Annual Reports: A Town’s Year in Review

By Kimberly A. Hallquist

The annual report is as much of a town meeting tradition as the moderator’s gavel, the old wooden ballot box and the rows of chairs facing the moderator’s podium. Prominently depicted in the 1942 Norman Rockwell painting Freedom of Speech, the annual report plays an important role before, during and after the annual town meeting. Making the reports available before the meeting allows voters to familiarize themselves with the financial status of the town and the noteworthy happenings of the past year as described in the various reports of town officers. During the meeting, voters use their report to support their positions, or, in towns that include the warrant, to follow along as each warrant article comes to the floor for debate and then to record the vote on its pages. After the meeting, the annual report serves as an important historical document on the town.

Times have changed since Norman Rockwell famously painted a citizen, his rolled up annual report sticking out of his coat pocket, addressing his town meeting while his fellow town meeting attendees respectfully give their attention. Today we have additional modes of communication, like websites and community television channels, as well as different modes of town meeting like SB 2. Following are some of the issues that may be faced by today’s town officials with the responsibility to prepare the annual report.

Q. Can we save money by having the annual report available on our website or e-mail it on request, instead of printing hundreds of the reports?

A. While it is certainly possible to have the annual report available online for the convenience of voters, RSA 41:14 requires the reports of the selectmen and other town officers to be “published in pamphlet form at the expense of the town…." This suggests that, at least for now, the town must publish its annual report in paper form to be given to voters who request a copy.

Q. Are the selectmen required to mail the reports to each voter?

A. No, there is no statutory requirement to mail the reports or to otherwise deliver them, only that they are available to voters at least seven days before the annual meeting. Towns make various arrangements to get the reports into the hands of voters, including mailing, leaving copies at local stores, leaving copies in town offices where voters will likely see them and pick them up, as well as having a supply available at the annual meeting.

Q. How about the size of the report, pictures and color?

A. These are decisions left to the town based on economics and local preferences. Many towns have moved away from the traditional 5.5" x 8.5" size to a larger report because of lower printing costs for the standard 8.5" x 11" paper, and the ability to use a larger font size, making the reports easier to read. Many towns also now include pictures as a way to make the reports more interesting and also to memorialize special events and people.

Q. What must be included in the annual report?

A. Unfortunately, no one statute lists the items that must be included in the annual report. See the Annual Report Booklet for a list of items that, while not necessarily exhaustive, should serve as a guide to preparing an annual report that meets the requirements of the various statutes.

Q. Is it possible to add to the list of required information?

A. Yes, and many communities do include additional information in order to present a more comprehensive picture of the status of the community. Offering expanded information makes the annual report more interesting, and thereby more likely to be read by the voters. Additional information also increases the historical value of the report. See the Annual Report Booklet for a list of additional items.

Q. What exactly should be included in the selectmen’s report?

A. The statute says simply “[a]t the close of each fiscal year the selectmen shall make a report to the town, giving a particular account of all their financial transactions during the year, and of the financial condition of the town at the close of the year, including a schedule of all its assets and liabilities." RSA 41:13. In addition to the various financial reports found throughout the annual report, the selectmen include a report that reviews the major accomplishments of the year, the challenges facing the town, and any other noteworthy information on town business.

Q. Can reports include information suggesting that voters vote a particular way on a warrant article?

A. What selectmen, department heads and other town officials can, and can’t, say in their written yearly reports has been the subject of much debate. In the case of Epping Residents for Principled Government, Inc. v. Epping School District, No. 05-E-0094, (Rockingham County Superior Court, June 15, 2005) a citizens group took issue with both the school board and board of selectmen for, among other things, comments made by town officials in support of warrant articles. Specifically, the police chief urged voters to support his request for additions to the police force, giving his opinion that current staffing levels would not be adequate to allow the department to accomplish its mission. The superior court refused to grant the relief requested by the plaintiffs, ruling that the statements made in the annual report were made by public officials on behalf of their respective public entities and were in furtherance of a public purpose, and thus did not violate the New Hampshire Constitution. Id. Moreover, the statements did not violate the U.S. Constitution because the U.S. Supreme Court has made clear that the government may spend public funds to endorse its own measures. Id. (citing Johanns v. Livestock Mktg. Ass’n, 544 U.S. 550 (2005)).

Although the Supreme Court in Residents for Principled Government, Inc. v. Epping School District, No. 2005-600 (October 6, 2006) upheld the superior court decision, it is of limited value because it was issued in an unpublished opinion, and thus cannot be cited for support. However, it is instructive in predicting how the court may treat comments made by local officials in support of measures on the warrant that are included in the annual report. When local officials are speaking on behalf of their public entity in furtherance of a public purpose, those comments will likely pass the constitutional test.

This case eventually made its way to federal court when the plaintiffs amended their complaint to include the town’s website. The selectmen refused to allow the group, Residents for Principled Government, Inc., a link from the town website to its own site. Sutliffe v. Epping School District, 584 F.3d 314 (2005). The plaintiffs argued that by allowing some groups to have links on the town website the selectmen created a public forum, and denying them a link would have to comply with the free speech requirements of the First Amendment. The U.S. Court of Appeals held that the decision by the selectmen to refuse to allow a link from the town’s website constituted government speech and thus was not subject to First Amendment scrutiny. Whether the government speech doctrine can be successfully applied to comments made by public officials in annual reports is not entirely clear given that the issue before the Court in Sutliffe concerned a website, and not an annual report. However, taken together, these cases are encouraging in support of the proposition that public officials can provide information in the town’s annual report that includes positions that favor measures that are put before the voters, when the information provided is in furtherance of a public purpose.

Q. Is there a statutory deadline for the annual report?

A. Yes. RSA 41:14 provides that the annual report must be available to voters at least seven days prior to the annual meeting. Considering all of the year-end information that must be gathered, as well as the proposed budget, and the time required for printing the reports, meeting this deadline can sometimes be tough. Office staff must often pressure local officials who are required to include reports to submit their reports in a timely manner, while gathering all of the required information to be typed into the format required by the printer. The cooperation of all local officials with responsibilities to submit reports for inclusion in the annual report is essential to meet the statutory deadline.

Q. What can we do if the printer is late getting our reports printed?

A. Even with the most meticulous planning, glitches can happen at the printer that result in a delay of the delivery of the annual reports. In the event that the delay means that the commercially printed reports will not be available by the statutory deadline of seven days prior to the annual meeting, one possible remedy is to photocopy a few of the reports and have the photocopies ready should a voter request an annual report before the booklet version is delivered by the printer.

Q. What is the retention requirement for annual reports?

A. Annual reports must be retained permanently. RSA 33-A:3-a, VII. As valuable historical documents, it is also helpful to have copies in the town library and other local libraries that may want to include annual reports in their collections. Also, towns are required by law to submit two copies of each annual report to the State Library. RSA 41:22.

Kimberly Hallquist is staff attorney with the New Hampshire Local Government Center's Legal Services and Government Affairs Department. For more information on this and other topics of interest to local officials, LGC's legal services attorneys can be reached Monday through Friday from 8:30 a.m. to 4:30 p.m. by calling 800.852.3358, ext. 384.