1.1                          A bill for an act 
  1.2             relating to the financing and operation of government 
  1.3             in this state; providing property tax reform; making 
  1.4             changes to property rates, levies, notices, hearings, 
  1.5             assessments, exemptions, aids, and credits; providing 
  1.6             bonding and levy authority, and other powers to 
  1.7             certain political subdivisions; making changes to 
  1.8             income, sales, and excise tax provisions; authorizing 
  1.9             the imposition of certain local sales, use, and excise 
  1.10            taxes; modifying provisions relating to the budget 
  1.11            reserve and other accounts; authorizing certain tax 
  1.12            incentives in certain border communities; making 
  1.13            changes to tax increment financing, regional 
  1.14            development, housing, and economic development 
  1.15            provisions; providing for the taxation of taconite and 
  1.16            the distribution of taconite taxes; modifying 
  1.17            provisions relating to the taxation and operation of 
  1.18            gaming; making miscellaneous changes to state and 
  1.19            local tax and operating provisions; amending Minnesota 
  1.20            Statutes 1996, sections 16A.6701, by adding a 
  1.21            subdivision; 124A.03, subdivision 1f; 240.15, 
  1.22            subdivisions 1 and 5; 273.1398, subdivisions 2 and 4; 
  1.23            275.07, by adding a subdivision; 290.01, subdivision 
  1.24            3b; 290.06, subdivisions 2c, and by adding 
  1.25            subdivisions; 290.067, subdivisions 2 and 2a; 
  1.26            290.0671, by adding subdivisions; 290.091, subdivision 
  1.27            2; 290.0921, subdivision 3a; 290.10; 290.191, 
  1.28            subdivisions 1, 6, and 11; 290.21, subdivision 3; 
  1.29            290A.03, subdivision 3; 297A.02, subdivisions 2 and 4; 
  1.30            297A.135, subdivision 4; 297A.25, by adding 
  1.31            subdivisions; 297E.02, subdivisions 1, 4, and 6; 
  1.32            298.22, subdivision 2; 298.221; 298.2213, subdivision 
  1.33            4; 298.225, subdivision 1; 298.28, subdivisions 2, 3, 
  1.34            4, 6, 7, 9, and 10; 298.48, subdivision 1; 462.396, 
  1.35            subdivision 2; 469.015, subdivision 4; 469.170, by 
  1.36            adding a subdivision; 469.171, subdivision 9; 469.174, 
  1.37            by adding a subdivision; 469.175, subdivisions 5, 6, 
  1.38            6a, and by adding a subdivision; 469.176, subdivision 
  1.39            7; 469.177, by adding a subdivision; 469.1771, 
  1.40            subdivision 5, and by adding a subdivision; 473.39, by 
  1.41            adding a subdivision; 473.3915, subdivisions 2, 3, and 
  1.42            5; 477A.0122, subdivision 6; 477A.03, subdivision 2; 
  1.43            Minnesota Statutes 1997 Supplement, sections 124.239, 
  1.44            subdivisions 5, 5a, and 5b; 270.60, subdivision 4; 
  1.45            270.67, subdivision 2; 272.02, subdivision 1; 272.115, 
  1.46            subdivisions 4 and 5; 273.124, subdivision 14; 
  2.1             273.126, subdivision 3; 273.127, subdivision 3; 
  2.2             273.13, subdivisions 22, 23, 24, 25, and 31; 273.1382, 
  2.3             subdivisions 1 and 3; 275.065, subdivisions 3 and 6; 
  2.4             275.16; 275.70, by adding a subdivision; 287.08; 
  2.5             289A.02, subdivision 7; 289A.19, subdivision 2; 
  2.6             290.01, subdivisions 19, 19a, 19b, 19c, 19f, and 31; 
  2.7             290.0671, subdivision 1; 290.0672, subdivision 1; 
  2.8             290.0673, subdivision 6; 290.091, subdivision 6; 
  2.9             290.371, subdivision 2; 290A.03, subdivision 15; 
  2.10            290B.04, subdivisions 1 and 3; 290B.05, subdivisions 
  2.11            1, 2, and 3; 290B.06; 290B.07; 291.005, subdivision 1; 
  2.12            297A.25, subdivisions 11, 59, and by adding a 
  2.13            subdivision; 297A.256, subdivision 1; 297B.03; 
  2.14            297G.01, by adding a subdivision; 297G.03, subdivision 
  2.15            1; 298.24, subdivision 1; 298.28, subdivisions 9a and 
  2.16            9b; 298.296, subdivision 4; 462A.071, subdivisions 2, 
  2.17            4, and 8; 465.715, subdivision 1; 469.1812, 
  2.18            subdivision 4; 477A.011, subdivision 36; Laws 1965, 
  2.19            chapter 326, section 1, subdivision 5, as amended; 
  2.20            Laws 1971, chapter 773, sections 1, as amended, and 2, 
  2.21            as amended; Laws 1976, chapter 162, section 1, as 
  2.22            amended; Laws 1984, chapter 380, sections 1, as 
  2.23            amended, and 2; Laws 1991, chapter 291, article 8, 
  2.24            section 27, subdivision 3; Laws 1992, chapter 511, 
  2.25            article 2, section 52, as amended; Laws 1993, chapter 
  2.26            375, article 9, section 46, subdivision 2; Laws 1997, 
  2.27            chapter 231, articles 1, section 16, as amended; 2, 
  2.28            section 68, subdivision 3; 5, section 18, subdivision 
  2.29            1; 7, section 47; 10, section 24; and 13, section 19; 
  2.30            proposing coding for new law in Minnesota Statutes, 
  2.31            chapters 272; 290; 290B; 298; and 469; repealing 
  2.32            Minnesota Statutes 1996, sections 289A.50, subdivision 
  2.33            6; 290.191, subdivision 8; 298.012; 298.21; 298.23; 
  2.34            298.34, subdivisions 1 and 4; 298.391, subdivisions 2 
  2.35            and 5; Minnesota Statutes 1997 Supplement, sections 
  2.36            273.13, subdivision 32; 275.70; 275.71; 275.72; 
  2.37            275.73; 275.74; Laws 1997, chapter 231, article 3, 
  2.38            section 8. 
  2.39  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  2.40                             ARTICLE 1
  2.41                        PROPERTY TAX REFORM
  2.42     Section 1.  Minnesota Statutes 1997 Supplement, section 
  2.43  124.239, subdivision 5, is amended to read: 
  2.44     Subd. 5.  [LEVY AUTHORIZED.] A district, after local board 
  2.45  approval, may levy for costs related to an approved facility 
  2.46  plan as follows:  
  2.47     (a) if the district has indicated to the commissioner that 
  2.48  bonds will be issued, the district may levy for the principal 
  2.49  and interest payments on outstanding bonds issued according to 
  2.50  subdivision 3 after reduction for any alternative facilities aid 
  2.51  receivable under subdivision 5a; or 
  2.52     (b) if the district has indicated to the commissioner that 
  2.53  the plan will be funded through levy, the district may levy 
  2.54  according to the schedule approved in the plan after reduction 
  3.1   for any alternative facilities aid receivable under subdivision 
  3.2   5a. 
  3.3      Sec. 2.  Minnesota Statutes 1997 Supplement, section 
  3.4   124.239, subdivision 5a, is amended to read: 
  3.5      Subd. 5a.  [ALTERNATIVE FACILITIES AID.] A district's 
  3.6   alternative facilities aid is the amount equal to the district's 
  3.7   annual debt service costs, provided that the amount does not 
  3.8   exceed the amount certified to be levied for those purposes for 
  3.9   taxes payable in 1997 plus, for districts with adjusted net tax 
  3.10  capacity per actual pupil unit of less than $2,800, an amount 
  3.11  equal to the district's gross levy authority under subdivision 
  3.12  5, clause (b), before reduction by debt service equalization aid 
  3.13  under section 124.95 for taxes payable in 1998. 
  3.14     Sec. 3.  Minnesota Statutes 1997 Supplement, section 
  3.15  124.239, subdivision 5b, is amended to read: 
  3.16     Subd. 5b.  [ALTERNATIVE FACILITIES APPROPRIATION.] (a) An 
  3.17  amount not to exceed ~~$17,000,000~~ $22,129,000 is appropriated 
  3.18  from the general fund to the commissioner of children, families, 
  3.19  and learning for fiscal year 2000 and not to exceed $22,698,000 
  3.20  for fiscal year 2001 and each year thereafter for payment of 
  3.21  alternative facilities aid under subdivision 5a.  The 2000 
  3.22  appropriation includes $1,700,000 for 1999 
  3.23  and ~~$15,300,000~~ $20,429,000 for 2000. 
  3.24     (b) The appropriation in paragraph (a) must be reduced by 
  3.25  the amount of any money specifically appropriated for the same 
  3.26  purpose in any year from any state fund. 
  3.27     Sec. 4.  Minnesota Statutes 1996, section 124A.03, 
  3.28  subdivision 1f, is amended to read: 
  3.29     Subd. 1f.  [REFERENDUM EQUALIZATION REVENUE.] A district's 
  3.30  referendum equalization revenue equals ~~$315~~ $385 times the 
  3.31  district's actual pupil units for that year. 
  3.32     Referendum equalization revenue must not exceed a 
  3.33  district's total referendum revenue for that year. 
  3.34     Sec. 5.  Minnesota Statutes 1997 Supplement, section 
  3.35  273.127, subdivision 3, is amended to read: 
  3.36     Subd. 3.  [CLASS 4C PROPERTIES.] For the market value of 
  4.1   properties that meet the criteria of subdivision 2, paragraph 
  4.2   (a), and which no longer qualify as a result of the eligibility 
  4.3   criteria specified in section 273.126, a class rate of 2.4 
  4.4   percent applies for taxes payable in 1999 and a class rate of 
  4.5   ~~2.6~~ 2.5 percent applies for taxes payable in 2000. 
  4.6      Sec. 6.  Minnesota Statutes 1997 Supplement, section 
  4.7   273.13, subdivision 22, is amended to read: 
  4.8      Subd. 22.  [CLASS 1.] (a) Except as provided in subdivision 
  4.9   23, real estate which is residential and used for homestead 
  4.10  purposes is class 1.  The market value of class 1a property must 
  4.11  be determined based upon the value of the house, garage, and 
  4.12  land.  
  4.13     ~~For taxes payable in 1998 and thereafter,~~ The first $75,000 
  4.14  of market value of class 1a property has a net class rate of one 
  4.15  percent of its market value; and the market value of class 1a 
  4.16  property that exceeds $75,000 has a class rate of ~~1.85~~ 1.7 
  4.17  percent of its market value for taxes payable in 1999, and 1.6 
  4.18  percent of its market value for taxes payable in 2000 and 
  4.19  thereafter.  
  4.20     (b) Class 1b property includes homestead real estate or 
  4.21  homestead manufactured homes used for the purposes of a 
  4.22  homestead by 
  4.23     (1) any blind person, or the blind person and the blind 
  4.24  person's spouse; or 
  4.25     (2) any person, hereinafter referred to as "veteran," who: 
  4.26     (i) served in the active military or naval service of the 
  4.27  United States; and 
  4.28     (ii) is entitled to compensation under the laws and 
  4.29  regulations of the United States for permanent and total 
  4.30  service-connected disability due to the loss, or loss of use, by 
  4.31  reason of amputation, ankylosis, progressive muscular 
  4.32  dystrophies, or paralysis, of both lower extremities, such as to 
  4.33  preclude motion without the aid of braces, crutches, canes, or a 
  4.34  wheelchair; and 
  4.35     (iii) has acquired a special housing unit with special 
  4.36  fixtures or movable facilities made necessary by the nature of 
  5.1   the veteran's disability, or the surviving spouse of the 
  5.2   deceased veteran for as long as the surviving spouse retains the 
  5.3   special housing unit as a homestead; or 
  5.4      (3) any person who: 
  5.5      (i) is permanently and totally disabled and 
  5.6      (ii) receives 90 percent or more of total income from 
  5.7      (A) aid from any state as a result of that disability; or 
  5.8      (B) supplemental security income for the disabled; or 
  5.9      (C) workers' compensation based on a finding of total and 
  5.10  permanent disability; or 
  5.11     (D) social security disability, including the amount of a 
  5.12  disability insurance benefit which is converted to an old age 
  5.13  insurance benefit and any subsequent cost of living increases; 
  5.14  or 
  5.15     (E) aid under the federal Railroad Retirement Act of 1937, 
  5.16  United States Code Annotated, title 45, section 228b(a)5; or 
  5.17     (F) a pension from any local government retirement fund 
  5.18  located in the state of Minnesota as a result of that 
  5.19  disability; or 
  5.20     (G) pension, annuity, or other income paid as a result of 
  5.21  that disability from a private pension or disability plan, 
  5.22  including employer, employee, union, and insurance plans and 
  5.23     (iii) has household income as defined in section 290A.03, 
  5.24  subdivision 5, of $50,000 or less; or 
  5.25     (4) any person who is permanently and totally disabled and 
  5.26  whose household income as defined in section 290A.03, 
  5.27  subdivision 5, is 275 percent or less of the federal poverty 
  5.28  level. 
  5.29     Property is classified and assessed under clause (4) only 
  5.30  if the government agency or income-providing source certifies, 
  5.31  upon the request of the homestead occupant, that the homestead 
  5.32  occupant satisfies the disability requirements of this paragraph.
  5.33     Property is classified and assessed pursuant to clause (1) 
  5.34  only if the commissioner of economic security certifies to the 
  5.35  assessor that the homestead occupant satisfies the requirements 
  5.36  of this paragraph.  
  6.1      Permanently and totally disabled for the purpose of this 
  6.2   subdivision means a condition which is permanent in nature and 
  6.3   totally incapacitates the person from working at an occupation 
  6.4   which brings the person an income.  The first $32,000 market 
  6.5   value of class 1b property has a net class rate of .45 percent 
  6.6   of its market value.  The remaining market value of class 1b 
  6.7   property has a net class rate using the rates for class 1 or 
  6.8   class 2a property, whichever is appropriate, of similar market 
  6.9   value.  
  6.10     (c) Class 1c property is commercial use real property that 
  6.11  abuts a lakeshore line and is devoted to temporary and seasonal 
  6.12  residential occupancy for recreational purposes but not devoted 
  6.13  to commercial purposes for more than 250 days in the year 
  6.14  preceding the year of assessment, and that includes a portion 
  6.15  used as a homestead by the owner, which includes a dwelling 
  6.16  occupied as a homestead by a shareholder of a corporation that 
  6.17  owns the resort or a partner in a partnership that owns the 
  6.18  resort, even if the title to the homestead is held by the 
  6.19  corporation or partnership.  For purposes of this clause, 
  6.20  property is devoted to a commercial purpose on a specific day if 
  6.21  any portion of the property, excluding the portion used 
  6.22  exclusively as a homestead, is used for residential occupancy 
  6.23  and a fee is charged for residential occupancy.  In order for a 
  6.24  property to be classified as class 1c, at least 40 percent of 
  6.25  the annual gross lodging receipts related to the property must 
  6.26  be from business conducted ~~between Memorial Day weekend and~~ 
  6.27  ~~Labor Day weekend~~ during any three consecutive calendar months, 
  6.28  and either (i) at least 60 percent of all paid reservations or 
  6.29  paid bookings by lodging guests during the year must be for 
  6.30  periods of at least two consecutive nights; or (ii) at least 20 
  6.31  percent of the annual gross receipts must be from sales of 
  6.32  recreational services, which include rental of fish houses, 
  6.33  boats and motors, snowmobiles, downhill or cross-country ski 
  6.34  equipment, marina services, launch services, and fishing guide 
  6.35  services.  Class 1c property has a class rate of one percent of 
  6.36  total market value with the following limitation:  the area of 
  7.1   the property must not exceed 100 feet of lakeshore footage for 
  7.2   each cabin or campsite located on the property up to a total of 
  7.3   800 feet and 500 feet in depth, measured away from the lakeshore.
  7.4      (d) Class 1d property includes structures that meet all of 
  7.5   the following criteria: 
  7.6      (1) the structure is located on property that is classified 
  7.7   as agricultural property under section 273.13, subdivision 23; 
  7.8      (2) the structure is occupied exclusively by seasonal farm 
  7.9   workers during the time when they work on that farm, and the 
  7.10  occupants are not charged rent for the privilege of occupying 
  7.11  the property, provided that use of the structure for storage of 
  7.12  farm equipment and produce does not disqualify the property from 
  7.13  classification under this paragraph; 
  7.14     (3) the structure meets all applicable health and safety 
  7.15  requirements for the appropriate season; and 
  7.16     (4) the structure is not saleable as residential property 
  7.17  because it does not comply with local ordinances relating to 
  7.18  location in relation to streets or roads. 
  7.19     The market value of class 1d property has the same class 
  7.20  rates as class 1a property under paragraph (a). 
  7.21     Sec. 7.  Minnesota Statutes 1997 Supplement, section 
  7.22  273.13, subdivision 23, is amended to read: 
  7.23     Subd. 23.  [CLASS 2.] (a) Class 2a property is agricultural 
  7.24  land including any improvements that is homesteaded.  The market 
  7.25  value of the house and garage and immediately surrounding one 
  7.26  acre of land has the same class rates as class 1a property under 
  7.27  subdivision 22.  The value of the remaining land including 
  7.28  improvements up to $115,000 has a net class rate of ~~0.4~~ 0.37 
  7.29  percent of market value for taxes payable in 1999 and 0.35 
  7.30  percent of market value for taxes payable in 2000 and 
  7.31  thereafter.  The remaining value of class 2a property over 
  7.32  $115,000 of market value that does not exceed 320 acres has a 
  7.33  net class rate of ~~0.9~~ 0.85 percent of market value for taxes 
  7.34  payable in 1999 and 0.8 percent of market value for taxes 
  7.35  payable in 2000 and thereafter.  The remaining property over the 
  7.36  $115,000 market value in excess of 320 acres has a class rate of 
  8.1   ~~1.4~~ 1.25 percent of market value for taxes payable in 1999 and 
  8.2   1.15 percent of market value for taxes payable in 2000 and 
  8.3   thereafter.  
  8.4      (b) Class 2b property is (1) real estate, rural in 
  8.5   character and used exclusively for growing trees for timber, 
  8.6   lumber, and wood and wood products; (2) real estate that is not 
  8.7   improved with a structure and is used exclusively for growing 
  8.8   trees for timber, lumber, and wood and wood products, if the 
  8.9   owner has participated or is participating in a cost-sharing 
  8.10  program for afforestation, reforestation, or timber stand 
  8.11  improvement on that particular property, administered or 
  8.12  coordinated by the commissioner of natural resources; (3) real 
  8.13  estate that is nonhomestead agricultural land; or (4) a landing 
  8.14  area or public access area of a privately owned public use 
  8.15  airport.  Class 2b property that is nonhomestead agricultural 
  8.16  land has a net class rate of ~~1.4~~ 1.25 percent of market 
  8.17  value for taxes payable in 1999 and 1.15 percent of market value 
  8.18  for taxes payable in 2000 and thereafter.  The remainder of 
  8.19  class 2b has a net class rate of 1.35 percent of market value 
  8.20  for taxes payable in 1999 and 1.25 percent of market value for 
  8.21  taxes payable in 2000 and thereafter. 
  8.22     (c) Agricultural land as used in this section means 
  8.23  contiguous acreage of ten acres or more, used during the 
  8.24  preceding year for agricultural purposes.  "Agricultural 
  8.25  purposes" as used in this section means the raising or 
  8.26  cultivation of agricultural products or enrollment in the 
  8.27  Reinvest in Minnesota program under sections 103F.501 to 
  8.28  103F.535 or the federal Conservation Reserve Program as 
  8.29  contained in Public Law Number 99-198.  Contiguous acreage on 
  8.30  the same parcel, or contiguous acreage on an immediately 
  8.31  adjacent parcel under the same ownership, may also qualify as 
  8.32  agricultural land, but only if it is pasture, timber, waste, 
  8.33  unusable wild land, or land included in state or federal farm 
  8.34  programs.  Agricultural classification for property shall be 
  8.35  determined excluding the house, garage, and immediately 
  8.36  surrounding one acre of land, and shall not be based upon the 
  9.1   market value of any residential structures on the parcel or 
  9.2   contiguous parcels under the same ownership. 
  9.3      (d) Real estate, excluding the house, garage, and 
  9.4   immediately surrounding one acre of land, of less than ten acres 
  9.5   which is exclusively and intensively used for raising or 
  9.6   cultivating agricultural products, shall be considered as 
  9.7   agricultural land.  
  9.8      Land shall be classified as agricultural even if all or a 
  9.9   portion of the agricultural use of that property is the leasing 
  9.10  to, or use by another person for agricultural purposes. 
  9.11     Classification under this subdivision is not determinative 
  9.12  for qualifying under section 273.111. 
  9.13     The property classification under this section supersedes, 
  9.14  for property tax purposes only, any locally administered 
  9.15  agricultural policies or land use restrictions that define 
  9.16  minimum or maximum farm acreage. 
  9.17     (e) The term "agricultural products" as used in this 
  9.18  subdivision includes production for sale of:  
  9.19     (1) livestock, dairy animals, dairy products, poultry and 
  9.20  poultry products, fur-bearing animals, horticultural and nursery 
  9.21  stock described in sections 18.44 to 18.61, fruit of all kinds, 
  9.22  vegetables, forage, grains, bees, and apiary products by the 
  9.23  owner; 
  9.24     (2) fish bred for sale and consumption if the fish breeding 
  9.25  occurs on land zoned for agricultural use; 
  9.26     (3) the commercial boarding of horses if the boarding is 
  9.27  done in conjunction with raising or cultivating agricultural 
  9.28  products as defined in clause (1); 
  9.29     (4) property which is owned and operated by nonprofit 
  9.30  organizations used for equestrian activities, excluding racing; 
  9.31  and 
  9.32     (5) game birds and waterfowl bred and raised for use on a 
  9.33  shooting preserve licensed under section 97A.115.  
  9.34     (f) If a parcel used for agricultural purposes is also used 
  9.35  for commercial or industrial purposes, including but not limited 
  9.36  to:  
 10.1      (1) wholesale and retail sales; 
 10.2      (2) processing of raw agricultural products or other goods; 
 10.3      (3) warehousing or storage of processed goods; and 
 10.4      (4) office facilities for the support of the activities 
 10.5   enumerated in clauses (1), (2), and (3), 
 10.6   the assessor shall classify the part of the parcel used for 
 10.7   agricultural purposes as class 1b, 2a, or 2b, whichever is 
 10.8   appropriate, and the remainder in the class appropriate to its 
 10.9   use.  The grading, sorting, and packaging of raw agricultural 
 10.10  products for first sale is considered an agricultural purpose.  
 10.11  A greenhouse or other building where horticultural or nursery 
 10.12  products are grown that is also used for the conduct of retail 
 10.13  sales must be classified as agricultural if it is primarily used 
 10.14  for the growing of horticultural or nursery products from seed, 
 10.15  cuttings, or roots and occasionally as a showroom for the retail 
 10.16  sale of those products.  Use of a greenhouse or building only 
 10.17  for the display of already grown horticultural or nursery 
 10.18  products does not qualify as an agricultural purpose.  
 10.19     The assessor shall determine and list separately on the 
 10.20  records the market value of the homestead dwelling and the one 
 10.21  acre of land on which that dwelling is located.  If any farm 
 10.22  buildings or structures are located on this homesteaded acre of 
 10.23  land, their market value shall not be included in this separate 
 10.24  determination.  
 10.25     (g) To qualify for classification under paragraph (b), 
 10.26  clause (4), a privately owned public use airport must be 
 10.27  licensed as a public airport under section 360.018.  For 
 10.28  purposes of paragraph (b), clause (4), "landing area" means that 
 10.29  part of a privately owned public use airport properly cleared, 
 10.30  regularly maintained, and made available to the public for use 
 10.31  by aircraft and includes runways, taxiways, aprons, and sites 
 10.32  upon which are situated landing or navigational aids.  A landing 
 10.33  area also includes land underlying both the primary surface and 
 10.34  the approach surfaces that comply with all of the following:  
 10.35     (i) the land is properly cleared and regularly maintained 
 10.36  for the primary purposes of the landing, taking off, and taxiing 
 11.1   of aircraft; but that portion of the land that contains 
 11.2   facilities for servicing, repair, or maintenance of aircraft is 
 11.3   not included as a landing area; 
 11.4      (ii) the land is part of the airport property; and 
 11.5      (iii) the land is not used for commercial or residential 
 11.6   purposes. 
 11.7   The land contained in a landing area under paragraph (b), clause 
 11.8   (4), must be described and certified by the commissioner of 
 11.9   transportation.  The certification is effective until it is 
 11.10  modified, or until the airport or landing area no longer meets 
 11.11  the requirements of paragraph (b), clause (4).  For purposes of 
 11.12  paragraph (b), clause (4), "public access area" means property 
 11.13  used as an aircraft parking ramp, apron, or storage hangar, or 
 11.14  an arrival and departure building in connection with the airport.
 11.15     Sec. 8.  Minnesota Statutes 1997 Supplement, section 
 11.16  273.13, subdivision 24, is amended to read: 
 11.17     Subd. 24.  [CLASS 3.] (a) Commercial and industrial 
 11.18  property and utility real and personal property, except class 5 
 11.19  property as identified in subdivision 31, clause (1), is class 
 11.20  3a.  Each parcel has a class rate of ~~2.7~~ 2.6 percent for taxes 
 11.21  payable in 1999 and 2.5 percent for taxes payable in 2000 and 
 11.22  thereafter of the first tier of market value, and ~~4.0~~ 3.65 
 11.23  percent for taxes payable in 1999 and 3.5 percent for taxes 
 11.24  payable in 2000 and thereafter of the remaining market value, 
 11.25  except that in the case of contiguous parcels of commercial and 
 11.26  industrial property owned by the same person or entity, only the 
 11.27  value equal to the first-tier value of the contiguous parcels 
 11.28  qualifies for the reduced class rate.  For the purposes of this 
 11.29  subdivision, the first tier means the first $150,000 of market 
 11.30  value.  In the case of utility property owned by one person or 
 11.31  entity, only one parcel in each county has a reduced class rate 
 11.32  on the first tier of market value. 
 11.33     For purposes of this paragraph, parcels are considered to 
 11.34  be contiguous even if they are separated from each other by a 
 11.35  road, street, vacant lot, waterway, or other similar intervening 
 11.36  type of property. 
 12.1      (b) Employment property defined in section 469.166, during 
 12.2   the period provided in section 469.170, shall constitute class 
 12.3   3b and has a class rate of 2.3 percent of the first $50,000 of 
 12.4   market value and 3.6 percent for taxes payable in 1999 and 3.5 
 12.5   percent for taxes payable in 2000 and thereafter of the 
 12.6   remainder, except that for employment property located in a 
 12.7   border city enterprise zone designated pursuant to section 
 12.8   469.168, subdivision 4, paragraph (c), the class rate of the 
 12.9   first tier of market value and the class rate of the remainder 
 12.10  is determined under paragraph (a), unless the governing body of 
 12.11  the city designated as an enterprise zone determines that a 
 12.12  specific parcel shall be assessed pursuant to the first clause 
 12.13  of this sentence.  The governing body may provide for assessment 
 12.14  under the first clause of the preceding sentence only for 
 12.15  property which is located in an area which has been designated 
 12.16  by the governing body for the receipt of tax reductions 
 12.17  authorized by section 469.171, subdivision 1. 
 12.18     (c) Structures which are (i) located on property classified 
 12.19  as class 3a, (ii) constructed under an initial building permit 
 12.20  issued after January 2, 1996, (iii) located in a transit zone as 
 12.21  defined under section 473.3915, subdivision 3, (iv) located 
 12.22  within the boundaries of a school district, and (v) not 
 12.23  primarily used for retail or transient lodging purposes, shall 
 12.24  have a class rate equal to 85 percent of the class rate of the 
 12.25  second tier of the commercial property rate under paragraph (a) 
 12.26  on any portion of the market value that does not qualify for the 
 12.27  first tier class rate under paragraph (a).  As used in item (v), 
 12.28  a structure is primarily used for retail or transient lodging 
 12.29  purposes if over 50 percent of its square footage is used for 
 12.30  those purposes.  ~~The four percent rate~~ A class rate equal to 85 
 12.31  percent of the class rate of the second tier of the commercial 
 12.32  property rate under paragraph (a) shall also apply to 
 12.33  improvements to existing structures that meet the requirements 
 12.34  of items (i) to (v) if the improvements are constructed under an 
 12.35  initial building permit issued after January 2, 1996, even if 
 12.36  the remainder of the structure was constructed prior to January 
 13.1   2, 1996.  For the purposes of this paragraph, a structure shall 
 13.2   be considered to be located in a transit zone if any portion of 
 13.3   the structure lies within the zone.  If any property once 
 13.4   eligible for treatment under this paragraph ceases to remain 
 13.5   eligible due to revisions in transit zone boundaries, the 
 13.6   property shall continue to receive treatment under this 
 13.7   paragraph for a period of three years. 
 13.8      Sec. 9.  Minnesota Statutes 1997 Supplement, section 
 13.9   273.13, subdivision 25, as amended by Laws 1997, Third Special 
 13.10  Session chapter 3, section 28, is amended to read: 
 13.11     Subd. 25.  [CLASS 4.] (a) Class 4a is residential real 
 13.12  estate containing four or more units and used or held for use by 
 13.13  the owner or by the tenants or lessees of the owner as a 
 13.14  residence for rental periods of 30 days or more.  Class 4a also 
 13.15  includes hospitals licensed under sections 144.50 to 144.56, 
 13.16  other than hospitals exempt under section 272.02, and contiguous 
 13.17  property used for hospital purposes, without regard to whether 
 13.18  the property has been platted or subdivided.  Class 4a property 
 13.19  in a city with a population of 5,000 or less, that is (1) 
 13.20  located outside of the metropolitan area, as defined in section 
 13.21  473.121, subdivision 2, or outside any county contiguous to the 
 13.22  metropolitan area, and (2) whose city boundary is at least 15 
 13.23  miles from the boundary of any city with a population greater 
 13.24  than 5,000 has a class rate of ~~2.3~~ 2.25 percent of market value 
 13.25  for taxes payable in 1999 and 2.15 percent of market value for 
 13.26  taxes payable in 2000 and thereafter.  All other class 4a 
 13.27  property has a class rate of ~~2.9~~ 2.65 percent of market 
 13.28  value for taxes payable in 1999 and 2.5 percent of market value 
 13.29  for taxes payable in 2000 and thereafter.  For purposes of this 
 13.30  paragraph, population has the same meaning given in section 
 13.31  477A.011, subdivision 3. 
 13.32     (b) Class 4b includes: 
 13.33     (1) residential real estate containing less than four units 
 13.34  that does not qualify as class 4bb, other than seasonal 
 13.35  residential, and recreational; 
 13.36     (2) manufactured homes not classified under any other 
 14.1   provision; 
 14.2      (3) a dwelling, garage, and surrounding one acre of 
 14.3   property on a nonhomestead farm classified under subdivision 23, 
 14.4   paragraph (b) containing two or three units; 
 14.5      (4) unimproved property that is classified residential as 
 14.6   determined under section 273.13, subdivision 33.  
 14.7      Class 4b property has a class rate of ~~2.1~~ 1.8 percent of 
 14.8   market value.  
 14.9      (c) Class 4bb includes: 
 14.10     (1) nonhomestead residential real estate containing one 
 14.11  unit, other than seasonal residential, and recreational; and 
 14.12     (2) a single family dwelling, garage, and surrounding one 
 14.13  acre of property on a nonhomestead farm classified under 
 14.14  subdivision 23, paragraph (b). 
 14.15     Class 4bb has a class rate of ~~1.9~~ 1.5 percent for taxes 
 14.16  payable in 1999 and 1.25 percent for taxes payable in 2000 and 
 14.17  thereafter on the first $75,000 of market value and a class rate 
 14.18  of ~~2.1~~ 1.7 percent for taxes payable in 1999 and 1.6 percent for 
 14.19  taxes payable in 2000 and thereafter of its market value that 
 14.20  exceeds $75,000. 
 14.21     Property that has been classified as seasonal recreational 
 14.22  residential property at any time during which it has been owned 
 14.23  by the current owner or spouse of the current owner does not 
 14.24  qualify for class 4bb. 
 14.25     (d) Class 4c property includes: 
 14.26     (1) except as provided in subdivision 22, paragraph (c), 
 14.27  real property devoted to temporary and seasonal residential 
 14.28  occupancy for recreation purposes, including real property 
 14.29  devoted to temporary and seasonal residential occupancy for 
 14.30  recreation purposes and not devoted to commercial purposes for 
 14.31  more than 250 days in the year preceding the year of 
 14.32  assessment.  For purposes of this clause, property is devoted to 
 14.33  a commercial purpose on a specific day if any portion of the 
 14.34  property is used for residential occupancy, and a fee is charged 
 14.35  for residential occupancy.  In order for a property to be 
 14.36  classified as class 4c, seasonal recreational residential for 
 15.1   commercial purposes, at least 40 percent of the annual gross 
 15.2   lodging receipts related to the property must be from business 
 15.3   conducted ~~between Memorial Day weekend and Labor Day~~ 
 15.4   ~~weekend~~ during three consecutive calendar months and either (i) 
 15.5   at least 60 percent of all paid reservations or paid bookings by 
 15.6   lodging guests during the year must be for periods of at least 
 15.7   two consecutive nights; or (ii) at least 20 percent of the 
 15.8   annual gross receipts must be from sales of recreational 
 15.9   services, which include rental of fish houses, boats and motors, 
 15.10  snowmobiles, downhill or cross-country ski equipment, marina 
 15.11  services, launch services, and fishing guide services.  Class 4c 
 15.12  also includes commercial use real property used exclusively for 
 15.13  recreational purposes in conjunction with class 4c property 
 15.14  devoted to temporary and seasonal residential occupancy for 
 15.15  recreational purposes, up to a total of two acres, provided the 
 15.16  property is not devoted to commercial recreational use for more 
 15.17  than 250 days in the year preceding the year of assessment and 
 15.18  is located within two miles of the class 4c property with which 
 15.19  it is used.  Class 4c property classified in this clause also 
 15.20  includes the remainder of class 1c resorts.  Owners of real 
 15.21  property devoted to temporary and seasonal residential occupancy 
 15.22  for recreation purposes and all or a portion of which was 
 15.23  devoted to commercial purposes for not more than 250 days in the 
 15.24  year preceding the year of assessment desiring classification as 
 15.25  class 1c or 4c, must submit a declaration to the assessor 
 15.26  designating the cabins or units occupied for 250 days or less in 
 15.27  the year preceding the year of assessment by January 15 of the 
 15.28  assessment year.  Those cabins or units and a proportionate 
 15.29  share of the land on which they are located will be designated 
 15.30  class 1c or 4c as otherwise provided.  The remainder of the 
 15.31  cabins or units and a proportionate share of the land on which 
 15.32  they are located will be designated as class 3a.  The owner of 
 15.33  property desiring designation as class 1c or 4c property must 
 15.34  provide guest registers or other records demonstrating that the 
 15.35  units for which class 1c or 4c designation is sought were not 
 15.36  occupied for more than 250 days in the year preceding the 
 16.1   assessment if so requested.  The portion of a property operated 
 16.2   as a (1) restaurant, (2) bar, (3) gift shop, and (4) other 
 16.3   nonresidential facility operated on a commercial basis not 
 16.4   directly related to temporary and seasonal residential occupancy 
 16.5   for recreation purposes shall not qualify for class 1c or 4c; 
 16.6      (2) qualified property used as a golf course if: 
 16.7      (i) ~~any portion of the property is located within a county~~ 
 16.8   ~~that has a population of less than 50,000, or within a county~~ 
 16.9   ~~containing a golf course owned by a municipality, the county, or~~ 
 16.10  ~~a special taxing district;~~ 
 16.11     ~~(ii)~~ it is open to the public on a daily fee basis.  It may 
 16.12  charge membership fees or dues, but a membership fee may not be 
 16.13  required in order to use the property for golfing, and its green 
 16.14  fees for golfing must be comparable to green fees typically 
 16.15  charged by municipal courses; and 
 16.16     ~~(iii)~~ (ii) it meets the requirements of section 273.112, 
 16.17  subdivision 3, paragraph (d). 
 16.18     A structure used as a clubhouse, restaurant, or place of 
 16.19  refreshment in conjunction with the golf course is classified as 
 16.20  class 3a property. 
 16.21     (3) real property up to a maximum of one acre of land owned 
 16.22  by a nonprofit community service oriented organization; provided 
 16.23  that the property is not used for a revenue-producing activity 
 16.24  for more than six days in the calendar year preceding the year 
 16.25  of assessment and the property is not used for residential 
 16.26  purposes on either a temporary or permanent basis.  For purposes 
 16.27  of this clause, a "nonprofit community service oriented 
 16.28  organization" means any corporation, society, association, 
 16.29  foundation, or institution organized and operated exclusively 
 16.30  for charitable, religious, fraternal, civic, or educational 
 16.31  purposes, and which is exempt from federal income taxation 
 16.32  pursuant to section 501(c)(3), (10), or (19) of the Internal 
 16.33  Revenue Code of 1986, as amended through December 31, 1990.  For 
 16.34  purposes of this clause, "revenue-producing activities" shall 
 16.35  include but not be limited to property or that portion of the 
 16.36  property that is used as an on-sale intoxicating liquor or 3.2 
 17.1   percent malt liquor establishment licensed under chapter 340A, a 
 17.2   restaurant open to the public, bowling alley, a retail store, 
 17.3   gambling conducted by organizations licensed under chapter 349, 
 17.4   an insurance business, or office or other space leased or rented 
 17.5   to a lessee who conducts a for-profit enterprise on the 
 17.6   premises.  Any portion of the property which is used for 
 17.7   revenue-producing activities for more than six days in the 
 17.8   calendar year preceding the year of assessment shall be assessed 
 17.9   as class 3a.  The use of the property for social events open 
 17.10  exclusively to members and their guests for periods of less than 
 17.11  24 hours, when an admission is not charged nor any revenues are 
 17.12  received by the organization shall not be considered a 
 17.13  revenue-producing activity; 
 17.14     (4) post-secondary student housing of not more than one 
 17.15  acre of land that is owned by a nonprofit corporation organized 
 17.16  under chapter 317A and is used exclusively by a student 
 17.17  cooperative, sorority, or fraternity for on-campus housing or 
 17.18  housing located within two miles of the border of a college 
 17.19  campus; and 
 17.20     (5) manufactured home parks as defined in section 327.14, 
 17.21  subdivision 3. 
 17.22     Class 4c property has a class rate of ~~2.1~~ 1.95 percent of 
 17.23  market value for taxes payable in 1999 and 1.8 percent for taxes 
 17.24  payable in 2000 and thereafter, except that (i) for each parcel 
 17.25  of seasonal residential recreational property not used for 
 17.26  commercial purposes the first $75,000 of market value has a 
 17.27  class rate of ~~1.4~~ 1.35 percent for taxes payable in 1999 and 
 17.28  1.25 percent for taxes payable in 2000 and thereafter, and the 
 17.29  market value that exceeds $75,000 has a class rate of ~~2.5~~ 2.4 
 17.30  percent for taxes payable in 1999 and 2.2 percent for taxes 
 17.31  payable in 2000 and thereafter, and (ii) manufactured home parks 
 17.32  assessed under clause (5) have a class rate of two percent.  
 17.33     (e) Class 4d property is qualifying low-income rental 
 17.34  housing certified to the assessor by the housing finance agency 
 17.35  under sections 273.126 and 462A.071.  Class 4d includes land in 
 17.36  proportion to the total market value of the building that is 
 18.1   qualifying low-income rental housing.  For all properties 
 18.2   qualifying as class 4d, the market value determined by the 
 18.3   assessor must be based on the normal approach to value using 
 18.4   normal unrestricted rents. 
 18.5      Class 4d property has a class rate of one percent of market 
 18.6   value.  
 18.7      (f) Class 4e property consists of the residential portion 
 18.8   of any structure located within a city that was converted from 
 18.9   nonresidential use to residential use, provided that: 
 18.10     (1) the structure had formerly been used as a warehouse; 
 18.11     (2) the structure was originally constructed prior to 1940; 
 18.12     (3) the conversion was done after December 31, 1995, but 
 18.13  before January 1, 2003; and 
 18.14     (4) the conversion involved an investment of at least 
 18.15  $25,000 per residential unit. 
 18.16     Class 4e property has a class rate of 2.3 percent, provided 
 18.17  that a structure is eligible for class 4e classification only in 
 18.18  the 12 assessment years immediately following the conversion. 
 18.19     Sec. 10.  Minnesota Statutes 1997 Supplement, section 
 18.20  273.13, subdivision 31, is amended to read: 
 18.21     Subd. 31.  [CLASS 5.] Class 5 property includes:  
 18.22     (1) tools, implements, and machinery of an electric 
 18.23  generating, transmission, or distribution system or a pipeline 
 18.24  system transporting or distributing water, gas, crude oil, or 
 18.25  petroleum products or mains and pipes used in the distribution 
 18.26  of steam or hot or chilled water for heating or cooling 
 18.27  buildings, which are fixtures; 
 18.28     (2) unmined iron ore and low-grade iron-bearing formations 
 18.29  as defined in section 273.14; and 
 18.30     (3) all other property not otherwise classified. 
 18.31     Class 5 property has a class rate of ~~4.0~~ 3.65 percent of 
 18.32  market value for taxes payable in ~~1998~~ 1999 and 3.5 percent of 
 18.33  market value for taxes payable in 2000 and thereafter. 
 18.34     Sec. 11.  Minnesota Statutes 1997 Supplement, section 
 18.35  273.1382, subdivision 1, is amended to read: 
 18.36     Subdivision 1.  [EDUCATION HOMESTEAD CREDIT.] Each year, 
 19.1   beginning with property taxes payable in 1998, the respective 
 19.2   county auditors shall determine the initial tax rate for each 
 19.3   school district for the general education levy certified under 
 19.4   section 124A.23, subdivision 2 or 3.  That rate plus the school 
 19.5   district's education homestead credit tax rate adjustment under 
 19.6   section 275.08, subdivision 1e, shall be the general education 
 19.7   homestead credit local tax rate for the district.  The auditor 
 19.8   shall then determine a general education homestead credit for 
 19.9   each homestead within the county equal to ~~32~~ 56 percent for 
 19.10  taxes payable in 1999 and 68 percent for taxes payable in 2000 
 19.11  and thereafter of the general education homestead credit local 
 19.12  tax rate times the net tax capacity of the homestead for the 
 19.13  taxes payable year.  The amount of general education homestead 
 19.14  credit for a homestead may not exceed ~~$225~~ $270 for taxes 
 19.15  payable in 1999 and $290 for taxes payable in 2000 and 
 19.16  thereafter.  In the case of an agricultural homestead, only the 
 19.17  net tax capacity of the house, garage, and surrounding one acre 
 19.18  of land shall be used in determining the property's education 
 19.19  homestead credit. 
 19.20     Sec. 12.  Minnesota Statutes 1997 Supplement, section 
 19.21  273.1382, subdivision 3, is amended to read: 
 19.22     Subd. 3.  [APPROPRIATION.] An amount sufficient to make the 
 19.23  payments required by this section is annually appropriated from 
 19.24  the general fund to the commissioner of children, families, and 
 19.25  learning, except that for fiscal years 2000 and 2001 the amount 
 19.26  necessary to make the increased payments attributable to section 
 19.27  11 is appropriated from the property tax reform account. 
 19.28     Sec. 13.  Minnesota Statutes 1996, section 273.1398, 
 19.29  subdivision 2, is amended to read: 
 19.30     Subd. 2.  [HOMESTEAD AND AGRICULTURAL CREDIT AID.] 
 19.31  Homestead and agricultural credit aid for each unique taxing 
 19.32  jurisdiction equals the product of (1) the homestead and 
 19.33  agricultural credit aid base, and (2) the growth adjustment 
 19.34  factor, plus the net tax capacity adjustment and the fiscal 
 19.35  disparity adjustment.  Beginning with homestead and agricultural 
 19.36  credit aid payable in 2000, each county that receives an amount 
 20.1   in calendar year 2000 under section 477A.0122 as a result of the 
 20.2   appropriation in section 477A.03, subdivision 2, paragraph (c), 
 20.3   clause (3), shall have its homestead and agricultural credit aid 
 20.4   permanently reduced by an equal amount. 
 20.5      Sec. 14.  Minnesota Statutes 1996, section 273.1398, 
 20.6   subdivision 4, is amended to read: 
 20.7      Subd. 4.  [DISPARITY REDUCTION CREDIT.] (a) Beginning with 
 20.8   taxes payable in 1989, class 4a, class 3a, and class 3b property 
 20.9   qualifies for a disparity reduction credit if:  (1) the property 
 20.10  is located in a border city that has an enterprise zone 
 20.11  designated pursuant to section 469.168, subdivision 4; (2) the 
 20.12  property is located in a city with a population greater than 
 20.13  2,500 and less than 35,000 according to the 1980 decennial 
 20.14  census; (3) the city is adjacent to a city in another state or 
 20.15  immediately adjacent to a city adjacent to a city in another 
 20.16  state; and (4) the adjacent city in the other state has a 
 20.17  population of greater than 5,000 and less than 75,000.  
 20.18     (b) The credit is an amount sufficient to reduce (i) the 
 20.19  taxes levied on class 4a property to 2.3 percent of the 
 20.20  property's market value and (ii) the tax on class 3a and class 
 20.21  3b property to ~~3.3~~ 2.3 percent of market value.  
 20.22     (c) The county auditor shall annually certify the costs of 
 20.23  the credits to the department of revenue.  The department shall 
 20.24  reimburse local governments for the property taxes foregone as 
 20.25  the result of the credits in proportion to their total levies. 
 20.26     Sec. 15.  Minnesota Statutes 1997 Supplement, section 
 20.27  275.16, is amended to read: 
 20.28     275.16 [COUNTY AUDITOR TO FIX AMOUNT OF LEVY.] 
 20.29     If any such municipality shall return to the county auditor 
 20.30  a levy greater than permitted by chapters 124, 124A, 124B, 136C, 
 20.31  and 136D, and sections 275.124 to 275.16, ~~and sections 275.70 to~~ 
 20.32  ~~275.74,~~ such county auditor shall extend only such amount of 
 20.33  taxes as the limitations herein prescribed will permit; 
 20.34  provided, if such levy shall include any levy for the payment of 
 20.35  bonded indebtedness or judgments, such levies for bonded 
 20.36  indebtedness or judgments shall be extended in full, and the 
 21.1   remainder of the levies shall be reduced so that the total 
 21.2   thereof, including levies for bonds and judgments, shall not 
 21.3   exceed such amount as the limitations herein prescribed will 
 21.4   permit.  
 21.5      Sec. 16.  Minnesota Statutes 1996, section 477A.0122, 
 21.6   subdivision 6, is amended to read: 
 21.7      Subd. 6.  [REPORT.] On or before March 15 of the year 
 21.8   following the year in which the distributions under this section 
 21.9   are received, each county shall file with the commissioner of 
 21.10  revenue and commissioner of human services a report on prior 
 21.11  year expenditures for out-of-home placement and family 
 21.12  preservation, including expenditures under this section.  For 
 21.13  the human services programs specified in this section, the 
 21.14  commissioner of revenue and commissioner of human services, in 
 21.15  consultation with representatives of county governments, shall 
 21.16  make a recommendation to the 1999 legislature as to which 
 21.17  current reporting requirements imposed on county governments, if 
 21.18  any, may be eliminated, replaced, or consolidated on the report 
 21.19  established by this section.  For aid payable in calendar year 
 21.20  2000 and thereafter, each county shall provide information on 
 21.21  the amount of state aid, local property tax revenue, and federal 
 21.22  aid expended by that county on the programs specified in this 
 21.23  section using the consolidated financial report recommended by 
 21.24  the commissioner of revenue and commissioner of human services 
 21.25  under this subdivision. 
 21.26     Sec. 17.  Minnesota Statutes 1996, section 477A.03, 
 21.27  subdivision 2, is amended to read: 
 21.28     Subd. 2.  [ANNUAL APPROPRIATION.] (a) A sum sufficient to 
 21.29  discharge the duties imposed by sections 477A.011 to 477A.014 is 
 21.30  annually appropriated from the general fund to the commissioner 
 21.31  of revenue.  For aids payable in 1996 and thereafter, the total 
 21.32  aids paid under ~~sections~~ section 477A.013, subdivision 9, ~~and~~ 
 21.33  ~~477A.0122~~ are the amounts certified to be paid in the previous 
 21.34  year, adjusted for inflation as provided under subdivision 
 21.35  3.  ~~Aid payments to counties under section 477A.0121 are limited~~ 
 21.36  ~~to $20,265,000 in 1996.  Aid payments to counties under section~~ 
 22.1   ~~477A.0121 are limited to $27,571,625 in 1997.~~  
 22.2      (b) For aid payable in 1998 and thereafter, the total aids 
 22.3   paid under section 477A.0121 are the amounts certified to be 
 22.4   paid in the previous year, adjusted for inflation as provided 
 22.5   under subdivision 3. 
 22.6      (c) For aid payable in 2000, the total aid payments under 
 22.7   section 477A.0122 are the sum of:  
 22.8      (1) the amounts certified to be paid in the previous year, 
 22.9   adjusted for inflation as provided in subdivision 3; plus 
 22.10     (2) $20,000,000; plus 
 22.11     (3) $10,000,000.  
 22.12     For aid payable in 2001 and thereafter, the total aid 
 22.13  payments under section 477A.0122 are the amounts certified to be 
 22.14  paid in the previous year, adjusted for inflation as provided in 
 22.15  subdivision 3. 
 22.16     Sec. 18.  [LOCAL GOVERNMENT AID INCREASE FOR JURISDICTIONS 
 22.17  WITH LOW-INCOME RENTAL HOUSING.] 
 22.18     Notwithstanding the limitations in Minnesota Statutes, 
 22.19  section 477A.013, subdivision 9, paragraphs (b) and (c), if a 
 22.20  city's net tax capacity loss as a result of the conversion of 
 22.21  existing class 4b nonhomestead residential properties and 
 22.22  existing class 4a, 4c, and 4d apartments under section 273.13, 
 22.23  subdivision 25, for the 1997 assessment to class 4d low-income 
 22.24  rental housing under section 273.13, subdivision 25, for the 
 22.25  1998 assessment exceeds five percent of the city's net tax 
 22.26  capacity used for computation of the local tax rate under 
 22.27  Minnesota Statutes, section 275.07, subdivision 1b, for taxes 
 22.28  payable in 1998, the city shall receive additional local 
 22.29  government aid in 1999.  The additional aid shall be equal to 50 
 22.30  percent of the product of the city's local tax rate for taxes 
 22.31  payable in 1998 and the city's net tax capacity loss as the 
 22.32  result of conversion.  The net tax capacity loss shall be 
 22.33  calculated using limited market values for the 1997 assessment.  
 22.34  On or before June 15, 1998, a city qualifying for additional aid 
 22.35  shall certify the 1997 limited market value of the converted 
 22.36  units and the proportionate share of the land qualifying for 
 23.1   class 4d and the property's old classification for the 1997 
 23.2   assessment to the commissioner of revenue along with any 
 23.3   additional information the commissioner may require.  For local 
 23.4   government aid in 2000 and subsequent years, the aid increase 
 23.5   under this section shall be added to the city's aid base under 
 23.6   Minnesota Statutes, section 477A.01.  The amount appropriated 
 23.7   for aid to be paid under this section in any year shall not 
 23.8   exceed $1,000,000.  If the total amount of aid that would 
 23.9   otherwise be payable under the formula in this section exceeds 
 23.10  $1,000,000, the amount of aid payable to each city is reduced 
 23.11  proportionately. 
 23.12     Sec. 19.  [PROPERTY TAX REFUNDS FOR 1999 CLAIMS.] 
 23.13     Subdivision 1.  [GENERALLY.] Claims based on rent paid in 
 23.14  1998 and property taxes payable in 1999 only are determined 
 23.15  according to this section in lieu of the provisions of Minnesota 
 23.16  Statutes, section 290A.04, subdivisions 2 and 2a. 
 23.17     Subd. 2.  [HOMEOWNERS.] A claimant whose property taxes 
 23.18  payable are in excess of the percentage of the household income 
 23.19  stated below shall pay an amount equal to the percent of income 
 23.20  shown for the appropriate household income level along with the 
 23.21  percent to be paid by the claimant of the remaining amount of 
 23.22  property taxes payable.  The state refund equals the amount of 
 23.23  property taxes payable that remain, up to the state refund 
 23.24  amount shown below.  
 23.25                        Percent           Percent    Maximum
 23.26  Household Income     of Income          Paid by     State
 23.27                                          Claimant    Refund
 23.28      $0 to  2,279    1.2 percent        18 percent   $1,000
 23.29   2,280 to  4,579    1.4 percent        20 percent   $1,000
 23.30   4,580 to  8,019    1.7 percent        20 percent   $1,000
 23.31   8,020 to 10,299    2.0 percent        25 percent   $1,000
 23.32  10,300 to 12,589    2.3 percent        30 percent   $1,000
 23.33  12,590 to 16,029    2.5 percent        30 percent   $1,000
 23.34  16,030 to 18,309    2.8 percent        35 percent   $1,000
 23.35  18,310 to 27,469    3.0 percent        40 percent   $1,000
 23.36  27,470 to 45,779    3.5 percent        45 percent   $1,000
 23.37  45,780 to 65,239    4.0 percent        50 percent   $1,000
 23.38  65,240 to 66,379    4.0 percent        50 percent   $  750
 23.39  66,380 to 67,529    4.0 percent        50 percent   $  600
 23.40  67,530 to 68,679    4.0 percent        50 percent   $  250
 23.41  68,680 and up                                       $    0
 23.42     The payment made to a claimant shall be the amount of the 
 23.43  state refund calculated under this subdivision.  No payment is 
 23.44  allowed if the claimant's household income is $61,930 or more. 
 24.1      Subd. 3.  [RENTERS.] A claimant whose rent constituting 
 24.2   property taxes exceeds the percentage of the household income 
 24.3   stated below must pay an amount equal to the percent of income 
 24.4   shown for the appropriate household income level along with the 
 24.5   percent to be paid by the claimant of the remaining amount of 
 24.6   rent constituting property taxes.  The state refund equals the 
 24.7   amount of rent constituting property taxes that remain, up to 
 24.8   the maximum state refund amount shown below.  
 24.9                         Percent           Percent      Maximum
 24.10  Household Income     of Income          Paid by        State
 24.11                                          Claimant      Refund
 24.12       $0 to  4,579    0.8 percent         5 percent    $1,200
 24.13    4,580 to  8,019    1.0 percent         5 percent    $1,200
 24.14    8,020 to 10,299    1.0 percent         8 percent    $1,200
 24.15   10,300 to 11,439    1.0 percent        10 percent    $1,200
 24.16   11,440 to 12,589    1.0 percent        12 percent    $1,200
 24.17   12,590 to 16,029    1.2 percent        15 percent    $1,200
 24.18   16,030 to 17,169    1.4 percent        17 percent    $1,200
 24.19   17,170 to 19,459    1.5 percent        20 percent    $1,200
 24.20   19,460 to 20,609    1.7 percent        20 percent    $1,200
 24.21   20,610 to 21,749    1.8 percent        25 percent    $1,200
 24.22   21,750 to 22,889    2.0 percent        25 percent    $1,200
 24.23   22,890 to 24,029    2.0 percent        30 percent    $1,200
 24.24   24,030 to 25,189    2.3 percent        35 percent    $1,200
 24.25   25,190 to 27,469    2.5 percent        35 percent    $1,200
 24.26   27,470 to 29,769    2.8 percent        40 percent    $1,200
 24.27   29,770 to 32,049    3.0 percent        40 percent    $1,200
 24.28   32,050 to 33,189    3.2 percent        45 percent    $1,075
 24.29   33,190 to 34,329    3.2 percent        45 percent    $  950
 24.30   34,330 to 35,489    3.5 percent        45 percent    $  800
 24.31   35,490 to 36,629    3.5 percent        50 percent    $  690
 24.32   36,630 to 37,769    3.5 percent        50 percent    $  580
 24.33   37,770 to 38,909    3.5 percent        50 percent    $  340
 24.34   38,910 to 40,059    3.5 percent        50 percent    $  110
 24.35   40,060 and up                                        $    0
 24.36     The payment made to a claimant is the amount of the state 
 24.37  refund calculated under this subdivision.  No payment is allowed 
 24.38  if the claimant's household income is $36,120 or more. 
 24.39     Sec. 20.  [EDUCATION LEVY REDUCTION APPROPRIATION.] 
 24.40     In addition to any amount appropriated by other law, 
 24.41  $50,557,000 is appropriated to the commissioner of children, 
 24.42  families, and learning in fiscal year 2000, $64,903,000 in 
 24.43  fiscal year 2001, and $65,873,000 in fiscal year 2002 and 
 24.44  thereafter to fund a reduction in the statewide general 
 24.45  education property tax levy.  The fiscal year 2001 appropriation 
 24.46  includes $5,617,000 for 2000 and $59,286,000 for 2001.  The 
 24.47  amounts appropriated under this section for fiscal years 2000 
 24.48  and 2001 are appropriated from the property tax reform account; 
 24.49  subsequent appropriations are from the general fund.  
