(bright music) - [Announcer] This is Carolina Business Review.
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- I'm Chris William.
Welcome again to the most widely watched and longest running program on Carolina business policy and public affairs seen across the Carolinas for more than 30 years now.
Many consider our guest one of the most powerful people in North Carolina politics, he has for more than two decades been in public policy and political leadership in the Tar Heel state, of course, during another year in which North Carolina does find itself with a substantial budget surplus, it's no surprise there are many voices who have an idea on how to spend such a fat purse.
Joining us in a moment from his office in Raleigh is the president pro tem of the North Carolina Senate, the Honorable Phil Berger, stay with us.
- [Announcer] Major funding also by Blue Cross Blue Shield of South Carolina, an independent licensee of the Blue Cross and Blue Shield Association.
And Martin Marietta, a leading provider of natural resource-based building materials, providing the foundation on which our communities improve and grow.
(upbeat music) On this edition of Carolina Business Review, an Executive Profile featuring Phil Berger, North Carolina State Senator, North Carolina Senate President Pro Tempore.
- Welcome again to our program.
Your Honor, welcome, glad to have you on the program, and by the way, Senator, thank you for taking time because you've got a couple things going on.
We appreciate that.
- Sure.
- Senator, you know, we may mention at the top of the program that both the Carolinas now have got a first-world problem for sure.
Several years, could be three, four, five, but several years now of budget surplus.
A couple of questions, and these may be simple, but maybe not when you're down in the mix trying to do it.
What kind of discipline does it take to have a budget surplus at the end of a fiscal year and in your opinion, to what end?
Why do you do it?
- Yeah, so the surplus is created as a result of a couple of things.
One, we collect more in revenue than we had budgeted, so that results in an excess of cash.
The other is that some efficiencies that may have been employed by the executive branch in terms of administering the budget, those things.
So we generally will have what we call a carry forward from the authorized budget.
So those two things combined, the bulk of the surplus that we have and have had for several years now in North Carolina has been the excess revenue kind where we have actually collected more than projected.
- How does that, just unpacking some of this, Senator, so the excess revenue part from a tax base, obviously in North Carolina, if the General Assembly continues to prioritize things like tax reductions, how do you plan out, or how does the arc of the tax reduction look against a possible budget surplus in the future?
What does that look like for you?
- Yeah, so a lot of the modeling that we see is on what we refer to as a static model where you take the existing revenue stream and you calculate how much more or less it would be if your tax rate changes.
But our experience has been that in times where we reduce the rate we have regularly, so long as our economy continues to grow and our state continues to grow, we have actually seen revenue come in at higher levels than what the projections are.
And so it's something that we're careful to be cautious about but clearly we have prioritized reducing the burden on the private sector, particularly the tax burden.
And that reduction of burden has resulted in really unprecedented growth in North Carolina.
- You know, I wanna unpack a couple of things around this, and I'm looking through my notes here for just a second, but North Carolina, and I know you know this, sir, but North Carolina, according to the television channel CNBC was number one for business again.
I think they're calling it a three-peat in economic development circles in North Carolina.
South Carolina has not gotten that role yet but still shows prominently in that.
But the ideas here, a couple things, you talked about the growth in North Carolina, you talked about these kind of accolades when clearly North Carolina is competitive economically and business development wise.
When you sit, and this has all been almost a recent phenomenon, well, I mean recent, the last few years, and I'd like to read just something, and then come back to a question around that.
And this was from Bloomberg, if you will.
For the first time since the US government started tracking six southern states, North Carolina, South Carolina, Tennessee, Georgia, Florida, Texas are contributing more now to the nation's gross domestic product GDP than the Northeast.
And to go on, the southeast accounted for more than 2/3 of all job growth across the US since early 2020.
This clearly is a recent phenomenon and I don't wanna put words in your mouth, your Honor, but does that go back to what you just said about managing this growth in particularly in North Carolina?
- Yeah, so I can only speak to what's happening here in North Carolina.
