A. Linwood Holton Jr., the first Republican governor of Virginia in this century, said Friday night that the national GOP should renounce its "segregationist appeal to Southerners," and he called on the state party to rethink its priorities.

Holton, the governor from 1970 to 1974, also said in interviews during a conference at the University of Virginia that he remains optimistic the GOP "will revert to reason and will find a way again to serve all of the people."

Holton said the party appears "overly obsessed" with tax cuts at the expense of other services. Recently, business and civic leaders in Northern Virginia urged the state to consider creating new sources of revenue, possibly through a gas tax, to fund transportation projects.

Holton noted that he and fellow former governors Mills E. Godwin Jr. and Gerald L. Baliles all raised taxes but that they are best remembered for creating the community college system, improving transportation and instituting environmental protections.

In a June speech, Baliles, a Democrat, urged the state to adopt what he decribed as a more realistic approach to funding transportation projects throughout Virginia. Gov. James S. Gilmore III (R) has launched a commission to study transportation solutions but does not favor new taxes to fund them.

Holton spoke to the Governors Project, a University of Virginia program looking at the record of Virginia's former governors.

Regarding the national Republican Party, he said: "It is still possible that the Republican Party will develop as a 'middle-of-the-road party' and that we will abandon the segregationist appeal to Southerners which has been so evident since I and the other 'New South' governors completed our terms.

"But Republicans, in and out of the U.S. Congress," he said, "are espousing such extreme measures as to be destructive of our credibility." Holton said the party's attitudes about handguns and automatic assault weapons and federal interference in private decision-making are driving voters away.

Mark A. Miner, a spokesman for Gilmore, disputed Holton's claim that the party still suffers from racial prejudice, and noted that Gilmore was elected easily after advocating tax relief.

"Gilmore believes that tax relief is good policy," Miner said.