1.1 	A bill for an act
1.2 	relating to taxation; increasing education funding;
1.3 	modifying the local government aid formula and
1.4 	increasing the program's appropriation; eliminating
1.5 	the dedication of a portion of motor vehicle sales tax
1.6 	proceeds to transit; authorizing either a local sales
1.7 	tax or a property tax levy for transit; appropriating
1.8 	money; amending Minnesota Statutes 2004, sections
1.9 	126C.10, by adding a subdivision; 174.24, subdivision
1.10 	3b; 297B.09, subdivision 1; 473.388, subdivisions 4,
1.11 	7, by adding a subdivision; 473.446, subdivision 1, by
1.12 	adding subdivisions; 477A.011, subdivisions 34, 36;
1.13 	477A.013, subdivisions 8, 9; 477A.03, subdivision 2a;
1.14 	proposing coding for new law in Minnesota Statutes,
1.15 	chapter 473.
1.16 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.17 	Section 1. Minnesota Statutes 2004, section 126C.10, is
1.18 	amended by adding a subdivision to read:
1.19 		Subd. 2b.Additional basic revenue. For fiscal year 2007
1.20 	and subsequent years, the formula allowance in subdivision 2 is
1.21 	increased by $84.
1.22 	
EFFECTIVE DATE. This section is effective for revenue
1.23 	beginning in fiscal year 2007.

1.24 	Sec. 2. Minnesota Statutes 2004, section 174.24,
1.25 	subdivision 3b, is amended to read:
1.26 		Subd. 3b.Operating assistance; recipient
1.27 	classifications.  (a) The commissioner shall determine the total
1.28 	operating cost of any public transit system receiving or
1.29 	applying for assistance in accordance with generally accepted
1.30 	accounting principles.  To be eligible for financial assistance,
2.1 	an applicant or recipient shall provide to the commissioner all
2.2 	financial records and other information and shall permit any
2.3 	inspection reasonably necessary to determine total operating
2.4 	cost and correspondingly the amount of assistance that may be
2.5 	paid to the applicant or recipient.  Where more than one county
2.6 	or municipality contributes assistance to the operation of a
2.7 	public transit system, the commissioner shall identify one as
2.8 	lead agency for the purpose of receiving money under this
2.9 	section.
2.10 	(b) Prior to distributing operating assistance to eligible
2.11 	recipients for any contract period, the commissioner shall place
2.12 	all recipients into one of the following classifications:
2.13 	urbanized area service, small urban area service, rural area
2.14 	service, and elderly and handicapped service.  The commissioner
2.15 	shall distribute funds under this section so that the percentage
2.16 	of total operating cost paid by any recipient from local sources
2.17 	will not exceed the percentage for that recipient's
2.18 	classification, except as provided in an undue hardship case.
2.19 	The percentages must be:  for urbanized area service ~~and~~ , 44
2.20 	percent; for small urban area service, ~~20~~ 65 percent; for rural
2.21 	area service, ~~15~~ 33 percent; and for elderly and handicapped
2.22 	service, ~~15~~ 19 percent. The remainder of the total operating
2.23 	cost will be paid from state funds less any assistance received
2.24 	by the recipient from any federal source.  For purposes of this
2.25 	subdivision, "local sources" means all local sources of funds
2.26 	and includes all operating revenue, tax levies, and
2.27 	contributions from public funds, except that the commissioner
2.28 	may exclude from the total assistance contract revenues derived
2.29 	from operations the cost of which is excluded from the
2.30 	computation of total operating cost.  Total operating costs of
2.31 	the Duluth Transit Authority or a successor agency does not
2.32 	include costs related to the Superior, Wisconsin service
2.33 	contract and the Independent School District No. 709 service
2.34 	contract.  For calendar years 2004 and 2005, to enable public
2.35 	transit systems to meet the provisions of this section, the
2.36 	commissioner may adjust payments of financial assistance to
3.1 	recipients that were under a contract with the department on
3.2 	January 1, 2003.  Payments to such a recipient in calendar years
3.3 	2004 and 2005 from the greater Minnesota transit fund may not be
3.4 	less than the payment to the recipient from that fund in
3.5 	calendar year 2003, except for reductions made necessary by
3.6 	reductions in base funding for those years.
3.7 	(c) If a recipient informs the commissioner in writing
3.8 	after the establishment of these percentages but prior to the
3.9 	distribution of financial assistance for any year that paying
3.10 	its designated percentage of total operating cost from local
3.11 	sources will cause undue hardship, the commissioner may reduce
3.12 	the percentage to be paid from local sources by the recipient
3.13 	and increase the percentage to be paid from local sources by one
3.14 	or more other recipients inside or outside the classification.
3.15 	However, the commissioner may not reduce or increase any
3.16 	recipient's percentage under this paragraph for more than two
3.17 	years successively.  If for any year the funds appropriated to
3.18 	the commissioner to carry out the purposes of this section are
3.19 	insufficient to allow the commissioner to pay the state share of
3.20 	total operating cost as provided in this paragraph, the
3.21 	commissioner shall reduce the state share in each classification
3.22 	to the extent necessary.
3.23 	
EFFECTIVE DATE. This section is effective for grants in
3.24 	2006 and thereafter.

