California voters approved Proposition 3 on Tuesday, cementing a permanent tax on the state's highest earners to fund public schools and community colleges, according to the Associated Press. The measure, a constitutional amendment, will maintain current income tax rates for top earners, which were originally set to expire after 2030.
Proposition 3 received 58.7% of the vote, with 4.4 million ballots in favor compared to 41.3% against, totaling 3.1 million votes, AP figures showed early Wednesday. The tax applies to individual income above approximately $371,000 annually, a threshold that is adjusted for inflation each year. Those earning below this amount are unaffected.
The annual revenue generated by this tax is estimated to be between $5 billion and $15 billion, according to the state's nonpartisan Legislative Analyst's Office. Of this revenue, 89% is allocated to K-12 schools and 11% to community colleges, with surplus funds potentially directed to healthcare in certain years. In prosperous years, this revenue constitutes about 15% of the state's K-12 education budget.
This marks the third time voters have decided on this tax measure. It was first enacted in 2012 as Proposition 30, a temporary measure designed by then-Gov. Jerry Brown to aid schools recovering from the Great Recession. Voters extended it in 2016 through Proposition 55. Combined with California's separate 1% surcharge on income exceeding $1 million for mental health services, the state's highest earners face a 13.3% income tax rate, among the highest in the nation.
The California Teachers Association spearheaded the initiative, contributing approximately $30 million to the campaign. Supporters, including the California State PTA, the California School Nurses Organization, and the California School Employees Association, argued that failing to pass the measure would lead to layoffs and program cuts, especially amidst federal funding reductions. The CTA framed the choice as a continuation of school funding versus a tax cut for the wealthiest residents.
Opposition, led by groups such as the California Taxpayers Association and the Family Business Association of California, contended that the tax was initially presented as temporary and that Californians already bear some of the nation's highest taxes. They advocated for fiscal restraint, urging the state to "fix spending first."
Polling data consistently indicated strong support for Proposition 3. A Public Policy Institute of California survey conducted from October 16-22 showed 58% in favor and 41% opposed, mirroring its September poll. The measure found broad backing among Democrats, independents, younger voters, and renters, while Republicans and older voters largely opposed it.
Proposition 3 shared the ballot with Proposition 40, a proposed 5% wealth tax on California's billionaires that did not secure majority support in the same PPIC poll, following significant spending by tech industry leaders against it. The measure also influenced the race for state superintendent of public instruction, with the CTA-backed candidate Richard Barrera supporting it.