House and Senate budget negotiators moved closer to a compromise yesterday, reaching tentative agreements on cancer screening for low-income residents, grants for arts programs and new vehicles for state agencies.

But the debate - which continued late into the night - also laid plain the differences between the House and Senate-backed budgets. Although lawmakers continued winnowing the list of disparities, they circled around some of the more contentious issues. As of press time last night, they had yet to agree on how much to increase the cigarette tax, whether to shift the state's responsibility for nursing home services to county governments and how much to spend on the Land and Community Heritage Investment Program.

House Finance Committee Chairwoman Marjorie Smith, a Durham Democrat, planned to continue the debate last night until lawmakers reached consensus on the roughly $10.3 billion two-year state spending plan. Lawmakers are supposed to reach an agreement by this afternoon. The next budget cycle begins July 1.

Earlier this month, the Senate passed its version of the two-year budget, which was roughly $40 million less than the version the House passed this spring. Both the House and Senate plans included many of Gov. John Lynch's proposals, such as cancer screening for low-income residents, children's health insurance and maintenance of state parks.

But LCHIP, another of Lynch's priorities, has proved a major point of contention between House and Senate budget negotiators. Yesterday, in a last-minute bid to shore up the LCHIP, Rep. Neal Kurk, a Weare Republican, proposed paying for the program through a $25 surcharge on registry of deeds documents.

"I hope the Senate would agree that this is the best of the available alternatives, and we've seen many of them proposed over the years," Kurk said. "Considering the alternatives, this is the least offensive."

In an effort to end the biennial fight over money for LCHIP, the House voted to pay for the program by increasing the real estate transfer tax. The increase, lawmakers said, would give LCHIP $6 million annually, the amount Lynch called for earlier this year.

But the Senate balked at the tax increase. Under the Senate version, LCHIP would receive $6 million from the state's general fund next year and nothing the following year. A committee would study alternative ways to pay for LCHIP, rather than supporting the program with money from the general fund.

For days, both sides refused to budge, and negotiators postponed a decision on the program. Kurk's proposed surcharge would raise $6 million annually for the program, he said. Registers of deeds would retain 4 percent of the surcharge as compensation for their services; Kurk's proposal also includes money to implement the change. No individual would pay more than $100 in surcharge fees for a real estate transaction, and local, state and federal governments would be exempt.

"Those two things - funding at $6 million a year and funding not using general funds - are extremely important to the House," Kurk said. Although many registers of deeds oppose such surcharges, the plan offers the best way forward, he said. "There is no surcharge on any registry document that the registrars will find acceptable."

For years, Democratic lawmakers have made LCHIP a priority, and many of them pledged to shore up the program when they campaigned for election last year. But senators rejected several proposals to raise money for the program, including a plan from Senate President Sylvia Larsen. That proposal would have forced landowners or developers to pay a 6.5 percent surcharge when land is removed from current use. The Senate also considered a plan similar to Kurk's.

Apart from LCHIP, Senate negotiators continued to oppose a House-backed increase to the University System of New Hampshire and the community technical colleges. The House devoted $233 million to the community technical college system, an 11 percent increase, in order to keep the cost of tuition from climbing sharply. Senators, like Lynch, proposed a more modest increase. (next page »)