1.1                          A bill for an act 
  1.2             relating to taxation; making technical and 
  1.3             administrative changes and corrections to property, 
  1.4             sales and use, income, franchise, occupation, gross 
  1.5             revenues, gasoline and special fuels, and insurance 
  1.6             tax provisions; making technical and administrative 
  1.7             changes and corrections to property tax refunds, local 
  1.8             government aid, homestead and agricultural credit aid, 
  1.9             referendum tax base replacement aid, and fire state 
  1.10            aid; making technical and administrative changes and 
  1.11            corrections to tax increment financing, tax court 
  1.12            jurisdiction, levy limits, and tax lien provisions; 
  1.13            amending Minnesota Statutes 2000, sections 272.02, 
  1.14            subdivision 15; 290.067, subdivision 2a; 290.17, 
  1.15            subdivisions 2, 3; 290A.03, subdivision 3; 295.53, 
  1.16            subdivision 1; 296A.18, subdivision 8; 297I.05, 
  1.17            subdivision 11; 477A.011, subdivision 20; Minnesota 
  1.18            Statutes 2001 Supplement, sections 69.021, subdivision 
  1.19            5; 126C.17, subdivision 7a; 270.69, subdivision 2; 
  1.20            271.01, subdivision 5; 271.21, subdivision 2; 273.121; 
  1.21            273.13, subdivision 24; 273.1392; 273.1398, 
  1.22            subdivision 4c; 275.065, subdivision 3; 275.71, 
  1.23            subdivision 3; 275.74, subdivision 2; 289A.20, 
  1.24            subdivisions 2, 4; 289A.60, subdivision 2; 290.01, 
  1.25            subdivision 19b; 290.0675, subdivisions 1, 3; 290.091, 
  1.26            subdivision 2; 290.0921, subdivision 2; 290A.04, 
  1.27            subdivision 2h; 295.60, subdivision 7, by adding 
  1.28            subdivisions; 297A.70, subdivision 3; 298.01, 
  1.29            subdivisions 3b, 4c; 469.174, subdivision 3; 477A.011, 
  1.30            subdivision 36; 477A.013, subdivision 9; 477A.07, 
  1.31            subdivision 1; Laws 1993, chapter 375, article 5, 
  1.32            section 42; Laws 2001, First Special Session chapter 
  1.33            5, article 9, section 3; Laws 2001, First Special 
  1.34            Session chapter 5, article 15, section 3, as amended; 
  1.35            repealing Minnesota Statutes 2000, sections 272.02, 
  1.36            subdivision 40; 290.01, subdivisions 19g, 32; 
  1.37            290.0921, subdivision 5; 295.44. 
  1.38  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.39     Section 1.  Minnesota Statutes 2001 Supplement, section 
  1.40  69.021, subdivision 5, is amended to read: 
  1.41     Subd. 5.  [CALCULATION OF STATE AID.] (a) The amount of 
  2.1   fire state aid available for apportionment, before the addition 
  2.2   of the minimum fire state aid allocation amount under 
  2.3   subdivision 7, is equal to 107 percent of the amount of premium 
  2.4   taxes paid to the state upon the fire, lightning, sprinkler 
  2.5   leakage, and extended coverage premiums reported to the 
  2.6   commissioner by insurers on the Minnesota Firetown Premium 
  2.7   Report.  This amount shall be reduced by the amount required to 
  2.8   pay the state auditor's costs and expenses of the audits or 
  2.9   exams of the firefighters relief associations. 
  2.10     The total amount for apportionment in respect to fire state 
  2.11  aid must not be less than two percent of the premiums reported 
  2.12  to the commissioner by insurers on the Minnesota Firetown 
  2.13  Premium Report after subtracting the following amounts: 
  2.14     (1) the amount required to pay the state auditor's costs 
  2.15  and expenses of the audits or exams of the firefighters relief 
  2.16  associations; and 
  2.17     (2) one percent of the premiums reported by town and 
  2.18  farmers' mutual insurance companies and mutual property and 
  2.19  casualty companies with total assets of $5,000,000 or less.  
  2.20     (b) The total amount for apportionment as police state aid 
  2.21  is equal to 104 percent of the amount of premium taxes paid to 
  2.22  the state on the premiums reported to the commissioner by 
  2.23  insurers on the Minnesota Aid to Police Premium Report, plus the 
  2.24  payment amounts received under section 297I.05, subdivision 8, 
  2.25  since the last aid apportionment, and reduced by the amount 
  2.26  required to pay the costs and expenses of the state auditor for 
  2.27  audits or exams of police relief associations.  The total amount 
  2.28  for apportionment in respect to the police state aid program 
  2.29  must not be less than two percent of the amount of premiums 
  2.30  reported to the commissioner by insurers on the Minnesota Aid to 
  2.31  Police Premium Report after subtracting the amount required to 
  2.32  pay the state auditor's cost and expenses of the audits or exams 
  2.33  of the police relief associations.  
  2.34     (c) The commissioner shall calculate the percentage of 
  2.35  increase or decrease reflected in the apportionment over or 
  2.36  under the previous year's available state aid using the same 
  3.1   premiums as a basis for comparison. 
  3.2      (d) The amount for apportionment in respect to peace 
  3.3   officer state aid under paragraph (b) must be further reduced by 
  3.4   $1,779,000 in fiscal year 1999, $2,077,000 in fiscal year 2000, 
  3.5   and $2,404,000 in fiscal year 2001.  These reductions in this 
  3.6   paragraph cancel to the general fund. 
  3.7      (e) In addition to the amount for apportionment of police 
  3.8   state aid under paragraph (b) is annually increased by an amount 
  3.9   equal to the revenues under the tax on automobile risk 
  3.10  self-insurance under Minnesota Statutes 2000, section 297I.05, 
  3.11  subdivision 8, that were collected in fiscal year 2001, each 
  3.12  year $100,000 shall be apportioned for police state aid.  An 
  3.13  amount sufficient to pay this increase is annually appropriated 
  3.14  from the general fund. 
  3.15     <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
  3.16  fiscal year 2003. 
  3.17     Sec. 2.  Minnesota Statutes 2001 Supplement, section 
  3.18  126C.17, subdivision 7a, is amended to read: 
  3.19     Subd. 7a.  [REFERENDUM TAX BASE REPLACEMENT AID.] For each 
  3.20  school district that had a referendum allowance for fiscal year 
  3.21  2002 exceeding $415, for each separately authorized referendum 
  3.22  levy, the commissioner of revenue, in consultation with the 
  3.23  commissioner of children, families, and learning, shall certify 
  3.24  the amount of the referendum levy in taxes payable year 2001 
  3.25  attributable to the portion of the referendum allowance 
  3.26  exceeding $415 levied against property classified as class 2, 
  3.27  noncommercial 4c(1), or 4c(4), under section 273.13, excluding 
  3.28  the portion of the tax paid by the portion of class 2a property 
  3.29  consisting of the house, garage, and surrounding one acre of 
  3.30  land.  The resulting amount must be used to reduce the 
  3.31  district's referendum levy amount otherwise determined, and must 
  3.32  be paid to the district each year that the referendum authority 
  3.33  remains in effect.  The aid payable under this subdivision must 
  3.34  be subtracted from the district's referendum equalization aid 
  3.35  under subdivision 7.  The referendum equalization aid after the 
  3.36  subtraction must not be less than zero. 
  4.1      For the purposes of this subdivision, the referendum levy 
  4.2   with the latest year of expiration is assumed to be at the 
  4.3   highest level of equalization, and the referendum levy with the 
  4.4   earliest year of expiration is assumed to be at the lowest level 
  4.5   of equalization. 
  4.6      <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
  4.7   payable in 2002 and thereafter. 
  4.8      Sec. 3.  Minnesota Statutes 2001 Supplement, section 
  4.9   270.69, subdivision 2, is amended to read: 
  4.10     Subd. 2.  [FILING OF LIENS NECESSARY FOR ENFORCEABILITY 
  4.11  AGAINST CERTAIN PERSONS; METHODS OF FILING; FEES.] (a) The lien 
  4.12  imposed by subdivision 1 is not enforceable against any 
  4.13  purchaser, mortgagee, pledgee, holder of a Uniform Commercial 
  4.14  Code security interest, mechanic's lienor, or judgment lien 
  4.15  creditor whose interest has been duly perfected or is entitled 
  4.16  to protection against judgments and attachments under section 
  4.17  507.34 or under any other applicable provisions of state law, 
  4.18  until a notice of lien has been filed by the commissioner of 
  4.19  revenue in the office of the county recorder of the county in 
  4.20  which real property is situated, or in the case of personal 
  4.21  property belonging to an individual who is not a resident of 
  4.22  this state or to a corporation, partnership, or other 
  4.23  organization, in the office of the secretary of state, or in the 
  4.24  case of personal property belonging to a resident individual, in 
  4.25  the office of the county recorder of the county of residence of 
  4.26  the individual. 
  4.27     (b)(1) Notices of liens, and lien releases, transcriptions, 
  4.28  and renewals, in a form prescribed by the commissioner of 
  4.29  revenue, may be filed with the county recorder or the secretary 
  4.30  of state by mail, personal delivery, or by electronic 
  4.31  transmission by the commissioner or a delegate into the 
  4.32  computerized filing system of the secretary of state.  The 
  4.33  secretary of state shall transmit the notice electronically to 
  4.34  the office of the county recorder, if that is the place of 
  4.35  filing, in the county or counties shown on the computer entry.  
  4.36  The filing officer, whether the county recorder or the secretary 
  5.1   of state, shall endorse and index a printout of the notice in 
  5.2   the same manner as if the notice had been mailed or delivered.  
  5.3      (2) County recorders and the secretary of state shall enter 
  5.4   information relative to lien notices, transcriptions, renewals, 
  5.5   and releases filed in their offices into the central database of 
  5.6   the secretary of state.  For notices filed electronically with 
  5.7   the county recorders, the date and time of receipt of the notice 
  5.8   and county recorder's file number, and for notices filed 
  5.9   electronically with the secretary of state, the secretary of 
  5.10  state's recording information, must be entered by the filing 
  5.11  officer into the central database before the close of the 
  5.12  working day following the day of the original data entry by the 
  5.13  department of revenue.  
  5.14     The filing and indexing of all notices must be in 
  5.15  accordance with the filing and indexing of notices of federal 
  5.16  liens, certificates of release, and refiled notices under 
  5.17  section 272.483.  
  5.18     (c) Notwithstanding any other law to the contrary, the 
  5.19  department of revenue is exempt from payment of fees when a 
  5.20  lien, lien renewal, or lien transcription is offered for 
  5.21  recording.  The recording fees must be paid along with the 
  5.22  release fee at the end of the month in which the release of lien 
  5.23  is recorded, after receipt of a monthly statement from a county 
  5.24  recorder or the secretary of state.  The department of revenue 
  5.25  shall add the recording fees to the delinquent tax liability of 
  5.26  the taxpayer.  Notwithstanding any other law to the contrary, 
  5.27  the fee for filing or recording a notice of lien, or lien 
  5.28  release, transcription, or renewal is $15.  
  5.29     (d) There is appropriated to the commissioner of revenue an 
  5.30  amount representing the cost of payment of recording fees to the 
  5.31  county recorders and the secretary of state.  The commissioner 
  5.32  shall keep a separate accounting of the costs and of payments 
  5.33  for recording fees remitted by taxpayers, and make the records 
  5.34  available to the legislature upon request.  
  5.35     <b>[EFFECTIVE DATE.]</b> As to the protection of interests in 
  5.36  property of third parties, this section is effective for liens 
  6.1   of record and enforceable as of the day following final 
  6.2   enactment, and for liens filed thereafter.  As to the place of 
  6.3   filing of liens against personal property, this section is 
  6.4   effective for liens filed on or after the day following final 
  6.5   enactment. 
  6.6      Sec. 4.  Minnesota Statutes 2001 Supplement, section 
  6.7   271.01, subdivision 5, is amended to read: 
  6.8      Subd. 5.  [JURISDICTION.] The tax court shall have 
  6.9   statewide jurisdiction.  Except for an appeal to the supreme 
  6.10  court or any other appeal allowed under this subdivision, the 
  6.11  tax court shall be the sole, exclusive, and final authority for 
  6.12  the hearing and determination of all questions of law and fact 
  6.13  arising under the tax laws of the state, as defined in this 
  6.14  subdivision, in those cases that have been appealed to the tax 
  6.15  court and in any case that has been transferred by the district 
  6.16  court to the tax court.  The tax court shall have no 
  6.17  jurisdiction in any case that does not arise under the tax laws 
  6.18  of the state or in any criminal case or in any case determining 
  6.19  or granting title to real property or in any case that is under 
  6.20  the probate jurisdiction of the district court.  The small 
  6.21  claims division of the tax court shall have no jurisdiction in 
  6.22  any case dealing with property valuation or assessment for 
  6.23  property tax purposes until the taxpayer has appealed the 
  6.24  valuation or assessment to the county board of equalization, and 
  6.25  in those towns and cities which have not transferred their 
  6.26  duties to the county, the town or city board of equalization, 
  6.27  except for:  (i) those taxpayers whose original assessments are 
  6.28  determined by the commissioner of revenue; (ii) those taxpayers 
  6.29  appealing a denial of a current year application for the 
  6.30  homestead classification for their property and the denial was 
  6.31  not reflected on a valuation notice issued in the year; and 
  6.32  (iii) any case dealing with property valuation, assessment, or 
  6.33  taxation for property tax purposes and meeting the 
  6.34  jurisdictional requirements of section 271.21, subdivision 2, 
  6.35  paragraph (c) only as provided in section 271.21, subdivision 2. 
  6.36  The tax court shall have no jurisdiction in any case involving 
  7.1   an order of the state board of equalization unless a taxpayer 
  7.2   contests the valuation of property.  Laws governing taxes, aids, 
  7.3   and related matters administered by the commissioner of revenue, 
  7.4   laws dealing with property valuation, assessment or taxation of 
  7.5   property for property tax purposes, and any other laws that 
  7.6   contain provisions authorizing review of taxes, aids, and 
  7.7   related matters by the tax court shall be considered tax laws of 
  7.8   this state subject to the jurisdiction of the tax court.  This 
  7.9   subdivision shall not be construed to prevent an appeal, as 
  7.10  provided by law, to an administrative agency, board of 
  7.11  equalization, review under section 274.13, subdivision 1c, or to 
  7.12  the commissioner of revenue.  Wherever used in this chapter, the 
  7.13  term commissioner shall mean the commissioner of revenue, unless 
  7.14  otherwise specified. 
  7.15     <b>[EFFECTIVE DATE.]</b> This section is effective for petitions 
  7.16  filed pertaining to the 2002 assessment, and thereafter. 
