(upbeat music) - Hello and welcome to Prairie Pulse.

Today we have joining us from the great state of North Dakota, Governor Kelly Armstrong.

Governor, thanks for joining us today.

- Glad to be here.

- As we get started, we always like to tell the folks a little bit about yourself and your background.

- Well, I grew up in Dickinson, North Dakota.

My dad's been in the oil business longer than I was born.

I spent 10 years as a criminal defense attorney, six years in the North Dakota State Senate, six years in Congress, and got elected to governor just over a year ago.

And I'm just going into my second year as being governor of the great state of North Dakota.

- Well, governor, as we were talking before we came on the air here, of course you were a practicing lawyer.

You were in the North Dakota legislature, you were a US congressman for the state of North Dakota.

Now of course, as you say, governor in your second year, how did those jobs differ?

- They all differed, I was also a volunteer firefighter and American Legion baseball coach.

I think the best part about being governor is one, being home and getting to spend every day in North Dakota for the most part.

And the second part is you can deploy decision making faster, you know, and a lawyer, you're fighting with a prosecutor.

You're representing a client both in the state Senate and in Congress to varying degrees of inefficiency by the way, you're one of many in a legislative body, and you have to work on the internal politics and convincing.

I mean, you need 218 votes in the house to move anything.

And that's before you talk about needing 60 in the Senate.

So it's a long, slow slog.

And once the legislature here passes bills, appropriates money, it's our job to implement it.

And so one of the best parts, and also one of the most daunting parts is to deploy decision making.

But you get to do it significantly faster.

So that is a lot of fun.

- You recently delivered your second state of the state address.

How do you feel it went?

- Well, we were there for very particular reason.

So I think we had a special session dealing with the Rural Health Transformation Program that was passed out of the reconciliation bill by Congress.

So we were very laser focused on the four policy bills and the one appropriation bill.

And I've said this before, I mean, we have a volunteer legislature, calling them back at an unscheduled time period, it's a grind for them.

They don't complain about it.

They do their job, they're awesome, they figure it all out.

But I thought the best way in which I could help my legislative colleagues get through the special session was spend as little time on pomp and circumstance as possible and let them get to work.

So we tried to keep it brief, we tried to keep it focused, I think it was well received by the legislators, so that was great.

- So governor, what, what major points did you cover in your address?

- Yeah, so I mean we focused solely on the five bills that we had coming.

The reason I called the special session, which were the four policy bills related to how we submitted our grants, or our proposal to CMS in DC.

And then the ability to appropriate the $199 million over the next two years in order to deliver 21st century solutions to rural healthcare.

- You know, you're kind of answering this, but you know, of course you wrapped up the session and it was mainly to distribute those federal funds.

Can you give us sort of your perspective of what was going on through your mind, through your thoughts as the session started?

- Yeah, I think before these start, with the session started, I think we gotta go back to September, October of last year because we got word from CMS that after the reconciliation bill passed, that we could qualify, we were guaranteed a hundred million, we could qualify for up to 200 million.

And so we went to work, our HHS team went to work with CMS to figure out what those proposals look like.

Then spoke with Leader Lfor and Leader Hogue, 'cause it was a very short timeline.

This money has to be deployed by September and appropriated by next September.

And so Senator Hogue stood up an interim healthcare committee with 31 members of the legislature on it.

I was very skeptical about that because of how quick the timelines have to work.

You usually put 31 legislators in a room, they can't decide what they're having for breakfast.

I was wrong, he was right.

The reason the special session went so smoothly is because between the communication from DC to our office and the buy-in and the input that legislators gave us in this process, 'cause we had to do four policy bills, 'cause we submitted our application to CMS before the special session, which means we were really betting on the come on how we were gonna score based on the policy changes we were asking the legislature to make.

And that would've never worked well if we wouldn't have had so many legislators really, really working with our team to get it where it needs to go.

So we get all of that done.

We come in, we have the four policy changes, which was the presidential fitness test, or physician assistants, expanded scope of practice, health education, continuing education for doctors and pharmacy scope of practice.

So those were the four policy bills which we had put in our application already to CMS.

