The Virginia Senate voted 21-19 in favor of accepting the money and the state unemployment-system rule change. The change would have made thousands of part-time workers and residents in approved job-training programs eligible to receive benefits.
Virginia's jobless rate is 6.7 percent, with almost 300,000 Virginians unemployed, the state labor department said.
But the legislature's lower House of Delegates rejected the bill 53-46, arguing the unemployment-system change would translate into higher business taxes once the stimulus money was exhausted, The Washington Post reported.
"We are being used," Republican state Sen. Ken Cuccinelli said. "Actually our constituents ... who are now unemployed are being used by this administration to hold a gun to the head of this General Assembly with the assistance of the governor to force through a bad bill."
Gov. Timothy Kaine, chairman of the Democratic National Committee, had pushed the bill as the state legislature convened for a one-day session, the Post said.
After the vote, Kaine berated legislators, saying they seemed to be telling unemployed Virginians: "We don't care. Fend for yourself," the Post said.
Kaine hinted he might try to find another way to accept the federal money, the newspaper said.