  7.17     Sec. 5.  Minnesota Statutes 2001 Supplement, section 
  7.18  271.21, subdivision 2, is amended to read: 
  7.19     Subd. 2.  [JURISDICTION.] At the election of the taxpayer, 
  7.20  the small claims division shall have jurisdiction only in the 
  7.21  following matters: 
  7.22     (a) cases involving valuation, assessment, or taxation of 
  7.23  real or personal property, if the taxpayer has satisfied the 
  7.24  requirements of section 271.01, subdivision 5, and:  
  7.25     (i) the issue is a denial of a current year application for 
  7.26  the homestead classification for the taxpayer's property and the 
  7.27  denial was not reflected on a valuation notice issued in the 
  7.28  year; or 
  7.29     (ii) in the case of nonhomestead property, only one parcel 
  7.30  is included in the petition, the entire parcel is classified as 
  7.31  homestead class 1a or 1b under section 273.13 and the parcel 
  7.32  contains no more than one dwelling unit; 
  7.33     (iii) the entire property is classified as agricultural 
  7.34  homestead class 2a or 1b under section 273.13; or 
  7.35     (iv) the assessor's estimated market value of the property 
  7.36  included in the petition is less than $100,000 $300,000; or 
  8.1      (b) any other case concerning the tax laws as defined in 
  8.2   section 271.01, subdivision 5, not involving valuation, 
  8.3   assessment, or taxation of real and personal property in which 
  8.4   the amount in controversy does not exceed $5,000, including 
  8.5   penalty and interest; or. 
  8.6      (c) cases involving valuation, assessment, or taxation of 
  8.7   real or personal property if: 
  8.8      (i) the issue is a denial of a current year application for 
  8.9   the homestead classification for the taxpayer's property; 
  8.10     (ii) only one parcel is included in the petition, the 
  8.11  entire parcel is classified as homestead 1a or 1b pursuant to 
  8.12  section 273.13, and the parcel contains no more than one 
  8.13  dwelling unit; or 
  8.14     (iii) the assessor's estimated market value of the property 
  8.15  included in the petition is less than $300,000. 
  8.16     <b>[EFFECTIVE DATE.]</b> This section is effective for petitions 
  8.17  filed pertaining to the 2002 assessment, and thereafter. 
  8.18     Sec. 6.  Minnesota Statutes 2000, section 272.02, 
  8.19  subdivision 15, is amended to read: 
  8.20     Subd. 15.  [PROPERTY USED TO GENERATE HYDROELECTRIC OR 
  8.21  HYDROMECHANICAL POWER.] To the extent provided by section 295.44 
  8.22  Notwithstanding the provisions of subdivision 39, and sections 
  8.23  272.01, subdivision 2, and 273.19, subdivision 1, real and or 
  8.24  personal property used or to be used primarily for the 
  8.25  production of hydroelectric or hydromechanical power on a site 
  8.26  owned by the federal government, the state, or a local 
  8.27  governmental unit which is and developed and operated pursuant 
  8.28  to the provisions of section 103G.535 is exempt from property 
  8.29  tax for all years during which the site is developed and 
  8.30  operated under the terms of a lease or agreement authorized by 
  8.31  section 103G.535. 
  8.32     Sec. 7.  Minnesota Statutes 2001 Supplement, section 
  8.33  273.121, is amended to read: 
  8.34     273.121 [VALUATION OF REAL PROPERTY, NOTICE.] 
  8.35     Any county assessor or city assessor having the powers of a 
  8.36  county assessor, valuing or classifying taxable real property 
  9.1   shall in each year notify those persons whose property is to be 
  9.2   included on the assessment roll that year if the person's 
  9.3   address is known to the assessor, otherwise the occupant of the 
  9.4   property.  The notice shall be in writing and shall be sent by 
  9.5   ordinary mail at least ten days before the meeting of the local 
  9.6   board of appeal and equalization under section 274.01 or the 
  9.7   review process established under section 274.13, subdivision 
  9.8   1c.  It shall contain:  (1) the market value for the current and 
  9.9   prior assessment, (2) the limited market value under section 
  9.10  273.11, subdivision 1a, for the current and prior assessment, (3)
  9.11  the qualifying amount of any improvements under section 273.11, 
  9.12  subdivision 16, for the current assessment, (4) the market value 
  9.13  subject to taxation after subtracting the amount of any 
  9.14  qualifying improvements for the current assessment, (5) the 
  9.15  classification of the property for the current and prior 
  9.16  assessment, (6) a note that if the property is homestead and at 
  9.17  least 35 45 years old, improvements made to the property may be 
  9.18  eligible for a valuation exclusion under section 273.11, 
  9.19  subdivision 16, (7) the assessor's office address, and (8) the 
  9.20  dates, places, and times set for the meetings of the local board 
  9.21  of appeal and equalization, the review process established under 
  9.22  section 274.13, subdivision 1c, and the county board of appeal 
  9.23  and equalization.  The commissioner of revenue shall specify the 
  9.24  form of the notice.  The assessor shall attach to the assessment 
  9.25  roll a statement that the notices required by this section have 
  9.26  been mailed.  Any assessor who is not provided sufficient funds 
  9.27  from the assessor's governing body to provide such notices, may 
  9.28  make application to the commissioner of revenue to finance such 
  9.29  notices.  The commissioner of revenue shall conduct an 
  9.30  investigation and, if satisfied that the assessor does not have 
  9.31  the necessary funds, issue a certification to the commissioner 
  9.32  of finance of the amount necessary to provide such notices.  The 
  9.33  commissioner of finance shall issue a warrant for such amount 
  9.34  and shall deduct such amount from any state payment to such 
  9.35  county or municipality.  The necessary funds to make such 
  9.36  payments are hereby appropriated.  Failure to receive the notice 
 10.1   shall in no way affect the validity of the assessment, the 
 10.2   resulting tax, the procedures of any board of review or 
 10.3   equalization, or the enforcement of delinquent taxes by 
 10.4   statutory means. 
 10.5      <b>[EFFECTIVE DATE.]</b> This section is effective for notices 
 10.6   required to be mailed in 2002 and thereafter. 
 10.7      Sec. 8.  Minnesota Statutes 2001 Supplement, section 
 10.8   273.13, subdivision 24, is amended to read: 
 10.9      Subd. 24.  [CLASS 3.] (a) Commercial and industrial 
 10.10  property and utility real and personal property is class 3a.  
 10.11     (1) Except as otherwise provided, each parcel of 
 10.12  commercial, industrial, or utility real property has a class 
 10.13  rate of 1.5 percent of the first tier of market value, and 2.0 
 10.14  percent of the remaining market value.  In the case of 
 10.15  contiguous parcels of property owned by the same person or 
 10.16  entity, only the value equal to the first-tier value of the 
 10.17  contiguous parcels qualifies for the reduced class rate, except 
 10.18  that contiguous parcels owned by the same person or entity shall 
 10.19  be eligible for the first-tier value class rate on each separate 
 10.20  business operated by the owner of the property, provided the 
 10.21  business is housed in a separate structure.  For the purposes of 
 10.22  this subdivision, the first tier means the first $150,000 of 
 10.23  market value.  Real property owned in fee by a utility for 
 10.24  transmission line right-of-way shall be classified at the class 
 10.25  rate for the higher tier.  
 10.26     For purposes of this subdivision, parcels are considered to 
 10.27  be contiguous even if they are separated from each other by a 
 10.28  road, street, waterway, or other similar intervening type of 
 10.29  property.  Connections between parcels that consist of power 
 10.30  lines or pipelines do not cause the parcels to be contiguous.  
 10.31  Property owners who have contiguous parcels of property that 
 10.32  constitute separate businesses that may qualify for the 
 10.33  first-tier class rate shall notify the assessor by July 1, for 
 10.34  treatment beginning in the following taxes payable year.  
 10.35     (2) All railroad operating property and All personal 
 10.36  property that is:  (i) part of an electric generation, 
 11.1   transmission, or distribution system; or (ii) part of a pipeline 
 11.2   system transporting or distributing water, gas, crude oil, or 
 11.3   petroleum products; and (iii) not described in clause (3), and 
 11.4   all railroad operating property has a class rate as provided 
 11.5   under clause (1) for the first tier of market value and the 
 11.6   remaining market value.  In the case of multiple parcels in one 
 11.7   county that are owned by one person or entity, only one first 
 11.8   tier amount is eligible for the reduced rate.  
 11.9      (3) The entire market value of personal property that is:  
 11.10  (i) tools, implements, and machinery of an electric generation, 
 11.11  transmission, or distribution system; (ii) tools, implements, 
 11.12  and machinery of a pipeline system transporting or distributing 
 11.13  water, gas, crude oil, or petroleum products; or (iii) the mains 
 11.14  and pipes used in the distribution of steam or hot or chilled 
 11.15  water for heating or cooling buildings, has a class rate as 
 11.16  provided under clause (1) for the remaining market value in 
 11.17  excess of the first tier. 
 11.18     (b) Employment property defined in section 469.166, during 
 11.19  the period provided in section 469.170, shall constitute class 
 11.20  3b.  The class rates for class 3b property are determined under 
 11.21  paragraph (a). 
 11.22     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 11.23  payable in 2002 and thereafter. 
 11.24     Sec. 9.  Minnesota Statutes 2001 Supplement, section 
 11.25  273.1392, is amended to read: 
 11.26     273.1392 [PAYMENT; SCHOOL DISTRICTS.] 
 11.27     The amounts of conservation tax credits under section 
 11.28  273.119; disaster or emergency reimbursement under section 
 11.29  273.123; attached machinery aid under section 273.138; homestead 
 11.30  and agricultural credits under section 273.1384; aids and 
 11.31  credits under section 273.1398; wetlands reimbursement under 
 11.32  section 275.295; enterprise zone property credit payments under 
 11.33  section 469.171; and metropolitan agricultural preserve 
 11.34  reduction under section 473H.10 for school districts, shall be 
 11.35  certified to the department of children, families, and learning 
 11.36  by the department of revenue.  The amounts so certified shall be 
 12.1   paid according to section 127A.45, subdivisions 9 and 13. 
 12.2      <b>[EFFECTIVE DATE.]</b> This section is effective for aids and 
 12.3   credits payable in 2002 and thereafter. 
 12.4      Sec. 10.  Minnesota Statutes 2001 Supplement, section 
 12.5   273.1398, subdivision 4c, is amended to read: 
 12.6      Subd. 4c.  [TEMPORARY AID; COURT ADMINISTRATION COSTS.] For 
 12.7   calendar years 2004 and 2005, each county in a judicial district 
 12.8   that has not been transferred to the state by January 1 of that 
 12.9   year shall receive additional homestead and agricultural credit 
 12.10  aid.  This amount is in addition to the amount calculated under 
 12.11  subdivision 2 and must not be included in the definition of 
 12.12  homestead and agricultural credit base under subdivision 1, 
 12.13  paragraph (j).  The amount of additional aid is equal to the 
 12.14  difference between (1) the amount budgeted for court 
 12.15  administration costs in 2001 as determined under subdivision 4b, 
 12.16  paragraph (c) (b), multiplied by the maintenance of effort 
 12.17  percent for the calendar year as determined under subdivision 
 12.18  4b, paragraph (d) (a), and (2) the amount calculated under 
 12.19  subdivision 4b, paragraph (a), for calendar year 2003.  This 
 12.20  additional aid must be used only to fund court administration 
 12.21  expenditures as defined in section 480.183, subdivision 3.  This 
 12.22  amount must be added to the state court's base budget in the 
 12.23  year when the court in that judicial district in which the 
 12.24  county is located is transferred to the state. 
 12.25     <b>[EFFECTIVE DATE.]</b> This section is effective retroactively 
 12.26  to July 1, 2001, and thereafter. 
 12.27     Sec. 11.  Minnesota Statutes 2001 Supplement, section 
 12.28  275.065, subdivision 3, is amended to read: 
 12.29     Subd. 3.  [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The 
 12.30  county auditor shall prepare and the county treasurer shall 
 12.31  deliver after November 10 and on or before November 24 each 
 12.32  year, by first class mail to each taxpayer at the address listed 
 12.33  on the county's current year's assessment roll, a notice of 
 12.34  proposed property taxes.  
 12.35     (b) The commissioner of revenue shall prescribe the form of 
 12.36  the notice. 
 13.1      (c) The notice must inform taxpayers that it contains the 
 13.2   amount of property taxes each taxing authority proposes to 
 13.3   collect for taxes payable the following year.  In the case of a 
 13.4   town, or in the case of the state determined portion of the 
 13.5   school district levy general tax, the final tax amount will be 
 13.6   its proposed tax.  In the case of taxing authorities required to 
 13.7   hold a public meeting under subdivision 6, the notice must 
 13.8   clearly state that each taxing authority, including regional 
 13.9   library districts established under section 134.201, and 
 13.10  including the metropolitan taxing districts as defined in 
 13.11  paragraph (i), but excluding all other special taxing districts 
 13.12  and towns, will hold a public meeting to receive public 
 13.13  testimony on the proposed budget and proposed or final property 
 13.14  tax levy, or, in case of a school district, on the current 
 13.15  budget and proposed property tax levy.  It must clearly state 
 13.16  the time and place of each taxing authority's meeting, a 
 13.17  telephone number for the taxing authority that taxpayers may 
 13.18  call if they have questions related to the notice, and an 
 13.19  address where comments will be received by mail.  
 13.20     (d) The notice must state for each parcel: 
 13.21     (1) the market value of the property as determined under 
 13.22  section 273.11, and used for computing property taxes payable in 
 13.23  the following year and for taxes payable in the current year as 
 13.24  each appears in the records of the county assessor on November 1 
 13.25  of the current year; and, in the case of residential property, 
 13.26  whether the property is classified as homestead or 
 13.27  nonhomestead.  The notice must clearly inform taxpayers of the 
 13.28  years to which the market values apply and that the values are 
 13.29  final values; 
 13.30     (2) the items listed below, shown separately by county, 
 13.31  city or town, and state determined school general tax, net of 
 13.32  the education residential and agricultural homestead credit 
 13.33  under section 273.1382 273.1384, voter approved school levy, 
 13.34  other local school levy, and the sum of the special taxing 
 13.35  districts, and as a total of all taxing authorities:  
 13.36     (i) the actual tax for taxes payable in the current year; 
 14.1      (ii) the tax change due to spending factors, defined as the 
 14.2   proposed tax minus the constant spending tax amount; 
 14.3      (iii) the tax change due to other factors, defined as the 
 14.4   constant spending tax amount minus the actual current year tax; 
 14.5   and 
 14.6      (iv) the proposed tax amount. 
 14.7      In the case of a town or the state determined school 
 14.8   general tax, the final tax shall also be its proposed tax unless 
 14.9   the town changes its levy at a special town meeting under 
 14.10  section 365.52.  If a school district has certified under 
 14.11  section 126C.17, subdivision 9, that a referendum will be held 
 14.12  in the school district at the November general election, the 
 14.13  county auditor must note next to the school district's proposed 
 14.14  amount that a referendum is pending and that, if approved by the 
 14.15  voters, the tax amount may be higher than shown on the notice.  
