HF 2020

as introduced - 86th Legislature (2009 - 2010) Posted on 02/09/2010 01:57am

A bill for an act
relating to taxation; allowing county local sales taxes, eliminating certain existing
local sales taxes; adjusting county program aid; modifying levy limits; amending
Minnesota Statutes 2008, sections 275.70, subdivision 3; 275.71, subdivisions
2, 4, 5; 297A.99, subdivision 1; 477A.0124, by adding a subdivision; 477A.03,
subdivision 2b; proposing coding for new law in Minnesota Statutes, chapter
297A; repealing Minnesota Statutes 2008, section 477A.0124, subdivisions 3,
4, 5; Laws 2008, chapter 366, article 7, section 18.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2008, section 275.70, subdivision 3, is amended to read:

Subd. 3.

Local governmental unit.

"Local governmental unit" means a county deleted text begin , or a
statutory or home rule charter city with a population greater than 2,500 deleted text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes levied in calendar year
2009, payable in 2010.
new text end

Sec. 2.

Minnesota Statutes 2008, section 275.71, subdivision 2, is amended to read:

Subd. 2.

Levy limit base.

(a) The levy limit base for a local governmental unit for
taxes levied in 2008 is its levy aid base from the previous year, subject to any adjustments
under section 275.72. For taxes levied in 2009 deleted text begin and 2010 deleted text end , the levy limit base for a local
governmental unit is its adjusted levy limit base in the previous year, subject to any
adjustments under section 275.72.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes levied in calendar year
2009, payable in 2010.
new text end

Sec. 3.

Minnesota Statutes 2008, section 275.71, subdivision 4, is amended to read:

Subd. 4.

Adjusted levy limit base.

For taxes levied in 2008 deleted text begin through 2010 deleted text end new text begin and 2009 new text end ,
the adjusted levy limit base is equal to the levy limit base computed under subdivision 2
or section 275.72, multiplied by:

(1) one plus the lesser of 3.9 percent or the percentage growth in the implicit price
deflator;

(2) one plus a percentage equal to 50 percent of the percentage increase in the number
of households, if any, for the most recent 12-month period for which data is available; and

(3) one plus a percentage equal to 50 percent of the percentage increase in the
taxable market value of the jurisdiction due to new construction of class 3 property, as
defined in section 273.13, subdivision 4, except for state-assessed utility and railroad
property, for the most recent year for which data is available.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes levied in calendar year
2009, payable in 2010.
new text end

Sec. 4.

Minnesota Statutes 2008, section 275.71, subdivision 5, is amended to read:

Subd. 5.

Property tax levy limit.

For taxes levied in deleted text begin 2008 through 2010 deleted text end new text begin 2009 new text end , the
property tax levy limit for a local governmental unit is equal to its adjusted levy limit
base determined under subdivision 4 plus any additional levy authorized under section
275.73, which is levied against net tax capacity, reduced by the sum of (i) the total amount
of aids and reimbursements that the local governmental unit is certified to receive under
sections 477A.011 to 477A.014, (ii) new text begin the amount of aid reduction under section 477A.0124,
subdivision (6), paragraph (c), (iii) new text end taconite aids under sections 298.28 and 298.282
including any aid which was required to be placed in a special fund for expenditure in the
next succeeding year, deleted text begin (iii) deleted text end new text begin (iv) new text end estimated payments to the local governmental unit under
section 272.029, adjusted for any error in estimation in the preceding year, and deleted text begin (iv) deleted text end new text begin (v) new text end
aids under section 477A.16.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes levied in calendar year
2009, payable in 2010.
new text end

Sec. 5.

Minnesota Statutes 2008, section 297A.99, subdivision 1, is amended to read:

Subdivision 1.

Authorization; scope.

(a) A political subdivision of this state may
impose a general sales tax (1) under section 297A.992, (2) under section 297A.993, (3)
new text begin under section 297A.994, or (4) new text end if permitted by special law enacted prior to May 20, 2008,
or deleted text begin (4) deleted text end new text begin (5) new text end if the political subdivision enacted and imposed the tax before January 1, 1982,
and its predecessor provision.

(b) This section governs the imposition of a general sales tax by the political
subdivision. The provisions of this section preempt the provisions of any special law:

(1) enacted before June 2, 1997, or

(2) enacted on or after June 2, 1997, that does not explicitly exempt the special law
provision from this section's rules by reference.

(c) This section does not apply to or preempt a sales tax on motor vehicles or a
special excise tax on motor vehicles.

