SF Standard: Don’t get distracted: The governor’s race matters as much as the wealth tax
Silicon Valley is right to fight the wealth tax. But it risks losing the longer-term war.
California’s tech community has its eyes locked on a proposed 5% wealth tax on residents with assets above $1 billion. They are raising money, making noise, and gearing up for a ballot fight. That’s all well and good, but by ignoring the bigger picture, they are getting snookered.
While the wealth tax consumes Silicon Valley’s attention, Lorena Gonzalez, the smart and aggressive president of the California Labor Federation, has her eye on the real prize: the governor’s mansion. She wants to elect a governor who, for the next eight years, will do the bidding of California’s monstrously powerful public employee unions.
The CLF holds an extraordinary degree of political power in Sacramento — far out of proportion to its share of California’s population. Its membership makes up less than 6% of Californians, yet the CLF has achieved near-total dominance of state Democratic politics. Not since 1990 has the federation’s favored candidate for governor failed to advance to the general election.
Why does this matter? Because California’s state budget exceeds $500 billion a year. The vendors and contractors who receive those dollars — and the workers who fill state and local government jobs — are largely chosen by, or answerable to, whoever sits in the governor’s chair. The CLF’s member unions are among the biggest beneficiaries of that spending. A CLF-friendly governor means more government contracts, more public-sector hiring, bigger pay packages, more generous pension and healthcare benefits, and more laws protecting public service workers.
When government spending flows to organized interests rather than toward improving the lives of all Californians, prices rise and quality falls for the very services we depend on most: healthcare, education, housing. Taxpayers fund this. Residents bear the burden. Organized interests get the fruits.
It’s a good thing the tech community has roused itself from its slumber to fight the wealth tax. But even assuming success on this score, Silicon Valley and the rest of California will remain vulnerable to the greed of the public-sector unions. They also need to concentrate on long-term structural reform of state government. This means making the tech industry’s voice heard in the Legislature, winning in the courts, and, this year, electing a governor not beholden to the unions. Tech needs two war chests — one to defeat the wealth tax and one to reverse California’s decline.
Gonzalez will make her endorsement for June’s gubernatorial primary this month. But the early signals are clear: The California School Employees Association and California Nurses Association have endorsed Tom Steyer, while the California Professional Firefighters have endorsed Rep. Eric Swalwell. The teachers unions, SEIU, American Federation of State, County and Municipal Employees, and prison guards association have yet to weigh in — but Steyer, with his embrace of the wealth tax, and Swalwell, who is demanding drivers in every Waymo vehicle, will be putty in the hands of Gonzalez. California, beware.
The returns on political investment in Sacramento are enormous. As one example: the California Correctional Peace Officers Association donated less than $3 million to Gov. Gavin Newsom and his ballot committees while, over the same period, annual general fund spending on prison personnel salaries rose by $1.36 billion — even as the prison population declined. If California’s tech and other business interests want to be a force, they need to get organized. They need to form a union of their own — one with members’ dues, a sizable and durable political war chest, canny political operatives, and a major presence in Sacramento.
Regardless of what happens to the wealth tax on the November ballot, if Gonzalez gets her governor, the tax will likely return, along with many more levies and regulations.
The June 2 gubernatorial primary is the moment that matters. Several candidates are battling it out, with Swalwell and Steyer among the leading Democrats. The question isn’t just who wins — it’s whether the interests of taxpayers and ordinary residents will be a deciding factor at all. That won’t happen without engagement. And it won’t happen if the only people paying attention are the leaders of the public-sector unions. The tech community needs to enter the ring — to defeat the wealth tax and elect a governor with backbone.
David Crane is a lecturer in public policy at Stanford University and president of Govern for California.
