Prop 3: Provides Permanent Funding for Schools and Health Care by Extending Existing Tax on High Incomes

Summary

Proposition 3 is a constitutional amendment placed on the ballot by petition signatures. It makes permanent the higher income tax rates that voters first approved in 2012 for high-income taxpayers, instead of letting them expire in 2031. The added brackets apply to income above about $371,000 for single filers and $742,000 for joint filers.

Revenue goes to the Education Protection Account, which is continuously appropriated, with 89 percent for K-12 schools and 11 percent for community colleges, and up to half of any amount above what the school funding formulas require, capped at $2 billion in a single year, for children's health care programs.^S1^S3^S6^S7^S10

What a yes or no vote means

Yes means

A yes vote means the higher income tax rates on high-income taxpayers that voters approved in 2012 would become permanent instead of expiring in 2031.^S1^S3^S4^S6

No means

A no vote means those higher rates would expire in 2031, and the Legislative Analyst's figure shows the rate on the highest incomes would return to 9.3 percent after 2030.^S3^S4^S6

How it works

Proposition 3 is an initiative constitutional amendment put on the ballot by petition signatures. Its title in the measure text is The California Children's Education and Health Care Protection Act of 2026. It amends Section 36 of Article XIII of the California Constitution, the section that also contains the Education Protection Account.^S4^S7
The measure keeps the extra income tax brackets that voters approved in 2012 and extended in 2016. Under the Legislative Analyst's figure, for a single filer the added brackets are 10.3 percent on income from $371,000 to $446,000, 11.3 percent on income from $446,000 to $743,000, and 12.3 percent above $743,000. The 9.3 percent rate applies to income from $73,000 to $371,000 under both the current schedule and the schedule if the measure fails.^S3^S6
If the measure fails, the Legislative Analyst's figure shows those three added brackets would no longer apply after 2030 and the 9.3 percent rate would apply to all income above $73,000 for a single filer. The voter guide's description of a no vote says the tax increase on high-income earners would expire in 2031.^S3^S4^S6
The Legislative Analyst says the top 2 percent of California taxpayers pay these higher rates, and that these taxpayers pay about half of all state income taxes. The measure's findings say it does not increase taxes on couples earning less than $680,000 or individuals earning less than $340,000, in today's dollars, and does not change the existing rates.^S2^S3^S7
Revenue from the added brackets goes to the Education Protection Account. The measure keeps the account's money continuously appropriated for school districts, county offices of education, charter schools and community college districts, with 89 percent for school districts, county offices of education and charter schools and 11 percent for community college districts, distributed under formulas set in law. No community college district may receive less than $100 per full time equivalent student, and no school district, county office of education or charter school may receive less than $200 per unit of average daily attendance.^S1^S7
The measure also directs money to health care. When the Director of Finance estimates that the amount available for transfer into the account in the following fiscal year is more than the amount required from it, 50 percent of the remainder, up to a maximum of $2 billion in any single fiscal year, is allocated by the Controller to the California Department of Health Care Services to increase funding for health care services to children and their families, including people covered by Medi-Cal.^S7^S10
The measure adds restrictions on how the money may be used. Money in the account for education may not pay costs incurred by the Legislature, the Governor or any agency of state government. School districts, county offices of education, charter schools and community college districts have sole authority to decide how the money is spent, must make those decisions in open session of a public meeting, may not use the money for salaries or benefits of administrators or any other administrative costs, and must publish an annual accounting of what they received and how it was spent on their websites.^S7
The measure requires auditing. The Controller shall audit the account to ensure the money is used and accounted for as the measure requires, and the annual independent financial and compliance audit of community college districts, county offices of education, school districts and charter schools must also verify that the money was properly disbursed and spent. The Attorney General or a local district attorney shall investigate and may seek civil or criminal penalties for misuse of the money.^S7
The measure states that its education funding cannot be suspended or withheld no matter what happens with the state budget. It says the account is self-executing and that distribution of the money may not be delayed by the failure of the Legislature and Governor to enact an annual budget bill or by suspension of the school funding guarantee.^S7
Money in the account counts as General Fund revenue and as money the state applies to the support of school districts and community college districts for purposes of the Proposition 98 minimum funding guarantee in Section 8 of Article XVI of the California Constitution.^S7
The measure includes a conflicting measures clause. If another measure that affects personal income tax rates appears on the same statewide ballot, that measure is deemed to be in conflict. If Proposition 3 receives more affirmative votes, Proposition 3 prevails in its entirety and the other measure is null and void.^S7
The measure's findings state that the tax was first passed in 2012 to fund state services and avoid cuts to public education, was extended by the voters in 2016 with 63 percent voting yes, and has since raised more than $104 billion for schools and other essential services. The findings also state that letting the tax expire would reduce state revenues by more than $10 billion a year.^S7
For context, the Legislative Analyst says the state plans to spend about $250 billion from the General Fund this year. About half of that spending is for schools, community colleges and the state's public universities, and about another one third is for health and human services, mainly Medi-Cal. The rest goes mostly to prisons, courts and other state services.^S2^S3

