At least six California-based companies worth more than $1 billion are expected to go public this year, Adam Beam of the Associated Press reports, and those IPOs will likely create a surge of tax revenue for the state.
The companies include Uber, Slack and Airbnb, and their initial offerings could provide a boost to California’s $200 billion annual budget – although it doesn’t really need one right now, Beam says, since the state is running a projected $21 billion surplus this year under Gov. Gavin Newsom (D).
It’s hard for state officials to predict exactly how much tax revenue the IPOs will produce, given the large number of investors involved. When Facebook went public in 2012, the state took in about $1.3 billion – most of that from founder Mark Zuckerberg.
Whatever the final number, lawmakers will be faced with the problem of spending it now or saving it for the next downturn, Beam says. “From a state budget perspective, major IPOs are a bit like rainbows,” said H.D. Palmer of the California Department of Finance. “They are lovely to watch but they don’t last for very long.”