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TALLAHASSEE, Florida (Reuters) - Florida's Tea Party-backed Governor Rick Scott on Wednesday rejected $2.4 billion in government funds to build a high-speed passenger rail line, prompting a sharp rebuke from Washington as political tensions grew over the federal budget deficit.
"Government cannot spend more than it takes in," the Republican governor said in an announcement making clear the rail project would not go forward.
"Government has become addicted to spending beyond its means and we cannot continue this flawed policy," he added.
At a news conference in the state capital, Scott strongly criticized President Barack Obama's budget proposal for 2012 unveiled on Monday and said federal grants earmarked for Florida to begin work on a high-speed rail link between Tampa and Orlando would be turned down.
The newly elected governor, a former healthcare executive and uncompromising fiscal conservative, cited what he described as likely cost overruns for the project as the main reason for rejecting the federal funding.
The potential overruns could put Florida taxpayers on the hook for billions of dollars, he said, laying out his objections to a project championed by the Obama administration and U.S. Transportation Secretary Ray LaHood
"The truth is that this project would be far too costly to taxpayers and I believe the risk far outweighs the benefits," he said.
In December, the Obama administration gave Florida about $342.3 million in additional funds for the rail line, meaning that Washington had committed to covering the full $2.4 billion projected cost of the project.
That $342.3 million was part of $1.2 billion intended to fund high-speed rail projects in Ohio and Wisconsin which had been spurned by newly elected governors in those states.
Saying he was "extremely disappointed" by the decision, LaHood said Scott's stated reasons made no sense, since any financial risk for Florida had been eliminated by a federal requirement that private businesses competing for the project absorb any cost overruns and operating expenses.
He said in a statement the project spurned by Scott "could have supported thousands of good-paying jobs for Floridians".
"It is projects like these that will help America out-build our competitors and lay the foundation to win the future," LaHood said.
The Florida Department of Transportation had been expected to invite formal bids for the high-speed rail project this spring, and as many as eight teams made up of firms that have built and operated bullet trains in Japan, Germany, France, South Korea and China had been expected to participate.
The Tampa to Orlando line would have been the first phase of a longer line to Miami.
The $814 billion federal stimulus plan passed last year included $8 billion to begin building a network of "bullet trains" across a country that has long relied on interstate highways for passenger travel.
Scott's announcement drew immediate criticism from Florida Democrats, who have pointed to his recent state budget proposals as highlighting a seeming disconnect between fiscal conservatives and ordinary Americans reeling from unemployment and the loss of homes and benefits in the recent recession.
"Over the past month, Governor Rick Scott has become a one-man wrecking crew for Florida's economy, putting at risk over 100,000 jobs as he tries to impose his extreme philosophy on the Sunshine State," state Democratic Party spokesman Eric Jotkoff said in a statement.
The governor's budget proposals for Florida include calls for hefty cuts in state spending on education and healthcare to close a deficit of nearly $4 billion, while slashing corporate income and property taxes.
Florida, an epicenter of the U.S. mortgage crisis, is struggling with a record-high 12 percent unemployment rate, the third highest in the country.
The Tea Party, a loosely organized conservative political movement that advocates smaller government and less taxes and regulation, is a key supporter of Scott.
Florida Democratic Senator Bill Nelson, who ridiculed Scott as someone who might have opposed the interstate highway system built under President Dwight Eisenhower, said he had talked to LaHood about the possibility of pressing ahead with the bullet train without the state government's participation because it uses federal funds.
"We are exploring ... how we could keep this project going forward," Nelson told the Palm Beach Post newspaper.
Writing by Tom Brown; additional reporting by Lisa Lambert and John Crawley in Washington; Editing by Pascal Fletcher and Philip Barbara