1.1                          A bill for an act 
  1.2             relating to taxation; providing for property tax 
  1.3             reform; providing for income and corporate franchise 
  1.4             tax relief and reform; providing for sales, use, and 
  1.5             motor vehicle sales tax reform; reducing the motor 
  1.6             vehicle registration tax; changing and reforming 
  1.7             health care provider taxes, insurance premiums taxes, 
  1.8             mortgage registry and deed taxes, and gambling, 
  1.9             petroleum, mining, and liquor taxes; changing property 
  1.10            tax refunds; reforming property tax aids and local 
  1.11            government aids provisions; conforming to changes in 
  1.12            federal income tax provisions; changing certain tax 
  1.13            increment financing provisions; providing for 
  1.14            appointment, training, and education of assessors; 
  1.15            making policy, clarifying, administrative, 
  1.16            collections, refunds, and licensing changes to various 
  1.17            taxes and fees; changing administration of the 
  1.18            political contribution refund; giving certain powers 
  1.19            and duties to the commissioner of revenue; authorizing 
  1.20            the commissioner to publish names of certain 
  1.21            delinquent taxpayers; imposing a use tax on certain 
  1.22            solid waste generators and self-haulers; requiring 
  1.23            notice to commissioner of city or town tobacco 
  1.24            licenses; changing health care funding and creating a 
  1.25            health care access fund reserve; providing for funding 
  1.26            of the highway user tax distribution fund; 
  1.27            appropriating money; amending Minnesota Statutes 2000, 
  1.28            sections 84.922, by adding a subdivision; 126C.01, by 
  1.29            adding subdivisions; 126C.13, subdivisions 1, 2, and 
  1.30            4; 126C.17, subdivisions 5, 6, 7, 8, 9, and 10; 
  1.31            127A.48, subdivision 1; 168.013, subdivision 1a; 
  1.32            239.101, subdivision 3; 270.60, by adding a 
  1.33            subdivision; 270.70, subdivision 13; 270.73, 
  1.34            subdivision 1; 272.02, subdivisions 7 and 10; 273.061, 
  1.35            subdivisions 1, 2, and 8; 273.11, subdivision 1a; 
  1.36            273.121; 273.124, subdivision 13; 273.13, subdivisions 
  1.37            22, 23, 24, 25, 31, and by adding subdivisions; 
  1.38            273.1392; 273.1393; 273.1398, subdivisions 1, 8, and 
  1.39            by adding a subdivision; 273.166, subdivisions 2, 3, 
  1.40            and 5; 273.42, by adding a subdivision; 274.01, 
  1.41            subdivision 1; 274.13, subdivision 1; 275.011, by 
  1.42            adding a subdivision; 275.02; 275.065, subdivisions 3, 
  1.43            5a, and 6; 275.08, subdivisions 1, 1a, and 1b; 275.28, 
  1.44            subdivision 1; 275.61; 276.04, subdivision 2; 276A.06, 
  1.45            subdivision 3; 282.01, subdivisions 1a and 1b; 282.08; 
  1.46            287.035; 287.08; 287.21, subdivision 1; 287.28; 
  2.1             289A.02, subdivision 7; 289A.11, subdivision 1; 
  2.2             289A.18, subdivision 4; 289A.20, subdivision 4; 
  2.3             289A.56, subdivision 4; 289A.60, subdivision 21; 
  2.4             290.01, subdivisions 19, 19b, 19c, 19d, 29, 31, and by 
  2.5             adding a subdivision; 290.02; 290.05, subdivisions 1 
  2.6             and 3; 290.06, subdivisions 1, 2c, and 23; 290.0671, 
  2.7             subdivision 1; 290.0674, subdivisions 1 and 2; 
  2.8             290.0675, subdivisions 1 and 3; 290.068, subdivision 
  2.9             2, and by adding a subdivision; 290.091, subdivisions 
  2.10            1 and 6; 290.0921, subdivision 8, and by adding a 
  2.11            subdivision; 290.0922, subdivision 2; 290.095, 
  2.12            subdivision 2; 290.17, subdivision 4; 290.191, 
  2.13            subdivisions 2, 3, and 5; 290.32; 290.92, subdivisions 
  2.14            3, 23, 28, and 29; 290.9727, subdivision 3; 290.9728, 
  2.15            subdivision 2; 290.9729, subdivision 2; 290A.03, 
  2.16            subdivisions 12 and 15; 290A.04, subdivisions 2, 2a, 
  2.17            and 4; 290A.15; 291.005, subdivision 1; 295.50, 
  2.18            subdivisions 3 and 4; 295.52, subdivisions 1, 1a, and 
  2.19            2; 295.53, subdivisions 1 and 3; 295.58; 295.582; 
  2.20            296A.15, subdivision 1; 296A.16, subdivision 1; 
  2.21            297A.01, subdivision 5; 297A.07, subdivision 3; 
  2.22            297A.61, subdivisions 3, 4, 6, 7, 10, 12, 16, and by 
  2.23            adding subdivisions; 297A.62, subdivision 1; 297A.67, 
  2.24            subdivisions 5 and 7; 297A.68, subdivisions 2, 3, 5, 
  2.25            17, 19, and by adding subdivisions; 297A.70, 
  2.26            subdivisions 1, 2, 4, and 14; 297A.71, by adding a 
  2.27            subdivision; 297A.72, subdivision 1; 297A.75, 
  2.28            subdivisions 1, 2, 3, and 4; 297A.80; 297A.82, 
  2.29            subdivisions 1, 3, 4, and by adding a subdivision; 
  2.30            297A.86, subdivision 1; 297A.87, subdivision 3; 
  2.31            297A.94; 297B.01, subdivision 8; 297B.03; 297B.09, 
  2.32            subdivision 1; 297E.02, subdivisions 1 and 6; 297F.10, 
  2.33            subdivision 1; 297I.15, by adding a subdivision; 
  2.34            297I.40, subdivisions 1, 2, and 7; 298.01, 
  2.35            subdivisions 3, 3a, 3b, 3d, 4, 4a, 4c, and 4e; 298.24, 
  2.36            subdivision 1; 298.28, subdivisions 1, 4, 5, 6, 10, 
  2.37            and 11; 461.12, by adding a subdivision; 469.1763, 
  2.38            subdivision 6; 469.177, subdivisions 1a and 11; 
  2.39            473.446, subdivision 1; 473F.08, subdivision 3; 
  2.40            473H.10, subdivision 3; 477A.011, subdivisions 3, 34, 
  2.41            and by adding subdivisions; 477A.013, subdivisions 1, 
  2.42            8, and 9; 477A.015; 477A.03, subdivision 2; and 
  2.43            477A.065, subdivision 1; Laws 2000, chapter 490, 
  2.44            article 7, section 3; proposing coding for new law in 
  2.45            Minnesota Statutes, chapters 16A; 126C; 270; 273; 275; 
  2.46            297A; 297F; and 297H; repealing Minnesota Statutes 
  2.47            2000, sections 16A.76; 126C.13, subdivision 1; 
  2.48            126C.18, subdivision 1; 273.13, subdivision 21b; 
  2.49            273.138; 273.1382; 273.1399; 275.065, subdivision 3a; 
  2.50            275.078; 275.08, subdivision 1e; 282.01, subdivisions 
  2.51            1c, 1d, and 1e; 289A.60, subdivision 15; 290.01, 
  2.52            subdivision 6b; 290.06, subdivision 25; 290.067; 
  2.53            290.0673; 290.091, subdivisions 1, 2, 3, 4, 5, and 6; 
  2.54            290.0921, subdivisions 1, 2, 3, 4, 5, 6, and 7; 
  2.55            290.21; 290.35, subdivisions 3, 4, and 5; 295.50, 
  2.56            subdivisions 10a, 14, and 15; 295.51, subdivision 1a; 
  2.57            295.52, subdivisions 3, 4, 4a, and 7; 295.54, 
  2.58            subdivisions 2 and 3; 297A.67, subdivisions 4, 6, 9, 
  2.59            10, 11, 12, 16, 17, 18, 19, and 25; 297A.68, 
  2.60            subdivisions 4, 6, 7, 8, 9, 10, 11, 12, 16, 18, 21, 
  2.61            22, 23, 24, 25, 26, 28, 29, 30, 31, 33, and 34; 
  2.62            297A.69, subdivisions 3, 5, 6, and 7; 297A.70, 
  2.63            subdivisions 3, 5, 6, 7, 8, 9, 10, 11, 12, 13, 15, and 
  2.64            16; 297A.82, subdivision 5; 297A.90; 297A.96; 297G.03, 
  2.65            subdivision 4; 297G.07, subdivision 3; 297I.05, 
  2.66            subdivisions 5 and 8; 297I.30, subdivision 3; 298.01, 
  2.67            subdivisions 3c and 4d; 469.132, subdivision 2; 
  2.68            469.1734, subdivisions 4 and 6; 477A.011, subdivisions 
  2.69            30, 31, 32, 33, 36, and 37; and 477A.03, subdivision 4.
  2.70  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  3.1                              ARTICLE 1 
  3.2               INDIVIDUAL INCOME TAX REFORM AND RELIEF 
  3.3      Section 1.  Minnesota Statutes 2000, section 290.01, 
  3.4   subdivision 19b, is amended to read: 
  3.5      Subd. 19b.  [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 
  3.6   individuals, estates, and trusts, there shall be subtracted from 
  3.7   federal taxable income: 
  3.8      (1) interest income on obligations of any authority, 
  3.9   commission, or instrumentality of the United States to the 
  3.10  extent includable in taxable income for federal income tax 
  3.11  purposes but exempt from state income tax under the laws of the 
  3.12  United States; 
  3.13     (2) if included in federal taxable income, the amount of 
  3.14  any overpayment of income tax to Minnesota or to any other 
  3.15  state, for any previous taxable year, whether the amount is 
  3.16  received as a refund or as a credit to another taxable year's 
  3.17  income tax liability; 
  3.18     (3) the amount paid to others, less the credit allowed 
  3.19  under section 290.0674, not to exceed $1,625 for each qualifying 
  3.20  child in grades kindergarten to 6 and $2,500 for each qualifying 
  3.21  child in grades 7 to 12, for tuition~~,~~ and textbooks~~, and~~ 
  3.22  ~~transportation~~ of each qualifying child in attending an 
  3.23  elementary or secondary school situated in Minnesota, North 
  3.24  Dakota, South Dakota, Iowa, or Wisconsin, wherein a resident of 
  3.25  this state may legally fulfill the state's compulsory attendance 
  3.26  laws, which is not operated for profit, and which adheres to the 
  3.27  provisions of the Civil Rights Act of 1964 and chapter 363.  For 
  3.28  the purposes of this clause, "tuition" includes fees or tuition 
  3.29  as defined in section 290.0674, subdivision 1, clause (1).  As 
  3.30  used in this clause, "textbooks" ~~includes books and other~~ 
  3.31  ~~instructional materials and equipment~~ is limited to 
  3.32  instructional books used in elementary and secondary schools in 
  3.33  teaching only those subjects legally and commonly taught in 
  3.34  public elementary and secondary schools in this state.  
  3.35  Equipment expenses qualifying for deduction includes expenses as 
  3.36  defined and limited in section 290.0674, subdivision 1, clause 
  4.1   (3).  "Textbooks" does not include instructional books ~~and~~ 
  4.2   ~~materials~~ used in the teaching of religious tenets, doctrines, 
  4.3   or worship, the purpose of which is to instill such tenets, 
  4.4   doctrines, or worship, nor does it include books ~~or materials~~ 
  4.5   for~~, or transportation to,~~ extracurricular activities including 
  4.6   sporting events, musical or dramatic events, speech activities, 
  4.7   driver's education, or similar programs.  For purposes of the 
  4.8   subtraction provided by this clause, "qualifying child" has the 
  4.9   meaning given in section 32(c)(3) of the Internal Revenue Code; 
  4.10     (4) ~~contributions made in taxable years beginning after~~ 
  4.11  ~~December 31, 1981, and before January 1, 1985, to a qualified~~ 
  4.12  ~~governmental pension plan, an individual retirement account,~~ 
  4.13  ~~simplified employee pension, or qualified plan covering a~~ 
  4.14  ~~self-employed person that were included in Minnesota gross~~ 
  4.15  ~~income in the taxable year for which the contributions were made~~ 
  4.16  ~~but were deducted or were not included in the computation of~~ 
  4.17  ~~federal adjusted gross income, less any amount allowed to be~~ 
  4.18  ~~subtracted as a distribution under this subdivision or a~~ 
  4.19  ~~predecessor provision in taxable years that began before January~~ 
  4.20  ~~1, 2000.  This subtraction applies only for taxable years~~ 
  4.21  ~~beginning after December 31, 1999, and before January 1, 2001.~~  
  4.22  ~~If an individual's subtraction under this clause exceeds the~~ 
  4.23  ~~individual's taxable income, the excess may be carried forward~~ 
  4.24  ~~to taxable years beginning after December 31, 2000, and before~~ 
  4.25  ~~January 1, 2002;~~ 
  4.26     ~~(5)~~ income as provided under section 290.0802; 
  4.27     ~~(6) the amount of unrecovered accelerated cost recovery~~ 
  4.28  ~~system deductions allowed under subdivision 19g;~~ 
  4.29     ~~(7)~~ (5) to the extent included in federal adjusted gross 
  4.30  income, income realized on disposition of property exempt from 
  4.31  tax under section 290.491; 
  4.32     ~~(8)~~ (6) to the extent not deducted in determining federal 
  4.33  taxable income or used to claim the long-term care insurance 
  4.34  credit under section 290.0672, the amount paid for health 
  4.35  insurance of self-employed individuals as determined under 
  4.36  section 162(l) of the Internal Revenue Code, except that the 
  5.1   percent limit does not apply.  If the individual deducted 
  5.2   insurance payments under section 213 of the Internal Revenue 
  5.3   Code of 1986, the subtraction under this clause must be reduced 
  5.4   by the lesser of: 
  5.5      (i) the total itemized deductions allowed under section 
  5.6   63(d) of the Internal Revenue Code, less state, local, and 
  5.7   foreign income taxes deductible under section 164 of the 
  5.8   Internal Revenue Code and the standard deduction under section 
  5.9   63(c) of the Internal Revenue Code; or 
  5.10     (ii) the lesser of (A) the amount of insurance qualifying 
  5.11  as "medical care" under section 213(d) of the Internal Revenue 
  5.12  Code to the extent not deducted under section 162(1) of the 
  5.13  Internal Revenue Code or excluded from income or (B) the total 
  5.14  amount deductible for medical care under section 213(a); 
  5.15     ~~(9)~~ (7) the exemption amount allowed under Laws 1995, 
  5.16  chapter 255, article 3, section 2, subdivision 3; 
  5.17     ~~(10)~~ (8) to the extent included in federal taxable income, 
  5.18  postservice benefits for youth community service under section 
  5.19  124D.42 for volunteer service under United States Code, title 
  5.20  42, sections 12601 to 12604; 
  5.21     ~~(11)~~ (9) to the extent not deducted in determining federal 
  5.22  taxable income by an individual who does not itemize deductions 
  5.23  for federal income tax purposes for the taxable year, an amount 
  5.24  equal to 50 percent of the excess of charitable contributions 
  5.25  allowable as a deduction for the taxable year under section 
  5.26  170(a) of the Internal Revenue Code over $500; 
  5.27     ~~(12)~~ (10) to the extent included in federal taxable income, 
  5.28  holocaust victims' settlement payments for any injury incurred 
  5.29  as a result of the holocaust, if received by an individual who 
  5.30  was persecuted for racial or religious reasons by Nazi Germany 
  5.31  or any other Axis regime or an heir of such a person; and 
  5.32     ~~(13)~~ (11) for taxable years beginning before January 1, 
  5.33  2008, the amount of the federal small ethanol producer credit 
  5.34  allowed under section 40(a)(3) of the Internal Revenue Code 
  5.35  which is included in gross income under section 87 of the 
  5.36  Internal Revenue Code. 
  6.1      <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
  6.2   beginning after December 31, 2001. 
  6.3      Sec. 2.  Minnesota Statutes 2000, section 290.06, 
  6.4   subdivision 2c, is amended to read: 
  6.5      Subd. 2c.  [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 
  6.6   AND TRUSTS.] (a) The income taxes imposed by this chapter upon 
  6.7   married individuals filing joint returns and surviving spouses 
  6.8   as defined in section 2(a) of the Internal Revenue Code must be 
  6.9   computed by applying to their taxable net income the following 
  6.10  schedule of rates: 
  6.11     (1) On the first $25,680, ~~5.35~~ 4.95 percent; 
  6.12     (2) On all over $25,680, but not over $102,030, ~~7.05~~ 6.65 
  6.13  percent; 
  6.14     (3) On all over $102,030, ~~7.85~~ 7.45 percent. 
  6.15     Married individuals filing separate returns, estates, and 
  6.16  trusts must compute their income tax by applying the above rates 
  6.17  to their taxable income, except that the income brackets will be 
  6.18  one-half of the above amounts.  
  6.19     (b) The income taxes imposed by this chapter upon unmarried 
  6.20  individuals must be computed by applying to taxable net income 
  6.21  the following schedule of rates: 
  6.22     (1) On the first $17,570, ~~5.35~~ 4.95 percent; 
  6.23     (2) On all over $17,570, but not over $57,710, ~~7.05~~ 6.65 
  6.24  percent; 
  6.25     (3) On all over $57,710, ~~7.85~~ 7.45 percent. 
  6.26     (c) The income taxes imposed by this chapter upon unmarried 
  6.27  individuals qualifying as a head of household as defined in 
  6.28  section 2(b) of the Internal Revenue Code must be computed by 
  6.29  applying to taxable net income the following schedule of rates: 
  6.30     (1) On the first $21,630, ~~5.35~~ 4.95 percent; 
  6.31     (2) On all over $21,630, but not over $86,910, ~~7.05~~ 6.65 
  6.32  percent; 
  6.33     (3) On all over $86,910, ~~7.85~~ 7.45 percent. 
  6.34  For tax years beginning after December 31, 2002, and before 
  6.35  January 1, 2004, all of the percentage rates in this section are 
  6.36  reduced by one-tenth of a percent.  For tax years beginning 
  7.1   after December 31, 2003, all of the percentage rates in this 
  7.2   section are reduced by two-tenths of a percent. 
  7.3      (d) In lieu of a tax computed according to the rates set 
  7.4   forth in this subdivision, the tax of any individual taxpayer 
  7.5   whose taxable net income for the taxable year is less than an 
  7.6   amount determined by the commissioner must be computed in 
  7.7   accordance with tables prepared and issued by the commissioner 
  7.8   of revenue based on income brackets of not more than $100.  The 
  7.9   amount of tax for each bracket shall be computed at the rates 
  7.10  set forth in this subdivision, provided that the commissioner 
  7.11  may disregard a fractional part of a dollar unless it amounts to 
  7.12  50 cents or more, in which case it may be increased to $1. 
  7.13     (e) An individual who is not a Minnesota resident for the 
  7.14  entire year must compute the individual's Minnesota income tax 
  7.15  as provided in this subdivision.  After the application of the 
  7.16  nonrefundable credits provided in this chapter, the tax 
  7.17  liability must then be multiplied by a fraction in which:  
  7.18     (1) the numerator is the individual's Minnesota source 
  7.19  federal adjusted gross income as defined in section 62 of the 
  7.20  Internal Revenue Code and increased by the additions required 
  7.21  under section 290.01, subdivision 19a, clauses (1) and (6), and 
  7.22  reduced by the Minnesota assignable portion of the subtraction 
  7.23  for United States government interest under section 290.01, 
  7.24  subdivision 19b, clause (1), after applying the allocation and 
  7.25  assignability provisions of section 290.081, clause (a), or 
  7.26  290.17; and 
  7.27     (2) the denominator is the individual's federal adjusted 
  7.28  gross income as defined in section 62 of the Internal Revenue 
  7.29  Code of 1986, increased by the amounts specified in section 
  7.30  290.01, subdivision 19a, clauses (1) and (6), and reduced by the 
  7.31  amounts specified in section 290.01, subdivision 19b, clause (1).
  7.32     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
  7.33  beginning after December 31, 2000. 
  7.34     Sec. 3.  Minnesota Statutes 2000, section 290.0671, 
  7.35  subdivision 1, is amended to read: 
  7.36     Subdivision 1.  [CREDIT ALLOWED.] (a) An individual is 
  8.1   allowed a credit against the tax imposed by this chapter equal 
  8.2   to a percentage of earned income.  To receive a credit, a 
  8.3   taxpayer must be eligible for a credit under section 32 of the 
  8.4   Internal Revenue Code.  
  8.5      (b) For individuals with no qualifying children, the credit 
  8.6   equals ~~1.9125~~ 2.85 percent of the first $4,460 of earned income. 
  8.7   The credit is reduced by ~~1.9125~~ 2.85 percent of earned income or 
  8.8   modified adjusted gross income, whichever is greater, in excess 
  8.9   of $5,570, but in no case is the credit less than zero. 
  8.10     (c) For individuals with one qualifying child, the credit 
  8.11  equals ~~8.5~~ 12.75 percent of the first $6,680 of earned income 
  8.12  and 8.5 percent of earned income over $11,650 but less than 
  8.13  $12,990. The credit is reduced by ~~5.73~~ 8.11 percent of earned 
  8.14  income or modified adjusted gross income, whichever is greater, 
  8.15  in excess of $14,560, but in no case is the credit less than 
  8.16  zero. 
  8.17     (d) For individuals with two or more qualifying children, 
  8.18  the credit equals ~~ten~~ 15 percent of the first $9,390 of earned 
  8.19  income and 20 percent of earned income over $14,350 but less 
  8.20  than $16,230.  The credit is reduced by ~~10.3~~ 13.92 percent of 
  8.21  earned income or modified adjusted gross income, whichever is 
  8.22  greater, in excess of $17,280, but in no case is the credit less 
  8.23  than zero. 
  8.24     (e) For tax years beginning after December 31, 2000, and 
  8.25  before January 1, 2003, individuals who qualify for a credit of 
  8.26  at least $1 under paragraph (c), the credit is increased by 
  8.27  $100.  For tax years beginning after December 31, 2002, for 
  8.28  individuals who qualify for a credit of at least $1 under 
  8.29  paragraph (c), the credit is increased by $200. 
  8.30     (f) For tax years beginning after December 31, 2000, and 
  8.31  before January 1, 2003, individuals who qualify for a credit of 
  8.32  at least $1 under paragraph (d), the credit is increased by 
  8.33  $200.  For tax years beginning after December 31, 2002, 
  8.34  individuals who qualify for a credit of at least $1 under 
  8.35  paragraph (d), the credit is increased by $400. 
  8.36     (g) For a nonresident or part-year resident, the credit 
  9.1   must be allocated based on the percentage calculated under 
  9.2   section 290.06, subdivision 2c, paragraph (e). 
  9.3      ~~(f)~~ (h) For a person who was a resident for the entire tax 
  9.4   year and has earned income not subject to tax under this 
  9.5   chapter, the credit must be allocated based on the ratio of 
  9.6   federal adjusted gross income reduced by the earned income not 
  9.7   subject to tax under this chapter over federal adjusted gross 
  9.8   income. 
  9.9      ~~(g)~~ (i) The commissioner shall construct tables showing the 
  9.10  amount of the credit at various income levels and make them 
  9.11  available to taxpayers.  The tables shall follow the schedule 
  9.12  contained in this subdivision, except that the commissioner may 
  9.13  graduate the transition between income brackets. 
  9.14     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
  9.15  beginning after December 31, 2000, except the changes in 
  9.16  paragraphs (b), (c), and (d) are effective for tax years 
  9.17  beginning after December 31, 2002. 
  9.18     Sec. 4.  Minnesota Statutes 2000, section 290.0674, 
  9.19  subdivision 1, is amended to read: 
  9.20     Subdivision 1.  [CREDIT ALLOWED.] An individual is allowed 
  9.21  a credit against the tax imposed by this chapter in an amount 
  9.22  equal to 75 percent of the amount paid for education-related 
  9.23  expenses for a qualifying child in kindergarten through grade 
  9.24  12.  For purposes of this section, "education-related expenses" 
  9.25  means: 
  9.26     (1) fees or tuition for instruction by an instructor ~~under~~ 
  9.27  who meets one of the requirements of section 120A.22, 
  9.28  subdivision 10, clause (1), (2), (3), (4), or (5), or ~~by~~ who is 
  9.29  a member of the Minnesota music teachers association, and is not 
  9.30  a lineal ancestor or sibling of the dependent for instruction 
  9.31  outside the regular school day or school year, including 
  9.32  tutoring, driver's education offered as part of school 
  9.33  curriculum, regardless of whether it is taken from a public or 
  9.34  private entity or summer camps, in grade or age appropriate 
  9.35  curricula that supplement curricula and instruction available 
  9.36  during the regular school year, that assists a dependent to 
 10.1   improve knowledge of core curriculum areas ~~or to expand~~ 
 10.2   ~~knowledge and skills under the graduation rule under section~~ 
 10.3   ~~120B.02~~ listed in section 120A.22, subdivision 9, clauses (1), 
 10.4   (2), and (3), and that do not include the teaching of religious 
 10.5   tenets, doctrines, or worship, the purpose of which is to 
 10.6   instill such tenets, doctrines, or worship; 
 10.7      (2) expenses for textbooks~~, including books and other~~ 
 10.8   ~~instructional materials and equipment~~ used in elementary and 
 10.9   secondary schools in teaching only those subjects legally and 
 10.10  commonly taught in public elementary and secondary schools in 
 10.11  this state.  "Textbooks" does not include instructional books 
 10.12  ~~and materials~~ used in the teaching of religious tenets, 
 10.13  doctrines, or worship, the purpose of which is to instill such 
 10.14  tenets, doctrines, or worship, nor does it include books or 
 10.15  materials for extracurricular activities including sporting 
 10.16  events, musical or dramatic events, speech activities, driver's 
 10.17  education, or similar programs; and 
 10.18     (3) a maximum expense of $200 per family for personal 
 10.19  computer hardware, excluding single purpose processors, ~~and~~ 
 10.20  ~~educational software that assists a dependent to improve~~ 
 10.21  ~~knowledge of core curriculum areas or to expand knowledge and~~ 
 10.22  ~~skills under the graduation rule under section 120B.02~~ purchased 
 10.23  for use in the taxpayer's home and not used in a trade or 
 10.24  business regardless of whether the computer is required by the 
 10.25  dependent's school~~; and~~ 
 10.26     ~~(4) the amount paid to others for transportation of a~~ 
 10.27  ~~qualifying child attending an elementary or secondary school~~ 
 10.28  ~~situated in Minnesota, North Dakota, South Dakota, Iowa, or~~ 
 10.29  ~~Wisconsin, wherein a resident of this state may legally fulfill~~ 
 10.30  ~~the state's compulsory attendance laws, which is not operated~~ 
 10.31  ~~for profit, and which adheres to the provisions of the Civil~~ 
 10.32  ~~Rights Act of 1964 and chapter 363~~. 
 10.33     For purposes of this section, "qualifying child" has the 
 10.34  meaning given in section 32(c)(3) of the Internal Revenue Code. 
 10.35     <b>[EFFECTIVE DATE.]</b> This section is effective tax years 
 10.36  beginning after December 31, 2001. 
 11.1      Sec. 5.  Minnesota Statutes 2000, section 290.0674, 
 11.2   subdivision 2, is amended to read: 
 11.3      Subd. 2.  [LIMITATIONS.] (a) For claimants with income not 
 11.4   greater than $33,500, the maximum credit allowed is $1,000 per 
 11.5   qualifying child and $2,000 per family.  No credit is allowed 
 11.6   for education-related expenses for claimants with income greater 
 11.7   than $37,500.  The maximum credit per child is reduced by $1 for 
 11.8   each $4 of household income over $33,500, and the maximum credit 
 11.9   per family is reduced by $2 for each $4 of household income over 
 11.10  $33,500, but in no case is the credit less than zero. 
 11.11     For purposes of this section "income" has the meaning given 
 11.12  in section ~~290.067, subdivision 2a~~ 290A.03, subdivision 3, 
 11.13  paragraphs (1) and (2).  In the case of a married claimant, a 
 11.14  credit is not allowed unless a joint income tax return is filed. 
 11.15     (b) For a nonresident or part-year resident, the credit 
 11.16  determined under subdivision 1 and the maximum credit amount in 
 11.17  paragraph (a) must be allocated using the percentage calculated 
 11.18  in section 290.06, subdivision 2c, paragraph (e). 
 11.19     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 11.20  beginning after December 31, 2001. 
 11.21     Sec. 6.  Minnesota Statutes 2000, section 290.0675, 
 11.22  subdivision 1, is amended to read: 
 11.23     Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
 11.24  section the following terms have the meanings given. 
 11.25     (b) "Earned income" means the sum of the following: 
 11.26     (1) to the extent included in Minnesota taxable income, 
 11.27  earned income as defined in section 32(c)(2) of the Internal 
 11.28  Revenue Code; 
 11.29     (2) to the extent included in Minnesota taxable income, 
 11.30  income received from a retirement pension, profit-sharing, stock 
 11.31  bonus, or annuity plan; and 
 11.32     (3) to the extent included in Minnesota taxable income, 
 11.33  social security benefits as defined in section 86(d)(1) of the 
 11.34  Internal Revenue Code. 
 11.35     (c) "Taxable income" means net income as defined in section 
 11.36  290.01, subdivision 19. 
 12.1      (d) "Earned income of lesser-earning spouse" means the 
 12.2   earned income of the spouse with the lesser amount of earned 
 12.3   income as defined in paragraph (b) for the taxable year.  
 12.4      <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 12.5   beginning after December 31, 2000. 
 12.6      Sec. 7.  Minnesota Statutes 2000, section 290.0675, 
 12.7   subdivision 3, is amended to read: 
 12.8      Subd. 3.  [CREDIT AMOUNT.] The credit amount is ~~as shown in~~ 
 12.9   ~~the table in this subdivision, based on the couple's taxable~~ 
 12.10  ~~income for the tax year and on the earned income of the~~ 
 12.11  ~~lesser-earning spouse~~ the difference between the tax on the 
 12.12  couple's joint Minnesota taxable income under the rates in 
 12.13  section 290.06, subdivision 2c, paragraph (a), and the sum of 
 12.14  the tax under the rates of section 290.06, subdivision 2c, 
 12.15  paragraph (b), on the earned income of the lesser-earning 
 12.16  spouse, and the tax under the rates of section 290.06, 
 12.17  subdivision 2c, paragraph (b), on the couple's joint Minnesota 
 12.18  taxable income, minus the earned income of the lesser-earning 
 12.19  spouse. 
 12.20                               ~~Credit For~~          ~~Credit For~~
 12.21    ~~Earned Income of~~           ~~Taxable Income~~      ~~Taxable Income~~
 12.22    ~~Lesser Earning Spouse~~      ~~$25,680-$102,029~~    ~~$102,030-over~~
 12.23    ~~$14,250 - $15,249~~          ~~$7~~                  ~~$0~~    
 12.24    ~~$15,250 - $16,249~~          ~~$24~~                 ~~$0~~    
 12.25    ~~$16,250 - $17,249~~          ~~$41~~                 ~~$0~~    
 12.26    ~~$17,250 - $18,249~~          ~~$58~~                 ~~$0~~    
 12.27    ~~$18,250 - $19,249~~          ~~$75~~                 ~~$0~~    
 12.28    ~~$19,250 - $20,249~~          ~~$92~~                 ~~$0~~  
 12.29    ~~$20,250 - $21,249~~          ~~$109~~                ~~$0~~  
 12.30    ~~$21,250 - $22,249~~          ~~$126~~                ~~$0~~ 
 12.31    ~~$22,250 - $23,249~~          ~~$143~~                ~~$0~~
 12.32    ~~$23,250 - $24,249~~          ~~$160~~                ~~$0~~ 
 12.33    ~~$24,250 - $25,249~~          ~~$161~~                ~~$0~~   
 12.34    ~~$25,250 - $26,249~~          ~~$161~~                ~~$0~~  
 12.35    ~~$26,250 - $27,249~~          ~~$161~~                ~~$0~~   
 12.36    ~~$27,250 - $28,249~~          ~~$161~~                ~~$0~~
 13.1     ~~$28,250 - $29,249~~          ~~$161~~                ~~$0~~
 13.2     ~~$29,250 - $30,249~~          ~~$161~~                ~~$0~~
 13.3     ~~$30,250 - $31,249~~          ~~$161~~                ~~$0~~
 13.4     ~~$31,250 - $32,249~~          ~~$161~~                ~~$6~~
 13.5     ~~$32,250 - $33,249~~          ~~$161~~                ~~$14~~
 13.6     ~~$33,250 - $34,249~~          ~~$161~~                ~~$22~~
 13.7     ~~$34,250 - $35,249~~          ~~$161~~                ~~$30~~
 13.8     ~~$35,250 - $36,249~~          ~~$161~~                ~~$38~~
 13.9     ~~$36,250 - $37,249~~          ~~$161~~                ~~$46~~
 13.10    ~~$37,250 - $38,249~~          ~~$161~~                ~~$54~~
 13.11    ~~$38,250 - $39,249~~          ~~$161~~                ~~$62~~
 13.12    ~~$39,250 - $40,249~~          ~~$161~~                ~~$70~~
 13.13    ~~$40,250 - $41,249~~          ~~$161~~                ~~$78~~
 13.14    ~~$41,250 - $42,249~~          ~~$161~~                ~~$86~~
 13.15    ~~$42,250 - $43,249~~          ~~$161~~                ~~$94~~
 13.16    ~~$43,250 - $44,249~~          ~~$161~~                ~~$102~~
 13.17    ~~$44,250 - $45,249~~          ~~$161~~                ~~$110~~
 13.18    ~~$45,250 - $46,249~~          ~~$161~~                ~~$118~~
 13.19    ~~$46,250 - $47,249~~          ~~$161~~                ~~$126~~
 13.20    ~~$47,250 - $48,249~~          ~~$161~~                ~~$134~~
 13.21    ~~$48,250 - $49,249~~          ~~$161~~                ~~$142~~
 13.22    ~~$49,250 - $50,249~~          ~~$161~~                ~~$150~~
 13.23    ~~$50,250 - $51,249~~          ~~$161~~                ~~$158~~
 13.24    ~~$51,250 - $52,249~~          ~~$161~~                ~~$166~~
 13.25    ~~$52,250 - $53,249~~          ~~$161~~                ~~$174~~
 13.26    ~~$53,250 - $54,249~~          ~~$161~~                ~~$182~~
 13.27    ~~$54,250 - $55,249~~          ~~$161~~                ~~$190~~
 13.28    ~~$55,250 - $56,249~~          ~~$161~~                ~~$198~~
 13.29    ~~$56,250 - $57,249~~          ~~$161~~                ~~$206~~
 13.30    ~~$57,250 - $58,249~~          ~~$161~~                ~~$214~~
 13.31    ~~$58,250 - $59,249~~          ~~$161~~                ~~$222~~
 13.32    ~~$59,250 - $60,249~~          ~~$161~~                ~~$230~~
 13.33    ~~$60,250 - $61,249~~          ~~$161~~                ~~$238~~
 13.34    ~~$61,250 - $62,249~~          ~~$161~~                ~~$246~~
 13.35    ~~$62,250 - $63,249~~          ~~$161~~                ~~$254~~
 13.36    ~~$63,250 - $64,249~~          ~~$161~~                ~~$262~~
 14.1     ~~$64,250 and over~~           ~~$161~~                ~~$268~~
 14.2      For taxable years beginning after December 31, 2001, the 
 14.3   commissioner of revenue shall construct and make available to 
 14.4   taxpayers a comprehensive table showing the credit under this 
 14.5   section at brackets of earnings of the lesser-earning spouse and 
 14.6   joint taxable income.  The brackets of earnings shall not be 
 14.7   more than $2,000. 
 14.8      For taxable years beginning after December 31, ~~2000~~ 2002, 
 14.9   the commissioner shall update the table as necessary to provide 
 14.10  a credit that reflects the relationship between the marginal tax 
 14.11  rates imposed under section 290.06, subdivision 2c. 
 14.12     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 14.13  beginning after December 31, 2000. 
 14.14     Sec. 8.  Minnesota Statutes 2000, section 290.091, 
 14.15  subdivision 1, is amended to read: 
 14.16     Subdivision 1.  [IMPOSITION OF TAX.] In addition to all 
 14.17  other taxes imposed by this chapter a tax is imposed on 
 14.18  individuals, estates, and trusts equal to the excess (if any) of 
 14.19     (a) an amount equal to ~~6.4~~ 6.0 percent of alternative 
 14.20  minimum taxable income after subtracting the exemption amount, 
 14.21  over 
 14.22     (b) the regular tax for the taxable year. 
 14.23     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 14.24  beginning after December 31, 2000. 
 14.25     Sec. 9.  Minnesota Statutes 2000, section 290.091, 
 14.26  subdivision 6, is amended to read: 
 14.27     Subd. 6.  [CREDIT FOR PRIOR YEARS' LIABILITY.] (a) For tax 
 14.28  years beginning after December 31, 2000, and before January 1, 
 14.29  2002, a credit is allowed against the tax imposed by this 
 14.30  chapter on individuals, trusts, and estates equal to the minimum 
 14.31  tax credit for the taxable year.  The minimum tax credit equals 
 14.32  the adjusted net minimum tax for taxable years beginning after 
 14.33  December 31, 1988, reduced by the minimum tax credits allowed in 
 14.34  a prior taxable year.  The credit may not exceed the excess (if 
 14.35  any) for the taxable year of 
 14.36     (1) the regular tax, over 
 15.1      (2) the greater of (i) the tentative alternative minimum 
 15.2   tax, or (ii) zero. 
 15.3      (b) The adjusted net minimum tax for a taxable year equals 
 15.4   the lesser of the net minimum tax or the excess (if any) of 
 15.5      (1) the tentative minimum tax, over 
 15.6      (2) ~~6.4~~ 6.0 percent of the sum of 
 15.7      (i) adjusted gross income as defined in section 62 of the 
 15.8   Internal Revenue Code, 
 15.9      (ii) interest income as defined in section 290.01, 
 15.10  subdivision 19a, clause (1), 
 15.11     (iii) interest on specified private activity bonds, as 
 15.12  defined in section 57(a)(5) of the Internal Revenue Code, to the 
 15.13  extent not included under clause (ii), 
 15.14     (iv) depletion as defined in section 57(a)(1), determined 
 15.15  without regard to the last sentence of paragraph (1), of the 
 15.16  Internal Revenue Code, less 
 15.17     (v) the deductions allowed in computing alternative minimum 
 15.18  taxable income provided in subdivision 2, paragraph (a), clause 
 15.19  (2) of the first series of clauses and clauses (1), (2), and (3) 
 15.20  of the second series of clauses, and 
 15.21     (vi) the exemption amount determined under subdivision 3. 
 15.22     In the case of an individual who is not a Minnesota 
 15.23  resident for the entire year, adjusted net minimum tax must be 
 15.24  multiplied by the fraction defined in section 290.06, 
 15.25  subdivision 2c, paragraph (e).  In the case of a trust or 
 15.26  estate, adjusted net minimum tax must be multiplied by the 
 15.27  fraction defined under subdivision 4, paragraph (b). 
 15.28     (c) For tax years beginning after December 31, 2001, and 
 15.29  before January 1, 2004, a credit is allowed against the tax 
 15.30  imposed by this chapter on individuals, trusts, and estates 
 15.31  equal to the minimum tax credit for the taxable year.  The 
 15.32  minimum tax credit equals the adjusted net minimum tax for 
 15.33  taxable years beginning after December 31, 1988, and before 
 15.34  January 1, 2002, reduced by the minimum tax credits allowed in a 
 15.35  prior taxable year.  The credit may not exceed the tax imposed 
 15.36  by this chapter after the allowance of the credits in sections 
 16.1   290.06, subdivisions 22, 22a, 26, and 28; 290.0672; and 290.075. 
 16.2      <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 16.3   beginning after December 31, 2000. 
 16.4      Sec. 10.  Minnesota Statutes 2000, section 290.92, 
 16.5   subdivision 3, is amended to read: 
 16.6      Subd. 3.  [WITHHOLDING, IRREGULAR PERIOD.] If payment of 
 16.7   wages is made to an employee by an employer 
 16.8      (a) With respect to a payroll period or other period, any 
 16.9   part of which is included in a payroll period or other period 
 16.10  with respect to which wages are also paid to such employees by 
 16.11  such employer, or 
 16.12     (b) Without regard to any payroll period or other period, 
 16.13  but on or prior to the expiration of a payroll period or other 
 16.14  period with respect to which wages are also paid to such 
 16.15  employee by such employer, or 
 16.16     (c) With respect to a period beginning in one and ending in 
 16.17  another calendar year, or 
 16.18     (d) Through an agent, fiduciary, or other person who also 
 16.19  has the control, receipt, custody, or disposal of or pays, the 
 16.20  wages payable by another employer to such employee. 
 16.21     The manner of withholding and the amount to be deducted and 
 16.22  withheld under subdivision 2a shall be determined in accordance 
 16.23  with rules prescribed by the commissioner under which the 
 16.24  withholding exemption allowed to the employee in any calendar 
 16.25  year shall approximate the withholding exemption allowable with 
 16.26  respect to an annual payroll period, except that if supplemental 
 16.27  wages are not paid concurrent with a payroll period the employer 
 16.28  shall withhold tax on the supplemental payment at the rate of 
 16.29  ~~6.25~~ 5.85 percent as if no exemption had been claimed. 
 16.30     <b>[EFFECTIVE DATE.]</b> This section is effective for wages paid 
 16.31  after July 1, 2001. 
 16.32     Sec. 11.  Minnesota Statutes 2000, section 290.92, 
 16.33  subdivision 28, is amended to read: 
 16.34     Subd. 28.  [PAYMENTS TO HORSE RACING LICENSE HOLDERS.] 
 16.35  Effective with payments made after April 1, 1988, any holder of 
 16.36  a license issued by the Minnesota racing commission who makes a 
 17.1   payment for personal or professional services to a holder of a 
 17.2   class C license issued by the commission, except an amount paid 
 17.3   as a purse, shall deduct from the payment and withhold ~~6.25~~ 5.85 
 17.4   percent of the amount as Minnesota withholding tax when the 
 17.5   amount paid to that individual by the same person during the 
 17.6   calendar year exceeds $600.  For purposes of the provisions of 
 17.7   this section, a payment to any person which is subject to 
 17.8   withholding under this subdivision must be treated as if the 
 17.9   payment was a wage paid by an employer to an employee.  Every 
 17.10  individual who is to receive a payment which is subject to 
 17.11  withholding under this subdivision shall furnish the license 
 17.12  holder with a statement, made under the penalties of perjury, 
 17.13  containing the name, address, and social security account number 
 17.14  of the person receiving the payment.  No withholding is required 
 17.15  if the individual presents a signed certificate from the 
 17.16  individual's employer which states that the individual is an 
 17.17  employee of that employer.  A nonresident individual who holds a 
 17.18  class C license must be treated as an athlete for purposes of 
 17.19  applying the provisions of sections 290.17, subdivision 
 17.20  2(1)(b)(ii) and 290.92, subdivision 4a.  
 17.21     <b>[EFFECTIVE DATE.]</b> This section is effective for payments 
 17.22  made after July 1, 2001. 
 17.23     Sec. 12.  Minnesota Statutes 2000, section 290.92, 
 17.24  subdivision 29, is amended to read: 
 17.25     Subd. 29.  [LOTTERY PRIZES.] ~~7.25~~ 6.85 percent of the 
 17.26  payment of Minnesota state lottery winnings which are subject to 
 17.27  withholding must be withheld as Minnesota withholding tax.  For 
 17.28  purposes of this subdivision, the term "winnings which are 
 17.29  subject to withholding" has the meaning given in section 
 17.30  3402(q)(3) of the Internal Revenue Code.  For purposes of the 
 17.31  provisions of this section, a payment to any person of winnings 
 17.32  which are subject to withholding must be treated as if the 
 17.33  payment was a wage paid by an employer to an employee.  Every 
 17.34  individual who is to receive a payment of winnings which are 
 17.35  subject to withholding shall furnish the state lottery with a 
 17.36  statement, made under the penalties of perjury, containing the 
 18.1   name, address, and social security account number of the person 
 18.2   receiving the payment.  The Minnesota state lottery is liable 
 18.3   for the payment of the tax required to be withheld under this 
 18.4   subdivision but is not liable to any person for the amount of 
 18.5   the payment. 
 18.6      <b>[EFFECTIVE DATE.]</b> This section is effective for winnings 
 18.7   paid after July 1, 2001. 
 18.8      Sec. 13.  [REPEALER.] 
 18.9      Minnesota Statutes 2000, sections 290.06, subdivision 25; 
 18.10  290.067; and 290.091, subdivisions 1, 2, 3, 4, 5, and 6, are 
 18.11  repealed. 
 18.12     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 18.13  beginning after December 31, 2001, except the repeal of section 
 18.14  290.091, subdivision 6, is effective for tax years beginning 
 18.15  after December 31, 2003. 
 18.16                             ARTICLE 2 
 18.17                           FEDERAL UPDATE
 18.18     Section 1.  Minnesota Statutes 2000, section 289A.02, 
 18.19  subdivision 7, is amended to read: 
 18.20     Subd. 7.  [INTERNAL REVENUE CODE.] Unless specifically 
 18.21  defined otherwise, "Internal Revenue Code" means the Internal 
 18.22  Revenue Code of 1986, as amended through December 31, ~~1999~~ 2000. 
 18.23     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 18.24  following final enactment. 
 18.25     Sec. 2.  Minnesota Statutes 2000, section 290.01, 
 18.26  subdivision 19, is amended to read: 
 18.27     Subd. 19.  [NET INCOME.] The term "net income" means the 
 18.28  federal taxable income, as defined in section 63 of the Internal 
 18.29  Revenue Code of 1986, as amended through the date named in this 
 18.30  subdivision, incorporating any elections made by the taxpayer in 
 18.31  accordance with the Internal Revenue Code in determining federal 
 18.32  taxable income for federal income tax purposes, and with the 
 18.33  modifications provided in subdivisions 19a to 19f. 
 18.34     In the case of a regulated investment company or a fund 
 18.35  thereof, as defined in section 851(a) or 851(g) of the Internal 
 18.36  Revenue Code, federal taxable income means investment company 
 19.1   taxable income as defined in section 852(b)(2) of the Internal 
 19.2   Revenue Code, except that:  
 19.3      (1) the exclusion of net capital gain provided in section 
 19.4   852(b)(2)(A) of the Internal Revenue Code does not apply; 
 19.5      (2) the deduction for dividends paid under section 
 19.6   852(b)(2)(D) of the Internal Revenue Code must be applied by 
 19.7   allowing a deduction for capital gain dividends and 
 19.8   exempt-interest dividends as defined in sections 852(b)(3)(C) 
 19.9   and 852(b)(5) of the Internal Revenue Code; and 
 19.10     (3) the deduction for dividends paid must also be applied 
 19.11  in the amount of any undistributed capital gains which the 
 19.12  regulated investment company elects to have treated as provided 
 19.13  in section 852(b)(3)(D) of the Internal Revenue Code.  
 19.14     The net income of a real estate investment trust as defined 
 19.15  and limited by section 856(a), (b), and (c) of the Internal 
 19.16  Revenue Code means the real estate investment trust taxable 
 19.17  income as defined in section 857(b)(2) of the Internal Revenue 
 19.18  Code.  
 19.19     The net income of a designated settlement fund as defined 
 19.20  in section 468B(d) of the Internal Revenue Code means the gross 
 19.21  income as defined in section 468B(b) of the Internal Revenue 
 19.22  Code. 
 19.23     The provisions of sections 1113(a), 1117, 1206(a), 1313(a), 
 19.24  1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612, 
 19.25  1616, 1617, 1704(l), and 1704(m) of the Small Business Job 
 19.26  Protection Act, Public Law Number 104-188, the provisions of 
 19.27  Public Law Number 104-117, the provisions of sections 313(a) and 
 19.28  (b)(1), 602(a), 913(b), 941, 961, 971, 1001(a) and (b), 1002, 
 19.29  1003, 1012, 1013, 1014, 1061, 1062, 1081, 1084(b), 1086, 1087, 
 19.30  1111(a), 1131(b) and (c), 1211(b), 1213, 1530(c)(2), 1601(f)(5) 
 19.31  and (h), and 1604(d)(1) of the Taxpayer Relief Act of 1997, 
 19.32  Public Law Number 105-34, the provisions of section 6010 of the 
 19.33  Internal Revenue Service Restructuring and Reform Act of 1998, 
 19.34  Public Law Number 105-206, and the provisions of section 4003 of 
 19.35  the Omnibus Consolidated and Emergency Supplemental 
 19.36  Appropriations Act, 1999, Public Law Number 105-277, and the 
 20.1   provisions of section 318 of the Consolidated Appropriation Act 
 20.2   of 2001, Public Law Number 106-554, shall become effective at 
 20.3   the time they become effective for federal purposes. 
 20.4      The Internal Revenue Code of 1986, as amended through 
 20.5   December 31, 1996, shall be in effect for taxable years 
 20.6   beginning after December 31, 1996. 
 20.7      The provisions of sections 202(a) and (b), 221(a), 225, 
 20.8   312, 313, 913(a), 934, 962, 1004, 1005, 1052, 1063, 1084(a) and 
 20.9   (c), 1089, 1112, 1171, 1204, 1271(a) and (b), 1305(a), 1306, 
 20.10  1307, 1308, 1309, 1501(b), 1502(b), 1504(a), 1505, 1527, 1528, 
 20.11  1530, 1601(d), (e), (f), and (i) and 1602(a), (b), (c), and (e) 
 20.12  of the Taxpayer Relief Act of 1997, Public Law Number 105-34, 
 20.13  the provisions of sections 6004, 6005, 6012, 6013, 6015, 6016, 
 20.14  7002, and 7003 of the Internal Revenue Service Restructuring and 
 20.15  Reform Act of 1998, Public Law Number 105-206, the provisions of 
 20.16  section 3001 of the Omnibus Consolidated and Emergency 
 20.17  Supplemental Appropriations Act, 1999, Public Law Number 
 20.18  105-277, and the provisions of section 3001 of the Miscellaneous 
 20.19  Trade and Technical Corrections Act of 1999, Public Law Number 
 20.20  106-36, and the provisions of section 316 of the Consolidated 
 20.21  Appropriation Act of 2001, Public Law Number 106-554, shall 
 20.22  become effective at the time they become effective for federal 
 20.23  purposes. 
 20.24     The Internal Revenue Code of 1986, as amended through 
 20.25  December 31, 1997, shall be in effect for taxable years 
 20.26  beginning after December 31, 1997. 
 20.27     The provisions of sections 5002, 6009, 6011, and 7001 of 
 20.28  the Internal Revenue Service Restructuring and Reform Act of 
 20.29  1998, Public Law Number 105-206, the provisions of section 9010 
 20.30  of the Transportation Equity Act for the 21st Century, Public 
 20.31  Law Number 105-178, the provisions of sections 1004, 4002, and 
 20.32  5301 of the Omnibus Consolidation and Emergency Supplemental 
 20.33  Appropriations Act, 1999, Public Law Number 105-277, the 
 20.34  provision of section 303 of the Ricky Ray Hemophilia Relief Fund 
 20.35  Act of 1998, Public Law Number 105-369, ~~and~~ the provisions of 
 20.36  sections 532, 534, 536, 537, and 538 of the Ticket to Work and 
 21.1   Work Incentives Improvement Act of 1999, Public Law Number 
 21.2   106-170, the provisions of the Installment Tax Correction Act of 
 21.3   2000, Public Law Number 106-573, and the provisions of section 
 21.4   309 of the Consolidated Appropriation Act of 2001, Public Law 
 21.5   Number 106-554, shall become effective at the time they become 
 21.6   effective for federal purposes. 
 21.7      The Internal Revenue Code of 1986, as amended through 
 21.8   December 31, 1998, shall be in effect for taxable years 
 21.9   beginning after December 31, 1998.  
 21.10     The provisions of the FSC Repeal and Extraterritorial 
 21.11  Income Exclusion Act of 2000, Public Law Number 106-519, shall 
 21.12  become effective at the time it became effective for federal 
 21.13  purposes. 
 21.14     The Internal Revenue Code of 1986, as amended through 
 21.15  December 31, 1999, shall be in effect for taxable years 
 21.16  beginning after December 31, 1999.  The provisions of sections 
 21.17  306 and 401 of the Consolidated Appropriation Act of 2001, 
 21.18  Public Law Number 106-554, shall become effective at the same 
 21.19  time it became effective for federal purposes. 
 21.20     The Internal Revenue Code of 1986, as amended through 
 21.21  December 31, 2000, shall be in effect for taxable years 
 21.22  beginning after December 31, 2000. 
 21.23     Except as otherwise provided, references to the Internal 
 21.24  Revenue Code in subdivisions 19a to 19g mean the code in effect 
 21.25  for purposes of determining net income for the applicable year. 
 21.26     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 21.27  following final enactment. 
 21.28     Sec. 3.  Minnesota Statutes 2000, section 290.01, 
 21.29  subdivision 31, is amended to read: 
 21.30     Subd. 31.  [INTERNAL REVENUE CODE.] Unless specifically 
 21.31  defined otherwise, "Internal Revenue Code" means the Internal 
 21.32  Revenue Code of 1986, as amended through December 31, ~~1999~~ 2000. 
 21.33     <b>[EFFECTIVE DATE.]</b> This section is effective at the same 
 21.34  time and in the same manner as the federal changes made by the 
 21.35  FSC Repeal and Extraterritorial Income Exclusion Act of 2000, 
 21.36  Public Law Number 106-519, and the Consolidated Appropriation 
 22.1   Act of 2001, Public Law Number 106-554, becomes effective. 
 22.2      Sec. 4.  Minnesota Statutes 2000, section 290.191, 
 22.3   subdivision 5, is amended to read: 
 22.4      Subd. 5.  [DETERMINATION OF SALES FACTOR.] For purposes of 
 22.5   this section, the following rules apply in determining the sales 
 22.6   factor.  
 22.7      (a) The sales factor includes all sales, gross earnings, or 
 22.8   receipts received in the ordinary course of the business, except 
 22.9   that the following types of income are not included in the sales 
 22.10  factor: 
 22.11     (1) interest; 
 22.12     (2) dividends; 
 22.13     (3) sales of capital assets as defined in section 1221 of 
 22.14  the Internal Revenue Code; 
 22.15     (4) sales of property used in the trade or business, except 
 22.16  sales of leased property of a type which is regularly sold as 
 22.17  well as leased; 
 22.18     (5) sales of debt instruments as defined in section 
 22.19  1275(a)(1) of the Internal Revenue Code or sales of stock; ~~and~~ 
 22.20     (6) royalties, fees, or other like income of a type which 
 22.21  qualify for a subtraction from federal taxable income under 
 22.22  section 290.01, subdivision 19(d)(11); and 
 22.23     (7) all sales, gross earnings, or receipts used to generate 
 22.24  income excluded under section 114 of the Internal Revenue Code. 
 22.25     (b) Sales of tangible personal property are made within 
 22.26  this state if the property is received by a purchaser at a point 
 22.27  within this state, and the taxpayer is taxable in this state, 
 22.28  regardless of the f.o.b. point, other conditions of the sale, or 
 22.29  the ultimate destination of the property. 
 22.30     (c) Tangible personal property delivered to a common or 
 22.31  contract carrier or foreign vessel for delivery to a purchaser 
 22.32  in another state or nation is a sale in that state or nation, 
 22.33  regardless of f.o.b. point or other conditions of the sale.  
 22.34     (d) Notwithstanding paragraphs (b) and (c), when 
 22.35  intoxicating liquor, wine, fermented malt beverages, cigarettes, 
 22.36  or tobacco products are sold to a purchaser who is licensed by a 
 23.1   state or political subdivision to resell this property only 
 23.2   within the state of ultimate destination, the sale is made in 
 23.3   that state.  
 23.4      (e) Sales made by or through a corporation that is 
 23.5   qualified as a domestic international sales corporation under 
 23.6   section 992 of the Internal Revenue Code are not considered to 
 23.7   have been made within this state.  
 23.8      (f) Sales, rents, royalties, and other income in connection 
 23.9   with real property is attributed to the state in which the 
 23.10  property is located.  
 23.11     (g) Receipts from the lease or rental of tangible personal 
 23.12  property, including finance leases and true leases, must be 
 23.13  attributed to this state if the property is located in this 
 23.14  state and to other states if the property is not located in this 
 23.15  state.  Receipts from the lease or rental of moving property 
 23.16  including, but not limited to, motor vehicles, rolling stock, 
 23.17  aircraft, vessels, or mobile equipment are included in the 
 23.18  numerator of the receipts factor to the extent that the property 
 23.19  is used in this state.  The extent of the use of moving property 
 23.20  is determined as follows: 
 23.21     (1) A motor vehicle is used wholly in the state in which it 
 23.22  is registered.  
 23.23     (2) The extent that rolling stock is used in this state is 
 23.24  determined by multiplying the receipts from the lease or rental 
 23.25  of the rolling stock by a fraction, the numerator of which is 
 23.26  the miles traveled within this state by the leased or rented 
 23.27  rolling stock and the denominator of which is the total miles 
 23.28  traveled by the leased or rented rolling stock. 
 23.29     (3) The extent that an aircraft is used in this state is 
 23.30  determined by multiplying the receipts from the lease or rental 
 23.31  of the aircraft by a fraction, the numerator of which is the 
 23.32  number of landings of the aircraft in this state and the 
 23.33  denominator of which is the total number of landings of the 
 23.34  aircraft. 
 23.35     (4) The extent that a vessel, mobile equipment, or other 
 23.36  mobile property is used in the state is determined by 
 24.1   multiplying the receipts from the lease or rental of the 
 24.2   property by a fraction, the numerator of which is the number of 
 24.3   days during the taxable year the property was in this state and 
 24.4   the denominator of which is the total days in the taxable year.  
 24.5      (h) Royalties and other income not described in paragraph 
 24.6   (a), clause (6), received for the use of or for the privilege of 
 24.7   using intangible property, including patents, know-how, 
 24.8   formulas, designs, processes, patterns, copyrights, trade names, 
 24.9   service names, franchises, licenses, contracts, customer lists, 
 24.10  or similar items, must be attributed to the state in which the 
 24.11  property is used by the purchaser.  If the property is used in 
 24.12  more than one state, the royalties or other income must be 
 24.13  apportioned to this state pro rata according to the portion of 
 24.14  use in this state.  If the portion of use in this state cannot 
 24.15  be determined, the royalties or other income must be excluded 
 24.16  from both the numerator and the denominator.  Intangible 
 24.17  property is used in this state if the purchaser uses the 
 24.18  intangible property or the rights therein in the regular course 
 24.19  of its business operations in this state, regardless of the 
 24.20  location of the purchaser's customers. 
 24.21     (i) Sales of intangible property are made within the state 
 24.22  in which the property is used by the purchaser.  If the property 
 24.23  is used in more than one state, the sales must be apportioned to 
 24.24  this state pro rata according to the portion of use in this 
 24.25  state.  If the portion of use in this state cannot be 
 24.26  determined, the sale must be excluded from both the numerator 
 24.27  and the denominator of the sales factor.  Intangible property is 
 24.28  used in this state if the purchaser used the intangible property 
 24.29  in the regular course of its business operations in this state. 
 24.30     (j) Receipts from the performance of services must be 
 24.31  attributed to the state where the services are received.  For 
 24.32  the purposes of this section, receipts from the performance of 
 24.33  services provided to a corporation, partnership, or trust may 
 24.34  only be attributed to a state where it has a fixed place of 
 24.35  doing business.  If the state where the services are received is 
 24.36  not readily determinable or is a state where the corporation, 
 25.1   partnership, or trust receiving the service does not have a 
 25.2   fixed place of doing business, the services shall be deemed to 
 25.3   be received at the location of the office of the customer from 
 25.4   which the services were ordered in the regular course of the 
 25.5   customer's trade or business.  If the ordering office cannot be 
 25.6   determined, the services shall be deemed to be received at the 
 25.7   office of the customer to which the services are billed. 
 25.8      <b>[EFFECTIVE DATE.]</b> This section is effective for 
 25.9   transactions after September 30, 2000. 
 25.10     Sec. 5.  Minnesota Statutes 2000, section 290A.03, 
 25.11  subdivision 15, is amended to read: 
 25.12     Subd. 15.  [INTERNAL REVENUE CODE.] "Internal Revenue Code" 
 25.13  means the Internal Revenue Code of 1986, as amended through 
 25.14  December 31, ~~1999~~ 2000. 
 25.15     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 25.16  following final enactment. 
 25.17     Sec. 6.  Minnesota Statutes 2000, section 291.005, 
 25.18  subdivision 1, is amended to read: 
 25.19     Subdivision 1.  Unless the context otherwise clearly 
 25.20  requires, the following terms used in this chapter shall have 
 25.21  the following meanings: 
 25.22     (1) "Federal gross estate" means the gross estate of a 
 25.23  decedent as valued and otherwise determined for federal estate 
 25.24  tax purposes by federal taxing authorities pursuant to the 
 25.25  provisions of the Internal Revenue Code. 
 25.26     (2) "Minnesota gross estate" means the federal gross estate 
 25.27  of a decedent after (a) excluding therefrom any property 
 25.28  included therein which has its situs outside Minnesota and (b) 
 25.29  including therein any property omitted from the federal gross 
 25.30  estate which is includable therein, has its situs in Minnesota, 
 25.31  and was not disclosed to federal taxing authorities.  
 25.32     (3) "Personal representative" means the executor, 
 25.33  administrator or other person appointed by the court to 
 25.34  administer and dispose of the property of the decedent.  If 
 25.35  there is no executor, administrator or other person appointed, 
 25.36  qualified, and acting within this state, then any person in 
 26.1   actual or constructive possession of any property having a situs 
 26.2   in this state which is included in the federal gross estate of 
 26.3   the decedent shall be deemed to be a personal representative to 
 26.4   the extent of the property and the Minnesota estate tax due with 
 26.5   respect to the property. 
 26.6      (4) "Resident decedent" means an individual whose domicile 
 26.7   at the time of death was in Minnesota. 
 26.8      (5) "Nonresident decedent" means an individual whose 
 26.9   domicile at the time of death was not in Minnesota. 
 26.10     (6) "Situs of property" means, with respect to real 
 26.11  property, the state or country in which it is located; with 
 26.12  respect to tangible personal property, the state or country in 
 26.13  which it was normally kept or located at the time of the 
 26.14  decedent's death; and with respect to intangible personal 
 26.15  property, the state or country in which the decedent was 
 26.16  domiciled at death. 
 26.17     (7) "Commissioner" means the commissioner of revenue or any 
 26.18  person to whom the commissioner has delegated functions under 
 26.19  this chapter. 
 26.20     (8) "Internal Revenue Code" means the United States 
 26.21  Internal Revenue Code of 1986, as amended through December 31, 
 26.22  ~~1999~~ 2000. 
 26.23     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 26.24  following final enactment. 
 26.25                             ARTICLE 3 
 26.26                   CORPORATE FRANCHISE TAX REFORM 
 26.27     Section 1.  Minnesota Statutes 2000, section 290.01, is 
 26.28  amended by adding a subdivision to read: 
 26.29     Subd. 5b.  [DEFINITION OF INSURANCE COMPANY.] The terms 
 26.30  "insurance company," "life insurance company," and "insurance 
 26.31  company other than life" have the meanings given in the Internal 
 26.32  Revenue Code. 
 26.33     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 26.34  beginning after December 31, 2000. 
 26.35     Sec. 2.  Minnesota Statutes 2000, section 290.01, 
 26.36  subdivision 19c, is amended to read: 
 27.1      Subd. 19c.  [CORPORATIONS; ADDITIONS TO FEDERAL TAXABLE 
 27.2   INCOME.] For corporations, there shall be added to federal 
 27.3   taxable income: 
 27.4      (1) the amount of any deduction taken for federal income 
 27.5   tax purposes for income, excise, or franchise taxes based on net 
 27.6   income or related minimum taxes, including but not limited to 
 27.7   the tax imposed under section 290.0922, paid by the corporation 
 27.8   to Minnesota, another state, a political subdivision of another 
 27.9   state, the District of Columbia, or any foreign country or 
 27.10  possession of the United States; 
 27.11     (2) interest not subject to federal tax upon obligations 
 27.12  of:  the United States, its possessions, its agencies, or its 
 27.13  instrumentalities; the state of Minnesota or any other state, 
 27.14  any of its political or governmental subdivisions, any of its 
 27.15  municipalities, or any of its governmental agencies or 
 27.16  instrumentalities; the District of Columbia; or Indian tribal 
 27.17  governments; 
 27.18     (3) exempt-interest dividends received as defined in 
 27.19  section 852(b)(5) of the Internal Revenue Code; 
 27.20     (4) the amount of any net operating loss deduction taken 
 27.21  for federal income tax purposes under section 172 or 832(c)(10) 
 27.22  of the Internal Revenue Code or operations loss deduction under 
 27.23  section 810 of the Internal Revenue Code; 
 27.24     ~~(5) the amount of any special deductions taken for federal~~ 
 27.25  ~~income tax purposes under sections 241 to 247 of the Internal~~ 
 27.26  ~~Revenue Code;~~ 
 27.27     ~~(6)~~ (5) losses from the business of mining, as defined in 
 27.28  section 290.05, subdivision 1, clause (a), that are not subject 
 27.29  to Minnesota income tax; 
 27.30     ~~(7)~~ (6) the amount of any capital losses deducted for 
 27.31  federal income tax purposes under sections 1211 and 1212 of the 
 27.32  Internal Revenue Code; 
 27.33     ~~(8) the amount of any charitable contributions deducted for~~ 
 27.34  ~~federal income tax purposes under section 170 of the Internal~~ 
 27.35  ~~Revenue Code;~~ 
 27.36     ~~(9)~~ (7) the exempt foreign trade income of a foreign sales 
 28.1   corporation under sections 921(a) and 291 of the Internal 
 28.2   Revenue Code; 
 28.3      ~~(10) the amount of percentage depletion deducted under~~ 
 28.4   ~~sections 611 through 614 and 291 of the Internal Revenue Code;~~ 
 28.5      ~~(11) for certified pollution control facilities placed in~~ 
 28.6   ~~service in a taxable year beginning before December 31, 1986,~~ 
 28.7   ~~and for which amortization deductions were elected under section~~ 
 28.8   ~~169 of the Internal Revenue Code of 1954, as amended through~~ 
 28.9   ~~December 31, 1985, the amount of the amortization deduction~~ 
 28.10  ~~allowed in computing federal taxable income for those~~ 
 28.11  ~~facilities;~~ 
 28.12     ~~(12) the amount of any deemed dividend from a foreign~~ 
 28.13  ~~operating corporation determined pursuant to section 290.17,~~ 
 28.14  ~~subdivision 4, paragraph (g);~~ 
 28.15     ~~(13) the amount of any environmental tax paid under section~~ 
 28.16  ~~59(a) of the Internal Revenue Code~~; and 
 28.17     ~~(14)~~ (8) the amount of a partner's pro rata share of net 
 28.18  income which does not flow through to the partner because the 
 28.19  partnership elected to pay the tax on the income under section 
 28.20  6242(a)(2) of the Internal Revenue Code. 
 28.21     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 28.22  beginning after December 31, 2000. 
