1.1 	A bill for an act
1.2 	relating to taxation; authorizing a property tax levy for transit operating costs in 
1.3 	the metropolitan area; amending a proposed constitutional amendment allocating 
1.4 	the proceeds of sales tax on motor vehicles; modifying the distribution of 
1.5 	revenues from the sales tax on motor vehicles; authorizing the sale of trunk 
1.6 	highway bonds; appropriating money; amending Minnesota Statutes 2004, 
1.7 	sections 297B.09, subdivision 1; 473.388, subdivisions 4, 7; 473.446, subdivision 
1.8 	1, by adding subdivisions;  Laws 2005, chapter 88, article 3, sections 9; 10.
1.9 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.10 	ARTICLE 1
1.11 	METROPOLITAN AREA TRANSIT LEVY

1.12 	Section 1. Minnesota Statutes 2004, section 473.388, subdivision 4, is amended to read:
1.13 		Subd. 4.Financial assistance. (a) The council mustmay grant the requested 
1.14 	financial assistance if it determines that the proposed service is intended to replace the 
1.15 	service to the applying city or town or combination thereof by the council and that the 
1.16 	proposed service will meet the needs of the applicant at least as efficiently and effectively 
1.17 	as the existing service.
1.18 	(b) The amount of assistance which the council must may provide to a system under 
1.19 	this section may not be less than the sum of the amounts determined for each municipality 
1.20 	comprising the system as follows exceed the sum of:
1.21 	(1) the transit operating assistance grants received under this subdivision by the 
1.22 	municipality in calendar year 2001 or the tax revenues for transit services levied by the 
1.23 	municipality for taxes payable in 2001, including that portion of the levy derived from 
1.24 	the areawide pool under section  473F.08, subdivision 3, clause (a), plus the portion of the 
1.25 	municipality's aid under section  273.1398, subdivision 2, attributable to the transit levy; 
2.1 	times portion of the available local transit funds which the applicant proposes to use to 
2.2 	subsidize the proposed service; and
2.3 	(2) the ratio of (i) the appropriation from the transit fund to the council for nondebt 
2.4 	transit operations for the current fiscal year to (ii) the total levy certified by the council 
2.5 	under section  473.446 and the opt-out municipalities under this section for taxes payable 
2.6 	in 2001, including the portion of homestead and agricultural credit aid under section 
2.7 	273.1398, subdivision 2, attributable to nondebt transit levies, times
2.8 	(3) the ratio of (i) the municipality's total taxable market value for taxes payable in 
2.9 	the most recent year for which data is available divided by the municipality's total taxable 
2.10 	market value for taxes payable in 2001, to (ii) the total taxable market value of all property 
2.11 	in the metropolitan area for taxes payable in the most recent year for which data is available 
2.12 	divided by the total taxable market value of all property in the metropolitan area for taxes 
2.13 	payable in 2001. an amount of financial assistance equal to the amount under clause (1) 
2.14 	multiplied by the ratio of (i) the total amount of funds used by the council to fund its transit 
2.15 	operations, to (ii) the total amount of taxes collected by the council under section 473.446.
2.16 	(c) The council shall pay the amount to be provided to the recipient from the funds 
2.17 	the council would otherwise use to fund its transit operations.
2.18 	(d) For purposes of this section, "available local transit funds" means 90 percent 
2.19 	of the tax revenues that would accrue to the council from the tax it levies under section 
2.20 	473.446 in the applicant city or town or combination thereof.
2.21 	(e) For purposes of this section, "tax revenues" in the city or town means the sum of:
2.22 	(1) the nondebt spread levy, which is the total of the taxes extended by application of 
2.23 	the local tax rate for nondebt purposes on the taxable net tax capacity; and
2.24 	(2) the fiscal disparities distribution levy under section 473F.08, subdivision 3, 
2.25 	due to the application of the council's nondebt transit levy rate to the city's or town's 
2.26 	distribution net tax capacity.

2.27 	EFFECTIVE DATE. This section is effective for grants covering transit operations 
2.28 	for the second half of calendar year 2007 and for each calendar year thereafter.

