CA Governor Candidate Steve Hilton on Why California is Destroying Itself & How a Republican Can Win
Summary
Steve Hilton’s economic bet is that roughly $60 billion of tax relief can restore household purchasing power and business investment while returning California’s budget roughly to its pre-pandemic level. His plan eliminates state income tax below $100,000 and imposes a 7.5% flat rate above it, benefiting about 7 million households and reducing revenue by an estimated 18.5%. He calls it “pro-worker and pro-growth,” arguing that the state’s roughly $349 billion budget has nearly doubled in a decade while economic outcomes deteriorated.
A major part of Hilton’s fiscal case is his claim that California loses about $80 billion annually to fraud, waste and abuse. His campaign’s Cal DOGE project estimated $425 billion over five years from published audit and program data; one cited fund allocated $1 billion for low-income solar installations but, by its accounting, spent only $72 million on panels. Other targets included $350 million in cannabis-tax proceeds and $3.8 billion for Project Homekey.
Housing is Hilton’s clearest example of regulation functioning as an incumbent-protection system rather than a public benefit. He says “union power, litigation and climate dogma” make identical buildings cost two or three times more than in neighboring states: impact fees can reach 20% of construction cost, while CEQA lawsuits—70% of which he says target housing—give unions leverage for closed-shop agreements and wages two or three times market rates. A host contrasted roughly $30,000 per door in California government fees with under $1,000 in Texas.
California’s energy policy, in Hilton’s telling, has displaced production rather than meaningfully reducing fossil-fuel dependence. He said fossil fuels remain about 80% of the state’s energy mix versus 81% nationally, yet California now imports nearly 80% of its oil and has seven refineries, down from roughly 40; Iraq is currently the largest supplier because its crude suits the remaining facilities. His rule is simple: “As long as we’re using oil and gas in California, let’s use our oil and gas rather than importing it.”
Education spending is high enough that Hilton treats California’s weak results as an operating failure, not a resource shortage. He cited spending above $27,000 per pupil, with 47% meeting basic English and reading standards and 35% meeting math standards. His immediate prescription borrows from Mississippi—systematic phonics, third-grade reading requirements and visible grades for schools and teachers—while school choice remains his longer-term, explicitly “not a panacea,” structural reform.
Hilton links visible disorder to enforcement capacity: fewer prison places produce crowded county jails, “catch and release,” less police effort and less public reporting. A host noted that California’s state-prison population fell from 165,000 in 2006 to 93,000; Hilton would reverse closures while emphasizing rehabilitation and lower recidivism. For homelessness, he proposes clearing encampments, mandatory recovery or jail, sober state-funded housing and larger mental-health facilities, citing estimates that over 80% of homeless people face drug or alcohol problems, addiction or severe mental illness.
His electoral case is arithmetically possible but operationally demanding. Hilton estimated 11.7 million votes in the 2026 midterm and about 5.9 million needed to win, versus Donald Trump’s 6.1 million California votes in 2024; he also cited “wrong track” sentiment rising from the mid-to-high 40s four years ago to the mid-to-high 50s. The proposed coalition combines Republican turnout, voter-ID enthusiasm and working-class voters offered “$3 gas,” electric bills cut in half, no state income tax on the first $100,000 and no tax on tips.
Deep dive
1. Hilton roots his politics in escape, work and Thatcher’s Britain
Hilton’s parents were Hungarian refugees from communism. His stepfather was 14 during the 1956 Soviet invasion when he, his brother and school friends ran through barbed wire, minefields and gunfire toward Austria; Hilton said half the group was killed, leaving him with an enduring appreciation for “freedom and opportunity.”
Raised in a working-class immigrant family in Brighton, Hilton attended Oxford but chose construction project management as his first job because, he said, “I just wanted to earn money. I just wanted to get out.” He later worked in advertising, built businesses and restaurants, and helped David Cameron win the Conservative leadership and become prime minister in 2010.
Margaret Thatcher supplied Hilton’s political template: Britain’s stagnant 1970s economy, union dominance, confiscatory taxes and the “Winter of Discontent,” when trash piled up and “the dead went unburied.” His stepfather’s formulation stayed with him: “Mrs. Thatcher’s for the workers and Labour are for the layabouts.”
Hilton moved to California in 2012 for his wife Rachel Wetstone’s Google career after serving in 10 Downing Street. He stressed that he later renounced British citizenship: borrowing the show’s title, he wanted Americans to know he was “all in.”
