"RICHMOND -- He plied his guests with the usual stiff drinks. He served up the obligatory fancy finger food. But the holiday gathering hosted by Virginia Gov. Mark R. Warner at his executive mansion a few weeks before Christmas was anything but routine.

Warner, gearing up for a battle with lawmakers over his plan to revamp Virginia's tax system, was turning a political tradition on its head: He was lobbying the lobbyists, wining and dining people who wine and dine for a living.

"I hope we can work together," the Democrat told one partygoer. If not, he warned another, "No more Mr. Nice Guy."

Over the coming weeks, Virginia's lawmakers will debate Warner's $1 billion plan to raise taxes on goods, cigarettes, some corporations and higher-income residents, while lowering them on food, cars, estates and incomes of the less affluent. The lobbyists at the Christmas party direct millions of dollars into those lawmakers' campaigns, and few issues galvanize them more than the opening up of a tax code they helped to write.

Already there is intense jockeying to kill certain portions of Warner's plan and cut deals on others. As the plan morphs, there could be consequences for average taxpayers.

If corporations keep certain tax shelters, the state could choose to cut some health or education programs to balance the budget. If tax rates do not rise for higher-income residents, lower- and middle-class taxpayers may not receive the cuts proposed for them. If shoppers are spared Warner's proposed penny increase in the sales tax, they may wind up paying for it with a higher tax at the gas pump.

Because the governor chose not to present his plan to voters before they chose all 140 members of the General Assembly last fall, he sacrificed an opportunity to win a public mandate for changing the tax structure. Instead, success for Warner depends on his ability to convince lawmakers that his plan is the right one.

He will try to avoid antagonizing the interests whose influence over elected officials could doom his plan.

"There's no question that the party was part of a charm offensive," said Steve Haner, a Virginia Chamber of Commerce lobbyist. "But there are a lot of games being played right now. In many cases, it's going to come down to 'Now, governor, I got this here bill I'd sure like you to support.' "

A More Complicated Scene

When Bruce Keeney first began lobbying 27 years ago, his job was a lot less complex. A Democratic Party machine ruled the state, and a handful of leaders in the House and Senate made most of the important decisions over cigars and boozy poker games at the Raleigh Hotel.

"The first thing I did as a lobbyist was to deliver a case of Scotch to the poker game," Keeney laughed.

Times have changed in the Capitol.

As party organizations have waned, the leadership no longer calls all the shots. Gone, too, are the days when a case of Scotch would do. Increasingly, lobbyists are expected to raise the bulk of money that lawmakers spend on their campaigns. Virginia, unlike some states including Maryland, has no prohibition against lobbyists raising campaign funds, and it has no contribution limits.

Over the last election cycle, the 140 current members of the House and Senate and their party's caucus and leadership committees raised $21.7 million, according to an analysis of data compiled by the Virginia Public Access Project. Of that amount, $11 million -- or more than half -- was given by corporations and special interests registered to lobby the legislature, and their hired representatives.

Lobbyists not only raise money but also dole it out in the form of ever-more-extravagant presents.

In 2002, the last year for which data are available, state politicians accepted more than a quarter of a million dollars' worth of gifts, not including junkets paid for with taxpayers' money. Most came from industries with business before the state, many of which have an interest in this year's tax debate.

Philip Morris, which has a stake in Warner's plan to raise cigarette taxes, was the most generous, shelling out nearly $20,000 for gifts to 108 elected officials. For the most part, the company wooed lawmakers at Richmond steakhouses or at the NASCAR Winston Cup and other racing events.

But for Warner, the tobacco company's number one gift recipient, Philip Morris provided its private jet, ferrying him to a Democratic Governors' Association meeting in San Francisco. The company provided a similar service to Attorney General Jerry W. Kilgore, who is expected to be the GOP's gubernatorial nominee in 2005.

"Gifts don't affect policy," said Ellen Qualls, Warner's spokeswoman.

But they do buy access, giving lobbyists time alone with busy elected officials.

The Virginia Auto Dealers Association, which is pushing for estate tax repeal on behalf of car dealers who hand their businesses down through the generations, is particularly active on the money-raising and gift-giving fronts.

During the last election cycles, the association was one of the top corporate political action committee donors to lawmakers, giving $344,000 in campaign contributions. It also spent more than $6,700 to send two lawmakers and their spouses to an annual convention in Bermuda.