Fiscal impact

The Legislative Analyst's summary of the estimate of net state and local government fiscal impact is one line: the measure maintains $5 billion to $15 billion of annual state income tax revenue by making a temporary tax increase on high-income earners permanent instead of letting it expire in 2031.

The LAO explains that the amount will swing a lot from year to year because much of the revenue comes from taxing income tied to the stock market, with around $5 billion in a weak year and $15 billion in a strong year, and most years in between. The LAO also says roughly 40 percent of the funding would go to schools and community colleges, with the rest to other state programs, and that part of the amount would be set aside in budget reserves the state could use when revenues decline.

CalMatters reports the tax typically raises $5 billion to $15 billion a year, which it describes as about 3 percent to 10 percent of overall K-12 spending. The measure's own findings state that letting the tax expire would reduce state revenues by more than $10 billion a year and would require major cuts to education and health programs.^S1^S2^S3^S6^S7^S10

Who benefits and who pays

Who benefits

K-12 school districts, county offices of education and charter schools: the measure directs 89 percent of the account's education money to them under existing funding formulas, guarantees at least $200 per unit of average daily attendance, and says the funding cannot be suspended or withheld because of the state budget. Supporters say the money reaches local classrooms and cannot be redirected by the Legislature.^S1^S4^S7
Community college districts: they receive 11 percent of the account's education money under existing formulas, with a floor of $100 per full time equivalent student. The Community College League of California and the California Federation of Teachers are listed among the supporters.^S1^S4^S6^S7
Children and families who use health care programs: up to 50 percent of the amount available above what the school formulas require, capped at $2 billion in a single fiscal year, goes to the Department of Health Care Services for critical, emergency, acute and preventive health care for children and their families. The measure says that money may not replace existing state General Fund money for the nonfederal share of those programs and must be used to obtain federal matching Medicaid funds.^S7^S10
The state budget generally: the LAO says the income tax pays for most spending from the General Fund, which covers education, health care and prisons. The measure's findings say that guaranteeing the school money in the constitution frees up state funding to help balance the budget and provide for the Rainy Day Fund, and the LAO says part of the funding would be set aside in budget reserves.^S2^S3^S7
Supporters say a yes vote would prevent billions in cuts to schools and health care, that without it eight million public school and community college students face teacher layoffs and larger classes, that families could lose preventive care and Medi-Cal coverage, and that the measure includes annual audits and criminal penalties for misuse. These are the supporters' claims, as printed in the voter guide.^S4^S5^S6^S10

Who pays

High-income taxpayers: the added brackets apply to income above about $371,000 for single filers, $742,000 for joint filers and $505,000 for heads of household (2025 levels, adjusted annually for inflation). The LAO says the top 2 percent of taxpayers pay these rates and about half of all state income taxes. If the measure fails, the LAO's figure shows those brackets would end after 2030 and the rate on the highest incomes would return to 9.3 percent, so this group would pay less.^S1^S3^S6
No new tax on anyone else: the measure creates no new tax and no new bracket below the current thresholds, and the LAO's fiscal summary describes maintained revenue rather than added revenue. The measure's findings state that it does not increase taxes on couples earning less than $680,000 or individuals earning less than $340,000, in today's dollars.^S1^S2^S7
Amounts that vary with the market: the LAO says the money comes largely from taxing income closely tied to the stock market, so the amount available would be about $5 billion in a weak year and about $15 billion in a strong year, with most years in between. CalMatters describes the same range.^S2^S3^S10
Opponents say making the tax permanent locks in what they call the largest permanent state income tax increase in California history, costing taxpayers up to $15 billion every year, that Californians already pay the highest income, sales and gas taxes in the country, and that the state should fix spending first. These are the opponents' claims, as printed in the voter guide and on their campaign page.^S4^S5^S6

