CA Governor Candidate Steve Hilton on Why California is Destroying Itself & How a Republican Can Win
(0:00) Intro: Steve Hilton is a Republican Brit Running for CA Governor
(8:34) Zero Tax Under $100K and a 7.5% Flat Rate: Is It Fiscally Possible?
(27:52) Why CA Homes Cost 3x More to Build (Unions, CEQA, and Climate Dogma)
(44:50) Why CA Schools Spend the Most but Get the Worst Results
(50:02) Crime, Homelessness, and the Failure to Enforce Laws That Already Exist
(1:01:34) Can a Republican Actually Win California?
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Hilton draws a direct parallel between California's current state and the UK in the 1970s, citing union power, economic stagnation, and high taxation as shared features.
transcript
Steve Hilton: There are so many things I see in California today that are exactly like the UK in the 70s. You've got the massive dominance of the unions in policy making. You've got a sclerotic economy. You've got massively high taxation.
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Hilton draws a direct parallel between California's current state and the UK in the 1970s, citing union power, economic stagnation, and high taxes as warning signs of impending crisis.
transcript
Steve Hilton: There are so many things I see in California today that are exactly like the UK in the 70s. You've got the massive dominance of the unions in policy making. You've got a sclerotic economy. You've got massively high taxation. I mean, it was higher then. At one point, I think the top rate when you add in the wealth taxes in the UK was literally 98%. But you had that confiscatory taxation and top rate of 60% and so on. So very, very similar.
Hilton draws a parallel between California now and the UK in the 1970s — union dominance, economic stagnation, and high taxation — which he says Thatcher was elected to fix.
transcript
Steve Hilton: There are so many things I see in California today that are exactly like the UK in the 70s. You've got the massive dominance of the unions in policy making. You've got a sclerotic economy. You've got massively high taxation.
Hilton argues the headline GDP figure masks severe hardship: highest unemployment, highest poverty tied with Louisiana, and over a third of residents unable to meet basic needs.
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Steve Hilton: That 4th biggest economy data point, underneath that, you've got the state with the highest unemployment rate in the country and the highest poverty rate in the country tied with Louisiana. There's a United Way report... they found that over a third of Californians cannot afford to meet basic needs.
Hilton presents his signature tax plan — zero tax under $100k, 7.5% flat above it — and argues it costs roughly 18.5% of revenue, which is covered by returning state spending to pre-pandemic levels and cutting an estimated $80 billion/year in fraud, waste, and abuse identified by his CalDOGE initiative.
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Steve Hilton: The cost of that in total is about an 18.5% reduction in revenue, which takes us down about 60 billion, something like that, which is not even going back to what the budget was just before the pandemic. They've actually, if you look at the budget of the state of California, it's nearly doubled in the last 10 years. In the last five years, it's gone up something like 75%. And so this is just bringing the budget back to achieve that entire tax up, would bring the budget back just to where it was roughly before the pandemic.
Hilton proposes eliminating state income tax on the first $100,000 (covering ~7 million households, about a third of the state) and a 7.5% flat rate above that, funded by rolling back the budget to pre-pandemic levels and eliminating waste.
transcript
Steve Hilton: The starting point for my tax plan is what can we do quickly to help people who are really struggling?... The $100,000 mark... in many counties in California today, the official definition for low income is 100,000. So that number may sound very high to people in other parts of the country. It's actually the definition in a lot of counties of low income. So you've got people earning 70 grand, 80 grand, 90 grand in California. They are paying 9.3% state income tax. That rate is higher than the top rate in most states in America... The cost of that in total is about an 18.5% reduction in revenue, which takes us down about 60 billion, something like that, which is not even going back to what the budget was just before the pandemic. They've... nearly doubled in the last 10 years.
Hilton argues his plan to eliminate state income tax on the first $100,000 and impose a 7.5% flat tax above that is fiscally viable because California's budget has ballooned roughly 75% in five years — returning to pre-pandemic levels would cover the revenue loss.
transcript
Steve Hilton: The cost of that in total is about an 18.5% reduction in revenue, which takes us back, it takes us down about 60 billion, something like that, which is not even going back to what the budget was just before the pandemic. They've actually, if you look at the budget of the state of California, it's nearly doubled in the last 10 years. In the last five years, it's gone up something like 75%. And so this is just bringing the budget back to achieve that entire tax up, would bring the budget back just to where it was roughly before the pandemic.
