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.

As most people know, Arizona soon will have a new Governor, a new Attorney General and a new State Treasurer, not to mention several new members of the state Legislature.  There’s no doubt that all of them have a lot on their plate as they make the transition from candidates to public officials.

But there’s one thing they should all have near the top of their priority list as they prepare to take office come January–getting Arizona’s $7.8 billion public safety pension system under some semblance of control.

If you’ve been distracted by the election and haven’t been paying attention to the what’s been going on over at the Public Safety Personnel Retirement System, here’s what you missed.

Jim Hacking, the head of the PSPRS, was forced to resign this summer after it was discovered he secretly ordered raises of up to 27% despite not receiving approval from the Department of Administration (ADOA) – making the raises illegal.  Doubling down on chutzpah, he then asked ADOA for those same raises, even though he had secretly already given them.  The PSPRS board decided to let Mr. Hacking retire rather than fire him for cause, so he could cash a $107,000 severance and begin receiving an $87,000 annual pension.

Not long after, the Arizona Attorney General cracked down on PSPRS for spending $1.76 million in legal bills last year alone for an outside law firm, despite the fact the pension fund is already represented by the Attorney General’s office for legal matters.  One of the many functions of Kutak Rock, the law firm in question, was to advise on how to slow-walk public records requests – like the ones filed by the Arizona Republic regarding the aforementioned illegal pay raises.

As I write this, the PSPRS is under state investigation for suspected sexual harassment of an employee and is under an FBI investigation for allegedly inflating the value of real estate investments in order to push higher employee bonuses.  That investigation was triggered by four whistle-blowers, who are now being sued for openly questioning how PSPRS was valuing land trusts, which has lost tens of millions.  The legal tab for their defense is being paid by taxpayers.

As the Arizona Republic rightly described it, the PSPRS is an unholy mess, and it’s long past time for reform.  Unfortunately, common sense proposals like HB 2060, introduced by Sen. Kavanaugh, went down to defeat this past session thanks to relentless pressure from unions and PSPRS lobbyists.  Reforms like ending no-bid contracts and reigning in illegal employee bonuses should have passed unanimously instead of being shot down in the House.

One can only hope the new Governor and Legislature will look at tackling this problem next year. Otherwise, reckless mismanagement of a pension system already on the brink of not being able to fulfill its payment obligations will only get worse.

The Arizona Free Enterprise Club today released our latest poll for the general election, focusing on the Governor’s and Attorney General Race. The Club’s in depth poll, conducted by the Tarrance Group, shows Doug Ducey maintaining his lead over Democrat Fred DuVal. Among likely voters, Ducey is currently leading DuVal 43% to 36%, with Libertarian Barry Hess garnering 5% of the vote. Our last poll, conducted in mid September, showed Ducey up six, 44% to 38%. 

Ducey’s support from his own party continues to help build on his lead, with 79% of Republicans supporting Ducey while 74% of Democrats supporting DuVal. Additionally, both candidates continue to split Independent voters, with both candidates receiving 32% support. There are 14% of voters that are still undecided.

In the Attorney General Race, Republican Mark Brnovich has opened up an impressive nine point lead over Felecia Rotellini, 48% to 39%. While each candidate is doing well within their own party, it is the independent vote that is proving decisive for Brnovich. He currently has a +12 point lead among Indendents, and is leading by +20 with male voters. Conversely, Rotellini is only leading by +3 with women voters.

The live telephone poll of 500 respondents was conducted October 13th through the 16th and has a 4.5% margin of error, and included a sample of 35.8% Rep, 30.5% Dem and 33.7% Ind.

 



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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.