2.29 	Sec. 2. Minnesota Statutes 2004, section 473.388, subdivision 7, is amended to read:
2.30 		Subd. 7.Local levy option. (a) A statutory or home rule charter city or town that is 
2.31 	eligible for assistance under this section, in lieu of receiving the assistance, may levy a tax 
2.32 	for payment of operating and capital expenditures for transit and other related activities and 
2.33 	to provide for payment of obligations issued by the municipality for capital expenditures 
2.34 	for transit and other related activities, provided that property taxes were pledged to satisfy 
2.35 	the obligations, and provided that legislative appropriations are insufficient to satisfy the 
3.1 	obligations. such purposes, provided that the tax must be sufficient to maintain the level of 
3.2 	transit service provided in the municipality in the previous year.
3.3 	(b) The transit tax revenues derived by the municipality may not exceed its available 
3.4 	local transit funds as defined in subdivision 4, calculated as if the percentage of transit tax 
3.5 	revenues were 88 percent instead of 90 percent.
3.6 	The commissioner of revenue shall certify the municipality's levy limitation 
3.7 	under this subdivision to the municipality by June 1 of the levy year. The tax must be 
3.8 	accumulated and kept in a separate fund to be known as the "replacement transit fund."
3.9 	(c) To enable the municipality to receive revenues described in clause (e) (2) of 
3.10 	subdivision 4 that would otherwise be lost if the municipality's transit tax was not treated 
3.11 	as a successor levy to that made by the council under section 473.446, in the first transit 
3.12 	levy year and any subsequent transit levy year immediately following a year in which the 
3.13 	municipality declined to make the levy, 88 percent of the council's nondebt spread levy 
3.14 	for the current taxes payable year shall be treated as levied by the municipality, and not the 
3.15 	council, for purposes of section 473F.08, subdivision 3, for the purpose of determining its 
3.16 	local tax rate for the preceding year.
3.17 	(d) Any transit taxes levied under this subdivision are not subject to, or counted 
3.18 	towards, any limit hereafter imposed by law on the levy of taxes upon taxable property 
3.19 	within any municipality unless the law specifically includes the transit tax.
3.20 	(b)(e) This subdivision is consistent with the transit redesign plan. Eligible 
3.21 	municipalities opting to operatelevy the transit tax under this subdivision shall continue to 
3.22 	meet the regional performance standards established by the council.
3.23 	(c)(f) Within the designated Americans with Disabilities Act area, metro mobility 
3.24 	remains the obligation of the state.
3.25 	(g) For purposes of this subdivision, "transit levy year" is any year in which the 
3.26 	municipality elects to levy under this subdivision.
3.27 	(h) A municipality may not levy taxes under this subdivision in any year unless it 
3.28 	notifies the council and the commissioner of revenue of its intent to levy before July 1 of 
3.29 	the levy year. The notification must include the amount of the municipality's proposed 
3.30 	transit tax for the current levy year or an indication that the municipality intends to levy its 
3.31 	maximum possible amount. After June 30 in the levy year, a municipality's decision to 
3.32 	levy or not levy taxes under this subdivision is irrevocable for that levy year.

