California Lt. Gov. Eleni Kounalakis announced Friday she is withdrawing from the 2026 governor’s race and will instead run for state treasurer, altering the crowded Democratic field and reflecting broader political shifts.
Kounalakis, a San Francisco resident and the state’s first woman to serve as lieutenant governor, launched her campaign in April 2023 with high expectations. In a statement Thursday night, she said her decision came after months of speaking with residents and assessing where she could make the most impact.
“At this moment, I believe I can make the greatest impact by focusing on California’s financial future,” Kounalakis said. “This decision was not made lightly.”
Her departure marks the second significant change in the race in less than a month. In July, former Vice President Kamala Harris announced she would not run for governor, though she left open the possibility of another presidential bid. Kounalakis had previously said she would step aside if Harris entered the race.
Kounalakis had raised about $9 million for her gubernatorial campaign, most of which can be transferred to the treasurer’s race. Despite strong fundraising, polls placed her behind former Rep. Katie Porter, a leading contender for the Democratic nomination.
The timing of her exit comes just days after House Speaker Emerita Nancy Pelosi appeared to endorse her in a CNN interview, calling her “one in particular” she supports, using Kounalakis’ maiden name, Eleni Tsakopoulos.
Gov. Gavin Newsom, barred from seeking a third term due to term limits, leaves the 2026 contest wide open. Remaining Democratic candidates include Porter and former Health and Human Services Secretary Xavier Becerra, with potential entrants such as Los Angeles billionaire Rick Caruso.
Kounalakis, 58, has served as lieutenant governor since 2019 and was U.S. Ambassador to Hungary under President Barack Obama from 2010 to 2013. Before her public service career, she was president of Sacramento-based AKT Development.
Her shift to the treasurer’s race, first reported by POLITICO, had been discussed with political allies since March, according to sources. The treasurer serves as California’s chief banker and investment manager, overseeing pension funds and bond programs.
Kounalakis’ exit could redirect donor support in San Francisco to other gubernatorial hopefuls and allow Pelosi to back another candidate. She now faces competition in the treasurer’s race from former Oakland Mayor Libby Schaaf and current state Board of Equalization member Tony Vasquez.
