1.1                          A bill for an act 
  1.2             relating to the financing and operation of government 
  1.3             in this state; providing a sales tax rebate; providing 
  1.4             property tax reform; making changes to income, 
  1.5             franchise, sales and use, property, motor vehicle 
  1.6             sales, motor vehicle registration, mortgage registry, 
  1.7             deed, motor fuels, cigarette and tobacco, liquor, 
  1.8             insurance premiums, lawful gambling, minerals, estate, 
  1.9             and special taxes; changing and allowing tax credits, 
  1.10            subtractions, and exemptions, including an income tax 
  1.11            subtraction for capital gains; providing a biomedical 
  1.12            innovation initiative; conforming with changes in 
  1.13            federal income tax provisions; providing for 
  1.14            allocation and apportionment of income; imposing a 
  1.15            state general tax levy on certain property; providing 
  1.16            a property tax homestead credit; imposing general levy 
  1.17            limits; providing for property tax levy reverse 
  1.18            referenda; changing property tax valuation, 
  1.19            assessment, levy, classification, homestead, credit, 
  1.20            aid, exemption, deferral, review, appeal, abatement, 
  1.21            and distribution provisions; abolishing certain 
  1.22            property tax levies for transit and establishing a 
  1.23            transit fund; providing and modifying certain aids to 
  1.24            local units of government; changing levy authority; 
  1.25            providing for certain payments in lieu of taxes; 
  1.26            reducing rates on lawful gambling taxes; reducing 
  1.27            rates on solid waste management taxes; providing for 
  1.28            state takeover of certain costs of district court 
  1.29            administration and out-of-home placement; providing 
  1.30            for uniform sales and use tax administration; 
  1.31            providing for taxation and incentive payments on 
  1.32            forest lands; providing for electronic filing and 
  1.33            payment of taxes; changing procedures for disposition 
  1.34            of seized contraband; abolishing certain health care 
  1.35            provider taxes and health plan premium taxes; 
  1.36            providing for deposit of certain tobacco settlement 
  1.37            and cigarette tax proceeds to the health care access 
  1.38            fund; changing tax increment financing provisions and 
  1.39            authorizing certain grants, duration extensions, and 
  1.40            expenditures; requiring registration of tax increment 
  1.41            financing consultants; creating a health care access 
  1.42            fund reserve; reducing the tax on life insurance 
  1.43            premiums; increasing property tax refunds and changing 
  1.44            calculation of rent constituting property taxes for 
  1.45            purposes of property tax refunds; reducing taconite 
  1.46            production tax and occupation tax rates; providing 
  2.1             special authority to certain political subdivisions; 
  2.2             authorizing special taxing districts; changing and 
  2.3             clarifying tax administration, collection, 
  2.4             enforcement, interest, and penalty provisions; 
  2.5             changing revenue recapture provisions; authorizing 
  2.6             abatements and waivers of fees and certain taxes in 
  2.7             disaster areas; changing and imposing fees; changing 
  2.8             debt collection provisions for student loans; 
  2.9             providing certain duties and powers to the 
  2.10            commissioner of revenue; authorizing publication of 
  2.11            names of certain delinquent taxpayers; authorizing 
  2.12            border city allocations; changing provisions relating 
  2.13            to tax-forfeited lands and providing for a 
  2.14            tax-forfeited lands transfer; defining terms; 
  2.15            classifying data; establishing a legislative 
  2.16            commission; requiring studies; imposing a criminal 
  2.17            penalty; appropriating money; amending Minnesota 
  2.18            Statutes 2000, sections 16D.08, subdivision 2; 
  2.19            62J.041, subdivision 1; 62Q.095, subdivision 6; 
  2.20            69.021, subdivision 5; 84.922, by adding a 
  2.21            subdivision; 88.49, subdivisions 5, 9a; 88.491, 
  2.22            subdivision 2; 97A.065, subdivision 2; 103D.905, 
  2.23            subdivision 3; 115B.24, subdivision 2; 123B.55; 
  2.24            126C.01, subdivision 3; 126C.13, subdivision 4; 
  2.25            126C.17, by adding a subdivision; 144.3831, 
  2.26            subdivision 2; 168.013, subdivision 1a; 174.24, 
  2.27            subdivision 3b; 179A.101, subdivision 1; 179A.102, 
  2.28            subdivision 6; 179A.103, subdivision 1; 214.16, 
  2.29            subdivisions 2, 3; 239.101, subdivision 3; 260.765, by 
  2.30            adding a subdivision; 260.771, by adding a 
  2.31            subdivision; 270.06; 270.07, subdivision 3; 270.11, by 
  2.32            adding a subdivision; 270.12, subdivision 2; 270.271, 
  2.33            subdivisions 1, 3; 270.60, subdivision 4, by adding a 
  2.34            subdivision; 270.70, subdivision 13; 270.73, 
  2.35            subdivision 1; 270.771; 270.78; 270A.03, subdivisions 
  2.36            5, 7; 270A.11; 270B.01, subdivision 8; 270B.02, 
  2.37            subdivisions 2, 3; 270B.03, subdivision 6; 270B.14, 
  2.38            subdivision 1; 271.01, subdivision 5; 271.21, 
  2.39            subdivision 2; 272.02, subdivisions 9, 10, 22, by 
  2.40            adding subdivisions; 273.061, subdivisions 1, 2, 8; 
  2.41            273.072, subdivision 1; 273.11, subdivisions 1a, 14, 
  2.42            by adding subdivisions; 273.1104, subdivision 2; 
  2.43            273.111, subdivision 4; 273.121; 273.124, subdivisions 
  2.44            8, 13, 14; 273.13, subdivisions 22, 23, 24, 25, 31; 
  2.45            273.1392; 273.1393; 273.1398, subdivisions 1a, 4a, by 
  2.46            adding subdivisions; 274.01, subdivision 1; 274.13, 
  2.47            subdivision 1; 275.02; 275.065, subdivisions 1, 3, 5a, 
  2.48            6, 8, by adding a subdivision; 275.066; 275.07, 
  2.49            subdivision 1; 275.16; 275.62, subdivision 1; 275.70, 
  2.50            subdivision 5, by adding subdivisions; 276.04, 
  2.51            subdivision 2; 276.11, subdivision 1; 276A.01, 
  2.52            subdivision 3; 276A.06, subdivision 3; 282.01, 
  2.53            subdivisions 1a, 1b; 282.04, subdivision 2; 287.035; 
  2.54            287.04; 287.08; 287.12; 287.13, by adding a 
  2.55            subdivision; 287.20, subdivisions 2, 9; 287.21, 
  2.56            subdivision 1; 287.28; 289A.02, subdivision 7, by 
  2.57            adding a subdivision; 289A.08, subdivision 16; 
  2.58            289A.12, subdivision 3; 289A.18, subdivision 4; 
  2.59            289A.20, subdivisions 1, 2, 4; 289A.26, subdivision 
  2.60            2a; 289A.31, subdivision 7; 289A.50, subdivisions 2, 
  2.61            2a; 289A.60, subdivisions 7, 21; 290.01, subdivisions 
  2.62            7, 19, 19b, 19c, 19d, 22, 29, 31; 290.014, subdivision 
  2.63            5; 290.05, subdivision 1; 290.06, subdivisions 2c, 22; 
  2.64            290.067, subdivisions 1, 2, 2b; 290.0671, subdivisions 
  2.65            1, 1a, 7; 290.0674, subdivisions 1, 2; 290.0675, 
  2.66            subdivisions 1, 3; 290.068, subdivisions 1, 3, 4; 
  2.67            290.091, subdivisions 2, 3; 290.0921, subdivisions 1, 
  2.68            2, 3, 6; 290.0922, subdivision 2; 290.093; 290.095, 
  2.69            subdivision 2; 290.17, subdivisions 1, 4; 290.191, 
  2.70            subdivisions 2, 3, 5; 290.21, subdivision 4; 290.9725; 
  2.71            290A.03, subdivisions 6, 11, 12, 13, 15; 290A.04, 
  3.1             subdivisions 2, 2a, 4; 290A.15; 291.005, subdivision 
  3.2             1; 295.55, subdivision 4; 296A.15, subdivisions 1, 7; 
  3.3             296A.16, subdivision 2; 296A.21, subdivisions 1, 4; 
  3.4             296A.24, subdivisions 1, 2; 297A.01, subdivision 3; 
  3.5             297A.07, subdivision 3; 297A.25, subdivisions 3, 11, 
  3.6             28; 297A.61, subdivisions 2, 3, 4, 6, 7, 9, 10, 12, 
  3.7             14, 16, 17, 19, 22, 23, by adding subdivisions; 
  3.8             297A.62, subdivision 3; 297A.66, subdivisions 1, 3; 
  3.9             297A.67, subdivisions 2, 8, 23, 24, 25, by adding 
  3.10            subdivisions; 297A.68, subdivisions 2, 3, 5, 11, 13, 
  3.11            14, 18, 25, by adding subdivisions; 297A.69, 
  3.12            subdivision 2; 297A.70, subdivisions 1, 2, 3, 4, 7, 8, 
  3.13            10, 13, 14; 297A.71, subdivisions 3, 6, by adding 
  3.14            subdivisions; 297A.72, subdivision 1; 297A.75; 
  3.15            297A.77, subdivision 1; 297A.80; 297A.82, subdivision 
  3.16            3, by adding a subdivision; 297A.89, subdivision 1; 
  3.17            297A.90, subdivision 1; 297A.91; 297A.92, subdivision 
  3.18            2; 297A.94; 297A.99, subdivisions 7, 9, 11; 297B.03; 
  3.19            297B.09, subdivision 1; 297E.02, subdivisions 1, 4, 6; 
  3.20            297E.16, subdivisions 1, 2; 297F.09, subdivision 7; 
  3.21            297F.10, subdivision 1; 297F.16, subdivision 4; 
  3.22            297F.20, subdivision 3; 297F.21, subdivisions 1, 2, 3; 
  3.23            297G.09, subdivision 6; 297G.15, subdivision 4; 
  3.24            297G.16, subdivisions 5, 7; 297G.20, subdivisions 3, 
  3.25            4; 297H.02, subdivision 2; 297H.03, subdivision 2; 
  3.26            297H.04, subdivision 2, by adding a subdivision; 
  3.27            297H.05; 297H.13, by adding a subdivision; 297I.05, by 
  3.28            adding a subdivision; 297I.15, by adding a 
  3.29            subdivision; 297I.20; 297I.35, subdivision 2; 297I.40, 
  3.30            subdivisions 1, 2, 7; 297I.85, subdivision 7; 298.01, 
  3.31            subdivisions 3, 3a, 3b, 4, 4a, 4c; 298.225, 
  3.32            subdivision 1; 298.24, subdivision 1; 298.27; 298.28, 
  3.33            subdivisions 6, 9a; 298.2961, subdivision 2; 298.75, 
  3.34            subdivisions 1, 2, by adding a subdivision; 299D.03, 
  3.35            subdivision 5; 345.41; 345.42, by adding a 
  3.36            subdivision; 349.19, subdivision 2a; 357.021, 
  3.37            subdivision 1a; 461.12, by adding a subdivision; 
  3.38            469.040, subdivision 5; 469.169, by adding a 
  3.39            subdivision; 469.1732, subdivision 1; 469.174, 
  3.40            subdivisions 1, 3, 10, 10a, 12, 25; 469.175, 
  3.41            subdivisions 1, 3, 6, 6b, by adding a subdivision; 
  3.42            469.176, subdivisions 1b, 1c, 1e, 3, 4, 4g, by adding 
  3.43            a subdivision; 469.1763, subdivision 6; 469.177, 
  3.44            subdivisions 1, 11, by adding a subdivision; 469.1771, 
  3.45            subdivision 1; 469.178, by adding a subdivision; 
  3.46            469.1791, subdivisions 1, 3, 9; 469.1812, subdivision 
  3.47            2; 469.1813, subdivisions 4, 6; 469.202, subdivision 
  3.48            2; 473.388, subdivisions 4, 7; 473.446, subdivision 1, 
  3.49            by adding a subdivision; 473.843, subdivision 3; 
  3.50            473F.08, subdivision 3; 473H.10, subdivision 3; 
  3.51            475.58, subdivision 1; 477A.011, subdivisions 35, 36; 
  3.52            477A.0121, by adding a subdivision; 477A.0122, by 
  3.53            adding a subdivision; 477A.013, subdivisions 1, 9; 
  3.54            477A.03, subdivision 2, by adding a subdivision; 
  3.55            477A.12; 477A.14; 480.181, subdivision 1; 487.33, 
  3.56            subdivision 5; 574.34, subdivision 1; Laws 1986, 
  3.57            chapter 396, section 5; Laws 1997, chapter 231, 
  3.58            article 10, section 25; Laws 1998, chapter 389, 
  3.59            article 16, section 35, subdivision 1; Laws 1999, 
  3.60            chapter 216, article 7, section 46, subdivision 3; 
  3.61            Laws 1999, chapter 243, article 4, section 19; Laws 
  3.62            2000, chapter 490, article 8, section 17; Laws 2000, 
  3.63            chapter 490, article 11, section 26; proposing coding 
  3.64            for new law in Minnesota Statutes, chapters 3; 12; 
  3.65            16A; 62Q; 103B; 116J; 123B; 144F; 245; 256L; 270; 272; 
  3.66            273; 275; 289A; 290; 290A; 295; 296A; 297A; 297H; 469; 
  3.67            471; 473; 477A; 480; 484; proposing coding for new law 
  3.68            as Minnesota Statutes, chapter 290C; repealing 
  3.69            Minnesota Statutes 2000, sections 13.4967, subdivision 
  3.70            3; 16A.76; 62T.10; 126C.13, subdivisions 1, 2, 3; 
  3.71            144.1484, subdivision 2; 256L.02, subdivision 3; 
  4.1             270.31; 270.32; 270.33; 270.34; 270.35; 270.36; 
  4.2             270.37; 270.38; 270.39; 273.13, subdivision 24a; 
  4.3             273.1382; 273.1399; 275.08, subdivision 1e; 278.078; 
  4.4             289A.60, subdivision 15; 290.06, subdivisions 25, 26; 
  4.5             290.0673; 290.095, subdivisions 1a, 7; 290.191, 
  4.6             subdivision 4; 290.21, subdivision 3; 290.23; 290.25; 
  4.7             290.31, subdivisions 2, 2a, 3, 4, 5, 19; 290.35; 
  4.8             290.9726, subdivision 7; 290A.04, subdivision 2j; 
  4.9             290A.18, subdivision 2; 295.50; 295.51; 295.52; 
  4.10            295.53; 295.54; 295.55; 295.56; 295.57; 295.58; 
  4.11            295.582; 295.59; 296A.16, subdivision 6; 296A.24, 
  4.12            subdivision 3; 297A.61, subdivision 16; 297A.62, 
  4.13            subdivision 2; 297A.64; 297A.68, subdivision 21; 
  4.14            297A.71, subdivisions 2, 15, 16, 21; 297B.032; 
  4.15            297E.16, subdivision 3; 297F.21, subdivision 4; 
  4.16            297G.20, subdivision 5; 297I.05, subdivisions 5, 8; 
  4.17            297I.30, subdivision 3; 469.1732, subdivision 2; 
  4.18            469.1734, subdivision 4; 469.1782, subdivision 1; Laws 
  4.19            1988, chapter 426, section 1; Laws 1988, chapter 702, 
  4.20            section 16; Laws 1992, chapter 511, article 2, section 
  4.21            52, as amended; Laws 1996, chapter 471, article 8, 
  4.22            section 45; Laws 1999, chapter 243, article 6, section 
  4.23            14; Laws 1999, chapter 243, article 6, section 15; 
  4.24            Laws 2000, chapter 490, article 6, section 17; 
  4.25            Minnesota Rules, parts 8120.0200; 8120.0500; 
  4.26            8120.0700; 8120.0900; 8120.1300; 8120.1600; 8120.2000; 
  4.27            8120.2100; 8120.2200; 8120.2300; 8120.2500; 8120.2700; 
  4.28            8120.2800; 8120.3000; 8120.3200; 8120.4300; 8120.4400; 
  4.29            8120.4500; 8120.4600; 8120.4900; 8120.5000; 8120.5100; 
  4.30            8120.5300. 
  4.31  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  4.32                             ARTICLE 1 
  4.33                          SALES TAX REBATE 
  4.34     Section 1.  [STATEMENT OF PURPOSE.] 
  4.35     (a) The state of Minnesota derives revenues from a variety 
  4.36  of taxes, fees, and other sources, including the state sales tax.
  4.37     (b) It is fair and reasonable to refund the existing state 
  4.38  budget surplus in the form of a rebate of nonbusiness consumer 
  4.39  sales taxes paid by individuals in calendar year 1999. 
  4.40     (c) Information concerning the amount of sales tax paid at 
  4.41  various income levels is contained in the Minnesota tax 
  4.42  incidence report, which is written by the commissioner of 
  4.43  revenue and presented to the legislature according to Minnesota 
  4.44  Statutes, section 270.0682. 
  4.45     (d) It is fair and reasonable to use information contained 
  4.46  in the Minnesota tax incidence report to determine the 
  4.47  proportionate share of the sales tax rebate due each eligible 
  4.48  taxpayer since no effective or practical mechanism exists for 
  4.49  determining the amount of actual sales tax paid by each eligible 
  4.50  individual. 
  5.1      Sec. 2.  [SALES TAX REBATE.] 
  5.2      Subdivision 1.  [ELIGIBILITY; REBATE BASED ON INCOME.] An 
  5.3   individual who was a resident of Minnesota for any part of 1999, 
  5.4   and filed a 1999 Minnesota income tax return on or before 
  5.5   November 30, 2001, and had a tax liability before refundable 
  5.6   credits on that return of at least $1 and who was not allowed to 
  5.7   be claimed as a dependent on a 1999 federal income tax return 
  5.8   filed by another person is eligible for a sales tax rebate based 
  5.9   on income under either subdivision 2 or 3. 
  5.10     Subd. 2.  [MARRIED JOINT AND HEAD OF HOUSEHOLD FILERS.] The 
  5.11  sales tax rebate for taxpayers who qualify under subdivision 1 
  5.12  and are married filing joint or head of household filers is 
  5.13  computed according to the following schedule: 
  5.14       Income                                Sales Tax Rebate
  5.15   less than $2,500                                $237
  5.16   at least $2,500 but less than $5,000            $295
  5.17   at least $5,000 but less than $10,000           $309
  5.18   at least $10,000 but less than $15,000          $341
  5.19   at least $15,000 but less than $20,000          $386
  5.20   at least $20,000 but less than $25,000          $417
  5.21   at least $25,000 but less than $30,000          $445
  5.22   at least $30,000 but less than $35,000          $483
  5.23   at least $35,000 but less than $40,000          $526
  5.24   at least $40,000 but less than $45,000          $571
  5.25   at least $45,000 but less than $50,000          $606
  5.26   at least $50,000 but less than $60,000          $621
  5.27   at least $60,000 but less than $70,000          $648
  5.28   at least $70,000 but less than $80,000          $706
  5.29   at least $80,000 but less than $90,000          $762
  5.30   at least $90,000 but less than $100,000         $825
  5.31   at least $100,000 but less than $120,000        $894
  5.32   at least $120,000 but less than $140,000        $979
  5.33   at least $140,000 but less than $160,000      $1,058
  5.34   at least $160,000 but less than $180,000      $1,133
  5.35   at least $180,000 but less than $200,000      $1,204
  5.36   at least $200,000 but less than $400,000      $1,540
  6.1    at least $400,000 but less than $600,000      $2,026
  6.2    at least $600,000 but less than $800,000      $2,431
  6.3    at least $800,000 but less than $1,000,000    $2,787
  6.4    $1,000,000 and over                           $3,250
  6.5      Subd. 3.  [SINGLE AND MARRIED SEPARATE FILERS.] The sales 
  6.6   tax rebate for individuals who qualify under subdivision 1 as 
  6.7   single or married filing separately is computed according to the 
  6.8   following schedule: 
  6.9        Income                                Sales Tax Rebate
  6.10   less than $2,500                                $120
  6.11   at least $2,500 but less than $5,000            $126
  6.12   at least $5,000 but less than $10,000           $168
  6.13   at least $10,000 but less than $15,000          $200
  6.14   at least $15,000 but less than $20,000          $231
  6.15   at least $20,000 but less than $25,000          $258
  6.16   at least $25,000 but less than $30,000          $311
  6.17   at least $30,000 but less than $40,000          $335
  6.18   at least $40,000 but less than $50,000          $370
  6.19   at least $50,000 but less than $70,000          $474
  6.20   at least $70,000 but less than $100,000         $657
  6.21   at least $100,000 but less than $140,000        $792
  6.22   at least $140,000 but less than $200,000        $956
  6.23   at least $200,000 but less than $400,000      $1,295
  6.24   at least $400,000 but less than $600,000      $1,625
  6.25   $600,000 and over                             $1,625
  6.26     Subd. 4.  [NONRESIDENTS.] Individuals who were not 
  6.27  residents of Minnesota for any part of 1999 and who paid more 
  6.28  than $10 in Minnesota sales tax under Minnesota Statutes, 
  6.29  chapter 297A on nonbusiness consumer purchases in that year 
  6.30  qualify for a rebate under this subdivision only.  Qualifying 
  6.31  nonresidents must file a claim for rebate on a form prescribed 
  6.32  by the commissioner by November 30, 2001.  The claim must 
  6.33  include receipts showing the Minnesota sales tax paid and the 
  6.34  date of the sale.  Taxes paid on purchases allowed in the 
  6.35  computation of federal taxable income or reimbursed by an 
  6.36  employer are not eligible for the rebate.  The commissioner 
  7.1   shall determine the qualifying taxes paid and rebate the lesser 
  7.2   of: 
  7.3      (1) 41.25 percent of that amount; or 
  7.4      (2) the maximum amount for which the claimant would have 
  7.5   been eligible as determined under subdivision 2 if the taxpayer 
  7.6   filed the 1999 federal income tax return as a married taxpayer 
  7.7   filing jointly or head of household, or as determined under 
  7.8   subdivision 3 for other taxpayers. 
  7.9      Subd. 5.  [DEFINITION OF INCOME.] "Income," for purposes of 
  7.10  this section other than subdivision 4, is taxable income as 
  7.11  defined in section 63 of the Internal Revenue Code of 1986, as 
  7.12  amended through December 31, 1998, plus the sum of any additions 
  7.13  to federal taxable income for the taxpayer under Minnesota 
  7.14  Statutes, section 290.01, subdivision 19a, and reported on the 
  7.15  original 1999 income tax return, including subsequent 
  7.16  adjustments to that return made within the time limits specified 
  7.17  in subdivision 12.  For an individual who was a resident of 
  7.18  Minnesota for less than the entire year, the sales tax rebate 
  7.19  equals the sales tax rebate calculated under subdivision 2 or 3 
  7.20  multiplied by the percentage determined pursuant to Minnesota 
  7.21  Statutes, section 290.06, subdivision 2c, paragraph (e), as 
  7.22  calculated on the original 1999 income tax return, including 
  7.23  subsequent adjustments to that return made within the time 
  7.24  limits specified in subdivision 12.  For purposes of subdivision 
  7.25  4, "income" is taxable income as defined in section 63 of the 
  7.26  Internal Revenue Code of 1986, as amended through December 31, 
  7.27  1998, and reported on the taxpayer's original federal tax return 
  7.28  for the first taxable year beginning after December 31, 1998. 
  7.29     Subd. 6.  [SOCIAL SECURITY AND PUBLIC PENSION 
  7.30  RECIPIENTS.] (a) An individual qualifies for a rebate of $120 
  7.31  under this subdivision if the individual: 
  7.32     (1) was a resident of Minnesota for all of calendar year 
  7.33  1999; 
  7.34     (2) is not eligible for a rebate under subdivision 7; 
  7.35     (3) attained the age of 18 on or before December 31, 1999; 
  7.36  and 
  8.1      (4)(i) received social security benefits as defined in 
  8.2   section 86(d)(1) of the Internal Revenue Code of 1986, as 
  8.3   amended through December 31, 2000, in calendar year 1999; or 
  8.4      (ii) received federal, state, or local public pension or 
  8.5   disability benefits in calendar year 1999 and the commissioner 
  8.6   is able to obtain reliable information from the appropriate 
  8.7   public pension plan administrator within a reasonable period of 
  8.8   time to permit paying the rebate. 
  8.9      (b) An individual or married couple who qualifies for a 
  8.10  rebate under both this subdivision and subdivision 1 is eligible 
  8.11  for the rebate under whichever subdivision provides a larger 
  8.12  amount. 
  8.13     (c) If the Social Security Administration, Railroad 
  8.14  Retirement Board, or the administrator of a public pension is 
  8.15  paying benefits to a recipient by electronic funds transfers in 
  8.16  calendar year 2001, the commissioner may pay the rebate under 
  8.17  this subdivision through electronic funds transfer to the same 
  8.18  financial institution and into the same account into which those 
  8.19  benefits are transferred in calendar year 2001. 
  8.20     (d) For purposes of this subdivision, "public pension plan 
  8.21  administrator" means (1) a state and local public pension 
  8.22  administrator, (2) the federal Civil Service Retirement System, 
  8.23  (3) the United States Department of Defense for the military 
  8.24  retirement and survivors benefit programs, (4) the United States 
  8.25  Veterans Administration, and (5) the Federal Employees 
  8.26  Retirement System. 
  8.27     (e) A state and local public pension administrator is an 
  8.28  entity paying benefits under a pension plan enumerated in 
  8.29  Minnesota Statutes, section 356.20, subdivision 2.  Each state 
  8.30  and local public pension administrator shall provide to the 
  8.31  commissioner of revenue, in a form the commissioner prescribes, 
  8.32  a list of individuals to whom it pays benefits that meet the 
  8.33  requirements of paragraph (a), clauses (1) and (3). 
  8.34     Subd. 7.  [DEPENDENTS.] An individual who: 
  8.35     (1) was allowed to be claimed as a dependent on a 1999 
  8.36  federal income tax return filed by another person; 
  9.1      (2) would have otherwise been eligible for a rebate under 
  9.2   subdivision 1; and 
  9.3      (3) reported earned income as defined in section 
  9.4   32(c)(2)(A)(i) of the Internal Revenue Code, 
  9.5   is eligible for a rebate under this subdivision only.  The 
  9.6   rebate under this subdivision equals 35 percent of the amount 
  9.7   allowed under the schedule in subdivision 3 based on the 
  9.8   individual's income.  For an individual who was a resident of 
  9.9   Minnesota for less than the entire year, the sales tax rebate 
  9.10  equals the rebate calculated under this subdivision multiplied 
  9.11  by the percentage determined pursuant to Minnesota Statutes, 
  9.12  section 290.06, subdivision 2c, paragraph (e), as calculated on 
  9.13  the original 1999 income tax return. 
  9.14     Subd. 8.  [CREDIT RECIPIENTS.] An individual who 
  9.15     (1) was a resident of Minnesota for any part of 1999; 
  9.16     (2) was not eligible for a rebate under subdivision 1, 6, 
  9.17  or 7; 
  9.18     (3) was not allowed to be claimed as a dependent on a 1999 
  9.19  federal income tax return by another person; and 
  9.20     (4)(i) claimed a refund under Minnesota Statutes, chapter 
  9.21  290A, for property taxes paid in 2000 or rent constituting 
  9.22  property taxes paid in 1999; or 
  9.23     (ii) filed a 1999 Minnesota income tax return before 
  9.24  November 30, 2001, in order to 
  9.25     (A) claim a credit under Minnesota Statutes, section 
  9.26  290.067, 290.0671, or 290.0674; 
  9.27     (B) claim a refund of withheld taxes; or 
  9.28     (C) claim a refund of estimated taxes, 
  9.29  is eligible for a rebate under this subdivision only.  For 
  9.30  married couples filing joint returns and heads of households, 
  9.31  the rebate equals the minimum amount in subdivision 2.  For 
  9.32  single filers and married individuals filing separate returns 
  9.33  and for rebates based on refunds under Minnesota Statutes, 
  9.34  chapter 290A, the rebate equals the minimum amount in 
  9.35  subdivision 3.  For an individual who was a resident of 
  9.36  Minnesota for less than the entire year, the sales tax rebate 
 10.1   equals the rebate calculated under this subdivision multiplied 
 10.2   by the percentage determined under Minnesota Statutes, section 
 10.3   290.06, subdivision 2c, paragraph (e), as calculated on the 
 10.4   original 1999 income tax return. 
 10.5      Subd. 9.  [FISCAL YEAR TAXPAYERS.] For a fiscal year 
 10.6   taxpayer, the dates in subdivisions 1 through 4 are extended one 
 10.7   month for each month in calendar year 1999 that occurred prior 
 10.8   to the start of the individual's 1999 fiscal tax year. 
 10.9      Subd. 10.  [PAYMENT TO STATE.] (a) A taxpayer receiving a 
 10.10  rebate under this section may endorse and return the rebate 
 10.11  check to the state and designate that the returned rebate be 
 10.12  deposited in one or more of the following accounts for use only 
 10.13  for the purposes designated in this subdivision: 
 10.14     (1) an account for the basic sliding fee child care program 
 10.15  for child care assistance to families administered by the 
 10.16  commissioner of children, families, and learning under Minnesota 
 10.17  Statutes, section 119B.03; 
 10.18     (2) an account for kindergarten through grade 12 education 
 10.19  purposes, such as reducing instructor-to-student ratios and 
 10.20  paying increased heating fuel costs for school facilities, to be 
 10.21  administered by the commissioner of children, families, and 
 10.22  learning; 
 10.23     (3) the affordable rental investment fund to be used by the 
 10.24  housing finance agency for family rental housing assistance 
 10.25  under Minnesota Statutes, section 462A.21, subdivision 8b; 
 10.26     (4) the contaminated site cleanup and development account 
 10.27  to be used by the commissioner of trade and economic development 
 10.28  for contamination cleanup development grants under Minnesota 
 10.29  Statutes, sections 116J.551 to 116J.556; 
 10.30     (5) an account to provide funding for public transit and 
 10.31  highway improvement projects to reduce congestion to be 
 10.32  administered by the commissioner of transportation; 
 10.33     (6) an account to increase funding for the University of 
 10.34  Minnesota and the Minnesota state colleges and universities 
 10.35  under Minnesota Statutes, section 136F.01, as appropriated by 
 10.36  law; and 
 11.1      (7) an account to provide a fund for reimbursement of 
 11.2   nursing homes, licensed under Minnesota Statutes, chapter 144A, 
 11.3   for increased heating fuel costs to be administered by the 
 11.4   commissioner of human services. 
 11.5      (b) The rebate check must be accompanied by a notice 
 11.6   prepared by the commissioner of revenue that explains the 
 11.7   taxpayer's option to endorse the check to the state and explains 
 11.8   the uses of the funds that the taxpayer may designate.  In 
 11.9   preparing the notice, the commissioner of revenue shall consult 
 11.10  with the commissioners or agencies that administer the funds or 
 11.11  accounts.  The notice must also explain that a taxpayer may cash 
 11.12  the rebate check and mail a contribution of any amount to the 
 11.13  state and that the contribution must be used for the option or 
 11.14  options under paragraph (a) as designated by the taxpayer.  The 
 11.15  notice must contain in bold print the address to which the 
 11.16  endorsed check or a state contribution may be mailed. 
 11.17     (c) Funds endorsed and mailed to the state and 
 11.18  contributions mailed to the state under this subdivision must be 
 11.19  deposited by the commissioner of finance in the fund or account 
 11.20  designated and are appropriated to the agency or commissioner 
 11.21  designated by the taxpayer or contributor for use as provided in 
 11.22  this subdivision.  Funds appropriated under this paragraph are 
 11.23  available until expended. 
 11.24     (d) Funds appropriated under this subdivision are in 
 11.25  addition to any funds appropriated for the purposes given in 
 11.26  this subdivision and may not be used for any other purposes 
 11.27  including the reduction of any other appropriations.  Funds 
 11.28  appropriated to a commissioner or agency under this subdivision 
 11.29  are not included in the department's or agency's budget base. 
 11.30     Subd. 11.  [PAYMENT DATES; INTEREST.] The commissioner of 
 11.31  revenue shall begin paying sales tax rebates by 90 days after 
 11.32  final enactment of this act.  Sales tax rebates not paid by 
 11.33  January 1, 2002, bear interest at the rate specified in 
 11.34  Minnesota Statutes, section 270.75. 
 11.35     Subd. 12.  [NO ADJUSTMENTS AFTER PROCESSING.] A sales tax 
 11.36  rebate may not be adjusted based on changes to a 1999 income tax 
 12.1   return that are made by order of assessment after the date the 
 12.2   rebate is processed, or made by the taxpayer that are filed with 
 12.3   the commissioner of revenue after that date. 
 12.4      Subd. 13.  [JOINT REBATE RULES.] Individuals who filed a 
 12.5   joint income tax return for 1999 must receive a joint sales tax 
 12.6   rebate.  After the sales tax rebate has been issued, but before 
 12.7   the check has been cashed, either joint claimant may request a 
 12.8   separate check for one-half of the joint sales tax rebate.  
 12.9   Notwithstanding anything in this section to the contrary, if 
 12.10  prior to payment, the commissioner has been notified that 
 12.11  persons who filed a joint 1999 income tax return are living at 
 12.12  separate addresses, as indicated on their 2000 income tax return 
 12.13  or otherwise, the commissioner may issue separate checks to each 
 12.14  person.  The amount payable to each person is one-half of the 
 12.15  total joint rebate. 
 12.16     Subd. 14.  [DECEASED INDIVIDUALS.] If a rebate is received 
 12.17  by the estate of a deceased individual after the probate estate 
 12.18  has been closed, and if the original rebate check is returned to 
 12.19  the commissioner with a copy of the decree of descent or final 
 12.20  account of the estate, social security numbers, and addresses of 
 12.21  the beneficiaries, the commissioner may issue separate checks in 
 12.22  proportion to their share in the residuary estate in the names 
 12.23  of the residuary beneficiaries of the estate. 
 12.24     Subd. 15.  [APPLICATION OF OTHER LAW.] (a) The sales tax 
 12.25  rebate is a "Minnesota tax law" for purposes of Minnesota 
 12.26  Statutes, section 270B.01, subdivision 8. 
 12.27     (b) The sales tax rebate is "an overpayment of any tax 
 12.28  collected by the commissioner" for purposes of Minnesota 
 12.29  Statutes, section 270.07, subdivision 5.  For purposes of this 
 12.30  subdivision, a joint sales tax rebate is payable to each spouse 
 12.31  equally. 
 12.32     (c) The sales tax rebate is a refund subject to revenue 
 12.33  recapture under Minnesota Statutes, chapter 270A.  The 
 12.34  commissioner of revenue shall remit the entire refund to the 
 12.35  claimant agency, which shall, upon the request of the spouse who 
 12.36  does not owe the debt, refund one-half of the joint sales tax 
 13.1   rebate to the spouse who does not owe the debt. 
 13.2      Subd. 16.  [LAPSE OF ENTITLEMENT.] If the commissioner of 
 13.3   revenue cannot locate an individual entitled to a sales tax 
 13.4   rebate by July 1, 2003, or if an individual to whom a sales tax 
 13.5   rebate was issued has not cashed the check by July 1, 2003, the 
 13.6   right to the sales tax rebate lapses and the check must be 
 13.7   deposited in the general fund. 
 13.8      Subd. 17.  [CLAIMS FOR UNPAID REBATES.] Individuals 
 13.9   entitled to a sales tax rebate pursuant to subdivision 1, 6, 7, 
 13.10  or 8 but who did not receive one, and individuals who receive a 
 13.11  sales tax rebate that was not correctly computed, must file a 
 13.12  claim with the commissioner before July 1, 2002, in a form 
 13.13  prescribed by the commissioner.  These claims must be treated as 
 13.14  if they are a claim for refund under Minnesota Statutes, section 
 13.15  289A.50, subdivisions 4 and 7. 
 13.16     Subd. 18.  [APPROPRIATION.] The rebate is a reduction of 
 13.17  fiscal year 2001 sales tax revenues.  The amount necessary to 
 13.18  make the sales tax rebates and interest provided in this section 
 13.19  is appropriated from the general fund to the commissioner of 
 13.20  revenue in fiscal year 2001 and is available until June 30, 2003.
 13.21     Subd. 19.  [ILLEGALLY CASHED CHECKS.] If a sales tax rebate 
 13.22  check is cashed by someone other than the payee or payees of the 
 13.23  check, and the commissioner of revenue determines that the check 
 13.24  has been forged or improperly endorsed or the commissioner 
 13.25  determines that a rebate was overstated or erroneously issued, 
 13.26  the commissioner may issue an order of assessment for the amount 
 13.27  of the check or the amount the check is overstated against the 
 13.28  person or persons cashing it.  The assessment must be made 
 13.29  within two years after the check is cashed, but if cashing the 
 13.30  check constitutes theft under Minnesota Statutes, section 
 13.31  609.52, or forgery under Minnesota Statutes, section 609.631, 
 13.32  the assessment can be made at any time.  The assessment may be 
 13.33  appealed administratively and judicially.  The commissioner may 
 13.34  take action to collect the assessment in the same manner as 
 13.35  provided by Minnesota Statutes, chapter 289A, for any other 
 13.36  order of the commissioner assessing tax. 
 14.1      Subd. 20.  [AUTHORITY TO CONTRACT WITH VENDOR.] 
 14.2   Notwithstanding Minnesota Statutes, sections 9.031, 16A.40, 
 14.3   16B.49, 16B.50, and any other law to the contrary, the 
 14.4   commissioner of revenue may take whatever actions the 
 14.5   commissioner deems necessary to pay the rebates required by this 
 14.6   section, and may, in consultation with the commissioner of 
 14.7   finance and the state treasurer, contract with a private vendor 
 14.8   or vendors to process, print, and mail the rebate checks or 
 14.9   warrants required under this section and receive and disburse 
 14.10  state funds to pay those checks or warrants. 
 14.11     Subd. 21.  [ELECTRONIC PAYMENT.] The commissioner may pay 
 14.12  rebates required by this section by electronic funds transfer to 
 14.13  individuals who requested that their 2000 individual income tax 
 14.14  refund be paid through electronic funds transfer.  The 
 14.15  commissioner may make the electronic funds transfer payments to 
 14.16  the same financial institution and into the same account as the 
 14.17  2000 individual income tax refund. 
 14.18     Subd. 22.  [ADJUSTMENTS.] Before payment, the commissioner 
 14.19  of revenue shall adjust the rebate as follows: 
 14.20     the rebates calculated in subdivisions 2, 3, 4, 6, 7, and 8 
 14.21  must be proportionately reduced to account for 1999 income tax 
 14.22  returns that are filed on or after January 1, 2001, but before 
 14.23  June 1, 2001, so that the estimated amount of sales tax rebates 
 14.24  payable under subdivisions 2, 3, 4, 6, 7, and 8 on the date the 
 14.25  rebate is processed does not exceed $856,280,000.  The 
 14.26  adjustment under this subdivision is not a rule subject to 
 14.27  Minnesota Statutes, chapter 14. 
 14.28     Sec. 3.  [APPROPRIATIONS.] 
 14.29     (a) $500,000 for fiscal year 2001 and $800,000 for fiscal 
 14.30  year 2002 is appropriated from the general fund to the 
 14.31  commissioner of revenue to administer the sales tax rebate in 
 14.32  this article.  Any unencumbered balance remaining on June 30, 
 14.33  2001, does not cancel but is available for expenditure by the 
 14.34  commissioner of revenue until June 30, 2002.  Notwithstanding 
 14.35  Minnesota Statutes, section 16A.285, the commissioner of revenue 
 14.36  may not use this appropriation for any purpose other than 
 15.1   administering the sales tax rebate.  This is a one-time 
 15.2   appropriation and may not be added to the agency's budget base. 
 15.3      (b) $278,000 is appropriated from the general fund to the 
 15.4   state treasurer to pay the cost of clearing sales tax rebate 
 15.5   checks through commercial banks. 
 15.6      Sec. 4.  [EFFECTIVE DATE.] 
 15.7      Sections 1 to 3 are effective the day following final 
 15.8   enactment. 
 15.9                              ARTICLE 2 
 15.10                        PROPERTY TAX REFORM 
 15.11     Section 1.  [16A.88] [TRANSIT FUND.] 
 15.12     The transit fund is established within the state treasury.  
 15.13  At least 5.5 percent of the appropriations from the fund must be 
 15.14  used for the funding of transit systems outside the metropolitan 
 15.15  area under section 174.24.  Appropriations from the fund may 
 15.16  also be used for the funding of transit systems within the 
 15.17  metropolitan area under sections 473.405 to 473.449.  Revenues 
 15.18  in this fund may not be used for the purposes of funding capital 
 15.19  or operating expenses related to the operation of a light rail 
 15.20  line or a commuter rail line. 
 15.21     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2002. 
 15.22     Sec. 2.  Minnesota Statutes 2000, section 123B.55, is 
 15.23  amended to read: 
 15.24     123B.55 [DEBT SERVICE LEVY.] 
 15.25     A district may levy the amounts necessary to make payments 
 15.26  for bonds issued and for interest on them, including the bonds 
 15.27  and interest on them, issued as authorized by Minnesota Statutes 
 15.28  1974, section 275.125, subdivision 3, clause (7)(C); and the 
 15.29  amounts necessary for repayment of debt service loans and 
 15.30  capital loans, minus the amount of debt service equalization 
 15.31  revenue of the district and the district's tax base replacement 
 15.32  aid under section 123B.551. 
 15.33     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 15.34  payable in 2003 and subsequent years. 
 15.35     Sec. 3.  [123B.551] [ELECTRIC GENERATION TAX BASE 
 15.36  REPLACEMENT DEBT SERVICE AID.] 
 16.1      Each school district is eligible for tax base replacement 
 16.2   debt service aid for taxes payable in 2003 and subsequent years 
 16.3   equal to 0.5 percent of the assessment year 2001 taxable market 
 16.4   value of property classified as class 3(4) under section 273.13, 
 16.5   subdivision 24, multiplied by the district's local tax rate for 
 16.6   bonded debt for taxes payable in 2002.  In the case of districts 
 16.7   having debt under multiple debt issues, an aid amount must be 
 16.8   separately determined for each issue.  Debt aid for each debt 
 16.9   issue must be paid annually as long as the bonds for the debt 
 16.10  issue remain outstanding. 
 16.11     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 16.12  payable in 2003 and subsequent years. 
 16.13     Sec. 4.  Minnesota Statutes 2000, section 126C.01, 
 16.14  subdivision 3, is amended to read: 
 16.15     Subd. 3.  [REFERENDUM MARKET VALUE.] "Referendum market 
 16.16  value" means the market value of all taxable property, except 
 16.17  that excluding property classified as class 2 or class 4c under 
 16.18  section 273.13.  The portion of class 2a property consisting of 
 16.19  the house, garage, and surrounding one acre of land of an 
 16.20  agricultural homestead is included in referendum market value.  
 16.21  Any class of property, or any portion of a class of 
 16.22  property, with that is included in the definition of referendum 
 16.23  market value and that has a class rate of less than one percent 
 16.24  under section 273.13 shall have a referendum market value equal 
 16.25  to its net tax capacity multiplied by 100. 
 16.26     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 16.27  payable in 2002 and subsequent years. 
 16.28     Sec. 5.  Minnesota Statutes 2000, section 126C.13, 
 16.29  subdivision 4, is amended to read: 
 16.30     Subd. 4.  [GENERAL EDUCATION AID.] A district's general 
 16.31  education aid is the sum of the following amounts:  
 16.32     (1) the product of (i) the difference between the general 
 16.33  education revenue, excluding transition revenue and supplemental 
 16.34  revenue, and the general education levy, times (ii) the ratio of 
 16.35  the actual amount levied to the permitted levy; 
 16.36     (2) transition aid according to section 126C.10, 
 17.1   subdivision 22; 
 17.2      (3) supplemental aid according to section 127A.49; 
 17.3      (4) shared time aid according to section 126C.01, 
 17.4   subdivision 7; and 
 17.5      (5) referendum aid according to section 126C.17. 
 17.6      <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 17.7   payable in 2002 and thereafter.  
 17.8      Sec. 6.  Minnesota Statutes 2000, section 126C.17, is 
 17.9   amended by adding a subdivision to read: 
 17.10     Subd. 7a.  [REFERENDUM TAX BASE REPLACEMENT AID.] For each 
 17.11  school district, for each separately authorized referendum levy, 
 17.12  the commissioner of revenue, in consultation with the 
 17.13  commissioner of children, families, and learning, shall certify 
 17.14  the amount of the referendum levy in taxes payable year 2001 
 17.15  levied against property classified as class 2 or class 4c, 
 17.16  excluding the portion of the tax paid by the portion of class 2a 
 17.17  property consisting of the house, garage, and surrounding one 
 17.18  acre of land.  The resulting amount must be used to reduce the 
 17.19  district's referendum levy amount otherwise determined, and must 
 17.20  be paid to the district each year that the referendum authority 
 17.21  remains in effect.  The aid payable under this subdivision must 
 17.22  be subtracted from the district's referendum equalization aid 
 17.23  under subdivision 7. 
 17.24     For the purposes of this subdivision, the referendum levy 
 17.25  with the latest year of expiration is assumed to be at the 
 17.26  highest level of equalization, and the referendum levy with the 
 17.27  earliest year of expiration is assumed to be at the lowest level 
 17.28  of equalization. 
 17.29     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 17.30  payable in 2002 and subsequent years. 
 17.31     Sec. 7.  Minnesota Statutes 2000, section 174.24, 
 17.32  subdivision 3b, is amended to read: 
 17.33     Subd. 3b.  [OPERATING ASSISTANCE.] (a) The commissioner 
 17.34  shall determine the total operating cost of any public transit 
 17.35  system receiving or applying for assistance in accordance with 
 17.36  generally accepted accounting principles.  To be eligible for 
 18.1   financial assistance, an applicant or recipient shall provide to 
 18.2   the commissioner all financial records and other information and 
 18.3   shall permit any inspection reasonably necessary to determine 
 18.4   total operating cost and correspondingly the amount of 
 18.5   assistance which may be paid to the applicant or recipient.  
 18.6   Where more than one county or municipality contributes 
 18.7   assistance to the operation of a public transit system, the 
 18.8   commissioner shall identify one as lead agency for the purpose 
 18.9   of receiving moneys under this section.  
 18.10     (b) Prior to distributing operating assistance to eligible 
 18.11  recipients for any contract period, the commissioner shall place 
 18.12  all recipients into one of the following classifications:  large 
 18.13  urbanized area service, urbanized area service, small urban area 
 18.14  service, rural area service, and elderly and handicapped 
 18.15  service.  The commissioner shall distribute funds under this 
 18.16  section so that the percentage of total operating cost paid by 
 18.17  any recipient from local sources will not exceed the percentage 
 18.18  for that recipient's classification, except as provided in an 
 18.19  undue hardship case.  The percentages shall be:  for large 
 18.20  urbanized area service, 50 35 percent; for urbanized area 
 18.21  service and small urban area service, 40 25 percent; for rural 
 18.22  area service, 35 25 percent; and for elderly and handicapped 
 18.23  service, 35 25 percent.  The remainder of the total operating 
 18.24  cost will be paid from state funds less any assistance received 
 18.25  by the recipient from any federal source.  For purposes of this 
 18.26  subdivision "local sources" means all local sources of funds and 
 18.27  includes all operating revenue, tax levies, and contributions 
 18.28  from public funds, except that the commissioner may exclude from 
 18.29  the total assistance contract revenues derived from operations 
 18.30  the cost of which is excluded from the computation of total 
 18.31  operating cost.  Any taxing jurisdiction receiving assistance 
 18.32  under this section must not use property tax levies to finance 
 18.33  transit services. 
 18.34     (c) If a recipient informs the commissioner in writing 
 18.35  after the establishment of these percentages but prior to the 
 18.36  distribution of financial assistance for any year that paying 
 19.1   its designated percentage of total operating cost from local 
 19.2   sources will cause undue hardship, the commissioner may reduce 
 19.3   the percentage to be paid from local sources by the recipient 
 19.4   and increase the percentage to be paid from local sources by one 
 19.5   or more other recipients inside or outside the classification, 
 19.6   provided that no recipient shall have its percentage thus 
 19.7   reduced or increased for more than two years successively.  If 
 19.8   for any year the funds appropriated to the commissioner to carry 
 19.9   out the purposes of this section are insufficient to allow the 
 19.10  commissioner to pay the state share of total operating cost as 
 19.11  provided in this paragraph, the commissioner shall reduce the 
 19.12  state share in each classification to the extent necessary. 
 19.13     <b>[EFFECTIVE DATE.]</b> This section is effective for transit 
 19.14  services provided and property taxes payable in calendar year 
 19.15  2002 and subsequent years. 
 19.16     Sec. 8.  Minnesota Statutes 2000, section 270.12, 
 19.17  subdivision 2, is amended to read: 
 19.18     Subd. 2.  [MEETING DATES; DUTIES.] The board shall meet 
 19.19  annually between April 15 and June 30 at the office of the 
 19.20  commissioner of revenue and examine and compare the returns of 
 19.21  the assessment of the property in the several counties, and 
 19.22  equalize the same so that all the taxable property in the state 
 19.23  shall be assessed at its market value, subject to the following 
 19.24  rules: 
 19.25     (1) The board shall add to the aggregate valuation of the 
 19.26  real property of every county, which the board believes to be 
 19.27  valued below its market value in money, such percent as will 
 19.28  bring the same to its market value in money; 
 19.29     (2) The board shall deduct from the aggregate valuation of 
 19.30  the real property of every county, which the board believes to 
 19.31  be valued above its market value in money, such percent as will 
 19.32  reduce the same to its market value in money; 
 19.33     (3) If the board believes the valuation for a part of a 
 19.34  class determined by a range of market value under clause (8) or 
 19.35  otherwise, a class, or classes of the real property of any town 
 19.36  or district in any county, or the valuation for a part of a 
 20.1   class, a class, or classes of the real property of any county 
 20.2   not in towns or cities, should be raised or reduced, without 
 20.3   raising or reducing the other real property of such county, or 
 20.4   without raising or reducing it in the same ratio, the board may 
 20.5   add to, or take from, the valuation of a part of a class, a 
 20.6   class, or classes in any one or more of such towns or cities, or 
 20.7   of the property not in towns or cities, such percent as the 
 20.8   board believes will raise or reduce the same to its market value 
 20.9   in money; 
 20.10     (4) The board shall add to the aggregate valuation of any 
 20.11  part of a class, a class, or classes of personal property of any 
 20.12  county, town, or city, which the board believes to be valued 
 20.13  below the market value thereof, such percent as will raise the 
 20.14  same to its market value in money; 
 20.15     (5) The board shall take from the aggregate valuation of 
 20.16  any part of a class, a class, or classes of personal property in 
 20.17  any county, town or city, which the board believes to be valued 
 20.18  above the market value thereof, such percent as will reduce the 
 20.19  same to its market value in money; 
 20.20     (6) The board shall not reduce the aggregate valuation of 
 20.21  all the property of the state, as returned by the several county 
 20.22  auditors, more than one percent on the whole valuation thereof; 
 20.23     (7) When it would be of assistance in equalizing values the 
 20.24  board may require any county auditor to furnish statements 
 20.25  showing assessments of real and personal property of any 
 20.26  individuals, firms, or corporations within the county.  The 
 20.27  board shall consider and equalize such assessments and may 
 20.28  increase the assessment of individuals, firms, or corporations 
 20.29  above the amount returned by the county board of equalization 
 20.30  when it shall appear to be undervalued, first giving notice to 
 20.31  such persons of the intention of the board so to do, which 
 20.32  notice shall fix a time and place of hearing.  The board shall 
 20.33  not decrease any such assessment below the valuation placed by 
 20.34  the county board of equalization; 
 20.35     (8) In equalizing values pursuant to this section, the 
 20.36  board shall utilize a 12-month assessment/sales ratio study 
 21.1   conducted by the department of revenue containing only sales 
 21.2   that are filed in the county auditor's office under section 
 21.3   272.115, by November 1 of the previous year and that occurred 
 21.4   between October 1 of the year immediately preceding the previous 
 21.5   year and September 30 of the previous year.  
 21.6      The assessment/sales ratio study may separate the values of 
 21.7   residential property into market value categories.  The board 
 21.8   may adjust the market value categories and the number of 
 21.9   categories as necessary to create an adequate sample size for 
 21.10  each market value category.  The board may determine the 
 21.11  adequate sample size.  The board may adjust the relative share 
 21.12  of market value assigned to land value versus building value, in 
 21.13  the case of property classes subject to the state general tax 
 21.14  under section 275.025.  To the extent practicable, the 
 21.15  methodology used in preparing the assessment/sales ratio study 
 21.16  must be consistent with the most recent Standard on Assessment 
 21.17  Sales Ratio Studies published by the assessment standards 
 21.18  committee of the International Association of Assessing 
 21.19  Officers.  The board may determine the geographic area used in 
 21.20  preparing the study to accurately equalize values.  A sales 
 21.21  ratio study separating residential property into market value 
 21.22  categories may not be used as the basis for a petition under 
 21.23  chapter 278. 
 21.24     The sales prices used in the study must be discounted for 
 21.25  terms of financing.  The board shall use the median ratio as the 
 21.26  statistical measure of the level of assessment for any 
 21.27  particular category of property; and 
 21.28     (9) The board shall receive from each county the estimated 
 21.29  market values on the assessment date falling within the study 
 21.30  period for all parcels by magnetic tape or other medium as 
 21.31  prescribed by the commissioner of revenue. 
 21.32     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2003.
 21.33     Sec. 9.  Minnesota Statutes 2000, section 273.13, 
 21.34  subdivision 22, is amended to read: 
 21.35     Subd. 22.  [CLASS 1.] (a) Except as provided in subdivision 
 21.36  23, real estate which is residential and used for homestead 
 22.1   purposes is class 1.  The market value of class 1a property must 
 22.2   be determined based upon the value of the house, garage, and 
 22.3   land.  
 22.4      The first $76,000 of market value of Class 1a property has 
 22.5   a net class rate of one percent of its market value; and the 
 22.6   market value of class 1a property that exceeds $76,000 has a 
 22.7   class rate of 1.65 percent of its market value. 
 22.8      (b) Class 1b property includes homestead real estate or 
 22.9   homestead manufactured homes used for the purposes of a 
 22.10  homestead by 
 22.11     (1) any blind person, or the blind person and the blind 
 22.12  person's spouse; or 
 22.13     (2) any person, hereinafter referred to as "veteran," who: 
 22.14     (i) served in the active military or naval service of the 
 22.15  United States; and 
 22.16     (ii) is entitled to compensation under the laws and 
 22.17  regulations of the United States for permanent and total 
 22.18  service-connected disability due to the loss, or loss of use, by 
 22.19  reason of amputation, ankylosis, progressive muscular 
 22.20  dystrophies, or paralysis, of both lower extremities, such as to 
 22.21  preclude motion without the aid of braces, crutches, canes, or a 
 22.22  wheelchair; and 
 22.23     (iii) has acquired a special housing unit with special 
 22.24  fixtures or movable facilities made necessary by the nature of 
 22.25  the veteran's disability, or the surviving spouse of the 
 22.26  deceased veteran for as long as the surviving spouse retains the 
 22.27  special housing unit as a homestead; or 
 22.28     (3) any person who: 
 22.29     (i) is permanently and totally disabled and 
 22.30     (ii) receives 90 percent or more of total household income, 
 22.31  as defined in section 290A.03, subdivision 5, from 
 22.32     (A) aid from any state as a result of that disability; or 
 22.33     (B) supplemental security income for the disabled; or 
 22.34     (C) workers' compensation based on a finding of total and 
 22.35  permanent disability; or 
 22.36     (D) social security disability, including the amount of a 
 23.1   disability insurance benefit which is converted to an old age 
 23.2   insurance benefit and any subsequent cost of living increases; 
 23.3   or 
 23.4      (E) aid under the federal Railroad Retirement Act of 1937, 
 23.5   United States Code Annotated, title 45, section 228b(a)5; or 
 23.6      (F) a pension from any local government retirement fund 
 23.7   located in the state of Minnesota as a result of that 
 23.8   disability; or 
 23.9      (G) pension, annuity, or other income paid as a result of 
 23.10  that disability from a private pension or disability plan, 
 23.11  including employer, employee, union, and insurance plans and 
 23.12     (iii) has household income as defined in section 290A.03, 
 23.13  subdivision 5, of $50,000 or less; or 
 23.14     (4) any person who is permanently and totally disabled and 
 23.15  whose household income as defined in section 290A.03, 
 23.16  subdivision 5, is 275 percent or less of the federal poverty 
 23.17  level. 
 23.18     Property is classified and assessed under clause (4) only 
 23.19  if the government agency or income-providing source certifies, 
 23.20  upon the request of the homestead occupant, that the homestead 
 23.21  occupant satisfies the disability requirements of this paragraph.
 23.22     Property is classified and assessed pursuant to clause (1) 
 23.23  only if the commissioner of economic security certifies to the 
 23.24  assessor that the homestead occupant satisfies the requirements 
 23.25  of this paragraph.  
 23.26     Permanently and totally disabled for the purpose of this 
 23.27  subdivision means a condition which is permanent in nature and 
 23.28  totally incapacitates the person from working at an occupation 
 23.29  which brings the person an income.  The first $32,000 market 
 23.30  value of class 1b property has a net class rate of .45 percent 
 23.31  of its market value.  The remaining market value of class 1b 
 23.32  property has a net class rate using the rates for class 1 or 
 23.33  class 2a property, whichever is appropriate, of similar market 
 23.34  value.  
 23.35     (c) Class 1c property is commercial use real property that 
 23.36  abuts a lakeshore line and is devoted to temporary and seasonal 
 24.1   residential occupancy for recreational purposes but not devoted 
 24.2   to commercial purposes for more than 250 days in the year 
 24.3   preceding the year of assessment, and that includes a portion 
 24.4   used as a homestead by the owner, which includes a dwelling 
 24.5   occupied as a homestead by a shareholder of a corporation that 
 24.6   owns the resort or a partner in a partnership that owns the 
 24.7   resort, even if the title to the homestead is held by the 
 24.8   corporation or partnership.  For purposes of this clause, 
 24.9   property is devoted to a commercial purpose on a specific day if 
 24.10  any portion of the property, excluding the portion used 
 24.11  exclusively as a homestead, is used for residential occupancy 
 24.12  and a fee is charged for residential occupancy.  Class 1c 
 24.13  property has a class rate of one percent of total market value 
 24.14  with the following limitation:  the area of the property must 
 24.15  not exceed 100 feet of lakeshore footage for each cabin or 
 24.16  campsite located on the property up to a total of 800 feet and 
 24.17  500 feet in depth, measured away from the lakeshore.  If any 
 24.18  portion of the class 1c resort property is classified as class 
 24.19  4c under subdivision 25, the entire property must meet the 
 24.20  requirements of subdivision 25, paragraph (d), clause (1), to 
 24.21  qualify for class 1c treatment under this paragraph. 
 24.22     (d) Class 1d property includes structures that meet all of 
 24.23  the following criteria: 
 24.24     (1) the structure is located on property that is classified 
 24.25  as agricultural property under section 273.13, subdivision 23; 
 24.26     (2) the structure is occupied exclusively by seasonal farm 
 24.27  workers during the time when they work on that farm, and the 
 24.28  occupants are not charged rent for the privilege of occupying 
 24.29  the property, provided that use of the structure for storage of 
 24.30  farm equipment and produce does not disqualify the property from 
 24.31  classification under this paragraph; 
 24.32     (3) the structure meets all applicable health and safety 
 24.33  requirements for the appropriate season; and 
 24.34     (4) the structure is not salable as residential property 
 24.35  because it does not comply with local ordinances relating to 
 24.36  location in relation to streets or roads. 
 25.1      The market value of class 1d property has the same class 
 25.2   rates as class 1a property under paragraph (a). 
 25.3      <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 25.4   payable in 2002 and subsequent years. 
 25.5      Sec. 10.  Minnesota Statutes 2000, section 273.13, 
 25.6   subdivision 23, is amended to read: 
 25.7      Subd. 23.  [CLASS 2.] (a) Class 2a property is agricultural 
 25.8   land including any improvements that is homesteaded.  The market 
 25.9   value of the house and garage and immediately surrounding one 
 25.10  acre of land has the same class rates as class 1a property under 
 25.11  subdivision 22.  The value of the remaining land including 
 25.12  improvements up to $115,000 has a net class rate of 0.35 percent 
 25.13  of market value.  The value of class 2a property over $115,000 
 25.14  of market value up to and including $600,000 market value has a 
 25.15  net class rate of 0.8 0.55 percent of market value.  The 
 25.16  remaining property over $600,000 market value has a class rate 
 25.17  of 1.20 one percent of market value. 
 25.18     (b) Class 2b property is (1) real estate, rural in 
 25.19  character and used exclusively for growing trees for timber, 
 25.20  lumber, and wood and wood products; (2) real estate that is not 
 25.21  improved with a structure and is used exclusively for growing 
 25.22  trees for timber, lumber, and wood and wood products, if the 
 25.23  owner has participated or is participating in a cost-sharing 
 25.24  program for afforestation, reforestation, or timber stand 
 25.25  improvement on that particular property, administered or 
 25.26  coordinated by the commissioner of natural resources; (3) real 
 25.27  estate that is nonhomestead agricultural land; or (4) a landing 
 25.28  area or public access area of a privately owned public use 
 25.29  airport.  Class 2b property has a net class rate of 1.20 one 
 25.30  percent of market value. 
 25.31     (c) Agricultural land as used in this section means 
 25.32  contiguous acreage of ten acres or more, used during the 
 25.33  preceding year for agricultural purposes.  "Agricultural 
 25.34  purposes" as used in this section means the raising or 
 25.35  cultivation of agricultural products or enrollment in the 
 25.36  Reinvest in Minnesota program under sections 103F.501 to 
 26.1   103F.535 or the federal Conservation Reserve Program as 
 26.2   contained in Public Law Number 99-198.  Contiguous acreage on 
 26.3   the same parcel, or contiguous acreage on an immediately 
 26.4   adjacent parcel under the same ownership, may also qualify as 
 26.5   agricultural land, but only if it is pasture, timber, waste, 
 26.6   unusable wild land, or land included in state or federal farm 
 26.7   programs.  Agricultural classification for property shall be 
 26.8   determined excluding the house, garage, and immediately 
 26.9   surrounding one acre of land, and shall not be based upon the 
 26.10  market value of any residential structures on the parcel or 
 26.11  contiguous parcels under the same ownership. 
 26.12     (d) Real estate, excluding the house, garage, and 
 26.13  immediately surrounding one acre of land, of less than ten acres 
 26.14  which is exclusively and intensively used for raising or 
 26.15  cultivating agricultural products, shall be considered as 
 26.16  agricultural land.  
 26.17     Land shall be classified as agricultural even if all or a 
 26.18  portion of the agricultural use of that property is the leasing 
 26.19  to, or use by another person for agricultural purposes. 
 26.20     Classification under this subdivision is not determinative 
 26.21  for qualifying under section 273.111. 
 26.22     The property classification under this section supersedes, 
 26.23  for property tax purposes only, any locally administered 
 26.24  agricultural policies or land use restrictions that define 
 26.25  minimum or maximum farm acreage. 
 26.26     (e) The term "agricultural products" as used in this 
 26.27  subdivision includes production for sale of:  
 26.28     (1) livestock, dairy animals, dairy products, poultry and 
 26.29  poultry products, fur-bearing animals, horticultural and nursery 
 26.30  stock described in sections 18.44 to 18.61, fruit of all kinds, 
 26.31  vegetables, forage, grains, bees, and apiary products by the 
 26.32  owner; 
 26.33     (2) fish bred for sale and consumption if the fish breeding 
 26.34  occurs on land zoned for agricultural use; 
 26.35     (3) the commercial boarding of horses if the boarding is 
 26.36  done in conjunction with raising or cultivating agricultural 
 27.1   products as defined in clause (1); 
 27.2      (4) property which is owned and operated by nonprofit 
 27.3   organizations used for equestrian activities, excluding racing; 
 27.4      (5) game birds and waterfowl bred and raised for use on a 
 27.5   shooting preserve licensed under section 97A.115; 
 27.6      (6) insects primarily bred to be used as food for animals; 
 27.7   and 
 27.8      (7) trees, grown for sale as a crop, and not sold for 
 27.9   timber, lumber, wood, or wood products; and 
 27.10     (8) maple syrup, grown by a person licensed by the 
 27.11  Minnesota department of agriculture under chapter 28A as a food 
 27.12  processor. 
 27.13     (f) If a parcel used for agricultural purposes is also used 
 27.14  for commercial or industrial purposes, including but not limited 
 27.15  to:  
 27.16     (1) wholesale and retail sales; 
 27.17     (2) processing of raw agricultural products or other goods; 
 27.18     (3) warehousing or storage of processed goods; and 
 27.19     (4) office facilities for the support of the activities 
 27.20  enumerated in clauses (1), (2), and (3), 
 27.21  the assessor shall classify the part of the parcel used for 
 27.22  agricultural purposes as class 1b, 2a, or 2b, whichever is 
 27.23  appropriate, and the remainder in the class appropriate to its 
 27.24  use.  The grading, sorting, and packaging of raw agricultural 
 27.25  products for first sale is considered an agricultural purpose.  
 27.26  A greenhouse or other building where horticultural or nursery 
 27.27  products are grown that is also used for the conduct of retail 
 27.28  sales must be classified as agricultural if it is primarily used 
 27.29  for the growing of horticultural or nursery products from seed, 
 27.30  cuttings, or roots and occasionally as a showroom for the retail 
 27.31  sale of those products.  Use of a greenhouse or building only 
 27.32  for the display of already grown horticultural or nursery 
 27.33  products does not qualify as an agricultural purpose.  
 27.34     The assessor shall determine and list separately on the 
 27.35  records the market value of the homestead dwelling and the one 
 27.36  acre of land on which that dwelling is located.  If any farm 
 28.1   buildings or structures are located on this homesteaded acre of 
 28.2   land, their market value shall not be included in this separate 
 28.3   determination.  
 28.4      (g) To qualify for classification under paragraph (b), 
 28.5   clause (4), a privately owned public use airport must be 
 28.6   licensed as a public airport under section 360.018.  For 
 28.7   purposes of paragraph (b), clause (4), "landing area" means that 
 28.8   part of a privately owned public use airport properly cleared, 
 28.9   regularly maintained, and made available to the public for use 
 28.10  by aircraft and includes runways, taxiways, aprons, and sites 
 28.11  upon which are situated landing or navigational aids.  A landing 
 28.12  area also includes land underlying both the primary surface and 
 28.13  the approach surfaces that comply with all of the following:  
 28.14     (i) the land is properly cleared and regularly maintained 
 28.15  for the primary purposes of the landing, taking off, and taxiing 
 28.16  of aircraft; but that portion of the land that contains 
 28.17  facilities for servicing, repair, or maintenance of aircraft is 
 28.18  not included as a landing area; 
 28.19     (ii) the land is part of the airport property; and 
 28.20     (iii) the land is not used for commercial or residential 
 28.21  purposes. 
 28.22  The land contained in a landing area under paragraph (b), clause 
 28.23  (4), must be described and certified by the commissioner of 
 28.24  transportation.  The certification is effective until it is 
 28.25  modified, or until the airport or landing area no longer meets 
 28.26  the requirements of paragraph (b), clause (4).  For purposes of 
 28.27  paragraph (b), clause (4), "public access area" means property 
 28.28  used as an aircraft parking ramp, apron, or storage hangar, or 
 28.29  an arrival and departure building in connection with the airport.
 28.30     (h) Class 2c property consists of any parcel or contiguous 
 28.31  parcels of unimproved real estate, excluding agricultural land 
 28.32  classified under this subdivision that meets all the criteria in 
 28.33  clauses (1) to (5): 
 28.34     (1) the property consists of at least 200 contiguous feet 
 28.35  of unimproved real estate that borders a meandered lake as 
 28.36  defined in section 103G.005, subdivision 15, paragraph (a), 
 29.1   clause (3); 
 29.2      (2) the unimproved real estate is located within 400 feet 
 29.3   from the ordinary high water elevation of the public waters.  
 29.4   For purposes of this clause, "unimproved" means that the 
 29.5   property, or that portion of the property qualifying under this 
 29.6   paragraph, contains no structures, that there are no docks or 
 29.7   landings on its shoreline, and that the natural terrain and 
 29.8   vegetation has not been disturbed, or has been restored to 
 29.9   native vegetation; 
 29.10     (3) the property is either (i) the homestead of the owner, 
 29.11  the owner's spouse, or the owner or spouse's son or daughter, or 
 29.12  (ii) has been in possession of the owner, the owner's spouse, or 
 29.13  the owner or spouse's son or daughter for a period of at least 
 29.14  seven years prior to application for benefits under this 
 29.15  section; 
 29.16     (4) the owner files an application with the county assessor 
 29.17  by July 1 for classification under this paragraph for the 
 29.18  subsequent assessment year; and 
 29.19     (5) the owner of the property signs a covenant agreement 
 29.20  and files the covenant with the county assessor in the county 
 29.21  where the property is located.  The covenant agreement must 
 29.22  include all of the following: 
 29.23     (i) legal description of the area to which the covenant 
 29.24  applies; 
 29.25     (ii) name and address of the owner; 
 29.26     (iii) a statement that the land described in the covenant 
 29.27  must be kept as undeveloped land for the duration of the 
 29.28  covenant; 
 29.29     (iv) a statement that the landowner may initiate expiration 
 29.30  of the covenant agreement by notifying the county assessor, in 
 29.31  writing, with the date of expiration which must be at least 
 29.32  eight years from the date of the expiration notice; 
 29.33     (v) a statement that the covenant is binding on the owner 
 29.34  or owner's successor or assignee and runs with the land; and 
 29.35     (vi) a witnessed signature of the owner covenanting to keep 
 29.36  the land in its undeveloped state as it existed on the date the 
 30.1   covenant was signed. 
 30.2      Upon expiration of a covenant agreement in clause (5), the 
 30.3   property which is sold is subject to additional taxes.  The 
 30.4   amount of additional taxes due on the property equals the 
 30.5   difference between the taxes actually levied and the taxes that 
 30.6   would have been imposed if the property had been valued and 
 30.7   classified as if class 2c did not apply.  The additional taxes 
 30.8   must be extended against the property on the tax list for the 
 30.9   current year, provided, however, that no interest or penalties 
 30.10  shall be levied on the additional taxes if timely paid, and 
 30.11  provided further, that the additional taxes must only be levied 
 30.12  with respect to the last seven years that the property has been 
 30.13  valued and assessed under this section.  For purposes of this 
 30.14  subdivision, "timely paid" means paid (i) within 60 days after 
 30.15  notification from the county that the property no longer 
 30.16  qualifies, or (ii) prior to the recording of the conveyance of 
 30.17  the property, whichever is earlier. 
 30.18     The tax imposed under this paragraph is a lien on the 
 30.19  property assessed to the same extent and for the same duration 
 30.20  as other real property taxes.  The tax must be extended by the 
 30.21  county auditor and, when payable, be collected and distributed 
 30.22  in the same manner provided by law for the collection and 
 30.23  distribution of other property taxes. 
 30.24     Class 2c has a class rate of 0.6 percent of market value. 
 30.25     <b>[EFFECTIVE DATE.]</b> This section is effective for the 2001 
 30.26  assessment and thereafter, for taxes payable in 2002 and 
 30.27  thereafter.  For taxes payable in 2002, the date for filing an 
 30.28  application with the county assessor under this section, 
 30.29  paragraph (h), clause (4), is September 1, 2001. 
 30.30     Sec. 11.  Minnesota Statutes 2000, section 273.13, 
 30.31  subdivision 24, is amended to read: 
 30.32     Subd. 24.  [CLASS 3.] (a) Commercial and industrial 
 30.33  property and utility real and personal property is class 3a.  
 30.34     (1) Except as otherwise provided, each parcel of 
 30.35  commercial, industrial, or utility real property has a class 
 30.36  rate of 2.4 1.5 percent of the first tier of market value, and 
 31.1   3.4 two percent of the remaining market value.  In the case of 
 31.2   contiguous parcels of property owned by the same person or 
 31.3   entity, only the value equal to the first-tier value of the 
 31.4   contiguous parcels qualifies for the reduced class rate, except 
 31.5   that contiguous parcels owned by the same person or entity shall 
 31.6   be eligible for the first-tier value class rate on each separate 
 31.7   business operated by the owner of the property, provided the 
 31.8   business is housed in a separate structure.  For the purposes of 
 31.9   this subdivision, the first tier means the 
 31.10  first $150,000 $200,000 of market value.  Real property owned in 
 31.11  fee by a utility for transmission line right-of-way shall be 
 31.12  classified at the class rate for the higher tier.  
 31.13     For purposes of this subdivision, parcels are considered to 
 31.14  be contiguous even if they are separated from each other by a 
 31.15  road, street, waterway, or other similar intervening type of 
 31.16  property.  Connections between parcels that consist of power 
 31.17  lines or pipelines do not cause the parcels to be contiguous.  
 31.18  Property owners who have contiguous parcels of property that 
 31.19  constitute separate businesses that may qualify for the 
 31.20  first-tier class rate shall notify the assessor by July 1, for 
 31.21  treatment beginning in the following taxes payable year.  
 31.22     (2) Notwithstanding clauses (1) and (2), all railroad 
 31.23  operating property and all personal property that is:  (i) part 
 31.24  of an electric generation, transmission, or distribution system; 
 31.25  or (ii) part of a pipeline system transporting or distributing 
 31.26  water, gas, crude oil, or petroleum products; and (iii) not 
 31.27  described in clause (3) or (4), has a class rate is subject to 
 31.28  the class rates as provided under clause (1) for the first tier 
 31.29  of market value and the remaining market value.  In the case of 
 31.30  multiple parcels in one county that are owned by one person or 
 31.31  entity, only one first tier amount is eligible for the reduced 
 31.32  rate.  
 31.33     (3) The entire market value of personal property that is:  
 31.34  (i) tools, implements, and machinery of an electric generation, 
 31.35  transmission, or distribution system; (ii) tools, implements, 
 31.36  and machinery of a pipeline system transporting or distributing 
 32.1   water, gas, crude oil, or petroleum products; or (iii) the mains 
 32.2   and pipes used in the distribution of steam or hot or chilled 
 32.3   water for heating or cooling buildings, has a class rate as 
 32.4   provided under clause (1) for the remaining market value in 
 32.5   excess of the first tier. 
 32.6      (4) The entire market value of personal property consisting 
 32.7   of attached machinery located at an electric generating station 
 32.8   that is part of an electric generating system has a class rate 
 32.9   as provided under clause (1) for the first tier of market value. 
 32.10     (b) Employment property defined in section 469.166, during 
 32.11  the period provided in section 469.170, shall constitute class 
 32.12  3b.  The class rates for class 3b property are determined under 
 32.13  paragraph (a). 
 32.14     (c)(1) Subject to the limitations of clause (2), structures 
 32.15  which are (i) located on property classified as class 3a, (ii) 
 32.16  constructed under an initial building permit issued after 
 32.17  January 2, 1996, (iii) located in a transit zone as defined 
 32.18  under section 473.3915, subdivision 3, (iv) located within the 
 32.19  boundaries of a school district, and (v) not primarily used for 
 32.20  retail or transient lodging purposes, shall have a class rate 
 32.21  equal to the lesser of 2.975 percent or the class rate of the 
 32.22  second tier of the commercial property rate under paragraph (a) 
 32.23  on any portion of the market value that does not qualify for the 
 32.24  first tier class rate under paragraph (a).  As used in item (v), 
 32.25  a structure is primarily used for retail or transient lodging 
 32.26  purposes if over 50 percent of its square footage is used for 
 32.27  those purposes.  A class rate equal to the lesser of 2.975 
 32.28  percent or the class rate of the second tier of the commercial 
 32.29  property class rate under paragraph (a) shall also apply to 
 32.30  improvements to existing structures that meet the requirements 
 32.31  of items (i) to (v) if the improvements are constructed under an 
 32.32  initial building permit issued after January 2, 1996, even if 
 32.33  the remainder of the structure was constructed prior to January 
 32.34  2, 1996.  For the purposes of this paragraph, a structure shall 
 32.35  be considered to be located in a transit zone if any portion of 
 32.36  the structure lies within the zone.  If any property once 
 33.1   eligible for treatment under this paragraph ceases to remain 
 33.2   eligible due to revisions in transit zone boundaries, the 
 33.3   property shall continue to receive treatment under this 
 33.4   paragraph for a period of three years. 
 33.5      (2) This clause applies to any structure qualifying for the 
 33.6   transit zone reduced class rate under clause (1) on January 2, 
 33.7   1999, or any structure meeting any of the qualification criteria 
 33.8   in item (i) and otherwise qualifying for the transit zone 
 33.9   reduced class rate under clause (1).  Such a structure continues 
 33.10  to receive the transit zone reduced class rate until the 
 33.11  occurrence of one of the events in item (ii).  Property 
 33.12  qualifying under item (i)(D), that is located outside of a city 
 33.13  of the first class, qualifies for the transit zone reduced class 
 33.14  rate as provided in that item.  Property qualifying under item 
 33.15  (i)(E) qualifies for the transit zone reduced class rate as 
 33.16  provided in that item. 
 33.17     (i) A structure qualifies for the rate in this clause if it 
 33.18  is: 
 33.19     (A) property for which a building permit was issued before 
 33.20  December 31, 1998; or 
 33.21     (B) property for which a building permit was issued before 
 33.22  June 30, 2001, if: 
 33.23     (I) at least 50 percent of the land on which the structure 
 33.24  is to be built has been acquired or is the subject of signed 
 33.25  purchase agreements or signed options as of March 15, 1998, by 
 33.26  the entity that proposes construction of the project or an 
 33.27  affiliate of the entity; 
 33.28     (II) signed agreements have been entered into with one 
 33.29  entity or with affiliated entities to lease for the account of 
 33.30  the entity or affiliated entities at least 50 percent of the 
 33.31  square footage of the structure or the owner of the structure 
 33.32  will occupy at least 50 percent of the square footage of the 
 33.33  structure; and 
 33.34     (III) one of the following requirements is met: 
 33.35     the project proposer has submitted the completed data 
 33.36  portions of an environmental assessment worksheet by December 
 34.1   31, 1998; or 
 34.2      a notice of determination of adequacy of an environmental 
 34.3   impact statement has been published by April 1, 1999; or 
 34.4      an alternative urban areawide review has been completed by 
 34.5   April 1, 1999; or 
 34.6      (C) property for which a building permit is issued before 
 34.7   July 30, 1999, if: 
 34.8      (I) at least 50 percent of the land on which the structure 
 34.9   is to be built has been acquired or is the subject of signed 
 34.10  purchase agreements as of March 31, 1998, by the entity that 
 34.11  proposes construction of the project or an affiliate of the 
 34.12  entity; 
 34.13     (II) a signed agreement has been entered into between the 
 34.14  building developer and a tenant to lease for its own account at 
 34.15  least 200,000 square feet of space in the building; 
 34.16     (III) a signed letter of intent is entered into by July 1, 
 34.17  1998, between the building developer and the tenant to lease the 
 34.18  space for its own account; and 
 34.19     (IV) the environmental review process required by state law 
 34.20  was commenced by December 31, 1998; 
 34.21     (D) property for which an irrevocable letter of credit with 
 34.22  a housing and redevelopment authority was signed before December 
 34.23  31, 1998.  The structure shall receive the transit zone reduced 
 34.24  class rate during construction and for the duration of time that 
 34.25  the original tenants remain in the building.  Any unoccupied net 
 34.26  leasable square footage that is not leased within 36 months 
 34.27  after the certificate of occupancy has been issued for the 
 34.28  building shall not be eligible to receive the reduced class 
 34.29  rate.  This reduced class rate applies only if a qualifying 
 34.30  entity continues to own the property; 
 34.31     (E) property, located in a city of the first class, and for 
 34.32  which the building permits for the excavation, the parking ramp, 
 34.33  and the office tower were issued prior to April 1, 1999, shall 
 34.34  receive the reduced class rate during construction and for the 
 34.35  first five assessment years immediately following its initial 
 34.36  occupancy provided that, when completed, at least 25 percent of 
 35.1   the net leasable square footage must be occupied by a qualifying 
 35.2   entity each year during this time period.  In order to receive 
 35.3   the reduced class rate on the structure in any subsequent 
 35.4   assessment years, at least 50 percent of the rentable square 
 35.5   footage must be occupied by a qualifying entity.  This reduced 
 35.6   class rate applies only if a qualifying entity continues to own 
 35.7   the property. 
 35.8      (ii) A structure specified by this clause, other than a 
 35.9   structure qualifying under clause (i)(D) or (E), shall continue 
 35.10  to receive the transit zone reduced class rate until the 
 35.11  occurrence of one of the following events: 
 35.12     (A) if the structure upon initial occupancy will be owner 
 35.13  occupied by the entity initially constructing the structure or 
 35.14  an affiliated entity, the structure receives the reduced class 
 35.15  rate until the structure ceases to be at least 50 percent 
 35.16  occupied by the entity or an affiliated entity, provided, if the 
 35.17  portion of the structure occupied by that entity or an affiliate 
 35.18  of the entity is less than 85 percent, the transit zone class 
 35.19  rate reduction for the portion of structure not so occupied 
 35.20  terminates upon the leasing of such space to any nonaffiliated 
 35.21  entity; or 
 35.22     (B) if the structure is leased by a single entity or 
 35.23  affiliated entity at the time of initial occupancy, the 
 35.24  structure shall receive the reduced class rate until the 
 35.25  structure ceases to be at least 50 percent occupied by the 
 35.26  entity or an affiliated entity, provided, if the portion of the 
 35.27  structure occupied by that entity or an affiliate of the entity 
 35.28  is less than 85 percent, the transit zone class rate reduction 
 35.29  for the portion of structure not so occupied shall terminate 
 35.30  upon the leasing of such space to any nonaffiliated entity; or 
 35.31     (C) if the structure meets the criteria in item (i)(C), the 
 35.32  structure shall receive the reduced class rate until the 
 35.33  expiration of the initial lease term of the applicable tenants. 
 35.34     Percentages occupied or leased shall be determined based 
 35.35  upon net leasable square footage in the structure.  The assessor 
 35.36  shall allocate the value of the structure in the same fashion as 
 36.1   provided in the general law for portions of any structure 
 36.2   receiving and not receiving the transit tax class reduction as a 
 36.3   result of this clause. 
 36.4      (3) For purposes of paragraph (c), "qualifying entity" 
 36.5   means the entity owning the property on September 1, 2000, or an 
 36.6   affiliate of an entity that owned the property on September 1, 
 36.7   2000. 
 36.8      <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 36.9   payable in 2002 and subsequent years. 
 36.10     Sec. 12.  Minnesota Statutes 2000, section 273.13, 
 36.11  subdivision 25, is amended to read: 
 36.12     Subd. 25.  [CLASS 4.] (a) Class 4a is residential real 
 36.13  estate containing four or more units and used or held for use by 
 36.14  the owner or by the tenants or lessees of the owner as a 
 36.15  residence for rental periods of 30 days or more.  Class 4a also 
 36.16  includes hospitals licensed under sections 144.50 to 144.56, 
 36.17  other than hospitals exempt under section 272.02, and contiguous 
 36.18  property used for hospital purposes, without regard to whether 
 36.19  the property has been platted or subdivided.  Class 4a property 
 36.20  in a city with a population of 5,000 or less, that is (1) 
 36.21  located outside of the metropolitan area, as defined in section 
 36.22  473.121, subdivision 2, or outside any county contiguous to the 
 36.23  metropolitan area, and (2) whose city boundary is at least 15 
 36.24  miles from the boundary of any city with a population greater 
 36.25  than 5,000 has a class rate of 2.15 percent of market value.  
 36.26  All other class 4a property has a class rate of 2.4 1.5 percent 
 36.27  of market value for taxes payable in 2002, 1.25 percent of 
 36.28  market value for taxes payable in 2003, and one percent of 
 36.29  market value for taxes payable in 2004 and subsequent years, 
 36.30  except that class 4a property consisting of a structure 
 36.31  constructed after June 30, 2001, has a class rate of one percent 
 36.32  of market value for taxes payable in 2003 and subsequent years.  
 36.33  For purposes of this paragraph, population has the same meaning 
 36.34  given in section 477A.011, subdivision 3. 
 36.35     (b) Class 4b includes: 
 36.36     (1) residential real estate containing less than four units 
 37.1   that does not qualify as class 4bb, other than seasonal 
 37.2   residential, and recreational; 
 37.3      (2) manufactured homes not classified under any other 
 37.4   provision; 
 37.5      (3) a dwelling, garage, and surrounding one acre of 
 37.6   property on a nonhomestead farm classified under subdivision 23, 
 37.7   paragraph (b) containing two or three units; 
 37.8      (4) unimproved property that is classified residential as 
 37.9   determined under subdivision 33.  
 37.10     Class 4b property has a class rate of 1.65 1.5 percent of 
 37.11  market value for taxes payable in 2002, 1.25 percent of market 
 37.12  value for taxes payable in 2003, and one percent of market value 
 37.13  for taxes payable in 2004 and subsequent years.  
 37.14     (c) Class 4bb includes: 
 37.15     (1) nonhomestead residential real estate containing one 
 37.16  unit, other than seasonal residential, and recreational; and 
 37.17     (2) a single family dwelling, garage, and surrounding one 
 37.18  acre of property on a nonhomestead farm classified under 
 37.19  subdivision 23, paragraph (b). 
 37.20     Class 4bb has a class rate of 1.2 one percent on the first 
 37.21  $76,000 of market value and a class rate of 1.65 1.5 percent of 
 37.22  its market value that exceeds $76,000 for taxes payable in 2002, 
 37.23  1.25 percent of market value for taxes payable in 2003, and one 
 37.24  percent of market value for taxes payable in 2004 and subsequent 
 37.25  years. 
 37.26     Property that has been classified as seasonal recreational 
 37.27  residential property at any time during which it has been owned 
 37.28  by the current owner or spouse of the current owner does not 
 37.29  qualify for class 4bb. 
 37.30     (d) Class 4c property includes: 
 37.31     (1) except as provided in subdivision 22, paragraph (c), 
 37.32  real property devoted to temporary and seasonal residential 
 37.33  occupancy for recreation purposes, including real property 
 37.34  devoted to temporary and seasonal residential occupancy for 
 37.35  recreation purposes and not devoted to commercial purposes for 
 37.36  more than 250 days in the year preceding the year of 
 38.1   assessment.  For purposes of this clause, property is devoted to 
 38.2   a commercial purpose on a specific day if any portion of the 
 38.3   property is used for residential occupancy, and a fee is charged 
 38.4   for residential occupancy.  In order for a property to be 
 38.5   classified as class 4c, seasonal recreational residential for 
 38.6   commercial purposes, at least 40 percent of the annual gross 
 38.7   lodging receipts related to the property must be from business 
 38.8   conducted during 90 consecutive days and either (i) at least 60 
 38.9   percent of all paid bookings by lodging guests during the year 
 38.10  must be for periods of at least two consecutive nights; or (ii) 
 38.11  at least 20 percent of the annual gross receipts must be from 
 38.12  charges for rental of fish houses, boats and motors, 
 38.13  snowmobiles, downhill or cross-country ski equipment, or charges 
 38.14  for marina services, launch services, and guide services, or the 
 38.15  sale of bait and fishing tackle.  For purposes of this 
 38.16  determination, a paid booking of five or more nights shall be 
 38.17  counted as two bookings.  Class 4c also includes commercial use 
 38.18  real property used exclusively for recreational purposes in 
 38.19  conjunction with class 4c property devoted to temporary and 
 38.20  seasonal residential occupancy for recreational purposes, up to 
 38.21  a total of two acres, provided the property is not devoted to 
 38.22  commercial recreational use for more than 250 days in the year 
 38.23  preceding the year of assessment and is located within two miles 
 38.24  of the class 4c property with which it is used.  Class 4c 
 38.25  property classified in this clause also includes the remainder 
 38.26  of class 1c resorts provided that the entire property including 
 38.27  that portion of the property classified as class 1c also meets 
 38.28  the requirements for class 4c under this clause; otherwise the 
 38.29  entire property is classified as class 3.  Owners of real 
 38.30  property devoted to temporary and seasonal residential occupancy 
 38.31  for recreation purposes and all or a portion of which was 
 38.32  devoted to commercial purposes for not more than 250 days in the 
 38.33  year preceding the year of assessment desiring classification as 
 38.34  class 1c or 4c, must submit a declaration to the assessor 
 38.35  designating the cabins or units occupied for 250 days or less in 
 38.36  the year preceding the year of assessment by January 15 of the 
 39.1   assessment year.  Those cabins or units and a proportionate 
 39.2   share of the land on which they are located will be designated 
 39.3   class 1c or 4c as otherwise provided.  The remainder of the 
 39.4   cabins or units and a proportionate share of the land on which 
 39.5   they are located will be designated as class 3a.  The owner of 
 39.6   property desiring designation as class 1c or 4c property must 
 39.7   provide guest registers or other records demonstrating that the 
 39.8   units for which class 1c or 4c designation is sought were not 
 39.9   occupied for more than 250 days in the year preceding the 
 39.10  assessment if so requested.  The portion of a property operated 
 39.11  as a (1) restaurant, (2) bar, (3) gift shop, and (4) other 
 39.12  nonresidential facility operated on a commercial basis not 
 39.13  directly related to temporary and seasonal residential occupancy 
 39.14  for recreation purposes shall not qualify for class 1c or 4c; 
 39.15     (2) qualified property used as a golf course if: 
 39.16     (i) it is open to the public on a daily fee basis.  It may 
 39.17  charge membership fees or dues, but a membership fee may not be 
 39.18  required in order to use the property for golfing, and its green 
 39.19  fees for golfing must be comparable to green fees typically 
 39.20  charged by municipal courses; and 
 39.21     (ii) it meets the requirements of section 273.112, 
 39.22  subdivision 3, paragraph (d). 
 39.23     A structure used as a clubhouse, restaurant, or place of 
 39.24  refreshment in conjunction with the golf course is classified as 
 39.25  class 3a property; 
 39.26     (3) real property up to a maximum of one acre of land owned 
 39.27  by a nonprofit community service oriented organization; provided 
 39.28  that the property is not used for a revenue-producing activity 
 39.29  for more than six days in the calendar year preceding the year 
 39.30  of assessment and the property is not used for residential 
 39.31  purposes on either a temporary or permanent basis.  For purposes 
 39.32  of this clause, a "nonprofit community service oriented 
 39.33  organization" means any corporation, society, association, 
 39.34  foundation, or institution organized and operated exclusively 
 39.35  for charitable, religious, fraternal, civic, or educational 
 39.36  purposes, and which is exempt from federal income taxation 
 40.1   pursuant to section 501(c)(3), (10), or (19) of the Internal 
 40.2   Revenue Code of 1986, as amended through December 31, 1990.  For 
 40.3   purposes of this clause, "revenue-producing activities" shall 
 40.4   include but not be limited to property or that portion of the 
 40.5   property that is used as an on-sale intoxicating liquor or 3.2 
 40.6   percent malt liquor establishment licensed under chapter 340A, a 
 40.7   restaurant open to the public, bowling alley, a retail store, 
 40.8   gambling conducted by organizations licensed under chapter 349, 
 40.9   an insurance business, or office or other space leased or rented 
 40.10  to a lessee who conducts a for-profit enterprise on the 
 40.11  premises.  Any portion of the property which is used for 
 40.12  revenue-producing activities for more than six days in the 
 40.13  calendar year preceding the year of assessment shall be assessed 
 40.14  as class 3a.  The use of the property for social events open 
 40.15  exclusively to members and their guests for periods of less than 
 40.16  24 hours, when an admission is not charged nor any revenues are 
 40.17  received by the organization shall not be considered a 
 40.18  revenue-producing activity; 
 40.19     (4) post-secondary student housing of not more than one 
 40.20  acre of land that is owned by a nonprofit corporation organized 
 40.21  under chapter 317A and is used exclusively by a student 
 40.22  cooperative, sorority, or fraternity for on-campus housing or 
 40.23  housing located within two miles of the border of a college 
 40.24  campus; 
 40.25     (5) manufactured home parks as defined in section 327.14, 
 40.26  subdivision 3; 
 40.27     (6) real property that is actively and exclusively devoted 
 40.28  to indoor fitness, health, social, recreational, and related 
 40.29  uses, is owned and operated by a not-for-profit corporation, and 
 40.30  is located within the metropolitan area as defined in section 
 40.31  473.121, subdivision 2; and 
 40.32     (7) a leased or privately owned noncommercial aircraft 
 40.33  storage hangar not exempt under section 272.01, subdivision 2, 
 40.34  and the land on which it is located, provided that: 
 40.35     (i) the land is on an airport owned or operated by a city, 
 40.36  town, county, metropolitan airports commission, or group 
 41.1   thereof; and 
 41.2      (ii) the land lease, or any ordinance or signed agreement 
 41.3   restricting the use of the leased premise, prohibits commercial 
 41.4   activity performed at the hangar. 
 41.5      If a hangar classified under this clause is sold after June 
 41.6   30, 2000, a bill of sale must be filed by the new owner with the 
 41.7   assessor of the county where the property is located within 60 
 41.8   days of the sale. 
 41.9      Class 4c property has a class rate of 1.65 one percent of 
 41.10  market value, except that (i) each parcel of seasonal 
 41.11  residential recreational property not used for commercial 
 41.12  purposes has the same class rates as class 4bb property, (ii) 
 41.13  manufactured home parks assessed under clause (5) have the same 
 41.14  class rate as class 4b property, and (iii) property described in 
 41.15  paragraph (d), clause (4), has the same class rate as the rate 
 41.16  applicable to the first tier of class 4bb nonhomestead 
 41.17  residential real estate under paragraph (c).  
 41.18     (e) Class 4d property is qualifying low-income rental 
 41.19  housing certified to the assessor by the housing finance agency 
 41.20  under sections 273.126 and 462A.071.  Class 4d includes land in 
 41.21  proportion to the total market value of the building that is 
 41.22  qualifying low-income rental housing.  For all properties 
 41.23  qualifying as class 4d, the market value determined by the 
 41.24  assessor must be based on the normal approach to value using 
 41.25  normal unrestricted rents. 
 41.26     Class 4d property has a class rate of one 0.9 percent of 
 41.27  market value for taxes payable in 2002, 0.95 percent of market 
 41.28  value for taxes payable in 2003, and one percent of market value 
 41.29  for taxes payable in 2004 and thereafter.  
 41.30     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 41.31  payable in 2002 and subsequent years. 
 41.32     Sec. 13.  Minnesota Statutes 2000, section 273.13, 
 41.33  subdivision 31, is amended to read: 
 41.34     Subd. 31.  [CLASS 5.] Class 5 property includes:  
 41.35     (1) unmined iron ore and low-grade iron-bearing formations 
 41.36  as defined in section 273.14; and 
 42.1      (2) all other property not otherwise classified. 
 42.2      Class 5 property has a class rate of 3.4 two percent of 
 42.3   market value. 
 42.4      <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 42.5   payable in 2002 and subsequent years. 
 42.6      Sec. 14.  [273.1384] [HOMESTEAD AND AGRICULTURAL CREDITS.] 
 42.7      Subdivision 1.  [HOMESTEAD CREDIT.] Each county auditor 
 42.8   shall determine a homestead credit amount for each property 
 42.9   classified as class 1 residential homestead or class 2a 
 42.10  agricultural homestead within the county equal to 0.37 percent 
 42.11  of net tax capacity, to a maximum of $256 per homestead.  In the 
 42.12  case of an agricultural or resort homestead, only the net tax 
 42.13  capacity of the house, garage, and surrounding one acre of land 
 42.14  shall be used in determining the property's homestead credit 
 42.15  amount.  The credit may not exceed the net tax on the property 
 42.16  after subtraction of all other credits under section 273.1393.  
 42.17     Subd. 2.  [AGRICULTURAL CREDIT.] Property classified as 
 42.18  class 2a agricultural homestead is eligible for an agricultural 
 42.19  credit.  The credit is equal to 0.2 percent of the market value 
 42.20  of the property, excluding the market value attributable to the 
 42.21  house, garage, and surrounding one acre of land, up to a maximum 
 42.22  of $368 per homestead. 
 42.23     Subd. 3.  [CREDIT APPLICATION.] The credits under this 
 42.24  section must be used to proportionately reduce the property tax 
 42.25  payable to all taxing jurisdictions, after subtraction of all 
 42.26  other credits under section 273.1393. 
 42.27     Subd. 4.  [CREDIT REIMBURSEMENT.] The county auditor shall 
 42.28  certify the amount of tax reductions granted under this section 
 42.29  to the commissioner of revenue on the abstracts of tax lists 
 42.30  submitted under section 275.29.  The commissioner of revenue 
 42.31  shall verify the credit amounts reported, and shall make 
 42.32  payments directly to the affected taxing jurisdictions other 
 42.33  than school districts in two equal installments on September 15 
 42.34  and December 26 each year.  The commissioner of revenue shall 
 42.35  certify the total of the tax reductions granted under this 
 42.36  section for each school district to the commissioner of 
 43.1   children, families, and learning before September 1 of each 
 43.2   taxes payable year.  The commissioner of children, families, and 
 43.3   learning shall reimburse each affected school district for the 
 43.4   amount of the property tax reductions allowed under this section 
 43.5   as provided in section 273.1392. 
 43.6      Subd. 5.  [APPROPRIATION.] An amount sufficient to pay the 
 43.7   credit reimbursements provided under this section for school 
 43.8   districts, intermediate school districts, or any group of school 
 43.9   districts levying as a single taxing entity, is annually 
 43.10  appropriated from the general fund to the commissioner of 
 43.11  children, families, and learning.  An amount sufficient to pay 
 43.12  the credit reimbursements provided under this section for 
 43.13  counties, cities, towns, and special taxing districts is 
 43.14  annually appropriated from the general fund to the commissioner 
 43.15  of revenue.  A jurisdiction's aid amount may be increased or 
 43.16  decreased based on any prior year adjustments for homestead 
 43.17  credit or other property tax credit or aid programs. 
 43.18     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 43.19  payable in 2002 and subsequent years. 
 43.20     Sec. 15.  Minnesota Statutes 2000, section 273.1392, is 
 43.21  amended to read: 
 43.22     273.1392 [PAYMENT; SCHOOL DISTRICTS.] 
 43.23     The amounts of conservation tax credits under section 
 43.24  273.119; disaster or emergency reimbursement under section 
 43.25  273.123; attached machinery aid under section 273.138; homestead 
 43.26  credit under section 273.13 homestead and agricultural credits 
 43.27  under section 273.1384; aids and credits under section 273.1398; 
 43.28  wetlands reimbursement under section 275.295; enterprise zone 
 43.29  property credit payments under section 469.171; and metropolitan 
 43.30  agricultural preserve reduction under section 473H.10 for school 
 43.31  districts, shall be certified to the department of children, 
 43.32  families, and learning by the department of revenue.  The 
 43.33  amounts so certified shall be paid according to section 127A.45, 
 43.34  subdivisions 9 and 13. 
 43.35     <b>[EFFECTIVE DATE.]</b> This section is effective for aids and 
 43.36  credits payable in 2002 and thereafter. 
 44.1      Sec. 16.  Minnesota Statutes 2000, section 273.1393, is 
 44.2   amended to read: 
 44.3      273.1393 [COMPUTATION OF NET PROPERTY TAXES.] 
 44.4      Notwithstanding any other provisions to the contrary, "net" 
 44.5   property taxes are determined by subtracting the credits in the 
 44.6   order listed from the gross tax:  
 44.7      (1) disaster credit as provided in section 273.123; 
 44.8      (2) powerline credit as provided in section 273.42; 
 44.9      (3) agricultural preserves credit as provided in section 
 44.10  473H.10; 
 44.11     (4) enterprise zone credit as provided in section 469.171; 
 44.12     (5) disparity reduction credit; 
 44.13     (6) conservation tax credit as provided in section 273.119; 
 44.14     (7) education homestead credit and agricultural credits as 
 44.15  provided in section 273.1382 273.1384; 
 44.16     (8) taconite homestead credit as provided in section 
 44.17  273.135; and 
 44.18     (9) supplemental homestead credit as provided in section 
 44.19  273.1391.  
 44.20     The combination of all property tax credits must not exceed 
 44.21  the gross tax amount.  
 44.22     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 44.23  payable in 2002 and subsequent years. 
 44.24     Sec. 17.  Minnesota Statutes 2000, section 273.1398, 
 44.25  subdivision 1a, is amended to read: 
 44.26     Subd. 1a.  [TAX BASE DIFFERENTIAL.] (a) For aids payable in 
 44.27  2000 2003, for county governments only, the tax base 
 44.28  differential is: 
 44.29     (1) 0.45 0.5 percent of the assessment year 1998 2001 
 44.30  taxable market value of class 2a agricultural homestead 
 44.31  property, excluding the house, garage, and surrounding one acre 
 44.32  of land, between $115,000 and $600,000 and over 320 acres, minus 
 44.33  the value over $600,000 that is less than 320 acres; plus 
 44.34     (2) 0.5 percent of the assessment year 1998 taxable market 
 44.35  value of noncommercial seasonal recreational residential 
 44.36  property over $75,000 in value; plus 
 45.1      (3) for purposes of computing the fiscal disparity 
 45.2   adjustment only, 0.2 percent of the assessment year 1998 taxable 
 45.3   market value of class 3 commercial-industrial property over 
 45.4   $150,000. 
 45.5      (b) For the purposes of the distribution of homestead and 
 45.6   agricultural credit aid for aids payable in 2000, the 
 45.7   commissioner of revenue shall use the best information available 
 45.8   as of June 30, 1999, to make an estimate of the value described 
 45.9   in paragraph (a), clause (1).  The commissioner shall adjust the 
 45.10  distribution of homestead and agricultural credit aid for aids 
 45.11  payable in 2001 and subsequent years if new information 
 45.12  regarding the value described in paragraph (a), clause (1), 
 45.13  becomes available after June 30, 1999 3(4) electric generation 
 45.14  attached machinery property under section 273.13, subdivision 24.
 45.15     Sec. 18.  Minnesota Statutes 2000, section 273.1398, is 
 45.16  amended by adding a subdivision to read: 
 45.17     Subd. 2e.  [HOMESTEAD AND AGRICULTURAL AID FOR CITIES, 
 45.18  TOWNS, AND SPECIAL TAXING DISTRICTS.] Notwithstanding the 
 45.19  provisions of subdivision 2, the amount of homestead and 
 45.20  agricultural credit aid for a statutory or home rule charter 
 45.21  city, town, school district, or special taxing district for aid 
 45.22  payable in calendar year 2002 and thereafter is zero. 
 45.23     <b>[EFFECTIVE DATE.]</b> This section is effective for aids 
 45.24  payable in 2002 and future years. 
 45.25     Sec. 19.  Minnesota Statutes 2000, section 275.02, is 
 45.26  amended to read: 
 45.27     275.02 [STATE LEVY, EXCEPTIONS FOR BONDED DEBT; 
 45.28  CERTIFICATION OF TAX RATE.] 
 45.29     The A state tax for bonded debt pursuant to the Minnesota 
 45.30  Constitution, article XI, shall be levied on the tax capacity of 
 45.31  all taxable property in the state.  The rate of the tax shall be 
 45.32  certified by the state auditor to each county auditor on or 
 45.33  before November 15 1 annually.  The tax under this section is 
 45.34  not treated as a local tax rate under 469.177.  
 45.35     Sec. 20.  [275.025] [STATE GENERAL TAX.] 
 45.36     Subdivision 1.  [LEVY AMOUNT.] The state general levy is 
 46.1   levied against commercial-industrial property and seasonal 
 46.2   recreational property, as defined in this section.  The state 
 46.3   general levy is $429,400,000 for taxes payable in 2002.  For 
 46.4   taxes payable in subsequent years, the levy is increased each 
 46.5   year by multiplying the amount for the prior year by the sum of 
 46.6   one plus the rate of increase, if any, in the implicit price 
 46.7   deflator for government consumption expenditures and gross 
 46.8   investment for state and local governments prepared by the 
 46.9   Bureau of Economic Analysts of the United States Department of 
 46.10  Commerce for the 12-month period ending March 31 of the year 
 46.11  prior to the year the taxes are payable.  The tax under this 
 46.12  section is not treated as a local tax rate under section 469.177.
 46.13     Subd. 2.  [COMMERCIAL-INDUSTRIAL TAX CAPACITY.] For the 
 46.14  purposes of this section, "commercial-industrial tax capacity" 
 46.15  means the tax capacity of all taxable property classified as 
 46.16  class 3 or class 5(1) under section 273.13, except for electric 
 46.17  generation attached machinery under class 3(4).  "Adjusted 
 46.18  commercial-industrial tax capacity" means commercial-industrial 
 46.19  tax capacity adjusted by countywide sales ratios for the 
 46.20  relevant classes of property determined under section 127A.48.  
 46.21  County commercial-industrial tax capacity amounts are not 
 46.22  adjusted under chapter 276A or 473F. 
 46.23     Subd. 3.  [COMMERCIAL-INDUSTRIAL LAND TAX CAPACITY.] For 
 46.24  the purposes of this section, "commercial-industrial land tax 
 46.25  capacity" means the tax capacity of the land value of all 
 46.26  taxable property classified as class 3 or class 5 under section 
 46.27  273.13.  "Adjusted commercial-industrial land tax capacity" 
 46.28  means commercial-industrial land tax capacity adjusted by 
 46.29  countywide sales ratios for the relevant classes of property 
 46.30  determined under section 127A.48.  County commercial-industrial 
 46.31  land tax capacity amounts are not adjusted under chapter 276A or 
 46.32  473F. 
 46.33     Subd. 4.  [SEASONAL RECREATIONAL TAX CAPACITY.] For the 
 46.34  purposes of this section, "seasonal recreational tax capacity" 
 46.35  means the tax capacity of all class 4c(1) and 4c(2) property 
 46.36  under section 273.13, subdivision 25, except that the first 
 47.1   $80,000 of market value of each noncommercial class 4c(1) 
 47.2   property shall have a tax capacity equal to one-half of the tax 
 47.3   capacity specified in section 273.13, subdivision 25.  "Adjusted 
 47.4   seasonal recreational tax capacity" means seasonal recreational 
 47.5   tax capacity adjusted by countywide sales ratios for the 
 47.6   relevant class of property determined under section 127A.48. 
 47.7      Subd. 5.  [APPORTIONMENT AND LEVY OF STATE GENERAL TAX; 
 47.8   TAXES PAYABLE IN 2002.] For taxes payable in 2002, the state 
 47.9   general tax must be distributed among the counties by applying a 
 47.10  uniform rate to each county's adjusted commercial-industrial tax 
 47.11  capacity and its adjusted seasonal recreational tax capacity.  
 47.12  Within each county, the tax must be levied by applying a uniform 
 47.13  rate against commercial-industrial tax capacity and seasonal 
 47.14  recreational tax capacity. 
 47.15     Subd. 6.  [APPORTIONMENT AND LEVY OF STATE GENERAL TAX; 
 47.16  TAXES PAYABLE IN 2003 AND SUBSEQUENT YEARS.] (a) For taxes 
 47.17  payable in 2003 and subsequent years, the state general levy 
 47.18  must first be apportioned into a commercial-industrial share and 
 47.19  a seasonal recreational share, in proportion to the share of the 
 47.20  general education tax paid by each of those classes in 2002.  
 47.21  The commercial-industrial apportionment must be further divided 
 47.22  into a regular commercial-industrial share and a 
 47.23  commercial-industrial land share.  For taxes payable in 2003, 
 47.24  100 percent must be apportioned to the regular 
 47.25  commercial-industrial share.  For taxes payable in 2004, 90 
 47.26  percent must be apportioned to the regular commercial-industrial 
 47.27  share and 10 percent to the commercial-industrial land share.  
 47.28  In each succeeding year, an additional ten percent must be 
 47.29  shifted from regular commercial-industrial to 
 47.30  commercial-industrial land; for taxes payable in 2013 and 
 47.31  thereafter the full amount of the commercial-industrial share 
 47.32  must be levied upon commercial-industrial land. 
 47.33     (b) For each of the component shares of the state general 
 47.34  levy determined in paragraph (a), the tax must be distributed 
 47.35  among the counties by applying a uniform rate to each county's 
 47.36  adjusted tax capacity for the relevant class.  Within each 
 48.1   county, each component share of the tax must be levied by 
 48.2   applying a uniform rate against the relevant tax capacity for 
 48.3   that share of the levy. 
 48.4      <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 48.5   payable in 2002 and subsequent years. 
 48.6      Sec. 21.  Minnesota Statutes 2000, section 276.11, 
 48.7   subdivision 1, is amended to read: 
 48.8      Subdivision 1.  [GENERALLY.] As soon as practical after the 
 48.9   settlement day determined in section 276.09, the county 
 48.10  treasurer shall pay to the state treasurer or the treasurer of a 
 48.11  town, city, school district, or special district, on the warrant 
 48.12  of the county auditor, all receipts of taxes levied by the 
 48.13  taxing district and deliver up all orders and other evidences of 
 48.14  indebtedness of the taxing district, taking triplicate receipts 
 48.15  for them.  The treasurer shall file one of the receipts with the 
 48.16  county auditor, and shall return one by mail on the day of its 
 48.17  receipt to the clerk of the town, city, school district, or 
 48.18  special district to which payment was made.  The clerk shall 
 48.19  keep the receipt in the clerk's office.  Upon written request of 
 48.20  the taxing district, to the extent practicable, the county 
 48.21  treasurer shall make partial payments of amounts collected 
 48.22  periodically in advance of the next settlement and 
 48.23  distribution.  A statement prepared by the county treasurer must 
 48.24  accompany each payment.  It must state the years for which taxes 
 48.25  included in the payment were collected and, for each year, the 
 48.26  amount of the taxes and any penalties on the tax.  Upon written 
 48.27  request of a taxing district, except school districts, the 
 48.28  county treasurer shall pay at least 70 percent of the estimated 
 48.29  collection within 30 days after the settlement date determined 
 48.30  in section 276.09.  Within seven business days after the due 
 48.31  date, or 28 calendar days after the postmark date on the 
 48.32  envelopes containing real or personal property tax statements, 
 48.33  whichever is latest, the county treasurer shall pay to the 
 48.34  treasurer of the school districts 50 percent of the estimated 
 48.35  collections arising from taxes levied by and belonging to the 
 48.36  school district, unless the school district elects to receive 50 
 49.1   percent of the estimated collections arising from taxes levied 
 49.2   by and belonging to the school district after making a 
 49.3   proportionate reduction to reflect any loss in collections as 
 49.4   the result of any delay in mailing tax statements.  In that 
 49.5   case, 50 percent of those adjusted, estimated collections shall 
 49.6   be paid by the county treasurer to the treasurer of the school 
 49.7   district within seven business days of the due date.  The 
 49.8   remaining 50 percent of the estimated collections must be paid 
 49.9   to the treasurer of the school district within the next seven 
 49.10  business days of the later of the dates in the preceding 
 49.11  sentence, unless the school district elects to receive the 
 49.12  remainder of its estimated collections after a proportionate 
 49.13  reduction has been made to reflect any loss in collections as 
 49.14  the result of any delay in mailing tax statements.  In that 
 49.15  case, the remaining 50 percent of those adjusted, estimated 
 49.16  collections shall be paid by the county treasurer to the 
 49.17  treasurer of the school district within 14 days of the due 
 49.18  date.  The treasurer shall pay the balance of the amounts 
 49.19  collected to the state within 35 days, or to a municipal 
 49.20  corporation or other body within 60 days after the settlement 
 49.21  date determined in section 276.09.  After 45 days interest at an 
 49.22  annual rate of eight percent accrues and must be paid to the 
 49.23  taxing district.  Interest must be paid upon appropriation from 
 49.24  the general revenue fund of the county.  If not paid, it may be 
 49.25  recovered by the taxing district, in a civil action. 
 49.26     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 49.27  payable in 2002 and subsequent years. 
 49.28     Sec. 22.  Minnesota Statutes 2000, section 276A.06, 
 49.29  subdivision 3, is amended to read: 
 49.30     Subd. 3.  [APPORTIONMENT OF LEVY.] The county auditor shall 
 49.31  apportion the levy of each governmental unit in the county in 
 49.32  the manner prescribed by this subdivision.  The auditor shall: 
 49.33     (a) by August 20 of 1997 and each subsequent year, 
 49.34  determine the areawide portion of the levy for each governmental 
 49.35  unit by multiplying the local tax rate of the governmental unit 
 49.36  for the preceding levy year times the distribution value set 
 50.1   forth in subdivision 2, clause (b); and 
 50.2      (b) by September 5 of 1997 and each subsequent year, 
 50.3   determine the local portion of the current year's levy by 
 50.4   subtracting the resulting amount from clause (a) from the 
 50.5   governmental unit's current year's levy; and 
 50.6      (c) for determinations made under paragraph (a) in the case 
 50.7   of school districts, for taxes payable in 2002, exclude the 
 50.8   general education tax rate from the local tax rate for the 
 50.9   preceding levy year. 
 50.10     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 50.11  following final enactment. 
 50.12     Sec. 23.  Minnesota Statutes 2000, section 297B.09, 
 50.13  subdivision 1, is amended to read: 
 50.14     Subdivision 1.  [GENERAL FUND SHARE.] Money collected and 
 50.15  received under this chapter must be deposited as provided in 
 50.16  this subdivision.  
 50.17     Thirty-two percent of the money collected and received must 
 50.18  be deposited in the highway user tax distribution fund, and.  
 50.19  Nineteen and one-half percent must be deposited in the transit 
 50.20  fund under section 16A.88.  The remaining 68 48.5 percent of the 
 50.21  money must be deposited in the general fund.  
 50.22     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2002. 
 50.23     Sec. 24.  Minnesota Statutes 2000, section 473.388, 
 50.24  subdivision 4, is amended to read: 
 50.25     Subd. 4.  [FINANCIAL ASSISTANCE.] The council may must 
 50.26  grant the requested financial assistance if it determines that 
 50.27  the proposed service is intended to replace the service to the 
 50.28  applying city or town or combination thereof by the council and 
 50.29  that the proposed service will meet the needs of the applicant 
 50.30  at least as efficiently and effectively as the existing service. 
 50.31     The amount of assistance which the council may provide 
 50.32  under this section may not exceed the sum of be less than:  
 50.33     (a) the portion of the available local transit funds which 
 50.34  the applicant proposes to use to subsidize the proposed 
 50.35  service the grants received under this subdivision by the 
 50.36  applicant in calendar year 2001 and the tax revenues for transit 
 51.1   services levied within the city or town, whether by the city or 
 51.2   town itself or by the metropolitan council, for taxes payable in 
 51.3   2001; and times 
 51.4      (b) an amount of financial assistance bearing an identical 
 51.5   proportional relationship to the amount under clause (a) as the 
 51.6   total amount of funds used by the council to fund its transit 
 51.7   operations bears to the ratio of the total appropriation to the 
 51.8   council for nondebt transit operations in the current fiscal 
 51.9   year to the sum of the total appropriation to the council for 
 51.10  nondebt transit operations in fiscal year 2001 and the total 
 51.11  amount of taxes collected by the council under section 
 51.12  473.446 and the opt-out municipalities under this section in 
 51.13  calendar year 2001, including the portion of homestead and 
 51.14  agricultural credit aid under section 273.1398 attributable to 
 51.15  the nondebt transit levy.  The council shall pay the amount to 
 51.16  be provided to the recipient from the funds the council would 
 51.17  otherwise use to fund its transit operations.  
 51.18     For purposes of this section, "available local transit 
 51.19  funds" means 90 percent of the tax revenues which would accrue 
 51.20  to the council from the tax it levies under section 473.446 in 
 51.21  the applicant city or town or combination thereof.  
 51.22     For purposes of this section, "tax revenues" in the city or 
 51.23  town means the sum of the following: 
 51.24     (1) the nondebt spread levy, which is the total of the 
 51.25  taxes extended by application of the local tax rate for nondebt 
 51.26  purposes on the taxable net tax capacity; 
 51.27     (2) the portion of the fiscal disparity distribution levy 
 51.28  under section 473F.08, subdivision 3, attributable to nondebt 
 51.29  purposes; and 
 51.30     (3) the portion of the homestead credit and agricultural 
 51.31  credit aid and disparity reduction aid amounts under section 
 51.32  273.1398, subdivisions 2 and 3, attributable to nondebt purposes.
 51.33     Tax revenues do not include the state feathering 
 51.34  reimbursement under section 473.446. 
 51.35     <b>[EFFECTIVE DATE.]</b> This section is effective for calendar 
 51.36  year 2002 and subsequent years. 
 52.1      Sec. 25.  Minnesota Statutes 2000, section 473.388, 
 52.2   subdivision 7, is amended to read: 
 52.3      Subd. 7.  [LOCAL LEVY OPTION.] (a) A statutory or home rule 
 52.4   charter city or town that is eligible for assistance under this 
 52.5   section, in lieu of receiving the assistance, may levy a tax for 
 52.6   payment of the operating and capital expenditures for transit 
 52.7   and other related activities and to provide for payment of 
 52.8   obligations issued by the municipality for such purposes, 
 52.9   provided that the tax must be sufficient to maintain the level 
 52.10  of transit service provided in the municipality in the previous 
 52.11  year capital expenditures for transit and other related 
 52.12  activities, provided that property taxes were pledged to satisfy 
 52.13  the obligations, and provided that legislative appropriations 
 52.14  are insufficient to satisfy the obligations. 
 52.15     (b) The transit tax revenues derived by the municipality 
 52.16  may not exceed: 
 52.17     (1) for the first transit levy year and any subsequent 
 52.18  transit levy year immediately following a year in which the 
 52.19  municipality declines to make the levy, the maximum available 
 52.20  local transit funds for the municipality for taxes payable in 
 52.21  the current year under section 473.446, calculated as if the 
 52.22  percentage of transit tax revenues for the municipality were 88 
 52.23  percent instead of 90 percent, and multiplied by the 
 52.24  municipality's market value adjustment ratio; and 
 52.25     (2) for taxes levied in any year that immediately follows a 
 52.26  year in which the municipality elects to levy under this 
 52.27  subdivision, the maximum transit tax that the municipality may 
 52.28  have levied in the previous year under this subdivision, 
 52.29  multiplied by the municipality's market value adjustment ratio. 
 52.30     The commissioner of revenue shall certify the 
 52.31  municipality's levy limitation under this subdivision to the 
 52.32  municipality by June 1 of the levy year.  The tax must be 
 52.33  accumulated and kept in a separate fund to be known as the 
 52.34  "replacement transit fund." 
 52.35     (c) To enable the municipality to receive revenues 
 52.36  described in clauses (2) and (3) of the definition of "tax 
 53.1   revenues" in subdivision 4, that would otherwise be lost if the 
 53.2   municipality's transit tax levy was not treated as a successor 
 53.3   levy to that made by the council under section 473.446: 
 53.4      (1) in the first transit levy year and any subsequent 
 53.5   transit levy year immediately following a year in which the 
 53.6   municipality declined to make the levy, 88 percent of the 
 53.7   council's nondebt spread levy for the current taxes payable year 
 53.8   shall be treated as levied by the municipality, and not the 
 53.9   council, for purposes of section 473F.08, subdivision 3, for the 
 53.10  purpose of determining its local tax rate for the preceding 
 53.11  year; and 
 53.12     (2) 88 percent of the revenues described in clause (3) of 
 53.13  the definition of "tax revenues" in subdivision 4, payable in 
 53.14  the first transit levy year, or payable in any subsequent 
 53.15  transit levy year following a year in which a municipality 
 53.16  declined to make the levy, shall be permanently transferred from 
 53.17  the council to the municipality.  If a municipality levies a tax 
 53.18  under this subdivision in one year, but declines to levy in a 
 53.19  subsequent year, the aid transferred under this clause shall be 
 53.20  transferred back to the council. 
 53.21     (d) Any transit taxes levied under this subdivision are not 
 53.22  subject to, or counted towards, any limit hereafter imposed by 
 53.23  law on the levy of taxes upon taxable property within any 
 53.24  municipality unless the law specifically includes the transit 
 53.25  tax. 
 53.26     (e) This subdivision is consistent with the transit 
 53.27  redesign plan.  Eligible municipalities opting to levy the 
 53.28  transit tax under this subdivision shall continue to meet the 
 53.29  regional performance standards established by the council. 
 53.30     (f) Within the designated Americans with Disabilities Act 
 53.31  area, metro mobility remains the obligation of the state. 
 53.32     (g) For purposes of this subdivision, "transit levy year" 
 53.33  is any year in which the municipality elects to levy under this 
 53.34  subdivision. 
 53.35     (h) A municipality may not levy taxes under this 
 53.36  subdivision in any year unless it notifies the council and the 
 54.1   commissioner of revenue of its intent to levy before July 1 of 
 54.2   the levy year.  The notification must include the amount of the 
 54.3   municipality's proposed transit tax for the current levy year.  
 54.4   After June 30 in the levy year, a municipality's decision to 
 54.5   levy or not levy taxes under this subdivision is irrevocable for 
 54.6   that levy year. 
 54.7      <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 54.8   payable in 2002 and subsequent years. 
 54.9      Sec. 26.  Minnesota Statutes 2000, section 473.446, 
 54.10  subdivision 1, is amended to read: 
 54.11     Subdivision 1.  [WITHIN TRANSIT TAXING DISTRICT.] For the 
 54.12  purposes of sections 473.405 to 473.449 and the metropolitan 
 54.13  transit system, except as otherwise provided in this subdivision 
 54.14  and subdivision 1b, the council shall levy each year upon all 
 54.15  taxable property within the metropolitan transit taxing 
 54.16  district, defined in subdivision 2, a transit tax consisting of: 
 54.17     (a) an amount which shall be used for payment of the 
 54.18  expenses of operating transit and paratransit service and to 
 54.19  provide for payment of obligations issued by the council under 
 54.20  section 473.436, subdivision 6; 
 54.21     (b) an additional amount, if any, the council determines to 
 54.22  be necessary to provide for the full and timely payment of its 
 54.23  certificates of indebtedness and other obligations outstanding 
 54.24  on July 1, 1985, to which property taxes under this section have 
 54.25  been pledged; and 
 54.26     (c) (b) an additional amount necessary to provide full and 
 54.27  timely payment of certificates of indebtedness, bonds, including 
 54.28  refunding bonds or other obligations issued or to be issued 
 54.29  under section 473.39 by the council for purposes of acquisition 
 54.30  and betterment of property and other improvements of a capital 
 54.31  nature and to which the council has specifically pledged tax 
 54.32  levies under this clause. 
 54.33     The property tax levied by the council for general purposes 
 54.34  under paragraph (a) must not exceed the following amount for the 
 54.35  years specified: 
 54.36     (1) for taxes payable in 1995, the council's property tax 
 55.1   levy limitation for general transit purposes is equal to the 
 55.2   former regional transit board's property tax levy limitation for 
 55.3   general transit purposes under this subdivision, for taxes 
 55.4   payable in 1994, multiplied by an index for market valuation 
 55.5   changes equal to the total market valuation of all taxable 
 55.6   property located within the metropolitan transit taxing district 
 55.7   for the current taxes payable year divided by the total market 
 55.8   valuation of all taxable property located within the 
 55.9   metropolitan transit taxing district for the previous taxes 
 55.10  payable year; and 
 55.11     (2) for taxes payable in 1996 and subsequent years, the 
 55.12  product of (i) the council's property tax levy limitation for 
 55.13  general transit purposes for the previous year determined under 
 55.14  this subdivision before reduction by the amount levied by any 
 55.15  municipality in the previous year under section 473.388, 
 55.16  subdivision 7, multiplied by (ii) an index for market valuation 
 55.17  changes equal to the total market valuation of all taxable 
 55.18  property located within the metropolitan transit taxing district 
 55.19  for the current taxes payable year divided by the total market 
 55.20  valuation of all taxable property located within the 
 55.21  metropolitan transit taxing district for the previous taxes 
 55.22  payable year, minus the amount levied by any municipality in the 
 55.23  current levy year under section 473.388, subdivision 7. 
 55.24     The portion of the property tax levy for transit district 
 55.25  operating purposes attributable to a municipality that has 
 55.26  exercised a local levy option under section 473.388, subdivision 
 55.27  7, is the amount as determined under subdivision 1b.  The 
 55.28  portion of the property tax levy for transit district operating 
 55.29  purposes attributable to the remaining municipalities within the 
 55.30  transit district is found by subtracting the portions 
 55.31  attributable to the municipalities that have exercised a local 
 55.32  levy option under section 473.388, subdivision 7. 
 55.33     For the taxes payable year 1995, the index for market 
 55.34  valuation changes shall be multiplied by an amount equal to the 
 55.35  sum of the regional transit board's property tax levy limitation 
 55.36  for the taxes payable year 1994 and $160,665.  The $160,665 
 56.1   increase shall be a permanent adjustment to the levy limit base 
 56.2   used in determining the regional transit board's property tax 
 56.3   levy limitation for general purposes for subsequent taxes 
 56.4   payable years. 
 56.5      For the purpose of determining the council's property tax 
 56.6   levy limitation for general transit purposes under this 
 56.7   subdivision, "total market valuation" means the total market 
 56.8   valuation of all taxable property within the metropolitan 
 56.9   transit taxing district without valuation adjustments for fiscal 
 56.10  disparities (chapter 473F), tax increment financing (sections 
 56.11  469.174 to 469.179), and high voltage transmission lines 
 56.12  (section 273.425). 
 56.13     The county auditor shall reduce the tax levied pursuant to 
 56.14  this section and section 473.388 on all property within 
 56.15  statutory and home rule charter cities and towns that receive 
 56.16  full-peak service and limited off-peak service by an amount 
 56.17  equal to the tax levy that would be produced by applying a rate 
 56.18  of 0.510 percent of net tax capacity on the property.  The 
 56.19  county auditor shall reduce the tax levied pursuant to this 
 56.20  section and section 473.388 on all property within statutory and 
 56.21  home rule charter cities and towns that receive limited peak 
 56.22  service by an amount equal to the tax levy that would be 
 56.23  produced by applying a rate of 0.765 percent of net tax capacity 
 56.24  on the property.  The amounts so computed by the county auditor 
 56.25  shall be submitted to the commissioner of revenue as part of the 
 56.26  abstracts of tax lists required to be filed with the 
 56.27  commissioner under section 275.29.  Any prior year adjustments 
 56.28  shall also be certified in the abstracts of tax lists.  The 
 56.29  commissioner shall review the certifications to determine their 
 56.30  accuracy and may make changes in the certification as necessary 
 56.31  or return a certification to the county auditor for 
 56.32  corrections.  The commissioner shall pay to the council and to 
 56.33  the municipalities levying under section 473.388, subdivision 7, 
 56.34  the amounts certified by the county auditors on the dates 
 56.35  provided in section 273.1398, apportioned between the council 
 56.36  and the municipality in the same proportion as the total transit 
 57.1   levy is apportioned within the municipality.  There is annually 
 57.2   appropriated from the general fund in the state treasury to the 
 57.3   department of revenue the amounts necessary to make these 
 57.4   payments.  
 57.5      For the purposes of this subdivision, "full-peak and 
 57.6   limited off-peak service" means peak period regular route 
 57.7   service, plus weekday midday regular route service at intervals 
 57.8   longer than 60 minutes on the route with the greatest frequency; 
 57.9   and "limited peak period service" means peak period regular 
 57.10  route service only.  
 57.11     For the purposes of property taxes payable in the following 
 57.12  year, the council shall annually determine which cities and 
 57.13  towns qualify for the 0.510 percent or 0.765 percent tax 
 57.14  capacity rate reduction and shall certify this list to the 
 57.15  county auditor of the county wherein such cities and towns are 
 57.16  located on or before September 15.  No changes may be made to 
 57.17  the annual list after September 15. 
 57.18     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 57.19  payable in 2002 and subsequent years. 
 57.20     Sec. 27.  Minnesota Statutes 2000, section 473.446, is 
 57.21  amended by adding a subdivision to read: 
 57.22     Subd. 1c.  [TRANSIT LEVY AFTER 2001.] Notwithstanding any 
 57.23  other provision of this section, beginning with taxes payable in 
 57.24  2002, the council may levy the transit tax authorized under 
 57.25  subdivision 1 only for the purpose of providing for the full and 
 57.26  timely payment of bonds, certificates of indebtedness, and other 
 57.27  obligations issued by the council, to which property taxes have 
 57.28  been pledged. 
 57.29     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 57.30  payable in 2002 and subsequent years.  
 57.31     Sec. 28.  Minnesota Statutes 2000, section 473F.08, 
 57.32  subdivision 3, is amended to read: 
 57.33     Subd. 3.  [APPORTIONMENT OF LEVY.] The county auditor shall 
 57.34  apportion the levy of each governmental unit in the auditor's 
 57.35  county in the manner prescribed by this subdivision.  The 
 57.36  auditor shall: 
 58.1      (a) by August 20, determine the areawide portion of the 
 58.2   levy for each governmental unit by multiplying the local tax 
 58.3   rate of the governmental unit for the preceding levy year times 
 58.4   the distribution value set forth in subdivision 2, clause (b); 
 58.5   and 
 58.6      (b) by September 5, determine the local portion of the 
 58.7   current year's levy by subtracting the resulting amount from 
 58.8   clause (a) from the governmental unit's current year's levy.; 
 58.9      (c) for determinations made under clause (a) in the case of 
 58.10  school districts, for taxes payable in 2002, exclude the general 
 58.11  education tax rate from the local tax rate for the preceding 
 58.12  levy year; 
 58.13     (d) for determinations made under clause (a) in the case of 
 58.14  the metropolitan council, for taxes payable in 2002, exclude the 
 58.15  transit operating tax rate from the local tax rate for the 
 58.16  preceding levy year; and 
 58.17     (e) for determinations made under clause (a) in the case of 
 58.18  transit opt-out cities, for taxes payable in 2002, exclude the 
 58.19  opt-out transit rate from the local tax rate for the preceding 
 58.20  levy year. 
 58.21     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 58.22  following final enactment. 
 58.23     Sec. 29.  Minnesota Statutes 2000, section 477A.011, 
 58.24  subdivision 35, is amended to read: 
 58.25     Subd. 35.  [TAX EFFORT RATE.] "Tax effort rate" means the 
 58.26  sum of (1) the net levy for all cities plus (2) the total aid 
 58.27  payments to all cities under section 273.1398 in the previous 
 58.28  year; divided by the sum of the city net tax capacity for all 
 58.29  cities.  For purposes of this section, "net levy" means the city 
 58.30  levy, after all adjustments, used for calculating the local tax 
 58.31  rate under section 275.08 for taxes payable in the year prior to 
 58.32  the aid distribution.  The fiscal disparity distribution levy 
 58.33  under chapter 276A or 473F is included in net levy. 
 58.34     <b>[EFFECTIVE DATE.]</b> This section is effective for aids 
 58.35  payable in 2002 and future years. 
 58.36     Sec. 30.  Minnesota Statutes 2000, section 477A.011, 
 59.1   subdivision 36, is amended to read: 
 59.2      Subd. 36.  [CITY AID BASE.] (a) Except as provided in 
 59.3   paragraphs (b) to (n) (q), "city aid base" means, for each city, 
 59.4   the sum of the local government aid and equalization aid it was 
 59.5   originally certified to receive in calendar year 1993 under 
 59.6   Minnesota Statutes 1992, section 477A.013, subdivisions 3 and 5, 
 59.7   and the amount of disparity reduction aid it received in 
 59.8   calendar year 1993 under Minnesota Statutes 1992, section 
 59.9   273.1398, subdivision 3. 
 59.10     (b) For aids payable in 1996 and thereafter, a city that in 
 59.11  1992 or 1993 transferred an amount from governmental funds to 
 59.12  its sewer and water fund, which amount exceeded its net levy for 
 59.13  taxes payable in the year in which the transfer occurred, has a 
 59.14  "city aid base" equal to the sum of (i) its city aid base, as 
 59.15  calculated under paragraph (a), and (ii) one-half of the 
 59.16  difference between its city aid distribution under section 
 59.17  477A.013, subdivision 9, for aids payable in 1995 and its city 
 59.18  aid base for aids payable in 1995. 
 59.19     (c) The city aid base for any city with a population less 
 59.20  than 500 is increased by $40,000 for aids payable in calendar 
 59.21  year 1995 and thereafter, and the maximum amount of total aid it 
 59.22  may receive under section 477A.013, subdivision 9, paragraph 
 59.23  (c), is also increased by $40,000 for aids payable in calendar 
 59.24  year 1995 only, provided that: 
 59.25     (i) the average total tax capacity rate for taxes payable 
 59.26  in 1995 exceeds 200 percent; 
 59.27     (ii) the city portion of the tax capacity rate exceeds 100 
 59.28  percent; and 
 59.29     (iii) its city aid base is less than $60 per capita. 
 59.30     (d) The city aid base for a city is increased by $20,000 in 
 59.31  1998 and thereafter and the maximum amount of total aid it may 
 59.32  receive under section 477A.013, subdivision 9, paragraph (c), is 
 59.33  also increased by $20,000 in calendar year 1998 only, provided 
 59.34  that: 
 59.35     (i) the city has a population in 1994 of 2,500 or more; 
 59.36     (ii) the city is located in a county, outside of the 
 60.1   metropolitan area, which contains a city of the first class; 
 60.2      (iii) the city's net tax capacity used in calculating its 
 60.3   1996 aid under section 477A.013 is less than $400 per capita; 
 60.4   and 
 60.5      (iv) at least four percent of the total net tax capacity, 
 60.6   for taxes payable in 1996, of property located in the city is 
 60.7   classified as railroad property. 
 60.8      (e) The city aid base for a city is increased by $200,000 
 60.9   in 1999 and thereafter and the maximum amount of total aid it 
 60.10  may receive under section 477A.013, subdivision 9, paragraph 
 60.11  (c), is also increased by $200,000 in calendar year 1999 only, 
 60.12  provided that: 
 60.13     (i) the city was incorporated as a statutory city after 
 60.14  December 1, 1993; 
 60.15     (ii) its city aid base does not exceed $5,600; and 
 60.16     (iii) the city had a population in 1996 of 5,000 or more. 
 60.17     (f) The city aid base for a city is increased by $450,000 
 60.18  in 1999 to 2008 and the maximum amount of total aid it may 
 60.19  receive under section 477A.013, subdivision 9, paragraph (c), is 
 60.20  also increased by $450,000 in calendar year 1999 only, provided 
 60.21  that: 
 60.22     (i) the city had a population in 1996 of at least 50,000; 
 60.23     (ii) its population had increased by at least 40 percent in 
 60.24  the ten-year period ending in 1996; and 
 60.25     (iii) its city's net tax capacity for aids payable in 1998 
 60.26  is less than $700 per capita. 
 60.27     (g) Beginning in 2002, the city aid base for a city is 
 60.28  equal to the sum of its city aid base in 2001 and the amount of 
 60.29  additional aid it was certified to receive under section 477A.06 
 60.30  in 2001.  For 2002 only, the maximum amount of total aid a city 
 60.31  may receive under section 477A.013, subdivision 9, paragraph 
 60.32  (c), is also increased by the amount it was certified to receive 
 60.33  under section 477A.06 in 2001. 
 60.34     (h) The city aid base for a city is increased by $150,000 
 60.35  for aids payable in 2000 and thereafter, and the maximum amount 
 60.36  of total aid it may receive under section 477A.013, subdivision 
 61.1   9, paragraph (c), is also increased by $150,000 in calendar year 
 61.2   2000 only, provided that: 
 61.3      (1) the city has a population that is greater than 1,000 
 61.4   and less than 2,500; 
 61.5      (2) its commercial and industrial percentage for aids 
 61.6   payable in 1999 is greater than 45 percent; and 
 61.7      (3) the total market value of all commercial and industrial 
 61.8   property in the city for assessment year 1999 is at least 15 
 61.9   percent less than the total market value of all commercial and 
 61.10  industrial property in the city for assessment year 1998. 
 61.11     (i) The city aid base for a city is increased by $200,000 
 61.12  in 2000 and thereafter, and the maximum amount of total aid it 
 61.13  may receive under section 477A.013, subdivision 9, paragraph 
 61.14  (c), is also increased by $200,000 in calendar year 2000 only, 
 61.15  provided that: 
 61.16     (1) the city had a population in 1997 of 2,500 or more; 
 61.17     (2) the net tax capacity of the city used in calculating 
 61.18  its 1999 aid under section 477A.013 is less than $650 per 
 61.19  capita; 
 61.20     (3) the pre-1940 housing percentage of the city used in 
 61.21  calculating 1999 aid under section 477A.013 is greater than 12 
 61.22  percent; 
 61.23     (4) the 1999 local government aid of the city under section 
 61.24  477A.013 is less than 20 percent of the amount that the formula 
 61.25  aid of the city would have been if the need increase percentage 
 61.26  was 100 percent; and 
 61.27     (5) the city aid base of the city used in calculating aid 
 61.28  under section 477A.013 is less than $7 per capita. 
 61.29     (j) The city aid base for a city is increased by $225,000 
 61.30  in calendar years 2000 to 2002 and the maximum amount of total 
 61.31  aid it may receive under section 477A.013, subdivision 9, 
 61.32  paragraph (c), is also increased by $225,000 in calendar year 
 61.33  2000 only, provided that: 
 61.34     (1) the city had a population of at least 5,000; 
 61.35     (2) its population had increased by at least 50 percent in 
 61.36  the ten-year period ending in 1997; 
 62.1      (3) the city is located outside of the Minneapolis-St. Paul 
 62.2   metropolitan statistical area as defined by the United States 
 62.3   Bureau of the Census; and 
 62.4      (4) the city received less than $30 per capita in aid under 
 62.5   section 477A.013, subdivision 9, for aids payable in 1999. 
 62.6      (k) The city aid base for a city is increased by $102,000 
 62.7   in 2000 and thereafter, and the maximum amount of total aid it 
 62.8   may receive under section 477A.013, subdivision 9, paragraph 
 62.9   (c), is also increased by $102,000 in calendar year 2000 only, 
 62.10  provided that: 
 62.11     (1) the city has a population in 1997 of 2,000 or more; 
 62.12     (2) the net tax capacity of the city used in calculating 
 62.13  its 1999 aid under section 477A.013 is less than $455 per 
 62.14  capita; 
 62.15     (3) the net levy of the city used in calculating 1999 aid 
 62.16  under section 477A.013 is greater than $195 per capita; and 
 62.17     (4) the 1999 local government aid of the city under section 
 62.18  477A.013 is less than 38 percent of the amount that the formula 
 62.19  aid of the city would have been if the need increase percentage 
 62.20  was 100 percent. 
 62.21     (l) The city aid base for a city is increased by $32,000 in 
 62.22  2001 and thereafter, and the maximum amount of total aid it may 
 62.23  receive under section 477A.013, subdivision 9, paragraph (c), is 
 62.24  also increased by $32,000 in calendar year 2001 only, provided 
 62.25  that: 
 62.26     (1) the city has a population in 1998 that is greater than 
 62.27  200 but less than 500; 
 62.28     (2) the city's revenue need used in calculating aids 
 62.29  payable in 2000 was greater than $200 per capita; 
 62.30     (3) the city net tax capacity for the city used in 
 62.31  calculating aids available in 2000 was equal to or less than 
 62.32  $200 per capita; 
 62.33     (4) the city aid base of the city used in calculating aid 
 62.34  under section 477A.013 is less than $65 per capita; and 
 62.35     (5) the city's formula aid for aids payable in 2000 was 
 62.36  greater than zero. 
 63.1      (m) The city aid base for a city is increased by $7,200 in 
 63.2   2001 and thereafter, and the maximum amount of total aid it may 
 63.3   receive under section 477A.013, subdivision 9, paragraph (c), is 
 63.4   also increased by $7,200 in calendar year 2001 only, provided 
 63.5   that: 
 63.6      (1) the city had a population in 1998 that is greater than 
 63.7   200 but less than 500; 
 63.8      (2) the city's commercial industrial percentage used in 
 63.9   calculating aids payable in 2000 was less than ten percent; 
 63.10     (3) more than 25 percent of the city's population was 60 
 63.11  years old or older according to the 1990 census; 
 63.12     (4) the city aid base of the city used in calculating aid 
 63.13  under section 477A.013 is less than $15 per capita; and 
 63.14     (5) the city's formula aid for aids payable in 2000 was 
 63.15  greater than zero. 
 63.16     (n) The city aid base for a city is increased by $45,000 in 
 63.17  2001 and thereafter, and the maximum amount of total aid it may 
 63.18  receive under section 477A.013, subdivision 9, paragraph (c), is 
 63.19  also increased by $45,000 in calendar year 2001 only, provided 
 63.20  that: 
 63.21     (1) the net tax capacity of the city used in calculating 
 63.22  its 2000 aid under section 477A.013 is less than $810 per 
 63.23  capita; 
 63.24     (2) the population of the city declined more than two 
 63.25  percent between 1988 and 1998; 
 63.26     (3) the net levy of the city used in calculating 2000 aid 
 63.27  under section 477A.013 is greater than $240 per capita; and 
 63.28     (4) the city received less than $36 per capita in aid under 
 63.29  section 477A.013, subdivision 9, for aids payable in 2000. 
 63.30     (o) The city aid base for a city is increased by $150,000 
 63.31  in calendar years 2002 to 2011 and the maximum amount of total 
 63.32  aid it may receive under section 477A.013, subdivision 9, 
 63.33  paragraph (c), is also increased by $150,000 in calendar year 
 63.34  2002 only, provided that: 
 63.35     (1) the city had a population of at least 3,000 but no more 
 63.36  than 4,000 in 1999; 
 64.1      (2) its home county is located within the seven-county 
 64.2   metropolitan area; 
 64.3      (3) its pre-1940 housing percentage is less than 15 
 64.4   percent; and 
 64.5      (4) its city net tax capacity per capita for taxes payable 
 64.6   in 2000 is less than $900 per capita. 
 64.7      (p) The city aid base for a city with a population greater 
 64.8   than 50,000 which is located outside of the seven-county 
 64.9   metropolitan area is increased in 2002 and thereafter, and the 
 64.10  maximum amount of total aid it may receive under section 
 64.11  477A.013, subdivision 9, paragraph (b) or (c), is also increased 
 64.12  in calendar year 2002 only, by an amount equal to the lesser of: 
 64.13     (1) the total population of the city's metropolitan 
 64.14  statistical area, as defined by the United States Bureau of the 
 64.15  Census, which resides outside of the city, multiplied by $25; or 
 64.16     (2) $1,000,000. 