(d) Until after May 31, 2010, a political subdivision may not advertise, promote,
expend funds, or hold a referendum to support imposing a local option sales tax unless
it is for extension of an existing tax or the tax was authorized by a special law enacted
prior to May 20, 2008.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 6.

new text begin [297A.994] COUNTY LOCAL OPTION SALES TAX.
new text end

new text begin Subdivision 1. new text end

new text begin Authorization; rates. new text end

new text begin Notwithstanding section 297A.99,
subdivisions 2, 3, and 5, or section 477A.016, or any other law, a county board may, by
resolution, impose a general sales tax of one-half of one percent on retail sales and uses
taxable under this chapter and chapter 297B.
new text end

new text begin Subd. 2. new text end

new text begin Application of election requirement. new text end

new text begin (a) Imposition of the tax under this
section is not subject to the requirements of section 297A.99, subdivision 3.
new text end

new text begin (b) Before imposing the tax under this section, the county must publish a notice of
its intention to impose the tax and the date and time of a hearing to obtain public comment
on the matter. The notice must be published in the official newspaper of the county, or
in a newspaper of general circulation in the county. The notice must be published at
least 14 days before the date of the hearing, but not more than 28 days. Following the
public hearing the county board may determine to take no further action, or may adopt a
resolution imposing the tax.
new text end

new text begin (c) A county may impose the tax only upon obtaining the approval of the majority
of voters voting on the question of imposing the tax, if a petition requesting a vote on
imposition of the tax is signed by voters equal to the greater of (1) 300, or (2) five percent
of the votes cast in the county at the last general election is filed with the county auditor
within 30 days after the public hearing. The commissioner of revenue shall prepare a
suggested form of the question to be presented at the election.
new text end

new text begin Subd. 3. new text end

new text begin Use of revenues. new text end

new text begin Revenues from the tax imposed under this section
must first be used to fund obligations under section 297A.9945. Remaining revenues
are deposited in the county general fund.
new text end

new text begin Subd. 4. new text end

new text begin Administration, collection, and enforcement. new text end

new text begin The administration,
collection, and enforcement of the provisions in section 297A.99, subdivisions 4, and 6 to
12, apply to a tax imposed under this section.
new text end

new text begin Subd. 5. new text end

new text begin Termination. new text end

new text begin A county may terminate a tax imposed under this section
upon resolution of the county board and notification to the commissioner of revenue, if
all obligations under section 297A.9945 have been paid.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 7.

new text begin [297A.9945] EFFECT ON EXISTING LOCAL SALES TAXES;
SATISFACTION OF PREEXISTING OBLIGATIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Preemption of preexisting local sales taxes. new text end

new text begin (a) Notwithstanding
section 297A.99 or any other law or local ordinance to the contrary, each general local
sales and use taxes in a county or a part of a county is preempted on the day that a
county local sales tax under section 297A.994 takes effect, except the following taxes
are not preempted:
new text end

new text begin (1) a local tax imposed under section 297A.992 or 297A.993; and
new text end

new text begin (2) a local sales tax authorized by special law in a city of the first class.
new text end

new text begin (b) A local sales tax that is imposed by a city located in two or more counties is
preempted if one or more counties in which the city is located impose the county tax. A
replacement tax must be imposed under subdivision 6 in any portion of the city located in
a county that has not imposed the tax under section 297A.994.
new text end

new text begin Subd. 2. new text end

new text begin County payment to cities; foregone sales tax revenue. new text end

new text begin (a) If a local
sales tax imposed in a city located partially or totally within a county is preempted under
subdivision 1, the county shall pay a portion of its local sales tax revenues, as provided
under subdivision 4 or 5, to the city to fund obligations allowed under the law authorizing
the city tax. The county must make these payments to the city within five business days
after it receives the revenues from the commissioner.
new text end

new text begin (b) If the local sales tax was imposed under a joint powers agreement in cities
located in more than one county, the share of the obligation to be funded by the county
must be determined under subdivision 5.
new text end

new text begin (c) The requirement to make these payments ceases on the earliest of the following:
new text end

new text begin (1) the date on which the city tax was required to expire under the special law
authorizing it;
new text end

new text begin (2) when the city has received sufficient revenues from its tax and from payments
under this section to pay in full or to defease debt obligations issued by the city under the
law authorizing the city sales tax and to pay any additional spending obligations allowed
under the special law and not funded by the issuance of debt obligations; or
new text end

new text begin (3) the city becomes a city of the first class and imposes a city sales tax.
new text end

