The ScotiaBank Dance Centre in Vancouver is just one of the arts programs facing cuts. (CBC)

As the B.C. government prepares to release its new deficit-fighting budget, many community arts groups have already received letters saying they will not get the cash they were counting on this year.

Before the provincial election the government had promised the theatre, dance and other arts organizations that they would be getting roughly $20 million in gaming grants from the province's casino revenues, just as they had received in recent years.

Much of that money was already earmarked for projects this year, but now the organizations such as Vancouver's Touchstone Theatre are learning they will have to do without, leaving many with a significant debt, according to the group's artistic director Katrina Dunn.

"It's a very large part of our operating budget, so it's a huge, huge impact for Touchstone. Shows will be cancelled. People will be laid off," said Dunn.

ScotiaBank Dance Centre executive director Mirna Zagar said she learned Friday that the grants had been cancelled this year, after being promised the cash earlier.

ScotiaBank Dance Centre executive director Mirna Zagar said she learned that the grants had been cancelled on Friday. (CBC)"We were all told, just like anyone else, all will be fine, the Ministry of Tourism and Culture supports the arts. Well, we see how they do," said Zagar.

The gaming grants make up 12 per cent of the Dance Centre's budget, and Zagar said the impact will be significant.

"We are looking at a very grey world ahead," said Zagar.

Salsa dancer Sabrina Battaglin said she expects the cuts will hurt the cultural life of the province.

"I think by cutting arts, it's cutting the heart of the culture and the vibrancy of the community," said Battaglin.

B.C. Liberals misled groups: NDP

The B.C. NDP's culture critic Spencer Herbert was also critical of the cuts.

"The government is stealing money from charities — that's the only way that we can see this," said Herbert on Friday.

NDP arts critic Spencer Herbert says the government misled the groups about their funding. (CBC)The B.C. Liberal government misled the groups before the May provincial election, Herbert maintained.

"This is about the government covering up its budget lie. The government told the arts community before the election, 'Don't worry, the budget is stable.' But now arts groups are starting to hear the funding is not stable and they are going to go into massive debts," said Herbert.

Herbert said the cuts are also economically shortsighted.

"It doesn't make sense economically. The B.C. government's own study shows that for every dollar invested in arts and culture, they get $1.38 back in taxes, so this is laying people off, and costing the government money to do it," said Herbert.

The government said last week it was reviewing the priorities of the gaming grants program, and warned many groups would not be getting the funding they were promised, as part of a plan to rein in the soaring provincial deficit.

More budget cuts are expected in many areas of provincial government spending on Tuesday when Finance Minster Colin Hansen tables his revised budget for 2009.

Last week Hansen said the government was facing a $2 billion revenue shortfall, due to declining tax and resource revenues, and $1 billion in cost increases for social services, firefighting and other costs, and he expected the province would be running a deficit for the next four years.