Virginia Gov. Bob McDonnell got his budget today, when the Senate Democrats relented and passed the funding mechanism to keep the state operating. Some last minute arm-twisting by McDonnell, including a letter obtained by Right Turn, to Sen.Charles Colgan (D) promising continued support for the Dulles Metrorail project (which had hung up the budget deal yesterday) was enough to flip the Democrat, and pass the budget by a 21-19 margin.

But when I sat down with the governor in his Richmond office this morning, the deal wasn’t done. He was irate that Senate Democrats were putting at risk construction and building projects and had “dramatically overreached” in such a partisan manner.

The Democrats were on their third excuse for not passing a budget. First they had complained about the power-sharing deal, then about K-12 and healthcare spending. After McDonnell met their concerns on the latter two areas of the budget, Democrats, tried to hold the state hostage for, as McDonnell put it “one earmark” for 11 miles in one area of the state. Some had been candid about holding the budget hostage until a “power sharing” arrangement was worked out in the 20-20 divided state senate. McDonnell was blunt, “They essentially lost control of the senate and lost in districts they redrew. So they are frustrated. They were going to use the 20 votes to slow down the process.” The governor, by contrast, was in a relaxed mood, recognizing he had the Democrats in a corner.

I asked McDonnell before the deal was closed if the Democrats were going after him personally, trying to embarrass him just as talk about his VP prospects had heated up. He demurred slightly, saying only, “There is no question that the minority party always makes a sport of going after the governor.” He had chastised the Democrats publicly, decrying the “serious body blow” to the usual comity that often pervades Virginia state politics. In the end, the Democrats, or at least Colgan, blinked.

This wasn’t the first contentious issue to hit the governor this year after what had been two years of relatively smooth sailing with a Republican House of Delegates and a Democratic state senate.

McDonnell is most proud of “the fact we manage the fiscal resources of the Commonwealth well.” He points to the $6 billion deficit he eliminated without tax hikes while also making “historic” investments in education, pensions and transportation. He attributes the state’s low unemployment rate (5.7 percent) to the certain refusal to raise taxes and fiscal discipline he brought to the state. He told me that fiscally managing the state “translates into job growth,” adding that this is the “same thing” that will be at the heart of the presidential election.

I asked McDonnell if he was satisfied with the progress on transportation in the state. He candidly told me, “No, there is a lot more to be done.”When he got into office, he conducted an audit, because he believed the legislature wouldn’t approve new funds unless they were satisfied the transportation department was being run well. “We found $1.4 billion in improperly used resources. I reorganized VDOT and put in a new director, the first African-American [to hold the job].” In 2011 he proposed $4 billion for transportation, raised mostly by bonds. He told me this was the right way to go given the state’s AAA bond rating and the availability of low interest rates. He said, “We got that passed...$2 billion in projects out on the street.”

This year things didn’t go so smoothly. McDonnell proposed increasing the portion of sales taxes allocated to transportation maintenance from 1/2 a cent to 3/4 of a cent. “That would have gone a long way,” he said. Democrats insisted on new money and McDonnell refused. He conceded, “I realize there is still work to be done.” The pool of revenue from gas taxes is not increasing and is not indexed for inflation, he acknowledged. “It’s not going to get any better. The money isn’t going to be there. It’s just math.” He told me, “We’ll work on it.”

The governor in his campaign had promised to privatize the state-owned monopoly on distilled spirits (other than wine and beer), but ran into a buzz saw of opposition. Lobbying interests and a good number of both Democrats and Republicans opposed the measure, and McDonnell didn’t bring it up again this year — “There are only so many battles you can fight.” “It was very disappointing,” he says, but he also contends privatization is inevitable. “It’s an 80-year old vestige of Prohibition,” he argued.

McDonnell also had a rough go of it earlier this year over proposed legislation for mandatory sonograms for abortions, ducking serious political damage. The measure, which he hastens to point out was not his idea, added to the existing “informed consent” law with the requirement that women be shown the sonogram. ”Twenty-three states have some form” of such legislation, he says. When a firestorm erupted over the issue of “invasive sonograms,” the governor stepped in: The legislation was modified to exclude such procedures, ending the flurry of controversy. But McDonnell doesn’t give too much ground. He emphasized, “I am singularly committed to embracing the culture of life.” One can conclude that McDonnell, who has earned his stripes as a pragmatic governor, decided this was not an issue on which to plant the pro-life flag.

The other contentious issue for him has been voter ID. Virginia actually has such a statute but a new measure proposed excluding those without ID from voting and requiring them to return to the polls with ID. He told me the issue is actually a tiny one in the state: An audit showed that only 1/4 of one percent of voters would have been disqualified for lack of ID. However, the former attorney general and Army lawyer argued there was a need to balance the “rock-solid” requirement for clean elections with not “creating roadblocks and barriers to citizens participating in democracy.” A compromise was reached allowing voters to cast provisional ballots and requiring no further ID if the signature at the polls for voting matched the individual’s signature on his voting card. He told me, “I’m hoping it will pass. It strikes that proper balance.”

In Part 2 of the interview McDonnell talks about Obama, Mitt Romney, and his VP prospects.