Circa Theatre in Wellington says the process used by Creative New Zealand for allocating funding is not entirely honest.
The agency has announced $50 million will go to 72 organisations over the next three years, as part of new funding schemes.
Circa will receive $100,000 less in the next two years.
Circa Council co-ordinator Ray Henwood says it's not the cut but the 18-month decision-making process that has angered him.
Circa, which breaks even most years, was told one of the reasons for the cut was that it was overfunded.
Mr Henwood says it was not fair that external panels could remain anonymous and Circa could not challenge incorrect statements.
Creative New Zealand says the names of panellists are kept confidential, so they can discuss applications freely and avoid being lobbied.
Two other professional theatres, the Fortune in Dunedin and Centrepoint in Palmerston North, will also get less money.
Centrepoint will receive $85,000 less in the next three years and the Fortune $40,000 less for the next two years.
The New Zealand Youth Choir is also receiving $40,000 less in the next two years.
However, the Auckland Theatre Company will get a 4% increase to $2.8 million over the next three years; and the Book Council and contemporary dance company Black Grace will also get more.