Pride Toronto was not on the list of over 50 festivals awarded grants on Friday as part of the federal government's two-year, $100-million Marquee Tourism program.
In a statement Friday, Industry Minister Tony Clement said there are 20 new beneficiaries this year, and the fund's second-year goal was to "ensure regional fairness by making sure every corner of Canada benefits from this temporary stimulus program.
"Since Canada is a vast and diverse country, it is important that tourism events in every corner of the country are given the opportunity to promote Canada as a global destination of choice," Clement said.
In an interview with The Canadian Press, Clement said it's inaccurate to say the pride festival's funding has been "cut off." He said there was "a whole new application process" this year and no event was guaranteed to get money just because they got some last year.
The two Toronto events that will get funding are the Luminato arts festival and the Royal Agricultural Winter Fair. Clement said both are making new attempts to reach international audiences.
He said the pride festival is "a very successful event, it's obviously able to stand on its own two feet."
But Pride Toronto executive director Tracey Sandilands called the decision a "clear indication that the federal government doesn't believe that queer arts and culture is worth investment in."
"We are very disappointed…. We believe that that is a very strong message for the queer community, especially here in Toronto," Sandilands told the CBC's Rosemary Barton.
Sandilands said the news took her organization by surprise. It hasn't been formally told about the decision and only learned about it through the media.
Pride Toronto's contact at Industry Canada had informed them just two days ago that no decision had been made, she added.
Pride Toronto organizers have been planning $600,000 worth of enhancements for tourists and festival-goers, she said.
"This is again another example, in my opinion, of a reckless, ideological cut from a Conservative government which actually has a history of attacking gay rights," said Liberal tourism critic Navdeep Bains.
It is not the first time that questions have been raised about the government's handling of the Marquee Tourism program, which was introduced as a component of the 2009 federal budget.
Last year, Diane Ablonczy, one of Prime Minister Stephen Harper's junior ministers, was removed from her responsibility of running the program. The decision came after she awarded $400,000 to Pride Toronto.
Saskatchewan MP Brad Trost, a fellow Conservative, told the anti-abortion website LifeSiteNews last July that Ablonczy was being punished for the decision to give $400,000 from the Marquee Tourism Events Program to Toronto's Pride Parade.
Trost was quoted as calling it "a very isolated decision" that was not supported "by a large majority of the MPs."
Trost's comments were dismissed by Clement's office, which said Ablonczy's office wasn't as well staffed as Clement's to handle the program while also trying to complete a federal tourism growth strategy.
Toronto's Pride Week attracts tens of thousands of visitors each year. Hundreds of thousands more either turn out or tune in on television to watch the free-wheeling parade that is the week's centrepiece.
Pride Toronto officials said last summer's Pride Week contributed more than $100 million to the province's economy.