Hilton argues that the headline GDP ranking masks severe human-scale economic distress: highest unemployment and highest poverty rate in the nation, plus a third of residents unable to meet basic needs.
transcript
Steve Hilton: But that 4th biggest economy data point, underneath that, you've got the state with the highest unemployment rate in the country and the highest poverty rate in the country tied with Louisiana. There's a United Way report just the other, about a year ago, they do it every two years, sort of an assessment of living conditions in California. And they found that over a third of Californians cannot afford to meet basic needs.
Hilton and his running mate Herb Morgan have published reports through their 'CalDOGE' initiative estimating $425 billion in fraud, waste, and abuse over five years, including $928 million of a $1 billion climate fund diverted from solar panel installation to nonprofit activism and voter registration.
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Steve Hilton: Our number over the last five years, total, our estimate was 425 billion. So averaged over the years, it's about 80 billion a year. So that's, so it's around, you know, 20% or so. ... Here's some specific examples. The second fraud report, it's a classic. $1 billion over the last 10 years, 100 million every year since 2015. This is from the Climate Change Mitigation Fund, which is part of the cap and trade system. ... 100 million a year was allocated to be spent on climate change mitigation. In this case, it was solar panels for low-income apartment buildings. So we actually tracked that money with an AI partner that can get all the reports. And of that 1 billion total in 10 years, the actual amount spent on the purported benefit here, solar panel installation, was 72 million. 928 million actually went to nonprofits doing all the usual Democrat-associated bullshit, frankly, voter registration, environmental justice campaigns, all that kind of stuff.
Hilton details findings from his CalDOGE initiative: an estimated $425 billion in fraud over five years (~$80 billion/year), including $1 billion from the climate change fund where $928 million went to nonprofits for activism instead of solar panels, and $350 million from cannabis tax diverted from substance abuse prevention.
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Steve Hilton: Our number over the last five years, total, our estimate was 425 billion. So averaged over the years, it's about 80 billion a year. So that's around 20% or so... $1 billion over the last 10 years... from the Climate Change Mitigation Fund... 100 million a year was allocated to be spent on climate change mitigation... solar panels for low-income apartment buildings. And of that 1 billion total in 10 years, the actual amount spent on the purported benefit here, solar panel installation, was 72 million. 928 million actually went to nonprofits doing all the usual Democrat-associated bullshit, frankly, voter registration, environmental justice campaigns, all that kind of stuff.
Hilton argues that all candidates across parties agree on the diagnosis — California is too expensive, over-regulated, and impossible to build in — and that a Republican victory would disrupt the political machine enough to allow cross-party cooperation on real reforms.
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Steve Hilton: It is completely conceivable that a Republican could win. ... All the day in terms of the diagnosis of the problem. It's incredibly expensive to live here. People can't, people are really struggling. The business climate is a disaster. We're massively over-regulated. We can't build anything. Everything takes too long. Everything's too complicated. You know, there's a real consensus about diagnosing the problem among all the candidates. ... I also think that when you have a situation where you have the first Republican governor elected for 20 years, that really will change the dynamic in Sacramento. I think it actually may loosen things up a little bit, because I think that there are people there in the legislature who really understand that things have gone too far. Some of them have said it to me personally, Democrats there, but they feel constrained by the current political situation, the machine being in control.
Hilton explains that California's housing crisis stems from three forces: CEQA's private right of action allows unions to sue to force project labor agreements; climate regulations like EV charging mandates add huge costs; and impact fees are 30x higher than in Texas. He recounts a legislator who privately admitted 'the unions run this place' and couldn't publicly support reform.
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Steve Hilton: You've got these three structural forces that underpin the problem... union power, litigation, and climate dogma. And they all come together in the housing story... The same exact floor plan... costs just two or three times more to build in California than in neighboring states... 70% of CEQA lawsuits are used to block housing. Most of those lawsuits are filed by unions. They're used as leverage to negotiate what they call project labor agreements... union only, so it's a closed shop, and prevailing wage... two or three times market rate wages... There's one meeting I had with the legislator who was described to me as good on housing... They said, 'Oh, I couldn't support you publicly.' I said, 'Why not?' 'Well, the unions would hate it.'... They just waved their arm around like this and said, 'Yeah, the unions run this place.'
Hilton breaks down why California homes cost 2-3x more to build: onerous building codes driven by climate requirements (EV charging, solar panels), the CEQA law's private right of action used by unions to extract project labor agreements with prevailing wages 2-3 times market rate, and impact fees of $30,000 per door versus under $1,000 in Texas.
