California Proposition 3 Seeks to Make Tax on Wealthy Permanent

-Editorial

California voters will decide Nov. 3 whether to make permanent an existing income tax on the state’s highest earners, a measure supporters say would protect billions of dollars in funding for public education and other state services while opponents raise concerns about its potential effects on the economy and high-income residents.

Proposition 3 would extend an income tax voters approved in 2012 and renewed in 2016. The tax, which applies to approximately the wealthiest 2% of California taxpayers, generates an estimated $5 billion to $15 billion annually, depending on economic conditions and income tax collections.

The measure would maintain existing tax rates rather than impose new taxes or increase current rates. Without another extension, the additional income tax rates are scheduled to expire in the early 2030s.

The proposal comes as California school districts continue to face challenges involving staffing shortages, classroom sizes, student services, and rising operational costs.

Supporters argue that making the tax permanent would provide schools with greater financial stability and help the state maintain funding for health care and other public programs. Critics contend that California’s high income tax rates could discourage investment, affect economic competitiveness and encourage wealthy residents to relocate.

Karen Getman, an attorney and expert on California ballot measures and public-school funding, said the tax was initially established during the Great Recession when school districts faced significant financial difficulties.

Getman, who worked on the original tax proposal in 2012, recalled that some California classrooms had as many as 42 students and that school districts struggled to maintain basic educational services.

“We were in the middle of the Great Recession, and everybody in the state was suffering terribly,” Getman said. “And in particular, our schools were really devastated at that point.”

The tax was originally intended as a temporary revenue measure. However, voters approved an extension in 2016 after state officials determined that additional funding would be necessary to support public services.

Getman said the revenue has since become an established component of California’s budget.

“They’re baked into the state budget, particularly in these times when the state is being asked to do more because of federal cuts,” she said.

Under California’s progressive income tax system, higher tax rates apply as taxpayers earn more income. Getman said the additional rates affect individuals earning more than approximately $371,000 annually, with higher marginal rates applying at additional income thresholds.

She emphasized that the proposal would maintain the current tax structure.

“We are not changing it. We’re not increasing it. We’re just not cutting it,” Getman said.

According to Getman, the revenue is deposited into a designated account within the state’s general fund, allowing officials to track collections and distributions.

School districts receiving funding must publicly report how the money is spent, and information is available through the California Department of Education and individual school districts.

Getman said the revenue is intended to support classroom-related expenditures rather than administrative costs.

She also explained that the additional education funding can free other general fund resources for services such as health care.

The revenue can fluctuate significantly because California relies heavily on income taxes paid by high earners, including taxes on capital gains from investments.

Getman said some revenue associated with strong economic periods can also contribute to the state’s budget reserves, helping California respond to future economic downturns.

The potential economic consequences of maintaining the tax remain a point of disagreement.

Opponents have argued that high income tax rates could encourage wealthy taxpayers to leave California, potentially reducing future tax collections and investment. Getman disputed that argument, citing research reviewed before the 2016 extension that she said did not establish a significant connection between the tax and residents leaving the state.

Education organizations supporting Proposition 3 say the measure would help districts maintain staffing levels and services for students.

Eva Ruiz, a District F board member of the California Teachers Association and an educator in the Central Valley, said the revenue has become an important source of financial stability for public schools.

“These revenues are no longer just a little stopgap,” Ruiz said. “They are foundational for our state budget and for our school district budget.”

Ruiz pointed to California’s universal school meals, transitional kindergarten, expanded before- and after-school programs and additional special education funding as examples of services requiring sustained public investment.

She said predictable funding is particularly important for school districts making long-term decisions about staffing and educational programs.

Ruiz also expressed concern about teacher shortages and the potential consequences of future budget reductions.

“When we’re facing cuts, who’s going to come into a profession where you’re risking being laid off?” Ruiz said.

She recalled that educators faced uncertainty and possible layoffs before the original tax was approved in 2012.

According to Ruiz, reductions in available funding could affect counseling, special education, English learner programs and other services provided by public schools.

School health services are another concern among organizations supporting the proposal.

Sheri Coburn, executive director of the California School Nurses Association, said schools increasingly serve students with complex physical and mental health needs, placing additional demands on school nurses and other support personnel.

“Children do not leave their physical or mental health care issues at the school’s front door,” Coburn said.

Coburn said approximately 40% of California school-age children have at least one chronic health condition, while one in five students experiences mental health conditions.

She explained that credentialed school nurses assist students with asthma, diabetes, seizure disorders, severe allergies, cancer, and other medical conditions that can affect school attendance and academic performance.

Coburn also described staffing shortages that require nurses to serve multiple campuses.

During her career in the Central Valley, Coburn said she was responsible for approximately 5,000 students across five schools.

More recently, she worked one day per week at a smaller school district serving 389 students, illustrating the limited availability of nursing services in some communities.

“For a lot of students, we are the first healthcare professional they see,” Coburn said.

She emphasized that preventive screenings, health education, early intervention, and case management can help students remain healthy and participate in classroom activities.

Coburn said maintaining school nursing and counseling positions requires dependable funding, particularly in rural and underserved communities where students may have limited access to health care outside school.