Gov. Schwarzenegger hits ground running
'Changing the entire political climate of this state'
Schwarzenegger speaks after being sworn in as governor Monday.
CNN's Frank Buckley on California Gov. Arnold Schwarzenegger's first actions after taking office.
Schwarzenegger is officially sworn in as California's governor.
A look at some potential challenges that Schwarzenegger will face.
SACRAMENTO, California (CNN ) -- Newly inaugurated California Gov. Arnold Schwarzenegger signed an order rolling back a 300 percent increase in state vehicle registration fees Monday, just hours after taking the oath of office.
Executive Order No. 1 repealed the $4 billion increase in the "car tax," imposed earlier this year to help shrink a massive budget shortfall from $38 billion to $8 billion. Analysts believe the fee hike contributed heavily to his predecessor's defeat. Reversing the car tax was one of actor Schwarzenegger's leading campaign promises.
Schwarzenegger, 56, a Republican, took office nearly six weeks after voters recalled embattled Democratic Gov. Gray Davis. After being sworn-in as the state's 38th governor, Schwarzenegger called on Californians to "put the rancor of the past behind us and do the extraordinary."
Schwarzenegger said the recall "was the people's veto of politics as usual," and pledged swift action to lead a state he said is "in crisis."
"We spent ourselves into the largest budget deficit in the nation," he said. "We have the worst credit rating in the nation. We have the highest worker compensation costs in the nation."
"I did not seek this office to do things the way they've always been done," he said in his inaugural address. "What I care about is restoring new confidence in your government."
California Supreme Court Chief Justice Ronald George administered the oath of office, as Schwarzenegger stood with his hand on a family Bible that George said dated to 1811.
Prior to his taking the oath, Vanessa L. Williams sang an a cappella rendition of "The Star-Spangled Banner" at the ceremony, which was backed by wide navy-blue banners studded with white stars. A group of children then recited the Pledge of Allegiance.
California's new first lady, Maria Shriver, read a passage from the work of poet Maya Angelou.
Organizers had said they wanted a "simple and dignified" event, given the state budget woes that helped fuel the unprecedented campaign to oust the unpopular Davis in the October 7 recall.
Immediately after taking the oath, Gov. Schwarzenegger told the dignitaries gathered at the statehouse, "In recent years, Californians have lost confidence. They felt that the actions of the government did not represent the will of the people.
"This election was not about replacing one man. It was not about replacing one party. It was about changing the entire political climate of this state."
Out of the gate
Schwarzenegger now has to deal with a shortfall expected to be at least $11.5 billion next year -- a gap he promised voters he would eliminate without raising taxes or cutting education spending.
"When Schwarzenegger was campaigning he was talking about action, action, action -- how he needed to come in and sweep up politics as usual in Sacramento and so on," said Kimberly Nalder, a government professor at California State University in Sacramento. "So people will be expecting that."
The new governor has promised to convene a special session of the state Legislature to address the fiscal crisis, overhaul the state's workers compensation system and repeal a measure Davis signed that would allow illegal immigrants to obtain drivers' licenses.
He is also expected to propose that the state Legislature back a $20 billion bond issue, which would have to be approved by voters.
"There is a massive weight we must lift off our state," Schwarzenegger said. "Alone, I cannot lift it, but together we can."
Don Perata, the Democratic state Senate leader, said his party is prepared to work with the new governor.
Modesto Tejada works over the weekend on scaffolding being erected at the Capitol in Sacramento for the inauguration.
"Our problems are legion," Perata said. "They're no different today than they were when Gov. Davis was here. Working together, we may be able to solve them. If he can help solve them, more power to him."
Perata said Schwarzenegger has a number of advantages, including a popular mandate. But he said a bond issue as large as $20 billion would require the state to pay up to $39 billion in interest before the bonds matured, and some Republicans are likely to oppose it.
"I don't know how carefully this has been thought through, but if he wants to bring it to us, we're going to entertain it," he said.
Schwarzenegger quoted President John F. Kennedy -- the slain uncle of his wife, Maria Shriver -- calling himself "an idealist without illusions." But he also invoked both former President Ronald Reagan and the framers of the Constitution, who faced a deep crisis when they met in Philadelphia in 1787.
"The dream of a new nation was falling apart," Schwarzenegger said. "Events were spiraling downward. Divisions were deep -- merchant against farmer, big states against small, north against south. Our founding fathers knew that the fate of the union was in their hands, just as the fate of California is in our hands."
But those delegates in Philadelphia produced what he called "the miracle of Philadelphia."
'Miracle of Sacramento'
"Now the members of the Legislature and I must bring about the miracle of Sacramento -- a miracle based on cooperation, goodwill, new ideas and devotion to the long-term good of California," Schwarzenegger said.
Former Los Angeles Mayor Dick Riordan, who will serve in the new administration as the state's education secretary, predicted that Schwarzenegger will govern the state "in a non-partisan way."
"People are ready for change right now," Riordan said. "What they know is that we are in moral and economic shambles in this state, and we need solutions that are going to reach out to everybody."
About 7,500 of the new governor's campaign supporters, state legislators, the California congressional delegation and other dignitaries attended Monday's ceremony. Though the recall campaign was rancorous, the transition has been marked by cooperation on both sides.
"I talk to him almost every day," Davis said. "I think he has good instincts, is appointing good people and is off to a good start."
CNN correspondents Frank Buckley and Kimberley Osias contributed to this report.