(ceremonious music) - This is Legislative Review on Prairie Public.

I'm Dave Thompson.

Thanks for joining us today.

Today, our guest is the Governor of North Dakota.

Kelly Armstrong.

Governor, thanks for being here.

- Well, thanks for having me on Legislative Review.

As we're going through the legislative session, I can't help but think of what I used to serve over in the North Dakota State Senate, so- - Yeah, what years did you serve in the Senate?

- I was in there from 2013 until I ran for Congress in 2018, and served in a whole different legislative body out in DC, and I can tell you North Dakota does it a lot better.

- Good to hear.

What I'm hearing from your colleagues in the legislature is they are glad to have you here, because you understand the process, you understand how it works, what has to be done, and how to go through it in North Dakota.

- Yeah, even when deciding whether or not we were gonna take this leap and run for governor, we talked, my wife and I talked about that.

I'm a legislator at heart.

I love the process.

Some of the hardest things for me to do while in these few short weeks we've been in this job is to make sure you recognize that when I'm in my office, and I know hearings are going on and things, and they're moving policy, it's hard to not be a part of, but also at the same time, really respect what they do over there.

- So at times, you chomp at the bit to go down and testify?

- Yeah, I mean, I've worked really hard my whole life not to sit in an office all day long, but when you're doing state of the state, property tax, budget testimony, we've been locked in.

But in the last couple days, we've got out and about, had a bunch of kids running around the capitol today.

That was fun, got out and talked to 'em.

But no, and I do, I think North Dakota has such a unique process.

They don't have staff, they don't have offices.

They meet every 2 years for 81 days.

And I know, I mean a lot of people get a lot of frustrated with a lot of the, some of the crazier stuff that goes on.

But we truly do have the most accessible government of any state in the country.

- And if I may add, it seems like the legislators who are elected, for the most part, they want to do what's good for North Dakota.

- Yeah, they take their job seriously.

And you don't have to, I mean, you don't even, I knew this is the judiciary chair, right?

You didn't have to agree with an idea to make sure that everybody got their right to talk about it, whether it's a legislator who introduced it or somebody who drove into Bismarck to testify on it.

And then the other answer is you wanna make sure the good idea actually becomes good policy, so it's a lot of fun to watch.

It's a citizen legislature and the truest sense, and that's the way our founders envisioned it.

- Well, let's talk about one of the issues right now that you said like it's top of mind.

You can guess it's property tax reform and relief.

- Well, I've been blessed to probably talk to more North Dakotans and listen to more North Dakotans than anybody else in politics.

Over the last year, we're about a year from when I announced I was running for governor.

And I can tell you it's the number one priority for our constituents.

And I said it in my state of the state, and I meant that it should be ours.

- And you have come up with a proposal, it's now in bill and it's before the legislature.

- Yeah, I mean, the bill is, I mean, this is, again, the legislative process versus the governor gets to give the grand speech.

I mean, it's, but yeah, it's a residential property tax bill.

I mean, when we talk to people across the state, the number one concern was their primary residence.

And so this bill would give $1,550 in credit to every primary residence in North Dakota, and that money would grow over time as the legacy of the bottom fund of the legacy fund earning stream grows.

So that's what I like about it.

I like that we can deliver the relief, and that relief will get bigger as the legacy fund gets bigger.

But I think the other part of it that's really important is the caps, and putting caps on local property tax budgets, which would be 3% every year.

If you don't use 'em, you can bank 'em for a period of up to five years that allows for locals to do some planning, particularly on big projects, but you've been around this a long time.

We've tried to buy down property taxes from the legislature for longer than I've been in the, when I originally served, and it hasn't worked.

So if you don't have the reform attached to it, I don't know why we would continue to try and do that, and think there'd be a different result.

- There seems to be a lot of support for this idea.

The pushback you hear, of course, is the cap that local governments are saying.

Yeah, maybe there's room for a cap and maybe 3% may be too severe.

- Yeah, and then there's other people in the legislature that think 3% may be too high.

So, and it's important to recognize this isn't their entire budget.

This doesn't deal with mill levies, bond initiated measures, or any of the other ways.

Special assessments, this is just on the property tax budget.

And if the relief portion of this bill goes through, Dave, the state of North Dakota will be paying essentially over 50% of the local share of property tax.

I think we have a little bit of a say in how fast their budgets grow.

- Yeah, and you're right about that, but there are some counties who argue that, well, the larger counties have possibility of county sales taxes or some other type of funding stream, whereas, a county like Dunn or maybe Slope doesn't have that.