 25.1      Sec. 21.  [REPEALER.] 
 25.2      Minnesota Statutes 1997 Supplement, sections 273.13, 
 25.3   subdivision 32; 275.70; 275.71; 275.72; 275.73; and 275.74; and 
 25.4   Laws 1997, chapter 231, article 3, section 8, are repealed. 
 25.5      Sec. 22.  [EFFECTIVE DATE.] 
 25.6      Sections 1 to 21 are effective for taxes payable in 1999 
 25.7   and thereafter and for aid payable in fiscal year 2000 and 
 25.8   thereafter. 
 25.9                              ARTICLE 2 
 25.10          PROPERTY TAXES, LOCAL BONDING AND LEVY AUTHORITY
 25.11     Section 1.  Minnesota Statutes 1997 Supplement, section 
 25.12  272.02, subdivision 1, is amended to read: 
 25.13     Subdivision 1.  All property described in this section to 
 25.14  the extent herein limited shall be exempt from taxation: 
 25.15     (1) All public burying grounds. 
 25.16     (2) All public schoolhouses. 
 25.17     (3) All public hospitals. 
 25.18     (4) All academies, colleges, and universities, and all 
 25.19  seminaries of learning. 
 25.20     (5) All churches, church property, and houses of worship. 
 25.21     (6) Institutions of purely public charity except parcels of 
 25.22  property containing structures and the structures described in 
 25.23  section 273.13, subdivision 25, paragraph (c), clauses (1), (2), 
 25.24  and (3), or paragraph (d), other than those that qualify for 
 25.25  exemption under clause (25). 
 25.26     (7) All public property exclusively used for any public 
 25.27  purpose. 
 25.28     (8) Except for the taxable personal property enumerated 
 25.29  below, all personal property and the property described in 
 25.30  section 272.03, subdivision 1, paragraphs (c) and (d), shall be 
 25.31  exempt.  
 25.32     The following personal property shall be taxable:  
 25.33     (a) personal property which is part of an electric 
 25.34  generating, transmission, or distribution system or a pipeline 
 25.35  system transporting or distributing water, gas, crude oil, or 
 25.36  petroleum products or mains and pipes used in the distribution 
 26.1   of steam or hot or chilled water for heating or cooling 
 26.2   buildings and structures; 
 26.3      (b) railroad docks and wharves which are part of the 
 26.4   operating property of a railroad company as defined in section 
 26.5   270.80; 
 26.6      (c) personal property defined in section 272.03, 
 26.7   subdivision 2, clause (3); 
 26.8      (d) leasehold or other personal property interests which 
 26.9   are taxed pursuant to section 272.01, subdivision 2; 273.124, 
 26.10  subdivision 7; or 273.19, subdivision 1; or any other law 
 26.11  providing the property is taxable as if the lessee or user were 
 26.12  the fee owner; 
 26.13     (e) manufactured homes and sectional structures, including 
 26.14  storage sheds, decks, and similar removable improvements 
 26.15  constructed on the site of a manufactured home, sectional 
 26.16  structure, park trailer or travel trailer as provided in section 
 26.17  273.125, subdivision 8, paragraph (f); and 
 26.18     (f) flight property as defined in section 270.071.  
 26.19     (9) Personal property used primarily for the abatement and 
 26.20  control of air, water, or land pollution to the extent that it 
 26.21  is so used, and real property which is used primarily for 
 26.22  abatement and control of air, water, or land pollution as part 
 26.23  of an agricultural operation, as a part of a centralized 
 26.24  treatment and recovery facility operating under a permit issued 
 26.25  by the Minnesota pollution control agency pursuant to chapters 
 26.26  115 and 116 and Minnesota Rules, parts 7001.0500 to 7001.0730, 
 26.27  and 7045.0020 to 7045.1260, as a wastewater treatment facility 
 26.28  and for the treatment, recovery, and stabilization of metals, 
 26.29  oils, chemicals, water, sludges, or inorganic materials from 
 26.30  hazardous industrial wastes, or as part of an electric 
 26.31  generation system.  For purposes of this clause, personal 
 26.32  property includes ponderous machinery and equipment used in a 
 26.33  business or production activity that at common law is considered 
 26.34  real property. 
 26.35     Any taxpayer requesting exemption of all or a portion of 
 26.36  any real property or any equipment or device, or part thereof, 
 27.1   operated primarily for the control or abatement of air or water 
 27.2   pollution shall file an application with the commissioner of 
 27.3   revenue.  The equipment or device shall meet standards, rules, 
 27.4   or criteria prescribed by the Minnesota pollution control 
 27.5   agency, and must be installed or operated in accordance with a 
 27.6   permit or order issued by that agency.  The Minnesota pollution 
 27.7   control agency shall upon request of the commissioner furnish 
 27.8   information or advice to the commissioner.  On determining that 
 27.9   property qualifies for exemption, the commissioner shall issue 
 27.10  an order exempting the property from taxation.  The equipment or 
 27.11  device shall continue to be exempt from taxation as long as the 
 27.12  permit issued by the Minnesota pollution control agency remains 
 27.13  in effect. 
 27.14     (10) Wetlands.  For purposes of this subdivision, 
 27.15  "wetlands" means:  (i) land described in section 103G.005, 
 27.16  subdivision 15a; (ii) land which is mostly under water, produces 
 27.17  little if any income, and has no use except for wildlife or 
 27.18  water conservation purposes, provided it is preserved in its 
 27.19  natural condition and drainage of it would be legal, feasible, 
 27.20  and economically practical for the production of livestock, 
 27.21  dairy animals, poultry, fruit, vegetables, forage and grains, 
 27.22  except wild rice; or (iii) land in a wetland preservation area 
 27.23  under sections 103F.612 to 103F.616.  "Wetlands" under items (i) 
 27.24  and (ii) include adjacent land which is not suitable for 
 27.25  agricultural purposes due to the presence of the wetlands, but 
 27.26  do not include woody swamps containing shrubs or trees, wet 
 27.27  meadows, meandered water, streams, rivers, and floodplains or 
 27.28  river bottoms.  Exemption of wetlands from taxation pursuant to 
 27.29  this section shall not grant the public any additional or 
 27.30  greater right of access to the wetlands or diminish any right of 
 27.31  ownership to the wetlands. 
 27.32     (11) Native prairie.  The commissioner of the department of 
 27.33  natural resources shall determine lands in the state which are 
 27.34  native prairie and shall notify the county assessor of each 
 27.35  county in which the lands are located.  Pasture land used for 
 27.36  livestock grazing purposes shall not be considered native 
 28.1   prairie for the purposes of this clause.  Upon receipt of an 
 28.2   application for the exemption provided in this clause for lands 
 28.3   for which the assessor has no determination from the 
 28.4   commissioner of natural resources, the assessor shall refer the 
 28.5   application to the commissioner of natural resources who shall 
 28.6   determine within 30 days whether the land is native prairie and 
 28.7   notify the county assessor of the decision.  Exemption of native 
 28.8   prairie pursuant to this clause shall not grant the public any 
 28.9   additional or greater right of access to the native prairie or 
 28.10  diminish any right of ownership to it. 
 28.11     (12) Property used in a continuous program to provide 
 28.12  emergency shelter for victims of domestic abuse, provided the 
 28.13  organization that owns and sponsors the shelter is exempt from 
 28.14  federal income taxation pursuant to section 501(c)(3) of the 
 28.15  Internal Revenue Code of 1986, as amended through December 31, 
 28.16  1992, notwithstanding the fact that the sponsoring organization 
 28.17  receives funding under section 8 of the United States Housing 
 28.18  Act of 1937, as amended. 
 28.19     (13) If approved by the governing body of the municipality 
 28.20  in which the property is located, property not exceeding one 
 28.21  acre which is owned and operated by any senior citizen group or 
 28.22  association of groups that in general limits membership to 
 28.23  persons age 55 or older and is organized and operated 
 28.24  exclusively for pleasure, recreation, and other nonprofit 
 28.25  purposes, no part of the net earnings of which inures to the 
 28.26  benefit of any private shareholders; provided the property is 
 28.27  used primarily as a clubhouse, meeting facility, or recreational 
 28.28  facility by the group or association and the property is not 
 28.29  used for residential purposes on either a temporary or permanent 
 28.30  basis. 
 28.31     (14) To the extent provided by section 295.44, real and 
 28.32  personal property used or to be used primarily for the 
 28.33  production of hydroelectric or hydromechanical power on a site 
 28.34  owned by the federal government, the state, or a local 
 28.35  governmental unit which is developed and operated pursuant to 
 28.36  the provisions of section 103G.535. 
 29.1      (15) If approved by the governing body of the municipality 
 29.2   in which the property is located, and if construction is 
 29.3   commenced after June 30, 1983:  
 29.4      (a) a "direct satellite broadcasting facility" operated by 
 29.5   a corporation licensed by the federal communications commission 
 29.6   to provide direct satellite broadcasting services using direct 
 29.7   broadcast satellites operating in the 12-ghz. band; and 
 29.8      (b) a "fixed satellite regional or national program service 
 29.9   facility" operated by a corporation licensed by the federal 
 29.10  communications commission to provide fixed satellite-transmitted 
 29.11  regularly scheduled broadcasting services using satellites 
 29.12  operating in the 6-ghz. band. 
 29.13  An exemption provided by clause (15) shall apply for a period 
 29.14  not to exceed five years.  When the facility no longer qualifies 
 29.15  for exemption, it shall be placed on the assessment rolls as 
 29.16  provided in subdivision 4.  Before approving a tax exemption 
 29.17  pursuant to this paragraph, the governing body of the 
 29.18  municipality shall provide an opportunity to the members of the 
 29.19  county board of commissioners of the county in which the 
 29.20  facility is proposed to be located and the members of the school 
 29.21  board of the school district in which the facility is proposed 
 29.22  to be located to meet with the governing body.  The governing 
 29.23  body shall present to the members of those boards its estimate 
 29.24  of the fiscal impact of the proposed property tax exemption.  
 29.25  The tax exemption shall not be approved by the governing body 
 29.26  until the county board of commissioners has presented its 
 29.27  written comment on the proposal to the governing body or 30 days 
 29.28  have passed from the date of the transmittal by the governing 
 29.29  body to the board of the information on the fiscal impact, 
 29.30  whichever occurs first. 
 29.31     (16) Real and personal property owned and operated by a 
 29.32  private, nonprofit corporation exempt from federal income 
 29.33  taxation pursuant to United States Code, title 26, section 
 29.34  501(c)(3), primarily used in the generation and distribution of 
 29.35  hot water for heating buildings and structures.  
 29.36     (17) Notwithstanding section 273.19, state lands that are 
 30.1   leased from the department of natural resources under section 
 30.2   92.46. 
 30.3      (18) Electric power distribution lines and their 
 30.4   attachments and appurtenances, that are used primarily for 
 30.5   supplying electricity to farmers at retail.  
 30.6      (19) Transitional housing facilities.  "Transitional 
 30.7   housing facility" means a facility that meets the following 
 30.8   requirements.  (i) It provides temporary housing to individuals, 
 30.9   couples, or families.  (ii) It has the purpose of reuniting 
 30.10  families and enabling parents or individuals to obtain 
 30.11  self-sufficiency, advance their education, get job training, or 
 30.12  become employed in jobs that provide a living wage.  (iii) It 
 30.13  provides support services such as child care, work readiness 
 30.14  training, and career development counseling; and a 
 30.15  self-sufficiency program with periodic monitoring of each 
 30.16  resident's progress in completing the program's goals.  (iv) It 
 30.17  provides services to a resident of the facility for at least 
 30.18  three months but no longer than three years, except residents 
 30.19  enrolled in an educational or vocational institution or job 
 30.20  training program.  These residents may receive services during 
 30.21  the time they are enrolled but in no event longer than four 
 30.22  years.  (v) It is owned and operated or under lease from a unit 
 30.23  of government or governmental agency under a property 
 30.24  disposition program and operated by one or more organizations 
 30.25  exempt from federal income tax under section 501(c)(3) of the 
 30.26  Internal Revenue Code of 1986, as amended through December 31, 
 30.27  1992.  This exemption applies notwithstanding the fact that the 
 30.28  sponsoring organization receives financing by a direct federal 
 30.29  loan or federally insured loan or a loan made by the Minnesota 
 30.30  housing finance agency under the provisions of either Title II 
 30.31  of the National Housing Act or the Minnesota housing finance 
 30.32  agency law of 1971 or rules promulgated by the agency pursuant 
 30.33  to it, and notwithstanding the fact that the sponsoring 
 30.34  organization receives funding under Section 8 of the United 
 30.35  States Housing Act of 1937, as amended. 
 30.36     (20) Real and personal property, including leasehold or 
 31.1   other personal property interests, owned and operated by a 
 31.2   corporation if more than 50 percent of the total voting power of 
 31.3   the stock of the corporation is owned collectively by:  (i) the 
 31.4   board of regents of the University of Minnesota, (ii) the 
 31.5   University of Minnesota Foundation, an organization exempt from 
 31.6   federal income taxation under section 501(c)(3) of the Internal 
 31.7   Revenue Code of 1986, as amended through December 31, 1992, and 
 31.8   (iii) a corporation organized under chapter 317A, which by its 
 31.9   articles of incorporation is prohibited from providing pecuniary 
 31.10  gain to any person or entity other than the regents of the 
 31.11  University of Minnesota; which property is used primarily to 
 31.12  manage or provide goods, services, or facilities utilizing or 
 31.13  relating to large-scale advanced scientific computing resources 
 31.14  to the regents of the University of Minnesota and others. 
 31.15     (21)(a) Small scale wind energy conversion systems 
 31.16  installed after January 1, 1991, and used as an electric power 
 31.17  source are exempt. 
 31.18     "Small scale wind energy conversion systems" are wind 
 31.19  energy conversion systems, as defined in section 216C.06, 
 31.20  subdivision 12, including the foundation or support pad, which 
 31.21  are (i) used as an electric power source; (ii) located within 
 31.22  one county and owned by the same owner; and (iii) produce two 
 31.23  megawatts or less of electricity as measured by nameplate 
 31.24  ratings. 
 31.25     (b) Medium scale wind energy conversion systems installed 
 31.26  after January 1, 1991, are treated as follows:  (i) the 
 31.27  foundation and support pad are taxable; (ii) the associated 
 31.28  supporting and protective structures are exempt for the first 
 31.29  five assessment years after they have been constructed, and 
 31.30  thereafter, 30 percent of the market value of the associated 
 31.31  supporting and protective structures are taxable; and (iii) the 
 31.32  turbines, blades, transformers, and its related equipment, are 
 31.33  exempt.  "Medium scale wind energy conversion systems" are wind 
 31.34  energy conversion systems as defined in section 216C.06, 
 31.35  subdivision 12, including the foundation or support pad, which 
 31.36  are:  (i) used as an electric power source; (ii) located within 
 32.1   one county and owned by the same owner; and (iii) produce more 
 32.2   than two but equal to or less than 12 megawatts of energy as 
 32.3   measured by nameplate ratings. 
 32.4      (c) Large scale wind energy conversion systems installed 
 32.5   after January 1, 1991, are treated as follows:  25 percent of 
 32.6   the market value of all property is taxable, including (i) the 
 32.7   foundation and support pad; (ii) the associated supporting and 
 32.8   protective structures; and (iii) the turbines, blades, 
 32.9   transformers, and its related equipment.  "Large scale wind 
 32.10  energy conversion systems" are wind energy conversion systems as 
 32.11  defined in section 216C.06, subdivision 12, including the 
 32.12  foundation or support pad, which are:  (i) used as an electric 
 32.13  power source; and (ii) produce more than 12 megawatts of energy 
 32.14  as measured by nameplate ratings. 
 32.15     (22) Containment tanks, cache basins, and that portion of 
 32.16  the structure needed for the containment facility used to 
 32.17  confine agricultural chemicals as defined in section 18D.01, 
 32.18  subdivision 3, as required by the commissioner of agriculture 
 32.19  under chapter 18B or 18C. 
 32.20     (23) Photovoltaic devices, as defined in section 216C.06, 
 32.21  subdivision 13, installed after January 1, 1992, and used to 
 32.22  produce or store electric power. 
 32.23     (24) Real and personal property owned and operated by a 
 32.24  private, nonprofit corporation exempt from federal income 
 32.25  taxation pursuant to United States Code, title 26, section 
 32.26  501(c)(3), primarily used for an ice arena or ice rink, and used 
 32.27  primarily for youth and high school programs. 
 32.28     (25) A structure that is situated on real property that is 
 32.29  used for: 
 32.30     (i) housing for the elderly or for low- and moderate-income 
 32.31  families as defined in Title II of the National Housing Act, as 
 32.32  amended through December 31, 1990, and funded by a direct 
 32.33  federal loan or federally insured loan made pursuant to Title II 
 32.34  of the act; or 
 32.35     (ii) housing lower income families or elderly or 
 32.36  handicapped persons, as defined in Section 8 of the United 
 33.1   States Housing Act of 1937, as amended. 
 33.2      In order for a structure to be exempt under (i) or (ii), it 
 33.3   must also meet each of the following criteria: 
 33.4      (A) is owned by an entity which is operated as a nonprofit 
 33.5   corporation organized under chapter 317A; 
 33.6      (B) is owned by an entity which has not entered into a 
 33.7   housing assistance payments contract under Section 8 of the 
 33.8   United States Housing Act of 1937, or, if the entity which owns 
 33.9   the structure has entered into a housing assistance payments 
 33.10  contract under Section 8 of the United States Housing Act of 
 33.11  1937, the contract provides assistance for less than 90 percent 
 33.12  of the dwelling units in the structure, excluding dwelling units 
 33.13  intended for management or maintenance personnel; 
 33.14     (C) operates an on-site congregate dining program in which 
 33.15  participation by residents is mandatory, and provides assisted 
 33.16  living or similar social and physical support services for 
 33.17  residents; and 
 33.18     (D) was not assessed and did not pay tax under chapter 273 
 33.19  prior to the 1991 levy, while meeting the other conditions of 
 33.20  this clause. 
 33.21     An exemption under this clause remains in effect for taxes 
 33.22  levied in each year or partial year of the term of its permanent 
 33.23  financing. 
 33.24     (26) Real and personal property that is located in the 
 33.25  Superior National Forest, and owned or leased and operated by a 
 33.26  nonprofit organization that is exempt from federal income 
 33.27  taxation under section 501(c)(3) of the Internal Revenue Code of 
 33.28  1986, as amended through December 31, 1992, and primarily used 
 33.29  to provide recreational opportunities for disabled veterans and 
 33.30  their families. 
 33.31     (27) Manure pits and appurtenances, which may include 
 33.32  slatted floors and pipes, installed or operated in accordance 
 33.33  with a permit, order, or certificate of compliance issued by the 
 33.34  Minnesota pollution control agency.  The exemption shall 
 33.35  continue for as long as the permit, order, or certificate issued 
 33.36  by the Minnesota pollution control agency remains in effect. 
 34.1      (28) Notwithstanding clause (8), item (a), attached 
 34.2   machinery and other personal property which is part of a 
 34.3   facility containing a cogeneration system as described in 
 34.4   section 216B.166, subdivision 2, paragraph (a), if the 
 34.5   cogeneration system has met the following criteria:  (i) the 
 34.6   system utilizes natural gas as a primary fuel and the 
 34.7   cogenerated steam initially replaces steam generated from 
 34.8   existing thermal boilers utilizing coal; (ii) the facility 
 34.9   developer is selected as a result of a procurement process 
 34.10  ordered by the public utilities commission; and (iii) 
 34.11  construction of the facility is commenced after July 1, 1994, 
 34.12  and before July 1, 1997. 
 34.13     (29) Real property acquired by a home rule charter city, 
 34.14  statutory city, county, town, or school district under a lease 
 34.15  purchase agreement or an installment purchase contract during 
 34.16  the term of the lease purchase agreement as long as and to the 
 34.17  extent that the property is used by the city, county, town, or 
 34.18  school district and devoted to a public use and to the extent it 
 34.19  is not subleased to any private individual, entity, association, 
 34.20  or corporation in connection with a business or enterprise 
 34.21  operated for profit. 
 34.22     (30) Property owned by a nonprofit charitable organization 
 34.23  that qualifies for tax exemption under section 501(c)(3) of the 
 34.24  Internal Revenue Code of 1986, as amended through December 31, 
 34.25  1997, that is intended to be used as a business incubator in a 
 34.26  high-unemployment county but is not occupied on the assessment 
 34.27  date.  As used in this clause, a "business incubator" is a 
 34.28  facility used for the development of nonretail businesses, 
 34.29  offering access to equipment, space, services, and advice to the 
 34.30  tenant businesses, for the purpose of encouraging economic 
 34.31  development, diversification, and job creation in the area 
 34.32  served by the organization, and "high-unemployment county" is a 
 34.33  county that had an average annual unemployment rate of 7.9 
 34.34  percent or greater in 1997.  Property that qualifies for the 
 34.35  exemption under this clause is limited to no more than two 
 34.36  contiguous parcels and structures that do not exceed in the 
 35.1   aggregate 40,000 square feet. 
 35.2      Sec. 2.  Minnesota Statutes 1997 Supplement, section 
 35.3   272.115, subdivision 4, is amended to read: 
 35.4      Subd. 4.  [ELIGIBILITY FOR HOMESTEAD STATUS.] No real 
 35.5   estate sold or transferred ~~on or after January 1, 1993,~~ for 
 35.6   which a certificate of real estate value is required under 
 35.7   ~~subdivision 1~~ this section shall be classified as a homestead, 
 35.8   unless ~~(1)~~ a certificate of value has been filed with the county 
 35.9   auditor in accordance with this section~~, or (2) the real estate~~ 
 35.10  ~~was conveyed by the federal government, the state, a political~~ 
 35.11  ~~subdivision of the state, or combination of them to a person~~ 
 35.12  ~~otherwise eligible to receive homestead classification of the~~ 
 35.13  ~~property~~. 
 35.14     This subdivision shall apply to any real estate taxes that 
 35.15  are payable the year or years following the sale or transfer of 
 35.16  the property. 
 35.17     Sec. 3.  Minnesota Statutes 1997 Supplement, section 
 35.18  272.115, subdivision 5, is amended to read: 
 35.19     Subd. 5.  [EXEMPTION FOR GOVERNMENT BODIES.] A certificate 
 35.20  of real estate value is not required when the real estate is 
 35.21  being conveyed to ~~or by a public authority or agency of the~~ 
 35.22  ~~federal government,~~ the state of Minnesota, a political 
 35.23  subdivision of the state, or any combination of them, for 
 35.24  highway or roadway right-of-way purposes, provided that the 
 35.25  ~~authority,~~ agency~~,~~ or governmental unit has agreed to file a 
 35.26  list of the real estate conveyed ~~by or~~ to the ~~authority,~~ agency~~,~~ 
 35.27  or governmental unit with the commissioner of revenue by June 1 
 35.28  of the year following the year of the conveyance. 
 35.29     Sec. 4.  Minnesota Statutes 1997 Supplement, section 
 35.30  273.124, subdivision 14, is amended to read: 
 35.31     Subd. 14.  [AGRICULTURAL HOMESTEADS; SPECIAL PROVISIONS.] 
 35.32  (a) Real estate of less than ten acres that is the homestead of 
 35.33  its owner must be classified as class 2a under section 273.13, 
 35.34  subdivision 23, paragraph (a), if:  
 35.35     (1) the parcel on which the house is located is contiguous 
 35.36  on at least two sides to (i) agricultural land, (ii) land owned 
 36.1   or administered by the United States Fish and Wildlife Service, 
 36.2   or (iii) land administered by the department of natural 
 36.3   resources on which in lieu taxes are paid under sections 477A.11 
 36.4   to 477A.14; 
 36.5      (2) its owner also owns a noncontiguous parcel of 
 36.6   agricultural land that is at least 20 acres; 
 36.7      (3) the noncontiguous land is located not farther than two 
 36.8   townships or cities, or a combination of townships or cities 
 36.9   from the homestead; and 
 36.10     (4) the agricultural use value of the noncontiguous land 
 36.11  and farm buildings is equal to at least 50 percent of the market 
 36.12  value of the house, garage, and one acre of land. 
 36.13     Homesteads initially classified as class 2a under the 
 36.14  provisions of this paragraph shall remain classified as class 
 36.15  2a, irrespective of subsequent changes in the use of adjoining 
 36.16  properties, as long as the homestead remains under the same 
 36.17  ownership, the owner owns a noncontiguous parcel of agricultural 
 36.18  land that is at least 20 acres, and the agricultural use value 
 36.19  qualifies under clause (4). 
 36.20     (b) Except as provided in paragraph (d), noncontiguous land 
 36.21  shall be included as part of a homestead under section 273.13, 
 36.22  subdivision 23, paragraph (a), only if the homestead is 
 36.23  classified as class 2a and the detached land is located in the 
 36.24  same township or city, or not farther than two townships or 
 36.25  cities or combination thereof from the homestead.  
 36.26     (c) Agricultural land used for purposes of a homestead and 
 36.27  actively farmed by a person holding a vested remainder interest 
 36.28  in it must be classified as a homestead under section 273.13, 
 36.29  subdivision 23, paragraph (a).  If agricultural land is 
 36.30  classified class 2a, any other dwellings on the land used for 
 36.31  purposes of a homestead by persons holding vested remainder 
 36.32  interests who are actively engaged in farming the property, and 
 36.33  up to one acre of the land surrounding each homestead and 
 36.34  reasonably necessary for the use of the dwelling as a home, must 
 36.35  also be assessed class 2a. 
 36.36     (d) Agricultural land and buildings that were class 2a 
 37.1   homestead property under section 273.13, subdivision 23, 
 37.2   paragraph (a), for the 1997 assessment shall remain classified 
 37.3   as agricultural homesteads for subsequent assessments if:  
 37.4      (1) the property owner abandoned the homestead dwelling 
 37.5   located on the agricultural homestead as a result of the April 
 37.6   1997 floods; 
 37.7      (2) the property is located in the county of Polk, Clay, 
 37.8   Kittson, Marshall, Norman, or Wilkin; 
 37.9      (3) the agricultural land and buildings remain under the 
 37.10  same ownership for the current assessment year as existed for 
 37.11  the 1997 assessment year and continue to be used for 
 37.12  agricultural purposes; 
 37.13     (4) the dwelling occupied by the owner is located in 
 37.14  Minnesota and is within 30 miles of one of the parcels of 
 37.15  agricultural land that is owned by the taxpayer; and 
 37.16     (5) the owner notifies the county assessor that the 
 37.17  relocation was due to the 1997 floods, and the owner furnishes 
 37.18  the assessor any information deemed necessary by the assessor in 
 37.19  verifying the change in homestead dwelling.  For taxes payable 
 37.20  in 1998, the owner must notify the assessor by December 1, 
 37.21  1997.  For taxes payable in 1999 and later years, additional 
 37.22  notifications to the assessor are not required if the property 
 37.23  continues to meet the requirements of this paragraph. 
 37.24     Sec. 5.  Minnesota Statutes 1997 Supplement, section 
 37.25  273.126, subdivision 3, is amended to read: 
 37.26     Subd. 3.  [RENT RESTRICTIONS.] (a) In order to qualify 
 37.27  under class 4d, a unit must be subject to a rent restriction 
 37.28  agreement with the housing finance agency for a period of at 
 37.29  least five years.  The agreement must be in effect and apply to 
 37.30  the rents to be charged for the year in which the property taxes 
 37.31  are payable.  The agreement must provide that the restrictions 
 37.32  apply to each year of the period, regardless of whether the unit 
 37.33  is occupied by an individual with qualifying income or whether 
 37.34  class 4d applies.  The rent restriction agreement must provide 
 37.35  for rents for the unit to be no higher than 30 percent of 60 
 37.36  percent of the median gross income.  The definition of median 
 38.1   gross income specified in this section applies.  "Rent" means 
 38.2   "gross rent" as defined in section 42(g)(2)(B) of the Internal 
 38.3   Revenue Code of 1986, as amended through December 31, 1996.  
 38.4      (b) Notwithstanding the maximum rent levels permitted, 20 
 38.5   percent of the units in the metropolitan area and ten percent of 
 38.6   the units in greater Minnesota qualifying under class 4d must be 
 38.7   made available to a family with a section 8 certificate or 
 38.8   voucher. 
 38.9      (c) The rent restriction agreement runs with the land and 
 38.10  binds any successor to title to the property, without regard to 
 38.11  whether the successor had actual notice or knowledge of the 
 38.12  agreement.  The owner must promptly record the agreement in the 
 38.13  office of the county recorder or must file it in the office of 
 38.14  the registrar of titles, in the county where the property is 
 38.15  located.  If the agreement is not recorded, class 4d does not 
 38.16  apply to the property. 
 38.17     Sec. 6.  Minnesota Statutes 1997 Supplement, section 
 38.18  275.065, subdivision 3, is amended to read: 
 38.19     Subd. 3.  [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The 
 38.20  county auditor shall prepare and the county treasurer shall 
 38.21  deliver after November 10 and on or before November 24 each 
 38.22  year, by first class mail to each taxpayer at the address listed 
 38.23  on the county's current year's assessment roll, a notice of 
 38.24  proposed property taxes.  
 38.25     (b) The commissioner of revenue shall prescribe the form of 
 38.26  the notice. 
 38.27     (c) The notice must inform taxpayers that it contains the 
 38.28  amount of property taxes each taxing authority proposes to 
 38.29  collect for taxes payable the following year.  In the case of a 
 38.30  town, or in the case of the state determined portion of the 
 38.31  school district levy, the final tax amount will be its proposed 
 38.32  tax.  The notice must clearly state that each taxing authority, 
 38.33  including regional library districts established under section 
 38.34  134.201, and including the metropolitan taxing districts as 
 38.35  defined in paragraph (i), but excluding all other special taxing 
 38.36  districts and towns, will hold a public meeting to receive 
 39.1   public testimony on the proposed budget and proposed or final 
 39.2   property tax levy, or, in case of a school district, on the 
 39.3   current budget and proposed property tax levy.  It must clearly 
 39.4   state the time and place of each taxing authority's meeting and 
 39.5   an address where comments will be received by mail.  
 39.6      (d) The notice must state for each parcel: 
 39.7      (1) the market value of the property as determined under 
 39.8   section 273.11, and used for computing property taxes payable in 
 39.9   the following year and for taxes payable in the current year as 
 39.10  each appears in the records of the county assessor on November 1 
 39.11  of the current year; and, in the case of residential property, 
 39.12  whether the property is classified as homestead or 
 39.13  nonhomestead.  The notice must clearly inform taxpayers of the 
 39.14  years to which the market values apply and that the values are 
 39.15  final values; 
 39.16     (2) the items listed below, shown separately by county, 
 39.17  city or town, state determined school tax net of the education 
 39.18  homestead credit under section 273.1382, voter approved school 
 39.19  levy, other local school levy, and the sum of the special taxing 
 39.20  districts, and as a total of all taxing authorities:  
 39.21     (i) the actual tax for taxes payable in the current year; 
 39.22     (ii) the tax change due to spending factors, defined as the 
 39.23  proposed tax minus the constant spending tax amount; 
 39.24     (iii) the tax change due to other factors, defined as the 
 39.25  constant spending tax amount minus the actual current year tax; 
 39.26  and 
 39.27     (iv) the proposed tax amount. 
 39.28     In the case of a town or the state determined school tax, 
 39.29  the final tax shall also be its proposed tax unless the town 
 39.30  changes its levy at a special town meeting under section 
 39.31  365.52.  If a school district has certified under section 
 39.32  124A.03, subdivision 2, that a referendum will be held in the 
 39.33  school district at the November general election, the county 
 39.34  auditor must note next to the school district's proposed amount 
 39.35  that a referendum is pending and that, if approved by the 
 39.36  voters, the tax amount may be higher than shown on the notice.  
 40.1   In the case of the city of Minneapolis, the levy for the 
 40.2   Minneapolis library board and the levy for Minneapolis park and 
 40.3   recreation shall be listed separately from the remaining amount 
 40.4   of the city's levy.  In the case of a parcel where tax increment 
 40.5   or the fiscal disparities areawide tax under chapter 276A or 
 40.6   473F applies, the proposed tax levy on the captured value or the 
 40.7   proposed tax levy on the tax capacity subject to the areawide 
 40.8   tax must each be stated separately and not included in the sum 
 40.9   of the special taxing districts; and 
 40.10     (3) the increase or decrease between the total taxes 
 40.11  payable in the current year and the total proposed taxes, 
 40.12  expressed as a percentage. 
 40.13     For purposes of this section, the amount of the tax on 
 40.14  homesteads qualifying under the senior citizens' property tax 
 40.15  deferral program under chapter 290B is the total amount of 
 40.16  property tax before subtraction of the deferred property tax 
 40.17  amount. 
 40.18     (e) The notice must clearly state that the proposed or 
 40.19  final taxes do not include the following: 
 40.20     (1) special assessments; 
 40.21     (2) levies approved by the voters after the date the 
 40.22  proposed taxes are certified, including bond referenda, school 
 40.23  district levy referenda, and levy limit increase referenda; 
 40.24     (3) amounts necessary to pay cleanup or other costs due to 
 40.25  a natural disaster occurring after the date the proposed taxes 
 40.26  are certified; 
 40.27     (4) amounts necessary to pay tort judgments against the 
 40.28  taxing authority that become final after the date the proposed 
 40.29  taxes are certified; and 
 40.30     (5) the contamination tax imposed on properties which 
 40.31  received market value reductions for contamination. 
 40.32     (f) Except as provided in subdivision 7, failure of the 
 40.33  county auditor to prepare or the county treasurer to deliver the 
 40.34  notice as required in this section does not invalidate the 
 40.35  proposed or final tax levy or the taxes payable pursuant to the 
 40.36  tax levy. 
 41.1      (g) If the notice the taxpayer receives under this section 
 41.2   lists the property as nonhomestead, and satisfactory 
 41.3   documentation is provided to the county assessor by the 
 41.4   applicable deadline, and the property qualifies for the 
 41.5   homestead classification in that assessment year, the assessor 
 41.6   shall reclassify the property to homestead for taxes payable in 
 41.7   the following year. 
 41.8      (h) In the case of class 4 residential property used as a 
 41.9   residence for lease or rental periods of 30 days or more, the 
 41.10  taxpayer must either: 
 41.11     (1) mail or deliver a copy of the notice of proposed 
 41.12  property taxes to each tenant, renter, or lessee; or 
 41.13     (2) post a copy of the notice in a conspicuous place on the 
 41.14  premises of the property.  
 41.15     The notice must be mailed or posted by the taxpayer by 
 41.16  November 27 or within three days of receipt of the notice, 
 41.17  whichever is later.  A taxpayer may notify the county treasurer 
 41.18  of the address of the taxpayer, agent, caretaker, or manager of 
 41.19  the premises to which the notice must be mailed in order to 
 41.20  fulfill the requirements of this paragraph. 
 41.21     (i) For purposes of this subdivision, subdivisions 5a and 
 41.22  6, "metropolitan special taxing districts" means the following 
 41.23  taxing districts in the seven-county metropolitan area that levy 
 41.24  a property tax for any of the specified purposes listed below: 
 41.25     (1) metropolitan council under section 473.132, 473.167, 
 41.26  473.249, 473.325, 473.446, 473.521, 473.547, or 473.834; 
 41.27     (2) metropolitan airports commission under section 473.667, 
 41.28  473.671, or 473.672; and 
 41.29     (3) metropolitan mosquito control commission under section 
 41.30  473.711. 
 41.31     For purposes of this section, any levies made by the 
 41.32  regional rail authorities in the county of Anoka, Carver, 
 41.33  Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 
 41.34  398A shall be included with the appropriate county's levy and 
 41.35  shall be discussed at that county's public hearing. 
 41.36     (j) If a statutory or home rule charter city or a town 
 42.1   exercises the local levy option provided by section 473.388, 
 42.2   subdivision 7, it may include in the notice of its proposed 
 42.3   taxes a statement of the amount by which its proposed taxes are 
 42.4   attributable to its exercise of the option, together with a 
 42.5   statement that the levy of the metropolitan council was 
 42.6   decreased by a similar amount because of exercise of that option.
 42.7      Sec. 7.  Minnesota Statutes 1997 Supplement, section 
 42.8   275.065, subdivision 6, is amended to read: 
 42.9      Subd. 6.  [PUBLIC HEARING; ADOPTION OF BUDGET AND LEVY.] 
 42.10  (a) For purposes of this section, the following terms shall have 
 42.11  the meanings given: 
 42.12     (1) "Initial hearing" means the first and primary hearing 
 42.13  held to discuss the taxing authority's proposed budget and 
 42.14  proposed property tax levy for taxes payable in the following 
 42.15  year, or, for school districts, the current budget and the 
 42.16  proposed property tax levy for taxes payable in the following 
 42.17  year. 
 42.18     (2) "Continuation hearing" means a hearing held to complete 
 42.19  the initial hearing, if the initial hearing is not completed on 
 42.20  its scheduled date. 
 42.21     (3) "Subsequent hearing" means the hearing held to adopt 
 42.22  the taxing authority's final property tax levy, and, in the case 
 42.23  of taxing authorities other than school districts, the final 
 42.24  budget, for taxes payable in the following year. 
 42.25     (b) Between November 29 and December 20, the governing 
 42.26  bodies of a city that has a population over 500, county, 
 42.27  metropolitan special taxing districts as defined in subdivision 
 42.28  3, paragraph (i), and regional library districts shall each hold 
 42.29  an initial public hearing to discuss and seek public comment on 
 42.30  its final budget and property tax levy for taxes payable in the 
 42.31  following year, and the governing body of the school district 
 42.32  shall hold an initial public hearing to review its current 
 42.33  budget and proposed property tax levy for taxes payable in the 
 42.34  following year.  The metropolitan special taxing districts shall 
 42.35  be required to hold only a single joint initial public hearing, 
 42.36  the location of which will be determined by the affected 
 43.1   metropolitan agencies. 
 43.2      (c) The initial hearing must be held after 5:00 p.m. if 
 43.3   scheduled on a day other than Saturday.  No initial hearing may 
 43.4   be held on a Sunday.  
 43.5      (d) At the initial hearing under this subdivision, the 
 43.6   percentage increase in property taxes proposed by the taxing 
 43.7   authority, if any, and the specific purposes for which property 
 43.8   tax revenues are being increased must be discussed.  During the 
 43.9   discussion, the governing body shall hear comments regarding a 
 43.10  proposed increase and explain the reasons for the proposed 
 43.11  increase.  The public shall be allowed to speak and to ask 
 43.12  questions.  At the public hearing, the school district must also 
 43.13  provide and discuss information on the distribution of its 
 43.14  revenues by revenue source, and the distribution of its spending 
 43.15  by program area.  
 43.16     (e) If the initial hearing is not completed on its 
 43.17  scheduled date, the taxing authority must announce, prior to 
 43.18  adjournment of the hearing, the date, time, and place for the 
 43.19  continuation of the hearing.  The continuation hearing must be 
 43.20  held at least five business days but no more than 14 business 
 43.21  days after the initial hearing.  A continuation hearing may not 
 43.22  be held later than December 20 except as provided in paragraphs 
 43.23  (f) and (g).  A continuation hearing must be held after 5:00 
 43.24  p.m. if scheduled on a day other than Saturday.  No continuation 
 43.25  hearing may be held on a Sunday. 
 43.26     (f) The governing body of a county shall hold its initial 
 43.27  hearing on the second Tuesday in December each year, and may 
 43.28  hold additional initial hearings on other dates before December 
 43.29  20 if necessary for the convenience of county residents.  If the 
 43.30  county needs a continuation of its hearing, the continuation 
 43.31  hearing shall be held on the third Tuesday in December.  If the 
 43.32  third Tuesday in December falls on December 21, the county's 
 43.33  continuation hearing shall be held on Monday, December 20.  
 43.34     (g) The metropolitan special taxing districts shall hold a 
 43.35  joint initial public hearing on the first ~~Monday~~ Wednesday of 
 43.36  December.  A continuation hearing, if necessary, shall be held 
 44.1   on the second ~~Monday~~ Wednesday of December even if that second 
 44.2   ~~Monday~~ Wednesday is after December 10. 
 44.3      (h) The county auditor shall provide for the coordination 
 44.4   of initial and continuation hearing dates for all school 
 44.5   districts and cities within the county to prevent conflicts 
 44.6   under clauses (i) and (j). 
 44.7      (i) By August 10, each school board and the board of the 
 44.8   regional library district shall certify to the county auditors 
 44.9   of the counties in which the school district or regional library 
 44.10  district is located the dates on which it elects to hold its 
 44.11  initial hearing and any continuation hearing.  If a school board 
 44.12  or regional library district does not certify these dates by 
 44.13  August 10, the auditor will assign the initial and continuation 
 44.14  hearing dates.  The dates elected or assigned must not conflict 
 44.15  with the initial and continuation hearing dates of the county or 
 44.16  the metropolitan special taxing districts.  
 44.17     (j) By August 20, the county auditor shall notify the 
 44.18  clerks of the cities within the county of the dates on which 
 44.19  school districts and regional library districts have elected to 
 44.20  hold their initial and continuation hearings.  At the time a 
 44.21  city certifies its proposed levy under subdivision 1 it shall 
 44.22  certify the dates on which it elects to hold its initial hearing 
 44.23  and any continuation hearing.  Until September 15, the first and 
 44.24  second Mondays of December are reserved for the use of cities.  
 44.25  If a city does not certify ~~these~~ its hearing dates by September 
 44.26  15, the auditor shall assign the initial and continuation 
 44.27  hearing dates.  The dates elected or assigned for the initial 
 44.28  hearing must not conflict with the initial hearing dates of the 
 44.29  county, metropolitan special taxing districts, regional library 
 44.30  districts, or school districts within which the city is 
 44.31  located.  To the extent possible, the dates of the city's 
 44.32  continuation hearing should not conflict with the continuation 
 44.33  hearing dates of the county, metropolitan special taxing 
 44.34  districts, regional library districts, or school districts 
 44.35  within which the city is located.  This paragraph does not apply 
 44.36  to cities of 500 population or less. 
 45.1      (k) The county initial hearing date and the city, 
 45.2   metropolitan special taxing district, regional library district, 
 45.3   and school district initial hearing dates must be designated on 
 45.4   the notices required under subdivision 3.  The continuation 
 45.5   hearing dates need not be stated on the notices.  
 45.6      (l) At a subsequent hearing, each county, school district, 
 45.7   city over 500 population, and metropolitan special taxing 
 45.8   district may amend its proposed property tax levy and must adopt 
 45.9   a final property tax levy.  Each county, city over 500 
 45.10  population, and metropolitan special taxing district may also 
 45.11  amend its proposed budget and must adopt a final budget at the 
 45.12  subsequent hearing.  The final property tax levy must be adopted 
 45.13  prior to adopting the final budget.  A school district is not 
 45.14  required to adopt its final budget at the subsequent hearing.  
 45.15  The subsequent hearing of a taxing authority must be held on a 
 45.16  date subsequent to the date of the taxing authority's initial 
 45.17  public hearing.  If a continuation hearing is held, the 
 45.18  subsequent hearing must be held either immediately following the 
 45.19  continuation hearing or on a date subsequent to the continuation 
 45.20  hearing.  The subsequent hearing may be held at a regularly 
 45.21  scheduled board or council meeting or at a special meeting 
 45.22  scheduled for the purposes of the subsequent hearing.  The 
 45.23  subsequent hearing of a taxing authority does not have to be 
 45.24  coordinated by the county auditor to prevent a conflict with an 
 45.25  initial hearing, a continuation hearing, or a subsequent hearing 
 45.26  of any other taxing authority.  All subsequent hearings must be 
 45.27  held prior to five working days after December 20 of the levy 
 45.28  year.  The date, time, and place of the subsequent hearing must 
 45.29  be announced at the initial public hearing or at the 
 45.30  continuation hearing. 
 45.31     (m) The property tax levy certified under section 275.07 by 
 45.32  a city of any population, county, metropolitan special taxing 
 45.33  district, regional library district, or school district must not 
 45.34  exceed the proposed levy determined under subdivision 1, except 
 45.35  by an amount up to the sum of the following amounts: 
 45.36     (1) the amount of a school district levy whose voters 
 46.1   approved a referendum to increase taxes under section 124.82, 
 46.2   subdivision 3, 124A.03, subdivision 2, or 124B.03, subdivision 
 46.3   2, after the proposed levy was certified; 
 46.4      (2) the amount of a city or county levy approved by the 
 46.5   voters after the proposed levy was certified; 
 46.6      (3) the amount of a levy to pay principal and interest on 
 46.7   bonds approved by the voters under section 475.58 after the 
 46.8   proposed levy was certified; 
 46.9      (4) the amount of a levy to pay costs due to a natural 
 46.10  disaster occurring after the proposed levy was certified, if 
 46.11  that amount is approved by the commissioner of revenue under 
 46.12  subdivision 6a; 
 46.13     (5) the amount of a levy to pay tort judgments against a 
 46.14  taxing authority that become final after the proposed levy was 
 46.15  certified, if the amount is approved by the commissioner of 
 46.16  revenue under subdivision 6a; 
 46.17     (6) the amount of an increase in levy limits certified to 
 46.18  the taxing authority by the commissioner of children, families, 
 46.19  and learning or the commissioner of revenue after the proposed 
 46.20  levy was certified; and 
 46.21     (7) the amount required under section 124.755. 
 46.22     (n) This subdivision does not apply to towns and special 
 46.23  taxing districts other than regional library districts and 
 46.24  metropolitan special taxing districts. 
 46.25     (o) Notwithstanding the requirements of this section, the 
 46.26  employer is required to meet and negotiate over employee 
 46.27  compensation as provided for in chapter 179A.  
 46.28     Sec. 8.  Minnesota Statutes 1996, section 275.07, is 
 46.29  amended by adding a subdivision to read: 
 46.30     Subd. 5.  [REVISED FINAL LEVY.] (a) If the final levy of a 
 46.31  taxing jurisdiction certified to the county auditor is incorrect 
 46.32  due to an error in the deduction of the aid received under 
 46.33  section 273.1398, subdivision 2, in determining the certified 
 46.34  levy as required under subdivision 1, the taxing jurisdiction 
 46.35  may apply to the commissioner of revenue to increase the levy 
 46.36  and recertify it in the correct amount.  The commissioner must 
 47.1   receive the request by January 2. 
 47.2      (b) If the commissioner determines that the requirements of 
 47.3   paragraph (a) have been met, the commissioner shall notify the 
 47.4   taxing jurisdiction that the revised final levy has been 
 47.5   approved.  Upon receipt of the approval, but no later than 
 47.6   January 15, the governing body of the taxing jurisdiction shall 
 47.7   adopt the revised final levy and the taxing jurisdiction shall 
 47.8   recertify the revised final levy to the county auditor.  The 
 47.9   county auditor shall use the revised final levy to compute the 
 47.10  tax rate for the taxing jurisdiction. 
 47.11     (c) The county auditor shall report to the commissioner of 
 47.12  revenue the revised final levy used to determine the tax rates 
 47.13  for the taxing jurisdiction.  The provisions of section 275.065, 
 47.14  subdivisions 6, 6a, and 7 do not apply to the revised final levy 
 47.15  for the taxing jurisdiction certified under this section. 
 47.16     (d) The taxing jurisdiction must publish in an official 
 47.17  newspaper of general circulation in the taxing jurisdiction a 
 47.18  notice of its revised final levy.  The notice shall contain 
 47.19  examples of the tax impact of the revised final levy on 
 47.20  homestead, apartment, and commercial classes of property in the 
 47.21  taxing jurisdiction.  The county auditor shall assist the taxing 
 47.22  jurisdiction in preparing the examples for the publication. 
 47.23     Sec. 9.  Minnesota Statutes 1997 Supplement, section 
 47.24  275.70, is amended by adding a subdivision to read: 
 47.25     Subd. 6.  [MATCHING FUND REQUIREMENTS.] The special levy 
 47.26  provided in subdivision 5, clause (8), does not include the 
 47.27  increased direct and indirect costs related to general increases 
 47.28  in program costs where there is no mandated increase regarding 
 47.29  the matching fund requirements.  Specifically, but without 
 47.30  limitation, the following provisions apply to the special levy 
 47.31  authorization in subdivision 5, clause (8):  (1) increases in 
 47.32  direct or indirect income maintenance administrative costs are 
 47.33  not included; (2) increases for social services and social 
 47.34  services administration are included, but only to the extent 
 47.35  that the minimum local share amount needed to receive community 
 47.36  social service aids exceeds the amount levied for social 
 48.1   services and social services administration for the taxes 
 48.2   payable year 1997; and (3) increases in county costs for Title 
 48.3   IV-E Foster Care Services over the amount levied for the taxes 
 48.4   payable year 1997 are included to the extent the amount from 
 48.5   both years represents the local matching fund requirement for 
 48.6   the federal grant.  
 48.7      Sec. 10.  Minnesota Statutes 1997 Supplement, section 
 48.8   287.08, is amended to read: 
 48.9      287.08 [TAX, HOW PAYABLE; RECEIPTS.] 
 48.10     (a) The tax imposed by sections 287.01 to 287.12 shall be 
 48.11  paid to the treasurer of the county in which the mortgaged land 
 48.12  or some part thereof is situated at or before the time of filing 
 48.13  the mortgage for record or registration.  The treasurer shall 
 48.14  endorse receipt on the mortgage, countersigned by the county 
 48.15  auditor, who shall charge the amount to the treasurer and such 
 48.16  receipt shall be recorded with the mortgage, and such receipt of 
 48.17  the record thereof shall be conclusive proof that the tax has 
 48.18  been paid to the amount therein stated and authorize any county 
 48.19  recorder to record the mortgage.  Its form, in substance, shall 
 48.20  be "registration tax hereon of ..................... dollars 
 48.21  paid."  If the mortgages be exempt from taxation the endorsement 
 48.22  shall be "exempt from registration tax," to be signed in either 
 48.23  case by the treasurer as such, and in case of payment to be 
 48.24  countersigned by the auditor.  In case the treasurer shall be 
 48.25  unable to determine whether a claim of exemption should be 
 48.26  allowed, the tax shall be paid as in the case of a taxable 
 48.27  mortgage.  
 48.28     (b) Upon written application of the taxpayer, the county 
 48.29  treasurer may refund in whole or in part any tax which has been 
 48.30  erroneously paid, or a person having paid a mortgage registry 
 48.31  tax amount may seek a refund of such tax, or other appropriate 
 48.32  relief, by bringing an action in tax court in the county in 
 48.33  which the tax was paid, within 60 days of the payment.  The 
 48.34  action is commenced by the serving of a petition for relief on 
 48.35  the county treasurer, and by filing a copy with the court.  The 
 48.36  county attorney shall defend the action.  The county treasurer 
 49.1   shall notify the treasurer of each county that has or would 
 49.2   receive a portion of the tax as paid.  
 49.3      (c) If the county treasurer determines a refund should be 
 49.4   paid, or if a refund is ordered, the county treasurer of each 
 49.5   county that actually received a portion of the tax shall 
 49.6   immediately pay a proportionate share of three percent of the 
 49.7   refund using any available county funds.  The county treasurer 
 49.8   of each county which received, or would have received, a portion 
 49.9   of the tax shall also pay their county's proportionate share of 
 49.10  the remaining 97 percent of the court-ordered refund on or 
 49.11  before the tenth day of the following month using solely the 
 49.12  mortgage registry tax funds that would be paid to the 
 49.13  commissioner of revenue on that date under section 287.12.  If 
 49.14  the funds on hand under this procedure are insufficient to fully 
 49.15  fund 97 percent of the court-ordered refund, the county 
 49.16  treasurer of the county in which the action was brought shall 
 49.17  file a claim with the commissioner of revenue under section 
 49.18  16A.48 for the remaining portion of 97 percent of the refund, 
 49.19  and shall pay over the remaining portion upon receipt of a 
 49.20  warrant from the state issued pursuant to the claim.  
 49.21     (d) When any such mortgage covers real property situate in 
 49.22  more than one county in this state the whole of such tax shall 
 49.23  be paid to the treasurer of the county where the mortgage is 
 49.24  first presented for record or registration, and the payment 
 49.25  shall be receipted and countersigned as above provided.  If the 
 49.26  principal debt or obligation secured by such a multiple county 
 49.27  mortgage exceeds $1,000,000, the tax shall be divided and paid 
 49.28  over by the county treasurer receiving the same, on or before 
 49.29  the tenth day of each month after receipt thereof, to the county 
 49.30  or counties entitled thereto in the ratio which the market value 
 49.31  of the real property covered by the mortgage in each county 
 49.32  bears to the market value of all the property described in the 
 49.33  mortgage.  In making such division and payment the county 
 49.34  treasurer shall send therewith a statement giving the 
 49.35  description of the property described in the mortgage and the 
 49.36  market value of the part thereof situate in each county.  For 
 50.1   the purpose aforesaid, the treasurer of any county may require 
 50.2   the treasurer of any other county to certify to the former the 
 50.3   market valuation of any tract of land in any such mortgage. 
 50.4      Sec. 11.  Minnesota Statutes 1996, section 462.396, 
 50.5   subdivision 2, is amended to read: 
 50.6      Subd. 2.  [BUDGET; HEARING; LEVY LIMITS.] On or before 
 50.7   August 20 each year, the commission shall submit its proposed 
 50.8   budget for the ensuing calendar year showing anticipated 
 50.9   receipts, disbursements and ad valorem tax levy with a written 
 50.10  notice of the time and place of the public hearing on the 
 50.11  proposed budget to each county auditor and municipal clerk 
 50.12  within the region and those town clerks who in advance have 
 50.13  requested a copy of the budget and notice of public hearing.  On 
 50.14  or before September 15 each year, the commission shall adopt, 
 50.15  after a public hearing held not later than September 15, a 
 50.16  budget covering its anticipated receipts and disbursements for 
 50.17  the ensuing year and shall decide upon the total amount 
 50.18  necessary to be raised from ad valorem tax levies to meet its 
 50.19  budget.  After adoption of the budget and no later than 
 50.20  September 15, the secretary of the commission shall certify to 
 50.21  the auditor of each county within the region the county share of 
 50.22  the tax, which shall be an amount bearing the same proportion to 
 50.23  the total levy agreed on by the commission as the net tax 
 50.24  capacity of the county bears to the net tax capacity of the 
 50.25  region.  (1) For taxes levied in ~~1990 and thereafter~~ 1998, the 
 50.26  maximum amounts of levies made for the purposes of sections 
 50.27  462.381 to 462.398 are the following amounts~~, less the sum of~~ 
 50.28  ~~regional planning grants from the commissioner to that region~~:  
 50.29  for Region 1, $180,337; for Region 2, ~~$150,000~~ $180,000; for 
 50.30  Region 3, $353,110; for Region 5, $195,865; for Region 6E, 
 50.31  $197,177; for Region 6W, ~~$150,000~~ $180,000; for Region 
 50.32  7E, ~~$158,653~~ $180,000; for Region 8, $206,107; for Region 9, 
 50.33  $343,572.  (2) For taxes levied in 1999 and thereafter, the 
 50.34  maximum amount that may be levied by each commission shall be 
 50.35  the amount authorized in clause (1), or 103 percent of the 
 50.36  amount levied in the previous year, whichever is greater.  The 
 51.1   auditor of each county in the region shall add the amount of any 
 51.2   levy made by the commission within the limits imposed by this 
 51.3   subdivision to other tax levies of the county for collection by 
 51.4   the county treasurer with other taxes.  When collected the 
 51.5   county treasurer shall make settlement of the taxes with the 
 51.6   commission in the same manner as other taxes are distributed to 
 51.7   political subdivisions. 
 51.8      Sec. 12.  Minnesota Statutes 1997 Supplement, section 
 51.9   462A.071, subdivision 2, is amended to read: 
 51.10     Subd. 2.  [APPLICATION.] (a) In order to qualify for 
 51.11  certification under subdivision 1, the owner or manager of the 
 51.12  property must annually apply to the agency.  The application 
 51.13  must be in the form prescribed by the agency, contain the 
 51.14  information required by the agency, and be submitted by the date 
 51.15  and time specified by the agency. 
 51.16     (b) Each application must include: 
 51.17     (1) the property tax identification number; 
 51.18     (2) the number, type, and size of units the applicant seeks 
 51.19  to qualify as low-income housing under class 4d; 
 51.20     (3) the number, type, and size of units in the property for 
 51.21  which the applicant is not seeking qualification, if any; 
 51.22     (4) a certification that the property has been inspected by 
 51.23  a qualified inspector within the past three years and meets the 
 51.24  minimum housing quality standards or is exempt from the 
 51.25  inspection requirement under subdivision 4; 
 51.26     (5) a statement indicating the ~~building is~~ qualifying units 
 51.27  in compliance with the income limits; 
 51.28     (6) an executed agreement to restrict rents meeting the 
 51.29  requirements specified by the agency or executed leases for the 
 51.30  units for which qualification as low-income housing as class 4d 
 51.31  under section 273.13 is sought and the rent schedule; and 
 51.32     (7) any additional information the agency deems appropriate 
 51.33  to require. 
 51.34     (c) The applicant must pay a per-unit application fee to be 
 51.35  set by the agency.  The application fee charged by the agency 
 51.36  must approximately equal the costs of processing and reviewing 
 52.1   the applications.  The fee must be deposited in the ~~general~~ 
 52.2   housing development fund. 
