"We've used up virtually all our cash, borrowed all the banks will lend us, and we are still spending more than we're earning," said Romney, who was sworn in as Massachusetts' 70th governor. "We are facing a financial emergency."

Confronted with a budget deficit that could soon expand to $3 billion, Romney told lawmakers to be prepared for stark measures.

"Many nonessential programs, even some that we like very much, will have to be downsized or even eliminated," said Romney, who recently announced that he and Lt. Gov. Kerry Healey would not accept salaries. "I didn't run for governor to do that, but I will do my job."

Romney also seemed to raise the specter of layoffs.

"A great share of the task ahead will be borne by the thousands upon thousands of public servants in state and municipal positions," Romney said. "You public servants know that these changes will be difficult and possibly painful for some. I wish that weren't the case, but it is."

Credited with reviving the Salt Lake games and countless corporations, the political newcomer will now be charged with leading the state through its worst financial crisis since the Great Depression.

Romney, 55, and Healey, 42, took the oath of office in the House of Representatives after noon after a morning spent serving breakfast to the homeless and greeting citizens at the Statehouse.

Prior to the ceremonies, Romney received the traditional symbols of power -- the pewter key and the Butler Bible -- from acting Gov. Jane Swift, who then made what is known as "the long walk" out of the Statehouse, where she presided for 20 months, and into private life.

Swift, the state's first female chief executive and the nation's first to give birth in office, walked down the front steps of the Statehouse and joined her husband and three children in a car that returned them to their home in western Massachusetts.

Romney enters public life at a time when dipping tax revenues are threatening social services and the state's ability to pay its bills on time. His budget chief has predicted a budget deficit of nearly $3 billion in the 2003-2004 fiscal year, which begins June 30.

In addition to short-term spending cuts, Romney pledged to take long-term actions to rid state government of its "slow and bureaucratic ways" and foster a "lighter more agile bureaucracy."

"It is the structure of state government itself that is at fault," Romney said in a 16-minute speech that was interrupted by applause a dozen times. "The economic downturn exposed our problems, it didn't create them."

Romney reiterated his vow to overcome the gaping deficit without resorting to new taxes.

"Continuing to raise taxes to feed the bureaucratic beast can only result in devouring the means and motivation of our people," Romney said.

In addition to the financial crisis, Romney will have to grapple with the transition from bilingual education to English immersion in the state's public schools, the future of publicly financed campaigns, and initiatives to expand legalized gambling in Massachusetts.

His partner in these tasks will be an overwhelmingly Democratic Legislature, where Republicans hold only 29 of the 200 seats.

The founder of Bain Capital, Romney's first political foray was an unsuccessful 1994 bid to unseat Democratic U.S. Sen. Edward M. Kennedy. Romney's father, the late George Romney, served as governor of Michigan and ran unsuccessfully for president in 1968; his mother, Lenore, ran unsuccessfully for U.S. Senate from Michigan in 1970.

Romney was enlisted in 1999 to rescue the Salt Lake Olympics from a bribery scandal and budget deficit. When he left in March, to begin his gubernatorial campaign, the games were showing a slight surplus.

After edging Swift out of the race, Romney engaged in a tight and often nasty election campaign against Democratic Treasurer Shannon O'Brien. Despite polls that showed him behind just a week before the election, Romney won with 50 percent of the vote.

Despite a sometimes-rancorous campaign of partisan shots, he has earned praise in recent weeks for including Democrats in his administration and hiring one of the state's leading environmentalists as a top adviser.

Romney and Healey, who also is a multimillionaire, announced this week that they would not accept salaries during their four years in office as a symbol of the sacrifices all Massachusetts citizens must now make. The combined $255,000 that would've been used to pay their salaries instead will go toward paying top administration staff.

Following Thursday's ceremonies, Romney called the two Boston police officers injured in New Year's day shootings. He spoke directly to Sergeant Charles L. Byrne at Brigham and Women's Hospital and to the wife of Patrolman Robert J. Welby at Boston Medical Center.

"In both cases, Mitt expressed his hope for a quick and speedy recovery," said communications director Eric Fehrnstrom.

Romney and Healey then coached a basketball game at the Colonel Marr Boys and Girls Club in the Dorchester section of Boston.

Romney is the first Mormon to hold the corner office. BOSTON -- Republican Mitt Romney, the former Olympic chief and millionaire venture capitalist, launched his governorship Thursday with a warning that "immediate, hard action" will be needed to address the state's escalating financial crisis.

