HF 3374

1st Unofficial Engrossment - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

1.1                                        A bill for an act
1.2     relating to financing and operation of state and local government; making 
1.3     policy, technical, administrative, enforcement, collection, refund, and other 
1.4     changes to income, franchise, property, sales and use, mortgage and deed, health 
1.5     care provider, cigarette and tobacco products, liquor, insurance premiums, 
1.6     aggregate removal, occupation, net proceeds, and production taxes, the property 
1.7     tax refund, and other taxes and tax-related provisions; providing income tax 
1.8     credits and subtraction; providing for taxation of foreign operating corporations; 
1.9     providing a refund for transit passes; modifying and authorizing sales tax 
1.10    exemptions; modifying and authorizing local government sales taxes; modifying 
1.11    the homestead market value credit; modifying certain levies; changing and 
1.12    providing property tax exemptions and value exclusions; providing for aids and 
1.13    payments to local governments; modifying international economic development 
1.14    zone authority; authorizing distributions of tax proceeds; changing provisions 
1.15    relating to fiscal disparities and education financing; changing and imposing 
1.16    powers, duties, and requirements on certain local governments and authorities 
1.17    and state departments or agencies; providing for issuance of obligations by local 
1.18    governments and other public authorities, and use of the proceeds of the debt; 
1.19    changing tax increment financing and abatement provisions, and providing 
1.20    authorities to certain districts; imposing a tax on sports memorabilia; changing 
1.21    a Council on Disability provision; providing for studies and reports; providing 
1.22    penalties; establishing accounts and providing funding; providing for allocation 
1.23    and transfers of funds; appropriating money; amending Minnesota Statutes 2004, 
1.24    sections 103E.635, subdivision 7; 116A.20, subdivision 3; 116J.993, subdivision 
1.25    3; 123B.53, subdivision 5; 144F.01, subdivision 4; 162.18, subdivision 1; 
1.26    162.181, subdivision 1; 216B.2424, subdivision 5; 256.482, subdivision 8; 
1.27    270A.03, subdivision 2; 272.02, subdivisions 12, 45, 54, 55, by adding a 
1.28    subdivision; 272.029, subdivision 2; 273.032; 273.11, by adding a subdivision; 
1.29    273.124, subdivision 12, by adding a subdivision; 273.13, subdivision 23; 
1.30    273.1384, subdivision 2; 273.1398, subdivision 3; 281.23, subdivision 9; 
1.31    289A.09, subdivision 2; 290.06, subdivision 28, by adding subdivisions; 
1.32    290.091, subdivision 3; 290.10; 290.17, subdivisions 1, 2; 290.34, subdivision 
1.33    1; 295.50, subdivision 4; 295.53, subdivisions 3, 4a; 297A.61, subdivisions 
1.34    12, 17, by adding subdivisions; 297A.63; 297A.668, subdivision 6; 297A.669, 
1.35    subdivision 11; 297A.67, subdivisions 4, 5, 14, 18, 27, by adding a subdivision; 
1.36    297A.68, subdivision 19, by adding a subdivision; 297A.70, subdivisions 2, 3, 
1.37    4, 7, 13, 14, 15; 297A.71, subdivision 23, by adding a subdivision; 297A.99, 
1.38    subdivision 7; 297F.01, by adding a subdivision; 297G.01, subdivision 7, by 
2.1     adding a subdivision; 298.001, by adding a subdivision; 298.01, subdivisions 
2.2     3a, 3b, 4a, 4b, by adding a subdivision; 298.17; 298.227; 298.28, subdivisions 
2.3     6, 8, by adding subdivisions; 298.2961, by adding a subdivision; 298.75, by 
2.4     adding a subdivision; 365A.08; 365A.095; 373.45, subdivision 1; 383A.80, 
2.5     subdivision 4; 383B.80, subdivision 4; 469.035; 469.103, subdivision 2; 469.175, 
