The Ann Arbor Film Festival is facing a budget deficit that is threatening to end its 43-year existence.

The festival - one of North America's longest-running - is about $160,000 short of its budget goal for the upcoming year, according to Christen McArdle, the festival's executive director.

For the last 10 years, the festival has received grants from the Michigan Council for the Arts and Cultural Affairs, a division of the state's Department of History, Arts and Libraries, but those funds were cut off in 2006 because of some controversial films that have been shown at the festival in past years.

The festival's plight is getting noticed by powerful groups in the film world.

The Ann Arbor Film Festival is one of the few American film festivals whose winners are added to the pool of candidates for Academy Award nominations. The International Film Festival Summit will discuss its financial situation at the group's annual meeting in December.

State Rep. Shelly Goodman Taub (R-Bloomfield Hills) introduced a bill in March of 2006 that withheld money earmarked for the festival for the 2005-2006 fiscal year. Gov. Jennifer Granholm signed the bill two months later. McArdle said the festival lost between $20,000 and $25,000 as a result.

Several selections from last year's festival were controversial for their supposed pornographic intent. Former state Rep. Leon Drolet (R-Clinton Twp.) singled out the films "Booby Girl" and "Chests" as "pornography so bad, no one will buy it."

"Booby Girl" is a comical, animated story about adolescent girls struggling to feel comfortable with their body. "Chests" explores masculinity and machismo and contains no sex.

The state legislature placed restrictions on MCACA's funding in 1996 over concerns that the council would fund works showing sexual acts and desecration of the flag or religious objects.

The Mackinac Center for Public Policy, a Michigan-based libertarian think tank, lobbied the state government last year to cancel funding for the festival altogether. Mike LaFaive, the center's director of fiscal policy, wrote an essay describing the festival as a "cesspool of silliness."

LaFaive said in a phone interview yesterday that the public should bear the responsibility for funding the film festival if it believes the event has value.

"The question of whether or not it's an asset is different from whether or not it should be state-funded," LaFaive said.

Festival planners have $190,000 of the $350,000 they hope to eventually raise, McArdle said.

The group has started a fundraising drive aimed at raising $75,000 by the end of the year. Called "Endangered," it compares the film festival to endangered species like the giant panda and the mountain gorilla.

McArdle said she's trying to receive grants from alternative sources, including the American Film Institute and the Sundance Institute, the sponsor of the Sundance Film Festival.

"The festival is living hand-to-mouth," she said. "We're raising our paychecks one week at a time, pulling out all the stops in looking for grants."

"There are legislators who obviously don't see the value in what we do," McArdle said. "Getting shut down is not an option."