Wednesday, August 9, 2017
State Finance 101
Although we tend to focus on the state's General Fund and its condition, the state has myriad funds outside the General Fund that are earmarked for specific purposes. Some are small; others are large. For example, the gas tax goes into a fund that is used for road repair and other transportation-related activities. Ultimately, it's all cash in the state treasury, whether or not it's labeled "General Fund." The more available cash there is, the lower the perceived risk on state bonds. As the chart above shows, since the bottom of the Great Recession, the amount of "unused borrowable resources" that are available for the controller to tap has risen. Ultimately, that's the reason why California bond yields are low.