HF 2294

2nd Unofficial Engrossment - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

1.1A bill for an act

1.2relating to the financing and operation of state and local government; modifying
1.3property tax provisions, credits, and levies; providing a homestead credit state
1.4refund; increasing property tax refunds; providing a school bond agricultural
1.5credit; adding an income tax bracket and rate;amending Minnesota Statutes
1.62006, sections 123B.53, subdivisions 4, 5; 123B.54; 126C.01, by adding a
1.7subdivision; 126C.10, subdivision 13a; 126C.17, subdivision 6; 127A.48, by
1.8adding a subdivision; 273.11, subdivision 1a; 273.1384, subdivision 1; 273.1393;
1.9275.065, subdivision 3; 275.07, subdivision 2; 275.08, subdivision 1b; 276.04,
1.10subdivision 2; 290.06, subdivisions 2c, 2d; 290A.03, subdivision 13; 290A.04,
1.11subdivisions 2a, 2h, 3, 4, by adding a subdivision; proposing coding for new
1.12law in Minnesota Statutes, chapter 123B; repealing Minnesota Statutes 2006,
1.13section 290A.04, subdivisions 2, 2b.
1.14BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.15ARTICLE 1

1.16HOMESTEAD CREDIT STATE REFUND

1.17HOMEOWNERS AND RENTERS

1.18    Section 1. Minnesota Statutes 2006, section 273.1384, subdivision 1, is amended to
1.19read:
1.20    Subdivision 1. Residential homestead market value credit. (a) Each county
1.21auditor shall determine a homestead credit for each class 1a, 1b, and 2a homestead
1.22property within the county equal to 0.4 percent of the first $76,000 of market value
1.23of the property minus .09 percent of the market value in excess of $76,000. The credit
1.24amount may not be less than zero. In the case of an agricultural or resort homestead, only
1.25the market value of the house, garage, and immediately surrounding one acre of land is
1.26eligible in determining the property's homestead credit. In the case of a property that
1.27is classified as part homestead and part nonhomestead, (i) the credit shall apply only
2.1to the homestead portion of the property, but (ii) if a portion of a property is classified
2.2as nonhomestead solely because not all the owners occupy the property, not all the
2.3owners have qualifying relatives occupying the property, or solely because not all the
2.4spouses of owners occupy the property, the credit amount shall be initially computed as
2.5if that nonhomestead portion were also in the homestead class and then prorated to the
2.6owner-occupant's percentage of ownership. For the purpose of this section, when an
2.7owner-occupant's spouse does not occupy the property, the percentage of ownership for
2.8the owner-occupant spouse is one-half of the couple's ownership percentage.
2.9    (b) For property taxes payable in 2008 and thereafter, the county auditor shall
2.10determine the amount of the homestead credit under paragraph (a) and this paragraph.
2.11The county auditor shall report the amount of the credit to the taxpayer on the property
2.12tax statement or in another manner, as authorized by the commissioner of revenue. The
2.13amount of the credit allowed for the property taxes payable year is to be computed as the
2.14following percentage of the credit amount under paragraph (a):
2.15    (1) for property taxes payable in 2008, 100 percent;
2.16    (2) for property taxes payable in 2009, 60 percent;
2.17    (3) for property taxes payable in 2010, 30 percent; and
2.18    (4) for property taxes payable in 2011 or thereafter, no credit is allowed.
2.19EFFECTIVE DATE.This section is effective beginning for property taxes payable
2.20in 2008.

2.21    Sec. 2. Minnesota Statutes 2006, section 276.04, subdivision 2, is amended to read:
2.22    Subd. 2. Contents of tax statements. (a) The treasurer shall provide for the
2.23printing of the tax statements. The commissioner of revenue shall prescribe the form
2.24of the property tax statement and its contents. The statement must contain a tabulated
2.25statement of the dollar amount due to each taxing authority and the amount of the state
2.26tax from the parcel of real property for which a particular tax statement is prepared. The
2.27dollar amounts attributable to the county, the state tax, the voter approved school tax, the
2.28other local school tax, the township or municipality, and the total of the metropolitan
2.29special taxing districts as defined in section 275.065, subdivision 3, paragraph (i), must
2.30be separately stated. The amounts due all other special taxing districts, if any, may be
2.31aggregated except that any levies made by the regional rail authorities in the county of
2.32Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 398A
2.33shall be listed on a separate line directly under the appropriate county's levy. If the county
2.34levy under this paragraph includes an amount for a lake improvement district as defined
2.35under sections 103B.501 to 103B.581, the amount attributable for that purpose must be
3.1separately stated from the remaining county levy amount. In the case of Ramsey County,
3.2if the county levy under this paragraph includes an amount for public library service
3.3under section 134.07, the amount attributable for that purpose may be separated from the
3.4remaining county levy amount. The amount of the tax on homesteads qualifying under the
3.5senior citizens' property tax deferral program under chapter 290B is the total amount of
3.6property tax before subtraction of the deferred property tax amount. The amount of the
3.7tax on contamination value imposed under sections 270.91 to 270.98, if any, must also
3.8be separately stated. The dollar amounts, including the dollar amount of any special
3.9assessments, may be rounded to the nearest even whole dollar. For purposes of this section
3.10whole odd-numbered dollars may be adjusted to the next higher even-numbered dollar.
3.11The amount of market value excluded under section 273.11, subdivision 16, if any, must
3.12also be listed on the tax statement.
3.13    (b) The property tax statements for manufactured homes and sectional structures
3.14taxed as personal property shall contain the same information that is required on the
3.15tax statements for real property.
3.16    (c) Real and personal property tax statements must contain the following information
3.17in the order given in this paragraph. The information must contain the current year tax
3.18information in the right column with the corresponding information for the previous year
3.19in a column on the left:
3.20    (1) the property's estimated market value under section 273.11, subdivision 1;
3.21    (2) the property's taxable market value after reductions under section 273.11,
3.22subdivisions 1a and 16 ;
3.23    (3) the property's gross tax, calculated by adding the property's total property tax to
3.24the sum of the aids enumerated in clause (4); any items required by the commissioner of
3.25revenue under section 273.1384, subdivision 1, paragraph (b); and
3.26    (4) a total of the following aids:
3.27    (i) education aids payable under chapters 122A, 123A, 123B, 124D, 125A, 126C,
3.28and 127A;
3.29    (ii) local government aids for cities, towns, and counties under sections 477A.011 to
3.30477A.04; and
3.31    (iii) disparity reduction aid under section 273.1398;
3.32    (5) for homestead residential and agricultural properties, the credits under section
3.33273.1384;
3.34    (6) any credits received under sections 273.119; 273.123; 273.135; 273.1391;
3.35273.1398, subdivision 4; 469.171; and 473H.10, except that the amount of credit received
3.36under section 273.135 must be separately stated and identified as "taconite tax relief"; and
4.1    (7) (4) the net tax payable in the manner required in paragraph (a).
4.2    (d) If the county uses envelopes for mailing property tax statements and if the county
4.3agrees, a taxing district may include a notice with the property tax statement notifying
4.4taxpayers when the taxing district will begin its budget deliberations for the current
4.5year, and encouraging taxpayers to attend the hearings. If the county allows notices to
4.6be included in the envelope containing the property tax statement, and if more than
4.7one taxing district relative to a given property decides to include a notice with the tax
4.8statement, the county treasurer or auditor must coordinate the process and may combine
4.9the information on a single announcement.
4.10    The commissioner of revenue shall certify to the county auditor the actual or
4.11estimated aids enumerated in paragraph (c), clause (4), that local governments will receive
4.12in the following year. The commissioner must certify this amount by January 1 of each
4.13year.
4.14EFFECTIVE DATE.This section is effective for taxes payable in 2008 and
4.15thereafter.

