Meg Whitman spent a record $142 million of her personal fortune on her campaign, but it was not enough to overcome Democrat Jerry Brown, the 72-year-old state attorney general who was governor from 1975-1983.
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Whitman took the stage at Universal City before hundreds of cheering supporters waving signs with pictures of California poppies, telling her volunteers they should be proud of their hard work.
She said she had called Brown, "to wish him well," a statement that was met with boos from her supporters.
"It is time now for Californians to unite behind the common cause of turning around this state that we love," she said.
In her first run for office after spending decades in corporate America, Whitman campaigned on a pledge to cut state spending, promote job creation by cutting taxes and fixing California's troubled schools. In months of wall-to-wall advertising, she said California needs a business leader to help it emerge from a deep recession and seemingly endless budget deficits.
"In many ways, this election was much bigger than Governor Brown or me. It was about the struggles and dreams of millions of Californians," Whitman said Tuesday. "Our challenges are daunting and they won't be solved by politics as usual. But we do need leaders in Sacramento to rise to the occasion and work together. It is my hope that a new era of bipartisan problem-solving can begin tonight because the people of California deserve no less. And tomorrow we are all Californians."
Whitman, 54, jumped into politics at a relatively late stage in life. She became politically engaged only a few years ago when her friend and one-time boss, former Massachusetts Gov. Mitt Romney, launched his GOP presidential campaign and she signed on as an economic adviser.
She spent nearly two years introducing herself to California voters. As that journey ended Tuesday night, Whitman appeared to get teary-eyed as supporters crowded around to hug her. She urged Republicans not to give up on trying to fix California, despite the loss.
"Because we are about California's future, I have one more request of you. If we all work together to demand change from Sacramento, a new California will rise. Let's never lose sight of what united us: a hope of good jobs, smarter government and better schools for our kids and our grandkids," Whitman said.
Christine Rubin, 51, of San Diego, was one of many Whitman supporters who had hoped to see California's first female governor swept into office and said she was grateful for Whitman's candidacy.
"I'm hopeful for Republican women in California and throughout the nation," Rubin said. "One day, we'll make it."