2.6     subdivision 4; 469.176, subdivisions 1, 3; 469.1763, subdivisions 3, 4; 469.1771, 
2.7     subdivision 2a; 469.1813, subdivisions 1, 6b, 8, 9, by adding a subdivision; 
2.8     469.312, subdivision 5; 473.39, by adding a subdivision; 473F.08, by adding 
2.9     a subdivision; 474A.062; 475.58, subdivision 1; 477A.013, subdivision 9; 
2.10    477A.014, subdivision 1; 477A.03, subdivision 2; Minnesota Statutes 2005 
2.11    Supplement, sections 115B.49, subdivision 4; 123B.54; 126C.10, subdivision 
2.12    13a; 270C.01, subdivision 4; 270C.304; 270C.33, subdivision 4; 270C.57, 
2.13    subdivision 3; 270C.67, subdivision 1, by adding a subdivision; 270C.722, 
2.14    subdivision 2; 271.12; 272.02, subdivision 83; 273.128, subdivision 1; 273.13, 
2.15    subdivisions 22, 25; 273.1384, subdivision 1; 276.04, subdivision 2; 284.07; 
2.16    289A.02, subdivision 7; 289A.121, subdivision 5; 290.01, subdivisions 6b, 19, 
2.17    19a, 19b, 19c, 19d, 31; 290.0675, subdivision 1; 290.0922, subdivisions 2, 3; 
2.18    290A.03, subdivision 15; 297A.61, subdivision 3; 297A.64, subdivision 4; 
2.19    297A.67, subdivision 6; 297A.68, subdivisions 37, 38, 41; 297A.70, subdivision 
2.20    8; 297A.72, subdivision 2; 297A.75, subdivisions 1, 2, 3; 297A.815, subdivision 
2.21    1; 298.01, subdivisions 3, 4; 298.223, subdivision 1; 298.2961, subdivision 4; 
2.22    469.175, subdivisions 2, 5; 469.1763, subdivisions 2, 6; 469.177, subdivision 1; 
2.23    469.178, subdivision 7; 469.1813, subdivision 6; 469.322; 469.323, subdivision 
2.24    2; 469.327; 475.521, subdivision 4; 477A.011, subdivision 36; 477A.013, 
2.25    subdivision 8; 477A.03, subdivision 2a;  Laws 1980, chapter 511, section 1, 
2.26    subdivision 2, as amended; Laws 1994, chapter 587, article 9, section 20, 
2.27    subdivisions 1, 2; Laws 1996, chapter 471, article 2, section 29; Laws 1999, 
2.28    chapter 243, article 4, section 18, subdivisions 1, 3, 4; Laws 2001, First Special 
2.29    Session chapter 5, article 3, section 8, as amended; Laws 2005, chapter 152, 
2.30    article 1, section 39, subdivision 1; Laws 2005, First Special Session chapter 
2.31    3, article 2, section 5; article 5, sections 3; 43, subdivision 3; 44, subdivision 
2.32    1; article 10, section 23; proposing coding for new law in Minnesota Statutes, 
2.33    chapters 41B; 270C; 273; 287; 290; 295; 383C; 383D; 469; repealing Minnesota 
2.34    Statutes 2004, sections 297A.68, subdivisions 15, 18; 298.01, subdivisions 3c, 
2.35    3d, 4d, 4e; Laws 1994, chapter 587, article 9, section 20, subdivision 4; Laws 
2.36    1996, chapter 464, article 1, section 8, subdivision 5; Laws 1998, chapter 389, 
2.37    article 11, section 18; Minnesota Rules, parts 8130.0400, subpart 3; 8130.4800, 
2.38    subparts 1, 3, 4, 5, 6, 7, 8; 8130.5100; 8130.5400; 8130.5800, subpart 6.
2.39    BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

2.40                                           ARTICLE 1
2.41                                           INCOME TAX

2.42        Section 1. [41B.0391] BEGINNING FARMER PROGRAM; TAX CREDITS.
2.43        Subdivision 1. Definitions. (a) For purposes of this section, the following terms 
2.44    have the meanings given.
2.45    (b) "Farm" means any tract of land over ten acres in area used for or devoted to the 
2.46    commercial production of farm products.
2.47    (c) "Farm product" means those plants and animals useful to humans and includes, 
2.48    but is not limited to, forage and sod crops, grain and feed crops, dairy and dairy products, 
2.49    poultry and poultry products, livestock, fruits, and vegetables.
3.1     (d) "Farming or livestock production" means the active use, management, and 
3.2     operation of real and personal property for the production of a farm product.