 28.23     Sec. 3.  Minnesota Statutes 2000, section 290.01, 
 28.24  subdivision 19d, is amended to read: 
 28.25     Subd. 19d.  [CORPORATIONS; MODIFICATIONS DECREASING FEDERAL 
 28.26  TAXABLE INCOME.] For corporations, there shall be subtracted 
 28.27  from federal taxable income after the increases provided in 
 28.28  subdivision 19c:  
 28.29     (1) the amount of foreign dividend gross-up added to gross 
 28.30  income for federal income tax purposes under section 78 of the 
 28.31  Internal Revenue Code; 
 28.32     (2) the amount of salary expense not allowed for federal 
 28.33  income tax purposes due to claiming the federal jobs credit 
 28.34  under section 51 of the Internal Revenue Code; 
 28.35     ~~(3) any dividend (not including any distribution in~~ 
 28.36  ~~liquidation) paid within the taxable year by a national or state~~ 
 29.1   ~~bank to the United States, or to any instrumentality of the~~ 
 29.2   ~~United States exempt from federal income taxes, on the preferred~~ 
 29.3   ~~stock of the bank owned by the United States or the~~ 
 29.4   ~~instrumentality;~~ 
 29.5      ~~(4)~~ (3) amounts disallowed for intangible drilling costs 
 29.6   due to differences between this chapter and the Internal Revenue 
 29.7   Code in taxable years beginning before January 1, 1987, as 
 29.8   follows: 
 29.9      (i) to the extent the disallowed costs are represented by 
 29.10  physical property, an amount equal to the allowance for 
 29.11  depreciation under Minnesota Statutes 1986, section 290.09, 
 29.12  subdivision 7, subject to the modifications contained in 
 29.13  subdivision 19e; and 
 29.14     (ii) to the extent the disallowed costs are not represented 
 29.15  by physical property, an amount equal to the allowance for cost 
 29.16  depletion under Minnesota Statutes 1986, section 290.09, 
 29.17  subdivision 8; except that 
 29.18     (iii) this subtraction is permitted for the tax year ending 
 29.19  before December 31, 2002.  Disallowed amounts remaining after 
 29.20  the tax year ending December 31, 2000, must be subtracted from 
 29.21  federal taxable income under this subdivision in two equal 
 29.22  portions in tax years 2001 and 2002; 
 29.23     ~~(5)~~ (4) the deduction for capital losses pursuant to 
 29.24  sections 1211 and 1212 of the Internal Revenue Code, except that:
 29.25     (i) for capital losses incurred in taxable years beginning 
 29.26  after December 31, 1986, capital loss carrybacks shall not be 
 29.27  allowed; and 
 29.28     (ii) for capital losses incurred in taxable years beginning 
 29.29  after December 31, 1986, a capital loss carryover to each of the 
 29.30  15 taxable years succeeding the loss year shall be allowed; 
 29.31     ~~(iii) for capital losses incurred in taxable years~~ 
 29.32  ~~beginning before January 1, 1987, a capital loss carryback to~~ 
 29.33  ~~each of the three taxable years preceding the loss year, subject~~ 
 29.34  ~~to the provisions of Minnesota Statutes 1986, section 290.16,~~ 
 29.35  ~~shall be allowed; and~~ 
 29.36     ~~(iv) for capital losses incurred in taxable years beginning~~ 
 30.1   ~~before January 1, 1987, a capital loss carryover to each of the~~ 
 30.2   ~~five taxable years succeeding the loss year to the extent such~~ 
 30.3   ~~loss was not used in a prior taxable year and subject to the~~ 
 30.4   ~~provisions of Minnesota Statutes 1986, section 290.16, shall be~~ 
 30.5   ~~allowed;~~ 
 30.6      ~~(6)~~ (5) an amount for interest and expenses relating to 
 30.7   income not taxable for federal income tax purposes, if (i) the 
 30.8   income is taxable under this chapter and (ii) the interest and 
 30.9   expenses were disallowed as deductions under the provisions of 
 30.10  section 171(a)(2), 265 or 291 of the Internal Revenue Code in 
 30.11  computing federal taxable income; 
 30.12     ~~(7) in the case of mines, oil and gas wells, other natural~~ 
 30.13  ~~deposits, and timber for which percentage depletion was~~ 
 30.14  ~~disallowed pursuant to subdivision 19c, clause (11), a~~ 
 30.15  ~~reasonable allowance for depletion based on actual cost.  In the~~ 
 30.16  ~~case of leases the deduction must be apportioned between the~~ 
 30.17  ~~lessor and lessee in accordance with rules prescribed by the~~ 
 30.18  ~~commissioner.  In the case of property held in trust, the~~ 
 30.19  ~~allowable deduction must be apportioned between the income~~ 
 30.20  ~~beneficiaries and the trustee in accordance with the pertinent~~ 
 30.21  ~~provisions of the trust, or if there is no provision in the~~ 
 30.22  ~~instrument, on the basis of the trust's income allocable to~~ 
 30.23  ~~each;~~ 
 30.24     ~~(8) for~~ (6) certified pollution control facilities ~~placed~~ 
 30.25  ~~in service in a taxable year beginning before December 31, 1986,~~ 
 30.26  ~~and for which amortization deductions were elected under section~~ 
 30.27  ~~169 of the Internal Revenue Code of 1954, as amended through~~ 
 30.28  ~~December 31, 1985, an amount equal to the allowance for~~ 
 30.29  ~~depreciation under Minnesota Statutes 1986, section 290.09,~~ 
 30.30  ~~subdivision 7~~ amortization deduction amounts remaining after the 
 30.31  tax year ending December 31, 2000, must be subtracted from 
 30.32  federal taxable income under this subdivision in two equal 
 30.33  portions in tax years 2001 and 2002; 
 30.34     ~~(9) the amount included in federal taxable income~~ 
 30.35  ~~attributable to the credits provided in Minnesota Statutes 1986,~~ 
 30.36  ~~section 273.1314, subdivision 9, or Minnesota Statutes, section~~ 
 31.1   ~~469.171, subdivision 6;~~ 
 31.2      ~~(10)~~ (7) amounts included in federal taxable income that 
 31.3   are due to refunds of income, excise, or franchise taxes based 
 31.4   on net income or related minimum taxes paid by the corporation 
 31.5   to Minnesota, another state, a political subdivision of another 
 31.6   state, the District of Columbia, or a foreign country or 
 31.7   possession of the United States to the extent that the taxes 
 31.8   were added to federal taxable income under section 290.01, 
 31.9   subdivision 19c, clause (1), in a prior taxable year; 
 31.10     ~~(11) 80 percent of royalties, fees, or other like income~~ 
 31.11  ~~accrued or received from a foreign operating corporation or a~~ 
 31.12  ~~foreign corporation which is part of the same unitary business~~ 
 31.13  ~~as the receiving corporation;~~ 
 31.14     ~~(12)~~ (8) income or gains from the business of mining as 
 31.15  defined in section 290.05, subdivision 1, clause (a), that are 
 31.16  not subject to Minnesota franchise tax; 
 31.17     ~~(13)~~ (9) the amount of handicap access expenditures in the 
 31.18  taxable year which are not allowed to be deducted or capitalized 
 31.19  under section 44(d)(7) of the Internal Revenue Code; 
 31.20     ~~(14)~~ (10) the amount of qualified research expenses not 
 31.21  allowed for federal income tax purposes under section 280C(c) of 
 31.22  the Internal Revenue Code, but only to the extent that the 
 31.23  amount exceeds the amount of the credit allowed under section 
 31.24  290.068; 
 31.25     ~~(15)~~ (11) the amount of salary expenses not allowed for 
 31.26  federal income tax purposes due to claiming the Indian 
 31.27  employment credit under section 45A(a) of the Internal Revenue 
 31.28  Code; 
 31.29     ~~(16)~~ (12) the amount of any refund of environmental taxes 
 31.30  paid under section 59A of the Internal Revenue Code; and 
 31.31     ~~(17)~~ (13) for taxable years beginning before January 1, 
 31.32  2008, the amount of the federal small ethanol producer credit 
 31.33  allowed under section 40(a)(3) of the Internal Revenue Code 
 31.34  which is included in gross income under section 87 of the 
 31.35  Internal Revenue Code. 
 31.36     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 32.1   beginning after December 31, 2000. 
 32.2      Sec. 4.  Minnesota Statutes 2000, section 290.01, 
 32.3   subdivision 29, is amended to read: 
 32.4      Subd. 29.  [TAXABLE INCOME.] ~~For tax years beginning after~~ 
 32.5   ~~December 31, 1986,~~ The term "taxable income" means:  
 32.6      (1) for individuals, estates, and trusts, the same as 
 32.7   taxable net income; 
 32.8      (2) for corporations, including insurance companies, the 
 32.9   taxable net income less 
 32.10     ~~(i)~~ the net operating loss deduction under section 290.095~~;~~ 
 32.11     ~~(ii) the dividends received deduction under section 290.21,~~ 
 32.12  ~~subdivision 4; and~~ 
 32.13     ~~(iii) the charitable contribution deduction under section~~ 
 32.14  ~~290.21, subdivision 3~~. 
 32.15     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 32.16  beginning after December 31, 2000. 
 32.17     Sec. 5.  Minnesota Statutes 2000, section 290.02, is 
 32.18  amended to read: 
 32.19     290.02 [FRANCHISE TAX ON CORPORATIONS MEASURED BY NET 
 32.20  INCOME.] 
 32.21     An annual franchise tax on the exercise of the corporate 
 32.22  franchise to engage in contacts with this state that produce 
 32.23  gross income attributable to sources within this state is 
 32.24  imposed upon every corporation that so exercises its franchise 
 32.25  during the taxable year.  
 32.26     Contacts within this state do not include transportation in 
 32.27  interstate or foreign commerce, or both, by means of ships 
 32.28  navigating within or through waters that are made international 
 32.29  for navigation purposes by any treaty or agreement to which the 
 32.30  United States is a party. 
 32.31     The tax so imposed is measured by the corporations' taxable 
 32.32  income ~~and alternative minimum taxable income~~ for the taxable 
 32.33  year for which the tax is imposed, and computed in the manner 
 32.34  and at the rates provided in this chapter. 
 32.35     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 32.36  beginning after December 31, 2000. 
 33.1      Sec. 6.  Minnesota Statutes 2000, section 290.05, 
 33.2   subdivision 1, is amended to read: 
 33.3      Subdivision 1.  [EXEMPT ENTITIES.] The following 
 33.4   corporations, individuals, estates, trusts, and organizations 
 33.5   shall be exempted from taxation under this chapter, provided 
 33.6   that every such person or corporation claiming exemption under 
 33.7   this chapter, in whole or in part, must establish to the 
 33.8   satisfaction of the commissioner the taxable status of any 
 33.9   income or activity: 
 33.10     (a) corporations, individuals, estates, and trusts engaged 
 33.11  in the business of mining or producing iron ore and other ores 
 33.12  the mining or production of which is subject to the occupation 
 33.13  tax imposed by section 298.01; but if any such corporation, 
 33.14  individual, estate, or trust engages in any other business or 
 33.15  activity or has income from any property not used in such 
 33.16  business it shall be subject to this tax computed on the net 
 33.17  income from such property or such other business or activity.  
 33.18  Royalty shall not be considered as income from the business of 
 33.19  mining or producing iron ore within the meaning of this section; 
 33.20     (b) the United States of America, the state of Minnesota or 
 33.21  any political subdivision of either agencies or 
 33.22  instrumentalities, whether engaged in the discharge of 
 33.23  governmental or proprietary functions; 
 33.24     (c) any insurance company that is domiciled in a state or 
 33.25  country other than Minnesota that imposes retaliatory taxes, 
 33.26  fines, deposits, penalties, licenses, or fees and that does not 
 33.27  grant, on a reciprocal basis, exemption from such retaliatory 
 33.28  taxes to insurance companies or their agents domiciled in 
 33.29  Minnesota.  "Retaliatory taxes" means taxes imposed on insurance 
 33.30  companies organized in another state or country that result from 
 33.31  the fact that an insurance company organized in the taxing 
 33.32  jurisdiction and doing business in the other jurisdiction is 
 33.33  subject to taxes, fines, deposits, penalties, licenses, or fees 
 33.34  in an amount exceeding that imposed by the taxing jurisdiction 
 33.35  upon an insurance company organized in the other state or 
 33.36  country and doing business to the same extent in the taxing 
 34.1   jurisdiction; ~~and~~ 
 34.2      (d) town and farmers' mutual insurance companies and mutual 
 34.3   property and casualty insurance companies, other than those (1) 
 34.4   writing life insurance or (2) whose total assets on December 31, 
 34.5   1989, exceeded $1,600,000,000; and 
 34.6      (e) insurance companies that have a premium tax liability 
 34.7   under section 297I.05. 
 34.8      <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 34.9   beginning after December 31, 2000. 
 34.10     Sec. 7.  Minnesota Statutes 2000, section 290.05, 
 34.11  subdivision 3, is amended to read: 
 34.12     Subd. 3.  [TAXES IMPOSED ON EXEMPT ENTITIES.] (a) An 
 34.13  organization exempt from taxation under subdivision 2 shall, 
 34.14  nevertheless, be subject to tax under this chapter to the extent 
 34.15  provided in the following provisions of the Internal Revenue 
 34.16  Code:  
 34.17     (i) section 527 (dealing with political organizations); 
 34.18     (ii) section 528 (dealing with certain homeowners 
 34.19  associations); 
 34.20     (iii) sections 511 to 515 (dealing with unrelated business 
 34.21  income); 
 34.22     (iv) section 521 (dealing with farmers' cooperatives); and 
 34.23     (v) section 6033(e)(2) (dealing with lobbying expense); but 
 34.24  notwithstanding this subdivision, shall be considered an 
 34.25  organization exempt from income tax for the purposes of any law 
 34.26  which refers to organizations exempt from income taxes.  
 34.27     (b) The tax shall be imposed on the taxable income of 
 34.28  political organizations or homeowner associations or the 
 34.29  unrelated business taxable income, as defined in section 512 of 
 34.30  the Internal Revenue Code, of organizations defined in section 
 34.31  511 of the Internal Revenue Code, provided that the tax is not 
 34.32  imposed on:  
 34.33     (1) advertising revenues from a newspaper published by an 
 34.34  organization described in section 501(c)(4) of the Internal 
 34.35  Revenue Code; or 
 34.36     (2) revenues from lawful gambling authorized under chapter 
 35.1   349 that are expended for purposes that qualify for the 
 35.2   deduction for charitable contributions under section 170 of the 
 35.3   Internal Revenue Code, disregarding the limitation under section 
 35.4   170(b)(2), but only to the extent the contributions are not 
 35.5   deductible in computing federal taxable income. 
 35.6      The tax shall be at the corporate rates.  The tax shall 
 35.7   only be imposed on income and deductions assignable to this 
 35.8   state under sections 290.17 to 290.20.  ~~To the extent deducted~~ 
 35.9   ~~in computing federal taxable income, the deductions contained in~~ 
 35.10  ~~section 290.21 shall not be allowed in computing Minnesota~~ 
 35.11  ~~taxable net income.~~ 
 35.12     (c) The tax shall be imposed on organizations subject to 
 35.13  federal tax under section 6033(e)(2) of the Internal Revenue 
 35.14  Code, in an amount equal to the corporate tax rate multiplied by 
 35.15  the amount of lobbying expenses taxed under section 6033(e)(2) 
 35.16  which are attributable to lobbying the Minnesota state 
 35.17  government. 
 35.18     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 35.19  beginning after December 31, 2000. 
 35.20     Sec. 8.  Minnesota Statutes 2000, section 290.06, 
 35.21  subdivision 1, is amended to read: 
 35.22     Subdivision 1.  [COMPUTATION, CORPORATIONS.] The franchise 
 35.23  tax imposed upon corporations shall be computed by applying to 
 35.24  their taxable income the rate of ~~9.8~~ 9.4 percent. 
 35.25     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 35.26  beginning after December 31, 2000. 
 35.27     Sec. 9.  Minnesota Statutes 2000, section 290.068, 
 35.28  subdivision 2, is amended to read: 
 35.29     Subd. 2.  [DEFINITIONS.] For purposes of this section, the 
 35.30  following terms have the meanings given.  
 35.31     (a) "Qualified research expenses" means (i) qualified 
 35.32  research expenses and basic research payments as defined in 
 35.33  section 41(b) and (e) of the Internal Revenue Code, except it 
 35.34  does not include expenses incurred for qualified research or 
 35.35  basic research conducted outside the state of Minnesota pursuant 
 35.36  to section 41(d) and (e) of the Internal Revenue Code; and (ii) 
 36.1   contributions to a nonprofit corporation established and 
 36.2   operated pursuant to the provisions of chapter 317A for the 
 36.3   purpose of promoting the establishment and expansion of business 
 36.4   in this state, provided the contributions are invested by the 
 36.5   nonprofit corporation for the purpose of providing funds for 
 36.6   small, technologically innovative enterprises in Minnesota 
 36.7   during the early stages of their development.  
 36.8      (b) "Qualified research" means qualified research as 
 36.9   defined in section 41(d) of the Internal Revenue Code, except 
 36.10  that the term does not include qualified research conducted 
 36.11  outside the state of Minnesota.  
 36.12     (c) "Base amount" means ~~base amount as defined in section~~ 
 36.13  ~~41(c) of the Internal Revenue Code, except that the average~~ 
 36.14  ~~annual gross receipts must be calculated using Minnesota sales~~ 
 36.15  ~~or receipts under section 290.191 and the definitions contained~~ 
 36.16  ~~in clauses (a) and (b) shall apply~~ the average of qualified 
 36.17  research expenses as defined in paragraph (a) for the five 
 36.18  taxable years preceding the taxable year for which the credit is 
 36.19  being determined.  
 36.20     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 36.21  beginning after December 31, 2000. 
 36.22     Sec. 10.  Minnesota Statutes 2000, section 290.068, is 
 36.23  amended by adding a subdivision to read: 
 36.24     Subd. 2a.  [INITIAL RESEARCH EXPENSE.] In the first taxable 
 36.25  year in which a taxpayer has qualified research expenses, the 
 36.26  base amount equals "zero."  In the second through the fifth 
 36.27  years, the base amount must be calculated using the average of 
 36.28  qualified research expenses for the taxable years which precede 
 36.29  the tax year for which the credit is being determined. 
 36.30     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 36.31  beginning after December 31, 2000. 
 36.32     Sec. 11.  Minnesota Statutes 2000, section 290.0921, 
 36.33  subdivision 8, is amended to read: 
 36.34     Subd. 8.  [CARRYOVER CREDIT.] (a) A corporation is allowed 
 36.35  a credit against qualified regular tax for qualified alternative 
 36.36  minimum tax previously paid.  The credit is allowable only 
 37.1   if ~~the corporation has no tax liability under this section for~~ 
 37.2   ~~the taxable year and if~~ the corporation has an alternative 
 37.3   minimum tax credit carryover from a previous year.  The credit 
 37.4   allowable in a taxable year equals ~~the lesser of~~ 
 37.5      ~~(1) the excess of the qualified regular tax for the taxable~~ 
 37.6   ~~year over the amount computed under subdivision 1, clause (1),~~ 
 37.7   ~~for the taxable year or~~ 
 37.8      ~~(2)~~ the carryover credit to the taxable year. 
 37.9      (b) ~~For purposes of this subdivision, the following terms~~ 
 37.10  ~~have the meanings given.~~ 
 37.11     ~~(1) "Qualified alternative minimum tax" equals the amount~~ 
 37.12  ~~determined under subdivision 1 for the taxable year.~~ 
 37.13     ~~(2)~~ "Qualified regular tax" means the tax imposed under 
 37.14  section 290.06, subdivision 1. 
 37.15     (c) The qualified alternative minimum tax for a taxable 
 37.16  year is an alternative minimum tax credit carryover to each of 
 37.17  the taxable years succeeding the taxable year.  The entire 
 37.18  amount of the credit must be carried to the earliest taxable 
 37.19  year to which the amount may be carried.  Any unused portion of 
 37.20  the credit must be carried to the following taxable year.  ~~No~~ 
 37.21  ~~credit may be carried to a taxable year in which alternative~~ 
 37.22  ~~minimum tax was paid.~~ 
 37.23     (d) An acquiring corporation may carry over this credit 
 37.24  from a transferor or distributor corporation in a corporate 
 37.25  acquisition.  The provisions of section 381 of the Internal 
 37.26  Revenue Code apply in determining the amount of the carryover, 
 37.27  if any. 
 37.28     (e) Notwithstanding any provisions in this subdivision to 
 37.29  the contrary, this credit is only available through the tax year 
 37.30  ending December 31, 2002.  This is not a refundable credit. 
 37.31     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 37.32  beginning after December 31, 2000. 
 37.33     Sec. 12.  Minnesota Statutes 2000, section 290.0921, is 
 37.34  amended by adding a subdivision to read: 
 37.35     Subd. 9.  [EXPIRATION.] This section expires effective for 
 37.36  taxable years beginning after December 31, 2002. 
 38.1      <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 38.2   beginning after December 31, 2000. 
 38.3      Sec. 13.  Minnesota Statutes 2000, section 290.0922, 
 38.4   subdivision 2, is amended to read: 
 38.5      Subd. 2.  [EXEMPTIONS.] The following entities are exempt 
 38.6   from the tax imposed by this section: 
 38.7      (1) corporations exempt from tax under section 290.05 ~~other~~ 
 38.8   ~~than insurance companies exempt under subdivision 1, paragraph~~ 
 38.9   ~~(d)~~; 
 38.10     (2) real estate investment trusts; 
 38.11     (3) regulated investment companies or a fund thereof; and 
 38.12     (4) entities having a valid election in effect under 
 38.13  section 860D(b) of the Internal Revenue Code; 
 38.14     (5) town and farmers' mutual insurance companies; and 
 38.15     (6) cooperatives organized under chapter 308A that provide 
 38.16  housing exclusively to persons age 55 and over and are 
 38.17  classified as homesteads under section 273.124, subdivision 3. 
 38.18     Entities not specifically exempted by this subdivision are 
 38.19  subject to tax under this section, notwithstanding section 
 38.20  290.05. 
 38.21     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 38.22  beginning after December 31, 2000. 
 38.23     Sec. 14.  Minnesota Statutes 2000, section 290.095, 
 38.24  subdivision 2, is amended to read: 
 38.25     Subd. 2.  [DEFINED AND LIMITED.] (a) The term "net 
 38.26  operating loss" as used in this section shall mean a net 
 38.27  operating loss as defined in section 172(c) or 810(a), in the 
 38.28  case of life insurance companies, of the Internal Revenue Code, 
 38.29  with the modifications specified in subdivision 4.  ~~The~~ 
 38.30  ~~deductions provided in section 290.21 and the modification~~ 
 38.31  ~~provided in section 290.01, subdivision 19d, clause (11), cannot~~ 
 38.32  ~~be used in the determination of a net operating loss.~~  
 38.33     (b) The term "net operating loss deduction" as used in this 
 38.34  section means the aggregate of the net operating loss carryovers 
 38.35  to the taxable year, computed in accordance with subdivision 3.  
 38.36  The provisions of section 172(b) or 810(b), in the case of life 
 39.1   insurance companies, of the Internal Revenue Code relating to 
 39.2   the carryback of net operating losses, do not apply. 
 39.3      <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 39.4   beginning after December 31, 2000. 
 39.5      Sec. 15.  Minnesota Statutes 2000, section 290.17, 
 39.6   subdivision 4, is amended to read: 
 39.7      Subd. 4.  [UNITARY BUSINESS PRINCIPLE.] (a) If a trade or 
 39.8   business conducted wholly within this state or partly within and 
 39.9   partly without this state is part of a unitary business, the 
 39.10  entire income of the unitary business is subject to 
 39.11  apportionment pursuant to section 290.191.  Notwithstanding 
 39.12  subdivision 2, paragraph (c), none of the income of a unitary 
 39.13  business is considered to be derived from any particular source 
 39.14  and none may be allocated to a particular place except as 
 39.15  provided by the applicable apportionment formula.  The 
 39.16  provisions of this subdivision do not apply to business income 
 39.17  subject to subdivision 5, income of an insurance company 
 39.18  determined under section 290.35, or income of an investment 
 39.19  company determined under section 290.36. 
 39.20     (b) The term "unitary business" means business activities 
 39.21  or operations which result in a flow of value between them.  The 
 39.22  term may be applied within a single legal entity or between 
 39.23  multiple entities and without regard to whether each entity is a 
 39.24  sole proprietorship, a corporation, a partnership or a trust.  
 39.25     (c) Unity is presumed whenever there is unity of ownership, 
 39.26  operation, and use, evidenced by centralized management or 
 39.27  executive force, centralized purchasing, advertising, 
 39.28  accounting, or other controlled interaction, but the absence of 
 39.29  these centralized activities will not necessarily evidence a 
 39.30  nonunitary business.  Unity is also presumed when business 
 39.31  activities or operations are of mutual benefit, dependent upon 
 39.32  or contributory to one another, either individually or as a 
 39.33  group. 
 39.34     (d) Where a business operation conducted in Minnesota is 
 39.35  owned by a business entity that carries on business activity 
 39.36  outside the state different in kind from that conducted within 
 40.1   this state, and the other business is conducted entirely outside 
 40.2   the state, it is presumed that the two business operations are 
 40.3   unitary in nature, interrelated, connected, and interdependent 
 40.4   unless it can be shown to the contrary.  
 40.5      (e) Unity of ownership is not deemed to exist when a 
 40.6   corporation is involved unless that corporation is a member of a 
 40.7   group of two or more business entities and more than 50 percent 
 40.8   of the voting stock of each member of the group is directly or 
 40.9   indirectly owned by a common owner or by common owners, either 
 40.10  corporate or noncorporate, or by one or more of the member 
 40.11  corporations of the group.  For this purpose, the term "voting 
 40.12  stock" shall include membership interests of mutual insurance 
 40.13  holding companies formed under section 60A.077.  
 40.14     (f) The net income and apportionment factors under section 
 40.15  290.191 or 290.20 of foreign corporations and other foreign 
 40.16  entities which are part of a unitary business shall not be 
 40.17  included in the net income or the apportionment factors of the 
 40.18  unitary business.  A foreign corporation or other foreign entity 
 40.19  which is required to file a return under this chapter shall file 
 40.20  on a separate return basis.  ~~The net income and apportionment~~ 
 40.21  ~~factors under section 290.191 or 290.20 of foreign operating~~ 
 40.22  ~~corporations shall not be included in the net income or the~~ 
 40.23  ~~apportionment factors of the unitary business except as provided~~ 
 40.24  ~~in paragraph (g).~~ 
 40.25     ~~(g) The adjusted net income of a foreign operating~~ 
 40.26  ~~corporation shall be deemed to be paid as a dividend on the last~~ 
 40.27  ~~day of its taxable year to each shareholder thereof, in~~ 
 40.28  ~~proportion to each shareholder's ownership, with which such~~ 
 40.29  ~~corporation is engaged in a unitary business.  Such deemed~~ 
 40.30  ~~dividend shall be treated as a dividend under section 290.21,~~ 
 40.31  ~~subdivision 4.~~ 
 40.32     ~~Dividends actually paid by a foreign operating corporation~~ 
 40.33  ~~to a corporate shareholder which is a member of the same unitary~~ 
 40.34  ~~business as the foreign operating corporation shall be~~ 
 40.35  ~~eliminated from the net income of the unitary business in~~ 
 40.36  ~~preparing a combined report for the unitary business.  The~~ 
 41.1   ~~adjusted net income of a foreign operating corporation shall be~~ 
 41.2   ~~its net income adjusted as follows:~~ 
 41.3      ~~(1) any taxes paid or accrued to a foreign country, the~~ 
 41.4   ~~commonwealth of Puerto Rico, or a United States possession or~~ 
 41.5   ~~political subdivision of any of the foregoing shall be a~~ 
 41.6   ~~deduction; and~~ 
 41.7      ~~(2) the subtraction from federal taxable income for~~ 
 41.8   ~~payments received from foreign corporations or foreign operating~~ 
 41.9   ~~corporations under section 290.01, subdivision 19d, clause (11),~~ 
 41.10  ~~shall not be allowed.~~ 
 41.11     ~~If a foreign operating corporation incurs a net loss,~~ 
 41.12  ~~neither income nor deduction from that corporation shall be~~ 
 41.13  ~~included in determining the net income of the unitary business.~~ 
 41.14     ~~(h)~~ (g) For purposes of determining the net income of a 
 41.15  unitary business and the factors to be used in the apportionment 
 41.16  of net income pursuant to section 290.191 or 290.20, there must 
 41.17  be included only the income and apportionment factors of 
 41.18  domestic corporations or other domestic entities ~~other than~~ 
 41.19  ~~foreign operating corporations~~ that are determined to be part of 
 41.20  the unitary business pursuant to this subdivision, 
 41.21  notwithstanding that foreign corporations or other foreign 
 41.22  entities might be included in the unitary business.  
 41.23     ~~(i)~~ (h) Deductions for expenses, interest, or taxes 
 41.24  otherwise allowable under this chapter that are connected with 
 41.25  or allocable against dividends~~, deemed dividends described in~~ 
 41.26  ~~paragraph (g), or royalties, fees, or other like income~~ 
 41.27  ~~described in section 290.01, subdivision 19d, clause (11),~~ shall 
 41.28  not be disallowed. 
 41.29     ~~(j)~~ (i) Each corporation or other entity, except a sole 
 41.30  proprietorship, that is part of a unitary business must file 
 41.31  combined reports as the commissioner determines.  On the 
 41.32  reports, all intercompany transactions between entities included 
 41.33  pursuant to paragraph ~~(h)~~ (g) must be eliminated and the entire 
 41.34  net income of the unitary business determined in accordance with 
 41.35  this subdivision is apportioned among the entities by using each 
 41.36  entity's Minnesota factors for apportionment purposes in the 
 42.1   numerators of the apportionment formula and the total factors 
 42.2   for apportionment purposes of all entities included pursuant to 
 42.3   paragraph ~~(h)~~ (g) in the denominators of the apportionment 
 42.4   formula. 
 42.5      ~~(k)~~ (j) If a corporation has been divested from a unitary 
 42.6   business and is included in a combined report for a fractional 
 42.7   part of the common accounting period of the combined report:  
 42.8      (1) its income includable in the combined report is its 
 42.9   income incurred for that part of the year determined by 
 42.10  proration or separate accounting; and 
 42.11     (2) its sales, property, and payroll included in the 
 42.12  apportionment formula must be prorated or accounted for 
 42.13  separately. 
 42.14     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 42.15  beginning after December 31, 2000. 
 42.16     Sec. 16.  Minnesota Statutes 2000, section 290.191, 
 42.17  subdivision 2, is amended to read: 
 42.18     Subd. 2.  [APPORTIONMENT FORMULA OF GENERAL APPLICATION.] 
 42.19  Except for those trades or businesses required to use a 
 42.20  different formula under subdivision 3 or section 290.35 or 
 42.21  290.36, and for those trades or businesses that receive 
 42.22  permission to use some other method under section 290.20 or 
 42.23  under subdivision 4, a trade or business required to apportion 
 42.24  its net income must apportion its income to this state on the 
 42.25  basis of the percentage obtained by taking the sum of:  
 42.26     (1) ~~75~~ 90 percent of the percentage which the sales made 
 42.27  within this state in connection with the trade or business 
 42.28  during the tax period are of the total sales wherever made in 
 42.29  connection with the trade or business during the tax period; 
 42.30     (2) ~~12.5~~ five percent of the percentage which the total 
 42.31  tangible property used by the taxpayer in this state in 
 42.32  connection with the trade or business during the tax period is 
 42.33  of the total tangible property, wherever located, used by the 
 42.34  taxpayer in connection with the trade or business during the tax 
 42.35  period; and 
 42.36     (3) ~~12.5~~ five percent of the percentage which the 
 43.1   taxpayer's total payrolls paid or incurred in this state or paid 
 43.2   in respect to labor performed in this state in connection with 
 43.3   the trade or business during the tax period are of the 
 43.4   taxpayer's total payrolls paid or incurred in connection with 
 43.5   the trade or business during the tax period.  
 43.6      <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 43.7   beginning after December 31, 2000. 
 43.8      Sec. 17.  Minnesota Statutes 2000, section 290.191, 
 43.9   subdivision 3, is amended to read: 
 43.10     Subd. 3.  [APPORTIONMENT FORMULA FOR FINANCIAL 
 43.11  INSTITUTIONS.] Except for an investment company required to 
 43.12  apportion its income under section 290.36, a financial 
 43.13  institution that is required to apportion its net income must 
 43.14  apportion its net income to this state on the basis of the 
 43.15  percentage obtained by taking the sum of:  
 43.16     (1) ~~75~~ 90 percent of the percentage which the receipts from 
 43.17  within this state in connection with the trade or business 
 43.18  during the tax period are of the total receipts in connection 
 43.19  with the trade or business during the tax period, from wherever 
 43.20  derived; 
 43.21     (2) ~~12.5~~ five percent of the percentage which the sum of 
 43.22  the total tangible property used by the taxpayer in this state 
 43.23  and the intangible property owned by the taxpayer and attributed 
 43.24  to this state in connection with the trade or business during 
 43.25  the tax period is of the sum of the total tangible property, 
 43.26  wherever located, used by the taxpayer and the intangible 
 43.27  property owned by the taxpayer and attributed to all states in 
 43.28  connection with the trade or business during the tax period; and 
 43.29     (3) ~~12.5~~ five percent of the percentage which the 
 43.30  taxpayer's total payrolls paid or incurred in this state or paid 
 43.31  in respect to labor performed in this state in connection with 
 43.32  the trade or business during the tax period are of the 
 43.33  taxpayer's total payrolls paid or incurred in connection with 
 43.34  the trade or business during the tax period. 
 43.35     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 43.36  beginning after December 31, 2000. 
 44.1      Sec. 18.  Minnesota Statutes 2000, section 290.32, is 
 44.2   amended to read: 
 44.3      290.32 [TAXES FOR PART OF YEAR, COMPUTATION.] 
 44.4      When under this chapter a taxpayer is permitted or required 
 44.5   to make a return for a fractional part of a year, the tax shall 
 44.6   be computed in the same manner as if such fractional part of a 
 44.7   year were an entire year, except: 
 44.8      (1)  A taxpayer who is permitted to change the basis for 
 44.9   reporting income from a fiscal to a calendar year shall make a 
 44.10  separate return for the period between the close of the 
 44.11  taxpayer's last fiscal year and the following December 31st; if 
 44.12  the change is from a calendar to a fiscal year, a separate 
 44.13  return shall be made for the period between the close of the 
 44.14  taxpayer's last calendar year and the date designated as the 
 44.15  close of the fiscal year; and if the change is from one fiscal 
 44.16  year to another fiscal year, a separate return shall be made for 
 44.17  the period between the close of the former fiscal year and the 
 44.18  date designated as the close of the new fiscal year.  The 
 44.19  taxable net income~~, or for corporations the taxable net income~~ 
 44.20  ~~as reduced by the deductions contained in section 290.21,~~ for 
 44.21  any such period shall be put on an annual basis by multiplying 
 44.22  the amount thereof by 12 and dividing by the number of months 
 44.23  included in the period for which such separate return is made; 
 44.24  and the tax shall be that part of a tax, computed on the taxable 
 44.25  net income put on such annual basis which the number of months 
 44.26  in such period bears to 12 months. 
 44.27     (2) Where any of the enumerated changes in accounting 
 44.28  period referred to in clause (1) involve a 52-53 week fiscal 
 44.29  year and any such change results in a short period of less than 
 44.30  seven days, such short period shall be added to and deemed a 
 44.31  part of the following taxable year.  If the change results in a 
 44.32  short period of seven or more days, but less than 359 days, the 
 44.33  taxable net income~~, or for corporations the taxable net income~~ 
 44.34  ~~as reduced by the deductions contained in section 290.21,~~ for 
 44.35  any such period shall be placed on an annual basis by 
 44.36  multiplying such income by 365 and dividing the result by the 
 45.1   same number of days in the short period; and the tax shall be 
 45.2   that part of a tax, computed on the taxable net income placed on 
 45.3   such annual basis which the number of days in such short period 
 45.4   bears to 365 days.  Where the short period is 359 days or more, 
 45.5   the tax shall be computed in the same manner as if such short 
 45.6   period were an entire year. 
 45.7      <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 45.8   beginning after December 31, 2000. 
 45.9      Sec. 19.  Minnesota Statutes 2000, section 290.9727, 
 45.10  subdivision 3, is amended to read: 
 45.11     Subd. 3.  [TAXABLE NET INCOME.] For purposes of this 
 45.12  section, taxable net income means the lesser of:  
 45.13     (1) the recognized built-in gains of the S corporation for 
 45.14  the taxable year, as determined under section 1374 of the 
 45.15  Internal Revenue Code, subject to the modifications provided in 
 45.16  section 290.01, subdivision 19f, that are allocable to this 
 45.17  state under section 290.17, 290.191, or 290.20; or 
 45.18     (2) the amount of the S corporation's federal taxable 
 45.19  income, as determined under section 1374(d)(4) of the Internal 
 45.20  Revenue Code, subject to the provisions of section 290.01, 
 45.21  subdivisions 19c to 19f, that is allocable to this state under 
 45.22  section 290.17, 290.191, or 290.20~~, less the deduction for~~ 
 45.23  ~~charitable contributions in section 290.21, subdivision 3~~.  
 45.24     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 45.25  beginning after December 31, 2000. 
 45.26     Sec. 20.  Minnesota Statutes 2000, section 290.9728, 
 45.27  subdivision 2, is amended to read: 
 45.28     Subd. 2.  [TAXABLE INCOME.] For purposes of this section, 
 45.29  taxable income means the lesser of:  
 45.30     (1) the amount of the net capital gain of the S corporation 
 45.31  for the taxable year, as determined under sections 1222 and 1374 
 45.32  of the Internal Revenue Code, and subject to the modifications 
 45.33  provided in section 290.01, subdivisions 19e and 19f, in excess 
 45.34  of $25,000 that is allocable to this state under section 290.17, 
 45.35  290.191, or 290.20; or 
 45.36     (2) the amount of the S corporation's federal taxable 
 46.1   income, subject to the provisions of section 290.01, 
 46.2   subdivisions 19c to 19f, that is allocable to this state under 
 46.3   section 290.17, 290.191, or 290.20~~, less the deduction for~~ 
 46.4   ~~charitable contributions in section 290.21, subdivision 3~~.  
 46.5      <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 46.6   beginning after December 31, 2000. 
 46.7      Sec. 21.  Minnesota Statutes 2000, section 290.9729, 
 46.8   subdivision 2, is amended to read: 
 46.9      Subd. 2.  [TAXABLE INCOME.] For the purposes of this 
 46.10  section, taxable income means the lesser of:  
 46.11     (1) the amount of the S corporation's excess net passive 
 46.12  income, as determined under section 1375 of the Internal Revenue 
 46.13  Code, subject to the provisions of section 290.01, subdivisions 
 46.14  19c to 19f, that is allocable to this state under section 
 46.15  290.17, 290.191, or 290.20; or 
 46.16     (2) the amount of the S corporation's federal taxable 
 46.17  income, as determined under section 1374(d)(4) of the Internal 
 46.18  Revenue Code, subject to the provisions of section 290.01, 
 46.19  subdivisions 19c to 19f, that is allocable to this state under 
 46.20  section 290.17, 290.191, or 290.20~~, less the deduction for~~ 
 46.21  ~~charitable contributions in section 290.21, subdivision 3~~. 
 46.22     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 46.23  beginning after December 31, 2000. 
 46.24     Sec. 22.  Minnesota Statutes 2000, section 298.01, 
 46.25  subdivision 3b, is amended to read: 
 46.26     Subd. 3b.  [DEDUCTIONS.] ~~(a)~~ For purposes of determining 
 46.27  taxable income under subdivision 3, the deductions from gross 
 46.28  income include only those expenses necessary to convert raw ores 
 46.29  to marketable quality.  Such expenses include costs associated 
 46.30  with refinement but do not include expenses such as 
 46.31  transportation, stockpiling, marketing, or marine insurance that 
 46.32  are incurred after marketable ores are produced, unless the 
 46.33  expenses are included in gross income. 
 46.34     (b) The provisions of section 290.01, subdivisions 19c, 
 46.35  ~~clauses (7) and (11)~~ clause (5), and 19d, ~~clauses (7) and~~ 
 46.36  ~~(12)~~ clause (8), are not used to determine taxable income. 
 47.1      <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 47.2   payable May 1, 2002, and thereafter. 
 47.3      Sec. 23.  Minnesota Statutes 2000, section 298.01, 
 47.4   subdivision 3d, is amended to read: 
 47.5      Subd. 3d.  [ALTERNATIVE MINIMUM TAX CREDIT.] A credit is 
 47.6   allowed against qualified regular tax for qualified alternative 
 47.7   minimum tax previously paid.  The amount of the credit allowed 
 47.8   under this subdivision is determined under section 290.0921, 
 47.9   subdivision 8.  For purposes of calculating this credit, the 
 47.10  following terms have the meanings given: 
 47.11     (a) "Qualified alternative minimum tax" means the amount of 
 47.12  alternative minimum tax determined under subdivision 3 and 
 47.13  Minnesota Statutes 2000, section 290.0921, subdivision 1. 
 47.14     (b) "Qualified regular tax" means the tax imposed under 
 47.15  subdivision 3 and section 290.06, subdivision 1. 
 47.16  Notwithstanding any provisions in this subdivision to the 
 47.17  contrary, this credit is only available through the tax year 
 47.18  ending December 31, 2002, for taxes payable on or before May 1, 
 47.19  2003.  This is not a refundable credit. 
 47.20     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 47.21  payable May 1, 2002, and thereafter. 
 47.22     Sec. 24.  Minnesota Statutes 2000, section 298.01, 
 47.23  subdivision 4c, is amended to read: 
 47.24     Subd. 4c.  [~~SPECIAL DEDUCTIONS~~ DEDUCTION FOR DEPRECIATION; 
 47.25  NET OPERATING LOSS.] (a) For purposes of determining taxable 
 47.26  income under subdivision 4, the following modifications are 
 47.27  allowed: 
 47.28     (1) the provisions of section 290.01, subdivisions 19c, 
 47.29  ~~clauses (7) and (11)~~ clause (5), and 19d, ~~clauses (7) and~~ 
 47.30  ~~(12)~~ clause (8), are not used to determine taxable income; and 
 47.31     (2) for assets placed in service before January 1, 1990, 
 47.32  the deduction for depreciation will be the same amount allowed 
 47.33  under chapter 290, except that after an asset has been fully 
 47.34  depreciated for federal income tax purposes any remaining 
 47.35  depreciable basis is allowed as a deduction using the 
 47.36  straight-line method over the following number of years: 
 48.1      (i) three-year property, one year; 
 48.2      (ii) five- and seven-year property, two years; 
 48.3      (iii) ten-year property, five years; and 
 48.4      (iv) all other property, seven years. 
 48.5      No deduction is allowed if an asset is fully depreciated 
 48.6   for occupation tax purposes before January 1990. 
 48.7      (b) For purposes of determining the deduction allowed under 
 48.8   paragraph (a), clause (2), the remaining depreciable basis of 
 48.9   property placed in service before January 1, 1990, is calculated 
 48.10  as follows: 
 48.11     (1) the adjusted basis of the property on December 31, 
 48.12  1989, which was used to calculate the hypothetical corporate 
 48.13  franchise tax under Minnesota Statutes 1988, section 298.40, 
 48.14  including salvage value; less 
 48.15     (2) deductions for depreciation allowed under section 
 48.16  290.01, subdivision 19e. 
 48.17     (c) The basis for determining gain or loss on sale or 
 48.18  disposition of assets placed in service before January 1, 1990, 
 48.19  is the basis determined under paragraph (b), less the deductions 
 48.20  allowed under paragraph (a), clause (2). 
 48.21     (d) The amount of net operating loss incurred in a taxable 
 48.22  year beginning before January 1, 1990, that may be carried over 
 48.23  to a taxable year beginning after December 31, 1989, is the 
 48.24  amount of net operating loss carryover determined in the 
 48.25  calculation of the hypothetical corporate franchise tax under 
 48.26  Minnesota Statutes 1988, sections 298.40 and 298.402. 
 48.27     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 48.28  payable May 1, 2002, and thereafter. 
 48.29     Sec. 25.  Minnesota Statutes 2000, section 298.01, 
 48.30  subdivision 4e, is amended to read: 
 48.31     Subd. 4e.  [ALTERNATIVE MINIMUM TAX CREDIT.] A credit is 
 48.32  allowed against qualified regular tax for qualified alternative 
 48.33  minimum tax previously paid.  The amount of the credit allowed 
 48.34  under this paragraph is determined under section 290.0921, 
 48.35  subdivision 8.  For purposes of calculating this credit, the 
 48.36  following terms have the meanings given: 
 49.1      (1) "Qualified alternative minimum tax" means the amount of 
 49.2   alternative minimum tax determined under subdivision 4d 
 49.3   and Minnesota Statutes 2000, section 290.0921, subdivision 1. 
 49.4      (2) "Qualified regular tax" means the tax imposed under 
 49.5   subdivision 4 and section 290.06, subdivision 1. 
 49.6   Notwithstanding any provisions in this subdivision to the 
 49.7   contrary, this credit is only available through the tax year 
 49.8   ending December 31, 2002, for taxes payable on or before May 1, 
 49.9   2003.  This is not a refundable credit. 
 49.10     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 49.11  payable May 1, 2002, and thereafter. 
 49.12     Sec. 26.  [REPEALER.] 
 49.13     (a) Minnesota Statutes 2000, sections 290.01, subdivision 
 49.14  6b; 290.0673; 290.0921, subdivisions 1, 2, 3, 4, 5, 6, and 7; 
 49.15  290.21; and 290.35, subdivisions 3, 4, and 5, are repealed. 
 49.16     (b) Minnesota Statutes 2000, section 298.01, subdivisions 
 49.17  3c and 4d, are repealed. 
 49.18     (c) Minnesota Statutes 2000, sections 469.132, subdivision 
 49.19  2; and 469.1734, subdivision 4, are repealed. 
 49.20     <b>[EFFECTIVE DATE.]</b> This section, paragraph (a), is effective 
 49.21  for tax years beginning after December 31, 2000.  This section, 
 49.22  paragraph (b), is effective for taxes payable May 1, 2002, and 
 49.23  thereafter.  This section, paragraph (c), is effective the day 
 49.24  following final enactment. 
 49.25                             ARTICLE 4 
 49.26                        PROPERTY TAX REFORM
 49.27     Section 1.  Minnesota Statutes 2000, section 126C.01, is 
 49.28  amended by adding a subdivision to read: 
 49.29     Subd. 12.  [RESIDENTIAL ASSESSED VALUE.] "Residential 
 49.30  assessed value" means the assessed value of the following 
 49.31  taxable properties located within the district, as defined in 
 49.32  section 273.13:  class 1a, 1b, and 1c properties, the house, 
 49.33  garage, and immediately surrounding one acre of land of class 2a 
 49.34  properties, class 4a properties, class 4b(1) properties, class 
 49.35  4b(3) properties, class 4bb properties, and class 4d properties. 
 49.36     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 50.1   payable in 2002 and thereafter. 
 50.2      Sec. 2.  Minnesota Statutes 2000, section 126C.01, is 
 50.3   amended by adding a subdivision to read: 
 50.4      Subd. 13.  [ADJUSTED RESIDENTIAL ASSESSED VALUE.] "Adjusted 
 50.5   residential assessed value" means the residential assessed value 
 50.6   of property located within the district as adjusted by the 
 50.7   commissioner of revenue under section 127A.48.  The adjusted 
 50.8   residential assessed value for a particular assessment year must 
 50.9   be used to compute referendum levy limitations under section 
 50.10  126C.17 for levies certified in the succeeding calendar year and 
 50.11  referendum aid for the school year beginning in the second 
 50.12  succeeding calendar year. 
 50.13     <b>[EFFECTIVE DATE.]</b> This section is effective for levies 
 50.14  certified in 2001 and aids payable for school years beginning in 
 50.15  2002, and thereafter. 
 50.16     Sec. 3.  Minnesota Statutes 2000, section 126C.01, is 
 50.17  amended by adding a subdivision to read: 
 50.18     Subd. 14.  [ADJUSTED ASSESSED VALUE.] "Adjusted assessed 
 50.19  value" means the assessed value of property located within the 
 50.20  district as adjusted by the commissioner of revenue under 
 50.21  section 127A.48.  The adjusted assessed value for a particular 
 50.22  assessment year must be used to compute levy limitations for 
 50.23  levies certified in the succeeding calendar year and aid for the 
 50.24  school year beginning in the second succeeding calendar year. 
 50.25     <b>[EFFECTIVE DATE.]</b> This section is effective for levies 
 50.26  certified in 2001 and aid payable for school years beginning in 
 50.27  2002, and thereafter. 
 50.28     Sec. 4.  [126C.02] [SCHOOL DISTRICT LEVY ADJUSTMENTS.] 
 50.29     Subdivision 1.  [TRANSITION ADJUSTMENTS.] For taxes payable 
 50.30  in 2002 and thereafter, the commissioner of children, families, 
 50.31  and learning shall, in consultation with the commissioner of 
 50.32  revenue, make the adjustments required by this section. 
 50.33     Subd. 2.  [REVENUE CONVERSION.] Each school district's 
 50.34  revenue authority that is established as a rate times net tax 
 50.35  capacity or adjusted net tax capacity under chapter 126C, shall 
 50.36  be adjusted by multiplying each revenue amount by the ratio of 
 51.1   the statewide net tax capacity as calculated using the class 
 51.2   rates in effect for assessment year 2001 to the statewide 
 51.3   assessed value using the class rates for the assessment year 
 51.4   related to the taxes payable year for which the revenue 
 51.5   authority is being determined. 
 51.6      Subd. 3.  [TAX RATE ADJUSTMENT.] Each tax rate established 
 51.7   under chapters 123B and 124D shall be adjusted by multiplying 
 51.8   the rate by the ratio of the statewide tax capacity as 
 51.9   calculated using the class rates in effect for assessment year 
 51.10  2001 to the statewide assessed value using the class rates for 
 51.11  the assessment year related to the taxes payable year for which 
 51.12  the rate is being determined. 
 51.13     Subd. 4.  [EQUALIZING FACTORS.] Each equalizing factor 
 51.14  established under chapters 123B, 124D, and 126C, excluding 
 51.15  sections 126C.10, subdivision 21, and 126C.17, subdivision 6, 
 51.16  shall be adjusted by dividing the equalizing factor by the ratio 
 51.17  of the statewide tax capacity as calculated using the class 
 51.18  rates in effect for assessment year 2001 to the statewide 
 51.19  assessed value using the class rates for the assessment year 
 51.20  related to the taxes payable year for which the factor is being 
 51.21  determined. 
 51.22     Subd. 5.  [QUALIFYING RATE.] Each qualifying rate under 
 51.23  section 123B.51, subdivision 3, shall be adjusted by multiplying 
 51.24  the qualifying rate times the ratio of the statewide tax 
 51.25  capacity, as calculated using the class rates in effect for 
 51.26  assessment year 2001, to the statewide assessed value using the 
 51.27  class rates for the assessment year related to the taxes payable 
 51.28  year for which the rate is being determined. 
 51.29     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 51.30  payable in 2002 and thereafter. 
 51.31     Sec. 5.  Minnesota Statutes 2000, section 126C.13, 
 51.32  subdivision 1, is amended to read: 
 51.33     Subdivision 1.  [GENERAL EDUCATION TAX RATE.] The 
 51.34  commissioner must establish the general education tax rate by 
 51.35  July 1 of each year for levies payable in the following year.  
 51.36  The general education tax capacity rate must be a rate, rounded 
 52.1   up to the nearest hundredth of a percent, that, when applied to 
 52.2   the adjusted net tax capacity for all districts, raises the 
 52.3   amount specified in this subdivision.  The general education tax 
 52.4   rate must be the rate that raises $1,330,000,000 for fiscal year 
 52.5   2001 and fiscal year 2002, and zero for later fiscal years.  The 
 52.6   general education tax rate may not be changed due to changes or 
 52.7   corrections made to a district's adjusted net tax capacity after 
 52.8   the tax rate has been established.  
 52.9      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 52.10  following final enactment. 
 52.11     Sec. 6.  Minnesota Statutes 2000, section 126C.13, 
 52.12  subdivision 2, is amended to read: 
 52.13     Subd. 2.  [GENERAL EDUCATION LEVY.] To obtain general 
 52.14  education revenue, excluding transition revenue and supplemental 
 52.15  revenue, a district may levy an amount not to exceed the general 
 52.16  education tax rate times the adjusted net tax capacity of the 
 52.17  district for the preceding year.  If the amount of the general 
 52.18  education levy would exceed the general education revenue, 
 52.19  excluding transition revenue and supplemental revenue, the 
 52.20  general education levy must be determined according to 
 52.21  subdivision 3.  For taxes payable in 2002 and thereafter, the 
 52.22  general education levy amount authorized by this subdivision for 
 52.23  all districts is zero. 
 52.24     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 52.25  payable in 2002 and thereafter. 
 52.26     Sec. 7.  Minnesota Statutes 2000, section 126C.13, 
 52.27  subdivision 4, is amended to read: 
 52.28     Subd. 4.  [GENERAL EDUCATION AID.] (a) For fiscal year 
 52.29  2002, a district's general education aid is the sum of the 
 52.30  following amounts:  
 52.31     (1) the product of (i) the difference between the general 
 52.32  education revenue, excluding transition revenue and supplemental 
 52.33  revenue, and the general education levy, times (ii) the ratio of 
 52.34  the actual amount levied to the permitted levy; 
 52.35     (2) transition aid according to section 126C.10, 
 52.36  subdivision 22; 
 53.1      (3) supplemental aid according to section ~~127A.49~~ 126C.10, 
 53.2   subdivision 11; 
 53.3      (4) shared time aid according to section 126C.01, 
 53.4   subdivision 7; and 
 53.5      (5) referendum aid according to section 126C.17. 
 53.6      (b) For fiscal year 2003 and later, a district's general 
 53.7   education aid is the sum of the following amounts: 
 53.8      (1) the general education revenue according to section 
 53.9   126C.10, subdivision 1, excluding transition revenue; 
 53.10     (2) transition aid according to section 126C.10, 
 53.11  subdivision 22; 
 53.12     (3) shared time aid according to section 126C.01, 
 53.13  subdivision 7; and 
 53.14     (4) referendum aid according to section 126C.17. 
 53.15     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2001, 
 53.16  and thereafter. 
 53.17     Sec. 8.  Minnesota Statutes 2000, section 126C.17, 
 53.18  subdivision 5, is amended to read: 
 53.19     Subd. 5.  [REFERENDUM EQUALIZATION REVENUE.] (a) For fiscal 
 53.20  year 2002, a district's referendum equalization revenue equals 
 53.21  the ~~referendum equalization allowance~~ lesser of the district's 
 53.22  referendum allowance under subdivision 1 or $415 times the 
 53.23  district's resident marginal cost pupil units for that 
 53.24  year.  For fiscal year 2003 and later, a district's referendum 
 53.25  equalization revenue equals the sum of the first tier referendum 
 53.26  equalization revenue and the second tier referendum equalization 
 53.27  revenue.  
 53.28     (b) ~~The~~ A district's first tier referendum equalization 
 53.29  revenue equals the district's first tier referendum equalization 
 53.30  allowance times the district's resident marginal cost pupil 
 53.31  units for that year. 
 53.32     (c) A district's first tier referendum equalization 
 53.33  allowance equals ~~$350 for fiscal year 2000 and $415 for fiscal~~ 
 53.34  ~~year 2001 and later.~~ 
 53.35     ~~(c) Referendum equalization revenue must not exceed a~~ 
 53.36  ~~district's total referendum revenue for that year~~ the lesser of 
 54.1   the district's referendum allowance under subdivision 1 or $600. 
 54.2      (d) A district's second tier referendum equalization 
 54.3   allowance equals the lesser of the district's referendum 
 54.4   allowance under subdivision 1 or 25 percent of the formula 
 54.5   allowance, minus the district's first tier referendum 
 54.6   equalization allowance. 
 54.7      <b>[EFFECTIVE DATE.]</b> This section is effective for fiscal year 
 54.8   2002 and thereafter. 
 54.9      Sec. 9.  Minnesota Statutes 2000, section 126C.17, 
 54.10  subdivision 6, is amended to read: 
 54.11     Subd. 6.  [REFERENDUM EQUALIZATION LEVY.] (a) A district's 
 54.12  referendum equalization levy for a ~~referendum levied against the~~ 
 54.13  ~~referendum market value of all taxable property as defined in~~ 
 54.14  ~~section 126C.01, subdivision 3~~ fiscal year 2002, equals the 
 54.15  district's referendum equalization revenue times the lesser of 
 54.16  one or the ratio of the district's referendum market value per 
 54.17  resident marginal cost pupil unit to $476,000. 
 54.18     (b) For fiscal year 2003 and later, a district's referendum 
 54.19  equalization levy ~~for a referendum levied against the net tax~~ 
 54.20  ~~capacity of all taxable property equals the district's~~ 
 54.21  ~~referendum equalization revenue times the lesser of one or the~~ 
 54.22  ~~ratio of the district's adjusted net tax capacity per resident~~ 
 54.23  ~~marginal cost pupil unit to $8,404~~ equals the sum of the first 
 54.24  tier referendum equalization levy and the second tier referendum 
 54.25  equalization levy. 
 54.26     (c) A district's first tier referendum equalization levy 
 54.27  equals the district's first tier referendum equalization revenue 
 54.28  times the lesser of one or the ratio of the district's adjusted 
 54.29  residential assessed value per resident marginal cost pupil unit 
 54.30  to $6,400. 
 54.31     (d) A district's second tier referendum equalization levy 
 54.32  equals the district's second tier revenue times the lesser of 
 54.33  one or the ratio of the district's adjusted residential assessed 
 54.34  value per resident marginal cost pupil unit to $4,265. 
 54.35     <b>[EFFECTIVE DATE.]</b> This section is effective for fiscal year 
 54.36  2002 and thereafter. 
 55.1      Sec. 10.  Minnesota Statutes 2000, section 126C.17, 
 55.2   subdivision 7, is amended to read: 
 55.3      Subd. 7.  [REFERENDUM EQUALIZATION AID.] (a) A district's 
 55.4   referendum equalization aid equals the difference between its 
 55.5   referendum equalization revenue and levy. 
 55.6      (b) If a district's actual levy for first or second tier 
 55.7   referendum equalization revenue is less than its maximum levy 
 55.8   limit for that tier, aid for that tier shall be proportionately 
 55.9   reduced. 
 55.10     <b>[EFFECTIVE DATE.]</b> This section is effective for fiscal year 
 55.11  2003 and thereafter. 
 55.12     Sec. 11.  Minnesota Statutes 2000, section 126C.17, 
 55.13  subdivision 8, is amended to read: 
 55.14     Subd. 8.  [UNEQUALIZED REFERENDUM LEVY.] Each year, a 
 55.15  district may levy an amount equal to the difference between its 
 55.16  total referendum revenue according to subdivision ~~5~~ 4 and its 
 55.17  ~~equalized referendum aid and levy according to subdivisions 6~~ 
 55.18  ~~and 7~~ referendum equalization revenue according to subdivision 5.
 55.19     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 55.20  payable in 2002 and thereafter. 
 55.21     Sec. 12.  Minnesota Statutes 2000, section 126C.17, 
 55.22  subdivision 9, is amended to read: 
 55.23     Subd. 9.  [REFERENDUM REVENUE.] (a) The revenue authorized 
 55.24  by section 126C.10, subdivision 1, may be increased in the 
 55.25  amount approved by the voters of the district at a referendum 
 55.26  called for the purpose.  The referendum may be called by the 
 55.27  board or shall be called by the board upon written petition of 
 55.28  qualified voters of the district.  The referendum must be 
 55.29  conducted one or two calendar years before the increased levy 
 55.30  authority, if approved, first becomes payable.  Only one 
 55.31  election to approve an increase may be held in a calendar year.  
 55.32  Unless the referendum is conducted by mail under paragraph (g), 
 55.33  the referendum must be held on the first Tuesday after the first 
 55.34  Monday in November.  The ballot must state the maximum amount of 
 55.35  the increased revenue per resident marginal cost pupil unit, the 
 55.36  estimated referendum tax mill rate ~~as a percentage of referendum~~ 
 56.1   ~~market value~~ in the first year it is to be levied, and that the 
 56.2   revenue must be used to finance school operations.  The ballot 
 56.3   may state a schedule, determined by the board, of increased 
 56.4   revenue per resident marginal cost pupil unit that differs from 
 56.5   year to year over the number of years for which the increased 
 56.6   revenue is authorized.  If the ballot contains a schedule 
 56.7   showing different amounts, it must also indicate the estimated 
 56.8   referendum tax mill rate ~~as a percent of referendum market value~~ 
 56.9   for the amount specified for the first year and for the maximum 
 56.10  amount specified in the schedule.  The ballot may state that 
 56.11  existing referendum levy authority is expiring.  In this case, 
 56.12  the ballot may also compare the proposed levy authority to the 
 56.13  existing expiring levy authority, and express the proposed 
 56.14  increase as the amount, if any, over the expiring referendum 
 56.15  levy authority.  The ballot must designate the specific number 
 56.16  of years, not to exceed ten, for which the referendum 
 56.17  authorization applies.  The notice required under section 275.60 
 56.18  may be modified to read, in cases of renewing existing levies: 
 56.19     "BY VOTING "YES" ON THIS BALLOT QUESTION, YOU MAY BE VOTING 
 56.20     FOR A PROPERTY TAX INCREASE." 
 56.21     The ballot may contain a textual portion with the 
 56.22  information required in this subdivision and a question stating 
 56.23  substantially the following:  
 56.24     "Shall the increase in the revenue proposed by (petition 
 56.25  to) the board of ........., School District No. .., be approved?"
 56.26     If approved, an amount equal to the approved revenue per 
 56.27  resident marginal cost pupil unit times the resident marginal 
 56.28  cost pupil units for the school year beginning in the year after 
 56.29  the levy is certified shall be authorized for certification for 
 56.30  the number of years approved, if applicable, or until revoked or 
 56.31  reduced by the voters of the district at a subsequent referendum.
 56.32     (b) The board must prepare and deliver by first class mail 
 56.33  at least 15 days but no more than 30 days before the day of the 
 56.34  referendum to each taxpayer a notice of the referendum and the 
 56.35  proposed revenue increase.  The board need not mail more than 
 56.36  one notice to any taxpayer.  For the purpose of giving mailed 
 57.1   notice under this subdivision, owners must be those shown to be 
 57.2   owners on the records of the county auditor or, in any county 
 57.3   where tax statements are mailed by the county treasurer, on the 
 57.4   records of the county treasurer.  Every property owner whose 
 57.5   name does not appear on the records of the county auditor or the 
 57.6   county treasurer is deemed to have waived this mailed notice 
 57.7   unless the owner has requested in writing that the county 
 57.8   auditor or county treasurer, as the case may be, include the 
 57.9   name on the records for this purpose.  The notice must project 
 57.10  the anticipated amount of tax increase in annual dollars and 
 57.11  annual ~~percentage~~ mill rates for typical residential homesteads, 
 57.12  agricultural homesteads, and apartments~~, and~~ 
 57.13  ~~commercial-industrial property~~ within the school district. 
 57.14     The notice for a referendum may state that an existing 
 57.15  referendum levy is expiring and project the anticipated amount 
 57.16  of increase over the existing referendum levy in the first year, 
 57.17  if any, in annual dollars and annual ~~percentage~~ mill rates for 
 57.18  typical residential homesteads, agricultural homesteads, and 
 57.19  apartments~~, and commercial-industrial property~~ within the 
 57.20  district. 
 57.21     The notice must include the following statement:  "Passage 
 57.22  of this referendum will result in an increase in your property 
 57.23  taxes."  However, in cases of renewing existing levies, the 
 57.24  notice may include the following statement:  "Passage of this 
 57.25  referendum may result in an increase in your property taxes." 
 57.26     (c) A referendum on the question of revoking or reducing 
 57.27  the increased revenue amount authorized pursuant to paragraph 
 57.28  (a) may be called by the board and shall be called by the board 
 57.29  upon the written petition of qualified voters of the district.  
 57.30  A referendum to revoke or reduce the levy amount must be based 
 57.31  upon the dollar ~~amount, local tax rate, or~~ amount per resident 
 57.32  marginal cost pupil unit, that was stated to be the basis for 
 57.33  the initial authorization.  Revenue approved by the voters of 
 57.34  the district pursuant to paragraph (a) must be received at least 
 57.35  once before it is subject to a referendum on its revocation or 
 57.36  reduction for subsequent years.  Only one revocation or 
 58.1   reduction referendum may be held to revoke or reduce referendum 
 58.2   revenue for any specific year and for years thereafter. 
 58.3      (d) A petition authorized by paragraph (a) or (c) is 
 58.4   effective if signed by a number of qualified voters in excess of 
 58.5   15 percent of the registered voters of the district on the day 
 58.6   the petition is filed with the board.  A referendum invoked by 
 58.7   petition must be held on the date specified in paragraph (a). 
 58.8      (e) The approval of 50 percent plus one of those voting on 
 58.9   the question is required to pass a referendum authorized by this 
 58.10  subdivision. 
 58.11     (f) At least 15 days before the day of the referendum, the 
 58.12  district must submit a copy of the notice required under 
 58.13  paragraph (b) to the commissioner and to the county auditor of 
 58.14  each county in which the district is located.  Within 15 days 
 58.15  after the results of the referendum have been certified by the 
 58.16  board, or in the case of a recount, the certification of the 
 58.17  results of the recount by the canvassing board, the district 
 58.18  must notify the commissioner of the results of the referendum. 
 58.19     (g) Except for a referendum held under subdivision 11, any 
 58.20  referendum under this section held on a day other than the first 
 58.21  Tuesday after the first Monday in November must be conducted by 
 58.22  mail in accordance with section 204B.46.  Notwithstanding 
 58.23  paragraph (b) to the contrary, in the case of a referendum 
 58.24  conducted by mail under this paragraph, the notice required by 
 58.25  paragraph (b) must be prepared and delivered by first class mail 
 58.26  at least 20 days before the referendum. 
 58.27     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 58.28  following final enactment. 
 58.29     Sec. 13.  Minnesota Statutes 2000, section 126C.17, 
 58.30  subdivision 10, is amended to read: 
 58.31     Subd. 10.  [SCHOOL REFERENDUM LEVY; ~~MARKET~~ RESIDENTIAL 
 58.32  ASSESSED VALUE.] Notwithstanding the provisions of subdivision 
 58.33  9, a school referendum levy ~~approved after November 1, 1992,~~ for 
 58.34  taxes payable in ~~1993~~ 2002 and thereafter, must be levied 
 58.35  against the ~~referendum market value~~ residential assessed value 
 58.36  of ~~all~~ taxable property as defined in section 126C.01, 
 59.1   subdivision ~~3~~ 12.  Any referendum levy amount subject to the 
 59.2   requirements of this subdivision must be certified separately to 
 59.3   the county auditor under section 275.07. 
 59.4      All other provisions of subdivision 9 that do not conflict 
 59.5   with this subdivision apply to referendum levies under this 
 59.6   subdivision.  
 59.7      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 59.8   following final enactment. 
 59.9      Sec. 14.  Minnesota Statutes 2000, section 127A.48, 
 59.10  subdivision 1, is amended to read: 
 59.11     Subdivision 1.  [COMPUTATION.] The department of revenue 
 59.12  must annually conduct an assessment/sales ratio study of the 
 59.13  taxable property in each school district in accordance with the 
 59.14  procedures in subdivisions 2 and 3.  Based upon the results of 
 59.15  this assessment/sales ratio study, the department of revenue 
 59.16  must determine an aggregate equalized ~~net tax capacity~~ assessed 
 59.17  value for the various classes of taxable property in each 
 59.18  district, which ~~tax capacity~~ assessed value shall be designated 
 59.19  as the adjusted ~~net tax capacity~~ assessed value.  The 
 59.20  adjusted ~~net tax capacities~~ assessed values shall be determined 
 59.21  using the ~~net tax capacity percentages~~ class rates in effect for 
 59.22  the assessment year following the assessment year of the study.  
 59.23  The department of revenue must make whatever estimates are 
 59.24  necessary to account for changes in the classification system.  
 59.25  The department of revenue may incur the expense necessary to 
 59.26  make the determinations.  The commissioner of revenue may 
 59.27  reimburse any county or governmental official for requested 
 59.28  services performed in ascertaining the adjusted ~~net tax capacity~~ 
 59.29  assessed value.  On or before March 15 annually, the department 
 59.30  of revenue shall file with the chair of the tax committee of the 
 59.31  house of representatives and the chair of the committee on taxes 
 59.32  and tax laws of the senate a report of adjusted ~~net tax~~ 
 59.33  ~~capacities~~ assessed values.  On or before June 15 annually, the 
 59.34  department of revenue shall file its final report on the 
 59.35  adjusted ~~net tax capacities~~ assessed values established by the 
 59.36  previous year's assessments and the current year's ~~net tax~~ 
 60.1   ~~capacity percentages~~ class rates with the commissioner of 
 60.2   children, families, and learning and each county auditor for 
 60.3   those districts for which the auditor has the responsibility for 
 60.4   determination of local tax rates.  A copy of the report so filed 
 60.5   shall be mailed to the clerk of each district involved and to 
 60.6   the county assessor or supervisor of assessments of the county 
 60.7   or counties in which each district is located. 
 60.8      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 60.9   following final enactment. 
 60.10     Sec. 15.  Minnesota Statutes 2000, section 272.02, 
 60.11  subdivision 7, is amended to read: 
 60.12     Subd. 7.  [INSTITUTIONS OF PUBLIC CHARITY.] 
 60.13  ~~Institutions~~ Property of an institution of purely public charity 
 60.14  ~~are~~, or property that would be listed for taxation in the name 
 60.15  of an institution of purely public charity under section 272.01, 
 60.16  subdivision 2, or 273.19, and that is used for the charitable 
 60.17  purposes of such institution, is exempt ~~except parcels of~~ 
 60.18  ~~property containing structures and the~~.  However, land and 
 60.19  structures ~~described in section~~ that qualify, or that could 
 60.20  qualify under sections 273.13, subdivision 25, paragraph 
 60.21  (e), and 462A.071, other than those that qualify for exemption 
 60.22  under subdivision 26, are not exempt. 
 60.23     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 60.24  payable in 2002 and thereafter. 
 60.25     Sec. 16.  Minnesota Statutes 2000, section 272.02, 
 60.26  subdivision 10, is amended to read: 
 60.27     Subd. 10.  [PERSONAL PROPERTY USED FOR POLLUTION CONTROL.] 
 60.28  Personal property used primarily for the abatement and control 
 60.29  of air, water, or land pollution is exempt to the extent that it 
 60.30  is so used, and real property is exempt if it is used primarily 
 60.31  for abatement and control of air, water, or land pollution as 
 60.32  part of an agricultural operation, as a part of a centralized 
 60.33  treatment and recovery facility operating under a permit issued 
 60.34  by the Minnesota pollution control agency pursuant to chapters 
 60.35  115 and 116 and Minnesota Rules, parts 7001.0500 to 7001.0730, 
 60.36  and 7045.0020 to 7045.1260, as a wastewater treatment facility 
 61.1   and for the treatment, recovery, and stabilization of metals, 
 61.2   oils, chemicals, water, sludges, or inorganic materials from 
 61.3   hazardous industrial wastes, or as part of an electric 
 61.4   generation system.  For purposes of this subdivision, personal 
 61.5   property includes ponderous machinery and equipment used in a 
 61.6   business or production activity that at common law is considered 
 61.7   real property. 
