- [Kelly] This week a one-on-one exclusive discussion with Senate President Pro Tempore, Phil Berger.

This is "State Lines."

- [Announcer] Quality Public television is made possible through the financial contributions of viewers like you, who invite you to join them in supporting PBS NC.

[gentle music] ♪ - Hello there, welcome back to "State Lines."

I'm Kelly McCullen, and joining me today, Senate President Pro Tempore, Phil Berger, a Republican from Rockingham County.

Welcome to the show, Senator.

Good to have you.

- Good to be here, Kelly.

- First time on "State Lines," I think.

- It is.

- And, well, we're here to recap the year for the most part.

2023 was eventful.

How was it for you and the Republican caucus?

A lot happened socially, budgetarily, and educationally in this state.

- Yeah, it was an eventful year.

One that I think a lot of the things that we've been working on for a pretty good period of time we were able to see them across the finish line.

The budget in 2023 was one that really continued the policies and the philosophy that we've engaged in since 2011.

And I think the state's in remarkably good shape.

- You know, quite a few voters out there are just absolutely upset that Republicans had a super majority in the Senate, and then they got one officially in the House to combat and put Roy Cooper on the defense of his governor.

How does that change legislating, when you have that much power to... You have, what, 60% voting power at the minimum?

How does it affect you as a leader, and how you craft the flow of legislation through that chamber and over to Speaker Moore?

- I don't know that it changes that much.

I think there are some things that you know that you'd have some real hurdles if you have less than the 60%.

But I don't think it's that much of a difference in the major things, and in a lot of the things that we do.

- How was the relationship with Speaker Moore?

People would say the budget would've went a little bit longer past the June 30th deadline, there were some disagreements on some issues we'll speak about a little bit later.

How was that working with your counterparts?

- Tim and I have worked well for a long time, and we know each other very well.

Just like any relationship, sometimes you disagree on certain things, but we've always been able to manage to work through those disagreements and make sure that things work like they need to for the people of the state of North Carolina.

- And where did Dan Blue and his team, that Democratic caucus, fit in with deliberations on big legislation?

You had the votes to get whatever you wanted, however you wanted it for the most part, but there are Democrats out there representing their folks.

How did you represent them, and how much of a seat at the table do you believe you gave them?

- So Dan and I have what I would consider to be a very strong and very productive relationship.

Dan and I both understand that there are some things that we're gonna disagree on, and our members are gonna disagree on, and we work very hard to make sure that those disagreements don't bleed over into some sort of animosity that really is not needed.

And I think we've been very successful as far as that's concerned.

- Let's start with the state spending, you passed a state budget bill.

It's big, it seems to grow every year.

It doesn't spend as much as Democrats want, and it spends more than some Republicans would like.

What's the calculus in setting the state spending rate?

How do you feel about the spending levels right now as we head into a, I won't say an uncertain economy, but there's hope and there's some apprehension about what might happen in 2024?

- Well, a lot of the decisions that we make are informed by what we've seen over the past 20 plus years.

And we've tried, on the budget, to make sure that we address what needs to be done in the state in a way that's fiscally responsible.

So one of the first things that we do is determine has there been growth that needs to take place because of inflation?

Has there been growth that needs to take place because we've got more people than we've had in the past?

And so we'll set a target number based on last year's budget and a calculation of those growth factors, and then we work from there to try to make sure that we've allocated the dollars in an appropriate way.

The reason we do it that way is, again, I was first elected in 2000, I saw what happens when you adopt a budget based solely on how much money is available.

And the Democrats did that.

And what happens is, from time to time, your revenue goes down, it doesn't always go up.

And on those times when it goes down, if you've already committed to spend a certain amount of money and the money's not gonna be there, you create all sorts of problems.

So we've avoided those.

We've had solid budgets for the last decade, and we intend to continue like that.

- I remember a time when I was in Raleigh full-time where the idea was if conservatives could write a budget for North Carolina at the time, it would be inflation plus the percentage of population growth.

Does that calculus and mathematical formula still hold, or are you relying on economic forecast, or other experts, or just gut feeling?

- It's more the inflation figure, and the population growth figure.

And we then extrapolate from that what a dollar amount, in addition to what we've been spending, would amount to.

- I get a few emails about this show, more than one of them recently has asked me about education funding.

You're funding education in dollar amounts that are higher than in the past, and some will say it's not growing with inflation.

And now off to the side here, as part of the package, hundreds of millions of dollars in what they're calling opportunity scholarships, or school vouchers, where public money funds can fund private tuition.

People are for it and against it.

How should we interpret those two policies as you fund public schools, but you also fund private school options?

- Yeah, so we've always had a funding of our schools that in many respects is based on a per pupil amount.