3.3     (e) "Beginning farmer or livestock producer" means a resident of Minnesota who:
3.4     (1) is seeking entry or has entered within the last two years into farming or livestock 
3.5     production; 
3.6     (2) intends to farm or raise crops or livestock on land located within the state borders 
3.7     of Minnesota; and
3.8     (3) meets the following eligibility requirements as determined by the authority:
3.9     (i) has a net worth of not more than $200,000, including any holdings by a spouse 
3.10    or dependent, based on fair market value;
3.11    (ii) provides the majority of the day-to-day physical labor and management of the 
3.12    farm;
3.13    (iii) has, by the judgment of the Rural Finance Authority ("authority"), adequate 
3.14    farming or livestock production experience or demonstrates knowledge in the type of 
3.15    farming or livestock production for which the beginning farmer seeks assistance from 
3.16    the authority;
3.17    (iv) demonstrates to the authority a profit potential by submitting projected earnings 
3.18    statements;
3.19    (v) asserts to the satisfaction of the authority that farming or livestock production 
3.20    will be a significant source of income for the beginning farmer or livestock producer; 
3.21    (vi) participates in a financial management program approved by the authority 
3.22    or the commissioner of agriculture; and
3.23    (vii) has other such qualifications as specified by the authority.
3.24        Subd. 2. Beginning farmer management tax credit. (a) A beginning farmer or 
3.25    livestock producer may take a credit against the tax due under chapter 290 for participating 
3.26    in a financial management program approved by the authority. The credit is equal to 100 
3.27    percent of the cost of participating in the program or $500, whichever is less. The credit 
3.28    is available for up to three years while the farmer is in the program. The authority shall 
3.29    maintain a list of approved financial management programs and establish a procedure for 
3.30    approving equivalent programs that are not on the list.
3.31    (b) The credit is limited to the liability for tax, as computed under chapter 290 for 
3.32    the taxable year. If the amount of the credit determined under this section for any taxable 
3.33    year exceeds this limitation, the excess is a beginning farmer management credit carryover 
3.34    according to section 290.06, subdivision 35.
3.35        Subd. 3. Authority's duties. The authority shall:
4.1     (1) approve and certify beginning farmers and livestock producers as eligible for 
4.2     the program under this section;
4.3     (2) provide necessary and reasonable assistance and support to beginning farmers 
4.4     and livestock producers for qualification and participation in financial management 
4.5     programs approved by the authority; and
4.6     (3) refer beginning farmers and livestock producers to agencies and organizations 
4.7     that may provide additional pertinent information and assistance.
4.8     EFFECTIVE DATE.This section is effective for taxable years beginning after 
4.9     December 31, 2006.

4.10        Sec. 2. Minnesota Statutes 2005 Supplement, section 290.01, subdivision 19b, is 
4.11    amended to read:
4.12        Subd. 19b. Subtractions from federal taxable income. For individuals, estates, 
4.13    and trusts, there shall be subtracted from federal taxable income:
4.14    (1) net interest income on obligations of any authority, commission, or 
4.15    instrumentality of the United States to the extent includable in taxable income for federal 
4.16    income tax purposes but exempt from state income tax under the laws of the United States;
4.17    (2) if included in federal taxable income, the amount of any overpayment of income 
4.18    tax to Minnesota or to any other state, for any previous taxable year, whether the amount 
4.19    is received as a refund or as a credit to another taxable year's income tax liability;
4.20    (3) the amount paid to others, less the amount used to claim the credit allowed under 
4.21    section 290.0674, not to exceed $1,625 for each qualifying child in grades kindergarten 
4.22    to 6 and $2,500 for each qualifying child in grades 7 to 12, for tuition, textbooks, and 
4.23    transportation of each qualifying child in attending an elementary or secondary school 
4.24    situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a 
4.25    resident of this state may legally fulfill the state's compulsory attendance laws, which 
4.26    is not operated for profit, and which adheres to the provisions of the Civil Rights Act 
4.27    of 1964 and chapter 363A. For the purposes of this clause, "tuition" includes fees or 
4.28    tuition as defined in section 290.0674, subdivision 1, clause (1). As used in this clause, 
4.29    "textbooks" includes books and other instructional materials and equipment purchased 
4.30    or leased for use in elementary and secondary schools in teaching only those subjects 
4.31    legally and commonly taught in public elementary and secondary schools in this state. 
