1.1 	A bill for an act
1.2 	relating to human services; providing rate adjustments for long-term care 
1.3 	providers; modifying the tax treatment of income of foreign operating 
1.4 	corporations;amending Minnesota Statutes 2004, section 290.17, subdivision 
1.5 	4; Minnesota Statutes 2005 Supplement, sections 256B.431, subdivision 41; 
1.6 	256B.5012, subdivision 6;  Laws 2005, First Special Session chapter 4, article 
1.7 	7, section 55.
1.8 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.9 	Section 1. Minnesota Statutes 2005 Supplement, section 256B.431, subdivision 41, 
1.10 	is amended to read:
1.11 		Subd. 41.Rate increases for October 1, 2005, and October 1, 2006. (a) For the 
1.12 	rate period beginning October 1, 2005, the commissioner shall make available to each 
1.13 	nursing facility reimbursed under this section or section 256B.434 an adjustment equal to 
1.14 	2.2553 percent of the total operating payment rate, and for the rate year beginning October 
1.15 	1, 2006, the commissioner shall make available to each nursing facility reimbursed under 
1.16 	this section or section 256B.434 an adjustment equal to 1.2553 6.2553 percent of the total 
1.17 	operating payment rate.
1.18 	(b) 75 percent of the money resulting from the rate adjustment under paragraph (a) 
1.19 	must be used to increase wages and benefits and pay associated costs for all employees, 
1.20 	except management fees, the administrator, and central office staff. Except as provided 
1.21 	in paragraph (c), 75 percent of the money received by a facility as a result of the rate 
1.22 	adjustment provided in paragraph (a) must be used only for wage, benefit, and staff 
1.23 	increases implemented on or after the effective date of the rate increase each year, and 
1.24 	must not be used for increases implemented prior to that date.
2.1 	(c) With respect only to the October 1, 2005, rate increase, a nursing facility that 
2.2 	incurred costs for salary and employee benefit increases first provided after July 1, 2003, 
2.3 	may count those costs towards the amount required to be spent on salaries and benefits 
2.4 	under paragraph (b). These costs must be reported to the commissioner in the form and 
2.5 	manner specified by the commissioner.
2.6 	(d) Nursing facilities may apply for the portion of the rate adjustment under 
2.7 	paragraph (a) for employee wages and benefits and associated costs. The application 
2.8 	must be made to the commissioner and contain a plan by which the nursing facility 
2.9 	will distribute the funds according to paragraph (b). For nursing facilities in which the 
2.10 	employees are represented by an exclusive bargaining representative, an agreement 
2.11 	negotiated and agreed to by the employer and the exclusive bargaining representative 
2.12 	constitutes the plan. A negotiated agreement may constitute the plan only if the agreement 
2.13 	is finalized after the date of enactment of all increases for the rate year and signed by both 
2.14 	parties prior to submission to the commissioner. The commissioner shall review the 
2.15 	plan to ensure that the rate adjustments are used as provided in paragraph (b). To be 
2.16 	eligible, a facility must submit its distribution plan by March 31, 2006, and March 31, 
2.17 	2007, respectively. The commissioner may approve distribution plans on or before June 
2.18 	30, 2006, and June 30, 2007, respectively. If a facility's distribution plan is effective after 
2.19 	the first day of the applicable rate period that the funds are available, the rate adjustments 
2.20 	are effective the same date as the facility's plan.
2.21 	(e) A copy of the approved distribution plan must be made available to all employees 
2.22 	by giving each employee a copy or by posting a copy in an area of the nursing facility 
2.23 	to which all employees have access. If an employee does not receive the wage and 
2.24 	benefit adjustment described in the facility's approved plan and is unable to resolve the 
2.25 	problem with the facility's management or through the employee's union representative, 
2.26 	the employee may contact the commissioner at an address or telephone number provided 
2.27 	by the commissioner and included in the approved plan.

2.28 	Sec. 2. Minnesota Statutes 2005 Supplement, section 256B.5012, subdivision 6, 
2.29 	is amended to read:
2.30 		Subd. 6.ICF/MR rate increases October 1, 2005, and October 1, 2006. (a) For 
2.31 	the rate periods period beginning October 1, 2005, and October 1, 2006, the commissioner 
2.32 	shall make available to each facility reimbursed under this section an adjustment to the 
2.33 	total operating payment rate of 2.2553 percent. For the rate period beginning October 1, 
2.34 	2006, the commissioner shall make available to each facility reimbursed under this section 
2.35 	an adjustment to the total operating payment rate of 7.2553 percent.
