Democrats emerged victorious in two hard-won gubernatorial races Tuesday, taking the top spot in two states on the front lines of the recent plague of terrorism.

Democratic millionaire businessman Mark Warner outspent his opponent Attorney General Mark Earley in a race for Virginia governor. The margin in the race was closer than expected — 52 percent to 47 percent with all precincts reporting.

In New Jersey, Jim McGreevey showed up Republican Bret Schundler without even campaigning in the last four days of the race, winning handily with 56 percent of the vote with 97 percent of precincts reporting.

New York saw an extraordinary Election Day upset, with billionaire Republican Michael Bloomberg defeating liberal Democrat Mark Green. With 99 percent of the votes counted, Bloomberg had 711,189 to Green's 670,413, making Bloomberg the mayor who will lead the city's recovery from the World Trade Center attack.

Bloomberg, who has never held public office, won an improbable victory in a city where Democrats outnumber Republicans by a 5-1 ratio. He will succeed Mayor Rudolph Giuliani, who is being forced out by term limits but who was the first Republican mayor in a generation when he was elected in 1993.

In a sweltering hotel ballroom in Richmond, Warner told exultant Democrats that he had finished "the longest job interview of my life" with the satisfaction of disproving skeptics who gave him — or any Democrat — no chance two years ago.

"As your governor, I will always be guided by one principle — to put Virginia first," Warner said.

At a somber Republican gathering, Earley stood with his wife, Cynthia, and their children, unbowed in conceding defeat. He said history would judge the past two Republican gubernatorial terms as a golden era in Virginia.

"We have every reason to be proud of a record unsurpassed by any state in the nation. We have won some, we have lost some, but we have never retreated from the message of individual liberty, low taxes, limited government and world-class education," Earley said.

In a lengthy speech to supporters in New Jersey, Schundler challenged McGreevey not to raise taxes and keep his promise to cut car insurance rates. Schundler also threatened the Democrat that he and his backers would be watching.

McGreevey, meanwhile, pledged in his victory speech "a government for all the people, a government that is accountable to you and only you."

"Tonight I have a message for all of you. This was your fight, this was your victory and the next four years belong to you," he told his supporters.

With the victories, there will be 21 Democratic governors, 27 Republicans and two independents.

Warner's victory continues a Southern resurgence by Democrats, who have elected governors in North Carolina, South Carolina, Georgia, Alabama, Kentucky, and Mississippi in recent years despite a regional drift toward the GOP.

In all, 362 cities cast their vote for mayor Tuesday, including Atlanta, Boston, Cleveland, Detroit, Seattle, Houston, Pittsburgh, Miami, and Atlantic City.

In Houston, incumbent Lee Brown, bidding for a third two-year term, and city councilman Orlando Sanchez pulled away from a field of six Tuesday and headed for a runoff that would pit Houston's first black mayor against a challenger who could become the city's first Hispanic mayor.

The incumbent in Cincinnati, Charlie Luken, prevailed over challenger Courtis Fuller in a race between registered Democrats. Fuller, who is black, had criticized the white mayor's handling of friction between blacks and police that sparked rioting last April.

Incumbent mayors Thomas Menino of Boston and Thomas Murphy of Pittsburgh won easily. But Miami voters ousted their mayor, Joe Carollo, who finished third in a 10-candidate race.

Looking at the Big Picture

Though Democrats tried to cast Tuesday's contests as a referendum on the president's first year in office, the gubernatorial races in states hit by terrorism provide little indication of national trends, said Sen. Bill Frist, R-Tenn., who chairs the Republican senatorial campaign committee. 

Next year, "the themes will be security and safety in view of terrorism ... and the economy," Frist said.

At the same time, says Rep. Tom Davis, R-Va. and head of the House GOP campaign committee, "You look for little clues" in Tuesday's balloting to illuminate the election year ahead. 

It is next year's election, however, that will grade the president's terror and economic recovery efforts.

"If we have not come out of the recession by next November, people will blame the party in power," said Howard Wolfson, executive director of the House Democratic campaign committee. 

"The recession that we undoubtedly are in, and will be, it needs to have turned the corner from the Republican standpoint by the late third quarter or early fourth quarter" of 2002, said Frist.

Thus far, the polls show Bush with the support in the 60 to 70 percent range for his handling of the economy, although administration officials concede unemployment is likely to continue to rise, at least into early next year.

The Associated Press contributed to this report.