Facebook’s IPO is so big, it might just balance California’s budget

From The Economist:

AMONG those in suspense as Facebook prepares for its initial public offering (IPO) of shares later this month are the bean-counters of California. After all, Facebook, which could be worth as much as $100 billion, is a Californian company and many of its employees, including its founder, Mark Zuckerberg, live there. That means they may soon be paying lots of tax.

The IPO’s timing fortuitously coincides with the beginning of California’s annual budget “kabuki”, as a former governor, Arnold Schwarzenegger, called the process. This kicks off with the official revision, on May 14th, by the current governor, Jerry Brown, of estimated incomings and outgoings. It drags on through June in the legislature and then, if all goes well, the governor signs something resembling a balanced budget by July 1st, the start of the new fiscal year.

Last year Mr Brown proposed spending $89 billion for the current fiscal year, which began on July 1st. As in recent years, however, revenues are falling short of official projections. Jason Sisney of the non-partisan Legislative Analyst’s Office says that the state seems to be facing an overall budget “problem” of more than $9 billion this year and next.

Enter Facebook (see article). The details are not yet known—at what price the shares list, how many Facebookers cash out, and so forth. But back-of-the-envelope calculations by Mr Sisney suggest that California might get a windfall of $2 billion over the current and coming fiscal years, and possibly billions more if the shares trade well.

Continue reading the rest of the story on The Economist