Here’s an interesting story from today’s Wall Street Journal about how bad the budget situation is in California: the disappointing Facebook IPO has forced them to downgrade their budget forecasts:
According to the budget document, the state projected three sources of tax revenue tied to the share offering: stock sales by early investors, vesting of restricted stock after the offering, and the exercise of some stock options, beginning at the time of the IPO.
But Facebook’s lower share price means those transactions are generating less income that can be taxed.
Restrictions on sales by Facebook insiders began to lapse in October 2012. At the time, Facebook shares traded at $23.21, compared with the state’s earlier estimate of $35, according to H.D. Palmer, a spokesman for the state Finance Department.
As a result, he said, the state now expects $581 million in taxes from vesting of restricted stock, compared with an earlier estimate of $891 million.
You know, when your state is this dependent on revenue from taxes from new social media networks, you might want to rethink things.