SPENCER MICHELS: Arnold Schwarzenegger won the California governorship outright against more than 100 candidates, with 49 percent of the vote, as he pledged to clean up politics, restore financial health to the state and end partisan wrangling.
ARNOLD SCHWARZENEGGER: We are here, ladies and gentlemen, to clean house!
SPENCER MICHELS: The governor's approval ratings soared early on to more than 60 percent as he reached out to the Democrats, who control the state legislature, to craft compromises on workers compensation reform and a $15 billion bond measure that the voters passed.
And with a rousing speech at the Republican Convention, he drew national attention and speculation that his moderate brand of Republicanism might represent the future of the party.
ARNOLD SCHWARZENEGGER: And maybe, just maybe you don't agree with this party on every single issue. I say to you tonight that I believe that's not only okay but that's what's great about this country.
SPENCER MICHELS: But much has changed since then. These days, nurses, firefighters and teachers are dogging the governor at nearly every public appearance and on TV, accusing him of abandoning his promises of non-partisanship and under funding key programs like healthcare and education.
SPOKESPERSON: Governor Schwarzenegger, you promised to be different. Then you broke your word to guarantee funding for our schools.
SPENCER MICHELS: A new poll shows only 37 percent of registered voters approve of the job Schwarzenegger is doing, with 53 percent disapproving -- extremely low numbers; the governor's aides dismissed the poll results. Public Policy Institute of California Director Mark Baldassare says recent polls bear out that the governor's charm has worn off.
MARK BALDASSARE: The voters, particularly the Democratic voters and the left-leaning independent voters in California view Arnold Schwarzenegger as more of a partisan figure.
SPENCER MICHELS: As Schwarzenegger's relationship with the legislature deteriorated, partisanship returned to Sacramento. And when lawmakers didn't agree with some of his more controversial reforms like closing down regulatory commissions and balancing the budget, he said he'd go directly to the people through the state's initiative process.
ARNOLD SCHWARZENEGGER: If, like I said, the politicians don't come to the table and represent the people in the right way, then we will take it to the special election.
SPENCER MICHELS: Despite complains he was overusing the initiative process and wasting $40 million to $80 million on a special election, the governor pushed ahead and ordered the election for November.
ARNOLD SCHWARZENEGGER: With the people's help, there will be reform. Our broken state government will be modernized and revitalized, and you, the people, will be heard.
SPENCER MICHELS: While eight initiatives will be on the ballot, Schwarzenegger is stumping hard for three of them: A measure to use non-partisan retired judges to redistrict the legislature, rather than letting the Democratic majority draw the lines; a law to increase from two to five years the time a teacher must serve before getting tenure; and the most controversial initiative to end automatic increases in the state budget and give the governor power to make across the board budget cuts when there is a deficit.
The governor blames Democratic lawmakers for continually overspending. State finance Director Tom Campbell says California, the seventh largest economy in the world needs a balanced, on-time budget and fiscal discipline.
TOM CAMPBELL: What this proposal does is to say if you don't have a budget, you continue last year's budget, and if you run out of money, you nip it in the bud. Both of those steps are essential to get some credibility attached to the way we handle our finances in this state.
SPENCER MICHELS: But Democratic legislators say the proposal gives far too much power to the governor. Fabian Nunez is assembly speaker.
FABIAN NUNEZ: He wants the power to essentially develop his own budget and set aside all the rules of the game. He is committed to this agenda that we need to starve government. This is a governor who wants the power to be king.
SPENCER MICHELS: Nunez and other Democrats claim the governor is playing to his own special interests, mostly business, by refusing any tax increases. And those interests, the Democrats claim, contribute to his campaigns and are pushing the governor to the right.
FABIAN NUNEZ: But after eight months, I think the right wing of the Republican Party began to take hold of Arnold's agenda, and they're leading his agenda today. That's why the dip in numbers. He's taken everybody on.
SPENCER MICHELS: Schwarzenegger is taking on public employee unions with his backers supporting a measure to outlaw using union dues for political purposes.
And he did attack nurses, calling them a special interest; he said he would "kick their butts" after they blasted him for supporting a reduction in nursing staffing standards at hospitals. But nurses are popular with the people, says executive director of the California Nurses Association Rose Ann Demoro.
ROSE ANN DEMORO: When he attacked the nurses and attacks the teachers, his credibility was hit back really hard, and his poll ratings fell from 65 to 40, and we take a lot of responsibility for that.
SPENCER MICHELS: Nurses have followed the governor to fund-raising events, and demonstrated at the offices of his wealthy backers.
ROSE ANN DEMORO: So the push here is to move to a more privatized corporate society. That's the overall agenda, and it's the same agenda as George Bush in Washington, D.C.
SPENCER MICHELS: But Schwarzenegger's supporters say he is no ideologue, and remains a compassionate social moderate.
TOM CAMPBELL: He's a pro-choice governor who endorsed the stem cell research initiative two weeks before President Bush was reelected. This is a man who stood up to the leader of his own party on a very important issue. He is moving the Republican Party on the social issues more towards the middle.
SPENCER MICHELS: The governor's staff points out that he issued an executive order to reduce greenhouse gas emissions and has recognized global warming as a problem, unlike the Bush administration. Bill Allayaud, Sierra Club legislative director, says Schwarzenegger's environmental record is mixed.
BILL ALLAYAUD: His speech on global warming, without naming George Bush by name, was really an in-your-face to Mr. Bush. He's saying the debate is over. That's what Arnold's saying. That's great. We needed that. It's a strong political statement. On the other hand, the executive order isn't all that bold and really is, in the short run, weaker than the Kyoto Protocol.
SPENCER MICHELS: Pollsters say the fine points of Schwarzenegger's positions are not what is dragging his popularity down. It's a more general perception that, despite his claims otherwise, he has become just another politician.
Analysts like Baldassare say the election is just as important for the governor as for the electorate.
MARK BALDASSARE: He's put everything on the line here, creating a special election that people weren't particularly enthusiastic about. If he wins, he has another opportunity to show people around the country that he can get his way in politics. If he loses, it would be the first major loss that he's faced at the ballot box.
LAURENCE LEAMER: It's the whole ballgame. If he doesn't win decisively in November, he's out of here.
SPENCER MICHELS: Laurence Leamer has just finished a book on Schwarzenegger's life, called "Fantastic". His whole career, the writer argues, has been based on vanquishing his opponents.
LAURENCE LEAMER: He is the most determined person imaginable. He's not going to kill and knife to achieve success, but short of that, he's going to do what he has to do to succeed.
SPENCER MICHELS: With poll results showing two of his initiatives trailing and his own popularity down, Schwarzenegger reached out to Democrats in the legislature. Along with Republicans, they came up with a compromise budget last night.
ARNOLD SCHWARZENEGGER: This is a budget that is wonderful and terrific for California, and for the future of our state.
SPENCER MICHELS: That message could help the governor restore his tattered image.