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Steve Hilton: The same exact floor plan, house, apartment building, industrial building, whatever it is, costs just two or three times more to build in California than in neighboring states. ... The first reason is the building codes, the actual requirements for construction, which is way more onerous, driven by climate dogma that actually doesn't really provide much climate. ... CEQA, the California Environmental Quality Act itself is a nightmare in terms of the amount of regulation you have to comply with. The private right of action means anyone can sue. 70% of CEQA lawsuits are used to block housing. Most of those lawsuits are filed by unions. They're used as leverage to negotiate what they call project labor agreements, where you have an agreement for the site, and usually they have one or two of these components, both of which sound great. Skilled and trained workforce, which means union only, so it's a closed shop, and prevailing wage. Again, sounds very good, but it's two or three times market rate wages.
Hilton breaks down why housing costs are so high: CEQA lawsuits (70% used to block housing, most filed by unions), onerous building codes driven by climate mandates like EV-charging requirements and solar panel mandates, and project labor agreements that force prevailing wage and union-only workforces, often requiring workers to be flown in from out of state.
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Steve Hilton: The same exact floor plan, house, apartment building, industrial building, whatever it is, costs just two or three times more to build in California than in neighboring states. The first reason is the building codes... driven by climate dogma that actually doesn't really provide much climate benefit. ...CEQA, the California Environmental Quality Act itself is a nightmare in terms of the amount of regulation you have to comply with. The private right of action means anyone can sue. 70% of CEQA lawsuits are used to block housing. Most of those lawsuits are filed by unions. They're used as leverage to negotiate what they call project labor agreements... skilled and trained workforce, which means union only, so it's a closed shop, and prevailing wage... two or three times market rate wages.
Hilton tells a story of a Democratic legislator who privately admitted his own housing reform proposal would be transformational but couldn't support it publicly because 'the unions run this place.' He then cites Gavin Newsom's donation history to show that government unions, trial lawyers, and non-government unions are the top three donor categories.
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Steve Hilton: I took meetings with legislators. There's one meeting I had with the legislator who was described to me as good on housing. This is a person you need to talk to. And we had a great meeting. They said this would be transformational. I said, great, let's work on it together. ...Oh, I couldn't support you publicly. Why not? Well, the unions would hate it. ...if you take away the private right of action, you take away the union's leverage. And I said, yeah, but you just told me it would be transformational. They just waved their arm around like this and said, yeah, the unions run this place.
Hilton explains that California's climate regulations since the 2006 Global Warming Solutions Act have driven down in-state oil production, forcing the state to import nearly 80% of its oil — primarily from Iraq — while fossil fuel use as a share of total energy has barely budged from the national average of 80%, resulting in the highest gas prices in the country.
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Steve Hilton: The fundamental reason that gas prices are so high is because, again, in the name of climate, but without actually, actually in this case, it's counterproductive to climate, instead of using the production that we have here in California, I've been to the oil fields in Kern County mainly, near Bakersfield. We are now importing nearly 80% of the oil that we use. Over the period of the, since, really this all started in 2006 with the passage of the Global Warming Solutions Act. That was the sort of foundational climate legislation in California. Over that period, our use of fossil fuels has declined by not that much. And the proportion of our energy that's coming from fossil fuels is about 80% still. The rest of the country, it's about 81%. So it's barely any different. But the difference is we used to produce most of what we use in state. Now we are importing nearly 80%. And that has driven up the cost. You have to strip it from halfway around the world. Our #1 provider is Iraq right now.
Hilton explains that California's climate policies since the 2006 Global Warming Solutions Act have driven down in-state oil production while fossil fuel consumption barely changed versus the rest of the country, so the state now imports nearly 80% of its oil — with Iraq as the number one source — driving up gas prices.
transcript
Steve Hilton: We are now importing nearly 80% of the oil that we use. Over the period of the, since, really this all started in 2006 with the passage of the Global Warming Solutions Act... the proportion of our energy that's coming from fossil fuels is about 80% still. The rest of the country, it's about 81%. So it's barely any different. But the difference is we used to produce most of what we use in state. Now we are importing nearly 80%. And that has driven up the cost. You have to strip it from halfway around the world. Our #1 provider is Iraq right now.
Hilton argues California's climate regulations are counterproductive: the state still uses ~80% fossil fuels (same as the national average), but has destroyed in-state production and now imports nearly 80% of its oil, with Iraq as the top supplier, driving gas prices to the highest in the nation.
transcript
Steve Hilton: We are now importing nearly 80% of the oil that we use... Our #1 provider is Iraq right now... Over that period, our use of fossil fuels has declined by not that much. And the proportion of our energy that's coming from fossil fuels is about 80% still. The rest of the country, it's about 81%. So it's barely any different. But the difference is we used to produce most of what we use in state. Now we are importing nearly 80%.