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McAuliffe (D) bagged big economic development wins in his freshman year, resulting in $5.5 billion in private economic investments in the state — more than double, he says, what any previous Virginia governor pulled off in his first year. But he also lost a bitter fight with the Republican-controlled General Assembly to expand Medicaid under the Affordable Care Act, his marquee campaign issue and chief legislative priority. As the legislature prepares to return to Richmond on Wednesday as resolute as ever about opposing Medicaid expansion, McAuliffe’s renewed call for such a change is widely seen as symbolic. He has promised to try a more hands-on approach with lawmakers who bucked him last year, but he has decided that jobs, an issue with broad bipartisan appeal, will be his chief cause in the session. (Vozzella and Portnoy, 1/10)

After losing a bruising battle over his top campaign promise of expanding Medicaid to 400,000 Virginians last year, the governor again included the issue in the amended budget proposal he unveiled in December. At the same time, he seemed to acknowledge how little chance the proposal has of passing by failing to factor the financial savings into his overall spending plan. (Portnoy, 1/10)

Taking advantage of a growing economy, Gov. Jerry Brown proposed a $164.7-billion budget Friday that would boost funding for schools, community colleges, courts and home care for the elderly and disabled. ... The governor is also grappling with higher costs as more Californians sign up for Medi-Cal, which provides healthcare to the poor, under President Obama's signature law. But Brown did not propose higher payments for doctors who participate in the program or set aside money to provide coverage for immigrants who are in the country illegally — two priorities for activists and some top lawmakers. Nor did he include money for the long-term expense of providing healthcare to retired public workers, although he said he would work with unions to address the issue. (Megerian, 1/9)

Brown warned of rising health care obligations that, without proper funding, could leave the state hundreds of billions of dollars in the red. Medicaid expansion under the Affordable Care Act has added more than 4 million new low-income residents to California’s program, and Brown said he would begin negotiating with state public employee unions over the amount of money they contribute to their own health-care costs, a significant and rising portion of the budget. (Reid, 1/9)

Yet that pragmatism is likely to be tested in the 24 states where Republicans also control the legislature and where bills are expected that would further restrict abortion, roll back the Common Core education standards and ensure that the president’s health care law does not gain a foothold in any more states. Many conservative lawmakers in these states see a turn toward moderation by Republican leaders as being at odds with the public mood, particularly after such a decisive electoral sweep. (Robertson and Gabriel, 1/11)