Some highlights of Gerald L. Baliles' first two years of his four-year term as governor of Virginia: 1986

January: Baliles sworn in to succeed fellow Democrat Charles S. Robb. Baliles identifies transportation as key to economic growth, calls for special legislative session later to address issue. He creates separate cabinet departments for economic development and natural resources.

June: Citing $18 billion in transportation needs, Baliles appoints Commission on Transportation in the 21st Century, proposes it consider abandoning pay-as-you-go reliance on gas tax in favor of new taxes and borrowing.

September: General Assembly, in special session, approves largest tax increase in state's history, including one-half percent increase in sales tax, to finance $1 billion-a-year transportation program. 1987

January: Baliles calls 1987 "the year of trade," promises to develop new markets overseas for Virginia products, to persuade foreign businesses to locate in the state, to establish foreign language academies for future business leaders. He promises to sign legislation for a referendum on a lottery.

February: Prodded by Baliles, legislature bans household use of phosphates to help clean up Chesapeake Bay, requires motorists to wear seat belts and hunters to wear blaze-orange clothing. Baliles wins tax changes to conform with new federal code despite Republican complaints that his package penalizes middle- and upper income taxpayers.

April: Governor makes first of three trade-oriented foreign trips, by year's end visiting China, Europe, Japan, Taiwan and Korea. Trips cost taxpayers $248,000; Baliles says state recovers more than that from one Japanese merchant alone who agreed to buy $1 million in Virginia peanuts.

June: At Virginia Tech's commencement, Baliles rebukes administrators there for allowing scandal-ridden athletic program to be placed ahead of academics. Tech's president, William E. Lavery, subsequently resigns.

July: Baliles elected vice chairman of National Governors Association, setting stage for his elevation to president in July 1988.

November: Voters approve state-sponsored lottery, over opposition of Baliles and most other political leaders, setting stage for budget windfall in last year of governor's administration.

December: State sells 900-bed penitentiary in downtown Richmond to Ethyl Corp. for $5 million, keeps corrections on schedule to close century-old institution by 1990. Two new prisons, with 1,700 beds and costing $110 million, planned for Greensville and Buchanan counties, with latter doubling as economic aid to double-digit unemployement in Southwest Virginia. 1988

January: Baliles unveils two-year, $22.5 billion budget that emphasizes catch-up programs for community-based mental health programs, medical help for poor, elderly and infants, steps to equalize quality of education between rich and poor districts.