The House is currently marking up their version of the S-CHIP reauthorization bill with a cigarette tax increase of half the senate version.
http://energycommerce.house.gov/CHAMP/CHAMP_index.shtml
I dont think any in the Senate expected their bill to be the final word. But I think it is very likely the program will be reauthorized this year with some increase in funding.
Why? Because the basic program currently funded by tobacco taxes has bi-partisan support and overwhelming support of the public.