 64.17     (q) The city aid base for a city for aid payable in 2003 is 
 64.18  increased by 0.5 percent of the assessment year 2001 taxable 
 64.19  market value of property classified as class 3(4) under section 
 64.20  273.13, subdivision 24, multiplied by the city's local tax rate 
 64.21  for taxes payable in 2002. 
 64.22     <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
 64.23  aids payable in 2002. 
 64.24     Sec. 31.  Minnesota Statutes 2000, section 477A.013, 
 64.25  subdivision 1, is amended to read: 
 64.26     Subdivision 1.  [TOWNS.] In 1994 each town that had levied 
 64.27  for taxes payable in the prior year a local tax rate of at least 
 64.28  .008 shall receive a distribution equal to the amount it 
 64.29  received in 1993 under this section before any nonpermanent 
 64.30  reductions made under section 477A.0132.  In 1995 each town that 
 64.31  had levied for taxes payable in 1993 a local tax rate of at 
 64.32  least .008 shall receive a distribution equal to 102 percent of 
 64.33  the amount it received in 1994 under this section before any 
 64.34  increases or reductions under sections 16A.711, subdivision 5, 
 64.35  and 477A.0132.  In 1996 and subsequent years each town that had 
 64.36  levied for taxes payable in 1993 a local tax rate of at least 
 65.1   .008 shall receive a distribution equal to the amount it 
 65.2   received in the previous year under this section, adjusted for 
 65.3   inflation as provided under section 477A.03, subdivision 3 2002, 
 65.4   no town is eligible for a distribution under this subdivision.  
 65.5   In 2003 and subsequent years, each town is eligible to receive 
 65.6   aid under this subdivision equal to 0.5 percent of the 
 65.7   assessment year 2001 taxable market value of property classified 
 65.8   as class 3(4) under section 273.13, subdivision 24, multiplied 
 65.9   by the town's local tax rate for taxes payable in 2002. 
 65.10     <b>[EFFECTIVE DATE.]</b> This section is effective for aids 
 65.11  payable in 2002 and subsequent years. 
 65.12     Sec. 32.  Minnesota Statutes 2000, section 477A.013, 
 65.13  subdivision 9, is amended to read: 
 65.14     Subd. 9.  [CITY AID DISTRIBUTION.] (a) In calendar year 
 65.15  1994 2002 and thereafter, each city shall receive an aid 
 65.16  distribution equal to the sum of (1) the city formula aid under 
 65.17  subdivision 8, and (2) its city aid base. 
 65.18     (b) The percentage increase for a first class city in 
 65.19  calendar year 1995 and thereafter shall not exceed the 
 65.20  percentage increase in the sum of the aid to all cities under 
 65.21  this section in the current calendar year compared to the sum of 
 65.22  the aid to all cities in the previous year.  For aids payable in 
 65.23  2002 only, the amount of the aid paid to a first class city 
 65.24  located in the seven-county metropolitan area, shall not exceed 
 65.25  its aid amount for calendar 2001 by more than 55 percent of its 
 65.26  aid payment in calendar year 2001 under section 273.1398, 
 65.27  subdivision 2. 
 65.28     (c) For aids payable in all years except 2002, the total 
 65.29  aid for any city, except a first class city, shall not exceed 
 65.30  the sum of (1) ten percent of the city's net levy for the year 
 65.31  prior to the aid distribution plus (2) its total aid in the 
 65.32  previous year before any increases or decreases under sections 
 65.33  16A.711, subdivision 5, and 477A.0132.  For aids payable in 2002 
 65.34  only, the total aid for any city, except a first class city, 
 65.35  shall not exceed the sum of (1) 50 percent of the city's net 
 65.36  levy for the year prior to the aid distribution plus (2) its 
 66.1   total aid in the previous year before any increases or decreases 
 66.2   under sections 16A.711, subdivision 5, and 477A.0132. 
 66.3      (d) Notwithstanding paragraph (c), in 1995 only, for cities 
 66.4   which in 1992 or 1993 transferred an amount from governmental 
 66.5   funds to their sewer and water fund in an amount greater than 
 66.6   their net levy for taxes payable in the year in which the 
 66.7   transfer occurred, the total aid shall not exceed the sum of (1) 
 66.8   20 percent of the city's net levy for the year prior to the aid 
 66.9   distribution plus (2) its total aid in the previous year before 
 66.10  any increases or decreases under sections 16A.711, subdivision 
 66.11  5, and 477A.0132. 
 66.12     <b>[EFFECTIVE DATE.]</b> This section is effective for aids 
 66.13  payable in 2002 and future years. 
 66.14     Sec. 33.  Minnesota Statutes 2000, section 477A.03, 
 66.15  subdivision 2, is amended to read: 
 66.16     Subd. 2.  [ANNUAL APPROPRIATION.] (a) A sum sufficient to 
 66.17  discharge the duties imposed by sections 477A.011 to 477A.014 is 
 66.18  annually appropriated from the general fund to the commissioner 
 66.19  of revenue.  
 66.20     (b) Aid payments to counties under section 477A.0121 are 
 66.21  limited to $20,265,000 in 1996.  Aid payments to counties under 
 66.22  section 477A.0121 are limited to $27,571,625 in 1997.  For aid 
 66.23  payable in 1998 and thereafter, the total aids paid under 
 66.24  section 477A.0121 are the amounts certified to be paid in the 
 66.25  previous year, adjusted for inflation as provided under 
 66.26  subdivision 3. 
 66.27     (c)(i) For aids payable in 1998 and thereafter, the total 
 66.28  aids paid to counties under section 477A.0122 are the amounts 
 66.29  certified to be paid in the previous year, adjusted for 
 66.30  inflation as provided under subdivision 3. 
 66.31     (ii) Aid payments to counties under section 477A.0122 in 
 66.32  2000 are further increased by an additional $20,000,000 in 2000. 
 66.33     (d) Aid payments to cities in 1999 2002 under section 
 66.34  477A.013, subdivision 9, are limited 
 66.35  to $380,565,489 $505,000,000.  For aids payable in 2000, the 
 66.36  total aids paid under section 477A.013, subdivision 9, are the 
 67.1   amounts certified to be paid in the previous year, adjusted for 
 67.2   inflation as provided in subdivision 3, and increased by the 
 67.3   amount necessary to effectuate Laws 1999, chapter 243, article 
 67.4   5, section 48, paragraph (b).  For aids payable in 2001 through 
 67.5   2003, the total aids paid under section 477A.013, subdivision 9, 
 67.6   are the amounts certified to be paid in the previous year, 
 67.7   adjusted for inflation as provided under subdivision 3, and 
 67.8   increased by an amount equal to the amounts calculated under 
 67.9   sections 477A.011, subdivision 36, paragraph (q), and 477A.07, 
 67.10  subdivision 3, for 2003.  For aids payable in 2004, the total 
 67.11  aids paid under section 477A.013, subdivision 9, are the amounts 
 67.12  certified to be paid in the previous year, adjusted for 
 67.13  inflation as provided under subdivision 3, and increased by the 
 67.14  amount certified to be paid in 2003 under section 477A.06, and 
 67.15  increased by an amount equal to the amounts calculated under 
 67.16  section 477A.07, subdivision 3, for 2004.  For aids payable in 
 67.17  2005 and thereafter, the total aids paid under section 477A.013, 
 67.18  subdivision 9, are the amounts certified to be paid in the 
 67.19  previous year, adjusted for inflation as provided under 
 67.20  subdivision 3.  The additional amount authorized under 
 67.21  subdivision 4 is not included when calculating the appropriation 
 67.22  limits under this paragraph. 
 67.23     <b>[EFFECTIVE DATE.]</b> This section is effective for aids 
 67.24  payable in 2002 and future years. 
 67.25     Sec. 34.  [477A.07] [RENTAL HOUSING TAX BASE REPLACEMENT 
 67.26  AID.] 
 67.27     Subdivision 1.  [AID AMOUNT.] Each county and city is 
 67.28  eligible for aid equal to the amount by which (i) 0.25 percent 
 67.29  of the assessment year 2001 taxable market value of class 4a, 
 67.30  class 4b, and that portion of class 4bb property in excess of 
 67.31  $76,000 in market value, as defined in section 273.13, 
 67.32  subdivision 25, exceeds (ii) 0.4 percent of the jurisdiction's 
 67.33  total taxable net tax capacity for taxes payable in 2002, 
 67.34  multiplied by the jurisdiction's average tax rate for taxes 
 67.35  payable in 2002. 
 67.36     Subd. 2.  [COUNTY AID.] Each county's aid amount determined 
 68.1   under subdivision 1 must be permanently added to the county's 
 68.2   homestead and agricultural credit aid base under section 
 68.3   273.1398 for aid payable in 2003, and the same amount must be 
 68.4   permanently added to the county's homestead and agricultural 
 68.5   credit aid base for aid payable in 2004. 
 68.6      Subd. 3.  [CITY AID.] Each city's aid amount determined 
 68.7   under subdivision 1 must be permanently added to its city aid 
 68.8   base under section 477A.011, subdivision 36, for aid payable in 
 68.9   2003, and the same amount must be permanently added to its city 
 68.10  aid base for aid payable in 2004. 
 68.11     Subd. 4.  [APPROPRIATION INCREASE.] The total aid amount 
 68.12  payable to cities under section 477A.03, subdivision 2, 
 68.13  paragraph (d), is permanently increased by the total amount 
 68.14  payable to all cities under subdivision 3 for aid payable in 
 68.15  2003 and increased again by the same amount for aid payable in 
 68.16  2004. 
 68.17     <b>[EFFECTIVE DATE.]</b> This section is effective for aids 
 68.18  payable in 2003 and subsequent years. 
 68.19     Sec. 35.  [ELECTRIC GENERATION TAX BASE REPLACEMENT AID.] 
 68.20     For taxes payable in 2002 only, the county auditor shall 
 68.21  compute all local tax rates as if the class rate for class 3(4)  
 68.22  property under Minnesota Statutes, section 273.13, subdivision 
 68.23  24, was two percent.  In determining the actual property tax due 
 68.24  and payable on class 3(4) property, the actual class rate must 
 68.25  be used.  Each local taxing jurisdiction is entitled to aid 
 68.26  equal to the difference between the property tax levied upon 
 68.27  class 3(4) property and the amount that would have been levied 
 68.28  had the class rate been two percent. 
 68.29     The auditor shall report the amount of aid to which each 
 68.30  local jurisdiction is entitled under this subdivision to the 
 68.31  commissioner of revenue in a manner prescribed by the 
 68.32  commissioner.  The commissioner shall verify the accuracy of the 
 68.33  amounts reported and shall make payments to local governments 
 68.34  other than school districts in two equal installments in 2002 on 
 68.35  the dates prescribed in Minnesota Statutes, section 477A.015.  
 68.36  Payments to school districts must be certified to the 
 69.1   commissioner of children, families, and learning and paid under 
 69.2   Minnesota Statutes, section 273.1392. 
 69.3      <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 69.4   payable in 2002. 
 69.5      Sec. 36.  [TIF GRANTS; APPROPRIATIONS.] 
 69.6      Subdivision 1.  [TIF GRANTS.] (a) The commissioner of 
 69.7   revenue shall pay grants to municipalities in calendar years 
 69.8   2003, 2004, and 2005 for deficits in tax increment financing 
 69.9   districts caused by the changes in class rates and the 
 69.10  elimination of the state-determined general education property 
 69.11  tax levy under this article.  To qualify for a grant under this 
 69.12  section, a municipality must impose the special tax under 
 69.13  Minnesota Statutes, section 469.1791, to the extent permitted by 
 69.14  law.  Municipalities must submit applications for the grants in 
 69.15  a form prescribed by the commissioner no later than August 1 for 
 69.16  grants payable during the calendar year.  The maximum grant 
 69.17  equals the lesser of: 
 69.18     (1) for taxes payable in the year before the grant is paid, 
 69.19  the reduction in the tax increment financing district's revenues 
 69.20  derived from increment resulting from the class rate changes and 
 69.21  the elimination of the state-determined general education 
 69.22  property tax levy under this article; or 
 69.23     (2) the amount due during the calendar year to pay: 
 69.24     (i) bonds issued before June 2, 2001, and 
 69.25     (ii) binding contracts entered into before June 2, 2001, 
 69.26  less 
 69.27     (iii) the municipality's total tax increments, including 
 69.28  unspent increments from previous years; and less 
 69.29     (iv) the amount of the special tax imposed under Minnesota 
 69.30  Statutes, section 469.1791. 
 69.31     (b) The commissioner of revenue may require applicants for 
 69.32  grants under this section to provide any information the 
 69.33  commissioner deems appropriate.  The commissioner shall 
 69.34  calculate the amount under paragraph (a), clause (2), based on 
 69.35  the reports for the tax increment financing district or 
 69.36  districts filed with the state auditor on or before August 1 of 
 70.1   the year before the year in which the grant is to be paid and 
 70.2   the special tax information provided by the county auditor. 
 70.3      (c) This section applies only to deficits in tax increment 
 70.4   districts for which: 
 70.5      (1) the request for certification was made before June 2, 
 70.6   2001; and 
 70.7      (2) all timely reports have been filed with the state 
 70.8   auditor, as required by Minnesota Statutes, section 469.175. 
 70.9      (d) The commissioner shall pay the grants under this 
 70.10  section by December 15 of the year. 
 70.11     (e) For the purposes of this section, "tax increments" and 
 70.12  "revenues derived from tax increments" have the meanings given 
 70.13  in Minnesota Statutes, section 469.174, subdivision 25, except 
 70.14  that the definition applies to all tax increment districts, 
 70.15  regardless of when the request for certification was made and 
 70.16  regardless of when the revenues were received, notwithstanding 
 70.17  the effective date of Minnesota Statutes, section 469.174, 
 70.18  subdivision 25. 
 70.19     Subd. 2.  [APPROPRIATION.] $184,000,000 is appropriated 
 70.20  from the general fund to the commissioner of revenue in fiscal 
 70.21  year 2002 and $22,000,000 for fiscal year 2003 to make grants 
 70.22  under this section.  The appropriations do not lapse at the end 
 70.23  of a fiscal year or biennium and are available until the later 
 70.24  of when expended or when this section expires.  If the amount of 
 70.25  grant entitlements for a year exceeds the amount available for 
 70.26  grants, the commissioner shall reduce each grant proportionately 
 70.27  so the total does not exceed the amount available. 
 70.28     Subd. 3.  [EXPIRATION.] This section expires on January 1, 
 70.29  2006. 
 70.30     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 
 70.31  2002, and thereafter. 
 70.32     Sec. 37.  [ASSESSMENT GUIDELINES.] 
 70.33     The commissioner of revenue shall develop instructional 
 70.34  materials and issue guidelines by December 31, 2002, to assist 
 70.35  assessors in determining the appropriate split between the 
 70.36  portion of market value attributable to land and the portion 
 71.1   attributable to buildings, in the case of properties subject to 
 71.2   the state general tax on commercial-industrial property under 
 71.3   Minnesota Statutes, section 275.025. 
 71.4      <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2001. 
 71.5      Sec. 38.  [APPROPRIATION.] 
 71.6      (a) $6,000,000 is appropriated from the transit fund to the 
 71.7   commissioner of transportation to finance nonmetropolitan 
 71.8   transit systems under Minnesota Statutes, section 174.24, for 
 71.9   fiscal year 2003.  Grants to recipient systems in calendar year 
 71.10  2002 must include all funding necessary to compensate for the 
 71.11  elimination of levy authority under section 7.  
 71.12     (b) $105,200,000 is appropriated from the transit fund to 
 71.13  the metropolitan council to finance transit operating expenses 
 71.14  for fiscal year 2003.  One-half of the appropriation to the 
 71.15  council must be paid on July 15, 2002, and the remaining 
 71.16  one-half must be paid on December 15, 2002. 
 71.17     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2002. 
 71.18     Sec. 39.  [REPEALER.] 
 71.19     Minnesota Statutes 2000, sections 126C.13, subdivisions 1, 
 71.20  2, and 3; 273.13, subdivision 24a; 273.1382; and 275.08, 
 71.21  subdivision 1e, are repealed. 
 71.22     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 71.23  payable in 2002 and subsequent years. 
 71.24                             ARTICLE 3  
 71.25                 STATE TAKEOVER OF COUNTY SERVICES 
 71.26     Section 1.  Minnesota Statutes 2000, section 97A.065, 
 71.27  subdivision 2, is amended to read: 
 71.28     Subd. 2.  [FINES AND FORFEITED BAIL.] (a) Fines and 
 71.29  forfeited bail collected from prosecutions of violations of:  
 71.30  the game and fish laws; sections 84.091 to 84.15; sections 84.81 
 71.31  to 84.91; section 169A.20, when the violation involved an 
 71.32  off-road recreational vehicle as defined in section 169A.03, 
 71.33  subdivision 16; chapter 348; and any other law relating to wild 
 71.34  animals or aquatic vegetation, must be paid to the treasurer of 
 71.35  the county where the violation is prosecuted.  The county 
 71.36  treasurer shall submit one-half of the receipts to the 
 72.1   commissioner and credit the balance to the county general 
 72.2   revenue fund except as provided in paragraphs (b), (c), and 
 72.3   (d).  In a county in a judicial district under section 480.181, 
 72.4   subdivision 1, paragraph (b), as added in Laws 1999, chapter 
 72.5   216, article 7, section 26, the share that would otherwise go to 
 72.6   the county under this paragraph must be submitted to the state 
 72.7   treasurer for deposit in the state treasury and credited to the 
 72.8   general fund. 
 72.9      (b) The commissioner must reimburse a county, from the game 
 72.10  and fish fund, for the cost of keeping prisoners prosecuted for 
 72.11  violations under this section if the county board, by 
 72.12  resolution, directs:  (1) the county treasurer to submit all 
 72.13  fines and forfeited bail to the commissioner; and (2) the county 
 72.14  auditor to certify and submit monthly itemized statements to the 
 72.15  commissioner.  
 72.16     (c) The county treasurer shall submit one-half of the 
 72.17  receipts collected under paragraph (a) from prosecutions of 
 72.18  violations of sections 84.81 to 84.91, and 169A.20, except 
 72.19  receipts that are surcharges imposed under section 357.021, 
 72.20  subdivision 6, to the commissioner and credit the balance to the 
 72.21  county general fund.  The commissioner shall credit these 
 72.22  receipts to the snowmobile trails and enforcement account in the 
 72.23  natural resources fund. 
 72.24     (d) The county treasurer shall indicate the amount of the 
 72.25  receipts that are surcharges imposed under section 357.021, 
 72.26  subdivision 6, and shall submit all of those receipts to the 
 72.27  state treasurer. 
 72.28     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2003, 
 72.29  in the first and fourth districts; July 1, 2004, in the third 
 72.30  and sixth districts; and July 1, 2005, in the second and tenth 
 72.31  districts. 
 72.32     Sec. 2.  Minnesota Statutes 2000, section 179A.101, 
 72.33  subdivision 1, is amended to read: 
 72.34     Subdivision 1.  [COURT EMPLOYEE UNITS.] (a) The state court 
 72.35  administrator shall meet and negotiate with the exclusive 
 72.36  representative of each of the units specified in this section.  
 73.1   The units provided in this section are the only appropriate 
 73.2   units for court employees.  Court employees, unless otherwise 
 73.3   excluded, are included within the units which include the 
 73.4   classifications to which they are assigned for purposes of 
 73.5   compensation.  Initial assignment of classifications to 
 73.6   bargaining units shall be made by the state court administrator 
 73.7   by August 15, 1999 of the year preceding the year in which the 
 73.8   state assumes the cost of court administration in the judicial 
 73.9   district in which the bargaining unit is located.  An exclusive 
 73.10  representative may appeal the initial assignment decision of the 
 73.11  state court administrator by filing a petition with the 
 73.12  commissioner within 45 days of being certified as the exclusive 
 73.13  representative for a judicial district.  The units in this 
 73.14  subdivision are the appropriate units of court employees. 
 73.15     (b) The judicial district unit consists of clerical, 
 73.16  administrative, and technical employees of a judicial district 
 73.17  under section 480.181, subdivision 1, paragraph (b), or of two 
 73.18  or more of these districts that are represented by the same 
 73.19  employee organization or one or more subordinate bodies of the 
 73.20  same employee organization.  The judicial district unit includes 
 73.21  individuals, not otherwise excluded, whose work is typically 
 73.22  clerical or secretarial in nature, including nontechnical data 
 73.23  recording and retrieval and general office work, and 
 73.24  individuals, not otherwise excluded, whose work is not typically 
 73.25  manual and which requires specialized knowledge or skills 
 73.26  acquired through two-year academic programs or equivalent 
 73.27  experience or on-the-job training. 
 73.28     (c) The appellate courts unit consists of clerical, 
 73.29  administrative, and technical employees of the court of appeals 
 73.30  and clerical, administrative, and technical employees of the 
 73.31  supreme court.  The appellate courts unit includes individuals, 
 73.32  not otherwise excluded, whose work is typically clerical or 
 73.33  secretarial in nature, including nontechnical data recording and 
 73.34  retrieval and general office work, and individuals, not 
 73.35  otherwise excluded, whose work is not typically manual and which 
 73.36  requires specialized knowledge or skills acquired through 
 74.1   two-year academic programs or equivalent experience or 
 74.2   on-the-job training. 
 74.3      (d) The court employees professional employee unit consists 
 74.4   of professional employees, not otherwise excluded, that are 
 74.5   employed by the supreme court, the court of appeals, or a 
 74.6   judicial district under section 480.181, subdivision 1, 
 74.7   paragraph (b). 
 74.8      (e) The court employees court reporter unit consists of 
 74.9   court reporters not otherwise excluded who are employed by a 
 74.10  judicial district under section 480.181, subdivision 1, 
 74.11  paragraph (a). 
 74.12     (f) Notwithstanding any provision of this chapter or any 
 74.13  other law to the contrary, judges may appoint and remove court 
 74.14  reporters at their pleasure. 
 74.15     (g) Copies of collective bargaining agreements entered into 
 74.16  under this section must be submitted to the legislative 
 74.17  coordinating commission for the commission's information. 
 74.18     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2003, 
 74.19  in the first and fourth districts; July 1, 2004, in the third 
 74.20  and sixth districts; and July 1, 2005, in the second and tenth 
 74.21  districts. 
 74.22     Sec. 3.  Minnesota Statutes 2000, section 179A.102, 
 74.23  subdivision 6, is amended to read: 
 74.24     Subd. 6.  [CONTRACT AND REPRESENTATION RESPONSIBILITIES.] 
 74.25  (a) Notwithstanding the provisions of section 179A.101, the 
 74.26  exclusive representatives of units of court employees certified 
 74.27  prior to the effective date of the judicial district coming 
 74.28  under section 480.181, subdivision 1, paragraph (b), remain 
 74.29  responsible for administration of their contracts and for other 
 74.30  contractual duties and have the right to dues and fair share fee 
 74.31  deduction and other contractual privileges and rights until a 
 74.32  contract is agreed upon with the state court administrator for a 
 74.33  new unit established under section 179A.101 or until June 30, 
 74.34  2001, whichever is earlier.  Exclusive representatives of court 
 74.35  employees certified after the effective date of this section in 
 74.36  the judicial district are immediately upon certification 
 75.1   responsible for bargaining on behalf of employees within the 
 75.2   unit.  They are also responsible for administering grievances 
 75.3   arising under previous contracts covering employees included 
 75.4   within the unit which remain unresolved on June 30, 2001, or 
 75.5   upon agreement with the state court administrator on a contract 
 75.6   for a new unit established under section 179A.101, whichever is 
 75.7   earlier.  Where the employer does not object, these 
 75.8   responsibilities may be varied by agreement between the outgoing 
 75.9   and incoming exclusive representatives.  All other rights and 
 75.10  duties of representation begin on July 1, 2001 of the year in 
 75.11  which the state assumes the funding of court administration in 
 75.12  the judicial district, except that exclusive representatives 
 75.13  certified after the effective date of this section shall 
 75.14  immediately, upon certification, have the right to all employer 
 75.15  information and all forms of access to employees within the 
 75.16  bargaining unit which would be permitted to the current contract 
 75.17  holder, including the rights in section 179A.07, subdivision 6.  
 75.18  This section does not affect an existing collective bargaining 
 75.19  contract.  Incoming exclusive representatives of court employees 
 75.20  from judicial districts that come under section 480.181, 
 75.21  subdivision 1, paragraph (b), are immediately, upon 
 75.22  certification, responsible for bargaining on behalf of all 
 75.23  previously unrepresented employees assigned to their units.  All 
 75.24  other rights and duties of exclusive representatives begin on 
 75.25  July 1, 2001 of the year in which the state assumes the funding 
 75.26  of court administration in the judicial district. 
 75.27     (b) Nothing in this act or Laws 1999, chapter 216, article 
 75.28  7, sections 3 to 15, prevents an exclusive representative 
 75.29  certified after the effective date of sections 3 to 15 dates of 
 75.30  those provisions from assessing fair share or dues deductions 
 75.31  immediately upon certification for employees in a unit 
 75.32  established under section 179A.101 if the employees were 
 75.33  unrepresented for collective bargaining purposes before that 
 75.34  certification. 
 75.35     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2003, 
 75.36  in the first and fourth districts; July 1, 2004, in the third 
 76.1   and sixth districts; and July 1, 2005, in the second and tenth 
 76.2   districts. 
 76.3      Sec. 4.  Minnesota Statutes 2000, section 179A.103, 
 76.4   subdivision 1, is amended to read: 
 76.5      Subdivision 1.  [CONTRACTS.] Contracts for the period 
 76.6   commencing July 1, 2000, of the year in which the state assumes 
 76.7   the cost of court administration in the judicial district for 
 76.8   the judicial district court employees of judicial districts that 
 76.9   are under section 480.181, subdivision 1, paragraph (b), must be 
 76.10  negotiated with the state court administrator.  Negotiations for 
 76.11  those contracts may begin any time after July 1, 1999 of the 
 76.12  year before the state assumes the cost, and may be initiated by 
 76.13  either party notifying the other of the desire to begin the 
 76.14  negotiating process.  Negotiations are subject to this chapter. 
 76.15     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2003, 
 76.16  in the first and fourth districts; July 1, 2004, in the third 
 76.17  and sixth districts; and July 1, 2005, in the second and tenth 
 76.18  districts. 
 76.19     Sec. 5.  [245.775] [REIMBURSEMENT OF COUNTY FOR CERTAIN 
 76.20  OUT-OF-HOME PLACEMENTS.] 
 76.21     (a) The commissioner of human services shall reimburse a 
 76.22  county for 30 percent of the nonfederal share of the cost of 
 76.23  out-of-home placement.  For purposes of this section, 
 76.24  "out-of-home placement" means the placement of a child in a 
 76.25  child caring institution or shelter licensed under Minnesota 
 76.26  Rules, parts 9545.0905 to 9545.1125, in a group home licensed 
 76.27  under Minnesota Rules, parts 9545.1400 to 9545.1500, in family 
 76.28  foster care or group family foster care licensed under Minnesota 
 76.29  Rules, parts 9545.0010 to 9545.0260, or a correctional facility 
 76.30  pursuant to a court order involving a county social services 
 76.31  agency.  For purposes of this section, "out-of-home placement" 
 76.32  includes voluntary and tribal court-ordered placement of an 
 76.33  Indian child under sections 260.765 and 260.771. 
 76.34     (b) The manner for making the reimbursement for costs under 
 76.35  paragraph (a) to the county is as follows: 
 76.36     (1) beginning in July 2002, and annually thereafter, the 
 77.1   commissioner will forecast out-of-home placements for each 
 77.2   calendar year and make payments as follows: 
 77.3      (i) in July of each year, the commissioner will make a 
 77.4   payment to a county to cover 12 percent of the county's 
 77.5   anticipated nonfederal costs of out-of-home placements for that 
 77.6   calendar year; 
 77.7      (ii) in September of each year, the commissioner will make 
 77.8   an additional payment, if necessary, to a county so that this 
 77.9   payment and the payment in item (i) reflect 30 percent of the 
 77.10  actual expenditures by the county of the nonfederal costs of 
 77.11  out-of-home placements for that county for the period January 
 77.12  through June of that calendar year; 
 77.13     (iii) in December of each year, the commissioner will make 
 77.14  a payment to a county which, when added to the payments in items 
 77.15  (i) and (ii), reflects 27 percent of the county's anticipated 
 77.16  nonfederal costs of out-of-home placements for that calendar 
 77.17  year; and 
 77.18     (iv) in March of the calendar year following the payments 
 77.19  made in items (i) to (iii), the commissioner will settle up with 
 77.20  each county by making an additional payment to or recovering 
 77.21  money from the county as necessary to reconcile the net amount 
 77.22  of the payments received by the county under items (i) to (iii) 
 77.23  with the total reimbursement to be made to the county under 
 77.24  paragraph (c). 
 77.25     (c) The total reimbursement to the county under paragraph 
 77.26  (b) shall be the lesser of: 
 77.27     (1) 30 percent; or 
 77.28     (2) a lesser percentage, so that total payments under this 
 77.29  section and sections 260.765, subdivision 2a, and 260.771, 
 77.30  subdivision 4a, equal the maximum appropriation allowed under 
 77.31  section 245.776, 
 77.32  of the actual expenditures by the county of the nonfederal costs 
 77.33  of out-of-home placements for the calendar year. 
 77.34     <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
 77.35  out-of-home placement costs incurred in calendar year 2002. 
 77.36     Sec. 6.  [245.776] [ANNUAL APPROPRIATION.] 
 78.1      A sum sufficient to discharge the duties imposed by 
 78.2   sections 245.775; 260.765, subdivision 2a; and 260.771, 
 78.3   subdivision 4a, is annually appropriated from the general fund 
 78.4   to the commissioner of human services.  The payments under these 
 78.5   sections are limited to $49,400,000 in fiscal year 2003.  The 
 78.6   payments under these sections in fiscal year 2004 and thereafter 
 78.7   are limited to an amount equal to: 
 78.8      (1) the maximum allowed appropriation under this section in 
 78.9   the previous calendar year, multiplied by 
 78.10     (2) one plus the percentage increase in the implicit price 
 78.11  deflator for government consumption expenditures and gross 
 78.12  investment for state and local governments prepared by the 
 78.13  Bureau of Economic Analysis of the United States Department of 
 78.14  Commerce for the 12-month period ending March 31 of the previous 
 78.15  year. 
 78.16     Sec. 7.  Minnesota Statutes 2000, section 260.765, is 
 78.17  amended by adding a subdivision to read: 
 78.18     Subd. 2a.  [REIMBURSEMENT FOR A PORTION OF COSTS.] When an 
 78.19  Indian child is voluntarily placed in foster care by a tribal 
 78.20  social services agency, the commissioner shall reimburse 30 
 78.21  percent of the nonfederal share of the costs of the placement.  
 78.22  The mechanism for reimbursement must be the same used for county 
 78.23  reimbursement of out-of-home placement costs under section 
 78.24  245.775. 
 78.25     <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
 78.26  foster care costs incurred after January 1, 2002. 
 78.27     Sec. 8.  Minnesota Statutes 2000, section 260.771, is 
 78.28  amended by adding a subdivision to read: 
 78.29     Subd. 4a.  [REIMBURSEMENT FOR A PORTION OF COSTS.] When an 
 78.30  Indian child is placed by a tribal social services agency 
 78.31  according to tribal court order, the commissioner shall 
 78.32  reimburse 30 percent of the nonfederal share of the costs of the 
 78.33  placement.  The mechanism for reimbursement must be the same 
 78.34  used for county reimbursement of out-of-home placement costs 
 78.35  under section 245.775. 
 78.36     <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
 79.1   out-of-home placement costs incurred after January 1, 2002. 
 79.2      Sec. 9.  Minnesota Statutes 2000, section 273.1398, 
 79.3   subdivision 4a, is amended to read: 
 79.4      Subd. 4a.  [AID OFFSET FOR COURT COSTS.] (a) By July 15, 
 79.5   1999 of the year preceding the year in which the state assumes 
 79.6   the cost of court administration in the judicial district as 
 79.7   specified under section 480.183, the supreme court shall 
 79.8   determine and certify to the commissioner of revenue for each 
 79.9   county, other than counties located in the eighth judicial 
 79.10  district, the county's share of the costs assumed in the 
 79.11  judicial districts specified under Laws 1999, chapter 216, 
 79.12  article 7, section 480.183, subdivision 1, during the succeeding 
 79.13  fiscal year beginning July 1, 2000,. 
 79.14     (b) The amount certified in paragraph (a) shall be equal to 
 79.15  the following: 
 79.16     (i) 103 percent of the required court administration 
 79.17  expenditures as defined under section 480.183, subdivision 3, 
 79.18  for calendar year 2003, as determined under subdivision 4b, 
 79.19  paragraph (a); plus 
 79.20     (ii) the required mandated court services expenditures as 
 79.21  defined under section 480.183, subdivision 4, for the calendar 
 79.22  year in which the court transfer will occur, as determined under 
 79.23  subdivision 4b, paragraph (b); plus 
 79.24     (iii) an adjustment for any cumulative percentage increase 
 79.25  in salary expenditures as defined under section 480.183, 
 79.26  subdivision 3, in excess of the maintenance of effort percentage 
 79.27  for the county, as determined under subdivision 4b, paragraph 
 79.28  (d); less 
 79.29     (iv) an amount equal to the county's share of transferred 
 79.30  fines collected by the district courts in the county during the 
 79.31  calendar year 1998 2003.  
 79.32     The court and the county may, if both parties agree, 
 79.33  negotiate and certify an amount higher than the amount 
 79.34  calculated under this paragraph. 
 79.35     (c) For purposes of this subdivision, the adjustment in 
 79.36  paragraph (b), clause (iii), shall be equal to: 
 80.1      (1) the sum of the court administration expenditures as 
 80.2   defined under section 480.183, subdivision 4, required under 
 80.3   subdivision 4b, paragraph (a), plus the temporary aid payment 
 80.4   under subdivision 4c; multiplied by 
 80.5      (2) the difference between (i) the cumulative percentage 
 80.6   increase in actual and anticipated salary settlements for court 
 80.7   employees from July 1, 2001, until the date of the court 
 80.8   transfer and (ii) the maintenance of effort percent of the 
 80.9   county for the year in which the court transfer occurs, as 
 80.10  determined under subdivision 4b, paragraph (d).  
 80.11     (b) (d) Payments to a county under subdivision 2 or section 
 80.12  273.166 for the calendar year 2000 in which the state assumes 
 80.13  the cost of court administration and mandated services as 
 80.14  defined under section 480.183, subdivisions 4 and 5, in the 
 80.15  judicial district must be permanently reduced by an amount equal 
 80.16  to 75 percent of the net cost to the state for assumption of 
 80.17  district court costs as certified in paragraph (a). 
 80.18     (c) (e) Payments to a county under subdivision 2 or section 
 80.19  273.166 for the calendar year 2001 after the calendar year in 
 80.20  which the state assumes the cost of court administration and 
 80.21  mandated services as defined under section 480.183, subdivisions 
 80.22  4 and 5, in the judicial district must be permanently reduced by 
 80.23  an amount equal to 25 percent of the net cost to the state for 
 80.24  assumption of district court costs as certified in paragraph (a).
 80.25     (d) (f) Payments to a county under subdivision 2 for 
 80.26  calendar year 2001 are permanently increased by an amount equal 
 80.27  to 7.5 percent of the county's share of transferred fines 
 80.28  collected by the district courts in the county during calendar 
 80.29  year 1998, as determined under paragraph (a).  If the amount 
 80.30  determined in paragraph (a) exceeds the amount of aid a county 
 80.31  is scheduled to be paid under subdivision 2 in 2000, then the 
 80.32  county shall not receive an aid increase under this paragraph. 
 80.33     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 80.34  following final enactment. 
 80.35     Sec. 10.  Minnesota Statutes 2000, section 273.1398, is 
 80.36  amended by adding a subdivision to read: 
 81.1      Subd. 4b.  [COURT EXPENDITURES; MAINTENANCE OF EFFORT.] (a) 
 81.2   Until the costs of court administration as defined under section 
 81.3   480.183, subdivision 4, in a county have been transferred to the 
 81.4   state, each county in a judicial district transferring court 
 81.5   administration costs to state funding after July 1, 2001, shall 
 81.6   budget for the funding of these costs an amount at least equal 
 81.7   to the certified budget amount for calendar year 2001 multiplied 
 81.8   by the maintenance of effort percent for each year from 2001 to 
 81.9   2003.  The county shall budget, fund, and authorize expenditures 
 81.10  not less than the amount calculated under this paragraph plus 
 81.11  the temporary aid amount under subdivision 4c for maintenance of 
 81.12  effort of administrative costs. 
 81.13     (b) Until the costs of mandated court services as defined 
 81.14  under section 480.183, subdivision 4, in a county have been 
 81.15  transferred to the state, each county in a judicial district 
 81.16  transferring the costs of mandated court services to state 
 81.17  funding after July 1, 2001, shall budget for the funding of 
 81.18  these costs an amount at least equal to the certified budgeted 
 81.19  amount for calendar year 2001 multiplied by the maintenance of 
 81.20  effort percent from 2001 to the year of the transfer.  The 
 81.21  county shall budget, fund, and authorize expenditures not less 
 81.22  than the amount calculated under this paragraph for maintenance 
 81.23  of effort of mandated services.  
 81.24     (c) By July 1, 2001, the court shall certify to each county 
 81.25  in the judicial district its cost of court administration and 
 81.26  its cost of mandated services as defined under section 480.183, 
 81.27  subdivisions 4 and 5, based on 2001 certified budgets.  In 
 81.28  making that determination, the court shall exclude the budget 
 81.29  costs of the county for the following categories: 
 81.30     (1) rent; 
 81.31     (2) examiner of titles; 
 81.32     (3) civil court appointed attorneys for civil matters; and 
 81.33     (4) hospitalization costs. 
 81.34     (d) For purposes of this subdivision, a county's 
 81.35  "maintenance of effort percent" is equal to one plus the average 
 81.36  annual percent increase in court operating expenditures for all 
 82.1   counties in that judicial district for the period from 1996 to 
 82.2   1999, as reported in the annual state auditor reports on 
 82.3   revenues, expenditures, and debt for Minnesota counties, raised 
 82.4   to a power equal to the difference between the budget year and 
 82.5   2001.  The annual percentage under this paragraph must be 
 82.6   rounded to the nearest one-tenth of one percent. 
 82.7      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 82.8   following final enactment. 
 82.9      Sec. 11.  Minnesota Statutes 2000, section 273.1398, is 
 82.10  amended by adding a subdivision to read: 
 82.11     Subd. 4c.  [TEMPORARY AID; COURT ADMINISTRATION COSTS.] For 
 82.12  calendar years 2004 and 2005, each county in a judicial district 
 82.13  that has not been transferred to the state by January 1 of that 
 82.14  year shall receive additional homestead and agricultural credit 
 82.15  aid.  This amount is in addition to the amount calculated under 
 82.16  subdivision 2 and must not be included in the definition of 
 82.17  homestead and agricultural credit base under subdivision 1, 
 82.18  paragraph (j).  The amount of additional aid is equal to the 
 82.19  difference between (1) the amount budgeted for court 
 82.20  administration costs in 2001 as determined under subdivision 2, 
 82.21  paragraph (c), multiplied by the maintenance of effort percent 
 82.22  for the calendar year as determined under subdivision 2, 
 82.23  paragraph (d), and (2) the amount calculated under subdivision 
 82.24  4b, paragraph (a), for calendar year 2003.  This additional aid 
 82.25  must be used only to fund court administration expenditures as 
 82.26  defined in section 480.183, subdivision 2.  This amount must be 
 82.27  added to the state court's base budget in the year when the 
 82.28  court in that judicial district in which the county is located 
 82.29  is transferred to the state. 
 82.30     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 82.31  following final enactment.  
 82.32     Sec. 12.  Minnesota Statutes 2000, section 273.1398, is 
 82.33  amended by adding a subdivision to read: 
 82.34     Subd. 4d.  [JUDICIAL DISTRICT MANDATED COURT SERVICES 
 82.35  AID.] (a) Mandated court services aid as provided in section 
 82.36  477A.0121, subdivision 4a, must be used to assist judicial 
 83.1   districts in the transition from the property tax funding to the 
 83.2   state funding of mandated court services as defined in section 
 83.3   480.183, subdivision 3, for the remaining judicial districts. 
 83.4      (b) The mandated court services aid shall be provided only 
 83.5   for aids payable in calendar years 2001 to 2004 to the court for 
 83.6   those judicial districts that have not been transferred to the 
 83.7   state by January 1 of those calendar years.  The mandated court 
 83.8   services aid will be as follows: 
 83.9      (1) for the first judicial district, $372,757 for fiscal 
 83.10  year 2002 and $590,970 for fiscal year 2003; 
 83.11     (2) for the fourth judicial district, $674,264 for fiscal 
 83.12  year 2002 and $1,068,975 for fiscal year 2003; 
 83.13     (3) for the third judicial district, $473,562 for fiscal 
 83.14  year 2003 and $750,785 for fiscal year 2004; 
 83.15     (4) for the sixth judicial district, $121,287 for fiscal 
 83.16  year 2003 and $192,288 for fiscal year 2004; 
 83.17     (5) for the second judicial district, $277,237 for fiscal 
 83.18  year 2004 and $439,530 for fiscal year 2005; and 
 83.19     (6) for the tenth judicial district, $422,891 for fiscal 
 83.20  year 2004 and $670,453 for fiscal year 2005. 
 83.21     (c) The mandated court services aid as contained in 
 83.22  paragraph (b) must be added to the state court's base budget for 
 83.23  subsequent fiscal years. 
 83.24     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 83.25  following final enactment. 
 83.26     Sec. 13.  Minnesota Statutes 2000, section 273.1398, is 
 83.27  amended by adding a subdivision to read: 
 83.28     Subd. 4e.  [JUDICIAL DISTRICT STATE TAKEOVER TRANSITION 
 83.29  AID.] (a) Judicial district state takeover transition aid as 
 83.30  provided in section 477A.0121, subdivision 4a, must be used to 
 83.31  assist in the transition from the property tax funding to the 
 83.32  state funding of district court administration costs for the 
 83.33  remaining judicial districts.  This aid is temporary and is 
 83.34  intended to finance those costs for accounting and human 
 83.35  resources which are necessary for the state court to expend to 
 83.36  prepare for the transfer of districts to the state. 
 84.1      (b) The transition aid must be provided only for the two 
 84.2   years prior to the scheduled state takeover under section 
 84.3   480.183, subdivision 1.  The transition aid will be as follows: 
 84.4      (1) $152,000 for fiscal year 2002; 
 84.5      (2) $442,000 for fiscal year 2003; 
 84.6      (3) $428,000 for fiscal year 2004; and 
 84.7      (4) $276,000 for fiscal year 2005. 
 84.8      (c) The transition aid in paragraph (b) must not be added 
 84.9   to the state court's base budget for any subsequent fiscal years.
 84.10     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 84.11  following final enactment. 
 84.12     Sec. 14.  Minnesota Statutes 2000, section 273.1398, is 
 84.13  amended by adding a subdivision to read: 
 84.14     Subd. 4f.  [AID OFFSET FOR OUT-OF-HOME PLACEMENT 
 84.15  COSTS.] For aid payable in 2002, each county's aid under 
 84.16  subdivision 2 must be permanently reduced by an amount equal to 
 84.17  30 percent of the county's estimated 2002 nonfederal 
 84.18  expenditures for out-of-home placements, as defined in section 
 84.19  245.775.  The counties shall provide all information requested 
 84.20  by the commissioner of human services necessary to allow the 
 84.21  commissioner to estimate and certify these nonfederal costs to 
 84.22  the commissioner of revenue by September 1, 2001.  The aid 
 84.23  reduction under this subdivision must be made prior to any aid 
 84.24  reductions for the state takeover of courts contained in this 
 84.25  article. 
 84.26     <b>[EFFECTIVE DATE.]</b> This section is effective the day after 
 84.27  final enactment, for aids payable beginning in 2002. 
 84.28     Sec. 15.  Minnesota Statutes 2000, section 299D.03, 
 84.29  subdivision 5, is amended to read: 
 84.30     Subd. 5.  [FINES AND FORFEITED BAIL MONEY.] (a) All fines 
 84.31  and forfeited bail money, from traffic and motor vehicle law 
 84.32  violations, collected from persons apprehended or arrested by 
 84.33  officers of the state patrol, shall be paid by the person or 
 84.34  officer collecting the fines, forfeited bail money or 
 84.35  installments thereof, on or before the tenth day after the last 
 84.36  day of the month in which these moneys were collected, to the 
 85.1   county treasurer of the county where the violation occurred.  
 85.2   Three-eighths of these receipts shall be credited to the general 
 85.3   revenue fund of the county, except that in a county in a 
 85.4   judicial district under section 480.181, subdivision 1, 
 85.5   paragraph (b), as added in Laws 1999, chapter 216, article 7, 
 85.6   section 26, this three-eighths share must be transmitted to the 
 85.7   state treasurer for deposit in the state treasury and credited 
 85.8   to the general fund.  The other five-eighths of these receipts 
 85.9   shall be transmitted by that officer to the state treasurer 
 85.10  and shall be credited as follows: 
 85.11     (1) In the fiscal year ending June 30, 1991, the first 
 85.12  $275,000 in money received by the state treasurer after June 4, 
 85.13  1991, must be credited to the transportation services fund, and 
 85.14  the remainder in the fiscal year credited to the trunk highway 
 85.15  fund. 
 85.16     (2) In fiscal year 1992, the first $215,000 in money 
 85.17  received by the state treasurer in the fiscal year must be 
 85.18  credited to the transportation services fund, and the remainder 
 85.19  credited to the trunk highway fund. 
 85.20     (3) In fiscal year 1993 and subsequent years, the entire 
 85.21  amount received by the state treasurer must be credited to the 
 85.22  trunk highway fund.  If, however, the violation occurs within a 
 85.23  municipality and the city attorney prosecutes the offense, and a 
 85.24  plea of not guilty is entered, one-third of the receipts shall 
 85.25  be credited to the general revenue fund of the county, one-third 
 85.26  of the receipts shall be paid to the municipality prosecuting 
 85.27  the offense, and one-third shall be transmitted to the state 
 85.28  treasurer as provided in this subdivision.  All costs of 
 85.29  participation in a nationwide police communication system 
 85.30  chargeable to the state of Minnesota shall be paid from 
 85.31  appropriations for that purpose. 
 85.32     (b) Notwithstanding any other provisions of law, all fines 
 85.33  and forfeited bail money from violations of statutes governing 
 85.34  the maximum weight of motor vehicles, collected from persons 
 85.35  apprehended or arrested by employees of the state of Minnesota, 
 85.36  by means of stationary or portable scales operated by these 
 86.1   employees, shall be paid by the person or officer collecting the 
 86.2   fines or forfeited bail money, on or before the tenth day after 
 86.3   the last day of the month in which the collections were made, to 
 86.4   the county treasurer of the county where the violation 
 86.5   occurred.  Five-eighths of these receipts shall be transmitted 
 86.6   by that officer to the state treasurer and shall be credited to 
 86.7   the highway user tax distribution fund.  Three-eighths of these 
 86.8   receipts shall be credited to the general revenue fund of the 
 86.9   county, except that in a county in a judicial district under 
 86.10  section 480.181, subdivision 1, paragraph (b), as added in Laws 
 86.11  1999, chapter 216, article 7, section 26, this three-eighths 
 86.12  share must be transmitted to the state treasurer for deposit in 
 86.13  the state treasury and credited to the general fund. 
 86.14     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2003, 
 86.15  in the first and fourth districts; July 1, 2004, in the third 
 86.16  and sixth districts; and July 1, 2005, in the second and tenth 
 86.17  districts. 
 86.18     Sec. 16.  Minnesota Statutes 2000, section 357.021, 
 86.19  subdivision 1a, is amended to read: 
 86.20     Subd. 1a.  [TRANSMITTAL OF FEES TO STATE TREASURER.] (a) 
 86.21  Every person, including the state of Minnesota and all bodies 
 86.22  politic and corporate, who shall transact any business in the 
 86.23  district court, shall pay to the court administrator of said 
 86.24  court the sundry fees prescribed in subdivision 2.  Except as 
 86.25  provided in paragraph (d), the court administrator shall 
 86.26  transmit the fees monthly to the state treasurer for deposit in 
 86.27  the state treasury and credit to the general fund.  
 86.28     (b) In a county which has a screener-collector position, 
 86.29  fees paid by a county pursuant to this subdivision shall be 
 86.30  transmitted monthly to the county treasurer, who shall apply the 
 86.31  fees first to reimburse the county for the amount of the salary 
 86.32  paid for the screener-collector position.  The balance of the 
 86.33  fees collected shall then be forwarded to the state treasurer 
 86.34  for deposit in the state treasury and credited to the general 
 86.35  fund.  In a county in a judicial district under section 480.181, 
 86.36  subdivision 1, paragraph (b), as added in Laws 1999, chapter 
 87.1   216, article 7, section 26, which has a screener-collector 
 87.2   position, the fees paid by a county shall be transmitted monthly 
 87.3   to the state treasurer for deposit in the state treasury and 
 87.4   credited to the general fund.  A screener-collector position for 
 87.5   purposes of this paragraph is an employee whose function is to 
 87.6   increase the collection of fines and to review the incomes of 
 87.7   potential clients of the public defender, in order to verify 
 87.8   eligibility for that service. 
 87.9      (c) No fee is required under this section from the public 
 87.10  authority or the party the public authority represents in an 
 87.11  action for: 
 87.12     (1) child support enforcement or modification, medical 
 87.13  assistance enforcement, or establishment of parentage in the 
 87.14  district court, or in a proceeding under section 484.702; 
 87.15     (2) civil commitment under chapter 253B; 
 87.16     (3) the appointment of a public conservator or public 
 87.17  guardian or any other action under chapters 252A and 525; 
 87.18     (4) wrongfully obtaining public assistance under section 
 87.19  256.98 or 256D.07, or recovery of overpayments of public 
 87.20  assistance; 
 87.21     (5) court relief under chapter 260; 
 87.22     (6) forfeiture of property under sections 169A.63 and 
 87.23  609.531 to 609.5317; 
 87.24     (7) recovery of amounts issued by political subdivisions or 
 87.25  public institutions under sections 246.52, 252.27, 256.045, 
 87.26  256.25, 256.87, 256B.042, 256B.14, 256B.15, 256B.37, 260B.331, 
 87.27  and 260C.331, or other sections referring to other forms of 
 87.28  public assistance; 
 87.29     (8) restitution under section 611A.04; or 
 87.30     (9) actions seeking monetary relief in favor of the state 
 87.31  pursuant to section 16D.14, subdivision 5. 
 87.32     (d) The fees collected for child support modifications 
 87.33  under subdivision 2, clause (13), must be transmitted to the 
 87.34  county treasurer for deposit in the county general fund.  The 
 87.35  fees must be used by the county to pay for child support 
 87.36  enforcement efforts by county attorneys. 
 88.1      <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2003, 
 88.2   in the first and fourth districts; July 1, 2004, in the third 
 88.3   and sixth districts; and July 1, 2005, in the second and tenth 
 88.4   districts. 
 88.5      Sec. 17.  Minnesota Statutes 2000, section 477A.0121, is 
 88.6   amended by adding a subdivision to read: 
 88.7      Subd. 4a.  [COURT TAKEOVER; MANDATED SERVICES AND 
 88.8   TRANSITION COSTS.] For calendar years 2001 to 2004, an amount 
 88.9   equal to the sum of the additional aid in section 477A.03, 
 88.10  subdivision 6, shall be retained by the commissioner of revenue 
 88.11  and transferred to the state court system to fund the mandated 
 88.12  court services aid in section 273.1398, subdivision 4d, and the 
 88.13  judicial district state takeover transition aid in section 
 88.14  273.1398, subdivision 4e. 
 88.15     <b>[EFFECTIVE DATE.]</b> This section is effective for aids 
 88.16  payable in calendar years 2001 to 2004. 
 88.17     Sec. 18.  Minnesota Statutes 2000, section 477A.0122, is 
 88.18  amended by adding a subdivision to read: 
 88.19     Subd. 4a.  [REDUCTIONS FOR INSUFFICIENT HOMESTEAD AND 
 88.20  AGRICULTURAL CREDIT AID.] If the reductions to a county's aid 
 88.21  under section 273.1398, subdivisions 4a and 4f, exceed the 
 88.22  amount of homestead and agricultural credit aid payable to the 
 88.23  county under section 273.1398, subdivision 2, for the year of 
 88.24  the reduction, the county's aid under subdivision 4 must be 
 88.25  permanently reduced by the excess reduction amount in the year 
 88.26  of the reduction.  The aid a county receives under this section 
 88.27  may not be less than zero. 
 88.28     <b>[EFFECTIVE DATE.]</b> This section is effective for aids 
 88.29  payable in 2002 and thereafter. 
 88.30     Sec. 19.  Minnesota Statutes 2000, section 477A.03, 
 88.31  subdivision 2, is amended to read: 
 88.32     Subd. 2.  [ANNUAL APPROPRIATION.] (a) A sum sufficient to 
 88.33  discharge the duties imposed by sections 477A.011 to 477A.014 is 
 88.34  annually appropriated from the general fund to the commissioner 
 88.35  of revenue.  
 88.36     (b) Aid payments to counties under section 477A.0121 are 
 89.1   limited to $20,265,000 in 1996.  Aid payments to counties under 
 89.2   section 477A.0121 are limited to $27,571,625 in 1997.  For aid 
 89.3   payable in 1998 and thereafter, the total aids paid under 
 89.4   section 477A.0121 are the amounts certified to be paid in the 
 89.5   previous year, adjusted for inflation as provided under 
 89.6   subdivision 3.  The additional amount authorized under 
 89.7   subdivision 6 is not included when calculating the appropriation 
 89.8   limits under this paragraph. 
 89.9      (c)(i) For aids payable in 1998 2002 and thereafter, the 
 89.10  total aids paid to counties under section 477A.0122 are the 
 89.11  amounts certified to be paid in the previous year, adjusted for 
 89.12  inflation as provided under subdivision 3, and less any 
 89.13  reduction required under section 477A.0122, subdivision 4a, in 
 89.14  the current year. 
 89.15     (ii) Aid payments to counties under section 477A.0122 in 
 89.16  2000 are further increased by an additional $20,000,000 in 2000. 
 89.17     (d) Aid payments to cities in 1999 under section 477A.013, 
 89.18  subdivision 9, are limited to $380,565,489.  For aids payable in 
 89.19  2000, the total aids paid under section 477A.013, subdivision 9, 
 89.20  are the amounts certified to be paid in the previous year, 
 89.21  adjusted for inflation as provided in subdivision 3, and 
 89.22  increased by the amount necessary to effectuate Laws 1999, 
 89.23  chapter 243, article 5, section 48, paragraph (b).  For aids 
 89.24  payable in 2001 through 2003, the total aids paid under section 
 89.25  477A.013, subdivision 9, are the amounts certified to be paid in 
 89.26  the previous year, adjusted for inflation as provided under 
 89.27  subdivision 3.  For aids payable in 2004, the total aids paid 
 89.28  under section 477A.013, subdivision 9, are the amounts certified 
 89.29  to be paid in the previous year, adjusted for inflation as 
 89.30  provided under subdivision 3, and increased by the amount 
 89.31  certified to be paid in 2003 under section 477A.06.  For aids 
 89.32  payable in 2005 and thereafter, the total aids paid under 
 89.33  section 477A.013, subdivision 9, are the amounts certified to be 
 89.34  paid in the previous year, adjusted for inflation as provided 
 89.35  under subdivision 3.  The additional amount authorized under 
 89.36  subdivision 4 is not included when calculating the appropriation 
 90.1   limits under this paragraph. 
 90.2      <b>[EFFECTIVE DATE.]</b> Paragraph (b) is effective for aids 
 90.3   payable in calendar years 2001 to 2004.  Paragraph (c) is 
 90.4   effective for aids payable in 2002 and thereafter. 
 90.5      Sec. 20.  Minnesota Statutes 2000, section 477A.03, is 
 90.6   amended by adding a subdivision to read: 
 90.7      Subd. 6.  [ADDITIONAL MONEY FOR COUNTY CRIMINAL JUSTICE 
 90.8   AID.] For the calendar years 2001 to 2004, the limit on the 
 90.9   appropriation for aids paid under section 477A.0121, as 
 90.10  determined in subdivision 2, paragraph (b), is increased by: 
 90.11     (1) $2,494,000 in calendar year 2001; 
 90.12     (2) $4,155,000 in calendar year 2002; 
 90.13     (3) $2,481,000 in calendar year 2003; and 
 90.14     (4) $1,386,000 in calendar year 2004. 
 90.15     <b>[EFFECTIVE DATE.]</b> This section is effective for aids 
 90.16  payable in calendar years 2001 to 2004. 
 90.17     Sec. 21.  Minnesota Statutes 2000, section 480.181, 
 90.18  subdivision 1, is amended to read: 
 90.19     Subdivision 1.  [STATE EMPLOYEES; COMPENSATION.] (a) 
 90.20  District court referees, judicial officers, court reporters, law 
 90.21  clerks, district administration staff, other than district 
 90.22  administration staff in the second and fourth judicial 
 90.23  districts, guardian ad litem program coordinators and staff, and 
 90.24  other court employees under paragraph (b), are state employees 
 90.25  and are governed by the judicial branch personnel rules adopted 
 90.26  by the supreme court.  The supreme court, in consultation with 
 90.27  the conference of chief judges, shall establish the salary range 
 90.28  of these employees under the judicial branch personnel rules.  
 90.29  In establishing the salary ranges, the supreme court shall 
 90.30  consider differences in the cost of living in different areas of 
 90.31  the state. 
 90.32     (b) The court administrator and employees of the court 
 90.33  administrator who are in the fifth, seventh, eighth, or ninth 
 90.34  judicial district are state employees.  The court administrator 
 90.35  and employees of the court administrator in the remaining 
 90.36  judicial districts become state employees as follows: 
 91.1      (1) effective July 1, 2003, for the first and fourth 
 91.2   judicial districts; 
 91.3      (2) effective July 1, 2004, for the third and sixth 
 91.4   judicial districts; and 
 91.5      (3) effective July 1, 2005, for the second and tenth 
 91.6   judicial districts. 
 91.7      Sec. 22.  [480.1811] [POST-RETIREMENT BENEFIT COSTS.] 
 91.8      Where court administration, guardian ad litem, or 
 91.9   interpreter employees elect to retain county insurance benefits 
 91.10  under section 480.181 after July 1, 2001, and the county 
 91.11  provides those employees post-retirement insurance benefits 
 91.12  prior to July 1, 2001, the county shall pay the post-retirement 
 91.13  cost of those benefits. 
 91.14     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 91.15  following final enactment. 
 91.16     Sec. 23.  [480.183] [JUDICIAL DISTRICTS; SCHEDULED DATES OF 
 91.17  STATE TRANSFER; DEFINITION OF SERVICES.] 
 91.18     Subdivision 1.  [DATE OF STATE TRANSFER.] The mandated 
 91.19  court services and court administration expenditures as defined 
 91.20  in this section for the remaining judicial districts shall be 
 91.21  transferred to the state according to the following schedule: 
 91.22     (1) effective July 1, 2003, the first and fourth judicial 
 91.23  districts; 
 91.24     (2) effective July 1, 2004, the third and sixth judicial 
 91.25  districts; and 
 91.26     (3) effective July 1, 2005, the second and tenth judicial 
 91.27  districts. 
 91.28     Subd. 2.  [DEFINITION; SALARY EXPENDITURES.] "Salary 
 91.29  expenditures" means the annualized salary of court 
 91.30  administration employees specified in the judicial branch 
 91.31  personnel plan on the date of transfer, the annualized cost of 
 91.32  employee benefits, including, but not limited to, retirement 
 91.33  plans and employer provided insurance, elected under section 
 91.34  480.181 for the year of transfer and the budgeted nonpersonnel 
 91.35  costs for the year of transfer.  The salary settlements include 
 91.36  both collective bargaining agreements and any pay plan that 
 92.1   applies to all county employees. 
 92.2      Subd. 3.  [DEFINITION; COURT ADMINISTRATION 
 92.3   EXPENDITURES.] "Court administration expenditures" means the 
 92.4   total expenditures of (1) salary expenditures as defined under 
 92.5   subdivision 2 and (2) other related administrative operating 
 92.6   expenditures. 
 92.7      Subd. 4.  [DEFINITION; MANDATED COURT SERVICES.] "Mandated 
 92.8   court services" means services for: 
 92.9      (1) guardian ad litem; 
 92.10     (2) interpreter; 
 92.11     (3) Minnesota Rules, parts 9525.0900 to 9525.1020 (rule 
 92.12  20); 
 92.13     (4) civil commitment examination, not including 
 92.14  hospitalization or treatment costs, for mental commitments and 
 92.15  related proceedings under chapter 253B; and 
 92.16     (5) in forma pauperis costs. 
 92.17     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 92.18  following final enactment. 
 92.19     Sec. 24.  [484.77] [FACILITIES.] 
 92.20     The county board in each county shall provide suitable 
 92.21  facilities for court purposes at the county seat, or at other 
 92.22  locations agreed upon by the district court and the county.  The 
 92.23  county shall also be responsible for the costs of renting, 
 92.24  maintaining, operating, remodeling, insuring, and renovating 
 92.25  those facilities occupied by the court. 
 92.26     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 92.27  following final enactment. 
 92.28     Sec. 25.  Minnesota Statutes 2000, section 487.33, 
 92.29  subdivision 5, is amended to read: 
 92.30     Subd. 5.  [ALLOCATION.] The court administrator shall 
 92.31  provide the county treasurer with the name of the municipality 
 92.32  or other subdivision of government where the offense was 
 92.33  committed which employed or provided by contract the arresting 
 92.34  or apprehending officer and the name of the municipality or 
 92.35  other subdivision of government which employed the prosecuting 
 92.36  attorney or otherwise provided for prosecution of the offense 
 93.1   for each fine or penalty and the total amount of fines or 
 93.2   penalties collected for each municipality or other subdivision 
 93.3   of government.  On or before the last day of each month, the 
 93.4   county treasurer shall pay over to the treasurer of each 
 93.5   municipality or subdivision of government within the county all 
 93.6   fines or penalties for parking violations for which complaints 
 93.7   and warrants have not been issued and one-third of all fines or 
 93.8   penalties collected during the previous month for offenses 
 93.9   committed within the municipality or subdivision of government 
 93.10  from persons arrested or issued citations by officers employed 
 93.11  by the municipality or subdivision or provided by the 
 93.12  municipality or subdivision by contract.  An additional 
 93.13  one-third of all fines or penalties shall be paid to the 
 93.14  municipality or subdivision of government providing prosecution 
 93.15  of offenses of the type for which the fine or penalty is 
 93.16  collected occurring within the municipality or subdivision, 
 93.17  imposed for violations of state statute or of an ordinance, 
 93.18  charter provision, rule or regulation of a city whether or not a 
 93.19  guilty plea is entered or bail is forfeited.  Except as provided 
 93.20  in section 299D.03, subdivision 5, or as otherwise provided by 
 93.21  law, all other fines and forfeitures and all fees and statutory 
 93.22  court costs collected by the court administrator shall be paid 
 93.23  to the county treasurer of the county in which the funds were 
 93.24  collected who shall dispense them as provided by law.  In a 
 93.25  county in a judicial district under section 480.181, subdivision 
 93.26  1, paragraph (b), as added in Laws 1999, chapter 216, article 7, 
 93.27  section 26, all other fines, forfeitures, fees, and statutory 
 93.28  court costs must be paid to the state treasurer for deposit in 
 93.29  the state treasury and credited to the general fund. 
 93.30     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2003, 
 93.31  in the first and fourth districts; July 1, 2004, in the third 
 93.32  and sixth districts; and July 1, 2005, in the second and tenth 
 93.33  districts. 
 93.34     Sec. 26.  Minnesota Statutes 2000, section 574.34, 
 93.35  subdivision 1, is amended to read: 
 93.36     Subdivision 1.  [GENERAL.] Fines and forfeitures not 
 94.1   specially granted or appropriated by law shall be paid into the 
 94.2   treasury of the county where they are incurred, except in a 
 94.3   county in a judicial district under section 480.181, subdivision 
 94.4   1, paragraph (b), as added in Laws 1999, chapter 216, article 7, 
 94.5   section 26, or section 480.181, subdivision 1, the fines and 
 94.6   forfeitures must be deposited in the state treasury and credited 
 94.7   to the general fund. 
 94.8      <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2003, 
 94.9   in the first and fourth districts; July 1, 2004, in the third 
 94.10  and sixth districts; and July 1, 2005, in the second and tenth 
 94.11  districts. 
 94.12     Sec. 27.  Laws 1999, chapter 216, article 7, section 46, 
 94.13  subdivision 3, is amended to read: 
 94.14     Subd. 3.  [MISCELLANEOUS COST.] The provisions of sections 
 94.15  1, 2, and 18 to 45, relating to the state takeover of court 
 94.16  interpreter costs, guardian ad litem costs, rule 20 and mental 
 94.17  commitment examination costs, and in forma pauperis costs are 
 94.18  effective January 1, 2000, in the eighth judicial district; July 
 94.19  1, 2000, in the fifth, seventh, and ninth judicial districts; 
 94.20  and July 1, 2001, on the date court administration expenditures 
 94.21  and costs of mandated court services costs as defined under 
 94.22  Minnesota Statutes, section 480.183, subdivisions 4 and 5, are 
 94.23  transferred to the state under Minnesota Statutes, section 
 94.24  480.183, subdivision 1, in the remaining judicial districts. 
 94.25     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 94.26  following final enactment. 
 94.27     Sec. 28.  [TRANSITIONAL PROVISIONS.] 
 94.28     Subdivision 1.  [TRANSFER OF PROPERTY.] The title to 
 94.29  personal property that is used by employees being transferred to 
 94.30  state employment under this article in the scope of their 
 94.31  employment is transferred to the state when they become state 
 94.32  employees.  
 94.33     Subd. 2.  [RULES.] The supreme court, in consultation with 
 94.34  the conference of chief judges, may adopt rules to implement 
 94.35  this article.  
 94.36     Subd. 3.  [BUDGETS.] Notwithstanding any law to the 
 95.1   contrary, the fiscal year budgets for the year in which the 
 95.2   state assumes the cost of court administration in the judicial 
 95.3   district for the court administrators' offices being transferred 
 95.4   to state employment under this article, including the number of 
 95.5   complement positions and salaries, must be submitted by the 
 95.6   court administrators to the supreme court.  The budgets must 
 95.7   include the current levels of funding and positions at the time 
 95.8   of submission as well as any requests for increases in funding 
 95.9   and positions. 
 95.10     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2003, 
 95.11  in the first and fourth districts; July 1, 2004, in the third 
 95.12  and sixth districts; and July 1, 2005, in the second and tenth 
 95.13  districts. 
 95.14     Sec. 29.  [APPROPRIATION.] 
 95.15     The supreme court general fund appropriation base is 
 95.16  increased by $48,040,000 in fiscal year 2004 and by an 
 95.17  additional $19,452,000 in fiscal year 2005.  In fiscal years 
 95.18  2006 and 2007 the supreme court may request additional base 
 95.19  adjustments to reflect the transfer of the remaining judicial 
 95.20  districts. 
 95.21                             ARTICLE 4 
 95.22                            LEVY LIMITS 
 95.23     Section 1.  Minnesota Statutes 2000, section 275.16, is 
 95.24  amended to read: 
 95.25     275.16 [COUNTY AUDITOR TO FIX AMOUNT OF LEVY.] 
 95.26     If any such municipality shall return to the county auditor 
 95.27  a levy greater than permitted by chapters 123A, 123B, 126C, 
 95.28  136C, and 136D and, sections 275.124 to 275.16, and 275.70 to 
 95.29  275.74, such county auditor shall extend only such amount of 
 95.30  taxes as the limitations herein prescribed will permit; 
 95.31  provided, if such levy shall include any levy for the payment of 
 95.32  bonded indebtedness or judgments, such levies for bonded 
 95.33  indebtedness or judgments shall be extended in full, and the 
 95.34  remainder of the levies shall be reduced so that the total 
 95.35  thereof, including levies for bonds and judgments, shall not 
 95.36  exceed such amount as the limitations herein prescribed will 
 96.1   permit. 
 96.2      Sec. 2.  Minnesota Statutes 2000, section 275.62, 
 96.3   subdivision 1, is amended to read: 
 96.4      Subdivision 1.  [REPORT ON TAXES LEVIED.] The commissioner 
 96.5   of revenue shall establish procedures for the annual reporting 
 96.6   of local government levies.  Each local governmental unit shall 
 96.7   submit a report to the commissioner by December 30 of the year 
 96.8   in which the tax is levied.  A local governmental unit is 
 96.9   required to file this report only for levy years in which it is 
 96.10  not subject to levy limits under sections 275.70 to 275.74.  The 
 96.11  report shall include, but is not limited to, information on the 
 96.12  amount of the tax levied by the governmental unit for the 
 96.13  following purposes: 
 96.14     (1) debt, which includes taxes levied for the purposes 
 96.15  defined in Minnesota Statutes 1991 Supplement, section 275.50, 
 96.16  subdivision 5, clauses (b), (c), (d), and (e); 
 96.17     (2) social services and related programs, which include 
 96.18  taxes levied for the purposes defined in Minnesota Statutes 1991 
 96.19  Supplement, section 275.50, subdivision 5, clauses (a), (j), and 
 96.20  (v); 
 96.21     (3) libraries, which include taxes levied for the purposes 
 96.22  defined in Minnesota Statutes 1991 Supplement, section 275.50, 
 96.23  subdivision 5, clause (n); 
 96.24     (4) for counties only, the amount of levy needed to fund 
 96.25  increased county costs associated with the welfare reform under 
 96.26  Laws 1997, chapter 85, including increased administration and 
 96.27  program costs of the income maintenance programs and also 
 96.28  related support services as they relate directly to the welfare 
 96.29  reform the amounts levied for each of the purposes listed in 
 96.30  section 275.70, subdivision 5; and 
 96.31     (5) (2) other levies, which include the taxes levied for 
 96.32  all purposes not included in clause (1), (2), (3), or (4). 
 96.33     Sec. 3.  Minnesota Statutes 2000, section 275.70, is 
 96.34  amended by adding a subdivision to read: 
 96.35     Subdivision 1.  [APPLICATION.] For the purposes of sections 
 96.36  275.70 to 275.74, the following terms have the meanings given 
 97.1   them, unless provided otherwise. 
 97.2      Sec. 4.  Minnesota Statutes 2000, section 275.70, is 
 97.3   amended by adding a subdivision to read: 
 97.4      Subd. 2.  [IMPLICIT PRICE DEFLATOR.] "Implicit price 
 97.5   deflator" means the implicit price deflator for government 
 97.6   consumption expenditures and gross investment for state and 
 97.7   local governments prepared by the bureau of economic analysis of 
 97.8   the United States Department of Commerce for the 12-month period 
 97.9   ending March 31 of the levy year. 
 97.10     Sec. 5.  Minnesota Statutes 2000, section 275.70, is 
 97.11  amended by adding a subdivision to read: 
 97.12     Subd. 3.  [LOCAL GOVERNMENTAL UNIT.] "Local governmental 
 97.13  unit" means a county, or a statutory or home rule charter city 
 97.14  with a population greater than 2,500. 
 97.15     Sec. 6.  Minnesota Statutes 2000, section 275.70, is 
 97.16  amended by adding a subdivision to read: 
 97.17     Subd. 4.  [POPULATION; NUMBER OF HOUSEHOLDS.] "Population" 
 97.18  or "number of households" means the population or number of 
 97.19  households for the local governmental unit as established by the 
 97.20  last federal census, by a census taken under section 275.14, or 
 97.21  by an estimate made by the metropolitan council or by the state 
 97.22  demographer under section 4A.02, whichever is most recent as to 
 97.23  the stated date of the count or estimate up to and including 
 97.24  June 1 of the current levy year. 
 97.25     Sec. 7.  Minnesota Statutes 2000, section 275.70, 
 97.26  subdivision 5, is amended to read: 
 97.27     Subd. 5.  [SPECIAL LEVIES.] "Special levies" means those 
 97.28  portions of ad valorem taxes levied by a local governmental unit 
 97.29  for the following purposes or in the following manner: 
 97.30     (1) to pay the costs of the principal and interest on 
 97.31  bonded indebtedness or to reimburse for the amount of liquor 
 97.32  store revenues used to pay the principal and interest due on 
 97.33  municipal liquor store bonds in the year preceding the year for 
 97.34  which the levy limit is calculated; 
 97.35     (2) to pay the costs of principal and interest on 
 97.36  certificates of indebtedness issued for any corporate purpose 
 98.1   except for the following: 
 98.2      (i) tax anticipation or aid anticipation certificates of 
 98.3   indebtedness; 
 98.4      (ii) certificates of indebtedness issued under sections 
 98.5   298.28 and 298.282; 
 98.6      (iii) certificates of indebtedness used to fund current 
 98.7   expenses or to pay the costs of extraordinary expenditures that 
 98.8   result from a public emergency; or 
 98.9      (iv) certificates of indebtedness used to fund an 
 98.10  insufficiency in tax receipts or an insufficiency in other 
 98.11  revenue sources; 
 98.12     (3) to provide for the bonded indebtedness portion of 
 98.13  payments made to another political subdivision of the state of 
 98.14  Minnesota; 
 98.15     (4) to fund payments made to the Minnesota state armory 
 98.16  building commission under section 193.145, subdivision 2, to 
 98.17  retire the principal and interest on armory construction bonds; 
 98.18     (5) for unreimbursed expenses related to flooding that 
 98.19  occurred during the first half of calendar year 1997, as allowed 
 98.20  by the commissioner of revenue under section 275.74, paragraph 
 98.21  (b); 
 98.22     (6) for local units of government located in an area 
 98.23  designated by the Federal Emergency Management Agency pursuant 
 98.24  to a major disaster declaration issued for Minnesota by 
 98.25  President Clinton after April 1, 1997, and before June 11, 1997, 
 98.26  for the amount of tax dollars lost due to abatements authorized 
 98.27  under section 273.123, subdivision 7, and Laws 1997, chapter 
 98.28  231, article 2, section 64, to the extent that they are related 
 98.29  to the major disaster and to the extent that neither the state 
 98.30  or federal government reimburses the local government for the 
 98.31  amount lost; 
 98.32     (7) property taxes approved by voters which are levied 
 98.33  against the referendum market value as provided under section 
 98.34  275.61; 
 98.35     (8) to fund matching requirements needed to qualify for 
 98.36  federal or state grants or programs to the extent that either 
 99.1   (i) the matching requirement exceeds the matching requirement in 
 99.2   calendar year 1997, or (ii) it is a new matching requirement 
 99.3   that didn't exist prior to 1998; 
 99.4      (9) (6) to pay the expenses reasonably and necessarily 
 99.5   incurred in preparing for or repairing the effects of natural 
 99.6   disaster including the occurrence or threat of widespread or 
 99.7   severe damage, injury, or loss of life or property resulting 
 99.8   from natural causes, in accordance with standards formulated by 
 99.9   the emergency services division of the state department of 
 99.10  public safety, as allowed by the commissioner of revenue under 
 99.11  section 275.74, paragraph (b); 
 99.12     (10) for the amount of tax revenue lost due to abatements 
 99.13  authorized under section 273.123, subdivision 7, for damage 
 99.14  related to the tornadoes of March 29, 1998, to the extent that 
 99.15  neither the state or federal government provides reimbursement 
 99.16  for the amount lost; 
 99.17     (11) (7) pay amounts required to correct an error in the 
 99.18  levy certified to the county auditor by a city or county in a 
 99.19  levy year, but only to the extent that when added to the 
 99.20  preceding year's levy it is not in excess of an applicable 
 99.21  statutory, special law or charter limitation, or the limitation 
 99.22  imposed on the governmental subdivision by sections 275.70 to 
 99.23  275.74 in the preceding levy year; 
 99.24     (12) (8) to pay an abatement under section 469.1815; 
 99.25     (13) to pay the employer contribution to the local 
 99.26  government correctional service retirement plan under section 
 99.27  353E.03, subdivision 2, to the extent that the employer 
 99.28  contribution exceeds 5.49 percent of total salary; 
 99.29     (14) to pay the operating or maintenance costs of a county 
 99.30  jail as authorized in section 641.01 or 641.262, or of a 
 99.31  correctional facility as defined in section 241.021, subdivision 
 99.32  1, paragraph (5), to the extent that the county can demonstrate 
 99.33  to the commissioner of revenue that the amount has been included 
 99.34  in the county budget as a direct result of a rule, minimum 
 99.35  requirement, minimum standard, or directive of the department of 
 99.36  corrections, or to pay the operating or maintenance costs of a 
100.1   regional jail as authorized in section 641.262.  For purposes of 
100.2   this clause, a district court order is not a rule, minimum 
100.3   requirement, minimum standard, or directive of the department of 
100.4   corrections.  If the county utilizes this special levy, any 
100.5   amount levied by the county in the previous levy year for the 
100.6   purposes specified under this clause and included in the 
100.7   county's previous year's levy limitation computed under section 
100.8   275.71, shall be deducted from the levy limit base under section 
100.9   275.71, subdivision 2, when determining the county's current 
100.10  year levy limitation.  The county shall provide the necessary 
100.11  information to the commissioner of revenue for making this 
100.12  determination; 
100.13     (15) (9) to pay for operation of a lake improvement 
100.14  district, as authorized under section 103B.555.  If the county 
100.15  utilizes this special levy, any amount levied by the county in 
100.16  the previous levy year for the purposes specified under this 
100.17  clause and included in the county's previous year's levy 
100.18  limitation computed under section 275.71 shall be deducted from 
100.19  the levy limit base under section 275.71, subdivision 2, when 
100.20  determining the county's current year levy limitation.  The 
100.21  county shall provide the necessary information to the 
100.22  commissioner of revenue for making this determination; and 
100.23     (16) (10) to repay a state or federal loan used to fund the 
100.24  direct or indirect required spending by the local government due 
100.25  to a state or federal transportation project or other state or 
100.26  federal capital project.  This authority may only be used if the 
100.27  project is not a local government initiative; and 
100.28     (11) to pay for court administration and mandated court 
100.29  services costs as required under section 273.1398, subdivision 
100.30  4b; however, for taxes levied to pay for these costs in the year 
100.31  in which the court financing is transferred to the state, the 
100.32  amount under this section is limited to one-third of the aid 
100.33  reduction under section 273.1398, subdivision 4a. 
100.34     <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
100.35  taxes levied in 2001, payable in 2002. 
100.36     Sec. 8.  [275.71] [LEVY LIMITS.] 
101.1      Subdivision 1.  [LIMIT ON LEVIES.] Notwithstanding any 
101.2   other provision of law or municipal charter to the contrary 
101.3   which authorize ad valorem taxes in excess of the limits 
101.4   established by sections 275.70 to 275.74, the provisions of this 
101.5   section apply to local governmental units for all purposes other 
101.6   than those for which special levies and special assessments are 
101.7   made. 
101.8      Subd. 2.  [LEVY LIMIT BASE.] (a) The levy limit base for a 
101.9   local governmental unit for taxes levied in 2001 is equal to the 
101.10  sum of its adjusted levy limit base for taxes levied in 1999 
101.11  plus the amount it levied in 1999 under Minnesota Statutes 1999 
101.12  Supplement, section 275.70, subdivision 5, clauses (8), (13), 
101.13  and (14), multiplied by: 
101.14     (1) one plus the percentage growth in the implicit price 
101.15  deflator for the 12-month period ending March 30, 2000; and 
101.16     (2) one plus a percentage equal to the annual percentage 
101.17  increase in the estimated number of households, if any, for the 
101.18  most recent 12-month period that was available on July 1, 2000. 
101.19     For a county in a judicial district for which financing has 
101.20  not been transferred to the state by January 1, 2001, the levy 
101.21  limit base for 2001 is reduced by the amount of the county's 
101.22  2001 budget for court administration costs and mandated services 
101.23  costs, as certified under section 273.1398, subdivision 4b, 
101.24  paragraph (c). 
101.25     If a governmental unit was not subject to levy limits for 
101.26  taxes levied in 1999, the commissioner of revenue shall request 
101.27  information from the local governmental unit and calculate a 
101.28  1999 adjusted levy limit base equal to the amount it levied for 
101.29  nondebt purposes in 1999, plus the amount of aids it was 
101.30  certified to receive in calendar year 1999 under sections 
101.31  273.1398, 298.28, 298.282, and 477A.011 to 477A.03, prior to any 
101.32  aid reductions under section 273.1399, subdivision 5.  
101.33     (b) The levy limit base for a local governmental unit for 
101.34  taxes levied in 2002 is equal to its adjusted levy limit base in 
101.35  the previous year, subject to any adjustments under section 
101.36  275.72. 
102.1      Subd. 3.  [ADJUSTED LEVY LIMIT BASE.] (a) For taxes levied 
102.2   in 2001 and 2002, the adjusted levy limit is equal to the levy 
102.3   limit base computed under subdivision 2 or section 275.72, 
102.4   multiplied by: 
102.5      (1) one plus a percentage equal to the percentage growth in 
102.6   the implicit price deflator; and 
102.7      (2) one plus a percentage equal to the percentage increase 
102.8   in number of households, if any, for the most recent 12-month 
102.9   period for which data is available. 
102.10     (b) For counties only, for taxes levied in 2001, the 
102.11  adjusted levy limit base is permanently reduced by an amount 
102.12  equal to the aid reduction under section 273.1398, subdivision 
102.13  4f.  For counties only, for taxes levied in 2001 and 2002, the 
102.14  adjusted levy limit base is also reduced by any amount of levy 
102.15  reduction required under section 275.07, subdivision 1, 
102.16  paragraph (b), clause (ii). 
102.17     Subd. 4.  [PROPERTY TAX LEVY LIMIT.] Notwithstanding any 
102.18  other provision of a municipal charter which limits ad valorem 
102.19  taxes to a lesser amount, for taxes levied in 2001 and 2002, the 
102.20  property tax levy limit for a local governmental unit is equal 
102.21  to the greater of (1) its adjusted levy limit base determined 
102.22  under subdivision 3 plus any additional levy authorized under 
102.23  section 275.73, which is levied against net tax capacity, 
102.24  reduced by the sum of (i) the total amount of aids that the 
102.25  local governmental unit is certified to receive under sections 
102.26  477A.011 to 477A.014, (ii) homestead and agricultural aids it is 
102.27  certified to receive under section 273.1398, (iii) taconite aids 
102.28  under sections 298.28 and 298.282 including any aid which was 
102.29  required to be placed in a special fund for expenditure in the 
102.30  next succeeding year, and (iv) low-income housing aid under 
102.31  sections 477A.06 and 477A.065; or (2) the amount the local 
102.32  governmental unit levied in 2000 minus the amount of the levy 
102.33  used for the purposes listed in section 275.70, subdivision 5, 
102.34  as determined by the commissioner of revenue under section 
102.35  275.74, subdivision 3. 
102.36     Subd. 5.  [LEVIES IN EXCESS OF LEVY LIMITS.] If the levy 
103.1   made by a city or county exceeds the levy limit provided in 
103.2   sections 275.70 to 275.74, except when the excess levy is due to 
103.3   the rounding of the rate in accordance with section 275.28, the 
103.4   county auditor shall only extend the amount of taxes permitted 
103.5   under sections 275.70 to 275.74, as provided for in section 
103.6   275.16. 
103.7      Sec. 9.  [275.72] [LEVY LIMIT ADJUSTMENTS FOR CONSOLIDATION 
103.8   AND ANNEXATION.] 
103.9      Subdivision 1.  [ADJUSTMENTS FOR CONSOLIDATION.] If all of 
103.10  the area included in two or more local governmental units is 
103.11  consolidated, merged, or otherwise combined to constitute a 
103.12  single governmental unit, the levy limit base for the resulting 
103.13  governmental unit in the first levy year in which the 
103.14  consolidation is effective shall be equal to (1) the highest tax 
103.15  rate in any of the merging governmental units in the previous 
103.16  year multiplied by the net tax capacity of all the merging 
103.17  governmental units in the previous year, minus (2) the sum of 
103.18  all levies in the merging governmental units in the previous 
103.19  year that qualify as special levies under section 275.70, 
103.20  subdivision 5. 
103.21     Subd. 2.  [ADJUSTMENTS FOR ANNEXATION.] If a local 
103.22  governmental unit increases its tax base through annexation of 
103.23  an area which is not the area of an entire local governmental 
103.24  unit, the levy limit base of the local governmental unit in the 
103.25  first year in which the annexation is effective shall be equal 
103.26  to its levy limit base established before the adjustment under 
103.27  section 275.71, subdivision 3, for the current levy year 
103.28  multiplied by the ratio of the net tax capacity in the local 
103.29  governmental unit after the annexation compared to its net tax 
103.30  capacity before the annexation.  
103.31     Subd. 3.  [ADJUSTMENTS FOR CHANGES IN SERVICE LEVELS.] If a 
103.32  local governmental unit, as a result of an annexation agreement 
103.33  prior to January 1, 1999, has different tax rates in various 
103.34  parts of the jurisdiction due to different service levels, it 
103.35  may petition the commissioner of revenue to adjust its levy 
103.36  limits established under section 275.71.  The commissioner shall 
104.1   adjust the levy limits to reflect scheduled changes in tax rates 
104.2   related to increasing service levels in areas currently 
104.3   receiving less city services.  The local governmental unit shall 
104.4   provide the commissioner with any information the commissioner 
104.5   deems necessary in making the levy limit adjustment. 
104.6      Subd. 4.  [TRANSFER OF GOVERNMENTAL FUNCTIONS.] If a 
104.7   function or service of one local governmental unit is 
104.8   transferred to another local governmental unit, the levy limits 
104.9   established under section 275.71 must be adjusted by the 
104.10  commissioner of revenue in such manner so as to fairly and 
104.11  equitably reflect the reduced or increased property tax burden 
104.12  resulting from the transfer.  The aggregate of the adjusted 
104.13  limitations must not exceed the aggregate of the limitations 
104.14  prior to adjustment. 
104.15     Subd. 5.  [EFFECTIVE DATE FOR LEVY LIMITS PURPOSES.] 
104.16  Annexations, mergers, and shifts in services and functional 
104.17  responsibilities that are effective by June 30 of the levy year 
104.18  are included in the calculation of the levy limit for that levy 
104.19  year.  Annexations, mergers, and shifts in services and 
104.20  functional responsibilities that are effective after June 30 of 
104.21  a levy year are not included in the calculation of the levy 
104.22  limit until the subsequent levy year. 
104.23     Sec. 10.  [275.73] [ELECTIONS FOR ADDITIONAL LEVIES.] 
104.24     Subdivision 1.  [ADDITIONAL LEVY AUTHORIZATION.] 
104.25  Notwithstanding the provisions of sections 275.70 to 275.72, but 
104.26  subject to other law or charter provisions establishing other 
104.27  limitations on the amount of property taxes a local governmental 
104.28  unit may levy, a local governmental unit may levy an additional 
104.29  levy in any amount which is approved by the majority of voters 
104.30  of the governmental unit voting on the question at a general or 
104.31  special election.  Notwithstanding section 275.61, any levy 
104.32  authorized under this section must be levied against net tax 
104.33  capacity unless the levy required voter approval under another 
104.34  general or special law or any charter provisions.  When the 
104.35  governing body of the local governmental unit resolves to 
104.36  increase the levy pursuant to this section, it shall provide for 
105.1   submission of the proposition of an additional levy at a general 
105.2   or special election.  Notice of the election must be given in 
105.3   the manner required by law.  The notice must state the purpose 
105.4   and the maximum yearly amount of the additional levy. 
105.5      Subd. 2.  [LEVY EFFECTIVE DATE.] An additional levy 
105.6   approved under subdivision 1 at a general or special election 
105.7   held prior to September 1 in any levy year may be levied in that 
105.8   same levy year and subsequent levy years.  An additional levy 
105.9   approved under subdivision 1 at a general or special election 
105.10  held after August 31 in any levy year shall not be levied in 
105.11  that same levy but may be levied in subsequent levy years. 
105.12     Sec. 11.  [275.74] [STATE REGULATION OF LEVIES.] 
105.13     Subdivision 1.  [CALCULATION AND NOTIFICATION.] The 
105.14  commissioner of revenue shall make all necessary calculations 
105.15  for determining levy limits for local governmental units and 
105.16  notify the affected governmental units of their levy limits 
105.17  directly by August 1 of each levy year.  The local governmental 
105.18  units shall, upon request, provide the commissioner with any 
105.19  information needed to make the calculations.  The local 
105.20  governmental unit shall report by September 15, in a manner 
105.21  prescribed by the commissioner, the maximum amount of taxes it 
105.22  plans to levy for each of the purposes listed under special 
105.23  levies and any additional levy authorized under section 275.73, 
105.24  along with any necessary documentation.  The commissioner shall 
105.25  review the proposed special levies and make any adjustments 
105.26  needed.  The commissioner's decision is final.  The final 
105.27  allowed special levy amounts and any levy limit adjustments must 
105.28  be certified back to the local governments by December 10.  In 
105.29  addition, the commissioner of revenue shall notify all county 
105.30  auditors on or before five working days after December 20 of the 
105.31  sum of the levy limit plus the total of allowed special levies 
105.32  for each local governmental unit located within their boundaries 
105.33  so that they may fix the levies as required in section 275.16.  
105.34  The local governmental units shall provide the commissioner of 
105.35  revenue with all information that the commissioner deems 
105.36  necessary to make the calculations provided for in sections 
106.1   275.70 to 275.73. 
106.2      Subd. 2.  [AUTHORIZATION FOR SPECIAL LEVIES.] A local 
106.3   governmental unit may request authorization to levy for 
106.4   unreimbursed costs for other natural disasters under section 
106.5   275.70, subdivision 5, clause (6).  The local governmental unit 
106.6   shall submit a request to levy under section 275.70, subdivision 
106.7   5, clause (6), to the commissioner of revenue by September 15 of 
106.8   the levy year and the request must include information 
106.9   documenting the estimated unreimbursed costs.  The commissioner 
106.10  of revenue may grant levy authority, up to the amount requested 
106.11  based on the documentation submitted.  All decisions of the 
106.12  commissioner are final. 
106.13     Subd. 3.  [AUTHORIZATION TO USE 2000 LEVY AMOUNT.] A local 
106.14  governmental unit may request authorization to levy the amount 
106.15  determined under section 275.71, subdivision 4, clause (2).  The 
106.16  local governmental unit shall submit the request to the 
106.17  commissioner by September 15 of the levy year and shall include 
106.18  the information required by the commissioner to determine the 
106.19  amount of the levy under section 275.71, subdivision 4, clause 
106.20  (2).  The commissioner may grant levy authority up to the amount 
106.21  requested based on the documentation submitted.  All decisions 
106.22  of the commissioner are final. 
106.23                             ARTICLE 5 
106.24                         REVERSE REFERENDA 
106.25                 TAXES PAYABLE 2004 AND THEREAFTER 
106.26     Section 1.  Minnesota Statutes 2000, section 275.065, 
106.27  subdivision 3, is amended to read: 
106.28     Subd. 3.  [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The 
106.29  county auditor shall prepare and the county treasurer shall 
106.30  deliver after November 10 and on or before November 24 17 each 
106.31  year, by first class mail to each taxpayer at the address listed 
106.32  on the county's current year's assessment roll, a notice of 
106.33  proposed property taxes.  
106.34     (b) The commissioner of revenue shall prescribe the form of 
106.35  the notice. 
106.36     (c) The notice must inform taxpayers that it contains the 
107.1   amount of property taxes each taxing authority proposes to 
107.2   collect for taxes payable the following year.  In the case of a 
107.3   town, or in the case of the state determined portion of the 
107.4   school district levy, the final tax amount will be its proposed 
107.5   tax.  The notice must clearly state that each taxing authority, 
107.6   including regional library districts established under section 
107.7   134.201, and including the metropolitan taxing districts as 
107.8   defined in paragraph (i), but excluding all other special taxing 
107.9   districts, cities with a population of 500 or less, and towns, 
107.10  will must hold a public meeting to receive public testimony on 
107.11  the proposed budget and proposed or final property tax levy, or, 
107.12  in case of a school district, on the current budget and proposed 
107.13  property tax levy.  It In the case of a county or a city with a 
107.14  population over 500, a public hearing is not required if the 
107.15  county's or city's proposed property tax levy has not increased 
107.16  over the levy amount certified by the county or city under 
107.17  section 275.07, subdivision 1, for the previous year.  The 
107.18  notice must clearly state the time and place of each taxing 
107.19  authority's meeting and if one is to be held.  It must also 
107.20  state an address where comments will be received by mail, 
107.21  whether or not a public hearing is held.  
107.22     (d) The notice must state for each parcel: 
107.23     (1) the market value of the property as determined under 
107.24  section 273.11, and used for computing property taxes payable in 
107.25  the following year and for taxes payable in the current year as 
107.26  each appears in the records of the county assessor on November 1 
107.27  of the current year; and, in the case of residential property, 
107.28  whether the property is classified as homestead or 
107.29  nonhomestead.  The notice must clearly inform taxpayers of the 
107.30  years to which the market values apply and that the values are 
107.31  final values; 
107.32     (2) the items listed below, shown separately by county, 
107.33  city or town, state determined school tax net of the education 
107.34  homestead credit under section 273.1382, voter approved school 
107.35  levy, other local school levy, and the sum of the special taxing 
107.36  districts, and as a total of all taxing authorities:  
108.1      (i) the actual tax for taxes payable in the current year; 
108.2      (ii) the tax change due to spending factors, defined as the 
108.3   proposed tax minus the constant spending tax amount; 
108.4      (iii) the tax change due to other factors, defined as the 
108.5   constant spending tax amount minus the actual current year tax; 
108.6   and 
108.7      (iv) the proposed tax amount. 
108.8      In the case of a town or the state determined school tax, 
108.9   the final tax shall also be its proposed tax unless the town 
108.10  changes its levy at a special town meeting under section 
108.11  365.52.  If a school district has certified under section 
108.12  126C.17, subdivision 9, that a referendum will be held in the 
108.13  school district at the November general election, the county 
108.14  auditor must note next to the school district's proposed amount 
108.15  that a referendum is pending and that, if approved by the 
108.16  voters, the tax amount may be higher than shown on the notice.  
108.17  In the case of the city of Minneapolis, the levy for the 
108.18  Minneapolis library board and the levy for Minneapolis park and 
108.19  recreation shall be listed separately from the remaining amount 
108.20  of the city's levy.  In the case of a parcel where tax increment 
108.21  or the fiscal disparities areawide tax under chapter 276A or 
108.22  473F applies, the proposed tax levy on the captured value or the 
108.23  proposed tax levy on the tax capacity subject to the areawide 
108.24  tax must each be stated separately and not included in the sum 
108.25  of the special taxing districts; and 
108.26     (3) the increase or decrease between the total taxes 
108.27  payable in the current year and the total proposed taxes, 
108.28  expressed as a percentage. 
108.29     For purposes of this section, the amount of the tax on 
108.30  homesteads qualifying under the senior citizens' property tax 
108.31  deferral program under chapter 290B is the total amount of 
108.32  property tax before subtraction of the deferred property tax 
108.33  amount. 
108.34     (e) The notice must clearly state that the proposed or 
108.35  final taxes do not include the following: 
108.36     (1) special assessments; 
109.1      (2) levies approved by the voters after the date the 
109.2   proposed taxes are certified, including bond referenda, school 
109.3   district levy referenda, and levy limit increase referenda; 
109.4      (3) amounts necessary to pay cleanup or other costs due to 
109.5   a natural disaster occurring after the date the proposed taxes 
109.6   are certified; 
109.7      (4) amounts necessary to pay tort judgments against the 
109.8   taxing authority that become final after the date the proposed 
109.9   taxes are certified; and 
109.10     (5) the contamination tax imposed on properties which 
109.11  received market value reductions for contamination. 
109.12     (f) Except as provided in subdivision 7, failure of the 
109.13  county auditor to prepare or the county treasurer to deliver the 
109.14  notice as required in this section does not invalidate the 
109.15  proposed or final tax levy or the taxes payable pursuant to the 
109.16  tax levy. 
109.17     (g) If the notice the taxpayer receives under this section 
109.18  lists the property as nonhomestead, and satisfactory 
109.19  documentation is provided to the county assessor by the 
109.20  applicable deadline, and the property qualifies for the 
109.21  homestead classification in that assessment year, the assessor 
109.22  shall reclassify the property to homestead for taxes payable in 
109.23  the following year. 
109.24     (h) In the case of class 4 residential property used as a 
109.25  residence for lease or rental periods of 30 days or more, the 
109.26  taxpayer must either: 
109.27     (1) mail or deliver a copy of the notice of proposed 
109.28  property taxes to each tenant, renter, or lessee; or 
109.29     (2) post a copy of the notice in a conspicuous place on the 
109.30  premises of the property.  
109.31     The notice must be mailed or posted by the taxpayer by 
109.32  November 27 18 or within three days of receipt of the notice, 
109.33  whichever is later.  A taxpayer may notify the county treasurer 
109.34  of the address of the taxpayer, agent, caretaker, or manager of 
109.35  the premises to which the notice must be mailed in order to 
109.36  fulfill the requirements of this paragraph. 
110.1      (i) For purposes of this subdivision, subdivisions 5a and 
110.2   6, "metropolitan special taxing districts" means the following 
110.3   taxing districts in the seven-county metropolitan area that levy 
110.4   a property tax for any of the specified purposes listed below: 
110.5      (1) metropolitan council under section 473.132, 473.167, 
110.6   473.249, 473.325, 473.446, 473.521, 473.547, or 473.834; 
110.7      (2) metropolitan airports commission under section 473.667, 
110.8   473.671, or 473.672; and 
110.9      (3) metropolitan mosquito control commission under section 
110.10  473.711. 
110.11     For purposes of this section, any levies made by the 
110.12  regional rail authorities in the county of Anoka, Carver, 
110.13  Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 
110.14  398A shall be included with the appropriate county's levy and 
110.15  shall be discussed at that county's public hearing, if held. 
110.16     (j) If a statutory or home rule charter city or a town has 
110.17  exercised the local levy option provided by section 473.388, 
110.18  subdivision 7, it may include in the notice of its proposed 
110.19  taxes the amount of its proposed taxes attributable to its 
110.20  exercise of the option.  In the first year of the city or town's 
110.21  exercise of this option, the statement shall include an estimate 
110.22  of the reduction of the metropolitan council's tax on the parcel 
110.23  due to exercise of that option.  The metropolitan council's levy 
110.24  shall be adjusted accordingly. 
110.25     <b>[EFFECTIVE DATE.]</b> This section is effective for notices 
110.26  prepared in 2003 and thereafter. 
110.27     Sec. 2.  Minnesota Statutes 2000, section 275.065, 
110.28  subdivision 5a, is amended to read: 
110.29     Subd. 5a.  [PUBLIC ADVERTISEMENT.] (a) A city that has a 
110.30  population of more than 2,500, county, a metropolitan special 
110.31  taxing district as defined in subdivision 3, paragraph (i), a 
110.32  regional library district established under section 134.201, or 
110.33  school district shall advertise in a newspaper a notice of its 
110.34  intent to adopt a budget and property tax levy or, in the case 
110.35  of a school district, to review its current budget and proposed 
110.36  property taxes payable in the following year, at a public 
111.1   hearing.  In the case of a county or city that has a population 
111.2   over 2,500, if its proposed property tax levy has not increased 
111.3   over its levy amount certified under section 275.07, subdivision 
111.4   1, for the previous year, no public hearing is required.  The 
111.5   notice must be published not less than two business days nor 
111.6   more than six business days before the hearing, if required due 
111.7   to a levy increase.  Even if a hearing is not required, counties 
111.8   and cities must continue to place an advertisement in the 
111.9   newspaper informing taxpayers of the proposed budget and levy 
111.10  amounts. 
111.11     The advertisement must be at least one-eighth page in size 
111.12  of a standard-size or a tabloid-size newspaper.  The 
111.13  advertisement must not be placed in the part of the newspaper 
111.14  where legal notices and classified advertisements appear.  The 
111.15  advertisement must be published in an official newspaper of 
111.16  general circulation in the taxing authority.  The newspaper 
111.17  selected must be one of general interest and readership in the 
111.18  community, and not one of limited subject matter.  The 
111.19  advertisement must appear in a newspaper that is published at 
111.20  least once per week.  
111.21     For purposes of this section, the metropolitan special 
111.22  taxing district's advertisement must only be published in the 
111.23  Minneapolis Star and Tribune and the Saint Paul Pioneer Press. 
111.24     (b) The advertisement for school districts, metropolitan 
111.25  special taxing districts, and regional library districts must be 
111.26  in the following form, except that the notice for a school 
111.27  district may include references to the current budget in regard 
111.28  to proposed property taxes. 
111.29                             "NOTICE OF
111.30                      PROPOSED PROPERTY TAXES
111.31                   (School District/Metropolitan
111.32                  Special Taxing District/Regional
111.33                   Library District) of .........
111.34  The governing body of ........ will soon hold budget hearings 
111.35  and vote on the property taxes for (metropolitan special taxing 
111.36  district/regional library district services that will be 
112.1   provided in (year)/school district services that will be 
112.2   provided in (year) and (year)). 
112.3                      NOTICE OF PUBLIC HEARING:
112.4   All concerned citizens are invited to attend a public hearing 
112.5   and express their opinions on the proposed (school 
112.6   district/metropolitan special taxing district/regional library 
112.7   district) budget and property taxes, or in the case of a school 
112.8   district, its current budget and proposed property taxes, 
112.9   payable in the following year.  The hearing will be held on 
112.10  (Month/Day/Year) at (Time) at (Location, Address)." 
112.11     (c)(1) If the city's or county's proposed property tax levy 
112.12  has increased over its previous year's certified levy, the 
112.13  advertisement for cities and counties must be in the following 
112.14  form. 
112.15                        "NOTICE OF PROPOSED
112.16                  TOTAL BUDGET AND PROPERTY TAXES
112.17  The (city/county) governing body or board of commissioners will 
112.18  hold a public hearing to discuss the budget and to vote on the 
112.19  amount of property taxes to collect for services the 
112.20  (city/county) will provide in (year). 
112.21     
112.22  SPENDING:  The total budget amounts below compare 
112.23  (city's/county's) (year) total actual budget with the amount the 
112.24  (city/county) proposes to spend in (year). 
112.25     
112.26  (Year) Total          Proposed (Year)          Change from
112.27  Actual Budget             Budget               (Year)-(Year)
112.28     
112.29    $.......              $.......                ...%
112.30     
112.31  TAXES:  The property tax amounts below compare that portion of 
112.32  the current budget levied in property taxes in (city/county) for 
112.33  (year) with the property taxes the (city/county) proposes to 
112.34  collect in (year). 
112.35     
112.36  (Year) Property       Proposed (Year)          Change from
113.1       Taxes              Property Taxes         (Year)-(Year)
113.2      
113.3     $.......              $.......                ...% 
113.4      
113.5                      ATTEND THE PUBLIC HEARING
113.6   All (city/county) residents are invited to attend the public 
113.7   hearing of the (city/county) to express your opinions on the 
113.8   budget and the proposed amount of (year) property taxes.  The 
113.9   hearing will be held on: 
113.10                       (Month/Day/Year/Time)
113.11                         (Location/Address)
113.12  If the discussion of the budget cannot be completed, a time and 
113.13  place for continuing the discussion will be announced at the 
113.14  hearing.  You are also invited to send your written comments to: 
113.15                           (City/County)
113.16                        (Location/Address)"
113.17     (2) If no hearing is required under this section for the 
113.18  city or county, its advertisement must be in the following 
113.19  form.  The advertisement must clearly state that because the 
113.20  proposed property tax levy amount is equal to or less than the 
113.21  taxing authority's previous year's actual property tax levy, no 
113.22  public hearing is required by law. 
113.23                       "NOTICE OF PROPOSED
113.24                 TOTAL BUDGET AND PROPERTY TAXES
113.25  Although no public hearing will be held, the (city/county) 
113.26  governing body or board of commissioners is planning to adopt 
113.27  the following budget and property tax levy. 
113.28     
113.29  SPENDING:  The total budget amounts below compare 
113.30  (city's/county's) (year) total actual budget with the amount 
113.31  (city/county) proposes to spend in (year). 
113.32     
113.33  (Year) Total          Proposed (Year)          Change from
113.34  Actual Budget             Budget               (Year)-(Year)
113.35     
113.36    $.......              $.......                ...%
114.1      
114.2   TAXES:  The property tax amounts below compare that portion of 
114.3   the current budget levied in property taxes in (city/county) for 
114.4   (year) with the property taxes (city/county) proposes to collect 
114.5   in (year). 
114.6      
114.7   (Year) Property       Proposed (Year)          Change from
114.8       Taxes              Property Taxes         (Year)-(Year)
114.9      
114.10    $.......              $.......                ...% 
114.11     Although no public hearing will be held, you are invited to 
114.12  send any written comments to: 
114.13                          (City/County)
114.14                       (Location/Address)"
114.15     (3) If the city's governing body or county board of 
114.16  commissioners decides to hold a public hearing on the proposed 
114.17  budget and levy, even though the proposed levy is equal to or 
114.18  less than the previous year's certified levy amount, the 
114.19  advertisement format in clause (2) must be used. 
114.20     (d) For purposes of this subdivision, the budget amounts 
114.21  listed on the advertisement mean: 
114.22     (1) for cities, the total government fund expenditures, as 
114.23  defined by the state auditor under section 471.6965, less any 
114.24  expenditures for improvements or services that are specially 
114.25  assessed or charged under chapter 429, 430, 435, or the 
114.26  provisions of any other law or charter; and 
114.27     (2) for counties, the total government fund expenditures, 
114.28  as defined by the state auditor under section 375.169, less any 
114.29  expenditures for direct payments to recipients or providers for 
114.30  the human service aids listed below: 
114.31     (i) Minnesota family investment program under chapters 256J 
114.32  and 256K; 
114.33     (ii) medical assistance under sections 256B.041, 
114.34  subdivision 5, and 256B.19, subdivision 1; 
114.35     (iii) general assistance medical care under section 
114.36  256D.03, subdivision 6; 
115.1      (iv) general assistance under section 256D.03, subdivision 
115.2   2; 
115.3      (v) emergency assistance under section 256J.48; 
115.4      (vi) Minnesota supplemental aid under section 256D.36, 
115.5   subdivision 1; 
115.6      (vii) preadmission screening under section 256B.0911, and 
115.7   alternative care grants under section 256B.0913; 
115.8      (viii) general assistance medical care claims processing, 
115.9   medical transportation and related costs under section 256D.03, 
115.10  subdivision 4; 
115.11     (ix) medical transportation and related costs under section 
115.12  256B.0625, subdivisions 17 to 18a; 
115.13     (x) group residential housing under section 256I.05, 
115.14  subdivision 8, transferred from programs in clauses (iv) and 
115.15  (vi); or 
115.16     (xi) any successor programs to those listed in clauses (i) 
115.17  to (x). 
115.18     (e) A city with a population of over 500 but not more than 
115.19  2,500 must advertise by posted notice as defined in section 
115.20  645.12, subdivision 1.  The advertisement must be posted at the 
115.21  time provided in paragraph (a).  It must be in the form required 
115.22  in paragraph (b). 
115.23     (f) For purposes of this subdivision, the population of a 
115.24  city is the most recent population as determined by the state 
115.25  demographer under section 4A.02. 
115.26     (g) The commissioner of revenue, subject to the approval of 
115.27  the chairs of the house and senate tax committees, shall 
115.28  prescribe the form and format of the advertisement. 
115.29     <b>[EFFECTIVE DATE.]</b> This section is effective for newspaper 
115.30  advertisements in 2003 and thereafter. 
115.31     Sec. 3.  Minnesota Statutes 2000, section 275.065, 
115.32  subdivision 6, is amended to read: 
115.33     Subd. 6.  [PUBLIC HEARING; ADOPTION OF BUDGET AND LEVY.] 
115.34  (a) For purposes of this section, the following terms shall have 
115.35  the meanings given: 
115.36     (1) "Initial hearing" means the first and primary hearing 
116.1   held to discuss the taxing authority's proposed budget and 
116.2   proposed property tax levy for taxes payable in the following 
116.3   year, or, for school districts, the current budget and the 
116.4   proposed property tax levy for taxes payable in the following 
116.5   year. 
116.6      (2) "Continuation hearing" means a hearing held to complete 
116.7   the initial hearing, if the initial hearing is not completed on 
116.8   its scheduled date. 
116.9      (3) "Subsequent hearing" means the hearing held to adopt 
116.10  the taxing authority's final property tax levy, and, in the case 
116.11  of taxing authorities other than school districts, the final 
116.12  budget, for taxes payable in the following year. 
116.13     (b) Between November 29 19 and December 20 10, the 
116.14  governing bodies of a city that has a population over 500, 
116.15  county, metropolitan special taxing districts as defined in 
116.16  subdivision 3, paragraph (i), and regional library districts 
116.17  shall each hold an initial public hearing to discuss and seek 
116.18  public comment on its final budget and property tax levy for 
116.19  taxes payable in the following year, and the governing body of 
116.20  the school district shall hold an initial public hearing to 
116.21  review its current budget and proposed property tax levy for 
116.22  taxes payable in the following year.  The metropolitan special 
116.23  taxing districts shall be required to hold only a single joint 
116.24  initial public hearing, the location of which will be determined 
116.25  by the affected metropolitan agencies. 
116.26     (c) The initial hearing must be held after 5:00 p.m. if 
116.27  scheduled on a day other than Saturday.  No initial hearing may 
116.28  be held on a Sunday.  
116.29     (d) At the initial hearing under this subdivision, the 
116.30  percentage increase in property taxes proposed by the taxing 
116.31  authority, if any, and the specific purposes for which property 
116.32  tax revenues are being increased must be discussed.  During the 
116.33  discussion, the governing body shall hear comments regarding a 
116.34  proposed increase and explain the reasons for the proposed 
116.35  increase.  The public shall be allowed to speak and to ask 
116.36  questions.  At the public hearing, the school district must also 
117.1   provide and discuss information on the distribution of its 
117.2   revenues by revenue source, and the distribution of its spending 
117.3   by program area.  
117.4      (e) If the initial hearing is not completed on its 
117.5   scheduled date, the taxing authority must announce, prior to 
117.6   adjournment of the hearing, the date, time, and place for the 
117.7   continuation of the hearing.  The continuation hearing must be 
117.8   held at least five business days but no more than 14 ten 
117.9   business days after the initial hearing.  A continuation hearing 
117.10  may not be held later than December 20 10 except as provided in 
117.11  paragraphs (f) and (g).  A continuation hearing must be held 
117.12  after 5:00 p.m. if scheduled on a day other than Saturday.  No 
117.13  continuation hearing may be held on a Sunday. 
117.14     (f) The governing body of a county shall hold its initial 
117.15  hearing on the first Thursday Tuesday in December each year, and 
117.16  may hold additional initial hearings on other dates before 
117.17  December 20 10 if necessary for the convenience of county 
117.18  residents.  If the county needs a continuation of its hearing, 
117.19  the continuation hearing shall be held on the third second 
117.20  Tuesday in December even if that second Tuesday is after 
117.21  December 10.  If the third Tuesday in December falls on December 
117.22  21, the county's continuation hearing shall be held on Monday, 
117.23  December 20.  
117.24     (g) The metropolitan special taxing districts shall hold a 
117.25  joint initial public hearing on the first Wednesday of 
117.26  December.  A continuation hearing, if necessary, shall be held 
117.27  on the second Wednesday of December even if that second 
117.28  Wednesday is after December 10. 
117.29     (h) The county auditor shall provide for the coordination 
117.30  of initial and continuation hearing dates for all school 
117.31  districts and cities within the county to prevent conflicts 
117.32  under clauses (i) and (j). 
117.33     (i) By August 10, each school board and the board of the 
117.34  regional library district shall certify to the county auditors 
117.35  of the counties in which the school district or regional library 
117.36  district is located the dates on which it elects to hold its 
118.1   initial hearing and any continuation hearing.  If a school board 
118.2   or regional library district does not certify these dates by 
118.3   August 10, the auditor will assign the initial and continuation 
118.4   hearing dates.  The dates elected or assigned must not conflict 
118.5   with the initial and continuation hearing dates of the county or 
118.6   the metropolitan special taxing districts.  
118.7      (j) By August 20, the county auditor shall notify the 
118.8   clerks of the cities within the county of the dates on which 
118.9   school districts and regional library districts have elected to 
118.10  hold their initial and continuation hearings.  At the time a 
118.11  city certifies its proposed levy under subdivision 1 it shall 
118.12  certify the dates on which it elects to hold its initial hearing 
118.13  and any continuation hearing.  Until September 15, the first and 
118.14  second Mondays of December are reserved for the use of the 
118.15  cities.  If a city does not certify its hearing dates by 
118.16  September 15, the auditor shall assign the initial and 
118.17  continuation hearing dates.  The dates elected or assigned for 
118.18  the initial hearing must not conflict with the initial hearing 
118.19  dates of the county, metropolitan special taxing districts, 
118.20  regional library districts, or school districts within which the 
118.21  city is located.  To the extent possible, the dates of the 
118.22  city's continuation hearing should not conflict with the 
118.23  continuation hearing dates of the county, metropolitan special 
118.24  taxing districts, regional library districts, or school 
118.25  districts within which the city is located.  This paragraph does 
118.26  not apply to cities of 500 population or less. 
118.27     (k) The county initial hearing date and the city, 
118.28  metropolitan special taxing district, regional library district, 
118.29  and school district initial hearing dates must be designated on 
118.30  the notices required under subdivision 3.  The continuation 
118.31  hearing dates need not be stated on the notices.  
118.32     (l) At a subsequent hearing, each county, school district, 
118.33  city over 500 population, and metropolitan special taxing 
118.34  district may amend its proposed property tax levy and must adopt 
118.35  a final property tax levy.  Each county, city over 500 
118.36  population, and metropolitan special taxing district may also 
119.1   amend its proposed budget and must adopt a final budget at the 
119.2   subsequent hearing.  The final property tax levy must be adopted 
119.3   prior to adopting the final budget.  A school district is not 
119.4   required to adopt its final budget at the subsequent hearing.  
119.5   The subsequent hearing of a taxing authority must be held on a 
119.6   date subsequent to the date of the taxing authority's initial 
119.7   public hearing.  If a continuation hearing is held, the 
119.8   subsequent hearing must be held either immediately following the 
119.9   continuation hearing or on a date subsequent to the continuation 
119.10  hearing.  The subsequent hearing may be held at a regularly 
119.11  scheduled board or council meeting or at a special meeting 
119.12  scheduled for the purposes of the subsequent hearing.  The 
119.13  subsequent hearing of a taxing authority does not have to be 
119.14  coordinated by the county auditor to prevent a conflict with an 
119.15  initial hearing, a continuation hearing, or a subsequent hearing 
119.16  of any other taxing authority.  All subsequent hearings must be 
119.17  held prior to five working days after December 20 of the levy 
119.18  year.  The date, time, and place of the subsequent hearing must 
119.19  be announced at the initial public hearing or at the 
119.20  continuation hearing. 
119.21     (m) The property tax levy certified under section 275.07 by 
119.22  a city of any population, county, metropolitan special taxing 
119.23  district, regional library district, or school district must not 
119.24  exceed the proposed levy determined under subdivision 1, except 
119.25  by an amount up to the sum of the following amounts: 
119.26     (1) the amount of a school district levy whose voters 
119.27  approved a referendum to increase taxes under section 123B.63, 
119.28  subdivision 3, or 126C.17, subdivision 9, after the proposed 
119.29  levy was certified; 
119.30     (2) the amount of a city or county levy approved by the 
119.31  voters after the proposed levy was certified; 
119.32     (3) the amount of a levy to pay principal and interest on 
119.33  bonds approved by the voters under section 475.58 after the 
119.34  proposed levy was certified; 
119.35     (4) the amount of a levy to pay costs due to a natural 
119.36  disaster occurring after the proposed levy was certified, if 
120.1   that amount is approved by the commissioner of revenue under 
120.2   subdivision 6a; 
120.3      (5) the amount of a levy to pay tort judgments against a 
120.4   taxing authority that become final after the proposed levy was 
120.5   certified, if the amount is approved by the commissioner of 
120.6   revenue under subdivision 6a; 
120.7      (6) the amount of an increase in levy limits certified to 
120.8   the taxing authority by the commissioner of children, families, 
120.9   and learning or the commissioner of revenue after the proposed 
120.10  levy was certified; and 
120.11     (7) the amount required under section 126C.55. 
120.12     (n) This subdivision does not apply to towns and, special 
120.13  taxing districts other than regional library districts and 
120.14  metropolitan special taxing districts, cities with a population 
120.15  of 500 or less, and counties or cities with a population over 
120.16  500 whose proposed property tax levy is less than or equal to 
120.17  its levy certified under section 275.07, subdivision 1, for the 
120.18  previous year. 
120.19     (o) Notwithstanding the requirements of this section, the 
120.20  employer is required to meet and negotiate over employee 
120.21  compensation as provided for in chapter 179A.  
120.22     <b>[EFFECTIVE DATE.]</b> This section is effective for hearings 
120.23  held in 2003 and thereafter. 
120.24     Sec. 4.  Minnesota Statutes 2000, section 275.065, 
120.25  subdivision 8, is amended to read: 
120.26     Subd. 8.  [HEARING.] Notwithstanding any other provision of 
120.27  law, Ramsey county, the city of St. Paul, and independent school 
120.28  district No. 625 are authorized to and shall hold their initial 
120.29  public hearing jointly.  The hearing must be held on the second 
120.30  first Tuesday of December each year.  The advertisement required 
120.31  in subdivision 5a may be a joint advertisement.  The hearing is 
120.32  otherwise subject to the requirements of this section. 
120.33     Ramsey county is authorized to hold an additional initial 
120.34  hearing or hearings as provided under this section, provided 
120.35  that any additional hearings must not conflict with the initial 
120.36  or continuation hearing dates of the other taxing districts.  
121.1   However, if Ramsey county elects not to hold such additional 
121.2   initial hearing or hearings, the joint initial hearing required 
121.3   by this subdivision must be held in a St. Paul location 
121.4   convenient to residents of Ramsey county. 
121.5      <b>[EFFECTIVE DATE.]</b> This section is effective for hearings 
121.6   held in 2003 and thereafter. 
121.7      Sec. 5.  Minnesota Statutes 2000, section 275.065, is 
121.8   amended by adding a subdivision to read: 
121.9      Subd. 9.  [REVERSE REFERENDUM.] The reverse referendum 
121.10  procedure in this subdivision applies only in the case of a 
121.11  county, or a city that has a population of more than 2,500, that 
121.12  has adopted a property tax levy increase over the levy amount 
121.13  certified under section 275.07, subdivision 1, for the previous 
121.14  year.  The levy subject to the provisions of this subdivision 
121.15  does not include the levy under section 475.61 or another 
121.16  similar provision providing a levy for general obligation bonds. 
121.17     If, within 21 days after the public hearing and adoption of 
121.18  a levy under subdivision 6, a petition signed by voters equal in 
121.19  number to five percent of the votes cast in the county or city 
121.20  in the last general election requesting a referendum on the levy 
121.21  increase is filed with the county auditor or the city clerk, the 
121.22  levy increase shall not be effective until it has been submitted 
121.23  to the voters at a special election to be held on the fourth 
121.24  Tuesday in January, and a majority of votes cast on the question 
121.25  of approving the levy increase are in the affirmative.  The 
121.26  commissioner of revenue shall prepare the form of the question 
121.27  to be presented at the referendum, which shall reference only 
121.28  the amount of the property tax levy increase over the previous 
121.29  year. 
121.30     The county or city shall notify the county auditor of the 
121.31  results of the referendum.  If the majority of the votes cast on 
121.32  the question are in the affirmative, the levy adopted under 
121.33  subdivision 6 shall be certified to the county auditor under 
121.34  section 275.07, subdivision 1.  If the majority of the votes 
121.35  cast on the question are in the negative, an amount equal to the 
121.36  preceding year's levy shall be certified to the county auditor 
122.1   for purposes of section 275.07, subdivision 1. 
122.2      <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
122.3   levied in 2003 and thereafter, for taxes payable in 2004 and 
122.4   thereafter. 
122.5      Sec. 6.  Minnesota Statutes 2000, section 275.07, 
122.6   subdivision 1, is amended to read: 
122.7      Subdivision 1.  [CERTIFICATION OF LEVY.] Except as 
122.8   otherwise provided in this subdivision, the taxes voted by 
122.9   cities, counties, school districts, and special districts shall 
122.10  be certified by the proper authorities to the county auditor on 
122.11  or before five working days after December 20 in each year.  A 
122.12  county or city to which the reverse referendum provisions under 
122.13  section 275.065, subdivision 9, apply shall certify the taxes to 
122.14  the county auditor by January 5, except that any county or city 
122.15  for which a petition has been filed under section 275.065, 
122.16  subdivision 9, must certify the day immediately following the 
122.17  election under that section.  A town must certify the levy 
122.18  adopted by the town board to the county auditor by September 15 
122.19  each year.  If the town board modifies the levy at a special 
122.20  town meeting after September 15, the town board must recertify 
122.21  its levy to the county auditor on or before five working days 
122.22  after December 20.  The taxes certified shall not be reduced by 
122.23  the county auditor by the aid received under section 273.1398, 
122.24  subdivision 2, but shall be reduced by the county auditor by the 
122.25  aid received under section 273.1398, subdivision 3.  If a city, 
122.26  town, county, school district, or special district fails to 
122.27  certify its levy by that date, its levy shall be the amount 
122.28  levied by it for the preceding year. 
122.29     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
122.30  levied in 2003 and thereafter, for taxes payable in 2004 and 
122.31  thereafter. 
122.32                             ARTICLE 6 
122.33                         HEALTH CARE TAXES 
122.34     Section 1.  [16A.78] [HEALTH CARE ACCESS FUND RESERVE.] 
122.35     Subdivision 1.  [ESTABLISH RESERVE.] A reserve is 
122.36  established within the health care access fund for uses 
123.1   necessary to preserve access to basic health care services. 
123.2      Subd. 2.  [RESERVE FINANCING.] The funds in the reserve are 
123.3   equal to 15 percent of the expenditures for the MinnesotaCare 
123.4   program in the immediately prior fiscal year. 
123.5      Subd. 3.  [RESERVE USE.] The reserve is established to 
123.6   protect access to basic health care services that are publicly 
123.7   funded. 
123.8      <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2001. 
123.9      Sec. 2.  Minnesota Statutes 2000, section 62J.041, 
123.10  subdivision 1, is amended to read: 
123.11     Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
123.12  section, the following definitions apply. 
123.13     (b) "Health plan company" has the definition provided in 
123.14  section 62Q.01. 
123.15     (c) "Total expenditures" means incurred claims or 
123.16  expenditures on health care services, administrative expenses, 
123.17  charitable contributions, and all other payments made by health 
123.18  plan companies out of premium revenues. 
123.19     (d) "Net expenditures" means total expenditures minus 
123.20  exempted taxes and assessments and payments or allocations made 
123.21  to establish or maintain reserves.  
123.22     (e) "Exempted taxes and assessments" means direct payments 
123.23  for taxes to government agencies, contributions to the Minnesota 
123.24  comprehensive health association, the medical assistance 
123.25  provider's surcharge under section 256.9657, the MinnesotaCare 
123.26  provider tax under Minnesota Statutes 2000, section 295.52, 
123.27  assessments by the health coverage reinsurance association, 
123.28  assessments by the Minnesota life and health insurance guaranty 
123.29  association, assessments by the Minnesota risk adjustment 
123.30  association, and any new assessments imposed by federal or state 
123.31  law. 
123.32     (f) "Consumer cost-sharing or subscriber liability" means 
123.33  enrollee coinsurance, copayment, deductible payments, and 
123.34  amounts in excess of benefit plan maximums. 
123.35     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2002.
123.36     Sec. 3.  Minnesota Statutes 2000, section 62Q.095, 
124.1   subdivision 6, is amended to read: 
124.2      Subd. 6.  [EXEMPTION.] A health plan company, to the extent 
124.3   that it operates as a staff model health plan company as defined 
124.4   in section 295.50, subdivision 12b, by employing allied 
124.5   independent health care providers to deliver health care 
124.6   services to enrollees, is exempt from this section.  For 
124.7   purposes of this subdivision, "staff model health plan company" 
124.8   means a health plan company as defined in section 62Q.01, 
124.9   subdivision 4, that employs one or more types of health care 
124.10  provider to deliver health care services to the health plan 
124.11  company's enrollees. 
124.12     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2002.
124.13     Sec. 4.  [62Q.671] [PASS-THROUGH OF SAVINGS TO CONSUMERS.] 
124.14     Subdivision 1.  [REDUCED PREMIUMS.] All health plan 
124.15  companies must pass on to consumers, in the form of reduced 
124.16  premium rates, all savings resulting from: 
124.17     (1) the repeal of the MinnesotaCare provider taxes imposed 
124.18  under Minnesota Statutes 2000, section 295.52, and the resulting 
124.19  reduction in the transfer of additional expenses generated by 
124.20  Minnesota Statutes 2000, section 295.52, obligations to 
124.21  third-party contracts under Minnesota Statutes 2000, section 
124.22  295.582; and 
124.23     (2) the repeal of the one percent premium tax for health 
124.24  maintenance organizations, nonprofit health service plan 
124.25  corporations, and community integrated service networks imposed 
124.26  under Minnesota Statutes 2000, section 297I.05, subdivision 5. 
124.27     Subd. 2.  [DOCUMENTING COMPLIANCE.] Each health plan 
124.28  company must include with its annual renewal for certification 
124.29  of authority or licensure documentation indicating compliance 
124.30  with subdivision 1. 
124.31     Subd. 3.  [ENFORCEMENT.] If the appropriate commissioner 
124.32  finds that a health plan company has not complied with 
124.33  subdivision 1, the commissioner may take enforcement action 
124.34  against that health plan company.  The commissioner may, by 
124.35  order, fine, or censure the health plan company or revoke or 
124.36  suspend the certificate of authority or license of the health 
125.1   plan company to do business in this state if the commissioner 
125.2   finds that the health plan company has not complied with this 
125.3   section.  The health plan company may appeal the commissioner's 
125.4   order through a contested case hearing in accordance with 
125.5   chapter 14. 
125.6      <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 
125.7   2002, and applies to premium rates for health plans issued or 
125.8   renewed after that date. 
125.9      Sec. 5.  Minnesota Statutes 2000, section 214.16, 
125.10  subdivision 2, is amended to read: 
125.11     Subd. 2.  [BOARD COOPERATION REQUIRED.] The board shall 
125.12  assist the commissioner of health in data collection activities 
125.13  required under Laws 1992, chapter 549, article 7, and shall 
125.14  assist the commissioner of revenue in activities related to 
125.15  collection of the health care provider tax required under Laws 
125.16  1992, chapter 549, article 9.  Upon the request of the 
125.17  commissioner or the commissioner of revenue, the board shall 
125.18  make available names and addresses of current licensees and 
125.19  provide other information or assistance as needed. 
125.20     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2002.
125.21     Sec. 6.  Minnesota Statutes 2000, section 214.16, 
125.22  subdivision 3, is amended to read: 
125.23     Subd. 3.  [GROUNDS FOR DISCIPLINARY ACTION.] The board 
125.24  shall take disciplinary action, which may include license 
125.25  revocation, against a regulated person for: 
125.26     (1) intentional failure to provide the commissioner of 
125.27  health with the data required under chapter 62J; and 
125.28     (2) intentional failure to provide the commissioner of 
125.29  revenue with data on gross revenue and other information 
125.30  required for the commissioner to implement sections 295.50 to 
125.31  295.58; 
125.32     (3) intentional failure to pay the health care provider tax 
125.33  required under section 295.52; and 
125.34     (4) entering into a contract or arrangement that is 
125.35  prohibited under sections 62J.70 to 62J.73. 
125.36     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2002.
126.1      Sec. 7.  [256L.021] [USE OF TOBACCO SETTLEMENT PROCEEDS.] 
126.2      (a) The commissioner of finance shall deposit the following 
126.3   amounts of the annual payments due under the terms of the 
126.4   tobacco settlement on December 31 of each year into the health 
126.5   care access fund established under section 16A.724: 
126.6      (1) the first $112,000,000 of the payment due December 31, 
126.7   2001; 
126.8      (2) the first $126,000,000 of the payment due December 31, 
126.9   2003; and 
126.10     (3) all payments due after January 1, 2004. 
126.11     (b) The commissioner of finance shall credit to the health 
126.12  care access fund the one-time tobacco settlement payment due on 
126.13  January 2, 2002. 
126.14     (c) For purposes of this section, "tobacco settlement" 
126.15  means the consent judgment entered in the case of State v. 
126.16  Philip Morris Inc., No. C1-94-8565 (Minnesota District Court, 
126.17  Second Judicial District). 
126.18     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
126.19  following final enactment. 
126.20     Sec. 8.  Minnesota Statutes 2000, section 270B.01, 
126.21  subdivision 8, is amended to read: 
126.22     Subd. 8.  [MINNESOTA TAX LAWS.] For purposes of this 
126.23  chapter only, unless expressly stated otherwise, "Minnesota tax 
126.24  laws" means the taxes, refunds, and fees administered by or paid 
126.25  to the commissioner under chapters 115B (except taxes imposed 
126.26  under sections 115B.21 to 115B.24), 289A (except taxes imposed 
126.27  under sections 298.01, 298.015, and 298.24), 290, 290A, 291, 
126.28  297A, and 297H and sections 295.50 to 295.59, or any similar 
126.29  Indian tribal tax administered by the commissioner pursuant to 
126.30  any tax agreement between the state and the Indian tribal 
126.31  government, and includes any laws for the assessment, 
126.32  collection, and enforcement of those taxes, refunds, and fees. 
126.33     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2002.
126.34     Sec. 9.  Minnesota Statutes 2000, section 270B.14, 
126.35  subdivision 1, is amended to read: 
126.36     Subdivision 1.  [DISCLOSURE TO COMMISSIONER OF HUMAN 
127.1   SERVICES.] (a) On the request of the commissioner of human 
127.2   services, the commissioner shall disclose return information 
127.3   regarding taxes imposed by chapter 290, and claims for refunds 
127.4   under chapter 290A, to the extent provided in paragraph (b) and 
127.5   for the purposes set forth in paragraph (c). 
127.6      (b) Data that may be disclosed are limited to data relating 
127.7   to the identity, whereabouts, employment, income, and property 
127.8   of a person owing or alleged to be owing an obligation of child 
127.9   support. 
127.10     (c) The commissioner of human services may request data 
127.11  only for the purposes of carrying out the child support 
127.12  enforcement program and to assist in the location of parents who 
127.13  have, or appear to have, deserted their children.  Data received 
127.14  may be used only as set forth in section 256.978. 
127.15     (d) The commissioner shall provide the records and 
127.16  information necessary to administer the supplemental housing 
127.17  allowance to the commissioner of human services.  
127.18     (e) At the request of the commissioner of human services, 
127.19  the commissioner of revenue shall electronically match the 
127.20  social security numbers and names of participants in the 
127.21  telephone assistance plan operated under sections 237.69 to 
127.22  237.711, with those of property tax refund filers, and determine 
127.23  whether each participant's household income is within the 
127.24  eligibility standards for the telephone assistance plan. 
127.25     (f) The commissioner may provide records and information 
127.26  collected under Minnesota Statutes 2000, sections 295.50 to 
127.27  295.59 to the commissioner of human services for purposes of the 
127.28  Medicaid Voluntary Contribution and Provider-Specific Tax 
127.29  Amendments of 1991, Public Law Number 102-234.  Upon the written 
127.30  agreement by the United States Department of Health and Human 
127.31  Services to maintain the confidentiality of the data, the 
127.32  commissioner may provide records and information collected under 
127.33  Minnesota Statutes 2000, sections 295.50 to 295.59 to the Health 
127.34  Care Financing Administration section of the United States 
127.35  Department of Health and Human Services for purposes of meeting 
127.36  federal reporting requirements.  
128.1      (g) The commissioner may provide records and information to 
128.2   the commissioner of human services as necessary to administer 
128.3   the early refund of refundable tax credits. 
128.4      (h) The commissioner may disclose information to the 
128.5   commissioner of human services necessary to verify income for 
128.6   eligibility and premium payment under the MinnesotaCare program, 
128.7   under section 256L.05, subdivision 2. 
128.8      (i) The commissioner may disclose information to the 
128.9   commissioner of human services necessary to verify whether 
128.10  applicants or recipients for the Minnesota family investment 
128.11  program, general assistance, food stamps, and Minnesota 
128.12  supplemental aid program have claimed refundable tax credits 
128.13  under chapter 290 and the property tax refund under chapter 
128.14  290A, and the amounts of the credits. 
128.15     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2002.
128.16     Sec. 10.  Minnesota Statutes 2000, section 297F.10, 
128.17  subdivision 1, is amended to read: 
128.18     Subdivision 1.  [TAX AND USE TAX ON CIGARETTES.] Revenue 
128.19  received from cigarette taxes, as well as related penalties, 
128.20  interest, license fees, and miscellaneous sources of revenue 
128.21  shall be deposited by the commissioner in the state treasury and 
128.22  credited as follows: 
128.23     (a) first to the general obligation special tax bond debt 
128.24  service account in each fiscal year the amount required to 
128.25  increase the balance on hand in the account on each December 1 
128.26  to an amount equal to the full amount of principal and interest 
128.27  to come due on all outstanding bonds whose debt service is 
128.28  payable primarily from the proceeds of the tax to and including 
128.29  the second following July 1; and 
128.30     (b) after the requirements of paragraph (a) have been met: 
128.31     (1) the revenue produced by one mill of the tax on 
128.32  cigarettes weighing not more than three pounds a thousand and 
128.33  two mills of the tax on cigarettes weighing more than three 
128.34  pounds a thousand must be credited to the Minnesota future 
128.35  resources fund; and 
128.36     (2) the amount of revenue specified under paragraph (c) 
129.1   must be credited to the health care access fund; and 
129.2      (3) the balance of the revenues derived from taxes, 
129.3   penalties, and interest (under this chapter) and from license 
129.4   fees and miscellaneous sources of revenue shall be credited to 
129.5   the general fund. 
129.6      (c) For fiscal year 2004, $120,000,000 of the revenue under 
129.7   paragraph (b) must be credited to the health care access fund.  
129.8   For each fiscal year after 2004, the amount credited to the 
129.9   health care access fund equals: 
129.10     (1) the amount certified to be paid in the previous year, 
129.11  plus 
129.12     (2) the percentage increase in the medical care of personal 
129.13  consumption expenditures, published by the Bureau of Economic 
129.14  Affairs of the United States Department of Commerce, for the 
129.15  most recent 12-month period available May 31 of the previous 
129.16  fiscal year multiplied by the sum of the amount under clause (1) 
129.17  and the amount of the ongoing tobacco settlement payments 
129.18  deposited in the health care access fund under section 256L.021, 
129.19  paragraph (a), clause (3), for the previous fiscal year. 
129.20     <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
129.21  fiscal year 2004. 
129.22     Sec. 11.  Minnesota Statutes 2000, section 297I.15, is 
129.23  amended by adding a subdivision to read: 
129.24     Subd. 11.  [HEALTH PLAN PREMIUMS.] Premiums received for 
129.25  health plans as defined in section 62A.011, subdivision 3, and 
129.26  premiums received for coverage described in section 62A.011, 
129.27  subdivision 3, clauses (6), (7), (9), (10), and (12), are exempt 
129.28  from the taxes imposed under this chapter. 
129.29     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 
129.30  2002, and applies to tax years beginning on or after that date. 
129.31     Sec. 12.  [REPEALER.] 
129.32     Subdivision 1.  [MINNESOTACARE PROVIDER TAX.] Minnesota 
129.33  Statutes 2000, sections 295.50; 295.51; 295.52; 295.53; 295.54; 
129.34  295.55; 295.56; 295.57; 295.58; 295.582; and 295.59, are 
129.35  repealed. 
129.36     Subd. 2.  [FEDERAL RESERVE; FINANCIAL MANAGEMENT.] 
130.1   Minnesota Statutes 2000, sections 16A.76; and 256L.02, 
130.2   subdivision 3, are repealed. 
130.3      Subd. 3.  [NONPROFIT HEALTH PLAN COMPANY PREMIUM 
130.4   TAX.] Minnesota Statutes 2000, section 297I.05, subdivision 5, 
130.5   is repealed. 
130.6      Subd. 4.  [CONFORMING PROVISIONS.] Minnesota Statutes 2000, 
130.7   sections 13.4967, subdivision 3; 62T.10; and 144.1484, 
130.8   subdivision 2, are repealed. 
130.9      <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 
130.10  2002, and applies to tax years beginning on or after that date. 
130.11                             ARTICLE 7 
130.12                     INCOME AND FRANCHISE TAXES
130.13     Section 1.  [116J.885] [BIOMEDICAL INNOVATION AND 
130.14  COMMERCIALIZATION INITIATIVE.] 
130.15     Subdivision 1.  [ESTABLISHED.] The commissioner shall 
130.16  establish the biomedical innovation and commercialization 
130.17  initiative (BICI) as a collaborative economic development 
130.18  initiative between the University of Minnesota, Minnesota's 
130.19  medical technology industry, and investors.  BICI is not a state 
130.20  agency.  
130.21     The board established in subdivision 2 shall organize and 
130.22  operate BICI as a for-profit entity and in a manner and form 
130.23  that the board determines best allows BICI to carry out its 
130.24  objectives.  Total cash investment may not exceed $40,000,000.  
130.25  Any distribution from BICI must be returned to all investors, 
130.26  including the state, in the same proportion as funds were 
130.27  invested.  The amount of credits granted is the amount of the 
130.28  state cash investment and is a reduction in the investor's cash 
130.29  investment for participation in any distribution under this 
130.30  subdivision. 
130.31     Subd. 2.  [BOARD.] BICI is governed by a board of 
130.32  directors, appointed to six-year terms, comprised of: 
130.33     (1) a representative chosen by the governor; 
130.34     (2) a representative chosen by the University of Minnesota; 
130.35  and 
130.36     (3) five representatives from the state's medical 
131.1   technology industry, chosen by private sector investors. 
131.2      The board may use up to five percent of its total 
131.3   capitalization to establish a management and administrative 
131.4   budget, including the hiring of staff and for professional 
131.5   management expenses.  Members of the staff are not state 
131.6   employees. 
131.7      Subd. 3.  [DUTIES OF BICI.] BICI shall: 
131.8      (1) add business and financial expertise to technologies 
131.9   that are being developed by University of Minnesota faculty and 
131.10  staff to enhance commercial value; 
131.11     (2) promote the depth, breadth, and value of technologies 
131.12  being developed by the biomedical academic community; 
131.13     (3) catalyze the development of functional, mutually 
131.14  advantageous relationships between industry, faculty, staff, the 
131.15  university, and extended research community; 
131.16     (4) provide a financial return on commercialization efforts 
131.17  to the stakeholders in BICI; 
131.18     (5) directly commercialize technologies through the startup 
131.19  of new Minnesota companies or enhance the marketing of 
131.20  technologies to existing companies creating expanded economic 
131.21  development opportunities in Minnesota; and 
131.22     (6) adopt corporate bylaws and make them available to the 
131.23  public. 
131.24     Subd. 4.  [STATEWIDE FOCUS.] BICI may contract and 
131.25  collaborate with higher education and other research 
131.26  institutions located throughout the state. 
131.27     Subd. 5.  [POWERS OF BOARD.] The board has the power to do 
131.28  all things reasonable and necessary to carry out the duties of 
131.29  BICI including, without limitation, the power to: 
131.30     (1) enter into contracts; 
131.31     (2) sue and be sued; 
131.32     (3) acquire, hold, lease, and transfer any interest in real 
131.33  and personal property; 
131.34     (4) accept appropriations, gifts, grants, and bequests; 
131.35     (5) hire employees for BICI; and 
131.36     (6) delegate any of its powers. 
132.1      Subd. 6.  [BOARD COMPENSATION.] Compensation and expense 
132.2   reimbursement of board members is as provided in section 
132.3   15.0575, subdivision 1. 
132.4      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
132.5   following final enactment. 
132.6      Sec. 2.  Minnesota Statutes 2000, section 270A.03, 
132.7   subdivision 5, is amended to read: 
132.8      Subd. 5.  [DEBT.] (a) "Debt" means a legal obligation of a 
132.9   natural person to pay a fixed and certain amount of money, which 
132.10  equals or exceeds $25 and which is due and payable to a claimant 
132.11  agency.  The term includes criminal fines imposed under section 
132.12  609.10 or 609.125 and restitution.  A debt may arise under a 
132.13  contractual or statutory obligation, a court order, or other 
132.14  legal obligation, but need not have been reduced to judgment.  
132.15     (b) A debt includes any legal obligation of a current 
132.16  recipient of assistance which is based on overpayment of an 
132.17  assistance grant where that payment is based on a client waiver 
132.18  or an administrative or judicial finding of an intentional 
132.19  program violation; or where the debt is owed to a program 
132.20  wherein the debtor is not a client at the time notification is 
132.21  provided to initiate recovery under this chapter and the debtor 
132.22  is not a current recipient of food stamps, transitional child 
132.23  care, or transitional medical assistance. 
132.24     (c) A debt does not include any legal obligation to pay a 
132.25  claimant agency for medical care, including hospitalization if 
132.26  the income of the debtor at the time when the medical care was 
132.27  rendered does not exceed the following amount: 
132.28     (1) for an unmarried debtor, an income of $6,400 $8,800 or 
132.29  less; 
132.30     (2) for a debtor with one dependent, an income 
132.31  of $8,200 $11,270 or less; 
132.32     (3) for a debtor with two dependents, an income 
132.33  of $9,700 $13,330 or less; 
132.34     (4) for a debtor with three dependents, an income of 
132.35  $11,000 $15,120 or less; 
132.36     (5) for a debtor with four dependents, an income 
133.1   of $11,600 $15,950 or less; and 
133.2      (6) for a debtor with five or more dependents, an income of 
133.3   $12,100 $16,630 or less.  
