1.1 	A bill for an act
1.2 	relating to the state budget; reducing appropriations to balance the state 
1.3 	budget; modifying calculation of state aids and credits payable to cities, 
1.4 	counties, school districts, and other local governments; appropriating money; 
1.5 	amending Minnesota Statutes 2008, sections 126C.10, subdivision 2; 273.1384, 
1.6 	subdivisions 1, 2; 477A.013, subdivision 9; 477A.03, subdivisions 2a, 2b; 
1.7 	repealing Minnesota Statutes 2008, section 477A.03, subdivision 5.
1.8 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.9 	Section 1. Minnesota Statutes 2008, section 126C.10, subdivision 2, is amended to read:
1.10 		Subd. 2.Basic revenue. The basic revenue for each district equals the formula 
1.11 	allowance times the adjusted marginal cost pupil units for the school year. The formula 
1.12 	allowance for fiscal year 2007 is $4,974. The formula allowance for fiscal year 2008 is 
1.13 	$5,074 and 2010 is $5,124, the formula allowance for fiscal year 2009 2011 is $4,659 and 
1.14 	the formula allowance for fiscal year 2012 and subsequent years is $5,124 $4,785.

1.15 	EFFECTIVE DATE. This section is effective for fiscal year 2011 and later.

1.16 	Sec. 2. Minnesota Statutes 2008, section 273.1384, subdivision 1, is amended to read:
1.17 		Subdivision 1.Residential homestead market value credit. Each county auditor 
1.18 	shall determine a homestead credit for each class 1a, 1b, and 2a homestead property within 
1.19 	the county equal to 0.4 0.35 percent of the first $76,000 of market value of the property 
1.20 	minus .09 0.121 percent of the market value in excess of $76,000. The credit amount may 
1.21 	not be less than zero. In the case of an agricultural or resort homestead, only the market 
1.22 	value of the house, garage, and immediately surrounding one acre of land is eligible in 
1.23 	determining the property's homestead credit. In the case of a property that is classified as 
1.24 	part homestead and part nonhomestead, (i) the credit shall apply only to the homestead 
2.1 	portion of the property, but (ii) if a portion of a property is classified as nonhomestead 
2.2 	solely because not all the owners occupy the property, not all the owners have qualifying 
2.3 	relatives occupying the property, or solely because not all the spouses of owners occupy 
2.4 	the property, the credit amount shall be initially computed as if that nonhomestead portion 
2.5 	were also in the homestead class and then prorated to the owner-occupant's percentage 
2.6 	of ownership. For the purpose of this section, when an owner-occupant's spouse does 
2.7 	not occupy the property, the percentage of ownership for the owner-occupant spouse is 
2.8 	one-half of the couple's ownership percentage.

2.9 	EFFECTIVE DATE. This section is effective for taxes payable in 2011 and 
2.10 	thereafter.

2.11 	Sec. 3. Minnesota Statutes 2008, section 273.1384, subdivision 2, is amended to read:
2.12 		Subd. 2.Agricultural homestead market value credit. Property classified as 
2.13 	agricultural homestead under section 273.13, subdivision 23, paragraph (a), is eligible 
2.14 	for an agricultural credit. The credit is computed using the property's agricultural credit 
2.15 	market value, defined for this purpose as the property's market value excluding the market 
2.16 	value of the house, garage, and immediately surrounding one acre of land. The credit is 
2.17 	equal to 0.3 0.24 percent of the first $115,000 of the property's agricultural credit market 
2.18 	value minus .05 .04 percent of the property's agricultural credit market value in excess 
2.19 	of $115,000, subject to a maximum reduction of $115 $92. In the case of property that 
2.20 	is classified as part homestead and part nonhomestead solely because not all the owners 
2.21 	occupy or farm the property, not all the owners have qualifying relatives occupying or 
2.22 	farming the property, or solely because not all the spouses of owners occupy the property, 
2.23 	the credit must be initially computed as if that nonhomestead agricultural land was also 
2.24 	classified as agricultural homestead and then prorated to the owner-occupant's percentage 
2.25 	of ownership.

