Cllr Dawe dismissed Ms Somerville's claim as "purely scaremongering".
She said: "It's a lot of nonsense and unbelievably unhelpful when we are trying to deliver such a major project as close as possible to the sum of money we know we have available and we have a contractor in dispute over various things.
"She doesn't like the trams and is doing everything she can to foil the project. She is not going to."
TIE spokeswoman Mandy Haeburn-Little said:
"For Shirley Ann Somerville to be suggesting that there is some other information being held back is ridiculous and unhelpful. If Ms Somerville would like to name her sources then we would be very pleased to respond fully."
She went further when speaking to the BBC:
Jenny Dawe, Edinburgh City Council leader, said: "The funding situation and projected delivery date for trams running on the street has not changed since being reported to the council last month.
"The dispute resolution process is currently underway and both the council and Tie are committed to ensuring that we come in as close to budget as possible.
"Speculation from Ms Somerville is purely scaremongering - a fact backed up by her inability to substantiate her sources."
Mandy Haeburn-Little, Tie spokeswoman, said: "Not only is this information incorrect but it is deeply damaging to the positive progress of the Edinburgh tram project.
"Categorically there is nothing to suggest that the programme will extend beyond 2012 as had been stated publicly.
"The programme is making good progress and is on track to be clear of Princes Street at the end of November as planned."
Of course, I believed the MSP. She was the one who revealed that line 1b was for the chop back in November 2008 and that was denied by Councillor Dawe as well, but the cancellation was announced in April 2009.
Now, it would appear, TIE and the council both knew at the time the council leader and the TIE PR consultant were making these statements that they were false.
Mandy Haeburn-Little said it would was "ridiculous and unhelpful" to suggest that information was being held back - while TIE and the council were both holding this information back. It's not the job of the leader of a PR team to tell lies, if she knew the truth then her position is untenable, if she didn't know the truth then the veracity of any and all of her other statements on behalf of TIE is open to question.
Jenny Dawe said that the claim was "a lot of nonsense and unbelievably unhelpful". If she knew that the council knew then her position is untenable, if she didn't know then serious questions have to be asked about her grip on the largest local authority public procurement project in Scotland in decades. Either way we can't take her at her word on the Tram Project.
It's time for some openness. Audit Scotland reported to the council on the Tram Project in January:
91. We will discuss these matters further in a more detailed report on the tram project which will be issued in the first instance to the Director of Finance in January 2010.
The council should publish that report in full. While it's going about that, it should also publish in full the "independent analysis of the project" which it claims to have had done. Some claim commercial confidentiality as the reason for keeping the chaos secret - how many more tram projects do they think the council will be commissioning in the near future?
Today's story included the memorable line:
There is absolutely no question of a cover-up
I can't help thinking "so why did you feel the need to say that?" There'll be no whitewash?
Mind how you go.