- Yeah, and I think the legislative process will work for that.

I mean, there's, I mean, in how we figure out if there's ways in which we can do that.

By the way, 3% of a small budget isn't as much as 3% of a big budget, but I can also tell you that it doesn't matter if you live in a rural North Dakota, in the eastern part of the state, oil patch in western part of the state, one of our larger communities, or one of our smaller communities, property tax is top of mind in all of those communities.

And it's, I mean, and it's important, because, I mean, we serve at the pleasure of the North Dakota citizens and this is what they want, and I think we need to work to make it happen.

- Now, you're only talking about residences, so like a Walmart would still be paying property taxes.

- But the cap would exist on the entire property tax budget.

And so like when you talk to rural, I mean, yeah, anybody who has a primary residence will get the benefit, and we talked a lot about doing that, but part of the problem with this is if you diffuse it across the entire tax base, you don't deliver enough relief for anybody to notice.

And the number one priority we heard is making sure people who purchase their house, I mean, if you are two retired teachers anywhere in North Dakota, and your house when you bought it was worth 100 grand, and now, it's worth 600 grand.

That's a great thing.

It's great for the community, it's great for the homeowner.

It's great for the state, except when you pay property taxes, particularly if you can't afford it.

- And the evaluations keep going up.

- Yeah, and I think that, I mean, and we had 162,000 people that have moved into North Dakota in the last 20 years.

That's great.

We're getting younger, we're getting bigger, towns that were dying are growing.

All of those things are fantastic, but with that rapid growth comes a rapid rise in property taxes, and it's raising it a place that's really, really squeezing homeowners.

- Now, segwaying into the fact that we have more people moving to the state, housing has become a major issue.

- We rolled out a housing plan in our budget address and we brought in our director of commerce has done this work in South Dakota before, and we really like the idea.

I think most of the money, just because it's a new program, will go, I mean, by the way, most construction companies are already know what they're doing in May and June of this year, so it'll probably be the second year of the biennium, but it's $50 million that we wanna leverage public or $50 million with community dollars with private dollars.

And we, I said it, my state of the state, I mean it, I think we need less programs and more solutions, and in conjunction with that, which isn't a budget number, but we've been working with the bank in North Dakota to work out a loan program, particularly in these smaller communities where if you build a house for $300,000, and it appraises at $200,000 because of caps and how that works, it's really difficult to solve the second problem if you don't get past that problem.

So I think it's the right amount of money, I think to start, I hope we're out of it completely by the next session, 'cause that proves that the program worked.

- And it proves that people are still moving to North Dakota.

- Yeah, and affordable housing is, I mean, housing and workforce, I mean, I've said this a lot on the campaign trail.

I'm the first governor in my lifetime who hasn't campaigned on jobs.

Now, I'm campaigning on workforce and housing and daycare, and trying to figure out how we bring some of these solutions, which is real, probably the biggest hindrances to growth in any community in North Dakota.

- Well, let's talk about daycare.

What are you proposing in terms of daycare?

- So the legislature invested a lot of money last time in the daycare, in daycare, and I think a lot of it has been deployed.

I think we have to go back and look at that and figure out how can we make it more efficient?

And some of this is anecdotal, so I mean, we talking about that, but you can't have a grant program going to a small town daycare who's two employees down, and just trying to figure out how to get through the day.

We had figure out a better way in which we can either get resources for that type of business to actually apply for the grant.

Our, I mean I think we can use our EDC or our regional economic development councils to do that.

So I think the legislature last session did a really good job of deploying assets and deploying resources to it.

Now, it's our job to streamline it and figure out how we get it out into the communities quicker and more efficiently.

- Yeah, childcare is an issue, how is it gonna issue?

But we are open to arms here in North Dakota.

We're looking for people to fill these jobs.

- We are, and I mean, and we just went up and we saw some events this week, and, you know, we can't do anything about the weather, but we can recruit people to be here, and we can do a better job in K through 12 and higher head.

There's still our best recruitment tool is our high schools and our public universities.

So making sure we're developing those into the workforce that's needed in North Dakota.

And part of being young is people leave.

We just wanna make sure that we create, I mean, one, any of them that wanna stay, we wanna keep here, which is, I think the challenge grants that we propose is a big part of that.

You can keep North Dakota kids in North Dakota schools, but also we wanna create the environment that if they do choose to go somewhere else for a little while, they want to come back.

- Since you brought up higher ed, I wanted to know if you have any other particular things you'd like to do with higher education.