3.25 	Sec. 3. Minnesota Statutes 2004, section 297B.09,
3.26 	subdivision 1, is amended to read:
3.27 		Subdivision 1.Deposit of revenues.  (a) Money collected
3.28 	and received under this chapter must be deposited as provided in
3.29 	this subdivision.
3.30 	(b) From July 1, 2002, to June 30, 2003, 32 percent of the
3.31 	money collected and received must be deposited in the highway
3.32 	user tax distribution fund, 20.5 percent must be deposited in
3.33 	the metropolitan area transit fund under section 16A.88, and
3.34 	1.25 percent must be deposited in the greater Minnesota transit
3.35 	fund under section 16A.88.  The remaining money must be
3.36 	deposited in the general fund.
4.1 	(c) From July 1, 2003, to June 30, ~~2007~~ 2006, 30 percent of
4.2 	the money collected and received must be deposited in the
4.3 	highway user tax distribution fund, 21.5 percent must be
4.4 	deposited in the metropolitan area transit fund under section
4.5 	16A.88, 1.43 percent must be deposited in the greater Minnesota
4.6 	transit fund under section 16A.88, 0.65 percent must be
4.7 	deposited in the county state-aid highway fund, and 0.17 percent
4.8 	must be deposited in the municipal state-aid street fund.  The
4.9 	remaining money must be deposited in the general fund.
4.10 	(d) From July 1, 2006, to June 30, 2007, 30 percent of the
4.11 	money collected and received must be deposited in the highway
4.12 	user tax distribution fund; 0.65 percent must be deposited in
4.13 	the county state aid highway fund; and 0.17 percent must be
4.14 	deposited in the municipal state aid street fund.  The remaining
4.15 	money must be deposited in the general fund.
4.16 	(e) On and after July 1, 2007, 32 percent of the money
4.17 	collected and received must be deposited in the highway user tax
4.18 	distribution fund~~, 20.5 percent must be deposited in the~~
4.19 	~~metropolitan area transit fund under section 16A.88, and 1.25~~
4.20 	~~percent must be deposited in the greater Minnesota transit fund~~
4.21 	~~under section 16A.88~~.  The remaining money must be deposited in
4.22 	the general fund.
4.23 	
EFFECTIVE DATE. This section is effective for collections
4.24 	after June 30, 2006.

4.25 	Sec. 4. Minnesota Statutes 2004, section 473.388,
4.26 	subdivision 4, is amended to read:
4.27 		Subd. 4.Financial assistance; sales tax option.  (a) The
4.28 	provisions of this subdivision only apply if the council elects
4.29 	to impose a sales tax for transit operations under section
4.30 	473.920.
4.31 	(b) The council must grant the requested financial
4.32 	assistance if it determines that the proposed service is
4.33 	intended to replace the service to the applying city or town or
4.34 	combination thereof by the council and that the proposed service
4.35 	will meet the needs of the applicant at least as efficiently and
4.36 	effectively as the existing service.
5.1 	~~(b)~~ (c) The amount of assistance which the council must
5.2 	provide to a system under this section may not be less than the
5.3 	sum of the amounts determined for each municipality comprising
5.4 	the system as follows:
5.5 	(1) the transit operating assistance grants received under
5.6 	this subdivision by the municipality in calendar year 2001 or
5.7 	the tax revenues for transit services levied by the municipality
5.8 	for taxes payable in 2001, including that portion of the levy
5.9 	derived from the areawide pool under section 473F.08,
5.10 	subdivision 3, clause (a), plus the portion of the
5.11 	municipality's aid under section 273.1398, subdivision 2,
5.12 	attributable to the transit levy; times
5.13 	(2) the ratio of (i) the ~~appropriation from the transit~~
5.14 	~~fund to the council~~ revenues received or expected to be received
5.15 	under section 473.920for nondebt transit operations for the
5.16 	current fiscal year to (ii) the total levy certified by the
5.17 	council under section 473.446 and the opt-out municipalities
5.18 	under this section for taxes payable in 2001, including the
5.19 	portion of homestead and agricultural credit aid under section
5.20 	273.1398, subdivision 2, attributable to nondebt transit levies,
5.21 	times
5.22 	(3) the ratio of (i) the municipality's total taxable
5.23 	market value for taxes payable in the most recent year for which
5.24 	data is available divided by the municipality's total taxable
5.25 	market value for taxes payable in 2001, to (ii) the total
5.26 	taxable market value of all property in the metropolitan area
5.27 	for taxes payable in the most recent year for which data is
5.28 	available divided by the total taxable market value of all
5.29 	property in the metropolitan area for taxes payable in 2001.
5.30 	~~(c)~~ (d) The council shall pay the amount to be provided to
5.31 	the recipient from the funds the council would otherwise use to
5.32 	fund its transit operations.
5.33 	
EFFECTIVE DATE. This section is effective for 2006 and
5.34 	thereafter.

5.35 	Sec. 5. Minnesota Statutes 2004, section 473.388, is
5.36 	amended by adding a subdivision to read:
6.1 		Subd. 4a.Financial assistance; property tax option. (a)
6.2 	The provisions of this subdivision will apply only if the
6.3 	council elects to impose a property tax for transit operations
6.4 	under section 473.446, subdivision 1, paragraph (a), clause (2).
