AUSTIN – Democratic lawmakers and labor leaders plan an all-out fight to overturn Gov. Rick Perry's rejection of federal stimulus money for unemployed Texans.

"A hundred percent political," House Democratic leader Jim Dunnam of Waco said Friday, referring to Perry's rejection a day earlier of $556 million of stimulus money for unemployment insurance.

Texas AFL-CIO legal director Rick Levy, referring to Perry's upcoming primary challenge from U.S. Sen. Kay Bailey Hutchison, said, "It appears to be much more about primary politics than solving the problems of Texas workers and business owners."

While Perry said there are too many strings attached to make it worth taking the money, Dunnam said at a Capitol news briefing that the rule changes required for Texas to pocket the money would expand the unemployment program's cost by only 2.5 percent this year.

Changes such as easing requirements that part-time workers search for a full-time job or letting workers draw benefits while being retrained would cost as little as $76 million, Dunnam said. He noted the entire program is expected to pay out $3 billion this year.

Meanwhile, the tax an average employer pays this year – $90 per worker – would at least double next year if Texas rejects the stimulus money, Dunnam warned. Big tax hikes over the next few years can only be avoided if Texas accepts the federal cash, he said.

"It's just foolish," said Dunnam, who heads the House committee studying the stimulus money.

A Perry spokesman, though, stressed that current unemployment benefits will remain available even if the federal funds aren't accepted. Perry communications director Mark Miner said Dunnam and other Democrats care more about liberalizing eligibility rules than keeping employer taxes low.

"This is expanding the program," Miner said of the stimulus bill's requirements. "The governor is looking out for small businesses and the millions of people they employ. These types of scare tactics that [Democrats] are going to be generating over the coming weeks are what's disingenuous about this whole issue."

A few Republicans have expressed interest in taking the money – including House Appropriations Committee Chairman Jim Pitts of Waxahachie and Rep. Tan Parker of Flower Mound – although GOP legislative leaders haven't weighed in. And some conservatives are wary.

"House conservatives will take a hard look at it because we said early on that we weren't going to allow the feds to stampede us into something that in future years increases any kind of expense, including unemployment expense," said Rep. Warren Chisum, R-Pampa.

Dunnam and Rep. Garnet Coleman, D-Houston, while declining to elaborate, said the issue may not be decided until late in the session, when lawmakers – as writers of the state budget – have leverage over the governor.

This week, though, Perry remained on the offensive.

In a "robo call" to conservative activists, Perry urged a big turnout at a public hearing that Dunnam's panel is holding in Arlington today. It is scheduled to begin at 10:30 a.m. in the Rio Grande Room of the Hereford University Center at the University of Texas at Arlington.

Perry said the hearing is a chance to vent "your frustration about the federal stimulus and the heavy cost it will place on Texans. It would force Texas to impose higher tax burdens on employers, and burden all Texans with bigger, more intrusive government."

Miner said the call was paid for by Texans for Fiscal Responsibility, which advocates free markets and small government.