RALEIGH - Advocates for the mentally ill lobbied the legislature Wednesday, seeking more money for community-based services in a public treatment system that keeps struggling under the weight of reforms started seven years ago.

Also attended by patients and their families, the annual gathering took on a relatively upbeat tone after months of finger-pointing over who is to blame for the failure of the 2001 reforms to improve overall care in the system. Coalition leaders said it's time to look forward.

"Too often we talk about a system like it's something out there somewhere," John Tote, executive director of the Mental Health Association in North Carolina, told a midday rally across the street from the Legislative Building. "You all are the system. The system is about people."

The hopes of the hundreds of advocates -- also representing the developmentally disabled and groups that provide substance abuse treatment -- were buoyed by news from budget meetings Wednesday morning. A draft of recommendations approved by a joint House-Senate subcommittee overseeing mental health set aside $30 million to build up teams to treat people where they live.

There's also new leadership within Gov. Mike Easley's administration, led by Health and Human Services Secretary Dempsey Benton, who has won high marks so far.

"We're very optimistic about getting reform on the right track," said Rep. Verla Insko, D-Orange, co-chairwoman of the House subcommittee.

This year, state lawmakers and regulators face pressure to fix a system that has foundered.

Mental health programs were supposed to shift away from institutional care to community-based treatment by private providers. But the state's institutions are being used more than ever, and some rural areas have few private providers, leading to uneven care statewide and forcing patients to find other treatment.

"We need system reform. We need to keep people out of jail," said John Owen of Saxapahaw, who has been a mental patient.

A report last fall found the state may have wasted hundreds of millions of dollars by overpaying providers of certain nonmedical services called community support. The Broughton state mental hospital in Morganton hasn't received federal funding since last summer, when safety problems surfaced following a patient's death.

Insko told the crowd she expects this year's session will focus on improving treatment and safety standards at state hospitals. She hopes legislation also will place beds for mental health patients in local hospitals.

According to documents released by the joint House-Senate subcommittee, members largely agree with several items in Easley's budget.

While the legislators' dollar amounts differ from the governor's proposal, the subcommittee wants to set aside $30 million for crisis response and more than $9 million in improved staffing and training at state hospitals.

Lawmakers also want $8 million in matching funds that could provide in-home services for an additional 1,000 patients.

Benton's department also has proposed consolidating some local mental health offices to reduce administrative spending.

Easley's budget also called for raising the tax on alcohol to help pay for more than $60 million in mental health improvements, but legislative leaders have said they won't back higher taxes this session.