Obviously we pay attention to what's going on in other states, and you're right, the southeastern part, and Bloomberg is right, the southeastern part of the nation does lead the country in job growth and in economic growth.
Here in North Carolina, it's our belief that the growth that we're seeing here is a direct result of policy changes that have been implemented in North Carolina since January of 2011.
If you'll recall, North Carolina had historically, at least as far as legislature is concerned, been controlled by the Democrats except for a couple of short periods.
And beginning in January of 2011 as a result of the election, in November of 2010, Republicans got majorities in both the state House and the state Senate and we began moving North Carolina, we think in a positive direction in terms of private sector growth by paying attention to our tax rates, by paying attention to the regulatory climate, by paying attention to those things that historically North Carolina had done well.
But the tax climate, the regulatory climate were things that were laggards as far as the southeast is concerned, and in many respects, as far as the rest of the nation was concerned.
And it's our belief that that combined with all of the other things that North Carolina had historically done well has resulted in North Carolina the kind of growth that we've seen and the kind of reviews such as the one that you mentioned from CNBC, which is only one of many that have put North Carolina at the top.
- When you all in session and you're in session now through the end of August, it's standard session or a regular long session as it is in the odd number of years at least in North Carolina, when you sit and when you prioritize not just to spend or save the budget, but when you start to look at, you've got the wind at your back or North Carolina, South Carolina has the wind at their back and they're planning out priorities for spending, for support, for expansion.
What are the top three or four or five in your mind and within the general assembly, what are those priorities to you that you feel strongly about?
- Yeah, so for most states, and clearly for North Carolina, the number one priority is education.
Whether it's K-12 education or community colleges or a university system, those entities actually bring forward the workforce.
That is extremely important to our success over and above other policies, we've got to have a highly-qualified and well-trained workforce.
Beyond education, though, the priorities that we've been looking at have a lot to do with infrastructure.
Our transportation infrastructure in our view is second to none.
The state is responsible for the bulk of the road system in North Carolina but also for our airports, for our rail system.
There's a good deal of attention paid to what we do in those areas.
One of the areas that we began over the past several years, concentrating more on has to do with our water and sewer infrastructure in North Carolina.
Historically, much of that has been the responsibility of local governments, cities primarily, but in some areas, counties, and we have fallen behind, quite frankly, as many other states have in dealing with some of those infrastructure issues with water and sewer.
And then for everybody with the technology revolution that we've seen over the past couple of decades, internet and broadband accessibility, we've concentrated greatly on that.
- Certainly a lot to say grace over.
At this moment, and I know this is not gonna be surprised to you that the governor in North Carolina Roy Cooper has said and is talking about that there is a state of emergency in public education funding.
There was an article in NNC recently, sir, that said the scale of tax cuts plus, what they said, the underinvestment of public education and the expansion of school choice equals a state of emergency.
And that's what Governor Cooper has called it.
How would you describe that?
How would you describe, not just the way that he has described that but how would you characterize, is North Carolina missing something on education?
Is it underfunding it?
Would you like to expand it?
How do you characterize it, sir?
- So I think Governor Cooper is playing to his base and his base is the teacher's unions and folks that are more tied to the bureaucracy of education.
What I say, and what I want people to do is look at the data, look at the increases in funding for K-12 education that have taken place over the past decade in North Carolina.
Look at what North Carolina has done in terms of average teacher pay.
When we gained control of the general assembly, North Carolina was in the high 40s in average teacher pay.
We, over the years, were able to move the needle on the NEA survey, which we have our own quarrels in some respects with the NEA, but in that survey, which is the one that is most often quoted, we moved from the high 40s into the low 30s, I think we ended up at 30 or 31 at one point.
I think we're in the low to mid-30s now.
We're not where we need to be on teacher compensation, but we are moving in the right direction and we treat that as a priority.
Aspects of education, again, you've just gotta look at what the data tells us.
