York Council has approved an 80 per cent reduction in its Holocaust Memorial Day budget, leaving just £1,000 to spend on the 2012 commemoration.
However, leader of the LibDem council Andrew Waller said money would be released from the Lord Mayor's budget to make up the deficit.
"We believe we can still organise the civic day with as many people, if not more, attending. It's very important to us."
Labour opposition leader James Alexander pledged to reinstate the funding if his party took control of the council in the May elections.
He pointed out that "the Lord Mayor's budget has to fund many other civic days and that budget has been cut, too. I cannot see how they will be able to give it the same funding."
HMD is normally marked in York with a candlelit vigil at Clifford's Tower, where 150 Jews were massacred in 1190. This year's memorial event was at Merchant Adventurers' Hall, where two survivors spoke.
LibDem councillor Madeline Klerk caused controversy last year by calling for an inquiry into alleged "organ harvesting" by IDF troops in Haiti. Councillor Klerk later apologised for the remark.