The Beginning

The state controller's cash report for March 2020 is now available. It shows just the beginning of what will be happening to the state budget. Compared with the previous March, revenues are down by $1.5 billion which is more than accounted for by a drop in personal income tax receipts compared to last March of about $1.8 billion.

On the expenditure side, compared to last March, expenditures in the health/public health categories rose by about $105 million to $230 million.

As we have previously noted, much of what has occurred in response to the coronavirus crisis began in the latter part of March and continued into April. Unlike the federal government, which essentially has the Federal Reserve to create money and fund the various new programs, state and local governments have only limited ability to run large deficits.

California - before the crisis struck - had its considerable reserves plus the ability to borrow internally from funds outside the general fund. Unused borrowable reserves stood at over $38 billion at the end of March. (Unused borrowable reserves include both reserves directly related to the general fund plus monies that can be borrowed from other accounts outside the general fund.)

The March cash report is available at:
https://sco.ca.gov/Files-ARD/CASH/March2020StatementofGeneralFundCashReceiptsandDisbursements.pdf