4.32    Equipment expenses qualifying for deduction includes expenses as defined and limited in 
4.33    section 290.0674, subdivision 1, clause (3). "Textbooks" does not include instructional 
4.34    books and materials used in the teaching of religious tenets, doctrines, or worship, the 
4.35    purpose of which is to instill such tenets, doctrines, or worship, nor does it include books 
5.1     or materials for, or transportation to, extracurricular activities including sporting events, 
5.2     musical or dramatic events, speech activities, driver's education, or similar programs. For 
5.3     purposes of the subtraction provided by this clause, "qualifying child" has the meaning 
5.4     given in section 32(c)(3) of the Internal Revenue Code;
5.5     (4) income as provided under section 290.0802;
5.6     (5) to the extent included in federal adjusted gross income, income realized on 
5.7     disposition of property exempt from tax under section 290.491;
5.8     (6) to the extent not deducted in determining federal taxable income by an individual 
5.9     who does not itemize deductions for federal income tax purposes for the taxable year, an 
5.10    amount equal to 50 percent of the excess of charitable contributions over $500 allowable 
5.11    as a deduction for the taxable year under section 170(a) of the Internal Revenue Code and 
5.12    under the provisions of Public Law 109-1;
5.13    (7) for taxable years beginning before January 1, 2008, the amount of the federal 
5.14    small ethanol producer credit allowed under section 40(a)(3) of the Internal Revenue Code 
5.15    which is included in gross income under section 87 of the Internal Revenue Code;
5.16    (8) for individuals who are allowed a federal foreign tax credit for taxes that do not 
5.17    qualify for a credit under section 290.06, subdivision 22, an amount equal to the carryover 
5.18    of subnational foreign taxes for the taxable year, but not to exceed the total subnational 
5.19    foreign taxes reported in claiming the foreign tax credit. For purposes of this clause, 
5.20    "federal foreign tax credit" means the credit allowed under section 27 of the Internal 
5.21    Revenue Code, and "carryover of subnational foreign taxes" equals the carryover allowed 
5.22    under section 904(c) of the Internal Revenue Code minus national level foreign taxes to 
5.23    the extent they exceed the federal foreign tax credit;
5.24    (9) in each of the five tax years immediately following the tax year in which an 
5.25    addition is required under subdivision 19a, clause (7), or 19c, clause (15), in the case 
5.26    of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth 
5.27    of the delayed depreciation. For purposes of this clause, "delayed depreciation" means 
5.28    the amount of the addition made by the taxpayer under subdivision 19a, clause (7), or 
5.29    subdivision 19c, clause (15), in the case of a shareholder of an S corporation, minus the 
5.30    positive value of any net operating loss under section 172 of the Internal Revenue Code 
5.31    generated for the tax year of the addition. The resulting delayed depreciation cannot be 
5.32    less than zero;
5.33    (10) job opportunity building zone income as provided under section 469.316;
5.34    (11) the amount of compensation paid to members of the Minnesota National Guard 
5.35    or other reserve components of the United States military for active service performed 
5.36    in Minnesota, excluding compensation for services performed under the Active Guard 
6.1     Reserve (AGR) program. For purposes of this clause, "active service" means (i) state 
6.2     active service as defined in section 190.05, subdivision 5a, clause (1); (ii) federally 
6.3     funded state active service as defined in section 190.05, subdivision 5b; or (iii) federal 
6.4     active service as defined in section 190.05, subdivision 5c, but "active service" excludes 
6.5     services performed exclusively for purposes of basic combat training, advanced individual 
6.6     training, annual training, and periodic inactive duty training; special training periodically 
6.7     made available to reserve members; and service performed in accordance with section 
6.8     190.08, subdivision 3;
6.9     (12) the amount of compensation paid to Minnesota residents who are members 
6.10    of the armed forces of the United States or United Nations for active duty performed 
6.11    outside Minnesota;
6.12    (13) an amount, not to exceed $10,000, equal to qualified expenses related to a 
6.13    qualified donor's donation, while living, of one or more of the qualified donor's organs 