133.4      The income amounts in this subdivision shall be adjusted 
133.5   for inflation for debts incurred in calendar years 1991 2001 and 
133.6   thereafter.  The dollar amount of each income level that applied 
133.7   to debts incurred in the prior year shall be increased in the 
133.8   same manner as provided in section 290.06, subdivision 2d, for 
133.9   the expansion of the tax rate brackets 1f of the Internal 
133.10  Revenue Code of 1986, as amended through December 31, 2000, 
133.11  except that for the purposes of this subdivision the percentage 
133.12  increase shall be determined from the year starting September 1, 
133.13  1999, and ending August 31, 2000, as the base year for adjusting 
133.14  for inflation for debts incurred after December 31, 2000. 
133.15     (d) Debt also includes an agreement to pay a MinnesotaCare 
133.16  premium, regardless of the dollar amount of the premium 
133.17  authorized under section 256L.15, subdivision 1a. 
133.18     <b>[EFFECTIVE DATE.]</b> This section is effective for debts 
133.19  incurred after December 31, 2000. 
133.20     Sec. 3.  Minnesota Statutes 2000, section 289A.12, 
133.21  subdivision 3, is amended to read: 
133.22     Subd. 3.  [RETURNS OR REPORTS BY PARTNERSHIPS, FIDUCIARIES, 
133.23  AND S CORPORATIONS.] (a) Partnerships must file a return with 
133.24  the commissioner for each taxable year.  The return must conform 
133.25  to the requirements of section 290.31 290.311, and must include 
133.26  the names and addresses of the partners entitled to a 
133.27  distributive share in their taxable net income, gain, loss, or 
133.28  credit, and the amount of the distributive share to which each 
133.29  is entitled.  A partnership required to file a return for a 
133.30  partnership taxable year must furnish a copy of the information 
133.31  required to be shown on the return to a person who is a partner 
133.32  at any time during the taxable year, on or before the day on 
133.33  which the return for the taxable year was filed. 
133.34     (b) The fiduciary of an estate or trust making the return 
133.35  required to be filed under section 289A.08, subdivision 2, for a 
133.36  taxable year must give a beneficiary who receives a distribution 
134.1   from the estate or trust with respect to the taxable year or to 
134.2   whom any item with respect to the taxable year is allocated, a 
134.3   statement containing the information required to be shown on the 
134.4   return, on or before the date on which the return was filed. 
134.5      (c) An S corporation must file a return with the 
134.6   commissioner for a taxable year during which an election under 
134.7   section 290.9725 is in effect, stating specifically the names 
134.8   and addresses of the persons owning stock in the corporation at 
134.9   any time during the taxable year, the number of shares of stock 
134.10  owned by a shareholder at all times during the taxable year, the 
134.11  shareholder's pro rata share of each item of the corporation for 
134.12  the taxable year, and other information the commissioner 
134.13  requires.  An S corporation required to file a return under this 
134.14  paragraph for any taxable year must furnish a copy of the 
134.15  information shown on the return to the person who is a 
134.16  shareholder at any time during the taxable year, on or before 
134.17  the day on which the return for the taxable year was filed. 
134.18     (d) The partnership or S corporation return must be signed 
134.19  by someone designated by the partnership or S corporation. 
134.20     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
134.21  years beginning after December 31, 2000. 
134.22     Sec. 4.  Minnesota Statutes 2000, section 290.01, 
134.23  subdivision 7, is amended to read: 
134.24     Subd. 7.  [RESIDENT.] The term "resident" means (1) any 
134.25  individual domiciled in Minnesota, except that an individual is 
134.26  not a "resident" for the period of time that the individual is a 
134.27  "qualified individual" as defined in section 911(d)(1) of the 
134.28  Internal Revenue Code, if the qualified individual notifies the 
134.29  county within three months of moving out of the country that 
134.30  homestead status be revoked for the Minnesota residence of the 
134.31  qualified individual, and the property is not classified as a 
134.32  homestead while the individual remains a qualified individual; 
134.33  and (2) any individual domiciled outside the state who maintains 
134.34  a place of abode in the state and spends in the aggregate more 
134.35  than one-half of the tax year in Minnesota, unless the 
134.36  individual or the spouse of the individual is in the armed 
135.1   forces of the United States, or the individual is covered under 
135.2   the reciprocity provisions in section 290.081. 
135.3      For purposes of this subdivision, presence within the state 
135.4   for any part of a calendar day constitutes a day spent in the 
135.5   state.  Individuals shall keep adequate records to substantiate 
135.6   the days spent outside the state. 
135.7      The term "abode" means a dwelling maintained by an 
135.8   individual, whether or not owned by the individual and whether 
135.9   or not occupied by the individual, and includes a dwelling place 
135.10  owned or leased by the individual's spouse. 
135.11     In determining if the individual is domiciled in Minnesota, 
135.12  neither the commissioner nor any court shall may consider: 
135.13     (1) charitable contributions made by an the individual 
135.14  within or without the state in determining if the individual is 
135.15  domiciled in Minnesota; or 
135.16     (2) the location of a bank, other financial institution, 
135.17  broker-dealer, as defined in section 80A.14, subdivision 4, or 
135.18  investment adviser, as defined in section 80A.14, subdivision 9, 
135.19  with which the individual has an account, loan, or other 
135.20  contractual relationship. 
135.21     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
135.22  following final enactment. 
135.23     Sec. 5.  Minnesota Statutes 2000, section 290.01, 
135.24  subdivision 19b, is amended to read: 
135.25     Subd. 19b.  [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 
135.26  individuals, estates, and trusts, there shall be subtracted from 
135.27  federal taxable income: 
135.28     (1) interest income on obligations of any authority, 
135.29  commission, or instrumentality of the United States to the 
135.30  extent includable in taxable income for federal income tax 
135.31  purposes but exempt from state income tax under the laws of the 
135.32  United States; 
135.33     (2) if included in federal taxable income, the amount of 
135.34  any overpayment of income tax to Minnesota or to any other 
135.35  state, for any previous taxable year, whether the amount is 
135.36  received as a refund or as a credit to another taxable year's 
136.1   income tax liability; 
136.2      (3) the amount paid to others, less the credit allowed 
136.3   under section 290.0674, not to exceed $1,625 for each qualifying 
136.4   child in grades kindergarten to 6 and $2,500 for each qualifying 
136.5   child in grades 7 to 12, for tuition, textbooks, and 
136.6   transportation of each qualifying child in attending an 
136.7   elementary or secondary school situated in Minnesota, North 
136.8   Dakota, South Dakota, Iowa, or Wisconsin, wherein a resident of 
136.9   this state may legally fulfill the state's compulsory attendance 
136.10  laws, which is not operated for profit, and which adheres to the 
136.11  provisions of the Civil Rights Act of 1964 and chapter 363.  For 
136.12  the purposes of this clause, "tuition" includes fees or tuition 
136.13  as defined in section 290.0674, subdivision 1, clause 
136.14  clauses (1), (6), and (7).  As used in this clause, "textbooks" 
136.15  includes books and other instructional materials and equipment 
136.16  used in elementary and secondary schools in teaching only those 
136.17  subjects legally and commonly taught in public elementary and 
136.18  secondary schools in this state.  Equipment expenses qualifying 
136.19  for deduction includes expenses as defined and limited in 
136.20  section 290.0674, subdivision 1, clause clauses (3) and (5).  
136.21  "Textbooks" does not include instructional books and materials 
136.22  used in the teaching of religious tenets, doctrines, or worship, 
136.23  the purpose of which is to instill such tenets, doctrines, or 
136.24  worship, nor does it include books or materials for, or 
136.25  transportation to, extracurricular activities including sporting 
136.26  events, musical or dramatic events, speech activities, driver's 
136.27  education, or similar programs.  For purposes of the subtraction 
136.28  provided by this clause, "qualifying child" has the meaning 
136.29  given in section 32(c)(3) of the Internal Revenue Code; 
136.30     (4) contributions made in taxable years beginning after 
136.31  December 31, 1981, and before January 1, 1985, to a qualified 
136.32  governmental pension plan, an individual retirement account, 
136.33  simplified employee pension, or qualified plan covering a 
136.34  self-employed person that were included in Minnesota gross 
136.35  income in the taxable year for which the contributions were made 
136.36  but were deducted or were not included in the computation of 
137.1   federal adjusted gross income, less any amount allowed to be 
137.2   subtracted as a distribution under this subdivision or a 
137.3   predecessor provision in taxable years that began before January 
137.4   1, 2000.  This subtraction applies only for taxable years 
137.5   beginning after December 31, 1999, and before January 1, 2001.  
137.6   If an individual's subtraction under this clause exceeds the 
137.7   individual's taxable income, the excess may be carried forward 
137.8   to taxable years beginning after December 31, 2000, and before 
137.9   January 1, 2002; 
137.10     (5) income as provided under section 290.0802; 
137.11     (6) the amount of unrecovered accelerated cost recovery 
137.12  system deductions allowed under subdivision 19g; 
137.13     (7) (6) to the extent included in federal adjusted gross 
137.14  income, income realized on disposition of property exempt from 
137.15  tax under section 290.491; 
137.16     (8) (7) to the extent not deducted in determining federal 
137.17  taxable income or used to claim the long-term care insurance 
137.18  credit under section 290.0672, the amount paid for health 
137.19  insurance of self-employed individuals as determined under 
137.20  section 162(l) of the Internal Revenue Code, except that the 
137.21  percent limit does not apply.  If the individual deducted 
137.22  insurance payments under section 213 of the Internal Revenue 
137.23  Code of 1986, the subtraction under this clause must be reduced 
137.24  by the lesser of: 
137.25     (i) the total itemized deductions allowed under section 
137.26  63(d) of the Internal Revenue Code, less state, local, and 
137.27  foreign income taxes deductible under section 164 of the 
137.28  Internal Revenue Code and the standard deduction under section 
137.29  63(c) of the Internal Revenue Code; or 
137.30     (ii) the lesser of (A) the amount of insurance qualifying 
137.31  as "medical care" under section 213(d) of the Internal Revenue 
137.32  Code to the extent not deducted under section 162(1) of the 
137.33  Internal Revenue Code or excluded from income or (B) the total 
137.34  amount deductible for medical care under section 213(a); 
137.35     (9) (8) the exemption amount allowed under Laws 1995, 
137.36  chapter 255, article 3, section 2, subdivision 3; 
138.1      (10) (9) to the extent included in federal taxable income, 
138.2   postservice benefits for youth community service under section 
138.3   124D.42 for volunteer service under United States Code, title 
138.4   42, sections 12601 to 12604; 
138.5      (11) (10) to the extent not deducted in determining federal 
138.6   taxable income by an individual who does not itemize deductions 
138.7   for federal income tax purposes for the taxable year, an amount 
138.8   equal to 50 100 percent of the excess of charitable 
138.9   contributions allowable as a deduction for the taxable year 
138.10  under section 170(a) of the Internal Revenue Code over $500; 
138.11     (12) (11) to the extent included in federal taxable income, 
138.12  holocaust victims' settlement payments for any injury incurred 
138.13  as a result of the holocaust, if received by an individual who 
138.14  was persecuted for racial or religious reasons by Nazi Germany 
138.15  or any other Axis regime or an heir of such a person; and 
138.16     (13) (12) for taxable years beginning before January 1, 
138.17  2008, the amount of the federal small ethanol producer credit 
138.18  allowed under section 40(a)(3) of the Internal Revenue Code 
138.19  which is included in gross income under section 87 of the 
138.20  Internal Revenue Code.; 
138.21     (13) to the extent included in federal taxable income, the 
138.22  compensation received for active duty in the armed forces of the 
138.23  United States or the United Nations for personal services wholly 
138.24  performed outside of the state of Minnesota; 
138.25     (14) to the extent included in federal taxable income, the 
138.26  first $3,000 of compensation received for (i) personal services 
138.27  in the Minnesota national guard or armed forces reserves, or (ii)
138.28  active duty in the armed forces of the United States or the 
138.29  United Nations for personal services wholly performed inside the 
138.30  state of Minnesota; 
138.31     (15) for individuals who are allowed a federal foreign tax 
138.32  credit for taxes that do not qualify for a credit under section 
138.33  290.06, subdivision 22, an amount equal to the carryover of 
138.34  subnational foreign taxes for the taxable year, but not to 
138.35  exceed the total subnational foreign taxes reported in claiming 
138.36  the foreign tax credit.  For purposes of this clause, "federal 
139.1   foreign tax credit" means the credit allowed under section 27 of 
139.2   the Internal Revenue Code, and "carryover of subnational foreign 
139.3   taxes" equals the carryover allowed under section 904(c) of the 
139.4   Internal Revenue Code minus national level foreign taxes to the 
139.5   extent they exceed the federal foreign tax credit; and 
139.6      (16) to the extent the gain was included in federal taxable 
139.7   income, the capital gain exclusion under section 290.0803. 
139.8      <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
139.9   years beginning after December 31, 2000. 
139.10     Sec. 6.  Minnesota Statutes 2000, section 290.01, 
139.11  subdivision 19c, is amended to read: 
139.12     Subd. 19c.  [CORPORATIONS; ADDITIONS TO FEDERAL TAXABLE 
139.13  INCOME.] For corporations, there shall be added to federal 
139.14  taxable income: 
139.15     (1) the amount of any deduction taken for federal income 
139.16  tax purposes for income, excise, or franchise taxes based on net 
139.17  income or related minimum taxes, including but not limited to 
139.18  the tax imposed under section 290.0922, paid by the corporation 
139.19  to Minnesota, another state, a political subdivision of another 
139.20  state, the District of Columbia, or any foreign country or 
139.21  possession of the United States; 
139.22     (2) interest not subject to federal tax upon obligations 
139.23  of:  the United States, its possessions, its agencies, or its 
139.24  instrumentalities; the state of Minnesota or any other state, 
139.25  any of its political or governmental subdivisions, any of its 
139.26  municipalities, or any of its governmental agencies or 
139.27  instrumentalities; the District of Columbia; or Indian tribal 
139.28  governments; 
139.29     (3) exempt-interest dividends received as defined in 
139.30  section 852(b)(5) of the Internal Revenue Code; 
139.31     (4) the amount of any net operating loss deduction taken 
139.32  for federal income tax purposes under section 172 or 832(c)(10) 
139.33  of the Internal Revenue Code or operations loss deduction under 
139.34  section 810 of the Internal Revenue Code; 
139.35     (5) the amount of any special deductions taken for federal 
139.36  income tax purposes under sections 241 to 247 of the Internal 
140.1   Revenue Code; 
140.2      (6) losses from the business of mining, as defined in 
140.3   section 290.05, subdivision 1, clause (a), that are not subject 
140.4   to Minnesota income tax; 
140.5      (7) the amount of any capital losses deducted for federal 
140.6   income tax purposes under sections 1211 and 1212 of the Internal 
140.7   Revenue Code; 
140.8      (8) the amount of any charitable contributions deducted for 
140.9   federal income tax purposes under section 170 of the Internal 
140.10  Revenue Code; 
140.11     (9) (8) the exempt foreign trade income of a foreign sales 
140.12  corporation under sections 921(a) and 291 of the Internal 
140.13  Revenue Code; 
140.14     (10) the amount of percentage depletion deducted under 
140.15  sections 611 through 614 and 291 of the Internal Revenue Code; 
140.16     (11) for certified pollution control facilities placed in 
140.17  service in a taxable year beginning before December 31, 1986, 
140.18  and for which amortization deductions were elected under section 
140.19  169 of the Internal Revenue Code of 1954, as amended through 
140.20  December 31, 1985, the amount of the amortization deduction 
140.21  allowed in computing federal taxable income for those 
140.22  facilities; 
140.23     (12) (9) the amount of any deemed dividend from a foreign 
140.24  operating corporation determined pursuant to section 290.17, 
140.25  subdivision 4, paragraph (g); 
140.26     (13) the amount of any environmental tax paid under section 
140.27  59(a) of the Internal Revenue Code; and 
140.28     (14) (10) the amount of a partner's pro rata share of net 
140.29  income which does not flow through to the partner because the 
140.30  partnership elected to pay the tax on the income under section 
140.31  6242(a)(2) of the Internal Revenue Code. 
140.32     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
140.33  years beginning after December 31, 2000. 
140.34     Sec. 7.  Minnesota Statutes 2000, section 290.01, 
140.35  subdivision 19d, is amended to read: 
140.36     Subd. 19d.  [CORPORATIONS; MODIFICATIONS DECREASING FEDERAL 
141.1   TAXABLE INCOME.] For corporations, there shall be subtracted 
141.2   from federal taxable income after the increases provided in 
141.3   subdivision 19c:  
141.4      (1) the amount of foreign dividend gross-up added to gross 
141.5   income for federal income tax purposes under section 78 of the 
141.6   Internal Revenue Code; 
141.7      (2) the amount of salary expense not allowed for federal 
141.8   income tax purposes due to claiming the federal jobs credit 
141.9   under section 51 of the Internal Revenue Code; 
141.10     (3) any dividend (not including any distribution in 
141.11  liquidation) paid within the taxable year by a national or state 
141.12  bank to the United States, or to any instrumentality of the 
141.13  United States exempt from federal income taxes, on the preferred 
141.14  stock of the bank owned by the United States or the 
141.15  instrumentality; 
141.16     (4) amounts disallowed for intangible drilling costs due to 
141.17  differences between this chapter and the Internal Revenue Code 
141.18  in taxable years beginning before January 1, 1987, as follows: 
141.19     (i) to the extent the disallowed costs are represented by 
141.20  physical property, an amount equal to the allowance for 
141.21  depreciation under Minnesota Statutes 1986, section 290.09, 
141.22  subdivision 7, subject to the modifications contained in 
141.23  subdivision 19e; and 
141.24     (ii) to the extent the disallowed costs are not represented 
141.25  by physical property, an amount equal to the allowance for cost 
141.26  depletion under Minnesota Statutes 1986, section 290.09, 
141.27  subdivision 8; except that 
141.28     (iii) this subtraction is permitted for the tax year ending 
141.29  before December 31, 2002.  Disallowed amounts remaining after 
141.30  the tax year ending December 31, 2000, must be subtracted from 
141.31  federal taxable income under this subdivision in two equal 
141.32  portions in tax years 2001 and 2002; 
141.33     (5) the deduction for capital losses pursuant to sections 
141.34  1211 and 1212 of the Internal Revenue Code, except that: 
141.35     (i) for capital losses incurred in taxable years beginning 
141.36  after December 31, 1986, capital loss carrybacks shall not be 
142.1   allowed; and 
142.2      (ii) for capital losses incurred in taxable years beginning 
142.3   after December 31, 1986, a capital loss carryover to each of the 
142.4   15 taxable years succeeding the loss year shall be allowed; 
142.5      (iii) for capital losses incurred in taxable years 
142.6   beginning before January 1, 1987, a capital loss carryback to 
142.7   each of the three taxable years preceding the loss year, subject 
142.8   to the provisions of Minnesota Statutes 1986, section 290.16, 
142.9   shall be allowed; and 
142.10     (iv) for capital losses incurred in taxable years beginning 
142.11  before January 1, 1987, a capital loss carryover to each of the 
142.12  five taxable years succeeding the loss year to the extent such 
142.13  loss was not used in a prior taxable year and subject to the 
142.14  provisions of Minnesota Statutes 1986, section 290.16, shall be 
142.15  allowed; 
142.16     (6) an amount for interest and expenses relating to income 
142.17  not taxable for federal income tax purposes, if (i) the income 
142.18  is taxable under this chapter and (ii) the interest and expenses 
142.19  were disallowed as deductions under the provisions of section 
142.20  171(a)(2), 265 or 291 of the Internal Revenue Code in computing 
142.21  federal taxable income; 
142.22     (7) in the case of mines, oil and gas wells, other natural 
142.23  deposits, and timber for which percentage depletion was 
142.24  disallowed pursuant to subdivision 19c, clause (11), a 
142.25  reasonable allowance for depletion based on actual cost.  In the 
142.26  case of leases the deduction must be apportioned between the 
142.27  lessor and lessee in accordance with rules prescribed by the 
142.28  commissioner.  In the case of property held in trust, the 
142.29  allowable deduction must be apportioned between the income 
142.30  beneficiaries and the trustee in accordance with the pertinent 
142.31  provisions of the trust, or if there is no provision in the 
142.32  instrument, on the basis of the trust's income allocable to 
142.33  each; 
142.34     (8) for (7) certified pollution control facilities placed 
142.35  in service in a taxable year beginning before December 31, 1986, 
142.36  and for which amortization deductions were elected under section 
143.1   169 of the Internal Revenue Code of 1954, as amended through 
143.2   December 31, 1985, an amount equal to the allowance for 
143.3   depreciation under Minnesota Statutes 1986, section 290.09, 
143.4   subdivision 7 amortization deduction amounts remaining after the 
143.5   tax year ending December 31, 2000, must be subtracted from 
143.6   federal taxable income under this subdivision in two equal 
143.7   portions in tax years 2001 and 2002; 
143.8      (9) the amount included in federal taxable income 
143.9   attributable to the credits provided in Minnesota Statutes 1986, 
143.10  section 273.1314, subdivision 9, or Minnesota Statutes, section 
143.11  469.171, subdivision 6; 
143.12     (10) (8) amounts included in federal taxable income that 
143.13  are due to refunds of income, excise, or franchise taxes based 
143.14  on net income or related minimum taxes paid by the corporation 
143.15  to Minnesota, another state, a political subdivision of another 
143.16  state, the District of Columbia, or a foreign country or 
143.17  possession of the United States to the extent that the taxes 
143.18  were added to federal taxable income under section 290.01, 
143.19  subdivision 19c, clause (1), in a prior taxable year; 
143.20     (11) (9) 80 percent of royalties, fees, or other like 
143.21  income accrued or received from a foreign operating corporation 
143.22  or a foreign corporation which is part of the same unitary 
143.23  business as the receiving corporation; 
143.24     (12) (10) income or gains from the business of mining as 
143.25  defined in section 290.05, subdivision 1, clause (a), that are 
143.26  not subject to Minnesota franchise tax; 
143.27     (13) (11) the amount of handicap access expenditures in the 
143.28  taxable year which are not allowed to be deducted or capitalized 
143.29  under section 44(d)(7) of the Internal Revenue Code; 
143.30     (14) (12) the amount of qualified research expenses not 
143.31  allowed for federal income tax purposes under section 280C(c) of 
143.32  the Internal Revenue Code, but only to the extent that the 
143.33  amount exceeds the amount of the credit allowed under section 
143.34  290.068; 
143.35     (15) (13) the amount of salary expenses not allowed for 
143.36  federal income tax purposes due to claiming the Indian 
144.1   employment credit under section 45A(a) of the Internal Revenue 
144.2   Code; 
144.3      (16) (14) the amount of any refund of environmental taxes 
144.4   paid under section 59A of the Internal Revenue Code; and 
144.5      (17) (15) for taxable years beginning before January 1, 
144.6   2008, the amount of the federal small ethanol producer credit 
144.7   allowed under section 40(a)(3) of the Internal Revenue Code 
144.8   which is included in gross income under section 87 of the 
144.9   Internal Revenue Code. 
144.10     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
144.11  years beginning after December 31, 2000. 
144.12     Sec. 8.  Minnesota Statutes 2000, section 290.01, 
144.13  subdivision 22, is amended to read: 
144.14     Subd. 22.  [TAXABLE NET INCOME.] For tax years beginning 
144.15  after December 31, 1986, the term "taxable net income" means:  
144.16     (1) for resident individuals the same as net income; 
144.17     (2) for individuals who were not residents of Minnesota for 
144.18  the entire year, the same as net income except that the tax is 
144.19  imposed only on the Minnesota apportioned share of that income 
144.20  as determined pursuant to section 290.06, subdivision 2c, 
144.21  paragraph (e); 
144.22     (3) for all other taxpayers, the part of net income that is 
144.23  allocable to Minnesota by assignment or apportionment under one 
144.24  or more of sections 290.17, 290.191, 290.20, 290.35, and 290.36. 
144.25     For tax years beginning before January 1, 1987, the term 
144.26  "taxable net income"  means the net income assignable to this 
144.27  state pursuant to sections 290.17 to 290.20.  For corporations, 
144.28  taxable net income is then reduced by the deductions contained 
144.29  in section 290.21.  
144.30     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
144.31  years beginning after December 31, 2000. 
144.32     Sec. 9.  Minnesota Statutes 2000, section 290.01, 
144.33  subdivision 29, is amended to read: 
144.34     Subd. 29.  [TAXABLE INCOME.] For tax years beginning after 
144.35  December 31, 1986, The term "taxable income" means:  
144.36     (1) for individuals, estates, and trusts, the same as 
145.1   taxable net income; 
145.2      (2) for corporations, including insurance companies, the 
145.3   taxable net income less 
145.4      (i) the net operating loss deduction under section 290.095; 
145.5   and 
145.6      (ii) the dividends received deduction under section 290.21, 
145.7   subdivision 4; and 
145.8      (iii) the charitable contribution deduction under section 
145.9   290.21, subdivision 3. 
145.10     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
145.11  years beginning after December 31, 2000. 
145.12     Sec. 10.  Minnesota Statutes 2000, section 290.014, 
145.13  subdivision 5, is amended to read: 
145.14     Subd. 5.  [CORPORATIONS.] Except as provided in section 
145.15  290.015, corporations are subject to the return filing 
145.16  requirements and to tax as provided in this chapter if the 
145.17  corporation so exercises its franchise as to engage in such 
145.18  contacts with this state as to cause part of the income of the 
145.19  corporation to be:  
145.20     (1) allocable to this state under section 290.17, 290.191, 
145.21  290.20, 290.35, or 290.36; 
145.22     (2) taxed to the corporation under the Internal Revenue 
145.23  Code (or not taxed under the Internal Revenue Code by reason of 
145.24  its character but of a character which is taxable under this 
145.25  chapter) in its capacity as a beneficiary of an estate with 
145.26  income allocable to this state under section 290.17, 290.191, or 
145.27  290.20 and the income, taking into account the income character 
145.28  provisions of section 662(b) of the Internal Revenue Code, would 
145.29  be allocable to this state under section 290.17, 290.191, or 
145.30  290.20 if realized by the corporation directly from the source 
145.31  from which realized by the estate; 
145.32     (3) taxed to the corporation under the Internal Revenue 
145.33  Code (or not taxed under the Internal Revenue Code by reason of 
145.34  its character but of a character which is taxable under this 
145.35  chapter) in its capacity as a beneficiary or grantor or other 
145.36  person treated as a substantial owner of a trust with income 
146.1   allocable to this state under section 290.17, 290.191, or 290.20 
146.2   and the income, taking into account the income character 
146.3   provisions of section 652(b), 662(b), or 664(b) of the Internal 
146.4   Revenue Code, would be allocable to this state under section 
146.5   290.17, 290.191, or 290.20 if realized by the corporation 
146.6   directly from the source from which realized by the trust; or 
146.7      (4) taxed to the corporation under the Internal Revenue 
146.8   Code (or not taxed under the Internal Revenue Code by reason of 
146.9   its character but of a character which is taxable under this 
146.10  chapter) in its capacity as a limited or general partner in a 
146.11  partnership with income allocable to this state under section 
146.12  290.17, 290.191, or 290.20 and the income, taking into account 
146.13  the income character provisions of section 702(b) of the 
146.14  Internal Revenue Code, would be allocable to this state under 
146.15  section 290.17, 290.191, or 290.20 if realized by the 
146.16  corporation directly from the source from which realized by the 
146.17  partnership. 
146.18     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
146.19  years beginning after December 31, 2000. 
146.20     Sec. 11.  Minnesota Statutes 2000, section 290.05, 
146.21  subdivision 1, is amended to read: 
146.22     Subdivision 1.  [EXEMPT ENTITIES.] The following 
146.23  corporations, individuals, estates, trusts, and organizations 
146.24  shall be exempted from taxation under this chapter, provided 
146.25  that every such person or corporation claiming exemption under 
146.26  this chapter, in whole or in part, must establish to the 
146.27  satisfaction of the commissioner the taxable status of any 
146.28  income or activity: 
146.29     (a) corporations, individuals, estates, and trusts engaged 
146.30  in the business of mining or producing iron ore and other ores 
146.31  the mining or production of which is subject to the occupation 
146.32  tax imposed by section 298.01; but if any such corporation, 
146.33  individual, estate, or trust engages in any other business or 
146.34  activity or has income from any property not used in such 
146.35  business it shall be subject to this tax computed on the net 
146.36  income from such property or such other business or activity.  
147.1   Royalty shall not be considered as income from the business of 
147.2   mining or producing iron ore within the meaning of this section; 
147.3      (b) the United States of America, the state of Minnesota or 
147.4   any political subdivision of either agencies or 
147.5   instrumentalities, whether engaged in the discharge of 
147.6   governmental or proprietary functions; and 
147.7      (c) any insurance company that is domiciled in a state or 
147.8   country other than Minnesota that imposes retaliatory taxes, 
147.9   fines, deposits, penalties, licenses, or fees and that does not 
147.10  grant, on a reciprocal basis, exemption from such retaliatory 
147.11  taxes to insurance companies or their agents domiciled in 
147.12  Minnesota.  "Retaliatory taxes" means taxes imposed on insurance 
147.13  companies organized in another state or country that result from 
147.14  the fact that an insurance company organized in the taxing 
147.15  jurisdiction and doing business in the other jurisdiction is 
147.16  subject to taxes, fines, deposits, penalties, licenses, or fees 
147.17  in an amount exceeding that imposed by the taxing jurisdiction 
147.18  upon an insurance company organized in the other state or 
147.19  country and doing business to the same extent in the taxing 
147.20  jurisdiction; and 
147.21     (d) town and farmers' mutual insurance companies and mutual 
147.22  property and casualty insurance companies, other than those (1) 
147.23  writing life insurance or (2) whose total assets on December 31, 
147.24  1989, exceeded $1,600,000,000. 
147.25     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
147.26  years beginning after December 31, 2000. 
147.27     Sec. 12.  Minnesota Statutes 2000, section 290.06, 
147.28  subdivision 2c, is amended to read: 
147.29     Subd. 2c.  [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 
147.30  AND TRUSTS.] (a) The income taxes imposed by this chapter upon 
147.31  married individuals filing joint returns and surviving spouses 
147.32  as defined in section 2(a) of the Internal Revenue Code must be 
147.33  computed by applying to their taxable net income the following 
147.34  schedule of rates: 
147.35     (1) On the first $25,680, 5.35 percent; 
147.36     (2) On all over $25,680, but not over $102,030, 7.05 
148.1   percent; 
148.2      (3) On all over $102,030, 7.85 percent. 
148.3      Married individuals filing separate returns, estates, and 
148.4   trusts must compute their income tax by applying the above rates 
148.5   to their taxable income, except that the income brackets will be 
148.6   one-half of the above amounts.  
148.7      (b) The income taxes imposed by this chapter upon unmarried 
148.8   individuals must be computed by applying to taxable net income 
148.9   the following schedule of rates: 
148.10     (1) On the first $17,570, 5.35 percent; 
148.11     (2) On all over $17,570, but not over $57,710, 7.05 
148.12  percent; 
148.13     (3) On all over $57,710, 7.85 percent. 
148.14     (c) The income taxes imposed by this chapter upon unmarried 
148.15  individuals qualifying as a head of household as defined in 
148.16  section 2(b) of the Internal Revenue Code must be computed by 
148.17  applying to taxable net income the following schedule of rates: 
148.18     (1) On the first $21,630, 5.35 percent; 
148.19     (2) On all over $21,630, but not over $86,910, 7.05 
148.20  percent; 
148.21     (3) On all over $86,910, 7.85 percent. 
148.22     (d) In lieu of a tax computed according to the rates set 
148.23  forth in this subdivision, the tax of any individual taxpayer 
148.24  whose taxable net income for the taxable year is less than an 
148.25  amount determined by the commissioner must be computed in 
148.26  accordance with tables prepared and issued by the commissioner 
148.27  of revenue based on income brackets of not more than $100.  The 
148.28  amount of tax for each bracket shall be computed at the rates 
148.29  set forth in this subdivision, provided that the commissioner 
148.30  may disregard a fractional part of a dollar unless it amounts to 
148.31  50 cents or more, in which case it may be increased to $1. 
148.32     (e) An individual who is not a Minnesota resident for the 
148.33  entire year must compute the individual's Minnesota income tax 
148.34  as provided in this subdivision.  After the application of the 
148.35  nonrefundable credits provided in this chapter, the tax 
148.36  liability must then be multiplied by a fraction in which:  
149.1      (1) the numerator is the individual's Minnesota source 
149.2   federal adjusted gross income as defined in section 62 of the 
149.3   Internal Revenue Code and increased by the additions required 
149.4   under section 290.01, subdivision 19a, clauses (1) and (6), and 
149.5   reduced by the Minnesota assignable portion of the subtraction 
149.6   for United States government interest under section 290.01, 
149.7   subdivision 19b, clause (1), after applying the allocation and 
149.8   assignability provisions of section 290.081, clause (a), or 
149.9   290.17; and 
149.10     (2) the denominator is the individual's federal adjusted 
149.11  gross income as defined in section 62 of the Internal Revenue 
149.12  Code of 1986, increased by the amounts specified in section 
149.13  290.01, subdivision 19a, clauses (1) and (6), and reduced by the 
149.14  amounts specified in section 290.01, subdivision 19b, clause (1).
149.15     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
149.16  years beginning after December 31, 2000. 
149.17     Sec. 13.  Minnesota Statutes 2000, section 290.06, 
149.18  subdivision 22, is amended to read: 
149.19     Subd. 22.  [CREDIT FOR TAXES PAID TO ANOTHER STATE.] (a) A 
149.20  taxpayer who is liable for taxes on or measured by net income to 
149.21  another state or province or territory of Canada, as provided in 
149.22  paragraphs (b) through (f), upon income allocated or apportioned 
149.23  to Minnesota, is entitled to a credit for the tax paid to 
149.24  another state or province or territory of Canada if the tax is 
149.25  actually paid in the taxable year or a subsequent taxable year.  
149.26  A taxpayer who is a resident of this state pursuant to section 
149.27  290.01, subdivision 7, clause (2), and who is subject to income 
149.28  tax as a resident in the state of the individual's domicile is 
149.29  not allowed this credit unless the state of domicile does not 
149.30  allow a similar credit. 
149.31     (b) For an individual, estate, or trust, the credit is 
149.32  determined by multiplying the tax payable under this chapter by 
149.33  the ratio derived by dividing the income subject to tax in the 
149.34  other state or province or territory of Canada that is also 
149.35  subject to tax in Minnesota while a resident of Minnesota by the 
149.36  taxpayer's federal adjusted gross income, as defined in section 
150.1   62 of the Internal Revenue Code, modified by the addition 
150.2   required by section 290.01, subdivision 19a, clause (1), and the 
150.3   subtraction allowed by section 290.01, subdivision 19b, clause 
150.4   (1), to the extent the income is allocated or assigned to 
150.5   Minnesota under sections 290.081 and 290.17.  
150.6      (c) If the taxpayer is an athletic team that apportions all 
150.7   of its income under section 290.17, subdivision 5, the credit is 
150.8   determined by multiplying the tax payable under this chapter by 
150.9   the ratio derived from dividing the total net income subject to 
150.10  tax in the other state or province or territory of Canada by the 
150.11  taxpayer's Minnesota taxable income. 
150.12     (d) The credit determined under paragraph (b) or (c) shall 
150.13  not exceed the amount of tax so paid to the other state or 
150.14  province or territory of Canada on the gross income earned 
150.15  within the other state or province or territory of Canada 
150.16  subject to tax under this chapter, nor shall the allowance of 
150.17  the credit reduce the taxes paid under this chapter to an amount 
150.18  less than what would be assessed if such income amount was 
150.19  excluded from taxable net income. 
150.20     (e) In the case of the tax assessed on a lump sum 
150.21  distribution under section 290.032, the credit allowed under 
150.22  paragraph (a) is the tax assessed by the other state or province 
150.23  or territory of Canada on the lump sum distribution that is also 
150.24  subject to tax under section 290.032, and shall not exceed the 
150.25  tax assessed under section 290.032.  To the extent the total 
150.26  lump sum distribution defined in section 290.032, subdivision 1, 
150.27  includes lump sum distributions received in prior years or is 
150.28  all or in part an annuity contract, the reduction to the tax on 
150.29  the lump sum distribution allowed under section 290.032, 
150.30  subdivision 2, includes tax paid to another state that is 
150.31  properly apportioned to that distribution. 
150.32     (f) If a Minnesota resident reported an item of income to 
150.33  Minnesota and is assessed tax in such other state or province or 
150.34  territory of Canada on that same income after the Minnesota 
150.35  statute of limitations has expired, the taxpayer shall receive a 
150.36  credit for that year under paragraph (a), notwithstanding any 
151.1   statute of limitations to the contrary.  The claim for the 
151.2   credit must be submitted within one year from the date the taxes 
151.3   were paid to the other state or province or territory of 
151.4   Canada.  The taxpayer must submit sufficient proof to show 
151.5   entitlement to a credit. 
151.6      (g) For the purposes of this subdivision, a resident 
151.7   shareholder of a corporation treated as an "S" corporation under 
151.8   section 290.9725, must be considered to have paid a tax imposed 
151.9   on the shareholder in an amount equal to the shareholder's pro 
151.10  rata share of any net income tax paid by the S corporation to 
151.11  another state.  For the purposes of the preceding sentence, the 
151.12  term "net income tax" means any tax imposed on or measured by a 
151.13  corporation's net income. 
151.14     (h) For the purposes of this subdivision, a resident 
151.15  partner of an entity taxed as a partnership under the Internal 
151.16  Revenue Code must be considered to have paid a tax imposed on 
151.17  the partner in an amount equal to the partner's pro rata share 
151.18  of any net income tax paid by the partnership to another state.  
151.19  For purposes of the preceding sentence, the term "net income" 
151.20  tax means any tax imposed on or measured by a partnership's net 
151.21  income. 
151.22     (i) For the purposes of this subdivision, "another state": 
151.23     (1) includes: 
151.24     (i) the District of Columbia, but does not include; and 
151.25     (ii) a province or territory of Canada; but 
151.26     (2) excludes Puerto Rico or and the several territories 
151.27  organized by Congress. 
151.28     (j) The limitations on the credit in paragraphs (b), (c), 
151.29  and (d), are imposed on a state by state basis. 
151.30     (k) For a tax imposed by a province or territory of Canada, 
151.31  the tax for purposes of this subdivision is the excess of the 
151.32  tax over the amount of the foreign tax credit allowed under 
151.33  section 27 of the Internal Revenue Code.  In determining the 
151.34  amount of the foreign tax credit allowed, the net income taxes 
151.35  imposed by Canada on the income are deducted first.  Any 
151.36  remaining amount of the allowable foreign tax credit reduces the 
152.1   provincial or territorial tax that qualifies for the credit 
152.2   under this subdivision. 
152.3      <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
152.4   years beginning after December 31, 2000. 
152.5      Sec. 14.  Minnesota Statutes 2000, section 290.067, 
152.6   subdivision 1, is amended to read: 
152.7      Subdivision 1.  [AMOUNT OF CREDIT.] (a) A taxpayer may take 
152.8   as a credit against the tax due from the taxpayer and a spouse, 
152.9   if any, under this chapter an amount equal to the dependent care 
152.10  credit for which the taxpayer is eligible pursuant to the 
152.11  provisions of section 21 of the Internal Revenue Code subject to 
152.12  the limitations provided in subdivision 2 except that in 
152.13  determining whether the child qualified as a dependent, income 
152.14  received as a Minnesota family investment program grant or 
152.15  allowance to or on behalf of the child must not be taken into 
152.16  account in determining whether the child received more than half 
152.17  of the child's support from the taxpayer, and the provisions of 
152.18  section 32(b)(1)(D) of the Internal Revenue Code do not apply. 
152.19     (b) If a child who has not attained the age of six years at 
152.20  the close of the taxable year is cared for at a licensed family 
152.21  day care home operated by the child's parent, the taxpayer is 
152.22  deemed to have paid employment-related expenses.  If the child 
152.23  is 16 months old or younger at the close of the taxable year, 
152.24  the amount of expenses deemed to have been paid equals the 
152.25  maximum limit for one qualified individual under section 21(c) 
152.26  and (d) of the Internal Revenue Code.  If the child is older 
152.27  than 16 months of age but has not attained the age of six years 
152.28  at the close of the taxable year, the amount of expenses deemed 
152.29  to have been paid equals the amount the licensee would charge 
152.30  for the care of a child of the same age for the same number of 
152.31  hours of care.  
152.32     (c) If a married couple: 
152.33     (1) has a child who has not attained the age of one year at 
152.34  the close of the taxable year; 
152.35     (2) files a joint tax return for the taxable year; and 
152.36     (3) does not participate in a dependent care assistance 
153.1   program as defined in section 129 of the Internal Revenue Code, 
153.2   in lieu of the actual employment related expenses paid for that 
153.3   child under paragraph (a) or the deemed amount under paragraph 
153.4   (b), the lesser of (i) the combined earned income of the couple 
153.5   or (ii) $2,400 will be deemed to be the employment related 
153.6   expense paid for that child.  The earned income limitation of 
153.7   section 21(d) of the Internal Revenue Code shall not apply to 
153.8   this deemed amount.  These deemed amounts apply regardless of 
153.9   whether any employment-related expenses have been paid.  
153.10     (d) An individual who: 
153.11     (1) incurs employment-related expenses for the care of one 
153.12  or more dependents who have attained the age of 13 years but not 
153.13  attained the age of 15 years at the close of the taxable year; 
153.14  and 
153.15     (2) is not eligible for a credit under section 21 of the 
153.16  Internal Revenue Code for the employment-related expenses 
153.17  incurred after the dependent or dependents attained the age of 
153.18  13 years; 
153.19  is eligible for a credit under this paragraph only. 
153.20  The credit under this paragraph equals the credit that would 
153.21  have been allowed under this section if the dependent or 
153.22  dependents had not attained the age of 13 years at the close of 
153.23  the taxable year.  The credit under this paragraph in 
153.24  combination with any other credits allowed under this section is 
153.25  subject to the limitations in subdivision 2. 
153.26     (d) (e) If the taxpayer is not required and does not file a 
153.27  federal individual income tax return for the tax year, no credit 
153.28  is allowed for any amount paid to any person unless: 
153.29     (1) the name, address, and taxpayer identification number 
153.30  of the person are included on the return claiming the credit; or 
153.31     (2) if the person is an organization described in section 
153.32  501(c)(3) of the Internal Revenue Code and exempt from tax under 
153.33  section 501(a) of the Internal Revenue Code, the name and 
153.34  address of the person are included on the return claiming the 
153.35  credit.  
153.36  In the case of a failure to provide the information required 
154.1   under the preceding sentence, the preceding sentence does not 
154.2   apply if it is shown that the taxpayer exercised due diligence 
154.3   in attempting to provide the information required. 
154.4      In the case of a nonresident, part-year resident, or a 
154.5   person who has earned income not subject to tax under this 
154.6   chapter, the credit determined under section 21 of the Internal 
154.7   Revenue Code must be allocated based on the ratio by which the 
154.8   earned income of the claimant and the claimant's spouse from 
154.9   Minnesota sources bears to the total earned income of the 
154.10  claimant and the claimant's spouse. 
154.11     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
154.12  years beginning after December 31, 2000. 
154.13     Sec. 15.  Minnesota Statutes 2000, section 290.067, 
154.14  subdivision 2, is amended to read: 
154.15     Subd. 2.  [LIMITATIONS.] The credit for expenses incurred 
154.16  for the care of each dependent shall not exceed $720 in any 
154.17  taxable year, and the total credit for all dependents of a 
154.18  claimant shall not exceed $1,440 in a taxable year.  The maximum 
154.19  total credit shall be reduced according to the amount of the 
154.20  income of the claimant and a spouse, if any, minus the earned 
154.21  income of the lesser-earning spouse, as follows:  
154.22     income up to $13,350 $18,040, $720 maximum for one 
154.23  dependent, $1,440 for all dependents; 
154.24     income over $13,350 $18,040, the maximum credit for one 
154.25  dependent shall be reduced by $18 for every $350 of additional 
154.26  income, $36 for all dependents. 
154.27     The commissioner shall construct and make available to 
154.28  taxpayers tables showing the amount of the credit at various 
154.29  levels of income and expenses.  The tables shall follow the 
154.30  schedule contained in this subdivision, except that the 
154.31  commissioner may graduate the transitions between expenses and 
154.32  income brackets.  
154.33     For purposes of this section, "earned income of the 
154.34  lesser-earning spouse" has the meaning given in section 
154.35  290.0675, subdivision 1, paragraph (d). 
154.36     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
155.1   years beginning after December 31, 1999. 
155.2      Sec. 16.  Minnesota Statutes 2000, section 290.067, 
155.3   subdivision 2b, is amended to read: 
155.4      Subd. 2b.  [INFLATION ADJUSTMENT.] The dollar amount of the 
155.5   income threshold at which the maximum credit begins to be 
155.6   reduced under subdivision 2 must be adjusted for inflation.  The 
155.7   commissioner shall adjust the threshold amount by the percentage 
155.8   determined under section 290.06, subdivision 2d, for the taxable 
155.9   year. make the inflation adjustments in accordance with section 
155.10  1f of the Internal Revenue Code except that for the purposes of 
155.11  this subdivision the percentage increase must be determined from 
155.12  the year starting September 1, 1999, and ending August 31, 2000, 
155.13  as the base year for adjusting for inflation for the tax year 
155.14  beginning after December 31, 2000.  The determination of the 
155.15  commissioner under this subdivision is not a rule under the 
155.16  Administrative Procedure Act. 
155.17     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
155.18  years beginning after December 31, 2000. 
155.19     Sec. 17.  Minnesota Statutes 2000, section 290.0671, 
155.20  subdivision 1, is amended to read: 
155.21     Subdivision 1.  [CREDIT ALLOWED.] (a) An individual is 
155.22  allowed a credit against the tax imposed by this chapter equal 
155.23  to a percentage of earned income.  To receive a credit, a 
155.24  taxpayer must be eligible for a credit under section 32 of the 
155.25  Internal Revenue Code.  An individual who would have been 
155.26  eligible for a credit under section 32 of the Internal Revenue 
155.27  Code if the phaseout in section 32(b) were calculated based on 
155.28  the individual's earned income or modified adjusted gross 
155.29  income, whichever is greater, minus the earned income of the 
155.30  lesser-earning spouse, is also eligible for a credit under this 
155.31  section. 
155.32     (b) For individuals with no qualifying children, the credit 
155.33  equals 1.9125 percent of the first $4,460 $4,620 of earned 
155.34  income.  The credit is reduced by 1.9125 percent of earned 
155.35  income or modified adjusted gross income, whichever is 
155.36  greater, minus the earned income of the lesser-earning spouse, 
156.1   in excess of $5,570 $5,770, but in no case is the credit less 
156.2   than zero. 
156.3      (c) For individuals with one qualifying child, the credit 
156.4   equals 8.5 percent of the first $6,680 $6,920 of earned income 
156.5   and 8.5 percent of earned income over $11,650 $12,080 but less 
156.6   than $12,990 $13,450. The credit is reduced by 5.73 percent of 
156.7   earned income or modified adjusted gross income, whichever is 
156.8   greater, minus the earned income of the lesser-earning spouse, 
156.9   in excess of $14,560 $15,080, but in no case is the credit less 
156.10  than zero. 
156.11     (d) For individuals with two or more qualifying children, 
156.12  the credit equals ten percent of the first $9,390 $9,720 of 
156.13  earned income and 20 percent of earned income 
156.14  over $14,350 $14,860 but less than $16,230 $16,800.  The credit 
156.15  is reduced by 10.3 percent of earned income or modified adjusted 
156.16  gross income, whichever is greater, minus the earned income of 
156.17  the lesser-earning spouse, in excess of $17,280 $17,890, but in 
156.18  no case is the credit less than zero. 
156.19     (e) For a nonresident or part-year resident, the credit 
156.20  must be allocated based on the percentage calculated under 
156.21  section 290.06, subdivision 2c, paragraph (e). 
156.22     (f) For a person who was a resident for the entire tax year 
156.23  and has earned income not subject to tax under this chapter, the 
156.24  credit must be allocated based on the ratio of federal adjusted 
156.25  gross income reduced by the earned income not subject to tax 
156.26  under this chapter over federal adjusted gross income. 
156.27     (g) The commissioner shall construct tables showing the 
156.28  amount of the credit at various income levels and make them 
156.29  available to taxpayers.  The tables shall follow the schedule 
156.30  contained in this subdivision, except that the commissioner may 
156.31  graduate the transition between income brackets. 
156.32     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
156.33  years beginning after December 31, 2000. 
156.34     Sec. 18.  Minnesota Statutes 2000, section 290.0671, 
156.35  subdivision 1a, is amended to read: 
156.36     Subd. 1a.  [DEFINITIONS.] For purposes of this section, the 
157.1   terms "qualifying child," "earned income," and "modified 
157.2   adjusted gross income" have the meanings given in section 32(c) 
157.3   of the Internal Revenue Code.  "Earned income of the 
157.4   lesser-earning spouse" has the meaning given in section 
157.5   290.0675, subdivision 1, paragraph (d). 
157.6      <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
157.7   years beginning after December 31, 2000. 
157.8      Sec. 19.  Minnesota Statutes 2000, section 290.0671, 
157.9   subdivision 7, is amended to read: 
157.10     Subd. 7.  [INFLATION ADJUSTMENT.] The earned income amounts 
157.11  used to calculate the credit and the income thresholds at which 
157.12  the maximum credit begins to be reduced in subdivision 1 must be 
157.13  adjusted for inflation.  The commissioner shall adjust the 
157.14  earned income and threshold amounts by the percentage determined 
157.15  under section 290.06, subdivision 2d, for the taxable year. make 
157.16  the inflation adjustments in accordance with section 1f of the 
157.17  Internal Revenue Code except that for the purposes of this 
157.18  subdivision the percentage increase shall be determined from the 
157.19  year starting September 1, 1999, and ending August 31, 2000, as 
157.20  the base year for adjusting for inflation for the tax year 
157.21  beginning after December 31, 2000.  The determination of the 
157.22  commissioner under this subdivision is not a rule under the 
157.23  Administrative Procedure Act. 
157.24     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
157.25  years beginning after December 31, 2000. 
157.26     Sec. 20.  Minnesota Statutes 2000, section 290.0674, 
157.27  subdivision 1, is amended to read: 
157.28     Subdivision 1.  [CREDIT ALLOWED.] An individual is allowed 
157.29  a credit against the tax imposed by this chapter in an amount 
157.30  equal to the amount paid for education-related expenses for a 
157.31  qualifying child in kindergarten through grade 12.  For purposes 
157.32  of this section, "education-related expenses" means: 
157.33     (1) fees or tuition for instruction by an instructor under 
157.34  who meets one of the requirements of section 120A.22, 
157.35  subdivision 10, clause (1), (2), (3), (4), or (5), or by who is 
157.36  a member of the Minnesota music teachers association, and is not 
158.1   a lineal ancestor or sibling of the dependent for instruction 
158.2   outside the regular school day or school year, including 
158.3   tutoring, driver's education offered as part of school 
158.4   curriculum, regardless of whether it is taken from a public or 
158.5   private entity or summer camps, in grade or age appropriate 
158.6   curricula that supplement curricula and instruction available 
158.7   during the regular school year, that assists a dependent to 
158.8   improve knowledge of core curriculum areas or to expand 
158.9   knowledge and skills under the graduation rule under section 
158.10  120B.02, paragraph (e), clauses (1) to (7), (9), and (10), and 
158.11  that do not include the teaching of religious tenets, doctrines, 
158.12  or worship, the purpose of which is to instill such tenets, 
158.13  doctrines, or worship; 
158.14     (2) expenses for textbooks, including books and other 
158.15  instructional materials and equipment used in elementary and 
158.16  secondary schools in teaching only those subjects legally and 
158.17  commonly taught in public elementary and secondary schools in 
158.18  this state.  "Textbooks" does not include instructional books 
158.19  and materials used in the teaching of religious tenets, 
158.20  doctrines, or worship, the purpose of which is to instill such 
158.21  tenets, doctrines, or worship, nor does it include books or 
158.22  materials for extracurricular activities including sporting 
158.23  events, musical or dramatic events, speech activities, driver's 
158.24  education, or similar programs; 
158.25     (3) a maximum expense of $200 per family for personal 
158.26  computer hardware, excluding single purpose processors, and 
158.27  educational software that assists a dependent to improve 
158.28  knowledge of core curriculum areas or to expand knowledge and 
158.29  skills under the graduation rule under section 120B.02, 
158.30  paragraph (e), clauses (1) to (7), (9), and (10), purchased for 
158.31  use in the taxpayer's home and not used in a trade or business 
158.32  regardless of whether the computer is required by the 
158.33  dependent's school; and 
158.34     (4) the amount paid to others for transportation of a 
158.35  qualifying child attending an elementary or secondary school 
158.36  situated in Minnesota, North Dakota, South Dakota, Iowa, or 
159.1   Wisconsin, wherein a resident of this state may legally fulfill 
159.2   the state's compulsory attendance laws, which is not operated 
159.3   for profit, and which adheres to the provisions of the Civil 
159.4   Rights Act of 1964 and chapter 363.; 
159.5      (5) expenses for the purchase or lease of musical 
159.6   instruments used in classes offered as part of the school 
159.7   curriculum; 
159.8      (6) the amount paid to a public school for participation in 
159.9   extracurricular activities for which fees are authorized under 
159.10  section 123B.36, subdivision 1, paragraph (b), clauses (2), (7), 
159.11  and (10); and 
159.12     (7) the amount paid to a nonpublic school for participation 
159.13  in activities listed in section 123B.36, subdivision 1, 
159.14  paragraph (b), clauses (2), (7), and (10). 
159.15     For purposes of this section, "qualifying child" has the 
159.16  meaning given in section 32(c)(3) of the Internal Revenue Code. 
159.17     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
159.18  years beginning after December 31, 2000. 
159.19     Sec. 21.  Minnesota Statutes 2000, section 290.0674, 
159.20  subdivision 2, is amended to read: 
159.21     Subd. 2.  [LIMITATIONS.] (a) For claimants with income not 
159.22  greater than $33,500, the maximum credit allowed is $1,000 per 
159.23  qualifying child and $2,000 per family.  No credit is allowed 
159.24  for education-related expenses for claimants with income greater 
159.25  than $37,500.  The maximum credit for each claimant is $1,000 
159.26  multiplied by the number of qualifying children for whom the 
159.27  individual claims the credit.  The maximum credit per child for 
159.28  a claimant is reduced by $1 for each $4 of household income over 
159.29  $33,500, and the maximum credit per family is reduced by $2 for 
159.30  each $4 of household income over $33,500 for claimants with one 
159.31  qualifying child, and by $1 for each $3 of household income over 
159.32  $33,500 for all other claimants, but in no case is the credit 
159.33  less than zero. 
159.34     For purposes of this section "income" has the meaning given 
159.35  in section 290.067, subdivision 2a.  In the case of a married 
159.36  claimant, a credit is not allowed unless a joint income tax 
160.1   return is filed. 
160.2      (b) For a nonresident or part-year resident, the credit 
160.3   determined under subdivision 1 and the maximum credit amount in 
160.4   paragraph (a) must be allocated using the percentage calculated 
160.5   in section 290.06, subdivision 2c, paragraph (e). 
160.6      (c) For taxable years beginning after December 31, 2001, 
160.7   the dollar amount of the income threshold at which the maximum 
160.8   credit begins to be reduced must be adjusted for inflation.  The 
160.9   commissioner shall make the inflation adjustments in accordance 
160.10  with section 1f of the Internal Revenue Code except that for the 
160.11  purposes of this subdivision the percentage increase shall be 
160.12  determined from the year starting September 1, 2000, and ending 
160.13  August 31, 2001, as the base year for adjusting for inflation 
160.14  for the tax year beginning after December 31, 2001.  The 
160.15  determination of the commissioner under this subdivision is not 
160.16  a rule under the Administrative Procedure Act. 
160.17     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
160.18  years beginning after December 31, 2000. 
160.19     Sec. 22.  Minnesota Statutes 2000, section 290.0675, 
160.20  subdivision 1, is amended to read: 
160.21     Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
160.22  section the following terms have the meanings given. 
160.23     (b) "Earned income" means the sum of the following, to the 
160.24  extent included in Minnesota taxable income: 
160.25     (1) earned income as defined in section 32(c)(2) of the 
160.26  Internal Revenue Code; 
160.27     (2) to the extent included in Minnesota taxable income, 
160.28  income received from a retirement pension, profit-sharing, stock 
160.29  bonus, or annuity plan; and 
160.30     (3) to the extent included in Minnesota taxable income, 
160.31  social security benefits as defined in section 86(d)(1) of the 
160.32  Internal Revenue Code. 
160.33     (c) "Taxable income" means net income as defined in section 
160.34  290.01, subdivision 19. 
160.35     (d) "Earned income of lesser-earning spouse" means the 
160.36  earned income of the spouse with the lesser amount of earned 
161.1   income as defined in paragraph (b) for the taxable year.  
161.2      <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
161.3   years beginning after December 31, 2000. 
161.4      Sec. 23.  Minnesota Statutes 2000, section 290.0675, 
161.5   subdivision 3, is amended to read: 
161.6      Subd. 3.  [CREDIT AMOUNT.] The credit amount is as shown in 
161.7   the table in this subdivision, based on the couple's taxable 
161.8   income for the tax year and on the earned income of the 
161.9   lesser-earning spouse the difference between the tax on the 
161.10  couple's joint Minnesota taxable income under the rates in 
161.11  section 290.06, subdivision 2c, paragraph (a), and the sum of 
161.12  the tax under the rates of section 290.06, subdivision 2c, 
161.13  paragraph (b), on the earned income of the lesser-earning 
161.14  spouse, and the tax under the rates of section 290.06, 
161.15  subdivision 2c, paragraph (b), on the couple's joint Minnesota 
161.16  taxable income, minus the earned income of the lesser-earning 
161.17  spouse. 
161.18                               Credit For          Credit For
161.19    Earned Income of           Taxable Income      Taxable Income
161.20    Lesser Earning Spouse      $25,680-$102,029    $102,030-over
161.21    $14,250 - $15,249          $7                  $0    
161.22    $15,250 - $16,249          $24                 $0    
161.23    $16,250 - $17,249          $41                 $0    
161.24    $17,250 - $18,249          $58                 $0    
161.25    $18,250 - $19,249          $75                 $0    
161.26    $19,250 - $20,249          $92                 $0  
161.27    $20,250 - $21,249          $109                $0  
161.28    $21,250 - $22,249          $126                $0 
161.29    $22,250 - $23,249          $143                $0
161.30    $23,250 - $24,249          $160                $0 
161.31    $24,250 - $25,249          $161                $0   
161.32    $25,250 - $26,249          $161                $0  
161.33    $26,250 - $27,249          $161                $0   
161.34    $27,250 - $28,249          $161                $0
161.35    $28,250 - $29,249          $161                $0
161.36    $29,250 - $30,249          $161                $0
162.1     $30,250 - $31,249          $161                $0
162.2     $31,250 - $32,249          $161                $6
162.3     $32,250 - $33,249          $161                $14
162.4     $33,250 - $34,249          $161                $22
162.5     $34,250 - $35,249          $161                $30
162.6     $35,250 - $36,249          $161                $38
162.7     $36,250 - $37,249          $161                $46
162.8     $37,250 - $38,249          $161                $54
162.9     $38,250 - $39,249          $161                $62
162.10    $39,250 - $40,249          $161                $70
162.11    $40,250 - $41,249          $161                $78
162.12    $41,250 - $42,249          $161                $86
162.13    $42,250 - $43,249          $161                $94
162.14    $43,250 - $44,249          $161                $102
162.15    $44,250 - $45,249          $161                $110
162.16    $45,250 - $46,249          $161                $118
162.17    $46,250 - $47,249          $161                $126
162.18    $47,250 - $48,249          $161                $134
162.19    $48,250 - $49,249          $161                $142
162.20    $49,250 - $50,249          $161                $150
162.21    $50,250 - $51,249          $161                $158
162.22    $51,250 - $52,249          $161                $166
162.23    $52,250 - $53,249          $161                $174
162.24    $53,250 - $54,249          $161                $182
162.25    $54,250 - $55,249          $161                $190
162.26    $55,250 - $56,249          $161                $198
162.27    $56,250 - $57,249          $161                $206
162.28    $57,250 - $58,249          $161                $214
162.29    $58,250 - $59,249          $161                $222
162.30    $59,250 - $60,249          $161                $230
162.31    $60,250 - $61,249          $161                $238
162.32    $61,250 - $62,249          $161                $246
162.33    $62,250 - $63,249          $161                $254
162.34    $63,250 - $64,249          $161                $262
162.35    $64,250 and over           $161                $268
162.36     For taxable years beginning after December 31, 2001, the 
163.1   commissioner of revenue shall prepare and make available to 
163.2   taxpayers a comprehensive table showing the credit under this 
163.3   section at brackets of earnings of the lesser-earning spouse and 
163.4   joint taxable income.  The brackets of earnings shall not be 
163.5   more than $2,000. 
163.6      For taxable years beginning after December 31, 2000 2002, 
163.7   the commissioner shall update the table as necessary to provide 
163.8   a credit that reflects the relationship between the marginal tax 
163.9   rates imposed under section 290.06, subdivision 2c. 
163.10     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
163.11  years beginning after December 31, 2000. 
163.12     Sec. 24.  [290.0676] [CREDIT FOR LAND DONATED FOR 
163.13  CONSERVATION PURPOSES.] 
163.14     Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
163.15  section, the following terms have the meanings given. 
163.16     (b) "Interest in real property" means fee title or 
163.17  qualified real property interest as defined in section 170(h) of 
163.18  the Internal Revenue Code and the United States Treasury 
163.19  Regulations promulgated thereunder. 
163.20     (c) "Fair market value" of an interest in real property 
163.21  means the value as determined by a "qualified appraisal" 
163.22  prepared by a "qualified appraiser" as those terms are defined 
163.23  in United States Treasury Regulations, section 1.170A-13, as 
163.24  amended through December 31, 2000.  If the taxpayer does not 
163.25  obtain an appraisal, "fair market value" means the estimated 
163.26  market value of the property as determined by the assessor for 
163.27  property tax purposes. 
163.28     (d) "Discount of the sale price" means the difference 
163.29  between the fair market value of an interest in real property at 
163.30  the time of sale and the sale price, if the price the property 
163.31  is sold for is lower. 
163.32     (e) "Conservation purposes" means the conservation purposes 
163.33  as defined in section 170(h)(4)(A)(i), (ii), and (iii) of the 
163.34  Internal Revenue Code. 
163.35     Subd. 2.  [CREDIT ALLOWED.] A taxpayer who donates an 
163.36  interest in real property in this state for conservation 
164.1   purposes to a qualified organization described in subdivision 3, 
164.2   paragraph (a), may take a credit against the tax imposed by this 
164.3   chapter in an amount equal to 50 percent of the fair market 
164.4   value of the interest in real property.  A taxpayer who sells an 
164.5   interest in real property at a discount for conservation 
164.6   purposes may take a credit against the tax imposed by this 
164.7   chapter in an amount equal to 50 percent of the value of the 
164.8   discount of the sale price in the interest in real property. 
164.9      Subd. 3.  [QUALIFICATION.] (a) To qualify for a credit 
164.10  under this section, the taxpayer must convey the interest in 
164.11  real property to: 
164.12     (1) the state of Minnesota, a local government conservation 
164.13  agency, or a special purpose unit of government; or 
164.14     (2) a private organization as provided in section 501(c) of 
164.15  the Internal Revenue Code that: 
164.16     (i) meets the requirements of section 170(h)(3) of the 
164.17  Internal Revenue Code; and 
164.18     (ii) is organized and operated for one of the conservation 
164.19  purposes specified in section 170(h)(4)(A)(i), (ii), and (iii) 
164.20  of the Internal Revenue Code.  
164.21     (b) A taxpayer claiming the credit under this section shall 
164.22  attach the following to the tax returns on which the credit is 
164.23  claimed:  
164.24     (1) a certificate of acceptance from an organization 
164.25  described in paragraph (a) verifying that the organization has 
164.26  accepted the contribution; and 
164.27     (2) a copy of a qualified appraisal by a qualified 
164.28  appraiser as those terms are defined in United States Treasury 
164.29  Regulations, section 1.170A-13, as amended through December 31, 
164.30  2000, or a copy of the most recent notice of estimated market 
164.31  value provided by the assessor. 
164.32     (c) Conveyances of real property for open space for the 
164.33  purpose of fulfilling density requirements or other requirements 
164.34  to obtain subdivision or building permits are not eligible for a 
164.35  credit under this section. 
164.36     Subd. 4.  [LIMITATION; CARRYOVER.] (a) The credit for the 
165.1   taxable year may not exceed the taxpayer's liability for tax 
165.2   before the credit under this section or $100,000, whichever is 
165.3   less. 
165.4      (b) If the amount of the credit determined under this 
165.5   section for any taxable year exceeds the limitation in paragraph 
165.6   (a), the excess is a carryover to each of the five succeeding 
165.7   taxable years.  All of the excess unused credit for the taxable 
165.8   year must be carried first to the earliest of the taxable years 
165.9   to which the credit may be carried and then to each successive 
165.10  year to which the credit may be carried.  The unused credit that 
165.11  may be added under this paragraph in any year may not exceed the 
165.12  lesser of the taxpayer's liability for tax less the land 
165.13  donation credit for the taxable year or $100,000. 
165.14     Subd. 5.  [EXPIRATION.] The credit under this section 
165.15  expires for contributions made after December 31, 2004.  
165.16     <b>[EFFECTIVE DATE.]</b> This section is effective for 
165.17  contributions made after the day following final enactment in 
165.18  taxable years beginning after December 31, 2000. 
165.19     Sec. 25.  [290.0679] [ASSIGNMENT OF REFUND.] 
165.20     Subdivision 1.  [DEFINITIONS.] (a) "Qualifying taxpayer" 
165.21  means a taxpayer who has a child in kindergarten through grade 
165.22  12 in the current tax year and who met all other eligibility 
165.23  requirements for receiving the education credit in the tax year 
165.24  preceding the assignment of the taxpayer's refund. 
165.25     (b) "Education credit" means the credit allowed under 
165.26  section 290.0674. 
165.27     (c) "Refund" means an individual income tax refund or 
165.28  political contribution refund under this chapter, or a property 
165.29  tax refund under chapter 290A. 
165.30     (d) "Financial institution" means a state or federally 
165.31  chartered bank, savings bank, savings association, or credit 
165.32  union. 
165.33     (e) "Qualifying organization" means a tax-exempt 
165.34  organization under section 501(c)(3) of the Internal Revenue 
165.35  Code. 
165.36     (f) "Assignee" means a financial institution or qualifying 
166.1   organization that is entitled to receive payment of a refund 
166.2   assigned under this section. 
166.3      Subd. 2.  [CONDITIONS FOR ASSIGNMENT.] A qualifying 
166.4   taxpayer may assign all or part of a refund for the current and 
166.5   future taxable years to a financial institution or a qualifying 
166.6   organization.  The amount assigned may not exceed the maximum 
166.7   allowed education credit.  Both the taxpayer and spouse must 
166.8   consent to the assignment of a refund from a joint return. 
166.9      Subd. 3.  [CONSENT FOR DISCLOSURE.] When the taxpayer 
166.10  applies to the financial institution or the qualifying 
166.11  organization for a loan to be secured by the assignment under 
166.12  subdivision 2, the taxpayer must sign a written consent on a 
166.13  form prescribed by the commissioner.  The consent must authorize 
166.14  the commissioner to disclose to the financial institution or 
166.15  qualifying organization the taxpayer's household income in the 
166.16  previous tax year, the number of qualifying children claimed by 
166.17  the taxpayer in the previous tax year, the total amount of state 
166.18  taxes owed or revenue recapture claims filed under chapter 270A 
166.19  against the taxpayer, and the total amount of outstanding 
166.20  assignments made by the taxpayer under this section.  For a 
166.21  refund from a joint return, the consent must also authorize the 
166.22  disclosure of taxes, revenue recapture claims, and assignments 
166.23  relating to the taxpayer's spouse, and must be signed by the 
166.24  spouse. 
166.25     Subd. 4.  [FILING OF ASSIGNMENT.] The commissioner shall 
166.26  prescribe the form of and manner for filing an assignment of a 
166.27  refund under this section. 
166.28     Subd. 5.  [EFFECT OF ASSIGNMENT.] The taxpayer may not 
166.29  revoke an assignment after it has been filed.  The assignee must 
166.30  notify the commissioner if the loan secured by the assignment 
166.31  has been paid in full, in which case the assignment is 
166.32  canceled.  An assignment is in effect until the amount assigned 
166.33  is refunded in full to the assignee, or until the assignee 
166.34  cancels the assignment. 
166.35     Subd. 6.  [PAYMENT OF REFUND.] When a refund assigned under 
166.36  this section is issued by the commissioner, the proceeds of the 
167.1   refund must be distributed in the following order: 
167.2      (1) to satisfy any delinquent tax obligations of the 
167.3   taxpayer which are owed to the commissioner; 
167.4      (2) to claimant agencies to satisfy any revenue recapture 
167.5   claims filed against the taxpayer, in the order of priority of 
167.6   the claims set forth in section 270A.10; 
167.7      (3) to assignees to satisfy assignments under this section, 
167.8   based on the order in time in which the commissioner received 
167.9   the assignments; and 
167.10     (4) to the taxpayer. 
167.11     Subd. 7.  [LEGAL ACTION.] If there is a dispute between the 
167.12  taxpayer and the assignee after the commissioner has remitted 
167.13  the taxpayer's refund to the assignee, the taxpayer's only 
167.14  remedy is to bring an action against the assignee in court to 
167.15  recover the refund.  The action must be brought within two years 
167.16  after the commissioner remits the refund to the assignee.  The 
167.17  commissioner may not be a party to the proceeding. 
167.18     Subd. 8.  [ASSIGNMENTS PRIVATE DATA.] Information regarding 
167.19  assignments under this section is classified as private data on 
167.20  individuals. 
167.21     <b>[EFFECTIVE DATE.]</b> This section is effective for assignment 
167.22  of refunds for taxable years beginning after December 31, 2000.  
167.23  The commissioner may begin accepting assignments after August 1, 
167.24  2000.  
167.25     Sec. 26.  Minnesota Statutes 2000, section 290.068, 
167.26  subdivision 1, is amended to read: 
167.27     Subdivision 1.  [CREDIT ALLOWED.] A corporation, other than 
167.28  a corporation treated as an "S" corporation under section 
167.29  290.9725, taxpayer is allowed a credit against the portion of 
167.30  the franchise tax computed under section 290.06, subdivision 1, 
167.31  for the taxable year equal to: 
167.32     (a) 5 percent of the first $2,000,000 of the excess (if 
167.33  any) of: 
167.34     (1) the qualified research expenses for the taxable year, 
167.35  over 
167.36     (2) the base amount; and 
168.1      (b) 2.5 4 percent on all of such excess expenses over 
168.2   $2,000,000. 
168.3      <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
168.4   years beginning after December 31, 2000. 
168.5      Sec. 27.  Minnesota Statutes 2000, section 290.068, 
168.6   subdivision 3, is amended to read: 
168.7      Subd. 3.  [LIMITATION; CARRYOVER.] (a)(1) The credit for 
168.8   the taxable year shall may not exceed the liability for tax.  
168.9   "Liability for tax" for purposes of this section means the tax 
168.10  imposed under this chapter section 290.06 for the taxable year 
168.11  reduced by the sum of the nonrefundable credits allowed under 
168.12  this chapter. 
168.13     (2) In the case of a corporation which is For a partner in 
168.14  a partnership, the credit allowed for the taxable year shall may 
168.15  not exceed the lesser of the amount determined under clause (1) 
168.16  for the taxable year or an amount (separately computed with 
168.17  respect to the corporation's taxpayer's interest in the trade or 
168.18  business or entity) equal to the amount of tax attributable to 
168.19  that portion of taxable income which is allocable or 
168.20  apportionable to the corporation's taxpayer's interest in the 
168.21  trade or business or entity.  
168.22     (b) If the amount of the credit determined under this 
168.23  section for any taxable year exceeds the limitation under clause 
168.24  (a), the excess shall be is a research credit carryover to each 
168.25  of the 15 succeeding taxable years.  The entire amount of the 
168.26  excess unused credit for the taxable year shall must be carried 
168.27  first to the earliest of the taxable years to which the credit 
168.28  may be carried and then to each successive year to which the 
168.29  credit may be carried.  The amount of the unused credit which 
168.30  may be added under this clause shall may not exceed the 
168.31  taxpayer's liability for tax less the research credit for the 
168.32  taxable year.  
168.33     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
168.34  years beginning after December 31, 2000. 
168.35     Sec. 28.  Minnesota Statutes 2000, section 290.068, 
168.36  subdivision 4, is amended to read: 
169.1      Subd. 4.  [PARTNERSHIPS.] In the case of partnerships 
169.2   taxpayers other than corporations, the credit shall be allocated 
169.3   in the same manner provided by section is subject to sections 
169.4   41(f)(2) and 41(g) of the Internal Revenue Code. 
169.5      <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
169.6   years beginning after December 31, 2000. 
169.7      Sec. 29.  [290.0692] [BIOMEDICAL INNOVATION AND 
169.8   COMMERCIALIZATION INITIATIVE CREDIT.] 
169.9      (a) A tax credit is allowed for cash investments in the 
169.10  biomedical innovation and commercialization initiative pursuant 
169.11  to section 116J.885.  A credit is allowed against the tax 
169.12  imposed by sections 290.03 and 290.06 equal to 25 percent of the 
169.13  amount of the investment by the taxpayer for the year of the 
169.14  investment. 
169.15     (b) The amount of tax credits for a taxable year shall not 
169.16  exceed the liability for tax.  For purposes of this section, 
169.17  "liability for tax," means the tax imposed by sections 290.03 
169.18  and 290.06 for the taxable year reduced by the amount of 
169.19  nonrefundable credits allowed under this chapter.  The unused 
169.20  portion of the credits shall be a biomedical innovation and 
169.21  commercialization credit carryover for the tax year and each of 
169.22  the subsequent nine succeeding taxable years.  The commissioner 
169.23  shall prescribe the manner in which the credit may be claimed.  
169.24  This may include allowing the credit only as a separately 
169.25  processed claim for refund. 
169.26     (c) The biomedical innovation and commercialization 
169.27  initiative or any for-profit entity that is formed under section 
169.28  116J.885, subdivision 3, clause (5), must file, in writing, an 
169.29  information return with the commissioner no later than February 
169.30  15 of each year.  The information return must contain the total 
169.31  amount of investments in the biomedical innovation and 
169.32  commercialization initiative or the for-profit entity, the 
169.33  amount of investment made by each taxpayer, and the taxpayer's 
169.34  name and Minnesota tax identification number. 
169.35     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
169.36  beginning after December 31, 2000.  
170.1      Sec. 30.  [290.0803] [GAIN ON QUALIFIED STOCK.] 
170.2      (a) An individual is allowed a subtraction for 50 percent 
170.3   of any gain from the sale or exchange of qualified stock held 
170.4   for more than five years.  To qualify for the subtraction under 
170.5   this section, the stock must be: 
170.6      (1) acquired after the day following final enactment of 
170.7   this section; 
170.8      (2) in a business that was a qualified business for the 
170.9   taxable year in which the individual acquired the stock and for 
170.10  the taxable year prior to the year in which the individual sold 
170.11  or exchanged the stock. 
170.12     (b) Stock means common or preferred stock or an ownership 
170.13  interest in an entity taxed as a partnership. 
170.14     (c) A business is a qualified business only if it: 
170.15     (1) meets the active business requirements of section 
170.16  1202(e) of the Internal Revenue Code, except the business need 
170.17  not be a C corporation; 
170.18     (2) meets the jurisdiction requirements of section 297A.66 
170.19  or agrees voluntarily to collect tax under chapter 297A; and 
170.20     (3) has filed a certification with the commissioner of 
170.21  trade and economic development for the taxable year under 
170.22  paragraph (d). 
170.23     (d) To be a qualified business for a taxable year, the 
170.24  business must file a certification with the commissioner of 
170.25  trade and economic development that it meets the requirements of 
170.26  paragraph (c), clauses (1) and (2), by 15 days before the start 
170.27  of a taxable year.  The certification must be made in the form 
170.28  prescribed by the commissioner of trade and economic development 
170.29  and must be annually renewed, in the manner prescribed by the 
170.30  commissioner of trade and economic development, to be in effect 
170.31  for a taxable year.  The commissioner of trade and economic 
170.32  development shall make available to the public, through the 
170.33  Internet or in any other way the commissioner determines 
170.34  appropriate, a list of the qualifying businesses for each 
170.35  taxable year. 
170.36     Sec. 31.  Minnesota Statutes 2000, section 290.091, 
171.1   subdivision 2, is amended to read: 
171.2      Subd. 2.  [DEFINITIONS.] For purposes of the tax imposed by 
171.3   this section, the following terms have the meanings given: 
171.4      (a) "Alternative minimum taxable income" means the sum of 
171.5   the following for the taxable year: 
171.6      (1) the taxpayer's federal alternative minimum taxable 
171.7   income as defined in section 55(b)(2) of the Internal Revenue 
171.8   Code; 
171.9      (2) the taxpayer's itemized deductions allowed in computing 
171.10  federal alternative minimum taxable income, but excluding: 
171.11     (i) the Minnesota charitable contribution deduction; 
171.12     (ii) the medical expense deduction; 
171.13     (iii) the casualty, theft, and disaster loss deduction; 
171.14     (iv) the impairment-related work expenses of a disabled 
171.15  person; and 
171.16     (v) holocaust victims' settlement payments to the extent 
171.17  allowed under section 290.01, subdivision 19b; 
171.18     (3) for depletion allowances computed under section 613A(c) 
171.19  of the Internal Revenue Code, with respect to each property (as 
171.20  defined in section 614 of the Internal Revenue Code), to the 
171.21  extent not included in federal alternative minimum taxable 
171.22  income, the excess of the deduction for depletion allowable 
171.23  under section 611 of the Internal Revenue Code for the taxable 
171.24  year over the adjusted basis of the property at the end of the 
171.25  taxable year (determined without regard to the depletion 
171.26  deduction for the taxable year); 
171.27     (4) to the extent not included in federal alternative 
171.28  minimum taxable income, the amount of the tax preference for 
171.29  intangible drilling cost under section 57(a)(2) of the Internal 
171.30  Revenue Code determined without regard to subparagraph (E); and 
171.31     (5) to the extent not included in federal alternative 
171.32  minimum taxable income, the amount of interest income as 
171.33  provided by section 290.01, subdivision 19a, clause (1); 
171.34     less the sum of the amounts determined under the following: 
171.35     (1) interest income as defined in section 290.01, 
171.36  subdivision 19b, clause (1); 
172.1      (2) an overpayment of state income tax as provided by 
172.2   section 290.01, subdivision 19b, clause (2), to the extent 
172.3   included in federal alternative minimum taxable income; 
172.4      (3) the amount of investment interest paid or accrued 
172.5   within the taxable year on indebtedness to the extent that the 
172.6   amount does not exceed net investment income, as defined in 
172.7   section 163(d)(4) of the Internal Revenue Code.  Interest does 
172.8   not include amounts deducted in computing federal adjusted gross 
172.9   income; and 
172.10     (4) amounts subtracted from federal taxable income as 
172.11  provided by section 290.01, subdivision 19b, clauses clause (4); 
172.12  and (6) 
172.13     (5) to the extent the gain was included in federal taxable 
172.14  income, the capital gains exclusion under section 290.0803. 
172.15     In the case of an estate or trust, alternative minimum 
172.16  taxable income must be computed as provided in section 59(c) of 
172.17  the Internal Revenue Code. 
172.18     (b) "Investment interest" means investment interest as 
172.19  defined in section 163(d)(3) of the Internal Revenue Code. 
172.20     (c) "Tentative minimum tax" equals 6.4 percent of 
172.21  alternative minimum taxable income after subtracting the 
172.22  exemption amount determined under subdivision 3. 
172.23     (d) "Regular tax" means the tax that would be imposed under 
172.24  this chapter (without regard to this section and section 
172.25  290.032), reduced by the sum of the nonrefundable credits 
172.26  allowed under this chapter.  
172.27     (e) "Net minimum tax" means the minimum tax imposed by this 
172.28  section. 
172.29     (f) "Minnesota charitable contribution deduction" means a 
172.30  charitable contribution deduction under section 170 of the 
172.31  Internal Revenue Code to or for the use of an entity described 
172.32  in section 290.21, subdivision 3, clauses (a) to (e).  When the 
172.33  federal deduction for charitable contributions is limited under 
172.34  section 170(b) of the Internal Revenue Code, the allowable 
172.35  contributions in the year of contribution are deemed to be first 
172.36  contributions to entities described in section 290.21, 
173.1   subdivision 3, clauses (a) to (e). 
173.2      Sec. 32.  Minnesota Statutes 2000, section 290.091, 
173.3   subdivision 3, is amended to read: 
173.4      Subd. 3.  [EXEMPTION AMOUNT.] For purposes of computing the 
173.5   alternative minimum tax, the exemption amount is the exemption 
173.6   determined under section 55(d) of the Internal Revenue Code, as 
173.7   amended through December 31, 1992, except that (i) for married 
173.8   couples filing joint returns, the exemption amount equals two 
173.9   times the amount allowed in section 55(d)(1)(B) of the Internal 
173.10  Revenue Code as amended through December 31, 1992, and the 
173.11  phaseout threshold equals two times the amount provided in 
173.12  section 55(d)(3)(B) of the Internal Revenue Code as amended 
173.13  through December 31, 1992; (ii) for married couples filing 
173.14  separate returns, the exemption amount and phaseout threshold 
173.15  equal one-half the amounts provided for married couples filing 
173.16  joint returns; and (iii) for all filers, alternative minimum 
173.17  taxable income as determined under this section must be 
173.18  substituted in the computation of the phase out under section 
173.19  55(d)(3). 
173.20     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
173.21  years beginning after December 31, 2000. 
173.22     Sec. 33.  Minnesota Statutes 2000, section 290.0921, 
173.23  subdivision 1, is amended to read: 
173.24     Subdivision 1.  [TAX IMPOSED.] In addition to the taxes 
173.25  computed under this chapter without regard to this section, the 
173.26  franchise tax imposed on corporations includes a tax equal to 
173.27  the excess, if any, for the taxable year of:  
173.28     (1) 5.8 percent of Minnesota alternative minimum taxable 
173.29  income less the credit allowed under section 290.35, subdivision 
173.30  3; over 
173.31     (2) the tax imposed under section 290.06, subdivision 1, 
173.32  without regard to this section.  
173.33     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
173.34  years beginning after December 31, 2000. 
173.35     Sec. 34.  Minnesota Statutes 2000, section 290.0921, 
173.36  subdivision 2, is amended to read: 
174.1      Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
174.2   the following terms have the meanings given them. 
174.3      (b) "Alternative minimum taxable net income" is alternative 
174.4   minimum taxable income, 
174.5      (1) less the exemption amount, and 
174.6      (2) apportioned or allocated to Minnesota under section 
174.7   290.17, 290.191, or 290.20. 
174.8      (c) The "exemption amount" is $40,000, reduced, but not 
174.9   below zero, by 25 percent of the excess of alternative minimum 
174.10  taxable income over $150,000. 
174.11     (d) "Minnesota alternative minimum taxable income" is 
174.12  alternative minimum taxable net income, less the deductions for 
174.13  alternative tax net operating loss under subdivision 4; 
174.14  charitable contributions under subdivision 5; and dividends 
174.15  received under subdivision 6.  The sum of the deductions under 
174.16  this paragraph may not exceed 90 percent of alternative minimum 
174.17  taxable net income.  This limitation does not apply to a 
174.18  deduction for dividends paid to or received from a corporation 
174.19  which is subject to tax under section 290.35 or 290.36 and which 
174.20  is a member of an affiliated group of corporations as defined by 
174.21  the Internal Revenue Code. 
174.22     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
174.23  years beginning after December 31, 2000. 
174.24     Sec. 35.  Minnesota Statutes 2000, section 290.0921, 
174.25  subdivision 3, is amended to read: 
174.26     Subd. 3.  [ALTERNATIVE MINIMUM TAXABLE INCOME.] 
174.27  "Alternative minimum taxable income" is Minnesota net income as 
174.28  defined in section 290.01, subdivision 19, and includes the 
174.29  adjustments and tax preference items in sections 56, 57, 58, and 
174.30  59(d), (e), (f), and (h) of the Internal Revenue Code.  If a 
174.31  corporation files a separate company Minnesota tax return, the 
174.32  minimum tax must be computed on a separate company basis.  If a 
174.33  corporation is part of a tax group filing a unitary return, the 
174.34  minimum tax must be computed on a unitary basis.  The following 
174.35  adjustments must be made. 
174.36     (1) For purposes of the depreciation adjustments under 
175.1   section 56(a)(1) and 56(g)(4)(A) of the Internal Revenue Code, 
175.2   the basis for depreciable property placed in service in a 
175.3   taxable year beginning before January 1, 1990, is the adjusted 
175.4   basis for federal income tax purposes, including any 
175.5   modification made in a taxable year under section 290.01, 
175.6   subdivision 19e, or Minnesota Statutes 1986, section 290.09, 
175.7   subdivision 7, paragraph (c). 
175.8      (2) For taxable years beginning after December 31, 2000, 
175.9   the amount of any remaining modification made under section 
175.10  290.01, subdivision 19e, or Minnesota Statutes 1986, section 
175.11  290.09, subdivision 7, paragraph (c), not previously deducted is 
175.12  a depreciation allowance in the first taxable year after 
175.13  December 31, 2000. 
175.14     (3) The alternative tax net operating loss deduction under 
175.15  sections 56(a)(4) and 56(d) of the Internal Revenue Code does 
175.16  not apply. 
175.17     (3) (4) The special rule for certain dividends under 
175.18  section 56(g)(4)(C)(ii) of the Internal Revenue Code does not 
175.19  apply. 
175.20     (4) (5) The special rule for dividends from section 936 
175.21  companies under section 56(g)(4)(C)(iii) does not apply. 
175.22     (5) (6) The tax preference for depletion under section 
175.23  57(a)(1) of the Internal Revenue Code does not apply. 
175.24     (6) (7) The tax preference for intangible drilling costs 
175.25  under section 57(a)(2) of the Internal Revenue Code must be 
175.26  calculated without regard to subparagraph (E) and the 
175.27  subtraction under section 290.01, subdivision 19d, clause (4). 
175.28     (7) (8) The tax preference for tax exempt interest under 
175.29  section 57(a)(5) of the Internal Revenue Code does not apply.  
175.30     (8) (9) The tax preference for charitable contributions of 
175.31  appreciated property under section 57(a)(6) of the Internal 
175.32  Revenue Code does not apply. 
175.33     (9) (10) For purposes of calculating the tax preference for 
175.34  accelerated depreciation or amortization on certain property 
175.35  placed in service before January 1, 1987, under section 57(a)(7) 
175.36  of the Internal Revenue Code, the deduction allowable for the 
176.1   taxable year is the deduction allowed under section 290.01, 
176.2   subdivision 19e. 
176.3      (11) For taxable years beginning after December 31, 2000, 
176.4   the amount of any remaining modification made under section 
176.5   290.01, subdivision 19e, not previously deducted is a 
176.6   depreciation or amortization allowance in the first taxable year 
176.7   after December 31, 2000. 
176.8      (10) (12) For purposes of calculating the adjustment for 
176.9   adjusted current earnings in section 56(g) of the Internal 
176.10  Revenue Code, the term "alternative minimum taxable income" as 
176.11  it is used in section 56(g) of the Internal Revenue Code, means 
176.12  alternative minimum taxable income as defined in this 
176.13  subdivision, determined without regard to the adjustment for 
176.14  adjusted current earnings in section 56(g) of the Internal 
176.15  Revenue Code. 
176.16     (11) (13) For purposes of determining the amount of 
176.17  adjusted current earnings under section 56(g)(3) of the Internal 
176.18  Revenue Code, no adjustment shall be made under section 56(g)(4) 
176.19  of the Internal Revenue Code with respect to (i) the amount of 
176.20  foreign dividend gross-up subtracted as provided in section 
176.21  290.01, subdivision 19d, clause (1), (ii) the amount of refunds 
176.22  of income, excise, or franchise taxes subtracted as provided in 
176.23  section 290.01, subdivision 19d, clause (10), or (iii) the 
176.24  amount of royalties, fees or other like income subtracted as 
176.25  provided in section 290.01, subdivision 19d, clause (11). 
176.26     Items of tax preference must not be reduced below zero as a 
176.27  result of the modifications in this subdivision. 
176.28     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
176.29  following final enactment. 
176.30     Sec. 36.  Minnesota Statutes 2000, section 290.0921, 
176.31  subdivision 6, is amended to read: 
176.32     Subd. 6.  [DIVIDENDS RECEIVED.] (a) A deduction is allowed 
176.33  from alternative minimum taxable net income equal to the 
176.34  deduction for dividends received under section 290.21, 
176.35  subdivision 4, for purposes of calculating taxable income under 
176.36  section 290.01, subdivision 29. 
177.1      (b) The amount of the deduction must not exceed 90 percent 
177.2   of alternative minimum taxable net income.  This limitation does 
177.3   not apply to dividends paid to or received from a corporation 
177.4   which is subject to tax under section 290.35 or 290.36 and which 
177.5   is a member of an affiliated group of corporations as defined by 
177.6   the Internal Revenue Code. 
177.7      <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
177.8   years beginning after December 31, 2000. 
177.9      Sec. 37.  Minnesota Statutes 2000, section 290.0922, 
177.10  subdivision 2, is amended to read: 
177.11     Subd. 2.  [EXEMPTIONS.] The following entities are exempt 
177.12  from the tax imposed by this section: 
177.13     (1) corporations exempt from tax under section 290.05 other 
177.14  than insurance companies exempt under subdivision 1, paragraph 
177.15  (d); 
177.16     (2) real estate investment trusts; 
177.17     (3) regulated investment companies or a fund thereof; and 
177.18     (4) entities having a valid election in effect under 
177.19  section 860D(b) of the Internal Revenue Code; 
177.20     (5) town and farmers' mutual insurance companies; and 
177.21     (6) cooperatives organized under chapter 308A that provide 
177.22  housing exclusively to persons age 55 and over and are 
177.23  classified as homesteads under section 273.124, subdivision 3. 
177.24     Entities not specifically exempted by this subdivision are 
177.25  subject to tax under this section, notwithstanding section 
177.26  290.05.  
177.27     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
177.28  years beginning after December 31, 2000. 
177.29     Sec. 38.  Minnesota Statutes 2000, section 290.093, is 
177.30  amended to read: 
177.31     290.093 [TAX COMPUTATION FOR MUTUAL SAVINGS BANKS 
177.32  CONDUCTING LIFE INSURANCE BUSINESS.] 
177.33     Mutual savings banks as defined in section 594 of the 
177.34  Internal Revenue Code are subject to a tax consisting of the sum 
177.35  of the taxes determined under clauses (1) and (2):  
177.36     (1) a tax computed on the taxable income determined without 
178.1   regard to any items of gross income or deductions properly 
178.2   allocable to the business of the life insurance department, at 
178.3   the rates and in the manner as if this section did not apply; 
178.4   and 
178.5      (2) a tax computed on the income of the life insurance 
178.6   department determined without regard to any items of gross 
178.7   income or deductions not properly allocable to the department 
178.8   computed in the manner provided in section 290.35 and at the 
178.9   rate provided in section 290.06 for a corporation not engaged in 
178.10  the business of issuing life insurance contracts.  
178.11     This section applies only if the life insurance department 
178.12  would, if it were treated as a separate corporation, qualify as 
178.13  a life insurance company under section 816 of the Internal 
178.14  Revenue Code. 
178.15     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
178.16  years beginning after December 31, 2000. 
178.17     Sec. 39.  Minnesota Statutes 2000, section 290.095, 
178.18  subdivision 2, is amended to read: 
178.19     Subd. 2.  [DEFINED AND LIMITED.] (a) The term "net 
178.20  operating loss" as used in this section shall mean a net 
178.21  operating loss as defined in section 172(c) or 810(a), in the 
178.22  case of life insurance companies, of the Internal Revenue Code, 
178.23  with the modifications specified in subdivision 4.  The 
178.24  deductions provided in section 290.21 and the modification 
178.25  provided in section 290.01, subdivision 19d, clause (11) (9), 
178.26  cannot be used in the determination of a net operating loss.  
178.27     (b) The term "net operating loss deduction" as used in this 
178.28  section means the aggregate of the net operating loss carryovers 
178.29  to the taxable year, computed in accordance with subdivision 3.  
178.30  The provisions of section 172(b) or 810(b), in the case of life 
178.31  insurance companies, of the Internal Revenue Code relating to 
178.32  the carryback of net operating losses, do not apply. 
178.33     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
178.34  years beginning after December 31, 2000. 
178.35     Sec. 40.  Minnesota Statutes 2000, section 290.17, 
178.36  subdivision 1, is amended to read: 
179.1      Subdivision 1.  [SCOPE OF ALLOCATION RULES.] (a) The income 
179.2   of resident individuals is not subject to allocation outside 
179.3   this state.  The allocation rules apply to nonresident 
179.4   individuals, estates, trusts, nonresident partners of 
179.5   partnerships, nonresident shareholders of corporations treated 
179.6   as "S" corporations under section 290.9725, and all corporations 
179.7   not having such an election in effect.  If a partnership or 
179.8   corporation would not otherwise be subject to the allocation 
179.9   rules, but conducts a trade or business that is part of a 
179.10  unitary business involving another legal entity that is subject 
179.11  to the allocation rules, the partnership or corporation is 
179.12  subject to the allocation rules. 
179.13     (b) Expenses, losses, and other deductions (referred to 
179.14  collectively in this paragraph as "deductions") must be 
179.15  allocated along with the item or class of gross income to which 
179.16  they are definitely related for purposes of assignment under 
179.17  this section or apportionment under section 290.191, 290.20, 
179.18  290.35, or 290.36.  Deductions not definitely related to any 
179.19  item or class of gross income are assigned to the taxpayer's 
179.20  domicile. 
179.21     (c) In the case of an individual who is a resident for only 
179.22  part of a taxable year, the individual's income, gains, losses, 
179.23  and deductions from the distributive share of a partnership, S 
179.24  corporation, trust, or estate are not subject to allocation 
179.25  outside this state to the extent of the distributive share 
179.26  multiplied by a ratio, the numerator of which is the number of 
179.27  days the individual was a resident of this state during the tax 
179.28  year of the partnership, S corporation, trust, or estate, and 
179.29  the denominator of which is the number of days in the taxable 
179.30  year of the partnership, S corporation, trust, or estate. 
179.31     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
179.32  years beginning after December 31, 2000. 
179.33     Sec. 41.  Minnesota Statutes 2000, section 290.17, 
179.34  subdivision 4, is amended to read: 
179.35     Subd. 4.  [UNITARY BUSINESS PRINCIPLE.] (a) If a trade or 
179.36  business conducted wholly within this state or partly within and 
180.1   partly without this state is part of a unitary business, the 
180.2   entire income of the unitary business is subject to 
180.3   apportionment pursuant to section 290.191.  Notwithstanding 
180.4   subdivision 2, paragraph (c), none of the income of a unitary 
180.5   business is considered to be derived from any particular source 
180.6   and none may be allocated to a particular place except as 
180.7   provided by the applicable apportionment formula.  The 
180.8   provisions of this subdivision do not apply to business income 
180.9   subject to subdivision 5, income of an insurance company 
180.10  determined under section 290.35, or income of an investment 
180.11  company determined under section 290.36. 
180.12     (b) The term "unitary business" means business activities 
180.13  or operations which result in a flow of value between them.  The 
180.14  term may be applied within a single legal entity or between 
180.15  multiple entities and without regard to whether each entity is a 
180.16  sole proprietorship, a corporation, a partnership or a trust.  
180.17     (c) Unity is presumed whenever there is unity of ownership, 
180.18  operation, and use, evidenced by centralized management or 
180.19  executive force, centralized purchasing, advertising, 
180.20  accounting, or other controlled interaction, but the absence of 
180.21  these centralized activities will not necessarily evidence a 
180.22  nonunitary business.  Unity is also presumed when business 
180.23  activities or operations are of mutual benefit, dependent upon 
180.24  or contributory to one another, either individually or as a 
180.25  group. 
180.26     (d) Where a business operation conducted in Minnesota is 
180.27  owned by a business entity that carries on business activity 
180.28  outside the state different in kind from that conducted within 
180.29  this state, and the other business is conducted entirely outside 
180.30  the state, it is presumed that the two business operations are 
180.31  unitary in nature, interrelated, connected, and interdependent 
180.32  unless it can be shown to the contrary.  
180.33     (e) Unity of ownership is not deemed to exist when a 
180.34  corporation is involved unless that corporation is a member of a 
180.35  group of two or more business entities and more than 50 percent 
180.36  of the voting stock of each member of the group is directly or 
181.1   indirectly owned by a common owner or by common owners, either 
181.2   corporate or noncorporate, or by one or more of the member 
181.3   corporations of the group.  For this purpose, the term "voting 
181.4   stock" shall include membership interests of mutual insurance 
181.5   holding companies formed under section 60A.077.  
181.6      (f) The net income and apportionment factors under section 
181.7   290.191 or 290.20 of foreign corporations and other foreign 
181.8   entities which are part of a unitary business shall not be 
181.9   included in the net income or the apportionment factors of the 
181.10  unitary business.  A foreign corporation or other foreign entity 
181.11  which is required to file a return under this chapter shall file 
181.12  on a separate return basis.  The net income and apportionment 
181.13  factors under section 290.191 or 290.20 of foreign operating 
181.14  corporations shall not be included in the net income or the 
181.15  apportionment factors of the unitary business except as provided 
181.16  in paragraph (g). 
181.17     (g) The adjusted net income of a foreign operating 
181.18  corporation shall be deemed to be paid as a dividend on the last 
181.19  day of its taxable year to each shareholder thereof, in 
181.20  proportion to each shareholder's ownership, with which such 
181.21  corporation is engaged in a unitary business.  Such deemed 
181.22  dividend shall be treated as a dividend under section 290.21, 
181.23  subdivision 4. 
181.24     Dividends actually paid by a foreign operating corporation 
181.25  to a corporate shareholder which is a member of the same unitary 
181.26  business as the foreign operating corporation shall be 
181.27  eliminated from the net income of the unitary business in 
181.28  preparing a combined report for the unitary business.  The 
181.29  adjusted net income of a foreign operating corporation shall be 
181.30  its net income adjusted as follows: 
181.31     (1) any taxes paid or accrued to a foreign country, the 
181.32  commonwealth of Puerto Rico, or a United States possession or 
181.33  political subdivision of any of the foregoing shall be a 
181.34  deduction; and 
181.35     (2) the subtraction from federal taxable income for 
181.36  payments received from foreign corporations or foreign operating 
182.1   corporations under section 290.01, subdivision 19d, 
182.2   clause (11) (9), shall not be allowed. 
182.3      If a foreign operating corporation incurs a net loss, 
182.4   neither income nor deduction from that corporation shall be 
182.5   included in determining the net income of the unitary business. 
182.6      (h) For purposes of determining the net income of a unitary 
182.7   business and the factors to be used in the apportionment of net 
182.8   income pursuant to section 290.191 or 290.20, there must be 
182.9   included only the income and apportionment factors of domestic 
182.10  corporations or other domestic entities other than foreign 
182.11  operating corporations that are determined to be part of the 
182.12  unitary business pursuant to this subdivision, notwithstanding 
182.13  that foreign corporations or other foreign entities might be 
182.14  included in the unitary business.  
182.15     (i) Deductions for expenses, interest, or taxes otherwise 
182.16  allowable under this chapter that are connected with or 
182.17  allocable against dividends, deemed dividends described in 
182.18  paragraph (g), or royalties, fees, or other like income 
182.19  described in section 290.01, subdivision 19d, clause (11) (9), 
182.20  shall not be disallowed. 
182.21     (j) Each corporation or other entity, except a sole 
182.22  proprietorship, that is part of a unitary business must file 
182.23  combined reports as the commissioner determines.  On the 
182.24  reports, all intercompany transactions between entities included 
182.25  pursuant to paragraph (h) must be eliminated and the entire net 
182.26  income of the unitary business determined in accordance with 
182.27  this subdivision is apportioned among the entities by using each 
182.28  entity's Minnesota factors for apportionment purposes in the 
182.29  numerators of the apportionment formula and the total factors 
182.30  for apportionment purposes of all entities included pursuant to 
182.31  paragraph (h) in the denominators of the apportionment formula. 
182.32     (k) If a corporation has been divested from a unitary 
182.33  business and is included in a combined report for a fractional 
182.34  part of the common accounting period of the combined report:  
182.35     (1) its income includable in the combined report is its 
182.36  income incurred for that part of the year determined by 
183.1   proration or separate accounting; and 
183.2      (2) its sales, property, and payroll included in the 
183.3   apportionment formula must be prorated or accounted for 
183.4   separately. 
183.5      <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
183.6   years beginning after December 31, 2000. 
183.7      Sec. 42.  Minnesota Statutes 2000, section 290.191, 
183.8   subdivision 2, is amended to read: 
183.9      Subd. 2.  [APPORTIONMENT FORMULA OF GENERAL APPLICATION.] 
183.10  Except for those trades or businesses required to use a 
183.11  different formula under subdivision 3 or section 290.35 or 
183.12  290.36, and for those trades or businesses that receive 
183.13  permission to use some other method under section 290.20 or 
183.14  under subdivision 4, a trade or business required to apportion 
183.15  its net income must apportion its income to this state on the 
183.16  basis of: 
183.17     (1) for taxable years beginning after December 31, 2000, 
183.18  and before January 1, 2004, the percentage obtained by taking 
183.19  the sum of:  
183.20     (1) 75 (i) 90 percent of the percentage which the sales 
183.21  made within this state in connection with the trade or business 
183.22  during the tax period are of the total sales wherever made in 
183.23  connection with the trade or business during the tax period; 
183.24     (2) 12.5 (ii) five percent of the percentage which the 
183.25  total tangible property used by the taxpayer in this state in 
183.26  connection with the trade or business during the tax period is 
183.27  of the total tangible property, wherever located, used by the 
183.28  taxpayer in connection with the trade or business during the tax 
183.29  period; and 
183.30     (3) 12.5 (iii) five percent of the percentage which the 
183.31  taxpayer's total payrolls paid or incurred in this state or paid 
183.32  in respect to labor performed in this state in connection with 
183.33  the trade or business during the tax period are of the 
183.34  taxpayer's total payrolls paid or incurred in connection with 
183.35  the trade or business during the tax period; and 
183.36     (2) for taxable years beginning after December 31, 2003, 
184.1   the percentage that the sales made within this state in 
184.2   connection with the trade or business during the tax period are 
184.3   of the total sales wherever made in connection with the trade or 
184.4   business during the tax period.  
184.5      <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
184.6   years beginning after December 31, 2000. 
184.7      Sec. 43.  Minnesota Statutes 2000, section 290.191, 
184.8   subdivision 3, is amended to read: 
184.9      Subd. 3.  [APPORTIONMENT FORMULA FOR FINANCIAL 
184.10  INSTITUTIONS.] Except for an investment company required to 
184.11  apportion its income under section 290.36, a financial 
184.12  institution that is required to apportion its net income must 
184.13  apportion its net income to this state on the basis of: 
184.14     (1) for taxable years beginning after December 31, 2000, 
184.15  and before January 1, 2004, the percentage obtained by taking 
184.16  the sum of:  
184.17     (1) 75 (i) 90 percent of the percentage which the receipts 
184.18  from within this state in connection with the trade or business 
184.19  during the tax period are of the total receipts in connection 
184.20  with the trade or business during the tax period, from wherever 
184.21  derived; 
184.22     (2) 12.5 (ii) five percent of the percentage which the sum 
184.23  of the total tangible property used by the taxpayer in this 
184.24  state and the intangible property owned by the taxpayer and 
184.25  attributed to this state in connection with the trade or 
184.26  business during the tax period is of the sum of the total 
184.27  tangible property, wherever located, used by the taxpayer and 
184.28  the intangible property owned by the taxpayer and attributed to 
184.29  all states in connection with the trade or business during the 
184.30  tax period; and 
184.31     (3) 12.5 (iii) five percent of the percentage which the 
184.32  taxpayer's total payrolls paid or incurred in this state or paid 
184.33  in respect to labor performed in this state in connection with 
184.34  the trade or business during the tax period are of the 
184.35  taxpayer's total payrolls paid or incurred in connection with 
184.36  the trade or business during the tax period; and 
185.1      (2) for taxable years beginning after December 31, 2003, 
185.2   the percentage that the receipts from within this state in 
185.3   connection with the trade or business during the tax period are 
185.4   of the total receipts in connection with the trade or business 
185.5   during the tax period, from wherever derived. 
185.6      <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
185.7   years beginning after December 31, 2000. 
185.8      Sec. 44.  Minnesota Statutes 2000, section 290.21, 
185.9   subdivision 4, is amended to read: 
185.10     Subd. 4.  (a)(1) Eighty percent of dividends received by a 
185.11  corporation during the taxable year from another corporation, in 
185.12  which the recipient owns 20 percent or more of the stock, by 
185.13  vote and value, not including stock described in section 
185.14  1504(a)(4) of the Internal Revenue Code when the corporate stock 
185.15  with respect to which dividends are paid does not constitute the 
185.16  stock in trade of the taxpayer or would not be included in the 
185.17  inventory of the taxpayer, or does not constitute property held 
185.18  by the taxpayer primarily for sale to customers in the ordinary 
185.19  course of the taxpayer's trade or business, or when the trade or 
185.20  business of the taxpayer does not consist principally of the 
185.21  holding of the stocks and the collection of the income and gains 
185.22  therefrom; and 
185.23     (2)(i) The remaining 20 percent of dividends if the 
185.24  dividends received are the stock in an affiliated company 
185.25  transferred in an overall plan of reorganization and the 
185.26  dividend is eliminated in consolidation under Treasury 
185.27  Department Regulation 1.1502-14(a), as amended through December 
185.28  31, 1989; or 
185.29     (ii) The remaining 20 percent of dividends if the dividends 
185.30  are received from a corporation which is subject to tax under 
185.31  section 290.35 or 290.36 and which is a member of an affiliated 
185.32  group of corporations as defined by the Internal Revenue Code 
185.33  and the dividend is eliminated in consolidation under Treasury 
185.34  Department Regulation 1.1502-14(a), as amended through December 
185.35  31, 1989, or is deducted under an election under section 243(b) 
185.36  of the Internal Revenue Code. 
186.1      (b) Seventy percent of dividends received by a corporation 
186.2   during the taxable year from another corporation in which the 
186.3   recipient owns less than 20 percent of the stock, by vote or 
186.4   value, not including stock described in section 1504(a)(4) of 
186.5   the Internal Revenue Code when the corporate stock with respect 
186.6   to which dividends are paid does not constitute the stock in 
186.7   trade of the taxpayer, or does not constitute property held by 
186.8   the taxpayer primarily for sale to customers in the ordinary 
186.9   course of the taxpayer's trade or business, or when the trade or 
186.10  business of the taxpayer does not consist principally of the 
186.11  holding of the stocks and the collection of income and gain 
186.12  therefrom.  
186.13     (c) The dividend deduction provided in this subdivision 
186.14  shall be allowed only with respect to dividends that are 
186.15  included in a corporation's Minnesota taxable net income for the 
186.16  taxable year. 
186.17     The dividend deduction provided in this subdivision does 
186.18  not apply to a dividend from a corporation which, for the 
186.19  taxable year of the corporation in which the distribution is 
186.20  made or for the next preceding taxable year of the corporation, 
186.21  is a corporation exempt from tax under section 501 of the 
186.22  Internal Revenue Code. 
186.23     The dividend deduction provided in this subdivision applies 
186.24  to the amount of regulated investment company dividends only to 
186.25  the extent determined under section 854(b) of the Internal 
186.26  Revenue Code. 
186.27     The dividend deduction provided in this subdivision shall 
186.28  not be allowed with respect to any dividend for which a 
186.29  deduction is not allowed under the provisions of section 246(c) 
186.30  of the Internal Revenue Code. 
186.31     (d) If dividends received by a corporation that does not 
186.32  have nexus with Minnesota under the provisions of Public Law 
186.33  Number 86-272 are included as income on the return of an 
186.34  affiliated corporation permitted or required to file a combined 
186.35  report under section 290.34, subdivision 2, then for purposes of 
186.36  this subdivision the determination as to whether the trade or 
187.1   business of the corporation consists principally of the holding 
187.2   of stocks and the collection of income and gains therefrom shall 
187.3   be made with reference to the trade or business of the 
187.4   affiliated corporation having a nexus with Minnesota. 
187.5      (e) The deduction provided by this subdivision does not 
187.6   apply if the dividends are paid by a FSC as defined in section 
187.7   922 of the Internal Revenue Code. 
187.8      (f) If one or more of the members of the unitary group 
187.9   whose income is included on the combined report received a 
187.10  dividend, the deduction under this subdivision for each member 
187.11  of the unitary business required to file a return under this 
187.12  chapter is the product of:  (1) 100 percent of the dividends 
187.13  received by members of the group; (2) the percentage allowed 
187.14  pursuant to paragraph (a) or (b); and (3) the percentage of the 
187.15  taxpayer's business income apportionable to this state for the 
187.16  taxable year under section 290.191 or 290.20. 
187.17     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
187.18  years beginning after December 31, 2000. 
187.19     Sec. 45.  Minnesota Statutes 2000, section 290.9725, is 
187.20  amended to read: 
187.21     290.9725 [S CORPORATION.] 
187.22     For purposes of this chapter, the term "S corporation" 
187.23  means any corporation having a valid election in effect for the 
187.24  taxable year under section 1362 of the Internal Revenue Code.  
187.25  An S corporation shall not be subject to the taxes imposed by 
187.26  this chapter, except:  
187.27     (1) the taxes imposed under sections 290.0922, 290.92, 
187.28  290.9727, 290.9728, and 290.9729; and 
187.29     (2) the tax under sections 290.06, subdivision 1, and 
187.30  290.0921 apply to a financial institution to which either 
187.31  section 585 or 593 of the Internal Revenue Code applies or that 
187.32  has a wholly owned subsidiary as described in section 
187.33  1361(b)(3)(B) of the Internal Revenue Code which is a financial 
187.34  institution under section 585 or 593 of the Internal Revenue 
187.35  Code. 
187.36     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
188.1   years beginning after December 31, 2000. 
188.2      Sec. 46.  Minnesota Statutes 2000, section 297I.20, is 
188.3   amended to read: 
188.4      297I.20 [GUARANTY ASSOCIATION ASSESSMENT OFFSET.] 
188.5      (a) An insurance company may offset against its premium tax 
188.6   liability to this state any amount paid for assessments made for 
188.7   insolvencies which occur after July 31, 1994, under sections 
188.8   60C.01 to 60C.22; and any amount paid for assessments made after 
188.9   July 31, 1994, under Minnesota Statutes 1992, sections 61B.01 to 
188.10  61B.16, or under sections 61B.18 to 61B.32 as follows: 
188.11     (1) Each such assessment shall give rise to an amount of 
188.12  offset equal to 20 percent of the amount of the assessment for 
188.13  each of the five calendar years following the year in which the 
188.14  assessment was paid. 
188.15     (2) The amount of offset initially determined for each 
188.16  taxable year is the sum of the amounts determined under clause 
188.17  (1) for that taxable year. 
188.18     (b)(1) Each year the commissioner shall compare total 
188.19  guaranty association assessments levied over the preceding five 
188.20  calendar years to the sum of all premium tax and corporate 
188.21  franchise tax revenues collected from insurance companies, 
188.22  without reduction for any guaranty association assessment offset 
188.23  in the preceding calendar year, referred to in this subdivision 
188.24  as "preceding year insurance tax revenues." 
188.25     (2) If total guaranty association assessments levied over 
188.26  the preceding five years exceed the preceding year insurance tax 
188.27  revenues, insurance companies must be allowed only a 
188.28  proportionate part of the premium tax offset calculated under 
188.29  paragraph (a) for the current calendar year. 
188.30     (3) The proportionate part of the premium tax offset 
188.31  allowed in the current calendar year is determined by 
188.32  multiplying the amount calculated under paragraph (a) by a 
188.33  fraction.  The numerator of the fraction equals the preceding 
188.34  year insurance tax revenues, and its denominator equals total 
188.35  guaranty association assessments levied over the preceding 
188.36  five-year period. 
189.1      (4) The proportionate part of the premium tax offset that 
189.2   is not allowed must be carried forward to subsequent tax years 
189.3   and added to the amount of premium tax offset calculated under 
189.4   paragraph (a) prior to application of the limitation imposed by 
189.5   this paragraph. 
189.6      (5) Any amount carried forward from prior years must be 
189.7   allowed before allowance of the offset for the current year 
189.8   calculated under paragraph (a). 
189.9      (6) The premium tax offset limitation must be calculated 
189.10  separately for (i) insurance companies subject to assessment 
189.11  under sections 60C.01 to 60C.22, and (ii) insurance companies 
189.12  subject to assessment under Minnesota Statutes 1992, sections 
189.13  61B.01 to 61B.16, or 61B.18 to 61B.32. 
189.14     (7) When the premium tax offset is limited by this 
189.15  provision, the commissioner shall notify affected insurance 
189.16  companies on a timely basis for purposes of completing premium 
189.17  and corporate franchise tax returns.  
189.18     (8) The guaranty associations created under sections 60C.01 
189.19  to 60C.22, Minnesota Statutes 1992, sections 61B.01 to 61B.16, 
189.20  and 61B.18 to 61B.32, shall provide the commissioner with the 
189.21  necessary information on guaranty association assessments. 
189.22     (c)(1) If the offset determined by the application of 
189.23  paragraphs (a) and (b) exceeds the greater of the insurance 
189.24  company's premium tax liability under this section or its 
189.25  corporate franchise tax liability under chapter 290 prior to 
189.26  allowance of the credit for premium taxes, then the insurance 
189.27  company may carry forward the excess, referred to in this 
189.28  subdivision as the "carryforward credit" to subsequent taxable 
189.29  years. 
189.30     (2) The carryforward credit is allowed as an offset against 
189.31  premium tax liability for the first succeeding year to the 
189.32  extent that the premium tax liability for that year exceeds the 
189.33  amount of the allowable offset for the year determined under 
189.34  paragraphs (a) and (b). 
189.35     (3) The carryforward credit must be reduced, but not below 
189.36  zero, by the greater of the amount of the carryforward credit 
190.1   allowed as an offset against the premium tax under this 
190.2   paragraph or the amount of the carryforward credit allowed as an 
190.3   offset against the insurance company's corporate franchise tax 
190.4   liability under section 290.35, subdivision 6, paragraph (d).  
190.5   The remainder, if any, of the carryforward credit must be 
190.6   carried forward to succeeding taxable years until the entire 
190.7   carryforward credit has been credited against the insurance 
190.8   company's liability for premium tax under this chapter and 
190.9   corporate franchise tax under chapter 290 if applicable for that 
190.10  taxable year. 
190.11     (d) When an insurer has offset against taxes its payment of 
190.12  an assessment of the Minnesota life and health guaranty 
190.13  association, and the association pays the insurer a refund with 
190.14  respect to the assessment under Minnesota Statutes 1992, section 
190.15  61B.07, subdivision 6, or 61B.24, subdivision 6, then the refund 
190.16  reduces the insurer's carryforward credit under paragraph (c).  
190.17  If the refund exceeds the amount of the carryforward credit, the 
190.18  excess amount must be repaid to the state by the insurers to the 
190.19  extent of the offset in the manner the commissioner requires. 
190.20     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
190.21  years beginning after December 31, 2000. 
190.22     Sec. 47.  Minnesota Statutes 2000, section 298.01, 
190.23  subdivision 3b, is amended to read: 
190.24     Subd. 3b.  [DEDUCTIONS.] (a) For purposes of determining 
190.25  taxable income under subdivision 3, the deductions from gross 
190.26  income include only those expenses necessary to convert raw ores 
190.27  to marketable quality.  Such expenses include costs associated 
190.28  with refinement but do not include expenses such as 
190.29  transportation, stockpiling, marketing, or marine insurance that 
190.30  are incurred after marketable ores are produced, unless the 
190.31  expenses are included in gross income. 
190.32     (b) The provisions of section 290.01, subdivisions 19c, 
190.33  clauses (7) and (11) clause (7), and 19d, clauses (7) and 
190.34  (12) clause (10), are not used to determine taxable income. 
190.35     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
190.36  payable May 1, 2002, and thereafter. 
191.1      Sec. 48.  Minnesota Statutes 2000, section 298.01, 
191.2   subdivision 4c, is amended to read: 
191.3      Subd. 4c.  [SPECIAL DEDUCTIONS DEDUCTION FOR DEPRECIATION; 
191.4   NET OPERATING LOSS.] (a) For purposes of determining taxable 
191.5   income under subdivision 4, the following modifications are 
191.6   allowed: 
191.7      (1) the provisions of section 290.01, subdivisions 19c, 
191.8   clauses (7) and (11) clause (7), and 19d, clauses (7) and 
191.9   (12) clause (10), are not used to determine taxable income; and. 
191.10     (2) for assets placed in service before January 1, 1990, 
191.11  the deduction for depreciation will be the same amount allowed 
191.12  under chapter 290, except that after an asset has been fully 
191.13  depreciated for federal income tax purposes any remaining 
191.14  depreciable basis is allowed as a deduction using the 
191.15  straight-line method over the following number of years: 
191.16     (i) three-year property, one year; 
191.17     (ii) five- and seven-year property, two years; 
191.18     (iii) ten-year property, five years; and 
191.19     (iv) all other property, seven years. 
191.20     No deduction is allowed if an asset is fully depreciated 
191.21  for occupation tax purposes before January 1990. 
191.22     (b) For purposes of determining the deduction allowed under 
191.23  paragraph (a), clause (2), the remaining depreciable basis of 
191.24  property placed in service before January 1, 1990, is calculated 
191.25  as follows: 
191.26     (1) the adjusted basis of the property on December 31, 
191.27  1989, which was used to calculate the hypothetical corporate 
191.28  franchise tax under Minnesota Statutes 1988, section 298.40, 
191.29  including salvage value; less 
191.30     (2) deductions for depreciation allowed under section 
191.31  290.01, subdivision 19e. 
191.32     (c) The basis for determining gain or loss on sale or 
191.33  disposition of assets placed in service before January 1, 1990, 
191.34  is the basis determined under paragraph (b), less the deductions 
191.35  allowed under paragraph (a), clause (2). 
191.36     (d) (b) The amount of net operating loss incurred in a 
192.1   taxable year beginning before January 1, 1990, that may be 
192.2   carried over to a taxable year beginning after December 31, 
192.3   1989, is the amount of net operating loss carryover determined 
192.4   in the calculation of the hypothetical corporate franchise tax 
192.5   under Minnesota Statutes 1988, sections 298.40 and 298.402. 
192.6      <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
192.7   payable May 1, 2002, and thereafter. 
192.8      Sec. 49.  Minnesota Statutes 2000, section 469.1732, 
192.9   subdivision 1, is amended to read: 
192.10     Subdivision 1.  [AUTHORITY.] A business that conducts 
192.11  business activity within a border city development zone 
192.12  designated under section 469.1731 may qualify for the property 
192.13  tax exemption under section 272.0212, the corporate franchise 
192.14  tax credit under subdivision 2, and the sales tax exemption 
192.15  under section 469.1734, subdivision 6. 
192.16     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
192.17  following final enactment. 
192.18     Sec. 50.  [REPORT ON INCOME TAX RECIPROCITY WITH 
192.19  WISCONSIN.] 
192.20     By March 1, 2002, the commissioner of revenue must report 
192.21  to house and senate committees dealing with taxes on the 
192.22  advisability of terminating individual income tax reciprocity 
192.23  with the state of Wisconsin under Minnesota Statutes, section 
192.24  290.081. 
192.25     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
192.26  following final enactment. 
192.27     Sec. 51.  [APPROPRIATION; TAXPAYER ASSISTANCE.] 
192.28     (a) $150,000 is appropriated from the general fund to the 
192.29  commissioner of revenue to make grants to one or more nonprofit 
192.30  organizations, qualifying under section 501(c)(3) of the 
192.31  Internal Revenue Code of 1986, to coordinate, facilitate, 
192.32  encourage, and aid in the provision of taxpayer assistance 
192.33  services.  This appropriation is available for fiscal years 2002 
192.34  and 2003 and does not become a part of the base.  
192.35     (b) For purposes of this section, "taxpayer assistance 
192.36  services" means accounting and tax preparation services provided 
193.1   by volunteers to low-income and disadvantaged Minnesota 
193.2   residents to help them file federal and state income tax returns 
193.3   and Minnesota property tax refund claims and to provide personal 
193.4   representation before the department of revenue and Internal 
193.5   Revenue Service. 
193.6      Sec. 52.  [REPEALER.] 
193.7      (a) Minnesota Statutes 2000, sections 290.06, subdivision 
193.8   25; and 290.0673, are repealed. 
193.9      (b) Minnesota Statutes 2000, sections 290.06, subdivision 
193.10  26; 290.095, subdivision 1a; 290.21, subdivision 3; 290.35; and 
193.11  290.9726, subdivision 7, are repealed. 
193.12     (c) Minnesota Statutes 2000, sections 469.1732, subdivision 
193.13  2; and 469.1734, subdivision 4, are repealed. 
193.14     (d) Minnesota Statutes 2000, sections 290.095, subdivision 
193.15  7; 290.23; 290.25; and 290.31, subdivisions 2, 2a, 3, 4, 5, and 
193.16  19, are repealed. 
193.17     (e) Minnesota Statutes 2000, section 290.191, subdivision 
193.18  4, is repealed. 
193.19     <b>[EFFECTIVE DATE.]</b> Paragraph (a) of this section is 
193.20  effective for taxable years beginning after December 31, 2001.  
193.21  Paragraphs (b) and (d) of this section are effective for taxable 
193.22  years beginning after December 31, 2000.  Paragraph (c) of this 
193.23  section is effective the day following final enactment.  
193.24  Paragraph (e) of this section is effective for tax years 
193.25  beginning after December 31, 2003. 
193.26                             ARTICLE 8 
193.27                        SALES AND USE TAXES 
193.28     Section 1.  Minnesota Statutes 2000, section 84.922, is 
193.29  amended by adding a subdivision to read: 
193.30     Subd. 11.  [PROOF OF SALES TAX PAYMENT.] A person applying 
193.31  for initial registration in Minnesota of an all-terrain vehicle 
193.32  shall provide a purchaser's certificate showing a complete 
193.33  description of the all-terrain vehicle, the seller's name and 
193.34  address, the full purchase price of the all-terrain vehicle, and 
193.35  the trade-in allowance, if any.  The certificate also must 
193.36  include information showing either that (1) the sales and use 
194.1   tax under chapter 297A was paid, or (2) the purchase was exempt 
194.2   from tax under chapter 297A.  The certificate is not required if 
194.3   the applicant provides a receipt, invoice, or other document 
194.4   that shows the all-terrain vehicle was purchased from a retailer 
194.5   maintaining a place of business in this state as defined in 
194.6   section 297A.66, subdivision 1. 
194.7      <b>[EFFECTIVE DATE.]</b> This section is effective for 
194.8   registrations occurring on or after July 1, 2001. 
194.9      Sec. 2.  Minnesota Statutes 2000, section 289A.18, 
194.10  subdivision 4, is amended to read: 
194.11     Subd. 4.  [SALES AND USE TAX RETURNS.] (a) Sales and use 
194.12  tax returns must be filed on or before the 20th day of the month 
194.13  following the close of the preceding reporting period, except 
194.14  that annual use tax returns provided for under section 289A.11, 
194.15  subdivision 1, must be filed by April 15 following the close of 
194.16  the calendar year, in the case of individuals.  Annual use tax 
194.17  returns of businesses, including sole proprietorships, and 
194.18  annual sales tax returns must be filed by February 5 following 
194.19  the close of the calendar year.  
194.20     (b) Except for the return for the June reporting period, 
194.21  which is due on the following August 25, Returns filed by 
194.22  retailers required to remit liabilities by means of funds 
194.23  transfer under section 289A.20, subdivision 4, 
194.24  paragraph (d) (b), are due on or before the 25th day of the 
194.25  month following the close of the preceding reporting period.  
194.26     (c) If a retailer has an average sales and use tax 
194.27  liability, including local sales and use taxes administered by 
194.28  the commissioner, equal to or less than $500 per month in any 
194.29  quarter of a calendar year, and has substantially complied with 
194.30  the tax laws during the preceding four calendar quarters, the 
194.31  retailer may request authorization to file and pay the taxes 
194.32  quarterly in subsequent calendar quarters.  The authorization 
194.33  remains in effect during the period in which the retailer's 
194.34  quarterly returns reflect sales and use tax liabilities of less 
194.35  than $1,500 and there is continued compliance with state tax 
194.36  laws. 
195.1      (d) If a retailer has an average sales and use tax 
195.2   liability, including local sales and use taxes administered by 
195.3   the commissioner, equal to or less than $100 per month during a 
195.4   calendar year, and has substantially complied with the tax laws 
195.5   during that period, the retailer may request authorization to 
195.6   file and pay the taxes annually in subsequent years.  The 
195.7   authorization remains in effect during the period in which the 
195.8   retailer's annual returns reflect sales and use tax liabilities 
195.9   of less than $1,200 and there is continued compliance with state 
195.10  tax laws. 
195.11     (e) The commissioner may also grant quarterly or annual 
195.12  filing and payment authorizations to retailers if the 
195.13  commissioner concludes that the retailers' future tax 
195.14  liabilities will be less than the monthly totals identified in 
195.15  paragraphs (c) and (d).  An authorization granted under this 
195.16  paragraph is subject to the same conditions as an authorization 
195.17  granted under paragraphs (c) and (d). 
195.18     (f) A taxpayer who is a materials supplier may report gross 
195.19  receipts either on: 
195.20     (1) the cash basis as the consideration is received; or 
195.21     (2) the accrual basis as sales are made.  
195.22  As used in this paragraph, "materials supplier" means a person 
195.23  who provides materials for the improvement of real property; who 
195.24  is primarily engaged in the sale of lumber and building 
195.25  materials-related products to owners, contractors, 
195.26  subcontractors, repairers, or consumers; who is authorized to 
195.27  file a mechanics lien upon real property and improvements under 
195.28  chapter 514; and who files with the commissioner an election to 
195.29  file sales and use tax returns on the basis of this paragraph. 
195.30     <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
195.31  returns filed after January 1, 2002. 
195.32     Sec. 3.  Minnesota Statutes 2000, section 289A.20, 
195.33  subdivision 4, is amended to read: 
195.34     Subd. 4.  [SALES AND USE TAX.] (a) The taxes imposed by 
195.35  chapter 297A are due and payable to the commissioner monthly on 
195.36  or before the 20th day of the month following the month in which 
196.1   the taxable event occurred, or following another reporting 
196.2   period as the commissioner prescribes or as allowed under 
196.3   section 289A.18, subdivision 4, paragraph (f), except that use 
196.4   taxes due on an annual use tax return as provided under section 
196.5   289A.11, subdivision 1, are payable by April 15 following the 
196.6   close of the calendar year. 
196.7      (b) A vendor having a liability of $120,000 or more during 
196.8   a fiscal year ending June 30 must remit the June liability for 
196.9   the next year in the following manner: 
196.10     (1) Two business days before June 30 of the year, the 
196.11  vendor must remit 62 percent of the estimated June liability to 
196.12  the commissioner.  
196.13     (2) On or before August 14 of the year, the vendor must pay 
196.14  any additional amount of tax not remitted in June. 
196.15     (c) A vendor having a liability of $120,000 or more during 
196.16  a fiscal year ending June 30 must remit all liabilities on 
196.17  returns due for periods beginning in the subsequent calendar 
196.18  year by means of a funds transfer as defined in section 
196.19  336.4A-104, paragraph (a).  The funds transfer payment date, as 
196.20  defined in section 336.4A-401, must be on or before the 14th day 
196.21  of the month following the month in which the taxable event 
196.22  occurred, or on or before the 14th day of the month following 
196.23  the month in which the sale is reported under section 289A.18, 
196.24  subdivision 4, except for 62 percent of the estimated June 
196.25  liability, which is due two business days before June 30.  The 
196.26  remaining amount of the June liability is due on August 14.  If 
196.27  the date the tax is due is not a funds transfer business day, as 
196.28  defined in section 336.4A-105, paragraph (a), clause (4), the 
196.29  payment date must be on or before the funds transfer business 
196.30  day next following the date the tax is due. 
196.31     (d) (c) If the vendor required to remit by electronic funds 
196.32  transfer as provided in paragraph (c) (b) is unable due to 
196.33  reasonable cause to determine the actual sales and use tax due 
196.34  on or before the due date for payment, the vendor may remit an 
196.35  estimate of the tax owed using one of the following options: 
196.36     (1) 100 percent of the tax reported on the previous month's 
197.1   sales and use tax return; 
197.2      (2) 100 percent of the tax reported on the sales and use 
197.3   tax return for the same month in the previous calendar year; or 
197.4      (3) 95 percent of the actual tax due. 
197.5      Any additional amount of tax that is not remitted on or 
197.6   before the due date for payment, must be remitted with the 
197.7   return.  If a vendor fails to remit the actual liability or does 
197.8   not remit using one of the estimate options by the due date for 
197.9   payment, the vendor must remit actual liability as provided in 
197.10  paragraph (c) (b) in all subsequent periods.  This paragraph 
197.11  does not apply to the June sales and use tax liability. 
197.12     <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
197.13  returns filed after January 1, 2002. 
197.14     Sec. 4.  Minnesota Statutes 2000, section 289A.50, 
197.15  subdivision 2a, is amended to read: 
197.16     Subd. 2a.  [REFUND OF SALES TAX TO PURCHASERS.] If a vendor 
197.17  has collected from a purchaser a tax on a transaction that is 
197.18  not subject to the tax imposed by chapter 297A, the purchaser 
197.19  may apply directly to the commissioner for a refund under this 
197.20  section if: 
197.21     (a) the purchaser is currently registered to collect and 
197.22  remit the sales and tax or to remit the use tax; and 
197.23     (b) the amount of the refund applied for exceeds $500. 
197.24     The purchaser may not file more than two applications for 
197.25  refund under this subdivision in a calendar year. 
197.26     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
197.27  following final enactment. 
197.28     Sec. 5.  Minnesota Statutes 2000, section 297A.01, 
197.29  subdivision 3, is amended to read: 
197.30     Subd. 3.  A "sale" and a "purchase" includes, but is not 
197.31  limited to, each of the following transactions: 
197.32     (a) Any transfer of title or possession, or both, of 
197.33  tangible personal property, whether absolutely or conditionally, 
197.34  and the leasing of or the granting of a license to use or 
197.35  consume tangible personal property other than manufactured homes 
197.36  used for residential purposes for a continuous period of 30 days 
198.1   or more, for a consideration in money or by exchange or barter; 
198.2      (b) The production, fabrication, printing, or processing of 
198.3   tangible personal property for a consideration for consumers who 
198.4   furnish either directly or indirectly the materials used in the 
198.5   production, fabrication, printing, or processing; 
198.6      (c) The furnishing, preparing, or serving for a 
198.7   consideration of food, meals, or drinks.  "Sale" or "purchase" 
198.8   does not include: 
198.9      (1) meals or drinks served to patients, inmates, or persons 
198.10  residing at hospitals, sanitariums, nursing homes, senior 
198.11  citizens homes, and correctional, detention, and detoxification 
198.12  facilities; 
198.13     (2) meals or drinks purchased for and served exclusively to 
198.14  individuals who are 60 years of age or over and their spouses or 
198.15  to the handicapped and their spouses by governmental agencies, 
198.16  nonprofit organizations, agencies, or churches or pursuant to 
198.17  any program funded in whole or part through 42 USCA sections 
198.18  3001 through 3045, wherever delivered, prepared or served; or 
198.19     (3) meals and lunches served at public and private schools, 
198.20  universities, or colleges. 
198.21  Notwithstanding section 297A.25, subdivision 2, taxable food or 
198.22  meals include, but are not limited to, the following:  
198.23     (i) food or drinks sold by the retailer for immediate 
198.24  consumption on the retailer's premises.  Food and drinks sold 
198.25  within a building or grounds which require an admission charge 
198.26  for entrance are presumed to be sold for consumption on the 
198.27  premises; 
198.28     (ii) food or drinks prepared by the retailer for immediate 
198.29  consumption either on or off the retailer's premises.  For 
198.30  purposes of this subdivision, "food or drinks prepared for 
198.31  immediate consumption" includes any food product upon which an 
198.32  act of preparation including, but not limited to, cooking, 
198.33  mixing, sandwich making, blending, heating, or pouring has been 
198.34  performed by the retailer so the food product may be immediately 
198.35  consumed by the purchaser; 
198.36     (iii) ice cream, ice milk, frozen yogurt products, or 
199.1   frozen novelties sold in single or individual servings including 
199.2   cones, sundaes, and snow cones.  For purposes of this 
199.3   subdivision, "single or individual servings" does not include 
199.4   products when sold in bulk containers or bulk packaging; 
199.5      (iv) soft drinks and other beverages including all 
199.6   carbonated and noncarbonated beverages or drinks sold in liquid 
199.7   form except nonalcoholic beverages or drinks which contain milk 
199.8   or milk products, nonalcoholic beverages or drinks containing 15 
199.9   or more percent fruit juice, and noncarbonated and 
199.10  noneffervescent bottled water sold in individual containers of 
199.11  one-half gallon or more in size; 
199.12     (v) gum, candy, and candy products, except when sold for 
199.13  fundraising purposes by a nonprofit organization that provides 
199.14  educational and social activities primarily for young people 18 
199.15  years of age and under; 
199.16     (vi) ice; 
199.17     (vii) all food sold from vending machines; 
199.18     (viii) all food for immediate consumption sold from 
199.19  concession stands and vehicles; 
199.20     (ix) party trays; 
199.21     (x) all meals and single servings of packaged snack food 
199.22  sold in restaurants and bars; and 
199.23     (xi) bakery products: 
199.24     (A) prepared by the retailer for consumption on the 
199.25  retailer's premises; 
199.26     (B) sold at a place that charges admission; 
199.27     (C) sold from vending machines; or 
199.28     (D) sold in single or individual servings from concession 
199.29  stands, vehicles, bars, and restaurants.  For purposes of this 
199.30  subdivision, "single or individual servings" does not include 
199.31  products when sold in bulk containers or bulk packaging.  
199.32     For purposes of this subdivision, "premises" means the 
199.33  total space and facilities, including buildings, grounds, and 
199.34  parking lots that are made available or that are available for 
199.35  use by the retailer or customer for the purpose of sale or 
199.36  consumption of prepared food and drinks.  The premises of a 
200.1   caterer is the place where the catered food or drinks are 
200.2   served; 
200.3      (d) The granting of the privilege of admission to places of 
200.4   amusement, recreational areas, or athletic events, except a 
200.5   world championship football game sponsored by the national 
200.6   football league, and the privilege of having access to and the 
200.7   use of amusement devices, tanning facilities, reducing salons, 
200.8   steam baths, turkish baths, health clubs, and spas or athletic 
200.9   facilities; 
200.10     (e) The furnishing for a consideration of lodging and 
200.11  related services by a hotel, rooming house, tourist court, motel 
200.12  or trailer camp and of the granting of any similar license to 
200.13  use real property other than the renting or leasing thereof for 
200.14  a continuous period of 30 days or more; 
200.15     (f) The furnishing for a consideration of electricity, gas, 
200.16  water, or steam for use or consumption within this state, or 
200.17  local exchange telephone service, intrastate toll service, and 
200.18  interstate toll service, if that service originates from and is 
200.19  charged to a telephone located in this state.  Telephone service 
200.20  does not include services purchased with prepaid telephone 
200.21  calling cards.  Telephone service includes paging services and 
200.22  private communication service, as defined in United States Code, 
200.23  title 26, section 4252(d), as amended through December 31, 1991, 
200.24  except for private communication service purchased by an agent 
200.25  acting on behalf of the state lottery.  The furnishing for a 
200.26  consideration of access to telephone services by a hotel to its 
200.27  guests is a sale under this clause.  Sales by municipal 
200.28  corporations in a proprietary capacity are included in the 
200.29  provisions of this clause.  The furnishing of water and sewer 
200.30  services for residential use shall not be considered a sale.  
200.31  The sale of natural gas to be used as a fuel in vehicles 
200.32  propelled by natural gas shall not be considered a sale for the 
200.33  purposes of this section; 
200.34     (g) The furnishing for a consideration of cable television 
200.35  services, including charges for basic service, charges for 
200.36  premium service, and any other charges for any other 
201.1   pay-per-view, monthly, or similar television services; 
201.2      (h) The furnishing for a consideration of parking services, 
201.3   whether on a contractual, hourly, or other periodic basis, 
201.4   except for parking at a meter; 
201.5      (i) The furnishing for a consideration of services listed 
201.6   in this paragraph: 
201.7      (i) laundry and dry cleaning services including cleaning, 
201.8   pressing, repairing, altering, and storing clothes, linen 
201.9   services and supply, cleaning and blocking hats, and carpet, 
201.10  drapery, upholstery, and industrial cleaning.  Laundry and dry 
201.11  cleaning services do not include services provided by coin 
201.12  operated facilities operated by the customer; 
201.13     (ii) motor vehicle washing, waxing, and cleaning services, 
201.14  including services provided by coin-operated facilities operated 
201.15  by the customer, and rustproofing, undercoating, and towing of 
201.16  motor vehicles; 
201.17     (iii) building and residential cleaning, maintenance, and 
201.18  disinfecting and exterminating services; 
201.19     (iv) detective services, security services, burglar, fire 
201.20  alarm, and armored car services; but not including services 
201.21  performed within the jurisdiction they serve by off-duty 
201.22  licensed peace officers as defined in section 626.84, 
201.23  subdivision 1, or services provided by a nonprofit organization 
201.24  for monitoring and electronic surveillance of persons placed on 
201.25  in-home detention pursuant to court order or under the direction 
201.26  of the Minnesota department of corrections; 
201.27     (v) pet grooming services; 
201.28     (vi) lawn care, fertilizing, mowing, spraying and sprigging 
201.29  services; garden planting and maintenance; tree, bush, and shrub 
201.30  pruning, bracing, spraying, and surgery; indoor plant care; 
201.31  tree, bush, shrub and stump removal; and tree trimming for 
201.32  public utility lines.  Services performed under a construction 
201.33  contract for the installation of shrubbery, plants, sod, trees, 
201.34  bushes, and similar items are not taxable; 
201.35     (vii) massages, except when provided by a licensed health 
201.36  care facility or professional or upon written referral from a 
202.1   licensed health care facility or professional for treatment of 
202.2   illness, injury, or disease; and 
202.3      (viii) the furnishing for consideration of lodging, board 
202.4   and care services for animals in kennels and other similar 
202.5   arrangements, but excluding veterinary and horse boarding 
202.6   services. 
202.7   The services listed in this paragraph are taxable under section 
202.8   297A.02 if the service is performed wholly within Minnesota or 
202.9   if the service is performed partly within and partly without 
202.10  Minnesota and the greater proportion of the service is performed 
202.11  in Minnesota, based on the cost of performance.  In applying the 
202.12  provisions of this chapter, the terms "tangible personal 
202.13  property" and "sales at retail" include taxable services and the 
202.14  provision of taxable services, unless specifically provided 
202.15  otherwise.  Services performed by an employee for an employer 
202.16  are not taxable under this paragraph.  Services performed by a 
202.17  partnership or association for another partnership or 
202.18  association are not taxable under this paragraph if one of the 
202.19  entities owns or controls more than 80 percent of the voting 
202.20  power of the equity interest in the other entity.  Services 
202.21  performed between members of an affiliated group of corporations 
202.22  are not taxable.  For purposes of this section, "affiliated 
202.23  group of corporations" includes those entities that would be 
202.24  classified as a member of an affiliated group under United 
202.25  States Code, title 26, section 1504, as amended through December 
202.26  31, 1987, and who are eligible to file a consolidated tax return 
202.27  for federal income tax purposes; 
202.28     (j) A "sale" and a "purchase" includes the transfer of 
202.29  computer software, meaning information and directions that 
202.30  dictate the function performed by data processing equipment.  A 
202.31  "sale" and a "purchase" does not include the design, 
202.32  development, writing, translation, fabrication, lease, or 
202.33  transfer for a consideration of title or possession of a custom 
202.34  computer program; and 
202.35     (k) The granting of membership in a club, association, or 
202.36  other organization if: 
203.1      (1) the club, association, or other organization makes 
203.2   available for the use of its members sports and athletic 
203.3   facilities (without regard to whether a separate charge is 
203.4   assessed for use of the facilities); and 
203.5      (2) use of the sports and athletic facilities is not made 
203.6   available to the general public on the same basis as it is made 
203.7   available to members.  
203.8   Granting of membership includes both one-time initiation fees 
203.9   and periodic membership dues.  Sports and athletic facilities 
203.10  include golf courses, tennis, racquetball, handball and squash 
203.11  courts, basketball and volleyball facilities, running tracks, 
203.12  exercise equipment, swimming pools, and other similar athletic 
203.13  or sports facilities.  The provisions of this paragraph do not 
203.14  apply to camps or other recreation facilities owned and operated 
203.15  by an exempt organization under section 501(c)(3) of the 
203.16  Internal Revenue Code of 1986, as amended through December 31, 
203.17  1992, for educational and social activities for young people 
203.18  primarily age 18 and under.  
203.19     <b>[EFFECTIVE DATE; INSTRUCTION TO REVISOR.]</b> This section is 
203.20  effective the day following final enactment.  In the next 
203.21  edition of Minnesota Statutes, the revisor of statutes shall 
203.22  codify the amendment in this section in Minnesota Statutes, 
203.23  section 297A.61, subdivision 3. 