Support and opposition

Supporters

Total raised: $46,260,006

As of: October 6, 2026

Organizations

California Teachers Association
California School Nurses Organization
California State PTA
Planned Parenthood Affiliates of CA
California Federation of Teachers
California School Employees Association
California Nurses Association
Community College League of California
Nurse Alliance of SEIU California
California Professional Firefighters
California Democratic Party
California Medical Association

Top funders

California Teachers Association / Issues PAC $43,836,341 Top contributor to committee ID 1483562; the FPPC lists California Teachers Association as its top donor
National Education Association (MPO) $7,500,000 Top contributor to committee ID 1483562
PACE of California School Employees Association-Issues $2,600,000 Top contributor to committee ID 1483562; the FPPC lists California School Employees Association as its top donor
California Federation of Teachers COPE Prop/Ballot Committee $1,750,000 Top contributor to committee ID 1483562
SEIU California State Council for Working People $1,509,029 Top contributor to committee ID 1483562
Service Employees International Union – SEIU Local 2015 Issues PAC $1,000,000 Top contributor to committee ID 1483562
California Professional Firefighters Ballot Issues Committee $500,000 Top contributor to committee ID 1483562
United Domestic Workers of America Issues PAC $500,000 Top contributor to committee ID 1483562
American Federation of State, County and Municipal Employees, AFL-CIO (MPO) $500,000 Top contributor to committee ID 1483562
American Federation of Teachers, AFL-CIO Committee on Political Education (FED PAC ID#C000028860) $450,000 Top contributor to committee ID 1483562

Key arguments

Supporters say the measure protects schools and health care without raising taxes, that it is not a new tax and does not raise taxes on anyone, and that it prevents a tax cut for millionaires and billionaires. They say the rates have been paid by the wealthiest 2 percent for 15 years.^S4^S5^S6
Supporters say that without the measure, California's 8 million public school and community college students face billions in cuts, including teacher layoffs, overcrowded classrooms and bigger class sizes, and that families could lose preventive health care and Medi-Cal coverage.^S5^S6
Supporters say the measure guarantees that the money goes directly to local schools and community colleges, that the Legislature cannot touch or redirect it, that no money may be spent on bureaucracy or administrative overhead, that every dollar is independently audited each year, and that districts must post their spending online. They also say any official who misuses the money faces prosecution and criminal penalties.^S5^S6
The voter guide argument in favor is signed by David Goldberg, president of the California Teachers Association, Katie Nilsson, RN, president of the California School Nurses Organization, and Jodi Hicks, president of Planned Parenthood Affiliates of California. The rebuttal to the argument against is signed by Jeff Freitas, president of the California Federation of Teachers, Darrell Roberts, president of the California Professional Firefighters, and Adam Weinberger, president of the California School Employees Association.^S5^S6
The Secretary of State's proposition summary page lists the California Teachers Association, the California School Nurses Organization, the California State PTA and Planned Parenthood Affiliates of CA as supporters. CalMatters lists the California Teachers Association, the California School Employees Association, the California State PTA, the California Democratic Party and the California Medical Association as supporters, and reports that the California Teachers Association put the measure on the ballot.^S4^S10
The voter guide lists a Yes on Prop 3 campaign committee at YesProp3CA.com for more information. The measure's supporting committees reported $46,260,006 in total contributions as of 10/06/2026.^S4^S8

Opponents

Total raised: $5,500

As of: October 6, 2026

Organizations

California Taxpayers Association
Family Business Association of California
California Hispanic Chambers of Commerce
Howard Jarvis Taxpayers Association
Hispanic Chambers of Commerce of San Francisco
Central Valley Business Federation
Reform California

