UNDATED (CNN) -- Facebook founder Mark Zuckerberg has the fate of
California's budget on his shoulders. Facebook stock plunged to an
all-time low Thursday. But, it's not just investors feeling the pinch.
California could lose hundreds of millions of dollars.
The opening excitement has faded fast as Facebook's stock continues
to tumble with hundreds of millions of dollars now at risk, according to
a report this week from the legislative analyst's office. Governor
brown's budget is based on a Facebook sales price of $35 a share, yet
the stock closed at $20.04, well below the benchmark that California is
banking on to bring in $1.9 billion. Jon Coupal with Howard Jarvis
Taxpayers Assoc. says, "We have to rely on steady, predictable sources
of revenue and not believe that we're going to have pink unicorns
pooping gold nuggets to solve the budget problem."
The initial public offering from Facebook was supposed to generate
big revenues from capital gains taxes that investors pay after they sell
a stock, but it could end up being phantom revenue. Political analyst
Kevin Riggs says, "We saw that last year. The governor depended on an
assumed $4 billion in extra revenue to balance the budget. The $4
billion never materialized and so the budget was out of balance almost
as soon as he signed it."
But the brown administration says, the stock price for Facebook is no
reason to panic. H.D. Palmer with the California State Finance
Department says, "The issue isn't where the Facebook stock is today.
It's where it's going to be in November that counts."
November is when the state expects Facebook employees to begin
selling their shares, but a low sales price could be a critical hit to
California's coffers. Also in November, the governor's tax initiative,
Brown's Budget, assumes his tax measure will pass in November.
If so, Facebook's shares will be taxed at a higher rate, but if it
fails, California will have $400 million less than what's now on the
books.
Via TodaysTHV.com
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