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.

 

 In what has become as predictable as summer monsoons in Arizona, another company has filed for bankruptcy after being wooed with millions in taxpayer incentives – the second in Arizona in as many years.

GT Advanced Technologies, which relocated to the vacant First Solar building (another rent seeking corporation) after securing a $10 million Grant from the Arizona Commerce Authority (ACA) and millions more in property tax breaks and tax credits, filed for Chapter 11 bankruptcy last week.  The “Apple Deal” was suppose to be economic boon for Mesa, investing in a factory that was going to create 700, high-paying jobs.  Now it looks like it may be over before it even gets started.

If you recall, the announcement of Apple’s purchase of the First Solar building was met with all the fanfare of a victory parade.  Gov. Brewer, Mayor Scott Smith, Sen. Bob Worsley and scores of other politicians and executives from the ACA nearly broke their arms patting themselves on the back for what they described as a “coup.”  Not even a year later, the entire project has collapsed, and the out-of-state company is now in a fight for its survival in bankruptcy court.

If this sounds familiar, it should.  Just last year, Suntech Power Holdings shut down their Goodyear plant – their only plant nationwide – just over two years after their grand opening, eliminating about 100 jobs.  This was after receiving as much as $3.6 million in state and federal tax breaks, and a half million from the City of Goodyear for “job training.”

This is hardly the first time these types of crony capitalist efforts have failed. We should all be familiar by now of the stories of Solyndra, Fisker Automotive and others – companies that took in hundreds of millions of taxpayer money, only to lose it all and file for bankruptcy a short time later.   As I wrote in an earlier post, Arizona was very fortunate to miss out on the Tesla plant in Nevada – costing taxpayers $3 billion and then some – and the SolarCity plant in Buffalo, NY – costing taxpayers $750 million.  Both companies (under the same ownership) have already taken in hundreds of millions in taxpayer incentives, have massive debts, and are burning through cash.  Neither company has ever posted a profit.

Additionally, this debacle should also put to rest the idea of letting the ACA engage in speculative investing with taxpayer money. The Goldwater Institute has put together a great resource about our very own Department of Crony Capitalism – the Arizona Commerce Authority.  Unsurprisingly, the ACA is rife with conflicts of interest, and lack of accountability controls.  It should hardly be a revelation that the former Department of Commerce, long a safe landing spot for well-connected political consultants and donors after an election, should not be a conduit for corporate welfare.

It’s time to put crony capitalism to rest in Arizona for good.  There is only one thing that should be deciding winners and losers in our economy, and that’s the free market.



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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.