Key arguments

Opponents say voters were told in 2012 that the higher income taxes were temporary and that making them permanent is a tax increase, not a continuation. They say California taxpayers paid the temporary higher rates for 16 years and that politicians should keep their side of the bargain.^S5^S6
Opponents say the measure locks in the largest permanent state income tax increase in California history and would cost taxpayers up to $15 billion every year. These are the opponents' figures as printed in their argument.^S4^S5^S6
Opponents say Californians already pay the nation's highest income, sales and gas taxes and have the highest cost of living, and that making a temporary tax permanent makes California more expensive. They also say the state has a spending problem rather than a revenue problem, that spending more than doubled while the population grew by less than 2 percent in the past decade, and that the state turned a $100 billion budget surplus into a $30 billion deficit in three years.^S4^S5^S6
Opponents say state government has lost billions to waste, fraud and overspending, and their argument lists $100 billion for a high speed rail project, $37 billion for homeless programs and $31 billion for unemployment fraud as examples. These are the opponents' characterizations as printed in their argument.^S5^S6
The voter guide argument against is signed by Robert Gutierrez, president of the California Taxpayers Association, Robert Rivinius, president of the Family Business Association of California, and Julian Canete, president of the California Hispanic Chambers of Commerce. The rebuttal to the argument in favor is signed by Jon Coupal, president of the Howard Jarvis Taxpayers Association, Carlos Solorzano, chief executive of the Hispanic Chambers of Commerce of San Francisco, and Clint Olivier, president of the Central Valley Business Federation.^S5^S6
The Secretary of State's proposition summary page lists the California Taxpayers Association, the Family Business Association of California and the California Hispanic Chambers of Commerce as opponents. CalMatters lists the California Taxpayers Association and Reform California as opponents, reports their argument that the measure may spur wealthy Californians to leave for lower-tax states, and lists The San Diego Union-Tribune and The Orange County Register as media outlets that endorsed a no position.^S4^S10
The voter guide lists a campaign committee for the against side at VoteNoProp3.com for more information. The opposing committee reported $5,500 in total contributions as of 10/06/2026.^S4^S8

How it could affect your household

Household type	Effect	Explanation	Confidence
Homeowner	Mixed	The measure changes no tax rate for households below its thresholds and does not change property taxes. A homeowner with income above about $371,000 for a single filer or $742,000 for a joint filer would keep paying the added brackets instead of seeing them end after 2030. The cited sources give no household-level estimate of the effect on property values or on the services a homeowner uses.^S1^S3^S6	Medium confidence
Renter	Neutral	The measure does not change income tax rates for income below its thresholds, so there is no direct change in what a renter pays. Its direct spending effect is that state funding for K-12 schools, community colleges and children's health care continues at current rates instead of falling when the tax expires. Whether that changes a specific household's services depends on later decisions by the state and local districts.^S1^S3^S6^S7	Medium confidence
W-2 earner ($100k to $250k)	Neutral	The added brackets apply to income above about $371,000 for single filers and $742,000 for joint filers, which is above this range, and the measure creates no new tax on income below those levels. There is no direct change in the tax or withholding for this group. The LAO says the revenue funds most state services, including schools and health care.^S1^S2^S3^S6	High confidence
High earner (over $1M)	Negative	Direct effect on taxes: the measure keeps the 10.3 percent, 11.3 percent and 12.3 percent brackets in place instead of letting them end, so a taxpayer in this range would pay more than if the measure fails. The LAO's figure shows the rate on income above $743,000 for a single filer would be 12.3 percent with the measure and 9.3 percent without it after 2030. The LAO says the top 2 percent of taxpayers pay these rates and about half of all state income taxes.^S1^S3^S6	High confidence
Small business owner	Mixed	The measure creates no new business tax or fee. It keeps the higher personal income tax rates in place, and the Legislative Analyst's background says the income tax applies to most types of income, including salaries, wages, interest and profits from investments. The cited sources do not analyze how the measure would affect small businesses specifically, and the opponents' argument discusses other proposed taxes that are not part of this measure.^S2^S3^S5^S6	Low confidence
Retiree	Mixed	The measure creates no new tax and changes no rate for households below its thresholds. A retiree with income above about $371,000 for a single filer or $742,000 for a joint filer would keep paying the added brackets rather than seeing them end. The measure keeps funding for Medi-Cal and for children's health care, and the LAO says about one third of General Fund spending goes to health and human services, mainly Medi-Cal.^S1^S2^S3^S7	Low confidence
Local government services user	Positive	Direct effect: the measure keeps $5 billion to $15 billion a year of state income tax revenue that the LAO says would otherwise fall away when the tax expires. The LAO says roughly 40 percent of that funding would go to schools and community colleges, with the rest to other state programs including health and human services, prisons and courts, and part set aside in budget reserves. School and community college districts receive their share under existing formulas, and the measure says the money may not be delayed by a budget impasse.^S2^S3^S7	Medium confidence

