Misguided Policy in California

Floor Speech

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Mr. KILEY of California. Mr. Speaker, every so often there comes along a policy so misguided, so self-destructive, so just utterly stupid that it has catastrophic consequences before it is even adopted.

Such is the case with the newly proposed wealth tax in the State of California, a proposal that is the height of folly, the height of insanity. The proposal would seize the assets, 5 percent of the net worth of citizens of our State who are purported to have a net worth over a billion dollars. Of course, that will simply be the first line that is drawn, with inevitably lower net worth levels ensnared in the future.

This measure, which would be adopted this November and put into effect next year, has a peculiar provision in it stating that it would apply even to people who are no longer residents of the State at the time of its enactment. It would apply to anyone who was a resident of California up until January 1 of this year, even though it doesn't take effect until January 1 of next year.

Those who would be affected by it got word that this is coming. Guess what they did? They made sure that they were not here as of January 1 of this year. For example, Larry Page and Sergey Brin, the founders of Google, have relocated from California because one analysis suggests that under this proposal the government could seize $60 billion from each of them.

There are reports now that already $1 trillion in net worth has exited California simply in anticipation of this policy being adopted. They simply can't take the risk. One person with knowledge of the affected individuals said that 80 to 90 percent of them either will leave the State or have left already, not to mention those who don't quite meet that threshold but know that they will be next, who have already left or are looking at an exit strategy.

The consequences of this growing exodus cannot be overstated when it comes to the future of our State. Number one, with all of these high- net-worth individuals leaving, they are, of course, taking all of the taxes that they pay with them, so the State Treasury no longer receives anything.

Now, obviously, this is a drain on the Treasury. It would be in any State, but in particular in California because of the unusual extent to which our State relies on the highest earners.

In some years, our State budget, our State income tax revenue gets 50 percent of its total revenues from the top 1 percent of earners. When you see those people leaving the State, it means that the house of cards that is our State's finances will come tumbling down.

We also should note the impact this is going to have on the startup community in California, which is so central to our State's identity, vitality, and economic prosperity and so central to what has made California such a vital part of the American economy and such a driving force in progress all around the world.

However, because this proposal would seize liquid assets, would demand 5 percent of an individual's net worth even though they are assessing assets of all kinds, what that would mean for a startup that has a very high paper value--based simply upon the way that startups receive their valuation, for example, based upon a multiple of an initial seed investment--then essentially you would have startups that would be forced to liquefy their assets or would simply not be able to pay this bill. Therefore, it would no longer be viable to be a startup in California. The entire ecosystem would cease to function as it does now.

It is worth mentioning, by the way, that this exodus has been an ongoing phenomenon in California. It is not just limited to those who are of a high net worth. For the sixth straight year, U-Haul has just ranked California as number one in the country in outbound U-Haul rentals, in people leaving the State. It is usually not the wealthiest people. It is people who simply can't afford to get by in California because of the inordinately high cost of living.

This proposed wealth tax would take this trend to an entirely new level in a way that would make it so California is a failed State, is no longer viable as a political entity. That is why we need to make sure that this provision does not pass. In addition, importantly, we need to make sure that the unconstitutional scheme whereby former residents would be ensnared is not allowed to even begin to be executed.

That is why I am working on legislation here in the House of Representatives, Federal legislation to preempt that provision, which I believe is unconstitutional under the Commerce Clause, but we need to have express preemption in law to make sure that at the very least people do not feel the need to leave in anticipation of this measure or a future such measure passing.

Now that we have discussed this absolutely insane proposal, I want to take a closer look at the California State budget as it now stands because this last week we got an announcement from the Governor that the State will be spending $348.9 billion in the coming fiscal year.

Now, notably, that is a massive increase over what the State spent just last year, and it is nearly double what the budget was when Gavin Newsom became Governor in 2019. At the time Newsom was sworn in, our State budget was $197.5 billion, already quite high. During his tenure, he has increased the budget to $348.9 billion, in the process putting the State's finances in dire straits.

A columnist for the San Francisco Chronicle noted that Newsom's gift to his successor is a $22 billion deficit. The State's nonpartisan legislative analyst came out with an absolutely scathing report, calling the State's financial situation and the Governor's budget ``alarming.'' The report raised ``serious concerns about the State's fiscal sustainability'' and noted that the Governor's budget does not materially address those concerns.