6.5 	(b) The council may grant the requested financial
6.6 	assistance if it determines that the proposed service is
6.7 	intended to replace the service to the applying city or town or
6.8 	combination thereof by the council and that the proposed service
6.9 	will meet the needs of the applicant at least as efficiently and
6.10 	effectively as the existing service.
6.11 	(c) The amount of assistance which the council may provide
6.12 	to a system under this section may not exceed the sum of:
6.13 	(1) the portion of the available local transit funds which
6.14 	the applicant proposes to use to subsidize the proposed service;
6.15 	and 
6.16 	(2) an amount of financial assistance bearing an identical
6.17 	proportional relationship to the amount under clause (1) as the
6.18 	total amount of funds used by the council to fund its transit
6.19 	operations bears to the total amount of taxes collected by the
6.20 	council under section 473.446, subdivision 1, paragraph (a),
6.21 	clause (2).
6.22 	(d) The council shall pay the amount to be provided to the
6.23 	recipient from the funds the council would otherwise use to fund
6.24 	its transit operations.
6.25 	(e) For purposes of this section, "available local transit
6.26 	funds" means 90 percent of the tax revenues which would accrue
6.27 	to the council from the tax it levies under section 473.446,
6.28 	subdivision 1, paragraph (a), clause (2), in the applicant city
6.29 	or town or combination thereof.
6.30 	
EFFECTIVE DATE. This section is effective for taxes
6.31 	payable in 2006 and thereafter.

6.32 	Sec. 6. Minnesota Statutes 2004, section 473.388,
6.33 	subdivision 7, is amended to read:
6.34 		Subd. 7.Local levy option.  (a) If the council elects to
6.35 	levy a property tax for transit operations under section
6.36 	473.446, subdivision 1, paragraph (a), clause (2),a statutory
7.1 	or home rule charter city or town that is eligible for
7.2 	assistance under this section may levy a tax for payment of the
7.3 	operating and capital expenditures for transit and other related
7.4 	activities and to provide for payment of obligations issued by
7.5 	the municipality for ~~capital expenditures for transit and other~~
7.6 	~~related activities, provided that property taxes were pledged to~~
7.7 	~~satisfy the obligations, and provided that legislative~~
7.8 	~~appropriations are insufficient to satisfy the obligations~~ such
7.9 	purposes, provided that the tax must be sufficient to maintain
7.10 	the level of transit service provided in the municipality in the
7.11 	previous year.
7.12 	(b) The transit tax revenues derived by the municipality
7.13 	may not exceed 88 percent of the tax revenues that would be
7.14 	raised by the council's levy under section 473.446, subdivision
7.15 	1, paragraph (a), clause (2), within the municipality, including
7.16 	the areawise portion of the levy under chapter 473F, if the
7.17 	municipality were not eligible for treatment under this section.
7.18 	The commissioner of revenue shall certify the
7.19 	municipality's levy limitation under this subdivision to the
7.20 	municipality by August 1 of the levy year.  The tax must be
7.21 	accumulated and kept in a separate fund to be known as the
7.22 	"replacement transit fund." 
7.23 	(c) This subdivision is consistent with the transit
7.24 	redesign plan.  Eligible municipalities opting to operate under
7.25 	this subdivision shall continue to meet the regional performance
7.26 	standards established by the council.
7.27 	~~(c)~~ (d) Within the designated Americans with Disabilities
7.28 	Act area, metro mobility remains the obligation of the state.
7.29 	
EFFECTIVE DATE. This section is effective for taxes
7.30 	payable in 2006 and thereafter.

7.31 	Sec. 7. Minnesota Statutes 2004, section 473.446,
7.32 	subdivision 1, is amended to read:
7.33 		Subdivision 1.Metropolitan area transit tax.  (a) For
7.34 	the purposes of sections 473.405 to 473.449 and the metropolitan
7.35 	transit system, except as otherwise provided in this
7.36 	subdivision, the council shall levy each year upon all taxable
8.1 	property within the metropolitan area, defined in section
8.2 	473.121, subdivision 2, a transit tax consisting of:
8.3 	(1) an amount necessary to provide full and timely payment
8.4 	of certificates of indebtedness, bonds, including refunding
8.5 	bonds or other obligations issued or to be issued under section
8.6 	473.39 by the council for purposes of acquisition and betterment
8.7 	of property and other improvements of a capital nature and to
8.8 	which the council has specifically pledged tax levies under this
8.9 	clause; and
8.10 	(2) ~~an additional amount necessary to provide full and~~
8.11 	~~timely payment of certificates of indebtedness issued by the~~
8.12 	~~council, after consultation with the commissioner of finance, if~~
8.13 	~~revenues to the metropolitan area transit fund in the fiscal~~
8.14 	~~year in which the indebtedness is issued increase over those~~
8.15 	~~revenues in the previous fiscal year by a percentage less than~~
8.16 	~~the percentage increase for the same period in the revised~~
8.17 	~~Consumer Price Index for all urban consumers for the St.~~
8.18 	~~Paul-Minneapolis metropolitan area prepared by the United States~~
8.19 	~~Department of Labor~~ an amount which shall be used for payment of
8.20 	the expenses of operating transit and paratransit services,
8.21 	provided that the council has not elected to impose a sales tax
8.22 	under section 473.920.
