California Dreaming Turns Into Nightmare As Sinking FaceBerg Stock Means Less State Revenue
Remember just a few happy months back when California's legislators were cock-a-hoop over the exuberance in Silicon Valley and all the yummy IPO/Capital Gains taxes they would tithe away - instantly solving all funding issues? Yeah, not gonna happen. As reported by the Sacramento Bee this evening:
The state's Legislative Analyst's Office said Wednesday that 'hundreds of millions' of dollars in assumed tax revenues may never materialize due to the continued slide in Facebook's stock price.
Menlo Park-based Facebook closed Wednesday trading at $20.88 per share, a new low 45 percent below the initial price. The state Department of Finance assumed the social media giant would trade at $35 by November, while the Analyst's Office believed it would trade at $42 at that time. The November marker is significant because another wave of insiders becomes eligible to sell shares at that point.
The Analyst's Office said today that much of the Facebook income tax revenues will still come in. But the LAO added that "if the company's stock price remains depressed, hundreds of millions of income tax dollars assumed in the 2012-13 state budget plan are at risk."