THE BLOG
03/03/2014 01:51 pm ET Updated May 03, 2014

Should California Be Split Into Six Smaller States? My Thoughts on Tim Draper's Idea

Tim Draper comes from an incredibly talented family. His father, along with his business partner "Pitch" Johnson essentially invented the venture capital infrastructure, which underwrote the development of Silicon Valley. His leadership at Draper Fisher Jurvetson has been essential in the formation of a number of emerging companies we all use on a daily basis. His siblings, children, and extended family have succeeded wonderfully in their chosen fields.

Right now, Tim Draper is generating signatures on a ballot initiative that will split California into a series of smaller states. It is certainly getting attention. Draper's rationale is that he feels the state has gotten too large, has become too ungovernable, and breaking up the California into smaller states would bring government closer to the people. The new states hatched out of the current California would have 6 governors and 12 US senators as opposed to what is found today.

While well intentioned, enacting his "Six Californias" would be disastrous for the entire state and beyond. We have had states split up in the past. During the Civil War, West Virginia was formed when 50 counties in Virginia seceded from the Confederacy and rejoined the Union. Often several states were carved from the large western territories between the Mississippi River and the west coast in the late 19th century. Texas has the right to be subdivided into five states as part of its agreement when the US government annexed the Independent Texas.

Countries have split up. After the Cold War ended, Czechoslovakia split into two countries, The Czech Republic and Slovakia. After a period of genocidal bloodshed, Yugoslavia broke up into a seven countries. The two most famous partitions took place when India and Pakistan split prior to independence and when the Soviet Union dissolved into a series of independent republics at the end of 1991. With the exception of the first example, most partitions have been bloody affairs.

Draper charts out six geographical states. From North to South, the new state of "Jefferson" would cover many of the northern rural counties and "North California" would cover a band of the state that would include Lake Tahoe through Sacramento, the Wine County to the Pacific. "Silicon Valley" would comprise most of the Bay Area counties with the exception of Marin. "Central California" would consist of the rich agricultural areas of the central valley. "West California" would include the counties that make up the Los Angeles basin and "South California" would consist of San Diego and the variously outlying counties.

While any partition might look appealing on a whiteboard, Draper's ideas fall to shreds when you look beyond the gauzy overview. It is a bad idea, plain and simple.

First, there is the issue of water. Without water distribution, California would quickly revert back to desert and grassland. The State Water Project is a complex infrastructure of aqueducts, dams, pumping stations and that carries water from Northern to Southern California. As you drive through Interstate 5, you can see the California Aqueduct as well as the huge pumps that move water over the mountains when you reach Grapevine Grade. Today 85 percent of the water is designated for agriculture and the remaining 15 percent is for residential use.

However, under Draper's Plan, water intended for use in Los Angeles would have to pass through the states of "Jefferson," "North California," and "Central California" before it ever reached Los Angeles in the new state of "West California." What is to keep a new Governor of "Central California" or "North California" from diverting more water to local farmers and closing the spigot for Los Angeles? Nothing. Why? The new Governor of "Central California" will cater to the needs of his/her voters as opposed to any out-of-state concerns, like a thirsty Los Angeles.

Under Draper's plan, San Francisco's water might be jeopardized too. San Francisco gets its water piped from the Hetch Hetchy Reservoir, located in Yosemite. This would mean that San Francisco's water needs might be held hostage by out-of-state politics. It also means that the new Governor of "Central California" might divert water once meant for San Francisco back to Central Valley farmers.

Further, there is a great deal of support around Yosemite to destroy the dam, drain the reservoir and return the valley to its once-natural state, something John Muir fought for until his death. What rights would an out-of-state municipality like San Francisco have in an out-of-state locale like Hetch Hetchy if popular opinion wanted to move in that direction? That would make for a series of interesting court cases that would take years to wind through the legal system. I sense that Draper, while well intentioned, clearly does not understand the water politics of our state.

Second, there is the case of higher education. If you lived in Oroville, Eureka, or Redding, your children are simply shut out of in-state tuition rates for the University of California system. Why? There are no UC campuses in Draper's State of "Jefferson." They can certainly attend UCLA, but they will have to pay out-of-state tuition, even if their siblings, parents, and grandparents attended UC schools as California residents.

The in-state tuition for California residents at UCLA is roughly $11,000 and with additional fees, it totals about $14,000 per year. The out-of-state tuition (with additional fees) is roughly $38,000 per year. The fees for Cal State Schools are roughly $6,500 for in state tuitions and $18,000 for out of state tuition. Under the Draper plan, California parents would be blindsided with sticker shock, even if their students were already enrolled as in-state residents. Once the partition begins, rules regarding higher tuition for out-of-state residents would legally kick in too.

In places like the new State of "Jefferson," where the state college choices are Humboldt State University or Chico State, neither which offer doctoral programs. Students who wish to attend law medical or dental school would have to pay out of state tuition to attend these "California" schools.

However, if you are fortunate enough to live in the new state of "Silicon Valley" you have a plethora of choices, paid for by residents from all of California, including the good people of Oroville, Eureka, or Redding. As a resident of the new state of "West California," I am rolling my eyes a bit because it's clear that this new fictional state of "Silicon Valley" gets the best deal while the rest of the of other California states get the short shrift. Draper's new home state gets, UC Berkeley (and all of its professional post grad and doc programs like Boalt Hall), UCSF Medical School, UC- Hastings School of Law, and UC Santa Cruz.

As I write this another challenge popped into my head. In California, most of the prison inmates of our state correctional facilities come from urban areas while the prison themselves are located in rural area, where correctional employment provides good jobs at good wages. Where do these prisoners go -- back to the "states from which they came?" Under the Draper Plan, States like "West California" and "Silicon Valley" would have to build a fleet of new prisons to house inmates currently located in the states rural prisons. Somebody has to pay for this new construction.

Finally, taxes will inevitably rise. Instead of one state, where costs of government are spread over a population base of 38 million people, each of Draper's six states will have to create their own institutional functions of state government, from their own DMVs, the prison systems, state police and to everything in-between. While these new states will partially inherit legacy programs from the old State of California, each governor will have to create new command and control functions for everything that once radiated from Sacramento. That will cost money and nobody knows that amount. All we know is that somebody will have to pay for things.

So, in one fell swoop, Draper's Plan reduces the Golden State into a balkanized mess.

Is smaller better? The jury is out. While his proposal is untenable, it does raise a number of important issues. Tim Draper sees problems for a position of optimizing goods and services and suggesting that splitting the state can do a better job. Bureaucracies can be streamlined and onerous regulations can be reformed. The state can do a better job in that area--but you don't have to blow up California in order to solve it.

I sincerely believe that Tim Draper wants nothing but the best for our state. However, if this were a business plan for a startup, it would be howled out of a conference room for lack of due diligence. He has thought nothing of the unintended consequences of what he proposes. Sadly, when this is over, a very smart man will come off looking both foolish and naïve.

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