4.16    Sec. 3. Minnesota Statutes 2006, section 290A.03, subdivision 13, is amended to read:
4.17    Subd. 13. Property taxes payable. "Property taxes payable" means the property
4.18tax exclusive of special assessments, penalties, and interest payable on a claimant's
4.19homestead after deductions made under sections 273.135, 273.1384, 273.1391, 273.42,
4.20subdivision 2 , and any other state paid property tax credits in any calendar year, and
4.21after any refund claimed and allowable under section 290A.04, subdivision 2h, that is
4.22first payable in the year that the property tax is payable. Beginning for property taxes
4.23payable in 2008, the amount of the credit under section 273.1384, subdivision 1, must
4.24not be deducted in computing property taxes payable. In the case of a claimant who
4.25makes ground lease payments, "property taxes payable" includes the amount of the
4.26payments directly attributable to the property taxes assessed against the parcel on which
4.27the house is located. No apportionment or reduction of the "property taxes payable" shall
4.28be required for the use of a portion of the claimant's homestead for a business purpose if
4.29the claimant does not deduct any business depreciation expenses for the use of a portion
4.30of the homestead in the determination of federal adjusted gross income. For homesteads
4.31which are manufactured homes as defined in section 273.125, subdivision 8, and for
4.32homesteads which are park trailers taxed as manufactured homes under section 168.012,
4.33subdivision 9 , "property taxes payable" shall also include 19 percent of the gross rent paid
4.34in the preceding year for the site on which the homestead is located. When a homestead
4.35is owned by two or more persons as joint tenants or tenants in common, such tenants
5.1shall determine between them which tenant may claim the property taxes payable on the
5.2homestead. If they are unable to agree, the matter shall be referred to the commissioner of
5.3revenue whose decision shall be final. Property taxes are considered payable in the year
5.4prescribed by law for payment of the taxes.
5.5    In the case of a claim relating to "property taxes payable," the claimant must have
5.6owned and occupied the homestead on January 2 of the year in which the tax is payable
5.7and (i) the property must have been classified as homestead property pursuant to section
5.8273.124 , on or before December 15 of the assessment year to which the "property taxes
5.9payable" relate; or (ii) the claimant must provide documentation from the local assessor
5.10that application for homestead classification has been made on or before December 15
5.11of the year in which the "property taxes payable" were payable and that the assessor has
5.12approved the application.
5.13EFFECTIVE DATE.This section is effective beginning for refund claims based on
5.14property taxes payable in 2008.

5.15    Sec. 4. Minnesota Statutes 2006, section 290A.04, subdivision 2a, is amended to read:
5.16    Subd. 2a. Renters. (a) A claimant whose rent constituting property taxes exceeds
5.17the percentage of the household income stated below must pay an amount equal to the
5.18percent of income shown for the appropriate household income level along with the
5.19percent to be paid by the claimant of the remaining amount of rent constituting property
5.20taxes. The state refund equals the amount of rent constituting property taxes that remain,
5.21up to the maximum state refund amount shown below.

