Southeast Missouri State University can't count on state funding for the River Campus arts school project until a lawsuit filed by Cape Girardeau businessman Jim Drury is resolved, Gov. Bob Holden said Friday.

While state funding for the project remains in limbo, the Missouri Department of Transportation has awarded a $260,000 grant to Southeast to construct hiking and biking trails at the River Campus site overlooking the Mississippi River in Cape Girardeau.

Besides trails, the project includes archaeological work and construction of picnic and parking areas.

Holden's comment came during a visit Friday to Cape Girardeau and comes on the heels of Thursday's ruling by the Missouri Supreme Court that the state doesn't owe a potentially budget-busting $529 million in refunds to taxpayers.

The court action came in a pair of cases seeking taxpayer refunds under the state constitution's revenue-limiting Hancock Amendment.

The ruling removes a major hurdle preventing the release of $161 million in state capital improvements spending, including nearly $12 million for Southeast's River Campus project.

In all, the university is waiting for about $17 million in state funding to help develop a former Catholic seminary in Cape Girardeau into a school for the visual and performing arts. The state money was appropriated by the Legislature over the past two years, but has yet to flow to the project.

Southeast can't secure that money until it gets its local funding in place, Holden said, echoing the view held by Southeast officials.

The local match for the $36 million project is expected to come from private donations to the university and $8.9 million in funding from the city of Cape Girardeau.

But the city's funding has been tied up in court since Drury filed suit in April 1999. The lawsuit blocked the city from using motel and restaurant tax money to fund its share of the project.,

The case is currently pending before the Missouri Court of Appeals Eastern District.