The Minnesota Orchestra said Monday that the labor contract with its musicians has expired and a new agreement has not been reached—prompting the organization to lock out musicians and cancel performances through late November.

The Minnesota Orchestra’s leaders have said that a decrease in musicians’ salaries is necessary in order for the orchestra to balance its budget. The organization had a deficit of $2.9 million in its 2011 fiscal year; for fiscal 2012, the deficit is expected to be considerably larger, according to media reports.

The orchestra said that, while it has seen a decline in non-musician expenses, costs related to musicians have increased $3.2 million, or 26 percent, during the past decade. Today, musician costs account for nearly half of the orchestra’s total costs, and financial difficulties have led the organization to lay off about 20 percent of its administrative staff since 2009.

The orchestra’s leaders said that the former labor contract was established in 2007, before the recession, and it included a 19.2 percent pay increase for musicians over the course of five years. The orchestra said that it honored the contract despite the fact that it has recently “placed extraordinary, unsustainable pressure on the endowment that helps secure our future,” and the contract is “out of step with the fiscal realities of today.”

The orchestra’s management in April proposed a new labor agreement and has since been in negotiations with musicians. The organization’s proposal would cut players’ average annual pay from $135,000 to $89,000.

On Sunday, the musicians—who are members of the Twin Cities Musicians’ Union, Local 30-73—rejected the organization’s proposal.

Tim Zavadil, a clarinet player and a member of the musicians’ negotiating team, said Monday that the proposed contract would cut each musician’s pay by between 30 percent and 50 percent. He said that competitive salaries are crucial to “retaining world-class musicians.” Zavadil also pointed out that the orchestra’s leaders are proposing the salary cuts while executing a $50 million renovation of Orchestra Hall. (The orchestra was scheduled to perform this season at the Minneapolis Convention Center during renovations.)

The orchestra’s management, meanwhile, contends that it was able to raise the funds because donors want to support a renovation, which will help attract new audiences and increase revenue.

During negotiations over the weekend, the musicians made two proposals. The first was to enter into “binding arbitration,” through which both parties would be bound to a decision made by an official arbitrator. The second was that they continue to play under the terms of the former contract while negotiations continue.

The orchestra’s management rejected both proposals, saying that the organization cannot afford to continue paying players under the former contract. They said that during the past six months of negotiations, they have asked the musicians to make a counter proposal to their labor agreement, which the musicians have not yet done.

The former labor contract expired at midnight on Monday, and orchestra management said that concerts have been canceled through November 25, although performances could resume before that date if the contract dispute is resolved.

Further negotiations have not been scheduled, according to Zavadil.

The Minnesota Orchestra said that ticketholders for canceled events have several options, including receiving refunds or exchanging seats for a future performance. For a complete list of cancelled performances, click here.

The Minnesota Orchestra is not the only Twin Cities orchestra facing financial difficulties, and Minnesota Public Radio last month noted that some people are questioning whether the Twin Cities needs two orchestras or can support them.

The Saint Paul Chamber Orchestra’s labor contract also expired over the weekend, and the two sides in that dispute have yet to reach a new labor agreement, according to a report by the Star Tribune. But the St. Paul orchestra’s management has reportedly agreed to let musicians continue playing under the terms of their existing contract while negotiations continue. The two sides reportedly plan to meet again next week.