 52.3      Sec. 13.  Minnesota Statutes 1997 Supplement, section 
 52.4   462A.071, subdivision 4, is amended to read: 
 52.5      Subd. 4.  [MINIMUM HOUSING QUALITY STANDARDS.] (a) To 
 52.6   qualify for taxation under class 4d under section 273.13, a unit 
 52.7   must meet ~~both~~ the housing maintenance code of the local unit of 
 52.8   government in which the unit is located, if such a code has been 
 52.9   adopted, ~~and~~ or the housing quality standards adopted by the 
 52.10  United States Department of Housing and Urban Development, if no 
 52.11  local housing maintenance code has been adopted. 
 52.12     (b) In order to meet the minimum housing quality standards, 
 52.13  a building must be inspected by an independent designated 
 52.14  inspector at least once every three years.  The inspector must 
 52.15  certify that the building complies with the minimum standards.  
 52.16  The property owner must pay the cost of the inspection. 
 52.17     (c) The agency may exempt from the inspection requirement 
 52.18  housing units that are financed by a governmental entity and 
 52.19  subject to regular inspection or other compliance checks with 
 52.20  regard to minimum housing quality.  Written certification must 
 52.21  be supplied to show that these exempt units have been inspected 
 52.22  within the last three years and comply with the requirements 
 52.23  under the public financing or local requirements. 
 52.24     Sec. 14.  Minnesota Statutes 1997 Supplement, section 
 52.25  462A.071, subdivision 8, is amended to read: 
 52.26     Subd. 8.  [PENALTIES.] (a) The penalties provided by this 
 52.27  subdivision apply to each unit that received class 4d taxation 
 52.28  for a year and failed to meet the requirements of section 
 52.29  273.126 and this section. 
 52.30     (b) If the owner or manager does not comply with the rent 
 52.31  restriction agreement, or does not comply with the income 
 52.32  restrictions ~~or~~, minimum housing quality standards, or the 
 52.33  section 8 availability requirements, a penalty applies equal to 
 52.34  the increased taxes that would have been imposed if the ~~property~~ 
 52.35  unit had not been classified under class 4d for the year in 
 52.36  which restrictions were violated, plus an additional amount 
 53.1   equal to ten percent of the increased taxes.  The provisions of 
 53.2   section 279.03 apply to the amount of increased taxes that would 
 53.3   have been imposed if a unit had not been classified under class 
 53.4   4d for the year in which restrictions were violated. 
 53.5      (c) If the agency finds that the violations were 
 53.6   inadvertent and insubstantial, a penalty of $50 per unit per 
 53.7   year applies in lieu of the penalty specified under paragraph 
 53.8   (b).  In order to qualify under this paragraph, violations of 
 53.9   the minimum housing quality standards must be corrected within a 
 53.10  reasonable period of time and rent charged in excess of the 
 53.11  agreement must be rebated to the tenants. 
 53.12     (d) The agency may abate the penalties under this 
 53.13  subdivision for reasonable cause. 
 53.14     (e) Penalties assessed under paragraph (c) are payable to 
 53.15  the agency and must be deposited in the ~~general~~ housing 
 53.16  development fund.  If an owner or manager fails to timely pay a 
 53.17  penalty imposed under paragraph (c), the agency may choose to: 
 53.18     (1) impose the penalty under paragraph (b); or 
 53.19     (2) certify the penalty under paragraph (c) to the auditor 
 53.20  for collection as additional taxes. 
 53.21  The agency shall certify to the county auditor penalties 
 53.22  assessed under paragraph (b) and clause (2).  The auditor shall 
 53.23  impose and collect the certified penalties as additional taxes 
 53.24  which will be distributed to taxing districts in the same manner 
 53.25  as property taxes on the property. 
 53.26     Sec. 15.  Minnesota Statutes 1996, section 473.39, is 
 53.27  amended by adding a subdivision to read: 
 53.28     Subd. 1e.  [OBLIGATIONS.] In addition to the authority in 
 53.29  subdivisions 1a, 1b, 1c, and 1d, the council may issue 
 53.30  certificates of indebtedness, bonds, or other obligations under 
 53.31  this section in an amount not exceeding $32,500,000, which may 
 53.32  be used for capital expenditures as prescribed in the council's 
 53.33  transit capital improvement program and for related costs, 
 53.34  including the costs of issuance and sale of the obligations. 
 53.35     Sec. 16.  Minnesota Statutes 1997 Supplement, section 
 53.36  477A.011, subdivision 36, is amended to read: 
 54.1      Subd. 36.  [CITY AID BASE.] (a) Except as provided in 
 54.2   paragraphs (b), (c), and (d), "city aid base" means, for each 
 54.3   city, the sum of the local government aid and equalization aid 
 54.4   it was originally certified to receive in calendar year 1993 
 54.5   under Minnesota Statutes 1992, section 477A.013, subdivisions 3 
 54.6   and 5, and the amount of disparity reduction aid it received in 
 54.7   calendar year 1993 under Minnesota Statutes 1992, section 
 54.8   273.1398, subdivision 3. 
 54.9      (b) For aids payable in 1996 and thereafter, a city that in 
 54.10  1992 or 1993 transferred an amount from governmental funds to 
 54.11  its sewer and water fund, which amount exceeded its net levy for 
 54.12  taxes payable in the year in which the transfer occurred, has a 
 54.13  "city aid base" equal to the sum of (i) its city aid base, as 
 54.14  calculated under paragraph (a), and (ii) one-half of the 
 54.15  difference between its city aid distribution under section 
 54.16  477A.013, subdivision 9, for aids payable in 1995 and its city 
 54.17  aid base for aids payable in 1995. 
 54.18     (c) The city aid base for any city with a population less 
 54.19  than 500 is increased by $40,000 for aids payable in calendar 
 54.20  year 1995 and thereafter, and the maximum amount of total aid it 
 54.21  may receive under section 477A.013, subdivision 9, paragraph 
 54.22  (c), is also increased by $40,000 for aids payable in calendar 
 54.23  year 1995 only, provided that: 
 54.24     (i) the average total tax capacity rate for taxes payable 
 54.25  in 1995 exceeds 200 percent; 
 54.26     (ii) the city portion of the tax capacity rate exceeds 100 
 54.27  percent; and 
 54.28     (iii) its city aid base is less than $60 per capita. 
 54.29     (d) The city aid base for a city is increased by $20,000 in 
 54.30  1998 and thereafter and the maximum amount of total aid it may 
 54.31  receive under section 477A.013, subdivision 9, paragraph (c), is 
 54.32  also increased by $20,000 in calendar year 1998 only, provided 
 54.33  that: 
 54.34     (i) the city has a population in 1994 of 2,500 or more; 
 54.35     (ii) the city is located in a county, outside of the 
 54.36  metropolitan area, which contains a city of the first class; 
 55.1      (iii) the city's net tax capacity used in calculating its 
 55.2   1996 aid under section 477A.013 is less than $400 per capita; 
 55.3   and 
 55.4      (iv) at least four percent of the total net tax capacity, 
 55.5   for taxes payable in 1996, of property located in the city is 
 55.6   classified as railroad property. 
 55.7      (e) The city aid base for a city is increased by $200,000 
 55.8   in 1999 and thereafter and the maximum amount of total aid it 
 55.9   may receive under section 477A.013, subdivision 9, paragraph 
 55.10  (c), is also increased by $200,000 in calendar year 1999 only, 
 55.11  provided that: 
 55.12     (i) the city was incorporated as a statutory city after 
 55.13  December 1, 1993; 
 55.14     (ii) its city aid base does not exceed $5,600; and 
 55.15     (iii) the city had a population in 1996 of 5,000 or more. 
 55.16     Sec. 17.  Laws 1971, chapter 773, section 1, subdivision 2, 
 55.17  as amended by Laws 1974, chapter 351, section 5, Laws 1976, 
 55.18  chapter 234, section 7, Laws 1978, chapter 788, section 1, Laws 
 55.19  1981, chapter 369, section 1, Laws 1983, chapter 302, section 1, 
 55.20  Laws 1988, chapter 513, section 1, and Laws 1992, chapter 511, 
 55.21  article 9, section 23, is amended to read: 
 55.22     Subd. 2.  For each of the years through ~~1998~~ 2003, the city 
 55.23  of St. Paul is authorized to issue bonds in the aggregate 
 55.24  principal amount of ~~$8,000,000~~ $15,000,000 for each year; or in 
 55.25  an amount equal to one-fourth of one percent of the assessors 
 55.26  estimated market value of taxable property in St. Paul, 
 55.27  whichever is greater, provided that no more than 
 55.28  ~~$8,000,000~~ $15,000,000 of bonds is authorized to be issued in 
 55.29  any year, unless St. Paul's local general obligation debt as 
 55.30  defined in this section is less than six percent of market value 
 55.31  calculated as of December 31 of the preceding year; but at no 
 55.32  time shall the aggregate principal amount of bonds authorized 
 55.33  exceed ~~$15,700,000 in 1992, $16,600,000 in 1993, $16,600,000 in~~ 
 55.34  ~~1994, $16,600,000 in 1995, $17,500,000 in 1996, $17,500,000 in~~ 
 55.35  ~~1997, and~~ $18,000,000 in 1998, $18,000,000 in 1999, $19,000,000 
 55.36  in 2000, $19,000,000 in 2001, $19,500,000 in 2002, and 
 56.1   $20,000,000 in 2003. 
 56.2      Sec. 18.  Laws 1971, chapter 773, section 1, as amended by 
 56.3   Laws 1974, chapter 351, section 5, subdivision 1, Laws 1976, 
 56.4   chapter 234, section 1, Laws 1978, chapter 788, section 1, Laws 
 56.5   1981, chapter 369, section 1, and Laws 1983, chapter 302, 
 56.6   section 1, is amended to read:  
 56.7      Section 1.  [ST. PAUL, CITY OF; CAPITAL IMPROVEMENT 
 56.8   PROGRAM.] 
 56.9      Subdivision 1.  Notwithstanding any provision of the 
 56.10  charter of the city of St. Paul, the council of said city shall 
 56.11  have power by a resolution adopted by five affirmative votes of 
 56.12  all its members to authorize the issuance and sale of general 
 56.13  obligation bonds of the city in the years stated and in the 
 56.14  aggregate annual amounts not to exceed the limits prescribed in 
 56.15  subdivision 2 of this section for the payment of which the full 
 56.16  faith and credit of the city is irrevocably pledged. 
 56.17     Subd. 2.  For each of the years 1983, 1984, 1985, 1986, 
 56.18  1987, and 1988 the city of St. Paul is authorized to issue bonds 
 56.19  in the aggregate principal amount of $8,000,000 for each year; 
 56.20  or in an amount equal to one-fourth of one percent of the 
 56.21  assessors estimated market value of taxable property in St. 
 56.22  Paul, whichever is greater, provided that no more than 
 56.23  $8,000,000 of bonds is authorized to be issued in any year, 
 56.24  unless St. Paul's local general obligation debt as defined in 
 56.25  this section is less than six percent of market value calculated 
 56.26  as of December 31 of the preceding year; but at no time shall 
 56.27  the aggregate principal amount of bonds authorized exceed 
 56.28  $9,000,000 in 1983, $9,500,000 in 1984, $10,100,000 in 1985, 
 56.29  $10,700,000 in 1986, $11,300,000 in 1987, and $12,000,000 in 
 56.30  1988.  
 56.31     Subd. 3.  For purposes of this section, St. Paul's general 
 56.32  obligation debt shall consist of the principal amount of all 
 56.33  outstanding bonds of (1) the city of St. Paul, the housing and 
 56.34  redevelopment authority of St. Paul, the civic center authority 
 56.35  of St. Paul, and the port authority of St. Paul, for which the 
 56.36  full faith and credit of the city or any of the foregoing 
 57.1   authorities has been pledged; (2) Independent School District 
 57.2   625, for which the full faith and credit of the district has 
 57.3   been pledged; and (3) the county of Ramsey, for which the full 
 57.4   faith and credit of the county has been pledged, reduced by an 
 57.5   amount equal to the principal amount of the outstanding bonds 
 57.6   multiplied by a figure, the numerator of which is equal to the 
 57.7   ~~assessed value~~ net tax capacity of property within the county 
 57.8   outside of the city of St. Paul and the denominator of which is 
 57.9   equal to the ~~assessed value~~ net tax capacity of the county.  
 57.10     There shall be deducted before making the foregoing 
 57.11  computations the outstanding principal amount of all refunded 
 57.12  bonds, all tax or aid anticipation certificates of indebtedness 
 57.13  of the city, the authorities, the school district and the county 
 57.14  for which the full faith and credit of the bodies has been 
 57.15  pledged and all tax increment financed bonds which have not 
 57.16  used, for the prior three consecutive years, general tax levies 
 57.17  ~~or capitalized interest~~ to support annual principal and interest 
 57.18  payments. 
 57.19     Sec. 19.  Laws 1971, chapter 773, section 2, as amended by 
 57.20  Laws 1978, chapter 788, section 2, Laws 1983, chapter 302, 
 57.21  section 2, Laws 1988, chapter 513, section 2, and Laws 1992, 
 57.22  chapter 511, article 9, section 24, is amended to read: 
 57.23     Sec. 2.  The proceeds of all bonds issued pursuant to 
 57.24  section 1 hereof shall be used exclusively for the acquisition, 
 57.25  construction, and repair of capital improvements and, commencing 
 57.26  in the year 1992 and notwithstanding any provision in Laws 1978, 
 57.27  chapter 788, section 5, as amended, for redevelopment project 
 57.28  activities as defined in Minnesota Statutes, section 469.002, 
 57.29  subdivision 14, in accordance with Minnesota Statutes, section 
 57.30  469.041, clause (6).  The amount of proceeds of bonds authorized 
 57.31  by section 1 used for redevelopment project activities shall not 
 57.32  exceed ~~$655,000 in 1992, $690,000 in 1993, $690,000 in 1994,~~ 
 57.33  ~~$690,000 in 1995, $700,000 in 1996, $700,000 in 1997,~~ 
 57.34  ~~and~~ $725,000 in 1998 or any later year. 
 57.35     None of the proceeds of any bonds so issued shall be 
 57.36  expended except upon projects which have been reviewed, and have 
 58.1   received a priority rating, from a capital improvements 
 58.2   committee consisting of 18 members, of whom a majority shall not 
 58.3   hold any paid office or position under the city of St. Paul.  
 58.4   The members shall be appointed by the mayor, with at least four 
 58.5   members from each Minnesota senate district located entirely 
 58.6   within the city and at least two members from each senate 
 58.7   district located partly within the city.  Prior to making an 
 58.8   appointment to a vacancy on the capital improvement budget 
 58.9   committee, the mayor shall consult the legislators of the senate 
 58.10  district in which the vacancy occurs.  The priorities and 
 58.11  recommendations of the committee shall be purely advisory, and 
 58.12  no buyer of any bonds shall be required to see to the 
 58.13  application of the proceeds. 
 58.14     Sec. 20.  Laws 1976, chapter 162, section 1, as amended by 
 58.15  Laws 1982, chapter 474, section 1, Laws 1983, chapter 338, 
 58.16  section 1, Laws 1989 First Special Session chapter 1, article 5, 
 58.17  section 45, and Laws 1991, chapter 167, section 1, is amended to 
 58.18  read: 
 58.19     Section 1.  [RED RIVER OF THE NORTH WATERSHED; TAX BY 
 58.20  WATERSHED DISTRICTS.] 
 58.21     Each watershed district located both within the counties of 
 58.22  Kittson, Marshall, Polk, Pennington, Red Lake, Norman, Clay, 
 58.23  Mahnomen, Clearwater, Roseau, Wilkin, Ottertail, Becker, 
 58.24  Koochiching, Beltrami, Traverse, Grant, Big Stone, Stevens, and 
 58.25  Itasca, ~~which district~~ and within the hydrologic basin of the 
 58.26  Red River of the North that is a member of the Red River 
 58.27  watershed management board, established by a joint powers 
 58.28  agreement in accordance with Minnesota Statutes, section 471.59, 
 58.29  may levy an ad valorem tax not to exceed 0.04836 percent of the 
 58.30  taxable market value of all property within the district.  This 
 58.31  levy shall be in excess of any levy authorized by Minnesota 
 58.32  Statutes, section 103D.905.  The proceeds of one-half of this 
 58.33  levy shall be credited to the district's construction fund and 
 58.34  shall be used for the development, construction, and maintenance 
 58.35  of projects and programs of benefit to the district.  The 
 58.36  proceeds of the remaining one-half of this levy shall be 
 59.1   credited to the general fund of the Red River watershed 
 59.2   management board and shall be used for funding the development, 
 59.3   construction, and maintenance of projects and programs of 
 59.4   benefit to the Red River basin.  The Red River management board 
 59.5   shall adopt criteria for member districts to follow in applying 
 59.6   for funding from the board. 
 59.7      Sec. 21.  Laws 1984, chapter 380, section 1, as amended by 
 59.8   Laws 1994, chapter 505, article 6, section 27, is amended to 
 59.9   read: 
 59.10     Section 1.  [TAX.] 
 59.11     The Anoka county board may levy a tax ~~on~~ of not more than 
 59.12  .01 percent of the taxable market value of taxable 
 59.13  property located within the county ~~outside of~~ excluding any 
 59.14  taxable property taxed by any city ~~in which is situated a~~ for 
 59.15  the support of any free public library, to acquire, better, and 
 59.16  construct county library buildings and to pay principal and 
 59.17  interest on bonds issued for that purpose.  The tax shall be 
 59.18  disregarded in the calculation of levies or limits on levies 
 59.19  provided by Minnesota Statutes, section 373.40, or other law.  
 59.20     Sec. 22.  Laws 1984, chapter 380, section 2, is amended to 
 59.21  read: 
 59.22     Sec. 2.  [AUTHORIZATION.] 
 59.23     The Anoka county board may, by resolution adopted by a 
 59.24  four-sevenths vote, issue and sell general obligation bonds of 
 59.25  the county ~~in the amount of $9,000,000~~ in the manner provided in 
 59.26  Minnesota Statutes, chapter 475, to acquire, better, and 
 59.27  construct county library buildings.  ~~The total amount of bonds~~ 
 59.28  ~~outstanding at any time shall not exceed $5,000,000.  The county~~ 
 59.29  ~~board, prior to the issuance of any bonds authorized by section~~ 
 59.30  ~~1 and after adopting the resolution as provided above in this~~ 
 59.31  ~~section, shall adopt a resolution by majority vote of the county~~ 
 59.32  ~~board stating the amount, purpose and, in general, the security~~ 
 59.33  ~~to be provided for the bonds, and shall publish the resolution~~ 
 59.34  ~~once each week for two consecutive weeks in the medium of~~ 
 59.35  ~~official and legal publication of the county.  The bonds may be~~ 
 59.36  ~~issued without the submission of the question of their issuance~~ 
 60.1   ~~to the voters of the county library district unless within 21~~ 
 60.2   ~~days after the second publication of the resolution a petition~~ 
 60.3   ~~requesting a referendum, signed by at least ten percent of the~~ 
 60.4   ~~registered voters of the county, is filed with the county~~ 
 60.5   ~~auditor.  If a petition is filed, bonds may be issued unless~~ 
 60.6   ~~disapproved by a majority of the voters of the county library~~ 
 60.7   ~~district, voting on the question of their issuance at a regular~~ 
 60.8   ~~or special election.~~  The bonds shall not be subject to the 
 60.9   requirements of Minnesota Statutes, sections 475.57 to 475.59.  
 60.10  The maturity years and amounts and interest rates of each series 
 60.11  of bonds shall be fixed so that the maximum amount of principal 
 60.12  and interest to become due in any year, on the bonds of that 
 60.13  series and of all outstanding series issued by or for the 
 60.14  purposes of libraries, shall not exceed an amount equal to 
 60.15  ~~three-fourths of a mill times the assessed value~~ the lesser of 
 60.16  (i) .01 percent of the taxable market value of all taxable 
 60.17  property in the county, ~~which was not~~ excluding any taxable 
 60.18  property taxed ~~in 1981~~ by any city for the support of any free 
 60.19  public library, ~~as last finally equalized before the issuance of~~ 
 60.20  ~~the series~~ or (ii) $1,250,000.  When the tax levy authorized in 
 60.21  this ~~sections~~ section is collected, it shall be appropriated and 
 60.22  credited to a debt service fund for the bonds.  The tax levy for 
 60.23  the debt service fund under Minnesota Statutes, section 475.61 
 60.24  shall be reduced by the amount available or reasonably 
 60.25  anticipated to be available in the fund to make payments 
 60.26  otherwise payable from the levy pursuant to section 475.61. 
 60.27     Sec. 23.  Laws 1992, chapter 511, article 2, section 52, as 
 60.28  amended by Laws 1997, chapter 231, article 2, section 50, is 
 60.29  amended to read: 
 60.30     Sec. 52.  [WATERSHED DISTRICT LEVIES.] 
 60.31     (a) The Nine Mile Creek watershed district, the 
 60.32  Riley-Purgatory Bluff Creek watershed district, the Minnehaha 
 60.33  Creek watershed district, the Coon Creek watershed district, and 
 60.34  the Lower Minnesota River watershed district may levy in 1992 
 60.35  and thereafter a tax not to exceed $200,000 on property within 
 60.36  the district for the administrative fund.  The levy authorized 
 61.1   under this section is in lieu of Minnesota Statutes, section 
 61.2   103D.905, subdivision 3.  The administrative fund shall be used 
 61.3   for the purposes contained in Minnesota Statutes, section 
 61.4   103D.905, subdivision 3.  The board of managers shall make the 
 61.5   levy for the administrative fund in accordance with Minnesota 
 61.6   Statutes, section 103D.915. 
 61.7      (b) The Wild Rice watershed district may levy, for taxes 
 61.8   payable in 1993, 1994, 1995, 1996, 1997, 1998, 1999, 2000, 2001, 
 61.9   and 2002, an ad valorem tax not to exceed $200,000 on property 
 61.10  within the district for the administrative fund.  The additional 
 61.11  $75,000 above the amount authorized in Minnesota Statutes, 
 61.12  section 103D.905, subdivision 3, must be used for (1) costs 
 61.13  incurred in connection with the development and maintenance of 
 61.14  cost-sharing projects with the United States Army Corps of 
 61.15  Engineers or (2) administrative costs associated with 1997 flood 
 61.16  mitigation projects.  The board of managers shall make the levy 
 61.17  for the administrative fund in accordance with Minnesota 
 61.18  Statutes, section 103D.915. 
 61.19     Sec. 24.  Laws 1997, chapter 231, article 2, section 68, 
 61.20  subdivision 1, is amended to read: 
 61.21     Subdivision 1.  [APPLICATION.] To facilitate a review by 
 61.22  the ~~1998~~ legislature of the property taxation of elderly 
 61.23  assisted living facilities and the development of standards and 
 61.24  criteria for the taxation of these facilities, this section: 
 61.25     (1) requires the commissioner of revenue to conduct a 
 61.26  survey of the tax status of these facilities under subdivision 
 61.27  2; and 
 61.28     (2) prohibits changes in assessment practices and policies 
 61.29  regarding these facilities under subdivision 3. 
 61.30     Sec. 25.  Laws 1997, chapter 231, article 2, section 68, 
 61.31  subdivision 3, is amended to read: 
 61.32     Subd. 3.  [MORATORIUM ON CHANGES IN ASSESSMENT PRACTICES.] 
 61.33  (a) An assessor may not change the current practices or policies 
 61.34  used generally in assessing elderly assisted living facilities. 
 61.35     (b) An assessor may not change the assessment of an 
 61.36  existing elderly assisted living facility, unless the change is 
 62.1   made as a result of a change in ownership, occupancy, or use of 
 62.2   the facility.  This paragraph does not apply to: 
 62.3      (1) a facility that was constructed during calendar year 
 62.4   1997 or 1998; 
 62.5      (2) a facility that was converted to an elderly assisted 
 62.6   living facility during calendar year 1997 or 1998; or 
 62.7      (3) a change in market value. 
 62.8      (c) This subdivision expires and no longer applies on the 
 62.9   earlier of: 
 62.10     (1) the enactment of legislation establishing criteria for 
 62.11  the property taxation of elderly assisted living facilities; or 
 62.12     (2) final adjournment of the ~~1998~~ 1999 legislature. 
 62.13     Sec. 26.  [CHILD CARE FACILITY.] 
 62.14     In connection with the capital expenditure authority in 
 62.15  Minnesota Statutes, section 473.39, subdivision 1e, the 
 62.16  metropolitan council shall consider incorporating in a new 
 62.17  transfer garage a child care facility to assist in the 
 62.18  recruitment and retention of metropolitan transit drivers. 
 62.19     Sec. 27.  [QUALIFIED PROPERTY.] 
 62.20     A contiguous property located within a county adjacent to a 
 62.21  county containing a city of the first class and within the 
 62.22  metropolitan area as defined in Minnesota Statutes, section 
 62.23  473.121, that was valued under Minnesota Statutes, section 
 62.24  273.111, for taxes payable in 1995, shall be valued and 
 62.25  classified under sections 28 and 29 and shall be eligible for 
 62.26  deferral of special assessments under section 30, provided it 
 62.27  meets the following conditions: 
 62.28     (1) the property does not exceed 60 acres; 
 62.29     (2) the property includes a sculpture garden open to the 
 62.30  public; 
 62.31     (3) the property includes a system of internal roads and 
 62.32  paths for pedestrian use and a planned amphitheater for live 
 62.33  artistic performances; 
 62.34     (4) the property is used for a summer youth art camp; 
 62.35     (5) the property is used for seminars for aspiring and 
 62.36  professional artists; 
 63.1      (6) the property includes the homestead of the owner; and 
 63.2      (7) the property has been owned by the owner for at least 
 63.3   40 years. 
 63.4      Sec. 28.  [CLASSIFICATION.] 
 63.5      Notwithstanding any law to the contrary, a property 
 63.6   qualifying under section 27 shall be classified as class 2a 
 63.7   property under Minnesota Statutes, section 273.13, subdivision 
 63.8   23. 
 63.9      Sec. 29.  [VALUATION.] 
 63.10     Notwithstanding Minnesota Statutes, section 273.111, 
 63.11  subdivisions 3 and 6, a property qualifying under section 27 
 63.12  shall be valued solely with reference to its agricultural value 
 63.13  as otherwise provided under Minnesota Statutes, section 273.111. 
 63.14     Sec. 30.  [SPECIAL ASSESSMENT DEFERRAL.] 
 63.15     Notwithstanding Minnesota Statutes, section 273.111, 
 63.16  subdivisions 3 and 6, a property qualifying under section 27 
 63.17  shall be eligible for deferral of both levied and pending 
 63.18  special assessments as otherwise provided under Minnesota 
 63.19  Statutes, section 273.111, subdivision 11.  Nothing in this 
 63.20  section requires the refund of special assessments already paid. 
 63.21     Sec. 31.  [TRANSFER OF PROPERTY; PAYMENT OF DEFERRED TAXES 
 63.22  AND SPECIAL ASSESSMENTS.] 
 63.23     Subdivision 1.  [ADDITIONAL TAX.] The assessor shall make a 
 63.24  separate determination of the market value and net tax capacity 
 63.25  of a property qualifying under section 27 as if sections 28 and 
 63.26  29 did not apply.  The tax based upon the appropriate local tax 
 63.27  rate applicable to such property in the taxing district shall be 
 63.28  recorded on the property assessment records. 
 63.29     Subd. 2.  [RECAPTURE.] (a) Property or any portion thereof 
 63.30  qualifying under section 27 is subject to additional taxes if (1)
 63.31  ownership of the property is transferred to anyone other than 
 63.32  the spouse or child of the current owner, or (2) the current 
 63.33  owner or the spouse or child of the current owner has not 
 63.34  conveyed or entered into a contract to convey the property to a 
 63.35  nonprofit foundation or corporation created to own and operate 
 63.36  the property as an art park providing services included in 
 64.1   section 28, clauses (2) to (5), before July 1, 2002.  
 64.2      (b) The additional taxes are imposed at the earlier of (1) 
 64.3   the year following transfer of ownership to anyone other than 
 64.4   the spouse of the current owner or a nonprofit foundation or 
 64.5   corporation created to own and operate the property as an art 
 64.6   park, or (2) 2003.  The additional taxes are equal to the 
 64.7   difference between the taxes determined under sections 28 and 29 
 64.8   and the amount determined under subdivision 1 for all years that 
 64.9   the property qualified under section 27.  The additional taxes 
 64.10  must be extended against the property on the tax list for the 
 64.11  current year; provided, however, that no interest or penalties 
 64.12  may be levied on the additional taxes if timely paid. 
 64.13     Subd. 3.  [PAYMENT OF DEFERRED SPECIAL 
 64.14  ASSESSMENTS.] Beginning with earlier of (1) the tax payable in 
 64.15  2003, or (2) the date ownership of the property is transferred 
 64.16  to anyone other than the spouse or child of the current owner or 
 64.17  an organization described in subdivision 2 for a property 
 64.18  qualifying under section 27, all deferred special assessments 
 64.19  plus interest are payable in equal installments spread over the 
 64.20  time remaining until the last maturity date of the bonds issued 
 64.21  to finance the improvement for which the assessments were 
 64.22  levied.  If the bonds have matured or if no bonds were issued to 
 64.23  finance the improvements, the deferred special assessments plus 
 64.24  interest are payable within 90 days.  The provisions of 
 64.25  Minnesota Statutes, section 429.061, subdivision 2, apply to the 
 64.26  collection of these installments.  Penalty may not be levied on 
 64.27  any such special assessments if timely paid. 
 64.28     Subd. 4.  [CURRENT OWNER.] For purposes of this section, 
 64.29  "current owner" means the owner of property qualifying under 
 64.30  section 27 on the date of final enactment of this act.  
 64.31     Subd. 5.  [NONPROFIT FOUNDATION OR CORPORATION.] For 
 64.32  purposes of sections 27 to 31, "nonprofit foundation or 
 64.33  corporation" means a nonprofit entity created to own and operate 
 64.34  the property as an art park providing the services included in 
 64.35  section 27, clauses (2) to (5). 
 64.36     Sec. 32.  [WATER SUPPLY PROJECTS OF MORE THAN $15,000,000.] 
 65.1      Notwithstanding Minnesota Statutes, chapter 410, or 
 65.2   Minneapolis city charter, chapter 15, section 9, the city of 
 65.3   Minneapolis and its board of estimate and taxation may issue and 
 65.4   sell bonds or incur other indebtedness for a capital improvement 
 65.5   project related to water supply that in all phases from 
 65.6   inception to completion exceeds $15,000,000 without submitting 
 65.7   the question of issuing such obligations or incurring such 
 65.8   indebtedness to the electorate for approval. 
 65.9      Sec. 33.  [EFFECTIVE DATE.] 
 65.10     Sections 1, 4 to 6, 8, and 11 to 14 are effective for 
 65.11  property taxes assessed in 1998 and payable in 1999, and 
 65.12  thereafter. 
 65.13     Sections 2 and 3 are effective for real estate sales and 
 65.14  transfers occurring on or after July 1, 1998.  
 65.15     Section 7 is effective for public hearings held in 1998, 
 65.16  and thereafter. 
 65.17     Section 9 is effective for property taxes payable in 1998 
 65.18  only. 
 65.19     Section 16 is effective for aids payable in 1999 and 
 65.20  thereafter. 
 65.21     Sections 17 to 19 are effective upon compliance by the 
 65.22  governing body of the city of St. Paul with Minnesota Statutes, 
 65.23  section 645.021, subdivision 3. 
 65.24     Sections 21 and 22 are effective upon compliance by the 
 65.25  governing body of Anoka county with Minnesota Statutes, section 
 65.26  645.021, subdivision 3. 
 65.27     Section 23 is effective for property taxes levied in 1997, 
 65.28  payable in 1998, and thereafter. 
 65.29     Sections 27 to 31 are effective beginning with taxes 
 65.30  payable in 1998 and ending with taxes payable in 2003. 
 65.31     Sections 21 and 32 are effective the day following final 
 65.32  enactment. 
 65.33                             ARTICLE 3
 65.34               SENIOR CITIZEN'S PROPERTY TAX DEFERRAL
 65.35     Section 1.  Minnesota Statutes 1997 Supplement, section 
 65.36  290B.04, subdivision 1, is amended to read: 
 66.1      Subdivision 1.  [INITIAL APPLICATION.] A taxpayer meeting 
 66.2   the program qualifications under section 290B.03 may apply to 
 66.3   the commissioner of revenue for the deferral of taxes.  
 66.4   Applications are due on or before July 1 for deferral of any of 
 66.5   the following year's property taxes.  A taxpayer may apply in 
 66.6   the year in which the taxpayer becomes 65 years old, provided 
 66.7   that no deferral of property taxes will be made until the 
 66.8   calendar year after the taxpayer becomes 65 years old.  The 
 66.9   application, which shall be prescribed by the commissioner of 
 66.10  revenue, shall include the following items and any other 
 66.11  information which the commissioner deems necessary: 
 66.12     (1) the name, address, and social security number of the 
 66.13  owner or owners; 
 66.14     (2) a copy of the property tax statement for the current 
 66.15  payable year for the homesteaded property; 
 66.16     (3) the initial year of ownership and occupancy as a 
 66.17  homestead; 
 66.18     (4) the owner's household income for the previous calendar 
 66.19  year; and 
 66.20     (5) information on any mortgage loans or other amounts 
 66.21  secured by mortgages or other liens against the property, for 
 66.22  which purpose the commissioner may require the applicant to 
 66.23  provide a copy of the mortgage note, the mortgage, or a 
 66.24  statement of the balance owing on the mortgage loan provided by 
 66.25  the mortgage holder.  The commissioner may require the 
 66.26  appropriate documents in connection with obtaining and 
 66.27  confirming information on unpaid amounts secured by other 
 66.28  liens.  As a condition for approving an initial application, the 
 66.29  commissioner may require applicants to obtain at their own cost, 
 66.30  a report which has been prepared by a licensed abstracter 
 66.31  showing the existing mortgages, lien notices, and other 
 66.32  obligations or encumbrances which are on record against the 
 66.33  involved property or the applicant as of 30 days prior to the 
 66.34  date of such report, and to submit that report by the due date 
 66.35  of the initial application.  The commissioner may also require 
 66.36  the county recorder or county registrar in the county where the 
 67.1   property is located to provide other documents or information 
 67.2   related to the applicant or the property, for which the recorder 
 67.3   or registrar shall not charge a fee. 
 67.4      The application must state that program participation is 
 67.5   voluntary.  The application must also state that the deferred 
 67.6   amount depends directly on the applicant's household income, and 
 67.7   that program participation includes authorization for the 
 67.8   deferred amount for each year and the cumulative deferral and 
 67.9   interest to appear on each year's property tax statement as 
 67.10  public data. 
 67.11     Sec. 2.  Minnesota Statutes 1997 Supplement, section 
 67.12  290B.04, subdivision 3, is amended to read: 
 67.13     Subd. 3.  [~~ANNUAL~~ EXCESS-INCOME CERTIFICATION BY TAXPAYER.] 
 67.14  ~~Annually on or before July 1,~~ A taxpayer whose initial 
 67.15  application has been approved under subdivision 2, shall 
 67.16  complete ~~the~~ a certification form and return it to the 
 67.17  commissioner of revenue by July 1 of each year of eligibility if 
 67.18  the taxpayer's household income in the preceding year exceeded 
 67.19  $30,000.  The certification must state ~~whether or not the~~ 
 67.20  ~~taxpayer wishes to have property taxes deferred for the~~ 
 67.21  ~~following year provided the taxes exceed the maximum property~~ 
 67.22  ~~tax amount under section 290B.05.  If the taxpayer does wish to~~ 
 67.23  ~~have property taxes deferred, the certification must state~~ the 
 67.24  homeowner's total household income for the previous calendar 
 67.25  year and any other information which the commissioner deems 
 67.26  necessary.  No property taxes may be deferred under chapter 290B 
 67.27  in the year following the year in which a program participant is 
 67.28  required to file an excess-income certification under this 
 67.29  subdivision. 
 67.30     Sec. 3.  Minnesota Statutes 1997 Supplement, section 
 67.31  290B.05, subdivision 1, is amended to read: 
 67.32     Subdivision 1.  [DETERMINATION BY COMMISSIONER.] The 
 67.33  commissioner shall annually determine the qualifying homeowner's 
 67.34  ~~"maximum property tax amount" and~~ "maximum allowable deferral."  
 67.35  ~~The maximum property tax amount calculated for taxes payable in~~ 
 67.36  ~~the following year is equal to five percent of the homeowner's~~ 
 68.1   ~~total household income for the previous calendar year.  No tax~~ 
 68.2   ~~may be deferred for any homeowner whose total household income~~ 
 68.3   ~~for the previous year exceeds $30,000.~~  No tax shall be deferred 
 68.4   in any year in which the homeowner or the property does not meet 
 68.5   the program qualifications in section 290B.03, subdivision 1, 
 68.6   clauses (1) and (3) through (8).  The maximum allowable total 
 68.7   deferral is equal to 75 percent of the assessor's estimated 
 68.8   market value for the year, less (1) the balance of any mortgage 
 68.9   loans and other amounts secured by liens against the property at 
 68.10  the time of application, including any unpaid special 
 68.11  assessments but not including property taxes payable during the 
 68.12  year; and (2) any outstanding deferral and interest.  
 68.13     Sec. 4.  Minnesota Statutes 1997 Supplement, section 
 68.14  290B.05, subdivision 2, is amended to read: 
 68.15     Subd. 2.  [CERTIFICATION BY COMMISSIONER.] On or before 
 68.16  December 1, the commissioner shall certify to the county auditor 
 68.17  of the county in which the qualifying homestead is located ~~(1)~~ 
 68.18  ~~the maximum property tax amount; (2)~~ the maximum allowable 
 68.19  deferral for ~~the year; and (3) the cumulative deferral and~~ 
 68.20  ~~interest for all years preceding~~ the next taxes payable year. 
 68.21     Sec. 5.  Minnesota Statutes 1997 Supplement, section 
 68.22  290B.05, subdivision 3, is amended to read: 
 68.23     Subd. 3.  [CALCULATION OF DEFERRED PROPERTY TAX AMOUNT.] 
 68.24  When final property tax amounts for the following year have been 
 68.25  determined, the county auditor shall calculate the "deferred 
 68.26  property tax amount."  The deferred property tax amount is equal 
 68.27  to the lesser of (1) the maximum allowable deferral for the 
 68.28  year; or (2) the ~~difference between the~~ total amount of property 
 68.29  taxes levied upon the qualifying homestead by all taxing 
 68.30  jurisdictions ~~and the maximum property tax amount~~.  Any special 
 68.31  assessments levied by any local unit of government must not be 
 68.32  included in the total tax used to calculate the deferred tax 
 68.33  amount.  No deferral of the current year's property taxes is 
 68.34  allowed if there are any delinquent property taxes or delinquent 
 68.35  special assessments for any previous year.  Any tax attributable 
 68.36  to new improvements made to the property after the initial 
 69.1   application has been approved under section 290B.04, subdivision 
 69.2   2, must be excluded when determining any subsequent deferred 
 69.3   property tax amount.  The county auditor shall annually, on or 
 69.4   before April 15, certify to the commissioner of revenue the 
 69.5   property tax deferral amounts determined under this subdivision 
 69.6   by property and by owner.  
 69.7      Sec. 6.  Minnesota Statutes 1997 Supplement, section 
 69.8   290B.06, is amended to read: 
 69.9      290B.06 [PROPERTY TAX REFUNDS.] 
 69.10     For purposes of qualifying for the regular property tax 
 69.11  refund or the special refund for homeowners under chapter 290A, 
 69.12  the qualifying tax is the full amount of taxes, including the 
 69.13  deferred portion of the tax.  ~~In any year in which a program~~ 
 69.14  ~~participant chooses to have property taxes deferred under this~~ 
 69.15  ~~section, any regular or special property tax refund awarded~~ 
 69.16  ~~based upon those property taxes must be taken first as a~~ 
 69.17  ~~deduction from the amount of the deferred tax for that year, and~~ 
 69.18  ~~second as a deduction against any outstanding deferral from~~ 
 69.19  ~~previous years, rather than as a cash payment to the homeowner.~~  
 69.20  ~~The commissioner shall cancel any current year's deferral or~~ 
 69.21  ~~previous years' deferral and interest that is offset by the~~ 
 69.22  ~~property tax refunds.  If the total of the regular and the~~ 
 69.23  ~~special property tax refund amounts exceeds the sum of the~~ 
 69.24  ~~deferred tax for the current year and cumulative deferred tax~~ 
 69.25  ~~and interest for previous years, the commissioner shall then~~ 
 69.26  ~~remit the excess amount to the homeowner.  On or before the date~~ 
 69.27  ~~on which the commissioner issues property tax refunds, the~~ 
 69.28  ~~commissioner shall notify program participants of any reduction~~ 
 69.29  ~~in the deferred amount for the current and previous years~~ 
 69.30  ~~resulting from property tax refunds.~~ 
 69.31     Sec. 7.  Minnesota Statutes 1997 Supplement, section 
 69.32  290B.07, is amended to read: 
 69.33     290B.07 [LIEN; DEFERRED PORTION.] 
 69.34     (a) Payment by the state to the county treasurer of taxes 
 69.35  deferred under this section is deemed a loan from the state to 
 69.36  the program participant.  The commissioner must compute the 
 70.1   interest as provided in section 270.75, subdivision 5, but not 
 70.2   to exceed five percent, and maintain records of the total 
 70.3   deferred amount and interest for each participant.  Interest 
 70.4   shall accrue beginning September 1 of the payable year for which 
 70.5   the taxes are deferred.  The lien created under section 272.31 
 70.6   continues to secure payment by the taxpayer, or by the 
 70.7   taxpayer's successors or assigns, of the amount deferred, 
 70.8   including interest, with respect to all years for which amounts 
 70.9   are deferred.  The lien for deferred taxes and interest has the 
 70.10  same priority as any other lien under section 272.31, except 
 70.11  that liens, including mortgages, recorded or filed prior to the 
 70.12  recording or filing of the notice under section 290B.04, 
 70.13  subdivision 2, have priority over the lien for deferred taxes 
 70.14  and interest.  A seller's interest in a contract for deed, in 
 70.15  which a qualifying homeowner is the purchaser or an assignee of 
 70.16  the purchaser, has priority over deferred taxes and interest on 
 70.17  deferred taxes, regardless of whether the contract for deed is 
 70.18  recorded or filed.  The lien for deferred taxes and interest for 
 70.19  future years has the same priority as the lien for deferred 
 70.20  taxes and interest for the first year, which is always higher in 
 70.21  priority than any mortgages or other liens filed, recorded, or 
 70.22  created after the notice recorded or filed under section 
 70.23  290B.04, subdivision 2.  The county treasurer or auditor shall 
 70.24  maintain records of the deferred portion and shall list the 
 70.25  amount of deferred taxes for the year and the cumulative 
 70.26  deferral and interest for all previous years as a lien against 
 70.27  the property on the property tax statement.  In any 
 70.28  certification of unpaid taxes for a tax parcel, the county 
 70.29  auditor shall clearly distinguish between taxes payable in the 
 70.30  current year, deferred taxes and interest, and delinquent 
 70.31  taxes.  Payment of the deferred portion becomes due and owing at 
 70.32  the time specified in section 290B.08.  Upon receipt of the 
 70.33  payment, the commissioner shall issue a receipt for it to the 
 70.34  person making the payment upon request and shall notify the 
 70.35  auditor of the county in which the parcel is located, within ten 
 70.36  days, identifying the parcel to which the payment applies.  Upon 
 71.1   receipt by the commissioner of revenue of collected funds in the 
 71.2   amount of the deferral, the state's loan to the program 
 71.3   participant is deemed paid in full. 
 71.4      (b) If property for which taxes have been deferred under 
 71.5   this chapter forfeits under chapter 281 for nonpayment of a 
 71.6   nondeferred property tax amount, or because of nonpayment of 
 71.7   amounts previously deferred following a termination under 
 71.8   section 290B.08, the lien for the taxes deferred under this 
 71.9   chapter, plus interest and costs, shall be canceled by the 
 71.10  county auditor as provided in section 282.07.  However, 
 71.11  notwithstanding any other law to the contrary, any proceeds from 
 71.12  a subsequent sale of the property under chapter 282 or another 
 71.13  law, must be used to first reimburse the county's forfeited tax 
 71.14  sale fund for any direct costs of selling the property or any 
 71.15  costs directly related to preparing the property for sale, and 
 71.16  then to reimburse the state for the amount of the canceled 
 71.17  lien.  Within 90 days of the receipt of any sale proceed to 
 71.18  which the state is entitled under these provisions, the county 
 71.19  auditor must pay those funds to the commissioner of revenue by 
 71.20  warrant for deposit in the general fund.  No other deposit, use, 
 71.21  distribution, or release of gross sale proceeds or receipts may 
 71.22  be made by the county until payments sufficient to fully 
 71.23  reimburse the state for the canceled lien amount have been 
 71.24  transmitted to the commissioner. 
 71.25     Sec. 8.  [290B.10] [INVESTIGATIONS; PENALTIES.] 
 71.26     The commissioner may use any information to which he or she 
 71.27  has access under the law in determining or verifying eligibility 
 71.28  under any provision of the senior citizens' property tax 
 71.29  deferral program.  The commissioner may conduct investigations 
 71.30  related to initial applications and excess-income certifications 
 71.31  required under this chapter within the period ending 3-1/2 years 
 71.32  from the due date of the application or certification.  The 
 71.33  commissioner shall assess a penalty equal to 50 percent of the 
 71.34  property taxes improperly deferred in the case of a false 
 71.35  application, a false certification, or in the case of a required 
 71.36  excess-income certification which was not filed as of the 
 72.1   applicable due date.  The commissioner shall assess a penalty 
 72.2   equal to 100 percent of the property taxes improperly deferred 
 72.3   if the taxpayer knowingly filed a false application or 
 72.4   certification, or knowingly failed to file a required 
 72.5   excess-income certification by the applicable due date.  The 
 72.6   commissioner shall assess penalties under this section through 
 72.7   the issuance of an order under the provisions of chapter 289A.  
 72.8   Persons affected by a commissioner's order issued under this 
 72.9   section may appeal as provided in chapter 289A. 
 72.10     Sec. 9.  [EFFECTIVE DATE.] 
 72.11     Sections 1 to 8 are effective for deferrals of property 
 72.12  taxes payable in 1999 and thereafter. 
 72.13                             ARTICLE 4 
 72.14                     INCOME AND FRANCHISE TAXES 
 72.15     Section 1.  Minnesota Statutes 1997 Supplement, section 
 72.16  289A.19, subdivision 2, is amended to read: 
 72.17     Subd. 2.  [CORPORATE FRANCHISE AND MINING COMPANY TAXES.] 
 72.18  Corporations or mining companies shall receive an extension of 
 72.19  seven months for filing the return of a corporation subject to 
 72.20  tax under chapter 290 or for filing the return of a mining 
 72.21  company subject to tax under sections 298.01 and 298.015 ~~if:~~.  
 72.22  Interest on any balance of tax not paid when the regularly 
 72.23  required return is due must be paid at the rate specified in 
 72.24  section 270.75, from the date such payment should have been made 
 72.25  if no extension was granted, until the date of payment of such 
 72.26  tax. 
 72.27     If a corporation or mining company does not:  
 72.28     (1) ~~the corporation or mining company pays~~ pay at least 90 
 72.29  percent of the amount of tax shown on the return on or before 
 72.30  the regular due date of the return, the penalty prescribed by 
 72.31  section 289A.60, subdivision 1, shall be imposed on the unpaid 
 72.32  balance of tax; or 
 72.33     (2) pay the balance due shown on the regularly required 
 72.34  return ~~is paid~~ on or before the extended due date of the return~~;~~ 
 72.35  ~~and~~ 
 72.36     ~~(3) interest on any balance due is paid at the rate~~ 
 73.1   ~~specified in section 270.75 from the regular due date of the~~ 
 73.2   ~~return until the tax is paid~~, the penalty prescribed by section 
 73.3   289A.60, subdivision 1, shall be imposed on the unpaid balance 
 73.4   of tax from the original due date of the return.  
 73.5      Sec. 2.  Minnesota Statutes 1996, section 290.01, 
 73.6   subdivision 3b, is amended to read: 
 73.7      Subd. 3b.  [LIMITED LIABILITY COMPANY.] For purposes of 
 73.8   this chapter and chapter 289A, a limited liability company that 
 73.9   is formed under either the laws of this state or under similar 
 73.10  laws of another state, ~~and that is considered to be a~~ 
 73.11  ~~partnership~~ will be treated as an entity similar to its 
 73.12  treatment for federal income tax purposes~~, is considered to be a~~ 
 73.13  ~~partnership and the members must be considered to be partners~~. 
 73.14     Sec. 3.  Minnesota Statutes 1997 Supplement, section 
 73.15  290.01, subdivision 19a, is amended to read: 
 73.16     Subd. 19a.  [ADDITIONS TO FEDERAL TAXABLE INCOME.] For 
 73.17  individuals, estates, and trusts, there shall be added to 
 73.18  federal taxable income: 
 73.19     (1)(i) interest income on obligations of any state other 
 73.20  than Minnesota or a political or governmental subdivision, 
 73.21  municipality, or governmental agency or instrumentality of any 
 73.22  state other than Minnesota exempt from federal income taxes 
 73.23  under the Internal Revenue Code or any other federal statute, 
 73.24  and 
 73.25     (ii) exempt-interest dividends as defined in section 
 73.26  852(b)(5) of the Internal Revenue Code, except the portion of 
 73.27  the exempt-interest dividends derived from interest income on 
 73.28  obligations of the state of Minnesota or its political or 
 73.29  governmental subdivisions, municipalities, governmental agencies 
 73.30  or instrumentalities, but only if the portion of the 
 73.31  exempt-interest dividends from such Minnesota sources paid to 
 73.32  all shareholders represents 95 percent or more of the 
 73.33  exempt-interest dividends that are paid by the regulated 
 73.34  investment company as defined in section 851(a) of the Internal 
 73.35  Revenue Code, or the fund of the regulated investment company as 
 73.36  defined in section 851(h) of the Internal Revenue Code, making 
 74.1   the payment; and 
 74.2      (iii) for the purposes of items (i) and (ii), interest on 
 74.3   obligations of an Indian tribal government described in section 
 74.4   7871(c) of the Internal Revenue Code shall be treated as 
 74.5   interest income on obligations of the state in which the tribe 
 74.6   is located; 
 74.7      (2) the amount of income taxes paid or accrued within the 
 74.8   taxable year under this chapter and income taxes paid to any 
 74.9   other state or to any province or territory of Canada, to the 
 74.10  extent allowed as a deduction under section 63(d) of the 
 74.11  Internal Revenue Code, but the addition may not be more than the 
 74.12  amount by which the itemized deductions as allowed under section 
 74.13  63(d) of the Internal Revenue Code exceeds the amount of the 
 74.14  standard deduction as defined in section 63(c) of the Internal 
 74.15  Revenue Code.  For the purpose of this paragraph, the 
 74.16  disallowance of itemized deductions under section 68 of the 
 74.17  Internal Revenue Code of 1986, income tax is the last itemized 
 74.18  deduction disallowed; 
 74.19     (3) the capital gain amount of a lump sum distribution to 
 74.20  which the special tax under section 1122(h)(3)(B)(ii) of the Tax 
 74.21  Reform Act of 1986, Public Law Number 99-514, applies; 
 74.22     (4) the amount of income taxes paid or accrued within the 
 74.23  taxable year under this chapter and income taxes paid to any 
 74.24  other state or any province or territory of Canada, to the 
 74.25  extent allowed as a deduction in determining federal adjusted 
 74.26  gross income.  For the purpose of this paragraph, income taxes 
 74.27  do not include the taxes imposed by sections 290.0922, 
 74.28  subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729; 
 74.29     (5) the amount of loss or expense included in federal 
 74.30  taxable income under section 1366 of the Internal Revenue Code 
 74.31  flowing from a corporation that has a valid election in effect 
 74.32  for the taxable year under section 1362 of the Internal Revenue 
 74.33  Code, but which is not allowed to be an "S" corporation under 
 74.34  section 290.9725; ~~and~~ 
 74.35     (6) the amount of any distributions in cash or property 
 74.36  made to a shareholder during the taxable year by a corporation 
 75.1   that has a valid election in effect for the taxable year under 
 75.2   section 1362 of the Internal Revenue Code, but which is not 
 75.3   allowed to be an "S" corporation under section 290.9725 to the 
 75.4   extent not already included in federal taxable income under 
 75.5   section 1368 of the Internal Revenue Code~~.~~; 
 75.6      (7) in the year stock of a corporation that had made a 
 75.7   valid election under section 1362 of the Internal Revenue Code 
 75.8   but was not an "S" corporation under section 290.9725 is sold or 
 75.9   disposed of in a transaction taxable under the Internal Revenue 
 75.10  Code, the amount of difference between the Minnesota basis of 
 75.11  the stock under subdivision 19f, paragraph (m), and the federal 
 75.12  basis if the Minnesota basis is lower than the shareholder's 
 75.13  federal basis; and 
 75.14     (8) the amount of expense, interest, or taxes disallowed 
 75.15  pursuant to section 290.10. 
 75.16     Sec. 4.  Minnesota Statutes 1997 Supplement, section 
 75.17  290.01, subdivision 19b, is amended to read: 
 75.18     Subd. 19b.  [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 
 75.19  individuals, estates, and trusts, there shall be subtracted from 
 75.20  federal taxable income: 
 75.21     (1) interest income on obligations of any authority, 
 75.22  commission, or instrumentality of the United States to the 
 75.23  extent includable in taxable income for federal income tax 
 75.24  purposes but exempt from state income tax under the laws of the 
 75.25  United States; 
 75.26     (2) if included in federal taxable income, the amount of 
 75.27  any overpayment of income tax to Minnesota or to any other 
 75.28  state, for any previous taxable year, whether the amount is 
 75.29  received as a refund or as a credit to another taxable year's 
 75.30  income tax liability; 
 75.31     (3) the amount paid to others, less the credit allowed 
 75.32  under section 290.0674, not to exceed $1,625 for each dependent 
 75.33  in grades kindergarten to 6 and $2,500 for each dependent in 
 75.34  grades 7 to 12, for tuition, textbooks, and transportation of 
 75.35  each dependent in attending an elementary or secondary school 
 75.36  situated in Minnesota, North Dakota, South Dakota, Iowa, or 
 76.1   Wisconsin, wherein a resident of this state may legally fulfill 
 76.2   the state's compulsory attendance laws, which is not operated 
 76.3   for profit, and which adheres to the provisions of the Civil 
 76.4   Rights Act of 1964 and chapter 363.  For the purposes of this 
 76.5   clause, "tuition" includes fees or tuition as defined in section 
 76.6   290.0674, subdivision 1, clause (1).  As used in this clause, 
 76.7   "textbooks" includes books and other instructional materials and 
 76.8   equipment used in elementary and secondary schools in teaching 
 76.9   only those subjects legally and commonly taught in public 
 76.10  elementary and secondary schools in this state.  Equipment 
 76.11  expenses qualifying for deduction includes expenses as defined 
 76.12  and limited in section 290.0674, subdivision 1, clause (3).  
 76.13  "Textbooks" does not include instructional books and materials 
 76.14  used in the teaching of religious tenets, doctrines, or worship, 
 76.15  the purpose of which is to instill such tenets, doctrines, or 
 76.16  worship, nor does it include books or materials for, or 
 76.17  transportation to, extracurricular activities including sporting 
 76.18  events, musical or dramatic events, speech activities, driver's 
 76.19  education, or similar programs; 
 76.20     (4) to the extent included in federal taxable income, 
 76.21  distributions from a qualified governmental pension plan, an 
 76.22  individual retirement account, simplified employee pension, or 
 76.23  qualified plan covering a self-employed person that represent a 
 76.24  return of contributions that were included in Minnesota gross 
 76.25  income in the taxable year for which the contributions were made 
 76.26  but were deducted or were not included in the computation of 
 76.27  federal adjusted gross income.  The distribution shall be 
 76.28  allocated first to return of contributions until the 
 76.29  contributions included in Minnesota gross income have been 
 76.30  exhausted.  This subtraction applies only to contributions made 
 76.31  in a taxable year prior to 1985; 
 76.32     (5) income as provided under section 290.0802; 
 76.33     (6) the amount of unrecovered accelerated cost recovery 
 76.34  system deductions allowed under subdivision 19g; 
 76.35     (7) to the extent included in federal adjusted gross 
 76.36  income, income realized on disposition of property exempt from 
 77.1   tax under section 290.491; 
 77.2      (8) to the extent not deducted in determining federal 
 77.3   taxable income, the amount paid for health insurance of 
 77.4   self-employed individuals as determined under section 162(l) of 
 77.5   the Internal Revenue Code, except that the 25 percent limit does 
 77.6   not apply.  If the taxpayer deducted insurance payments under 
 77.7   section 213 of the Internal Revenue Code of 1986, the 
 77.8   subtraction under this clause must be reduced by the lesser of: 
 77.9      (i) the total itemized deductions allowed under section 
 77.10  63(d) of the Internal Revenue Code, less state, local, and 
 77.11  foreign income taxes deductible under section 164 of the 
 77.12  Internal Revenue Code and the standard deduction under section 
 77.13  63(c) of the Internal Revenue Code; or 
 77.14     (ii) the lesser of (A) the amount of insurance qualifying 
 77.15  as "medical care" under section 213(d) of the Internal Revenue 
 77.16  Code to the extent not deducted under section 162(1) of the 
 77.17  Internal Revenue Code or excluded from income or (B) the total 
 77.18  amount deductible for medical care under section 213(a); 
 77.19     (9) the exemption amount allowed under Laws 1995, chapter 
 77.20  255, article 3, section 2, subdivision 3; 
 77.21     (10) to the extent included in federal taxable income, 
 77.22  postservice benefits for youth community service under section 
 77.23  121.707 for volunteer service under United States Code, title 
 77.24  42, section 5011(d), as amended; ~~and~~ 
 77.25     (11) to the extent not subtracted under clause (1), the 
 77.26  amount of income or gain included in federal taxable income 
 77.27  under section 1366 of the Internal Revenue Code flowing from a 
 77.28  corporation that has a valid election in effect for the taxable 
 77.29  year under section 1362 of the Internal Revenue Code which is 
 77.30  not allowed to be an "S" corporation under section 290.9725; 
 77.31     (12) in the year stock of a corporation that had made a 
 77.32  valid election under section 1362 of the Internal Revenue Code 
 77.33  but was not an "S" corporation under section 290.9725 is sold or 
 77.34  disposed of in a transaction taxable under the Internal Revenue 
 77.35  Code, the amount of difference between the Minnesota basis of 
 77.36  the stock under subdivision 19f, paragraph (m), and the federal 
 78.1   basis if the Minnesota basis is higher than the shareholder's 
 78.2   federal basis; and 
 78.3      (13) an amount equal to the portion of the distributions 
 78.4   made by a corporation, having a valid election in effect for 
 78.5   federal tax purposes under section 1362 of the Internal Revenue 
 78.6   Code but not treated as a "S" corporation for state tax purposes 
 78.7   under section 290.9725, which is equal to the individual's, 
 78.8   estate's, or trust's federal income tax liability that is 
 78.9   attributable to the items of income, expense, gain, loss, or 
 78.10  credits from the corporation. 