3.1 	(b) 75 percent of the money resulting from the rate adjustment under paragraph (a) 
3.2 	must be used to increase wages and benefits and pay associated costs for all employees, 
3.3 	except for administrative and central office employees. 75 percent of the money received 
3.4 	by a facility as a result of the rate adjustment provided in paragraph (a) must be used only 
3.5 	for wage, benefit, and staff increases implemented on or after the effective date of the rate 
3.6 	increase each year, and must not be used for increases implemented prior to that date.
3.7 	(c) For each facility, the commissioner shall make available an adjustment using the 
3.8 	percentage specified in paragraph (a) multiplied by the total payment rate, excluding the 
3.9 	property-related payment rate, in effect on the preceding day. The total payment rate shall 
3.10 	include the adjustment provided in section 256B.501, subdivision 12.
3.11 	(d) A facility whose payment rates are governed by closure agreements, receivership 
3.12 	agreements, or Minnesota Rules, part 9553.0075, is not eligible for an adjustment 
3.13 	otherwise granted under this subdivision.
3.14 	(e) A facility may apply for the portion of the payment rate adjustment provided 
3.15 	under paragraph (a) for employee wages and benefits and associated costs. The application 
3.16 	must be made to the commissioner and contain a plan by which the facility will distribute 
3.17 	the funds according to paragraph (b). For facilities in which the employees are represented 
3.18 	by an exclusive bargaining representative, an agreement negotiated and agreed to by the 
3.19 	employer and the exclusive bargaining representative constitutes the plan. A negotiated 
3.20 	agreement may constitute the plan only if the agreement is finalized after the date of 
3.21 	enactment of all rate increases for the rate year. The commissioner shall review the plan to 
3.22 	ensure that the payment rate adjustment per diem is used as provided in this subdivision. 
3.23 	To be eligible, a facility must submit its plan by March 31, 2006, and December 31, 
3.24 	2006, respectively. If a facility's plan is effective for its employees after the first day of 
3.25 	the applicable rate period that the funds are available, the payment rate adjustment per 
3.26 	diem is effective the same date as its plan.
3.27 	(f) A copy of the approved distribution plan must be made available to all employees 
3.28 	by giving each employee a copy or by posting it in an area of the facility to which all 
3.29 	employees have access. If an employee does not receive the wage and benefit adjustment 
3.30 	described in the facility's approved plan and is unable to resolve the problem with the 
3.31 	facility's management or through the employee's union representative, the employee 
3.32 	may contact the commissioner at an address or telephone number provided by the 
3.33 	commissioner and included in the approved plan.

3.34 	Sec. 3. Minnesota Statutes 2004, section 290.17, subdivision 4, is amended to read:
4.1 		Subd. 4.Unitary business principle. (a) If a trade or business conducted wholly 
4.2 	within this state or partly within and partly without this state is part of a unitary business, 
4.3 	the entire income of the unitary business is subject to apportionment pursuant to section  
4.4 	290.191. Notwithstanding subdivision 2, paragraph (c), none of the income of a unitary 
4.5 	business is considered to be derived from any particular source and none may be allocated 
4.6 	to a particular place except as provided by the applicable apportionment formula. The 
4.7 	provisions of this subdivision do not apply to business income subject to subdivision 5, 
4.8 	income of an insurance company, or income of an investment company determined under 
4.9 	section  290.36. 
4.10 	(b) The term "unitary business" means business activities or operations which 
4.11 	result in a flow of value between them. The term may be applied within a single legal 
4.12 	entity or between multiple entities and without regard to whether each entity is a sole 
4.13 	proprietorship, a corporation, a partnership or a trust.
4.14 	(c) Unity is presumed whenever there is unity of ownership, operation, and use, 
4.15 	evidenced by centralized management or executive force, centralized purchasing, 
4.16 	advertising, accounting, or other controlled interaction, but the absence of these 
4.17 	centralized activities will not necessarily evidence a nonunitary business. Unity is also 
4.18 	presumed when business activities or operations are of mutual benefit, dependent upon or 
4.19 	contributory to one another, either individually or as a group.
4.20 	(d) Where a business operation conducted in Minnesota is owned by a business 
4.21 	entity that carries on business activity outside the state different in kind from that 
4.22 	conducted within this state, and the other business is conducted entirely outside the state, it 
4.23 	is presumed that the two business operations are unitary in nature, interrelated, connected, 
4.24 	and interdependent unless it can be shown to the contrary.
4.25 	(e) Unity of ownership is not deemed to exist when a corporation is involved unless 
4.26 	that corporation is a member of a group of two or more business entities and more than 50 
4.27 	percent of the voting stock of each member of the group is directly or indirectly owned 
4.28 	by a common owner or by common owners, either corporate or noncorporate, or by one 
4.29 	or more of the member corporations of the group. For this purpose, the term "voting 
4.30 	stock" shall include membership interests of mutual insurance holding companies formed 
4.31 	under section  60A.077. 
