The Senate Finance Committee on Tuesday unanimously adopted a proposal to raise cigarette taxes by 53 cents per pack. The proposal also includes Governor Sandford's plan to cut income tax rates in future years when economic growth will cushion the state's revenue collections. The cigarette tax increase will provide a recurring source of revenue for medicaid, the state-federal partnership that provides healthcare to the poor and elderly. The increase will produce about $171 million in new state funding for medicaid. When the federal match of about three-for-one is factored in, the plan will provide over $500 million annually for health care. The senate also rejected a House plan that would have used non-recurring funds from refinancing tobacco bonds to fund medicaid. Senate Finance Committee Chairman Hugh Leatherman and State Treasurer Grady Patterson have both called that plan unworkable, and supporters of the cigarette tax have pointed to last week's announcement by the Philip Morris company that it might not be able to make its next payment on the tobacco settlement with the states as a key reason they oppose the House plan. - Source, South Carolina Hospital Association