A proposed parcel tax ballot measure that would have created a new stream of local funding for the Los Angeles Unified School District went down to defeat at the hands of voters late Tuesday, even as its supporters acknowledged it had an “uphill battle” from the beginning.

With all precincts reporting following the day’s special election, 54.32% of the electorate —165,294 voters — said no to Measure EE, and 139,027 — 45.68% — said yes, a far cry from the required two-thirds majority of voters need to pass the controversial measure. As the only item on the ballot in most parts of the massive district, low turnout was anticipated.

A total of 304,321 voters cast ballots for or against Measure EE in Tuesday’s election.

The district placed this parcel tax on the ballot — an annual charge of 16 cents per square foot of developed property — to help pay for a labor contract agreement reached with striking teachers and ease its financial burden due to ballooning pension costs and declining student enrollment.

The campaign was quickly launched in the wake of a high-profile strike in January, as district leaders hoped to capitalize on public support for picketing teachers.

In response to early returns, Mayor Eric Garcetti said it’s often “rare” for any school district facing opposition on a parcel tax effort to achieve a two-thirds vote.

“The campaign against got two million bucks from Trump’s biggest supporter in the state,” he said at a Measure EE returns party in reference to a donation to an opposition campaign by Geoffrey Palmer, a LA-based real estate developer.

“It was going to be an uphill battle for sure … I’d do it again in a heartbeat. If there’s something you believe in, you take risk and you lead,” he said.

Mayor Eric Garcetti has invested significant political capital in this measure, stumping for it in his “State of the City” speech and spending significant time campaigning in recent weeks.

“I’m not a poll reader,” said LAUSD Superintendent Austin Beutner of the early returns. “But I think we put together the broadest, deepest coalition for public education we could.”

Under Measure EE, commercial property owners would have paid the bulk of the estimated $500 million per year in tax revenue, with an average cost to homeowners of $100 to $450 per year. The measure was written to sunset in 12 years.

LAUSD has pledged to use the money for things included in the strike-ending agreement like teacher salary increases, class-size reduction and the hiring of additional support staff like counselors and librarians in the long term.

Key supporters include United Teachers Los Angeles President Alex Caputo-Pearl, the California Charter Schools Association, Superintendent Beutner and Mayor Garcetti, who helped negotiate the $840 million labor contract between teachers and the district to end the walkout.

Supporters of the measure posited that the tax would be a first step to address relatively low per-pupil funding at LAUSD compared with other major city school districts — about $24,000 per student in New York City compared to $16,000 in Los Angeles.

But an opposition campaign to the tax questioned whether district leaders would be trustworthy stewards of taxpayer dollars. Business leaders and anti-tax advocates argue LAUSD has done little to curb rising costs — which they say would gobble up parcel tax dollars before they ever reached the classroom.

CEO of BizFed Tracy Hernandez, who has acted as a spokesperson for the NO on EE campaign, said Tuesday evening that she was encouraged by early results.

“We feel confident that we ran an honest educational campaign to make sure everyone knew to vote, first off, and also how badly written this measure was,” she said.

A lawsuit filed by the Howard Jarvis Taxpayer’s Association against the district claimed a language change to the measure made by LAUSD Superintendent Austin Beutner allowed even more types of structures to be subject to the tax, like parking garages, without the school board’s consent.

The district called the lawsuit, which is slated for court after the election, “frivolous and wholly lacking in merit,” and said the tax was never meant to apply to parking structures.

Parcel taxes are a California phenomenon designed to raise tax revenue for local government institutions in the wake of Proposition 13. School districts in San Francisco Bay Area have found the most success in passing them. More than three out of five school districts that have placed parcel tax measures on the ballot since 2001 have done so, according to this independent analysis.

A successful Measure EE would make LA Unified the largest district in the state to use parcel tax revenue, senior fellow Patrick Murphy at the Public Policy Institute of California said ahead of Tuesday’s vote.

If the tax fails, the district could consider placing it on the ballot during a future election with higher turnout, like the March presidential primary next year.

EE is also being watched from Sacramento as having possible ramifications on the so called “split-roll,” a ballot measure that would repeal some parts of Proposition 13 and give local government entities more power to collect commercial — but not residential — property taxes.

Activist groups like Inner City Struggle, which played a lead role in phone banking and canvassing for the EE campaign, are gearing up for a push to pass that tax reform measure in November 2020 to benefit schools.

In the same vein, experts say a successful Measure EE would have thrown cold water on another pending state constitutional amendment to lowering the threshold to pass a parcel tax to a 55% majority.