State finance officials in May estimated Facebook’s stock price would be $35 in November. “If forecasters had omitted Facebook, it could have resulted in schools receiving less money,” Sisney said. Palmer said the state was right to put the projected revenue into the budget because the Facebook IPO was so unique: The company publicly scheduled dates of taxable transactions, allowing the state to budget IPO revenues on a scale never before seen - particularly useful as officials were desperate to balance the budget. Shaun Bowler, a UC Riverside voter-behavior expert and associate dean, thinks the Facebook tax drop may help voters realize there is no winning “lottery ticket” to save the budget, but isn’t likely to persuade the masses.ĭeputy Legislative Analyst Jason Sisney and state Finance Department spokesman H.D. “Just know this: Our schools need the funds the people we’re asking for it can well-afford it.” It depends on “where the stock market is going to be in November,” Brown said Thursday. The news could also impact the November vote on Brown’s Proposition 30, a plan to balance the budget by increasing taxes on the wealthy and sales. The whole world was shocked with what happened.” “We were counting on so many dollars from Facebook - and the whole public was, the whole world was. Elaine Alquist, D-Santa Clara, like Simitian a member of the Senate Budget Committee. “I’m really hoping we don’t have to go there,” said state Sen. If the stock doesn’t rebound and the rest of the state’s books don’t balance out, the lost revenue could help pile onto a list of “trigger cuts” that will hit K-12 classrooms the hardest. It won’t be clear until November exactly how much red ink the Facebook stock drop will cause the budget. Brown’s soak-the-rich tax initiative passes in November. But the bulk of the windfall will come in November, when most company employees can begin selling billions of dollars worth of long-held stock options, at a maximum state tax rate of 10.3 percent - higher if Gov. While officials expected the Facebook revenue to make up less than 2 percent of California’s general fund budget, the money is enough to pay the salaries of 28,000 public school teachers.Ībout $212 million in state revenue is already in the bag because of taxes Facebook founder and CEO Mark Zuckerberg paid when he purchased more than $2 billion in stock during the IPO. The expected “Facebook Effect” on the state budget is unique since no other company has had such a massive, tightly scheduled public offering that allowed finance officials to pencil-in so much tax revenue ahead of time. Joe Simitian, a Democrat whose district includes Menlo Park, where the social media giant is based. “If Facebook is on a roller coaster ride, we’re on the roller coaster with them,” said Sen. At the same time, the Legislative Analyst’s Office reported this week that a big chunk of the extra state revenue resulting from the IPO won’t materialize unless the stock turns around soon. Jerry Brown and state lawmakers in June approved a $91 billion budget that included $1.9 billion in expected tax revenue from Facebook employees striking it rich - a rare projection that helped stave off cuts to schools and programs for the sick, poor and disabled.īut Facebook’s stock price dipped below $20 a share for the first time Thursday before closing at $20.04, the latest in a shocking fall from the company’s initial stock price of $38 in May. Facebook stock plunged to an all-time low of nearly half its IPO price Thursday, but it’s not just investors feeling the pinch: The state of California stands to lose “hundreds of millions of dollars” in the fallout, state analysts say.
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