Gov. Maura Healey moved Wednesday to use a routine spending bill as a catch-all for a few different big priorities, including clean energy siting and permitting changes that prompted one top Democrat to accuse the governor of "taking sides" in a legislative dispute.
Healey filed a supplemental budget that would close the state's financial books on fiscal year 2024 while also overhauling how Massachusetts approves clean energy infrastructure projects, replenishing a "transitional" savings account, redirecting surtax dollars to close a budget gap, and funding collective bargaining agreements.
The bill proposes $714 million in spending, which Healey's office said would carry a net cost of $149 million after accounting for federal reimbursement for the MassHealth program.
But it was a series of policy changes, not appropriations, that raised eyebrows most sharply on Beacon Hill.
Healey included in the closeout supp "several essential and timely provisions" that would streamline the process of siting and permitting clean energy infrastructure, an area that regulators, advocates and industry representatives have all said is in need of reform. She also included language around clean energy procurement.
The permitting and siting changes -- which lawmakers worked with the administration to craft -- anchored bills that both the House and Senate approved. However, Democrat-led negotiators have been unable to agree on whether or how to broaden the scope to include other measures, preventing the bill from getting to Healey.
"While a final bill has not yet reached my desk, these issues remain before a conference committee and I respectfully ask that you consider advancing these items in the coming weeks so that we can capitalize on the potential to grow our clean energy sector and advance our climate goals," the governor wrote to lawmakers.
Sen. Michael Barrett, the Senate's point person on the topic, called the governor's proposed end-run around the stalled clean energy bill "very disappointing."
"The governor is all but killing the negotiations," Barrett told the News Service. "You can't create an altogether second track that gives one side almost everything it seeks and still claim to be interested in a true compromise."
His counterpart in negotiations, Rep. Jeff Roy of Franklin, offered a more upbeat assessment.
"At the beginning of the session, I filed a bill calling for siting and permitting reform. When I was appointed to the [siting and permitting] commission by the governor and sworn in, as I was talking to her that day, I said, 'Governor, I think this is the most important thing we are going to do this session,'" Roy said. "I'm not disappointed that she's trying to advance it in another vehicle because I think it needs to be done. I've been working closely with Senator Barrett to try to come to an agreement with the conference committee to get this going. I was confident that we were going to be able to reach an agreement, but failing that, here's another opportunity for us to get something very important and critical for our forward path on achieving our climate goals."
He added, "I don't think doing nothing is the appropriate option here, so in that sense, I'm encouraged by what the governor is attempting to do."
Both branches loaded their versions of the bill with their own policy priorities, and Senate Democrats have insisted it's necessary to counterbalance the siting and permitting changes with measures that would boost regulations on natural gas and provide some relief to ratepayers.
According to Roy, the governor's bill also calls for procuring more energy storage and authorizes regional procurements, both of which he called House priorities.
Barrett alleged that the governor is effectively "taking sides" with the House.
"What's very distressing is that no attention is paid to getting EV chargers out there. No attention is paid to getting some kind of relief on people's monthly gas bills. She is abandoning all efforts to deal with plastic waste. It's really a deeply distressing set of concessions," the Lexington Democrat said.
Barrett added, "The bottom line is we are ensuring a big-time buildout of the electric grid, which means a big-time increase in people's electric bills. You are laying the groundwork for an eventual ratepayer revolt against the entire clean energy agenda. That's what today's move feeds into. No relief for people in their monthly bills, a significant uptick in electric grid spending -- necessary, but guaranteed to result in a major hike in people's monthly electric bills."
The Mass Coalition for Sustainable Energy said Healey's move made "clear that the Administration sees the need for siting and permitting reform as the most important priority for climate policy in Massachusetts at the moment."
"We agree. Moving game-changing energy facility siting and permitting reform is critical, and the Commonwealth should not allow important policy with such broad political support to be lost amidst efforts to address other concerns," the collection of trade and business groups said.