 14.16  In the case of the city of Minneapolis, the levy for the 
 14.17  Minneapolis library board and the levy for Minneapolis park and 
 14.18  recreation shall be listed separately from the remaining amount 
 14.19  of the city's levy.  In the case of a parcel where tax increment 
 14.20  or the fiscal disparities areawide tax under chapter 276A or 
 14.21  473F applies, the proposed tax levy on the captured value or the 
 14.22  proposed tax levy on the tax capacity subject to the areawide 
 14.23  tax must each be stated separately and not included in the sum 
 14.24  of the special taxing districts; and 
 14.25     (3) the increase or decrease between the total taxes 
 14.26  payable in the current year and the total proposed taxes, 
 14.27  expressed as a percentage. 
 14.28     For purposes of this section, the amount of the tax on 
 14.29  homesteads qualifying under the senior citizens' property tax 
 14.30  deferral program under chapter 290B is the total amount of 
 14.31  property tax before subtraction of the deferred property tax 
 14.32  amount. 
 14.33     (e) The notice must clearly state that the proposed or 
 14.34  final taxes do not include the following: 
 14.35     (1) special assessments; 
 14.36     (2) levies approved by the voters after the date the 
 15.1   proposed taxes are certified, including bond referenda, school 
 15.2   district levy referenda, and levy limit increase referenda; 
 15.3      (3) amounts necessary to pay cleanup or other costs due to 
 15.4   a natural disaster occurring after the date the proposed taxes 
 15.5   are certified; 
 15.6      (4) amounts necessary to pay tort judgments against the 
 15.7   taxing authority that become final after the date the proposed 
 15.8   taxes are certified; and 
 15.9      (5) the contamination tax imposed on properties which 
 15.10  received market value reductions for contamination. 
 15.11     (f) Except as provided in subdivision 7, failure of the 
 15.12  county auditor to prepare or the county treasurer to deliver the 
 15.13  notice as required in this section does not invalidate the 
 15.14  proposed or final tax levy or the taxes payable pursuant to the 
 15.15  tax levy. 
 15.16     (g) If the notice the taxpayer receives under this section 
 15.17  lists the property as nonhomestead, and satisfactory 
 15.18  documentation is provided to the county assessor by the 
 15.19  applicable deadline, and the property qualifies for the 
 15.20  homestead classification in that assessment year, the assessor 
 15.21  shall reclassify the property to homestead for taxes payable in 
 15.22  the following year. 
 15.23     (h) In the case of class 4 residential property used as a 
 15.24  residence for lease or rental periods of 30 days or more, the 
 15.25  taxpayer must either: 
 15.26     (1) mail or deliver a copy of the notice of proposed 
 15.27  property taxes to each tenant, renter, or lessee; or 
 15.28     (2) post a copy of the notice in a conspicuous place on the 
 15.29  premises of the property.  
 15.30     The notice must be mailed or posted by the taxpayer by 
 15.31  November 27 or within three days of receipt of the notice, 
 15.32  whichever is later.  A taxpayer may notify the county treasurer 
 15.33  of the address of the taxpayer, agent, caretaker, or manager of 
 15.34  the premises to which the notice must be mailed in order to 
 15.35  fulfill the requirements of this paragraph. 
 15.36     (i) For purposes of this subdivision, subdivisions 5a and 
 16.1   6, "metropolitan special taxing districts" means the following 
 16.2   taxing districts in the seven-county metropolitan area that levy 
 16.3   a property tax for any of the specified purposes listed below: 
 16.4      (1) metropolitan council under section 473.132, 473.167, 
 16.5   473.249, 473.325, 473.446, 473.521, 473.547, or 473.834; 
 16.6      (2) metropolitan airports commission under section 473.667, 
 16.7   473.671, or 473.672; and 
 16.8      (3) metropolitan mosquito control commission under section 
 16.9   473.711. 
 16.10     For purposes of this section, any levies made by the 
 16.11  regional rail authorities in the county of Anoka, Carver, 
 16.12  Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 
 16.13  398A shall be included with the appropriate county's levy and 
 16.14  shall be discussed at that county's public hearing. 
 16.15     (j) If a statutory or home rule charter city or a town has 
 16.16  exercised the local levy option provided by section 473.388, 
 16.17  subdivision 7, it may include in the notice of its proposed 
 16.18  taxes the amount of its proposed taxes attributable to its 
 16.19  exercise of the option.  In the first year of the city or town's 
 16.20  exercise of this option, the statement shall include an estimate 
 16.21  of the reduction of the metropolitan council's tax on the parcel 
 16.22  due to exercise of that option.  The metropolitan council's levy 
 16.23  shall be adjusted accordingly. 
 16.24     <b>[EFFECTIVE DATE.]</b> This section is effective for notices of 
 16.25  proposed property taxes required in 2002 for taxes payable in 
 16.26  2003, and thereafter. 
 16.27     Sec. 12.  Minnesota Statutes 2001 Supplement, section 
 16.28  275.71, subdivision 3, is amended to read: 
 16.29     Subd. 3.  [ADJUSTMENTS FOR STATE TAKEOVERS.] (a) The levy 
 16.30  limit base for each local unit of government shall be adjusted 
 16.31  to reflect the assumption by the state of financing for certain 
 16.32  government functions as indicated in this subdivision. 
 16.33     (b) For a county in a judicial district for which financing 
 16.34  has not been transferred to the state by January 1, 2001, the 
 16.35  levy limit base for 2001 is permanently reduced by the amount of 
 16.36  the county's 2001 budget for court administration costs, as 
 17.1   certified under section 273.1398, subdivision 4b, paragraph (b), 
 17.2   net of the county's share of transferred fines and fees 
 17.3   collected by the district courts in the county for the same 
 17.4   budget period. 
 17.5      (c) For a governmental unit which levied a tax in 2000 
 17.6   under section 473.388, subdivision 7, the levy limit base for 
 17.7   2001 is permanently reduced by an amount equal to the sum of the 
 17.8   governmental unit's taxes payable 2001 nondebt transit services 
 17.9   levy plus the portion of its 2001 homestead and agricultural 
 17.10  credit aid under section 273.1398, subdivision 2, attributable 
 17.11  to nondebt transit services. 
 17.12     (d) For counties in a judicial district in which the state 
 17.13  assumed financing of mandated services costs as defined in 
 17.14  section 480.181, subdivision 4, on July 1, 2001, the levy limit 
 17.15  base for taxes levied in 2001 is permanently reduced by an 
 17.16  amount equal to one-half of the aid reduction under section 
 17.17  273.1398, subdivision 4a, paragraph (g). 
 17.18     <b>[EFFECTIVE DATE.]</b> This section is effective retroactively 
 17.19  for taxes payable in 2002 and 2003. 
 17.20     Sec. 13.  Minnesota Statutes 2001 Supplement, section 
 17.21  275.74, subdivision 2, is amended to read: 
 17.22     Subd. 2.  [AUTHORIZATION FOR SPECIAL LEVIES.] A local 
 17.23  governmental unit may request authorization to levy for 
 17.24  unreimbursed costs for other natural disasters under section 
 17.25  275.70, subdivision 5, clause (6) (7).  The local governmental 
 17.26  unit shall submit a request to levy under section 275.70, 
 17.27  subdivision 5, clause (6) (7), to the commissioner of revenue by 
 17.28  September 30 of the levy year and the request must include 
 17.29  information documenting the estimated unreimbursed costs.  The 
 17.30  commissioner of revenue may grant levy authority, up to the 
 17.31  amount requested based on the documentation submitted.  All 
 17.32  decisions of the commissioner are final. 
 17.33     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 17.34  payable in 2002 and 2003. 
 17.35     Sec. 14.  Minnesota Statutes 2001 Supplement, section 
 17.36  289A.20, subdivision 2, is amended to read: 
 18.1      Subd. 2.  [WITHHOLDING FROM WAGES, ENTERTAINER WITHHOLDING, 
 18.2   WITHHOLDING FROM PAYMENTS TO OUT-OF-STATE CONTRACTORS, AND 
 18.3   WITHHOLDING BY PARTNERSHIPS AND SMALL BUSINESS CORPORATIONS.] 
 18.4   (a) A tax required to be deducted and withheld during the 
 18.5   quarterly period must be paid on or before the last day of the 
 18.6   month following the close of the quarterly period, unless an 
 18.7   earlier time for payment is provided.  A tax required to be 
 18.8   deducted and withheld from compensation of an entertainer and 
 18.9   from a payment to an out-of-state contractor must be paid on or 
 18.10  before the date the return for such tax must be filed under 
 18.11  section 289A.18, subdivision 2.  Taxes required to be deducted 
 18.12  and withheld by partnerships and S corporations must be paid on 
 18.13  or before the date the return must be filed under section 
 18.14  289A.18, subdivision 2. 
 18.15     (b) An employer who, during the previous quarter, withheld 
 18.16  more than $1,500 of tax under section 290.92, subdivision 2a or 
 18.17  3, or 290.923, subdivision 2, must deposit tax withheld under 
 18.18  those sections with the commissioner within the time allowed to 
 18.19  deposit the employer's federal withheld employment taxes under 
 18.20  Treasury Regulation Code of Federal Regulations, title 26, 
 18.21  section 31.6302-1, as amended through December 31, 2001, without 
 18.22  regard to the safe harbor or de minimis rules in subparagraph 
 18.23  (f) or the one-day rule in subsection (c), clause (3).  
 18.24  Taxpayers must submit a copy of their federal notice of deposit 
 18.25  status to the commissioner upon request by the commissioner. 
 18.26     (c) The commissioner may prescribe by rule other return 
 18.27  periods or deposit requirements.  In prescribing the reporting 
 18.28  period, the commissioner may classify payors according to the 
 18.29  amount of their tax liability and may adopt an appropriate 
 18.30  reporting period for the class that the commissioner judges to 
 18.31  be consistent with efficient tax collection.  In no event will 
 18.32  the duration of the reporting period be more than one year. 
 18.33     (d) If less than the correct amount of tax is paid to the 
 18.34  commissioner, proper adjustments with respect to both the tax 
 18.35  and the amount to be deducted must be made, without interest, in 
 18.36  the manner and at the times the commissioner prescribes.  If the 
 19.1   underpayment cannot be adjusted, the amount of the underpayment 
 19.2   will be assessed and collected in the manner and at the times 
 19.3   the commissioner prescribes. 
 19.4      (e) If the aggregate amount of the tax withheld during a 
 19.5   fiscal year ending June 30 under section 290.92, subdivision 2a 
 19.6   or 3, is equal to or exceeds the amounts established for 
 19.7   remitting federal withheld taxes pursuant to the regulations 
 19.8   promulgated under section 6302(h) of the Internal Revenue Code, 
 19.9   the employer must remit each required deposit for wages paid in 
 19.10  the subsequent calendar year by electronic means. 
 19.11     (f) A third-party bulk filer as defined in section 290.92, 
 19.12  subdivision 30, paragraph (a), clause (2), who remits 
 19.13  withholding deposits must remit all deposits by electronic means 
 19.14  as provided in paragraph (e), regardless of the aggregate amount 
 19.15  of tax withheld during a fiscal year for all of the employers.  
 19.16     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 19.17  following final enactment. 
 19.18     Sec. 15.  Minnesota Statutes 2001 Supplement, section 
 19.19  289A.20, subdivision 4, is amended to read: 
 19.20     Subd. 4.  [SALES AND USE TAX.] (a) The taxes imposed by 
 19.21  chapter 297A are due and payable to the commissioner monthly on 
 19.22  or before the 20th day of the month following the month in which 
 19.23  the taxable event occurred, or following another reporting 
 19.24  period as the commissioner prescribes or as allowed under 
 19.25  section 289A.18, subdivision 4, paragraph (f), except that use 
 19.26  taxes due on an annual use tax return as provided under section 
 19.27  289A.11, subdivision 1, are payable by April 15 following the 
 19.28  close of the calendar year. 
 19.29     (b) For a fiscal year ending before July 1, 2002 2001, a 
 19.30  vendor having a liability of $120,000 or more during a fiscal 
 19.31  year ending June 30 must remit the June liability for the next 
 19.32  year in the following manner: 
 19.33     (1) Two business days before June 30 of the year, the 
 19.34  vendor must remit 62 percent of the estimated June liability to 
 19.35  the commissioner.  
 19.36     (2) On or before August 20 of the year, the vendor must pay 
 20.1   any additional amount of tax not remitted in June. 
 20.2      (c) A vendor having a liability of $120,000 or more during 
 20.3   a fiscal year ending June 30 must remit all liabilities on 
 20.4   returns due for periods beginning in the subsequent calendar 
 20.5   year by electronic means on or before the 20th day of the month 
 20.6   following the month in which the taxable event occurred, or on 
 20.7   or before the 20th day of the month following the month in which 
 20.8   the sale is reported under section 289A.18, subdivision 4, 
 20.9   except for 62 percent of the estimated June liability, which is 
 20.10  due two business days before June 30.  The remaining amount of 
 20.11  the June liability is due on August 20.  
 20.12     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 20.13  following final enactment. 
 20.14     Sec. 16.  Minnesota Statutes 2001 Supplement, section 
 20.15  289A.60, subdivision 2, is amended to read: 
 20.16     Subd. 2.  [PENALTY FOR FAILURE TO MAKE AND FILE RETURN.] If 
 20.17  a taxpayer fails to make and file a tax return within the time 
 20.18  prescribed, including an extension, or fails to file an 
 20.19  individual income tax return within six months after the due 
 20.20  date, a penalty of five percent of the amount of tax not paid by 
 20.21  the end of that period is added to the tax.  
 20.22     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 20.23  following final enactment. 
