When the police do a large drug raid there are usually large amounts of cash that are found. Fist i would suspect that this is used as evidence in the case against the offenders.
Where does it go after that?
They buy shit with it.
It all depends on the state. Rules vary widely. There is usually a forfeiture hearing where a judge awards the money (or car, boat, house etc) to the law enforcement agency. Most jurisdictions have rules about what the money is used for. I have not dealt with this directly but where I am from it has to be used for a specific purpose. In other words the town can’t say that it is being used to help pay for police salaries and then dump the money into the general fund. It has to be used for a specific purpose like buying a new police car or vests for the Emergency Response Team.
You’re right. One sneaky little bureaucratic trick, though, is that municipalities have been known to reduce the agency’s budget by an equivalent amount, thereby effectively placing the money into the general fund.