And so the idea that opportunity scholarships somehow is taking money away from the traditional public schools is just a false approach to it because those children will not be in the public schools.

So it doesn't make any sense to continue to fund positions for children in a system when those children are not gonna be there.

Our philosophy is that the money ought to follow the child, because the child is who we are trying to make sure gets educated.

The other thing that we think is very important is empowering parents to make decisions about their child's education.

And the approach that we've taken with charter schools, with opportunity scholarships, and in many respects with the traditional public schools, is to do as much as possible to make sure that parents have a role, and have a meaningful role, in their child's education.

- Yeah, people, parents often like their local school teacher, even if they're a public teacher.

And I've gotten some feedback from folks saying, you know, "I'm a veteran teacher, I didn't get a big pay raise, barely one at all, and this rookie comes in and starts at a higher base salary and gets higher pay raises because they're presumably younger and less experienced."

What is it about the market that says invest more heavily at a higher percentage rate in younger teachers versus the ones that've been there 20 plus years, up to what we call retirement age, 30 plus years of state service?

- So, just to be clear though, the first year teacher is not making more money than the teacher that's been there for 15 years.

But one of the challenges that we've got is fewer and fewer people are choosing to go into education as a career and so there's a real challenge for us to compete with other states to get those graduating educators from colleges and universities.

And we really were not competing very well on the salary side.

So we've worked to make sure that the beginning pay for teachers is something that's competitive with other states so that we are in the competition to get educators to stay in North Carolina, and to come to North Carolina.

- As a person with great say over the state budget, what should parents expect of their local school, public school boards, with the money they are given by you, which you say is a satisfactory amount?

If you look at a parent who's mad at you, how much do you absorb and say, "I understand you disagree with me, but..." Talk locally.

- Yeah, so when I talk to parents, the thing that they're concerned about as much as anything is discipline in the schools, whether or not their child is given an opportunity to learn, and whether or not the school system itself is adequately addressing certain discipline problems.

I really don't hear that much from parents about compensation for teachers, and those sorts of things.

And I think if you look at what we've been able to do over the past decade in North Carolina, as far as average teacher pay, you know, at the end of the biennium, the average teacher pay, average teacher pay in North Carolina is gonna be right at $60,000.

The average household income in North Carolina is right at $60,000.

When we started in 2011, North Carolina ranked in the high 40s, like 47th, 48th in the nation as far as teacher pay is concerned.

We've moved that number, so we're now in the low 30s and we continue to make progress there.

So we're not where we need to be, but we are moving in the right direction.

- So going out to maybe the early next decade, there will be over a half a billion dollars for opportunity scholarships.

The state budget, we would expect, would continue growing organically with the inflation and population growth.

What will our school ecosystem look like?

Not public school, but everything rolled together with public dollars now offering private opportunities.

- Yeah, I think the vast majority of kids will be going to the traditional public schools.

I don't think there's any question about that.

But we'll see an increase in the number of children that their parents have opted for a charter school, which is a public school.

And others that will have opted for a private school with the assistance of the opportunity scholarships.

And we have, in North Carolina, a really robust homeschooling environment as well.

So I think the thing to really look at in North Carolina is the fact that parents have options, and parents have those options whether they are wealthy or not, that the state of North Carolina is interested in making sure that children get educated and making sure that parents have a meaningful say in that education.

- Whose job is it at the local county level to make sure parents know they have an option to get a scholarship and potentially go to private school?

- So at the local level, I think in some instances it would be the private schools themselves, with some sort of advertising.

At the local level I would suggest that in some instances the folks at the traditional public school, if they see that it's a better option for a child to go to a private school, that they would put the interest of the child ahead of any interest that they individually have.

- We've taken care of the children with this conversation, let's talk about healthcare.

I get asked, "What changed Phil Berger's mind on Medicaid?"

Was it good lobbying?

Was it the right people they hired to get to you and talk to you?

And I will not put an answer in your mouth, so I'll ask you directly, how did it go from a bad idea to a conservative idea?

- So I think you've gotta go back to 2011 and you've gotta listen to what folks were saying that were opposed to expanding Medicaid.

One of the things was we had a broken, traditional Medicaid system.

Our traditional Medicaid system was running cost overruns of $500 million, $600 million a year.

It made absolutely no sense to put another 500,000, 600,000 people into that system that was already broken.

So that was one thing.

The second thing you heard people say is, "Well, is the federal government gonna keep its promise to pay 90% of the cost?"

Folks were worried about the state being left holding the bag for a significant billions of dollars in expenses.

And then it was also something that folks were concerned about exactly who are these people that would be covered with expansion?

There was a lot of concern that we would be providing health coverage for able-bodied folks who were basically not working, whether refusing to work but not working.