 20.24     Sec. 17.  Minnesota Statutes 2001 Supplement, section 
 20.25  290.01, subdivision 19b, is amended to read: 
 20.26     Subd. 19b.  [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 
 20.27  individuals, estates, and trusts, there shall be subtracted from 
 20.28  federal taxable income: 
 20.29     (1) interest income on obligations of any authority, 
 20.30  commission, or instrumentality of the United States to the 
 20.31  extent includable in taxable income for federal income tax 
 20.32  purposes but exempt from state income tax under the laws of the 
 20.33  United States; 
 20.34     (2) if included in federal taxable income, the amount of 
 20.35  any overpayment of income tax to Minnesota or to any other 
 20.36  state, for any previous taxable year, whether the amount is 
 21.1   received as a refund or as a credit to another taxable year's 
 21.2   income tax liability; 
 21.3      (3) the amount paid to others, less the amount used to 
 21.4   claim the credit allowed under section 290.0674, not to exceed 
 21.5   $1,625 for each qualifying child in grades kindergarten to 6 and 
 21.6   $2,500 for each qualifying child in grades 7 to 12, for tuition, 
 21.7   textbooks, and transportation of each qualifying child in 
 21.8   attending an elementary or secondary school situated in 
 21.9   Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, 
 21.10  wherein a resident of this state may legally fulfill the state's 
 21.11  compulsory attendance laws, which is not operated for profit, 
 21.12  and which adheres to the provisions of the Civil Rights Act of 
 21.13  1964 and chapter 363.  For the purposes of this clause, 
 21.14  "tuition" includes fees or tuition as defined in section 
 21.15  290.0674, subdivision 1, clause (1).  As used in this clause, 
 21.16  "textbooks" includes books and other instructional materials and 
 21.17  equipment purchased or leased for use in elementary and 
 21.18  secondary schools in teaching only those subjects legally and 
 21.19  commonly taught in public elementary and secondary schools in 
 21.20  this state.  Equipment expenses qualifying for deduction 
 21.21  includes expenses as defined and limited in section 290.0674, 
 21.22  subdivision 1, clause (3).  "Textbooks" does not include 
 21.23  instructional books and materials used in the teaching of 
 21.24  religious tenets, doctrines, or worship, the purpose of which is 
 21.25  to instill such tenets, doctrines, or worship, nor does it 
 21.26  include books or materials for, or transportation to, 
 21.27  extracurricular activities including sporting events, musical or 
 21.28  dramatic events, speech activities, driver's education, or 
 21.29  similar programs.  For purposes of the subtraction provided by 
 21.30  this clause, "qualifying child" has the meaning given in section 
 21.31  32(c)(3) of the Internal Revenue Code; 
 21.32     (4) contributions made in taxable years beginning after 
 21.33  December 31, 1981, and before January 1, 1985, to a qualified 
 21.34  governmental pension plan, an individual retirement account, 
 21.35  simplified employee pension, or qualified plan covering a 
 21.36  self-employed person that were included in Minnesota gross 
 22.1   income in the taxable year for which the contributions were made 
 22.2   but were deducted or were not included in the computation of 
 22.3   federal adjusted gross income, less any amount allowed to be 
 22.4   subtracted as a distribution under this subdivision or a 
 22.5   predecessor provision in taxable years that began before January 
 22.6   1, 2000.  This subtraction applies only for taxable years 
 22.7   beginning after December 31, 1999, and before January 1, 2001.  
 22.8   If an individual's subtraction under this clause exceeds the 
 22.9   individual's taxable income, the excess may be carried forward 
 22.10  to taxable years beginning after December 31, 2000, and before 
 22.11  January 1, 2002; 
 22.12     (5) income as provided under section 290.0802; 
 22.13     (6) (5) to the extent included in federal adjusted gross 
 22.14  income, income realized on disposition of property exempt from 
 22.15  tax under section 290.491; 
 22.16     (7) (6) to the extent not deducted in determining federal 
 22.17  taxable income or used to claim the long-term care insurance 
 22.18  credit under section 290.0672, the amount paid for health 
 22.19  insurance of self-employed individuals as determined under 
 22.20  section 162(l) of the Internal Revenue Code, except that the 
 22.21  percent limit does not apply.  If the individual deducted 
 22.22  insurance payments under section 213 of the Internal Revenue 
 22.23  Code of 1986, the subtraction under this clause must be reduced 
 22.24  by the lesser of: 
 22.25     (i) the total itemized deductions allowed under section 
 22.26  63(d) of the Internal Revenue Code, less state, local, and 
 22.27  foreign income taxes deductible under section 164 of the 
 22.28  Internal Revenue Code and the standard deduction under section 
 22.29  63(c) of the Internal Revenue Code; or 
 22.30     (ii) the lesser of (A) the amount of insurance qualifying 
 22.31  as "medical care" under section 213(d) of the Internal Revenue 
 22.32  Code to the extent not deducted under section 162(1) of the 
 22.33  Internal Revenue Code or excluded from income or (B) the total 
 22.34  amount deductible for medical care under section 213(a); 
 22.35     (8) (7) the exemption amount allowed under Laws 1995, 
 22.36  chapter 255, article 3, section 2, subdivision 3; 
 23.1      (9) (8) to the extent included in federal taxable income, 
 23.2   postservice benefits for youth community service under section 
 23.3   124D.42 for volunteer service under United States Code, title 
 23.4   42, sections 12601 to 12604; 
 23.5      (10) (9) to the extent not deducted in determining federal 
 23.6   taxable income by an individual who does not itemize deductions 
 23.7   for federal income tax purposes for the taxable year, an amount 
 23.8   equal to 50 percent of the excess of charitable contributions 
 23.9   allowable as a deduction for the taxable year under section 
 23.10  170(a) of the Internal Revenue Code over $500; 
 23.11     (11) (10) for taxable years beginning before January 1, 
 23.12  2008, the amount of the federal small ethanol producer credit 
 23.13  allowed under section 40(a)(3) of the Internal Revenue Code 
 23.14  which is included in gross income under section 87 of the 
 23.15  Internal Revenue Code; and 
 23.16     (12) (11) for individuals who are allowed a federal foreign 
 23.17  tax credit for taxes that do not qualify for a credit under 
 23.18  section 290.06, subdivision 22, an amount equal to the carryover 
 23.19  of subnational foreign taxes for the taxable year, but not to 
 23.20  exceed the total subnational foreign taxes reported in claiming 
 23.21  the foreign tax credit.  For purposes of this clause, "federal 
 23.22  foreign tax credit" means the credit allowed under section 27 of 
 23.23  the Internal Revenue Code, and "carryover of subnational foreign 
 23.24  taxes" equals the carryover allowed under section 904(c) of the 
 23.25  Internal Revenue Code minus national level foreign taxes to the 
 23.26  extent they exceed the federal foreign tax credit. 
 23.27     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 23.28  following final enactment. 
 23.29     Sec. 18.  Minnesota Statutes 2001 Supplement, section 
 23.30  290.0675, subdivision 1, is amended to read: 
 23.31     Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
 23.32  section the following terms have the meanings given. 
 23.33     (b) "Earned income" means the sum of the following, to the 
 23.34  extent included in Minnesota taxable income: 
 23.35     (1) earned income as defined in section 32(c)(2) of the 
 23.36  Internal Revenue Code; 
 24.1      (2) income received from a retirement pension, 
 24.2   profit-sharing, stock bonus, or annuity plan; and 
 24.3      (3) social security benefits as defined in section 86(d)(1) 
 24.4   of the Internal Revenue Code. 
 24.5      (c) "Taxable income" means net income as defined in section 
 24.6   290.01, subdivision 19. 
 24.7      (d) "Earned income of lesser-earning spouse" means the 
 24.8   earned income of the spouse with the lesser amount of earned 
 24.9   income as defined in paragraph (b) for the taxable year minus 
 24.10  the sum of (i) the amount for one exemption under section 151(d) 
 24.11  of the Internal Revenue Code and (ii) one-half the amount of the 
 24.12  standard deduction under section 63(c)(2)(A) and (4) of the 
 24.13  Internal Revenue Code.  
 24.14     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 24.15  beginning after December 31, 2000. 
 24.16     Sec. 19.  Minnesota Statutes 2001 Supplement, section 
 24.17  290.0675, subdivision 3, is amended to read: 
 24.18     Subd. 3.  [CREDIT AMOUNT.] The credit amount is the 
 24.19  difference between the tax on the couple's joint Minnesota 
 24.20  taxable income under the rates in section 290.06, subdivision 
 24.21  2c, paragraph (a), and the sum of the tax under the rates of 
 24.22  section 290.06, subdivision 2c, paragraph (b), on the earned 
 24.23  income of the lesser-earning spouse, and the tax under the rates 
 24.24  of section 290.06, subdivision 2c, paragraph (b), on the 
 24.25  couple's joint Minnesota taxable income, minus the earned income 
 24.26  of the lesser-earning spouse. 
 24.27     For taxable years beginning after December 31, 2001, The 
 24.28  commissioner of revenue shall prepare and make available to 
 24.29  taxpayers a comprehensive table showing the credit under this 
 24.30  section at brackets of earnings of the lesser-earning spouse and 
 24.31  joint taxable income.  The brackets of earnings shall not be 
 24.32  more than $2,000. 
 24.33     For taxable years beginning after December 31, 2002, the 
 24.34  commissioner shall update the table as necessary to provide a 
 24.35  credit that reflects the relationship between the marginal tax 
 24.36  rates imposed under section 290.06, subdivision 2c. 
 25.1      <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 25.2   beginning after December 31, 2000. 
 25.3      Sec. 20.  Minnesota Statutes 2000, section 290.067, 
 25.4   subdivision 2a, is amended to read: 
 25.5      Subd. 2a.  [INCOME.] (a) For purposes of this section, 
 25.6   "income" means the sum of the following: 
 25.7      (1) federal adjusted gross income as defined in section 62 
 25.8   of the Internal Revenue Code; and 
 25.9      (2) the sum of the following amounts to the extent not 
 25.10  included in clause (1): 
 25.11     (i) all nontaxable income; 
 25.12     (ii) the amount of a passive activity loss that is not 
 25.13  disallowed as a result of section 469, paragraph (i) or (m) of 
 25.14  the Internal Revenue Code and the amount of passive activity 
 25.15  loss carryover allowed under section 469(b) of the Internal 
 25.16  Revenue Code; 
 25.17     (iii) an amount equal to the total of any discharge of 
 25.18  qualified farm indebtedness of a solvent individual excluded 
 25.19  from gross income under section 108(g) of the Internal Revenue 
 25.20  Code; 
 25.21     (iv) cash public assistance and relief; 
 25.22     (v) any pension or annuity (including railroad retirement 
 25.23  benefits, all payments received under the federal Social 
 25.24  Security Act, supplemental security income, and veterans 
 25.25  benefits), which was not exclusively funded by the claimant or 
 25.26  spouse, or which was funded exclusively by the claimant or 
 25.27  spouse and which funding payments were excluded from federal 
 25.28  adjusted gross income in the years when the payments were made; 
 25.29     (vi) interest received from the federal or a state 
 25.30  government or any instrumentality or political subdivision 
 25.31  thereof; 
 25.32     (vii) workers' compensation; 
 25.33     (viii) nontaxable strike benefits; 
 25.34     (ix) the gross amounts of payments received in the nature 
 25.35  of disability income or sick pay as a result of accident, 
 25.36  sickness, or other disability, whether funded through insurance 
 26.1   or otherwise; 
 26.2      (x) a lump sum distribution under section 402(e)(3) of the 
 26.3   Internal Revenue Code; 
 26.4      (xi) contributions made by the claimant to an individual 
 26.5   retirement account, including a qualified voluntary employee 
 26.6   contribution; simplified employee pension plan; self-employed 
 26.7   retirement plan; cash or deferred arrangement plan under section 
 26.8   401(k) of the Internal Revenue Code; or deferred compensation 
 26.9   plan under section 457 of the Internal Revenue Code; and 
 26.10     (xii) nontaxable scholarship or fellowship grants. 
 26.11     In the case of an individual who files an income tax return 
 26.12  on a fiscal year basis, the term "federal adjusted gross income" 
 26.13  means federal adjusted gross income reflected in the fiscal year 
 26.14  ending in the next calendar year.  Federal adjusted gross income 
 26.15  may not be reduced by the amount of a net operating loss 
 26.16  carryback or carryforward or a capital loss carryback or 
 26.17  carryforward allowed for the year. 
 26.18     (b) "Income" does not include: 
 26.19     (1) amounts excluded pursuant to the Internal Revenue Code, 
 26.20  sections 101(a) and 102; 
 26.21     (2) amounts of any pension or annuity that were exclusively 
 26.22  funded by the claimant or spouse if the funding payments were 
 26.23  not excluded from federal adjusted gross income in the years 
 26.24  when the payments were made; 
 26.25     (3) surplus food or other relief in kind supplied by a 
 26.26  governmental agency; 
 26.27     (4) relief granted under chapter 290A; and 
 26.28     (5) child support payments received under a temporary or 
 26.29  final decree of dissolution or legal separation; and 
 26.30     (6) restitution payments received by eligible individuals 
 26.31  and excludible interest as defined in section 803 of the 
 26.32  Economic Growth and Tax Relief Reconciliation Act of 2001, 
 26.33  Public Law Number 107-16. 
 26.34     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 26.35  beginning after December 31, 2000. 
 26.36     Sec. 21.  Minnesota Statutes 2001 Supplement, section 
 27.1   290.091, subdivision 2, is amended to read: 
 27.2      Subd. 2.  [DEFINITIONS.] For purposes of the tax imposed by 
 27.3   this section, the following terms have the meanings given: 
 27.4      (a) "Alternative minimum taxable income" means the sum of 
 27.5   the following for the taxable year: 
 27.6      (1) the taxpayer's federal alternative minimum taxable 
 27.7   income as defined in section 55(b)(2) of the Internal Revenue 
 27.8   Code; 
 27.9      (2) the taxpayer's itemized deductions allowed in computing 
 27.10  federal alternative minimum taxable income, but excluding: 
 27.11     (i) the Minnesota charitable contribution deduction; 
 27.12     (ii) the medical expense deduction; 
 27.13     (iii) the casualty, theft, and disaster loss deduction; and 
 27.14     (iv) the impairment-related work expenses of a disabled 
 27.15  person; and 
 27.16     (v) holocaust victims' settlement payments to the extent 
 27.17  allowed under section 290.01, subdivision 19b; 
 27.18     (3) for depletion allowances computed under section 613A(c) 
 27.19  of the Internal Revenue Code, with respect to each property (as 
 27.20  defined in section 614 of the Internal Revenue Code), to the 
 27.21  extent not included in federal alternative minimum taxable 
 27.22  income, the excess of the deduction for depletion allowable 
 27.23  under section 611 of the Internal Revenue Code for the taxable 
 27.24  year over the adjusted basis of the property at the end of the 
 27.25  taxable year (determined without regard to the depletion 
 27.26  deduction for the taxable year); 
 27.27     (4) to the extent not included in federal alternative 
 27.28  minimum taxable income, the amount of the tax preference for 
 27.29  intangible drilling cost under section 57(a)(2) of the Internal 
 27.30  Revenue Code determined without regard to subparagraph (E); and 
 27.31     (5) to the extent not included in federal alternative 
 27.32  minimum taxable income, the amount of interest income as 
 27.33  provided by section 290.01, subdivision 19a, clause (1); 
 27.34     less the sum of the amounts determined under the following: 
 27.35     (1) interest income as defined in section 290.01, 
 27.36  subdivision 19b, clause (1); 
 28.1      (2) an overpayment of state income tax as provided by 
 28.2   section 290.01, subdivision 19b, clause (2), to the extent 
 28.3   included in federal alternative minimum taxable income; and 
 28.4      (3) the amount of investment interest paid or accrued 
 28.5   within the taxable year on indebtedness to the extent that the 
 28.6   amount does not exceed net investment income, as defined in 
 28.7   section 163(d)(4) of the Internal Revenue Code.  Interest does 
 28.8   not include amounts deducted in computing federal adjusted gross 
 28.9   income; and 
 28.10     (4) amounts subtracted from federal taxable income as 
 28.11  provided by section 290.01, subdivision 19b, clause (4). 
