MADISON, Wis. — Republican Scott Walker took office Monday as Wisconsin's 45th governor, promising to "right-size" state government and make tough but compassionate decisions to balance an expected $3 billion shortfall in the two-year state budget.

Walker didn't say what those tough decisions would involve, but he's made it clear that reducing state workers' benefits and the size of government are part of his plans. He called on state employees Monday to work with him to ensure that government provides only essential services that citizens need and taxpayers can afford.

"Our government will not only be smaller, it will be better," Walker said. "More responsive, more efficient, more effective."

Walker had campaigned on promises to cut taxes and create 250,000 jobs in the next four years. He was elected after the recession resulted in the loss of 180,000 jobs since 2008 and the lowest approval ratings ever for outgoing two-term Democratic Gov. Jim Doyle, who decided not to seek another term.

Walker declared that "Wisconsin is open for business" during his 20-minute inauguration address.

"We will make tough but compassionate decisions to balance the next state budget in a way that will get Wisconsin working again," Walker said. "Under our administration, state government will do only what is necessary — no more, no less."

The 43-year-old former Milwaukee County executive comes into office with new Republican majorities in both the Senate and Assembly. Democrats have accused them of planning to push conservative social agendas, along with economic reforms, and protesters held two rallies around the Capitol on Monday to protest Walker's decision to turn down more than $800 million in federal aid for a high-speed rail line between Madison and Milwaukee. Construction was expected to create thousands of jobs.

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