1.1 	A bill for an act
1.2 	relating to education finance; correcting the calculation of the sales ratio to 
1.3 	adjust for limited market value; amending Minnesota Statutes 2004, sections 
1.4 	123B.53, subdivisions 4, 5; 126C.01, by adding a subdivision; 127A.48, by 
1.5 	adding a subdivision; Minnesota Statutes 2005 Supplement, section 273.11, 
1.6 	subdivision 1a.
1.7 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.8 	Section 1. Minnesota Statutes 2004, section 123B.53, subdivision 4, is amended to read:
1.9 		Subd. 4.Debt service equalization revenue. (a) The debt service equalization 
1.10 	revenue of a district equals the sum of the first tier debt service equalization revenue and 
1.11 	the second tier debt service equalization revenue.
1.12 	(b) The first tier debt service equalization revenue of a district equals the greater of 
1.13 	zero or the eligible debt service revenue minus the amount raised by a levy of 15 percent 
1.14 	times the adjusted debt service net tax capacity of the district minus the second tier debt 
1.15 	service equalization revenue of the district.
1.16 	(c) The second tier debt service equalization revenue of a district equals the greater 
1.17 	of zero or the eligible debt service revenue, excluding alternative facilities levies under 
1.18 	section  123B.59, subdivision 5, minus the amount raised by a levy of 25 percent times 
1.19 	the adjusted debt service net tax capacity of the district. 

1.20 	EFFECTIVE DATE. This section is effective for revenue for fiscal year 2008. 

1.21 	Sec. 2. Minnesota Statutes 2004, section 123B.53, subdivision 5, is amended to read:
1.22 		Subd. 5.Equalized debt service levy. (a) The equalized debt service levy of a 
1.23 	district equals the sum of the first tier equalized debt service levy and the second tier 
1.24 	equalized debt service levy.
2.1 	(b) A district's first tier equalized debt service levy equals the district's first tier debt 
2.2 	service equalization revenue times the lesser of one or the ratio of:
2.3 	(1) the quotient derived by dividing the adjusted debt service net tax capacity of the 
2.4 	district for the year before the year the levy is certified by the adjusted pupil units in the 
2.5 	district for the school year ending in the year prior to the year the levy is certified; to
2.6 	(2) $3,200.
2.7 	(c) A district's second tier equalized debt service levy equals the district's second 
2.8 	tier debt service equalization revenue times the lesser of one or the ratio of:
2.9 	(1) the quotient derived by dividing the adjusted debt service net tax capacity of the 
2.10 	district for the year before the year the levy is certified by the adjusted pupil units in the 
2.11 	district for the school year ending in the year prior to the year the levy is certified; to
2.12 	(2) $8,000.

2.13 	EFFECTIVE DATE. This section is effective for revenue for fiscal year 2008. 

2.14 	Sec. 3. Minnesota Statutes 2004, section 126C.01, is amended by adding a subdivision 
2.15 	to read:
2.16 		Subd. 2a.Debt service net tax capacity. A school district's debt service net tax 
2.17 	capacity means the net tax capacity of the taxable property of the district as adjusted by 
2.18 	the commissioner of revenue under section 127A.48, subdivision 17.  The debt service net 
2.19 	tax capacity for any given calendar year must be used to compute the debt service levy 
2.20 	limitations for levies certified in the succeeding calendar year and aid for the school year 
2.21 	beginning in the second succeeding calendar year.

2.22 	EFFECTIVE DATE. This section is effective the day following final enactment for 
2.23 	computing taxes payable in 2007.

2.24 	Sec. 4. Minnesota Statutes 2004, section 127A.48, is amended by adding a subdivision 
2.25 	to read:
2.26 		Subd. 17.Debt service net tax capacity. To calculate each district's debt service 
2.27 	net tax capacity, the commissioner of revenue must recompute the amounts in this section 
2.28 	using an alternative sales ratio comparing the sales price to the estimated market value 
2.29 	of the property.

2.30 	EFFECTIVE DATE. This section is effective the day following final enactment for 
2.31 	computing taxes payable in 2007.

3.1 	Sec. 5. Minnesota Statutes 2005 Supplement, section 273.11, subdivision 1a, is 
3.2 	amended to read:
3.3 		Subd. 1a.Limited market value. In the case of all property classified as 
3.4 	agricultural homestead or nonhomestead, residential homestead or nonhomestead, timber, 
3.5 	or noncommercial seasonal residential recreational, the assessor shall compare the value 
3.6 	with the taxable portion of the value determined in the preceding assessment.
3.7 	For assessment years 2004, 2005, and 2006, the amount of the increase shall not 
3.8 	exceed the greater of (1) 15 percent of the value in the preceding assessment, or (2) 25 
3.9 	percent of the difference between the current assessment and the preceding assessment.
3.10 	For assessment year 2007, the amount of the increase shall not exceed the greater of 
3.11 	(1) 15 percent of the value in the preceding assessment, or (2) 33 percent of the difference 
3.12 	between the current assessment and the preceding assessment.
3.13 	For assessment year 2008, the amount of the increase shall not exceed the greater of 
3.14 	(1) 15 percent of the value in the preceding assessment, or (2) 50 percent of the difference 
3.15 	between the current assessment and the preceding assessment.
3.16 	This limitation shall not apply to increases in value due to improvements. For 
3.17 	purposes of this subdivision, the term "assessment" means the value prior to any exclusion 
3.18 	under subdivision 16.
3.19 	The provisions of this subdivision shall be in effect through assessment year 2008 
3.20 	as provided in this subdivision.
3.21 	For purposes of the assessment/sales ratio study conducted under section 127A.48, 
3.22 	and the computation of state aids paid under chapters 122A, 123A, 123B excluding section 
3.23 	123B.53, 124D, 125A, 126C, 127A, and 477A, market values and net tax capacities 
3.24 	determined under this subdivision and subdivision 16, shall be used.

3.25 	EFFECTIVE DATE. This section is effective the day following final enactment for 
3.26 	computing taxes payable in 2007.