So those passed, and then we appropriated the $199 million.

So we were guaranteed 100 million.

Because of the strength of our application and the work with everybody involved in that, we got 199 million to deploy.

So that piece of the special session could not have went, I don't think you could write it to work smoother than it did.

And so we're really proud of that, really proud of our relationship with the legislature to make that happen.

But at the same time, that's not the end, that's the beginning.

Now we gotta figure out how to do this well, 'cause I don't wanna spray $200 million worth of money into the healthcare ecosystem with a fire hose.

We want it to actually go to things that are going to help people deliver more health.

- That every state was eligible to get about the same amount.

- Yeah, roughly the same amount.

We did really, really well.

And even before that, you gotta give a lot of credit to Senator Hove, Senator Kramer and Congresswoman for helping marshal this through, I mean, and getting us in a position where we can really do this.

So our score, we anticipated getting 135, 140 million because of the hard work of our team at HHS.

And really the really great feedback from CMS, we basically got 100% of what we were eligible for in this first two years.

- Governor, I'm gonna take a step back for those that are watching and maybe don't follow politics as much as you do.

For those that don't know, what is a special session and why do you call it?

- A special session, is when you call the legislature in, they're constitutionally mandated to only be in session 80 days.

They left themselves, I don't even remember, six or seven days.

They could call themselves in for a special session and use up those days.

If the governor calls them in, those days don't count.

But the difference is when I call them in, there is no focus.

Anything can be introduced.

The plus side is the bills have to pass by a simple majority, and they're effective immediately.

So again, coordinating with the leaders, working it through, and we called them in, our focus was this, we had to call them in.

We had to get those policy bills passed, we had to appropriate the money.

Those are not things, I mean, I can do a lot of things in the governor's office.

I cannot appropriate money.

So the cooperative arrangement and the collaboration with the legislature really made it possible.

So I called them in, they still have whatever days they have left that they didn't use in the last session if they would need to come in before next session.

But I called them in specifically to deal with this.

- Well, there you go.

You just answered the next question.

And let's expand on it.

Why couldn't it wait till next session?

- Because we had to get the policy changes in place because we put them on our application to CMS and I have no ability, the emergency commission budget section of the legislature are interim committees, they can appropriate $200 million.

We would never ask them to do that.

So it requires the vote of both chambers in order to do this appropriately and legally.

- So what is the Rural Health Program?

- So it was put into place in the Reconciliation bill, Tax Cuts and Jobs Act.

One big beautiful bill, it's had lots of names, but essentially what it is, and we've spent a lot of time talking to Dr.

Oz and CMS, it is designed to get money back to rural communities across the state.

And every state has this, but it is not for infrastructure.

It's not for new buildings, it's not for new fiber optic.

It is really designed, it's not for propping up struggling or failing systems.

The goal of this is to figure out how you utilize technology.

You utilize, we're talking mobile labs, telehealth units, those types of things to deliver healthcare in communities that no longer have it because I mean, healthcare has always, the economies of scale of healthcare over the last 20 years have really taken away that small local clinic in a town of 1200 people.

Right, I mean, it can conglomerates in Dickinson, Bismarck, Minot, and those types of areas.

So we're really focused on two things.

One, that we're doing it in a way that will bring healthcare closer to home as we continue to go through the 21st century.

And that requires 21st century solutions, and two, that we're not propping up and creating full-time programs that when the federal money runs out, it now becomes a state obligation.

We're very conscious of that.

So this is money recruitment and retention.

If you ever talk to Pat Trainor, it's about front end health, sedentary lifestyles, obedience, I mean, working, exercise.

And he's right.

If we start talking about those things and we start implementing those things into community and personal habits, we'll drop the backend cost to healthcare in a significant way.

So this isn't creating new programs that the state's gonna have to take over in five years.

This isn't creating a bunch of new full-time employees that the state is gonna have to pay for in five years.

This is about delivering, using technology, using mobile, using creative solutions to bring healthcare closer to people so they don't have to leave their community and move into a bigger one.

- Well, there were a number of bills, I believe 19, that were introduced in this session.