8.23 	(b) ~~Indebtedness to which property taxes have been pledged~~
8.24 	~~under paragraph (a), clause (2), that is incurred in any fiscal~~
8.25 	~~year may not exceed the amount necessary to make up the~~
8.26 	~~difference between (1) the amount that the council received or~~
8.27 	~~expects to receive in that fiscal year from the metropolitan~~
8.28 	~~area transit fund and (2) the amount the council received from~~
8.29 	~~that fund in the previous fiscal year multiplied by the~~
8.30 	~~percentage increase for the same period in the revised Consumer~~
8.31 	~~Price Index for all urban consumers for the St. Paul-Minneapolis~~
8.32 	~~metropolitan area prepared by the United States Department of~~
8.33 	~~Labor.~~The property tax levied by the council under paragraph
8.34 	(a), clause (2), must not exceed the following amount for the
8.35 	years specified:
8.36 	(1) for taxes payable in 2006, one-half of the amount
9.1 	received by the council and municipalities for that purpose from
9.2 	the metropolitan area transit fund under section 16A.88,
9.3 	subdivision 2, in fiscal year 2005, adjusted for inflation,
9.4 	minus (i) any amounts to be levied for taxes payable in 2006
9.5 	under section 473.388, subdivision 7, and (ii) any amounts to be
9.6 	levied for taxes payable in 2006 under subdivision 1c;
9.7 	(2) for taxes payable in 2007, the council's property tax
9.8 	levy limitation for taxes payable in 2006 determined under this
9.9 	subdivision before reduction by any amounts levied in the
9.10 	previous year under section 473.388, subdivision 7, and under
9.11 	subdivision 1c, multiplied by a factor of two and adjusted for
9.12 	inflation, minus (i) any amounts to be levied for taxes payable
9.13 	in 2007 under section 473.388, subdivision 7, and (ii) any
9.14 	amounts to be levied for taxes payable in 2007 under subdivision
9.15 	1c; and 
9.16 	(3) for taxes payable in 2008 and subsequent years, the
9.17 	council's property tax levy limitation for the previous year
9.18 	determined under this subdivision before reductions by any
9.19 	amounts levied in the previous year under section 473.388,
9.20 	subdivision 7, and subdivision 1c, adjusted for inflation, minus
9.21 	any amounts to be levied in the current levy year under section
9.22 	473.388, subdivision 7, and subdivision 1c.
9.23 	(c) For the purposes of this subdivision, "adjusted for
9.24 	inflation" means multiplied by the percentage increase in the
9.25 	revised Consumer Price Index for all urban consumers in the St.
9.26 	Paul-Minneapolis metropolitan area prepared by the United States
9.27 	Department of Labor for the most recent 12-month period
9.28 	available compared to the previous 12-month period.
9.29 	
EFFECTIVE DATE. This section is effective for taxes
9.30 	payable in 2006 and thereafter.

9.31 	Sec. 8. Minnesota Statutes 2004, section 473.446, is
9.32 	amended by adding a subdivision to read:
9.33 		Subd. 1c.Taxation within transit area. For the purposes
9.34 	of sections 473.405 to 473.449, if the Metropolitan Council
9.35 	elects to levy a tax under subdivision 1, paragraph (a), clause
9.36 	(2), the council shall levy a transit tax upon all taxable
10.1 	property within the metropolitan transit area but outside of the
10.2 	metropolitan transit taxing district, as defined in subdivision
10.3 	2, at a rate equal to ten percent of the rate within the transit
10.4 	district.  The proceeds of this tax shall be used only for
10.5 	paratransit services or ride sharing programs designed to serve
10.6 	persons located within the transit area but outside of the
10.7 	transit taxing district.
10.8 	
EFFECTIVE DATE. This section is effective for taxes
10.9 	payable in 2006 and thereafter.

10.10 	Sec. 9. Minnesota Statutes 2004, section 473.446, is
10.11 	amended by adding a subdivision to read:
10.12 		Subd. 1d.Levy within eligible municipalities. If the
10.13 	council chooses to levy a tax under subdivision 1, paragraph
10.14 	(a), clause (2), the council's levy upon taxable property within
10.15 	a municipality levying taxes under section 473.388, subdivision
10.16 	7, is the tax that would be levied within the municipality if it
10.17 	were not levying under section 473.388, subdivision 7, minus the
10.18 	amount to be levied by the municipality under section 473.388,
10.19 	subdivision 7, for the current levy year.
10.20 	
EFFECTIVE DATE. This section is effective for taxes
10.21 	payable in 2006 and thereafter.

10.22 	Sec. 10. [473.920] METROPOLITAN AREA TRANSIT SERVICES.
10.23 		Subdivision 1.Sales and use tax
10.24 	authorized. Notwithstanding section 477A.016 or any other
10.25 	provision of law, ordinance, or city charter, the council may
10.26 	impose by resolution a sales and use tax of up to one-half of
10.27 	one percent on sales in the metropolitan area for the purposes
10.28 	specified in subdivision 3.  This tax may be imposed only if the
10.29 	council does not elect to levy for transit operations under
10.30 	section 473.446, subdivision 1, paragraph (a), clause (2).