 78.11     Sec. 5.  Minnesota Statutes 1997 Supplement, section 
 78.12  290.01, subdivision 19f, is amended to read: 
 78.13     Subd. 19f.  [BASIS MODIFICATIONS AFFECTING GAIN OR LOSS ON 
 78.14  DISPOSITION OF PROPERTY.] (a) For individuals, estates, and 
 78.15  trusts, the basis of property is its adjusted basis for federal 
 78.16  income tax purposes except as set forth in paragraphs (f), (g), 
 78.17  and (m).  For corporations, the basis of property is its 
 78.18  adjusted basis for federal income tax purposes, without regard 
 78.19  to the time when the property became subject to tax under this 
 78.20  chapter or to whether out-of-state losses or items of tax 
 78.21  preference with respect to the property were not deductible 
 78.22  under this chapter, except that the modifications to the basis 
 78.23  for federal income tax purposes set forth in paragraphs (b) to 
 78.24  (j) are allowed to corporations, and the resulting modifications 
 78.25  to federal taxable income must be made in the year in which gain 
 78.26  or loss on the sale or other disposition of property is 
 78.27  recognized. 
 78.28     (b) The basis of property shall not be reduced to reflect 
 78.29  federal investment tax credit.  
 78.30     (c) The basis of property subject to the accelerated cost 
 78.31  recovery system under section 168 of the Internal Revenue Code 
 78.32  shall be modified to reflect the modifications in depreciation 
 78.33  with respect to the property provided for in subdivision 19e.  
 78.34  For certified pollution control facilities for which 
 78.35  amortization deductions were elected under section 169 of the 
 78.36  Internal Revenue Code of 1954, the basis of the property must be 
 79.1   increased by the amount of the amortization deduction not 
 79.2   previously allowed under this chapter. 
 79.3      (d) For property acquired before January 1, 1933, the basis 
 79.4   for computing a gain is the fair market value of the property as 
 79.5   of that date.  The basis for determining a loss is the cost of 
 79.6   the property to the taxpayer less any depreciation, 
 79.7   amortization, or depletion, actually sustained before that 
 79.8   date.  If the adjusted cost exceeds the fair market value of the 
 79.9   property, then the basis is the adjusted cost regardless of 
 79.10  whether there is a gain or loss.  
 79.11     (e) The basis is reduced by the allowance for amortization 
 79.12  of bond premium if an election to amortize was made pursuant to 
 79.13  Minnesota Statutes 1986, section 290.09, subdivision 13, and the 
 79.14  allowance could have been deducted by the taxpayer under this 
 79.15  chapter during the period of the taxpayer's ownership of the 
 79.16  property.  
 79.17     (f) For assets placed in service before January 1, 1987, 
 79.18  corporations, partnerships, or individuals engaged in the 
 79.19  business of mining ores other than iron ore or taconite 
 79.20  concentrates subject to the occupation tax under chapter 298 
 79.21  must use the occupation tax basis of property used in that 
 79.22  business. 
 79.23     (g) For assets placed in service before January 1, 1990, 
 79.24  corporations, partnerships, or individuals engaged in the 
 79.25  business of mining iron ore or taconite concentrates subject to 
 79.26  the occupation tax under chapter 298 must use the occupation tax 
 79.27  basis of property used in that business.  
 79.28     (h) In applying the provisions of sections 301(c)(3)(B), 
 79.29  312(f) and (g), and 316(a)(1) of the Internal Revenue Code, the 
 79.30  dates December 31, 1932, and January 1, 1933, shall be 
 79.31  substituted for February 28, 1913, and March 1, 1913, 
 79.32  respectively.  
 79.33     (i) In applying the provisions of section 362(a) and (c) of 
 79.34  the Internal Revenue Code, the date December 31, 1956, shall be 
 79.35  substituted for June 22, 1954.  
 79.36     (j) The basis of property shall be increased by the amount 
 80.1   of intangible drilling costs not previously allowed due to 
 80.2   differences between this chapter and the Internal Revenue Code.  
 80.3      (k) The adjusted basis of any corporate partner's interest 
 80.4   in a partnership is the same as the adjusted basis for federal 
 80.5   income tax purposes modified as required to reflect the basis 
 80.6   modifications set forth in paragraphs (b) to (j).  The adjusted 
 80.7   basis of a partnership in which the partner is an individual, 
 80.8   estate, or trust is the same as the adjusted basis for federal 
 80.9   income tax purposes modified as required to reflect the basis 
 80.10  modifications set forth in paragraphs (f) and (g).  
 80.11     (l) The modifications contained in paragraphs (b) to (j) 
 80.12  also apply to the basis of property that is determined by 
 80.13  reference to the basis of the same property in the hands of a 
 80.14  different taxpayer or by reference to the basis of different 
 80.15  property.  
 80.16     (m) If a corporation has a valid election in effect for the 
 80.17  taxable year under section 1362 of the Internal Revenue Code, 
 80.18  but is not allowed to be an "S" corporation under section 
 80.19  290.9725, and the corporation is liquidated or the individual 
 80.20  shareholder disposes of the stock ~~and there is no capital loss~~ 
 80.21  ~~reflected in federal adjusted gross income because of the fact~~ 
 80.22  ~~that corporate losses have exhausted the shareholders' basis for~~ 
 80.23  ~~federal purposes, the shareholders shall be entitled to a~~ 
 80.24  ~~capital loss commensurate to their Minnesota basis for the~~ 
 80.25  ~~stock~~, the Minnesota basis in the shareholder's stock in the 
 80.26  corporation shall be computed as if the corporation were not an 
 80.27  "S" corporation for federal tax purposes. 
 80.28     Sec. 6.  Minnesota Statutes 1996, section 290.06, 
 80.29  subdivision 2c, is amended to read: 
 80.30     Subd. 2c.  [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 
 80.31  AND TRUSTS.] (a) The income taxes imposed by this chapter upon 
 80.32  married individuals filing joint returns and surviving spouses 
 80.33  as defined in section 2(a) of the Internal Revenue Code must be 
 80.34  computed by applying to their taxable net income the following 
 80.35  schedule of rates: 
 80.36     (1) On the first $19,910, 6 percent; 
 81.1      (2) On all over $19,910, but not over $79,120, 8 percent; 
 81.2      (3) On all over $79,120, 8.5 percent. 
 81.3      Married individuals filing separate returns, estates, and 
 81.4   trusts must compute their income tax by applying the above rates 
 81.5   to their taxable income, except that the income brackets will be 
 81.6   one-half of the above amounts.  
 81.7      (b) The income taxes imposed by this chapter upon unmarried 
 81.8   individuals must be computed by applying to taxable net income 
 81.9   the following schedule of rates: 
 81.10     (1) On the first $13,620, 6 percent; 
 81.11     (2) On all over $13,620, but not over $44,750, 8 percent; 
 81.12     (3) On all over $44,750, 8.5 percent. 
 81.13     (c) The income taxes imposed by this chapter upon unmarried 
 81.14  individuals qualifying as a head of household as defined in 
 81.15  section 2(b) of the Internal Revenue Code must be computed by 
 81.16  applying to taxable net income the following schedule of rates: 
 81.17     (1) On the first $16,770, 6 percent; 
 81.18     (2) On all over $16,770, but not over $67,390, 8 percent; 
 81.19     (3) On all over $67,390, 8.5 percent. 
 81.20     (d) In lieu of a tax computed according to the rates set 
 81.21  forth in this subdivision, the tax of any individual taxpayer 
 81.22  whose taxable net income for the taxable year is less than an 
 81.23  amount determined by the commissioner must be computed in 
 81.24  accordance with tables prepared and issued by the commissioner 
 81.25  of revenue based on income brackets of not more than $100.  The 
 81.26  amount of tax for each bracket shall be computed at the rates 
 81.27  set forth in this subdivision, provided that the commissioner 
 81.28  may disregard a fractional part of a dollar unless it amounts to 
 81.29  50 cents or more, in which case it may be increased to $1. 
 81.30     (e) An individual who is not a Minnesota resident for the 
 81.31  entire year must compute the individual's Minnesota income tax 
 81.32  as provided in this subdivision.  After the application of the 
 81.33  nonrefundable credits provided in this chapter, the tax 
 81.34  liability must then be multiplied by a fraction in which:  
 81.35     (1) The numerator is the individual's Minnesota source 
 81.36  federal adjusted gross income as defined in section 62 of the 
 82.1   Internal Revenue Code disregarding income or loss flowing from a 
 82.2   corporation having a valid election for the taxable year under 
 82.3   section 1362 of the Internal Revenue Code but which is not an 
 82.4   "S" corporation under section 290.9725 and increased by the 
 82.5   addition required for interest income from non-Minnesota state 
 82.6   and municipal bonds under section 290.01, subdivision 19a, 
 82.7   clause (1), after applying the allocation and assignability 
 82.8   provisions of section 290.081, clause (a), or 290.17; and 
 82.9      (2) the denominator is the individual's federal adjusted 
 82.10  gross income as defined in section 62 of the Internal Revenue 
 82.11  Code of 1986~~, as amended through April 15, 1995,~~ increased by 
 82.12  the ~~addition required for interest income from non-Minnesota~~ 
 82.13  ~~state and municipal bonds under section 290.01, subdivision 19a,~~ 
 82.14  ~~clause (1)~~ amounts specified in section 290.01, subdivision 19a, 
 82.15  clauses (1), (5), (6), and (7), and reduced by the amounts 
 82.16  specified in section 290.01, subdivision 19b, clauses (1), (11), 
 82.17  and (12). 
 82.18     Sec. 7.  Minnesota Statutes 1996, section 290.06, is 
 82.19  amended by adding a subdivision to read: 
 82.20     Subd. 26.  [COLLECTORS OF USED MOTOR OIL.] A person who 
 82.21  accepts used motor oil and used motor oil filters as defined in 
 82.22  section 325E.11, subdivisions 3 and 5, from the public may take 
 82.23  a credit against the tax liability under this chapter of $250 
 82.24  for any taxable year during which the taxpayer operates a 
 82.25  facility that qualifies for the reimbursement under section 
 82.26  325E.112, subdivision 2, or would qualify for the reimbursement 
 82.27  except that it does not accept contaminated motor oil.  In order 
 82.28  to claim the credit, the taxpayer must provide the commissioner 
 82.29  with a copy of a credit certificate issued to the taxpayer by 
 82.30  the commissioner of the pollution control agency verifying the 
 82.31  taxpayer's eligibility for this credit.  The commissioner of the 
 82.32  pollution control agency may issue no more than 200 certificates 
 82.33  for any calendar year. 
 82.34     Sec. 8.  Minnesota Statutes 1996, section 290.067, 
 82.35  subdivision 2, is amended to read: 
 82.36     Subd. 2.  [LIMITATIONS.] The credit for expenses incurred 
 83.1   for the care of each dependent shall not exceed $720 in any 
 83.2   taxable year, and the total credit for all dependents of a 
 83.3   claimant shall not exceed $1,440 in a taxable year.  The maximum 
 83.4   total credit shall be reduced according to the amount of the 
 83.5   income of the claimant and a spouse, if any, as follows:  
 83.6      income up to ~~$13,350~~ $17,430, $720 maximum for a claimant 
 83.7   with one dependent, and $1,440 for ~~all dependents~~ a claimant 
 83.8   with more than one dependent; 
 83.9      income over ~~$13,350~~ $17,430, the maximum credit for a 
 83.10  claimant with one dependent shall be reduced by ~~$18~~ $9 for 
 83.11  every ~~$350~~ $410 of additional income, ~~$36 for all dependents~~ up 
 83.12  to $8,200 of income in excess of the threshold amount as 
 83.13  adjusted under subdivision 2b and by $27 for every $410 of 
 83.14  income in excess of that second threshold amount; the maximum 
 83.15  credit for a claimant with more than one dependent shall be 
 83.16  reduced by $18 for every $410 of additional income up to $8,200 
 83.17  in excess of the threshold amount as adjusted under subdivision 
 83.18  26, and by $54 for every $410 of income in excess of that second 
 83.19  threshold amount. 
 83.20     The commissioner shall construct and make available to 
 83.21  taxpayers tables showing the amount of the credit at various 
 83.22  levels of income and expenses.  The tables shall follow the 
 83.23  schedule contained in this subdivision, except that the 
 83.24  commissioner may graduate the transitions between expenses and 
 83.25  income brackets. 
 83.26     Sec. 9.  Minnesota Statutes 1997 Supplement, section 
 83.27  290.0671, subdivision 1, is amended to read: 
 83.28     Subdivision 1.  [CREDIT ALLOWED.] An individual is allowed 
 83.29  a credit against the tax imposed by this chapter equal to a 
 83.30  percentage of ~~the credit for which the individual is~~ 
 83.31  ~~eligible~~ earned income.  To receive a credit, a taxpayer must be 
 83.32  eligible for a credit under section 32 of the Internal Revenue 
 83.33  Code.  ~~The percentage is 15 for individuals without a qualifying~~ 
 83.34  ~~child, and 25 for individuals with at least one qualifying~~ 
 83.35  ~~child.  For purposes of this section, "qualifying child" has the~~ 
 83.36  ~~meaning given in section 32(c)(3) of the Internal Revenue Code.~~ 
 84.1      (a) For individuals with no qualifying children, the credit 
 84.2   equals 1.1475 percent of the first $4,460 of earned income.  The 
 84.3   credit is reduced by 1.1475 percent of earned income or modified 
 84.4   adjusted gross income, whichever is greater, in excess of 
 84.5   $5,570, but in no case is the credit less than zero. 
 84.6      (b) For individuals with one qualifying child, the credit 
 84.7   equals 8.5 percent of the first $6,680 of earned income.  The 
 84.8   credit is reduced by 4.77 percent of earned income or modified 
 84.9   adjusted gross income, whichever is greater, in excess of 
 84.10  $14,560, but in no case is the credit less than zero. 
 84.11     (c) For individuals with two or more qualifying children, 
 84.12  the credit equals ten percent of the first $9,390 of earned 
 84.13  income.  The credit is reduced by 6.98 percent of earned income 
 84.14  or modified adjusted gross income, whichever is greater, in 
 84.15  excess of $16,640, but in no case is the credit less than zero. 
 84.16     For a nonresident or part-year resident, the credit 
 84.17  determined under section 32 of the Internal Revenue Code must be 
 84.18  allocated based on the percentage calculated under section 
 84.19  290.06, subdivision 2c, paragraph (e). 
 84.20     For a person who was a resident for the entire tax year and 
 84.21  has earned income not subject to tax under this chapter, the 
 84.22  credit must be allocated based on the ratio of federal adjusted 
 84.23  gross income reduced by the earned income not subject to tax 
 84.24  under this chapter over federal adjusted gross income. 
 84.25     Sec. 10.  Minnesota Statutes 1996, section 290.0671, is 
 84.26  amended by adding a subdivision to read: 
 84.27     Subd. 1a.  [DEFINITIONS.] For purposes of this section, the 
 84.28  terms "qualifying child," "earned income," and "modified 
 84.29  adjusted gross income" have the meanings given in section 32(c) 
 84.30  of the Internal Revenue Code. 
 84.31     Sec. 11.  Minnesota Statutes 1996, section 290.0671, is 
 84.32  amended by adding a subdivision to read: 
 84.33     Subd. 7.  [INFLATION ADJUSTMENT.] The earned income amounts 
 84.34  used to calculate the credit and the income thresholds at which 
 84.35  the maximum credit begins to be reduced in subdivision 1 must be 
 84.36  adjusted for inflation.  The commissioner shall adjust the 
 85.1   earned income and threshold amounts by the percentage determined 
 85.2   under section 290.06, subdivision 2d, for the taxable year. 
 85.3      Sec. 12.  Minnesota Statutes 1997 Supplement, section 
 85.4   290.0672, subdivision 1, is amended to read: 
 85.5      Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
 85.6   section, the following terms have the meanings given. 
 85.7      (b) "Long-term care insurance" means a policy that: 
 85.8      (1) qualifies for a deduction under section 213 of the 
 85.9   Internal Revenue Code, disregarding the 7.5 percent income test; 
 85.10  or meets the requirements given in section 62A.46; or provides 
 85.11  similar coverage issued under the laws of another jurisdiction; 
 85.12  and 
 85.13     (2) does not have a lifetime long-term care benefit limit 
 85.14  of less than $100,000; and 
 85.15     (3) ~~includes~~ provides an offer of inflation protection that 
 85.16  meets or exceeds the inflation protection requirements of ~~the~~ 
 85.17  ~~long-term care insurance model regulation cited under~~ section 
 85.18  ~~7702B(g)(2)(A)(i)(x) of the Internal Revenue Code~~ 62S.23. 
 85.19     (c) "Qualified beneficiary" means the taxpayer or the 
 85.20  taxpayer's spouse.  
 85.21     (d) "Premiums deducted in determining federal taxable 
 85.22  income" means the lesser of (1) long-term care insurance 
 85.23  premiums that qualify as deductions under section 213 of the 
 85.24  Internal Revenue Code; and (2) the total amount deductible for 
 85.25  medical care under section 213 of the Internal Revenue Code. 
 85.26     Sec. 13.  Minnesota Statutes 1997 Supplement, section 
 85.27  290.0673, subdivision 6, is amended to read: 
 85.28     Subd. 6.  [~~NONREFUNDABLE~~ REFUNDABLE.] The taxpayer must use 
 85.29  the tax credit for the taxable year in which the certificate is 
 85.30  issued to the employer.  If the credit for the taxable year ~~may~~ 
 85.31  ~~not exceed~~ exceeds the liability for tax under ~~section 290.06,~~ 
 85.32  ~~subdivision 1,~~ chapter 290 for the taxable year, ~~before~~ 
 85.33  ~~reduction by the nonrefundable credits allowed under this~~ 
 85.34  ~~chapter~~ the commissioner shall refund the excess to the 
 85.35  taxpayer.  An amount sufficient to pay the refunds authorized by 
 85.36  this subdivision is appropriated to the commissioner from the 
 86.1   general fund. 
 86.2      Sec. 14.  [290.0681] [CREDIT FOR EMPLOYER CONTRIBUTIONS FOR 
 86.3   EMPLOYEE HOUSING.] 
 86.4      Subdivision 1.  [CREDIT ALLOWED.] Subject to the 
 86.5   limitations and conditions of this section, a taxpayer is 
 86.6   allowed a credit against the tax imposed by section 290.06, 
 86.7   subdivision 1 or 2c, in an amount equal to 50 percent of the 
 86.8   amount certified to the commissioner by the commissioner of the 
 86.9   housing finance agency as qualifying employer housing 
 86.10  contributions made by the taxpayer during the taxable year. 
 86.11     Subd. 2.  [DEFINITION.] For the purpose of this section, a 
 86.12  "qualifying employer housing contribution" means a cash 
 86.13  contribution made by an employer (1) as capital for production 
 86.14  of affordable housing; (2) for direct down payment assistance 
 86.15  for employees; or (3) to a fund administered by a nonprofit 
 86.16  corporation or government agency and used as capital for 
 86.17  production of affordable housing or direct down payment 
 86.18  assistance.  A contribution is a qualifying contribution only if 
 86.19  the commissioner of the housing finance agency determines that 
 86.20  its use is consistent with the requirements of section 
 86.21  42(m)(2)(A) of the Internal Revenue Code. 
 86.22     Subd. 3.  [CREDIT ALLOCATION.] An employer must apply each 
 86.23  year to the commissioner of the housing finance agency for an 
 86.24  allocation of qualifying employer housing contribution tax 
 86.25  credits.  The credit is at a rate of 50 percent of qualifying 
 86.26  employer housing contributions.  A credit need not be allocated 
 86.27  for all of an employer's qualifying contributions.  The 
 86.28  commissioner shall notify the commissioner of revenue regarding 
 86.29  the identity of each employer that has been allocated the tax 
 86.30  credits for the following calendar year, by September 1 of each 
 86.31  year.  The commissioner of the housing finance agency shall give 
 86.32  priority to employers that collaborate and receive matching 
 86.33  funds from a nonprofit organization and projects which best 
 86.34  promote the economic vitality of the community or region they 
 86.35  are located in. 
 86.36     Subd. 4.  [LIMITATIONS; CARRYOVER.] (a) The credit allowed 
 87.1   to any taxpayer under this section may not exceed $250,000 for 
 87.2   any taxable year. 
 87.3      (b) The credit for the taxable year shall not exceed the 
 87.4   tax imposed on the taxpayer for the taxable year under section 
 87.5   290.06, subdivision 1 or 2c, reduced by the sum of the 
 87.6   nonrefundable credits allowed under this chapter. 
 87.7      (c) If the amount of the credit determined under this 
 87.8   section for any taxable year exceeds the limitation under 
 87.9   paragraph (b), the excess shall be a credit carryover to each of 
 87.10  the five succeeding taxable years.  The entire amount of the 
 87.11  excess unused credit for the taxable year shall be carried, 
 87.12  first to the earliest of the taxable years to which the credit 
 87.13  may be carried, and then to each successive year to which the 
 87.14  credit may be carried.  The amount of the unused credit which 
 87.15  may be added under this paragraph shall not exceed the 
 87.16  taxpayer's liability for tax less any additional credit under 
 87.17  this section for the current taxable year. 
 87.18     (d) The total credit allocation allowed for all taxpayers 
 87.19  is limited to $2,000,000.  The total credit remains available 
 87.20  until it is completely allocated or until December 31, 2003, 
 87.21  whichever occurs earlier.  Unallocated credits carry over from 
 87.22  one year to the next. 
 87.23     Sec. 15.  Minnesota Statutes 1996, section 290.091, 
 87.24  subdivision 2, is amended to read: 
 87.25     Subd. 2.  [DEFINITIONS.] For purposes of the tax imposed by 
 87.26  this section, the following terms have the meanings given: 
 87.27     (a) "Alternative minimum taxable income" means the sum of 
 87.28  the following for the taxable year: 
 87.29     (1) the taxpayer's federal alternative minimum taxable 
 87.30  income as defined in section 55(b)(2) of the Internal Revenue 
 87.31  Code; 
 87.32     (2) the taxpayer's itemized ~~deductions~~ deduction allowed in 
 87.33  computing federal alternative minimum taxable income~~, but~~ 
 87.34  ~~excluding the Minnesota charitable contribution deduction and~~ 
 87.35  ~~the medical expense deduction~~ and described in section 67(b)(1), 
 87.36  (2), and (4) of the Internal Revenue Code; 
 88.1      (3) for depletion allowances computed under section 613A(c) 
 88.2   of the Internal Revenue Code, with respect to each property (as 
 88.3   defined in section 614 of the Internal Revenue Code), to the 
 88.4   extent not included in federal alternative minimum taxable 
 88.5   income, the excess of the deduction for depletion allowable 
 88.6   under section 611 of the Internal Revenue Code for the taxable 
 88.7   year over the adjusted basis of the property at the end of the 
 88.8   taxable year (determined without regard to the depletion 
 88.9   deduction for the taxable year); 
 88.10     (4) ~~to the extent not included in federal alternative~~ 
 88.11  ~~minimum taxable income, the amount of the tax preference for~~ 
 88.12  ~~intangible drilling cost under section 57(a)(2) of the Internal~~ 
 88.13  ~~Revenue Code determined without regard to subparagraph (E);~~ 
 88.14     ~~(5)~~ to the extent not included in federal alternative 
 88.15  minimum taxable income, the amount of interest income as 
 88.16  provided by section 290.01, subdivision 19a, clause (1); 
 88.17     (5) amounts added to federal taxable income as provided by 
 88.18  section 290.01, subdivision 19a, clauses (5), (6), and (7); 
 88.19     less the sum of the amounts determined under the following 
 88.20  clauses (1) to ~~(3)~~ (4): 
 88.21     (1) interest income as defined in section 290.01, 
 88.22  subdivision 19b, clause (1); 
 88.23     (2) an overpayment of state income tax as provided by 
 88.24  section 290.01, subdivision 19b, clause (2), to the extent 
 88.25  included in federal alternative minimum taxable income; ~~and~~ 
 88.26     (3) the amount of investment interest paid or accrued 
 88.27  within the taxable year on indebtedness to the extent that the 
 88.28  amount does not exceed net investment income, as defined in 
 88.29  section 163(d)(4) of the Internal Revenue Code.  Interest does 
 88.30  not include amounts deducted in computing federal adjusted gross 
 88.31  income; 
 88.32     (4) amounts subtracted from federal taxable income as 
 88.33  provided by section 290.01, subdivision 19b, clauses (11) and 
 88.34  (12); and 
 88.35     (5) the Minnesota charitable contribution deduction. 
 88.36     In the case of an estate or trust, alternative minimum 
 89.1   taxable income must be computed as provided in section 59(c) of 
 89.2   the Internal Revenue Code. 
 89.3      (b) "Investment interest" means investment interest as 
 89.4   defined in section 163(d)(3) of the Internal Revenue Code. 
 89.5      (c) "Tentative minimum tax" equals seven percent of 
 89.6   alternative minimum taxable income after subtracting the 
 89.7   exemption amount determined under subdivision 3. 
 89.8      (d) "Regular tax" means the tax that would be imposed under 
 89.9   this chapter (without regard to this section and section 
 89.10  290.032), reduced by the sum of the nonrefundable credits 
 89.11  allowed under this chapter.  
 89.12     (e) "Net minimum tax" means the minimum tax imposed by this 
 89.13  section. 
 89.14     (f) "Minnesota charitable contribution deduction" means a 
 89.15  charitable contribution deduction under section 170 of the 
 89.16  Internal Revenue Code to or for the use of an entity described 
 89.17  in section 290.21, subdivision 3, clauses (a) to (e).  When the 
 89.18  federal deduction for charitable contributions is limited under 
 89.19  section 170(b) of the Internal Revenue Code, the allowable 
 89.20  contributions in the year of contribution are deemed to be first 
 89.21  contributions to entities described in section 290.21, 
 89.22  subdivision 3, clauses (a) to (e). 
 89.23     Sec. 16.  Minnesota Statutes 1997 Supplement, section 
 89.24  290.091, subdivision 6, is amended to read: 
 89.25     Subd. 6.  [CREDIT FOR PRIOR YEARS' LIABILITY.] (a) A credit 
 89.26  is allowed against the tax imposed by this chapter on 
 89.27  individuals, trusts, and estates equal to the minimum tax credit 
 89.28  for the taxable year.  The minimum tax credit equals the 
 89.29  adjusted net minimum tax for taxable years beginning after 
 89.30  December 31, 1988, reduced by the minimum tax credits allowed in 
 89.31  a prior taxable year.  The credit may not exceed the excess (if 
 89.32  any) for the taxable year of 
 89.33     (1) the regular tax, over 
 89.34     (2) the greater of (i) the tentative alternative minimum 
 89.35  tax, or (ii) zero. 
 89.36     (b) The adjusted net minimum tax for a taxable year equals 
 90.1   the lesser of the net minimum tax or the excess (if any) of 
 90.2      (1) the tentative minimum tax, over 
 90.3      (2) seven percent of the sum of 
 90.4      (i) adjusted gross income as defined in section 62 of the 
 90.5   Internal Revenue Code, 
 90.6      (ii) interest income as defined in section 290.01, 
 90.7   subdivision 19a, clause (1), 
 90.8      (iii) the amount added to federal taxable income as 
 90.9   provided by section 290.01, subdivision 19a, clauses (5), (6), 
 90.10  and (7), 
 90.11     (iv) the itemized deduction allowed for computing federal 
 90.12  alternative income under section 56(b) of the Internal Revenue 
 90.13  Code and not disallowed for Minnesota purposes under subdivision 
 90.14  2, paragraph (a), clause (2), of the first series of clauses, 
 90.15     (v) interest on specified private activity bonds, as 
 90.16  defined in section 57(a)(5) of the Internal Revenue Code, to the 
 90.17  extent not included under clause (ii), 
 90.18     ~~(iv)~~ (vi) depletion as defined in section 57(a)(1), 
 90.19  determined without regard to the last sentence of paragraph (1), 
 90.20  of the Internal Revenue Code, less 
 90.21     ~~(v)~~ (vii) the deductions allowed in computing alternative 
 90.22  minimum taxable income provided in subdivision 2, paragraph (a), 
 90.23  clause (2) of the first series of clauses and clauses (1), 
 90.24  (2), ~~and~~ (3), and (5) of the second series of clauses, and 
 90.25     ~~(vi)~~ (viii) the exemption amount determined under 
 90.26  subdivision 3. 
 90.27     In the case of an individual who is not a Minnesota 
 90.28  resident for the entire year, adjusted net minimum tax must be 
 90.29  multiplied by the fraction defined in section 290.06, 
 90.30  subdivision 2c, paragraph (e).  In the case of a trust or 
 90.31  estate, adjusted net minimum tax must be multiplied by the 
 90.32  fraction defined under subdivision 4, paragraph (b). 
 90.33     Sec. 17.  Minnesota Statutes 1996, section 290.10, is 
 90.34  amended to read: 
 90.35     290.10 [NONDEDUCTIBLE ITEMS.] 
 90.36     Except as provided in section 290.17, subdivision 4, 
 91.1   paragraph (i), in computing the net income of a ~~corporation~~ 
 91.2   taxpayer no deduction shall in any case be allowed for expenses, 
 91.3   interest and taxes connected with or allocable against the 
 91.4   production or receipt of all income not included in the measure 
 91.5   of the tax imposed by this chapter, except that for corporations 
 91.6   engaged in the business of mining or producing iron ore, the 
 91.7   mining of which is subject to the occupation tax imposed by 
 91.8   section 298.01, subdivision 4, this shall not prevent the 
 91.9   deduction of expenses and other items to the extent that the 
 91.10  expenses and other items are allowable under this chapter and 
 91.11  are not deductible, capitalizable, retainable in basis, or taken 
 91.12  into account by allowance or otherwise in computing the 
 91.13  occupation tax and do not exceed the amounts taken for federal 
 91.14  income tax purposes for that year.  Occupation taxes imposed 
 91.15  under chapter 298, royalty taxes imposed under chapter 299, or 
 91.16  depletion expenses may not be deducted under this clause. 
 91.17     Sec. 18.  Minnesota Statutes 1996, section 290.191, 
 91.18  subdivision 1, is amended to read: 
 91.19     Subdivision 1.  [GENERAL RULE.] (a) Except as otherwise 
 91.20  provided in section 290.17, subdivision 5, the net income from a 
 91.21  trade or business carried on partly within and partly without 
 91.22  this state must be apportioned to this state as provided in this 
 91.23  section.  
 91.24     (b) For purposes of this section, "state" means a state of 
 91.25  the United States, the District of Columbia, the commonwealth of 
 91.26  Puerto Rico, or any territory or possession of the United States 
 91.27  or any foreign country. 
 91.28     (c) For purposes of this section, "commercial domicile" 
 91.29  means the headquarters of the trade or business, that is, the 
 91.30  place from which the trade or business is principally managed 
 91.31  and directed.  If a taxpayer is organized under the laws of a 
 91.32  foreign country, or of the Commonwealth of Puerto Rico, or any 
 91.33  territory or possession of the United States, the taxpayer's 
 91.34  commercial domicile is the state that the taxpayer has declared 
 91.35  to be its home state under the International Banking Act of 
 91.36  1978; or, if the taxpayer has not made such a declaration or is 
 92.1   not required to make such a declaration, its commercial domicile 
 92.2   for the purpose of this section is the state of the United 
 92.3   States or the District of Columbia to which the greatest number 
 92.4   of employees are regularly connected or out of which they are 
 92.5   working, irrespective of where the services of the employees are 
 92.6   performed, as of the last day of the taxable year. 
 92.7      Sec. 19.  Minnesota Statutes 1996, section 290.191, 
 92.8   subdivision 6, is amended to read: 
 92.9      Subd. 6.  [DETERMINATION OF RECEIPTS FACTOR FOR FINANCIAL 
 92.10  INSTITUTIONS.] (a) For purposes of this section, the rules in 
 92.11  this subdivision ~~and subdivision 8~~ apply in determining the 
 92.12  receipts factor for financial institutions.  
 92.13     (b) "Receipts" for this purpose means gross income, 
 92.14  including net taxable gain on disposition of assets, including 
 92.15  securities and money market instruments, when derived from 
 92.16  transactions and activities in the regular course of the 
 92.17  taxpayer's trade or business.  
 92.18     (c) "Money market instruments" means federal funds sold and 
 92.19  securities purchased under agreements to resell, commercial 
 92.20  paper, banker's acceptances, and purchased certificates of 
 92.21  deposit and similar instruments to the extent that the 
 92.22  instruments are reflected as assets under generally accepted 
 92.23  accounting principles.  
 92.24     (d) "Securities" means United States Treasury securities, 
 92.25  obligations of United States government agencies and 
 92.26  corporations, obligations of state and political subdivisions, 
 92.27  corporate stock, bonds, and other securities, participations in 
 92.28  securities backed by mortgages held by United States or state 
 92.29  government agencies, loan-backed securities and similar 
 92.30  investments to the extent the investments are reflected as 
 92.31  assets under generally accepted accounting principles.  
 92.32     (e) Receipts from the lease or rental of real or tangible 
 92.33  personal property, including both finance leases and true 
 92.34  leases, must be attributed to this state if the property is 
 92.35  located in this state.  Receipts from the lease or rental of 
 92.36  tangible personal property that is characteristically moving 
 93.1   property, including, but not limited to, motor vehicles, rolling 
 93.2   stock, aircraft, vessels, or mobile equipment are included in 
 93.3   the numerator of the receipts factor to the extent that the 
 93.4   property is used in this state.  The extent of the use of moving 
 93.5   property is determined as follows: 
 93.6      (1) A motor vehicle is used wholly in the state in which it 
 93.7   is registered. 
 93.8      (2) The extent that rolling stock is used in this state is 
 93.9   determined by multiplying the receipts from the lease or rental 
 93.10  of the rolling stock by a fraction, the numerator of which is 
 93.11  the miles traveled within this state by the leased or rented 
 93.12  rolling stock and the denominator of which is the total miles 
 93.13  traveled by the leased or rented rolling stock. 
 93.14     (3) The extent that an aircraft is used in this state is 
 93.15  determined by multiplying the receipts from the lease or rental 
 93.16  of the aircraft by a fraction, the numerator of which is the 
 93.17  number of landings of the aircraft in this state and the 
 93.18  denominator of which is the total number of landings of the 
 93.19  aircraft. 
 93.20     (4) The extent that a vessel, mobile equipment, or other 
 93.21  mobile property is used in the state is determined by 
 93.22  multiplying the receipts from the lease or rental of property by 
 93.23  a fraction, the numerator of which is the number of days during 
 93.24  the taxable year the property was in this state and the 
 93.25  denominator of which is the total days in the taxable year. 
 93.26     (f) Interest income and other receipts from assets in the 
 93.27  nature of loans that are secured primarily by real estate or 
 93.28  tangible personal property must be attributed to this state if 
 93.29  the security property is located in this state under the 
 93.30  principles stated in paragraph (e).  
 93.31     (g) Interest income and other receipts from consumer loans 
 93.32  not secured by real or tangible personal property that are made 
 93.33  to residents of this state, whether at a place of business, by 
 93.34  traveling loan officer, by mail, by telephone or other 
 93.35  electronic means, must be attributed to this state.  
 93.36     (h) Interest income and other receipts from commercial 
 94.1   loans and installment obligations that are unsecured by real or 
 94.2   tangible personal property or secured by intangible property 
 94.3   must be attributed to this state if the ~~proceeds of the loan are~~ 
 94.4   ~~to be applied in this state.  If it cannot be determined where~~ 
 94.5   ~~the funds are to be applied, the income and receipts are~~ 
 94.6   ~~attributed to the state in which the office of the borrower from~~ 
 94.7   ~~which the application would be made in the regular course of~~ 
 94.8   ~~business is located.  If this cannot be determined, the~~ 
 94.9   ~~transaction is disregarded in the apportionment~~ 
 94.10  ~~formula~~ borrower's commercial domicile is located in this state. 
 94.11     (i) Interest income and other receipts from a participating 
 94.12  financial institution's portion of participation and syndication 
 94.13  loans must be attributed under paragraphs (e) to (h).  A 
 94.14  participation loan is an arrangement in which a lender makes a 
 94.15  loan to a borrower and then sells, assigns, or otherwise 
 94.16  transfers all or a part of the loan to a purchasing financial 
 94.17  institution.  A syndication loan is a loan transaction involving 
 94.18  multiple financial institutions in which all the lenders are 
 94.19  named as parties to the loan documentation, are known to the 
 94.20  borrower, and have privity of contract with the borrower.  
 94.21     (j) Interest income and other receipts including service 
 94.22  charges from financial institution credit card and travel and 
 94.23  entertainment credit card receivables and credit card holders' 
 94.24  fees must be attributed to the state to which the card charges 
 94.25  and fees are regularly billed.  
 94.26     (k) The receipts factor includes net gains (but not less 
 94.27  than zero) from the sale of credit card receivables, the 
 94.28  numerator of which is determined by multiplying the net gains by 
 94.29  a fraction, the numerator of which is the amount in the 
 94.30  numerator of the receipts factor under paragraph (j) and the 
 94.31  denominator of which is the taxpayer's total amount of interest 
 94.32  and fees or penalties in the nature of interest from credit card 
 94.33  receivables and fees charged to cardholders. 
 94.34     (1) The receipts factor includes all credit card issuer's 
 94.35  reimbursement fees, the numerator of which is determined by 
 94.36  multiplying the reimbursement fees by a fraction, the numerator 
 95.1   of which is the amount included in the numerator of the receipts 
 95.2   factor under paragraph (j) and the denominator of which is the 
 95.3   total amount of interest and fees or penalties in the nature of 
 95.4   interest from credit card receivables and fees charged to 
 95.5   cardholders. 
 95.6      (m) Merchant discount income derived from financial 
 95.7   institution credit card holder transactions with a merchant must 
 95.8   be attributed to the state ~~in which the merchant is located.  In~~ 
 95.9   ~~the case of merchants located within and outside the state, only~~ 
 95.10  ~~receipts from merchant discounts attributable to sales made from~~ 
 95.11  ~~locations within the state are attributed to this state.  It is~~ 
 95.12  ~~presumed, subject to rebuttal, that the location of a merchant~~ 
 95.13  ~~is the address shown on the invoice submitted by the merchant to~~ 
 95.14  ~~the taxpayer~~ of the merchant's commercial domicile. 
 95.15     (n) The receipts from the servicing of loans are included 
 95.16  in the receipts factor and are attributed to this state as 
 95.17  follows: 
 95.18     (1) The numerator of the receipts factor includes loan 
 95.19  servicing fees derived from loans secured by real estate or 
 95.20  tangible personal property multiplied by a fraction, the 
 95.21  numerator of which is the amount included in the numerator of 
 95.22  the receipts factor under paragraph (f) and the denominator of 
 95.23  which is the total amount of interest and fees or penalties in 
 95.24  the nature of interest from loans secured by real estate and 
 95.25  tangible personal property. 
 95.26     (2) The numerator of the receipts factor includes loan 
 95.27  servicing fees derived from consumer loans not secured by real 
 95.28  estate or tangible personal property multiplied by a fraction, 
 95.29  the numerator of which is the amount included in the numerator 
 95.30  of the receipts factor under paragraph (g) and the denominator 
 95.31  of which is the total amount of interest and fees or penalties 
 95.32  in the nature of interest from loans not secured by real estate 
 95.33  and tangible personal property. 
 95.34     (3) The numerator of the receipts factor includes loan 
 95.35  servicing fees derived from commercial loans and installment 
 95.36  obligations that are unsecured by real or tangible personal 
 96.1   property or secured by intangible property multiplied by a 
 96.2   fraction, the numerator of which is the amount included in the 
 96.3   numerator of the receipts factor under paragraph (h) and the 
 96.4   denominator of which is the total amount of interest and fees or 
 96.5   penalties in the nature of interest from commercial loans and 
 96.6   installment obligations that are unsecured by real or tangible 
 96.7   personal property or secured by intangible property. 
 96.8      (4) The numerator of the receipts factor includes loan 
 96.9   servicing fees derived from financial institution credit card 
 96.10  and travel and entertainment credit card receivables and credit 
 96.11  cardholders' fees multiplied by a fraction, the numerator of 
 96.12  which is the amount included in the numerator of the receipts 
 96.13  factor under paragraph (j) and the denominator of which is the 
 96.14  total amount of interest and fees or penalties in the nature of 
 96.15  interest from financial institution credit card and travel and 
 96.16  entertainment credit card receivables and credit cardholders' 
 96.17  fees. 
 96.18     (5) If the taxpayer receives loan servicing fees for 
 96.19  servicing either the secured or the unsecured loans of the 
 96.20  unrelated third party, the receipts are attributed under the 
 96.21  principles in paragraph (o). 
 96.22     ~~(l)~~ (o) Receipts from the performance of fiduciary and 
 96.23  other services must be attributed to the state in which the 
 96.24  services are received.  For the purposes of this section, 
 96.25  services provided to a corporation, partnership, or trust must 
 96.26  be attributed to a state where it has a fixed place of doing 
 96.27  business.  If the state where the services are received is not 
 96.28  readily determinable or is a state where the corporation, 
 96.29  partnership, or trust does not have a fixed place of doing 
 96.30  business, the services shall be deemed to be received at the 
 96.31  location of the office of the customer from which the services 
 96.32  were ordered in the regular course of the customer's trade or 
 96.33  business.  If the ordering office cannot be determined, the 
 96.34  services shall be deemed to be received at the office of the 
 96.35  customer to which the services are billed.  
 96.36     ~~(m)~~ (p) Receipts from the issuance of travelers checks and 
 97.1   money orders must be attributed to the state in which the checks 
 97.2   and money orders are purchased.  
 97.3      ~~(n)~~ (q) Receipts from investments of a financial 
 97.4   institution in securities and from money market instruments ~~must~~ 
 97.5   ~~be apportioned to this state based on the ratio that total~~ 
 97.6   ~~deposits from this state, its residents, including any business~~ 
 97.7   ~~with an office or other place of business in this state, its~~ 
 97.8   ~~political subdivisions, agencies, and instrumentalities bear to~~ 
 97.9   ~~the total deposits from all states, their residents, their~~ 
 97.10  ~~political subdivisions, agencies, and instrumentalities.  In the~~ 
 97.11  ~~case of an unregulated financial institution subject to this~~ 
 97.12  ~~section, these receipts are apportioned to this state based on~~ 
 97.13  ~~the ratio that its gross business income, excluding such~~ 
 97.14  ~~receipts, earned from sources within this state bears to gross~~ 
 97.15  ~~business income, excluding such receipts, earned from sources~~ 
 97.16  ~~within all states.  For purposes of this subdivision, deposits~~ 
 97.17  ~~made by this state, its residents, its political subdivisions,~~ 
 97.18  ~~agencies, and instrumentalities must be attributed to this~~ 
 97.19  ~~state, whether or not the deposits are accepted or maintained by~~ 
 97.20  ~~the taxpayer at locations~~ are attributed to this state if the 
 97.21  investments are properly assigned to a regular place of business 
 97.22  of the taxpayer within this state. 
 97.23     The taxpayer has the burden of proving that investments of 
 97.24  a financial institution in securities and from money market 
 97.25  instruments are properly assigned to a regular place of business 
 97.26  outside this state.  Where the day-to-day decisions regarding an 
 97.27  investment occur at more than one regular place of business, the 
 97.28  investment is considered to be located at the regular place of 
 97.29  business of the taxpayer where the investment or trading 
 97.30  policies and guidelines with respect to the investment are 
 97.31  established. 
 97.32     ~~(o)~~ (r) A financial institution's interest in property 
 97.33  described in section 290.015, subdivision 3, paragraph (b), is 
 97.34  included in the receipts factor in the same manner as assets in 
 97.35  the nature of securities or money market instruments are 
 97.36  included in paragraph ~~(n)~~ (q). 
 98.1      (s) Receipts from investments in securities and money 
 98.2   market instruments of financial institutions which are managed 
 98.3   by a third party are assigned to the commercial domicile of the 
 98.4   financial institution. 
 98.5      Sec. 20.  Minnesota Statutes 1996, section 290.191, 
 98.6   subdivision 11, is amended to read: 
 98.7      Subd. 11.  [FINANCIAL INSTITUTIONS; PROPERTY FACTOR.] (a) 
 98.8   For financial institutions, the property factor includes, as 
 98.9   well as tangible property, intangible property as set forth in 
 98.10  this subdivision.  
 98.11     (b) Intangible personal property must be included at its 
 98.12  tax basis for federal income tax purposes.  
 98.13     (c) Goodwill must not be included in the property factor.  
 98.14     (d) Coin and currency ~~located in this state must be~~ 
 98.15  ~~attributed to this state~~ must not be included in the property 
 98.16  factor.  
 98.17     (e) Lease financing receivables from both financial leases 
 98.18  and true leases must be attributed to this state if ~~and to the~~ 
 98.19  ~~extent that the property is located~~ the receivables are properly 
 98.20  assigned to a regular place of business of the taxpayer within 
 98.21  this state.  
 98.22     (f) Assets in the nature of loans ~~that are secured by real~~ 
 98.23  ~~or tangible personal property~~ must be attributed to this state 
 98.24  if ~~and to the extent that the security property is located~~ the 
 98.25  loans are properly assigned to a regular place of business of 
 98.26  the taxpayer within this state.  
 98.27     (g) ~~Assets in the nature of consumer loans and installment~~ 
 98.28  ~~obligations that are unsecured or secured by intangible property~~ 
 98.29  ~~must be attributed to this state if the loan was made to a~~ 
 98.30  ~~resident of this state.~~  
 98.31     ~~(h) Assets in the nature of commercial loan and installment~~ 
 98.32  ~~obligations that are unsecured by real or tangible personal~~ 
 98.33  ~~property or secured by intangible property must be attributed to~~ 
 98.34  ~~this state if the proceeds of the loan are to be applied in this~~ 
 98.35  ~~state.  If it cannot be determined where the funds are to be~~ 
 98.36  ~~applied, the assets must be attributed to the state in which~~ 
 99.1   ~~there is located the office of the borrower from which the~~ 
 99.2   ~~application would be made in the regular course of business.  If~~ 
 99.3   ~~this cannot be determined, the transaction is disregarded in the~~ 
 99.4   ~~apportionment formula.~~  
 99.5      ~~(i)~~ A participating financial institution's portion of 
 99.6   participation and syndication loans must be attributed under 
 99.7   paragraphs (e) ~~to (h)~~ and (f).  
 99.8      ~~(j)~~ (h) Financial institution credit card and travel and 
 99.9   entertainment credit card receivables must be attributed to the 
 99.10  state ~~to which the credit card charges and fees are regularly~~ 
 99.11  ~~billed~~ if the receivables are properly assigned to a regular 
 99.12  place of business of the taxpayer within the state.  
 99.13     ~~(k)~~ (i) Receivables arising from merchant discount income 
 99.14  derived from financial institution credit card holder 
 99.15  transactions with a merchant are attributed to the state ~~in~~ 
 99.16  ~~which the merchant is located.  In the case of merchants located~~ 
 99.17  ~~within and without the state, only receivables from merchant~~ 
 99.18  ~~discounts attributable to sales made from locations within the~~ 
 99.19  ~~state are attributed to this state.  It is presumed, subject to~~ 
 99.20  ~~rebuttal, that the location of a merchant is the address shown~~ 
 99.21  ~~on the invoice submitted by the merchant to the taxpayer~~ if the 
 99.22  receivables are properly assigned to a regular place of business 
 99.23  of the taxpayer within the state. 
 99.24     ~~(l)~~ (j) Assets in the nature of securities and money market 
 99.25  instruments ~~are apportioned to this state based upon the ratio~~ 
 99.26  ~~that total deposits from this state, its residents, its~~ 
 99.27  ~~political subdivisions, agencies and instrumentalities bear to~~ 
 99.28  ~~the total deposits from all states, their residents, their~~ 
 99.29  ~~political subdivisions, agencies and instrumentalities.  In the~~ 
 99.30  ~~case of an unregulated financial institution, the assets are~~ 
 99.31  ~~apportioned to this state based upon the ratio that its gross~~ 
 99.32  ~~business income earned from sources within this state bears to~~ 
 99.33  ~~gross business income earned from sources within all states.~~  
 99.34  ~~For purposes of this paragraph, deposits made by this state, its~~ 
 99.35  ~~residents, its political subdivisions, agencies, and~~ 
 99.36  ~~instrumentalities are attributed to this state, whether or not~~ 
100.1   ~~the deposits are accepted or maintained by the taxpayer at~~ 
100.2   ~~locations within this state~~ must not be included in the property 
100.3   factor. 
100.4      ~~(m)~~ (k) A financial institution's interest in any property 
100.5   described in section 290.015, subdivision 3, paragraph (b), ~~is~~ 
100.6   ~~included in the property factor in the same manner as assets in~~ 
100.7   ~~the nature of securities or money market instruments are~~ 
100.8   ~~included under paragraph (1)~~ must not be included in the 
100.9   property factor.  
100.10     (l) For the purposes of paragraphs (e) to (i), loan assets 
100.11  and receivables are properly assigned in this state if the 
100.12  preponderance of substantive contact occurred in this state.  In 
100.13  determining where the preponderance of substantive contact 
100.14  occurred, the following consideration should be given: 
100.15     (1) solicitation; 
100.16     (2) investigation; 
100.17     (3) negotiation; 
100.18     (4) approval; and 
100.19     (5) administration.  
100.20     Sec. 21.  Minnesota Statutes 1996, section 290.21, 
100.21  subdivision 3, is amended to read: 
100.22     Subd. 3.  An amount for contribution or gifts made within 
100.23  the taxable year: 
100.24     (a) to or for the use of the state of Minnesota, or any of 
100.25  its political subdivisions for exclusively public purposes, 
100.26     (b) to or for the use of any community chest, corporation, 
100.27  organization, trust, fund, association, or foundation located in 
100.28  and carrying on substantially all of its activities within this 
100.29  state, organized and operating exclusively for religious, 
100.30  charitable, public cemetery, scientific, literary, artistic, or 
100.31  educational purposes, or for the prevention of cruelty to 
100.32  children or animals, no part of the net earnings of which inures 
100.33  to the benefit of any private stockholder or individual, 
100.34     (c) to a fraternal society, order, or association, 
100.35  operating under the lodge system located in and carrying on 
100.36  substantially all of their activities within this state if such 
101.1   contributions or gifts are to be used exclusively for the 
101.2   purposes specified in clause (b), or for or to posts or 
101.3   organizations of war veterans or auxiliary units or societies of 
101.4   such posts or organizations, if they are within the state and no 
101.5   part of their net income inures to the benefit of any private 
101.6   shareholder or individual, 
101.7      (d) to or for the use of the United States of America for 
101.8   exclusively public purposes if the contribution or gift consists 
101.9   of real property located in Minnesota, 
101.10     (e) to or for the use of a foundation if the foundation is 
101.11  organized and operated exclusively for a purpose in clause (b), 
101.12  and has no part of its net earnings inuring to the benefit of a 
101.13  private shareholder or individual, but does not carry on 
101.14  substantially all of its activities within this state.  The 
101.15  deduction under this clause equals the amount of the 
101.16  corporation's contributions or gifts to the foundation within 
101.17  the taxable year multiplied by a fraction equal to the ratio of 
101.18  the foundation's total expenditures during the taxable year for 
101.19  the benefit of organizations described in clause (b) to the 
101.20  foundation's total expenditures during the taxable year, 
101.21     (f) the total deduction hereunder shall not exceed 15 
101.22  percent of the taxpayer's taxable net income less the deductions 
101.23  allowable under this section other than those for contributions 
101.24  or gifts, 
101.25     (g) in the case of a corporation reporting its taxable 
101.26  income on the accrual basis, if:  (A) the board of directors 
101.27  authorizes a charitable contribution during any taxable year, 
101.28  and (B) payment of such contribution is made after the close of 
101.29  such taxable year and on or before the 15th day of the third 
101.30  month following the close of such taxable year; then the 
101.31  taxpayer may elect to treat such contribution as paid during 
101.32  such taxable year.  The election may be made only at the time of 
101.33  the filing of the return for such taxable year, and shall be 
101.34  signified in such manner as the commissioner shall by rules 
101.35  prescribe, 
101.36     (h) in the case of a contribution of ordinary income or 
102.1   capital gains property, the amount allowed as a deduction is 
102.2   limited to the federal amount deductible under section 170(e) of 
102.3   the Internal Revenue Code. 
102.4      Sec. 22.  Minnesota Statutes 1997 Supplement, section 
102.5   290.371, subdivision 2, is amended to read: 
102.6      Subd. 2.  [EXEMPTIONS.] A corporation is not required to 
102.7   file a notice of business activities report if:  
102.8      (1) by the end of an accounting period for which it was 
102.9   otherwise required to file a notice of business activities 
102.10  report under this section, it had received a certificate of 
102.11  authority to do business in this state; 
102.12     (2) a timely return has been filed under section 289A.08; 
102.13     (3) the corporation is exempt from taxation under this 
102.14  chapter pursuant to section 290.05; or 
102.15     (4) the corporation's activities in Minnesota, or the 
102.16  interests in property which it owns, consist solely of 
102.17  activities or property exempted from jurisdiction to tax under 
102.18  section 290.015, subdivision 3, paragraph (b)~~; or~~ 
102.19     ~~(5) the corporation is an "S" corporation under section~~ 
102.20  ~~290.9725~~. 
102.21     Sec. 23.  Laws 1997, chapter 231, article 1, section 16, as 
102.22  amended by Laws 1997, First Special Session chapter 5, section 
102.23  35, as amended by Laws 1997, Third Special Session chapter 3, 
102.24  section 11, is amended to read: 
102.25     Sec. 16.  [PROPERTY TAX REBATE.] 
102.26     (a) A credit is allowed against the tax imposed under 
102.27  Minnesota Statutes, chapter 290, to an individual, other than as 
102.28  a dependent, as defined in sections 151 and 152 of the Internal 
102.29  Revenue Code, disregarding section 152(b)(3) of the Internal 
102.30  Revenue Code, equal to 20 percent of the qualified property tax 
102.31  paid ~~in calendar year 1997~~ before January 1, 1998, for taxes 
102.32  assessed in 1996.  
102.33     (b) For property owned and occupied by the taxpayer during 
102.34  1997, qualified tax means property taxes payable as defined in 
102.35  Minnesota Statutes, section 290A.03, subdivision 13, assessed in 
102.36  1996 and payable in 1997, except the requirement that the 
103.1   taxpayer own and occupy the property on January 2, 1997, does 
103.2   not apply.  The credit is allowed only to the individual and 
103.3   spouse, if any, who paid the tax, whether directly, through an 
103.4   escrow arrangement, or under a contractual agreement for the 
103.5   purchase or sale of the property.  In the case of agricultural 
103.6   land assessed as part of a homestead pursuant to section 273.13, 
103.7   subdivision 23, the owner is allowed to calculate the credit on 
103.8   all property taxes on the homestead, except to the extent the 
103.9   owner is required to furnish a rent certificate under section 
103.10  290A.19 to a tenant leasing a part of the farm homestead. 
103.11     (c) For a renter, the qualified property tax means the 
103.12  amount of rent constituting property taxes under Minnesota 
103.13  Statutes, section 290A.03, subdivision 11, based on rent paid in 
103.14  1997.  If two or more renters could be claimants under Minnesota 
103.15  Statutes, chapter 290A with regard to the rent constituting 
103.16  property taxes, the rules under Minnesota Statutes, section 
103.17  290A.03, subdivision 8, paragraph (f), applies to determine the 
103.18  amount of the credit for the individual. 
