A Maitland council meeting this week heard how costs for the delivery of the festival have grown substantially in recent years.
A report said increasing costs present a challenge for staff who attempt to continue to deliver a quality product with less funds for activity programming and marketing.
"This approach of delivering the same or more with less, is not sustainable and will ultimately lead to the decline of the event if a decision is not made to change the current approach of cost neutrality," the report by council's Events Coordinator Adam Franks said.
He said the event is annually budgeted to achieve cost neutral status (wages excluded) with the exception of 2016, when council made a financial contribution to allow for an extraordinary program of activities for Steamfest's 30th anniversary.
Mr Franks recommended that an annual funding allocation of $50,000 is included in the annual operating budget from the 2016/17 financial year which councillors approved.
"In recent years, this has become increasingly challenging as operating costs have risen substantially without a correlating increase in income. Largely this has been driven by the growing cost of steam train hire. As machinery becomes older, their maintenance costs increase and there is limited availability of usable locomotives," Mr Franks said.
Quotes provided by the two rail providers, who have serviceable locomotives for 2017, show that steam train hire (for three steam locomotives) has increased by more than $33,000, or over 32% since the last time three locomotives were hired in 2014.
Mr Franks said there is limited capacity to increase the cost of tickets on train journeys as Steamfest is already at the higher end of the market.
"A second challenge is the non-rail steam and antique machinery program, held on the rally ground and managed by Maitland Steam and Antique Machinery Association. Increasing costs for the delivery of this program, which sees machinery transported to the event from locations around NSW and interstate, without a correlating increase in funding from council, is making it difficult to maintain a diverse and interesting program."
Mr Franks said the final challenge is the ability to grow and evolve the program of activities, marketing and theming of infrastructure.
"As more funds get channeled towards trains, it leaves less funding available for programming other activities, marketing and presentation of the event," Mr Franks said.
Steamfest is the city’s largest flagship event, which attracts over 60,000 people and is estimated to inject more than $11 million into the local economy annually.
"During the last 30 years, consumer expectations have changed considerably and competition in the area of events has increased exponentially. To ensure events remain relevant to consumers and secure their patronage, it is essential that they continue to grow and evolve," Mr Franks said.