10.31 	Except as otherwise provided in this section, the provisions of
10.32 	section 297A.99, subdivisions 4 to 12, govern the application,
10.33 	administration, collection, and enforcement of the tax
10.34 	authorized under this subdivision.
10.35 		Subd. 2.Use of revenues. Revenues received from taxes
10.36 	authorized by subdivisions 1 and 2, minus the costs of
11.1 	collection, must be used by the council to fund metropolitan
11.2 	area transit services and to pay for acquisition of buses,
11.3 	highway shoulder improvements for buses, and other capital and
11.4 	operating expenses related to metropolitan area transit
11.5 	systems.  The amount expended on metropolitan transit systems in
11.6 	each calendar year must be at least equal to (1) the amount of
11.7 	motor vehicle sales tax revenues deposited in fiscal year 2006,
11.8 	multiplied by (2) the ratio of the annual implicit price
11.9 	deflator for government consumption expenditures and gross
11.10 	investment for state and local governments as prepared by the
11.11 	United States Department of Commerce for the most recently
11.12 	available year, to the 2004 implicit price deflator for
11.13 	government consumption expenditures and gross investment for
11.14 	state and governments.  The council may use any funds in excess
11.15 	of that amount to fund congestion relief projects related to
11.16 	transportation in the metropolitan area.
11.17 		Subd. 3.Application. This section applies in the
11.18 	counties of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and
11.19 	Washington.
11.20 	
EFFECTIVE DATE. This section is effective for sales made
11.21 	after June 30, 2006.

11.22 	Sec. 11. Minnesota Statutes 2004, section 477A.011,
11.23 	subdivision 34, is amended to read:
11.24 		Subd. 34.City revenue need.  (a) For a city with a
11.25 	population equal to or greater than 2,500, "city revenue need"
11.26 	is the sum of (1) 5.0734098 times the pre-1940 housing
11.27 	percentage; plus (2) 19.141678 times the population decline
11.28 	percentage; plus (3) 2504.06334 times the road accidents factor;
11.29 	plus (4) 355.0547; minus (5) the metropolitan area factor; minus
11.30 	(6) 49.10638 times the household size.
11.31 	(b) For a city with a population less than 2,500, "city
11.32 	revenue need" is the sum of (1) 2.387 times the pre-1940 housing
11.33 	percentage; plus (2) 2.67591 times the commercial industrial
11.34 	percentage; plus (3) 3.16042 times the population decline
11.35 	percentage; plus (4) 1.206 times the transformed population;
11.36 	minus (5) 62.772.
12.1 	(c) The city revenue need cannot be less than zero.
12.2 	(d) For calendar year 2005 and subsequent years, the city
12.3 	revenue need for a city, as determined in paragraphs (a) to (c),
12.4 	is multiplied by the ratio of the ~~annual~~ most recently available
12.5 	first quarter implicit price deflator for government consumption
12.6 	expenditures and gross investment for state and local
12.7 	governments as prepared by the United States Department of
12.8 	Commerce, ~~for the most recently available year~~ to the ~~2003~~ first
12.9 	quarter 2000 implicit price deflator for state and local
12.10 	government purchases.
12.11 	
EFFECTIVE DATE. This section is effective for aids
12.12 	payable in 2006 and thereafter.

12.13 	Sec. 12. Minnesota Statutes 2004, section 477A.011,
12.14 	subdivision 36, is amended to read:
12.15 		Subd. 36.City aid base.  (a) Except as otherwise
12.16 	provided in this subdivision, "city aid base" is zero.
12.17 	(b) The city aid base for any city with a population less
12.18 	than 500 is increased by $40,000 for aids payable in calendar
12.19 	year 1995 and thereafter, and the maximum amount of total aid it
12.20 	may receive under section 477A.013, subdivision 9, paragraph
12.21 	(c), is also increased by $40,000 for aids payable in calendar
12.22 	year 1995 only, provided that:
12.23 	(i) the average total tax capacity rate for taxes payable
12.24 	in 1995 exceeds 200 percent;
12.25 	(ii) the city portion of the tax capacity rate exceeds 100
12.26 	percent; and
12.27 	(iii) its city aid base is less than $60 per capita.
12.28 	(c) The city aid base for a city is increased by $20,000 in
12.29 	1998 and thereafter and the maximum amount of total aid it may
12.30 	receive under section 477A.013, subdivision 9, paragraph (c), is
12.31 	also increased by $20,000 in calendar year 1998 only, provided
12.32 	that:
12.33 	(i) the city has a population in 1994 of 2,500 or more;
12.34 	(ii) the city is located in a county, outside of the
12.35 	metropolitan area, which contains a city of the first class;
12.36 	(iii) the city's net tax capacity used in calculating its
13.1 	1996 aid under section 477A.013 is less than $400 per capita;
13.2 	and
13.3 	(iv) at least four percent of the total net tax capacity,
13.4 	for taxes payable in 1996, of property located in the city is
13.5 	classified as railroad property.
