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California warily watches Facebook stock price

August 2, 2012: 3:19 PM ET

Facebook investors and employees aren't the only ones carefully watching the company's stock price deflate.

California, which was hoping to net up to $2 billion for its cash-strapped budget from Facebook's IPO, acknowledged this week that the company's stock price has "fallen far below" the $35 level assumed in the state's revenue projections.

Facebook (FB) dipped below $20 for the first time on Thursday, a far cry from its $38 initial public offering price.

Related: Facebook has no friends

But the time period California really cares about for Facebook's stock price will come later this year: Oct. 15 to Nov. 14. In that one-month window, Facebook will issue around 273 million new shares to current and former employees to settle its equity obligations. Employees will in turn hand over around 45% of that windfall to governments to pay off their federal, state and local tax bills.

California was hoping to strike it rich when those Facebook insiders cash in on their stock and options. Facebook had said in May that expects its employees' post-IPO tax obligations to total $4.4 billion. If the stock price remains around the current $20, that tax bill drops to $2.5 billion.

This could spell big trouble -- and deficits -- for the Golden State. The state's Legislative Analyst's Office said in a report Wednesday that if "the lower share prices persist through November and December, hundreds of millions of dollars of income tax revenue assumed in the state budget plan are at risk."

Still, California might not get hit quite as hard if scared insiders dump Facebook shares later this year, since that could generate more taxable stock sales than originally projected. The state will next update its revenue estimates in November.

CNNMoney tech editor Stacy Cowley contributed to this report

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