And so if you go over the 10, 12 years after that, we reformed the traditional Medicaid system, went from a fee for service model to a capitated model.

We went from having cost overruns to a balanced Medicaid budget- - Go back to that first part.

What does that mean?

What did you do with Medicaid that saved money and, in your opinion, made it a better Medicaid system?

'Cause people get lost in that.

- Yeah, so basically we changed it from a situation where every time someone on Medicaid went to a doctor, went to the hospital, went to have a prescription filled, the state just wrote a check to cover those costs, to a system where we contract with insurance companies for them to cover the Medicaid population, and we pay the insurance company a fixed amount per person per year on that.

And so they then have the responsibility to control the cost, they have the responsibility of making sure that the folks that are within their system are people that are taking their medicine, are going to the doctor, and those sorts of things.

So we have predictability as far as what the cost is gonna be regardless of the utilization that takes place.

- So you did that, and now here comes Medicaid expansion as the option.

And sorry to interrupt you on that, but I wanted to dial in on that because something was fundamentally different, and that was- - Correct, that was.

- [Kelly] Okay, go ahead.

Get us to expansion.

- So we're in a capitated model now so when we have additional folks come online then they go into one of those insurance company plans.

The situation with the federal government, we have gone from 2010, 2011 with a situation where we've had a Democratic president with a Democratic Congress, we've had a Democratic president with a Republican Congress, we've had a Republican president with a Democratic Congress, we had a Republican president with a Republican Congress.

They haven't done anything to change that mix of what the federal government would be paying, the 90% share that the federal government would be paying.

So the confidence level actually was much higher that we would not be left holding the bag at the state level for all these folks that were now being put on the Medicaid roll.

So from the standpoint of our budgeting, and our fiscal situation, we had a lot of confidence that Medicaid was not gonna break the bank, so to speak.

- Have the people spoken on this type of medical coverage, it's not exactly free market, but it's socialized medicine as your critics would say, and people wouldn't like it.

But you think the people have spoken, voters want it, whether they're Republican or Democrat?

- I don't think there's any question that if you look at surveys, public opinion surveys, that have been done over the past 10 years, that the idea of Medicaid expansion is something that was popular as far as the public is concerned.

I don't know whether or not the level of detail in terms of how the system works, and who pays for what, and those sorts of things, is as well known.

But I do think it's a program that the people do support.

And then that third thing, the question of who would be covered, what we actually have found is that the vast majority of people that would be in the expansion population are people that actually are working 30 hours or more a week.

And it's just that because of the way that the Affordable Care Act was designed, because of the expense of private insurance, they were working full-time, but they just didn't have the money to buy insurance, and they made too much money to qualify for some of the plans that were out there.

So what we're seeing, and what we will see, is that a lot of the working folks, at the lower part of the income scale, are now going to have insurance coverage.

And that should over time increase positive outcomes as far as healthcare.

The other part of Medicaid expansion that is not very much reported on is the question of certificate of need.

We had fairly significant modification of our certificate of need laws as part of the expansion legislation.

- Which is?

The certificate of need for the average person is what?

- Well what it is is that North Carolina law for a long time has basically said if someone wants to go out and build a diagnostic center, an MRI, they have to get permission from the government to do that.

If a group of doctors want to go out and build a surgical center so that they can offer surgeries maybe at a lower cost, they have to get permission from the government to do that.

They have to get a certificate of need.

The idea that some government bureaucrat, or some group of government bureaucrats, has the foresight and the wisdom to decide exactly how many surgical centers we need, how many beds we need in mental health facilities, how many MRIs are necessary, really is contrary to at least philosophically where I am, and I think where most people are.

So the reform in our certificate of needs requirements would lessen that red tape so that if a doctor, or a group of doctors, feels like there's a need for additional surgical beds, they would be able to go out and move forward with building those.

If there is a radiologist out there, a group of radiologists who feel like, you know, we could probably use another MRI, they don't have to get the government's permission in order to be able to do that.

- You would think big medicine would go to the big cities because you could compete head to head.

We have three major hospitals, I think, in the triangle, or more than that right now.

What about the rural medical care?

There's a lot of folks need a dentist, and they need an MRI.

There is no market demand to build those facilities.

How do you go about recruiting that and making sure the country folks are well protected and served?

- Yeah, so the larger economic forces that are working are things that are creating some real challenges for rural healthcare.

And we've tried to pay particular attention to our rural hospitals and some of the issues that are out there.

Listen, Medicaid expansion is no silver bullet to cure all of the ills that we've got as far as healthcare in North Carolina is concerned.

I do think, incrementally, that we're moving in the right direction, but we will continue to have challenges in rural areas.

The fact is that for a lot of folks, because of our transportation infrastructure, it's just as easy, or even easier for them, to travel from Rockingham County to Greensboro for their healthcare.

