Tag: Facebook

Facebook IPO Worth $2.5 Billion to California Within 5 Years


This is the estimate that was delivered yesterday by the California Legislative Analyst’s Office.

Facebook’s eagerly anticipated Wall Street debut could pump nearly $2.5 billion into California coffers over the next five years, the state’s top budget analyst said Monday.

It was the first public prediction by a state official of what the social networking giant’s initial public offering could mean for California’s bottom line.

The revenue would come partly from taxes on the sale of stock, as a lucky few cash in their Facebook holdings. A report from Legislative Analyst Mac Taylor said that could lead to “extraordinary one-time changes” that drive up tax receipts from newly wealthy residents.

Facebook filed for a $5-billion IPO earlier this month, smaller than some predicted but still the biggest yet for an Internet company. If the IPO occurs this spring, the state could get a $500-million boost in the current fiscal year, which ends June 30, Taylor wrote.The real payoff would come after that, with an estimated $1.5-billion windfall in the 2012-13 fiscal year. An additional $450 million is expected to trickle in over the following three years, according to the report.

This is one time money and I am confident that California Governor Jerry Brown and his minions in the Democratic Party controlled Legislature will squander it.

The California Legislature just cannot bear to cut entitlement programs to their many constituents.

Interestingly enough the amount of money the State of California will receive from Facebook this year won’t be making even a dent in the $8 plus Billion deficit.


Flap’s California Morning Collection: February 2, 2012


Facebook workers in Menlo Park, California

The California Legislature is in session. Today’s schedule is here.

On to today’s California headlines:

Facebook IPO triggers California budget fracas

Moments after Facebook filed its IPO on Wednesday, California legislative Republicans used it to take a swipe at Gov. Jerry Brown’s proposed tax initiative.

It’s an indication of how the public offering will dominate not only the business blogs, but discussions among budget wonks in the state Capitol in coming weeks.

The leaders of the small GOP caucuses in both houses of the Legislature released a joint statement urging Brown to use the expected windfall of state tax revenue from the IPO — very, very rough estimates are in the $500-million ballpark — to “protect our public schools from the Governor’s trigger cuts and pay down the state’s debt service.”

Brown, a Democrat, has proposed cutting more than $4 billion from public schools if voters in November reject his proposed temporary tax hike to close California’s persistent budget deficit. Republicans oppose the tax hike and would rather see Facebook revenues go toward keeping schools solvent this year.

Of course, the statement from Assemblywoman Connie Conway (R-Tulare) and state Sen. Bob Huff (R-Diamond Bar) urges that the revenues be used just for one-time purposes rather than ongoing funding. So the Facebook cash wouldn’t go as far as a five-year tax hike.

California lawmakers cut ties with Komen over funding decision

Several California lawmakers are severing ties with Susan G. Komen for the Cure over the breast cancer foundation’s decision to stop providing breast cancer exam funding to Planned Parenthood.

Democratic Sen. Noreen Evans, who chairs the Legislative Women’s Caucus, blasted the decision in a statement, saying it “defies logic … to deny the most disadvantaged women the critical care they need.”

Evans announced Wednesday that the caucus has decided to suspend its annual bake sale to raise money for the foundation and withdraw its sponsorship of a recent tradition of illuminating the Capitol dome with pink lights to raise awareness of breast cancer.

“I am frustrated, angered, and offended that Susan G. Komen for the Cure let a radical political viewpoint withdraw its support for women’s health care,” Evans said in a statement, referring to reports that the funding decision was made in response to pressure from anti-abortion groups. “I am hopeful they will reconsider their draconian move and fund Planned Parenthood throughout the nation.”

Budget Dreams and Dangers of Facebook’s IPO

In the world of state budget writing, the past is often prologue. And that’s why news of a tech company’s dazzling initial public offering is nothing new in Sacramento, and why there’s both hope… and caution.

And the bottom line: the eventual capital gains from the 2012 Facebook IPO will no doubt help balance the state’s books. But the smart bet is that it won’t be enough to stave off the vast majority of the tough choices that lie ahead.

Wednesday’s IPO announcement by the Menlo Park company is the jumping off point of my budget story on this morning’s edition of The California Report — specifically, the impact on state finances.

The easy assumption to make is that Facebook will be, for the budget, better than Google was in 2006. After all, news reports say that the search engine giant’s 2004 initial public offering will be dwarfed by the king of social media. So that would mean the state’s finances are in store for some great times?

Well, not so fast.