13.6 	(d) The city aid base for a city is increased by $200,000
13.7 	in 1999 and thereafter and the maximum amount of total aid it
13.8 	may receive under section 477A.013, subdivision 9, paragraph
13.9 	(c), is also increased by $200,000 in calendar year 1999 only,
13.10 	provided that:
13.11 	(i) the city was incorporated as a statutory city after
13.12 	December 1, 1993;
13.13 	(ii) its city aid base does not exceed $5,600; and
13.14 	(iii) the city had a population in 1996 of 5,000 or more.
13.15 	(e) The city aid base for a city is increased by $450,000
13.16 	in 1999 to 2008 and the maximum amount of total aid it may
13.17 	receive under section 477A.013, subdivision 9, paragraph (c), is
13.18 	also increased by $450,000 in calendar year 1999 only, provided
13.19 	that:
13.20 	(i) the city had a population in 1996 of at least 50,000;
13.21 	(ii) its population had increased by at least 40 percent in
13.22 	the ten-year period ending in 1996; and
13.23 	(iii) its city's net tax capacity for aids payable in 1998
13.24 	is less than $700 per capita.
13.25 	(f) ~~Beginning in 2004, the city aid base for a city is~~
13.26 	~~equal to the sum of its city aid base in 2003 and the amount of~~
13.27 	~~additional aid it was certified to receive under section 477A.06~~
13.28 	~~in 2003.  For 2004 only, the maximum amount of total aid a city~~
13.29 	~~may receive under section 477A.013, subdivision 9, paragraph~~
13.30 	~~(c), is also increased by the amount it was certified to receive~~
13.31 	~~under section 477A.06 in 2003.~~
13.32 	~~(g)~~ The city aid base for a city is increased by $150,000
13.33 	for aids payable in 2000 and thereafter, and the maximum amount
13.34 	of total aid it may receive under section 477A.013, subdivision
13.35 	9, paragraph (c), is also increased by $150,000 in calendar year
13.36 	2000 only, provided that:
14.1 	(1) the city has a population that is greater than 1,000
14.2 	and less than 2,500;
14.3 	(2) its commercial and industrial percentage for aids
14.4 	payable in 1999 is greater than 45 percent; and
14.5 	(3) the total market value of all commercial and industrial
14.6 	property in the city for assessment year 1999 is at least 15
14.7 	percent less than the total market value of all commercial and
14.8 	industrial property in the city for assessment year 1998.
14.9 	~~(h)~~ (g) The city aid base for a city is increased by
14.10 	$200,000 in 2000 and thereafter, and the maximum amount of total
14.11 	aid it may receive under section 477A.013, subdivision 9,
14.12 	paragraph (c), is also increased by $200,000 in calendar year
14.13 	2000 only, provided that:
14.14 	(1) the city had a population in 1997 of 2,500 or more;
14.15 	(2) the net tax capacity of the city used in calculating
14.16 	its 1999 aid under section 477A.013 is less than $650 per
14.17 	capita;
14.18 	(3) the pre-1940 housing percentage of the city used in
14.19 	calculating 1999 aid under section 477A.013 is greater than 12
14.20 	percent;
14.21 	(4) the 1999 local government aid of the city under section
14.22 	477A.013 is less than 20 percent of the amount that the formula
14.23 	aid of the city would have been if the need increase percentage
14.24 	was 100 percent; and
14.25 	(5) the city aid base of the city used in calculating aid
14.26 	under section 477A.013 is less than $7 per capita.
14.27 	~~(i)~~ (h) The city aid base for a city is increased by
14.28 	$102,000 in 2000 and thereafter, and the maximum amount of total
14.29 	aid it may receive under section 477A.013, subdivision 9,
14.30 	paragraph (c), is also increased by $102,000 in calendar year
14.31 	2000 only, provided that:
14.32 	(1) the city has a population in 1997 of 2,000 or more;
14.33 	(2) the net tax capacity of the city used in calculating
14.34 	its 1999 aid under section 477A.013 is less than $455 per
14.35 	capita;
14.36 	(3) the net levy of the city used in calculating 1999 aid
15.1 	under section 477A.013 is greater than $195 per capita; and
15.2 	(4) the 1999 local government aid of the city under section
15.3 	477A.013 is less than 38 percent of the amount that the formula
15.4 	aid of the city would have been if the need increase percentage
15.5 	was 100 percent.
15.6 	~~(j)~~ (i) The city aid base for a city is increased by
15.7 	$32,000 in 2001 and thereafter, and the maximum amount of total
15.8 	aid it may receive under section 477A.013, subdivision 9,
15.9 	paragraph (c), is also increased by $32,000 in calendar year
15.10 	2001 only, provided that:
15.11 	(1) the city has a population in 1998 that is greater than
15.12 	200 but less than 500;
15.13 	(2) the city's revenue need used in calculating aids
15.14 	payable in 2000 was greater than $200 per capita;
15.15 	(3) the city net tax capacity for the city used in
15.16 	calculating aids available in 2000 was equal to or less than
15.17 	$200 per capita;
15.18 	(4) the city aid base of the city used in calculating aid
15.19 	under section 477A.013 is less than $65 per capita; and
15.20 	(5) the city's formula aid for aids payable in 2000 was
15.21 	greater than zero.
