California voters have rejected a ballot measure that sought to impose a one-time tax on the state’s billionaires, NBC News projected Monday, dealing a blow to progressives who championed the proposal.

Proposition 40 sharply divided Democrats in the state and nationally as the party figures out what direction it wants to take heading into an open presidential contest. It also faced a barrage of ad spending funded by the billionaires it would have affected, particularly in Silicon Valley.

The ballot initiative proposed a 5% tax on the assets of state residents who have net worths of more than $1.1 billion, with the option for a smaller, phased-in tax for those worth between $1 billion and $1.1 billion. It would require California to spend 90% of the created revenue on healthcare. The taxes would apply retroactively to anyone living in the state as of Jan. 1, 2026.

Proposition 40 would have been the first enactment of a billionaire tax in the U.S.…