Inside Star Trek: The Real Story
Well, as far as the budget of Trek goes, I believe the "slashed" budget of the third season is one of those myths that doesn't hold up under scrutiny. If I recall correctly, the original budget for the first season was around $200,000 per episode, or about $1.3 million today. The budget for the third season was $185,000 per episode. Smaller, but hardly slashed. I wish I could find the site where I found these figures. If someone else has a source, that would be great!
quotes the third season budget at $178,500 per episode (page 399). The second season budget was $187,500 per episode (page 317) according to the same book. Memory Alpha quotes the average first season budget at $190,635 per episode, although skimming I can't find the page number.
Although the decrease might not seem like a lot of money, when you take into account two years of salary increases for each of the regular and semi-regular actors (not to mention the additional increase in pay Nimoy negotiated for after the first season) it is. It doesn't help that many of the costs of production are fixed. Since you can't cut the salaries being drawn for above-the-line costs (writing, directing, acting) -- many of which are actually increasing -- that means the money has to come from below-the-line areas of the production. That's one of the reasons why only two episodes in the entire season went on location.