Chenault reviews session work, prepares for leadership role

Posted: Friday, July 09, 2004

Rep. Mike Chenault told a Kenai chamber luncheon audience Wednesday that he hoped to be one of two co-chairs of the House Finance Committee in the 24th Alaska Legislature.

"That's where I'm planning to be right now," he said. "That may change with the makeup of the House and all the other races around, but expect I'm going to be there."

Chenault, R-Nikiski, represents House District 34. The senior state lawmaker from the Kenai Peninsula, he already sits on the House Finance Committee and chairs subcommittees on natural resources and administration.

Chenault faces no challenger in the upcoming primary election in August, but may meet Sterling resident Glen F. Martin in the general election. Martin has filed a nominating petition with the Alaska Division of Elections, but that has yet to be certified. Martin has listed no party affiliation.

Chenault reviewed the recent special session of the Legislature during his address Wednesday.

"Not a whole lot transpired," he said. "The only thing that had a chance was the tobacco tax and that was all that passed."

Chenault disagreed with his colleagues over the tax, which was sold largely as an anti-smoking measure aimed at deterring youngsters from starting the habit. Chenault said it wasn't likely to produce that effect and really amounted to a revenue measure, and an unfair one at that.

"While I agree that there are health issues with cigarette smoking, I think that all we are doing is picking on one small group," he said.

"If we are truly concerned about the health of America, of the health of Alaska, then we need to look at a majority of other issues besides cigarette smoking. Within a few years, obesity will exceed smoking in deaths of Americans."

Chenault said he had asked his colleagues prior to the start of the special session how much support he could expect if he introduced "a Twinkies tax, or a fast-food tax or a tax on potato chips." The chamber audience chuckled.

"That's the same response I got (from fellow lawmakers)," he said.

A smoker himself, Chenault said had he been convinced that raising the cigarette tax $1 over three years would deter young people from smoking, he'd have supported the measure wholeheartedly.

"I sure don't want kids to smoke, but I don't believe the only reason kids won't smoke is simply because of what the cost of a pack of cigarettes is," he said.

On the debate over and ultimate defeat of the proposed percent-of-market-value approach to managing the Alaska Permanent Fund that could have made a percentage of its value available for state programs each year, Chenault said the state still faces a long-term fiscal dilemma.

He said he opposed an income tax, which he said would be unfair to working Alaskans, and noted municipal opposition to a sales tax. Meanwhile, the public has said it opposes use of the permanent fund.

High oil prices bailed the state out this year, as they have in the past.

"Personally, I think we are all right right now," he said.

Chenault said he doesn't see oil prices declining for several years.

"Years ago, when we did have oil plunges and cycles, Saudi Arabia and other oil-producing countries could simply go over and turn on the valve," he said. "They can't do it anymore. Their oil fields are in decline as all oil fields are around the world."

Resource legislation backed by Chenault, as well as others, including Sen. Tom Wagoner, R-Kenai, have included royalty reductions and tax incentives in an effort to encourage oil and gas companies to explore for more supply and to deliver that supply to market.

"People say, 'Why are you giving them so much?'" he said. "The problem is, folks, that oil companies aren't out actively exploring, all they are doing is producing and an increase (in supply) is not going to happen."

A 10-percent tax credit may save the companies money as they develop new resource finds, but over time, the state coffers would reap the rewards as those resources are delivered to consumers, he said.

"We are giving them something, but we're going to get it on the other end. If we have to wait a number of years to get it, I'm willing to do it," he said.

Chenault also noted the success of his House Bill 417 (and the Wagoner companion SB 247) that broadened the mandate of the Alaska Natural Gas Development Authority, placing a direct main gas line project from Prudhoe Bay to Cook Inlet on the same level as a proposed line to Valdez. ANGDA officials now will investigate both possibilities.

Chenault said the Cook Inlet area has many advantages that argue for a direct line.

"We feel we have the infrastructure in place now to accept the deliverability of gas," he said.

In addition, there is a ready market in the peninsula's existing gas-dependent industries. Should plants such as Agrium or Phillips run out and close down, hundreds of jobs would be lost, producing serious ripple effects throughout the local economy, Chenault noted. On the other hand, a steady gas supply would allow those industries to expand, increase jobs and the local tax base, he said.

Chenault also noted increases in state funding to schools, but qualified that by saying that the state's foundation formula has been shortchanging the Kenai Peninsula Borough School District for years. Indeed, he said the district's efforts at efficiency have actually cost them in reduced state dollars.

Another success, Chenault said, was the passage of SB 136, which allows local municipalities, upon a vote of the public, to up the amount of real property value that can be exempted from property taxes from $10,000 to $20,000.

Another, SB 382, he said, clarified language and cleared up right-of-way problems surrounding some highway projects, including the reconstruction of the bridge across the Kenai River in Soldotna.

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