April 10 (Bloomberg) — Los Angeles should emulate Berkshire Hathaway Inc. Chairman Warren Buffett to curb a sixfold increase in city pension costs since 2003, a panel led by former U.S. Commerce Secretary Mickey Cantor recommended.
The second-largest U.S. city relies on an overly optimistic forecast of 7.75 percent annual returns for its pension fund, causing the gap between available assets and obligations to widen, according to the report by the L.A. 2020 Commission. Under billionaire Buffett, Berkshire counts on annual returns of 6 percent for its pensions.
The independent commission established last year by Los Angeles City Council President Herb Wesson identified a number of other threats to the city's competitiveness and quality of life. Fewer than a quarter of registered voters participated in last year's municipal elections, regional tourism efforts are balkanized among several agencies, and pensions now consume 18 percent of the city budget, up from 3 percent in 2003, the report said.
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