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IPOs Could Send $1B to California’s Burgeoning Budget

The slate of planned or recently-launched public offerings by California companies could send $1 billion in tax revenue to state coffers. At least six IPO’s valued at more than $1 billion could contribute to the budget, including Uber, Airbnb, Palantir and Slack, while Lyft and Pinterest already went public.

The windfalls IPOs produce are tough for state lawmakers to ignore, and they are just as difficult to count on as reliable sources of tax revenue from year to year. Any IPO tax revenue would be on top of the state’s projected $21 billion surplus this year.

H.D. Palmer, deputy director for external affairs at the California Department of Finance, which manages Gov. Gavin Newsom’s budget plans, told AP News, “From a state budget perspective, major IPOs are a bit like rainbows. They are lovely to watch, but they don’t last for very long.”

California has grown accustomed to IPO revenue since it is taxed as capital gains. To put it in perspective, the wealthiest 1% of the state’s earners were responsible for more than 47% of the state’s income tax collections in 2017.

Still, Assembly Budget Chairman Phil Ting (D-San Francisco) notes legislators must learn from the past. He told AP News, “My sense of it is we will have to be very careful. Our overall budget is $200 billion. So even if there was a $1 billion or $2 billion windfall, let’s say, it doesn’t make or break the budget — unless we spend it in the wrong way.”

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Inside The Story

Read more at AP NewsConnect With California Department of Finance’s PalmerConnect With Assembly Budget’s Ting

About Dennis Kaiser

Dennis Kaiser is Vice President of Content and Public Relations for Connect Commercial Real Estate. Dennis is a communications leader with more than 30 years of experience including as a journalist and in corporate and agency marketing communications roles. He is responsible for Connect’s client content operations and is involved in a range of initiatives ranging from content strategy, message development, copywriting, media relations, social media and content marketing services. In his most recent corporate communications roles, he led a regional public relations effort across Southern California for CBRE, played a key marketing role on JLL’s national retail team, and was responsible for directing the global public relations effort at ValleyCrest, the nation’s largest commercial landscape services company. In addition to his vast commercial real estate experience, Dennis has worked on communications and launch strategies for a number of residential projects such as Disney’s Celebration in Florida, Ritter Ranch in Palmdale California (7,200 homes, 22,000 acres), WaterColor in Florida and PremierGarage in Phoenix. Dennis’s agency background included firms such as Idea Hall and Macy + Associates. He has earned an outstanding reputation with organization leaders as a trusted advisor, strategic program implementer, consensus builder and exceptional collaborator. Dennis has developed and managed national communications programs for Fortune 500 companies to start-ups, both public and private. He’s successfully worked with journalists across the globe representing clients involved in major-breaking news stories, product launches, media tours, and company news announcements. Dennis has been involved in a host of charitable and community organizations including the American Cancer Society, Easter Seals, BoyScouts, Chrysalis Foundation, Freedom For Life, HOLA, L.A.’s BEST, Reach Out and Read, Super Bowl Host Committee, and Thunderbirds Charities.

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