103.19     (d) For an individual who both owned and rented principal 
103.20  residences in calendar year 1997, qualified taxes are the sum of 
103.21  the amounts under paragraphs (a) and (b). 
103.22     (e) If the amount of the credit under this subdivision 
103.23  exceeds the taxpayer's tax liability under this chapter, the 
103.24  commissioner shall refund the excess. 
103.25     (f) To claim a credit under this subdivision, the taxpayer 
103.26  must attach a copy of the property tax statement and certificate 
103.27  of rent paid, as applicable, and provide any additional 
103.28  information the commissioner requires. 
103.29     (g) An amount sufficient to pay refunds under this 
103.30  subdivision is appropriated to the commissioner from the general 
103.31  fund. 
103.32     (h) This credit applies to taxable years beginning after 
103.33  December 31, 1996, and before January 1, 1998. 
103.34     (i) Payment of the credit under this section is subject to 
103.35  Minnesota Statutes, chapter 270A, and any other provision 
103.36  applicable to refunds under Minnesota Statutes, chapter 290. 
104.1      Sec. 24.  Laws 1997, chapter 231, article 5, section 18, 
104.2   subdivision 1, is amended to read: 
104.3      Subdivision 1.  [COMMISSION RESPONSIBILITIES.] (a) The 
104.4   legislative coordinating commission shall prepare studies of 
104.5   business taxation and the taxation of telecommunications 
104.6   services during the ~~1997-98~~ 1998 interim and the 1999 
104.7   legislative session, as provided by this section.  The 
104.8   commission is responsible for managing any contracts under this 
104.9   section and for preparing the studies.  It may delegate any or 
104.10  all of its responsibilities under this section to the 
104.11  legislative commission on planning and fiscal policy. 
104.12     (b) For the business tax study under subdivision 2, the 
104.13  commission may appoint a formal or informal bipartisan working 
104.14  group of house and senate members to oversee and coordinate the 
104.15  study. 
104.16     (c) For the study of the taxation of telecommunications 
104.17  services under subdivision 4, the commission shall appoint a 
104.18  bipartisan working group that includes house and senate members 
104.19  and members of the public, at least two of whom are 
104.20  representatives of Internet service businesses who are 
104.21  knowledgeable about the technologies and practices of the 
104.22  Internet and at least two of whom are the representatives of 
104.23  businesses that conduct commerce on the Internet. 
104.24     Sec. 25.  [STUDY OF HOME CARE TAX INCENTIVES.] 
104.25     The commissioners of revenue and human services shall 
104.26  conduct a study on the issue of the effectiveness of tax 
104.27  incentives to encourage people to provide care for elderly or 
104.28  disabled individuals in their homes.  The study must include 
104.29  analysis of the most effective types of incentives and their 
104.30  cost.  The commissioners shall transmit the conclusions of the 
104.31  study in a report to the legislature by January 15, 1999. 
104.32     Sec. 26.  [REPEALER.] 
104.33     Minnesota Statutes 1996, sections 289A.50, subdivision 6; 
104.34  and 290.191, subdivision 8, are repealed. 
104.35     Sec. 27.  [EFFECTIVE DATES.] 
104.36     Section 1 is effective for extensions received under 
105.1   Minnesota Statutes, section 289A.19, subdivision 2, for tax 
105.2   years beginning after December 31, 1996. 
105.3      Section 2 is effective retroactive to August 1, 1997.  The 
105.4   change in section 3 made by clause (7) is effective for tax 
105.5   years beginning after December 31, 1996.  The change in section 
105.6   3 made by clause (8) is effective for tax years beginning after 
105.7   December 31, 1997.  
105.8      Sections 4, clause (12), 5, 14, and 16, items (iii) and 
105.9   (vii) are effective for tax years beginning after December 31, 
105.10  1996.  
105.11     Section 6 is effective for tax years beginning after 
105.12  December 31, 1996, except the change in denominator for 
105.13  Minnesota Statutes, section 290.01, subdivision 19b, clause (1), 
105.14  is effective for tax years beginning after December 31, 1997.  
105.15     Section 7 is effective for taxable years beginning after 
105.16  December 31, 1997. 
105.17     Sections 8, 9, 10, 16, item (iv), 17, and 21 are effective 
105.18  for tax years beginning after December 31, 1997. 
105.19     Sections 11, 18 to 20, and 22 are effective for tax years 
105.20  beginning after December 31, 1998. 
105.21     Contingent on the agency receiving a commitment for at 
105.22  least $2,000,000 from nonstate resources that would be used in 
105.23  coordination with the agency's programs to secure affordable 
105.24  housing for workers, section 13 is effective for taxable years 
105.25  beginning after December 31, 1998. 
105.26     Section 23 is effective the day following final enactment. 
105.27     Section 26 is effective for tax years beginning after 
105.28  December 31, 1997, except that the repeal of Minnesota Statutes, 
105.29  section 290.191, subdivision 8, is effective for tax years 
105.30  beginning after December 31, 1998. 
105.31                             ARTICLE 5 
105.32                           FEDERAL UPDATE 
105.33     Section 1.  Minnesota Statutes 1997 Supplement, section 
105.34  289A.02, subdivision 7, is amended to read: 
105.35     Subd. 7.  [INTERNAL REVENUE CODE.] Unless specifically 
105.36  defined otherwise, "Internal Revenue Code" means the Internal 
106.1   Revenue Code of 1986, as amended through December 31, ~~1996, and~~ 
106.2   ~~includes the provisions of section 1(a) and (b) of Public Law~~ 
106.3   ~~Number 104-117~~ 1997. 
106.4      Sec. 2.  Minnesota Statutes 1997 Supplement, section 
106.5   290.01, subdivision 19, is amended to read: 
106.6      Subd. 19.  [NET INCOME.] The term "net income" means the 
106.7   federal taxable income, as defined in section 63 of the Internal 
106.8   Revenue Code of 1986, as amended through the date named in this 
106.9   subdivision, incorporating any elections made by the taxpayer in 
106.10  accordance with the Internal Revenue Code in determining federal 
106.11  taxable income for federal income tax purposes, and with the 
106.12  modifications provided in subdivisions 19a to 19f. 
106.13     In the case of a regulated investment company or a fund 
106.14  thereof, as defined in section 851(a) or 851(h) of the Internal 
106.15  Revenue Code, federal taxable income means investment company 
106.16  taxable income as defined in section 852(b)(2) of the Internal 
106.17  Revenue Code, except that:  
106.18     (1) the exclusion of net capital gain provided in section 
106.19  852(b)(2)(A) of the Internal Revenue Code does not apply; 
106.20     (2) the deduction for dividends paid under section 
106.21  852(b)(2)(D) of the Internal Revenue Code must be applied by 
106.22  allowing a deduction for capital gain dividends and 
106.23  exempt-interest dividends as defined in sections 852(b)(3)(C) 
106.24  and 852(b)(5) of the Internal Revenue Code; and 
106.25     (3) the deduction for dividends paid must also be applied 
106.26  in the amount of any undistributed capital gains which the 
106.27  regulated investment company elects to have treated as provided 
106.28  in section 852(b)(3)(D) of the Internal Revenue Code.  
106.29     The net income of a real estate investment trust as defined 
106.30  and limited by section 856(a), (b), and (c) of the Internal 
106.31  Revenue Code means the real estate investment trust taxable 
106.32  income as defined in section 857(b)(2) of the Internal Revenue 
106.33  Code.  
106.34     The net income of a designated settlement fund as defined 
106.35  in section 468B(d) of the Internal Revenue Code means the gross 
106.36  income as defined in section 468B(b) of the Internal Revenue 
107.1   Code. 
107.2      The Internal Revenue Code of 1986, as amended through 
107.3   December 31, 1986, shall be in effect for taxable years 
107.4   beginning after December 31, 1986.  The provisions of sections 
107.5   10104, 10202, 10203, 10204, 10206, 10212, 10221, 10222, 10223, 
107.6   10226, 10227, 10228, 10611, 10631, 10632, and 10711 of the 
107.7   Omnibus Budget Reconciliation Act of 1987, Public Law Number 
107.8   100-203, the provisions of sections 1001, 1002, 1003, 1004, 
107.9   1005, 1006, 1008, 1009, 1010, 1011, 1011A, 1011B, 1012, 1013, 
107.10  1014, 1015, 1018, 2004, 3041, 4009, 6007, 6026, 6032, 6137, 
107.11  6277, and 6282 of the Technical and Miscellaneous Revenue Act of 
107.12  1988, Public Law Number 100-647, the provisions of sections 
107.13  7811, 7816, and 7831 of the Omnibus Budget Reconciliation Act of 
107.14  1989, Public Law Number 101-239, ~~and~~ the provisions of sections 
107.15  1305, 1704(r), and 1704(e)(1) of the Small Business Job 
107.16  Protection Act, Public Law Number 104-188, and the provisions of 
107.17  sections 975 and 1604(d)(2) and (e) of the Taxpayer Relief Act 
107.18  of 1997, Public Law Number 105-34, shall be effective at the 
107.19  time they become effective for federal income tax purposes.  
107.20     The Internal Revenue Code of 1986, as amended through 
107.21  December 31, 1987, shall be in effect for taxable years 
107.22  beginning after December 31, 1987.  The provisions of sections 
107.23  4001, 4002, 4011, 5021, 5041, 5053, 5075, 6003, 6008, 6011, 
107.24  6030, 6031, 6033, 6057, 6064, 6066, 6079, 6130, 6176, 6180, 
107.25  6182, 6280, and 6281 of the Technical and Miscellaneous Revenue 
107.26  Act of 1988, Public Law Number 100-647, the provisions of 
107.27  sections 7815 and 7821 of the Omnibus Budget Reconciliation Act 
107.28  of 1989, Public Law Number 101-239, and the provisions of 
107.29  section 11702 of the Revenue Reconciliation Act of 1990, Public 
107.30  Law Number 101-508, shall become effective at the time they 
107.31  become effective for federal tax purposes.  
107.32     The Internal Revenue Code of 1986, as amended through 
107.33  December 31, 1988, shall be in effect for taxable years 
107.34  beginning after December 31, 1988.  The provisions of sections 
107.35  7101, 7102, 7104, 7105, 7201, 7202, 7203, 7204, 7205, 7206, 
107.36  7207, 7210, 7211, 7301, 7302, 7303, 7304, 7601, 7621, 7622, 
108.1   7641, 7642, 7645, 7647, 7651, and 7652 of the Omnibus Budget 
108.2   Reconciliation Act of 1989, Public Law Number 101-239, the 
108.3   provision of section 1401 of the Financial Institutions Reform, 
108.4   Recovery, and Enforcement Act of 1989, Public Law Number 101-73, 
108.5   the provisions of sections 11701 and 11703 of the Revenue 
108.6   Reconciliation Act of 1990, Public Law Number 101-508, and the 
108.7   provisions of sections 1702(g) and 1704(f)(2)(A) and (B) of the 
108.8   Small Business Job Protection Act, Public Law Number 104-188, 
108.9   shall become effective at the time they become effective for 
108.10  federal tax purposes.  
108.11     The Internal Revenue Code of 1986, as amended through 
108.12  December 31, 1989, shall be in effect for taxable years 
108.13  beginning after December 31, 1989.  The provisions of sections 
108.14  11321, 11322, 11324, 11325, 11403, 11404, 11410, and 11521 of 
108.15  the Revenue Reconciliation Act of 1990, Public Law Number 
108.16  101-508, and the provisions of sections 13224 and 13261 of the 
108.17  Omnibus Budget Reconciliation Act of 1993, Public Law Number 
108.18  103-66, shall become effective at the time they become effective 
108.19  for federal purposes.  
108.20     The Internal Revenue Code of 1986, as amended through 
108.21  December 31, 1990, shall be in effect for taxable years 
108.22  beginning after December 31, 1990. 
108.23     The provisions of section 13431 of the Omnibus Budget 
108.24  Reconciliation Act of 1993, Public Law Number 103-66, shall 
108.25  become effective at the time they became effective for federal 
108.26  purposes.  
108.27     The Internal Revenue Code of 1986, as amended through 
108.28  December 31, 1991, shall be in effect for taxable years 
108.29  beginning after December 31, 1991.  
108.30     The provisions of sections 1936 and 1937 of the 
108.31  Comprehensive National Energy Policy Act of 1992, Public Law 
108.32  Number 102-486, ~~and~~ the provisions of sections 13101, 13114, 
108.33  13122, 13141, 13150, 13151, 13174, 13239, 13301, and 13442 of 
108.34  the Omnibus Budget Reconciliation Act of 1993, Public Law Number 
108.35  103-66, and the provisions of section 1604(a)(1), (2), and (3) 
108.36  of the Taxpayer Relief Act of 1997, Public Law Number 105-34, 
109.1   shall become effective at the time they become effective for 
109.2   federal purposes.  
109.3      The Internal Revenue Code of 1986, as amended through 
109.4   December 31, 1992, shall be in effect for taxable years 
109.5   beginning after December 31, 1992.  
109.6      The provisions of sections 13116, 13121, 13206, 13210, 
109.7   13222, 13223, 13231, 13232, 13233, 13239, 13262, and 13321 of 
109.8   the Omnibus Budget Reconciliation Act of 1993, Public Law Number 
109.9   103-66, ~~and~~ the provisions of sections 1703(a), 1703(d), 
109.10  1703(i), 1703(l), and 1703(m) of the Small Business Job 
109.11  Protection Act, Public Law Number 104-188, and the provision of 
109.12  section 1604(c) of the Taxpayer Relief Act of 1997, Public Law 
109.13  Number 105-34, shall become effective at the time they become 
109.14  effective for federal purposes. 
109.15     The Internal Revenue Code of 1986, as amended through 
109.16  December 31, 1993, shall be in effect for taxable years 
109.17  beginning after December 31, 1993. 
109.18     The provision of section 741 of Legislation to Implement 
109.19  Uruguay Round of General Agreement on Tariffs and Trade, Public 
109.20  Law Number 103-465, the provisions of sections 1, 2, and 3, of 
109.21  the Self-Employed Health Insurance Act of 1995, Public Law 
109.22  Number 104-7, the provision of section 501(b)(2) of the Health 
109.23  Insurance Portability and Accountability Act, Public Law Number 
109.24  104-191, ~~and~~ the provisions of sections 1604 and 1704(p)(1) and 
109.25  (2) of the Small Business Job Protection Act, Public Law Number 
109.26  104-188, and the provisions of sections 1011, 1211(b)(1), and 
109.27  1602(f) of the Taxpayer Relief Act of 1997, Public Law Number 
109.28  105-34, shall become effective at the time they become effective 
109.29  for federal purposes. 
109.30     The Internal Revenue Code of 1986, as amended through 
109.31  December 31, 1994, shall be in effect for taxable years 
109.32  beginning after December 31, 1994. 
109.33     The provisions of sections 1119(a), 1120, 1121, 1202(a), 
109.34  1444, 1449(b), 1602(a), 1610(a), 1613, and 1805 of the Small 
109.35  Business Job Protection Act, Public Law Number 104-188, ~~and~~ the 
109.36  provision of section 511 of the Health Insurance Portability and 
110.1   Accountability Act, Public Law Number 104-191, and the 
110.2   provisions of sections 1174 and 1601(i)(2) of the Taxpayer 
110.3   Relief Act of 1997, Public Law Number 105-34, shall become 
110.4   effective at the time they become effective for federal purposes.
110.5      The Internal Revenue Code of 1986, as amended through March 
110.6   22, 1996, is in effect for taxable years beginning after 
110.7   December 31, 1995. 
110.8      The provisions of sections 1113(a), 1117, 1206(a), 1313(a), 
110.9   1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612, 
110.10  1616, 1617, 1704(l), and 1704(m) of the Small Business Job 
110.11  Protection Act, Public Law Number 104-188, ~~and~~ the provisions of 
110.12  Public Law Number 104-117, and the provisions of sections 313(a) 
110.13  and (b)(1), 602(a), 913(b), 941, 961, 971, 1001(a) and (b), 
110.14  1002, 1003, 1012, 1013, 1014, 1061, 1062, 1081, 1084(b), 1086, 
110.15  1087, 1111(a), 1131(b) and (c), 1211(b), 1213, 1530(c)(2), 
110.16  1601(f)(5) and (h), and 1604(d)(1) of the Taxpayer Relief Act of 
110.17  1997, Public Law Number 105-34, shall become effective at the 
110.18  time they become effective for federal purposes. 
110.19     The Internal Revenue Code of 1986, as amended through 
110.20  December 31, 1996, shall be in effect for taxable years 
110.21  beginning after December 31, 1996. 
110.22     The provisions of sections 202(a) and (b), 221(a), 225, 
110.23  312, 313, 913(a), 934, 962, 1004, 1005, 1052, 1063, 1084(a) and 
110.24  (c), 1089, 1112, 1171, 1204, 1271(a) and (b), 1305(a), 1306, 
110.25  1307, 1308, 1309, 1501(b), 1502(b), 1504(a), 1505, 1527, 1528, 
110.26  1530, 1601(d), (e), (f), and (i) and 1602(a), (b), (c), and (e) 
110.27  of the Taxpayer Relief Act of 1997, Public Law Number 105-34, 
110.28  shall become effective at the time they become effective for 
110.29  federal purposes. 
110.30     The Internal Revenue Code of 1986, as amended through 
110.31  December 31, 1997, shall be in effect for taxable years 
110.32  beginning after December 31, 1997. 
110.33     Except as otherwise provided, references to the Internal 
110.34  Revenue Code in subdivisions 19a to 19g mean the code in effect 
110.35  for purposes of determining net income for the applicable year. 
110.36     Sec. 3.  Minnesota Statutes 1997 Supplement, section 
111.1   290.01, subdivision 19a, is amended to read: 
111.2      Subd. 19a.  [ADDITIONS TO FEDERAL TAXABLE INCOME.] For 
111.3   individuals, estates, and trusts, there shall be added to 
111.4   federal taxable income: 
111.5      (1)(i) interest income on obligations of any state other 
111.6   than Minnesota or a political or governmental subdivision, 
111.7   municipality, or governmental agency or instrumentality of any 
111.8   state other than Minnesota exempt from federal income taxes 
111.9   under the Internal Revenue Code or any other federal statute, 
111.10  and 
111.11     (ii) exempt-interest dividends as defined in section 
111.12  852(b)(5) of the Internal Revenue Code, except the portion of 
111.13  the exempt-interest dividends derived from interest income on 
111.14  obligations of the state of Minnesota or its political or 
111.15  governmental subdivisions, municipalities, governmental agencies 
111.16  or instrumentalities, but only if the portion of the 
111.17  exempt-interest dividends from such Minnesota sources paid to 
111.18  all shareholders represents 95 percent or more of the 
111.19  exempt-interest dividends that are paid by the regulated 
111.20  investment company as defined in section 851(a) of the Internal 
111.21  Revenue Code, or the fund of the regulated investment company as 
111.22  defined in section 851(h) of the Internal Revenue Code, making 
111.23  the payment; and 
111.24     (iii) for the purposes of items (i) and (ii), interest on 
111.25  obligations of an Indian tribal government described in section 
111.26  7871(c) of the Internal Revenue Code shall be treated as 
111.27  interest income on obligations of the state in which the tribe 
111.28  is located; 
111.29     (2) the amount of income taxes paid or accrued within the 
111.30  taxable year under this chapter and income taxes paid to any 
111.31  other state or to any province or territory of Canada, to the 
111.32  extent allowed as a deduction under section 63(d) of the 
111.33  Internal Revenue Code, but the addition may not be more than the 
111.34  amount by which the itemized deductions as allowed under section 
111.35  63(d) of the Internal Revenue Code exceeds the amount of the 
111.36  standard deduction as defined in section 63(c) of the Internal 
112.1   Revenue Code.  For the purpose of this paragraph, the 
112.2   disallowance of itemized deductions under section 68 of the 
112.3   Internal Revenue Code of 1986, income tax is the last itemized 
112.4   deduction disallowed; 
112.5      (3) the capital gain amount of a lump sum distribution to 
112.6   which the special tax under section 1122(h)(3)(B)(ii) of the Tax 
112.7   Reform Act of 1986, Public Law Number 99-514, applies; 
112.8      (4) the amount of income taxes paid or accrued within the 
112.9   taxable year under this chapter and income taxes paid to any 
112.10  other state or any province or territory of Canada, to the 
112.11  extent allowed as a deduction in determining federal adjusted 
112.12  gross income.  For the purpose of this paragraph, income taxes 
112.13  do not include the taxes imposed by sections 290.0922, 
112.14  subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729; 
112.15     (5) the amount of loss or expense included in federal 
112.16  taxable income under section 1366 of the Internal Revenue Code 
112.17  flowing from a corporation that has a valid election in effect 
112.18  for the taxable year under section 1362 of the Internal Revenue 
112.19  Code, but which is not allowed to be an "S" corporation under 
112.20  section 290.9725; ~~and~~ 
112.21     (6) the amount of any distributions in cash or property 
112.22  made to a shareholder during the taxable year by a corporation 
112.23  that has a valid election in effect for the taxable year under 
112.24  section 1362 of the Internal Revenue Code, but which is not 
112.25  allowed to be an "S" corporation under section 290.9725 to the 
112.26  extent not already included in federal taxable income under 
112.27  section 1368 of the Internal Revenue Code; 
112.28     (7) the amount of a partner's pro rata share of net income 
112.29  which does not flow through to the partner because the 
112.30  partnership elected to pay the tax on the income under section 
112.31  6242(a)(2) of the Internal Revenue Code; and 
112.32     (8) upon withdrawal of funds from a Roth IRA authorized 
112.33  under section 408A of the Internal Revenue Code or from an 
112.34  education IRA authorized under section 530 of the Internal 
112.35  Revenue Code, the amount withdrawn that exceeds the amount of 
112.36  unwithdrawn contributions made to the fund over all years on the 
113.1   basis that withdrawals are first made out of contributions. 
113.2      Sec. 4.  Minnesota Statutes 1997 Supplement, section 
113.3   290.01, subdivision 19b, is amended to read: 
113.4      Subd. 19b.  [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 
113.5   individuals, estates, and trusts, there shall be subtracted from 
113.6   federal taxable income: 
113.7      (1) interest income on obligations of any authority, 
113.8   commission, or instrumentality of the United States to the 
113.9   extent includable in taxable income for federal income tax 
113.10  purposes but exempt from state income tax under the laws of the 
113.11  United States; 
113.12     (2) if included in federal taxable income, the amount of 
113.13  any overpayment of income tax to Minnesota or to any other 
113.14  state, for any previous taxable year, whether the amount is 
113.15  received as a refund or as a credit to another taxable year's 
113.16  income tax liability; 
113.17     (3) the amount paid to others, less the credit allowed 
113.18  under section 290.0674, not to exceed $1,625 for each dependent 
113.19  in grades kindergarten to 6 and $2,500 for each dependent in 
113.20  grades 7 to 12, for tuition, textbooks, and transportation of 
113.21  each dependent in attending an elementary or secondary school 
113.22  situated in Minnesota, North Dakota, South Dakota, Iowa, or 
113.23  Wisconsin, wherein a resident of this state may legally fulfill 
113.24  the state's compulsory attendance laws, which is not operated 
113.25  for profit, and which adheres to the provisions of the Civil 
113.26  Rights Act of 1964 and chapter 363.  For the purposes of this 
113.27  clause, "tuition" includes fees or tuition as defined in section 
113.28  290.0674, subdivision 1, clause (1).  As used in this clause, 
113.29  "textbooks" includes books and other instructional materials and 
113.30  equipment used in elementary and secondary schools in teaching 
113.31  only those subjects legally and commonly taught in public 
113.32  elementary and secondary schools in this state.  Equipment 
113.33  expenses qualifying for deduction includes expenses as defined 
113.34  and limited in section 290.0674, subdivision 1, clause (3).  
113.35  "Textbooks" does not include instructional books and materials 
113.36  used in the teaching of religious tenets, doctrines, or worship, 
114.1   the purpose of which is to instill such tenets, doctrines, or 
114.2   worship, nor does it include books or materials for, or 
114.3   transportation to, extracurricular activities including sporting 
114.4   events, musical or dramatic events, speech activities, driver's 
114.5   education, or similar programs; 
114.6      (4) to the extent included in federal taxable income, 
114.7   distributions from a qualified governmental pension plan, an 
114.8   individual retirement account, simplified employee pension, or 
114.9   qualified plan covering a self-employed person that represent a 
114.10  return of contributions that were included in Minnesota gross 
114.11  income in the taxable year for which the contributions were made 
114.12  but were deducted or were not included in the computation of 
114.13  federal adjusted gross income.  The distribution shall be 
114.14  allocated first to return of contributions until the 
114.15  contributions included in Minnesota gross income have been 
114.16  exhausted.  This subtraction applies only to contributions made 
114.17  in a taxable year prior to 1985; 
114.18     (5) income as provided under section 290.0802; 
114.19     (6) the amount of unrecovered accelerated cost recovery 
114.20  system deductions allowed under subdivision 19g; 
114.21     (7) to the extent included in federal adjusted gross 
114.22  income, income realized on disposition of property exempt from 
114.23  tax under section 290.491; 
114.24     (8) to the extent not deducted in determining federal 
114.25  taxable income, the amount paid for health insurance of 
114.26  self-employed individuals as determined under section 162(l) of 
114.27  the Internal Revenue Code, except that the 25 percent limit does 
114.28  not apply.  If the taxpayer deducted insurance payments under 
114.29  section 213 of the Internal Revenue Code of 1986, the 
114.30  subtraction under this clause must be reduced by the lesser of: 
114.31     (i) the total itemized deductions allowed under section 
114.32  63(d) of the Internal Revenue Code, less state, local, and 
114.33  foreign income taxes deductible under section 164 of the 
114.34  Internal Revenue Code and the standard deduction under section 
114.35  63(c) of the Internal Revenue Code; or 
114.36     (ii) the lesser of (A) the amount of insurance qualifying 
115.1   as "medical care" under section 213(d) of the Internal Revenue 
115.2   Code to the extent not deducted under section 162(1) of the 
115.3   Internal Revenue Code or excluded from income or (B) the total 
115.4   amount deductible for medical care under section 213(a); 
115.5      (9) the exemption amount allowed under Laws 1995, chapter 
115.6   255, article 3, section 2, subdivision 3; 
115.7      (10) to the extent included in federal taxable income, 
115.8   postservice benefits for youth community service under section 
115.9   121.707 for volunteer service under United States Code, title 
115.10  42, section 5011(d), as amended; ~~and~~ 
115.11     (11) the amount of income or gain included in federal 
115.12  taxable income under section 1366 of the Internal Revenue Code 
115.13  flowing from a corporation that has a valid election in effect 
115.14  for the taxable year under section 1362 of the Internal Revenue 
115.15  Code which is not allowed to be an "S" corporation under section 
115.16  290.9725; and 
115.17     (12) upon the final withdrawal of funds from a Roth IRA 
115.18  authorized under section 408A of the Internal Revenue Code or 
115.19  from an education IRA under section 530 of the Internal Revenue 
115.20  Code, the amount by which the total of unwithdrawn contributions 
115.21  to the account over all years exceeds the amount in the account. 
115.22     Sec. 5.  Minnesota Statutes 1997 Supplement, section 
115.23  290.01, subdivision 19c, is amended to read: 
115.24     Subd. 19c.  [CORPORATIONS; ADDITIONS TO FEDERAL TAXABLE 
115.25  INCOME.] For corporations, there shall be added to federal 
115.26  taxable income: 
115.27     (1) the amount of any deduction taken for federal income 
115.28  tax purposes for income, excise, or franchise taxes based on net 
115.29  income or related minimum taxes paid by the corporation to 
115.30  Minnesota, another state, a political subdivision of another 
115.31  state, the District of Columbia, or any foreign country or 
115.32  possession of the United States; 
115.33     (2) interest not subject to federal tax upon obligations 
115.34  of:  the United States, its possessions, its agencies, or its 
115.35  instrumentalities; the state of Minnesota or any other state, 
115.36  any of its political or governmental subdivisions, any of its 
116.1   municipalities, or any of its governmental agencies or 
116.2   instrumentalities; the District of Columbia; or Indian tribal 
116.3   governments; 
116.4      (3) exempt-interest dividends received as defined in 
116.5   section 852(b)(5) of the Internal Revenue Code; 
116.6      (4) the amount of any net operating loss deduction taken 
116.7   for federal income tax purposes under section 172 or 832(c)(10) 
116.8   of the Internal Revenue Code or operations loss deduction under 
116.9   section 810 of the Internal Revenue Code; 
116.10     (5) the amount of any special deductions taken for federal 
116.11  income tax purposes under sections 241 to 247 of the Internal 
116.12  Revenue Code; 
116.13     (6) losses from the business of mining, as defined in 
116.14  section 290.05, subdivision 1, clause (a), that are not subject 
116.15  to Minnesota income tax; 
116.16     (7) the amount of any capital losses deducted for federal 
116.17  income tax purposes under sections 1211 and 1212 of the Internal 
116.18  Revenue Code; 
116.19     (8) the amount of any charitable contributions deducted for 
116.20  federal income tax purposes under section 170 of the Internal 
116.21  Revenue Code; 
116.22     (9) the exempt foreign trade income of a foreign sales 
116.23  corporation under sections 921(a) and 291 of the Internal 
116.24  Revenue Code; 
116.25     (10) the amount of percentage depletion deducted under 
116.26  sections 611 through 614 and 291 of the Internal Revenue Code; 
116.27     (11) for certified pollution control facilities placed in 
116.28  service in a taxable year beginning before December 31, 1986, 
116.29  and for which amortization deductions were elected under section 
116.30  169 of the Internal Revenue Code of 1954, as amended through 
116.31  December 31, 1985, the amount of the amortization deduction 
116.32  allowed in computing federal taxable income for those 
116.33  facilities; 
116.34     (12) the amount of any deemed dividend from a foreign 
116.35  operating corporation determined pursuant to section 290.17, 
116.36  subdivision 4, paragraph (g); ~~and~~ 
117.1      (13) the amount of any environmental tax paid under section 
117.2   59(a) of the Internal Revenue Code~~.~~; and 
117.3      (14) the amount of a partner's pro rata share of net income 
117.4   which does not flow through to the partner because the 
117.5   partnership elected to pay the tax on the income under section 
117.6   6242(a)(2) of the Internal Revenue Code. 
117.7      Sec. 6.  Minnesota Statutes 1997 Supplement, section 
117.8   290.01, subdivision 31, is amended to read: 
117.9      Subd. 31.  [INTERNAL REVENUE CODE.] Unless specifically 
117.10  defined otherwise, "Internal Revenue Code" means the Internal 
117.11  Revenue Code of 1986, as amended through December 31, ~~1996, and~~ 
117.12  ~~includes the provisions of section 1(a) and (b) of Public Law~~ 
117.13  ~~Number 104-117~~ 1997. 
117.14     Sec. 7.  Minnesota Statutes 1996, section 290.06, 
117.15  subdivision 2c, is amended to read: 
117.16     Subd. 2c.  [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 
117.17  AND TRUSTS.] (a) The income taxes imposed by this chapter upon 
117.18  married individuals filing joint returns and surviving spouses 
117.19  as defined in section 2(a) of the Internal Revenue Code must be 
117.20  computed by applying to their taxable net income the following 
117.21  schedule of rates: 
117.22     (1) On the first $19,910, 6 percent; 
117.23     (2) On all over $19,910, but not over $79,120, 8 percent; 
117.24     (3) On all over $79,120, 8.5 percent. 
117.25     Married individuals filing separate returns, estates, and 
117.26  trusts must compute their income tax by applying the above rates 
117.27  to their taxable income, except that the income brackets will be 
117.28  one-half of the above amounts.  
117.29     (b) The income taxes imposed by this chapter upon unmarried 
117.30  individuals must be computed by applying to taxable net income 
117.31  the following schedule of rates: 
117.32     (1) On the first $13,620, 6 percent; 
117.33     (2) On all over $13,620, but not over $44,750, 8 percent; 
117.34     (3) On all over $44,750, 8.5 percent. 
117.35     (c) The income taxes imposed by this chapter upon unmarried 
117.36  individuals qualifying as a head of household as defined in 
118.1   section 2(b) of the Internal Revenue Code must be computed by 
118.2   applying to taxable net income the following schedule of rates: 
118.3      (1) On the first $16,770, 6 percent; 
118.4      (2) On all over $16,770, but not over $67,390, 8 percent; 
118.5      (3) On all over $67,390, 8.5 percent. 
118.6      (d) In lieu of a tax computed according to the rates set 
118.7   forth in this subdivision, the tax of any individual taxpayer 
118.8   whose taxable net income for the taxable year is less than an 
118.9   amount determined by the commissioner must be computed in 
118.10  accordance with tables prepared and issued by the commissioner 
118.11  of revenue based on income brackets of not more than $100.  The 
118.12  amount of tax for each bracket shall be computed at the rates 
118.13  set forth in this subdivision, provided that the commissioner 
118.14  may disregard a fractional part of a dollar unless it amounts to 
118.15  50 cents or more, in which case it may be increased to $1. 
118.16     (e) An individual who is not a Minnesota resident for the 
118.17  entire year must compute the individual's Minnesota income tax 
118.18  as provided in this subdivision.  After the application of the 
118.19  nonrefundable credits provided in this chapter, the tax 
118.20  liability must then be multiplied by a fraction in which:  
118.21     (1) The numerator is the individual's Minnesota source 
118.22  federal adjusted gross income as defined in section 62 of the 
118.23  Internal Revenue Code increased by the ~~addition~~ additions 
118.24  required ~~for interest income from non-Minnesota state and~~ 
118.25  ~~municipal bonds~~ under section 290.01, subdivision 19a, ~~clause~~ 
118.26  clauses (1) and (7), after applying the allocation and 
118.27  assignability provisions of section 290.081, clause (a), or 
118.28  290.17; and 
118.29     (2) the denominator is the individual's federal adjusted 
118.30  gross income as defined in section 62 of the Internal Revenue 
118.31  Code of 1986, ~~as amended through April 15, 1995,~~ increased by 
118.32  the ~~addition required for interest income from non-Minnesota~~ 
118.33  ~~state and municipal bonds~~ amounts specified under section 
118.34  290.01, subdivision 19a, ~~clause~~ clauses (1) and (7). 
118.35     Sec. 8.  Minnesota Statutes 1996, section 290.067, 
118.36  subdivision 2a, is amended to read: 
119.1      Subd. 2a.  [INCOME.] (a) For purposes of this section, 
119.2   "income" means the sum of the following: 
119.3      (1) federal adjusted gross income as defined in section 62 
119.4   of the Internal Revenue Code; and 
119.5      (2) the sum of the following amounts to the extent not 
119.6   included in clause (1): 
119.7      (i) all nontaxable income; 
119.8      (ii) the amount of a passive activity loss that is not 
119.9   disallowed as a result of section 469, paragraph (i) or (m) of 
119.10  the Internal Revenue Code and the amount of passive activity 
119.11  loss carryover allowed under section 469(b) of the Internal 
119.12  Revenue Code; 
119.13     (iii) an amount equal to the total of any discharge of 
119.14  qualified farm indebtedness of a solvent individual excluded 
119.15  from gross income under section 108(g) of the Internal Revenue 
119.16  Code; 
119.17     (iv) cash public assistance and relief; 
119.18     (v) any pension or annuity (including railroad retirement 
119.19  benefits, all payments received under the federal Social 
119.20  Security Act, supplemental security income, and veterans 
119.21  benefits), which was not exclusively funded by the claimant or 
119.22  spouse, or which was funded exclusively by the claimant or 
119.23  spouse and which funding payments were excluded from federal 
119.24  adjusted gross income in the years when the payments were made; 
119.25     (vi) interest received from the federal or a state 
119.26  government or any instrumentality or political subdivision 
119.27  thereof; 
119.28     (vii) workers' compensation; 
119.29     (viii) nontaxable strike benefits; 
119.30     (ix) the gross amounts of payments received in the nature 
119.31  of disability income or sick pay as a result of accident, 
119.32  sickness, or other disability, whether funded through insurance 
119.33  or otherwise; 
119.34     (x) a lump sum distribution under section 402(e)(3) of the 
119.35  Internal Revenue Code; 
119.36     (xi) contributions made by the claimant to an individual 
120.1   retirement account, including a qualified voluntary employee 
120.2   contribution; simplified employee pension plan; self-employed 
120.3   retirement plan; cash or deferred arrangement plan under section 
120.4   401(k) of the Internal Revenue Code; or deferred compensation 
120.5   plan under section 457 of the Internal Revenue Code; and 
120.6      (xii) nontaxable scholarship or fellowship grants. 
120.7      In the case of an individual who files an income tax return 
120.8   on a fiscal year basis, the term "federal adjusted gross income" 
120.9   means federal adjusted gross income reflected in the fiscal year 
120.10  ending in the next calendar year.  Federal adjusted gross income 
120.11  may not be reduced by the amount of a net operating loss 
120.12  carryback or carryforward or a capital loss carryback or 
120.13  carryforward allowed for the year. 
120.14     (b) "Income" does not include: 
120.15     (1) amounts excluded pursuant to the Internal Revenue Code, 
120.16  sections 101(a)~~,~~ and 102~~, and 121~~; 
120.17     (2) amounts of any pension or annuity that were exclusively 
120.18  funded by the claimant or spouse if the funding payments were 
120.19  not excluded from federal adjusted gross income in the years 
120.20  when the payments were made; 
120.21     (3) surplus food or other relief in kind supplied by a 
120.22  governmental agency; 
120.23     (4) relief granted under chapter 290A; and 
120.24     (5) child support payments received under a temporary or 
120.25  final decree of dissolution or legal separation. 
120.26     Sec. 9.  Minnesota Statutes 1997 Supplement, section 
120.27  290.0671, subdivision 1, is amended to read: 
120.28     Subdivision 1.  [CREDIT ALLOWED.] An individual is allowed 
120.29  a credit against the tax imposed by this chapter equal to a 
120.30  percentage of the credit for which the individual is eligible 
120.31  under section 32 of the Internal Revenue Code disregarding the 
120.32  supplemental child credit of clause (m)[(n)].  The percentage is 
120.33  15 for individuals without a qualifying child, and 25 for 
120.34  individuals with at least one qualifying child.  For purposes of 
120.35  this section, "qualifying child" has the meaning given in 
120.36  section 32(c)(3) of the Internal Revenue Code. 
121.1      For a nonresident or part-year resident, the credit 
121.2   determined under section 32 of the Internal Revenue Code must be 
121.3   allocated based on the percentage calculated under section 
121.4   290.06, subdivision 2c, paragraph (e). 
121.5      For a person who was a resident for the entire tax year and 
121.6   has earned income not subject to tax under this chapter, the 
121.7   credit must be allocated based on the ratio of federal adjusted 
121.8   gross income reduced by the earned income not subject to tax 
121.9   under this chapter over federal adjusted gross income. 
121.10     Sec. 10.  Minnesota Statutes 1996, section 290.0921, 
121.11  subdivision 3a, is amended to read: 
121.12     Subd. 3a.  [EXEMPTIONS.] The following entities are exempt 
121.13  from the tax imposed by this section: 
121.14     (1) cooperatives taxable under subchapter T of the Internal 
121.15  Revenue Code or organized under chapter 308 or a similar law of 
121.16  another state; 
121.17     (2) corporations subject to tax under section 60A.15, 
121.18  subdivision 1; 
121.19     (3) real estate investment trusts; 
121.20     (4) regulated investment companies or a fund thereof; ~~and~~ 
121.21     (5) entities having a valid election in effect under 
121.22  section 860D(b) of the Internal Revenue Code~~.~~; and 
121.23     (6) small corporations exempt from the federal alternative 
121.24  minimum tax under section 55(e) of the Internal Revenue Code. 
121.25     Sec. 11.  Minnesota Statutes 1996, section 290A.03, 
121.26  subdivision 3, is amended to read: 
121.27     Subd. 3.  [INCOME.] (1) "Income" means the sum of the 
121.28  following:  
121.29     (a) federal adjusted gross income as defined in the 
121.30  Internal Revenue Code; and 
121.31     (b) the sum of the following amounts to the extent not 
121.32  included in clause (a):  
121.33     (i) all nontaxable income; 
121.34     (ii) the amount of a passive activity loss that is not 
121.35  disallowed as a result of section 469, paragraph (i) or (m) of 
121.36  the Internal Revenue Code and the amount of passive activity 
122.1   loss carryover allowed under section 469(b) of the Internal 
122.2   Revenue Code; 
122.3      (iii) an amount equal to the total of any discharge of 
122.4   qualified farm indebtedness of a solvent individual excluded 
122.5   from gross income under section 108(g) of the Internal Revenue 
122.6   Code; 
122.7      (iv) cash public assistance and relief; 
122.8      (v) any pension or annuity (including railroad retirement 
122.9   benefits, all payments received under the federal Social 
122.10  Security Act, supplemental security income, and veterans 
122.11  benefits), which was not exclusively funded by the claimant or 
122.12  spouse, or which was funded exclusively by the claimant or 
122.13  spouse and which funding payments were excluded from federal 
122.14  adjusted gross income in the years when the payments were made; 
122.15     (vi) interest received from the federal or a state 
122.16  government or any instrumentality or political subdivision 
122.17  thereof; 
122.18     (vii) workers' compensation; 
122.19     (viii) nontaxable strike benefits; 
122.20     (ix) the gross amounts of payments received in the nature 
122.21  of disability income or sick pay as a result of accident, 
122.22  sickness, or other disability, whether funded through insurance 
122.23  or otherwise; 
122.24     (x) a lump sum distribution under section 402(e)(3) of the 
122.25  Internal Revenue Code; 
122.26     (xi) contributions made by the claimant to an individual 
122.27  retirement account, including a qualified voluntary employee 
122.28  contribution; simplified employee pension plan; self-employed 
122.29  retirement plan; cash or deferred arrangement plan under section 
122.30  401(k) of the Internal Revenue Code; or deferred compensation 
122.31  plan under section 457 of the Internal Revenue Code; and 
122.32     (xii) nontaxable scholarship or fellowship grants.  
122.33     In the case of an individual who files an income tax return 
122.34  on a fiscal year basis, the term "federal adjusted gross income" 
122.35  shall mean federal adjusted gross income reflected in the fiscal 
122.36  year ending in the calendar year.  Federal adjusted gross income 
123.1   shall not be reduced by the amount of a net operating loss 
123.2   carryback or carryforward or a capital loss carryback or 
123.3   carryforward allowed for the year.  
123.4      (2) "Income" does not include 
123.5      (a) amounts excluded pursuant to the Internal Revenue Code, 
123.6   sections 101(a)~~,~~ and 102~~, and 121~~; 
123.7      (b) amounts of any pension or annuity which was exclusively 
123.8   funded by the claimant or spouse and which funding payments were 
123.9   not excluded from federal adjusted gross income in the years 
123.10  when the payments were made; 
123.11     (c) surplus food or other relief in kind supplied by a 
123.12  governmental agency; 
123.13     (d) relief granted under this chapter; or 
123.14     (e) child support payments received under a temporary or 
123.15  final decree of dissolution or legal separation.  
123.16     (3) The sum of the following amounts may be subtracted from 
123.17  income:  
123.18     (a) for the claimant's first dependent, the exemption 
123.19  amount multiplied by 1.4; 
123.20     (b) for the claimant's second dependent, the exemption 
123.21  amount multiplied by 1.3; 
123.22     (c) for the claimant's third dependent, the exemption 
123.23  amount multiplied by 1.2; 
123.24     (d) for the claimant's fourth dependent, the exemption 
123.25  amount multiplied by 1.1; 
123.26     (e) for the claimant's fifth dependent, the exemption 
123.27  amount; and 
123.28     (f) if the claimant or claimant's spouse was disabled or 
123.29  attained the age of 65 on or before December 31 of the year for 
123.30  which the taxes were levied or rent paid, the exemption amount.  
123.31     For purposes of this subdivision, the "exemption amount" 
123.32  means the exemption amount under section 151(d) of the Internal 
123.33  Revenue Code for the taxable year for which the income is 
123.34  reported.  
123.35     Sec. 12.  Minnesota Statutes 1997 Supplement, section 
123.36  290A.03, subdivision 15, is amended to read: 
124.1      Subd. 15.  [INTERNAL REVENUE CODE.] "Internal Revenue Code" 
124.2   means the Internal Revenue Code of 1986, as amended through 
124.3   December 31, ~~1996~~ 1997. 
124.4      Sec. 13.  Minnesota Statutes 1997 Supplement, section 
124.5   291.005, subdivision 1, is amended to read: 
124.6      Subdivision 1.  Unless the context otherwise clearly 
124.7   requires, the following terms used in this chapter shall have 
124.8   the following meanings: 
124.9      (1) "Federal gross estate" means the gross estate of a 
124.10  decedent as valued and otherwise determined for federal estate 
124.11  tax purposes by federal taxing authorities pursuant to the 
124.12  provisions of the Internal Revenue Code. 
124.13     (2) "Minnesota gross estate" means the federal gross estate 
124.14  of a decedent after (a) excluding therefrom any property 
124.15  included therein which has its situs outside Minnesota and (b) 
124.16  including therein any property omitted from the federal gross 
124.17  estate which is includable therein, has its situs in Minnesota, 
124.18  and was not disclosed to federal taxing authorities.  
124.19     (3) "Personal representative" means the executor, 
124.20  administrator or other person appointed by the court to 
124.21  administer and dispose of the property of the decedent.  If 
124.22  there is no executor, administrator or other person appointed, 
124.23  qualified, and acting within this state, then any person in 
124.24  actual or constructive possession of any property having a situs 
124.25  in this state which is included in the federal gross estate of 
124.26  the decedent shall be deemed to be a personal representative to 
124.27  the extent of the property and the Minnesota estate tax due with 
124.28  respect to the property. 
124.29     (4) "Resident decedent" means an individual whose domicile 
124.30  at the time of death was in Minnesota. 
124.31     (5) "Nonresident decedent" means an individual whose 
124.32  domicile at the time of death was not in Minnesota. 
124.33     (6) "Situs of property" means, with respect to real 
124.34  property, the state or country in which it is located; with 
124.35  respect to tangible personal property, the state or country in 
124.36  which it was normally kept or located at the time of the 
125.1   decedent's death; and with respect to intangible personal 
125.2   property, the state or country in which the decedent was 
125.3   domiciled at death. 
125.4      (7) "Commissioner" means the commissioner of revenue or any 
125.5   person to whom the commissioner has delegated functions under 
125.6   this chapter. 
125.7      (8) "Internal Revenue Code" means the United States 
125.8   Internal Revenue Code of 1986, as amended through December 31, 
125.9   ~~1996, and includes the provisions of section 1(a)(4) of Public~~ 
125.10  ~~Law Number 104-117~~ 1997. 
125.11     Sec. 14.  [EFFECTIVE DATES.] 
125.12     Sections 1, 3, 5, and 7 to 11 are effective for tax years 
125.13  beginning after December 31, 1997. 
125.14     Sections 6, 12, and 13 are effective at the same time 
125.15  federal changes made by the Taxpayer Relief Act of 1997, Public 
125.16  Law Number 105-34, which are incorporated into Minnesota 
125.17  Statutes, chapters 290, 290A, and 291 by these sections become 
125.18  effective for federal tax purposes. 
125.19                             ARTICLE 6
125.20                       SALES AND EXCISE TAXES
125.21     Section 1.  Minnesota Statutes 1996, section 297A.02, 
125.22  subdivision 2, is amended to read: 
125.23     Subd. 2.  [MACHINERY AND EQUIPMENT.] Notwithstanding the 
125.24  provisions of subdivision 1, the rate of the excise tax imposed 
125.25  upon sales of farm machinery and aquaculture production 
125.26  equipment is ~~2.5~~ two percent for sales after June 30, 1998, and 
125.27  before July 1, 1999, and one percent for sales after June 30, 
125.28  1999, and before July 1, 2000. 
125.29     Sec. 2.  Minnesota Statutes 1996, section 297A.02, 
125.30  subdivision 4, is amended to read: 
125.31     Subd. 4.  [MANUFACTURED HOUSING AND PARK TRAILERS.] 
125.32  Notwithstanding the provisions of subdivision 1, for sales at 
125.33  retail of manufactured homes as defined in section 327.31, 
125.34  subdivision 6, that is used for residential purposes ~~and new or~~ 
125.35  ~~used park trailers, as defined in section 168.011, subdivision~~ 
125.36  ~~8, paragraph (b)~~, the excise tax is imposed upon 65 percent of 
126.1   the ~~sales price~~ dealer's cost of the home ~~or~~, and for sales of 
126.2   new and used park trailers, as defined in section 168.011, 
126.3   subdivision 8, paragraph (b), the excise tax is imposed upon 65 
126.4   percent of the sales price of the park trailer. 
126.5      Sec. 3.  Minnesota Statutes 1996, section 297A.135, 
126.6   subdivision 4, is amended to read: 
126.7      Subd. 4.  [~~EXEMPTION~~ EXEMPTIONS.] (a) The tax and the fee 
126.8   imposed by this section do not apply to a lease or rental of (1) 
126.9   a vehicle to be used by the lessee to provide a licensed taxi 
126.10  service; (2) a hearse or limousine used in connection with a 
126.11  burial or funeral service; or (3) a van designed or adapted 
126.12  primarily for transporting property rather than passengers. 
126.13     (b) The fee imposed by this section does not apply if: 
126.14     (1) the lessor either: 
126.15     (i) has available for rent during the calendar year no more 
126.16  than 20 registered vehicles; or 
126.17     (ii) had during the previous calendar year not more than 
126.18  $50,000 in gross receipts that would otherwise, except for the 
126.19  exemption provided by this paragraph, have been subject to tax 
126.20  under this section; 
126.21     (2) the lessor pays the registration tax under chapter 168; 
126.22  and 
126.23     (3) the lessor elects not to charge the fee. 
126.24     Sec. 4.  Minnesota Statutes 1997 Supplement, section 
126.25  297A.25, subdivision 11, is amended to read: 
126.26     Subd. 11.  [SALES TO GOVERNMENT.] The gross receipts from 
126.27  all sales, including sales in which title is retained by a 
126.28  seller or a vendor or is assigned to a third party under an 
126.29  installment sale or lease purchase agreement under section 
126.30  465.71, of tangible personal property to, and all storage, use 
126.31  or consumption of such property by, the United States and its 
126.32  agencies and instrumentalities, the University of Minnesota, 
126.33  state universities, community colleges, technical colleges, 
126.34  state academies, the Lola and Rudy Perpich Minnesota center for 
126.35  arts education, ~~and~~ school districts, public libraries, public 
126.36  library systems, multicounty, multitype library systems as 
127.1   defined in section 134.001, county law libraries under chapter 
127.2   134A, the state library under section 480.09, and the 
127.3   legislative reference library are exempt. 
127.4      As used in this subdivision, "school districts" means 
127.5   public school entities and districts of every kind and nature 
127.6   organized under the laws of the state of Minnesota, including, 
127.7   without limitation, school districts, intermediate school 
127.8   districts, education districts, service cooperatives, secondary 
127.9   vocational cooperative centers, special education cooperatives, 
127.10  joint purchasing cooperatives, telecommunication cooperatives, 
127.11  regional management information centers, and any instrumentality 
127.12  of a school district, as defined in section 471.59. 
127.13     Sales exempted by this subdivision include sales under 
127.14  section 297A.01, subdivision 3, paragraph (f).  
127.15     Sales to hospitals and nursing homes owned and operated by 
127.16  political subdivisions of the state are exempt under this 
127.17  subdivision.  
127.18     ~~The sales to and exclusively for the use of libraries of~~ 
127.19  ~~books, periodicals, audio-visual materials and equipment,~~ 
127.20  ~~photocopiers for use by the public, and all cataloguing and~~ 
127.21  ~~circulation equipment, and cataloguing and circulation software~~ 
127.22  ~~for library use are exempt under this subdivision.  For purposes~~ 
127.23  ~~of this paragraph "libraries" means libraries as defined in~~ 
127.24  ~~section 134.001, county law libraries under chapter 134A, the~~ 
127.25  ~~state library under section 480.09, and the legislative~~ 
127.26  ~~reference library.~~ 
127.27     Sales of supplies and equipment used in the operation of an 
127.28  ambulance service owned and operated by a political subdivision 
127.29  of the state are exempt under this subdivision provided that the 
127.30  supplies and equipment are used in the course of providing 
127.31  medical care.  Sales to a political subdivision of repair and 
127.32  replacement parts for emergency rescue vehicles and fire trucks 
127.33  and apparatus are exempt under this subdivision.  
127.34     Sales to a political subdivision of machinery and 
127.35  equipment, except for motor vehicles, used directly for mixed 
127.36  municipal solid waste management services at a solid waste 
128.1   disposal facility as defined in section 115A.03, subdivision 10, 
128.2   are exempt under this subdivision.  
128.3      Sales to political subdivisions of chore and homemaking 
128.4   services to be provided to elderly or disabled individuals are 
128.5   exempt. 
128.6      Sales to a town of gravel and of machinery, equipment, and 
128.7   accessories, except motor vehicles, used exclusively for road 
128.8   maintenance are exempt. 
128.9      Sales of telephone services to the department of 
128.10  administration that are used to provide telecommunications 
128.11  services through the intertechnologies revolving fund are exempt 
128.12  under this subdivision. 
128.13     This exemption shall not apply to building, construction or 
128.14  reconstruction materials purchased by a contractor or a 
128.15  subcontractor as a part of a lump-sum contract or similar type 
128.16  of contract with a guaranteed maximum price covering both labor 
128.17  and materials for use in the construction, alteration, or repair 
128.18  of a building or facility.  This exemption does not apply to 
128.19  construction materials purchased by tax exempt entities or their 
128.20  contractors to be used in constructing buildings or facilities 
128.21  which will not be used principally by the tax exempt entities. 
128.22     This exemption does not apply to the leasing of a motor 
128.23  vehicle as defined in section 297B.01, subdivision 5, except for 
128.24  leases entered into by the United States or its agencies or 
128.25  instrumentalities.  
128.26     The tax imposed on sales to political subdivisions of the 
128.27  state under this section applies to all political subdivisions 
128.28  other than those explicitly exempted under this subdivision, 
128.29  notwithstanding section 115A.69, subdivision 6, 116A.25, 
128.30  360.035, 458A.09, 458A.30, 458D.23, 469.101, subdivision 2, 
128.31  469.127, 473.448, 473.545, or 473.608 or any other law to the 
128.32  contrary enacted before 1992. 
128.33     Sales exempted by this subdivision include sales made to 
128.34  other states or political subdivisions of other states, if the 
128.35  sale would be exempt from taxation if it occurred in that state, 
128.36  but do not include sales under section 297A.01, subdivision 3, 
129.1   paragraphs (c) and (e). 
129.2      Sec. 5.  Minnesota Statutes 1997 Supplement, section 
129.3   297A.25, subdivision 59, is amended to read: 
129.4      Subd. 59.  [FARM MACHINERY.] The gross receipts from the 
129.5   sale of used farm machinery and, after June 30, 2000, the gross 
129.6   receipts from the sale of new farm machinery, are exempt. 
129.7      Sec. 6.  Minnesota Statutes 1996, section 297A.25, is 
129.8   amended by adding a subdivision to read: 
129.9      Subd. 73.  [BIOSOLIDS PROCESSING EQUIPMENT.] The gross 
129.10  receipts from the sale of and the storage, use, or consumption 
129.11  of equipment designed to process, dewater, and recycle biosolids 
129.12  for wastewater treatment facilities of political subdivisions, 
129.13  and materials incidental to installation of that equipment, are 
129.14  exempt. 
129.15     Sec. 7.  Minnesota Statutes 1996, section 297A.25, is 
129.16  amended by adding a subdivision to read: 
129.17     Subd. 74.  [CONSTRUCTION MATERIALS; DULUTH ENTERTAINMENT 
129.18  CONVENTION CENTER.] Purchases of materials, supplies, or 
129.19  equipment used or consumed in the construction, equipment, 
129.20  improvement, or expansion of the Duluth entertainment convention 
129.21  center are exempt from the tax imposed under this chapter and 
129.22  from any sales and use tax imposed by a local unit of government 
129.23  notwithstanding any ordinance or charter provision.  This 
129.24  exemption applies regardless of whether the materials, supplies, 
129.25  or equipment are purchased by the city or by a construction 
129.26  manager or contractor. 
129.27     Sec. 8.  Minnesota Statutes 1996, section 297A.25, is 
129.28  amended by adding a subdivision to read: 
129.29     Subd. 75.  [CONSTRUCTION MATERIALS; MINNEAPOLIS CONVENTION 
129.30  CENTER.] Purchases of materials, supplies, or equipment used or 
129.31  consumed in the construction, equipment, improvement, or 
129.32  expansion of the Minneapolis convention center are exempt from 
129.33  the tax imposed under this chapter and from any sales and use 
129.34  tax imposed by a local unit of government notwithstanding any 
129.35  ordinance or charter provision.  This exemption applies 
129.36  regardless of whether the materials, supplies, or equipment are 
130.1   purchased by the city or by a construction manager or contractor.
