Virginia Democrats are smarting from recent setbacks, which many party regulars say may bode ill for their fall legislative elections and next year's U.S. Senate race.

First, Democratic Party Chairman Kenneth R. Plum, a state delegate from Fairfax, held a Capitol news conference July 13 on issues in the November races but was unable to offer specifics on the financing of several proposals, including tax relief for elderly homeowners and dedication of local taxes for transportation improvements.

Later that same day, former governor George Allen (R) announced he had raised $2.5 million for the 2000 Senate race, while allies of Sen. Charles S. Robb (D) conceded that their candidate had raised only $1 million so far.

The day's events further dispirited a party bracing for the possibility that the GOP will gain control of the General Assembly in November, when every legislative seat is on the ballot. Similarly, Allen is leading Robb in most polling.

"People on both sides of the aisle think Republicans have a pretty good chance of getting both the House and Senate," said Jackson E. Reasor Jr., a Democrat from southwest Virginia who served seven years in the state Senate before retiring recently to become a utility company executive.

A Northern Virginia Democrat who served in the state Cabinet a decade ago concurred, saying: "Demographically and politically, the default position is now Republican. The general run-of-the-mill Democrat can't run in Virginia. The general run-of-the-mill Republican can."

By the end of that week, when a fresh round of campaign finance reports were filed, it was clear that Gov. James S. Gilmore III (R) held the upper hand in fund-raising for the fall, sitting on more than $773,000 in two political action committees he controls, while fellow Republicans in the legislature had $405,000 in their political action committee.

Democrats in the state House and Senate had $762,000 in their PACs, their reports said.

Yet many Democrats are optimistic about the campaign season.

"It's incredible, the candidates we have," said Susan R. Swecker, a Richmond-based consultant who serves on the Democratic National Committee. "We're insulated in Richmond, but there seems to be enthusiasm at the local level."

Added Senate Minority Leader Richard L. Saslaw (D-Fairfax): "It's a crap shoot right now. People shouldn't be making predictions, and can't. Things heat up only after Labor Day."

Still, in the dog days of summer, there is something disquieting in the Democratic ranks, a deep yearning for victory in the fall, for Robb next year, but most of all in the 2001 governor's race, when many of the faithful have their hopes pinned on former U.S. Senate nominee Mark R. Warner.

There is also a sense, indicated by more than a dozen interviews with party activists last week, that Democrats have been outfoxed by Republicans in recent years, that they lacked forceful leaders and gave way to the GOP on ideas that resonated with voters.

Harris N. Miller, a former Democratic Party chairman for Fairfax County who now runs an Arlington-based national lobbying group of high-technology companies, said he was at a fund-raiser at Warner's home where the talk was all "meat and potatoes" about traditional constituencies but not about the region's burgeoning Internet industry.

"No one stood up and said we're going to bring high technology to the inner city, to rural areas, which kind of surprised me," Miller said. "That's a mistake."

Miller, a close friend of Gilmore's opponent in 1997, former lieutenant governor Donald S. Beyer Jr., who had close ties to the high-tech community, added, "The Democrats had some leadership on the issue for a while, but the Republicans have done a good job of catching up and in some case surpassing" Democrats.

To Miller and many other observers, the party needs to expand its base, reaching beyond its traditional support groups such as organized labor, teachers and farmers. Robb gets it, Miller said: Virginia's junior senator, in the fight of his political life, recently led a delegation of eight senators, including Senate Minority Leader Thomas A. Daschle (D-S.D.), to visit several technology companies.

But Gilmore and his generation of Virginia Republicans also get it. Twenty-four hours after the Democrats' bad Tuesday, Gilmore was squiring GOP presidential hopeful George W. Bush around Northern Virginia, first to a summer technology camp for children and then to a $1,000-a-plate luncheon at Tysons Corners with technology company executives.

Republican strategists said they painstakingly chipped away at the hold on state politics Democrats have enjoyed for years, particularly in the legislature.

"All of the ideas and initiatives have come from the Republican side," said Frank B. Atkinson, one of Allen's closest advisers, who has published a history of the state party.

"I can tick them off: abolishing parole, raising academic standards, lowering tuition, reforming welfare, abolishing the car tax," Atkinson said. "Republicans not only articulated the concept, but told you how to get it done and did it.

"There's not a case for making a change right now," he said.

Dick Leggitt, a longtime GOP operative and senior Gilmore adviser, said the Democrats' fatal error has been in failing to keep up with an ever-changing Virginia, rehashing issues from 20 years ago instead of reaching out to new arrivals to the state, its huge military presence and pocketbook issues that affect the middle class.

"They're playing in a whole other universe," Leggitt said. "The world has moved on."

Democrats are sensitive to such stings, which is why they paired Plum's appearance in Richmond with an earlier--and more organized--news conference at the Franconia-Springfield Metro station to highlight traffic congestion.

Democratic Party leaders said the media events were the first in a series leading up to the elections. "We're always being criticized for not having a message, but we're getting out there with broad themes," said Craig K. Bieber, the party's executive director, who acknowledged that Plum was poorly prepared for his appearance at the Capitol.

Indeed, experienced Republicans are by no means writing off the party this year or next.

"I wish the election were tomorrow, but I never count till it's over," said John McLaughlin, who has polled extensively in the state for Allen and Gilmore. "Don't underestimate the Democrats, that would be a mistake.

"They're very smart," McLaughlin added. "You have to watch your enemies in the Democratic Party, but you have to give 'em respect."

Still, many party sympathizers are expectant about the future of Virginia Democrats.

"At the state level, they're searching," said Fairfax County's Miller.