2.26 	EFFECTIVE DATE. This section is effective for taxes payable in 2011 and 
2.27 	thereafter.

2.28 	Sec. 4. Minnesota Statutes 2008, section 477A.013, subdivision 9, is amended to read:
2.29 		Subd. 9. City aid distribution. (a) In calendar year 2009 2011 and thereafter, each 
2.30 	city shall receive an aid distribution equal to the sum of (1) the city formula aid under 
2.31 	subdivision 8, and (2) its city aid base. 
2.32 	(b) For aids payable in 2009 2011 only, the total aid for any city shall not exceed the 
2.33 	sum of (1) 35 percent of the city's net levy for the year prior to the aid distribution, plus 
3.1 	(2) its total aid in the previous year. for the previous year means the total amount paid in 
3.2 	calendar year 2010, after accounting for unallotments and reductions made after the aid 
3.3 	amounts were certified. For aids payable in 2012 and thereafter the total aid paid in the 
3.4 	previous year means the amount of aid certified to be paid in the previous year.
3.5 	(c)(1) For aids payable in 2011 only, the total aid for any city shall not exceed the 
3.6 	sum of (i) 75 percent of its aid loss in 2010 due to unallotments and reductions made after 
3.7 	amounts were certified, plus (ii) its total aid in the previous year. 
3.8 	(2) For aids payable in 2010 2012 and thereafter, the total aid for any city shall not 
3.9 	exceed the sum of (1) (i) ten percent of the city's net levy for the year prior to the aid 
3.10 	distribution plus (2) (ii) its total aid in the previous year. 
3.11 	(3) For aids payable in 2009 2011 and thereafter, the total aid for any city with a 
3.12 	population of 2,500 or more may not be less than its total aid under this section in the 
3.13 	previous year minus the lesser of $10 multiplied by its population, or ten percent of its net 
3.14 	levy in the year prior to the aid distribution. 
3.15 	(d) For aids payable in 2010 2011 and thereafter, the total aid for a city with a 
3.16 	population less than 2,500 must not be less than the amount it was certified to receive in 
3.17 	the previous year minus the lesser of $10 multiplied by its population, or five percent of its 
3.18 	2003 certified aid amount. For aids payable in 2009 only, the total aid for a city with a 
3.19 	population less than 2,500 must not be less than what it received under this section in the 
3.20 	previous year unless its total aid in calendar year 2008 was aid under section 477A.011, 
3.21 	subdivision 36, paragraph (s), in which case its minimum aid is zero.
3.22 	(e) A city's aid loss under this section may not exceed $300,000 in any year in 
3.23 	which the total city aid appropriation under section 477A.03, subdivision 2a, is equal or 
3.24 	greater than the appropriation under that subdivision in the previous year, unless the 
3.25 	city has an adjustment in its city net tax capacity under the process described in section 
3.26 	469.174, subdivision 28.
3.27 	(f) If a city's net tax capacity used in calculating aid under this section has decreased 
3.28 	in any year by more than 25 percent from its net tax capacity in the previous year due to 
3.29 	property becoming tax-exempt Indian land, the city's maximum allowed aid increase 
3.30 	under paragraph (c) shall be increased by an amount equal to (1) the city's tax rate in the 
3.31 	year of the aid calculation, multiplied by (2) the amount of its net tax capacity decrease 
3.32 	resulting from the property becoming tax exempt. 

3.33 	EFFECTIVE DATE. This section is effective for aids payable in calendar year 
3.34 	2011 and thereafter.

3.35 	Sec. 5. Minnesota Statutes 2008, section 477A.03, subdivision 2a, is amended to read:
4.1 		Subd. 2a.Cities. For aids payable in 2009 2011 and thereafter, the total aid 
4.2 	paid under section 477A.013, subdivision 9, is $526,148,487, subject to adjustment in 
4.3 	subdivision 5 $380,749,182. 