Tradeoffs

Permanent versus temporary: supporters say the tax was passed to fund schools and health care and that letting it expire would cut up to $15 billion a year, while opponents say voters were promised in 2012 and 2016 that the increase was temporary and that making it permanent locks in the largest permanent income tax increase in state history. Both are the campaigns' claims.^S4^S5^S6
Volatility: the LAO says the money swings a lot from year to year because much of it comes from income tied to the stock market, from about $5 billion in a weak year to about $15 billion in a strong year, which makes the amount available for schools and health care uneven.^S2^S3^S10
Reserves versus current spending: the LAO says part of the funding would be set aside in budget reserves the state could use when revenues decline, which supports programs in bad years but holds money back in good years.^S2^S3
Accountability provisions: the measure requires an audit of the account by the Controller, adds a verification step to the annual school audits, requires districts to post their spending online, and allows civil or criminal penalties for misuse, in exchange for a constitutional funding guarantee that the Legislature cannot reduce. The opponents' argument says Sacramento wastes billions and should fix spending first.^S5^S6^S7
Health care link: the health care allocation is capped at $2 billion in a single fiscal year and may be suspended by statute during a declared budget emergency, though the reduction may not go beyond the proportional reduction in overall General Fund spending for that year. That money may not replace existing state General Fund money for the nonfederal share of those programs and must be used to draw federal matching Medicaid funds.^S7
Local control versus state oversight: districts decide how the money is spent in open session under the measure, which supporters describe as money going straight to classrooms, while the LAO describes the overall effect as funding for education and other state programs, with roughly 40 percent going to schools and community colleges.^S2^S3^S7
Conflict with other tax measures: the measure says any other measure on the same ballot that affects personal income tax rates is in conflict, and that if Proposition 3 gets more affirmative votes the other measure is null and void. CalMatters reports that two other tax measures on the ballot could affect how this one is decided.^S7^S10
What the measure does not change: the rates paid on income below the added brackets, the standard schedule that reaches 9.3 percent, and the Proposition 98 minimum funding guarantee, which stays in place and toward which the measure counts the account's revenue.^S3^S6^S7

Sources

Proposition 3 Official Title and Summary (Official Voter Information Guide, November 3, 2026) California Secretary of State Accessed 2026-10-17
Proposition 3 Analysis by the Legislative Analyst (Official Voter Information Guide, November 3, 2026) California Secretary of State and Legislative Analyst's Office Accessed 2026-10-17
Proposition 3 [Ballot], Propositions on the November 3, 2026 Ballot Legislative Analyst's Office Accessed 2026-10-17
Proposition 3 summary page (Official Voter Information Guide, November 3, 2026) California Secretary of State Accessed 2026-10-17
Proposition 3 Arguments and Rebuttals (Official Voter Information Guide, November 3, 2026) California Secretary of State Accessed 2026-10-17
Proposition 3 print version, Official Voter Information Guide (title and summary, LAO analysis with Figure 1 tax rate table, arguments and rebuttals) California Secretary of State Accessed 2026-10-17
Proposition 3 Text of Proposed Laws, Official Voter Information Guide (The California Children's Education and Health Care Protection Act of 2026) California Secretary of State Accessed 2026-10-17
2026 Ballot Measure Contribution Totals: Proposition 3 – Provides Permanent Funding for Schools and Healthcare by Extending Existing Tax on High Incomes California Secretary of State (Cal-Access) Accessed 2026-10-17
Top 10 Contributors List, November 2026 General Election California Fair Political Practices Commission Accessed 2026-10-17
CalMatters California Voter Guide 2026: Proposition 3, Make income taxes on higher earners permanent to fund education and healthcare CalMatters Accessed 2026-10-17