6.14    to another person for human organ transplantation. For purposes of this clause, "organ" 
6.15    means all or part of an individual's liver, pancreas, kidney, intestine, lung, or bone marrow; 
6.16    "human organ transplantation" means the medical procedure by which transfer of a human 
6.17    organ is made from the body of one person to the body of another person; "qualified 
6.18    expenses" means unreimbursed expenses for both the individual and the qualified donor 
6.19    for (i) travel, (ii) lodging, and (iii) lost wages net of sick pay, except that such expenses 
6.20    may be subtracted under this clause only once; and "qualified donor" means the individual 
6.21    or the individual's dependent, as defined in section 152 of the Internal Revenue Code. An 
6.22    individual may claim the subtraction in this clause for each instance of organ donation for 
6.23    transplantation during the taxable year in which the qualified expenses occur;
6.24    (14) in each of the five tax years immediately following the tax year in which an 
6.25    addition is required under subdivision 19a, clause (8), or 19c, clause (16), in the case of a 
6.26    shareholder of a corporation that is an S corporation, an amount equal to one-fifth of the 
6.27    addition made by the taxpayer under subdivision 19a, clause (8), or 19c, clause (16), in the 
6.28    case of a shareholder of a corporation that is an S corporation, minus the positive value of 
6.29    any net operating loss under section 172 of the Internal Revenue Code generated for the 
6.30    tax year of the addition. If the net operating loss exceeds the addition for the tax year, a 
6.31    subtraction is not allowed under this clause;
6.32    (15) to the extent included in federal taxable income, compensation paid to a 
6.33    nonresident who is a service member as defined in United States Code, title 10, section 
6.34    101(a)(5), for military service as defined in the Service Member Civil Relief Act, Public 
6.35    Law 108-189, section 101(2); and
7.1     (16) international economic development zone income as provided under section 
7.2     469.325; and
7.3     (17) to the extent included in federal taxable income, a percentage of compensation 
7.4     received from a pension or other retirement pay from the government for service in the 
7.5     armed forces of the United States, up to a maximum amount.
7.6     For taxable years beginning after December 31, 2005, and before January 1, 2007, the 
7.7     percentage is 25 percent and the maximum amount is $7,500; for taxable years beginning 
7.8     after December 31, 2006, and before January 1, 2008, the percentage is 50 percent and 
7.9     the maximum amount is $15,000; for taxable years beginning after December 31, 2007, 
7.10    and before January 1, 2009, the percentage is 75 percent and the maximum amount is 
7.11    $22,500; and for taxable years beginning after December 31, 2008, the percentage is 100 
7.12    percent and there is no maximum amount.
7.13    EFFECTIVE DATE.This section is effective for tax years beginning after 
7.14    December 31, 2006.

7.15        Sec. 3. Minnesota Statutes 2004, section 290.06, subdivision 28, is amended to read:
7.16        Subd. 28. Credit Credits and refunds for transit passes. (a) A taxpayer may 
7.17    take a credit against the tax due under this chapter equal to 30 percent of the expense 
7.18    incurred by the taxpayer to provide transit passes, for use in Minnesota, to employees of 
7.19    the taxpayer. As used in this subdivision, "transit pass" has the meaning given in section 
7.20    132(f)(5)(A) of the Internal Revenue Code. If the taxpayer purchases the transit passes 
7.21    from the transit system operator, and resells them to the employees, the credit is based on 
7.22    the amount of the difference between the price paid for the passes by the employer and 
7.23    the amount charged to employees.
7.24    (b) An employer that is exempt from taxation under section 290.05, but excluding 
7.25    entities enumerated in section 290.05, subdivision 1, clause (b), may claim a refund equal 
7.26    to 30 percent of an expense incurred by the employer to provide transit passes to the 
7.27    employer's employees for use in Minnesota.
7.28    (c) The commissioner shall prescribe the forms for and the manner in which the 
7.29    refund may be claimed. The commissioner must provide for paying refunds at least 
7.30    quarterly. The commissioner may set a minimum amount of qualifying expenses that must 
7.31    be incurred before a refund may be claimed.
7.32    (d) An amount sufficient to pay the refunds required by this subdivision is 
7.33    appropriated to the commissioner of revenue.