5.22 5.23	Household Income	Percent of Income	Percent Paid by Claimant	Maximum State Refund
5.24	$0 to 3,589	1.0 percent	5 percent	$1,190
5.25	$0 to 4,579			$1,500
5.26	3,590 to 4,779	1.0 percent	10 percent	$1,190
5.27	4,580 to 6,099			$1,500
5.28	4,780 to 5,969	1.1 percent	10 percent	$1,190
5.29	6,100 to 7,619			$1,500
5.30	5,970 to 8,369	1.2 percent	10 percent	$1,190
5.31	7,620 to 10,669			$1,500
5.32	8,370 to 10,759	1.3 percent	15 percent	$1,190
5.33	10,670 to 13,729			$1,500
5.34	10,760 to 11,949	1.4 percent	15 percent	$1,190
5.35	13,730 to 15,239			$1,500
5.36	11,950 to 13,139	1.4 percent	20 percent	$1,190
5.37	15,240 to 16,769			$1,500
6.1	13,140 to 15,539	1.5 percent	20 percent	$1,190
6.2	16,770 to 19,829			$1,500
6.3	15,540 to 16,729	1.6 percent	20 percent	$1,190
6.4	19,830 to 21,349			$1,500
6.5	16,730 to 17,919	1.7 percent	25 percent	$1,190
6.6	21,350 to 22,859			$1,500
6.7	17,920 to 20,319	1.8 percent	25 percent	$1,190
6.8	22,860 to 25,929			$1,500
6.9	20,320 to 21,509	1.9 percent	30 percent	$1,190
6.10	25,930 to 27,439			$1,500
6.11	21,510 to 22,699	2.0 percent	30 percent	$1,190
6.12	27,440 to 28,959			$1,500
6.13	22,700 to 23,899	2.2 percent	30 percent	$1,190
6.14	28,960 to 30,499			$1,500
6.15	23,900 to 25,089	2.4 percent	30 percent	$1,190
6.16	30,500 to 32,009			$1,500
6.17	25,090 to 26,289	2.6 percent	35 percent	$1,190
6.18	32,010 to 33,539			$1,500
6.19	26,290 to 27,489	2.7 percent	35 percent	$1,190
6.20	33,540 to 35,079			$1,500
6.21	27,490 to 28,679	2.8 percent	35 percent	$1,190
6.22	35,080 to 36,589			$1,500
6.23	28,680 to 29,869	2.9 percent	40 percent	$1,190
6.24	36,590 to 38,109			$1,500
6.25	29,870 to 31,079	3.0 percent	40 percent	$1,190
6.26	38,110 to 39,649			$1,500
6.27	31,080 to 32,269	3.1 percent	40 percent	$1,190
6.28	39,650 to 41,169			$1,500
6.29	32,270 to 33,459	3.2 percent	40 percent	$1,190
6.30	41,170 to 42,689			$1,500
6.31	33,460 to 34,649	3.3 percent	45 percent	$1,080
6.32	42,690 to 49,729			$1,370
6.33	34,650 to 35,849	3.4 percent	45 percent	$ 960
6.34	49,730 to 51,459			$1,220
6.35	35,850 to 37,049	3.5 percent	45 percent	$ 830
6.36	51,460 to 53,189			$1,050
6.37	37,050 to 38,239	3.5 percent	50 percent	$ 720
6.38	53,190 to 54,899			$910
6.39	38,240 to 39,439	3.5 percent	50 percent	$ 600
6.40	54,900 to 56,609			$760
6.41	38,440 to 40,629	3.5 percent	50 percent	$ 360
6.42	56,610 to 58,319			$450
7.1	40,630 to 41,819	3.5 percent	50 percent	$ 120
7.2	58,320 to 60,000			$150

7.3    (b) The payment made to a claimant is the amount of the state refund calculated
7.4under this subdivision. No payment is allowed if the claimant's household income is
7.5$41,820 $60,000 or more.
7.6EFFECTIVE DATE.This section is effective beginning for claims filed for rent
7.7paid after December 31, 2006.

7.8    Sec. 5. Minnesota Statutes 2006, section 290A.04, subdivision 2h, is amended to read:
7.9    Subd. 2h. Additional refund. (a) If the gross property taxes payable on a
7.10homestead increase more than 12 percent over the property taxes payable in the prior year
7.11on the same property that is owned and occupied by the same owner on January 2 of both
7.12years, and the amount of that increase is $100 or more, a claimant who is a homeowner
7.13shall be allowed an additional refund equal to 60 percent of the amount of the increase
7.14over the greater of 12 percent of the prior year's property taxes payable or $100. This
7.15subdivision shall not apply to any increase in the gross property taxes payable attributable
7.16to improvements made to the homestead after the assessment date for the prior year's
7.17taxes. This subdivision shall not apply to any increase in the gross property taxes payable
7.18attributable to the termination of valuation exclusions under section 273.11, subdivision
7.1916 , or to the reduction in and elimination of the homestead market value credit under
7.20section 273.1384, subdivision 1, paragraph (b).
7.21    The maximum refund allowed under this subdivision is $1,000.
7.22    (b) For purposes of this subdivision "gross property taxes payable" means property
7.23taxes payable determined without regard to the refund allowed under this subdivision.
7.24    (c) In addition to the other proofs required by this chapter, each claimant under
7.25this subdivision shall file with the property tax refund return a copy of the property tax
7.26statement for taxes payable in the preceding year or other documents required by the
7.27commissioner.
7.28    (d) Upon request, the appropriate county official shall make available the names and
7.29addresses of the property taxpayers who may be eligible for the additional property tax
7.30refund under this section. The information shall be provided on a magnetic computer
7.31disk. The county may recover its costs by charging the person requesting the information
7.32the reasonable cost for preparing the data. The information may not be used for any
7.33purpose other than for notifying the homeowner of potential eligibility and assisting the
7.34homeowner, without charge, in preparing a refund claim.
8.1EFFECTIVE DATE.This section is effective for claims based on property taxes
8.2payable in 2008 and thereafter.

8.3    Sec. 6. Minnesota Statutes 2006, section 290A.04, is amended by adding a subdivision
8.4to read:
8.5    Subd. 2k. Homestead credit state refund. (a) A claimant who is a homeowner
8.6is entitled to a state refund of the amount of the property taxes payable in excess of two
8.7percent of the claimant's household income, based on the percentage and maximum for the
8.8appropriate household income level shown below. The refund amount determined from the
8.9table must be reduced further by the amount of the homestead market value credit under
8.10section 273.1384, subdivision 1, paragraph (b), but not to an amount that is less than zero.