The CNBC survey said that, and one of the benchmarks they had was workforce and they ranked North Carolina's workforce as best in the nation.
Well, you don't get a best in the nation workforce if you have an education system that's falling behind.
The university system in North Carolina is roundly recognized, our public university system as among the best that we think the best in the country.
So I think there's a lot of politics that goes into things that the governor is saying about education.
And I think if you look at the data, you look at the outcomes, you look at the results that his picture is not an accurate one.
- Lemme take just a cultural shift on that for a second, and say, when you debate within whether you're a Democrat or a Republican within General Assembly, and in this case in North Carolina, when you debate these very polarizing issues, where is the disconnect between what's prioritized and what's honestly debated within the general assembly and then the public perception of it, sans the governor's comments?
Where is that gap and why is that gap as wide as it seems to be?
- Yeah, so I mean for me, a lot of it has to do with just how North Carolina stands on the political spectrum.
We are a very, I mean, we are conservative state.
I think the outcomes of our elections bear that out.
And we work together with republicans, work together with Democrats.
I would say that even some of the more partisan Democrats would say that on economic development issues, there's been a great deal of cooperation between the general assembly and the executive branch.
But there are differences, and I think sometimes those differences get focused o, as opposed to the broader picture and the outcomes.
And again, I just think you need to look at, and folks, I encourage them to look at what the overall outcomes are and draw your judgment from that observation.
- As you have referenced, sir, not just in North Carolina, but for South Carolina as well, the K through 12, the technical colleges in South Carolina, community colleges in North Carolina, and then higher ed for four-year institutions is quite the continuum.
Very healthy, a lot of funding, maybe not as much as some people would like to have, but how do you look at being a good steward of that continuous continuum?
What would you like to see from K-12 up to community colleges with the new Jeff Cox, Dr. Cox and Peter Hans and the system?
What does that look like in a perfect world that the general assembly and that you would like to see?
- So the thing that I would like to see at this point in terms of our K-12 system is a concentration on outcomes for kids, particularly outcomes at the elementary level with kind of the basics, reading in particular, and basic math.
Those are things that are really the foundation of a child's education.
And if we can get those things right in those early years, then the prospects for the next generation become brighter and brighter.
And so we've had a particular emphasis in North Carolina in K-12 on reading, and that it is an area that there is broad agreement across partisan lines as to the strategies that we are now employing.
It's taken us a while to get there.
There was some disagreement over the years, but over the past three or four years, the idea that the science of reading is widely recognized as the appropriate approach for teaching reading is something that Republicans, Democrats, Democrats on the State Board of Education, Republicans in the General Assembly, the executive branch, I think we're all on the same page as far as that's concerned.
With reference to our community colleges, I think the key there is the word community.
Our community college system actually grew up out of an interest in particular communities around the state in having something beyond K-12 education but not quite a university education.
And so those communities are very much invested in our community college system, and we have individual campuses that are among the finest in the nation.
And we think overall the system is among the finest in the nation.
Our concentration there has to do with making sure that at the state level, we have a community college governance structure that prioritizes the kinds of things that we're seeing at the state level in terms of our economic development and in terms of the needs for job growth and development.
In our university system, we are beginning to see a further concentration on the STEM subjects and generating more graduates in STEM fields.
We're also seeing research institutions really shine as far as their ability to draw down grants from the federal government and the actual applied research that is coming out.
We instituted something several years ago here in North Carolina in our university system called the North Carolina College Collaboratory.
And that entity has really worked very hard and been successful in addressing the brain or using the brain power that we have in our university system to try to address some of the public policy issues that are out there.
- Let's shift gears just a little bit.
We have about seven minutes, and I wanna unpack the idea of Medicaid expansion in North Carolina, it was certainly historic and now it just is going to be a budgeted item at some point, even though it's flow-through money.
And that of course, that's my term.
We spoke recently with Kody Kinsley from the North Carolina Department of DHSS and he is deploying his plan on how Medicaid expansion will look in North Carolina.
