Proposition 3 is being promoted by unions primarily as a critical bill for public school funding, with proponents emphasizing its role in preventing larger class sizes and teacher layoffs. However, a closer examination reveals it is a broader tax measure affecting all state services funded by the general fund, including healthcare, courts, and schools.
The ballot initiative seeks to make permanent higher tax rates for approximately the top 2% of high-income Californians. These rates, originally set to expire at the end of 2030, are projected to generate an estimated $5 billion to $15 billion annually for the state's general fund. While about 40% of the revenue is earmarked for educational funds from transitional kindergarten through community college, the remaining 60% will support a wide array of other services such as healthcare, in-home supportive services, higher education, and the judicial system.
The California Teachers Association (CTA) is the largest financial backer of Proposition 3, having invested approximately $60 million in its promotion. The union views Proposition 3 as a more strategically sound alternative to Proposition 40, another tax measure targeting billionaires that has shown divisive effects in voter polling. CTA President David Goldberg expressed concern that having two significant tax-raising measures on the ballot could confuse voters, potentially leading to a backlash against both.
Proposition 40, distinct from Proposition 3, proposes a one-time 5% tax on many assets of California billionaires and is projected to raise tens of billions, primarily for healthcare. While both measures would benefit schools, educators, represented by the CTA, prefer Proposition 3 due to its ongoing nature and a larger percentage of its revenue directed towards education. Goldberg stated that the funding from Proposition 3 has become "huge and an essential part" of California's education funding, and making it permanent is vital to avert potential educator layoffs.
A diverse coalition of organizations, including the National Education Association, California School Employees Association, and various Service Employees International Union locals, has also contributed significantly to the "Yes on 3" campaign. In a notable alignment, the billionaire-funded group "Building a Better California," which is actively campaigning against Proposition 40, has endorsed Proposition 3, citing a belief in strong investments for the state's schools, housing, and essential services. This stance is shared by numerous political figures and professional associations, including Governor Gavin Newsom.
Opponents of Proposition 3 argue that the higher tax rates were initially presented as temporary measures to address budget deficits and that making them permanent constitutes a broken promise to California voters. The current higher tax rates, which went into effect in 2012 and were extended through 2030 by Proposition 55 in 2016, apply to single filers with taxable incomes above $371,479 and married couples filing jointly with incomes above $742,958, with the highest rate affecting those with incomes above $742,953 (single) and $1,485,906 (joint).