new text begin Subd. 3. new text end

new text begin Dedication of tax to fund county projects. new text end

new text begin If a county imposed local
sales tax is preempted under subdivision 1, the revenues from the tax imposed under
section 297A.994 are pledged first to pay and secure the bond obligations secured by and
to be paid with the revenues from the preempted county sales tax.
new text end

new text begin Subd. 4. new text end

new text begin Calculation of forgone revenue in cities located entirely within a
county. new text end

new text begin For purposes of subdivision 2, the forgone revenue to be paid to the city located
entirely in a county imposing a tax under section 297A.994 is calculated as follows:
new text end

new text begin (1) in the first 12 months after the tax is preempted, the county shall make quarterly
payments to a city entirely located within the county equal to the amount that the city
received from the commissioner of revenue from the preempted tax in the corresponding
quarter in the previous year, multiplied by a percentage equal to the percentage change in
total state sales tax revenue in the previous quarter compared to the total state sales tax
revenue for the fifth preceding quarter; and
new text end

new text begin (2) in subsequent years, the county shall make quarterly payments to the city equal
to the payment made in the corresponding quarter in the previous year, multiplied by the
ratio of the total quarterly remittance to the county in the current year compared to the
total quarterly remittance to the county in the previous year.
new text end

new text begin Subd. 5. new text end

new text begin Calculation of forgone revenue in cities located partially within a
county. new text end

new text begin (a) For purposes of subdivision 2, the forgone revenue to be paid to the city
located entirely in a county imposing a tax under section 297A.994 is calculated as
provided in this subdivision.
new text end

new text begin (b) The commissioner of revenue shall determine the percentage of the city's local
sales tax revenue attributable to transactions located in the county. The commissioner
may consult with the county and the city to determine a reasonable percentage, or the
commissioner may set the percentage equal to the percentage of the city's market value
for the most recently available assessment year of class 3 property, except utility real and
personal property located in the county. The sum of the percentage of a city's local sales
tax revenue attributable to each county in which the city is located must equal 100 percent.
The determination of the commissioner is final.
new text end

new text begin (c) In the first 12 months after the tax is preempted, the county shall make quarterly
payments to a city partially located within the county equal to the amount that the city
received from the commissioner from the preempted tax in the corresponding quarter in
the previous year, multiplied by (1) a percentage equal to one plus the percentage change
in total state sales tax revenue in the previous quarter compared to the total state sales tax
revenue for the fifth preceding quarter, and (2) one plus the percentage calculated in
paragraph (b).
new text end

new text begin (d) In subsequent years, the county shall make quarterly payments to the city equal
to the payment made in the corresponding quarter in the previous year multiplied by the
ratio of the total quarterly remittance to the county in the current year compared to the
total quarterly remittance to the county in the previous year.
new text end

new text begin (e) A county's share of a city's obligations from the special law authorizing the city's
sales tax is equal to the total obligation under the special law multiplied by one plus the
percentage determined under paragraph (b).
new text end

new text begin Subd. 6. new text end

new text begin Establishment of special sales tax districts within certain cities. new text end

new text begin (a)
For any city located in two or more counties, if at least one county imposes a county
sales tax under subdivision 1, and at least one county does not impose a county sales tax,
a special sales tax district is established in the portion of the city that is not subject to
a county sales tax.
new text end

new text begin (b) The governing body of the city is the governing body of the special taxing district
and the special taxing district shall impose a replacement local sales tax by resolution
to take effect upon the preemption of the city's sales tax under subdivision 1. The
replacement tax must be imposed at the same rate as the city tax it replaces. Revenues
from the replacement tax are pledged to and may only be used for the purposes permitted
by law for the city sales tax, which it replaces. The authority to impose this tax expires
upon the city's receipt of sufficient revenues to pay the obligations to which the city sales
tax was pledged and other spending permitted by the law authorizing imposition of the
city sales tax from the sum of the following:
new text end

new text begin (1) the city sales tax;
new text end

new text begin (2) county payments of foregone sales tax revenues under this section; and
new text end

new text begin (3) the special taxing district sales tax.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 8.