Did any of those address concerns you have with the state of, you know, current rural healthcare in North Dakota?

- I think the one is the Elgin bill, right?

The hospital's in real structural challenges down there.

And I gotta give a ton of credit to Senator Don Shiley.

That facility has had, to be honest, some pretty bad management and some structural problems.

But if the Elgin Hospital would go away, it's not just that everybody has to go to Dickinson or Bismarck or Hedinger for healthcare.

The number of jobs and the number of just overall activity in that area would be really, really detrimentally hurt.

So I think that Bill and giving them essentially a bridge loan, which is what it is in order to get their finances in place and figure out a structural way where they can continue to operate, is the closest of the other bills that were introduced that actually deal with rural healthcare.

- So I think you read my question, Senator, I'm sorry, your governor.

It was a large loan, can you tell us the amount of the loan?

- Yeah, I think it's $5 million, in order for them to, I mean, without it, the legislature last session debated annual sessions, they chose not to do that.

So we didn't want this special session to turn into a mini annual session.

But that's one of those bills that really actually was time sensitive.

I don't know if the hospital would've survived whether or not, if they would've waited till next January.

So it's basically the Bank of North Dakota, the state of North Dakota is going to guarantee the loan and they have to pay it back, but it allows them to figure out their finances in a way that doesn't shut the hospital down.

- Okay, so Elgin was one of the big ones for you, but were there other concerns in rural healthcare that the legislature looked to fix during this session?

- No, I think during the special session, I mean, they were really well, and again, prior to the special focusing on, you know, there was some debate on the pharmacy scope of practice.

And that's how it's supposed to go.

We get a proposal interim committee.

I don't even think when they did it during the interim committee that they didn't think there was gonna be the potential for amendments.

But we really focused and they were really focused on the things that allowed us to qualify for the amount of money we're getting and in order to enact that.

- Governor, are you confident North Dakota will receive funding for rural healthcare over the next four years?

- Yeah, I mean, the 199 million is the only money guaranteed.

And I will tell you one of my favorite parts about this since we've done it, is typically when you work for government and somebody gives you a bunch of free money, everybody's really excited about it.

I can tell you Pat Trainor and I are nervous and not nervous in a bad way, but we're very cognizant of delivering this in a way that actually does what it's intended to do for two reasons.

One and most important, because it will better the lives of North Dakotans.

Two, because we know our next of money is dependent on how well we do this.

And then I guess there's a third one and three, we wanna make sure that we are accountable for how the money's being deployed and that it's actually being spent in the way in which it's intended to be spent when we deploy it.

Because we want, I mean, it's taxpayer dollars, it's real money.

And we wanna make sure that the North Dakota citizens can have confidence that it's being spent in the way it's intended to be spent.

- Okay, another talking point that had plenty of headlines during the special session was the Universal School Meal bill.

That bill of course, failed in the Senate, in the state Senate.

But can you tell us your thoughts on it and how it progressed through the session?

- Yeah, I mean, obviously there's a lot of policy debate around school lunches.

They've done it in the last three sessions to one degree or another.

I disagree, I think with that, I don't think it was a policy decision.

I think it was a political decision.

I think school lunches is gonna be on the ballot and I think it will pass.

There are polls, I did a poll with Republican voters.

It has 65% favorability amongst just Republicans.

I think the last four polls that have been done over the last two years, the lowest it's been is 70%.

The highest it's been is 79%.

North Dakota citizens clearly want this.

I have no idea who would organize a coalition to defeat it on the ballot.

So I understand I've been a part of legislative bodies, the policy becomes a huge issue.

And to my mind, the policy debate was over the last time it was defeated at the regular session, this was clearly a question in my opinion, if you wanted the money in statute or you wanted in the constitution.

- Well, you say that.

Do you think it will end up on the ballot?

- [Kelly] I do.

- And you have data that you just quoted, I think you said 65%.

How then does policy in the Senate defeat it?

- Well, they defeated it as a statutory measure.

I mean, that's my frustration with the whole thing.

I hate constitutionally mandated spending because what you're saying with constitutionally, you can be the biggest support.