8.11	Household Income	Refund Percentage	Maximum State Refund
8.12	0 to $5,399	90 percent	$2,500
8.13	5,400 to 18,899	85 percent	2,500
8.14	18,900 to 26,999	80 percent	2,500
8.15	27,000 to 32,399	75 percent	2,500
8.16	32,400 to 37,799	70 percent	2,500
8.17	37,800 to 45,899	65 percent	2,500
8.18	45,900 to 64,699	60 percent	2,500
8.19	64,700 to 80,899	55 percent	2,300
8.20	80,900 to 94,399	50 percent	2,100
8.21	94,400 to 99,299	45 percent	1,900
8.22	99,300 to 104,099	40 percent	1,700
8.23	104,100 to 115,599	30 percent	1,500
8.24	115,600 to 127,199	30 percent	1,250
8.25	127,200 to 134,099	25 percent	1,000
8.26	134,100 to 138,799	25 percent	750
8.27	138,800 to 144,399	25 percent	500
8.28	144,400 to 150,000	25 percent	250

8.29    (b) No payment is allowed under paragraph (a) if the claimant's household income
8.30is more than $150,000.
8.31EFFECTIVE DATE.This section is effective beginning for claims based on
8.32property taxes payable in 2008.

8.33    Sec. 7. Minnesota Statutes 2006, section 290A.04, subdivision 3, is amended to read:
8.34    Subd. 3. Table. The commissioner of revenue shall construct and make available
8.35to taxpayers a comprehensive table showing the property taxes to be paid and refund
8.36allowed at various levels of income and assessment. The table shall follow the schedule
9.1of income percentages, maximums and other provisions specified in subdivision 2 this
9.2section, except that the commissioner may graduate the transition between income
9.3brackets. All refunds shall be computed in accordance with tables prepared and issued
9.4by the commissioner of revenue.
9.5    The commissioner shall include on the form an appropriate space or method for the
9.6claimant to identify if the property taxes paid are for a manufactured home, as defined in
9.7section 273.125, subdivision 8, paragraph (c), or a park trailer taxed as a manufactured
9.8home under section 168.012, subdivision 9.

9.9    Sec. 8. Minnesota Statutes 2006, section 290A.04, subdivision 4, is amended to read:
9.10    Subd. 4. Inflation adjustment. Beginning for property tax refunds payable in
9.11calendar year 2002 2009, the commissioner shall annually adjust the dollar amounts of
9.12the income thresholds and the maximum refunds under subdivisions 2 and 2a and 2k for
9.13inflation. The commissioner shall make the inflation adjustments in accordance with
9.14section 1(f) of the Internal Revenue Code, except that for purposes of this subdivision
9.15the percentage increase shall be determined from the year ending on June 30, 2000 2007,
9.16to the year ending on June 30 of the year preceding that in which the refund is payable.
9.17The commissioner shall use the appropriate percentage increase to annually adjust the
9.18income thresholds and maximum refunds under subdivisions 2 and 2a and 2k for inflation
9.19without regard to whether or not the income tax brackets are adjusted for inflation in that
9.20year. The commissioner shall round the thresholds and the maximum amounts, as adjusted
9.21to the nearest $10 amount. If the amount ends in $5, the commissioner shall round it up
9.22to the next $10 amount.
9.23    The commissioner shall annually announce the adjusted refund schedule at the same
9.24time provided under section 290.06. The determination of the commissioner under this
9.25subdivision is not a rule under the Administrative Procedure Act.
9.26EFFECTIVE DATE.This section is effective beginning for claims based on
9.27property taxes payable in 2009.

9.28    Sec. 9. HOMESTEAD CREDIT STATE REFUND TRANSITION RESERVE.
9.29    Subdivision 1. Reserve account. A homestead credit state refund transition reserve
9.30account is established in the general fund to provide two additional years of transition
9.31funding for the homestead credit state refund.
9.32    Subd. 2. Transfer to account. On June 29, 2009, the commissioner of finance
9.33shall transfer $129,000,000 from the general fund to the homestead credit state refund
9.34transition reserve account.
10.1    Subd. 3. Transfer to general fund. On July 1, 2009, the commissioner of finance
10.2shall transfer the balance in the homestead credit state refund transition reserve account
10.3to the general fund.
10.4    Subd. 4. Expiration date. This section expires July 2, 2009.

10.5    Sec. 10. REPEALER.
10.6Minnesota Statutes 2006, section 290A.04, subdivisions 2 and 2b, are repealed.
10.7EFFECTIVE DATE.This section is effective for claims based on property taxes
10.8payable in 2008 and later.

10.9ARTICLE 2

10.10EDUCATION PROPERTY TAX RELIEF

10.11    Section 1. Minnesota Statutes 2006, section 123B.53, subdivision 4, is amended to read:
10.12    Subd. 4. Debt service equalization revenue. (a) The debt service equalization
10.13revenue of a district equals the sum of the first tier debt service equalization revenue and
10.14the second tier debt service equalization revenue.
10.15    (b) The first tier debt service equalization revenue of a district equals the greater of
10.16zero or the eligible debt service revenue minus the amount raised by a levy of 15 percent
10.17times the adjusted debt service net tax capacity of the district minus the second tier debt
10.18service equalization revenue of the district.
10.19    (c) The second tier debt service equalization revenue of a district equals the greater
10.20of zero or the eligible debt service revenue, excluding alternative facilities levies under
10.21section 123B.59, subdivision 5, minus the amount raised by a levy of 25 percent times the
10.22adjusted net tax capacity of the district.
10.23EFFECTIVE DATE.This section is effective for revenue for fiscal year 2009.

10.24    Sec. 2. Minnesota Statutes 2006, section 123B.53, subdivision 5, is amended to read:
10.25    Subd. 5. Equalized debt service levy. (a) The equalized debt service levy of a
10.26district equals the sum of the first tier equalized debt service levy and the second tier
10.27equalized debt service levy.
10.28    (b) A district's first tier equalized debt service levy equals the district's first tier debt
10.29service equalization revenue times the lesser of one or the ratio of:
10.30    (1) the quotient derived by dividing the adjusted debt service net tax capacity of the
10.31district for the year before the year the levy is certified by the adjusted pupil units in the
10.32district for the school year ending in the year prior to the year the levy is certified; to
11.1    (2) $3,200 100 percent of the statewide adjusted net tax capacity equalizing factor.
11.2    (c) A district's second tier equalized debt service levy equals the district's second tier
11.3debt service equalization revenue times the lesser of one or the ratio of:
11.4    (1) the quotient derived by dividing the adjusted net tax capacity of the district for
11.5the year before the year the levy is certified by the adjusted pupil units in the district for
11.6the school year ending in the year prior to the year the levy is certified; to
11.7    (2) $8,000.
11.8EFFECTIVE DATE.This section is effective for revenue for fiscal year 2009.

