Legal Corner – Financial Disclosure Statement Requirements

A new year is approaching with new deadlines and one of the most frequently asked questions this time of year is about the filing of the Financial Disclosure Statement (Statement). The Statement is a form that requires a public officer to disclose financial information about the officer and the officer’s spouse and children if they are living in the household. The Statement outlines the following categories to be disclosed:

• Sources of personal compensation
• Professional, occupational and business licenses
• Personal creditors
• Personal debtors
• Any gifts received
• Offices, positions or fiduciary relationships in businesses, nonprofit organizations or trusts
• Ownership or financial interests in businesses, trusts or investment funds
• Ownership of bonds
• Real property ownership
• Travel expenses
• Business financial interests

This extensive list must cover the preceding calendar year. The Statement is a public record and it is not required to be posted online but cities and towns may post the information on the municipal website. Due to privacy concerns, minor children do not have to be identified by name on the Statement and the law does not require the disclosure of any information that is privileged by law. A.R.S. § 18-444(C). The Statement for city and town council members must be obtained from the city or town clerk.

Who Files the Statement and When is it Filed?

Public Officers – Annual Statements

State law requires cities and towns to adopt standards of financial disclosure consistent with the state standards and apply local rules to local public officers. A.R.S. § 38-545. A “local public officer” is a person holding an elective office of an incorporated city or town. A.R.S. § 38-541(6). Your city or town should have adopted a resolution with provisions consistent with the state’s requirements.

The deadline for filing is January 31 of each year and must include all the required information in the preceding calendar year.

Public officers whose final term expires less than 31 days into the immediately following calendar year may file the final Statement at the same time the officer filed the Statement for the last immediately preceding year. A.R.S. § 18-444(D). For example, a public officer whose term ends in mid-January 2020 does not have to file a Statement the following year in 2021 and instead files the final Statement in 2020. The Secretary of State’s Handbook states that the final Statement must cover the preceding calendar year through the last day in office. For public officers who are appointed, the Statement must be filed within 60 days of appointment and cover the 12-month period ending with the last full month prior to the date of taking office. The Secretary of State has provided guidance that if the public officer was appointed in January, only one Statement is required because both the previous 12-month and annual reporting obligations will be reported.

Candidates – Nomination Process

A candidate for public office is required to file a financial disclosure statement covering the preceding 12-month period and containing the same information on the annual Statement. A.R.S. § 38-543. This Statement is due by the nomination filing deadline, which is 120 days prior to the election date and the clerk may refuse the nomination paperwork if a candidate fails to file the Statement. A.R.S. § 16-311(I).

The Statement is required for all public officers and candidates. If an incumbent is running for another term, the person will file two Statements within the year – the annual Statement and the candidate Statement.

Where is the Statement filed?

Mayor and council members must file the Statement with the city or town clerk. The Statement is prescribed by the Secretary of State and it is a fillable pdf that may be emailed to the municipal clerk if the officer chooses to deliver it electronically. A.R.S. § 18-444(F). There is no requirement for the Statements to be posted online but many jurisdictions make them available on the city or town website.

Consequences of Failure to File

The penalty for failure to file can be severe. If a local public officer or candidate violates the law, the person is subject to a civil penalty of $50 for each day of noncompliance (maximum of $500). A.R.S. § 38-544. However, if a local public officer or candidate knowingly fails to file a financial disclosure statement, knowingly files an incomplete financial disclosure statement, or knowingly files a false financial disclosure statement, the officer or candidate is guilty of a Class 1 misdemeanor. A.R.S. § 38-544. The clerk may refer the failure to file the Statement or an incomplete filing to the city or town attorney for enforcement.

Conclusion

While cities and towns are encouraged to provide notifications to the officers about the annual Statement, the responsibility to file is borne by the public officer. Talk to your clerk or attorney to obtain a copy of your resolution establishing the filing requirements and the Statement itself, which is prescribed by the State and available from your clerk. The Secretary of State’s Office publishes a Guide that explains the categories required to be reported to assist officers and candidates with their reporting requirements.