 28.12     In the case of an estate or trust, alternative minimum 
 28.13  taxable income must be computed as provided in section 59(c) of 
 28.14  the Internal Revenue Code. 
 28.15     (b) "Investment interest" means investment interest as 
 28.16  defined in section 163(d)(3) of the Internal Revenue Code. 
 28.17     (c) "Tentative minimum tax" equals 6.4 percent of 
 28.18  alternative minimum taxable income after subtracting the 
 28.19  exemption amount determined under subdivision 3. 
 28.20     (d) "Regular tax" means the tax that would be imposed under 
 28.21  this chapter (without regard to this section and section 
 28.22  290.032), reduced by the sum of the nonrefundable credits 
 28.23  allowed under this chapter.  
 28.24     (e) "Net minimum tax" means the minimum tax imposed by this 
 28.25  section. 
 28.26     (f) "Minnesota charitable contribution deduction" means a 
 28.27  charitable contribution deduction under section 170 of the 
 28.28  Internal Revenue Code to or for the use of an entity described 
 28.29  in Minnesota Statutes 2000, section 290.21, subdivision 3, 
 28.30  clauses (a) to (e).  When the federal deduction for charitable 
 28.31  contributions is limited under section 170(b) of the Internal 
 28.32  Revenue Code, the allowable contributions in the year of 
 28.33  contribution are deemed to be first contributions to entities 
 28.34  described in Minnesota Statutes 2000, section 290.21, 
 28.35  subdivision 3, clauses (a) to (e). 
 28.36     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 29.1   following final enactment. 
 29.2      Sec. 22.  Minnesota Statutes 2001 Supplement, section 
 29.3   290.0921, subdivision 2, is amended to read: 
 29.4      Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
 29.5   the following terms have the meanings given them. 
 29.6      (b) "Alternative minimum taxable net income" is alternative 
 29.7   minimum taxable income, 
 29.8      (1) less the exemption amount, and 
 29.9      (2) apportioned or allocated to Minnesota under section 
 29.10  290.17, 290.191, or 290.20. 
 29.11     (c) The "exemption amount" is $40,000, reduced, but not 
 29.12  below zero, by 25 percent of the excess of alternative minimum 
 29.13  taxable income over $150,000. 
 29.14     (d) "Minnesota alternative minimum taxable income" is 
 29.15  alternative minimum taxable net income, less the deductions for 
 29.16  alternative tax net operating loss under subdivision 4; 
 29.17  charitable contributions under subdivision 5; and dividends 
 29.18  received under subdivision 6.  The sum of the deductions under 
 29.19  this paragraph may not exceed 90 percent of alternative minimum 
 29.20  taxable net income.  This limitation does not apply to a 
 29.21  deduction for dividends paid to or received from a corporation 
 29.22  which is subject to tax under section 290.36 and which is a 
 29.23  member of an affiliated group of corporations as defined by the 
 29.24  Internal Revenue Code. 
 29.25     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
 29.26  years beginning after December 31, 2001. 
 29.27     Sec. 23.  Minnesota Statutes 2000, section 290.17, 
 29.28  subdivision 2, is amended to read: 
 29.29     Subd. 2.  [INCOME NOT DERIVED FROM CONDUCT OF A TRADE OR 
 29.30  BUSINESS.] The income of a taxpayer subject to the allocation 
 29.31  rules that is not derived from the conduct of a trade or 
 29.32  business must be assigned in accordance with paragraphs (a) to 
 29.33  (f):  
 29.34     (a)(1) Subject to paragraphs (a)(2), (a)(3), and (a)(4), 
 29.35  income from wages as defined in section 3401(a) and (f) of the 
 29.36  Internal Revenue Code is assigned to this state if, and to the 
 30.1   extent that, the work of the employee is performed within it; 
 30.2   all other income from such sources is treated as income from 
 30.3   sources without this state.  
 30.4      Severance pay shall be considered income from labor or 
 30.5   personal or professional services. 
 30.6      (2) In the case of an individual who is a nonresident of 
 30.7   Minnesota and who is an athlete or entertainer, income from 
 30.8   compensation for labor or personal services performed within 
 30.9   this state shall be determined in the following manner:  
 30.10     (i) The amount of income to be assigned to Minnesota for an 
 30.11  individual who is a nonresident salaried athletic team employee 
 30.12  shall be determined by using a fraction in which the denominator 
 30.13  contains the total number of days in which the individual is 
 30.14  under a duty to perform for the employer, and the numerator is 
 30.15  the total number of those days spent in Minnesota.  For purposes 
 30.16  of this paragraph, off-season training activities, unless 
 30.17  conducted at the team's facilities as part of a team imposed 
 30.18  program, are not included in the total number of duty days.  
 30.19  Bonuses earned as a result of play during the regular season or 
 30.20  for participation in championship, play-off, or all-star games 
 30.21  must be allocated under the formula.  Signing bonuses are not 
 30.22  subject to allocation under the formula if they are not 
 30.23  conditional on playing any games for the team, are payable 
 30.24  separately from any other compensation, and are nonrefundable; 
 30.25  and 
 30.26     (ii) The amount of income to be assigned to Minnesota for 
 30.27  an individual who is a nonresident, and who is an athlete or 
 30.28  entertainer not listed in clause (i), for that person's athletic 
 30.29  or entertainment performance in Minnesota shall be determined by 
 30.30  assigning to this state all income from performances or athletic 
 30.31  contests in this state.  
 30.32     (3) For purposes of this section, amounts received by a 
 30.33  nonresident as "retirement income" as defined in section (b)(1) 
 30.34  of the State Income Taxation of Pension Income Act, Public Law 
 30.35  Number 104-95, are not considered income derived from carrying 
 30.36  on a trade or business or from wages or other compensation for 
 31.1   work an employee performed in Minnesota, and are not taxable 
 31.2   under this chapter.  
 31.3      (4) Wages, otherwise assigned to this state under clause 
 31.4   (1) and not qualifying under clause (3), are not taxable under 
 31.5   this chapter if the following conditions are met: 
 31.6      (i) the recipient was not a resident of this state for any 
 31.7   part of the taxable year in which the wages were received; and 
 31.8      (ii) the wages are for work performed while the recipient 
 31.9   was a resident of this state. 
 31.10     (b) Income or gains from tangible property located in this 
 31.11  state that is not employed in the business of the recipient of 
 31.12  the income or gains must be assigned to this state. 
 31.13     (c) Income or gains from intangible personal property not 
 31.14  employed in the business of the recipient of the income or gains 
 31.15  must be assigned to this state if the recipient of the income or 
 31.16  gains is a resident of this state or is a resident trust or 
 31.17  estate.  
 31.18     Gain on the sale of a partnership interest is allocable to 
 31.19  this state in the ratio of the original cost of partnership 
 31.20  tangible property in this state to the original cost of 
 31.21  partnership tangible property everywhere, determined at the time 
 31.22  of the sale.  If more than 50 percent of the value of the 
 31.23  partnership's assets consists of intangibles, gain or loss from 
 31.24  the sale of the partnership interest is allocated to this state 
 31.25  in accordance with the sales factor of the partnership for its 
 31.26  first full tax period immediately preceding the tax period of 
 31.27  the partnership during which the partnership interest was sold. 
 31.28     Gain on the sale of goodwill or income from a covenant not 
 31.29  to compete that is connected with a business operating all or 
 31.30  partially in Minnesota is allocated to this state to the extent 
 31.31  that the income from the business in the year preceding the year 
 31.32  of sale was assignable to Minnesota under subdivision 3.  
 31.33     When an employer pays an employee for a covenant not to 
 31.34  compete, the income allocated to this state is in the ratio of 
 31.35  the employee's service in Minnesota in the calendar year 
 31.36  preceding leaving the employment of the employer over the total 
 32.1   services performed by the employee for the employer in that year.
 32.2      (d) Income from winnings on Minnesota pari-mutuel betting 
 32.3   tickets, the Minnesota state lottery, and lawful gambling as 
 32.4   defined in section 349.12, subdivision 24, conducted within the 
 32.5   boundaries of the state of Minnesota shall be assigned to this 
 32.6   state a bet made by an individual while in Minnesota is assigned 
 32.7   to this state.  In this paragraph, "bet" has the meaning given 
 32.8   in section 609.75, subdivision 2, as limited by section 609.75, 
 32.9   subdivision 3, clauses (1), (2), and (3).  
 32.10     (e) All items of gross income not covered in paragraphs (a) 
 32.11  to (d) and not part of the taxpayer's income from a trade or 
 32.12  business shall be assigned to the taxpayer's domicile. 
 32.13     (f) For the purposes of this section, working as an 
 32.14  employee shall not be considered to be conducting a trade or 
 32.15  business. 
 32.16     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 32.17  beginning after December 31, 2001. 
 32.18     Sec. 24.  Minnesota Statutes 2000, section 290.17, 
 32.19  subdivision 3, is amended to read: 
 32.20     Subd. 3.  [TRADE OR BUSINESS INCOME; GENERAL RULE.] All 
 32.21  income of a trade or business is subject to apportionment except 
 32.22  nonbusiness income.  Income derived from carrying on a trade or 
 32.23  business must be assigned to this state if the trade or business 
 32.24  is conducted wholly within this state, assigned outside this 
 32.25  state if conducted wholly without this state and apportioned 
 32.26  between this state and other states and countries under this 
 32.27  subdivision if conducted partly within and partly without this 
 32.28  state.  For purposes of determining whether a trade or business 
 32.29  is carried on exclusively within or without this state:  
 32.30     (a) A trade or business physically located exclusively 
 32.31  within this state is nevertheless carried on partly within and 
 32.32  partly without this state if any of the principles set forth in 
 32.33  section 290.191 for the allocation of sales or receipts within 
 32.34  or without this state when applied to the taxpayer's situation 
 32.35  result in the allocation of any sales or receipts without this 
 32.36  state.  
 33.1      (b) A trade or business physically located exclusively 
 33.2   without this state is nevertheless carried on partly within and 
 33.3   partly without this state if any of the principles set forth in 
 33.4   section 290.191 for the allocation of sales or receipts within 
 33.5   or without this state when applied to the taxpayer's situation 
 33.6   result in the allocation of any sales or receipts without within 
 33.7   this state.  The jurisdiction to tax such a business under this 
 33.8   chapter must be determined in accordance with sections 290.014 
 33.9   and 290.015. 
 33.10     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 33.11  beginning after December 31, 2001. 
 33.12     Sec. 25.  Minnesota Statutes 2000, section 290A.03, 
 33.13  subdivision 3, is amended to read: 
 33.14     Subd. 3.  [INCOME.] (1) "Income" means the sum of the 
 33.15  following:  
 33.16     (a) federal adjusted gross income as defined in the 
 33.17  Internal Revenue Code; and 
 33.18     (b) the sum of the following amounts to the extent not 
 33.19  included in clause (a):  
 33.20     (i) all nontaxable income; 
 33.21     (ii) the amount of a passive activity loss that is not 
 33.22  disallowed as a result of section 469, paragraph (i) or (m) of 
 33.23  the Internal Revenue Code and the amount of passive activity 
 33.24  loss carryover allowed under section 469(b) of the Internal 
 33.25  Revenue Code; 
 33.26     (iii) an amount equal to the total of any discharge of 
 33.27  qualified farm indebtedness of a solvent individual excluded 
 33.28  from gross income under section 108(g) of the Internal Revenue 
 33.29  Code; 
 33.30     (iv) cash public assistance and relief; 
 33.31     (v) any pension or annuity (including railroad retirement 
 33.32  benefits, all payments received under the federal Social 
 33.33  Security Act, supplemental security income, and veterans 
 33.34  benefits), which was not exclusively funded by the claimant or 
 33.35  spouse, or which was funded exclusively by the claimant or 
 33.36  spouse and which funding payments were excluded from federal 
 34.1   adjusted gross income in the years when the payments were made; 
 34.2      (vi) interest received from the federal or a state 
 34.3   government or any instrumentality or political subdivision 
 34.4   thereof; 
 34.5      (vii) workers' compensation; 
 34.6      (viii) nontaxable strike benefits; 
 34.7      (ix) the gross amounts of payments received in the nature 
 34.8   of disability income or sick pay as a result of accident, 
 34.9   sickness, or other disability, whether funded through insurance 
 34.10  or otherwise; 
 34.11     (x) a lump sum distribution under section 402(e)(3) of the 
 34.12  Internal Revenue Code; 
 34.13     (xi) contributions made by the claimant to an individual 
 34.14  retirement account, including a qualified voluntary employee 
 34.15  contribution; simplified employee pension plan; self-employed 
 34.16  retirement plan; cash or deferred arrangement plan under section 
 34.17  401(k) of the Internal Revenue Code; or deferred compensation 
 34.18  plan under section 457 of the Internal Revenue Code; and 
 34.19     (xii) nontaxable scholarship or fellowship grants.  
 34.20     In the case of an individual who files an income tax return 
 34.21  on a fiscal year basis, the term "federal adjusted gross income" 
 34.22  shall mean federal adjusted gross income reflected in the fiscal 
 34.23  year ending in the calendar year.  Federal adjusted gross income 
 34.24  shall not be reduced by the amount of a net operating loss 
 34.25  carryback or carryforward or a capital loss carryback or 
 34.26  carryforward allowed for the year.  
 34.27     (2) "Income" does not include:  
 34.28     (a) amounts excluded pursuant to the Internal Revenue Code, 
 34.29  sections 101(a) and 102; 
 34.30     (b) amounts of any pension or annuity which was exclusively 
 34.31  funded by the claimant or spouse and which funding payments were 
 34.32  not excluded from federal adjusted gross income in the years 
 34.33  when the payments were made; 
 34.34     (c) surplus food or other relief in kind supplied by a 
 34.35  governmental agency; 
 34.36     (d) relief granted under this chapter; 
 35.1      (e) child support payments received under a temporary or 
 35.2   final decree of dissolution or legal separation; or 
 35.3      (f) holocaust settlement payments as defined in section 
 35.4   290.01, subdivision 32 restitution payments received by eligible 
 35.5   individuals and excludible interest as defined in section 803 of 
 35.6   the Economic Growth and Tax Relief Reconciliation Act of 2001, 
 35.7   Public Law Number 107-16.  
 35.8      (3) The sum of the following amounts may be subtracted from 
 35.9   income:  
 35.10     (a) for the claimant's first dependent, the exemption 
 35.11  amount multiplied by 1.4; 
 35.12     (b) for the claimant's second dependent, the exemption 
 35.13  amount multiplied by 1.3; 
 35.14     (c) for the claimant's third dependent, the exemption 
 35.15  amount multiplied by 1.2; 
 35.16     (d) for the claimant's fourth dependent, the exemption 
 35.17  amount multiplied by 1.1; 
 35.18     (e) for the claimant's fifth dependent, the exemption 
 35.19  amount; and 
 35.20     (f) if the claimant or claimant's spouse was disabled or 
 35.21  attained the age of 65 on or before December 31 of the year for 
 35.22  which the taxes were levied or rent paid, the exemption amount.  
