Funding for tourism, the state's No. 1 industry, would take an 8.6 percent hit if the budget proposal unveiled by Gov. Mark Sanford on Wednesday is accepted by lawmakers as is.

Moreover, state support of Spoleto Festival USA, one of the Charleston region's biggest tourist draws, would end in favor of a competitive grant pool open to other bidders.

Sanford's plan called for $54.9 million in total funding for the Department of Parks, Recreation and Tourism. That's $5.2 million, or 8.6 percent, less than what the agency will spend in the current fiscal year. PRT would get $28.9 million from state general funds next year under the governor's budget proposal, meaning $3.2 million, or 9.9 percent, less than its 2004-05 appropriations.

Most of the cuts would be to state-owned parks, golf courses and restaurants that Sanford believes should be privatized, a theme favored by the governor. Another big chunk of the proposed cuts, almost $1 million, is from items Sanford has dubbed "off-line pass-throughs." Those are items that are not included in Sanford's budget authority.

Sanford made both of those recommendations a year ago, but legislators balked at the notion of selling off or leasing state parks and they kept pass-through dollars intact. The state makes money on just five of its 46 state parks. But opponents of privatization have argued that wilderness owned by the state should be run like a nonprofit organization, not a business.

Sanford's proposal would keep intact PRT marketing and media-buying line items, which account for almost a quarter of the agency's spending. He also called for a 21 percent boost in funding for the state Tourism Marketing Partnership Program, in which the state buys travel ads in concert with companies and local organizations such as convention and visitors' bureaus. Charleston is one of the biggest beneficiaries of TMPP grants.

The state tourism agency has been spending more of its money on marketing in recent years and Sanford's proposal takes that philosophy a step further. Most of the state's tourism interests, especially those in bigger markets such as Charleston, support the spending shift and say it is a way to maximize returns. But the change has come at the expense of dozens of PRT jobs.

"They're really leveraging every dollar into marketing," said Helen Hill, executive director of the Charleston Area Convention and Visitors Bureau. "It's one of the best ways that the state can spend money. ... There's no fluffy stuff."

In his budget proposal last year, Sanford called for an 8.5 percent cut in the amount of state funds going to PRT. However, lawmakers knocked most of those cuts off the table and increased PRT general fund allocations by 13.8 percent.

The governor this time around also suggested that Spoleto no longer receive state appropriations as a separate line item in the budget. Sanford proposed a $500,000 competitive grant fund that Spoleto could apply for, along with other organizations that contribute to economic development.

The state is giving Spoleto $373,000 in the current fiscal year, about 10 percent of the nonprofit's total contributions.

Julia Forster, director of development at Spoleto, said she was concerned about the change but does not see it as a threat.

"It seems to be a more fair process in obtaining government funding," she said. "We always have to work hard for every dollar we receive. ... (But) each governor during the festival's 29-year history, including Gov. Sanford, has recognized the festival's economic value to the state."

Mayor Joe Riley said he would encourage the General Assembly not to adopt Sanford's suggestion about Spoleto funding.

"The state's financial support for Spoleto has been essential and longstanding," Riley said. "(It) has brought huge dividends for South Carolina, that's for sure."