Becerra Courts Legislature as Voters Approve Prop. 38 and Prop. 3

California's post-election fiscal landscape came into focus this week as Governor-elect Xavier Becerra opened budget talks with Democratic legislative leaders in Sacramento, voters approved an $8.4 billion immunology research bond while overwhelmingly defeating a hospital executive pay measure, and statewide returns backed making California's top personal income tax brackets permanent.

Governor-Elect Xavier Becerra Pledges Early Partnership with Legislative Leaders

Following his election victory on November 3, 2026, Governor-elect Xavier Becerra signaled a collaborative governing style with Capitol lawmakers, as reported by the Mountain View Voice and CalMatters. Bringing a legislative resume of 24 years in Congress and 1 term in State Assembly alongside tenure as California Attorney General and U.S. Health and Human Services Secretary, Becerra met with legislative leaders Monique Limón (Senate) and Robert Rivas (Assembly)—Senate President Pro Tem Monique Limón of Santa Barbara and Assembly Speaker Robert Rivas of Hollister—to pledge joint policy drafting before his January budget proposal.

Capitol analysts note that early cooperation will be tested immediately by a projected deficit of $3 billion to $10 billion in 2027-28 budget cycle estimates, driven by rising Medi-Cal obligations and federal funding uncertainties.

Voters Approve $8.4 Billion Proposition 38 Bond and Reject Proposition 44

On the statewide ballot, Californians split sharply on two healthcare initiatives, according to the San Francisco Examiner. Proposition 38—an $8.4 billion immunology bond passes with over 55% statewide support (and 66.8% in San Francisco)—creates the California Institute for Immunology and Immunotherapy in Los Angeles to fund research into autoimmune disorders, infectious diseases, and cancer, with an estimated debt service of $410 million per year over 30 years for research.

Conversely, Proposition 44, placed on the ballot by the Service Employees International Union-United Healthcare Workers West (SEIU-UHW) to cap private hospital executive compensation at the U.S. President's $400,000 salary and regulate hospital reserve spending, was rejected by 81.8% of voters (81.4% no in SF) after the union suspended its campaign following a legislative compromise.

Proposition 3 Leads with 58.7% to Make High-Earner Tax Rates Permanent

State budget writers also received a major revenue boost as Proposition 3 held a 58.7% yes statewide and 74.1% yes in San Francisco margin, as detailed by the San Francisco Examiner. Sponsored by the California Teachers Association and major healthcare labor coalitions, Proposition 3 permanently extends the marginal income tax brackets first enacted by Proposition 30 in 2012 and extended through 2030 by Proposition 55 in 2016.

Applying to the top 1.5% of earners ($360,000 single / $721,000 joint filers), the permanent rates are projected by the Legislative Analyst's Office to generate $5 billion to $15 billion for schools and Medi-Cal each year, dedicating 85% of proceeds to K-12 public schools and community colleges and up to 15% ($2 billion annually) to Medi-Cal.