3.33 	EFFECTIVE DATE. This section is effective for taxes payable in 2007 and 
3.34 	thereafter.

3.35 	Sec. 3. Minnesota Statutes 2004, section 473.446, subdivision 1, is amended to read:
4.1 		Subdivision 1.Metropolitan area transit tax. Within transit taxing district. (a) 
4.2 	For the purposes of sections  473.405 to  473.449 and the metropolitan transit system, 
4.3 	except as otherwise provided in this subdivision and subdivision 1d, the council shall levy 
4.4 	each year upon all taxable property within the metropolitan area transit taxing district, 
4.5 	defined in section473.121, subdivision 2, a transit tax consisting of: 
4.6 	(1) an amount which shall be used for payment of the expenses of operating transit 
4.7 	and paratransit service and to provide for payment of obligations issued by the council 
4.8 	under section 473.436, subdivision 6; and
4.9 	(1) (2) an additional amount necessary to provide full and timely payment of 
4.10 	certificates of indebtedness, bonds, including refunding bonds or other obligations 
4.11 	issued or to be issued under section  473.39 by the council for purposes of acquisition 
4.12 	and betterment of property and other improvements of a capital nature and to which the 
4.13 	council has specifically pledged tax levies under this clause; and.
4.14 	(2) an additional amount necessary to provide full and timely payment of certificates 
4.15 	of indebtedness issued by the council, after consultation with the commissioner of finance, 
4.16 	if revenues to the metropolitan area transit fund in the fiscal year in which the indebtedness 
4.17 	is issued increase over those revenues in the previous fiscal year by a percentage less than 
4.18 	the percentage increase for the same period in the revised Consumer Price Index for all 
4.19 	urban consumers for the St. Paul-Minneapolis metropolitan area prepared by the United 
4.20 	States Department of Labor.
4.21 	(b) Indebtedness to which property taxes have been pledged under paragraph (a), 
4.22 	clause (2), that is incurred in any fiscal year may not exceed the amount necessary to make 
4.23 	up the difference between (1) the amount that the council received or expects to receive 
4.24 	in that fiscal year from the metropolitan area transit fund and (2) the amount the council 
4.25 	received from that fund in the previous fiscal year multiplied by the percentage increase 
4.26 	for the same period in the revised Consumer Price Index for all urban consumers for the St. 
4.27 	Paul-Minneapolis metropolitan area prepared by the United States Department of Labor.
4.28 	(b) The property tax levied by the council for general purposes under clause (a) (1) 
4.29 	must not exceed the following amount for the year specified:
4.30 	(1) for taxes payable in 2007, one-half of the estimated amount to be appropriated 
4.31 	to the council from the metropolitan area transit fund under section 16A.88, subdivision 
4.32 	2, in fiscal year 2006, multiplied by a factor of one plus the percentage increase in the 
4.33 	implicit price deflator, minus any amounts levied by any municipalities in 2007 under 
4.34 	section 473.388, subdivision 7;
4.35 	(2) for taxes payable in 2008, the limit is the estimated amount to be appropriated 
4.36 	to the council from the metropolitan area transit fund under section 16A.88, subdivision 
5.1 	2, in fiscal year 2007, multiplied by a factor of one plus the percentage increase in the 
5.2 	implicit price deflator, minus any amounts levied by any municipalities in 2008 under 
5.3 	section 473.388, subdivision 7; and
5.4 	(3) for taxes payable in 2009 and thereafter, the limit is (i) the council's property tax 
5.5 	levy limitation for general transit purposes for the previous year determined under this 
5.6 	subdivision before reduction by any amounts levied by any municipalities in the previous 
5.7 	year under section 473.388, subdivision 7, (ii) multiplied by a factor of one plus the 
5.8 	percentage increase in the implicit price deflator, (iii) minus any amounts levied by any 
5.9 	municipalities in the current levy year under section 473.388, subdivision 7.
5.10 	(c) For purposes of this subdivision, "implicit price deflator" means the implicit 
5.11 	price deflator for government consumption expenditures and gross investment for state 
5.12 	and local governments as prepared by the United States Department of Commerce, for the 
5.13 	12-month period ending March 31 of the levy year.
5.14 	(d) The portion of the property tax levy for transit district operating purposes 
5.15 	attributable to a municipality that has exercised a local levy option under section 473.388, 
5.16 	subdivision 7, is the amount determined under subdivision 1d. The portion of the property 
5.17 	tax levy for transit district operating purposes attributable to the remaining municipalities 
5.18 	within the transit district is found by subtracting the portions attributable to the 
5.19 	municipalities that have exercised a local levy option under section 473.388, subdivision 7.
5.20 	(e) The county auditor shall adjust the tax rate levied pursuant to this section and 
5.21 	section 473.388 on all property within municipalities that receive full peak service and 
5.22 	limited off-peak service so that it is ten percent less than the rate within municipalities in 
5.23 	the district that do not qualify under this paragraph or paragraph (f).
5.24 	(f) The county auditor shall adjust the tax rate levied pursuant to this section and 
5.25 	section 473.388 on all property within municipalities that receive limited peak service 
5.26 	so that it is 15 percent less than the rate within municipalities in the district that do not 
5.27 	qualify under this paragraph or paragraph (e).
5.28 	(g) For purposes of this subdivision, "full peak and limited off-peak service" means 
5.29 	peak period regular route service plus weekday midday regular route service at intervals 
5.30 	longer than 60 minutes on the regular route with the greatest frequency; and "limited peak 
5.31 	period service" means peak period regular route service only.
5.32 	(h) For the purposes of property taxes payable in the following year, the council shall 
5.33 	annually determine which cities and towns qualify for the reduced rates under paragraphs 
5.34 	(e) and (f) and shall certify this list to the affected county auditors on or before September 
5.35 	15. No changes may be made to the annual list after September 15.

