Updated | 5:30 p.m.

PROVIDENCE – Gov. Donald L. Carcieri today signed into law the General Assembly’s $7.81 billion state budget package for fiscal 2010, a day before the start of the new fiscal year, ending any speculation that he would either veto it or let it pass into law without his signature.

In a statement issued late today, Carcieri continued to be critical of the General Assembly’s budget proposal, but he said he signed it because more than $40 million of state funding from the federal government, plus “hundreds of millions” in Medicaid funding called the Federal Medical Assistance Percentage, or FMAP, were in jeopardy if the budget did not become law before tomorrow.

“My signing this budget is not an endorsement of it in its entirety,” Carcieri said in a letter to House Speaker William Murphy, D-West Warwick. “I had intended to allow this budget to become law without my signature, however it was delivered to my office too late to do so.”

“I had the option to veto this ill-conceived budget, however it was overwhelmingly approved by both the House and Senate,” the governor continued. “A veto would have required both chambers to return to override it before July 1st. It appeared highly unlikely that they would have returned, leaving us with no budget.

“As governor, I was not willing to risk forfeiture of this money and the potential of creating an enormous additional burden for our taxpayers,” Carcieri said.

Nevertheless, the governor criticized the budget assembled by the legislators, calling it a “short-sighted scheme.”

The budget package closes a projected deficit of nearly $590 million by increasing the capital gains tax, adding 2 cents to the gasoline tax and mandating about $70 million of cuts in departmental budgets.

The budget also relies heavily on federal dollars – $236.5 million in economic stimulus money – to close the gap, while slashing $55 million in revenue sharing with cities and towns.

Carcieri did commend the General Assembly for continuing forward with the alternative flat income tax for wealthy taxpayers.

But while praising lawmakers for making changes to the pension system, Carcieri argued they did not go far enough because they failed to a establish a 401(k)-style system.

And, the governor said, increasing the estate tax exemption to $850,000 was “a move in the right direction [but] not much more than token.” Carcieri had recommended the threshold be raised to $1 million.

“Thankfully, this budget does not raise broad-based sales or income taxes,” the governor continued. “However, raising the capital gains tax to the ordinary income rate is discouraging to businesses, and eliminates one area where our tax policy was more attractive than our neighbors.

“In my opinion, the General Assembly wasted the chance to embrace new tax policies that would have encouraged job growth within our existing businesses and would have had great potential to attract new businesses here,” he said. “My tax reform proposals were designed to energize our economic development efforts, attract new business and grow jobs.”

Carcieri chided the legislature for ignoring recommendations that he said would have saved cities and town more than $125 million annually.

And he hinted that the $70 million in across-the-board departmental budget cuts mandated by the budget might lead to layoffs or wage cuts for state workers. “My administration has begun discussing the consequences with union leadership,” he said.