After several different calls to Tech Support I finally got my geodatabase to upgrade and now I can also upgrade my annotation. It had something to do with the sde user in SQL Management Studio. Its sad these days that you have to be an IT guru to do some things in GIS.
Specifically here is how my Support Analyst wrote it up:
we were able to resolve the issue after resyncing the "sde" login to the database and granting it db_owner role and then running upgrade geodatabase tool on the database. This behavior is due to an existing defect.
Here are the details of the defect:
BUG-000100778 : Upgrade geodatabase tool at 10.5 fails with error [sde_branches : Error (-96) DBMS error code: 0]
We had to also first upgrade to a 10.5 database before upgrading to 10.6.
Josh White, AICP
Principal Planner
City of Arkansas City