By Gary Robertson
RICHMOND, Virginia (Reuters) - Virginia's Democratic governor, Terry McAuliffe, and the state's Republican-dominated House of Delegates face off on Monday in the start of a special legislative session on Medicaid expansion.
The impasse over Medicaid, the federal health care program for the poor, is holding up passage of a two-year, $96 billion budget. If the two sides fail to reach a deal by July 1, the state government could grind to a halt.
Legislators deadlocked over the budget during a 60-day regular session that ended March 8.
McAuliffe, former chairman of the Democratic National Committee and close friend of former President Bill Clinton, made expanding Medicaid coverage to more than 400,000 Virginians a top priority during his gubernatorial campaign in 2013.
During a swing across the state last week to promote his program, McAuliffe pledged, "We will get this done this year."
McAuliffe, who led a Democratic sweep of statewide offices in the 2013 elections, is expected to release his own budget proposal later on Monday. Republican leaders are also seen putting out their own spending blueprint on Monday.
Under the current Medicaid proposal, the federal government would pay the full cost of Virginia's expansion through 2016, then pare its contribution to 90 percent by 2020.
McAuliffe has argued that accepting $2 billion in federal funds to expand Medicaid under the Affordable Care Act would release money that could be used to create jobs, raise state salaries, bolster pensions and come up with health reforms.
But Republicans have called the move unaffordable.
"We're not going to do Medicaid expansion in the budget," Kirk Cox, majority leader of the House of Delegates, said last week.
Republicans have spent much of March pointing out the Affordable Care Act's shaky launch and highlighting the sizable salaries earned by executives at hospitals where McAuliffe has touted his proposal.
Republicans in Virginia's lower legislative chamber defeated Medicaid expansion 67-32 in a test vote during the legislature's regular session. Cox said no minds had changed since then.
He reiterated Republicans' desire to separate consideration of the budget from a discussion of Medicaid expansion.
House Republicans contend the federal government cannot afford to make good on its promise to pick up most of the Medicaid tab.
The evenly split Senate is leaning toward supporting McAuliffe's expansion program.
Cox has said he had heard from numerous Virginia localities that are concerned that if legislators do not pass a state budget soon, their budgets will be imperiled.
(Editing by Ian Simpson and Jeffrey Benkoe)