ANCHORAGE, Alaska (Reuters) - It garnered big applause in her first speech as Republican John McCain’s vice presidential pick, but Alaska Gov. Sarah Palin’s assertion that she rejected Congressional funds for the so-called “bridge to nowhere” has upset many Alaskans.

Republican vice-presidential candidate Alaska Governor Sarah Palin campaigns in Washington, Pennsylvania August 30, 2008. REUTERS/John Gress

During her first speech after being named as McCain’s surprise pick as a running mate, Palin said she had told Congress “‘thanks but no thanks’ on that bridge to nowhere.”

In the city Ketchikan, the planned site of the so-called “Bridge to Nowhere,” political leaders of both parties said the claim was false and a betrayal of their community, because she had supported the bridge and the earmark for it secured by Alaska’s Congressional delegation during her run for governor.

The bridge, a span from the city to Gravina Island, home to only a few dozen people, secured a $223 million earmark in 2005. The pricey designation raised a furor and critics, including McCain, used the bridge as an example of wasteful federal spending on politicians’ pet projects.

When she was running for governor in 2006, Palin said she was insulted by the term “bridge to nowhere,” according to Ketchikan Mayor Bob Weinstein, a Democrat, and Mike Elerding, a Republican who was Palin’s campaign coordinator in the southeast Alaska city.

“People are learning that she pandered to us by saying, I’m for this’ ... and then when she found it was politically advantageous for her nationally, abruptly she starts using the very term that she said was insulting,” Weinstein said.

Palin’s spokeswoman in Alaska was not immediately available to comment.

National fury over the bridge caused Congress to remove the earmark designation, but Alaska was still granted an equivalent amount of transportation money to be used at its own discretion.

Last year, Palin announced she was stopping state work on the controversial project, earning her admirers from earmark critics and budget hawks from around the nation. The move also thrust her into the spotlight as a reform-minded newcomer.

The state, however, never gave back any of the money that was originally earmarked for the Gravina Island bridge, said Weinstein and Elerding.

In fact, the Palin administration has spent “tens of millions of dollars” in federal funds to start building a road on Gravina Island that is supposed to link up to the yet-to-be-built bridge, Weinstein said.

“She said ‘thanks but no thanks,’ but they kept the money,” said Elerding about her applause line.

Former state House Speaker Gail Phillips, a Republican who represented the Kenai Peninsula city of Homer, is also critical about Palin’s reversal on the bridge issue.

“You don’t tell a group of Alaskans you support something and then go to someplace else and say you oppose it,” said Phillips, who supported Palin’s opponent, Democrat Tony Knowles, in the 2006 gubernatorial race.

A press release issued by the governor on September 21, 2007 said she decided to cancel state work on the project because of rising cost estimates.

“It’s clear that Congress has little interest in spending any more money on a bridge between Ketchikan and Gravina Island,” Palin said in the news release. “Much of the public’s attitude toward Alaska bridges is based on inaccurate portrayals of the projects here.”