- I think whoever cracks the higher ed code, and again, the 162,000 people moving into North Dakota puts us in a better place than most places.

But more people are leaving the workforce than moving into it.

Demographically, there are less children being born now than there were a generation ago.

Higher ed is going to have to adapt and change.

And I know we do online learning models and a lot of that works, but a kid taking a class, a kid in New Jersey taking an online class at Valley City, or Mayville, or Dickinson states, never buying a mountain dew in North Dakota, and probably never filling one of those jobs we have in North Dakota.

So I think we have to create a 21st century learning environment, and figure out how we maximize all of our universities from our research university at UND and NDSU to every school in between.

- On schools, what do you think about the state paying for breakfast and lunches at schools?

- So I've been all over this personally, like I have a 17-year-old daughter and a 14-year-old son.

I have a freshman and a junior in public school.

They've been in four different public school systems.

in two towns since I originally ran for Congress.

I think that it's obviously very popular.

One of the things I don't think we factor in as a state when we talk about the cost is how much the locals have to eat the bad debt cost on school lunches.

And not just the monetary cost, but also the human resources it takes to try and chase that down.

That's somebody who's working in an educational setting doing something other than education.

Now, the other side of that equation is how many federal dollars you leave on the table when you do that, because there are a lot of reduced lunch, and we can talk about whether those federal programs should exist in that way.

And that's a worthy conversation.

In fact, I was engaged in it in DC for six years, but when those federal dollars are on the table, we have to make sure we're not leaving all that money on the table in North Dakota.

That's why I like education savings accounts, digital wallets, particularly if they're means tested, then those kids can use that, utilize those kind of funds for whatever's necessary in their particular family setting.

- Some critics of the education savings account say it's just a modified voucher program.

- Well, there are voucher programs that have worked.

There are voucher programs that haven't worked.

I mean you, the criticism from the conservative side and the Republican side of the aisle is be North Dakota's behind the game and other conservative states that have done this.

And to some, I mean, and that's, in some instances, valid.

The nice thing about that is you can look at the ones that have worked.

You can look at the ones that haven't worked, and make sure you're deploying it, because there's nothing about these, the programs that have been introduced that don't apply to public school, homeschool, and non-public institutions.

- So you think K-12 education is very good at this point.

You've increased funding for K-12 in your budget?

- Well, as a consumer of K-12 education, as somebody who's had two schools, like I support parents having more control and autonomy over their children's education, but I can tell you as somebody who consumes it, really proud my kids go to school at public school in North Dakota, 'cause a lot of the fights that have happened at the national level, I don't see in the classrooms that my kids have participated in, and I think we do a good job.

- Right.

- It's education, we can always do better.

- Sure.

Well, I would just shift gears a little bit, because of your budget address, I wanted to ask you about the bonding program, priorities for airports, priority for a new state hospital in Jamestown.

And there are a few legislators who are saying, we've got all this surplus money, why bond?

- I mean, my biggest frustration, and this is my frustration in the legislature and you saw it in some of the other ways in which I addressed spending in my budget issue.

The nice thing about bonding is you fund the project.

And I think that's hugely important the way we set up our legislative session.

One of the more frustrating votes you'd ever take is funding part of a really good project, and then knowing you're gonna come back two years later, and have to fund the rest of it.

So why do I like bonding?

'Cause even at 4%, the time value of money, the state hospital's a good example.

I mean, we reduced it from what I think they want, but every month, you don't build it is another month in construction cause, so if you delay it by 2 years, you're really talking 36 months.

36 months before you put a shovel in the ground.

And so that's 36 million you gotta take off of the top before you ever start.

Not to mention you're gonna have other needs moving forward.

So I like bonding stream.

You know, we do 10% on POMV out of the common schools trust fund.

That has grown at a really great rate.

I think the other answer with this, and 'cause I'm hugely protect and very, very protective of the legacy fund as somebody who's grown up in the oil country and wife is from Norway, I understand where we've come from and where we have the opportunity to go, but it'd be really nice to be able to let, I mean, both through property tax relief, and also through some of these projects, where you can see that North Dakota citizens are seeing some real world positive impact from legacy fund dollars.

- And the good thing is it's from the earnings of the legacy fund, not the principle yet.

- But if you don't protect, we should protect the principle of the legacy fund at all costs.

No matter how long we keep getting oil and natural gas out of the bock, and out of the three forks, out of other formations, we know it's a finite resource, and this money is designed and set aside to make sure that we're putting, I mean, this is generational wealth that my grandparents and my parents never even thought possible for the state of North Dakota.

