By Spencer S. Hsu
Washington Post Staff Writer
Saturday, March 7, 1998; Page D05

RICHMOND, March 6—Gov. James S. Gilmore III vowed today to force low-income working families to help pay for extending health insurance to their 83,000 children, criticizing a more generous legislative plan as "the largest expansion of welfare benefits in Virginia history."

Hours earlier, the Republican governor also demanded that lawmakers pass his original versions of bills that would cut the car tax and pay for thousands of additional schoolteachers.

Gilmore's attack on the health initiative could force moderates in his own party to choose between him or a popular program, which passed the Senate today, 29 to 10, and the House last week, 59 to 39. Mindful of that, the governor tried to recast the idea of giving health insurance to poor children as a return to failed welfare policies of the past.

"I have always believed we should give poor families a hand up, not a handout," Gilmore said, adding that the General Assembly plan "costs far too much and serves far too few children."

He added, "I will not be the governor who presides over the largest expansion of public assistance at the expense of Virginia taxpayers."

Supporters of the legislative health insurance plan, including several Republican lawmakers, say the administration is guided more by conservative opposition to government social spending than by disagreement with the plan's specifics. They say Gilmore administration health officials have failed to propose compromise legislation.

"I am disappointed that the administration still does not seem to understand the specifics," said Sen. Jane H. Woods (R-Fairfax), chairman of the Health and Education Committee. "I do not consider Medicaid or subsidized health insurance to be welfare. These are working families, and I don't attach a stigma to children accessing health care."

Both chambers have passed funding for scaled-down versions of a legislative commission proposal to cover 100,000 children. Under a 1997 measure passed by Congress, Virginia would spend $37 million on the program and receive about $60 million in federal aid.

The plan would extend Medicaid insurance to children in families with incomes up to 150 percent of the federal poverty level, or $24,075 a year for a family of four. It would provide similar, non-Medicaid benefits to families with incomes up to $32,000, or 185 percent of the poverty level, with minimal co-payments for doctor visits.

Gilmore aides want to use a less-comprehensive state employee health plan, instead of Medicaid, as the basis for the benefits, require co-payments from the lower-income group and require the higher-income group to pay full premiums.

Last week, Gilmore administration and state Medicaid officials said the legislative version would cost $9 million more or cover 20,000 fewer children than the administration's plan.

Gilmore will send his amendments to the bill to the full House and Senate on Monday. The governor is expected to act on about 30 bills awaiting his signature, veto or amendments.

Delegates also are scheduled to take up a bill that would relax an ethics measure passed last year at the insistence of then-Gov. George Allen. Lawmakers from both parties say they favor loosening a law that required legislators and lobbyists to disclose gifts whose total value tops $50 a year. They would raise the limit to $100.

The $50 threshold is "sorta silly," said Del. Glenn R. Croshaw (D-Virginia Beach), suggesting that it covers no more than a couple of dinners and a cup of coffee. "At some point, you're wasting paper," he said.

Also today, Gilmore turned up the heat on budget negotiators and House Democrats over his car-tax cut. Lawmakers said Gilmore drew a line in the sand with the 12 members of a bipartisan budget conference committee that must reconcile rival House and Senate car-tax plans by Tuesday.

In an open letter Gilmore released later, he wrote, "It is absolutely essential that the conference report provide car-tax relief along the lines of the proposal that I submitted," referring to his full $493 million tax cut plan.

Hours later, the Senate killed a House bill on a party-line vote, 21 to 19, that would have sent $110 million in state lottery profits to local school districts as construction aid. The Senate also voted 25 to 15 to revive its streamlined, $474 million version of Gilmore's car-tax cut.