"However, I respect the priorities of the House majority and I am encouraged by and supportive of our work together to bring about a new Virginia Way on Medicaid", he said.
The General Assembly's budget-writers split over expanding Medicaid to cover some 300,000 uninsured, low-income Virginians, with the House saying yes - with a requirement that enrollees help with the cost - and the state Senate saying no.
"I have long supported a simple and straightforward expansion of Medicaid", Northam said in a statement on Sunday.
Similarly, the proposed Senate budget includes $5 million in additional funding split among 39 school districts with declining enrollment.
The House plan includes funding for accelerating 2 percent raises in the second year for state employees, teachers, and state-supported local employees such as sheriff's deputies. The votes against the proposed budget were cast by Dels.
Senate Finance Co-Chairman Emmett Hanger, R-Augusta, who has led past efforts to expand coverage, acknowledged the decision "does not please every member of this committee, but what I will say to you is that the conversations will continue on this issue and will not end here".
Del. Will Morefield, another Republican from Southwest Virginia, said he's not ready to endorse any form of Medicaid expansion just yet but is much more receptive than in the past.
The Senate budget, due Sunday night, was expected to follow that direction, rejecting federal Medicaid dollars and leaving roughly $400 million less than the budgets proposed by the governor and House.
While the Senate plan does not now include the expansion, Finance Committee Chairman Sen.
The House would also fund a new cyber training program with a hub in Northern Virginia led by Virginia Tech that would include startups and established companies.
Delegate Terry Kilgore (R-Scott County) told the John Fredericks Show Thursday that President Trump's proposal of able-bodied Medicaid recipients work or do community service for their benefits is attractive to him.
The plan assumes savings of more than $371 million over two years by expanding the program on January 1, 2019, rather than Oct 1, as McAuliffe had proposed.
"We feel very strongly that with all of our other institutions, it will be a very unique model nationwide to put us at the forefront of where we need to be", he said.
The cost of the state's share of covering the newly eligible Medicaid enrollees - estimated at $251 million over the two years beginning July 1 - would be funded by a tax on hospitals.
"I think everyone wants to help give people a hand up, and I think this is the way to go".
The House proposal sets the stage for a political showdown as the GOP-controlled Senate has indicated it still opposes Medicaid expansion. A majority said yes, partly because of support from delegates in the southwestern part of the state, where poverty and hospital closures have made health care an urgent issue.