BOSTON (AP) -- Gov. Deval Patrick signed a $34 billion state budget Friday while vetoing $417 million in transportation and local aid pending the fate of a separate transportation financing bill.
The spending plan is for the fiscal year that started July 1.
Patrick said he hopes the transportation and local aid spending can be restored if a dispute over the transportation bill is resolved. Patrick has asked lawmakers to amend the bill. Legislative leaders oppose the change.
Patrick said the transportation bill includes about $500 million in new taxes needed to balance the budget and that he has never approved a budget that was unbalanced.
Geoffrey Beckwith, head of the Massachusetts Municipal Association, warned the cuts in local aid, if not overridden by the Legislature, would lead to massive layoffs and cuts in programs by cities and towns.
Patrick did say the budget has many positive elements, including a freeze in tuition and fees for state university students in the new academic year.
"This budget invests in many of our most important needs as a Commonwealth, especially education," Patrick said.
The budget increases local school funding by $130 million compared with the most recent budget, bringing total spending on schools to $4.3 billion.
Patrick said the budget also includes a significant investment in public universities and colleges, moving the state toward funding 50 percent of public higher education costs within the University of Massachusetts system.
The $479 million appropriation for the UMass system will head off a nearly 5 percent increase in tuition and fees that would have otherwise gone into effect for in-state students in September. Officials say tuition and fees also will remain flat for students attending other state colleges and universities.
Patrick also pointed to $15 million in new investments for early education in the budget that he said will help reduce waiting lists for early education programs, providing access for more than 1,000 new eligible children.
The budget was given final approval by the Legislature on July 1, the same day the state's new fiscal year began, but state government has continued to operate on a stopgap budget while Patrick spent the full 10 days allotted to him to review the spending plan.
House Speaker Robert DeLeo, in a statement Friday, strongly suggested that lawmakers would vote next week to overturn the governor's vetoes.
"The House of Representatives will protect the cities and towns of Massachusetts," DeLeo said.
Patrick had sought $1.9 billion in new taxes in his original budget request, including a hike in the income tax that would have been coupled with a reduction in the sales tax.
But legislative leaders, wary of approving such a large tax hike amid a sluggish economic recovery, instead approved a $500 million in new taxes that were added to the transportation financing bill and included hikes in the gasoline and cigarette taxes.
The Legislature sent the transportation bill to Patrick's desk earlier this month, but he returned it to lawmakers with an amendment that would authorize a further increase in the gas tax if tolls are removed from the western portion of the Massachusetts Turnpike as scheduled in 2017. Without the tolls or equivalent source of revenue, Patrick contends that the bill could not deliver the promised $800 million in new annual spending within five years.
DeLeo and Senate President Therese Murray oppose the governor's amendment and are urging members to reject it when it comes up for a vote next week. Patrick said he will veto the bill if it returns to his desk unchanged.
The budget signed on Friday authorizes the state to withdraw $350 million from its stabilization fund, better known as the rainy day fund. But officials say the fund would retain a balance of more than $1.5 billion even after the transfer.