4.4 	EFFECTIVE DATE. This section is effective for aids payable in calendar year 
4.5 	2011 and thereafter.

4.6 	Sec. 6. Minnesota Statutes 2008, section 477A.03, subdivision 2b, is amended to read:
4.7 		Subd. 2b.Counties. (a) For aids payable in 2009 2011 and thereafter, the total aid 
4.8 	payable under section 477A.0124, subdivision 3, is $111,500,000 $72,279,200 minus 
4.9 	one-half of the total aid amount determined under section 477A.0124, subdivision 5, 
4.10 	paragraph (b), subject to adjustment in subdivision 5. Each calendar year, $500,000 shall 
4.11 	be retained by the commissioner of revenue to make reimbursements to the commissioner 
4.12 	of management and budget for payments made under section 611.27. For calendar 
4.13 	year 2004, the amount shall be in addition to the payments authorized under section 
4.14 	477A.0124, subdivision 1. For calendar year 2005 and subsequent years, the amount shall 
4.15 	be deducted from the appropriation under this paragraph. The reimbursements shall be to 
4.16 	defray the additional costs associated with court-ordered counsel under section 611.27. 
4.17 	Any retained amounts not used for reimbursement in a year shall be included in the next 
4.18 	distribution of county need aid that is certified to the county auditors for the purpose of 
4.19 	property tax reduction for the next taxes payable year.
4.20 	(b) For aids payable in 2009 2011 and thereafter, the total aid under section 
4.21 	477A.0124, subdivision 4, is $116,132,923 $77,193,804 minus one-half of the total aid 
4.22 	amount determined under section 477A.0124, subdivision 5, paragraph (b), subject to 
4.23 	adjustment in subdivision 5. The commissioner of management and budget shall bill the 
4.24 	commissioner of revenue for the cost of preparation of local impact notes as required by 
4.25 	section 3.987, not to exceed $207,000 in fiscal year 2004 and thereafter. The commissioner 
4.26 	of education shall bill the commissioner of revenue for the cost of preparation of local 
4.27 	impact notes for school districts as required by section 3.987, not to exceed $7,000 in fiscal 
4.28 	year 2004 and thereafter. The commissioner of revenue shall deduct the amounts billed 
4.29 	under this paragraph from the appropriation under this paragraph. The amounts deducted 
4.30 	are appropriated to the commissioner of management and budget and the commissioner of 
4.31 	education for the preparation of local impact notes.

4.32 	Sec. 7. 2010 AID AND CREDIT REDUCTIONS.
 4.33 		Subdivision 1.Definitions. For purposes of this section, the 2010 levy plus aid 
4.34 	revenue base for a city, town, or county equals the sum of the following:
5.1 	(1) its certified property tax levy for taxes payable in 2010;
5.2 	(2) the local government aid or county program aid it was certified to receive in 
5.3 	calendar year 2010 under Minnesota Statutes, sections 477A.011 to 477A.03; and
5.4 	(3) the taconite aids it was certified to receive in calendar year 2010 under Minnesota 
5.5 	Statutes, sections 298.28 and 298.282, including any aid which was required to be placed 
5.6 	in a special fund for expenditure in the next succeeding year.
5.7 		Subd. 2.2010 city aid and credit reductions. (a) The commissioner of revenue 
5.8 	shall compute an aid reduction amount for each city for 2010 equal to the amount in 
5.9 	paragraph (b). The total reduction to a city under this subdivision is limited to the sum of 
5.10 	the city's payable 2010 distributions pursuant to Minnesota Statutes, section 477A.013, 
5.11 	and related sections, and the city's payable 2010 reimbursements pursuant to Minnesota 
5.12 	Statutes, section 273.1384. The reduction is applied first to the aid payments under 
5.13 	Minnesota Statutes section 477A.013 and, then, if necessary to the reimbursements under 
5.14 	Minnesota Statutes, section 273.1384.
5.15 	(b) The commissioner shall compute an aid reduction amount for each city equal to 
5.16 	7.4525 percent of the city's 2010 levy plus aid revenue base.
5.17 		Subd. 3.2010 county aid and credit reductions. (a) The commissioner of revenue 
5.18 	shall compute an aid reduction amount for each county for 2010 equal to the amount 
5.19 	in paragraph (b). The total reduction to a county under this subdivision is limited to 
5.20 	the sum of the county's payable 2010 distributions pursuant to Minnesota Statutes, 
5.21 	section 477A.0124, and related sections, and the county's payable 2010 reimbursements 
5.22 	pursuant to Minnesota Statutes, section 273.1384. The reduction is applied first to the aid 
5.23 	payments under Minnesota Statutes, section 477A.0124 and, then, if necessary to the 
5.24 	reimbursements under Minnesota Statutes, section 273.1384.
5.25 	(b) The commissioner shall compute an aid reduction amount for each county equal 
5.26 	to 2.452 percent of the county's 2010 levy plus aid revenue base. If a county has a 2007 
5.27 	population less than 5,100, its reduction amount under this paragraph is zero.
5.28 		Subd. 4.2010 town credit reductions. (a) The commissioner of revenue shall 
5.29 	compute a reduction amount for each town for 2010 equal to the amount in paragraph (b). 
5.30 	The total reduction to a town under this subdivision is limited to the town's payable 2010 
5.31 	reimbursements pursuant to Minnesota Statutes, section 273.1384.
5.32 	(b) The commissioner shall compute a credit reduction amount for each town equal 
5.33 	to 4.15 percent of the town's 2010 levy plus aid revenue base.
5.34 		Subd. 5.2010 special taxing district credit reductions. The commissioner of 
5.35 	revenue shall compute a credit reduction amount for each special taxing district for 2010 
5.36 	equal to five percent of the district's levy for taxes payable in 2010. The total reduction 
6.1 	to a special taxing district under this subdivision is limited to the district's payable 2010 
6.2 	reimbursements pursuant to Minnesota Statutes, section 273.1384.

