A state Senate panel voted Monday to reject enrollment limits on a range of health-care programs, an early signal that majority Democrats will fight Gov. Arnold Schwarzenegger's proposed cuts in social services.

During a preliminary review of the administration's proposals on medical services for poor and middle-income Californians, members of a budget review panel said the state should do more to collect debts owed to the state and cut down on inefficiency.

"To the extent that it's possible, we need to reduce the cost of providing services, not reduce the services," said Sen. Wes Chesbro, D-Arcata, the budget subcommittee chair.

Chesbro and other Democratic members of the panel voted not to recommend enrollment caps in programs that provide AIDS drugs, medical care for moderate-income children and children with extensive health problems, and people born with genetic diseases such as hemophilia.

H.D. Palmer, a spokesman for the Schwarzenegger administration's Department of Finance, said lawmakers will need to come up with enough savings to offset the costs of keeping open enrollment in those programs if they are to balance the budget.

"They're going to have to find a like amount of savings to offset the actions they took today," Palmer said.

Members of the budget panel recommended that the state do more to collect rebates from drug companies that supply medications for the state programs.

They said more agencies should follow the lead of the AIDS Drug Assistance Program, which had $21 million of untapped funds from rebates in its coffers. The panel recommended that the state use that money to fund the program instead of capping enrollment.

Members had sharp criticism for other state services - such as the Genetically Handicapped Persons Program - which have failed to collect millions of dollars in potential rebates from pharmaceutical companies.

Before the hearing, hundreds of patients and advocates gathered on the Capitol lawn to protest the cuts.

A handful of Democratic lawmakers promised the crowd to prevent the cuts to the AIDS drug program.

"A budget is about people, (and) we can't afford as a state to tell people that we can't help you anymore," said Assemblyman Darrell Steinberg, D-Sacramento, who chairs the Assembly budget committee. "We are going to make painful cuts, but when it comes to matters of life and death, we choose life."

Protesters lifted signs reading "No cuts, no caps, ADAP saves lives."

Demetri Moshoyannis, 32, an AIDS activist who has been living with HIV for a decade, said the assistance program is "a ray of hope and that last lifeline" for uninsured and underinsured people living with AIDS.

"We are all standing here today because that lifeline may be cut off for thousands of people," Moshoyannis said.