By Gary Robertson
RICHMOND, Va., March 26 (Reuters) - Virginia's legislature has recessed without reaching agreement with Democratic Governor Terry McAuliffe over a budget or Medicaid expansion.
McAuliffe, a former Democratic Party fundraiser, and the Republican-dominated House of Delegates are deadlocked over a two-year pilot expansion of Medicaid, the federal healthcare program for the poor the governor has proposed.
House lawmakers meeting in a two-day special session defeated McAuliffe's proposed $96 billion two-year budget late on Tuesday. The House then passed its own version of the budget without Medicaid expansion, seen as a priority for the governor, before adjourning.
The Democratic-controlled state Senate will reconvene April 7 to take up the budget fight anew. A budget must be approved by June 30 or risk state operations starting to shut down.
Republicans are asking McAuliffe to deal with the budget and Medicaid in separate sessions.
"We would be more than happy to debate Medicaid in a special session," said Kirk Cox, Republican House majority leader. "I think is afraid he loses all his leverage without the budget."
McAuliffe, who made Medicaid expansion the centerpiece of his gubernatorial campaign last year, has not responded to the rebuff.
But he has said 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 implement health reforms.
(Editing by Ian Simpson and Gunna Dickson)