California's Facebook windfall looks a lot smaller than expected

Boy, a lot can change in three months. Back in May, the Legislative Analyst's Office had projected that the state would pick up between $1.6 billion and $2.1 billion in tax revenue as company shareholders begin cashing out. Unfortunately, that forecast, made before the disastrous IPO, was based on a share price of $35 to $45. Facebook is now under $21. The lower the share price, the lower the tax revenue. We're talking hundreds of millions of dollars that California won't be receiving. Stock chart from CNNMoney shows Facebook's big drop over the past month. From Capitol Weekly:

"It's a massive IPO but in terms of being determinative of the overall revenue performance this year and next year its impact is pretty modest. It will be outweighed by broader financial and economic developments," said Brad Williams, a senior partner with Capitol Matrix Consulting. "The general direction of the stock market, the strength of wages, unemployment levels, the strength of overall business income -- those are all going to weigh more heavily on the personal income tax total over this year and the next."

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Jason Sisney of the analyst's office told Capitol Weekly in a June 18 interview: "State budget forecasts are always based on assumptions -- either explicit or implicit -- about stock market performance. What's unusual this year is that, besides the usual stock market uncertainties, we had this enormous uncertainty about one particular stock. We know the state will get substantial revenue related to the IPO but the question is how much. "We still don't have a precise answer to that. By November, we'll have a better idea."