We seem to have a state budget crisis. Yet, it doesn't feel like some of the crises of the past. Why is that? Why aren't we going hat-in-hand to Wall Street to borrow money? The basic explanation is that the state has a lot of cash on hand outside its General Fund which handles ongoing, day-to-day expenses. But this cash is in all kinds of places, not just in the rainy-day fund and similar funds that are associated with the General Fund as reserves.
You may never have heard of the Barbering and Cosmetology Contingent Fund, or the Diesel Emission Reduction Fund, or the Gambling Addiction Program Fund. But these funds, and myriad others, were created by the legislature in its wisdom. They are all earmarked funds that perform designated purposes.
At any point in time, there is cash in these internal funds that the state can borrow temporarily to deal with potential overdrafts in the General Fund. The state essentially borrows internally from these earmarked funds and doesn't have to go to external financial markets for credit. It puts an IOU in these funds and then repays them at a later date. Of course, internal borrowing has its limits. If, say, the Infant Botulism Treatment and Prevention Fund is filled up with IOUs, it can't perform the function for which it was created.
You can find a list of the internal funds from which money has been borrowed at:
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