SC House GOP stops short of calling on Loftis to leave after $1.8B error. Here’s why
Despite a hostile exchange between Treasurer Curtis Loftis and a panel of House budget writers over a $1.8 billion accounting error, House Republicans stop short of calling on the state’s banker to step down as more work needs to be done.
Republicans, who hold a supermajority in the chamber, say they’re still reviewing how the $1.8 billion accounting error occurred and whether changes recommended by an outside forensic auditor are actually implemented.
Members of the Senate have pushed for Loftis to leave, and a House Democrat has even filed articles of impeachment over his office’s role in the $1.8 billion accounting error. Following an initial disclosure of a $3.5 billion accounting error the state’s finances are under investigation by the Securities and Exchange Commission.
House members who oversee the treasurer’s office budget acknowledge they were frustrated with Loftis’ responses during the hearing over the $1.8 billion issue.
State Rep. Chris Murphy, R-Dorchester, who leads that House Ways and Means panel, said he moved closer to wanting Loftis to resign, but still hasn’t reached that point.
“That’s a decision that he has to make. But it was very concerning during today’s hearing that there was a complete lack of responsibility, and what frustrated me the most was his inability to answer simple yes or no questions with an answer.”
But House members say their review will continue, and add even though Loftis is a fellow Republican, his political affiliation won’t factor into their decision making on what happens with the treasurer’s office.
House Speaker Murrell Smith said after an outside forensic auditor report was released that lawmakers would not worry about the potential political fallout of whatever decision they make.
“I think the speaker and Chairman (Bruce) Bannister are clear that we want to pursue this deliberately and purposefully for the purpose of getting to the right answer, whatever that answer is, and politics doesn’t enter into that equation,” said state Rep. Micah Caskey, R-Lexington, who also sits on the panel that questioned Loftis.
AlixPartners, an outside forensic auditor paid $3 million to determine whether the $1.8 billion was real, found most of the money did not exist and that the comptroller-general’s, treasurer’s and state auditor’s office all knew for years about the accounting issue that stemmed from an accounting system conversion that took place in 2016. However, no one alerted lawmakers about the issue.
Comptroller-General Richard Eckstrom resigned in 2023 after he disclosed a separate accounting issue where he inflated the state’s cash balances by $3.5 billion that also stemmed from the state’s conversion in accounting systems.
State Auditor George Kennedy resigned this month after the AlixPartners report was released.
The $1.8 billion accounting issue only was disclosed after Eckstrom’s successor Brian Gaines brought it to lawmakers’ attention.
All of the state’s constitutional offices are up for election in 2026 and Loftis has vowed to finish his fourth term.
During Wednesday’s hearing, Loftis argued the public airing of the state’s financial systems problems has hurt the state’s reputation.
“If I could walk out the door and it’s over, I’d have done it. I got other things to do, but it’s not about that,” Loftis said. “We can’t allow a treasurer to be pushed out because of other people’s failures and also because the next guy coming in. What’s he going to do?”
House members also say they first want to make sure recommendations from AlixPartners are implemented into the state’s financial system.
“That provides immediate improvement to the state’s fiscal management right away,” Caskey said. “So that’s the first thing, then deciding what we should do about things that have already happened is a secondary concern.”
In order to make sure the recommendations by AlixPartners are actually implemented, the state Senate passed a resolution to hire an outside compliance officer to monitor the comptroller, state auditor and treasurer’s offices.
The compliance officer would make sure the three offices work together to implement recommendations and the three offices provide monthly reports on their progress.
“We’ve given the treasurer’s office, comptroller’s office and state auditor’s office specific instructions that do require cooperation, and so we’re having a third party now independently report over their activities,” said state Sen. Larry Grooms, R-Berkeley.
Grooms, who has led a Senate investigation into the state’s books, has called for Loftis to resign.
State Rep. Heather Bauer, D-Richland, has filed articles of impeachment. However, no House Republicans have signed-on to that resolution. Any impeachment move to oust Loftis would start in the House and requires GOP support. Removing Loftis for willful neglect of duty, commonly referred to as impeachment-light, can start in either chamber and requires two-thirds vote of each chamber.
Murphy said going down the impeachment route is complicated.
“Any time you throw out the words impeachment, the impeachment process, that’s a serious undertaking, and I think we have to continue to do our due diligence,” Murphy said. “Hopefully things will work out for themselves without us having to go down a path like that, because that is a drastic action.”
Democrats in their response to Gov. Henry McMaster’s annual state of the state address, called on the state’s elected leadership to hold Loftis accountable.
“Our leadership continues to support Treasurer Loftis, knowing that we cannot afford to entrust our state’s financial resources to a politician who has proven he knows nothing about protecting and investing the people’s money,” said state Sen. Margie Bright Matthews, D-Colleton.
Caskey still said he had confidence in Loftis’ ability to invest the state’s money wisely.
“I think the record is clear, based on performance, that the investment decisions that his office have made have been beneficial, and while his testimony today was heated and animated, that alone doesn’t cause me any reason give me any reason to doubt his ability to manage those monies,” Caskey said.
State Rep. Jordan Pace, R-Berkeley, who chairs the hard-line conservative House Freedom Caucus, said his group is still working its way through the AlixPartners report before taking a position on Loftis.
But he criticized the way Wednesday’s hearing was conducted.
“The tenor of that conversation did seem more like a cross-examination by a couple of attorneys on the panel, rather than, ‘hey, can you explain to us?’ It seemed more hostile than it had to be,” Pace said. “I thought Curtis held his composure pretty well, (while) not necessarily endorsing one side or the other side of the story.”
Pace points to how accounting is the comptroller general office’s job.
“It seemed like all that was originated, primarily was at the feet of former comptroller general, from the AlixPartners report, it seems like the the auditor had some blame in that, too, and the treasurer, constitutionally, the treasurer can’t even move, as I understand, can’t move money or write checks without comptroller signing off on it,” Pace said.
Pace said however the Freedom Caucus had yet to determine which direction to support.
“We’re still learning, we don’t have all the facts,” Pace said.
This story was originally published February 3, 2025 at 5:00 AM.
