In summary

In a 50-minute interview with CalMatters, Lt. Gov. Eleni Kounalakis talks about what she can and can’t do in the job on higher education, income inequality, offshore oil drilling and other issues. She also discusses her political ambitions.

The duties of California’s lieutenant governor are light compared to other statewide elected officials: voting on the boards of three public higher education systems; serving on the commission that oversees millions of acres of land under state waterways; and stepping in for the governor when he leaves the state, as Eleni Kounalakis was doing this week when she joined CalMatters for an interview about her re-election campaign.

But the second-highest office in the state can also be a powerful launching pad for Californians with greater aspirations. Two of the last four governors served immediately prior as lieutenant governor, including current Gov. Gavin Newsom.

Kounalakis, a longtime housing developer and former U.S. ambassador to Hungary who was elected in 2018, made clear that she’s interested in being the next — which, if she succeeded, would make her the first woman to govern the biggest state in the country.

“I think if we are going to have a woman governor of California, that she shouldn’t be coy in her ambitions,” Kounalakis said. “I have found my first four years as lieutenant governor to be a very good training ground for the bigger job.”

That includes advancing higher education, environmental protections, gender equity and California’s engagement on an international stage, Kounalakis said, though she called rebuilding the lieutenant governor’s office the main accomplishment of her first term. 

“By the time I came in, it was not fully functional. And so I started with what does the Constitution dictate that this office should be used for?” she said. “Being involved in learning and understanding what’s happening in state government is very important.”

First, however, Kounalakis will have to win a second term. Here is what the Democrat told CalMatters that she would do with four more years on the job.

More funding to help college students graduate faster

Kounalakis points to public higher education as the greatest tool that California has to combat income inequality and its affordability crisis, by helping students get higher-paying jobs. She said she would continue to push for the state to increase funding for its colleges and universities, which has dropped to about 10% of general tax revenues in the state budget from 18% more than four decades ago.

“It is a clear investment in our future,” she said. “It isn’t just an investment in the future GDP. It’s an investment in the richness of the fabric of our society and it is an investment in our democracy.”

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Kounalakis said that money should go to expanding slots for residents at the University of California, which has been criticized for bringing in too many out-of-state and international students who pay more in tuition, and to raise graduation rates in the California State University system, where just 33% of first-time students finish in four years and degree completion among Black students is even lower.

“Any private university, if you said that only one in three of your students are graduating after four years, people would rebel against such a notion,” she said. “So we have a lot of room left to grow in figuring out how to make sure that when our students arrive on campus, they have the support and the assistance that they need, and a system that’s easy enough to navigate that they know how to get all their credits in four years and get their major done.”

Phase out offshore oil drilling

As one of three members of the State Lands Commission, Kounalakis has outsized control over the future of a handful of oil rigs that still operate in state waters off the coast of California. She does not support offshore oil drilling, because of the environmental risks of a potential spill.

“The waters off of the coast around Southern California are far more valuable to us as a state in terms of recreation, in terms of habitat, in terms of trade,” she said. “It just doesn’t make sense to have this activity going on.”

But don’t expect the commission to move to shut down the remaining rigs any time soon. While there has been a moratorium on new oil and gas leases in state waters since the 1969 Santa Barbara spill, a few companies still have contracts to operate and Kounalakis said it would be prohibitively expensive to buy them out. She has instead sponsored legislation to boost the development of offshore wind energy facilities.

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“What I am focused on is when we do have the legal authority to transition away from offshore drilling, that we do it,” she said. “Since I have been in office, we have seen the closure of three offshore oil operations and the transitioning and transferring over of offshore lands, significant thousands of acres, back into the marine sanctuaries.”

Kounalakis’ Republican opponent, Angela Underwood Jacobs, similarly has told CalMatters that she considers the coastline a precious resource and would support phasing out offshore drilling entirely.

Build housing to ease affordability crisis

Kounalakis agrees that the state minimum wage, which increased to $15 per hour for large employers and $14 per hour for small businesses at the start of the year, is not enough to live on in California.

She is intrigued by experiments with a guaranteed income in cities such as Stockton and is watching the outcome. But, like Underwood Jacobs, she does not favor taking additional steps to raise the hourly rate beyond its current trajectory tied to inflation, which will bring the minimum wage to $15.50 for all workers in 2023.

“I’m supportive of the process that we are on right now in implementing the higher minimum wage,” Kounalakis said. “It’s important to recognize that unions in California have actually done a good job in making sure that their members are paid enough, or more anyway than minimum wage, and getting benefits and other things.”

Kounalakis blames a lack of housing as the biggest issue driving California’s affordability crisis. Though her office has no authority over housing policy, she said the state must work more closely with the private sector to boost development.

“We do have a supply and demand problem that’s driving up the cost,” she said.

She does not buy into critiques, however, that the cost of living is causing a mass exodus of Californians or that the state’s wealthiest residents, who provide nearly half of income tax revenues, are fleeing high tax rates.

“People are coming and going all the time — coming here from around the world or around the country to start a business, and then after that business matures, or frankly, they’re just ready to go home, they might leave,” Kounalakis said. “When you draw the lens back to really understand the state of California, it is important to know that we have always had these boom-and-bust cycles, since the first massive wave of immigration happened during the gold rush.”

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Alexei covers Gov. Gavin Newsom, the Legislature and California government from Sacramento. He joined CalMatters in January 2022 after previously reporting on the Capitol for The Sacramento Bee and the...