GALVESTON — With less than five weeks to go until Mardi Gras, the city council on Thursday finalized a downtown vendor and entertainment policy for the two-week party.

Local businesses will be allowed to sell Mardi Gras merchandise, alcohol and food from their storefronts and can give independent vendors permission to set up temporary concessions on the sidewalk. Vendor booths will not be allowed, even in private parking lots.

Strolling vendors will be allowed on the parade routes but cannot come in to the downtown entertainment district, which stretches from 19th to 25th streets between Harborside and Mechanic.

No bands will be allowed to play outside, unless they are on balconies.

The debate over vendors started two weeks ago after council members protested that the city staff was denying vendor permits to merchants who had sold beads at Mardi Gras for years and were counting on income from the festival.

Three months ago, the council unanimously decided not to allow vendors, in an attempt to discourage large crowds from gathering downtown.

But on Thursday, Patricia Bolton-Legg, whose district includes the downtown area, said she didn’t know why the city couldn’t relax its new policy if vendors were willing to help cover security costs.

“I’m frustrated because it doesn’t make any sense to me,” she said. “We’re like in the middle. In order for people to want to go downtown, they need to generate some kind of activity or entertainment. Why can’t we do that with private vendors if they will take care of security costs?”

Both city and Galveston Park Board of Trustees officials asked local businesses to share Mardi Gras costs during discussions about the event earlier this year, even offering to let a private group take over responsibility for an organized entertainment district, but no one took them up on their offer.

The council and the park board agreed to host a bare-bones Mardi Gras this year because neither group wanted to pay for the estimated $560,000 in city services.

After prohibiting all outside entertainment, including vendors, and curtailing advertising for the event, City Manager Steve LeBlanc revised the city services cost to $450,000.

But when LeBlanc denied a request by the U.S. Navy Band to play in Saengerfest Park, council members started to get complaints.

Council member Danny Weber, who also sits on the park board, said he thought the city could allow limited entertainment at the park, but Council member Dianna Puccetti said if the city changed course now, it would never find out if the new Mardi Gras concept could be successful.

“The whole concept was to have bands inside,” she said. ‘If you start allowing them outside, you don’t give this plan an opportunity to work.”

Downtown merchants previously lobbied for no outside entertainment in hopes a lack of activities in the street would encourage revelers to party inside local businesses.

Although she said she liked the idea of having some entertainment downtown, Mayor Lyda Ann Thomas acknowledged it was too late in the game to be making changes to this year’s plan.

“Any parts of this discussion that seem attractive should go toward planning for 2009,” she said. “The shopkeepers have asked us to try it this way. We should give them that opportunity and see what happens.”