COLUMBIA, S.C. - Gov. Mark Sanford said Friday he's in favor of raising the state's cigarette tax as long as it's tied to a bill that would reduce the personal income tax rate during the next 15 years.

Sanford said it was important to reveal his plan to fund the state's Medicaid plan because he said the House and Senate were on different paths in their attempts to solve the state's roughly $1 billion shortfall for next year's budget.

Sanford said if the votes were taken today, he thinks the Senate would approve a cigarette tax increase and the House would reject it.

Republican House leaders introduced a plan Wednesday to refinance the state's tobacco settlement bonds to fully fund Medicaid, a health care program that serves South Carolina's poorest residents.

GOP leaders in the House said they were encouraged by Sanford's plan to eventually lower income taxes, but they don't want to raise taxes, either.

The timing also is important because Sanford leaves next weekend for reserve training in Alabama that will last two weeks.

"It's crucial we use the debate on Medicaid funding and the cigarette tax as a way to advance tax changes that will strengthen the economy," Sanford said.

Sanford wants to raise the state's cigarette tax to 53 cents-a-pack from seven cents-a-pack, which is one of the lowest in the nation. The governor said he would support a smaller tax increase, but "if it's a smaller number then it's going to take longer to get where we want to get."

Sanford said a 53-cent increase would generate about $400 million, which would be matched by federal dollars for the Medicaid program.

The proposal benefits small businesses and personal income earners, Sanford said, and will help the state become more competitive economically, creating more jobs.

Sanford said the reductions would come in the form of income tax credits as personal income levels grow in our state.

But College of Charleston economics professor Frank Hefner said he's not so sure Sanford's plan to reduce income tax rate to 5 percent from 7 percent over 15 years would work.

"As much as I would like to be a fan of tax cuts, I'm not too sure this is the best time to do it," Hefner said.

Sanford said a cigarette tax increase also helps insurance payers avoid a hidden tax that health care providers have said would be shifted to higher insurance premiums if Medicaid was not fully funded.

House Speaker David Wilkins, R-Greenville, said he remains firmly opposed to a cigarette tax increase but wants to learn more about Sanford's proposal.

"The concern with his plan at this stage is that it proposes a huge tax increase without a guarantee of a tax decrease," Wilkins said. "The House developed a proposal that provides funding of Medicaid without raising taxes and without taking additional revenue out of the general fund that must be used to meet other critical needs."

Sanford applauded the GOP leaders' plan and called it creative, but said it's still borrowing from within the state.

Rep. Joel Lourie agreed with the governor, said he would take a wait-and-see approach before endorsing the Sanford's plan.

"We think the governor's plan is certainly better than the House leadership plan," said Lourie, D-Columbia, who has sponsored legislation that would increase the cigarette tax. "We certainly appreciate the governor's willingness to open up the dialogue and his understanding of the need to find a long-term solution to Medicaid."

Sanford has said his plan is a long-term solution to helping fund Medicaid.

"We're in an unprecedented time in terms of the budget crisis that is before us," Sanford said. "It really does make everybody in South Carolina a shareholder in the growth of the economy. So, as the economy expands, people get a larger and larger credit back in the form of personal income tax reduction."

But if the economy doesn't expand, it might just be a tax increase.

"If we were flat next year, then there would be no income tax credit because obviously personal income tax revenue had not grown," said Sanford, adding that situation is unlikely.

Personal income tax collections have increased on average by 6 percent annually, according to statistics from Sanford's office, and about half of that would go each year toward lowering the income tax.