 61.8      Any taxpayer requesting exemption of all or a portion of 
 61.9   any real property or any equipment or device, or part thereof, 
 61.10  operated primarily for the control or abatement of air ~~or~~, 
 61.11  water, or land pollution shall file an application with the 
 61.12  commissioner of revenue.  ~~The equipment or device shall meet~~ 
 61.13  ~~standards, rules, or criteria prescribed by the Minnesota~~ 
 61.14  ~~pollution control agency, and must be installed or operated in~~ 
 61.15  ~~accordance with a permit or order issued by that agency.~~  The 
 61.16  Minnesota pollution control agency shall upon request of the 
 61.17  commissioner furnish information ~~or~~ and advice to the 
 61.18  commissioner.  
 61.19     The information and advice furnished by the Minnesota 
 61.20  pollution control agency must include statements as to whether 
 61.21  the equipment, device, or real property meets a standard, rule, 
 61.22  criteria, guideline, policy, or order of the Minnesota pollution 
 61.23  control agency, and whether the equipment, device, or real 
 61.24  property is installed or operated in accordance with it.  On 
 61.25  determining that property qualifies for exemption, the 
 61.26  commissioner shall issue an order exempting the property from 
 61.27  taxation.  The equipment ~~or~~, device, or real property shall 
 61.28  continue to be exempt from taxation as long as the ~~permit~~ order 
 61.29  issued by the ~~Minnesota pollution control agency~~ commissioner 
 61.30  remains in effect. 
 61.31     <b>[EFFECTIVE DATE.]</b> This section is effective for exemption 
 61.32  applications received on or after July 1, 2001.  
 61.33     Sec. 17.  Minnesota Statutes 2000, section 273.061, 
 61.34  subdivision 1, is amended to read: 
 61.35     Subdivision 1.  [OFFICE CREATED; APPOINTMENT, 
 61.36  QUALIFICATIONS.] Every county in this state shall have a county 
 62.1   assessor.  The county assessor shall be appointed by the board 
 62.2   of county commissioners.  The assessor shall be selected and 
 62.3   appointed because of knowledge and training in the field of 
 62.4   property taxation and appointment shall be approved by the 
 62.5   commissioner of revenue before the same shall become effective.  
 62.6   Upon receipt by the county commissioners of the commissioner of 
 62.7   revenue's refusal to approve an appointment, the term of the 
 62.8   appointee shall terminate at the end of that day.  
 62.9      The commissioner of revenue may grant approval on a 
 62.10  probationary basis for a period of two years.  The commissioner 
 62.11  must base the decision to impose a probationary period on 
 62.12  objective and consistent criteria.  At the end of the two-year 
 62.13  probationary period, the commissioner may either refuse to 
 62.14  approve the person's appointment for the remainder of the 
 62.15  person's four-year term, approve the person's appointment but 
 62.16  only for another two-year probationary period, or 
 62.17  unconditionally approve the person's appointment for the 
 62.18  remainder of the four-year term for which the person was 
 62.19  originally appointed by the county board.  The criteria shall 
 62.20  not be considered rules and are not subject to the 
 62.21  Administrative Procedure Act. 
 62.22     Notwithstanding any law to the contrary, a county assessor 
 62.23  must have senior accreditation from the state board of assessors 
 62.24  by January 1, 1992, or within two years of the assessor's first 
 62.25  appointment under this section, whichever is later. 
 62.26     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 62.27  following final enactment. 
 62.28     Sec. 18.  Minnesota Statutes 2000, section 273.061, 
 62.29  subdivision 2, is amended to read: 
 62.30     Subd. 2.  [TERM; VACANCY.] (a) The terms of county 
 62.31  assessors appointed under this section shall be four years.  A 
 62.32  new term shall begin on January 1 of every fourth year after 
 62.33  1973.  When any vacancy in the office occurs, the board of 
 62.34  county commissioners, within ~~30~~ 90 days thereafter, shall fill 
 62.35  the same by appointment for the remainder of the term, following 
 62.36  the procedure prescribed in subdivision 1.  The term of the 
 63.1   county assessor may be terminated by the board of county 
 63.2   commissioners at any time, on charges of ~~inefficiency or neglect~~ 
 63.3   ~~of duty~~ malfeasance, misfeasance, or nonfeasance by the 
 63.4   commissioner of revenue.  If the board of county commissioners 
 63.5   does not intend to reappoint a county assessor who has been 
 63.6   certified by the state board of assessors, the board shall 
 63.7   present written notice to the county assessor not later than 90 
 63.8   days prior to the termination of the assessor's term, that it 
 63.9   does not intend to reappoint the assessor.  If written notice is 
 63.10  not timely made, the county assessor will automatically be 
 63.11  reappointed by the board of county commissioners. 
 63.12     The commissioner of revenue may recommend to the state 
 63.13  board of assessors the nonrenewal, suspension, or revocation of 
 63.14  an assessor's license as provided in sections 270.41 to 270.53.  
 63.15     (b) In the event of a vacancy in the office of county 
 63.16  assessor, through death, resignation or other reasons, the 
 63.17  deputy (or chief deputy, if more than one) shall perform the 
 63.18  functions of the office.  If there is no deputy, the county 
 63.19  auditor shall designate a person to perform the duties of the 
 63.20  office until an appointment is made as provided in clause (a).  
 63.21  Such person shall perform the duties of the office for a period 
 63.22  not exceeding ~~30~~ 90 days during which the county board must 
 63.23  appoint a county assessor.  Such ~~30-day~~ 90-day period may, 
 63.24  however, be extended by written approval of the commissioner of 
 63.25  revenue. 
 63.26     (c) In the case of the first appointment under paragraph 
 63.27  (a) of a county assessor who is accredited but who does not have 
 63.28  senior accreditation, an approval of the appointment by the 
 63.29  commissioner shall be provisional, provided that a county 
 63.30  assessor appointed to a provisional term under this paragraph 
 63.31  must reapply to the commissioner at the end of the provisional 
 63.32  term.  A provisional term may not exceed two years.  The 
 63.33  commissioner shall not approve the appointment for the remainder 
 63.34  of the four-year term unless the assessor has obtained senior 
 63.35  accreditation. 
 63.36     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 64.1   following final enactment. 
 64.2      Sec. 19.  Minnesota Statutes 2000, section 273.061, 
 64.3   subdivision 8, is amended to read: 
 64.4      Subd. 8.  [POWERS AND DUTIES.] The county assessor shall 
 64.5   have the following powers and duties: 
 64.6      (1) To call upon and confer with the township and city 
 64.7   assessors in the county, and advise and give them the necessary 
 64.8   instructions and directions as to their duties under the laws of 
 64.9   this state, to the end that a uniform assessment of all real 
 64.10  property in the county will be attained. 
 64.11     (2) To assist and instruct the local assessors in the 
 64.12  preparation and proper use of land maps and record cards, in the 
 64.13  property classification of real and personal property, and in 
 64.14  the determination of proper standards of value. 
 64.15     (3) To keep the local assessors in the county advised of 
 64.16  all changes in assessment laws and all instructions which the 
 64.17  assessor receives from the commissioner of revenue relating to 
 64.18  their duties. 
 64.19     (4) To ~~have authority to~~ require the attendance of groups 
 64.20  of local assessors at sectional meetings called by the assessor 
 64.21  for the purpose of giving them further assistance and 
 64.22  instruction as to their duties. 
 64.23     (5) To require the attendance of all licensed assessors 
 64.24  working in that county at instructional meetings attended by the 
 64.25  department of revenue regional representative to provide 
 64.26  assistance and instruction as to their duties under the law and 
 64.27  the proper implementation of assessment procedures. 
 64.28     (6) To immediately commence the preparation of a large 
 64.29  scale topographical land map of the county, in such form as may 
 64.30  be prescribed by the commissioner of revenue, showing thereon 
 64.31  the location of all railroads, highways and roads, bridges, 
 64.32  rivers and lakes, swamp areas, wooded tracts, stony ridges and 
 64.33  other features which might affect the value of the land.  
 64.34  Appropriate symbols shall be used to indicate the best, the 
 64.35  fair, and the poor land of the county.  For use in connection 
 64.36  with the topographical land map, the assessor shall prepare and 
 65.1   keep available in the assessor's office tables showing fair 
 65.2   average minimum and maximum market values per acre of 
 65.3   cultivated, meadow, pasture, cutover, timber and waste lands of 
 65.4   each township.  The assessor shall keep the map and tables 
 65.5   available in the office for the guidance of town assessors, 
 65.6   boards of review, and the county board of equalization. 
 65.7      ~~(6)~~ (7) To also prepare and keep available in the office 
 65.8   for the guidance of town assessors, boards of review and the 
 65.9   county board of equalization, a land valuation map of the 
 65.10  county, in such form as may be prescribed by the commissioner of 
 65.11  revenue.  This map, which shall include the bordering tier of 
 65.12  townships of each county adjoining, shall show the average 
 65.13  market value per acre, both with and without improvements, as 
 65.14  finally equalized in the last assessment of real estate, of all 
 65.15  land in each town or unorganized township which lies outside the 
 65.16  corporate limits of cities.  
 65.17     ~~(7)~~ (8) To regularly examine all conveyances of land 
 65.18  outside the corporate limits of cities of the first and second 
 65.19  class, filed with the county recorder of the county, and keep a 
 65.20  file, by descriptions, of the considerations shown thereon.  
 65.21  From the information obtained by comparing the considerations 
 65.22  shown with the market values assessed, the assessor shall make 
 65.23  recommendations to the county board of equalization of necessary 
 65.24  changes in individual assessments or aggregate valuations. 
 65.25     ~~(8)~~ (9) To become familiar with the values of the different 
 65.26  items of personal property so as to be in a position when called 
 65.27  upon to advise the boards of review and the county board of 
 65.28  equalization concerning property, market values thereof. 
 65.29     ~~(9)~~ (10) While the county board of equalization is in 
 65.30  session, to give it every possible assistance to enable it to 
 65.31  perform its duties.  The assessor shall furnish the board with 
 65.32  all necessary charts, tables, comparisons, and data which it 
 65.33  requires in its deliberations, and shall make whatever 
 65.34  investigations the board may desire. 
 65.35     ~~(10)~~ (11) At the request of either the board of county 
 65.36  commissioners or the commissioner of revenue, to investigate 
 66.1   applications for reductions of valuation and abatements and 
 66.2   settlements of taxes, examine the real or personal property 
 66.3   involved, and submit written reports and recommendations with 
 66.4   respect to the applications, in such form as may be prescribed 
 66.5   by the board of county commissioners and commissioner of revenue.
 66.6      ~~(11)~~ (12) To make diligent search each year for real and 
 66.7   personal property which has been omitted from assessment in the 
 66.8   county, and report all such omissions to the county auditor. 
 66.9      ~~(12)~~ (13) To regularly confer with county assessors in all 
 66.10  adjacent counties about the assessment of property in order to 
 66.11  uniformly assess and equalize the value of similar properties 
 66.12  and classes of property located in adjacent counties.  The 
 66.13  conference shall emphasize the assessment of agricultural and 
 66.14  commercial and industrial property or other properties that may 
 66.15  have an inadequate number of sales in a single county. 
 66.16     ~~(13)~~ (14) To render such other services pertaining to the 
 66.17  assessment of real and personal property in the county as are 
 66.18  not inconsistent with the duties set forth in this section, and 
 66.19  as may be required by the board of county commissioners or by 
 66.20  the commissioner of revenue. 
 66.21     ~~(14)~~ (15) To maintain a record, in conjunction with other 
 66.22  county offices, of all transfers of property to assist in 
 66.23  determining the proper classification of property, including but 
 66.24  not limited to, transferring homestead property and name changes 
 66.25  on homestead property. 
 66.26     ~~(15)~~ (16) To determine if a homestead application is 
 66.27  required due to the transfer of homestead property or an owner's 
 66.28  name change on homestead property. 
 66.29     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2001, 
 66.30  and thereafter. 
 66.31     Sec. 20.  [273.0755] [TRAINING AND EDUCATION OF PROPERTY 
 66.32  TAX PERSONNEL.] 
 66.33     (a) Beginning with the four-year period starting on July 1, 
 66.34  2000, every person licensed by the state board of assessors at 
 66.35  the Accredited Minnesota Assessor level or higher, shall 
 66.36  successfully complete a week-long Minnesota laws course 
 67.1   sponsored by the department of revenue at least once in every 
 67.2   four-year period.  An assessor need not attend the course if 
 67.3   they successfully pass the test for the course. 
 67.4      (b) The commissioner of revenue may require that each 
 67.5   county, and each city for which the city assessor performs the 
 67.6   duties of county assessor, have (i) a person on the assessor's 
 67.7   staff who is certified by the department of revenue in sales 
 67.8   ratio calculations, (ii) an officer or employee who is certified 
 67.9   by the department of revenue in tax calculations, and (iii) an 
 67.10  officer or employee who is certified by the department of 
 67.11  revenue in the proper preparation of abstracts of assessment.  
 67.12  The commissioner of revenue may require that each county have an 
 67.13  officer or employee who is certified by the department of 
 67.14  revenue in the proper preparation of abstracts of tax lists. 
 67.15     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2001, 
 67.16  and thereafter. 
 67.17     Sec. 21.  Minnesota Statutes 2000, section 273.11, 
 67.18  subdivision 1a, is amended to read: 
 67.19     Subd. 1a.  [LIMITED MARKET VALUE.] (a) In the case of all 
 67.20  property classified as agricultural homestead or nonhomestead, 
 67.21  residential homestead or nonhomestead, or noncommercial seasonal 
 67.22  recreational residential, the assessor shall compare the value 
 67.23  with that determined in the preceding assessment.  The amount of 
 67.24  the increase entered in the current assessment shall not exceed 
 67.25  the greater of (1) 8.5 percent of the value in the preceding 
 67.26  assessment, or (2) 15 percent of the difference between the 
 67.27  current assessment and the preceding assessment.  This 
 67.28  limitation shall not apply to increases in value due to 
 67.29  improvements.  For purposes of this ~~subdivision~~ paragraph, the 
 67.30  term "assessment" means the value prior to any exclusion under 
 67.31  subdivision 16. 
 67.32     The provisions of this ~~subdivision~~ paragraph shall be in 
 67.33  effect only through assessment year 2001. 
 67.34     (b) For purposes of the assessment/sales ratio study 
 67.35  conducted under section 127A.48, and the computation of state 
 67.36  aids paid under chapters 122A, 123A, 123B, 124D, 125A, 126C, 
 68.1   127A, and 477A, market values and ~~net tax capacities~~ assessed 
 68.2   values determined under this subdivision and subdivision 16, 
 68.3   shall be used. 
 68.4      (c) In each of the assessment years 2002, 2003, and 2004, 
 68.5   the assessor shall enter the sum of the following amounts for 
 68.6   the properties described in paragraph (a):  (i) the value 
 68.7   entered for the preceding assessment; (ii) the entire amount of 
 68.8   the increase between the amount determined for the prior 
 68.9   assessment and the amount determined for the current assessment; 
 68.10  plus (iii) one-third of the difference between the value entered 
 68.11  for the 2001 assessment and the value determined for the 2001 
 68.12  assessment.  This limitation does not apply to increases in 
 68.13  value due to new improvements.  For purposes of this paragraph, 
 68.14  the term "assessment" means the value prior to any exclusions 
 68.15  under subdivision 16.  
 68.16     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 68.17  following final enactment. 
 68.18     Sec. 22.  Minnesota Statutes 2000, section 273.121, is 
 68.19  amended to read: 
 68.20     273.121 [VALUATION OF REAL PROPERTY, NOTICE.] 
 68.21     Any county assessor or city assessor having the powers of a 
 68.22  county assessor, valuing or classifying taxable real property 
 68.23  shall in each year notify those persons whose property is to be 
 68.24  ~~assessed or reclassified~~ included on the assessment roll that 
 68.25  year if the person's address is known to the assessor, otherwise 
 68.26  the occupant of the property.  The notice shall be in writing 
 68.27  and shall be sent by ordinary mail at least ten days before the 
 68.28  meeting of the local board of review or equalization under 
 68.29  section 274.01 or the review process established under section 
 68.30  274.13, subdivision 1c.  The notice may not be mailed within 
 68.31  five working days of the mailing of the tax statements, unless 
 68.32  this restriction conflicts with the mailing dates in the 
 68.33  preceding sentence or in section 276.04 and the approval of the 
 68.34  commissioner of revenue is obtained for a mailing within the 
 68.35  five-day period.  It shall contain:  (1) the market value for 
 68.36  the current and the prior assessment, (2) the limited market 
 69.1   value under section 273.11, subdivision 1a for the current and 
 69.2   the prior assessment, (3) the qualifying amount of any 
 69.3   improvements under section 273.11, subdivision 16 for the 
 69.4   current assessment, (4) the market value subject to taxation 
 69.5   after subtracting the amount of any qualifying improvements for 
 69.6   the current assessment, (5) the ~~new~~ classification of the 
 69.7   property for the current and prior assessment, (6) a note that 
 69.8   if the property is homestead and at least 35 years old, 
 69.9   improvements made to the property may be eligible for a 
 69.10  valuation exclusion under section 273.11, subdivision 16, (7) 
 69.11  the assessor's office address, and (8) the dates, places, and 
 69.12  times set for the meetings of the local board of review or 
 69.13  equalization, the review process established under section 
 69.14  274.13, subdivision 1c, and the county board of appeal and 
 69.15  equalization.  ~~If the assessment roll is not complete, the~~ 
 69.16  ~~notice shall be sent by ordinary mail at least ten days prior to~~ 
 69.17  ~~the date on which the board of review has adjourned~~ The 
 69.18  commissioner of revenue shall specify the form of the notice.  
 69.19  The assessor shall attach to the assessment roll a statement 
 69.20  that the notices required by this section have been mailed.  Any 
 69.21  assessor who is not provided sufficient funds from the 
 69.22  assessor's governing body to provide such notices, may make 
 69.23  application to the commissioner of revenue to finance such 
 69.24  notices.  The commissioner of revenue shall conduct an 
 69.25  investigation and, if satisfied that the assessor does not have 
 69.26  the necessary funds, issue a certification to the commissioner 
 69.27  of finance of the amount necessary to provide such notices.  The 
 69.28  commissioner of finance shall issue a warrant for such amount 
 69.29  and shall deduct such amount from any state payment to such 
 69.30  county or municipality.  The necessary funds to make such 
 69.31  payments are hereby appropriated.  Failure to receive the notice 
 69.32  shall in no way affect the validity of the assessment, the 
 69.33  resulting tax, the procedures of any board of review or 
 69.34  equalization, or the enforcement of delinquent taxes by 
 69.35  statutory means. 
 69.36     <b>[EFFECTIVE DATE.]</b> This section is effective for notices 
 70.1   required to be mailed in 2002 and thereafter. 
 70.2      Sec. 23.  Minnesota Statutes 2000, section 273.124, 
 70.3   subdivision 13, is amended to read: 
 70.4      Subd. 13.  [HOMESTEAD APPLICATION.] (a) A person who meets 
 70.5   the homestead requirements under subdivision 1 must file a 
 70.6   homestead application with the county assessor to initially 
 70.7   obtain homestead classification. 
 70.8      (b) On or before January 2, 1993, each county assessor 
 70.9   shall mail a homestead application to the owner of each parcel 
 70.10  of property within the county which was classified as homestead 
 70.11  for the 1992 assessment year.  The format and contents of a 
 70.12  uniform homestead application shall be prescribed by the 
 70.13  commissioner of revenue.  The commissioner shall consult with 
 70.14  the chairs of the house and senate tax committees on the 
 70.15  contents of the homestead application form.  The application 
 70.16  must clearly inform the taxpayer that this application must be 
 70.17  signed by all owners who occupy the property or by the 
 70.18  qualifying relative and returned to the county assessor in order 
 70.19  for the property to continue receiving homestead treatment.  The 
 70.20  envelope containing the homestead application shall clearly 
 70.21  identify its contents and alert the taxpayer of its necessary 
 70.22  immediate response. 
 70.23     (c) Every property owner applying for homestead 
 70.24  classification must furnish to the county assessor the social 
 70.25  security number of each occupant who is listed as an owner of 
 70.26  the property on the deed of record, the name and address of each 
 70.27  owner who does not occupy the property, and the name and social 
 70.28  security number of each owner's spouse who occupies the 
 70.29  property.  The application must be signed by each owner who 
 70.30  occupies the property and by each owner's spouse who occupies 
 70.31  the property, or, in the case of property that qualifies as a 
 70.32  homestead under subdivision 1, paragraph (c), by the qualifying 
 70.33  relative. 
 70.34     If a property owner occupies a homestead, the property 
 70.35  owner's spouse may not claim another property as a homestead 
 70.36  unless the property owner and the property owner's spouse file 
 71.1   with the assessor an affidavit or other proof required by the 
 71.2   assessor stating that the property qualifies as a homestead 
 71.3   under subdivision 1, paragraph (e). 
 71.4      Owners or spouses occupying residences owned by their 
 71.5   spouses and previously occupied with the other spouse, either of 
 71.6   whom fail to include the other spouse's name and social security 
 71.7   number on the homestead application or provide the affidavits or 
 71.8   other proof requested, will be deemed to have elected to receive 
 71.9   only partial homestead treatment of their residence.  The 
 71.10  remainder of the residence will be classified as nonhomestead 
 71.11  residential.  When an owner or spouse's name and social security 
 71.12  number appear on homestead applications for two separate 
 71.13  residences and only one application is signed, the owner or 
 71.14  spouse will be deemed to have elected to homestead the residence 
 71.15  for which the application was signed. 
 71.16     The social security numbers or affidavits or other proofs 
 71.17  of the property owners and spouses are private data on 
 71.18  individuals as defined by section 13.02, subdivision 12, but, 
 71.19  notwithstanding that section, the private data may be disclosed 
 71.20  to the commissioner of revenue, or, for purposes of proceeding 
 71.21  under the Revenue Recapture Act to recover personal property 
 71.22  taxes owing, to the county treasurer. 
 71.23     (d) If residential real estate is occupied and used for 
 71.24  purposes of a homestead by a relative of the owner and qualifies 
 71.25  for a homestead under subdivision 1, paragraph (c), in order for 
 71.26  the property to receive homestead status, a homestead 
 71.27  application must be filed with the assessor.  The social 
 71.28  security number of each relative occupying the property and the 
 71.29  social security number of each owner who is related to an 
 71.30  occupant of the property shall be required on the homestead 
 71.31  application filed under this subdivision.  If a different 
 71.32  relative of the owner subsequently occupies the property, the 
 71.33  owner of the property must notify the assessor within 30 days of 
 71.34  the change in occupancy.  The social security number of a 
 71.35  relative occupying the property is private data on individuals 
 71.36  as defined by section 13.02, subdivision 12, but may be 
 72.1   disclosed to the commissioner of revenue.  
 72.2      (e) The homestead application shall also notify the 
 72.3   property owners that the application filed under this section 
 72.4   will not be mailed annually and that if the property is granted 
 72.5   homestead status for the 1993 assessment, or any assessment year 
 72.6   thereafter, that same property shall remain classified as 
 72.7   homestead until the property is sold or transferred to another 
 72.8   person, or the owners, the spouse of the owner, or the relatives 
 72.9   no longer use the property as their homestead.  Upon the sale or 
 72.10  transfer of the homestead property, a certificate of value must 
 72.11  be timely filed with the county auditor as provided under 
 72.12  section 272.115.  Failure to notify the assessor within 30 days 
 72.13  that the property has been sold, transferred, or that the owner, 
 72.14  the spouse of the owner, or the relative is no longer occupying 
 72.15  the property as a homestead, shall result in the penalty 
 72.16  provided under this subdivision and the property will lose its 
 72.17  current homestead status. 
 72.18     (f) If the homestead application is not returned within 30 
 72.19  days, the county will send a second application to the present 
 72.20  owners of record.  The notice of proposed property taxes 
 72.21  prepared under section 275.065, subdivision 3, shall reflect the 
 72.22  property's classification.  Beginning with assessment year 1993 
 72.23  for all properties, if a homestead application has not been 
 72.24  filed with the county by December 15, the assessor shall 
 72.25  classify the property as nonhomestead for the current assessment 
 72.26  year for taxes payable in the following year, provided that the 
 72.27  owner may be entitled to receive the homestead classification by 
 72.28  proper application under section 375.192. 
 72.29     (g) At the request of the commissioner, each county must 
 72.30  give the commissioner a list that includes the name and social 
 72.31  security number of each property owner and the property owner's 
 72.32  spouse occupying the property, or relative of a property owner, 
 72.33  applying for homestead classification under this subdivision.  
 72.34  The commissioner shall use the information provided on the lists 
 72.35  as appropriate under the law, including for the detection of 
 72.36  improper claims by owners, or relatives of owners, under chapter 
 73.1   290A.  
 73.2      (h) If the commissioner finds that a property owner may be 
 73.3   claiming a fraudulent homestead, the commissioner shall notify 
 73.4   the appropriate counties.  Within 90 days of the notification, 
 73.5   the county assessor shall investigate to determine if the 
 73.6   homestead classification was properly claimed.  If the property 
 73.7   owner does not qualify, the county assessor shall notify the 
 73.8   county auditor who will determine the amount of homestead 
 73.9   benefits that had been improperly allowed.  For the purpose of 
 73.10  this section, "homestead benefits" means the tax reduction 
 73.11  resulting from the classification as a homestead under section 
 73.12  273.13, the taconite homestead credit under section 273.135, the 
 73.13  residential homestead and agricultural homestead credits under 
 73.14  section 273.1384, and the supplemental homestead credit under 
 73.15  section 273.1391. 
 73.16     The county auditor shall send a notice to the person who 
 73.17  owned the affected property at the time the homestead 
 73.18  application related to the improper homestead was filed, 
 73.19  demanding reimbursement of the homestead benefits plus a penalty 
 73.20  equal to 100 percent of the homestead benefits.  The person 
 73.21  notified may appeal the county's determination by serving copies 
 73.22  of a petition for review with county officials as provided in 
 73.23  section 278.01 and filing proof of service as provided in 
 73.24  section 278.01 with the Minnesota tax court within 60 days of 
 73.25  the date of the notice from the county.  Procedurally, the 
 73.26  appeal is governed by the provisions in chapter 271 which apply 
 73.27  to the appeal of a property tax assessment or levy, but without 
 73.28  requiring any prepayment of the amount in controversy.  If the 
 73.29  amount of homestead benefits and penalty is not paid within 60 
 73.30  days, and if no appeal has been filed, the county auditor shall 
 73.31  certify the amount of taxes and penalty to the county 
 73.32  treasurer.  The county treasurer will add interest to the unpaid 
 73.33  homestead benefits and penalty amounts at the rate provided in 
 73.34  section 279.03 for real property taxes becoming delinquent in 
 73.35  the calendar year during which the amount remains unpaid.  
 73.36  Interest may be assessed for the period beginning 60 days after 
 74.1   demand for payment was made. 
 74.2      If the person notified is the current owner of the 
 74.3   property, the treasurer may add the total amount of homestead 
 74.4   benefits, penalty, interest, and costs to the ad valorem taxes 
 74.5   otherwise payable on the property by including the amounts on 
 74.6   the property tax statements under section 276.04, subdivision 
 74.7   3.  The amounts added under this paragraph to the ad valorem 
 74.8   taxes shall include interest accrued through December 31 of the 
 74.9   year preceding the taxes payable year for which the amounts are 
 74.10  first added.  These amounts, when added to the property tax 
 74.11  statement, become subject to all the laws for the enforcement of 
 74.12  real or personal property taxes for that year, and for any 
 74.13  subsequent year. 
 74.14     If the person notified is not the current owner of the 
 74.15  property, the treasurer may collect the amounts due under the 
 74.16  Revenue Recapture Act in chapter 270A, or use any of the powers 
 74.17  granted in sections 277.20 and 277.21 without exclusion, to 
 74.18  enforce payment of the homestead benefits, penalty, interest, 
 74.19  and costs, as if those amounts were delinquent tax obligations 
 74.20  of the person who owned the property at the time the application 
 74.21  related to the improperly allowed homestead was filed.  The 
 74.22  treasurer may relieve a prior owner of personal liability for 
 74.23  the homestead benefits, penalty, interest, and costs, and 
 74.24  instead extend those amounts on the tax lists against the 
 74.25  property as provided in this paragraph to the extent that the 
 74.26  current owner agrees in writing.  On all demands, billings, 
 74.27  property tax statements, and related correspondence, the county 
 74.28  must list and state separately the amounts of homestead 
 74.29  benefits, penalty, interest and costs being demanded, billed or 
 74.30  assessed. 
 74.31     (i) Any amount of homestead benefits recovered by the 
 74.32  county from the property owner shall be distributed to the 
 74.33  county, city or town, and school district where the property is 
 74.34  located in the same proportion that each taxing district's levy 
 74.35  was to the total of the three taxing districts' levy for the 
 74.36  current year.  Any amount recovered attributable to taconite 
 75.1   homestead credit shall be transmitted to the St. Louis county 
 75.2   auditor to be deposited in the taconite property tax relief 
 75.3   account.  Any amount recovered that is attributable to 
 75.4   supplemental homestead credit is to be transmitted to the 
 75.5   commissioner of revenue for deposit in the general fund of the 
 75.6   state treasury.  The total amount of penalty collected must be 
 75.7   deposited in the county general fund. 
 75.8      (j) If a property owner has applied for more than one 
 75.9   homestead and the county assessors cannot determine which 
 75.10  property should be classified as homestead, the county assessors 
 75.11  will refer the information to the commissioner.  The 
 75.12  commissioner shall make the determination and notify the 
 75.13  counties within 60 days. 
 75.14     (k) In addition to lists of homestead properties, the 
 75.15  commissioner may ask the counties to furnish lists of all 
 75.16  properties and the record owners.  The social security numbers 
 75.17  and federal identification numbers that are maintained by a 
 75.18  county or city assessor for property tax administration 
 75.19  purposes, and that may appear on the lists retain their 
 75.20  classification as private or nonpublic data; but may be viewed, 
 75.21  accessed, and used by the county auditor or treasurer of the 
 75.22  same county for the limited purpose of assisting the 
 75.23  commissioner in the preparation of microdata samples under 
 75.24  section 270.0681. 
 75.25     <b>[EFFECTIVE DATE.]</b> This section is effective for homestead 
 75.26  applications submitted on or after the day following final 
 75.27  enactment. 
 75.28     Sec. 24.  Minnesota Statutes 2000, section 273.13, is 
 75.29  amended by adding a subdivision to read: 
 75.30     Subd. 21c.  [ASSESSED VALUE.] "Assessed value" means the 
 75.31  product of the appropriate class rates in this section and 
 75.32  market values. 
 75.33     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 75.34  payable in 2002 and thereafter. 
 75.35     Sec. 25.  Minnesota Statutes 2000, section 273.13, 
 75.36  subdivision 22, is amended to read: 
 76.1      Subd. 22.  [CLASS 1.] (a) Except as provided in subdivision 
 76.2   23 and in paragraphs (b) and (c), real estate which is 
 76.3   residential and used for homestead purposes is class ~~1~~ 1a.  The 
 76.4   market value of class 1a property must be determined based upon 
 76.5   the value of the house, garage, and land.  
 76.6      The first ~~$76,000~~ $200,000 of market value of class 1a 
 76.7   property has a ~~net~~ class rate of ~~one percent of its market value~~ 
 76.8   0.50; and the market value of class 1a property that 
 76.9   exceeds ~~$76,000~~ $200,000 has a class rate of ~~1.65 percent of its~~ 
 76.10  ~~market value~~ 0.75. 
 76.11     (b) Class 1b property includes homestead real estate or 
 76.12  homestead manufactured homes used for the purposes of a 
 76.13  homestead by 
 76.14     (1) any blind person, or the blind person and the blind 
 76.15  person's spouse; or 
 76.16     (2) any person, hereinafter referred to as "veteran," who: 
 76.17     (i) served in the active military or naval service of the 
 76.18  United States; and 
 76.19     (ii) is entitled to compensation under the laws and 
 76.20  regulations of the United States for permanent and total 
 76.21  service-connected disability due to the loss, or loss of use, by 
 76.22  reason of amputation, ankylosis, progressive muscular 
 76.23  dystrophies, or paralysis, of both lower extremities, such as to 
 76.24  preclude motion without the aid of braces, crutches, canes, or a 
 76.25  wheelchair; and 
 76.26     (iii) has acquired a special housing unit with special 
 76.27  fixtures or movable facilities made necessary by the nature of 
 76.28  the veteran's disability, or the surviving spouse of the 
 76.29  deceased veteran for as long as the surviving spouse retains the 
 76.30  special housing unit as a homestead; or 
 76.31     (3) any person who: 
 76.32     (i) is permanently and totally disabled and 
 76.33     (ii) receives 90 percent or more of total household income, 
 76.34  as defined in section 290A.03, subdivision 5, from 
 76.35     (A) aid from any state as a result of that disability; or 
 76.36     (B) supplemental security income for the disabled; or 
 77.1      (C) workers' compensation based on a finding of total and 
 77.2   permanent disability; or 
 77.3      (D) social security disability, including the amount of a 
 77.4   disability insurance benefit which is converted to an old age 
 77.5   insurance benefit and any subsequent cost of living increases; 
 77.6   or 
 77.7      (E) aid under the federal Railroad Retirement Act of 1937, 
 77.8   United States Code Annotated, title 45, section 228b(a)5; or 
 77.9      (F) a pension from any local government retirement fund 
 77.10  located in the state of Minnesota as a result of that 
 77.11  disability; or 
 77.12     (G) pension, annuity, or other income paid as a result of 
 77.13  that disability from a private pension or disability plan, 
 77.14  including employer, employee, union, and insurance plans and 
 77.15     (iii) has household income as defined in section 290A.03, 
 77.16  subdivision 5, of $50,000 or less; or 
 77.17     (4) any person who is permanently and totally disabled and 
 77.18  whose household income as defined in section 290A.03, 
 77.19  subdivision 5, is 275 percent or less of the federal poverty 
 77.20  level. 
 77.21     Property is classified and assessed under clause (4) only 
 77.22  if the government agency or income-providing source certifies, 
 77.23  upon the request of the homestead occupant, that the homestead 
 77.24  occupant satisfies the disability requirements of this paragraph.
 77.25     Property is classified and assessed pursuant to clause (1) 
 77.26  only if the commissioner of economic security certifies to the 
 77.27  assessor that the homestead occupant satisfies the requirements 
 77.28  of this paragraph.  
 77.29     Permanently and totally disabled for the purpose of this 
 77.30  subdivision means a condition which is permanent in nature and 
 77.31  totally incapacitates the person from working at an occupation 
 77.32  which brings the person an income.  The first $32,000 market 
 77.33  value of class 1b property has a ~~net~~ class rate of ~~.45 percent~~ 
 77.34  ~~of its market value~~ 0.225.  The remaining market value of class 
 77.35  1b property has a ~~net~~ class rate using the rates for class ~~1~~ 1a 
 77.36  or class 2a property, whichever is appropriate, of similar 
 78.1   market value.  
 78.2      (c) Class 1c property is commercial use real property that 
 78.3   abuts a lakeshore line and is devoted to temporary and seasonal 
 78.4   residential occupancy for recreational purposes but not devoted 
 78.5   to commercial purposes for more than 250 days in the year 
 78.6   preceding the year of assessment, and that includes a portion 
 78.7   used as a homestead by the owner, which includes a dwelling 
 78.8   occupied as a homestead by a shareholder of a corporation that 
 78.9   owns the resort or a partner in a partnership that owns the 
 78.10  resort, even if the title to the homestead is held by the 
 78.11  corporation or partnership.  For purposes of this clause, 
 78.12  property is devoted to a commercial purpose on a specific day if 
 78.13  any portion of the property, excluding the portion used 
 78.14  exclusively as a homestead, is used for residential occupancy 
 78.15  and a fee is charged for residential occupancy.  The first 
 78.16  $200,000 of market value of class 1c property has a class rate 
 78.17  of ~~one percent of total~~ 0.50, and the remaining market value of 
 78.18  class 1c property has a class rate of 0.75, with the following 
 78.19  limitation:  the area of the property must not exceed 100 feet 
 78.20  of lakeshore footage for each cabin or campsite located on the 
 78.21  property up to a total of 800 feet and 500 feet in depth, 
 78.22  measured away from the lakeshore.  If any portion of the class 
 78.23  1c resort property is classified as class 4c under subdivision 
 78.24  25, the entire property must meet the requirements of 
 78.25  subdivision 25, paragraph (d), clause (1), to qualify for class 
 78.26  1c treatment under this paragraph. 
 78.27     (d) Class 1d property includes structures that meet all of 
 78.28  the following criteria: 
 78.29     (1) the structure is located on property that is classified 
 78.30  as agricultural property under section 273.13, subdivision 23; 
 78.31     (2) the structure is occupied exclusively by seasonal farm 
 78.32  workers during the time when they work on that farm, and the 
 78.33  occupants are not charged rent for the privilege of occupying 
 78.34  the property, provided that use of the structure for storage of 
 78.35  farm equipment and produce does not disqualify the property from 
 78.36  classification under this paragraph; 
 79.1      (3) the structure meets all applicable health and safety 
 79.2   requirements for the appropriate season; and 
 79.3      (4) the structure is not salable as residential property 
 79.4   because it does not comply with local ordinances relating to 
 79.5   location in relation to streets or roads. 
 79.6      The market value of class 1d property has the same class 
 79.7   rates as class 1a property under paragraph (a). 
 79.8      <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 79.9   payable in 2002 and thereafter. 
 79.10     Sec. 26.  Minnesota Statutes 2000, section 273.13, 
 79.11  subdivision 23, is amended to read: 
 79.12     Subd. 23.  [CLASS 2.] (a) Class 2a property is agricultural 
 79.13  land including any improvements that is homesteaded.  The market 
 79.14  value of the house and garage and immediately surrounding one 
 79.15  acre of land has the same class rates as class 1a property under 
 79.16  subdivision 22.  The market value of the remaining land 
 79.17  including improvements up to ~~$115,000~~ $600,000 has a ~~net~~ class 
 79.18  rate of ~~0.35 percent of market value~~ 0.30.  The market value of 
 79.19  class 2a property over ~~$115,000 of market value up to and~~ 
 79.20  ~~including~~ $600,000 ~~market value~~ has a ~~net~~ class rate of ~~0.8~~ 
 79.21  ~~percent of market value~~ 0.50.  ~~The remaining property over~~ 
 79.22  ~~$600,000 market value has a class rate of 1.20 percent of market~~ 
 79.23  ~~value.~~ 
 79.24     (b) Class 2b property is (1) real estate, rural in 
 79.25  character and used exclusively for growing trees for timber, 
 79.26  lumber, and wood and wood products; (2) real estate that is not 
 79.27  improved with a structure and is used exclusively for growing 
 79.28  trees for timber, lumber, and wood and wood products, if the 
 79.29  owner has participated or is participating in a cost-sharing 
 79.30  program for afforestation, reforestation, or timber stand 
 79.31  improvement on that particular property, administered or 
 79.32  coordinated by the commissioner of natural resources; (3) real 
 79.33  estate that is nonhomestead agricultural land; or (4) a landing 
 79.34  area or public access area of a privately owned public use 
 79.35  airport.  The market value of class 2b property has a ~~net~~ class 
 79.36  rate of ~~1.20 percent of market value~~ 0.50. 
 80.1      (c) Agricultural land as used in this section means 
 80.2   contiguous acreage of ten acres or more, used during the 
 80.3   preceding year for agricultural purposes.  "Agricultural 
 80.4   purposes" as used in this section means the raising or 
 80.5   cultivation of agricultural products or enrollment in the 
 80.6   Reinvest in Minnesota program under sections 103F.501 to 
 80.7   103F.535 or the federal Conservation Reserve Program as 
 80.8   contained in Public Law Number 99-198.  Contiguous acreage on 
 80.9   the same parcel, or contiguous acreage on an immediately 
 80.10  adjacent parcel under the same ownership, may also qualify as 
 80.11  agricultural land, but only if it is pasture, timber, waste, 
 80.12  unusable wild land, or land included in state or federal farm 
 80.13  programs.  Agricultural classification for property shall be 
 80.14  determined excluding the house, garage, and immediately 
 80.15  surrounding one acre of land, and shall not be based upon the 
 80.16  market value of any residential structures on the parcel or 
 80.17  contiguous parcels under the same ownership. 
 80.18     (d) Real estate, excluding the house, garage, and 
 80.19  immediately surrounding one acre of land, of less than ten acres 
 80.20  which is exclusively and intensively used for raising or 
 80.21  cultivating agricultural products, shall be considered as 
 80.22  agricultural land.  
 80.23     Land shall be classified as agricultural even if all or a 
 80.24  portion of the agricultural use of that property is the leasing 
 80.25  to, or use by another person for agricultural purposes. 
 80.26     Classification under this subdivision is not determinative 
 80.27  for qualifying under section 273.111. 
 80.28     The property classification under this section supersedes, 
 80.29  for property tax purposes only, any locally administered 
 80.30  agricultural policies or land use restrictions that define 
 80.31  minimum or maximum farm acreage. 
 80.32     (e) The term "agricultural products" as used in this 
 80.33  subdivision includes production for sale of:  
 80.34     (1) livestock, dairy animals, dairy products, poultry and 
 80.35  poultry products, fur-bearing animals, horticultural and nursery 
 80.36  stock described in sections 18.44 to 18.61, fruit of all kinds, 
 81.1   vegetables, forage, grains, bees, and apiary products by the 
 81.2   owner; 
 81.3      (2) fish bred for sale and consumption if the fish breeding 
 81.4   occurs on land zoned for agricultural use; 
 81.5      (3) the commercial boarding of horses if the boarding is 
 81.6   done in conjunction with raising or cultivating agricultural 
 81.7   products as defined in clause (1); 
 81.8      (4) property which is owned and operated by nonprofit 
 81.9   organizations used for equestrian activities, excluding racing; 
 81.10     (5) game birds and waterfowl bred and raised for use on a 
 81.11  shooting preserve licensed under section 97A.115; 
 81.12     (6) insects primarily bred to be used as food for animals; 
 81.13  and 
 81.14     (7) trees, grown for sale as a crop, and not sold for 
 81.15  timber, lumber, wood, or wood products. 
 81.16     (f) If a parcel used for agricultural purposes is also used 
 81.17  for commercial or industrial purposes, including but not limited 
 81.18  to:  
 81.19     (1) wholesale and retail sales; 
 81.20     (2) processing of raw agricultural products or other goods; 
 81.21     (3) warehousing or storage of processed goods; and 
 81.22     (4) office facilities for the support of the activities 
 81.23  enumerated in clauses (1), (2), and (3), 
 81.24  the assessor shall classify the part of the parcel used for 
 81.25  agricultural purposes as class 1b, 2a, or 2b, whichever is 
 81.26  appropriate, and the remainder in the class appropriate to its 
 81.27  use.  The grading, sorting, and packaging of raw agricultural 
 81.28  products for first sale is considered an agricultural purpose.  
 81.29  A greenhouse or other building where horticultural or nursery 
 81.30  products are grown that is also used for the conduct of retail 
 81.31  sales must be classified as agricultural if it is primarily used 
 81.32  for the growing of horticultural or nursery products from seed, 
 81.33  cuttings, or roots and occasionally as a showroom for the retail 
 81.34  sale of those products.  Use of a greenhouse or building only 
 81.35  for the display of already grown horticultural or nursery 
 81.36  products does not qualify as an agricultural purpose.  
 82.1      The assessor shall determine and list separately on the 
 82.2   records the market value of the homestead dwelling and the one 
 82.3   acre of land on which that dwelling is located.  If any farm 
 82.4   buildings or structures are located on this homesteaded acre of 
 82.5   land, their market value shall not be included in this separate 
 82.6   determination.  
 82.7      (g) To qualify for classification under paragraph (b), 
 82.8   clause (4), a privately owned public use airport must be 
 82.9   licensed as a public airport under section 360.018.  For 
 82.10  purposes of paragraph (b), clause (4), "landing area" means that 
 82.11  part of a privately owned public use airport properly cleared, 
 82.12  regularly maintained, and made available to the public for use 
 82.13  by aircraft and includes runways, taxiways, aprons, and sites 
 82.14  upon which are situated landing or navigational aids.  A landing 
 82.15  area also includes land underlying both the primary surface and 
 82.16  the approach surfaces that comply with all of the following:  
 82.17     (i) the land is properly cleared and regularly maintained 
 82.18  for the primary purposes of the landing, taking off, and taxiing 
 82.19  of aircraft; but that portion of the land that contains 
 82.20  facilities for servicing, repair, or maintenance of aircraft is 
 82.21  not included as a landing area; 
 82.22     (ii) the land is part of the airport property; and 
 82.23     (iii) the land is not used for commercial or residential 
 82.24  purposes. 
 82.25  The land contained in a landing area under paragraph (b), clause 
 82.26  (4), must be described and certified by the commissioner of 
 82.27  transportation.  The certification is effective until it is 
 82.28  modified, or until the airport or landing area no longer meets 
 82.29  the requirements of paragraph (b), clause (4).  For purposes of 
 82.30  paragraph (b), clause (4), "public access area" means property 
 82.31  used as an aircraft parking ramp, apron, or storage hangar, or 
 82.32  an arrival and departure building in connection with the airport.
 82.33     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 82.34  payable in 2002 and thereafter. 
 82.35     Sec. 27.  Minnesota Statutes 2000, section 273.13, 
 82.36  subdivision 24, is amended to read: 
 83.1      Subd. 24.  [CLASS 3.] (a) Commercial and industrial 
 83.2   property and utility real and personal property is class 3a.  
 83.3      (1) Except as otherwise provided, each parcel of 
 83.4   commercial, industrial, or utility real property has a class 
 83.5   rate of ~~2.4 percent of~~ 0.75 for the first tier of market value, 
 83.6   and ~~3.4 percent of~~ 1.0 for the remaining market value.  In the 
 83.7   case of contiguous parcels of property owned by the same person 
 83.8   or entity, only the value equal to the first-tier value of the 
 83.9   contiguous parcels qualifies for the reduced class rate, except 
 83.10  that contiguous parcels owned by the same person or entity shall 
 83.11  be eligible for the first-tier value class rate on each separate 
 83.12  business operated by the owner of the property, provided the 
 83.13  business is housed in a separate structure.  For the purposes of 
 83.14  this subdivision, the first tier means the 
 83.15  first ~~$150,000~~ $200,000 of market value.  Real property owned in 
 83.16  fee by a utility for transmission line right-of-way shall be 
 83.17  classified at the class rate for the higher tier.  
 83.18     For purposes of this subdivision, parcels are considered to 
 83.19  be contiguous even if they are separated from each other by a 
 83.20  road, street, waterway, or other similar intervening type of 
 83.21  property.  Connections between parcels that consist of power 
 83.22  lines or pipelines do not cause the parcels to be contiguous.  
 83.23  Property owners who have contiguous parcels of property that 
 83.24  constitute separate businesses that may qualify for the 
 83.25  first-tier class rate shall notify the assessor by July 1, for 
 83.26  treatment beginning in the following taxes payable year.  
 83.27     (2) Notwithstanding clauses (1) and (3), all railroad 
 83.28  operating property and all personal property that is:  (i) part 
 83.29  of an electric generation, transmission, or distribution system; 
 83.30  or (ii) part of a pipeline system transporting or distributing 
 83.31  water, gas, crude oil, or petroleum products; and (iii) not 
 83.32  described in clause (3), has a class rate ~~as provided under~~ 
 83.33  ~~clause (1) for the first tier~~ of 0.75 for the first $200,000 of 
 83.34  market value and a class rate of 1.0 for the remaining market 
 83.35  value.  In the case of multiple parcels in one county that are 
 83.36  owned by one person or entity, only one first tier amount is 
 84.1   eligible for the reduced rate.  
 84.2      (3) The entire market value of personal property that is:  
 84.3   (i) tools, implements, and machinery of an electric generation, 
 84.4   transmission, or distribution system; (ii) tools, implements, 
 84.5   and machinery of a pipeline system transporting or distributing 
 84.6   water, gas, crude oil, or petroleum products; or (iii) the mains 
 84.7   and pipes used in the distribution of steam or hot or chilled 
 84.8   water for heating or cooling buildings, has a class rate as 
 84.9   provided under clause (1) for the remaining market value in 
 84.10  excess of the first tier. 
 84.11     (b) Employment property defined in section 469.166, during 
 84.12  the period provided in section 469.170, shall constitute class 
 84.13  3b.  The class rates for class 3b property are determined under 
 84.14  paragraph (a). 
 84.15     ~~(c)(1) Subject to the limitations of clause (2), structures~~ 
 84.16  ~~which are (i) located on property classified as class 3a, (ii)~~ 
 84.17  ~~constructed under an initial building permit issued after~~ 
 84.18  ~~January 2, 1996, (iii) located in a transit zone as defined~~ 
 84.19  ~~under section 473.3915, subdivision 3, (iv) located within the~~ 
 84.20  ~~boundaries of a school district, and (v) not primarily used for~~ 
 84.21  ~~retail or transient lodging purposes, shall have a class rate~~ 
 84.22  ~~equal to the lesser of 2.975 percent or the class rate of the~~ 
 84.23  ~~second tier of the commercial property rate under paragraph (a)~~ 
 84.24  ~~on any portion of the market value that does not qualify for the~~ 
 84.25  ~~first tier class rate under paragraph (a).  As used in item (v),~~ 
 84.26  ~~a structure is primarily used for retail or transient lodging~~ 
 84.27  ~~purposes if over 50 percent of its square footage is used for~~ 
 84.28  ~~those purposes.  A class rate equal to the lesser of 2.975~~ 
 84.29  ~~percent or the class rate of the second tier of the commercial~~ 
 84.30  ~~property class rate under paragraph (a) shall also apply to~~ 
 84.31  ~~improvements to existing structures that meet the requirements~~ 
 84.32  ~~of items (i) to (v) if the improvements are constructed under an~~ 
 84.33  ~~initial building permit issued after January 2, 1996, even if~~ 
 84.34  ~~the remainder of the structure was constructed prior to January~~ 
 84.35  ~~2, 1996.  For the purposes of this paragraph, a structure shall~~ 
 84.36  ~~be considered to be located in a transit zone if any portion of~~ 
 85.1   ~~the structure lies within the zone.  If any property once~~ 
 85.2   ~~eligible for treatment under this paragraph ceases to remain~~ 
 85.3   ~~eligible due to revisions in transit zone boundaries, the~~ 
 85.4   ~~property shall continue to receive treatment under this~~ 
 85.5   ~~paragraph for a period of three years.~~ 
 85.6      ~~(2) This clause applies to any structure qualifying for the~~ 
 85.7   ~~transit zone reduced class rate under clause (1) on January 2,~~ 
 85.8   ~~1999, or any structure meeting any of the qualification criteria~~ 
 85.9   ~~in item (i) and otherwise qualifying for the transit zone~~ 
 85.10  ~~reduced class rate under clause (1).  Such a structure continues~~ 
 85.11  ~~to receive the transit zone reduced class rate until the~~ 
 85.12  ~~occurrence of one of the events in item (ii).  Property~~ 
 85.13  ~~qualifying under item (i)(D), that is located outside of a city~~ 
 85.14  ~~of the first class, qualifies for the transit zone reduced class~~ 
 85.15  ~~rate as provided in that item.  Property qualifying under item~~ 
 85.16  ~~(i)(E) qualifies for the transit zone reduced class rate as~~ 
 85.17  ~~provided in that item.~~ 
 85.18     ~~(i) A structure qualifies for the rate in this clause if it~~ 
 85.19  ~~is:~~ 
 85.20     ~~(A) property for which a building permit was issued before~~ 
 85.21  ~~December 31, 1998; or~~ 
 85.22     ~~(B) property for which a building permit was issued before~~ 
 85.23  ~~June 30, 2001, if:~~ 
 85.24     ~~(I) at least 50 percent of the land on which the structure~~ 
 85.25  ~~is to be built has been acquired or is the subject of signed~~ 
 85.26  ~~purchase agreements or signed options as of March 15, 1998, by~~ 
 85.27  ~~the entity that proposes construction of the project or an~~ 
 85.28  ~~affiliate of the entity;~~ 
 85.29     ~~(II) signed agreements have been entered into with one~~ 
 85.30  ~~entity or with affiliated entities to lease for the account of~~ 
 85.31  ~~the entity or affiliated entities at least 50 percent of the~~ 
 85.32  ~~square footage of the structure or the owner of the structure~~ 
 85.33  ~~will occupy at least 50 percent of the square footage of the~~ 
 85.34  ~~structure; and~~ 
 85.35     ~~(III) one of the following requirements is met:~~ 
 85.36     ~~the project proposer has submitted the completed data~~ 
 86.1   ~~portions of an environmental assessment worksheet by December~~ 
 86.2   ~~31, 1998; or~~ 
 86.3      ~~a notice of determination of adequacy of an environmental~~ 
 86.4   ~~impact statement has been published by April 1, 1999; or~~ 
 86.5      ~~an alternative urban areawide review has been completed by~~ 
 86.6   ~~April 1, 1999; or~~ 
 86.7      ~~(C) property for which a building permit is issued before~~ 
 86.8   ~~July 30, 1999, if:~~ 
 86.9      ~~(I) at least 50 percent of the land on which the structure~~ 
 86.10  ~~is to be built has been acquired or is the subject of signed~~ 
 86.11  ~~purchase agreements as of March 31, 1998, by the entity that~~ 
 86.12  ~~proposes construction of the project or an affiliate of the~~ 
 86.13  ~~entity;~~ 
 86.14     ~~(II) a signed agreement has been entered into between the~~ 
 86.15  ~~building developer and a tenant to lease for its own account at~~ 
 86.16  ~~least 200,000 square feet of space in the building;~~ 
 86.17     ~~(III) a signed letter of intent is entered into by July 1,~~ 
 86.18  ~~1998, between the building developer and the tenant to lease the~~ 
 86.19  ~~space for its own account; and~~ 
 86.20     ~~(IV) the environmental review process required by state law~~ 
 86.21  ~~was commenced by December 31, 1998;~~ 
 86.22     ~~(D) property for which an irrevocable letter of credit with~~ 
 86.23  ~~a housing and redevelopment authority was signed before December~~ 
 86.24  ~~31, 1998.  The structure shall receive the transit zone reduced~~ 
 86.25  ~~class rate during construction and for the duration of time that~~ 
 86.26  ~~the original tenants remain in the building.  Any unoccupied net~~ 
 86.27  ~~leasable square footage that is not leased within 36 months~~ 
 86.28  ~~after the certificate of occupancy has been issued for the~~ 
 86.29  ~~building shall not be eligible to receive the reduced class~~ 
 86.30  ~~rate.  This reduced class rate applies only if a qualifying~~ 
 86.31  ~~entity continues to own the property;~~ 
 86.32     ~~(E) property, located in a city of the first class, and for~~ 
 86.33  ~~which the building permits for the excavation, the parking ramp,~~ 
 86.34  ~~and the office tower were issued prior to April 1, 1999, shall~~ 
 86.35  ~~receive the reduced class rate during construction and for the~~ 
 86.36  ~~first five assessment years immediately following its initial~~ 
 87.1   ~~occupancy provided that, when completed, at least 25 percent of~~ 
 87.2   ~~the net leasable square footage must be occupied by a qualifying~~ 
 87.3   ~~entity each year during this time period.  In order to receive~~ 
 87.4   ~~the reduced class rate on the structure in any subsequent~~ 
 87.5   ~~assessment years, at least 50 percent of the rentable square~~ 
 87.6   ~~footage must be occupied by a qualifying entity.  This reduced~~ 
 87.7   ~~class rate applies only if a qualifying entity continues to own~~ 
 87.8   ~~the property.~~ 
 87.9      ~~(ii) A structure specified by this clause, other than a~~ 
 87.10  ~~structure qualifying under clause (i)(D) or (E), shall continue~~ 
 87.11  ~~to receive the transit zone reduced class rate until the~~ 
 87.12  ~~occurrence of one of the following events:~~ 
 87.13     ~~(A) if the structure upon initial occupancy will be owner~~ 
 87.14  ~~occupied by the entity initially constructing the structure or~~ 
 87.15  ~~an affiliated entity, the structure receives the reduced class~~ 
 87.16  ~~rate until the structure ceases to be at least 50 percent~~ 
 87.17  ~~occupied by the entity or an affiliated entity, provided, if the~~ 
 87.18  ~~portion of the structure occupied by that entity or an affiliate~~ 
 87.19  ~~of the entity is less than 85 percent, the transit zone class~~ 
 87.20  ~~rate reduction for the portion of structure not so occupied~~ 
 87.21  ~~terminates upon the leasing of such space to any nonaffiliated~~ 
 87.22  ~~entity; or~~ 
 87.23     ~~(B) if the structure is leased by a single entity or~~ 
 87.24  ~~affiliated entity at the time of initial occupancy, the~~ 
 87.25  ~~structure shall receive the reduced class rate until the~~ 
 87.26  ~~structure ceases to be at least 50 percent occupied by the~~ 
 87.27  ~~entity or an affiliated entity, provided, if the portion of the~~ 
 87.28  ~~structure occupied by that entity or an affiliate of the entity~~ 
 87.29  ~~is less than 85 percent, the transit zone class rate reduction~~ 
 87.30  ~~for the portion of structure not so occupied shall terminate~~ 
 87.31  ~~upon the leasing of such space to any nonaffiliated entity; or~~ 
 87.32     ~~(C) if the structure meets the criteria in item (i)(C), the~~ 
 87.33  ~~structure shall receive the reduced class rate until the~~ 
 87.34  ~~expiration of the initial lease term of the applicable tenants.~~ 
 87.35     ~~Percentages occupied or leased shall be determined based~~ 
 87.36  ~~upon net leasable square footage in the structure.  The assessor~~ 
 88.1   ~~shall allocate the value of the structure in the same fashion as~~ 
 88.2   ~~provided in the general law for portions of any structure~~ 
 88.3   ~~receiving and not receiving the transit tax class reduction as a~~ 
 88.4   ~~result of this clause.~~ 
 88.5      ~~(3) For purposes of paragraph (c), "qualifying entity"~~ 
 88.6   ~~means the entity owning the property on September 1, 2000, or an~~ 
 88.7   ~~affiliate of an entity that owned the property on September 1,~~ 
 88.8   ~~2000.~~ 
 88.9      <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 88.10  payable in 2002 and thereafter. 
 88.11     Sec. 28.  Minnesota Statutes 2000, section 273.13, 
 88.12  subdivision 25, is amended to read: 
 88.13     Subd. 25.  [CLASS 4.] (a) Class 4a is residential real 
 88.14  estate containing four or more units and used or held for use by 
 88.15  the owner or by the tenants or lessees of the owner as a 
 88.16  residence for rental periods of 30 days or more.  Class 4a also 
 88.17  includes hospitals licensed under sections 144.50 to 144.56, 
 88.18  other than hospitals exempt under section 272.02, and contiguous 
 88.19  property used for hospital purposes, without regard to whether 
 88.20  the property has been platted or subdivided.  The market value 
 88.21  of class 4a property ~~in a city with a population of 5,000 or~~ 
 88.22  ~~less, that is (1) located outside of the metropolitan area, as~~ 
 88.23  ~~defined in section 473.121, subdivision 2, or outside any county~~ 
 88.24  ~~contiguous to the metropolitan area, and (2) whose city boundary~~ 
 88.25  ~~is at least 15 miles from the boundary of any city with a~~ 
 88.26  ~~population greater than 5,000 has a class rate of 2.15 percent~~ 
 88.27  ~~of market value.  All other class 4a property~~ has a class rate 
 88.28  of ~~2.4 percent of market value.  For purposes of this paragraph,~~ 
 88.29  ~~population has the same meaning given in section 477A.011,~~ 
 88.30  ~~subdivision 3~~ 0.75. 
 88.31     (b) Class 4b includes: 
 88.32     (1) residential real estate containing less than four units 
 88.33  that does not qualify as class 4bb, other than seasonal 
 88.34  residential, and recreational; 
 88.35     (2) manufactured homes not classified under any other 
 88.36  provision; 
 89.1      (3) a dwelling, garage, and surrounding one acre of 
 89.2   property on a nonhomestead farm classified under subdivision 23, 
 89.3   paragraph (b) containing two or three units; 
 89.4      (4) unimproved property that is classified residential as 
 89.5   determined under subdivision 33.  
 89.6      The market value of class 4b property has a class rate of 
 89.7   ~~1.65 percent of market value~~ 0.75.  
 89.8      (c) Class 4bb includes: 
 89.9      (1) nonhomestead residential real estate containing one 
 89.10  unit, other than seasonal residential, and recreational; and 
 89.11     (2) a single family dwelling, garage, and surrounding one 
 89.12  acre of property on a nonhomestead farm classified under 
 89.13  subdivision 23, paragraph (b). 
 89.14     Class 4bb has a class rate of ~~1.2 percent~~ 0.50 on the first 
 89.15  ~~$76,000~~ $200,000 of market value and a class rate of ~~1.65~~ 
 89.16  ~~percent~~ of 0.75 for that portion of its market value that 
 89.17  exceeds ~~$76,000~~ $200,000. 
 89.18     Property that has been classified as seasonal recreational 
 89.19  residential property at any time during which it has been owned 
 89.20  by the current owner or spouse of the current owner does not 
 89.21  qualify for class 4bb. 
 89.22     (d) Class 4c property includes: 
 89.23     (1) except as provided in subdivision 22, paragraph (c), 
 89.24  real property devoted to temporary and seasonal residential 
 89.25  occupancy for recreation purposes, including real property 
 89.26  devoted to temporary and seasonal residential occupancy for 
 89.27  recreation purposes and not devoted to commercial purposes for 
 89.28  more than 250 days in the year preceding the year of 
 89.29  assessment.  For purposes of this clause, property is devoted to 
 89.30  a commercial purpose on a specific day if any portion of the 
 89.31  property is used for residential occupancy, and a fee is charged 
 89.32  for residential occupancy.  In order for a property to be 
 89.33  classified as class 4c, seasonal recreational residential for 
 89.34  commercial purposes, at least 40 percent of the annual gross 
 89.35  lodging receipts related to the property must be from business 
 89.36  conducted during 90 consecutive days and either (i) at least 60 
 90.1   percent of all paid bookings by lodging guests during the year 
 90.2   must be for periods of at least two consecutive nights; or (ii) 
 90.3   at least 20 percent of the annual gross receipts must be from 
 90.4   charges for rental of fish houses, boats and motors, 
 90.5   snowmobiles, downhill or cross-country ski equipment, or charges 
 90.6   for marina services, launch services, and guide services, or the 
 90.7   sale of bait and fishing tackle.  For purposes of this 
 90.8   determination, a paid booking of five or more nights shall be 
 90.9   counted as two bookings.  Class 4c also includes commercial use 
 90.10  real property used exclusively for recreational purposes in 
 90.11  conjunction with class 4c property devoted to temporary and 
 90.12  seasonal residential occupancy for recreational purposes, up to 
 90.13  a total of two acres, provided the property is not devoted to 
 90.14  commercial recreational use for more than 250 days in the year 
 90.15  preceding the year of assessment and is located within two miles 
 90.16  of the class 4c property with which it is used.  Class 4c 
 90.17  property classified in this clause also includes the remainder 
 90.18  of class 1c resorts provided that the entire property including 
 90.19  that portion of the property classified as class 1c also meets 
 90.20  the requirements for class 4c under this clause; otherwise the 
 90.21  entire property is classified as class 3.  Owners of real 
 90.22  property devoted to temporary and seasonal residential occupancy 
 90.23  for recreation purposes and all or a portion of which was 
 90.24  devoted to commercial purposes for not more than 250 days in the 
 90.25  year preceding the year of assessment desiring classification as 
 90.26  class 1c or 4c, must submit a declaration to the assessor 
 90.27  designating the cabins or units occupied for 250 days or less in 
 90.28  the year preceding the year of assessment by January 15 of the 
 90.29  assessment year.  Those cabins or units and a proportionate 
 90.30  share of the land on which they are located will be designated 
 90.31  class 1c or 4c as otherwise provided.  The remainder of the 
 90.32  cabins or units and a proportionate share of the land on which 
 90.33  they are located will be designated as class 3a.  The owner of 
 90.34  property desiring designation as class 1c or 4c property must 
 90.35  provide guest registers or other records demonstrating that the 
 90.36  units for which class 1c or 4c designation is sought were not 
 91.1   occupied for more than 250 days in the year preceding the 
 91.2   assessment if so requested.  The portion of a property operated 
 91.3   as a (1) restaurant, (2) bar, (3) gift shop, and (4) other 
 91.4   nonresidential facility operated on a commercial basis not 
 91.5   directly related to temporary and seasonal residential occupancy 
 91.6   for recreation purposes shall not qualify for class 1c or 4c; 
 91.7      (2) qualified property used as a golf course if: 
 91.8      (i) it is open to the public on a daily fee basis.  It may 
 91.9   charge membership fees or dues, but a membership fee may not be 
 91.10  required in order to use the property for golfing, and its green 
 91.11  fees for golfing must be comparable to green fees typically 
 91.12  charged by municipal courses; and 
 91.13     (ii) it meets the requirements of section 273.112, 
 91.14  subdivision 3, paragraph (d). 
 91.15     A structure used as a clubhouse, restaurant, or place of 
 91.16  refreshment in conjunction with the golf course is classified as 
 91.17  class 3a property; 
 91.18     (3) real property up to a maximum of one acre of land owned 
 91.19  by a nonprofit community service oriented organization; provided 
 91.20  that the property is not used for a revenue-producing activity 
 91.21  for more than six days in the calendar year preceding the year 
 91.22  of assessment and the property is not used for residential 
 91.23  purposes on either a temporary or permanent basis.  For purposes 
 91.24  of this clause, a "nonprofit community service oriented 
 91.25  organization" means any corporation, society, association, 
 91.26  foundation, or institution organized and operated exclusively 
 91.27  for charitable, religious, fraternal, civic, or educational 
 91.28  purposes, and which is exempt from federal income taxation 
 91.29  pursuant to section 501(c)(3), (10), or (19) of the Internal 
 91.30  Revenue Code of 1986, as amended through December 31, 1990.  For 
 91.31  purposes of this clause, "revenue-producing activities" shall 
 91.32  include but not be limited to property or that portion of the 
 91.33  property that is used as an on-sale intoxicating liquor or 3.2 
 91.34  percent malt liquor establishment licensed under chapter 340A, a 
 91.35  restaurant open to the public, bowling alley, a retail store, 
 91.36  gambling conducted by organizations licensed under chapter 349, 
 92.1   an insurance business, or office or other space leased or rented 
 92.2   to a lessee who conducts a for-profit enterprise on the 
 92.3   premises.  Any portion of the property which is used for 
 92.4   revenue-producing activities for more than six days in the 
 92.5   calendar year preceding the year of assessment shall be assessed 
 92.6   as class 3a.  The use of the property for social events open 
 92.7   exclusively to members and their guests for periods of less than 
 92.8   24 hours, when an admission is not charged nor any revenues are 
 92.9   received by the organization shall not be considered a 
 92.10  revenue-producing activity; 
 92.11     (4) post-secondary student housing of not more than one 
 92.12  acre of land that is owned by a nonprofit corporation organized 
 92.13  under chapter 317A and is used exclusively by a student 
 92.14  cooperative, sorority, or fraternity for on-campus housing or 
 92.15  housing located within two miles of the border of a college 
 92.16  campus; 
 92.17     (5) manufactured home parks as defined in section 327.14, 
 92.18  subdivision 3; 
 92.19     (6) real property that is actively and exclusively devoted 
 92.20  to indoor fitness, health, social, recreational, and related 
 92.21  uses, is owned and operated by a not-for-profit corporation, and 
 92.22  is located within the metropolitan area as defined in section 
 92.23  473.121, subdivision 2; and 
 92.24     (7) a leased or privately owned noncommercial aircraft 
 92.25  storage hangar not exempt under section 272.01, subdivision 2, 
 92.26  and the land on which it is located, provided that: 
 92.27     (i) the land is on an airport owned or operated by a city, 
 92.28  town, county, metropolitan airports commission, or group 
 92.29  thereof; and 
 92.30     (ii) the land lease, or any ordinance or signed agreement 
 92.31  restricting the use of the leased premise, prohibits commercial 
 92.32  activity performed at the hangar. 
 92.33     If a hangar classified under this clause is sold after June 
 92.34  30, 2000, a bill of sale must be filed by the new owner with the 
 92.35  assessor of the county where the property is located within 60 
 92.36  days of the sale. 
 93.1      The market value of class 4c property has a class rate of 
 93.2   ~~1.65 percent of market value~~ 0.75, except that (i) ~~each parcel~~ 
 93.3   ~~of~~ seasonal residential recreational property not used for 
 93.4   commercial purposes has the same class rates as class 4bb 
 93.5   property, (ii) ~~manufactured home parks assessed under clause (5)~~ 
 93.6   ~~have the same class rate as class 4b property, and (iii)~~ 
 93.7   ~~property described in paragraph (d), clause (4), has the same~~ 
 93.8   ~~class rate as the rate applicable to the first tier of class 4bb~~ 
 93.9   ~~nonhomestead residential real estate under paragraph (c)~~ the 
 93.10  market value of commercial-use seasonal residential recreational 
 93.11  property has a class rate of 0.50, and (iii) the market value of 
 93.12  property described in clauses (2) and (6) has a class rate of 
 93.13  0.50.  