203.24     Sec. 6.  Minnesota Statutes 2000, section 297A.07, 
203.25  subdivision 3, is amended to read: 
203.26     Subd. 3.  [NEW PERMITS AFTER REVOCATION.] The commissioner 
203.27  shall not issue a new permit or reinstate a revoked permit after 
203.28  revocation unless the taxpayer applies for a permit and provides 
203.29  reasonable evidence of intention to comply with the sales and 
203.30  use tax laws and rules.  The commissioner may require the 
203.31  applicant to supply security, in addition to that authorized by 
203.32  section 297A.28, as is reasonably necessary to insure compliance 
203.33  with the sales and use tax laws and rules.  If the commissioner 
203.34  issues or reinstates a permit not in conformance with the 
203.35  requirements of this subdivision or applicable rules, the 
203.36  commissioner may cancel the permit upon notice to the permit 
204.1   holder.  The notice must be served by first class and certified 
204.2   mail at the permit holder's last known address.  The 
204.3   cancellation shall be effective immediately, subject to the 
204.4   right of the permit holder to show that the permit was issued in 
204.5   conformance with the requirements of this subdivision and 
204.6   applicable rules.  Upon such showing, the permit must be 
204.7   reissued. 
204.8      If a taxpayer has had a permit or permits revoked three 
204.9   times in a five-year period, the commissioner shall not issue a 
204.10  new permit or reinstate the revoked permit until 24 months have 
204.11  elapsed after revocation and the taxpayer has satisfied the 
204.12  conditions for reinstatement of a revoked permit or issuance of 
204.13  a new permit imposed by this section and rules adopted hereunder.
204.14     For purposes of this subdivision, the term "taxpayer" means 
204.15  an individual, if a revoked permit was issued to or in the name 
204.16  of an individual, or a corporation or partnership, if a revoked 
204.17  permit was issued to or in the name of a corporation or 
204.18  partnership.  Taxpayer also means an officer of a corporation, a 
204.19  member of a partnership, or an individual who is liable for 
204.20  delinquent sales taxes, either for the entity for which the new 
204.21  or reinstated permit is at issue, or for another entity for 
204.22  which a permit was previously revoked, or personally as a permit 
204.23  holder. 
204.24     <b>[EFFECTIVE DATE; INSTRUCTION TO REVISOR.]</b> (a) This section 
204.25  is effective the day following final enactment.  
204.26     (b) In the next edition of Minnesota Statutes, the revisor 
204.27  shall codify the amendments to this section in Minnesota 
204.28  Statutes, section 297A.86, subdivision 2. 
204.29     Sec. 7.  Minnesota Statutes 2000, section 297A.25, 
204.30  subdivision 3, is amended to read: 
204.31     Subd. 3.  [MEDICINES; MEDICAL DEVICES.] The gross receipts 
204.32  from the sale of and storage, use, or consumption of prescribed 
204.33  drugs, prescribed medicine and insulin, intended for use, 
204.34  internal or external, in the cure, mitigation, treatment or 
204.35  prevention of illness or disease in human beings are exempt, 
204.36  together with prescription glasses, fever thermometers, 
205.1   therapeutic, and prosthetic devices.  "Prescribed drugs" or 
205.2   "prescribed medicine" includes over-the-counter drugs or 
205.3   medicine prescribed by a licensed physician health care 
205.4   professional.  "Therapeutic devices" includes reusable finger 
205.5   pricking devices for the extraction of blood, blood glucose 
205.6   monitoring machines, and other diagnostic agents used in 
205.7   diagnosing, monitoring, or treating diabetes.  Nonprescription 
205.8   analgesics consisting principally (determined by the weight of 
205.9   all ingredients) of acetaminophen, acetylsalicylic acid, 
205.10  ibuprofen, ketoprofen, naproxen, and other nonprescription 
205.11  analgesics that are approved by the United States Food and Drug 
205.12  Administration for internal use by human beings, or a 
205.13  combination thereof, are exempt. 
205.14     Medical supplies purchased by a licensed health care 
205.15  facility or licensed health care professional to provide medical 
205.16  treatment to residents or patients are exempt.  The exemption 
205.17  does not apply to medical equipment or components of medical 
205.18  equipment, laboratory supplies, radiological supplies, and other 
205.19  items used in providing medical services.  For purposes of this 
205.20  subdivision, "medical supplies" means adhesive and nonadhesive 
205.21  bandages, gauze pads and strips, cotton applicators, 
205.22  antiseptics, nonprescription drugs, eye solution, and other 
205.23  similar supplies used directly on the resident or patient in 
205.24  providing medical services. 
205.25     <b>[EFFECTIVE DATE; INSTRUCTION TO REVISOR.]</b> This section is 
205.26  effective the day following final enactment.  In the next 
205.27  edition of Minnesota Statutes, the revisor of statutes shall 
205.28  codify the amendment in this section in Minnesota Statutes, 
205.29  section 297A.67, subdivision 6. 
205.30     Sec. 8.  Minnesota Statutes 2000, section 297A.25, 
205.31  subdivision 11, is amended to read: 
205.32     Subd. 11.  [SALES TO GOVERNMENT.] The gross receipts from 
205.33  all sales, including sales in which title is retained by a 
205.34  seller or a vendor or is assigned to a third party under an 
205.35  installment sale or lease purchase agreement under section 
205.36  465.71, of tangible personal property to, and all storage, use 
206.1   or consumption of such property by, the United States and its 
206.2   agencies and instrumentalities, the University of Minnesota, 
206.3   state universities, community colleges, technical colleges, 
206.4   state academies, the Perpich center for arts education, an 
206.5   instrumentality of a political subdivision that is accredited as 
206.6   an optional/special function school by the North Central 
206.7   Association of Colleges and Schools, school districts, public 
206.8   libraries, public library systems, multicounty, multitype 
206.9   library systems as defined in section 134.001, county law 
206.10  libraries under chapter 134A, state agency libraries, the state 
206.11  library under section 480.09, and the legislative reference 
206.12  library are exempt. 
206.13     As used in this subdivision, "school districts" means 
206.14  public school entities and districts of every kind and nature 
206.15  organized under the laws of the state of Minnesota, including, 
206.16  without limitation, school districts, intermediate school 
206.17  districts, education districts, service cooperatives, secondary 
206.18  vocational cooperative centers, special education cooperatives, 
206.19  joint purchasing cooperatives, telecommunication cooperatives, 
206.20  regional management information centers, and any instrumentality 
206.21  of a school district, as defined in section 471.59. 
206.22     Sales exempted by this subdivision include sales under 
206.23  section 297A.01, subdivision 3, paragraph (f).  
206.24     Sales to hospitals and nursing homes owned and operated by 
206.25  political subdivisions of the state of tangible personal 
206.26  property and taxable services used at or by the hospitals and 
206.27  nursing homes are exempt under this subdivision.  
206.28     Sales of supplies and equipment used in the operation of an 
206.29  ambulance service owned and operated by a political subdivision 
206.30  of the state are exempt under this subdivision provided that the 
206.31  supplies and equipment are used in the course of providing 
206.32  medical care.  Sales to a political subdivision of repair and 
206.33  replacement parts for emergency rescue vehicles and fire trucks 
206.34  and apparatus are exempt under this subdivision.  
206.35     Sales to a political subdivision of machinery and 
206.36  equipment, except for motor vehicles, used directly for mixed 
207.1   municipal solid waste management services at a solid waste 
207.2   disposal facility as defined in section 115A.03, subdivision 10, 
207.3   are exempt under this subdivision.  
207.4      Sales to political subdivisions of chore and homemaking 
207.5   services to be provided to elderly or disabled individuals are 
207.6   exempt. 
207.7      Sales to a town of gravel and of machinery, equipment, and 
207.8   accessories, except motor vehicles, used exclusively for road 
207.9   and bridge maintenance, and leases of motor vehicles exempt from 
207.10  tax under section 297B.03, clause (10), are exempt. 
207.11     Sales of telephone services to the department of 
207.12  administration that are used to provide telecommunications 
207.13  services through the intertechnologies revolving fund are exempt 
207.14  under this subdivision. 
207.15     This exemption shall not apply to building, construction or 
207.16  reconstruction materials purchased by a contractor or a 
207.17  subcontractor as a part of a lump-sum contract or similar type 
207.18  of contract with a guaranteed maximum price covering both labor 
207.19  and materials for use in the construction, alteration, or repair 
207.20  of a building or facility.  This exemption does not apply to 
207.21  construction materials purchased by tax exempt entities or their 
207.22  contractors to be used in constructing buildings or facilities 
207.23  which will not be used principally by the tax exempt entities. 
207.24     This exemption does not apply to the leasing of a motor 
207.25  vehicle as defined in section 297B.01, subdivision 5, except for 
207.26  leases entered into by the United States or its agencies or 
207.27  instrumentalities. 
207.28     The tax imposed on sales to political subdivisions of the 
207.29  state under this section applies to all political subdivisions 
207.30  other than those explicitly exempted under this subdivision, 
207.31  notwithstanding section 115A.69, subdivision 6, 116A.25, 
207.32  360.035, 458A.09, 458A.30, 458D.23, 469.101, subdivision 2, 
207.33  469.127, 473.448, 473.545, or 473.608 or any other law to the 
207.34  contrary enacted before 1992. 
207.35     Sales exempted by this subdivision include sales made to 
207.36  other states or political subdivisions of other states, if the 
208.1   sale would be exempt from taxation if it occurred in that state, 
208.2   but do not include sales under section 297A.01, subdivision 3, 
208.3   paragraphs (c) and (e). 
208.4      <b>[EFFECTIVE DATE; INSTRUCTION TO REVISOR.]</b> This section is 
208.5   effective the day following final enactment.  In the next 
208.6   edition of Minnesota Statutes, the revisor of statutes shall 
208.7   codify the amendment in this section in Minnesota Statutes, 
208.8   section 297A.70, section 1. 
208.9      Sec. 9.  Minnesota Statutes 2000, section 297A.25, 
208.10  subdivision 28, is amended to read: 
208.11     Subd. 28.  [WASTE PROCESSING EQUIPMENT.] The gross receipts 
208.12  from the sale of and storage, use, or consumption of equipment 
208.13  used for processing solid or hazardous waste at a resource 
208.14  recovery facility, as defined in section 115A.03, subdivision 
208.15  28, are exempt, including pollution control equipment at a 
208.16  resource recovery facility that burns refuse-derived fuel or 
208.17  mixed municipal solid waste as its primary fuel.  An electric 
208.18  generation facility that processes and utilizes waste tires as 
208.19  its primary fuel is a resource recovery facility for the 
208.20  purposes of this section.  
208.21     <b>[EFFECTIVE DATE; INSTRUCTION TO REVISOR.]</b> This section is 
208.22  effective for purchases and sales made on or after June 1, 2001. 
208.23  In the next edition of Minnesota Statutes, the revisor of 
208.24  statutes shall codify the amendment to this section in section 
208.25  297A.68, subdivision 24. 
208.26     Sec. 10.  Minnesota Statutes 2000, section 297A.61, 
208.27  subdivision 3, is amended to read: 
208.28     Subd. 3.  [SALE AND PURCHASE.] (a) "Sale" and "purchase" 
208.29  include, but are not limited to, each of the transactions listed 
208.30  in this subdivision. 
208.31     (b) Sale and purchase include any transfer of title or 
208.32  possession, or both, of tangible personal property, whether 
208.33  absolutely or conditionally, and the leasing of or the granting 
208.34  of a license to use or consume, for a consideration, tangible 
208.35  personal property, other than a manufactured home used for 
208.36  residential purposes for a continuous period of 30 days or more. 
209.1      (c) Sale and purchase include the production, fabrication, 
209.2   printing, or processing of tangible personal property for a 
209.3   consideration for consumers who furnish either directly or 
209.4   indirectly the materials used in the production, fabrication, 
209.5   printing, or processing. 
209.6      (d) Sale and purchase include the furnishing, preparing, or 
209.7   serving for a consideration of food or drinks.  Notwithstanding 
209.8   section 297A.67, subdivision 2, taxable food or drinks include, 
209.9   but are not limited to, the following: 
209.10     (1) food or drinks sold by the retailer for immediate 
209.11  consumption on the retailer's premises.  Food and drinks sold 
209.12  within a building or grounds that require an admission charge 
209.13  for entrance are presumed to be sold for consumption on the 
209.14  premises; 
209.15     (2) food or drinks prepared by the retailer for immediate 
209.16  consumption either on or off the retailer's premises.  For 
209.17  purposes of this subdivision, "food or drinks prepared for 
209.18  immediate consumption" means any food product upon which an act 
209.19  of preparation including, but not limited to, cooking, mixing, 
209.20  sandwich making, blending, heating, or pouring has been 
209.21  performed by the retailer so the food product may be immediately 
209.22  consumed by the purchaser; 
209.23     (3) ice cream, ice milk, frozen yogurt products, or frozen 
209.24  novelties sold in single or individual servings including, but 
209.25  not limited to, cones, sundaes, and snow cones; 
209.26     (4) soft drinks and other beverages, including all 
209.27  carbonated and noncarbonated beverages or drinks sold in liquid 
209.28  form, but not including beverages or drinks which contain milk 
209.29  or milk products, beverages or drinks containing 15 or more 
209.30  percent fruit juice, and noncarbonated and noneffervescent 
209.31  bottled water sold in individual containers of one-half gallon 
209.32  or more in size; 
209.33     (5) gum, candy, and candy products; 
209.34     (6) ice; 
209.35     (7) all food sold from vending machines; 
209.36     (8) all food for immediate consumption sold from concession 
210.1   stands and vehicles; 
210.2      (9) party trays; 
210.3      (10) all meals and single servings of packaged snack food 
210.4   sold in restaurants and bars; and 
210.5      (11) bakery products that are: 
210.6      (i) prepared by the retailer for consumption on the 
210.7   retailer's premises; 
210.8      (ii) sold at a place that charges admission; 
210.9      (iii) sold from vending machines; or 
210.10     (iv) sold in single or individual servings from concession 
210.11  stands, vehicles, bars, and restaurants.  
210.12     For purposes of this paragraph, "single or individual 
210.13  servings" does not include products when sold in bulk containers 
210.14  or bulk packaging.  
210.15     For purposes of this paragraph, "premises" means the total 
210.16  space and facilities, including buildings, grounds, and parking 
210.17  lots that are made available or that are available for use by 
210.18  the retailer or customer for the purpose of sale or consumption 
210.19  of prepared food and drinks.  The premises of a caterer is the 
210.20  place where the catered food or drinks are served. 
210.21     (e) A sale and a purchase includes the furnishing for a 
210.22  consideration of electricity, gas, water, or steam for use or 
210.23  consumption within this state or local exchange telephone 
210.24  service, intrastate toll service, and interstate toll service, 
210.25  if that service originates from and is charged to a telephone 
210.26  located in this state.  Telephone service includes (1) paging 
210.27  services, and (2) private communication service, as defined in 
210.28  United States Code, title 26, section 4252(d), except for 
210.29  private communication service purchased by an agent acting on 
210.30  behalf of the state lottery.  Telephone service does not include 
210.31  services purchased with a prepaid telephone calling card.  The 
210.32  furnishing for a consideration of access to telephone services 
210.33  by a hotel to its guests is a sale.  The furnishing for a 
210.34  consideration of items listed in this paragraph by a municipal 
210.35  corporation is a sale. 
210.36     (f) A sale and a purchase includes the transfer for a 
211.1   consideration of computer software.  
211.2      (g) A sale and a purchase includes the furnishing for a 
211.3   consideration of taxable services as defined in subdivision 16. 
211.4      (h) A sale and a purchase includes the furnishing for a 
211.5   consideration of tangible personal property or taxable services 
211.6   by the United States or any of its agencies or 
211.7   instrumentalities, or the state of Minnesota, its agencies, 
211.8   instrumentalities, or political subdivisions. 
211.9      (i) A sale and a purchase includes the furnishing for a 
211.10  consideration of telecommunications services, including cable 
211.11  television services and direct satellite services.  
211.12  Telecommunications services are taxed to the extent allowed 
211.13  under federal law if those services: 
211.14     (1) either (i) originate and terminate in this state; or 
211.15  (ii) originate in this state and terminate outside the state and 
211.16  the service is charged to a telephone number customer located in 
211.17  this state or to the account of any transmission instrument in 
211.18  this state; or (iii) originate outside this state and terminate 
211.19  in this state and the service is charged to a telephone number 
211.20  customer located in this state or to the account of any 
211.21  transmission instrument in this state; or 
211.22     (2) are rendered by providing a private communications 
211.23  service for which the customer has one or more locations within 
211.24  Minnesota connected to the service and the service is charged to 
211.25  a telephone number customer located in this state or to the 
211.26  account of any transmission instrument in this state. 
211.27     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
211.28  purchases made after June 30, 2001. 
211.29     Sec. 11.  Minnesota Statutes 2000, section 297A.61, 
211.30  subdivision 12, is amended to read: 
211.31     Subd. 12.  [FARM MACHINERY.] (a) "Farm machinery" means new 
211.32  or used machinery, equipment, implements, accessories, and 
211.33  contrivances used directly and principally in the production for 
211.34  sale, but not including the processing, of livestock, dairy 
211.35  animals, dairy products, poultry and poultry products, fruits, 
211.36  vegetables, trees and shrubs, nursery stock, forage, grains, and 
212.1   bees and apiary products.  
212.2      (b) Farm machinery includes: 
212.3      (1) machinery for the preparation, seeding, or cultivation 
212.4   of soil for growing agricultural crops and sod, for the 
212.5   harvesting and threshing of agricultural products, or for the 
212.6   harvesting or mowing of sod; 
212.7      (2) barn cleaners, milking systems, grain dryers, automatic 
212.8   feeding systems including stationary feed bunks, and similar 
212.9   installations, whether or not the equipment is installed by the 
212.10  seller and becomes part of the real property; 
212.11     (3) irrigation equipment sold for exclusively agricultural 
212.12  use, including pumps, pipe fittings, valves, sprinklers, and 
212.13  other equipment necessary to the operation of an irrigation 
212.14  system when sold as part of an irrigation system, whether or not 
212.15  the equipment is installed by the seller and becomes part of the 
212.16  real property; 
212.17     (4) logging equipment, including chain saws used for 
212.18  commercial logging; 
212.19     (5) fencing used for the containment of farmed cervidae, as 
212.20  defined in section 17.451, subdivision 2; 
212.21     (6) primary and backup generator units used to generate 
212.22  electricity for the purpose of operating farm machinery, as 
212.23  defined in this subdivision, or providing light or space heating 
212.24  necessary for the production of livestock, dairy animals, dairy 
212.25  products, or poultry and poultry products; 
212.26     (7) aquaculture production equipment as defined in 
212.27  subdivision 13; and 
212.28     (8) equipment used for maple syrup harvesting.  
212.29     (c) Farm machinery does not include: 
212.30     (1) repair or replacement parts; 
212.31     (2) tools, shop equipment, grain bins, feed bunks, fencing 
212.32  material except fencing material covered by paragraph (b), 
212.33  clause (5), communication equipment, and other farm supplies; 
212.34     (3) motor vehicles taxed under chapter 297B; 
212.35     (4) snowmobiles or snow blowers; or 
212.36     (5) lawn mowers except those used in the production of sod 
213.1   for sale, or garden-type tractors or garden tillers. 
213.2      <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
213.3   purchases made after June 30, 2001. 
213.4      Sec. 12.  Minnesota Statutes 2000, section 297A.61, 
213.5   subdivision 16, is amended to read: 
213.6      Subd. 16.  [TAXABLE SERVICES.] (a) "Taxable services" means 
213.7   the services listed in this subdivision and other services 
213.8   listed in subdivision 3. 
213.9      (b) Taxable services includes the granting of the privilege 
213.10  of admission to places of amusement, recreational areas, or 
213.11  athletic events, and the making available of amusement devices, 
213.12  tanning facilities, reducing salons, steam baths, turkish baths, 
213.13  health clubs, and spas or athletic facilities. 
213.14     (c) Taxable services includes the furnishing of lodging and 
213.15  related services by a hotel, rooming house, resort, campground, 
213.16  motel, or trailer camp and the granting of any similar license 
213.17  to use real property other than the renting or leasing thereof 
213.18  for a continuous period of 30 days or more. 
213.19     (d) Taxable services includes the furnishing of cable 
213.20  television services or similar television services, including, 
213.21  but not limited to, charges for basic, premium, pay-per-view, 
213.22  and any other similar service. 
213.23     (e) Taxable services includes the furnishing of parking 
213.24  services, whether on a contractual, hourly, or other periodic 
213.25  basis, except for parking at a meter. 
213.26     (f) (e) Taxable services includes the granting of 
213.27  membership in a club, association, or other organization if: 
213.28     (1) the club, association, or other organization makes 
213.29  available for the use of its members sports and athletic 
213.30  facilities, without regard to whether a separate charge is 
213.31  assessed for use of the facilities; and 
213.32     (2) use of the sports and athletic facility is not made 
213.33  available to the general public on the same basis as it is made 
213.34  available to members.  
213.35  Granting of membership means both one-time initiation fees and 
213.36  periodic membership dues.  Sports and athletic facilities 
214.1   include golf courses; tennis, racquetball, handball, and squash 
214.2   courts; basketball and volleyball facilities; running tracks; 
214.3   exercise equipment; swimming pools; and other similar athletic 
214.4   or sports facilities. 
214.5      (g) (f) Taxable services includes the furnishing of the 
214.6   following services as provided in this paragraph: 
214.7      (1) laundry and dry cleaning services including cleaning, 
214.8   pressing, repairing, altering, and storing clothes, linen 
214.9   services and supply, cleaning and blocking hats, and carpet, 
214.10  drapery, upholstery, and industrial cleaning.  Laundry and dry 
214.11  cleaning services do not include services provided by coin 
214.12  operated facilities operated by the customer; 
214.13     (2) motor vehicle washing, waxing, and cleaning services, 
214.14  including services provided by coin operated facilities operated 
214.15  by the customer, and rustproofing, undercoating, and towing of 
214.16  motor vehicles; 
214.17     (3) building and residential cleaning, maintenance, and 
214.18  disinfecting and exterminating services; 
214.19     (4) detective, security, burglar, fire alarm, and armored 
214.20  car services; but not including services performed within the 
214.21  jurisdiction they serve by off-duty licensed peace officers as 
214.22  defined in section 626.84, subdivision 1, or services provided 
214.23  by a nonprofit organization for monitoring and electronic 
214.24  surveillance of persons placed on in-home detention pursuant to 
214.25  court order or under the direction of the Minnesota department 
214.26  of corrections; 
214.27     (5) pet grooming services; 
214.28     (6) lawn care, fertilizing, mowing, spraying and sprigging 
214.29  services; garden planting and maintenance; tree, bush, and shrub 
214.30  pruning, bracing, spraying, and surgery; indoor plant care; 
214.31  tree, bush, shrub, and stump removal; and tree trimming for 
214.32  public utility lines.  Services performed under a construction 
214.33  contract for the installation of shrubbery, plants, sod, trees, 
214.34  bushes, and similar items are not taxable; 
214.35     (7) massages, except when provided by a licensed health 
214.36  care facility or professional or upon written referral from a 
215.1   licensed health care facility or professional for treatment of 
215.2   illness, injury, or disease; and 
215.3      (8) the furnishing of lodging, board, and care services for 
215.4   animals in kennels and other similar arrangements, but excluding 
215.5   veterinary and horse boarding services. 
215.6      The services listed in this paragraph are taxable under 
215.7   section 297A.62 if the service is performed wholly within 
215.8   Minnesota or if the service is performed partly within and 
215.9   partly outside Minnesota and the greater proportion of the 
215.10  service is performed in Minnesota, based on the cost of 
215.11  performance.  In applying the provisions of this chapter, the 
215.12  terms "tangible personal property" and "sales at retail" include 
215.13  taxable services and the provision of taxable services, unless 
215.14  specifically provided otherwise.  Services performed by an 
215.15  employee for an employer are not taxable.  Services performed by 
215.16  a partnership or association for another partnership or 
215.17  association are not taxable if one of the entities owns or 
215.18  controls more than 80 percent of the voting power of the equity 
215.19  interest in the other entity.  Services performed between 
215.20  members of an affiliated group of corporations are not taxable.  
215.21  For purposes of this section, "affiliated group of corporations" 
215.22  includes those entities that would be classified as members of 
215.23  an affiliated group under United States Code, title 26, section 
215.24  1504, and that are eligible to file a consolidated tax return 
215.25  for federal income tax purposes. 
215.26     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
215.27  purchases made after June 30, 2001. 
215.28     Sec. 13.  Minnesota Statutes 2000, section 297A.61, is 
215.29  amended by adding a subdivision to read: 
215.30     Subd. 24.  [TELECOMMUNICATIONS SERVICES.] (a) 
215.31  "Telecommunications services" means the transmission, 
215.32  conveyance, or routing of voice, data, audio, video, or any 
215.33  other information or signals to a point, or between or among 
215.34  points, by or through any electronic, satellite, optical, 
215.35  microwave, or other medium or method now in existence or 
215.36  hereafter devised, regardless of the protocol used for such 
216.1   transmission, conveyance, or routing.  
216.2      (b) Telecommunications services includes the furnishing for 
216.3   consideration of access to telephone services by a hotel to its 
216.4   guests.  
216.5      (c) Telecommunications services do not include: 
216.6      (1) services purchased with a prepaid telephone calling 
216.7   card; 
216.8      (2) private communication service purchased by an agent 
216.9   acting on behalf of the state lottery; 
216.10     (3) information services; and 
216.11     (4) purchases of telecommunications when the purchaser uses 
216.12  the purchased services as a component part of or integrates such 
216.13  service into another telecommunications service that is sold by 
216.14  the purchaser in the normal course of business.  
216.15     (d) For purposes of this subdivision, "information 
216.16  services" means the offering of the capability for generating, 
216.17  acquiring, storing, transforming, processing, retrieving, 
216.18  utilizing, or making available information. 
216.19     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
216.20  purchases occurring after June 30, 2001. 
216.21     Sec. 14.  Minnesota Statutes 2000, section 297A.61, is 
216.22  amended by adding a subdivision to read: 
216.23     Subd. 25.  [CABLE TELEVISION SERVICE.] "Cable television 
216.24  service" means the transmission of video, audio, or other 
216.25  programming service to purchasers, and the subscriber 
216.26  interaction, if any, required for the selection or use of the 
216.27  programming service, regardless of whether the programming is 
216.28  transmitted over facilities owned or operated by the cable 
216.29  service provider or over facilities owned or operated by one or 
216.30  more dealers of communications services.  The term includes 
216.31  point-to-multipoint distribution services by which programming 
216.32  is transmitted or broadcast by microwave or other equipment 
216.33  directly to the subscriber's premises.  The term includes basic, 
216.34  extended, premium, pay-per-view, digital, and music services. 
216.35     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
216.36  purchases occurring after June 30, 2001. 
217.1      Sec. 15.  Minnesota Statutes 2000, section 297A.61, is 
217.2   amended by adding a subdivision to read: 
217.3      Subd. 26.  [PRIVATE COMMUNICATION SERVICE.] "Private 
217.4   communication service" means a communication service furnished 
217.5   to a subscriber which entitles the subscriber to:  
217.6      (1) exclusive or priority use of any communication channel 
217.7   or group of channels; 
217.8      (2) the use of an intercommunication system for the 
217.9   subscriber's stations, or regardless of whether the channel, 
217.10  group of channels, or intercommunication system may be connected 
217.11  through switching; 
217.12     (3) the switching capacity, extension lines and stations, 
217.13  or other associated services that are provided in connection 
217.14  with, and are necessary or unique to the use of, channels or 
217.15  systems described in clause (1); or 
217.16     (4) any combination of tunneling, encryption, 
217.17  authentication, and access control technologies and services 
217.18  used to carry traffic over the Internet, a managed Internet 
217.19  provider network or provider's backbone. 
217.20     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
217.21  purchases occurring after June 30, 2001. 
217.22     Sec. 16.  Minnesota Statutes 2000, section 297A.61, is 
217.23  amended by adding a subdivision to read: 
217.24     Subd. 27.  [DIRECT SATELLITE SERVICE.] "Direct satellite 
217.25  service" means programming transmitted or broadcast by satellite 
217.26  directly to the subscriber's premises without the use of ground 
217.27  receiving or distribution equipment, except at the subscriber's 
217.28  premises or in the uplink process to the satellite. 
217.29     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
217.30  purchases occurring after June 30, 2001. 
217.31     Sec. 17.  Minnesota Statutes 2000, section 297A.62, 
217.32  subdivision 3, is amended to read: 
217.33     Subd. 3.  [MANUFACTURED HOUSING AND; PARK TRAILERS; 
217.34  PREFABRICATED HOMES.] (a) For retail sales of manufactured homes 
217.35  as defined in section 327.31, subdivision 6, for residential 
217.36  uses, the sales tax under subdivision 1 is imposed on 65 percent 
218.1   of the dealer's cost of the manufactured home.  
218.2      (b) For retail sales of new or used park trailers, as 
218.3   defined in section 168.011, subdivision 8, paragraph (b), the 
218.4   sales tax under subdivision 1 is imposed on 65 percent of the 
218.5   sales price of the park trailer.  
218.6      (c) For retail sales of prefabricated homes, the sales tax 
218.7   under subdivision 1 is imposed on 65 percent of the 
218.8   manufacturer's wholesale list price of the prefabricated home 
218.9   for sales to dealers.  As used in this paragraph, a 
218.10  "prefabricated home" is a prefabricated building subject to 
218.11  Minnesota Rules, chapter 1360 or 1361, that is intended for use 
218.12  as a single-family or multifamily dwelling. 
218.13     <b>[EFFECTIVE DATE.]</b> This section is effective for sales made 
218.14  after June 30, 2001. 
218.15     Sec. 18.  Minnesota Statutes 2000, section 297A.67, 
218.16  subdivision 25, is amended to read: 
218.17     Subd. 25.  [MAINTENANCE OF CEMETERY GROUNDS.] Lawn care and 
218.18  related services used in the maintenance of cemetery grounds are 
218.19  exempt.  For purposes of this subdivision, "lawn care and 
218.20  related services" means the services listed in section 297A.61, 
218.21  subdivision 16, paragraph (g) (f), clause (6), and "cemetery" 
218.22  means a cemetery for human burial. 
218.23     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
218.24  purchases made after June 30, 2001. 
218.25     Sec. 19.  Minnesota Statutes 2000, section 297A.67, is 
218.26  amended by adding a subdivision to read: 
218.27     Subd. 26.  [AMBULANCE SUPPLIES, PARTS, AND EQUIPMENT.] The 
218.28  following sales to or use by an ambulance service licensed under 
218.29  section 144E.10 are exempt: 
218.30     (1) supplies and equipment used to provide medical care; 
218.31  and 
218.32     (2) repair and replacement parts for ambulances. 
218.33     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
218.34  purchases made after June 30, 2001. 
218.35     Sec. 20.  Minnesota Statutes 2000, section 297A.67, is 
218.36  amended by adding a subdivision to read: 
219.1      Subd. 27.  [ENERGY EFFICIENT PRODUCTS.] (a) A residential 
219.2   lighting fixture or a compact fluorescent bulb is exempt if it 
219.3   has an energy star label. 
219.4      (b) The following products are exempt if they have an 
219.5   energyguide label that indicates that the product meets or 
219.6   exceeds the standards listed below: 
219.7      (1) an electric heat pump hot water heater with an energy 
219.8   factor of at least 1.9; 
219.9      (2) a natural gas water heater with an energy factor of at 
219.10  least 0.62; 
219.11     (3) a window air conditioner with an energy efficiency 
219.12  rating greater than 11.0; 
219.13     (4) a clothes washer that uses less than 250 kilowatt-hours 
219.14  per year or any horizontal axis washer; and 
219.15     (5) a central air conditioner with a seasonal energy 
219.16  efficiency rating greater than 14.0. 
219.17     (c) For purposes of this subdivision, "energy star label" 
219.18  means the label granted to certain products that meet United 
219.19  States Environmental Protection Agency and United States 
219.20  Department of Energy criteria for energy efficiency.  For 
219.21  purposes of this subdivision, "energyguide label" means the 
219.22  label that the United State Federal Trade Commissioner requires 
219.23  manufacturers to apply to certain appliances under United States 
219.24  Code, title 16, part 305. 
219.25     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
219.26  purchases made after June 30, 2001, and before January 1, 2005. 
219.27     Sec. 21.  Minnesota Statutes 2000, section 297A.68, 
219.28  subdivision 3, is amended to read: 
219.29     Subd. 3.  [MATERIALS USED IN PROVIDING CERTAIN TAXABLE 
219.30  SERVICES.] (a) Materials stored, used, or consumed in providing 
219.31  a taxable service listed in section 297A.61, subdivision 16, 
219.32  paragraph (g) (f), intended to be sold ultimately at retail are 
219.33  exempt. 
219.34     (b) This exemption includes, but is not limited to: 
219.35     (1) chemicals, lubricants, packaging materials, seeds, 
219.36  trees, fertilizers, and herbicides, if these items are used or 
220.1   consumed in providing the taxable service; 
220.2      (2) chemicals used to treat waste generated as a result of 
220.3   providing the taxable service; 
220.4      (3) accessory tools, equipment, and other items that are 
220.5   separate detachable units used in providing the service and that 
220.6   have an ordinary useful life of less than 12 months; and 
220.7      (4) fuel, electricity, gas, and steam used or consumed in 
220.8   the production process, except that electricity, gas, or steam 
220.9   used for space heating or lighting is exempt only if it is 
220.10  necessary to produce that particular taxable service. 
220.11     (c) This exemption does not include machinery, equipment, 
220.12  implements, tools, accessories, appliances, contrivances, 
220.13  furniture, and fixtures used in providing the taxable service. 
220.14     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
220.15  purchases made after June 30, 2001. 
220.16     Sec. 22.  Minnesota Statutes 2000, section 297A.68, 
220.17  subdivision 5, is amended to read: 
220.18     Subd. 5.  [CAPITAL EQUIPMENT.] (a) Capital equipment is 
220.19  exempt.  The tax must be imposed and collected as if the rate 
220.20  under section 297A.62, subdivision 1, applied, and then refunded 
220.21  in the manner provided in section 297A.75. 
220.22     "Capital equipment" means machinery and equipment purchased 
220.23  or leased and used in this state by the purchaser or lessee 
220.24  primarily for manufacturing, fabricating, mining, or refining 
220.25  tangible personal property to be sold ultimately at retail. 
220.26     Capital equipment means machinery and equipment essential 
220.27  to the integrated production process.  Capital equipment also 
220.28  includes machinery and equipment used to electronically transmit 
220.29  results retrieved by a customer of an online computerized data 
220.30  retrieval system. 
220.31     (b) Capital equipment includes, but is not limited to: 
220.32     (1) machinery and equipment used to operate, control, or 
220.33  regulate the production equipment; 
220.34     (2) machinery and equipment used for research and 
220.35  development, design, quality control, and testing activities; 
220.36     (3) environmental control devices that are used to maintain 
221.1   conditions such as temperature, humidity, light, or air pressure 
221.2   when those conditions are essential to and are part of the 
221.3   production process; 
221.4      (4) materials and supplies used to construct and install 
221.5   machinery or equipment; 
221.6      (5) repair and replacement parts, including accessories, 
221.7   whether purchased as spare parts, repair parts, or as upgrades 
221.8   or modifications to machinery or equipment; 
221.9      (6) materials used for foundations that support machinery 
221.10  or equipment; 
221.11     (7) materials used to construct and install special purpose 
221.12  buildings used in the production process; and 
221.13     (8) ready-mixed concrete trucks in which the ready-mixed 
221.14  concrete is mixed as part of the delivery process.  
221.15     (c) Capital equipment does not include the following: 
221.16     (1) motor vehicles taxed under chapter 297B; 
221.17     (2) machinery or equipment used to receive or store raw 
221.18  materials; 
221.19     (3) building materials, except for materials included in 
221.20  paragraph (b), clauses (6) and (7); 
221.21     (4) machinery or equipment used for nonproduction purposes, 
221.22  including, but not limited to, the following:  plant security,; 
221.23  fire prevention,; first aid, and hospital stations; support 
221.24  operations or administration; pollution control; and plant 
221.25  cleaning,; disposal of scrap and waste,; plant communications 
221.26  ,; space heating, and lighting, or; and safety; 
221.27     (5) farm machinery and aquaculture production equipment as 
221.28  defined by section 297A.61, subdivisions 12 and 13; 
221.29     (6) machinery or equipment purchased and installed by a 
221.30  contractor as part of an improvement to real property; or 
221.31     (7) any other item that is not essential to the integrated 
221.32  process of manufacturing, fabricating, mining, or refining. 
221.33     (d) For purposes of this subdivision: 
221.34     (1) "Machinery" means mechanical, electronic, or electrical 
221.35  devices, including computers and computer software, that are 
221.36  purchased or constructed to be used for the activities set forth 
222.1   in paragraph (a). 
222.2      (2) "Equipment" means independent devices or tools separate 
222.3   from machinery, including computers and computer software, used 
222.4   in operating, controlling, or regulating machinery and 
222.5   equipment; and any subunit or assembly comprising a component of 
222.6   any machinery or accessory or attachment parts of machinery, 
222.7   such as tools, dies, jigs, patterns, and molds.  
222.8      (3) "Primarily" means machinery and equipment used 50 
222.9   percent or more of the time in an activity described in 
222.10  paragraph (a). 
222.11     (4) "Manufacturing" means an operation or series of 
222.12  operations where raw materials are changed in form, composition, 
222.13  or condition by machinery and equipment and which results in the 
222.14  production of a new article of tangible personal property.  For 
222.15  purposes of this subdivision, "manufacturing" includes the 
222.16  generation of electricity or steam to be sold at retail. 
222.17     (5) "Fabricating" means to make, build, create, produce, or 
222.18  assemble components or property to work in a new or different 
222.19  manner. 
222.20     (6) "Mining" means the extraction of minerals, ores, stone, 
222.21  or peat. 
222.22     (7) "Refining" means the process of converting a natural 
222.23  resource to a product, including the treatment of water to be 
222.24  sold at retail. 
222.25     (8) "Integrated production process" means a process 
222.26  beginning with the removal of raw materials from inventory 
222.27  through the completion of the product, including packaging of 
222.28  the product. 
222.29     (9) "Online data retrieval system" means a system whose 
222.30  cumulation of information is equally available and accessible to 
222.31  all its customers. 
222.32     (10) "Machinery and equipment used for pollution control" 
222.33  means machinery and equipment used solely to eliminate, prevent, 
222.34  or reduce pollution resulting from an activity described in 
222.35  paragraph (a).  
222.36     <b>[EFFECTIVE DATE.]</b> This section is effective for purchases 
223.1   made after June 30, 2001. 
223.2      Sec. 23.  Minnesota Statutes 2000, section 297A.68, is 
223.3   amended by adding a subdivision to read: 
223.4      Subd. 35.  [TELECOMMUNICATIONS EQUIPMENT.] (a) 
223.5   Telecommunications machinery and equipment purchased or leased 
223.6   for use directly by a telecommunications service provider 
223.7   primarily in the provision of telecommunications services that 
223.8   are ultimately to be sold at retail are exempt, regardless of 
223.9   whether purchased by the owner, a contractor, or a subcontractor.
223.10     (b) For purposes of this subdivision, "telecommunications 
223.11  machinery and equipment" includes, but is not limited to: 
223.12     (1) machinery, equipment, and fixtures utilized in 
223.13  receiving, initiating, amplifying, processing, transmitting, 
223.14  retransmitting, recording, switching, or monitoring 
223.15  telecommunications services, such as computers, transformers, 
223.16  amplifiers, routers, bridges, repeaters, multiplexers, and other 
223.17  items performing comparable functions; 
223.18     (2) machinery, equipment, and fixtures used in the 
223.19  transportation of telecommunications services, radio 
223.20  transmitters and receivers, satellite equipment, microwave 
223.21  equipment, and other transporting media, but not wire, cable, 
223.22  fiber, poles, or conduit; 
223.23     (3) ancillary machinery, equipment, and fixtures that 
223.24  regulate, control, protect, or enable the machinery in clauses 
223.25  (1) and (2) to accomplish its intended function, such as 
223.26  auxiliary power supply, test equipment, towers, heating, 
223.27  ventilating and air conditioning equipment necessary to the 
223.28  operation of the telecommunications equipment; and software 
223.29  necessary to the operation of the telecommunications equipment; 
223.30  and 
223.31     (4) repair and replacement parts, including accessories, 
223.32  whether purchased as spare parts, repair parts, or as upgrades 
223.33  or modifications to qualified machinery or equipment. 
223.34     (c) For purposes of this subdivision, "telecommunications 
223.35  services" means telecommunications services as defined in 
223.36  section 297A.61, subdivision 24, paragraph (a), only. 
224.1      <b>[EFFECTIVE DATE.]</b> This section is effective for purchases 
224.2   and lease payments, including payments made on existing leases, 
224.3   made after June 30, 2001. 
224.4      Sec. 24.  Minnesota Statutes 2000, section 297A.68, is 
224.5   amended by adding a subdivision to read: 
224.6      Subd. 36.  [RESEARCH SUPPLIES AND EQUIPMENT.] Tangible 
224.7   personal property and taxable services are exempt if: 
224.8      (1) the purchase was made by or to be used by a person 
224.9   engaged in a trade or business; 
224.10     (2) the expenditure by the person qualified as a deductible 
224.11  expense under section 174 of the Internal Revenue Code or the 
224.12  expenditures would have qualified as a deductible expense under 
224.13  section 174, if the disallowance of items subject to allowance 
224.14  under section 167 or 611 of the Internal Revenue Code were not 
224.15  in effect; and 
224.16     (3) the items purchased or used do not constitute an 
224.17  improvement to real property. 
224.18     <b>[EFFECTIVE DATE.]</b> This section is effective for sales made 
224.19  after June 30, 2001. 
224.20     Sec. 25.  Minnesota Statutes 2000, section 297A.68, is 
224.21  amended by adding a subdivision to read: 
224.22     Subd. 37.  [COIN-OPERATED AMUSEMENT DEVICES.] Coin, 
224.23  currency, and token-operated amusement devices are exempt if 
224.24  they are purchased or leased by a person for the purpose of 
224.25  making the device available to the general public for a fee. 
224.26     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
224.27  purchases made after June 30, 2001. 
224.28     Sec. 26.  Minnesota Statutes 2000, section 297A.70, 
224.29  subdivision 2, is amended to read: 
224.30     Subd. 2.  [SALES TO GOVERNMENT.] (a) All sales, except 
224.31  those listed in paragraph (b), to the following governments and 
224.32  political subdivisions, or to the listed agencies or 
224.33  instrumentalities of governments and political subdivisions, are 
224.34  exempt: 
224.35     (1) the United States and its agencies and 
224.36  instrumentalities; 
225.1      (2) school districts, the University of Minnesota, state 
225.2   universities, community colleges, technical colleges, state 
225.3   academies, the Perpich Minnesota center for arts education, and 
225.4   an instrumentality of a political subdivision that is accredited 
225.5   as an optional/special function school by the North Central 
225.6   Association of Colleges and Schools; 
225.7      (3) hospitals and nursing homes owned and operated by 
225.8   political subdivisions of the state; 
225.9      (4) other states or political subdivisions of other states, 
225.10  if the sale would be exempt from taxation if it occurred in that 
225.11  state; and 
225.12     (5) sales to public libraries, public library systems, 
225.13  multicounty, multitype library systems as defined in section 
225.14  134.001, county law libraries under chapter 134A, state agency 
225.15  libraries, the state library under section 480.09, and the 
225.16  legislative reference library.  
225.17     (b) This exemption does not apply to the sales of the 
225.18  following products and services: 
225.19     (1) building, construction, or reconstruction materials 
225.20  purchased by a contractor or a subcontractor as a part of a 
225.21  lump-sum contract or similar type of contract with a guaranteed 
225.22  maximum price covering both labor and materials for use in the 
225.23  construction, alteration, or repair of a building or facility, 
225.24  except for correctional facilities for which construction 
225.25  materials are exempt under section 297A.71, subdivision 3; 
225.26     (2) construction materials purchased by tax exempt entities 
225.27  or their contractors to be used in constructing buildings or 
225.28  facilities which will not be used principally by the tax exempt 
225.29  entities; 
225.30     (3) the leasing of a motor vehicle as defined in section 
225.31  297B.01, subdivision 5, except for leases entered into by the 
225.32  United States or its agencies or instrumentalities; or 
225.33     (4) meals and lodging as defined under section 297A.61, 
225.34  subdivisions 3, paragraph (d), and 16, paragraph (c), except for 
225.35  meals and lodging purchased directly by the United States or its 
225.36  agencies or instrumentalities. 
226.1      (c) As used in this subdivision, "school districts" means 
226.2   public school entities and districts of every kind and nature 
226.3   organized under the laws of the state of Minnesota, and any 
226.4   instrumentality of a school district, as defined in section 
226.5   471.59. 
226.6      <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
226.7   purchases occurring after June 30, 2001. 
226.8      Sec. 27.  Minnesota Statutes 2000, section 297A.70, 
226.9   subdivision 3, is amended to read: 
226.10     Subd. 3.  [SALES OF CERTAIN GOODS AND SERVICES TO 
226.11  GOVERNMENT.] (a) The following sales to or use by the specified 
226.12  governments and political subdivisions of the state are exempt: 
226.13     (1) supplies and equipment used to provide medical care in 
226.14  the operation of an ambulance service owned and operated by a 
226.15  political subdivision of the state; 
226.16     (2) repair and replacement parts for emergency rescue 
226.17  vehicles, fire trucks, and fire apparatus to a political 
226.18  subdivision; 
226.19     (3) (2) machinery and equipment, except for motor vehicles, 
226.20  used directly for mixed municipal solid waste management 
226.21  services at a solid waste disposal facility as defined in 
226.22  section 115A.03, subdivision 10; 
226.23     (4) (3) chore and homemaking services to a political 
226.24  subdivision of the state to be provided to elderly or disabled 
226.25  individuals; 
226.26     (5) (4) telephone services to the department of 
226.27  administration that are used to provide telecommunications 
226.28  services through the intertechnologies revolving fund; 
226.29     (6) (5) firefighter personal protective equipment as 
226.30  defined in paragraph (b), if purchased or authorized by and for 
226.31  the use of an organized fire department, fire protection 
226.32  district, or fire company regularly charged with the 
226.33  responsibility of providing fire protection to the state or a 
226.34  political subdivision; 
226.35     (7) (6) bullet-resistant body armor that provides the 
226.36  wearer with ballistic and trauma protection, if purchased by a 
227.1   law enforcement agency of the state or a political subdivision 
227.2   of the state, or a licensed peace officer, as defined in section 
227.3   626.84, subdivision 1; 
227.4      (8) (7) motor vehicles purchased or leased by political 
227.5   subdivisions of the state if the vehicles are exempt from 
227.6   registration under section 168.012, subdivision 1, paragraph 
227.7   (b), or exempt from taxation under section 473.448; 
227.8      (9) (8)  equipment designed to process, dewater, and 
227.9   recycle biosolids for wastewater treatment facilities of 
227.10  political subdivisions, and materials incidental to installation 
227.11  of that equipment; and materials used to construct buildings to 
227.12  house the equipment, if the materials are purchased after June 
227.13  30, 1998, and before July 1, 2001; and 
227.14     (10) (9) sales to a town of gravel and of machinery, 
227.15  equipment, and accessories, except motor vehicles, used 
227.16  exclusively for road and bridge maintenance, and leases by a 
227.17  town of motor vehicles exempt from tax under section 297B.03, 
227.18  clause (10). 
227.19     (b) For purposes of this subdivision, "firefighters 
227.20  personal protective equipment" means helmets, including face 
227.21  shields, chin straps, and neck liners; bunker coats and pants, 
227.22  including pant suspenders; boots; gloves; head covers or hoods; 
227.23  wildfire jackets; protective coveralls; goggles; self-contained 
227.24  breathing apparatus; canister filter masks; personal alert 
227.25  safety systems; spanner belts; optical or thermal imaging search 
227.26  devices; and all safety equipment required by the Occupational 
227.27  Safety and Health Administration. 
227.28     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
227.29  purchases made after June 30, 2001. 
227.30     Sec. 28.  Minnesota Statutes 2000, section 297A.70, 
227.31  subdivision 4, is amended to read: 
227.32     Subd. 4.  [SALES TO NONPROFIT GROUPS.] (a) All sales, 
227.33  except those listed in paragraph (b), to the following 
227.34  "nonprofit organizations" are exempt: 
227.35     (1) an entity organized and operated exclusively for 
227.36  charitable, religious, or educational purposes if the item 
228.1   purchased is used in the performance of charitable, religious, 
228.2   or educational functions; 
228.3      (2) any senior citizen group or association of groups that: 
228.4      (i) in general limits membership to persons who are either 
228.5   age 55 or older, or physically disabled; and 
228.6      (ii) is organized and operated exclusively for pleasure, 
228.7   recreation, and other nonprofit purposes, no part of the net 
228.8   earnings of which inures to the benefit of any private 
228.9   shareholders; and 
228.10     (3) an entity organized and operated exclusively to 
228.11  maintain a cemetery owned by a religious organization. 
228.12     (b) This exemption does not apply to the following sales: 
228.13     (1) building, construction, or reconstruction materials 
228.14  purchased by a contractor or a subcontractor as a part of a 
228.15  lump-sum contract or similar type of contract with a guaranteed 
228.16  maximum price covering both labor and materials for use in the 
228.17  construction, alteration, or repair of a building or facility; 
228.18     (2) construction materials purchased by tax-exempt entities 
228.19  or their contractors to be used in constructing buildings or 
228.20  facilities that will not be used principally by the tax-exempt 
228.21  entities; and 
228.22     (3) meals and lodging as defined under section 297A.61, 
228.23  subdivisions 3, paragraph (d), and 16, paragraph (c); and 
228.24     (4) leasing of a motor vehicle as defined in section 
228.25  297B.01, subdivision 5, except as provided in paragraph (c). 
228.26     (c) This exemption applies to the leasing of a motor 
228.27  vehicle as defined in section 297B.01, subdivision 5, only if 
228.28  the vehicle is: 
228.29     (1) a truck, as defined in section 168.011, a bus, as 
228.30  defined in section 168.011, or a passenger automobile, as 
228.31  defined in section 168.011, if the automobile is designed and 
228.32  used for carrying more than nine persons including the driver; 
228.33  and 
228.34     (2) intended to be used primarily to transport tangible 
228.35  personal property or individuals, other than employees, to whom 
228.36  the organization provides service in performing its charitable, 
229.1   religious, or educational purpose. 
229.2      (d) A limited liability company also qualifies for 
229.3   exemption under this subdivision if (1) it consists of a sole 
229.4   member that would qualify for the exemption, and (2) the items 
229.5   purchased qualify for the exemption. 
229.6      Sec. 29.  Minnesota Statutes 2000, section 297A.70, 
229.7   subdivision 7, is amended to read: 
229.8      Subd. 7.  [HOSPITALS AND OUTPATIENT SURGICAL CENTERS.] (a) 
229.9   Sales, except for those listed in paragraph (c), to a hospital 
229.10  are exempt, if the items purchased are used in providing 
229.11  hospital services.  For purposes of this subdivision, "hospital" 
229.12  means a hospital organized and operated for charitable purposes 
229.13  within the meaning of section 501(c)(3) of the Internal Revenue 
229.14  Code, and licensed under chapter 144 or by any other 
229.15  jurisdiction, and "hospital services" are services authorized or 
229.16  required to be performed by a "hospital" under chapter 144. 
229.17     (b) Sales, except for those listed in paragraph (c), to an 
229.18  outpatient surgical center are exempt, if the items purchased 
229.19  are used in providing outpatient surgical services.  For 
229.20  purposes of this subdivision, "outpatient surgical center" means 
229.21  an outpatient surgical center organized and operated for 
229.22  charitable purposes within the meaning of section 501(c)(3) of 
229.23  the Internal Revenue Code, and licensed under chapter 144 or by 
229.24  any other jurisdiction.  For the purposes of this subdivision, 
229.25  "outpatient surgical services" means:  (1) services authorized 
229.26  or required to be performed by an outpatient surgical center 
229.27  under chapter 144 or under the applicable licensure law of any 
229.28  other jurisdiction; and (2) urgent care.  For purposes of this 
229.29  subdivision, "urgent care" means health services furnished to a 
229.30  person whose medical condition is sufficiently acute to require 
229.31  treatment unavailable through, or inappropriate to be provided 
229.32  by, a clinic or physician's office, but not so acute as to 
229.33  require treatment in a hospital emergency room.  
229.34     (c) This exemption does not apply to the following products 
229.35  and services: 
229.36     (1) purchases made by a clinic, physician's office, or any 
230.1   other medical facility not operating as a hospital or outpatient 
230.2   surgical center, even though the clinic, office, or facility may 
230.3   be owned and operated by a hospital or outpatient surgical 
230.4   center; 
230.5      (2) sales under section 297A.61, subdivisions 3, paragraph 
230.6   (d), and 16, paragraph (c); 
230.7      (3) building and construction materials used in 
230.8   constructing buildings or facilities that will not be used 
230.9   principally by the hospital or outpatient surgical center; 
230.10     (4) building, construction, or reconstruction materials 
230.11  purchased by a contractor or a subcontractor as a part of a 
230.12  lump-sum contract or similar type of contract with a guaranteed 
230.13  maximum price covering both labor and materials for use in the 
230.14  construction, alteration, or repair of a hospital or outpatient 
230.15  surgical center; or 
230.16     (5) the leasing of a motor vehicle as defined in section 
230.17  297B.01, subdivision 5. 
230.18     (d) A limited liability company also qualifies for 
230.19  exemption under this subdivision if (1) it consists of a sole 
230.20  member that would qualify for the exemption, and (2) the items 
230.21  purchased qualify for the exemption. 
230.22     Sec. 30.  Minnesota Statutes 2000, section 297A.70, 
230.23  subdivision 10, is amended to read: 
230.24     Subd. 10.  [NONPROFIT TICKETS OR ADMISSIONS.] Tickets or 
230.25  admissions to the premises of or events sponsored by an 
230.26  organization that provides an event are exempt if all the gross 
230.27  receipts are recorded as such, in accordance with generally 
230.28  accepted accounting principles, on the books of one or more 
230.29  organizations that provide an opportunity for citizens of the 
230.30  state to participate in the creation, performance, or 
230.31  appreciation of the arts are exempt if the, and provided that 
230.32  each organization is either:  
230.33     (1) a tax-exempt an organization within the meaning of 
230.34  Minnesota Statutes 1980, section 290.05, subdivision 1, clause 
230.35  (i), described in section 501(c)(3) of the Internal Revenue Code 
230.36  and at least five percent of the organization's annual revenue 
231.1   in its most recently completed 12-month fiscal year, or in the 
231.2   current year if the organization has not completed a 12-month 
231.3   fiscal year, consisted of voluntary contributions; or 
231.4      (2) a municipal board that promotes cultural and arts 
231.5   activities.  The exemption provided with respect to a municipal 
231.6   board applies only to tickets and admissions to events sponsored 
231.7   by the board. 
231.8   The exemption only applies if the entire proceeds, after 
231.9   reasonable expenses, are used solely to provide opportunities 
231.10  for citizens of the state to participate in the creation, 
231.11  performance, or appreciation of the arts. 
231.12     <b>[EFFECTIVE DATE.]</b> This section is effective for tickets and 
231.13  admissions to events held after June 30, 2001, but does not 
231.14  apply to events for which sales of tickets or admissions were 
231.15  made prior to July 1, 2001. 
231.16     Sec. 31.  Minnesota Statutes 2000, section 297A.70, 
231.17  subdivision 13, is amended to read: 
231.18     Subd. 13.  [FUNDRAISING SALES BY OR FOR NONPROFIT GROUPS.] 
231.19  (a) The following sales by the specified organizations for 
231.20  fundraising purposes are exempt, subject to the limitations 
231.21  listed in paragraph (b): 
231.22     (1) all sales made by an organization that exists solely 
231.23  for the purpose of providing educational or social activities 
231.24  for young people primarily age 18 and under; 
231.25     (2) all sales made by an organization that is a senior 
231.26  citizen group or association of groups if (i) in general it 
231.27  limits membership to persons age 55 or older; (ii) it is 
231.28  organized and operated exclusively for pleasure, recreation, and 
231.29  other nonprofit purposes; and (iii) no part of its net earnings 
231.30  inures to the benefit of any private shareholders; 
231.31     (3) the sale or use of tickets or admissions to a golf 
231.32  tournament held in Minnesota if the beneficiary of the 
231.33  tournament's net proceeds qualifies as a tax-exempt organization 
231.34  under section 501(c)(3) of the Internal Revenue Code; and 
231.35     (4) sales of gum, candy, and candy products sold for 
231.36  fundraising purposes by a nonprofit organization that provides 
232.1   educational and social activities primarily for young people 18 
232.2   years of age and under. 
232.3      (b) The exemptions listed in paragraph (a) are limited in 
232.4   the following manner: 
232.5      (1) the exemption under paragraph (a), clauses (1) and (2), 
232.6   applies only if the gross annual receipts of the organization 
232.7   from fundraising do not exceed $10,000; and 
232.8      (2) the exemption under paragraph (a), clause (1), does not 
232.9   apply if the sales are derived from admission charges or from 
232.10  activities for which the money must be deposited with the school 
232.11  district treasurer under section 123B.49, subdivision 2, or be 
232.12  recorded in the same manner as other revenues or expenditures of 
232.13  the school district under section 123B.49, subdivision 4. 
232.14     (c) Sales of tangible personal property are exempt if the 
232.15  entire proceeds, less the necessary expenses for obtaining the 
232.16  property, will be contributed to a registered combined 
232.17  charitable organization described in section 309.501, to be used 
232.18  exclusively for charitable, religious, or educational purposes, 
232.19  and the registered combined charitable organization has given 
232.20  its written permission for the sale.  Sales that occur over a 
232.21  period of more than 24 days per year are not exempt under this 
232.22  paragraph. 
232.23     (d) For purposes of this subdivision, a club, association, 
232.24  or other organization of elementary or secondary school students 
232.25  organized for the purpose of carrying on sports, educational, or 
232.26  other extracurricular activities is a separate organization from 
232.27  the school district or school for purposes of applying the 
232.28  $10,000 limit. 
232.29     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
232.30  purchases made after June 30, 2001. 
232.31     Sec. 32.  Minnesota Statutes 2000, section 297A.70, 
232.32  subdivision 14, is amended to read: 
232.33     Subd. 14.  [FUNDRAISING EVENTS SPONSORED BY NONPROFIT 
232.34  GROUPS.] (a) Sales of tangible personal property at, and 
232.35  admission charges for fundraising events sponsored by, a 
232.36  nonprofit organization are exempt if the entire proceeds, less 
233.1   the necessary expenses for the event, will be used solely and 
233.2   exclusively for charitable, religious, or educational purposes.  
233.3   Exempt sales include the sale of food, meals, drinks, and 
233.4   taxable services at the fundraising event. 
233.5      (b) This exemption is limited in the following manner: 
233.6      (1) it does not apply to admission charges for events 
233.7   involving bingo or other gambling activities or to charges for 
233.8   use of amusement devices involving bingo or other gambling 
233.9   activities; 
233.10     (2) all gross receipts are taxable if the profits are not 
233.11  used solely and exclusively for charitable, religious, or 
233.12  educational purposes; 
233.13     (3) it does not apply unless the organization keeps a 
233.14  separate accounting record, including receipts and disbursements 
233.15  from each fundraising event that all the gross receipts and 
233.16  disbursements from the event are recorded as such, in accordance 
233.17  with generally accepted accounting principles, on the books of 
233.18  the sponsoring organization, and the organization documents all 
233.19  deductions from gross receipts with receipts and other records; 
233.20     (4) it does not apply to any sale made by or in the name of 
233.21  a nonprofit corporation as the active or passive agent of a 
233.22  person that is not a nonprofit corporation; 
233.23     (5) all gross receipts are taxable if fundraising events 
233.24  exceed 24 days per year; and 
233.25     (6) it does not apply to fundraising events conducted on 
233.26  premises leased for more than five days but less than 30 days. 
233.27     (c) For purposes of this subdivision, a "nonprofit 
233.28  organization" means any unit of government, corporation, 
233.29  society, association, foundation, or institution organized and 
233.30  operated for charitable, religious, educational, civic, 
233.31  fraternal, and senior citizens' or veterans' purposes, no part 
233.32  of the net earnings of which inures to the benefit of a private 
233.33  individual. 
233.34     <b>[EFFECTIVE DATE.]</b> This section is effective for tickets and 
233.35  admissions to events held after June 30, 2001. 
233.36     Sec. 33.  Minnesota Statutes 2000, section 297A.71, 
234.1   subdivision 3, is amended to read: 
234.2      Subd. 3.  [CORRECTIONAL FACILITIES.] Building materials and 
234.3   supplies for constructing or improving an adult or juvenile 
234.4   correctional facility by a county, home rule charter city, or 
234.5   statutory city are exempt if the project is mandated by state or 
234.6   federal law, rule, or regulation.  The tax must be imposed and 
234.7   collected as if the rate under section 297A.62, subdivision 1, 
234.8   applied and then refunded in the manner provided in section 
234.9   297A.75. 
234.10     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
234.11  purchases occurring after June 30, 2001. 
234.12     Sec. 34.  Minnesota Statutes 2000, section 297A.71, 
234.13  subdivision 6, is amended to read: 
234.14     Subd. 6.  [BUSINESS INCUBATOR AND INDUSTRIAL PARK.] 
234.15  Building materials and supplies for construction of a facility 
234.16  that includes a business incubator and industrial park are 
234.17  exempt if the facility: 
234.18     (1) is owned and operated by a nonprofit charitable 
234.19  organization that qualifies for tax exemption under section 
234.20  501(c)(3) of the Internal Revenue Code; 
234.21     (2) is used for the development of nonretail businesses, 
234.22  offering access to equipment, space, services, and advice to the 
234.23  tenant businesses, for the purpose of encouraging economic 
234.24  development and job creation in the area served by the 
234.25  organization, and emphasizes development of businesses that 
234.26  manufacture products from materials found in the waste stream, 
234.27  or manufacture alternative energy and conservation systems, or 
234.28  make use of emerging environmental technologies; 
234.29     (3) includes in its structure systems of material and 
234.30  energy exchanges that use waste products from one industrial 
234.31  process as sources of energy and material for other processes; 
234.32  and 
234.33     (4) makes use of solar and wind energy technology and 
234.34  incorporates salvaged materials in its construction. 
234.35     A limited liability company also qualifies for exemption 
234.36  under this subdivision if (1) it consists of a sole member that 
235.1   would qualify for the exemption, and (2) the items purchased 
235.2   qualify for the exemption. 
235.3      Sec. 35.  Minnesota Statutes 2000, section 297A.71, is 
235.4   amended by adding a subdivision to read: 
235.5      Subd. 23.  [CONSTRUCTION MATERIALS AND EQUIPMENT; 
235.6   AGRICULTURAL PROCESSING MATERIALS.] Materials and supplies used 
235.7   or consumed in, and machinery and equipment incorporated into 
235.8   the construction, improvement, or expansion of an agricultural 
235.9   processing facility are exempt if: 
235.10     (1) the facility is owned and operated by a cooperative 
235.11  organized under chapter 308A; and 
235.12     (2) the total capital investment in the processing facility 
235.13  is at least $1,000,000 but no more than $100,000,000. 
235.14     The tax must be imposed and collected as if the rate under 
235.15  section 297A.62, subdivision 1, applied, and then refunded in 
235.16  the manner provided in section 297A.75. 
235.17     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
235.18  purchases made after June 30, 2001. 
235.19     Sec. 36.  Minnesota Statutes 2000, section 297A.71, is 
235.20  amended by adding a subdivision to read: 
235.21     Subd. 24.  [CONSTRUCTION MATERIALS; YELLOW MEDICINE COUNTY 
235.22  LAW ENFORCEMENT AND FAMILY SERVICE CENTER.] Materials and 
235.23  supplies used or consumed in, and fixtures, furnishings, and 
235.24  equipment incorporated into, the construction, improvement, or 
235.25  expansion of the Yellow Medicine county law enforcement and 
235.26  family service center are exempt.  The tax must be imposed and 
235.27  collected as if the rate under section 297A.62, subdivision 1, 
235.28  applied and then refunded in the manner prescribed for refunds 
235.29  in section 297A.75. 
235.30     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
235.31  purchases made after June 30, 2000, and before January 1, 2003. 
235.32     Sec. 37.  Minnesota Statutes 2000, section 297A.71, is 
235.33  amended by adding a subdivision to read: 
235.34     Subd. 25.  [POULTRY LITTER BIOMASS GENERATION FACILITY 
235.35  CONSTRUCTION MATERIALS AND EQUIPMENT.] Materials and supplies 
235.36  used or consumed in, and equipment incorporated into, the 
236.1   construction, improvement, or expansion of a facility using 
236.2   biomass to generate electricity are exempt if: 
236.3      (1) the facility is designed to utilize poultry litter 
236.4   biomass as a primary fuel source; and 
236.5      (2) the facility generates power under a contract approved 
236.6   by the public utilities commission in accordance with the 
236.7   biomass mandate imposed under section 216B.2424. 
236.8      <b>[EFFECTIVE DATE.]</b> This section is effective for purchases 
236.9   and sales after June 30, 2001, and before January 1, 2003. 
236.10     Sec. 38.  Minnesota Statutes 2000, section 297A.71, is 
236.11  amended by adding a subdivision to read: 
236.12     Subd. 26.  [CONSTRUCTION MATERIALS AND EQUIPMENT; WASTE 
236.13  TIRES COGENERATION ELECTRIC GENERATING FACILITY.] Materials and 
236.14  supplies used or consumed in, and equipment incorporated into, 
236.15  the construction, improvement, or expansion of a facility using 
236.16  waste tires to generate electricity are exempt if: 
236.17     (1) the facility utilizes waste tires as a primary fuel in 
236.18  generating electricity; 
236.19     (2) the facility is a cogeneration facility; and 
236.20     (3) the installed capacity of the facility is 1 to 25 
236.21  megawatts. 
236.22     <b>[EFFECTIVE DATE.]</b> This section is effective for purchases 
236.23  and sales made on or after June 1, 2001. 
236.24     Sec. 39.  Minnesota Statutes 2000, section 297A.75, is 
236.25  amended to read: 
236.26     297A.75 [REFUND; APPROPRIATION.] 
236.27     Subdivision 1.  [TAX COLLECTED.] The tax on the gross 
236.28  receipts from the sale of the following exempt items must be 
236.29  imposed and collected as if the sale were taxable and the rate 
236.30  under section 297A.62, subdivision 1, applied.  The exempt items 
236.31  include: 
236.32     (1) capital equipment exempt under section 297A.68, 
236.33  subdivision 5; 
236.34     (2) building materials for an agricultural processing 
236.35  facility exempt under section 297A.71, subdivision 13; 
236.36     (3) (2) building materials for mineral production 
237.1   facilities exempt under section 297A.71, subdivision 14; 
237.2      (4) building materials for correctional facilities under 
237.3   section 297A.71, subdivision 3; 
237.4      (5) (3) building materials used in a residence for disabled 
237.5   veterans exempt under section 297A.71, subdivision 11; and 
237.6      (6) (4) chair lifts, ramps, elevators, and associated 
237.7   building materials exempt under section 297A.71, subdivision 12; 
237.8      (5) building materials, supplies, machinery, and equipment 
237.9   for an agricultural processing facility under section 297A.71, 
237.10  subdivision 23; and 
237.11     (6) materials, supplies, fixtures, furnishings, and 
237.12  equipment for a county law enforcement and family service center 
237.13  under section 297A.71, subdivision 24. 
237.14     Subd. 2.  [REFUND; ELIGIBLE PERSONS.] Upon application on 
237.15  forms prescribed by the commissioner, a refund equal to the tax 
237.16  paid on the gross receipts of the exempt items must be paid to 
237.17  the applicant.  Only the following persons may apply for the 
237.18  refund: 
237.19     (1) for subdivision 1, clauses (1) to (3) and (2), the 
237.20  applicant must be the purchaser; 
237.21     (2) for subdivision 1, clause (4) (6), the applicant must 
237.22  be the governmental subdivision; 
237.23     (3) for subdivision 1, clause (5) (3), the applicant must 
237.24  be the recipient of the benefits provided in United States Code, 
237.25  title 38, chapter 21; and 
237.26     (4) for subdivision 1, clause (6) (4), the applicant must 
237.27  be the owner of the homestead property; and 
237.28     (5) for subdivision 1, clause (5), the applicant must be 
237.29  the owner of the agricultural processing facility. 
237.30     Subd. 3.  [APPLICATION.] (a) The application must include 
237.31  sufficient information to permit the commissioner to verify the 
237.32  tax paid.  If the tax was paid by a contractor, subcontractor, 
237.33  or builder, under subdivision 1, clause (3), (4), (5), or (6), 
237.34  the contractor, subcontractor, or builder must furnish to the 
237.35  refund applicant a statement including the cost of the exempt 
237.36  items and the taxes paid on the items unless otherwise 
238.1   specifically provided by this subdivision.  The provisions of 
238.2   sections 289A.40 and 289A.50 apply to refunds under this section.
238.3      (b) An applicant may not file more than two applications 
238.4   per calendar year for refunds for taxes paid on capital 
238.5   equipment exempt under section 297A.68, subdivision 5.  
238.6      Subd. 4.  [INTEREST.] Interest must be paid on the refund 
238.7   at the rate in section 270.76 from the date the refund claim is 
238.8   filed for taxes paid under subdivision 1, clauses (1) to, 
238.9   (2), (3), and (5), and from 60 days after the date the refund 
238.10  claim is filed with the commissioner for claims filed under 
238.11  subdivision 1, clauses (4) and (6). 
238.12     Subd. 5.  [APPROPRIATION.] The amount required to make the 
238.13  refunds is annually appropriated to the commissioner. 
238.14     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
238.15  purchases made after June 30, 2001, except that clause (6) and 
238.16  references to clause (6) are effective June 30, 2001, for 
238.17  purchases made after June 30, 2000, and before January 1, 2003. 
238.18     Sec. 40.  Minnesota Statutes 2000, section 297A.80, is 
238.19  amended to read: 
238.20     297A.80 [TAXES IN OTHER STATES; OFFSET AGAINST USE TAX.] 
238.21     If an article of tangible personal property or an item 
238.22  listed in section 297A.63 has already been taxed by another 
238.23  state and any subdivision thereof for its sale, storage, use, or 
238.24  other consumption in an amount less than the tax imposed by this 
238.25  chapter, then as to the person who paid the tax in the other 
238.26  state or any subdivision thereof, section 297A.63 applies only 
238.27  at a rate measured by the difference between the rate imposed 
238.28  under section 297A.62 and the rate by which the previous tax was 
238.29  computed.  If the tax imposed in the other state or any 
238.30  subdivision thereof is equal to or greater than the tax imposed 
238.31  in this state, then no tax is due from that person under section 
238.32  297A.63.  The credit shall be applied first against the amount 
238.33  of any use tax due the state, and any unused portion of the 
238.34  credit shall then be applied against any use tax due a 
238.35  subdivision. 
238.36     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
239.1   purchases occurring after December 31, 2001. 
239.2      Sec. 41.  Minnesota Statutes 2000, section 297A.82, 
239.3   subdivision 3, is amended to read: 
239.4      Subd. 3.  [PAYMENT OF TAX TO COMMISSIONER.] If the aircraft 
239.5   is purchased from a person who is not the holder of a valid 
239.6   sales and use tax permit under this chapter, the purchaser shall 
239.7   pay the tax to the commissioner of revenue prior to registering 
239.8   or licensing the aircraft in this state.  The commissioner of 
239.9   revenue shall issue a certificate stating that the sales and use 
239.10  tax in respect to the transaction has been paid. 
239.11     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
239.12  purchases occurring after the day following final enactment. 
239.13     Sec. 42.  Minnesota Statutes 2000, section 297A.82, is 
239.14  amended by adding a subdivision to read: 
239.15     Subd. 7.  [AGREEMENT WITH COMMISSIONER OF 
239.16  TRANSPORTATION.] Notwithstanding subdivisions 1 to 4, the 
239.17  commissioner may enter into an agreement with the commissioner 
239.18  of transportation whereby, upon approval of both commissioners, 
239.19  the commissioner of transportation will collect the sales tax on 
239.20  aircraft from persons required to register or license aircraft 
239.21  in this state.  For purposes of collecting the tax, the 
239.22  commissioner of transportation shall act as agent of the 
239.23  commissioner of revenue and shall be subject to all rules not 
239.24  inconsistent with the provisions of this chapter, that may be 
239.25  prescribed by the commissioner. 
239.26     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
239.27  following final enactment. 
239.28     Sec. 43.  Minnesota Statutes 2000, section 297A.94, is 
239.29  amended to read: 
239.30     297A.94 [DEPOSIT OF REVENUES.] 
239.31     (a) Except as provided in this section, the commissioner 
239.32  shall deposit the revenues, including interest and penalties, 
239.33  derived from the taxes imposed by this chapter in the state 
239.34  treasury and credit them to the general fund.  
239.35     (b) The commissioner shall deposit taxes in the Minnesota 
239.36  agricultural and economic account in the special revenue fund if:
240.1      (1) the taxes are derived from sales and use of property 
240.2   and services purchased for the construction and operation of an 
240.3   agricultural resource project; and 
240.4      (2) the purchase was made on or after the date on which a 
240.5   conditional commitment was made for a loan guaranty for the 
240.6   project under section 41A.04, subdivision 3. 
240.7   The commissioner of finance shall certify to the commissioner 
240.8   the date on which the project received the conditional 
240.9   commitment.  The amount deposited in the loan guaranty account 
240.10  must be reduced by any refunds and by the costs incurred by the 
240.11  department of revenue to administer and enforce the assessment 
240.12  and collection of the taxes.  
240.13     (c) The commissioner shall deposit the revenues, including 
240.14  interest and penalties, derived from the taxes imposed on sales 
240.15  and purchases included in section 297A.61, subdivision 16, 
240.16  paragraphs (b) and (f) (e), in the state treasury, and credit 
240.17  them as follows: 
240.18     (1) first to the general obligation special tax bond debt 
240.19  service account in each fiscal year the amount required by 
240.20  section 16A.661, subdivision 3, paragraph (b); and 
240.21     (2) after the requirements of clause (1) have been met, the 
240.22  balance to the general fund. 
240.23     (d) The commissioner shall deposit the revenues, including 
240.24  interest and penalties, collected under section 297A.64, 
240.25  subdivision 5, in the state treasury and credit them to the 
240.26  general fund.  By July 15 of each year the commissioner shall 
240.27  transfer to the highway user tax distribution fund an amount 
240.28  equal to the excess fees collected under section 297A.64, 
240.29  subdivision 5, for the previous calendar year. 
240.30     (e) For fiscal year 2001, 97 percent, and for fiscal year 
240.31  2002 and thereafter, 87 percent of the revenues, including 
240.32  interest and penalties, transmitted to the commissioner under 
240.33  section 297A.65, must be deposited by the commissioner in the 
240.34  state treasury as follows: 
240.35     (1) 50 percent of the receipts must be deposited in the 
240.36  heritage enhancement account in the game and fish fund, and may 
241.1   be spent only on activities that improve, enhance, or protect 
241.2   fish and wildlife resources, including conservation, 
241.3   restoration, and enhancement of land, water, and other natural 
241.4   resources of the state; 
241.5      (2) 22.5 percent of the receipts must be deposited in the 
241.6   natural resources fund, and may be spent only for state parks 
241.7   and trails; 
241.8      (3) 22.5 percent of the receipts must be deposited in the 
241.9   natural resources fund, and may be spent only on metropolitan 
241.10  park and trail grants; 
241.11     (4) three percent of the receipts must be deposited in the 
241.12  natural resources fund, and may be spent only on local trail 
241.13  grants; and 
241.14     (5) two percent of the receipts must be deposited in the 
241.15  natural resources fund, and may be spent only for the Minnesota 
241.16  zoological garden, the Como park zoo and conservatory, and the 
241.17  Duluth zoo. 
241.18     (f) The revenue dedicated under paragraph (e) may not be 
241.19  used as a substitute for traditional sources of funding for the 
241.20  purposes specified, but the dedicated revenue shall supplement 
241.21  traditional sources of funding for those purposes.  Land 
241.22  acquired with money deposited in the game and fish fund under 
241.23  paragraph (e) must be open to public hunting and fishing during 
241.24  the open season.  At least 87 percent of the money deposited in 
241.25  the game and fish fund for improvement, enhancement, or 
241.26  protection of fish and wildlife resources under paragraph (e) 
241.27  must be allocated for field operations. 
241.28     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
241.29  purchases made after June 30, 2001. 
241.30     Sec. 44.  Minnesota Statutes 2000, section 297B.03, is 
241.31  amended to read: 
241.32     297B.03 [EXEMPTIONS.] 
241.33     There is specifically exempted from the provisions of this 
241.34  chapter and from computation of the amount of tax imposed by it 
241.35  the following:  
241.36     (1) purchase or use, including use under a lease purchase 
242.1   agreement or installment sales contract made pursuant to section 
242.2   465.71, of any motor vehicle by the United States and its 
242.3   agencies and instrumentalities and by any person described in 
242.4   and subject to the conditions provided in section 297A.25, 
242.5   subdivision 18; 
242.6      (2) purchase or use of any motor vehicle by any person who 
242.7   was a resident of another state or country at the time of the 
242.8   purchase and who subsequently becomes a resident of Minnesota, 
242.9   provided the purchase occurred more than 60 days prior to the 
242.10  date such person began residing in the state of Minnesota and 
242.11  the motor vehicle was registered in the person's name in the 
242.12  other state or country; 
242.13     (3) purchase or use of any motor vehicle by any person 
242.14  making a valid election to be taxed under the provisions of 
242.15  section 297A.211; 
242.16     (4) purchase or use of any motor vehicle previously 
242.17  registered in the state of Minnesota when such transfer 
242.18  constitutes a transfer within the meaning of section 118, 331, 
242.19  332, 336, 337, 338, 351, 355, 368, 721, 731, 1031, 1033, or 
242.20  1563(a) of the Internal Revenue Code of 1986, as amended through 
242.21  December 31, 1999; 
242.22     (5) purchase or use of any vehicle owned by a resident of 
242.23  another state and leased to a Minnesota based private or for 
242.24  hire carrier for regular use in the transportation of persons or 
242.25  property in interstate commerce provided the vehicle is titled 
242.26  in the state of the owner or secured party, and that state does 
242.27  not impose a sales tax or sales tax on motor vehicles used in 
242.28  interstate commerce; 
242.29     (6) purchase or use of a motor vehicle by a private 
242.30  nonprofit or public educational institution for use as an 
242.31  instructional aid in automotive training programs operated by 
242.32  the institution.  "Automotive training programs" includes motor 
242.33  vehicle body and mechanical repair courses but does not include 
242.34  driver education programs; 
242.35     (7) purchase of a motor vehicle for use as an ambulance by 
242.36  an ambulance service licensed under section 144E.10; 
243.1      (8) purchase of a motor vehicle by or for a public library, 
243.2   as defined in section 134.001, subdivision 2, as a bookmobile or 
243.3   library delivery vehicle; 
243.4      (9) purchase of a ready-mixed concrete truck; 
243.5      (10) purchase or use of a motor vehicle by a town for use 
243.6   exclusively for road maintenance, including snowplows and dump 
243.7   trucks, but not including automobiles, vans, or pickup trucks; 
243.8      (11) purchase or use of a motor vehicle by a corporation, 
243.9   society, association, foundation, or institution organized and 
243.10  operated exclusively for charitable, religious, or educational 
243.11  purposes, except a public school, university, or library, but 
243.12  only if the vehicle is: 
243.13     (i) a truck, as defined in section 168.011, a bus, as 
243.14  defined in section 168.011, or a passenger automobile, as 
243.15  defined in section 168.011, if the automobile is designed and 
243.16  used for carrying more than nine persons including the driver; 
243.17  and 
243.18     (ii) intended to be used primarily to transport tangible 
243.19  personal property or individuals, other than employees, to whom 
243.20  the organization provides service in performing its charitable, 
243.21  religious, or educational purpose.; and 
243.22     (12) a purchase or use of a motor vehicle that draws its 
243.23  propulsion energy either: 
243.24     (i) solely from an alternative fuel source; or 
243.25     (ii) from a rechargeable energy storage system and either 
243.26  unleaded gasoline, diesel fuel, or an alternative fuel or a 
243.27  mixture of two or more of these fuels. 
243.28     For purposes of this clause, "alternative fuel source" 
243.29  means a fuel that the United States Department of Energy 
243.30  recognizes and classifies as an alternative fuel, including, but 
243.31  not limited to: 
243.32     (1) alcohol fuels where the fuel mixture consists of at 
243.33  least 70 percent by volume of an alcohol product such as 
243.34  methanol or denatured alcohol; 
243.35     (2) natural gas, whether compressed or liquefied; 
243.36     (3) liquefied petroleum gas; 
244.1      (4) hydrogen; 
244.2      (5) coal-derived liquid fuels; 
244.3      (6) fuels derived from biological materials; and 
244.4      (7) electricity, including solar power. 
244.5      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
244.6   following final enactment, except that the amendment to clause 
244.7   (11) is effective for sales and purchases occurring after June 
244.8   30, 2000, and except that clause (12) is effective for sales and 
244.9   purchases made after June 30, 2001, and before January 1, 2005. 
244.10     Sec. 45.  Laws 1986, chapter 396, section 5, is amended to 
244.11  read: 
244.12     Sec. 5.  [LIQUOR, LODGING, AND RESTAURANT TAXES.] 
244.13     The city may, by resolution, levy in addition to taxes 
244.14  authorized by other law: 
244.15     (1) a sales tax of not more than three percent on the gross 
244.16  receipts on retail on-sales of intoxicating liquor and fermented 
244.17  malt beverages described in section 473.592 occurring in the 
244.18  downtown taxing area, provided that this tax may not be imposed 
244.19  if sales of intoxicating liquor and fermented malt beverages are 
244.20  exempt from taxation under chapter 297A; 
244.21     (2) a sales tax of not more than three percent on the gross 
244.22  receipts from the furnishing for consideration of lodging 
244.23  described in section 473.592 by a hotel or motel which has more 
244.24  than 50 rooms available for lodging; the tax imposed under this 
244.25  clause shall be at a rate that, when added to the sum of the 
244.26  rate of the sales tax imposed under Minnesota Statutes, chapter 
244.27  297A, the rate of the sales tax imposed under section 4, and the 
244.28  rate of any other taxes on lodging in the city of Minneapolis, 
244.29  equals 12 13 percent; and 
244.30     (3) a sales tax of not more than three percent on the gross 
244.31  receipts on all sales of food primarily for consumption on or 
244.32  off the premises by restaurants and places of refreshment as 
244.33  defined by resolution of the city that occur within the downtown 
244.34  taxing area. 
244.35  These taxes shall be applied solely to pay costs of collection 
244.36  and to pay or secure the payment of any principal of, premium 
245.1   and interest on any bonds or any costs referred to in section 4, 
245.2   subdivision 3.  The commissioner of revenue may enter into 
245.3   appropriate agreements with the city to provide for the 
245.4   collection of these taxes by the state on behalf of the city.  
245.5   The commissioner may charge the city a reasonable fee for its 
245.6   collection from the proceeds of any taxes.  These taxes shall be 
245.7   subject to the same interest penalties and enforcement 
245.8   provisions as the taxes imposed under section 473.592. 
245.9      Sec. 46.  Laws 1999, chapter 243, article 4, section 19, is 
245.10  amended to read: 
245.11     Sec. 19.  [EFFECTIVE DATES.] 
245.12     Sections 1, 2, 5, 7, 9, and 11 are effective for sales and 
245.13  purchases made after June 30, 1999.  
245.14     Section 3 is effective for amended returns and refund 
245.15  claims filed on or after July 1, 1999. 
245.16     Section 4 is effective the day following final enactment 
245.17  and applies retroactively to all open tax years and to 
245.18  assessments and appeals under Minnesota Statutes, sections 
245.19  289A.38 and 289A.65, for which the time limits have not expired 
245.20  on the date of final enactment of this act.  The provisions of 
245.21  Minnesota Statutes, section 289A.50, apply to refunds claimed 
245.22  under section 4.  Refunds claimed under section 4 must be filed 
245.23  by the later of December 31, 1999, or the time limit under 
245.24  Minnesota Statutes, section 289A.40, subdivision 1. 
245.25     Section 6 is effective retroactively for sales and 
245.26  purchases made after June 30, 1998. 
245.27     Section 8 is effective for purchases and sales made after 
245.28  the date of final enactment.  
245.29     Section 10 is effective for purchases made after the date 
245.30  of final enactment and before July 1, 2001 2003. 
245.31     Section 12 is effective the day after final enactment.  
245.32  Section 12, paragraphs (a) to (c), apply to all local sales 
245.33  taxes enacted after July 1, 1999.  Section 12, paragraph (d), 
245.34  applies to all local sales taxes in effect at the time of, or 
245.35  imposed after the day of, the enactment of this section. 
245.36     Section 13 is effective the day following final enactment. 
246.1      <b>[EFFECTIVE DATE.]</b> This section is effective the day after 
246.2   final enactment. 
246.3      Sec. 47.  Laws 2000, chapter 490, article 8, section 17, 
246.4   the effective date, is amended to read: 
246.5      <b>EFFECTIVE DATE:</b> This section is effective for sales and 
246.6   purchases made after January 1, 2000, and before December 
246.7   31, 2000 2001. 
246.8      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
246.9   following final enactment and applies retroactively to sales and 
246.10  purchases made on or after December 31, 2000. 
246.11     Sec. 48.  [REPORT.] 
246.12     By December 1, 2004, the commissioner of commerce, in 
246.13  consultation with the commissioner of revenue, shall report to 
246.14  the legislative committees over energy and efficiency and tax 
246.15  issues, the impact and effectiveness of the exemptions 
246.16  authorized in Minnesota Statutes, sections 297A.67, subdivision 
246.17  27 and 297B.03, clause (12).  This report shall include an 
246.18  estimate of the revenue loss to the state as well as an estimate 
246.19  on changes in energy consumption.  The commissioner shall 
246.20  include in the report legislative recommendations as to whether 
246.21  and how to reform or extend these exemptions. 
246.22     Sec. 49.  [REPEALER.] 
246.23     (a) Minnesota Statutes 2000, section 289A.60, subdivision 
246.24  15, is repealed effective beginning with returns filed after 
246.25  January 1, 2002. 
246.26     (b) Minnesota Statutes 2000, section 297A.71, subdivisions 
246.27  2, 15, and 16, are repealed effective for sales and purchases 
246.28  made after June 30, 2002.  
246.29     (c) Minnesota Statutes 2000, section 297B.032, is repealed 
246.30  effective the day following final enactment. 
246.31                             ARTICLE 9 
246.32                           PROPERTY TAXES 
246.33     Section 1.  [3.99] [LEGISLATIVE COMMISSION ON METROPOLITAN 
246.34  GOVERNMENT.] 
246.35     Subdivision 1.  [ESTABLISHED.] The legislative commission 
246.36  on metropolitan government is established to oversee the 
247.1   metropolitan council's operating and capital budgets, work 
247.2   program, and capital improvement program. 
247.3      Subd. 2.  [MEMBERSHIP.] The commission consists of four 
247.4   senators appointed by the senate subcommittee on committees of 
247.5   the committee on rules and administration, three senators 
247.6   appointed by the senate minority leader, four state 
247.7   representatives appointed by the speaker of the house, and three 
247.8   state representatives appointed by the house minority leader. 
247.9   All members must reside in or represent a portion of the 
247.10  seven-county metropolitan area.  The appointing authorities must 
247.11  ensure balanced geographic representation.  Each appointing 
247.12  authority must make appointments as soon as possible after the 
247.13  opening of the next regular session of the legislature in each 
247.14  odd-numbered year. 
247.15     Subd. 3.  [TERMS; VACANCIES.] Members of the commission 
247.16  serve for a two-year term beginning upon appointment and 
247.17  expiring upon appointment of a successor after the opening of 
247.18  the next regular session of the legislature in the odd-numbered 
247.19  year.  A vacancy in the membership of the commission must be 
247.20  filled for the unexpired term in a manner that will preserve the 
247.21  representation established by this section. 
247.22     Subd. 4.  [CHAIR.] The commission must meet as soon as 
247.23  practicable after members are appointed in each odd-numbered 
247.24  year to elect its chair and other officers as it may determine 
247.25  necessary.  A chair serves a two-year term, expiring in the 
247.26  odd-numbered year after a successor is elected.  The chair 
247.27  alternates biennially between the senate and the house. 
247.28     Subd. 5.  [COMPENSATION.] Members serve without 
247.29  compensation but may be reimbursed for their reasonable expenses 
247.30  as members of the legislature. 
247.31     Subd. 6.  [STAFF.] Legislative staff must provide 
247.32  administrative and research assistance to the commission. 
247.33     Subd. 7.  [MEETINGS; PROCEDURES.] The commission must meet 
247.34  at the call of the chair.  If there is a quorum, the commission 
247.35  may take action by a simple majority vote of commission members 
247.36  present. 
248.1      Subd. 8.  [POWERS; DUTIES; METROPOLITAN COUNCIL LEVY, 
248.2   BUDGET OVERSIGHT.] The commission must monitor, review, and make 
248.3   recommendations to the metropolitan council and to the 
248.4   legislature for the following calendar year on: 
248.5      (1) the tax rate and dollar amount of the metropolitan 
248.6   council's property tax levies and any proposed increases in the 
248.7   rate or dollar amount of tax; 
248.8      (2) any request for an increase in the debt of the 
248.9   metropolitan council; 
248.10     (3) the overall work and role of the metropolitan council; 
248.11     (4) the metropolitan council's proposed operating and 
248.12  capital budgets, work program, and capital improvement program; 
248.13  and 
248.14     (5) the metropolitan council's implementation of the 
248.15  operating and capital budgets, work program, and capital 
248.16  improvement program. 
248.17     Subd. 9.  [POWERS; DUTIES; METROPOLITAN COUNCIL 
248.18  APPOINTMENTS OVERSIGHT.] The commission must monitor 
248.19  appointments to the metropolitan council and may make 
248.20  recommendations on appointments to the nominating committee 
248.21  under section 473.123, subdivision 3, or to the governor before 
248.22  the governor makes the appointments.  The commission may also 
248.23  make recommendations to the senate before appointments are 
248.24  presented to the senate for its advice and consent. 
248.25     Subd. 10.  [EXPIRATION.] This section expires July 1, 2007. 
248.26     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2001. 
248.27     Sec. 2.  [103B.253] [COUNTY LEVY AUTHORITY.] 
248.28     Notwithstanding any other law to the contrary, a county 
248.29  levying a tax under section 103B.241, 103B.245, or 103B.251 
248.30  shall not include any taxes levied under those authorities in 
248.31  the levy certified under section 275.07, subdivision 1, 
248.32  paragraph (a).  A county levying under section 103B.241, 
248.33  103B.245, or 103B.251 shall separately certify that amount and 
248.34  the auditor shall extend that levy as a special taxing district 
248.35  levy under sections 275.066 and 275.07, subdivision 1, paragraph 
248.36  (b). 
249.1      <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
249.2   levied in 2001, payable in 2002, and thereafter. 
249.3      Sec. 3.  Minnesota Statutes 2000, section 103D.905, 
249.4   subdivision 3, is amended to read: 
249.5      Subd. 3.  [ADMINISTRATIVE GENERAL FUND.] An administrative 
249.6   A general fund, consisting of an ad valorem tax levy, may not 
249.7   exceed 0.02418 0.048 percent of taxable market value, or 
249.8   $125,000 $250,000, whichever is less.  The money in the fund 
249.9   shall be used for general administrative expenses and for the 
249.10  construction or implementation and maintenance of projects of 
249.11  common benefit to the watershed district.  The managers may make 
249.12  an annual levy for the administrative general fund as provided 
249.13  in section 103D.911.  In addition to the annual administrative 
249.14  general levy, the managers may annually levy a tax not to exceed 
249.15  0.00798 percent of taxable market value for a period not to 
249.16  exceed 15 consecutive years to pay the cost attributable to the 
249.17  basic water management features of projects initiated by 
249.18  petition of a municipality of political subdivision within the 
249.19  watershed district or by petition of at least 50 resident owners 
249.20  whose property is within the watershed district.  
249.21     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
249.22  levied in 2001, payable in 2002, and thereafter. 
249.23     Sec. 4.  [144F.01] [EMERGENCY MEDICAL SERVICES SPECIAL 
249.24  TAXING DISTRICTS.] 
249.25     Subdivision 1.  [POLITICAL SUBDIVISION DEFINED.] In this 
249.26  section, "political subdivision" means a county, a statutory or 
249.27  home rule charter city, or a township organized to provide town 
249.28  government. 
249.29     Subd. 2.  [WHO MAY ESTABLISH.] Two or more political 
249.30  subdivisions, or parts of them, may establish by resolution of 
249.31  their governing bodies a special taxing district for emergency 
249.32  medical services.  The participating territory of a 
249.33  participating political subdivision need not abut any other 
249.34  participating territory to be in the special taxing district. 
249.35     Subd. 3.  [BOARD.] The special taxing district under this 
249.36  section is governed by a board made up initially of 
250.1   representatives of each participating political subdivision in 
250.2   the proportions set out in the establishing resolution, subject 
250.3   to change as provided in the district's charter, if any, or in 
250.4   the district's bylaws.  Each participant's representative serves 
250.5   at the pleasure of that participant's governing body. 
250.6      Subd. 4.  [PROPERTY TAX LEVY AUTHORITY.] The district's 
250.7   board may levy a tax on the taxable real and personal property 
250.8   in the district.  The ad valorem tax levy may not exceed 0.048 
250.9   percent of the taxable market value of the district or $250,000, 
250.10  whichever is less.  The proceeds of the levy must be used as 
250.11  provided in subdivision 5.  The board shall certify the levy at 
250.12  the times as provided under section 275.07.  The board shall 
250.13  provide the county with whatever information is necessary to 
250.14  identify the property that is located within the district.  If 
250.15  the boundaries include a part of a parcel, the entire parcel 
250.16  shall be included in the district.  The county auditors must 
250.17  spread, collect, and distribute the proceeds of the tax at the 
250.18  same time and in the same manner as provided by law for all 
250.19  other property taxes. 
250.20     Subd. 5.  [USE OF LEVY PROCEEDS.] The proceeds of property 
250.21  taxes levied under this section must be used to support the 
250.22  providing of out-of-hospital emergency medical services 
250.23  including, but not limited to, first responder or rescue squads 
250.24  recognized by the district, ambulance services licensed under 
250.25  chapter 144E and recognized by the district, medical control 
250.26  functions set out in chapter 144E, communications equipment and 
250.27  systems, and programs of regional emergency medical services 
250.28  authorized by regional boards described in section 144E.52. 
250.29     Subd. 6.  [ADVISORY COMMITTEE.] A special taxing district 
250.30  board under this section must have an advisory committee to 
250.31  advise the board on issues involving emergency medical services 
250.32  and EMS communications.  The committee's membership must be 
250.33  comprised of representatives of first responders, ambulance 
250.34  services, ambulance medical directors, and EMS communication 
250.35  experts.  The advisory committee members serve at the pleasure 
250.36  of the appointing board. 
251.1      Subd. 7.  [POWERS.] (a) In addition to authority expressly 
251.2   granted in this section, a special taxing district under this 
251.3   section may exercise any power that may be exercised by any of 
251.4   its participating political subdivisions, except that the board 
251.5   may not incur debt.  The special taxing district may only use 
251.6   the power to do what is necessary or reasonable to support the 
251.7   services set out in subdivision 5. 
251.8      (b) Notwithstanding paragraph (a), the district may only 
251.9   levy the taxes authorized in this section. 
251.10     Subd. 8.  [ADDITIONS AND WITHDRAWALS.] (a) Additional 
251.11  eligible political subdivisions may be added to a special taxing 
251.12  district under this section as provided by the board of the 
251.13  district and agreed to in a resolution of the governing body of 
251.14  the political subdivision proposed to be added. 
251.15     (b) A political subdivision may withdraw from a special 
251.16  taxing district under this section by resolution of its 
251.17  governing body.  The political subdivision must notify the board 
251.18  of the special taxing district of the withdrawal by providing a 
251.19  copy of the resolution at least one year in advance of the 
251.20  proposed withdrawal.  The taxable property of the withdrawing 
251.21  member is subject to the property tax levy under subdivision 4 
251.22  for the taxes payable year following the notice of the 
251.23  withdrawal, unless the board and the withdrawing member agree 
251.24  otherwise by action of their governing bodies. 
251.25     (c) Notwithstanding subdivision 2, if the district is 
251.26  comprised of only two political subdivisions and one of the 
251.27  political subdivisions withdraws, the district can continue to 
251.28  exist. 
251.29     Subd. 9.  [DISSOLUTION.] If the special taxing district is 
251.30  dissolved, the assets and liabilities may be assigned to a 
251.31  successor entity, if any, or otherwise disposed of for public 
251.32  purposes as provided by law.  
251.33     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
251.34  levied in 2002, payable in 2003, through taxes levied in 2007, 
251.35  payable in 2008. 
251.36     Sec. 5.  Minnesota Statutes 2000, section 270.11, is 
252.1   amended by adding a subdivision to read: 
252.2      Subd. 8.  [SPECIALIZED ASSISTANCE TO ASSESSORS.] Upon 
252.3   request of a county assessor, the commissioner of revenue shall, 
252.4   through the commissioner's regional representatives, advise and 
252.5   assist the assessor in assessing commercial and industrial 
252.6   single-use property, preparing for tax court proceedings, and 
252.7   performing other functions or duties requiring specialized 
252.8   knowledge or experience. 
252.9      Sec. 6.  Minnesota Statutes 2000, section 271.01, 
252.10  subdivision 5, is amended to read: 
252.11     Subd. 5.  [JURISDICTION.] The tax court shall have 
252.12  statewide jurisdiction.  Except for an appeal to the supreme 
252.13  court or any other appeal allowed under this subdivision, the 
252.14  tax court shall be the sole, exclusive, and final authority for 
252.15  the hearing and determination of all questions of law and fact 
252.16  arising under the tax laws of the state, as defined in this 
252.17  subdivision, in those cases that have been appealed to the tax 
252.18  court and in any case that has been transferred by the district 
252.19  court to the tax court.  The tax court shall have no 
252.20  jurisdiction in any case that does not arise under the tax laws 
252.21  of the state or in any criminal case or in any case determining 
252.22  or granting title to real property or in any case that is under 
252.23  the probate jurisdiction of the district court.  The small 
252.24  claims division of the tax court shall have no jurisdiction in 
252.25  any case dealing with property valuation or assessment for 
252.26  property tax purposes until the taxpayer has appealed the 
252.27  valuation or assessment to the county board of equalization, and 
252.28  in those towns and cities which have not transferred their 
252.29  duties to the county, the town or city board of equalization, 
252.30  except for:  (i) those taxpayers whose original assessments are 
252.31  determined by the commissioner of revenue; and (ii) those 
252.32  taxpayers appealing a denial of a current year application for 
252.33  the homestead classification for their property and the denial 
252.34  was not reflected on a valuation notice issued in the year; and 
252.35  (iii) any case dealing with property valuation, assessment, or 
252.36  taxation for property tax purposes and meeting the 
253.1   jurisdictional requirements of section 271.21, subdivision 2, 
253.2   paragraph (c).  The tax court shall have no jurisdiction in any 
253.3   case involving an order of the state board of equalization 
253.4   unless a taxpayer contests the valuation of property.  Laws 
253.5   governing taxes, aids, and related matters administered by the 
253.6   commissioner of revenue, laws dealing with property valuation, 
253.7   assessment or taxation of property for property tax purposes, 
253.8   and any other laws that contain provisions authorizing review of 
253.9   taxes, aids, and related matters by the tax court shall be 
253.10  considered tax laws of this state subject to the jurisdiction of 
253.11  the tax court.  This subdivision shall not be construed to 
253.12  prevent an appeal, as provided by law, to an administrative 
253.13  agency, board of equalization, review under section 274.13, 
253.14  subdivision 1c, or to the commissioner of revenue.  Wherever 
253.15  used in this chapter, the term commissioner shall mean the 
253.16  commissioner of revenue, unless otherwise specified. 
253.17     Sec. 7.  Minnesota Statutes 2000, section 271.21, 
253.18  subdivision 2, is amended to read: 
253.19     Subd. 2.  [JURISDICTION.] At the election of the taxpayer, 
253.20  the small claims division shall have jurisdiction only in the 
253.21  following matters: 
253.22     (a) cases involving valuation, assessment, or taxation of 
253.23  real or personal property, if the taxpayer has satisfied the 
253.24  requirements of section 271.01, subdivision 5, and:  (i) the 
253.25  issue is a denial of a current year application for the 
253.26  homestead classification for the taxpayer's property and the 
253.27  denial was not reflected on a valuation notice issued in the 
253.28  year; or (ii) in the case of nonhomestead property, the 
253.29  assessor's estimated market value is less than $100,000; or 
253.30     (b) any other case concerning the tax laws as defined in 
253.31  section 271.01, subdivision 5, in which the amount in 
253.32  controversy does not exceed $5,000, including penalty and 
253.33  interest; or 
253.34     (c) cases involving valuation, assessment, or taxation of 
253.35  real or personal property if: 
253.36     (i) the issue is a denial of a current year application for 
254.1   the homestead classification for the taxpayer's property; 
254.2      (ii) only one parcel is included in the petition, the 
254.3   entire parcel is classified as homestead 1a or 1b pursuant to 
254.4   section 273.13, and the parcel contains no more than one 
254.5   dwelling unit; or 
254.6      (iii) the assessor's estimated market value of the property 
254.7   included in the petition is less than $300,000. 
254.8      Sec. 8.  Minnesota Statutes 2000, section 272.02, 
254.9   subdivision 9, is amended to read: 
254.10     Subd. 9.  [PERSONAL PROPERTY; EXCEPTIONS.] Except for the 
254.11  taxable personal property enumerated below, all personal 
254.12  property and the property described in section sections 272.03, 
254.13  subdivision 1, paragraphs (c) and (d), and 272.028 shall be 
254.14  exempt.  
254.15     The following personal property shall be taxable:  
254.16     (a) except as provided in section 272.028, personal 
254.17  property which is part of an electric generating, transmission, 
254.18  or distribution system or a pipeline system transporting or 
254.19  distributing water, gas, crude oil, or petroleum products or 
254.20  mains and pipes used in the distribution of steam or hot or 
254.21  chilled water for heating or cooling buildings and structures; 
254.22     (b) railroad docks and wharves which are part of the 
254.23  operating property of a railroad company as defined in section 
254.24  270.80; 
254.25     (c) personal property defined in section 272.03, 
254.26  subdivision 2, clause (3); 
254.27     (d) leasehold or other personal property interests which 
254.28  are taxed pursuant to section 272.01, subdivision 2; 273.124, 
254.29  subdivision 7; or 273.19, subdivision 1; or any other law 
254.30  providing the property is taxable as if the lessee or user were 
254.31  the fee owner; 
254.32     (e) manufactured homes and sectional structures, including 
254.33  storage sheds, decks, and similar removable improvements 
254.34  constructed on the site of a manufactured home, sectional 
254.35  structure, park trailer or travel trailer as provided in section 
254.36  273.125, subdivision 8, paragraph (f); and 
255.1      (f) flight property as defined in section 270.071.  
255.2      <b>[EFFECTIVE DATE.]</b> This section is effective for the 2001 
255.3   assessment and thereafter. 
255.4      Sec. 9.  Minnesota Statutes 2000, section 272.02, 
255.5   subdivision 10, is amended to read: 
255.6      Subd. 10.  [PERSONAL PROPERTY USED FOR POLLUTION CONTROL.] 
255.7   Personal property used primarily for the abatement and control 
255.8   of air, water, or land pollution is exempt to the extent that it 
255.9   is so used, and real property is exempt if it is used primarily 
255.10  for abatement and control of air, water, or land pollution as 
255.11  part of an agricultural operation, as a part of a centralized 
255.12  treatment and recovery facility operating under a permit issued 
255.13  by the Minnesota pollution control agency pursuant to chapters 
255.14  115 and 116 and Minnesota Rules, parts 7001.0500 to 7001.0730, 
255.15  and 7045.0020 to 7045.1260, as a wastewater treatment facility 
255.16  and for the treatment, recovery, and stabilization of metals, 
255.17  oils, chemicals, water, sludges, or inorganic materials from 
255.18  hazardous industrial wastes, or as part of an electric 
255.19  generation system.  For purposes of this subdivision, personal 
255.20  property includes ponderous machinery and equipment used in a 
255.21  business or production activity that at common law is considered 
255.22  real property. 
255.23     Any taxpayer requesting exemption of all or a portion of 
255.24  any real property or any equipment or device, or part thereof, 
255.25  operated primarily for the control or abatement of air or, 
255.26  water, or land pollution shall file an application with the 
255.27  commissioner of revenue.  The equipment or device shall meet 
255.28  standards, rules, or criteria prescribed by the Minnesota 
255.29  pollution control agency, and must be installed or operated in 
255.30  accordance with a permit or order issued by that agency.  The 
255.31  Minnesota pollution control agency shall upon request of the 
255.32  commissioner furnish information or and advice to the 
255.33  commissioner.  
255.34     The information and advice furnished by the Minnesota 
255.35  pollution control agency must include statements as to whether 
255.36  the equipment, device, or real property meets a standard, rule, 
256.1   criteria, guideline, policy, or order of the Minnesota pollution 
256.2   control agency, and whether the equipment, device, or real 
256.3   property is installed or operated in accordance with it.  On 
256.4   determining that property qualifies for exemption, the 
256.5   commissioner shall issue an order exempting the property from 
256.6   taxation.  The equipment or, device, or real property shall 
256.7   continue to be exempt from taxation as long as the permit order 
256.8   issued by the Minnesota pollution control agency commissioner 
256.9   remains in effect. 
256.10     <b>[EFFECTIVE DATE.]</b> This section is effective for exemption 
256.11  applications received on or after July 1, 2001.  
256.12     Sec. 10.  Minnesota Statutes 2000, section 272.02, 
256.13  subdivision 22, is amended to read: 
256.14     Subd. 22.  [WIND ENERGY CONVERSION SYSTEMS.] (a) Small 
256.15  scale wind energy conversion systems installed after January 1, 
256.16  1991, and used as an electric power source are exempt. 
256.17     "Small scale wind energy conversion systems" are wind 
256.18  energy conversion systems, as defined in section 216C.06, 
256.19  subdivision 12, including the foundation or support pad, which 
256.20  (i) are used as an electric power source; (ii) are located 
256.21  within one county and owned by the same owner; and (iii) produce 
256.22  two megawatts or less of electricity as measured by nameplate 
256.23  ratings. 
256.24     (b) Medium scale wind energy conversion systems installed 
256.25  after January 1, 1991, are treated as follows:  (i) the 
256.26  foundation and support pad are taxable; (ii) the associated 
256.27  supporting and protective structures are exempt for the first 
256.28  five assessment years after they have been constructed, and 
256.29  thereafter, 30 percent of the market value of the associated 
256.30  supporting and protective structures are taxable; and (iii) the 
256.31  turbines, blades, transformers, and its related equipment, are 
256.32  exempt.  "Medium scale wind energy conversion systems" are wind 
256.33  energy conversion systems as defined in section 216C.06, 
256.34  subdivision 12, including the foundation or support pad, which:  
256.35  (i) are used as an electric power source; (ii) are located 
256.36  within one county and owned by the same owner; and (iii) produce 
257.1   more than two but equal to or less than 12 megawatts of energy 
257.2   as measured by nameplate ratings. 
257.3      (c) Large scale wind energy conversion systems installed 
257.4   after January 1, 1991, are treated as follows:  25 percent of 
257.5   the market value of all property is taxable, including (i) the 
257.6   foundation and support pad; (ii) the associated supporting and 
257.7   protective structures; and (iii) the turbines, blades, 
257.8   transformers, and its related equipment.  "Large scale wind 
257.9   energy conversion systems" are wind energy conversion systems as 
257.10  defined in section 216C.06, subdivision 12, including the 
257.11  foundation or support pad, which (i) are used as an electric 
257.12  power source; and (ii) produce more than 12 megawatts of energy 
257.13  as measured by nameplate ratings. 
257.14     (d) The total size of a wind energy conversion system under 
257.15  this subdivision shall be determined according to this paragraph.
257.16  Unless the systems are interconnected with different 
257.17  distribution systems, the nameplate capacity of one wind energy 
257.18  conversion system shall be combined with the nameplate capacity 
257.19  of any other wind energy conversion system that is: 
257.20     (1) located within five miles of the wind energy conversion 
257.21  system; 
257.22     (2) constructed within the same calendar year as the wind 
257.23  energy conversion system; and 
257.24     (3) under common ownership.  
257.25     In the case of a dispute, the commissioner of commerce 
257.26  shall determine the total size of the system, and shall draw all 
257.27  reasonable inferences in favor of combining the systems. 
257.28     (e) In making a determination under paragraph (d), the 
257.29  commissioner of commerce may determine that two wind energy 
257.30  conversion systems are under common ownership when the 
257.31  underlying ownership structure contains similar persons or 
257.32  entities, even if the ownership shares differ between the two 
257.33  systems.  Wind energy conversion systems are not under common 
257.34  ownership solely because the same person or entity provided 
257.35  equity financing for the systems. 
257.36     <b>[EFFECTIVE DATE.]</b> This section is effective for wind energy 
258.1   conversion systems installed after January 1, 2001. 
258.2      Sec. 11.  Minnesota Statutes 2000, section 272.02, is 
258.3   amended by adding a subdivision to read: 
258.4      Subd. 45.  [PUBLICLY OWNED PARKING FACILITIES.] Parking 
258.5   lots, ramps, structures, garages, and other facilities for 
258.6   vehicle parking owned by a municipality or authority established 
258.7   under chapter 469 or any affiliate nonprofit corporate entity 
258.8   organized by a municipality or authority are exempt, including 
258.9   those parking lots, ramps, structures, garages, and other 
258.10  facilities that are in whole or in part operated by, used by, 
258.11  leased, or subleased to an individual or nonprofit or for-profit 
258.12  entity. 
258.13     <b>[EFFECTIVE DATE.]</b> This section is effective for assessment 
258.14  year 2001 and thereafter. 
258.15     Sec. 12.  Minnesota Statutes 2000, section 272.02, is 
258.16  amended by adding a subdivision to read: 
258.17     Subd. 46.  [RESIDENTIAL BUILDINGS ON TEMPORARY SITES.] A 
258.18  newly constructed building that is situated on real property is 
258.19  exempt if it is: 
258.20     (1) intended for future residential occupancy; 
258.21     (2) on a temporary foundation and intended to be moved; 
258.22     (3) not used as a model or for any other business purposes; 
258.23     (4) not connected to any utilities; and 
258.24     (5) located on land that will not be sold with the building.
258.25     The exemption under this subdivision is allowable for only 
258.26  one assessment year after the date of the initial construction 
258.27  of the building. 
258.28     <b>[EFFECTIVE DATE.]</b> This section is effective for assessment 
258.29  year 2001 and thereafter. 
258.30     Sec. 13.  Minnesota Statutes 2000, section 272.02, is 
258.31  amended by adding a subdivision to read: 
258.32     Subd. 47.  [POULTRY LITTER BIOMASS GENERATION FACILITY; 
258.33  PERSONAL PROPERTY.] Notwithstanding subdivision 9, clause (a), 
258.34  attached machinery and other personal property which is part of 
258.35  an electrical generating facility that meets the requirements of 
258.36  this subdivision is exempt.  At the time of construction, the 
259.1   facility must: 
259.2      (1) be designed to utilize poultry litter as a primary fuel 
259.3   source; and 
259.4      (2) be constructed for the purpose of generating power at 
259.5   the facility that will be sold pursuant to a contract approved 
259.6   by the public utilities commission in accordance with the 
259.7   biomass mandate imposed under section 216B.2424. 
259.8      Construction of the facility must be commenced after 
259.9   January 1, 2000, and before December 31, 2002.  Property 
259.10  eligible for this exemption does not include electric 
259.11  transmission lines and interconnections or gas pipelines and 
259.12  interconnections appurtenant to the property or the facility. 
259.13     <b>[EFFECTIVE DATE.]</b> This section is effective for assessment 
259.14  year 2001 and thereafter. 
259.15     Sec. 14.  Minnesota Statutes 2000, section 272.02, is 
259.16  amended by adding a subdivision to read: 
259.17     Subd. 48.  [WASTE TIRE COGENERATION FACILITY; PERSONAL 
259.18  PROPERTY.] Notwithstanding subdivision 9, clause (a), attached 
259.19  machinery and other personal property which is part of an 
259.20  electric generating facility that meets the requirements of this 
259.21  subdivision is exempt.  At the time of construction, the 
259.22  facility must: 
259.23     (1) be designed to utilize waste tires as a primary fuel 
259.24  source; and 
259.25     (2) be a cogeneration electric generating facility of 15 to 
259.26  25 megawatts of installed capacity. 
259.27     Construction of the facility must be commenced after 
259.28  January 1, 2000, and before January 1, 2004.  Property eligible 
259.29  for this exemption does not include electric transmission lines 
259.30  and interconnections or gas pipelines and interconnections 
259.31  appurtenant to the property or the facility. 
259.32     <b>[EFFECTIVE DATE.]</b> This section is effective for assessment 
259.33  year 2001 and thereafter. 
259.34     Sec. 15.  Minnesota Statutes 2000, section 272.02, is 
259.35  amended by adding a subdivision to read: 
259.36     Subd. 49.  [BIOMASS ELECTRICAL GENERATION FACILITY; 
260.1   PERSONAL PROPERTY.] Notwithstanding subdivision 9, clause (a), 
260.2   attached machinery and other personal property which is part of 
260.3   an electrical generating facility that meets the requirements of 
260.4   this subdivision is exempt.  At the time of construction, the 
260.5   facility must: 
260.6      (1) be designed to utilize biomass as established in 
260.7   section 216B.2424 as a primary fuel source; and 
260.8      (2) be constructed for the purpose of generating power at 
260.9   the facility that will be sold pursuant to a contract approved 
260.10  by the public utilities commission in accordance with the 
260.11  biomass mandate imposed under section 216B.2424.  
260.12     Construction of the facility must be commenced after 
260.13  January 1, 2000, and before December 31, 2002.  Property 
260.14  eligible for this exemption does not include electric 
260.15  transmission lines and interconnections or gas pipelines and 
260.16  interconnections appurtenant to the property or facility.  
260.17     <b>[EFFECTIVE DATE.]</b> This section is effective for assessment 
260.18  year 2001 and thereafter. 
260.19     Sec. 16.  Minnesota Statutes 2000, section 272.02, is 
260.20  amended by adding a subdivision to read: 
260.21     Subd. 50.  [AGRICULTURAL HISTORICAL SOCIETY PROPERTY; 
260.22  EDUCATIONAL PURPOSES.] Property is exempt from taxation if it: 
260.23     (1) is owned and operated by a nonprofit charitable 
260.24  organization that qualifies for tax exemption under section 
260.25  501(c)(3) of the Internal Revenue Code of 1986, as amended; and 
260.26     (2) is primarily used for agricultural educational purposes 
260.27  including acquiring, preserving, restoring, and exhibiting 
260.28  artifacts and other items useful in providing an understanding 
260.29  of local or regional agricultural history. 
260.30     The exemption under this subdivision is limited to a 
260.31  maximum of $100,000 market value for a nonprofit charitable 
260.32  organization. 
260.33     <b>[EFFECTIVE DATE.]</b> This section is effective for assessment 
260.34  year 2001 and thereafter. 
260.35     Sec. 17.  [272.028] [PERSONAL PROPERTY USED TO GENERATE 
260.36  ELECTRICITY.] 
261.1      Subdivision 1.  [NEW PLANT CONSTRUCTION AFTER JANUARY 1, 
261.2   2001.] For a new generating plant built and placed in service 
261.3   after January 1, 2001, personal property used to generate 
261.4   electric power is exempt if an exemption of generation personal 
261.5   property form, with an attached siting agreement, signed by the 
261.6   utility and the host taxing authorities is filed with the 
261.7   department of revenue.  The siting agreement may include a plan 
261.8   to provide fees or compensation to the host jurisdictions.  
261.9      Subd. 2.  [EXISTING PLANT; INCREASE IN NAMEPLATE CAPACITY.] 
261.10  For a plant existing or under construction on the day of final 
261.11  enactment of this act, a partial exemption applies if an 
261.12  exemption of generation personal property form, with an attached 
261.13  siting agreement, signed by the utility and the host taxing 
261.14  authorities is filed with the department of revenue, and if the 
261.15  nameplate capacity of the plant is increased from that existing 
261.16  on the day of final enactment of this act.  The siting agreement 
261.17  may include a plan to provide fees or compensation to the host 
261.18  jurisdictions.  This partial exemption must be computed by 
261.19  taking the increase in megawatts over the total megawatt 
261.20  nameplate capacity after construction is complete, multiplied by 
261.21  the market value of all taxable tools, implements, and machinery 
261.22  of the generating plant as determined by the commissioner of 
261.23  revenue.  The resulting exemption is effective beginning in the 
261.24  next assessment year. 
261.25     Subd. 3.  [EXISTING PLANT; NO INCREASE IN NAMEPLATE 
261.26  CAPACITY; CAPITAL EXPENDITURES.] (a) For a plant existing on the 
261.27  day of final enactment of this act, a reduction in market value 
261.28  of the personal property of a plant applies if the utility: 
261.29     (1) has made capital expenditures to the plant in a 
261.30  calendar year that exceed two percent of the estimated market 
261.31  value of the plant for the previous year; and 
261.32     (2) applies to the commissioner of revenue and provides 
261.33  information documenting the amount of capital expenditures made 
261.34  in the calendar year, in the form prescribed by the commissioner.
261.35  The market value reduction equals 75 percent of the capital 
261.36  expenditures made, except the market value reductions under this 
262.1   subdivision may not exceed 25 percent of the plant's market 
262.2   value, excluding the reductions under this section for prior 
262.3   years.  The reduction applies beginning for the first assessment 
262.4   year after the qualifying capital expenditures are made. 
262.5      (b) The reduction in market value determined under this 
262.6   subdivision applies after the commissioner has allocated the 
262.7   utility's market value, using the unit value method, to the 
262.8   taxing jurisdiction where the plant is located.  The market 
262.9   value reduction is permanent and applies in each subsequent 
262.10  assessment year. 
262.11     (c) For purposes of this subdivision, "capital expenditures"
262.12  excludes any expenditures made for ordinary plant maintenance or 
262.13  repair. 
262.14     Subd. 4.  [DEFINITION; APPLICABILITY.] For purposes of this 
262.15  section, "personal property" means tools, implements, and 
262.16  machinery of the generating plant.  The exemption under this 
262.17  section does not apply to transformers, transmission lines, 
262.18  distribution lines, or any other tools, implements, and 
262.19  machinery that are part of an electric substation, wherever 
262.20  located. 
262.21     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
262.22  following final enactment. 
262.23     Sec. 18.  Minnesota Statutes 2000, section 273.061, 
262.24  subdivision 1, is amended to read: 
262.25     Subdivision 1.  [OFFICE CREATED; APPOINTMENT, 
262.26  QUALIFICATIONS.] Every county in this state shall have a county 
262.27  assessor.  The county assessor shall be appointed by the board 
262.28  of county commissioners.  The assessor shall be selected and 
262.29  appointed because of knowledge and training in the field of 
262.30  property taxation and appointment shall be approved by the 
262.31  commissioner of revenue before the same shall become effective.  
262.32  Upon receipt by the county commissioners of the commissioner of 
262.33  revenue's refusal to approve an appointment, the term of the 
262.34  appointee shall terminate at the end of that day.  
262.35     The commissioner of revenue may grant approval on a 
262.36  probationary basis for a period of two years.  The commissioner 
263.1   must base the decision to impose a probationary period on 
263.2   objective and consistent criteria.  At the end of the two-year 
263.3   probationary period, the commissioner may either refuse to 
263.4   approve the person's appointment for the remainder of the 
263.5   person's four-year term, approve the person's appointment but 
263.6   only for another two-year probationary period, or 
263.7   unconditionally approve the person's appointment for the 
263.8   remainder of the four-year term for which the person was 
263.9   originally appointed by the county board.  The criteria shall 
263.10  not be considered rules and are not subject to the 
263.11  Administrative Procedure Act. 
263.12     Notwithstanding any law to the contrary, a county assessor 
263.13  must have senior accreditation from the state board of assessors 
263.14  by January 1, 1992, or within two years of the assessor's first 
263.15  appointment under this section, whichever is later. 
263.16     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
263.17  following final enactment. 
263.18     Sec. 19.  Minnesota Statutes 2000, section 273.061, 
263.19  subdivision 2, is amended to read: 
263.20     Subd. 2.  [TERM; VACANCY.] (a) The terms of county 
263.21  assessors appointed under this section shall be four years.  A 
263.22  new term shall begin on January 1 of every fourth year after 
263.23  1973.  When any vacancy in the office occurs, the board of 
263.24  county commissioners, within 30 90 days thereafter, shall fill 
263.25  the same by appointment for the remainder of the term, following 
263.26  the procedure prescribed in subdivision 1.  The term of the 
263.27  county assessor may be terminated by the board of county 
263.28  commissioners at any time, on charges of inefficiency or neglect 
263.29  of duty malfeasance, misfeasance, or nonfeasance by the 
263.30  commissioner of revenue.  If the board of county commissioners 
263.31  does not intend to reappoint a county assessor who has been 
263.32  certified by the state board of assessors, the board shall 
263.33  present written notice to the county assessor not later than 90 
263.34  days prior to the termination of the assessor's term, that it 
263.35  does not intend to reappoint the assessor.  If written notice is 
263.36  not timely made, the county assessor will automatically be 
264.1   reappointed by the board of county commissioners. 
264.2      The commissioner of revenue may recommend to the state 
264.3   board of assessors the nonrenewal, suspension, or revocation of 
264.4   an assessor's license as provided in sections 270.41 to 270.53.  
264.5      (b) In the event of a vacancy in the office of county 
264.6   assessor, through death, resignation or other reasons, the 
264.7   deputy (or chief deputy, if more than one) shall perform the 
264.8   functions of the office.  If there is no deputy, the county 
264.9   auditor shall designate a person to perform the duties of the 
264.10  office until an appointment is made as provided in clause (a).  
264.11  Such person shall perform the duties of the office for a period 
264.12  not exceeding 30 90 days during which the county board must 
264.13  appoint a county assessor.  Such 30-day 90-day period may, 
264.14  however, be extended by written approval of the commissioner of 
264.15  revenue. 
264.16     (c) In the case of the first appointment under paragraph 
264.17  (a) of a county assessor who is accredited but who does not have 
264.18  senior accreditation, an approval of the appointment by the 
264.19  commissioner shall be provisional, provided that a county 
264.20  assessor appointed to a provisional term under this paragraph 
264.21  must reapply to the commissioner at the end of the provisional 
264.22  term.  A provisional term may not exceed two years.  The 
264.23  commissioner shall not approve the appointment for the remainder 
264.24  of the four-year term unless the assessor has obtained senior 
264.25  accreditation. 
264.26     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
264.27  following final enactment. 
264.28     Sec. 20.  Minnesota Statutes 2000, section 273.061, 
264.29  subdivision 8, is amended to read: 
264.30     Subd. 8.  [POWERS AND DUTIES.] The county assessor shall 
264.31  have the following powers and duties: 
264.32     (1) To call upon and confer with the township and city 
264.33  assessors in the county, and advise and give them the necessary 
264.34  instructions and directions as to their duties under the laws of 
264.35  this state, to the end that a uniform assessment of all real 
264.36  property in the county will be attained. 
265.1      (2) To assist and instruct the local assessors in the 
265.2   preparation and proper use of land maps and record cards, in the 
265.3   property classification of real and personal property, and in 
265.4   the determination of proper standards of value. 
265.5      (3) To keep the local assessors in the county advised of 
265.6   all changes in assessment laws and all instructions which the 
265.7   assessor receives from the commissioner of revenue relating to 
265.8   their duties. 
265.9      (4) To have authority to require the attendance of groups 
265.10  of local assessors at sectional meetings called by the assessor 
265.11  for the purpose of giving them further assistance and 
265.12  instruction as to their duties. 
265.13     (5) To require the attendance of all licensed assessors 
265.14  working in that county at annual instructional meetings 
265.15  presented in part by the department of revenue regional 
265.16  representative to provide assistance and instruction as to their 
265.17  duties under the law and the proper implementation of assessment 
265.18  procedures. 
265.19     (6) To immediately commence the preparation of a large 
265.20  scale topographical land map of the county, in such form as may 
265.21  be prescribed by the commissioner of revenue, showing thereon 
265.22  the location of all railroads, highways and roads, bridges, 
265.23  rivers and lakes, swamp areas, wooded tracts, stony ridges and 
265.24  other features which might affect the value of the land.  
265.25  Appropriate symbols shall be used to indicate the best, the 
265.26  fair, and the poor land of the county.  For use in connection 
265.27  with the topographical land map, the assessor shall prepare and 
265.28  keep available in the assessor's office tables showing fair 
265.29  average minimum and maximum market values per acre of 
265.30  cultivated, meadow, pasture, cutover, timber and waste lands of 
265.31  each township.  The assessor shall keep the map and tables 
265.32  available in the office for the guidance of town assessors, 
265.33  boards of review, and the county board of equalization. 
265.34     (6) (7) To also prepare and keep available in the office 
265.35  for the guidance of town assessors, boards of review and the 
265.36  county board of equalization, a land valuation map of the 
266.1   county, in such form as may be prescribed by the commissioner of 
266.2   revenue.  This map, which shall include the bordering tier of 
266.3   townships of each county adjoining, shall show the average 
266.4   market value per acre, both with and without improvements, as 
266.5   finally equalized in the last assessment of real estate, of all 
266.6   land in each town or unorganized township which lies outside the 
266.7   corporate limits of cities.  
266.8      (7) (8) To regularly examine all conveyances of land 
266.9   outside the corporate limits of cities of the first and second 
266.10  class, filed with the county recorder of the county, and keep a 
266.11  file, by descriptions, of the considerations shown thereon.  
266.12  From the information obtained by comparing the considerations 
266.13  shown with the market values assessed, the assessor shall make 
266.14  recommendations to the county board of equalization of necessary 
266.15  changes in individual assessments or aggregate valuations. 
266.16     (8) (9) To become familiar with the values of the different 
266.17  items of personal property so as to be in a position when called 
266.18  upon to advise the boards of review and the county board of 
266.19  equalization concerning property, market values thereof. 
266.20     (9) (10) While the county board of equalization is in 
266.21  session, to give it every possible assistance to enable it to 
266.22  perform its duties.  The assessor shall furnish the board with 
266.23  all necessary charts, tables, comparisons, and data which it 
266.24  requires in its deliberations, and shall make whatever 
266.25  investigations the board may desire. 
266.26     (10) (11) At the request of either the board of county 
266.27  commissioners or the commissioner of revenue, to investigate 
266.28  applications for reductions of valuation and abatements and 
266.29  settlements of taxes, examine the real or personal property 
266.30  involved, and submit written reports and recommendations with 
266.31  respect to the applications, in such form as may be prescribed 
266.32  by the board of county commissioners and commissioner of revenue.
266.33     (11) (12) To make diligent search each year for real and 
266.34  personal property which has been omitted from assessment in the 
266.35  county, and report all such omissions to the county auditor. 
266.36     (12) (13) To regularly confer with county assessors in all 
267.1   adjacent counties about the assessment of property in order to 
267.2   uniformly assess and equalize the value of similar properties 
267.3   and classes of property located in adjacent counties.  The 
267.4   conference shall emphasize the assessment of agricultural and 
267.5   commercial and industrial property or other properties that may 
267.6   have an inadequate number of sales in a single county. 
267.7      (13) (14) To render such other services pertaining to the 
267.8   assessment of real and personal property in the county as are 
267.9   not inconsistent with the duties set forth in this section, and 
267.10  as may be required by the board of county commissioners or by 
267.11  the commissioner of revenue. 
267.12     (14) (15) To maintain a record, in conjunction with other 
267.13  county offices, of all transfers of property to assist in 
267.14  determining the proper classification of property, including but 
267.15  not limited to, transferring homestead property and name changes 
267.16  on homestead property. 
267.17     (15) (16) To determine if a homestead application is 
267.18  required due to the transfer of homestead property or an owner's 
267.19  name change on homestead property. 
267.20     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2001, 
267.21  and thereafter. 
267.22     Sec. 21.  Minnesota Statutes 2000, section 273.072, 
267.23  subdivision 1, is amended to read: 
267.24     Subdivision 1.  Any county and any city or town lying 
267.25  wholly or partially within the county and constituting a 
267.26  separate assessment district may, by agreement entered into 
267.27  under section 471.59 and approved by the commissioner of 
267.28  revenue, provide for the assessment of property in the 
267.29  municipality or town by the county assessor.  Any two or more 
267.30  cities or towns constituting separate assessment districts, 
267.31  whether their assessors are elective or appointive, may enter 
267.32  into an agreement under section 471.59 for the assessment of 
267.33  property in the contracting units by the assessor of one of the 
267.34  units or by an assessor who is jointly employed.  
267.35     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
267.36  following final enactment. 
268.1      Sec. 22.  [273.0755] [TRAINING AND EDUCATION OF PROPERTY 
268.2   TAX PERSONNEL.] 
268.3      (a) Beginning with the four-year period starting on July 1, 
268.4   2000, every person licensed by the state board of assessors at 
268.5   the Accredited Minnesota Assessor level or higher, shall 
268.6   successfully complete a week-long Minnesota laws course 
268.7   sponsored by the department of revenue at least once in every 
268.8   four-year period.  An assessor need not attend the course if 
268.9   they successfully pass the test for the course. 
268.10     (b) The commissioner of revenue may require that each 
268.11  county, and each city for which the city assessor performs the 
268.12  duties of county assessor, have (i) a person on the assessor's 
268.13  staff who is certified by the department of revenue in sales 
268.14  ratio calculations, (ii) an officer or employee who is certified 
268.15  by the department of revenue in tax calculations, and (iii) an 
268.16  officer or employee who is certified by the department of 
268.17  revenue in the proper preparation of abstracts of assessment.  
268.18     (c) The commissioner of revenue may require that each 
268.19  county have an officer or employee who is certified by the 
268.20  department of revenue in the proper preparation of abstracts of 
268.21  tax lists. 
268.22     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2001, 
268.23  and thereafter. 
268.24     Sec. 23.  Minnesota Statutes 2000, section 273.11, 
268.25  subdivision 1a, is amended to read: 
268.26     Subd. 1a.  [LIMITED MARKET VALUE.] In the case of all 
268.27  property classified as agricultural homestead or nonhomestead, 
268.28  residential homestead or nonhomestead, or noncommercial seasonal 
268.29  recreational residential, the assessor shall compare the value 
268.30  with that the taxable portion of the value determined in the 
268.31  preceding assessment.  The amount of the increase entered in the 
268.32  current assessment shall not exceed the greater of (1) 8.5 
268.33  percent of the value in the preceding assessment, or (2) 15 
268.34  percent of the difference between the current assessment and the 
268.35  preceding assessment. 
268.36     For assessment year 2002, the amount of the increase shall 
269.1   not exceed the greater of (1) 12 percent of the value in the 
269.2   preceding assessment, or (2) 20 percent of the difference 
269.3   between the current assessment and the preceding assessment. 
269.4      For assessment year 2003, the amount of the increase shall 
269.5   not exceed the greater of (1) 12 percent of the value in the 
269.6   preceding assessment, or (2) 25 percent of the difference 
269.7   between the current assessment and the preceding assessment. 
269.8      For assessment year 2004, the amount of the increase shall 
269.9   not exceed the greater of (1) 12 percent of the value in the 
269.10  preceding assessment, or (2) 33 percent of the difference 
269.11  between the current assessment and the preceding assessment. 
269.12     For assessment year 2005, the amount of the increase shall 
269.13  not exceed the greater of (1) 12 percent of the value in the 
269.14  preceding assessment, or (2) 50 percent of the difference 
269.15  between the current assessment and the preceding assessment.  
269.16     This limitation shall not apply to increases in value due 
269.17  to improvements.  For purposes of this subdivision, the term 
269.18  "assessment" means the value prior to any exclusion under 
269.19  subdivision 16. 
269.20     The provisions of this subdivision shall be in effect only 
269.21  through assessment year 2001 2005 as provided in this 
269.22  subdivision. 
269.23     For purposes of the assessment/sales ratio study conducted 
269.24  under section 127A.48, and the computation of state aids paid 
269.25  under chapters 122A, 123A, 123B, 124D, 125A, 126C, 127A, and 
269.26  477A, market values and net tax capacities determined under this 
269.27  subdivision and subdivision 16, shall be used. 
269.28     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
269.29  following final enactment. 
269.30     Sec. 24.  Minnesota Statutes 2000, section 273.11, 
269.31  subdivision 14, is amended to read: 
269.32     Subd. 14.  [VACANT LAND PLATTED ON OR AFTER BEFORE AUGUST 
269.33  1, 1991 2001.] (a) All land platted on or after before August 1, 
269.34  1991 2001, and not improved with a permanent structure, shall be 
269.35  assessed as provided in this subdivision.  The assessor shall 
269.36  determine the market value of each individual lot based upon the 
270.1   highest and best use of the property as unplatted land.  In 
270.2   establishing the market value of the property, the assessor 
270.3   shall consider the sale price of the unplatted land or 
270.4   comparable sales of unplatted land of similar use and similar 
270.5   availability of public utilities. 
270.6      (b) The market value determined in paragraph (a) shall be 
270.7   increased as follows for each of the three assessment years 
270.8   immediately following the final approval of the plat:  one-third 
270.9   of the difference between the property's unplatted market value 
270.10  as determined under paragraph (a) and the market value based 
270.11  upon the highest and best use of the land as platted property 
270.12  shall be added in each of the three subsequent assessment years. 
270.13     (c) Any increase in market value after the first assessment 
270.14  year following the plat's final approval shall be added to the 
270.15  property's market value in the next assessment year.  
270.16  Notwithstanding paragraph (b), if construction begins before the 
270.17  expiration of the three years in paragraph (b), that lot shall 
270.18  be eligible for revaluation in the next assessment year.  The 
270.19  market value of a platted lot determined under this subdivision 
270.20  shall not exceed the value of that lot based upon the highest 
270.21  and best use of the property as platted land. 
270.22     <b>[EFFECTIVE DATE.]</b> This section is effective for land 
270.23  platted after July 31, 2001. 
270.24     Sec. 25.  Minnesota Statutes 2000, section 273.11, is 
270.25  amended by adding a subdivision to read: 
270.26     Subd. 14a.  [VACANT LAND PLATTED ON OR AFTER AUGUST 1, 
270.27  2001; LOCATED IN METROPOLITAN COUNTIES.] (a) All land platted on 
270.28  or after August 1, 2001, located in a metropolitan county, and 
270.29  not improved with a permanent structure, shall be assessed as 
270.30  provided in this subdivision.  The assessor shall determine the 
270.31  market value of each individual lot based upon the highest and 
270.32  best use of the property as unplatted land.  In establishing the 
270.33  market value of the property, the assessor shall consider the 
270.34  sale price of the unplatted land or comparable sales of 
270.35  unplatted land of similar use and similar availability of public 
270.36  utilities. 
271.1      (b) The market value determined in paragraph (a) shall be 
271.2   increased as follows for each of the three assessment years 
271.3   immediately following the final approval of the plat:  one-third 
271.4   of the difference between the property's unplatted market value 
271.5   as determined under paragraph (a) and the market value based 
271.6   upon the highest and best use of the land as platted property 
271.7   shall be added in each of the three subsequent assessment years. 
271.8      (c) Any increase in market value after the first assessment 
271.9   year following the plat's final approval shall be added to the 
271.10  property's market value in the next assessment year.  
271.11  Notwithstanding paragraph (b), if construction begins before the 
271.12  expiration of the three years in paragraph (b), that lot shall 
271.13  be eligible for revaluation in the next assessment year.  The 
271.14  market value of a platted lot determined under this subdivision 
271.15  shall not exceed the value of that lot based upon the highest 
271.16  and best use of the property as platted land. 
271.17     (d) For purposes of this section, "metropolitan county" 
271.18  means the counties of Anoka, Carver, Dakota, Hennepin, Ramsey, 
271.19  Scott, and Washington. 
271.20     <b>[EFFECTIVE DATE.]</b> This section is effective for land 
271.21  platted after July 31, 2001. 
271.22     Sec. 26.  Minnesota Statutes 2000, section 273.11, is 
271.23  amended by adding a subdivision to read: 
271.24     Subd. 14b.  [VACANT LAND PLATTED ON OR AFTER AUGUST 1, 
271.25  2001; LOCATED IN NONMETROPOLITAN COUNTIES.] (a) All land platted 
271.26  on or after August 1, 2001, located in a nonmetropolitan county, 
271.27  and not improved with a permanent structure, shall be assessed 
271.28  as provided in this subdivision.  The assessor shall determine 
271.29  the market value of each individual lot based upon the highest 
271.30  and best use of the property as unplatted land.  In establishing 
271.31  the market value of the property, the assessor shall consider 
271.32  the sale price of the unplatted land or comparable sales of 
271.33  unplatted land of similar use and similar availability of public 
271.34  utilities. 
271.35     (b) The market value determined in paragraph (a) shall be 
271.36  increased as follows for each of the five assessment years 
272.1   immediately following the final approval of the plat:  one-fifth 
272.2   of the difference between the property's unplatted market value 
272.3   as determined under paragraph (a) and the market value based 
272.4   upon the highest and best use of the land as platted property 
272.5   shall be added in each of the five subsequent assessment years. 
272.6      (c) Any increase in market value after the first assessment 
272.7   year following the plat's final approval shall be added to the 
272.8   property's market value in the next assessment year.  
272.9   Notwithstanding paragraph (b), if construction begins before the 
272.10  expiration of the five years in paragraph (b), that lot shall be 
272.11  eligible for revaluation in the next assessment year.  The 
272.12  market value of a platted lot determined under this subdivision 
272.13  shall not exceed the value of that lot based upon the highest 
272.14  and best use of the property as platted land. 
272.15     <b>[EFFECTIVE DATE.]</b> This section is effective for land 
272.16  platted after July 31, 2001. 
272.17     Sec. 27.  Minnesota Statutes 2000, section 273.111, 
272.18  subdivision 4, is amended to read: 
272.19     Subd. 4.  [DETERMINATION OF VALUE.] The value of any real 
272.20  estate described in subdivision 3 shall upon timely application 
272.21  by the owner, in the manner provided in subdivision 8, be 
272.22  determined solely with reference to its appropriate agricultural 
272.23  classification and value notwithstanding sections 272.03, 
272.24  subdivision 8, and 273.11.  In determining the value for ad 
272.25  valorem tax purposes, the assessor shall use sales data obtained 
272.26  from for agricultural lands located outside the seven 
272.27  metropolitan counties but within the region used for computing 
272.28  the range of values under section 273.11, subdivision 10.  The 
272.29  sales shall have having similar soil types, number of degree 
272.30  days, and other similar agricultural characteristics as 
272.31  contained in section 273.11, subdivision 10.  Furthermore, the 
272.32  assessor shall not consider any added values resulting from 
272.33  nonagricultural factors. 
272.34     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
272.35  following final enactment. 
272.36     Sec. 28.  [273.1115] [MINNESOTA ENVIRONMENTAL PRESERVATION 
273.1   PROPERTY TAX LAW.] 
273.2      Subdivision 1.  [CITATION.] This section may be cited as 
273.3   the "Minnesota Environmental Preservation Property Tax Law." 
273.4      Subd. 2.  [PUBLIC POLICY.] The present general system of ad 
273.5   valorem property taxation in the state of Minnesota does not 
273.6   provide an equitable basis for the taxation of certain real 
273.7   property and may result in excessive taxes on some land.  It is 
273.8   therefore declared to be the public policy of this state that 
273.9   the public interest would best be served by imposing property 
273.10  tax burdens through appropriate taxing measures upon certain 
273.11  properties within this state based upon their current use and 
273.12  not on their potential alternative or future use. 
273.13     Subd. 3.  [REQUIREMENTS.] (a) Real estate consisting of at 
273.14  least 20 acres classified under section 273.13, subdivision 22 
273.15  or 23, is entitled to valuation and tax deferment under this 
273.16  section only if it meets all of the following criteria: 
273.17     (1) the property is either (i) the homestead of the owner, 
273.18  the owner's spouse, or the owner or spouse's son or daughter, or 
273.19  (ii) has been in possession of the owner, the owner's spouse, or 
273.20  the owner or spouse's son or daughter for a period of at least 
273.21  seven years prior to application for benefits under this 
273.22  section; 
273.23     (2) the land consists of forestland, woodland, meadowland, 
273.24  slough, wasteland, or a combination thereof; 
273.25     (3) revenues derived from the property in the year 
273.26  immediately preceding application for enrollment in the program 
273.27  must not exceed $5 per acre and must continue to be less than $5 
273.28  per acre in each year that the property continues to be enrolled 
273.29  in the program; and 
273.30     (4) the property must border public waters and the land 
273.31  bordering the water must be substantially undeveloped and must 
273.32  not be platted.  For purposes of this clause, "undeveloped" 
273.33  means that the property contains no docks or landings on its 
273.34  shoreline and its natural terrain and vegetation has not been 
273.35  disturbed.  For purposes of this clause, "public waters" has the 
273.36  meaning given in section 103G.005, subdivision 15, paragraph 
274.1   (a), clauses (1) to (5) and (7) to (9). 
274.2      (b) If only a portion of the property meets the 
274.3   qualifications of this subdivision then only that portion 
274.4   qualifies for deferment under this section. 
274.5      (c) Valuation of real estate under this section is limited 
274.6   to parcels owned by noncorporate entities. 
274.7      Subd. 4.  [DETERMINATION OF VALUE.] Notwithstanding 
274.8   sections 272.03, subdivision 8, and 273.11, subdivision 1, upon 
274.9   timely application by the owner, in the manner provided in 
274.10  subdivision 6, the value of any real estate described in 
274.11  subdivision 3 must be determined with reference to its current 
274.12  use, except that in determining its value, the assessor shall 
274.13  ignore any value resulting from proximity to the public waters. 
274.14  The market value determined under this section cannot be less 
274.15  than the market value of the property for the assessment year 
274.16  preceding the year of enrollment. 
