October 12, 1977 

Honorable Ben 2. Grant Opinion No. H-1070 

Chairman, Judiciary Committee 

Texas House of Representatives Re: Validity of financial 

'P. 0. Box 2910 disclosure ordinance applyAustin, Texas 78769 ing to officials and candidates in a home rule city. 

Dear Chairman Grant: 

You have submitted to us a proposed financial disclosure 

ordinance and asked whether it would, if enacted by a home 

rule city, conform to various provisions of state and federal 

law. The proposed ordinance would require the mayor, city 

council members, the city manager and other specified high 

ranking city officials and candidates for city office to file 

an annual statement reflecting the official's financial status 

and financial activity during the reporting period. The financial statement would include a list of all sources of income over $1,000 received by the official or family members, 

identification of all business entities in which the official 

is significantly interested and certain customers of that 

entity, a listing of real property owned within the city, a 

list of all debts owed or notes held of over $10,000, a list 

of certain gifts received, identification of any financial 

interest in or transaction with a city franchise holder, and 

a portion of the official's income tax return. 

We have recently considered the authority of a home rule 

city to require its officials to file a financial disclosure 

statement as a condition of holding office. Attorney General 

Opinion H-969 (1977) concluded that a home rule city is authorized to require such disclosure, so long as the disclosure 

ordinance is not inconsistent with the city's charter or state 

law. 

You ask if the proposed ordinance would conflict with 

state law because its disclosure provisions are more extensive than those of article 6252-9b, V.T.C.S. Article 6252-9b 

applies only to state officers and employees, and we do not 

believe it either explicitly or implicitly restricts the 
Honorable Ben 2. Grant - Page 2 (H-1070) 

power of a home rule city to enact financial disclosure requirements applicable to city officials. We perceive no 

conflict between article 6252-933 and the proposed ordinance. 

You ask if the proposed ordinance would unconstitutionally 

burden the right of free speech and expression or the right to 

seek office. YOU also question whether the ordinance might invade constitutionally protected zones of privacy, constitute an 

unreasonable search and seizure, or violate the prohibition 

against compelled self-incrimination. Similar constitutional 

challenges have been considered by the courts of various states. 

The case traditionally cited by those who would find financial 

disclosure laws unconstitutional is City of Carmel-by-the-Sea v. 

?f"f;g;l$;;,;.;z X2,;",;1. 1970). In Attorney General Opinion 

In light of . . . [Stein v. Howlett, 289 

N.E.Zd 409 (111. 1972), appeal dismissed 

for want of substantial federal question, 

412 U.S. 925 (197311, we now believe the 

Carmel-by-the Sea opinion overbalanced 

the scales in favor of private rights, 

and that a different shift in the balance 

will be found by the Texas Supreme Court 

and the United States Supreme Court when 

such questions reach them. 

Id. at 2. Our belief in this regard has been reinforced by a 

Gtual barrage of recent court decisions upholding financial disclosure requirements in the face of constitutional challenges 

similar to-those you suggest. Illinois State Employees Ass'n V. 

Walker, 315 N.E.2d 9 (Ill.), cert. denied, 419 s 1058 (1974). 

Montgomery County v. Walsh, 336 A.2d 97 (Md. 19;:); appeal dis-‘ 

missed for want of substantial federal question, 424 U.S. 901 

(1976); Chamberlin v. Missouri Elections Comm'n, 540 S.W.2d 876 

(MO. 1976); Kenny v. Byrne, 365 2d 211 (Super. Ct. App. Div. 

19761, cert. (N.J. 1977) ; Lehrhaupt v. 

__- _..-_-.-- ..- 

Fritz v. Gorton, 5ficp.2d iii (Wash:), appeal dismissed for want 

of substantial federal question, 417 U.S. 902 (1974); In re 

iF?? 

235 N.W.2d 409 (Wise. 1976). Even the Supreme Court of 

a i ornia has distinguished its previous Carmel-by-the-Sea 

decision in upholding a new financial disclosure law. County 

of Nevada v. MacMillen, 522 P.2d 1345 (Cal. 1974). We have 

examined the nrooosed ordinance in light of these decisions, and 

we do not belle& the courts would find it to violate any of 

the constitutional provisions about which you inquire. 

