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RICHMOND, Va. (WUSA9) -- Richmond Virginia lawmakers are taking another crack at solving the budget impasse in a special session, however the partisan divide over Medicaid expansion continues.

Just before the session started today, Governor Terry McAuliffe announced his own two-year budget proposal that includes expanding Medicaid in a two-year pilot program. He held up a letter from the Centers for Medicare and Medicaid Services that he said guaranteed Virginia it could launch a two-year pilot program and withdraw with no obligation.

McAuliffe told lawmakers that with that assurance, "There can be no more excuses... So when people say, 'what happens in two years if we don't continue the program and we have to knock folks off,' let every camera have it clear that it was the Governor who will take full responsibility. Everybody else is off the hook," he said.

McAuliffe's plan includes 104 amendments to the budget proposal from former Governor Bob McDonnell. McAuliffe has added a 2% pay raise for state employees and teachers and state workers, more money for mental health ($9 million) and $7 million for Pre-K.

He said the letter from the federal government "…says Virginia can do this for two years, use 100% of federal dollars money to help our sickest people with federal dollars."

A few hours later in the special session, Democrats waived that same letter, urging republicans to change their minds.

Majority Leader Kirkland Cox (R) said, "This is all about leverage. This all about something where they cannot get to stand alone a piece of legislation so they are willing to hold up an entire state budget."

Delegate Ken Plum (D 36th District) said, "This is nonsensical. We've got to do this. The money is there and Virginians need it."

During the past two weeks, McAuliffe has traveled to hospitals and clinics around the state to promote expanding Medicaid to cover Virginia's 400,000 uninsured people.

"Hundreds of thousands of working poor are counting on us to put aside partisan politics and get the job done," said McAuliffe.

Democrats say the Governor has answered all the Republicans' objections to expanding Medicaid. Sen. Barbara Favola (D) Arlington, said, "They're upset its part of Obamacare and they don't want to participate for political reasons. They've lost all rationality."

But Delegate Dave Albo (R 42nd-District) disagreed. "What we've been worried about is not the first two years, where the feds pay 100 percent; we're worried about the years there after," with the rising costs of Medicaid, if the Federal Government shifts the cost burden, "…we could go broke." Albo said.

Albo did say he is open to looking at the proposal. So did Delegate Tag Greason (R 32nd District) except Greason, like many Republicans say the budget needs to be balanced first, and then Medicaid expansion considered at a later date.

Democrat Leader Senate Dick Saslaw says there is no way.

"I didn't just arrive here from Mars. Even Ray Charles can see through that. Yes, it's leverage. That's exactly what it is."

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