15.22 	~~(k)~~ (j) The city aid base for a city is increased by $7,200
15.23 	in 2001 and thereafter, and the maximum amount of total aid it
15.24 	may receive under section 477A.013, subdivision 9, paragraph
15.25 	(c), is also increased by $7,200 in calendar year 2001 only,
15.26 	provided that:
15.27 	(1) the city had a population in 1998 that is greater than
15.28 	200 but less than 500;
15.29 	(2) the city's commercial industrial percentage used in
15.30 	calculating aids payable in 2000 was less than ten percent;
15.31 	(3) more than 25 percent of the city's population was 60
15.32 	years old or older according to the 1990 census;
15.33 	(4) the city aid base of the city used in calculating aid
15.34 	under section 477A.013 is less than $15 per capita; and
15.35 	(5) the city's formula aid for aids payable in 2000 was
15.36 	greater than zero.
16.1 	~~(l)~~ (k) The city aid base for a city is increased by
16.2 	$45,000 in 2001 and thereafter and by an additional $50,000 in
16.3 	calendar years 2002 to 2011, and the maximum amount of total aid
16.4 	it may receive under section 477A.013, subdivision 9, paragraph
16.5 	(c), is also increased by $45,000 in calendar year 2001 only,
16.6 	and by $50,000 in calendar year 2002 only, provided that:
16.7 	(1) the net tax capacity of the city used in calculating
16.8 	its 2000 aid under section 477A.013 is less than $810 per
16.9 	capita;
16.10 	(2) the population of the city declined more than two
16.11 	percent between 1988 and 1998;
16.12 	(3) the net levy of the city used in calculating 2000 aid
16.13 	under section 477A.013 is greater than $240 per capita; and
16.14 	(4) the city received less than $36 per capita in aid under
16.15 	section 477A.013, subdivision 9, for aids payable in 2000.
16.16 	~~(m)~~ (l) Beginning with aids payable in 2002,the city aid
16.17 	base for a city with a population of 10,000 or more which is
16.18 	located outside of the seven-county metropolitan area is
16.19 	increased ~~in 2002 and thereafter~~, and the maximum amount of
16.20 	total aid it may receive under section 477A.013, subdivision 9,
16.21 	paragraph (b) or (c), is also increased in ~~calendar year 2002~~
16.22 	~~only~~ the first year in which it receives aid under this
16.23 	paragraph, by an amount equal to the lesser of:
16.24 	(1)(i) the total population of the city, ~~as determined by~~
16.25 	~~the United States Bureau of the Census, in the 2000 census,~~(ii)
16.26 	minus 5,000, (iii) times 60; or
16.27 	(2) $2,500,000.
16.28 	~~(n)~~ (m) The city aid base is increased by $50,000 in 2002
16.29 	and thereafter, and the maximum amount of total aid it may
16.30 	receive under section 477A.013, subdivision 9, paragraph (c), is
16.31 	also increased by $50,000 in calendar year 2002 only, provided
16.32 	that:
16.33 	(1) the city is located in the seven-county metropolitan
16.34 	area;
16.35 	(2) its population in 2000 is between 10,000 and 20,000;
16.36 	and
17.1 	(3) its commercial industrial percentage, as calculated for
17.2 	city aid payable in 2001, was greater than 25 percent.
17.3 	~~(o)~~ (n) The city aid base for a city is increased by
17.4 	$150,000 in calendar years 2002 to 2011 and the maximum amount
17.5 	of total aid it may receive under section 477A.013, subdivision
17.6 	9, paragraph (c), is also increased by $150,000 in calendar year
17.7 	2002 only, provided that:
17.8 	(1) the city had a population of at least 3,000 but no more
17.9 	than 4,000 in 1999;
17.10 	(2) its home county is located within the seven-county
17.11 	metropolitan area;
17.12 	(3) its pre-1940 housing percentage is less than 15
17.13 	percent; and
17.14 	(4) its city net tax capacity per capita for taxes payable
17.15 	in 2000 is less than $900 per capita.
17.16 	~~(p)~~ (o) The city aid base for a city is increased by
17.17 	$200,000 beginning in calendar year 2003 and the maximum amount
17.18 	of total aid it may receive under section 477A.013, subdivision
17.19 	9, paragraph (c), is also increased by $200,000 in calendar year
17.20 	2003 only, provided that the city qualified for an increase in
17.21 	homestead and agricultural credit aid under Laws 1995, chapter
17.22 	264, article 8, section 18.
17.23 	~~(q)~~ (p) The city aid base for a city is increased by
17.24 	$200,000 in 2004 only and the maximum amount of total aid it may
17.25 	receive under section 477A.013, subdivision 9, is also increased
17.26 	by $200,000 in calendar year 2004 only, if the city is the site
17.27 	of a nuclear dry cask storage facility.
17.28 	~~(r)~~ (q) The city aid base for a city is increased by
17.29 	$10,000 in 2004 and thereafter and the maximum total aid it may
17.30 	receive under section 477A.013, subdivision 9, is also increased
17.31 	by $10,000 in calendar year 2004 only, if the city was included
17.32 	in a federal major disaster designation issued on April 1, 1998,
17.33 	and its pre-1940 housing stock was decreased by more than 40
17.34 	percent between 1990 and 2000.
