One thing "they DON'T teach in art school" is how to manage a clients' high expectations and the reality of a budget.There are times when a budget can be so restrictive that you must trim the client's ideas or get creative with interpretation. It's rare that the producer or client will want to spend more money then what they budgeted but sometimes it's necessary to keep the production value up.
Production Value is my favorite saying because it not only acts as reminder to stay true to quality but having a degrading "production value" sometimes wakes people up the importance of the art department. It's a thankless job, it's not flashy like wardrobe stylist or as glamourous as DP but if the production value of the art department decreases it will be obvious to the viewer. Art Direction is something people don't know they need until they work with an art director and notice the difference between "I can do it myself" and having someone " interpret your vision properly".
People like to slash the art dept. budget because they don't see it as a "necessity" but more of a luxury and although it is true you won't need it for every shoot , if you can get an art director, please do, you'll thank me later!
As for dealing with a restrictive budget, the best advice is communication is key. If you feel it will hurt the production value then please voice your objection so they understand the consequences of overzealous budget slashing and then offer realstic alternatives. It's your job as art director to come up with creative solutions; example one client wanted 3 live crows for a shoot, it was impossible to provide this on a very limited budget, I came up with two alternatives (both within budget) of using taxidermy crows only in background and using a video that looped of ravens flying in a projector. Client went with the the shadows of ravens in flight, both gave the creepy haunting vibe wanted but also didn't break the bank.
Always have 2 or 3 alternatives for every line item you put down in your budget, being prepared saves time and stress in the future. Pro-active not re-active <3 Cybel - your friendly neighborhood art director