Local leaders were surprised when a $16,000 funding announcement for Uralla, announced in 2018, was described as pork barrelling.
But the grant, which Uralla Shire Council used to install display cabinets to showcase historical Indigenous items, was listed among 13 arts grants, which were not recommended.
Former NSW Arts Minister Don Harwin and Nationals leader John Barilaro had approved more than $3 million in grants in coalition-held seats for 13 regional arts projects, which were not recommended for funding by an expert panel.
"I'd love for the Labor Party, the ABC or anyone to go to those communities that received funding, the little cultural communities that received funding," he said.
According to a NSW Government Planning and Environment document obtained by the ABC under freedom of information, Mr Harwin had identified 13 applications that were "not recommended" by the Regional Cultural Fund (RCF) panel for funding.
The document states the minister then sought advice on whether to allocate funding to these 13 applications. It says he asked "what conditions would be needed to ensure the applications met the objective of the RCF panel".
Uralla Shire Council had submitted the application in September 2017 after they were approached by Aboriginal elders with a donation of cultural artefacts.
In November 2017, The Armidale Express reported that the submission had been sent and the cabinets would cost more than $4700. The proposed location for the Anaiwan display was the Uralla Library.
The grant was announced the following year.
"Uralla has never had a dedicated space to display Aboriginal artefacts but now it will and importantly it will also preserve local heritage for future generations," Northern Tablelands MP Adam Marshall said when he announced the grant, in June 2018.
At that time it was revealed the funding would be used to set up artefacts in special display cabinets in the town's information centre, rather than the library.
Fast forward to March this year, and about 70 people were there so see the new display unveiled, including Mr Marshall and Cr Pearce.
But both the mayor and the state MP have told The Express they were unaware of the funding problem, and that the grant was included on a list of 13 projects not recommended for funding.
"News to me," Mr Marshall said. "I am just glad we got the funding for a good local project."
An earlier version of this story said the Uralla project was not eligible for funding. That was incorrect. It was eligible, but not recommended by the RCF panel.