In a city where House Speaker Nancy Pelosi faces criticism for not being liberal enough, California Republicans gathered this weekend to repair deep divides over how to appeal to an electorate that continues to trend away from the steady diet of conservative candidates and issues served up by the state GOP.

The party leadership, meeting at its semiannual state convention near San Francisco Bay, appeared energized by Republican presidential candidate John McCain's prospects for victory in November, enough to salve conservatives still sore over his past support for bipartisan immigration and campaign finance reforms.

But that was a rare bright spot for a party facing serious political and financial problems.

The number of registered Republicans in California continues to dwindle, and the party's bench of viable statewide candidates is sparse. Democrats have a firm grip on both chambers of the state Legislature and California's congressional delegation. GOP lawmakers continue to throw fits over the maverick tendencies of the party's brightest star, Gov. Arnold Schwarzenegger, who by law must leave office in less than three years.

The state party also is in the red, with $3.2 million in the bank and $3.4 million in bills.

"Obviously we have challenges," said Mike Spence, head of the California Republican Assembly, a conservative offshoot of the party. "The biggest problem is that we've always been the anti-tax and fiscally responsible party, and we're losing that at the state and national level."

Chairman Ron Nehring on Saturday acknowledged that the party faces some significant obstacles, but he said he is confident that party membership and funding will rebound as voters draw distinctions between McCain and his eventual Democratic challenger, either Sen. Barack Obama of Illinois or Sen. Hillary Rodham Clinton of New York.

He said the state party's fundraising dropped in 2007 because it was the first time in five years that there was no high-profile election to drive donations. GOP registration, he said, has dipped throughout the West.

"Republicans had a bad year in 2006, and the party had to deal with that," Nehring said. "The Republican brand was damaged by scandal in Washington and overspending in Washington."

In the months leading up to California's presidential primary, Democrats gained four new voters to every one gained by Republicans, giving the Democrats just under 43% of the state's registered voters compared with the Republicans' 33%.

And the party has alienated, at least in part, two of the fastest-growing segments of the California electorate: Latinos and independents. Latinos have largely rejected the GOP since divisive rhetoric surrounded Proposition 187, the landmark 1994 voter initiative to cut off services to illegal immigrants. Independents, who now constitute 19.37% of voters, were barred from voting in February's Republican presidential primary but were welcomed in the Democratic contest.

James Hartman, the former chairman of the Alameda County Republican Party, said those handicaps are the byproduct of an inflexible party leadership, and he doubts the GOP will reverse its fortunes unless that changes.

"It's being dominated and controlled by a very conservative faction," said Hartman, a Walnut Creek attorney who joined about a thousand other Republicans attending the convention. "How can you win an election without appealing to the 'decline-to-state voters' and when you have only a third of the electorate? Just look at the math."

McCain's California campaign chairman, former California Secretary of State Bill Jones, on Saturday dropped by to rally support for the presumptive Republican nominee, and emphasized that McCain had traditionally done well with both independent and Latino voters. That, he said, gives him a legitimate shot to win California in November, which would help the state party in the years ahead.

"Californians can support candidates that they believe in, regardless of the party registration," Jones told delegates. "But it means that we have to work that much harder, because there are not enough Republicans, even with a 90%-plus Republican turnout, to get the job done. That means we have to have independents and conservative Democrats who believe in integrity, honesty, strong defense, less taxes and reducing the deficit . . . and those are issues that Sen. John McCain will campaign on."

Still, McCain has work to do if he expects conservative party members to fork over donations and walk neighborhoods for him, said Jon Fleischman, vice chairman of the Southern California GOP. Many still harbor doubts about McCain's dedication to cracking down on illegal immigration and extending Bush's tax cuts, which he initially opposed.

"He has the heads of the delegates, but he still has to win their hearts," Fleischman said.

Schwarzenegger and McCain were conspicuous by their absence from the three-day convention, with both blaming scheduling conflicts.

At the last state party convention in November, Schwarzenegger said the GOP was "dying at the box office" because it remains too ideologically conservative on issues such as healthcare and global warming -- criticism that still burns many party loyalists. Earlier this year, Republican state lawmakers helped torpedo the governor's $1.49-billion plan for universal healthcare.

"Essentially, there is no relationship between Schwarzenegger and the Republican Party. He's basically a man without a party," said Mike Schroeder, a former state GOP chairman from Orange County.

A bigger concern for the GOP is what happens after Schwarzenegger leaves office. The list of California Republicans with a shot of winning the governor's office is, at this point, limited to moderate Insurance Commissioner Steve Poizner, a wealthy Silicon Valley entrepreneur and the only other Republican currently holding statewide office, Schroeder said.

Poizner was one of the headlining speakers at the convention Friday night and talked of the party's need to focus on fiscal conservatism and reducing government intrusion -- not mentioning any social issue.

Another name rising above the chatter at this weekend's convention was EBay Chief Executive Meg Whitman, who recently talked to Republican leaders about the logistics of a possible run for governor in 2010. Whitman, a fundraiser and former business colleague of failed Republican presidential hopeful Mitt Romney, is wealthy enough to bankroll her own campaign.

Conservatives also pine for state Sen. Tom McClintock (R- Thousand Oaks), a longtime favorite of the party's right wing. However, McClintock has failed to win three statewide campaigns -- for governor, lieutenant governor and controller -- and may instead be considering a run for Congress.

Former Gov. George Deukmejian, who was not at the convention, said in an interview that the party can regain stature by focusing on the issues that matter most to Californians: low taxes, safe streets and limited government. Those were the issues that help elect him, as well as Schwarzenegger and former Gov. Pete Wilson.

"A lot of the social issues they're talking about, those weren't our priority," he said.

phil.willon@latimes.com