I think sector right now has several weak points. However, before I discuss each weak point and idea / suggestion to mend them, we must first clarify design intention behind sector. Depending on design intention, some weak points may require radically different solutions.
Sector may be designed to:
a) minimize micro-management, by delegating economic development to sector AI. Sector options like "allow redevelopment" and "respect tile output" make sense in this interpretation only. Sector production preference also fits this interpretation more than the other one.
or
b) be a sub-entity with semi-independence, an obstacle to expansion, a vehicle for internal politics. The fact that increasing number of core systems are considered benefit effect of some government forms and repeatable techs clearly supports this interpretation as intended one.
While solution in line of interpretation a is relatively simpler, interpretation b has more potential for future contents. So I'll focus on interpretation b below.
==========
Now let's see each individual weak point.
0) Sector planets are sometimes irresponsive to replacing sector governor. For example, I replace a 5-star governor with a 4-star one. Two months later happiness of pops on sector planets still shows "Skill: +10%". Governor's trait doesn't apply, either.
-- Solution: Straightforward. Fix that bug.
1) Currently each change in sector system management is applied immediately, without free undo. So any misclick is costly. The must-continuous rule further aggravate the undo cost.
-- Solution: Make the changes apply (and thus paying influence cost) only when sector management mode closes. Preferably with a notification showing sector's projected income of energy and mineral, with three options of "Confirm" (close drawing board, apply changes), "Continue managing" (return to drawing board), and "Cancel" (close drawing board, discard changes).
2) Sector AI fails to build buildings for pops on empty tiles in time. Sector AI fails to clear tile blockers in time. Sector AI fails to replace farms when planet fully grown. Sector AI fails to construct mining and research stations in time. Sector AI overemphasize power plants. Etc, etc. In all, sector AI (in fact, general economic AI) performs unsatisfyingly in economic development / budgeting.
Some people think economics built on tile system is too difficult for AI. Some other people claim building structures on planet tiles is routinely and repetitive. Those two opinions are obviously contradicting. If building sequences are so routinely, which I partially agree with, we can easily teach those routines to AI. Current bad performance, in my opinion, is due to underoptimized development / budgeting logic, and probably some hidden bugs in that logic make the problem worse.
-- Solution: This will require a big wall of text to explain, so I'll leave it to
a seperate post.
One important thing to note here, though: Running out of energy causes serious economic maluses, and sector AI shall avoid it. However, if we leave that burden to sector AI alone, it can complicate its priorities significantly. So there need to be a "subsidize sector" function, that is, when sector has negative energy income and runs dry of its energy stockpile, it will be paid from empire stockpile. That will give more time to sector to rebalance its energy budget.
3) Sector has full stockpile rotting, while empire starves of resources.
This is actually two problems. One is mineral overflow, which is in fact problem 2 manifested. Once economic / budgeting logic works, sector shall seldom run out of way to spend its minerals. The other is energy overflow, which is a real problem.
Energy is primarily spent on maintenance. If sector AI sets its energy budget target at mere balance, the empire will starve of energy to feed its fleets. If sector AI sets its target at surplus, it will have no meaningful way to spend its stockpile once all tile blockers are removed. Terraforming are the only other way to spend energy on bulk, but its priority is way lower than supporting fleets in most cases.
-- Solution: Simple. Let us assign ships to sector. At the moment this just means let sector, instead of empire, pay maintenance for ships assigned. In the future when sector has its own agenda, those ships will naturally be sector's assets.
4) Sector's shape is arbitrary. Also, there is almost no reason to set up more than one sector.
Before we dive into this one, let's look at problem 3 from another angle. People complain sector hoarding resources that can be used by empire otherwise. What if that portion of resources were inaccessible by empire in any way, no matter the planet in sector or not? Then assigning planet to sector would be straightforward beneficial, as it at least enables sector to use those inaccessible resources.
-- Solution: Introduce resource efficiency to energy and mineral, which diminishes as distance to capital (empire capital for core systems, sector capital for sector systems) increases. Sector's tax to empire will also be capped by distance between sector capital and empire capital, though it will be higher than core planet's sfficiency at the same distance.
Details: Resource efficiency (RE) for systems of distance less than 100 to capital is 100%. (For comparison, range of lv 1 warp drive is 45, lv 1 wormhole is 65, and diameter of 600-star galaxy is about 650.) That is, a planet or a mining station in those systems contributes 100% of its energy / mineral output to empire or its sector. As distance increases from 100 to 200, RE drops slowly from 100% to 75%. Then it starts dropping faster, with RE = 50% at distance 250, RE = 25% at distance 300, and finally RE = 10% at distance 330+. Sector's tax cap (TC) is 75% at distance 200-, then gradually drops to TC = 50% at distance 300, and finally TC = 25% at distance 400+. Of course you can still select tax level lower than TC. For example, for a sector whose TC = 40% (that is, distance between its capital and empire capital is 340), you can set its tax level at 0%, 25%, or 40% (TC), but not any higher.
In this way, frontier systems will naturally be grouped into sectors, and there will be no huge long sector snaking around the galaxy. For example, a frontier system A, whose distance to empire capital C is 220, will have RE = 65% if set as a core system. That is, 65% of its energy and mineral output contributes to empire and 35% is lost. However, if we group it into a nearby sector whose capital is B with AB = 70 and BC = 170 (so its TC = 75%), system A's RE will be 100%. So 100% of system A's energy and mineral output contributes to sector, who in turn can contribute 75% to empire as tax, and keep 25% for sector itself. A win-win for both empire and sector.
Of course, to implement this, we need to be able to easily appoint sector's capital (and show its TC) in sector management mode. We also need clear visual indicators for RE in both sector management mode and common galaxy map (for example, circles of radius 100, 200, 250, 300 around sector capital in sector manage mode and around empire capital in both mode). Better yet, show RE directly on enhanced galaxy map. We also need to scrap max number of sectors, which serves no purpose anyway.
5) Sector AI fails at slavery management and purging.
I have little personal experiences in this aspect, as I usually don't play with those features. So I can propose no suggestion to this.
Edit: To accommodate different density of habitable worlds due to habitable percentage setting (HP), we can apply a factor such as [1.5 / (0.5+HP)] to distance list above.