Facebook hasn't performed the way investors expected.
No one may be more disappointed than those trying to pay the bills at the Capitol in Sacramento.
Before the social networking giant went public last spring, California's Legislative Analyst's Office predicted the state could reap billions in extra income taxes from Facebook stock sales before the end of June 2013.
"Our updated Facebook revenue forecasts now assume a $38 IPO share price, which would rise to $45 in six months, with additional share price growth in later years,” the analysts wrote in mid-May. “We estimate that this would result in $2.1 billion of General Fund revenue collections over the next 13 months."
Facebook did touch $45 for a moment on its disastrous first day of trading, but shares have never gotten close again since.
The LAO now suggests the state should still reap a large of amount of income taxes even at Facebook’s current price. Many insiders received shares at well below that price, and some may cash out a portion of those shares before the end of the year, especially if voters approve a tax hike for 2013.
However, if the , the LAO warns, "hundreds of millions of income tax dollars assumed in the 2012-13 state budget plan are at risk."
The loss of potentially hundreds of millions of dollars could be a problem as the state struggles to cover an estimated $16 billion gap this year.
The Governor is counting on voters approving the income tax increase in November. But the chances of the tax increase passing may have been hurt by revelations that there are hundreds of millions of dollars hiding in "special funds" throughout state government.
The Sacramento Bee discovered $54 million which may have been hiding for years in the parks department, even as California threatened to close dozens of parks unless private donors came forward with funding. The Los Angeles Times followed up with more discoveries, including $113 million untapped in a state recycling fund.
Meantime, Standard & Poor's has given California's new short-term bonds its highest rating. The bonds are "revenue anticipation notes" which keep cash flowing in to pay the state's bills. S&P notes that California's still has problems, but its economic recovery "is gaining momentum."
Yet even if Facebook's share price doesn't gain the same type of momentum, the loss in anticipated income taxes from the IPO may be offset by new discoveries of money tucked away throughout Sacramento.
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