Minnesota Statutes 2008, section 477A.0124, is amended by adding a
subdivision to read:

new text begin Subd. 6. new text end

new text begin County program aid. new text end

new text begin (a) For calendar year 2010 and thereafter, a county's
program aid under this section is equal to (1) its county program aid amount certified for
aids payable in 2009 under this section, minus (2) an amount determined under paragraph
(b) or (c). A county's program aid shall not be less than zero.
new text end new text begin new text end

new text begin (b) For a county that does not impose a tax under section 297A.994, the amount
subtracted under paragraph (a) is equal to 3.58 percent of the county's 2009 levy plus aid
revenue base. The "2009 levy plus aid revenue base" for a county is equal to the sum of
the county's certified property tax levy for taxes payable in 2009 plus the amount the
county was certified to receive in county program aid in 2009 under this section and
the amount the county was certified to receive in taconite aids in 2009 under sections
298.28 and 292.282, including any aid that was required to be placed in a special fund for
expenditure in the next succeeding year.
new text end

new text begin (c) For a county that imposes a tax under section 297A.994, the amount subtracted
under paragraph (a) is equal to (1) 50 percent of its net sales tax revenue for the preceding
12-month period in excess of $7 per capita, plus (2) 25 percent of its net sales tax revenue
for the preceding 12-month period in excess of $17 per capita.
new text end

new text begin (d) For purposes of this subdivision, "net sales tax revenue for the preceding
12-month period" means the sales tax revenue for the county for the 12-month period
ending July 1 of the year in which the aid under this section is certified minus its estimated
existing obligations under section 297A.9945 for the year in which the aid is paid. For
the first two years in which the aid is offset under this paragraph, the commissioner of
revenue shall estimate the offset based on available data regarding sales tax collections in
the county. Beginning with the third year in which the aid is offset under this paragraph,
the offset will be based on actual sales tax collections in the county in the 12-month period
ending July 1 of the year in which the aid is certified.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year
2010 and thereafter.
new text end

Sec. 9.

Minnesota Statutes 2008, section 477A.03, subdivision 2b, is amended to read:

Subd. 2b.

Counties.

deleted text begin (a) deleted text end For aids payable in deleted text begin 2009 deleted text end new text begin 2010 new text end and thereafter, new text begin in addition
to new text end the total aid payable under section deleted text begin 477A.0124, subdivision 3, is $111,500,000 minus
one-half of the total aid amount determined under section 477A.0124, subdivision 5,
paragraph (b), subject to adjustment in subdivision 5. Each calendar year, deleted text end new text begin 477A.0124,
new text end $500,000 deleted text begin shall be retained by deleted text end new text begin is appropriated to new text end the commissioner of revenue to make
reimbursements to the commissioner of finance for payments made under section 611.27 new text begin ,
$207,000 is appropriated by the commissioner of revenue to make reimbursements
to the commissioner of finance for the preparation of local impact notes, and $7,000 is
appropriated to the commissioner of revenue to reimburse the commissioner of education
for the preparation of local impact notes for school districts new text end . deleted text begin For calendar year 2004,
the amount shall be in addition to the payments authorized under section 477A.0124,
subdivision 1. For calendar year 2005 and subsequent years, the amount shall be deducted
from the appropriation under this paragraph. The reimbursements shall be to defray the
additional costs associated with court-ordered counsel under section 611.27. deleted text end Any deleted text begin retained deleted text end new text begin
appropriated new text end amounts not used for reimbursement deleted text begin in a year shall be included in the next
distribution of county need aid that is certified to the county auditors for the purpose
of property tax reduction for the next taxes payable year. deleted text end new text begin under this subdivision shall
be returned to the general fund.
new text end

deleted text begin (b) For aids payable in 2009 and thereafter, the total aid under section 477A.0124,
subdivision 4, is $116,132,923 minus one-half of the total aid amount determined under
section 477A.0124, subdivision 5, paragraph (b), subject to adjustment in subdivision
5. The commissioner of finance shall bill the commissioner of revenue for the cost of
preparation of local impact notes as required by section 3.987, not to exceed $207,000 in
fiscal year 2004 and thereafter. The commissioner of education shall bill the commissioner
of revenue for the cost of preparation of local impact notes for school districts as required
by section 3.987, not to exceed $7,000 in fiscal year 2004 and thereafter. The commissioner
of revenue shall deduct the amounts billed under this paragraph from the appropriation
under this paragraph. The amounts deducted are appropriated to the commissioner of
finance and the commissioner of education for the preparation of local impact notes.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aids payable in calendar year
2010 and thereafter.
new text end

Sec. 10. new text begin REPEALER.
new text end

new text begin (a) new text end new text begin Minnesota Statutes 2008, section 477A.0124, subdivisions 3, 4, and 5, new text end new text begin are
repealed.
new text end

new text begin (b) new text end new text begin Laws 2008, chapter 366, article 7, section 18, new text end new text begin is repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin Paragraph (a) is effective for aids payable in calendar year
2010 and thereafter. Paragraph (b) is effective the day following final enactment.
new text end