130.2      Sec. 9.  Minnesota Statutes 1996, section 297A.25, is 
130.3   amended by adding a subdivision to read: 
130.4      Subd. 76.  [CONSTRUCTION MATERIALS; RIVERCENTRE 
130.5   ARENA.] Purchases of materials, supplies, or equipment used or 
130.6   consumed in the construction, equipment, improvement, or 
130.7   expansion of the Rivercentre arena complex in the city of St. 
130.8   Paul are exempt from the tax imposed under this chapter and from 
130.9   any sales and use tax imposed by a local unit of government 
130.10  notwithstanding any ordinance or charter provision.  This 
130.11  exemption applies regardless of whether the materials, supplies, 
130.12  or equipment are purchased by the city or by a construction 
130.13  manager or contractor. 
130.14     Sec. 10.  Minnesota Statutes 1997 Supplement, section 
130.15  297A.25, is amended by adding a subdivision to read: 
130.16     Subd. 77.  [CONSTRUCTION MATERIALS FOR AN ENVIRONMENTAL 
130.17  LEARNING CENTER.] Construction materials and supplies are exempt 
130.18  from the tax imposed under this section, regardless of whether 
130.19  purchased by the owner or a contractor, subcontractor, or 
130.20  builder, if they are used or consumed in constructing or 
130.21  improving the Long Lake Conservation Center pursuant to the 
130.22  funding provided under Laws 1994, chapter 643, section 23, 
130.23  subdivision 28, as amended by Laws 1995 First Special Session, 
130.24  chapter 2, article 1, section 48; and Laws 1996, chapter 463, 
130.25  section 7, subdivision 26.  The tax shall be calculated and paid 
130.26  as if the rate in section 297A.02, subdivision 1, was in effect 
130.27  and a refund applied for in the manner prescribed in section 
130.28  297A.15, subdivision 7. 
130.29     Sec. 11.  Minnesota Statutes 1996, section 297A.25, is 
130.30  amended by adding a subdivision to read: 
130.31     Subd. 78.  [SOYBEAN OILSEED PROCESSING AND REFINING 
130.32  FACILITY.] Purchases of construction materials and supplies are 
130.33  exempt from the sales and use taxes imposed under this chapter, 
130.34  regardless of whether purchased by the owner or a contractor, 
130.35  subcontractor, or builder, if: 
130.36     (1) the materials and supplies are used or consumed in 
131.1   constructing a facility for soybean oilseed processing and 
131.2   refining; 
131.3      (2) the total capital investment made in the facility is at 
131.4   least $60,000,000; and 
131.5      (3) the facility is constructed by a Minnesota-based 
131.6   cooperative, organized under chapter 308A. 
131.7      Sec. 12.  Minnesota Statutes 1997 Supplement, section 
131.8   297A.256, subdivision 1, is amended to read: 
131.9      Subdivision 1.  [FUNDRAISING SALES BY NONPROFIT GROUPS.] 
131.10  Notwithstanding the provisions of this chapter, the following 
131.11  sales made by a "nonprofit organization" are exempt from the 
131.12  sales and use tax. 
131.13     (a)(1) All sales made by an organization for fundraising 
131.14  purposes if that organization exists solely for the purpose of 
131.15  providing educational or social activities for young people 
131.16  primarily age 18 and under.  This exemption shall apply only if 
131.17  the gross annual sales receipts of the organization from 
131.18  fundraising do not exceed $10,000. 
131.19     (2) A club, association, or other organization of 
131.20  elementary or secondary school students organized for the 
131.21  purpose of carrying on sports, educational, or other 
131.22  extracurricular activities is a separate organization from the 
131.23  school district or school for purposes of applying the $10,000 
131.24  limit.  This paragraph does not apply if the sales are derived 
131.25  from admission charges or from activities for which the money 
131.26  must be deposited with the school district treasurer under 
131.27  section 123.38, subdivision 2, or be recorded in the same manner 
131.28  as other revenues or expenditures of the school district under 
131.29  section 123.38, subdivision 2b. 
131.30     (b) All sales made by an organization for fundraising 
131.31  purposes if that organization is a senior citizen group or 
131.32  association of groups that in general limits membership to 
131.33  persons age 55 or older and is organized and operated 
131.34  exclusively for pleasure, recreation and other nonprofit 
131.35  purposes and no part of the net earnings inure to the benefit of 
131.36  any private shareholders.  This exemption shall apply only if 
132.1   the gross annual sales receipts of the organization from 
132.2   fundraising do not exceed $10,000. 
132.3      (c) The gross receipts from the sales of tangible personal 
132.4   property at, admission charges for, and sales of food, meals, or 
132.5   drinks at fundraising events sponsored by a nonprofit 
132.6   organization when the entire proceeds, except for the necessary 
132.7   expenses therewith, will be used solely and exclusively for 
132.8   charitable, religious, or educational purposes.  This exemption 
132.9   does not apply to admission charges for events involving bingo 
132.10  or other gambling activities or to charges for use of amusement 
132.11  devices involving bingo or other gambling activities.  For 
132.12  purposes of this paragraph, a "nonprofit organization" means any 
132.13  unit of government, corporation, society, association, 
132.14  foundation, or institution organized and operated for 
132.15  charitable, religious, educational, civic, fraternal, senior 
132.16  citizens' or veterans' purposes, no part of the net earnings of 
132.17  which inures to the benefit of a private individual. 
132.18     If the profits are not used solely and exclusively for 
132.19  charitable, religious, or educational purposes, the entire gross 
132.20  receipts are subject to tax. 
132.21     Each nonprofit organization shall keep a separate 
132.22  accounting record, including receipts and disbursements from 
132.23  each fundraising event.  All deductions from gross receipts must 
132.24  be documented with receipts and other records.  If records are 
132.25  not maintained as required, the entire gross receipts are 
132.26  subject to tax. 
132.27     The exemption provided by this paragraph does not apply to 
132.28  any sale made by or in the name of a nonprofit corporation as 
132.29  the active or passive agent of a person that is not a nonprofit 
132.30  corporation. 
132.31     The exemption for fundraising events under this paragraph 
132.32  is limited to no more than 24 days a year.  Fundraising events 
132.33  conducted on premises leased for more than ~~four~~ five days but 
132.34  less than 30 days do not qualify for this exemption. 
132.35     (d) The gross receipts from the sale or use of tickets or 
132.36  admissions to a golf tournament held in Minnesota are exempt if 
133.1   the beneficiary of the tournament's net proceeds qualifies as a 
133.2   tax-exempt organization under section 501(c)(3) of the Internal 
133.3   Revenue Code, as amended through December 31, 1994, including a 
133.4   tournament conducted on premises leased or occupied for more 
133.5   than four days. 
133.6      Sec. 13.  Minnesota Statutes 1997 Supplement, section 
133.7   297B.03, is amended to read: 
133.8      297B.03 [EXEMPTIONS.] 
133.9      There is specifically exempted from the provisions of this 
133.10  chapter and from computation of the amount of tax imposed by it 
133.11  the following:  
133.12     (1) Purchase or use, including use under a lease purchase 
133.13  agreement or installment sales contract made pursuant to section 
133.14  465.71, of any motor vehicle by the United States and its 
133.15  agencies and instrumentalities and by any person described in 
133.16  and subject to the conditions provided in section 297A.25, 
133.17  subdivision 18.  
133.18     (2) Purchase or use of any motor vehicle by any person who 
133.19  was a resident of another state at the time of the purchase and 
133.20  who subsequently becomes a resident of Minnesota, provided the 
133.21  purchase occurred more than 60 days prior to the date such 
133.22  person began residing in the state of Minnesota.  
133.23     (3) Purchase or use of any motor vehicle by any person 
133.24  making a valid election to be taxed under the provisions of 
133.25  section 297A.211.  
133.26     (4) Purchase or use of any motor vehicle previously 
133.27  registered in the state of Minnesota when such transfer 
133.28  constitutes a transfer within the meaning of section 351 or 721 
133.29  of the Internal Revenue Code of 1986, as amended through 
133.30  December 31, 1988.  
133.31     (5) Purchase or use of any vehicle owned by a resident of 
133.32  another state and leased to a Minnesota based private or for 
133.33  hire carrier for regular use in the transportation of persons or 
133.34  property in interstate commerce provided the vehicle is titled 
133.35  in the state of the owner or secured party, and that state does 
133.36  not impose a sales tax or sales tax on motor vehicles used in 
134.1   interstate commerce.  
134.2      (6) Purchase or use of a motor vehicle by a private 
134.3   nonprofit or public educational institution for use as an 
134.4   instructional aid in automotive training programs operated by 
134.5   the institution.  "Automotive training programs" includes motor 
134.6   vehicle body and mechanical repair courses but does not include 
134.7   driver education programs.  
134.8      (7) Purchase of a motor vehicle for use as an ambulance by 
134.9   an ambulance service licensed under section 144E.10. 
134.10     (8) Purchase of a motor vehicle by or for a public library, 
134.11  as defined in section 134.001, subdivision 2, as a bookmobile or 
134.12  library delivery vehicle. 
134.13     (9) Purchase or use of a motor vehicle by a town for use 
134.14  exclusively for road maintenance, including snowplows and dump 
134.15  trucks, but not including automobiles, vans, or pickup trucks. 
134.16     Sec. 14.  Minnesota Statutes 1997 Supplement, section 
134.17  297G.01, is amended by adding a subdivision to read: 
134.18     Subd. 3a.  [CIDER.] "Cider" means a product that contains 
134.19  not less than one-half of one percent nor more than seven 
134.20  percent alcohol by volume and is made from the alcoholic 
134.21  fermentation of the juice of apples.  Cider includes, but is not 
134.22  limited to, flavored, sparkling, and carbonated cider. 
134.23     Sec. 15.  Minnesota Statutes 1997 Supplement, section 
134.24  297G.03, subdivision 1, is amended to read: 
134.25     Subdivision 1.  [GENERAL RATE; DISTILLED SPIRITS AND WINE.] 
134.26  The following excise tax is imposed on all distilled spirits and 
134.27  wine manufactured, imported, sold, or possessed in this state: 
134.28                                  Standard             Metric
134.29  (a) Distilled spirits,      $5.03 per gallon   $1.33 per liter
134.30  liqueurs, cordials, 
134.31  and specialties regardless 
134.32  of alcohol content 
134.33  (excluding ethyl alcohol) 
134.34  (b) Wine containing         $ .30 per gallon   $ .08 per liter 
134.35  14 percent or less
134.36  alcohol by volume 
135.1   (except cider as defined 
135.2   in section 297G.01, 
135.3   subdivision 3a) 
135.4   (c) Wine containing         $ .95 per gallon   $ .25 per liter
135.5   more than 14 percent 
135.6   but not more than 21
135.7   percent alcohol by volume 
135.8   (d) Wine containing more    $1.82 per gallon   $ .48 per liter
135.9   than 21 percent but not 
135.10  more than 24 percent
135.11  alcohol by volume 
135.12  (e) Wine containing more    $3.52 per gallon   $ .93 per liter
135.13  than 24 percent alcohol
135.14  by volume
135.15  (f) Natural and             $1.82 per gallon   $ .48 per liter
135.16  artificial sparkling wines
135.17  containing alcohol 
135.18  (g) Cider as defined in     $ .15 per gallon   $ .04 per liter
135.19  section 297G.01,
135.20  subdivision 3a
135.21     In computing the tax on a package of distilled spirits or 
135.22  wine, a proportional tax at a like rate on all fractional parts 
135.23  of a gallon or liter must be paid, except that the tax on a 
135.24  fractional part of a gallon less than 1/16 of a gallon is the 
135.25  same as for 1/16 of a gallon. 
135.26     Sec. 16.  Laws 1997, chapter 231, article 7, section 47, is 
135.27  amended to read: 
135.28     Sec. 47.  [EFFECTIVE DATES.] 
135.29     Section 1 is effective for refund claims filed after June 
135.30  30, 1997. 
135.31     Sections 2, 6, 7, 9, 13, 15, 16, 17, 18, 20, 21, 25, 31, 
135.32  and 32 are effective for purchases, sales, storage, use, or 
135.33  consumption occurring after June 30, 1997. 
135.34     Section 3 is effective on July 1, 1997, or upon adoption of 
135.35  the corresponding rules, whichever occurs earlier. 
135.36     Section 4, paragraph (i), clause (iv), is effective for 
136.1   purchases and sales occurring after September 30, 1987; the 
136.2   remainder of section 4 is effective for purchases and sales 
136.3   occurring after June 30, 1997. 
136.4      Section 5, paragraph (h), is effective for purchases and 
136.5   sales occurring after June 30, 1997, and paragraph (i) is 
136.6   effective for purchases and sales occurring after December 31, 
136.7   1992. 
136.8      Sections 8 and 46 are effective July 1, 1998. 
136.9      Sections 10 and 22 are effective for purchases, sales, 
136.10  storage, use, or consumption occurring after August 31, 1996. 
136.11     Sections 11, 12, 33, 34, and 35 are effective July 1, 1997. 
136.12     Sections 14 and 19 are effective for purchases and sales 
136.13  after June 30, 1999. 
136.14     Section 23 is effective January 1, 1997. 
136.15     Section 24 is effective for purchases, sales, storage, use, 
136.16  or consumption occurring after April 30, 1997. 
136.17     Sections 26 and 45 are effective for purchases, sales, 
136.18  storage, use, or consumption occurring after July 31, 1997, and 
136.19  before August 1, 2003. 
136.20     Section 27 is effective for purchases, sales, storage, use, 
136.21  or consumption occurring after May 31, 1997. 
136.22     Section 28 is effective for sales made after December 31, 
136.23  1989, and before January 1, 1997.  The provisions of Minnesota 
136.24  Statutes, section 289A.50, apply to refunds claimed under 
136.25  section 28.  Refunds claimed under section 28 must be filed by 
136.26  the later of December 31, 1997, or the time limit under 
136.27  Minnesota Statutes, section 289A.40, subdivision 1. 
136.28     Section 29 is effective for sales or first use after May 
136.29  31, 1997~~, and before June 1, 1998~~. 
136.30     Sections 30, 42, and 43 are effective the day following 
136.31  final enactment. 
136.32     Sections 36 to 39 are effective the day after compliance by 
136.33  the governing body of Cook county with Minnesota Statutes, 
136.34  section 645.021, subdivision 3. 
136.35     Section 40 is effective for STAR funds collected after June 
136.36  30, 1997. 
137.1      Sec. 17.  Laws 1997, chapter 231, article 13, section 19, 
137.2   is amended to read: 
137.3      Sec. 19.  [MORATORIUM.] 
137.4      The commissioner of revenue shall not initiate or continue 
137.5   any action to collect any underpayment from political 
137.6   subdivisions, or to reimburse any overpayment to any political 
137.7   subdivisions, of use taxes on solid waste management services 
137.8   under Minnesota Statutes, section 297A.45, or of sales taxes on 
137.9   any amount included on a property tax statement for county solid 
137.10  waste management services, and any other amount collected by a 
137.11  county under Minnesota Statutes, section 400.08 or 473.811, 
137.12  subdivision 3a.  The moratorium is effective for the period from 
137.13  January 1, 1990, through December 31, ~~1996~~ 1997. 
137.14     Sec. 18.  Laws 1993, chapter 375, article 9, section 46, 
137.15  subdivision 2, is amended to read: 
137.16     Subd. 2.  [USE OF REVENUES.] Revenues received from the tax 
137.17  authorized by subdivision 1 may only be used by the city to pay 
137.18  the cost of collecting the tax, and to pay for the following 
137.19  projects or to secure or pay any principal, premium, or interest 
137.20  on bonds issued in accordance with subdivision 3 for the 
137.21  following projects.  
137.22     (a) To pay all or a portion of the capital expenses of 
137.23  construction, equipment and acquisition costs for the expansion 
137.24  and remodeling of the St. Paul Civic Center complex. 
137.25     (b) The remainder of the funds must be spent for capital 
137.26  projects to further residential, cultural, commercial, and 
137.27  economic development in both downtown St. Paul and St. Paul 
137.28  neighborhoods.  The amount apportioned under this paragraph 
137.29  shall be no less than 60 percent of the revenues derived from 
137.30  the tax each year, except to the extent that a portion of that 
137.31  amount is required to pay debt service on bonds issued for the 
137.32  purposes of paragraph (a) prior to March 1, 1998. 
137.33     By January 15 of each odd-numbered year, the mayor and the 
137.34  city council must report to the legislature on the use of sales 
137.35  tax revenues during the preceding two-year period. 
137.36     Sec. 19.  Laws 1991, chapter 291, article 8, section 27, 
138.1   subdivision 3, is amended to read: 
138.2      Subd. 3.  [USE OF REVENUES.] Revenues received from taxes 
138.3   authorized by subdivisions 1 and 2 shall be used by the city to 
138.4   pay the cost of collecting the tax and to pay all or a portion 
138.5   of the expenses of constructing and operating facilities as part 
138.6   of an urban revitalization project in downtown Mankato known as 
138.7   Riverfront 2000.  Authorized expenses include, but are not 
138.8   limited to, acquiring property and paying relocation expenses 
138.9   related to the development of Riverfront 2000 and related 
138.10  facilities, and securing or paying debt service on bonds or 
138.11  other obligations issued to finance the construction of 
138.12  Riverfront 2000 and related facilities.  For purposes of this 
138.13  section, "Riverfront 2000 and related facilities" means a 
138.14  civic-convention center, an arena, a riverfront park, a 
138.15  technology center and related educational facilities, and all 
138.16  publicly owned real or personal property that the governing body 
138.17  of the city determines will be necessary to facilitate the use 
138.18  of these facilities, including but not limited to parking, 
138.19  skyways, pedestrian bridges, lighting, and landscaping. 
138.20     Sec. 20.  [CITY OF ST. PAUL; USE OF SALES TAX REVENUES.] 
138.21     The revenue derived from the sales tax imposed by the city 
138.22  of St. Paul under Laws 1993, chapter 375, article 9, section 46, 
138.23  as amended by Laws 1997, chapter 231, article 7, section 40, 
138.24  that is distributed to the city's cultural STAR program must be 
138.25  awarded through a grant or loan review process as provided in 
138.26  this section.  Eighty percent of the revenue must be annually 
138.27  awarded to nonprofit arts organizations, libraries, and museums 
138.28  that are located in the designated cultural district of downtown 
138.29  St. Paul, and the remaining 20 percent may be awarded to 
138.30  businesses in the cultural district for projects which enhance 
138.31  visitor enjoyment of the district, or to nonprofit arts 
138.32  organizations, libraries, and museums located in St. Paul but 
138.33  outside of the cultural district.  Grants or loans may be used 
138.34  for capital improvements. The restrictions in this section apply 
138.35  to all STAR cultural funds collected after June 30, 1998. 
138.36     Sec. 21.  [ST. PAUL NEIGHBORHOOD INVESTMENT SALES TAX 
139.1   EXPENDITURES; CITIZEN REVIEW PROCESS.] 
139.2      Subdivision 1.  [REQUIREMENT.] Expenditures of revenues 
139.3   from the sales tax imposed by the city of St. Paul that are 
139.4   dedicated to neighborhood investments may be made only after 
139.5   review of the proposals for expenditures by the citizen review 
139.6   panel described in this section.  The panel must evaluate the 
139.7   proposals and provide a report to the city council that makes 
139.8   recommendations regarding the proposed expenditures in rank 
139.9   order. 
139.10     Subd. 2.  [APPOINTMENT OF MEMBERS.] The citizen review 
139.11  panel must consist of at least seven members, with at least one 
139.12  member residing in each of the city council ward areas.  The 
139.13  mayor must appoint the members, and the appointments are subject 
139.14  to confirmation by a majority vote of the city council.  Members 
139.15  serve for a term of four years.  Elected officials and employees 
139.16  of the city are ineligible to serve as members of the panel. 
139.17     Sec. 22.  [CITY OF BEMIDJI; TAXES AUTHORIZED.] 
139.18     Subdivision 1.  [SALES AND USE TAXES.] Notwithstanding 
139.19  Minnesota Statutes, section 477A.016, or any other provision of 
139.20  law, ordinance, or city charter, if approved by the city voters 
139.21  at the next general election held after the date of final 
139.22  enactment of this act, the city of Bemidji may impose by 
139.23  ordinance sales and use taxes of up to one percent for the 
139.24  purposes specified in subdivision 3.  The provisions of 
139.25  Minnesota Statutes, section 297A.48, govern the imposition, 
139.26  administration, collection, and enforcement of the taxes 
139.27  authorized under this subdivision. 
139.28     Subd. 2.  [EXCISE TAX AUTHORIZED.] Notwithstanding 
139.29  Minnesota Statutes, section 477A.016, or any other provision of 
139.30  law, ordinance, or city charter, if a sales and use tax is 
139.31  imposed under subdivision 1, the city of Bemidji may impose by 
139.32  ordinance, for the purpose specified in subdivision 3, an excise 
139.33  tax of up to $20 per motor vehicle, as defined by ordinance, 
139.34  purchased or acquired from any person engaged within the city in 
139.35  the business of selling motor vehicles at retail. 
139.36     Subd. 3.  [USE OF REVENUES.] Revenues received from taxes 
140.1   authorized by subdivisions 1 and 2 must be used by the city to 
140.2   pay the cost of collecting the taxes and to pay all or part of 
140.3   the capital and administrative cost of constructing, 
140.4   maintaining, and operating facilities as part of a regional 
140.5   convention center in Bemidji.  Authorized expenses include, but 
140.6   are not limited to, acquiring property and paying construction, 
140.7   maintenance, and operating expenses related to the development 
140.8   of a convention center which is an arena for sporting events, 
140.9   concerts, trade shows, conventions, meeting rooms, and other 
140.10  compatible uses including, but not limited to, parking, 
140.11  lighting, and landscaping. 
140.12     Subd. 4.  [BONDS.] If the tax authorized under subdivision 
140.13  1 is approved by the city voters, the city of Bemidji may issue, 
140.14  without additional election, general obligation bonds of the 
140.15  city in an amount not to exceed $25,000,000 to pay capital and 
140.16  administrative expenses for the acquisition, construction, 
140.17  improvement, operation, and maintenance of a convention center.  
140.18  The debt represented by the bonds must not be included in 
140.19  computing any debt limitations applicable to the city, and the 
140.20  levy of taxes required by Minnesota Statutes, section 475.61, to 
140.21  pay the principal or any interest on the bonds must not be 
140.22  subject to any levy limitations or be included in computing or 
140.23  applying any levy limitation applicable to the city. 
140.24     Subd. 5.  [TERMINATION OF TAXES.] The taxes imposed under 
140.25  subdivisions 1 and 2 expire when the city council determines 
140.26  that sufficient funds have been received from taxes to finance 
140.27  the capital and administrative costs for acquisition, 
140.28  construction, improvement, operation, and maintenance of a 
140.29  convention center and related facilities to repay or retire at 
140.30  maturity the principal, interest, and premium due on any bonds 
140.31  issued for the project under subdivision 4.  Any funds remaining 
140.32  after completion of the project and retirement or redemption of 
140.33  the bonds may be placed in the general fund of the city.  The 
140.34  taxes imposed under subdivisions 1 and 2 may expire at an 
140.35  earlier time if the city so determines by ordinance. 
140.36     Subd. 6.  [EFFECTIVE DATE.] This section is effective the 
141.1   day after compliance by the governing body of the city of 
141.2   Bemidji with Minnesota Statutes, section 645.021, subdivision 3. 
141.3      Sec. 23.  [CITY OF DETROIT LAKES; TAXES AUTHORIZED.] 
141.4      Subdivision 1.  [SALES AND USE TAXES.] Notwithstanding 
141.5   Minnesota Statutes, section 477A.016, or any other provision of 
141.6   law, ordinance, or city charter, if approved by the city voters 
141.7   at the next general election held after the date of final 
141.8   enactment of this act, the city of Detroit Lakes may impose by 
141.9   ordinance sales and use taxes of up to one-half of one percent.  
141.10  The provisions of Minnesota Statutes, section 297A.48, govern 
141.11  the imposition, administration, collection, and enforcement of 
141.12  the taxes authorized under this subdivision. 
141.13     Subd. 2.  [USE OF REVENUES.] Revenues received from the 
141.14  taxes authorized under subdivision 1 must be used for 
141.15  construction of a community center and for economic development 
141.16  projects. 
141.17     Subd. 3.  [EFFECTIVE DATE.] This section is effective the 
141.18  day after compliance by the governing body of the city of 
141.19  Detroit Lakes with Minnesota Statutes, section 645.021, 
141.20  subdivision 3. 
141.21     Sec. 24.  [CITY OF FERGUS FALLS; TAXES AUTHORIZED.] 
141.22     Subdivision 1.  [SALES AND USE TAXES.] Notwithstanding 
141.23  Minnesota Statutes, section 477A.016, or any other provision of 
141.24  law, ordinance, or city charter, if approved by the city voters 
141.25  at the next general election held after the date of final 
141.26  enactment of this act, the city of Fergus Falls may impose by 
141.27  ordinance sales and use taxes of up to one-half of one percent 
141.28  for the purposes specified in subdivision 3.  The provisions of 
141.29  Minnesota Statutes, section 297A.48, govern the imposition, 
141.30  administration, collection, and enforcement of the taxes 
141.31  authorized under this subdivision, except that the sales and use 
141.32  tax shall not apply to farm machinery. 
141.33     Subd. 2.  [EXCISE TAX AUTHORIZED.] Notwithstanding 
141.34  Minnesota Statutes, section 477A.016, or any other provision of 
141.35  law, ordinance, or city charter, if a sales and use tax is 
141.36  imposed under subdivision 1, the city of Fergus Falls may impose 
142.1   by ordinance, for the purposes specified in subdivision 3, an 
142.2   excise tax of up to $20 per motor vehicle, as defined by 
142.3   ordinance, purchased or acquired from any person engaged within 
142.4   the city in the business of selling motor vehicles at retail. 
142.5      Subd. 3.  [USE OF REVENUES.] Revenues received from taxes 
142.6   authorized by subdivisions 1 and 2 must be used by the city to 
142.7   pay the costs of collecting the taxes and to pay all or part of 
142.8   the capital and administrative costs of constructing and 
142.9   operating facilities as part of a regional conference center, 
142.10  community center, recreational and tourism project in Fergus 
142.11  Falls known as Project Reach Out.  Authorized expenses include, 
142.12  but are not limited to, acquiring property and paying 
142.13  construction and operating expenses related to the development 
142.14  of Project Reach Out and related facilities, and securing or 
142.15  paying debt service on bonds or other obligations issued to 
142.16  finance the construction of Project Reach Out and related 
142.17  facilities. 
142.18     For purposes of this section, "Project Reach Out and 
142.19  related facilities" means a regional conference center, 
142.20  community center, regional park and recreational facilities, and 
142.21  all publicly owned real or personal property that the governing 
142.22  body of the city determines are necessary to facilitate the use 
142.23  of these facilities, including but not limited to, parking, 
142.24  pedestrian bridges, lighting, and landscaping. 
142.25     Subd. 4.  [BONDS.] If the taxes authorized under 
142.26  subdivision 1 are approved by the city voters, the city of 
142.27  Fergus Falls may issue without additional election general 
142.28  obligation bonds of the city in an amount necessary to pay 
142.29  capital and administrative expenses for the acquisition, 
142.30  construction, improvement, and maintenance of Project Reach Out 
142.31  and related facilities.  The debt represented by the bonds must 
142.32  not be included in computing any debt limitations applicable to 
142.33  the city, and the levy of taxes required by Minnesota Statutes, 
142.34  section 475.61, to pay the principal or any interest on the 
142.35  bonds must not be subject to any levy limitation or be included 
142.36  in computing or applying any levy limitation applicable to the 
143.1   city. 
143.2      Subd. 5.  [TERMINATION OF TAXES.] The taxes imposed under 
143.3   subdivisions 1 and 2 expire at the end of 15 years beginning 
143.4   with the date the tax is imposed, unless the city determines 
143.5   that insufficient funds have been received from the taxes to 
143.6   finance the capital and administrative costs for acquisition, 
143.7   construction, improvement, and operation of Project Reach Out 
143.8   and related facilities and to prepay or retire at maturity the 
143.9   principal, interest, and premium due on any bonds issued for the 
143.10  project under subdivision 4.  If the city council determines 
143.11  that the funds are not sufficient, it may extend the tax by 
143.12  ordinance, subject to the provisions of Minnesota Statutes, 
143.13  section 297A.48, subdivision 9.  The tax may be extended for the 
143.14  period of time the city council determines is necessary to 
143.15  finance the capital and administrative costs of the project and 
143.16  to prepay or retire at maturity the principal, interest, and 
143.17  premium due on any bonds issued for the project under 
143.18  subdivision 4.  Any funds remaining after completion of the 
143.19  project and retirement or redemption of the bonds may be placed 
143.20  in the general fund of the city.  The taxes imposed under 
143.21  subdivisions 1 and 2 may expire at an earlier time if the city 
143.22  so determines by ordinance. 
143.23     Subd. 6.  [EFFECTIVE DATE.] This section is effective the 
143.24  day after compliance by the governing body of the city of Fergus 
143.25  Falls with Minnesota Statutes, section 645.021, subdivision 3. 
143.26     Sec. 25.  [CITY OF HUTCHINSON; TAXES AUTHORIZED.] 
143.27     Subdivision 1.  [SALES AND USE TAXES.] Notwithstanding 
143.28  Minnesota Statutes, section 477A.016, or any other provision of 
143.29  law, ordinance, or city charter, the city of Hutchinson may 
143.30  impose by ordinance a sales and use tax of up to one-half of one 
143.31  percent for the purposes specified in subdivision 4, paragraph 
143.32  (a).  The provisions of Minnesota Statutes, section 297A.48, 
143.33  govern the imposition, administration, collection, and 
143.34  enforcement of the tax authorized under this subdivision. 
143.35     Subd. 2.  [EXCISE TAX AUTHORIZED.] Notwithstanding 
143.36  Minnesota Statutes, section 477A.016, or any other provision of 
144.1   law, ordinance, or city charter, if a sales and use tax is 
144.2   imposed under subdivision 1, the city of Hutchinson may impose 
144.3   by ordinance, for the purposes specified in subdivision 4, 
144.4   paragraph (a), an excise tax of up to $20 per motor vehicle, as 
144.5   defined by ordinance, purchased or acquired from any person 
144.6   engaged within the city in the business of selling motor 
144.7   vehicles at retail. 
144.8      Subd. 3.  [TAX ON FOOD AND BEVERAGES 
144.9   AUTHORIZED.] Notwithstanding Minnesota Statutes, section 
144.10  477A.016, or any other provision of law, ordinance, or city 
144.11  charter, the city of Hutchinson may impose by ordinance, for the 
144.12  purposes specified in subdivision 4, paragraph (b), a tax on the 
144.13  gross receipts from the on-sales of intoxicating liquor and 
144.14  fermented malt beverages and the sale of food and beverages sold 
144.15  for consumption on or off the premises by restaurants and places 
144.16  of refreshment within the city.  The tax is limited to one-half 
144.17  of one percent on gross receipts while the tax under subdivision 
144.18  1 is imposed and one percent on gross receipts when the tax 
144.19  under subdivision 1 expires as provided in subdivision 7.  The 
144.20  city shall define "restaurant" and "place of refreshment" as 
144.21  part of the ordinance. 
144.22     Subd. 4.  [USE OF REVENUES.] (a) Revenues received from 
144.23  taxes authorized by subdivisions 1 and 2 must be used by the 
144.24  city to pay the cost of collecting the taxes and to pay for 
144.25  construction and improvement of a civic and community center and 
144.26  recreational facilities to serve seniors and youth.  Authorized 
144.27  expenses include, but are not limited to, acquiring property, 
144.28  paying construction and operating expenses related to the 
144.29  development of an authorized facility, and securing or paying 
144.30  debt service on bonds or other obligations issued to finance the 
144.31  construction or expansion of an authorized facility.  The 
144.32  capital expenses for all projects authorized under this 
144.33  paragraph that may be paid with these taxes is limited to 
144.34  $5,000,000.  In addition, an amount not to exceed the amount 
144.35  raised by the tax in subdivision 3 may be used each year for the 
144.36  purposes listed in paragraph (b). 
145.1      (b) Revenues received from taxes authorized under 
145.2   subdivision 3 shall be used by the city to pay the cost of 
145.3   collecting the tax and to pay all or part of the operating costs 
145.4   for the civic and community center. 
145.5      Subd. 5.  [REFERENDUM.] If the Hutchinson city council 
145.6   intends to exercise the authority provided in subdivisions 1 to 
145.7   3, it shall conduct a referendum on the issue.  The question, 
145.8   which shall seek simultaneous approval for imposing all three 
145.9   taxes, must be submitted to the voters at the next general 
145.10  election held after the date of final enactment of this act.  
145.11  The taxes may not be imposed unless a majority of votes cast on 
145.12  the question of imposing the taxes is in the affirmative.  The 
145.13  commissioner of revenue shall prepare a suggested form of 
145.14  question to be presented at the election.  This subdivision 
145.15  applies notwithstanding any city charter provision to the 
145.16  contrary. 
145.17     Subd. 6.  [BONDS.] If the taxes are approved by the city 
145.18  voters as provided in subdivision 5, the city of Hutchinson may 
145.19  issue, without additional election, general obligation bonds of 
145.20  the city in an amount equal to $5,000,000 to pay capital and 
145.21  administrative expenses for the acquisition, construction, 
145.22  improvement, and maintenance of the facilities listed in 
145.23  subdivision 4, paragraph (a).  The debt represented by the bonds 
145.24  must not be included in computing any debt limitations 
145.25  applicable to the city.  The levy of taxes required by Minnesota 
145.26  Statutes, section 475.61, to pay the principal or any interest 
145.27  on the bonds must not be subject to any levy limitation or be 
145.28  included in computing or applying any levy limitation applicable 
145.29  to the city. 
145.30     Subd. 7.  [TERMINATION OF TAXES.] (a) The taxes imposed 
145.31  under subdivisions 1 and 2 expire when the city council 
145.32  determines that sufficient funds have been received from the 
145.33  taxes to finance the capital and administrative costs for the 
145.34  acquisition, construction, and improvement of facilities 
145.35  described in subdivision 4, paragraph (a), and to prepay or 
145.36  retire at maturity the principal, interest, and premium due on 
146.1   any bonds issued for the facilities under subdivision 6.  Any 
146.2   funds remaining after completion of the project and retirement 
146.3   or redemption of the bonds may be placed in the general fund of 
146.4   the city.  The taxes imposed under subdivisions 1 and 2 may 
146.5   expire at an earlier time if the city so determines by ordinance.
146.6      (b) The tax imposed under subdivision 3 shall only expire 
146.7   if the city chooses to rescind it by ordinance. 
146.8      Subd. 8.  [EFFECTIVE DATE.] This section is effective the 
146.9   day after compliance by the governing body of the city of 
146.10  Hutchinson with Minnesota Statutes, section 645.021, subdivision 
146.11  3. 
146.12     Sec. 26.  [CITY OF OWATONNA; TAXES AUTHORIZED.] 
146.13     Subdivision 1.  [SALES AND USE TAXES.] Notwithstanding 
146.14  Minnesota Statutes, section 477A.016, or any other provision of 
146.15  law, ordinance, or city charter, if approved by the city voters 
146.16  at the next general election held after final enactment of this 
146.17  act, the city of Owatonna may impose by ordinance a sales and 
146.18  use tax of up to one-half of one percent for the purposes 
146.19  specified in subdivision 3.  The provisions of Minnesota 
146.20  Statutes, section 297A.48, govern the imposition, 
146.21  administration, collection, and enforcement of the tax 
146.22  authorized under this subdivision. 
146.23     Subd. 2.  [EXCISE TAX AUTHORIZED.] Notwithstanding 
146.24  Minnesota Statutes, section 477A.016, or any other provision of 
146.25  law, ordinance, or city charter, if a sales and use tax is 
146.26  imposed under subdivision 1, the city of Owatonna may impose by 
146.27  ordinance, for the purposes specified in subdivision 3, an 
146.28  excise tax of up to $20 per motor vehicle, as defined by 
146.29  ordinance, purchased or acquired from any person engaged within 
146.30  the city in the business of selling motor vehicles at retail. 
146.31     Subd. 3.  [USE OF REVENUES.] Revenues received from taxes 
146.32  authorized by subdivisions 1 and 2 must be used by the city to 
146.33  pay the costs of collecting the taxes and to pay all or part of 
146.34  the capital and administrative costs of constructing and 
146.35  improving infrastructure and facilities as part of Owatonna 
146.36  Economic Development 2000 and related facilities.  Authorized 
147.1   expenses include, but are not limited to, acquiring property and 
147.2   paying construction and operating expenses related to the 
147.3   development of Owatonna Economic Development 2000 and related 
147.4   facilities, and securing or paying debt service on bonds or 
147.5   other obligations issued to finance the construction of Owatonna 
147.6   Economic Development 2000 and related facilities. 
147.7      For purposes of this section, "Owatonna Economic 
147.8   Development 2000 and related facilities" means the improvement 
147.9   of the Owatonna regional airport and infrastructure 
147.10  improvements, including roads and the extension of water and 
147.11  sewer services, for an economic and tourism project. 
147.12     Subd. 4.  [BONDS.] If the taxes authorized under 
147.13  subdivision 1 are approved by the city voters, the city of 
147.14  Owatonna may issue without additional election general 
147.15  obligation bonds of the city in an amount not to exceed 
147.16  $5,000,000 to pay capital and administrative expenses for the 
147.17  acquisition, construction, improvement, and maintenance of 
147.18  Owatonna Economic Development 2000 and related facilities.  The 
147.19  debt represented by the bonds must not be included in computing 
147.20  any debt limitations applicable to the city, and the levy of 
147.21  taxes required by Minnesota Statutes, section 475.61, to pay the 
147.22  principal and any interest on the bonds must not be subject to 
147.23  any levy limitation or be included in computing or applying any 
147.24  levy limitation applicable to the city. 
147.25     Subd. 5.  [TERMINATION OF TAXES.] The taxes imposed under 
147.26  subdivisions 1 and 2 expire when the city council determines 
147.27  that sufficient funds have been received from the taxes to 
147.28  finance the capital and administrative costs for acquisition, 
147.29  construction, and improvement of Owatonna Economic Development 
147.30  2000 and related facilities and to prepay or retire at maturity 
147.31  the principal, interest, and premium due on any bonds issued for 
147.32  the project under subdivision 4.  Any funds remaining after 
147.33  completion of the project and retirement or redemption of the 
147.34  bonds may be placed in the general fund of the city.  The taxes 
147.35  imposed under subdivisions 1 and 2 may expire at an earlier time 
147.36  if the city so determines by ordinance. 
148.1      Subd. 6.  [EFFECTIVE DATE.] This section is effective the 
148.2   day after compliance by the governing body of the city of 
148.3   Owatonna with Minnesota Statutes, section 645.021, subdivision 3.
148.4      Sec. 27.  [ST. CLOUD, SAUK RAPIDS, SARTELL, WAITE PARK, ST. 
148.5   JOSEPH; TAXES AUTHORIZED.] 
148.6      Subdivision 1.  [SALES AND USE TAXES.] Notwithstanding 
148.7   Minnesota Statutes, section 477A.016, or any other provision of 
148.8   law, ordinance, or city charter, the cities of St. Cloud, Sauk 
148.9   Rapids, Sartell, Waite Park, and St. Joseph may each impose by 
148.10  ordinance a sales and use tax of up to one percent for the 
148.11  purposes specified in subdivision 5.  The provisions of 
148.12  Minnesota Statutes, section 297A.48, govern the imposition, 
148.13  administration, collection, and enforcement of the taxes 
148.14  authorized under this subdivision. 
148.15     Subd. 2.  [EXCISE TAX AUTHORIZED.] Notwithstanding 
148.16  Minnesota Statutes, section 477A.016, or any other provision of 
148.17  law, ordinance, or city charter, the cities that impose the 
148.18  sales and use taxes under subdivision 1 may each impose by 
148.19  ordinance, for the purposes specified in subdivision 5, an 
148.20  excise tax of up to $20 per motor vehicle acquired from any 
148.21  person engaged within the city in the business of selling motor 
148.22  vehicles at retail. 
148.23     Subd. 3.  [FOOD AND BEVERAGE TAX 
148.24  AUTHORIZED.] Notwithstanding Minnesota Statutes, section 
148.25  477A.016, or any other provision of law, ordinance, or city 
148.26  charter, the cities identified in subdivision 1 may each impose 
148.27  by ordinance, for the purposes specified in subdivision 5, a tax 
148.28  of up to one percent on the gross receipts from the on-sales of 
148.29  intoxicating liquor and fermented malt beverages and the sale of 
148.30  food and beverages sold at restaurants and places of refreshment 
148.31  within the city.  The city shall define "restaurant" and "place 
148.32  of refreshment" as part of the ordinance. 
148.33     Subd. 4.  [LODGING TAX AUTHORIZED.] Notwithstanding 
148.34  Minnesota Statutes, section 477A.016, or any other provision of 
148.35  law, ordinance, or city charter, the cities identified in 
148.36  subdivision 1 may each impose by ordinance, for the purposes 
149.1   specified in subdivision 5, a tax of up to one percent on the 
149.2   gross receipts from the furnishing for a consideration of 
149.3   lodging and related services by a hotel, rooming house, tourist 
149.4   court, motel, or trailer camp, other than the renting or leasing 
149.5   of it for a continuous period of 30 days or more.  This tax is 
149.6   in addition to the tax authorized in Minnesota Statutes, section 
149.7   469.190, and is not included in calculating the tax rate subject 
149.8   to the limit imposed on lodging taxes in Minnesota Statutes, 
149.9   section 469.190, subdivision 2. 
149.10     Subd. 5.  [USE OF REVENUES.] (a) Revenues received from the 
149.11  taxes authorized by subdivisions 1 to 4 must be used to pay for 
149.12  the cost of collecting the taxes; to pay all or part of the 
149.13  capital or administrative cost of the acquisition, construction, 
149.14  and improvement of the Central Minnesota Events Center and 
149.15  related on-site and off-site improvements; and to pay for the 
149.16  operating deficit, if any, in the first five years of operation 
149.17  of the facility.  Authorized expenses related to acquisition, 
149.18  construction, and improvement of the center include, but are not 
149.19  limited to, acquiring property, paying construction and 
149.20  operating expenses related to the development of the facility, 
149.21  and securing and paying debt service on bonds or other 
149.22  obligations issued to finance construction or improvement of the 
149.23  authorized facility. 
149.24     (b) In addition, if the revenues collected from a tax 
149.25  imposed in subdivisions 1 to 4 are greater than the amount 
149.26  needed to meet obligations under paragraph (a) in any year, the 
149.27  surplus shall be returned to the cities in proportion to the 
149.28  amount of each city's tax collections under this section for the 
149.29  year of the surplus, and may be used by the city for the 
149.30  acquisition and improvement of park land and open space; for the 
149.31  purchase, renovation, and construction of public buildings and 
149.32  land primarily used for the arts, libraries, and community 
149.33  centers; and for debt service on bonds issued for these 
149.34  purposes.  The amount of surplus revenues raised by a tax will 
149.35  be determined either as provided for by an applicable joint 
149.36  powers agreement or by a governing entity in charge of 
150.1   administering the project in paragraph (a). 
150.2      Subd. 6.  [BONDS.] The cities named in subdivision 1 may 
150.3   each issue bonds that produce in the aggregate the amount needed 
150.4   to pay capital and administrative expenses for the acquisition, 
150.5   construction, and improvement of the Central Minnesota Events 
150.6   Center.  The debt represented by the bonds must not be included 
150.7   in computing any debt limitation applicable to the city and the 
150.8   levy of taxes required by Minnesota Statutes, section 475.61, to 
150.9   pay the principal of and interest on the bonds must not be 
150.10  subject to any levy limitation or be included in computing or 
150.11  applying any levy limitation applicable to the city. 
150.12     Subd. 7.  [TERMINATION OF TAXES.] The taxes imposed by each 
150.13  city under subdivisions 1 to 4 expire when sufficient funds have 
150.14  been received from the taxes to finance the obligations under 
150.15  subdivision (5), paragraph (a), and to prepay or retire at 
150.16  maturity the principal, interest, and premium due on the 
150.17  original bonds issued for the initial acquisition, construction, 
150.18  and improvement of the Central Minnesota Events Center as 
150.19  determined under an applicable joint powers agreement or by a 
150.20  governing entity in charge of administering the project.  Any 
150.21  funds remaining after completion of the project and retirement 
150.22  or redemption of the bonds may be placed in the general funds of 
150.23  the cities imposing the taxes.  The taxes imposed by a city 
150.24  under this section may expire at an earlier time by city 
150.25  ordinance, if authorized under the applicable joint powers 
150.26  agreement or by the governing entity in charge of administering 
150.27  the project. 
150.28     Subd. 8.  [REFERENDUM.] (a) If a governing body of any of 
150.29  the cities listed in subdivision 1 intends to impose any tax 
150.30  authorized under subdivisions 1 to 4, it shall conduct a 
150.31  referendum on the issue.  The question of imposition of the tax 
150.32  must be submitted to the voters at the next general election 
150.33  held after final enactment of this act, and the tax may not be 
150.34  imposed unless a majority of votes cast on the question are in 
150.35  the affirmative.  The commissioner of revenue shall prepare a 
150.36  suggested form of question to be presented at the election. 
151.1      (b) If the cities that pass a referendum required under 
151.2   paragraph (a) determine that the revenues raised from the sum of 
151.3   all the taxes authorized by referendum under this subdivision 
151.4   will not be sufficient to fund the project in subdivision 5, 
151.5   paragraph (a), none of the authorized taxes may be imposed. 
151.6      Subd. 9.  [COLLECTION.] The commissioner of revenue may 
151.7   enter into appropriate agreements with any city listed in 
151.8   subdivision 1 to collect, on behalf of the city, a tax imposed 
151.9   under subdivisions 2 to 4.  The commissioner shall charge the 
151.10  city from the proceeds of any tax a reasonable fee for its 
151.11  collection. 
151.12     Subd. 10.  [EFFECTIVE DATE.] This section is effective 
151.13  August 1, 1998, with respect to any city listed in subdivision 1 
151.14  upon compliance of the governing body of that city with 
151.15  Minnesota Statutes, section 645.021, subdivision 3.  
151.16     Sec. 28.  [CITY OF ROCHESTER; TAXES AUTHORIZED.] 
151.17     Subdivision 1.  [SALES AND USE TAXES.] Notwithstanding 
151.18  Minnesota Statutes, section 477A.016, or any other provision of 
151.19  law, ordinance, or city charter, upon termination of the taxes 
151.20  authorized under Laws 1992, chapter 511, article 8, section 33, 
151.21  subdivision 1, the city of Rochester may, by ordinance, impose 
151.22  sales and use taxes of up to one percent.  The provisions of 
151.23  Minnesota Statutes, section 297A.48, govern the imposition, 
151.24  administration, collection, and enforcement of the tax 
151.25  authorized under this subdivision. 
151.26     Subd. 2.  [EXCISE TAX AUTHORIZED.] Notwithstanding 
151.27  Minnesota Statutes, section 477A.016, or any other contrary 
151.28  provision of law, ordinance, or city charter, upon termination 
151.29  of the tax authorized under Laws 1992, chapter 511, article 8, 
151.30  section 33, subdivision 2, the city of Rochester may, by 
151.31  ordinance, impose an excise tax of up to $20 per motor vehicle, 
151.32  as defined by ordinance, purchased or acquired from any person 
151.33  engaged within the city in the business of selling motor 
151.34  vehicles at retail. 
151.35     Subd. 3.  [USE OF REVENUES.] Revenues received from the 
151.36  taxes authorized by subdivisions 1 and 2 must be used by the 
152.1   city to pay for the cost of collecting and administering the 
152.2   taxes and to pay for capital expenditures and improvements 
152.3   projects approved by ordinance by the Rochester city council up 
152.4   to an amount equal to $76,000,000 provided that at least 25 
152.5   percent of the revenue may be used to fund regional, cultural, 
152.6   recreational, or athletic facilities at the Rochester Center 
152.7   which are approved by the board of trustees of the Minnesota 
152.8   state colleges and universities or the University of Minnesota 
152.9   and which will be available for both community and student use. 
152.10     Subd. 4.  [REFERENDUM.] If the Rochester city council 
152.11  intends to exercise the authority provided in subdivisions 1 and 
152.12  2, it shall conduct a referendum on the issue.  The referendum, 
152.13  which must be approved by the majority of votes cast on the 
152.14  question of imposing the tax, must occur at a general or special 
152.15  election within one year of the date of final enactment of this 
152.16  act. 
152.17     Subd. 5.  [TERMINATION OF TAXES.] The taxes imposed under 
152.18  subdivisions 1 and 2 expire when the city council determines 
152.19  that sufficient funds have been received from the taxes to 
152.20  finance the projects and to prepay or retire at maturity the 
152.21  principal, interest, and premium due on any bonds issued for the 
152.22  projects under subdivision 3.  Any funds remaining after 
152.23  completion of the project and retirement or redemption of the 
152.24  bonds may be placed in the general fund of the city.  The taxes 
152.25  imposed under subdivisions 1 and 2 may expire at an earlier time 
152.26  if the city so determines by ordinance. 
152.27     Subd. 6.  [EFFECTIVE DATE.] This section is effective the 
152.28  day after compliance by the governing body of the city of 
152.29  Rochester with Minnesota Statutes, section 645.021, subdivision 
152.30  3. 
152.31     Sec. 29.  [CITY OF TWO HARBORS; TAXES AUTHORIZED.] 
152.32     Subdivision 1.  [SALES AND USE TAXES.] Notwithstanding 
152.33  Minnesota Statutes, section 477A.016, or any other provision of 
152.34  law, ordinance, or city charter, the city of Two Harbors may 
152.35  impose by ordinance, if approved by the voters of the city at 
152.36  the next general election held after the date of final enactment 
153.1   of this act, sales and use taxes at a rate of up to one 
153.2   percent.  The provisions of Minnesota Statutes, section 297A.48, 
153.3   govern the imposition, administration, collection, and 
153.4   enforcement of the taxes authorized under this subdivision. 
153.5      Subd. 2.  [USE OF REVENUES.] Revenues received from the 
153.6   taxes authorized under subdivision 1 must be used for sanitary 
153.7   sewer separation, wastewater treatment, and harbor refuge 
153.8   development projects. 
153.9      Subd. 3.  [TERMINATION OF TAXES.] The authority granted 
153.10  under subdivision 1 to the city of Two Harbors to impose sales 
153.11  and use taxes expires when the costs of the projects described 
153.12  in subdivision 2 have been paid. 
153.13     Subd. 4.  [EFFECTIVE DATE.] This section is effective the 
153.14  day after compliance by the governing body of the city of Two 
153.15  Harbors with Minnesota Statutes, section 645.021, subdivision 3. 
153.16     Sec. 30.  [CITY OF WINONA; TAXES AUTHORIZED.] 
153.17     Subdivision 1.  [SALES AND USE TAX 
153.18  AUTHORIZED.] Notwithstanding Minnesota Statutes, section 
153.19  477A.016, or any other provision of law, ordinance, or city 
153.20  charter, if approved by the city voters at the next general 
153.21  election held after the date of final enactment of this act, the 
153.22  city of Winona may impose by ordinance sales and use taxes of up 
153.23  to one-half of one percent for the purposes specified in 
153.24  subdivision 3.  The provisions of Minnesota Statutes, section 
153.25  297A.48, govern the imposition, administration, collection, and 
153.26  enforcement of the tax authorized under this subdivision. 
153.27     Subd. 2.  [EXCISE TAX AUTHORIZED.] Notwithstanding 
153.28  Minnesota Statutes, section 477A.016, or any other contrary 
153.29  provision of law, ordinance, or city charter, the city of Winona 
153.30  may impose by ordinance, for the purposes specified in 
153.31  subdivision 3, an excise tax of up to $20 per motor vehicle, as 
153.32  defined by ordinance, purchased or acquired from any person 
153.33  engaged within the city in the business of selling motor 
153.34  vehicles at retail. 
153.35     Subd. 3.  [USE OF REVENUES.] Revenues received from taxes 
153.36  authorized by subdivisions 1 and 2 must be used by the city to 
154.1   pay the costs of collecting the taxes and to pay all or a part 
154.2   of the capital and administrative costs of the dredging of Lake 
154.3   Winona, including securing or paying debt service on bonds or 
154.4   other obligations issued to finance the project under 
154.5   subdivision 4.  
154.6      Subd. 4.  [BONDS.] Pursuant to the approval of the city 
154.7   voters under subdivision 1, the city of Winona may issue without 
154.8   additional election general obligation bonds of the city in an 
154.9   amount not to exceed $4,000,000 to pay capital and 
154.10  administrative expenses for the dredging of Lake Winona.  The 
154.11  debt represented by the bonds must not be included in computing 
154.12  any debt limitations applicable to the city, and the levy of 
154.13  taxes required by Minnesota Statutes, section 475.61, to pay the 
154.14  principal of and interest on the bonds must not be subject to 
154.15  any levy limitation or be included in computing or applying any 
154.16  levy limitation applicable to the city. 
154.17     Subd. 5.  [TERMINATION OF TAXES.] The taxes imposed under 
154.18  subdivisions 1 and 2 expire when the city council determines 
154.19  that sufficient funds have been received from the taxes to 
154.20  finance the dredging of Lake Winona and to prepay or retire at 
154.21  maturity the principal, interest, and premium due on any bonds 
154.22  issued for the project under subdivision 4.  Any funds remaining 
154.23  after completion of the project and retirement or redemption of 
154.24  the bonds may be placed in the general fund of the city.  The 
154.25  taxes imposed under subdivisions 1 and 2 may expire at an 
154.26  earlier time if the city so determines by ordinance.  
154.27     Subd. 6.  [EFFECTIVE DATE.] This section is effective upon 
154.28  compliance by the governing body of the city of Winona with 
154.29  Minnesota Statutes, section 645.021, subdivision 3. 
154.30     Sec. 31.  [CITY OF BURNSVILLE; ADMISSIONS TAX.] 
154.31     Subdivision 1.  [IMPOSITION.] Notwithstanding Minnesota 
154.32  Statutes, section 477A.016, or any other contrary provision of 
154.33  law or ordinance, the governing body of the city of Burnsville 
154.34  may by ordinance impose a tax on admissions to an amphitheater 
154.35  to be constructed within the city. 
154.36     Subd. 2.  [RATE.] The tax may be imposed at a rate not to 
155.1   exceed two dollars per paid admission.  The governing body of 
155.2   the city may by ordinance change the rate imposed, subject to 
155.3   the limitation in this subdivision. 
155.4      Subd. 3.  [COLLECTION.] The method of collection of the tax 
155.5   must be specified in the ordinance imposing the tax.  The tax is 
155.6   exempt from the rules under Minnesota Statutes, section 
155.7   297A.48.  The commissioner of revenue and the city may enter 
155.8   into agreements for the collection and administration of the tax 
155.9   by the state on behalf of the city.  The commissioner may charge 
155.10  the city a reasonable fee for its services from the proceeds of 
155.11  the tax.  The tax is subject to the same interest, penalties, 
155.12  and enforcement provisions as the tax imposed under Minnesota 
155.13  Statutes, chapter 297A. 
155.14     Subd. 4.  [USE OF PROCEEDS.] The city must pay money 
155.15  received from the tax imposed under this section into a separate 
155.16  fund or account to be used only to pay: 
155.17     (1) the costs of imposing and collecting the tax; and 
155.18     (2) for parking lots or ramps, and other public 
155.19  improvements as defined by Minnesota Statutes, section 429.021, 
155.20  within the boundaries of the tax increment financing district 
155.21  established under section 2, or that serve the area within the 
155.22  district. 
155.23     Sec. 32.  [EFFECTIVE DATE.] 
155.24     Section 3 is effective for vehicles registered after June 
155.25  30, 1998. 
155.26     Sections 2, 4, 6, 11, 12, 13, and 14 are effective for 
155.27  sales occurring after June 30, 1998. 
155.28     Sections 7 to 9, 16 to 21, and 31 are effective the day 
155.29  following final enactment.  
155.30     Section 10 is effective for purchases made after December 
155.31  1, 1997. 
155.32     Sections 14 and 15 are effective July 1, 1998. 
155.33                             ARTICLE 7
155.34                          BUDGET RESERVES
155.35     Section 1.  Minnesota Statutes 1996, section 16A.6701, is 
155.36  amended by adding a subdivision to read: 
156.1      Subd. 4.  [DISCHARGE OF REVENUE BONDS.] Notwithstanding 
156.2   subdivision 2, the commissioner shall transfer from the special 
156.3   revenue fund to the debt service fund, by the tenth day of each 
156.4   month, all money then on hand in the special revenue fund, until 
156.5   the cash and securities on hand in the debt service fund are 
156.6   sufficient to defease all outstanding revenue bonds issued under 
156.7   section 16A.67 in accordance with the commissioner's order 
156.8   authorizing their issuance.  The commissioner shall take all 
156.9   actions required under the order authorizing the issuance of the 
156.10  bonds to defease them at the earliest practical date.  The 
156.11  commissioner may retain or contract for the services of 
156.12  accountants, escrow agents, financial advisors, and other 
156.13  consultants or agents as may be necessary in accordance with the 
156.14  order. 
156.15     Sec. 2.  [APPROPRIATION TO BUDGET RESERVE.] 
156.16     $100,000,000 is appropriated from the general fund to the 
156.17  commissioner of finance for transfer to the budget reserve 
156.18  account under Minnesota Statutes, section 16A.152, subdivision 
156.19  1a, on July 1, 1998. 