The news, as we remember from the spring of 2006, was amazing: a $7 billion windfall of tax revenues, led largely by Google. The company’s insiders and staffers began cashing in their IPO stocks on Valentine’s Day 2005, meaning much of the state taxes they paid on capital gains showed up in the 2006 calendar year. And while the data doesn’t single out Google, state tax stats show that the number of $1 million+ tax returns in California jumped an amazing 27% between 2004 and 2006.

Jerry Brown: California no worse than elsewhere in manufacturing losses

Gov. Jerry Brown said this evening that California is losing manufacturing at a rate no faster than the rest of the country, telling the TV show host and former Michigan Gov. Jennifer Granholm the problem is a national one.

“This is the place where Facebook started, where Hewlett-Packard started, where Steve Jobs built Apple Computer just a few miles from where we’re sitting,” California’s Democratic governor said on Current TV’s “The War Room with Jennifer Granholm. “This is a place of innovation.”

Enjoy your morning!


Flap’s California Morning Collection: January 12, 2012


Petco Park, San Diego

The California Legislature is in session. Today’s schedule is here.

On to today’s California headlines:

Number of millionaires in state surged last year

The number of Californians reporting incomes of more than $1 million increased sharply last year, as did their share of the income stream, a new report from the Franchise Tax Board reveals.

There were 10,000 taxpayers in the million-dollar income club during the 2009 tax year – just one-third of 1 percent of all returns – but that number jumped 27 percent to more than 13,000 for 2010, based on tax returns filed in 2011.

California GOP needs more like Rep. Kevin McCarthy

Listening for two hours to House Republican Whip Kevin McCarthy, I didn’t once hear the word “Obamacare.” And in an election year. How refreshing!

Not that the Bakersfield congressman doesn’t oppose President Obama’s sweeping healthcare act. He does and voted against it.

He just is not as nauseatingly trite about it as, say, Rep. Michele Bachmann, the Minnesota tea party bore who can’t seem to get through two sentences without regurgitating “Obamacare.” But I’m getting off track.

Anyway, Iowa caucus-goers booted her out of the presidential race.

I’m sitting wondering why McCarthy — savvy, substantive, sane and civil — and other Republican members of Congress don’t run for higher office in California: U.S. senator or governor.

Landing in one of those slots would put them in position to run for the White House from a state possessing the nation’s most potent political arsenal: roughly one-fifth of the necessary convention delegates to nominate, and electoral votes to elect, a president.

I’m not saying that McCarthy would be a great senator or governor, let alone a president. Let’s not get ahead of ourselves.

But he certainly has a track record in office that shows he’s plenty qualified to be a senator or governor. And that’s a long step ahead of our most recent Republican nominees for those offices.

California legislative analyst expects lower revenue than Gov. Brown, raising specter of more cuts

The nonpartisan Legislative Analyst’s Office on Wednesday questioned whether Gov. Jerry Brown has put more state programs at risk of further cuts by projecting overly optimistic tax revenues.

Mac Taylor, the legislative analyst, also suggested that the Legislature should consider providing more certainty to schools, which will be on tenterhooks through the year waiting to see whether they can avoid the nearly $5 billion in cuts that would be “triggered” if voters reject Brown’s November tax-hike initiative.

Taylor said the governor, who released his $92.6 billion budget last week, is counting on taxes from investments by the wealthy that might not materialize.

“What we’re concerned about is that his capital gains assumption is a little bit optimistic,” Taylor said at a news conference unveiling the LAO report. “We’ve looked historically, we’ve considered what’s happening in housing, which is fairly stagnant, we’ve looked at projections of where we think the (stock) market will be, and we do get considerably lower numbers from capital gains.”

The LAO’s annual review of the state budget provides an alternative to the governor’s proposal. It’s used by legislators as a key guideline as they move through the first stages of their budget work.

The governor responded by saying that the report backed up his call for tough measures to close the deficit. Brown is proposing $4.2 billion in cuts — many to social programs that serve low-income residents. The cuts would take effect whether or not voters pass Brown’s tax measure, which would temporarily raise sales taxes by a half-percent and the income tax of individuals who make $250,000 a year or more.

“The Legislative Analyst’s Office report underscores the fundamental uncertainty of our time and, therefore, the financial imperative to be prudent, make the tough cuts now and give the voters a choice on additional revenues,” Brown said in a written statement.

‘Facebook Effect’ Shows California Budget Reliance on Capital Gains Taxes

The potential for California (STOCA1) to see a tax windfall from a Facebook Inc. public stock offering this year demonstrates how much the state relies on capital-gains taxes, a volatile revenue stream that hampers its credit rating.

