Louisiana's Bobby Jindal, a Republican, became the first governor Friday to refuse officially a part of his state's share of the $787 billion stimulus bill, while President Obama warned the nation´s mayors to spend stimulus money wisely.
While some governors were subtly backing off previous statements that they wouldn't take their share of the windfall, Mr. Jindal issued a statement saying Louisiana would not participate in a program aimed at expanding state unemployment insurance coverage.
"Increasing taxes on our Louisiana businesses is certainly not a way to stimulate our economy. It would be the exact wrong thing we could do to encourage further growth and job creation," said Mr. Jindal, although the Louisiana legislature could override his decision.
He said accepting the money would have required a change in state law and, after federal money runs out in three years, would have led to a $12 million increase in taxes on his state's businesses to keep funding the benefit. He also warned other states against the program.
"I strongly suggest that other states also look closely at this provision in the bill so they can also avoid ultimately passing on a significant tax to businesses that will be left paying for this expansion of benefits when the federal money dries up," he said.
For his part, Mr. Obama told the mayors who gathered in the White House´s East Room that the adminstration will be on the prowl to stop wasteful spending.
"The American people are watching. They need this plan to work. They expect to see the money they've earned, they've worked so hard to earn, spent in its intended purposes," he said.
The spending bill includes tens of billions of dollars in aid to states to help them keep government workers on their payrolls, and includes separate lines of money to build road and other infrastructure projects throughout the country.
But besides Mr. Jindal, South Carolina Gov. Mark Sanford and Alaska Gov. Sarah Palin have said federal money may be coming with too many strings attached and may leave the states on the hook to fund the positions and projects when the stimulus money is gone. All three governors are being widely considered as possible 2012 presidential candidates.
"We may reject or accept some or all of the money. We just don't know at this point," said Joel Sawyer, communications director for Mr. Sanford. "We're going line by line to see what's in there and what isn't and what strings are attached."
He conceded it would politically perilous for Mr. Sanford to decline the aid. "It probably will not go over too well if the governor decides to reject some of the money," Mr. Sawyer said.
On Thursday, Texas Gov. Rick Perry became the first to acquiesce completely, as he accepted Texas' $17 billion share of the funds.
"I believe there are better ways to reinvigorate our economy and believe [the stimulus] will burden future generations with unprecedented levels of debt," Mr. Perry wrote in a letter Thursday formally accepting Texas' share of the funds.
He previously threatened to "look a gift horse in the mouth" with respect to Mr. Obama's economic rescue.
Mr. Jindal's resistance to the stimulus prompted blistering attacks from Louisiana Democrats.
"He seems to be trying to play both sides of the fence. He might refuse some of the money, he might take some of the money," said Louisiana Democratic Party spokesman Scott Jordan.
"We've got almost $2 billion, education, health care, coastal restoration," he said. "The notion that Governor Jindal would turn down money that would help in those areas ... is just crazy."
Congressional Democrats, anticipating that some Republican governors might reject the money, wrote a clause into the bill allowing the money to be disbursed over the objection of governors if the state legislatures pass resolutions accepting the money.
House Majority Whip James E. Clyburn, South Carolina Democrat, wrote the clause into the bill to circumvent early threats by Mr. Sanford, a provision that won him praise for his foresight from the mayors who met with Mr. Obama at the White House.
New Orleans Mayor C. Ray Nagin said after the meeting that Mr. Jindal's tough talk, though he hadn't at the time officially said "no," was probably about his political ambitions.
"The governor of the state of Louisiana is a Republican. I think he's been tapped as the up-and-coming Republican to potentially run for president the next time it goes around. So he has a certain vernacular and a certain way he needs to talk right now," Mr. Nagin said.
Still, Mr. Nagin said he expects the state to use the legislative work-around provision.
"I told the governor personally, any dollars he does not want, we will take them gladly," he said.
Mrs. Palin already has pushed the decision onto the state Legislature while still warning of "strings" attached to the federal handout.
"The governor has said that she would be wary of federal money that would create ongoing appropriations obligations that would fall to the state once the stimulus injection is gone," said Bill McAllister, spokesman for the one-time vice presidential candidate.
Mr. Obama has spent the days since he signed the bill urging those who will spend the money to be vigilant.
His administration has created recovery.gov, which he says will allow taxpayers to track all of the bill's spending and to submit comments if they see wasteful items.
Mr. Obama said he will call out any federal agency that he thinks is wasting money and will do the same to state and local officials. On Thursday, Mr. Obama created a White House Office of Urban Affairs to help him coordinate policy toward cities.
As the meeting with the mayors began Friday, those present gave Mr. Obama an extended round of applause, and Vice President Joseph R. Biden Jr. could be heard over the microphone saying, "They haven't been here in a while.
"Welcome back to the White House," he told them when the applause died down.
It's the second time Mr. Biden has pointedly implied that groups were kept out of the White House under President Bush. Mr. Biden made the same "welcome back" remark to union leaders in a similar East Room ceremony in the administration's earliest days.