It said its expectation comes after receiving advice from the Department of Culture, Arts and Leisure (DCAL).
As a result, most of the arts organisations it funds will get no additional grant money this year.
Of the 107 arts organisations that receive support from ACNI for running and programming costs, only five will receive more funding in 2016-17.
Those organisations are An Gaelaras, Community Arts Partnership, Ulster Youth Choir, Irish Traditional Music Archive and the Northern Ireland Piping and Drumming School.
Bob Collins, chair of the Arts Council, said the sector was facing another challenging year and criticised "ten years of disinvestment by government" in the arts.
The Arts Council's funding from the DCAL was cut by 11%, or £1.38m, in 2015-16 and it now faces a reduction of about £500,000 in 2016-17.
The council said it had found most of the savings required through shedding staff and moving headquarters from Belfast to Lisburn in County Antrim.
Mr Collins said the funding to the arts had been cut for a number of years.
"There has been a cumulative loss of £3.5m of exchequer funding for the arts over the last three years alone, a reduction of over 25%," he said.
"It is with sincere concern for the future that I call on the new minister and the new Northern Ireland Executive to begin to focus anew on the value of the arts, on their relationship to everyone in Northern Ireland and to begin a programme of reinvestment in the arts."
DCAL itself is being dissolved this year and its responsibilities taken over by the new Department of Communities.
About £8.7m which the council receives from DCAL will be used to fund running costs for arts organisations, while the Arts Council also distributes £4.7m from the National Lottery to cover arts activity.
The Arts Council of Northern Ireland (ACNI) has said it expects its budget for 2016-17 to be reduced by almost 6%.