11.9    Sec. 3. Minnesota Statutes 2006, section 123B.54, is amended to read:
11.10123B.54 DEBT SERVICE AND SCHOOL BOND AGRICULTURAL CREDIT
11.11APPROPRIATION.
11.12    (a) $21,624,000 $14,813,000 in fiscal year 2008 and $20,403,000, $26,100,000 in
11.13fiscal year 2009, $29,816,000 in fiscal year 2010, and $30,538,000 in fiscal year 2011 and
11.14later are appropriated from the general fund to the commissioner of education for payment
11.15of debt service equalization aid under section 123B.53.
11.16    (b) $16,200,000 in fiscal year 2009, $18,531,000 in fiscal year 2010, and
11.17$19,242,000 in fiscal year 2011 and each year thereafter are appropriated from the general
11.18fund to the commissioner of education for payment of school bond agricultural credit aid
11.19under section 123B.555.
11.20    (b) (c) The appropriations in paragraph paragraphs (a) and (b) must be reduced by
11.21the amount of any money specifically appropriated for the same purpose in any year
11.22from any state fund.
11.23EFFECTIVE DATE.This section is effective for revenue for fiscal year 2009.

11.24    Sec. 4. [123B.555] SCHOOL BOND AGRICULTURAL CREDIT.
11.25    Subdivision 1. Eligibility. All class 2 property under section 273.13, subdivision 23,
11.26except for (1) property consisting of the house, garage, and immediately surrounding one
11.27acre of land of an agricultural homestead, and (2) property classified under section 273.13,
11.28subdivision 23, paragraph (b), clause (4), is eligible to receive the credit under this section.
11.29    Subd. 2. Credit amount. For each qualifying property, the school bond agricultural
11.30credit is equal to 36 percent of the property's eligible net tax capacity multiplied by the
11.31school debt tax rate determined under section 275.08, subdivision 1b.
11.32    Subd. 3. Credit reimbursements. The county auditor shall determine the tax
11.33reductions allowed under this section within the county for each taxes payable year and
12.1shall certify that amount to the commissioner of revenue as a part of the abstracts of tax
12.2lists submitted under section 275.29. Any prior year adjustments shall also be certified on
12.3the abstracts of tax lists. The commissioner shall review the certifications for accuracy,
12.4and may make such changes as are deemed necessary, or return the certification to the
12.5county auditor for correction. The credit under this section must be used to reduce the
12.6school district net tax capacity-based property tax as provided in section 273.1393.
12.7    Subd. 4. Payment. The commissioner of revenue shall certify the total of the tax
12.8reductions granted under this section for each taxes payable year within each school
12.9district to the commissioner of education, who shall pay the reimbursement amounts to
12.10each school district as provided in section 273.1392.
12.11EFFECTIVE DATE.This section is effective for taxes payable in 2008.

12.12    Sec. 5. Minnesota Statutes 2006, section 126C.01, is amended by adding a subdivision
12.13to read:
12.14    Subd. 2a. Statewide adjusted net tax capacity equalizing factor. The statewide
12.15adjusted net tax capacity equalizing factor equals the quotient derived by dividing the total
12.16adjusted net tax capacity of all school districts in the state for the year before the year
12.17the levy is certified by the total number of adjusted pupil units in the state for the fiscal
12.18year preceding the year the levy is certified.
12.19EFFECTIVE DATE.This section is effective for taxes payable in 2008.

12.20    Sec. 6. Minnesota Statutes 2006, section 126C.10, subdivision 13a, is amended to read:
12.21    Subd. 13a. Operating capital levy. To obtain operating capital revenue for fiscal
12.22year 2007 and later, a district may levy an amount not more than the product of its
12.23operating capital revenue for the fiscal year times the lesser of one or the ratio of its
12.24adjusted net tax capacity per adjusted marginal cost pupil unit to the operating capital
12.25equalizing factor. The operating capital equalizing factor equals $22,222 for fiscal year
12.262006, and $10,700 for fiscal year years 2007 and later 2008, and $21,250 for fiscal year
12.272009 and later.

12.28    Sec. 7. Minnesota Statutes 2006, section 126C.17, subdivision 6, is amended to read:
12.29    Subd. 6. Referendum equalization levy. (a) For fiscal year 2003 and later,
12.30A district's referendum equalization levy equals the sum of the first tier referendum
12.31equalization levy and the second tier referendum equalization levy.
13.1    (b) A district's first tier referendum equalization levy equals the district's first tier
13.2referendum equalization revenue times the lesser of one or the ratio of the district's
13.3referendum market value per resident marginal cost pupil unit to $476,000 111 percent of
13.4the referendum market value equalizing factor.
13.5    (c) A district's second tier referendum equalization levy equals the district's second
13.6tier referendum equalization revenue times the lesser of one or the ratio of the district's
13.7referendum market value per resident marginal cost pupil unit to $270,000 60 percent of
13.8the referendum market value equalizing factor.
13.9EFFECTIVE DATE.This section is effective for taxes payable in 2008.

13.10    Sec. 8. Minnesota Statutes 2006, section 127A.48, is amended by adding a subdivision
13.11to read:
13.12    Subd. 17. Adjusted debt service net tax capacity. To calculate each district's
13.13adjusted debt service net tax capacity, the commissioner of revenue must recompute
13.14the amounts in this section using an alternative sales ratio comparing the sales price to
13.15the estimated market value of the property.
13.16EFFECTIVE DATE.This section is effective the day following final enactment for
13.17computing taxes payable in 2008.