 93.14     (e) Class 4d property is qualifying low-income rental 
 93.15  housing certified to the assessor by the housing finance agency 
 93.16  under sections 273.126 and 462A.071.  Class 4d includes land in 
 93.17  proportion to the total market value of the building that is 
 93.18  qualifying low-income rental housing.  For all properties 
 93.19  qualifying as class 4d, the market value determined by the 
 93.20  assessor must be based on the normal approach to value using 
 93.21  normal unrestricted rents. 
 93.22     The market value of class 4d property has a class rate of 
 93.23  ~~one percent of market value~~ 0.40.  
 93.24     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 93.25  payable in 2002 and thereafter. 
 93.26     Sec. 29.  Minnesota Statutes 2000, section 273.13, 
 93.27  subdivision 31, is amended to read: 
 93.28     Subd. 31.  [CLASS 5.] Class 5 property includes:  
 93.29     (1) unmined iron ore and low-grade iron-bearing formations 
 93.30  as defined in section 273.14; and 
 93.31     (2) all other property not otherwise classified. 
 93.32     The market value of class 5 property has a class rate of 
 93.33  ~~3.4 percent of market value~~ 1.0. 
 93.34     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 93.35  payable in 2002 and thereafter. 
 93.36     Sec. 30.  Minnesota Statutes 2000, section 273.13, is 
 94.1   amended by adding a subdivision to read: 
 94.2      Subd. 34.  [INFLATION ADJUSTMENT.] Beginning with the year 
 94.3   2002 assessment, for taxes payable in 2003, the commissioner of 
 94.4   revenue shall annually adjust the valuation limits specified in 
 94.5   subdivisions 22, 23, 24, and 25 for inflation.  The commissioner 
 94.6   shall make the adjustments in accordance with section 290.06, 
 94.7   subdivision 2d, except that for the purposes of this subdivision 
 94.8   the percentage increase shall be determined from the year ending 
 94.9   on August 31, 2000, to the year ending on August 31 of the year 
 94.10  preceding the assessment year.  The commissioner shall round the 
 94.11  valuation limits to the nearest $1,000.  The commissioner shall 
 94.12  annually announce the valuation limits at the time specified in 
 94.13  section 290.06 for the succeeding assessment year.  The 
 94.14  determination of the commissioner under this subdivision is not 
 94.15  a rule under the Administrative Procedure Act. 
 94.16     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2001, 
 94.17  and thereafter. 
 94.18     Sec. 31.  [273.1384] [MARKET VALUE HOMESTEAD CREDITS.] 
 94.19     Subdivision 1.  [RESIDENTIAL HOMESTEAD MARKET VALUE 
 94.20  CREDIT.] Each county auditor shall determine a residential 
 94.21  homestead market value credit for each class 1a, 1b, 1c, and 2a 
 94.22  homestead property within the county.  The credit is equal to 
 94.23  0.5 percent of the market value of the property.  The amount of 
 94.24  homestead credit for a homestead may not exceed the lesser of 
 94.25  $330 or an amount that would reduce the tax on the parcel to an 
 94.26  amount equal to 0.85 percent of the parcel's market value.  In 
 94.27  the case of an agricultural or resort homestead, only the market 
 94.28  value of the house, garage, and immediately surrounding one acre 
 94.29  of land is eligible in determining the property's residential 
 94.30  homestead market value credit. 
 94.31     Subd. 2.  [AGRICULTURAL HOMESTEAD MARKET VALUE 
 94.32  CREDIT.] Except as provided in subdivision 1, property 
 94.33  classified as class 2a agricultural homestead is eligible for an 
 94.34  agricultural market value credit.  The credit is equal to 0.25 
 94.35  percent of the property's market value.  The credit under this 
 94.36  subdivision is limited to $288 for each homestead. 
 95.1      Subd. 3.  [CREDIT REIMBURSEMENTS.] The county auditor shall 
 95.2   determine the tax reductions allowed under this section within 
 95.3   the county for each taxes payable year and shall certify that 
 95.4   amount to the commissioner of revenue as a part of the abstracts 
 95.5   of tax lists submitted by the county auditors under section 
 95.6   275.29.  Any prior year adjustments shall also be certified on 
 95.7   the abstracts of tax lists.  The commissioner shall review the 
 95.8   certifications for accuracy, and may make such changes as are 
 95.9   deemed necessary, or return the certification to the county 
 95.10  auditor for correction.  
 95.11     Subd. 4.  [PAYMENT.] (a) The commissioner of revenue shall 
 95.12  reimburse each local taxing jurisdiction, other than school 
 95.13  districts, for the tax reductions granted under this section in 
 95.14  two equal installments on August 31 and December 15 of the taxes 
 95.15  payable year for which the reductions are granted, including in 
 95.16  each payment the prior year adjustments certified on the 
 95.17  abstracts for that taxes payable year. 
 95.18     (b) The commissioner of revenue shall certify the total of 
 95.19  the tax reductions granted under this section for each taxes 
 95.20  payable year within each school district to the commissioner of 
 95.21  the department of children, families, and learning and the 
 95.22  commissioner of children, families, and learning shall pay the 
 95.23  reimbursement amounts to each school district under the 
 95.24  provisions of section 273.1392. 
 95.25     Subd. 5.  [APPROPRIATION.] An amount sufficient to make the 
 95.26  payments required by this section to taxing jurisdictions other 
 95.27  than school districts is annually appropriated from the general 
 95.28  fund to the commissioner of revenue.  An amount sufficient to 
 95.29  make the payments required by this section for school districts 
 95.30  is annually appropriated from the general fund to the 
 95.31  commissioner of children, families, and learning. 
 95.32     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes, 
 95.33  credits, and reimbursements payable in 2002 and thereafter. 
 95.34     Sec. 32.  Minnesota Statutes 2000, section 273.1392, is 
 95.35  amended to read: 
 95.36     273.1392 [PAYMENT; SCHOOL DISTRICTS.] 
 96.1      The amounts of conservation tax credits under section 
 96.2   273.119; disaster or emergency reimbursement under section 
 96.3   273.123; ~~attached machinery aid under section 273.138; homestead~~ 
 96.4   ~~credit under section 273.13~~ market value homestead credits under 
 96.5   section 273.1384; aids and credits under section 273.1398; 
 96.6   wetlands reimbursement under section 275.295; enterprise zone 
 96.7   property credit payments under section 469.171; and metropolitan 
 96.8   agricultural preserve reduction under section 473H.10 for school 
 96.9   districts, shall be certified to the department of children, 
 96.10  families, and learning by the department of revenue.  The 
 96.11  amounts so certified shall be paid according to section 127A.45, 
 96.12  subdivisions 9 and 13. 
 96.13     <b>[EFFECTIVE DATE.]</b> This section is effective for aids and 
 96.14  credits payable in 2002 and thereafter. 
 96.15     Sec. 33.  Minnesota Statutes 2000, section 273.1393, is 
 96.16  amended to read: 
 96.17     273.1393 [COMPUTATION OF NET PROPERTY TAXES.] 
 96.18     Notwithstanding any other provisions to the contrary, "net" 
 96.19  property taxes are determined by subtracting the credits in the 
 96.20  order listed from the gross tax:  
 96.21     (1) disaster credit as provided in section 273.123; 
 96.22     (2) powerline credit as provided in section 273.42; 
 96.23     (3) agricultural preserves credit as provided in section 
 96.24  473H.10; 
 96.25     (4) enterprise zone credit as provided in section 469.171; 
 96.26     (5) disparity reduction credit; 
 96.27     (6) conservation tax credit as provided in section 273.119; 
 96.28     (7) ~~education~~ residential homestead market value credit and 
 96.29  agricultural market value credit as provided in section ~~273.1382~~ 
 96.30  273.1384; 
 96.31     (8) taconite homestead credit as provided in section 
 96.32  273.135; and 
 96.33     (9) supplemental homestead credit as provided in section 
 96.34  273.1391.  
 96.35     The combination of all property tax credits must not exceed 
 96.36  the gross tax amount.  
 97.1      <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 97.2   payable in 2002 and thereafter. 
 97.3      Sec. 34.  Minnesota Statutes 2000, section 273.1398, 
 97.4   subdivision 1, is amended to read: 
 97.5      Subdivision 1.  [DEFINITIONS.] (a) In this section, the 
 97.6   terms defined in this subdivision have the meanings given them. 
 97.7      (b) "Unique taxing jurisdiction" means the geographic area 
 97.8   subject to the same set of local tax rates. 
 97.9      (c) "Previous net tax capacity" means the product of the 
 97.10  appropriate net class rates for the year previous to the year in 
 97.11  which the aid is payable, and estimated market values for the 
 97.12  assessment two years prior to that in which aid is payable.  
 97.13  "Total previous net tax capacity" means the previous net tax 
 97.14  capacities for all property within the unique taxing 
 97.15  jurisdiction.  The total previous net tax capacity shall be 
 97.16  reduced by the sum of (1) the unique taxing jurisdiction's 
 97.17  previous net tax capacity of commercial-industrial property as 
 97.18  defined in section 473F.02, subdivision 3, or 276A.01, 
 97.19  subdivision 3, multiplied by the ratio determined pursuant to 
 97.20  section 473F.08, subdivision 6, or 276A.06, subdivision 7, for 
 97.21  the municipality, as defined in section 473F.02, subdivision 8, 
 97.22  or 276A.01, subdivision 8, in which the unique taxing 
 97.23  jurisdiction is located, (2) the previous net tax capacity of 
 97.24  the captured value of tax increment financing districts as 
 97.25  defined in section 469.177, subdivision 2, and (3) the previous 
 97.26  net tax capacity of transmission lines deducted from a local 
 97.27  government's total net tax capacity under section 273.425.  
 97.28  Previous net tax capacity cannot be less than zero. 
 97.29     (d) "Equalized market values" are market values that have 
 97.30  been equalized by dividing the assessor's estimated market value 
 97.31  for the second year prior to that in which the aid is payable by 
 97.32  the assessment sales ratios determined by class in the 
 97.33  assessment sales ratio study conducted by the department of 
 97.34  revenue pursuant to section 127A.48 in the second year prior to 
 97.35  that in which the aid is payable.  The equalized market values 
 97.36  shall equal the unequalized market values divided by the 
 98.1   assessment sales ratio. 
 98.2      (e) "Equalized school levies" means the amounts levied for: 
 98.3      (1) general education under section 126C.13, subdivision 2; 
 98.4      (2) supplemental revenue under section 126C.10, subdivision 
 98.5   10; 
 98.6      (3) transition revenue under section 126C.10, subdivision 
 98.7   20; and 
 98.8      (4) referendum revenue under section 126C.17. 
 98.9      (f) "Current local tax rate" means the quotient derived by 
 98.10  dividing the taxes levied within a unique taxing jurisdiction 
 98.11  for taxes payable in the year prior to that for which aids are 
 98.12  being calculated by the total previous net tax capacity of the 
 98.13  unique taxing jurisdiction.  
 98.14     (g) For purposes of calculating and allocating homestead 
 98.15  and agricultural credit aid authorized pursuant to subdivision 2 
 98.16  and the disparity reduction aid authorized in subdivision 3, 
 98.17  "gross taxes levied on all properties," "gross taxes," or "taxes 
 98.18  levied" means the total net tax capacity based taxes levied on 
 98.19  all properties except that levied on the captured value of tax 
 98.20  increment districts as defined in section 469.177, subdivision 
 98.21  2, and that levied on the portion of commercial industrial 
 98.22  properties' assessed value or gross tax capacity, as defined in 
 98.23  section 473F.02, subdivision 3, subject to the areawide tax as 
 98.24  provided in section 473F.08, subdivision 6, in a unique taxing 
 98.25  jurisdiction.  "Gross taxes" are before any reduction for 
 98.26  disparity reduction aid but "taxes levied" are after any 
 98.27  reduction for disparity reduction aid.  Gross taxes levied or 
 98.28  taxes levied cannot be less than zero.  
 98.29     "Taxes levied" excludes equalized school levies. 
 98.30     (h) "Household adjustment factor" means the number of 
 98.31  households, for the year most recently determined as of ~~July~~ 
 98.32  June 1 in the aid calculation year, divided by the number of 
 98.33  households for the year immediately preceding the year for which 
 98.34  the number of households has most recently been determined as of 
 98.35  ~~July~~ June 1.  The household adjustment factor cannot be less 
 98.36  than one.  
 99.1      (i) "Growth adjustment factor" means the household 
 99.2   adjustment factor in the case of counties.  In the case of 
 99.3   cities, towns, school districts, and special taxing districts, 
 99.4   the growth adjustment factor equals one.  The growth adjustment 
 99.5   factor cannot be less than one.  
 99.6      (j) "Homestead and agricultural credit base" means the 
 99.7   previous year's certified homestead and agricultural credit aid 
 99.8   determined under subdivision 2 less any permanent aid reduction 
 99.9   in the previous year to homestead and agricultural credit aid.  
 99.10     (k) "Net tax capacity adjustment" means (1) the tax base 
 99.11  differential defined in subdivision 1a, multiplied by (2) the 
 99.12  unique taxing jurisdiction's current local tax rate.  The net 
 99.13  tax capacity adjustment cannot be less than zero. 
 99.14     (l) "Fiscal disparity adjustment" means a taxing 
 99.15  jurisdiction's fiscal disparity distribution levy under section 
 99.16  473F.08, subdivision 3, clause (a), or 276A.06, subdivision 3, 
 99.17  clause (a), for taxes payable in the year prior to that for 
 99.18  which aids are being calculated, multiplied by the ratio of the 
 99.19  tax base differential percent referenced in subdivision 1a for 
 99.20  the highest class rate for class 3 property for taxes payable in 
 99.21  the year prior to that for which aids are being calculated to 
 99.22  the highest class rate for class 3 property for taxes payable in 
 99.23  the second prior year to that for which aids are being 
 99.24  calculated.  In the case of school districts, the fiscal 
 99.25  disparity distribution levy shall exclude that part of the levy 
 99.26  attributable to equalized school levies. 
 99.27     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 99.28  following final enactment. 
 99.29     Sec. 35.  Minnesota Statutes 2000, section 273.1398, is 
 99.30  amended by adding a subdivision to read: 
 99.31     Subd. 4b.  [CREDIT AID CHANGES.] (a) For aid payable in 
 99.32  2002, each county shall have its aid under subdivision 2, after 
 99.33  adjustment under subdivision 4a, permanently reduced.  The 
 99.34  amount of the reduction for each county is the sum of the 
 99.35  following amounts: 
 99.36     (1) for counties in the first through fourth, sixth, and 
100.1   tenth judicial districts, the estimated costs submitted by the 
100.2   court administrators for the calendar year 2001 budget requests 
100.3   of such counties for guardians ad litem, court interpreters, 
100.4   Rule 20 and civil commitment examinations and hearings, and in 
100.5   forma pauperis costs, as confirmed and reported by the Minnesota 
100.6   supreme court to the commissioner of revenue on or before July 
100.7   1, 2001; 
100.8      (2) the 1999 nonfederal expenditures for child family 
100.9   foster care as reported by the county during calendar year 2000 
100.10  to the department of human services under section 256E.08, 
100.11  subdivision 8; and 
100.12     (3) the additional amount of aid the county receives in 
100.13  2002 under section 477A.03, subdivision 2, paragraph (c), clause 
100.14  (ii), excluding increases due to inflation. 
100.15     (b) For aid payable in 2002 and thereafter, no aid shall be 
100.16  computed or paid pursuant to subdivision 2 for statutory or home 
100.17  rule cities, towns, school districts, and special taxing 
100.18  districts. 
100.19     <b>[EFFECTIVE DATE.]</b> This section is effective for aid payable 
100.20  in 2002 and thereafter. 
100.21     Sec. 36.  Minnesota Statutes 2000, section 273.1398, 
100.22  subdivision 8, is amended to read: 
100.23     Subd. 8.  [APPROPRIATION.] (a) An amount sufficient to pay 
100.24  the aids and credits provided under this section for school 
100.25  districts, intermediate school districts, or any group of school 
100.26  districts levying as a single taxing entity, is annually 
100.27  appropriated from the general fund to the commissioner of 
100.28  children, families, and learning.  An amount sufficient to pay 
100.29  the aids and credits provided under this section for counties, 
100.30  cities, towns, and special taxing districts is annually 
100.31  appropriated from the general fund to the commissioner of 
100.32  revenue.  A jurisdiction's aid amount may be increased or 
100.33  decreased based on any prior year adjustments for homestead 
100.34  credit or other property tax credit or aid programs. 
100.35     (b) The commissioner of finance shall bill the commissioner 
100.36  of revenue for the cost of preparation of local impact notes as 
101.1   required by section 3.987 only to the extent to which those 
101.2   costs exceed those costs incurred in fiscal year 1997 and for 
101.3   any other new costs attributable to the local impact note 
101.4   function required by section 3.987, not to exceed $100,000 in 
101.5   fiscal years 1998 and 1999 and $200,000 in fiscal year 2000 and 
101.6   thereafter. 
101.7      The commissioner of revenue shall deduct the amount billed 
101.8   under this paragraph from aid payments to be made to ~~cities and~~ 
101.9   counties under subdivision 2 on a pro rata basis.  The amount 
101.10  deducted under this paragraph is appropriated to the 
101.11  commissioner of finance for the preparation of local impact 
101.12  notes. 
101.13     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2002 
101.14  and thereafter. 
101.15     Sec. 37.  Minnesota Statutes 2000, section 273.166, 
101.16  subdivision 2, is amended to read: 
101.17     Subd. 2.  [MANUFACTURED HOME HOMESTEAD AND AGRICULTURAL 
101.18  CREDIT AID.] ~~For~~ In calendar year 2002, and each calendar year 
101.19  thereafter, ~~the~~ manufactured home homestead and agricultural 
101.20  credit aid ~~for each taxing jurisdiction equals the taxing~~ 
101.21  ~~jurisdiction's~~ shall be paid to each county under this section 
101.22  in an amount equal to the county's manufactured home homestead 
101.23  and agricultural credit aid determined under this subdivision 
101.24  for the preceding aid payable year times the growth adjustment 
101.25  factor for the ~~jurisdiction plus the net tax capacity adjustment~~ 
101.26  ~~for the jurisdiction~~ county.  Payment will not be made to 
101.27  any ~~taxing jurisdiction~~ county that has ceased to levy a 
101.28  property tax. 
101.29     <b>[EFFECTIVE DATE.]</b> This section is effective for aid paid in 
101.30  2002 and thereafter. 
101.31     Sec. 38.  Minnesota Statutes 2000, section 273.166, 
101.32  subdivision 3, is amended to read: 
101.33     Subd. 3.  [AID CALCULATION.] The commissioner of revenue 
101.34  shall make the calculation required in subdivision 2 and 
101.35  annually pay manufactured home homestead and agricultural credit 
101.36  aid to ~~the local governments~~ counties at the times provided in 
102.1   section 473H.10 for local governments other than school 
102.2   districts.  ~~Aid payments to the school districts must be~~ 
102.3   ~~certified to the commissioner of children, families, and~~ 
102.4   ~~learning and paid under section 273.1392.~~ 
102.5      <b>[EFFECTIVE DATE.]</b> This section is effective for aid paid in 
102.6   2002 and thereafter. 
102.7      Sec. 39.  Minnesota Statutes 2000, section 273.166, 
102.8   subdivision 5, is amended to read: 
102.9      Subd. 5.  [APPROPRIATION.] ~~There is annually appropriated~~ 
102.10  ~~from the general fund to the commissioner of children, families,~~ 
102.11  ~~and learning a sum sufficient to pay the aids provided under~~ 
102.12  ~~this section for school districts, intermediate school~~ 
102.13  ~~districts, or any group of school districts levying as a single~~ 
102.14  ~~taxing entity.~~  There is annually appropriated from the general 
102.15  fund to the commissioner of revenue a sum sufficient to pay the 
102.16  aids provided under this section to counties~~, cities, towns, and~~ 
102.17  ~~special taxing districts~~. 
102.18     <b>[EFFECTIVE DATE.]</b> This section is effective for fiscal year 
102.19  2003 and thereafter. 
102.20     Sec. 40.  Minnesota Statutes 2000, section 273.42, is 
102.21  amended by adding a subdivision to read: 
102.22     Subd. 3.  [STATE TAX ON TRANSMISSION AND DISTRIBUTION 
102.23  LINES.] Notwithstanding section 273.425, the entire assessed 
102.24  value of property taxed at the average local tax rate under 
102.25  subdivision 1 is subject to the state tax rate provided in 
102.26  section 275.02.  Notwithstanding subdivisions 1 and 2, the 
102.27  entire proceeds of the state tax levy for each such property 
102.28  must be distributed to the state under the procedures provided 
102.29  in chapter 276.  No portion of the proceeds from the state levy 
102.30  on such property is distributed within the county under 
102.31  subdivision 1 or 2. 
102.32     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
102.33  payable in 2002 and thereafter. 
102.34     Sec. 41.  Minnesota Statutes 2000, section 274.01, 
102.35  subdivision 1, is amended to read: 
102.36     Subdivision 1.  [ORDINARY BOARD; MEETINGS, DEADLINES, 
103.1   GRIEVANCES.] (a) The town board of a town, or the council or 
103.2   other governing body of a city, is the board of ~~review~~ appeal 
103.3   and equalization except (1) in cities whose charters provide for 
103.4   a board of equalization or (2) in any city or town that has 
103.5   transferred its local board of review power and duties to the 
103.6   county board as provided in subdivision 3.  The county assessor 
103.7   shall fix a day and time when the board or the board of 
103.8   equalization shall meet in the assessment districts of the 
103.9   county.  Notwithstanding any law or city charter to the 
103.10  contrary, a city board of equalization shall be referred to as a 
103.11  board of appeal and equalization.  On or before February 15 of 
103.12  each year the assessor shall give written notice of the time to 
103.13  the city or town clerk.  Notwithstanding the provisions of any 
103.14  charter to the contrary, the meetings must be held between April 
103.15  1 and May 31 each year.  The clerk shall give published and 
103.16  posted notice of the meeting at least ten days before the date 
103.17  of the meeting.  
103.18     ~~If in any county, at least 25 percent of the total net tax~~ 
103.19  ~~capacity of a city or town is noncommercial seasonal residential~~ 
103.20  ~~recreational property classified under section 273.13,~~ 
103.21  ~~subdivision 25, the county must hold two countywide~~ 
103.22  ~~informational meetings on Saturdays.  The meetings will allow~~ 
103.23  ~~noncommercial seasonal residential recreational taxpayers to~~ 
103.24  ~~discuss their property valuation with the appropriate assessment~~ 
103.25  ~~staff.  These Saturday informational meetings must be scheduled~~ 
103.26  ~~to allow the owner of the noncommercial seasonal residential~~ 
103.27  ~~recreational property the opportunity to attend one of the~~ 
103.28  ~~meetings prior to the scheduled board of review for their city~~ 
103.29  ~~or town.  The Saturday meeting dates must be contained on the~~ 
103.30  ~~notice of valuation of real property under section 273.121.~~  
103.31     The board shall meet at the office of the clerk to review 
103.32  the assessment and classification of property in the town or 
103.33  city.  No changes in valuation or classification which are 
103.34  intended to correct errors in judgment by the county assessor 
103.35  may be made by the county assessor after the board ~~of review~~ has 
103.36  adjourned in those cities or towns that hold a local board of 
104.1   review; however, corrections of errors that are merely clerical 
104.2   in nature or changes that extend homestead treatment to property 
104.3   are permitted after adjournment until the tax extension date for 
104.4   that assessment year.  The changes must be fully documented and 
104.5   maintained in the assessor's office and must be available for 
104.6   review by any person.  A copy of the changes made during this 
104.7   period in those cities or towns that hold a local board of 
104.8   review must be sent to the county board no later than December 
104.9   31 of the assessment year.  
104.10     (b) The board shall determine whether the taxable property 
104.11  in the town or city has been properly placed on the list and 
104.12  properly valued by the assessor.  If real or personal property 
104.13  has been omitted, the board shall place it on the list with its 
104.14  market value, and correct the assessment so that each tract or 
104.15  lot of real property, and each article, parcel, or class of 
104.16  personal property, is entered on the assessment list at its 
104.17  market value.  No assessment of the property of any person may 
104.18  be raised unless the person has been duly notified of the intent 
104.19  of the board to do so.  On application of any person feeling 
104.20  aggrieved, the board shall review the assessment or 
104.21  classification, or both, and correct it as appears just.  The 
104.22  board may not make an individual market value adjustment or 
104.23  classification change that would benefit the property in cases 
104.24  where the owner or other person having control over the property 
104.25  will not permit the assessor to inspect the property and the 
104.26  interior of any buildings or structures.  
104.27     (c) A local board ~~of review~~ may reduce assessments upon 
104.28  petition of the taxpayer but the total reductions must not 
104.29  reduce the aggregate assessment made by the county assessor by 
104.30  more than one percent.  If the total reductions would lower the 
104.31  aggregate assessments made by the county assessor by more than 
104.32  one percent, none of the adjustments may be made.  The assessor 
104.33  shall correct any clerical errors or double assessments 
104.34  discovered by the board ~~of review~~ without regard to the one 
104.35  percent limitation.  
104.36     (d) A majority of the members may act at the meeting, and 
105.1   adjourn from day to day until they finish hearing the cases 
105.2   presented.  The assessor shall attend, with the assessment books 
105.3   and papers, and take part in the proceedings, but must not 
105.4   vote.  The county assessor, or an assistant delegated by the 
105.5   county assessor shall attend the meetings.  The board shall list 
105.6   separately, on a form appended to the assessment book, all 
105.7   omitted property added to the list by the board and all items of 
105.8   property increased or decreased, with the market value of each 
105.9   item of property, added or changed by the board, placed opposite 
105.10  the item.  The county assessor shall enter all changes made by 
105.11  the board in the assessment book.  
105.12     (e) Except as provided in subdivision 3, if a person fails 
105.13  to appear in person, by counsel, or by written communication 
105.14  before the board after being duly notified of the board's intent 
105.15  to raise the assessment of the property, or if a person feeling 
105.16  aggrieved by an assessment or classification fails to apply for 
105.17  a review of the assessment or classification, the person may not 
105.18  appear before the county board of appeal and equalization for a 
105.19  review of the assessment or classification.  This paragraph does 
105.20  not apply if an assessment was made after the local board 
105.21  meeting, as provided in section 273.01, or if the person can 
105.22  establish not having received notice of market value at least 
105.23  five days before the local board ~~of review~~ meeting.  
105.24     (f) The local board ~~of review or the board of equalization~~ 
105.25  must complete its work and adjourn within 20 days from the time 
105.26  of convening stated in the notice of the clerk, unless a longer 
105.27  period is approved by the commissioner of revenue.  No action 
105.28  taken after that date is valid.  All complaints about an 
105.29  assessment or classification made after the meeting of the board 
105.30  must be heard and determined by the county board of 
105.31  equalization.  A nonresident may, at any time, before the 
105.32  meeting of the board ~~of review~~ file written objections to an 
105.33  assessment or classification with the county assessor.  The 
105.34  objections must be presented to the board ~~of review~~ at its 
105.35  meeting by the county assessor for its consideration. 
105.36     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 
106.1   2002, and thereafter. 
106.2      Sec. 42.  Minnesota Statutes 2000, section 274.13, 
106.3   subdivision 1, is amended to read: 
106.4      Subdivision 1.  [MEMBERS; MEETINGS; RULES FOR EQUALIZING 
106.5   ASSESSMENTS.] The county commissioners, or a majority of them, 
106.6   with the county auditor, or, if the auditor cannot be present, 
106.7   the deputy county auditor, or, if there is no deputy, the court 
106.8   administrator of the district court, shall form a board for the 
106.9   equalization of the assessment of the property of the county, 
106.10  including the property of all cities whose charters provide for 
106.11  a board of equalization.  This board shall be referred to as the 
106.12  county board of appeal and equalization.  The board shall meet 
106.13  annually, on the date specified in section 274.14, at the office 
106.14  of the auditor.  Each member shall take an oath to fairly and 
106.15  impartially perform duties as a member.  The board shall examine 
106.16  and compare the returns of the assessment of property of the 
106.17  towns or districts, and equalize them so that each tract or lot 
106.18  of real property and each article or class of personal property 
106.19  is entered on the assessment list at its market value, subject 
106.20  to the following rules: 
106.21     (1) The board shall raise the valuation of each tract or 
106.22  lot of real property which in its opinion is returned below its 
106.23  market value to the sum believed to be its market value.  The 
106.24  board must first give notice of intention to raise the valuation 
106.25  to the person in whose name it is assessed, if the person is a 
106.26  resident of the county.  The notice must fix a time and place 
106.27  for a hearing.  
106.28     (2) The board shall reduce the valuation of each tract or 
106.29  lot which in its opinion is returned above its market value to 
106.30  the sum believed to be its market value. 
106.31     (3) The board shall raise the valuation of each class of 
106.32  personal property which in its opinion is returned below its 
106.33  market value to the sum believed to be its market value.  It 
106.34  shall raise the aggregate value of the personal property of 
106.35  individuals, firms, or corporations, when it believes that the 
106.36  aggregate valuation, as returned, is less than the market value 
107.1   of the taxable personal property possessed by the individuals, 
107.2   firms, or corporations, to the sum it believes to be the market 
107.3   value.  The board must first give notice to the persons of 
107.4   intention to do so.  The notice must set a time and place for a 
107.5   hearing. 
107.6      (4) The board shall reduce the valuation of each class of 
107.7   personal property that is returned above its market value to the 
107.8   sum it believes to be its market value.  Upon complaint of a 
107.9   party aggrieved, the board shall reduce the aggregate valuation 
107.10  of the individual's personal property, or of any class of 
107.11  personal property for which the individual is assessed, which in 
107.12  its opinion has been assessed at too large a sum, to the sum it 
107.13  believes was the market value of the individual's personal 
107.14  property of that class.  
107.15     (5) The board must not reduce the aggregate value of all 
107.16  the property of its county, as submitted to the county board of 
107.17  equalization, with the additions made by the auditor under this 
107.18  chapter, by more than one percent of its whole valuation.  The 
107.19  board may raise the aggregate valuation of real property, and of 
107.20  each class of personal property, of the county, or of any town 
107.21  or district of the county, when it believes it is below the 
107.22  market value of the property, or class of property, to the 
107.23  aggregate amount it believes to be its market value. 
107.24     (6) The board shall change the classification of any 
107.25  property which in its opinion is not properly classified. 
107.26     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 
107.27  2002, and thereafter. 
107.28     Sec. 43.  Minnesota Statutes 2000, section 275.011, is 
107.29  amended by adding a subdivision to read: 
107.30     Subd. 4.  [CONVERSION OF NET TAX CAPACITY RATE LEVY LIMIT.] 
107.31  (a) Except as provided in section 126C.02, for purposes of 
107.32  determining the mill rate limits applicable to a levy authority 
107.33  or limitation expressed in law as a net tax capacity rate limit, 
107.34  the commissioner of revenue shall prescribe the conversion 
107.35  factors and methodology for use by all county auditors. 
107.36     (b) If the conversion from net tax capacities to assessed 
108.1   values or from net tax capacity tax rates to mill rates, as 
108.2   provided in this article, causes a provision of law related to 
108.3   the administration of the property tax to be unadministrable, 
108.4   the commissioner of revenue may prescribe an adjustment or 
108.5   conversion factor or method to preserve the purpose of that law. 
108.6      (c) The prescription of a conversion or adjustment factor 
108.7   or method by the commissioner of revenue under this subdivision 
108.8   shall not be considered a "rule" and is not subject to the 
108.9   Administrative Procedure Act. 
108.10     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
108.11  payable in 2002 and thereafter. 
108.12     Sec. 44.  Minnesota Statutes 2000, section 275.02, is 
108.13  amended to read: 
108.14     275.02 [STATE LEVY, EXCEPTIONS; CERTIFICATION OF TAX RATE.] 
108.15     ~~The~~ (a) For taxes payable in 2002 and subsequent years, a 
108.16  state tax shall be levied on all class 3, other than attached 
108.17  machinery located at an electric generating station that is part 
108.18  of an electric generating system, class 4c(1), class 4c(2), and 
108.19  class 5(1) taxable property in the state as defined in section 
108.20  273.13.  For noncommercial class 4c(1) property, 50 percent of 
108.21  the assessed value of the property, up to a maximum of $20,000, 
108.22  is exempt from the state levy.  The rate of the tax shall be 
108.23  certified by the ~~state auditor~~ commissioner of revenue to each 
108.24  county auditor on or before November ~~15~~ 1 annually.  
108.25     For taxes payable in 2002, the commissioner shall compute 
108.26  and certify a tax rate necessary to raise $470,400,000.  For 
108.27  taxes payable in years after 2002, the amount to be raised is 
108.28  increased each year by multiplying the amount for the prior year 
108.29  by the sum of one plus the rate of increase, if any, in the 
108.30  implicit price deflator for government consumption expenditures 
108.31  and gross investment for state and local governments prepared by 
108.32  the Bureau of Economic Analysts of the United States Department 
108.33  of Commerce for the 12-month period ending March 31 of the year 
108.34  prior to the year the taxes are payable.  It shall take a 
108.35  two-thirds vote of the legislature to increase the state tax 
108.36  levy by a greater amount. 
109.1      (b) The state levy under paragraph (a) is in addition to 
109.2   any state levy certified by the state auditor under article XI 
109.3   of the Minnesota Constitution.  A levy certified by the state 
109.4   auditor under article XI shall be certified by the state auditor 
109.5   to each county auditor by November 1 for taxes payable in the 
109.6   following year, and shall be applied against the assessed value 
109.7   of all taxable property in the state. 
109.8      <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
109.9   payable in 2002 and thereafter. 
109.10     Sec. 45.  Minnesota Statutes 2000, section 275.065, 
109.11  subdivision 3, is amended to read: 
109.12     Subd. 3.  [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The 
109.13  county auditor shall prepare and the county treasurer shall 
109.14  deliver after November 10 and on or before November 24 each 
109.15  year, by first class mail to each taxpayer at the address listed 
109.16  on the county's current year's assessment roll, a notice of 
109.17  proposed property taxes.  
109.18     (b) The commissioner of revenue shall prescribe the form of 
109.19  the notice.  
109.20     (c) The notice must inform taxpayers that it contains the 
109.21  amount of property taxes each taxing authority proposes to 
109.22  collect for taxes payable the following year.  In the case of a 
109.23  town, ~~or in the case of the state determined portion of the~~ 
109.24  ~~school district levy,~~ the final tax amount will be its proposed 
109.25  tax.  In the case of taxing authorities required to hold a 
109.26  public meeting under subdivision 6, the notice must clearly 
109.27  state that each taxing authority, including regional library 
109.28  districts established under section 134.201, and including the 
109.29  metropolitan taxing districts as defined in paragraph (i), but 
109.30  excluding all other special taxing districts and towns, will 
109.31  hold a public meeting to receive public testimony on the 
109.32  proposed budget and proposed or final property tax levy, or, in 
109.33  case of a school district, on the current budget and proposed 
109.34  property tax levy.  It must clearly state the time and place of 
109.35  each taxing authority's meeting, a phone number for the taxing 
109.36  jurisdiction where taxpayers may call if they have questions 
110.1   related to the notice, and an address where comments will be 
110.2   received by mail.  
110.3      (d) The notice must state for each parcel: 
110.4      (1) the market value of the property as determined under 
110.5   section 273.11, and used for computing property taxes payable in 
110.6   the following year and for taxes payable in the current year as 
110.7   each appears in the records of the county assessor on November 1 
110.8   of the current year; and, in the case of residential property, 
110.9   whether the property is classified as homestead or 
110.10  nonhomestead.  The notice must clearly inform taxpayers of the 
110.11  years to which the market values apply and that the values are 
110.12  final values; 
110.13     (2) the items listed below, shown separately by county, 
110.14  city or town, state ~~determined school~~ tax ~~net of the education~~ 
110.15  ~~homestead credit~~ under section ~~273.1382~~ 275.02, voter approved 
110.16  school levy, other local school levy, and the sum of the special 
110.17  taxing districts, and as a total of all taxing authorities:  
110.18     (i) the actual tax for taxes payable in the current 
110.19  year; and 
110.20     (ii) ~~the tax change due to spending factors, defined as the~~ 
110.21  ~~proposed tax minus the constant spending tax amount;~~ 
110.22     ~~(iii) the tax change due to other factors, defined as the~~ 
110.23  ~~constant spending tax amount minus the actual current year tax;~~ 
110.24  ~~and~~ 
110.25     ~~(iv)~~ the proposed tax amount net of credits. 
110.26     In the case of a town or the state ~~determined school~~ tax, 
110.27  the final tax shall also be its proposed tax unless the town 
110.28  changes its levy at a special town meeting under section 
110.29  365.52.  If a school district has certified under section 
110.30  126C.17, subdivision 9, that a referendum will be held in the 
110.31  school district at the November general election, the county 
110.32  auditor must note next to the school district's proposed amount 
110.33  that a referendum is pending and that, if approved by the 
110.34  voters, the tax amount may be higher than shown on the notice.  
110.35  In the case of the city of Minneapolis, the levy for the 
110.36  Minneapolis library board and the levy for Minneapolis park and 
111.1   recreation shall be listed separately from the remaining amount 
111.2   of the city's levy.  In the case of a parcel where tax increment 
111.3   or the fiscal disparities areawide tax under chapter 276A or 
111.4   473F applies, the proposed tax levy on the captured value or the 
111.5   proposed tax levy on the tax capacity subject to the areawide 
111.6   tax must each be stated separately and not included in the sum 
111.7   of the special taxing districts; and 
111.8      (3) the increase or decrease between the total taxes 
111.9   payable in the current year and the total proposed taxes, 
111.10  expressed as a percentage. 
111.11     For purposes of this section, the amount of the tax on 
111.12  homesteads qualifying under the senior citizens' property tax 
111.13  deferral program under chapter 290B is the total amount of 
111.14  property tax before subtraction of the deferred property tax 
111.15  amount. 
111.16     (e) The notice must clearly state that the proposed or 
111.17  final taxes do not include the following: 
111.18     (1) special assessments; 
111.19     (2) levies approved by the voters after the date the 
111.20  proposed taxes are certified, including bond referenda, school 
111.21  district levy referenda, and levy limit increase referenda; 
111.22     (3) amounts necessary to pay cleanup or other costs due to 
111.23  a natural disaster occurring after the date the proposed taxes 
111.24  are certified; 
111.25     (4) amounts necessary to pay tort judgments against the 
111.26  taxing authority that become final after the date the proposed 
111.27  taxes are certified; and 
111.28     (5) the contamination tax imposed on properties which 
111.29  received market value reductions for contamination. 
111.30     (f) Except as provided in subdivision 7, failure of the 
111.31  county auditor to prepare or the county treasurer to deliver the 
111.32  notice as required in this section does not invalidate the 
111.33  proposed or final tax levy or the taxes payable pursuant to the 
111.34  tax levy. 
111.35     (g) If the notice the taxpayer receives under this section 
111.36  lists the property as nonhomestead, and satisfactory 
112.1   documentation is provided to the county assessor by the 
112.2   applicable deadline, and the property qualifies for the 
112.3   homestead classification in that assessment year, the assessor 
112.4   shall reclassify the property to homestead for taxes payable in 
112.5   the following year. 
112.6      (h) In the case of class 4 residential property used as a 
112.7   residence for lease or rental periods of 30 days or more, the 
112.8   taxpayer must either: 
112.9      (1) mail or deliver a copy of the notice of proposed 
112.10  property taxes to each tenant, renter, or lessee; or 
112.11     (2) post a copy of the notice in a conspicuous place on the 
112.12  premises of the property.  
112.13     The notice must be mailed or posted by the taxpayer by 
112.14  November 27 or within three days of receipt of the notice, 
112.15  whichever is later.  A taxpayer may notify the county treasurer 
112.16  of the address of the taxpayer, agent, caretaker, or manager of 
112.17  the premises to which the notice must be mailed in order to 
112.18  fulfill the requirements of this paragraph. 
112.19     (i) For purposes of this subdivision, subdivisions 5a and 
112.20  6, "metropolitan special taxing districts" means the following 
112.21  taxing districts in the seven-county metropolitan area that levy 
112.22  a property tax for any of the specified purposes listed below: 
112.23     (1) metropolitan council under section 473.132, 473.167, 
112.24  473.249, 473.325, 473.446, 473.521, 473.547, or 473.834; 
112.25     (2) metropolitan airports commission under section 473.667, 
112.26  473.671, or 473.672; and 
112.27     (3) metropolitan mosquito control commission under section 
112.28  473.711. 
112.29     For purposes of this section, any levies made by the 
112.30  regional rail authorities in the county of Anoka, Carver, 
112.31  Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 
112.32  398A shall be included with the appropriate county's levy and 
112.33  shall be discussed at that county's public hearing. 
112.34     (j) If a statutory or home rule charter city or a town has 
112.35  exercised the local levy option provided by section 473.388, 
112.36  subdivision 7, it may include in the notice of its proposed 
113.1   taxes the amount of its proposed taxes attributable to its 
113.2   exercise of the option.  In the first year of the city or town's 
113.3   exercise of this option, the statement shall include an estimate 
113.4   of the reduction of the metropolitan council's tax on the parcel 
113.5   due to exercise of that option.  The metropolitan council's levy 
113.6   shall be adjusted accordingly. 
113.7      <b>[EFFECTIVE DATE.]</b> This section is effective for notices of 
113.8   proposed property taxes required in 2001 for taxes payable in 
113.9   2002, and thereafter. 
113.10     Sec. 46.  Minnesota Statutes 2000, section 275.065, 
113.11  subdivision 5a, is amended to read: 
113.12     Subd. 5a.  [PUBLIC ADVERTISEMENT.] (a) A city that has a 
113.13  population of more than 2,500, county, a metropolitan special 
113.14  taxing district as defined in subdivision 3, paragraph (i), a 
113.15  regional library district established under section 134.201, or 
113.16  school district shall advertise in a newspaper a notice of its 
113.17  intent to adopt a budget and property tax levy or, in the case 
113.18  of a school district, to review its current budget and proposed 
113.19  property taxes payable in the following year, at a public 
113.20  hearing, if a public hearing is required under subdivision 6.  
113.21  The notice must be published not less than two business days nor 
113.22  more than six business days before the hearing. 
113.23     The advertisement must be at least one-eighth page in size 
113.24  of a standard-size or a tabloid-size newspaper.  The 
113.25  advertisement must not be placed in the part of the newspaper 
113.26  where legal notices and classified advertisements appear.  The 
113.27  advertisement must be published in an official newspaper of 
113.28  general circulation in the taxing authority.  The newspaper 
113.29  selected must be one of general interest and readership in the 
113.30  community, and not one of limited subject matter.  The 
113.31  advertisement must appear in a newspaper that is published at 
113.32  least once per week.  
113.33     For purposes of this section, the metropolitan special 
113.34  taxing district's advertisement must only be published in the 
113.35  Minneapolis Star and Tribune and the Saint Paul Pioneer Press. 
113.36     (b) The advertisement for school districts, metropolitan 
114.1   special taxing districts, and regional library districts must be 
114.2   in the following form, except that the notice for a school 
114.3   district may include references to the current budget in regard 
114.4   to proposed property taxes. 
114.5                              "NOTICE OF
114.6                       PROPOSED PROPERTY TAXES
114.7                    (School District/Metropolitan
114.8                   Special Taxing District/Regional
114.9                    Library District) of .........
114.10  The governing body of ........ will soon hold budget hearings 
114.11  and vote on the property taxes for (metropolitan special taxing 
114.12  district/regional library district services that will be 
114.13  provided in (year)/school district services that will be 
114.14  provided in (year) and (year)). 
114.15                     NOTICE OF PUBLIC HEARING:
114.16  All concerned citizens are invited to attend a public hearing 
114.17  and express their opinions on the proposed (school 
114.18  district/metropolitan special taxing district/regional library 
114.19  district) budget and property taxes, or in the case of a school 
114.20  district, its current budget and proposed property taxes, 
114.21  payable in the following year.  The hearing will be held on 
114.22  (Month/Day/Year) at (Time) at (Location, Address)." 
114.23     (c) The advertisement for cities and counties must be in 
114.24  the following form. 
114.25                        "NOTICE OF PROPOSED
114.26                  TOTAL BUDGET AND PROPERTY TAXES
114.27  The (city/county) governing body or board of commissioners will 
114.28  hold a public hearing to discuss the budget and to vote on the 
114.29  amount of property taxes to collect for services the 
114.30  (city/county) will provide in (year). 
114.31     
114.32  SPENDING:  The total budget amounts below compare 
114.33  (city's/county's) (year) total actual budget with the amount the 
114.34  (city/county) proposes to spend in (year). 
114.35     
114.36  (Year) Total          Proposed (Year)          Change from
115.1   Actual Budget             Budget               (Year)-(Year)
115.2      
115.3     $.......              $.......                ...%
115.4      
115.5   TAXES:  The property tax amounts below compare that portion of 
115.6   the current budget levied in property taxes in (city/county) for 
115.7   (year) with the property taxes the (city/county) proposes to 
115.8   collect in (year). 
115.9      
115.10  (Year) Property       Proposed (Year)          Change from
115.11      Taxes              Property Taxes         (Year)-(Year)
115.12     
115.13    $.......              $.......                ...% 
115.14     
115.15                     ATTEND THE PUBLIC HEARING
115.16  All (city/county) residents are invited to attend the public 
115.17  hearing of the (city/county) to express your opinions on the 
115.18  budget and the proposed amount of (year) property taxes.  The 
115.19  hearing will be held on: 
115.20                       (Month/Day/Year/Time)
115.21                         (Location/Address)
115.22  If the discussion of the budget cannot be completed, a time and 
115.23  place for continuing the discussion will be announced at the 
115.24  hearing.  You are also invited to send your written comments to: 
115.25                           (City/County)
115.26                        (Location/Address)"
115.27     (d) For purposes of this subdivision, the budget amounts 
115.28  listed on the advertisement mean: 
115.29     (1) for cities, the total government fund expenditures, as 
115.30  defined by the state auditor under section 471.6965, less any 
115.31  expenditures for improvements or services that are specially 
115.32  assessed or charged under chapter 429, 430, 435, or the 
115.33  provisions of any other law or charter; and 
115.34     (2) for counties, the total government fund expenditures, 
115.35  as defined by the state auditor under section 375.169, less any 
115.36  expenditures for direct payments to recipients or providers for 
116.1   the human service aids listed below: 
116.2      (i) Minnesota family investment program under chapters 256J 
116.3   and 256K; 
116.4      (ii) medical assistance under sections 256B.041, 
116.5   subdivision 5, and 256B.19, subdivision 1; 
116.6      (iii) general assistance medical care under section 
116.7   256D.03, subdivision 6; 
116.8      (iv) general assistance under section 256D.03, subdivision 
116.9   2; 
116.10     (v) emergency assistance under section 256J.48; 
116.11     (vi) Minnesota supplemental aid under section 256D.36, 
116.12  subdivision 1; 
116.13     (vii) preadmission screening under section 256B.0911, and 
116.14  alternative care grants under section 256B.0913; 
116.15     (viii) general assistance medical care claims processing, 
116.16  medical transportation and related costs under section 256D.03, 
116.17  subdivision 4; 
116.18     (ix) medical transportation and related costs under section 
116.19  256B.0625, subdivisions 17 to 18a; 
116.20     (x) group residential housing under section 256I.05, 
116.21  subdivision 8, transferred from programs in clauses (iv) and 
116.22  (vi); or 
116.23     (xi) any successor programs to those listed in clauses (i) 
116.24  to (x). 
116.25     (e) A city with a population of over 500 but not more than 
116.26  2,500 that is required to hold a public hearing under 
116.27  subdivision 6 must advertise by posted notice as defined in 
116.28  section 645.12, subdivision 1.  The advertisement must be posted 
116.29  at the time provided in paragraph (a).  It must be in the form 
116.30  required in paragraph (b). 
116.31     (f) For purposes of this subdivision, the population of a 
116.32  city is the most recent population as determined by the state 
116.33  demographer under section 4A.02. 
116.34     (g) The commissioner of revenue, subject to the approval of 
116.35  the chairs of the house and senate tax committees, shall 
116.36  prescribe the form and format of the ~~advertisement~~ 
117.1   advertisements required under this subdivision. 
117.2      <b>[EFFECTIVE DATE.]</b> This section is effective for public 
117.3   advertisements required in 2001 for taxes payable in 2002, and 
117.4   thereafter. 
117.5      Sec. 47.  Minnesota Statutes 2000, section 275.065, 
117.6   subdivision 6, is amended to read: 
117.7      Subd. 6.  [PUBLIC HEARING; ADOPTION OF BUDGET AND LEVY.] 
117.8   (a) For purposes of this section, the following terms shall have 
117.9   the meanings given: 
117.10     (1) "Initial hearing" means the first and primary hearing 
117.11  held to discuss the taxing authority's proposed budget and 
117.12  proposed property tax levy for taxes payable in the following 
117.13  year, or, for school districts, the current budget and the 
117.14  proposed property tax levy for taxes payable in the following 
117.15  year. 
117.16     (2) "Continuation hearing" means a hearing held to complete 
117.17  the initial hearing, if the initial hearing is not completed on 
117.18  its scheduled date. 
117.19     (3) "Subsequent hearing" means the hearing held to adopt 
117.20  the taxing authority's final property tax levy, and, in the case 
117.21  of taxing authorities other than school districts, the final 
117.22  budget, for taxes payable in the following year. 
117.23     (b) Between November 29 and December 20, the governing 
117.24  bodies of a city that has a population over 500, county, 
117.25  metropolitan special taxing districts as defined in subdivision 
117.26  3, paragraph (i), and regional library districts shall each hold 
117.27  an initial public hearing to discuss and seek public comment on 
117.28  its final budget and property tax levy for taxes payable in the 
117.29  following year, and the governing body of the school district 
117.30  shall hold an initial public hearing to review its current 
117.31  budget and proposed property tax levy for taxes payable in the 
117.32  following year.  The metropolitan special taxing districts shall 
117.33  be required to hold only a single joint initial public hearing, 
117.34  the location of which will be determined by the affected 
117.35  metropolitan agencies.  A city, county, metropolitan special 
117.36  taxing district as defined in subdivision 3, paragraph (i), 
118.1   regional library district established under section 134.201, or 
118.2   school district is not required to hold a public hearing under 
118.3   this subdivision unless its proposed property tax levy for taxes 
118.4   payable in the following year, as certified under subdivision 1, 
118.5   has increased over its final property tax levy for taxes payable 
118.6   in the current year by a percentage that is greater than the 
118.7   percentage increase in the implicit price deflator for 
118.8   government consumption expenditures and gross investment for 
118.9   state and local governments prepared by the Bureau of Economic 
118.10  Analysts of the United States Department of Commerce for the 
118.11  12-month period ending March 31 of the current year. 
118.12     (c) The initial hearing must be held after 5:00 p.m. if 
118.13  scheduled on a day other than Saturday.  No initial hearing may 
118.14  be held on a Sunday.  
118.15     (d) At the initial hearing under this subdivision, the 
118.16  percentage increase in property taxes proposed by the taxing 
118.17  authority, if any, and the specific purposes for which property 
118.18  tax revenues are being increased must be discussed.  During the 
118.19  discussion, the governing body shall hear comments regarding a 
118.20  proposed increase and explain the reasons for the proposed 
118.21  increase.  The public shall be allowed to speak and to ask 
118.22  questions.  At the public hearing, the school district must also 
118.23  provide and discuss information on the distribution of its 
118.24  revenues by revenue source, and the distribution of its spending 
118.25  by program area.  
118.26     (e) If the initial hearing is not completed on its 
118.27  scheduled date, the taxing authority must announce, prior to 
118.28  adjournment of the hearing, the date, time, and place for the 
118.29  continuation of the hearing.  The continuation hearing must be 
118.30  held at least five business days but no more than 14 business 
118.31  days after the initial hearing.  A continuation hearing may not 
118.32  be held later than December 20 except as provided in paragraphs 
118.33  (f) and (g).  A continuation hearing must be held after 5:00 
118.34  p.m. if scheduled on a day other than Saturday.  No continuation 
118.35  hearing may be held on a Sunday. 
118.36     (f) The governing body of a county shall hold its initial 
119.1   hearing on the first Thursday in December each year, and may 
119.2   hold additional initial hearings on other dates before December 
119.3   20 if necessary for the convenience of county residents.  If the 
119.4   county needs a continuation of its hearing, the continuation 
119.5   hearing shall be held on the third Tuesday in December.  If the 
119.6   third Tuesday in December falls on December 21, the county's 
119.7   continuation hearing shall be held on Monday, December 20.  
119.8      (g) The metropolitan special taxing districts shall hold a 
119.9   joint initial public hearing on the first Wednesday of 
119.10  December.  A continuation hearing, if necessary, shall be held 
119.11  on the second Wednesday of December even if that second 
119.12  Wednesday is after December 10. 
119.13     (h) The county auditor shall provide for the coordination 
119.14  of initial and continuation hearing dates for all school 
119.15  districts and cities within the county to prevent conflicts 
119.16  under clauses (i) and (j). 
119.17     (i) By August 10, each school board and the board of the 
119.18  regional library district shall certify to the county auditors 
119.19  of the counties in which the school district or regional library 
119.20  district is located the dates on which it elects to hold its 
119.21  initial hearing and any continuation hearing.  If a school board 
119.22  or regional library district does not certify these dates by 
119.23  August 10, the auditor will assign the initial and continuation 
119.24  hearing dates.  The dates elected or assigned must not conflict 
119.25  with the initial and continuation hearing dates of the county or 
119.26  the metropolitan special taxing districts.  
119.27     (j) By August 20, the county auditor shall notify the 
119.28  clerks of the cities within the county of the dates on which 
119.29  school districts and regional library districts have elected to 
119.30  hold their initial and continuation hearings.  At the time a 
119.31  city certifies its proposed levy under subdivision 1 it shall 
119.32  certify the dates on which it elects to hold its initial hearing 
119.33  and any continuation hearing.  Until September 15, the first and 
119.34  second Mondays of December are reserved for the use of the 
119.35  cities.  If a city does not certify its hearing dates by 
119.36  September 15, the auditor shall assign the initial and 
120.1   continuation hearing dates.  The dates elected or assigned for 
120.2   the initial hearing must not conflict with the initial hearing 
120.3   dates of the county, metropolitan special taxing districts, 
120.4   regional library districts, or school districts within which the 
120.5   city is located.  To the extent possible, the dates of the 
120.6   city's continuation hearing should not conflict with the 
120.7   continuation hearing dates of the county, metropolitan special 
120.8   taxing districts, regional library districts, or school 
120.9   districts within which the city is located.  This paragraph does 
120.10  not apply to cities of 500 population or less. 
120.11     (k) The county initial hearing date and the city, 
120.12  metropolitan special taxing district, regional library district, 
120.13  and school district initial hearing dates must be designated on 
120.14  the notices required under subdivision 3.  The continuation 
120.15  hearing dates need not be stated on the notices.  
120.16     (l) At a subsequent hearing, each county, school district, 
120.17  city over 500 population, and metropolitan special taxing 
120.18  district may amend its proposed property tax levy and must adopt 
120.19  a final property tax levy.  Each county, city over 500 
120.20  population, and metropolitan special taxing district may also 
120.21  amend its proposed budget and must adopt a final budget at the 
120.22  subsequent hearing.  The final property tax levy must be adopted 
120.23  prior to adopting the final budget.  A school district is not 
120.24  required to adopt its final budget at the subsequent hearing.  
120.25  The subsequent hearing of a taxing authority must be held on a 
120.26  date subsequent to the date of the taxing authority's initial 
120.27  public hearing.  If a continuation hearing is held, the 
120.28  subsequent hearing must be held either immediately following the 
120.29  continuation hearing or on a date subsequent to the continuation 
120.30  hearing.  The subsequent hearing may be held at a regularly 
120.31  scheduled board or council meeting or at a special meeting 
120.32  scheduled for the purposes of the subsequent hearing.  The 
120.33  subsequent hearing of a taxing authority does not have to be 
120.34  coordinated by the county auditor to prevent a conflict with an 
120.35  initial hearing, a continuation hearing, or a subsequent hearing 
120.36  of any other taxing authority.  All subsequent hearings must be 
121.1   held prior to five working days after December 20 of the levy 
121.2   year.  The date, time, and place of the subsequent hearing must 
121.3   be announced at the initial public hearing or at the 
121.4   continuation hearing. 
121.5      (m) The property tax levy certified under section 275.07 by 
121.6   a city of any population, county, metropolitan special taxing 
121.7   district, regional library district, or school district must not 
121.8   exceed the proposed levy determined under subdivision 1, except 
121.9   by an amount up to the sum of the following amounts: 
121.10     (1) the amount of a school district levy whose voters 
121.11  approved a referendum to increase taxes under section 123B.63, 
121.12  subdivision 3, or 126C.17, subdivision 9, after the proposed 
121.13  levy was certified; 
121.14     (2) the amount of a city or county levy approved by the 
121.15  voters after the proposed levy was certified; 
121.16     (3) the amount of a levy to pay principal and interest on 
121.17  bonds approved by the voters under section 475.58 after the 
121.18  proposed levy was certified; 
121.19     (4) the amount of a levy to pay costs due to a natural 
121.20  disaster occurring after the proposed levy was certified, if 
121.21  that amount is approved by the commissioner of revenue under 
121.22  subdivision 6a; 
121.23     (5) the amount of a levy to pay tort judgments against a 
121.24  taxing authority that become final after the proposed levy was 
121.25  certified, if the amount is approved by the commissioner of 
121.26  revenue under subdivision 6a; 
121.27     (6) the amount of an increase in levy limits certified to 
121.28  the taxing authority by the commissioner of children, families, 
121.29  and learning or the commissioner of revenue after the proposed 
121.30  levy was certified; and 
121.31     (7) the amount required under section 126C.55. 
121.32     (n) This subdivision does not apply to towns and special 
121.33  taxing districts other than regional library districts and 
121.34  metropolitan special taxing districts. 
121.35     (o) Notwithstanding the requirements of this section, the 
121.36  employer is required to meet and negotiate over employee 
122.1   compensation as provided for in chapter 179A.  
122.2      <b>[EFFECTIVE DATE.]</b> This section is effective for hearings 
122.3   required in 2001 for taxes payable in 2002 and thereafter. 
122.4      Sec. 48.  Minnesota Statutes 2000, section 275.08, 
122.5   subdivision 1, is amended to read: 
122.6      Subdivision 1.  [GENERALLY.] The mill rate ~~percent~~ of all 
122.7   taxes, except the state tax and taxes the rate of which may be 
122.8   fixed by law, shall be calculated and fixed by the county 
122.9   auditor according to the limitations in this chapter hereinafter 
122.10  prescribed; provided, that if any county, city, town, or school 
122.11  district shall return a greater amount than its limit or than 
122.12  the prescribed rates will raise, the auditor shall extend only 
122.13  such amount of tax as allowed by the limit or that the limited 
122.14  rate will produce. 
122.15     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
122.16  payable in 2002 and thereafter. 
122.17     Sec. 49.  Minnesota Statutes 2000, section 275.08, 
122.18  subdivision 1a, is amended to read: 
122.19     Subd. 1a.  [COMPUTATION OF ~~TAX CAPACITY~~ ASSESSED VALUE.] 
122.20  For taxes payable in ~~1989~~ 2002 and subsequent years, the county 
122.21  auditor shall compute the ~~gross tax capacity~~ assessed value for 
122.22  each parcel according to the class rates specified in section 
122.23  273.13.  The ~~gross tax capacity will be~~ assessed value is the 
122.24  appropriate class rate multiplied by the parcel's market value.  
122.25  ~~For taxes payable in 1990 and subsequent years, the county~~ 
122.26  ~~auditor shall compute the net tax capacity for each parcel~~ 
122.27  ~~according to the class rates specified in section 273.13.  The~~ 
122.28  ~~net tax capacity will be the appropriate class rate multiplied~~ 
122.29  ~~by the parcel's market value.~~  
122.30     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
122.31  payable in 2002 and thereafter. 
122.32     Sec. 50.  Minnesota Statutes 2000, section 275.08, 
122.33  subdivision 1b, is amended to read: 
122.34     Subd. 1b.  [COMPUTATION OF TAX RATES.] The amounts 
122.35  certified to be levied against ~~net tax capacity~~ assessed value 
122.36  under section 275.07 by an individual local government unit 
123.1   shall be divided by the total ~~net tax capacity~~ assessed value of 
123.2   all taxable properties within the local government unit's taxing 
123.3   jurisdiction, excluding the assessed value of properties taxed 
123.4   under section 275.083.  The resulting ratio~~,~~ is expressed as a 
123.5   mill rate, where one mill equals one-tenth of a percent.  The 
123.6   mill rate shall be the local government's local tax rate~~,~~.  The 
123.7   mill rate multiplied by each property's ~~net tax capacity shall~~ 
123.8   ~~be~~ assessed value produces each property's ~~net tax capacity~~ tax 
123.9   for that local government unit before reduction by any credits.  
123.10     ~~Any amount certified to the county auditor to be levied~~ 
123.11  ~~against market value shall be divided by the total referendum~~ 
123.12  ~~market value of all taxable properties within the taxing~~ 
123.13  ~~district.  The resulting ratio, the taxing district's new~~ 
123.14  ~~referendum tax rate, multiplied by each property's referendum~~ 
123.15  ~~market value shall be each property's new referendum tax before~~ 
123.16  ~~reduction by any credits.  For the purposes of this subdivision,~~ 
123.17  ~~"referendum market value" means the market value as defined in~~ 
123.18  ~~section 126C.01, subdivision 3.~~ 
123.19     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
123.20  payable in 2002 and thereafter. 
123.21     Sec. 51.  [275.083] [LOCAL OPTION PUBLIC SAFETY FEE.] 
123.22     Notwithstanding section 272.02, subdivision 7, and any 
123.23  other law to the contrary, a home rule charter or statutory city 
123.24  may impose a tax on each parcel, lot, or tract of real property 
123.25  described as exempt under section 272.02, subdivision 7, that is 
123.26  located within the boundaries of the city or county.  The tax 
123.27  shall be imposed at a uniform rate within the city.  The tax on 
123.28  any parcel shall not exceed the market value of the property, as 
123.29  determined under the provisions of chapters 272 and 273 for 
123.30  taxable properties, times 0.75, times the city local tax rate 
123.31  for the applicable taxes payable year, times a proportion equal 
123.32  to the city's total public safety expenditures divided by its 
123.33  total expenditures, both as reported for the most recent budget 
123.34  year for which the city has submitted information to the state 
123.35  auditor under section 6.74.  A tax imposed under this section 
123.36  must be certified according to the provisions of section 275.07, 
124.1   and must be entered on the tax rolls as a local property tax.  
124.2   All the laws for the enforcement of taxes on real estate apply 
124.3   to the tax imposed under this section. 
124.4      <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
124.5   payable in 2002 and thereafter. 
124.6      Sec. 52.  [275.084] [TRANSPORTATION UTILITY FEE.] 
124.7      Subdivision 1.  [DEFINITIONS.] For the purposes of this 
124.8   section, the following terms in this subdivision have the 
124.9   meanings given: 
124.10     (1) "Municipality" means a home rule charter or statutory 
124.11  city.  
124.12     (2) "Governing body" means the city council of a 
124.13  municipality.  
124.14     (3) "Reconstruction" means paving, grading, curbs and 
124.15  gutters, bridge repair, overlays, drainage, base work, subgrade 
124.16  corrections, and boulevard restoration.  
124.17     (4) "Facility upgrade" means traffic signals, turn lanes, 
124.18  medians, street approaches, alleys, rights-of-way, sidewalks, 
124.19  retaining walls, fence installation, and additional traffic 
124.20  lanes.  
124.21     (5) "Maintenance" means striping, seal coating, crack 
124.22  sealing, sidewalk maintenance, signal maintenance, street light 
124.23  maintenance, and signage. 
124.24     Subd. 2.  [AUTHORIZATION.] A municipality may impose the 
124.25  transportation utility fee provided in this section against land 
124.26  located within its boundaries. 
124.27     Subd. 3.  [PROCEDURES FOR ADOPTION.] A municipality may 
124.28  impose the transportation utility fee provided in this section 
124.29  by ordinance adopted by a two-thirds vote of its governing 
124.30  body.  The resolution must not be voted on or adopted until 
124.31  after a public hearing has been held on the question.  A notice 
124.32  of the time, place, and purpose of the hearing must be published 
124.33  at least once in each week for two successive weeks in the 
124.34  official newspaper of the municipality, or in a newspaper of 
124.35  general content and circulation within the municipality, and the 
124.36  last notice must be published at least seven days prior to the 
125.1   hearing.  The municipality, if adopted, must file the ordinance 
125.2   of record with the county recorder, and the municipality must 
125.3   provide a copy to the county auditor. 
125.4      Subd. 4.  [COLLECTION.] The ordinance adopted under this 
125.5   section must provide for the billing and payment of the fee on a 
125.6   monthly, quarterly, or other basis as the governing body by 
125.7   resolution shall direct.  Fees that, as of October 15 each 
125.8   calendar year, have remained unpaid for at least 30 days must be 
125.9   certified to the county auditor for collection as a special 
125.10  assessment payable in the following calendar year against the 
125.11  affected property. 
125.12     Subd. 5.  [MASTER PLAN REQUIREMENT.] A municipality may not 
125.13  impose the fee provided in this section unless it has prepared 
125.14  and adopted a master plan that includes information on the 
125.15  proposed reconstruction, facility upgrade, and maintenance for 
125.16  the following five years.  A capital improvement plan, public 
125.17  facility plan, or comparable information qualifies as a master 
125.18  plan.  The master plan must include information on the proposed 
125.19  funding sources for all projects required to be included in the 
125.20  plan.  The master plan must be adopted by resolution of the 
125.21  governing body following a hearing and publication of notice of 
125.22  the hearing, as provided in subdivision 3. 
125.23     Subd. 6.  [USE OF PROCEEDS.] Revenues from the fee 
125.24  authorized in this section may only be used for specific 
125.25  projects listed in the master plan and are limited to projected 
125.26  costs of the needs approved in the master plan.  The 
125.27  municipality may not accumulate revenues from the fee beyond the 
125.28  estimated costs for reconstructions, facility upgrades, and 
125.29  maintenance that are described in the master plan. 
125.30     Subd. 7.  [TRIP GENERATION DATA.] The fee imposed must be 
125.31  calculated based on the relationship of the revenues the 
125.32  municipality proposes to generate and a city determined trip 
125.33  generation rate for each type of land use. 
125.34     Subd. 8.  [APPEALS.] A property owner may administratively 
125.35  appeal the amount of the fee or the trip generation rate to the 
125.36  governing body within 60 days after notice of the amount of fee 
126.1   due has been mailed to the property owner.  The appeal must be 
126.2   in writing, signed, and dated by the property owner, and must 
126.3   state the reasons why the amount of the fee or the trip 
126.4   generation rate is incorrect.  The decision of the governing 
126.5   body may be appealed to the tax court in the same manner as 
126.6   appeals of determinations regarding property tax matters 
126.7   provided for in chapter 271.  If the governing body does not 
126.8   make a decision within six months after the filing of an 
126.9   administrative appeal, the property owner may elect to appeal to 
126.10  tax court.  The appeal procedures in this subdivision are in 
126.11  lieu of any appeal procedures relating to special assessments 
126.12  provided for in chapter 429. 
126.13     Subd. 9.  [SPECIAL ASSESSMENTS; BONDS; PROPERTY TAX 
126.14  LEVIES.] The use of the transportation utility fee by a 
126.15  municipality does not restrict the municipality from imposing 
126.16  special assessments, issuing bond debt, or levying property 
126.17  taxes to pay the costs of local street reconstruction, facility 
126.18  upgrades, or maintenance. 
126.19     <b>[EFFECTIVE DATE.]</b> This section is effective for fees 
126.20  payable in 2002 and thereafter. 
126.21     Sec. 53.  Minnesota Statutes 2000, section 275.28, 
126.22  subdivision 1, is amended to read: 
126.23     Subdivision 1.  [AUDITOR TO MAKE.] The county auditor shall 
126.24  make out the tax lists according to the prescribed form, and to 
126.25  correspond with the assessment districts.  The mill rate ~~percent~~ 
126.26  necessary to raise the required amount of the various taxes 
126.27  shall be calculated on the ~~net tax capacity~~ assessed value of 
126.28  property as determined by the state board of equalization, but, 
126.29  in calculating such rates, no rate shall be used ~~resulting in a~~ 
126.30  ~~fraction other than a decimal fraction, or~~ less than a ~~gross~~ 
126.31  local tax rate of ~~.01 percent or a net local tax rate of .01~~ 
126.32  ~~percent~~ 1/1000 of a mill; and, in extending any tax, whenever it 
126.33  amounts to the fractional part of a cent, it shall be made one 
126.34  cent.  The tax lists shall also be made out to correspond with 
126.35  the assessment books in reference to ownership and description 
126.36  of property, with columns for the valuation and for the various 
127.1   items of tax included in the total amount of all taxes set down 
127.2   opposite each description.  The auditor shall enter both the 
127.3   state tax determined under section 275.02, and the local taxes 
127.4   determined under sections 275.08 and 275.083, on the tax lists.  
127.5   The total ad valorem property tax for each description of 
127.6   property before credits is the sum of the amounts of the various 
127.7   local taxes that apply to the parcel plus the amount of any 
127.8   applicable state tax under section 275.02.  Opposite each 
127.9   description which has been sold for taxes, and which is subject 
127.10  to redemption, but not redeemed, shall be placed the words "sold 
127.11  for taxes."  The amount of all special taxes shall be entered in 
127.12  the proper columns, but the general taxes may be shown by 
127.13  entering the mill rate ~~percent~~ of each tax at the head of the 
127.14  proper columns, without extending the same, in which case a 
127.15  schedule of the mill rates ~~percent~~ of such taxes shall be made 
127.16  on the first page of each tax list.  If the auditor fails to 
127.17  enter on any such list before its delivery to the treasurer any 
127.18  tax levied, the tax may be subsequently entered.  The tax lists 
127.19  shall be deemed completed, and all taxes extended thereon, as of 
127.20  January 1 annually.  
127.21     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
127.22  payable in 2002 and thereafter. 
