LONG BEACH - After a five-month political drama, Gov. Arnold Schwarzenegger called it a wrap Monday on his pledge to overhaul California's beleaguered workers' compensation system.

In signing a landmark bill that dramatically reshapes how medical treatment and disability benefits are determined for injured workers, Schwarzenegger declared California is taking another major step toward economic recovery.

"Today I am delivering my promise," a beaming Schwarzenegger told a crowd of about 2,800 workers, business leaders and government officials packed into a 1.1-million-square-foot airplane hangar at the Boeing manufacturing plant here.

"This workers' compensation reform will reduce the high costs that have driven jobs out of California," he said. "No longer will workers' compensation be the poison of our economy. California is open for business."

Boeing officials, who said workers' compensation reform was critical to the plant's competitiveness, provided Schwarzenegger with the backdrop for his speech of a canary-yellow C-17 cargo transport plane. Factory workers perched along its 170-foot wingspan and flanked the governor on the stage, along with a bipartisan delegation from Sacramento.

The Hollywood-style production featured overhead stage lights and rock music. One employee held a sign in the audience while others pulled out cameras to take snapshots of the actor-turned-governor. Boeing issued commemorative bill-signing badges to VIPs, some of whom arrived by limousine. A group of Democratic and Republican lawmakers together chartered an airplane to fly down from the capital for the event.

"I feel like I'm in a Hollywood production studio," said Assembly Speaker Fabian Núñez, D-Los Angeles.

The agreement was a major victory for Schwarzenegger, who threatened lawmakers that he would bypass them with an initiative if they did not meet his deadline last Friday.

"Without his leadership, this bill would not be ready today," Senate Republican leader Jim Brulte of Rancho Cucamonga said. "He's restoring job creation." Assembly Republican leader Kevin McCarthy of Bakersfield added: "What a difference a year makes. What a difference a man makes."

Democrats also credited the bipartisan effort that led to passage of the workers' compensation reform by a wide margin Friday.

"In balancing the needs of business and workers, we were able to deliver a comprehensive workers' comp reform while at the same time (assuring that) workers injured on the job get the treatment each and everyone of them deserve," Núñez told the gathering. "This is the only way we're going to be able to move California forward is if we work together, Democrats and Republicans, to find common ground."

A blue-and-white sign reading "Promise Made. Promise Kept. Workers' Comp Reform" decorated the front of a desk where the governor signed the bill, SB 899 by Sen. Chuck Poochigian, R-Fresno.

As he declared victory, Schwarzenegger gave credit to his proposed initiative for forcing lawmakers to act. Sponsors of the proposed ballot measure said they gathered enough signatures last week to qualify the measure, but it was dropped when lawmakers passed their plan Friday.

"It was because of all those signatures that drove this legislative agreement," Schwarzenegger said. "We are cleaning up the system. We will terminate the fraud and abuse that was going on in the system. Those who were gaming the system, we're saying, 'Hasta la vista,' because the game is over."

The law, which is effective right away because it was passed with a two-thirds vote, is aimed at slashing billions from a $17.9 billion state program to treat job-related injuries. Experts estimate the savings could range from $4 billion to $6 billion and eventually give much-anticipated financial relief to employers - from nonprofit charities to Fortune 500 companies - plagued by skyrocketing workers' compensation costs in recent years. The governor's original reform package, introduced a day after he took office in mid-November, called for $11.3 billion in cuts.

Schwarzenegger, noting that California workers' compensation insurance premiums are the highest in the nation while the benefits paid to injured workers are among the lowest, campaigned heavily on revamping the program. He anticipates premiums eventually dropping 25 percent to 30 percent.

The new legislation is also intended to stabilize a shaky insurance market rattled by more than two dozen carriers going bankrupt and the quasi-public State Compensation Insurance Fund growing at an unhealthy rate during the late 1990s. The State Fund now covers more than half of the employers in California.

"We want more insurance companies to come into the state," Schwarzenegger told reporters Friday. By creating more competition to drive down the price of insurance, he said, it will "reduce the size of State Fund. I want to open it up ... for private insurance companies to come in."

Under the new law, for the first time, employers and insurance companies will develop a physician network to treat injured workers. Some workers can designate their own doctor if their employers offer health insurance. An independent medical review program will be set up to resolve disputes and allow injured workers to switch physicians.

Uniform medical guidelines will be used to determine disability benefits. Critics say the current system is overly subjective and often leads to different disability awards for the same type of injury.

The new law also requires employers to approve treatment right away for injuries - a safeguard against any delays over hard-to-diagnose injuries such as back strains. Severely disabled workers will receive an increase in benefits while less injured workers will see their payments reduced.

Emboldened by his latest victory, Schwarzenegger vowed Monday to take a similar approach to tackle other pressing issues, including the state budget and energy, education and prison reform. "We will do it over and over again because everything is possible," he said. "We will rise to any challenge."