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Honorable Ben 8. Grant - Page 3 (H-1070) 

You ask if requiring a city officer or candidate for city 

office to file certain portions of his income tax return with 

the city secretary would violate either 26 U.S.C, 5 7213(a) (2) 

or (a) (3), or section 7 of the Privacy Act of 1974, 88 Stat. 

1896, 1909, 5 U.S.C.A. 9 552a note. Section 7213(a) (2) and 

(a) (3) of title 26 of the United States Code (the Internal 

Revenue Code) makes it unlawful for any state officer to disclose 

"any return or return information . . . acquired by him or 

another person under section 6103(d) or (1) (61." Section 

6103(d) concerns information disclosed by-the Internal Revenue 

Service to state officers charged with the administration of 

state tax laws. Section 6103(l) (6) relates to information 

disclosed by the I.R.S. to chiTd support enforcement agencies. 

These provisions do not appear to relate to any state or local 

requirement that might be enacted requiring public officers or 

candidates to reveal their individual tax returns. Whether 

the proposed ordinance should be enacted is, of course, a 

question of policy to be determined by the policy makers. We 

do not believe the proposed ordinance, if enacted, would violate 

these provisions of the Internal Revenue Code or subject the 

city secretary to penalties thereunder for disclosure of any 

information subsequently released by him. We have also examined 

26 U.S.C. 9 6103(p)(4) and (p) (8). Those provisions concern the 

security of information obtained by state authorities charged 

with administering state tax collections, and do not appear to 

relate to the type of disclosure involved here. 

Section 7 of the Privacy Act of 1974, about which you 

specifically inquire, addresses the disclosure of social security 

numbers. We note that the proposed ordinance requires only the 

filing of designated portions of the city official's 'or candidate's income tax return. Under the proposal, the official or 

candidate would need file only those portions of his return 

showing occupation, gross income, net income, and income from 

investments. The taxpayer's social security number need not 

be disclosed under the proposed ordinance. 

Protection Study Commission, 

See wm;f;;icY 

Personal Privacy in an 

Society,at 613 (1977). 

Section 43-3 (a) (8) of the proposed ordinance would require a public official or candidate to include the following 

information in his financial disclosure statement: 

[Plrovided such information is not privileged by law, if the person filing the 

statement is the owner of five (5) per 

cent or more of any corporation, trust, 

partnership, firm or business association, 

such person shall list all customers of 

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Honorable Ben 2. Grant - Page 4 (H-1070) 

such entities with whom five thousand 

dollars ($5,000.00) or more business 

was transacted during the reporting 

period, stating the dollar value of 

business transacted. . . . 

You ask whether an attorney or a physician could legally or 

ethically disclose the names of clients or patients and compensation received from them as required by this provision. 

The identity of a client and matters involving the receipt of 

fees from a client are not normally within the scope of the 

attorney-client privilege, 521 F.2d 179 (10th 

Cir.), cert. denied, 423 U.S ; United States v. 

Ponder, 475 F.2d 37 (5th Cir. 1973). While certain medical 

records may be made confidential either by statute, see V.T.C.S. 

arts. 695j-1, S 10 (names of persons receiving publicssistance); 4445c, S 4 (notice of laboratory information indicating 

venereal disease); 5547-87 (patients of mental hospitals); 

5547-202, S 2.23 (identity of persons studied in connection 

with mental disorders), or ,by a constitutional or common law 

right of privacy, see Industrial Foundation of the South v. 

Texas Industrial Axdent Board, 540 S.W.2d 668 (Tex. 1976), 

cert. denied, U.S. (March 21, 1977) (No. 76-840), 

we do not believe a physicianwould in every case be legally 

or ethically barred from revealing the name-and dollar amount 

of his sources of professional income over $5,000. See Biggers 

v. State, 358 S.W.2d 188, 191 (Tex. Civ. App. -- Dal=), writ 

ref'd n.r.e., 360 S.W.Zd 516 (Tex. 1962) (the doctrine of sileged communication does not extend to physician and patient). 

