California is counting on a $2 billion tax windfall from Facebook's IPO.
NEW YORK (CNNMoney) -- Facebook's employees and investors aren't the only ones who will get a windfall from the company's IPO this week.
California is hoping to reap a cool $2 billion in income taxes when those Facebook insiders cash in on their stock and options.
The exact numbers are still up in the air, but all sides agree that they will be large. Governor Jerry Brown's office is predicting that California will receive $1.9 billion over the next 13 months, while the Legislative Analyst's Office pegs the figure at $2.1 billion.
The gift will keep on giving for several years. The state could get $800 million more between 2013 and 2015, as well as tens of millions per year through 2017.
About one-fifth of the growth in California's personal income tax revenue this year can be attributed to the social networking titan's IPO, according to the analyst's office. Nearly 1% of all personal income in the state this year will be related to Facebook.
That figure could grow. In a review, released Tuesday, of the governor's newly revised budget, the analyst's office warned that it's very difficult to forecast how much the Golden State will receive. Facebook's share price hasn't been finalized, and more importantly, no one knows where the stock will trade in six months. That's when Facebook will issue stock to many of its 3,500 employees -- most of whom will owe taxes immediately on their paper gains.
As Facebook's share price rises, so do its employees' tax payments. Facebook said Tuesday that it now expects its employees' post-IPO tax obligations to total $4.4 billion, up from the $4 billion it previously estimated. That money will cover both state and federal tax obligations.
The Golden State desperately needs this golden egg. On Monday, Brown said the state's budget shortfall has grown to nearly $16 billion.
|5 people you might not tip (but should)|
|Stocks: It's report card time on Wall Street|
|Lara Spencer promoted to 'GMA' co-host|
|Stocks: Chipper after the long weekend|
|General Mills reverses course on right to sue after backlash|