"In order to have time to develop a personal relationship, you have to be creative," explained Don Hall, the association's president and chief lobbyist. "It's important that when you go into their offices and say, 'Trust me; this is the way it is,' they look at you and say, 'No problem. I understand your concerns.' "

Plotting a Path

The Christmas party at the governor's mansion was the culmination of months of work on the part of Warner's administration to win special-interest support for his tax proposal. As the governor put together his plan, lobbyists for the state's leading industries helped shape it through meetings at which administration officials sought their input.

The budget and tax plan that emerged was, for the most part, carefully crafted to avoid vociferous opposition from organized coalitions of business interests, and it was sprinkled with provisions designed to give moneyed special interests a stake in its passage.

"The politics of this are already so challenging for us that of course we tried to appeal to as wide a group of influential people in the capital as possible," Qualls said. "Conversely, there were poison pills that we could have put in but didn't."

The plan, for instance, leaves in place the numerous sales tax exemptions that various industry lobbyists have managed to insert into the tax code over the last century.

The plan does not try to tax professional services such as those provided by barbers, accountants and lawyers, something Warner contemplated but dropped after considering how vigorous lobbying campaigns killed similar efforts in other states.

"That was huge," said Laurie Peterson, a lobbyist for Virginia retailers. "That would have been a major stopper."

But lobbyists aren't paid to be grateful.

Last year, Warner vetoed a bill that would have eliminated Virginia's estate tax. The measure was backed by a powerful group of businesses and millionaires in a drive spearheaded by McGuire Woods Consulting.

The firm and its clients gave the winning House and Senate members at least $1.1 million in the 2003 elections, records show, and McGuire Woods is credited with organizing a grass-roots campaign in Alabama that doomed an effort similar to Warner's to revamp that state's tax code.

This year, Warner switched tacks, tying other portions of his tax plan to a proposal to eliminate estate taxes on farms, closely held businesses and personal estates worth less than $10 million. But McGuire Woods lobbyist Steven A. Horton said that although his clients are "encouraged" by Warner's outreach, they will be pushing for "full and total elimination."

Meanwhile, business interests are lining up to fight provisions in Warner's plan that close corporate loopholes, which account for $82 million -- or less than a tenth -- of the $1 billion the governor hopes to raise in the next two years.

Manufacturing and business interests that include Peterson's group are hoping to save a tax break targeted by Warner that helps companies avoid taxes on some of the goods they ship out of state.

PricewaterhouseCoopers, the accounting giant, is behind a new "Coalition for Tax Equity" that hopes to modify a provision that would close off a corporation's ability to park profits tax-free in a Delaware holding company.

The coalition has hired William Thomas, a powerhouse lobbyist and an informal Warner adviser. Warner's tax commissioner, Kenneth W. Thorson, said he hopes a compromise can be reached.

Weighing Their Interests

This early in the session, many interest groups are taking a hard line that could be softened later if the right deal is cut.

Take the cigarette industry. Most of the big tobacco companies have stated that they are flatly opposed to Warner's proposal to increase cigarette taxes. Philip Morris, based in Richmond, has stopped short of that position, calling the increase "excessive."

Behind the scenes, Philip Morris officials have approached administration officials about a tax break similar to one recently passed in North Carolina. There, lawmakers expanded a tax credit on export cigarettes, a move that will be worth more than $200 million to Philip Morris and R.J. Reynolds in the next 13 years.

Lorillard Tobacco Co., which does not sell cigarettes overseas, said it would be "outrageous" if Virginia gave Philip Morris a similar deal in return for the company's support for a higher tax on smokers.

"It would be completely disingenuous for Philip Morris to say they'd be willing to pass along a tax increase to their customers just as long as at the end of the day they get a tax credit that helps their bottom line," said Steve Watson, Lorillard's vice president of government affairs. "That's a payoff. If you are going to do something for an industry, you need to do something for everyone."

Even those who stand only to gain from Warner's proposal will have to weigh their self-interests against another calculation: the politics of siding with a Democratic governor against a Republican House leadership adamantly opposed to Warner's plan to increase the state's sales tax.

Warner's budget raises the Medicaid rate that the state pays hospitals, emergency room doctors and nursing homes to treat indigent Virginians. That is a top priority for the Virginia Hospital and Healthcare Association, one of the state's top PAC donors to political campaigns.

By linking the Medicaid rate increase to passage of his tax plan, Warner hopes to harness the group's power to push his plan through the legislature. But hospital lobbyist Katharine Webb is worried about getting caught in the crossfire of a highly charged, partisan debate.

"It put us in a terrible position," she said. "The issue for everyone is going to be whether the pot is sweet enough to take the political risk."" (Jo Becker, The Washington Post, January 20, 2004)

Staff writer Michael D. Shear contributed to this report.