127.23     Sec. 54.  Minnesota Statutes 2000, section 275.61, is 
127.24  amended to read: 
127.25     275.61 [VOTER APPROVED LEVY; ~~MARKET~~ ASSESSED VALUE.] 
127.26     For local governmental subdivisions other than school 
127.27  districts, any levy, including the issuance of debt obligations 
127.28  payable in whole or in part from property taxes, required to be 
127.29  approved and approved by the voters at a general or special 
127.30  election ~~for taxes payable in 1993 and thereafter,~~ shall be 
127.31  levied against the ~~referendum market~~ assessed value of all 
127.32  taxable property within the governmental subdivision~~, as defined~~ 
127.33  ~~in section 126C.01, subdivision 3~~.  Any levy amount subject to 
127.34  the requirements of this section shall be certified separately 
127.35  to the county auditor under section 275.07. 
127.36     The ballot shall state the maximum amount of the increased 
128.1   levy as a percentage of ~~market~~ assessed value and the amount 
128.2   that will be raised by the new referendum tax rate in the first 
128.3   year it is to be levied.  
128.4      <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
128.5   payable in 2002 and thereafter. 
128.6      Sec. 55.  Minnesota Statutes 2000, section 276.04, 
128.7   subdivision 2, is amended to read: 
128.8      Subd. 2.  [CONTENTS OF TAX STATEMENTS.] (a) The treasurer 
128.9   shall provide for the printing of the tax statements.  The 
128.10  commissioner of revenue shall prescribe the form of the property 
128.11  tax statement and its contents.  The statement must contain a 
128.12  tabulated statement of the dollar amount due to each taxing 
128.13  authority and the amount of the state ~~determined school~~ tax from 
128.14  the parcel of real property for which a particular tax statement 
128.15  is prepared.  The dollar amounts attributable to the county, the 
128.16  state ~~determined school~~ tax, the voter approved school tax, the 
128.17  other local school tax, the township or municipality, and the 
128.18  total of the metropolitan special taxing districts as defined in 
128.19  section 275.065, subdivision 3, paragraph (i), must be 
128.20  separately stated.  The amounts due all other special taxing 
128.21  districts, if any, may be aggregated.  The amount of the tax on 
128.22  homesteads qualifying under the senior citizens' property tax 
128.23  deferral program under chapter 290B is the total amount of 
128.24  property tax before subtraction of the deferred property tax 
128.25  amount.  The amount of the tax on contamination value imposed 
128.26  under sections 270.91 to 270.98, if any, must also be separately 
128.27  stated.  The dollar amounts, including the dollar amount of any 
128.28  special assessments, may be rounded to the nearest even whole 
128.29  dollar.  For purposes of this section whole odd-numbered dollars 
128.30  may be adjusted to the next higher even-numbered dollar.  The 
128.31  amount of market value excluded under section 273.11, 
128.32  subdivision 16, if any, must also be listed on the tax 
128.33  statement.  ~~The statement shall include the following sentences,~~ 
128.34  ~~printed in upper case letters in boldface print:  "EVEN THOUGH~~ 
128.35  ~~THE STATE OF MINNESOTA DOES NOT RECEIVE ANY PROPERTY TAX~~ 
128.36  ~~REVENUES, IT SETS THE AMOUNT OF THE STATE-DETERMINED SCHOOL TAX~~ 
129.1   ~~LEVY.  THE STATE OF MINNESOTA REDUCES YOUR PROPERTY TAX BY~~ 
129.2   ~~PAYING CREDITS AND REIMBURSEMENTS TO LOCAL UNITS OF GOVERNMENT."~~ 
129.3      (b) The property tax statements for manufactured homes and 
129.4   sectional structures taxed as personal property shall contain 
129.5   the same information that is required on the tax statements for 
129.6   real property.  
129.7      (c) Real and personal property tax statements must contain 
129.8   the following information in the order given in this paragraph.  
129.9   The information must contain the current year tax information in 
129.10  the right column with the corresponding information for the 
129.11  previous year in a column on the left: 
129.12     (1) the property's estimated market value under section 
129.13  273.11, subdivision 1; 
129.14     (2) the property's taxable market value after reductions 
129.15  under section 273.11, subdivisions 1a and 16; 
129.16     (3) the property's gross tax, calculated by adding the 
129.17  property's total property tax to the sum of the aids enumerated 
129.18  in clause (4); 
129.19     (4) a total of the following aids: 
129.20     (i) education aids payable under chapters 122A, 123A, 123B, 
129.21  124D, 125A, 126C, and 127A; 
129.22     (ii) local government aids for cities, towns, and counties 
129.23  under chapter 477A; 
129.24     (iii) disparity reduction aid under section 273.1398; and 
129.25     (iv) homestead and agricultural credit aid under section 
129.26  273.1398; 
129.27     (5) for homestead ~~residential and agricultural~~ properties, 
129.28  the ~~education~~ market value homestead ~~credit~~ credits under 
129.29  section ~~273.1382~~ 273.1384; 
129.30     (6) any credits received under sections 273.119; 273.123; 
129.31  273.135; 273.1391; 273.1398, subdivision 4; 469.171; and 
129.32  473H.10, except that the amount of credit received under section 
129.33  273.135 must be separately stated and identified as "taconite 
129.34  tax relief"; and 
129.35     (7) the net tax payable in the manner required in paragraph 
129.36  (a). 
130.1      (d) If the county uses envelopes for mailing property tax 
130.2   statements and if the county agrees, a taxing district may 
130.3   include a notice with the property tax statement notifying 
130.4   taxpayers when the taxing district will begin its budget 
130.5   deliberations for the current year, and encouraging taxpayers to 
130.6   attend the hearings.  If the county allows notices to be 
130.7   included in the envelope containing the property tax statement, 
130.8   and if more than one taxing district relative to a given 
130.9   property decides to include a notice with the tax statement, the 
130.10  county treasurer or auditor must coordinate the process and may 
130.11  combine the information on a single announcement.  
130.12     The commissioner of revenue shall certify to the county 
130.13  auditor the actual or estimated aids enumerated in clause (4) 
130.14  that local governments will receive in the following year.  The 
130.15  commissioner must certify this amount by January 1 of each year. 
130.16     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2001 
130.17  and thereafter, for statements required in 2002 and thereafter. 
130.18     Sec. 56.  Minnesota Statutes 2000, section 276A.06, 
130.19  subdivision 3, is amended to read: 
130.20     Subd. 3.  [APPORTIONMENT OF LEVY.] The county auditor shall 
130.21  apportion the levy of each governmental unit in the county in 
130.22  the manner prescribed by this subdivision.  The auditor shall: 
130.23     (a) by August 20 of 1997 and each subsequent year, 
130.24  determine the areawide portion of the levy for each governmental 
130.25  unit by multiplying the local tax rate of the governmental unit 
130.26  for the preceding levy year times the distribution value set 
130.27  forth in subdivision 2, clause (b); ~~and~~ 
130.28     (b) by September 5 of 1997 and each subsequent year, 
130.29  determine the local portion of the current year's levy by 
130.30  subtracting the resulting amount from clause (a) from the 
130.31  governmental unit's current year's levy~~.~~; and 
130.32     (c) for determinations made under paragraph (a) in the case 
130.33  of school districts, in 2001 and thereafter, for taxes payable 
130.34  in 2002 and thereafter, exclude the general education tax rate 
130.35  from the local tax rate for the preceding levy year. 
130.36     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
131.1   following final enactment. 
131.2      Sec. 57.  Minnesota Statutes 2000, section 282.01, 
131.3   subdivision 1a, is amended to read: 
131.4      Subd. 1a.  [CONVEYANCE; GENERALLY.] Tax-forfeited lands may 
131.5   be sold by the county board to an organized or incorporated 
131.6   governmental subdivision of the state for any public purpose for 
131.7   which the subdivision is authorized to acquire property or may 
131.8   be released from the trust in favor of the taxing districts on 
131.9   application of a state agency for an authorized use at not less 
131.10  than their value as determined by the county board.  ~~The~~ 
131.11  ~~commissioner of revenue may convey by deed in the name of the~~ 
131.12  ~~state a tract of tax-forfeited land held in trust in favor of~~ 
131.13  ~~the taxing districts to a governmental subdivision for an~~ 
131.14  ~~authorized public use, if an application is submitted to the~~ 
131.15  ~~commissioner which includes a statement of facts as to the use~~ 
131.16  ~~to be made of the tract and the need therefor and the~~ 
131.17  ~~recommendation of the county board.~~  
131.18     <b>[EFFECTIVE DATE.]</b> This section is effective for deeds 
131.19  issued on or after July 1, 2001. 
131.20     Sec. 58.  Minnesota Statutes 2000, section 282.01, 
131.21  subdivision 1b, is amended to read: 
131.22     Subd. 1b.  [CONVEYANCE; TARGETED NEIGHBORHOOD LANDS.] (a) 
131.23  Notwithstanding subdivision 1a, in the case of tax-forfeited 
131.24  lands located in a targeted neighborhood, as defined in section 
131.25  469.201, subdivision 10, ~~outside the metropolitan area, as~~ 
131.26  ~~defined in~~ and section 473.121, subdivision 2, the commissioner 
131.27  of revenue ~~may~~ shall convey by deed in the name of the state any 
131.28  tract of tax-forfeited land held in trust in favor of the taxing 
131.29  districts, to a political subdivision that submits an 
131.30  application to the commissioner of revenue and the 
131.31  recommendation of the county board. 
131.32     (b) ~~Notwithstanding subdivision 1a, in the case of~~ 
131.33  ~~tax-forfeited lands located in a targeted neighborhood, as~~ 
131.34  ~~defined in section 469.201, subdivision 10, in a county in the~~ 
131.35  ~~metropolitan area, as defined in section 473.121, subdivision 2,~~ 
131.36  ~~the commissioner of revenue shall convey by deed in the name of~~ 
132.1   ~~the state any tract of tax-forfeited land held in trust in favor~~ 
132.2   ~~of the taxing districts, to a political subdivision that submits~~ 
132.3   ~~an application to the commissioner of revenue and the county~~ 
132.4   ~~board.~~ 
132.5      ~~(c)~~ The application under paragraph (a) ~~or (b)~~ must include 
132.6   a statement of facts as to the use to be made of the tract, the 
132.7   need therefor, and a resolution, adopted by the governing body 
132.8   of the political subdivision, finding that the conveyance of a 
132.9   tract of tax-forfeited land to the political subdivision is 
132.10  necessary to provide for the redevelopment of land as productive 
132.11  taxable property.  Deeds of conveyance issued under paragraph 
132.12  (a) are not conditioned on continued use of the property for the 
132.13  use stated in the application.  
132.14     <b>[EFFECTIVE DATE.]</b> This section is effective for deeds 
132.15  issued on or after July 1, 2001. 
132.16     Sec. 59.  Minnesota Statutes 2000, section 282.08, is 
132.17  amended to read: 
132.18     282.08 [APPORTIONMENT OF PROCEEDS TO TAXING DISTRICTS.] 
132.19     The net proceeds from the sale or rental of any parcel of 
132.20  forfeited land, or from the sale of products from the forfeited 
132.21  land, must be apportioned by the county auditor to the taxing 
132.22  districts interested in the land, as follows: 
132.23     (1) the portion required to pay any amounts included in the 
132.24  appraised value under section 282.01, subdivision 3, as 
132.25  representing increased value due to any public improvement made 
132.26  after forfeiture of the parcel to the state, but not exceeding 
132.27  the amount certified by the clerk of the municipality must be 
132.28  apportioned to the municipal subdivision entitled to it; 
132.29     (2) the portion required to pay any amount included in the 
132.30  appraised value under section 282.019, subdivision 5, 
132.31  representing increased value due to response actions taken after 
132.32  forfeiture of the parcel to the state, but not exceeding the 
132.33  amount of expenses certified by the pollution control agency or 
132.34  the commissioner of agriculture, must be apportioned to the 
132.35  agency or the commissioner of agriculture and deposited in the 
132.36  fund from which the expenses were paid; 
133.1      (3) the portion of the remainder required to discharge any 
133.2   special assessment chargeable against the parcel for drainage or 
133.3   other purpose whether due or deferred at the time of forfeiture, 
133.4   must be apportioned to the municipal subdivision entitled to it; 
133.5   ~~and~~ 
133.6      (4) the portion of the remainder equal to unpaid state tax 
133.7   levies against the property for the years the property was on 
133.8   the tax lists prior to forfeiture, not including the associated 
133.9   penalty and interest amounts; and 
133.10     (5) any balance must be apportioned as follows: 
133.11     (i) The county board may annually by resolution set aside 
133.12  no more than 30 percent of the receipts remaining to be used for 
133.13  timber development on tax-forfeited land and dedicated memorial 
133.14  forests, to be expended under the supervision of the county 
133.15  board.  It must be expended only on projects approved by the 
133.16  commissioner of natural resources. 
133.17     (ii) The county board may annually by resolution set aside 
133.18  no more than 20 percent of the receipts remaining to be used for 
133.19  the acquisition and maintenance of county parks or recreational 
133.20  areas as defined in sections 398.31 to 398.36, to be expended 
133.21  under the supervision of the county board. 
133.22     (iii) Any balance remaining must be apportioned as 
133.23  follows:  county, 40 percent; town or city, 20 percent; and 
133.24  school district, 40 percent, provided, however, that in 
133.25  unorganized territory that portion which would have accrued to 
133.26  the township must be administered by the county board of 
133.27  commissioners. 
133.28     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2001, 
133.29  and thereafter. 
133.30     Sec. 60.  Minnesota Statutes 2000, section 290A.04, 
133.31  subdivision 2, is amended to read: 
133.32     Subd. 2.  [HOMEOWNERS.] A claimant whose property taxes 
133.33  payable are in excess of the percentage of the household income 
133.34  stated below shall pay an amount equal to the percent of income 
133.35  shown for the appropriate household income level along with the 
133.36  percent to be paid by the claimant of the remaining amount of 
134.1   property taxes payable.  The state refund equals the amount of 
134.2   property taxes payable that remain, up to the state refund 
134.3   amount shown below.  
134.4                         Percent           Percent    Maximum
134.5   Household Income     of Income          Paid by     State
134.6                                           Claimant    Refund
134.7       ~~$0 to 1,029~~
134.8       $0 to 1,189     1.2 percent        18 percent   ~~$440~~ $1,190
134.9    ~~1,030 to 2,059~~
134.10   1,190 to 2,389     1.3 percent        18 percent   ~~$440~~ $1,190
134.11   ~~2,060 to 3,099~~
134.12   2,390 to 3,589     1.4 percent        20 percent   ~~$440~~ $1,190
134.13   ~~3,100 to 4,129~~
134.14   3,590 to 4,779     1.6 percent        20 percent   ~~$440~~ $1,190
134.15   ~~4,130 to 5,159~~
134.16   4,780 to 5,969     1.7 percent        20 percent   ~~$440~~ $1,190
134.17   ~~5,160 to 7,229~~
134.18   5,970 to 8,369     1.9 percent        25 percent   ~~$440~~ $1,190
134.19   ~~7,230 to 8,259~~
134.20   8,370 to 9,559     2.1 percent        25 percent   ~~$440~~ $1,190
134.21   ~~8,260 to 9,289~~
134.22   9,560 to 10,759    2.2 percent        25 percent   ~~$440~~ $1,190
134.23   ~~9,290 to 10,319~~
134.24  10,760 to 11,949    2.3 percent        30 percent   ~~$440~~ $1,190
134.25  ~~10,320 to 11,349~~
134.26  11,950 to 13,139    2.4 percent        30 percent   ~~$440~~ $1,190
134.27  ~~11,350 to 12,389~~
134.28  13,140 to 14,349    2.5 percent        30 percent   ~~$440~~ $1,190
134.29  ~~12,390 to 14,449~~
134.30  14,350 to 16,729    2.6 percent        30 percent   ~~$440~~ $1,190
134.31  ~~14,450 to 15,479~~
134.32  16,730 to 17,919    2.8 percent        35 percent   ~~$440~~ $1,190
134.33  ~~15,480 to 16,509~~
134.34  17,920 to 19,119    3.0 percent        35 percent   ~~$440~~ $1,190
134.35  ~~16,510 to 17,549~~
134.36  19,120 to 20,319    3.2 percent        40 percent   ~~$440~~ $1,190
134.37  ~~17,550 to 21,669~~
134.38  20,320 to 25,089    3.3 percent        40 percent   ~~$440~~ $1,190
134.39  ~~21,670 to 24,769~~
134.40  25,090 to 28,679    3.4 percent        45 percent   ~~$440~~ $1,190
134.41  ~~24,770 to 30,959~~
134.42  28,680 to 41,819    3.5 percent        45 percent   ~~$440~~ $1,190
134.43  ~~30,960 to 36,119~~    ~~3.5 percent~~        ~~45 percent~~   ~~$440~~
134.44  ~~36,120 to 41,279~~
134.45  41,820 to 47,789    3.7 percent        50 percent   ~~$440~~ $1,190
134.46  ~~41,280 to 58,829~~
134.47  47,790 to 63,329    4.0 percent        50 percent   ~~$440~~ $1,190
134.48  63,330 to 64,519    4.0 percent        50 percent   $1,080
134.49  64,520 to 65,719    4.0 percent        50 percent   $  960
134.50  65,720 to 66,909    4.0 percent        50 percent   $  830
134.51  66,910 to 68,109    4.0 percent        50 percent   $  720
134.52  ~~58,830 to 59,859~~
134.53  68,110 to 69,309    4.0 percent        50 percent   ~~$310~~ $600
134.54  ~~59,860 to 60,889~~
134.55  69,310 to 70,499    4.0 percent        50 percent   ~~$210~~ $360
134.56  ~~60,890 to 61,929~~
134.57  70,500 to 71,699    4.0 percent        50 percent   ~~$100~~ $120
134.58     The payment made to a claimant shall be the amount of the 
134.59  state refund calculated under this subdivision.  No payment is 
134.60  allowed if the claimant's household income is ~~$61,930~~ $71,700 or 
134.61  more. 
134.62     <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
135.1   refunds based on property taxes payable in 2002. 
135.2      Sec. 61.  Minnesota Statutes 2000, section 290A.04, 
135.3   subdivision 2a, is amended to read: 
135.4      Subd. 2a.  [RENTERS.] A claimant whose rent constituting 
135.5   property taxes exceeds the percentage of the household income 
135.6   stated below must pay an amount equal to the percent of income 
135.7   shown for the appropriate household income level along with the 
135.8   percent to be paid by the claimant of the remaining amount of 
135.9   rent constituting property taxes.  The state refund equals the 
135.10  amount of rent constituting property taxes that remain, up to 
135.11  the maximum state refund amount shown below.  
135.12                        Percent           Percent      Maximum
135.13  Household Income     of Income          Paid by        State
135.14                                          Claimant      Refund
135.15  $     ~~0 to 3,099~~
135.16        0 to 3,589     1.0 percent       5 percent    ~~$1,030~~ $1,190
135.17    ~~3,100 to 4,129~~
135.18    3,590 to 4,779     1.0 percent      10 percent    ~~$1,030~~ $1,190
135.19    ~~4,130 to 5,159~~
135.20    4,780 to 5,969     1.1 percent      10 percent    ~~$1,030~~ $1,190
135.21    ~~5,160 to 7,229~~
135.22    5,970 to 8,369     1.2 percent      10 percent    ~~$1,030~~ $1,190
135.23    ~~7,230 to 9,289~~
135.24    8,370 to 10,759    1.3 percent      15 percent    ~~$1,030~~ $1,190
135.25    ~~9,290 to 10,319~~
135.26   10,760 to 11,949    1.4 percent      15 percent    ~~$1,030~~ $1,190
135.27   ~~10,320 to 11,349~~
135.28   11,950 to 13,139    1.4 percent      20 percent    ~~$1,030~~ $1,190
135.29   ~~11,350 to 13,419~~
135.30   13,140 to 15,539    1.5 percent      20 percent    ~~$1,030~~ $1,190
135.31   ~~13,420 to 14,449~~
135.32   15,540 to 16,729    1.6 percent      20 percent    ~~$1,030~~ $1,190
135.33   ~~14,450 to 15,479~~
135.34   16,730 to 17,919    1.7 percent      25 percent    ~~$1,030~~ $1,190
135.35   ~~15,480 to 17,549~~
135.36   17,920 to 20,319    1.8 percent      25 percent    ~~$1,030~~ $1,190
135.37   ~~17,550 to 18,579~~
135.38   20,320 to 21,509    1.9 percent      30 percent    ~~$1,030~~ $1,190
135.39   ~~18,580 to 19,609~~
135.40   21,510 to 22,699    2.0 percent      30 percent    ~~$1,030~~ $1,190
135.41   ~~19,610 to 20,639~~
135.42   22,700 to 23,899    2.2 percent      30 percent    ~~$1,030~~ $1,190
135.43   ~~20,640 to 21,669~~
135.44   23,900 to 25,089    2.4 percent      30 percent    ~~$1,030~~ $1,190
135.45   ~~21,670 to 22,709~~
135.46   25,090 to 26,289    2.6 percent      35 percent    ~~$1,030~~ $1,190
135.47   ~~22,710 to 23,739~~
135.48   26,290 to 27,489    2.7 percent      35 percent    ~~$1,030~~ $1,190
135.49   ~~23,740 to 24,769~~
135.50   27,490 to 28,679    2.8 percent      35 percent    ~~$1,030~~ $1,190
135.51   ~~24,770 to 25,799~~
135.52   28,680 to 29,869    2.9 percent      40 percent    ~~$1,030~~ $1,190
135.53   ~~25,800 to 26,839~~
135.54   29,870 to 31,079    3.0 percent      40 percent    ~~$1,030~~ $1,190
135.55   ~~26,840 to 27,869~~
135.56   31,080 to 32,269    3.1 percent      40 percent    ~~$1,030~~ $1,190
135.57   ~~27,870 to 28,899~~
135.58   32,270 to 33,459    3.2 percent      40 percent    ~~$1,030~~ $1,190
135.59   ~~28,900 to 29,929~~
135.60   33,460 to 34,649    3.3 percent      45 percent    ~~$  930~~ $1,080
136.1    ~~29,930 to 30,959~~
136.2    34,650 to 35,849    3.4 percent      45 percent    ~~$  830~~ $  960
136.3    ~~30,960 to 31,999~~
136.4    35,850 to 37,049    3.5 percent      45 percent    ~~$  720~~ $  830
136.5    ~~32,000 to 33,029~~
136.6    37,050 to 38,239    3.5 percent      50 percent    ~~$  620~~ $  720
136.7    ~~33,030 to 34,059~~
136.8    38,240 to 39,439    3.5 percent      50 percent    ~~$  520~~ $  600
136.9    ~~34,060 to 35,089~~
136.10   39,440 to 40,629    3.5 percent      50 percent    ~~$  310~~ $  360
136.11   ~~35,090 to 36,119~~
136.12   40,630 to 41,819    3.5 percent      50 percent    ~~$  100~~ $  120
136.13     The payment made to a claimant is the amount of the state 
136.14  refund calculated under this subdivision.  No payment is allowed 
136.15  if the claimant's household income is ~~$36,120~~ $41,820 or more. 
136.16     <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
136.17  refunds based on rent constituting property taxes paid in 2001. 
136.18     Sec. 62.  Minnesota Statutes 2000, section 290A.04, 
136.19  subdivision 4, is amended to read: 
136.20     Subd. 4.  [INFLATION ADJUSTMENT.] Beginning for property 
136.21  tax refunds payable in calendar year ~~1996~~ 2002, the commissioner 
136.22  shall annually adjust the dollar amounts of the income 
136.23  thresholds and the maximum refunds under subdivisions 2 and 2a 
136.24  for inflation.  The commissioner shall make the inflation 
136.25  adjustments in accordance with section ~~290.06, subdivision 2d~~ 1f 
136.26  of the Internal Revenue Code, except that for purposes of this 
136.27  subdivision the percentage increase shall be determined from the 
136.28  year ending on June 30, ~~1994~~ 2000, to the year ending on June 30 
136.29  of the year preceding that in which the refund is payable.  The 
136.30  commissioner shall use the appropriate percentage increase to 
136.31  annually adjust the income thresholds and maximum refunds under 
136.32  subdivisions 2 and 2a for inflation without regard to whether or 
136.33  not the income tax brackets are adjusted for inflation in that 
136.34  year.  The commissioner shall round the thresholds and the 
136.35  maximum amounts, as adjusted to the nearest $10 amount.  If the 
136.36  amount ends in $5, the commissioner shall round it up to the 
136.37  next $10 amount.  
136.38     The commissioner shall annually announce the adjusted 
136.39  refund schedule at the same time provided under section 290.06.  
136.40  The determination of the commissioner under this subdivision is 
136.41  not a rule under the Administrative Procedure Act. 
137.1      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
137.2   following final enactment. 
137.3      Sec. 63.  Minnesota Statutes 2000, section 469.1763, 
137.4   subdivision 6, is amended to read: 
137.5      Subd. 6.  [POOLING PERMITTED FOR DEFICITS.] (a) This 
137.6   subdivision applies only to districts for which the request for 
137.7   certification was made before June 2, ~~1997~~ 2001. 
137.8      (b) The municipality for the district may transfer 
137.9   available increments from another tax increment financing 
137.10  district located in the municipality, if the transfer is 
137.11  necessary to eliminate a deficit in the district to which the 
137.12  increments are transferred.  A deficit in the district for 
137.13  purposes of this subdivision means the lesser of the following 
137.14  two amounts: 
137.15     (1)(i) the amount due during the calendar year to pay 
137.16  preexisting obligations of the district; minus 
137.17     (ii) the total increments to be collected from properties 
137.18  located within the district that are available for the calendar 
137.19  year; plus 
137.20     (iii) total increments from properties located in other 
137.21  districts in the municipality that are available to be used to 
137.22  meet the district's obligations under this section, excluding 
137.23  this subdivision, or other provisions of law (but excluding a 
137.24  special tax under section 469.1791 and the grant program under 
137.25  Laws 1997, chapter 231, article 1, section 19, or this article); 
137.26  or 
137.27     (2) the reduction in increments collected from properties 
137.28  located in the district for the calendar year as a result of the 
137.29  changes in class rates in ~~Laws 1997, chapter 231, article 1;~~ 
137.30  ~~Laws 1998, chapter 389, article 2; and Laws 1999, chapter~~ 
137.31  ~~243~~ this article or the elimination of the general education tax 
137.32  levy under this article. 
137.33     (c) A preexisting obligation means bonds issued and sold 
137.34  before June 2, ~~1997~~ 2001, and bonds issued to refund such bonds 
137.35  or to reimburse expenditures made in conjunction with a signed 
137.36  contractual agreement entered into before June 2, ~~1997~~ 2001, to 
138.1   the extent that the bonds are secured by a pledge of increments 
138.2   from the tax increment financing district.  For purposes of this 
138.3   subdivision, bonds exclude an obligation to reimburse or pay a 
138.4   developer or owner of property located in the district for 
138.5   amounts incurred or paid by the developer or owner. 
138.6      (d) The municipality may require a development authority, 
138.7   other than a seaway port authority, to transfer available 
138.8   increments for any of its tax increment financing districts in 
138.9   the municipality to make up an insufficiency in another district 
138.10  in the municipality, regardless of whether the district was 
138.11  established by the development authority or another development 
138.12  authority.  This authority applies notwithstanding any law to 
138.13  the contrary, but applies only to a development authority that: 
138.14     (1) was established by the municipality; or 
138.15     (2) the governing body of which is appointed, in whole or 
138.16  part, by the municipality or an officer of the municipality or 
138.17  which consists, in whole or part, of members of the governing 
138.18  body of the municipality. 
138.19     (e) The authority under this subdivision to spend tax 
138.20  increments outside of the area of the district from which the 
138.21  tax increments were collected: 
138.22     (1) may only be exercised after obtaining approval of the 
138.23  use of the increments, in writing, by the commissioner of 
138.24  revenue; 
138.25     (2) is an exception to the restrictions under section 
138.26  469.176, subdivision 4i, and the other provisions of this 
138.27  section, and the percentage restrictions under subdivision 2 
138.28  must be calculated after deducting increments spent under this 
138.29  subdivision from the total increments for the district; and 
138.30     (3) applies notwithstanding the provisions of the Tax 
138.31  Increment Financing Act in effect for districts for which the 
138.32  request for certification was made before June 30, 1982, or any 
138.33  other law to the contrary. 
138.34     <b>[EFFECTIVE DATE.]</b> This section is effective January 2, 
138.35  2003, and thereafter. 
138.36     Sec. 64.  Minnesota Statutes 2000, section 469.177, 
139.1   subdivision 1a, is amended to read: 
139.2      Subd. 1a.  [ORIGINAL LOCAL TAX RATE.] At the time of the 
139.3   initial certification of the original net tax capacity for a tax 
139.4   increment financing district or a subdistrict, the county 
139.5   auditor shall certify the original local tax rate that applies 
139.6   to the district or subdistrict.  The original local tax rate is 
139.7   the sum of all the local tax rates that apply to a property in 
139.8   the district or subdistrict.  The local tax rate to be certified 
139.9   is the rate in effect for the same taxes payable year applicable 
139.10  to the tax capacity values certified as the district's or 
139.11  subdistrict's original tax capacity.  The resulting tax capacity 
139.12  rate is the original local tax rate for the life of the district 
139.13  or subdistrict.  The original local tax rate does not include 
139.14  any rate or amount attributable to a state levy, whether the 
139.15  state levy is imposed by section 275.02 or another provision of 
139.16  law. 
139.17     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
139.18  following final enactment. 
139.19     Sec. 65.  Minnesota Statutes 2000, section 469.177, 
139.20  subdivision 11, is amended to read: 
139.21     Subd. 11.  [DEDUCTION FOR ENFORCEMENT COSTS; 
139.22  APPROPRIATION.] (a) The county treasurer shall deduct an amount 
139.23  equal to ~~0.25~~ 0.34 percent of any increment distributed to an 
139.24  authority or municipality.  The county treasurer shall pay the 
139.25  amount deducted to the state treasurer for deposit in the state 
139.26  general fund. 
139.27     (b) The amounts deducted and paid under paragraph (a) are 
139.28  appropriated to the state auditor for the cost of (1) the 
139.29  financial reporting of tax increment financing information and 
139.30  (2) the cost of examining and auditing of authorities' use of 
139.31  tax increment financing as provided under section 469.1771, 
139.32  subdivision 1.  Notwithstanding section 16A.28 or any other law 
139.33  to the contrary, this appropriation does not cancel and remains 
139.34  available until spent.  
139.35     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
139.36  payable in 2002 and thereafter. 
140.1      Sec. 66.  Minnesota Statutes 2000, section 473.446, 
140.2   subdivision 1, is amended to read: 
140.3      Subdivision 1.  [WITHIN TRANSIT TAXING DISTRICT.] For the 
140.4   purposes of sections 473.405 to 473.449 and the metropolitan 
140.5   transit system, except as otherwise provided in this subdivision 
140.6   and subdivision 1b, the council shall levy each year upon all 
140.7   taxable property within the metropolitan transit taxing 
140.8   district, defined in subdivision 2, a transit tax consisting of: 
140.9      (a) an amount which shall be used for payment of the 
140.10  expenses of operating transit and paratransit service and to 
140.11  provide for payment of obligations issued by the council under 
140.12  section 473.436, subdivision 6; 
140.13     (b) an additional amount, if any, the council determines to 
140.14  be necessary to provide for the full and timely payment of its 
140.15  certificates of indebtedness and other obligations outstanding 
140.16  on July 1, 1985, to which property taxes under this section have 
140.17  been pledged; and 
140.18     (c) an additional amount necessary to provide full and 
140.19  timely payment of certificates of indebtedness, bonds, including 
140.20  refunding bonds or other obligations issued or to be issued 
140.21  under section 473.39 by the council for purposes of acquisition 
140.22  and betterment of property and other improvements of a capital 
140.23  nature and to which the council has specifically pledged tax 
140.24  levies under this clause. 
140.25     The property tax levied by the council for general purposes 
140.26  under paragraph (a) must not exceed the following amount for the 
140.27  years specified: 
140.28     (1) for taxes payable in 1995, the council's property tax 
140.29  levy limitation for general transit purposes is equal to the 
140.30  former regional transit board's property tax levy limitation for 
140.31  general transit purposes under this subdivision, for taxes 
140.32  payable in 1994, multiplied by an index for market valuation 
140.33  changes equal to the total market valuation of all taxable 
140.34  property located within the metropolitan transit taxing district 
140.35  for the current taxes payable year divided by the total market 
140.36  valuation of all taxable property located within the 
141.1   metropolitan transit taxing district for the previous taxes 
141.2   payable year; ~~and~~ 
141.3      (2) for taxes payable in 1996 ~~and subsequent years~~ through 
141.4   2001, the product of (i) the council's property tax levy 
141.5   limitation for general transit purposes for the previous year 
141.6   determined under this subdivision before reduction by the amount 
141.7   levied by any municipality in the previous year under section 
141.8   473.388, subdivision 7, multiplied by (ii) an index for market 
141.9   valuation changes equal to the total market valuation of all 
141.10  taxable property located within the metropolitan transit taxing 
141.11  district for the current taxes payable year divided by the total 
141.12  market valuation of all taxable property located within the 
141.13  metropolitan transit taxing district for the previous taxes 
141.14  payable year, minus the amount levied by any municipality in the 
141.15  current levy year under section 473.388, subdivision 7~~.~~; 
141.16     (3) for taxes payable in 2002, the council's property tax 
141.17  levy limitation for general transit purposes is equal to (i) the 
141.18  council's property tax levy limitation for general transit 
141.19  purposes for the previous year, determined under this 
141.20  subdivision before reduction by the amount levied by any 
141.21  municipality for the previous year under section 473.388, 
141.22  subdivision 7, multiplied by (ii) an index for market valuation 
141.23  changes equal to the total market valuation of all taxable 
141.24  property located within the metropolitan transit taxing district 
141.25  for the current taxes payable year divided by the total market 
141.26  valuation of all taxable property located within the 
141.27  metropolitan transit taxing district for the previous taxes 
141.28  payable year, minus (iii) the amount levied by a municipality 
141.29  under section 473.388, subdivision 7, for the same taxes payable 
141.30  year as the council's limitation, plus (iv) $17,400,000.  The 
141.31  council must distribute 13.8 percent of any amount levied 
141.32  pursuant to item (iv) as additional financial assistance under 
141.33  section 473.388; 
141.34     (4) for taxes payable in 2003, the council's property tax 
141.35  levy limitation for general transit purposes is equal to (i) the 
141.36  council's property tax levy limitation for general transit 
142.1   purposes for the previous year, determined under this 
142.2   subdivision before reduction by the amount levied by any 
142.3   municipality for the previous year under section 473.388, 
142.4   subdivision 7, minus (ii) $17,400,000, multiplied by (iii) the 
142.5   index for market valuation changes as described in clause (3), 
142.6   minus (iv) the amount levied by a municipality under section 
142.7   473.388, subdivision 7, for the same taxes payable year as the 
142.8   council's limitation, plus (iv) $11,500,000.  The council must 
142.9   distribute 13.8 percent of any amount levied pursuant to item 
142.10  (iv) as additional financial assistance under section 473.388; 
142.11  and 
142.12     (5) for taxes payable in 2004 and thereafter, the council's 
142.13  property tax levy limitation for general transit purposes is 
142.14  equal to (i) the council's property tax levy limitation for 
142.15  general transit purposes for the previous year, determined under 
142.16  this subdivision before reduction by the amount levied by any 
142.17  municipality for the previous year under section 473.388, 
142.18  subdivision 7, but excluding the amount in clause (4), item 
142.19  (iv), multiplied by (ii) the index for market valuation changes 
142.20  as described in clause (3), minus (iii) the amount levied by a 
142.21  municipality under section 473.388, subdivision 7, for the same 
142.22  taxes payable year as the council's limitation, plus (iv) 
142.23  $11,500,000 times an index for market valuation changes equal to 
142.24  the total market valuation of all taxable property located 
142.25  within the transit district for the current taxes payable year 
142.26  divided by the total market valuation of all taxable property 
142.27  located in the district for the taxes payable year 2002.  In 
142.28  2004, and each year thereafter, the council must distribute 13.8 
142.29  percent of any amount levied pursuant to item (iv) as additional 
142.30  financial assistance under section 473.388, subdivision 7. 
142.31     The portion of the property tax levy for transit district 
142.32  operating purposes attributable to a municipality that has 
142.33  exercised a local levy option under section 473.388, subdivision 
142.34  7, is the amount as determined under subdivision 1b.  The 
142.35  portion of the property tax levy for transit district operating 
142.36  purposes attributable to the remaining municipalities within the 
143.1   transit district is found by subtracting the portions 
143.2   attributable to the municipalities that have exercised a local 
143.3   levy option under section 473.388, subdivision 7. 
143.4      For the taxes payable year 1995, the index for market 
143.5   valuation changes shall be multiplied by an amount equal to the 
143.6   sum of the regional transit board's property tax levy limitation 
143.7   for the taxes payable year 1994 and $160,665.  The $160,665 
143.8   increase shall be a permanent adjustment to the levy limit base 
143.9   used in determining the regional transit board's property tax 
143.10  levy limitation for general purposes for subsequent taxes 
143.11  payable years. 
143.12     For the purpose of determining the council's property tax 
143.13  levy limitation for general transit purposes under this 
143.14  subdivision, "total market valuation" means the total market 
143.15  valuation of all taxable property within the metropolitan 
143.16  transit taxing district without valuation adjustments for fiscal 
143.17  disparities (chapter 473F), tax increment financing (sections 
143.18  469.174 to 469.179), and high voltage transmission lines 
143.19  (section 273.425). 
143.20     The county auditor shall reduce the tax levied pursuant to 
143.21  this section and section 473.388 on all property within 
143.22  statutory and home rule charter cities and towns that receive 
143.23  full-peak service and limited off-peak service by an amount 
143.24  equal to the tax levy that would be produced by applying a rate 
143.25  of 0.510 percent of net tax capacity on the property.  The 
143.26  county auditor shall reduce the tax levied pursuant to this 
143.27  section and section 473.388 on all property within statutory and 
143.28  home rule charter cities and towns that receive limited peak 
143.29  service by an amount equal to the tax levy that would be 
143.30  produced by applying a rate of 0.765 percent of net tax capacity 
143.31  on the property.  The amounts so computed by the county auditor 
143.32  shall be submitted to the commissioner of revenue as part of the 
143.33  abstracts of tax lists required to be filed with the 
143.34  commissioner under section 275.29.  Any prior year adjustments 
143.35  shall also be certified in the abstracts of tax lists.  The 
143.36  commissioner shall review the certifications to determine their 
144.1   accuracy and may make changes in the certification as necessary 
144.2   or return a certification to the county auditor for 
144.3   corrections.  The commissioner shall pay to the council and to 
144.4   the municipalities levying under section 473.388, subdivision 7, 
144.5   the amounts certified by the county auditors on the dates 
144.6   provided in section 273.1398, apportioned between the council 
144.7   and the municipality in the same proportion as the total transit 
144.8   levy is apportioned within the municipality.  There is annually 
144.9   appropriated from the general fund in the state treasury to the 
144.10  department of revenue the amounts necessary to make these 
144.11  payments.  
144.12     For the purposes of this subdivision, "full-peak and 
144.13  limited off-peak service" means peak period regular route 
144.14  service, plus weekday midday regular route service at intervals 
144.15  longer than 60 minutes on the route with the greatest frequency; 
144.16  and "limited peak period service" means peak period regular 
144.17  route service only.  
144.18     For the purposes of property taxes payable in the following 
144.19  year, the council shall annually determine which cities and 
144.20  towns qualify for the 0.510 percent or 0.765 percent tax 
144.21  capacity rate reduction and shall certify this list to the 
144.22  county auditor of the county wherein such cities and towns are 
144.23  located on or before September 15.  No changes may be made to 
144.24  the annual list after September 15. 
144.25     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
144.26  payable in 2002 and thereafter. 
144.27     Sec. 67.  Minnesota Statutes 2000, section 473F.08, 
144.28  subdivision 3, is amended to read: 
144.29     Subd. 3.  [APPORTIONMENT OF LEVY.] The county auditor shall 
144.30  apportion the levy of each governmental unit in the auditor's 
144.31  county in the manner prescribed by this subdivision.  The 
144.32  auditor shall: 
144.33     (a) by August 20, determine the areawide portion of the 
144.34  levy for each governmental unit by multiplying the local tax 
144.35  rate of the governmental unit for the preceding levy year times 
144.36  the distribution value set forth in subdivision 2, clause (b); 
145.1   ~~and~~ 
145.2      (b) by September 5, determine the local portion of the 
145.3   current year's levy by subtracting the resulting amount from 
145.4   clause (a) from the governmental unit's current year's levy~~.~~; 
145.5   and 
145.6      (c) for determinations made under paragraph (a), in the 
145.7   case of school districts, in 2001 and thereafter, for taxes 
145.8   payable in 2002 and thereafter, exclude the general education 
145.9   tax rate from the local tax rate for the preceding levy year. 
145.10     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
145.11  following final enactment. 
145.12     Sec. 68.  Minnesota Statutes 2000, section 473H.10, 
145.13  subdivision 3, is amended to read: 
145.14     Subd. 3.  [COMPUTATION OF TAX; STATE REIMBURSEMENT.] (a) 
145.15  After having determined the market value of all land valued 
145.16  according to subdivision 2, the assessor shall compute the ~~net~~ 
145.17  ~~tax capacity~~ assessed value of those properties by applying the 
145.18  appropriate class rates.  When computing the rate of tax 
145.19  pursuant to section 275.08, the county auditor shall include the 
145.20  ~~net tax capacity~~ assessed value of land as provided in this 
145.21  clause.  
145.22     (b) The county auditor shall compute the tax on lands 
145.23  valued according to subdivision 2 and nonresidential buildings 
145.24  by multiplying the ~~net tax capacity~~ assessed value times the 
145.25  total local tax rate for all purposes as provided in clause (a). 
145.26     (c) The county auditor shall then compute the tax on lands 
145.27  valued according to subdivision 2 and nonresidential buildings 
145.28  by multiplying the ~~net tax capacity~~ assessed value times the 
145.29  total local tax rate for all purposes as provided in clause (a), 
145.30  subtracting $1.50 per acre of land in the preserve.  
145.31     (d) The county auditor shall then compute the maximum ad 
145.32  valorem property tax on lands valued according to subdivision 2 
145.33  and nonresidential buildings by multiplying the ~~net tax capacity~~ 
145.34  assessed value times 105 percent of the previous year's 
145.35  statewide average local tax rate levied on property located 
145.36  within townships for all purposes.  
146.1      (e) The tax due and payable by the owner of preserve land 
146.2   valued according to subdivision 2 and nonresidential buildings 
146.3   will be the amount determined in clause (c) or (d), whichever is 
146.4   less.  The state shall reimburse the taxing jurisdictions for 
146.5   the amount of the difference between the net tax determined 
146.6   under this clause and the gross tax in clause (b).  Residential 
146.7   buildings shall continue to be valued and classified according 
146.8   to the provisions of sections 273.11 and 273.13, as they would 
146.9   be in the absence of this section, and the tax on those 
146.10  buildings shall not be subject to the limitation contained in 
146.11  this clause.  
146.12     The county may transfer money from the county conservation 
146.13  account created in section 40A.152 to the county revenue fund to 
146.14  reimburse the fund for the tax lost as a result of this 
146.15  subdivision or to pay taxing jurisdictions within the county for 
146.16  the tax lost.  The county auditor shall certify to the 
146.17  commissioner of revenue on or before June 1 the total amount of 
146.18  tax lost to the county and taxing jurisdictions located within 
146.19  the county as a result of this subdivision and the extent that 
146.20  the tax lost exceeds funds available in the county conservation 
146.21  account.  Payment shall be made by the state on December ~~26~~ 15 
146.22  to each of the affected taxing jurisdictions, other than school 
146.23  districts, in the same proportion that the ad valorem tax is 
146.24  distributed if the county conservation account is insufficient 
146.25  to make the reimbursement.  There is annually appropriated from 
146.26  the Minnesota conservation fund under section 40A.151 to the 
146.27  commissioner of revenue an amount sufficient to make the 
146.28  reimbursement provided in this subdivision.  If the amount 
146.29  available in the Minnesota conservation fund is insufficient, 
146.30  the balance that is needed is appropriated from the general fund.
146.31     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes and 
146.32  reimbursements payable in 2002 and thereafter. 
146.33     Sec. 69.  Minnesota Statutes 2000, section 477A.011, 
146.34  subdivision 3, is amended to read: 
146.35     Subd. 3.  [POPULATION.] "Population" means the population 
146.36  established as of ~~July~~ June 1 in an aid calculation year by the 
147.1   most recent federal census, by a special census conducted under 
147.2   contract with the United States Bureau of the Census, by a 
147.3   population estimate made by the metropolitan council, or by a 
147.4   population estimate of the state demographer made pursuant to 
147.5   section 4A.02, whichever is the most recent as to the stated 
147.6   date of the count or estimate for the preceding calendar year.  
147.7   The term "per capita" refers to population as defined by this 
147.8   subdivision. 
147.9      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
147.10  following final enactment. 
147.11     Sec. 70.  Minnesota Statutes 2000, section 477A.011, is 
147.12  amended by adding a subdivision to read: 
147.13     Subd. 3b.  [POPULATION SPRAWL FACTOR.] For a city with a 
147.14  population of 5,000 or more that is located outside of the 
147.15  metropolitan area, the "population sprawl factor" is equal to 
147.16  ten percent of the population of the towns located within five 
147.17  miles of the city.  Cities of under 5,000 population located 
147.18  outside the metropolitan area are to be treated as towns under 
147.19  the preceding sentence.  The unorganized territory of a county 
147.20  is treated as one town for the same purpose.  For all other 
147.21  cities, the "population sprawl factor" is zero.  If a town is 
147.22  within five miles of more than one city, ten percent of the 
147.23  town's population is counted for the closest city only, unless 
147.24  the town is adjacent to more than one city. 
147.25     <b>[EFFECTIVE DATE.]</b> This section is effective for aid payable 
147.26  in 2002 and thereafter. 
147.27     Sec. 71.  Minnesota Statutes 2000, section 477A.011, is 
147.28  amended by adding a subdivision to read: 
147.29     Subd. 3c.  [DENSITY FACTOR.] For a city located within the 
147.30  metropolitan area, except Minneapolis and St. Paul, the "density 
147.31  factor" is equal to the square root of the quotient derived by 
147.32  dividing the number of residential units per acre within the 
147.33  city by the average number of residential units per acre for all 
147.34  cities located within the metropolitan area, except for the 
147.35  cities of St. Paul and Minneapolis, as certified to the 
147.36  commissioner by the metropolitan council on or before June 30 of 
148.1   the aid determination year.  If the density factor computed for 
148.2   a city is greater than 1.75, the density factor for that city is 
148.3   1.75.  If the density factor computed for a city is less than 
148.4   0.50, the density factor for that city is 0.50.  For all other 
148.5   cities, the "density factor" is zero. 
148.6      <b>[EFFECTIVE DATE.]</b> This section is effective for aid payable 
148.7   in 2002 and thereafter. 
148.8      Sec. 72.  Minnesota Statutes 2000, section 477A.011, is 
148.9   amended by adding a subdivision to read: 
148.10     Subd. 3d.  [TAX CAPACITY.] "Tax capacity" means (1) the net 
148.11  tax capacity or assessed value of all taxable property located 
148.12  in a city or town computed using the class rates in section 
148.13  273.13, and the market values for taxes payable in the year 
148.14  prior to the aid distribution, plus (2) the city's or town's 
148.15  fiscal disparities distribution net tax capacity or assessed 
148.16  value under section 276A.06, subdivision 2, paragraph (b), or 
148.17  473F.08, subdivision 2, paragraph (b), for taxes payable in the 
148.18  year prior to the aid distribution.  The market values utilized 
148.19  in computing a city's or town's tax capacity must be reduced by 
148.20  the sum of (1) the city's or town's market value of commercial 
148.21  industrial property as defined in section 276A.01, subdivision 
148.22  3, or 473F.02, subdivision 3, multiplied by the ratio determined 
148.23  pursuant to section 276A.06, subdivision 2, paragraph (a), or 
148.24  473F.08, subdivision 2, paragraph (a), and (2) the market value 
148.25  of the captured value of tax increment financing districts as 
148.26  defined in section 469.177, subdivision 2, and (3) the market 
148.27  value of transmission lines deducted from the city's or town's 
148.28  total assessed value under section 273.425.  Tax capacity must 
148.29  be computed using equalized market values. 
148.30     <b>[EFFECTIVE DATE.]</b> This section is effective for aid payable 
148.31  in 2002 and thereafter. 
148.32     Sec. 73.  Minnesota Statutes 2000, section 477A.011, 
148.33  subdivision 34, is amended to read: 
148.34     Subd. 34.  [CITY REVENUE NEED.] (a) ~~For a city with a~~ 
148.35  ~~population equal to or greater than 2,500, "city revenue need"~~ 
148.36  ~~is the sum of (1) 3.462312 times the pre-1940 housing~~ 
149.1   ~~percentage; plus (2) 2.093826 times the commercial industrial~~ 
149.2   ~~percentage; plus (3) 6.862552 times the population decline~~ 
149.3   ~~percentage; plus (4) .00026 times the city population; plus (5)~~ 
149.4   ~~152.0141.~~  "City revenue need" for the city of Minneapolis is 
149.5   $508.  "City revenue need" for the city of St. Paul is $431.  
149.6   "City revenue need" for the city of Duluth is $425.  "City 
149.7   revenue need" for all cities in the metropolitan area, except 
149.8   for the cities of Minneapolis and St. Paul, is $194 times the 
149.9   city's density factor.  "City revenue need" for all cities 
149.10  outside the metropolitan area with a population of 5,000 or 
149.11  more, except for the city of Duluth, is $265.  "City revenue 
149.12  need" for all cities outside the metropolitan area with a 
149.13  population of less than 5,000 is $234. 
149.14     (b) ~~For a city with a population less than 2,500, "city~~ 
149.15  ~~revenue need" is the sum of (1) 1.795919 times the pre-1940~~ 
149.16  ~~housing percentage; plus (2) 1.562138 times the commercial~~ 
149.17  ~~industrial percentage; plus (3) 4.177568 times the population~~ 
149.18  ~~decline percentage; plus (4) 1.04013 times the transformed~~ 
149.19  ~~population; minus (5) 107.475.~~ 
149.20     ~~(c) The city revenue need cannot be less than zero.~~ 
149.21     ~~(d)~~ For aid payable in calendar year ~~1998~~ 2003 and 
149.22  subsequent years, ~~the city revenue need for a city, as~~ 
149.23  ~~determined in paragraphs (a) to (c), is~~ the dollar amounts in 
149.24  paragraph (a) are multiplied by the ~~ratio of the annual implicit~~ 
149.25  ~~price deflator for government consumption expenditures and gross~~ 
149.26  ~~investment for state and local governments as prepared by the~~ 
149.27  ~~United States Department of Commerce, for the most recently~~ 
149.28  ~~available year to the 1993 implicit price deflator for state and~~ 
149.29  ~~local government purchases~~ inflation adjustment determined for 
149.30  the aid payment year under section 477A.03, subdivision 3, 
149.31  paragraph (b), without regard to the minimum and maximum 
149.32  inflation adjustments in that paragraph. 
149.33     <b>[EFFECTIVE DATE.]</b> This section is effective for aid payable 
149.34  in 2002 and thereafter. 
149.35     Sec. 74.  Minnesota Statutes 2000, section 477A.011, is 
149.36  amended by adding a subdivision to read: 
150.1      Subd. 36a.  [CITY AID BASE.] For cities located outside of 
150.2   the metropolitan area "city aid base" means the sum of (1) the 
150.3   amount of local government aid the city was originally certified 
150.4   to receive in calendar year 2001 under section 477A.013, and (2) 
150.5   the amount of homestead and agricultural aid the city was 
150.6   originally certified to receive in calendar year 2001 under 
150.7   section 273.1398, subdivision 2, less an amount equal to eight 
150.8   percent of the city tax capacity as defined in subdivision 3d.  
150.9   If the amount determined under clause (2) for a city is less 
150.10  than zero, the city aid base for that city is equal to the 
150.11  amount determined under clause (1). 
150.12     <b>[EFFECTIVE DATE.]</b> This section is effective for aid payable 
150.13  in 2002 and thereafter. 
150.14     Sec. 75.  Minnesota Statutes 2000, section 477A.013, 
150.15  subdivision 1, is amended to read: 
150.16     Subdivision 1.  [TOWNS.] In ~~1994~~ 2002 each town that had 
150.17  levied for taxes payable in ~~the prior year~~ 1993 a local tax rate 
150.18  of at least .008 shall receive a distribution equal to ~~the~~ 
150.19  ~~amount it received in 1993 under this section before any~~ 
150.20  ~~nonpermanent reductions made under section 477A.0132.  In 1995~~ 
150.21  ~~each town that had levied for taxes payable in 1993 a local tax~~ 
150.22  ~~rate of at least .008 shall receive a distribution equal to 102~~ 
150.23  ~~percent of the amount it received in 1994 under this section~~ 
150.24  ~~before any increases or reductions under sections 16A.711,~~ 
150.25  ~~subdivision 5, and 477A.0132~~ (1) $9 times the town's population 
150.26  plus (2)(i) $81 minus (ii) ten percent of the per capita net tax 
150.27  capacity of the class 1, 3, 4, and 5 properties in the town for 
150.28  taxes payable in 2001 times (iii) the town's population.  No 
150.29  town shall have a value under clause (2) of less than zero.  In 
150.30  ~~1996~~ 2003 and subsequent years each town ~~that had levied for~~ 
150.31  ~~taxes payable in 1993 a local tax rate of at least .008~~ shall 
150.32  receive a distribution equal to the amount it received in the 
150.33  previous year under this section before any increases or 
150.34  reductions under section 477A.0132, adjusted for inflation as 
150.35  provided under section 477A.03, subdivision 3~~.~~ and adjusted by 
150.36  the "household adjustment factor" defined in section 273.1398, 
151.1   subdivision 1.  The commissioner shall prorate the amount 
151.2   distributed to each town under clause (2) as necessary so that 
151.3   the total amount distributed does not exceed the appropriation 
151.4   for this purpose in section 477A.03. 
151.5      <b>[EFFECTIVE DATE.]</b> This section is effective for aid payable 
151.6   in 2002 and thereafter. 
151.7      Sec. 76.  Minnesota Statutes 2000, section 477A.013, 
151.8   subdivision 8, is amended to read: 
151.9      Subd. 8.  [CITY FORMULA AID.] (a) In calendar year ~~1994 and~~ 
151.10  ~~subsequent years~~ 2002, the formula aid for a city is equal to 
151.11  the need increase percentage multiplied by ~~the difference~~ 
151.12  ~~between (1) the city's revenue need multiplied by its~~ 
151.13  ~~population, and (2) the city's net tax capacity multiplied by~~ 
151.14  ~~the tax effort rate.~~  (1) the city revenue need minus (2) 0.17 
151.15  times the city's tax capacity divided by its population times 
151.16  (3) the city population or, for cities of 5,000 population or 
151.17  more located outside the metropolitan area, the city population 
151.18  plus the city's population sprawl factor. 
151.19     (b) In calendar year 2003 and thereafter, the formula aid 
151.20  for a city is equal to the need increase percentage multiplied 
151.21  by (i) the city revenue need minus (ii) a uniform mill rate 
151.22  determined by the commissioner to be the equivalent to the 0.17 
151.23  rate in paragraph (a) times (iii) the city's tax capacity 
151.24  divided by its population times (iv) the city's population, or 
151.25  in the case of a city of 5,000 population or more located 
151.26  outside the metropolitan area, the city's population plus its 
151.27  population sprawl factor.  No city may have a formula aid amount 
151.28  less than zero.  The need increase percentage must be the 
151.29  same within each category for all cities in the following 
151.30  categories:  (i) Minneapolis, St. Paul, and Duluth; (ii) cities 
151.31  in the metropolitan area except for Minneapolis and St. Paul; 
151.32  and (iii) all other cities.  
151.33     ~~Notwithstanding the prior sentence, in 1995 only, the need~~ 
151.34  ~~increase percentage for a city shall be twice the need increase~~ 
151.35  ~~percentage applicable to other cities if:~~  
151.36     ~~(1) the city, in 1992 or 1993, transferred an amount from~~ 
152.1   ~~governmental funds to their sewer and water fund, and~~ 
152.2      ~~(2) the amount transferred exceeded their net levy for~~ 
152.3   ~~taxes payable in the year in which the transfer occurred.~~ 
152.4      The applicable need increase percentage or percentages must 
152.5   be calculated by the department of revenue so that the total of 
152.6   the aid under subdivision 9 equals the total amount available 
152.7   for aid under section 477A.03.  
152.8      <b>[EFFECTIVE DATE.]</b> This section is effective for aid payable 
152.9   in 2002 and thereafter. 
152.10     Sec. 77.  Minnesota Statutes 2000, section 477A.013, 
152.11  subdivision 9, is amended to read: 
152.12     Subd. 9.  [CITY AID DISTRIBUTION.] (a) In calendar year 
152.13  ~~1994 and thereafter, each city shall receive an aid distribution~~ 
152.14  ~~equal to the sum of (1) the city formula aid under subdivision~~ 
152.15  ~~8, and (2) its city aid base~~ 2002 and thereafter, each city in 
152.16  the metropolitan area and the city of Duluth shall receive an 
152.17  aid distribution equal to its formula aid. 
152.18     (b) ~~The percentage increase for a first class city in~~ 
152.19  ~~calendar year 1995 and thereafter shall not exceed the~~ 
152.20  ~~percentage increase in the sum of the aid to all cities under~~ 
152.21  ~~this section in the current calendar year compared to the sum of~~ 
152.22  ~~the aid to all cities in the previous year.~~ 
152.23     ~~(c) The total aid for any city, except a first class city,~~ 
152.24  ~~shall not exceed the sum of (1) ten percent of the city's net~~ 
152.25  ~~levy for the year prior to the aid distribution plus (2) its~~ 
152.26  ~~total aid in the previous year before any increases or decreases~~ 
152.27  ~~under sections 16A.711, subdivision 5, and 477A.0132.~~ 
152.28     ~~(d) Notwithstanding paragraph (c), in 1995 only, for cities~~ 
152.29  ~~which in 1992 or 1993 transferred an amount from governmental~~ 
152.30  ~~funds to their sewer and water fund in an amount greater than~~ 
152.31  ~~their net levy for taxes payable in the year in which the~~ 
152.32  ~~transfer occurred, the total aid shall not exceed the sum of (1)~~ 
152.33  ~~20 percent of the city's net levy for the year prior to the aid~~ 
152.34  ~~distribution plus (2) its total aid in the previous year before~~ 
152.35  ~~any increases or decreases under sections 16A.711, subdivision~~ 
152.36  ~~5, and 477A.0132.~~  In calendar year 2002, each nonmetropolitan 
153.1   city, except Duluth, shall receive an aid distribution equal to 
153.2   (1) 90 percent of its city aid base plus (2) a percentage of its 
153.3   city formula aid.  The commissioner of revenue shall determine 
153.4   the percentage of its city formula aid amount that each 
153.5   nonmetropolitan city will receive by comparing the aggregate 
153.6   amount determined for nonmetropolitan cities under clause (1) 
153.7   with the appropriation available under section 477A.03 for this 
153.8   paragraph.  The percentage of city formula aid that each 
153.9   nonmetropolitan city will receive is the percentage that will 
153.10  make the total aid distribution for nonmetropolitan cities equal 
153.11  to the appropriation for that purpose under section 477A.03.  
153.12  For calendar years 2003 and thereafter, a nonmetropolitan city 
153.13  shall receive the amount computed under this subdivision, except 
153.14  that the percentage in clause (1) shall be 72 percent for aid 
153.15  payable in 2003, 54 percent for aid payable in 2004, 36 percent 
153.16  for aid payable in 2005, 18 percent for aid payable in 2006, and 
153.17  zero for aid payable in 2007 and thereafter. 
153.18     <b>[EFFECTIVE DATE.]</b> This section is effective for aid payable 
153.19  in 2002 and thereafter. 
153.20     Sec. 78.  Minnesota Statutes 2000, section 477A.015, is 
153.21  amended to read: 
153.22     477A.015 [PAYMENT DATES.] 
153.23     The commissioner of revenue shall make the payments of 
153.24  local government aid to affected taxing authorities in two 
153.25  installments on ~~July~~ June 20 and December ~~26~~ 15 annually.  If 
153.26  any statute incorporates by reference the payment dates provided 
153.27  in this section, the payment date of the first annual 
153.28  installment for the purpose of that other statute is July 20.  
153.29     The commissioner may pay all or part of the payment due on 
153.30  December ~~26~~ 15 at any time after August 15 upon the request of a 
153.31  city or town that requests such payment as being necessary for 
153.32  meeting its cash flow needs. 
153.33     <b>[EFFECTIVE DATE.]</b> This section is effective for payments 
153.34  made in 2002 and thereafter. 
153.35     Sec. 79.  Minnesota Statutes 2000, section 477A.03, 
153.36  subdivision 2, is amended to read: 
154.1      Subd. 2.  [ANNUAL APPROPRIATION.] (a) A sum sufficient to 
154.2   discharge the duties imposed by sections 477A.011 to 477A.014 is 
154.3   annually appropriated from the general fund to the commissioner 
154.4   of revenue.  
154.5      (b) ~~Aid payments to counties under section 477A.0121 are~~ 
154.6   ~~limited to $20,265,000 in 1996.  Aid payments to counties under~~ 
154.7   ~~section 477A.0121 are limited to $27,571,625 in 1997.~~  For aid 
154.8   payable in 1998 and thereafter, the total aids paid under 
154.9   section 477A.0121 are the amounts certified to be paid in the 
154.10  previous year, adjusted for inflation as provided under 
154.11  subdivision 3. 
154.12     (c)(i) For aids payable in 1998 and thereafter, the total 
154.13  aids paid to counties under section 477A.0122 are the amounts 
154.14  certified to be paid in the previous year, adjusted for 
154.15  inflation as provided under subdivision 3. 
154.16     (ii) Aid payments to counties under section 477A.0122 ~~in~~ 
154.17  ~~2000~~ are further increased by an additional $20,000,000 in 2000, 
154.18  and an additional $10,000,000 in 2002.  The amounts provided in 
154.19  this clause are annually adjusted for inflation as provided in 
154.20  clause (i). 
154.21     (d) Aid payments ~~to cities~~ in ~~1999~~ 2002 under section 
154.22  477A.013, ~~subdivision~~ subdivisions 1 and 9, are limited ~~to~~ 
154.23  ~~$380,565,489.  For aids payable in 2000, the total aids paid~~ 
154.24  ~~under section 477A.013, subdivision 9, are the amounts certified~~ 
154.25  ~~to be paid in the previous year, adjusted for inflation as~~ 
154.26  ~~provided in subdivision 3, and increased by the amount necessary~~ 
154.27  ~~to effectuate Laws 1999, chapter 243, article 5, section 48,~~ 
154.28  ~~paragraph (b)~~ in the aggregate to $184,065,000 for the first 
154.29  class cities of Minneapolis, St. Paul, and Duluth; $51,916,000 
154.30  for the cities in the metropolitan area excluding the cities of 
154.31  Minneapolis and St. Paul; $235,981,000 for all nonmetropolitan 
154.32  cities except for the city of Duluth; and $18,476,000 for all 
154.33  towns.  For aids payable in ~~2001 through~~ 2003, the total aids 
154.34  paid under section 477A.013, ~~subdivision~~ subdivisions 1 and 9, 
154.35  are the amounts certified to be paid in the previous year, 
154.36  adjusted for inflation as provided under subdivision 3 and 
155.1   increased by the household adjustment factor defined in section 
155.2   273.1398.  For aids payable in 2004, the total aids paid under 
155.3   section 477A.013, ~~subdivision~~ subdivisions 1 and 9, are the 
155.4   amounts certified to be paid in the previous year, adjusted for 
155.5   inflation as provided under subdivision 3, ~~and~~ increased by the 
155.6   amount certified to be paid in 2003 under section 477A.06 and 
155.7   increased by the household adjustment factor defined in section 
155.8   273.1398.  For aids payable in 2005 and thereafter, the total 
155.9   aids paid under section 477A.013, ~~subdivision~~ subdivisions 1 and 
155.10  9, are the amounts certified to be paid in the previous year, 
155.11  adjusted for inflation as provided under subdivision 3 and 
155.12  increased by the household adjustment factor defined in section 
155.13  273.1398.  The additional amount authorized under subdivision 4 
155.14  is not included when calculating the appropriation limits under 
155.15  this paragraph. 
155.16     <b>[EFFECTIVE DATE.]</b> This section is effective for aids paid 
155.17  in 2002 and thereafter. 
155.18     Sec. 80.  Minnesota Statutes 2000, section 477A.065, 
155.19  subdivision 1, is amended to read: 
155.20     Subdivision 1.  [ELIGIBILITY.] Each taxes payable year, 
155.21  each city containing class 4d property on which initial 
155.22  construction was begun after January 1, 1999, shall be eligible 
155.23  for aid equal to (1) ~~1.5 times~~ the ~~net tax capacity~~ market value 
155.24  of the property for the assessment year corresponding to the 
155.25  taxes payable year, multiplied by (2) the city government's 
155.26  average local tax rate for the previous taxes payable year. 
155.27     <b>[EFFECTIVE DATE.]</b> This section is effective for aid paid in 
155.28  2002 and thereafter. 
155.29     Sec. 81.  [TIF GRANTS; APPROPRIATIONS.] 
155.30     Subdivision 1.  [TIF GRANTS.] (a) The commissioner of 
155.31  revenue shall pay grants to municipalities in calendar years 
155.32  2003, 2004, and 2005 for deficits in tax increment financing 
155.33  districts caused by the changes in class rates and the 
155.34  elimination of the state-determined general education property 
155.35  tax levy under this article.  Municipalities must submit 
155.36  applications for the grants in a form prescribed by the 
156.1   commissioner no later than August 1 for grants payable during 
156.2   the calendar year.  The maximum grant equals the lesser of: 
156.3      (1) for taxes payable in the year before the grant is paid, 
156.4   the reduction in the tax increment financing district's revenues 
156.5   derived from increment resulting from the class rate changes and 
156.6   the elimination of the state-determined general education 
156.7   property tax levy under this article; or 
156.8      (2) the amount due during the calendar year to pay (i) 
156.9   bonds issued before June 2, 2001, and (ii) binding contracts 
156.10  entered into before June 2, 2001, less (iii) the municipality's 
156.11  total tax increments, including unspent increments from previous 
156.12  years. 
156.13     (b) The commissioner of revenue may require applicants for 
156.14  grants under this section to provide any information the 
156.15  commissioner deems appropriate.  The commissioner shall 
156.16  calculate the amount under paragraph (a), clause (2), based on 
156.17  the reports for the tax increment financing district or 
156.18  districts filed with the state auditor on or before August 1 of 
156.19  the year before the year in which the grant is to be paid. 
156.20     (c) This section applies only to deficits in tax increment 
156.21  districts for which: 
156.22     (1) the request for certification was made before June 2, 
156.23  2001; and 
156.24     (2) all timely reports have been filed with the state 
156.25  auditor, as required by Minnesota Statutes, section 469.175. 
156.26     (d) The commissioner shall pay the grants under this 
156.27  section by December 15 of the year. 
156.28     (e) For the purposes of this section "tax increments" and 
156.29  "revenues derived from tax increments" have the meanings given 
156.30  in Minnesota Statutes, section 469.174, subdivision 25, except 
156.31  that the definition applies to all tax increment districts, 
156.32  regardless of when the request for certification was made and 
156.33  regardless of when the revenues were received, notwithstanding 
156.34  the effective date of Minnesota Statutes, section 469.174, 
156.35  subdivision 25. 
156.36     Subd. 2.  [APPROPRIATION.] $65,600,000 in fiscal year 2003, 
157.1   $65,600,000 in fiscal year 2004, and $65,600,000 in fiscal year 
157.2   2005 is appropriated to the commissioner of revenue from the 
157.3   general fund to make grants under this section.  The 
157.4   appropriated amounts do not lapse at the end of a fiscal year.  
157.5   Each amount is available until the later of when expended or 
157.6   when this section expires.  If the amount of grant entitlements 
157.7   for a year exceeds the amount available for grants, the 
157.8   commissioner shall reduce each grant proportionately so the 
157.9   total does not exceed the amount available. 
157.10     Subd. 3.  [EXPIRATION.] This section expires on January 1, 
157.11  2006. 
157.12     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 
157.13  2002, and thereafter. 
157.14     Sec. 82.  [INSTRUCTIONS TO REVISOR.] 
157.15     In the next edition of Minnesota Statutes, the revisor of 
157.16  statutes shall replace each occurrence of the phrase "net tax 
157.17  capacity" with the phrase "assessed value," except for 
157.18  occurrences in Minnesota Statutes, section 275.011. 
157.19     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
157.20  following final enactment.  