4.32 	(f) The net income and apportionment factors under section  290.191 or  290.20 of 
4.33 	foreign corporations and other foreign entities which are part of a unitary business shall 
4.34 	not be included in the net income or the apportionment factors of the unitary business. 
4.35 	A foreign corporation or other foreign entity which is required to file a return under this 
4.36 	chapter shall file on a separate return basis. The net income and apportionment factors 
5.1 	under section  290.191 or  290.20 of foreign operating corporations shall not be included in 
5.2 	the net income or the apportionment factors of the unitary business except as provided in 
5.3 	paragraph (g). 
5.4 	(g) ......... percent of the adjusted net income of a foreign operating corporation shall 
5.5 	be deemed to be paid as a dividend on the last day of its taxable year to each shareholder 
5.6 	thereof, in proportion to each shareholder's ownership, with which such corporation is 
5.7 	engaged in a unitary business. Such deemed dividend shall be treated as a dividend under 
5.8 	section  290.21, subdivision 4. 
5.9 	Dividends actually paid by a foreign operating corporation to a corporate shareholder 
5.10 	which is a member of the same unitary business as the foreign operating corporation shall 
5.11 	be eliminated from the net income of the unitary business in preparing a combined report 
5.12 	for the unitary business. The adjusted net income of a foreign operating corporation 
5.13 	shall be its net income adjusted as follows:
5.14 	(1) any taxes paid or accrued to a foreign country, the commonwealth of Puerto 
5.15 	Rico, or a United States possession or political subdivision of any of the foregoing shall 
5.16 	be a deduction; and
5.17 	(2) the subtraction from federal taxable income for payments received from foreign 
5.18 	corporations or foreign operating corporations under section  290.01, subdivision 19d, 
5.19 	clause (10), shall not be allowed. 
5.20 	If a foreign operating corporation incurs a net loss, neither income nor deduction 
5.21 	from that corporation shall be included in determining the net income of the unitary 
5.22 	business.
5.23 	(h) For purposes of determining the net income of a unitary business and the factors 
5.24 	to be used in the apportionment of net income pursuant to section  290.191 or  290.20, there 
5.25 	must be included only the income and apportionment factors of domestic corporations or 
5.26 	other domestic entities other than foreign operating corporations that are determined to 
5.27 	be part of the unitary business pursuant to this subdivision, notwithstanding that foreign 
5.28 	corporations or other foreign entities might be included in the unitary business. 
5.29 	(i) Deductions for expenses, interest, or taxes otherwise allowable under this chapter 
5.30 	that are connected with or allocable against dividends, deemed dividends described 
5.31 	in paragraph (g), or royalties, fees, or other like income described in section  290.01, 
5.32 	subdivision 19d, clause (10), shall not be disallowed. 
5.33 	(j) Each corporation or other entity, except a sole proprietorship, that is part of a 
5.34 	unitary business must file combined reports as the commissioner determines. On the 
5.35 	reports, all intercompany transactions between entities included pursuant to paragraph 
5.36 	(h) must be eliminated and the entire net income of the unitary business determined in 
6.1 	accordance with this subdivision is apportioned among the entities by using each entity's 
6.2 	Minnesota factors for apportionment purposes in the numerators of the apportionment 
6.3 	formula and the total factors for apportionment purposes of all entities included pursuant 
6.4 	to paragraph (h) in the denominators of the apportionment formula.
6.5 	(k) If a corporation has been divested from a unitary business and is included in a 
6.6 	combined report for a fractional part of the common accounting period of the combined 
6.7 	report:
6.8 	(1) its income includable in the combined report is its income incurred for that part 
6.9 	of the year determined by proration or separate accounting; and
6.10 	(2) its sales, property, and payroll included in the apportionment formula must 
6.11 	be prorated or accounted for separately.

6.12 	EFFECTIVE DATE. This section is effective for tax years beginning on or after 
6.13 	December 31, 2005.

6.14 	Sec. 4. Laws 2005, First Special Session chapter 4, article 7, section 55, is amended to 
6.15 	read:
6.16 	Sec. 55.  [COMMUNITY SERVICES PROVIDER RATE INCREASES.]  
6.17 	
6.18 	(a) The commissioner of human services shall increase  reimbursement rates or rate 
6.19 	limits, as applicable, by 2.2553  percent for the rate period beginning October 1, 2005, and 
6.20 	by 7.2553 percent for the  rate period beginning October 1, 2006, effective for services  
6.21 	rendered on or after those dates.  