6.3 	EFFECTIVE DATE. This section is effective for aids and credit reimbursements 
6.4 	payable in calendar year 2010.

6.5 	Sec. 8. APPROPRIATION REDUCTIONS; FISCAL YEAR 2011.
 6.6 		Subdivision 1.General directions. (a) This section is intended to reduce fiscal year 
6.7 	2011 general fund appropriations by an amount that is sufficient, when combined with 
6.8 	the other provisions of this act, to offset the projected reduction in revenues forecast by 
6.9 	the commissioner of the Department of Management and Budget in December 2009 by 
6.10 	over $1,100,000,000. In making these reductions, the legislature intends that the officials, 
6.11 	designed in this section, reduce state expenditures in such a manner that:
6.12 	(1) minimizes, to the greatest extent possible, the effects on the delivery of essential 
6.13 	state and local government services;
6.14 	(2) maintains or maximizes the receipt of federal grants-in-aid and other similar 
6.15 	sources of funding of state and local operations;
6.16 	(3) maintains or increases the collection of state taxes and other revenues; and
6.17 	(4) is consistent with the original legislative intent in enacting the state budget 
6.18 	to the maximum extent possible.
6.19 	(b) For purposes of this section unless the context indicates otherwise, 
6.20 	"commissioner" means the commissioner of the Department of Management and Budget.
6.21 		Subd. 2.Transportation; Laws 2009, chapter 36. The fiscal year 2011 general 
6.22 	fund appropriations in Laws 2009, chapter 36, are reduced by $7,165,000. After consulting 
6.23 	with the commissioner, other chief administrative officer, or governing body of each 
6.24 	affected agency, the commissioner shall allocate this reduction among the appropriations 
6.25 	in Laws 2009, chapter 36, in a manner that is consistent with the principles outlined in 
6.26 	subdivision 1.
6.27 		Subd. 3.Energy and environment; Laws 2009, chapter 37. The fiscal year 2011 
6.28 	general fund appropriations in Laws 2009, chapter 37, are reduced by $13,575,000. 
6.29 	After consulting with the commissioner, other chief administrative officer, or governing 
6.30 	body of each affected agency, the commissioner shall allocate this reduction among the 
6.31 	appropriations in Laws 2009, chapter 37, in a manner that is consistent with the principles 
6.32 	outlined in subdivision 1.
7.1 		Subd. 4.Economic development; Laws 2009, chapter 78. The fiscal year 2011 
7.2 	general fund appropriations in Laws 2009, chapter 78, are reduced by $10,015,000. 
7.3 	After consulting with the commissioner, other chief administrative officer, or governing 
7.4 	body of each affected agency, the commissioner shall allocate this reduction among the 
7.5 	appropriations in Laws 2009, chapter 78, in a manner that is consistent with the principles 
7.6 	outlined in subdivision 1.
7.7 		Subd. 5.Health and human services; Laws 2009, chapter 79. The fiscal year 
7.8 	2011 general fund appropriations in Laws 2009, chapter 79, are reduced by $369,505,000. 
7.9 	After consulting with the commissioner, other chief administrative officer, or governing 
7.10 	body of each affected agency, the commissioner shall allocate this reduction among the 
7.11 	appropriations in Laws 2009, chapter 79, in a manner that is consistent with the principles 
7.12 	outlined in subdivision 1.
7.13 		Subd. 6.Public safety; Laws 2009, chapter 83. The fiscal year 2011 general fund 
7.14 	appropriations in Laws 2009, chapter 83, are reduced by $70,455,000. These reductions 
7.15 	must be allocated among the appropriations in Laws 2009, chapter 83, in equal proportions.
7.16 		Subd. 7.Agriculture and veterans affairs; Laws 2009, chapter 94. The fiscal year 
7.17 	2011 general fund appropriations in Laws 2009, chapter 94, are reduced by $9,345,000. 
7.18 	After consulting with the commissioner, other chief administrative officer, or governing 
7.19 	body of each affected agency, the commissioner shall allocate this reduction among the 
7.20 	appropriations in Laws 2009, chapter 94, in a manner that is consistent with the principles 
7.21 	outlined in subdivision 1.
7.22 		Subd. 8.Higher education; Laws 2009, chapter 95. The fiscal year 2011 general 
7.23 	fund appropriations in Laws 2009, chapter 95, to the Board of Regents of the University 
7.24 	of Minnesota is reduced by $36,000,000 and to the Board of Trustees of the Minnesota 
7.25 	State Colleges and Universities is reduced by $10,000,000.
7.26 		Subd. 9.State government; Laws 2009, chapter 101. (a) The fiscal year 2011 
7.27 	general fund appropriations in Laws 2009, chapter 101, to the legislature are reduced 
7.28 	as follows:
7.29 	(1) senate, $1,887,000;
7.30 	(2) house of representatives, $2,538,000; and
7.31 	(3) Legislative Coordinating Commission, $1,305,000.
7.32 	(b) The fiscal year 2011 general fund appropriations in Laws 2009, chapter 101, to 
7.33 	constitutional officers are reduced as follows:
7.34 	(1) governor and lieutenant governor, $297,000;
8.1 	(2) state auditor, $778,000;
8.2 	(3) attorney general, $1,963,000; and
8.3 	(4) secretary of state, $501,000;
8.4 	(c) The fiscal year 2011 general fund appropriations in Laws 2009, chapter 101, to 
8.5 	state agencies or entities not covered by paragraph (a) or (b), are reduced by $14,844,000. 
8.6 	After consulting with the commissioner, other chief administrative officer, or governing 
8.7 	body of each affected agency, the commissioner shall allocate this reduction among 
8.8 	the appropriations in Laws 2009, chapter 101, in a manner that is consistent with the 
8.9 	principles outlined in subdivision 1.