157.21     Sec. 83.  [REPEALER.] 
157.22     (a) Minnesota Statutes 2000, sections 126C.13, subdivision 
157.23  1; 126C.18, subdivision 1; 273.13, subdivision 21b; 273.1382; 
157.24  275.078; and 275.08, subdivision 1e, are repealed effective for 
157.25  taxes payable in 2002 and thereafter. 
157.26     (b) Minnesota Statutes 2000, sections 273.138; 273.1399; 
157.27  477A.011, subdivisions 30, 31, 32, 33, 36, and 37; and 477A.03, 
157.28  subdivision 4, are repealed for aids payable in 2002 and 
157.29  thereafter. 
157.30     (c) Minnesota Statutes 2000, section 275.065, subdivision 
157.31  3a, is repealed. 
157.32     (d) Minnesota Statutes 2000, section 282.01, subdivisions 
157.33  1c, 1d, and 1e, are repealed for deeds issued on or after July 
157.34  1, 2001.  
157.35     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
157.36  following final enactment. 
158.1                              ARTICLE 5 
158.2                       SALES AND USE TAX REFORM 
158.3      Section 1.  Minnesota Statutes 2000, section 289A.11, 
158.4   subdivision 1, is amended to read: 
158.5      Subdivision 1.  [RETURN REQUIRED.] ~~Except as provided in~~ 
158.6   ~~section 289A.18, subdivision 4,~~ For the ~~month~~ period in which 
158.7   taxes imposed by chapter 297A are payable, or for which a return 
158.8   is due, a return for the preceding reporting period must be 
158.9   filed with the commissioner in the form and manner the 
158.10  commissioner prescribes.  A person making sales at retail at two 
158.11  or more places of business may file a consolidated return 
158.12  subject to rules prescribed by the commissioner.  In computing 
158.13  the dollar amount of items on the return, the amounts are 
158.14  rounded off to the nearest whole dollar, disregarding amounts 
158.15  less than 50 cents and increasing amounts of 50 cents to 99 
158.16  cents to the next highest dollar. 
158.17     Notwithstanding this subdivision, a person who is not 
158.18  required to hold a sales tax permit under chapter 297A and who 
158.19  makes annual purchases of less than $18,500 that are subject to 
158.20  the use tax imposed by section 297A.14, may file an annual use 
158.21  tax return on a form prescribed by the commissioner.  If a 
158.22  person who qualifies for an annual use tax reporting period is 
158.23  required to obtain a sales tax permit or makes use tax purchases 
158.24  in excess of $18,500 during the calendar year, the reporting 
158.25  period must be considered ended at the end of the month in which 
158.26  the permit is applied for or the purchase in excess of $18,500 
158.27  is made and a return must be filed for the preceding reporting 
158.28  period. 
158.29     <b>[EFFECTIVE DATE.]</b> This section is effective for returns due 
158.30  after January 1, 2002. 
158.31     Sec. 2.  Minnesota Statutes 2000, section 289A.18, 
158.32  subdivision 4, is amended to read: 
158.33     Subd. 4.  [SALES AND USE TAX RETURNS.] (a) Sales and use 
158.34  tax returns must be filed on or before the 20th day of the month 
158.35  following the close of the preceding reporting period, except 
158.36  that annual use tax returns provided for under section 289A.11, 
159.1   subdivision 1, must be filed by April 15 following the close of 
159.2   the calendar year, in the case of individuals.  Annual use tax 
159.3   returns of businesses, including sole proprietorships, and 
159.4   annual sales tax returns must be filed by February 5 following 
159.5   the close of the calendar year.  
159.6      (b) ~~Except for the return for the June reporting period,~~ 
159.7   ~~which is due on the following August 25,~~ Returns filed by 
159.8   retailers required to remit liabilities by means of funds 
159.9   transfer under section 289A.20, subdivision 4, 
159.10  paragraph ~~(d)~~ (b), are due on or before the 25th day of the 
159.11  month following the close of the preceding reporting period.  
159.12     (c) If a retailer has an average sales and use tax 
159.13  liability, including local sales and use taxes administered by 
159.14  the commissioner, equal to or less than $500 per month in any 
159.15  quarter of a calendar year, and has substantially complied with 
159.16  the tax laws during the preceding four calendar quarters, the 
159.17  retailer may request authorization to file and pay the taxes 
159.18  quarterly in subsequent calendar quarters.  The authorization 
159.19  remains in effect during the period in which the retailer's 
159.20  quarterly returns reflect sales and use tax liabilities of less 
159.21  than $1,500 and there is continued compliance with state tax 
159.22  laws. 
159.23     (d) If a retailer has an average sales and use tax 
159.24  liability, including local sales and use taxes administered by 
159.25  the commissioner, equal to or less than $100 per month during a 
159.26  calendar year, and has substantially complied with the tax laws 
159.27  during that period, the retailer may request authorization to 
159.28  file and pay the taxes annually in subsequent years.  The 
159.29  authorization remains in effect during the period in which the 
159.30  retailer's annual returns reflect sales and use tax liabilities 
159.31  of less than $1,200 and there is continued compliance with state 
159.32  tax laws. 
159.33     (e) The commissioner may also grant quarterly or annual 
159.34  filing and payment authorizations to retailers if the 
159.35  commissioner concludes that the retailers' future tax 
159.36  liabilities will be less than the monthly totals identified in 
160.1   paragraphs (c) and (d).  An authorization granted under this 
160.2   paragraph is subject to the same conditions as an authorization 
160.3   granted under paragraphs (c) and (d). 
160.4      (f) A taxpayer who is a materials supplier may report gross 
160.5   receipts either on: 
160.6      (1) the cash basis as the consideration is received; or 
160.7      (2) the accrual basis as sales are made.  
160.8   As used in this paragraph, "materials supplier" means a person 
160.9   who provides materials for the improvement of real property; who 
160.10  is primarily engaged in the sale of lumber and building 
160.11  materials-related products to owners, contractors, 
160.12  subcontractors, repairers, or consumers; who is authorized to 
160.13  file a mechanics lien upon real property and improvements under 
160.14  chapter 514; and who files with the commissioner an election to 
160.15  file sales and use tax returns on the basis of this paragraph. 
160.16     <b>[EFFECTIVE DATE.]</b> This section is effective for returns due 
160.17  after January 1, 2002. 
160.18     Sec. 3.  Minnesota Statutes 2000, section 289A.20, 
160.19  subdivision 4, is amended to read: 
160.20     Subd. 4.  [SALES AND USE TAX.] (a) The taxes imposed by 
160.21  chapter 297A are due and payable to the commissioner monthly on 
160.22  or before the 20th day of the month following the month in which 
160.23  the taxable event occurred, or following another reporting 
160.24  period as the commissioner prescribes or as allowed under 
160.25  section 289A.18, subdivision 4, paragraph (f), except that use 
160.26  taxes due on an annual use tax return as provided under section 
160.27  289A.11, subdivision 1, are payable by April 15 following the 
160.28  close of the calendar year. 
160.29     (b) ~~A vendor having a liability of $120,000 or more during~~ 
160.30  ~~a fiscal year ending June 30 must remit the June liability for~~ 
160.31  ~~the next year in the following manner:~~ 
160.32     ~~(1) Two business days before June 30 of the year, the~~ 
160.33  ~~vendor must remit 62 percent of the estimated June liability to~~ 
160.34  ~~the commissioner.~~  
160.35     ~~(2) On or before August 14 of the year, the vendor must pay~~ 
160.36  ~~any additional amount of tax not remitted in June.~~ 
161.1      ~~(c)~~ A vendor having a liability of $120,000 or more during 
161.2   a fiscal year ending June 30 must remit all liabilities on 
161.3   returns due for periods beginning in the subsequent calendar 
161.4   year by means of a funds transfer as defined in section 
161.5   336.4A-104, paragraph (a).  The funds transfer payment date, as 
161.6   defined in section 336.4A-401, must be on or before the 14th day 
161.7   of the month following the month in which the taxable event 
161.8   occurred, or on or before the 14th day of the month following 
161.9   the month in which the sale is reported under section 289A.18, 
161.10  subdivision 4~~, except for 62 percent of the estimated June~~ 
161.11  ~~liability, which is due two business days before June 30.  The~~ 
161.12  ~~remaining amount of the June liability is due on August 14~~.  If 
161.13  the date the tax is due is not a funds transfer business day, as 
161.14  defined in section 336.4A-105, paragraph (a), clause (4), the 
161.15  payment date must be on or before the funds transfer business 
161.16  day next following the date the tax is due. 
161.17     ~~(d)~~ (c) If the vendor required to remit by electronic funds 
161.18  transfer as provided in paragraph ~~(c)~~ (b) is unable due to 
161.19  reasonable cause to determine the actual sales and use tax due 
161.20  on or before the due date for payment, the vendor may remit an 
161.21  estimate of the tax owed using one of the following options: 
161.22     (1) 100 percent of the tax reported on the previous month's 
161.23  sales and use tax return; 
161.24     (2) 100 percent of the tax reported on the sales and use 
161.25  tax return for the same month in the previous calendar year; or 
161.26     (3) 95 percent of the actual tax due. 
161.27     Any additional amount of tax that is not remitted on or 
161.28  before the due date for payment, must be remitted with the 
161.29  return.  If a vendor fails to remit the actual liability or does 
161.30  not remit using one of the estimate options by the due date for 
161.31  payment, the vendor must remit actual liability as provided in 
161.32  paragraph ~~(c)~~ (b) in all subsequent periods.  ~~This paragraph~~ 
161.33  ~~does not apply to the June sales and use tax liability.~~ 
161.34     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes due 
161.35  after January 1, 2002. 
161.36     Sec. 4.  Minnesota Statutes 2000, section 289A.56, 
162.1   subdivision 4, is amended to read: 
162.2      Subd. 4.  [~~CAPITAL EQUIPMENT REFUNDS;~~ REFUNDS TO 
162.3   PURCHASERS.] ~~Notwithstanding subdivision 3, for refunds payable~~ 
162.4   ~~under section 297A.15, subdivision 5, interest is computed from~~ 
162.5   ~~the date the refund claim is filed with the commissioner.~~  For 
162.6   refunds payable under section 289A.50, subdivision 2a, interest 
162.7   is computed from the 20th day of the month following the month 
162.8   of the invoice date for the purchase which is the subject of the 
162.9   refund, if the refund claim includes a detailed schedule of 
162.10  purchases made during each of the periods in the claim.  If the 
162.11  refund claim submitted does not contain a schedule reflecting 
162.12  purchases made in each period, interest is computed from the 
162.13  date the claim was filed. 
162.14     <b>[EFFECTIVE DATE.]</b> This section is effective for capital 
162.15  equipment purchased after December 31, 2001. 
162.16     Sec. 5.  Minnesota Statutes 2000, section 289A.60, 
162.17  subdivision 21, is amended to read: 
162.18     Subd. 21.  [PENALTY FOR FAILURE TO MAKE PAYMENT BY 
162.19  ELECTRONIC FUNDS TRANSFER.] In addition to other applicable 
162.20  penalties imposed by this section, after notification from the 
162.21  commissioner to the taxpayer that payments are required to be 
162.22  made by means of electronic funds transfer under section 
162.23  289A.20, subdivision 2, paragraph (e), or 4, paragraph ~~(d)~~ (b), 
162.24  or 289A.26, subdivision 2a, and the payments are remitted by 
162.25  some other means, there is a penalty in the amount of five 
162.26  percent of each payment that should have been remitted 
162.27  electronically.  The penalty can be abated under the abatement 
162.28  procedures prescribed in section 270.07, subdivision 6, if the 
162.29  failure to remit the payment electronically is due to reasonable 
162.30  cause. 
162.31     Sec. 6.  Minnesota Statutes 2000, section 297A.61, 
162.32  subdivision 3, is amended to read: 
162.33     Subd. 3.  [SALE AND PURCHASE.] (a) "Sale" and "purchase" 
162.34  include, but are not limited to, each of the transactions listed 
162.35  in this subdivision. 
162.36     (b) Sale and purchase include any transfer of title or 
163.1   possession, or both, of tangible personal property, whether 
163.2   absolutely or conditionally, and the leasing of or the granting 
163.3   of a license to use or consume, for a consideration, tangible 
163.4   personal property, other than a manufactured home used for 
163.5   residential purposes for a continuous period of 30 days or more. 
163.6      (c) Sale and purchase include the production, fabrication, 
163.7   printing, or processing of tangible personal property for a 
163.8   consideration for consumers who furnish either directly or 
163.9   indirectly the materials used in the production, fabrication, 
163.10  printing, or processing. 
163.11     (d) Sale and purchase include the furnishing, preparing, or 
163.12  serving for a consideration of food or drinks.  Notwithstanding 
163.13  section 297A.67, subdivision 2, taxable food or drinks include, 
163.14  but are not limited to, the following: 
163.15     (1) food or drinks sold by the retailer for immediate 
163.16  consumption on the retailer's premises.  Food and drinks sold 
163.17  within a building or grounds that require an admission charge 
163.18  for entrance are presumed to be sold for consumption on the 
163.19  premises; 
163.20     (2) food or drinks prepared by the retailer for immediate 
163.21  consumption either on or off the retailer's premises.  For 
163.22  purposes of this subdivision, "food or drinks prepared for 
163.23  immediate consumption" means any food product upon which an act 
163.24  of preparation including, but not limited to, cooking, mixing, 
163.25  sandwich making, blending, heating, or pouring has been 
163.26  performed by the retailer so the food product may be immediately 
163.27  consumed by the purchaser; 
163.28     (3) ice cream, ice milk, frozen yogurt products, or frozen 
163.29  novelties sold in single or individual servings including, but 
163.30  not limited to, cones, sundaes, and snow cones; 
163.31     (4) soft drinks and other beverages, including all 
163.32  carbonated and noncarbonated beverages or drinks sold in liquid 
163.33  form, but not including beverages or drinks which contain milk 
163.34  or milk products, beverages or drinks containing 15 or more 
163.35  percent fruit juice, and noncarbonated and noneffervescent 
163.36  bottled water sold in individual containers of one-half gallon 
164.1   or more in size; 
164.2      (5) gum, candy, and candy products; 
164.3      (6) ice; 
164.4      (7) all food sold from vending machines; 
164.5      (8) all food for immediate consumption sold from concession 
164.6   stands and vehicles; 
164.7      (9) party trays; 
164.8      (10) all meals and single servings of packaged snack food 
164.9   sold in restaurants and bars; and 
164.10     (11) bakery products that are: 
164.11     (i) prepared by the retailer for consumption on the 
164.12  retailer's premises; 
164.13     (ii) sold at a place that charges admission; 
164.14     (iii) sold from vending machines; or 
164.15     (iv) sold in single or individual servings from concession 
164.16  stands, vehicles, bars, and restaurants.  
164.17     For purposes of this paragraph, "single or individual 
164.18  servings" does not include products when sold in bulk containers 
164.19  or bulk packaging.  
164.20     For purposes of this paragraph, "premises" means the total 
164.21  space and facilities, including buildings, grounds, and parking 
164.22  lots that are made available or that are available for use by 
164.23  the retailer or customer for the purpose of sale or consumption 
164.24  of prepared food and drinks.  The premises of a caterer is the 
164.25  place where the catered food or drinks are served. 
164.26     (e) A sale and a purchase includes the furnishing for a 
164.27  consideration of sewer services, electricity, gas, water, or 
164.28  steam for use or consumption within this state ~~or local exchange~~ 
164.29  ~~telephone service, intrastate toll service, and interstate toll~~ 
164.30  ~~service, if that service originates from and is charged to a~~ 
164.31  ~~telephone located in this state.  Telephone service includes (1)~~ 
164.32  ~~paging services, and (2) private communication service, as~~ 
164.33  ~~defined in United States Code, title 26, section 4252(d), except~~ 
164.34  ~~for private communication service purchased by an agent acting~~ 
164.35  ~~on behalf of the state lottery.  Telephone service does not~~ 
164.36  ~~include services purchased with a prepaid telephone calling~~ 
165.1   ~~card.  The furnishing for a consideration of access to telephone~~ 
165.2   ~~services by a hotel to its guests is a sale.~~  The furnishing for 
165.3   a consideration of items listed in this paragraph by a municipal 
165.4   corporation is a sale. 
165.5      (f) A sale and a purchase includes the transfer for a 
165.6   consideration of computer software.  
165.7      (g) A sale and a purchase includes the furnishing for a 
165.8   consideration of taxable services as defined in subdivision 16. 
165.9      (h) A sale and a purchase includes the furnishing for a 
165.10  consideration of tangible personal property or taxable services 
165.11  by the United States or any of its agencies or 
165.12  instrumentalities, or the state of Minnesota, its agencies, 
165.13  instrumentalities, or political subdivisions. 
165.14     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
165.15  purchases occurring after December 31, 2001. 
165.16     Sec. 7.  Minnesota Statutes 2000, section 297A.61, 
165.17  subdivision 4, is amended to read: 
165.18     Subd. 4.  [RETAIL SALE.] (a) A "retail sale" means a sale 
165.19  for any purpose other than resale in the regular course of 
165.20  business. 
165.21     (b) A sale of property used by the owner only by leasing it 
165.22  to others or by holding it in an effort to lease it, and put to 
165.23  no use by the owner other than resale after the lease or effort 
165.24  to lease, is a sale of property for resale. 
165.25     (c) A sale of master computer software that is purchased 
165.26  and used to make copies for sale or lease is a sale of property 
165.27  for resale. 
165.28     (d) A sale of building materials~~,~~ and supplies~~, and~~ 
165.29  ~~equipment~~ to ~~owners,~~ contractors, subcontractors, or builders 
165.30  for the erection of buildings or the alteration, repair, or 
165.31  improvement of real property is a ~~retail~~ sale ~~in whatever~~ 
165.32  ~~quantity sold, whether the sale is for purposes of resale in the~~ 
165.33  ~~form of real property or otherwise~~ for resale. 
165.34     (e) A sale of carpeting, linoleum, or similar floor 
165.35  covering to a person who provides for installation of the floor 
165.36  covering is a ~~retail~~ sale ~~and not a sale for resale since a sale~~ 
166.1   ~~of floor covering which includes installation is a contract for~~ 
166.2   ~~the improvement of real property~~ for resale. 
166.3      (f) A sale of shrubbery, plants, sod, trees, and similar 
166.4   items to a person who provides for installation of the items is 
166.5   a ~~retail~~ sale ~~and not a sale for resale since a sale of~~ 
166.6   ~~shrubbery, plants, sod, trees, and similar items that includes~~ 
166.7   ~~installation is a contract for the improvement of real~~ 
166.8   ~~property~~ for resale. 
166.9      ~~(g) A sale of tangible personal property that is awarded as~~ 
166.10  ~~prizes is a retail sale and is not considered a sale of property~~ 
166.11  ~~for resale.~~ 
166.12     ~~(h)~~ (g) A sale of tangible personal ~~property utilized or~~ 
166.13  ~~employed in the furnishing or providing of services under~~ 
166.14  ~~subdivision 16, paragraph (b), including, but not limited to,~~ 
166.15  property given as promotional items, is a retail sale and is not 
166.16  considered a sale of property for resale. 
166.17     ~~(i)~~ (h) A sale of tangible personal property used in 
166.18  conducting lawful gambling under chapter 349 or the state 
166.19  lottery under chapter 349A, including, but not limited to, 
166.20  property given as promotional items, is a retail sale and is not 
166.21  considered a sale of property for resale. 
166.22     ~~(j)~~ (i) A sale of machines, equipment, or devices that are 
166.23  used to furnish, provide, or dispense goods or services, 
166.24  including, but not limited to, coin-operated devices, is a 
166.25  retail sale and is not considered a sale of property for resale. 
166.26     ~~(k)~~ (j) In the case of a lease, a retail sale occurs when 
166.27  an obligation to make a lease payment becomes due under the 
166.28  terms of the agreement or the trade practices of the lessor. 
166.29     ~~(l)~~ (k) In the case of a conditional sales contract, a 
166.30  retail sale occurs upon the transfer of title or possession of 
166.31  the tangible personal property. 
166.32     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
166.33  purchases occurring after December 31, 2001. 
166.34     Sec. 8.  Minnesota Statutes 2000, section 297A.61, 
166.35  subdivision 6, is amended to read: 
166.36     Subd. 6.  [USE.] ~~(a)~~ "Use" includes the exercise of a right 
167.1   or power incident to the ownership of any interest in tangible 
167.2   personal property, or taxable services, purchased from a 
167.3   retailer, other than the sale of that property in the regular 
167.4   course of business. 
167.5      ~~(b) Use includes the consumption of printed materials in~~ 
167.6   ~~the creation of nontaxable advertising that is distributed,~~ 
167.7   ~~either directly or indirectly, within Minnesota.~~ 
167.8      <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
167.9   purchases occurring after December 31, 2001. 
167.10     Sec. 9.  Minnesota Statutes 2000, section 297A.61, 
167.11  subdivision 7, is amended to read: 
167.12     Subd. 7.  [SALES PRICE.] (a) "Sales price" means the total 
167.13  consideration for a retail sale, valued in money, whether paid 
167.14  in money or by barter or exchange.  
167.15     (b) Sales price includes: 
167.16     (1) the cost of the property sold, cost of materials used, 
167.17  labor or service cost, interest, or discount allowed after the 
167.18  sale is consummated; 
167.19     (2) ~~the cost of~~ all transportation ~~incurred prior to the~~ 
167.20  ~~time of sale~~ and delivery charges; 
167.21     (3) any amount for which credit is given by the seller to 
167.22  the purchaser; 
167.23     (4) charges for services that are part of a sale; ~~or~~ 
167.24     (5) any other expense whatsoever; or 
167.25     (6) charges for labor or service used in installing or 
167.26  applying the property sold. 
167.27     (c) Sales price does not include the following: 
167.28     (1) an amount allowed as credit for tangible personal 
167.29  property taken in trade for resale; 
167.30     (2) charges of up to 15 percent in lieu of tips if the 
167.31  charges are separately stated; 
167.32     (3) interest, financing, or carrying charges if the charges 
167.33  are separately stated; 
167.34     (4) ~~charges for labor or services used in installing or~~ 
167.35  ~~applying the property sold if the charges are separately stated;~~ 
167.36     ~~(5) transportation charges if the transportation occurs~~ 
168.1   ~~after the retail sale of the property if the charges are~~ 
168.2   ~~separately stated;~~ 
168.3      ~~(6)~~ cash discounts allowed and taken on sales or the amount 
168.4   refunded either in cash or in credit for property returned by 
168.5   purchasers; 
168.6      ~~(7)~~ (5) the rental motor vehicle tax imposed under section 
168.7   297A.64; or 
168.8      ~~(8)~~ (6) the amount of any tax imposed by the United States 
168.9   on communications services under United States Code, title 26, 
168.10  section 4251(a). 
168.11     ~~(d) Notwithstanding paragraph (c), "sales price," for~~ 
168.12  ~~purposes of sales of ready-mixed concrete sold from a~~ 
168.13  ~~ready-mixed concrete truck, includes any transportation,~~ 
168.14  ~~delivery, or other service charges, and no deduction is allowed~~ 
168.15  ~~for those charges, whether or not the charges are separately~~ 
168.16  ~~stated.~~ 
168.17     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
168.18  purchases occurring after December 31, 2001. 
168.19     Sec. 10.  Minnesota Statutes 2000, section 297A.61, 
168.20  subdivision 10, is amended to read: 
168.21     Subd. 10.  [TANGIBLE PERSONAL PROPERTY.] (a) "Tangible 
168.22  personal property" means corporeal personal property of any 
168.23  kind, including property that is to become real property as a 
168.24  result of incorporation, attachment, or installation following 
168.25  its acquisition. 
168.26     (b) Tangible personal property includes, but is not limited 
168.27  to: 
168.28     (1) computer software, whether contained on tape, discs, 
168.29  cards, or other devices; ~~and~~ 
168.30     (2) prepaid telephone calling cards~~.~~; 
168.31     (3) tools, implements, machinery, and equipment used in a 
168.32  business or production activity regardless of size, weight, or 
168.33  method of attachment to real property; 
168.34     (4) building materials and supplies when initially 
168.35  incorporated, attached, or installed into real property; and 
168.36     (5) electricity. 
169.1      (c) Personal property does not include: 
169.2      (1) ~~large ponderous machinery and equipment used in a~~ 
169.3   ~~business or production activity which at common law would be~~ 
169.4   ~~considered to be real property;~~ 
169.5      ~~(2)~~ property which is subject to an ad valorem property 
169.6   tax; 
169.7      ~~(3)~~ (2) property described in section 272.02, subdivision 
169.8   9, clauses ~~(a)~~ (b) to (d)~~; and~~ 
169.9      ~~(4) property described in section 272.03, subdivision 2,~~ 
169.10  ~~clauses (3) and (5)~~. 
169.11     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
169.12  purchases occurring after December 31, 2001. 
169.13     Sec. 11.  Minnesota Statutes 2000, section 297A.61, 
169.14  subdivision 12, is amended to read: 
169.15     Subd. 12.  [FARM MACHINERY.] (a) "Farm machinery" means new 
169.16  or used machinery, equipment, implements, accessories, and 
169.17  contrivances used directly and principally in the production for 
169.18  sale, but not including the processing, of livestock, dairy 
169.19  animals, dairy products, poultry and poultry products, fruits, 
169.20  vegetables, trees and shrubs, plants, forage, grains, and bees 
169.21  and apiary products. 
169.22     (b) Farm machinery includes: 
169.23     (1) machinery for the preparation, seeding, or cultivation 
169.24  of soil for growing agricultural crops and sod, for the 
169.25  harvesting and threshing of agricultural products, or for the 
169.26  harvesting or mowing of sod; 
169.27     (2) barn cleaners, milking systems, grain dryers, automatic 
169.28  feeding systems, and similar installations~~, whether or not the~~ 
169.29  ~~equipment is installed by the seller and becomes part of the~~ 
169.30  ~~real property~~; 
169.31     (3) irrigation equipment sold for exclusively agricultural 
169.32  use, including pumps, pipe fittings, valves, sprinklers, and 
169.33  other equipment necessary to the operation of an irrigation 
169.34  system when sold as part of an irrigation system~~, whether or not~~ 
169.35  ~~the equipment is installed by the seller and becomes part of the~~ 
169.36  ~~real property~~; 
170.1      (4) logging equipment, including chain saws used for 
170.2   commercial logging; 
170.3      (5) fencing used for the containment of farmed cervidae, as 
170.4   defined in section 17.451, subdivision 2; 
170.5      (6) primary and backup generator units used to generate 
170.6   electricity for the purpose of operating farm machinery, as 
170.7   defined in this subdivision, or providing light or space heating 
170.8   necessary for the production of livestock, dairy animals, dairy 
170.9   products, or poultry and poultry products; 
170.10     (7) aquaculture production equipment as defined in 
170.11  subdivision 13; ~~and~~ 
170.12     (8) equipment used for maple syrup harvesting~~.~~; 
170.13     (9) repair and replacement parts, including tires, and 
170.14  accessories attached to the farm machinery; and 
170.15     (10) animal handling equipment, including squeeze chutes 
170.16  and portable farrowing crates.  
170.17     (c) Farm machinery does not include: 
170.18     (1) ~~repair or replacement parts;~~ 
170.19     ~~(2)~~ tools, shop equipment, grain bins, feed bunks, fencing 
170.20  material except fencing material covered by paragraph (b), 
170.21  clause (5), communication equipment, and other farm supplies; 
170.22     ~~(3)~~ (2) motor vehicles taxed under chapter 297B; 
170.23     ~~(4)~~ (3) all-terrain vehicles, snowmobiles, or snow blowers; 
170.24  or 
170.25     ~~(5)~~ (4) lawn mowers except those used in the production of 
170.26  sod for sale, or garden-type tractors or garden tillers. 
170.27     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
170.28  purchases occurring after December 31, 2001. 
170.29     Sec. 12.  Minnesota Statutes 2000, section 297A.61, 
170.30  subdivision 16, is amended to read: 
170.31     Subd. 16.  [TAXABLE SERVICES; SERVICE.] (a) "Taxable 
170.32  services" means the services listed in this subdivision and 
170.33  other services listed in subdivision 3. 
170.34     (b) ~~Taxable services includes the granting of the privilege~~ 
170.35  ~~of admission to places of amusement, recreational areas, or~~ 
170.36  ~~athletic events, and the making available of amusement devices,~~ 
171.1   ~~tanning facilities, reducing salons, steam baths, turkish baths,~~ 
171.2   ~~health clubs, and spas or athletic facilities.~~  
171.3      ~~(c) Taxable services includes the furnishing of lodging and~~ 
171.4   ~~related services by a hotel, rooming house, resort, campground,~~ 
171.5   ~~motel, or trailer camp and the granting of any similar license~~ 
171.6   ~~to use real property other than the renting or leasing thereof~~ 
171.7   ~~for a continuous period of 30 days or more.~~ 
171.8      ~~(d) Taxable services includes the furnishing of cable~~ 
171.9   ~~television services or similar television services, including,~~ 
171.10  ~~but not limited to, charges for basic, premium, pay-per-view,~~ 
171.11  ~~and any other similar service.~~ 
171.12     ~~(e) Taxable services includes the furnishing of parking~~ 
171.13  ~~services, whether on a contractual, hourly, or other periodic~~ 
171.14  ~~basis, except for parking at a meter.~~  The term "service" means 
171.15  all activities engaged in for other persons for consideration 
171.16  that involve predominantly the performance of a service as 
171.17  distinguished from selling property. 
171.18     (c) The following services are not included within the 
171.19  definition of taxable services: 
171.20     (1) services performed by an employee for an employer; 
171.21     (2) the sale or use of services between divisions within 
171.22  the same corporation; and 
171.23     (3) services that partners who are natural persons render 
171.24  to their partnerships, unless the partner renders the services 
171.25  to the partnership in the capacity of an independent contractor. 
171.26     (d) Taxable services includes the furnishing of 
171.27  communications services which include telecommunications 
171.28  services, cable television services, and direct satellite 
171.29  services.  Telecommunications services are taxed to the extent 
171.30  allowed by federal law, if those services 
171.31     (1)(i) originated in this state and terminated in this 
171.32  state; or (ii) originated in this state and terminated outside 
171.33  this state and the service is charged to a telephone number or 
171.34  customer located in this state or to the account of any 
171.35  transmission instrument in this state; or (iii) originated 
171.36  outside this state and terminated in this state and the service 
172.1   is charged to a telephone number or customer located in this 
172.2   state or to the account of any transmission instrument in this 
172.3   state; or 
172.4      (2) are rendered by providing a private communications 
172.5   service for which the customer has one or more locations within 
172.6   Minnesota connected to the service and the service is charged to 
172.7   a telephone number or customer located in this state or to the 
172.8   account of any transmission instrument in this state. 
172.9      ~~(f)~~ (e) Taxable services includes the granting of 
172.10  membership in a club, association, or other organization if: 
172.11     (1) the club, association, or other organization makes 
172.12  available for the use of its members sports and athletic 
172.13  facilities, without regard to whether a separate charge is 
172.14  assessed for use of the facilities; and 
172.15     (2) use of the sports and athletic facility is not made 
172.16  available to the general public on the same basis as it is made 
172.17  available to members. 
172.18  Granting of membership means both one-time initiation fees and 
172.19  periodic membership dues.  Sports and athletic facilities 
172.20  include golf courses; tennis, racquetball, handball, and squash 
172.21  courts; basketball and volleyball facilities; running tracks; 
172.22  exercise equipment; swimming pools; and other similar athletic 
172.23  or sports facilities. 
172.24     ~~(g) Taxable services includes the furnishing of the~~ 
172.25  ~~following services as provided in this paragraph:~~ 
172.26     ~~(1) laundry and dry cleaning services including cleaning,~~ 
172.27  ~~pressing, repairing, altering, and storing clothes, linen~~ 
172.28  ~~services and supply, cleaning and blocking hats, and carpet,~~ 
172.29  ~~drapery, upholstery, and industrial cleaning.  Laundry and dry~~ 
172.30  ~~cleaning services do not include services provided by coin~~ 
172.31  ~~operated facilities operated by the customer;~~ 
172.32     ~~(2) motor vehicle washing, waxing, and cleaning services,~~ 
172.33  ~~including services provided by coin operated facilities operated~~ 
172.34  ~~by the customer, and rustproofing, undercoating, and towing of~~ 
172.35  ~~motor vehicles;~~ 
172.36     ~~(3) building and residential cleaning, maintenance, and~~ 
173.1   ~~disinfecting and exterminating services;~~ 
173.2      ~~(4) detective, security, burglar, fire alarm, and armored~~ 
173.3   ~~car services; but not including services performed within the~~ 
173.4   ~~jurisdiction they serve by off-duty licensed peace officers as~~ 
173.5   ~~defined in section 626.84, subdivision 1, or services provided~~ 
173.6   ~~by a nonprofit organization for monitoring and electronic~~ 
173.7   ~~surveillance of persons placed on in-home detention pursuant to~~ 
173.8   ~~court order or under the direction of the Minnesota department~~ 
173.9   ~~of corrections;~~ 
173.10     ~~(5) pet grooming services;~~ 
173.11     ~~(6) lawn care, fertilizing, mowing, spraying and sprigging~~ 
173.12  ~~services; garden planting and maintenance; tree, bush, and shrub~~ 
173.13  ~~pruning, bracing, spraying, and surgery; indoor plant care;~~ 
173.14  ~~tree, bush, shrub, and stump removal; and tree trimming for~~ 
173.15  ~~public utility lines.  Services performed under a construction~~ 
173.16  ~~contract for the installation of shrubbery, plants, sod, trees,~~ 
173.17  ~~bushes, and similar items are not taxable;~~ 
173.18     ~~(7) massages, except when provided by a licensed health~~ 
173.19  ~~care facility or professional or upon written referral from a~~ 
173.20  ~~licensed health care facility or professional for treatment of~~ 
173.21  ~~illness, injury, or disease; and~~ 
173.22     ~~(8) the furnishing of lodging, board, and care services for~~ 
173.23  ~~animals in kennels and other similar arrangements, but excluding~~ 
173.24  ~~veterinary and horse boarding services.~~ 
173.25     ~~The services listed in this paragraph are taxable under~~ 
173.26  ~~section 297A.62 if the service is performed wholly within~~ 
173.27  ~~Minnesota or if the service is performed partly within and~~ 
173.28  ~~partly outside Minnesota and the greater proportion of the~~ 
173.29  ~~service is performed in Minnesota, based on the cost of~~ 
173.30  ~~performance.  In applying the provisions of this chapter, the~~ 
173.31  ~~terms "tangible personal property" and "sales at retail" include~~ 
173.32  ~~taxable services and the provision of taxable services, unless~~ 
173.33  ~~specifically provided otherwise.  Services performed by an~~ 
173.34  ~~employee for an employer are not taxable.  Services performed by~~ 
173.35  ~~a partnership or association for another partnership or~~ 
173.36  ~~association are not taxable if one of the entities owns or~~ 
174.1   ~~controls more than 80 percent of the voting power of the equity~~ 
174.2   ~~interest in the other entity.  Services performed between~~ 
174.3   ~~members of an affiliated group of corporations are not taxable.~~  
174.4   ~~For purposes of this section, "affiliated group of corporations"~~ 
174.5   ~~includes those entities that would be classified as members of~~ 
174.6   ~~an affiliated group under United States Code, title 26, section~~ 
174.7   ~~1504, and that are eligible to file a consolidated tax return~~ 
174.8   ~~for federal income tax purposes.~~ 
174.9      (f) Taxable services includes the following services 
174.10  enumerated in North American Industry Classification System, 
174.11  1997, as prepared by the Office of Management and Budget, 
174.12  Executive Office of the President:  special trade contractors 
174.13  (subsector no. 235); taxi and limousine service (industry group 
174.14  no. 4853); scenic and sightseeing transportation (subsector no. 
174.15  487); motor vehicle towing (industry no. 48841); postal service 
174.16  (subsector no. 491); couriers and messengers (subsector no. 
174.17  492); warehousing and storage (subsector no. 493); information 
174.18  (sector no. 51); security brokerage (industry no. 52312); 
174.19  investment advice (industry no. 52393); insurance-related 
174.20  activities (industry no. 524291); lessors of miniwarehouse and 
174.21  self-storage units (industry no. 531130); offices of real estate 
174.22  agents and brokers (industry group no. 5312); activities related 
174.23  to real estate (industry group no. 53130); professional, 
174.24  scientific, and technical services (subsector no. 541); 
174.25  administrative and support services (subsector no. 561); septic 
174.26  tank and related services (industry no. 562991); amusement, 
174.27  entertainment, and recreation services (sector no. 71), except 
174.28  gambling services provided under industry group no. 7132; 
174.29  accommodations services (subsector no. 721), except contracts or 
174.30  leases to use real property for a continuous period of 30 days 
174.31  or more; repair and maintenance services (subsector no. 811); 
174.32  personal and laundry services (subsector no. 812); massage 
174.33  services, including reflexology, shiatsu and other forms of 
174.34  alternative medical treatment, except when provided by a 
174.35  licensed health care facility or licensed health care 
174.36  professional or upon written referral from a licensed health 
175.1   care facility or professional for treatment of illness, injury, 
175.2   or disease; and leases or rentals of office space, meeting 
175.3   rooms, or convention and trade show space for periods of 29 days 
175.4   or less. 
175.5      (g) Taxable services includes the following services 
175.6   enumerated in the North American Industry Classification System, 
175.7   1997, as prepared by the Office of Management and Budget, 
175.8   Executive Office of the President:  air transportation 
175.9   (subsector no. 481); rail transportation (subsector no. 482); 
175.10  water transportation (subsector no. 483); truck transportation 
175.11  (subsector no. 484); pipeline transportation (subsector no. 
175.12  486); charter bus industry (industry group no. 4855); and other 
175.13  transit and group passenger transportation (industry group no. 
175.14  4859), except special needs transportation provided under 
175.15  industry group no. 485991.  The services listed in this 
175.16  paragraph are taxed to the extent allowed by the United States 
175.17  Constitution and the laws of the United States.  The tax applies 
175.18  only to the transportation of tangible personal property if both 
175.19  the origin and destination of the tangible personal property are 
175.20  within this state and to the transportation of passengers if the 
175.21  passenger boards and exits the mode of transportation within 
175.22  this state. 
175.23     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
175.24  purchases occurring after December 31, 2001. 
175.25     Sec. 13.  Minnesota Statutes 2000, section 297A.61, is 
175.26  amended by adding a subdivision to read: 
175.27     Subd. 24.  [TELECOMMUNICATIONS SERVICES.] (a) 
175.28  "Telecommunications services" means the transmission, 
175.29  conveyance, or routing of voice, data, audio, video, or any 
175.30  other information or signals to a point, or between or among 
175.31  points, by or through any electronic, satellite, optical, 
175.32  microwave, or other medium or method now in existence or 
175.33  hereafter devised, regardless of the protocol used for such 
175.34  transmission, conveyance, or routing.  
175.35     (b) Telecommunications services includes the furnishing for 
175.36  consideration of access to telephone services by a hotel to its 
176.1   guests.  
176.2      (c) Telecommunications services do not include: 
176.3      (1) services purchased with a prepaid telephone calling 
176.4   card; 
176.5      (2) private communication service purchased by an agent 
176.6   acting on behalf of the state lottery; 
176.7      (3) information services; and 
176.8      (4) purchases of telecommunications when the purchaser uses 
176.9   the purchased services as a component part of or integrates such 
176.10  service into another telecommunications service that is sold by 
176.11  the purchaser in the normal course of business.  
176.12     (d) For purposes of this subdivision, "information 
176.13  services" means the offering of the capability for generating, 
176.14  acquiring, storing, transforming, processing, retrieving, 
176.15  utilizing, or making available information. 
176.16     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
176.17  purchases occurring after December 31, 2001. 
176.18     Sec. 14.  Minnesota Statutes 2000, section 297A.61, is 
176.19  amended by adding a subdivision to read: 
176.20     Subd. 25.  [CABLE TELEVISION SERVICE.] "Cable television 
176.21  service" means the transmission of video, audio, or other 
176.22  programming service to purchasers, and the subscriber 
176.23  interaction, if any, required for the selection or use of the 
176.24  programming service, regardless of whether the programming is 
176.25  transmitted over facilities owned or operated by the cable 
176.26  service provider or over facilities owned or operated by one or 
176.27  more dealers of communications services.  The term includes 
176.28  point-to-multipoint distribution services by which programming 
176.29  is transmitted or broadcast by microwave or other equipment 
176.30  directly to the subscriber's premises.  The term includes basic, 
176.31  extended, premium, pay-per-view, digital, and music services. 
176.32     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
176.33  purchases occurring after December 31, 2001. 
176.34     Sec. 15.  Minnesota Statutes 2000, section 297A.61, is 
176.35  amended by adding a subdivision to read: 
176.36     Subd. 26.  [PRIVATE COMMUNICATION SERVICE.] "Private 
177.1   communication service" means a communication service furnished 
177.2   to a subscriber which entitles the subscriber to:  
177.3      (1) exclusive or priority use of any communication channel 
177.4   or group of channels; 
177.5      (2) the use of an intercommunication system for the 
177.6   subscriber's stations, or regardless of whether the channel, 
177.7   group of channels, or intercommunication system may be connected 
177.8   through switching; 
177.9      (3) the switching capacity, extension lines and stations, 
177.10  or other associated services that are provided in connection 
177.11  with, and are necessary or unique to the use of, channels or 
177.12  systems described in clause (1); or 
177.13     (4) any combination of tunneling, encryption, 
177.14  authentication, and access control technologies and services 
177.15  used to carry traffic over the Internet, a managed Internet 
177.16  provider network or provider's backbone. 
177.17     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
177.18  purchases occurring after December 31, 2001. 
177.19     Sec. 16.  Minnesota Statutes 2000, section 297A.61, is 
177.20  amended by adding a subdivision to read: 
177.21     Subd. 27.  [DIRECT SATELLITE SERVICE.] "Direct satellite 
177.22  service" means programming transmitted or broadcast by satellite 
177.23  directly to the subscriber's premises without the use of ground 
177.24  receiving or distribution equipment, except at the subscriber's 
177.25  premises or in the uplink process to the satellite. 
177.26     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
177.27  purchases occurring after December 31, 2001. 
177.28     Sec. 17.  Minnesota Statutes 2000, section 297A.62, 
177.29  subdivision 1, is amended to read: 
177.30     Subdivision 1.  [GENERALLY.] Except as otherwise provided 
177.31  in subdivision 2 or 3 or in this chapter, a sales tax of ~~6.5~~ six 
177.32  percent is imposed on the gross receipts from retail sales as 
177.33  defined in section 297A.61, subdivision 4, made in this state or 
177.34  to a destination in this state by a person who is required to 
177.35  have or voluntarily obtains a permit under section 297A.83, 
177.36  subdivision 1. 
178.1      <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
178.2   purchases occurring after December 31, 2001. 
178.3      Sec. 18.  [297A.668] [SOURCING OF SALE; SITUS IN THIS 
178.4   STATE.] 
178.5      Subdivision 1.  [SOURCING RULES.] (a) The following 
178.6   provisions apply regardless of the characterization of a product 
178.7   as tangible personal property, a digital good, or a service; but 
178.8   do not apply to telecommunications services, or to sales of 
178.9   motor vehicles, watercraft, or aircraft.  These provisions only 
178.10  apply to determine a seller's obligation to pay or collect and 
178.11  remit a sales or use tax with respect to the seller's sale of a 
178.12  product.  These provisions do not affect the obligation of a 
178.13  seller as purchaser to remit tax on the use of the product. 
178.14     (b) When the product is received by the purchaser at a 
178.15  business location of the seller, the sale is sourced to that 
178.16  business location. 
178.17     (c) When the product is not received by the purchaser at a 
178.18  business location of the seller, the sale is sourced to the 
178.19  location where receipt by the purchaser or the donee designated 
178.20  by the purchaser occurs, including the location indicated by 
178.21  instructions for delivery to the purchasers or the purchaser's 
178.22  donee, known to the seller. 
178.23     (d) When paragraphs (b) and (c) do not apply, the sale is 
178.24  sourced to the location indicated by an address for the 
178.25  purchaser that is available from the business records of the 
178.26  seller that are maintained in the ordinary course of the 
178.27  seller's business when use of this address does not constitute 
178.28  bad faith. 
178.29     (e) When paragraphs (b), (c), and (d) do not apply, the 
178.30  sale is sourced to the location indicated by an address for the 
178.31  purchaser obtained during the consummation of the sale, 
178.32  including the address of a purchaser's payment instrument if no 
178.33  other address is available, when use of this address does not 
178.34  constitute bad faith. 
178.35     (f) When paragraphs (b), (c), (d), and (e) do not apply, 
178.36  including the circumstance where the seller is without 
179.1   sufficient information to apply the previous paragraphs, then 
179.2   the location is determined by the address from which tangible 
179.3   personal property was shipped, from which the digital good was 
179.4   first available for transmission by the seller, or from which 
179.5   the service was provided. 
179.6      Subd. 2.  [MULTIPLE POINTS OF USE.] (a) Notwithstanding the 
179.7   provisions of subdivision 1, a business purchaser that is not a 
179.8   holder of a direct pay permit and that knows at the time of its 
179.9   purchase of a digital good or service that the digital good or 
179.10  service will be concurrently available for use in more than one 
179.11  taxing jurisdiction shall deliver to the seller in conjunction 
179.12  with its purchase a multiple points of use exemption certificate 
179.13  disclosing this fact.  
179.14     (b) Upon receipt of the multiple points of use exemption 
179.15  certificate, the seller is relieved of the obligation to 
179.16  collect, pay, or remit the applicable tax and the purchaser is 
179.17  obligated to collect, pay, or remit the applicable tax on a 
179.18  direct pay basis. 
179.19     (c) A purchaser delivering the multiple points of use 
179.20  exemption certificate may use any reasonable, but consistent and 
179.21  uniform, method of apportionment that is supported by the 
179.22  purchaser's business records as they exist at the time of the 
179.23  consummation of the sale. 
179.24     (d) The multiple points of use exemption certificate 
179.25  remains in effect for all future sales by the seller to the 
179.26  purchaser until it is revoked in writing. 
179.27     (e) A holder of a direct pay permit is not required to 
179.28  deliver a multiple points or use exemption certificate to the 
179.29  seller.  A direct pay permit holder shall follow the provisions 
179.30  of paragraph (c) in apportioning the tax due on a digital good 
179.31  or a service that will be concurrently available for use in more 
179.32  than one taxing jurisdiction. 
179.33     Subd. 3.  [DEFINITION OF TERMS.] For purposes of this 
179.34  section, the terms "receive" and "receipt" mean taking 
179.35  possession of tangible personal property, making first use of 
179.36  services, or taking possession or making first use of digital 
180.1   goods, whichever occurs first.  The terms receive and receipt do 
180.2   not include possession by a carrier for hire on behalf of the 
180.3   purchaser. 
180.4      <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
180.5   purchases occurring after December 31, 2001. 
180.6      Sec. 19.  Minnesota Statutes 2000, section 297A.67, 
180.7   subdivision 5, is amended to read: 
180.8      Subd. 5.  [EXEMPT MEALS AT SCHOOLS.] ~~Meals and lunches~~ Food 
180.9   and drinks furnished, prepared, or served ~~at~~ by public and 
180.10  private schools, universities, or colleges are exempt. 
180.11     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
180.12  purchases occurring after December 31, 2001. 
180.13     Sec. 20.  Minnesota Statutes 2000, section 297A.67, 
180.14  subdivision 7, is amended to read: 
180.15     Subd. 7.  [MEDICINES; ~~MEDICAL~~ EYEGLASSES; PROSTHETIC 
180.16  DEVICES.] (a) Prescribed drugs and medicine, and insulin, 
180.17  intended for internal or external use, in the cure, mitigation, 
180.18  treatment, or prevention of illness or disease in human beings 
180.19  are exempt.  "Prescribed drugs and medicine" includes 
180.20  over-the-counter drugs or medicine prescribed by a licensed 
180.21  physician. 
180.22     (b) ~~Nonprescription medicines consisting principally~~ 
180.23  ~~(determined by the weight of all ingredients) of analgesics that~~ 
180.24  ~~are approved by the United States Food and Drug Administration~~ 
180.25  ~~for internal use by human beings are exempt.  For purposes of~~ 
180.26  ~~this subdivision, "principally" means greater than 50 percent~~ 
180.27  ~~analgesics by weight.~~ 
180.28     ~~(c)~~ Prescription glasses~~, hospital beds, fever~~ 
180.29  ~~thermometers, reusable finger-pricking devices for the~~ 
180.30  ~~extraction of blood, blood glucose monitoring machines, and~~ 
180.31  ~~other diagnostic agents used in diagnosing, monitoring, or~~ 
180.32  ~~treating diabetes, and therapeutic~~ and prosthetic devices are 
180.33  exempt.  ~~"Therapeutic devices" means devices that are attached~~ 
180.34  ~~or applied to the human body to cure, heal, or alleviate injury,~~ 
180.35  ~~illness, or disease, either directly or by administering a~~ 
180.36  ~~curative agent.~~  "Prosthetic devices" means devices that replace 
181.1   injured, diseased, or missing parts of the human body, either 
181.2   temporarily or permanently. 
181.3      <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
181.4   purchases occurring after December 31, 2001. 
181.5      Sec. 21.  Minnesota Statutes 2000, section 297A.68, 
181.6   subdivision 2, is amended to read: 
181.7      Subd. 2.  [MATERIALS AND SERVICES USED OR CONSUMED IN 
181.8   INDUSTRIAL PRODUCTION.] (a) Materials ~~stored, used, or~~ 
181.9   ~~consumed~~ and services used or consumed directly in industrial 
181.10  production of personal property intended to be sold ultimately 
181.11  at retail are exempt, whether or not the item so used becomes an 
181.12  ingredient or constituent part of the property produced.  
181.13  Materials that qualify for this exemption include, but are not 
181.14  limited to, the following: 
181.15     (1) chemicals, including chemicals used for cleaning food 
181.16  processing machinery and equipment; 
181.17     (2) materials, including chemicals, fuels, and electricity 
181.18  purchased by persons engaged in industrial production to treat 
181.19  waste generated as a result of the production process; 
181.20     (3) fuels, electricity, gas, and steam used or consumed in 
181.21  the production process, except that electricity, gas, or steam 
181.22  used for space heating or lighting is exempt only if it is 
181.23  necessary to produce that particular industrial product; 
181.24     (4) petroleum products and lubricants; and 
181.25     (5) packaging materials, including returnable containers 
181.26  used in packaging food and beverage products~~;~~. 
181.27     ~~(6) accessory tools, equipment, and other items that are~~ 
181.28  ~~separate detachable units with an ordinary useful life of less~~ 
181.29  ~~than 12 months used in producing a direct effect upon the~~ 
181.30  ~~product; and~~ 
181.31     ~~(7) the following materials, tools, and equipment used in~~ 
181.32  ~~metalcasting:  crucibles, thermocouple protection sheaths and~~ 
181.33  ~~tubes, stalk tubes, refractory materials, molten metal filters~~ 
181.34  ~~and filter boxes, degassing lances, and base blocks.~~ 
181.35     (b) This exemption does not include: 
181.36     (1) machinery, equipment, implements, tools, accessories, 
182.1   appliances, contrivances and furniture and fixtures~~, except~~ 
182.2   ~~those listed in paragraph (a), clause (6)~~; and 
182.3      (2) ~~petroleum and special fuels used in producing or~~ 
182.4   ~~generating power for propelling ready-mixed concrete trucks on~~ 
182.5   ~~the public highways of this state~~ services used for 
182.6   nonproduction purposes, including, but not limited to, the 
182.7   following:  plant security; fire prevention or safety unless 
182.8   required by state or federal law; administrative, sales, and 
182.9   marketing; facility maintenance; communications; and 
182.10  transportation. 
182.11     (c) Industrial production includes, but is not limited to, 
182.12  research, development, design or production of any tangible 
182.13  personal property, manufacturing, processing ~~(other than by~~ 
182.14  ~~restaurants and consumers)~~ of agricultural products (whether 
182.15  vegetable or animal), commercial fishing, refining, smelting, 
182.16  reducing, brewing, distilling, printing, mining, quarrying, 
182.17  lumbering, generating electricity and the production of road 
182.18  building materials.  Industrial production does not include 
182.19  painting, cleaning, repairing or similar processing of property 
182.20  except as part of the original manufacturing process. 
182.21     (d) Industrial production does not include storage, 
182.22  transportation, transmission, or distribution of electricity, 
182.23  petroleum, liquefied gas, water, or steam in, by, or through 
182.24  lines, wires, cables, poles, pipelines, tanks, mains, or other 
182.25  modes of transporting these products.  
182.26     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
182.27  purchases occurring after December 31, 2001. 
182.28     Sec. 22.  Minnesota Statutes 2000, section 297A.68, 
182.29  subdivision 3, is amended to read: 
182.30     Subd. 3.  [MATERIALS AND SERVICES USED IN PROVIDING ~~CERTAIN~~ 
182.31  TAXABLE SERVICES.] (a) Materials ~~stored, used, or consumed~~ and 
182.32  services used or consumed directly in providing ~~a~~ taxable 
182.33  ~~service listed in section 297A.61, subdivision 16, paragraph~~ 
182.34  ~~(g),~~ services intended to be sold ultimately at retail are 
182.35  exempt. 
182.36     (b) This exemption includes, but is not limited to: 
183.1      (1) chemicals, lubricants, packaging materials, seeds, 
183.2   trees, fertilizers, and herbicides, if these items are used or 
183.3   consumed in providing the taxable service; 
183.4      (2) chemicals used to treat waste generated as a result of 
183.5   providing the taxable service; 
183.6      (3) accessory tools, equipment, and other items that are 
183.7   separate detachable units used in providing the service and that 
183.8   have an ordinary useful life of less than 12 months; and 
183.9      (4) fuel, electricity, gas, and steam used or consumed in 
183.10  ~~the production process~~ furnishing the service, except that 
183.11  electricity, gas, or steam used for space heating or lighting is 
183.12  exempt only if it is ~~necessary~~ essential to ~~produce~~ furnish that 
183.13  particular taxable service. 
183.14     (c) This exemption does not include machinery, equipment, 
183.15  implements, tools, accessories, appliances, contrivances, 
183.16  furniture, and fixtures used in providing the taxable service.  
183.17     (d) This exemption does not apply to materials and services 
183.18  used or consumed for the following purposes, including, but not 
183.19  limited to:  security; fire prevention and safety unless 
183.20  required by state or federal law; administrative, sales, and 
183.21  marketing; facility maintenance; communications; and 
183.22  transportation. 
183.23     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
183.24  purchases occurring after December 31, 2001. 
183.25     Sec. 23.  Minnesota Statutes 2000, section 297A.68, 
183.26  subdivision 5, is amended to read: 
183.27     Subd. 5.  [CAPITAL EQUIPMENT.] (a) Capital equipment is 
183.28  exempt.  ~~The tax must be imposed and collected as if the rate~~ 
183.29  ~~under section 297A.62, subdivision 1, applied, and then refunded~~ 
183.30  ~~in the manner provided in section 297A.75.~~ 
183.31     "Capital equipment" means machinery and equipment purchased 
183.32  or leased and used in this state by the purchaser or lessee 
183.33  primarily for manufacturing, fabricating, mining, or refining 
183.34  tangible personal property or for furnishing taxable services to 
183.35  be sold ultimately at retail. 
183.36     Capital equipment means machinery and equipment essential 
184.1   to the integrated production process or to the furnishing of 
184.2   taxable services.  ~~Capital equipment also includes machinery and~~ 
184.3   ~~equipment used to electronically transmit results retrieved by a~~ 
184.4   ~~customer of an online computerized data retrieval system.~~ 
184.5      (b) Capital equipment includes, but is not limited to: 
184.6      (1) machinery and equipment used to operate, control, or 
184.7   regulate the production or service equipment; 
184.8      (2) machinery and equipment used for research and 
184.9   development, design, quality control, and testing activities; 
184.10     (3) environmental control devices that are used to maintain 
184.11  conditions such as temperature, humidity, light, or air pressure 
184.12  when those conditions are essential to and are part of the 
184.13  production or service process; 
184.14     (4) materials and supplies used to construct and install 
184.15  machinery or equipment; 
184.16     (5) repair and replacement parts, including accessories, 
184.17  whether purchased as spare parts, repair parts, or as upgrades 
184.18  or modifications to machinery or equipment; 
184.19     (6) materials used for foundations that support machinery 
184.20  or equipment; 
184.21     (7) materials used to construct and install special purpose 
184.22  buildings used in the production or service process; ~~and~~ 
184.23     (8) ready-mixed concrete ~~trucks~~ equipment in which the 
184.24  ready-mixed concrete is mixed as part of the delivery process~~.~~ 
184.25  regardless if mounted on a chassis; 
184.26     (9) machinery and equipment used for control of pollution 
184.27  that was generated as a result of the integrated production 
184.28  process or the furnishing of taxable services; and 
184.29     (10) machinery and equipment used to receive and store raw 
184.30  materials. 
184.31     (c) Capital equipment does not include the following: 
184.32     (1) motor vehicles taxed under chapter 297B; 
184.33     (2) machinery or equipment used to ~~receive or store raw~~ 
184.34  ~~materials~~ store or handle finished goods; 
184.35     (3) building materials, except for materials included in 
184.36  paragraph (b), clauses (6) and (7); 
185.1      (4) machinery or equipment used for nonproduction or 
185.2   non-service-related purposes, including, but not limited to, the 
185.3   following:  plant security, ~~fire prevention,~~ first aid, and 
185.4   hospital stations; support operations or 
185.5   administration; ~~pollution control;~~ and plant cleaning, disposal 
185.6   of scrap and waste, plant communications, space heating, or 
185.7   lighting~~, or safety~~; 
185.8      (5) farm machinery and aquaculture production equipment as 
185.9   defined by section 297A.61, subdivisions 12 and 13; 
185.10     (6) ~~machinery or equipment purchased and installed by a~~ 
185.11  ~~contractor as part of an improvement to real property~~ machinery 
185.12  and equipment used in connection with the storage, 
185.13  transportation, transmission, or distribution of electricity, 
185.14  petroleum, liquefied gas, water, or steam in, by, or through 
185.15  lines, wires, cables, poles, pipelines, tanks, mains, or other 
185.16  modes of transporting these products; or 
185.17     (7) any other item that is not essential to the integrated 
185.18  process of manufacturing, fabricating, mining, or refining or to 
185.19  the furnishing of taxable services. 
185.20     (d) For purposes of this subdivision: 
185.21     (1) "Machinery" means mechanical, electronic, or electrical 
185.22  devices, including computers and computer software, that are 
185.23  purchased or constructed to be used for the activities set forth 
185.24  in paragraph (a). 
185.25     (2) "Equipment" means independent devices or tools separate 
185.26  from machinery, including computers and computer software, used 
185.27  in operating, controlling, or regulating machinery and 
185.28  equipment; and any subunit or assembly comprising a component of 
185.29  any machinery or accessory or attachment parts of machinery, 
185.30  such as tools, dies, jigs, patterns, and molds.  
185.31     (3) "Primarily" means machinery and equipment used 50 
185.32  percent or more of the time in an activity described in 
185.33  paragraph (a). 
185.34     (4) "Manufacturing" means an operation or series of 
185.35  operations where raw materials are changed in form, composition, 
185.36  or condition by machinery and equipment and which results in the 
186.1   production of a new article of tangible personal property.  For 
186.2   purposes of this subdivision, "manufacturing" includes the 
186.3   generation of electricity or steam to be sold at retail. 
186.4      (5) "Fabricating" means to make, build, create, produce, or 
186.5   assemble components or property to work in a new or different 
186.6   manner. 
186.7      (6) "Mining" means the extraction of minerals, ores, stone, 
186.8   or peat. 
186.9      (7) "Refining" means the process of converting a natural 
186.10  resource to a product, including the treatment of water to be 
186.11  sold at retail. 
186.12     (8) "Integrated production process" means a process 
186.13  beginning with the ~~removal~~ receipt and storage of raw materials 
186.14  ~~from inventory~~ through the completion of the product, including 
186.15  packaging of the product. 
186.16     (9) ~~"Online data retrieval system" means a system whose~~ 
186.17  ~~cumulation of information is equally available and accessible to~~ 
186.18  ~~all its customers.~~ 
186.19     ~~(10)~~ "Machinery and equipment used for pollution control" 
186.20  means machinery and equipment used ~~solely to eliminate, prevent,~~ 
186.21  ~~or reduce pollution resulting from an activity described in~~ 
186.22  ~~paragraph (a)~~ primarily for the abatement and control of air, 
186.23  water, or land pollution. 
186.24     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
186.25  purchases occurring after December 31, 2001. 
186.26     Sec. 24.  Minnesota Statutes 2000, section 297A.68, 
186.27  subdivision 17, is amended to read: 
186.28     Subd. 17.  [SHIPS USED IN INTERSTATE COMMERCE.] ~~Repair,~~ 
186.29  ~~replacement, and rebuilding parts and materials, and lubricants,~~ 
186.30  ~~for ships or vessels used or to be used principally in~~ 
186.31  ~~interstate or foreign commerce are exempt.~~  Vessels used 
186.32  principally in interstate or foreign commerce with a gross 
186.33  registered tonnage of at least 3,000 tons are exempt.  The 
186.34  exemption does not apply to lubricants, fuels, or to parts and 
186.35  accessories to be attached to the vessel. 
186.36     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
187.1   purchases occurring after December 31, 2001. 
187.2      Sec. 25.  Minnesota Statutes 2000, section 297A.68, 
187.3   subdivision 19, is amended to read: 
187.4      Subd. 19.  [PETROLEUM PRODUCTS.] The following petroleum 
187.5   products are exempt: 
187.6      (1) products upon which a tax has been imposed and paid 
187.7   under chapter 296A, and for which no refund has been or will be 
187.8   allowed because the buyer used the fuel for nonhighway use; 
187.9      (2) products that are used in the improvement of 
187.10  agricultural land by constructing, maintaining, and repairing 
187.11  drainage ditches, tile drainage systems, grass waterways, water 
187.12  impoundment, and other erosion control structures; 
187.13     (3) products purchased by a transit system receiving 
187.14  financial assistance under section 174.24 or 473.384; or 
187.15     (4) products used in a passenger snowmobile, as defined in 
187.16  section 296A.01, subdivision 39, for off-highway business use as 
187.17  part of the operations of a resort as provided under section 
187.18  296A.16, subdivision 2, clause (2)~~; or~~ 
187.19     ~~(5) products purchased by a state or a political~~ 
187.20  ~~subdivision of a state for use in motor vehicles exempt from~~ 
187.21  ~~registration under section 168.012, subdivision 1, paragraph (b)~~.
187.22     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
187.23  purchases occurring after December 31, 2001. 
187.24     Sec. 26.  Minnesota Statutes 2000, section 297A.68, is 
187.25  amended by adding a subdivision to read: 
187.26     Subd. 35.  [INTERSTATE MOTOR VEHICLES.] Motor vehicles used 
187.27  by persons who engage in interstate for-hire transportation of 
187.28  tangible personal property or passengers are exempt.  For 
187.29  purposes of this subdivision, "person" means 
187.30     (1) one who possesses a certificate or permit or has 
187.31  completed a registration process that authorizes for-hire 
187.32  transportation of property or passengers from the United States 
187.33  Department of Transportation, the transportation regulation 
187.34  board, or the department of transportation; 
187.35     (2) one who transports commodities defined as "exempt" in 
187.36  for-hire transportation in interstate commerce; or 
188.1      (3) one who transports tangible personal property in 
188.2   interstate commerce, pursuant to contracts with persons 
188.3   described in clause (1) or (2).  The exemption also applies to 
188.4   motor vehicles used by persons who in the course of their 
188.5   business are transporting solely their own goods in interstate 
188.6   commerce.  The exemption does not apply to parts or accessories 
188.7   to be attached to the vehicle. 
188.8      <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
188.9   purchases occurring after December 31, 2001. 
188.10     Sec. 27.  Minnesota Statutes 2000, section 297A.68, is 
188.11  amended by adding a subdivision to read: 
188.12     Subd. 36.  [RAILROAD ROLLING STOCK.] Rolling stock used by 
188.13  railroads to engage in the for-hire transportation of persons or 
188.14  property is exempt.  For purposes of this subdivision, "rolling 
188.15  stock" means all portable or movable equipment, apparatus, or 
188.16  machinery that moves on railroad tracks, including engines, 
188.17  cars, tenders, coaches, and sleeping cars.  The exemption does 
188.18  not apply to lubricants, fuels, or to parts and accessories to 
188.19  be attached to the rolling stock. 
188.20     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
188.21  purchases occurring after December 31, 2001. 
188.22     Sec. 28.  Minnesota Statutes 2000, section 297A.70, 
188.23  subdivision 1, is amended to read: 
188.24     Subdivision 1.  [SCOPE.] (a) To the extent provided in this 
188.25  section, the gross receipts from sales of items to ~~or by~~, and 
188.26  storage, distribution, use, or consumption of items by the 
188.27  organizations listed in this section are specifically exempted 
188.28  from the taxes imposed by this chapter. 
188.29     (b) ~~Notwithstanding any law to the contrary enacted before~~ 
188.30  ~~1992, only sales to governments and political subdivisions~~ 
188.31  ~~listed in this section are exempt from the taxes imposed by this~~ 
188.32  ~~chapter.~~ 
188.33     ~~(c)~~ "Sales" includes purchases under an installment 
188.34  contract or lease purchase agreement under section 465.71. 
188.35     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
188.36  purchases occurring after December 31, 2001. 
189.1      Sec. 29.  Minnesota Statutes 2000, section 297A.70, 
189.2   subdivision 2, is amended to read: 
189.3      Subd. 2.  [SALES TO GOVERNMENT.] (a) All sales, except 
189.4   those listed in paragraph (b), to the following governments and 
189.5   political subdivisions, or to the listed agencies or 
189.6   instrumentalities of governments and political subdivisions, are 
189.7   exempt: 
189.8      (1) the United States and its agencies and 
189.9   instrumentalities; and 
189.10     (2) ~~school districts, the University of Minnesota, state~~ 
189.11  ~~universities, community colleges, technical colleges, state~~ 
189.12  ~~academies, the Perpich Minnesota center for arts education, and~~ 
189.13  ~~an instrumentality of a political subdivision that is accredited~~ 
189.14  ~~as an optional/special function school by the North Central~~ 
189.15  ~~Association of Colleges and Schools;~~ 
189.16     ~~(3) hospitals and nursing homes owned and operated by~~ 
189.17  ~~political subdivisions of the state;~~ 
189.18     ~~(4) other states or political subdivisions of other states,~~ 
189.19  ~~if the sale would be exempt from taxation if it occurred in that~~ 
189.20  ~~state; and~~ 
189.21     ~~(5) sales to public libraries, public library systems,~~ 
189.22  ~~multicounty, multitype library systems as defined in section~~ 
189.23  ~~134.001, county law libraries under chapter 134A, state agency~~ 
189.24  ~~libraries, the state library under section 480.09, and the~~ 
189.25  ~~legislative reference library~~ a state and its agencies, 
189.26  instrumentalities, and political subdivisions. 
189.27     (b) This exemption ~~does not apply~~ applies to ~~the sales~~ 
189.28  purchases of ~~the following products and services:~~ 
189.29     ~~(1)~~ building, construction, or reconstruction materials 
189.30  ~~purchased~~ by a contractor or a subcontractor ~~as a part of~~ under 
189.31  a ~~lump-sum~~ construction contract ~~or similar type of contract~~ 
189.32  ~~with a guaranteed maximum price covering both labor and~~ 
189.33  ~~materials~~ with a government entity for use in the construction, 
189.34  alteration, or repair of a building or facility~~;~~ 
189.35     ~~(2) construction materials purchased by tax exempt entities~~ 
189.36  ~~or their contractors to be used in constructing~~ provided that 
190.1   the buildings or facilities ~~which~~ will ~~not~~ be used principally 
190.2   by the ~~tax exempt entities;~~ government entity. 
190.3      ~~(3) the leasing of a motor vehicle as defined in section~~ 
190.4   ~~297B.01, subdivision 5, except for leases entered into by the~~ 
190.5   ~~United States or its agencies or instrumentalities; or~~ 
190.6      ~~(4) meals and lodging as defined under section 297A.61,~~ 
190.7   ~~subdivisions 3, paragraph (d), and 16, paragraph (c), except for~~ 
190.8   ~~meals and lodging purchased directly by the United States or its~~ 
190.9   ~~agencies or instrumentalities.~~ 
190.10     ~~(c) As used in this subdivision, "school districts" means~~ 
190.11  ~~public school entities and districts of every kind and nature~~ 
190.12  ~~organized under the laws of the state of Minnesota, and any~~ 
190.13  ~~instrumentality of a school district, as defined in section~~ 
190.14  ~~471.59.~~ 
190.15     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
190.16  purchases occurring after December 31, 2001. 
