Virginia Gov. James S. Gilmore III (R) sat down with Washington Post reporter R.H. Melton recently to discuss his first two years in office and plans for the second half of his administration. Virginia governors may not succeed themselves.

Some edited highlights:

Q: What have been the most rewarding aspects of the job?

A: Gilmore: The things that are most rewarding [are] that we have had great success in what we're trying to do--the successes we've had, even though we did not have a majority in the legislature. Nonetheless, we've been successful with the programs. We've been able to do what we said we were going to do, which I think adds a great deal to the public.

The examples of that, of course, are the substantive policies we've been able to do, the tax cuts that we've done. The car tax cut is, in fact, being effectuated; the food tax cut, I think, is a nice one; the military pay tax cut is a good one, particularly in the readership of The Post.

Q: You're returning a sizable piece of a more than $2 billion budget surplus to taxpayers; Maryland is doing no broad tax relief with its surplus. Why the difference?

A: You see a mind-set that is very typical of the 20th century, which is that in good times, prosperous times, where that just means, "The public can afford to pay more money to the government--so let's go increase taxes!" And in bad times, "Well, things are very tight so we have to raise taxes to make ends meet."

So any way you look at it, the philosophy is you increase taxes. It's because there is no grasp of the importance of a person's take-home pay for average, middle-class, working men and women. There's no grasp of it. And I did grasp it. I feel strongly about it.

You can't stop all taxation. You can't stop doing what government ought to do. But when you have an opportunity to cut taxes and enrich the lives of working men and women, you should do it.

Q: Is there now a tax-cutting political culture in Virginia?

A: There has been no culture in Virginia of cutting taxes, up until now. And in fact, the implementation of the car tax is still considered to be new in the minds of people who are in the legislature, Republicans and Democrats.

This grows out of the public, really. If the public did not feel strongly about this--if they didn't care--then this would not be occurring. The public themselves care about this: They have a sense of the value of their own money, and they express it.

Q: Is there a danger in being too reliant on polling that shows that we all would like to have money back from government?

A: When government needs revenue to do things, they need to have the public buy into it. The public has got to say we have to raise taxes or we have to raise revenues to do something. And it doesn't have to be a specific project. It can be broad-term things, it can be transportation, it can be education, it can be any number of major areas that the public might feel the need to build more on and they're prepared to make a personal sacrifice in order to achieve that.

And that's what you want government to do. Government ought not to just take because the taking's there, and then the legislators all come in and decide what their projects or their pork barrel is. It needs to rise up out of the people, a sense that there's a need for it.

Q: What do you do for an encore in the second half of your term?

A: At the Cabinet meeting [on Jan. 3], what I basically said was, "Look, we've had two great years, we've achieved these things, we've got great approval ratings." But my approach was--and this is what I said to them--was that this is the first Cabinet meeting, now, of the new millennium.

And I want to tell you I think we're starting fresh. I told 'em I thought we were virtually writing on a blank slate now, for the last two years. I felt entirely fresh, that many things had changed, the environment in terms of thinking about taxes had changed. A more conservative approach to government was in place, a new majority was here, astoundingly.

But this was all background. This was a new slate, if you will. Still, we have to write on it.

Q: What are those new themes?

A: Virginia must be prepared to grasp the future. Virginia must be prepared to be progressive and do exciting new things and not think in old ways in doing that. New doesn't just mean going off and being a liberal in the 1950s model--that's not being progressive in the first part of the 21st century.

Being progressive is defined differently, and it's defined as being able to move the state forward, but approach all the issues of governance that a government must do, but to find new and innovative and conservative approaches to it.

Q: Which is the more enduring legacy, your efforts on behalf of the high-technology industry or car tax repeal?

A: Both.

I will not demean the tax side of this, because it is a new line of thought, that is what is so critical about it. It's got two elements of it. Number one is keeping your promises.

The other side of it is the capacity to recognize that there ought to be limits upon the growth of government. Believe me, they'll spend it all, believe me. And they won't be very discerning about it.

It is an essence of political power: If you can deliver more pork barrel--the transmittal of tax money--it is the essence of political power. As people in government, we must have the discipline to restrain ourselves from that type of thing because it actually matters about people's individual pocketbooks.

The technology side is equally important.

Yes, Virginia is on the map and is going to be more on the map, because we are positioned to take advantage of the information technology revolution, not just the manufacturing side of things.

We are almost uniquely positioned to take advantage of it, and we will. And Virginia ought to be recognized for what it is, and we are.

Of course, what you are also seeing is another change: It used to be that Northern Virginia was just a bedroom community to Washington, and it is true--that there are still aspects of that, or we wouldn't be talking about expanding I-66.

But today, Northern Virginia is more than that. Northern Virginia now stands on its own feet. That growth is representative of activity--commercial and social and otherwise--being centered in Northern Virginia, not just as an appendage of the District.

That's the value of what the contemporary world looks like now.

I can't resist telling you: Northern Virginia must exist as a component of the overall commonwealth.

That's an entirely new concept. When we started talking in this campaign there was this old thought about how Northern Virginia was this entity and the rest of Virginia was this entity and there was this uncomfortable joining together of these two twins.

We need to recognize that it is all one big family, it is all one big unit.

Q: How does your talk of inclusion manifest itself?

A: The old concept of how you had to be a Virginian for generations in order to be a Virginian--baloney! Nice for the '40s, nice for the '50s, inapplicable to the '90s and . . . 2000. You're a Virginian now if you're here for six minutes, not six years, not 60 years.

It's a radical idea, but the only concept that gives Virginia the resources to be a contemporary society, a progressive, modern society. You have to have the human resources to advance, and you cannot do that unless you welcome people into the family of the commonwealth.

This is radical, this is different intellectually.

Q: What are the frustrations of the job?

A: The thing I found most frustrating about being governor was the real inability to work with individual members of the Democratic Party. That has not been possible. And the reason is that there was this grasping desire to not be the group that ever lost the majority, that ever actually had the control of the state wrested from their hand.

You just can't talk to them. To talk to the governor was somehow threatening. They know I'm a partisan Republican and what my long-term aspirations were for the democracy of this state, and they weren't for that.

They're in a minority now and as result of that, I'm hopeful that instead of them basically saying, "Don't talk to us, we're a bloc," we can now speak to individual members about common interests and common issues that are pertinent to their constituents. And that remains to be seen.

I'm hoping it's better, but it's too soon to know.

Q: Are there any areas where you wish you had the resources to do more?

A: No, I'm comfortable with the approaches, the balances we've struck. I mean, if you're looking for self-critique, I can't tell you that I think that there were any places where we went in the wrong direction. I feel like we've been very careful about the direction we've tried to take because you don't get a lot of time to backtrack. You've got one four-year term, and you've got to do it as well as you can do it. You don't have time . . . to go down blind alleys and turn around and retrace your steps. You don't have time; it's only four years.

I think I've grown over the past two years.

CAPTION: "Virginia must be prepared to grasp the future," Gov. James S. Gilmore III said while discussing his next two years.