Texas Democrats aim to overturn Perry's stimulus fund rejection

Gov. Rick Perry's decision on Thursday to turn down $555 million for expanded unemployment benefits from the federal stimulus package became an instant issue in his re-election campaign and provoked a confrontation with Democratic lawmakers who vowed to try to overturn the decision.

But business groups and conservatives in the Legislature stood behind the Republican governor, saying that Perry's refusal spares Texas from paying a big tab later when the federal dollars run out.

Perry said he would accept most of the roughly $17 billion slated for Texas in the plan.

But accepting the jobless aid would require the state to enlarge its unemployment insurance program, subjecting Texas employers to millions of dollars in debilitating higher taxes, he said.

Perry assured jobless Texans looking for work that they would continue to receive unemployment benefits.

Perry unveiled his decision at a news conference in the middle of Bering's Hardware store in Houston. Supporters were invited to watch the announcement via a live video stream on his political Web site,

"I am here today to stand with Texas employers and the millions of Texans they employ to resist further intrusion into their businesses through an expansion of our state’s unemployment insurance program," Perry said.

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