The 2015 session of the Arizona Legislature is officially underway.   For taxpayer advocates like us, it’s the start of our busy season.  Time to get to work supporting good ideas and defeating bad ideas, including – as is often the case – the same bad ideas that we defeated last year.

Last session, Sen. Carlyle Begay sponsored legislation that would have created a the office of Film and Media, a new state agency at a cost of over $600,000. The bill stalled in the Senate, but has been revived again this year as House Bill 2144.

Proponents of HB 2144 are claiming that the state needs a taxpayer funded advocate to promote the movie industry in Arizona. This of course is a very dubious reason to create a entirely new office, and even if it were a good idea, it is a job better left to the private sector, not taxpayers.

We also suspect that film promotion in Arizona is not the only purpose this office will serve. For years policymakers have talked to 20th Century Fox and other media interests, asking what it would take to get them to film here in Arizona. Their answer has always been the same: bring back the Hollywood tax credit, and we’ll consider it.  As you may recall, this multi-million dollar taxpayer handout to Hollywood studios expired in 2010 (costing taxpayers millions), but advocates of this blatant corporate welfare have been trying to revive it ever since.  They have failed to convince lawmakers on their own, so now it looks like they want to create a taxpayer-funded commission to assist them in their efforts.

These are no ordinary times.  Gov. Ducey and Legislative leaders are preparing to tackle a massive budget deficit, notwithstanding the uncertainty of ongoing court cases that will decide Constitutional mandates over education and Medicaid funding.   To add an entirely new government agency  in the midst of this crisis, whose sole job will be to figure out how to direct more taxpayer money to the multi-billion dollar film industry, is simply ridiculous.

Hollywood studios already employ an army of high-priced lobbyists to seek out taxpayer subsidies, they don’t need Arizona taxpayers to pay for another one.

 

On Friday, Governor Doug Ducey released his budget plan that sends more money to the classroom, protects taxpayers and puts Arizona on the path to economic prosperity.

Specifically, Gov. Ducey’s budget implements a hiring freeze, consolidates agencies that often have overlapping roles, cuts bureaucracy across the board and ends the inflation tax that effects thousands of hardworking taxpayers every year.  Just as importantly, it increases dollars to the classroom – while only cutting school administration expenses – so Arizona students receive the best education possible.

“For years, Arizona’s budget has been beset by accounting gimmicks and special interest loopholes that only added to our debt and has led to one budget crisis after another,” said AZ Free Enterprise Club President Scot Mussi.  “Gov. Ducey showed genuine leadership by boldly proposing to immediately close the current budget deficit and produce a structurally balanced budget by FY 2017.”

Governor Ducey’s budget does more than just eliminate wasteful spending.  It provides innovative reforms that will make government run more efficiently and effectively, while protecting vital services.

“By offering a true balanced budget and making sure more dollars reach the classroom, Gov. Ducey is leading the way towards making Arizona a model for economic growth and job creation,” said Mussi.  “We can only hope the Legislature shows the same courage and leadership by passing this budget.”

Four Peaks Brewery is exactly the kind of small business that sustains Arizona’s economy. Over the course of nearly 20 years, the Tempe-based brewery and restaurant has grown from a tiny establishment next to Arizona State University into a flourishing enterprise. It has continued to grow, expand, and now employs well over 200 people. In fact, Four Peaks brewery is a small part of a larger craft beer explosion that is transforming the beer industry:

Yet their success might become a barrier to future growth if the Arizona legislature does not intervene. Under current law, microbrewers like Four Peaks are currently capped at producing 40,000 barrels of beer per year and have a limit on their distribution.  Should they cross that 40,000 threshold – which Four Peaks is on the verge of doing this year– they would have to apply to be a beer producer, which cannot operate restaurants outside of their main brewery.  Four Peaks currently has two such restaurants, which means they must soon either cap their production, or shut down those restaurants and put hundreds of people out of work.

Some might be asking why such an arbitrary and seemingly bizarre law even exists, especially one that does not appear to serve a useful public purpose?  The reason is as simple as it is obvious: the entrenched beer wholesalers that helped write (and benefit from) the current regulations stand opposed to any changes that threaten their market share.

Of course, they will never admit that this is the basis of their opposition. Instead, we will hear lengthy diatribes about how the “3 tier” model (a prohibition era relic) that has been in effect for over 80 years has been great for the beer industry and any changes to the current model could endanger the public and lead to catastrophic unintended consequences. You might even hear a few make the claim that the current law is in place to “protect” small businesses like Four Peaks.

Recognizing the clout of the multibillion dollar beer wholesalers, the microbreweries are going to seek compromise legislation that allows for a grandfathering of existing restaurants and a modification of the limits for self-distribution should a brewer cross the 40,000 barrel cap.  By all accounts, the beer establishment is having none of it, and will likely push their own bill to keep Four Peaks and other Arizona micro-breweries from impeding on their bottom line.

For advocates of free enterprise, this is an important fight.  In a free market, a local company that makes a more popular beer than a national brand should flourish and be rewarded, not be stopped in their tracks by protectionist laws and an army of high-powered lobbyists.  Our legislature needs to understand that our economy depends on more competition, not less, and that small businesses should never have a “cap” on their growth and employment – especially not at the behest of would-be competitors.



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The Arizona Free Enterprise Club is a free market policy and lobbying group dedicated to promoting a strong and vibrant Arizona economy.