That money will go to pay for police, EMS and sanitation during the parade.
The Mummers, meanwhile, will have to pay anything over $300,000 which is estimated to be about $50,000.
They've set up a website, savethemummers.com, to help raise money.
The Parade route will remain the same, but don't expect an all day affair.
The parade will be cut down from 12 hours to 6 hours.
The shortened timeframe has left at least one Mummer upset.
"We'll have to rush up Broad Street. We'll have to run up Broad Street now, and I just think it takes away from tradition," said Comic Division Mummer Dominic Latella, Jr.
With $300,000 in prize money gone because of the budget crunch, the Mummers are plunging into a deep deficit of their own. The city is willing to give them until the end of March to come up with the money for parade overruns.
"They're having to pay additional money, in addition to paying the prize money," said George Badey, the Mummer's attorney. "At a minimum, the Mummers are $400,000 in the hole. And it's a hobby."
The city also says, there is no rain date. So, if there is inclement weather on New Year's Day, the 2009 edition of the Mummer's Parade will be cancelled.
The Mummers credit Congressman Bob Brady for saving this parade.