State Controller John Chiang on Tuesday released a report that broke California's two-year negative trend line.

Cash receipts in October were up $285 million, it said.

That's a welcome break from a downward trend in a state experiencing its worst cash crisis in history, Chiang said during an address to the Coachella Valley Economic Partnership Investors Forum at Westin Mission Hills Resort in Rancho Mirage.

The event was attended by roughly 50 business, civic and government leaders, including state Sen. John Benoit, who becomes a county supervisor next month.

With expenditures running $1.2 billion below projections, and $1 billion in additional external borrowing, Chiang said the state's overall cash position as of Oct. 31 was $1.2 billion ahead of projections.

Personal income tax revenues for the month were $10.5 million above estimates, while corporate taxes were up $241 million, or 151 percent.

Still, sales tax revenues came in $102 million lower than expected. That was off projections by 9 percent.

To Chiang, that's a sign California consumers are still traversing a rocky road.

High unemployment, excessive borrowing, the ailing construction industry and legal challenges to the budget also continue to threaten the state's cash outlook, he said.

“We will have a tough cash situation in the spring,'' Chiang said. “We will be in tough straits again in March.”

Chiang stopped short of guessing what the deficit might be by then, saying: “There are too many variables.”

The state's general fund has been in the red since July 12, 2007, and as of late October had plunged to $23 billion.

To avert fiscal disaster, Chiang said $19.7 billion was borrowed, state IOUs were issued and 10 percent now is being shaved off paychecks as a hedge against state income taxes owed.

Is it too simplistic to say stop the spending, Chiang was asked.

“That's the core solution,'' Chiang said, saying the budget has to be brought into control.

“You don't fix the state budget on a grand scheme. You do it with brick and mortar, brick by brick.”

After the address, Cathedral City Community Development Director Andy Hall said he thought the last message from Chiang rang true.

“I think we're all waiting for that magic moment,'' Hall said, as Cathedral City colleague Mitch Nieman said it's chipping away at the problem piece by piece.