See generally Annot., 20 A.L.R. 3d 1109 (1968). But cf. Texas 

Employers' Ins. Ass'n v. Marshall, 436 S.W.2d 617(Tex.Cr 

APP. -- Eastland 1969, writ ref'd n.r.e.) (information obtained 

by physician doing examination on behalf of Social Security 

Administration protected from disclosure by federal law). 

The Missouri Supreme Court has expressly upheld such a 

reporting requirement for attorneys, finding that "the attorneyclient privilege generally will remain inviolate." Chamberlin 

v. Missouri Elections Comm'n, 540 S.W.Zd 876, 880 (MO. 1976). 

In those cases where disclosure might present a legal or ethical problem, however, the proposed ordinance has left room for 

evaluation of any claim of privilege by requiring disclosure 

only "provided such information is not privileged by law." Any 

assertion of privilege must be evaluated on a case-by-case 

basis, and will require a "particularized concern with the facts 

of each case." In-re Grand-Jury Proceedings, 517 F.2d 667, 671 

n.2 (5th Cir. 1975). 

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Honorable Ben 2. Grant - Page 5 (H-1070) 

could 

Finally, we must consider your inquiry whether a city 

exempt from public inspection the income tax returns or 

customer lists filed in the disclosure statements, or could 

exempt from public inspection the entire financial statement 

of city employees such as assistant city managers and department heads. The disclosure of information collected, assembled 

or maintained by governmental bodies is generally controlled 

by the Texas Open Records Act, V.T.C.S. art 6252-17a. Section 

3 of that Act requires that all such information shall be 

available to the public unless specifically excepted therein, 

As previously discussed, we do not believe the portions of 

income tax returns filed with the city secretary would be 

"deemed confidential by law,” and thus generally excepted 

from public disclosures by section 3(a) (1) of the Open Records 

Act. The release of portions of the returns would not 

generally constitute an "unwarranted invasion of privacy," 

as provided by the exception to disclosure in section 3(a) (2) 

of the Open Records Act. See Heathman v. United States District 

Court, 503 F.2d 1032 (9th G. 1974). While the list of customers required of an attorney or physician might be confidential by law in some cases, those lists would not always be 

excepted from disclosure by section 3(a) (1) or 3(a)(2). The 

release of a list of an official's or candidate's customers 

might in some cases be excepted from disclosure under sections 

3(a) (4) or 3(a) (10) of the Open Records Act, but such a situation 

must be addressed on a case-by-case basis. 

Decision No. 89 (1975). 

See Open Recorda 

We believe that any-tempt to exea&t 

entirely the portions of income tax returns or customer lists 

included in the proposed financial disclosure statement weuld 

violate the Texas Open Records Act. 

Information contained in the financial disclosure statements of city employees such as assistant city manager% and 

department heads would also be subject to the Open Uecordr, 

Act. Such information might, of course, be excepted from 

disclo,sure in individual cases under one or more of the provisions of section 3 of that Act. We believe, howwer, thag 

any attempt to make the information contained in the proposed 

financial disclosure statements per se exempt from public 

disclosure would run afoul of the ODE Records Act and be of 

no effect. See Industrial Foundation of the~South v. Texas 

Industrial AcTdent Hoard, supra at 677. 

SUMMARY 

A proposed financial disclosure ordinance 

would not, if enacted by a home rule city, 

conflict with state law or violate the 

constitutional rights of city officials 

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Honorable 

APPROVED: 

Ben 2. Grant - Page 6 (H-1070) 

and candidates required to file financial 

statements. Requiring the attachment of 

portions of an official's or candidate's 

income tax return to the financial statement would ndt violate federal law. An 

attorney or physician may in some instances 

reveal large fees received from clients 

or patients without violating ethical or 

legal obligations. Public access to financial disclosure statements filed with the 

city secretary would be controlled by the 

Texas Open Records Act. Whether such an 

ordinance as has been suggested should be 

enacted is a question of policy which cannot be addressed in the context of an attorney general opinion. 

DAVID M. KENDALL, First Assistant 

C. ROBERT HEATH, Chairman 

Opinion Committee 

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