The Wangaratta Festival of Jazz and Blues will not be cancelled, with organisers and the council waiting to see if public gatherings will be allowed by October.
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If not, performances will be live-streamed.
After taking a break in 2019 due to financial issues, festival organisers were keen for the 30th anniversary event to go ahead in 2020.
Wangaratta Council has been a supporter of the event and had committed a $30,000 financial contribution, but councillors at yesterday's meeting voted to only pay that money after October if the event goes ahead with crowds of over 500 allowed in the city - which are currently banned.
If live performances are allowed in front of Wangaratta crowds by October 30, the number will be reduced 17 ticketed and seven free shows.
A decision on easing or extending regional Victoria's stage three coronavirus restrictions and Melbourne's stage four restrictions is not due until September 13.
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The financial benefit of the jazz festival for Wangaratta comes from ticket holders travelling to the region for the long weekend, which in 2020 was predicted to be $99,840 from overnight visitors and $12,600 from day visitors.
Councillors voted unanimously at Tuesday's meeting to only pay the $30,000 if the crowds were allowed at the festival, but none made any comments.
Community wellbeing director Jaime Chubb said the council would continue to be involved if the jazz festival moved to an online-only event, by helping with a mutual communications strategy.
"One of the elements that the council would continue to work with the festival around is the provision of online or virtual presentation of some element of the festival where possible," she said.
