Despite the Legislature's override of Gov. Michael S. Dukakis cuts in state aid to Massachusetts cities and towns, city officials said yesterday they are planning for next year on the assumption that they will not receive the slashed funds.

Meanwhile, state politicians are bracing themselves for a pitched battle with the governor over whether he has the constitutional right to freeze local funding over their objections.

"We are assuming that the funds are gone," said City Treasurer James T. Maloney, adding that it is unclear how the budget cuts will affect different departments within the city. Cambridge state Reps. Alvin E. Thompson and Peter A. Vellucci predicted Monday that schools, fire, police and human service departments would be among the hardesthit.

Maloney said that the the governor's direct veto would cost Cambridge $1.57 million in state funding and that the entire package of budget costs would amount to $3.3 million less for the city.

Dukakis cut a total of $210 million in local aid from the state budget, $110 million by a conditional veto. These funds could be restored if the money become available. On Wednesday, the House and Senate voted overwhelmingly to restore the remaining $100 million, which Dukakis vetoed directly.

Maloney said the direct veto would cost the city $1.57 million, and estimated that the total cost of the cuts would be about $3.3 million.

But despite the override vote and heavy public criticism, Dukakis continues to hold his ground and refuses to free the $100 million. The governor said he made the cuts "under the authority given to me by the Legislature. I can't distribute those funds unless they're there and they're not going to be there," he said.

"It's time to face up to reality," Dukakis said. "Without new revenues, there will be a drastic cut in both local aid and state services."

The House vote to override the cuts was unanimous, 149-0, while the Senate vote was 32-4.

Among Dukakis' few supporters in the Legislature is Sen. Michael J. Barrett '70 (D-Cambridge). Barrett could not be reached for comment yesterday, but according to aide David Osborne the Cambridge senator supported the governor's veto because he believes the state doesn't have the money to fund the local aid package.

"The best estimates are that the budget is one-half billion dollars out of balance," Osborne said. "We can't allocate money we don't have."

Osborne said that "there is nothing Barrett would like more" than to support local aid, but not without a revenue-raising bill to come up with the funding first.

But legislative leaders, including House Speaker George Keverian '53 (D-Everett), said the governor's power to impound money must be challenged.

"I think the time has come for us to determine with as much accuracy as we can what the powers of the Legislature [and] the governor are on these conditional vetoes," Keverian said. "I don't see it as a crisis so much as a difference of opinion."

Sen. Patricia McGovern (D-Lawrence) chairman of the Senate Ways and Means Committee, voted for the override but admitted it was a symbolic gesture. McGovern said Dukakis has the legal power to make the cuts and is right when he says the money is not there. Several court precedents, she said, have clearly established the power of the governor to freeze spending.

Outcome of Prop 2 1/2

In 1980 voters approved a statewide referendum known as Proposition 2 1/2, which puts a cap on the ability of cities and towns to raise new funds. Since then, the state has increasingly made up for the lost revenue. In the budget for the current fiscal year beginning July 1, cities and towns would receive some $2.8 billion, or just under a quarter of state spending, according to the governor's budget office.

"Cambridge is in a little bit better shape this year than almost all other cities and towns in Massachusetts because it is currently taxing below its levy limit [as regulated by Proposition 2 1/2]," Maloney said. "It's our hope not to tax more, but that cannot be decided now."