WASHINGTON (Reuters) - Two-thirds of states cut mental health funding from their general fund budgets over the last two years, according to a report released by a mental illness advocacy group on Wednesday.

Kentucky with 47 percent, Alaska with 35 percent, and South Carolina and Arizona both with 23 percent made the largest percentage cuts to mental health spending in their general fund budgets, which do not include federal Medicaid funding, the study by the National Alliance on Mental Illness (NAMI) found.

"Cutting mental health means that costs only get shifted to emergency rooms, schools, police, local courts, jails and prisons," said NAMI executive director Michael Fitzpatrick. "The taxpayer still pays the bill."

"Some states are trying to hold the line or make progress, but most are cutting deep. This stands in contrast to the intense national concern about the mental health care system following the Arizona tragedy two months ago," he said.

He was referring to the shooting attack in Tucson in which six people were killed and 13 wounded, including U.S. Representative Gabrielle Giffords.

The mental state of the alleged shooter, Jared Loughner, is an issue in the case based on various incidents in his past. Federal prosecutors on Monday asked a judge to order that Loughner be tested to determine if he is mentally competent to stand trial.

The National Alliance on Mental Illness said there is not a source for uniform information about state-by-state funding. Therefore, NAMI conducted the study by reviewing budgets from all 50 states and the District of Columbia.

Differences in state budget reporting and in states' populations may impact the findings.

Leading the states that were exceptions to the mental healthcare budget cutting rule were Oregon, North Carolina, and Rhode Island, with 23 percent, 21 percent, and 7 percent increases respectively.

(Reporting by Wendell Marsh; Editing by Jerry Norton)