Preparations are in gear for Saturday's Caribana parade in Toronto that will feature a sea of colourful floats, and participants dressed in spectacular, elaborate costumes. (Pat Hewitt/Canadian Press)

North America's largest Caribbean festival is underway in Toronto, heading into a final weekend of dancing, parades, parties and music after surviving a federal funding cut.

Since its inception in 1967, Caribana has grown to be the jewel of the city's summer festivals.

More than a million people turn out to watch the parade every year, with floats, bands and exoticly dressed dancers.

It's also estimated that the two-week festival pumps more than $400 million into the Ontario economy.

But this year, organizers have tightened their belts, partly because of Ottawa's decision to withhold $400,000 in funding provided last year.

The Department of Industry, which oversees the Marquee Tourism Events Program, has said the money wasn't given this year in part because of regional balance, as well as the need to focus attention on smaller events.

'A really good event'

Stephen Weir, one of Caribana's organizers, said it's a confusing decision.

"This is a really good event. We bring a lot of money in to the city. It's not that we feel anybody owes us anything, but we could use some help," said Weir.

It means a few things will be handled differently this year. A few more corporate sponsorship ads, a smaller stage, fewer big-name entertainers and a 30 per cent cut in pay for the festival staff.

In spite of the difficulties, organizers say they don't expect the crowds will notice much difference, especially at Thursday night's King and Queen Show.

"The heart of what we do happens here," said Weir. "This is really one of the events that we actually make money so we want to put on a first class show."