13.18    Sec. 9. Minnesota Statutes 2006, section 273.11, subdivision 1a, is amended to read:
13.19    Subd. 1a. Limited market value. In the case of all property classified as
13.20agricultural homestead or nonhomestead, residential homestead or nonhomestead, timber,
13.21or noncommercial seasonal residential recreational, the assessor shall compare the value
13.22with the taxable portion of the value determined in the preceding assessment.
13.23    For assessment years 2004, 2005, and 2006, the amount of the increase shall not
13.24exceed the greater of (1) 15 percent of the value in the preceding assessment, or (2) 25
13.25percent of the difference between the current assessment and the preceding assessment.
13.26    For assessment year 2007, the amount of the increase shall not exceed the greater of
13.27(1) 15 percent of the value in the preceding assessment, or (2) 33 percent of the difference
13.28between the current assessment and the preceding assessment.
13.29    For assessment year 2008, the amount of the increase shall not exceed the greater of
13.30(1) 15 percent of the value in the preceding assessment, or (2) 50 percent of the difference
13.31between the current assessment and the preceding assessment.
14.1    This limitation shall not apply to increases in value due to improvements. For
14.2purposes of this subdivision, the term "assessment" means the value prior to any exclusion
14.3under subdivision 16.
14.4    The provisions of this subdivision shall be in effect through assessment year 2008
14.5as provided in this subdivision.
14.6    For purposes of the assessment/sales ratio study conducted under section 127A.48,
14.7and the computation of state aids paid under chapters 122A, 123A, 123B, excluding
14.8section 123B.53, 124D, 125A, 126C, 127A, and 477A, market values and net tax
14.9capacities determined under this subdivision and subdivision 16, shall be used.
14.10EFFECTIVE DATE.This section is effective the day following final enactment for
14.11computing taxes payable in 2008.

14.12    Sec. 10. Minnesota Statutes 2006, section 273.1393, is amended to read:
14.13273.1393 COMPUTATION OF NET PROPERTY TAXES.
14.14    Notwithstanding any other provisions to the contrary, "net" property taxes are
14.15determined by subtracting the credits in the order listed from the gross tax:
14.16    (1) disaster credit as provided in section 273.123;
14.17    (2) powerline credit as provided in section 273.42;
14.18    (3) agricultural preserves credit as provided in section 473H.10;
14.19    (4) enterprise zone credit as provided in section 469.171;
14.20    (5) disparity reduction credit;
14.21    (6) conservation tax credit as provided in section 273.119;
14.22    (7) homestead and agricultural credits as provided in section 273.1384;
14.23    (8) school bond agricultural credit as provided in section 123B.555;
14.24    (8) (9) taconite homestead credit as provided in section 273.135; and
14.25    (9) (10) supplemental homestead credit as provided in section 273.1391.
14.26    The combination of all property tax credits must not exceed the gross tax amount.
14.27EFFECTIVE DATE.This section is effective for taxes payable in 2008.

