Matt Mahan, mayor of San Jose and Democratic candidate for California governor, discusses his background growing up in Watsonville in a working-class family and his path from public school teacher to civic tech entrepreneur to elected official.

The conversation covers California's dysfunction across multiple areas: a 75% increase in state spending with no improved outcomes, the $14 billion high-speed rail failure, housing affordability crisis, energy costs, homelessness, and pension liabilities.

Mahan argues California has an incentives problem rather than a money problem, with highly organized interests in Sacramento being served while regular citizens see declining outcomes despite record spending and the nation's highest tax rates.

California's $150 Billion Spending Surge With Zero Results

California increased state spending by 75% over six years, adding $150 billion annually, while outcomes remained flat or declined across key metrics

The high-speed rail project exemplifies the dysfunction: "If a startup took 20 years, spent $14 billion, and didn't deliver a product, people would have been fired a long time ago" - Matt

Money disappears into "endless process, years of environmental review, the most litigious environment imaginable" with contractors, lawyers, and consultants consuming billions

California documented over $30 billion in fraudulent unemployment claims during the pandemic, with emerging investigations into hundreds of potentially non-existent hospice providers

San Jose's Turnaround Without Tax Increases

San Jose led the state in reducing crime and became the safest big city in America while reducing unsheltered homelessness by about one-third

The city deployed $85,000 sleeping cabins instead of spending "a million dollars a door to build a brand new apartment" and added over 2,000 shelter beds

Success required "change the existing process that was in the way, reduce fees, and cut funding for programs that weren't delivering"

San Jose operates with "about a third less" revenue per capita than neighboring cities due to its bedroom community structure under Prop 13

Housing Crisis Driven by Regulation, Not Supply

California's housing crisis stems from zoning, high fees, cumbersome building codes, and construction defect liability allowing trial lawyers to sue in year nine

The Bay Area created "about eight jobs for every one new home we've built" over 20 years, creating an "unsustainable ratio"

Modular construction can "bring down the cost per unit by 20%, speed up overall project timelines by up to 50%" through industrialized production

California should be able to "drop the cost on a per square foot basis by at least a third with actions that are within our control as regulators"

Energy Policy Backfire and Refinery Exodus

California lost most refineries due to intentional regulation, now importing "the same amount of gas from thousands of miles away" that is "dirtier" with "a bigger carbon footprint"

The state has 70 cents per gallon in taxes, making gas $5.50 versus $3.50 nationally, disproportionately hurting working families who haven't adopted EVs

"Texas is providing dramatically cheaper power that is cleaner than California" through investment in innovation and infrastructure rather than regulation

Mahan proposes temporarily suspending the gas tax for immediate relief while shifting to EV-inclusive user fees for road maintenance

Homelessness Crisis and Treatment Resistance

Over 50,000 people died on California streets in the last decade, "about half from overdose and suicide," with the state leading in unsheltered homelessness

"Two-thirds of people say yes" to shelter alternatives, but "the other third is so deep in the throes of addiction to substances like meth and fentanyl that they can't make a rational decision"

Mahan supports involuntary treatment: "It is not compassionate or progressive to leave them to endlessly cycle between streets, emergency rooms, jails, and ultimately die of an overdose"

Prop 36 allows choice between treatment and incarceration on third public drug offense, with Mahan being "the first Democratic mayor in the state to come out in support"

Pension Crisis and Trillion-Dollar Liability

CalPERS and CalSTRS face $250-300 billion shortfall, potentially reaching $1 trillion, with California taxpayers ultimately liable for public employee retirement benefits

San Jose currently pays "19% of our general fund this year goes to paying an unfunded pension liability" even after pension reform

The city negotiated a two-tier system where new employees share 50-50 responsibility for shortfalls while maintaining a 20-year payoff schedule for existing obligations

State headcount increased "over 20%" while population stayed flat, with spending up 75%, requiring zero-based budgeting to optimize outcomes