Gov. Jerry Brown has weathered criticism for making an aggressive bet on revenues in last year's budget act, but the state's top fiscal analyst approves of his latest forecast, which is more conservative.
The nonpartisan Legislative Analyst's Office said today that its own forecasts "now are fairly similar to the administration's in both 2011-12 and 2012-13, with just a few hundred million dollars of bottom-line differences each year." LAO forecaster Jason Sisney would not specify whether his estimate is higher or lower than the governor's, only that they are "fairly close, and in the revenue forecasting world, fairly close means a great deal."
That is a significant change after the LAO had disagreed since November with Brown's revenue estimates, saying the governor had been too optimistic in thinking the state would remain flush with capital gains revenue after a hot spring 2011. Several economists and fiscal experts said in today's Bee that last year's optimistic assumption was driven much more by politics than economic data.
Interestingly enough, the scaling back of capital gains forecasts comes on the eve of the highly anticipated Facebook initial public offering slated for Friday morning that will generate billions for California tax coffers. The Analyst's Office said transactions related to the IPO would be responsible for one-fifth of California's economic growth over the next 13 months.
The LAO estimates that California will receive $2.1 billion through June 2013 from the Facebook IPO alone as employees and insiders cash in their stock options. That figure also assumes that voters will pass Brown's tax hike on wealthy earners and sales. The LAO increased its projection after Facebook increased its per share estimate this week.
The LAO assumes the Facebook IPO will start at $38 and that shares will trade at $45 in six months, when a new round of insiders are slated to cash in.
Brown's Department of Finance was more conservative on Facebook, estimating the state would receive $1.9 billion, which includes $400 million if his tax plan passes. Finance assumed a $35 per share IPO and a $35 per share price after six months.
Finance spokesman H.D. Palmer said the department had even calculated the state's tax benefit from Facebook CEO Mark Zuckerberg's initial transaction alone. California is slated to receive $195 million this month when Zuckerberg exercises his option on 60 million shares, Palmer said.
PHOTO CREDIT: In this Feb. 5, 2007 file photo, Facebook CEO Mark Zuckerberg smiles in this office in Palo Alto, Calif. AP Photo/Paul Sakuma, File