14.28    Sec. 11. Minnesota Statutes 2006, section 275.065, subdivision 3, is amended to read:
14.29    Subd. 3. Notice of proposed property taxes. (a) The county auditor shall prepare
14.30and the county treasurer shall deliver after November 10 and on or before November 24
14.31each year, by first class mail to each taxpayer at the address listed on the county's current
14.32year's assessment roll, a notice of proposed property taxes.
14.33    (b) The commissioner of revenue shall prescribe the form of the notice.
15.1    (c) The notice must inform taxpayers that it contains the amount of property taxes
15.2each taxing authority proposes to collect for taxes payable the following year. In the case
15.3of a town, or in the case of the state general tax, the final tax amount will be its proposed
15.4tax. In the case of taxing authorities required to hold a public meeting under subdivision 6,
15.5the notice must clearly state that each taxing authority, including regional library districts
15.6established under section 134.201, and including the metropolitan taxing districts as
15.7defined in paragraph (i), but excluding all other special taxing districts and towns, will
15.8hold a public meeting to receive public testimony on the proposed budget and proposed or
15.9final property tax levy, or, in case of a school district, on the current budget and proposed
15.10property tax levy. It must clearly state the time and place of each taxing authority's
15.11meeting, a telephone number for the taxing authority that taxpayers may call if they have
15.12questions related to the notice, and an address where comments will be received by mail.
15.13    (d) The notice must state for each parcel:
15.14    (1) the market value of the property as determined under section 273.11, and used
15.15for computing property taxes payable in the following year and for taxes payable in the
15.16current year as each appears in the records of the county assessor on November 1 of the
15.17current year; and, in the case of residential property, whether the property is classified as
15.18homestead or nonhomestead. The notice must clearly inform taxpayers of the years to
15.19which the market values apply and that the values are final values;
15.20    (2) the items listed below, shown separately by county, city or town, and state
15.21general tax, net of the residential and agricultural homestead credit under section 273.1384
15.22and the school bond agricultural credit under section 123B.555, voter approved school
15.23levy, other local school levy, and the sum of the special taxing districts, and as a total
15.24of all taxing authorities:
15.25    (i) the actual tax for taxes payable in the current year; and
15.26    (ii) the proposed tax amount.
15.27    If the county levy under clause (2) includes an amount for a lake improvement
15.28district as defined under sections 103B.501 to 103B.581, the amount attributable for that
15.29purpose must be separately stated from the remaining county levy amount.
15.30    In the case of a town or the state general tax, the final tax shall also be its proposed
15.31tax unless the town changes its levy at a special town meeting under section 365.52. If a
15.32school district has certified under section 126C.17, subdivision 9, that a referendum will
15.33be held in the school district at the November general election, the county auditor must
15.34note next to the school district's proposed amount that a referendum is pending and that,
15.35if approved by the voters, the tax amount may be higher than shown on the notice. In
15.36the case of the city of Minneapolis, the levy for the Minneapolis Library Board and the
16.1levy for Minneapolis Park and Recreation shall be listed separately from the remaining
16.2amount of the city's levy. In the case of the city of St. Paul, the levy for the St. Paul
16.3Library Agency must be listed separately from the remaining amount of the city's levy.
16.4In the case of Ramsey County, any amount levied under section 134.07 may be listed
16.5separately from the remaining amount of the county's levy. In the case of a parcel where
16.6tax increment or the fiscal disparities areawide tax under chapter 276A or 473F applies,
16.7the proposed tax levy on the captured value or the proposed tax levy on the tax capacity
16.8subject to the areawide tax must each be stated separately and not included in the sum of
16.9the special taxing districts; and
16.10    (3) the increase or decrease between the total taxes payable in the current year and
16.11the total proposed taxes, expressed as a percentage.
16.12    For purposes of this section, the amount of the tax on homesteads qualifying under
16.13the senior citizens' property tax deferral program under chapter 290B is the total amount
16.14of property tax before subtraction of the deferred property tax amount.
16.15    (e) The notice must clearly state that the proposed or final taxes do not include
16.16the following:
16.17    (1) special assessments;
16.18    (2) levies approved by the voters after the date the proposed taxes are certified,
16.19including bond referenda and school district levy referenda;
16.20    (3) a levy limit increase approved by the voters by the first Tuesday after the first
16.21Monday in November of the levy year as provided under section 275.73;
16.22    (4) amounts necessary to pay cleanup or other costs due to a natural disaster
16.23occurring after the date the proposed taxes are certified;
16.24    (5) amounts necessary to pay tort judgments against the taxing authority that become
16.25final after the date the proposed taxes are certified; and
16.26    (6) the contamination tax imposed on properties which received market value
16.27reductions for contamination.
16.28    (f) Except as provided in subdivision 7, failure of the county auditor to prepare or
16.29the county treasurer to deliver the notice as required in this section does not invalidate the
16.30proposed or final tax levy or the taxes payable pursuant to the tax levy.
16.31    (g) If the notice the taxpayer receives under this section lists the property as
16.32nonhomestead, and satisfactory documentation is provided to the county assessor by the
16.33applicable deadline, and the property qualifies for the homestead classification in that
16.34assessment year, the assessor shall reclassify the property to homestead for taxes payable
16.35in the following year.
17.1    (h) In the case of class 4 residential property used as a residence for lease or rental
17.2periods of 30 days or more, the taxpayer must either:
17.3    (1) mail or deliver a copy of the notice of proposed property taxes to each tenant,
17.4renter, or lessee; or
17.5    (2) post a copy of the notice in a conspicuous place on the premises of the property.
17.6    The notice must be mailed or posted by the taxpayer by November 27 or within
17.7three days of receipt of the notice, whichever is later. A taxpayer may notify the county
17.8treasurer of the address of the taxpayer, agent, caretaker, or manager of the premises to
17.9which the notice must be mailed in order to fulfill the requirements of this paragraph.
17.10    (i) For purposes of this subdivision, subdivisions 5a and 6, "metropolitan special
17.11taxing districts" means the following taxing districts in the seven-county metropolitan area
17.12that levy a property tax for any of the specified purposes listed below:
17.13    (1) Metropolitan Council under section 473.132, 473.167, 473.249, 473.325,
17.14473.446 , 473.521, 473.547, or 473.834;
17.15    (2) Metropolitan Airports Commission under section 473.667, 473.671, or 473.672;
17.16and
17.17    (3) Metropolitan Mosquito Control Commission under section 473.711.
17.18    For purposes of this section, any levies made by the regional rail authorities in the
17.19county of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, or Washington under chapter
17.20398A shall be included with the appropriate county's levy and shall be discussed at that
17.21county's public hearing.
17.22    (j) The governing body of a county, city, or school district may, with the consent
17.23of the county board, include supplemental information with the statement of proposed
17.24property taxes about the impact of state aid increases or decreases on property tax
17.25increases or decreases and on the level of services provided in the affected jurisdiction.
17.26This supplemental information may include information for the following year, the current
17.27year, and for as many consecutive preceding years as deemed appropriate by the governing
17.28body of the county, city, or school district. It may include only information regarding:
17.29    (1) the impact of inflation as measured by the implicit price deflator for state and
17.30local government purchases;
17.31    (2) population growth and decline;
17.32    (3) state or federal government action; and
17.33    (4) other financial factors that affect the level of property taxation and local services
17.34that the governing body of the county, city, or school district may deem appropriate to
17.35include.
18.1    The information may be presented using tables, written narrative, and graphic
18.2representations and may contain instruction toward further sources of information or
18.3opportunity for comment.
18.4EFFECTIVE DATE.This section is effective for taxes payable in 2008.

18.5    Sec. 12. Minnesota Statutes 2006, section 275.07, subdivision 2, is amended to read:
18.6    Subd. 2. School district in more than one county levies; special requirements. (a)
18.7In school districts lying in more than one county, the clerk shall certify the tax levied to the
18.8auditor of the county in which the administrative offices of the school district are located.
18.9    (b) The clerk shall identify the portion of the school district levy that is levied for the
18.10purposes specified in section 123B.53, subdivision 5, as the school debt levy at the time
18.11that the levy is certified under this section.
18.12EFFECTIVE DATE.This section is effective for taxes payable in 2008.

18.13    Sec. 13. Minnesota Statutes 2006, section 275.08, subdivision 1b, is amended to read:
18.14    Subd. 1b. Computation of tax rates. (a) The amounts certified to be levied against
18.15net tax capacity under section 275.07 by an individual local government unit shall be
18.16divided by the total net tax capacity of all taxable properties within the local government
18.17unit's taxing jurisdiction. The resulting ratio, the local government's local tax rate,
18.18multiplied by each property's net tax capacity shall be each property's net tax capacity tax
18.19for that local government unit before reduction by any credits.
18.20    (b) The auditor shall also determine the school debt tax rate for each school district
18.21equal to the school debt levy certified under section 275.07 divided by the total net tax
18.22capacity of all taxable property within the district.
18.23    (c) Any amount certified to the county auditor to be levied against market value shall
18.24be divided by the total referendum market value of all taxable properties within the taxing
18.25district. The resulting ratio, the taxing district's new referendum tax rate, multiplied by
18.26each property's referendum market value shall be each property's new referendum tax
18.27before reduction by any credits. For the purposes of this subdivision, "referendum market
18.28value" means the market value as defined in section 126C.01, subdivision 3.
18.29EFFECTIVE DATE.This section is effective for taxes payable in 2008.

