California voters committed billions of dollars to stem-cell research (search) and raised taxes on the wealthy, passing controversial ballot initiatives designed to create jobs and improve mental health care.

Gov. Arnold Schwarzenegger (search) broke with President Bush and the national Republican Party to support spending $3 billion in seed money for stem-cell research, saying it would bring the state more jobs.

The stem-cell initiative "really highlights how California has become the capital of the 'second nation' and is going to the left when the rest of the country goes right," said Bruce Cain, director of the Institute of Governmental Studies at the University of California at Berkeley.

Californians also voted to levy a 1 percent income tax surcharge on 30,000 Californians who earn more than $1 million a year. The money will be used to expand mental health programs.

The tax increase is "another example of something you're not seeing nationally," Cain said. "It's very clear California has some core concerns with creating jobs and maintaining a healthy economy."

Voters also limited a 71-year-old law that Schwarzenegger and business groups said encouraged "shakedown" lawsuits against businesses suspected of defrauding customers or seizing an unfair competitive advantage.

They rejected requiring businesses to provide health care coverage for about 1 million employees, a mandate businesses described as a $7 billion job-killer.

"We took a big, big step in the right direction," Schwarzenegger said Wednesday. "The people have basically voted to keep the jobs, the safe jobs, in California and move the state forward in a strong way."

Schwarzenegger also helped defeat an attempt to ease California's tough three-strikes sentencing law, which he said would have put thousands of repeat criminals back on the streets.

Elsewhere on the ballot, Democrats preserved their majorities in both houses of the Legislature, despite efforts by Schwarzenegger to bolster the Republican ranks.