The budget deadlock continues in Virginia as Senate and House lawmakers refuse to compromise on Medicaid expansion.

They have until July 1st to pass the budget but that deadline comes much earlier for many local governments who are now waiting on state funds.

The Democratically-controlled Senate passed their version with Medicaid expansion included but the Republican-controlled House passed their version without it.

"The Governor has been very adamant that he wants Medicaid expansion," said Republican Delegate Israel O'Quinn. "He wants to legislate that through the budget, which we normally would not do, and that has been the House's contention that Medicaid expansion has no business being in the budget."

O'Quinn told us the issues should be dealt with separately.

"If you want to address Medicaid expansion in a special session that's fine, however we need a state budget now," he said.

Democratic Senator Phillip Puckett told News 5 that Republicans suggested the same thing last year and but that session was never held.

Puckett said pushing Medicaid through with the budget is the best way to secure coverage for more than 400,000 Virginians. Republican Senator Bill Carrico doesn't agree.

"The issue that we have, the 17 of us that are supporting the House measures, is that it's a policy that we need to be debating because we're not sure the federal government is going to be able to live up to their side of funding this," said Carrico.

The federal government would cover 90 percent, while 10 percent falls on the state.

Carrico said the federal government has told them they're not confident they'll have their part of the funding in two years.

"Then what do we do? Do we take them off the books, do we disenroll them? I've never seen that happen in federal government," said Carrico.

He told us that's why there needs to be more debate over the expansion.

We're told the Commonwealth also faces a $300 million budget short-fall due to decreased sales and income tax revenues.

The lawmakers we spoke to were not able to tells us how they plan to make up for the deficit.