Facebook IPO triggers California budget fracas
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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.
(The GOP contends that keeping taxes low will create more entrepeneurial success stories like Facebook, and more revenues.)
It’s just the latest way the social media boom in Silicon Valley has become a political football in Sacramento.
Democrats in the Legislature, who are reluctant to make other cuts Brown has proposed, have argued holding off until the state starts to see some of the revenues from Facebook and other internet IPOs expected this year.
The Brown administration has said that it did not budget for the Facebook IPO when it released its $92.6-billion budget earlier this year.
That means legislators and interest groups will be able to contend that the as-yet-unrealized money should go to their political priorities in the coming months.
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-- Nicholas Riccardi