Steve Long, director of policy and partnerships for The Nature Conservancy, praised Healey "for strategically selecting pieces from the climate bills on which there is consensus between the House and Senate."
"Siting and permitting reforms provide a more efficient and equitable process that combines site suitability and community voices to help determine where energy facilities go, how they are designed, and how they are operated," Long said.
The Mass. Fiscal Alliance slammed the governor's inclusion of siting and permitting language in her budget proposal as a "backhanded attempt" to "sneak in policy."
The so-called closeout budget is necessary for the state comptroller to formally close the books on fiscal year 2024, which ended June 30.
Fiscal year 2024 tax collections of $40.8 billion beat fiscal 2023's total by $1.636 billion or 4.2 percent and topped the fiscal 2024 benchmark that was revised downward by $1 billion in January by $967 million or 2.4 percent, the Department of Revenue announced last month. But all of that overage and then some came as a result of the state's new high-earner surtax, leaving a budget gap of $233 million.
Healey said Wednesday she wants to "strategically allocate" $225 million of the excess surtax revenue to support education and transportation initiatives as a way to help close the non-surtax budget gap.
Her bill would use that surtax money on programs such as Commonwealth Cares for Children (C3) early education grants, universal school meals, Department of Transportation operations and more. Money originally allocated for the programs from the General Fund and Commonwealth Transportation Fund could then be used to close the budget gap.
The maneuver "would also leave a substantial surplus of unappropriated funds that we look forward in the coming session to working with the Legislature to allocate in the most efficient and impactful way," Healey wrote of the surtax revenue.
She also rolled out another novel state budgeting proposal. Healey's supplemental budget calls for using $265 million in excess capital gains tax revenues to "rebuild" a state savings account known as the transitional escrow fund.
Former Gov. Charlie Baker in 2021 signed a law stashing about $1.5 billion in surplus dollars into the fund, and the account is now poised to run out as the state taps into it to cover unexpected expenses including a spike in emergency shelter spending.
Healey wrote that the transitional escrow account has "proven to be a valuable tool for the state to manage spending throughout the fiscal year."
"Additionally, I've already made clear my intention to use the forthcoming tobacco settlement funds secured by the Attorney General to further build back the balance of the Transitional Escrow Fund," Healey said, referring to a roughly $600 million windfall headed to the state from tobacco companies. "We view these steps to be critical to managing available resources for FY25 and beyond."
Alongside the move to replenish the transitional escrow fund, Healey's bill would deposit another $265 million into the state's rainy day savings account, pushing its balance to about $8.8 billion. Lawmakers and governors in recent years have been hesitant to draw any funding from that source.
Most of the spending in Healey's closeout budget, about $679 million, would cover "deficiencies incurred over the course of the prior fiscal year," she wrote. The largest is the MassHealth program, where "caseload exceeded initial expectations."
The bill proposes $565.4 million for MassHealth, though the governor said the net cost to Massachusetts would be nothing because federal reimbursement is available to cover services provided in fiscal 2024.
Other spending proposals include $46 million for a reserve to cover sheriff costs, $14 million for substance and alcohol use disorder treatment, $7.3 million for the Residential Assistance to Families in Transition program, $5.1 million to support public health hospitals, $11 million to seed a new disaster relief fund, $10 million each for the Mass. Clean Energy Center and Mass. Life Sciences Center, and $2.5 million for costs of launching an online Lottery program authorized in the state budget.
The closeout budget would fund a raft of collective bargaining agreements with public employees.
An administration official said the latest bill combines all CBAs that would be covered by a separate supplemental budget Healey filed in March and agreements reached since then into one vehicle.
The House approved a redraft of the springtime supplemental budget in June, and the Senate followed course in July, but the proposal since then appears to have fallen between Beacon Hill's couch cushions, delaying raises for workers that already have new contracts in place.
STATE HOUSE NEWS
Colin A. Young contributed to this report.
