California voters will decide this November whether to permanently lock in a tax rate on the state's highest earners that currently funds a significant share of public education, or let it expire in 2031 as originally promised. Proposition 3 asks voters whether to make permanent a temporary income tax on California's highest earners to help fund education, setting up a fight over whether preserving billions in school funding is worth cementing one of the nation's highest tax rates into the state constitution.
The measure, as reported by the Sacramento Bee, would remove the scheduled 2030 sunset clause on tax rates California voters first approved in 2012 and then extended in 2016. Those higher rates apply to the top 2% of California taxpayers, kicking in for single filers earning at least $361,000 and joint filers earning at least $721,000, with the thresholds increasing annually with inflation, per the Bee's reporting. Without action, the higher income tax is set to expire in 2031.
David Goldberg, president of the California Teachers Association, frames the stakes in terms of stability rather than a new burden on taxpayers. He said California's reliance on income taxes to fund public education makes school funding vulnerable to large year-to-year swings, according to the same report. Goldberg said the need to make the tax permanent is made clear by recurring fiscal cliffs as expiration dates approach, and argued that permanent higher taxes on California's top earners would provide more stability for schools.
What Supporters and Opponents Actually Dispute
Prop. 3 supporters say allowing the higher rates to expire would amount to a tax cut for the state's highest earners, and that making the tax permanent would protect a critical source of funding for schools, the Bee reports. Opponents frame it differently: Prop. 3 opponents say voters were promised a temporary tax and the state should let it expire. David Kline, with the California Taxpayers Association, argued that lawmakers should allow the higher rates to expire as promised, saying the fiscal emergency that prompted voters to approve the higher rates in 2012 has passed.
Kline said lawmakers should instead reflect education's priority in the existing state budget rather than lean on a narrow tax base indefinitely. He also warned that making the tax permanent could contribute to instability in school funding, and that California school funding risks losing significant revenue if high-income taxpayers move elsewhere. Kline pointed to other proposed taxes on high earners, including a billionaire tax, as evidence the state should be careful about harming a major revenue source, according to the Bee's account.
How Much Money Is Actually on the Line
According to the Legislative Analyst's Office, letting the higher rates expire in 2031 as scheduled under current law would reduce state General Fund revenues by $5 billion to $15 billion per year in today's dollars — the same range cited in the Bee's reporting on the higher income tax's annual generation. The California Budget & Policy Center reported that revenue from the higher rates now forms a core component of the state budget, and separately found that the rates enacted under Proposition 30 and extended under Proposition 55 have generated roughly $120 billion total over nearly 15 years for schools and health services.
California is constitutionally required to provide a minimum level of funding for public schools and community colleges, and that minimum often amounts to about 40% of the state's general fund, per the Bee. The Legislative Analyst's Office separately notes that education spending draws on roughly half of the state's roughly $250 billion General Fund overall, through the Proposition 98 formula set in 1988. If the higher rates expire, that expiration could force lawmakers to draw more heavily from other general fund dollars and could increase pressure on funding for healthcare and housing, according to the reporting.
Who Pays, and Who's Funding the Campaign
The Legislative Analyst's Office has found that the top 2% of California taxpayers subject to these surtaxes contribute approximately 50% of all personal income tax collected by the state General Fund, underscoring how narrow the base is that funds these programs. Under Prop. 3's provisions, 89% of generated revenues would go to K-12 public school districts and 11% to community college districts, with local school boards retaining spending discretion while administrative uses are prohibited, according to CalMatters.
Campaign finance filings reported by CalMatters show the campaign supporting Prop. 3 received $17.775 million from the California Teachers Association Issues PAC and $750,000 from the California Federation of Teachers. Proponents submitted 962,106 valid signatures to qualify the measure for the ballot, well above the state's requirement of 874,641 signatures tied to turnout in the prior gubernatorial election.
A Local Classroom Backdrop
The debate arrives as new schools open across the state — Winding Creek Elementary opened in Roseville on August 6, according to the Bee's reporting, which included an interview with Jenifer Merritt, a kindergarten teacher there. Goldberg said that even if voters approve Prop. 3 and stabilize school funding, it still would not provide students, educators, families and communities everything they deserve. He added that voters now have the opportunity to decide again whether the higher rates should continue.
Whichever way the vote goes, the underlying tax rate does not change on its own this year — Prop. 3 does not raise anyone's taxes today. It simply decides whether the current top rate, which combined with the state's Mental Health Services tax pushes California's peak marginal income tax rate to 13.3%, becomes a permanent fixture of the state constitution instead of expiring in 2031 as originally scheduled.
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