And it's gonna create opportunities for kids who haven't even been born yet.

- You said in your address that the state hospital is a priority.

It's very important.

There's a measure that Senator Mathern introduced to reduce that and put the money into regional centers.

- Two things.

One, the state hospital's constitutionally supposed to be in Jamestown, so there's that little tricky constitutional issue, and I just, I, you know, we talked about workforce earlier, these are really hard jobs to fill.

One of the reasons I did some creative things in the addiction space is because there's not enough people going to school for these jobs nationwide to fill the open positions.

And if you have a regional care model, which in some ways would probably be better, you have to duplicate.

You multiply efficiencies in one facility that you don't in other facilities, it's not just the medical side of it, it's the people who are doing the linens, people cooking, people mowing lawns, cleaning the facility.

I mean, there are a lot of jobs in those facilities that don't have initials behind the title that are really, really important for them to function.

And I've just seen no realistic metric that I believe that says you could adequately staff those and maintain those at a reasonable rate.

- But there might still be a problem getting staff at Jamestown, as well.

- Yeah, there is.

And I think that's one of the things when you expand on it, I would like to see, I think the more front end care, emergent beds, psychiatric beds, smaller.

I mean, you have some numbers on 16 and 12 in which you can federal dollars come into play.

But that, one, if you can do that before you have to get it admitted to the state hospital, that's a better way to solve the problem than afterwards.

So I think there's ways you can do both, but I think the state hospital should still be in Jamestown.

- And going on with that kind of the broader subject, you are continuing things like recovery reinvented through programs through the health and human services department.

- Yeah, and we actually created a new cabinet position.

Jonathan Holth ran Recovery Reinvented for First Lady Kathryn Burgum.

And it was a really great program, and I'm really, I mean, I brought her out to DC, and to testify in front of the bipartisan working group on addiction.

And I thought the best way I could honor that is bring an old street lawyer's view to it.

The reason I like Recovery Reinvented at Community Connect is because we can deliver services with the services we have, not the services we wish we had.

And it's not secondary service.

I mean, the outcomes in these programs are really, really good.

But you can also deliver them in places that you're never going to get a licensed addiction counselor to go to.

I wish we had one in every community in North Dakota.

I think no matter how big or small your county is, every county could utilize one, but we're not gonna get 'em, we're not gonna get 'em in the short term.

So let's train people how to do peer-to-peer counseling, and then let's get court systems in rural North Dakota to understand that those are the best services available, and let's deploy those in the settings in which we can do the most good.

- And I know you made a statement about he did, you don't like to have the prison where people go to get counseling and get addiction treatment, that type of thing.

- No, and we saw this when I was practicing in the heart in the beginning of the oil boom, and, you know, judges are sentencing people to jail and prison knowing that is the only place they can get help.

And if that is the only place they can get help, then let's go get it for 'em there.

But you're way better off delivering it before you get to that point.

And we wanna make sure we have the, partially, also, we know this, our jails are full.

I mean, we've tried to figure out some solutions for that, both in the long term and the short term, but if you can short circuit that before you get into the revolving door of the criminal justice system, one, you're saving lives, you're creating more of a workforce, you're saving taxpayers' money, and you're delivering what we should do as North Dakota is, and that is helping our most vulnerable citizens succeed.

- And is there some type kind of stigma about somebody who has to go to jail to get treatment?

- Well, I think first of all, the problem is, is you have obviously not recognized the problem a farther upstream.

So as a government, you're dealing with it after when it becomes the least likely ability to, I mean, recidivism goes up a lot more, I mean, as you continue down that path, so you can do that.

The other answer, which I don't think we talk enough about is a lot of the offenders, male and female are young, and they have young families.

And when you start, I mean, and when you start breaking those up, the chances if you can break that pattern and you can break that cycle of addiction and the revolving door of the criminal justice system, not only do you help that person, but you give that person's child a significantly better chance to succeed, as well.

- Well, you mentioned jails when you came up with the plan to use the Grand Forks Correctional Center for extra beds, that really opened some of our eyes.

We didn't know that was available.

- I didn't either, it wasn't my plan.

We got reached out to by some local public officials in Grand Forks.

And it was a really unique circumstance that actually, you know, when you get sworn in December 15th and the legislature meets January 6th, and you're still a member of Congress until you get sworn in, even though the election was in November, there's a lot of craziness that goes around that period of time.

And you, I mean you deal, you triage a lot of things.