6.1 	EFFECTIVE DATE. This section is effective for taxes payable in 2007 and 
6.2 	thereafter.

6.3 	Sec. 4. Minnesota Statutes 2004, section 473.446, is amended by adding a subdivision 
6.4 	to read:
6.5 		Subd. 1c.Taxation within transit area.  For purposes of sections 473.405 to 
6.6 	473.449, and the metropolitan transit system, the metropolitan council shall levy upon all 
6.7 	taxable property within the metropolitan area but outside of the metropolitan transit taxing 
6.8 	district, as defined in subdivision 2, a transit tax which shall be equal to ten percent of the 
6.9 	levies provided in subdivision 1, paragraph (a). The proceeds of this tax shall be used 
6.10 	only for paratransit services or ride-sharing programs designed to serve persons located 
6.11 	within the transit area but outside of the transit taxing district.

6.12 	EFFECTIVE DATE. This section is effective for taxes payable in 2007 and 
6.13 	thereafter.

6.14 	Sec. 5. Minnesota Statutes 2004, section 473.446, is amended by adding a subdivision 
6.15 	to read:
6.16 		Subd. 1d.Deduction of levy for eligible municipalities.  (a) The maximum the 
6.17 	council may levy for general purposes under subdivision 1, clause (a) (1), upon taxable 
6.18 	property within a municipality levying taxes under the provisions of section 473.388, 
6.19 	subdivision 7, is the amount that could be levied within the municipality if it were not 
6.20 	eligible to levy under section 473.388, subdivision 7, minus the amount actually levied 
6.21 	by the municipality under the aforementioned provision.

6.22 	EFFECTIVE DATE. This section is effective for taxes payable in 2007 and 
6.23 	thereafter.

6.24 	ARTICLE 2
6.25 	SALES TAX ON MOTOR VEHICLES

6.26 	Section 1. Minnesota Statutes 2004, section 297B.09, subdivision 1, is amended to read:
6.27 		Subdivision 1.Deposit of revenues. (a) Money collected and received under this 
6.28 	chapter must be deposited as provided in this subdivision.
6.29 	(b) From July 1, 2002, to June 30, 2003, 32 percent of the money collected and 
6.30 	received must be deposited in the highway user tax distribution fund, 20.5 percent must be 
6.31 	deposited in the metropolitan area transit fund under section  16A.88, and  1.25 percent 
7.1 	must be deposited in the greater Minnesota transit fund under section  16A.88. The 
7.2 	remaining money must be deposited in the general fund.
7.3 	(c) From July 1, 2003, to June 30, 2007, 30 percent of the money collected and 
7.4 	received must be deposited in the highway user tax distribution fund, 21.5 percent must be 
7.5 	deposited in the metropolitan area transit fund under section  16A.88,  1.43 percent must be 
7.6 	deposited in the greater Minnesota transit fund under section  16A.88, 0.65 percent must 
7.7 	be deposited in the county state-aid highway fund, and 0.17 percent must be deposited 
7.8 	in the municipal state-aid street fund. The remaining money must be deposited in the 
7.9 	general fund. 
7.10 	(d)(c) On and after July 1, 2007, 32 percent of the money collected and received
7.11 	must be deposited in the highway user tax distribution fund, 20.5and 21.75 percent must 
7.12 	be deposited in the metropolitan area transit fund under section  16A.88, and  1.25 percent 
7.13 	must be deposited in the greater Minnesota transit fund under section  16A.88 trunk 
7.14 	highway fund. The remaining money must be deposited in the general fund. 
7.15 	(d) Notwithstanding paragraph (c), from July 1, 2007, to June 30, 2008, 38.25 
7.16 	percent must be deposited in the highway user tax distribution fund, and 25.5 percent 
7.17 	must be deposited in the trunk highway fund. The remaining money must be deposited 
7.18 	in the general fund.
7.19 	(e) From July 1, 2008, to June 30, 2009, 44.25 percent must be deposited in the 
7.20 	highway user tax distribution fund, and 29.5 percent must be deposited in the trunk 
7.21 	highway fund. The remaining money must be deposited in the general fund. 
7.22 	(f) From July 1, 2009, to June 30, 2010, 50.25 percent must be deposited in the 
7.23 	highway user tax distribution fund, and 33.5 percent must be deposited in the trunk 
7.24 	highway fund. The remaining money must be deposited in the general fund.
7.25 	(g) From July 1, 2010, to June 30, 2011, 56.25 percent must be deposited in the 
7.26 	highway user tax distribution fund, and 37.5 percent must be deposited in the trunk 
7.27 	highway fund. The remaining money must be deposited in the general fund. 
7.28 	(h) On and after July 1, 2011, 60 percent must be deposited in the highway user tax 
7.29 	distribution fund, and 40 percent must be deposited in the trunk highway fund.