"We've used up virtually all our cash, borrowed all the banks will lend us, and we are still spending more than we're earning," said Romney, who was sworn in as Massachusetts' 70th governor. "We are facing a financial emergency."

Confronted with a budget deficit that could soon expand to $3 billion, Romney told lawmakers to be prepared for stark measures.

"Many nonessential programs, even some that we like very much, will have to be downsized or even eliminated," said Romney, who recently announced that he and Lt. Gov. Kerry Healey would not accept salaries. "I didn't run for governor to do that, but I will do my job."

Romney also seemed to raise the specter of layoffs.

"A great share of the task ahead will be borne by the thousands upon thousands of public servants in state and municipal positions," Romney said. "You public servants know that these changes will be difficult and possibly painful for some. I wish that weren't the case, but it is."

Credited with reviving the Salt Lake games and countless corporations, the political newcomer will now be charged with leading the state through its worst financial crisis since the Great Depression.

Romney, 55, and Healey, 42, took the oath of office in the House of Representatives after noon after a morning spent serving breakfast to the homeless and greeting citizens at the Statehouse.

Prior to the ceremonies, Romney received the traditional symbols of power -- the pewter key and the Butler Bible -- from acting Gov. Jane Swift, who then made what is known as "the long walk" out of the Statehouse, where she presided for 20 months, and into private life.

Swift, the state's first female chief executive and the nation's first to give birth in office, walked down the front steps of the Statehouse and joined her husband and three children in a car that returned them to their home in western Massachusetts.

Romney enters public life at a time when dipping tax revenues are threatening social services and the state's ability to pay its bills on time. His budget chief has predicted a budget deficit of nearly $3 billion in the 2003-2004 fiscal year, which begins June 30.

In addition to short-term spending cuts, Romney pledged to take long-term actions to rid state government of its "slow and bureaucratic ways" and foster a "lighter more agile bureaucracy."

"It is the structure of state government itself that is at fault," Romney said in a 16-minute speech that was interrupted by applause a dozen times. "The economic downturn exposed our problems, it didn't create them."

Romney reiterated his vow to overcome the gaping deficit without resorting to new taxes.

"Continuing to raise taxes to feed the bureaucratic beast can only result in devouring the means and motivation of our people," Romney said.

In addition to the financial crisis, Romney will have to grapple with the transition from bilingual education to English immersion in the state's public schools, the future of publicly financed campaigns, and initiatives to expand legalized gambling in Massachusetts.

His partner in these tasks will be an overwhelmingly Democratic Legislature, where Republicans hold only 29 of the 200 seats.

The founder of Bain Capital, Romney's first political foray was an unsuccessful 1994 bid to unseat Democratic U.S. Sen. Edward M. Kennedy. Romney's father, the late George Romney, served as governor of Michigan and ran unsuccessfully for president in 1968; his mother, Lenore, ran unsuccessfully for U.S. Senate from Michigan in 1970.

Romney was enlisted in 1999 to rescue the Salt Lake Olympics from a bribery scandal and budget deficit. When he left in March, to begin his gubernatorial campaign, the games were showing a slight surplus.

After edging Swift out of the race, Romney engaged in a tight and often nasty election campaign against Democratic Treasurer Shannon O'Brien. Despite polls that showed him behind just a week before the election, Romney won with 50 percent of the vote.

Despite a sometimes-rancorous campaign of partisan shots, he has earned praise in recent weeks for including Democrats in his administration and hiring one of the state's leading environmentalists as a top adviser.

Romney and Healey, who also is a multimillionaire, announced this week that they would not accept salaries during their four years in office as a symbol of the sacrifices all Massachusetts citizens must now make. The combined $255,000 that would've been used to pay their salaries instead will go toward paying top administration staff.

Following Thursday's ceremonies, Romney called the two Boston police officers injured in New Year's day shootings. He spoke directly to Sergeant Charles L. Byrne at Brigham and Women's Hospital and to the wife of Patrolman Robert J. Welby at Boston Medical Center.

"In both cases, Mitt expressed his hope for a quick and speedy recovery," said communications director Eric Fehrnstrom.

Romney and Healey then coached a basketball game at the Colonel Marr Boys and Girls Club in the Dorchester section of Boston.

Romney is the first Mormon to hold the corner office.