274.17     Subd. 5.  [SEPARATE DETERMINATION OF MARKET VALUE AND TAX; 
274.18  HIGHEST AND BEST USE.] The assessor shall annually make a 
274.19  separate determination of the market value of the real estate at 
274.20  its highest and best use.  The tax based upon the appropriate 
274.21  local tax rate and the highest and best use value must be 
274.22  recorded on the property assessment records. 
274.23     Subd. 6.  [APPLICATION.] Application for deferment of taxes 
274.24  and assessment under this section must be filed by May 1 of the 
274.25  assessment year.  Any application filed and granted continues in 
274.26  effect for subsequent years until the property no longer 
274.27  qualifies.  The application must be filed with the assessor of 
274.28  the taxing district in which the real property is located on 
274.29  such form as may be prescribed by the commissioner of revenue.  
274.30  The assessor may require proof by affidavit or otherwise that 
274.31  the property initially qualifies under subdivision 3, and 
274.32  continues to qualify each subsequent year. 
274.33     Subd. 7.  [ADDITIONAL TAXES.] When real property which has 
274.34  been valued and assessed under this section no longer qualifies 
274.35  under subdivision 3, the property is subject to additional 
274.36  taxes, in the amount equal to the difference between the taxes 
275.1   determined in accordance with subdivision 4, and the tax amount 
275.2   determined under subdivision 5, provided, however, that if the 
275.3   property was sold in an arms-length transaction the tax amount 
275.4   determined under subdivision 5 must not be greater than it would 
275.5   have been had the actual bona fide sale price of the property 
275.6   been used in lieu of the market value determined under 
275.7   subdivision 5.  The additional taxes under this subdivision 
275.8   apply to the entire property if any portion of the property is 
275.9   sold, provided that the sold portion does not continue to 
275.10  qualify under this section. 
275.11     The additional taxes must be extended against the property 
275.12  on the tax list for the current year, provided, however, that no 
275.13  interest or penalties shall be levied on the additional taxes if 
275.14  timely paid, and provided further, that the additional taxes 
275.15  must only be levied with respect to the last three years that 
275.16  the property has been valued and assessed under this section.  
275.17  For purposes of this subdivision, "timely paid" means paid (i) 
275.18  within 60 days after notification from the county that the 
275.19  property no longer qualifies, or (ii) prior to the recording of 
275.20  the conveyance of the property, whichever is earlier. 
275.21     Subd. 8.  [LIEN.] The tax imposed by this section is a lien 
275.22  upon the property assessed to the same extent and for the same 
275.23  duration as other taxes imposed upon property within this 
275.24  state.  The tax must be annually extended by the county auditor 
275.25  and if and when payable must be collected and distributed in the 
275.26  manner provided by law for the collection and distribution of 
275.27  other property taxes. 
275.28     Any additional taxes due under subdivision 7 must be paid 
275.29  prior to the recording of the conveyance under section 272.12. 
275.30     Subd. 9.  [CONTINUATION OF TAX TREATMENT UPON 
275.31  SALE.] Notwithstanding subdivision 7, when real property 
275.32  qualifying under subdivision 3 is sold, no additional taxes 
275.33  shall be extended against the property if the property continues 
275.34  to qualify under subdivision 3. 
275.35     Subd. 10.  [APPLICATION.] This section does not apply to 
275.36  property located in the counties of Anoka, Carver, Dakota, 
276.1   Hennepin, Ramsey, Scott, and Washington. 
276.2      <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
276.3   the 2001 assessment year, for taxes payable in 2002 and 
276.4   thereafter, except that for the 2001 assessment year, the 
276.5   application date under subdivision 6 shall be September 1, 2001. 
276.6      Sec. 29.  Minnesota Statutes 2000, section 273.121, is 
276.7   amended to read: 
276.8      273.121 [VALUATION OF REAL PROPERTY, NOTICE.] 
276.9      Any county assessor or city assessor having the powers of a 
276.10  county assessor, valuing or classifying taxable real property 
276.11  shall in each year notify those persons whose property is to be 
276.12  assessed or reclassified included on the assessment roll that 
276.13  year if the person's address is known to the assessor, otherwise 
276.14  the occupant of the property.  The notice shall be in writing 
276.15  and shall be sent by ordinary mail at least ten days before the 
276.16  meeting of the local board of review or equalization under 
276.17  section 274.01 or the review process established under section 
276.18  274.13, subdivision 1c.  It shall contain:  (1) the market value 
276.19  for the current and prior assessment, (2) the limited market 
276.20  value under section 273.11, subdivision 1a for the current and 
276.21  prior assessment, (3) the qualifying amount of any improvements 
276.22  under section 273.11, subdivision 16 for the current assessment, 
276.23  (4) the market value subject to taxation after subtracting the 
276.24  amount of any qualifying improvements for the current 
276.25  assessment, (5) the new classification of the property for the 
276.26  current and prior assessment, (6) a note that if the property is 
276.27  homestead and at least 35 years old, improvements made to the 
276.28  property may be eligible for a valuation exclusion under section 
276.29  273.11, subdivision 16, (7) the assessor's office address, and 
276.30  (8) the dates, places, and times set for the meetings of the 
276.31  local board of review or equalization, the review process 
276.32  established under section 274.13, subdivision 1c, and the county 
276.33  board of appeal and equalization.  If the assessment roll is not 
276.34  complete, the notice shall be sent by ordinary mail at least ten 
276.35  days prior to the date on which the board of review has 
276.36  adjourned The commissioner of revenue shall specify the form of 
277.1   the notice.  The assessor shall attach to the assessment roll a 
277.2   statement that the notices required by this section have been 
277.3   mailed.  Any assessor who is not provided sufficient funds from 
277.4   the assessor's governing body to provide such notices, may make 
277.5   application to the commissioner of revenue to finance such 
277.6   notices.  The commissioner of revenue shall conduct an 
277.7   investigation and, if satisfied that the assessor does not have 
277.8   the necessary funds, issue a certification to the commissioner 
277.9   of finance of the amount necessary to provide such notices.  The 
277.10  commissioner of finance shall issue a warrant for such amount 
277.11  and shall deduct such amount from any state payment to such 
277.12  county or municipality.  The necessary funds to make such 
277.13  payments are hereby appropriated.  Failure to receive the notice 
277.14  shall in no way affect the validity of the assessment, the 
277.15  resulting tax, the procedures of any board of review or 
277.16  equalization, or the enforcement of delinquent taxes by 
277.17  statutory means. 
277.18     <b>[EFFECTIVE DATE.]</b> This section is effective for notices 
277.19  required to be mailed in 2002 and thereafter. 
277.20     Sec. 30.  Minnesota Statutes 2000, section 273.124, 
277.21  subdivision 8, is amended to read: 
277.22     Subd. 8.  [HOMESTEAD OWNED BY OR LEASED TO FAMILY FARM 
277.23  CORPORATION, JOINT FAMILY FARM VENTURE, LIMITED LIABILITY 
277.24  COMPANY, OR PARTNERSHIP.] (a) Each family farm corporation, each 
277.25  joint family farm venture, each limited liability company, and 
277.26  each partnership operating a family farm is entitled to class 1b 
277.27  under section 273.13, subdivision 22, paragraph (b), or class 2a 
277.28  assessment for one homestead occupied by a shareholder, member, 
277.29  or partner thereof who is residing on the land except as 
277.30  provided in subdivision 14, paragraph (g), and actively engaged 
277.31  in farming of the land owned by the family farm corporation, 
277.32  joint family farm venture, limited liability company, or 
277.33  partnership operating a family farm.  Homestead treatment 
277.34  applies even if legal title to the property is in the name of 
277.35  the family farm corporation, joint family farm venture, limited 
277.36  liability company, or partnership operating the family farm, and 
278.1   not in the name of the person residing on it. 
278.2      "Family farm corporation," "family farm," and "farm 
278.3   partnership operating a family farm" have the meanings given in 
278.4   section 500.24, except that the number of allowable 
278.5   shareholders, members, or partners under this subdivision shall 
278.6   not exceed 12.  "Limited liability company" has the meaning 
278.7   contained in section sections 322B.03, subdivision 28, and 
278.8   500.24, subdivision 2, paragraphs (l) and (m).  "Joint family 
278.9   farm venture" means a cooperative agreement among two or more 
278.10  farm enterprises authorized to operate a family farm land under 
278.11  section 500.24. 
278.12     (b) In addition to property specified in paragraph (a), any 
278.13  other residences owned by family farm corporations, joint family 
278.14  farm ventures, limited liability companies, or 
278.15  partnerships operating a family farm described in paragraph (a) 
278.16  which are located on agricultural land and occupied as 
278.17  homesteads by its shareholders, members, or partners who are 
278.18  actively engaged in farming on behalf of the that corporation, 
278.19  joint farm venture, limited liability company, or partnership 
278.20  must also be assessed as class 2a property or as class 1b 
278.21  property under section 273.13, subdivision 22, paragraph (b). 
278.22     (c) Agricultural property that is owned by a member, 
278.23  partner, or shareholder of a family farm corporation or 
278.24  joint family farm venture, as defined in paragraph (a), or by a 
278.25  member of a limited liability company, or by a partner in a 
278.26  partnership operating a family farm and leased to the family 
278.27  farm corporation by the shareholder, or to a member of a, 
278.28  limited liability company, or to the partnership by the partner 
278.29  operating a family farm, or joint farm venture, as defined in 
278.30  paragraph (a), is eligible for classification as class 1b or 
278.31  class 2a under section 273.13, subdivision 22, paragraph (b), or 
278.32  class 2a under section 273.13, subdivision 23, paragraph (a), if 
278.33  the owner is actually residing on the property except as 
278.34  provided in subdivision 14, paragraph (g), and is actually 
278.35  engaged in farming the land on behalf of the that corporation, 
278.36  joint farm venture, limited liability company, or partnership.  
279.1   This paragraph applies without regard to any legal possession 
279.2   rights of the family farm corporation, joint family farm 
279.3   venture, limited liability company, or partnership operating a 
279.4   family farm under the lease. 
279.5      <b>[EFFECTIVE DATE.]</b> This section is effective for the 2001 
279.6   assessment, taxes payable in 2002, and thereafter. 
279.7      Sec. 31.  Minnesota Statutes 2000, section 273.124, 
279.8   subdivision 13, is amended to read: 
279.9      Subd. 13.  [HOMESTEAD APPLICATION.] (a) A person who meets 
279.10  the homestead requirements under subdivision 1 must file a 
279.11  homestead application with the county assessor to initially 
279.12  obtain homestead classification. 
279.13     (b) On or before January 2, 1993, each county assessor 
279.14  shall mail a homestead application to the owner of each parcel 
279.15  of property within the county which was classified as homestead 
279.16  for the 1992 assessment year.  The format and contents of a 
279.17  uniform homestead application shall be prescribed by the 
279.18  commissioner of revenue.  The commissioner shall consult with 
279.19  the chairs of the house and senate tax committees on the 
279.20  contents of the homestead application form.  The application 
279.21  must clearly inform the taxpayer that this application must be 
279.22  signed by all owners who occupy the property or by the 
279.23  qualifying relative and returned to the county assessor in order 
279.24  for the property to continue receiving homestead treatment.  The 
279.25  envelope containing the homestead application shall clearly 
279.26  identify its contents and alert the taxpayer of its necessary 
279.27  immediate response. 
279.28     (c) Every property owner applying for homestead 
279.29  classification must furnish to the county assessor the social 
279.30  security number of each occupant who is listed as an owner of 
279.31  the property on the deed of record, the name and address of each 
279.32  owner who does not occupy the property, and the name and social 
279.33  security number of each owner's spouse who occupies the 
279.34  property.  The application must be signed by each owner who 
279.35  occupies the property and by each owner's spouse who occupies 
279.36  the property, or, in the case of property that qualifies as a 
280.1   homestead under subdivision 1, paragraph (c), by the qualifying 
280.2   relative. 
280.3      If a property owner occupies a homestead, the property 
280.4   owner's spouse may not claim another property as a homestead 
280.5   unless the property owner and the property owner's spouse file 
280.6   with the assessor an affidavit or other proof required by the 
280.7   assessor stating that the property qualifies as a homestead 
280.8   under subdivision 1, paragraph (e). 
280.9      Owners or spouses occupying residences owned by their 
280.10  spouses and previously occupied with the other spouse, either of 
280.11  whom fail to include the other spouse's name and social security 
280.12  number on the homestead application or provide the affidavits or 
280.13  other proof requested, will be deemed to have elected to receive 
280.14  only partial homestead treatment of their residence.  The 
280.15  remainder of the residence will be classified as nonhomestead 
280.16  residential.  When an owner or spouse's name and social security 
280.17  number appear on homestead applications for two separate 
280.18  residences and only one application is signed, the owner or 
280.19  spouse will be deemed to have elected to homestead the residence 
280.20  for which the application was signed. 
280.21     The social security numbers or affidavits or other proofs 
280.22  of the property owners and spouses are private data on 
280.23  individuals as defined by section 13.02, subdivision 12, but, 
280.24  notwithstanding that section, the private data may be disclosed 
280.25  to the commissioner of revenue, or, for purposes of proceeding 
280.26  under the Revenue Recapture Act to recover personal property 
280.27  taxes owing, to the county treasurer. 
280.28     (d) If residential real estate is occupied and used for 
280.29  purposes of a homestead by a relative of the owner and qualifies 
280.30  for a homestead under subdivision 1, paragraph (c), in order for 
280.31  the property to receive homestead status, a homestead 
280.32  application must be filed with the assessor.  The social 
280.33  security number of each relative occupying the property and the 
280.34  social security number of each owner who is related to an 
280.35  occupant of the property shall be required on the homestead 
280.36  application filed under this subdivision.  If a different 
281.1   relative of the owner subsequently occupies the property, the 
281.2   owner of the property must notify the assessor within 30 days of 
281.3   the change in occupancy.  The social security number of a 
281.4   relative occupying the property is private data on individuals 
281.5   as defined by section 13.02, subdivision 12, but may be 
281.6   disclosed to the commissioner of revenue.  
281.7      (e) The homestead application shall also notify the 
281.8   property owners that the application filed under this section 
281.9   will not be mailed annually and that if the property is granted 
281.10  homestead status for the 1993 assessment, or any assessment year 
281.11  thereafter, that same property shall remain classified as 
281.12  homestead until the property is sold or transferred to another 
281.13  person, or the owners, the spouse of the owner, or the relatives 
281.14  no longer use the property as their homestead.  Upon the sale or 
281.15  transfer of the homestead property, a certificate of value must 
281.16  be timely filed with the county auditor as provided under 
281.17  section 272.115.  Failure to notify the assessor within 30 days 
281.18  that the property has been sold, transferred, or that the owner, 
281.19  the spouse of the owner, or the relative is no longer occupying 
281.20  the property as a homestead, shall result in the penalty 
281.21  provided under this subdivision and the property will lose its 
281.22  current homestead status. 
281.23     (f) If the homestead application is not returned within 30 
281.24  days, the county will send a second application to the present 
281.25  owners of record.  The notice of proposed property taxes 
281.26  prepared under section 275.065, subdivision 3, shall reflect the 
281.27  property's classification.  Beginning with assessment year 1993 
281.28  for all properties, if a homestead application has not been 
281.29  filed with the county by December 15, the assessor shall 
281.30  classify the property as nonhomestead for the current assessment 
281.31  year for taxes payable in the following year, provided that the 
281.32  owner may be entitled to receive the homestead classification by 
281.33  proper application under section 375.192. 
281.34     (g) At the request of the commissioner, each county must 
281.35  give the commissioner a list that includes the name and social 
281.36  security number of each property owner and the property owner's 
282.1   spouse occupying the property, or relative of a property owner, 
282.2   applying for homestead classification under this subdivision.  
282.3   The commissioner shall use the information provided on the lists 
282.4   as appropriate under the law, including for the detection of 
282.5   improper claims by owners, or relatives of owners, under chapter 
282.6   290A.  
282.7      (h) If the commissioner finds that a property owner may be 
282.8   claiming a fraudulent homestead, the commissioner shall notify 
282.9   the appropriate counties.  Within 90 days of the notification, 
282.10  the county assessor shall investigate to determine if the 
282.11  homestead classification was properly claimed.  If the property 
282.12  owner does not qualify, the county assessor shall notify the 
282.13  county auditor who will determine the amount of homestead 
282.14  benefits that had been improperly allowed.  For the purpose of 
282.15  this section, "homestead benefits" means the tax reduction 
282.16  resulting from the classification as a homestead under section 
282.17  273.13, the taconite homestead credit under section 273.135, the 
282.18  homestead and agricultural credits under section 273.1384, and 
282.19  the supplemental homestead credit under section 273.1391. 
282.20     The county auditor shall send a notice to the person who 
282.21  owned the affected property at the time the homestead 
282.22  application related to the improper homestead was filed, 
282.23  demanding reimbursement of the homestead benefits plus a penalty 
282.24  equal to 100 percent of the homestead benefits.  The person 
282.25  notified may appeal the county's determination by serving copies 
282.26  of a petition for review with county officials as provided in 
282.27  section 278.01 and filing proof of service as provided in 
282.28  section 278.01 with the Minnesota tax court within 60 days of 
282.29  the date of the notice from the county.  Procedurally, the 
282.30  appeal is governed by the provisions in chapter 271 which apply 
282.31  to the appeal of a property tax assessment or levy, but without 
282.32  requiring any prepayment of the amount in controversy.  If the 
282.33  amount of homestead benefits and penalty is not paid within 60 
282.34  days, and if no appeal has been filed, the county auditor shall 
282.35  certify the amount of taxes and penalty to the county 
282.36  treasurer.  The county treasurer will add interest to the unpaid 
283.1   homestead benefits and penalty amounts at the rate provided in 
283.2   section 279.03 for real property taxes becoming delinquent in 
283.3   the calendar year during which the amount remains unpaid.  
283.4   Interest may be assessed for the period beginning 60 days after 
283.5   demand for payment was made. 
283.6      If the person notified is the current owner of the 
283.7   property, the treasurer may add the total amount of homestead 
283.8   benefits, penalty, interest, and costs to the ad valorem taxes 
283.9   otherwise payable on the property by including the amounts on 
283.10  the property tax statements under section 276.04, subdivision 
283.11  3.  The amounts added under this paragraph to the ad valorem 
283.12  taxes shall include interest accrued through December 31 of the 
283.13  year preceding the taxes payable year for which the amounts are 
283.14  first added.  These amounts, when added to the property tax 
283.15  statement, become subject to all the laws for the enforcement of 
283.16  real or personal property taxes for that year, and for any 
283.17  subsequent year. 
283.18     If the person notified is not the current owner of the 
283.19  property, the treasurer may collect the amounts due under the 
283.20  Revenue Recapture Act in chapter 270A, or use any of the powers 
283.21  granted in sections 277.20 and 277.21 without exclusion, to 
283.22  enforce payment of the homestead benefits, penalty, interest, 
283.23  and costs, as if those amounts were delinquent tax obligations 
283.24  of the person who owned the property at the time the application 
283.25  related to the improperly allowed homestead was filed.  The 
283.26  treasurer may relieve a prior owner of personal liability for 
283.27  the homestead benefits, penalty, interest, and costs, and 
283.28  instead extend those amounts on the tax lists against the 
283.29  property as provided in this paragraph to the extent that the 
283.30  current owner agrees in writing.  On all demands, billings, 
283.31  property tax statements, and related correspondence, the county 
283.32  must list and state separately the amounts of homestead 
283.33  benefits, penalty, interest and costs being demanded, billed or 
283.34  assessed. 
283.35     (i) Any amount of homestead benefits recovered by the 
283.36  county from the property owner shall be distributed to the 
284.1   county, city or town, and school district where the property is 
284.2   located in the same proportion that each taxing district's levy 
284.3   was to the total of the three taxing districts' levy for the 
284.4   current year.  Any amount recovered attributable to taconite 
284.5   homestead credit shall be transmitted to the St. Louis county 
284.6   auditor to be deposited in the taconite property tax relief 
284.7   account.  Any amount recovered that is attributable to 
284.8   supplemental homestead credit is to be transmitted to the 
284.9   commissioner of revenue for deposit in the general fund of the 
284.10  state treasury.  The total amount of penalty collected must be 
284.11  deposited in the county general fund. 
284.12     (j) If a property owner has applied for more than one 
284.13  homestead and the county assessors cannot determine which 
284.14  property should be classified as homestead, the county assessors 
284.15  will refer the information to the commissioner.  The 
284.16  commissioner shall make the determination and notify the 
284.17  counties within 60 days. 
284.18     (k) In addition to lists of homestead properties, the 
284.19  commissioner may ask the counties to furnish lists of all 
284.20  properties and the record owners.  The social security numbers 
284.21  and federal identification numbers that are maintained by a 
284.22  county or city assessor for property tax administration 
284.23  purposes, and that may appear on the lists retain their 
284.24  classification as private or nonpublic data; but may be viewed, 
284.25  accessed, and used by the county auditor or treasurer of the 
284.26  same county for the limited purpose of assisting the 
284.27  commissioner in the preparation of microdata samples under 
284.28  section 270.0681. 
284.29     <b>[EFFECTIVE DATE.]</b> This section is effective for homestead 
284.30  applications submitted on or after the day following final 
284.31  enactment. 
284.32     Sec. 32.  Minnesota Statutes 2000, section 273.124, 
284.33  subdivision 14, is amended to read: 
284.34     Subd. 14.  [AGRICULTURAL HOMESTEADS; SPECIAL PROVISIONS.] 
284.35  (a) Real estate of less than ten acres that is the homestead of 
284.36  its owner must be classified as class 2a under section 273.13, 
285.1   subdivision 23, paragraph (a), if:  
285.2      (1) the parcel on which the house is located is contiguous 
285.3   on at least two sides to (i) agricultural land, (ii) land owned 
285.4   or administered by the United States Fish and Wildlife Service, 
285.5   or (iii) land administered by the department of natural 
285.6   resources on which in lieu taxes are paid under sections 477A.11 
285.7   to 477A.14; 
285.8      (2) its owner also owns a noncontiguous parcel of 
285.9   agricultural land that is at least 20 acres; 
285.10     (3) the noncontiguous land is located not farther than four 
285.11  townships or cities, or a combination of townships or cities 
285.12  from the homestead; and 
285.13     (4) the agricultural use value of the noncontiguous land 
285.14  and farm buildings is equal to at least 50 percent of the market 
285.15  value of the house, garage, and one acre of land. 
285.16     Homesteads initially classified as class 2a under the 
285.17  provisions of this paragraph shall remain classified as class 
285.18  2a, irrespective of subsequent changes in the use of adjoining 
285.19  properties, as long as the homestead remains under the same 
285.20  ownership, the owner owns a noncontiguous parcel of agricultural 
285.21  land that is at least 20 acres, and the agricultural use value 
285.22  qualifies under clause (4).  Homestead classification under this 
285.23  paragraph is limited to property that qualified under this 
285.24  paragraph for the 1998 assessment. 
285.25     (b)(i) Agricultural property consisting of at least 40 
285.26  acres shall be classified as the owner's homestead, to the same 
285.27  extent as other agricultural homestead property, if all of the 
285.28  following criteria are met: 
285.29     (1) the owner, the owner's spouse, or the owner's son or 
285.30  daughter of the owner or owner's spouse, is actively farming the 
285.31  agricultural property, either on the person's own behalf as an 
285.32  individual or on behalf of a partnership operating a family 
285.33  farm, family farm corporation, joint family farm venture, or 
285.34  limited liability company of which the person is a partner, 
285.35  shareholder, or member; 
285.36     (2) both the owner of the agricultural property is a 
286.1   Minnesota resident, and if the owner's son or daughter person 
286.2   who is actively farming the agricultural property under clause 
286.3   (1), that person must also be a are Minnesota 
286.4   resident residents; 
286.5      (3) neither the owner nor the spouse of the owner claims 
286.6   another agricultural homestead in Minnesota; and 
286.7      (4) neither the owner does not live, nor the person 
286.8   actively farming the property, lives farther than four townships 
286.9   or cities, or a combination of four townships or cities, from 
286.10  the agricultural property, and if the owner's son or daughter is 
286.11  actively farming the agricultural property under clause (1), 
286.12  that person must also live within the four townships or cities, 
286.13  or combination of four townships or cities from the agricultural 
286.14  property. 
286.15     The relationship under this paragraph may be either by 
286.16  blood or marriage. 
286.17     (ii) Real property held by a trustee under a trust is 
286.18  eligible for agricultural homestead classification under this 
286.19  paragraph if the qualifications in clause (i) are met, except 
286.20  that "owner" means the grantor of the trust. 
286.21     (ii) (iii) Property containing the residence of an owner 
286.22  who owns qualified property under clause (i) shall be classified 
286.23  as part of the owner's agricultural homestead, if that property 
286.24  is also used for noncommercial storage or drying of agricultural 
286.25  crops. 
286.26     (c) Except as provided in paragraph (e), Noncontiguous land 
286.27  shall be included as part of a homestead under section 273.13, 
286.28  subdivision 23, paragraph (a), only if the homestead is 
286.29  classified as class 2a and the detached land is located in the 
286.30  same township or city, or not farther than four townships or 
286.31  cities or combination thereof from the homestead.  Any taxpayer 
286.32  of these noncontiguous lands must notify the county assessor 
286.33  that the noncontiguous land is part of the taxpayer's homestead, 
286.34  and, if the homestead is located in another county, the taxpayer 
286.35  must also notify the assessor of the other county. 
286.36     (d) Agricultural land used for purposes of a homestead and 
287.1   actively farmed by a person holding a vested remainder interest 
287.2   in it must be classified as a homestead under section 273.13, 
287.3   subdivision 23, paragraph (a).  If agricultural land is 
287.4   classified class 2a, any other dwellings on the land used for 
287.5   purposes of a homestead by persons holding vested remainder 
287.6   interests who are actively engaged in farming the property, and 
287.7   up to one acre of the land surrounding each homestead and 
287.8   reasonably necessary for the use of the dwelling as a home, must 
287.9   also be assessed class 2a. 
287.10     (e) Agricultural land and buildings that were class 2a 
287.11  homestead property under section 273.13, subdivision 23, 
287.12  paragraph (a), for the 1997 assessment shall remain classified 
287.13  as agricultural homesteads for subsequent assessments if:  
287.14     (1) the property owner abandoned the homestead dwelling 
287.15  located on the agricultural homestead as a result of the April 
287.16  1997 floods; 
287.17     (2) the property is located in the county of Polk, Clay, 
287.18  Kittson, Marshall, Norman, or Wilkin; 
287.19     (3) the agricultural land and buildings remain under the 
287.20  same ownership for the current assessment year as existed for 
287.21  the 1997 assessment year and continue to be used for 
287.22  agricultural purposes; 
287.23     (4) the dwelling occupied by the owner is located in 
287.24  Minnesota and is within 30 miles of one of the parcels of 
287.25  agricultural land that is owned by the taxpayer; and 
287.26     (5) the owner notifies the county assessor that the 
287.27  relocation was due to the 1997 floods, and the owner furnishes 
287.28  the assessor any information deemed necessary by the assessor in 
287.29  verifying the change in dwelling.  Further notifications to the 
287.30  assessor are not required if the property continues to meet all 
287.31  the requirements in this paragraph and any dwellings on the 
287.32  agricultural land remain uninhabited. 
287.33     (f) Agricultural land and buildings that were class 2a 
287.34  homestead property under section 273.13, subdivision 23, 
287.35  paragraph (a), for the 1998 assessment shall remain classified 
287.36  agricultural homesteads for subsequent assessments if: 
288.1      (1) the property owner abandoned the homestead dwelling 
288.2   located on the agricultural homestead as a result of damage 
288.3   caused by a March 29, 1998, tornado; 
288.4      (2) the property is located in the county of Blue Earth, 
288.5   Brown, Cottonwood, LeSueur, Nicollet, Nobles, or Rice; 
288.6      (3) the agricultural land and buildings remain under the 
288.7   same ownership for the current assessment year as existed for 
288.8   the 1998 assessment year; 
288.9      (4) the dwelling occupied by the owner is located in this 
288.10  state and is within 50 miles of one of the parcels of 
288.11  agricultural land that is owned by the taxpayer; and 
288.12     (5) the owner notifies the county assessor that the 
288.13  relocation was due to a March 29, 1998, tornado, and the owner 
288.14  furnishes the assessor any information deemed necessary by the 
288.15  assessor in verifying the change in homestead dwelling.  For 
288.16  taxes payable in 1999, the owner must notify the assessor by 
288.17  December 1, 1998.  Further notifications to the assessor are not 
288.18  required if the property continues to meet all the requirements 
288.19  in this paragraph and any dwellings on the agricultural land 
288.20  remain uninhabited. 
288.21     (g) Agricultural property consisting of at least 40 acres 
288.22  of a family farm corporation, joint family farm venture, limited 
288.23  liability company, or partnership operating a family farm as 
288.24  described under subdivision 8 shall be classified homestead, to 
288.25  the same extent as other agricultural homestead property, if all 
288.26  of the following criteria are met: 
288.27     (1) the a shareholder, member, or partner of that entity is 
288.28  actively farming the agricultural property; 
288.29     (2) the that shareholder, member, or partner of who is 
288.30  actively farming the agricultural property is a Minnesota 
288.31  resident; 
288.32     (3) neither the that shareholder, member, or partner, nor 
288.33  the spouse of the that shareholder, member, or partner claims 
288.34  another agricultural homestead in Minnesota; and 
288.35     (4) the that shareholder, member, or partner does not live 
288.36  farther than four townships or cities, or a combination of four 
289.1   townships or cities, from the agricultural property. 
289.2      Homestead treatment applies under this paragraph for 
289.3   property leased to a family farm corporation, joint farm 
289.4   venture, limited liability company, or partnership operating a 
289.5   family farm if legal title to the property is in the name of an 
289.6   individual who is a member, shareholder, or partner in the 
289.7   entity. 
289.8      <b>[EFFECTIVE DATE.]</b> This section is effective for the 2001 
289.9   assessment, taxes payable in 2002, and thereafter. 
289.10     Sec. 33.  Minnesota Statutes 2000, section 274.01, 
289.11  subdivision 1, is amended to read: 
289.12     Subdivision 1.  [ORDINARY BOARD; MEETINGS, DEADLINES, 
289.13  GRIEVANCES.] (a) The town board of a town, or the council or 
289.14  other governing body of a city, is the board of review appeal 
289.15  and equalization except (1) in cities whose charters provide for 
289.16  a board of equalization or (2) in any city or town that has 
289.17  transferred its local board of review power and duties to the 
289.18  county board as provided in subdivision 3.  The county assessor 
289.19  shall fix a day and time when the board or the board of 
289.20  equalization shall meet in the assessment districts of the 
289.21  county.  Notwithstanding any law or city charter to the 
289.22  contrary, a city board of equalization shall be referred to as a 
289.23  board of appeal and equalization.  On or before February 15 of 
289.24  each year the assessor shall give written notice of the time to 
289.25  the city or town clerk.  Notwithstanding the provisions of any 
289.26  charter to the contrary, the meetings must be held between April 
289.27  1 and May 31 each year.  The clerk shall give published and 
289.28  posted notice of the meeting at least ten days before the date 
289.29  of the meeting.  
289.30     If in any county, at least 25 percent of the total net tax 
289.31  capacity of a city or town is noncommercial seasonal residential 
289.32  recreational property classified under section 273.13, 
289.33  subdivision 25, the county must hold two countywide 
289.34  informational meetings on Saturdays.  The meetings will allow 
289.35  noncommercial seasonal residential recreational taxpayers to 
289.36  discuss their property valuation with the appropriate assessment 
290.1   staff.  These Saturday informational meetings must be scheduled 
290.2   to allow the owner of the noncommercial seasonal residential 
290.3   recreational property the opportunity to attend one of the 
290.4   meetings prior to the scheduled board of review for their city 
290.5   or town.  The Saturday meeting dates must be contained on the 
290.6   notice of valuation of real property under section 273.121.  
290.7      The board shall meet at the office of the clerk to review 
290.8   the assessment and classification of property in the town or 
290.9   city.  No changes in valuation or classification which are 
290.10  intended to correct errors in judgment by the county assessor 
290.11  may be made by the county assessor after the board of review has 
290.12  adjourned in those cities or towns that hold a local board of 
290.13  review; however, corrections of errors that are merely clerical 
290.14  in nature or changes that extend homestead treatment to property 
290.15  are permitted after adjournment until the tax extension date for 
290.16  that assessment year.  The changes must be fully documented and 
290.17  maintained in the assessor's office and must be available for 
290.18  review by any person.  A copy of the changes made during this 
290.19  period in those cities or towns that hold a local board of 
290.20  review must be sent to the county board no later than December 
290.21  31 of the assessment year.  
290.22     (b) The board shall determine whether the taxable property 
290.23  in the town or city has been properly placed on the list and 
290.24  properly valued by the assessor.  If real or personal property 
290.25  has been omitted, the board shall place it on the list with its 
290.26  market value, and correct the assessment so that each tract or 
290.27  lot of real property, and each article, parcel, or class of 
290.28  personal property, is entered on the assessment list at its 
290.29  market value.  No assessment of the property of any person may 
290.30  be raised unless the person has been duly notified of the intent 
290.31  of the board to do so.  On application of any person feeling 
290.32  aggrieved, the board shall review the assessment or 
290.33  classification, or both, and correct it as appears just.  The 
290.34  board may not make an individual market value adjustment or 
290.35  classification change that would benefit the property in cases 
290.36  where the owner or other person having control over the property 
291.1   will not permit the assessor to inspect the property and the 
291.2   interior of any buildings or structures.  
291.3      (c) A local board of review may reduce assessments upon 
291.4   petition of the taxpayer but the total reductions must not 
291.5   reduce the aggregate assessment made by the county assessor by 
291.6   more than one percent.  If the total reductions would lower the 
291.7   aggregate assessments made by the county assessor by more than 
291.8   one percent, none of the adjustments may be made.  The assessor 
291.9   shall correct any clerical errors or double assessments 
291.10  discovered by the board of review without regard to the one 
291.11  percent limitation.  
291.12     (d) A majority of the members may act at the meeting, and 
291.13  adjourn from day to day until they finish hearing the cases 
291.14  presented.  The assessor shall attend, with the assessment books 
291.15  and papers, and take part in the proceedings, but must not 
291.16  vote.  The county assessor, or an assistant delegated by the 
291.17  county assessor shall attend the meetings.  The board shall list 
291.18  separately, on a form appended to the assessment book, all 
291.19  omitted property added to the list by the board and all items of 
291.20  property increased or decreased, with the market value of each 
291.21  item of property, added or changed by the board, placed opposite 
291.22  the item.  The county assessor shall enter all changes made by 
291.23  the board in the assessment book.  
291.24     (e) Except as provided in subdivision 3, if a person fails 
291.25  to appear in person, by counsel, or by written communication 
291.26  before the board after being duly notified of the board's intent 
291.27  to raise the assessment of the property, or if a person feeling 
291.28  aggrieved by an assessment or classification fails to apply for 
291.29  a review of the assessment or classification, the person may not 
291.30  appear before the county board of appeal and equalization for a 
291.31  review of the assessment or classification.  This paragraph does 
291.32  not apply if an assessment was made after the local board 
291.33  meeting, as provided in section 273.01, or if the person can 
291.34  establish not having received notice of market value at least 
291.35  five days before the local board of review meeting.  
291.36     (f) The local board of review or the board of equalization 
292.1   must complete its work and adjourn within 20 days from the time 
292.2   of convening stated in the notice of the clerk, unless a longer 
292.3   period is approved by the commissioner of revenue.  No action 
292.4   taken after that date is valid.  All complaints about an 
292.5   assessment or classification made after the meeting of the board 
292.6   must be heard and determined by the county board of 
292.7   equalization.  A nonresident may, at any time, before the 
292.8   meeting of the board of review file written objections to an 
292.9   assessment or classification with the county assessor.  The 
292.10  objections must be presented to the board of review at its 
292.11  meeting by the county assessor for its consideration. 
292.12     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 
292.13  2002, and thereafter. 
292.14     Sec. 34.  Minnesota Statutes 2000, section 274.13, 
292.15  subdivision 1, is amended to read: 
292.16     Subdivision 1.  [MEMBERS; MEETINGS; RULES FOR EQUALIZING 
292.17  ASSESSMENTS.] The county commissioners, or a majority of them, 
292.18  with the county auditor, or, if the auditor cannot be present, 
292.19  the deputy county auditor, or, if there is no deputy, the court 
292.20  administrator of the district court, shall form a board for the 
292.21  equalization of the assessment of the property of the county, 
292.22  including the property of all cities whose charters provide for 
292.23  a board of equalization.  This board shall be referred to as the 
292.24  county board of appeal and equalization.  The board shall meet 
292.25  annually, on the date specified in section 274.14, at the office 
292.26  of the auditor.  Each member shall take an oath to fairly and 
292.27  impartially perform duties as a member.  The board shall examine 
292.28  and compare the returns of the assessment of property of the 
292.29  towns or districts, and equalize them so that each tract or lot 
292.30  of real property and each article or class of personal property 
292.31  is entered on the assessment list at its market value, subject 
292.32  to the following rules: 
292.33     (1) The board shall raise the valuation of each tract or 
292.34  lot of real property which in its opinion is returned below its 
292.35  market value to the sum believed to be its market value.  The 
292.36  board must first give notice of intention to raise the valuation 
293.1   to the person in whose name it is assessed, if the person is a 
293.2   resident of the county.  The notice must fix a time and place 
293.3   for a hearing.  
293.4      (2) The board shall reduce the valuation of each tract or 
293.5   lot which in its opinion is returned above its market value to 
293.6   the sum believed to be its market value. 
293.7      (3) The board shall raise the valuation of each class of 
293.8   personal property which in its opinion is returned below its 
293.9   market value to the sum believed to be its market value.  It 
293.10  shall raise the aggregate value of the personal property of 
293.11  individuals, firms, or corporations, when it believes that the 
293.12  aggregate valuation, as returned, is less than the market value 
293.13  of the taxable personal property possessed by the individuals, 
293.14  firms, or corporations, to the sum it believes to be the market 
293.15  value.  The board must first give notice to the persons of 
293.16  intention to do so.  The notice must set a time and place for a 
293.17  hearing. 
293.18     (4) The board shall reduce the valuation of each class of 
293.19  personal property that is returned above its market value to the 
293.20  sum it believes to be its market value.  Upon complaint of a 
293.21  party aggrieved, the board shall reduce the aggregate valuation 
293.22  of the individual's personal property, or of any class of 
293.23  personal property for which the individual is assessed, which in 
293.24  its opinion has been assessed at too large a sum, to the sum it 
293.25  believes was the market value of the individual's personal 
293.26  property of that class.  
293.27     (5) The board must not reduce the aggregate value of all 
293.28  the property of its county, as submitted to the county board of 
293.29  equalization, with the additions made by the auditor under this 
293.30  chapter, by more than one percent of its whole valuation.  The 
293.31  board may raise the aggregate valuation of real property, and of 
293.32  each class of personal property, of the county, or of any town 
293.33  or district of the county, when it believes it is below the 
293.34  market value of the property, or class of property, to the 
293.35  aggregate amount it believes to be its market value. 
293.36     (6) The board shall change the classification of any 
294.1   property which in its opinion is not properly classified. 
294.2      <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 
294.3   2002, and thereafter. 
294.4      Sec. 35.  Minnesota Statutes 2000, section 275.065, 
294.5   subdivision 1, is amended to read: 
294.6      Subdivision 1.  [PROPOSED LEVY.] (a) Notwithstanding any 
294.7   law or charter to the contrary, on or before September 15, each 
294.8   taxing authority, other than a school district, and including 
294.9   the state, shall adopt a proposed budget and shall certify to 
294.10  the county auditor the proposed or, in the case of a town or the 
294.11  state, the final property tax levy for taxes payable in the 
294.12  following year. 
294.13     (b) On or before September 30, each school district shall 
294.14  certify to the county auditor the proposed property tax levy for 
294.15  taxes payable in the following year.  The school district shall 
294.16  certify the proposed levy as: 
294.17     (1) the state determined school levy amount as prescribed 
294.18  under section 126C.13, subdivision 2; 
294.19     (2) voter approved referendum and debt levies; and 
294.20     (3) (2) the sum of the remaining school levies, or the 
294.21  maximum levy limitation certified by the commissioner of 
294.22  children, families, and learning according to section 126C.48, 
294.23  subdivision 1, less the amounts levied under clauses 
294.24  clause (1) and (2). 
294.25     (c) If the board of estimate and taxation or any similar 
294.26  board that establishes maximum tax levies for taxing 
294.27  jurisdictions within a first class city certifies the maximum 
294.28  property tax levies for funds under its jurisdiction by charter 
294.29  to the county auditor by September 15, the city shall be deemed 
294.30  to have certified its levies for those taxing jurisdictions. 
294.31     (d) For purposes of this section, "taxing authority" 
294.32  includes all home rule and statutory cities, towns, counties, 
294.33  school districts, and special taxing districts as defined in 
294.34  section 275.066.  Intermediate school districts that levy a tax 
294.35  under chapter 124 or 136D, joint powers boards established under 
294.36  sections 123A.44 to 123A.446, and common school districts No. 
295.1   323, Franconia, and No. 815, Prinsburg, are also special taxing 
295.2   districts for purposes of this section.  
295.3      <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
295.4   payable in 2002 and subsequent years. 
295.5      Sec. 36.  Minnesota Statutes 2000, section 275.065, 
295.6   subdivision 3, is amended to read: 
295.7      Subd. 3.  [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The 
295.8   county auditor shall prepare and the county treasurer shall 
295.9   deliver after November 10 and on or before November 24 each 
295.10  year, by first class mail to each taxpayer at the address listed 
295.11  on the county's current year's assessment roll, a notice of 
295.12  proposed property taxes.  
295.13     (b) The commissioner of revenue shall prescribe the form of 
295.14  the notice. 
295.15     (c) The notice must inform taxpayers that it contains the 
295.16  amount of property taxes each taxing authority proposes to 
295.17  collect for taxes payable the following year.  In the case of a 
295.18  town, or in the case of the state determined portion of the 
295.19  school district general levy, the final tax amount will be its 
295.20  proposed tax.  In the case of taxing authorities required to 
295.21  hold a public meeting under subdivision 6, the notice must 
295.22  clearly state that each taxing authority, including regional 
295.23  library districts established under section 134.201, and 
295.24  including the metropolitan taxing districts as defined in 
295.25  paragraph (i), but excluding all other special taxing districts 
295.26  and towns, will hold a public meeting to receive public 
295.27  testimony on the proposed budget and proposed or final property 
295.28  tax levy, or, in case of a school district, on the current 
295.29  budget and proposed property tax levy.  It must clearly state 
295.30  the time and place of each taxing authority's meeting, a 
295.31  telephone number for the taxing authority that taxpayers may 
295.32  call if they have questions related to the notice, and an 
295.33  address where comments will be received by mail.  
295.34     (d) The notice must state for each parcel: 
295.35     (1) the market value of the property as determined under 
295.36  section 273.11, and used for computing property taxes payable in 
296.1   the following year and for taxes payable in the current year as 
296.2   each appears in the records of the county assessor on November 1 
296.3   of the current year; and, in the case of residential property, 
296.4   whether the property is classified as homestead or 
296.5   nonhomestead.  The notice must clearly inform taxpayers of the 
296.6   years to which the market values apply and that the values are 
296.7   final values; 
296.8      (2) the items listed below, shown separately by county, 
296.9   city or town, state determined school general tax net of the 
296.10  education homestead credit under section 273.1382, voter 
296.11  approved school levy, other local school levy, and the sum of 
296.12  the special taxing districts, and as a total of all taxing 
296.13  authorities in all cases net of the credit amounts determined 
296.14  under section 273.1384:  
296.15     (i) the actual tax for taxes payable in the current year; 
296.16     (ii) the tax change due to spending factors, defined as the 
296.17  proposed tax minus the constant spending tax amount; 
296.18     (iii) the tax change due to other factors, defined as the 
296.19  constant spending tax amount minus the actual current year tax; 
296.20  and 
296.21     (iv) the proposed tax amount. 
296.22     In the case of a town or the state determined school 
296.23  general tax, the final tax shall also be its proposed tax unless 
296.24  the town changes its levy at a special town meeting under 
296.25  section 365.52.  If a school district has certified under 
296.26  section 126C.17, subdivision 9, that a referendum will be held 
296.27  in the school district at the November general election, the 
296.28  county auditor must note next to the school district's proposed 
296.29  amount that a referendum is pending and that, if approved by the 
296.30  voters, the tax amount may be higher than shown on the notice.  
296.31  In the case of the city of Minneapolis, the levy for the 
296.32  Minneapolis library board and the levy for Minneapolis park and 
296.33  recreation shall be listed separately from the remaining amount 
296.34  of the city's levy.  In the case of a parcel where tax increment 
296.35  or the fiscal disparities areawide tax under chapter 276A or 
296.36  473F applies, the proposed tax levy on the captured value or the 
297.1   proposed tax levy on the tax capacity subject to the areawide 
297.2   tax must each be stated separately and not included in the sum 
297.3   of the special taxing districts; and 
297.4      (3) the increase or decrease between the total taxes 
297.5   payable in the current year and the total proposed taxes, 
297.6   expressed as a percentage. 
297.7      For purposes of this section, the amount of the tax on 
297.8   homesteads qualifying under the senior citizens' property tax 
297.9   deferral program under chapter 290B is the total amount of 
297.10  property tax before subtraction of the deferred property tax 
297.11  amount. 
297.12     (e) The notice must clearly state that the proposed or 
297.13  final taxes do not include the following: 
297.14     (1) special assessments; 
297.15     (2) levies approved by the voters after the date the 
297.16  proposed taxes are certified, including bond referenda, school 
297.17  district levy referenda, and levy limit increase referenda; 
297.18     (3) amounts necessary to pay cleanup or other costs due to 
297.19  a natural disaster occurring after the date the proposed taxes 
297.20  are certified; 
297.21     (4) amounts necessary to pay tort judgments against the 
297.22  taxing authority that become final after the date the proposed 
297.23  taxes are certified; and 
297.24     (5) the contamination tax imposed on properties which 
297.25  received market value reductions for contamination. 
297.26     (f) Except as provided in subdivision 7, failure of the 
297.27  county auditor to prepare or the county treasurer to deliver the 
297.28  notice as required in this section does not invalidate the 
297.29  proposed or final tax levy or the taxes payable pursuant to the 
297.30  tax levy. 
297.31     (g) If the notice the taxpayer receives under this section 
297.32  lists the property as nonhomestead, and satisfactory 
297.33  documentation is provided to the county assessor by the 
297.34  applicable deadline, and the property qualifies for the 
297.35  homestead classification in that assessment year, the assessor 
297.36  shall reclassify the property to homestead for taxes payable in 
298.1   the following year. 
298.2      (h) In the case of class 4 residential property used as a 
298.3   residence for lease or rental periods of 30 days or more, the 
298.4   taxpayer must either: 
298.5      (1) mail or deliver a copy of the notice of proposed 
298.6   property taxes to each tenant, renter, or lessee; or 
298.7      (2) post a copy of the notice in a conspicuous place on the 
298.8   premises of the property.  
298.9      The notice must be mailed or posted by the taxpayer by 
298.10  November 27 or within three days of receipt of the notice, 
298.11  whichever is later.  A taxpayer may notify the county treasurer 
298.12  of the address of the taxpayer, agent, caretaker, or manager of 
298.13  the premises to which the notice must be mailed in order to 
298.14  fulfill the requirements of this paragraph. 
298.15     (i) For purposes of this subdivision, subdivisions 5a and 
298.16  6, "metropolitan special taxing districts" means the following 
298.17  taxing districts in the seven-county metropolitan area that levy 
298.18  a property tax for any of the specified purposes listed below: 
298.19     (1) metropolitan council under section 473.132, 473.167, 
298.20  473.249, 473.325, 473.446, 473.521, 473.547, or 473.834; 
298.21     (2) metropolitan airports commission under section 473.667, 
298.22  473.671, or 473.672; and 
298.23     (3) metropolitan mosquito control commission under section 
298.24  473.711. 
298.25     For purposes of this section, any levies made by the 
298.26  regional rail authorities in the county of Anoka, Carver, 
298.27  Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 
298.28  398A shall be included with the appropriate county's levy and 
298.29  shall be discussed at that county's public hearing. 
298.30     (j) If a statutory or home rule charter city or a town has 
298.31  exercised the local levy option provided by section 473.388, 
298.32  subdivision 7, it may include in the notice of its proposed 
298.33  taxes the amount of its proposed taxes attributable to its 
298.34  exercise of the option.  In the first year of the city or town's 
298.35  exercise of this option, the statement shall include an estimate 
298.36  of the reduction of the metropolitan council's tax on the parcel 
299.1   due to exercise of that option.  The metropolitan council's levy 
299.2   shall be adjusted accordingly. 
299.3      <b>[EFFECTIVE DATE.]</b> This section is effective for notices of 
299.4   proposed property taxes required in 2001 for taxes payable in 
299.5   2002, and thereafter. 
299.6      Sec. 37.  Minnesota Statutes 2000, section 275.065, 
299.7   subdivision 5a, is amended to read: 
299.8      Subd. 5a.  [PUBLIC ADVERTISEMENT.] (a) A city that has a 
299.9   population of more than 2,500, county, a metropolitan special 
299.10  taxing district as defined in subdivision 3, paragraph (i), a 
299.11  regional library district established under section 134.201, or 
299.12  school district shall advertise in a newspaper a notice of its 
299.13  intent to adopt a budget and property tax levy or, in the case 
299.14  of a school district, to review its current budget and proposed 
299.15  property taxes payable in the following year, at a public 
299.16  hearing.  The notice must be published not less than two 
299.17  business days nor more than six business days before the hearing.
299.18     The advertisement must be at least one-eighth page in size 
299.19  of a standard-size or a tabloid-size newspaper.  The 
299.20  advertisement must not be placed in the part of the newspaper 
299.21  where legal notices and classified advertisements appear.  The 
299.22  advertisement must be published in an official newspaper of 
299.23  general circulation in the taxing authority.  The newspaper 
299.24  selected must be one of general interest and readership in the 
299.25  community, and not one of limited subject matter.  The 
299.26  advertisement must appear in a newspaper that is published at 
299.27  least once per week.  
299.28     For purposes of this section, the metropolitan special 
299.29  taxing district's advertisement must only be published in the 
299.30  Minneapolis Star and Tribune and the Saint Paul Pioneer Press. 
299.31     In addition to other requirements, a county, a city having 
299.32  a population of more than 2,500, and a school district must show 
299.33  in the public advertisement required under this section, the 
299.34  lobbying expenditures of the county, city, and school district 
299.35  as most recently reported under section 6.76. 
299.36     In addition to other requirements, a county and a city 
300.1   having a population of more than 2,500 must show in the public 
300.2   advertisement required under this subdivision the current tax 
300.3   rate, the proposed tax rate if no property tax levy increase is 
300.4   adopted, and the proposed rate if the proposed levy is adopted. 
300.5      (b) The advertisement for school districts, metropolitan 
300.6   special taxing districts, and regional library districts must be 
300.7   in the following form, except that the notice for a school 
300.8   district may include references to the current budget in regard 
300.9   to proposed property taxes.  
300.10                             "NOTICE OF
300.11                      PROPOSED PROPERTY TAXES
300.12                   (School District/Metropolitan
300.13                  Special Taxing District/Regional
300.14                   Library District) of .........
300.15  The governing body of ........ will soon hold budget hearings 
300.16  and vote on the property taxes for (metropolitan special taxing 
300.17  district/regional library district services that will be 
300.18  provided in (year)/school district services that will be 
300.19  provided in (year) and (year)). 
300.20                     NOTICE OF PUBLIC HEARING:
300.21  All concerned citizens are invited to attend a public hearing 
300.22  and express their opinions on the proposed (school 
300.23  district/metropolitan special taxing district/regional library 
300.24  district) budget and property taxes, or in the case of a school 
300.25  district, its current budget and proposed property taxes, 
300.26  payable in the following year.  The hearing will be held on 
300.27  (Month/Day/Year) at (Time) at (Location, Address)." 
300.28     (c) The advertisement for cities and counties must be in 
300.29  the following form. 
300.30                        "NOTICE OF PROPOSED
300.31                  TOTAL BUDGET AND PROPERTY TAXES
300.32  The (city/county) governing body or board of commissioners will 
300.33  hold a public hearing to discuss the budget and to vote on the 
300.34  amount of property taxes to collect for services the 
300.35  (city/county) will provide in (year). 
300.36     
301.1   SPENDING:  The total budget amounts below compare 
301.2   (city's/county's) (year) total actual budget with the amount the 
301.3   (city/county) proposes to spend in (year). 
301.4      
301.5   (Year) Total          Proposed (Year)         Change from 
301.6   Actual Budget         Budget                  (Year)-(Year)
301.7      
301.8   $.......              $.......                ...%
301.9      
301.10  SPENDING:  Lobbying expenditures (included in the budget amounts 
301.11  listed above). 
301.12     
301.13  (Year)                Proposed (Year)         Change from
301.14  Amount                Amount                  (Year)-(Year)
301.15     
301.16  $.......              $.......                ...%
301.17     
301.18  TAXES:  The property tax amounts below compare that portion of 
301.19  the current budget levied in property taxes in (city/county) for 
301.20  (year) with the property taxes the (city/county) proposes to 
301.21  collect in (year). 
301.22     
301.23  (Year) Property       Proposed (Year)          Change from
301.24  Taxes                 Property Taxes           (Year)-(Year)
301.25     
301.26  $.......              $.......                 ...% 
301.27     
301.28  LOCAL TAX RATE COMPARISON:  The current local tax rate, the 
301.29  local tax rate if no tax levy increase is adopted, and the 
301.30  proposed local tax rate if the proposed levy is adopted. 
301.31     
301.32  (Year)                (Year)                       (Year) 
301.33  Tax Rate              Tax Rate if NO               Proposed 
301.34                        Levy Increase                Tax Rate 
301.36  .......               .......                      ....... 
302.1      
302.2                      ATTEND THE PUBLIC HEARING
302.3   All (city/county) residents are invited to attend the public 
302.4   hearing of the (city/county) to express your opinions on the 
302.5   budget and the proposed amount of (year) property taxes.  The 
302.6   hearing will be held on: 
302.7                        (Month/Day/Year/Time)
302.8                          (Location/Address)
302.9   If the discussion of the budget cannot be completed, a time and 
302.10  place for continuing the discussion will be announced at the 
302.11  hearing.  You are also invited to send your written comments to: 
302.12                           (City/County)
302.13                        (Location/Address)"
302.14     (d) For purposes of this subdivision, the budget amounts 
302.15  listed on the advertisement mean: 
302.16     (1) for cities, the total government fund expenditures, as 
302.17  defined by the state auditor under section 471.6965, less any 
302.18  expenditures for improvements or services that are specially 
302.19  assessed or charged under chapter 429, 430, 435, or the 
302.20  provisions of any other law or charter; and 
302.21     (2) for counties, the total government fund expenditures, 
302.22  as defined by the state auditor under section 375.169, less any 
302.23  expenditures for direct payments to recipients or providers for 
302.24  the human service aids listed below: 
302.25     (i) Minnesota family investment program under chapters 256J 
302.26  and 256K; 
302.27     (ii) medical assistance under sections 256B.041, 
302.28  subdivision 5, and 256B.19, subdivision 1; 
302.29     (iii) general assistance medical care under section 
302.30  256D.03, subdivision 6; 
302.31     (iv) general assistance under section 256D.03, subdivision 
302.32  2; 
302.33     (v) emergency assistance under section 256J.48; 
302.34     (vi) Minnesota supplemental aid under section 256D.36, 
302.35  subdivision 1; 
302.36     (vii) preadmission screening under section 256B.0911, and 
303.1   alternative care grants under section 256B.0913; 
303.2      (viii) general assistance medical care claims processing, 
303.3   medical transportation and related costs under section 256D.03, 
303.4   subdivision 4; 
303.5      (ix) medical transportation and related costs under section 
303.6   256B.0625, subdivisions 17 to 18a; 
303.7      (x) group residential housing under section 256I.05, 
303.8   subdivision 8, transferred from programs in clauses (iv) and 
303.9   (vi); or 
303.10     (xi) any successor programs to those listed in clauses (i) 
303.11  to (x). 
303.12     (e) A city with a population of over 500 but not more than 
303.13  2,500 must advertise by posted notice as defined in section 
303.14  645.12, subdivision 1.  The advertisement must be posted at the 
303.15  time provided in paragraph (a).  It must be in the form required 
303.16  in paragraph (b). 
303.17     (f) For purposes of this subdivision, the population of a 
303.18  city is the most recent population as determined by the state 
303.19  demographer under section 4A.02. 
303.20     (g) The commissioner of revenue, subject to the approval of 
303.21  the chairs of the house and senate tax committees, shall 
303.22  prescribe the form and format of the advertisement. 
303.23     <b>[EFFECTIVE DATE.]</b> This section is effective for newspaper 
303.24  advertisements in 2001 and thereafter. 
303.25     Sec. 38.  Minnesota Statutes 2000, section 275.066, is 
303.26  amended to read: 
303.27     275.066 [SPECIAL TAXING DISTRICTS; DEFINITION.] 
303.28     For the purposes of property taxation and property tax 
303.29  state aids, the term "special taxing districts" includes the 
303.30  following entities: 
303.31     (1) watershed districts under chapter 103D; 
303.32     (2) sanitary districts under sections 115.18 to 115.37; 
303.33     (3) regional sanitary sewer districts under sections 115.61 
303.34  to 115.67; 
303.35     (4) regional public library districts under section 
303.36  134.201; 
304.1      (5) park districts under chapter 398; 
304.2      (6) regional railroad authorities under chapter 398A; 
304.3      (7) hospital districts under sections 447.31 to 447.38; 
304.4      (8) St. Cloud metropolitan transit commission under 
304.5   sections 458A.01 to 458A.15; 
304.6      (9) Duluth transit authority under sections 458A.21 to 
304.7   458A.37; 
304.8      (10) regional development commissions under sections 
304.9   462.381 to 462.398; 
304.10     (11) housing and redevelopment authorities under sections 
304.11  469.001 to 469.047; 
304.12     (12) port authorities under sections 469.048 to 469.068; 
304.13     (13) economic development authorities under sections 
304.14  469.090 to 469.1081; 
304.15     (14) metropolitan council under sections 473.123 to 
304.16  473.549; 
304.17     (15) metropolitan airports commission under sections 
304.18  473.601 to 473.680; 
304.19     (16) metropolitan mosquito control commission under 
304.20  sections 473.701 to 473.716; 
304.21     (17) Morrison county rural development financing authority 
304.22  under Laws 1982, chapter 437, section 1; 
304.23     (18) Croft Historical Park District under Laws 1984, 
304.24  chapter 502, article 13, section 6; 
304.25     (19) East Lake county medical clinic district under Laws 
304.26  1989, chapter 211, sections 1 to 6; 
304.27     (20) Floodwood area ambulance district under Laws 1993, 
304.28  chapter 375, article 5, section 39; 
304.29     (21) Middle Mississippi river watershed management 
304.30  organization under sections 103B.211 and 103B.241; and 
304.31     (22) emergency medical services special taxing districts 
304.32  under section 144F.01; 
304.33     (23) a county levying under the authority of section 
304.34  103B.241, 103B.245, or 103B.251; and 
304.35     (24) any other political subdivision of the state of 
304.36  Minnesota, excluding counties, school districts, cities, and 
305.1   towns, that has the power to adopt and certify a property tax 
305.2   levy to the county auditor, as determined by the commissioner of 
305.3   revenue. 
305.4      <b>[EFFECTIVE DATE.]</b> Clause (22) of this section is effective 
305.5   for taxes levied in 2001, payable in 2002, through taxes levied 
305.6   in 2006, payable in 2007.  Clause (23) of this section is 
305.7   effective for taxes levied in 2001, payable in 2002, and 
305.8   thereafter. 
305.9      Sec. 39.  Minnesota Statutes 2000, section 275.07, 
305.10  subdivision 1, is amended to read: 
305.11     Subdivision 1.  [CERTIFICATION OF LEVY.] (a) Except as 
305.12  provided under paragraph (b), the taxes voted by cities, 
305.13  counties, school districts, and special districts shall be 
305.14  certified by the proper authorities to the county auditor on or 
305.15  before five working days after December 20 in each year.  A town 
305.16  must certify the levy adopted by the town board to the county 
305.17  auditor by September 15 each year.  If the town board modifies 
305.18  the levy at a special town meeting after September 15, the town 
305.19  board must recertify its levy to the county auditor on or before 
305.20  five working days after December 20.  The taxes certified shall 
305.21  not be reduced by the county auditor by the aid received under 
305.22  section 273.1398, subdivision 2, but shall be reduced by the 
305.23  county auditor by the aid received under section 273.1398, 
305.24  subdivision 3.  If a city, town, county, school district, or 
305.25  special district fails to certify its levy by that date, its 
305.26  levy shall be the amount levied by it for the preceding year. 
305.27     (b)(i) The taxes voted by counties under sections 103B.241, 
305.28  103B.245, and 103B.251 shall be separately certified by the 
305.29  county to the county auditor on or before five working days 
305.30  after December 20 in each year.  The taxes certified shall not 
305.31  be reduced by the county auditor by the aid received under 
305.32  section 273.1398, subdivisions 2 and 3.  If a county fails to 
305.33  certify its levy by that date, its levy shall be the amount 
305.34  levied by it for the preceding year.  
305.35     (ii) For purposes of the proposed property tax notice under 
305.36  section 275.065 and the property tax statement under section 
306.1   276.04, for the first year in which the county implements the 
306.2   provisions of this paragraph, the county auditor shall reduce 
306.3   the county's levy for the preceding year to reflect any amount 
306.4   levied for water management purposes under clause (i) included 
306.5   in the county's levy. 
306.6      <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
306.7   levied in 2001, payable in 2002, and thereafter. 
306.8      Sec. 40.  Minnesota Statutes 2000, section 276.04, 
306.9   subdivision 2, is amended to read: 
306.10     Subd. 2.  [CONTENTS OF TAX STATEMENTS.] (a) The treasurer 
306.11  shall provide for the printing of the tax statements.  The 
306.12  commissioner of revenue shall prescribe the form of the property 
306.13  tax statement and its contents.  The statement must contain a 
306.14  tabulated statement of the dollar amount due to each taxing 
306.15  authority and the amount of the state determined school general 
306.16  tax from the parcel of real property for which a particular tax 
306.17  statement is prepared.  The dollar amounts attributable to the 
306.18  county, the state determined school general tax, the voter 
306.19  approved school tax, the other local school tax, the township or 
306.20  municipality, and the total of the metropolitan special taxing 
306.21  districts as defined in section 275.065, subdivision 3, 
306.22  paragraph (i), must be separately stated.  The amounts due all 
306.23  other special taxing districts, if any, may be aggregated.  The 
306.24  amount of the tax on homesteads qualifying under the senior 
306.25  citizens' property tax deferral program under chapter 290B is 
306.26  the total amount of property tax before subtraction of the 
306.27  deferred property tax amount.  The amount of the tax on 
306.28  contamination value imposed under sections 270.91 to 270.98, if 
306.29  any, must also be separately stated.  The dollar amounts, 
306.30  including the dollar amount of any special assessments, may be 
306.31  rounded to the nearest even whole dollar.  For purposes of this 
306.32  section whole odd-numbered dollars may be adjusted to the next 
306.33  higher even-numbered dollar.  The amount of market value 
306.34  excluded under section 273.11, subdivision 16, if any, must also 
306.35  be listed on the tax statement.  The statement shall include the 
306.36  following sentences, printed in upper case letters in boldface 
307.1   print:  "EVEN THOUGH THE STATE OF MINNESOTA DOES NOT RECEIVE ANY 
307.2   PROPERTY TAX REVENUES, IT SETS THE AMOUNT OF THE 
307.3   STATE-DETERMINED SCHOOL TAX LEVY.  THE STATE OF MINNESOTA 
307.4   REDUCES YOUR PROPERTY TAX BY PAYING CREDITS AND REIMBURSEMENTS 
307.5   TO LOCAL UNITS OF GOVERNMENT." 
307.6      (b) The property tax statements for manufactured homes and 
307.7   sectional structures taxed as personal property shall contain 
307.8   the same information that is required on the tax statements for 
307.9   real property.  
307.10     (c) Real and personal property tax statements must contain 
307.11  the following information in the order given in this paragraph.  
307.12  The information must contain the current year tax information in 
307.13  the right column with the corresponding information for the 
307.14  previous year in a column on the left: 
307.15     (1) the property's estimated market value under section 
307.16  273.11, subdivision 1; 
307.17     (2) the property's taxable market value after reductions 
307.18  under section 273.11, subdivisions 1a and 16; 
307.19     (3) the property's gross tax, calculated by adding the 
307.20  property's total property tax to the sum of the aids enumerated 
307.21  in clause (4); 
307.22     (4) a total of the following aids: 
307.23     (i) education aids payable under chapters 122A, 123A, 123B, 
307.24  124D, 125A, 126C, and 127A; 
307.25     (ii) local government aids for cities, towns, and counties 
307.26  under chapter 477A; 
307.27     (iii) disparity reduction aid under section 273.1398; and 
307.28     (iv) homestead and agricultural credit aid under section 
307.29  273.1398; 
307.30     (5) for homestead residential and agricultural properties, 
307.31  the education homestead credit under section 273.1382 273.1384; 
307.32     (6) any credits received under sections 273.119; 273.123; 
307.33  273.135; 273.1391; 273.1398, subdivision 4; 469.171; and 
307.34  473H.10, except that the amount of credit received under section 
307.35  273.135 must be separately stated and identified as "taconite 
307.36  tax relief"; and 
308.1      (7) the net tax payable in the manner required in paragraph 
308.2   (a). 
308.3      (d) If the county uses envelopes for mailing property tax 
308.4   statements and if the county agrees, a taxing district may 
308.5   include a notice with the property tax statement notifying 
308.6   taxpayers when the taxing district will begin its budget 
308.7   deliberations for the current year, and encouraging taxpayers to 
308.8   attend the hearings.  If the county allows notices to be 
308.9   included in the envelope containing the property tax statement, 
308.10  and if more than one taxing district relative to a given 
308.11  property decides to include a notice with the tax statement, the 
308.12  county treasurer or auditor must coordinate the process and may 
308.13  combine the information on a single announcement.  
308.14     The commissioner of revenue shall certify to the county 
308.15  auditor the actual or estimated aids enumerated in clause (4) 
308.16  that local governments will receive in the following year.  The 
308.17  commissioner must certify this amount by January 1 of each year. 
308.18     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2001, 
308.19  and thereafter, for statements required in 2002 and thereafter. 
308.20     Sec. 41.  Minnesota Statutes 2000, section 282.01, 
308.21  subdivision 1a, is amended to read: 
308.22     Subd. 1a.  [CONVEYANCE; GENERALLY.] Tax-forfeited lands may 
308.23  be sold by the county board to an organized or incorporated 
308.24  governmental subdivision of the state for any public purpose for 
308.25  which the subdivision is authorized to acquire property or may 
308.26  be released from the trust in favor of the taxing districts on 
308.27  application of a state agency for an authorized use at not less 
308.28  than their value as determined by the county board.  The 
308.29  commissioner of revenue may convey by deed in the name of the 
308.30  state a tract of tax-forfeited land held in trust in favor of 
308.31  the taxing districts to a governmental subdivision for an 
308.32  authorized public use, if an application is submitted to the 
308.33  commissioner which includes a statement of facts as to the use 
308.34  to be made of the tract and the need therefor and the 
308.35  recommendation of the county board.  
308.36     <b>[EFFECTIVE DATE.]</b> This section is effective for deeds 
309.1   issued on or after July 1, 2001. 
309.2      Sec. 42.  Minnesota Statutes 2000, section 282.01, 
309.3   subdivision 1b, is amended to read: 
309.4      Subd. 1b.  [CONVEYANCE; TARGETED NEIGHBORHOOD LANDS.] (a) 
309.5   Notwithstanding subdivision 1a, in the case of tax-forfeited 
309.6   lands located in a targeted neighborhood, as defined in section 
309.7   469.201, subdivision 10, outside the metropolitan area, as 
309.8   defined in and section 473.121, subdivision 2, the commissioner 
309.9   of revenue may shall convey by deed in the name of the state any 
309.10  tract of tax-forfeited land held in trust in favor of the taxing 
309.11  districts, to a political subdivision that submits an 
309.12  application to the commissioner of revenue and the 
309.13  recommendation of the county board. 
309.14     (b) Notwithstanding subdivision 1a, in the case of 
309.15  tax-forfeited lands located in a targeted neighborhood, as 
309.16  defined in section 469.201, subdivision 10, in a county in the 
309.17  metropolitan area, as defined in section 473.121, subdivision 2, 
309.18  the commissioner of revenue shall convey by deed in the name of 
309.19  the state any tract of tax-forfeited land held in trust in favor 
309.20  of the taxing districts, to a political subdivision that submits 
309.21  an application to the commissioner of revenue and the county 
309.22  board. 
309.23     (c) The application under paragraph (a) or (b) must include 
309.24  a statement of facts as to the use to be made of the tract, the 
309.25  need therefor, and a resolution, adopted by the governing body 
309.26  of the political subdivision, finding that the conveyance of a 
309.27  tract of tax-forfeited land to the political subdivision is 
309.28  necessary to provide for the redevelopment of land as productive 
309.29  taxable property.  Deeds of conveyance issued under paragraph 
309.30  (a) are not conditioned on continued use of the property for the 
309.31  use stated in the application.  
309.32     <b>[EFFECTIVE DATE.]</b> This section is effective for deeds 
309.33  issued on or after July 1, 2001. 
309.34     Sec. 43.  Minnesota Statutes 2000, section 282.04, 
309.35  subdivision 2, is amended to read: 
309.36     Subd. 2.  [RIGHTS BEFORE SALE; IMPROVEMENTS, INSURANCE, 
310.1   DEMOLITION.] Before the sale of a parcel of forfeited land the 
310.2   county auditor may, with the approval of the county board of 
310.3   commissioners, provide for the repair and improvement of any 
310.4   building or structure located upon the parcel, and may provide 
310.5   for maintenance of tax-forfeited lands, if it is determined by 
310.6   the county board that such repairs, improvements, or maintenance 
310.7   are necessary for the operation, use, preservation and safety of 
310.8   the building or structure.  If so authorized by the county 
310.9   board, the county auditor may insure the building or structure 
310.10  against loss or damage resulting from fire or windstorm, may 
310.11  purchase workers' compensation insurance to insure the county 
310.12  against claims for injury to the persons employed in the 
310.13  building or structure by the county, and may insure the county, 
310.14  its officers and employees against claims for injuries to 
310.15  persons or property because of the management, use or operation 
310.16  of the building or structure.  The county auditor may, with the 
310.17  approval of the county board, provide for the demolition of the 
310.18  building or structure, which has been determined by the county 
310.19  board to be within the purview of section 299F.10, and for the 
310.20  sale of salvaged materials from the building or structure.  The 
310.21  county auditor, with the approval of the county board, may 
310.22  provide for the sale of abandoned personal property under either 
310.23  chapter 345 or 566, as appropriate.  The sale may be made by the 
310.24  sheriff using the procedures for the sale of abandoned property 
310.25  in section 345.15 or by the county auditor using the procedures 
310.26  for the sale of abandoned property in section 504B.271.  The net 
310.27  proceeds from any sale of the personal property, salvaged 
310.28  materials, timber or other products, or leases made under this 
310.29  law must be deposited in the forfeited tax sale fund and must be 
310.30  distributed in the same manner as if the parcel had been sold. 
310.31     The county auditor, with the approval of the county board, 
310.32  may provide for the demolition of any structure on tax-forfeited 
310.33  lands, if in the opinion of the county board, the county 
310.34  auditor, and the land commissioner, if there is one, the sale of 
310.35  the land with the structure on it, or the continued existence of 
310.36  the structure by reason of age, dilapidated condition or 
311.1   excessive size as compared with nearby structures, will result 
311.2   in a material lessening of net tax capacities of real estate in 
311.3   the vicinity of the tax-forfeited lands, or if the demolition of 
311.4   the structure or structures will aid in disposing of the 
311.5   tax-forfeited property. 
311.6      Before the sale of a parcel of forfeited land located in an 
311.7   urban area, the county auditor may with the approval of the 
311.8   county board provide for the grading of the land by filling or 
311.9   the removal of any surplus material from it.  If the physical 
311.10  condition of forfeited lands is such that a reasonable grading 
311.11  of the lands is necessary for the protection and preservation of 
311.12  the property of any adjoining owner, the adjoining property 
311.13  owner or owners may apply to the county board to have the 
311.14  grading done.  If, after considering the application, the county 
311.15  board believes that the grading will enhance the value of the 
311.16  forfeited lands commensurate with the cost involved, it may 
311.17  approve it, and the work must be performed under the supervision 
311.18  of the county or city engineer, as the case may be, and the 
311.19  expense paid from the forfeited tax sale fund. 
311.20     Sec. 44.  Minnesota Statutes 2000, section 469.040, 
311.21  subdivision 5, is amended to read: 
311.22     Subd. 5.  [DESIGNATED HOUSING CORPORATION.] Property 
311.23  located within the exterior boundaries of the White Earth an 
311.24  Indian reservation in the state that is owned by the tribe's 
311.25  designated housing entity as defined in United States Code, 
311.26  title 25, section 4103(21), and that is a housing project or a 
311.27  housing development project, as defined in section 469.002, 
311.28  subdivisions 13 and 15, is exempt from all real and personal 
311.29  property taxes of the city, the county, the state, or any 
311.30  political subdivision thereof, but the property is subject to 
311.31  subdivision 3.  A copy of those portions of the annual reports 
311.32  submitted on behalf of the housing entity to the Secretary of 
311.33  the United States Department of Housing and Urban Development 
311.34  for the project that contain information sufficient to determine 
311.35  the amount due under subdivision 3 satisfies the reporting 
311.36  requirements of subdivision 3 for the project. 
312.1      <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
312.2   levied in 2001, payable in 2002, and thereafter. 
312.3      Sec. 45.  Minnesota Statutes 2000, section 469.202, 
312.4   subdivision 2, is amended to read: 
312.5      Subd. 2.  [ELIGIBILITY REQUIREMENTS FOR TARGETED 
312.6   NEIGHBORHOODS.] An area within a city is eligible for 
312.7   designation as a targeted neighborhood if the area meets two of 
312.8   the following three criteria: 
312.9      (a) The area had an unemployment rate that was twice the 
312.10  unemployment rate for the Minneapolis and Saint Paul standard 
312.11  metropolitan statistical area as determined by the 1980 most 
312.12  recent federal decennial census. 
312.13     (b) The median household income in the area was no more 
312.14  than half the median household income for the Minneapolis and 
312.15  Saint Paul standard metropolitan statistical area as determined 
312.16  by the 1980 most recent federal decennial census. 
312.17     (c) The area is characterized by residential dwelling units 
312.18  in need of substantial rehabilitation.  An area qualifies under 
312.19  this paragraph if 25 percent or more of the residential dwelling 
312.20  units are in substandard condition as determined by the city, or 
312.21  if 70 percent or more of the residential dwelling units in the 
312.22  area were built before 1940 as determined by the 1980 most 
312.23  recent federal decennial census. 
312.24     <b>[EFFECTIVE DATE.]</b> This section is effective beginning July 
312.25  1, 2001. 
312.26     Sec. 46.  [473.246] [LEGISLATIVE COMMISSION ON METROPOLITAN 
312.27  GOVERNMENT; REVIEW.] 
312.28     Subdivision 1.  [METROPOLITAN COUNCIL INFORMATION; REVIEW 
312.29  BY LEGISLATIVE COMMISSION ON METROPOLITAN GOVERNMENT.] The 
312.30  metropolitan council must submit to the legislative commission 
312.31  on metropolitan government information on the council's tax 
312.32  rates and dollar amounts levied for the current year, proposed 
312.33  property tax rates and levies, operating and capital budgets, 
312.34  work program, capital improvement program, and any other 
312.35  information requested by the commission, for review by the 
312.36  legislative commission, as provided in section 3.99. 
313.1      Subd. 2.  [EXPIRATION.] This section expires July 1, 2007. 
313.2      <b>[EFFECTIVE DATE; APPLICATION.]</b> This section is effective 
313.3   July 1, 2001, and applies in the counties of Anoka, Carver, 
313.4   Dakota, Hennepin, Ramsey, Scott, and Washington. 
313.5      Sec. 47.  Minnesota Statutes 2000, section 473H.10, 
313.6   subdivision 3, is amended to read: 
313.7      Subd. 3.  [COMPUTATION OF TAX; STATE REIMBURSEMENT.] (a) 
313.8   After having determined the market value of all land valued 
313.9   according to subdivision 2, the assessor shall compute the net 
313.10  tax capacity of those properties by applying the appropriate 
313.11  class rates.  When computing the rate of tax pursuant to section 
313.12  275.08, the county auditor shall include the net tax capacity of 
313.13  land as provided in this clause.  
313.14     (b) The county auditor shall compute the tax on lands 
313.15  valued according to subdivision 2 and nonresidential buildings 
313.16  by multiplying the net tax capacity times the total local tax 
313.17  rate for all purposes as provided in clause (a).  
313.18     (c) The county auditor shall then compute the tax on lands 
313.19  valued according to subdivision 2 and nonresidential buildings 
313.20  by multiplying the net tax capacity times the total local tax 
313.21  rate for all purposes as provided in clause (a), subtracting 
313.22  $1.50 per acre of land in the preserve.  
313.23     (d) The county auditor shall then compute the maximum ad 
313.24  valorem property tax on lands valued according to subdivision 2 
313.25  and nonresidential buildings by multiplying the net tax capacity 
313.26  times 105 percent of the previous year's statewide average local 
313.27  tax rate levied on property located within townships for all 
313.28  purposes.  
313.29     (e) The tax due and payable by the owner of preserve land 
313.30  valued according to subdivision 2 and nonresidential buildings 
313.31  will be the amount determined in clause (c) or (d), whichever is 
313.32  less.  The state shall reimburse the taxing jurisdictions for 
313.33  the amount of the difference between the net tax determined 
313.34  under this clause and the gross tax in clause (b).  Residential 
313.35  buildings shall continue to be valued and classified according 
313.36  to the provisions of sections 273.11 and 273.13, as they would 
314.1   be in the absence of this section, and the tax on those 
314.2   buildings shall not be subject to the limitation contained in 
314.3   this clause.  
314.4      The county may transfer money from the county conservation 
314.5   account created in section 40A.152 to the county revenue fund to 
314.6   reimburse the fund for the tax lost as a result of this 
314.7   subdivision or to pay taxing jurisdictions within the county for 
314.8   the tax lost.  The county auditor shall certify to the 
314.9   commissioner of revenue on or before June 1 the total amount of 
314.10  tax lost to the county and taxing jurisdictions located within 
314.11  the county as a result of this subdivision and the extent that 
314.12  the tax lost exceeds funds available in the county conservation 
314.13  account.  Payment shall be made by the state on December 26 15 
314.14  to each of the affected taxing jurisdictions, other than school 
314.15  districts, in the same proportion that the ad valorem tax is 
314.16  distributed if the county conservation account is insufficient 
314.17  to make the reimbursement.  There is annually appropriated from 
314.18  the Minnesota conservation fund under section 40A.151 to the 
314.19  commissioner of revenue an amount sufficient to make the 
314.20  reimbursement provided in this subdivision.  If the amount 
314.21  available in the Minnesota conservation fund is insufficient, 
314.22  the balance that is needed is appropriated from the general fund.
314.23     Sec. 48.  Minnesota Statutes 2000, section 477A.12, is 
314.24  amended to read: 
314.25     477A.12 [ANNUAL APPROPRIATIONS; LANDS ELIGIBLE; 
314.26  CERTIFICATION OF ACREAGE.] 
314.27     Subdivision 1.  [TYPES OF LAND; PAYMENTS.] (a) As an offset 
314.28  for expenses incurred by counties and towns in support of 
314.29  natural resources lands, the following amounts are annually 
314.30  appropriated to the commissioner of natural resources from the 
314.31  general fund for transfer to the commissioner of revenue.  The 
314.32  commissioner of revenue shall pay the transferred funds to 
314.33  counties as required by sections 477A.11 to 477A.145.  The 
314.34  amounts are: 
314.35     (1) for acquired natural resources land, $3, as adjusted 
314.36  for inflation under section 477A.145, multiplied by the total 
315.1   number of acres of acquired natural resources land or, at the 
315.2   county's option three-fourths of one percent of the appraised 
315.3   value of all acquired natural resources land in the county, 
315.4   whichever is greater; 
315.5      (2) 75 cents, as adjusted for inflation under section 
315.6   477A.145, multiplied by the number of acres of 
315.7   county-administered other natural resources land; and 
315.8      (3) 37.5 cents, as adjusted for inflation under section 
315.9   477A.145, multiplied by the number of acres of 
315.10  commissioner-administered other natural resources land located 
315.11  in each county as of July 1 of each year prior to the payment 
315.12  year. 
315.13     (b) The amount determined under paragraph (a), clause (1), 
315.14  is payable for land that is acquired from a private owner and 
315.15  owned by the department of transportation for the purpose of 
315.16  replacing wetland losses caused by transportation projects, but 
315.17  only if the county contains more than 500 acres of such land at 
315.18  the time the certification is made under subdivision 2. 
315.19     Subd. 2.  [PROCEDURE.] Lands for which payments in lieu are 
315.20  made pursuant to section 97A.061, subdivision 3, and Laws 1973, 
315.21  chapter 567, shall not be eligible for payments under this 
315.22  section.  Each county auditor shall certify to the department of 
315.23  natural resources during July of each year prior to the payment 
315.24  year the number of acres of county-administered other natural 
315.25  resources land within the county.  The department of natural 
315.26  resources may, in addition to the certification of acreage, 
315.27  require descriptive lists of land so certified.  The 
315.28  commissioner of natural resources shall determine and certify to 
315.29  the commissioner of revenue by March 1 of the payment year:  
315.30     (1) the number of acres and most recent appraised value of 
315.31  acquired natural resources land within each county; 
315.32     (2) the number of acres of commissioner-administered 
315.33  natural resources land within each county; and 
315.34     (3) the number of acres of county-administered other 
315.35  natural resources land within each county, based on the reports 
315.36  filed by each county auditor with the commissioner of natural 
316.1   resources. 
316.2      The commissioner of transportation shall determine and 
316.3   certify to the commissioner of revenue by March 1 of the payment 
316.4   year the number of acres of land and the appraised value of the 
316.5   land described in subdivision 1, paragraph (b), but only if it 
316.6   exceeds 500 acres. 
316.7      The commissioner of revenue shall determine the 
316.8   distributions provided for in this section using the number of 
316.9   acres and appraised values certified by the commissioner of 
316.10  natural resources and the commissioner of transportation by 
316.11  March 1 of the payment year. 
316.12     (c) Subd 3.  [DETERMINATION OF APPRAISED VALUE.] For the 
316.13  purposes of this section, the appraised value of acquired 
316.14  natural resources land is the purchase price for the first five 
316.15  years after acquisition.  The appraised value of acquired 
316.16  natural resources land received as a donation is the value 
316.17  determined for the commissioner of natural resources by a 
316.18  licensed appraiser, or the county assessor's estimated market 
316.19  value if no appraisal is done.  The appraised value must be 
316.20  determined by the county assessor every five years after the 
316.21  land is acquired. 
316.22     <b>[EFFECTIVE DATE.]</b> This section is effective for payments in 
316.23  2002 and thereafter. 
316.24     Sec. 49.  Minnesota Statutes 2000, section 477A.14, is 
316.25  amended to read: 
316.26     477A.14 [USE OF FUNDS.] 
316.27     Except as provided in section 97A.061, subdivision 5, 40 
316.28  percent of the total payment to the county shall be deposited in 
316.29  the county general revenue fund to be used to provide property 
316.30  tax levy reduction.  The remainder shall be distributed by the 
316.31  county in the following priority:  
316.32     (a) 37.5 cents, as adjusted for inflation under section 
316.33  477A.145, for each acre of county-administered other natural 
316.34  resources land shall be deposited in a resource development fund 
316.35  to be created within the county treasury for use in resource 
316.36  development, forest management, game and fish habitat 
317.1   improvement, and recreational development and maintenance of 
317.2   county-administered other natural resources land.  Any county 
317.3   receiving less than $5,000 annually for the resource development 
317.4   fund may elect to deposit that amount in the county general 
317.5   revenue fund; 
317.6      (b) From the funds remaining, within 30 days of receipt of 
317.7   the payment to the county, the county treasurer shall pay each 
317.8   organized township 30 cents, as adjusted for inflation under 
317.9   section 477A.145, for each acre of acquired natural resources 
317.10  land and each acre of land described in section 477A.12, 
317.11  subdivision 1, paragraph (b), and 7.5 cents, as adjusted for 
317.12  inflation under section 477A.145, for each acre of other natural 
317.13  resources land located within its boundaries.  Payments for 
317.14  natural resources lands not located in an organized township 
317.15  shall be deposited in the county general revenue fund.  Payments 
317.16  to counties and townships pursuant to this paragraph shall be 
317.17  used to provide property tax levy reduction, except that of the 
317.18  payments for natural resources lands not located in an organized 
317.19  township, the county may allocate the amount determined to be 
317.20  necessary for maintenance of roads in unorganized townships.  
317.21  Provided that, if the total payment to the county pursuant to 
317.22  section 477A.12 is not sufficient to fully fund the distribution 
317.23  provided for in this clause, the amount available shall be 
317.24  distributed to each township and the county general revenue fund 
317.25  on a pro rata basis; and 
317.26     (c) Any remaining funds shall be deposited in the county 
317.27  general revenue fund.  Provided that, if the distribution to the 
317.28  county general revenue fund exceeds $35,000, the excess shall be 
317.29  used to provide property tax levy reduction. 
317.30     <b>[EFFECTIVE DATE.]</b> This section is effective for payments in 
317.31  2002 and thereafter. 
317.32     Sec. 50.  [STUDY REQUIRED; METROPOLITAN FISCAL DISPARITIES 
317.33  PROGRAM.] 
317.34     The commissioner of revenue, in conjunction with one 
317.35  representative from each of the seven metropolitan counties to 
317.36  be appointed by the respective county boards and legislative 
318.1   staff, shall conduct a study of the metropolitan revenue 
318.2   distribution program contained in Minnesota Statutes, chapter 
318.3   473F, commonly known as the fiscal disparities program.  The 
318.4   commissioner shall make a report to the legislature by February 
318.5   1, 2002, consisting of the findings of the study and any 
318.6   recommendations resulting from the study. 
318.7      The study shall primarily address the question of whether 
318.8   the program is achieving the purposes for which it was created.  
318.9   Additionally, the study shall address the following questions: 
318.10     (1) How has the program affected property tax disparities 
318.11  across the Twin Cities metropolitan area? 
318.12     (2) Is the formula for contributing tax base to the 
318.13  areawide pool reasonable?  Should certain commercial-industrial 
318.14  tax base continue to be exempt from contribution to the areawide 
318.15  pool, such as tax base in existence prior to 1979, tax base in 
318.16  tax increment financing districts established before 1979, and 
318.17  tax base located at the Minneapolis-Saint Paul International 
318.18  Airport?  Should contribution amounts be adjusted for 
318.19  differences in sales ratios between communities? 
318.20     (3) Is the formula for distributing tax base from the 
318.21  areawide pool reasonable?  Should the formula reflect measures 
318.22  of need in addition to population?  Should the distribution 
318.23  formula be based on tax capacity rather than market value? 
318.24     (4) Does the program help promote orderly growth and 
318.25  encourage environmentally sound land use? 
318.26     (5) Does the program reduce competition for 
318.27  commercial-industrial tax base between communities?  Is reduced 
318.28  competition for commercial-industrial tax base desirable? 
318.29     (6) Do local governments derive sufficient tax revenues 
318.30  from commercial-industrial property to cover the costs of 
318.31  providing services to the property, considering the tax base 
318.32  that must be contributed to the areawide pool? 
318.33     (7) Could improvements be made in the administration of the 
318.34  program? 
318.35     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2001. 
318.36     Sec. 51.  [LAKES REGION EMS SERVICE CHARGES.] 
319.1      Subdivision 1.  [AUTHORIZATION.] The Lakes Region emergency 
319.2   medical services district may charge and collect through the 
319.3   county with county property taxes, an annual service charge of 
319.4   $7 per unit for properties in the primary service area within 
319.5   Chisago county and $3.50 per unit for properties in the 
319.6   secondary service area within Chisago county according to the 
319.7   schedule in subdivision 2 for emergency medical services 
319.8   authorized as provided in subdivision 3. 
319.9      Subd. 2.  [EMS FEE SCHEDULE.] 
319.10     (a) RESIDENTIAL PROPERTIES          UNIT VALUE 
319.11     (1) Agricultural with Dwelling      1.0 
319.12     (2) Seasonal/Recreational           1.0 
319.13     (3) Residential Homestead           1.0 
319.14     (4) Residential Non-Homestead       1.0 for up to three 
319.15                                             living units 
319.16                                         1.0 for each additional 
319.17                                             living unit 
319.18                                             thereafter 
319.19     (5) Mobile Homes                    1.0 
319.20     (b) COMMERCIAL PROPERTIES 
319.21     (1) Up to $100,000 valuation        1.0 
319.22     (2) $100,001 to $150,000            2.0 
319.23     (3) $150,001 to $200,000            3.0 
319.24     (4) $200,001 to $250,000            4.0 
319.25     (5) $250,001 to $300,000            5.0 
319.26     (6) $300,001 to $350,000            6.0 
319.27     (7) $350,001 to $400,000            7.0 
319.28     (8) $400,001 to $450,000            8.0 
319.29     (9) $450,001 to $500,000            9.0 
319.30     (10) $500,001 to $550,000           10.0 
319.31     (11) $550,001 to $600,000           11.0 
319.32     (12) Over $600,000                  12.0 
319.33     Subd. 3.  [USE OF FEE PROCEEDS.] The proceeds of fees 
319.34  charged and collected under this section must be used to support 
319.35  the providing of out-of-hospital emergency medical services 
319.36  including, but not limited to, first responder or rescue squads 
320.1   recognized by the Lakes Region emergency medical services 
320.2   district, ambulance services licensed under Minnesota Statutes, 
320.3   chapter 144E, and recognized by the district, medical control 
320.4   functions set out in Minnesota Statutes, chapter 144E, and 
320.5   communications equipment and systems. 
320.6      Subd. 4.  [BOARD.] (a) The district is governed by a board 
320.7   made up of the members of the governing bodies including town 
320.8   boards of local governmental units in Chisago county, as follows:
320.9      (1) three members chosen by all of the cities in a manner 
320.10  convenient to them that reflects geographic balance; and 
320.11     (2) three members chosen by all of the town boards in a 
320.12  manner convenient to them that reflects geographic balance. 
320.13     (b) If the members are not selected as provided in 
320.14  paragraph (a), clause (1) or (2), by September 1, 2001, the 
320.15  county board must make the appointments from the governing 
320.16  bodies of cities under paragraph (a), clause (1), or from the 
320.17  governing bodies of town boards under paragraph (a), clause (2), 
320.18  respectively, and, in either case, reflecting geographic balance.
320.19     (c) A representative from the county board chosen by the 
320.20  county board must serve as the chair of the district board. 
320.21     (d) All members of the district board serve a three-year 
320.22  term. 
320.23     (e) A vacancy on the district board must be filled as 
320.24  provided for the initial appointment.  If the vacancy is not 
320.25  filled within 30 days by the initial appointing authority under 
320.26  paragraph (a), clause (1) or (2), the county board must make the 
320.27  appointment as provided in paragraph (b). 
320.28     Subd. 5.  [PROCEDURE.] The Chisago county board must charge 
320.29  and collect, and disburse the fees authorized in this section in 
320.30  the same manner authorized by ordinance for the charging, 
320.31  collection, and disbursing of solid waste management fees within 
320.32  the county.  The county may proceed to collect unpaid fees under 
320.33  this section in the same manner and extent, including interest 
320.34  charges, as provided by ordinance for collection of unpaid solid 
320.35  waste management fees. 
320.36     Subd. 6.  [ADMINISTRATIVE SHARE.] The county may retain up 
321.1   to one percent of the fees collected under this section each 
321.2   year for administration of the fee collection and disbursal. 
321.3      Subd. 7.  [SUNSET.] The fee authorized under this section 
321.4   may be imposed in 2001 through 2003 and collected with property 
321.5   taxes payable in 2002 through 2004 only.  
321.6      Sec. 52.  [CONVEYANCE OF TAX-FORFEITED LAND; DAKOTA 
321.7   COUNTY.] 
321.8      (a) If special school district No. 6 conveys the land 
321.9   described in paragraph (c) to the state according to Minnesota 
321.10  Statutes, section 282.01, subdivision 1d, then, notwithstanding 
321.11  any other provision of Minnesota Statutes, chapter 282, the 
321.12  commissioner of revenue shall reconvey the land described in 
321.13  paragraph (c) to special school district No. 6 for no 
321.14  consideration.  
321.15     (b) The conveyance must be in a form approved by the 
321.16  attorney general.  Notwithstanding Minnesota Statutes, chapter 
321.17  282, or other law to the contrary, special school district No. 6 
321.18  may use or sell the land for other than a public use.  
321.19  Notwithstanding Minnesota Statutes, chapter 282, or other law to 
321.20  the contrary, the state shall not retain a reversionary interest 
321.21  and shall convey the land free of the trust in favor of the 
321.22  taxing district. 
321.23     (c) The land to be conveyed is in the city of South St. 
321.24  Paul, Dakota county, and is described as:  
321.25     (1) Lots 4, 5, 6, and 7, Block 1, Lookout Park Addition; 
321.26     (2) Lots 25 and 26, Block 1, Lookout Park Addition; 
321.27     (3) Lots 11, 12, 13, 14, 15, 16, 17, 18, 19, and 20, Block 
321.28  2, Lookout Park Addition; 
321.29     (4) Lots 1, 2, 3, 4, and 5, Block 1, Bryants First Addition 
321.30  to the city of South St. Paul; and 
321.31     (5) Lot 21, Block 1, Bryants First Addition to the city of 
321.32  South St. Paul, together with that part of the vacated alley and 
321.33  vacated Stanley Place accruing thereto. 
321.34     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
321.35  following final enactment. 
321.36     Sec. 53.  [INDEPENDENT SCHOOL DISTRICT NO. 319, 
322.1   NASHWAUK-KEEWATIN, ADDITIONAL LEVY.] 
322.2      In addition to other levies, independent school district 
322.3   No. 319, Nashwauk-Keewatin, may levy an amount up to $25,000 
322.4   each year to finance the Nashwauk School-Community Library and 
322.5   Community Service Project. 
322.6      <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2001. 
322.7      Sec. 54.  [PROPERTY TAX ABATEMENTS; PROPERTY DAMAGED BY 
322.8   TORNADO; YELLOW MEDICINE AND CHIPPEWA COUNTIES.] 
322.9      Subdivision 1.  [AUTHORIZATION.] Notwithstanding the 
322.10  requirements of Minnesota Statutes, section 375.192, a city 
322.11  council by resolution may request the county board of a 
322.12  qualified county to grant abatements on eligible property for 
322.13  taxes payable in 2001 as provided in this section.  Up to 50 
322.14  percent of the taxes payable in 2001 on an eligible property 
322.15  that does not qualify for reimbursement under Minnesota 
322.16  Statutes, section 273.123, subdivision 4, may be abated.  The 
322.17  owner of the eligible property is not required to apply for the 
322.18  abatement. 
322.19     Subd. 2.  [DEFINITIONS.] (a) As used in this section, the 
322.20  terms defined in this subdivision have the meanings given them. 
322.21     (b) "Qualified county" means any county in the area added 
322.22  to the Presidential Declaration of Major Disaster, DR1333, by 
322.23  amendment number 5 dated July 28, 2000, and amendment number 6 
322.24  dated August 14, 2000. 
322.25     (c) "Eligible property" means a parcel of taxable property 
322.26  located in a qualified county that contains a structure that has 
322.27  been determined by the assessor to have lost over 50 percent of 
322.28  its estimated market value due to wind damage.  In the case of 
322.29  agricultural property, the abatement is limited to the taxes on 
322.30  the parcel attributable to the value of the house, garage, and 
322.31  surrounding one acre, if the house has lost over 50 percent of 
322.32  its estimated market value; and the tax attributable to the 
322.33  value of any farm buildings and structures that have lost over 
322.34  50 percent of their estimated market value. 
322.35     Subd. 3.  [ASSESSORS' DUTIES.] As soon as practicable, 
322.36  local and county assessors in qualified counties shall notify 
323.1   the county board and property owners of parcels of eligible 
323.2   property. 
323.3      Subd. 4.  [APPROPRIATION.] $100,000 is appropriated to the 
323.4   commissioner of revenue for fiscal year 2002 to be apportioned 
323.5   among the counties in amendment number 5 and amendment number 6 
323.6   to the Presidential Declaration of Major Disaster, DR1333, to 
323.7   provide reimbursement for abatements granted under this section 
323.8   for taxes payable in 2001 to properties damaged from tornadoes 
323.9   on July 25, 2000.  The apportionment shall be based upon the 
323.10  amount of disaster-related market value loss in each county.  
323.11  Counties must be reimbursed only for property taxes that were 
323.12  actually abated, not to exceed each county's apportioned amount. 
323.13     Sec. 55.  [MINNEHAHA WATERSHED DISTRICT.] 
323.14     Subdivision 1.  [LEVY AUTHORIZED.] Notwithstanding 
323.15  Minnesota Statutes, section 103D.905, subdivision 3, the 
323.16  Minnehaha watershed district may annually levy an additional 
323.17  amount up to $50,000 for enforcing rules and permits. 
323.18     Subd. 2.  [EFFECTIVE DATE.] This section is effective, 
323.19  without local approval, beginning with taxes levied in 2001, 
323.20  payable in 2002. 
323.21     Sec. 56.  [REPEALER.] 
323.22     (a) Minnesota Statutes 2000, section 278.078, is repealed. 
323.23     (b) Laws 1988, chapter 426, section 1; Laws 1988, chapter 
323.24  702, section 16; Laws 1992, chapter 511, article 2, section 52, 
323.25  as amended by Laws 1997, chapter 231, article 2, section 50, and 
323.26  Laws 1998, chapter 389, article 3, section 32; Laws 1996, 
323.27  chapter 471, article 8, section 45; Laws 1999, chapter 243, 
323.28  article 6, section 14; Laws 1999, chapter 243, article 6, 
323.29  section 15; and Laws 2000, chapter 490, article 6, section 17, 
323.30  are repealed. 
323.31     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
323.32  levied in 2001, payable in 2002 and thereafter. 
323.33                             ARTICLE 10 
323.34                        PROPERTY TAX REFUND 
323.35     Section 1.  Minnesota Statutes 2000, section 290A.03, 
323.36  subdivision 6, is amended to read: 
324.1      Subd. 6.  [HOMESTEAD.] "Homestead" means the dwelling 
324.2   occupied as the claimant's principal residence and so much of 
324.3   the land surrounding it, not exceeding ten acres, as is 
324.4   reasonably necessary for use of the dwelling as a home and any 
324.5   other property used for purposes of a homestead as defined in 
324.6   section 273.13, subdivision 22, except for agricultural land 
324.7   assessed as part of a homestead pursuant to section 273.13, 
324.8   subdivision 23, "homestead" is limited to the first $600,000 of 
324.9   market value or, where the farm homestead is rented, house and 
324.10  garage and immediately surrounding one acre of land.  The 
324.11  homestead may be owned or rented and may be a part of a 
324.12  multidwelling or multipurpose building and the land on which it 
324.13  is built.  A manufactured home, as defined in section 273.125, 
324.14  subdivision 8, or a park trailer taxed as a manufactured home 
324.15  under section 168.012, subdivision 9, assessed as personal 
324.16  property may be a dwelling for purposes of this subdivision. 
324.17     <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
324.18  refunds based on property taxes payable in 2002. 
324.19     Sec. 2.  Minnesota Statutes 2000, section 290A.03, 
324.20  subdivision 11, is amended to read: 
324.21     Subd. 11.  [RENT CONSTITUTING PROPERTY TAXES.] "Rent 
324.22  constituting property taxes" means 19 the percent of the gross 
324.23  rent, as provided under section 290A.046, actually paid in cash, 
324.24  or its equivalent, or the portion of rent paid in lieu of 
324.25  property taxes, in any calendar year by a claimant for the right 
324.26  of occupancy of the claimant's Minnesota homestead in the 
324.27  calendar year, and which rent constitutes the basis, in the 
324.28  succeeding calendar year of a claim for relief under this 
324.29  chapter by the claimant.  
324.30     <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
324.31  refunds based on rent paid in calendar year 2001. 
324.32     Sec. 3.  Minnesota Statutes 2000, section 290A.03, 
324.33  subdivision 12, is amended to read: 
324.34     Subd. 12.  [GROSS RENT.] (a) "Gross rent" means rental paid 
324.35  for the right of occupancy, at arms-length, of a homestead, 
324.36  exclusive of charges for any medical services furnished by the 
325.1   landlord as a part of the rental agreement, whether expressly 
325.2   set out in the rental agreement or not. 
325.3      (b) The gross rent of a resident of a nursing home or 
325.4   intermediate care facility is $350 per month.  The gross rent of 
325.5   a resident of an adult foster care home is $550 per month.  
325.6   Beginning for rent paid in 2002, the commissioner shall annually 
325.7   adjust for inflation the gross rent amounts stated in this 
325.8   paragraph.  The adjustment must be made in accordance with 
325.9   section 1f of the Internal Revenue Code, except that for 
325.10  purposes of this paragraph the percentage increase shall be 
325.11  determined from the year ending on June 30, 2001, to the year 
325.12  ending on June 30 of the year in which the rent is paid.  The 
325.13  commissioner shall round the gross rents to the nearest $10 
325.14  amount.  If the amount ends in $5, the commissioner shall round 
325.15  it up to the next $10 amount.  The determination of the 
325.16  commissioner under this paragraph is not a rule under the 
325.17  Administrative Procedure Act. 
325.18     (c) If the landlord and tenant have not dealt with each 
325.19  other at arms-length and the commissioner determines that the 
325.20  gross rent charged was excessive, the commissioner may adjust 
325.21  the gross rent to a reasonable amount for purposes of this 
325.22  chapter. 
325.23     (d) Any amount paid by a claimant residing in property 
325.24  assessed pursuant to section 273.124, subdivision 3, 4, 5, or 6 
325.25  for occupancy in that property shall be excluded from gross rent 
325.26  for purposes of this chapter.  However, property taxes imputed 
325.27  to the homestead of the claimant or the dwelling unit occupied 
325.28  by the claimant that qualifies for homestead treatment pursuant 
325.29  to section 273.124, subdivision 3, 4, 5, or 6 shall be included 
325.30  within the term "property taxes payable" as defined in 
325.31  subdivision 13, notwithstanding the fact that ownership is not 
325.32  in the name of the claimant. 
325.33     <b>[EFFECTIVE DATE.]</b> This section is effective for refunds 
325.34  based on rent paid after December 31, 2000. 
325.35     Sec. 4.  Minnesota Statutes 2000, section 290A.03, 
325.36  subdivision 13, is amended to read: 
326.1      Subd. 13.  [PROPERTY TAXES PAYABLE.] "Property taxes 
326.2   payable" means the property tax exclusive of special 
326.3   assessments, penalties, and interest payable on a claimant's 
326.4   homestead after deductions made under sections 273.135, 
326.5   273.1382, 273.1391, 273.42, subdivision 2, and any other state 
326.6   paid property tax credits in any calendar year.  In the case of 
326.7   a claimant who makes ground lease payments, "property taxes 
326.8   payable" includes the amount of the payments directly 
326.9   attributable to the property taxes assessed against the parcel 
326.10  on which the house is located.  No apportionment or reduction of 
326.11  the "property taxes payable" shall be required for the use of a 
326.12  portion of the claimant's homestead for a business purpose if 
326.13  the claimant does not deduct any business depreciation expenses 
326.14  for the use of a portion of the homestead in the determination 
326.15  of federal adjusted gross income.  For homesteads which are 
326.16  manufactured homes as defined in section 273.125, subdivision 8, 
326.17  and for homesteads which are park trailers taxed as manufactured 
326.18  homes under section 168.012, subdivision 9, "property taxes 
326.19  payable" shall also include 19 the percent, as provided under 
326.20  section 290A.046, of the gross rent paid in the preceding year 
326.21  for the site on which the homestead is located.  When a 
326.22  homestead is owned by two or more persons as joint tenants or 
326.23  tenants in common, such tenants shall determine between them 
326.24  which tenant may claim the property taxes payable on the 
326.25  homestead.  If they are unable to agree, the matter shall be 
326.26  referred to the commissioner of revenue whose decision shall be 
326.27  final.  Property taxes are considered payable in the year 
326.28  prescribed by law for payment of the taxes. 
326.29     In the case of a claim relating to "property taxes 
326.30  payable," the claimant must have owned and occupied the 
326.31  homestead on January 2 of the year in which the tax is payable 
326.32  and (i) the property must have been classified as homestead 
326.33  property pursuant to section 273.124, on or before December 15 
326.34  of the assessment year to which the "property taxes payable" 
326.35  relate; or (ii) the claimant must provide documentation from the 
326.36  local assessor that application for homestead classification has 
327.1   been made on or before December 15 of the year in which the 
327.2   "property taxes payable" were payable and that the assessor has 
327.3   approved the application. 
327.4      <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
327.5   refunds based on rent paid in calendar year 2001. 
327.6      Sec. 5.  Minnesota Statutes 2000, section 290A.04, 
327.7   subdivision 2, is amended to read: 
327.8      Subd. 2.  [HOMEOWNERS.] A claimant whose property taxes 
327.9   payable are in excess of the percentage of the household income 
327.10  stated below shall pay an amount equal to the percent of income 
327.11  shown for the appropriate household income level along with the 
327.12  percent to be paid by the claimant of the remaining amount of 
327.13  property taxes payable.  The state refund equals the amount of 
327.14  property taxes payable that remain, up to the state refund 
327.15  amount shown below.  
327.16                        Percent           Percent    Maximum
327.17  Household Income     of Income          Paid by     State
327.18                                          Claimant    Refund
327.19      $0 to 1,029
327.20      $0 to 1,189     1.2 percent        18 percent   $440 $1,190
327.21   1,030 to 2,059
327.22   1,190 to 2,389     1.3 percent        18 percent   $440 $1,190
327.23   2,060 to 3,099
327.24   2,390 to 3,589     1.4 percent        20 percent   $440 $1,190
327.25   3,100 to 4,129
327.26   3,590 to 4,779     1.6 percent        20 percent   $440 $1,190
327.27   4,130 to 5,159
327.28   4,780 to 5,969     1.7 percent        20 percent   $440 $1,190
327.29   5,160 to 7,229
327.30   5,970 to 8,369     1.9 percent        25 percent   $440 $1,190
327.31   7,230 to 8,259
327.32   8,370 to 9,559     2.1 percent        25 percent   $440 $1,190
327.33   8,260 to 9,289
327.34   9,560 to 10,759    2.2 percent        25 percent   $440 $1,190
327.35   9,290 to 10,319
327.36  10,760 to 11,949    2.3 percent        30 percent   $440 $1,190
327.37  10,320 to 11,349
327.38  11,950 to 13,139    2.4 percent        30 percent   $440 $1,190
327.39  11,350 to 12,389
327.40  13,140 to 14,349    2.5 percent        30 percent   $440 $1,190
327.41  12,390 to 14,449
327.42  14,350 to 16,729    2.6 percent        30 percent   $440 $1,190
327.43  14,450 to 15,479
327.44  16,730 to 17,919    2.8 percent        35 percent   $440 $1,190
327.45  15,480 to 16,509
327.46  17,920 to 19,119    3.0 percent        35 percent   $440 $1,190
327.47  16,510 to 17,549
327.48  19,120 to 20,319    3.2 percent        40 percent   $440 $1,190
327.49  17,550 to 21,669
327.50  20,320 to 25,089    3.3 percent        40 percent   $440 $1,190
327.51  21,670 to 24,769
327.52  25,090 to 28,679    3.4 percent        45 percent   $440 $1,190
327.53  24,770 to 30,959
327.54  28,680 to 41,819    3.5 percent        45 percent   $440 $1,190
327.55  30,960 to 36,119    3.5 percent        45 percent   $440
327.56  36,120 to 41,279
328.1   41,820 to 47,789    3.7 percent        50 percent   $440 $1,190
328.2   41,280 to 58,829
328.3   47,790 to 63,329    4.0 percent        50 percent   $440 $1,190
328.4   63,330 to 64,519    4.0 percent        50 percent   $1,080
328.5   64,520 to 65,719    4.0 percent        50 percent   $  960
328.6   65,720 to 66,909    4.0 percent        50 percent   $  830
328.7   66,910 to 68,109    4.0 percent        50 percent   $  720
328.8   58,830 to 59,859
328.9   68,110 to 69,309    4.0 percent        50 percent   $310 $600
328.10  59,860 to 60,889
328.11  69,310 to 70,499    4.0 percent        50 percent   $210 $360
328.12  60,890 to 61,929
328.13  70,500 to 71,699    4.0 percent        50 percent   $100 $120
328.14     The payment made to a claimant shall be the amount of the 
328.15  state refund calculated under this subdivision.  No payment is 
328.16  allowed if the claimant's household income is $61,930 $71,700 or 
328.17  more. 
328.18     <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
328.19  refunds based on property taxes payable in 2002. 
328.20     Sec. 6.  Minnesota Statutes 2000, section 290A.04, 
328.21  subdivision 2a, is amended to read: 
328.22     Subd. 2a.  [RENTERS.] A claimant whose rent constituting 
328.23  property taxes exceeds the percentage of the household income 
328.24  stated below must pay an amount equal to the percent of income 
328.25  shown for the appropriate household income level along with the 
328.26  percent to be paid by the claimant of the remaining amount of 
328.27  rent constituting property taxes.  The state refund equals the 
328.28  amount of rent constituting property taxes that remain, up to 
328.29  the maximum state refund amount shown below.  
328.30                        Percent           Percent      Maximum
328.31  Household Income     of Income          Paid by        State
328.32                                          Claimant      Refund
328.33  $     0 to 3,099
328.34        0 to 3,589     1.0 percent       5 percent    $1,030 $1,190
328.35    3,100 to 4,129
328.36    3,590 to 4,779     1.0 percent      10 percent    $1,030 $1,190
328.37    4,130 to 5,159
328.38    4,780 to 5,969     1.1 percent      10 percent    $1,030 $1,190
328.39    5,160 to 7,229
328.40    5,970 to 8,369     1.2 percent      10 percent    $1,030 $1,190
328.41    7,230 to 9,289
328.42    8,370 to 10,759    1.3 percent      15 percent    $1,030 $1,190
328.43    9,290 to 10,319
328.44   10,760 to 11,949    1.4 percent      15 percent    $1,030 $1,190
328.45   10,320 to 11,349
328.46   11,950 to 13,139    1.4 percent      20 percent    $1,030 $1,190
328.47   11,350 to 13,419
328.48   13,140 to 15,539    1.5 percent      20 percent    $1,030 $1,190
328.49   13,420 to 14,449
328.50   15,540 to 16,729    1.6 percent      20 percent    $1,030 $1,190
328.51   14,450 to 15,479
328.52   16,730 to 17,919    1.7 percent      25 percent    $1,030 $1,190
328.53   15,480 to 17,549
328.54   17,920 to 20,319    1.8 percent      25 percent    $1,030 $1,190
329.1    17,550 to 18,579
329.2    20,320 to 21,509    1.9 percent      30 percent    $1,030 $1,190
329.3    18,580 to 19,609
329.4    21,510 to 22,699    2.0 percent      30 percent    $1,030 $1,190
329.5    19,610 to 20,639
329.6    22,700 to 23,899    2.2 percent      30 percent    $1,030 $1,190
329.7    20,640 to 21,669
329.8    23,900 to 25,089    2.4 percent      30 percent    $1,030 $1,190
329.9    21,670 to 22,709
329.10   25,090 to 26,289    2.6 percent      35 percent    $1,030 $1,190
329.11   22,710 to 23,739
329.12   26,290 to 27,489    2.7 percent      35 percent    $1,030 $1,190
329.13   23,740 to 24,769
329.14   27,490 to 28,679    2.8 percent      35 percent    $1,030 $1,190
329.15   24,770 to 25,799
329.16   28,680 to 29,869    2.9 percent      40 percent    $1,030 $1,190
329.17   25,800 to 26,839
329.18   29,870 to 31,079    3.0 percent      40 percent    $1,030 $1,190
329.19   26,840 to 27,869
329.20   31,080 to 32,269    3.1 percent      40 percent    $1,030 $1,190
329.21   27,870 to 28,899
329.22   32,270 to 33,459    3.2 percent      40 percent    $1,030 $1,190
329.23   28,900 to 29,929
329.24   33,460 to 34,649    3.3 percent      45 percent    $  930 $1,080
329.25   29,930 to 30,959
329.26   34,650 to 35,849    3.4 percent      45 percent    $  830 $  960
329.27   30,960 to 31,999
329.28   35,850 to 37,049    3.5 percent      45 percent    $  720 $  830
329.29   32,000 to 33,029
329.30   37,050 to 38,239    3.5 percent      50 percent    $  620 $  720
329.31   33,030 to 34,059
329.32   38,240 to 39,439    3.5 percent      50 percent    $  520 $  600
329.33   34,060 to 35,089
329.34   39,440 to 40,629    3.5 percent      50 percent    $  310 $  360
329.35   35,090 to 36,119
329.36   40,630 to 41,819    3.5 percent      50 percent    $  100 $  120
329.37     The payment made to a claimant is the amount of the state 
329.38  refund calculated under this subdivision.  No payment is allowed 
329.39  if the claimant's household income is $36,120 $41,820 or more. 
329.40     <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
329.41  refunds based on rent constituting property taxes paid in 2001. 
329.42     Sec. 7.  Minnesota Statutes 2000, section 290A.04, 
329.43  subdivision 4, is amended to read: 
329.44     Subd. 4.  [INFLATION ADJUSTMENT.] Beginning for property 
329.45  tax refunds payable in calendar year 1996 2002, the commissioner 
329.46  shall annually adjust the dollar amounts of the income 
329.47  thresholds and the maximum refunds under subdivisions 2 and 2a 
329.48  for inflation.  The commissioner shall make the inflation 
329.49  adjustments in accordance with section 290.06, subdivision 2d 1f 
329.50  of the Internal Revenue Code, except that for purposes of this 
329.51  subdivision the percentage increase shall be determined from the 
329.52  year ending on June 30, 1994 2000, to the year ending on June 30 
329.53  of the year preceding that in which the refund is payable.  The 
330.1   commissioner shall use the appropriate percentage increase to 
330.2   annually adjust the income thresholds and maximum refunds under 
330.3   subdivisions 2 and 2a for inflation without regard to whether or 
330.4   not the income tax brackets are adjusted for inflation in that 
330.5   year.  The commissioner shall round the thresholds and the 
330.6   maximum amounts, as adjusted to the nearest $10 amount.  If the 
330.7   amount ends in $5, the commissioner shall round it up to the 
330.8   next $10 amount.  
330.9      The commissioner shall annually announce the adjusted 
330.10  refund schedule at the same time provided under section 290.06.  
330.11  The determination of the commissioner under this subdivision is 
330.12  not a rule under the Administrative Procedure Act. 
330.13     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
330.14  following final enactment. 
330.15     Sec. 8.  [290A.046] [RENT CONSTITUTING PROPERTY TAXES.] 
330.16     (a)(1) For claims based on rent paid in calendar years 2001 
330.17  and 2002, the percentage of rent constituting property taxes is 
330.18  19 percent. 
330.19     (2) For claims based on rent paid in calendar year 2003 and 
330.20  later calendar years, the percentage is the percentage 
330.21  determined under paragraph (c), rounded to the nearest whole 
330.22  percent. 
330.23     (b)(1) By September 30, 2002, the commissioner shall 
330.24  estimate the average percentage that property taxes consist of 
330.25  rent paid for occupancy of residential properties in Minnesota 
330.26  for taxes and rents payable in the immediately preceding 
330.27  calendar year and make the estimate available to the public.  
330.28  This percentage must be used in making the determination under 
330.29  paragraph (c) for refunds based on rent paid in calendar years 
330.30  2003 through 2008. 
330.31     (2) Beginning in 2008 and each year after 2008 that is 
330.32  evenly divisible by four, the commissioner shall estimate the 
330.33  average percentage that property taxes consist of rent paid for 
330.34  occupancy of residential properties in Minnesota for taxes and 
330.35  rents payable in the immediately preceding calendar year.  The 
330.36  commissioner shall make the estimate available to the public by 
331.1   September 30 of the year in which it was prepared.  This 
331.2   estimate must be used in making the determination under 
331.3   paragraph (c) for refunds based on rent paid in the four 
331.4   calendar years immediately following the year in which the 
331.5   estimate is published. 
331.6      (c) For claims based on rent paid in calendar year 2004 and 
331.7   later years, the percentage of rent constituting property taxes 
331.8   is the greater of: 
331.9      (1) the percentage estimate determined under paragraph (b); 
331.10  or 
331.11     (2) the percentage used in the immediately previous year 
331.12  minus the greater of (i) one-third of the difference between the 
331.13  percentage determined under paragraph (b) and the percentage 
331.14  used in the year the estimate was prepared or (ii) one 
331.15  percentage point. 
331.16     (d) In preparing the estimates under this section, the 
331.17  commissioner may use surveys of landlords, information obtained 
331.18  from assessors, or any other information that the commissioner 
331.19  considers appropriate.  The estimates are not subject to chapter 
331.20  14. 
331.21     <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
331.22  refunds based on rent paid in calendar year 2001. 
331.23     Sec. 9.  Minnesota Statutes 2000, section 290A.15, is 
331.24  amended to read: 
331.25     290A.15 [CLAIM APPLIED AGAINST OUTSTANDING LIABILITY.] 
331.26     The amount of any claim otherwise payable under this 
331.27  chapter may be applied by the commissioner against any 
331.28  delinquent tax liability of the claimant or spouse of the 
331.29  claimant payable to the department of revenue any member of the 
331.30  household.  If there are two members of the household, the 
331.31  commissioner may apply only one-half of a refund to the separate 
331.32  liability of either member of the household. 
331.33     <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
331.34  refunds paid on or after July 1, 2001. 
331.35     Sec. 10.  [REPEALER.] 
331.36     Minnesota Statutes 2000, section 290A.04, subdivision 2j, 
332.1   is repealed. 
332.2      <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
332.3   years beginning after December 31, 2001. 
332.4                              ARTICLE 11 
332.5                   SUSTAINABLE FOREST INCENTIVE ACT 
332.6      Section 1.  Minnesota Statutes 2000, section 88.49, 
332.7   subdivision 5, is amended to read: 
332.8      Subd. 5.  [CANCELLATION.] Upon the failure of the owner 
332.9   faithfully to fulfill and perform such contract or any provision 
332.10  thereof, or any requirement of sections 88.47 to 88.53, or any 
332.11  rule adopted by the commissioner thereunder, the commissioner 
332.12  may cancel the contract in the manner herein provided.  The 
332.13  commissioner shall give to the owner, in the manner prescribed 
332.14  in section 88.48, subdivision 4, 60 days' notice of a hearing 
332.15  thereon at which the owner may appear and show cause, if any, 
332.16  why the contract should not be canceled.  The commissioner shall 
332.17  thereupon determine whether the contract should be canceled and 
332.18  make an order to that effect.  Notice of the commissioner's 
332.19  determination and the making of the order shall be given to the 
332.20  owner in the manner provided in section 88.48, subdivision 4.  
332.21  On determining that the contract should be canceled and no 
332.22  appeal therefrom be taken, the commissioner shall send notice 
332.23  thereof to the auditor of the county and to the town clerk of 
332.24  the town affected and file with the recorder a certified copy of 
332.25  the order, who shall forthwith note the cancellation upon the 
332.26  record thereof, and thereupon the land therein described shall 
332.27  cease to be an auxiliary forest and, together with the timber 
332.28  thereon, become liable to all taxes and assessments that 
332.29  otherwise would have been levied against it had it never been an 
332.30  auxiliary forest from the time of the making of the contract, 
332.31  any provisions of the statutes of limitation to the contrary 
332.32  notwithstanding, less the amount of taxes paid under the 
332.33  provisions of section 88.51, subdivision 1, together with 
332.34  interest on such taxes and assessments at six percent per annum, 
332.35  but without penalties. 
332.36     The commissioner may in like manner and with like effect 
333.1   cancel the contract upon written application of the owner. 
333.2      The commissioner shall cancel any contract if the owner has 
333.3   made successful application under sections 270.31 to 270.39 
333.4   290C.01 to 290C.11 inclusive, the Minnesota Tree Growth Tax Law 
333.5   Sustainable Forest Incentive Act, and has paid to the county 
333.6   treasurer the difference between the amount which would have 
333.7   been paid had the land under contract been subject to the 
333.8   Minnesota Tree Growth Tax Law and the Sustainable Forest 
333.9   Incentive Act from the date of the filing of the contract and 
333.10  the amount actually paid under section 88.51, subdivisions 1 and 
333.11  2.  This tax difference must be calculated based on the years 
333.12  the lands would have been taxed under the Tree Growth Tax Law 
333.13  and the Sustainable Forest Incentive Act.  The sustainable 
333.14  forest tax difference is net of the refund provision of section 
333.15  290C.07.  If the amount which would have been paid, had the land 
333.16  under contract been under the Minnesota Tree Growth Tax Law and 
333.17  the Sustainable Forest Incentive Act from the date of the filing 
333.18  of the contract, is less than the amount actually paid under the 
333.19  contract, the cancellation shall be made without further payment 
333.20  by the owner. 
333.21     When the execution of any contract creating an auxiliary 
333.22  forest shall have been procured through fraud or deception 
333.23  practiced upon the county board or the commissioner or any other 
333.24  person or body representing the state, it may be canceled upon 
333.25  suit brought by the attorney general at the direction of the 
333.26  commissioner.  This cancellation shall have the same effect as 
333.27  the cancellation of a contract by the commissioner. 
333.28     Sec. 2.  Minnesota Statutes 2000, section 88.49, 
333.29  subdivision 9a, is amended to read: 
333.30     Subd. 9a.  [LAND TRADES WITH GOVERNMENTAL UNITS.] 
333.31  Notwithstanding subdivisions 6 and 9, or section 88.491, 
333.32  subdivision 2, if an owner trades land under auxiliary forest 
333.33  contract for land owned by a governmental unit and the owner 
333.34  agrees to use the land received in trade from the governmental 
333.35  unit for the production of forest products, upon resolution of 
333.36  the county board, no taxes and assessments shall be levied 
334.1   against the land traded, except that any current or delinquent 
334.2   annual taxes or yield taxes due on that land while it was under 
334.3   the auxiliary forest provision must be paid prior to the land 
334.4   exchange.  The land received from the governmental unit in the 
334.5   land trade automatically qualifies for inclusion in the Tree 
334.6   Growth Tax Law Sustainable Forest Incentive Act. 
334.7      Sec. 3.  Minnesota Statutes 2000, section 88.491, 
334.8   subdivision 2, is amended to read: 
334.9      Subd. 2.  [EFFECT OF EXPIRED CONTRACT.] When auxiliary 
334.10  forest contracts expire, or prior to expiration by mutual 
334.11  agreement between the land owner and the appropriate county 
334.12  office, the lands previously covered by an auxiliary forest 
334.13  contract automatically qualify for inclusion in the Tree Growth 
334.14  Tax Law under the provisions of the Sustainable Forest Incentive 
334.15  Act; provided that when such lands are included in the Tree 
334.16  Growth Tax Law Sustainable Forest Incentive Act prior to 
334.17  expiration of the auxiliary forest contract they will be 
334.18  transferred and a tax paid as provided in accordance with the 
334.19  provisions of section 88.49, subdivision 5, upon application and 
334.20  inclusion in the sustainable forest incentive program.  The land 
334.21  owner shall pay taxes in an amount equal to the difference 
334.22  between the amount which would have been paid from the date of 
334.23  the filing of the contract had the land under contract been 
334.24  subject to the Minnesota Tree Growth Tax Law from the date of 
334.25  the filing of the contract and, beginning with taxes payable in 
334.26  2003 enrolled in the sustainable forest incentive program, and 
334.27  the amount actually paid under section 88.51, subdivisions 1 and 
334.28  2. 
334.29     Sec. 4.  Minnesota Statutes 2000, section 270A.03, 
334.30  subdivision 7, is amended to read: 
334.31     Subd. 7.  [REFUND.] "Refund" means an individual income tax 
334.32  refund or political contribution refund, pursuant to chapter 
334.33  290, or a property tax credit or refund, pursuant to chapter 
334.34  290A, or a sustainable forest tax payment to a claimant under 
334.35  chapter 290C.  
334.36     For purposes of this chapter, lottery prizes, as set forth 
335.1   in section 349A.08, subdivision 8, and amounts granted to 
335.2   persons by the legislature on the recommendation of the joint 
335.3   senate-house of representatives subcommittee on claims shall be 
335.4   treated as refunds. 
335.5      In the case of a joint property tax refund payable to 
335.6   spouses under chapter 290A, the refund shall be considered as 
335.7   belonging to each spouse in the proportion of the total refund 
335.8   that equals each spouse's proportion of the total income 
335.9   determined under section 290A.03, subdivision 3.  In the case of 
335.10  a joint income tax refund under chapter 289A, the refund shall 
335.11  be considered as belonging to each spouse in the proportion of 
335.12  the total refund that equals each spouse's proportion of the 
335.13  total taxable income determined under section 290.01, 
335.14  subdivision 29.  The commissioner shall remit the entire refund 
335.15  to the claimant agency, which shall, upon the request of the 
335.16  spouse who does not owe the debt, determine the amount of the 
335.17  refund belonging to that spouse and refund the amount to that 
335.18  spouse.  For court fines, fees, and surcharges and court-ordered 
335.19  restitution under section 611A.04, subdivision 2, the notice 
335.20  provided by the commissioner of revenue under section 270A.07, 
335.21  subdivision 2, paragraph (b), serves as the appropriate legal 
335.22  notice to the spouse who does not owe the debt. 
335.23     <b>[EFFECTIVE DATE.]</b> This section is effective for refunds in 
335.24  2003 and thereafter. 
335.25     Sec. 5.  [290C.01] [PURPOSE.] 
335.26     It is the policy of this state to promote sustainable 
335.27  forest resource management on the state's public and private 
335.28  lands.  Recognizing that private forests comprise approximately 
335.29  one-half of the state forest land resources, that healthy and 
335.30  robust forest land provides significant benefits to the state of 
335.31  Minnesota, and that ad valorem property taxes represent a 
335.32  significant annual cost that can discourage long-term forest 
335.33  management investments, this chapter, hereafter referred to as 
335.34  the "Sustainable Forest Incentive Act," is enacted to encourage 
335.35  the state's private forest landowners to make a long-term 
335.36  commitment to sustainable forest management. 
336.1      <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
336.2   levied in 2002, payable in 2003, and thereafter. 
336.3      Sec. 6.  [290C.02] [DEFINITIONS.] 
336.4      Subdivision 1.  [APPLICATION.] When used in sections 
336.5   290C.01 to 290C.11, the terms in this section have the meanings 
336.6   given them. 
336.7      Subd. 2.  [APPROVED PLAN WRITERS.] "Approved plan writers" 
336.8   are natural resource professionals who are self-employed, 
336.9   employed by private companies or individuals, nonprofit 
336.10  organizations, local units of government, or public agencies, 
336.11  and who are approved by the commissioner of natural resources.  
336.12  Persons determined to be certified foresters by the Society of 
336.13  American Foresters shall be deemed to meet the standards 
336.14  required under this subdivision.  The commissioner of natural 
336.15  resources shall issue a unique identification number to each 
336.16  approved planner. 
336.17     Subd. 3.  [CLAIMANT.] "Claimant" means a person, as that 
336.18  term is defined in section 290.01, subdivision 2, who owns 
336.19  forest land in Minnesota and files an application authorized by 
336.20  the Sustainable Forest Incentive Act.  No more than one claimant 
336.21  is entitled to a payment under this act with respect to any 
336.22  tract, parcel, or piece of land enrolled under this act.  When 
336.23  enrolled forest land is owned by two or more persons, the owners 
336.24  must determine between them which person may claim the refunds 
336.25  provided under sections 290C.01 to 290C.11. 
336.26     Subd. 4.  [COMMISSIONER.] "Commissioner" means the 
336.27  commissioner of revenue. 
336.28     Subd. 5.  [CURRENT USE VALUE.] "Current use value" means 
336.29  the statewide average annual income per acre, multiplied by 90 
336.30  percent and divided by the capitalization rate determined under 
336.31  subdivision 9.  The statewide net annual income shall be a 
336.32  weighted average based on the most recent data as of July 1 of 
336.33  the computation year on stumpage prices and annual tree growth 
336.34  rates and acreage by cover type provided by the department of 
336.35  natural resources and the United States Forest Service. 
336.36     Subd. 6.  [FOREST LAND.] "Forest land" means land 
337.1   containing a minimum of 20 contiguous acres for which the owner 
337.2   has implemented a forest management plan that was prepared or 
337.3   updated within the past ten years by an approved plan writer.  
337.4   At least 50 percent of the contiguous acreage must meet the 
337.5   definition of forest land in section 88.01, subdivision 7.  For 
337.6   the purposes of sections 290C.01 to 209C.11, forest land does 
337.7   not include (i) land used for residential or agricultural 
337.8   purposes, (ii) land enrolled in the reinvest in Minnesota 
337.9   program, a state or federal conservation reserve or easement 
337.10  reserve program under sections 103F.501 to 103F.531, the 
337.11  Minnesota agricultural property tax law under section 273.111, 
337.12  or land subject to agricultural land preservation controls or 
337.13  restrictions as defined in section 40A.02 or under the 
337.14  Metropolitan Agricultural Preserves Act under chapter 473H, or 
337.15  (iii) land improved with a structure, pavement, sewer, campsite, 
337.16  or any road, other than a township road, used for purposes not 
337.17  prescribed in the forest management plan. 
337.18     Subd. 7.  [FOREST MANAGEMENT PLAN.] "Forest management plan"
337.19  means a written document providing a framework for site-specific 
337.20  healthy, productive, and sustainable forest resources.  A forest 
337.21  management plan must include at least the following:  (i) 
337.22  owner-specific forest management goals for the property 
337.23  including, when available, goals for individual cover types; 
337.24  (ii) a reliable field inventory of the individual forest cover 
337.25  types, their age, and density; (iii) a description of the soil 
337.26  type and quality; (iv) an aerial photo and/or map of the 
337.27  vegetation and other natural features of the property clearly 
337.28  indicating the boundaries of the property and of the forest 
337.29  land; (v) the proposed future conditions of the property; (vi) 
337.30  prescriptions to meet proposed future conditions of the 
337.31  property; (vii) a recommended timetable for implementing the 
337.32  prescribed activities; and (viii) a legal description of the 
337.33  parcels encompassing the parcels included in the plan.  All 
337.34  management activities prescribed in a plan must be in accordance 
337.35  with the recommended timber harvesting and forest management 
337.36  guidelines developed under section 89A.05.  The commissioner of 
338.1   natural resources shall provide a framework for plan content and 
338.2   updating and revising plans. 
338.3      Subd. 8.  [TIMBER HARVESTING AND FOREST MANAGEMENT 
338.4   GUIDELINES.] "Timber harvesting and forest management guidelines"
338.5   means guidelines developed under section 89A.05 and adopted by 
338.6   the Minnesota forest resources council in 1998. 
338.7      Subd. 9.  [CAPITALIZATION RATE.] By July 1 of each year, 
338.8   the commissioner shall determine a statewide capitalization rate 
338.9   for use under this act.  The rate shall be the average annual 
338.10  effective interest rate for St. Paul on new loans under the Farm 
338.11  Credit Bank system calculated under section 2032A(e)(7)(A) of 
338.12  the Internal Revenue Code. 
338.13     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
338.14  levied in 2002, payable in 2003, and thereafter. 
338.15     Sec. 7.  [290C.03] [ELIGIBILITY REQUIREMENTS.] 
338.16     (a) Property may be enrolled in the sustainable forest 
338.17  incentive program under this chapter if all of the following 
338.18  conditions are met: 
338.19     (1) property consists of at least 20 contiguous acres and 
338.20  at least 50 percent of the land must meet the definition of 
338.21  forest land in section 88.01, subdivision 7, during the 
338.22  enrollment; 
338.23     (2) a forest management plan for the property must be 
338.24  prepared by an approved plan writer and implemented during the 
338.25  period in which the land is enrolled; 
338.26     (3) timber harvesting and forest management guidelines must 
338.27  be used in conjunction with any timber harvesting or forest 
338.28  management activities conducted on the land during the period in 
338.29  which the land is enrolled; 
338.30     (4) the property must be enrolled for a minimum of eight 
338.31  years; 
338.32     (5) there are no delinquent property taxes on the property; 
338.33  and 
338.34     (6) claimants enrolling at least 80 contiguous acres in the 
338.35  sustainable forest incentive program must allow year-round, 
338.36  nonmotorized access to fish and wildlife resources on enrolled 
339.1   land except within one-fourth mile of a permanent dwelling or 
339.2   during periods of high fire hazard as determined by the 
339.3   commissioner of natural resources.  For purposes of this clause, 
339.4   acres are considered to be contiguous even if they are separated 
339.5   by a road, waterway, railroad track, or other similar 
339.6   intervening type of property. 
339.7      (b) Claimants required to allow access under clause (6) do 
339.8   not by that action: 
339.9      (1) extend any assurance that the land is safe for any 
339.10  purpose; 
339.11     (2) confer upon the person the legal status of an invitee 
339.12  or licensee to whom a duty of care is owed; or 
339.13     (3) assume responsibility for or incur liability for any 
339.14  injury to the person or property caused by an act or omission of 
339.15  the person. 
339.16     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
339.17  levied in 2002, payable in 2003, and thereafter. 
339.18     Sec. 8.  [290C.04] [APPLICATIONS.] 
339.19     (a) A landowner may apply to enroll forest land for the 
339.20  sustainable forest incentive program under this act.  The 
339.21  claimant must complete, sign, and submit an application to the 
339.22  commissioner by September 30 in order for the land to become 
339.23  eligible beginning in the next year.  The application shall be 
339.24  on a form prescribed by the commissioner and must include the 
339.25  information the commissioner deems necessary.  At a minimum, the 
339.26  application must show the following information for the land and 
339.27  the claimant:  (i) the claimant's social security number or 
339.28  state or federal business tax registration number and date of 
339.29  birth, (ii) the claimant's address, (iii) the claimant's 
339.30  signature, (iv) the county's parcel identification numbers for 
339.31  the tax parcels that completely contain the claimant's forest 
339.32  land that is sought to be enrolled, (v) the number of acres 
339.33  eligible for enrollment in the program, (vi) the approved plan 
339.34  writer's signature and identification number, and (vii) proof, 
339.35  in a form specified by the commissioner, that the claimant has 
339.36  executed and acknowledged in the manner required by law for a 
340.1   deed, and recorded, a covenant that the land is not and shall 
340.2   not be developed in a manner inconsistent with the requirements 
340.3   and conditions of chapter 290C.  The covenant shall state in 
340.4   writing that the covenant is binding on the claimant and the 
340.5   claimant's successor or assignee, and that it runs with the land 
340.6   for a period of not less than eight years.  The commissioner 
340.7   shall specify the form of the covenant and provide copies upon 
340.8   request.  The covenant must include a legal description that 
340.9   encompasses all the forest land that the claimant wishes to 
340.10  enroll under this section or the certificate of title number for 
340.11  that land if it is registered land. 
340.12     (b) In all cases, the commissioner shall notify the 
340.13  claimant within 90 days after receipt of a completed application 
340.14  that either the land has or has not been approved for enrollment.
340.15  The claimant for which the application is denied may, within 60 
340.16  days of receipt of a notice of denial, appeal the denial to the 
340.17  commissioner. 
340.18     (c) Within 45 days after the denial of an application, or 
340.19  within 45 days after the denial of an appeal, the commissioner 
340.20  shall execute and acknowledge a document releasing the land from 
340.21  the covenant required under this chapter.  The document must be 
340.22  mailed to the claimant and is entitled to be recorded. 
340.23     (d) The social security numbers collected from individuals 
340.24  under this section are private data as provided in section 13.49.
340.25  The state or federal business tax registration number and date 
340.26  of birth data collected under this section are also private data 
340.27  but may be shared with county assessors for purposes of tax 
340.28  administration and with county treasurers for purposes of the 
340.29  revenue recapture under chapter 270A. 
340.30     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
340.31  levied in 2002, payable in 2003, and thereafter. 
340.32     Sec. 9.  [290C.05] [ANNUAL CERTIFICATION.] 
340.33     On or before July 1 of each year, beginning with the year 
340.34  after the claimant has received an approved application, the 
340.35  commissioner shall send each claimant enrolled under the 
340.36  sustainable forest incentive program a certification form.  The 
341.1   claimant must sign the certification, attesting that the 
341.2   requirements and conditions for continued enrollment in the 
341.3   program are currently being met, and must return the signed 
341.4   certification form to the commissioner by August 15 of that same 
341.5   year.  Failure to return an annual certification form by the due 
341.6   date shall result in removal of the lands from the provisions of 
341.7   the sustainable forest incentive program, and the imposition of 
341.8   any applicable removal penalty.  The claimant may appeal the 
341.9   removal and any associated penalty according to the procedures 
341.10  and within the time allowed under this chapter. 
341.11     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
341.12  levied in 2002, payable in 2003, and thereafter. 
341.13     Sec. 10.  [290C.06] [CALCULATION OF AVERAGE TAXABLE MARKET 
341.14  VALUE; TIMBERLAND.] 
341.15     The commissioner shall annually calculate a statewide 
341.16  average taxable market value per acre for class 2b timberland 
341.17  under section 273.13, subdivision 23, paragraph (b). 
341.18     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
341.19  levied in 2002, payable in 2003, and thereafter. 
341.20     Sec. 11.  [290C.07] [CALCULATION OF INCENTIVE PAYMENT.] 
341.21     An approved claimant under the sustainable forest incentive 
341.22  program is eligible to receive an annual payment.  The payment 
341.23  shall equal the greater of: 
341.24     (1) the difference between the property tax that would be 
341.25  paid on the property using the previous year's statewide average 
341.26  total township tax rate and the class rate for class 2b 
341.27  timberland under section 273.13, subdivision 23, paragraph (b), 
341.28  if the property were valued at (i) the average statewide 
341.29  timberland market value per acre calculated under section 
341.30  290C.06, and (ii) the average statewide timberland current use 
341.31  value per acre calculated under section 290C.02, subdivision 5; 
341.32     (2) two-thirds of the property tax amount determined by 
341.33  using the previous year's statewide average total township tax 
341.34  rate, the estimated market value per acre as calculated in 
341.35  section 290C.06, and the class rate for 2b timberland under 
341.36  section 273.13, subdivision 23, paragraph (b); or 
342.1      (3) $1.50 per acre for each acre enrolled in the 
342.2   sustainable forest incentive program. 
342.3      <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
342.4   levied in 2002, payable in 2003, and thereafter. 
342.5      Sec. 12.  [290C.08] [ANNUAL INCENTIVE PAYMENT; 
342.6   APPROPRIATION.] 
342.7      Subdivision 1.  [ANNUAL PAYMENT.] An incentive payment on 
342.8   enrolled land will be made annually to each claimant in the 
342.9   amount determined under section 290C.07.  The incentive payment 
342.10  shall be paid on or before October 1 each year based on the 
342.11  certifications due August 15 of that year.  Interest at the 
342.12  annual rate determined under section 270.75 shall be included 
342.13  with any incentive payment not paid by the later of October 1 of 
342.14  the year the certification was due, or 45 days after the 
342.15  completed certification was returned or filed if the 
342.16  commissioner accepts a certification filed after August 15 of 
342.17  the taxes payable year as the resolution of an appeal. 
342.18     Subd. 2.  [APPROPRIATION.] The amount necessary to make the 
342.19  payments under this section is annually appropriated to the 
342.20  commissioner from the general fund. 
342.21     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
342.22  levied in 2002, payable in 2003, and thereafter. 
342.23     Sec. 13.  [290C.09] [REMOVAL FOR PROPERTY TAX DELINQUENCY.] 
342.24     The commissioner shall immediately remove any property 
342.25  enrolled in the sustainable forest incentive program for which 
342.26  taxes are determined to be delinquent as provided in chapter 279 
342.27  and shall notify the claimant of such action.  Lands terminated 
342.28  from the sustainable forest incentive program under this section 
342.29  are not entitled to any payments provided in this chapter and 
342.30  are subject to removal penalties prescribed in section 290C.11.  
342.31  The claimant has 90 days from the receipt of notice from the 
342.32  commissioner under this section to pay the delinquent taxes.  If 
342.33  the delinquent taxes are paid within this 90-day period, the 
342.34  lands shall be reinstated in the program as if they had not been 
342.35  withdrawn and without the payment of a penalty. 
342.36     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
343.1   levied in 2002, payable in 2003, and thereafter. 
343.2      Sec. 14.  [290C.10] [WITHDRAWAL PROCEDURES.] 
343.3      An approved claimant under the sustainable forest incentive 
343.4   program for a minimum of four years may notify the commissioner 
343.5   of the intent to terminate enrollment.  Within 90 days of 
343.6   receipt of notice to terminate enrollment, the commissioner 
343.7   shall inform the claimant in writing, acknowledging receipt of 
343.8   this notice and indicating the effective date of termination 
343.9   from the sustainable forest incentive program.  Termination of 
343.10  enrollment in the sustainable forest incentive program occurs on 
343.11  January 1 of the fifth calendar year that begins after receipt 
343.12  by the commissioner of the termination notice.  After the 
343.13  commissioner issues an effective date of termination, a claimant 
343.14  wishing to continue the property's enrollment in the sustainable 
343.15  forest incentive program beyond the termination date must apply 
343.16  for enrollment as prescribed in section 290C.04.  A claimant who 
343.17  withdraws a parcel of land from this program may not reenroll 
343.18  the parcel for a period of three years.  Within 45 days after 
343.19  the termination date, the commissioner shall execute and 
343.20  acknowledge a document releasing the land from the covenant 
343.21  required under this chapter.  The document must be mailed to the 
343.22  claimant and is entitled to be recorded.  The commissioner may 
343.23  allow early withdrawal from the Sustainable Forest Incentive Act 
343.24  without penalty in cases of condemnation for a public purpose 
343.25  notwithstanding the provisions of this section. 
