JADGE-
Think Barbr has some good advice. It sounds like there is more to this situation than meets the eye. It would be wise to sit down with the principal and find out what's going on and hear more about her reasons. At the very least a meeting will help you and board members figure out the best way to work with her. What you don't want, is to encourage an us against her culture -- noone wins that way.
I would say a meeting to sit down and have a heart to heart with her about it is in order. Find out exactly why she felt it was necessary and does she understand what the PTO will not be able to do in the school with the lost revenue and ask her to reconsider.
After finding out what the full issues are, with the event chairs, etc. try to address them. Ask exactly what it would take to make the event happen.
If this is a trendy pattern, make sure records are kept of discussions, etc. It may be a matter that will need to be taken to her supervisor at some point. Although that may or may not be successful depending on several factors.
Frustrated with our current elementary school principal. The first year she was in our building she was "everyone's buddy" now as we are almost midway year 3 she has proven that a leopard can't hide it's stripes.
She is now canceling events that are standing committee events (Santa Shoppe) without prior discussion or a vote. This is also a budget line item.
Parents are furious, but what can we actually do?
All because she has a conflict of interest with the 2 moms that are chairing the event. These two moms have put on a wonderful production the past two years building an entire castle and lining up over 50 parent volunteers to run the event, inviting younger siblings to attend and be able to shop, and coordinating donations of wrapping paper for a free wrap room from local businesses.