U.S. Sen. Kay Bailey Hutchison, throwing down cards that she has held close to her vest for months, said Friday that Gov. Rick Perry was wrong to reject federal stimulus dollars for expanded unemployment benefits this year.

Perry first came out against the stimulus in March. Hutchison, who is challenging the governor in next year's Republican primary, has in recent months sought to avoid hand-to-hand combat and has avoided saying whether he should have opposed the funds.

But with a written statement Friday, Hutchison signaled that she's ready to directly engage on the issue as she prepares to formally announce her candidacy next month, launching what is expected to be one of country's hottest intraparty fights of 2010.

Hutchison, who voted against the Obama administration's economic stimulus bill, said Texans "were stuck with the bill whether we took the money or not" and that Perry's stand has left business owners facing higher taxes.

"It's not conservative. It's irresponsible," Hutchison said of Perry's position. "It's not just a lack of leadership; it's a lack of judgment. And Texas will pay a high price for Governor Perry putting politics above his responsibility to Texans."

Perry spokesman Mark Miner described Hutchison's position as inconsistent, asking why she would vote against the stimulus if she wanted the unemployment dollars.

"It's more Washington double-talk," Miner said. "She continues to not have a clear focus."

But Perry — who has criticized the stimulus package — signed a state budget last month that included $12 billion in stimulus dollars for programs other than unemployment insurance, and he recently asked Vice President Joe Biden on a conference call when stimulus dollars would start coming to Texas.

Miner said the money Texas accepted did not have the same strings attached as the unemployment funds.

To illustrate that the strings attached to the program were not permanent, however, Hutchison's campaign pointed to statements from officials with the U.S. Department of Labor that said state lawmakers could change laws to revert to their old programs once the stimulus dollars run out.

With Texas unemployment at its highest level in 16 years and benefit payouts having tripled in the past year, the state will have to borrow more than $643 million from the federal government in the coming months to keep paying unemployment benefits. The money comes interest-free for 18 months.

In addition, officials at the Texas Workforce Commission said that in December they will have to increase unemployment taxes that businesses pay to maintain benefits.

Perry has said business owners expect unemployment taxes to rise and fall with the economy. In fact, the tax rate fell steadily in Texas between 2004 and 2008. Commission officials say an increase in the employer tax would have been necessary even if Perry had taken the stimulus dollars, which would have provided $555 million to expand eligibility for the program at a cost of $369 million over five years.

Perry has described the unemployment expansion as an indefinite obligation that business owners would have to fund once the stimulus dollars are gone.

Perry's stand against the stimulus package gave him a platform to criticize the federal government — and, by extension, Hutchison — throughout the legislative session this spring. A bipartisan vote in the state Senate to overrule him and accept the dollars did little to slow him, and that effort later died in the House.

The governor's anti-Washington stand allowed him to reverse Hutchison's early lead in polls.

His campaign seemed to welcome the renewed attention on stimulus dollars Friday, eager to tout support for his position from the National Federation of Independent Business and the Texas Association of Business.

"The long-term consequences for our employers and job creators outweigh the short-term benefits of accepting the (unemployment insurance) money," Texas Association of Business spokesman Enrique Marquez said Friday.

Business interests, however, have not marched in lockstep. Bill Allaway, president of the business-backed Texas Taxpayers and Research Association, has said it would have been better to take the stimulus dollars and leave more money in employers' pockets during the recession.