Facing perhaps the most difficult challenge of any incumbent governor in 2008, Missouri's Matt Blunt has had a rough couple of days. After running up a huge fundraising lead on his likely opponent, Attorney General Jay Nixon, Blunt is agreeing to return about three quarters of his $6 million haul thanks to a state Ethics Commission ruling, severely reducing his financial edge.

The state legislature repealed donation limits set in 1994, sparking a fundraising battle that saw hundreds of thousands of dollars pour into both candidates' coffers in single contributions. But the state's Supreme Court overturned the law in mid-July, ruling that the manner in which the state Senate had acted was unconstitutional.

After fighting the decision for months, Blunt and Nixon agreed earlier this week to refund excess contributions. The upshot: Blunt's money advantage will shrink from about $3.3 million to about $130,000. Nixon will refund $1.3 million -- a significant chunk, but nowhere close to the nearly $4.5 million Blunt will give back.

The young governor, son of House Minority Whip Roy Blunt, skyrocketed to national attention in 2004 when he beat now-Sen. Claire McCaskill for the governorship when he was just 33 years old. Last year he was elected vice chair of the Republican Governor's Association, a top post that gave him access to national donors and an excuse to travel around the country, beginning what many believed would be an exciting political career.

This year, though, Blunt will become the first person in RGA history to run for re-election as vice chair instead of ascending to the chairman's post, the Kansas City Star reports today. Blunt will forgo a bid to chair the group after Georgia Gov. Sonny Perdue steps down in order, a spokesman said, to focus more on Missouri and his own re-election contest.

An RGA spokesman told the paper Blunt would have won the support of Perdue should he have decided to run. The news meant a Missouri Democratic spokesman could give the zinger of the day: "Missouri voters lost confidence in Matt Blunt's ability to lead years ago. It looks like his fellow Republican governors are just getting around to that same idea," said party flack Jack Cardetti.

GOP governors meeting this week in California are now expected to select Texas Gov. Rick Perry as their chief headed into the 2008 elections. And, judging from recent poll numbers, Blunt will be one of Perry's top priorities. A poll conducted in mid-November for the St. Louis Post-Dispatch shows Nixon leading Blunt by 9 points among all voters and by an astonishing 27 points among independents.