State May Send Out New $1.8 Billion in Direct Payments

The exterior of the South Carolina State House is seen on January 29, 2023 in Columbia, South Carolina. South Carolina is looking to pass a rebate that would send $1.8 billion back to taxpayers.

South Carolinians could earn $1.8 billion in rebates after the state found the extra money in a state government bank account—and one expert told Newsweek it’s a sign of the times.

Now South Carolina lawmakers have proposed giving the cash back to taxpayers in a refund bill.

“The goal with this bill is to say, ‘If this was South Carolina taxpayer money,'” said Republican State Representative Jordan Pace, as reported by WBTW Myrtle Beach, “then the way we should appropriate it is to give it back to the taxpayers in South Carolina.”

The rebate bill asks for the funds to be used by the Department of Revenue to offer 2023 taxpayers a one-time payment. Each rebate would be equal to the amount determined by multiplying the total amount in the taxpayer rebate fund by a fraction based on the taxpayer’s income tax liability.

If passed, the checks will go out before the end of the year.

Some lawmakers say the fate of the money should not yet be determined as it’s unclear where the $1.8 billion actually came from and if it was indeed from taxpayers’ wallets.

“The difference is we know, the ownership of the other money that is there, we just haven’t been able to identify the $1.8 billion ownership, whether it’s federal funds, whether it should be in the unemployment insurance trust fund,” state Senator Larry Grooms told Queen City News. “But if there’s those that want to get that money without understanding the exact ownership of it or the original appropriation, then maybe they should just rebate all of the state treasury $60 billion that make for a much larger rebate check.”

“The main question is, ‘Is the money real? Does it actually exist?’ There’s still some question behind that,” Grooms added.

To prevent a budgetary miscalculation like this in the future, lawmakers have suggested a standalone state auditory entity to ensure some level of separation and prevent conflicts of interest. The financial committee also recommended using $4.2 million toward a forensic audit of the state treasury to figure out where the money belongs.

Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, said the origin of the money will continue to be a concern as lawmakers decide on how to proceed regarding the rebate bill.

“The supposed origin of the $1.8 billion comes from a conversion from one accounting system at the state level to another, but there are still many questions as to the banking and investment records surrounding it,” Beene told Newsweek. “In many ways, it’s a sign of the times when a state government can find nearly $2 billion in its pocket and have no clue who or what put it there.”

If the rebate does get the votes it needs to pass, it could be a significant financial boost for South Carolinians as they continue to navigate inflation and economic uncertainty.

Nationwide, inflation was at 3.5 percent for the 12 months ending in March.

“The rebate would put more money in their pockets at a time when so many are struggling with the additional costs inflation has brought,” Beene said. “If the money is there and it isn’t discovered to already be misappropriated, a rebate is the right call.”

Finance expert Kevin Thompson, who is also the CEO and founder of 9i Capital Group, shared this belief, calling the potential rebate a “much-needed blessing.”

“The truth is, no one truly knows where the money has come from and an extensive forensic accounting needs to be done, which will take time and money,” Thompson told Newsweek.

“For South Carolinians, this would be a much-needed blessing, having cash bestowed upon them when they have seen their grocery bills and cost of living continue to move in the wrong direction. The passage of this rebate needs to come down to hard evidence as to where the money derived, but as we all know, this will be politicized and used as a bargaining chip for power.”

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