190.17     Sec. 30.  Minnesota Statutes 2000, section 297A.70, 
190.18  subdivision 4, is amended to read: 
190.19     Subd. 4.  [SALES TO NONPROFIT GROUPS.] (a) All sales~~,~~ 
190.20  ~~except those listed in paragraph (b), to the following~~ 
190.21  ~~"nonprofit organizations" are exempt:~~ 
190.22     ~~(1) an entity organized and operated exclusively for~~ 
190.23  ~~charitable, religious, or educational purposes if the item~~ 
190.24  ~~purchased is used in the performance of charitable, religious,~~ 
190.25  ~~or educational functions;~~ 
190.26     ~~(2) any senior citizen group or association of groups that:~~ 
190.27     ~~(i) in general limits membership to persons who are either~~ 
190.28  ~~age 55 or older, or physically disabled; and~~ 
190.29     ~~(ii) is organized and operated exclusively for pleasure,~~ 
190.30  ~~recreation, and other nonprofit purposes, no part of the net~~ 
190.31  ~~earnings of which inures to the benefit of any private~~ 
190.32  ~~shareholders; and~~ 
190.33     ~~(3) an entity organized and operated exclusively to~~ 
190.34  ~~maintain a cemetery owned by a religious organization~~ to an 
190.35  organization that (1) has a federal determination letter stating 
190.36  that it qualifies as an exempt organization under section 
191.1   501(c)(3) of the Internal Revenue Code, and (2) obtains a tax 
191.2   identification number from the department of revenue under 
191.3   section 297A.83, are exempt. 
191.4      (b) This exemption ~~does not apply~~ applies to the ~~following~~ 
191.5   ~~sales:~~ 
191.6      ~~(1)~~ purchase of building, construction, or reconstruction 
191.7   materials ~~purchased~~ by a contractor or a subcontractor ~~as a part~~ 
191.8   ~~of~~ under a ~~lump-sum~~ construction contract ~~or similar type of~~ 
191.9   ~~contract with a guaranteed maximum price covering both labor and~~ 
191.10  ~~materials~~ with a 501(c)(3) organization for use in the 
191.11  construction, alteration, or repair of a building or facility~~;~~ 
191.12     ~~(2) construction materials purchased by tax-exempt entities~~ 
191.13  ~~or their contractors to be used in constructing~~ provided that 
191.14  the buildings or facilities ~~that~~ will ~~not~~ be used principally by 
191.15  the ~~tax-exempt entities; and~~ 501(c)(3) organization. 
191.16     ~~(3) meals and lodging as defined under section 297A.61,~~ 
191.17  ~~subdivisions 3, paragraph (d), and 16, paragraph (c); and~~ 
191.18     ~~(4) leasing of a motor vehicle as defined in section~~ 
191.19  ~~297B.01, subdivision 5, except as provided in paragraph (c).~~ 
191.20     ~~(c) This exemption applies to the leasing of a motor~~ 
191.21  ~~vehicle as defined in section 297B.01, subdivision 5, only if~~ 
191.22  ~~the vehicle is:~~ 
191.23     ~~(1) a truck, as defined in section 168.011, a bus, as~~ 
191.24  ~~defined in section 168.011, or a passenger automobile, as~~ 
191.25  ~~defined in section 168.011, if the automobile is designed and~~ 
191.26  ~~used for carrying more than nine persons including the driver;~~ 
191.27  ~~and~~ 
191.28     ~~(2) intended to be used primarily to transport tangible~~ 
191.29  ~~personal property or individuals, other than employees, to whom~~ 
191.30  ~~the organization provides service in performing its charitable,~~ 
191.31  ~~religious, or educational purpose.~~ 
191.32     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
191.33  purchases occurring after December 31, 2001. 
191.34     Sec. 31.  Minnesota Statutes 2000, section 297A.70, 
191.35  subdivision 14, is amended to read: 
191.36     Subd. 14.  [~~FUNDRAISING EVENTS SPONSORED BY~~ NONPROFIT 
192.1   ~~GROUPS~~ SALES.] (a) Sales ~~of tangible personal property at, and~~ 
192.2   ~~admission charges for fundraising events~~ made or sponsored by~~,~~ a 
192.3   nonprofit organization are exempt ~~if the entire proceeds, less~~ 
192.4   ~~the necessary expenses for the event, will be used solely and~~ 
192.5   ~~exclusively for charitable, religious, or educational purposes.~~  
192.6   ~~Exempt sales include the sale of food, meals, drinks, and~~ 
192.7   ~~taxable services at the fundraising event~~. 
192.8      (b) This exemption is limited in the following manner: 
192.9      (1) ~~it does not apply to admission charges for events~~ 
192.10  ~~involving bingo or other gambling activities or to charges for~~ 
192.11  ~~use of amusement devices involving bingo or other gambling~~ 
192.12  ~~activities;~~ 
192.13     ~~(2) all gross receipts are taxable if the profits are not~~ 
192.14  ~~used solely and exclusively for charitable, religious, or~~ 
192.15  ~~educational purposes;~~ 
192.16     ~~(3)~~ it does not apply unless the organization keeps a 
192.17  separate accounting record~~, including receipts and disbursements~~ 
192.18  ~~from each fundraising event that documents all deductions from~~ 
192.19  ~~gross receipts with receipts and other records~~ of sales 
192.20  qualifying for the exemption; 
192.21     ~~(4)~~ (2) it does not apply to any sale made by or in the 
192.22  name of a nonprofit corporation as the active or passive agent 
192.23  of a person that is not a nonprofit corporation; 
192.24     ~~(5) all gross receipts are taxable if fundraising events~~ 
192.25  ~~exceed 24 days per year; and~~ 
192.26     ~~(6) it does not apply to fundraising events conducted on~~ 
192.27  ~~premises leased for more than five days but less than 30 days.~~ 
192.28     (3) it only applies to the first $25,000 of taxable sales 
192.29  in a calendar year and it does not apply to any sales after the 
192.30  $25,000 amount has been exceeded; and 
192.31     (4) it does not apply if the sales are derived from 
192.32  admission charges or from activities for which the money must be 
192.33  deposited with the school district treasurer under section 
192.34  123B.49, subdivision 2, or be recorded in the same manner as 
192.35  other revenues or expenditures of the school district under 
192.36  section 123B.49, subdivision 4. 
193.1      (c) For purposes of this subdivision, a "nonprofit 
193.2   organization" means a public school or any ~~unit of government,~~ 
193.3   corporation, society, association, foundation, or institution 
193.4   organized and operated for charitable, religious, educational, 
193.5   civic, fraternal, and senior citizens' or veterans' purposes, no 
193.6   part of the net earnings of which inures to the benefit of a 
193.7   private individual.  
193.8      (d) For purposes of this subdivision, a club, association, 
193.9   or other organization of elementary or secondary school students 
193.10  organized for the purpose of carrying on sports, educational, or 
193.11  other extracurricular activities is a separate organization from 
193.12  the school district or school. 
193.13     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
193.14  purchases occurring after December 31, 2001. 
193.15     Sec. 32.  Minnesota Statutes 2000, section 297A.71, is 
193.16  amended by adding a subdivision to read: 
193.17     Subd. 1a.  [EXPIRATION DATES.] Except as otherwise provided 
193.18  in subdivision 19, the exemptions provided in this section are 
193.19  only effective for sales and purchases occurring before January 
193.20  1, 2003.  This section expires on January 1, 2003, except that 
193.21  subdivision 19 expires on July 1, 2003. 
193.22     Sec. 33.  Minnesota Statutes 2000, section 297A.72, 
193.23  subdivision 1, is amended to read: 
193.24     Subdivision 1.  [DUTY OF RETAILER.] An exemption 
193.25  certificate conclusively relieves the retailer from collecting 
193.26  and remitting the tax ~~only~~ if taken ~~in good faith~~ from the 
193.27  purchaser. 
193.28     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
193.29  purchases occurring after December 31, 2001. 
193.30     Sec. 34.  Minnesota Statutes 2000, section 297A.75, 
193.31  subdivision 1, is amended to read: 
193.32     Subdivision 1.  [TAX COLLECTED.] The tax on the gross 
193.33  receipts from the sale of the following exempt items must be 
193.34  imposed and collected as if the sale were taxable and the rate 
193.35  under section 297A.62, subdivision 1, applied.  The exempt items 
193.36  include: 
194.1      (1) ~~capital equipment exempt under section 297A.68,~~ 
194.2   ~~subdivision 5;~~ 
194.3      ~~(2)~~ building materials for an agricultural processing 
194.4   facility exempt under section 297A.71, subdivision 13; 
194.5      ~~(3)~~ (2) building materials for mineral production 
194.6   facilities exempt under section 297A.71, subdivision 14; 
194.7      ~~(4)~~ (3) building materials for correctional facilities 
194.8   under section 297A.71, subdivision 3; 
194.9      ~~(5)~~ (4) building materials used in a residence for disabled 
194.10  veterans exempt under section 297A.71, subdivision 11; and 
194.11     ~~(6)~~ (5) chair lifts, ramps, elevators, and associated 
194.12  building materials exempt under section 297A.71, subdivision 12. 
194.13     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
194.14  purchases occurring after December 31, 2001. 
194.15     Sec. 35.  Minnesota Statutes 2000, section 297A.75, 
194.16  subdivision 2, is amended to read: 
194.17     Subd. 2.  [REFUND; ELIGIBLE PERSONS.] Upon application on 
194.18  forms prescribed by the commissioner, a refund equal to the tax 
194.19  paid on the gross receipts of the exempt items must be paid to 
194.20  the applicant.  Only the following persons may apply for the 
194.21  refund: 
194.22     (1) for subdivision 1, clauses (1) to ~~(3)~~ (2), the 
194.23  applicant must be the purchaser; 
194.24     (2) for subdivision 1, clause ~~(4)~~ (3), the applicant must 
194.25  be the governmental subdivision; 
194.26     (3) for subdivision 1, clause ~~(5)~~ (4), the applicant must 
194.27  be the recipient of the benefits provided in United States Code, 
194.28  title 38, chapter 21; and 
194.29     (4) for subdivision 1, clause ~~(6)~~ (5), the applicant must 
194.30  be the owner of the homestead property. 
194.31     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
194.32  purchases occurring after December 31, 2001. 
194.33     Sec. 36.  Minnesota Statutes 2000, section 297A.75, 
194.34  subdivision 3, is amended to read: 
194.35     Subd. 3.  [APPLICATION.] ~~(a)~~ The application must include 
194.36  sufficient information to permit the commissioner to verify the 
195.1   tax paid.  If the tax was paid by a contractor, subcontractor, 
195.2   or builder, under subdivision 1, clause (3), (4), or (5), ~~or~~ 
195.3   ~~(6),~~ the contractor, subcontractor, or builder must furnish to 
195.4   the refund applicant a statement including the cost of the 
195.5   exempt items and the taxes paid on the items unless otherwise 
195.6   specifically provided by this subdivision.  The provisions of 
195.7   sections 289A.40 and 289A.50 apply to refunds under this section.
195.8      ~~(b) An applicant may not file more than two applications~~ 
195.9   ~~per calendar year for refunds for taxes paid on capital~~ 
195.10  ~~equipment exempt under section 297A.68, subdivision 5.~~ 
195.11     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
195.12  purchases occurring after December 31, 2001. 
195.13     Sec. 37.  Minnesota Statutes 2000, section 297A.75, 
195.14  subdivision 4, is amended to read: 
195.15     Subd. 4.  [INTEREST.] Interest must be paid on the refund 
195.16  at the rate in section 270.76 from the date the refund claim is 
195.17  filed for taxes paid under subdivision 1, clauses (1) ~~to (3)~~, 
195.18  (2), and ~~(5)~~ (4), and from 60 days after the date the refund 
195.19  claim is filed with the commissioner for claims filed under 
195.20  subdivision 1, clauses ~~(4) and (6)~~ (3) and (5). 
195.21     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
195.22  purchases occurring after December 31, 2001. 
195.23     Sec. 38.  Minnesota Statutes 2000, section 297A.80, is 
195.24  amended to read: 
195.25     297A.80 [TAXES IN OTHER STATES; OFFSET AGAINST USE TAX.] 
195.26     If an article of tangible personal property or an item 
195.27  listed in section 297A.63 has already been taxed by another 
195.28  state and any subdivision thereof for its sale, storage, use, or 
195.29  other consumption in an amount less than the tax imposed by this 
195.30  chapter, then as to the person who paid the tax in the other 
195.31  state or any subdivision thereof, section 297A.63 applies only 
195.32  at a rate measured by the difference between the rate imposed 
195.33  under section 297A.62 and the rate by which the previous tax was 
195.34  computed.  If the tax imposed in the other state or any 
195.35  subdivision thereof is equal to or greater than the tax imposed 
195.36  in this state, then no tax is due from that person under section 
196.1   297A.63.  The credit shall be applied first against the amount 
196.2   of any use tax due the state, and any unused portion of the 
196.3   credit shall then be applied against any use tax due a 
196.4   subdivision. 
196.5      <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
196.6   purchases occurring after December 31, 2001. 
196.7      Sec. 39.  Minnesota Statutes 2000, section 297A.82, 
196.8   subdivision 1, is amended to read: 
196.9      Subdivision 1.  [REQUIREMENTS FOR REGISTRATION.] An 
196.10  aircraft must not be registered or licensed in this state unless 
196.11  the applicant presents proof that the sales or use tax imposed 
196.12  by this chapter has been paid or that the transaction is exempt 
196.13  from the sales and use tax.  The exemption for an occasional 
196.14  sale under section 297A.67, subdivision 23, ~~or 297A.68,~~ 
196.15  ~~subdivision 25,~~ does not apply to the sale or purchase of an 
196.16  aircraft. 
196.17     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
196.18  purchases occurring after December 31, 2001. 
196.19     Sec. 40.  Minnesota Statutes 2000, section 297A.82, 
196.20  subdivision 3, is amended to read: 
196.21     Subd. 3.  [PAYMENT OF TAX ~~TO COMMISSIONER~~.] If the aircraft 
196.22  is purchased from a person who is not the holder of a valid 
196.23  sales and use tax permit under this chapter, the purchaser shall 
196.24  pay the tax ~~to the commissioner of revenue~~ prior to registering 
196.25  or licensing the aircraft in this state.  ~~The commissioner of~~ 
196.26  ~~revenue shall issue a certificate stating that the sales and use~~ 
196.27  ~~tax in respect to the transaction has been paid.~~ 
196.28     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
196.29  purchases occurring after the day following final enactment. 
196.30     Sec. 41.  Minnesota Statutes 2000, section 297A.82, 
196.31  subdivision 4, is amended to read: 
196.32     Subd. 4.  [EXEMPTIONS.] (a) The following transactions are 
196.33  exempt from the tax imposed in this chapter to the extent 
196.34  provided. 
196.35     (b) The purchase or use of aircraft previously registered 
196.36  in Minnesota by a corporation or partnership is exempt if the 
197.1   transfer constitutes a transfer within the meaning of section 
197.2   351 or 721 of the Internal Revenue Code. 
197.3      (c) The sale to or purchase, storage, use, or consumption 
197.4   by a licensed aircraft dealer of an aircraft for which a 
197.5   commercial use permit has been issued pursuant to section 
197.6   360.654 is exempt, if the aircraft is resold while the permit is 
197.7   in effect. 
197.8      (d) Airflight equipment when sold to, or purchased, stored, 
197.9   used, or consumed by airline companies, as defined in section 
197.10  270.071, subdivision 4, is exempt.  For purposes of this 
197.11  subdivision, "airflight equipment" includes airplanes ~~and parts~~ 
197.12  ~~necessary for the repair and maintenance of such airflight~~ 
197.13  ~~equipment, and flight simulators~~, aircraft communications and 
197.14  navigational equipment, flight crew equipment, and hydraulics 
197.15  equipment, but does not include airplanes with a gross weight of 
197.16  less than 30,000 pounds that are used on intermittent or 
197.17  irregularly timed flights.  The exemption does not apply to 
197.18  repair parts, lubricants, fuels, or flight simulators. 
197.19     (e) Sales of, and the storage, distribution, use, or 
197.20  consumption of aircraft, as defined in section 360.511 and 
197.21  approved by the Federal Aviation Administration, and which the 
197.22  seller delivers to a purchaser outside Minnesota or which, 
197.23  without intermediate use, is shipped or transported outside 
197.24  Minnesota by the purchaser are exempt, but only if the purchaser 
197.25  is not a resident of Minnesota and provided that the aircraft is 
197.26  not thereafter returned to a point within Minnesota, except in 
197.27  the course of interstate commerce or isolated and occasional 
197.28  use, and will be registered in another state or country upon its 
197.29  removal from Minnesota.  This exemption applies even if the 
197.30  purchaser takes possession of the aircraft in Minnesota and uses 
197.31  the aircraft in the state exclusively for training purposes for 
197.32  a period not to exceed ten days prior to removing the aircraft 
197.33  from this state. 
197.34     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
197.35  purchases occurring after December 31, 2001. 
197.36     Sec. 42.  Minnesota Statutes 2000, section 297A.82, is 
198.1   amended by adding a subdivision to read: 
198.2      Subd. 7.  [AGREEMENT WITH COMMISSIONER OF 
198.3   TRANSPORTATION.] Notwithstanding subdivisions 1 to 4, the 
198.4   commissioner may enter into an agreement with the commissioner 
198.5   of transportation whereby, upon approval of both commissioners, 
198.6   the commissioner of transportation will collect the sales tax on 
198.7   aircraft from persons required to register or license aircraft 
198.8   in this state.  For purposes of collecting the tax, the 
198.9   commissioner of transportation shall act as agent of the 
198.10  commissioner of revenue and shall be subject to all rules not 
198.11  inconsistent with the provisions of this chapter, that may be 
198.12  prescribed by the commissioner. 
198.13     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
198.14  following final enactment. 
198.15     Sec. 43.  Minnesota Statutes 2000, section 297A.87, 
198.16  subdivision 3, is amended to read: 
198.17     Subd. 3.  [OCCASIONAL SALE PROVISIONS NOT APPLICABLE.] The 
198.18  isolated and occasional sale provisions under section 297A.67, 
198.19  subdivision 23, ~~or under section 297A.68, subdivision 25,~~ do not 
198.20  apply to a seller at an event under this section. 
198.21     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
198.22  purchases occurring after December 31, 2001. 
198.23     Sec. 44.  Minnesota Statutes 2000, section 297A.94, is 
198.24  amended to read: 
198.25     297A.94 [DEPOSIT OF REVENUES.] 
198.26     (a) Except as provided in this section, the commissioner 
198.27  shall deposit the revenues, including interest and penalties, 
198.28  derived from the taxes imposed by this chapter in the state 
198.29  treasury and credit them to the general fund.  
198.30     (b) The commissioner shall deposit taxes in the Minnesota 
198.31  agricultural and economic account in the special revenue fund if:
198.32     (1) the taxes are derived from sales and use of property 
198.33  and services purchased for the construction and operation of an 
198.34  agricultural resource project; and 
198.35     (2) the purchase was made on or after the date on which a 
198.36  conditional commitment was made for a loan guaranty for the 
199.1   project under section 41A.04, subdivision 3. 
199.2   The commissioner of finance shall certify to the commissioner 
199.3   the date on which the project received the conditional 
199.4   commitment.  The amount deposited in the loan guaranty account 
199.5   must be reduced by any refunds and by the costs incurred by the 
199.6   department of revenue to administer and enforce the assessment 
199.7   and collection of the taxes.  
199.8      (c) The commissioner shall deposit the revenues, including 
199.9   interest and penalties, derived from the taxes imposed on sales 
199.10  and purchases included in section 297A.61, subdivision 16, 
199.11  ~~paragraphs (b) and (f)~~ paragraph (e), and on amusement, 
199.12  entertainment, and recreation services under section 297A.61, 
199.13  subdivision 16, paragraph (f), in the state treasury, and credit 
199.14  them as follows: 
199.15     (1) first to the general obligation special tax bond debt 
199.16  service account in each fiscal year the amount required by 
199.17  section 16A.661, subdivision 3, paragraph (b); and 
199.18     (2) after the requirements of clause (1) have been met, the 
199.19  balance to the general fund. 
199.20     (d) The commissioner shall deposit the revenues, including 
199.21  interest and penalties, collected under section 297A.64, 
199.22  subdivision 5, in the state treasury and credit them to the 
199.23  general fund.  By July 15 of each year the commissioner shall 
199.24  transfer to the highway user tax distribution fund an amount 
199.25  equal to the excess fees collected under section 297A.64, 
199.26  subdivision 5, for the previous calendar year. 
199.27     (e) For fiscal year 2001, 97 percent, and for fiscal year 
199.28  2002 and thereafter, 87 percent of the revenues, including 
199.29  interest and penalties, transmitted to the commissioner under 
199.30  section 297A.65, must be deposited by the commissioner in the 
199.31  state treasury as follows: 
199.32     (1) 50 percent of the receipts must be deposited in the 
199.33  heritage enhancement account in the game and fish fund, and may 
199.34  be spent only on activities that improve, enhance, or protect 
199.35  fish and wildlife resources, including conservation, 
199.36  restoration, and enhancement of land, water, and other natural 
200.1   resources of the state; 
200.2      (2) 22.5 percent of the receipts must be deposited in the 
200.3   natural resources fund, and may be spent only for state parks 
200.4   and trails; 
200.5      (3) 22.5 percent of the receipts must be deposited in the 
200.6   natural resources fund, and may be spent only on metropolitan 
200.7   park and trail grants; 
200.8      (4) three percent of the receipts must be deposited in the 
200.9   natural resources fund, and may be spent only on local trail 
200.10  grants; and 
200.11     (5) two percent of the receipts must be deposited in the 
200.12  natural resources fund, and may be spent only for the Minnesota 
200.13  zoological garden, the Como park zoo and conservatory, and the 
200.14  Duluth zoo. 
200.15     (f) The revenue dedicated under paragraph (e) may not be 
200.16  used as a substitute for traditional sources of funding for the 
200.17  purposes specified, but the dedicated revenue shall supplement 
200.18  traditional sources of funding for those purposes.  Land 
200.19  acquired with money deposited in the game and fish fund under 
200.20  paragraph (e) must be open to public hunting and fishing during 
200.21  the open season.  At least 87 percent of the money deposited in 
200.22  the game and fish fund for improvement, enhancement, or 
200.23  protection of fish and wildlife resources under paragraph (e) 
200.24  must be allocated for field operations. 
200.25     Sec. 45.  Minnesota Statutes 2000, section 297B.01, 
200.26  subdivision 8, is amended to read: 
200.27     Subd. 8.  [PURCHASE PRICE.] "Purchase price" means the 
200.28  total consideration valued in money for a sale, whether paid in 
200.29  money or otherwise.  The purchase price excludes the amount of a 
200.30  manufacturer's rebate paid or payable to the purchaser.  If a 
200.31  motor vehicle is taken in trade as a credit or as part payment 
200.32  on a motor vehicle taxable under this chapter, the credit or 
200.33  trade-in value allowed by the person selling the motor vehicle 
200.34  shall be deducted from the total selling price to establish the 
200.35  purchase price of the vehicle being sold and the trade-in 
200.36  allowance allowed by the seller shall constitute the purchase 
201.1   price of the motor vehicle accepted as a trade-in.  The purchase 
201.2   price in those instances where the motor vehicle is acquired by 
201.3   gift or by any other transfer for a nominal or no monetary 
201.4   consideration shall also include the average value of similar 
201.5   motor vehicles, established by standards and guides as 
201.6   determined by the motor vehicle registrar.  The purchase price 
201.7   in those instances where a motor vehicle is manufactured by a 
201.8   person who registers it under the laws of this state shall mean 
201.9   the manufactured cost of such motor vehicle and manufactured 
201.10  cost shall mean the amount expended for materials, labor and 
201.11  other properly allocable costs of manufacture, except that in 
201.12  the absence of actual expenditures for the manufacture of a part 
201.13  or all of the motor vehicle, manufactured costs shall mean the 
201.14  reasonable value of the completed motor vehicle.  
201.15     The term "purchase price" shall ~~not~~ include the portion of 
201.16  the value of a motor vehicle due solely to modifications 
201.17  necessary to make the motor vehicle handicapped accessible.  The 
201.18  term "purchase price" shall not include the transfer of a motor 
201.19  vehicle by way of gift between a husband and wife or parent and 
201.20  child, or to a nonprofit organization as provided under 
201.21  subdivision 7, paragraph (e), nor shall it include the transfer 
201.22  of a motor vehicle by a guardian to a ward when there is no 
201.23  monetary consideration and the title to such vehicle was 
201.24  registered in the name of the guardian, as guardian, only 
201.25  because the ward was a minor.  There shall not be included in 
201.26  "purchase price" the amount of any tax imposed by the United 
201.27  States upon or with respect to retail sales whether imposed upon 
201.28  the retailer or the consumer.  The term "purchase price" does 
201.29  not include the portion of the value of a motor vehicle due 
201.30  solely to additions or modifications necessary to make the 
201.31  vehicle into a ready-mixed concrete vehicle. 
201.32     The term "purchase price" shall not include the transfer of 
201.33  a motor vehicle as a gift between a foster parent and foster 
201.34  child.  For purposes of this subdivision, a foster relationship 
201.35  exists, regardless of the age of the child, if (1) a foster 
201.36  parent's home is or was licensed as a foster family home under 
202.1   Minnesota Rules, parts 9545.0010 to 9545.0260, and (2) the 
202.2   county verifies that the child was a state ward or in permanent 
202.3   foster care. 
202.4      <b>[EFFECTIVE DATE.]</b> This section is effective for vehicles 
202.5   sold, purchased, or acquired after December 31, 2001. 
202.6      Sec. 46.  Minnesota Statutes 2000, section 297B.03, is 
202.7   amended to read: 
202.8      297B.03 [EXEMPTIONS.] 
202.9      There is specifically exempted from the provisions of this 
202.10  chapter and from computation of the amount of tax imposed by it 
202.11  the following:  
202.12     (1) purchase or use, including use under a lease purchase 
202.13  agreement or installment sales contract made pursuant to section 
202.14  465.71, of any motor vehicle by the United States and its 
202.15  agencies and instrumentalities and by any person described in 
202.16  and subject to the conditions provided in ~~section 297A.25,~~ 
202.17  ~~subdivision 18~~ section 297A.70, subdivisions 2 and 4; 
202.18     (2) purchase or use of any motor vehicle by any person who 
202.19  was a resident of another state at the time of the purchase and 
202.20  who subsequently becomes a resident of Minnesota, provided the 
202.21  purchase occurred more than 60 days prior to the date such 
202.22  person began residing in the state of Minnesota; 
202.23     (3) purchase or use of any motor vehicle ~~by any person~~ 
202.24  ~~making a valid election to be taxed under the provisions of~~ 
202.25  ~~section 297A.211~~ that is exempt from taxation under section 
202.26  297A.68, subdivision 35; 
202.27     (4) purchase or use of any motor vehicle previously 
202.28  registered in the state of Minnesota when such transfer 
202.29  constitutes a transfer within the meaning of section 118, 331, 
202.30  332, 336, 337, 338, 351, 355, 368, 721, 731, 1031, 1033, or 
202.31  1563(a) of the Internal Revenue Code of 1986, as amended through 
202.32  December 31, 1999; 
202.33     (5) purchase or use of any vehicle owned by a resident of 
202.34  another state and leased to a Minnesota based private or for 
202.35  hire carrier for regular use in the transportation of persons or 
202.36  property in interstate commerce provided the vehicle is titled 
203.1   in the state of the owner or secured party, and that state does 
203.2   not impose a sales tax or sales tax on motor vehicles used in 
203.3   interstate commerce; and 
203.4      (6) ~~purchase or use of a motor vehicle by a private~~ 
203.5   ~~nonprofit or public educational institution for use as an~~ 
203.6   ~~instructional aid in automotive training programs operated by~~ 
203.7   ~~the institution.  "Automotive training programs" includes motor~~ 
203.8   ~~vehicle body and mechanical repair courses but does not include~~ 
203.9   ~~driver education programs;~~ 
203.10     ~~(7)~~ purchase of a motor vehicle for use as an ambulance by 
203.11  an ambulance service licensed under section 144E.10~~;~~. 
203.12     ~~(8) purchase of a motor vehicle by or for a public library,~~ 
203.13  ~~as defined in section 134.001, subdivision 2, as a bookmobile or~~ 
203.14  ~~library delivery vehicle;~~ 
203.15     ~~(9) purchase of a ready-mixed concrete truck;~~ 
203.16     ~~(10) purchase or use of a motor vehicle by a town for use~~ 
203.17  ~~exclusively for road maintenance, including snowplows and dump~~ 
203.18  ~~trucks, but not including automobiles, vans, or pickup trucks;~~ 
203.19     ~~(11) purchase or use of a motor vehicle by a corporation,~~ 
203.20  ~~society, association, foundation, or institution organized and~~ 
203.21  ~~operated exclusively for charitable, religious, or educational~~ 
203.22  ~~purposes, but only if the vehicle is:~~ 
203.23     ~~(i) a truck, as defined in section 168.011, a bus, as~~ 
203.24  ~~defined in section 168.011, or a passenger automobile, as~~ 
203.25  ~~defined in section 168.011, if the automobile is designed and~~ 
203.26  ~~used for carrying more than nine persons including the driver;~~ 
203.27  ~~and~~ 
203.28     ~~(ii) intended to be used primarily to transport tangible~~ 
203.29  ~~personal property or individuals, other than employees, to whom~~ 
203.30  ~~the organization provides service in performing its charitable,~~ 
203.31  ~~religious, or educational purpose.~~ 
203.32     <b>[EFFECTIVE DATE.]</b> This section is effective for vehicles 
203.33  sold, purchased, or acquired after December 31, 2001. 
203.34     Sec. 47.  [WHEN SERVICES PROVIDED; TRANSITION.] 
203.35     If a service that is taxable beginning January 1, 2002, is 
203.36  provided prior to that date, it is not taxed, notwithstanding 
204.1   that compensation for the service is paid or payable on or after 
204.2   that date.  If a service that is taxable beginning January 1, 
204.3   2002, is provided on or after that date, the service is taxed 
204.4   unless it was prepaid in full prior to October 1, 2001.  If a 
204.5   service that is taxable beginning January 1, 2002, is provided 
204.6   over a period of time beginning prior to that date and ending 
204.7   after that date, only that portion of the service provided on or 
204.8   after January 1, 2002, is taxed. 
204.9      Sec. 48.  [APPROPRIATIONS.] 
204.10     $6,839,810 is appropriated from the general fund to the 
204.11  commissioner of revenue for fiscal year 2002 to administer this 
204.12  act, and $4,945,125 is appropriated from the general fund to the 
204.13  commissioner of revenue for fiscal year 2003 to administer this 
204.14  act.  The appropriations are available until June 30, 2003. 
204.15     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2001. 
204.16     Sec. 49.  [REPEALER.] 
204.17     (a) Minnesota Statutes 2000, sections 289A.60, subdivision 
204.18  15, is repealed. 
204.19     (b) Minnesota Statutes 2000, sections 297A.67, subdivisions 
204.20  4, 6, 9, 10, 11, 12, 16, 17, 18, 19, and 25; 297A.68, 
204.21  subdivisions 4, 6, 7, 8, 9, 10, 11, 12, 16, 18, 21, 22, 23, 24, 
204.22  25, 26, 28, 29, 30, 31, 33, and 34; 297A.69, subdivisions 3, 5, 
204.23  6, and 7; 297A.70, subdivisions 3, 5, 6, 7, 8, 9, 10, 11, 12, 
204.24  13, 15, and 16; 297A.82, subdivision 5; 297A.90; 297A.96; and 
204.25  469.1734, subdivision 6, are repealed. 
204.26     <b>[EFFECTIVE DATE.]</b> This section, paragraph (a), is effective 
204.27  for returns due after January 2002.  This section, paragraph 
204.28  (b), is effective for sales and purchases occurring after 
204.29  December 31, 2001. 
204.30                             ARTICLE 6 
204.31                        SPECIAL TAXES REFORM
204.32     Section 1.  Minnesota Statutes 2000, section 287.035, is 
204.33  amended to read: 
204.34     287.035 [IMPOSITION OF TAX.] 
204.35     A tax ~~of 23 cents~~ is imposed upon ~~each $100, or fraction~~ 
204.36  ~~thereof, of~~ the debt or portion of a debt that is secured by any 
205.1   recorded mortgage of real property located in this state at the 
205.2   rate of .0023.  The person liable for the tax is the mortgagee.  
205.3   The tax is not imposed on the lawful interest amounts that may 
205.4   accrue with respect to a debt. 
205.5      <b>[EFFECTIVE DATE.]</b> This section is effective for documents 
205.6   executed, recorded, or registered after June 30, 2001. 
205.7      Sec. 2.  Minnesota Statutes 2000, section 287.21, 
205.8   subdivision 1, is amended to read: 
205.9      Subdivision 1.  [DETERMINATION OF TAX.] (a) A tax is 
205.10  imposed on each deed or instrument by which any real property in 
205.11  this state is granted, assigned, transferred, or otherwise 
205.12  conveyed.  The tax applies against the net consideration. 
205.13     (b) The tax is determined in the following manner:  (1) 
205.14  when transfers are made by instruments pursuant to mergers, 
205.15  consolidations, sales, or transfers of substantially all of the 
205.16  assets of the entities as defined in section 287.20, subdivision 
205.17  9, pursuant to plans of reorganization, the tax is $1.65; (2) 
205.18  when there is no consideration or when the consideration, 
205.19  exclusive of the value of any lien or encumbrance remaining 
205.20  thereon at the time of sale, is $500 or less, the tax is $1.65; 
205.21  or (3) when the consideration, exclusive of the value of any 
205.22  lien or encumbrance remaining at the time of sale, exceeds $500, 
205.23  the tax is ~~$1.65 plus $1.65 for each additional $500 or fraction~~ 
205.24  ~~of that amount~~ .0033 of the net consideration. 
205.25     (c) The tax is due at the time a taxable deed or instrument 
205.26  is presented for recording. 
205.27     <b>[EFFECTIVE DATE.]</b> This section is effective for documents 
205.28  executed, recorded, or registered after June 30, 2001. 
205.29     Sec. 3.  Minnesota Statutes 2000, section 297E.02, 
205.30  subdivision 1, is amended to read: 
205.31     Subdivision 1.  [~~IMPOSITION~~ TAX ON BINGO.] A tax is imposed 
205.32  on all ~~lawful gambling other than (1) pull-tab deals or games;~~ 
205.33  ~~(2) tipboard deals or games; and (3) items listed in section~~ 
205.34  ~~297E.01, subdivision 8, clauses (4) and (5)~~ bingo games, at the 
205.35  rate of ~~8.5~~ five percent on the gross receipts as defined in 
205.36  section 297E.01, subdivision 8, less prizes actually paid.  The 
206.1   tax imposed by this subdivision is in lieu of the tax imposed by 
206.2   section 297A.02 and all local taxes and license fees except a 
206.3   fee authorized under section 349.16, subdivision 8, or a tax 
206.4   authorized under subdivision 5.  
206.5      The tax imposed under this subdivision is payable by the 
206.6   organization or party conducting, directly or indirectly, the 
206.7   gambling.  
206.8      <b>[EFFECTIVE DATE.]</b> This section is effective for tax periods 
206.9   beginning on or after July 1, 2001. 
206.10     Sec. 4.  Minnesota Statutes 2000, section 297E.02, 
206.11  subdivision 6, is amended to read: 
206.12     Subd. 6.  [COMBINED RECEIPTS TAX.] In addition to the taxes 
206.13  imposed under subdivisions 1 and 4, a tax is imposed on the 
206.14  combined receipts of the organization.  As used in this section, 
206.15  "combined receipts" is the sum of the organization's gross 
206.16  receipts from lawful gambling less gross receipts directly 
206.17  derived from the conduct of bingo~~, raffles, and paddlewheels~~, as 
206.18  defined in section 297E.01, subdivision 8, for the fiscal year.  
206.19  The combined receipts of an organization are subject to a tax 
206.20  computed according to the following schedule: 
206.21     If the combined receipts for the          The tax is:
206.22     fiscal year are:
206.23     Not over ~~$500,000~~ $700,000          zero
206.24     Over ~~$500,000~~ $700,000, but
206.25     not over ~~$700,000~~ $900,000          1.7 percent of the amount 
206.26                                         over ~~$500,000~~ $700,000, 
206.27                                         but not over ~~$700,000~~
206.28                                         $900,000
206.29     Over ~~$700,000~~ $900,000, but
206.30     not over ~~$900,000~~ $1,100,000        $3,400 plus 3.4 
206.31                                         percent of the amount 
206.32                                         over ~~$700,000~~ 
206.33                                         $900,000, but not
206.34                                         over ~~$900,000~~
206.35                                         $1,100,000
206.36     Over ~~$900,000~~ $1,100,000            $10,200 plus 5.1 
207.1                                          percent of the amount 
207.2                                          over ~~$900,000~~
207.3                                          $1,100,000
207.4      <b>[EFFECTIVE DATE.]</b> This section is effective for tax periods 
207.5   beginning on or after July 1, 2001. 
207.6      Sec. 5.  Minnesota Statutes 2000, section 297I.40, 
207.7   subdivision 1, is amended to read: 
207.8      Subdivision 1.  [REQUIREMENT TO PAY.] On or before ~~April 1~~ 
207.9   March 15, June ~~1~~ 15, September 15, and December ~~1 of each year~~ 
207.10  15 of the current year, every taxpayer subject to tax under 
207.11  section 297I.05, subdivisions 1 to 6, and 12, paragraphs (a), 
207.12  clauses (1) to (5), (b), and (e), must pay to the commissioner 
207.13  an installment equal to ~~one-third~~ one-fourth of the insurer's 
207.14  total estimated tax for the current year. 
207.15     <b>[EFFECTIVE DATE.]</b> This section is effective for payments 
207.16  required to be made after December 31, 2001. 
207.17     Sec. 6.  Minnesota Statutes 2000, section 297I.40, 
207.18  subdivision 2, is amended to read: 
207.19     Subd. 2.  [AMOUNT OF REQUIRED INSTALLMENT.] The amount of 
207.20  any required installment is ~~one-third~~ one-fourth of the lesser 
207.21  of 
207.22     (1) 80 percent of the tax imposed for the current year, or 
207.23     (2) 100 percent of the tax paid for the previous year. 
207.24     <b>[EFFECTIVE DATE.]</b> This section is effective for payments 
207.25  required to be made after December 31, 2001. 
207.26     Sec. 7.  Minnesota Statutes 2000, section 297I.40, 
207.27  subdivision 7, is amended to read: 
207.28     Subd. 7.  [~~APRIL~~ MARCH ESTIMATED PAYMENT.] A taxpayer who 
207.29  claims a refund of an overpayment on an original return may 
207.30  elect to have all or any portion of the overpayment applied as a 
207.31  credit to the ~~April 1~~ March 15 estimated tax payment for the 
207.32  year following the year of the return.  The credit is considered 
207.33  applied on ~~April 1~~ March 15.  Notwithstanding section 297I.80, 
207.34  the amount credited does not bear interest. 
207.35     <b>[EFFECTIVE DATE.]</b> This section is effective for payments 
207.36  required to be made after December 31, 2001. 
208.1      Sec. 8.  [REPEALER.] 
208.2      (a) Minnesota Statutes 2000, sections 297G.03, subdivision 
208.3   4; and 297G.07, subdivision 3, are repealed. 
208.4      (b) Minnesota Statutes 2000, sections 297I.05, subdivision 
208.5   8; and 297I.30, subdivision 3, are repealed. 
208.6      <b>[EFFECTIVE DATE.]</b> This section, paragraph (a), is effective 
208.7   for tax periods beginning on or after July 1, 2001.  This 
208.8   section, paragraph (b), is effective for calendar years 
208.9   beginning after December 31, 1999. 
208.10                             ARTICLE 7 
208.11                        PETROLEUM TAX REFORM 
208.12     Section 1.  Minnesota Statutes 2000, section 239.101, 
208.13  subdivision 3, is amended to read: 
208.14     Subd. 3.  [PETROLEUM INSPECTION FEE.] ~~A person who owns~~ 
208.15  ~~petroleum products held in storage at a pipeline terminal, river~~ 
208.16  ~~terminal, or refinery shall pay a petroleum inspection fee of 85~~ 
208.17  ~~cents for every 1,000 gallons sold or withdrawn from the~~ 
208.18  ~~terminal or refinery storage~~ An inspection fee is imposed on 
208.19  petroleum products when received by the first licensed 
208.20  distributor, and on petroleum products received and held for 
208.21  sale or use by any person when the petroleum products have not 
208.22  previously been received by a licensed distributor.  The 
208.23  petroleum inspection fee is 85 cents for every 1,000 gallons 
208.24  received.  The commissioner of revenue shall collect the fee.  
208.25  The revenue from the fee must first be applied to cover the 
208.26  amounts appropriated for petroleum product quality inspection 
208.27  expenses, for the inspection and testing of petroleum product 
208.28  measuring equipment, and for petroleum supply monitoring under 
208.29  chapter 216C.  
208.30     The commissioner of revenue shall credit a person for 
208.31  inspection fees previously paid in error or for any material 
208.32  exported or sold for export from the state upon filing of a 
208.33  report as prescribed by the commissioner of revenue.  The 
208.34  commissioner of revenue may collect the inspection fee along 
208.35  with any taxes due under chapter 296A.  
208.36     <b>[EFFECTIVE DATE.]</b> This section is effective for petroleum 
209.1   products received on or after July 1, 2001. 
209.2      Sec. 2.  Minnesota Statutes 2000, section 296A.15, 
209.3   subdivision 1, is amended to read: 
209.4      Subdivision 1.  [MONTHLY GASOLINE REPORT; SHRINKAGE 
209.5   ALLOWANCE.] (a) Except as provided in paragraph (e), on or 
209.6   before the 23rd day of each month, every person who is required 
209.7   to pay a gasoline tax shall file with the commissioner a report, 
209.8   in the form and manner prescribed by the commissioner, showing 
209.9   the number of gallons of petroleum products received by the 
209.10  reporter during the preceding calendar month, and other 
209.11  information the commissioner may require.  A written report is 
209.12  deemed to have been filed as required in this subdivision if 
209.13  postmarked on or before the 23rd day of the month in which the 
209.14  tax is payable. 
209.15     (b) The number of gallons of gasoline must be reported in 
209.16  United States standard liquid gallons, 231 cubic inches, except 
209.17  that the commissioner may upon written application and for cause 
209.18  shown permit the distributor to report the number of gallons of 
209.19  gasoline as corrected to a temperature of 60-degrees 
209.20  Fahrenheit.  If the application is granted, all gasoline covered 
209.21  in the application and allowed by the commissioner must continue 
209.22  to be reported by the distributor on the adjusted basis for a 
209.23  period of one year from the date of the granting of the 
209.24  application.  The number of gallons of petroleum products other 
209.25  than gasoline must be reported as originally invoiced.  Each 
209.26  report must show separately the number of gallons of aviation 
209.27  gasoline received by the reporter during each calendar month. 
209.28     (c) Each report must also include the amount of gasoline 
209.29  tax on gasoline received by the reporter during the preceding 
209.30  month.  In computing the tax a deduction of ~~three~~ 2.5 percent of 
209.31  the quantity of gasoline received by a distributor shall be made 
209.32  for evaporation and loss.  At the time of reporting, the 
209.33  reporter shall submit satisfactory evidence that one-third of 
209.34  the ~~three~~ 2.5 percent deduction has been credited or paid to 
209.35  dealers on quantities sold to them. 
209.36     (d) Each report shall contain a confession of judgment for 
210.1   the amount of the tax shown due to the extent not timely paid. 
210.2      (e) Under certain circumstances and with the approval of 
210.3   the commissioner, taxpayers may be allowed to file reports 
210.4   annually. 
210.5      <b>[EFFECTIVE DATE.]</b> This section is effective for reports due 
210.6   on or after July 1, 2001. 
210.7      Sec. 3.  Minnesota Statutes 2000, section 296A.16, 
210.8   subdivision 1, is amended to read: 
210.9      Subdivision 1.  [CREDIT OR REFUND OF GASOLINE OR SPECIAL 
210.10  FUEL TAX PAID.] The commissioner shall allow the distributor 
210.11  credit or refund of the tax paid on gasoline and special fuel: 
210.12     (1) exported or sold for export from the state, other than 
210.13  in the supply tank of a motor vehicle or of an aircraft; 
210.14     (2) sold to the United States government to be used 
210.15  exclusively in performing its governmental functions and 
210.16  activities or to any "cost plus a fixed fee" contractor employed 
210.17  by the United States government on any national defense project; 
210.18     (3) if the fuel is placed in a tank used exclusively for 
210.19  residential heating; 
210.20     (4) destroyed by accident while in the possession of the 
210.21  distributor; 
210.22     (5) in error; and 
210.23     (6) ~~in the case of gasoline only, sold for storage in an~~ 
210.24  ~~on-farm bulk storage tank, if the tax was not collected on the~~ 
210.25  ~~sale; and~~ 
210.26     ~~(7)~~ in such other cases as the commissioner may permit, 
210.27  consistent with the provisions of this chapter and other laws 
210.28  relating to the gasoline and special fuel excise taxes. 
210.29     <b>[EFFECTIVE DATE.]</b> This section is effective for gasoline 
210.30  purchased or refunds claimed on or after July 1, 2001. 
210.31     Sec. 4.  [APPROPRIATION.] 
210.32     A one-time appropriation of $140,000 is appropriated for 
210.33  fiscal year 2002 from the highway user tax distribution fund to 
210.34  the commissioner of revenue for systems modifications associated 
210.35  with petroleum tax reform. 
210.36                             ARTICLE 8 
211.1                         MINERALS TAX REFORM 
211.2      Section 1.  Minnesota Statutes 2000, section 298.01, 
211.3   subdivision 3, is amended to read: 
211.4      Subd. 3.  [OCCUPATION TAX; OTHER ORES.] Every person 
211.5   engaged in the business of mining or producing ores in this 
211.6   state, except iron ore or taconite concentrates, shall pay an 
211.7   occupation tax to the state of Minnesota as provided in this 
211.8   subdivision.  The tax is determined in the same manner as the 
211.9   tax imposed by section 290.02, except that sections 290.05, 
211.10  subdivision 1, clause (a), and 290.17, subdivision 4, do not 
211.11  apply, and except that the tax rate is 2.45 percent of a 
211.12  person's taxable income.  The tax is in addition to all other 
211.13  taxes. 
211.14     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
211.15  payable May 1, 2002, and thereafter. 
211.16     Sec. 2.  Minnesota Statutes 2000, section 298.01, 
211.17  subdivision 3a, is amended to read: 
211.18     Subd. 3a.  [GROSS INCOME.] (a) For purposes of determining 
211.19  a person's taxable income under subdivision 3, gross income is 
211.20  determined by the amount of gross proceeds from mining in this 
211.21  state under section 298.016 and includes any gain or loss 
211.22  recognized from the sale or disposition of assets used in the 
211.23  business in this state. 
211.24     (b) In applying section 290.191, subdivision 5, all 
211.25  transfers of ores are deemed to be sales ~~outside~~ inside this 
211.26  state ~~if the ores are transported out of this state after the~~ 
211.27  ~~ores have been converted to a marketable quality~~. 
211.28     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
211.29  payable May 1, 2002, and thereafter. 
211.30     Sec. 3.  Minnesota Statutes 2000, section 298.01, 
211.31  subdivision 4, is amended to read: 
211.32     Subd. 4.  [OCCUPATION TAX; IRON ORE; TACONITE 
211.33  CONCENTRATES.] A person engaged in the business of mining or 
211.34  producing of iron ore, taconite concentrates or direct reduced 
211.35  ore in this state shall pay an occupation tax to the state of 
211.36  Minnesota.  The tax is determined in the same manner as the tax 
212.1   imposed by section 290.02, except that sections 290.05, 
212.2   subdivision 1, clause (a), and 290.17, subdivision 4, do not 
212.3   apply, and except that the tax rate is 2.45 percent of a 
212.4   person's taxable income.  The tax is in addition to all other 
212.5   taxes. 
212.6      <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
212.7   payable May 1, 2002, and thereafter. 
212.8      Sec. 4.  Minnesota Statutes 2000, section 298.01, 
212.9   subdivision 4a, is amended to read: 
212.10     Subd. 4a.  [GROSS INCOME.] (a) For purposes of determining 
212.11  a person's taxable income under subdivision 4, gross income is 
212.12  determined by the mine value of the ore mined in Minnesota and 
212.13  includes any gain or loss recognized from the sale or 
212.14  disposition of assets used in the business in this state. 
212.15     (b) Mine value is the value, or selling price, of iron ore 
212.16  or taconite concentrates, f.o.b. mine.  The mine value is 
212.17  calculated by multiplying the iron unit price for the period, as 
212.18  determined by the commissioner, by the tons produced and the 
212.19  weighted average analysis. 
212.20     (c) In applying section 290.191, subdivision 5, all 
212.21  transfers of iron ore and taconite concentrates are deemed to be 
212.22  sales ~~outside~~ inside this state ~~if the iron ore or taconite~~ 
212.23  ~~concentrates are transported out of this state after the raw~~ 
212.24  ~~iron ore and taconite concentrates have been converted to a~~ 
212.25  ~~marketable quality~~. 
212.26     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
212.27  payable May 1, 2002, and thereafter. 
212.28     Sec. 5.  Minnesota Statutes 2000, section 298.01, 
212.29  subdivision 4c, is amended to read: 
212.30     Subd. 4c.  [SPECIAL DEDUCTIONS; NET OPERATING LOSS.] (a) 
212.31  For purposes of determining taxable income under subdivision 
212.32  4, ~~the following modifications are allowed:~~ 
212.33     ~~(1)~~ the provisions of section 290.01, subdivisions 19c, 
212.34  clauses (7) and (11), and 19d, clauses (7) and (12), are not 
212.35  used to determine taxable income~~; and~~. 
212.36     ~~(2) for assets placed in service before January 1, 1990,~~ 
213.1   ~~the deduction for depreciation will be the same amount allowed~~ 
213.2   ~~under chapter 290, except that after an asset has been fully~~ 
213.3   ~~depreciated for federal income tax purposes any remaining~~ 
213.4   ~~depreciable basis is allowed as a deduction using the~~ 
213.5   ~~straight-line method over the following number of years:~~ 
213.6      ~~(i) three-year property, one year;~~ 
213.7      ~~(ii) five- and seven-year property, two years;~~ 
213.8      ~~(iii) ten-year property, five years; and~~ 
213.9      ~~(iv) all other property, seven years.~~ 
213.10     ~~No deduction is allowed if an asset is fully depreciated~~ 
213.11  ~~for occupation tax purposes before January 1990.~~ 
213.12     ~~(b) For purposes of determining the deduction allowed under~~ 
213.13  ~~paragraph (a), clause (2), the remaining depreciable basis of~~ 
213.14  ~~property placed in service before January 1, 1990, is calculated~~ 
213.15  ~~as follows:~~ 
213.16     ~~(1) the adjusted basis of the property on December 31,~~ 
213.17  ~~1989, which was used to calculate the hypothetical corporate~~ 
213.18  ~~franchise tax under Minnesota Statutes 1988, section 298.40,~~ 
213.19  ~~including salvage value; less~~ 
213.20     ~~(2) deductions for depreciation allowed under section~~ 
213.21  ~~290.01, subdivision 19e.~~ 
213.22     ~~(c) The basis for determining gain or loss on sale or~~ 
213.23  ~~disposition of assets placed in service before January 1, 1990,~~ 
213.24  ~~is the basis determined under paragraph (b), less the deductions~~ 
213.25  ~~allowed under paragraph (a), clause (2).~~ 
213.26     ~~(d)~~ (b) The amount of net operating loss incurred in a 
213.27  taxable year beginning before January 1, 1990, that may be 
213.28  carried over to a taxable year beginning after December 31, 
213.29  1989, is the amount of net operating loss carryover determined 
213.30  in the calculation of the hypothetical corporate franchise tax 
213.31  under Minnesota Statutes 1988, sections 298.40 and 298.402. 
213.32     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
213.33  payable May 1, 2002, and thereafter. 
213.34     Sec. 6.  Minnesota Statutes 2000, section 298.24, 
213.35  subdivision 1, is amended to read: 
213.36     Subdivision 1.  (a) For concentrate produced in 1999, there 
214.1   is imposed upon taconite and iron sulphides, and upon the mining 
214.2   and quarrying thereof, and upon the production of iron ore 
214.3   concentrate therefrom, and upon the concentrate so produced, a 
214.4   tax of $2.141 per gross ton of merchantable iron ore concentrate 
214.5   produced therefrom.  
214.6      (b) For concentrates produced in 2000 and subsequent years, 
214.7   the tax rate shall be equal to the preceding year's tax rate 
214.8   plus an amount equal to the preceding year's tax rate multiplied 
214.9   by the percentage increase in the implicit price deflator from 
214.10  the fourth quarter of the second preceding year to the fourth 
214.11  quarter of the preceding year, except that for concentrates 
214.12  produced in 2001, the tax rate is $1.956 per gross ton of 
214.13  merchantable iron ore concentrate produced therefrom.  "Implicit 
214.14  price deflator" means the implicit price deflator for the gross 
214.15  domestic product prepared by the bureau of economic analysis of 
214.16  the United States Department of Commerce.  
214.17     (c) On concentrates produced in 1997 and thereafter, an 
214.18  additional tax is imposed equal to three cents per gross ton of 
214.19  merchantable iron ore concentrate for each one percent that the 
214.20  iron content of the product exceeds 72 percent, when dried at 
214.21  212 degrees Fahrenheit. 
214.22     (d) The tax shall be imposed on the average of the 
214.23  production for the current year and the previous two years.  The 
214.24  rate of the tax imposed will be the current year's tax rate.  
214.25  This clause shall not apply in the case of the closing of a 
214.26  taconite facility if the property taxes on the facility would be 
214.27  higher if this clause and section 298.25 were not applicable.  
214.28     (e) If the tax or any part of the tax imposed by this 
214.29  subdivision is held to be unconstitutional, a tax of $2.141 per 
214.30  gross ton of merchantable iron ore concentrate produced shall be 
214.31  imposed.  
214.32     (f) Consistent with the intent of this subdivision to 
214.33  impose a tax based upon the weight of merchantable iron ore 
214.34  concentrate, the commissioner of revenue may indirectly 
214.35  determine the weight of merchantable iron ore concentrate 
214.36  included in fluxed pellets by subtracting the weight of the 
215.1   limestone, dolomite, or olivine derivatives or other basic flux 
215.2   additives included in the pellets from the weight of the 
215.3   pellets.  For purposes of this paragraph, "fluxed pellets" are 
215.4   pellets produced in a process in which limestone, dolomite, 
215.5   olivine, or other basic flux additives are combined with 
215.6   merchantable iron ore concentrate.  No subtraction from the 
215.7   weight of the pellets shall be allowed for binders, mineral and 
215.8   chemical additives other than basic flux additives, or moisture. 
215.9      (g)(1) Notwithstanding any other provision of this 
215.10  subdivision, for the first two years of a plant's production of 
215.11  direct reduced ore, no tax is imposed under this section.  As 
215.12  used in this paragraph, "direct reduced ore" is ore that results 
215.13  in a product that has an iron content of at least 75 percent.  
215.14  For the third year of a plant's production of direct reduced 
215.15  ore, the rate to be applied to direct reduced ore is 25 percent 
215.16  of the rate otherwise determined under this subdivision.  For 
215.17  the fourth such production year, the rate is 50 percent of the 
215.18  rate otherwise determined under this subdivision; for the fifth 
215.19  such production year, the rate is 75 percent of the rate 
215.20  otherwise determined under this subdivision; and for all 
215.21  subsequent production years, the full rate is imposed. 
215.22     (2) Subject to clause (1), production of direct reduced ore 
215.23  in this state is subject to the tax imposed by this section, but 
215.24  if that production is not produced by a producer of taconite or 
215.25  iron sulfides, the production of taconite or iron sulfides 
215.26  consumed in the production of direct reduced iron in this state 
215.27  is not subject to the tax imposed by this section on taconite or 
215.28  iron sulfides. 
215.29     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
215.30  following final enactment. 
215.31     Sec. 7.  Minnesota Statutes 2000, section 298.28, 
215.32  subdivision 1, is amended to read: 
215.33     Subdivision 1.  [DISTRIBUTION.] The proceeds of the taxes 
215.34  collected under section 298.24, except the tax collected under 
215.35  section 298.24, subdivision 2, shall, upon certification of the 
215.36  commissioner of revenue, be allocated under subdivisions 2 to 
216.1   12, except as otherwise provided in subdivision 4, paragraph 
216.2   (f), and subdivision 11, paragraph (d). 
216.3      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
216.4   following final enactment. 
216.5      Sec. 8.  Minnesota Statutes 2000, section 298.28, 
216.6   subdivision 4, is amended to read: 
216.7      Subd. 4.  [SCHOOL DISTRICTS.] (a) 22.28 cents per taxable 
216.8   ton plus the increase provided in paragraph (d) must be 
216.9   allocated to qualifying school districts to be distributed, 
216.10  based upon the certification of the commissioner of revenue, 
216.11  under paragraphs (b) and (c), except as otherwise provided in 
216.12  paragraph (f). 
216.13     (b) 4.46 cents per taxable ton must be distributed to the 
216.14  school districts in which the lands from which taconite was 
216.15  mined or quarried were located or within which the concentrate 
216.16  was produced.  The distribution must be based on the 
216.17  apportionment formula prescribed in subdivision 2. 
216.18     (c)(i) 17.82 cents per taxable ton, less any amount 
216.19  distributed under paragraph (e), shall be distributed to a group 
216.20  of school districts comprised of those school districts in which 
216.21  the taconite was mined or quarried or the concentrate produced 
216.22  or in which there is a qualifying municipality as defined by 
216.23  section 273.134 in direct proportion to school district indexes 
216.24  as follows:  for each school district, its pupil units 
216.25  determined under section 126C.05 for the prior school year shall 
216.26  be multiplied by the ratio of the average adjusted net tax 
216.27  capacity per pupil unit for school districts receiving aid under 
216.28  this clause as calculated pursuant to chapters 122A, 126C, and 
216.29  127A for the school year ending prior to distribution to the 
216.30  adjusted net tax capacity per pupil unit of the district.  Each 
216.31  district shall receive that portion of the distribution which 
216.32  its index bears to the sum of the indices for all school 
216.33  districts that receive the distributions.  
216.34     (ii) Notwithstanding clause (i), each school district that 
216.35  receives a distribution under sections 298.018; 298.23 to 
216.36  298.28, exclusive of any amount received under this clause; 
217.1   298.34 to 298.39; 298.391 to 298.396; 298.405; or any law 
217.2   imposing a tax on severed mineral values that is less than the 
217.3   amount of its levy reduction under section 126C.48, subdivision 
217.4   8, for the second year prior to the year of the distribution 
217.5   shall receive a distribution equal to the difference; the amount 
217.6   necessary to make this payment shall be derived from 
217.7   proportionate reductions in the initial distribution to other 
217.8   school districts under clause (i).  
217.9      (d) Any school district described in paragraph (c) where a 
217.10  levy increase pursuant to section 126C.17, subdivision 9, is 
217.11  authorized by referendum, shall receive a distribution from a 
217.12  fund that receives a distribution in 1998 of 21.3 cents per 
217.13  ton.  On July 15 of 1999, and each year thereafter, the increase 
217.14  over the amount established for the prior year shall be 
217.15  determined according to the increase in the implicit price 
217.16  deflator as provided in section 298.24, subdivision 1.  Each 
217.17  district shall receive the product of: 
217.18     (i) $175 times the pupil units identified in section 
217.19  126C.05, subdivision 1, enrolled in the second previous year or 
217.20  the 1983-1984 school year, whichever is greater, less the 
217.21  product of 1.8 percent times the district's taxable net tax 
217.22  capacity in the second previous year; times 
217.23     (ii) the lesser of: 
217.24     (A) one, or 
217.25     (B) the ratio of the sum of the amount certified pursuant 
217.26  to section 126C.17, subdivision 6, in the previous year, plus 
217.27  the amount certified pursuant to section 126C.17, subdivision 8, 
217.28  in the previous year, plus the referendum aid according to 
217.29  section 126C.17, subdivision 7, for the current year, plus an 
217.30  amount equal to the reduction under section 126C.17, subdivision 
217.31  12, to the product of 1.8 percent times the district's taxable 
217.32  net tax capacity in the second previous year. 
217.33     If the total amount provided by paragraph (d) is 
217.34  insufficient to make the payments herein required then the 
217.35  entitlement of $175 per pupil unit shall be reduced uniformly so 
217.36  as not to exceed the funds available.  Any amounts received by a 
218.1   qualifying school district in any fiscal year pursuant to 
218.2   paragraph (d) shall not be applied to reduce general education 
218.3   aid which the district receives pursuant to section 126C.13 or 
218.4   the permissible levies of the district.  Any amount remaining 
218.5   after the payments provided in this paragraph shall be paid to 
218.6   the commissioner of iron range resources and rehabilitation who 
218.7   shall deposit the same in the taconite environmental protection 
218.8   fund and the northeast Minnesota economic protection trust fund 
218.9   as provided in subdivision 11. 
218.10     Each district receiving money according to this paragraph 
218.11  shall reserve $25 times the number of pupil units in the 
218.12  district.  It may use the money for early childhood programs or 
218.13  for outcome-based learning programs that enhance the academic 
218.14  quality of the district's curriculum.  The outcome-based 
218.15  learning programs must be approved by the commissioner of 
218.16  children, families, and learning. 
218.17     (e) There shall be distributed to any school district the 
218.18  amount which the school district was entitled to receive under 
218.19  section 298.32 in 1975. 
218.20     (f) Notwithstanding language to the contrary in this 
218.21  subdivision, beginning with the year 2002 distribution, the 
218.22  amount necessary for distributions to school districts under 
218.23  paragraphs (c) and (e) is annually appropriated, upon 
218.24  certification by the commissioner of revenue, to the 
218.25  commissioner of children, families, and learning from the 
218.26  general fund.  On or before February 25, the commissioner of 
218.27  children, families, and learning shall distribute the 
218.28  appropriation in the manner provided by paragraphs (c) and (e). 
218.29     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
218.30  following final enactment. 
218.31     Sec. 9.  Minnesota Statutes 2000, section 298.28, 
218.32  subdivision 5, is amended to read: 
218.33     Subd. 5.  [COUNTIES.] (a) ~~16.5~~ 26.05 cents per taxable ton 
218.34  is allocated to counties to be distributed, based upon 
218.35  certification by the commissioner of revenue, under paragraphs 
218.36  (b) to (d). 
219.1      (b) ~~13~~ 20.525 cents per taxable ton shall be distributed to 
219.2   the county in which the taconite is mined or quarried or in 
219.3   which the concentrate is produced, less any amount which is to 
219.4   be distributed pursuant to paragraph (c).  The apportionment 
219.5   formula prescribed in subdivision 2 is the basis for the 
219.6   distribution. 
219.7      (c) If an electric power plant owned by and providing the 
219.8   primary source of power for a taxpayer mining and concentrating 
219.9   taconite is located in a county other than the county in which 
219.10  the mining and the concentrating processes are conducted, one 
219.11  cent per taxable ton of the tax distributed to the counties 
219.12  pursuant to paragraph (b) and imposed on and collected from such 
219.13  taxpayer shall be paid to the county in which the power plant is 
219.14  located. 
219.15     (d) ~~3.5~~ 5.525 cents per taxable ton shall be paid to the 
219.16  county from which the taconite was mined, quarried or 
219.17  concentrated to be deposited in the county road and bridge 
219.18  fund.  If the mining, quarrying and concentrating, or separate 
219.19  steps in any of those processes are carried on in more than one 
219.20  county, the commissioner shall follow the apportionment formula 
219.21  prescribed in subdivision 2. 
219.22     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
219.23  following final enactment. 
219.24     Sec. 10.  Minnesota Statutes 2000, section 298.28, 
219.25  subdivision 6, is amended to read: 
219.26     Subd. 6.  [PROPERTY TAX RELIEF.] (a) In 1999, ~~38.81~~ 36.81 
219.27  cents per taxable ton, less any amount required to be 
219.28  distributed under paragraphs (b) and (c), ~~and less any amount~~ 
219.29  ~~required to be deducted under paragraph (d),~~ must be allocated 
219.30  to St. Louis county acting as the counties' fiscal agent, to be 
219.31  distributed as provided in sections 273.134 to 273.136. 
219.32     (b) If an electric power plant owned by and providing the 
219.33  primary source of power for a taxpayer mining and concentrating 
219.34  taconite is located in a county other than the county in which 
219.35  the mining and the concentrating processes are conducted, .1875 
219.36  cent per taxable ton of the tax imposed and collected from such 
220.1   taxpayer shall be paid to the county. 
220.2      (c) If an electric power plant owned by and providing the 
220.3   primary source of power for a taxpayer mining and concentrating 
220.4   taconite is located in a school district other than a school 
220.5   district in which the mining and concentrating processes are 
220.6   conducted, ~~.7282~~ .5898 cent per taxable ton of the tax imposed 
220.7   and collected from the taxpayer shall be paid to the school 
220.8   district. 
220.9      ~~(d) Two cents per taxable ton must be deducted from the~~ 
220.10  ~~amount allocated to the St. Louis county auditor under paragraph~~ 
220.11  ~~(a).~~ 
220.12     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
220.13  following final enactment. 
220.14     Sec. 11.  Minnesota Statutes 2000, section 298.28, 
220.15  subdivision 10, is amended to read: 
220.16     Subd. 10.  [INCREASE.] Beginning with distributions in 
220.17  2000, the amounts determined under subdivisions 6, paragraph 
220.18  (a), and 9 shall be increased in the same proportion as the 
220.19  increase in the implicit price deflator as provided in section 
220.20  298.24, subdivision 1.  
220.21     ~~The distributions per ton determined under subdivisions 5,~~ 
220.22  ~~paragraphs (b) and (d), and 6, paragraph (b), for distribution~~ 
220.23  ~~in 1988 and subsequent years shall be the distribution per ton~~ 
220.24  ~~determined for distribution in 1987.  The distribution per ton~~ 
220.25  ~~under subdivision 6, paragraph (c), for distribution in 2000 and~~ 
220.26  ~~subsequent years shall be 81 percent of the distribution per ton~~ 
220.27  ~~determined for distribution in 1987.~~ 
220.28     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
220.29  following final enactment. 
220.30     Sec. 12.  Minnesota Statutes 2000, section 298.28, 
220.31  subdivision 11, is amended to read: 
220.32     Subd. 11.  [REMAINDER.] (a) The proceeds of the tax imposed 
220.33  by section 298.24 which remain after the distributions and 
220.34  payments in subdivisions 2 to 10a, as certified by the 
220.35  commissioner of revenue, and paragraphs (b)~~,~~ and (c)~~, and (d)~~ 
220.36  have been made, together with interest earned on all money 
221.1   distributed under this section prior to distribution, shall be 
221.2   divided between the taconite environmental protection fund 
221.3   created in section 298.223 and the northeast Minnesota economic 
221.4   protection trust fund created in section 298.292 as follows:  
221.5   Two-thirds to the taconite environmental protection fund and 
221.6   one-third to the northeast Minnesota economic protection trust 
221.7   fund.  The proceeds shall be placed in the respective special 
221.8   accounts.  In this paragraph, the terms "distributions and 
221.9   payments" and "all money distributed under this section" do not 
221.10  mean distributions from general fund appropriations. 
221.11     (b) There shall be distributed to each city, town, and 
221.12  county the amount that it received under section 294.26 in 
221.13  calendar year 1977; provided, however, that the amount 
221.14  distributed in 1981 to the unorganized territory number 2 of 
221.15  Lake county and the town of Beaver Bay based on the 
221.16  between-terminal trackage of Erie Mining Company will be 
221.17  distributed in 1982 and subsequent years to the unorganized 
221.18  territory number 2 of Lake county and the towns of Beaver Bay 
221.19  and Stony River based on the miles of track of Erie Mining 
221.20  Company in each taxing district. 
221.21     (c) There shall be distributed to the iron range resources 
221.22  and rehabilitation board the amounts it received in 1977 under 
221.23  section 298.22.  The amount distributed under this paragraph 
221.24  shall be expended within or for the benefit of the tax relief 
221.25  area defined in section 273.134. 
221.26     (d) There shall be distributed to each school district 81 
221.27  percent of the amount that it received under section 294.26 in 
221.28  calendar year 1977, except that, beginning with the year 2002 
221.29  distribution, the amount necessary for distributions to school 
221.30  districts is annually appropriated, upon certification by the 
221.31  commissioner of revenue, to the commissioner of children, 
221.32  families, and learning from the general fund.  On or before 
221.33  February 25, the commissioner of children, families, and 
221.34  learning shall distribute the appropriation as provided in this 
221.35  paragraph. 
221.36     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
222.1   following final enactment. 
222.2                              ARTICLE 9 
222.3                       MINNESOTACARE TAX REFORM 
222.4      Section 1.  [16A.78] [HEALTH CARE ACCESS FUND RESERVE.] 
222.5      Subdivision 1.  [ESTABLISH RESERVE.] A reserve is 
222.6   established within the health care access fund for uses 
222.7   necessary to preserve access to basic health care services. 
222.8      Subd. 2.  [RESERVE FINANCING.] The funds in the reserve are 
222.9   equal to 20 percent of the direct appropriation for the 
222.10  MinnesotaCare program. 
222.11     Subd. 3.  [RESERVE USE.] The reserve is established to 
222.12  protect access to basic health care services that are publicly 
222.13  funded. 
222.14     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2001. 
222.15     Sec. 2.  Minnesota Statutes 2000, section 295.50, 
222.16  subdivision 3, is amended to read: 
222.17     Subd. 3.  [GROSS REVENUES.] "Gross revenues" are total 
222.18  amounts received in money or otherwise by: 
222.19     (1) a hospital for patient services; 
222.20     (2) a surgical center for patient services; 
222.21     (3) a health care provider, other than a staff model health 
222.22  carrier, for patient services; 
222.23     ~~(4) a wholesale drug distributor for sale or distribution~~ 
222.24  ~~of legend drugs that are delivered in Minnesota by the wholesale~~ 
222.25  ~~drug distributor, by common carrier, or by mail, unless the~~ 
222.26  ~~legend drugs are delivered to another wholesale drug distributor~~ 
222.27  ~~who sells legend drugs exclusively at wholesale.  Legend drugs~~ 
222.28  ~~do not include nutritional products as defined in Minnesota~~ 
222.29  ~~Rules, part 9505.0325;~~ and 
222.30     ~~(5)~~ (4) a staff model health plan company as gross premiums 
222.31  for enrollees, copayments, deductibles, coinsurance, and fees 
222.32  for patient services covered under its contracts with groups and 
222.33  enrollees. 