343.26     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
343.27  levied in 2002, payable in 2003, and thereafter. 
343.28     Sec. 15.  [290C.11] [PENALTIES FOR REMOVAL.] 
343.29     (a) If the commissioner determines that property enrolled 
343.30  in the sustainable forest incentive program is in violation of 
343.31  the conditions for enrollment as specified in section 290C.03, 
343.32  the commissioner shall notify the claimant of the intent to 
343.33  remove all enrolled land from the sustainable forest incentive 
343.34  program.  The claimant has 90 days to appeal this determination. 
343.35  The appeal must be made in writing to the commissioner, who 
343.36  shall, within 60 days, notify the claimant as to the outcome of 
344.1   the appeal.  Within 60 days after the commissioner denies an 
344.2   appeal, or within 120 days after the commissioner received a 
344.3   written appeal if the commissioner has not made a determination 
344.4   in that time, the owner may appeal to tax court under chapter 
344.5   271 as if the appeal is from an order of the commissioner. 
344.6      (b) If the commissioner determines the property is to be 
344.7   removed from the sustainable forest incentive program, the 
344.8   claimant is liable for payment to the commissioner in the amount 
344.9   equal to the payments received under this chapter for the 
344.10  previous four-year period, plus interest.  The claimant has 90 
344.11  days to satisfy the payment for removal of land from the 
344.12  sustainable forest incentive program under this section.  If the 
344.13  penalty is not paid within the 90-day period under paragraph 
344.14  (a), the commissioner shall certify the amount to the county 
344.15  auditor for collection as a part of the general ad valorem real 
344.16  property taxes on the land in the following taxes payable year.  
344.17     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
344.18  levied in 2002, payable in 2003, and thereafter. 
344.19     Sec. 16.  [REPEALER.] 
344.20     Minnesota Statutes 2000, sections 270.31; 270.32; 270.33; 
344.21  270.34; 270.35; 270.36; 270.37; 270.38; and 270.39, are repealed.
344.22     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
344.23  levied in 2002, payable in 2003, and thereafter. 
344.24                             ARTICLE 12
344.25                         LOCAL DEVELOPMENT 
344.26     Section 1.  Minnesota Statutes 2000, section 276A.01, 
344.27  subdivision 3, is amended to read: 
344.28     Subd. 3.  [COMMERCIAL-INDUSTRIAL PROPERTY.] 
344.29  "Commercial-industrial property" means the following categories 
344.30  of property, as defined in section 273.13, excluding that 
344.31  portion of the property (i) that may, by law, constitute the tax 
344.32  base for a tax increment pledged pursuant to section 469.042 or 
344.33  469.162 or sections 469.174 to 469.178, certification of which 
344.34  was requested prior to May 1, 1996, to the extent and while the 
344.35  tax increment is so pledged; or (ii) that is exempt from 
344.36  taxation under section 272.02:  
345.1      (1) that portion of class 5 property consisting of unmined 
345.2   iron ore and low-grade iron-bearing formations as defined in 
345.3   section 273.14, tools, implements, and machinery, except the 
345.4   portion of high voltage transmission lines, the value of which 
345.5   is deducted from net tax capacity under section 273.425; and 
345.6      (2) that portion of class 3 and class 5 property which is 
345.7   either used or zoned for use for any commercial or industrial 
345.8   purpose, except for such property which is, or, in the case of 
345.9   property under construction, will when completed be used 
345.10  exclusively for residential occupancy and the provision of 
345.11  services to residential occupants thereof.  Property must be 
345.12  considered as used exclusively for residential occupancy only if 
345.13  each of not less than 80 percent of its occupied residential 
345.14  units is, or, in the case of property under construction, will 
345.15  when completed be occupied under an oral or written agreement 
345.16  for occupancy over a continuous period of not less than 30 days. 
345.17     If the classification of property prescribed by section 
345.18  273.13 is modified by legislative amendment, the references in 
345.19  this subdivision are to the successor class or classes of 
345.20  property, or portions thereof, that include the kinds of 
345.21  property designated in this subdivision.  
345.22     <b>[EFFECTIVE DATE.]</b> This section is effective retroactive to 
345.23  July 1, 1997, for taxes levied in 1997, payable in 1998, and 
345.24  subsequent years. 
345.25     Sec. 2.  Minnesota Statutes 2000, section 469.169, is 
345.26  amended by adding a subdivision to read: 
345.27     Subd. 15.  [ADDITIONAL BORDER CITY ALLOCATIONS.] In 
345.28  addition to tax reductions authorized in subdivisions 7 to 14, 
345.29  the commissioner shall allocate $1,500,000 for tax reductions to 
345.30  border city enterprise zones in cities located on the western 
345.31  border of the state.  The commissioner shall make allocations to 
345.32  zones in cities on the western border on a per capita basis.  
345.33  Allocations made under this subdivision may be used for tax 
345.34  reductions as provided in section 469.171, or for other offsets 
345.35  of taxes imposed on or remitted by businesses located in the 
345.36  enterprise zone, but only if the municipality determines that 
346.1   the granting of the tax reduction or offset is necessary in 
346.2   order to retain a business within or attract a business to the 
346.3   zone.  Limitations on allocations under subdivision 7 do not 
346.4   apply to this allocation. 
346.5      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
346.6   following final enactment. 
346.7      Sec. 3.  Minnesota Statutes 2000, section 469.174, 
346.8   subdivision 1, is amended to read: 
346.9      Subdivision 1.  [GENERALLY.] In sections 469.174 to 469.179 
346.10  469.1799, the terms defined in this section have the meanings 
346.11  given them herein, unless the context indicates a different 
346.12  meaning. 
346.13     <b>[EFFECTIVE DATE.]</b> This section is effective for all tax 
346.14  increment financing districts, regardless of when the request 
346.15  for certification was made. 
346.16     Sec. 4.  Minnesota Statutes 2000, section 469.174, 
346.17  subdivision 3, is amended to read: 
346.18     Subd. 3.  [BONDS.] "Bonds" means any bonds, including 
346.19  refunding bonds, notes, interim certificates, 
346.20  debentures, interfund loans or advances, or other obligations 
346.21  issued by an authority under section 469.178 or which were 
346.22  issued in aid of a project under any other law, except revenue 
346.23  bonds issued pursuant to sections 469.152 to 469.165, prior to 
346.24  August 1, 1979. 
346.25     Sec. 5.  Minnesota Statutes 2000, section 469.174, 
346.26  subdivision 10, is amended to read: 
346.27     Subd. 10.  [REDEVELOPMENT DISTRICT.] (a) "Redevelopment 
346.28  district" means a type of tax increment financing district 
346.29  consisting of a project, or portions of a project, within which 
346.30  the authority finds by resolution that one or more of the 
346.31  following conditions, reasonably distributed throughout the 
346.32  district, exists: 
346.33     (1) parcels consisting of 70 percent of the area of the 
346.34  district are occupied by buildings, streets, utilities, paved or 
346.35  gravel parking lots, or other improvements similar structures 
346.36  and more than 50 percent of the buildings, not including 
347.1   outbuildings, are structurally substandard to a degree requiring 
347.2   substantial renovation or clearance; or 
347.3      (2) the property consists of vacant, unused, underused, 
347.4   inappropriately used, or infrequently used railyards, rail 
347.5   storage facilities, or excessive or vacated railroad 
347.6   rights-of-way; or 
347.7      (3) tank facilities, or property whose immediately previous 
347.8   use was for tank facilities, as defined in section 115C.02, 
347.9   subdivision 15, if the tank facilities: 
347.10     (i) have or had a capacity of more than 1,000,000 gallons; 
347.11     (ii) are located adjacent to rail facilities; and 
347.12     (iii) have been removed or are unused, underused, 
347.13  inappropriately used, or infrequently used. 
347.14     (b) For purposes of this subdivision, "structurally 
347.15  substandard" shall mean containing defects in structural 
347.16  elements or a combination of deficiencies in essential utilities 
347.17  and facilities, light and ventilation, fire protection including 
347.18  adequate egress, layout and condition of interior partitions, or 
347.19  similar factors, which defects or deficiencies are of sufficient 
347.20  total significance to justify substantial renovation or 
347.21  clearance means a building that: 
347.22     (1) is in an advanced state of disrepair or neglect of 
347.23  necessary repairs to the primary and structural components of 
347.24  the building that a documented building condition analysis 
347.25  determines that major repair is required or the defects are so 
347.26  serious and so extensive that the building must be removed; or 
347.27     (2) has major defects in secondary building components, 
347.28  such as doors, windows, porches, gutters and downspouts, and 
347.29  fascia, requiring repairs costing 25 percent of the estimated 
347.30  market value of the building.  
347.31     (c) A building is not structurally substandard if it is in 
347.32  compliance with the building code applicable to new buildings or 
347.33  could be modified to satisfy the building code at a cost of less 
347.34  than 15 percent of the cost of constructing a new structure of 
347.35  the same square footage and type on the site.  The municipality 
347.36  may find that a building is not disqualified as structurally 
348.1   substandard under the preceding sentence on the basis of 
348.2   reasonably available evidence, such as the size, type, and age 
348.3   of the building, the average cost of plumbing, electrical, or 
348.4   structural repairs, or other similar reliable evidence.  The 
348.5   municipality may not make such a determination without an 
348.6   interior inspection of the property, but need not have an 
348.7   independent, expert appraisal prepared of the cost of repair and 
348.8   rehabilitation of the building.  An interior inspection of the 
348.9   property is not required, if the municipality finds that (1) the 
348.10  municipality or authority is unable to gain access to the 
348.11  property after using its best efforts to obtain permission from 
348.12  the party that owns or controls the property; and (2) the 
348.13  evidence otherwise supports a reasonable conclusion that the 
348.14  building is structurally substandard.  Items of evidence that 
348.15  support such a conclusion include recent fire or police 
348.16  inspections, on-site property tax appraisals or housing 
348.17  inspections, exterior evidence of deterioration, or other 
348.18  similar reliable evidence.  Written documentation of the 
348.19  findings and reasons why an interior inspection was not 
348.20  conducted must be made and retained under section 469.175, 
348.21  subdivision 3, clause (1). 
348.22     (d) A parcel is deemed to be occupied by a structurally 
348.23  substandard building for purposes of the finding under paragraph 
348.24  (a) if all of the following conditions are met: 
348.25     (1) the parcel was occupied by a substandard building 
348.26  within three years of the filing of the request for 
348.27  certification of the parcel as part of the district with the 
348.28  county auditor; 
348.29     (2) the substandard building was demolished or removed by 
348.30  the authority or the demolition or removal was financed by the 
348.31  authority or was done by a developer under a development 
348.32  agreement with the authority; 
348.33     (3) the authority found by resolution before the demolition 
348.34  or removal that the parcel was occupied by a structurally 
348.35  substandard building and that after demolition and clearance the 
348.36  authority intended to include the parcel within a district; and 
349.1      (4) upon filing the request for certification of the tax 
349.2   capacity of the parcel as part of a district, the authority 
349.3   notifies the county auditor that the original tax capacity of 
349.4   the parcel must be adjusted as provided by section 469.177, 
349.5   subdivision 1, paragraph (h). 
349.6      (e) For purposes of this subdivision, a parcel is not 
349.7   occupied by buildings, streets, utilities, paved or gravel 
349.8   parking lots, or other improvements similar structures unless 15 
349.9   percent of the area of the parcel contains improvements 
349.10  buildings, streets, utilities, paved or gravel parking lots, or 
349.11  other similar structures. 
349.12     (f) For districts consisting of two or more noncontiguous 
349.13  areas, each area must qualify as a redevelopment district under 
349.14  paragraph (a) to be included in the district, and the entire 
349.15  area of the district must satisfy paragraph (a). 
349.16     <b>[EFFECTIVE DATE.]</b> This section is effective for districts 
349.17  for which the request for certification is made after June 30, 
349.18  2001, except that the amendments to paragraph (b) are effective 
349.19  for districts for which the request for certification is made 
349.20  after September 30, 2001. 
349.21     Sec. 6.  Minnesota Statutes 2000, section 469.174, 
349.22  subdivision 10a, is amended to read: 
349.23     Subd. 10a.  [RENEWAL AND RENOVATION DISTRICT.] (a) "Renewal 
349.24  and renovation district" means a type of tax increment financing 
349.25  district consisting of a project, or portions of a project, 
349.26  within which the authority finds by resolution that: 
349.27     (1)(i) parcels consisting of 70 percent of the area of the 
349.28  district are occupied by buildings, streets, utilities, paved or 
349.29  gravel parking lots, or other improvements similar structures; 
349.30  (ii) 20 percent of the buildings are structurally substandard; 
349.31  and (iii) 30 percent of the other buildings require substantial 
349.32  renovation or clearance to remove existing conditions such as:  
349.33  inadequate street layout, incompatible uses or land use 
349.34  relationships, overcrowding of buildings on the land, excessive 
349.35  dwelling unit density, obsolete buildings not suitable for 
349.36  improvement or conversion, or other identified hazards to the 
350.1   health, safety, and general well-being of the community; and 
350.2      (2) the conditions described in clause (1) are reasonably 
350.3   distributed throughout the geographic area of the district. 
350.4      (b) For purposes of determining whether a building is 
350.5   structurally substandard, whether parcels are occupied by 
350.6   buildings, streets, utilities, paved or gravel parking lots, or 
350.7   other improvements similar structures, or whether noncontiguous 
350.8   areas qualify, the provisions of subdivision 10, 
350.9   paragraphs (b), (c), (e), and (d) (f) apply.  
350.10     <b>[EFFECTIVE DATE.]</b> This section is effective for districts 
350.11  for which the requests for certification are made after June 30, 
350.12  1997, except the provision requiring parcels to be occupied by 
350.13  structures is effective for districts for which the request for 
350.14  certification is made after June 30, 2001. 
350.15     Sec. 7.  Minnesota Statutes 2000, section 469.174, 
350.16  subdivision 12, is amended to read: 
350.17     Subd. 12.  [ECONOMIC DEVELOPMENT DISTRICT.] "Economic 
350.18  development district" means a type of tax increment financing 
350.19  district which consists of any project, or portions of a 
350.20  project, not meeting the requirements found in the definition of 
350.21  redevelopment district, renewal and renovation district, soils 
350.22  condition district, or housing district, but which the authority 
350.23  finds to be in the public interest because: 
350.24     (1) it will discourage commerce, industry, or manufacturing 
350.25  from moving their operations to another state or municipality; 
350.26  or 
350.27     (2) it will result in increased employment in the state; or 
350.28     (3) it will result in preservation and enhancement of the 
350.29  tax base of the state. 
350.30     <b>[EFFECTIVE DATE.]</b> This section is effective for districts 
350.31  for which the request for certification is made after June 30, 
350.32  2001. 
350.33     Sec. 8.  Minnesota Statutes 2000, section 469.174, 
350.34  subdivision 25, is amended to read: 
350.35     Subd. 25.  [INCREMENT.] "Increment," "tax increment," "tax 
350.36  increment revenues," "revenues derived from tax increment," and 
351.1   other similar terms for a district include: 
351.2      (1) taxes paid by the captured net tax capacity, but 
351.3   excluding any excess taxes, as computed under section 469.177; 
351.4      (2) the proceeds from the sale or lease of property, 
351.5   tangible or intangible, purchased by the authority with tax 
351.6   increments; 
351.7      (3) repayments of debt service payments received on loans 
351.8   or other advances made by the authority with tax increments; and 
351.9      (4) interest or other investment earnings, other than 
351.10  payments under loans or other advances within the meaning of 
351.11  clause (3), on or from tax increments. 
351.12     <b>[EFFECTIVE DATE.]</b> This section is effective retroactive to 
351.13  the effective date of Minnesota Statutes, section 469.174, 
351.14  subdivision 25. 
351.15     Sec. 9.  Minnesota Statutes 2000, section 469.175, 
351.16  subdivision 1, is amended to read: 
351.17     Subdivision 1.  [TAX INCREMENT FINANCING PLAN.] (a) A tax 
351.18  increment financing plan shall contain:  
351.19     (1) a statement of objectives of an authority for the 
351.20  improvement of a project; 
351.21     (2) a statement as to the development program for the 
351.22  project, including the property within the project, if any, that 
351.23  the authority intends to acquire; 
351.24     (3) a list of any development activities that the plan 
351.25  proposes to take place within the project, for which contracts 
351.26  have been entered into at the time of the preparation of the 
351.27  plan, including the names of the parties to the contract, the 
351.28  activity governed by the contract, the cost stated in the 
351.29  contract, and the expected date of completion of that activity; 
351.30     (4) identification or description of the type of any other 
351.31  specific development reasonably expected to take place within 
351.32  the project, and the date when the development is likely to 
351.33  occur; 
351.34     (5) estimates of the following:  
351.35     (i) cost of the project, including administration expenses; 
351.36     (ii) amount of bonded indebtedness to be incurred; 
352.1      (iii) sources of revenue to finance or otherwise pay public 
352.2   costs; 
352.3      (iv) (ii) the most recent net tax capacity of taxable real 
352.4   property within the tax increment financing district and within 
352.5   any subdistrict; 
352.6      (v) (iii) the estimated captured net tax capacity of the 
352.7   tax increment financing district at completion; and 
352.8      (vi) (iv) the duration of the tax increment financing 
352.9   district's and any subdistrict's existence; 
352.10     (6) a budget specifying the following items for the project 
352.11  to be paid with tax increments from the district: 
352.12     (i) the total cost of the district, broken down by at least 
352.13  the following items (to the extent the plan permits spending for 
352.14  items within these categories and subcategories within an item, 
352.15  if the authority so elects): 
352.16     (A) administrative expenses; 
352.17     (B) property acquisition and site preparation, including 
352.18  but not limited to clearance and soils preparation; 
352.19     (C) public improvements (other than public improvements 
352.20  that are part of site preparation); and 
352.21     (D) amounts for assistance to construct, acquire, or 
352.22  improve other improvements or other eligible forms of 
352.23  assistance; and 
352.24     (ii) the amount of bonded indebtedness to be incurred; 
352.25     (6) (7) statements of the authority's alternate estimates 
352.26  of the impact of tax increment financing on the net tax 
352.27  capacities of all taxing jurisdictions in which the tax 
352.28  increment financing district is located in whole or in part.  
352.29  For purposes of one statement, the authority shall assume that 
352.30  the estimated captured net tax capacity would be available to 
352.31  the taxing jurisdictions without creation of the district, and 
352.32  for purposes of the second statement, the authority shall assume 
352.33  that none of the estimated captured net tax capacity would be 
352.34  available to the taxing jurisdictions without creation of the 
352.35  district or subdistrict; 
352.36     (7) (8) identification and description of studies and 
353.1   analyses used to make the determination set forth in subdivision 
353.2   3, clause (2); and 
353.3      (8) (9) identification of all parcels to be included in the 
353.4   district or any subdistrict. 
353.5      (b) For a housing district, redevelopment district, or a 
353.6   hazardous substance subdistrict, the authority may elect in the 
353.7   tax increment financing plan to provide for the identification 
353.8   of a minimum market value in the plan, development agreement, or 
353.9   assessment agreement, and provide that increment is first 
353.10  received by the authority when (1) the market value of the 
353.11  improvements as determined by the assessor reaches or exceeds 
353.12  the minimum market value, or (2) four years has elapsed from the 
353.13  date of certification of the original net tax capacity of the 
353.14  taxable real property in the district or subdistrict by the 
353.15  county auditor, whichever is earlier. 
353.16     <b>[EFFECTIVE DATE.]</b> The amendments to paragraph (a) are 
353.17  effective for tax increment financing plans approved after June 
353.18  30, 2001, and for amendments to tax increment financing plans 
353.19  modifying the total estimated tax increment expenditures 
353.20  approved after June 30, 2001.  The amendments to paragraph (b) 
353.21  are effective for requests for certification of tax increment 
353.22  financing districts received after June 30, 2001. 
353.23     Sec. 10.  Minnesota Statutes 2000, section 469.175, 
353.24  subdivision 3, is amended to read: 
353.25     Subd. 3.  [MUNICIPALITY APPROVAL.] A county auditor shall 
353.26  not certify the original net tax capacity of a tax increment 
353.27  financing district until the tax increment financing plan 
353.28  proposed for that district has been approved by the municipality 
353.29  in which the district is located.  If an authority that proposes 
353.30  to establish a tax increment financing district and the 
353.31  municipality are not the same, the authority shall apply to the 
353.32  municipality in which the district is proposed to be located and 
353.33  shall obtain the approval of its tax increment financing plan by 
353.34  the municipality before the authority may use tax increment 
353.35  financing.  The municipality shall approve the tax increment 
353.36  financing plan only after a public hearing thereon after 
354.1   published notice in a newspaper of general circulation in the 
354.2   municipality at least once not less than ten days nor more than 
354.3   30 days prior to the date of the hearing.  The published notice 
354.4   must include a map of the area of the district from which 
354.5   increments may be collected and, if the project area includes 
354.6   additional area, a map of the project area in which the 
354.7   increments may be expended.  The hearing may be held before or 
354.8   after the approval or creation of the project or it may be held 
354.9   in conjunction with a hearing to approve the project.  Before or 
354.10  at the time of approval of the tax increment financing plan, the 
354.11  municipality shall make the following findings, and shall set 
354.12  forth in writing the reasons and supporting facts for each 
354.13  determination: 
354.14     (1) that the proposed tax increment financing district is a 
354.15  redevelopment district, a renewal or renovation district, a 
354.16  housing district, a soils condition district, or an economic 
354.17  development district; if the proposed district is a 
354.18  redevelopment district or a renewal or renovation district, the 
354.19  reasons and supporting facts for the determination that the 
354.20  district meets the criteria of section 469.174, subdivision 10, 
354.21  paragraph (a), clauses (1) and (2), or subdivision 10a, must be 
354.22  documented in writing and retained and made available to the 
354.23  public by the authority until the district has been terminated. 
354.24     (2) that the proposed development or redevelopment, in the 
354.25  opinion of the municipality, would not reasonably be expected to 
354.26  occur solely through private investment within the reasonably 
354.27  foreseeable future and that the increased market value of the 
354.28  site that could reasonably be expected to occur without the use 
354.29  of tax increment financing would be less than the increase in 
354.30  the market value estimated to result from the proposed 
354.31  development after subtracting the present value of the projected 
354.32  tax increments for the maximum duration of the district 
354.33  permitted by the plan.  The requirements of this clause do not 
354.34  apply if the district is a qualified housing district, as 
354.35  defined in section 273.1399, subdivision 1. 
354.36     (3) that the tax increment financing plan conforms to the 
355.1   general plan for the development or redevelopment of the 
355.2   municipality as a whole. 
355.3      (4) that the tax increment financing plan will afford 
355.4   maximum opportunity, consistent with the sound needs of the 
355.5   municipality as a whole, for the development or redevelopment of 
355.6   the project by private enterprise. 
355.7      (5) that the municipality elects the method of tax 
355.8   increment computation set forth in section 469.177, subdivision 
355.9   3, clause (b), if applicable. 
355.10     When the municipality and the authority are not the same, 
355.11  the municipality shall approve or disapprove the tax increment 
355.12  financing plan within 60 days of submission by the authority.  
355.13  When the municipality and the authority are not the same, the 
355.14  municipality may not amend or modify a tax increment financing 
355.15  plan except as proposed by the authority pursuant to subdivision 
355.16  4.  Once approved, the determination of the authority to 
355.17  undertake the project through the use of tax increment financing 
355.18  and the resolution of the governing body shall be conclusive of 
355.19  the findings therein and of the public need for the financing. 
355.20     <b>[EFFECTIVE DATE.]</b> This section is effective for districts 
355.21  for which the request for certification is made after September 
355.22  30, 2001.  
355.23     Sec. 11.  Minnesota Statutes 2000, section 469.175, is 
355.24  amended by adding a subdivision to read: 
355.25     Subd. 4a.  [FILING PLAN WITH STATE.] (a) The authority must 
355.26  file a copy of the tax increment financing plan and amendments 
355.27  to the plan with the commissioner of revenue.  The authority 
355.28  must also file a copy of the development plan or the project 
355.29  plan for the project area with the commissioner of revenue.  The 
355.30  commissioner of revenue shall provide a copy of a plan to the 
355.31  state auditor upon request. 
355.32     (b) Filing under this subdivision must be made within 60 
355.33  days after the latest of: 
355.34     (1) the filing of the request for certification of the 
355.35  district; 
355.36     (2) approval of the plan by the municipality; or 
356.1      (3) adoption of the plan by the authority. 
356.2      <b>[EFFECTIVE DATE.]</b> This section is effective for plans and 
356.3   amendments approved after July 1, 2000. 
356.4      Sec. 12.  Minnesota Statutes 2000, section 469.175, 
356.5   subdivision 6, is amended to read: 
356.6      Subd. 6.  [ANNUAL FINANCIAL REPORTING.] (a) The state 
356.7   auditor shall develop a uniform system of accounting and 
356.8   financial reporting for tax increment financing districts.  The 
356.9   system of accounting and financial reporting shall, as nearly as 
356.10  possible: 
356.11     (1) provide for full disclosure of the sources and uses of 
356.12  public funds in the district; 
356.13     (2) permit comparison and reconciliation with the affected 
356.14  local government's accounts and financial reports; 
356.15     (3) permit auditing of the funds expended on behalf of a 
356.16  district, including a single district that is part of a 
356.17  multidistrict project or that is funded in part or whole through 
356.18  the use of a development account funded with tax increments from 
356.19  other districts or with other public money; 
356.20     (4) be consistent with generally accepted accounting 
356.21  principles. 
356.22     (b) The authority must annually submit to the state auditor 
356.23  a financial report in compliance with paragraph (a).  Copies of 
356.24  the report must also be provided to the county auditor and to 
356.25  the governing body of the municipality, if the authority is not 
356.26  the municipality.  To the extent necessary to permit compliance 
356.27  with the requirement of financial reporting, the county and any 
356.28  other appropriate local government unit or private entity must 
356.29  provide the necessary records or information to the authority or 
356.30  the state auditor as provided by the system of accounting and 
356.31  financial reporting developed pursuant to paragraph (a).  The 
356.32  authority must submit the annual report for a year on or before 
356.33  August 1 of the next year. 
356.34     (c) The annual financial report must also include the 
356.35  following items: 
356.36     (1) the original net tax capacity of the district and any 
357.1   subdistrict under section 469.177, subdivision 1; 
357.2      (2) the net tax capacity for the reporting period of the 
357.3   district and any subdistrict; 
357.4      (3) the captured net tax capacity of the district; 
357.5      (4) any fiscal disparity deduction from the captured net 
357.6   tax capacity under section 469.177, subdivision 3; 
357.7      (5) the captured net tax capacity retained for tax 
357.8   increment financing under section 469.177, subdivision 2, 
357.9   paragraph (a), clause (1); 
357.10     (6) any captured net tax capacity distributed among 
357.11  affected taxing districts under section 469.177, subdivision 2, 
357.12  paragraph (a), clause (2); 
357.13     (7) the type of district; 
357.14     (8) the date the municipality approved the tax increment 
357.15  financing plan and the date of approval of any modification of 
357.16  the tax increment financing plan, the approval of which requires 
357.17  notice, discussion, a public hearing, and findings under 
357.18  subdivision 4, paragraph (a); 
357.19     (9) the date the authority first requested certification of 
357.20  the original net tax capacity of the district and the date of 
357.21  the request for certification regarding any parcel added to the 
357.22  district; 
357.23     (10) the date the county auditor first certified the 
357.24  original net tax capacity of the district and the date of 
357.25  certification of the original net tax capacity of any parcel 
357.26  added to the district; 
357.27     (11) the month and year in which the authority has received 
357.28  or anticipates it will receive the first increment from the 
357.29  district; 
357.30     (12) the date the district must be decertified; 
357.31     (13) for the reporting period and prior years of the 
357.32  district, the actual amount received from, at least, the 
357.33  following categories: 
357.34     (i) tax increments paid by the captured net tax capacity 
357.35  retained for tax increment financing under section 469.177, 
357.36  subdivision 2, paragraph (a), clause (1), but excluding any 
358.1   excess taxes; 
358.2      (ii) tax increments that are interest or other investment 
358.3   earnings on or from tax increments; 
358.4      (iii) tax increments that are proceeds from the sale or 
358.5   lease of property, tangible or intangible, purchased by the 
358.6   authority with tax increments; 
358.7      (iv) tax increments that are repayments of loans or other 
358.8   advances made by the authority with tax increments; 
358.9      (v) bond or loan proceeds; 
358.10     (vi) special assessments; 
358.11     (vii) grants; and 
358.12     (viii) transfers from funds not exclusively associated with 
358.13  the district; 
358.14     (14) for the reporting period and for the prior years of 
358.15  the district, the amount budgeted under the tax increment 
358.16  financing plan, and the actual amount expended for, at least, 
358.17  the following categories: 
358.18     (i) acquisition of land and buildings through condemnation 
358.19  or purchase; 
358.20     (ii)  site improvements or preparation costs; 
358.21     (iii) installation of public utilities, parking facilities, 
358.22  streets, roads, sidewalks, or other similar public improvements; 
358.23     (iv) administrative costs, including the allocated cost of 
358.24  the authority; 
358.25     (v) public park facilities, facilities for social, 
358.26  recreational, or conference purposes, or other similar public 
358.27  improvements; and 
358.28     (vi) transfers to funds not exclusively associated with the 
358.29  district; 
358.30     (15) for properties sold to developers, the total cost of 
358.31  the property to the authority and the price paid by the 
358.32  developer; 
358.33     (16) the amount of any payments and the value of any 
358.34  in-kind benefits, such as physical improvements and the use of 
358.35  building space, that are paid or financed with tax increments 
358.36  and are provided to another governmental unit other than the 
359.1   municipality during the reporting period; 
359.2      (17) the amount of any payments for activities and 
359.3   improvements located outside of the district that are paid for 
359.4   or financed with tax increments; 
359.5      (18) the amount of payments of principal and interest that 
359.6   are made during the reporting period on any nondefeased: 
359.7      (i) general obligation tax increment financing bonds; 
359.8      (ii) other tax increment financing bonds; and 
359.9      (iii) notes and pay-as-you-go contracts; 
359.10     (19) the principal amount, at the end of the reporting 
359.11  period, of any nondefeased: 
359.12     (i) general obligation tax increment financing bonds; 
359.13     (ii) other tax increment financing bonds; and 
359.14     (iii) notes and pay-as-you-go contracts; 
359.15     (20) the amount of principal and interest payments that are 
359.16  due for the current calendar year on any nondefeased: 
359.17     (i) general obligation tax increment financing bonds; 
359.18     (ii) other tax increment financing bonds; and 
359.19     (iii) notes and pay-as-you-go contracts; 
359.20     (21) if the fiscal disparities contribution under chapter 
359.21  276A or 473F for the district is computed under section 469.177, 
359.22  subdivision 3, paragraph (a), the amount of increased property 
359.23  taxes imposed on other properties in the municipality that 
359.24  approved the tax increment financing plan as a result of the 
359.25  fiscal disparities contribution; 
359.26     (22) whether the tax increment financing plan or other 
359.27  governing document permits increment revenues to be expended: 
359.28     (i) to pay bonds, the proceeds of which were or may be 
359.29  expended on activities outside of the district; 
359.30     (ii) for deposit into a common bond fund from which money 
359.31  may be expended on activities located outside of the district; 
359.32  or 
359.33     (iii) to otherwise finance activities located outside of 
359.34  the tax increment financing district; and 
359.35     (23) any additional information the state auditor may 
359.36  require. 
360.1      (d) The commissioner of revenue shall prescribe the method 
360.2   of calculating the increased property taxes under paragraph (c), 
360.3   clause (21), and the form of the statement disclosing this 
360.4   information on the annual statement under subdivision 5. 
360.5      (e) The reporting requirements imposed by this subdivision 
360.6   apply to districts certified before, on, and after August 1, 
360.7   1979. 
360.8      <b>[EFFECTIVE DATE.]</b> This section is effective for reports 
360.9   filed after January 1, 2002. 
360.10     Sec. 13.  Minnesota Statutes 2000, section 469.175, 
360.11  subdivision 6b, is amended to read: 
360.12     Subd. 6b.  [DURATION OF DISCLOSURE AND REPORTING 
360.13  REQUIREMENTS.] The disclosure and reporting requirements imposed 
360.14  by subdivisions 5, and 6, and 6a apply with respect to a tax 
360.15  increment financing district beginning with the annual 
360.16  disclosure and reports for the year in which the original net 
360.17  tax capacity of the district was certified and ending with the 
360.18  annual disclosure and reports for the year in which both of the 
360.19  following events have occurred: 
360.20     (1) decertification of the district; and 
360.21     (2) expenditure or return to the county auditor of all 
360.22  remaining revenues derived from tax increments paid by 
360.23  properties in the district. 
360.24     <b>[EFFECTIVE DATE.]</b> This section is effective for reports 
360.25  filed after December 31, 2000. 
360.26     Sec. 14.  Minnesota Statutes 2000, section 469.176, 
360.27  subdivision 1b, is amended to read: 
360.28     Subd. 1b.  [DURATION LIMITS; TERMS.] (a) No tax increment 
360.29  shall in any event be paid to the authority 
360.30     (1) after 15 years after receipt by the authority of the 
360.31  first increment for a renewal and renovation district, 
360.32     (2) after 20 years after receipt by the authority of the 
360.33  first increment for a soils condition district, 
360.34     (3) after eight years after receipt by the authority of the 
360.35  first increment for an economic development district, 
360.36     (4) for a housing district or a redevelopment district, 
361.1   after 20 years from the date of receipt by the authority of the 
361.2   first tax increment by the authority pursuant to section 
361.3   469.175, subdivision 1, paragraph (b); or, if no provision is 
361.4   made under section 469.175, subdivision 1, paragraph (b), after 
361.5   25 years from the date of receipt by the authority of the first 
361.6   increment. 
361.7      (b) For purposes of determining a duration limit under this 
361.8   subdivision or subdivision 1e that is based on the receipt of an 
361.9   increment, any increments from taxes payable in the year in 
361.10  which the district terminates shall be paid to the authority.  
361.11  This paragraph does not affect a duration limit calculated from 
361.12  the date of approval of the tax increment financing plan or 
361.13  based on the recovery of costs or to a duration limit under 
361.14  subdivision 1c.  This paragraph does not supersede the 
361.15  restrictions on payment of delinquent taxes in subdivision 1f. 
361.16     (c) Except as authorized by section 469.175, subdivision 1, 
361.17  paragraph (b), An action by the authority to waive or decline to 
361.18  accept an increment has no effect for purposes of computing a 
361.19  duration limit based on the receipt of increment under this 
361.20  subdivision or any other provision of law.  The authority is 
361.21  deemed to have received an increment for any year in which it 
361.22  waived or declined to accept an increment, regardless of whether 
361.23  the increment was paid to the authority. 
361.24     (d) Receipt by a hazardous substance subdistrict of an 
361.25  increment as a result of a reduction in original net tax 
361.26  capacity under section 469.174, subdivision 7, paragraph (b), 
361.27  does not constitute receipt of increment by the overlying 
361.28  district for purpose of calculating the duration limit under 
361.29  this section. 
361.30     <b>[EFFECTIVE DATE.]</b> This section is effective for districts 
361.31  for which the request for certification is made after June 30, 
361.32  2001. 
361.33     Sec. 15.  Minnesota Statutes 2000, section 469.176, 
361.34  subdivision 1c, is amended to read: 
361.35     Subd. 1c.  [DURATION LIMITS; PRE-1979 DISTRICTS.] For tax 
361.36  increment financing districts created prior to August 1, 1979, 
362.1   no tax increment shall be paid to the authority after April 1, 
362.2   2001, or the term of a nondefeased bond or obligation 
362.3   outstanding on April 1, 1990, secured by increments from the 
362.4   district or project area, whichever time is greater, provided 
362.5   that in no case will a tax increment be paid to an authority 
362.6   after August 1, 2009, from such a district.  If a district's 
362.7   termination date is extended beyond April 1, 2001, because bonds 
362.8   were outstanding on April 1, 1990, with maturities extending 
362.9   beyond April 1, 2001, the following restrictions apply.  No 
362.10  Increment collected from the district may at any time, and 
362.11  interest earned on increment from the district and received 
362.12  after December 31, 2001, must be expended after April 1, 
362.13  2001, except only to pay or defease (i) bonds issued before 
362.14  April 1, 1990, or (ii) bonds issued to refund the principal of 
362.15  the outstanding bonds and pay associated issuance costs, 
362.16  provided the average maturity of the refunding bonds does not 
362.17  exceed the bonds refunded.  When sufficient money has been 
362.18  received to defease or pay the bonds, the tax increment project 
362.19  or district must be decertified. 
362.20     <b>[EFFECTIVE DATE.]</b> This section is effective for tax 
362.21  increment financing districts and projects for which the request 
362.22  for certification was made before August 1, 1979. 
362.23     Sec. 16.  Minnesota Statutes 2000, section 469.176, 
362.24  subdivision 1e, is amended to read: 
362.25     Subd. 1e.  [DURATION LIMITS; HAZARDOUS SUBSTANCE 
362.26  SUBDISTRICTS.] If a parcel of a district is part of a designated 
362.27  hazardous substance site or a hazardous substance subdistrict, 
362.28  tax increment may be paid to the authority from the parcel for 
362.29  longer than the period otherwise provided by subdivisions 1 to 
362.30  1f for the overlying district.  The extended period for 
362.31  collection of tax increment begins on the date of receipt of the 
362.32  first tax increment from the parcel that is more than any tax 
362.33  increment received from the parcel before the date of the 
362.34  certification under section 469.174, subdivision 7, paragraph 
362.35  (b), and received after the date of certification to the county 
362.36  auditor described in section 469.174, subdivision 7, paragraph 
363.1   (b).  The extended period for collection of tax increment is the 
363.2   lesser of:  (1) 25 years from the date of commencement of the 
363.3   extended period or 20 years if the authority elects under 
363.4   section 469.175, subdivision 1, paragraph (b), to defer receipt 
363.5   of the first increment; or (2) the period necessary to recover 
363.6   the costs of removal actions or remedial actions specified in a 
363.7   development response action plan. 
363.8      <b>[EFFECTIVE DATE.]</b> This section is effective for requests 
363.9   for certification of subdistricts made after June 30, 2001. 
363.10     Sec. 17.  Minnesota Statutes 2000, section 469.176, 
363.11  subdivision 3, is amended to read: 
363.12     Subd. 3.  [LIMITATION ON ADMINISTRATIVE EXPENSES.] (a) For 
363.13  districts for which certification was requested before August 1, 
363.14  1979, or after June 30, 1982, no tax increment shall be used to 
363.15  pay any administrative expenses for a project which exceed ten 
363.16  percent of the total tax increment expenditures authorized by 
363.17  the tax increment financing plan or the total tax increment 
363.18  expenditures for the project, whichever is less.  
363.19     (b) For districts for which certification was requested 
363.20  after July 31, 1979, and before July 1, 1982, no tax increment 
363.21  shall be used to pay administrative expenses, as defined in 
363.22  Minnesota Statutes 1980, section 273.73, for a project district 
363.23  which exceeds five percent of the total tax increment 
363.24  expenditures authorized by the tax increment financing plan or 
363.25  the total tax increment expenditures for the project district, 
363.26  whichever is less. 
363.27     (c) For districts for which certification was requested 
363.28  after June 30, 2001, no tax increment may be used to pay any 
363.29  administrative expenses for a project which exceed ten percent 
363.30  of total tax increment expenditures authorized by the tax 
363.31  increment financing plan or the total tax increments from the 
363.32  district, whichever is less. 
363.33     <b>[EFFECTIVE DATE.]</b> This section is effective for districts 
363.34  for which the request for certification is received after June 
363.35  30, 2001. 
363.36     Sec. 18.  Minnesota Statutes 2000, section 469.176, 
364.1   subdivision 4, is amended to read: 
364.2      Subd. 4.  [LIMITATION ON USE OF TAX INCREMENT; GENERAL 
364.3   RULE.] (a) All revenues derived from Tax increment shall 
364.4   increments must be used in accordance with the tax increment 
364.5   financing plan, including the separate line items amounts 
364.6   required by section 469.175, subdivision 1, clause (6), but 
364.7   excluding any subcategories within the required items that the 
364.8   authority elects to include.  If a tax increment financing plan 
364.9   does not include an amount for a separate line item required by 
364.10  section 469.175, subdivision 1, clause (6), the amount for the 
364.11  line item is zero. 
364.12     (b) The revenues shall tax increments may be used solely 
364.13  for the following purposes: 
364.14     (1) to pay the principal of and interest on bonds issued to 
364.15  finance a project; 
364.16     (2) as permitted by an enabling development authority law, 
364.17  whether made by the authority or the municipality or another 
364.18  entity authorized to exercise the powers of the respective 
364.19  authority, as specified in paragraph (c). 
364.20     (c) The following purposes are permitted: 
364.21     (1) by a rural development financing authority for the 
364.22  purposes stated in section 469.142,; 
364.23     (2) by a port authority or municipality exercising the 
364.24  powers of a port authority to finance or otherwise pay the cost 
364.25  of redevelopment pursuant to under sections 469.048 to 469.068,; 
364.26     (3) by an economic development authority to finance or 
364.27  otherwise pay the cost of redevelopment pursuant to under 
364.28  sections 469.090 to 469.108,; 
364.29     (4) by a housing and redevelopment authority or economic 
364.30  development authority to finance or otherwise pay public 
364.31  redevelopment costs pursuant to under sections 469.001 to 
364.32  469.047,; 
364.33     (5) by a municipality or economic development authority to 
364.34  finance or otherwise pay the capital and administration costs of 
364.35  a development district pursuant to under sections 469.124 to 
364.36  469.134,; 
365.1      (6) by a municipality or authority to finance or otherwise 
365.2   pay the costs of developing and implementing a development 
365.3   action response plan,; 
365.4      (7) by a municipality or redevelopment agency to finance or 
365.5   otherwise pay premiums for insurance or other security 
365.6   guaranteeing the payment when due of principal of and interest 
365.7   on the bonds pursuant to under chapter 462C, sections 469.152 to 
365.8   469.165, or both, or to accumulate and maintain a reserve 
365.9   securing the payment when due of the principal of and interest 
365.10  on the bonds pursuant to under chapter 462C, sections 469.152 to 
365.11  469.165, or both, which revenues in the reserve shall may not 
365.12  exceed, subsequent to after the fifth anniversary of the date of 
365.13  issue of the first bond issue secured by the reserve, an amount 
365.14  equal to 20 percent of the aggregate principal amount of the 
365.15  outstanding and nondefeased bonds secured by the reserve. 
365.16     <b>[EFFECTIVE DATE.]</b> This section is effective for tax 
365.17  increment financing plans approved after June 30, 2001, and for 
365.18  amendments to tax increment financing plans modifying the total 
365.19  estimated tax increment expenditures approved after June 30, 
365.20  2001.  Amounts spent in excess of the estimates or budget items 
365.21  in the tax increment financing plan are deemed to be spent in 
365.22  accordance within the plan, notwithstanding that they exceeded 
365.23  the estimates or budget items, for purposes of this section if 
365.24  the plan and amendments to it were approved before July 1, 2001, 
365.25  and if the total amounts spent are within the total estimated 
365.26  tax increment expenditures under the plan for the district. 
365.27     Sec. 19.  Minnesota Statutes 2000, section 469.176, 
365.28  subdivision 4g, is amended to read: 
365.29     Subd. 4g.  [GENERAL GOVERNMENT USE PROHIBITED.] (a) These 
365.30  revenues shall Tax increments may not be used to circumvent 
365.31  existing levy limit law.  
365.32     (b) No revenues derived from tax increment from any 
365.33  district, whether certified before or after August 1, 1979, 
365.34  shall may be used for the acquisition, construction, renovation, 
365.35  operation, or maintenance of a building to be used primarily and 
365.36  regularly for conducting the business of a municipality, county, 
366.1   school district, or any other local unit of government or the 
366.2   state or federal government or for a commons area used as a 
366.3   public park, or a facility used for social, recreational, or 
366.4   conference purposes.  This provision shall does not prohibit the 
366.5   use of revenues derived from tax increments for the construction 
366.6   or renovation of a parking structure or of a privately owned 
366.7   facility for conference purposes.  
366.8      (b) If any publicly owned facility used for social, 
366.9   recreational, or conference purposes and financed in whole or in 
366.10  part from revenues derived from a district is operated or 
366.11  managed by an entity other than the authority, the operating and 
366.12  management policies of the facility must be approved by the 
366.13  governing body of the authority. 
366.14     (c)(1) Tax increments may not be used to pay for the cost 
366.15  of public improvements, equipment, or other items, if: 
366.16     (i) the improvements, equipment, or other items are located 
366.17  outside of the area of the tax increment financing district from 
366.18  which the increments were collected; and 
366.19     (ii) the improvements, equipment, or items that (A) 
366.20  primarily serve a decorative or aesthetic purpose, or (B) serve 
366.21  a functional purpose, but their cost is increased by more than 
366.22  100 percent as a result of the selection of materials, design, 
366.23  or type as compared with more commonly used materials, designs, 
366.24  or types for similar improvements, equipment, or items. 
366.25     (2) The provisions of this paragraph do not apply to 
366.26  expenditures related to the rehabilitation of historic 
366.27  structures that are: 
366.28     (i) individually listed on the National Register of 
366.29  Historic Places; or 
366.30     (ii) a contributing element to a historic district listed 
366.31  on the National Register of Historic Places. 
366.32     <b>[EFFECTIVE DATE.]</b> This section is effective for 
366.33  expenditures of increment made after June 30, 2001. 
366.34     Sec. 20.  Minnesota Statutes 2000, section 469.176, is 
366.35  amended by adding a subdivision to read: 
366.36     Subd. 41.  [PROHIBITED FACILITIES.] (a) No tax increment 
367.1   from any district may be used for: 
367.2      (1) a commons area used as a public park; or 
367.3      (2) a facility used for social, recreational, or conference 
367.4   purposes. 
367.5      (b) This subdivision does not apply to a privately owned 
367.6   facility for conference purposes or a parking structure. 
367.7      <b>[EFFECTIVE DATE.]</b> This section is effective for 
367.8   expenditures of increment made after June 30, 2001, but does not 
367.9   apply to (1) expenditures made before January 1, 2000; (2) 
367.10  expenditures made under a binding contract entered before 
367.11  January 1, 2000; or (3) expenditures made under a binding 
367.12  contract entered pursuant to a letter of intent with the 
367.13  developer or contractor or its assigns if the letter of intent 
367.14  was entered before January 1, 2000. 
367.15     Sec. 21.  Minnesota Statutes 2000, section 469.1763, 
367.16  subdivision 6, is amended to read: 
367.17     Subd. 6.  [POOLING PERMITTED FOR DEFICITS.] (a) This 
367.18  subdivision applies only to districts for which the request for 
367.19  certification was made before June 2, 1997 2001. 
367.20     (b) The municipality for the district may transfer 
367.21  available increments from another tax increment financing 
367.22  district located in the municipality, if the transfer is 
367.23  necessary to eliminate a deficit in the district to which the 
367.24  increments are transferred.  A deficit in the district for 
367.25  purposes of this subdivision means the lesser of the following 
367.26  two amounts: 
367.27     (1)(i) the amount due during the calendar year to pay 
367.28  preexisting obligations of the district; minus 
367.29     (ii) the total increments to be collected from properties 
367.30  located within the district that are available for the calendar 
367.31  year; plus 
367.32     (iii) total increments from properties located in other 
367.33  districts in the municipality that are available to be used to 
367.34  meet the district's obligations under this section, excluding 
367.35  this subdivision, or other provisions of law (but excluding a 
367.36  special tax under section 469.1791 and the grant program under 
368.1   Laws 1997, chapter 231, article 1, section 19, or this act); or 
368.2      (2) the reduction in increments collected from properties 
368.3   located in the district for the calendar year as a result of the 
368.4   changes in class rates in Laws 1997, chapter 231, article 1; 
368.5   Laws 1998, chapter 389, article 2; and Laws 1999, chapter 
368.6   243 and this act or the elimination of the general education tax 
368.7   levy under this act. 
368.8      (c) A preexisting obligation means: 
368.9      (1) bonds issued and sold before June 2, 1997 2001, and 
368.10  bonds issued to refund such bonds or to reimburse expenditures 
368.11  made in conjunction with a signed contractual agreement entered 
368.12  into before June 2, 1997 2001, to the extent that the bonds are 
368.13  secured by a pledge of increments from the tax increment 
368.14  financing district.  For purposes of this subdivision, bonds 
368.15  exclude an obligation to reimburse or pay a developer or owner 
368.16  of property located in the district for amounts incurred or paid 
368.17  by the developer or owner; and 
368.18     (2) binding contracts entered into before June 2, 2001, to 
368.19  the extent that the contracts require payments secured by a 
368.20  pledge of increments from the tax increment financing district. 
368.21     (d) The municipality may require a development authority, 
368.22  other than a seaway port authority, to transfer available 
368.23  increments for any of its tax increment financing districts in 
368.24  the municipality to make up an insufficiency in another district 
368.25  in the municipality, regardless of whether the district was 
368.26  established by the development authority or another development 
368.27  authority.  This authority applies notwithstanding any law to 
368.28  the contrary, but applies only to a development authority that: 
368.29     (1) was established by the municipality; or 
368.30     (2) the governing body of which is appointed, in whole or 
368.31  part, by the municipality or an officer of the municipality or 
368.32  which consists, in whole or part, of members of the governing 
368.33  body of the municipality. 
368.34     (e) The authority under this subdivision to spend tax 
368.35  increments outside of the area of the district from which the 
368.36  tax increments were collected: 
369.1      (1) may only be exercised after obtaining approval of the 
369.2   use of the increments, in writing, by the commissioner of 
369.3   revenue; 
369.4      (2) is an exception to the restrictions under section 
369.5   469.176, subdivision 4i, and the other provisions of this 
369.6   section, and the percentage restrictions under subdivision 2 
369.7   must be calculated after deducting increments spent under this 
369.8   subdivision from the total increments for the district; and 
369.9      (3) applies notwithstanding the provisions of the Tax 
369.10  Increment Financing Act in effect for districts for which the 
369.11  request for certification was made before June 30, 1982, or any 
369.12  other law to the contrary. 
369.13     <b>[EFFECTIVE DATE.]</b> This section is effective January 2, 
369.14  2003, and thereafter. 
369.15     Sec. 22.  Minnesota Statutes 2000, section 469.177, 
369.16  subdivision 1, is amended to read: 
369.17     Subdivision 1.  [ORIGINAL NET TAX CAPACITY.] (a) Upon or 
369.18  after adoption of a tax increment financing plan, the auditor of 
369.19  any county in which the district is situated shall, upon request 
369.20  of the authority, certify the original net tax capacity of the 
369.21  tax increment financing district and that portion of the 
369.22  district overlying any subdistrict as described in the tax 
369.23  increment financing plan and shall certify in each year 
369.24  thereafter the amount by which the original net tax capacity has 
369.25  increased or decreased as a result of a change in tax exempt 
369.26  status of property within the district and any subdistrict, 
369.27  reduction or enlargement of the district or changes pursuant to 
369.28  subdivision 4.  
369.29     (b) For districts approved under section 469.175, 
369.30  subdivision 3, or parcels added to existing districts after May 
369.31  1, 1988, if the classification under section 273.13 of property 
369.32  located in a district changes to a classification that has a 
369.33  different assessment ratio, the original net tax capacity of 
369.34  that property must be redetermined at the time when its use is 
369.35  changed as if the property had originally been classified in the 
369.36  same class in which it is classified after its use is changed. 
370.1      (c) The amount to be added to the original net tax capacity 
370.2   of the district as a result of previously tax exempt real 
370.3   property within the district becoming taxable equals the net tax 
370.4   capacity of the real property as most recently assessed pursuant 
370.5   to section 273.18 or, if that assessment was made more than one 
370.6   year prior to the date of title transfer rendering the property 
370.7   taxable, the net tax capacity assessed by the assessor at the 
370.8   time of the transfer.  If improvements are made to tax exempt 
370.9   property after certification of the district and before the 
370.10  parcel becomes taxable, the assessor shall, at the request of 
370.11  the authority, separately assess the estimated market value of 
370.12  the improvements.  If the property becomes taxable, the county 
370.13  auditor shall add to original net tax capacity, the net tax 
370.14  capacity of the parcel, excluding the separately assessed 
370.15  improvements.  If substantial taxable improvements were made to 
370.16  a parcel after certification of the district and if the property 
370.17  later becomes tax exempt, in whole or part, as a result of the 
370.18  authority acquiring the property through foreclosure or exercise 
370.19  of remedies under a lease or other revenue agreement or as a 
370.20  result of tax forfeiture, the amount to be added to the original 
370.21  net tax capacity of the district as a result of the property 
370.22  again becoming taxable is the amount of the parcel's value that 
370.23  was included in original net tax capacity when the parcel was 
370.24  first certified.  The amount to be added to the original net tax 
370.25  capacity of the district as a result of enlargements equals the 
370.26  net tax capacity of the added real property as most recently 
370.27  certified by the commissioner of revenue as of the date of 
370.28  modification of the tax increment financing plan pursuant to 
370.29  section 469.175, subdivision 4. 
370.30     (d) For districts approved under section 469.175, 
370.31  subdivision 3, or parcels added to existing districts after May 
370.32  1, 1988, if the net tax capacity of a property increases because 
370.33  the property no longer qualifies under the Minnesota 
370.34  Agricultural Property Tax Law, section 273.111; the Minnesota 
370.35  Open Space Property Tax Law, section 273.112; or the 
370.36  Metropolitan Agricultural Preserves Act, chapter 473H, or 
371.1   because platted, unimproved property is improved or three years 
371.2   pass after approval of the plat under section 273.11, 
371.3   subdivision 1, the increase in net tax capacity must be added to 
371.4   the original net tax capacity.  
371.5      (e) The amount to be subtracted from the original net tax 
371.6   capacity of the district as a result of previously taxable real 
371.7   property within the district becoming tax exempt, or a reduction 
371.8   in the geographic area of the district, shall be the amount of 
371.9   original net tax capacity initially attributed to the property 
371.10  becoming tax exempt or being removed from the district.  If the 
371.11  net tax capacity of property located within the tax increment 
371.12  financing district is reduced by reason of a court-ordered 
371.13  abatement, stipulation agreement, voluntary abatement made by 
371.14  the assessor or auditor or by order of the commissioner of 
371.15  revenue, the reduction shall be applied to the original net tax 
371.16  capacity of the district when the property upon which the 
371.17  abatement is made has not been improved since the date of 
371.18  certification of the district and to the captured net tax 
371.19  capacity of the district in each year thereafter when the 
371.20  abatement relates to improvements made after the date of 
371.21  certification.  The county auditor may specify reasonable form 
371.22  and content of the request for certification of the authority 
371.23  and any modification thereof pursuant to section 469.175, 
371.24  subdivision 4.  
371.25     (f) If a parcel of property contained a substandard 
371.26  building that was demolished or removed and if the authority 
371.27  elects to treat the parcel as occupied by a substandard building 
371.28  under section 469.174, subdivision 10, paragraph (b), the 
371.29  auditor shall certify the original net tax capacity of the 
371.30  parcel using the greater of (1) the current net tax capacity of 
371.31  the parcel, or (2) the estimated market value of the parcel for 
371.32  the year in which the building was demolished or removed, but 
371.33  applying the class rates for the current year. 
371.34     <b>[EFFECTIVE DATE.]</b> This section is effective for parcels 
371.35  that become taxable after June 30, 2001, and applies to tax 
371.36  increment financing districts, regardless of when the request 
372.1   for certification was made. 
372.2      Sec. 23.  Minnesota Statutes 2000, section 469.177, is 
372.3   amended by adding a subdivision to read: 
372.4      Subd. 1b.  [STATE TAX AND INCREMENT COMPUTATION.] The 
372.5   original local tax rate and any other tax rate or amount used to 
372.6   calculate the amount of tax increment does not include any rate 
372.7   or amount attributable to a state levy, whether the state levy 
372.8   is imposed by section 275.02 or another provision of law. 
372.9      Sec. 24.  Minnesota Statutes 2000, section 469.177, 
372.10  subdivision 11, is amended to read: 
372.11     Subd. 11.  [DEDUCTION FOR ENFORCEMENT COSTS; 
372.12  APPROPRIATION.] (a) The county treasurer shall deduct an amount 
372.13  equal to 0.25 0.34 percent of any increment distributed to an 
372.14  authority or municipality.  The county treasurer shall pay the 
372.15  amount deducted to the state treasurer for deposit in the state 
372.16  general fund. 
372.17     (b) The amounts deducted and paid under paragraph (a) are 
372.18  appropriated to the state auditor for the cost of (1) the 
372.19  financial reporting of tax increment financing information and 
372.20  (2) the cost of examining and auditing of authorities' use of 
372.21  tax increment financing as provided under section 469.1771, 
372.22  subdivision 1.  Notwithstanding section 16A.28 or any other law 
372.23  to the contrary, this appropriation does not cancel and remains 
372.24  available until spent.  
372.25     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
372.26  payable in 2002 and thereafter. 
372.27     Sec. 25.  Minnesota Statutes 2000, section 469.1771, 
372.28  subdivision 1, is amended to read: 
372.29     Subdivision 1.  [ENFORCEMENT.] (a) The owner of taxable 
372.30  property located in the city, town, school district, or county 
372.31  in which the tax increment financing district is located may 
372.32  bring suit for equitable relief or for damages, as provided in 
372.33  subdivisions 2, 3, and 4, arising out of a failure of a 
372.34  municipality or authority to comply with the provisions of 
372.35  sections 469.174 to 469.179 469.1799, or related provisions of 
372.36  this chapter.  The prevailing party in a suit filed under the 
373.1   preceding sentence is entitled to costs, including reasonable 
373.2   attorney fees. 
373.3      (b) The state auditor may examine and audit political 
373.4   subdivisions' use of tax increment financing.  Without previous 
373.5   notice, the state auditor may examine or audit accounts and 
373.6   records on a random basis as the auditor deems to be in the 
373.7   public interest.  If the state auditor finds evidence that an 
373.8   authority or municipality has violated a provision of the law 
373.9   for which a remedy is provided under this section, the state 
373.10  auditor shall forward the relevant information to the county 
373.11  attorney.  The county attorney may bring an action to enforce 
373.12  the provisions of sections 469.174 to 469.179 469.1799 or 
373.13  related provisions of this chapter, for matters referred by the 
373.14  state auditor or on behalf of the county.  If the county 
373.15  attorney determines not to bring an action or if the county 
373.16  attorney has not brought an action within 12 months after 
373.17  receipt of the initial notification by the state auditor of the 
373.18  violation, the county attorney shall notify the state auditor in 
373.19  writing. 
373.20     (c) If the state auditor finds an authority is not in 
373.21  compliance with sections 469.174 to 469.179 469.1799 or related 
373.22  provisions of law, the auditor shall notify the governing body 
373.23  of the municipality that approved the tax increment financing 
373.24  district of its findings.  The governing body of the 
373.25  municipality must respond in writing to the state auditor within 
373.26  60 days after receiving the notification.  Its written response 
373.27  must state whether the municipality accepts, in whole or part, 
373.28  the auditor's findings.  If the municipality does not accept the 
373.29  findings, the statement must indicate the basis for its 
373.30  disagreement.  The state auditor shall annually summarize the 
373.31  responses it receives under this section and send the summary 
373.32  and copies of the responses to the chairs of the committees of 
373.33  the legislature with jurisdiction over tax increment financing. 
373.34     (d) The state auditor shall notify the attorney general in 
373.35  writing and provide supporting materials for a violation found 
373.36  by the auditor, if the: 
374.1      (1) auditor receives notification from the county attorney 
374.2   under paragraph (b) or receives no notification for a 12-month 
374.3   period after initially notifying the county attorney and the 
374.4   state auditor confirms with the county attorney or the 
374.5   municipality that no action has been brought regarding the 
374.6   matter; and 
374.7      (2) municipality or development authority have not 
374.8   eliminated or resolved the violation to the satisfaction of the 
374.9   state auditor. 
374.10  The auditor shall provide the municipality and development 
374.11  authority a copy of the notification sent to the attorney 
374.12  general. 
374.13     <b>[EFFECTIVE DATE.]</b> This section applies to violations 
374.14  occurring after July 1, 2001. 
374.15     Sec. 26.  Minnesota Statutes 2000, section 469.178, is 
374.16  amended by adding a subdivision to read: 
374.17     Subd. 7.  [INTERFUND LOANS.] The authority or municipality 
374.18  may advance or loan money to finance expenditures under section 
374.19  469.176, subdivision 4, from its general fund or any other fund 
374.20  regarding which it has legal authority to do so.  The loan or 
374.21  advance must be approved, by resolution of the governing body, 
374.22  before money is transferred, advanced, or spent, whichever is 
374.23  earliest.  The terms and conditions for repayment of the loan 
374.24  must be provided in writing and include, at a minimum, the 
374.25  principal amount, the interest rate, maturity, and repayment 
374.26  schedule.  The maximum rate of interest permitted to be charged 
374.27  is limited to the greater of the rates specified under section 
374.28  270.75 or 549.09. 
374.29     <b>[EFFECTIVE DATE.]</b> This section is effective for loans and 
374.30  advances made after June 30, 2001.  Interfund loans and advances 
374.31  made before July 1, 2001, are ratified and approved, subject to 
374.32  the requirement that interest accrued or paid after July 1, 
374.33  2001, may not exceed the limit in this section.  An authority or 
374.34  municipality may modify the terms of an interfund loan or 
374.35  advance made before July 1, 2001, to comply with any of the 
374.36  requirements of this section as the authority or municipality 
375.1   deems appropriate.  
375.2      Sec. 27.  Minnesota Statutes 2000, section 469.1791, 
375.3   subdivision 1, is amended to read: 
375.4      Subdivision 1.  [DEFINITIONS.] (a) As used in this section, 
375.5   the terms defined in this subdivision have the meanings given 
375.6   them. 
375.7      (b) "City" means a city municipality containing a tax 
375.8   increment financing district, the request for certification of 
375.9   which was made before June 2, 1997 2001. 
375.10     (c) "Enabling ordinance" means an ordinance adopted by a 
375.11  city council establishing a special taxing district. 
375.12     (d) "Special taxing district" means all or any portion of 
375.13  the property located within a tax increment financing district, 
375.14  the request for certification of which was made before June 2, 
375.15  1997 2001. 
375.16     (e) "Development or redevelopment services" has the meaning 
375.17  given in the city's enabling ordinance, and may include any 
375.18  services or expenditures the city or its economic development 
375.19  authority or housing and redevelopment authority or port 
375.20  authority may provide or incur under sections 469.001 to 
375.21  469.1081 and 469.124 to 469.134, including, without limitation, 
375.22  amounts necessary to pay the principal of or interest on bonds 
375.23  issued by the city or its economic development authority or 
375.24  housing and redevelopment authority or port authority under 
375.25  section 469.178, for the tax increment financing districts 
375.26  contained within the special taxing district or projects to be 
375.27  funded with increments from tax increment financing districts 
375.28  contained within the special taxing district. 
375.29     (f) "Preexisting obligations" means bonds issued and sold 
375.30  before June 2, 1997 2001, and binding contracts entered into 
375.31  before June 2, 1997 2001, to the extent that the bonds and 
375.32  contracts are secured by a pledge of increments from the tax 
375.33  increment financing district contained within the special taxing 
375.34  district. 
375.35     <b>[EFFECTIVE DATE.]</b> This section is effective for all tax 
375.36  increment financing districts, regardless of when the request 
376.1   for certification was made. 
376.2      Sec. 28.  Minnesota Statutes 2000, section 469.1791, 
376.3   subdivision 3, is amended to read: 
376.4      Subd. 3.  [PRECONDITIONS TO ESTABLISH DISTRICT.] (a) A city 
376.5   may establish a special taxing district within a tax increment 
376.6   financing district under this section only if the conditions 
376.7   under paragraphs (b) and (c) are met or if the city elects to 
376.8   exercise the authority under paragraph (d). 
376.9      (b) The city has determined that: 
376.10     (1) total tax increments from the district, including 
376.11  unspent increments from previous years and increments 
376.12  transferred under paragraph (c), will be insufficient to pay the 
376.13  amounts due in a year on preexisting obligations; and 
376.14     (2) this insufficiency of increments resulted from the 
376.15  reduction in property tax class rates enacted in the 1997 and, 
376.16  1998, and 2001 legislative sessions. 
376.17     (c) The city has agreed to transfer any available 
376.18  increments from other tax increment financing districts in the 
376.19  city to pay the preexisting obligations of the district under 
376.20  section 469.1763, subdivision 6.  This requirement does not 
376.21  apply to any available increments of a qualified housing 
376.22  district, as defined in Minnesota Statutes 2000, section 
376.23  273.1399, subdivision 1.  
376.24     (d) If a tax increment financing district does not qualify 
376.25  under paragraphs (b) and (c), the governing body may elect to 
376.26  establish a special taxing district under this section.  If the 
376.27  city elects to exercise this authority, increments from the tax 
376.28  increment financing district and the proceeds of the tax imposed 
376.29  under this section may only be used to pay preexisting 
376.30  obligations and reasonable administrative expenses of the 
376.31  authority for the tax increment financing district.  The tax 
376.32  increment financing district must be decertified when all 
376.33  preexisting obligations have been paid.  
376.34     <b>[EFFECTIVE DATE.]</b> This section is effective for all tax 
376.35  increment financing districts, regardless of when the request 
376.36  for certification was made. 
377.1      Sec. 29.  Minnesota Statutes 2000, section 469.1791, 
377.2   subdivision 9, is amended to read: 
377.3      Subd. 9.  [LIMITS ON TAX.] (a) The maximum levy for any 
377.4   year may not exceed the least of: 
377.5      (1) the amount specified in the assessment agreement or 
377.6   development agreement; 
377.7      (2) the amount needed to pay preexisting obligations, less 
377.8   available increments including increments transferred from other 
377.9   districts; and 
377.10     (3) the amount of the general ad valorem tax that would 
377.11  have been paid by the captured net tax capacity of the tax 
377.12  increment financing district, if the property tax class rates 
377.13  for taxes payable in 1997 2001 were in effect, less the amount 
377.14  of the general ad valorem tax imposed for the payable year on 
377.15  the captured net tax capacity. 
377.16     (b) If the city uses the proceeds of a tax imposed under 
377.17  this section to pay preexisting obligations secured by 
377.18  increments from more than one tax increment financing district, 
377.19  the city must establish a special taxing district in each of the 
377.20  districts and impose a uniform rate upon all the districts.  The 
377.21  maximum limits under paragraph (a) must be calculated in 
377.22  aggregate for all of the affected districts.  
377.23     (c) If neither the assessment agreement nor the development 
377.24  agreement specify a tax amount but state an agreed market value 
377.25  for the property, the amount specified for purposes of paragraph 
377.26  (a), clause (1), is the market value of the property under the 
377.27  agreement multiplied by the class rate for taxes payable in 1997 
377.28  2001 and multiplied by the sum of the ad valorem tax rates for 
377.29  all the taxing jurisdictions. 
377.30     (d) If neither the assessment agreement nor the development 
377.31  agreement specify a tax amount or an agreed market value for the 
377.32  property, the amount for purposes of paragraph (a), clause (1), 
377.33  is the amount specified in the development agreement to be paid 
377.34  or provided by the development authority on behalf of 
377.35  development of the district, less the amount of increment paid 
377.36  or collected in prior years and estimated to be collected in the 
378.1   current year and any tax imposed under this section in prior 
378.2   years. 
378.3      (e) If neither the assessment agreement nor the development 
378.4   agreement specify a tax amount, an agreed market value for the 
378.5   property, or an amount to be paid or provided by the development 
378.6   authority on behalf of development of the district, the 
378.7   provisions of paragraph (a), clause (1), do not apply. 
378.8      <b>[EFFECTIVE DATE.]</b> This section is effective for all tax 
378.9   increment financing districts, regardless of when the request 
378.10  for certification was made. 
378.11     Sec. 30.  [469.1792] [CERTAIN DISTRICTS; LIMITATIONS.] 
378.12     Subdivision 1.  [TAX INCREMENT FINANCING PLAN MODIFICATION 
378.13  PROHIBITED.] Notwithstanding any other law to the contrary, no 
378.14  tax increment financing district the certification of which was 
378.15  requested before May 1, 1990, may modify its tax increment 
378.16  financing plan after April 30, 2001. 
378.17     Subd. 2.  [LIMITS ON USE OF TAX INCREMENT REVENUES.] (a) 
378.18  After April 30, 2001, tax increments from a tax increment 
378.19  financing district the certification of which was requested 
378.20  after July 31, 1979, and before May 1, 1990, may be expended on 
378.21  an activity as defined under section 469.1763, subdivision 2, 
378.22  only if one of the following occurs: 
378.23     (1) on or before April 30, 2002, the revenues are actually 
378.24  paid to a third party with respect to the activity; 
378.25     (2) bonds, the proceeds of which must be used to finance 
378.26  the activity, are issued and sold to a third party on or before 
378.27  April 30, 2002, the revenues are spent to repay the bonds, and 
378.28  the proceeds of the bonds either are, on the date of issuance, 
378.29  reasonably expected to be spent on or before April 30, 2002, or 
378.30  are deposited in a reasonably required reserve or replacement 
378.31  fund; 
378.32     (3) binding contracts with a third party are entered into 
378.33  for performance of the activity on or before April 30, 2002, and 
378.34  the revenues are spent under the contractual obligation; or 
378.35     (4) costs with respect to the activity are paid on or 
378.36  before April 30, 2002, and the revenues are spent to reimburse a 
379.1   party for payment of the costs, including interest on 
379.2   unreimbursed costs. 
379.3      (b) For purposes of this section, bonds include subsequent 
379.4   refunding bonds if the original refunded bonds meet the 
379.5   requirements of paragraph (a), clause (2). 
379.6      (c) Nothing in this section extends the duration of a 
379.7   district beyond the earlier of: 
379.8      (1) the duration limit of the district as established in 
379.9   its tax increment financing plan; or 
379.10     (2) the duration limit of the district as established by 
379.11  law. 
379.12     Subd. 3.  [USE OF REVENUES FOR DECERTIFICATION.] (a) For 
379.13  any tax increment financing district subject to subdivision 2, 
379.14  any revenues derived from tax increments paid by properties in 
379.15  the district that remain after the expenditures permitted under 
379.16  subdivision 2 must be used only to pay: 
379.17     (1) outstanding bonds, as defined in subdivision 2, 
379.18  paragraphs (a), clause (2), and (b); 
379.19     (2) contractual obligations, as defined in subdivision 2, 
379.20  paragraph (a), clauses (3) and (4); or 
379.21     (3) credit enhanced bonds as defined in section 469.1763, 
379.22  subdivision 5, to which the revenues derived from tax increments 
379.23  are pledged, but only to the extent that revenues of the 
379.24  district for which the credit enhanced bonds were issued are 
379.25  insufficient to pay the bonds and to the extent that the 
379.26  increments from the applicable pooling percent share for the 
379.27  district are insufficient. 
379.28     (b) When the outstanding bonds have been defeased and when 
379.29  sufficient money has been set aside to pay contractual 
379.30  obligations as defined in subdivision 2, paragraph (a), clauses 
379.31  (3) and (4), the district must be decertified and the pledge of 
379.32  tax increment discharged. 
379.33     Subd. 4.  [EXEMPTIONS.] The provisions of this section do 
379.34  not apply if any of the following apply: 
379.35     (1) the county board approves, by resolution, a request by 
379.36  the authority and municipality to exempt the district from this 
380.1   section by April 1, 2002; 
380.2      (2) the increments are spent to obtain matching federal 
380.3   funds for a portion of the project; 
380.4      (3) a special law applies to authorize the spending; or 
380.5      (4) a special law extended the duration of the district and 
380.6   the district is subject to section 469.1782, subdivision 1, and 
380.7   was approved under section 469.1782, subdivision 2. 
380.8      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
380.9   following final enactment for districts for which the request 
380.10  for certification was made before May 1, 1990. 
380.11     Sec. 31.  [469.1793] [TIF CONSULTANTS.] 
380.12     Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
380.13  section, the definitions under section 469.174 apply and the 
380.14  following terms have the meanings given. 
380.15     (b) "Act" means sections 469.174 to 469.1791. 
380.16     (c) "Commissioner" means the commissioner of revenue. 
380.17     (d) "Consultant" means an individual, partnership, 
380.18  association, private corporation, or any other legal entity that 
380.19  provides consulting services. 
380.20     (e) "Consulting services" include the rendering of 
380.21  professional opinion, advice, or analysis regarding application 
380.22  of the act for a municipality or authority, including legal, 
380.23  accounting, and fiscal services. 
380.24     Subd. 2.  [REGISTRATION.] (a) All consultants who provide 
380.25  consulting services to municipalities or development authorities 
380.26  must register with the commissioner.  Registrations must be 
380.27  annually renewed.  In order to register, consultants must meet 
380.28  and demonstrate compliance with the following criteria: 
380.29     (1) provide a signed statement agreeing to abide by the 
380.30  act; 
380.31     (2) provide a signed statement agreeing to make available 
380.32  for inspection any records requested by the commissioner, state 
380.33  auditor, or commissioner of commerce for field or financial 
380.34  audits under the scope of the act; 
380.35     (3) certify knowledge of the requirements of the act and 
380.36  guidelines published by the state auditor; 
381.1      (4) obtain and maintain professional liability coverage; 
381.2   and 
381.3      (5) agree to submit to the commissioner a certificate or 
381.4   certificates verifying the existence of the required insurance 
381.5   coverage. 
381.6      (b) The commissioner shall maintain a list of all 
381.7   registered consultants. 
381.8      (c) All consulting services must be performed by registered 
381.9   consultants.  A municipality or authority may not contract for 
381.10  consulting services other than with registered consultants.  
381.11  This requirement does not apply to employees of the municipality 
381.12  or development authority.  Reimbursement for services performed 
381.13  by an unregistered consultant does not qualify for payment using 
381.14  tax increments.  Consulting services performed by a consultant 
381.15  before the consultant's removal from the registration list may 
381.16  be paid with tax increments.  A municipality or development 
381.17  authority may not enter into a contract or other arrangement 
381.18  with a consultant that provides that the consultant's 
381.19  compensation is contingent upon establishment of a tax increment 
381.20  district or completion of a financing arrangement to be paid 
381.21  with tax increments or that provides compensation to the 
381.22  consultant is based on a percentage of increments or eligible 
381.23  costs of a tax increment financing district. 
381.24     (d) If the information in an application for registration 
381.25  becomes inaccurate or incomplete in any material respect, the 
381.26  registered consultant must promptly file a corrected application 
381.27  with the commissioner. 
381.28     (e) Registration is effective 30 days after a complete 
381.29  application is received by the commissioner. 
381.30     (f) Registration under this section remains in force until 
381.31  voluntarily terminated by the registrant, until the registrant 
381.32  fails to renew, or until suspended or revoked by the 
381.33  commissioner of revenue.  All registrants must comply with 
381.34  registration criteria under this subdivision. 
381.35     (g) The fee for filing an application for registration 
381.36  under this section is $100.  The fee for filing an application 
382.1   for renewal of registration under this section is $50.  The 
382.2   commissioner shall deposit the fees in the general fund. 
382.3      Subd. 3.  [CONSULTANT AND CONTRACTOR SANCTIONS.] (a) The 
382.4   commissioner of commerce may, by order, revoke a registration, 
382.5   censure or suspend a registrant and require payment of all costs 
382.6   of proceedings resulting in an action instituted under this 
382.7   section and impose a civil penalty of not more than $10,000 if 
382.8   the commissioner of commerce finds: 
382.9      (1) that the order is in the public interest; and 
382.10     (2) that the registrant or, in the case of a registrant 
382.11  that is not a natural person, any partner, officer, or director, 
382.12  any person occupying a similar status or performing similar 
382.13  functions, or any person directly or indirectly controlling the 
382.14  registrant committed a violation enumerated in paragraph (b). 
382.15     (b) A consultant violates the provisions of this section if 
382.16  the consultant: 
382.17     (1) has engaged in conduct that departs from or fails to 
382.18  conform to the minimal standards of acceptable and prevailing 
382.19  legal, accounting, or fiscal practices under the act within the 
382.20  reasonable control of the consultant; 
382.21     (2) has committed fraud, embezzlement, theft, forgery, 
382.22  bribery, falsified or destroyed records, made false statements, 
382.23  received stolen property, made false claims, or obstructed 
382.24  justice; 
382.25     (3) is the subject of an order revoking, suspending, 
382.26  restricting, limiting, or imposing other disciplinary action 
382.27  against the consultant's license or certification in this or 
382.28  another state or jurisdiction; 
382.29     (4) has failed to comply with any of the ongoing 
382.30  obligations for registration; 
382.31     (5) has failed to comply with any provision or order under 
382.32  the act or chapter 45; 
382.33     (6) has provided consulting services without having an 
382.34  accurate and complete registration on file with the 
382.35  commissioner; 
382.36     (7) has been shown to be incompetent, untrustworthy, or 
383.1   financially irresponsible; 
383.2      (8) has made or assisted another in making any material 
383.3   misrepresentation or omission to the governing body or staff of 
383.4   the authority or the municipality or to the commissioner or upon 
383.5   reasonable request has withheld or concealed information from, 
383.6   or refused to furnish information to, the authority, 
383.7   municipality, commissioner, or the commissioner of commerce; or 
383.8      (9) has entered into a compensation arrangement for 
383.9   consulting services that is contingent upon establishment of a 
383.10  tax increment financing district or completion of a financing 
383.11  arrangement to be paid with tax increments or that provides 
383.12  compensation to the consultant based on a percentage of 
383.13  increments or eligible costs of a tax increment financing 
383.14  district. 
383.15     Subd. 4.  [ORDERS.] The commissioner of commerce may issue 
383.16  an order requiring a registrant or applicant for registration to 
383.17  show cause why the registration should not be revoked or 
383.18  suspended, the registrant censured, the application denied, or 
383.19  other sanction imposed under this section.  The order must be 
383.20  calculated to give reasonable notice of the time and place for 
383.21  hearing on the matter and must state the reasons for the entry 
383.22  of the order.  The commissioner of commerce may, by order, 
383.23  summarily suspend a registration pending final determination of 
383.24  an order to show cause.  A hearing on the merits must be held 
383.25  within 30 days of the issuance of the order of summary 
383.26  suspension.  All hearings must be conducted under chapter 14.  
383.27  After the hearing, the commissioner of commerce shall enter an 
383.28  order disposing of the matter as the facts require.  If the 
383.29  registrant or applicant for registration fails to appear at a 
383.30  hearing after having been duly notified of it, the person is in 
383.31  default and the proceeding may be determined against the 
383.32  registrant or applicant for registration upon consideration of 
383.33  the order to show cause, the allegations of which may be 
383.34  considered to be true. 
383.35     <b>[EFFECTIVE DATE.]</b> This section is effective for consulting 
383.36  services provided after July 1, 2002. 
384.1      Sec. 32.  Minnesota Statutes 2000, section 469.1812, 
384.2   subdivision 2, is amended to read: 
384.3      Subd. 2.  [GOVERNING BODY.] "Governing body" means, for a 
384.4   city, the city council; for a school district, the school board; 
384.5   for a county, the county board; and for a town, the annual 
384.6   meeting of the town board of supervisors. 
384.7      <b>[EFFECTIVE DATE.]</b> This section is effective retroactive to 
384.8   May 26, 1999. 
384.9      Sec. 33.  Minnesota Statutes 2000, section 469.1813, 
384.10  subdivision 4, is amended to read: 
384.11     Subd. 4.  [PROPERTY LOCATED IN TAX INCREMENT FINANCING 
384.12  DISTRICTS.] The governing body of a political subdivision may 
384.13  not enter into a property tax abatement agreement under sections 
384.14  469.1812 to 469.1815 that provides for abatement of taxes on a 
384.15  parcel, if the abatement will occur either: 
384.16     (1) while the parcel is located in a tax increment 
384.17  financing district; or 
384.18     (2) within two years after the parcel was eliminated from a 
384.19  tax increment financing district, other than by decertification 
384.20  of the entire district. 
384.21     <b>[EFFECTIVE DATE.]</b> This section is effective for abatement 
384.22  resolutions approved after June 30, 2001. 
384.23     Sec. 34.  Minnesota Statutes 2000, section 469.1813, 
384.24  subdivision 6, is amended to read: 
384.25     Subd. 6.  [DURATION LIMIT.] (a) A political subdivision may 
384.26  grant an abatement for a period no longer than ten years, except 
384.27  as provided under paragraph (b).  The subdivision may specify in 
384.28  the abatement resolution a shorter duration.  If the resolution 
384.29  does not specify a period of time, the abatement is for eight 
384.30  years.  If an abatement has been granted to a parcel of property 
384.31  and the period of the abatement has expired, the political 
384.32  subdivision that granted the abatement may not grant another 
384.33  abatement for eight years after the expiration of the first 
384.34  abatement.  This prohibition does not apply to improvements 
384.35  added after and not subject to the first abatement. 
384.36     (b) A political subdivision proposing to abate taxes for a 
385.1   parcel may request, in writing, that the other political 
385.2   subdivisions in which the parcel is located grant an abatement 
385.3   for the property.  If one of the other political subdivisions 
385.4   declines, in writing, to grant an abatement or if 90 days pass 
385.5   after receipt of the request to grant an abatement without a 
385.6   written response from one of the political subdivisions, the 
385.7   duration limit for an abatement for the parcel by the requesting 
385.8   political subdivision and any other participating political 
385.9   subdivision is increased to 15 years.  If the political 
385.10  subdivision which declined to grant an abatement later grants an 
385.11  abatement for the parcel, the 15-year duration limit is reduced 
385.12  by one year for each year that the declining political 
385.13  subdivision grants an abatement for the parcel during the period 
385.14  of the abatement granted by the requesting political 
385.15  subdivision.  The duration limit may not be reduced below the 
385.16  limit under paragraph (a).  
385.17     <b>[EFFECTIVE DATE.]</b> This section is effective for abatements 
385.18  approved after the day following final enactment. 
385.19     Sec. 35.  Minnesota Statutes 2000, section 475.58, 
385.20  subdivision 1, is amended to read: 
385.21     Subdivision 1.  [APPROVAL BY ELECTORS; EXCEPTIONS.] 
385.22  Obligations authorized by law or charter may be issued by any 
385.23  municipality upon obtaining the approval of a majority of the 
385.24  electors voting on the question of issuing the obligations, but 
385.25  an election shall not be required to authorize obligations 
385.26  issued: 
385.27     (1) to pay any unpaid judgment against the municipality; 
385.28     (2) for refunding obligations; 
385.29     (3) for an improvement or improvement program, which 
385.30  obligation is payable wholly or partly from the proceeds of 
385.31  special assessments levied upon property specially benefited by 
385.32  the improvement or by an improvement within the improvement 
385.33  program, or of taxes levied upon the increased value of property 
385.34  within a district for the development of which the improvement 
385.35  is undertaken, including obligations which are the general 
385.36  obligations of the municipality, if the municipality is entitled 
386.1   to reimbursement in whole or in part from the proceeds of such 
386.2   special assessments or taxes and not less than 20 percent of the 
386.3   cost of the improvement or the improvement program is to be 
386.4   assessed against benefited property or is to be paid from the 
386.5   proceeds of federal grant funds or a combination thereof, or is 
386.6   estimated to be received from such taxes within the district; 
386.7      (4) payable wholly from the income of revenue producing 
386.8   conveniences; 
386.9      (5) under the provisions of a home rule charter which 
386.10  permits the issuance of obligations of the municipality without 
386.11  election; 
386.12     (6) under the provisions of a law which permits the 
386.13  issuance of obligations of a municipality without an election; 
386.14     (7) to fund pension or retirement fund liabilities pursuant 
386.15  to section 475.52, subdivision 6; 
386.16     (8) under a capital improvement plan under section 373.40; 
386.17     (9) to fund facilities as provided in subdivision 3; and 
386.18     (10) under sections 469.1813 to 469.1815 (property tax 
386.19  abatement authority bonds), if the proceeds of the bonds are not 
386.20  used for a purpose prohibited under section 469.176, subdivision 
386.21  4g, paragraph (b). 
386.22     <b>[EFFECTIVE DATE.]</b> This section is effective for bonds 
386.23  issued or sold after the day following final enactment. 
386.24     Sec. 36.  Laws 1997, chapter 231, article 10, section 25, 
386.25  is amended to read: 
386.26     Sec. 25.  [EFFECTIVE DATE.] 
386.27     Sections 1, 3 to 6, 7, and 10, are effective for districts 
386.28  for which the requests for certification are made after June 30, 
386.29  1997. 
386.30     Section 2, clauses clause (1) and (4), are is effective for 
386.31  all districts for which regardless of when the requests for 
386.32  certification were made after July 31, 1979, and for payments 
386.33  and investment earnings received after July 1, 1997 and 
386.34  regardless of when the increments were received.  Section 2, 
386.35  clauses (2) and (3), are effective for districts for which the 
386.36  request for certification was made after June 30, 1982, and 
387.1   proceeds from sales and leases of properties purchased by the 
387.2   authority after June 30, 1997, and repayments of advances and 
387.3   loans that were made after June 30, 1997.  Section 2, clause 
387.4   (4), is effective for districts for which the requests for 
387.5   certification were made (i) after July 31, 1979, and for 
387.6   investment earnings received after July 1, 1997, and (ii) before 
387.7   August 1, 1979, and for interest and investment earnings 
387.8   received after December 31, 2001. 
387.9      Sections 8 and 9 apply to all tax increment districts, 
387.10  whenever certified, insofar as the underlying law applies to 
387.11  them, and any uses of tax increment expended prior to the date 
387.12  of enactment of this act which are in compliance with the 
387.13  provisions of those sections are deemed valid. 
387.14     Sections 12 and 13 are effective on the day the chief 
387.15  clerical officer of the city of Columbia Heights complies with 
387.16  Minnesota Statutes, sections 645.021, subdivision 3. 
387.17     Sections 17 to 20 are effective the day following final 
387.18  enactment and upon compliance by the governing body with 
387.19  Minnesota Statutes, section 645.021, subdivision 3. 
387.20     Section 24 is effective the day following final enactment. 
387.21     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
387.22  following final enactment. 
387.23     Sec. 37.  Laws 2000, chapter 490, article 11, section 26, 
387.24  the effective date, is amended to read: 
387.25     <b>EFFECTIVE DATE:</b>  This section is effective for increments 
387.26  spent after July 1, 2000, from districts for which certification 
387.27  was requested after May 1, 1990 June 30, 1982. 
387.28     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
387.29  following final enactment. 
387.30     Sec. 38.  [HOLLMAN DECREE HOUSING.] 
387.31     To implement a federal court order or decree relating to 
387.32  the provision of low-rent public housing finance, in whole or in 
387.33  part, with federal financial assistance under section 5 of the 
387.34  United States Housing Act, or any successor legislation, the 
387.35  Minneapolis public housing authority or the metropolitan 
387.36  council, acting under the powers of Minnesota Statutes, sections 
388.1   469.001 to 469.047, may enter a cooperation agreement with the 
388.2   governing body of any municipality or county within the 
388.3   metropolitan area, as defined in Minnesota Statutes, section 
388.4   473.121, subdivision 2, to provide exemption from all real and 
388.5   personal taxes levied or imposed by the state, city, county, or 
388.6   other political subdivision, for which the Minneapolis public 
388.7   housing authority or the metropolitan council shall make, or 
388.8   cause to be made, payments in lieu of taxes as provided under 
388.9   Minnesota Statutes, section 469.040.  This exemption and 
388.10  obligation to make payments in lieu of taxes continues until the 
388.11  housing is no longer subject to the provisions of section 5 of 
388.12  the United States Housing Act, or any successor legislation. 
388.13     <b>[EFFECTIVE DATE.]</b> This section is effective with respect to 
388.14  any cooperation agreement entered into on or after November 1, 
388.15  1997.  Any owner of low-rent public housing acquired and 
388.16  renovated or constructed under a cooperation agreement under 
388.17  this section may apply for abatement of the real or personal 
388.18  property taxes under Minnesota Statutes, section 375.192, 
388.19  notwithstanding the time limitation for filing application under 
388.20  section 375.192.  This section applies in counties of Anoka, 
388.21  Carver, Dakota, Hennepin, Ramsey, Scott, and Washington. 
388.22     Sec. 39.  [AURORA; TAX INCREMENT DISTRICT EXTENSION.] 
388.23     Subdivision 1.  [DISTRICT EXTENSION.] Notwithstanding the 
388.24  provisions of Minnesota Statutes, section 469.176, subdivision 
388.25  1c, upon approval of the governing body of the city of Aurora by 
388.26  resolution, the housing and redevelopment authority in and for 
388.27  the city of Aurora may extend to December 31, 2009, the duration 
388.28  of its downtown tax increment financing district originally 
388.29  certified in 1978.  
388.30     Subd. 2.  [SPECIAL RULES.] Increments permitted to be paid 
388.31  to and retained by the authority by subdivision 1 may only be 
388.32  used to: 
388.33     (1) pay or defease bonds or other contractual obligations; 
388.34     (2) fund public redevelopment costs within the 
388.35  redevelopment project or costs provided for in the tax increment 
388.36  financing plan; or 
389.1      (3) pay or defease bonds issued to refund the bonds.  
389.2      <b>[EFFECTIVE DATE.]</b> This section is effective the day after 
389.3   compliance with Minnesota Statutes, sections 469.1782, 
389.4   subdivision 2, and 645.021, subdivision 2. 
389.5      Sec. 40.  [GAYLORD; TIF DISTRICT EXTENSION.] 
389.6      Notwithstanding the provisions of Minnesota Statutes, 
389.7   section 469.176, subdivision 1c, or any other law, the city of 
389.8   Gaylord may, by resolution, extend the duration of a tax 
389.9   increment financing district originally certified in 1978.  If 
389.10  the city extends the district, the district is deemed to 
389.11  continue to be in effect, beginning for taxes payable in 2002, 
389.12  and notwithstanding the decertification of the district for 
389.13  taxes payable in 2001.  The city may not extend the duration 
389.14  beyond December 31, 2008.  Notwithstanding the provisions of 
389.15  Minnesota Statutes, section 469.176, subdivision 1c, the city 
389.16  may spend increments from the district on project costs other 
389.17  than bonds issued before April 1, 1990. 
389.18     <b>[EFFECTIVE DATE.]</b> This section is effective upon completion 
389.19  with the requirements of Minnesota Statutes, sections 469.1782 
389.20  and 645.021. 
389.21     Sec. 41.  [CITY OF NORTH ST. PAUL; TIF GRANT.] 
389.22     Notwithstanding Laws 1997, chapter 231, article 1, sections 
389.23  19 and 22, as amended by Laws 1997, First Special Session 
389.24  chapter 5, section 36, Laws 1999, chapter 243, article 10, 
389.25  sections 16, 17, 27, and 28, and Laws 2000, chapter 490, article 
389.26  11, section 36, the commissioner of revenue shall pay to the 
389.27  city of North St. Paul the amount of $12,800 as a tax increment 
389.28  financing grant provided for under those laws.  This amount 
389.29  compensates the city for the aggregate amount of the calendar 
389.30  year 1999 deficits in the tax increment financing districts 
389.31  within the city, as determined under the laws cited in this 
389.32  section using the accrual method of accounting.  The amount 
389.33  authorized to be paid under this section for the calendar year 
389.34  1999 tax increment financing deficits may not also be paid under 
389.35  any other provision of law.  The commissioner shall pay the 
389.36  amount authorized under this section to the city by warrant 
390.1   issued on or before 60 days after the enactment of this 
390.2   section.  The warrant must be drawn on the state treasury from 
390.3   the appropriations made in Laws 1997, chapter 231, article 1, 
390.4   section 19, and Laws 1999, chapter 243, article 10, section 27. 
390.5      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
390.6   following final enactment without local approval. 
390.7      Sec. 42.  [CITY OF PARK RAPIDS; EXTENSION OF TIME FOR 
390.8   ACTIVITY IN A TAX INCREMENT FINANCING DISTRICT.] 
390.9      The requirement in Minnesota Statutes, section 469.1763, 
390.10  subdivision 3, that activities must be undertaken within a 
390.11  five-year period from the date of certification of a tax 
390.12  increment financing district must be considered to be met in the 
390.13  case of redevelopment district No. 4 in the city of Park Rapids 
390.14  if the activities are undertaken within six years from the date 
390.15  of certification of the district. 
390.16     <b>[EFFECTIVE DATE.]</b> This section is effective upon approval 
390.17  by the governing body of the city of Park Rapids and compliance 
390.18  with Minnesota Statutes, section 645.021, subdivision 3. 
390.19     Sec. 43.  [ROBBINSDALE; TAX INCREMENT FINANCING DISTRICT.] 
390.20     Notwithstanding the provisions of Minnesota Statutes, 
390.21  section 469.176, subdivision 1c, tax increment may be expended 
390.22  until June 30, 2001, for project costs other than bonds 
390.23  outstanding on April 1, 1990, for the tax increment financing 
390.24  district designated as Project 4 in the city of Robbinsdale.  
390.25     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
390.26  following final enactment, and after approval by the governing 
390.27  body of the city of Robbinsdale and compliance with Minnesota 
390.28  Statutes, section 645.021, subdivision 3. 
390.29     Sec. 44.  [CITY OF LUVERNE; BORDER CITY DEVELOPMENT ZONES.] 
390.30     Subdivision 1.  [AUTHORIZATION.] The governing body of the 
390.31  city of Luverne may designate between one and six areas of the 
390.32  city as border city development zones.  The total area of the 
390.33  zones may not exceed 100 acres. 
390.34     Subd. 2.  [APPLICATION OF GENERAL LAW.] (a) The provisions 
390.35  of Minnesota Statutes, sections 469.1731 to 469.1735, apply to 
390.36  the border city development zones designated under this 
391.1   section.  The governing body of the city may exercise the powers 
391.2   granted under Minnesota Statutes, sections 469.1731 to 469.1735, 
391.3   including powers that apply outside of the zones. 
391.4      (b) The allocation under subdivision 3 for purposes of 
391.5   Minnesota Statutes, section 469.1735, subdivision 2, and the 
391.6   necessary amount of the allocation is appropriated to the 
391.7   commissioner of revenue. 
391.8      Subd. 3.  [ALLOCATION OF STATE TAX REDUCTIONS.] (a) The 
391.9   cumulative total amount of tax reductions for all years of the 
391.10  program under Minnesota Statutes, sections 469.1731 to 469.1735, 
391.11  is limited to $183,000. 
391.12     (b) This allocation may be used for tax reductions provided 
391.13  in Minnesota Statutes, section 469.1732 or 469.1734, or for 
391.14  reimbursements under Minnesota Statutes, section 469.1735, 
391.15  subdivision 3, but only if the governing body of the city of 
391.16  Luverne determines that the tax reduction or offset is necessary 
391.17  to enable a business to expand within a city or to attract a 
391.18  business to the city. 
391.19     (c) The commissioner of revenue may waive the limit under 
391.20  this subdivision using the same rules and standards provided in 
391.21  Minnesota Statutes, section 469.169, subdivision 12, paragraph 
391.22  (b). 
391.23     <b>[EFFECTIVE DATE.]</b> This section is effective upon compliance 
391.24  by the governing body of the city of Luverne with the 
391.25  requirements of Minnesota Statutes, section 645.021. 
391.26     Sec. 45.  [REPEALER.] 
391.27     Minnesota Statutes 2000, sections 273.1399, and 469.1782, 
391.28  subdivision 1, are repealed. 
391.29     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2002.
391.30                             ARTICLE 13
391.31                       STREAMLINED SALES TAX
391.32     Section 1.  [295.60] [SPECIAL FUR CLOTHING TAX.] 
391.33     Subdivision 1.  [IMPOSITION.] If clothing made of fur is 
391.34  not subject to the sales tax under chapter 297A, a tax is 
391.35  imposed on each furrier equal to 6.5 percent of gross revenues 
391.36  from the sale of clothing made from fur made in Minnesota during 
392.1   the calendar year. 
392.2      Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
392.3   the following terms have the meanings given. 
392.4      (b) "Commissioner" means the commissioner of revenue. 
392.5      (c) "Furrier" means a retailer that sells clothing made of 
392.6   fur. 
392.7      (d) "Clothing made of fur" means articles of clothing made 
392.8   of fur on the hide or pelt, and articles of clothing of which 
392.9   such fur is the component material of chief value, but only if 
392.10  such value is more than three times the value of the next most 
392.11  valuable material.  
392.12     Subd. 3.  [PAYMENT.] (a) Each furrier shall make estimated 
392.13  payments of the taxes for the calendar year in quarterly 
392.14  installments to the commissioner by April 15, July 15, October 
392.15  15, and January 15 of the following calendar year. 
392.16     (b) Estimated tax payments are not required if: 
392.17     (1) the tax for the current calendar year is less than 
392.18  $500; or 
392.19     (2) the tax for the previous calendar year is less than 
392.20  $500, if the taxpayer had a tax liability and was doing business 
392.21  the entire year. 
392.22     (c) Underpayment of estimated installments bear interest at 
392.23  the rate specified in section 270.75, from the due date of the 
392.24  payment until paid or until the due date of the annual return, 
392.25  whichever comes first.  An underpayment of an estimated 
392.26  installment is the difference between the amount paid and the 
392.27  lesser of (1) 90 percent of one-quarter of the tax for the 
392.28  calendar year or (2) one-quarter of the total tax for the 
392.29  previous calendar year if the taxpayer had a tax liability and 
392.30  was doing business the entire year. 
392.31     Subd. 4.  [ELECTRONIC FUNDS TRANSFER PAYMENTS.] A taxpayer 
392.32  with an aggregate tax liability of $120,000 or more during a 
392.33  fiscal year ending June 30 must remit all liabilities by means 
392.34  of a funds transfer as defined in section 336.4A-104, paragraph 
392.35  (a), in the subsequent calendar year.  The funds transfer 
392.36  payment date, as defined in section 336.4A-401, is on or before 
393.1   the date the tax is due.  If the date the tax is due is not a 
393.2   funds-transfer business day, as defined in section 336.4A-105, 
393.3   paragraph (a), clause (4), the payment date is on or before the 
393.4   first funds-transfer business day after the date the tax is due. 
393.5      Subd. 5.  [ANNUAL RETURN.] The taxpayer must file an annual 
393.6   return reconciling the estimated payments by March 15 of the 
393.7   following calendar year. 
393.8      Subd. 6.  [FORM OF RETURNS.] The estimated payments and 
393.9   annual return must contain the information and be in the form 
393.10  prescribed by the commissioner. 
393.11     Subd. 7.  [APPLICATION OF OTHER CHAPTERS.] Unless 
393.12  specifically provided otherwise by this section, the 
393.13  enforcement, interest, and penalty provisions under chapter 294, 
393.14  appeal provisions in sections 289A.43 and 289A.65, criminal 
393.15  penalties in section 289A.63, refunds provisions in section 
393.16  289A.50, and collection and rulemaking provisions under chapter 
393.17  270, apply to a liability for the taxes imposed under this 
393.18  section. 
393.19     Subd. 8.  [INTEREST ON OVERPAYMENTS.] Interest must be paid 
393.20  on an overpayment refunded or credited to the taxpayer from the 
393.21  date of payment of the tax until the date the refund is paid or 
393.22  credited.  For purposes of this subdivision, the date of payment 
393.23  is the due date of the return or the date of actual payment of 
393.24  the tax, whichever is later. 
393.25     Subd. 9.  [DEPOSIT OF REVENUES.] The commissioner shall 
393.26  deposit all revenues, including penalties and interest, derived 
393.27  from the tax imposed by this section in the general fund. 
393.28     <b>[EFFECTIVE DATE.]</b> This section is effective for sales made 
393.29  after December 31, 2001. 
393.30     Sec. 2.  Minnesota Statutes 2000, section 297A.61, 
393.31  subdivision 3, is amended to read: 
393.32     Subd. 3.  [SALE AND PURCHASE.] (a) "Sale" and "purchase" 
393.33  include, but are not limited to, each of the transactions listed 
393.34  in this subdivision. 
393.35     (b) Sale and purchase include any transfer of title or 
393.36  possession, or both, of tangible personal property, whether 
394.1   absolutely or conditionally, and the leasing of or the granting 
394.2   of a license to use or consume, for a consideration, tangible 
394.3   personal property, other than a manufactured home used for 
394.4   residential purposes for a continuous period of 30 days or more. 
394.5      (c) Sale and purchase include the production, fabrication, 
394.6   printing, or processing of tangible personal property for a 
394.7   consideration for consumers who furnish either directly or 
394.8   indirectly the materials used in the production, fabrication, 
394.9   printing, or processing. 
394.10     (d) Sale and purchase include the furnishing, preparing, or 
394.11  serving for a consideration of food or drinks.  Notwithstanding 
394.12  section 297A.67, subdivision 2, taxable food or drinks 
394.13  include includes, but are is not limited to, the following: 
394.14     (1) prepared food or drinks sold by the retailer for 
394.15  immediate consumption on the retailer's premises.  Food and 
394.16  drinks sold within a building or grounds that require an 
394.17  admission charge for entrance are presumed to be sold for 
394.18  consumption on the premises; 
394.19     (2) food or drinks prepared by the retailer for immediate 
394.20  consumption either on or off the retailer's premises.  For 
394.21  purposes of this subdivision, "food or drinks prepared for 
394.22  immediate consumption" means any food product upon which an act 
394.23  of preparation including, but not limited to, cooking, mixing, 
394.24  sandwich making, blending, heating, or pouring has been 
394.25  performed by the retailer so the food product may be immediately 
394.26  consumed by the purchaser; 
394.27     (3) ice cream, ice milk, frozen yogurt products, or frozen 
394.28  novelties sold in single or individual servings including, but 
394.29  not limited to, cones, sundaes, and snow cones; 
394.30     (4) (2) soft drinks and other beverages, including all 
394.31  carbonated and noncarbonated beverages or drinks sold in liquid 
394.32  form, but not including beverages or drinks which contain milk 
394.33  or milk products, beverages or drinks containing 15 or more 
394.34  percent fruit juice, and noncarbonated and noneffervescent 
394.35  bottled water sold in individual containers of one-half gallon 
394.36  or more in size; 
395.1      (5) gum, (3) candy, and candy products; and 
395.2      (6) ice; 
395.3      (7) (4) all food sold from through vending machines;.  
395.4      (8) all food for immediate consumption sold from concession 
395.5   stands and vehicles; 
395.6      (9) party trays; 
395.7      (10) all meals and single servings of packaged snack food 
395.8   sold in restaurants and bars; and 
395.9      (11) bakery products that are: 
395.10     (i) prepared by the retailer for consumption on the 
395.11  retailer's premises; 
395.12     (ii) sold at a place that charges admission; 
395.13     (iii) sold from vending machines; or 
395.14     (iv) sold in single or individual servings from concession 
395.15  stands, vehicles, bars, and restaurants.  
395.16     For purposes of this paragraph, "single or individual 
395.17  servings" does not include products when sold in bulk containers 
395.18  or bulk packaging.  
395.19     For purposes of this paragraph, "premises" means the total 
395.20  space and facilities, including buildings, grounds, and parking 
395.21  lots that are made available or that are available for use by 
395.22  the retailer or customer for the purpose of sale or consumption 
395.23  of prepared food and drinks.  The premises of a caterer is the 
395.24  place where the catered food or drinks are served. 
395.25     (e) A sale and a purchase includes the furnishing for a 
395.26  consideration of electricity, gas, water, or steam for use or 
395.27  consumption within this state or local exchange telephone 
395.28  service, intrastate toll service, and interstate toll service, 
395.29  if that service originates from and is charged to a telephone 
395.30  located in this state.  Telephone service includes (1) paging 
395.31  services, and (2) private communication service, as defined in 
395.32  United States Code, title 26, section 4252(d), except for 
395.33  private communication service purchased by an agent acting on 
395.34  behalf of the state lottery.  Telephone service does not include 
395.35  services purchased with a prepaid telephone calling card.  The 
395.36  furnishing for a consideration of access to telephone services 
396.1   by a hotel to its guests is a sale.  The furnishing for a 
396.2   consideration of items listed in this paragraph by a municipal 
396.3   corporation is a sale. 
396.4      (f) A sale and a purchase includes the transfer for a 
396.5   consideration of computer software.  
396.6      (g) A sale and a purchase includes the furnishing for a 
396.7   consideration of taxable services as defined in subdivision 16. 
396.8      (h) A sale and a purchase includes the furnishing for a 
396.9   consideration of tangible personal property or taxable services 
396.10  by the United States or any of its agencies or 
396.11  instrumentalities, or the state of Minnesota, its agencies, 
396.12  instrumentalities, or political subdivisions. 
396.13     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
396.14  purchases occurring after December 31, 2001. 
396.15     Sec. 3.  Minnesota Statutes 2000, section 297A.61, 
396.16  subdivision 4, is amended to read: 
396.17     Subd. 4.  [RETAIL SALE.] (a) A "retail sale" means a any 
396.18  sale, lease, or rental for any purpose other than resale in the 
396.19  regular course of business, sublease, or subrent.  
396.20     (b) A sale of property used by the owner only by leasing it 
396.21  to others or by holding it in an effort to lease it, and put to 
396.22  no use by the owner other than resale after the lease or effort 
396.23  to lease, is a sale of property for resale.  
396.24     (c) A sale of master computer software that is purchased 
396.25  and used to make copies for sale or lease is a sale of property 
396.26  for resale.  
396.27     (d) A sale of building materials, supplies, and equipment 
396.28  to owners, contractors, subcontractors, or builders for the 
396.29  erection of buildings or the alteration, repair, or improvement 
396.30  of real property is a retail sale in whatever quantity sold, 
396.31  whether the sale is for purposes of resale in the form of real 
396.32  property or otherwise.  
396.33     (e) A sale of carpeting, linoleum, or similar floor 
396.34  covering to a person who provides for installation of the floor 
396.35  covering is a retail sale and not a sale for resale since a sale 
396.36  of floor covering which includes installation is a contract for 
397.1   the improvement of real property. 
397.2      (f) A sale of shrubbery, plants, sod, trees, and similar 
397.3   items to a person who provides for installation of the items is 
397.4   a retail sale and not a sale for resale since a sale of 
397.5   shrubbery, plants, sod, trees, and similar items that includes 
397.6   installation is a contract for the improvement of real property. 
397.7      (g) A sale of tangible personal property that is awarded as 
397.8   prizes is a retail sale and is not considered a sale of property 
397.9   for resale. 
397.10     (h) A sale of tangible personal property utilized or 
397.11  employed in the furnishing or providing of services under 
397.12  subdivision 16, paragraph (b), including, but not limited to, 
397.13  property given as promotional items, is a retail sale and is not 
397.14  considered a sale of property for resale. 
397.15     (i) A sale of tangible personal property used in conducting 
397.16  lawful gambling under chapter 349 or the state lottery under 
397.17  chapter 349A, including, but not limited to, property given as 
397.18  promotional items, is a retail sale and is not considered a sale 
397.19  of property for resale. 
397.20     (j) A sale of machines, equipment, or devices that are used 
397.21  to furnish, provide, or dispense goods or services, including, 
397.22  but not limited to, coin-operated devices, is a retail sale and 
397.23  is not considered a sale of property for resale. 
397.24     (k) In the case of a lease, a retail sale occurs when an 
397.25  obligation to make a lease payment becomes due under the terms 
397.26  of the agreement or the trade practices of the lessor. 
397.27     (l) In the case of a conditional sales contract, a retail 
397.28  sale occurs upon the transfer of title or possession of the 
397.29  tangible personal property. 
397.30     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2002.
397.31     Sec. 4.  Minnesota Statutes 2000, section 297A.61, 
397.32  subdivision 7, is amended to read: 
397.33     Subd. 7.  [SALES PRICE.] (a) "Sales price" means the total 
397.34  consideration for a retail sale, valued in money, whether paid 
397.35  in money or by barter or exchange. the measure subject to sales 
397.36  tax, and means the total amount of consideration, including 
398.1   cash, credit, property, and services, for which personal 
398.2   property or services are sold, leased, or rented, valued in 
398.3   money, whether received in money or otherwise, without any 
398.4   deduction for the following: 
398.5      (1) the seller's cost of the property sold; 
398.6      (2) the cost of materials used, labor or service cost, 
398.7   interest, losses, all costs of transportation to the seller, all 
398.8   taxes imposed on the seller, and any other expenses of the 
398.9   seller; 
398.10     (3) charges by the seller for any services necessary to 
398.11  complete the sale, other than delivery and installation charges; 
398.12  and 
398.13     (4) the value of exempt property given to the purchaser 
398.14  when taxable and exempt personal property have been bundled 
398.15  together and sold by the seller as a single product or piece of 
398.16  merchandise. 
398.17     (b) Sales price includes: 
398.18     (1) the cost of the property sold, cost of materials used, 
398.19  labor or service cost, interest, or discount allowed after the 
398.20  sale is consummated; 
398.21     (2) the cost of transportation incurred prior to the time 
398.22  of sale; 
398.23     (3) any amount for which credit is given by the seller to 
398.24  the purchaser; 
398.25     (4) charges for services that are part of a sale; or 
398.26     (5) any other expense whatsoever. 
398.27     (c) (b) Sales price does not include the following: 
398.28     (1) an amount allowed as credit for tangible personal 
398.29  property taken in trade for resale discounts, including cash, 
398.30  terms, or coupons that are not reimbursed by a third party and 
398.31  that are allowed by the seller and taken by a purchaser on a 
398.32  sale; 
398.33     (2) charges of up to 15 percent in lieu of tips if the 
398.34  charges are separately stated interest, financing, and carrying 
398.35  charges from credit extended on the sale of personal property or 
398.36  services, if the amount is separately stated on the invoice, 
399.1   bill of sale, or similar document given to the purchaser; 
399.2      (3) interest, financing, or carrying charges if the charges 
399.3   are separately stated any taxes legally imposed directly on the 
399.4   consumer that are separately stated on the invoice, bill of 
399.5   sale, or similar document given to the purchaser; 
399.6      (4) charges for labor or services used in installing or 
399.7   applying the property sold if the charges are separately stated; 
399.8   and 
399.9      (5) transportation charges if the transportation occurs 
399.10  after the retail sale of the property delivery charges if the 
399.11  charges are separately stated; 
399.12     (6) cash discounts allowed and taken on sales or the amount 
399.13  refunded either in cash or in credit for property returned by 
399.14  purchasers; 
399.15     (7) the rental motor vehicle tax imposed under section 
399.16  297A.64; or 
399.17     (8) the amount of any tax imposed by the United States on 
399.18  communications services under United States Code, title 26, 
399.19  section 4251(a). 
399.20     (d) Notwithstanding paragraph (c), "sales price," for 
399.21  purposes of sales of ready-mixed concrete sold from a 
399.22  ready-mixed concrete truck, includes any transportation, 
399.23  delivery, or other service charges, and no deduction is allowed 
399.24  for those charges, whether or not the charges are separately 
399.25  stated.  
399.26     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2002.
399.27     Sec. 5.  Minnesota Statutes 2000, section 297A.61, 
399.28  subdivision 9, is amended to read: 
399.29     Subd. 9.  [RETAILER AND SELLER.] "Retailer" and "seller" 
399.30  means every any person engaged in making retail sales, leases, 
399.31  or rentals of personal property or services. 
399.32     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2002.
399.33     Sec. 6.  Minnesota Statutes 2000, section 297A.61, is 
399.34  amended by adding a subdivision to read: 
399.35     Subd. 24.  [PURCHASE PRICE.] "Purchase price" means the 
399.36  measure subject to the use tax and has the same meaning as 
400.1   "sales price." 
400.2      <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2002.
400.3      Sec. 7.  Minnesota Statutes 2000, section 297A.61, is 
400.4   amended by adding a subdivision to read: 
400.5      Subd. 25.  [STATE.] Unless specifically provided otherwise, 
400.6   "state" means any state of the United States and the District of 
400.7   Columbia. 
400.8      <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2002.
400.9      Sec. 8.  Minnesota Statutes 2000, section 297A.61, is 
400.10  amended by adding a subdivision to read: 
400.11     Subd. 26.  [DELIVERY CHARGES.] "Delivery charges" means 
400.12  charges by the seller for preparation and delivery to a location 
400.13  designated by the purchaser of personal property or services 
400.14  including, but not limited to, transportation, shipping, 
400.15  postage, handling, crating, and packing. 
400.16     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2002.
400.17     Sec. 9.  Minnesota Statutes 2000, section 297A.61, is 
400.18  amended by adding a subdivision to read: 
400.19     Subd. 27.  [PREPARED FOOD.] "Prepared food" means (i) food 
400.20  sold in a heated state or heated by the seller; (ii) two or more 
400.21  food ingredients mixed or combined by the seller for sale as a 
400.22  single item; or (iii) food sold with eating utensils provided by 
400.23  the seller, including plates, knives, forks, spoons, glasses, 
400.24  cups, napkins, or straws.  Prepared food does not include food 
400.25  that is sliced, repackaged, or pasteurized by the seller. 
400.26     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2002.
400.27     Sec. 10.  Minnesota Statutes 2000, section 297A.61, is 
400.28  amended by adding a subdivision to read: 
400.29     Subd. 28.  [SOFT DRINKS.] "Soft drinks" means nonalcoholic 
400.30  beverages that contain natural or artificial sweeteners.  Soft 
400.31  drinks do not include beverages that contain milk or milk 
400.32  products; soy, rice, or similar milk substitutes; or greater 
400.33  than 50 percent vegetable or fruit juice by volume. 
400.34     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2002.
400.35     Sec. 11.  Minnesota Statutes 2000, section 297A.61, is 
400.36  amended by adding a subdivision to read:  
401.1      Subd. 29.  [CANDY.] "Candy" means a preparation of sugar, 
401.2   honey, or other natural or artificial sweeteners in combination 
401.3   with chocolate, fruits, nuts, or other ingredients or flavorings 
401.4   in the form of bars, drops, or pieces.  Candy does not include 
401.5   any preparation containing flour and must require no 
401.6   refrigeration. 
401.7      <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2002.
401.8      Sec. 12.  Minnesota Statutes 2000, section 297A.61, is 
401.9   amended by adding a subdivision to read: 
401.10     Subd. 30.  [FOOD SOLD THROUGH VENDING MACHINES.] "Food sold 
401.11  through vending machines" means food dispensed from a machine or 
401.12  other mechanical device that accepts payment. 
401.13     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2002.
401.14     Sec. 13.  [297A.668] [SOURCING OF SALE; SITUS IN THIS 
401.15  STATE.] 
401.16     Subdivision 1.  [SOURCING RULES.] (a) The following 
401.17  provisions apply regardless of the characterization of a product 
401.18  as tangible personal property, a digital good, or a service; but 
401.19  do not apply to telecommunications services, or the sales of 
401.20  motor vehicles, watercraft, aircraft, modular homes, 
401.21  manufactured homes, or mobile homes.  These provisions only 
401.22  apply to determine a seller's obligation to pay or collect and 
401.23  remit a sales or use tax with respect to the seller's sale of a 
401.24  product.  These provisions do not affect the obligation of a 
401.25  seller as purchaser to remit tax on the use of the product. 
401.26     (b) When the product is received by the purchaser at a 
401.27  business location of the seller, the sale is sourced to that 
401.28  business location. 
401.29     (c) When the product is not received by the purchaser at a 
401.30  business location of the seller, the sale is sourced to the 
401.31  location where receipt by the purchaser or the donee designated 
401.32  by the purchaser occurs, including the location indicated by 
401.33  instructions for delivery to the purchasers or the purchaser's 
401.34  donee, known to the seller. 
401.35     (d) When paragraphs (b) and (c) do not apply, the sale is 
401.36  sourced to the location indicated by an address for the 
402.1   purchaser that is available from the business records of the 
402.2   seller that are maintained in the ordinary course of the 
402.3   seller's business, when use of this address does not constitute 
402.4   bad faith. 
402.5      (e) When paragraphs (b), (c), and (d) do not apply, the 
402.6   sale is sourced to the location indicated by an address for the 
402.7   purchaser obtained during the consummation of the sale, 
402.8   including the address of a purchaser's payment instrument if no 
402.9   other address is available, when use of this address does not 
402.10  constitute bad faith. 
402.11     (f) When paragraphs (b), (c), (d), and (e) do not apply, 
402.12  including the circumstance where the seller is without 
402.13  sufficient information to apply the previous paragraphs, then 
402.14  the location is determined by the address from which tangible 
402.15  personal property was shipped, from which the digital good was 
402.16  first available for transmission by the seller, or from which 
402.17  the service was provided. 
402.18     Subd. 2.  [MULTIPLE POINTS OF USE.] (a) Notwithstanding the 
402.19  provisions of subdivision 1, a business purchaser that is not a 
402.20  holder of a direct pay permit that knows at the time of its 
402.21  purchase of a digital good or service that the digital good or 
402.22  service will be concurrently available for use in more than one 
402.23  taxing jurisdiction shall deliver to the seller in conjunction 
402.24  with its purchase a multiple points of use exemption certificate 
402.25  disclosing this fact. 
402.26     (b) Upon receipt of the multiple points of use exemption 
402.27  certificate, the seller is relieved of the obligation to 
402.28  collect, pay, or remit the applicable tax and the purchaser is 
402.29  obligated to collect, pay, or remit the applicable tax on a 
402.30  direct pay basis. 
402.31     (c) A purchaser delivering the multiple points of use 
402.32  exemption certificate may use any reasonable, but consistent and 
402.33  uniform, method of apportionment that is supported by the 
402.34  purchaser's business records as they exist at the time of the 
402.35  consummation of the sale. 
402.36     (d) The multiple points of use exemption certificate 
403.1   remains in effect for all future sales by the seller to the 
403.2   purchaser until it is revoked in writing. 
403.3      (e) A holder of a direct pay permit is not required to 
403.4   deliver a multiple points or use exemption certificate to the 
403.5   seller.  A direct pay permit holder shall follow the provisions 
403.6   of paragraph (c) in apportioning the tax due on a digital good 
403.7   or a service that will be concurrently available for use in more 
403.8   than one taxing jurisdiction. 
403.9      Subd. 3.  [DEFINITION OF TERMS.] For purposes of this 
403.10  section, the terms "receive" and "receipt" mean taking 
403.11  possession of tangible personal property, making first use of 
403.12  services, or taking possession of making first use of digital 
403.13  goods, whichever occurs first.  The terms receive and receipt do 
403.14  not include possession by a carrier for hire on behalf of the 
403.15  purchaser. 
403.16     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
403.17  purchases occurring after December 31, 2001. 
403.18     Sec. 14.  Minnesota Statutes 2000, section 297A.67, 
403.19  subdivision 2, is amended to read: 
403.20     Subd. 2.  [FOOD PRODUCTS AND FOOD INGREDIENTS.] 
403.21  Food products including, but not limited to, cereal and cereal 
403.22  products, butter, cheese, milk and milk products, oleomargarine, 
403.23  meat and meat products, fish and fish products, eggs and egg 
403.24  products, vegetables and vegetable products, fruit and fruit 
403.25  products, spices and salt, sugar and sugar products, coffee and 
403.26  coffee substitutes, tea, and cocoa and cocoa products and food 
403.27  ingredients are exempt.  For purposes of this subdivision, 
403.28  "food" and "food ingredients" mean substances, whether in 
403.29  liquid, concentrated, solid, frozen, dried, or dehydrated form, 
403.30  that are sold for ingestion or chewing by humans and are 
403.31  consumed for their taste or nutritional value.  Food and food 
403.32  ingredients do not include candy, soft drinks, food sold through 
403.33  vending machines, and prepared foods.  Food and food ingredients 
403.34  do not include alcoholic beverages, dietary supplements, and 
403.35  tobacco.  For purposes of this subdivision, "alcoholic 
403.36  beverages" means beverages that are suitable for human 
404.1   consumption and contain one-half of one percent or more of 
404.2   alcohol by volume.  For purposes of this subdivision, "tobacco" 
404.3   means cigarettes, cigars, chewing or pipe tobacco, or any other 
404.4   item that contains tobacco.  For purposes of this subdivision, 
404.5   "dietary supplements" means any product, other than tobacco, 
404.6   intended to supplement the diet that: 
404.7      (1) contains one or more of the following dietary 
404.8   ingredients: 
404.9      (i) a vitamin; 
404.10     (ii) a mineral; 
404.11     (iii) an herb or other botanical; 
404.12     (iv) an amino acid; 
404.13     (v) a dietary substance for use by humans to supplement the 
404.14  diet by increasing the total dietary intake; and 
404.15     (vi) a concentrate, metabolite, constituent, extract, or 
404.16  combination of any ingredient described in items (i) to (v); 
404.17     (2) is intended for ingestion in tablet, capsule, powder, 
404.18  softgel, gelcap, or liquid form, or if not intended for 
404.19  ingestion in such form, is not represented as conventional food 
404.20  and is not represented for use as a sole item of a meal or of 
404.21  the diet; and 
404.22     (3) is required to be labeled as a dietary supplement, 
404.23  identifiable by the supplement facts box found on the label and 
404.24  as required pursuant to Code of Federal Regulations, title 21, 
404.25  section 101.36. 
404.26     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
404.27  purchases occurring after December 31, 2001. 
404.28     Sec. 15.  Minnesota Statutes 2000, section 297A.67, 
404.29  subdivision 8, is amended to read: 
404.30     Subd. 8.  [CLOTHING.] (a) Clothing and wearing apparel, 
404.31  including sewing materials to be directly incorporated into 
404.32  wearing apparel, are is exempt.  For purposes of this 
404.33  subdivision, clothing and wearing apparel do not include the 
404.34  following: 
404.35     (1) articles designed primarily for use while engaging in a 
404.36  specific sport or recreational activity that are not also worn 
405.1   for general use; 
405.2      (2) articles designed primarily to provide safety or 
405.3   protection against injury while the user is engaged in 
405.4   industrial or general job activities; 
405.5      (3) all articles commonly or commercially known as jewelry 
405.6   including, but not limited to, watches; 
405.7      (4) nonprescription optical glasses of any sort; 
405.8      (5) articles made entirely of fur on the hide or pelt, or 
405.9   partially of such fur if the value of the fur is more than three 
405.10  times the value of the next most valuable component material; 
405.11     (6) perfume, lotions, creams, dyes, or other substances 
405.12  that are applied to the skin or the hair; and 
405.13     (7) luggage, bags, purses, wallets, or cases of any 
405.14  sort. "clothing" means all human wearing apparel suitable for 
405.15  general use. 
405.16     (b) Clothing includes, but is not limited to, aprons, 
405.17  household and shop; athletic supporters; baby receiving 
405.18  blankets; bathing suits and caps; beach capes and coats; belts 
405.19  and suspenders; boots; coats and jackets; costumes; children and 
405.20  adult diapers, including disposable; ear muffs; footlets; formal 
405.21  wear; garters and garter belts; girdles; gloves and mittens for 
405.22  general use; hats and caps; hosiery; insoles for shoes; lab 
405.23  coats; neckties; overshoes; pantyhose; rainwear; rubber pants; 
405.24  sandals; scarves; shoes and shoe laces; slippers; sneakers; 
405.25  socks and stockings; steel-toed boots; underwear; uniforms, 
405.26  athletic and nonathletic; and wedding apparel. 
405.27     (c) Clothing does not include the following: 
405.28     (1) belt buckles sold separately; 
405.29     (2) costume masks sold separately; 
405.30     (3) patches and emblems sold separately; 
405.31     (4) sewing equipment and supplies, including but not 
405.32  limited to, knitting needles, patterns, pins, scissors, sewing 
405.33  machines, sewing needles, tape measures, and thimbles; 
405.34     (5) sewing materials that become part of clothing, 
405.35  including but not limited to, buttons, fabric, lace, thread, 
405.36  yarn, and zippers; 
406.1      (6) clothing accessories or equipment; 
406.2      (7) sports or recreational equipment; and 
406.3      (8) protective equipment. 
406.4   Clothing also does not include apparel made from fur if a 
406.5   uniform definition of "apparel made from fur" is developed by 
406.6   the member states of the Streamlined Sales and Use Tax Agreement.
406.7      For purposes of this subdivision, "clothing accessories or 
406.8   equipment" means incidental items worn on the person or in 
406.9   conjunction with clothing.  Clothing accessories include, but 
406.10  are not limited to, briefcases; cosmetics; hair notions, 
406.11  including barrettes, hair bows, and hairnets; handbags; 
406.12  handkerchiefs; jewelry; nonprescription sunglasses; umbrellas; 
406.13  wallets; watches; and wigs and hairpieces.  "Sports or 
406.14  recreational equipment" means items designed for human use and 
406.15  worn in conjunction with an athletic or recreational activity 
406.16  that are not suitable for general use.  Sports and recreational 
406.17  equipment includes, but is not limited to, ballet and tap shoes; 
406.18  cleated or spiked athletic shoes; baseball, bowling, boxing, 
406.19  hockey, and golf gloves; goggles; hand and elbow guards; life 
406.20  preservers and vests; mouth guards; roller and ice skates; shin 
406.21  guards; shoulder pads; ski boots; waders; and wetsuits and 
406.22  fins.  "Protective equipment" means items for human wear and 
406.23  designed as protection of the wearer against injury or disease 
406.24  or as protection against damage or injury of other persons or 
406.25  property but not suitable for general use.  Protective equipment 
406.26  includes, but is not limited to, breathing masks; clean room 
406.27  apparel and equipment; ear and hearing protectors; face shields; 
406.28  finger guards; hard hats; helmets; paint or dust respirators; 
406.29  protective gloves; safety glasses and goggles; safety belts; 
406.30  tool belts; and welders gloves and masks. 
406.31     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
406.32  purchases occurring after December 31, 2001. 
406.33     Sec. 16.  Minnesota Statutes 2000, section 297A.67, is 
406.34  amended by adding a subdivision to read: 
406.35     Subd. 26.  [TRADE ALLOWANCE.] The amount allowed as a 
406.36  credit against the sales price for tangible personal property 
407.1   taken in trade for resale is exempt. 
407.2      <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
407.3   purchases occurring after December 31, 2001. 
407.4      Sec. 17.  Minnesota Statutes 2000, section 297A.67, is 
407.5   amended by adding a subdivision to read: 
407.6      Subd. 27.  [SEWING MATERIALS.] Sewing materials are exempt. 
407.7   For purposes of this subdivision "sewing materials" mean fabric, 
407.8   thread, zippers, interfacing, buttons, trim, and other items 
407.9   that are usually directly incorporated into the construction of 
407.10  clothing, regardless of whether it is actually used for making 
407.11  clothing.  It does not include batting, foam, or fabric 
407.12  specifically manufactured for arts and craft projects, or other 
407.13  materials for craft projects. 
407.14     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
407.15  purchases made after December 31, 2001. 
407.16     Sec. 18.  Minnesota Statutes 2000, section 297A.72, 
407.17  subdivision 1, is amended to read: 
407.18     Subdivision 1.  [DUTY OF RETAILER.] An A fully completed 
407.19  exemption certificate conclusively relieves the retailer from 
407.20  collecting and remitting the tax only if taken in good faith 
407.21  from the purchaser at the time of sale. 
407.22     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
407.23  purchases occurring after December 31, 2001. 
407.24     Sec. 19.  Minnesota Statutes 2000, section 297A.99, 
407.25  subdivision 9, is amended to read: 
407.26     Subd. 9.  [ENFORCEMENT; COLLECTION; AND ADMINISTRATION.] 
407.27  (a) The commissioner of revenue shall collect the taxes subject 
407.28  to this section.  The commissioner may collect the tax with the 
407.29  state sales and use tax.  All taxes under this section are 
407.30  subject to the same penalties, interest, and enforcement 
407.31  provisions as apply to the state sales and use tax. 
407.32     (b) A request for a refund of state sales tax paid in 
407.33  excess of the amount of tax legally due includes a request for a 
407.34  refund of the political subdivision taxes paid on the goods or 
407.35  services.  The commissioner shall refund to the taxpayer the 
407.36  full amount of the political subdivision taxes paid on exempt 
408.1   sales or use. 
408.2      (c) A political subdivision that is collecting and 
408.3   administering its own sales and use tax before January 1, 1998, 
408.4   may elect to be exempt from this subdivision and subdivision 11. 
408.5      <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2002.
408.6      Sec. 20.  Minnesota Statutes 2000, section 297A.99, 
408.7   subdivision 11, is amended to read: 
408.8      Subd. 11.  [REVENUES; COST OF COLLECTION.] The commissioner 
408.9   shall remit the proceeds of the tax, less refunds and a 
408.10  proportionate share of the cost of collection, at least 
408.11  quarterly, to the political subdivision.  The commissioner shall 
408.12  deduct from the proceeds remitted an amount that equals 
408.13     (1) the direct and indirect costs of the department to 
408.14  administer, audit, and collect the political subdivision's tax, 
408.15  plus 
408.16     (2) the political subdivision's proportionate share of the 
408.17  indirect cost of administering all taxes under this section, 
408.18  plus 
408.19     (3) the cost of constructing and maintaining a zip code or 
408.20  geo-code data base necessary for local sales tax collections 
408.21  under the Streamlined Sales and Use Tax Agreement in section 
408.22  297A.995. 
408.23     The initial cost of constructing a data base under clause 
408.24  (3) shall be distributed among the cities with a local sales tax 
408.25  based on each city's population.  The commissioner shall develop 
408.26  a method for distributing the cost of maintaining the data base 
408.27  among the cities with a local sales tax based on the number of 
408.28  boundary changes for each city. 
408.29     <b>[EFFECTIVE DATE.]</b> This section is effective for payments to 
408.30  the counties after June 30, 2001, for costs incurred after June 
408.31  30, 2001. 
408.32     Sec. 21.  [297A.995] [UNIFORM SALES AND USE TAX 
408.33  ADMINISTRATION ACT.] 
408.34     Subdivision 1.  [TITLE.] This section may be cited as the 
408.35  Uniform Sales and Use Tax Administration Act. 
408.36     Subd. 2.  [DEFINITIONS.] As used in this section: 
409.1      (a) "Agreement" means the Streamlined Sales and Use Tax 
409.2   Agreement. 
409.3      (b) "Certified automated system" means software certified 
409.4   jointly by the states that are signatories to the agreement to 
409.5   calculate the tax imposed by each jurisdiction on a transaction, 
409.6   determine the amount of tax to remit to the appropriate state, 
409.7   and maintain a record of the transaction. 
409.8      (c) "Certified service provider" means an agent certified 
409.9   jointly by the states that are signatories to the agreement to 
409.10  perform all of the seller's sales tax functions. 
409.11     Subd. 3.  [LEGISLATIVE FINDING.] The legislature finds that 
409.12  this state should enter into an agreement with one or more 
409.13  states to simplify and modernize sales and use tax 
409.14  administration in order to substantially reduce the burden of 
409.15  tax compliance for all sellers and for all types of commerce. 
409.16     Subd. 4.  [AUTHORITY TO ENTER AGREEMENT.] The commissioner 
409.17  of revenue is authorized and directed to enter into the 
409.18  agreement with one or more states to simplify and modernize 
409.19  sales and use tax administration in order to substantially 
409.20  reduce the burden of tax compliance for all sellers and for all 
409.21  types of commerce.  In furtherance of the agreement, the 
409.22  commissioner is authorized to act jointly with other states that 
409.23  are members of the agreement to establish standards for 
409.24  certification of a certified service provider and certified 
409.25  automated system and establish performance standards for 
409.26  multistate sellers. 
409.27     The commissioner is further authorized to take other 
409.28  actions reasonably required to implement the provisions set 
409.29  forth in this article.  Other actions authorized by this section 
409.30  include, but are not limited to, the adoption of rules and 
409.31  regulations and the joint procurement, with other member states, 
409.32  of goods and services in furtherance of the cooperative 
409.33  agreement. 
409.34     The commissioner or the commissioner's designee is 
409.35  authorized to represent this state before the other states that 
409.36  are signatories to the agreement. 
410.1      Subd. 5.  [RELATIONSHIP TO STATE LAW.] No provision of the 
410.2   agreement authorized by this bill in whole or part invalidates 
410.3   or amends any provision of the law of this state.  Adoption of 
410.4   the agreement by this state does not amend or modify any law of 
410.5   this state.  Implementation of any condition of the agreement in 
410.6   this state, whether adopted before, at, or after membership of 
410.7   this state in the agreement, must be by the action of this state.
410.8      Subd. 6.  [AGREEMENT REQUIREMENTS.] The commissioner of 
410.9   revenue shall not enter into the agreement unless the agreement 
410.10  requires each state to abide by the following requirements: 
410.11     (a) [UNIFORM STATE RATE.] The agreement must set 
410.12  restrictions to achieve more uniform state rates through the 
410.13  following: 
410.14     (1) limiting the number of state rates; 
410.15     (2) eliminating maximums on the amount of state tax that is 
410.16  due on a transaction; and 
410.17     (3) eliminating thresholds on the application of state tax. 
410.18     (b) [UNIFORM STANDARDS.] The agreement must establish 
410.19  uniform standards for the following: 
410.20     (1) the sourcing of transactions to taxing jurisdictions; 
410.21     (2) the administration of exempt sales; 
410.22     (3) the allowances a seller can take for bad debts; and 
410.23     (4) sales and use tax returns and remittances. 
410.24     (c) [UNIFORM DEFINITIONS.] The agreement must require 
410.25  states to develop and adopt uniform definitions of sales and use 
410.26  tax terms.  The definitions must enable a state to preserve its 
410.27  ability to make policy choices not inconsistent with the uniform 
410.28  definitions. 
410.29     (d) [CENTRAL REGISTRATION.] The agreement must provide a 
410.30  central, electronic registration system that allows a seller to 
410.31  register to collect and remit sales and use taxes for all 
410.32  signatory states. 
410.33     (e) [NO NEXUS ATTRIBUTION.] The agreement must provide that 
410.34  registration with the central registration system and the 
410.35  collection of sales and use taxes in the signatory states will 
410.36  not be used as a factor in determining whether the seller has 
411.1   nexus with a state for any tax. 
411.2      (f) [LOCAL SALES AND USE TAXES.] The agreement must provide 
411.3   for reduction of the burdens of complying with local sales and 
411.4   use taxes through the following: 
411.5      (1) restricting and eliminating variances between the state 
411.6   and local tax bases; 
411.7      (2) requiring states to administer any sales and use taxes 
411.8   levied by local jurisdictions within the state so that sellers 
411.9   collecting and remitting these taxes will not have to register 
411.10  or file returns with, remit funds to, or be subject to 
411.11  independent audits from local taxing jurisdictions; 
411.12     (3) restricting the frequency of changes in the local sales 
411.13  and use tax rates and setting effective dates for the 
411.14  application of local jurisdictional boundary changes to local 
411.15  sales and use taxes; and 
411.16     (4) providing notice of changes in local sales and use tax 
411.17  rates and of changes in the boundaries of local taxing 
411.18  jurisdictions. 
411.19     (g) [MONETARY ALLOWANCES.] The agreement must outline any 
411.20  monetary allowances that are to be provided by the states to 
411.21  sellers or certified service providers. 
411.22     (h) [STATE COMPLIANCE.] The agreement must require each 
411.23  state to certify compliance with the terms of the agreement 
411.24  prior to joining and to maintain compliance, under the laws of 
411.25  the member state, with all provisions of the agreement while a 
411.26  member. 
411.27     (i) [CONSUMER PRIVACY.] The agreement must require each 
411.28  state to adopt a uniform policy for certified service providers 
411.29  that protects the privacy of consumers and maintains the 
411.30  confidentiality of tax information. 
411.31     (j) [ADVISORY COUNCILS.] The agreement must provide for the 
411.32  appointment of an advisory council of private sector 
411.33  representatives and an advisory council of nonmember state 
411.34  representatives to consult with in the administration of the 
411.35  agreement. 
411.36     Subd. 7.  [COOPERATING SOVEREIGNS.] The agreement 
412.1   authorized by this bill is an accord among individual 
412.2   cooperating sovereigns in furtherance of their governmental 
412.3   functions.  The agreement provides a mechanism among the member 
412.4   states to establish and maintain a cooperative, simplified 
412.5   system for the application and administration of sales and use 
412.6   taxes under the duly adopted law of each member state. 
412.7      Subd. 8.  [LIMITED BINDING AND BENEFICIAL EFFECT.] (a) The 
412.8   agreement authorized by this bill binds and inures only to the 
412.9   benefit of this state and the other member states.  No person, 
412.10  other than a member state, is an intended beneficiary of the 
412.11  agreement.  Any benefit to a person other than a state is 
412.12  established by the law of this state and the other member states 
412.13  and not by the terms of the agreement. 
412.14     (b) Consistent with paragraph (a), no person shall have any 
412.15  cause of action or defense under the agreement or by virtue of 
412.16  this state's approval of the agreement.  No person may 
412.17  challenge, in any action brought under any provision of law, any 
412.18  action or inaction by any department, agency, or other 
412.19  instrumentality of this state, or any political subdivision of 
412.20  this state, on the ground that the action or inaction is 
412.21  inconsistent with the agreement. 
412.22     (c) No law of this state, or its application, may be 
412.23  declared invalid as to any person or circumstance on the ground 
412.24  that the provision or application is inconsistent with the 
412.25  agreement. 
412.26     Subd. 9.  [SELLER AND THIRD-PARTY LIABILITY.] (a) A 
412.27  certified service provider is the agent of a seller, with whom 
412.28  the certified service provider has contracted, for the 
412.29  collection and remittance of sales and use taxes.  As the 
412.30  seller's agent, the certified service provider is liable for 
412.31  sales and use tax due each member state on all sales 
412.32  transactions it processes for the seller except as set out in 
412.33  this section. 
412.34     A seller that contracts with a certified service provider 
412.35  is not liable to the state for sales or use tax due on 
412.36  transactions processed by the certified service provider unless 
413.1   the seller misrepresented the type of items it sells or 
413.2   committed fraud.  In the absence of probable cause to believe 
413.3   that the seller has committed fraud or made a material 
413.4   misrepresentation, the seller is not subject to audit on the 
413.5   transactions processed by the certified service provider.  A 
413.6   seller is subject to audit for transactions not processed by the 
413.7   certified service provider.  The member states acting jointly 
413.8   may perform a system check of the seller and review the seller's 
413.9   procedures to determine if the certified service provider's 
413.10  system is functioning properly and the extent to which the 
413.11  seller's transactions are being processed by the certified 
413.12  service provider. 
413.13     (b) A person that provides a certified automated system is 
413.14  responsible for the proper functioning of that system and is 
413.15  liable to the state for underpayments of tax attributable to 
413.16  errors in the functioning of the certified automated system.  A 
413.17  seller that uses a certified automated system remains 
413.18  responsible and is liable to the state for reporting and 
413.19  remitting tax. 
413.20     (c) A seller that has a proprietary system for determining 
413.21  the amount of tax due on transactions and has signed an 
413.22  agreement establishing a performance standard for that system is 
413.23  liable for the failure of the system to meet the performance 
413.24  standard. 
413.25     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
413.26  following final enactment. 
413.27     Sec. 22.  [PLAN FOR REPLACEMENT OF REVENUES RAISED BY 
413.28  CURRENT TAXES ON ALCOHOL.] 
413.29     The commissioner of revenue, in consultation with 
413.30  interested parties from the alcohol beverage industry, shall 
413.31  prepare a plan to replace the current higher sales tax on liquor 
413.32  and beer under Minnesota Statutes, section 297A.62, subdivision 
413.33  2, and the liquor tax under Minnesota Statutes, chapter 297G, 
413.34  with a single tax on liquor.  The commissioner shall report the 
413.35  plan to the legislature by January 1, 2003.  The plan should 
413.36  include recommendations for tax rates, tax base, and tax 
414.1   administration, and should be structured so that the revenue 
414.2   raised is equivalent to the revenue lost from the repeal of the 
414.3   current taxes.  The plan should also, to the extent practical, 
414.4   mirror the current incidence of the tax as it relates to 
414.5   different types of liquor, and whether the liquor is consumed 
414.6   on-site or off-site. 
414.7      <b>[EFFECTIVE DATE.]</b> This section is effective the day after 
414.8   final enactment. 
414.9      Sec. 23.  [PLAN FOR REPLACEMENT OF REVENUES RAISED BY TAXES 
414.10  ON SHORT-TERM MOTOR VEHICLE RENTAL.] 
414.11     The commissioner of revenue, in consultation with 
414.12  interested parties from the industry, shall prepare a plan to 
414.13  replace the current sales tax and fees on short-term motor 
414.14  vehicle rentals under Minnesota Statutes, section 297A.64, with 
414.15  a single tax or fee on motor vehicle rentals.  The commissioner 
414.16  shall report the plan to the legislature by January 1, 2003.  
414.17  The plan should include recommendations for tax rates, tax base, 
414.18  and tax administration, and should be structured so that the 
414.19  state revenue raised is equivalent to the state revenue lost 
414.20  from the repeal of the current taxes. 
414.21     <b>[EFFECTIVE DATE.]</b> This section is effective the day after 
414.22  final enactment. 
414.23     Sec. 24.  [DIRECTIONS TO COMMISSIONER OF REVENUE.] 
414.24     The commissioner of revenue shall request that the member 
414.25  states of the Streamlined Sales and Use Tax Agreement adopt at 
414.26  their earliest convenience a uniform definition of clothing made 
414.27  from fur. 
414.28     <b>[EFFECTIVE DATE.]</b> This section is effective the day after 
414.29  final enactment. 
414.30     Sec. 25.  [REPEALER.] 
414.31     Minnesota Statutes 2000, sections 297A.62, subdivision 2 
414.32  and 297A.64, are repealed. 
414.33     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
414.34  purchases made after December 31, 2005. 
414.35                             ARTICLE 14 
414.36                 SALES TAX RECODIFICATION TECHNICAL 
415.1      Section 1.  Minnesota Statutes 2000, section 289A.31, 
415.2   subdivision 7, is amended to read: 
415.3      Subd. 7.  [SALES AND USE TAX.] (a) The sales and use tax 
415.4   required to be collected by the retailer under chapter 297A 
415.5   constitutes a debt owed by the retailer to Minnesota, and the 
415.6   sums collected must be held as a special fund in trust for the 
415.7   state of Minnesota. 
