The union behind California’s billionaire tax won the signature fight, then offered to walk it back within 24 hours
A California union that spent years building momentum for a billionaire wealth tax made a dramatic pivot on Friday, offering to scrap its 5% proposal in exchange for a smaller deal — just one day after the initiative cleared a critical signature threshold to make the November ballot.
The Service Employees International Union-United Healthcare Workers West (SEIU-UHW) has been pushing the California Billionaire Tax Act, a one-time 5% levy on the net worth of any California resident worth more than $1 billion. The measure targets roughly 200 individuals who collectively hold an estimated $2 trillion in wealth, according to the union, and is designed to raise around $100 billion over five years to offset federal healthcare funding cuts signed into law under President Trump’s administration.
On Wednesday, state officials confirmed the union had gathered approximately 980,438 valid signatures, clearing the 875,000-threshold needed to place the measure on the November 2026 ballot. Within 24 hours, the union moved to reframe the fight entirely.
In an open letter to Governor Gavin Newsom on Friday, SEIU-UHW offered to voluntarily withdraw the 5% tax if the governor would champion a 2% annual wealth tax on billionaires’ net worth instead.
“In a spirit of unity to fix the problems created by the Trump cuts to the California healthcare system, we would like to join you in enacting a 2% version of our initiative,” the union wrote.
The standoff offers a glimpse of the difficult trade-offs states face as federal healthcare funding continues to shrink.
The pivot: a smaller tax in exchange for a deal
Newsom rejected the offer swiftly. The union said it was willing to accept a smaller measure because the healthcare funding crisis driven by federal cuts is immediate, and California needs guaranteed revenue now.
Newsom rejected the offer swiftly. A spokesperson for the governor said he “has been clear that he is strongly opposed to a California-only wealth tax,” and characterized the measure, at any rate, as poorly designed and harmful to working Californians.
The union has until June 25, 2026, to voluntarily withdraw its initiative. If it doesn’t, the California secretary of state will certify it as qualified for the November ballot on that date. A person familiar with SEIU-UHW’s position said the union would pull the measure if Newsom could push a 2% version through the state legislature and sign it into law before that deadline.
What’s behind the urgency
The SEIU-UHW has framed the tax as an emergency response to the federal funding cuts signed into law under President Trump’s administration, which the union estimates will strip roughly $100 billion from California’s healthcare system over five years. The initiative was designed to fund Medi-Cal, California’s Medicaid program, as well as food assistance and public education.
A 2025 policy brief from the UC Berkeley Labor Center on Medicaid job loss projections found that California could lose between 109,000 and 217,000 jobs if federal Medi-Cal funding is cut by $10 billion to $20 billion annually. Approximately two-thirds of those losses would hit healthcare directly, including hospitals, nursing homes, clinics, and home care providers, with the remaining third cascading into auxiliary industries that supply and support the healthcare sector.
For HR leaders in California managing large workforces, particularly in healthcare, hospitality, food service, or any sector with significant Medi-Cal-covered employees, the ripple effects of either an unresolved funding gap or the instability of a prolonged ballot battle have direct implications for benefits strategy, workforce planning, and employee retention.
A labor movement divided
What makes the current environment especially complicated is that California’s labor movement is no longer speaking with one voice. The California Teachers Association, Planned Parenthood Affiliates of California, and the California Medical Association, which represents more than 50,000 physicians, have all aligned against the tax. So has Newsom and Xavier Becerra, who led this month’s open primary and is widely seen as a likely successor to the governorship.
On the other side, billionaires including Google co-founder Sergey Brin have funded two countermeasures of their own, which could also appear on November’s ballot and effectively block the tax from taking effect if passed. According to campaign finance tracking by OpenSecrets as of May 2026, a handful of billionaires had collectively contributed more than $116 million across committees working to defeat the initiative.
The OpenSecrets breakdown of campaign spending on California’s billionaire tax battle shows the SEIU-UHW has directed more than $30 million to its own campaign supporting the measure, a figure that reflects the scale of the union’s commitment but also the resource intensity of ballot-level labor campaigns.
The fracture across labor, healthcare, and education groups is significant for HR professionals to monitor. It reflects a broader tension between short-term funding urgency and longer-term concerns about talent flight, employer tax exposure, and the overall economic climate for hiring.
The wider workforce implications
Whether the initiative reaches voters in November or a smaller legislative deal is struck before June 25, HR leaders in California are already grappling with the downstream effects of federal healthcare funding cuts on their workforce. The KFF analysis of California’s fiscal position under Medicaid funding cuts released in April 2026 found the state is operating under rising spending pressure across healthcare, employee benefits, and education, with several cost-containment measures already in effect.
HR leaders whose employees rely on Medi-Cal for coverage, or who manage benefits packages built around California’s healthcare infrastructure, may find that the next six months bring significant volatility regardless of how the ballot question resolves. Workforce planning in healthcare and adjacent sectors, in particular, should account for potential staffing shortfalls if hospital and clinic funding is further disrupted.
The SEIU-UHW’s willingness to accept less than it originally demanded also signals something broader: that even unions with strong ballot momentum are calculating that certainty, however smaller, may be worth more than a high-stakes November fight. For employers managing labor relations in California, that calculus is worth tracking as contract cycles and workforce negotiations play out against a backdrop of deepening fiscal uncertainty.
