The state Auditor General's Office says the Arizona Department of Liquor Licenses and Control should take "stronger action against repeat and serious violators" of state liquor laws.
In a report issued Wednesday, the agency, which serves as the watchdog arm of the Legislature, said the liquor department's own policies result in some multiple offenders getting hit with smaller penalties than would otherwise be appropriate. Auditor General Debra Davenport said her staffers also found instances where the department cut fines by half in situations that were probably not appropriate.
All that, Davenport said, undermines the ability of the department to attack those who commit the most serious violations: serving alcohol to minors and providing drinks to people who already are intoxicated.
Jerry Oliver, director of the department, issued a brief response saying he agrees with Davenport's findings and is making changes in response to the recommendations.
Citing a 2005 report by the National Highway Traffic Safety Administration, Davenport said the "certainty and swiftness" of penalties against liquor retailers, as well as the severity of the penalties imposed, are key factors in ensuring that the businesses comply with state laws.
"Licensees should believe that the costs of violating the law outweigh the benefits," she wrote.
Davenport said state law does allow Oliver's department to suspend or revoke the licenses of violators. Alternately, she said, the law lets him impose fines of up to $3,000.
Based on that, Davenport said, her agency has come up with a schedule of fines.
For example, serving alcohol to someone younger than 21 can net up to a $2,000 fine. A second offense within two years increases the maximum fine to $3,000, with an automatic $3,000 fine for a third offense.
In each case, the owner can lose the license to sell alcohol for up to 30 days.
But Davenport said the department's policies about what constitutes a repeat offense can let establishments escape harsher penalties. So a bar could be cited for serving a minor but a subsequent charge of failing to follow procedures in checking identification would not be considered a repeat offense because of the way each is classified.
Her auditors, reviewing 40 cases, found four where establishments were not cited as repeat violators because of those inconsistencies.
"This makes it difficult for the department to impose appropriate fines and escalate discipline against repeat violators," she wrote.
Oliver said his department is reorganizing its policies to try to deal with the issue.
Davenport also noted the department's policy allows fines to be reduced in the case of "minor" first-time offenses. The problem, she said, is there is no definition of what is "minor."
The result was that 16 of those 40 cases reviewed involved discounts even though they involved offenses like selling alcohol to a minor, allowing minors on the premises without a parent or guardian, or employees drinking while on duty.
"In one case, a licensee received a penalty discounted by 50 percent for allowing 12 minors on site without a parent, selling alcohol to minors, failing to request identification, and allowing an intoxicated person to remain on the premises," Davenport said. "Although this was the licensee's first enforcement case, the violations did not appear to be minor."
And her staffers found four other cases where fines were discounted for serious violations that were not first-time offenses.
Davenport even questioned whether these reduced penalties are appropriate. She said staffers contacted nine other states and found that only three allow for such reductions.
One recommendation from Davenport's office that Oliver questioned was that the liquor officers, after conducting a covert operation, identify themselves to business owners even if they found nothing at all.
"If licensees remain unaware that investigations have taken place, the department does not realize any deterrent effect from its investigations," she wrote.
Oliver, however, said that presents problems from a law enforcement perspective.
He said investigators checking out a complaint might not find evidence when they show up. But Oliver said they want the opportunity to come back at some other time to take a second look.
"If you notify them that you were there, sometimes you're tipping your hand," he said.