Legislative Session number- 84

Bill Name: SF2206

2E Relating to financing and operation of state and local government

ARTICLE 1
- INDIVIDUAL INCOME TAX

Expanding the priority list for allocation by the
commissioner of finance of positive unrestricted budgetary general fund balances
to amounts necessary to eliminate accelerated payments of certain June tax
liabilities and to provide for the payment of interest on claims for refund of
sales taxes paid on exempt capital equipment and for installment payments of
local government aids (LGA) and taconite aid reimbursements; expanding the
definition of resident trust for income tax purposes; eliminating the addition
of certain standard deduction excesses to federal taxable income; temporarily
increasing the income tax rate on income over a certain amount and adjusting the
brackets for the lower tax rates, providing for continuing inflation adjustments
of the brackets; providing a dairy investment credit against the income tax;
eliminating the exclusion of certain wages from allocation to the state of
income not derived from a trade or business

ARTICLE 2 - CORPORATE FRANCHISE
TAX

Modifying the definition of foreign operating corporation; eliminating the
subtraction for royalties or fees received from foreign corporations; excluding
certain intangible income from the deemed dividend deduction for foreign
operating corporation income under the unitary business principle

ARTICLE 3 -
SALES TAX

Exempting certain meals and drinks purchased for and served
exclusively to certain children attending child care or early childhood
education programs; modifying the sales tax exemption for certain medicines and
medical devices; excluding event souvenir clothing from the sales tax exemption
on clothing, defining event souvenir clothing; changing the sales tax exemption
for energy efficient products to an exemption for solar energy products and
making permanent the exemption for certain energy efficient products; clarifying
the sales tax exemption for medical equipment and excluding nonprescription
drugs from the definition of medical supplies for exemption purposes; clarifying
the sales tax exemption for chair lifts, ramps and elevators; exempting from the
sales tax materials and supplies used in the construction of certain
hydroelectric generating facilities; restricting the use of revenues from the
local sales tax in the city of St. Paul; authorizing and providing for Mower
county and the city of Worthington to impose local sales taxes for certain
purposes

ARTICLE 4 - PROPERTY TAX AND AIDS

Modifying the tax base used to
calculate school district debt service levies; defining debt service net tax
capacity, requiring use to compute debt service levy limits and aid; requiring
the commissioner of revenue to recompute debt service net tax capacity amounts
using an alterative sales ratio comparing the sale price to the estimated market
value of the property; gradually reducing the county match requirement for the
allocation of chemical dependency treatment funds; clarifying the property tax
exemption for personal property of certain hydroelectric generation facilities
and exempting from the tax personal property of certain combustion turbine
electric facilities; modifying and clarifying the market value exclusion for
electric power generation facility efficiency; setting the state general tax
rate for commercial industrial property; modifying certain proposed property tax
(truth in taxation) provisions, providing for inclusion of certain supplemental
information on the impact of state aid increases or decreases; modifying the
levy limit basis for housing and redevelopment authorities (HRA); extending the
metropolitan fiscal disparities (revenue distribution) repayment schedule for
the city of Bloomington; modifying the definition of city revenue need for
certain cities for local government aid purposes and increasing the city aid
base for certain cities; annually allocating certain amounts of county program
aid and providing a court aid adjustment to Anoka and Washington counties to pay
postretirement costs of health insurance premiums for court employees and
reducing the general fund appropriation for the district courts accordingly;
eliminating taconite aids from the city LGA formula and modifying certain city
aid distribution limits; codifying and providing for county criminal justice
aid; increasing the appropriation limits for payment of city and county LGA;
increasing the maximum levy limit of certain cities and towns in Itasca county
for appropriations to the Lakeview cemetery association; providing for a sewer
district pilot project in Crow Wing county; authorizing the Dakota county
regional railroad authority to establish a bus rapid transit (BRT) system
located within the Cedar avenue transitway corridor; requiring the commissioner
to make certain payments to the city of White Bear Lake; appropriating money to
the commissioner of human services for the consolidated chemical dependency
treatment fund

