Cigarette Tax Medicaid Funding Plan Fails In Senate

COLUMBIA, S.C. -- Gov. Mark Sanford's plan to increase the state's cigarette tax by 53 cents per pack while lowering income tax rates failed in the Senate on Thursday night.

Senators voted 27-18 to table the issue.

The tax increase would have generated about $171 million for the state's Medicaid programs for the poor, disabled and elderly.

The tax reduction would have reduced the state's top income-tax rate from 7 percent to 5 percent during the next few years.

Greer Sen. Verne Smith, a Republican, said that there is no other clear way to save Medicaid programs from cuts.

Smith said that without the tobacco tax increases, Medicaid costs will be shifted to paying patients and private insurers.

But West Columbia Sen. Jake Knotts, a Republican, said that by funding Medicaid, the state is throwing money into a wasteful program.

Sanford's tax plan could re-emerge next week as the Senate continues the longest budget debate in years.