Chenault: Balance budget with mix of cuts, new revenue

The Alaska Legislative session started today in Juneau. The Senate gaveled in at 11 a.m. and House speaker Mike Chenault started things off for the House at 1 p.m. Lawmakers have a lot of work ahead of them as they attempt to address the state’s massive budget deficit. We’re talking with legislative leaders this week about what they want they want to accomplish this session.

Download Audio

Speaker of the House Mike Chenault, R-Nikiski, wields the gavel of the second regular session of the 29th Alaska State Legislature on Jan. 19, 2016. Photo: Skip Gray/360North
Speaker of the House Mike Chenault, R-Nikiski, wields the gavel of the second regular session of the 29th Alaska State Legislature on Jan. 19, 2016. Photo: Skip Gray/360North

Chenault says he’s focused on trimming the budget, but doesn’t have a target number for cuts:

CHENAULT: I don’t have an exact number… but we’re in a position we’ve never been in before where our revenue stream dropped 88 percent over a period of a year, year and a half, and I think it’s going to call for drastic measures… not only within the budget itself, but also looking at those revenue streams and deciding which may move Alaska ahead without some of the conflicts that may arise.

TOWNSEND: The governor and his budget team really feel we need to solve the budget problem this year before the state’s savings are depleted. Do you look at this problem the same way or do you think we have more time to figure this out?

CHENAULT: You know I think it’s really important that we address the issue. Whether we do that all in one step this year, or whether we do it all over a couple of years remains to be seen. But I do think it’s an issue we need to address.

TOWNSEND: Are there any income taxes or other taxes that you would consider supporting?

CHENAULT: A lot of that depends on (exactly) what that would be. I would be more apt to probably support a sales tax versus an income tax. But I’m open to looking at each of the taxes the governor’s proposed and determine, ‘Is that best for the state of Alaska, or not?’ or, ‘Is that best for the constituents in my district?’

TOWNSEND: Do you think lawmakers will end up tapping the Permanent Fund earnings this session?

CHENAULT: It’s 50-50 right now — that’d be my guess.

TOWNSEND: If so, how will you sell that to your constituents? What are you hearing from them?

CHENAULT: What I hear from my constituents is that they would like to see a smaller government to begin with. Then they would be open to looking at use of the Permanent Fund, or an income tax, or any of the other revenue-generating proposals. But first they would like to see a smaller, more lean, responsible government.

TOWNSEND: Do you have ideas about where those cuts should come from?

CHENAULT: I think we’re going to have to look at actual programs. There’s nothing out there that should be sacred. Whether that’s education or Medicaid or any other program out there. I can tell you during the Knowles administration we actually went in and took out PCN numbers of employees just to get rid of certain — we ended up having no deputy commissioners, we didn’t have public relations people in every one of the departments… There were a number of things we did to try to trim that budget down. I don’t agree with across-the-board cuts because you may end up running programs that may not be as efficient as they could be. And you end up getting rid of the greater operators… a middle-management person sitting in an office somewhere around the state.

TOWNSEND: Are you concerned with cuts going so deep within state government it might cause the unintended consequence of harming the economy even more since state government drives so much of the economy here?

CHENAULT: I think we have to be concerned about that. Nobody wants to go back to the ’80s when oil prices were $8 a barrel and people were walking out of the house and throwing their keys on the desk of the banker and saying, ‘We can’t make the payments.’ Nobody wants to see that. But also we have to be concerned that if we spend all of our reserves then that lowers the opportunities we have to get out of this thing unscathed. I think we need to be very careful of what we do and how we reduce the budget in order to get to that $3.9 billion deficit number.

House Speaker Mike Chenault is a Republican from Nikiski. Tune in tomorrow for a conversation with House minority leader Chris Tuck.

Lori Townsend is the news director and senior host for Alaska Public Media. You can send her program ideas for Talk of Alaska and Alaska Insight at or call 907-350-2058.

Previous articleAlaska, Inc: The roots of the Permanent Fund dividend
Next articleAlaska News Nightly: Tues., Jan. 19, 2016