Last year, the festival gave $350,000 to charity.  But, it got a $215,000 discount for police department officers and staff to provide security for the event.    With the city facing a $26 million dollar deficit, the festival's Kate Post knows it will have to pay more.

POST: "We understand.  We want to be a good city partner.  We're probably one of the best advertisements for the city that we could ever be.  We're the largest charitable festival in California."

She says four of their best five years have come at the downtown Marina location. 

POST: "They had a $100,000-plus in parking revenue back to the city.  I mean, it's an en economic engine also back to the city. 51 companies that we supply and pay bills to in the county.  I mean, you can imagine the domino effect that when you get 104,000 people in to your  city, the kind of money they're spending."

The city provides about 70 patrol officers in addition to traffic control, community service, and dispatch services during the three-day event.

The festival and the City have a contract through next year, but the city is trying to restructure such contracts so that it can either cut costs or raise revenue.

Stockton's been in mediation with creditors since the end of March for bond and benefits debt that totals more than 700 million dollars.