 35.23     For purposes of this subdivision, the "exemption amount" 
 35.24  means the exemption amount under section 151(d) of the Internal 
 35.25  Revenue Code for the taxable year for which the income is 
 35.26  reported.  
 35.27     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 35.28  following final enactment. 
 35.29     Sec. 26.  Minnesota Statutes 2001 Supplement, section 
 35.30  290A.04, subdivision 2h, is amended to read: 
 35.31     Subd. 2h.  [ADDITIONAL REFUND.] (a) Beginning with gross 
 35.32  property taxes payable in 2003, If the gross property taxes 
 35.33  payable on a homestead increase more than 12 percent over the 
 35.34  property taxes payable in the prior year on the same property 
 35.35  that is owned and occupied by the same owner on January 2 of 
 35.36  both years, and the amount of that increase is $100 or more, a 
 36.1   claimant who is a homeowner shall be allowed an additional 
 36.2   refund equal to 60 percent of the amount of the increase over 
 36.3   the greater of 12 percent of the prior year's property taxes 
 36.4   payable or $100.  This subdivision shall not apply to any 
 36.5   increase in the gross property taxes payable attributable to 
 36.6   improvements made to the homestead after the assessment date for 
 36.7   the prior year's taxes.  This subdivision shall not apply to any 
 36.8   increase in the gross property taxes payable attributable to the 
 36.9   termination of valuation exclusions under section 273.11, 
 36.10  subdivision 16. 
 36.11     The maximum refund allowed under this subdivision is $1,000.
 36.12     (b) For purposes of this subdivision "gross property taxes 
 36.13  payable" means property taxes payable determined without regard 
 36.14  to the refund allowed under this subdivision. 
 36.15     (c) In addition to the other proofs required by this 
 36.16  chapter, each claimant under this subdivision shall file with 
 36.17  the property tax refund return a copy of the property tax 
 36.18  statement for taxes payable in the preceding year or other 
 36.19  documents required by the commissioner. 
 36.20     (d) Upon request, the appropriate county official shall 
 36.21  make available the names and addresses of the property taxpayers 
 36.22  who may be eligible for the additional property tax refund under 
 36.23  this section.  The information shall be provided on a magnetic 
 36.24  computer disk.  The county may recover its costs by charging the 
 36.25  person requesting the information the reasonable cost for 
 36.26  preparing the data.  The information may not be used for any 
 36.27  purpose other than for notifying the homeowner of potential 
 36.28  eligibility and assisting the homeowner, without charge, in 
 36.29  preparing a refund claim. 
 36.30     <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
 36.31  refunds based on gross property taxes payable in 2002. 
 36.32     Sec. 27.  Minnesota Statutes 2000, section 295.53, 
 36.33  subdivision 1, is amended to read: 
 36.34     Subdivision 1.  [EXEMPTIONS.] (a) The following payments 
 36.35  are excluded from the gross revenues subject to the hospital, 
 36.36  surgical center, or health care provider taxes under sections 
 37.1   295.50 to 295.57: 
 37.2      (1) payments received for services provided under the 
 37.3   Medicare program, including payments received from the 
 37.4   government, and organizations governed by sections 1833 and 1876 
 37.5   of title XVIII of the federal Social Security Act, United States 
 37.6   Code, title 42, section 1395, and enrollee deductibles, 
 37.7   coinsurance, and copayments, whether paid by the Medicare 
 37.8   enrollee or by a Medicare supplemental coverage as defined in 
 37.9   section 62A.011, subdivision 3, clause (10).  Payments for 
 37.10  services not covered by Medicare are taxable; 
 37.11     (2) medical assistance payments including payments received 
 37.12  directly from the government or from a prepaid plan; 
 37.13     (3) payments received for home health care services; 
 37.14     (4) payments received from hospitals or surgical centers 
 37.15  for goods and services on which liability for tax is imposed 
 37.16  under section 295.52 or the source of funds for the payment is 
 37.17  exempt under clause (1), (2), (7), (8), (10), (13), or (20); 
 37.18     (5) payments received from health care providers for goods 
 37.19  and services on which liability for tax is imposed under this 
 37.20  chapter or the source of funds for the payment is exempt under 
 37.21  clause (1), (2), (7), (8), (10), (13), or (20); 
 37.22     (6) amounts paid for legend drugs, other than nutritional 
 37.23  products, to a wholesale drug distributor who is subject to tax 
 37.24  under section 295.52, subdivision 3, reduced by reimbursements 
 37.25  received for legend drugs under clauses (1), (2), (7), and 
 37.26  (8) otherwise exempt under chapter 295; 
 37.27     (7) payments received under the general assistance medical 
 37.28  care program including payments received directly from the 
 37.29  government or from a prepaid plan; 
 37.30     (8) payments received for providing services under the 
 37.31  MinnesotaCare program including payments received directly from 
 37.32  the government or from a prepaid plan and enrollee deductibles, 
 37.33  coinsurance, and copayments.  For purposes of this clause, 
 37.34  coinsurance means the portion of payment that the enrollee is 
 37.35  required to pay for the covered service; 
 37.36     (9) payments received by a health care provider or the 
 38.1   wholly owned subsidiary of a health care provider for care 
 38.2   provided outside Minnesota; 
 38.3      (10) payments received from the chemical dependency fund 
 38.4   under chapter 254B; 
 38.5      (11) payments received in the nature of charitable 
 38.6   donations that are not designated for providing patient services 
 38.7   to a specific individual or group; 
 38.8      (12) payments received for providing patient services 
 38.9   incurred through a formal program of health care research 
 38.10  conducted in conformity with federal regulations governing 
 38.11  research on human subjects.  Payments received from patients or 
 38.12  from other persons paying on behalf of the patients are subject 
 38.13  to tax; 
 38.14     (13) payments received from any governmental agency for 
 38.15  services benefiting the public, not including payments made by 
 38.16  the government in its capacity as an employer or insurer; 
 38.17     (14) payments received for services provided by community 
 38.18  residential mental health facilities licensed under Minnesota 
 38.19  Rules, parts 9520.0500 to 9520.0690, community support programs 
 38.20  and family community support programs approved under Minnesota 
 38.21  Rules, parts 9535.1700 to 9535.1760, and community mental health 
 38.22  centers as defined in section 245.62, subdivision 2; 
 38.23     (15) government payments received by a regional treatment 
 38.24  center; 
 38.25     (16) payments received for hospice care services; 
 38.26     (17) payments received by a health care provider for 
 38.27  hearing aids and related equipment or prescription eyewear 
 38.28  delivered outside of Minnesota; 
 38.29     (18) payments received by an educational institution from 
 38.30  student tuition, student activity fees, health care service 
 38.31  fees, government appropriations, donations, or grants.  Fee for 
 38.32  service payments and payments for extended coverage are taxable; 
 38.33     (19) payments received for services provided by:  assisted 
 38.34  living programs and congregate housing programs; and 
 38.35     (20) payments received under the federal Employees Health 
 38.36  Benefits Act, United States Code, title 5, section 8909(f), as 
 39.1   amended by the Omnibus Reconciliation Act of 1990. 
 39.2      (b) Payments received by wholesale drug distributors for 
 39.3   legend drugs sold directly to veterinarians or veterinary bulk 
 39.4   purchasing organizations are excluded from the gross revenues 
 39.5   subject to the wholesale drug distributor tax under sections 
 39.6   295.50 to 295.59. 
 39.7      <b>[EFFECTIVE DATE.]</b> This section is effective for payments 
 39.8   received after December 31, 2001. 
 39.9      Sec. 28.  Minnesota Statutes 2001 Supplement, section 
 39.10  295.60, is amended by adding a subdivision to read: 
 39.11     Subd. 1a.  [USE TAX; CREDIT FOR TAXES PAID.] (a) A person 
 39.12  that receives fur clothing for use or storage in Minnesota, 
 39.13  other than from a furrier that paid the tax under subdivision 1, 
 39.14  is subject to tax at the rate imposed under subdivision 1.  
 39.15  Liability for the tax is incurred when the person has possession 
 39.16  of the fur clothing in Minnesota.  The tax must be remitted to 
 39.17  the commissioner in the manner prescribed by subdivision 3. 
 39.18     (b) A person that has paid taxes to another jurisdiction on 
 39.19  the same transaction and is subject to tax under this section is 
 39.20  entitled to a credit for the tax legally due and paid to another 
 39.21  jurisdiction to the extent of the lesser of (1) the tax actually 
 39.22  paid to the other jurisdiction, or (2) the amount of tax imposed 
 39.23  by Minnesota on the transaction subject to tax in the other 
 39.24  jurisdiction. 
 39.25     <b>[EFFECTIVE DATE.]</b> This section is effective for fur 
 39.26  clothing purchased and brought into Minnesota on or after 
 39.27  January 1, 2002. 
 39.28     Sec. 29.  Minnesota Statutes 2001 Supplement, section 
 39.29  295.60, is amended by adding a subdivision to read: 
 39.30     Subd. 1b.  [TAX COLLECTION REQUIRED.] A furrier with nexus 
 39.31  in Minnesota, who is not subject to tax under subdivision 1, is 
 39.32  required to collect the tax imposed under subdivision 1a from 
 39.33  the purchaser of the clothing made from fur and give the 
 39.34  purchaser a receipt for the tax paid.  The tax collected must be 
 39.35  remitted to the commissioner in the manner prescribed by 
 39.36  subdivision 3. 
 40.1      <b>[EFFECTIVE DATE.]</b> This section is effective for fur 
 40.2   clothing purchased and brought into Minnesota on or after 
 40.3   January 1, 2002. 
 40.4      Sec. 30.  Minnesota Statutes 2001 Supplement, section 
 40.5   295.60, is amended by adding a subdivision to read: 
 40.6      Subd. 1c.  [TAXES PAID TO ANOTHER JURISDICTION; CREDIT.] A 
 40.7   furrier that has paid taxes to another jurisdiction measured by 
 40.8   gross revenue and is subject to tax under this section on the 
 40.9   same gross revenues is entitled to a credit for the tax legally 
 40.10  due and paid to another jurisdiction to the extent of the lesser 
 40.11  of (1) the tax actually paid to the other jurisdiction, or (2) 
 40.12  the amount of tax imposed by Minnesota on the gross revenues 
 40.13  subject to tax in the other taxing jurisdictions. 
 40.14     <b>[EFFECTIVE DATE.]</b> This section is effective for gross 
 40.15  revenues received on or after January 1, 2002. 
 40.16     Sec. 31.  Minnesota Statutes 2001 Supplement, section 
 40.17  295.60, subdivision 7, is amended to read: 
 40.18     Subd. 7.  [APPLICATION OF OTHER CHAPTERS.] Unless 
 40.19  specifically provided otherwise by this section, the 
 40.20  enforcement, interest, and penalty provisions under chapter 294, 
 40.21  appeal provisions in sections 289A.43 and 289A.65, criminal 
 40.22  penalties in section 289A.63, and refunds provisions in section 
 40.23  289A.50 chapter 289A, civil penalty provisions applicable to 
 40.24  withholding and sales taxes under section 289A.60, and 
 40.25  collection and rulemaking provisions under chapter 270, apply to 
 40.26  a liability for the taxes imposed under this section. 
 40.27     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2002.
 40.28     Sec. 32.  Minnesota Statutes 2000, section 296A.18, 
 40.29  subdivision 8, is amended to read: 
 40.30     Subd. 8.  [AVIATION FUEL TAX STATE AIRPORTS FUND.] The 
 40.31  revenues derived from the excise taxes on aviation gasoline and 
 40.32  on special fuel received, sold, stored, or withdrawn from 
 40.33  storage as substitutes for aviation gasoline, shall be paid into 
 40.34  the state treasury and credited to the aviation fuel tax state 
 40.35  airports fund.  There is hereby appropriated such sums as are 
 40.36  needed to carry out the provisions of this subdivision. 
 41.1      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 41.2   following final enactment. 
 41.3      Sec. 33.  Minnesota Statutes 2001 Supplement, section 
 41.4   297A.70, subdivision 3, is amended to read: 
 41.5      Subd. 3.  [SALES OF CERTAIN GOODS AND SERVICES TO 
 41.6   GOVERNMENT.] (a) The following sales to or use by the specified 
 41.7   governments and political subdivisions of the state are exempt: 
 41.8      (1) repair and replacement parts for emergency rescue 
 41.9   vehicles, fire trucks, and fire apparatus to a political 
 41.10  subdivision; 
 41.11     (2) machinery and equipment, except for motor vehicles, 
 41.12  used directly for mixed municipal solid waste management 
 41.13  services at a solid waste disposal facility as defined in 
 41.14  section 115A.03, subdivision 10; 
 41.15     (3) chore and homemaking services to a political 
 41.16  subdivision of the state to be provided to elderly or disabled 
 41.17  individuals; 
 41.18     (4) telephone services to the department of administration 
 41.19  that are used to provide telecommunications services through the 
 41.20  intertechnologies revolving fund; 
 41.21     (5) firefighter personal protective equipment as defined in 
 41.22  paragraph (b), if purchased or authorized by and for the use of 
 41.23  an organized fire department, fire protection district, or fire 
 41.24  company regularly charged with the responsibility of providing 
 41.25  fire protection to the state or a political subdivision; 
 41.26     (6) bullet-resistant body armor that provides the wearer 
 41.27  with ballistic and trauma protection, if purchased by a law 
 41.28  enforcement agency of the state or a political subdivision of 
 41.29  the state, or a licensed peace officer, as defined in section 
 41.30  626.84, subdivision 1; 
 41.31     (7) motor vehicles purchased or leased by political 
 41.32  subdivisions of the state if the vehicles are exempt from 
 41.33  registration under section 168.012, subdivision 1, paragraph 
 41.34  (b), exempt from taxation under section 473.448, or exempt from 
 41.35  the motor vehicle sales tax under section 297B.03, clause (12); 
 41.36     (8) equipment designed to process, dewater, and recycle 
 42.1   biosolids for wastewater treatment facilities of political 
 42.2   subdivisions, and materials incidental to installation of that 
 42.3   equipment; and materials used to construct buildings to house 
 42.4   the equipment, if the materials are purchased after June 30, 
 42.5   1998, and before July 1, 2001; and 
 42.6      (9) sales to a town of gravel and of machinery, equipment, 
 42.7   and accessories, except motor vehicles, used exclusively for 
 42.8   road and bridge maintenance, and leases by a town of motor 
 42.9   vehicles exempt from tax under section 297B.03, clause (10). 
