California uses $86.9 billion in special fund reserves for cash flow | The Locally Times
State Controller Malia M. Cohen reports the state borrowed $86.9 billion from special funds to cover General Fund gaps through May 31, 2026.
## Cash Flow Management California utilized $86.9 billion in internal borrowable resources from special funds to maintain General Fund liquidity as of May 31, 2026. General Fund receipts for the fiscal year through May exceeded May Revision estimates by $643.7 million. State spending through May 2026 totaled $5.4 billion less than the amount projected in the May Revision. ## Fiscal Risks State Controller Malia M. Cohen released a statement on June 10, 2026, identifying risks associated with internal borrowing. The state’s financial records show personal income tax receipts were $412.7 million above projections, while corporation tax collections fell $89.4 million below estimates for the fiscal year through May 31, 2026. ## Local Budgetary Context The Sacramento County Board of Supervisors approved a $9 billion budget for the 2026-27 fiscal year on June 11, 2026. This local budget operates independently of the state’s internal borrowable funds. The 2024 Gaps Analysis by Sacramento Steps Forward, a report on unsheltered homelessness, proposes prevention and housing investments. Public records from the county and state do not specify how state internal borrowing affects funding for these local initiatives. ## Budget Deadline The state legislature must approve a balanced budget by June 15, 2026. The Controller’s office provides oversight of state financial resources and manages the repayment of internal funds to ensure special fund operations continue. No public response from the legislature regarding the Controller’s June 10 warning appears on the official legislative website as of June 14, 2026. ## Key Questions **What are internal borrowable funds?** These are $86.9 billion in special fund reserves that the state uses for short-term General Fund liquidity. **Why does the State Controller warn against this practice?** Controller Malia M. Cohen stated that overusing these reserves increases future liabilities and weakens the state's ability to fund services during economic downturns. **How does this affect the Sacramento County budget?** While the county approved a separate $9 billion budget on June 11, state records do not specify how state-level borrowing impacts future funding for local housing and service initiatives.