415.8      A retailer who does not maintain a place of business within 
415.9   this state as defined by section 297A.21, subdivision 1, shall 
415.10  not be indebted to Minnesota for amounts of tax that it was 
415.11  required to collect but did not collect unless the retailer knew 
415.12  or had been advised by the commissioner of its obligation to 
415.13  collect the tax.  
415.14     (b) The use tax required to be paid by a purchaser is a 
415.15  debt owed by the purchaser to Minnesota. 
415.16     (c) The tax imposed by chapter 297A, and interest and 
415.17  penalties, is a personal debt of the individual required to file 
415.18  a return from the time the liability arises, irrespective of 
415.19  when the time for payment of that liability occurs.  The debt 
415.20  is, in the case of the executor or administrator of the estate 
415.21  of a decedent and in the case of a fiduciary, that of the 
415.22  individual in an official or fiduciary capacity unless the 
415.23  individual has voluntarily distributed the assets held in that 
415.24  capacity without reserving sufficient assets to pay the tax, 
415.25  interest, and penalties, in which case the individual is 
415.26  personally liable for the deficiency. 
415.27     (d) Liability for payment of sales and use taxes includes 
415.28  any responsible person or entity described in the personal 
415.29  liability provisions of section 270.101. 
415.30     (e) Any amounts collected, even if erroneously or illegally 
415.31  collected, from a purchaser under a representation that they are 
415.32  taxes imposed under chapter 297A are state funds from the time 
415.33  of collection and must be reported on a return filed with the 
415.34  commissioner.  The amounts collected are not subject to refund 
415.35  unless the seller submits written evidence to the commissioner 
415.36  that the tax and any interest earned on the tax has been or will 
416.1   be refunded or credited to the purchaser by the seller. 
416.2      (f) The tax imposed under chapter 297A on sales of tickets 
416.3   to the premises of or events sponsored by the state agricultural 
416.4   society and conducted on the state fairgrounds during the period 
416.5   of the annual state fair may be retained by the state 
416.6   agricultural society if the funds are used and matched as 
416.7   required under section 37.13, subdivision 2. 
416.8      Sec. 2.  Minnesota Statutes 2000, section 289A.50, 
416.9   subdivision 2, is amended to read: 
416.10     Subd. 2.  [REFUND OF SALES TAX TO VENDORS; LIMITATION.] If 
416.11  a vendor has collected from a purchaser and remitted to the 
416.12  state a tax on a transaction that is not subject to the tax 
416.13  imposed by chapter 297A, the tax is refundable to the vendor 
416.14  only if and to the extent that it the tax and any interest 
416.15  earned on the tax is credited to amounts due to the vendor by 
416.16  the purchaser or returned to the purchaser by the vendor.  In 
416.17  addition to the requirements of subdivision 1, a claim for 
416.18  refund under this subdivision must state in writing that the tax 
416.19  and interest earned on the tax has been or will be refunded or 
416.20  credited to the purchaser by the vendor. 
416.21     Sec. 3.  Minnesota Statutes 2000, section 297A.61, 
416.22  subdivision 2, is amended to read: 
416.23     Subd. 2.  [PERSON.] (a) "Person" includes any individual, 
416.24  and any or group or and any combination of individuals, 
416.25  groups, or individuals and groups acting as a unit, and the 
416.26  plural as well as the singular number.  
416.27     (b) Person includes a firm, partnership, joint venture, 
416.28  limited liability company, association, cooperative, social 
416.29  club, fraternal organization, municipal or private corporation 
416.30  whether or not organized for profit, estates, trusts, business 
416.31  trusts estate, trust, business trust, receiver, trustee, 
416.32  syndicate, the United States, and a state and its political 
416.33  subdivisions.  
416.34     (c) Person includes, but is not limited to, directors and 
416.35  officers of corporations, governors and managers of a limited 
416.36  liability company, or members of partnerships who, either 
417.1   individually or jointly with others, have the control, 
417.2   supervision, or responsibility of filing returns and making 
417.3   payment of the amount of tax imposed by this chapter. 
417.4      (d) Person also includes any agent or consignee of any 
417.5   individual or organization enumerated listed in this subdivision.
417.6      Sec. 4.  Minnesota Statutes 2000, section 297A.61, 
417.7   subdivision 3, is amended to read: 
417.8      Subd. 3.  [SALE AND PURCHASE.] (a) "Sale" and "purchase" 
417.9   include, but are not limited to, each of the transactions listed 
417.10  in this subdivision. 
417.11     (b) Sale and purchase include: 
417.12     (1) any transfer of title or possession, or both, of 
417.13  tangible personal property, whether absolutely or conditionally, 
417.14  for a consideration in money or by exchange or barter; and 
417.15     (2) the leasing of or the granting of a license to use or 
417.16  consume, for a consideration in money or by exchange or barter, 
417.17  tangible personal property, other than a manufactured home used 
417.18  for residential purposes for a continuous period of 30 days or 
417.19  more. 
417.20     (c) Sale and purchase include the production, fabrication, 
417.21  printing, or processing of tangible personal property for a 
417.22  consideration for consumers who furnish either directly or 
417.23  indirectly the materials used in the production, fabrication, 
417.24  printing, or processing. 
417.25     (d) Sale and purchase include the furnishing, preparing, or 
417.26  serving for a consideration of food or drinks.  Notwithstanding 
417.27  section 297A.67, subdivision 2, taxable food or drinks include, 
417.28  but are not limited to, the following: 
417.29     (1) food or drinks sold by the retailer for immediate 
417.30  consumption on the retailer's premises.  Food and drinks sold 
417.31  within a building or grounds that require an admission charge 
417.32  for entrance are presumed to be sold for consumption on the 
417.33  premises; 
417.34     (2) food or drinks prepared by the retailer for immediate 
417.35  consumption either on or off the retailer's premises.  For 
417.36  purposes of this subdivision, "food or drinks prepared for 
418.1   immediate consumption" means any food product upon which an act 
418.2   of preparation including, but not limited to, cooking, mixing, 
418.3   sandwich making, blending, heating, or pouring has been 
418.4   performed by the retailer so the food product may be immediately 
418.5   consumed by the purchaser; 
418.6      (3) ice cream, ice milk, frozen yogurt products, or frozen 
418.7   novelties sold in single or individual servings including, but 
418.8   not limited to, cones, sundaes, and snow cones; 
418.9      (4) soft drinks and other beverages, including all 
418.10  carbonated and noncarbonated beverages or drinks sold in liquid 
418.11  form, but not including beverages or drinks which contain milk 
418.12  or milk products, beverages or drinks containing 15 or more 
418.13  percent fruit juice, and noncarbonated and noneffervescent 
418.14  bottled water sold in individual containers of one-half gallon 
418.15  or more in size; 
418.16     (5) gum, candy, and candy products; 
418.17     (6) ice; 
418.18     (7) all food sold from vending machines; 
418.19     (8) all food for immediate consumption sold from concession 
418.20  stands and vehicles; 
418.21     (9) party trays; 
418.22     (10) all meals and single servings of packaged snack food 
418.23  sold in restaurants and bars; and 
418.24     (11) bakery products that are: 
418.25     (i) prepared by the retailer for consumption on the 
418.26  retailer's premises; 
418.27     (ii) sold at a place that charges admission; 
418.28     (iii) sold from vending machines; or 
418.29     (iv) sold in single or individual servings from concession 
418.30  stands, vehicles, bars, and restaurants.  
418.31     For purposes of this paragraph, "single or individual 
418.32  servings" does not include products when sold in bulk containers 
418.33  or bulk packaging.  
418.34     For purposes of this paragraph, "premises" means the total 
418.35  space and facilities, including buildings, grounds, and parking 
418.36  lots that are made available or that are available for use by 
419.1   the retailer or customer for the purpose of sale or consumption 
419.2   of prepared food and drinks.  The premises of a caterer is the 
419.3   place where the catered food or drinks are served. 
419.4      (e) A sale and a purchase includes the furnishing for a 
419.5   consideration of electricity, gas, water, or steam for use or 
419.6   consumption within this state or local exchange telephone 
419.7   service, intrastate toll service, and interstate toll service, 
419.8   if that service originates from and is charged to a telephone 
419.9   located in this state.  Telephone service includes (1) paging 
419.10  services, and (2) private communication service, as defined in 
419.11  United States Code, title 26, section 4252(d), except for 
419.12  private communication service purchased by an agent acting on 
419.13  behalf of the state lottery.  Telephone service does not include 
419.14  services purchased with a prepaid telephone calling card.  The 
419.15  furnishing for a consideration of access to telephone services 
419.16  by a hotel to its guests is a sale.  The furnishing for a 
419.17  consideration of items listed in this paragraph by a municipal 
419.18  corporation is a sale. 
419.19     (f) A sale and a purchase includes the transfer for a 
419.20  consideration of computer software.  
419.21     (g) A sale and a purchase includes the furnishing for a 
419.22  consideration of taxable services as defined in subdivision 
419.23  16. the following services: 
419.24     (1) the privilege of admission to places of amusement, 
419.25  recreational areas, or athletic events, and the making available 
419.26  of amusement devices, tanning facilities, reducing salons, steam 
419.27  baths, turkish baths, health clubs, and spas or athletic 
419.28  facilities; 
419.29     (2) lodging and related services by a hotel, rooming house, 
419.30  resort, campground, motel, or trailer camp and the granting of 
419.31  any similar license to use real property other than the renting 
419.32  or leasing of it for a continuous period of 30 days or more; 
419.33     (3) cable television services or similar television 
419.34  services, including, but not limited to, charges for basic, 
419.35  premium, pay-per-view, and any other similar service; 
419.36     (4) parking services, whether on a contractual, hourly, or 
420.1   other periodic basis, except for parking at a meter; 
420.2      (5) the granting of membership in a club, association, or 
420.3   other organization if: 
420.4      (i) the club, association, or other organization makes 
420.5   available for the use of its members sports and athletic 
420.6   facilities, without regard to whether a separate charge is 
420.7   assessed for use of the facilities; and 
420.8      (ii) use of the sports and athletic facility is not made 
420.9   available to the general public on the same basis as it is made 
420.10  available to members.  
420.11  Granting of membership means both one-time initiation fees and 
420.12  periodic membership dues.  Sports and athletic facilities 
420.13  include golf courses; tennis, racquetball, handball, and squash 
420.14  courts; basketball and volleyball facilities; running tracks; 
420.15  exercise equipment; swimming pools; and other similar athletic 
420.16  or sports facilities; and 
420.17     (6) services as provided in this clause: 
420.18     (i) laundry and dry cleaning services including cleaning, 
420.19  pressing, repairing, altering, and storing clothes, linen 
420.20  services and supply, cleaning and blocking hats, and carpet, 
420.21  drapery, upholstery, and industrial cleaning.  Laundry and dry 
420.22  cleaning services do not include services provided by coin 
420.23  operated facilities operated by the customer; 
420.24     (ii) motor vehicle washing, waxing, and cleaning services, 
420.25  including services provided by coin operated facilities operated 
420.26  by the customer, and rustproofing, undercoating, and towing of 
420.27  motor vehicles; 
420.28     (iii) building and residential cleaning, maintenance, and 
420.29  disinfecting and exterminating services; 
420.30     (iv) detective, security, burglar, fire alarm, and armored 
420.31  car services; but not including services performed within the 
420.32  jurisdiction they serve by off-duty licensed peace officers as 
420.33  defined in section 626.84, subdivision 1, or services provided 
420.34  by a nonprofit organization for monitoring and electronic 
420.35  surveillance of persons placed on in-home detention pursuant to 
420.36  court order or under the direction of the Minnesota department 
421.1   of corrections; 
421.2      (v) pet grooming services; 
421.3      (vi) lawn care, fertilizing, mowing, spraying and sprigging 
421.4   services; garden planting and maintenance; tree, bush, and shrub 
421.5   pruning, bracing, spraying, and surgery; indoor plant care; 
421.6   tree, bush, shrub, and stump removal; and tree trimming for 
421.7   public utility lines.  Services performed under a construction 
421.8   contract for the installation of shrubbery, plants, sod, trees, 
421.9   bushes, and similar items are not taxable; 
421.10     (vii) massages, except when provided by a licensed health 
421.11  care facility or professional or upon written referral from a 
421.12  licensed health care facility or professional for treatment of 
421.13  illness, injury, or disease; and 
421.14     (viii) the furnishing of lodging, board, and care services 
421.15  for animals in kennels and other similar arrangements, but 
421.16  excluding veterinary and horse boarding services. 
421.17     The services listed in this clause (6) are taxable under 
421.18  section 297A.62 if the service is performed wholly within 
421.19  Minnesota or if the service is performed partly within and 
421.20  partly outside Minnesota and the greater proportion of the 
421.21  service is performed in Minnesota, based on the cost of 
421.22  performance.  In applying the provisions of this chapter, the 
421.23  terms "tangible personal property" and "sales at retail" include 
421.24  taxable services and the provision of taxable services, unless 
421.25  specifically provided otherwise.  Services performed by an 
421.26  employee for an employer are not taxable.  Services performed by 
421.27  a partnership or association for another partnership or 
421.28  association are not taxable if one of the entities owns or 
421.29  controls more than 80 percent of the voting power of the equity 
421.30  interest in the other entity.  Services performed between 
421.31  members of an affiliated group of corporations are not taxable.  
421.32  For purposes of this section, "affiliated group of corporations" 
421.33  includes those entities that would be classified as members of 
421.34  an affiliated group under United States Code, title 26, section 
421.35  1504, and that are eligible to file a consolidated tax return 
421.36  for federal income tax purposes. 
422.1      (h) A sale and a purchase includes the furnishing for a 
422.2   consideration of tangible personal property or taxable services 
422.3   by the United States or any of its agencies or 
422.4   instrumentalities, or the state of Minnesota, its agencies, 
422.5   instrumentalities, or political subdivisions. 
422.6      Sec. 5.  Minnesota Statutes 2000, section 297A.61, 
422.7   subdivision 4, is amended to read: 
422.8      Subd. 4.  [RETAIL SALE.] (a) A "retail sale" means a sale 
422.9   for any purpose other than resale in the regular course of 
422.10  business.  
422.11     (b) A sale of property used by the owner only by leasing it 
422.12  to others or by holding it in an effort to lease it, and put to 
422.13  no use by the owner other than resale after the lease or effort 
422.14  to lease, is a sale of property for resale.  
422.15     (c) A sale of master computer software that is purchased 
422.16  and used to make copies for sale or lease is a sale of property 
422.17  for resale.  
422.18     (d) A sale of building materials, supplies, and equipment 
422.19  to owners, contractors, subcontractors, or builders for the 
422.20  erection of buildings or the alteration, repair, or improvement 
422.21  of real property is a retail sale in whatever quantity sold, 
422.22  whether the sale is for purposes of resale in the form of real 
422.23  property or otherwise.  
422.24     (e) A sale of carpeting, linoleum, or similar floor 
422.25  covering to a person who provides for installation of the floor 
422.26  covering is a retail sale and not a sale for resale since a sale 
422.27  of floor covering which includes installation is a contract for 
422.28  the improvement of real property. 
422.29     (f) A sale of shrubbery, plants, sod, trees, and similar 
422.30  items to a person who provides for installation of the items is 
422.31  a retail sale and not a sale for resale since a sale of 
422.32  shrubbery, plants, sod, trees, and similar items that includes 
422.33  installation is a contract for the improvement of real property. 
422.34     (g) A sale of tangible personal property that is awarded as 
422.35  prizes is a retail sale and is not considered a sale of property 
422.36  for resale. 
423.1      (h) A sale of tangible personal property utilized or 
423.2   employed in the furnishing or providing of services under 
423.3   subdivision 16 3, paragraph (b) (g), clause (1), including, but 
423.4   not limited to, property given as promotional items, is a retail 
423.5   sale and is not considered a sale of property for resale. 
423.6      (i) A sale of tangible personal property used in conducting 
423.7   lawful gambling under chapter 349 or the state lottery under 
423.8   chapter 349A, including, but not limited to, property given as 
423.9   promotional items, is a retail sale and is not considered a sale 
423.10  of property for resale. 
423.11     (j) A sale of machines, equipment, or devices that are used 
423.12  to furnish, provide, or dispense goods or services, including, 
423.13  but not limited to, coin-operated devices, is a retail sale and 
423.14  is not considered a sale of property for resale. 
423.15     (k) In the case of a lease, a retail sale occurs when an 
423.16  obligation to make a lease payment becomes due under the terms 
423.17  of the agreement or the trade practices of the lessor. 
423.18     (l) In the case of a conditional sales contract, a retail 
423.19  sale occurs upon the transfer of title or possession of the 
423.20  tangible personal property. 
423.21     Sec. 6.  Minnesota Statutes 2000, section 297A.61, 
423.22  subdivision 6, is amended to read: 
423.23     Subd. 6.  [USE.] (a) "Use" includes the exercise of a right 
423.24  or power incident to the ownership of any interest in tangible 
423.25  personal property, or taxable services, purchased from a 
423.26  retailer, other than the sale of that property in the regular 
423.27  course of business.  
423.28     (b) Use includes the consumption of printed materials in 
423.29  the creation of nontaxable advertising that is distributed, 
423.30  either directly or indirectly, within Minnesota. 
423.31     Sec. 7.  Minnesota Statutes 2000, section 297A.61, 
423.32  subdivision 10, is amended to read: 
423.33     Subd. 10.  [TANGIBLE PERSONAL PROPERTY.] (a) "Tangible 
423.34  personal property" means corporeal personal property of any 
423.35  kind, including property that is to become real property as a 
423.36  result of incorporation, attachment, or installation following 
424.1   its acquisition. 
424.2      (b) Tangible personal property includes, but is not limited 
424.3   to: 
424.4      (1) computer software, whether contained on tape, discs, 
424.5   cards, or other devices; and 
424.6      (2) prepaid telephone calling cards.  
424.7      (c) Tangible personal property does not include: 
424.8      (1) large ponderous machinery and equipment used in a 
424.9   business or production activity which at common law would be 
424.10  considered to be real property; 
424.11     (2) property which is subject to an ad valorem property 
424.12  tax; 
424.13     (3) property described in section 272.02, subdivision 9, 
424.14  clauses (a) to (d); and 
424.15     (4) property described in section 272.03, subdivision 2, 
424.16  clauses (3) and (5). 
424.17     Sec. 8.  Minnesota Statutes 2000, section 297A.61, 
424.18  subdivision 14, is amended to read: 
424.19     Subd. 14.  [LEASING; LEASE.] "Leasing" includes all 
424.20  transfers of possession or the use of tangible personal property 
424.21  by the lessee for a consideration, if title remains with the 
424.22  lessor at the end of the lease.  For purposes of this chapter, A 
424.23  lease of tangible personal property is a series of sales 
424.24  transactions that impose upon the lessee multiple payment 
424.25  obligations.  "Leasing" does not include a transaction defined 
424.26  under subdivision 15.  
424.27     Sec. 9.  Minnesota Statutes 2000, section 297A.61, 
424.28  subdivision 17, is amended to read: 
424.29     Subd. 17.  [COMPUTER SOFTWARE.] "Computer software" means a 
424.30  computer program, either in the form of written procedures or in 
424.31  the form of storage media on which, or in which, the program is 
424.32  recorded contained on tapes, discs, cards, or another device, or 
424.33  any required documentation or manuals designed to facilitate the 
424.34  use of the computer program.  For purposes of this subdivision: 
424.35     (1) "Storage media" includes punched cards, tapes, discs, 
424.36  diskettes, or drums on which computer programs may be embodied 
425.1   or stored; 
425.2      (2) "Computer" does not include tape-controlled automatic 
425.3   drilling, milling, or other manufacturing machinery or 
425.4   equipment; and 
425.5      (3) (2) "Computer program" means information and directions 
425.6   that dictate the function performed by data processing 
425.7   equipment.  It includes the complete plan for the solution of a 
425.8   problem, such as the complete sequence of automatic data 
425.9   processing equipment instructions necessary to solve a problem 
425.10  and includes both systems and application programs and 
425.11  subdivisions, such as assemblers, compilers, routines, 
425.12  generators, and utility programs.  Computer program includes a 
425.13  "canned" or prewritten computer program that is held or existing 
425.14  for general or repeated sale or lease, even if the prewritten or 
425.15  "canned" program was initially developed on a custom basis or 
425.16  for in-house use. 
425.17     Sec. 10.  Minnesota Statutes 2000, section 297A.61, 
425.18  subdivision 19, is amended to read: 
425.19     Subd. 19.  [COMMON FOR-HIRE CARRIER.] "Common For-hire 
425.20  carrier" means a person engaged in transportation for hire of 
425.21  tangible personal property by motor vehicle, if the person:. 
425.22     (1) has a certificate or permit or has completed a 
425.23  registration process that authorizes for-hire transportation of 
425.24  property from the United States Department of Transportation, 
425.25  the transportation regulation board, or the department of 
425.26  transportation; 
425.27     (2) is transporting commodities defined as "exempt" in 
425.28  for-hire transportation; or 
425.29     (3) transports tangible personal property pursuant to a 
425.30  contract with a person described in clause (1) or (2). 
425.31     Sec. 11.  Minnesota Statutes 2000, section 297A.61, 
425.32  subdivision 22, is amended to read: 
425.33     Subd. 22.  [INTERNAL REVENUE CODE.] Unless specifically 
425.34  provided otherwise, "Internal Revenue Code" means the Internal 
425.35  Revenue Code of 1986, as amended through December 31, 1999 2000. 
425.36     Sec. 12.  Minnesota Statutes 2000, section 297A.61, 
426.1   subdivision 23, is amended to read: 
426.2      Subd. 23.  [UNITED STATES CODE.] Unless specifically 
426.3   provided otherwise, "United States Code" means the United States 
426.4   Code as amended through December 31, 1999 2000. 
426.5      Sec. 13.  Minnesota Statutes 2000, section 297A.66, 
426.6   subdivision 1, is amended to read: 
426.7      Subdivision 1.  [DEFINITIONS.] (a) "Retailer maintaining a 
426.8   place of business in this state," or a similar term, means a 
426.9   retailer: 
426.10     (1) having or maintaining within this state, directly or by 
426.11  a subsidiary, an office, place of distribution, sales or sample 
426.12  room or place, warehouse, or other place of business; or 
426.13     (2) having a representative, agent, salesperson, canvasser, 
426.14  or solicitor operating in this state under the authority of the 
426.15  retailer or its subsidiary, for any purpose, including the 
426.16  repairing, selling, delivering, installing, or soliciting of 
426.17  orders for the retailer's goods or services, or the leasing of 
426.18  tangible personal property located in this state, whether the 
426.19  place of business or agent, representative, salesperson, 
426.20  canvasser, or solicitor is located in the state permanently or 
426.21  temporarily, or whether or not the retailer or subsidiary is 
426.22  authorized to do business in this state. 
426.23     (b) "Destination of a sale" means the location to which the 
426.24  retailer makes delivery of the property sold, or causes the 
426.25  property to be delivered, to the purchaser of the property, or 
426.26  to the agent or designee of the purchaser.  The delivery may be 
426.27  made by any means, including the United States Postal Service, a 
426.28  common carrier, or a contract for-hire carrier. 
426.29     Sec. 14.  Minnesota Statutes 2000, section 297A.66, 
426.30  subdivision 3, is amended to read: 
426.31     Subd. 3.  [RETAILER NOT MAINTAINING A PLACE OF BUSINESS IN 
426.32  THIS STATE.] (a) To the extent allowed by the United States 
426.33  Constitution and the laws of the United States, a retailer 
426.34  making retail sales from outside this state to a destination 
426.35  within this state and not maintaining a place of business in 
426.36  this state shall collect sales and use taxes and remit them to 
427.1   the commissioner under section 297A.77, if the retailer engages 
427.2   in the regular or systematic soliciting of sales from potential 
427.3   customers in this state by: 
427.4      (1) distribution, by mail or otherwise, of catalogs, 
427.5   periodicals, advertising flyers, or other written solicitations 
427.6   of business to customers in this state; 
427.7      (2) display of advertisements on billboards or other 
427.8   outdoor advertising in this state; 
427.9      (3) advertisements in newspapers published in this state; 
427.10     (4) advertisements in trade journals or other periodicals 
427.11  the circulation of which is primarily within this state; 
427.12     (5) advertisements in a Minnesota edition of a national or 
427.13  regional publication or a limited regional edition in which this 
427.14  state is included as part of a broader regional or national 
427.15  publication which are not placed in other geographically defined 
427.16  editions of the same issue of the same publication; 
427.17     (6) advertisements in regional or national publications in 
427.18  an edition which is not by its contents geographically targeted 
427.19  to Minnesota but which is sold over the counter in Minnesota or 
427.20  by subscription to Minnesota residents; 
427.21     (7) advertisements broadcast on a radio or television 
427.22  station located in Minnesota; or 
427.23     (8) any other solicitation by telegraphy, telephone, 
427.24  computer database, cable, optic, microwave, or other 
427.25  communication system. 
427.26     This paragraph (a) must be construed without regard to the 
427.27  state from which distribution of the materials originated or in 
427.28  which they were prepared.  
427.29     (b) The location within or without this state of 
427.30  independent vendors independent of the retailer that provide 
427.31  products or services to the retailer in connection with its 
427.32  solicitation of customers within this state, including such 
427.33  products and services as creation of copy, printing, 
427.34  distribution, and recording, is not considered in determining 
427.35  whether the retailer is required to collect tax.  
427.36     (c) A retailer not maintaining a place of business in this 
428.1   state is presumed, subject to rebuttal, to be engaged in regular 
428.2   solicitation within this state if it engages in any of the 
428.3   activities in paragraph (a) and: 
428.4      (1) makes 100 or more retail sales from outside this state 
428.5   to destinations in this state during a period of 12 consecutive 
428.6   months; or 
428.7      (2) makes ten or more retail sales totaling more than 
428.8   $100,000 from outside this state to destinations in this state 
428.9   during a period of 12 consecutive months. 
428.10     Sec. 15.  Minnesota Statutes 2000, section 297A.67, 
428.11  subdivision 8, is amended to read: 
428.12     Subd. 8.  [CLOTHING.] Clothing and wearing apparel, 
428.13  including sewing materials to be directly incorporated into 
428.14  wearing apparel, are exempt.  For purposes of this subdivision, 
428.15  clothing and wearing apparel do not include the following: 
428.16     (1) articles designed primarily for use while engaging in a 
428.17  specific sport or recreational activity that are not also worn 
428.18  for general use; 
428.19     (2) articles designed primarily to provide safety or 
428.20  protection against injury while the user is engaged in 
428.21  industrial or general job activities; 
428.22     (3) all articles commonly or commercially known as jewelry 
428.23  including, but not limited to, watches; 
428.24     (4) nonprescription optical glasses of any sort; 
428.25     (5) articles made entirely of fur on the hide or pelt, or 
428.26  partially of such fur if the value of the fur is more than three 
428.27  times the value of the next most valuable component material; 
428.28     (6) perfume, lotions, creams, dyes, or other substances 
428.29  that are applied to the skin, nails, or the hair; and 
428.30     (7) luggage, bags, purses, wallets, or cases of any sort. 
428.31     Sec. 16.  Minnesota Statutes 2000, section 297A.67, 
428.32  subdivision 23, is amended to read: 
428.33     Subd. 23.  [OCCASIONAL SALES.] Isolated and occasional 
428.34  sales in Minnesota not made in the normal course of business, 
428.35  and of selling that kind of property or service are exempt.  The 
428.36  storage, use, or consumption of property or services resulting 
429.1   from such sales, are acquired as a result of such a sale is 
429.2   exempt.  This exemption does not apply to sales of tangible 
429.3   personal property primarily used in a trade or business. 
429.4      Sec. 17.  Minnesota Statutes 2000, section 297A.67, 
429.5   subdivision 24, is amended to read: 
429.6      Subd. 24.  [CONSTITUTIONAL PROHIBITIONS.] The gross 
429.7   receipts from The sale of and the storage, use, or other 
429.8   consumption in Minnesota of tangible personal property, tickets, 
429.9   or admissions, electricity, gas, or local exchange telephone 
429.10  service or services, that the state of Minnesota is prohibited 
429.11  from taxing under the Constitution or laws of the United States 
429.12  or under the Constitution of Minnesota, are exempt. 
429.13     Sec. 18.  Minnesota Statutes 2000, section 297A.67, 
429.14  subdivision 25, is amended to read: 
429.15     Subd. 25.  [MAINTENANCE OF CEMETERY GROUNDS.] Lawn care and 
429.16  related services used in the maintenance of cemetery grounds are 
429.17  exempt.  For purposes of this subdivision, "lawn care and 
429.18  related services" means the services listed in section 297A.61, 
429.19  subdivision 16 3, paragraph (g), clause (6), item (vi), and 
429.20  "cemetery" means a cemetery for human burial. 
429.21     Sec. 19.  Minnesota Statutes 2000, section 297A.68, 
429.22  subdivision 2, is amended to read: 
429.23     Subd. 2.  [MATERIALS CONSUMED IN INDUSTRIAL PRODUCTION.] 
429.24  (a) Materials stored, used, or consumed in industrial production 
429.25  of personal property intended to be sold ultimately at retail 
429.26  are exempt, whether or not the item so used becomes an 
429.27  ingredient or constituent part of the property produced.  
429.28  Materials that qualify for this exemption include, but are not 
429.29  limited to, the following: 
429.30     (1) chemicals, including chemicals used for cleaning food 
429.31  processing machinery and equipment; 
429.32     (2) materials, including chemicals, fuels, and electricity 
429.33  purchased by persons engaged in industrial production to treat 
429.34  waste generated as a result of the production process; 
429.35     (3) fuels, electricity, gas, and steam used or consumed in 
429.36  the production process, except that electricity, gas, or steam 
430.1   used for space heating, cooling, or lighting is exempt only if 
430.2   (i) it is in excess of the average climate control or lighting 
430.3   for the production area, and (ii) it is necessary to produce 
430.4   that particular industrial product; 
430.5      (4) petroleum products and lubricants; 
430.6      (5) packaging materials, including returnable containers 
430.7   used in packaging food and beverage products; 
430.8      (6) accessory tools, equipment, and other items that are 
430.9   separate detachable units with an ordinary useful life of less 
430.10  than 12 months used in producing a direct effect upon the 
430.11  product; and 
430.12     (7) the following materials, tools, and equipment used in 
430.13  metalcasting:  crucibles, thermocouple protection sheaths and 
430.14  tubes, stalk tubes, refractory materials, molten metal filters 
430.15  and filter boxes, degassing lances, and base blocks. 
430.16     (b) This exemption does not include: 
430.17     (1) machinery, equipment, implements, tools, accessories, 
430.18  appliances, contrivances and furniture and fixtures, except 
430.19  those listed in paragraph (a), clause (6); and 
430.20     (2) petroleum and special fuels used in producing or 
430.21  generating power for propelling ready-mixed concrete trucks on 
430.22  the public highways of this state. 
430.23     (c) Industrial production includes, but is not limited to, 
430.24  research, development, design or production of any tangible 
430.25  personal property, manufacturing, processing (other than by 
430.26  restaurants and consumers) of agricultural products (whether 
430.27  vegetable or animal), commercial fishing, refining, smelting, 
430.28  reducing, brewing, distilling, printing, mining, quarrying, 
430.29  lumbering, generating electricity and the production of road 
430.30  building materials.  Industrial production does not include 
430.31  painting, cleaning, repairing or similar processing of property 
430.32  except as part of the original manufacturing process.  
430.33     Sec. 20.  Minnesota Statutes 2000, section 297A.68, 
430.34  subdivision 3, is amended to read: 
430.35     Subd. 3.  [MATERIALS USED IN PROVIDING CERTAIN TAXABLE 
430.36  SERVICES.] (a) Materials stored, used, or consumed in providing 
431.1   a taxable service listed in section 297A.61, subdivision 16 3, 
431.2   paragraph (g), clause (6), intended to be sold ultimately at 
431.3   retail are exempt. 
431.4      (b) This exemption includes, but is not limited to: 
431.5      (1) chemicals, lubricants, packaging materials, seeds, 
431.6   trees, fertilizers, and herbicides, if these items are used or 
431.7   consumed in providing the taxable service; 
431.8      (2) chemicals used to treat waste generated as a result of 
431.9   providing the taxable service; 
431.10     (3) accessory tools, equipment, and other items that are 
431.11  separate detachable units used in providing the service and that 
431.12  have an ordinary useful life of less than 12 months; and 
431.13     (4) fuel, electricity, gas, and steam used or consumed in 
431.14  the production process, except that electricity, gas, or steam 
431.15  used for space heating, cooling, or lighting is exempt only if 
431.16  (i) it is in excess of average climate control or lighting, and 
431.17  (ii) it is necessary to produce that particular taxable service. 
431.18     (c) This exemption does not include machinery, equipment, 
431.19  implements, tools, accessories, appliances, contrivances, 
431.20  furniture, and fixtures used in providing the taxable service. 
431.21     Sec. 21.  Minnesota Statutes 2000, section 297A.68, 
431.22  subdivision 5, is amended to read: 
431.23     Subd. 5.  [CAPITAL EQUIPMENT.] (a) Capital equipment is 
431.24  exempt.  The tax must be imposed and collected as if the rate 
431.25  under section 297A.62, subdivision 1, applied, and then refunded 
431.26  in the manner provided in section 297A.75. 
431.27     "Capital equipment" means machinery and equipment purchased 
431.28  or leased, and used in this state by the purchaser or lessee 
431.29  primarily for manufacturing, fabricating, mining, or refining 
431.30  tangible personal property to be sold ultimately at retail. 
431.31     Capital equipment means if the machinery and equipment is 
431.32  essential to the integrated production process of manufacturing, 
431.33  fabricating, mining, or refining.  Capital equipment also 
431.34  includes machinery and equipment used to electronically transmit 
431.35  results retrieved by a customer of an online computerized data 
431.36  retrieval system. 
432.1      (b) Capital equipment includes, but is not limited to: 
432.2      (1) machinery and equipment used to operate, control, or 
432.3   regulate the production equipment; 
432.4      (2) machinery and equipment used for research and 
432.5   development, design, quality control, and testing activities; 
432.6      (3) environmental control devices that are used to maintain 
432.7   conditions such as temperature, humidity, light, or air pressure 
432.8   when those conditions are essential to and are part of the 
432.9   production process; 
432.10     (4) materials and supplies used to construct and install 
432.11  machinery or equipment; 
432.12     (5) repair and replacement parts, including accessories, 
432.13  whether purchased as spare parts, repair parts, or as upgrades 
432.14  or modifications to machinery or equipment; 
432.15     (6) materials used for foundations that support machinery 
432.16  or equipment; 
432.17     (7) materials used to construct and install special purpose 
432.18  buildings used in the production process; and 
432.19     (8) ready-mixed concrete trucks in which the ready-mixed 
432.20  concrete is mixed as part of the delivery process.  
432.21     (c) Capital equipment does not include the following: 
432.22     (1) motor vehicles taxed under chapter 297B; 
432.23     (2) machinery or equipment used to receive or store raw 
432.24  materials; 
432.25     (3) building materials, except for materials included in 
432.26  paragraph (b), clauses (6) and (7); 
432.27     (4) machinery or equipment used for nonproduction purposes, 
432.28  including, but not limited to, the following:  plant security, 
432.29  fire prevention, first aid, and hospital stations; support 
432.30  operations or administration; pollution control; and plant 
432.31  cleaning, disposal of scrap and waste, plant communications, 
432.32  space heating, cooling, lighting, or safety; 
432.33     (5) farm machinery and aquaculture production equipment as 
432.34  defined by section 297A.61, subdivisions 12 and 13; 
432.35     (6) machinery or equipment purchased and installed by a 
432.36  contractor as part of an improvement to real property; or 
433.1      (7) any other item that is not essential to the integrated 
433.2   process of manufacturing, fabricating, mining, or refining. 
433.3      (d) For purposes of this subdivision: 
433.4      (1) "Machinery" means mechanical, electronic, or electrical 
433.5   devices, including computers and computer software, that are 
433.6   purchased or constructed to be used for the activities set forth 
433.7   in paragraph (a), beginning with the removal of raw materials 
433.8   from inventory through completion of the product, including 
433.9   packaging of the product. 
433.10     (2) "Equipment" means independent devices or tools separate 
433.11  from machinery but essential to an integrated production 
433.12  process, including computers and computer software, used in 
433.13  operating, controlling, or regulating machinery and equipment; 
433.14  and any subunit or assembly comprising a component of any 
433.15  machinery or accessory or attachment parts of machinery, such as 
433.16  tools, dies, jigs, patterns, and molds.  
433.17     (3) "Primarily" means machinery and equipment used 50 
433.18  percent or more of the time in an activity described in 
433.19  paragraph (a). 
433.20     (4) "Manufacturing" means an operation or series of 
433.21  operations where raw materials are changed in form, composition, 
433.22  or condition by machinery and equipment and which results in the 
433.23  production of a new article of tangible personal property.  For 
433.24  purposes of this subdivision, "manufacturing" includes the 
433.25  generation of electricity or steam to be sold at retail. 
433.26     (5) "Fabricating" means to make, build, create, produce, or 
433.27  assemble components or property to work in a new or different 
433.28  manner. 
433.29     (6) "Mining" means the extraction of minerals, ores, stone, 
433.30  or peat. 
433.31     (7) "Refining" means the process of converting a natural 
433.32  resource to a product, including the treatment of water to be 
433.33  sold at retail. 
433.34     (8) "Integrated production process" means a process 
433.35  beginning with the removal of raw materials from inventory 
433.36  through the completion of the product, including packaging of 
434.1   the product. 
434.2      (9) "Online data retrieval system" means a system whose 
434.3   cumulation of information is equally available and accessible to 
434.4   all its customers. 
434.5      (10) (9) "Machinery and equipment used for pollution 
434.6   control" means machinery and equipment used solely to eliminate, 
434.7   prevent, or reduce pollution resulting from an activity 
434.8   described in paragraph (a).  
434.9      Sec. 22.  Minnesota Statutes 2000, section 297A.68, 
434.10  subdivision 11, is amended to read: 
434.11     Subd. 11.  [ADVERTISING MATERIALS.] Material Materials 
434.12  designed to advertise and promote the sale of merchandise or 
434.13  services is are exempt if the material is purchased and stored 
434.14  for the purpose of subsequently shipping or otherwise 
434.15  transferring outside the state by the purchaser for later these 
434.16  materials are mailed or transferred to a person outside the 
434.17  state for use solely outside the state of Minnesota.  Mailing 
434.18  and reply envelopes and cards used exclusively in connection 
434.19  with these advertising and promotional materials are included in 
434.20  this exemption.  The exemption applies regardless of where the 
434.21  mailing occurs.  The storage of these materials in the state for 
434.22  the purpose of subsequently shipping or otherwise transferring 
434.23  the material out of state is also exempt if the other conditions 
434.24  in this subdivision are met. 
434.25     Sec. 23.  Minnesota Statutes 2000, section 297A.68, 
434.26  subdivision 13, is amended to read: 
434.27     Subd. 13.  [OUTSTATE TRANSPORT OR DELIVERY.] (a) Tangible 
434.28  personal property is exempt if the property, without 
434.29  intermediate use, is all of the following conditions are met:  
434.30     (1) the property, without intermediate use, is shipped or 
434.31  transported outside Minnesota by the purchaser or is stored, 
434.32  processed, fabricated or manufactured into, attached to or 
434.33  incorporated into other tangible personal property that is 
434.34  transported or shipped outside Minnesota; and 
434.35     (2) the property is used in a trade or business outside 
434.36  Minnesota after being shipped or transported outside of 
435.1   Minnesota, and is not returned to Minnesota, except in the 
435.2   course of interstate commerce; and 
435.3      (3) the property is either (i) not subject to tax in the 
435.4   state or country to which it is transported for storage or use, 
435.5   or (ii) to be used in other states or countries as part of a 
435.6   maintenance contract. 
435.7      (b) For purposes of this subdivision, storage or 
435.8   processing, fabricating, manufacturing, attaching to, or 
435.9   incorporating into other property is not intermediate use. 
435.10     Sec. 24.  Minnesota Statutes 2000, section 297A.68, 
435.11  subdivision 14, is amended to read: 
435.12     Subd. 14.  [TEMPORARY STORAGE PROPERTY IN TRANSIT.] 
435.13  Tangible personal property is exempt if all of the following 
435.14  conditions are met: 
435.15     (1) it is shipped or brought into Minnesota by a common 
435.16  for-hire carrier; 
435.17     (2) without intermediate use, it is kept in a public 
435.18  warehouse; 
435.19     (3) it is kept for the purpose of being later transported 
435.20  outside Minnesota; and 
435.21     (4) after storage, it is used solely outside Minnesota, 
435.22  except in the course of interstate commerce. 
435.23     Sec. 25.  Minnesota Statutes 2000, section 297A.68, 
435.24  subdivision 18, is amended to read: 
435.25     Subd. 18.  [CUSTOM COMPUTER SOFTWARE.] The design, 
435.26  development, writing, translation, fabrication, lease, or 
435.27  transfer for a consideration of title or possession of a custom 
435.28  computer program is exempt.  "Custom computer program" means a 
435.29  computer program prepared to the special order of the customer, 
435.30  either in the form of written procedures or in the form of 
435.31  storage media on which, or in which, the program is 
435.32  recorded contained on tapes, discs, cards, or another device, or 
435.33  any required documentation or manuals designed to facilitate the 
435.34  use of the custom computer program transferred.  It includes 
435.35  those services represented by separately stated charges for 
435.36  modifications to an existing prewritten program that are 
436.1   prepared to the special order of the customer.  It does not 
436.2   include a "canned" or prewritten computer program that is held 
436.3   or existing for general or repeated sale or lease, even if the 
436.4   prewritten or "canned" program was initially developed on a 
436.5   custom basis or for in-house use.  Modification to an existing 
436.6   prewritten program to meet the customer's needs is custom 
436.7   computer programming only to the extent of the modification.  
436.8      Sec. 26.  Minnesota Statutes 2000, section 297A.68, 
436.9   subdivision 25, is amended to read: 
436.10     Subd. 25.  [OCCASIONAL SALES SALE OF PROPERTY USED IN A 
436.11  TRADE OR BUSINESS.] (a) Isolated or occasional sales of The sale 
436.12  of tangible personal property in Minnesota primarily used in a 
436.13  trade or business is exempt if the sale is not made in the 
436.14  normal course of business of selling that kind of property are 
436.15  exempt.  The storage, use, or consumption of property acquired 
436.16  as a result of such a sale is exempt. 
436.17     (b) This exemption applies to a sale of tangible personal 
436.18  property primarily used in a trade or business only and if one 
436.19  of the following conditions is satisfied:  
436.20     (1) the sale occurs in a transaction subject to or 
436.21  described in section 118, 331, 332, 336, 337, 338, 351, 355, 
436.22  368, 721, 731, 1031, or 1033 of the Internal Revenue Code; 
436.23     (2) the sale is between members of a controlled group as 
436.24  defined in section 1563(a) of the Internal Revenue Code; 
436.25     (3) the sale is a sale of farm machinery; 
436.26     (4) the sale is a farm auction sale; 
436.27     (5) the sale is a sale of substantially all of the assets 
436.28  of a trade or business; or 
436.29     (6) the total amount of gross receipts from the sale of 
436.30  trade or business property made during the calendar month of the 
436.31  sale and the preceding 11 calendar months does not exceed $1,000.
436.32     The use, storage, distribution, or consumption of tangible 
436.33  personal property acquired as a result of a sale exempt under 
436.34  this subdivision is also exempt. 
436.35     (c) (b) For purposes of this subdivision, the following 
436.36  terms have the meanings given.  
437.1      (1) A "farm auction" is a public auction conducted by a 
437.2   licensed auctioneer if substantially all of the property sold 
437.3   consists of property used in the trade or business of farming 
437.4   and property not used primarily in a trade or business. 
437.5      (2) "Trade or business" includes the assets of a separate 
437.6   division, branch, or identifiable segment of a trade or business 
437.7   if, before the sale, the income and expenses attributable to the 
437.8   separate division, branch, or identifiable segment could be 
437.9   separately ascertained from the books of account or record (the 
437.10  lease or rental of an identifiable segment does not qualify for 
437.11  the exemption). 
437.12     (3) A "sale of substantially all of the assets of a trade 
437.13  or business" must occur as a single transaction or a series of 
437.14  related transactions within the 12-month period beginning on the 
437.15  date of the first sale of assets intended to qualify for the 
437.16  exemption provided in paragraph (b) (a), clause (5). 
437.17     Sec. 27.  Minnesota Statutes 2000, section 297A.69, 
437.18  subdivision 2, is amended to read: 
437.19     Subd. 2.  [MATERIALS CONSUMED IN AGRICULTURAL PRODUCTION.] 
437.20  (a) Materials stored, used, or consumed in agricultural 
437.21  production of personal property intended to be sold ultimately 
437.22  at retail are exempt, whether or not the item becomes an 
437.23  ingredient or constituent part of the property produced.  
437.24  Materials that qualify for this exemption include, but are not 
437.25  limited to, the following: 
437.26     (1) feeds, seeds, trees, fertilizers, and herbicides, 
437.27  including when purchased for use by farmers in a federal or 
437.28  state farm or conservation program; 
437.29     (2) materials sold to a veterinarian to be used or consumed 
437.30  in the care, medication, and treatment of agricultural 
437.31  production animals and horses; 
437.32     (3) chemicals, including chemicals used for cleaning food 
437.33  processing machinery and equipment; 
437.34     (4) materials, including chemicals, fuels, and electricity 
437.35  purchased by persons engaged in agricultural production to treat 
437.36  waste generated as a result of the production process; 
438.1      (5) fuels, electricity, gas, and steam used or consumed in 
438.2   the production process, except that electricity, gas, or steam 
438.3   used for space heating, cooling, or lighting is exempt only if 
438.4   (i) it is in excess of the average climate control or lighting 
438.5   for the production area, and (ii) it is necessary to produce 
438.6   that particular agricultural product; 
438.7      (6) petroleum products and lubricants; 
438.8      (7) packaging materials, including returnable containers 
438.9   used in packaging food and beverage products; and 
438.10     (8) accessory tools and equipment that are separate 
438.11  detachable units with an ordinary useful life of less than 12 
438.12  months used in producing a direct effect upon the product. 
438.13  Machinery, equipment, implements, tools, accessories, 
438.14  appliances, contrivances, and furniture and fixtures, except 
438.15  those listed in this clause are not included within this 
438.16  exemption. 
438.17     (b) For purposes of this subdivision, "agricultural 
438.18  production" includes, but is not limited to, horticulture, 
438.19  floriculture, maple syrup harvesting, and the raising of pets, 
438.20  fur-bearing animals, research animals, horses, farmed cervidae 
438.21  as defined in section 17.451, subdivision 2, llamas as defined 
438.22  in section 17.455, subdivision 2, and ratitae as defined in 
438.23  section 17.453, subdivision 3. 
438.24     Sec. 28.  Minnesota Statutes 2000, section 297A.70, 
438.25  subdivision 1, is amended to read: 
438.26     Subdivision 1.  [SCOPE.] (a) To the extent provided in this 
438.27  section, the gross receipts from sales of items to or by, and 
438.28  storage, distribution, use, or consumption of items by the 
438.29  organizations listed in this section are specifically exempted 
438.30  from the taxes imposed by this chapter. 
438.31     (b) Notwithstanding any law to the contrary enacted before 
438.32  1992, only sales to governments and political subdivisions 
438.33  listed in this section are exempt from the taxes imposed by this 
438.34  chapter.  
438.35     (c) "Sales" includes purchases under an installment 
438.36  contract or lease purchase agreement under section 465.71. 
439.1      Sec. 29.  Minnesota Statutes 2000, section 297A.70, 
439.2   subdivision 2, is amended to read: 
439.3      Subd. 2.  [SALES TO GOVERNMENT.] (a) All sales, except 
439.4   those listed in paragraph (b), to the following governments and 
439.5   political subdivisions, or to the listed agencies or 
439.6   instrumentalities of governments and political subdivisions, are 
439.7   exempt: 
439.8      (1) the United States and its agencies and 
439.9   instrumentalities; 
439.10     (2) school districts, the University of Minnesota, state 
439.11  universities, community colleges, technical colleges, state 
439.12  academies, the Perpich Minnesota center for arts education, and 
439.13  an instrumentality of a political subdivision that is accredited 
439.14  as an optional/special function school by the North Central 
439.15  Association of Colleges and Schools; 
439.16     (3) hospitals and nursing homes owned and operated by 
439.17  political subdivisions of the state; 
439.18     (4) other states or political subdivisions of other states, 
439.19  if the sale would be exempt from taxation if it occurred in that 
439.20  state; and 
439.21     (5) sales to public libraries, public library systems, 
439.22  multicounty, multitype library systems as defined in section 
439.23  134.001, county law libraries under chapter 134A, state agency 
439.24  libraries, the state library under section 480.09, and the 
439.25  legislative reference library.  
439.26     (b) This exemption does not apply to the sales of the 
439.27  following products and services: 
439.28     (1) building, construction, or reconstruction materials 
439.29  purchased by a contractor or a subcontractor as a part of a 
439.30  lump-sum contract or similar type of contract with a guaranteed 
439.31  maximum price covering both labor and materials for use in the 
439.32  construction, alteration, or repair of a building or facility; 
439.33     (2) construction materials purchased by tax exempt entities 
439.34  or their contractors to be used in constructing buildings or 
439.35  facilities which will not be used principally by the tax exempt 
439.36  entities; 
440.1      (3) the leasing of a motor vehicle as defined in section 
440.2   297B.01, subdivision 5, except for leases entered into by the 
440.3   United States or its agencies or instrumentalities; or 
440.4      (4) meals and lodging as defined under section 297A.61, 
440.5   subdivisions subdivision 3, paragraph paragraphs (d), and 16 
440.6   (g), paragraph (c) clause (2), except for meals and lodging 
440.7   purchased directly by the United States or its agencies or 
440.8   instrumentalities. 
440.9      (c) As used in this subdivision, "school districts" means 
440.10  public school entities and districts of every kind and nature 
440.11  organized under the laws of the state of Minnesota, and any 
440.12  instrumentality of a school district, as defined in section 
440.13  471.59. 
440.14     Sec. 30.  Minnesota Statutes 2000, section 297A.70, 
440.15  subdivision 4, is amended to read: 
440.16     Subd. 4.  [SALES TO NONPROFIT GROUPS.] (a) All sales, 
440.17  except those listed in paragraph (b), to the following 
440.18  "nonprofit organizations" are exempt: 
440.19     (1) an entity a corporation, society, association, 
440.20  foundation, or institution organized and operated exclusively 
440.21  for charitable, religious, or educational purposes if the item 
440.22  purchased is used in the performance of charitable, religious, 
440.23  or educational functions; and 
440.24     (2) any senior citizen group or association of groups that: 
440.25     (i) in general limits membership to persons who are either 
440.26  age 55 or older, or physically disabled; and 
440.27     (ii) is organized and operated exclusively for pleasure, 
440.28  recreation, and other nonprofit purposes, no part of the net 
440.29  earnings of which inures to the benefit of any private 
440.30  shareholders; and. 
440.31     (3) an entity organized and operated exclusively to 
440.32  maintain 
440.33  For purposes of this subdivision, charitable purpose includes 
440.34  the maintenance of a cemetery owned by a religious organization. 
440.35     (b) This exemption does not apply to the following sales: 
440.36     (1) building, construction, or reconstruction materials 
441.1   purchased by a contractor or a subcontractor as a part of a 
441.2   lump-sum contract or similar type of contract with a guaranteed 
441.3   maximum price covering both labor and materials for use in the 
441.4   construction, alteration, or repair of a building or facility; 
441.5      (2) construction materials purchased by tax-exempt entities 
441.6   or their contractors to be used in constructing buildings or 
441.7   facilities that will not be used principally by the tax-exempt 
441.8   entities; and 
441.9      (3) meals and lodging as defined under section 297A.61, 
441.10  subdivisions subdivision 3, paragraph paragraphs (d), and 
441.11  16 (g), paragraph (c) clause (2); and 
441.12     (4) leasing of a motor vehicle as defined in section 
441.13  297B.01, subdivision 5, except as provided in paragraph (c). 
441.14     (c) This exemption applies to the leasing of a motor 
441.15  vehicle as defined in section 297B.01, subdivision 5, only if 
441.16  the vehicle is: 
441.17     (1) a truck, as defined in section 168.011, a bus, as 
441.18  defined in section 168.011, or a passenger automobile, as 
441.19  defined in section 168.011, if the automobile is designed and 
441.20  used for carrying more than nine persons including the driver; 
441.21  and 
441.22     (2) intended to be used primarily to transport tangible 
441.23  personal property or individuals, other than employees, to whom 
441.24  the organization provides service in performing its charitable, 
441.25  religious, or educational purpose. 
441.26     Sec. 31.  Minnesota Statutes 2000, section 297A.70, 
441.27  subdivision 7, is amended to read: 
441.28     Subd. 7.  [HOSPITALS AND OUTPATIENT SURGICAL CENTERS.] (a) 
441.29  Sales, except for those listed in paragraph (c), to a hospital 
441.30  are exempt, if the items purchased are used in providing 
441.31  hospital services.  For purposes of this subdivision, "hospital" 
441.32  means a hospital organized and operated for charitable purposes 
441.33  within the meaning of section 501(c)(3) of the Internal Revenue 
441.34  Code, and licensed under chapter 144 or by any other 
441.35  jurisdiction, and "hospital services" are services authorized or 
441.36  required to be performed by a "hospital" under chapter 144. 
442.1      (b) Sales, except for those listed in paragraph (c), to an 
442.2   outpatient surgical center are exempt, if the items purchased 
442.3   are used in providing outpatient surgical services.  For 
442.4   purposes of this subdivision, "outpatient surgical center" means 
442.5   an outpatient surgical center organized and operated for 
442.6   charitable purposes within the meaning of section 501(c)(3) of 
442.7   the Internal Revenue Code, and licensed under chapter 144 or by 
442.8   any other jurisdiction.  For the purposes of this subdivision, 
442.9   "outpatient surgical services" means:  (1) services authorized 
442.10  or required to be performed by an outpatient surgical center 
442.11  under chapter 144 or under the applicable licensure law of any 
442.12  other jurisdiction; and (2) urgent care.  For purposes of this 
442.13  subdivision, "urgent care" means health services furnished to a 
442.14  person whose medical condition is sufficiently acute to require 
442.15  treatment unavailable through, or inappropriate to be provided 
442.16  by, a clinic or physician's office, but not so acute as to 
442.17  require treatment in a hospital emergency room.  
442.18     (c) This exemption does not apply to the following products 
442.19  and services: 
442.20     (1) purchases made by a clinic, physician's office, or any 
442.21  other medical facility not operating as a hospital or outpatient 
442.22  surgical center, even though the clinic, office, or facility may 
442.23  be owned and operated by a hospital or outpatient surgical 
442.24  center; 
442.25     (2) sales under section 297A.61, subdivisions 3, paragraph 
442.26  (d), and 16, paragraph (c); 
442.27     (3) building and construction materials used in 
442.28  constructing buildings or facilities that will not be used 
442.29  principally by the hospital or outpatient surgical center; 
442.30     (4) building, construction, or reconstruction materials 
442.31  purchased by a contractor or a subcontractor as a part of a 
442.32  lump-sum contract or similar type of contract with a guaranteed 
442.33  maximum price covering both labor and materials for use in the 
442.34  construction, alteration, or repair of a hospital or outpatient 
442.35  surgical center; or 
442.36     (5) the leasing of a motor vehicle as defined in section 
443.1   297B.01, subdivision 5. 
443.2      Sec. 32.  Minnesota Statutes 2000, section 297A.70, 
443.3   subdivision 8, is amended to read: 
443.4      Subd. 8.  [REGIONWIDE PUBLIC SAFETY RADIO COMMUNICATION 
443.5   SYSTEM; PRODUCTS AND SERVICES.] Products and services including, 
443.6   but not limited to, end user equipment used for construction, 
443.7   ownership, operation, maintenance, and enhancement of the 
443.8   backbone system of the regionwide public safety radio 
443.9   communication system established under sections 473.891 to 
443.10  473.905, are exempt.  For purposes of this subdivision, backbone 
443.11  system is defined in section 473.891, subdivision 9.  This 
443.12  subdivision is effective for purchases, sales, storage, use, or 
443.13  consumption occurring before August 1, 2003, in the counties of 
443.14  Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington. 
443.15     Sec. 33.  Minnesota Statutes 2000, section 297A.70, 
443.16  subdivision 10, is amended to read: 
443.17     Subd. 10.  [NONPROFIT TICKETS OR ADMISSIONS.] Tickets or 
443.18  admissions to the premises of or events sponsored by an 
443.19  organization that provides an opportunity for citizens of the 
443.20  state to participate in the creation, performance, or 
443.21  appreciation of the arts are exempt if the organization is 
443.22  either: 
443.23     (1) a tax-exempt organization within the meaning of 
443.24  Minnesota Statutes 1980, section 290.05, subdivision 1, clause 
443.25  (i), a corporation, fund, foundation, trust, or association if 
443.26  (i) it is organized for exclusively scientific, literary, 
443.27  religious, charitable, educational, or artistic purposes, or for 
443.28  the purpose of making contributions to or for the use of the 
443.29  United States of America, the state of Minnesota or any of its 
443.30  political subdivisions for exclusively public purposes, or for 
443.31  any combination of the purposes listed in this clause, and (ii) 
443.32  no part of the net income of the corporation, fund, foundation, 
443.33  trust, or association inures to the benefit of any private 
443.34  member, stockholder, or individual; or 
443.35     (2) a municipal board that promotes cultural and arts 
443.36  activities. 
444.1   The exemption provided with respect to a municipal board applies 
444.2   only to tickets and admissions to events sponsored by the board. 
444.3      Sec. 34.  Minnesota Statutes 2000, section 297A.70, 
444.4   subdivision 13, is amended to read: 
444.5      Subd. 13.  [FUNDRAISING SALES BY OR FOR NONPROFIT GROUPS.] 
444.6   (a) The following sales by the specified organizations for 
444.7   fundraising purposes are exempt, subject to the limitations 
444.8   listed in paragraph (b): 
444.9      (1) all sales made by an organization that exists solely 
444.10  for the purpose of providing educational or social activities 
444.11  for young people primarily age 18 and under; 
444.12     (2) all sales made by an organization that is a senior 
444.13  citizen group or association of groups if (i) in general it 
444.14  limits membership to persons age 55 or older; (ii) it is 
444.15  organized and operated exclusively for pleasure, recreation, and 
444.16  other nonprofit purposes; and (iii) no part of its net earnings 
444.17  inures to the benefit of any private shareholders; 
444.18     (3) the sale or use of tickets or admissions to a golf 
444.19  tournament held in Minnesota if the beneficiary of the 
444.20  tournament's net proceeds qualifies as a tax-exempt organization 
444.21  under section 501(c)(3) of the Internal Revenue Code; and 
444.22     (4) sales of gum, candy, and candy products sold for 
444.23  fundraising purposes by a nonprofit organization that provides 
444.24  educational and social activities primarily for young people age 
444.25  18 years of age and under. 
444.26     (b) The exemptions listed in paragraph (a) are limited in 
444.27  the following manner: 
444.28     (1) the exemption under paragraph (a), clauses (1) and (2), 
444.29  applies only if the gross annual receipts of the organization 
444.30  from fundraising do not exceed $10,000; and 
444.31     (2) the exemption under paragraph (a), clause (1), does not 
444.32  apply if the sales are derived from admission charges or from 
444.33  activities for which the money must be deposited with the school 
444.34  district treasurer under section 123B.49, subdivision 2, or be 
444.35  recorded in the same manner as other revenues or expenditures of 
444.36  the school district under section 123B.49, subdivision 4. 
445.1      (c) For purposes of this subdivision, a club, association, 
445.2   or other organization of elementary or secondary school students 
445.3   organized for the purpose of carrying on sports, educational, or 
445.4   other extracurricular activities is a separate organization from 
445.5   the school district or school for purposes of applying the 
445.6   $10,000 limit. 
445.7      Sec. 35.  Minnesota Statutes 2000, section 297A.70, 
445.8   subdivision 14, is amended to read: 
445.9      Subd. 14.  [FUNDRAISING EVENTS SPONSORED BY NONPROFIT 
445.10  GROUPS.] (a) Sales of tangible personal property at, and 
445.11  admission charges for fundraising events sponsored by, a 
445.12  nonprofit organization are exempt if the entire proceeds, less 
445.13  the necessary expenses for the event, will be used solely and 
445.14  exclusively for charitable, religious, or educational purposes.  
445.15  Exempt sales include the sale of food, meals, and drinks, and 
445.16  taxable services at the fundraising event. 
445.17     (b) This exemption is limited in the following manner: 
445.18     (1) it does not apply to admission charges for events 
445.19  involving bingo or other gambling activities or to charges for 
445.20  use of amusement devices involving bingo or other gambling 
445.21  activities; 
445.22     (2) all gross receipts are taxable if the profits are not 
445.23  used solely and exclusively for charitable, religious, or 
445.24  educational purposes; 
445.25     (3) it does not apply unless the organization keeps a 
445.26  separate accounting record, including receipts and disbursements 
445.27  from each fundraising event that documents all deductions from 
445.28  gross receipts with receipts and other records; 
445.29     (4) it does not apply to any sale made by or in the name of 
445.30  a nonprofit corporation as the active or passive agent of a 
445.31  person that is not a nonprofit corporation; 
445.32     (5) all gross receipts are taxable if fundraising events 
445.33  exceed 24 days per year; and 
445.34     (6) it does not apply to fundraising events conducted on 
445.35  premises leased for more than five days but less than 30 days. 
445.36     (c) For purposes of this subdivision, a "nonprofit 
446.1   organization" means any unit of government, corporation, 
446.2   society, association, foundation, or institution organized and 
446.3   operated for charitable, religious, educational, civic, 
446.4   fraternal, and senior citizens' or veterans' purposes, no part 
446.5   of the net earnings of which inures to the benefit of a private 
446.6   individual. 
446.7      Sec. 36.  Minnesota Statutes 2000, section 297A.75, is 
446.8   amended to read: 
446.9      297A.75 [REFUND; APPROPRIATION.] 
446.10     Subdivision 1.  [TAX COLLECTED.] The tax on the gross 
446.11  receipts from the sale of the following exempt items must be 
446.12  imposed and collected as if the sale were taxable and the rate 
446.13  under section 297A.62, subdivision 1, applied.  The exempt items 
446.14  include: 
446.15     (1) capital equipment exempt under section 297A.68, 
446.16  subdivision 5; 
446.17     (2) building materials for an agricultural processing 
446.18  facility exempt under section 297A.71, subdivision 13; 
446.19     (3) building materials for mineral production facilities 
446.20  exempt under section 297A.71, subdivision 14; 
446.21     (4) building materials for correctional facilities under 
446.22  section 297A.71, subdivision 3; 
446.23     (5) building materials used in a residence for disabled 
446.24  veterans exempt under section 297A.71, subdivision 11; and 
446.25     (6) chair lifts, ramps, elevators, and associated building 
446.26  materials exempt under section 297A.71, subdivision 12; and 
446.27     (7) building materials for the Long Lake Conservation 
446.28  Center exempt under section 297A.71, subdivision 17. 
446.29     Subd. 2.  [REFUND; ELIGIBLE PERSONS.] Upon application on 
446.30  forms prescribed by the commissioner, a refund equal to the tax 
446.31  paid on the gross receipts of the exempt items must be paid to 
446.32  the applicant.  Only the following persons may apply for the 
446.33  refund: 
446.34     (1) for subdivision 1, clauses (1) to (3), the applicant 
446.35  must be the purchaser; 
446.36     (2) for subdivision 1, clause clauses (4) and (7), the 
447.1   applicant must be the governmental subdivision; 
447.2      (3) for subdivision 1, clause (5), the applicant must be 
447.3   the recipient of the benefits provided in United States Code, 
447.4   title 38, chapter 21; and 
447.5      (4) for subdivision 1, clause (6), the applicant must be 
447.6   the owner of the homestead property. 
447.7      Subd. 3.  [APPLICATION.] (a) The application must include 
447.8   sufficient information to permit the commissioner to verify the 
447.9   tax paid.  If the tax was paid by a contractor, subcontractor, 
447.10  or builder, under subdivision 1, clause (4), (5), or (6), or 
447.11  (7), the contractor, subcontractor, or builder must furnish to 
447.12  the refund applicant a statement including the cost of the 
447.13  exempt items and the taxes paid on the items unless otherwise 
447.14  specifically provided by this subdivision.  The provisions of 
447.15  sections 289A.40 and 289A.50 apply to refunds under this section.
447.16     (b) An applicant may not file more than two applications 
447.17  per calendar year for refunds for taxes paid on capital 
447.18  equipment exempt under section 297A.68, subdivision 5.  
447.19     Subd. 4.  [INTEREST.] Interest must be paid on the refund 
447.20  at the rate in section 270.76 from the date the refund claim is 
447.21  filed for taxes paid under subdivision 1, clauses (1) to (3), 
447.22  and (5), and from 60 days after the date the refund claim is 
447.23  filed with the commissioner for claims filed under subdivision 
447.24  1, clauses (4) and, (6), and (7). 
447.25     Subd. 5.  [APPROPRIATION.] The amount required to make the 
447.26  refunds is annually appropriated to the commissioner. 
447.27     Sec. 37.  Minnesota Statutes 2000, section 297A.77, 
447.28  subdivision 1, is amended to read: 
447.29     Subdivision 1.  [COLLECTION OF TAX AT TIME OF SALE.] The 
447.30  tax must be stated and charged separately from the sales 
447.31  price or charge for service insofar as practicable and must be 
447.32  collected by the seller from the purchaser.  
447.33     Sec. 38.  Minnesota Statutes 2000, section 297A.80, is 
447.34  amended to read: 
447.35     297A.80 [TAXES IN OTHER STATES; OFFSET AGAINST USE 
447.36  TAX CREDIT.] 
448.1      Subdivision 1.  [MULTISTATE TAX COMPACT STATES.] If an 
448.2   article of tangible personal property or an item listed in 
448.3   section 297A.63 has already been taxed for its sale, 
448.4   distribution, storage, use, or other consumption by another 
448.5   state, or a subdivision of another state, that is a member of 
448.6   the multistate tax compact, a tax credit is allowed to the 
448.7   person who paid the tax in the other state or subdivision of the 
448.8   other state under the provisions of section 290.171, article V. 
448.9      Subd. 2.  [OTHER STATES; GENERALLY.] If an article of 
448.10  tangible personal property or an item listed in section 297A.63 
448.11  has already been taxed by another state for its sale, 
448.12  distribution, storage, use, or other consumption in an amount 
448.13  less than the tax imposed by this chapter, then as to the person 
448.14  who paid the tax in the other state, section 297A.63 applies 
448.15  only at a rate measured by the difference between the rate 
448.16  imposed under section 297A.62 and the rate by which the previous 
448.17  tax was computed by another state not included in subdivision 1, 
448.18  a tax credit is allowed against the tax imposed in section 
448.19  297A.63 to the person who paid the tax in the amount of tax paid 
448.20  to the other state.  If the tax imposed in the other state is 
448.21  equal to or greater than The credit cannot exceed the tax 
448.22  imposed in this state, then no tax is due from that person under 
448.23  section 297A.63. 
448.24     Sec. 39.  Minnesota Statutes 2000, section 297A.82, 
448.25  subdivision 3, is amended to read: 
448.26     Subd. 3.  [PAYMENT OF TAX TO COMMISSIONER.] If the an 
448.27  aircraft is purchased from a person who is not the holder of a 
448.28  valid sales and use tax permit under this chapter, the purchaser 
448.29  shall pay the tax to the commissioner of revenue prior to 
448.30  registering or licensing the aircraft in this state.  The 
448.31  commissioner of revenue shall issue a certificate stating that 
448.32  the sales and use tax in respect to the transaction has been 
448.33  paid.  
448.34     Sec. 40.  Minnesota Statutes 2000, section 297A.89, 
448.35  subdivision 1, is amended to read: 
448.36     Subdivision 1.  [COMMISSIONER MAY PERMIT.] The commissioner 
449.1   may permit purchasers to pay taxes imposed by this chapter 
449.2   directly to the commissioner.  Any taxes paid by purchasers 
449.3   under this section are considered use taxes, except for local 
449.4   sales taxes when no corresponding local use tax is imposed.  
449.5      Sec. 41.  Minnesota Statutes 2000, section 297A.90, 
449.6   subdivision 1, is amended to read: 
449.7      Subdivision 1.  [REGISTRATION; RECORDS.] (a) A person who 
449.8   is engaged in interstate for-hire transportation of tangible 
449.9   personal property or passengers by motor vehicle may, under 
449.10  rules prescribed by the commissioner, register as a retailer and 
449.11  pay the taxes imposed by this chapter in accordance with this 
449.12  section.  Any taxes paid under this section are use taxes, 
449.13  except local sales taxes when no corresponding local use tax is 
449.14  imposed. 
449.15     (b) As used in this section, "person" means:  
449.16     (1) one who possesses a certificate or permit or has 
449.17  completed a registration process that authorizes for-hire 
449.18  transportation of property or passengers from the United States 
449.19  Department of Transportation, the transportation regulation 
449.20  board, or the department of transportation; 
449.21     (2) one who transports commodities defined as "exempt" in 
449.22  for-hire transportation in interstate commerce; or 
449.23     (3) one who transports tangible personal property in 
449.24  interstate commerce, pursuant to contracts with persons 
449.25  described in clause (1) or (2).  
449.26  Persons qualifying under clause (2) or (3) must maintain on a 
449.27  current basis the same type of mileage records that are required 
449.28  by persons specified in clause (1) by the United States 
449.29  Department of Transportation.  
449.30     (c) Persons who in the course of their business are 
449.31  transporting solely their own goods in interstate commerce may 
449.32  also register as retailers under rules prescribed by the 
449.33  commissioner and pay the taxes imposed by this chapter in 
449.34  accordance with this section.  
449.35     Sec. 42.  Minnesota Statutes 2000, section 297A.91, 
449.36  subdivision 1, is amended to read: 
450.1      Subdivision 1.  [SEIZURE OF PROPERTY USED IN ILLEGAL 
450.2   TRANSPORT.] (a) If the retailer does not have a sales or use tax 
450.3   permit and has been engaging in transporting personal property 
450.4   into the state without payment of the tax, the commissioner of 
450.5   revenue or the commissioner's agents may seize in the name of 
450.6   the state any truck, automobile, or means of transportation not 
450.7   owned or operated by a common for-hire carrier, used in the 
450.8   illegal importation and transportation of any tangible personal 
450.9   property by a retailer or the retailer's agent or employee.  The 
450.10  commissioner may demand the forfeiture and sale of the truck, 
450.11  automobile, or other means of transportation together with the 
450.12  property being transported illegally, unless the owner 
450.13  establishes to the satisfaction of the commissioner or the court 
450.14  that the owner had no notice or knowledge or reason to believe 
450.15  that the vehicle was used or intended to be used in any such 
450.16  violation. 
450.17     (b) Within two days after the seizure, the person making 
450.18  the seizure shall deliver an inventory of the vehicle and 
450.19  property seized to the person from whom the seizure was made, if 
450.20  known, and to any person known or believed to have any right, 
450.21  title, interest, or lien on the vehicle or property.  The person 
450.22  making the seizure shall also file a copy of the inventory with 
450.23  the commissioner.  
450.24     Sec. 43.  Minnesota Statutes 2000, section 297A.92, 
450.25  subdivision 2, is amended to read: 
450.26     Subd. 2.  [AUCTIONS OF SECURITY.] The commissioner may sell 
450.27  property deposited as security at public auction if necessary to 
450.28  recover the amount required to be collected, including any 
450.29  interest and penalties.  Notice of the sale must be served upon 
450.30  the person who deposited the security.  It must be served 
450.31  personally, or by mail as prescribed for the service of a notice 
450.32  of a deficiency an order of assessment under section 289A.37, 
450.33  subdivision 5.  After a sale any surplus above the amount due 
450.34  not required as security under this section must be returned to 
450.35  the person who deposited the security. 
450.36     Sec. 44.  Minnesota Statutes 2000, section 297A.94, is 
451.1   amended to read: 
451.2      297A.94 [DEPOSIT OF REVENUES.] 
451.3      (a) Except as provided in this section, the commissioner 
451.4   shall deposit the revenues, including interest and penalties, 
451.5   derived from the taxes imposed by this chapter in the state 
451.6   treasury and credit them to the general fund.  
451.7      (b) The commissioner shall deposit taxes in the Minnesota 
451.8   agricultural and economic account in the special revenue fund if:
451.9      (1) the taxes are derived from sales and use of property 
451.10  and services purchased for the construction and operation of an 
451.11  agricultural resource project; and 
451.12     (2) the purchase was made on or after the date on which a 
451.13  conditional commitment was made for a loan guaranty for the 
451.14  project under section 41A.04, subdivision 3. 
451.15  The commissioner of finance shall certify to the commissioner 
451.16  the date on which the project received the conditional 
451.17  commitment.  The amount deposited in the loan guaranty account 
451.18  must be reduced by any refunds and by the costs incurred by the 
451.19  department of revenue to administer and enforce the assessment 
451.20  and collection of the taxes.  
451.21     (c) The commissioner shall deposit the revenues, including 
451.22  interest and penalties, derived from the taxes imposed on sales 
451.23  and purchases included in section 297A.61, subdivision 16, 
451.24  paragraphs (b) and (f) 3, paragraph (g), clauses (1) and (5), in 
451.25  the state treasury, and credit them as follows: 
451.26     (1) first to the general obligation special tax bond debt 
451.27  service account in each fiscal year the amount required by 
451.28  section 16A.661, subdivision 3, paragraph (b); and 
451.29     (2) after the requirements of clause (1) have been met, the 
451.30  balance to the general fund. 
451.31     (d) The commissioner shall deposit the revenues, including 
451.32  interest and penalties, collected under section 297A.64, 
451.33  subdivision 5, in the state treasury and credit them to the 
451.34  general fund.  By July 15 of each year the commissioner shall 
451.35  transfer to the highway user tax distribution fund an amount 
451.36  equal to the excess fees collected under section 297A.64, 
452.1   subdivision 5, for the previous calendar year. 
452.2      (e) For fiscal year 2001, 97 percent, and for fiscal year 
452.3   2002 and thereafter, 87 percent of the revenues, including 
452.4   interest and penalties, transmitted to the commissioner under 
452.5   section 297A.65, must be deposited by the commissioner in the 
452.6   state treasury as follows: 
452.7      (1) 50 percent of the receipts must be deposited in the 
452.8   heritage enhancement account in the game and fish fund, and may 
452.9   be spent only on activities that improve, enhance, or protect 
452.10  fish and wildlife resources, including conservation, 
452.11  restoration, and enhancement of land, water, and other natural 
452.12  resources of the state; 
452.13     (2) 22.5 percent of the receipts must be deposited in the 
452.14  natural resources fund, and may be spent only for state parks 
452.15  and trails; 
452.16     (3) 22.5 percent of the receipts must be deposited in the 
452.17  natural resources fund, and may be spent only on metropolitan 
452.18  park and trail grants; 
452.19     (4) three percent of the receipts must be deposited in the 
452.20  natural resources fund, and may be spent only on local trail 
452.21  grants; and 
452.22     (5) two percent of the receipts must be deposited in the 
452.23  natural resources fund, and may be spent only for the Minnesota 
452.24  zoological garden, the Como park zoo and conservatory, and the 
452.25  Duluth zoo. 
452.26     (f) The revenue dedicated under paragraph (e) may not be 
452.27  used as a substitute for traditional sources of funding for the 
452.28  purposes specified, but the dedicated revenue shall supplement 
452.29  traditional sources of funding for those purposes.  Land 
452.30  acquired with money deposited in the game and fish fund under 
452.31  paragraph (e) must be open to public hunting and fishing during 
452.32  the open season.  At least 87 percent of the money deposited in 
452.33  the game and fish fund for improvement, enhancement, or 
452.34  protection of fish and wildlife resources under paragraph (e) 
452.35  must be allocated for field operations. 
452.36     Sec. 45.  Minnesota Statutes 2000, section 297A.99, 
453.1   subdivision 7, is amended to read: 
453.2      Subd. 7.  [EXEMPTIONS.] (a) All goods or services that are 
453.3   otherwise exempt from taxation under this chapter are exempt 
453.4   from a political subdivision's tax. 
453.5      (b) The gross receipts from the sale of tangible personal 
453.6   property that meets the requirement of section 297A.68, 
453.7   subdivision 13 or 14 15, are exempt, except the qualification 
453.8   test applies based on the boundaries of the political 
453.9   subdivision instead of the state of Minnesota. 
453.10     (c) All mobile transportation equipment, and parts and 
453.11  accessories attached to or to be attached to the equipment are 
453.12  exempt, if purchased by a holder of a motor carrier direct pay 
453.13  permit under section 297A.90.  
453.14     Sec. 46.  [INSTRUCTIONS TO REVISOR.] 
453.15     (a) In the next edition of Minnesota Statutes, the revisor 
453.16  of statutes shall put the definitions in section 297A.68, 
453.17  subdivision 5, paragraph (d), in alphabetical order and correct 
453.18  any references to the reordered definitions. 
453.19     (b) In the next edition of Minnesota Statutes, the revisor 
453.20  of statutes shall renumber section 297A.68, subdivision 27, as 
453.21  297A.67, subdivision 25, and correct any references to the 
453.22  renumbered section. 
453.23     Sec. 47.  [REPEALER.] 
453.24     Minnesota Statutes 2000, sections 297A.61, subdivision 16; 
453.25  297A.68, subdivision 21; and 297A.71, subdivision 21, are 
453.26  repealed. 
453.27     Sec. 48.  [EFFECTIVE DATE.] 
453.28     Each section of this act takes effect at the time the 
453.29  section it amends is effective under Laws 2000, chapter 418, 
453.30  article 1, section 46. 
453.31                             ARTICLE 15
453.32                           SPECIAL TAXES
453.33     Section 1.  Minnesota Statutes 2000, section 69.021, 
453.34  subdivision 5, is amended to read: 
453.35     Subd. 5.  [CALCULATION OF STATE AID.] (a) The amount of 
453.36  fire state aid available for apportionment, before the addition 
454.1   of the minimum fire state aid allocation amount under 
454.2   subdivision 7, is equal to 107 percent of the amount of premium 
454.3   taxes paid to the state upon the fire, lightning, sprinkler 
454.4   leakage, and extended coverage premiums reported to the 
454.5   commissioner by insurers on the Minnesota Firetown Premium 
454.6   Report.  This amount shall be reduced by the amount required to 
454.7   pay the state auditor's costs and expenses of the audits or 
454.8   exams of the firefighters relief associations. 
454.9      The total amount for apportionment in respect to fire state 
454.10  aid must not be less than two percent of the premiums reported 
454.11  to the commissioner by insurers on the Minnesota Firetown 
454.12  Premium Report after subtracting the following amounts: 
454.13     (1) the amount required to pay the state auditor's costs 
454.14  and expenses of the audits or exams of the firefighters relief 
454.15  associations; and 
454.16     (2) one percent of the premiums reported by town and 
454.17  farmers' mutual insurance companies and mutual property and 
454.18  casualty companies with total assets of $5,000,000 or less.  
454.19     (b) The total amount for apportionment as police state aid 
454.20  is equal to 104 percent of the amount of premium taxes paid to 
454.21  the state on the premiums reported to the commissioner by 
454.22  insurers on the Minnesota Aid to Police Premium Report, plus the 
454.23  payment amounts received under section 60A.152 since the last 
454.24  aid apportionment, and reduced by the amount required to pay the 
454.25  costs and expenses of the state auditor for audits or exams of 
454.26  police relief associations.  The total amount for apportionment 
454.27  in respect to the police state aid program must not be less than 
454.28  two percent of the amount of premiums reported to the 
454.29  commissioner by insurers on the Minnesota Aid to Police Premium 
454.30  Report after subtracting the amount required to pay the state 
454.31  auditor's cost and expenses of the audits or exams of the police 
454.32  relief associations.  
454.33     (c) The commissioner shall calculate the percentage of 
454.34  increase or decrease reflected in the apportionment over or 
454.35  under the previous year's available state aid using the same 
454.36  premiums as a basis for comparison. 
455.1      (d) The amount for apportionment in respect to peace 
455.2   officer state aid under paragraph (b) must be further reduced by 
455.3   $1,779,000 in fiscal year 1999, $2,077,000 in fiscal year 2000, 
455.4   and $2,404,000 in fiscal year 2001.  These reductions in this 
455.5   paragraph cancel to the general fund. 
455.6      (e) The amount for apportionment of police state aid under 
455.7   paragraph (b) is annually increased by an amount equal to the 
455.8   revenues under the tax on automobile risk self-insurance under 
455.9   Minnesota Statutes 2000, section 297I.05, subdivision 8, that 
455.10  were collected in fiscal year 2001.  An amount sufficient to pay 
455.11  this increase is annually appropriated from the general fund. 
455.12     <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
455.13  fiscal year 2002. 
455.14     Sec. 2.  Minnesota Statutes 2000, section 168.013, 
455.15  subdivision 1a, is amended to read: 
455.16     Subd. 1a.  [PASSENGER AUTOMOBILE; HEARSE.] (a) On passenger 
455.17  automobiles as defined in section 168.011, subdivision 7, and 
455.18  hearses, except as otherwise provided, the tax shall be $10 plus 
455.19  an additional tax equal to 1.25 percent of the base value.  
455.20     (b) Subject to the classification provisions herein, "base 
455.21  value" means the manufacturer's suggested retail price of the 
455.22  vehicle including destination charge using list price 
455.23  information published by the manufacturer or determined by the 
455.24  registrar if no suggested retail price exists, and shall not 
455.25  include the cost of each accessory or item of optional equipment 
455.26  separately added to the vehicle and the suggested retail price. 
455.27     (c) If the manufacturer's list price information contains a 
455.28  single vehicle identification number followed by various 
455.29  descriptions and suggested retail prices, the registrar shall 
455.30  select from those listings only the lowest price for determining 
455.31  base value. 
455.32     (d) If unable to determine the base value because the 
455.33  vehicle is specially constructed, or for any other reason, the 
455.34  registrar may establish such value upon the cost price to the 
455.35  purchaser or owner as evidenced by a certificate of cost but not 
455.36  including Minnesota sales or use tax or any local sales or other 
456.1   local tax. 
456.2      (e) The registrar shall classify every vehicle in its 
456.3   proper base value class as follows: 
456.4                         FROM                   TO
456.5                         $  0                $199.99
456.6                          200                 399.99
456.7   and thereafter a series of classes successively set in brackets 
456.8   having a spread of $200 consisting of such number of classes as 
456.9   will permit classification of all vehicles. 
456.10     (f) The base value for purposes of this section shall be 
456.11  the middle point between the extremes of its class. 
456.12     (g) The registrar shall establish the base value, when new, 
456.13  of every passenger automobile and hearse registered prior to the 
456.14  effective date of Extra Session Laws 1971, chapter 31, using 
456.15  list price information published by the manufacturer or any 
456.16  nationally recognized firm or association compiling such data 
456.17  for the automotive industry.  If unable to ascertain the base 
456.18  value of any registered vehicle in the foregoing manner, the 
456.19  registrar may use any other available source or method.  The tax 
456.20  on all previously registered vehicles shall be computed upon the 
456.21  base value thus determined taking into account the depreciation 
456.22  provisions of paragraph (h). 
456.23     (h) Except as provided in paragraph (i), The annual 
456.24  additional tax computed upon the base value as provided herein, 
456.25  during the first and second years of vehicle life shall be 
456.26  computed upon 100 percent of the base value; for the third and 
456.27  fourth years, 90 percent of such value; for the fifth and sixth 
456.28  years, 75 percent of such value; for the seventh year, 60 
456.29  percent of such value; for the eighth year, 40 percent of such 
456.30  value; for the ninth year, 30 percent of such value; for the 
456.31  tenth year, ten percent of such value; for the 11th and each 
456.32  succeeding year, the sum of $25.  
456.33  In no event shall the annual additional tax be less than $25.  
456.34  The total tax under this subdivision shall not exceed $189 for 
456.35  the first renewal period and shall not exceed $99 for subsequent 
456.36  renewal periods.  The total tax under this subdivision on any 
457.1   vehicle filing its initial registration in Minnesota in the 
457.2   second year of vehicle life shall not exceed $189 and shall not 
457.3   exceed $99 for subsequent renewal periods.  The total tax under 
457.4   this subdivision on any vehicle filing its initial registration 
457.5   in Minnesota in the third or subsequent year of vehicle life 
457.6   shall not exceed $99 and shall not exceed $99 in any subsequent 
457.7   renewal period. 
457.8      (i) The annual additional tax under paragraph (h) on a 
457.9   motor vehicle on which the first annual tax was paid before 
457.10  January 1, 1990, must not exceed the tax that was paid on that 
457.11  vehicle the year before.  The total tax due for the first 
457.12  renewal period on any vehicle whose initial registration in 
457.13  Minnesota was for a period of less than 12 months under section 
457.14  168.017, subdivision 3, paragraph (a), clause (2), shall be the 
457.15  ad valorem rate for the remainder of the initial 12-month period 
457.16  plus $16 per month on each remaining month.  The total tax due 
457.17  on the second renewal period shall be $16 per month for the 
457.18  remainder of the first 12-month renewal period and $8 per month 
457.19  thereafter for a total of 12 months. 
457.20     <b>[EFFECTIVE DATE.]</b> This section is effective June 1, 2001, 
457.21  for taxes payable on and after that date. 
457.22     Sec. 3.  Minnesota Statutes 2000, section 239.101, 
457.23  subdivision 3, is amended to read: 
457.24     Subd. 3.  [PETROLEUM INSPECTION FEE.] A person who owns 
457.25  petroleum products held in storage at a pipeline terminal, river 
457.26  terminal, or refinery shall pay a petroleum inspection fee of 85 
457.27  cents for every 1,000 gallons sold or withdrawn from the 
457.28  terminal or refinery storage An inspection fee is imposed on 
457.29  petroleum products when received by the first licensed 
457.30  distributor, and on petroleum products received and held for 
457.31  sale or use by any person when the petroleum products have not 
457.32  previously been received by a licensed distributor.  The 
457.33  petroleum inspection fee is 85 cents for every 1,000 gallons 
457.34  received.  The commissioner of revenue shall collect the fee.  
457.35  The revenue from the fee must first be applied to cover the 
457.36  amounts appropriated for petroleum product quality inspection 
458.1   expenses, for the inspection and testing of petroleum product 
458.2   measuring equipment, and for petroleum supply monitoring under 
458.3   chapter 216C.  
458.4      The commissioner of revenue shall credit a person for 
458.5   inspection fees previously paid in error or for any material 
458.6   exported or sold for export from the state upon filing of a 
458.7   report as prescribed by the commissioner of revenue.  The 
458.8   commissioner of revenue may collect the inspection fee along 
458.9   with any taxes due under chapter 296A.  
458.10     <b>[EFFECTIVE DATE.]</b> This section is effective for petroleum 
458.11  products received on or after July 1, 2001. 
458.12     Sec. 4.  Minnesota Statutes 2000, section 287.035, is 
458.13  amended to read: 
458.14     287.035 [IMPOSITION OF TAX.] 
458.15     A tax of 23 cents is imposed upon each $100, or fraction 
458.16  thereof, is imposed on the privilege of recording a mortgage.  
458.17  The tax rate is .0023 of the debt or portion of a debt that is 
458.18  secured by any recorded mortgage of real property located in 
458.19  this state.  The person liable for the tax is the mortgagee.  If 
458.20  the mortgagee is a governmental agency, the tax is imposed on 
458.21  and must be paid by the mortgagor.  A governmental agency 
458.22  includes a federal, state, or local government or an 
458.23  instrumentality of a federal, state, or local government.  The 
458.24  tax is not imposed on the lawful interest amounts that may 
458.25  accrue with respect to a debt. 
458.26     <b>[EFFECTIVE DATE.]</b> This section is effective for mortgages 
458.27  recorded after June 30, 2001. 
458.28     Sec. 5.  Minnesota Statutes 2000, section 287.04, is 
458.29  amended to read: 
458.30     287.04 [EXEMPTIONS.] 
458.31     The tax imposed by section 287.035 does not apply to:  
458.32     (a) A decree of marriage dissolution or an instrument made 
458.33  pursuant to it.  
458.34     (b) A mortgage given to correct a misdescription of the 
458.35  mortgaged property. 
458.36     (c) A mortgage or other instrument that adds additional 
459.1   security for the same debt for which mortgage registry tax has 
459.2   been paid.  
459.3      (d) A contract for the conveyance of any interest in real 
459.4   property, including a contract for deed. 
459.5      (e) A mortgage secured by real property subject to the 
459.6   minerals production tax of sections 298.24 to 298.28. 
459.7      (f) The principal amount of bonds or other obligations 
459.8   issued by the St. Paul port authority under its common revenue 
459.9   bond fund if each of the following conditions are met. 
459.10     (1) The bonds or other obligations are secured by a 
459.11  mortgage on property, title to which is held by the political 
459.12  subdivision. 
459.13     (2) The mortgage is recorded after May 19, 1993. 
459.14     (3) The bonds or other obligations are either (i)  
459.15  outstanding on May 19, 1993, or (ii) issued in exchange for or 
459.16  to otherwise refund bonds or other obligations the original 
459.17  series of which were issued before May 19, 1993 a mortgage loan 
459.18  made under a low and moderate income or other affordable housing 
459.19  program, if the mortgagee is a federal, state, or local 
459.20  government agency. 
459.21     (g) Mortgages taken in good faith by persons or 
459.22  corporations whose property is expressly exempted from taxation 
459.23  by section 272.02, subdivisions 2 to 8 7, or mortgagees that are 
459.24  fraternal benefit societies subject to section 64B.24. 
459.25     (h) A mortgage amendment or extension, as defined in 
459.26  section 287.01. 
459.27     <b>[EFFECTIVE DATE.]</b> This section is effective for mortgages 
459.28  recorded after June 30, 2001. 
459.29     Sec. 6.  Minnesota Statutes 2000, section 287.08, is 
459.30  amended to read: 
459.31     287.08 [TAX, HOW PAYABLE; RECEIPTS.] 
459.32     (a) The tax imposed by sections 287.01 to 287.12 must be 
459.33  paid to the treasurer of any county in this state in which the 
459.34  real property or some part is located at or before the time of 
459.35  filing the mortgage for record.  The treasurer shall endorse 
459.36  receipt on the mortgage and the receipt is conclusive proof that 
460.1   the tax has been paid in the amount stated and authorizes any 
460.2   county recorder or registrar of titles to record the mortgage.  
460.3   Its form, in substance, shall be "registration tax hereon of 
460.4   ..................... dollars paid."  If the mortgage is exempt 
460.5   from taxation the endorsement shall, in substance, be "exempt 
460.6   from registration tax."  In either case the receipt must be 
460.7   signed by the treasurer.  In case the treasurer is unable to 
460.8   determine whether a claim of exemption should be allowed, the 
460.9   tax must be paid as in the case of a taxable mortgage.  
460.10     (b) Upon written application of the taxpayer, The county 
460.11  treasurer may refund in whole or in part any mortgage registry 
460.12  tax that has been erroneously paid, or a person having paid a 
460.13  mortgage registry tax amount may seek a refund of the tax, or 
460.14  other appropriate relief, overpayment if a written application 
460.15  by the taxpayer is submitted to the county treasurer within 
460.16  three and one-half years from the date of the overpayment.  If 
460.17  the county has not issued a denial of the application, the 
460.18  taxpayer may bring an action in tax court in the county in which 
460.19  the tax was paid at any time after the expiration of six months 
460.20  from the time that the application was submitted.  A denial of 
460.21  refund may be appealed within 60 days from the date of the 
460.22  denial by bringing an action in tax court in the county in which 
460.23  the tax was paid, within 60 days of the payment.  The action is 
460.24  commenced by the serving of a petition for relief on the county 
460.25  treasurer, and by filing a copy with the court.  The county 
460.26  attorney shall defend the action.  The county treasurer shall 
460.27  notify the treasurer of each county that has or would receive a 
460.28  portion of the tax as paid.  
460.29     (c) If the county treasurer determines a refund should be 
460.30  paid, or if a refund is ordered by the court, the county 
460.31  treasurer of each county that actually received a portion of the 
460.32  tax shall immediately pay a proportionate share of three percent 
460.33  of the refund using any available county funds.  The county 
460.34  treasurer of each county that received, or would have received, 
460.35  a portion of the tax shall also pay their county's proportionate 
460.36  share of the remaining 97 percent of the court-ordered refund on 
461.1   or before the 20th day of the following month using solely the 
461.2   mortgage registry tax funds that would be paid to the 
461.3   commissioner of revenue on that date under section 287.12.  If 
461.4   the funds on hand under this procedure are insufficient to fully 
461.5   fund 97 percent of the court-ordered refund, the county 
461.6   treasurer of the county in which the action was brought shall 
461.7   file a claim with the commissioner of revenue under section 
461.8   16A.48 for the remaining portion of 97 percent of the refund, 
461.9   and shall pay over the remaining portion upon receipt of a 
461.10  warrant from the state issued pursuant to the claim. 
461.11     (d) When any mortgage covers real property located in more 
461.12  than one county in this state the total tax must be paid to the 
461.13  treasurer of the county where the mortgage is first presented 
461.14  for recording, and the payment must be receipted as provided in 
461.15  paragraph (a).  If the principal debt or obligation secured by 
461.16  such a multiple county mortgage exceeds $1,000,000, the nonstate 
461.17  portion of the tax must be divided and paid over by the county 
461.18  treasurer receiving it, on or before the 20th day of each month 
461.19  after receipt, to the county or counties entitled in the ratio 
461.20  that the market value of the real property covered by the 
461.21  mortgage in each county bears to the market value of all the 
461.22  real property in this state described in the mortgage.  In 
461.23  making the division and payment the county treasurer shall send 
461.24  a statement giving the description of the real property 
461.25  described in the mortgage and the market value of the part 
461.26  located in each county.  For this purpose, the treasurer of any 
461.27  county may require the treasurer of any other county to certify 
461.28  to the former the market valuation of any tract of real property 
461.29  in any mortgage. 
461.30     (e) If the mortgagee is a governmental agency as defined in 
461.31  section 287.035, the mortgagor must pay the tax imposed by 
461.32  sections 287.01 to 287.12.  The mortgagee may undertake to 
461.33  collect and remit the tax on behalf of the mortgagor.  If the 
461.34  mortgagee collects money from the mortgagor to remit the tax on 
461.35  behalf of the mortgagor, the mortgagee has a fiduciary duty to 
461.36  remit the tax on behalf of the mortgagor as to the amount of the 
462.1   tax collected for that purpose and the mortgagor is relieved of 
462.2   any further obligation to pay the tax as to the amount collected 
462.3   by the mortgagee for this purpose. 
462.4      <b>[EFFECTIVE DATE.]</b> This section is effective for 
462.5   overpayments made after June 30, 2001, and for documents 
462.6   executed, recorded, or registered after June 30, 2001. 
462.7      Sec. 7.  Minnesota Statutes 2000, section 287.13, is 
462.8   amended by adding a subdivision to read: 
462.9      Subd. 3.  [PAYMENT TO MORTGAGEE.] If a mortgagee undertakes 
462.10  to collect from the mortgagor the amount of the tax due under 
462.11  sections 287.01 to 287.12 as provided in section 287.08, 
462.12  paragraph (e), the mortgagor is not subject to the penalties 
462.13  under this section and the mortgagee is subject to the 
462.14  provisions of this section. 
462.15     <b>[EFFECTIVE DATE.]</b> This section is effective for documents 
462.16  executed, recorded, or registered after June 30, 2001. 
462.17     Sec. 8.  Minnesota Statutes 2000, section 287.20, 
462.18  subdivision 2, is amended to read: 
462.19     Subd. 2.  [CONSIDERATION.] (a) "Consideration" means 
462.20  generally the total monetary value that is given in return for a 
462.21  conveyance of real property in this state and includes all 
462.22  lump-sum payments, all prior or future installment payments that 
462.23  are required under the agreement between the parties, and the 
462.24  fair market value of any property taken, or to be taken, in 
462.25  exchange. 
462.26     (b) Consideration does not include the reasonable and 
462.27  lawful amounts of interest paid for the privilege of paying the 
462.28  purchase price in installments and the fair market value of any 
462.29  items of intangible personal property that are conveyed by the 
462.30  taxable instrument. 
462.31     (c) Consideration does not include the amount paid for the 
462.32  personal property located on the real property being conveyed 
462.33  and transferred as a part of the total consideration, except 
462.34  that the amount paid for the personal property located on the 
462.35  real property being conveyed must be included if the real 
462.36  property being conveyed is a one-, two-, or three-unit 
463.1   residential structure. 
463.2      (d) When a conveyance of real property is made pursuant to 
463.3   a contract for deed, the consideration is the price for the real 
463.4   property reflected in the contract; except that, subject to the 
463.5   limitations under section 287.221, when the conveyance is made 
463.6   by a person engaged in the business of land sales or 
463.7   construction of buildings and other improvements, or by an 
463.8   affiliated person if the contract for deed, or other agreement 
463.9   entered into as a condition to the seller executing the 
463.10  contract, requires the property to be improved during the term 
463.11  of the contract and the price of the real property as reflected 
463.12  in the contract does not include the consideration for the 
463.13  required improvements, then the consideration is the amount paid 
463.14  for the land price for the real property as reflected in the 
463.15  contract and the consideration for the required improvements 
463.16  added during the term of the contract.  By January 1, 2001, the 
463.17  commissioner shall adopt rules that define the phrases "engaged 
463.18  in the business of land sales or construction of buildings and 
463.19  other improvements" and "affiliated person" as those phrases are 
463.20  used in this paragraph. 
463.21     (e) "Total consideration" has the same meaning as 
463.22  consideration. 
463.23     (f) "Consideration, exclusive of the value of any lien or 
463.24  encumbrance remaining at the time of sale" or "net 
463.25  consideration" means the amount of consideration as reduced by 
463.26  the amount outstanding under any lien that attached to the real 
463.27  property prior to the time of sale and that is not released or 
463.28  satisfied as a result of the sale. 
463.29     <b>[EFFECTIVE DATE.]</b> This section is effective for deeds 
463.30  recorded after June 30, 2001. 
463.31     Sec. 9.  Minnesota Statutes 2000, section 287.20, 
463.32  subdivision 9, is amended to read: 
463.33     Subd. 9.  [REORGANIZATION.] "Reorganization" means the 
463.34  transfer of substantially all of the assets of a corporation, a 
463.35  limited liability company, or a partnership not in the usual or 
463.36  regular course of business if at the time of the transfer the 
464.1   transfer qualifies as:  (i) a corporate reorganization under 
464.2   section 368(a) of the Internal Revenue Code of 1986, as amended 
464.3   through December 31, 2000; or (ii) a transfer pursuant to the 
464.4   continuation of an existing partnership under section 708 of the 
464.5   Internal Revenue Code of 1986, as amended through December 31, 
464.6   2000. 
464.7      <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
464.8   deeds recorded or registered on or after July 1, 2001. 
464.9      Sec. 10.  Minnesota Statutes 2000, section 287.21, 
464.10  subdivision 1, is amended to read: 
464.11     Subdivision 1.  [DETERMINATION OF TAX.] (a) A tax is 
464.12  imposed on each deed or instrument by which any real property in 
464.13  this state is granted, assigned, transferred, or otherwise 
464.14  conveyed.  The tax applies against the net consideration. 
464.15     (b) The tax is determined in the following manner:  (1) 
464.16  when transfers are made by instruments pursuant to mergers, 
464.17  consolidations, sales, or transfers of substantially all of the 
464.18  assets of the entities as defined in section 287.20, subdivision 
464.19  9, pursuant to plans of reorganization, the tax is $1.65; (2) 
464.20  when there is no consideration or when the consideration, 
464.21  exclusive of the value of any lien or encumbrance remaining 
464.22  thereon at the time of sale, is $500 or less, the tax is $1.65; 
464.23  or (3) when the consideration, exclusive of the value of any 
464.24  lien or encumbrance remaining at the time of sale, exceeds $500, 
464.25  the tax is $1.65 plus $1.65 for each additional $500 or fraction 
464.26  of that amount .0033 of the net consideration. 
464.27     (c) The tax is due at the time a taxable deed or instrument 
464.28  is presented for recording. 
464.29     <b>[EFFECTIVE DATE.]</b> This section is effective for documents 
464.30  executed, recorded, or registered after June 30, 2001. 
464.31     Sec. 11.  Minnesota Statutes 2000, section 287.28, is 
464.32  amended to read: 
464.33     287.28 [REFUNDS OR REDEMPTION.] 
464.34     (a) The county treasurer may refund in whole or in part any 
464.35  tax which has been erroneously paid and may allow for or redeem 
464.36  such of the stamps, issued under the authority of sections 
465.1   287.20 to 287.31 as may that have been spoiled, destroyed, or 
465.2   rendered useless or unfit for the purpose intended or for which 
465.3   the owner may have no use or which through mistake may have been 
465.4   improperly or unnecessarily used.  Such order Redemption shall 
465.5   be made only upon written application of the taxpayer.  
465.6      (b) A person having paid a deed tax amount may seek a 
465.7   refund of the tax, or other appropriate relief, The county 
465.8   treasurer may refund any deed tax overpayment if a written 
465.9   application by the taxpayer is submitted to the county treasurer 
465.10  within three and one-half years from the date of the 
465.11  overpayment.  If the county has not issued a denial of the 
465.12  application, the taxpayer may bring an action in tax court in 
465.13  the county in which the tax was paid at any time after the 
465.14  expiration of six months from the time that the application was 
465.15  submitted.  A denial of refund may be appealed within 60 days 
465.16  from the date of the denial by commencing an action in tax court 
465.17  in the county where the tax was paid, within 60 days of the 
465.18  payment.  The action is commenced by serving a petition for 
465.19  relief on the county treasurer, and filing a copy with the 
465.20  court.  The county attorney shall defend the action.  The county 
465.21  treasurer shall notify the treasurer of each county that has, or 
465.22  would receive a portion of the tax as paid.  Any refund of deed 
465.23  tax which the county treasurer determines should be made, and 
465.24  any court ordered refund of deed tax, shall be accomplished 
465.25  using the refund procedures in section 287.08. 
465.26     <b>[EFFECTIVE DATE.]</b> This section is effective for 
465.27  overpayments made on or after July 1, 2001. 
465.28     Sec. 12.  Minnesota Statutes 2000, section 296A.15, 
465.29  subdivision 1, is amended to read: 
465.30     Subdivision 1.  [MONTHLY GASOLINE REPORT; SHRINKAGE 
465.31  ALLOWANCE.] (a) Except as provided in paragraph (e), on or 
465.32  before the 23rd day of each month, every person who is required 
465.33  to pay a gasoline tax shall file with the commissioner a report, 
465.34  in the form and manner prescribed by the commissioner, showing 
465.35  the number of gallons of petroleum products received by the 
465.36  reporter during the preceding calendar month, and other 
466.1   information the commissioner may require.  A written report is 
466.2   deemed to have been filed as required in this subdivision if 
466.3   postmarked on or before the 23rd day of the month in which the 
466.4   tax is payable. 
466.5      (b) The number of gallons of gasoline must be reported in 
466.6   United States standard liquid gallons, 231 cubic inches, except 
466.7   that the commissioner may upon written application and for cause 
466.8   shown permit the distributor to report the number of gallons of 
466.9   gasoline as corrected to a temperature of 60-degrees 
466.10  Fahrenheit.  If the application is granted, all gasoline covered 
466.11  in the application and allowed by the commissioner must continue 
466.12  to be reported by the distributor on the adjusted basis for a 
466.13  period of one year from the date of the granting of the 
466.14  application.  The number of gallons of petroleum products other 
466.15  than gasoline must be reported as originally invoiced.  Each 
466.16  report must show separately the number of gallons of aviation 
466.17  gasoline received by the reporter during each calendar month. 
466.18     (c) Each report must also include the amount of gasoline 
466.19  tax on gasoline received by the reporter during the preceding 
466.20  month.  In computing the tax a deduction of three 2.5 percent of 
466.21  the quantity of gasoline received by a distributor shall be made 
466.22  for evaporation and loss.  At the time of reporting, the 
466.23  reporter shall submit satisfactory evidence that one-third of 
466.24  the three 2.5 percent deduction has been credited or paid to 
466.25  dealers on quantities sold to them. 
466.26     (d) Each report shall contain a confession of judgment for 
466.27  the amount of the tax shown due to the extent not timely paid. 
466.28     (e) Under certain circumstances and with the approval of 
466.29  the commissioner, taxpayers may be allowed to file reports 
466.30  annually. 
466.31     <b>[EFFECTIVE DATE.]</b> This section is effective for reports due 
466.32  on or after July 1, 2001. 
466.33     Sec. 13.  Minnesota Statutes 2000, section 296A.16, 
466.34  subdivision 2, is amended to read: 
466.35     Subd. 2.  [FUEL USED IN OTHER VEHICLE; CLAIM FOR REFUND.] 
466.36  Any person who shall buy buys and use uses gasoline for a 
467.1   qualifying purpose other than use in motor vehicles, snowmobiles 
467.2   except as provided in clause (2), or motorboats, or special fuel 
467.3   for a qualifying purpose other than use in licensed motor 
467.4   vehicles, and who shall have paid the tax directly or indirectly 
467.5   through the amount of the tax being included in the price of the 
467.6   gasoline or special fuel, or otherwise, shall be reimbursed and 
467.7   repaid the amount of the tax paid upon filing with the 
467.8   commissioner a claim for refund in the form and manner 
467.9   prescribed by the commissioner, and containing the information 
467.10  the commissioner shall require.  By signing any such claim which 
467.11  is false or fraudulent, the applicant shall be subject to the 
467.12  penalties provided in this chapter for knowingly making a false 
467.13  claim.  The claim shall set forth the total amount of the 
467.14  gasoline so purchased and used by the applicant other than in 
467.15  motor vehicles, or special fuel purchased and used by the 
467.16  applicant other than in licensed motor vehicles, and shall state 
467.17  when and for what purpose it was used.  When a claim contains an 
467.18  error in computation or preparation, the commissioner is 
467.19  authorized to adjust the claim in accordance with the evidence 
467.20  shown on the claim or other information available to the 
467.21  commissioner.  The commissioner, on being satisfied that the 
467.22  claimant is entitled to the payments, shall approve the claim 
467.23  and transmit it to the commissioner of finance.  The words 
467.24  "gasoline" or "special fuel" as used in this subdivision do not 
467.25  include aviation gasoline or special fuel for aircraft.  
467.26  Gasoline or special fuel bought and used for a "qualifying 
467.27  purpose" means: 
467.28     (1) Gasoline or special fuel used in carrying on a trade or 
467.29  business, used on a farm situated in Minnesota, and used for a 
467.30  farming purpose.  "Farm" and "farming purpose" have the meanings 
467.31  given them in section 6420(c)(2), (3), and (4) of the Internal 
467.32  Revenue Code of 1986, as amended through December 31, 1997. 
467.33     (2) Gasoline or special fuel used for off-highway business 
467.34  use.  "Off-highway business use" means any use off the public 
467.35  highway by a person in that person's trade, business, or 
467.36  activity for the production of income.  Off-highway business use 
468.1   includes: 
468.2      (i) use of a passenger snowmobile off the public highways 
468.3   as part of the operations of a resort as defined in section 
468.4   157.15, subdivision 11; and 
468.5      (ii) use of gasoline or special fuel to operate a power 
468.6   takeoff unit on a vehicle, but not including fuel consumed 
468.7   during idling time.  
468.8   Off-highway business use does not include: 
468.9      (i) use as a fuel in a motor vehicle which, at the time of 
468.10  use, is registered or is required to be registered for highway 
468.11  use under the laws of any state or foreign country; or 
468.12     (ii) use of a licensed motor vehicle fuel tank in lieu of a 
468.13  separate storage tank for storing fuel to be used for a 
468.14  qualifying purpose, as defined in this section.  Fuel purchased 
468.15  to be used for a qualifying purpose cannot be placed in the fuel 
468.16  tank of a licensed motor vehicle and must be stored in a 
468.17  separate supply tank. 
468.18     (3) Gasoline or special fuel placed in the fuel tanks of 
468.19  new motor vehicles, manufactured in Minnesota, and shipped by 
468.20  interstate carrier to destinations in other states or foreign 
468.21  countries.  
468.22     By July 1, 1998, the commissioner shall adopt rules that 
468.23  determine the rates and percentages necessary to develop 
468.24  formulas for calculating the refund under clause (2), item (ii). 
468.25     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
468.26  following final enactment. 
468.27     Sec. 14.  [296A.201] [ASSESSMENTS.] 
468.28     Subdivision 1.  [GENERAL RULE.] The commissioner may make 
468.29  determinations, corrections, and assessments with respect to any 
468.30  tax or fee under this chapter, including interest, additions to 
468.31  taxes and fees, and assessable penalties. 
468.32     Subd. 2.  [COMMISSIONER FILED RETURNS.] If a taxpayer fails 
468.33  to file a required return, the commissioner, from information in 
468.34  the commissioner's possession or obtainable by the commissioner, 
468.35  may make a return for the taxpayer.  The return is prima facie 
468.36  correct and valid.  The commissioner may use statistical or 
469.1   other sampling techniques consistent with generally accepted 
469.2   auditing standards in examining returns or records and making 
469.3   assessments. 
469.4      Subd. 3.  [ORDER OF ASSESSMENT; NOTICE AND DEMAND TO 
469.5   TAXPAYER.] (a) If a return has been filed and the commissioner 
469.6   determines that the tax or fee disclosed by the return is 
469.7   different than the tax or fee determined by the examination, the 
469.8   commissioner shall send an order of assessment to the taxpayer.  
469.9   If no return has been filed, the commissioner may make a return 
469.10  for the taxpayer under subdivision 2 or may send an order of 
469.11  assessment under this subdivision.  The order must explain the 
469.12  basis for the assessment and must explain the taxpayer's appeal 
469.13  rights.  An order of assessment is final when made but may be 
469.14  reconsidered by the commissioner under section 296A.25. 
469.15     (b) Penalties under this chapter are not imposed and no 
469.16  collection action can be taken, including the filing of liens 
469.17  under section 270.69, if the amount shown on the order is paid 
469.18  to the commissioner: 
469.19     (1) within 60 days after notice of the amount and demand 
469.20  for its payment have been mailed to the taxpayer by the 
469.21  commissioner; or 
469.22     (2) if an administrative appeal is filed under this 
469.23  chapter, or a tax court appeal is filed under chapter 271, 
469.24  within 60 days following final determination of the appeal if 
469.25  the appeal is based upon a constitutional challenge to the tax 
469.26  or fee, and if not, when the decision of the tax court is made. 
469.27     Subd. 4.  [ERRONEOUS REFUNDS.] An erroneous refund is 
469.28  considered an underpayment of tax or fee on the date made.  An 
469.29  assessment of a deficiency arising out of an erroneous refund 
469.30  may be made at any time within two years from the making of the 
469.31  refund.  If part of the refund was induced by fraud or 
469.32  misrepresentation of a material fact, the assessment may be made 
469.33  at any time. 
469.34     Subd. 5.  [ASSESSMENT PRESUMED VALID.] A return or 
469.35  assessment of tax or fee made by the commissioner is prima facie 
469.36  correct and valid.  The taxpayer has the burden of establishing 
470.1   its incorrectness or invalidity in any related action or 
470.2   proceeding. 
470.3      Subd. 6.  [AGGREGATE REFUND OR ASSESSMENT.] The 
470.4   commissioner, on examining returns of a taxpayer for more than 
470.5   one year or period, may issue one order covering the period 
470.6   under examination that reflects the aggregate refund or 
470.7   additional tax or fee due. 
470.8      Subd. 7.  [SUFFICIENCY OF NOTICE.] An order of assessment, 
470.9   sent postage prepaid by United States mail to the taxpayer at 
470.10  the taxpayer's last known address, is sufficient even if the 
470.11  taxpayer is deceased or is under a legal disability, or, in the 
470.12  case of a corporation, even if the corporation has terminated 
470.13  its existence, unless the department has been provided with a 
470.14  new address by a party authorized to receive notices of 
470.15  assessment. 
470.16     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
470.17  following final enactment. 
470.18     Sec. 15.  Minnesota Statutes 2000, section 296A.21, 
470.19  subdivision 1, is amended to read: 
470.20     Subdivision 1.  [GENERAL RULE RULES.] (a) The commissioner 
470.21  shall make determinations, corrections, and assessments, and 
470.22  refunds with respect to taxes and fees under this chapter, 
470.23  including interest, additions to taxes, and assessable 
470.24  penalties.  Except as otherwise provided in this section, the 
470.25  amount of taxes assessable must be assessed within 3-1/2 years 
470.26  after the date the return is filed. 
470.27     (b) A claim for a refund of an overpayment of state tax or 
470.28  fees must be filed within 3-1/2 years from the date prescribed 
470.29  for filing the return, plus any extension of time granted for 
470.30  filing the return, but only if filed within the extended time; 
470.31  or the claim must be filed within one year from the date of an 
470.32  order assessing tax or fees, or from the date of a return filed 
470.33  by the commissioner, upon payment in full of the tax, fees, 
470.34  penalties, and interest shown on the order or return, whichever 
470.35  period expires later. 
470.36     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
471.1   following final enactment. 
471.2      Sec. 16.  Minnesota Statutes 2000, section 296A.21, 
471.3   subdivision 4, is amended to read: 
471.4      Subd. 4.  [TIME LIMIT FOR REPAYMENT CERTAIN REFUNDS.] No 
471.5   repayment Notwithstanding subdivision 1, paragraph (b), no 
471.6   refund under section 296A.16, subdivision 2, shall be made 
471.7   unless the claim for refund and invoice shall be are filed with 
471.8   the commissioner within one year from the date of purchase.  The 
471.9   postmark on the envelope in which a written claim is mailed 
471.10  shall determine its date of filing. 
471.11     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
471.12  following final enactment. 
471.13     Sec. 17.  Minnesota Statutes 2000, section 297E.02, 
471.14  subdivision 1, is amended to read: 
471.15     Subdivision 1.  [IMPOSITION.] A tax is imposed on all 
471.16  lawful gambling other than (1) pull-tab deals or games; (2) 
471.17  tipboard deals or games; and (3) items listed in section 
471.18  297E.01, subdivision 8, clauses (4) and (5), at the rate of 8.5 
471.19  7.5 percent on the gross receipts as defined in section 297E.01, 
471.20  subdivision 8, less prizes actually paid.  The tax imposed by 
471.21  this subdivision is in lieu of the tax imposed by section 
471.22  297A.02 and all local taxes and license fees except a fee 
471.23  authorized under section 349.16, subdivision 8, or a tax 
471.24  authorized under subdivision 5.  
471.25     The tax imposed under this subdivision is payable by the 
471.26  organization or party conducting, directly or indirectly, the 
471.27  gambling.  
471.28     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2001. 
471.29     Sec. 18.  Minnesota Statutes 2000, section 297E.02, 
471.30  subdivision 4, is amended to read: 
471.31     Subd. 4.  [PULL-TAB AND TIPBOARD TAX.] (a) A tax is imposed 
471.32  on the sale of each deal of pull-tabs and tipboards sold by a 
471.33  distributor.  The rate of the tax is 1.7 1.5 percent of the 
471.34  ideal gross of the pull-tab or tipboard deal.  The sales tax 
471.35  imposed by chapter 297A on the sale of the pull-tabs and 
471.36  tipboards by the distributor is imposed on the retail sales 
472.1   price less the tax imposed by this subdivision.  The retail sale 
472.2   of pull-tabs or tipboards by the organization is exempt from 
472.3   taxes imposed by chapter 297A and is exempt from all local taxes 
472.4   and license fees except a fee authorized under section 349.16, 
472.5   subdivision 8.  
472.6      (b) The liability for the tax imposed by this section is 
472.7   incurred when the pull-tabs and tipboards are delivered by the 
472.8   distributor to the customer or to a common or contract carrier 
472.9   for delivery to the customer, or when received by the customer's 
472.10  authorized representative at the distributor's place of 
472.11  business, regardless of the distributor's method of accounting 
472.12  or the terms of the sale.  
472.13     The tax imposed by this subdivision is imposed on all sales 
472.14  of pull-tabs and tipboards, except the following:  
472.15     (1) sales to the governing body of an Indian tribal 
472.16  organization for use on an Indian reservation; 
472.17     (2) sales to distributors licensed under the laws of 
472.18  another state or of a province of Canada, as long as all 
472.19  statutory and regulatory requirements are met in the other state 
472.20  or province; 
472.21     (3) sales of promotional tickets as defined in section 
472.22  349.12; and 
472.23     (4) pull-tabs and tipboards sold to an organization that 
472.24  sells pull-tabs and tipboards under the exemption from licensing 
472.25  in section 349.166, subdivision 2.  A distributor shall require 
472.26  an organization conducting exempt gambling to show proof of its 
472.27  exempt status before making a tax-exempt sale of pull-tabs or 
472.28  tipboards to the organization.  A distributor shall identify, on 
472.29  all reports submitted to the commissioner, all sales of 
472.30  pull-tabs and tipboards that are exempt from tax under this 
472.31  subdivision.  
472.32     (c) A distributor having a liability of $120,000 or more 
472.33  during a fiscal year ending June 30 must remit all liabilities 
472.34  in the subsequent calendar year by a funds transfer as defined 
472.35  in section 336.4A-104, paragraph (a).  The funds transfer 
472.36  payment date, as defined in section 336.4A-401, must be on or 
473.1   before the date the tax is due.  If the date the tax is due is 
473.2   not a funds transfer business day, as defined in section 
473.3   336.4A-105, paragraph (a), clause (4), the payment date must be 
473.4   on or before the funds transfer business day next following the 
473.5   date the tax is due. 
473.6      (d) Any customer who purchases deals of pull-tabs or 
473.7   tipboards from a distributor may file an annual claim for a 
473.8   refund or credit of taxes paid pursuant to this subdivision for 
473.9   unsold pull-tab and tipboard tickets.  The claim must be filed 
473.10  with the commissioner on a form prescribed by the commissioner 
473.11  by March 20 of the year following the calendar year for which 
473.12  the refund is claimed.  The refund must be filed as part of the 
473.13  customer's February monthly return.  The refund or credit is 
473.14  equal to 1.7 1.5 percent of the face value of the unsold 
473.15  pull-tab or tipboard tickets, provided that the refund or credit 
473.16  will be 1.75 1.6 percent of the face value of the unsold 
473.17  pull-tab or tipboard tickets for claims for a refund or credit 
473.18  of taxes filed on the February 2001 2002 monthly return.  The 
473.19  refund claimed will be applied as a credit against tax owing 
473.20  under this chapter on the February monthly return.  If the 
473.21  refund claimed exceeds the tax owing on the February monthly 
473.22  return, that amount will be refunded.  The amount refunded will 
473.23  bear interest pursuant to section 270.76 from 90 days after the 
473.24  claim is filed.  
473.25     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2001. 
473.26     Sec. 19.  Minnesota Statutes 2000, section 297E.02, 
473.27  subdivision 6, is amended to read: 
473.28     Subd. 6.  [COMBINED RECEIPTS TAX.] In addition to the taxes 
473.29  imposed under subdivisions 1 and 4, a tax is imposed on the 
473.30  combined receipts of the organization.  As used in this section, 
473.31  "combined receipts" is the sum of the organization's gross 
473.32  receipts from lawful gambling less gross receipts directly 
473.33  derived from the conduct of bingo, raffles, and paddlewheels, as 
473.34  defined in section 297E.01, subdivision 8, for the fiscal year.  
473.35  The combined receipts of an organization are subject to a tax 
473.36  computed according to the following schedule: 
474.1      If the combined receipts for the          The tax is:
474.2      fiscal year are:
474.3      Not over $500,000                   zero
474.4      Over $500,000, but not over
474.5      $700,000                            1.7 1.5 percent of the 
474.6                                          amount over $500,000, but 
474.7                                          not over $700,000
474.8      Over $700,000, but not over
474.9      $900,000                            $3,400 $3,000 plus 3.4 3.0
474.10                                         percent of the amount 
474.11                                         over $700,000, but 
474.12                                         not over $900,000
474.13     Over $900,000                       $10,200 $9,000 plus 5.1 
474.14                                         4.5 percent of the amount 
474.15                                         over $900,000
474.16     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2001. 
474.17     Sec. 20.  Minnesota Statutes 2000, section 297F.16, 
474.18  subdivision 4, is amended to read: 
474.19     Subd. 4.  [ERRONEOUS REFUNDS OR CREDITS.] An erroneous 
474.20  refund or credit is considered an underpayment of tax on the 
474.21  date made.  An assessment of a deficiency arising out of an 
474.22  erroneous refund or credit must be made within 3-1/2 years from 
474.23  the date prescribed for filing the return, plus any extension of 
474.24  time granted for filing the return, but only if filed within the 
474.25  extended time, or two years from the time the tax is paid in 
474.26  full, whichever period expires later two years from the making 
474.27  of the refund.  If part of the refund was induced by fraud or 
474.28  misrepresentation of a material fact, the assessment may be made 
474.29  at any time. 
474.30     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
474.31  following final enactment. 
474.32     Sec. 21.  Minnesota Statutes 2000, section 297F.20, 
474.33  subdivision 3, is amended to read: 
474.34     Subd. 3.  [FALSE OR FRAUDULENT RETURNS; PENALTIES.] (a) A 
474.35  person who files with the commissioner a return, report, or 
474.36  other document, or who maintains or provides invoices subject to 
475.1   review by the commissioner under this chapter, known by the 
475.2   person to be fraudulent or false concerning a material matter, 
475.3   is guilty of a felony. 
475.4      (b) A person who knowingly aids or assists in, or advises 
475.5   in the preparation or presentation of a return, report, invoice, 
475.6   or other document that is fraudulent or false concerning a 
475.7   material matter, whether or not the falsity or fraud is 
475.8   committed with the knowledge or consent of the person authorized 
475.9   or required to present the return, report, invoice, or other 
475.10  document, is guilty of a felony. 
475.11     <b>[EFFECTIVE DATE.]</b> This section is effective for crimes 
475.12  occurring on or after July 1, 2001. 
475.13     Sec. 22.  Minnesota Statutes 2000, section 297G.15, 
475.14  subdivision 4, is amended to read: 
475.15     Subd. 4.  [ERRONEOUS REFUNDS OR CREDITS.] An erroneous 
475.16  refund or credit is considered an underpayment of tax on the 
475.17  date made.  An assessment of a deficiency arising out of an 
475.18  erroneous refund or credit must be made within 3-1/2 years from 
475.19  the date prescribed for filing the return, plus any extension of 
475.20  time granted for filing the return, but only if filed within the 
475.21  extended time, or two years from the time the tax is paid in 
475.22  full, whichever period expires later two years from the making 
475.23  of the refund.  If part of the refund was induced by fraud or 
475.24  misrepresentation of a material fact, the assessment may be made 
475.25  at any time. 
475.26     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
475.27  following final enactment. 
475.28     Sec. 23.  Minnesota Statutes 2000, section 297G.16, 
475.29  subdivision 5, is amended to read: 
475.30     Subd. 5.  [TIME LIMIT FOR REFUNDS.] Unless otherwise 
475.31  provided in this chapter, a claim for a refund of an overpayment 
475.32  of tax must be filed within 3-1/2 years from the date prescribed 
475.33  for filing the return, plus any extension of time granted for 
475.34  filing the return, but only if filed within the extended time, 
475.35  or two years from the time the tax is paid in full, whichever 
475.36  period expires later.  Claimants under this section are subject 
476.1   to the notice requirements of section 289A.38, subdivision 7 or 
476.2   within one year from the date of an order assessing tax or from 
476.3   the date of a return filed by the commissioner, upon payment in 
476.4   full of the tax, penalties, and interest shown on the order or 
476.5   return made by the commissioner, whichever period expires later. 
476.6      <b>[EFFECTIVE DATE.]</b> This section is effective for returns 
476.7   becoming due or orders assessing tax issued on or after the day 
476.8   following final enactment. 
476.9      Sec. 24.  Minnesota Statutes 2000, section 297G.16, 
476.10  subdivision 7, is amended to read: 
476.11     Subd. 7.  [TIME LIMIT FOR A BAD DEBT DEDUCTION.] Claims for 
476.12  refund must be filed with the commissioner within one year of 
476.13  the filing of the taxpayer's income tax return containing the 
476.14  bad debt deduction that is being claimed.  Claimants under this 
476.15  subdivision are subject to the notice requirements of section 
476.16  289A.38, subdivision 7. 
476.17     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
476.18  following final enactment. 
476.19     Sec. 25.  Minnesota Statutes 2000, section 297H.02, 
476.20  subdivision 2, is amended to read: 
476.21     Subd. 2.  [RATES.] The rate of tax under this section 
476.22  is 9.75 8.8 percent. 
476.23     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2001, 
476.24  and thereafter. 
476.25     Sec. 26.  Minnesota Statutes 2000, section 297H.03, 
476.26  subdivision 2, is amended to read: 
476.27     Subd. 2.  [RATE.] The rate of the tax under this section is 
476.28  17 15.4 percent. 
476.29     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2001, 
476.30  and thereafter. 
476.31     Sec. 27.  Minnesota Statutes 2000, section 297H.04, 
476.32  subdivision 2, is amended to read: 
476.33     Subd. 2.  [RATE.] (a) Commercial generators that generate 
476.34  non-mixed-municipal solid waste shall pay a solid waste 
476.35  management tax of 60 54 cents per noncompacted cubic yard of 
476.36  periodic waste collection capacity purchased by the generator, 
477.1   based on the size of the container for the non-mixed-municipal 
477.2   solid waste, the actual volume, or the weight-to-volume 
477.3   conversion schedule in paragraph (c).  However, the tax must be 
477.4   calculated by the waste management service provider using the 
477.5   same method for calculating the waste management service fee so 
477.6   that both are calculated according to container capacity, actual 
477.7   volume, or weight. 
477.8      (b) Notwithstanding section 297H.02, a residential 
477.9   generator that generates non-mixed-municipal solid waste shall 
477.10  pay a solid waste management tax in the same manner as provided 
477.11  in paragraph (a). 
477.12     (c) The weight-to-volume conversion schedule for: 
477.13     (1) construction debris as defined in section 115A.03, 
477.14  subdivision 7, is one ton equals 3.33 cubic yards, or $2 $1.80 
477.15  per ton; 
477.16     (2) industrial waste as defined in section 115A.03, 
477.17  subdivision 13a, is equal to 60 54 cents per cubic yard.  The 
477.18  commissioner of revenue after consultation with the commissioner 
477.19  of the pollution control agency, shall determine, and may 
477.20  publish by notice, a conversion schedule for various industrial 
477.21  wastes; and 
477.22     (3) infectious waste as defined in section 116.76, 
477.23  subdivision 12, and pathological waste as defined in section 
477.24  116.76, subdivision 14, is 150 pounds equals one cubic yard, or 
477.25  60 54 cents per 150 pounds. 
477.26     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2001, 
477.27  and thereafter. 
477.28     Sec. 28.  Minnesota Statutes 2000, section 297H.04, is 
477.29  amended by adding a subdivision to read: 
477.30     Subd. 4.  [DISPOSAL WITH MIXED WASTE; RATE.] Nonmixed 
477.31  municipal solid waste that is separately collected or processed, 
477.32  but is disposed of within the permitted boundaries of a land 
477.33  disposal facility that is also actively accepting and disposing 
477.34  of mixed municipal solid waste, shall be taxed at the rate for 
477.35  mixed municipal solid waste, unless the facility owner and 
477.36  operator can demonstrate a physical separation between the mixed 
478.1   municipal solid waste disposal area and nonmixed municipal solid 
478.2   waste disposal area, such that any air or liquid emissions being 
478.3   collected from the disposal areas are collected separately. 
478.4      <b>[EFFECTIVE DATE.]</b> This section is effective for waste 
478.5   disposed of after June 30, 2001. 
478.6      Sec. 29.  Minnesota Statutes 2000, section 297H.05, is 
478.7   amended to read: 
478.8      297H.05 [SELF-HAULERS.] 
478.9      (a) A self-hauler of mixed municipal solid waste shall pay 
478.10  the tax to the operator of the waste management facility to 
478.11  which the waste is delivered at the rate imposed under section 
478.12  297H.03, based on the sales price of the waste management 
478.13  services. 
478.14     (b) A self-hauler of non-mixed-municipal solid waste shall 
478.15  pay the tax to the operator of the waste management facility to 
478.16  which the waste is delivered at the rate imposed under section 
478.17  297H.04. 
478.18     (c) The tax imposed on the self-hauler of 
478.19  non-mixed-municipal solid waste may be based either on the 
478.20  capacity of the container, the actual volume, or the 
478.21  weight-to-volume conversion schedule in paragraph (d).  However, 
478.22  the tax must be calculated by the operator using the same method 
478.23  for calculating the tipping fee so that both are calculated 
478.24  according to container capacity, actual volume, or weight. 
478.25     (d) The weight-to-volume conversion schedule for: 
478.26     (1) construction debris as defined in section 115A.03, 
478.27  subdivision 7, is one ton equals 3.33 cubic yards, or $2 $1.80 
478.28  per ton; 
478.29     (2) industrial waste as defined in section 115A.03, 
478.30  subdivision 13a, is equal to 60 54 cents per cubic yard.  The 
478.31  commissioner of revenue, after consultation with the 
478.32  commissioner of the pollution control agency, shall determine, 
478.33  and may publish by notice, a conversion schedule for various 
478.34  industrial wastes; and 
478.35     (3) infectious waste as defined in section 116.76, 
478.36  subdivision 12, and pathological waste as defined in section 
479.1   116.76, subdivision 14, is 150 pounds equals one cubic yard, or 
479.2   60 54 cents per 150 pounds. 
479.3      (e) For mixed municipal solid waste the tax is imposed upon 
479.4   the difference between the market price and the tip fee at a 
479.5   processing or disposal facility if the tip fee is less than the 
479.6   market price and the political subdivision subsidizes the cost 
479.7   of service at the facility.  The political subdivision is liable 
479.8   for the tax. 
479.9      <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2001, 
479.10  and thereafter. 
479.11     Sec. 30.  Minnesota Statutes 2000, section 297H.13, is 
479.12  amended by adding a subdivision to read: 
479.13     Subd. 6.  [NOTICE OF RATE CHANGE.] Waste management service 
479.14  providers shall provide notice to each customer of the rate 
479.15  decreases provided in this section no later than 90 days after 
479.16  the rate decreases take effect. 
479.17     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2001, 
479.18  and thereafter. 
479.19     Sec. 31.  [297H.14] [SOLID WASTE MANAGEMENT TAX WAIVER.] 
479.20     Notwithstanding any law to the contrary, the commissioner 
479.21  of revenue may waive solid waste management taxes under 
479.22  Minnesota Statutes, chapter 297H, for construction debris 
479.23  generated from repair and demolition activities in a disaster or 
479.24  emergency area, and disposed of in a waste management facility 
479.25  or facilities designated by the commissioner of the pollution 
479.26  control agency.  The commissioner of revenue shall designate the 
479.27  date on which the waiver of taxes for waste transported to the 
479.28  designated facilities expires.  For purposes of this section, 
479.29  "disaster or emergency area" has the meaning given in section 
479.30  273.123, subdivision 1. 
479.31     Sec. 32.  Minnesota Statutes 2000, section 297I.05, is 
479.32  amended by adding a subdivision to read: 
479.33     Subd. 14.  [LIFE INSURANCE.] A tax is imposed on every 
479.34  domestic and foreign insurance company equal to 1.75 percent of 
479.35  gross premiums less return premiums on all direct business 
479.36  received by the insurer or agents of the insurer in Minnesota 
480.1   for life insurance, in cash or otherwise, during the year. 
480.2      <b>[EFFECTIVE DATE.]</b> This section is effective for premiums 
480.3   received after June 30, 2001. 
480.4      Sec. 33.  Minnesota Statutes 2000, section 297I.40, 
480.5   subdivision 1, is amended to read: 
480.6      Subdivision 1.  [REQUIREMENT TO PAY.] On or before April 1 
480.7   March 15, June 1 15, September 15, and December 1 of each year 
480.8   15 of the current year, every taxpayer subject to tax under 
480.9   section 297I.05, subdivisions 1 to 6, and 12, paragraphs (a), 
480.10  clauses (1) to (5), (b), and (e), must pay to the commissioner 
480.11  an installment equal to one-third one-fourth of the insurer's 
480.12  total estimated tax for the current year. 
480.13     <b>[EFFECTIVE DATE.]</b> This section is effective for payments 
480.14  required to be made after December 31, 2001. 
480.15     Sec. 34.  Minnesota Statutes 2000, section 297I.40, 
480.16  subdivision 2, is amended to read: 
480.17     Subd. 2.  [AMOUNT OF REQUIRED INSTALLMENT.] The amount of 
480.18  any required installment is one-third one-fourth of the lesser 
480.19  of 
480.20     (1) 80 percent of the tax imposed for the current year, or 
480.21     (2) 100 percent of the tax paid for the previous year. 
480.22     <b>[EFFECTIVE DATE.]</b> This section is effective for payments 
480.23  required to be made after December 31, 2001. 
480.24     Sec. 35.  Minnesota Statutes 2000, section 297I.40, 
480.25  subdivision 7, is amended to read: 
480.26     Subd. 7.  [APRIL MARCH ESTIMATED PAYMENT.] A taxpayer who 
480.27  claims a refund of an overpayment on an original return may 
480.28  elect to have all or any portion of the overpayment applied as a 
480.29  credit to the April 1 March 15 estimated tax payment for the 
480.30  year following the year of the return.  The credit is considered 
480.31  applied on April 1 March 15.  Notwithstanding section 297I.80, 
480.32  the amount credited does not bear interest. 
480.33     <b>[EFFECTIVE DATE.]</b> This section is effective for payments 
480.34  required to be made after December 31, 2001. 
480.35     Sec. 36.  Minnesota Statutes 2000, section 349.19, 
480.36  subdivision 2a, is amended to read: 
481.1      Subd. 2a.  [TAX REFUND OR CREDIT.] (a) Each organization 
481.2   that receives a refund or credit under section 297E.02, 
481.3   subdivision 4, paragraph (d), must within four business days of 
481.4   receiving a refund under that paragraph deposit the refund in 
481.5   the organization's gambling account.  
481.6      (b) In addition, each organization must annually calculate 
481.7   5.26 percent of the sum of the amount of tax it paid under: 
481.8      (1) section 297E.02, subdivision 1, on gross receipts, less 
481.9   prizes paid, after August 1, 1998; and 
481.10     (2) section 297E.02, subdivision 6, on combined receipts 
481.11  received after August 1, 1998. 
481.12     (c) The calculated amount must be reported to the board on 
481.13  a form prescribed by the board by March 20 of the year after the 
481.14  calendar year for which the calculated amount is made.  The 
481.15  calculated amount must be filed as part of the organization's 
481.16  report of expenditure of profits from lawful gambling required 
481.17  under section 349.19, subdivision 5. 
481.18     (d) The organization may expend the tax refund or credit 
481.19  issued under section 297E.02, subdivision 4, paragraph (d), plus 
481.20  the amount calculated under paragraph (b), only for lawful 
481.21  purposes, other than lawful purposes described in section 
481.22  349.12, subdivision 25, paragraph (a), clauses (8), (9), and 
481.23  (12).  Amounts subject to this paragraph must be spent for 
481.24  qualifying lawful purposes no later than one year after the 
481.25  refund or credit is received or the tax savings calculated under 
481.26  paragraph (b). 
481.27     Sec. 37.  Minnesota Statutes 2000, section 461.12, is 
481.28  amended by adding a subdivision to read: 
481.29     Subd. 8.  [NOTICE TO COMMISSIONER.] The licensing authority 
481.30  under this section shall, within 30 days of the issuance of a 
481.31  license, inform the commissioner of revenue of the licensee's 
481.32  name, address, trade name, and the effective and expiration 
481.33  dates of the license.  The commissioner of revenue must also be 
481.34  informed of a license renewal, transfer, cancellation, 
481.35  suspension, or revocation during the license period. 
481.36     <b>[EFFECTIVE DATE.]</b> This section is effective for licenses 
482.1   issued, renewed, transferred, canceled, suspended, or revoked on 
482.2   or after January 1, 2002. 
482.3      Sec. 38.  [REPEALER.] 
482.4      (a) Minnesota Statutes 2000, section 296A.16, subdivision 
482.5   6, is repealed effective the day following final enactment. 
482.6      (b) Minnesota Statutes 2000, sections 297I.05, subdivision 
482.7   8; and 297I.30, subdivision 3, are repealed effective for 
482.8   calendar years beginning after December 31, 1999. 
482.9      (c) Minnesota Rules, parts 8120.0200; 8120.0500; 8120.0700; 
482.10  8120.0900; 8120.1300; 8120.1600; 8120.2000; 8120.2100; 
482.11  8120.2200; 8120.2300; 8120.2500; 8120.2700; 8120.2800; 
482.12  8120.3000; 8120.3200; 8120.4300; 8120.4400; 8120.4500; 
482.13  8120.4600; 8120.4900; 8120.5000; 8120.5100; and 8120.5300, are 
482.14  repealed effective the day following final enactment. 
482.15                             ARTICLE 16
482.16                           MINERALS TAXES
482.17     Section 1.  Minnesota Statutes 2000, section 273.1104, 
482.18  subdivision 2, is amended to read: 
482.19     Subd. 2.  [NOTICE OF MARKET VALUE.] On or before May 1 in 
482.20  each year, the commissioner shall send to each person subject to 
482.21  the tax on unmined iron ores and to each taxing district 
482.22  affected, a notice of the market value of the unmined ores as 
482.23  determined by the commissioner prior to adjustment under 
482.24  subdivision 1.  Said notice shall be sent by mail directed to 
482.25  such person at the address given in the report filed and the 
482.26  assessor of such taxing district, but the validity of the tax 
482.27  shall not be affected by the failure of the commissioner of 
482.28  revenue to mail such notice or the failure of the person subject 
482.29  to the tax to receive it. 
482.30     On the first secular day following May 20, the commissioner 
482.31  of revenue shall hold a hearing which may be adjourned from day 
482.32  to day.  All relevant and material evidence having probative 
482.33  value with respect to the issues shall be submitted at the 
482.34  hearing and such hearing shall not be a "contested case" within 
482.35  the meaning of section 14.02, subdivision 3.  Every person 
482.36  subject to such tax may at such hearing present evidence and 
483.1   argument on any matter bearing upon the validity or correctness 
483.2   of the tax determined to be due, and the commissioner of revenue 
483.3   shall review the determination of such tax. 
483.4      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
483.5   following final enactment. 
483.6      Sec. 2.  Minnesota Statutes 2000, section 298.01, 
483.7   subdivision 3, is amended to read: 
483.8      Subd. 3.  [OCCUPATION TAX; OTHER ORES.] Every person 
483.9   engaged in the business of mining or producing ores in this 
483.10  state, except iron ore or taconite concentrates, shall pay an 
483.11  occupation tax to the state of Minnesota as provided in this 
483.12  subdivision.  The tax is determined in the same manner as the 
483.13  tax imposed by section 290.02, except that sections 290.05, 
483.14  subdivision 1, clause (a), and 290.17, subdivision 4, do not 
483.15  apply, and except that the tax rate is 2.45 percent of a 
483.16  person's taxable income.  The tax is in addition to all other 
483.17  taxes. 
483.18     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
483.19  payable May 1, 2002, and thereafter. 
483.20     Sec. 3.  Minnesota Statutes 2000, section 298.01, 
483.21  subdivision 3a, is amended to read: 
483.22     Subd. 3a.  [GROSS INCOME.] (a) For purposes of determining 
483.23  a person's taxable income under subdivision 3, gross income is 
483.24  determined by the amount of gross proceeds from mining in this 
483.25  state under section 298.016 and includes any gain or loss 
483.26  recognized from the sale or disposition of assets used in the 
483.27  business in this state. 
483.28     (b) In applying section 290.191, subdivision 5, all 
483.29  transfers of ores are deemed to be sales outside inside this 
483.30  state if the ores are transported out of this state after the 
483.31  ores have been converted to a marketable quality. 
483.32     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
483.33  payable May 1, 2002, and thereafter. 
483.34     Sec. 4.  Minnesota Statutes 2000, section 298.01, 
483.35  subdivision 4, is amended to read: 
483.36     Subd. 4.  [OCCUPATION TAX; IRON ORE; TACONITE 
484.1   CONCENTRATES.] A person engaged in the business of mining or 
484.2   producing of iron ore, taconite concentrates or direct reduced 
484.3   ore in this state shall pay an occupation tax to the state of 
484.4   Minnesota.  The tax is determined in the same manner as the tax 
484.5   imposed by section 290.02, except that sections 290.05, 
484.6   subdivision 1, clause (a), and 290.17, subdivision 4, do not 
484.7   apply, and except that the tax rate is 2.45 percent of a 
484.8   person's taxable income.  The tax is in addition to all other 
484.9   taxes. 
484.10     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
484.11  payable May 1, 2002, and thereafter. 
484.12     Sec. 5.  Minnesota Statutes 2000, section 298.01, 
484.13  subdivision 4a, is amended to read: 
484.14     Subd. 4a.  [GROSS INCOME.] (a) For purposes of determining 
484.15  a person's taxable income under subdivision 4, gross income is 
484.16  determined by the mine value of the ore mined in Minnesota and 
484.17  includes any gain or loss recognized from the sale or 
484.18  disposition of assets used in the business in this state. 
484.19     (b) Mine value is the value, or selling price, of iron ore 
484.20  or taconite concentrates, f.o.b. mine.  The mine value is 
484.21  calculated by multiplying the iron unit price for the period, as 
484.22  determined by the commissioner, by the tons produced and the 
484.23  weighted average analysis. 
484.24     (c) In applying section 290.191, subdivision 5, all 
484.25  transfers of iron ore and taconite concentrates are deemed to be 
484.26  sales outside inside this state if the iron ore or taconite 
484.27  concentrates are transported out of this state after the raw 
484.28  iron ore and taconite concentrates have been converted to a 
484.29  marketable quality. 
484.30     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
484.31  payable May 1, 2002, and thereafter. 