 42.10     (b) For purposes of this subdivision, "firefighters 
 42.11  personal protective equipment" means helmets, including face 
 42.12  shields, chin straps, and neck liners; bunker coats and pants, 
 42.13  including pant suspenders; boots; gloves; head covers or hoods; 
 42.14  wildfire jackets; protective coveralls; goggles; self-contained 
 42.15  breathing apparatus; canister filter masks; personal alert 
 42.16  safety systems; spanner belts; optical or thermal imaging search 
 42.17  devices; and all safety equipment required by the Occupational 
 42.18  Safety and Health Administration. 
 42.19     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 42.20  following final enactment. 
 42.21     Sec. 34.  Minnesota Statutes 2000, section 297I.05, 
 42.22  subdivision 11, is amended to read: 
 42.23     Subd. 11.  [RETALIATORY PROVISIONS.] (a) If any other state 
 42.24  or country imposes any taxes, fines, deposits, penalties, 
 42.25  licenses, or fees upon any insurance companies of this state and 
 42.26  their agents doing business in another state or country that are 
 42.27  in addition to or in excess of those imposed by the laws of this 
 42.28  state upon foreign insurance companies and their agents doing 
 42.29  business in this state, the same taxes, fines, deposits, 
 42.30  penalties, licenses, and fees are imposed upon every similar 
 42.31  insurance company of that state or country and their agents 
 42.32  doing or applying to do business in this state. 
 42.33     (b) If any conditions precedent to the right to do business 
 42.34  in any other state or country are imposed by the laws of that 
 42.35  state or country, beyond those imposed upon foreign companies by 
 42.36  the laws of this state, the same conditions precedent are 
 43.1   imposed upon every similar insurance company of that state or 
 43.2   country and their agents doing or applying to do business in 
 43.3   that state. 
 43.4      (c) For purposes of this subdivision, "taxes, fines, 
 43.5   deposits, penalties, licenses, or fees" means an amount of money 
 43.6   that is deposited in the general revenue fund of the state or 
 43.7   other similar fund in another state or country and is not 
 43.8   dedicated to a special purpose or use or money deposited in the 
 43.9   general revenue fund of the state or other similar fund in 
 43.10  another state or country and appropriated to the commissioner of 
 43.11  commerce or insurance for the operation of the department of 
 43.12  commerce or other similar agency with jurisdiction over 
 43.13  insurance.  Taxes, fines, deposits, penalties, licenses, or fees 
 43.14  do not include: 
 43.15     (1) special purpose obligations or assessments imposed in 
 43.16  connection with particular kinds of insurance, including but not 
 43.17  limited to assessments imposed in connection with residual 
 43.18  market mechanisms; or 
 43.19     (2) assessments made by the insurance guaranty association, 
 43.20  life and health guarantee association, or similar association. 
 43.21     (d) This subdivision applies to taxes imposed under 
 43.22  subdivisions 1, 3, 4, 6, and 12, paragraph (a), clauses (1) and 
 43.23  (3) (2). 
 43.24     (e) This subdivision does not apply to insurance companies 
 43.25  organized or domiciled in a state or country, the laws of which 
 43.26  do not impose retaliatory taxes, fines, deposits, penalties, 
 43.27  licenses, or fees or which grant, on a reciprocal basis, 
 43.28  exemptions from retaliatory taxes, fines, deposits, penalties, 
 43.29  licenses, or fees to insurance companies domiciled in this state.
 43.30     <b>[EFFECTIVE DATE.]</b> This section is effective retroactively 
 43.31  to tax years beginning on or after January 1, 2001. 
 43.32     Sec. 35.  Minnesota Statutes 2001 Supplement, section 
 43.33  298.01, subdivision 3b, is amended to read: 
 43.34     Subd. 3b.  [DEDUCTIONS.] (a) For purposes of determining 
 43.35  taxable income under subdivision 3, the deductions from gross 
 43.36  income include only those expenses necessary to convert raw ores 
 44.1   to marketable quality.  Such expenses include costs associated 
 44.2   with refinement but do not include expenses such as 
 44.3   transportation, stockpiling, marketing, or marine insurance that 
 44.4   are incurred after marketable ores are produced, unless the 
 44.5   expenses are included in gross income. 
 44.6      (b) The provisions of section 290.01, subdivisions 19c, 
 44.7   clauses (6) and (10) (9), and 19d, clauses (7) and (11), are not 
 44.8   used to determine taxable income. 
 44.9      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 44.10  following final enactment. 
 44.11     Sec. 36.  Minnesota Statutes 2001 Supplement, section 
 44.12  298.01, subdivision 4c, is amended to read: 
 44.13     Subd. 4c.  [SPECIAL DEDUCTIONS; NET OPERATING LOSS.] (a) 
 44.14  For purposes of determining taxable income under subdivision 
 44.15  4, the following modifications are allowed: 
 44.16     (1) the provisions of section 290.01, subdivisions 19c, 
 44.17  clauses (6) and (10) (9), and 19d, clauses (7) and (11), are not 
 44.18  used to determine taxable income; and. 
 44.19     (2) for assets placed in service before January 1, 1990, 
 44.20  the deduction for depreciation will be the same amount allowed 
 44.21  under chapter 290, except that after an asset has been fully 
 44.22  depreciated for federal income tax purposes any remaining 
 44.23  depreciable basis is allowed as a deduction using the 
 44.24  straight-line method over the following number of years: 
 44.25     (i) three-year property, one year; 
 44.26     (ii) five- and seven-year property, two years; 
 44.27     (iii) ten-year property, five years; and 
 44.28     (iv) all other property, seven years. 
 44.29     No deduction is allowed if an asset is fully depreciated 
 44.30  for occupation tax purposes before January 1990. 
 44.31     (b) For purposes of determining the deduction allowed under 
 44.32  paragraph (a), clause (2), the remaining depreciable basis of 
 44.33  property placed in service before January 1, 1990, is calculated 
 44.34  as follows: 
 44.35     (1) the adjusted basis of the property on December 31, 
 44.36  1989, which was used to calculate the hypothetical corporate 
 45.1   franchise tax under Minnesota Statutes 1988, section 298.40, 
 45.2   including salvage value; less 
 45.3      (2) deductions for depreciation allowed under section 
 45.4   290.01, subdivision 19e. 
 45.5      (c) The basis for determining gain or loss on sale or 
 45.6   disposition of assets placed in service before January 1, 1990, 
 45.7   is the basis determined under paragraph (b), less the deductions 
 45.8   allowed under paragraph (a), clause (2). 
 45.9      (d) (b) The amount of net operating loss incurred in a 
 45.10  taxable year beginning before January 1, 1990, that may be 
 45.11  carried over to a taxable year beginning after December 31, 
 45.12  1989, is the amount of net operating loss carryover determined 
 45.13  in the calculation of the hypothetical corporate franchise tax 
 45.14  under Minnesota Statutes 1988, sections 298.40 and 298.402. 
 45.15     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 45.16  payable May 1, 2002, and thereafter. 
 45.17     Sec. 37.  Minnesota Statutes 2001 Supplement, section 
 45.18  469.174, subdivision 3, is amended to read: 
 45.19     Subd. 3.  [BONDS.] "Bonds" means any bonds, including 
 45.20  refunding bonds, notes, interim certificates, debentures, 
 45.21  interfund loans or advances qualifying under section 469.178, 
 45.22  subdivision 7, or other obligations issued by an authority under 
 45.23  section 469.178 or which were issued in aid of a project under 
 45.24  any other law, except revenue bonds issued pursuant to sections 
 45.25  469.152 to 469.165, prior to August 1, 1979. 
 45.26     <b>[EFFECTIVE DATE.]</b> This section is effective August 1, 2001, 
 45.27  and thereafter. 
 45.28     Sec. 38.  Minnesota Statutes 2000, section 477A.011, 
 45.29  subdivision 20, is amended to read: 
 45.30     Subd. 20.  [CITY NET TAX CAPACITY.] "City net tax capacity" 
 45.31  means (1) the net tax capacity computed using the net tax 
 45.32  capacity rates in section 273.13 for taxes payable in the year 
 45.33  of the aid distribution, and the market values for taxes payable 
 45.34  in the year prior to the aid distribution plus (2) a city's 
 45.35  fiscal disparities distribution tax capacity under section 
 45.36  276A.06, subdivision 2, paragraph (b), or 473F.08, subdivision 
 46.1   2, paragraph (b), for taxes payable in the year prior to that 
 46.2   for which aids are being calculated.  The market value utilized 
 46.3   in computing city net tax capacity shall be reduced by the sum 
 46.4   of (1) a city's market value of commercial industrial property 
 46.5   as defined in section 276A.01, subdivision 3, or 473F.02, 
 46.6   subdivision 3, multiplied by the ratio determined pursuant to 
 46.7   section 276A.06, subdivision 2, paragraph (a), or 473F.08, 
 46.8   subdivision 2, paragraph (a), (2) the market value of the 
 46.9   captured value of tax increment financing districts as defined 
 46.10  in section 469.177, subdivision 2, and (3) the market value of 
 46.11  transmission lines deducted from a city's total net tax capacity 
 46.12  under section 273.425.  The city net tax capacity will be 
 46.13  computed using equalized market values.  
 46.14     <b>[EFFECTIVE DATE.]</b> This section is effective for aid payable 
 46.15  in 2002 and thereafter. 
 46.16     Sec. 39.  Minnesota Statutes 2001 Supplement, section 
 46.17  477A.011, subdivision 36, is amended to read: 
 46.18     Subd. 36.  [CITY AID BASE.] (a) Except as otherwise 
 46.19  provided in paragraphs (b) to (o) this subdivision, "city aid 
 46.20  base" means, for each city, the sum of the local government aid 
 46.21  and equalization aid it was originally certified to receive in 
 46.22  calendar year 1993 under Minnesota Statutes 1992, section 
 46.23  477A.013, subdivisions 3 and 5, and the amount of disparity 
 46.24  reduction aid it received in calendar year 1993 under Minnesota 
 46.25  Statutes 1992, section 273.1398, subdivision 3. 
 46.26     (b) For aids payable in 1996 and thereafter, a city that in 
 46.27  1992 or 1993 transferred an amount from governmental funds to 
 46.28  its sewer and water fund, which amount exceeded its net levy for 
 46.29  taxes payable in the year in which the transfer occurred, has a 
 46.30  "city aid base" equal to the sum of (i) its city aid base, as 
 46.31  calculated under paragraph (a), and (ii) one-half of the 
 46.32  difference between its city aid distribution under section 
 46.33  477A.013, subdivision 9, for aids payable in 1995 and its city 
 46.34  aid base for aids payable in 1995. 
 46.35     (c) The city aid base for any city with a population less 
 46.36  than 500 is increased by $40,000 for aids payable in calendar 
 47.1   year 1995 and thereafter, and the maximum amount of total aid it 
 47.2   may receive under section 477A.013, subdivision 9, paragraph 
 47.3   (c), is also increased by $40,000 for aids payable in calendar 
 47.4   year 1995 only, provided that: 
 47.5      (i) the average total tax capacity rate for taxes payable 
 47.6   in 1995 exceeds 200 percent; 
 47.7      (ii) the city portion of the tax capacity rate exceeds 100 
 47.8   percent; and 
 47.9      (iii) its city aid base is less than $60 per capita. 
 47.10     (d) The city aid base for a city is increased by $20,000 in 
 47.11  1998 and thereafter and the maximum amount of total aid it may 
 47.12  receive under section 477A.013, subdivision 9, paragraph (c), is 
 47.13  also increased by $20,000 in calendar year 1998 only, provided 
 47.14  that: 
 47.15     (i) the city has a population in 1994 of 2,500 or more; 
 47.16     (ii) the city is located in a county, outside of the 
 47.17  metropolitan area, which contains a city of the first class; 
 47.18     (iii) the city's net tax capacity used in calculating its 
 47.19  1996 aid under section 477A.013 is less than $400 per capita; 
 47.20  and 
 47.21     (iv) at least four percent of the total net tax capacity, 
 47.22  for taxes payable in 1996, of property located in the city is 
 47.23  classified as railroad property. 
 47.24     (e) The city aid base for a city is increased by $200,000 
 47.25  in 1999 and thereafter and the maximum amount of total aid it 
 47.26  may receive under section 477A.013, subdivision 9, paragraph 
 47.27  (c), is also increased by $200,000 in calendar year 1999 only, 
 47.28  provided that: 
 47.29     (i) the city was incorporated as a statutory city after 
 47.30  December 1, 1993; 
 47.31     (ii) its city aid base does not exceed $5,600; and 
 47.32     (iii) the city had a population in 1996 of 5,000 or more. 
 47.33     (f) The city aid base for a city is increased by $450,000 
 47.34  in 1999 to 2008 and the maximum amount of total aid it may 
 47.35  receive under section 477A.013, subdivision 9, paragraph (c), is 
 47.36  also increased by $450,000 in calendar year 1999 only, provided 
 48.1   that: 
 48.2      (i) the city had a population in 1996 of at least 50,000; 
 48.3      (ii) its population had increased by at least 40 percent in 
 48.4   the ten-year period ending in 1996; and 
 48.5      (iii) its city's net tax capacity for aids payable in 1998 
 48.6   is less than $700 per capita. 
 48.7      (g) Beginning in 2002 2004, the city aid base for a city is 
 48.8   equal to the sum of its city aid base in 2001 2003 and the 
 48.9   amount of additional aid it was certified to receive under 
 48.10  section 477A.06 in 2001 2003.  For 2002 2004 only, the maximum 
 48.11  amount of total aid a city may receive under section 477A.013, 
 48.12  subdivision 9, paragraph (c), is also increased by the amount it 
 48.13  was certified to receive under section 477A.06 in 2001 2003. 
 48.14     (h) The city aid base for a city is increased by $150,000 
 48.15  for aids payable in 2000 and thereafter, and the maximum amount 
 48.16  of total aid it may receive under section 477A.013, subdivision 
 48.17  9, paragraph (c), is also increased by $150,000 in calendar year 
 48.18  2000 only, provided that: 
 48.19     (1) the city has a population that is greater than 1,000 
 48.20  and less than 2,500; 
 48.21     (2) its commercial and industrial percentage for aids 
 48.22  payable in 1999 is greater than 45 percent; and 
 48.23     (3) the total market value of all commercial and industrial 
 48.24  property in the city for assessment year 1999 is at least 15 
 48.25  percent less than the total market value of all commercial and 
 48.26  industrial property in the city for assessment year 1998. 
