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SACRAMENTO — Gov. Gray Davis signed an overdue, $103 billion state budget Thursday after vetoing $600 million in projects and saying it’s “a little late, but it’s a good document.” 

The budget, which was supposed to kick in nearly a month ago, includes less overall spending than last year but increases spending for education and health care for the poor. It includes a $2.6 billion “rainy day” fund; state revenues have been sagging and may decline even more next year. 

“It hopes for the best but prepares for the worst,” Davis said before signing the budget in a ceremony at a local elementary school. 

This is Davis’ first late budget and comes after a three-week partisan standoff in the Legislature over an automatically triggered sales tax increase that could start in January. 

Davis and legislators call this a lean budget plan. It includes a handful of targeted tax breaks, many of which were part of a last-minute deal to lure Republican votes, but it has no new across-the-board tax relief. It increases K-12 education by $2.5 billion, to $45.5 billion, and includes money for higher energy bills, teacher training, before- and after-school programs and grants for low-performing schools. It also includes more money for health clinics and expands eligibility for the state’s Healthy Family program. 

Overall, however, the budget is less than what Davis outlined in January, because revenues have dropped and the state has spent $8 billion to buy energy for three cash-strapped utilities. 

Still, the budget signed buy Davis totals $103 billion, although lawmakers estimated the legislature’s budget at $101 billion. Sandy Harrison, a Finance Department spokesman, said the larger figure includes bond and special funds. 

A slowing economy, the energy crisis and a faltering stock market meant less money and some painful budget decisions, said Assembly Budget Chairman Tony Cardenas, D-Arleta. 

It took the standoff between Republican lawmakers, who refused to support the budget, Davis and legislative Democrats to finally get the two-thirds approval for the budget that was signed Thursday. 

In the end, Democrats — who control the Legislature — offered tax breaks to farmers and senior citizens to attract enough Republican votes. Democrats also agree to place on a March ballot a constitutional amendment requiring that gasoline tax money be spent on transportation projects. 

On the sales tax issue, a quarter-cent tax increase will be triggered in January if the reserves fall below 3 percent of the budget for one year. 

That means about $50 more in sales tax for a $20,000 car and about 5 cents on a compact disc. Government officials estimate will cost a family of four an average of $120 a year. 

“Gray Davis’ irresponsible budget raises taxes and threatens to harm our already struggling economy,” said Assembly Republican leader Dave Cox of Fair Oaks in a statement Thursday. 

Democrats say the sales-tax trigger, signed into law by Republican former Gov. Pete Wilson, is meant to funnel dollars back to taxpayers when the economy soars and reserves swell. 

The budget Davis signed was missing $600 million worth of items on which he used his line-item veto power. Those cuts included money for community colleges, an AIDS prevention program, state funding for a host of local programs such as light poles in Brea, research on sudden oak death and $5.7 million for youth drug and alcohol treatment. 

Also getting the “blue pencil” treatment was a $10 million request by Republican Secretary of State Bill Jones to pay to train people how to properly use voting equipment. Jones is a Republican candidate to oppose Davis next year. 

On the Net: 

The governor’s budget is available at www.dof.ca.gov and more budget analysis at www.lao.ca.gov.