17.35 	
EFFECTIVE DATE. This section is effective for aids
17.36 	payable in 2006 and thereafter, except that the stricken
18.1 	language in paragraph (f) is effective beginning with aids
18.2 	payable in 2004.

18.3 	Sec. 13. Minnesota Statutes 2004, section 477A.013,
18.4 	subdivision 8, is amended to read:
18.5 		Subd. 8.City formula aid.  In calendar year 2004 and
18.6 	subsequent years, the formula aid for a city is equal to the
18.7 	need increase percentage multiplied by the difference between
18.8 	(1) the city's revenue need multiplied by its population, and
18.9 	(2) ~~the sum of~~ the city's net tax capacity multiplied by the tax
18.10 	effort rate~~, and the taconite aids under sections 298.28 and~~
18.11 	~~298.282, multiplied by the following percentages:~~
18.12 	~~(i) zero percent for aids payable in 2004;~~
18.13 	~~(ii) 25 percent for aids payable in 2005;~~
18.14 	~~(iii) 50 percent for aids payable in 2006;~~
18.15 	~~(iv) 75 percent for aids payable in 2007; and~~ 
18.16 	~~(v) 100 percent for aids payable in 2008 and thereafter~~.
18.17 	No city may have a formula aid amount less than zero.  The need
18.18 	increase percentage must be the same for all cities.
18.19 	The applicable need increase percentage must be calculated
18.20 	by the Department of Revenue so that the total of the aid under
18.21 	subdivision 9 equals the total amount available for aid under
18.22 	section 477A.03 after the subtraction under section 477A.014,
18.23 	subdivisions 4 and 5.
18.24 	
EFFECTIVE DATE. This section is effective for aids
18.25 	payable in 2006 and thereafter.

18.26 	Sec. 14. Minnesota Statutes 2004, section 477A.013,
18.27 	subdivision 9, is amended to read:
18.28 		Subd. 9.City aid distribution.  (a) In calendar year
18.29 	2002 and thereafter, each city shall receive an aid distribution
18.30 	equal to the sum of (1) the city formula aid under subdivision
18.31 	8, and (2) its city aid base.
18.32 	(b) ~~The aid for a city in calendar year 2004 shall not~~
18.33 	~~exceed the amount of its aid in calendar year 2003 after the~~
18.34 	~~reductions under Laws 2003, First Special Session chapter 21,~~
18.35 	~~article 5.~~
18.36 	~~(c) For aids payable in 2005 and thereafter, the total aid~~
19.1 	~~for any city shall not exceed the sum of (1) ten percent of the~~
19.2 	~~city's net levy for the year prior to the aid distribution plus~~
19.3 	~~(2) its total aid in the previous year.  For aids payable in~~
19.4 	~~2005 and thereafter, the total aid for any city with a~~
19.5 	~~population of 2,500 or more may not decrease from its total aid~~
19.6 	~~under this section in the previous year by an amount greater~~
19.7 	~~than ten percent of its net levy in the year prior to the aid~~
19.8 	~~distribution.~~
19.9 	~~(d) For aids payable in 2004 only, the total aid for a city~~
19.10 	~~with a population less than 2,500 may not be less than the~~
19.11 	~~amount it was certified to receive in 2003 minus the greater of~~
19.12 	~~(1) the reduction to this aid payment in 2003 under Laws 2003,~~
19.13 	~~First Special Session chapter 21, article 5, or (2) five percent~~
19.14 	~~of its 2003 aid amount.~~For aids payable in ~~2005~~ 2006 and
19.15 	thereafter, the total aid for a city ~~with a population less than~~
19.16 	~~2,500~~ must not be less than the amount it was certified to
19.17 	receive in the previous year minus five percent of its 2003
19.18 	certified aid amount.
19.19 	
EFFECTIVE DATE. This section is effective for aids
19.20 	payable in 2006 and thereafter.

19.21 	Sec. 15. Minnesota Statutes 2004, section 477A.03,
19.22 	subdivision 2a, is amended to read:
19.23 		Subd. 2a.Cities. ~~For aids payable in 2004, the total~~
19.24 	~~aids paid under section 477A.013, subdivision 9, are limited to~~
19.25 	~~$429,000,000.~~For aids payable in ~~2005 and thereafter~~ 2006, the
19.26 	total aids paid under section 477A.013, subdivision 9,
19.27 	are ~~increased to $437,052,000~~ limited to $497,052,000.  For aids
19.28 	payable in 2007 and thereafter, the total aids payable under
19.29 	section 477A.013, subdivision 9, are limited to the amount
19.30 	certified to be paid in the previous year, multiplied by the
19.31 	lesser of (1) one plus the percentage increase in the implicit
19.32 	price deflator for consumption expenditures and gross investment
19.33 	for state and local governments prepared by the Bureau of
19.34 	Economic Analysis of the United States Department of Commerce
19.35 	for the 12-month period ending March 31 of the previous year, or
19.36 	(2) 1.05.
20.1 	
EFFECTIVE DATE. This section is effective for aids
20.2 	payable in 2006 and thereafter.