Are you fairly optimistic that there will be a budget that does include what's needed to get that Medicaid expansion in the right place by the end of the year?
- Yes.
I don't think there's any question that that is a priority for not only Secretary Kinsley but also for the members and the leadership here in the general assembly.
- We had Dr. Wesley Burks, who I'm sure you know, chief executive officer from UNC Health, on a few weeks ago and talking about the cost of healthcare.
And now with inflation being such a kind of the bugaboo it's been the past two or three years, that's an additional concern.
But Senator, do you think that Medicaid dollars now flowing into a state like North Carolina, is that an inflationary pressure as well?
- I think it could be in some respects.
I don't think overall it impacts the medical care, the cost of medicine inflation that greatly, and some of the initiatives that we've followed through on in North Carolina actually we think will help tamp down some of the inflationary pressures as part of our Medicaid expansion bill.
We also initiated what is historic certificate of need reform here in North Carolina that will bring to market, we believe additional facilities for surgical center, additional surgical centers, additional diagnostic treatment centers, and more competition in that area will we believe have a downward pressure on some of the costs in medical care.
So Medicaid expansion overall is going to be a positive for North Carolina.
Of course, I was a big opponent and a consistent opponent to expansion for a number of years, but the more that I looked at it and the more my members looked at it, the more it began to be something that we see as solid public policy for North Carolina at this time.
And something that will provide access to care and provide for individuals the ability to get care that may have been lacking prior to Medicaid expansion coming in.
- And to go a little bit deeper in healthcare, Senator, how do you think different, well, maybe you don't think differently, but how does mental health now play into this whole debate around healthcare?
For a long time, and again, these are my words, mental health didn't have a champion anywhere in the public domain, and it had kinda (indistinct), and then the pandemic came along and all of a sudden mental health was not just a real thing but continues to be almost in a triage mode.
So how do you approach yet one more important part of communities in North Carolina when it comes to mental health and prioritize that in the budget?
- Yeah, so there's no question that mental health is at the forefront when people are talking about healthcare now.
One of the things that we've been concentrating on in North Carolina is in the context of our Medicaid managed care system that we want that system to be one where the insurance companies that are responsible for the individuals who are in Medicaid, that they are looking at whole person care.
And so you don't have this division between healthcare for medical items and then healthcare for mental health items.
You know, having to deal with with two separate tracks.
And so we're ways from getting to where we need to be and we're ways from being where we need to be in terms of facilities, in connection with mental health and in terms of personnel.
We are not alone among these states as far as that is concerned.
I think everybody is struggling with what's the right answer to this issue.
I can just say that there is a concentration and there are folks that are working to try to improve outcomes in that area as well.
- We have about a minute and a half left, your Honor.
How long do you wanna serve?
How long do you wanna stay in leadership at this level and even in public policy?
- Well, at this time, I enjoy what I have an opportunity to do.
I feel as though what I've been able to do and what we've been able to do here in North Carolina has made a positive impact overall on people here in North Carolina.
As long as I continue to enjoy it, as long as I feel like there's a difference that can be made, and as long as my colleagues see fit to honor me with the position of president pro tem of the Senate, I'm pretty happy with where I am.
- Do you, and literally in about 35 seconds, it's probably not a fair question but do you think differently about the cultural debate that goes on Democrat, Republican, political polarizing?
Literally have 30 seconds.
- Yeah, it's frustrating at times.
I think when you can talk one-on-one, there's more common ground out there than the perception is but often in these days and times it's difficult to have those one-on-one conversations get very far in terms of the public sphere.
- Do you see it getting any better anytime soon?
- I think it's got to, yeah.
And I think if folks continue to work on it, we'll get there.
- Okay, your Honor, thanks, I'm sorry, forgive me.
Thanks so much for joining us.
We will let you go.
You've been very patient with some of the technical starts and restarts, but happy summer, what's left of it, and thank you for your leadership, sir.
Take care.
- Thank you, Chris.
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Thank you.
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