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From NPR News, this is ALL THINGS CONSIDERED. I'm Michele Norris.

MELISSA BLOCK, host:

And I'm Melissa Block.

As states begin to receive their share of federal stimulus dollars, several Republican governors are under increasing fire for rejecting some of the money. In Texas, the battle is over unemployment benefits, and the issue has made its way into the governor's race.

From member station KUT in Austin, Ben Philpott reports.

BEN PHILPOTT: Texas Governor Rick Perry misses no opportunity to bash the stimulus and how other states jumped at the chance to get the money.

Governor RICK PERRY (Republican, Texas): They're begging Washington, D.C. for a bailout. Is there anybody out there that's going to get one of them bailout checks? In Texas, we actually know it is a good idea to look a gift horse in the mouth.

PHILPOTT: Texas does plan to spend $14 billion in stimulus money over the next two years. But the governor rejected $555 million in unemployment insurance, money which would increase the number of people eligible for benefits. Perry says the Obama administration's move would have businesses paying more when the funds run out in the future.

Gov. PERRY: This administration wants to force the state of Texas and other states with this stimulus money to change our practices, change our habits, change the way that we govern. And on this unemployment insurance side, the message is very clear: thank you, but no thank you.

PHILPOTT: Several other GOP governors have rejected parts of the stimulus package. South Carolina's Mark Sanford has balked at taking education money. Louisiana's Bobby Jindal, Mississippi's Haley Barbour, Alabama's Bob Riley, and Alaska's Sarah Palin have joined Perry turning down extra unemployment insurance money. But Perry's decision doesn't sit well with job seekers.

Unidentified Man #1: Bob, return to the front desk, please. Bob, return to the front desk.

PHILPOTT: At a state-run job center in Austin, about 40 people huddle over computers typing resumes and scanning want ads. Wilbert Butler(ph) has been out of work since last summer and thinks public outrage over the governor's decision will only grow.

Mr. WILBERT BUTLER: I believe some of them don't know, but some of them is going to know sooner or later…

(Soundbite of laughter)

Mr. BUTLER: …about what he is doing.

PHILPOTT: Texas' unemployment rate is below the national average, but 100,000 Texans lost their jobs in the first two months of the year. State businesses could have their unemployment taxes doubled to meet the demand. So, reject the stimulus money and businesses pay now. Take it, and they pay later when the money runs out.

Jim Dunham is a leading Democrat in the Texas House.

State Representative JIM DUNHAM (Democrat, Texas): So, the question is who is going to have to pay? Is it going to be the federal government helping us pay for it or are we going to double the tax on our employers to pay for it? And that's the choice he's making.

PHILPOTT: Perry's battle against the legislature is complicated by his re-election bid next year. He already has a strong primary challenger, U.S. Senator Kay Bailey Hutchison. At a recent AFL-CIO event near the Texas capitol, unemployed steelworker Don Smith said the governor shouldn't play politics while people in Texas are hurting.

Mr. DON SMITH: It's just another cheap trick, but your time is up Mr. Perry, and we're going to make sure of it.

(Soundbite of applause)

PHILPOTT: Ross Ramsey writes for the political newsletter Texas Weekly. He says whether the state should accept all federal stimulus money has galvanized Republican candidates, as they try to stake out their positions without alienating voters.

Mr. ROSS RAMSEY (Writer, Texas Weekly): Everything's going to be viewed through that prism. So, if he chooses a red jersey and she chooses a green jersey, everybody's going to say, oh, that's just politics. It may be that they would differ on this anyway, but it's brought into high contrast by the fact that they're running against each other.

PHILPOTT: Governor Perry remains firm on his rejection for now. But just last week, Nevada's GOP governor, Jim Gibbons, backed away from his initial concerns and has accepted all the stimulus money. And like the Texas governor, he's up for re-election next year and already has primary challengers.

For NPR News, I'm Ben Philbott in Austin.

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