The council's officers had advised paying £78,000 of taxpayer cash to WtY, which is chaired by the authority's former leader of 21 years, Peter Box.
The agency is in dire financial straits and Mr Box warned councils earlier this summer that it would have to close without them collectively coming up with a £1.4m emergency payout.
But although council officers backed the bailout in the interests of jobs in the region, Cabinet members said they believed the money would be better spent locally.
At a virtual meeting on Tuesday, councillors said they did not think WtY, whose former chief executive Gary Verity was forced to resign last year after an expenses scandal, for leading a "lavish lifestyle" offers value for money.
Wakefield Council already pays the agency £12,000 a year in membership fees.
Council leader Denise Jeffery, who succeeded Mr Box when he stepped down to take over his new role at the end of last year, said: "I don't feel at this time it's opportune for us to (pay the money).
"We're in a situation we've never seen before with our funding and I feel we'd be better keeping this money in-house.
"I think it's important we keep money in this district.
"It's not that we don't support Welcome to Yorkshire and we hope they thrive. "We'll continue to pay our subscription along with everyone else but I think at this moment in time we're not going to put any more money into it."
WtY was praised for its role in bringing the Tour de France to Yorkshire in 2014, off the back of which the annual Tour de Yorkshire cycling race was conceived.
The race passed through Pontefract in 2018, but Cabinet members said they believed the public costs of running that had been extortionate.
Transport portfolio holder Matthew Morley said: "I just don't think it gives any economic benefit to Wakefield whatsoever.
"Welcome to Yorkshire have led a very lavish lifestyle, more than they could (afford) really.
"When you see people going round in helicopters and motorcars, it's the sort of stuff that would make the President of America jealous.
"I can't support funding them any longer."
Cabinet members agreed to ringfence the cash, which comes from its business rates pool, and suggested it could be spent on a new festival or event.
Portfolio holder for communities Maureen Cummings said: "I haven't seen any benefit of being a member from Welcome to Yorkshire.
"Yes, we got the Tour de Yorkshire coming through the district but not everyone felt the benefit of that.
"It cost an awful lot of money.
"I think we need to look after our own at this moment in time."
In response, Welcome to Yorkshire said the criticisms were "completely untrue" when applied to their conduct over the last 18 months.
Speaking after the meeting, Wakefield Lib Dem opposition councillor Tom Gordon said: "This is a damning indictment that even Peter Box's former colleagues don't feel he can deliver value for money or turn around Welcome To Yorkshire."
Local Democracy Reporting Service