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LAO provides update on California’s cash management situation

In the annual budget process, the Legislature creates a plan that aligns General Fund expenditures with anticipated revenues for the upcoming fiscal year. After this budget plan is put into law, the executive branch has the responsibility to execute it. Importantly, this means managing the General Fund’s cash—for example by collecting tax revenues and paying the state’s bills.

Cash management is not, therefore, an issue that typically requires sustained legislative attention. However, when a recession occurs, the state’s cash position typically weakens. In past recessions, the Legislature has had to take steps to address the state’s cash position to ensure California was able to pay its bills. Our office monitors the state’s cash position in order to anticipate these potential challenges for the Legislature in advance.

In this post, we give an update on the General Fund’s current cash situation. In particular, although there was a great deal of concern about cash in the spring of 2020, we explain why the situation did not significantly deteriorate as expected. We also discuss the General Fund’s “cash outlook” for the rest of the fiscal year, including major developments that are likely to affect the state’s cash situation for better or worse.

This report is available using the following link: https://lao.ca.gov/Publications/Report/4266

This article was released by the Legislative Analyst’s Office.