Seattle Times news services

SACRAMENTO, Calif. — California Gov. Jerry Brown on Monday released a $91 billion budget proposal that sharply cuts health and welfare spending, reduces state payrolls by 5 percent and freezes construction of new courthouses. But the situation would be worse were it not for Facebook.

The budget presumes the social-media company's IPO will kick $1.5 billion in tax revenues into the state's coffers by the end of the fiscal year in June 2013.

California taxes the capital gains from stock sales.

In 2006, two years after Google went public, sales of that company's shares boosted tax receipts. After cashing in more than 9 million shares valued at $3.7 billion that year, 16 Google insiders owed the state as much as $380 million in taxes. At the time, that was enough to cover the salaries of more than 3,000 state workers, USA Today reported.

In addition to paying California's 9.3 percent capital-gains tax, the state's millionaires pay 1 percent income tax to underwrite mental-health programs, the result of a voter-approved ballot initiative.

Mac Taylor, California's legislative analyst, said a Facebook offering could be four times as large as Google's IPO, making it the largest public offering ever by a California company.

According to a report in Sunday's San Francisco Chronicle, most of the money will come in two large chunks: when Facebook goes public and founder/chief executive Mark Zuckerberg exercises options to buy 60 million shares, and six months later when Facebook frees up about 280 million restricted stock units granted to employees.

Brown's revised budget reflects a steadily worsening fiscal picture for California. On Saturday, he announced via YouTube that the state's deficit had grown to $16 billion, nearly twice what he projected when he released his initial budget proposal in January.

The gap grew, the budget revision states, because Brown overestimated tax revenues by $4.3 billion and the federal government and courts blocked $1.7 billion in cuts the state wanted to make. The remainder of the difference reflects an increase in the amount of money the state is mandated to spend on education under a complex voter-approved formula.

To close the wider gap, Brown has heightened the cuts he wants to make to Medi-Cal, to $1.2 billion, and maintained another $1.2 billion in welfare and child-care savings he proposed in January.

He also wants to slash payments to people who care for the disabled by 7 percent and reduce the state payroll through a shorter workweek or wage concessions. He proposed $500 million in cuts to the state's struggling court system, including a one-year freeze on all new construction projects.

The service reductions are expected to be harsher if voters in November reject Brown's proposed combination of a sales-tax increase and higher levies on high earners. The governor presumes that $8.5 billion of the state's $16 billion deficit will be filled by his tax measure. If it fails, he would impose an automatic $5.5 billion cut to public schools, along with ending popular programs such as lifeguards at state beaches.

Compiled from the Los Angeles Times and Seattle Times research