7.30 	EFFECTIVE DATE. This section is effective the day following final enactment, 
7.31 	except that paragraphs (d) to (h) are effective only upon the adoption at the 2006 general 
7.32 	election of an amendment to the state constitution that requires dedication of all motor 
7.33 	vehicle sales tax revenues to transportation purposes beginning in 2011.

7.34 	Sec. 2. Laws 2005, chapter 88, article 3, section 9, is amended to read:
7.35 	Sec. 9. CONSTITUTIONAL AMENDMENT PROPOSED.
8.1 	An amendment to the Minnesota Constitution is proposed to the people. If the 
8.2 	amendment is adopted, two sections will be added to article XIV to read:
8.3 	Sec. 12. Beginning with the fiscal year starting July 1, 2007, 63.75 percent of 
8.4 	the revenue from a tax imposed by the state on the sale of a new or used motor vehicle 
8.5 	must be apportioned for the transportation purposes described in section 13, then the 
8.6 	revenue apportioned for transportation purposes must be increased by ten percent for each 
8.7 	subsequent fiscal year through June 30, 2011, and then the revenue must be apportioned 
8.8 	100 percent for transportation purposes after June 30, 2011.
8.9 	Sec. 13. The revenue apportioned in section 12 must be allocated for the following 
8.10 	transportation purposes: not more than 60 percent must be deposited in the highway user 
8.11 	tax distribution fund, and not less than 40 percent must be deposited in a fund dedicated 
8.12 	solely to public transit assistance as defined by law the trunk highway fund.
8.13 	

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

8.15 	Sec. 3. Laws 2005, chapter 88, article 3, section 10, is amended to read:
8.16 	Sec. 10.  SUBMISSION TO VOTERS.
8.17 	The constitutional amendment proposed in section 12 9 must be presented to the 
8.18 	people at the 2006 general election. The question submitted must be:
8.19 	"Shall the Minnesota Constitution be amended to dedicate revenue from a tax on the 
8.20 	sale of new and used motor vehicles over a five-year period, so that after June 30, 2011, 
8.21 	all of the revenue is dedicated at least 40 percent for public transit assistance and not 
8.22 	more than 60 percent for highway purposes?

