Editor’s note: This is one of several stories The Pajaronian is running in advance of the Nov. 3 gubernatorial election.
Prooposition 3
If passed, Proposition 3 will amend the California Constitution to add the existing voter-approved tax rates for individuals earning over $371,000 or joint filers earning over $742,000, adjusted annually for inflation.
This applies to about 2% of California’s population and would maintain the $5 billion to $15 billion of annual state income tax revenue generated by the original tax.
Prop. 3 is nothing new. The tax rate first went into effect in 2012 with Prop. 30, and was extended in 2016 with Prop. 55. The original two propositions did not allow for inflation adjustment, which Prop. 3 includes.
Prop. 3 breaks the state’s higher-income earners into three brackets, meaning residents earning over $371,000 may pay 10.3%, 11.3% or 12.3% in income tax depending on how much they earn above that threshold. If Prop. 3 is defeated, the rates would be 9.3% across all brackets.
The generated tax revenue goes to public education, with 89% to K-12 schools and 11% to state community colleges, and deposited into the Education Protection Account. This division carries over from the initial 2012 passing.
If there are excess funds, 50% must be allocated to the state Department of Health Care Services for children and their families, primarily through Medi-Cal programs.
Since its passing in 2012, higher tax rates have generated around $120 billion for schools and other essential services and represent about 5.5% of total General Fund revenues, according to California’s State Controller’s Office.
Prop. 3, officially titled the “California Children’s Education and Health Care Protection Act of 2026,” is supported by the California Teachers Association, California School Nurses Organization, California Medical Association, California State PTA and Planned Parenthood Affiliates of California.
Supporters argue the proposition is not a tax increase, but prevents a tax cut for millionaires by maintaining the current tax rates that affect the top 2% of the state’s population. They highlight strict accountability and audits that ensure school funding gets to classrooms.
“Allowing the rates to expire would mean a substantial tax cut for the state’s wealthiest residents and less revenue for schools, health care and other essential programs,” Chris Hoeme, executive director of the Center on Budget and Policy Priorities, wrote in an opinion article for Mercury News.
Opponents of Prop. 3 include the California Taxpayers Association, Family Business Association of California, Reform California and California Hispanic Chamber of Commerce, who argue that California already has some of the highest income taxes in the country and that making these permanent may drive more wealthy residents out of the state.
No on 3 also calls for the State to fix its spending, and says the tax acts as a bail out from California residents.
“Extending these income tax rates, it’s hitting that same pressure points and it’s causing the same incentives to leave,” said senior fellow at the Pacific Research Institute Wayne Winegarden. “And if you look at the latest IRS migration data, you can see it. People with greater means are leaving the state.”
Proposition 38
On the ballot this November is Prop. 38, which if passed will create $8.4 billion in general obligation bonds for immunology and immunotherapy research targeting diseases such as cancer and Alzheimer’s disease.
Of the $8.4 billion, half will be directed to a single UC-affiliated nonprofit medical research institute, and half to both public and nonprofit research grants.
Other notable provisions include a 20% discount for California residents on any technology, treatment or drug developed through research, and requiring grant recipients to purchase most goods and services from California suppliers.
According to a CalMatters analysis, the criteria for that single institution essentially guarantees the money will go to the California Institute for Immunology and Immunotherapy (CIII), a UCLA-affiliated nonprofit.
Prop. 38 landed on the ballot by petition signatures, but the proposal itself was crafted by billionaire philanthropist and medical inventor Gary Michelson, who also financed the campaign to collect the necessary signatures. Michelson donated $120 million in seed money to the CIII in 2022, which has yet to open.
While Prop. 38 has been endorsed by several patient advocacy groups—especially those focused on chronic diseases like Kidney Cancer Association and the Michael J. Fox Foundation—the American Association of Immunologists is the only national organization of researchers backing the proposal.
Supporters argue the proposal will create a stable source of funding for scientists and medical experts that will speed up the discovery process and create tens of thousands of jobs in the science industry.
Yes on 38 said the proposal is designed to pay for itself, with 10% of generated revenue going back into California’s General Fund.
The Legislative Analyst’s Office reports the bond will cost $500 to $600 million annually for 25 years, with the possibility of receiving part or all of that money back in the coming decades if the research generates revenue.
At the head of the opposition is Robert Kaplan, a senior scholar at the Stanford School of Medicine’s Clinical Excellence Research Center and former associate director at the National Institutes of Health.
“Voters should reject a measure that channels half of the state funds to one institution based on arbitrary criteria chosen by the proposition authors,” Kaplan said, instead arguing that grants for medical research should be awarded via a competitive process that gives all applicants an equal chance.
Kaplan said Prop. 38 unfairly concentrates half the funding to one unnamed institute and limits California’s flexibility to address changing health priorities.
“There is a lot of talent in immunology, immunotherapy research in California,” Kaplan said in an interview. “All the institutions are scrambling, and so tracking a huge portion of it to one institution, I think, is a bad idea.”
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Syd Fluker is a California Local News Fellow. Visit (fellowships.journalism.berkeley.edu/cafellows).