I understand why it's going that way.

I mean, when people think the legislature's not reacting to what the people want them to do, I mean, we have ballot access in North Dakota, I wish it would've been a statutory ballot access, not constitutional.

But when you do constitutionally mandated spending, what you say is that's the most important money the state of North Dakota spends under any economic scenario.

So if it passes and if it ends up in the constitution, that money comes off the top before you do anything else, before you fund regular K through 12, before you fund higher ed, before you fund the DOT, before you fund property tax reform, that bogey comes off the board before anything else does, regardless of the price of oil or a bushel of soybeans or whatever.

So I mean, I would much prefer it as statutory spending.

You know, if you pass it, if you do that, I can guarantee you we would've worked with DPI to implement it well, but it failed at the legislature, and now we'll see what happens.

- So there you go, so there is a big difference between North Dakota Congress passing a bill versus a constitutional amendment approved by voters as you just.

- Yeah, I mean, one's philosophical, whether you believe in, I mean, California legislature goes in and somewhere between 70 and 80% of their budget is spent before the legislature ever goes into session because of all of the petitions and initiated measures they have put in the ballots in California.

I think you are better off when your elected officials have the most flexibility possible given the economic realities of each and every session.

And that just is taken away with constitutionally mandated spending.

- Okay, yeah, so let's maybe move on a little bit.

What are the issues states looking at to address for next year's regular session?

- Well, I think one is budget.

I mean, I didn't look at oil this morning, but I mean, we've been stubbornly below forecast and oil as we've moved through the session now.

Production has remained remarkably strong.

So I think we will not walk into the next session with a $1.5 billion surplus.

It's just, there's almost no, I mean, unless oil went to $130 a barrel and stayed there for a while, there's no real reasonable way that looks.

And I view that as an opportunity.

We've grown 20% in 20 years, and with that, we've had a lot of growth in government and necessary growth in government.

I mean, when you grow that fast, you have two choices, you can solve problems or you can try and do it in the most efficient way possible.

But the flip side to that argument is the growth in government is unsustainable.

So this allows us a chance to level reset with Allstate budgets, get back to some basics, maybe look at how this looks.

We're gonna have to, I mean, we're gonna have to find at least, you know, a billion dollars across the state where we're not gonna be able to spend like we did for the budgets last session.

And so now we have to figure out how to deliver the services that North Dakota's comes to expect in a little different economic environment.

And I think it's a real opportunity for each.

I mean, we're doing it now with our agencies.

We're sitting down, we're like, no new projects.

Don't tell me what your wishlist is.

Tell me how we're gonna deliver the services we deliver now if we have less money.

- Well, that said, what changes will the people of North Dakota see with the measures that did pass?

- So what we passed during the session, I mean, that's dedicated funding, right?

Yeah, that's money that is being given to us from the federal government.

So that comes in separate from the overall budgeting process.

But I can tell you when we're talking to HHS and we're doing our budget for next session, talking about what programs do we have that maybe don't work as well as they should, that the rural health transformation money is gonna help us do better.

Because then you can look in that side of the budget and figure out where we're at.

I have a different view, I mean, when you get in these situations, some people are like 10% across the board cuts, right?

And they tell every agency to bring them an 85% budget or a 90% budget.

I don't view it that way.

I ask our guys and our team to say what programs work really well, but don't have enough money?

And then what ideas that have been implemented that were really good ideas have never worked, have just never worked, like it's never actually deployed the way we intended it to, 'cause I don't wanna fund that program less.

I don't wanna fund it at all.

Either you've gotta rewrite it and figure out how it works.

But if you have a program over here that is working really well, but needs more money, and you have a program over here that was very well intentioned but doesn't work at all or isn't working, I'd rather take 60% of this money, give it to the program that's working really well and turn 40 back so we can get our overall budget into balance the state's budget.

And I think that's the appropriate way to look at it.

I mean, obviously if you get rid of some programs, people are gonna be upset both internally and externally.

But the point to this all is to maximize resources for the best good, for the most North Dakota citizens.

- Now, you talked earlier, and I think you said it, how long will it take for these changes to be implemented or do these bills?

