The Selma Water Works and Sewer Board said the Alabama Department of Environment Management rejected its application for stimulus money. Representatives of ADEM said it never received an application from the utility.

The Rev. Lee Goodwin, chairman of the water board, told other board members Monday that the state said the Selma utility could not have stimulus money because it did not have a revolving loan with ADEM. Selma had decided not to borrow money from the state because of the interest.

Goodwin used an example. “Under the revolving load, if you borrowed $1 million, but ADEM gave you $200,000, you still have to pay interest on the $1 million, so Selma went to the bonds,” he said.

That action, he asserted, kept Selma Water Works from getting stimulus money.

But Scott Hughes, a spokesman for ADEM said Selma did not apply for any funding through the recovery program. The state environmental management department received $19 million to support funding water treatment and infrastructure programs. It received $44 million for wastewater treatment and infrastructure programs.

The department published an intended use plan on its Web site.

“What might have happened is they could have called and asked about submitting and decided not to apply,” Hughes said.

Goodwin said he has asked the American Water Works Association to challenge ADEM’s decision. The Selma utility’s chairman said ADEM forgave some loans for work already completed.

“That wasn’t in my view the attempt to create new jobs,” Goodwin said.

Hughes denied any money was used to forgive loans. The law under which the stimulus grants are used allow the principal of the loan, “but not for ongoing or completed projects.”

Mayor George Evans, superintendent of the water board, said he would meet with Dallas County’s legislative delegation to see how to deal with the issue.