It also trims $800 million from MassHealth, the state's Medicaid program.

Other reductions include a $70 million cut to higher education, which has prompted some public colleges and universities to raise tuition and fee rates. The budget only funds services for adult day care for half the year, and cuts the clothing allowance for needy children to $40 from $150.

The budget provides an additional $80 million for public schools, bringing funding to $3.99 billion, and offsetting $100 million cuts in previous years.

"Our budgets have consistently been balanced and responsible," Patrick said before signing the budget, "Today that balanced approach continues."

Patrick tried to argue that the budget he signed Monday spends less than what the state spent during the fiscal year that just ended.

The original 2011 fiscal year budget passed last year was $29.4 billion, but the state ended up spending a total of up to $31.4 billion after a series of supplemental budgets were approved during the course of the fiscal year.

State lawmakers routinely pass supplemental spending plans during the course of a fiscal year. Any supplemental budgets approved during the next 12 months would add to the current fiscal year spending.

The state begins the new fiscal year with $585 million left in its one-time rainy day fund, far below the more than $2 billion in the account at its peak, but still among the top 10 largest stabilization funds of any state, according to the administration.

Patrick said the budget also includes changes to help reduce homelessness in Massachusetts, tighten oversight of quasi-public agencies by requiring annual audits and maintain funding for programs designed to close the racial and ethnic achievement gap in the state's schools.

The spending plan also supports increased efforts by the state to curb youth violence.

Although he made no spending vetoes, Patrick did veto some outside sections of the budget, including one proposal that would have prevented local health officials from blocking cigar bars and another aimed at reducing prescription drug waste. Patrick said the state already has laws governing the return of prescription drugs.

Senate Minority Leader Bruce Tarr, R-Gloucester, faulted Patrick's vetoes, saying the governor failed to understand the need "to identify and eliminate the misspending of precious dollars in our state's MassHealth system" and "prevent the waste of costly drugs that could be effectively re-used."

The budget signing follows an agreement reached Friday on a contentious plan to reduce the cost to cities and towns for providing health insurance to municipal employees.

Amendments filed by Patrick to the budget would give cities and towns more flexibility to make changes in co-payments, deductibles and other aspects of public employee health insurance outside of the collective bargaining process.

Under the proposal, cities and towns could shift their workers into the state's Group Insurance Commission or another lower-cost plan after a monthlong discussion period with unions.

The issue had been one of the thorniest of the lengthy budget negotiations on Beacon Hill, with intense lobbying by union leaders who claimed it would violate collective bargaining rights won over the years. Meanwhile, cities and towns facing cuts in local aid demanded that the state provide them relief from the soaring costs of providing health insurance to workers.

House Speaker Robert DeLeo and Senate President Therese Murray support the changes, which were approved by House and Senate lawmakers on Monday.

Labor leaders representing public employees issued a joint statement saying the agreement backed by Patrick and lawmakers would save cities and towns an estimated $100 million in health insurance costs while still preserving workers a "meaningful voice" in negotiations.

Despite the souring national economy, Massachusetts' jobs picture has brightened somewhat. In May, the unemployment rate in Massachusetts fell to 7.6 percent, well below the national rate that rose to 9.2 percent in June. The June numbers for Massachusetts have yet to be released.

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Associated Press writer Johanna Kaiser contributed to this report.