m.
The major funders are Arts Council England (£7.75m), Essex County Council (£6m), the East of England Development Agency (£6.25m) and Colchester Borough Council (£3m). A new opening date will be announced early next year.