The City of Goleta has filed a lawsuit with the state over the San Jose Creek project.
The lawsuit was filed Monday against the State Department of Finance.
At issue is an $18 million dollar transfer from the city's redevelopment fund to the main budget for the San Jose Creek improvement project off Highway 217 near Old Town.
The state has cut out redevelopment agencies and is taking back that funding to help control a large financial debt.
Goleta leaders say the money was appropriately spent for a project that will save homes and businesses from flooding in a major storm and the state no longer has control over it.