 48.27     (i) The city aid base for a city is increased by $200,000 
 48.28  in 2000 and thereafter, and the maximum amount of total aid it 
 48.29  may receive under section 477A.013, subdivision 9, paragraph 
 48.30  (c), is also increased by $200,000 in calendar year 2000 only, 
 48.31  provided that: 
 48.32     (1) the city had a population in 1997 of 2,500 or more; 
 48.33     (2) the net tax capacity of the city used in calculating 
 48.34  its 1999 aid under section 477A.013 is less than $650 per 
 48.35  capita; 
 48.36     (3) the pre-1940 housing percentage of the city used in 
 49.1   calculating 1999 aid under section 477A.013 is greater than 12 
 49.2   percent; 
 49.3      (4) the 1999 local government aid of the city under section 
 49.4   477A.013 is less than 20 percent of the amount that the formula 
 49.5   aid of the city would have been if the need increase percentage 
 49.6   was 100 percent; and 
 49.7      (5) the city aid base of the city used in calculating aid 
 49.8   under section 477A.013 is less than $7 per capita. 
 49.9      (j) The city aid base for a city is increased by $225,000 
 49.10  in calendar years 2000 to 2002 and the maximum amount of total 
 49.11  aid it may receive under section 477A.013, subdivision 9, 
 49.12  paragraph (c), is also increased by $225,000 in calendar year 
 49.13  2000 only, provided that: 
 49.14     (1) the city had a population of at least 5,000; 
 49.15     (2) its population had increased by at least 50 percent in 
 49.16  the ten-year period ending in 1997; 
 49.17     (3) the city is located outside of the Minneapolis-St. Paul 
 49.18  metropolitan statistical area as defined by the United States 
 49.19  Bureau of the Census; and 
 49.20     (4) the city received less than $30 per capita in aid under 
 49.21  section 477A.013, subdivision 9, for aids payable in 1999. 
 49.22     (k) The city aid base for a city is increased by $102,000 
 49.23  in 2000 and thereafter, and the maximum amount of total aid it 
 49.24  may receive under section 477A.013, subdivision 9, paragraph 
 49.25  (c), is also increased by $102,000 in calendar year 2000 only, 
 49.26  provided that: 
 49.27     (1) the city has a population in 1997 of 2,000 or more; 
 49.28     (2) the net tax capacity of the city used in calculating 
 49.29  its 1999 aid under section 477A.013 is less than $455 per 
 49.30  capita; 
 49.31     (3) the net levy of the city used in calculating 1999 aid 
 49.32  under section 477A.013 is greater than $195 per capita; and 
 49.33     (4) the 1999 local government aid of the city under section 
 49.34  477A.013 is less than 38 percent of the amount that the formula 
 49.35  aid of the city would have been if the need increase percentage 
 49.36  was 100 percent. 
 50.1      (l) The city aid base for a city is increased by $32,000 in 
 50.2   2001 and thereafter, and the maximum amount of total aid it may 
 50.3   receive under section 477A.013, subdivision 9, paragraph (c), is 
 50.4   also increased by $32,000 in calendar year 2001 only, provided 
 50.5   that: 
 50.6      (1) the city has a population in 1998 that is greater than 
 50.7   200 but less than 500; 
 50.8      (2) the city's revenue need used in calculating aids 
 50.9   payable in 2000 was greater than $200 per capita; 
 50.10     (3) the city net tax capacity for the city used in 
 50.11  calculating aids available in 2000 was equal to or less than 
 50.12  $200 per capita; 
 50.13     (4) the city aid base of the city used in calculating aid 
 50.14  under section 477A.013 is less than $65 per capita; and 
 50.15     (5) the city's formula aid for aids payable in 2000 was 
 50.16  greater than zero. 
 50.17     (m) The city aid base for a city is increased by $7,200 in 
 50.18  2001 and thereafter, and the maximum amount of total aid it may 
 50.19  receive under section 477A.013, subdivision 9, paragraph (c), is 
 50.20  also increased by $7,200 in calendar year 2001 only, provided 
 50.21  that: 
 50.22     (1) the city had a population in 1998 that is greater than 
 50.23  200 but less than 500; 
 50.24     (2) the city's commercial industrial percentage used in 
 50.25  calculating aids payable in 2000 was less than ten percent; 
 50.26     (3) more than 25 percent of the city's population was 60 
 50.27  years old or older according to the 1990 census; 
 50.28     (4) the city aid base of the city used in calculating aid 
 50.29  under section 477A.013 is less than $15 per capita; and 
 50.30     (5) the city's formula aid for aids payable in 2000 was 
 50.31  greater than zero. 
 50.32     (n) The city aid base for a city is increased by $45,000 in 
 50.33  2001 and thereafter and by an additional $50,000 in calendar 
 50.34  years 2002 to 2011, and the maximum amount of total aid it may 
 50.35  receive under section 477A.013, subdivision 9, paragraph (c), is 
 50.36  also increased by $45,000 in calendar year 2001 only, and by 
 51.1   $50,000 in calendar year 2002 only, provided that: 
 51.2      (1) the net tax capacity of the city used in calculating 
 51.3   its 2000 aid under section 477A.013 is less than $810 per 
 51.4   capita; 
 51.5      (2) the population of the city declined more than two 
 51.6   percent between 1988 and 1998; 
 51.7      (3) the net levy of the city used in calculating 2000 aid 
 51.8   under section 477A.013 is greater than $240 per capita; and 
 51.9      (4) the city received less than $36 per capita in aid under 
 51.10  section 477A.013, subdivision 9, for aids payable in 2000. 
 51.11     (o) The city aid base for a city with a population of 
 51.12  10,000 or more which is located outside of the seven-county 
 51.13  metropolitan area is increased in 2002 and thereafter, and the 
 51.14  maximum amount of total aid it may receive under section 
 51.15  477A.013, subdivision 9, paragraph (b) or (c), is also increased 
 51.16  in calendar year 2002 only, by an amount equal to the lesser of: 
 51.17     (1)(i) the total population of the city, as determined by 
 51.18  the United States Bureau of the Census, in the 2000 census, (ii) 
 51.19  minus 5,000, (iii) times 60; or 
 51.20     (2) $2,500,000. 
 51.21     (p) The city aid base is increased by $50,000 in 2002 and 
 51.22  thereafter, and the maximum amount of total aid it may receive 
 51.23  under section 477A.013, subdivision 9, paragraph (c), is also 
 51.24  increased by $50,000 in calendar year 2002 only, provided that: 
 51.25     (1) the city is located in the seven-county metropolitan 
 51.26  area; 
 51.27     (2) its population in 2000 is between 10,000 and 20,000; 
 51.28  and 
 51.29     (3) its commercial industrial percentage, as calculated for 
 51.30  city aid payable in 2001, was greater than 25 percent. 
 51.31     (q) The city aid base for a city is increased by $150,000 
 51.32  in calendar years 2002 to 2011 and the maximum amount of total 
 51.33  aid it may receive under section 477A.013, subdivision 9, 
 51.34  paragraph (c), is also increased by $150,000 in calendar year 
 51.35  2002 only, provided that: 
 51.36     (1) the city had a population of at least 3,000 but no more 
 52.1   than 4,000 in 1999; 
 52.2      (2) its home county is located within the seven-county 
 52.3   metropolitan area; 
 52.4      (3) its pre-1940 housing percentage is less than 15 
 52.5   percent; and 
 52.6      (4) its city net tax capacity per capita for taxes payable 
 52.7   in 2000 is less than $900 per capita. 
 52.8      <b>[EFFECTIVE DATE.]</b> This section is effective for aid payable 
 52.9   in 2002 and thereafter. 
 52.10     Sec. 40.  Minnesota Statutes 2001 Supplement, section 
 52.11  477A.013, subdivision 9, is amended to read: 
 52.12     Subd. 9.  [CITY AID DISTRIBUTION.] (a) In calendar year 
 52.13  2002 and thereafter, each city shall receive an aid distribution 
 52.14  equal to the sum of (1) the city formula aid under subdivision 
 52.15  8, and (2) its city aid base. 
 52.16     (b) The percentage increase for a first class city in 
 52.17  calendar year 1995 and thereafter, except for 2002, shall not 
 52.18  exceed the percentage increase in the sum of the aid to all 
 52.19  cities under this section in the current calendar year compared 
 52.20  to the sum of the aid to all cities in the previous year.  For 
 52.21  aids payable in 2002 only, the amount of the aid paid to a first 
 52.22  class city shall not exceed the sum of its aid amount for 
 52.23  calendar year 2001 under this section and its aid payment in 
 52.24  calendar year 2001 under section 273.1398, subdivision 2, by 
 52.25  more than 2.5 percent. 
 52.26     (c) For aids payable in all years except 2002, the total 
 52.27  aid for any city, except a first class city, shall not exceed 
 52.28  the sum of (1) ten percent of the city's net levy for the year 
 52.29  prior to the aid distribution plus (2) its total aid in the 
 52.30  previous year before any increases or decreases under sections 
 52.31  16A.711, subdivision 5, and 477A.0132.  For aids payable in 2002 
 52.32  only, the total aid for any city, except a first class city, 
 52.33  shall not exceed 40 percent of the sum of (1) 40 percent of the 
 52.34  city's net levy for taxes payable in the year prior to the aid 
 52.35  distribution plus (2) 40 percent of its total aid in the 
 52.36  previous year under section 273.1398, subdivision 2, before any 
 53.1   increases or decreases under sections 16A.711, subdivision 5, 
 53.2   and 477A.0132 plus (3) its total aid in the previous year under 
 53.3   this section. 
 53.4      <b>[EFFECTIVE DATE.]</b> This section is effective for aid payable 
 53.5   in 2002 and thereafter. 
 53.6      Sec. 41.  Minnesota Statutes 2001 Supplement, section 
 53.7   477A.07, subdivision 1, is amended to read: 
 53.8      Subdivision 1.  [AID AMOUNT.] (a) For aid payable in 2003, 
 53.9   each county and city is eligible for aid equal to the amount by 
 53.10  which (i) 0.3 percent of the assessment year 2001 taxable market 
 53.11  value of class 4a property, plus 0.25 percent of the assessment 
 53.12  year 2001 market value of class 4b property, as defined in 
 53.13  section 273.13, subdivision 25, multiplied by the jurisdiction's 
 53.14  average tax rate for taxes payable in 2002, exceeds (ii) 0.4 
 53.15  percent of the jurisdiction's total taxable net tax capacity for 
 53.16  taxes payable in 2002, multiplied by the jurisdiction's average 
 53.17  tax rate for taxes payable in 2002. 
 53.18     (b) For aid payable in 2004, each county and city is 
 53.19  eligible for aid equal to the amount by which (i) 0.25 percent 
 53.20  of the assessment year 2002 taxable market value of class 4a 
 53.21  property, as defined in section 273.13, subdivision 
 53.22  25, multiplied by the jurisdiction's average tax rate for taxes 
 53.23  payable in 2003, exceeds (ii) 0.4 percent of the jurisdiction's 
 53.24  total taxable net tax capacity for taxes payable in 2003, 
 53.25  multiplied by the jurisdiction's average tax rate for taxes 
 53.26  payable in 2003. 
 53.27     <b>[EFFECTIVE DATE.]</b> This section is effective for aid payable 
 53.28  in 2003 and thereafter. 
 53.29     Sec. 42.  Laws 1993, chapter 375, article 5, section 42, is 
 53.30  amended to read: 
 53.31     Sec. 42. [REPORT TO LEGISLATURE.] 
 53.32     By February March 1 of each year, the commissioner of 
 53.33  revenue shall make a report to the legislature on the use of 
 53.34  limited market value under section 273.13, subdivision 1a, and 
 53.35  the valuation exclusion under section 273.13, subdivision 16.  
 53.36  For the limited market value provision, the report shall include 
 54.1   the total value excluded from taxation by type of property for 
 54.2   each city and town.  For the valuation exclusion provision, the 
 54.3   report shall include the total market value excluded from 
 54.4   taxation for each city and town, as well as a breakdown of the 
 54.5   excluded improvement amounts by age and value of the property 
 54.6   being improved and the amount of the qualifying improvement.  
 54.7   The county assessors shall provide the information necessary for 
 54.8   the commissioner to compile the report in a manner prescribed by 
 54.9   the commissioner. 
 54.10     Sec. 43.  Laws 2001, First Special Session chapter 5, 
 54.11  article 9, section 3, the effective date, is amended to read: 
 54.12     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 54.13  beginning after December 31, 2001, except that the amendment 
 54.14  to clause clauses (3) is and (12) are effective for tax years 
 54.15  beginning after December 31, 2000. 
 54.16     Sec. 44.  Laws 2001, First Special Session chapter 5, 
 54.17  article 15, section 3, the effective date, as amended by Laws 
 54.18  2001, First Special Session chapter 13, section 1, is amended to 
 54.19  read: 
 54.20     <b>[EFFECTIVE DATE.]</b> This section is effective for loans and 
 54.21  advances made after July 31, 2001, and to districts with 
 54.22  requests for certification made after July 31, 1979.  Interfund 
 54.23  loans and advances made before August 1, 2001, are ratified and 
 54.24  approved, subject to the following restrictions:  (1) the 
 54.25  interest accrued or paid after July 31, 2001, may not exceed the 
 54.26  limit in Minnesota Statutes, section 469.178, subdivision 7, and 
 54.27  (2) if there is no resolution or other document created 
 54.28  contemporaneously with the making of the loan or advance that 
 54.29  specifies the principal amount of the loan or advance, the 
 54.30  principal amount of the loan or advance is limited to a maximum 
 54.31  amount equal to the largest negative cash balance that existed 
 54.32  at any time in the fund that received the undocumented loan or 
 54.33  advance.  An authority or municipality may modify the terms of 
 54.34  an interfund loan or advance made before August 1, 2001, to 
 54.35  comply with any of the requirements of this section as the 
 54.36  authority or municipality deems appropriate August 1, 2001, and 
 55.1   thereafter. 
 55.2      Sec. 45.  [EARLY DECERTIFICATION OF TAX INCREMENT 
 55.3   DISTRICTS; EFFECTIVE DATE.] 
 55.4      Laws 2001, First Special Session chapter 5, article 15, 
 55.5   section 12, is retroactively effective for decertifications 
 55.6   occurring on or after July 1, 2001, regardless of the date of 
 55.7   the request for certification of the district or any portion of 
 55.8   the district. 
 55.9      Sec. 46.  [REPEALER.] 
 55.10     (a) Minnesota Statutes 2000, sections 272.02, subdivision 
 55.11  40; 290.01, subdivisions 19g and 32; and 295.44, are repealed 
 55.12  effective the day following final enactment. 
 55.13     (b) Minnesota Statutes 2000, section 290.0921, subdivision 
 55.14  5, is repealed effective for taxable years beginning after 
 55.15  December 31, 2001.