Steve Hilton pitches affordability agenda as he tries to close gap in CA governor's race

SAN FRANCISCO (KGO) -- Republican candidate for governor Steve Hilton is betting that California voters' frustration with the cost of living can help propel him to an upset in November.

In an interview with ABC7 Eyewitness News on Wednesday, Hilton laid out an ambitious agenda aimed at lowering housing costs, cutting state income taxes and bringing down gas prices - while facing questions about how he would deliver on those promises in a state where Democrats control the Legislature.

Housing is near the top of Hilton's list, and argues government costs and regulations are contributing to the price of new housing.

MORE: Xavier Becerra's lead over Steve Hilton widens in California governor's race, new poll shows

He cited a June study from the National Association of Home Builders, an industry trade group, which estimated government regulations add nearly $132,000 to the price of a typical newly built home nationally. Hilton characterized the figure as California-specific during the interview, but the study's estimate is national.

"We can immediately do something about it," Hilton said. "I'm going to cap that at $30,000 on average. That's $100,000 straight off the asking price."

Hilton also wants to loosen restrictions on development and give local governments more financial incentive to approve new housing.

Hilton's plan to eliminate income taxes for many Californians

Perhaps his biggest affordability proposal is eliminating state income taxes for people earning $150,000 or less, while imposing an 8% flat rate on income above that threshold.

"The quickest, most direct way to get money in people's pockets is for the government to take less out in the first place," Hilton said.

Asked how he would pay for it, Hilton said he would reduce state spending.

His proposals include canceling California's high-speed rail project, cutting payments to homelessness nonprofits he believes are failing to produce results and cutting what he calls "bureaucratic bloat" in Sacramento.

"I will ask government departments to save 5%," Hilton said. "That's more than enough to pay for those tax reductions for working people."

But those changes would have to contend with a Democratic-controlled Legislature that holds significant power over the state budget.

MORE: In California governor's race, Steve Hilton looks to court voters wary of Trump

Asked how he would persuade lawmakers to support cuts to some of their priorities, Hilton argued his election would send a message from voters.

"I think that they will understand that you've got to go some way towards delivering the agenda that the people of California would have just voted for," he said.

Hilton's proposed 8% rate would also apply to California's highest earners.

Asked whether a billionaire could therefore pay the same 8% rate, Hilton said yes, arguing wealthy Californians would still pay more in total dollars and that a lower rate could discourage people and businesses from leaving the state.

Hilton is also rolling out what he calls a "Working Class Healthcare Guarantee," focused on Californians who have insurance but still struggle with high deductibles and other costs.

His proposal calls for increasing competition among insurers, targeting fraud and redirecting existing healthcare spending toward care. Hilton also floated health savings accounts for lower-income Californians as one potential approach, giving patients more control over how those dollars are spent.

$3 gas and eliminating the DMV

Hilton is making other eye-catching promises on the campaign trail, including bringing gasoline down to $3 per gallon and eliminating California's standalone Department of Motor Vehicles.

His gas plan calls for increasing in-state oil production, repealing the state's Low Carbon Fuel Standard, changing cap-and-trade costs and rolling back some refinery regulations. Hilton has argued those changes could narrow the significant gap between California gas prices and the national average.

But he acknowledged that a governor cannot control all the forces determining prices at the pump.

MORE: Steve Hilton pledges to abolish California DMV if elected governor

"As long as the situation in the Middle East doesn't change, it's going to be hard to get exactly to that," Hilton said.

Hilton's DMV proposal would cap annual vehicle registration at a flat $73 per vehicle and eliminate the department as a standalone agency. Under his plan, routine registration, title and renewal services would shift online or to county offices and certified local service centers, while a smaller state operation would remain responsible for functions including driver's licenses, REAL ID, fraud prevention and safety records.

Hilton said California Highway Patrol funding currently tied to vehicle fees would instead come from the state's general fund.

Eliminating the DMV would require approval from the Legislature.

Hilton urges caution on AI

On AI regulation, Hilton has some agreement with Democrats on protecting California kids. He supports stronger restrictions around children and said he would pause AI use in schools until its effects are better understood. But he urged caution on broader regulation of the industry.

"The worst kind of policymaking is panic-driven policymaking," Hilton said, arguing California should bring together AI leaders and critics before pursuing sweeping new restrictions.

An 'uphill battle'

Hilton's challenge is turning those proposals into enough votes to overcome Democrat Xavier Becerra's lead.

Recent polling has shown Becerra ahead by double digits, even as many Californians express dissatisfaction with the direction of the state.

MORE: CA gubernatorial candidate Steve Hilton accuses Xavier Becerra of putting migrant children at risk

Asked about that disconnect, Hilton questioned assumptions about who will ultimately turn out in November and pointed to other polling showing a closer contest.

Still, he acknowledged the challenge ahead.

"I think we're closing the gap," Hilton said. "It's still an uphill battle, no question about that."

Hilton is betting that as Election Day approaches, voters frustrated with California's cost of living will give his argument for a sharp change in direction a closer look.