GOV. MAURA HEALEY sent lawmakers a close-out spending bill that uses revenues from the millionaire tax to cover a shortfall in the state’s general fund and includes siting and permitting provisions for clean energy facilities that were bogged down in broader House and Senate negotiations over climate legislation.

Healey has expressed optimism that the Legislature will pass economic development legislation in a special session later this year, but the spending bill she filed on Wednesday suggested she isn’t confident that the House and Senate will reach a deal on climate legislation.

Both branches embraced reforms backed by a commission designed to speed up the siting and permitting of clean energy and the House pushed a procurement plan for electricity storage facilities. The House wanted to stop there, but the Senate wanted to include a number of other measures that would pare back natural gas infrastructure, expand the state’s bottle deposit law, and shut down retail electricity sellers.

No compromise was reached by the end of formal sessions in July and climate legislation became one of several items of unfinished business that lingered on the Legislature’s to-do list.

The Healey administration had previously been trying to broker a deal between the two branches, and administration officials say they continue to work with the Legislature on passage of a climate bill. But the spending bill signals that the governor is hedging her bets, shifting gears with 3 ½ months left in the session and trying to win passage of siting and permitting reforms that she says are needed to boost the state’s clean energy production.

Sen. Michael Barrett of Lexington, who was leading the negotiations for the Senate, said he was very disappointed that Healey was giving up. He said the Senate was pushing for measures that would reduce energy costs for consumers and offset the growing tab for new energy infrastructure. Barrett said it’s possible the Senate may push for additional climate initiatives in the close-out spending bill but indicated that was unlikely.

“Some day under some leader we will take on these interests and win. But it won’t be today,” Barrett said, referring to resistance to the Senate measures by various industry groups.

Rep. Jeffrey Roy of Franklin said he was confident his negotiations with Barrett would have eventually been fruitful. But he said the governor apparently liked what she saw in the original House proposal and decided to include it in the close-out spending bill.

“I can’t say that I’m disappointed it’s happening this way,” he said.

Money raised by the millionaire tax was supposed to go for new transportation and education programs and not simply displace existing state funding that could then be used for other government programs.

In the closeout spending bill, Healey appears to walk a fine line on the use of millionaire tax money. In preparing the fiscal 2024 budget, state officials estimated the surtax on income over $1 million would generate $1 billion in revenue. In fact, the surtax brought in nearly $2.2 billion. The surplus of $1.2 billion was set aside for spending in future years.

Healey is now proposing that $225 million of that surplus be used to cover education and transportation programs that were being paid for in fiscal 2024 using other government funds. The freed-up money from the other government funds would then be used to cover a shortfall in the fiscal 2024 budget. The close-out spending bill is intended to close the books on fiscal 2024, which ended at the end of July.

In a letter to the Legislature, Healey justified the use of the surplus surtax revenue by noting that the money is going to cover programs that “align with the approach already taken by our administration and the Legislature in the FY25 budget.”  She noted the FY25 budget is using surtax revenues to cover the cost of grants for child care providers, the universal school lunch program, and “MassDOT operations.”

Healey said her financial maneuvering would leave “a substantial surplus of unappropriated funds that we look forward in the upcoming session to working with the Legislature to allocate in the most efficient and impactful way.”