484.32     Sec. 6.  Minnesota Statutes 2000, section 298.225, 
484.33  subdivision 1, is amended to read: 
484.34     Subdivision 1.  (a) The distribution of the taconite 
484.35  production tax as provided in section 298.28, subdivisions 2 3 
484.36  to 5, 6, paragraph (b), 7, and 8, shall equal the lesser of the 
485.1   following amounts:  
485.2      (1) the amount distributed pursuant to this section and 
485.3   section 298.28, with respect to 1983 production if the 
485.4   production for the year prior to the distribution year is no 
485.5   less than 42,000,000 taxable tons.  If the production is less 
485.6   than 42,000,000 taxable tons, the amount of the distributions 
485.7   shall be reduced proportionately at the rate of two percent for 
485.8   each 1,000,000 tons, or part of 1,000,000 tons by which the 
485.9   production is less than 42,000,000 tons; or 
485.10     (2)(i) for the distributions made pursuant to section 
485.11  298.28, subdivisions 4, paragraphs (b) and (c), and 6, paragraph 
485.12  (c), 40.5 percent of the amount distributed pursuant to this 
485.13  section and section 298.28, with respect to 1983 production; 
485.14     (ii) for the distributions made pursuant to section 298.28, 
485.15  subdivision 5, paragraphs (b) and (d), 75 percent of the amount 
485.16  distributed pursuant to this section and section 298.28, with 
485.17  respect to 1983 production.  
485.18     (b) The distribution of the taconite production tax as 
485.19  provided in section 298.28, subdivision 2, shall equal the 
485.20  following amount: 
485.21     (1) if the production for the year prior to the 
485.22  distribution year is at least 42,000,000 taxable tons, the 
485.23  amount distributed pursuant to this section and section 298.28, 
485.24  with respect to 1999 production; or 
485.25     (2) if the production for the year prior to the 
485.26  distribution year is less than 42,000,000 taxable tons, the 
485.27  amount distributed pursuant to this section and section 298.28 
485.28  with respect to 1999 production, reduced proportionately at the 
485.29  rate of two percent for each 1,000,000 tons or part of 1,000,000 
485.30  tons by which the production is less than 42,000,000 tons. 
485.31     <b>[EFFECTIVE DATE; RETROACTIVE APPLICATION.]</b> This section is 
485.32  effective for distributions in 2001 and thereafter.  For the 
485.33  distribution paid in February 2001 only, as soon as practicable 
485.34  after the date of final enactment of this act, the commissioner 
485.35  of Iron Range Resources and Rehabilitation shall pay two-thirds 
485.36  of any additional amounts required under this section from the 
486.1   taconite environmental protection fund and one-third of any 
486.2   additional amounts required under this section from the 
486.3   northeast Minnesota economic protection trust fund, as directed 
486.4   by the commissioner of revenue. 
486.5      Sec. 7.  Minnesota Statutes 2000, section 298.24, 
486.6   subdivision 1, is amended to read: 
486.7      Subdivision 1.  (a) For concentrate produced in 1999 2001, 
486.8   2002, and 2003, there is imposed upon taconite and iron 
486.9   sulphides, and upon the mining and quarrying thereof, and upon 
486.10  the production of iron ore concentrate therefrom, and upon the 
486.11  concentrate so produced, a tax of $2.141 $2.013 per gross ton of 
486.12  merchantable iron ore concentrate produced therefrom.  
486.13     (b) For concentrates produced in 2000 2004 and subsequent 
486.14  years, the tax rate shall be equal to the preceding year's tax 
486.15  rate plus an amount equal to the preceding year's tax rate 
486.16  multiplied by the percentage increase in the implicit price 
486.17  deflator from the fourth quarter of the second preceding year to 
486.18  the fourth quarter of the preceding year.  "Implicit price 
486.19  deflator" means the implicit price deflator for the gross 
486.20  domestic product prepared by the bureau of economic analysis of 
486.21  the United States Department of Commerce.  
486.22     (c) On concentrates produced in 1997 and thereafter, an 
486.23  additional tax is imposed equal to three cents per gross ton of 
486.24  merchantable iron ore concentrate for each one percent that the 
486.25  iron content of the product exceeds 72 percent, when dried at 
486.26  212 degrees Fahrenheit. 
486.27     (d) (c) The tax shall be imposed on the average of the 
486.28  production for the current year and the previous two years.  The 
486.29  rate of the tax imposed will be the current year's tax rate.  
486.30  This clause shall not apply in the case of the closing of a 
486.31  taconite facility if the property taxes on the facility would be 
486.32  higher if this clause and section 298.25 were not applicable.  
486.33     (e) (d) If the tax or any part of the tax imposed by this 
486.34  subdivision is held to be unconstitutional, a tax 
486.35  of $2.141 $2.013 per gross ton of merchantable iron ore 
486.36  concentrate produced shall be imposed.  
487.1      (f) (e) Consistent with the intent of this subdivision to 
487.2   impose a tax based upon the weight of merchantable iron ore 
487.3   concentrate, the commissioner of revenue may indirectly 
487.4   determine the weight of merchantable iron ore concentrate 
487.5   included in fluxed pellets by subtracting the weight of the 
487.6   limestone, dolomite, or olivine derivatives or other basic flux 
487.7   additives included in the pellets from the weight of the 
487.8   pellets.  For purposes of this paragraph, "fluxed pellets" are 
487.9   pellets produced in a process in which limestone, dolomite, 
487.10  olivine, or other basic flux additives are combined with 
487.11  merchantable iron ore concentrate.  No subtraction from the 
487.12  weight of the pellets shall be allowed for binders, mineral and 
487.13  chemical additives other than basic flux additives, or moisture. 
487.14     (g) (f)(1) Notwithstanding any other provision of this 
487.15  subdivision, for the first two years of a plant's production of 
487.16  direct reduced ore, no tax is imposed under this section.  As 
487.17  used in this paragraph, "direct reduced ore" is ore that results 
487.18  in a product that has an iron content of at least 75 percent.  
487.19  For the third year of a plant's production of direct reduced 
487.20  ore, the rate to be applied to direct reduced ore is 25 percent 
487.21  of the rate otherwise determined under this subdivision.  For 
487.22  the fourth such production year, the rate is 50 percent of the 
487.23  rate otherwise determined under this subdivision; for the fifth 
487.24  such production year, the rate is 75 percent of the rate 
487.25  otherwise determined under this subdivision; and for all 
487.26  subsequent production years, the full rate is imposed. 
487.27     (2) Subject to clause (1), production of direct reduced ore 
487.28  in this state is subject to the tax imposed by this section, but 
487.29  if that production is not produced by a producer of taconite or 
487.30  iron sulfides, the production of taconite or iron sulfides 
487.31  consumed in the production of direct reduced iron in this state 
487.32  is not subject to the tax imposed by this section on taconite or 
487.33  iron sulfides. 
487.34     Sec. 8.  Minnesota Statutes 2000, section 298.27, is 
487.35  amended to read: 
487.36     298.27 [COLLECTION AND PAYMENT OF TAX.] 
488.1      The taxes provided by section 298.24 shall be paid directly 
488.2   to each eligible county and the iron range resources and 
488.3   rehabilitation board.  The commissioner of revenue shall notify 
488.4   each producer of the amount to be paid each recipient prior to 
488.5   February 15.  Every person subject to taxes imposed by section 
488.6   298.24 shall file a correct report covering the preceding year.  
488.7   The report must contain the information required by the 
488.8   commissioner.  The report shall be filed on or before February 
488.9   1.  A remittance equal to 100 50 percent of the total tax 
488.10  required to be paid hereunder shall be paid on or before 
488.11  February 24 and June 15.  On or before February 25, The county 
488.12  auditor shall make distribution of the payment received by the 
488.13  county in the manner provided by section 298.28 on March 1 and 
488.14  June 24.  Reports shall be made and hearings held upon the 
488.15  determination of the tax in accordance with procedures 
488.16  established by the commissioner of revenue.  The commissioner of 
488.17  revenue shall have authority to make reasonable rules as to the 
488.18  form and manner of filing reports necessary for the 
488.19  determination of the tax hereunder, and by such rules may 
488.20  require the production of such information as may be reasonably 
488.21  necessary or convenient for the determination and apportionment 
488.22  of the tax.  All the provisions of the occupation tax law with 
488.23  reference to the assessment and determination of the occupation 
488.24  tax, including all provisions for appeals from or review of the 
488.25  orders of the commissioner of revenue relative thereto, but not 
488.26  including provisions for refunds, are applicable to the taxes 
488.27  imposed by section 298.24 except in so far as inconsistent 
488.28  herewith.  If any person subject to section 298.24 shall fail to 
488.29  make the report provided for in this section at the time and in 
488.30  the manner herein provided, the commissioner of revenue shall in 
488.31  such case, upon information possessed or obtained, ascertain the 
488.32  kind and amount of ore mined or produced and thereon find and 
488.33  determine the amount of the tax due from such person.  There 
488.34  shall be added to the amount of tax due a penalty for failure to 
488.35  report on or before February 1, which penalty shall equal ten 
488.36  percent of the tax imposed and be treated as a part thereof. 
489.1      If any person responsible for making a tax payment at the 
489.2   time and in the manner herein provided fails to do so, there 
489.3   shall be imposed a penalty equal to ten percent of the amount so 
489.4   due, which penalty shall be treated as part of the tax due. 
489.5      In the case of any underpayment of the tax payment required 
489.6   herein, there may be added and be treated as part of the tax due 
489.7   a penalty equal to ten percent of the amount so underpaid. 
489.8      A person having a liability of $120,000 or more during a 
489.9   calendar year must remit all liabilities by means of a funds 
489.10  transfer as defined in section 336.4A-104, paragraph (a).  The 
489.11  funds transfer payment date, as defined in section 336.4A-401, 
489.12  must be on or before the date the tax is due.  If the date the 
489.13  tax is due is not a funds transfer business day, as defined in 
489.14  section 336.4A-105, paragraph (a), clause (4), the payment date 
489.15  must be on or before the funds transfer business day next 
489.16  following the date the tax is due. 
489.17     <b>[EFFECTIVE DATE.]</b> This section is effective for the 2001 
489.18  production year and thereafter. 
489.19     Sec. 9.  Minnesota Statutes 2000, section 298.28, 
489.20  subdivision 6, is amended to read: 
489.21     Subd. 6.  [PROPERTY TAX RELIEF.] (a) In 1999 2001, 2002, 
489.22  and 2003, 38.81 22.81 cents per taxable ton, and in 2004 and 
489.23  thereafter, 38.81 cents per taxable ton, less any amount 
489.24  required to be distributed under paragraphs (b) and (c), and 
489.25  less any amount required to be deducted under paragraph (d), 
489.26  must be allocated to St. Louis county acting as the counties' 
489.27  fiscal agent, to be distributed as provided in sections 273.134 
489.28  to 273.136. 
489.29     (b) If an electric power plant owned by and providing the 
489.30  primary source of power for a taxpayer mining and concentrating 
489.31  taconite is located in a county other than the county in which 
489.32  the mining and the concentrating processes are conducted, .1875 
489.33  cent per taxable ton of the tax imposed and collected from such 
489.34  taxpayer shall be paid to the county. 
489.35     (c) If an electric power plant owned by and providing the 
489.36  primary source of power for a taxpayer mining and concentrating 
490.1   taconite is located in a school district other than a school 
490.2   district in which the mining and concentrating processes are 
490.3   conducted, .7282 cent per taxable ton of the tax imposed and 
490.4   collected from the taxpayer shall be paid to the school district.
490.5      (d) Two cents per taxable ton must be deducted from the 
490.6   amount allocated to the St. Louis county auditor under paragraph 
490.7   (a). 
490.8      Sec. 10.  Minnesota Statutes 2000, section 298.28, 
490.9   subdivision 9a, is amended to read: 
490.10     Subd. 9a.  [TACONITE ECONOMIC DEVELOPMENT FUND.] (a) 
490.11  15.4 31.4 cents per ton for distributions in 1999, 2000, 2001, 
490.12  and 2002, 2003, and 2004, and 15.4 cents per ton for 
490.13  distributions in 2005 and thereafter must be paid to the 
490.14  taconite economic development fund.  No distribution shall be 
490.15  made under this paragraph in any year in which total industry 
490.16  production falls below 30 million tons. 
490.17     (b) An amount equal to 50 percent of the tax under section 
490.18  298.24 for concentrate sold in the form of pellet chips and 
490.19  fines not exceeding 5/16 inch in size and not including crushed 
490.20  pellets shall be paid to the taconite economic development 
490.21  fund.  The amount paid shall not exceed $700,000 annually for 
490.22  all companies.  If the initial amount to be paid to the fund 
490.23  exceeds this amount, each company's payment shall be prorated so 
490.24  the total does not exceed $700,000. 
490.25     Sec. 11.  Minnesota Statutes 2000, section 298.2961, 
490.26  subdivision 2, is amended to read: 
490.27     Subd. 2.  [PROJECTS; APPROVAL.] (a) Projects funded must be 
490.28  for: 
490.29     (1) environmentally unique reclamation projects; or 
490.30     (2) pit or plant expansions or modernizations other than 
490.31  for a value added iron products plant that extend the life of 
490.32  the plant; or 
490.33     (3) haulage trucks and equipment and mining shovels. 
490.34     (b) To be proposed by the board, a project must be approved 
490.35  by at least eight iron range resources and rehabilitation board 
490.36  members.  The money for a project may be spent only upon 
491.1   approval of the project by the governor.  The board may submit 
491.2   supplemental projects for approval at any time. 
491.3      (c) The board may require that it receive an equity 
491.4   percentage in any project to which it contributes under this 
491.5   section.  
491.6      Sec. 12.  Minnesota Statutes 2000, section 298.75, 
491.7   subdivision 1, is amended to read: 
491.8      Subdivision 1.  [DEFINITIONS.] Except as may otherwise be 
491.9   provided, the following words, when used in this section, shall 
491.10  have the meanings herein ascribed to them.  
491.11     (1) "Aggregate material" shall mean nonmetallic natural 
491.12  mineral aggregate including, but not limited to sand, silica 
491.13  sand, gravel, building stone, crushed rock, limestone, and 
491.14  granite.  Aggregate material shall not include dimension stone 
491.15  and dimension granite.  Aggregate material must be measured or 
491.16  weighed after it has been extracted from the pit, quarry, or 
491.17  deposit.  
491.18     (2) "Person" shall mean any individual, firm, partnership, 
491.19  corporation, organization, trustee, association, or other entity.
491.20     (3) "Operator" shall mean any person engaged in the 
491.21  business of removing aggregate material from the surface or 
491.22  subsurface of the soil, for the purpose of sale, either directly 
491.23  or indirectly, through the use of the aggregate material in a 
491.24  marketable product or service.  
491.25     (4) "Extraction site" shall mean a pit, quarry, or deposit 
491.26  containing aggregate material and any contiguous property to the 
491.27  pit, quarry, or deposit which is used by the operator for 
491.28  stockpiling the aggregate material.  
491.29     (5) "Importer" shall mean any person who buys aggregate 
491.30  material produced from a county not listed in paragraph (6) or 
491.31  another state and causes the aggregate material to be imported 
491.32  into a county in this state which imposes a tax on aggregate 
491.33  material.  
491.34     (6)(a) "County" shall mean the counties of Pope, Stearns, 
491.35  Benton, Sherburne, Carver, Scott, Dakota, Le Sueur, Kittson, 
491.36  Marshall, Pennington, Red Lake, Polk, Norman, Mahnomen, Clay, 
492.1   Becker, Carlton, St. Louis, Rock, Murray, Wilkin, Big Stone, 
492.2   Sibley, Hennepin, Washington, Chisago, and Ramsey. 
492.3      (b) "County" also means any other county whose board has 
492.4   voted after a public hearing to impose the tax under this 
492.5   section, has notified the commissioner of the imposition of the 
492.6   tax, and either (1) no reverse referendum under subdivision 9 
492.7   has been requested, or (2) a referendum has been held and the 
492.8   majority of the votes cast are in the affirmative. 
492.9      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
492.10  following final enactment. 
492.11     Sec. 13.  Minnesota Statutes 2000, section 298.75, 
492.12  subdivision 2, is amended to read: 
492.13     Subd. 2.  A county shall impose upon every importer and 
492.14  operator a production tax equal up to ten cents per cubic yard 
492.15  or up to seven cents per ton of aggregate material removed 
492.16  except that the county board may decide not to impose this tax 
492.17  if it determines that in the previous year operators removed 
492.18  less than 20,000 tons or 14,000 cubic yards of aggregate 
492.19  material from that county.  The tax shall be imposed on 
492.20  aggregate material produced in the county when the aggregate 
492.21  material is transported from the extraction site or sold.  When 
492.22  aggregate material is stored in a stockpile within the state of 
492.23  Minnesota and a public highway, road or street is not used for 
492.24  transporting the aggregate material, the tax shall be imposed 
492.25  either when the aggregate material is sold, or when it is 
492.26  transported from the stockpile site, or when it is used from the 
492.27  stockpile, whichever occurs first.  The tax shall be imposed on 
492.28  an importer when the aggregate material is imported into the 
492.29  county that imposes the tax.  
492.30     If the aggregate material is transported directly from the 
492.31  extraction site to a waterway, railway, or another mode of 
492.32  transportation other than a highway, road or street, the tax 
492.33  imposed by this section shall be apportioned equally between the 
492.34  county where the aggregate material is extracted and the county 
492.35  to which the aggregate material is originally transported.  If 
492.36  that destination is not located in Minnesota, then the county 
493.1   where the aggregate material was extracted shall receive all of 
493.2   the proceeds of the tax.  
493.3      <b>[EFFECTIVE DATE.]</b> This section is effective for aggregate 
493.4   material sold, imported, transported, or used from a stockpile 
493.5   after June 30, 2001. 
493.6      Sec. 14.  Minnesota Statutes 2000, section 298.75, is 
493.7   amended by adding a subdivision to read: 
493.8      Subd. 9.  [REVERSE REFERENDUM.] The reverse referendum 
493.9   procedure in this subdivision applies only if a county has 
493.10  adopted an aggregate material removal production tax under 
493.11  subdivision 1, paragraph (6)(b). 
493.12     If, within 21 days after the public hearing and adoption of 
493.13  the tax under subdivision 1, a petition signed by voters equal 
493.14  in number to five percent of the votes cast in the county in the 
493.15  last general election requesting a referendum on the imposition 
493.16  of the tax is filed with the county auditor, the tax is not 
493.17  effective until it has been submitted to the voters at a special 
493.18  election and a majority of votes cast on the question of 
493.19  approving the imposition of the tax are in the affirmative.  The 
493.20  commissioner of revenue shall prepare the form of the question 
493.21  to be presented at the referendum. 
493.22     The county shall notify the county auditor of the results 
493.23  of the referendum.  If the majority of the votes cast on the 
493.24  question are in the affirmative, the tax imposed under 
493.25  subdivision 1 takes effect.  If the majority of the votes cast 
493.26  on the question are in the negative, the tax does not take 
493.27  effect. 
493.28     <b>[EFFECTIVE DATE.]</b> This section is effective for aggregate 
493.29  material removal production taxes first imposed after the day 
493.30  following final enactment. 
493.31     Sec. 15.  [APPROPRIATION.] 
493.32     The commissioner of revenue shall determine a state aid 
493.33  amount equal to a tax of 16 cents per taxable ton of iron ore 
493.34  concentrates for production years 2001, 2002, and 2003.  There 
493.35  is appropriated from the general fund to the commissioner an 
493.36  amount equal to the state aid determined under this section in 
494.1   each of fiscal years 2002, 2003, and 2004 which is added to the 
494.2   taconite production tax distributions in 2002, 2003, and 2004 
494.3   and must be distributed under Minnesota Statutes, section 
494.4   298.28, as if the aid were production tax revenues. 
494.5                              ARTICLE 17 
494.6                            FEDERAL UPDATE
494.7      Section 1.  Minnesota Statutes 2000, section 289A.02, 
494.8   subdivision 7, is amended to read: 
494.9      Subd. 7.  [INTERNAL REVENUE CODE.] Unless specifically 
494.10  defined otherwise, "Internal Revenue Code" means the Internal 
494.11  Revenue Code of 1986, as amended through December 31, 1999 2000. 
494.12     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
494.13  following final enactment. 
494.14     Sec. 2.  Minnesota Statutes 2000, section 290.01, 
494.15  subdivision 19, is amended to read: 
494.16     Subd. 19.  [NET INCOME.] The term "net income" means the 
494.17  federal taxable income, as defined in section 63 of the Internal 
494.18  Revenue Code of 1986, as amended through the date named in this 
494.19  subdivision, incorporating any elections made by the taxpayer in 
494.20  accordance with the Internal Revenue Code in determining federal 
494.21  taxable income for federal income tax purposes, and with the 
494.22  modifications provided in subdivisions 19a to 19f. 
494.23     In the case of a regulated investment company or a fund 
494.24  thereof, as defined in section 851(a) or 851(g) of the Internal 
494.25  Revenue Code, federal taxable income means investment company 
494.26  taxable income as defined in section 852(b)(2) of the Internal 
494.27  Revenue Code, except that:  
494.28     (1) the exclusion of net capital gain provided in section 
494.29  852(b)(2)(A) of the Internal Revenue Code does not apply; 
494.30     (2) the deduction for dividends paid under section 
494.31  852(b)(2)(D) of the Internal Revenue Code must be applied by 
494.32  allowing a deduction for capital gain dividends and 
494.33  exempt-interest dividends as defined in sections 852(b)(3)(C) 
494.34  and 852(b)(5) of the Internal Revenue Code; and 
494.35     (3) the deduction for dividends paid must also be applied 
494.36  in the amount of any undistributed capital gains which the 
495.1   regulated investment company elects to have treated as provided 
495.2   in section 852(b)(3)(D) of the Internal Revenue Code.  
495.3      The net income of a real estate investment trust as defined 
495.4   and limited by section 856(a), (b), and (c) of the Internal 
495.5   Revenue Code means the real estate investment trust taxable 
495.6   income as defined in section 857(b)(2) of the Internal Revenue 
495.7   Code.  
495.8      The net income of a designated settlement fund as defined 
495.9   in section 468B(d) of the Internal Revenue Code means the gross 
495.10  income as defined in section 468B(b) of the Internal Revenue 
495.11  Code. 
495.12     The provisions of sections 1113(a), 1117, 1206(a), 1313(a), 
495.13  1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612, 
495.14  1616, 1617, 1704(l), and 1704(m) of the Small Business Job 
495.15  Protection Act, Public Law Number 104-188, the provisions of 
495.16  Public Law Number 104-117, the provisions of sections 313(a) and 
495.17  (b)(1), 602(a), 913(b), 941, 961, 971, 1001(a) and (b), 1002, 
495.18  1003, 1012, 1013, 1014, 1061, 1062, 1081, 1084(b), 1086, 1087, 
495.19  1111(a), 1131(b) and (c), 1211(b), 1213, 1530(c)(2), 1601(f)(5) 
495.20  and (h), and 1604(d)(1) of the Taxpayer Relief Act of 1997, 
495.21  Public Law Number 105-34, the provisions of section 6010 of the 
495.22  Internal Revenue Service Restructuring and Reform Act of 1998, 
495.23  Public Law Number 105-206, and the provisions of section 4003 of 
495.24  the Omnibus Consolidated and Emergency Supplemental 
495.25  Appropriations Act, 1999, Public Law Number 105-277, and the 
495.26  provisions of section 318 of the Consolidated Appropriation Act 
495.27  of 2001, Public Law Number 106-554, shall become effective at 
495.28  the time they become effective for federal purposes. 
495.29     The Internal Revenue Code of 1986, as amended through 
495.30  December 31, 1996, shall be in effect for taxable years 
495.31  beginning after December 31, 1996. 
495.32     The provisions of sections 202(a) and (b), 221(a), 225, 
495.33  312, 313, 913(a), 934, 962, 1004, 1005, 1052, 1063, 1084(a) and 
495.34  (c), 1089, 1112, 1171, 1204, 1271(a) and (b), 1305(a), 1306, 
495.35  1307, 1308, 1309, 1501(b), 1502(b), 1504(a), 1505, 1527, 1528, 
495.36  1530, 1601(d), (e), (f), and (i) and 1602(a), (b), (c), and (e) 
496.1   of the Taxpayer Relief Act of 1997, Public Law Number 105-34, 
496.2   the provisions of sections 6004, 6005, 6012, 6013, 6015, 6016, 
496.3   7002, and 7003 of the Internal Revenue Service Restructuring and 
496.4   Reform Act of 1998, Public Law Number 105-206, the provisions of 
496.5   section 3001 of the Omnibus Consolidated and Emergency 
496.6   Supplemental Appropriations Act, 1999, Public Law Number 
496.7   105-277, and the provisions of section 3001 of the Miscellaneous 
496.8   Trade and Technical Corrections Act of 1999, Public Law Number 
496.9   106-36, and the provisions of section 316 of the Consolidated 
496.10  Appropriation Act of 2001, Public Law Number 106-554, shall 
496.11  become effective at the time they become effective for federal 
496.12  purposes. 
496.13     The Internal Revenue Code of 1986, as amended through 
496.14  December 31, 1997, shall be in effect for taxable years 
496.15  beginning after December 31, 1997. 
496.16     The provisions of sections 5002, 6009, 6011, and 7001 of 
496.17  the Internal Revenue Service Restructuring and Reform Act of 
496.18  1998, Public Law Number 105-206, the provisions of section 9010 
496.19  of the Transportation Equity Act for the 21st Century, Public 
496.20  Law Number 105-178, the provisions of sections 1004, 4002, and 
496.21  5301 of the Omnibus Consolidation and Emergency Supplemental 
496.22  Appropriations Act, 1999, Public Law Number 105-277, the 
496.23  provision of section 303 of the Ricky Ray Hemophilia Relief Fund 
496.24  Act of 1998, Public Law Number 105-369, and the provisions of 
496.25  sections 532, 534, 536, 537, and 538 of the Ticket to Work and 
496.26  Work Incentives Improvement Act of 1999, Public Law Number 
496.27  106-170, the provisions of the Installment Tax Correction Act of 
496.28  2000, Public Law Number 106-573, and the provisions of section 
496.29  309 of the Consolidated Appropriation Act of 2001, Public Law 
496.30  Number 106-554, shall become effective at the time they become 
496.31  effective for federal purposes. 
496.32     The Internal Revenue Code of 1986, as amended through 
496.33  December 31, 1998, shall be in effect for taxable years 
496.34  beginning after December 31, 1998.  
496.35     The provisions of the FSC Repeal and Extraterritorial 
496.36  Income Exclusion Act of 2000, Public Law Number 106-519, shall 
497.1   become effective at the time it became effective for federal 
497.2   purposes. 
497.3      The Internal Revenue Code of 1986, as amended through 
497.4   December 31, 1999, shall be in effect for taxable years 
497.5   beginning after December 31, 1999.  The provisions of sections 
497.6   306 and 401 of the Consolidated Appropriation Act of 2001, 
497.7   Public Law Number 106-554, shall become effective at the same 
497.8   time it became effective for federal purposes. 
497.9      The Internal Revenue Code of 1986, as amended through 
497.10  December 31, 2000, shall be in effect for taxable years 
497.11  beginning after December 31, 2000. 
497.12     Except as otherwise provided, references to the Internal 
497.13  Revenue Code in subdivisions 19a to 19g mean the code in effect 
497.14  for purposes of determining net income for the applicable year. 
497.15     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
497.16  following final enactment. 
497.17     Sec. 3.  Minnesota Statutes 2000, section 290.01, 
497.18  subdivision 31, is amended to read: 
497.19     Subd. 31.  [INTERNAL REVENUE CODE.] Unless specifically 
497.20  defined otherwise, "Internal Revenue Code" means the Internal 
497.21  Revenue Code of 1986, as amended through December 31, 1999 2000. 
497.22     <b>[EFFECTIVE DATE.]</b> This section is effective at the same 
497.23  time and in the same manner as the federal changes made by the 
497.24  FSC Repeal and Extraterritorial Income Exclusion Act of 2000, 
497.25  Public Law Number 106-519, and the Consolidated Appropriation 
497.26  Act of 2001, Public Law Number 106-554, becomes effective. 
497.27     Sec. 4.  Minnesota Statutes 2000, section 290.191, 
497.28  subdivision 5, is amended to read: 
497.29     Subd. 5.  [DETERMINATION OF SALES FACTOR.] For purposes of 
497.30  this section, the following rules apply in determining the sales 
497.31  factor.  
497.32     (a) The sales factor includes all sales, gross earnings, or 
497.33  receipts received in the ordinary course of the business, except 
497.34  that the following types of income are not included in the sales 
497.35  factor: 
497.36     (1) interest; 
498.1      (2) dividends; 
498.2      (3) sales of capital assets as defined in section 1221 of 
498.3   the Internal Revenue Code; 
498.4      (4) sales of property used in the trade or business, except 
498.5   sales of leased property of a type which is regularly sold as 
498.6   well as leased; 
498.7      (5) sales of debt instruments as defined in section 
498.8   1275(a)(1) of the Internal Revenue Code or sales of stock; and 
498.9      (6) royalties, fees, or other like income of a type which 
498.10  qualify for a subtraction from federal taxable income under 
498.11  section 290.01, subdivision 19(d)(11); and 
498.12     (7) all sales, gross earnings, or receipts used to generate 
498.13  income excluded under section 114 of the Internal Revenue Code. 
498.14     (b) Sales of tangible personal property are made within 
498.15  this state if the property is received by a purchaser at a point 
498.16  within this state, and the taxpayer is taxable in this state, 
498.17  regardless of the f.o.b. point, other conditions of the sale, or 
498.18  the ultimate destination of the property. 
498.19     (c) Tangible personal property delivered to a common or 
498.20  contract carrier or foreign vessel for delivery to a purchaser 
498.21  in another state or nation is a sale in that state or nation, 
498.22  regardless of f.o.b. point or other conditions of the sale.  
498.23     (d) Notwithstanding paragraphs (b) and (c), when 
498.24  intoxicating liquor, wine, fermented malt beverages, cigarettes, 
498.25  or tobacco products are sold to a purchaser who is licensed by a 
498.26  state or political subdivision to resell this property only 
498.27  within the state of ultimate destination, the sale is made in 
498.28  that state.  
498.29     (e) Sales made by or through a corporation that is 
498.30  qualified as a domestic international sales corporation under 
498.31  section 992 of the Internal Revenue Code are not considered to 
498.32  have been made within this state.  
498.33     (f) Sales, rents, royalties, and other income in connection 
498.34  with real property is attributed to the state in which the 
498.35  property is located.  
498.36     (g) Receipts from the lease or rental of tangible personal 
499.1   property, including finance leases and true leases, must be 
499.2   attributed to this state if the property is located in this 
499.3   state and to other states if the property is not located in this 
499.4   state.  Receipts from the lease or rental of moving property 
499.5   including, but not limited to, motor vehicles, rolling stock, 
499.6   aircraft, vessels, or mobile equipment are included in the 
499.7   numerator of the receipts factor to the extent that the property 
499.8   is used in this state.  The extent of the use of moving property 
499.9   is determined as follows: 
499.10     (1) A motor vehicle is used wholly in the state in which it 
499.11  is registered.  
499.12     (2) The extent that rolling stock is used in this state is 
499.13  determined by multiplying the receipts from the lease or rental 
499.14  of the rolling stock by a fraction, the numerator of which is 
499.15  the miles traveled within this state by the leased or rented 
499.16  rolling stock and the denominator of which is the total miles 
499.17  traveled by the leased or rented rolling stock. 
499.18     (3) The extent that an aircraft is used in this state is 
499.19  determined by multiplying the receipts from the lease or rental 
499.20  of the aircraft by a fraction, the numerator of which is the 
499.21  number of landings of the aircraft in this state and the 
499.22  denominator of which is the total number of landings of the 
499.23  aircraft. 
499.24     (4) The extent that a vessel, mobile equipment, or other 
499.25  mobile property is used in the state is determined by 
499.26  multiplying the receipts from the lease or rental of the 
499.27  property by a fraction, the numerator of which is the number of 
499.28  days during the taxable year the property was in this state and 
499.29  the denominator of which is the total days in the taxable year.  
499.30     (h) Royalties and other income not described in paragraph 
499.31  (a), clause (6), received for the use of or for the privilege of 
499.32  using intangible property, including patents, know-how, 
499.33  formulas, designs, processes, patterns, copyrights, trade names, 
499.34  service names, franchises, licenses, contracts, customer lists, 
499.35  or similar items, must be attributed to the state in which the 
499.36  property is used by the purchaser.  If the property is used in 
500.1   more than one state, the royalties or other income must be 
500.2   apportioned to this state pro rata according to the portion of 
500.3   use in this state.  If the portion of use in this state cannot 
500.4   be determined, the royalties or other income must be excluded 
500.5   from both the numerator and the denominator.  Intangible 
500.6   property is used in this state if the purchaser uses the 
500.7   intangible property or the rights therein in the regular course 
500.8   of its business operations in this state, regardless of the 
500.9   location of the purchaser's customers. 
500.10     (i) Sales of intangible property are made within the state 
500.11  in which the property is used by the purchaser.  If the property 
500.12  is used in more than one state, the sales must be apportioned to 
500.13  this state pro rata according to the portion of use in this 
500.14  state.  If the portion of use in this state cannot be 
500.15  determined, the sale must be excluded from both the numerator 
500.16  and the denominator of the sales factor.  Intangible property is 
500.17  used in this state if the purchaser used the intangible property 
500.18  in the regular course of its business operations in this state. 
500.19     (j) Receipts from the performance of services must be 
500.20  attributed to the state where the services are received.  For 
500.21  the purposes of this section, receipts from the performance of 
500.22  services provided to a corporation, partnership, or trust may 
500.23  only be attributed to a state where it has a fixed place of 
500.24  doing business.  If the state where the services are received is 
500.25  not readily determinable or is a state where the corporation, 
500.26  partnership, or trust receiving the service does not have a 
500.27  fixed place of doing business, the services shall be deemed to 
500.28  be received at the location of the office of the customer from 
500.29  which the services were ordered in the regular course of the 
500.30  customer's trade or business.  If the ordering office cannot be 
500.31  determined, the services shall be deemed to be received at the 
500.32  office of the customer to which the services are billed. 
500.33     <b>[EFFECTIVE DATE.]</b> This section is effective for 
500.34  transactions after September 30, 2000. 
500.35     Sec. 5.  Minnesota Statutes 2000, section 290A.03, 
500.36  subdivision 15, is amended to read: 
501.1      Subd. 15.  [INTERNAL REVENUE CODE.] "Internal Revenue Code" 
501.2   means the Internal Revenue Code of 1986, as amended through 
501.3   December 31, 1999 2000. 
501.4      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
501.5   following final enactment. 
501.6      Sec. 6.  Minnesota Statutes 2000, section 291.005, 
501.7   subdivision 1, is amended to read: 
501.8      Subdivision 1.  Unless the context otherwise clearly 
501.9   requires, the following terms used in this chapter shall have 
501.10  the following meanings: 
501.11     (1) "Federal gross estate" means the gross estate of a 
501.12  decedent as valued and otherwise determined for federal estate 
501.13  tax purposes by federal taxing authorities pursuant to the 
501.14  provisions of the Internal Revenue Code. 
501.15     (2) "Minnesota gross estate" means the federal gross estate 
501.16  of a decedent after (a) excluding therefrom any property 
501.17  included therein which has its situs outside Minnesota and (b) 
501.18  including therein any property omitted from the federal gross 
501.19  estate which is includable therein, has its situs in Minnesota, 
501.20  and was not disclosed to federal taxing authorities.  
501.21     (3) "Personal representative" means the executor, 
501.22  administrator or other person appointed by the court to 
501.23  administer and dispose of the property of the decedent.  If 
501.24  there is no executor, administrator or other person appointed, 
501.25  qualified, and acting within this state, then any person in 
501.26  actual or constructive possession of any property having a situs 
501.27  in this state which is included in the federal gross estate of 
501.28  the decedent shall be deemed to be a personal representative to 
501.29  the extent of the property and the Minnesota estate tax due with 
501.30  respect to the property. 
501.31     (4) "Resident decedent" means an individual whose domicile 
501.32  at the time of death was in Minnesota. 
501.33     (5) "Nonresident decedent" means an individual whose 
501.34  domicile at the time of death was not in Minnesota. 
501.35     (6) "Situs of property" means, with respect to real 
501.36  property, the state or country in which it is located; with 
502.1   respect to tangible personal property, the state or country in 
502.2   which it was normally kept or located at the time of the 
502.3   decedent's death; and with respect to intangible personal 
502.4   property, the state or country in which the decedent was 
502.5   domiciled at death. 
502.6      (7) "Commissioner" means the commissioner of revenue or any 
502.7   person to whom the commissioner has delegated functions under 
502.8   this chapter. 
502.9      (8) "Internal Revenue Code" means the United States 
502.10  Internal Revenue Code of 1986, as amended through December 31, 
502.11  1999 2000. 
502.12     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
502.13  following final enactment. 
502.14                             ARTICLE 18 
502.15                       SEIZURES OF CONTRABAND 
502.16     Section 1.  Minnesota Statutes 2000, section 296A.24, 
502.17  subdivision 1, is amended to read: 
502.18     Subdivision 1.  [SEIZURE.] The commissioner or authorized 
502.19  agents may seize gasoline or special fuel being transported for 
502.20  delivery in violation of section 296A.03, subdivision 1, and any 
502.21  vehicle or other method of conveyance used for transporting the 
502.22  gasoline or special fuel.  Any untaxed motor vehicle fuel that 
502.23  is received by a person other than a licensee is subject to 
502.24  seizure along with the vehicle or other means of transportation 
502.25  used to transport the motor vehicle fuel.  Any motor vehicle 
502.26  fuel, along with the transporting vehicle, brought into the 
502.27  state of Minnesota by a transporter for use, distribution, 
502.28  storage, or sale that is not supported by a manifest, bill of 
502.29  lading, or invoice, reflecting the licensed distributor 
502.30  responsible for the tax and/or fees is subject to seizure by the 
502.31  Minnesota department of revenue.  Property seized under this 
502.32  subdivision is subject to forfeiture as provided in subdivisions 
502.33  subdivision 2 and 3. 
502.34     <b>[EFFECTIVE DATE.]</b> This section is effective for seizures 
502.35  made on or after July 1, 2001. 
502.36     Sec. 2.  Minnesota Statutes 2000, section 296A.24, 
503.1   subdivision 2, is amended to read: 
503.2      Subd. 2.  [DISPOSITION OF SEIZED PROPERTY.] (a) Within ten 
503.3   days after the seizure of gasoline or special fuel, the person 
503.4   making the seizure shall deliver serve by certified mail an 
503.5   inventory of the vehicle or property seized to on the person 
503.6   from whom the seizure was made, if known, and on any person 
503.7   known or believed to have any right, title, interest, or lien on 
503.8   the vehicle or property, at the last known address, and file a 
503.9   copy with the office of the commissioner.  The notice must 
503.10  include an explanation of the right to demand a judicial 
503.11  forfeiture determination. 
503.12     (b) Within ten 60 days after the date of service of the 
503.13  inventory, which is the date of mailing, the person from whom 
503.14  the vehicle or property was seized or any person claiming an 
503.15  interest in the property it may file with the commissioner a 
503.16  demand for a judicial determination of whether the vehicle or 
503.17  property was lawfully subject to seizure and forfeiture.  The 
503.18  commissioner, within 60 days of demand for a judicial 
503.19  determination, shall begin an action in the district court of 
503.20  the county where the seizure was made to determine the issue of 
503.21  forfeiture. 
503.22     (b) The action must be brought in the name of the state and 
503.23  prosecuted by the county attorney or by the attorney 
503.24  general.  The demand must be in the form of a civil complaint 
503.25  and must be filed with the court administrator in the county in 
503.26  which the seizure occurred, together with proof of service of a 
503.27  copy of the complaint on the commissioner of revenue, and the 
503.28  standard filing fee for civil actions unless the petitioner has 
503.29  the right to sue in forma pauperis under section 563.01.  If the 
503.30  value of the seized property or vehicle is $7,500 or less, the 
503.31  claimant may file an action in conciliation court for its 
503.32  recovery.  If the value of the seized property or vehicle is 
503.33  less than $500, the claimant does not have to pay the 
503.34  conciliation court filing fee. 
503.35     (c) The complaint must be captioned in the name of the 
503.36  claimant as plaintiff and the seized property or vehicle as 
504.1   defendant, and must state with specificity the grounds on which 
504.2   the claimant alleges the property or vehicle was improperly 
504.3   seized and the plaintiff's interest in the property or vehicle 
504.4   seized.  No responsive pleading is required of the commissioner 
504.5   and no court fees may be charged for the commissioner's 
504.6   appearance in the matter.  The proceedings are governed by the 
504.7   Rules of Civil Procedure.  Notwithstanding any law to the 
504.8   contrary, an action for the return of property or a vehicle 
504.9   seized under this section may not be maintained by or on behalf 
504.10  of any person who has been served with an inventory unless the 
504.11  person has complied with this subdivision.  The court shall hear 
504.12  the action without a jury and shall try and determine the issues 
504.13  of fact and law involved. 
504.14     (c) (d) When a judgment of forfeiture is entered, the 
504.15  commissioner may, unless the judgment is stayed pending an 
504.16  appeal, either: 
504.17     (1) cause the forfeited property gasoline or special fuel 
504.18  to be destroyed; or 
504.19     (2) cause it the forfeited property in clause (1) or 
504.20  vehicle to be sold at public auction as provided by 
504.21  law.  Proceeds of a sale, after deducting the expense of keeping 
504.22  the gasoline or special fuel and costs of the sale, must be paid 
504.23  into the state treasury.  The commissioner shall reimburse 
504.24  designees for costs incurred.  After deducting the expense of 
504.25  keeping the property and vehicle and the costs of the sale, the 
504.26  commissioner shall pay from the funds collected all liens 
504.27  according to their priority, which are established as being bona 
504.28  fide and as existing without the lienor having any notice or 
504.29  knowledge that the property or vehicle was being used or was 
504.30  intended to be used for or in connection with any violation, and 
504.31  shall pay the balance of the proceeds into the general fund.  
504.32     (d) If a demand for judicial determination is made and no 
504.33  action is commenced as provided in this subdivision, the 
504.34  property must be released by the commissioner and redelivered to 
504.35  the person entitled to it.  (e) If no demand for judicial 
504.36  determination is made, the property or vehicle seized must be 
505.1   considered forfeited to the state by operation of law and may be 
505.2   disposed of by the commissioner as provided where there has been 
505.3   a judgment of forfeiture.  When the commissioner is satisfied 
505.4   that a person from whom property is seized under this chapter 
505.5   was acting in good faith and without intent to evade the tax, 
505.6   the commissioner shall release the property seized, without 
505.7   further legal proceedings. 
505.8      <b>[EFFECTIVE DATE.]</b> This section is effective for seizures 
505.9   made on or after July 1, 2001. 
505.10     Sec. 3.  Minnesota Statutes 2000, section 297A.91, is 
505.11  amended to read: 
505.12     297A.91 [SEIZURE; COURT REVIEW.] 
505.13     Subdivision 1.  [SEIZURE OF PROPERTY USED IN ILLEGAL 
505.14  TRANSPORT.] (a) If the retailer does not have a sales or use tax 
505.15  permit and has been engaging in transporting personal property 
505.16  into the state without payment of the tax, the commissioner of 
505.17  revenue or the commissioner's agents may seize in the name of 
505.18  the state any truck, automobile, or means of transportation not 
505.19  owned or operated by a common carrier, used in the illegal 
505.20  importation and transportation of any tangible personal property 
505.21  by a retailer or the retailer's agent or employee.  The 
505.22  commissioner may demand the forfeiture and sale of the truck, 
505.23  automobile, or other means of transportation together with the 
505.24  property being transported illegally, unless the owner 
505.25  establishes to the satisfaction of the commissioner or the court 
505.26  that the owner had no notice or knowledge or reason to believe 
505.27  that the vehicle was used or intended to be used in any such 
505.28  violation. 
505.29     (b) Within two ten days after the seizure, the person 
505.30  making the seizure shall deliver serve by certified mail an 
505.31  inventory of the vehicle and property seized to on the person 
505.32  from whom the seizure was made, if known, and to on any person 
505.33  known or believed to have any right, title, interest, or lien on 
505.34  the vehicle or property, at the last known address.  The person 
505.35  making the seizure shall also file a copy of the inventory with 
505.36  the commissioner.  The notice must include an explanation of the 
506.1   right to demand a judicial forfeiture determination.  
506.2      Subd. 2.  [COURT REVIEW OF FORFEITURE.] (a) Within ten 60 
506.3   days after the date of service of the inventory, which is the 
506.4   date of mailing, the person from whom the vehicle and property 
506.5   were seized or any person claiming an interest in the vehicle or 
506.6   property may file with the commissioner a demand for a judicial 
506.7   determination of the question of whether the vehicle or property 
506.8   was lawfully subject to seizure and forfeiture.  The 
506.9   commissioner, within 30 days, shall institute an action in the 
506.10  district court of the county where the seizure was made to 
506.11  determine the issue of forfeiture. 
506.12     (b) The action must be brought in the name of the state and 
506.13  prosecuted by the county attorney or the attorney general.  The 
506.14  demand must be in the form of a civil complaint and must be 
506.15  filed with the court administrator in the county in which the 
506.16  seizure occurred, together with proof of service or a copy of 
506.17  the complaint on the commissioner of revenue, and the standard 
506.18  filing fee for civil actions unless the petitioner has the right 
506.19  to sue in forma pauperis under section 563.01.  If the value of 
506.20  the seized property or vehicle is $7,500 or less, the claimant 
506.21  may file an action in conciliation court for its recovery.  If 
506.22  the value of the seized property or vehicle is less than $500, 
506.23  the claimant does not have to pay the conciliation court filing 
506.24  fee.  
506.25     (c) The complaint must be captioned in the name of the 
506.26  claimant as plaintiff and the seized property or vehicle as 
506.27  defendant, and must state with specificity the grounds on which 
506.28  the claimant alleges the property or vehicle was improperly 
506.29  seized and the plaintiff's interest in the property or vehicle 
506.30  seized.  No responsive pleading is required of the commissioner, 
506.31  and no court fees may be charged for the commissioner's 
506.32  appearance in the matter.  The proceedings are governed by the 
506.33  Rules of Civil Procedure.  Notwithstanding any law to the 
506.34  contrary, an action for the return of property or a vehicle 
506.35  seized under this subdivision may not be maintained by or on 
506.36  behalf of any person who has been served with an inventory 
507.1   unless the person has complied with this subdivision.  The court 
507.2   shall hear the action without a jury and shall determine the 
507.3   issues of fact and law involved.  If a judgment of forfeiture is 
507.4   entered and is not stayed pending an appeal, the commissioner 
507.5   may have the forfeited vehicle and property sold at public 
507.6   auction as provided by law.  
507.7      Subd. 3.  [TREATMENT OF SEIZED PROPERTY.] If a demand for 
507.8   judicial determination is made and no action is commenced as 
507.9   provided in this subdivision, the vehicle and property must be 
507.10  released by the commissioner and redelivered to the person 
507.11  entitled to it.  If no demand for judicial determination is 
507.12  made, the vehicle and property seized are considered forfeited 
507.13  to the state by operation of law and may be disposed of by the 
507.14  commissioner as if there were a judgment of forfeiture.  The 
507.15  forfeiture and sale of the automobile, truck, or other means of 
507.16  transportation, and of the property being transported illegally 
507.17  in it, are a penalty for the violation of this chapter.  After 
507.18  deducting the expense of keeping the vehicle and property, the 
507.19  fee for seizure, and the costs of the sale, the commissioner 
507.20  shall pay liens from the funds collected.  The commissioner 
507.21  shall pay all liens, according to their priority, that are 
507.22  established at the hearing as being bona fide and as existing 
507.23  without the lienor having any notice or knowledge that the 
507.24  vehicle or property was being used or was intended to be used 
507.25  for or in connection with any such violation as specified in the 
507.26  order of the court.  The commissioner shall pay the balance of 
507.27  the proceeds into the state treasury to be credited to the 
507.28  general fund.  The state is not liable for any liens in excess 
507.29  of the proceeds from the sale after allowable deductions.  A 
507.30  sale under this section frees the vehicle and property sold from 
507.31  all liens.  The order of the district court may be appealed as 
507.32  in other civil cases.  
507.33     <b>[EFFECTIVE DATE.]</b> This section is effective for seizures 
507.34  made on or after July 1, 2001. 
507.35     Sec. 4.  Minnesota Statutes 2000, section 297E.16, 
507.36  subdivision 1, is amended to read: 
508.1      Subdivision 1.  [SEIZURE.] Contraband may be seized by the 
508.2   commissioner or by any sheriff or other police officer, 
508.3   hereinafter referred to as the "seizing authority," with or 
508.4   without process, and is subject to forfeiture as provided in 
508.5   subdivisions subdivision 2 and 3.  
508.6      <b>[EFFECTIVE DATE.]</b> This section is effective for seizures 
508.7   made on or after July 1, 2001. 
508.8      Sec. 5.  Minnesota Statutes 2000, section 297E.16, 
508.9   subdivision 2, is amended to read: 
508.10     Subd. 2.  [INVENTORY; JUDICIAL DETERMINATION; APPEAL; 
508.11  DISPOSITION OF SEIZED PROPERTY.] (a) Within ten days after the 
508.12  seizure of alleged contraband described in section 349.2125, 
508.13  subdivision 1, the person making the seizure shall make 
508.14  available serve by certified mail an inventory of the property 
508.15  seized to on the person from whom the property was seized, if 
508.16  known, and on any person known or believed to have any right, 
508.17  title, interest, or lien in the property, at the last known 
508.18  address, and file a copy with the commissioner or the director 
508.19  of alcohol and gambling enforcement.  The notice must include an 
508.20  explanation of the right to demand a judicial forfeiture 
508.21  determination. 
508.22     (b) Within ten 60 days after the date of service of the 
508.23  inventory, which is the date of mailing, the person from whom 
508.24  the property was seized or any person claiming an interest in 
508.25  the property may file with the seizing authority a demand for 
508.26  judicial determination of whether the property was lawfully 
508.27  subject to seizure and forfeiture.  Within 60 days after the 
508.28  date of filing of the demand, the seizing authority must bring 
508.29  an action in the district court of the county where seizure was 
508.30  made to determine the issue of forfeiture.  The action must be 
508.31  brought in the name of the state and be prosecuted by the county 
508.32  attorney or by the attorney general.  The demand must be in the 
508.33  form of a civil complaint and must be filed with the court 
508.34  administrator in the county in which the seizure occurred, 
508.35  together with proof of service of a copy of the complaint on the 
508.36  commissioner of revenue or the director of alcohol and gambling 
509.1   enforcement, and the standard filing fee for civil actions 
509.2   unless the petitioner has the right to sue in forma pauperis 
509.3   under section 563.01.  If the value of the seized property is 
509.4   $7,500 or less, the claimant may file an action in conciliation 
509.5   court for recovery of the property.  If the value of the seized 
509.6   property is less than $500, the claimant does not have to pay 
509.7   the conciliation court filing fee.  
509.8      (c) The complaint must be captioned in the name of the 
509.9   claimant as plaintiff and the seized property as defendant, and 
509.10  must state with specificity the grounds on which the claimant 
509.11  alleges the property was improperly seized and the plaintiff's 
509.12  interest in the property seized.  No responsive pleading is 
509.13  required of the commissioner or director, and no court fees may 
509.14  be charged for the commissioner's or director's appearance in 
509.15  the matter.  The proceedings are governed by the Rules of Civil 
509.16  Procedure.  Notwithstanding any law to the contrary, an action 
509.17  for the return of property seized under this section may not be 
509.18  maintained by or on behalf of any person who has been served 
509.19  with an inventory unless the person has complied with this 
509.20  subdivision.  The court shall hear the action without a jury and 
509.21  determine the issues of fact and law involved.  
509.22     (d) If a judgment of forfeiture is entered, the seizing 
509.23  authority may, unless the judgment is stayed pending an appeal, 
509.24  either (1) cause the forfeited property, other than a vehicle, 
509.25  to be destroyed; or (2) cause it to be sold at a public auction 
509.26  as provided by law.  The person making a sale, after deducting 
509.27  the expense of keeping the property, the fee for seizure, and 
509.28  the costs of the sale, shall pay all liens according to their 
509.29  priority, which are established as being bona fide and as 
509.30  existing without the lienor having any notice or knowledge that 
509.31  the property was being used or was intended to be used for or in 
509.32  connection with the violation.  The balance of the proceeds must 
509.33  be paid 70 percent to the seizing authority for deposit as a 
509.34  supplement to its operating fund or similar fund for official 
509.35  use, and 20 percent to the county attorney or other prosecuting 
509.36  agency that handled the court proceeding, if there is one, for 
510.1   deposit as a supplement to its operating fund or similar fund 
510.2   for prosecutorial purposes.  The remaining ten percent of the 
510.3   proceeds must be forwarded within 60 days after resolution of 
510.4   the forfeiture to the department of human services to fund 
510.5   programs for the treatment of compulsive gamblers.  If there is 
510.6   no prosecuting authority involved in the forfeiture, the 20 
510.7   percent of the proceeds otherwise designated for the prosecuting 
510.8   authority must be deposited into the general fund.  
510.9      If demand for judicial determination is made and no action 
510.10  is commenced by the seizing authority as provided in this 
510.11  subdivision, the property must be released by the seizing 
510.12  authority and delivered to the person entitled to it.  (e) If no 
510.13  demand for judicial determination is made, the property seized 
510.14  is considered forfeited to the seizing authority by operation of 
510.15  law and may be disposed of by the seizing authority as provided 
510.16  where there has been a judgment of forfeiture.  When the seizing 
510.17  authority is satisfied that a person from whom property is 
510.18  seized was acting in good faith and without intent to evade the 
510.19  tax imposed by section 297E.02, the seizing authority shall 
510.20  release the property seized without further legal proceedings. 
510.21     <b>[EFFECTIVE DATE.]</b> This section is effective for seizures 
510.22  made on or after July 1, 2001. 
510.23     Sec. 6.  Minnesota Statutes 2000, section 297F.21, 
510.24  subdivision 1, is amended to read: 
510.25     Subdivision 1.  [CONTRABAND DEFINED.] The following are 
510.26  declared to be contraband and therefore subject to civil and 
510.27  criminal penalties under this chapter: 
510.28     (a) Cigarette packages which do not have stamps affixed to 
510.29  them as provided in this chapter, including but not limited to 
510.30  (i) packages with illegible stamps and packages with stamps that 
510.31  are not complete or whole even if the stamps are legible, and 
510.32  (ii) all devices for the vending of cigarettes in which packages 
510.33  as defined in item (i) are found, including all contents 
510.34  contained within the devices. 
510.35     (b) A device for the vending of cigarettes and all packages 
510.36  of cigarettes, where the device does not afford at least partial 
511.1   visibility of contents.  Where any package exposed to view does 
511.2   not carry the stamp required by this chapter, it shall be 
511.3   presumed that all packages contained in the device are unstamped 
511.4   and contraband. 
511.5      (c) A device for the vending of cigarettes to which the 
511.6   commissioner or authorized agents have been denied access for 
511.7   the inspection of contents.  In lieu of seizure, the 
511.8   commissioner or an agent may seal the device to prevent its use 
511.9   until inspection of contents is permitted. 
511.10     (d) A device for the vending of cigarettes which does not 
511.11  carry the name and address of the owner, plainly marked and 
511.12  visible from the front of the machine. 
511.13     (e) A device including, but not limited to, motor vehicles, 
511.14  trailers, snowmobiles, airplanes, and boats used with the 
511.15  knowledge of the owner or of a person operating with the consent 
511.16  of the owner for the storage or transportation of more than 
511.17  5,000 cigarettes which are contraband under this subdivision.  
511.18  When cigarettes are being transported in the course of 
511.19  interstate commerce, or are in movement from either a public 
511.20  warehouse to a distributor upon orders from a manufacturer or 
511.21  distributor, or from one distributor to another, the cigarettes 
511.22  are not contraband, notwithstanding the provisions of clause (a).
511.23     (f) A device including, but not limited to, motor vehicles, 
511.24  trailers, snowmobiles, airplanes, and boats used with the 
511.25  knowledge of the owner, or of a person operating with the 
511.26  consent of the owner, for the storage or transportation of 
511.27  untaxed tobacco products intended for sale in Minnesota other 
511.28  than those in the possession of a licensed distributor on or 
511.29  before the due date for payment of the tax under section 
511.30  297F.09, subdivision 2. 
511.31     (g) Cigarette packages or tobacco products obtained from an 
511.32  unlicensed seller. 
511.33     (g) (h) Cigarette packages offered for sale or held as 
511.34  inventory in violation of section 297F.20, subdivision 7. 
511.35     (h) (i) Tobacco products on which the tax has not been paid 
511.36  by a licensed distributor. 
512.1      (i) (j) Any cigarette packages or tobacco products offered 
512.2   for sale or held as inventory for which there is not an invoice 
512.3   from a licensed seller as required under section 297F.13, 
512.4   subdivision 4.  
512.5      (j) (k) Cigarette packages which have been imported into 
512.6   the United States in violation of United States Code, title 26, 
512.7   section 5754.  All cigarettes held in violation of that section 
512.8   shall be presumed to have entered the United States after 
512.9   December 31, 1999, in the absence of proof to the contrary. 
512.10     <b>[EFFECTIVE DATE.]</b> This section is effective for seizures 
512.11  made on or after July 1, 2001. 
512.12     Sec. 7.  Minnesota Statutes 2000, section 297F.21, 
512.13  subdivision 2, is amended to read: 
512.14     Subd. 2.  [SEIZURE.] Cigarettes, tobacco products, or other 
512.15  property made contraband by subdivision 1 may be seized by the 
512.16  commissioner or authorized agents or by any sheriff or other 
512.17  police officer, with or without process, and are subject to 
512.18  forfeiture as provided in subdivisions subdivision 3 and 4. 
512.19     <b>[EFFECTIVE DATE.]</b> This section is effective for seizures 
512.20  made on or after July 1, 2001. 
512.21     Sec. 8.  Minnesota Statutes 2000, section 297F.21, 
512.22  subdivision 3, is amended to read: 
512.23     Subd. 3.  [INVENTORY; JUDICIAL DETERMINATION; APPEAL; 
512.24  DISPOSITION OF SEIZED PROPERTY.] (a) Within ten days after the 
512.25  seizure of any alleged contraband, the person making the seizure 
512.26  shall make available serve by certified mail an inventory of the 
512.27  property seized to on the person from whom the seizure was made, 
512.28  if known, and on any person known or believed to have any right, 
512.29  title, interest, or lien in the property, at the last known 
512.30  address, and file a copy with the commissioner.  The notice must 
512.31  include an explanation of the right to demand a judicial 
512.32  forfeiture determination. 
512.33     (b) Within ten 60 days after the date of service of the 
512.34  inventory, which is the date of mailing, the person from whom 
512.35  the property was seized or any person claiming an interest in 
512.36  the property may file with the commissioner a demand for a 
513.1   judicial determination of the question as to whether the 
513.2   property was lawfully subject to seizure and forfeiture.  The 
513.3   commissioner, within 60 days, shall institute an action in the 
513.4   district court of the county where the seizure was made to 
513.5   determine the issue of forfeiture.  The demand must be in the 
513.6   form of a civil complaint and must be filed with the court 
513.7   administrator in the county in which the seizure occurred, 
513.8   together with proof of service of a copy of the complaint on the 
513.9   commissioner of revenue, and the standard filing fee for civil 
513.10  actions unless the petitioner has the right to sue in forma 
513.11  pauperis under section 563.01.  If the value of the seized 
513.12  property is $7,500 or less, the claimant may file an action in 
513.13  conciliation court for recovery of the property.  If the value 
513.14  of the seized property is less than $500, the claimant does not 
513.15  have to pay the conciliation court filing fee. 
513.16     (c) The complaint must be captioned in the name of the 
513.17  claimant as plaintiff and the seized property as defendant, and 
513.18  must state with specificity the grounds on which the claimant 
513.19  alleges the property was improperly seized and the plaintiff's 
513.20  interest in the property seized.  No responsive pleading is 
513.21  required of the commissioner, and no court fees may be charged 
513.22  for the commissioner's appearance in the matter.  The 
513.23  proceedings are governed by the Rules of Civil Procedure.  
513.24  Notwithstanding any law to the contrary, an action for the 
513.25  return of property seized under this section may not be 
513.26  maintained by or on behalf of any person who has been served 
513.27  with an inventory unless the person has complied with this 
513.28  subdivision.  The court shall decide whether the alleged 
513.29  contraband is contraband, as defined in subdivision 1. 
513.30     (b) The action must be brought in the name of the state and 
513.31  must be prosecuted by the county attorney or by the attorney 
513.32  general.  The court shall hear the action without a jury and 
513.33  shall try and determine the issues of fact and law involved. 
513.34     (c) (d) When a judgment of forfeiture is entered, the 
513.35  commissioner may, unless the judgment is stayed pending an 
513.36  appeal, either: 
514.1      (1) deliver the forfeited property cigarette packages or 
514.2   tobacco products to the commissioner of human services for use 
514.3   by patients in state institutions; 
514.4      (2) cause it the property in clause (1) to be destroyed; or 
514.5      (3) cause it the forfeited property to be sold at public 
514.6   auction as provided by law.  
514.7   The person making a sale, after deducting the expense of keeping 
514.8   the property, the fee for seizure, and the costs of the sale, 
514.9   shall pay all liens according to their priority, which are 
514.10  established as being bona fide and as existing without the 
514.11  lienor having any notice or knowledge that the property was 
514.12  being used or was intended to be used for or in connection with 
514.13  the violation.  The balance of the proceeds must be paid 75 
514.14  percent to the department of revenue for deposit as a supplement 
514.15  to its operating fund or similar fund for official use, and 25 
514.16  percent to the county attorney or other prosecuting agency that 
514.17  handled the court proceeding, if there is one, for deposit as a 
514.18  supplement to its operating fund or similar fund for 
514.19  prosecutorial purposes.  If there is no prosecuting authority 
514.20  involved in the forfeiture, the 25 percent of the proceeds 
514.21  otherwise designated for the prosecuting authority must be 
514.22  deposited into the general fund.  
514.23     (d) If a demand for judicial determination is made and no 
514.24  action commenced as provided in this subdivision, the property 
514.25  must be released by the commissioner and returned to the person 
514.26  entitled to it.  (e) If no demand for judicial determination is 
514.27  made, the property seized is considered forfeited to the state 
514.28  by operation of law and may be disposed of by the commissioner 
514.29  as provided in the case of a judgment of forfeiture. 
514.30     <b>[EFFECTIVE DATE.]</b> This section is effective for seizures 
514.31  made on or after July 1, 2001. 
514.32     Sec. 9.  Minnesota Statutes 2000, section 297G.20, 
514.33  subdivision 3, is amended to read: 
514.34     Subd. 3.  [SEIZURE.] Distilled spirits, wine, fermented 
514.35  malt beverages, or other property made contraband by subdivision 
514.36  1 may be seized by the commissioner of revenue or public safety 
515.1   and their authorized agents or by any sheriff or other police 
515.2   officer, with or without process, and are subject to forfeiture 
515.3   as provided in subdivisions subdivision 4 and 5. 
515.4      <b>[EFFECTIVE DATE.]</b> This section is effective for seizures 
515.5   made on or after July 1, 2001. 
515.6      Sec. 10.  Minnesota Statutes 2000, section 297G.20, 
515.7   subdivision 4, is amended to read: 
515.8      Subd. 4.  [INVENTORY; JUDICIAL DETERMINATION; APPEAL; 
515.9   DISPOSITION OF SEIZED PROPERTY.] (a) Within ten days after the 
515.10  seizure of alleged contraband, the person making the seizure 
515.11  shall make available serve by certified mail an inventory of the 
515.12  property seized to on the person from whom the property was 
515.13  seized, if known, and on any person known or believed to have 
515.14  any right, title, interest, or lien in the property, at the last 
515.15  known address, and file a copy with both the commissioners of 
515.16  revenue and public safety.  The notice must include an 
515.17  explanation of the right to demand a judicial forfeiture 
515.18  determination. 
515.19     (b) Within ten 60 days after the date of service of the 
515.20  inventory, which is the date of mailing, the person from whom 
515.21  the property was seized or any person claiming an interest in 
515.22  the property may file with the seizing authority a demand for 
515.23  judicial determination of whether the property was lawfully 
515.24  subject to seizure and forfeiture.  Within 60 days after the 
515.25  date of the filing of the demand, the seizing authority must 
515.26  bring an action in the district court of the county where 
515.27  seizure was made to determine the issue of forfeiture.  The 
515.28  demand must be in the form of a civil complaint and must be 
515.29  filed with the court administrator in the county in which the 
515.30  seizure occurred, together with proof of service of a copy of 
515.31  the complaint on the commissioner of revenue or public safety, 
515.32  and the standard filing fee for civil actions unless the 
515.33  petitioner has the right to sue in forma pauperis under section 
515.34  563.01.  If the value of the seized property or vehicle is 
515.35  $7,500 or less, the claimant may file an action in conciliation 
515.36  court for recovery of the property.  If the value of the seized 
516.1   property is less than $500, the claimant does not have to pay 
516.2   the conciliation court filing fee.  
516.3      (c) The complaint must be captioned in the name of the 
516.4   claimant as plaintiff and the seized property as defendant, and 
516.5   must state with specificity the grounds on which the claimant 
516.6   alleges the property was improperly seized and the plaintiff's 
516.7   interest in the property seized.  No responsive pleading is 
516.8   required of the commissioner of revenue or public safety and no 
516.9   court fees may be charged for either commissioner's appearance 
516.10  in the matter.  The proceedings are governed by the Rules of 
516.11  Civil Procedure.  Notwithstanding any law to the contrary, an 
516.12  action for the return of property seized under this section may 
516.13  not be maintained by or on behalf of any person who has been 
516.14  served with an inventory unless the person has complied with 
516.15  this subdivision.  
516.16     (b) The action must be brought in the name of the state and 
516.17  must be prosecuted by the county attorney or by the attorney 
516.18  general.  The court shall hear the action without a jury and 
516.19  determine the issues of fact and law involved. 
516.20     (c) (d) If a judgment of forfeiture is entered, the seizing 
516.21  authority may, unless the judgment is stayed pending an appeal, 
516.22  either: 
516.23     (1) cause the forfeited property, other than a vehicle, to 
516.24  be destroyed; or 
516.25     (2) cause it to be sold at a public auction as provided by 
516.26  law.  
516.27     The person making a sale, after deducting the expense of 
516.28  keeping the property, the fee for seizure, and the costs of the 
516.29  sale, shall pay all liens according to their priority, which are 
516.30  established as being bona fide and as existing without the 
516.31  lienor having any notice or knowledge that the property was 
516.32  being used or was intended to be used for or in connection with 
516.33  the violation.  The balance of the proceeds must be paid 75 
516.34  percent to the seizing authority for deposit as a supplement to 
516.35  its operating fund or similar fund for official use, and 25 
516.36  percent to the county attorney or other prosecuting agency that 
517.1   handled the court proceeding, if there is one, for deposit as a 
517.2   supplement to its operating fund or similar fund for 
517.3   prosecutorial purposes.  If there is no prosecuting authority 
517.4   involved in the forfeiture, the 25 percent of the proceeds 
517.5   otherwise designated for the prosecuting authority must be 
517.6   deposited into the general fund.  
517.7      (d) If demand for judicial determination is made and no 
517.8   action is commenced by the seizing authority as provided in this 
517.9   subdivision, the property must be released by the seizing 
517.10  authority and delivered to the person entitled to it.  (e) If no 
517.11  demand is made, the property seized is considered forfeited to 
517.12  the seizing authority by operation of law and may be disposed of 
517.13  by the seizing authority as provided for a judgment of 
517.14  forfeiture.  When the seizing authority is satisfied that a 
517.15  person from whom property is seized was acting in good faith and 
517.16  without intent to evade the tax imposed by this chapter, the 
517.17  seizing authority shall release the property seized without 
517.18  further legal proceedings. 
517.19     <b>[EFFECTIVE DATE.]</b> This section is effective for seizures 
517.20  made on or after July 1, 2001. 
517.21     Sec. 11.  [REPEALER.] 
517.22     Minnesota Statutes 2000, sections 296A.24, subdivision 3; 
517.23  297E.16, subdivision 3; 297F.21, subdivision 4; and 297G.20, 
517.24  subdivision 5, are repealed. 
517.25     <b>[EFFECTIVE DATE.]</b> This section is effective for seizures 
517.26  made on or after July 1, 2001. 
517.27                             ARTICLE 19 
517.28                   ELECTRONIC FILING AND PAYMENT
517.29     Section 1.  Minnesota Statutes 2000, section 115B.24, 
517.30  subdivision 2, is amended to read: 
517.31     Subd. 2.  [DECLARATIONS OF ESTIMATED TAX.] For 1983, every 
517.32  generator of hazardous waste required to pay a tax pursuant to 
517.33  section 115B.22 shall make a declaration of estimated hazardous 
517.34  waste generated for the last six months of calendar year 1983 if 
517.35  the tax can reasonably be estimated to exceed $500.  The 
517.36  declaration of the estimated tax shall be filed by October 15, 
518.1   1983.  The amount of estimated tax with respect to which a 
518.2   declaration is required shall be paid in two equal installments 
518.3   by October 15, 1983 and January 15, 1984.  For 1984 and 
518.4   subsequent years, every generator of hazardous waste required to 
518.5   pay a tax pursuant to section 115B.22 shall make a declaration 
518.6   of estimated hazardous waste generated for the calendar year if 
518.7   the tax can reasonably be expected to be in excess of $1,000.  
518.8   The declaration of estimated tax shall be filed by March 15.  
518.9   The amount of estimated tax with respect to which a declaration 
518.10  is required shall be paid in four equal installments on or 
518.11  before the 15th day of March, June, September, and December.  
518.12     An amendment of a declaration may be filed in any interval 
518.13  between installment dates prescribed above but only one 
518.14  amendment may be filed in each interval.  If an amendment of a 
518.15  declaration is filed, the amount of each remaining installment 
518.16  shall be the amount which would have been payable if the new 
518.17  estimate had been made when the first estimate for the calendar 
518.18  year was made, increased or decreased, as the case may be, by 
518.19  the amount computed by dividing 
518.20     (1) the difference between (A) the amount of estimated tax 
518.21  required to be paid before the date on which the amendment was 
518.22  made, and (B) the amount of estimated tax which would have been 
518.23  required to be paid before that date if the new estimate had 
518.24  been made when the first estimate was made, by 
518.25     (2) the number of installments remaining to be paid on or 
518.26  after the date on which the amendment is made.  
518.27     The commissioner of revenue may grant a reasonable 
518.28  extension of time for filing any declaration but the extension 
518.29  shall not be for more than six months.  
518.30     If the aggregate amount of estimated tax payments made 
518.31  during a fiscal year ending June 30 is equal to or exceeds 
518.32  $80,000, all estimated tax payments in the subsequent calendar 
518.33  year must be paid by electronic means of a funds transfer as 
518.34  defined in section 336.4A-104, paragraph (a).  The funds 
518.35  transfer payment date, as defined in section 336.4A-401, must be 
518.36  on or before the date the estimated tax payment is due.  If the 
519.1   date the estimated tax payment is due is not a funds transfer 
519.2   business day, as defined in section 336.4A-105, paragraph (a), 
519.3   clause (4), the payment date must be on or before the funds 
519.4   transfer business day next following the date the estimated tax 
519.5   payment is due. 
519.6      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
519.7   following final enactment. 
519.8      Sec. 2.  Minnesota Statutes 2000, section 270.271, 
519.9   subdivision 1, is amended to read: 
519.10     Subdivision 1.  [DATE OF DELIVERY.] When a document, 
519.11  including a return, claim, or statement, is required to be 
519.12  filed, or a payment is required to be made to the commissioner 
519.13  within a prescribed period, or on or before a prescribed date, 
519.14  and if the document or payment is delivered by electronic means 
519.15  or by United States mail after the period or the date to the 
519.16  place prescribed for filing or payment, then the date of 
519.17  delivery or of payment is the date of the confirmation 
519.18  time-and-date stamp of the transaction, if delivered by 
519.19  electronic means, or the date of the United States postmark 
519.20  stamped on the cover in which the document or payment is mailed, 
519.21  if delivered by United States mail shall be considered the date 
519.22  of delivery or of payment, as the case may be. 
519.23     <b>[EFFECTIVE DATE.]</b> This section is effective for returns and 
519.24  payments due on or after July 1, 2001. 
519.25     Sec. 3.  Minnesota Statutes 2000, section 270.271, 
519.26  subdivision 3, is amended to read: 
519.27     Subd. 3.  [CONFIRMATION OF ELECTRONIC FILING AND PAYMENT 
519.28  AND UNITED STATES POSTAL SERVICE POSTMARK.] The confirmation 
519.29  numbers and confirmation time-and-date stamps received by the 
519.30  taxpayer following electronic payment or filing is proof of the 
519.31  payment authorization and filing dates.  Only the postmark of 
519.32  the United States Postal Service, rather than those of private 
519.33  postage meters, qualifies as proof of timely mailing under this 
519.34  section.  If the document or payment is sent by United States 
519.35  registered mail, the date of registration shall be treated as 
519.36  the postmark date.  If the document or payment is sent by United 
520.1   States certified mail and the sender's receipt is postmarked by 
520.2   the postal employee to whom the envelope containing such 
520.3   document or payment is presented, the date of the United States 
520.4   postmark on the receipt shall be treated as the postmark date of 
520.5   the document or payment. 
520.6      <b>[EFFECTIVE DATE.]</b> This section is effective for returns and 
520.7   payments due on or after July 1, 2001. 
520.8      Sec. 4.  Minnesota Statutes 2000, section 270.771, is 
520.9   amended to read: 
520.10     270.771 [PAYMENTS REQUIRED TO BE MADE BY ELECTRONIC FUNDS 
520.11  TRANSFER ELECTRONICALLY.] 
520.12     (a) If a taxpayer is required to make payment of a tax to 
520.13  the commissioner by electronic means of electronic funds 
520.14  transfer as defined in section 336.4A-104, paragraph (a), the 
520.15  taxpayer shall make all payments of all taxes and fees paid to 
520.16  the commissioner by electronic means of electronic funds 
520.17  transfer. 
520.18     (b) Paragraph (a) does not apply to payments required to be 
520.19  made for individual income taxes under section 289A.20, 
520.20  subdivision 1, paragraph (a), or 289A.25.  
520.21     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
520.22  following final enactment. 
520.23     Sec. 5.  Minnesota Statutes 2000, section 270.78, is 
520.24  amended to read: 
520.25     270.78 [PENALTY FOR FAILURE TO MAKE PAYMENT BY ELECTRONIC 
520.26  FUNDS TRANSFER PAY ELECTRONICALLY.] 
520.27     In addition to other applicable penalties imposed by law, 
520.28  after notification from the commissioner of revenue to the 
520.29  taxpayer that payments for a tax administered by the 
520.30  commissioner are required to be made by electronic means of 
520.31  electronic funds transfer, and the payments are remitted by some 
520.32  other means, there is a penalty in the amount of five percent of 
520.33  each payment that should have been remitted electronically. 
520.34  After the commissioner's initial notification to the taxpayer 
520.35  that payments are required to be made by electronic means, the 
520.36  commissioner is not required to notify the taxpayer in 
521.1   subsequent periods if the initial notification specified the 
521.2   amount of tax liability at which a taxpayer is required to remit 
521.3   payments by electronic means.  The penalty can be abated under 
521.4   the abatement procedures prescribed in section 270.07, 
521.5   subdivision 6, if the failure to remit the payment 
521.6   electronically is due to reasonable cause.  The penalty bears 
521.7   interest at the rate specified in section 270.75 from the due 
521.8   date of the payment of the tax to the date of payment of the 
521.9   penalty. 
521.10     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
521.11  following final enactment. 
521.12     Sec. 6.  Minnesota Statutes 2000, section 287.12, is 
521.13  amended to read: 
521.14     287.12 [TAXES, HOW APPORTIONED.] 
521.15     (a) All taxes paid to the county treasurer under the 
521.16  provisions of sections 287.01 to 287.12 must be apportioned, 97 
521.17  percent to the general fund of the state, and three percent to 
521.18  the county revenue fund. 
521.19     (b) On or before the 20th day of each month the county 
521.20  treasurer shall determine and pay to the commissioner of revenue 
521.21  for deposit in the state treasury and credit to the general fund 
521.22  the state's portion of the receipts from the mortgage registry 
521.23  tax during the preceding month subject to the electronic funds 
521.24  transfer payment requirements of section 270.771.  The county 
521.25  treasurer shall provide any related reports requested by the 
521.26  commissioner of revenue. 
521.27     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
521.28  following final enactment. 
521.29     Sec. 7.  Minnesota Statutes 2000, section 289A.02, is 
521.30  amended by adding a subdivision to read: 
521.31     Subd. 8.  [ELECTRONIC MEANS.] "Electronic means" refers to 
521.32  a method that is electronic, as defined in section 325L.02, 
521.33  paragraph (e), and that is prescribed by the commissioner. 
521.34     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
521.35  following final enactment. 
521.36     Sec. 8.  Minnesota Statutes 2000, section 289A.08, 
522.1   subdivision 16, is amended to read: 
522.2      Subd. 16.  [TAX REFUND OR RETURN PREPARERS.] (a) A "tax 
522.3   refund or return preparer," as defined in section 289A.60, 
522.4   subdivision 13, paragraph (g), who prepared more than 500 
522.5   Minnesota individual income tax returns for the prior calendar 
522.6   year must file all Minnesota individual income tax returns 
522.7   prepared for the current calendar year by electronic means. 
522.8      (b) For tax returns prepared for the tax year beginning in 
522.9   2001, the "500" in paragraph (a) is reduced to 250. 
522.10     (c) For tax returns prepared for tax years beginning after 
522.11  December 31, 2001, the "500" in paragraph (a) is reduced to 100. 
522.12     (d) Paragraph (a) does not apply to a return if the 
522.13  taxpayer has indicated on the return that the taxpayer did not 
522.14  want the return filed by electronic means. 
522.15     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
522.16  years beginning with December 31, 2000. 
522.17     Sec. 9.  Minnesota Statutes 2000, section 289A.20, 
522.18  subdivision 1, is amended to read: 
522.19     Subdivision 1.  [INDIVIDUAL INCOME, FIDUCIARY INCOME, 
522.20  MINING COMPANY, CORPORATE FRANCHISE, AND ENTERTAINMENT TAXES.] 
522.21  (a) Individual income, fiduciary, mining company, and corporate 
522.22  franchise taxes must be paid to the commissioner on or before 
522.23  the date the return must be filed under section 289A.18, 
522.24  subdivision 1, or the extended due date as provided in section 
522.25  289A.19, unless an earlier date for payment is provided.  
522.26     Notwithstanding any other law, a taxpayer whose unpaid 
522.27  liability for income or corporate franchise taxes, as reflected 
522.28  upon the return, is $1 or less need not pay the tax.  
522.29     (b) Entertainment taxes must be paid on or before the date 
522.30  the return must be filed under section 289A.18, subdivision 1. 
522.31     (c) If a fiduciary administers 100 or more trusts, 
522.32  fiduciary income taxes for all trusts administered by the 
522.33  fiduciary must be paid by funds transfer as defined in section 
522.34  336.4A-104, paragraph (a).  The funds transfer payment date, as 
522.35  defined in section 336.4A-401, must be on or before the date the 
522.36  tax payment is due.  If the date the payment is due is not a 
523.1   funds transfer business day, as defined in section 336.4A-105, 
523.2   paragraph (a), clause (4), the payment date must be on or before 
523.3   the funds transfer business day next following the date the 
523.4   payment is due electronic means.  
523.5      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
523.6   following final enactment. 
523.7      Sec. 10.  Minnesota Statutes 2000, section 289A.20, 
523.8   subdivision 2, is amended to read: 
523.9      Subd. 2.  [WITHHOLDING FROM WAGES, ENTERTAINER WITHHOLDING, 
523.10  WITHHOLDING FROM PAYMENTS TO OUT-OF-STATE CONTRACTORS, AND 
523.11  WITHHOLDING BY PARTNERSHIPS AND SMALL BUSINESS CORPORATIONS.] 
523.12  (a) A tax required to be deducted and withheld during the 
523.13  quarterly period must be paid on or before the last day of the 
523.14  month following the close of the quarterly period, unless an 
523.15  earlier time for payment is provided.  A tax required to be 
523.16  deducted and withheld from compensation of an entertainer and 
523.17  from a payment to an out-of-state contractor must be paid on or 
523.18  before the date the return for such tax must be filed under 
523.19  section 289A.18, subdivision 2.  Taxes required to be deducted 
523.20  and withheld by partnerships and S corporations must be paid on 
523.21  or before the date the return must be filed under section 
523.22  289A.18, subdivision 2. 
523.23     (b) An employer who, during the previous quarter, withheld 
523.24  more than $1,500 of tax under section 290.92, subdivision 2a or 
523.25  3, or 290.923, subdivision 2, must deposit tax withheld under 
523.26  those sections with the commissioner within the time allowed to 
523.27  deposit the employer's federal withheld employment taxes under 
523.28  Treasury Regulation, section 31.6302-1, without regard to the 
523.29  safe harbor or de minimis rules in subparagraph (f) or the 
523.30  one-day rule in subsection (c), clause (3).  Taxpayers must 
523.31  submit a copy of their federal notice of deposit status to the 
523.32  commissioner upon request by the commissioner. 
523.33     (c) The commissioner may prescribe by rule other return 
523.34  periods or deposit requirements.  In prescribing the reporting 
523.35  period, the commissioner may classify payors according to the 
523.36  amount of their tax liability and may adopt an appropriate 
524.1   reporting period for the class that the commissioner judges to 
524.2   be consistent with efficient tax collection.  In no event will 
524.3   the duration of the reporting period be more than one year. 
524.4      (d) If less than the correct amount of tax is paid to the 
524.5   commissioner, proper adjustments with respect to both the tax 
524.6   and the amount to be deducted must be made, without interest, in 
524.7   the manner and at the times the commissioner prescribes.  If the 
524.8   underpayment cannot be adjusted, the amount of the underpayment 
524.9   will be assessed and collected in the manner and at the times 
524.10  the commissioner prescribes. 
524.11     (e) If the aggregate amount of the tax withheld during a 
524.12  fiscal year ending June 30 under section 290.92, subdivision 2a 
524.13  or 3, is equal to or exceeds the amounts established for 
524.14  remitting federal withheld taxes pursuant to the regulations 
524.15  promulgated under section 6302(h) of the Internal Revenue Code, 
524.16  the employer must remit each required deposit for wages paid in 
524.17  the subsequent calendar year by electronic means of a funds 
524.18  transfer as defined in section 336.4A-104, paragraph (a).  The 
524.19  funds transfer payment date, as defined in section 336.4A-401, 
524.20  must be on or before the date the deposit is due.  If the date 
524.21  the deposit is due is not a funds transfer business day, as 
524.22  defined in section 336.4A-105, paragraph (a), clause (4), the 
524.23  payment date must be on or before the funds transfer business 
524.24  day next following the date the deposit is due. 
524.25     (f) A third-party bulk filer as defined in section 290.92, 
524.26  subdivision 30, paragraph (a), clause (2), who remits 
524.27  withholding deposits must remit all deposits by electronic means 
524.28  of a funds transfer as provided in paragraph (e), regardless of 
524.29  the aggregate amount of tax withheld during a fiscal year for 
524.30  all of the employers.  
524.31     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
524.32  following final enactment. 
524.33     Sec. 11.  Minnesota Statutes 2000, section 289A.20, 
524.34  subdivision 4, is amended to read: 
524.35     Subd. 4.  [SALES AND USE TAX.] (a) The taxes imposed by 
524.36  chapter 297A are due and payable to the commissioner monthly on 
525.1   or before the 20th day of the month following the month in which 
525.2   the taxable event occurred, or following another reporting 
525.3   period as the commissioner prescribes or as allowed under 
525.4   section 289A.18, subdivision 4, paragraph (f), except that use 
525.5   taxes due on an annual use tax return as provided under section 
525.6   289A.11, subdivision 1, are payable by April 15 following the 
525.7   close of the calendar year. 
525.8      (b) A vendor having a liability of $120,000 or more during 
525.9   a fiscal year ending June 30 must remit the June liability for 
525.10  the next year in the following manner: 
525.11     (1) Two business days before June 30 of the year, the 
525.12  vendor must remit 62 percent of the estimated June liability to 
525.13  the commissioner.  
525.14     (2) On or before August 14 of the year, the vendor must pay 
525.15  any additional amount of tax not remitted in June. 
525.16     (c) A vendor having a liability of $120,000 or more during 
525.17  a fiscal year ending June 30 must remit all liabilities on 
525.18  returns due for periods beginning in the subsequent calendar 
525.19  year by electronic means of a funds transfer as defined in 
525.20  section 336.4A-104, paragraph (a).  The funds transfer payment 
525.21  date, as defined in section 336.4A-401, must be on or before the 
525.22  14th day of the month following the month in which the taxable 
525.23  event occurred, or on or before the 14th day of the month 
525.24  following the month in which the sale is reported under section 
525.25  289A.18, subdivision 4, except for 62 percent of the estimated 
525.26  June liability, which is due two business days before June 30.  
525.27  The remaining amount of the June liability is due on August 14.  
525.28  If the date the tax is due is not a funds transfer business day, 
525.29  as defined in section 336.4A-105, paragraph (a), clause (4), the 
525.30  payment date must be on or before the funds transfer business 
525.31  day next following the date the tax is due. 
525.32     (d) If the vendor required to remit by electronic funds 
525.33  transfer as provided in paragraph (c) is unable due to 
525.34  reasonable cause to determine the actual sales and use tax due 
525.35  on or before the due date for payment, the vendor may remit an 
525.36  estimate of the tax owed using one of the following options: 
526.1      (1) 100 percent of the tax reported on the previous month's 
526.2   sales and use tax return; 
526.3      (2) 100 percent of the tax reported on the sales and use 
526.4   tax return for the same month in the previous calendar year; or 
526.5      (3) 95 percent of the actual tax due. 
526.6      Any additional amount of tax that is not remitted on or 
526.7   before the due date for payment, must be remitted with the 
526.8   return.  If a vendor fails to remit the actual liability or does 
526.9   not remit using one of the estimate options by the due date for 
526.10  payment, the vendor must remit actual liability as provided in 
526.11  paragraph (c) in all subsequent periods.  This paragraph does 
526.12  not apply to the June sales and use tax liability. 
526.13     <b>[EFFECTIVE DATE.]</b> This section is effective for payments 
526.14  due on or after July 1, 2001. 
526.15     Sec. 12.  Minnesota Statutes 2000, section 289A.26, 
526.16  subdivision 2a, is amended to read: 
526.17     Subd. 2a.  [ELECTRONIC FUNDS TRANSFER PAYMENTS.] If the 
526.18  aggregate amount of estimated tax payments made during a 
526.19  calendar year is equal to or exceeds $20,000, all estimated tax 
526.20  payments in the subsequent calendar year must be paid 
526.21  by electronic means of a funds transfer as defined in section 
526.22  336.4A-104, paragraph (a).  The funds transfer payment date, as 
526.23  defined in section 336.4A-401, must be on or before the date the 
526.24  estimated tax payment is due.  If the date the estimated tax 
526.25  payment is due is not a funds transfer business day, as defined 
526.26  in section 336.4A-105, paragraph (a), clause (4), the payment 
526.27  date must be on or before the funds transfer business day next 
526.28  following the date the estimated tax payment is due. 
526.29     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
526.30  following final enactment. 
526.31     Sec. 13.  Minnesota Statutes 2000, section 289A.60, 
526.32  subdivision 21, is amended to read: 
526.33     Subd. 21.  [PENALTY FOR FAILURE TO MAKE PAYMENT BY 
526.34  ELECTRONIC FUNDS TRANSFER MEANS.] In addition to other 
526.35  applicable penalties imposed by this section, after notification 
526.36  from the commissioner to the taxpayer that payments are required 
527.1   to be made by electronic means of electronic funds transfer 
527.2   under section 289A.20, subdivision 2, paragraph (e), or 4, 
527.3   paragraph (d) (c), or 289A.26, subdivision 2a, and the payments 
527.4   are remitted by some other means, there is a penalty in the 
527.5   amount of five percent of each payment that should have been 
527.6   remitted electronically.  After the commissioner's initial 
527.7   notification to the taxpayer that payments are required to be 
527.8   made by electronic means, the commissioner is not required to 
527.9   notify the taxpayer in subsequent periods if the initial 
527.10  notification specified the amount of tax liability at which a 
527.11  taxpayer is required to remit payments by electronic means.  The 
527.12  penalty can be abated under the abatement procedures prescribed 
527.13  in section 270.07, subdivision 6, if the failure to remit the 
527.14  payment electronically is due to reasonable cause. 
527.15     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
527.16  following final enactment. 
527.17     Sec. 14.  Minnesota Statutes 2000, section 295.55, 
527.18  subdivision 4, is amended to read: 
527.19     Subd. 4.  [ELECTRONIC FUNDS TRANSFER PAYMENTS.] A taxpayer 
527.20  with an aggregate tax liability of $120,000 or more during a 
527.21  fiscal year ending June 30, must remit all liabilities by 
527.22  electronic means of a funds transfer as defined in section 
527.23  336.4A-104, paragraph (a), in the subsequent calendar year.  The 
527.24  funds transfer payment date, as defined in section 336.4A-401, 
527.25  is on or before the date the tax is due.  If the date the tax is 
527.26  due is not a funds-transfer business day, as defined in section 
527.27  336.4A-105, paragraph (a), clause (4), the payment date is on or 
527.28  before the first funds-transfer business day after the date the 
527.29  tax is due. 
527.30     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
527.31  following final enactment. 
527.32     Sec. 15.  Minnesota Statutes 2000, section 296A.15, 
527.33  subdivision 7, is amended to read: 
527.34     Subd. 7.  [ELECTRONIC FUNDS TRANSFER PAYMENT REQUIRED.] All 
527.35  remittances must be made by electronic means of electronic funds 
527.36  transfer as defined in section 336.4A-104, paragraph (a).  The 
528.1   funds transfer payment date, as defined in section 336.4A-401, 
528.2   must be on or before the date the remittance is due.  If the 
528.3   date the remittance is due is not a funds transfer business day, 
528.4   as defined in section 336.4A-105, paragraph (a), clause (4), the 
528.5   payment date must be on or before the funds transfer business 
528.6   day next following the date the remittance is due.  
528.7      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
528.8   following final enactment. 
528.9      Sec. 16.  Minnesota Statutes 2000, section 297E.02, 
528.10  subdivision 4, is amended to read: 
528.11     Subd. 4.  [PULL-TAB AND TIPBOARD TAX.] (a) A tax is imposed 
528.12  on the sale of each deal of pull-tabs and tipboards sold by a 
528.13  distributor.  The rate of the tax is 1.7 percent of the ideal 
528.14  gross of the pull-tab or tipboard deal.  The sales tax imposed 
528.15  by chapter 297A on the sale of the pull-tabs and tipboards by 
528.16  the distributor is imposed on the retail sales price less the 
528.17  tax imposed by this subdivision.  The retail sale of pull-tabs 
528.18  or tipboards by the organization is exempt from taxes imposed by 
528.19  chapter 297A and is exempt from all local taxes and license fees 
528.20  except a fee authorized under section 349.16, subdivision 8.  
528.21     (b) The liability for the tax imposed by this section is 
528.22  incurred when the pull-tabs and tipboards are delivered by the 
528.23  distributor to the customer or to a common or contract carrier 
528.24  for delivery to the customer, or when received by the customer's 
528.25  authorized representative at the distributor's place of 
528.26  business, regardless of the distributor's method of accounting 
528.27  or the terms of the sale.  
528.28     The tax imposed by this subdivision is imposed on all sales 
528.29  of pull-tabs and tipboards, except the following:  
528.30     (1) sales to the governing body of an Indian tribal 
528.31  organization for use on an Indian reservation; 
528.32     (2) sales to distributors licensed under the laws of 
528.33  another state or of a province of Canada, as long as all 
528.34  statutory and regulatory requirements are met in the other state 
528.35  or province; 
528.36     (3) sales of promotional tickets as defined in section 
529.1   349.12; and 
529.2      (4) pull-tabs and tipboards sold to an organization that 
529.3   sells pull-tabs and tipboards under the exemption from licensing 
529.4   in section 349.166, subdivision 2.  A distributor shall require 
529.5   an organization conducting exempt gambling to show proof of its 
529.6   exempt status before making a tax-exempt sale of pull-tabs or 
529.7   tipboards to the organization.  A distributor shall identify, on 
529.8   all reports submitted to the commissioner, all sales of 
529.9   pull-tabs and tipboards that are exempt from tax under this 
529.10  subdivision.  
529.11     (c) A distributor having a liability of $120,000 or more 
529.12  during a fiscal year ending June 30 must remit all liabilities 
529.13  in the subsequent calendar year by a funds transfer as defined 
529.14  in section 336.4A-104, paragraph (a).  The funds transfer 
529.15  payment date, as defined in section 336.4A-401, must be on or 
529.16  before the date the tax is due.  If the date the tax is due is 
529.17  not a funds transfer business day, as defined in section 
529.18  336.4A-105, paragraph (a), clause (4), the payment date must be 
529.19  on or before the funds transfer business day next following the 
529.20  date the tax is due electronic means. 
529.21     (d) Any customer who purchases deals of pull-tabs or 
529.22  tipboards from a distributor may file an annual claim for a 
529.23  refund or credit of taxes paid pursuant to this subdivision for 
529.24  unsold pull-tab and tipboard tickets.  The claim must be filed 
529.25  with the commissioner on a form prescribed by the commissioner 
529.26  by March 20 of the year following the calendar year for which 
529.27  the refund is claimed.  The refund must be filed as part of the 
529.28  customer's February monthly return.  The refund or credit is 
529.29  equal to 1.7 percent of the face value of the unsold pull-tab or 
529.30  tipboard tickets, provided that the refund or credit will be 
529.31  1.75 percent of the face value of the unsold pull-tab or 
529.32  tipboard tickets for claims for a refund or credit of taxes 
529.33  filed on the February 2001 monthly return.  The refund claimed 
529.34  will be applied as a credit against tax owing under this chapter 
529.35  on the February monthly return.  If the refund claimed exceeds 
529.36  the tax owing on the February monthly return, that amount will 
530.1   be refunded.  The amount refunded will bear interest pursuant to 
530.2   section 270.76 from 90 days after the claim is filed.  
530.3      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
530.4   following final enactment. 
530.5      Sec. 17.  Minnesota Statutes 2000, section 297F.09, 
530.6   subdivision 7, is amended to read: 
530.7      Subd. 7.  [ELECTRONIC FUNDS TRANSFER PAYMENT.] A cigarette 
530.8   or tobacco products distributor having a liability of $120,000 
530.9   or more during a fiscal year ending June 30 must remit all 
530.10  liabilities in the subsequent calendar year by electronic means 
530.11  of a fund transfer as defined in section 336.4A-104, paragraph 
530.12  (a).  The funds transfer payment date, as defined in section 
530.13  336.4A-401, must be on or before the date the tax is due.  If 
530.14  the date the tax is due is not a funds transfer business day, as 
530.15  defined in section 336.4A-105, paragraph (a), clause (4), the 
530.16  payment date must be on or before the funds transfer day 
530.17  immediately following the date the tax is due. 
530.18     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
530.19  following final enactment. 
530.20     Sec. 18.  Minnesota Statutes 2000, section 297G.09, 
530.21  subdivision 6, is amended to read: 
530.22     Subd. 6.  [ELECTRONIC FUNDS TRANSFER PAYMENTS.] A licensed 
530.23  brewer, importer, or wholesaler having an excise tax liability 
530.24  of $120,000 or more during a fiscal year ending June 30 must 
530.25  remit all excise tax liabilities in the subsequent calendar year 
530.26  by electronic means of a funds transfer as defined in section 
530.27  336.4A-104, paragraph (a).  The funds transfer payment date, as 
530.28  defined in section 336.4A-401, must be on or before the date the 
530.29  excise tax is due.  If the date the excise tax is due is not a 
530.30  funds transfer business day, as defined in section 336.4A-105, 
530.31  paragraph (a), clause (4), the payment date must be on or before 
530.32  the funds transfer business day next following the date the 
530.33  excise tax is due. 
530.34     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
530.35  following final enactment. 
530.36     Sec. 19.  Minnesota Statutes 2000, section 297I.35, 
531.1   subdivision 2, is amended to read: 
531.2      Subd. 2.  [ELECTRONIC FUNDS TRANSFER PAYMENTS.] If the 
531.3   aggregate amount of tax and surcharges due under this chapter 
531.4   during a calendar year is equal to or exceeds $120,000, or if 
531.5   the taxpayer is required to make payment of any other tax to the 
531.6   commissioner by electronic means of electronic funds transfer as 
531.7   defined in section 336.4A-104, paragraph (a), then all tax and 
531.8   surcharge payments in the subsequent calendar year must be paid 
531.9   by electronic means of a funds transfer as defined in section 
531.10  336.4A-104, paragraph (a).  The funds transfer payment date, as 
531.11  defined in section 336.4A-104, must be on or before the date the 
531.12  payment is due.  If the date the payment is due is not a funds 
531.13  transfer business day, as defined in section 336.4A-105, 
531.14  paragraph (a), clause (4), the payment date must be on or before 
531.15  the funds transfer business day next following the date the 
531.16  payment is due. 
531.17     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
531.18  following final enactment. 
531.19     Sec. 20.  Minnesota Statutes 2000, section 297I.85, 
531.20  subdivision 7, is amended to read: 
531.21     Subd. 7.  [PENALTY FOR FAILURE TO MAKE PAYMENT BY 
531.22  ELECTRONIC FUNDS TRANSFER PAY ELECTRONICALLY.] In addition to 
531.23  other applicable penalties imposed by this section, if the 
531.24  commissioner notifies the taxpayer that payments are required to 
531.25  be made by electronic means of electronic funds transfer, and 
531.26  the payments are made by some other means, a penalty is 
531.27  imposed.  The amount of the penalty is equal to five percent of 
531.28  each payment that should have been paid electronically.  After 
531.29  the commissioner's initial notification to the taxpayer that 
531.30  payments are required to be made by electronic means, the 
531.31  commissioner is not required to notify the taxpayer in 
531.32  subsequent periods if the initial notification specified the 
531.33  amount of tax liability at which a taxpayer is required to remit 
531.34  payments by electronic means.  The penalty may be abated under 
531.35  the abatement procedures prescribed in section 270.07, 
531.36  subdivision 6, if the failure to pay electronically is due to 
532.1   reasonable cause. 
532.2      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
532.3   following final enactment. 
532.4      Sec. 21.  Minnesota Statutes 2000, section 473.843, 
532.5   subdivision 3, is amended to read: 
532.6      Subd. 3.  [PAYMENT OF FEE.] On or before the 20th day of 
532.7   each month each operator shall pay the fee due under this 
532.8   section for the previous month, using a form provided by the 
532.9   commissioner of revenue.  
532.10     An operator having a fee of $120,000 or more during a 
532.11  fiscal year ending June 30 must pay all fees in the subsequent 
532.12  calendar year by electronic means of a funds transfer as defined 
532.13  in section 336.4A-104, paragraph (a).  The funds transfer 
532.14  payment date, as defined in section 336.4A-401, must be on or 
532.15  before the date the fee is due.  If the date the fee is due is 
532.16  not a funds transfer business day, as defined in section 
532.17  336.4A-105, paragraph (a), clause (4), the payment date must be 
532.18  on or before the funds transfer business day next following the 
532.19  date the fee is due. 
532.20     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
532.21  following final enactment. 
532.22                             ARTICLE 20 
532.23                           MISCELLANEOUS 
532.24     Section 1.  [12.38] [STATE AGENCIES; TEMPORARY WAIVER OF 
532.25  FEES.] 
532.26     Notwithstanding any law to the contrary, a state agency as 
532.27  defined in section 16B.01, subdivision 2, with the approval of 
532.28  the governor, may waive fees that would otherwise be charged for 
532.29  agency services.  The waiver of fees must be confined to 
532.30  geographic areas within a disaster or emergency area as defined 
532.31  in section 273.123, subdivision 1, and to the minimum periods of 
532.32  time necessary to deal with the emergency situation.  The 
532.33  requirements of section 14.05, subdivision 4, do not apply to a 
532.34  waiver made under this section.  The agency must promptly report 
532.35  the reasons for and the impact of any suspended fees to the 
532.36  chairs of the legislative committees that oversee the policy and 
533.1   budgetary affairs of the agency.  
533.2      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
533.3   following final enactment and applies to disasters or 
533.4   emergencies as defined in Minnesota Statutes, section 273.123, 
533.5   subdivision 1, that occur after March 30, 2001. 
533.6      Sec. 2.  Minnesota Statutes 2000, section 16D.08, 
533.7   subdivision 2, is amended to read: 
533.8      Subd. 2.  [POWERS.] (a) In addition to the collection 
533.9   remedies available to private collection agencies in this state, 
533.10  the commissioner, with legal assistance from the attorney 
533.11  general, may utilize any statutory authority granted to a 
533.12  referring agency for purposes of collecting debt owed to that 
533.13  referring agency.  The commissioner may also delegate to the 
533.14  enterprise the tax collection remedies in sections 270.06, 
533.15  clauses (7) and (17), excluding the power to subpoena witnesses; 
533.16  270.66; 270.69, excluding subdivisions 7 and 13; 270.70, 
533.17  excluding subdivision 14; 270.7001 to 270.72; and 290.92, 
533.18  subdivision 23, except that a continuous wage levy under section 
533.19  290.92, subdivision 23, is only effective for 70 days, unless no 
533.20  competing wage garnishments, executions, or levies are served 
533.21  within the 70-day period, in which case a wage levy is 
533.22  continuous until a competing garnishment, execution, or levy is 
533.23  served in the second or a succeeding 70-day period, in which 
533.24  case a continuous wage levy is effective for the remainder of 
533.25  that period.  A debtor who qualifies for cancellation of 
533.26  collection costs under section 16D.11, subdivision 3, clause 
533.27  (1), can apply to the commissioner for reduction or release of a 
533.28  continuous wage levy, if the debtor establishes that the debtor 
533.29  needs all or a portion of the wages being levied upon to pay for 
533.30  essential living expenses, such as food, clothing, shelter, 
533.31  medical care, or expenses necessary for maintaining employment.  
533.32  The commissioner's determination not to reduce or release a 
533.33  continuous wage levy is appealable to district court.  The word 
533.34  "tax" or "taxes" when used in the tax collection statutes listed 
533.35  in this subdivision also means debts referred under this chapter.
533.36     (b) For debts other than state taxes or, child support, or 
534.1   student loans, before any of the tax collection remedies listed 
534.2   in this subdivision can be used, except for the remedies in 
534.3   section 270.06, clauses (7) and (17), if the referring agency 
534.4   has not already obtained a judgment or filed a lien, the 
534.5   commissioner must first obtain a judgment against the debtor.  
534.6   For student loans when the referring agency has not obtained a 
534.7   judgment or filed a lien, before using the tax collection 
534.8   remedies listed in this subdivision, except for the remedies in 
534.9   section 270.06, clauses (7) and (17), the commissioner shall 
534.10  give the debtor 30 days' notice in writing, which may be served 
534.11  in any manner permitted in section 270.68 for service of a 
534.12  summons and complaint.  The notice must advise the debtor of the 
534.13  debtor's right to request that the commissioner commence a court 
534.14  action, and that if no such request is made within 30 days after 
534.15  service of the notice, the commissioner may use these tax 
534.16  collection remedies.  If a timely request is made, the 
534.17  commissioner shall obtain a judgment before using these tax 
534.18  collection remedies. 
534.19     <b>[EFFECTIVE DATE.]</b> This section is effective for student 
534.20  loans referred to the commissioner for collection on or after 
534.21  July 1, 2001. 
534.22     Sec. 3.  Minnesota Statutes 2000, section 144.3831, 
534.23  subdivision 2, is amended to read: 
534.24     Subd. 2.  [COLLECTION AND PAYMENT OF FEE.] The public water 
534.25  supply described in subdivision 1 shall: 
534.26     (1) collect the fees assessed on its service connections; 
534.27     (2) pay the department of revenue health an amount 
534.28  equivalent to the fees based on the total number of service 
534.29  connections.  The service connections for each public water 
534.30  supply described in subdivision 1 shall be verified every four 
534.31  years by the department of health; and 
534.32     (3) pay one-fourth of the total yearly fee to the 
534.33  department of revenue health each calendar quarter.  The first 
534.34  quarterly payment is due on or before September 30, 1992.  In 
534.35  lieu of quarterly payments, a public water supply described in 
534.36  subdivision 1 with fewer than 50 service connections may make a 
535.1   single annual payment by June 30 each year, starting in 1993.  
535.2   The fees payable to the department of revenue health shall be 
535.3   deposited in the state treasury as nondedicated state government 
535.4   special revenue fund revenues. 
535.5      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
535.6   following final enactment. 
535.7      Sec. 4.  Minnesota Statutes 2000, section 270.06, is 
535.8   amended to read: 
535.9      270.06 [POWERS AND DUTIES.] 
535.10     The commissioner of revenue shall: 
535.11     (1) have and exercise general supervision over the 
535.12  administration of the assessment and taxation laws of the state, 
535.13  over assessors, town, county, and city boards of review and 
535.14  equalization, and all other assessing officers in the 
535.15  performance of their duties, to the end that all assessments of 
535.16  property be made relatively just and equal in compliance with 
535.17  the laws of the state; 
535.18     (2) confer with, advise, and give the necessary 
535.19  instructions and directions to local assessors and local boards 
535.20  of review throughout the state as to their duties under the laws 
535.21  of the state; 
535.22     (3) direct proceedings, actions, and prosecutions to be 
535.23  instituted to enforce the laws relating to the liability and 
535.24  punishment of public officers and officers and agents of 
535.25  corporations for failure or negligence to comply with the 
535.26  provisions of the laws of this state governing returns of 
535.27  assessment and taxation of property, and cause complaints to be 
535.28  made against local assessors, members of boards of equalization, 
535.29  members of boards of review, or any other assessing or taxing 
535.30  officer, to the proper authority, for their removal from office 
535.31  for misconduct or negligence of duty; 
535.32     (4) require county attorneys to assist in the commencement 
535.33  of prosecutions in actions or proceedings for removal, 
535.34  forfeiture and punishment for violation of the laws of this 
535.35  state in respect to the assessment and taxation of property in 
535.36  their respective districts or counties; 
536.1      (5) require town, city, county, and other public officers 
536.2   to report information as to the assessment of property, 
536.3   collection of taxes received from licenses and other sources, 
536.4   and such other information as may be needful in the work of the 
536.5   department of revenue, in such form and upon such blanks as the 
536.6   commissioner may prescribe; 
536.7      (6) require individuals, copartnerships, companies, 
536.8   associations, and corporations to furnish information concerning 
536.9   their capital, funded or other debt, current assets and 
536.10  liabilities, earnings, operating expenses, taxes, as well as all 
536.11  other statements now required by law for taxation purposes; 
536.12     (7) subpoena witnesses, at a time and place reasonable 
536.13  under the circumstances, to appear and give testimony, and to 
536.14  produce books, records, papers and documents for inspection and 
536.15  copying relating to any matter which the commissioner may have 
536.16  authority to investigate or determine; 
536.17     (8) issue a subpoena which does not identify the person or 
536.18  persons with respect to whose liability the subpoena is issued, 
536.19  but only if (a) the subpoena relates to the investigation of a 
536.20  particular person or ascertainable group or class of persons, 
536.21  (b) there is a reasonable basis for believing that such person 
536.22  or group or class of persons may fail or may have failed to 
536.23  comply with any law administered by the commissioner, (c) the 
536.24  information sought to be obtained from the examination of the 
536.25  records (and the identity of the person or persons with respect 
536.26  to whose liability the subpoena is issued) is not readily 
536.27  available from other sources, (d) the subpoena is clear and 
536.28  specific as to the information sought to be obtained, and (e) 
536.29  the information sought to be obtained is limited solely to the 
536.30  scope of the investigation.  Provided further that the party 
536.31  served with a subpoena which does not identify the person or 
536.32  persons with respect to whose tax liability the subpoena is 
536.33  issued shall have the right, within 20 days after service of the 
536.34  subpoena, to petition the district court for the judicial 
536.35  district in which lies the county in which that party is located 
536.36  for a determination as to whether the commissioner of revenue 
537.1   has complied with all the requirements in (a) to (e), and thus, 
537.2   whether the subpoena is enforceable.  If no such petition is 
537.3   made by the party served within the time prescribed, the 
537.4   subpoena shall have the force and effect of a court order; 
537.5      (9) cause the deposition of witnesses residing within or 
537.6   without the state, or absent therefrom, to be taken, upon notice 
537.7   to the interested party, if any, in like manner that depositions 
537.8   of witnesses are taken in civil actions in the district court, 
537.9   in any matter which the commissioner may have authority to 
537.10  investigate or determine; 
537.11     (10) investigate the tax laws of other states and countries 
537.12  and to formulate and submit to the legislature such legislation 
537.13  as the commissioner may deem expedient to prevent evasions of 
537.14  assessment and taxing laws, and secure just and equal taxation 
537.15  and improvement in the system of assessment and taxation in this 
537.16  state; 
537.17     (11) consult and confer with the governor upon the subject 
537.18  of taxation, the administration of the laws in regard thereto, 
537.19  and the progress of the work of the department of revenue, and 
537.20  furnish the governor, from time to time, such assistance and 
537.21  information as the governor may require relating to tax matters; 
537.22     (12) transmit to the governor, on or before the third 
537.23  Monday in December of each even-numbered year, and to each 
537.24  member of the legislature, on or before November 15 of each 
537.25  even-numbered year, the report of the department of revenue for 
537.26  the preceding years, showing all the taxable property in the 
537.27  state and the value of the same, in tabulated form; 
537.28     (13) inquire into the methods of assessment and taxation 
537.29  and ascertain whether the assessors faithfully discharge their 
537.30  duties, particularly as to their compliance with the laws 
537.31  requiring the assessment of all property not exempt from 
537.32  taxation; 
537.33     (14) administer and enforce the assessment and collection 
537.34  of state taxes and fees, including the use of any remedy 
537.35  available to nongovernmental creditors, and, from time to time, 
537.36  make, publish, and distribute rules for the administration and 
538.1   enforcement of assessments and fees administered by the 
538.2   commissioner and state tax laws.  The rules have the force of 
538.3   law; 
538.4      (15) prepare blank forms for the returns required by state 
538.5   tax law and distribute them throughout the state, furnishing 
538.6   them subject to charge on application; 
538.7      (16) prescribe rules governing the qualification and 
538.8   practice of agents, attorneys, or other persons representing 
538.9   taxpayers before the commissioner.  The rules may require that 
538.10  those persons, agents, and attorneys show that they are of good 
538.11  character and in good repute, have the necessary qualifications 
538.12  to give taxpayers valuable services, and are otherwise competent 
538.13  to advise and assist taxpayers in the presentation of their case 
538.14  before being recognized as representatives of taxpayers.  After 
538.15  due notice and opportunity for hearing, the commissioner may 
538.16  suspend and disbar bar from further practice before the 
538.17  commissioner any person, agent, or attorney who is shown to be 
538.18  incompetent or disreputable, who refuses to comply with the 
538.19  rules, or who with intent to defraud, willfully or knowingly 
538.20  deceives, misleads, or threatens a taxpayer or prospective 
538.21  taxpayer, by words, circular, letter, or by advertisement.  This 
538.22  clause does not curtail the rights of individuals to appear in 
538.23  their own behalf or partners or corporations' officers to appear 
538.24  in behalf of their respective partnerships or corporations; 
538.25     (17) appoint agents as the commissioner considers necessary 
538.26  to make examinations and determinations.  The agents have the 
538.27  rights and powers conferred on the commissioner to subpoena, 
538.28  examine, and copy books, records, papers, or memoranda, subpoena 
538.29  witnesses, administer oaths and affirmations, and take 
538.30  testimony.  In addition to administrative subpoenas of the 
538.31  commissioner and the agents, upon demand of the commissioner or 
538.32  an agent, the court administrator of any district court shall 
538.33  issue a subpoena for the attendance of a witness or the 
538.34  production of books, papers, records, or memoranda before the 
538.35  agent for inspection and copying.  Disobedience of a court 
538.36  administrator's subpoena shall be punished by the district court 
539.1   of the district in which the subpoena is issued, or in the case 
539.2   of a subpoena issued by the commissioner or an agent, by the 
539.3   district court of the district in which the party served with 
539.4   the subpoena is located, in the same manner as contempt of the 
539.5   district court; 
539.6      (18) appoint and employ additional help, purchase supplies 
539.7   or materials, or incur other expenditures in the enforcement of 
539.8   state tax laws as considered necessary.  The salaries of all 
539.9   agents and employees provided for in this chapter shall be fixed 
539.10  by the appointing authority, subject to the approval of the 
539.11  commissioner of administration; 
539.12     (19) execute and administer any agreement with the 
539.13  secretary of the treasury of the United States or a 
539.14  representative of another state regarding the exchange of 
539.15  information and administration of the tax laws; 
539.16     (20) administer and enforce the provisions of sections 
539.17  325D.30 to 325D.42, the Minnesota Unfair Cigarette Sales Act; 
539.18     (21) authorize the use of unmarked motor vehicles to 
539.19  conduct seizures or criminal investigations pursuant to the 
539.20  commissioner's authority; and 
539.21     (22) exercise other powers and perform other duties 
539.22  required of or imposed upon the commissioner of revenue by law.  
539.23     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
539.24  following final enactment. 
539.25     Sec. 5.  Minnesota Statutes 2000, section 270.07, 
539.26  subdivision 3, is amended to read: 
539.27     Subd. 3.  [ADDITIONAL POWERS OF COMMISSIONER.] 
539.28  Notwithstanding any other provision of law the commissioner of 
539.29  revenue may, 
539.30     (a) based upon the administrative costs of processing, 
539.31  determine minimum standards for the determination of additional 
539.32  tax for which an order shall be issued, and 
539.33     (b) based upon collection costs as compared to the amount 
539.34  of tax involved, determine minimum standards of collection, and 
539.35     (c) based upon the administrative costs of processing, 
539.36  determine the minimum amount of refunds for which an order shall 
540.1   be issued and refund made where no claim therefor has been 
540.2   filed, and 
540.3      (d) cancel any amounts below these minimum standards 
540.4   determined under (a) and (b) hereof, and 
540.5      (e) based upon the inability of a taxpayer to pay a 
540.6   delinquent tax liability, abate the liability if the taxpayer 
540.7   agrees to perform uncompensated public service work for a state 
540.8   agency, a political subdivision or public corporation of this 
540.9   state, or a nonprofit educational, medical, or social service 
540.10  agency.  The department of corrections shall administer the work 
540.11  program.  No benefits under chapter 176 or 268 shall be 
540.12  available, but a claim authorized under section 3.739 may be 
540.13  made by the taxpayer.  The state may not enter into any 
540.14  agreement that has the purpose of or results in the displacement 
540.15  of public employees by a delinquent taxpayer under this 
540.16  section.  The state must certify to the appropriate bargaining 
540.17  agent or employees, as applicable, that the work performed by a 
540.18  delinquent taxpayer will not result in the displacement of 
540.19  currently employed workers or layoff from a substantially 
540.20  equivalent position, including partial displacement such as 
540.21  reduction in hours of nonovertime work, wages, or other 
540.22  employment benefits, and 
540.23     (f) based on a showing of reasonable cause:  (1) reissue an 
540.24  uncashed rebate warrant or check that has lapsed under any 
540.25  provision of law relating to rebates; or (2) reissue an uncashed 
540.26  tax refund warrant or check that has not lapsed by law, but has 
540.27  been reported to the commissioner of commerce as abandoned 
540.28  property under the Uniform Disposition of Unclaimed Property Act 
540.29  in sections 345.31 to 345.60.  The authority to reissue warrants 
540.30  or checks under this paragraph is limited to five years after 
540.31  the date of issuance of the original warrant or check. 
540.32     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
540.33  following final enactment. 
540.34     Sec. 6.  [270.277] [NOTICES TO HOLDERS OF POWERS OF 
540.35  ATTORNEY.] 
540.36     If a taxpayer has executed a written power of attorney, in 
541.1   a form prescribed by the commissioner, the commissioner shall 
541.2   allow the taxpayer to elect, in writing, that all notices and 
541.3   correspondence between the department of revenue and the 
541.4   taxpayer will be sent to the holder of the power of attorney. 
541.5      Sec. 7.  Minnesota Statutes 2000, section 270.60, 
541.6   subdivision 4, is amended to read: 
541.7      Subd. 4.  [PAYMENTS TO COUNTIES.] (a) The commissioner 
541.8   shall pay to a county in which an Indian gaming casino is 
541.9   located ten percent of the state share of all taxes generated 
541.10  from activities on reservations and collected under a tax 
541.11  agreement under this section with the tribal government for the 
541.12  reservation located in the county.  If the tribe has casinos 
541.13  located in more than one county, the payment must be divided 
541.14  equally among the counties in which the casinos are located. 
541.15     (b) A county is a qualified county under this subdivision 
541.16  if one of the following conditions is met: 
541.17     (1) the county's per capita income is less than 80 percent 
541.18  of the state per capita personal income, based on the most 
541.19  recent estimates made by the United States Bureau of Economic 
541.20  Analysis; or 
541.21     (2) 30 percent or more of the total market value of real 
541.22  property in the county is exempt from ad valorem taxation. 
541.23     (c) The commissioner shall make the payments required under 
541.24  this subdivision by February 28 of the year following the year 
541.25  the taxes are collected. 
541.26     (d) (c) An amount sufficient to make the payments 
541.27  authorized by this subdivision, not to exceed $1,100,000 in any 
541.28  fiscal year, is annually appropriated from the general fund to 
541.29  the commissioner.  If the authorized payments exceed the amount 
541.30  of the appropriation, the commissioner shall first 
541.31  proportionately reduce the payments to counties other than 
541.32  qualified counties so that the total amount equals the 
541.33  appropriation.  If the authorized payments to qualified counties 
541.34  also exceed the amount of the appropriation, the commissioner 
541.35  shall then proportionately reduce the rate so that the total 
541.36  amount to be paid to qualified counties equals the appropriation.
542.1      <b>[EFFECTIVE DATE.]</b> This section is effective for payments 
542.2   made after December 31, 2001. 
542.3      Sec. 8.  Minnesota Statutes 2000, section 270.60, is 
542.4   amended by adding a subdivision to read: 
542.5      Subd. 5.  [FEES; APPROPRIATION.] (a) The commissioner may 
542.6   enter into an agreement with the governing body of any federally 
542.7   recognized Indian reservation in Minnesota concerning fees 
542.8   administered by the commissioner that are paid by the tribe, 
542.9   members of the tribe, or persons who conduct business with the 
542.10  tribe, or otherwise imposed on on-reservation activities.  The 
542.11  agreement may provide for the refund or sharing of the fee.  The 
542.12  commissioner may make any payments required by the agreement 
542.13  from the fees collected. 
542.14     (b) Each head of an agency, board, or other governmental 
542.15  entity that administers a program that is funded by fees 
542.16  administered by the commissioner may sign an agreement entered 
542.17  into by the commissioner under this subdivision.  An agreement 
542.18  is not valid until signed by the head of each agency, board, or 
542.19  other governmental entity that administers a program funded by 
542.20  the particular fee covered in an agreement and by the 
542.21  commissioner of revenue. 
542.22     (c) There is annually appropriated to the commissioner of 
542.23  revenue from the funds for which the fees are collected the 
542.24  amounts necessary to make payments as provided in this 
542.25  subdivision. 
542.26     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
542.27  following final enactment and applies to all fees administered 
542.28  by the commissioner of revenue for which timely claims for 
542.29  refund have been, or can be, filed. 
542.30     Sec. 9.  [270.691] [PUBLICATION OF NAMES OF DELINQUENT 
542.31  TAXPAYERS.] 
542.32     Subdivision 1.  [COMMISSIONER MAY PUBLISH.] (a) 
542.33  Notwithstanding any other law, the commissioner may publish a 
542.34  list or lists of taxpayers who owe delinquent taxes or fees 
542.35  administered by the commissioner, and who meet the requirements 
542.36  of paragraph (b). 
543.1      (b) For purposes of this section, a taxpayer may be 
543.2   included on a list if: 
543.3      (1) the taxes or fees owed remain unpaid at least 180 days 
543.4   after the dates they were due; 
543.5      (2) the taxpayer's total liability for the taxes and fees, 
543.6   including penalties, interest, and other charges, is at least 
543.7   $5,000; and 
543.8      (3) a tax lien has been filed or a judgment for the 
543.9   liability has been entered against the taxpayer before notice is 
543.10  given under subdivision 3. 
543.11     (c) In the case of listed taxpayers that are business 
543.12  entities, the commissioner may also list the names of 
543.13  responsible persons assessed pursuant to section 270.101 for 
543.14  listed liabilities, who are not protected from publication by 
543.15  subdivision 2, and for whom the requirements of paragraph (b) 
543.16  are satisfied with regard to the personal assessment. 
543.17     Subd. 2.  [REQUIRED AND EXCLUDED TAXPAYERS.] (a) The 
543.18  commissioner may publish lists of some or all of the taxpayers 
543.19  described in subdivision 1.  A list must include the taxpayers 
543.20  with the largest unpaid liabilities of the kind used to define 
543.21  the list, subject to the limitations of paragraphs (b) and (c). 
543.22     (b) For the purposes of this section, a tax or fee is not 
543.23  delinquent if: 
543.24     (1) an administrative or court action contesting the amount 
543.25  or validity of the taxpayer's liability has been filed or served 
543.26  and is unresolved at the time when notice would be given under 
543.27  subdivision 3; 
543.28     (2) an appeal period to contest the liability has not 
543.29  expired; or 
543.30     (3) the liability is subject to a payment agreement and 
543.31  there is no delinquency in the payments required under the 
543.32  agreement. 
543.33     (c) Unpaid liabilities are not subject to publication if: 
543.34     (1) the commissioner is in the process of reviewing or 
543.35  adjusting the liability; 
543.36     (2) the taxpayer is a debtor in a bankruptcy proceeding and 
544.1   the automatic stay is in effect; 
544.2      (3) the commissioner has been notified that the taxpayer is 
544.3   deceased; or 
544.4      (4) the time period for collecting the taxes or fees has 
544.5   expired. 
544.6      Subd. 3.  [NOTICE TO TAXPAYER.] (a) At least 30 days before 
544.7   publishing the name of a delinquent taxpayer, the commissioner 
544.8   shall mail a written notice to the taxpayer, detailing the 
544.9   amount and nature of each liability and the intended publication 
544.10  of the information listed in subdivision 4 related to the 
544.11  liability.  The notice must be mailed by first class and 
544.12  certified mail addressed to the last known address of the 
544.13  taxpayer.  The notice must include information regarding the 
544.14  exceptions listed in subdivision 2 and must state that the 
544.15  taxpayer's information will not be published if the taxpayer 
544.16  pays the delinquent obligation, enters into an agreement to pay, 
544.17  or provides information establishing that subdivision 2 
544.18  prohibits publication of the taxpayer's name. 
544.19     (b) After at least 30 days has elapsed since the notice was 
544.20  mailed and the delinquent tax or fee has not been paid and the 
544.21  taxpayer has not proved to the commissioner that subdivision 2 
544.22  prohibits publication, the commissioner may publish in a list of 
544.23  delinquent taxpayers the information about the taxpayer that is 
544.24  listed in subdivision 4. 
544.25     Subd. 4.  [FORM OF LIST.] The list may be published by any 
544.26  medium or method.  The list must contain the name, address, type 
544.27  of tax or fee, and period for which payment is due for each 
544.28  liability, including penalties, interest, and other charges owed 
544.29  by each listed delinquent taxpayer. 
544.30     Subd. 5.  [REMOVAL FROM LIST.] The commissioner shall 
544.31  remove the name of a taxpayer from the list of delinquent 
544.32  taxpayers after the commissioner receives written notice of and 
544.33  verifies any of the following facts about the liability in 
544.34  question: 
544.35     (1) the taxpayer has contacted the commissioner and 
544.36  arranged resolution of the liability; 
545.1      (2) an active bankruptcy proceeding has been initiated for 
545.2   the liability; 
545.3      (3) a bankruptcy proceeding concerning the liability has 
545.4   resulted in discharge of the liability; or 
545.5      (4) the commissioner has written off the liability. 
545.6      Subd. 6.  [NAMES PUBLISHED IN ERROR.] If the commissioner 
545.7   publishes a name under subdivision 1 in error, the taxpayer 
545.8   whose name was erroneously published has a right to request a 
545.9   retraction and apology.  If the taxpayer so requests, the 
545.10  commissioner shall publish a retraction and apology 
545.11  acknowledging that the taxpayer's name was published in error.  
545.12  The retraction and apology must appear in the same medium and 
545.13  the same format as the original list that contained the name 
545.14  listed in error. 
545.15     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
545.16  following final enactment for all liabilities owing on that date 
545.17  for which the statute of limitations for collection has not 
545.18  expired, and all liabilities arising after that date. 
545.19     Sec. 10.  Minnesota Statutes 2000, section 270.70, 
545.20  subdivision 13, is amended to read: 
545.21     Subd. 13.  [LEVY AND SALE BY SHERIFF.] If any tax payable 
545.22  to the commissioner of revenue or to the department of revenue 
545.23  is not paid as provided in subdivision 2, the commissioner may, 
545.24  within five years after the date of assessment of the 
545.25  tax, within the time periods provided in subdivision 1 for 
545.26  collection of taxes, delegate the authority granted by 
545.27  subdivision 1, by means of issuing a warrant to the sheriff of 
545.28  any county of the state commanding the sheriff, as agent for the 
545.29  commissioner, to levy upon and sell the real and personal 
545.30  property of the person liable for the payment or collection of 
545.31  the tax and to levy upon the rights to property of that person 
545.32  within the county, or to levy upon and seize any property within 
545.33  the county on which there is a lien provided in section 270.69, 
545.34  and to return the warrant to the commissioner and pay to the 
545.35  commissioner the money collected by virtue thereof by a time to 
545.36  be therein specified not less than 60 days from the date of the 
546.1   warrant.  The sheriff shall proceed thereunder to levy upon and 
546.2   seize any property of the person and to levy upon the rights to 
546.3   property of the person within the county (except the person's 
546.4   homestead or that property which is exempt from execution 
546.5   pursuant to section 550.37), or to levy upon and seize any 
546.6   property within the county on which there is a lien provided in 
546.7   section 270.69.  For purposes of the preceding sentence, the 
546.8   term "tax" shall include any penalty, interest and costs 
546.9   properly payable.  The sheriff shall then sell so much of the 
546.10  property levied upon as is required to satisfy the taxes, 
546.11  interest, and penalties, together with the sheriff's costs; but 
546.12  the sales, and the time and manner of redemption therefrom, 
546.13  shall, to the extent not provided in sections 270.701 to 
546.14  270.709, be governed by chapter 550.  The proceeds of the sales, 
546.15  less the sheriff's costs, shall be turned over to the 
546.16  commissioner, who shall then apply the proceeds as provided in 
546.17  section 270.708. 
546.18     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
546.19  following final enactment for all taxes for which issuance of a 
546.20  warrant under this subdivision has not been barred as of that 
546.21  date. 
546.22     Sec. 11.  Minnesota Statutes 2000, section 270.73, 
546.23  subdivision 1, is amended to read: 
546.24     Subdivision 1.  [POSTING, NOTICE.] Pursuant to the 
546.25  authority to disclose under section 270B.12, subdivision 4, the 
546.26  commissioner shall, by the 15th of each month, submit to the 
546.27  commissioner of public safety a list of all taxpayers who are 
546.28  required to pay, withhold, or collect the tax imposed by section 
546.29  290.02, 290.0922, 290.92, 290.9727, 290.9728, 290.9729, or 
546.30  297A.02, or local sales and use tax payable to the commissioner 
546.31  of revenue, or a local option tax administered and collected by 
546.32  the commissioner of revenue, and who are ten days or more 
546.33  delinquent in either filing a tax return or paying the tax. 
546.34     The commissioner of revenue is under no obligation to list 
546.35  a taxpayer whose business is inactive.  At least ten days before 
546.36  notifying the commissioner of public safety, the commissioner of 
547.1   revenue shall notify the taxpayer of the intended action. 
547.2      The commissioner of public safety shall post the list in 
547.3   the same manner as provided in section 340A.318, subdivision 3.  
547.4   The list will prominently show the date of posting.  If a 
547.5   taxpayer previously listed files all returns and pays all taxes 
547.6   then due, the commissioner shall notify the commissioner of 
547.7   public safety within two business days. 
547.8      <b>[EFFECTIVE DATE.]</b> This section is effective for lists 
547.9   submitted to the commissioner of public safety on or after the 
547.10  day following final enactment. 
547.11     Sec. 12.  Minnesota Statutes 2000, section 270A.11, is 
547.12  amended to read: 
547.13     270A.11 [DATA PRIVACY.] 
547.14     Private and confidential data on individuals may be 
547.15  exchanged among the department, the taxpayer's rights advocate, 
547.16  the attorney general, the claimant agency, and the debtor as 
547.17  necessary to accomplish and effectuate the intent of sections 
547.18  270A.01 to 270A.12, as provided by section 13.05, subdivision 4, 
547.19  clause (b).  The department may disclose to the claimant agency 
547.20  only the debtor's name, address, social security number and the 
547.21  amount of the refund, and in the case of a joint return, the 
547.22  name of the debtor's spouse.  Any person employed by, or 
547.23  formerly employed by, a claimant agency who discloses any such 
547.24  information for any other purpose, shall be subject to the civil 
547.25  and criminal penalties of section 270B.18.  Data collected by 
547.26  the department from claimant agencies relating to claims filed 
547.27  under this chapter are private data on individuals. 
547.28     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
547.29  following final enactment. 
547.30     Sec. 13.  Minnesota Statutes 2000, section 270B.02, 
547.31  subdivision 2, is amended to read: 
547.32     Subd. 2.  [PROTECTED NONPUBLIC DATA.] The following are 
547.33  protected nonpublic data as defined in section 13.02, 
547.34  subdivision 13: 
547.35     (1) criteria for determining which computer processed 
547.36  returns are selected for audit; 
548.1      (2) criteria for determining which returns are selected for 
548.2   an in-depth audit; and 
548.3      (3) criteria for determining which accounts receivable 
548.4   balances below a stated amount are written off or canceled; and 
548.5      (4) criteria or information used in determining which 
548.6   alleged criminal violations of any law administered by the 
548.7   commissioner are selected for criminal investigation.  
548.8      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
548.9   following final enactment. 
548.10     Sec. 14.  Minnesota Statutes 2000, section 270B.02, 
548.11  subdivision 3, is amended to read: 
548.12     Subd. 3.  [CONFIDENTIAL DATA ON INDIVIDUALS; PROTECTED 
548.13  NONPUBLIC DATA.] (a) Except as provided in paragraph (b), the 
548.14  name or existence of an informer, informer letters, and other 
548.15  unsolicited data, in whatever form, given to the department of 
548.16  revenue by a person, other than the data subject, who informs 
548.17  that a specific taxpayer is not or may not be in compliance with 
548.18  tax laws, or nontax laws administered by the department of 
548.19  revenue, including laws not listed in section 270B.01, 
548.20  subdivision 8, are confidential data on individuals or protected 
548.21  nonpublic data as defined in section 13.02, subdivisions 3 and 
548.22  13. 
548.23     (b) Data under paragraph (a) may be disclosed with the 
548.24  consent of the informer or upon a written finding by a court 
548.25  that the information provided by the informer was false and that 
548.26  there is evidence that the information was provided in bad 
548.27  faith.  This subdivision does not alter disclosure 
548.28  responsibilities or obligations under the rules of criminal 
548.29  procedure. 
548.30     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
548.31  following final enactment. 
548.32     Sec. 15.  Minnesota Statutes 2000, section 270B.03, 
548.33  subdivision 6, is amended to read: 
548.34     Subd. 6.  [INVESTIGATIVE DATA.] For purposes of any law 
548.35  administered by the department of revenue, including laws not 
548.36  listed in section 270B.01, subdivision 8, investigative data 
549.1   collected or created by the department of revenue in order to 
549.2   prepare a case against a person, whether known or unknown, for 
549.3   the commission of a crime is confidential or protected nonpublic 
549.4   during an investigation.  When the investigation becomes 
549.5   inactive, as defined in section 13.82, subdivision 5, the 
549.6   classifications otherwise applicable under any other laws become 
549.7   effective data is private or nonpublic. 
549.8      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
549.9   following final enactment. 
549.10     Sec. 16.  [289A.395] [LIMITATIONS; DISASTER AREAS.] 
549.11     Subdivision 1.  [EXTENSION OF TIME.] The limitations of 
549.12  time provided by this chapter, chapter 290 relating to income 
549.13  taxes, chapter 271 relating to the tax court for filing returns, 
549.14  paying taxes, claiming refunds, commencing action thereon, 
549.15  appealing to the tax court from orders relating to income taxes, 
549.16  and the filing of petitions under chapter 278 are extended by 45 
549.17  days for individuals residing in areas designated a disaster or 
549.18  emergency area, if the time period for which the area is so 
549.19  designated includes at least one of the 30 days immediately 
549.20  preceding the time limit.  For purposes of this section, 
549.21  "disaster or emergency area" has the meaning given in section 
549.22  273.123, subdivision 1. 
549.23     Subd. 2.  [INTEREST AND PENALTIES.] Interest on tax must 
549.24  not be assessed or collected from an individual with respect to 
549.25  whom, and for the period during which, the limitations of time 
549.26  are extended as provided in subdivision 1.  A penalty shall not 
549.27  be assessed or collected from an individual for failure during 
549.28  that period to perform an act required by the laws described in 
549.29  subdivision 1. 
549.30     Subd. 3.  [ABATEMENT.] The commissioner of revenue shall 
549.31  abate penalties and interest on withholding taxes and 
549.32  declarations under section 290.92, and on sales taxes deposits 
549.33  and returns under chapters 289A and 297B for failure to pay 
549.34  amounts or file returns between the date due and 45 days after 
549.35  the date due, if: 
549.36     (1) the taxpayer is a resident in the area designated under 
550.1   subdivision 1, or the taxpayer's business operations are located 
550.2   in the area designated in subdivision 1, and the taxpayer's 
550.3   ability to file returns or declarations or pay the taxes is 
550.4   affected by the disaster; and 
550.5      (2) the taxpayer files all required returns and 
550.6   declarations and pays all tax amounts due on or before the 45th 
550.7   day following the due date. 
550.8      Subd. 4.  [APPLICABILITY.] Nothing in this section reduces 
550.9   the time within which an act is required or permitted under 
550.10  chapter 271; 289A; 290; 297A; or 297B. 
550.11     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
550.12  following final enactment and applies to disasters or 
550.13  emergencies as defined in Minnesota Statutes, section 273.123, 
550.14  subdivision 1, that occur after March 30, 2001. 
550.15     Sec. 17.  Minnesota Statutes 2000, section 289A.60, 
550.16  subdivision 7, is amended to read: 
550.17     Subd. 7.  [PENALTY FOR FRIVOLOUS RETURN.] If an individual 
550.18  a taxpayer files what purports to be a tax return required by 
550.19  chapter 290 or a claim for refund but which does not contain 
550.20  information on which the substantial correctness of 
550.21  the assessment purported return or claim for refund may be 
550.22  judged or contains information that on its face shows that the 
550.23  assessment purported return or claim for refund is substantially 
550.24  incorrect and the conduct is due to a position that is frivolous 
550.25  or a desire that appears on the purported return or claim for 
550.26  refund to delay or impede the administration of Minnesota tax 
550.27  laws, then the individual shall pay a penalty of $500.  In a 
550.28  proceeding involving the issue of whether or not a person is 
550.29  liable for this penalty, the burden of proof is on the 
550.30  commissioner.  
550.31     <b>[EFFECTIVE DATE.]</b> This section is effective for returns or 
550.32  claims for refunds filed on or after the day following final 
550.33  enactment. 
550.34     Sec. 18.  Minnesota Statutes 2000, section 345.41, is 
550.35  amended to read: 
550.36     345.41 [REPORT OF ABANDONED PROPERTY.] 
551.1      (a) Every person holding funds or other property, tangible 
551.2   or intangible, presumed abandoned under sections 345.31 to 
551.3   345.60 shall report annually to the commissioner with respect to 
551.4   the property as hereinafter provided. 
551.5      (b) The report shall be verified and shall include: 
551.6      (1) except with respect to traveler's checks and money 
551.7   orders, the name, if known, and last known address, if any, of 
551.8   each person appearing from the records of the holder to be the 
551.9   owner of any property of the value of $100 or more presumed 
551.10  abandoned under sections 345.31 to 345.60; 
551.11     (2) in case of unclaimed funds of life insurance 
551.12  corporations, the full name of the policyholder, insured or 
551.13  annuitant and that person's last known address according to the 
551.14  life insurance corporation's records; 
551.15     (3) the nature and identifying number, if any, or 
551.16  description of the property and the amount appearing from the 
551.17  records to be due, except that items of value under $100 each 
551.18  may be reported in aggregate; 
551.19     (4) the date when the property became payable, demandable 
551.20  or returnable, and the date of the last transaction with the 
551.21  owner with respect to the property; and 
551.22     (5) other information which the commissioner prescribes by 
551.23  rule as necessary for the administration of sections 345.31 to 
551.24  345.60. 
551.25     (c) If the person holding property presumed abandoned is a 
551.26  successor to other persons who previously held the property for 
551.27  the owner, or if the holder has changed a name while holding the 
551.28  property, the holder shall file with the report all prior known 
551.29  names and addresses of each holder of the property. 
551.30     (d) The report shall be filed before November 1 of each 
551.31  year as of June 30 next preceding, but the report of life 
551.32  insurance corporations shall be filed before October 1 of each 
551.33  year as of December 31 next preceding.  The commissioner may 
551.34  postpone the reporting date upon written request by any person 
551.35  required to file a report. 
551.36     (e) Not more than 120 days before filing the report 
552.1   required by this section, the holder in possession of property 
552.2   abandoned and subject to custody as unclaimed property under 
552.3   this chapter shall send written notice to the presumed owner at 
552.4   that owner's last known address informing the owner that the 
552.5   holder is in possession of property subject to this chapter and 
552.6   advising the owner of the steps necessary to prevent abandonment 
552.7   if: 
552.8      (1) the holder has in its records an address for the 
552.9   presumed owner that the holder's records do not disclose to be 
552.10  inaccurate; 
552.11     (2) the claim of the apparent owner is not barred by the 
552.12  statute of limitations; and 
552.13     (3) the property has a value of $100 or more. 
552.14     (f) Verification, if made by a partnership, shall be 
552.15  executed by a partner; if made by an unincorporated association 
552.16  or private corporation, by an officer, and if made by a public 
552.17  corporation, by its chief fiscal officer. 
552.18     (g) Holders of property described in section 345.32 shall 
552.19  not impose any charges against property which is described in 
552.20  section 345.32, clause (a), (b) or (c). 
552.21     (h) Any person who has possession of property which the 
552.22  person has reason to believe will be reportable in the future as 
552.23  unclaimed property may, with the permission of the commissioner, 
552.24  report and deliver such property prior to the date required for 
552.25  reporting in accordance with this section. 
552.26     (i) Before the last day of each calendar year, the 
552.27  commissioner of revenue shall report to the commissioner as 
552.28  unclaimed property under this section any uncashed checks or 
552.29  warrants for overpayments of taxes that were issued more than 
552.30  one year before the end of the calendar quarter immediately 
552.31  preceding the end of the calendar year. 
552.32     <b>[EFFECTIVE DATE.]</b> This section is effective August 1, 2001. 
552.33     Sec. 19.  Minnesota Statutes 2000, section 345.42, is 
552.34  amended by adding a subdivision to read: 
552.35     Subd. 5.  [UNCASHED TAX REFUNDS.] The commissioner of 
552.36  revenue shall notify the commissioner of any checks or warrants 
553.1   reported under section 345.41 that the commissioner of revenue 
553.2   has reissued under section 270.07, subdivision 3, clause (f).  
553.3   The commissioner shall remove the item from any future 
553.4   publication of lists or notifications of owners of abandoned 
553.5   property. 
553.6      <b>[EFFECTIVE DATE.]</b> This section is effective August 1, 2001. 
553.7      Sec. 20.  [471.699] [EXTENSION OF FINANCIAL REPORT FILING 
553.8   TIME LIMITS; DISASTER AREAS.] 
553.9      The time limit by which financial reports are required to 
553.10  be filed under section 471.697 or 471.698, is extended by 90 
553.11  days for any city or town located in whole or in part within a 
553.12  disaster or emergency area as defined in section 273.123, 
553.13  subdivision 1, if the time period for which the area is so 
553.14  designated includes at least one of the 30 days immediately 
553.15  preceding the time limit. 
553.16     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
553.17  following final enactment. 
553.18     Sec. 21.  Laws 1998, chapter 389, article 16, section 35, 
553.19  subdivision 1, is amended to read: 
553.20     Subdivision 1.  [BAT STUDY.] $100,000 is appropriated from 
553.21  the general fund for fiscal year 1999 to the legislative 
553.22  coordinating commission to study alternative methods of taxing 
553.23  business.  The appropriations under this section and under Laws 
553.24  1997, chapter 231, article 5, section 18, subdivision 3, are 
553.25  available in fiscal years 2000 and 2001 2003.  
553.26     Sec. 22.  [APPROPRIATION.] 
553.27     The following amounts are appropriated to the commissioner 
553.28  of revenue from the general fund to administer this act:  
553.29     (1) $2,050,000 in fiscal year 2002; and 
553.30     (2) $900,000 in fiscal year 2003. 
553.31     These are one-time appropriations and are not added to the 
553.32  base, except $175,000 for each year for assessment training and 
553.33  education (regional representatives) is added to the budget base.
553.34     Sec. 23.  [REPEALER.] 
553.35     Minnesota Statutes 2000, section 290A.18, subdivision 2, is 
553.36  repealed. 
554.1      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
554.2   following final enactment.