156.20     Sec. 3. [PROPERTY TAX REFORM ACCOUNT CANCELLATION.] 
156.21     On July 1, 1998, the commissioner of finance shall cancel 
156.22  $504,387,000 from the balance in the property tax reform account 
156.23  established in Minnesota Statutes, section 16A.1521, to the 
156.24  general fund. 
156.25     Sec. 4.  [LOAN GUARANTEES.] 
156.26     The director of the division of emergency management of the 
156.27  department of public safety shall, as the governor's authorized 
156.28  representative and on behalf of the state, agree to provide 
156.29  security for and guarantee promissory notes or similar documents 
156.30  for loans from the Federal Emergency Management Agency under its 
156.31  community disaster loan program to the city of Ada in the amount 
156.32  of $1,423,448 and to the city of East Grand Forks in the amount 
156.33  of $2,907,340.  The loan to the city of Ada is to cover 
156.34  operating losses for a publicly owned health care facility that 
156.35  was damaged in the spring floods of 1997. $4,330,788 is 
156.36  appropriated from the general fund to the commissioner of 
157.1   finance for transfer to a separate community disaster loan 
157.2   guarantee account in the general fund in the state treasury for 
157.3   the purpose of this section. 
157.4      Sec. 5.  [TEMPORARY LOCAL GOVERNMENT AID INCREASES.] 
157.5      For payments in calendar year 1998 only, the city of East 
157.6   Grand Forks shall receive an additional payment of $13,800,000 
157.7   and the city of Warren shall receive an additional payment of 
157.8   $1,200,000 under the provisions of Minnesota Statutes, sections 
157.9   477A.011 to 477A.014.  The amounts of these payments shall not 
157.10  be included in the calculation of any other aids provided under 
157.11  Minnesota Statutes, chapter 477A, or other law or in any 
157.12  limitations on levies or expenditures. 
157.13     $15,000,000 is appropriated to the commissioner of revenue 
157.14  from the general fund to make the payments under this section. 
157.15                             ARTICLE 8
157.16                           TACONITE TAXES
157.17     Section 1.  [298.001] [DEFINITIONS.] 
157.18     Subdivision 1.  [GENERALLY.] As used in this chapter, the 
157.19  terms defined in this section have the meanings given in this 
157.20  section. 
157.21     Subd. 2.  [CITY.] "City" includes any home rule charter 
157.22  city, statutory city, or any city however organized. 
157.23     Subd. 3.  [PERSON.] "Person" means individuals, 
157.24  fiduciaries, estates, trusts, partnerships, companies, joint 
157.25  stock companies, corporations, and all associations. 
157.26     Subd. 4.  [TACONITE.] "Taconite" means ferruginous chert or 
157.27  ferruginous slate in the form of compact, siliceous rock, in 
157.28  which the iron oxide is so finely disseminated that 
157.29  substantially all of the iron-bearing particles of merchantable 
157.30  grade are smaller than 20 mesh and which is not merchantable as 
157.31  iron ore in its natural state, and which cannot be made 
157.32  merchantable by simple methods of beneficiation involving only 
157.33  crushing, screening, washing, jigging, drying, or any 
157.34  combination thereof. 
157.35     Subd. 5.  [IRON SULPHIDES.] "Iron sulphides" means chemical 
157.36  combinations of iron and sulphur (mineralogically known as 
158.1   pyrrhotite, pyrites, or marcasite), in relatively impure 
158.2   condition, which are not merchantable as iron ore and which 
158.3   cannot be made merchantable by the simple methods of 
158.4   beneficiation above described.  
158.5      Subd. 6.  [SEMITACONITE.] "Semitaconite" means altered iron 
158.6   formation, altered taconite, ferruginous chert, or ferruginous 
158.7   slate which has been oxidized and partially leached and in which 
158.8   the iron oxide is so finely disseminated that substantially all 
158.9   of the iron-bearing particles of merchantable grade are smaller 
158.10  than 20 mesh and which is not merchantable as iron ore in its 
158.11  natural state, and which cannot be made merchantable by simple 
158.12  methods of beneficiation involving only crushing, screening, 
158.13  washing, jigging, heavy media separation, spirals, cyclones, 
158.14  drying, or any combination thereof.  
158.15     Subd. 7.  [AGGLOMERATES.] "Agglomerates" means the 
158.16  merchantable iron ore aggregates which are produced by 
158.17  agglomeration.  
158.18     Subd. 8.  [COMMISSIONER.] "Commissioner" means the 
158.19  commissioner of revenue of the state of Minnesota.  
158.20     Sec. 2.  Minnesota Statutes 1996, section 298.22, 
158.21  subdivision 2, is amended to read: 
158.22     Subd. 2.  There is hereby created the iron range resources 
158.23  and rehabilitation board, consisting of 11 members, five of whom 
158.24  ~~shall be~~ are state senators appointed by the subcommittee on 
158.25  committees of the rules committee of the senate, and five of 
158.26  whom ~~shall be~~ are representatives, appointed by the speaker of 
158.27  the house of representatives~~, their terms of office to commence~~ 
158.28  ~~on May 1, 1943, and continue until January 3rd, 1945, or until~~ 
158.29  ~~their successors are appointed and qualified~~.  ~~Their successors~~ 
158.30  The members shall be appointed ~~each two years in the same manner~~ 
158.31  ~~as the original members were appointed,~~ in January of every 
158.32  ~~second~~ odd-numbered year~~, commencing in January, 1945~~.  The 11th 
158.33  member of ~~said~~ the board ~~shall be~~ is the commissioner of natural 
158.34  resources ~~of the state of Minnesota~~.  Vacancies on the board 
158.35  shall be filled in the same manner as the original members were 
158.36  chosen.  At least a majority of the legislative members of the 
159.1   board shall be elected from state senatorial or legislative 
159.2   districts in which over 50 percent of the residents reside 
159.3   within a tax relief area as defined in section 273.134.  All 
159.4   expenditures and projects made by the commissioner of iron range 
159.5   resources and rehabilitation shall first be submitted to ~~said~~ 
159.6   the iron range resources and rehabilitation board for approval 
159.7   by at least eight board members of expenditures and projects for 
159.8   rehabilitation purposes as provided by this section, and the 
159.9   method, manner, and time of payment of all ~~said~~ funds proposed 
159.10  to be disbursed shall be first approved or disapproved by ~~said~~ 
159.11  the board.  The board shall biennially make its report to the 
159.12  governor and the legislature on or before November 15 of each 
159.13  even-numbered year.  The expenses of ~~said~~ the board shall be 
159.14  paid by the state ~~of Minnesota~~ from the funds raised pursuant to 
159.15  this section. 
159.16     Sec. 3.  Minnesota Statutes 1996, section 298.221, is 
159.17  amended to read: 
159.18     298.221 [RECEIPTS FROM CONTRACTS; APPROPRIATION.] 
159.19     (a) All ~~moneys~~ money paid to the state of Minnesota 
159.20  pursuant to the terms of any contract entered into by the state 
159.21  under authority of ~~Laws 1941, chapter 544, section 4, or of said~~ 
159.22  ~~section as amended~~ section 298.22 and any fees which may, in the 
159.23  discretion of the commissioner of iron range resources and 
159.24  rehabilitation, be charged in connection with any project 
159.25  pursuant to that section as amended, shall be deposited in the 
159.26  state treasury to the credit of the iron range resources and 
159.27  rehabilitation board account in the special revenue fund and are 
159.28  hereby appropriated for the purposes of section 298.22. 
159.29     (b) Notwithstanding section 7.09, merchandise may be 
159.30  accepted by the commissioner of the iron range resources and 
159.31  rehabilitation board for payment of advertising contracts if the 
159.32  commissioner determines that the merchandise can be used for 
159.33  special event prizes or mementos at facilities operated by the 
159.34  board.  Nothing in this paragraph authorizes the commissioner or 
159.35  a member of the board to receive merchandise for personal use.  
159.36     Sec. 4.  Minnesota Statutes 1996, section 298.2213, 
160.1   subdivision 4, is amended to read: 
160.2      Subd. 4.  [PROJECT APPROVAL.] The board shall by August 1~~,~~ 
160.3   ~~1987, and~~ each year ~~thereafter~~ prepare a list of projects to be 
160.4   funded from the money appropriated in this section with 
160.5   necessary supporting information including descriptions of the 
160.6   projects, plans, and cost estimates.  A project must not be 
160.7   approved by the board unless it finds that:  
160.8      (1) the project will materially assist, directly or 
160.9   indirectly, the creation of additional long-term employment 
160.10  opportunities; 
160.11     (2) the prospective benefits of the expenditure exceed the 
160.12  anticipated costs; and 
160.13     (3) in the case of assistance to private enterprise, the 
160.14  project will serve a sound business purpose.  
160.15     To be proposed by the board, a project must be approved by 
160.16  at least eight iron range resources and rehabilitation board 
160.17  members and the commissioner of iron range resources and 
160.18  rehabilitation.  The list of projects must be submitted to the 
160.19  governor, who shall, by November 15 of each year, approve, 
160.20  disapprove, or return for further consideration, each project.  
160.21  The money for a project may be spent only upon approval of the 
160.22  project by the governor.  The board may submit supplemental 
160.23  projects for approval at any time.  
160.24     Sec. 5.  Minnesota Statutes 1996, section 298.225, 
160.25  subdivision 1, is amended to read: 
160.26     Subdivision 1.  ~~For distribution of taconite production tax~~ 
160.27  ~~in 1987 and thereafter with respect to production in 1986 and~~ 
160.28  ~~thereafter,~~ The distribution of the taconite production tax as 
160.29  provided in section 298.28, subdivisions 2 to 5, 6, paragraphs 
160.30  (b) and (c), 7, and 8, shall equal the lesser of the following 
160.31  amounts:  
160.32     (1) the amount distributed pursuant to this section and 
160.33  section 298.28, with respect to 1983 production if the 
160.34  production for the year prior to the distribution year is no 
160.35  less than 42,000,000 taxable tons.  If the production is less 
160.36  than 42,000,000 taxable tons, the amount of the distributions 
161.1   shall be reduced proportionately at the rate of two percent for 
161.2   each 1,000,000 tons, or part of 1,000,000 tons by which the 
161.3   production is less than 42,000,000 tons; or 
161.4      (2)(i) for the distributions made pursuant to section 
161.5   298.28, subdivisions 4, paragraphs (b) and (c), and 6, paragraph 
161.6   (c), 50 percent of the amount distributed pursuant to this 
161.7   section and section 298.28, with respect to 1983 production.  
161.8      (ii) for the distributions made pursuant to section 298.28, 
161.9   subdivision 5, paragraphs (b) and (d), 75 percent of the amount 
161.10  distributed pursuant to this section and section 298.28, with 
161.11  respect to 1983 production.  
161.12     Sec. 6.  Minnesota Statutes 1997 Supplement, section 
161.13  298.24, subdivision 1, is amended to read: 
161.14     Subdivision 1.  (a) For concentrate produced in ~~1992, 1993,~~ 
161.15  ~~1994, and 1995~~ 1997 and 1998, there is imposed upon taconite and 
161.16  iron sulphides, and upon the mining and quarrying thereof, and 
161.17  upon the production of iron ore concentrate therefrom, and upon 
161.18  the concentrate so produced, a tax of ~~$2.054~~ $2.141 per gross 
161.19  ton of merchantable iron ore concentrate produced therefrom.  
161.20     (b) ~~On concentrates produced in 1997 and thereafter, an~~ 
161.21  ~~additional tax is imposed equal to three cents per gross ton of~~ 
161.22  ~~merchantable iron ore concentrate for each one percent that the~~ 
161.23  ~~iron content of the product exceeds 72 percent, when dried at~~ 
161.24  ~~212 degrees Fahrenheit.~~ 
161.25     ~~(c)~~ For concentrates produced in ~~1996~~ 1999 and subsequent 
161.26  years, the tax rate shall be equal to the preceding year's tax 
161.27  rate plus an amount equal to the preceding year's tax rate 
161.28  multiplied by the percentage increase in the implicit price 
161.29  deflator from the fourth quarter of the second preceding year to 
161.30  the fourth quarter of the preceding year~~, provided that, for~~ 
161.31  ~~concentrates produced in 1996 only, the increase in the rate of~~ 
161.32  ~~tax imposed under this section over the rate imposed for the~~ 
161.33  ~~previous year may not exceed four cents per ton~~.  "Implicit 
161.34  price deflator" for the gross national product means the 
161.35  implicit price deflator prepared by the bureau of economic 
161.36  analysis of the United States Department of Commerce.  
162.1      (c) On concentrates produced in 1997 and thereafter, an 
162.2   additional tax is imposed equal to three cents per gross ton of 
162.3   merchantable iron ore concentrate for each one percent that the 
162.4   iron content of the product exceeds 72 percent, when dried at 
162.5   212 degrees Fahrenheit. 
162.6      (d) The tax shall be imposed on the average of the 
162.7   production for the current year and the previous two years.  The 
162.8   rate of the tax imposed will be the current year's tax rate.  
162.9   This clause shall not apply in the case of the closing of a 
162.10  taconite facility if the property taxes on the facility would be 
162.11  higher if this clause and section 298.25 were not applicable.  
162.12     (e) If the tax or any part of the tax imposed by this 
162.13  subdivision is held to be unconstitutional, a tax 
162.14  of ~~$2.054~~ $2.141 per gross ton of merchantable iron ore 
162.15  concentrate produced shall be imposed.  
162.16     (f) Consistent with the intent of this subdivision to 
162.17  impose a tax based upon the weight of merchantable iron ore 
162.18  concentrate, the commissioner of revenue may indirectly 
162.19  determine the weight of merchantable iron ore concentrate 
162.20  included in fluxed pellets by subtracting the weight of the 
162.21  limestone, dolomite, or olivine derivatives or other basic flux 
162.22  additives included in the pellets from the weight of the 
162.23  pellets.  For purposes of this paragraph, "fluxed pellets" are 
162.24  pellets produced in a process in which limestone, dolomite, 
162.25  olivine, or other basic flux additives are combined with 
162.26  merchantable iron ore concentrate.  No subtraction from the 
162.27  weight of the pellets shall be allowed for binders, mineral and 
162.28  chemical additives other than basic flux additives, or moisture. 
162.29     (g)(1) Notwithstanding any other provision of this 
162.30  subdivision, for the first two years of a plant's production of 
162.31  direct reduced ore, no tax is imposed under this section.  As 
162.32  used in this paragraph, "direct reduced ore" is ore that results 
162.33  in a product that has an iron content of at least 75 percent.  
162.34  For the third year of a plant's production of direct reduced 
162.35  ore, the rate to be applied to direct reduced ore is 25 percent 
162.36  of the rate otherwise determined under this subdivision.  For 
163.1   the fourth such production year, the rate is 50 percent of the 
163.2   rate otherwise determined under this subdivision; for the fifth 
163.3   such production year, the rate is 75 percent of the rate 
163.4   otherwise determined under this subdivision; and for all 
163.5   subsequent production years, the full rate is imposed. 
163.6      (2) Subject to clause (1), production of direct reduced ore 
163.7   in this state is subject to the tax imposed by this section, but 
163.8   if that production is not produced by a producer of taconite or 
163.9   iron sulfides, the production of taconite or iron sulfides 
163.10  consumed in the production of direct reduced iron in this state 
163.11  is not subject to the tax imposed by this section on taconite or 
163.12  iron sulfides. 
163.13     Sec. 7.  Minnesota Statutes 1996, section 298.28, 
163.14  subdivision 2, is amended to read: 
163.15     Subd. 2.  [CITY OR TOWN WHERE QUARRIED OR PRODUCED.] (a) 
163.16  4.5 cents per gross ton of merchantable iron ore concentrate, 
163.17  hereinafter referred to as "taxable ton," must be allocated to 
163.18  the city or town in the county in which the lands from which 
163.19  taconite was mined or quarried were located or within which the 
163.20  concentrate was produced.  If the mining, quarrying, and 
163.21  concentration, or different steps in either thereof are carried 
163.22  on in more than one taxing district, the commissioner shall 
163.23  apportion equitably the proceeds of the part of the tax going to 
163.24  cities and towns among such subdivisions upon the basis of 
163.25  attributing 40 percent of the proceeds of the tax to the 
163.26  operation of mining or quarrying the taconite, and the remainder 
163.27  to the concentrating plant and to the processes of 
163.28  concentration, and with respect to each thereof giving due 
163.29  consideration to the relative extent of such operations 
163.30  performed in each such taxing district.  The commissioner's 
163.31  order making such apportionment shall be subject to review by 
163.32  the tax court at the instance of any of the interested taxing 
163.33  districts, in the same manner as other orders of the 
163.34  commissioner. 
163.35     (b) Four cents per taxable ton shall be allocated to cities 
163.36  and organized townships affected by mining because their 
164.1   boundaries are within two miles of a taconite mine pit that has 
164.2   been actively mined in at least one of the prior three years.  
164.3   If a city or town is located near more than one mine meeting 
164.4   these criteria, the city or town is eligible to receive aid 
164.5   calculated from only the mine producing the largest taxable 
164.6   tonnage.  When more than one municipality qualifies for aid 
164.7   based on one company's production, the aid must be apportioned 
164.8   among the municipalities in proportion to their populations.  Of 
164.9   the amounts distributed under this paragraph to each 
164.10  municipality, one-half must be used for infrastructure 
164.11  improvement projects, and one-half must be used for projects in 
164.12  which two or more municipalities cooperate.  Each municipality 
164.13  that receives a distribution under this paragraph must report 
164.14  annually to the iron range resources and rehabilitation board 
164.15  and the commissioner of iron range resources and rehabilitation 
164.16  on the projects involving cooperation with other municipalities. 
164.17     Sec. 8.  Minnesota Statutes 1996, section 298.28, 
164.18  subdivision 3, is amended to read: 
164.19     Subd. 3.  [CITIES; TOWNS.] (a) 12.5 cents per taxable ton, 
164.20  less any amount distributed under subdivision 8, and paragraph 
164.21  (b), must be allocated to the taconite municipal aid account to 
164.22  be distributed as provided in section 298.282. 
164.23     (b) An amount must be allocated to towns or cities that is 
164.24  annually certified by the county auditor of a county containing 
164.25  a taconite tax relief area within which there is (1) an 
164.26  organized township if, as of January 2, 1982, more than 75 
164.27  percent of the assessed valuation of the township consists of 
164.28  iron ore or (2) a city if, as of January 2, 1980, more than 75 
164.29  percent of the assessed valuation of the city consists of iron 
164.30  ore.  
164.31     (c) The amount allocated under paragraph (b) will be the 
164.32  portion of a township's or city's certified levy equal to the 
164.33  proportion of (1) the difference between 50 percent of January 
164.34  2, 1982, assessed value in the case of a township and 50 percent 
164.35  of the January 2, 1980, assessed value in the case of a city and 
164.36  its current assessed value to (2) the sum of its current 
165.1   assessed value plus the difference determined in (1), provided 
165.2   that the amount distributed shall not exceed $55 per capita in 
165.3   the case of a township or $75 per capita in the case of a city.  
165.4   For purposes of this limitation, population will be determined 
165.5   according to the 1980 decennial census conducted by the United 
165.6   States Bureau of the Census.  If the current assessed value of 
165.7   the township exceeds 50 percent of the township's January 2, 
165.8   1982, assessed value, or if the current assessed value of the 
165.9   city exceeds 50 percent of the city's January 2, 1980, assessed 
165.10  value, this paragraph shall not apply.  For purposes of this 
165.11  paragraph, "assessed value," when used in reference to years 
165.12  other than 1980 or 1982, means~~, for distributions for production~~ 
165.13  ~~year 1989, production taxes payable in 1990, the appropriate net~~ 
165.14  ~~tax capacities multiplied by 8.2 and for distributions for~~ 
165.15  ~~production year 1990 and thereafter, production taxes payable in~~ 
165.16  ~~1991 and thereafter,~~ the appropriate net tax capacities 
165.17  multiplied by 10.2. 
165.18     Sec. 9.  Minnesota Statutes 1996, section 298.28, 
165.19  subdivision 4, is amended to read: 
165.20     Subd. 4.  [SCHOOL DISTRICTS.] (a) 27.5 cents per taxable 
165.21  ton plus the increase provided in paragraph (d) must be 
165.22  allocated to qualifying school districts to be distributed, 
165.23  based upon the certification of the commissioner of revenue, 
165.24  under paragraphs (b) and (c). 
165.25     (b) 5.5 cents per taxable ton must be distributed to the 
165.26  school districts in which the lands from which taconite was 
165.27  mined or quarried were located or within which the concentrate 
165.28  was produced.  The distribution must be based on the 
165.29  apportionment formula prescribed in subdivision 2. 
165.30     (c)(i) 22 cents per taxable ton, less any amount 
165.31  distributed under paragraph (e), shall be distributed to a group 
165.32  of school districts comprised of those school districts in which 
165.33  the taconite was mined or quarried or the concentrate produced 
165.34  or in which there is a qualifying municipality as defined by 
165.35  section 273.134 in direct proportion to school district indexes 
165.36  as follows:  for each school district, its pupil units 
166.1   determined under section 124.17 for the prior school year shall 
166.2   be multiplied by the ratio of the average adjusted net tax 
166.3   capacity per pupil unit for school districts receiving aid under 
166.4   this clause as calculated pursuant to chapter 124A for the 
166.5   school year ending prior to distribution to the adjusted net tax 
166.6   capacity per pupil unit of the district.  Each district shall 
166.7   receive that portion of the distribution which its index bears 
166.8   to the sum of the indices for all school districts that receive 
166.9   the distributions.  
166.10     (ii) Notwithstanding clause (i), each school district that 
166.11  receives a distribution under sections 298.018; 298.23 to 
166.12  298.28, exclusive of any amount received under this clause; 
166.13  298.34 to 298.39; 298.391 to 298.396; 298.405; or any law 
166.14  imposing a tax on severed mineral values that is less than the 
166.15  amount of its levy reduction under section 124.918, subdivision 
166.16  8, for the second year prior to the year of the distribution 
166.17  shall receive a distribution equal to the difference; the amount 
166.18  necessary to make this payment shall be derived from 
166.19  proportionate reductions in the initial distribution to other 
166.20  school districts under clause (i).  
166.21     (d) Any school district described in paragraph (c) where a 
166.22  levy increase pursuant to section 124A.03, subdivision 2, is 
166.23  authorized by referendum, shall receive a distribution ~~according~~ 
166.24  ~~to the following formula.  In 1994, the amount distributed per~~ 
166.25  ~~ton shall be equal to the amount per ton distributed in 1991~~ 
166.26  ~~under this paragraph increased in the same proportion as the~~ 
166.27  ~~increase between the fourth quarter of 1989 and the fourth~~ 
166.28  ~~quarter of 1992 in the implicit price deflator as defined in~~ 
166.29  ~~section 298.24, subdivision 1~~ from a fund that receives a 
166.30  distribution in 1998 of 21.3 cents per ton.  On July 15~~, 1995,~~ 
166.31  ~~and subsequent years~~ of 1999, and each year thereafter, the 
166.32  increase over the amount established for the prior year shall be 
166.33  determined according to the increase in the implicit price 
166.34  deflator as provided in section 298.24, subdivision 1.  Each 
166.35  district shall receive the product of: 
166.36     (i) $175 times the pupil units identified in section 
167.1   124.17, subdivision 1, enrolled in the second previous year or 
167.2   the 1983-1984 school year, whichever is greater, less the 
167.3   product of 1.8 percent times the district's taxable net tax 
167.4   capacity in the second previous year; times 
167.5      (ii) the lesser of: 
167.6      (A) one, or 
167.7      (B) the ratio of the sum of the amount certified pursuant 
167.8   to section 124A.03, subdivision 1g, in the previous year, plus 
167.9   the amount certified pursuant to section 124A.03, subdivision 
167.10  1i, in the previous year, plus the referendum aid according to 
167.11  section 124A.03, subdivision 1h, for the current year, plus an 
167.12  amount equal to the reduction under section 124A.03, subdivision 
167.13  3b, to the product of 1.8 percent times the district's taxable 
167.14  net tax capacity in the second previous year. 
167.15     If the total amount provided by paragraph (d) is 
167.16  insufficient to make the payments herein required then the 
167.17  entitlement of $175 per pupil unit shall be reduced uniformly so 
167.18  as not to exceed the funds available.  Any amounts received by a 
167.19  qualifying school district in any fiscal year pursuant to 
167.20  paragraph (d) shall not be applied to reduce general education 
167.21  aid which the district receives pursuant to section 124A.23 or 
167.22  the permissible levies of the district.  Any amount remaining 
167.23  after the payments provided in this paragraph shall be paid to 
167.24  the commissioner of iron range resources and rehabilitation who 
167.25  shall deposit the same in the taconite environmental protection 
167.26  fund and the northeast Minnesota economic protection trust fund 
167.27  as provided in subdivision 11. 
167.28     Each district receiving money according to this paragraph 
167.29  shall reserve $25 times the number of pupil units in the 
167.30  district.  It may use the money for early childhood programs or 
167.31  for outcome-based learning programs that enhance the academic 
167.32  quality of the district's curriculum.  The outcome-based 
167.33  learning programs must be approved by the commissioner of 
167.34  children, families, and learning. 
167.35     (e) There shall be distributed to any school district the 
167.36  amount which the school district was entitled to receive under 
168.1   section 298.32 in 1975. 
168.2      Sec. 10.  Minnesota Statutes 1996, section 298.28, 
168.3   subdivision 6, is amended to read: 
168.4      Subd. 6.  [PROPERTY TAX RELIEF.] (a) ~~Fifteen~~ 32.6 cents per 
168.5   taxable ton, less any amount required to be distributed under 
168.6   paragraphs (b) and (c), and less any amount required to be 
168.7   deducted under paragraph (d), must be allocated to St. Louis 
168.8   county acting as the counties' fiscal agent, to be distributed 
168.9   as provided in sections 273.134 to 273.136. 
168.10     (b) If an electric power plant owned by and providing the 
168.11  primary source of power for a taxpayer mining and concentrating 
168.12  taconite is located in a county other than the county in which 
168.13  the mining and the concentrating processes are conducted, .1875 
168.14  cent per taxable ton of the tax imposed and collected from such 
168.15  taxpayer shall be paid to the county. 
168.16     (c) If an electric power plant owned by and providing the 
168.17  primary source of power for a taxpayer mining and concentrating 
168.18  taconite is located in a school district other than a school 
168.19  district in which the mining and concentrating processes are 
168.20  conducted, .5625 cent per taxable ton of the tax imposed and 
168.21  collected from the taxpayer shall be paid to the school district.
168.22     (d) Two cents per taxable ton must be deducted from the 
168.23  amount allocated to the St. Louis county auditor under paragraph 
168.24  (a). 
168.25     Sec. 11.  Minnesota Statutes 1996, section 298.28, 
168.26  subdivision 7, is amended to read: 
168.27     Subd. 7.  [IRON RANGE RESOURCES AND REHABILITATION BOARD.] 
168.28  ~~Three~~ For the 1998 distribution, 6.5 cents per taxable ton shall 
168.29  be paid to the iron range resources and rehabilitation board for 
168.30  the purposes of section 298.22.  ~~The amount determined in this~~ 
168.31  ~~subdivision shall be increased in 1981 and subsequent years~~ 
168.32  ~~prior to 1988 in the same proportion as the increase in the~~ 
168.33  ~~steel mill products index as provided in section 298.24,~~ 
168.34  ~~subdivision 1, and shall be increased in 1989, 1990, and 1991~~ 
168.35  ~~according to the increase in the implicit price deflator as~~ 
168.36  ~~provided in section 298.24, subdivision 1.  In 1992 and 1993,~~ 
169.1   ~~the amount distributed per ton shall be the same as the amount~~ 
169.2   ~~distributed per ton in 1991.  In 1994, the amount distributed~~ 
169.3   ~~shall be the distribution per ton for 1991 increased in the same~~ 
169.4   ~~proportion as the increase between the fourth quarter of 1989~~ 
169.5   ~~and the fourth quarter of 1992 in the implicit price deflator as~~ 
169.6   ~~defined in section 298.24, subdivision 1.~~  That amount shall be 
169.7   increased in ~~1995~~ 1999 and subsequent years in the same 
169.8   proportion as the increase in the implicit price deflator as 
169.9   provided in section 298.24, subdivision 1.  ~~The amount~~ 
169.10  ~~distributed in 1988 shall be increased according to the increase~~ 
169.11  ~~that would have occurred in the rate of tax under section 298.24~~ 
169.12  ~~if the rate had been adjusted according to the implicit price~~ 
169.13  ~~deflator for 1987 production.~~  The amount distributed pursuant 
169.14  to this subdivision shall be expended within or for the benefit 
169.15  of a tax relief area defined in section 273.134.  No part of the 
169.16  fund provided in this subdivision may be used to provide loans 
169.17  for the operation of private business unless the loan is 
169.18  approved by the governor. 
169.19     Sec. 12.  Minnesota Statutes 1996, section 298.28, 
169.20  subdivision 9, is amended to read: 
169.21     Subd. 9.  [MINNESOTA ECONOMIC PROTECTION TRUST FUND.] 
169.22  ~~1.5~~ 3.3 cents per taxable ton shall be paid to the northeast 
169.23  Minnesota economic protection trust fund.  
169.24     Sec. 13.  Minnesota Statutes 1997 Supplement, section 
169.25  298.28, subdivision 9a, is amended to read: 
169.26     Subd. 9a.  [TACONITE ECONOMIC DEVELOPMENT FUND.] (a) 15.4 
169.27  cents per ton for distributions in 1996, 1998, ~~and~~ 1999, and 
169.28  2000 and 20.4 cents per ton for distributions in 1997 shall be 
169.29  paid to the taconite economic development fund.  No distribution 
169.30  shall be made under this paragraph in any year in which total 
169.31  industry production falls below 30 million tons. 
169.32     (b) An amount equal to 50 percent of the tax under section 
169.33  298.24 for concentrate sold in the form of pellet chips and 
169.34  fines not exceeding 5/16 inch in size and not including crushed 
169.35  pellets shall be paid to the taconite economic development 
169.36  fund.  The amount paid shall not exceed $700,000 annually for 
170.1   all companies.  If the initial amount to be paid to the fund 
170.2   exceeds this amount, each company's payment shall be prorated so 
170.3   the total does not exceed $700,000. 
170.4      Sec. 14.  Minnesota Statutes 1997 Supplement, section 
170.5   298.28, subdivision 9b, is amended to read: 
170.6      Subd. 9b.  [TACONITE ENVIRONMENTAL FUND.] Five cents per 
170.7   ton for distributions in 1998 ~~and~~ 1999, and 2000 shall be paid 
170.8   to the taconite environmental fund for use under section 
170.9   298.2961.  No distribution may be made under this paragraph in 
170.10  any year in which total industry production falls below 
170.11  30,000,000 tons. 
170.12     Sec. 15.  Minnesota Statutes 1996, section 298.28, 
170.13  subdivision 10, is amended to read: 
170.14     Subd. 10.  [INCREASE.] The amounts determined under 
170.15  ~~subdivisions~~ subdivision 6, paragraph (a), and subdivision 9 
170.16  shall be increased ~~in 1979 and subsequent years prior to 1988 in~~ 
170.17  ~~the same proportion as the increase in the steel mill products~~ 
170.18  ~~index as provided in section 298.24, subdivision 1.  The amount~~ 
170.19  ~~distributed in 1988 shall be increased according to the increase~~ 
170.20  ~~that would have occurred in the rate of tax under section 298.24~~ 
170.21  ~~if the rate had been adjusted according to the implicit price~~ 
170.22  ~~deflator for 1987 production.  Those amounts shall be increased~~ 
170.23  ~~in 1989, 1990, and 1991 in the same proportion as the increase~~ 
170.24  ~~in the implicit price deflator as provided in section 298.24,~~ 
170.25  ~~subdivision 1.  In 1992 and 1993, the amounts determined under~~ 
170.26  ~~subdivisions 6, paragraph (a), and 9, shall be the distribution~~ 
170.27  ~~per ton determined for distribution in 1991.  In 1994, the~~ 
170.28  ~~amounts determined under subdivisions 6, paragraph (a), and 9,~~ 
170.29  ~~shall be the distribution per ton determined for distribution in~~ 
170.30  ~~1991 increased in the same proportion as the increase between~~ 
170.31  ~~the fourth quarter of 1989 and the fourth quarter of 1992 in the~~ 
170.32  ~~implicit price deflator as defined in section 298.24,~~ 
170.33  ~~subdivision 1.  Those amounts shall be increased in 1995~~ for 
170.34  distributions based on the 1998 production year and subsequent 
170.35  years in the same proportion as the increase in the implicit 
170.36  price deflator as provided in section 298.24, subdivision 1.  
171.1      The distributions per ton determined under subdivisions 5, 
171.2   paragraphs (b) and (d), and 6, paragraphs (b) and (c) for 
171.3   distribution in 1988 and subsequent years shall be the 
171.4   distribution per ton determined for distribution in 1987. 
171.5      Sec. 16.  Minnesota Statutes 1997 Supplement, section 
171.6   298.296, subdivision 4, is amended to read: 
171.7      Subd. 4.  [TEMPORARY LOAN AUTHORITY.] (a) The board may 
171.8   recommend that up to $7,500,000 from the corpus of the trust may 
171.9   be used for loans as provided in this subdivision.  The money 
171.10  would be available for loans for construction and equipping of 
171.11  facilities constituting (1) a value added iron products plant, 
171.12  which may be either a new plant or a facility incorporated into 
171.13  an existing plant that produces iron upgraded to a minimum of 75 
171.14  percent iron content or any iron alloy with a total minimum 
171.15  metallic content of 90 percent; or (2) a new mine or minerals 
171.16  processing plant for any mineral subject to the net proceeds tax 
171.17  imposed under section 298.015.  A loan under this paragraph may 
171.18  not exceed $5,000,000 for any facility.  
171.19     (b) Additionally, the board must reserve the first 
171.20  $2,000,000 of the net interest, dividends, and earnings arising 
171.21  from the investment of the trust after June 30, 1996, to be used 
171.22  for additional grants for the purposes set forth in paragraph 
171.23  (a).  This amount must be reserved until it is used for the 
171.24  grants or until June 30, ~~1998~~ 1999, whichever is earlier. 
171.25     (c) Additionally, the board may recommend that up to 
171.26  $5,500,000 from the corpus of the trust may be used for 
171.27  additional grants for the purposes set forth in paragraph (a). 
171.28     (d) The board may require that it receive an equity 
171.29  percentage in any project to which it contributes under this 
171.30  section. 
171.31     (e) The authority to make loans and grants under this 
171.32  subdivision terminates June 30, ~~1998~~ 1999. 
171.33     Sec. 17.  Minnesota Statutes 1996, section 298.48, 
171.34  subdivision 1, is amended to read: 
171.35     Subdivision 1.  [ANNUAL FILING.] By April 1 each year, 
171.36  every owner or lessee of mineral rights who, in respect thereto, 
172.1   has engaged in any exploration for or mining of taconite, 
172.2   semitaconite, or iron-sulphide shall~~, within six months of June~~ 
172.3   ~~3, 1977,~~ file with the commissioner of revenue all data of the 
172.4   following kinds in the possession or under the control of the 
172.5   owner or lessee which was acquired ~~prior to January 1, 1977~~ 
172.6   during the preceding calendar year: 
172.7      (a) Maps and other records indicating the location, 
172.8   character and extent of exploration for taconite, semitaconite, 
172.9   or iron-sulphides; 
172.10     (b) Logs, notes and other records indicating the nature of 
172.11  minerals encountered during the course of exploration; 
172.12     (c) The results of any analyses of metallurgical tests or 
172.13  samples taken in connection with exploration; 
172.14     (d) The ultimate pit layout and the supporting cross 
172.15  sections; and 
172.16     (e) Any other data which the commissioner of revenue may 
172.17  determine to be relevant to the determination of the location, 
172.18  nature, extent, quality or quantity of unmined ores of said 
172.19  minerals.  The commissioner of revenue ~~shall have the power to~~ 
172.20  may compel submission of the data.  The court administrator of 
172.21  any court of record, upon demand of the commissioner, shall 
172.22  issue a subpoena for the production of any data before the 
172.23  commissioner.  Disobedience of subpoenas issued under this 
172.24  section shall be punished by the district court of the district 
172.25  in which the subpoena is issued as for a contempt of the 
172.26  district court.  ~~By April 1 of each succeeding year every owner~~ 
172.27  ~~or lessee of mineral rights shall file with the commissioner of~~ 
172.28  ~~revenue all such data acquired during the preceding calendar~~ 
172.29  ~~year.~~ 
172.30     Sec. 18.  [USE OF PRODUCTION TAX PROCEEDS.] 
172.31     Of the amount distributed to the iron range resources and 
172.32  rehabilitation board under Minnesota Statutes, section 298.28, 
172.33  subdivision 7, an amount equal to the amount distributed under 
172.34  Laws 1997, chapter 231, article 8, section 16, shall be used by 
172.35  the board to make equal grants to the cities of Chisholm and 
172.36  Hibbing to be used for the establishment of an industrial park 
173.1   located at the Hibbing-Chisholm airport. 
173.2      Sec. 19.  [REPEALER.] 
173.3      Minnesota Statutes 1996, sections 298.012; 298.21; 298.23; 
173.4   298.34, subdivisions 1 and 4; and 298.391, subdivisions 2 and 5, 
173.5   are repealed. 
173.6      Sec. 20.  [EFFECTIVE DATE.] 
173.7      Section 7 is effective for distributions in 2000 and 
173.8   subsequent years. 
173.9                              ARTICLE 9
173.10              TAX INCREMENT FINANCING AND DEVELOPMENT
173.11     Section 1.  Minnesota Statutes 1996, section 469.174, is 
173.12  amended by adding a subdivision to read: 
173.13     Subd. 28.  [DECERTIFY OR DECERTIFICATION.] "Decertify" or 
173.14  "decertification" means the termination of a tax increment 
173.15  financing district which occurs when the county auditor removes 
173.16  all remaining parcels from the district. 
173.17     Sec. 2.  Minnesota Statutes 1996, section 469.175, 
173.18  subdivision 5, is amended to read: 
173.19     Subd. 5.  [ANNUAL DISCLOSURE.] (a) ~~For all tax increment~~ 
173.20  ~~financing districts, whether created prior or subsequent to~~ 
173.21  ~~August 1, 1979, on or before July 1 of each year,~~ The authority 
173.22  shall annually submit to the county board, the county auditor, 
173.23  the school board, state auditor and, if the authority is other 
173.24  than the municipality, the governing body of the municipality, a 
173.25  report of the status of the district.  The report shall include 
173.26  the following information:  the amount and the source of revenue 
173.27  in the account, the amount and purpose of expenditures from the 
173.28  account, the amount of any pledge of revenues, including 
173.29  principal and interest on any outstanding bonded indebtedness, 
173.30  the original net tax capacity of the district and any 
173.31  subdistrict, the captured net tax capacity retained by the 
173.32  authority, the captured net tax capacity shared with other 
173.33  taxing districts, the tax increment received, and any additional 
173.34  information necessary to demonstrate compliance with any 
173.35  applicable tax increment financing plan.  The authority must 
173.36  submit the annual report for a year on or before August 1 of the 
174.1   next year. 
174.2      (b) An annual statement showing the tax increment received 
174.3   and expended in that year, the original net tax capacity, 
174.4   captured net tax capacity, amount of outstanding bonded 
174.5   indebtedness, the amount of the district's and any subdistrict's 
174.6   increments paid to other governmental bodies, the amount paid 
174.7   for administrative costs, the sum of increments paid, directly 
174.8   or indirectly, for activities and improvements located outside 
174.9   of the district, and any additional information the authority 
174.10  deems necessary shall be published in a newspaper of general 
174.11  circulation in the municipality.  If the fiscal disparities 
174.12  contribution under chapter 276A or 473F for the district is 
174.13  computed under section 469.177, subdivision 3, paragraph (a), 
174.14  the annual statement must disclose that fact and indicate the 
174.15  amount of increased property tax imposed on other properties in 
174.16  the municipality as a result of the fiscal disparities 
174.17  contribution.  The commissioner of revenue shall prescribe the 
174.18  form of this statement and the method for calculating the 
174.19  increased property taxes.  The authority must publish the annual 
174.20  statement for a year no later than ~~July 1~~ August 15 of the next 
174.21  year.  The authority must ~~provide~~ identify the newspaper of 
174.22  general circulation in the municipality to which the annual 
174.23  statement has been or will be submitted for publication and 
174.24  provide a copy of the annual statement to the state auditor ~~by~~ 
174.25  ~~the time it submits it for publication~~ on or before August 1 of 
174.26  the year in which the statement must be published.  
174.27     (c) The disclosure and reporting requirements imposed by 
174.28  this subdivision apply to districts certified before, on, or 
174.29  after August 1, 1979. 
174.30     Sec. 3.  Minnesota Statutes 1996, section 469.175, 
174.31  subdivision 6, is amended to read: 
174.32     Subd. 6.  [FINANCIAL REPORTING.] (a) The state auditor 
174.33  shall develop a uniform system of accounting and financial 
174.34  reporting for tax increment financing districts.  The system of 
174.35  accounting and financial reporting shall, as nearly as possible: 
174.36     (1) provide for full disclosure of the sources and uses of 
175.1   public funds in the district; 
175.2      (2) permit comparison and reconciliation with the affected 
175.3   local government's accounts and financial reports; 
175.4      (3) permit auditing of the funds expended on behalf of a 
175.5   district, including a single district that is part of a 
175.6   multidistrict project or that is funded in part or whole through 
175.7   the use of a development account funded with tax increments from 
175.8   other districts or with other public money; 
175.9      (4) be consistent with generally accepted accounting 
175.10  principles. 
175.11     (b) The authority must annually submit to the state 
175.12  auditor~~, on or before July 1,~~ a financial report in compliance 
175.13  with paragraph (a).  Copies of the report must also be provided 
175.14  to the county and school district boards and to the governing 
175.15  body of the municipality, if the authority is not the 
175.16  municipality.  To the extent necessary to permit compliance with 
175.17  the requirement of financial reporting, the county and any other 
175.18  appropriate local government unit or private entity must provide 
175.19  the necessary records or information to the authority or the 
175.20  state auditor as provided by the system of accounting and 
175.21  financial reporting developed pursuant to paragraph (a).  The 
175.22  authority must submit the annual report for a year on or before 
175.23  August 1 of the next year. 
175.24     (c) The annual financial report must also include the 
175.25  following items: 
175.26     (1) the original net tax capacity of the district and any 
175.27  subdistrict; 
175.28     (2) the captured net tax capacity of the district, 
175.29  including the amount of any captured net tax capacity shared 
175.30  with other taxing districts; 
175.31     (3) for the reporting period and for the duration of the 
175.32  district, the amount budgeted under the tax increment financing 
175.33  plan, and the actual amount expended for, at least, the 
175.34  following categories: 
175.35     (i) acquisition of land and buildings through condemnation 
175.36  or purchase; 
176.1      (ii)  site improvements or preparation costs; 
176.2      (iii) installation of public utilities, parking facilities, 
176.3   streets, roads, sidewalks, or other similar public improvements; 
176.4      (iv) administrative costs, including the allocated cost of 
176.5   the authority; 
176.6      (v) public park facilities, facilities for social, 
176.7   recreational, or conference purposes, or other similar public 
176.8   improvements; 
176.9      (4) for properties sold to developers, the total cost of 
176.10  the property to the authority and the price paid by the 
176.11  developer; and 
176.12     (5) the amount of increments rebated or paid to developers 
176.13  or property owners for privately financed improvements or other 
176.14  qualifying costs. 
176.15     (d) The reporting requirements imposed by this subdivision 
176.16  apply to districts certified before, on, and after August 1, 
176.17  1979. 
176.18     Sec. 4.  Minnesota Statutes 1996, section 469.175, 
176.19  subdivision 6a, is amended to read: 
176.20     Subd. 6a.  [REPORTING REQUIREMENTS.] (a) The municipality 
176.21  must annually report to the state auditor the following amounts 
176.22  for the entire municipality: 
176.23     (1) the total principal amount of nondefeased tax increment 
176.24  financing bonds that are outstanding at the end of the previous 
176.25  calendar year; and 
176.26     (2) the total annual amount of principal and interest 
176.27  payments that are due for the current calendar year on (i) 
176.28  general obligation tax increment financing bonds, and (ii) other 
176.29  tax increment financing bonds. 
176.30     (b) The municipality must annually report to the state 
176.31  auditor the following amounts for each tax increment financing 
176.32  district located in the municipality: 
176.33     (1) the type of district, whether economic development, 
176.34  redevelopment, housing, soils condition, mined underground 
176.35  space, or hazardous substance site; 
176.36     (2) the date on which the district is required to be 
177.1   decertified; 
177.2      (3) the amount of any payments and the value of in-kind 
177.3   benefits, such as physical improvements and the use of building 
177.4   space, that are financed with revenues derived from increments 
177.5   and are provided to another governmental unit (other than the 
177.6   municipality) during the preceding calendar year; 
177.7      (4) the tax increment revenues for taxes payable in the 
177.8   current calendar year; 
177.9      (5) whether the tax increment financing plan or other 
177.10  governing document permits increment revenues to be expended (i) 
177.11  to pay bonds, the proceeds of which were or may be expended on 
177.12  activities located outside of the district, (ii) for deposit 
177.13  into a common fund from which money may be expended on 
177.14  activities located outside of the district, or (iii) to 
177.15  otherwise finance activities located outside of the tax 
177.16  increment financing district; and 
177.17     (6) any additional information that the state auditor may 
177.18  require.  
177.19     (c) ~~The report required by this subdivision must be filed~~ 
177.20  ~~with the state auditor on or before July 1 of each year.~~  The 
177.21  municipality must submit the annual report for a year required 
177.22  by this subdivision on or before August 1 of the next year. 
177.23     (d) The state auditor may provide for combining the reports 
177.24  required by this subdivision and subdivisions 5 and 6 so that 
177.25  only one report is made for each year to the auditor. 
177.26     (e) This section applies to districts certified before, on, 
177.27  and after August 1, 1979. 
177.28     Sec. 5.  Minnesota Statutes 1996, section 469.175, is 
177.29  amended by adding a subdivision to read: 
177.30     Subd. 6b.  [DURATION OF DISCLOSURE AND REPORTING 
177.31  REQUIREMENTS.] The disclosure and reporting requirements imposed 
177.32  by subdivisions 5, 6, and 6a apply with respect to a tax 
177.33  increment financing district beginning with the annual 
177.34  disclosure and reports for the year in which the original net 
177.35  tax capacity of the district was certified and ending with the 
177.36  annual disclosure and reports for the year in which both of the 
178.1   following events have occurred: 
178.2      (1) decertification of the district; and 
178.3      (2) expenditure or return to the county auditor of all 
178.4   remaining revenues derived from tax increments paid by 
178.5   properties in the district. 
178.6      Sec. 6.  Minnesota Statutes 1996, section 469.176, 
178.7   subdivision 7, is amended to read: 
178.8      Subd. 7.  [PARCELS NOT INCLUDABLE IN DISTRICTS.] The 
178.9   authority may request inclusion in a tax increment financing 
178.10  district and the county auditor may certify the original tax 
178.11  capacity of a parcel or a part of a parcel that qualified under 
178.12  the provisions of section 273.111 or 273.112 or chapter 473H for 
178.13  taxes payable in any of the five calendar years before the 
178.14  filing of the request for certification only for 
178.15     (1) a district in which 85 percent or more of the planned 
178.16  buildings and facilities (determined on the basis of square 
178.17  footage) are for manufacturing or production of tangible 
178.18  personal property, including processing resulting in the change 
178.19  in condition of the property or space necessary for and related 
178.20  to the manufacturing activities; or 
178.21     (2) a qualified housing district as defined in section 
178.22  273.1399, subdivision 1. 
178.23     Sec. 7.  Minnesota Statutes 1996, section 469.177, is 
178.24  amended by adding a subdivision to read: 
178.25     Subd. 12.  [DECERTIFICATION OF TAX INCREMENT FINANCING 
178.26  DISTRICT.] The county auditor shall decertify a tax increment 
178.27  financing district when the earliest of the following times is 
178.28  reached: 
178.29     (1) the applicable maximum duration limit under section 
178.30  469.176, subdivisions 1a to 1g; 
178.31     (2) the maximum duration limit, if any, provided by the 
178.32  municipality pursuant to section 469.176, subdivision 1; 
178.33     (3) the time of decertification specified in section 
178.34  469.1761, subdivision 4, if the commissioner of revenue issues 
178.35  an order of noncompliance and the maximum duration limit for 
178.36  economic development districts has been exceeded; 
179.1      (4) upon completion of the required actions to allow 
179.2   decertification under section 469.1763, subdivision 4; or 
179.3      (5) upon receipt by the county auditor of a written request 
179.4   for decertification from the authority that requested 
179.5   certification of the original net tax capacity of the district 
179.6   or its successor. 
179.7      Sec. 8.  Minnesota Statutes 1996, section 469.1771, is 
179.8   amended by adding a subdivision to read: 
179.9      Subd. 2a.  [SUSPENSION OF DISTRIBUTION OF TAX 
179.10  INCREMENT.] (a) If an authority fails to make a disclosure or to 
179.11  submit a report containing the information required by section 
179.12  469.175, subdivisions 5 and 6, regarding a tax increment 
179.13  financing district within the time provided in section 469.175, 
179.14  subdivisions 5 and 6, or if a municipality fails to submit a 
179.15  report containing the information required of section 469.175, 
179.16  subdivision 6a, regarding a tax increment financing district 
179.17  within the time provided in section 469.175, subdivision 6a, the 
179.18  state auditor shall mail to the authority a written notice that 
179.19  it or the municipality has failed to make the required 
179.20  disclosure or to submit a required report with respect to a 
179.21  particular district.  The state auditor shall mail the notice on 
179.22  or before the third Tuesday of August of the year in which the 
179.23  disclosure or report was required to be made or submitted.  The 
179.24  notice shall describe the consequences of failing to disclose or 
179.25  submit a report as provided in paragraph (b).  If the state 
179.26  auditor has not received a copy of a disclosure or a report 
179.27  described in this paragraph on or before the third Tuesday of 
179.28  November of the year in which the disclosure or report was 
179.29  required to be made or submitted, the state auditor shall mail a 
179.30  written notice to the county auditor to hold the distribution of 
179.31  tax increment from a particular district.  
179.32     (b) Upon receiving written notice from the state auditor to 
179.33  hold the distribution of tax increment, the county auditor shall 
179.34  hold: 
179.35     (1) 25 percent of the amount of tax increment that 
179.36  otherwise would be distributed, if the distribution is made 
180.1   after the third Friday in November but during the year in which 
180.2   the disclosure or report was required to be made or submitted; 
180.3   or 
180.4      (2) 100 percent of the amount of tax increment that 
180.5   otherwise would be distributed, if the distribution is made 
180.6   after December 31 of the year in which the disclosure or report 
180.7   was required to be made or submitted. 
180.8      (c) Upon receiving the copy of the disclosure and all of 
180.9   the reports described in paragraph (a) with respect to a 
180.10  district regarding which the state auditor has mailed to the 
180.11  county auditor a written notice to hold distribution of tax 
180.12  increment, the state auditor shall mail to the county auditor a 
180.13  written notice lifting the hold and authorizing the county 
180.14  auditor to distribute to the authority or municipality any tax 
180.15  increment that the county auditor had held pursuant to paragraph 
180.16  (b).  The state auditor shall mail the written notice required 
180.17  by this paragraph within five working days after receiving the 
180.18  last outstanding item.  The county auditor shall distribute the 
180.19  tax increment to the authority or municipality within 15 working 
180.20  days after receiving the written notice required by this 
180.21  paragraph. 
180.22     (d) Notwithstanding any law to the contrary, any interest 
180.23  that accrues on tax increment while it is being held by the 
180.24  county auditor pursuant to paragraph (b) is not tax increment 
180.25  and may be retained by the county. 
180.26     (e) For purposes of sections 469.176, subdivisions 1a to 
180.27  1g, and 469.177, subdivision 11, tax increment being held by the 
180.28  county auditor pursuant to paragraph (b) shall be considered 
180.29  distributed to or received by the authority or municipality as 
180.30  of the time that it would have been distributed or received but 
180.31  for paragraph (b). 
180.32     Sec. 9.  Minnesota Statutes 1996, section 469.1771, 
180.33  subdivision 5, is amended to read: 
180.34     Subd. 5.  [DISPOSITION OF PAYMENTS.] If the authority does 
180.35  not have sufficient increments or other available money to make 
180.36  a payment required by this section, the municipality that 
181.1   approved the district must use any available money to make the 
181.2   payment including the levying of property taxes.  Money received 
181.3   by the county auditor under this section must be distributed as 
181.4   excess increments under section 469.176, subdivision 2, 
181.5   paragraph (a), clause (4)~~.~~, except that if the county auditor 
181.6   receives the payment after (1) 60 days from a municipality's 
181.7   receipt of the state auditor's notification under subdivision 1, 
181.8   paragraph (c), of noncompliance requiring the payment, or (2) 
181.9   the commencement of an action by the county attorney to compel 
181.10  the payment, then no distributions may be made to the 
181.11  municipality that approved the tax increment financing district. 
181.12     Sec. 10.  [469.1791] [TAX INCREMENT FINANCING SPECIAL 
181.13  TAXING DISTRICT.] 
181.14     Subdivision 1.  [DEFINITIONS.] (a) As used in this section, 
181.15  the terms defined in this subdivision have the meanings given 
181.16  them. 
181.17     (b) "City" means a city containing a tax increment 
181.18  financing district the request for certification of which was 
181.19  made before June 2, 1997. 
181.20     (c) "Enabling ordinance" means an ordinance adopted by a 
181.21  city council establishing a special taxing district. 
181.22     (d) "Special taxing district" means all or any portion of 
181.23  the property located within a tax increment financing district 
181.24  the request for certification of which was made before June 2, 
181.25  1997. 
181.26     (e) "Development or redevelopment services" has the meaning 
181.27  given in the city's enabling ordinance, and may include any 
181.28  services or expenditures the city or its economic development 
181.29  authority or housing and redevelopment authority or port 
181.30  authority may provide or incur under sections 469.001 to 
181.31  469.1081 and 469.124 to 469.134, including, without limitation, 
181.32  amounts necessary to pay the principal of or interest on bonds 
181.33  issued by the city or its economic development authority or 
181.34  housing and redevelopment authority or port authority under 
181.35  section 469.178, for the tax increment financing districts 
181.36  contained within the special taxing district or projects to be 
182.1   funded with increments from tax increment financing districts 
182.2   contained within the special taxing district. 
182.3      Subd. 2.  [ESTABLISHMENT OF SPECIAL TAXING DISTRICT.] The 
182.4   governing body of a city may adopt an ordinance establishing a 
182.5   special taxing district.  The ordinance must describe with 
182.6   particularity the property to be included in the district and 
182.7   the development or redevelopment services to be provided in the 
182.8   district.  Only property that is subject to an assessment 
182.9   agreement with the city or its economic development authority, 
182.10  housing and redevelopment authority, or port authority, as of 
182.11  the date of adoption of the ordinance, may be included within 
182.12  the special taxing district and be subject to the tax imposed by 
182.13  the city on the district. 
182.14     Subd. 3.  [MODIFICATION OF SPECIAL TAXING DISTRICT.] The 
182.15  boundaries of the special taxing district may be enlarged or 
182.16  reduced under the procedures for establishment of the district 
182.17  under subdivision 2.  Property added to the district is subject 
182.18  to the special tax imposed within the district after the 
182.19  property becomes a part of the district. 
182.20     Subd. 4.  [SPECIAL TAX AUTHORITY.] A city may impose a 
182.21  special tax within a special taxing district that is reasonably 
182.22  related to the development or redevelopment services provided.  
182.23  The tax may be imposed at a rate or amount sufficient to produce 
182.24  the revenues required to provide redevelopment services within 
182.25  the district.  The special tax is payable only in a year in 
182.26  which the assessment agreement for the property subject to the 
182.27  tax remains in effect for that taxes payable year.  The maximum 
182.28  levy may not exceed the amount specified in the assessment 
182.29  agreement.  The tax imposed under this section is not included 
182.30  in the calculation of levies or limits imposed under law or 
182.31  chapter.  The tax proceeds are subject to the restrictions 
182.32  imposed by law on revenues derived from tax increments and may 
182.33  only be spent for the purposes for which increments may be spent.
182.34     Subd. 5.  [COLLECTION OF TAX.] The special tax must be 
182.35  imposed on the net tax capacity of the taxable property located 
182.36  in the geographic area described in the ordinance.  Taxable net 
183.1   tax capacity must be determined without regard to captured or 
183.2   original net tax capacity under Minnesota Statutes, section 
183.3   469.177, or to the distribution or contribution value under 
183.4   section 473F.08.  The special tax is payable and must be 
183.5   collected at the same time and in the same manner as provided 
183.6   for payment and collection of ad valorem taxes.  Special taxes 
183.7   not paid on or before the applicable due date are subject to the 
183.8   same penalty and interest as ad valorem tax amounts not paid by 
183.9   the respective due date.  The due date for the special tax is 
183.10  the due date for the real property tax for the property on which 
183.11  the special tax is imposed. 
