Newcastle City Council has responded to an open letter from members of the arts community who have called the proposed spending cuts, particularly to arts, "totally unnecessary".
The council said it recognises that some of its decisions are not palatable but it can only spend the resources it has.
"We face unpalatable decisions which we know are counterproductive and, in many cases, false economy but the council can only spend the resources that it has as it faces losing more than a third of its budget over the next three years.
The reason for a long-term approach is to be able to talk with cultural organisations to find alternative sources of funding, and we are having positive discussions with organisations across the city about what we need to do together."
Newcastle council's proposal to cut 100% of its arts funding has been condemned by prominent artists and musicians.
In an open letter to the city council, famous names connected to the region like Sting, Bryan Ferry and Mark Knopfler branded the authority's plans "totally unnecessary".
It is a "short-sighted attack on the arts" and the council risks "throwing away a shared cultural heritage that has been built up by generations and generations of ordinary people in the city", the letter said.
Neil Tennant, Robson Green and Jimmy Nail also signed the letter against the cuts which, if implemented, will affect venues including the Theatre Royal, the Northern Stage and City Hall.
The council should "rethink this baffling decision and find an appropriate way to preserve the arts in Newcastle", the letter concludes.
In response the council said it recognises that some of its decisions are not palatable but it can only spend the resources it has.