2. The tax plan exchanges $60 billion of revenue for affordability
Hilton’s diagnosis begins beneath California’s “fourth-largest economy” headline: he said the state has the country’s highest unemployment rate and highest poverty rate, tied with Louisiana, while a United Way study found more than one-third of Californians unable to meet basic needs.
The pressure is especially acute for workers earning $70,000-$90,000, who can face a 9.3% state income-tax rate alongside nationally high gasoline, electricity, housing and insurance costs. In several California counties, Hilton noted, $100,000 officially qualifies as low income.
His proposed structure is no state income tax below $100,000 and a 7.5% flat rate above it, with roughly 7 million households benefiting from the exemption. The estimated revenue reduction is 18.5%, or around $60 billion—enough, he argued, merely to return spending toward its pre-pandemic level after a roughly 75% five-year increase.
Jason’s pushback was institutional: major tax and spending changes require a Democratic legislature, and the host said Arnold Schwarzenegger was forced toward the center. Hilton conceded the constraint, but pointed to Katie Porter publicly “stealing Steve Hilton’s tax plan” and argued that his experience negotiating Britain’s coalition government prepares him to bargain across party lines.
3. Cal DOGE makes waste reduction the fiscal bridge
Hilton said he set up the California Department of Government Efficiency, or Cal DOGE, a few months earlier; he and state-controller candidate Herb Morgan worked together using published spending, state-auditor and Medicaid-error data. Four reports estimated $425 billion of fraud, waste and abuse over five years—about $80 billion annually. A host summarized that as roughly 20% of the current budget.
The sharpest specimen was a climate-mitigation program receiving $100 million annually since 2015 for solar panels on low-income apartment buildings. Of $1 billion allocated, Hilton said only $72 million funded installations; $928 million went through nonprofits engaged in activities including voter registration and environmental-justice campaigns.
Further reports identified $350 million in Proposition 64 cannabis taxes intended for substance-abuse prevention but distributed among more than 500 nonprofits. For Project Homekey, Hilton cited $3.8 billion and referred to other findings that “most” of the money went to developers, without completing that claim.
The broader warning is that firms are already near “the cliff edge.” A unionized Pomona manufacturer making HVAC ductwork important for TSMC and other semiconductor factories told him it might relocate because the facilities it serves are being built elsewhere: “What’s the point of making this stuff in California” if nothing is happening there?
4. Housing costs reveal who benefits from scarcity
Hilton accepted the basic supply-and-demand explanation: California has not built enough homes for its population and jobs. Rent control may leave some properties empty, he said, but it is secondary to the construction shortage.
His causal triangle is “union power, litigation and climate dogma.” Building codes mandate items such as EV charging, reinforced parking structures, wider bays, solar panels, insulation and efficiency measures; individually defensible requirements become cumulative costs that make the same floor plan two or three times more expensive than in neighboring states.
CEQA adds both delay and bargaining leverage. Hilton said 70% of CEQA lawsuits are used to block housing and most are filed by unions seeking project labor agreements requiring a “skilled and trained workforce”—effectively union-only labor—and prevailing wages two or three times market rates, sometimes with workers flown in from other states.
Hilton once proposed capping impact fees at 3% of construction cost and eliminating CEQA’s private right of action. A Democratic legislator privately called the proposal “transformational” but refused public support because “the unions run this place”; Hilton said AB 130 and SB 131 similarly included union conditions inside celebrated CEQA exemptions.
5. Energy policy has shifted emissions and raised costs
California has the country’s highest gasoline prices despite significant oil reserves. The hosts said most of the roughly $2 premium is regulatory rather than taxes, while Hilton made $3 gasoline part of his “Californable” affordability platform.
Since the 2006 Global Warming Solutions Act, Hilton said California’s fossil-fuel share has fallen only to about 80%, barely different from the nation’s 81%. What changed was sourcing: the state moved from producing most of its own oil to importing nearly 80%, with no oil pipelines into California and tanker transport therefore required.
Refinery capacity fell from about 40 facilities to seven. Because the remaining refineries were designed for heavy California crude, Hilton said Iraq—now the leading supplier—and parts of South America offer compatible oil, producing the perverse result of more Amazon drilling and long-distance ships burning highly polluting bunker fuel. He also criticized the California Air Resources Board for counting imported oil’s carbon emissions only from 12 miles off California’s coast.
