A state agency and Mayor-President Kip Holden said this week they have resolved a dispute over federal Homeland Security grants that last year led to the state stripping the Mayor’s Office of control over the money.

But both sides still disagree over how they will move forward with the 2012 grants.

Holden and the Governor’s Office of Homeland Security and Emergency Preparedness have been in a yearlong battle over whether the state agency has the authority to require that the Sheriff’s Office reviews and signs the Homeland Security grant applications.

GOHSEP has said the signature of each parish sheriff is required under its rules, since 25 percent of the Homeland Security grants are dedicated to law enforcement.

But Holden refused to allow East Baton Rouge Parish Sheriff Sid Gautreaux to review and sign the grant application last year. The mayor maintained GOHSEP lacked the legal authority to impose the requirement on the federal grants that it administers.

By October 2011, GOHSEP had stripped Holden’s office of control of about $4 million in federal Homeland Security grant money spanning from 2009 to 2011.

Christina Stephens, GOHSEP spokeswoman, said this week that Holden has been reinstated as manager of the Homeland Security grants for 2012 and other federal grants moving forward.

Holden said the resolution was made possible by open communication with new GOHSEP Director Kevin Davis.

Davis replaced former Director Mark Cooper, who led the agency during the duration of the dispute between the two agencies. Cooper left in late 2011 to take a job with Wal-Mart Stores Inc.

Holden said he feels vindicated by GOHSEP’s decision to reinstate his office as grant manager.

“The whole ordeal simply says that before you make accusations, make sure the facts are straight,” Holden said. “We still firmly believe our facts were correct, and even through all the turmoil, we’re glad we never gave up.”

Stephens said Holden was given grant authority back because he promised that moving forward he would abide by state rules that he had been violating.

“The mayor assured Director Davis that the city will comply with all of the rules and regulations associated with the grant funding,” Stephens said, specifically allowing the sheriff to sign the grant applications and even “forming a committee that includes the Sheriff’s Office to direct the use of some of the funds.”

But when told Wednesday evening that GOHSEP still expects the Mayor’s Office to allow the sheriff to sign the grant applications, Holden said, “We will not be subjected to an arbitrary rule, and I’m going to take the battle all the way to Washington.”

Stephens said the 2012 grants include $126,000 from the state Homeland Security program, which will require the sheriff’s signature on the grant application.

Another grant worth about $190,000 will not require the sheriff’s signature.

She said GOHSEP sent out specific guidelines to all the parishes in September outlining the requirements, which included having a parish sheriff sign the grant application.

“The parish (East Baton Rouge) has those requirements, and we feel good that they’re going to comply,” Stephens said.

But Murphy Foster III, attorney for Holden, said the Mayor’s Office never agreed to allow the sheriff to sign the grants.

“There is no requirement we get the sheriff to sign off,” Foster said. “We were encouraged to seek the advice and participation of the sheriff and all law enforcement, as we always have done.”

Foster also said the past several months of fighting between the agency was based on a misunderstanding that was resolved by Davis’ involvement.

“It was not so much a big fight as much as it was an unraveling of a ball of string tangled because of misunderstandings,” Foster said. “Mayor Holden maintained his position, and Director Davis came on board and was able to right the ship of GOHSEP and make some strong decisions, and GOHSEP is much better for it.”

Stephens said GOHSEP declined to reimburse the parish $362,795 in grant expenditures for 2008 and 2009 because the parish did not obtain a FEMA-required environmental and historic preservation review.

The Mayor’s Office of Homeland Security and Emergency Preparedness, which has never been denied a federal reimbursement through GOHSEP, is appealing the decision.