The governor's budget counts on big savings from plans to attack Medicaid fraud and to get more savings out of the Medicaid care-management program.

One of the biggest program cuts is to in-home health care for adults. The state has not been able to reduce Medicaid in-home care expenses as it had planned. The state Department of Health and Human Services is being suedover the way it wanted to cut services. The budget proposes a $59.8 million cut and a restructuring that would provide care only for adults who need the most help.

The trade organization that represents home health care companies will fight the cut in the legislature and in court, said Tim Rogers, chief executive officer of the Association for Home & Hospice Care of North Carolina.

"The governor has basically turned her back on the elderly, disabled and chronically ill," Rogers said.

Also, the state would no longer pay for basic dental care for adults on Medicaid. Only emergencies such as urgent tooth-pulling, and treatment of wounds or broken bones would be covered, saving $11.6 million.

Other programs would expand or be restored, including:

$8.5 million for Health Choice, the government-subsidized health insurance program for children. Perdue said there would be enough money to cover all eligible children.

$12 million for 50 additional local hospital beds for mentally ill patients.

$23 million to restore this year's cut to local mental health offices.

$14 million to provide AIDS drugs to low-income people and to get medicine to people on a waiting list.

Staff writer Lynn Bonner