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Old 03-01-2019, 06:26 AM
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Mary Pat Campbell
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https://www.bizjournals.com/sanfranc...hoo&yptr=yahoo

Quote:
Warren Buffett discusses ‘disaster’ contributing to Bay Area exodus in CNBC interview

Spoiler:
Warren Buffett described unfunded public pensions as a “disaster” that companies and individuals must consider when deciding where to expand or move.

While corporate America’s traditional, defined-benefit pension plans are no longer the problem they were 10 or 20 years ago, “in the public sector, you know, it’s a disaster,” Buffett told CNBC this week in discussing Amazon’s (NASDAQ: AMZN) decision to ditch New York City for a major expansion.

California’s unfunded public pensions are a hot topic, with taxpayers on the hook for making up any shortfalls in employee contributions or investment returns.

“If I were relocating into some state that had a huge unfunded pension plan, I'm walking into liabilities," Buffett said. "'Cause I mean, who knows whether they're gonna get it from the corporate income tax or my employees — you know, with personal income taxes or what. That liability isn't gonna — you can't ship it offshore or anything like that. And those are big numbers, really big numbers.

“The politicians are the ones that really haven't attacked it in a good many states. And when you see what they would have to do, I say to myself, ‘Why do I wanna build a plant there that has to sit there for 30 or 40 years?’” he said. “They will come after corporations, they'll come after individuals. They're gonna have to raise a lotta money.”

Buffett’s concerns, however, haven’t stopped him from investing in California. Buffett-led Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) is the largest shareholder in San Francisco-based Wells Fargo (NYSE: WFC) and is the outright owner of San Francisco-based Business Wire and South San Francisco-based See’s Candies.

But talk of a Bay Area exodus has been on the rise in recent months as a change in federal tax law means affluent residents of California and other high-tax states likely face bigger tax bills. Plus, the Bay Area has recently lost two Fortune 500 headquarters: San Francisco-based McKesson (NYSE: MCK) and South San Francisco-based Core-Mark Holding Co. (NASDAQ: CORE). Both companies moved to Dallas.


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But Bay Area business leaders are quick to counter such talk, saying the region's economy continues to enjoy dramatic growth, with the nine-county region’s unemployment at levels that are below the national and California averages.

Joining Buffett’s chorus is Berkshire Hathaway Vice Chairman Charlie Munger, a Southern California resident, who criticizes states and cities with high taxes and regulations that make them unattractive to the wealthy.

“Driving the rich people out is pretty dumb, if you’re a state or a city,” Munger told CNBC. “There are a number of places that have shot themselves in the foot — Connecticut, California, New York City.”


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