COLUMBIA — Lawmakers Monday rejected Gov. Nikki Haley's proposal that the state cut its budget by requiring state employees to pick up the added cost of their health insurance.

They also balked at her suggestion that the state eliminate $1 million from its budget earmarked for the 2012 presidential primary.

But S.C. House members said they were open to other proposals from the new governor, such as eliminating $5 million earmarked for an aerospace research center at the University of South Carolina.

Haley sent a list of budget recommendations to House lawmakers Monday as they began floor debate on the state's $5.2 billion spending plan for the budget year that starts July 1.

The House budget would close an estimated $700 million shortfall by:

cutting state money for Medicaid, the health care program for the poor and disabled;

spending less on K-12 education, colleges and universities;

making cuts to state agencies.

With the economy and state revenues beginning to recover from the Great Recession, lawmakers had an additional $350 million to spend on next year's budget. But the state finds itself having to cut services because that new revenue is not enough to offset lost federal stimulus money and the growing cost of existing services, such as Medicaid.

In a Monday letter to lawmakers, Haley said she had been focusing on the budgets of the Cabinet agencies that report directly to her, since taking office in January, but wanted to suggest a few other cost-saving measures. They included having state employees pick up the entire increased cost of their health insurance instead of splitting that increase with the state.

"As the taxpayer already picks up over 70 percent of a State employee's health care coverage, I believe those receiving the benefit should pay for the increase," Haley wrote.

An analysis by The State newspaper found state employees pay about 30 percent of the cost of the health insurance, roughly the national average, according to Kaiser Family Foundation data. Haley's proposal would have cost state employees an additional $21 a month, or roughly $250 a year. But lawmakers said they did not want to ask employees to bear that added cost while facing layoffs and furloughs.

The amendment to shift the cost to employees was withdrawn with no debate.

Haley also asked lawmakers to eliminate $5 million earmarked to create an aviation research center at the University of South Carolina - similar to an automotive research facility affiliated with Clemson University. The aviation research center would support Boeing's Lowcountry manufacturing efforts. Commerce Secretary Bobby Hitt thinks the project is premature, Haley wrote.

Haley also suggested cutting:

the entire Arts Commission budget of $1.9 million,

$1.2 million that now goes to pay for lobbyists at publicly funded agencies,

$1 million to pay for the 2012 presidential primary.

"Political parties have sufficient fundraising ability to offset the costs of partisan presidential preference primaries ... something I believe does not rise to the level of a core function of government," Haley wrote.

In the past, the state has paid for the primaries, lawmakers say, to ensure state election officials can provide proper oversight.

Democrats supported Haley's primary proposal but were voted down by Republicans.

Democrats are unlikely to have a 2012 S.C. presidential primary; their party has an incumbent who will be seeking re-election. Republicans, meanwhile, will have a 2012 S.C. primary.

A small group of protesters gathered in the lobby between the House and Senate chambers Monday, continuing a weekend protest in favor of a "moral budget" and asking lawmakers to stop cuts to the state budget.

"I am feeling attacked, and my principles are being attacked," said Marjorie Hammock, a professor at Benedict College. "I support a government that supports its people."

The protest sparked concerns from House security and state law enforcement officers. Lawmakers were escorted into the building and directed to private elevators to avoid entering the State House through the lobby.

Hopkins resident Odell Middleton, 65, retired from the state Corrections Department, said he hoped lawmakers took notice of the roughly 50 or so budget protesters, nearly all of whom did not return after the House broke for lunch.

"I don't think that people are here to start a fight or anything," Middleton said, adding he did not want South Carolina to surrender progress it has made in several areas in recent years.