Buffett : Companies should avoid states with large pension shortfalls: CA, CT, Illinois
Updated: Mar 4, 2019
Many people who try to pretend like California isn't drifting into sub-first world status like to pretend like the state doesn't have a massive deficit. It does. However, for some reason California is allowed to keep its pension obligations off the books, so people who aren't paying attention don't understand the deal. California has a 1 TRILLION dollar pension shortfall. A shortfall the taxpayers of the state are on the hook for. (Unless they can get a bailout from the rest of the country, which they will likely try to do.) Buffett is finally sounding the warning bell for the people who think these lavish government employee pensions are sustainable. We said a few years ago that one would have to be nuts to stick around in places like Illinois (which is at the critical stage already) if one had any wealth. This goes for individuals and for companies. Get out while you still can.
"In the public sector, you know, it's a disaster. And, you know, some of the—it's interesting to me when they talk about these relocation problems, you know, and New York and Amazon, all that sort of thing, you know—I—if I were relocating into some state that had a huge unfunded pension plan I'm walking into liabilities. '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. But that—that liability isn't gonna—you can't ship it offshore or anything like that. And those are big numbers, really big numbers. And they may come—you can delay a long time. I mean, they—you're getting pushed maybe somewhat. But 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?" Because I'll be here for the life of the pension plan—and they will come after corporations, they'll come after individuals. They just—they're gonna have to raise a lotta money."
Indeed. GET OUT.