California's 2026 gubernatorial race just got a serious reshuffle.
Lt. Gov. Eleni Kounalakis, once seen as one of the frontrunners and the first major candidate to officially launch a campaign, has stepped away from the race. Instead, she's setting her sights on a different state office—state treasurer.
This move isn’t just about switching seats. It has serious ripple effects across the political chessboard in California.
💥 Why This Matters:
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Kounalakis had millions in campaign funds for the governor’s race.
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High-profile donors were backing her, many with ties to Bay Area political elites.
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Her exit makes space for other power players in the Democratic field.
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The governor’s race is thinning, just as it was beginning to heat up.
A Strategic Pivot
In a public statement Friday morning, Kounalakis explained her change in direction, saying she believes she can make the "greatest impact" by focusing on California’s financial health. As state treasurer, she’d oversee massive state investments, pension boards, affordable housing, and infrastructure financing.
She didn’t mince words: “This work is critical and I am prepared for the challenge.” That’s a clear sign she’s not stepping back—she’s shifting gears with precision.
From Ceremonial to Critical
Let’s be honest: the lieutenant governor role is often seen as more of a ceremonial gig than one with real teeth. But in California, it’s also been a launchpad. Just look at Gov. Gavin Newsom and former Gov. Gray Davis—both were in that exact seat before moving into the governor’s mansion.
Kounalakis had been following that same trajectory since being elected lieutenant governor in 2018 and reelected in 2022. But now, she’s steering away from tradition and going where she feels she’ll have more influence—on California’s finances.
💰 Treasurer = Real Power
Being treasurer is no small job. The office controls the purse strings of the world’s fifth-largest economy. We're talking state investments, pension funds, clean energy incentives, affordable housing, and more.
Kounalakis framed it like this: her work would focus on “fiscal responsibility, economic opportunity, and strategic investment in our state's priorities — from affordable housing and clean energy to infrastructure and education.”
That’s a pretty powerful portfolio.
A Political Force of Nature
Kounalakis isn’t new to the political spotlight. She was once the U.S. Ambassador to Hungary, and her roots in politics run deep. In 2016, she was California co-chair for Hillary Clinton’s presidential campaign, raising serious funds and offering foreign policy advice.
Her father, a wealthy Sacramento real estate mogul, has long been entrenched in political donor circles, especially in the Bay Area. That includes major connections like House Speaker Nancy Pelosi, who recently gave Kounalakis a subtle endorsement on TV following Kamala Harris' decision not to run for governor.
🌀 Harris Opts Out, The Race Shifts Again
Speaking of Kamala Harris, her recent announcement that she won’t be joining the governor's race left a vacuum. Many Democrats were holding their breath waiting for her decision, including major donors who hadn’t committed to any other candidate yet.
With Harris out and Kounalakis now running for treasurer, it’s full-on scramble mode for the rest of the Democratic field. The chessboard has been flipped.
Who's Still in the Race?
There’s no shortage of Democrats ready to take a shot at the governor’s office. Here’s a snapshot of who’s still standing:
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Toni Atkins – former Assembly Speaker and Senate President pro tem
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Xavier Becerra – former state attorney general and Biden Cabinet member
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Katie Porter – the sharp, whiteboard-wielding former Congresswoman from Orange County
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Tony Thurmond – current superintendent of public instruction
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Antonio Villaraigosa – former Los Angeles mayor with name recognition to spare
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Betty Yee – former state controller
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Stephen Cloobeck – businessman and philanthropist with deep pockets
And Don’t Forget the GOP...
While the Democrats dominate the conversation, two Republican challengers are still in the race:
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Steve Hilton, a former Fox News commentator with a populist appeal
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Chad Bianco, the tough-talking sheriff from Riverside County
Though California leans heavily blue, the Republican candidates could make waves—especially in a fractured Democratic primary.
💸 What Happens to Kounalakis’ Millions?
Here’s the kicker: most of the millions she raised for the governor’s race can be rolled over into her campaign for treasurer. That gives her a significant war chest, especially compared to others eyeing the treasurer’s seat.
She’ll be up against some veteran politicians in that race, including:
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Anna Caballero, state senator from Salinas
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Libby Schaaf, former mayor of Oakland
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Tony Vazquez, a member of the state Board of Equalization
It won’t be a cakewalk, but Kounalakis is clearly betting that this role aligns more closely with her strengths and goals.
🧭 What's Next?
Kounalakis' decision doesn’t just shrink the list of candidates—it reshuffles the momentum and opens new doors for other Democrats to snag donors, endorsements, and headlines. Expect new alliances, big money moves, and even some surprise entries before the race really locks in.
One thing’s for sure: California’s political landscape just shifted, and everyone with skin in the game is recalculating their next move.
Final Thoughts
With Kounalakis stepping away from the governor's race, the narrative around the 2026 election has already changed. Her pivot reminds us that in politics, timing and strategy are everything.
And while she's trading one high-profile campaign for another, her influence remains. Whether it's in the treasurer’s office or behind the scenes in donor circles, Eleni Kounalakis isn't going anywhere—she's just switching lanes.
As California barrels toward 2026, voters are going to be watching closely, not just who’s running, but how the race evolves in real time. Buckle up—it’s going to be one wild political ride.
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