19.1ARTICLE 3

19.2INCOME TAX

19.3    Section 1. Minnesota Statutes 2006, section 290.06, subdivision 2c, is amended to read:
19.4    Subd. 2c. Schedules of rates for individuals, estates, and trusts. (a) The income
19.5taxes imposed by this chapter upon married individuals filing joint returns and surviving
19.6spouses as defined in section 2(a) of the Internal Revenue Code must be computed by
19.7applying to their taxable net income the following schedule of rates:
19.8    (1) On the first $25,680 $31,150, 5.35 percent;
19.9    (2) On all over $25,680 $31,150, but not over $102,030 $123,750, 7.05 percent;
19.10    (3) On all over $102,030 $123,750, but not over $400,000, 7.85 percent;
19.11    (4) On all over $400,000, 9 percent.
19.12    Married individuals filing separate returns, estates, and trusts must compute their
19.13income tax by applying the above rates to their taxable income, except that the income
19.14brackets will be one-half of the above amounts.
19.15    (b) The income taxes imposed by this chapter upon unmarried individuals must be
19.16computed by applying to taxable net income the following schedule of rates:
19.17    (1) On the first $17,570 $21,310, 5.35 percent;
19.18    (2) On all over $17,570 $21,310, but not over $57,710 $69,990, 7.05 percent;
19.19    (3) On all over $57,710 $69,990, but not over $226,230, 7.85 percent;
19.20    (4) On all over $226,230, 9 percent.
19.21    (c) The income taxes imposed by this chapter upon unmarried individuals qualifying
19.22as a head of household as defined in section 2(b) of the Internal Revenue Code must be
19.23computed by applying to taxable net income the following schedule of rates:
19.24    (1) On the first $21,630 $26,230, 5.35 percent;
19.25    (2) On all over $21,630 $26,230, but not over $86,910 $105,410, 7.05 percent;
19.26    (3) On all over $86,910 $105,410, but not over $340,720, 7.85 percent;
19.27    (4) On all over $340,720, 9 percent.
19.28    (d) In lieu of a tax computed according to the rates set forth in this subdivision, the
19.29tax of any individual taxpayer whose taxable net income for the taxable year is less than
19.30an amount determined by the commissioner must be computed in accordance with tables
19.31prepared and issued by the commissioner of revenue based on income brackets of not
19.32more than $100. The amount of tax for each bracket shall be computed at the rates set
19.33forth in this subdivision, provided that the commissioner may disregard a fractional part of
19.34a dollar unless it amounts to 50 cents or more, in which case it may be increased to $1.
20.1    (e) An individual who is not a Minnesota resident for the entire year must compute
20.2the individual's Minnesota income tax as provided in this subdivision. After the
20.3application of the nonrefundable credits provided in this chapter, the tax liability must
20.4then be multiplied by a fraction in which:
20.5    (1) the numerator is the individual's Minnesota source federal adjusted gross income
20.6as defined in section 62 of the Internal Revenue Code and increased by the additions
20.7required under section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), and (9),
20.8and reduced by the Minnesota assignable portion of the subtraction for United States
20.9government interest under section 290.01, subdivision 19b, clause (1), and the subtractions
20.10under section 290.01, subdivision 19b, clauses (9), (10), (14), (15), and (16), after applying
20.11the allocation and assignability provisions of section 290.081, clause (a), or 290.17; and
20.12    (2) the denominator is the individual's federal adjusted gross income as defined in
20.13section 62 of the Internal Revenue Code of 1986, increased by the amounts specified in
20.14section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), and (9), and reduced by the
20.15amounts specified in section 290.01, subdivision 19b, clauses (1), (9), (10), (14), (15),
20.16and (16).
20.17EFFECTIVE DATE.This section is effective for taxable years beginning after
20.18December 31, 2006.

20.19    Sec. 2. Minnesota Statutes 2006, section 290.06, subdivision 2d, is amended to read:
20.20    Subd. 2d. Inflation adjustment of brackets. (a) For taxable years beginning after
20.21December 31, 2000 2007, the minimum and maximum dollar amounts for each rate
20.22bracket for which a tax is imposed in subdivision 2c shall be adjusted for inflation by the
20.23percentage determined under paragraph (b). For the purpose of making the adjustment as
20.24provided in this subdivision all of the rate brackets provided in subdivision 2c shall be the
20.25rate brackets as they existed for taxable years beginning after December 31, 1999 2006,
20.26and before January 1, 2001 2008. The rate applicable to any rate bracket must not be
20.27changed. The dollar amounts setting forth the tax shall be adjusted to reflect the changes
20.28in the rate brackets. The rate brackets as adjusted must be rounded to the nearest $10
20.29amount. If the rate bracket ends in $5, it must be rounded up to the nearest $10 amount.
20.30    (b) The commissioner shall adjust the rate brackets and by the percentage determined
20.31pursuant to the provisions of section 1(f) of the Internal Revenue Code, except that in
20.32section 1(f)(3)(B) the word "1999" "2006" shall be substituted for the word "1992." For
20.332001 2008, the commissioner shall then determine the percent change from the 12 months
20.34ending on August 31, 1999 2006, to the 12 months ending on August 31, 2000 2007, and
20.35in each subsequent year, from the 12 months ending on August 31, 1999 2006, to the 12
21.1months ending on August 31 of the year preceding the taxable year. The determination of
21.2the commissioner pursuant to this subdivision shall not be considered a "rule" and shall
21.3not be subject to the Administrative Procedure Act contained in chapter 14.
21.4    No later than December 15 of each year, the commissioner shall announce the
21.5specific percentage that will be used to adjust the tax rate brackets.
21.6EFFECTIVE DATE.This section is effective for taxable years beginning after
21.7December 31, 2006.