Sanford's stop in Rock Hill was part of a three-day, 12-city swing across the state to promote his plan, which he hopes to sell legislators on in January.

"We really have a profound job and economy problem in South Carolina," Sanford said, adding the state can't afford to wait for the national economy to make a full recovery. "We're in a real budget hurt."

Sanford's plan would lower the state's income tax rate from 7 percent to 5.9 percent. The cut would be paid for by adding sales tax to lottery tickets and raising the cigarette tax by 61 cents to match the national average of 68 cents per pack. The governor's plan also proposes changes in the worker's compensation system, small business regulations and includes health insurance cost containment initiatives.

South Carolina's 7 percent tax rate ranks as the second-highest in the Southeast and the 14th highest in the nation, Sanford said. For the average taxpayer earning an annual income of about $25,400, the state's rate is the highest in the Southeast and the fifth-highest in the country, he said.

Sanford cited studies showing states that lowered income taxes during the 1990s saw three times the job growth at 41 percent higher personal income levels than states that raised income taxes.

"Do the math," he said. "That additional income can mean a lot of different things."

It could mean a better house or better educational opportunities, Sanford said. "There's a lot of different options. I think it's important for the government not to take more than we need to be taking."

Groups and individuals who lobbied during the last legislative session for a cigarette tax increase to pay for shortfalls in Medicaid funding are upset with Sanford's new proposal. They believe the cigarette tax increase could provide a stable recurring source of Medicaid funding in future years.

When questioned about the issue Thursday, Sanford said a cigarette tax isn't the only way to fund Medicaid.

His tax plan also would give a boost to small business, Sanford said, citing trends in other states. Florida, which does not collect an income tax, added more than 35,400 small businesses and saw a nearly 13 percent employment growth from 1998-2002. In Georgia, which has an income tax rate of 6 percent, more than 3,500 small businesses were added with a statewide net employment growth of 9 percent over the same time.

By contrast, South Carolina lost more than 3,600 small businesses during the same period and saw a net employment growth of negative 1.96 percent.

"The real backbone to job creation in our state is small businesses," Sanford said.

Sanford chose to make his pitch at the construction site for First Baptist Church because Sutton Construction, a Rock Hill family-owned small business, is preparing the site for the church. Sutton Construction fits the profile of the type of business Sanford said would benefit from his tax plan.

The Sutton family agreed to host Sanford's visit after being contacted by one of their colleagues at Blanchard Machinery. The family supported Sanford in his race for governor.

State Rep. Gary Simrill, R-Rock Hill, said he agreed with most of Sanford's proposal.

"I certainly agree that working toward the income tax being reduced in South Carolina is a good thing," Simrill said.

But Simrill said the hike on the cigarette tax would have a negative effect. "I think we have to be extremely careful here. We have to look at what our neighbors do."

If South Carolina went to a 68-cent tax per pack of cigarettes, smokers could go to North Carolina or Georgia, where the price would be cheaper, Simrill said.

"What we do is hurt businesses in and around York County," Simrill said. "If someone goes across the state line to buy cigarettes, they're going to buy other items as well."

After his tax pitch, Sanford took a turn behind the controls of a trackhoe, construction equipment that uses a large claw to move dirt. Construction workers joked that if Sanford lost his re-election bid, he could take a job in the construction business.

Contact Jason Foster at 329-4066 or mailto:jfoster@heraldonline.com