COLUMBIA, S.C. (WCSC) – Some South Carolina taxpayers say they want nearly $2 billion that the state government lost track of to be put back in their pockets after news came of the mysterious money sitting in a state account for years.
In this election year, some candidates for office are even making these rebates a campaign promise.
But the senator leading the investigation into this multibillion-dollar mystery said spending the money in this way would be a bad idea at this point.
“That would be irresponsible,” Sen. Larry Grooms, R–Berkeley, said. “We need to understand the origins of the $1.8 billion that the treasurer lost control of, we need to understand where those funds rightfully belong.”
Grooms’ Senate Finance Constitutional Budget Subcommittee spent months digging into this discrepancy, holding hours-long hearings and meetings that have so far culminated in a 116-page interim report that places the blame for the debacle on State Treasurer Curtis Loftis.
The report states the South Carolina Treasurer’s Office moved the money into an account years ago, but Loftis never told lawmakers, which Grooms’ panel believes was Loftis’ responsibility. Eventually, the state’s top accountant, Comptroller General Brian Gaines, alerted legislators to the account last fall after his office discovered it.
Loftis has denied responsibility and said he would soon issue his own rebuttal report.
But many questions still remain unanswered, including who owns the money and what its purpose is. Grooms said one thing they know for sure is that this money does have an owner, so there are likely restrictions on how it can be spent.
“If these were unrestricted funds that had not been obligated — that is, if they didn’t have a particular purpose — then absolutely, let’s talk about a rebate,” Grooms said. “But these funds had been obligated to a particular purpose. We just don’t know where.”
Grooms said it is a possibility, for example, the owner of this money could be the federal government, and that would determine how it can be spent.
Funding from the Federal-Aid Highway Program would have to be used on South Carolina roads, and money given to the state for harbor deepening is earmarked specifically for that purpose, Grooms said.
“And if we sent the money in the form of a taxpayer rebate, we’re going to have to tax the taxpayers to get the money back,” he said.
Loftis has claimed he invested the money in various funds, earning the state around $200 million in interest that the legislature has spent.
If that is the case and the money came from the federal government, Grooms said the federal government will demand those interest payments back.
Ultimately, Grooms said rebating this money would be a bad idea without resolving these unknowns first.
“They could be teacher and other state employee retirement funds, and it would be a shame for someone to say, ‘Let’s take the money out of teacher retirement accounts and give it as a form of a rebate to the taxpayer,’” he said. “That would be irresponsible.”
Senators have included money in their version of the next state budget, which has yet to be finalized, for a forensic audit to determine the funding’s ownership. Grooms expects that the process will begin this summer and take around a year or even longer to fully untangle the trail of the money.
Gov. Henry McMaster recently told reporters he would recommend the state not spend these dollars right away and instead hold onto it as they work to answer all the questions surrounding the mystery money.
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Source: Could $1.8B in newly discovered taxpayer money be rebated to South Carolinians?
