By Spencer S. Hsu
Washington Post Staff Writer
Saturday, March 14, 1998; Page A01

RICHMOND, March 13 – After a day of political trash-talking, Virginia Gov. James S. Gilmore III and the General Assembly moved tentatively tonight toward a compromise plan to cut the car tax and build schools, as lawmakers prepared to work past their scheduled adjournment on Saturday.

Talks between the Republican governor's office and key legislators focused tonight on a two-year package put together by House Republicans that would direct $447 million to cutting the property tax on cars and trucks, plus $110 million in cash to build and renovate schools.

The new car-tax cut, which was quickly embraced by House Democrats, would be $46 million less than Gilmore has proposed, but similar to the amount in a plan that was passed by the House this week and then killed by the GOP-led Senate.

The earlier plan called on the state to sell $350 million in bonds to build schools; Gilmore and the Republican senators objected to the idea of borrowing money to build schools at a time when the state is flush with revenue.

Gilmore, who began the session by dismissing Democrats' calls for school construction, has seen the proposal hit home with many Republicans.

He indicated tonight that he might accept a compromise, which could take him out of the politically difficult position of rejecting schoolchildren's needs for new facilities.

But at the same time, Gilmore's staff members spent much of the day making it clear that they were prepared to end the legislative session without a car-tax deal, then spend a month whipping up support for it across the state before lawmakers return here April 22 to consider bills vetoed and amended by the governor.

Besides Gilmore – who has staked the success of his administration's first year on beginning his five-year, $2.8 billion plan to cut the car tax – the key players here heading into the weekend were the 21 Senate Republicans.

They, for the most part, have done Gilmore's bidding in the tussling over car-tax legislation.

Gilmore this afternoon promised Democrats he would not veto a compromise agreed to by the Senate.

"Our task now is to see if the Senate will come on board," said Del. Vincent F. Callahan Jr. (R-Fairfax), co-chairman of the House Appropriations Committee and an architect of the new plan.

That could be difficult; the initial response to the new plan from several senators was cool.

"The sentiment of most of us is, 'Pack it in,'" said Sen. J. Randy Forbes (R-Chesapeake), who also is the state GOP's chairman.

At a conference meeting late tonight, some senators balked at the new $557 million package, noting that they had passed only a $474 million car-tax cut without any school construction money.

"What you're saying to us is, you need $80 million more to do our thing . . . so start slicing?" asked Senate Finance Committee Co-Chairman John H. Chichester (R-Stafford).

Still, that lawmakers were meeting at all was a turnaround from the situation this morning, when Gilmore threatened to simply walk away from the legislature and take his case for his full car-tax cut on a campaign against Democrats.

Democrats said such a move could force the legislature to leave Richmond without having passed its two-year, $40 billion budget and would raise the possibility of a government shutdown this summer.

Throughout the day, Gilmore aides said that the governor would refile his original $493 million tax-cut plan – without any school construction plan attached – and dare Democratic lawmakers to reject it.

Gilmore spokesman Mark A. Miner already was peppering reporters with the theme of a spring campaign to cut the car tax.

"From the [session's] opening bell to the closing bell, the governor fought every day for tax relief, and it's the same old Democratic obstructionists that prevented it from happening," he said.

Democrats sniped back, accusing Gilmore of playing politics instead of governing.

"This governor is good at politics and bad for schoolchildren," said Del. Glenn R. Croshaw (D-Virginia Beach).

Other Democrats said that without a compromise, they would not allow the state budget to be passed.

Otherwise, Gilmore could recall lawmakers and force votes on item-by-item amendments that would leave Democrats helpless to advance their school-building plans.

"We get a compromise, or we go home without a budget," said Del. Thomas M. Jackson Jr. (D-Carroll), sponsor of school package.

But tonight, both sides expressed hope for a resolution.

Jackson had a private, 30-minute chat with Gilmore, and said he was cautiously hopeful.

"The governor has been talking with delegates and senators on both sides of the aisle and everyone remains committed to car-tax relief," Miner said. "The session isn't over until it's over."

"It looks like we made a little bit of progress with the executive branch today," said House Democratic Leader C. Richard Cranwell (Roanoke), who nevertheless warned that reluctance by GOP senators or the governor could wreck any compromise.

"Leaving without a budget is not a palatable option," Cranwell said. "But we're as close to a shipwreck as I've ever seen in 27 years down here."

For both sides, a settlement is attractive. Gilmore has lost several legislative skirmishes as he has focused on the car tax in his inaugural session, and he likely will veto two popular measures that sailed through the Assembly: a plan to expand Medicaid coverage to more than 100,000 children in low-income families and another to mandate sex education in public schools.

But a victory on the car-tax cut, his centerpiece issue, would allow Gilmore to declare the session a success.

Democrats, meanwhile, aren't eager for a reprise of Gilmore's "No Car Tax!" campaign that led the GOP to a sweep of all three statewide offices and control of the Senate last winter. The Democrats believe passage of a school construction package would indicate that their party is back on the right track.

Staff writers R.H. Melton and Ellen Nakashima contributed to this report.