This was one of those things that just through really great set of circumstances kind of fell into place.

And I'm really excited about it, because even if we passed an addition on the state pen in Bismarck, those beds wouldn't be open until 2030.

If we can get this project done, those beds will be open by July.

And the DOCR has been over capacity since 2023, which is bleeding into the counties overcrowding, and there's a lot of different places where this hurts public safety.

- And this came about because Grand Forks says they didn't have the wherewithal to staff it in management.

- Yeah, I mean, they're building it.

That was part of a lot of different, I mean, they built the new county jail up there, and I think their concern is, now this is secondhand, I haven't looked at their budget, but their concern is they would have to dig in to their reserves in a meaningful, meaningful way that is unsustainable in order to staff it.

So they have something, they have a brand new, top of the line facility that they don't know necessarily how they can afford to staff.

We don't have that kind of facility, but we really need the space, and I think it's a really unique opportunity that should help to release some of that pressure on the jail overcrowding right now.

- And the other thing you talked about for jail overcrowding is to put temporary beds at the MRCC South of Bismarck - Minimum security, and if with the money we ask for in our budget, those beds would be available by about July 1st, 2026.

So we can bring a 150 plus beds online into an over full system of, none of this is cheap and none of this is quick, but this is about as cheaply and fast as you can do something like this.

- And the MRCC is going to be, they are looking for a new facility, as well.

You kind of put some money toward planning for it, but not going as far as funding it at this point.

- Yeah, so we put $41 million to the planning for it, but the original ask was $171 million.

That construction wouldn't have started till the end of the biennium, and it's gonna cost at least $300 million more to do it.

So I said we'll deal with the planning, but I think the next legislature should decide of if that $500 million investment is still necessary and needed at that time.

Circle all the way back to my bonding conversation of if you spend the 171 and you don't spend the next 300, you've just lit $171 million on fire.

So I think this is a better way to do it and I think we can add more beds online in the system the way we presented it than that.

- So it's kind of a chess game, dealing with bonding, dealing with cost, dealing with supply chain issues.

It's all kind of... - Yeah, and you're also dealing with large scale state invested infrastructure projects, and so you have to prioritize each and every way.

By the way, if the legislature says we'll pay cash and set it aside for these projects instead of bonding, I'm okay with that, too.

What I don't like is the layaway funding where, you know, no matter, I mean if oil goes to $50 a barrel and soybeans go to $6 a bushel, you and I both been around this long enough to know that 300 for the correctional facility is gonna be pretty low on the totem pole of things that they need to fund under adverse economic circumstances.

And that's where I think we should plan out fund projects that we deem a priority and fully fund them.

- Is there anything that your office can do to help get the oil companies going again or getting back to where they were, getting more rigs out in the field?

- I think the single thing we need to pay attention to in North Dakota for as valuable as natural gas is to everybody else, to our oil and gas production into our state budget, it could run the risk of being not, I don't wanna say a waste product, but a budget negative, not a budget positive, because if we don't figure out how to offload our gas, companies aren't gonna flare, companies will drill slower.

And so I think the biggest thing state of North Dakota should do is be anything we can to work with private industry to make sure we have a real way to offload our gas out of the bucket.

- Maybe getting the gas to Eastern North Dakota like is being proposed by WBI.

They've got that new pipeline proposal.

- Yeah, I mean, I think that's fantastic.

I'm actually agnostic as to who takes it.

I just need to, I mean, we need to start it.

And I think there's a little field of dreams once you start.

I mean, those are long-term infrastructure projects and young end user contracts are really important, but we have to work with industry to do that.

- We just have a minute or so.

I wanted to ask this question for a long time.

Were you in Dickinson when the decision was made to move, Theodore Roosevelt Library from Dickinson in Medora?

- I was, my dad was a big advocate of having it at DSU.

This is before I was in the legislature.

And I remember talking to him, he's a DSU grad, and said it only works if it's in Medora.

And he yelled at me all the way back from the meeting to the office.

But now, he's a big supporter of it being in Medora, too.

- So you're looking forward to the opening in 2026?

- Cannot wait.

There might be a nicer presidential library.

I don't know if there is, but nobody has a more beautiful backyard.

- Great.

Well, governor, thank you very much for your time today.

- Thanks for having me, Dave.

- I don't think this will be the last time we'll be talking to you either.

- I doubt it.

- You have been watching and listening to Legislative Review on Prairie Public, our guest, Kelly Armstrong, the Governor of North Dakota.

And for Prairie Public, I'm Dave Thompson.

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