Or it's just as easy for someone who lives in Franklin County to come to Wake County.

So we've got to reimagine in some respects what kinds of hospitals, and what kinds of healthcare, we have in our rural areas.

- As a statewide Republican leader, with a presidential debate coming up, and a possible President Trump, gonna campaign, that he might revisit what they call Obamacare and the Affordable Care Act, which is Medicaid expansion, all this, how do you nuance this now that you've put your support behind expanded Medicaid, but if the feds go to repeal it and Republicans get gaga about it and they get majorities, do you lend your way into trying to preserve the state's services, or do you have to just watch as a bystander what happens in DC and then wonder if you will hold the bag, as you say, with the costs?

- Yeah, I really don't think there's any likelihood that the kinds of changes that may take place in Washington are going to upset the apple cart, so to speak, as far as our fiscal situation is concerned.

First of all, those folks can't get anything done.

I mean...

I hope that changes.

- Why don't you run for Congress?

Everyone else is.

- I know that.

I am...

I feel like where I am is where I need to be, and I feel I can make a difference, positive difference, in staying in North Carolina Senate.

But I just don't see the kinds of radical change that some folks seem to have put into those comments that were made by the former president.

- I have to ask you about gambling in North Carolina.

It almost, if you'd had your way, we'd have at least four casinos, new ones coming in on top of the couple that we have already.

Gaming, from Phil Berger's perspective, is what in North Carolina?

- So, remember, a lot of folks are talking about the gaming aspect, but the proposal that we were talking about was a proposal to enhance development in rural areas.

And it was something that yes, gaming was a part of that, but only a part of that.

It was a situation where a developer would commit to invest $500 million, at a minimum, in a particular location, create 1,750 new jobs, at a minimum, and that would go in particular rural areas.

I was pretty much on the fence on some of these things, until we started seeing what's happening in the state of Virginia, particularly right over the state line in Danville, where the state of Virginia has now licensed multiple gaming facilities right on the North Carolina-Virginia line and it's crystal clear- - Surely that's an accident?

- Right, well, it's crystal clear that their business model is to suck a quarter of a billion dollars, annually, out of North Carolina just for the Danville facility.

And so those dollars, those dollars are North Carolina dollars that if there's something that we can do to keep the development in North Carolina...

The gaming is already here, we already have three gaming locations in North Carolina, one in Kings Mountain, and two in the western part of the state, so it's not like there's no gaming.

We've also got a lottery that we've had for a number of years now.

We have sports betting that's in place.

I just think that the economic development aspects of what we were talking about are so significant, and so positive, for rural areas that continue to struggle, even though we are doing well on a statewide basis.

- And there are social conservatives who are joining with some liberal progressive who say it's worth it not to have casinos.

And, you would say, even if 250 million go across the border.

And to a point there was some talk people were gonna challenge you for your seat in the Republican primary on the basis of casinos.

What do you say to the social conservatives?

Many of them have been very good to you over the past 25 years of your career.

- Yeah.

You know, I respect their position on gaming, and if we were in a state that had no gaming whatsoever then I could see the idea that we ought to continue to maintain that posture, but we're just kidding ourselves if we're trying to say that it's not here.

It is here.

And nobody would force anyone to go into a gaming facility.

- Last question is, we have one minute left, legislative Republicans took a lot of power from their future governor, whether it's Josh Stein or it could be Mr. Falwell, or Mr. Moore, any of it, doesn't matter which one it is, if it's Republican or a Democrat, you are more empowered in 2025.

Why does the executive power need to be transferred legislatively on certain appointments, the elections and other matters that have gotten such headlines?

- Yeah, so our feeling is that what we're doing is really rebalancing the situation between the legislative branch and the executive branch.

You know, for the longest time North Carolina's governor could not succeed himself, did not have a veto, those powers were given to the executive branch and essentially at the expense of the legislative branch.

So we just feel like we're rebalancing things.

- Yeah.

- Apologize for my throat.

- Well, you know, it's a good time to stop, 'cause the clock in my ear says we're down to the final 30 seconds, and I've gotten a bunch of questions out of you.

Senator Berger, I appreciate you coming on for an end of year recap.

It's good to talk to all the state leaders.

That you made time as a service to our viewers is much appreciated.

Thank you, sir.

Happy holidays to you.

Safe travels around this state.

- Thank you, Kelly.

- And we thank you for watching this very special conversation.

Email your thoughts and opinions, I'm sure you have some, statelines@pbsnc.org.

I'll read every email.

I'm Kelly McCullen, thank you for watching, and we'll see you next time.

[gentle music] ♪ - [Announcer] Quality public television is made possible through the financial contributions of viewers like you, who invite you to join them in supporting PBS NC.