183.12     Sec. 11.  Minnesota Statutes 1997 Supplement, section 
183.13  469.1812, subdivision 4, is amended to read: 
183.14     Subd. 4.  [POLITICAL SUBDIVISION OR SUBDIVISION.] 
183.15  "Political subdivision" or "subdivision" means a statutory or 
183.16  home rule charter city, town, or school district~~, or county~~. 
183.17     Sec. 12.  Laws 1965, chapter 326, section 1, subdivision 5, 
183.18  as amended by Laws 1975, chapter 110, section 1, and Laws 1985, 
183.19  chapter 87, section 3, is amended to read: 
183.20     Subd. 5.  [PROMOTION OF TOURIST, AGRICULTURAL AND 
183.21  INDUSTRIAL DEVELOPMENT.] The amount to be spent annually for the 
183.22  purposes of this subdivision shall not exceed ~~$1~~ $4 per capita 
183.23  of the county's population. 
183.24     Sec. 13.  Laws 1997, chapter 231, article 10, section 24, 
183.25  is amended to read: 
183.26     Sec. 24.  [TASK FORCE; TIF RECODIFICATION.] 
183.27     (a) A legislative task force is established on tax 
183.28  increment financing and local economic development powers.  The 
183.29  task force consists of 12 members as follows: 
183.30     (1) six members of the house of representatives, at least 
183.31  two of whom are members of the minority caucus, appointed by the 
183.32  speaker; and 
183.33     (2) six members of the senate, at least two of whom are 
183.34  members of the minority caucus, appointed by the committee on 
183.35  committees. 
183.36     (b) The task force shall prepare a bill for the ~~1998~~ 1999 
184.1   legislative session that recodifies the Tax Increment Financing 
184.2   Act and combines the statutes providing local economic 
184.3   development powers into one law providing a uniform set of 
184.4   powers relative to the use of tax increment financing. 
184.5      (c) In preparing the bill under this section, the task 
184.6   force shall consult with and seek comments from and 
184.7   participation by representatives of the affected local 
184.8   governments. 
184.9      (d) The revisor of statutes and house and senate 
184.10  legislative staff shall staff the task force. 
184.11     (e) This section expires on ~~March 1, 1998~~ May 1, 1999. 
184.12     Sec. 14.  [CITY OF BURNSVILLE; USE OF TAX INCREMENTS.] 
184.13     Subdivision 1.  [AUTHORIZATION.] Notwithstanding Minnesota 
184.14  Statutes, section 469.176, 469.1763, or any other law to the 
184.15  contrary, tax increments derived from the tax increment 
184.16  financing district No. 2-1 in the city of Burnsville may, to the 
184.17  extent not required for purposes of that district's tax 
184.18  increment financing plan, be used to meet costs incurred by the 
184.19  city or its economic development authority in relation to 
184.20  assisting in the construction of an amphitheater and related 
184.21  infrastructure improvements.  This section does not authorize an 
184.22  extension of the duration of tax increment financing district No.
184.23  2-1 beyond its duration under current law. 
184.24     Subd. 2.  [EFFECTIVE DATE.] This section is effective upon 
184.25  compliance by the city of Burnsville with Minnesota Statutes, 
184.26  section 645.021, subdivision 3. 
184.27     Sec. 15.  [CITY OF FOLEY; TAX INCREMENT FINANCING.] 
184.28     Subdivision 1.  [AUTHORIZATION OF USE OF 
184.29  INCREMENTS.] Notwithstanding any law to the contrary, 
184.30  expenditures by the city of Foley before January 1, 1998, of 
184.31  revenue derived from tax increment financing district No. 1 to 
184.32  finance a wastewater treatment facility located outside of the 
184.33  district are authorized expenditures of that revenue.  
184.34     Subd. 2.  [EFFECTIVE DATE.] Pursuant to Minnesota Statutes, 
184.35  section 645.023, subdivision 1, paragraph (a), this section is 
184.36  effective without local approval the day following final 
185.1   enactment and applies to revenues expended before January 1, 
185.2   1998. 
185.3      Sec. 16.  [CITY OF MINNEAPOLIS; LAKE STREET REDEVELOPMENT 
185.4   DISTRICT.] 
185.5      Subdivision 1.  [AUTHORIZATION.] Upon approval of the 
185.6   governing body of the Minneapolis community development agency 
185.7   by resolution, the authority may establish a redevelopment tax 
185.8   increment financing district with phased redevelopment at a site 
185.9   located on Lake Street and Chicago Avenue.  The district shall 
185.10  be subject to Minnesota Statutes, sections 469.174 to 469.179, 
185.11  except as provided in this section.  
185.12     Subd. 2.  [ORIGINAL NET TAX CAPACITY.] Notwithstanding 
185.13  Minnesota Statutes, section 469.174, subdivision 7, the original 
185.14  net tax capacity of the district, as of the date the authority 
185.15  certifies to the county auditor that the authority has entered 
185.16  into a redevelopment or other agreement for rehabilitation of 
185.17  the site or remediation of hazardous substances, shall be zero.  
185.18     Subd. 3.  [DURATION OF DISTRICT.] Notwithstanding the 
185.19  provisions of Minnesota Statutes, section 469.176, subdivision 
185.20  1b, no tax increment shall be paid to the authority after the 
185.21  earlier of:  (1) 18 years from the date of receipt by the 
185.22  authority of the first increment generated from the final phase 
185.23  of redevelopment or (2) 30 years from the date of receipt by the 
185.24  authority of the first increment from the district.  "Final 
185.25  phase of redevelopment" means that phase of redevelopment 
185.26  activity which completes the rehabilitation of the Sears site.  
185.27     Subd. 4.  [REMOVAL OF HAZARDOUS SUBSTANCES.] For purposes 
185.28  of the three-year activity rule under Minnesota Statutes, 
185.29  section 469.176, subdivision 1a, and the four-year action 
185.30  requirement under Minnesota Statutes, section 469.176, 
185.31  subdivision 6, the removal of hazardous substances from the site 
185.32  shall constitute a qualifying activity.  
185.33     Subd. 5.  [FIVE-YEAR RULE.] Minnesota Statutes, section 
185.34  469.1763, subdivision 3, does not apply.  
185.35     Subd. 6.  [NEIGHBORHOOD REVITALIZATION FUNDS.] Revenues 
185.36  reserved by the authority for the neighborhood revitalization 
186.1   program and allocated pursuant to the requirements of Minnesota 
186.2   Statutes, section 469.1831, for expenditure in the tax increment 
186.3   financing district described in this section qualify as a local 
186.4   contribution for purposes of Minnesota Statutes, section 
186.5   273.1399, subdivision 6. 
186.6      Subd. 7.  [EFFECTIVE DATE.] Subdivisions 1 to 6 are 
186.7   effective upon compliance by the governing body of the 
186.8   Minneapolis community development agency with Minnesota 
186.9   Statutes, section 645.021, subdivision 3.  Subdivision 6 is 
186.10  effective for aid paid after July 1, 1998. 
186.11     Sec. 17.  [CITY OF RENVILLE; TAX INCREMENT FINANCING 
186.12  DISTRICT.] 
186.13     Subdivision 1.  [CERTIFICATION DATE.] Except as otherwise 
186.14  provided in this section, for purposes of Minnesota Statutes, 
186.15  section 273.1399, and chapter 469, the certification date of the 
186.16  addition of the following described property to tax increment 
186.17  financing district No. 1 in the city of Renville is deemed to be 
186.18  November 1, 1994:  Lots 5, 6, 7, 8, and 9, Block 32, O'Connor's 
186.19  Addition. 
186.20     Subd. 2.  [ORIGINAL NET TAX CAPACITY; ORIGINAL LOCAL TAX 
186.21  RATE.] The original net tax capacity of property in subdivision 
186.22  1 shall be $432 and the original local tax rate shall be 186.871 
186.23  as of January 2, 1998, for increment collected in 1999. 
186.24     Subd. 3.  [EXPENDITURE OF INCREMENT.] Notwithstanding the 
186.25  provisions of Minnesota Statutes, section 469.176, subdivision 
186.26  1b, the city of Renville may collect and expend tax increment 
186.27  generated by the lots cited in subdivision 1, in tax increment 
186.28  financing district No. 1 in the city of Renville, until December 
186.29  31, 2007. 
186.30     Subd. 4.  [APPLICABILITY.] The provisions of Minnesota 
186.31  Statutes, sections 273.1399, subdivision 8, and 469.1782, do not 
186.32  apply to the authority granted in this section. 
186.33     Subd. 5.  [LOCAL APPROVAL.] This section is effective upon 
186.34  compliance by the city of Renville with Minnesota Statutes, 
186.35  section 645.021, subdivision 3. 
186.36     Sec. 18.  [CITY OF WEST ST. PAUL; DAKOTA COUNTY HOUSING AND 
187.1   REDEVELOPMENT AUTHORITY; EXCEPTION TO TAX INCREMENT FINANCING 
187.2   REQUIREMENTS.] 
187.3      Subdivision 1.  [GENERALLY.] The city of West St. Paul and 
187.4   the Dakota county housing and redevelopment authority may 
187.5   operate the Signal Hills Redevelopment tax increment financing 
187.6   district (Dakota county housing and redevelopment authority tax 
187.7   increment financing district No. 11) hereinafter referred to as 
187.8   "the district" according to the provisions set forth in this 
187.9   section. 
187.10     Subd. 2.  [LOCAL CONTRIBUTION.] The district is exempt from 
187.11  the reduction in state aid imposed under Minnesota Statutes, 
187.12  section 273.1399, without making a contribution required under 
187.13  Minnesota Statutes, section 273.1399, subdivision 6, paragraph 
187.14  (d), if it contributes each year an amount equal to 15 percent 
187.15  of the tax increments from the district received in that year 
187.16  into a redevelopment account, which may be used for 
187.17  redevelopment projects in the South Robert Street Redevelopment 
187.18  tax increment financing district (Dakota county housing and 
187.19  redevelopment authority tax increment financing district No. 4). 
187.20     Subd. 3.  [TIME LIMIT FOR INITIATING ACTION.] The time 
187.21  limits for initiation of activity in the district and reporting 
187.22  the initiation to the county auditor under Minnesota Statutes, 
187.23  section 469.176, subdivision 6, are extended to five and six 
187.24  years, respectively. 
187.25     Subd. 4.  [FIVE-YEAR RULE.] The district is subject to the 
187.26  requirement of Minnesota Statutes, section 469.1763, subdivision 
187.27  3, except that the five-year period is extended to a ten-year 
187.28  period. 
187.29     Subd. 5.  [THREE-YEAR RULE.] The district is not subject to 
187.30  the provisions of Minnesota Statutes, section 469.176, 
187.31  subdivision 1a. 
187.32     Subd. 6.  [EFFECTIVE DATE.] This section is effective upon 
187.33  compliance by the city of West St. Paul with Minnesota Statutes, 
187.34  section 645.021, subdivision 3. 
187.35     Sec. 19.  [CITY OF BROWERVILLE; TAX INCREMENT FINANCING 
187.36  DISTRICT.] 
188.1      Subdivision 1.  [EXPENDITURES OUTSIDE OF 
188.2   DISTRICT.] Notwithstanding the provisions of Minnesota Statutes, 
188.3   section 469.1763, the city of Browerville may expend tax 
188.4   increments from tax increment district No. 2 for eligible 
188.5   activities outside tax increment district No. 2 but within 
188.6   development district No. 1, and the limitations contained in 
188.7   Minnesota Statutes, section 469.1763, subdivision 2, shall not 
188.8   apply.  
188.9      Subd. 2.  [EFFECTIVE DATE.] This section is effective after 
188.10  its approval by the governing body of the city of Browerville 
188.11  and compliance with Minnesota Statutes, section 645.021, 
188.12  subdivision 3. 
188.13     Sec. 20.  [CITY OF DEEPHAVEN; TAX INCREMENT FINANCING.] 
188.14     Subdivision 1.  [AUTHORIZATION OF 
188.15  EXPENDITURES.] Notwithstanding any law to the contrary, the city 
188.16  of Deephaven may expend revenues derived from tax increment 
188.17  financing district number 1-1 that are available and 
188.18  unencumbered on the date of enactment of this act to finance a 
188.19  public improvement located outside of the district.  The public 
188.20  improvement must be included in the tax increment plan prior to 
188.21  January 1, 1997. 
188.22     Subd. 2.  [EFFECTIVE DATE.] This section is effective the 
188.23  day upon approval by the governing body of the city of Deephaven 
188.24  and compliance with Minnesota Statutes, section 645.021, 
188.25  subdivision 3, and applies to revenues expended after the date 
188.26  of final enactment. 
188.27     Sec. 21.  [EFFECTIVE DATE.] 
188.28     Sections 1, 5, and 7 apply to tax increment financing 
188.29  districts certified before, on, or after August 1, 1979. 
188.30     Sections 2, 3, 4, and 8 are effective for disclosures 
188.31  required to be made and reports required to be submitted in 1999.
188.32     Section 6 is effective for tax increment financing 
188.33  districts for which certification is requested after April 30, 
188.34  1998. 
188.35     Section 9 is effective the day following final enactment. 
188.36     Section 11 is effective the day following final enactment 
189.1   and applies to abatements granted on or after that date. 
189.2      Section 12 is effective upon compliance by Itasca county 
189.3   with Minnesota Statutes, section 645.021, subdivision 3. 
189.4                              ARTICLE 10
189.5                          BORDER CITY ZONES
189.6      Section 1.  [272.0212] [BORDER DEVELOPMENT ZONE PROPERTY.] 
189.7      Subdivision 1.  [EXEMPTION.] All qualified property in a 
189.8   zone is exempt to the extent and for the duration provided by 
189.9   the zone designation and under sections 469.1931 to 469.1933. 
189.10     Subd. 2.  [LIMITS ON EXEMPTION.] Property in a zone is not 
189.11  exempt under this section from the following: 
189.12     (1) special assessments; 
189.13     (2) ad valorem property taxes specifically levied for the 
189.14  payment of principal and interest on debt obligations; and 
189.15     (3) all taxes levied by a school district, except equalized 
189.16  school levies as defined in section 273.1398, subdivision 1, 
189.17  paragraph (e). 
189.18     Subd. 3.  [STATE AID.] Property exempt under this section 
189.19  is included in the net tax capacity for purposes of computing 
189.20  aids under chapter 477A. 
189.21     Subd. 4.  [DEFINITIONS.] (a) For purposes of this section, 
189.22  the following terms have the meanings given. 
189.23     (b) "Qualified property" means class 3 and class 5 property 
189.24  as defined in section 273.13 that is located in a zone: 
189.25     (1) designated by the city of Breckenridge or East Grand 
189.26  Forks; or 
189.27     (2) not covered by clause (1) and is newly constructed 
189.28  after the zone was designated. 
189.29     (c) "Zone" means a border city development zone designated 
189.30  under the provisions of section 469.1931. 
189.31     Sec. 2.  Minnesota Statutes 1996, section 290.06, is 
189.32  amended by adding a subdivision to read: 
189.33     Subd. 26.  [BORDER CITY ZONE CREDIT.] (a) A corporation may 
189.34  claim a credit against the tax imposed by this section and 
189.35  sections 290.0921 and 290.0922.  The commissioner shall 
189.36  prescribe the method in which the credit may be claimed.  This 
190.1   may include allowing the credit only as a separately processed 
190.2   claim for refund. The allowable credit equals the tax liability 
190.3   attributable to business conducted within a zone. 
190.4      (b) Tax liability means the tax liability under this 
190.5   section and sections 290.0921 and 290.0922 after any other 
190.6   credits. 
190.7      (c) The tax liability attributable to business conducted 
190.8   within a zone means the taxpayer's tax liability multiplied by a 
190.9   fraction: 
190.10     (1) the numerator of which is (i) the ratio of the 
190.11  taxpayer's property factor under section 290.191 located in the 
190.12  zone for the taxable year minus the property factor located in 
190.13  zone for the taxable year immediately before the zone 
190.14  designation took effect to the taxpayer's total Minnesota 
190.15  property factor, plus (ii) the ratio of the taxpayer's payroll 
190.16  factor under section 290.191 for services performed in the zone 
190.17  for the taxable year minus the payroll factor for services 
190.18  performed in zone for the taxable year immediately before the 
190.19  zone designation took effect to the taxpayer's total Minnesota 
190.20  payroll factor; and 
190.21     (2) the denominator of which is two. 
190.22     (d) Any portion of the taxpayer's tax liability that is 
190.23  attributable to illegal activity conducted in the zone must not 
190.24  be used to calculate a credit under this subdivision. 
190.25     (e) The credit allowed under this section continues through 
190.26  the taxable year in which the zone designation expires. 
190.27     (f) To be eligible for a credit under this subdivision, the 
190.28  taxpayer must file an annual return under this chapter. 
190.29     (g) The credit allowed under this subdivision may not 
190.30  exceed the lesser of: 
190.31     (1) the tax liability of the taxpayer for the taxable year; 
190.32  or 
190.33     (2) for taxable years beginning before January 1, 2002, the 
190.34  amount of the tax credit certificates received by the taxpayer 
190.35  from the city, less any tax credit certificates used under 
190.36  subdivision 27, and sections 297A.25, subdivision 73; and 
191.1   469.1934, subdivision 4. 
191.2      (h) "Zone" means a border city development zone designated 
191.3   under the provisions of section 469.1931. 
191.4      Sec. 3.  Minnesota Statutes 1996, section 290.06, is 
191.5   amended by adding a subdivision to read: 
191.6      Subd. 27.  [BORDER CITY NEW INDUSTRY CREDIT.] (a) To 
191.7   provide a tax incentive for new industry in border cities, a 
191.8   corporation is allowed a credit against the tax imposed by this 
191.9   section.  The commissioner shall prescribe the method in which 
191.10  the credit may be claimed.  This may include allowing the credit 
191.11  only as a separately processed claim for refund. 
191.12     (b) For purposes of this subdivision, a border city means 
191.13  any city that is authorized to create a border city development 
191.14  zone under section 469.1931. 
191.15     (c) The credit equals one percent of the wages and salaries 
191.16  paid by the taxpayer during the taxable year for employees whose 
191.17  principal place of work is located in a border city but outside 
191.18  of a zone designated under section 469.1931.  The credit applies 
191.19  for the first three taxable years of the operation of the 
191.20  corporation in the border city.  In the fourth and fifth taxable 
191.21  years of the operation of the corporation in the border city, 
191.22  the credit equals 0.5 percent of the wages and salaries.  After 
191.23  the fifth year, no credit is allowed. 
191.24     (d) The credit under this subdivision applies only to a 
191.25  corporate enterprise engaged in assembling, fabricating, 
191.26  manufacturing, mixing, or processing of any agricultural, 
191.27  mineral, or manufactured product or combinations of them. 
191.28     (e) A corporation is not a new industry in a border city if 
191.29  the corporation is created from an existing corporation and 
191.30  remains part of the same unitary business as defined in section 
191.31  290.17. 
191.32     (f) The credit allowed under this subdivision may not 
191.33  exceed the lesser of: 
191.34     (1) the tax liability of the taxpayer for the taxable year; 
191.35  or 
191.36     (2) for taxable years beginning before January 1, 2002, the 
192.1   amount of the tax credit certificates received by the taxpayer 
192.2   from the city, less any tax credit certificates used under 
192.3   subdivision 26, and sections 297A.25, subdivision 73; and 
192.4   469.1934, subdivision 4. 
192.5      Sec. 4.  Minnesota Statutes 1996, section 297A.25, is 
192.6   amended by adding a subdivision to read: 
192.7      Subd. 73.  [BORDER CITIES; CAPITAL EQUIPMENT; CONSTRUCTION 
192.8   MATERIALS.] (a) The gross receipts from the sale of machinery 
192.9   and equipment and repair parts are exempt, if the machinery and 
192.10  equipment: 
192.11     (1) are used in connection with a trade or business; 
192.12     (2) are placed in service in a city that has designated a 
192.13  zone under section 469.1931, regardless of whether the machinery 
192.14  and equipment are used in a zone; and 
192.15     (3) have a useful life of 12 months or more. 
192.16     (b) The gross receipts from the sale of construction 
192.17  materials are exempt, if they are used to construct a facility 
192.18  for use in a trade or business located in a city that has 
192.19  designated a zone under section 469.1931, regardless of whether 
192.20  the facility is located in a zone. 
192.21     (c) The exemptions under this subdivision apply regardless 
192.22  of whether the purchase is made by the owner, the user, or a 
192.23  contractor. 
192.24     (d) For purchases made before July 1, 2001, a purchaser may 
192.25  claim an exemption under this subdivision for tax on the 
192.26  purchases up to, but not exceeding: 
192.27     (1) the amount of the tax credit certificates received from 
192.28  the city, less 
192.29     (2) any tax credit certificates used under the provisions 
192.30  of sections 290.06, subdivisions 26 and 27; and 469.1934, 
192.31  subdivision 4. 
192.32     Sec. 5.  Minnesota Statutes 1996, section 469.170, is 
192.33  amended by adding a subdivision to read: 
192.34     Subd. 5e.  [LIMITS ON MULTIYEAR PLANS.] The requirements 
192.35  for a multiyear enterprise zone tax credit distribution plan 
192.36  under subdivisions 5a to 5d apply only for: 
193.1      (1) each business that will receive more than $25,000 in 
193.2   credits in a year; or 
193.3      (2) tax reductions under section 469.171, subdivision 1, 
193.4   for businesses in areas designated under section 469.171, 
193.5   subdivision 5. 
193.6      Sec. 6.  Minnesota Statutes 1996, section 469.171, 
193.7   subdivision 9, is amended to read: 
193.8      Subd. 9.  [RECAPTURE.] Any business that (1) receives tax 
193.9   reductions authorized by subdivisions 1 to 8, classification as 
193.10  employment property pursuant to section 469.170, or an 
193.11  alternative local contribution under section 469.169, 
193.12  subdivision 5; and (2) ceases to operate its facility located 
193.13  within the enterprise zone ~~within two years after the expiration~~ 
193.14  ~~of the tax reductions~~ shall repay the amount of the tax 
193.15  reduction or local contribution ~~pursuant to the following~~ 
193.16  ~~schedule:~~  
193.17        ~~Termination~~                                   ~~Repayment~~
193.18        ~~of operations~~                                   ~~Portion~~
193.19        ~~Less than 6 months~~                            ~~100 percent~~
193.20        ~~6 months or more but less than 12 months~~       ~~75 percent~~
193.21        ~~12 months or more but less than 18 months~~      ~~50 percent~~
193.22        ~~18 months or more but less than 24 months~~      ~~25 percent~~
193.23  received during the two years immediately before it stopped 
193.24  operating in the zone. 
193.25     The repayment must be paid to the state to the extent it 
193.26  represents a tax reduction under subdivisions 1 to 8 and to the 
193.27  municipality to the extent it represents a property tax 
193.28  reduction or other local contribution.  Any amount repaid to the 
193.29  state must be credited to the amount certified as available for 
193.30  tax reductions in the zone pursuant to section 469.169, 
193.31  subdivision 7.  Any amount repaid to the municipality must be 
193.32  used by the municipality for economic development purposes.  The 
193.33  commissioner of revenue may seek repayment of tax credits from a 
193.34  business ceasing to operate within an enterprise zone.  
193.35     Sec. 7.  [469.1931] [BORDER CITY DEVELOPMENT ZONES.] 
193.36     Subdivision 1.  [DESIGNATION.] To encourage economic 
194.1   development, to revitalize the designated areas, to expand tax 
194.2   base and economic activity, and to provide job creation, growth, 
194.3   and retention, the following border cities may designate, by 
194.4   resolution, areas of the city as development zones after a 
194.5   public hearing upon 30-day notice. 
194.6      (a) The city of Breckenridge may designate all or any part 
194.7   of the city as a zone. 
194.8      (b) The city of Dilworth may designate between one and six 
194.9   areas of the city as zones containing not more than 100 acres in 
194.10  the aggregate. 
194.11     (c) The city of East Grand Forks may designate all or any 
194.12  part of the city as a zone. 
194.13     (d) The city of Moorhead may designate between one and six 
194.14  areas of the city as zones containing not more than 100 acres in 
194.15  the aggregate. 
194.16     (e) The city of Ortonville may designate between one and 
194.17  six areas of the city as zones containing not more than 100 
194.18  acres in the aggregate. 
194.19     Subd. 2.  [DEVELOPMENT PLAN.] (a) Before designating a 
194.20  development zone, the city must adopt a written development plan 
194.21  that addresses: 
194.22     (1) evidence of adverse economic conditions within the area 
194.23  resulting from competition with the bordering state or the 1997 
194.24  floods or both; 
194.25     (2) the viability of the development plan; 
194.26     (3) public and private commitment to and other resources 
194.27  available for the area; 
194.28     (4) how designation would relate to a development and 
194.29  revitalization plan for the city as a whole; and 
194.30     (5) how the local regulatory burden will be eased for 
194.31  businesses operating in the area. 
194.32     (b) The development plan must include: 
194.33     (1) a map of the proposed zone that indicates the 
194.34  geographic boundaries, the total area, and the present use and 
194.35  conditions generally of land and structures within the area; 
194.36     (2) evidence of community support and commitment from 
195.1   business interests; 
195.2      (3) a description of the methods proposed to increase 
195.3   economic opportunity and expansion, facilitate infrastructure 
195.4   improvement, and identify job opportunities; and 
195.5      (4) the duration of the zone designation, not to exceed 15 
195.6   years. 
195.7      Subd. 3.  [FILING.] The city must file a copy of the 
195.8   resolution and development plan with the commissioner of trade 
195.9   and economic development.  The designation takes effect for the 
195.10  first calendar year that begins more than 90 days after the 
195.11  filing. 
195.12     Sec. 8.  [469.1932] [TAX INCENTIVES.] 
195.13     Subdivision 1.  [ZONE INCENTIVES.] A business that conducts 
195.14  business activity within a border city development zone may 
195.15  qualify for the property tax exemption under section 272.0212, 
195.16  the corporate franchise tax credit under section 290.06, 
195.17  subdivision 26, and the sales tax exemption under section 
195.18  297A.25, subdivision 73. 
195.19     Subd. 2.  [PHASEOUT AT END OF ZONE DURATION.] During the 
195.20  last three years of the duration of a border city development 
195.21  zone, the available exemptions, subtractions, or credits are 
195.22  reduced by the following percentages for the taxes payable year 
195.23  or the taxable years that begin during: 
195.24     (1) the calendar year that is two years before the final 
195.25  year of designation as a development zone, 25 percent; 
195.26     (2) the calendar year that is immediately before the final 
195.27  year of designation as a development zone, 50 percent; and 
195.28     (3) for the final calendar year of designation as a 
195.29  development zone, 75 percent. 
195.30     Sec. 9.  [469.1933] [DISQUALIFIED TAXPAYERS.] 
195.31     Subdivision 1.  [DELINQUENT TAXPAYERS.] An individual who 
195.32  is a resident of a border city development zone or a business 
195.33  that conducts business activity within a border city development 
195.34  zone is not eligible for the exemptions or credits available in 
195.35  the border city development zone, if the individual or business 
195.36  owes delinquent amounts under chapter 290 or if the individual 
196.1   or business owns property located in the city or county in which 
196.2   the zone is located on which the property taxes are delinquent. 
196.3      Subd. 2.  [RELOCATION WITHIN COUNTY.] If a business located 
196.4   in the county in which the border city development zone is 
196.5   located relocates from outside a zone into a zone, the business 
196.6   is not eligible for the exemptions or credits available in the 
196.7   border city development zone, unless the governing body of the 
196.8   city, for a business located in an incorporated area, or the 
196.9   county, for a business located outside of an incorporated area, 
196.10  approves the relocation of the business. 
196.11     Subd. 3.  [RELOCATION FROM OUTSIDE COUNTY.] (a) If a 
196.12  business relocates more than 25 full-time equivalent jobs from a 
196.13  location in Minnesota outside of the county in which the zone is 
196.14  located, the business must notify the commissioner of trade and 
196.15  economic development and the city and county governments from 
196.16  which the jobs are being relocated.  A business may satisfy the 
196.17  notification requirement by notifying the commissioner of trade 
196.18  and economic development, the city, and county of its intent to 
196.19  transfer jobs to a zone before actually doing so.  The business 
196.20  is not eligible for the exemptions and credits available in the 
196.21  border city development zone, if the governing body of the city 
196.22  or county from which the jobs are being relocated adopts a 
196.23  resolution objecting to the relocation within 60 days after its 
196.24  receipt of the notice. 
196.25     (b) The business becomes eligible for the exemptions and 
196.26  credits available in the zone when each city and county that 
196.27  objected to the relocation rescinds its objection by resolution. 
196.28     (c) A city or county that objects to the relocation of jobs 
196.29  must file a copy of the resolution with the commissioners of 
196.30  trade and economic development and revenue, and the city that 
196.31  created the border city development zone into which the jobs 
196.32  were or intend to be transferred. 
196.33     Sec. 10.  [469.1934] [TAX INCENTIVES OUTSIDE ZONES.] 
196.34     Subdivision 1.  [AUTHORITY.] A city with authority to 
196.35  establish a border city development zone under section 469.1931 
196.36  may grant the tax incentives provided by this section.  This 
197.1   authority applies only to projects located outside of a zone. 
197.2      Subd. 2.  [DEFINITIONS.] For purposes of this section, 
197.3   "qualifying business" means the business conducted by a 
197.4   corporation, partnership, or individual doing business from a 
197.5   fixed location within the border city but located outside of the 
197.6   border city development zone. 
197.7      Subd. 3.  [PROPERTY TAX.] (a) A city may grant a partial or 
197.8   complete exemption from property taxation of all buildings, 
197.9   structures, fixtures, and improvements used in or necessary to a 
197.10  qualifying business for a period not exceeding five years from 
197.11  the date the project begins operating.  A partial exemption must 
197.12  be stated as a percentage of the total ad valorem taxes assessed 
197.13  against the property. 
197.14     (b) In addition to, or in lieu of, a property tax exemption 
197.15  under paragraph (a), a city may establish an amount due as 
197.16  payments in lieu of ad valorem taxes on buildings, structures, 
197.17  fixtures, and improvements used by the qualifying business. The 
197.18  city council shall designate the amount of the payments for each 
197.19  year and the beginning year and the concluding year for payments 
197.20  in lieu of taxes.  The option to make payments in lieu of taxes 
197.21  under this section may not extend beyond the 20th year after the 
197.22  taxpayer becomes a qualifying business.  To establish the amount 
197.23  of payments in lieu of taxes, the city council may use actual or 
197.24  estimated levels of assessment and taxation or may designate 
197.25  different amounts of payments in lieu of other taxes in 
197.26  different years to recognize future expansion plans of a 
197.27  qualifying business or other considerations.  The payments in 
197.28  lieu shall be collected and distributed in the same manner as ad 
197.29  valorem taxes. 
197.30     (c) The city council must determine whether granting the 
197.31  exemption or payments in lieu of taxes, or both, is in the best 
197.32  interest of the city, and if it so determines, must give its 
197.33  approval. 
197.34     Subd. 4.  [INCOME TAX.] (a) Upon application by the 
197.35  qualifying business to the city, and approval of the city, the 
197.36  net income of the qualified business attributable to the border 
198.1   city, but outside the border city development zone, shall be 
198.2   exempt.  The attributable net income of a qualified business in 
198.3   the border city is determined by multiplying the net income of 
198.4   the taxpayer by a fraction: 
198.5      (1) the numerator of which is: 
198.6      (i) the ratio of the taxpayer's property factor under 
198.7   section 290.191 located in the border city, but outside of the 
198.8   border city development zone, for the taxable year over the 
198.9   property factor denominator determined under section 290.191, 
198.10  plus 
198.11     (ii) the ratio of the taxpayer's payroll factor under 
198.12  section 290.191 located in the border city, but outside of the 
198.13  border city development zone, for the taxable year over the 
198.14  payroll factor denominator determined under section 290.191; and 
198.15     (2) the denominator of which is two. 
198.16     (b) The exemption under this subdivision applies after any 
198.17  credit allowed under section 290.06, subdivision 27. 
198.18     (c) After any notice period required by subdivision 5, the 
198.19  city council must determine whether granting the exemption is in 
198.20  the best interest of the city, and if it so determines, must 
198.21  give its approval. 
198.22     (d) For taxable years beginning before January 1, 2002, the 
198.23  exemption under this subdivision may not exceed the amount of 
198.24  the tax credit certificates received by the taxpayer from the 
198.25  city, less any tax credit certificates used under sections 
198.26  290.06, subdivisions 26 and 27; and 297A.25, subdivision 73. 
198.27     Subd. 5.  [NOTICE TO COMPETITORS.] (a) Before an exemption 
198.28  or other concession is granted under subdivision 3 or 4, the 
198.29  procedure under this subdivision applies. 
198.30     (b) Unless the city council determines that no existing 
198.31  business within the city would be a potential competitor of the 
198.32  project, the project operator shall publish two notices to 
198.33  competitors of the application of the tax exemption or payments 
198.34  in lieu in the official newspaper of the city.  The commissioner 
198.35  of revenue shall prescribe the form of the notice.  The two 
198.36  notices must be published at least one week apart.  The 
199.1   publications must be completed not less than 15 days nor more 
199.2   than 30 days before the city council approves the tax exemption 
199.3   or payments in lieu of taxes. 
199.4      Sec. 11.  [469.1935] [NEW HOME EXEMPTION.] 
199.5      The governing body of a city with authority to establish a 
199.6   border city development zone under section 469.1931 may grant a 
199.7   property tax exemption for the first $75,000 of estimated market 
199.8   value of new property that will be assessed under section 
199.9   273.13, subdivision 22, as class 1, or under subdivision 25, as 
199.10  class 4bb, and that consists of no more than one dwelling unit.  
199.11  The exemption does not apply to the value of the land.  The 
199.12  exemption applies to the first two assessment years that begin 
199.13  after construction began on the dwelling.  The following 
199.14  requirements apply: 
199.15     (1) the governing body must grant the exemption by 
199.16  resolution.  It may rescind or amend the resolution at any time, 
199.17  effective for assessment years beginning after the date of 
199.18  adoption; 
199.19     (2) special assessments and taxes on the property upon 
199.20  which the dwelling is situated are not delinquent; and 
199.21     (3) the first owner after the builder resides on the 
199.22  property or the builder still owns the property.  A builder 
199.23  includes a person who builds that person's own residence. 
199.24     Sec. 12.  [469.1936] [LIMIT ON TAX REDUCTIONS; FISCAL YEARS 
199.25  1999-2001.] 
199.26     Subdivision 1.  [BUSINESSES MUST APPLY.] To claim a tax 
199.27  credit or exemption under section 290.06, subdivision 26 or 27; 
199.28  or 469.1934, subdivision 4 for a taxable year beginning before 
199.29  January 1, 2002 or an exemption from sales tax under section 
199.30  297A.25, subdivision 73, for a purchase made before July 1, 
199.31  2001, a business must apply to the city for a tax credit 
199.32  certificate.  The total amount of the state tax reductions 
199.33  allowed for the specified period may not exceed the amount of 
199.34  the tax credit certificates provided by the city to the business.
199.35     Subd. 2.  [CITY LIMITS.] (a) Each city may provide tax 
199.36  credit certificates to businesses that apply and meet the 
200.1   requirements for the tax credit and exemption.  The certificates 
200.2   that each city may provide for the period covered by this 
200.3   section is limited to the amount specified in this subdivision.  
200.4   No other tax credits or exemptions apply for otherwise 
200.5   qualifying activity or purchases during taxable years beginning 
200.6   before January 1, 2002 or for purchases made before July 1, 2001.
200.7      (b) The maximum amount of tax credit certificates each city 
200.8   may issue equals: 
200.9      (1) for the city of Breckenridge, $394,000; 
200.10     (2) for the city of Dilworth, $118,200; 
200.11     (3) for the city of East Grand Forks, $788,000; 
200.12     (4) for the city of Moorhead, $591,000; and 
200.13     (5) for the city of Ortonville, $78,800. 
200.14     Sec. 13.  [EFFECTIVE DATE.] 
200.15     Sections 1 to 4 and 7 to 12 are effective the day following 
200.16  final enactment. 
200.17     Section 5 is effective for plans required to be filed after 
200.18  the day following final enactment, regardless of whether the 
200.19  business received a credit and was required to file a plan in a 
200.20  prior year. 
200.21     Section 6 is effective for tax reductions received 
200.22  beginning in the first calendar year after the day following 
200.23  final enactment. 
200.24                             ARTICLE 11
200.25                            GAMING TAXES
200.26     Section 1.  Minnesota Statutes 1996, section 240.15, 
200.27  subdivision 1, is amended to read: 
200.28     Subdivision 1.  [TAXES IMPOSED.] (a) ~~From July 1, 1996,~~ 
200.29  ~~until July 1, 1999,~~ There is imposed a tax at the rate of six 
200.30  percent of the amount in excess of $12,000,000 annually withheld 
200.31  from all pari-mutuel pools by the licensee, including breakage 
200.32  and amounts withheld under section 240.13, subdivision 4.  ~~After~~ 
200.33  ~~June 30, 1999, the tax is imposed on the total amount withheld~~ 
200.34  ~~from all pari-mutuel pools.~~  For the purpose of this 
200.35  subdivision, "annually" is the period from July 1 to June 30 of 
200.36  the next year. 
201.1      In addition to the above tax, the licensee must designate 
201.2   and pay to the commission a tax of one percent of the total 
201.3   amount bet on each racing day, for deposit in the Minnesota 
201.4   breeders fund.  
201.5      The taxes imposed by this clause must be paid from the 
201.6   amounts permitted to be withheld by a licensee under section 
201.7   240.13, subdivision 4.  
201.8      (b) The commission may impose an admissions tax of not more 
201.9   than ten cents on each paid admission at a licensed racetrack on 
201.10  a racing day if:  
201.11     (1) the tax is requested by a local unit of government 
201.12  within whose borders the track is located; 
201.13     (2) a public hearing is held on the request; and 
201.14     (3) the commission finds that the local unit of government 
201.15  requesting the tax is in need of its revenue to meet 
201.16  extraordinary expenses caused by the racetrack. 
201.17     Sec. 2.  Minnesota Statutes 1996, section 240.15, 
201.18  subdivision 5, is amended to read: 
201.19     Subd. 5.  [UNREDEEMED TICKETS.] (a) Notwithstanding any 
201.20  provision to the contrary in chapter 345, unredeemed pari-mutuel 
201.21  tickets shall not be considered unclaimed funds and shall be 
201.22  handled in accordance with the provisions of this subdivision.  
201.23     (b) ~~Until the end of calendar year 1999,~~ Any person 
201.24  claiming to be entitled to the proceeds of any unredeemed ticket 
201.25  may within one year after the conclusion of each race meet file 
201.26  with the licensee a verified claim for such proceeds on such 
201.27  form as the licensee prescribes along with the pari-mutuel 
201.28  ticket.  Unless the claimant satisfactorily establishes the 
201.29  right to the proceeds, the claim shall be rejected.  If the 
201.30  claim is allowed, the licensee shall pay the proceeds without 
201.31  interest to the claimant.  
201.32     ~~(c) Beginning January 1, 2000, not later than 100 days~~ 
201.33  ~~after the end of a race meet a licensee who sells pari-mutuel~~ 
201.34  ~~tickets must remit to the commission or its representative an~~ 
201.35  ~~amount equal to the total value of unredeemed tickets from the~~ 
201.36  ~~race meet.  The remittance must be accompanied by a detailed~~ 
202.1   ~~statement of the money on a form the commission prescribes.  Any~~ 
202.2   ~~person claiming to be entitled to the proceeds of any unredeemed~~ 
202.3   ~~ticket who fails to claim said proceeds prior to their being~~ 
202.4   ~~remitted to the commission, may within one year after the date~~ 
202.5   ~~of remittance to the commission file with the commission a~~ 
202.6   ~~verified claim for such proceeds on such form as the commission~~ 
202.7   ~~prescribes along with the pari-mutuel ticket.  Unless the~~ 
202.8   ~~claimant satisfactorily establishes the right to the proceeds,~~ 
202.9   ~~the claim shall be rejected.  If the claim is allowed, the~~ 
202.10  ~~commission shall pay the proceeds without interest to the~~ 
202.11  ~~claimant.  There is hereby appropriated from the general fund to~~ 
202.12  ~~the commission an amount sufficient to make payment to persons~~ 
202.13  ~~entitled to such proceeds.~~ 
202.14     Sec. 3.  Minnesota Statutes 1996, section 297E.02, 
202.15  subdivision 1, is amended to read: 
202.16     Subdivision 1.  [IMPOSITION.] A tax is imposed on all 
202.17  lawful gambling other than (1) pull-tabs purchased and placed 
202.18  into inventory after January 1, 1987, and (2) tipboards 
202.19  purchased and placed into inventory after June 30, 1988, at the 
202.20  rate of ~~ten~~ 9.5 percent on the gross receipts as defined in 
202.21  section 297E.01, subdivision 8, less prizes actually paid.  The 
202.22  tax imposed by this subdivision is in lieu of the tax imposed by 
202.23  section 297A.02 and all local taxes and license fees except a 
202.24  fee authorized under section 349.16, subdivision 8, or a tax 
202.25  authorized under subdivision 5.  
202.26     The tax imposed under this subdivision is payable by the 
202.27  organization or party conducting, directly or indirectly, the 
202.28  gambling.  
202.29     Sec. 4.  Minnesota Statutes 1996, section 297E.02, 
202.30  subdivision 4, is amended to read: 
202.31     Subd. 4.  [PULL-TAB AND TIPBOARD TAX.] (a) A tax is imposed 
202.32  on the sale of each deal of pull-tabs and tipboards sold by a 
202.33  distributor.  The rate of the tax is ~~two~~ 1.9 percent of the 
202.34  ideal gross of the pull-tab or tipboard deal.  The sales tax 
202.35  imposed by chapter 297A on the sale of the pull-tabs and 
202.36  tipboards by the distributor is imposed on the retail sales 
203.1   price less the tax imposed by this subdivision.  The retail sale 
203.2   of pull-tabs or tipboards by the organization is exempt from 
203.3   taxes imposed by chapter 297A and is exempt from all local taxes 
203.4   and license fees except a fee authorized under section 349.16, 
203.5   subdivision 8.  
203.6      (b) The liability for the tax imposed by this section is 
203.7   incurred when the pull-tabs and tipboards are delivered by the 
203.8   distributor to the customer or to a common or contract carrier 
203.9   for delivery to the customer, or when received by the customer's 
203.10  authorized representative at the distributor's place of 
203.11  business, regardless of the distributor's method of accounting 
203.12  or the terms of the sale.  
203.13     The tax imposed by this subdivision is imposed on all sales 
203.14  of pull-tabs and tipboards, except the following:  
203.15     (1) sales to the governing body of an Indian tribal 
203.16  organization for use on an Indian reservation; 
203.17     (2) sales to distributors licensed under the laws of 
203.18  another state or of a province of Canada, as long as all 
203.19  statutory and regulatory requirements are met in the other state 
203.20  or province; 
203.21     (3) sales of promotional tickets as defined in section 
203.22  349.12; and 
203.23     (4) pull-tabs and tipboards sold to an organization that 
203.24  sells pull-tabs and tipboards under the exemption from licensing 
203.25  in section 349.166, subdivision 2.  A distributor shall require 
203.26  an organization conducting exempt gambling to show proof of its 
203.27  exempt status before making a tax-exempt sale of pull-tabs or 
203.28  tipboards to the organization.  A distributor shall identify, on 
203.29  all reports submitted to the commissioner, all sales of 
203.30  pull-tabs and tipboards that are exempt from tax under this 
203.31  subdivision.  
203.32     (c) A distributor having a liability of $120,000 or more 
203.33  during a fiscal year ending June 30 must remit all liabilities 
203.34  in the subsequent calendar year by a funds transfer as defined 
203.35  in section 336.4A-104, paragraph (a).  The funds transfer 
203.36  payment date, as defined in section 336.4A-401, must be on or 
204.1   before the date the tax is due.  If the date the tax is due is 
204.2   not a funds transfer business day, as defined in section 
204.3   336.4A-105, paragraph (a), clause (4), the payment date must be 
204.4   on or before the funds transfer business day next following the 
204.5   date the tax is due. 
204.6      (d) Any customer who purchases deals of pull-tabs or 
204.7   tipboards from a distributor may file an annual claim for a 
204.8   refund or credit of taxes paid pursuant to this subdivision for 
204.9   unsold pull-tab and tipboard tickets.  The claim must be filed 
204.10  with the commissioner on a form prescribed by the commissioner 
204.11  by March 20 of the year following the calendar year for which 
204.12  the refund is claimed.  The refund must be filed as part of the 
204.13  customer's February monthly return.  The refund or credit is 
204.14  equal to ~~two~~ 1.9 percent of the face value of the unsold 
204.15  pull-tab or tipboard tickets, provided that the refund or credit 
204.16  will be 1.95 percent of the face value of the unsold pull-tab or 
204.17  tipboard tickets for claims for a refund or credit of taxes 
204.18  filed on the February 1999 monthly return.  The refund claimed 
204.19  will be applied as a credit against tax owing under this chapter 
204.20  on the February monthly return.  If the refund claimed exceeds 
204.21  the tax owing on the February monthly return, that amount will 
204.22  be refunded.  The amount refunded will bear interest pursuant to 
204.23  section 270.76 from 90 days after the claim is filed.  
204.24     Sec. 5.  Minnesota Statutes 1996, section 297E.02, 
204.25  subdivision 6, is amended to read: 
204.26     Subd. 6.  [COMBINED RECEIPTS TAX.] In addition to the taxes 
204.27  imposed under subdivisions 1 and 4, a tax is imposed on the 
204.28  combined receipts of the organization.  As used in this section, 
204.29  "combined receipts" is the sum of the organization's gross 
204.30  receipts from lawful gambling less gross receipts directly 
204.31  derived from the conduct of bingo, raffles, and paddlewheels, as 
204.32  defined in section 297E.01, subdivision 8, for the fiscal year.  
204.33  The combined receipts of an organization are subject to a tax 
204.34  computed according to the following schedule: 
204.35     If the combined receipts for the          The tax is:
204.36     fiscal year are:
205.1      Not over $500,000                   zero
205.2      Over $500,000, but not over
205.3      $700,000                            ~~two~~ 1.9 percent of the 
205.4                                          amount over $500,000, but 
205.5                                          not over $700,000
205.6      Over $700,000, but not over
205.7      $900,000                            ~~$4,000~~ $3,800 plus ~~four~~ 
205.8                                          3.8 percent of the 
205.9                                          amount over $700,000, but 
205.10                                         not over $900,000
205.11     Over $900,000                       ~~$12,000~~ $11,400 plus ~~six~~ 
205.12                                         5.7 percent of the 
205.13                                         amount over $900,000
205.14     Sec. 6.  [EFFECTIVE DATE.] 
205.15     Sections 2 to 5 are effective July 1, 1998. 
205.16                             ARTICLE 12 
205.17                           MISCELLANEOUS 
205.18     Section 1.  Minnesota Statutes 1997 Supplement, section 
205.19  270.60, subdivision 4, is amended to read: 
205.20     Subd. 4.  [PAYMENTS TO COUNTIES.] (a) The commissioner 
205.21  shall pay to a ~~qualified~~ county in which an Indian gaming casino 
205.22  is located ten percent of the state share of all taxes generated 
205.23  from activities on reservations and collected under a tax 
205.24  agreement under this section with the tribal government for the 
205.25  reservation located in the county.  If the tribe has casinos 
205.26  located in more than one county, the payment must be divided 
205.27  equally among the counties in which the casinos are located. 
205.28     (b) ~~A county qualifies for payments under this subdivision~~ 
205.29  ~~only if one of the following conditions is met:~~ 
205.30     ~~(1) the county's per capita income is less than 80 percent~~ 
205.31  ~~of the state per capita personal income, based on the most~~ 
205.32  ~~recent estimates made by the United States Bureau of Economic~~ 
205.33  ~~Analysis; or~~ 
205.34     ~~(2) 30 percent or more of the total market value of real~~ 
205.35  ~~property in the county is exempt from ad valorem taxation.~~ 
205.36     ~~(c)~~ The commissioner shall make the payments required under 
206.1   this subdivision by February 28 of the year following the year 
206.2   the taxes are collected. 
206.3      ~~(d)~~ (c) An amount sufficient to make the payments 
206.4   authorized by this subdivision, not to exceed $1,100,000 in any 
206.5   fiscal year, is annually appropriated from the general fund to 
206.6   the commissioner.  If the authorized payments exceed the amount 
206.7   of the appropriation, the commissioner shall proportionately 
206.8   reduce the rate so that the total amount equals the 
206.9   appropriation. 
206.10     Sec. 2.  Minnesota Statutes 1997 Supplement, section 
206.11  270.67, subdivision 2, is amended to read: 
206.12     Subd. 2.  [EXTENSION AGREEMENTS.] When any portion of any 
206.13  tax payable to the commissioner of revenue together with 
206.14  interest and penalty thereon, if any, has not been paid, the 
206.15  commissioner may extend the time for payment for a further 
206.16  period.  When the authority of this section is invoked, the 
206.17  extension shall be evidenced by written agreement signed by the 
206.18  taxpayer and the commissioner, stating the amount of the tax 
206.19  with penalty and interest, if any, and providing for the payment 
206.20  of the amount in installments.  The agreement may contain a 
206.21  confession of judgment for the amount and for any unpaid portion 
206.22  thereof and shall provide that the commissioner may forthwith 
206.23  enter judgment against the taxpayer in the district court of the 
206.24  county of residence as shown upon the taxpayer's tax return for 
206.25  the unpaid portion of the amount specified in the extension 
206.26  agreement.  The agreement shall provide that it can be 
206.27  terminated, after notice by the commissioner, if information 
206.28  provided by the taxpayer prior to the agreement was inaccurate 
206.29  or incomplete, collection of the tax covered by the agreement is 
206.30  in jeopardy, there is a subsequent change in the taxpayer's 
206.31  financial condition, the taxpayer has failed to make a payment 
206.32  due under the agreement, or has failed to pay any other tax or 
206.33  file a tax return coming due after the agreement.  The notice 
206.34  must be given at least 14 calendar days prior to termination, 
206.35  and shall advise the taxpayer of the right to request a 
206.36  reconsideration from the commissioner of whether termination is 
207.1   reasonable and appropriate under the circumstances.  A request 
207.2   for reconsideration does not stay collection action beyond the 
207.3   14-day notice period.  If the commissioner has reason to believe 
207.4   that collection of the tax covered by the agreement is in 
207.5   jeopardy, the commissioner may proceed under sections 270.70, 
207.6   subdivision 2, paragraph (b), and 270.274, and terminate the 
207.7   agreement without regard to the 14-day period.  The commissioner 
207.8   may accept other collateral the commissioner considers 
207.9   appropriate to secure satisfaction of the tax liability.  The 
207.10  principal sum specified in the agreement shall bear interest at 
207.11  the rate specified in section 270.75 on all unpaid portions 
207.12  thereof until the same has been fully paid or the unpaid portion 
207.13  thereof has been entered as a judgment.  The judgment shall bear 
207.14  interest at the rate specified in section 270.75.  If it appears 
207.15  to the commissioner that the tax reported by the taxpayer is in 
207.16  excess of the amount actually owing by the taxpayer, the 
207.17  extension agreement or the judgment entered pursuant thereto 
207.18  shall be corrected.  If after making the extension agreement or 
207.19  entering judgment with respect thereto, the commissioner 
207.20  determines that the tax as reported by the taxpayer is less than 
207.21  the amount actually due, the commissioner shall assess a further 
207.22  tax in accordance with the provisions of law applicable to the 
207.23  tax.  The authority granted to the commissioner by this section 
207.24  is in addition to any other authority granted to the 
207.25  commissioner by law to extend the time of payment or the time 
207.26  for filing a return and shall not be construed in limitation 
207.27  thereof. 
207.28     Sec. 3.  Minnesota Statutes 1997 Supplement, section 
207.29  465.715, subdivision 1, is amended to read: 
207.30     Subdivision 1.  [STATUTORY AUTHORIZATION REQUIRED.] A 
207.31  county, home rule charter city, statutory city, town, school 
207.32  district, or other political subdivision may not create a 
207.33  corporation, whether for profit or not for profit, unless 
207.34  explicitly authorized to do so by law.  Except as provided by 
207.35  subdivision 2, this subdivision applies to a corporation for 
207.36  which a certificate of incorporation is issued by the secretary 
208.1   of state on or after June 1, 1997.  A corporation that had been 
208.2   issued a certificate of incorporation before June 1, 1997, may 
208.3   continue to operate as if it had been created in compliance with 
208.4   this subdivision.  
208.5      Sec. 4.  Minnesota Statutes 1996, section 469.015, 
208.6   subdivision 4, is amended to read: 
208.7      Subd. 4.  [EXCEPTIONS.] (a) An authority need not require 
208.8   competitive bidding in the following circumstances:  
208.9      (1) in the case of a contract for the acquisition of a 
208.10  low-rent housing project: 
208.11     (i) for which financial assistance is provided by the 
208.12  federal government; 
208.13     (ii) which does not require any direct loan or grant of 
208.14  money from the municipality as a condition of the federal 
208.15  financial assistance; and 
208.16     (iii) for which the contract provides for the construction 
208.17  of the project upon land that is either owned by the authority 
208.18  for redevelopment purposes or not owned by the authority at the 
208.19  time of the contract but the contract provides for the 
208.20  conveyance or lease to the authority of the project or 
208.21  improvements upon completion of construction; 
208.22     (2) with respect to a structured parking facility:  
208.23     (i) constructed in conjunction with, and directly above or 
208.24  below, a development; and 
208.25     (ii) financed with the proceeds of tax increment or parking 
208.26  ramp general obligation or revenue bonds; and 
208.27     (3) in the case of any building in which at least 75 
208.28  percent of the useable square footage constitutes a housing 
208.29  development project if: 
208.30     (i) the project is financed with the proceeds of bonds 
208.31  issued under section 469.034 or from nongovernmental sources; 
208.32     (ii) the project is either located on land that is owned or 
208.33  is being acquired by the authority only for development 
208.34  purposes, or is not owned by the authority at the time the 
208.35  contract is entered into but the contract provides for 
208.36  conveyance or lease to the authority of the project or 
209.1   improvements upon completion of construction; and 
209.2      (iii) the authority finds and determines that elimination 
209.3   of the public bidding requirements is necessary in order for the 
209.4   housing development project to be economical and feasible. 
209.5      (b) An authority need not require a performance bond for 
209.6   the following projects: 
209.7      (1) a contract described in paragraph (a), clause (1); 
209.8      (2) a construction change order for a housing project in 
209.9   which 30 percent of the construction has been completed; 
209.10     (3) a construction contract for a single-family housing 
209.11  project in which the authority acts as the general construction 
209.12  contractor; or 
209.13     (4) a services or materials contract for a housing project. 
209.14     For purposes of this paragraph, "services or materials 
209.15  contract" does not include construction contracts. 
209.16     Sec. 5.  Minnesota Statutes 1996, section 473.3915, 
209.17  subdivision 2, is amended to read: 
209.18     Subd. 2.  [REGULAR ROUTE TRANSIT SERVICE.] "Regular route 
209.19  transit service" means services as defined in section 473.385, 
209.20  subdivision 1, paragraph (b), with at least two scheduled runs 
209.21  per hour between 7:00 a.m. and 6:30 p.m., Monday to Friday, and 
209.22  regularly scheduled service on Saturday, Sunday, and holidays, 
209.23  and weekdays after 6:30 p.m.  The two scheduled runs for buses 
209.24  leaving a replacement transit service transit hub need not be on 
209.25  the same route.  
209.26     Sec. 6.  Minnesota Statutes 1996, section 473.3915, 
209.27  subdivision 3, is amended to read: 
209.28     Subd. 3.  [TRANSIT ZONE.] (a) Except as provided in 
209.29  paragraph (b), "transit zone" means the area within one-quarter 
209.30  of a mile of a route along which regular route transit service 
209.31  is provided that is also within the metropolitan urban service 
209.32  area, as determined by the council.  "Transit zone" includes any 
209.33  light rail transit route for which funds for construction have 
209.34  been committed. 
209.35     (b) A transit zone that surrounds a replacement transit 
209.36  service transit hub has a limiting area of one-eighth mile 
210.1   rather than the one-quarter mile provided in paragraph (a).  
210.2      (c) The prohibition under section 273.13, subdivision 24, 
210.3   paragraph (c), item (v), that applies to structures primarily 
210.4   used for retail does not apply to structures primarily used for 
210.5   retail that are in transit zones described in paragraph (b). 
210.6      Sec. 7.  Minnesota Statutes 1996, section 473.3915, 
210.7   subdivision 5, is amended to read: 
210.8      Subd. 5.  [TRANSIT ZONE ~~MAP; DATE FIRST PRODUCED~~ MAPS.] The 
210.9   metropolitan council shall produce an initial version of the 
210.10  transit zone map required under subdivision 4 by January 1, 
210.11  1996, and a later version as required by the amendments made in 
210.12  sections 1 and 2. 
210.13     Sec. 8.  [EFFECTIVE DATE.] 
210.14     Section 2 is effective the day following final enactment. 
210.15     Section 6, paragraph (c), is effective July 1, 1998, only 
210.16  for taxes levied in 1998, payable in 1999, through taxes levied 
210.17  in 2008, payable in 2009.