Menlo Park, California-based Facebook, the world’s most- used social-networking site, is considering the largest initial public offering for an Internet company on record, a person familiar with the plans said last year. Estimated at $10 billion, the offering would make instant millionaires of company employees and require the state to adjust its revenue forecast to reflect additional capital-gains taxes they’d pay, the state’s legislative analyst said yesterday.

That kind of unanticipated boost shows the boom-and-bust cycle that capital gains taxes often inflict on California’s budget. In fact, capital-gains tax revenue as a percentage of the state’s general fund plummeted from 12 percent to just 3 percent between 2007 and 2009 as investors pulled away from the stock market, a decline of $9.3 billion, according to state finance department figures.

“It is a significant concern,” said Gabriel Petek, an analyst at Standard & Poor’s, which ranks California’s credit the worst among its peers at A-. “It’s probably one of the things that presents a structural impediment to the rating and makes it hard for the state’s credit rating to move up into the AA range that the typical state is.”

Enjoy your morning!


Flap’s California Morning Collection: November 22, 2011


The California Legislature is not in session.

On to today’s headlines:

New challenge to California’s “top two” primaries

Candidates and voters who belong to the Green, Libertarian and Peace and Freedom political parties are holding a news conference today to announce a new lawsuit challenging Proposition 14.

They don’t like last year’s initiative that created a new election system in which the top two vote-getters advance to a general election – regardless of party affiliation. The minor parties argue that the new system puts them at a disadvantage.

They’ll announce details of their suit today at 11 a.m. in front of the Secretary of State’s office at 1500 11th St.

Dan Walters: California government reformers occupy two camps

California’s political dysfunction has evolved from a theory first advanced by a few jaundiced observers a generation ago – including yours truly – to a widely embraced axiom that has spawned endless journalistic, academic and civic discourse.

While there’s broad agreement on symptoms of California’s malaise, such as chronic budget deficits, there’s wide disagreement on its causes and what might be done to correct it.

Reformers divide roughly into two camps: Those who believe that tweaking political processes incrementally can make government work again, and those who contend there’s a more fundamental disconnect that can be cured only by creating a new structure attuned to 21st-century reality.

Wal-Mart ramps up ballot threats to speed new stores

In a push to expand across California without interference, Wal-Mart is increasingly taking advantage of the state’s initiative system to threaten elected officials with costly special elections and to avoid environmental lawsuits.

The Arkansas-based retailer has hired paid signature gatherers to circulate petitions to build new superstores or repeal local restrictions on big-box stores. Once 15 percent of eligible voters sign the petitions, state election law puts cash-strapped cities in a bind: City councils must either approve the Wal-Mart-drafted measure without changes or put it to a special election.

As local officials grapple with whether to spend tens of thousands or even millions of taxpayer dollars on such an election, Wal-Mart urges cities to approve the petition outright rather than send it to voters.

Inmates harass victims via Facebook

Lisa Gesik hesitates to log into her Facebook account nowadays because of unwanted “friend” requests, not from long-ago classmates but from the ex-husband now in prison for kidnapping her and her daughter.

Neither Gesik nor prison officials can prove her ex-husband is sending her the messages, which feature photos of him wearing his prison blues and dark sunglasses, arms crossed as he poses in front of a prison gate. It doesn’t matter if he’s sending them or someone else is — the Newport, Ore., woman is afraid and, as the days tick down to his January release, is considering going into hiding with her 12-year-old daughter.

“It’s just being victimized all over again,” she said.

Across the U.S. and beyond, inmates are using social networks and the growing numbers of smartphones smuggled into prisons and jails to harass their victims or accusers and intimidate witnesses. California corrections officials who monitor social networking sites said they have found many instances in which inmates taunted victims or made unwanted sexual advances.

Enjoy your morning!


President 2012: President Obama to Address LinkedIn – the Online Professional Network


President Barack Obama arrives at Moffett Federal Airfield in Mountain View, Calif., on Sunday, Sept. 25, 2011. Obama is scheduled to attend several campaign events and a town hall meeting at LinkedIn

Then, the President is off to Southern California to hit up the Hollywood/Beverly Hills campaign ATM.

Fresh off two weekend fundraisers in Silicon Valley, President Barack Obama talks jobs and the economy today at a town hall sponsored by the online professional network LinkedIn.

Obama will answer questions from a live audience of LinkedIn members and employees and take questions as well from LinkedIn members across the country. The event starts at 11 a.m. at the Computer History Museum in Mountain View.

Watch it live at LinkedIn or on the White House’s website.

President Obama’s fundraisers on Sunday included Facebook’s COO Sheryl Sandberg.

Los Angeles is bracing for the massive traffic jam as a result of Obama’s visit. Traffic maps of street closures can be found here.