Virginia House Rejects $125M in Stimulus Cash

RICHMOND, Va. -- Virginia's Republican-run House of Delegates rejected a proposed expansion of unemployment benefits Wednesday, along with $125 million in federal stimulus cash to pay for it.

On a mostly party-line 46-53 vote, the House turned down amendments by Democratic Gov. Timothy M. Kaine that were necessary to make Virginia eligible for the federal aid.

The vote mirrored a debate raging in state capitols across the nation over whether to accept the federal stimulus cash to cushion soaring unemployment rates in the worst economy since the Great Depression.

Republican governors in several states, including Mississippi, Louisiana, South Carolina, Alaska and Texas, say they will reject at least part of the cash because of mandates by a Democratic Congress and President Barack Obama to broaden state unemployment insurance programs.

Wednesday's vote makes Virginia among the first states to definitively repudiate the unemployment insurance expansion.

The vote was also a stinging rebuke to Kaine, Obama's hand-picked chairman of the Democratic National Committee, and becomes a major issue in Virginia's elections this year for governor and all 100 House of Delegates seats.

The putative Republican nominee for governor, Robert F. McDonnell, on Wednesday came out in opposition to Kaine's enhanced benefits proposals.

Kaine's amendments would have expanded jobless benefits for the first time to part-time workers and doubled the period during which people who have lost their jobs can receive benefits if they are in retraining programs.

Virginia's unemployment rate of nearly 7 percent in February is almost double its 3.8 percent rate one year earlier, but 34 of the state's 136 localities had double-digit rates.

The state's highest rate is Martinsville, Va., whose apparel mills, furniture factories and tobacco industry have been reeling for years. House Democratic leader Ward Armstrong, who represents the city, warned that the if the measure is defeated, Virginia's $125 million goes to other states that accept it.

"So we're at a defining moment and a kind of a crossroads in this commonwealth, but this is not a fork in the road where you choose business one side and employees on the other," Armstrong said.

Republicans in both the House and Senate took aim at expanding benefits for the first time to part time workers and what they said amounted to an open-ended tax increase on employers to cover the costs of sweetened unemployment benefits after the $125 million federal subsidy plays out.

"Because the federal government wants to dangle money in front of us -- and I know that's very tempting -- to change some sound policies that have worked so well for this commonwealth for so many years," said Del. Kathy Byron, R-Campbell County.

"It is not stimulus. Paying workers not to work does not promote economic growth," Byron said.

In the 40-member Senate where Democrats rule, Kaine's amendments survived on a strict party line vote of 21-19.

Sen. Frank Wagner, R-Virginia Beach, said he had been forced to lay off 45 workers from his shipbuilding business and more layoffs were inevitable, so he had planned to back the amendments.

"But it has become clear to me that this part-time provision, flawed as it is, will probably stay on the books once we put it there," he said, urging a vote against the amendments.

Sen. Kenneth Cuccinelli, R-Fairfax County, said Kaine and legislative Democrats used the dire economy to force through unpalatable policy, just as Obama and congressional Democrats stampeded stimulus legislation into law.

"We are being used. Actually, our constituents and now the unemployed are being used by this administration to put a gun to the head of the General Assembly and force through a bad bill that would never survive on its own," Cuccinelli said.