This, by the way, isn't even to mention the massive around $1 trillion--shortfall when it comes to funding the State's long-term liabilities, the unfunded liabilities that we have in the State.

Let's just look at this increase in the size of the budget. Remember, this wealth tax is being offered on the premise that we need even more revenue. Over the course of this Governor's tenure, California's budget has grown by 75.7 percent.

Now, you might say, well, maybe that is what other States are doing, too. Surely, other States have increased their budget. However, they have not increased their budget nearly as much as California has.

Florida, for example, has a $78.6 billion budget. That is compared to $349 billion in California. Over that same period, Florida's budget grew by 56 percent, Ohio's budget grew by 36 percent.

You might say, well, those are red States, what about comparing California to other blue States? Well, Massachusetts' budget grew by 44 percent, New York's budget grew by 37 percent, while California's budget grew by 75.7 percent during that time period.

Now, you might say, okay, we are spending more, but surely the people of California are getting something worthwhile in return for this massive increase in tax revenue, this massive increase in public expenditures. Surely, we are seeing major gains in the achievement of our students in schools. Surely, we have gotten beautiful new roads and transit systems. Surely, we are seeing the cost of living go down and the quality of life go up.

However, no, quite the opposite has happened. Infrastructure in California remains among the worst in the country. Our roads are routinely rated among the three worst roads in terms of their condition anywhere in the country. We pay the highest gas taxes, yet drive over the deepest potholes.

Despite tens of billions of dollars more being spent every year on education, educational achievement in California has flatlined, and we continue to have some of the most glaring achievement gaps of any State in the country.

Meanwhile, the cost of living in California is the highest anywhere in the United States. We have the highest taxes. We have the highest cost of housing of any State other than Hawaii. We have the highest gas prices. We have the highest electricity prices, including the highest increase in electricity prices during Newsom's tenure as Governor compared to any other State. We are among the top two or three in the country when it comes to water bills. In every single dimension of affordability, California is the Nation's least affordable State.

Mr. Speaker, the Governor has utterly failed to justify asking our citizens to pay even more when they receive a historically, unfathomably low return on that investment. The fact is, the people of California continue to sacrifice more and more and get less and less in return.

Now, Mr. Speaker, I will examine one of the reasons why that is the case. I will take a moment today to look at the vast waste, fraud, and abuse that exists in the State of California and the proposal that I am working on to bring the full scale, extent, and breadth of it to light so that we can work to address it using every tool that we have here at the Federal level and to compel changes at the State level.

This is the simple reality: Every single time there has been any sort of independent audit of a program in California, the results have been the same. There has been mind-boggling waste and fraud identified, and the causality has been identified as unbelievable negligence and neglect on the part of the State, its agencies, and its government.

I will list just a few examples. During the COVID years, California had, at a bare minimum, $32.6 billion in unemployment fraud through our EDD agency. A State audit that I initially requested, as a member of the legislature, and that Governor Newsom initially killed, found that the State spent $24 billion on homelessness over a 5-year span and failed to track the actual uses of those funds or whether they made any measurable improvement on the homelessness problem in our State. By the way, they didn't. The homeless population increased by some 50,000 individuals.

We have already seen charges brought in both San Francisco and Florida when it comes to fraud in relation to the expenditure of funds that were earmarked for homelessness. We have also seen convictions in Orange County in connection, for example, with workers' compensation fraud.

The State auditor also just came out with a scathing high-risk audit identifying the agencies in California that qualify as high risk, meaning they exhibit a serious risk of waste, fraud, abuse, or mismanagement, and have failed to take corrective steps.

The number of these high-risk agencies is now at an all-time high. It has doubled during the course of Governor Newsom's tenure. Among the findings were error rates when it comes to food assistance benefits that could cost a loss of $2.5 billion in Federal funds.

Billions more are at risk of being lost or are being lost through improper Medi-Cal determinations and through ongoing EDD fraud, which continues at staggering levels even after the $32.6 billion lost during the COVID years.

