Canowindra's Age of Fishes Museum will continue to lose about $130,000 a year after transition of operations to Cabonne Council are finalised at the end of the financial year.
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The museum's Anne Clark said it would be business as usual after the transition, which she said gave the museum greater financial security into the future.
"We can also apply for much bigger grants," she said.
The museum was waiting to hear whether a $500,000 grant application from the federal government's Building Better Regions Fund had been successful.
The application was lodged in January and Mrs Clark said the decision-making process usually took about three to four months.
If the funding comes through, Cabonne Council has said it will look at kicking in another $500,000 from its Canowindra Town Improvement Fund.
Mrs Clark said the museum's second floor was unused except for the occasional conference.
She said funding would allow it to install a lift for disabled access and double the floor space for exhibitions and other uses.
It would also allow the museum to build a playground suitable for children with disabilities.
She described the prospect of being able to upgrade the museum as 'exciting'.
In its 2021/2022 budget Cabonne Council has made provision for operating expenses of $262,494, and an income of $131,700.
The forecast net result is a $130,794 deficit.
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