6.22 	
6.23 	(b) The 2.2553 percent annual rate increaseincreases described in  this section must 
6.24 	be provided to:  
6.25 	
6.26 	(1) home and community-based waivered services for persons  with mental 
6.27 	retardation or related conditions under Minnesota  Statutes, section 256B.501;  
6.28 	
6.29 	(2) home and community-based waivered services for the  elderly under Minnesota 
6.30 	Statutes, section 256B.0915;  
6.31 	
6.32 	(3) waivered services under community alternatives for  disabled individuals under 
6.33 	Minnesota Statutes, section 256B.49;  
6.34 	
7.1 	(4) community alternative care waivered services under  Minnesota Statutes, section 
7.2 	256B.49;  
7.3 	
7.4 	(5) traumatic brain injury waivered services under  Minnesota Statutes, section 
7.5 	256B.49;  
7.6 	
7.7 	(6) nursing services and home health services under  Minnesota Statutes, section 
7.8 	256B.0625, subdivision 6a;  
7.9 	
7.10 	(7) personal care services and nursing supervision of  personal care services under 
7.11 	Minnesota Statutes, section  256B.0625, subdivision 19a;  
7.12 	
7.13 	(8) private duty nursing services under Minnesota Statutes,  section 256B.0625, 
7.14 	subdivision 7;  
7.15 	
7.16 	(9) day training and habilitation services for adults with  mental retardation or related 
7.17 	conditions under Minnesota  Statutes, sections 252.40 to 252.46;  
7.18 	
7.19 	(10) alternative care services under Minnesota Statutes,  section 256B.0913;  
7.20 	
7.21 	(11) adult residential program grants under Minnesota  Rules, parts 9535.2000 to 
7.22 	9535.3000;  
7.23 	
7.24 	(12) adult and family community support grants under  Minnesota Rules, parts 
7.25 	9535.1700 to 9535.1760;  
7.26 	
7.27 	(13) the group residential housing supplementary service  rate under Minnesota 
7.28 	Statutes, section 256I.05, subdivision 1a;  
7.29 	
7.30 	(14) adult mental health integrated fund grants under  Minnesota Statutes, section 
7.31 	245.4661;  
7.32 	
7.33 	(15) semi-independent living services under Minnesota  Statutes, section 252.275, 
7.34 	including SILS funding under county  social services grants formerly funded under 
7.35 	Minnesota Statutes,  chapter 256I;  
7.36 	
8.1 	(16) community support services for deaf and  hard-of-hearing adults with mental 
8.2 	illness who use or wish to  use sign language as their primary means of communication;  
8.3 	
8.4 	(17) living skills training programs for persons with  intractable epilepsy who need 
8.5 	assistance in the transition to  independent living;  
8.6 	
8.7 	(18) physical therapy services under sections 256B.0625,  subdivision 8, and 
8.8 	256D.03, subdivision 4;  
8.9 	
8.10 	(19) occupational therapy services under sections  256B.0625, subdivision 8a, and 
8.11 	256D.03, subdivision 4;  
8.12 	
8.13 	(20) speech-language therapy services under section  256D.03, subdivision 4, and 
8.14 	Minnesota Rules, part 9505.0390; and  
8.15 	
8.16 	(21) respiratory therapy services under section 256D.03,  subdivision 4, and 
8.17 	Minnesota Rules, part 9505.0295.  
8.18 	
8.19 	(c) Providers that receive a rate increase under this  section shall use 75 percent of 
8.20 	the additional revenue to  increase wages and benefits and pay associated costs for all  
8.21 	employees, except for management fees, the administrator, and  central office staffs.  
8.22 	
8.23 	(d) For public employees, the increase for wages and  benefits for certain staff is 
8.24 	available and pay rates shall be  increased only to the extent that they comply with laws  
8.25 	governing public employees collective bargaining.  Money  received by a provider for pay 
8.26 	increases under this section may  be used only for increases implemented on or after the 
8.27 	first day  of the rate period in which the increase is available and must  not be used for 
8.28 	increases implemented prior to that date.  
8.29 	
8.30 	(e) A copy of the provider's plan for complying with  paragraph (c) must be made 
8.31 	available to all employees by giving  each employee a copy or by posting a copy in an area 
8.32 	of the  provider's operation to which all employees have access.  If an  employee does not 
8.33 	receive the adjustment, if any, described in  the plan and is unable to resolve the problem 
8.34 	with the provider,  the employee may contact the employee's union representative.  If the 
8.35 	employee is not covered by a collective bargaining  agreement, the employee may contact 
9.1 	the commissioner at a  telephone number provided by the commissioner and included in  
9.2 	the provider's plan.