California State budget office reports…

One big OOPS! Yes, California, the first failed state in American history just admitted that they made a “slight” mistake. What was that mistake? They invested rather heavily in the Facebook IPO.

Now I’m not saying that California invested directly in the Initial Public Offering. No, they were counting on all that money from people cashing in on the stock once they sold it. So sure was California that they would be rolling in the IPO dough, that they budgeted and spent the money before it actually collected the taxes. The problem is, Facebook’s IPO is considered a failure. The stock, which opened at $37/share is now around $19-$20/share.

Here are some of the details on what passes for thinking in the California state government.

Facebook Stock Drop Devastates California Budget Calculations

Since its initial public offering (IPO), Facebook’s stock price dropped from $38 per share on May 17 to $19.82 per share today, Bloomberg BusinessWeek reports. The writers of California’s budget relied heavily on a stock price increase in their calculations.

Working around a drop in personal income tax collections, the Legislative Analyst’s Office showed in May how the Brown administration factored into their budget calculations the Facebook IPO. Brown estimated that a stable share price — at least $35 per share for the next six months — would lead to an influx of $1.9 billion into the state’s general fund over the course of 13 months. In addition to counting on a stable Facebook stock price, the governor also factored in voter approval of his proposed tax hikes, which will be on the November ballot.

Betting on the stock market, especially in the current economic environment, is just plain stupid. Yes, I have small stock portfolio, however every penny in it is money I expect to lose. I don’t factor it into my net worth except at tax time. However, Governor Moonbat, (Formally Moonbeam), never considered that the stock price would crater. The second delusion are the new tax hikes on the ballot. The odds of that referendum passing is about the same as me winning the lottery. A nice dream, but nothing more.

Brown also counted on IPO-related personal income tax revenues to the tune of $80 million for the 2013 to 2014 as well as the 2014 to 2015 budget years. For the 2012 tax year, the profits of the IPO — under favorable circumstances — were to have accounted for one fifth of personal income tax revenue increases.

I see Governor Moonbat has been visiting some of the Medical Marijuana wards and sampling the goods. It looks like a few others were thinking the same thing.

The legislative analyst from the Legislative Analyst’s Office cautioned Brown about the impossibility to forecast accurately how any stock would perform.

Ahh! Some common sense at last!

Nevertheless, this expert estimated that the stock price would rise to $45 per share in a six-month period. The analyst predicted further price increases in the following years.

Well so much for THAT forlorn hope! Obviously, the analyst was also inhaling the “medicine” and deeply. They are still hoping the voters are stupid enough to increase their taxes. What happens if they should say NO!? My guess is California will start issuing IOU’s to their vendors and not give people their tax refunds…again.

The Facebook Crater

However, I doubt that Brown will finally cancel his personal Choo Choo train ((California Bullet Train to Nowhere Gets $6 Billion Via State Lawmakers)). He is a progressive liberal democrat and their motto is “If you waste billions building it, they will come…or else.” They will continue paying their union cronies far more than they are worth, and be completely stunned when all that tax revenue they keep expecting never comes in. Right now, no business will expand or move into California and many are fleeing the state as fast as they can find new locations. Even all those “Evil rich people” are bailing out.

California is a doomed state. You people out there deserve every bad thing that’s going to happen to you. I don’t doubt you’re expecting massive bailouts from the Federal Government, but the states that will be looted to pay for your spendthrift ways will flat out refuse. The worst case scenario is California being stripped of it’s statehood and made a territory, the state and probably the local governments removed and replaced by federal appointees, and the eventual break up of the state into 2-5 new, much smaller states.

You voted for those morons who ran the state into the ground, enjoy the collapse when it happens.

Remember in November!

Thatisall

~The Angry Webmaster~

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