ARTICLE 5 - INTERNATIONAL ECONOMIC DEVELOPMENT ZONE

Providing
for designation of foreign trade zones as international economic development
zones by certain foreign trade zone authorities under certain conditions,
specifying certain powers of the authorities; requiring and providing for
creation of regional distribution center development plans and preparation of a
business plan; providing certain tax incentives; creating a jobs credit for
qualified businesses and appropriating money to the commissioner of revenue for
the credit; requiring and providing for repayment of certain tax incentives upon
ceasing operation in the zones; authorizing the governor to designate the zones
as job opportunity building zones (JOBZ) under certain conditions; requiring the
commissioner of employment and economic development (DEED) to study and analyze
the benefit to the state of additional international economic development zones
and report the results to the legislature by a certain date

ARTICLE 6 -
MISCELLANEOUS

Clarifying the effect of failure to receive the taxpayers rights
statement and the application of the property tax exemption for job opportunity
building zone (JOBZ) property improvements to certain agricultural processing
zone property; authorizing cities, towns and counties to assess affected
property owners for agreed to costs for electric utilities, telecommunications
carriers or cable system operators to bury or alter new or existing distribution
systems within public rights-of-way exceeding design and construction standards
upon petition by the property owners; providing a temporary exception to
competitive bidding requirements of housing and redevelopment authorities (HRA)
for construction of certain public transit facilities financed with certain bond
proceeds or federal subsidies; defining fiscal and economic implications of the
proposed tax increment financing district for TIF financing plan development
purposes; defining tax and fee for statutory interpretation purposes; extending
the temporary petrofund fee exemption for commercial airlines headquartered in
the state; authorizing the city of Rosemount to spend increments from a certain
TIF district to acquire certain property acquired by the department of
transportation (DOT) or Dakota county in connection with the realignment of
trunk highway #3; appropriating money to the commissioner of revenue for grants
to nonprofit organizations providing volunteer income tax preparation assistance
services to low income and disadvantaged residents, to the commissioner of
employment and economic development (DEED) for distribution to the city of
Duluth for grants to enterprises for environmental cleanup of Lake Superior and
long term community health care and to the commissioner of finance for transfer
to the clean water legacy account and for buyback of certain school districts
aid payment shifts; providing for the payment of deferred maintenance aid to
school districts; appropriating money to the commissioner of education for
deferred maintenance aid and to the higher education services office (HESO) for
Rochester higher education program development

ARTICLE 7 - TAX SHELTER AND
VOLUNTARY COMPLIANCE INITIATIVES

Requiring and providing the commissioner of
revenue to develop and administer a tax shelter voluntary compliance initiative;
specifying eligibility requirements; providing for the registration of tax
shelters; specifying certain material advisors tax shelter or reportable
transaction reporting requirements; providing for assessment; imposing penalties
for registration or reporting failure

ARTICLE 8 - PROPERTY TAX FREEZE

"Truth
and Fairness in Taxation Act" (TAFTA) or "State/Local Fiscal Relations: Truth in
Taxation Act", recognizing the implications of addressing the state budget
deficit without increasing general tax rates by preventing local property tax
rate increases; freezing the benefit ratio used for city apportionment of levies
to rural service districts; prohibiting local government units from incurring
new debt by issuing obligations or entering into installment or lease purchase
contracts or agreements after a certain date, exceptions; imposing certain levy
limits for taxes payable in 2007 and subsequent years, providing exceptions for
debt service, annexation and school district statutory operating debt; freezing
local match requirements; suspending local salary or budget increase appeals
authority and proposed property tax notice (truth in taxation) and hearing
requirements; requiring levy reductions or adjustments under certain conditions;
prohibiting unfunded pension liabilities of local police and fire relief
associations from exceeding levies; requiring township boards of supervisors to
adjust levies before the freeze termination year, authorizing reduction of
expenditures to adjust for levy reductions; prohibiting local government units,
special taxing districts or state agencies from imposing new or increasing the
rates or amounts of existing fees; savings clause; providing for termination of
the freeze
(ra, ja)