State Controller Malia M. Cohen Continues to Urge Fiscal Discipline as the State’s Revenue Collections Show Strength Through January

SACRAMENTO - State Controller Malia M. Cohen today released her January Cash Report which shows solid revenue collections for the fiscal year through January. With persistent global economic uncertainty remaining a concern, Controller Cohen continues to urge budget leaders to limit budgetary borrowing and reduce the size of projected multi-year deficits in order to best position the state to face potential revenue volatility.

According to the Controller's Monthly Statement of General Fund Cash Receipts and Disbursements, receipts for the fiscal year through January exceeded the 2026-27 Governor's Budget estimate by $6.9 billion, or 5.1 percent. Spending was lower than Governor's Budget estimates by $563.6 million, or 0.4 percent.

"As the state's Chief Fiscal Officer, I recognize that while solid cash receipts are welcome news for California's balance sheet, our stature as a global economic powerhouse will always bring with it near- and long-term financial challenges," said Controller Cohen. With requirements placed on how the state may spend any excess revenues - which include essential obligations to schools and rainy-day savings - I urge budget leaders to remain mindful that the state has experienced boom-and-bust revenue cycles in the past. Tackling ongoing deficits and limiting the amount of budgetary borrowing reinforces that the state is prepared to thrive in the face of future revenue volatility."

For the fiscal year through January, personal income tax receipts came in above Governor's Budget projections by $4.6 billion, or 5.5 percent. Corporation tax collections were $1.4 billion above estimates, or 7.3 percent, and retail sales and use tax receipts were $20 million below projections, or 0.1 percent.

As of January 31, the state had $86.8 billion in unused borrowable resources in its special funds. These internal funds are available for short-term General Fund use in order to manage cash deficits related to the timing of revenue collections. While any cash-flow borrowing is repaid to not affect special fund operations, Controller Cohen cautioned against relying on internal borrowing to address budget gaps, warning that overuse can increase future liabilities and weaken reserves needed to avoid deeper cuts during an economic downturn.

As shown in the summary chart below, the Governor's Budget expects an ongoing gap of spending outpacing revenues: