Judicial Council of California Volume 4, Issue 2 Office of Governmental Affairs March 2002 T HE CAPITOL CONNECTION INSIDE THIS ISSUE: F ACILITIES, JUDICIAL RETIREMENT HIGHLIGHT J UDICIAL COUNCIL’ S LEGISLATIVE PROPOSALS Tax Law Conformity 2 The Judicial Council, The council is co-sponsoring legislation Anti-terrorism Bills 3 through its Office of Gov- with the California Judges Association ernmental Affairs, develops (CJA) to conform certain retirement Ripped from 4 legislative proposals for benefits for judges with those of other the Headlines introduction as council- public employees. AB 2879 (Strom- Primary Election 6,7 sponsored bills each year. Martin) gives judges the same ability as With the February 22 deadline to intro- other state employees to select a New Committee Chairs 8 duce bills having passed, now is a good “designated beneficiary” rather than lim- time to highlight the council’s sponsored iting the selection to “surviving spouse.” legislation program for 2002. Also, the bill eliminates the minimum age for service retirement requirement for Among the key issues the council is ad- judges with 20 years in service who die dressing through proposed legislation is while in office. This provision also mir- court facilities. SB 1732 (Escutia) has LEGISLATIVE rors the existing practice for other state been introduced as a “spot bill.” Co- CALENDAR: employees. Last, AB 2879 conforms the sponsored with the California State Asso- compensation of a retired judge assigned ciation of Counties, this bill is intended to Spring recess begins upon to serve on a court of appeal or the Su- implement the recommendations of the adjournment preme Court to that of a retired judge as- Task Force on Court Facilities regarding March 21 signed to serve on a trial court. the transfer of responsibility for trial court Legislature reconvenes facilities from the counties to the state. Retired judges will also be interested in April 1 This proposal, following previous legisla- AB 2065 (Nakano), also co-sponsored tion dealing with funding of trial court with CJA, which extends to retired judges Last day for policy commit- operations and the governance of court the confidentiality of home addresses in tees to report same house non- employees, would complete the full tran- records of the Department of Motor Ve- sition of trial court responsibility to the fiscal bills to fiscal committees (Continued on page 3) state. April 26 LEGISLATURE TAKES AIM AT PRIVATE ARBITRATION rivate dispute resolution and those who provide it are that explored several serious issues affecting the fair- P again the subject of legislation that is intended to en- ness of the mandatory arbitration process. sure fairness in private arbitration settings. On Monday, Some of the proposals specifically address the impact March 11, Assembly members Ellen Corbett (D-San Lean- that a prospective career in private arbitration has on dro) and Darrell Steinberg (D-Sacramento), the current sitting judges. Recent press reports have alleged that and outgoing chairs of the Assembly Judiciary Committee, judges looking to move into private judging may seek announced the introduction of a package of bills that re- assignments that would make them more attractive to sponds to perceptions that private arbitration processes are arbitration firms. It was argued that the active recruit- stacked against consumers. This announcement follows an informational hearing held by the committee in February (Continued on page 2) The Capitol Connection Page 2 P RIVATE ARBITRATION (Continued from page 1) The legislation would also prohibit providers from engag- ment of sitting judges could even affect the outcomes of ing in any business with a party, including investing, other cases, especially those in which arbitration clauses are at than the direct provision of dispute resolution services. issue. To address this matter, the proposed legislation In an effort to reduce the financial hardship that some con- would prohibit arbitration firms from recruiting sitting sumers may face in deciding whether to pursue a case judges and impose a minimum time period that a judge through mandatory arbitration, the package announced by must wait after leaving the bench before going to work as the committee would require a waiver of provider fees in a private arbitrator. certain circumstances and would prohibit arbitration rules The perception of conflicts of interest also arises because that require the loser to pay the winner’s share of the arbi- companies who impose mandatory arbitration on their cus- tration fees. The proponents state that consumers would tomers are repeat users of private arbitration firms. Critics also benefit from clarification that provider organizations contend that arbitrators and the organizations that employ are not entitled to absolute immunity for any wrongdoing them have a financial interest in keeping their corporate in mandatory consumer arbitrations. clients satisfied. Also, arbitration organizations often have The Judicial Council will review these proposals after spe- business relationships with clients for whom they provide cific language is amended into existing committee bills. arbitration services, such as consulting contracts. The pro- The Capitol Connection will continue to report on these posals include provisions to prohibit companies from des- bills as they move through the Legislature. ignating an exclusive arbitration provider in consumer contracts and to regulate how providers solicit business. LEGISLATURE SEEKS CONFORMITY WITH FEDERAL TAX LAW ast year’s federal Economic Growth and Tax Relief they potentially face increased state tax liability, as contri- L Reconciliation Act (EGTRRA) made a number of bution amounts that are non-deductible under state tax law changes regarding the amounts that can be contributed to- are included as taxable income. Even worse, an entire re- wards IRAs, 401(k) retirement plans, and 457 deferred tirement account could be disqualified for state income tax compensation programs. For the 2002 tax year, under fed- purposes. And this is on top of increased recordkeeping eral law, the maximum amount that can be contributed to burdens. 401(k) and 457 plans is $11,000 per year. The maximum State lawmakers have acknowledged the need for legisla- increases every year up to an annual limit of $15,000 for tive action so that California residents can enjoy the full the 2006 tax year. In addition, certain 457 plan partici- range of the federal tax relief measure and several have in- pants within three years of retirement may contribute even troduced bills to achieve conformity, all of which would more than $11,000 as a catch-up provision. be retroactively effective beginning January 1, 2002. Many Americans welcome these changes as a way to re- These include SB 657 by Sen. Jack Scott (D-Altadena), duce their taxable income and increase their retirement in- which has cleared the Senate and is now in the Assembly; come. In California, however, the initial delight felt by AB 1743 by Assembly Member John Campbell (R-Irvine), many has given way to confusion as it has become clear which has not yet been heard in committee; and AB 1122 that benefits offered by the new federal rules cannot be by Assembly Member Ellen Corbett (D-San Leandro) fully realized in California until appropriate changes are which is in the Senate but still must return to the Assem- made to the state’s tax laws. While some states’ tax laws bly because it has been amended in the Senate. automatically track the federal laws that are in effect in Another bill, Assembly Member Corbett’s AB 1744 spe- any given year, California’s laws are based on the federal cifically addresses issues regarding soon-to-retire public laws in effect on January 1, 1998 and cannot be updated employees by offering a limited opportunity for 457 plan without legislative action. participants who retire after January 1, 2002 and before Many California residents have decided to increase their conforming legislation is enacted to take advantage of contributions to the various retirement plans with the ex- some election options of EGTRRA. AB 1744 has passed pectation that state lawmakers will pass legislation that the Assembly Revenue and Taxation Committee and will conforms California’s Revenue and Taxation Code to the next be considered by the Appropriations Committee. new federal rules. Without the conforming legislation, The Capitol Connection Page 3 L EGISLATURE RESPONDS TO TERRORIST ATTACKS he impact of September 11 continues to be felt from judges for wiretaps in emergency situations. AB 74 T throughout the country. For their part, legislators in (Washington) would, among other things, permit a pre- California have responded by introducing more than 100 siding judge to designate a sequence of judges to be bills this year to address a variety of issues that the state available to hear applications for wiretap orders. faces in the aftermath. Changes to civil law are also contemplated as a way of The bills cover a wide range of topics, from general state- ensuring local communities are protected from terrorism. level preparedness such as SB 1350 (Burton and McPher- AB 2578 (Alquist) would make neighborhood associa- son), which would require the Office of Emergency Ser- tions and community groups engaged in, or training for, vices to develop specified training relative to terrorism emergency preparedness, emergency response, emer- awareness and response, to more specific responses, such gency relief or support activity