Business coalition urges Va. to reject $130M in stimulus

RICHMOND

A coalition of Republican lawmakers and business interests is urging Virginia to reject $130 million in federal stimulus money that would expand unemployment benefits.

The group says strings attached to the windfall ultimately would require Virginia businesses to pay higher taxes and undercut their ability to create jobs.

House Speaker Bill Howell, R-Stafford County, assailed the stimulus program Thursday during a seminar held by the National Conference of State Legislatures in Washington.

"The federal money will only be there for two years, and after that businesses will be holding the bag," he said in a phone interview after his presentation. "That's just bad public policy."

Howell echoed arguments that the Republican governors of Texas, Louisiana and South Carolina have made recently for rejecting the federal windfall for unemployment benefits.

Pushing for acceptance of the stimulus is The Commonwealth Institute, a coalition that includes the Catholic Diocese of Richmond, the Virginia Poverty Law Center, the Virginia Coalition for the Homeless, the Virginia Interfaith Center for Public Policy, and Voices for Virginia's Children.

"These federal resources help ensure that states' unemployment systems can meet the new challenges of the shifting economy and that hard-working families are not left behind in the midst of one of the most severe economic downturns the country has experienced," the group said in a written statement.

Gov. Timothy M. Kaine has not expressed a view on the stimulus plan. He has an opportunity next month to propose legislation that would allow Virginia to accept the money. The General Assembly is to convene April 8 to review his amendments and vetoes of legislation that lawmakers approved over the winter.

"We're studying what we can do in time for the reconvened session," said Gordon Hickey, Kaine's press secretary.

The political stakes could be high. As President Barack Obama's hand-picked chairman of the Democratic National Committee, Kaine is a top supporter of the administration. A Kaine decision not to seek the money in Virginia, or the legislature's rejection of the money against his will, could be embarrassing to the governor and the president.

Virginia is slated to get $4.8 billion in stimulus money over the next two years. The $130 million to boost unemployment benefits is the only portion that faces rejection.

Virginia essentially restricts unemployment pay to residents who have unwillingly lost their jobs. To receive the stimulus money, the state would have to change its laws to accommodate at least two of four circumstances:

- Allow benefits for idled part-time workers who are unwilling to take a full-time job.

- Allow benefits for people who quit jobs to move with their spouses or for other "compelling" family reasons.

- Enhance benefits for unemployed people with dependents.

- Enhance benefits to unemployed people taking job-training classes.

The stimulus would pay for the increased benefits for two years. After that, critics say, Virginia businesses would have to support the expansion through higher unemployment taxes.

"It's tough out there, and raising costs on anyone who might be able to create jobs is not a good idea right now," said Clayton Roberts, president of Virginia Free, a state business lobby.

Virginia Free and the Virginia Chamber of Commerce oppose changing unemployment benefit laws.

Del. Sam Nixon, R-Chesterfield County, said the stimulus money would alter Virginia's benefits program to "an entitlement program." Nixon said it is "very unlikely" the Republican-controlled House would allow the change.

The Commonwealth Institute countered that when the stimulus money runs out, the General Assembly could rescind changes to the unemployment benefit laws.

Nixon, however, said he is unwilling to take that chance.

"We all know that once the legislature passes an entitlement," he said, "the chances of rolling it back are nil."

Warren Fiske, (804) 697-1565, warren.fiske@pilotonline.com