Facebook's initial public offering (IPO) is likely to create over 1,000 millionaires as well as many billionaires. There's another big group of people that will benefit from Facebook going public: the state of California. The Golden State currently has a multi-billion dollar budget deficit. Facebook to the rescue!
As you can see in the chart above, when the social networking giant goes public, the state of California could net $2.45 billion over the next five years or so. In fact, California could see as much as $1.5 billion in fiscal year 2013, which ends next June. That should give California's budget problems a leg up.
The numbers come from a 36-page report titled "The 2012-13 Budget: Economic and Revenue Update" (PDF) published by the Legislative Analyst's Office (LAO), California's Nonpartisan Fiscal and Policy Advisor. Here's an excerpt from the report, which emphasizes the figures are just estimates:
As we discussed in the Overview of the Governor's Budget, the Facebook impact on state revenues cannot be predicted in advance and will never be known retrospectively with any degree of precision. Yet, given that an IPO clearly would benefit state revenues, we believe it is appropriate for policymakers to incorporate this into their budgetary discussions—whether they decide to expend Facebook-related PIT revenues in advance of their receipt or, alternatively, to adopt a more cautious approach in light of the many uncertainties in this area.
In short, it's difficult to quantify the impact of Facebook's IPO on the state of California. That being said, the LAO is confident Facebook will help California with its budget deficit over the next couple of years. I bet California is very happy Facebook stayed in the state when it moved its headquarters late last year.
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