The $2 million Gov. Mitch Daniels has proposed for the Little Calumet River Basin Development Commission may do nothing for building more flood control walls.

Local officials Thursday said it's their understanding that the money will be used to pay back the Northwest Indiana Regional Development Authority for money it already advanced the commission.

Both Hammond Mayor Thomas McDermott Jr. and commission interim director Jody Melton said that is because of a deal struck in 2007 between Daniels and the RDA.

A year ago, the RDA approved granting the commission $6 million. Daniels and U.S. Rep. Pete Visclosky, D-Ind., wrote to the RDA, pledging to work with legislators to see the money would be repaid to the RDA out of the state's biennial state budget.

The RDA so far has disbursed about half of the $6 million to the commission.

The revelation puts even more pressure on local leaders and state legislators who are trying to pry more money for flood control out of the General Assembly.

And right now, there is sharp division on how to do that.

McDermott is pushing the use of sales tax increment financing reserved to some cities in Indiana as the best way to pay for the work, estimated to cost at least $13.5 million.

"We've been arguing about budgets, audits and this board, but that's not the problem," McDermott said Thursday. "The problem is a lack of money. There has never been enough money to complete this project."

But McDermott's idea is going nowhere in the Indiana General Assembly, said state Rep. Ed Soliday, R-Valparaiso.

"There is no support, not that, none, zero," Soliday said. "That is not sales tax increment financing he's talking about; that's sales tax diversion."

Hammond would need state approval to implement the local sales tax increment financing, and the governor has opposed the idea in the past.

Soliday has introduced a bill that would reduce the Little Calumet River Basin Development Commission from 14 members to five. Those five all would be appointed by the governor.

Soliday said a reformed commission is the first step in restoring legislators' and the governor's confidence. Then, he and other area legislators can come up with a means of funding the project, he said.

Soliday also said the money requested by the governor in his proposed budget most likely will be used to pay back the RDA.

In September, communities along the Little Calumet were struck by disastrous flooding when the river overflowed its banks. Hundreds of people were forced out of their homes.