In a drastic move for a major regional theater, Arena Stage is dropping one of the spring plays from its current season, an action prompted by the anticipated cancellation of $500,000 in federal funds for the year.

The company disclosed in a separate decision Tuesday that it is also postponing a world-premiere musical version of “Like Water for Chocolate,” intended to bow at Arena in June, because of changes being made in the show’s creative team. Arena is replacing the musical with a touring version of Broadway’s recent Tony-winning revival of Larry Kramer’s AIDS drama, “The Normal Heart.”

The pair of unrelated schedule changes not only amounts to a huge logistical headache for Arena, which had been selling seats to both “Water for Chocolate” and the other canceled event, Tazewell Thompson’s new play set in the Lincoln era, “Mary T. and Lizzy K.” The shuffling also deals a blow to the troupe’s ambition to program all three of its theaters in Southwest Washington virtually year-round.

And it’s a concrete demonstration, too, of the impact that the battle in Congress over support for the arts is having on nonprofit institutions such as Arena, which rely only in small measure on public money but require it nonetheless to make ends meet.

Being forced to drop “Mary T. and Lizzy K.” was especially painful for Arena’s artistic director, Molly Smith, because it was in no way related to the piece being ready. It was, instead, a result of the drying up of revenue from the National Capital Arts and Cultural Affairs program, a grants initiative that for 25 years has provided federal funds to theaters and other arts groups in the District.

Ellen Barkin as Dr. Emma Brookner in Larry Kramer’s "The Normal Heart.” The Broadway revival is a substitution in the Arena Stage summer 2012 lineup. (Joan Marcus)

Last season, Arena expected to receive $600,000 from the program and ultimately got $130,000, according to Edgar Dobie, Arena’s managing director. This season, Dobie said, Arena included an anticipated $500,000 from the program in its $18.5 million budget. But, he added, indications from Capitol Hill are that Congress will cut the program — if not to nothing, then close to that.

“We’re told, because we’re up there lobbying with other folks, that in some people’s minds it’s going to be zeroed out,” Dobie explained. “The prudent thing is to assume they mean it when they say they’re going to zero out the budget.”

The issue of state funding for arts institutions is heated across the country, as public money dwindles and in some places, like Kansas, the funding is eliminated. The National Capital Arts and Cultural Affairs Program, administered by the Commission of Fine Arts, was created by Congress in 1985 to fill the funding gap in the District. Since the District is not a state and lacks a statewide arts council, its local arts institutions do not receive money from a state treasury.

Twenty-five local groups lost a large amount of their funding after Congress cut the program’s budget from $9.5 million in fiscal 2010 to $2.9 million in 2011.

The federal budget for fiscal 2012 has not been made final, but the White House did zero out the program in its proposals to Congress. The Senate restored $1 million; the working version keeps the program at the 2011 level of $2.9 million in a continuing resolution until Dec. 16. The final amount will be decided in a conference committee.

The potential loss of half a million dollars had Arena scrambling, and the decision was made to drop a show near the end of the season. “Mary T. and Lizzy K.” — about the friendship between Mary Todd Lincoln and her dressmaker, the freed slave Elizabeth Keckley — became the victim. (It is now envisioned as part of a slightly scaled-back 2012-13 Arena season.)

“We have been trying to find a way to be able to move through the season without having to do a creative cut, and finally we realized we weren’t going to be able to do it,” Smith said. “A million dollars is a lot to lose over a 14-month period.”

From June 1 to July 22, when “Mary T. and Lizzy K.” was supposed to have run in the Arena’s newest space, the Kogod Cradle will be dark. On the other hand, the hole created by the indefinite postponement of “Like Water for Chocolate,” a musical by Lila Downs, Paul Cohen and Quiara Alegria Hudes, will be filled in the Kreeger Theater by “The Normal Heart,” June 8 to July 29.

Arena is sending a notice to ticketholders outlining options for refunding “Mary T. and Lizzy K.” tickets and offering “The Normal Heart” as a replacement for “Like Water for Chocolate.”

Smith would not say who in the “interpretive team” had left the “Like Water for Chocolate” project, but the departure meant that the show still needed to be worked on. “We believe it needs more of a gestation period before it’s ready to be produced in front of an audience,” she said, adding, however, that “The Normal Heart” will be a strong replacement. It will be mounted at Arena while AIDS 2012, a biennial global conference on public health, in scheduled in Washington in late July.

“I thought the most important thing that would happen for this play would be to be in Washington at that time,” said Daryl Roth, the revival’s lead Broadway producer, who will also produce the national tour that will launch at Arena. Noting the production’s replacement status, she added: “It feels as if this were meant to happen now.”

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