The audit also found that California has missed six straight financial reporting deadlines, putting the State's very credit rating at risk. Then, of course, there is the matter of the high-speed rail, which was supposed to be completed, a full, functioning, high-speed rail line from San Francisco to Los Angeles in 2020, 6 years ago. Yet, here we are in 2026, $18 billion spent. The overall cost is now projected to be $128 billion, and literally nothing has been built. No track has been laid, and not a single passenger has ridden this nonexistent train, which raises the question: Where has all of this money gone?

Even an audit during the Biden administration from President Biden's Health and Human Services agency found that California improperly claimed $52.7 million in Medicaid reimbursement for noncitizens, which, of course, raises many questions about how pervasive these improper payments might be in our Medi-Cal system more broadly.

Mr. Speaker, this is just a snapshot into certain programs in the State of California. What we need is a comprehensive review to see just how staggering the problem is, just how many tens of billions of dollars our citizens are losing. Maybe that would be a better way to give Californians a higher return on their investments.

Rather than increasing the budget to $349 billion, rather than imposing an absolutely ruinous wealth tax that will give our State government the unprecedented authority to simply confiscate the assets of anyone they choose, maybe it would be better to make it so California is no longer the fraud capital of the United States.

Honoring an extraordinary American, Richard ``Dick'' Burbine

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Mr. KILEY of California. Mr. Speaker, I rise today to honor an extraordinary American, a man whose life story reflects the very best of our Nation's character, courage, and commitment to service. Richard ``Dick'' Burbine represents a generation that answered history's call with quiet resolve and uncommon bravery.

Dick Burbine was born on January 9, 1926, in Melrose, Massachusetts. Like so many young Americans of his time, his life was forever changed by the events of World War II.

In the wake of the attack on Pearl Harbor, while most teenagers were still in high school, Dick Burbine chose service. At just 16 years old, he enlisted in the United States Merchant Marine, trained at Gallops Island in Boston Harbor, and soon found himself at sea, supporting Allied operations in both the Atlantic and Pacific theaters.

One of the most defining chapters of his service came aboard the Liberty ship SS Henry Bacon. Dick served during the infamous Murmansk Run, an Arctic supply route widely regarded as one of the most dangerous missions of the war. Sailors faced brutal weather, freezing seas, and constant enemy attack, all to ensure vital supplies reached those fighting tyranny.

On February 23, 1945, tragedy struck when the Henry Bacon was attacked by enemy aircraft in the Barents Sea and ultimately sank. Dick Burbine was only 18 years old when he was thrown into icy, subzero waters. What he did next defines heroism.

At great personal risk, he righted a capsized lifeboat, pulled fellow sailors to safety, and helped rescue Norwegian women and children who were fleeing the war. Despite the loss of 28 crewmembers, every one of the 19 Norwegian refugees survived, making this a powerful testament to the courage and selflessness of Dick Burbine and his shipmates.

His service did not end with World War II. Dick continued to serve during the early Cold War and later enlisted in the United States Marine Corps. During the Korean war, he served with distinction as a helicopter mechanic and crew chief, eventually earning the rank of staff sergeant.

After leaving the military, Dick Burbine remained dedicated to protecting others. He served in law enforcement with the Contra Costa Sheriff's Department, the Danville Constable's Office, and the University of California Police Department at Lawrence Livermore National Laboratory. In 1987, he retired as a sergeant and watch commander, concluding yet another chapter of public service.

Even in retirement, Dick did not step away from giving back. He volunteered with the U.S. Forest Service in the Bridgeport Ranger District, helping maintain campgrounds for the benefit of residents and visitors alike.

Remarkably, even as he approaches his 100th birthday, he continues to harvest and donate firewood each winter to neighbors in need, quiet acts of kindness that say as much about his character as any medal ever could.

His legacy of service lives on through his family, including his son, Joseph, who also served in the United States Marine Corps and in law enforcement.

On January 9, 2026, just a few days ago, Richard ``Dick'' Burbine celebrated his centennial birthday, 100 years defined by courage under fire, unwavering devotion to country, and a lifelong commitment to community.

On behalf of a grateful nation and with deep respect and admiration, we thank Dick Burbine for his heroic military service, his distinguished public safety career, and his enduring example of what it means to serve others. It is an honor to represent exemplary individuals like Dick Burbine in Congress.

Mr. Speaker, I offer our heartfelt congratulations and best wishes as he reaches this remarkable milestone. We say, simply and sincerely, thank you.

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