8.23	Yes .......
	
8.24	No ......."
	
8.25 	

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

8.27 	Sec. 4. APPROPRIATION; BOND SALE AUTHORIZATION.
 8.28 		Subdivision 1. Appropriation of trunk highway bonds.  $2,900,000,000 
8.29 	is appropriated from the bond proceeds account in the trunk highway fund to the 
8.30 	commissioner of transportation, and must be used for the following purposes:
8.31 	(1) 65 percent of the money must be used for highway bottleneck and expansion 
8.32 	projects within the Department of Transportation??a??a??s metropolitan district; and
9.1 	(2) 35 percent of the money must be used for highway projects outside of the 
9.2 	Department of Transportation??a??a??s metropolitan district.
9.3 		Subd. 2. Bond sale authorization.  To provide the money appropriated by 
9.4 	subdivision 1 from the bond proceeds account in the trunk highway fund, the commissioner 
9.5 	of finance shall sell and issue bonds of the state in an amount up to $2,900,000,000 in 
9.6 	the manner, on the terms, and with the effect prescribed by Minnesota Statutes, sections 
9.7 	167.50 to 167.52, and by the Minnesota Constitution, article XIV, section 11, at the times 
9.8 	and in the amounts requested by the commissioner of transportation.  The proceeds of the 
9.9 	bonds, except accrued interest and any premium received on the sale of the bonds, must be 
9.10 	credited to the bond proceeds account in the trunk highway fund.

9.11 	EFFECTIVE DATE. This section is effective only upon the adoption at the 2006 
9.12 	general election of an amendment to the state constitution that requires dedication of all 
9.13 	motor vehicle sales tax revenues to transportation purposes beginning in 2011.

9.14 	Sec. 5. APPROPRIATION; BOND SALE AUTHORIZATION.
 9.15 		Subdivision 1. Appropriation of trunk highway bonds.  $2,450,000,000 
9.16 	is appropriated from the bond proceeds account in the trunk highway fund to the 
9.17 	commissioner of transportation.
9.18 		Subd. 2. Bond sale authorization.  To provide the money appropriated by 
9.19 	subdivision 1 from the bond proceeds account in the trunk highway fund, the commissioner 
9.20 	of finance shall sell and issue bonds of the state in an amount up to $2,450,000,000 in 
9.21 	the manner, on the terms, and with the effect prescribed by Minnesota Statutes, sections 
9.22 	167.50 to 167.52, and by the Minnesota Constitution, article XIV, section 11, at the times 
9.23 	and in the amounts requested by the commissioner of transportation. The proceeds of the 
9.24 	bonds, except accrued interest and any premium received on the sale of the bonds, must be 
9.25 	credited to the bond proceeds account in the trunk highway fund.

9.26 	EFFECTIVE DATE. This section is effective only upon the adoption at the 2006 
9.27 	general election of an amendment to the state constitution that requires dedication of all 
9.28 	motor vehicle sales tax revenues to transportation purposes beginning in 2011.

9.29 	Sec. 6. APPROPRIATION; BOND SALE AUTHORIZATION.
 9.30 		Subdivision 1.Appropriation of trunk highway bonds. $1,650,000,000 
9.31 	is appropriated from the bond proceeds account in the trunk highway fund to the 
9.32 	commissioner of transportation, and must be used for the following purposes:
10.1 	(1) 70 percent of the money must be used for highway bottleneck and expansion 
10.2 	projects within the Department of Transportation??a??a??s metropolitan district; and
10.3 	(2) 30 percent of the money must be used for highway projects outside of the 
10.4 	Department of Transportation??a??a??s metropolitan district.
10.5 		Subd. 2.Bond sale authorization. To provide the money appropriated by 
10.6 	subdivision 1 from the bond proceeds account in the trunk highway fund, the commissioner 
10.7 	of finance shall sell and issue bonds of the state in an amount up to $1,650,000,000 in 
10.8 	the manner, on the terms, and with the effect prescribed by Minnesota Statutes, sections 
10.9 	167.50 to 167.52, and by the Minnesota Constitution, article XIV, section 11, at the times 
10.10 	and in the amounts requested by the commissioner of transportation.  The proceeds of the 
10.11 	bonds, except accrued interest and any premium received on the sale of the bonds, must be 
10.12 	credited to the bond proceeds account in the trunk highway fund.

10.13 	EFFECTIVE DATE. This section is effective only if an amendment to the 
10.14 	state constitution that requires dedication of all motor vehicle sales tax revenues to 
10.15 	transportation purposes beginning in 2011 is not adopted at the 2006 general election.