COLUMBIA--Even though the state House and Senate were still wrangling over a $5 billion budget Thursday, the chance for a cigarette tax hike in South Carolina has already gone up in smoke.

But there's always next year.

Gov. Mark Sanford, who championed the idea of a cigarette tax hike coupled with a decrease in the state income tax, said Thursday that he will keep pushing the plan and hopes it will pass next year.

The cigarette tax was the only tax increase to receive serious consideration in the 2003 legislative session and on several occasions appeared to have a real chance at passage. Despite efforts to kill it, the idea didn't really die until the state received an 11th-hour influx of unexpected federal cash.

"The good news is that we're four or five votes from where we need to be," Sanford said. "Come summer, we'll be out talking to folks in a couple of districts talking about the benefits of this. We've got the third-lowest cigarette tax in the nation and the eighth-highest income tax. That has an impact on the state."Raising the tax on a pack of smokes from 7 cents to 60 cents would generate about $170 million annually, according to state estimates. That money could be used to leverage federal Medicaid dollars at a nearly 3-to-1 clip.

Sanford's plan was to use the money to stabilize Medicaid while using future state revenue growth to reduce the rate on the state's top income tax bracket -- which applies to just about everyone making more than minimum wage -- from 7 percent to 5 percent.

An all-night House-Senate conference committee reached agreement on a state budget Thursday, and the House approved it. But later Thursday, the Senate held up the compromise plan on a technicality. The delay likely will force the budget to be finished in a special session after lawmakers officially adjourn June 5.

As of Thursday evening, it appeared there was no appetite to go in and make major changes in the budget. The cigarette tax, which had seemed close to passage in the Senate as late as Wednesday, was taken off life support.

"It's dead over here," Senate President Pro Tem Glenn McConnell said, adding that if someone tries to bring it up again, "I'm ready with a point of order to nail it."

House Ways and Means Chairman Bobby Harrell said the tax likely would not have gotten majority support in the House anyway, but the point is moot now.

"The budget does not have any general tax increases in it, and it's the budget for the year. I don't anticipate any tax increases coming up now," Harrell said.

Sanford had lobbied for his idea, which he characterized as a restructuring of the state's tax system, for months. As recently as Tuesday, Sanford and a dozen senators were promoting the cigarette tax hike for an income tax cut in news conferences.

Ultimately though, lawmakers' adamant opposition to raising taxes -- coupled with a windfall of more than $200 million in federal money announced Friday -- doomed the plan.

The governor said he didn't take the loss personally. "Ronald Reagan talked about the happy warrior, and that's how I feel," Sanford said. "You don't get all you want, particularly if you aim for big things."

While Sanford did not criticize lawmakers, he said part of the problem was an over-simplification of political positions, that all taxes are bad, or all taxes are good.

Reducing the income tax and funding Medicaid better , Sanford argued, would lighten the tax load on small businesses, spur economic development and save on health insurance bills, which is the hidden tax increase in under-funding Medicaid.

So the debate is only on hold. The General Assembly has delayed Medicaid reform until next year, when an ongoing source of money must be found to pay for the rising costs for the health care program for the poor and uninsured.

"I think the cigarette tax will be back," said Sen. Arthur Ravenel, R-Mount Pleasant. "We're going to have to fund Medicaid with ongoing money. I don't see the problem here. Everybody acknowledges that tobacco is a killer -- so what's the problem with taxing the heck out of a killer?"