In discussing air quality, Hilton separated smog from carbon, attributing Los Angeles’s dramatic air-quality gains mainly to improved car technology, not EV adoption, which he put at only 4%-5%. He said the state agency he called the California Department of Geologic and Energy Management could approve production permits, and that industry estimates suggested output could double every two years.
6. California’s schools spend heavily but miss basic benchmarks
Hilton cited annual spending above $27,000 per student while only 47% meet basic English and reading standards and 35% meet math standards. “Two-thirds do not meet the standards,” he emphasized, framing the gap between spending and outcomes as systemic failure.
His structural culprit is a union-controlled public-school monopoly increasingly focused on ideology. As evidence, he recalled the Los Angeles teachers’ union’s pandemic reopening demands encompassing a wealth tax, Medicare for All and Palestine; school choice is his long-term answer, though he called it “not a panacea” and acknowledged California’s legislature makes it difficult.
The immediate model is Mississippi, which Hilton said achieves dramatically better results at one-third of California’s per-pupil spending. He would promote phonics, require students who fail the basic reading test by the end of third grade to receive summer help and repeat the year if necessary, and publish grades for every school and teacher “so we can reward the good ones and remove the bad ones.”
7. Prison contraction weakened enforcement down the chain
Hilton contrasted California’s appetite for legislation—1,118 bills in one session—with its reluctance to enforce existing law. Proposition 47’s treatment of theft below $950 was overturned by Proposition 36 with roughly 70% support in 2024, he said, yet implementation remains resisted by politicians who opposed it.
The state-prison population peaked around 165,000 in 2006 and has fallen to about 93,000, according to a host’s figures. Hilton said closures and transfers packed county jails, leaving judges and prosecutors aware that local capacity is exhausted.
That constraint creates the operating rule law enforcement calls “catch and release”: police expect offenders to return immediately, enforcement effort declines and residents stop reporting crime. Hilton would reverse prison closures, expand capacity and pair accountability with rehabilitation, noting poor literacy, dyslexia and recidivism among prisoners; Virginia’s recidivism rate, he said, is less than half California’s.
8. Homelessness requires enforcement, recovery and mental-health beds
Hilton argued that encampments were already illegal, but local officials relied on the Ninth Circuit’s Boise ruling, which conditioned removal on available shelter. He said shelter did not have to mean $900,000 permanent supportive-housing units; even a camp with cots could qualify. The Supreme Court’s 2024 Grants Pass v. Oregon decision removed that excuse, and he would give cities a deadline before deploying state law-enforcement resources to clear remaining encampments.
Because over 80% of homeless people have drug or alcohol problems, addiction or severe mental-health problems, by Hilton’s estimate, removal must lead to treatment rather than displacement. He advocates the former “rehab or jail” rule and a 100% sobriety requirement for state-funded homeless services, criticizing the veto of the legislature’s Sober Housing Act.
Sheriffs told Hilton that 50%-70% of jail inmates may have severe mental-health conditions. He blamed Medicaid’s exclusion of reimbursement for institutions with more than 16 beds; California has not pursued the available federal waiver, he said, so he would redirect money from $900,000-per-unit supportive housing into modern, large-scale treatment facilities.
9. The victory path runs through turnout and a cost-of-living referendum
California’s top-two primary likely leaves Hilton against one Democrat—he named Tom Steyer, Katie Porter and Javier Basera as the leading possibilities. With President Trump’s endorsement and Hilton leading the Republican field in cited polls, he was confident but not certain of advancing.
Hilton’s central question would be: “Are you happy with the way things are going in California?” He said the state’s “wrong track” reading has risen from the mid-to-high 40s during the previous governor’s race to the mid-to-high 50s, creating a majority constituency for change.
Averaging turnout in the 2018 and 2022 midterms yields an estimated 11.7 million votes, making about 5.9 million sufficient to win. Trump received 6.1 million California votes in 2024 without targeting the state, showing, Hilton argued, that the raw electorate exists even though reproducing presidential turnout is unrealistic. He also noted that Democrats outnumber Republicans two to one in registration, while Republicans had averaged just over 40% of the vote in recent statewide races.
His coalition combines Republican mobilization, a voter-ID measure on the November ballot and multiracial working-class voters offered “$3 gas,” electric bills cut in half, affordable housing, no state income tax on the first $100,000 and no tax on tips. The stakes, in his signature framing: “California means to America what America means to the world.”