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Former Gov. Schwarzenegger Spokesperson Aaron McLear on the impact of Facebook’s declining stock price on California’s budget.
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Problems aren't just their own anymore shares -- to another all time -- today they actually went below twenty bucks at one point you can see that they closed at 204.
It is taking a direct -- in California is already over -- deficit the state budgeted.
Nearly one point nine billion dollars in new revenues from sales tax and from the IPO but now the Golden State is getting.
Majorly -- joining us now is -- -- clear Press Secretary to former California Governor Arnold Schwarzenegger Aaron thanks for coming on the show we appreciate it.
-- Melissa thanks for having me so I was breaking down all these numbers with -- -- McDonald from box business who has on this story all day and she said basically as she looked in the records.
That they budgeted at getting one point nine billion dollars they built this into the budget one point five.
Was gonna come from the IPO they were figuring that people were going to cash out as the lock up expired.
They were banking on a the governor I guess it was bank and a 35 dollar price.
The legislature was banking on a 45.
Dollar price in the stock as this lock -- expired this summer.
Between August and then November.
Obviously a huge Al shortfall in the budget now as a result how this -- Well because it's a lot easier than making the tough choices of of either cuts or or higher taxes needed has been going on for years is one time solutions.
Are much easier -- make in a tops the tough calls and that's exactly what they did.
I think it's just amazing to me that you would sit there and you -- the budget and you're gonna have to tell -- is this business as usual you would sit there and you would build the budget.
-- you would look down the line and say -- there's this huge IPO coming.
Let's budget for all of these people to realize their options and cash out.
And then we're gonna read this windfall of tax revenue from that in and by the way let's gas at.
What the stock price is going to be when that happens and then they built in this other number.
Of how sales tax was gonna increase because they were also betting that all those people would go out buy houses and cars without money.
It's -- they're discounting the revenue -- written -- -- the budget that's easy for the sales.
Tax increase that -- more to do with the governor's proposed tax hike on the ballot in November.
But it -- -- exactly right it is what we did this under Schwarzenegger till our governor Brown's also doing at the legislature.
Is is not very good -- -- until decisions and and that's why we do things like this you know we -- -- office.
We actually move the the -- -- one day into the next fiscal year to save about a billion dollars.
Last year -- -- -- four billion that they hoped would just come because they thought the economy would get better.
The folks in Sacramento are not very good prognosticators they were the -- Wall Street and and our pension funds wouldn't be so bad so the idea you're exactly right -- they're guessing on on what this is going to be is is not helpful.
It would be funny or ironic if there wasn't such a fiscal crisis going on around the country and especially in California.
If I was planning -- own budget home I would see you know something like this as a windfall potential windfall down the road but you certainly wouldn't plan.
Hi you're gonna feed your -- how are you gonna pay your bills -- you're gonna pay your mortgage based on some hope down the road that something like this was gonna happen.
That's exactly right look at our pension system calpers.
Got which is our is our state -- -- pension system.
They were expecting about -- seven point 25% return on their investment.
Last of the got 1% return on their investment which means that crowds out funding for other services in the state.
This is how things work here they hope things get -- they don't get better than just paper over from year to year what they need to do Melissa is get at the root causes you do tax reform do budgeting reform do pension reform.
How those stocks saw an easy stop spending as much exactly -- the easy part is a hay out -- that we get two billion from FaceBook what do you think greatness do that you know that's the easy way out that's exactly what -- -- Emma Claire thanks coming out we appreciate your time.
It's --