8.10 	EFFECTIVE DATE. This section is effective the day following final enactment.

8.11 	Sec. 9. APPROPRIATION; REVENUE; TAX COMPLIANCE.
 8.12 	(a) $6,727,000 is appropriated to the commissioner of revenue from the general fund 
8.13 	for fiscal year 2011. This appropriation is for additional activities of the Department of 
8.14 	Revenue to identify and collect tax liabilities from individuals and businesses that do not 
8.15 	pay all of the taxes they owe. This initiative is expected to result in new general fund 
8.16 	revenues of $26,865,000 for the biennium ending June 30, 2011.
8.17 	(b) The department must report to the chairs of the house of representatives Ways 
8.18 	and Means and senate Finance Committees by January 15, 2011, on the following 
8.19 	performance indicators:
8.20 	(1) the number of corporations noncompliant with the corporate tax system each 
8.21 	year and the percentage and dollar amounts of valid tax liabilities collected;
8.22 	(2) the number of businesses noncompliant with the sales and use tax system and the 
8.23 	percentage and dollar amount of the valid tax liabilities collected; and
8.24 	(3) the number of individual noncompliant cases resolved and the percentage and 
8.25 	dollar amounts of valid tax liabilities collected.
8.26 	This report may be included in the second report required under Laws 2009, chapter 
8.27 	101, article 1, section 15, subdivision 2, paragraph (b).

8.28 	Sec. 10.  REPEALER.
 8.29 	Minnesota Statutes 2008, section 477A.03, subdivision 5, is repealed.

8.30 	EFFECTIVE DATE. The repeal of Minnesota Statutes, section 477A.03, 
8.31 	subdivision 5, is effective for aids payable in calendar year 2011 and thereafter.