- They're immediate, that's the nice thing about the special session, when I call it, they go into effect immediately.

Now, the process of getting programs, I mean, so CMS has to approve everything we ask for.

So we get a grant from Mott or Reynolds, North Dakota and then we run through the whole process.

We get it to CMS, and then we deploy the funds as soon as CMS.

I mean, this stuff will happen very fast.

And I think as the program goes, it'll be different, you know, long term structural things.

We'll set those up with first time, you know, like a mobile telehealth lab or a mobile clinic equipment, types of purchases, retention money for rural healthcare employees.

That's what we'll see a lot of in the first tranche.

But that'll set up as we go through the second tranche as we continue down this process to make sure that we're doing it in a real meaningful way.

- You talked about it from your perspective, you thought this session went very well.

- [Kelly] Yes.

- About as good as it could, I think you said.

- Yeah.

- Do all sessions go that way?

- No, and one of the frustrating parts of this, and this is just the nature of it.

I mean, the reason we were there were five bills.

And if you would write a case study on how the executive branch works with the legislative branch, works with the federal government, this would be it.

Like I've been around this stuff a long time.

If you'd have told me at the beginning of this whole process in September that we could have got this done the way we did, I would've been shocked if it went this well, which is just a testament to all the people involved, but that doesn't really get the coverage, right?

School lunches got all the coverage because that's where the conflict is, that's where the drama is.

That's where everything is.

And I get it, I mean, I've been a part of this for a long time, but we should really celebrate.

I mean, government doesn't function.

I spent six years in DC, they just wish one day ever on a random Tuesday in Washington worked as well as this worked, given the tight timelines in the scenario we were in.

And that's really a testament to the people who are elected across all 47 districts in North Dakota.

Way more so than us in our team.

I mean, it's hard to ask people to come in and make significant changes and do it quickly.

And I mean, in an environment where they're not in the evid flow of a regular session, - Is there another special session likely to occur to deal with maybe the budget issues?

- No, I mean, the misnomer on this is we're not looking at allotments.

There's nothing in our forecast that says any of that is even remotely possible.

It's more, you know, we've been blessed every two years in North Dakota that we come in with this fantastic surplus because oil production and pricing has like just done differently.

Oil production, again, is surprisingly resilient, but you know, it's a bad price environment.

So the allotment issue, I don't know where that's coming from.

Nobody who's looking at the forecast in our office or OMB, and we're pretty, I mean, we are the definition of under promise and overperform, particularly when it comes to money, I think it's more about how we tighten our belt the next regular session.

- Governor, the legislative council, of course, you've talked about it, is predicting a billion dollar less to spend next year with the oil prices.

You've mentioned it to a time or two here, you know, how is that gonna impact your executive budget process?

- It already has.

I mean, we've started months ago meeting with agencies telling them, I don't wanna see new FTEs.

We repurpose the ones you have.

I mean, figure out how we do more with less or continue to do what we're doing with less.

We're looking at a budget process.

And in the middle of that, there's two things that are really important that have to be factored in.

One is cost to continue, healthcare costs go up.

I mean, you know, employees, whether it's teachers, whether it's state employees, all of that.

So those are almost fixed costs.

I mean, you gotta figure out what it is and you can play with it a little bit, but the increased cost in healthcare is going to be a fixed cost.

And then the second one for me is we are protecting the primary residential property tax credit, regardless of wherever else we are in a budgeting process, we are gonna continue to protect that because that has been very popular with North Dakotans.

It is a thing that if we protect, we're gonna allow it to grow over time.

And we're gonna be super excited about that.

- Governor, I wish we had some more time, but we are out.

If people want more information, where can they go?

- Follow us on any social media is usually the best way to get topical.

But governor@nd.gov, hhs@nd.gov for Rural Health Care Transformation, I mean, we're trying to put as much information as possible out there to make sure people have the ability to understand what's available and how they have access to it.

- Governor Armstrong, thank you for your time today.

- Thanks.

- Well, that's all we have for Prairie Pulse this week.

And as always, thanks for watching.

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