222.34     <b>[EFFECTIVE DATE.]</b> This section is effective for gross 
222.35  revenues received on or after January 1, 2002. 
222.36     Sec. 3.  Minnesota Statutes 2000, section 295.52, 
223.1   subdivision 1, is amended to read: 
223.2      Subdivision 1.  [HOSPITAL TAX.] A tax is imposed on each 
223.3   hospital equal to ~~two~~ 1.5 percent of its gross revenues. 
223.4      <b>[EFFECTIVE DATE.]</b> This section is effective for gross 
223.5   revenues received on or after January 1, 2002. 
223.6      Sec. 4.  Minnesota Statutes 2000, section 295.52, 
223.7   subdivision 1a, is amended to read: 
223.8      Subd. 1a.  [SURGICAL CENTER TAX.] A tax is imposed on each 
223.9   surgical center equal to ~~two~~ 1.5 percent of its gross revenues. 
223.10     <b>[EFFECTIVE DATE.]</b> This section is effective for gross 
223.11  revenues received on or after January 1, 2002. 
223.12     Sec. 5.  Minnesota Statutes 2000, section 295.52, 
223.13  subdivision 2, is amended to read: 
223.14     Subd. 2.  [PROVIDER TAX.] A tax is imposed on each health 
223.15  care provider equal to ~~two~~ 1.5 percent of its gross revenues. 
223.16     <b>[EFFECTIVE DATE.]</b> This section is effective for gross 
223.17  revenues received on or after January 1, 2002. 
223.18     Sec. 6.  Minnesota Statutes 2000, section 295.53, 
223.19  subdivision 1, is amended to read: 
223.20     Subdivision 1.  [EXEMPTIONS.] ~~(a)~~ The following payments 
223.21  are excluded from the gross revenues subject to the hospital, 
223.22  surgical center, or health care provider taxes under sections 
223.23  295.50 to 295.57: 
223.24     (1) payments received for services provided under the 
223.25  Medicare program, including payments received from the 
223.26  government, and organizations governed by sections 1833 and 1876 
223.27  of title XVIII of the federal Social Security Act, United States 
223.28  Code, title 42, section 1395, and enrollee deductibles, 
223.29  coinsurance, and copayments, whether paid by the Medicare 
223.30  enrollee or by a Medicare supplemental coverage as defined in 
223.31  section 62A.011, subdivision 3, clause (10).  Payments for 
223.32  services not covered by Medicare are taxable; 
223.33     (2) medical assistance payments including payments received 
223.34  directly from the government or from a prepaid plan; 
223.35     (3) payments received for home health care services; 
223.36     (4) payments received from hospitals or surgical centers 
224.1   for goods and services on which liability for tax is imposed 
224.2   under section 295.52 or the source of funds for the payment is 
224.3   exempt under clause (1), (2), ~~(7), (8), (10), (13),~~ (6), (7), 
224.4   (9), (12), or ~~(20)~~ (19); 
224.5      (5) payments received from health care providers for goods 
224.6   and services on which liability for tax is imposed under this 
224.7   chapter or the source of funds for the payment is exempt under 
224.8   clause (1), (2), ~~(7), (8), (10), (13),~~ (6), (7), (9), (12), or 
224.9   ~~(20)~~ (19); 
224.10     ~~(6) amounts paid for legend drugs, other than nutritional~~ 
224.11  ~~products, to a wholesale drug distributor who is subject to tax~~ 
224.12  ~~under section 295.52, subdivision 3, reduced by reimbursements~~ 
224.13  ~~received for legend drugs under clauses (1), (2), (7), and (8);~~ 
224.14     ~~(7)~~ (6) payments received under the general assistance 
224.15  medical care program including payments received directly from 
224.16  the government or from a prepaid plan; 
224.17     ~~(8)~~ (7) payments received for providing services under the 
224.18  MinnesotaCare program including payments received directly from 
224.19  the government or from a prepaid plan and enrollee deductibles, 
224.20  coinsurance, and copayments.  For purposes of this clause, 
224.21  coinsurance means the portion of payment that the enrollee is 
224.22  required to pay for the covered service; 
224.23     ~~(9)~~ (8) payments received by a health care provider or the 
224.24  wholly owned subsidiary of a health care provider for care 
224.25  provided outside Minnesota; 
224.26     ~~(10)~~ (9) payments received from the chemical dependency 
224.27  fund under chapter 254B; 
224.28     ~~(11)~~ (10) payments received in the nature of charitable 
224.29  donations that are not designated for providing patient services 
224.30  to a specific individual or group; 
224.31     ~~(12)~~ (11) payments received for providing patient services 
224.32  incurred through a formal program of health care research 
224.33  conducted in conformity with federal regulations governing 
224.34  research on human subjects.  Payments received from patients or 
224.35  from other persons paying on behalf of the patients are subject 
224.36  to tax; 
225.1      ~~(13)~~ (12) payments received from any governmental agency 
225.2   for services benefiting the public, not including payments made 
225.3   by the government in its capacity as an employer or insurer; 
225.4      ~~(14)~~ (13) payments received for services provided by 
225.5   community residential mental health facilities licensed under 
225.6   Minnesota Rules, parts 9520.0500 to 9520.0690, community support 
225.7   programs and family community support programs approved under 
225.8   Minnesota Rules, parts 9535.1700 to 9535.1760, and community 
225.9   mental health centers as defined in section 245.62, subdivision 
225.10  2; 
225.11     ~~(15)~~ (14) government payments received by a regional 
225.12  treatment center; 
225.13     ~~(16)~~ (15) payments received for hospice care services; 
225.14     ~~(17)~~ (16) payments received by a health care provider for 
225.15  hearing aids and related equipment or prescription eyewear 
225.16  delivered outside of Minnesota; 
225.17     ~~(18)~~ (17) payments received by an educational institution 
225.18  from student tuition, student activity fees, health care service 
225.19  fees, government appropriations, donations, or grants.  Fee for 
225.20  service payments and payments for extended coverage are taxable; 
225.21     ~~(19)~~ (18) payments received for services provided by:  
225.22  assisted living programs and congregate housing programs; and 
225.23     ~~(20)~~ (19) payments received under the federal Employees 
225.24  Health Benefits Act, United States Code, title 5, section 
225.25  8909(f), as amended by the Omnibus Reconciliation Act of 1990. 
225.26     ~~(b) Payments received by wholesale drug distributors for~~ 
225.27  ~~legend drugs sold directly to veterinarians or veterinary bulk~~ 
225.28  ~~purchasing organizations are excluded from the gross revenues~~ 
225.29  ~~subject to the wholesale drug distributor tax under sections~~ 
225.30  ~~295.50 to 295.59.~~ 
225.31     <b>[EFFECTIVE DATE.]</b> This section is effective for gross 
225.32  revenues received on or after January 1, 2002. 
225.33     Sec. 7.  Minnesota Statutes 2000, section 295.53, 
225.34  subdivision 3, is amended to read: 
225.35     Subd. 3.  [SEPARATE STATEMENT OF TAX.] A hospital, surgical 
225.36  center, or health care provider must not state the tax 
226.1   obligation under section 295.52 in a deceptive or misleading 
226.2   manner.  It must not separately state tax obligations on bills 
226.3   provided to patients, consumers, or other payers when the amount 
226.4   received for the services or goods is not subject to tax.  
226.5      ~~Pharmacies that separately state the tax obligations on~~ 
226.6   ~~bills provided to consumers or to other payers who purchase~~ 
226.7   ~~legend drugs may state the tax obligation as the wholesale price~~ 
226.8   ~~of the legend drugs multiplied by the tax percentage specified~~ 
226.9   ~~in section 295.52.  Pharmacies must not state the tax obligation~~ 
226.10  ~~based on the retail price.~~  
226.11     Whenever the commissioner determines that a person has 
226.12  engaged in any act or practice constituting a violation of this 
226.13  subdivision, the commissioner may bring an action in the name of 
226.14  the state in the district court of the appropriate county to 
226.15  enjoin the act or practice and to enforce compliance with this 
226.16  subdivision, or the commissioner may refer the matter to the 
226.17  attorney general or the county attorney of the appropriate 
226.18  county.  Upon a proper showing, a permanent or temporary 
226.19  injunction, restraining order, or other appropriate relief must 
226.20  be granted.  
226.21     <b>[EFFECTIVE DATE.]</b> This section is effective for gross 
226.22  revenues received on or after January 1, 2002. 
226.23     Sec. 8.  Minnesota Statutes 2000, section 295.58, is 
226.24  amended to read: 
226.25     295.58 [DEPOSIT OF REVENUES AND PAYMENT OF REFUNDS.] 
226.26     The commissioner shall deposit all revenues, including 
226.27  penalties and interest, derived from the taxes imposed by 
226.28  sections 295.50 to 295.57 ~~and from the insurance premiums tax~~ 
226.29  ~~imposed by section 297I.05, subdivision 5, on health maintenance~~ 
226.30  ~~organizations, community integrated service networks, and~~ 
226.31  ~~nonprofit health service plan corporations~~ in the health care 
226.32  access fund.  There is annually appropriated from the health 
226.33  care access fund to the commissioner of revenue the amount 
226.34  necessary to make refunds under this chapter. 
226.35     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
226.36  following final enactment. 
227.1      Sec. 9.  Minnesota Statutes 2000, section 295.582, is 
227.2   amended to read: 
227.3      295.582 [AUTHORITY.] 
227.4      (a) A hospital, surgical center, or health care provider 
227.5   that is subject to a tax under section 295.52~~, or a pharmacy~~ 
227.6   ~~that has paid additional expense transferred under this section~~ 
227.7   ~~by a wholesale drug distributor,~~ may transfer additional expense 
227.8   generated by section 295.52 obligations on to all third-party 
227.9   contracts for the purchase of health care services on behalf of 
227.10  a patient or consumer.  The additional expense transferred to 
227.11  the third-party purchaser must not exceed the tax percentage 
227.12  specified in section 295.52 multiplied against the gross 
227.13  revenues received under the third-party contract, and the tax 
227.14  percentage specified in section 295.52 multiplied against 
227.15  copayments and deductibles paid by the individual patient or 
227.16  consumer.  The expense must not be generated on revenues derived 
227.17  from payments that are excluded from the tax under section 
227.18  295.53.  All third-party purchasers of health care services 
227.19  including, but not limited to, third-party purchasers regulated 
227.20  under chapter 60A, 62A, 62C, 62D, 62H, 62N, 64B, 65A, 65B, 79, 
227.21  or 79A, or under section 471.61 or 471.617, must pay the 
227.22  transferred expense in addition to any payments due under 
227.23  existing contracts with the hospital, surgical center, ~~pharmacy,~~ 
227.24  or health care provider, to the extent allowed under federal 
227.25  law.  A third-party purchaser of health care services includes, 
227.26  but is not limited to, a health carrier or community integrated 
227.27  service network that pays for health care services on behalf of 
227.28  patients or that reimburses, indemnifies, compensates, or 
227.29  otherwise insures patients for health care services.  A 
227.30  third-party purchaser shall comply with this section regardless 
227.31  of whether the third-party purchaser is a for-profit, 
227.32  not-for-profit, or nonprofit entity.  ~~A wholesale drug~~ 
227.33  ~~distributor may transfer additional expense generated by section~~ 
227.34  ~~295.52 obligations to entities that purchase from the~~ 
227.35  ~~wholesaler, and the entities must pay the additional expense.~~  
227.36  Nothing in this section limits the ability of a hospital, 
228.1   surgical center, ~~pharmacy, wholesale drug distributor,~~ or health 
228.2   care provider to recover all or part of the section 295.52 
228.3   obligation by other methods, including increasing fees or 
228.4   charges. 
228.5      (b) Each third-party purchaser regulated under any chapter 
228.6   cited in paragraph (a) shall include with its annual renewal for 
228.7   certification of authority or licensure documentation indicating 
228.8   compliance with paragraph (a).  
228.9      (c) Any hospital, surgical center, or health care provider 
228.10  subject to a tax under section 295.52 ~~or a pharmacy that has~~ 
228.11  ~~paid additional expense transferred under this section by a~~ 
228.12  ~~wholesale drug distributor~~ may file a complaint with the 
228.13  commissioner responsible for regulating the third-party 
228.14  purchaser if at any time the third-party purchaser fails to 
228.15  comply with paragraph (a).  
228.16     (d) If the commissioner responsible for regulating the 
228.17  third-party purchaser finds at any time that the third-party 
228.18  purchaser has not complied with paragraph (a), the commissioner 
228.19  may take enforcement action against a third-party purchaser 
228.20  which is subject to the commissioner's regulatory jurisdiction 
228.21  and which does not allow a hospital, surgical center, ~~pharmacy,~~ 
228.22  or provider to pass-through the tax.  The commissioner may by 
228.23  order fine or censure the third-party purchaser or revoke or 
228.24  suspend the certificate of authority or license of the 
228.25  third-party purchaser to do business in this state if the 
228.26  commissioner finds that the third-party purchaser has not 
228.27  complied with this section.  The third-party purchaser may 
228.28  appeal the commissioner's order through a contested case hearing 
228.29  in accordance with chapter 14. 
228.30     <b>[EFFECTIVE DATE.]</b> This section is effective for gross 
228.31  revenues received on or after January 1, 2002. 
228.32     Sec. 10.  Minnesota Statutes 2000, section 297F.10, 
228.33  subdivision 1, is amended to read: 
228.34     Subdivision 1.  [TAX AND USE TAX ON CIGARETTES.] Revenue 
228.35  received from cigarette taxes, as well as related penalties, 
228.36  interest, license fees, and miscellaneous sources of revenue 
229.1   shall be deposited by the commissioner in the state treasury and 
229.2   credited as follows: 
229.3      (a) first to the general obligation special tax bond debt 
229.4   service account in each fiscal year the amount required to 
229.5   increase the balance on hand in the account on each December 1 
229.6   to an amount equal to the full amount of principal and interest 
229.7   to come due on all outstanding bonds whose debt service is 
229.8   payable primarily from the proceeds of the tax to and including 
229.9   the second following July 1; and 
229.10     (b) after the requirements of paragraph (a) have been met: 
229.11     (1) the revenue produced by one mill of the tax on 
229.12  cigarettes weighing not more than three pounds a thousand and 
229.13  two mills of the tax on cigarettes weighing more than three 
229.14  pounds a thousand must be credited to the Minnesota future 
229.15  resources fund; ~~and~~ 
229.16     (2) 85 percent of the taxes on cigarettes collected under 
229.17  section 297F.05 must be credited to the health care access fund 
229.18  in the state treasury; and 
229.19     (3) the balance of the revenues derived from taxes, 
229.20  penalties, and interest (under this chapter) and from license 
229.21  fees and miscellaneous sources of revenue shall be credited to 
229.22  the general fund. 
229.23     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2003. 
229.24     Sec. 11.  Minnesota Statutes 2000, section 297I.15, is 
229.25  amended by adding a subdivision to read: 
229.26     Subd. 11.  [HEALTH MAINTENANCE ORGANIZATIONS, NONPROFIT 
229.27  HEALTH SERVICE PLAN CORPORATIONS, AND COMMUNITY INTEGRATED 
229.28  SERVICE NETWORKS.] Health maintenance organizations, nonprofit 
229.29  health service plan corporations, and community integrated 
229.30  service networks are exempt from the taxes imposed under this 
229.31  chapter. 
229.32     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
229.33  following final enactment. 
229.34     Sec. 12.  [REPEALER.] 
229.35     (a) Minnesota Statutes 2000, sections 295.50, subdivisions 
229.36  10a, 14, and 15; 295.51, subdivision 1a; 295.52, subdivisions 3, 
230.1   4, 4a, and 7; 295.54, subdivisions 2 and 3; and 297I.05, 
230.2   subdivision 5, are repealed. 
230.3      (b) Minnesota Statutes 2000, section 16A.76, is repealed. 
230.4      <b>[EFFECTIVE DATE.]</b> This section, paragraph (a), is effective 
230.5   for gross revenues received on or after January 1, 2002.  This 
230.6   section, paragraph (b), is effective July 1, 2001. 
230.7                              ARTICLE 10 
230.8                MOTOR VEHICLE REGISTRATION TAX REFORM 
230.9      Section 1.  Minnesota Statutes 2000, section 168.013, 
230.10  subdivision 1a, is amended to read: 
230.11     Subd. 1a.  [PASSENGER AUTOMOBILE; HEARSE.] (a) On passenger 
230.12  automobiles as defined in section 168.011, subdivision 7, and 
230.13  hearses, except as otherwise provided, the tax shall be $10 plus 
230.14  an additional tax equal to 1.25 percent of the base value.  
230.15     (b) Subject to the classification provisions herein, "base 
230.16  value" means the manufacturer's suggested retail price of the 
230.17  vehicle including destination charge using list price 
230.18  information published by the manufacturer or determined by the 
230.19  registrar if no suggested retail price exists, and shall not 
230.20  include the cost of each accessory or item of optional equipment 
230.21  separately added to the vehicle and the suggested retail price. 
230.22     (c) If the manufacturer's list price information contains a 
230.23  single vehicle identification number followed by various 
230.24  descriptions and suggested retail prices, the registrar shall 
230.25  select from those listings only the lowest price for determining 
230.26  base value. 
230.27     (d) If unable to determine the base value because the 
230.28  vehicle is specially constructed, or for any other reason, the 
230.29  registrar may establish such value upon the cost price to the 
230.30  purchaser or owner as evidenced by a certificate of cost but not 
230.31  including Minnesota sales or use tax or any local sales or other 
230.32  local tax. 
230.33     (e) The registrar shall classify every vehicle in its 
230.34  proper base value class as follows: 
230.35                        FROM                   TO
230.36                        $  0                $199.99
231.1                          200                 399.99
231.2   and thereafter a series of classes successively set in brackets 
231.3   having a spread of $200 consisting of such number of classes as 
231.4   will permit classification of all vehicles. 
231.5      (f) The base value for purposes of this section shall be 
231.6   the middle point between the extremes of its class. 
231.7      (g) The registrar shall establish the base value, when new, 
231.8   of every passenger automobile and hearse registered prior to the 
231.9   effective date of Extra Session Laws 1971, chapter 31, using 
231.10  list price information published by the manufacturer or any 
231.11  nationally recognized firm or association compiling such data 
231.12  for the automotive industry.  If unable to ascertain the base 
231.13  value of any registered vehicle in the foregoing manner, the 
231.14  registrar may use any other available source or method.  The tax 
231.15  on all previously registered vehicles shall be computed upon the 
231.16  base value thus determined taking into account the depreciation 
231.17  provisions of paragraph (h). 
231.18     (h) (1) Except as provided in paragraph (i), the annual 
231.19  additional tax computed upon the base value as provided herein, 
231.20  during the first and second years of vehicle life shall be 
231.21  computed upon 100 percent of the base value; for the third and 
231.22  fourth years, 90 percent of such value; for the fifth and sixth 
231.23  years, 75 percent of such value; for the seventh year, 60 
231.24  percent of such value; for the eighth year, 40 percent of such 
231.25  value; for the ninth year, 30 percent of such value; for the 
231.26  tenth year, ten percent of such value; for the 11th and each 
231.27  succeeding year, the sum of $25.  
231.28  In no event shall the annual additional tax be less than $25.  
231.29     (2) Until superseded by clause (3), the total tax under 
231.30  this subdivision shall not exceed $189 upon the initial 
231.31  registration of any vehicle first subject to registration tax in 
231.32  Minnesota prior to the end of the first year of vehicle life.  
231.33  The total tax under this subdivision shall not exceed ~~$189~~ $89 
231.34  for ~~the first~~ any renewal period ~~and shall not exceed $99 for~~ 
231.35  ~~subsequent renewal periods.  The total tax under this~~ 
231.36  ~~subdivision on~~ or for any vehicle filing its initial 
232.1   registration in Minnesota in the second year of vehicle 
232.2   life ~~shall not exceed $189 and shall not exceed $99 for~~ 
232.3   ~~subsequent renewal periods.  The total tax under this~~ 
232.4   ~~subdivision on any vehicle filing its initial registration in~~ 
232.5   ~~Minnesota in the third or subsequent year of vehicle life shall~~ 
232.6   ~~not exceed $99 and shall not exceed $99 in any subsequent~~ 
232.7   ~~renewal period~~ or later. 
232.8      (3) Beginning in 2004, the total tax under this subdivision 
232.9   shall not exceed $75. 
232.10     (i) The annual additional tax under paragraph (h) on a 
232.11  motor vehicle on which the first annual tax was paid before 
232.12  January 1, 1990, must not exceed the tax that was paid on that 
232.13  vehicle the year before. 
232.14     <b>[EFFECTIVE DATE.]</b> (a) The change to this section, paragraph 
232.15  (h), clause (2), is effective for vehicles first subject to 
232.16  registration tax in Minnesota on or after January 1, 2002.  It 
232.17  is also effective for vehicles registered in Minnesota prior to 
232.18  January 1, 2002, beginning with the renewal of the registration 
232.19  of vehicles that were assigned an expiration month pursuant to 
232.20  section 168.017 of January 1, 2002, or later.  It does not apply 
232.21  to vehicles that were assigned an expiration month pursuant to 
232.22  section 168.017 of December 2001 or earlier. 
232.23     (b) The change to this section, paragraph (h), clause (3), 
232.24  is effective for vehicles first subject to registration tax in 
232.25  Minnesota on or after January 1, 2004.  It is also effective for 
232.26  vehicles registered in Minnesota prior to January 1, 2004, 
232.27  beginning with the renewal of the registration of vehicles that 
232.28  were assigned an expiration month pursuant to section 168.017 of 
232.29  January 2004 or later.  It does not apply to vehicles that were 
232.30  assigned an expiration month pursuant to section 168.017 of 
232.31  December 2003 or earlier. 
232.32     Sec. 2.  Minnesota Statutes 2000, section 297B.09, 
232.33  subdivision 1, is amended to read: 
232.34     Subdivision 1.  [GENERAL FUND SHARE.] Money collected and 
232.35  received under this chapter must be deposited as provided in 
232.36  this subdivision.  
233.1      ~~Thirty-two~~ (a) Thirty-nine percent of the money collected 
233.2   and received after June 30, 2001, but before July 1, 2002, must 
233.3   be deposited in the highway user tax distribution fund~~, and~~.  
233.4   The ~~remaining 68 percent of the money~~ remainder must be 
233.5   deposited in the general fund. 
233.6      (b) Fifty percent of the money collected and received after 
233.7   June 30, 2002, but before July 1, 2003, must be deposited in the 
233.8   highway user tax distribution fund.  The remainder must be 
233.9   deposited in the general fund.  
233.10     (c) Fifty-five percent of the money collected and received 
233.11  after June 30, 2003, but before July 1, 2004, must be deposited 
233.12  in the highway user tax distribution fund.  The remainder must 
233.13  be deposited in the general fund. 
233.14     (d) Sixty-one percent of the money collected and received 
233.15  after June 30, 2004, must be deposited in the highway user tax 
233.16  distribution fund.  The remainder must be deposited in the 
233.17  general fund.  
233.18     <b>[EFFECTIVE DATE.]</b> This section is effective for money 
233.19  collected and received after June 30, 2001.  
233.20     Sec. 3.  Laws 2000, chapter 490, article 7, section 3, is 
233.21  amended to read: 
233.22     Sec. 3.  [APPROPRIATION.] 
233.23     For fiscal year 2001, $149,804,000 is appropriated from the 
233.24  general fund to the highway user tax distribution fund.  ~~For~~ 
233.25  ~~fiscal year 2002, $161,723,000 is appropriated from the general~~ 
233.26  ~~fund to the highway user tax distribution fund.~~ 
233.27                             ARTICLE 11 
233.28                       TAX POLICY PROVISIONS
233.29     Section 1.  Minnesota Statutes 2000, section 84.922, is 
233.30  amended by adding a subdivision to read: 
233.31     Subd. 11.  [PROOF OF SALES TAX PAYMENT.] A person applying 
233.32  for initial registration in Minnesota of an all-terrain vehicle 
233.33  shall provide a purchaser's certificate showing a complete 
233.34  description of the all-terrain vehicle, the seller's name and 
233.35  address, the full purchase price of the all-terrain vehicle, and 
233.36  the trade-in allowance, if any.  The certificate also must 
234.1   include information showing either that (1) the sales and use 
234.2   tax under chapter 297A was paid, or (2) the purchase was exempt 
234.3   from tax under chapter 297A.  The certificate is not required if 
234.4   the applicant provides a receipt, invoice, or other document 
234.5   that shows the all-terrain vehicle was purchased from a retailer 
234.6   maintaining a place of business in this state as defined in 
234.7   section 297A.66, subdivision 1. 
234.8      <b>[EFFECTIVE DATE.]</b> This section is effective for 
234.9   registrations occurring on or after July 1, 2001. 
234.10     Sec. 2.  Minnesota Statutes 2000, section 270.60, is 
234.11  amended by adding a subdivision to read: 
234.12     Subd. 5.  [FEES; APPROPRIATION.] (a) The commissioner may 
234.13  enter into an agreement with the governing body of any federally 
234.14  recognized Indian reservation in Minnesota concerning fees 
234.15  administered by the commissioner that are paid by the tribe, 
234.16  members of the tribe, or persons who conduct business with the 
234.17  tribe, or otherwise imposed on on-reservation activities.  The 
234.18  agreement may provide for the refund or sharing of the fee.  The 
234.19  commissioner may make any payments required by the agreement 
234.20  from the fees collected. 
234.21     (b) Each head of an agency, board, or other governmental 
234.22  entity that administers a program that is funded by fees 
234.23  administered by the commissioner may sign an agreement entered 
234.24  into by the commissioner under this subdivision.  An agreement 
234.25  is not valid until signed by the head of each agency, board, or 
234.26  other governmental entity that administers a program funded by 
234.27  the particular fee covered in an agreement and by the 
234.28  commissioner of revenue. 
234.29     (c) There is annually appropriated to the commissioner of 
234.30  revenue from the funds for which the fees are collected the 
234.31  amounts necessary to make payments as provided in this 
234.32  subdivision. 
234.33     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
234.34  following final enactment and applies to all fees administered 
234.35  by the commissioner of revenue for which timely claims for 
234.36  refund have been, or can be, filed. 
235.1      Sec. 3.  [270.691] [PUBLICATION OF NAMES OF DELINQUENT 
235.2   TAXPAYERS.] 
235.3      Subdivision 1.  [COMMISSIONER MAY PUBLISH.] (a) 
235.4   Notwithstanding any other law, the commissioner may publish a 
235.5   list or lists of taxpayers who owe delinquent taxes or fees 
235.6   administered by the commissioner, and who meet the requirements 
235.7   of paragraph (b). 
235.8      (b) For purposes of this section, a taxpayer may be 
235.9   included on a list if: 
235.10     (1) the taxes or fees owed remain unpaid at least 180 days 
235.11  after the dates they were due; 
235.12     (2) the taxpayer's total liability for the taxes and fees, 
235.13  including penalties, interest, and other charges, is at least 
235.14  $5,000; and 
235.15     (3) a tax lien has been filed or a judgment for the 
235.16  liability has been entered against the taxpayer before notice is 
235.17  given under subdivision 3. 
235.18     (c) In the case of listed taxpayers that are business 
235.19  entities, the commissioner may also list the names of 
235.20  responsible persons assessed pursuant to section 270.101 for 
235.21  listed liabilities, who are not protected from publication by 
235.22  subdivision 2, and for whom the requirements of paragraph (b) 
235.23  are satisfied with regard to the personal assessment. 
235.24     Subd. 2.  [REQUIRED AND EXCLUDED TAXPAYERS.] (a) The 
235.25  commissioner may publish lists of some or all of the taxpayers 
235.26  described in subdivision 1.  A list must include the taxpayers 
235.27  with the largest unpaid liabilities of the kind used to define 
235.28  the list, subject to the limitations of paragraphs (b) and (c). 
235.29     (b) For the purposes of this section, a tax or fee is not 
235.30  delinquent if: 
235.31     (1) an administrative or court action contesting the amount 
235.32  or validity of the taxpayer's liability has been filed or served 
235.33  and is unresolved at the time when notice would be given under 
235.34  subdivision 3; 
235.35     (2) an appeal period to contest the liability has not 
235.36  expired; or 
236.1      (3) the liability is subject to a payment agreement and 
236.2   there is no delinquency in the payments required under the 
236.3   agreement. 
236.4      (c) Unpaid liabilities are not subject to publication if: 
236.5      (1) the commissioner is in the process of reviewing or 
236.6   adjusting the liability; 
236.7      (2) the taxpayer is a debtor in a bankruptcy proceeding and 
236.8   the automatic stay is in effect; 
236.9      (3) the commissioner has been notified that the taxpayer is 
236.10  deceased; or 
236.11     (4) the time period for collecting the taxes or fees has 
236.12  expired. 
236.13     Subd. 3.  [NOTICE TO TAXPAYER.] (a) At least 30 days before 
236.14  publishing the name of a delinquent taxpayer, the commissioner 
236.15  shall mail a written notice to the taxpayer, detailing the 
236.16  amount and nature of each liability and the intended publication 
236.17  of the information listed in subdivision 4 related to the 
236.18  liability.  The notice must be mailed by first class and 
236.19  certified mail addressed to the last known address of the 
236.20  taxpayer.  The notice must include information regarding the 
236.21  exceptions listed in subdivision 2 and must state that the 
236.22  taxpayer's information will not be published if the taxpayer 
236.23  pays the delinquent obligation, enters into an agreement to pay, 
236.24  or provides information establishing that subdivision 2 
236.25  prohibits publication of the taxpayer's name. 
236.26     (b) After at least 30 days has elapsed since the notice was 
236.27  mailed and the delinquent tax or fee has not been paid and the 
236.28  taxpayer has not proved to the commissioner that subdivision 2 
236.29  prohibits publication, the commissioner may publish in a list of 
236.30  delinquent taxpayers the information about the taxpayer that is 
236.31  listed in subdivision 4. 
236.32     Subd. 4.  [FORM OF LIST.] The list may be published by any 
236.33  medium or method.  The list must contain the name, address, type 
236.34  of tax or fee, and period for which payment is due for each 
236.35  liability, including penalties, interest, and other charges owed 
236.36  by each listed delinquent taxpayer. 
237.1      Subd. 5.  [REMOVAL FROM LIST.] The commissioner shall 
237.2   remove the name of a taxpayer from the list of delinquent 
237.3   taxpayers after the commissioner receives written notice of and 
237.4   verifies any of the following facts about the liability in 
237.5   question: 
237.6      (1) the taxpayer has contacted the commissioner and 
237.7   arranged resolution of the liability; 
237.8      (2) an active bankruptcy proceeding has been initiated for 
237.9   the liability; 
237.10     (3) a bankruptcy proceeding concerning the liability has 
237.11  resulted in discharge of the liability; or 
237.12     (4) the commissioner has written off the liability. 
237.13     Subd. 6.  [NAMES PUBLISHED IN ERROR.] If the commissioner 
237.14  publishes a name under subdivision 1 in error, the taxpayer 
237.15  whose name was erroneously published has a right to request a 
237.16  retraction and apology.  If the taxpayer so requests, the 
237.17  commissioner shall publish a retraction and apology 
237.18  acknowledging that the taxpayer's name was published in error.  
237.19  The retraction and apology must appear in the same medium and 
237.20  the same format as the original list that contained the name 
237.21  listed in error. 
237.22     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
237.23  following final enactment for all liabilities owing on that date 
237.24  for which the statute of limitations for collection has not 
237.25  expired, and all liabilities arising after that date. 
237.26     Sec. 4.  Minnesota Statutes 2000, section 270.70, 
237.27  subdivision 13, is amended to read: 
237.28     Subd. 13.  [LEVY AND SALE BY SHERIFF.] If any tax payable 
237.29  to the commissioner of revenue or to the department of revenue 
237.30  is not paid as provided in subdivision 2, the commissioner may~~,~~ 
237.31  ~~within five years after the date of assessment of the~~ 
237.32  ~~tax~~, within the time periods provided in subdivision 1 for 
237.33  collection of taxes, delegate the authority granted by 
237.34  subdivision 1, by means of issuing a warrant to the sheriff of 
237.35  any county of the state commanding the sheriff, as agent for the 
237.36  commissioner, to levy upon and sell the real and personal 
238.1   property of the person liable for the payment or collection of 
238.2   the tax and to levy upon the rights to property of that person 
238.3   within the county, or to levy upon and seize any property within 
238.4   the county on which there is a lien provided in section 270.69, 
238.5   and to return the warrant to the commissioner and pay to the 
238.6   commissioner the money collected by virtue thereof by a time to 
238.7   be therein specified not less than 60 days from the date of the 
238.8   warrant.  The sheriff shall proceed thereunder to levy upon and 
238.9   seize any property of the person and to levy upon the rights to 
238.10  property of the person within the county (except the person's 
238.11  homestead or that property which is exempt from execution 
238.12  pursuant to section 550.37), or to levy upon and seize any 
238.13  property within the county on which there is a lien provided in 
238.14  section 270.69.  For purposes of the preceding sentence, the 
238.15  term "tax" shall include any penalty, interest and costs 
238.16  properly payable.  The sheriff shall then sell so much of the 
238.17  property levied upon as is required to satisfy the taxes, 
238.18  interest, and penalties, together with the sheriff's costs; but 
238.19  the sales, and the time and manner of redemption therefrom, 
238.20  shall, to the extent not provided in sections 270.701 to 
238.21  270.709, be governed by chapter 550.  The proceeds of the sales, 
238.22  less the sheriff's costs, shall be turned over to the 
238.23  commissioner, who shall then apply the proceeds as provided in 
238.24  section 270.708. 
238.25     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
238.26  following final enactment for all taxes for which issuance of a 
238.27  warrant under this subdivision has not been barred as of that 
238.28  date. 
238.29     Sec. 5.  Minnesota Statutes 2000, section 270.73, 
238.30  subdivision 1, is amended to read: 
238.31     Subdivision 1.  [POSTING, NOTICE.] Pursuant to the 
238.32  authority to disclose under section 270B.12, subdivision 4, the 
238.33  commissioner shall, by the 15th of each month, submit to the 
238.34  commissioner of public safety a list of all taxpayers who are 
238.35  required to pay, withhold, or collect the tax imposed by section 
238.36  290.02, 290.0922, 290.92, 290.9727, 290.9728, 290.9729, or 
239.1   297A.02, or local sales and use tax payable to the commissioner 
239.2   of revenue, or a local option tax administered and collected by 
239.3   the commissioner of revenue, and who are ten days or more 
239.4   delinquent in either filing a tax return or paying the tax. 
239.5      The commissioner of revenue is under no obligation to list 
239.6   a taxpayer whose business is inactive.  At least ten days before 
239.7   notifying the commissioner of public safety, the commissioner of 
239.8   revenue shall notify the taxpayer of the intended action. 
239.9      The commissioner of public safety shall post the list in 
239.10  the same manner as provided in section 340A.318, subdivision 3.  
239.11  The list will prominently show the date of posting.  If a 
239.12  taxpayer previously listed files all returns and pays all taxes 
239.13  then due, the commissioner shall notify the commissioner of 
239.14  public safety within two business days. 
239.15     <b>[EFFECTIVE DATE.]</b> This section is effective for lists 
239.16  submitted to the commissioner of public safety on or after the 
239.17  day following final enactment. 
239.18     Sec. 6.  Minnesota Statutes 2000, section 287.08, is 
239.19  amended to read: 
239.20     287.08 [TAX, HOW PAYABLE; RECEIPTS.] 
239.21     (a) The tax imposed by sections 287.01 to 287.12 must be 
239.22  paid to the treasurer of any county in this state in which the 
239.23  real property or some part is located at or before the time of 
239.24  filing the mortgage for record.  The treasurer shall endorse 
239.25  receipt on the mortgage and the receipt is conclusive proof that 
239.26  the tax has been paid in the amount stated and authorizes any 
239.27  county recorder or registrar of titles to record the mortgage.  
239.28  Its form, in substance, shall be "registration tax hereon of 
239.29  ..................... dollars paid."  If the mortgage is exempt 
239.30  from taxation the endorsement shall, in substance, be "exempt 
239.31  from registration tax."  In either case the receipt must be 
239.32  signed by the treasurer.  In case the treasurer is unable to 
239.33  determine whether a claim of exemption should be allowed, the 
239.34  tax must be paid as in the case of a taxable mortgage.  
239.35     (b) ~~Upon written application of the taxpayer,~~ The county 
239.36  treasurer may refund in whole or in part any mortgage registry 
240.1   tax ~~that has been erroneously paid, or a person having paid a~~ 
240.2   ~~mortgage registry tax amount may seek a refund of the tax, or~~ 
240.3   ~~other appropriate relief,~~ overpayment if a written application 
240.4   by the taxpayer is submitted to the county treasurer within 
240.5   three and one-half years from the date of the overpayment.  If 
240.6   the county has not issued a denial of the application, the 
240.7   taxpayer may bring an action in tax court in the county in which 
240.8   the tax was paid at any time after the expiration of six months 
240.9   from the time that the application was submitted.  A denial of 
240.10  refund may be appealed within 60 days from the date of the 
240.11  denial by bringing an action in tax court in the county in which 
240.12  the tax was paid~~, within 60 days of the payment~~.  The action is 
240.13  commenced by the serving of a petition for relief on the county 
240.14  treasurer, and by filing a copy with the court.  The county 
240.15  attorney shall defend the action.  The county treasurer shall 
240.16  notify the treasurer of each county that has or would receive a 
240.17  portion of the tax as paid.  
240.18     (c) If the county treasurer determines a refund should be 
240.19  paid, or if a refund is ordered by the court, the county 
240.20  treasurer of each county that actually received a portion of the 
240.21  tax shall immediately pay a proportionate share of three percent 
240.22  of the refund using any available county funds.  The county 
240.23  treasurer of each county that received, or would have received, 
240.24  a portion of the tax shall also pay their county's proportionate 
240.25  share of the remaining 97 percent of the court-ordered refund on 
240.26  or before the 20th day of the following month using solely the 
240.27  mortgage registry tax funds that would be paid to the 
240.28  commissioner of revenue on that date under section 287.12.  If 
240.29  the funds on hand under this procedure are insufficient to fully 
240.30  fund 97 percent of the court-ordered refund, the county 
240.31  treasurer of the county in which the action was brought shall 
240.32  file a claim with the commissioner of revenue under section 
240.33  16A.48 for the remaining portion of 97 percent of the refund, 
240.34  and shall pay over the remaining portion upon receipt of a 
240.35  warrant from the state issued pursuant to the claim. 
240.36     (d) When any mortgage covers real property located in more 
241.1   than one county in this state the total tax must be paid to the 
241.2   treasurer of the county where the mortgage is first presented 
241.3   for recording, and the payment must be receipted as provided in 
241.4   paragraph (a).  If the principal debt or obligation secured by 
241.5   such a multiple county mortgage exceeds $1,000,000, the nonstate 
241.6   portion of the tax must be divided and paid over by the county 
241.7   treasurer receiving it, on or before the 20th day of each month 
241.8   after receipt, to the county or counties entitled in the ratio 
241.9   that the market value of the real property covered by the 
241.10  mortgage in each county bears to the market value of all the 
241.11  real property in this state described in the mortgage.  In 
241.12  making the division and payment the county treasurer shall send 
241.13  a statement giving the description of the real property 
241.14  described in the mortgage and the market value of the part 
241.15  located in each county.  For this purpose, the treasurer of any 
241.16  county may require the treasurer of any other county to certify 
241.17  to the former the market valuation of any tract of real property 
241.18  in any mortgage. 
241.19     <b>[EFFECTIVE DATE.]</b> This section is effective for 
241.20  overpayments made on or after July 1, 2001. 
241.21     Sec. 7.  Minnesota Statutes 2000, section 287.28, is 
241.22  amended to read: 
241.23     287.28 [REFUNDS OR REDEMPTION.] 
241.24     (a) The county treasurer may ~~refund in whole or in part any~~ 
241.25  ~~tax which has been erroneously paid and may allow for or~~ redeem 
241.26  ~~such of the~~ stamps~~,~~ issued under the authority of sections 
241.27  287.20 to 287.31 ~~as may~~ that have been spoiled, destroyed, or 
241.28  rendered useless or unfit for the purpose intended or for which 
241.29  the owner may have no use or which through mistake may have been 
241.30  improperly or unnecessarily used.  ~~Such order~~ Redemption shall 
241.31  be made only upon written application of the taxpayer.  
241.32     (b) ~~A person having paid a deed tax amount may seek a~~ 
241.33  ~~refund of the tax, or other appropriate relief,~~ The county 
241.34  treasurer may refund any deed tax overpayment if a written 
241.35  application by the taxpayer is submitted to the county treasurer 
241.36  within three and one-half years from the date of the 
242.1   overpayment.  If the county has not issued a denial of the 
242.2   application, the taxpayer may bring an action in tax court in 
242.3   the county in which the tax was paid at any time after the 
242.4   expiration of six months from the time that the application was 
242.5   submitted.  A denial of refund may be appealed within 60 days 
242.6   from the date of the denial by commencing an action in tax court 
242.7   in the county where the tax was paid~~, within 60 days of the~~ 
242.8   ~~payment~~.  The action is commenced by serving a petition for 
242.9   relief on the county treasurer, and filing a copy with the 
242.10  court.  The county attorney shall defend the action.  The county 
242.11  treasurer shall notify the treasurer of each county that has, or 
242.12  would receive a portion of the tax as paid.  Any refund of deed 
242.13  tax which the county treasurer determines should be made, and 
242.14  any court ordered refund of deed tax, shall be accomplished 
242.15  using the refund procedures in section 287.08. 
242.16     <b>[EFFECTIVE DATE.]</b> This section is effective for 
242.17  overpayments made on or after July 1, 2001. 
242.18     Sec. 8.  Minnesota Statutes 2000, section 290.06, 
242.19  subdivision 23, is amended to read: 
242.20     Subd. 23.  [REFUND OF CONTRIBUTIONS TO POLITICAL PARTIES 
242.21  AND CANDIDATES.] (a) A taxpayer may claim a refund equal to the 
242.22  amount of the taxpayer's contributions made in the calendar year 
242.23  to candidates and to a political party.  The maximum refund for 
242.24  an individual must not exceed $50 and for a married couple, 
242.25  filing jointly, must not exceed $100.  A refund of a 
242.26  contribution is allowed only if the taxpayer files a form 
242.27  required by the commissioner and attaches to the form a copy of 
242.28  an official refund receipt form issued by the candidate or party 
242.29  and signed by the candidate, the treasurer of the candidate's 
242.30  principal campaign committee, or the chair or treasurer of the 
242.31  party unit, after the contribution was received.  The receipt 
242.32  forms must be numbered, and the data on the receipt that are not 
242.33  public must be made available to the campaign finance and public 
242.34  disclosure board upon its request.  A claim must be filed with 
242.35  the commissioner no sooner than January 1 of the calendar year 
242.36  in which the contribution was made and no later than April 15 of 
243.1   the calendar year following the calendar year in which the 
243.2   contribution was made.  A taxpayer may file only one claim per 
243.3   calendar year.  Amounts paid by the commissioner after June 15 
243.4   of the calendar year following the calendar year in which the 
243.5   contribution was made must include interest at the rate 
243.6   specified in section 270.76. 
243.7      (b) No refund is allowed under this subdivision for a 
243.8   contribution to a candidate unless the candidate: 
243.9      (1) has signed an agreement to limit campaign expenditures 
243.10  as provided in section 10A.322; 
243.11     (2) is seeking an office for which voluntary spending 
243.12  limits are specified in section 10A.25; and 
243.13     (3) has designated a principal campaign committee.  
243.14     This subdivision does not limit the campaign expenditures 
243.15  of a candidate who does not sign an agreement but accepts a 
243.16  contribution for which the contributor improperly claims a 
243.17  refund.  
243.18     (c) For purposes of this subdivision, "political party" 
243.19  means a major political party as defined in section 200.02, 
243.20  subdivision 7, or a minor political party qualifying for 
243.21  inclusion on the income tax or property tax refund form under 
243.22  section 10A.31, subdivision 3a.  
243.23     A "major party" or "minor party" includes the aggregate of 
243.24  that party's organization within each house of the legislature, 
243.25  the state party organization, and the party organization within 
243.26  congressional districts, counties, legislative districts, 
243.27  municipalities, and precincts.  
243.28     "Candidate" means a candidate as defined in section 10A.01, 
243.29  subdivision 10, except a candidate for judicial office.  
243.30     "Contribution" means a gift of money. 
243.31     (d) The commissioner shall make copies of the form 
243.32  available to the public and candidates upon request. 
243.33     (e) The following data collected or maintained by the 
243.34  commissioner under this subdivision are private:  the identities 
243.35  of individuals claiming a refund, the identities of candidates 
243.36  to whom those individuals have made contributions, and the 
244.1   amount of each contribution.  
244.2      (f) The commissioner shall report to the campaign finance 
244.3   and public disclosure board by each August 1 a summary showing 
244.4   the total number and aggregate amount of political contribution 
244.5   refunds made on behalf of each candidate and each political 
244.6   party.  These data are public. 
244.7      (g) The amount necessary to pay claims for the refund 
244.8   provided in this section is appropriated from the general fund 
244.9   to the commissioner of revenue. 
244.10     (h) For a taxpayer who files a claim for refund via the 
244.11  Internet or other electronic means, the commissioner may accept 
244.12  the number on the official receipt as documentation that a 
244.13  contribution was made rather than the actual receipt as required 
244.14  by paragraph (a). 
244.15     <b>[EFFECTIVE DATE.]</b> This section is effective for refund 
244.16  claims based on contributions made after December 31, 2001. 
244.17     Sec. 9.  Minnesota Statutes 2000, section 290.92, 
244.18  subdivision 23, is amended to read: 
244.19     Subd. 23.  [WITHHOLDING BY EMPLOYER OF DELINQUENT TAXES.] 
244.20  (1) The commissioner may, within five years after the date of 
244.21  assessment of the tax, or if a lien has been filed under section 
244.22  270.69, within the statutory period for enforcement of the lien, 
244.23  give notice to any employer deriving income which has a taxable 
244.24  situs in this state regardless of whether the income is exempt 
244.25  from taxation, that an employee of that employer is delinquent 
244.26  in a certain amount with respect to any state taxes, including 
244.27  penalties, interest, and costs.  The commissioner can proceed 
244.28  under this subdivision only if the tax is uncontested or if the 
244.29  time for appeal of the tax has expired.  The commissioner shall 
244.30  not proceed under this subdivision until the expiration of 30 
244.31  days after mailing to the taxpayer, at the taxpayer's last known 
244.32  address, a written notice of (a) the amount of taxes, interest, 
244.33  and penalties due from the taxpayer and demand for their 
244.34  payment, and (b) the commissioner's intention to require 
244.35  additional withholding by the taxpayer's employer pursuant to 
244.36  this subdivision.  The effect of the notice shall expire ~~180~~ 
245.1   ~~days~~ one year after it has been mailed to the taxpayer provided 
245.2   that the notice may be renewed by mailing a new notice which is 
245.3   in accordance with this subdivision.  The renewed notice shall 
245.4   have the effect of reinstating the priority of the original 
245.5   claim.  The notice to the taxpayer shall be in substantially the 
245.6   same form as that provided in section 571.72.  The notice shall 
245.7   further inform the taxpayer of the wage exemptions contained in 
245.8   section 550.37, subdivision 14.  If no statement of exemption is 
245.9   received by the commissioner within 30 days from the mailing of 
245.10  the notice, the commissioner may proceed under this 
245.11  subdivision.  The notice to the taxpayer's employer may be 
245.12  served by mail or by delivery by an employee of the department 
245.13  of revenue and shall be in substantially the same form as 
245.14  provided in section 571.75.  Upon receipt of notice, the 
245.15  employer shall withhold from compensation due or to become due 
245.16  to the employee, the total amount shown by the notice, subject 
245.17  to the provisions of section 571.922.  The employer shall 
245.18  continue to withhold each pay period until the notice is 
245.19  released by the commissioner under section 270.709.  Upon 
245.20  receipt of notice by the employer, the claim of the state of 
245.21  Minnesota shall have priority over any subsequent garnishments 
245.22  or wage assignments.  The commissioner may arrange between the 
245.23  employer and the employee for withholding a portion of the total 
245.24  amount due the employee each pay period, until the total amount 
245.25  shown by the notice plus accrued interest has been withheld.  
245.26     The "compensation due" any employee is defined in 
245.27  accordance with the provisions of section 571.921.  The maximum 
245.28  withholding allowed under this subdivision for any one pay 
245.29  period shall be decreased by any amounts payable pursuant to a 
245.30  garnishment action with respect to which the employer was served 
245.31  prior to being served with the notice of delinquency and any 
245.32  amounts covered by any irrevocable and previously effective 
245.33  assignment of wages; the employer shall give notice to the 
245.34  department of the amounts and the facts relating to such 
245.35  assignments within ten days after the service of the notice of 
245.36  delinquency on the form provided by the department of revenue as 
246.1   noted in this subdivision.  
246.2      (2) If the employee ceases to be employed by the employer 
246.3   before the full amount set forth in a notice of delinquency plus 
246.4   accrued interest has been withheld, the employer shall 
246.5   immediately notify the commissioner in writing of the 
246.6   termination date of the employee and the total amount withheld.  
246.7   No employer may discharge any employee by reason of the fact 
246.8   that the commissioner has proceeded under this subdivision.  If 
246.9   an employer discharges an employee in violation of this 
246.10  provision, the employee shall have the same remedy as provided 
246.11  in section 571.927, subdivision 2.  
246.12     (3) Within ten days after the expiration of such pay 
246.13  period, the employer shall remit to the commissioner, on a form 
246.14  and in the manner prescribed by the commissioner, the amount 
246.15  withheld during each pay period under this subdivision.  
246.16     (4) Clauses (1), (2), and (3), except provisions imposing a 
246.17  liability on the employer for failure to withhold or remit, 
246.18  shall apply to cases in which the employer is the United States 
246.19  or any instrumentality thereof or this state or any municipality 
246.20  or other subordinate unit thereof.  
246.21     (5) The commissioner shall refund to the employee excess 
246.22  amounts withheld from the employee under this subdivision.  If 
246.23  any excess results from payments by the employer because of 
246.24  willful failure to withhold or remit as prescribed in clause 
246.25  (3), the excess attributable to the employer's payment shall be 
246.26  refunded to the employer.  
246.27     (6) Employers required to withhold delinquent taxes, 
246.28  penalties, interest, and costs under this subdivision shall not 
246.29  be required to compute any additional interest, costs or other 
246.30  charges to be withheld.  
246.31     (7) The collection remedy provided to the commissioner by 
246.32  this subdivision shall have the same legal effect as if it were 
246.33  a levy made pursuant to section 270.70.  
246.34     <b>[EFFECTIVE DATE.]</b> This section is effective for notices of 
246.35  intent mailed on or after the day following final enactment. 
246.36     Sec. 10.  Minnesota Statutes 2000, section 290A.03, 
247.1   subdivision 12, is amended to read: 
247.2      Subd. 12.  [GROSS RENT.] (a) "Gross rent" means rental paid 
247.3   for the right of occupancy, at arms-length, of a homestead, 
247.4   exclusive of charges for any medical services furnished by the 
247.5   landlord as a part of the rental agreement, whether expressly 
247.6   set out in the rental agreement or not. 
247.7      (b) The gross rent of a resident of a nursing home or 
247.8   intermediate care facility is $350 per month.  The gross rent of 
247.9   a resident of an adult foster care home is $550 per month.  
247.10  Beginning for rent paid in 2002, the commissioner shall annually 
247.11  adjust for inflation the gross rent amounts stated in this 
247.12  paragraph.  The adjustment must be made in accordance with 
247.13  section 1f of the Internal Revenue Code, except that for 
247.14  purposes of this paragraph the percentage increase shall be 
247.15  determined from the year ending on June 30, 2001, to the year 
247.16  ending on June 30 of the year in which the rent is paid.  The 
247.17  commissioner shall round the gross rents to the nearest $10 
247.18  amount.  If the amount ends in $5, the commissioner shall round 
247.19  it up to the next $10 amount.  The determination of the 
247.20  commissioner under this paragraph is not a rule under the 
247.21  Administrative Procedure Act. 
247.22     (c) If the landlord and tenant have not dealt with each 
247.23  other at arms-length and the commissioner determines that the 
247.24  gross rent charged was excessive, the commissioner may adjust 
247.25  the gross rent to a reasonable amount for purposes of this 
247.26  chapter. 
247.27     (d) Any amount paid by a claimant residing in property 
247.28  assessed pursuant to section 273.124, subdivision 3, 4, 5, or 6 
247.29  for occupancy in that property shall be excluded from gross rent 
247.30  for purposes of this chapter.  However, property taxes imputed 
247.31  to the homestead of the claimant or the dwelling unit occupied 
247.32  by the claimant that qualifies for homestead treatment pursuant 
247.33  to section 273.124, subdivision 3, 4, 5, or 6 shall be included 
247.34  within the term "property taxes payable" as defined in 
247.35  subdivision 13, notwithstanding the fact that ownership is not 
247.36  in the name of the claimant. 
248.1      <b>[EFFECTIVE DATE.]</b> This section is effective for refunds 
248.2   based on rent paid after December 31, 2000. 
248.3      Sec. 11.  Minnesota Statutes 2000, section 290A.15, is 
248.4   amended to read: 
248.5      290A.15 [CLAIM APPLIED AGAINST OUTSTANDING LIABILITY.] 
248.6      The amount of any claim otherwise payable under this 
248.7   chapter may be applied by the commissioner against any 
248.8   delinquent tax liability of ~~the claimant or spouse of the~~ 
248.9   ~~claimant payable to the department of revenue~~ any member of the 
248.10  household.  If there are two members of the household, the 
248.11  commissioner may apply only one-half of a refund to the separate 
248.12  liability of either member of the household. 
248.13     <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
248.14  refunds paid on or after July 1, 2001. 
248.15     Sec. 12.  Minnesota Statutes 2000, section 295.50, 
248.16  subdivision 4, is amended to read: 
248.17     Subd. 4.  [HEALTH CARE PROVIDER.] (a) "Health care 
248.18  provider" means: 
248.19     (1) a person whose health care occupation is regulated or 
248.20  required to be regulated by the state of Minnesota furnishing 
248.21  any or all of the following goods or services directly to a 
248.22  patient or consumer:  medical, surgical, optical, visual, 
248.23  dental, hearing, nursing services, drugs, laboratory, diagnostic 
248.24  or therapeutic services; 
248.25     (2) a person who provides goods and services not listed in 
248.26  clause (1) that qualify for reimbursement under the medical 
248.27  assistance program provided under chapter 256B; 
248.28     (3) a staff model health plan company; 
248.29     (4) an ambulance service required to be licensed; or 
248.30     (5) a person who sells or repairs hearing aids and related 
248.31  equipment or prescription eyewear. 
248.32     (b) Health care provider does not include: 
248.33     (1) hospitals; medical supplies distributors, except as 
248.34  specified under paragraph (a), clause (5); nursing homes 
248.35  licensed under chapter 144A or licensed in any other 
248.36  jurisdiction; pharmacies; surgical centers; bus and taxicab 
249.1   transportation, or any other providers of transportation 
249.2   services other than ambulance services required to be licensed; 
249.3   supervised living facilities for persons with mental retardation 
249.4   or related conditions, licensed under Minnesota Rules, parts 
249.5   4665.0100 to 4665.9900; residential care homes licensed under 
249.6   chapter 144B; board and lodging establishments providing only 
249.7   custodial services that are licensed under chapter 157 and 
249.8   registered under section 157.17 to provide supportive services 
249.9   or health supervision services; adult foster homes as defined in 
249.10  Minnesota Rules, part 9555.5105; day training and habilitation 
249.11  services for adults with mental retardation and related 
249.12  conditions as defined in section 252.41, subdivision 3; ~~and~~ 
249.13  boarding care homes, as defined in Minnesota Rules, part 
249.14  4655.0100; and adult day care centers as defined in Minnesota 
249.15  Rules, part 9555.9600; 
249.16     (2) home health agencies as defined in Minnesota Rules, 
249.17  part 9505.0175, subpart 15; a person providing personal care 
249.18  services and supervision of personal care services as defined in 
249.19  Minnesota Rules, part 9505.0335; a person providing private duty 
249.20  nursing services as defined in Minnesota Rules, part 9505.0360; 
249.21  and home care providers required to be licensed under chapter 
249.22  144A; 
249.23     (3) a person who employs health care providers solely for 
249.24  the purpose of providing patient services to its employees; and 
249.25     (4) an educational institution that employs health care 
249.26  providers solely for the purpose of providing patient services 
249.27  to its students if the institution does not receive fee for 
249.28  service payments or payments for extended coverage. 
249.29     <b>[EFFECTIVE DATE.]</b> This section is effective for gross 
249.30  revenues received on or after January 1, 2002. 
249.31     Sec. 13.  Minnesota Statutes 2000, section 297A.01, 
249.32  subdivision 5, is amended to read: 
249.33     Subd. 5.  "Storage" includes any keeping or retention in 
249.34  Minnesota for any purpose except sale in the regular course of 
249.35  business ~~or subsequent use solely outside Minnesota of tangible~~ 
249.36  ~~personal property~~. 
250.1      <b>[EFFECTIVE DATE; INSTRUCTION TO REVISOR.]</b> (a) This section 
250.2   is effective for purchases, sales, storage, use, or consumption 
250.3   occurring after June 30, 1997. 
250.4      (b) In the next edition of Minnesota Statutes, the revisor 
250.5   shall codify the amendment to this section in Minnesota 
250.6   Statutes, section 297A.61, subdivision 5. 
250.7      Sec. 14.  Minnesota Statutes 2000, section 297A.07, 
250.8   subdivision 3, is amended to read: 
250.9      Subd. 3.  [NEW PERMITS AFTER REVOCATION.] The commissioner 
250.10  shall not issue a new permit or reinstate a revoked permit after 
250.11  revocation unless the taxpayer applies for a permit and provides 
250.12  reasonable evidence of intention to comply with the sales and 
250.13  use tax laws and rules.  The commissioner may require the 
250.14  applicant to supply security, in addition to that authorized by 
250.15  section 297A.28, as is reasonably necessary to insure compliance 
250.16  with the sales and use tax laws and rules.  If the commissioner 
250.17  issues or reinstates a permit not in conformance with the 
250.18  requirements of this subdivision or applicable rules, the 
250.19  commissioner may cancel the permit upon notice to the permit 
250.20  holder.  The notice must be served by first class and certified 
250.21  mail at the permit holder's last known address.  The 
250.22  cancellation shall be effective immediately, subject to the 
250.23  right of the permit holder to show that the permit was issued in 
250.24  conformance with the requirements of this subdivision and 
250.25  applicable rules.  Upon such showing, the permit must be 
250.26  reissued. 
250.27     If a taxpayer has had a permit or permits revoked three 
250.28  times in a five-year period, the commissioner shall not issue a 
250.29  new permit or reinstate the revoked permit until 24 months have 
250.30  elapsed after revocation and the taxpayer has satisfied the 
250.31  conditions for reinstatement of a revoked permit or issuance of 
250.32  a new permit imposed by this section and rules adopted hereunder.
250.33     For purposes of this subdivision, the term "taxpayer" means 
250.34  an individual, if a revoked permit was issued to or in the name 
250.35  of an individual, or a corporation or partnership, if a revoked 
250.36  permit was issued to or in the name of a corporation or 
251.1   partnership.  Taxpayer also means an officer of a corporation, a 
251.2   member of a partnership, or an individual who is liable for 
251.3   delinquent sales taxes, either for the entity for which the new 
251.4   or reinstated permit is at issue, or for another entity for 
251.5   which a permit was previously revoked, or personally as a permit 
251.6   holder. 
251.7      <b>[EFFECTIVE DATE; INSTRUCTION TO REVISOR.]</b> (a) This section 
251.8   is effective the day following final enactment.  
251.9      (b) In the next edition of Minnesota Statutes, the revisor 
251.10  shall codify the amendments to this section in Minnesota 
251.11  Statutes, section 297A.86, subdivision 2. 
251.12     Sec. 15.  Minnesota Statutes 2000, section 297A.86, 
251.13  subdivision 1, is amended to read: 
251.14     Subdivision 1.  [NOTICE OF REVOCATION; HEARINGS.] (a) If a 
251.15  person fails to comply with this chapter or the sales and use 
251.16  tax provisions of chapter 289A or the rules ~~adopted under either~~ 
251.17  ~~chapter~~ related to sales and use tax, or if any person fails to 
251.18  comply with chapter 297F or the rules related to cigarette and 
251.19  tobacco products, without reasonable cause, the commissioner may 
251.20  give the person 30 days' notice in writing, specifying the 
251.21  violations, and stating that based on the violations the 
251.22  commissioner intends to revoke the person's permit.  The notice 
251.23  must also advise the person of the right to contest the 
251.24  revocation under this subdivision.  It must also explain the 
251.25  general procedures for a contested case hearing under chapter 
251.26  14.  The notice may be served personally or by mail in the 
251.27  manner prescribed for service of an order of assessment. 
251.28     (b) If the person does not request a hearing within 30 days 
251.29  after the date of the notice of intent, the commissioner may 
251.30  serve a notice of revocation of permit upon the person, and the 
251.31  permit is revoked.  If a hearing is timely requested, and held, 
251.32  the permit is revoked after the commissioner serves an order of 
251.33  revocation of permit under section 14.62, subdivision 1. 
251.34     <b>[EFFECTIVE DATE.]</b> This section is effective for violations 
251.35  occurring on or after July 1, 2001. 
251.36     Sec. 16.  Minnesota Statutes 2000, section 297B.03, is 
252.1   amended to read: 
252.2      297B.03 [EXEMPTIONS.] 
252.3      There is specifically exempted from the provisions of this 
252.4   chapter and from computation of the amount of tax imposed by it 
252.5   the following:  
252.6      (1) purchase or use, including use under a lease purchase 
252.7   agreement or installment sales contract made pursuant to section 
252.8   465.71, of any motor vehicle by the United States and its 
252.9   agencies and instrumentalities and by any person described in 
252.10  and subject to the conditions provided in section 297A.25, 
252.11  subdivision 18; 
252.12     (2) purchase or use of any motor vehicle by any person who 
252.13  was a resident of another state or country at the time of the 
252.14  purchase and who subsequently becomes a resident of Minnesota, 
252.15  provided the purchase occurred more than 60 days prior to the 
252.16  date such person began residing in the state of Minnesota and 
252.17  the motor vehicle was registered in the person's name in the 
252.18  other state or country; 
252.19     (3) purchase or use of any motor vehicle by any person 
252.20  making a valid election to be taxed under the provisions of 
252.21  section 297A.211; 
252.22     (4) purchase or use of any motor vehicle previously 
252.23  registered in the state of Minnesota when such transfer 
252.24  constitutes a transfer within the meaning of section 118, 331, 
252.25  332, 336, 337, 338, 351, 355, 368, 721, 731, 1031, 1033, or 
252.26  1563(a) of the Internal Revenue Code of 1986, as amended through 
252.27  December 31, 1999; 
252.28     (5) purchase or use of any vehicle owned by a resident of 
252.29  another state and leased to a Minnesota based private or for 
252.30  hire carrier for regular use in the transportation of persons or 
252.31  property in interstate commerce provided the vehicle is titled 
252.32  in the state of the owner or secured party, and that state does 
252.33  not impose a sales tax or sales tax on motor vehicles used in 
252.34  interstate commerce; 
252.35     (6) purchase or use of a motor vehicle by a private 
252.36  nonprofit or public educational institution for use as an 
253.1   instructional aid in automotive training programs operated by 
253.2   the institution.  "Automotive training programs" includes motor 
253.3   vehicle body and mechanical repair courses but does not include 
253.4   driver education programs; 
253.5      (7) purchase of a motor vehicle for use as an ambulance by 
253.6   an ambulance service licensed under section 144E.10; 
253.7      (8) purchase of a motor vehicle by or for a public library, 
253.8   as defined in section 134.001, subdivision 2, as a bookmobile or 
253.9   library delivery vehicle; 
253.10     (9) purchase of a ready-mixed concrete truck; 
253.11     (10) purchase or use of a motor vehicle by a town for use 
253.12  exclusively for road maintenance, including snowplows and dump 
253.13  trucks, but not including automobiles, vans, or pickup trucks; 
253.14     (11) purchase or use of a motor vehicle by a corporation, 
253.15  society, association, foundation, or institution organized and 
253.16  operated exclusively for charitable, religious, or educational 
253.17  purposes, except a public school, university, or library, but 
253.18  only if the vehicle is: 
253.19     (i) a truck, as defined in section 168.011, a bus, as 
253.20  defined in section 168.011, or a passenger automobile, as 
253.21  defined in section 168.011, if the automobile is designed and 
253.22  used for carrying more than nine persons including the driver; 
253.23  and 
253.24     (ii) intended to be used primarily to transport tangible 
253.25  personal property or individuals, other than employees, to whom 
253.26  the organization provides service in performing its charitable, 
253.27  religious, or educational purpose. 
253.28     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
253.29  following final enactment, except that the change to paragraph 
253.30  (11) is effective for sales and purchases occurring after June 
253.31  30, 2000. 
253.32     Sec. 17.  [297F.185] [REVOCATION OF SALES AND USE TAX 
253.33  PERMITS.] 
253.34     If a person fails to comply with this chapter, or the rules 
253.35  related to cigarette and tobacco products, the commissioner may 
253.36  revoke the person's sales and use tax permit as provided in 
254.1   section 297A.86. 
254.2      <b>[EFFECTIVE DATE.]</b> This section is effective for violations 
254.3   occurring on or after July 1, 2001. 
254.4      Sec. 18.  [297H.115] [USE TAX.] 
254.5      Subdivision 1.  [IMPOSITION; LIABILITY OF GENERATORS AND 
254.6   SELF-HAULERS.] (a) A use tax is imposed on the sales price of 
254.7   mixed municipal solid waste management services received by a 
254.8   residential generator at the rate imposed under section 297H.02, 
254.9   unless the tax imposed under section 297H.02 was paid.  The 
254.10  residential generator is liable. 
254.11     (b) A use tax is imposed on the sales price of mixed 
254.12  municipal solid waste management services received by a 
254.13  commercial generator at the rate imposed under section 297H.03, 
254.14  unless the tax imposed under section 297H.03 was paid.  The 
254.15  commercial generator is liable. 
254.16     (c) A use tax is imposed on the volume of nonmixed 
254.17  municipal solid waste that is managed at the rate imposed under 
254.18  section 297H.04, unless the tax imposed under section 297H.04 
254.19  was paid.  The generator is liable. 
254.20     (d) A use tax is imposed on the sales price of mixed 
254.21  municipal solid waste management services received by a 
254.22  self-hauler at the rate imposed under section 297H.05, paragraph 
254.23  (a), unless the tax imposed under section 297H.05, paragraph 
254.24  (a), was paid.  The self-hauler is liable. 
254.25     (e) A use tax is imposed on the volume of nonmixed 
254.26  municipal solid waste managed at the rate imposed under section 
254.27  297H.05, paragraph (b), unless the tax imposed under section 
254.28  297H.05, paragraph (b), was paid.  The self-hauler is liable. 
254.29     Subd. 2.  [PAYMENT; REPORTING.] A generator or self-hauler 
254.30  that is liable under subdivision 1 shall report the use tax on a 
254.31  return prescribed by the commissioner of revenue, and shall 
254.32  remit the tax with the return.  The return and the tax must be 
254.33  filed using the filing cycle and due dates provided for taxes 
254.34  imposed under chapter 297A. 
254.35     Subd. 3.  [COMMISSIONER ASSESSMENT.] (a) The commissioner 
254.36  of revenue may not assess the generator or self-hauler a use tax 
255.1   on a transaction for which the waste management service provider 
255.2   has paid the solid waste management tax, except as provided in 
255.3   paragraph (b). 
255.4      (b) If the waste management service provider who is an 
255.5   accrual basis taxpayer remits a payment and thereafter offsets 
255.6   the amount as a bad debt under section 297H.09, the commissioner 
255.7   of revenue may assess the generator or self-hauler a use tax for 
255.8   the offset amount. 
255.9      <b>[EFFECTIVE DATE.]</b> This section is effective for services 
255.10  received on or after July 1, 2001. 
255.11     Sec. 19.  Minnesota Statutes 2000, section 461.12, is 
255.12  amended by adding a subdivision to read: 
255.13     Subd. 8.  [NOTICE TO COMMISSIONER.] The licensing authority 
255.14  under this section shall, within 30 days of the issuance of a 
255.15  license, inform the commissioner of revenue of the licensee's 
255.16  name, address, trade name, and the effective and expiration 
255.17  dates of the license.  The commissioner of revenue must also be 
255.18  informed of a license renewal, transfer, cancellation, 
255.19  suspension, or revocation during the license period. 
255.20     <b>[EFFECTIVE DATE.]</b> This section is effective for licenses 
255.21  issued, renewed, transferred, canceled, suspended, or revoked on 
255.22  or after January 1, 2002.