Gov. Mark Sanford today will unveil a plan to increase the cigarette tax by 61 cents a pack and extend the sales tax to lottery tickets.

The $222 million in new tax money would lower the state’s income tax rate. But unlike Sanford’s previous proposal for increasing the cigarette tax, the money would not fund Medicaid, the health care program for the poor, elderly and disabled.

That would gut the program, some health care advocates say.

According to details obtained by The State, Sanford’s plan would:

• Increase the tax on a pack of cigarettes to 68 cents, the national average. The state’s 7-cent tax is fourth-lowest in the nation.

• Apply the 5 percent state sales tax to lottery tickets, which are now not subject to sales tax.

• Lower income taxes by 15 percent. The state’s top income tax rate would be reduced to 5.9 percent from the current 7 percent.

Sanford today begins a three-day tour of the state to tout the new plan. His spokesman said the governor would not discuss details until today.

In March, Sanford unveiled a similar blueprint to lower income taxes and raise cigarette taxes. That plan would have used the cigarette tax money to fully pay for Medicaid.

This time, all the money goes to income tax reduction.

“That’s not a good thing,” said Sue Berkowitz, director of the S.C. Appleseed Legal Justice Center, which has worked with some 50 other groups for two years to persuade lawmakers to raise the cigarette tax to pay for Medicaid.

Sanford’s plan “is going to destroy the program,” Berkowitz said. “This is pretty scary to think this is what he’s going to float.”

Berkowitz and other advocates worry the state has no other practical way to pay for Medicaid. Lawmakers were rescued from slashing the program this year by a one-time, $200 million federal bailout. That money won’t return next year, Berkowitz said.

But Ken Jackson, president of the S.C. Association of Realtors, believes Sanford’s plan is important.

“I’ve never been asked what the taxes are (in South Carolina) on cigarettes and lottery tickets, but I’m often asked about the high income tax,” Jackson said. “It’s impossible to know how many relocations and jobs we don’t get.”

Only 13 states have a top income tax rate higher than South Carolina’s 7 percent.

Besides, Jackson said, Medicaid should be paid for with dollars that are guaranteed each year, and the cigarette tax could fluctuate from year to year.

Ken Shull, president of the S.C. Hospital Association, said he is “disappointed that (Sanford’s) plan does not specifically and permanently earmark the proceeds (of the cigarette tax) for Medicaid.”

Instead, he said, it would “create an even worse situation, because we will have permanently taken the cigarette tax off the table as a dedicated, recurring source of funding for Medicaid.”

Sanford spokesman Will Folks would not discuss the governor’s plan for funding Medicaid. But, he said, Sanford “is committed to fully funding Medicaid with recurring, general fund dollars.”

Lottery Commission chairman John C.B. Smith Jr. also is concerned that Sanford’s tax plan would hurt education funding. Profits from lottery sales pay for college scholarships, K-12 programs and school buses, among other things.

Increasing the price of lottery tickets would hurt sales, Smith said.

“I would sure hope that does not happen, because the net effect is just to siphon off some percentage away from education,” Smith said.

In 2002, the lottery generated $640 million in revenue.

Sanford’s plan has some Republicans in the House and Senate unsure of where their governor is coming from.

State Sen. Jim Ritchie, R-Spartanburg, said he supports Sanford’s desire to reduce income taxes, “but it requires a more realistic plan to achieve that goal, given our tremendous budget challenges.”

When lawmakers return to Columbia in January, they will face projected revenue shortfalls of at least $300 million as they prepare the 2004-05 budget. Medicaid costs are likely to increase as well, meaning paying for Medicaid out of general fund dollars would be difficult.

House Speaker David Wilkins, R-Greenville, said he believes the House will insist that Medicaid reform legislation pass before any cigarette tax is considered. That legislation, which the House approved earlier this year, is before the Senate. Sanford, too, supports Medicaid reform.

“I personally believe it’s irresponsible to raise the cigarette tax unless we have Medicaid reform,” Wilkins said.

While Sanford’s plan does not use the cigarette tax money for Medicaid, Wilkins said, other plans will.

“Just because the governor suggests it, there’s nothing to say this plan is going to pass.”

Reach Gould Sheinin at (803) 771-8658 or asheinin@thestate.com.