8.1     EFFECTIVE DATE.This section is effective for transit passes purchased after 
8.2     June 30, 2006.

8.3         Sec. 4. Minnesota Statutes 2004, section 290.06, is amended by adding a subdivision 
8.4     to read:
8.5         Subd. 33. Film production credit. (a) A taxpayer is allowed a credit against the 
8.6     taxes due under this chapter equal to 15 percent of film production expenditures made in 
8.7     Minnesota that are directly attributable to film production in Minnesota. For purposes of 
8.8     this subdivision, "film" means a movie, documentary, or music video, whether on film 
8.9     or video; and "film production" means all the activities related to (i) the preparation for 
8.10    shooting, (ii) the shooting, including processing, and (iii) the editing and finishing of a 
8.11    film. For purposes of this subdivision, the following is not a "film:"
8.12    (1) news, current events, or public programming or a program that includes weather 
8.13    or market reports;
8.14    (2) a talk show;
8.15    (3) a production with respect to a questionnaire or contest;
8.16    (4) a sports event or sports activity;
8.17    (5) a gala representation or awards show;
8.18    (6) a finished production that solicits funds; or
8.19    (7) a production for which the production company is required under United States 
8.20    Code, title 18, section 2257, to maintain records with respect to a performer portrayed 
8.21    in a single media or multimedia program.
8.22    (b) Expenditures that qualify for the credit under this subdivision must be subject to 
8.23    taxation in Minnesota and include:
8.24    (1) payment of wages, fringe benefits, or fees for talent, management, or labor to a 
8.25    person who is a Minnesota resident for purposes of this chapter;
8.26    (2) payment to personal services corporations for the services of a performing artist, 
8.27    if the performing artist receiving payments from the personal services corporation pays 
8.28    Minnesota income tax; and 
8.29    (3) any of the following provided by a vendor:
8.30    (i) the story and scenario to be used for a film;
8.31    (ii) set construction and operations, wardrobe, accessories, and related services;
8.32    (iii) photography, sound synchronization, lighting, and related services;
8.33    (iv) editing and related services;
8.34    (v) rental of facilities and equipment;
8.35    (vi) leasing of vehicles; and 
9.1     (vii) food and lodging.
9.2     (c) If the amount of the credit under this subdivision exceeds the taxpayer's tax 
9.3     liability under this chapter for the taxable year, the amount of the excess must be refunded 
9.4     to the taxpayer.  The amount necessary to pay the refunds is appropriated annually from 
9.5     the general fund to the commissioner of revenue.
9.6     EFFECTIVE DATE.This section is effective for taxable years beginning after 
9.7     December 31, 2005. 

9.8         Sec. 5. Minnesota Statutes 2004, section 290.06, is amended by adding a subdivision 
9.9     to read:
9.10        Subd. 34. Credit for military service. (a) An individual may take a credit 
9.11    against the tax due under this chapter equal to $59 for each month or portion thereof the 
9.12    individual was in active military service in a designated area after September 11, 2001. 
9.13    An individual may take this credit in the taxable year the individual returns to Minnesota 
9.14    residency following active military service in a designated area. If a Minnesota resident 
9.15    served in a designated area between September 11, 2001, and December 31, 2005, the 
9.16    individual may take this credit in the taxable year beginning after December 31, 2005, and 
9.17    before January 1, 2007.
9.18    (b) If a Minnesota resident is killed while serving in active military service in a 
9.19    designated area, the individual's surviving spouse or dependent child may take this credit 
9.20    in the taxable year of the death. If a Minnesota resident was killed while serving in a 
9.21    designated area between September 11, 2002, and December 31, 2005, the individual's 
9.22    surviving spouse or dependent child may take this credit in the taxable year beginning 
9.23    after December 31, 2005, and before January 1, 2007.
9.24    (c) For purposes of this section, a "designated area" means a:
9.25    (1) combat zone designated by Executive Order from the President of the United 
9.26    States; 
9.27    (2) qualified hazardous duty area, designated in Public Law; or 
9.28    (3) location certified by the U.S. Department of Defense as eligible for combat zone 
9.29    tax benefits due to the location's direct support of military operations.
9.30    (d) For purposes of this section, active military service includes active duty service 
9.31    in any of the United States Armed Forces, the National Guard, or reserves.
9.32    (e) If the amount of the credit which the taxpayer is eligible to receive under this 
9.33    section exceeds the taxpayer's tax liability under this chapter, the commissioner of revenue 
9.34    shall refund the excess to the taxpayer.
10.1    (f) The amount necessary to pay claims for the refund provided in this section is 
10.2    appropriated from the general fund to the commissioner of revenue.
10.3    EFFECTIVE DATE.This section is effective for taxable years beginning after 
10.4    December 31, 2005.

10.5        Sec. 6. Minnesota Statutes 2004, section 290.06, is amended by adding a subdivision 
10.6    to read:
10.7        Subd. 35. Beginning farmer management credit. (a) A taxpayer who is a 
10.8    beginning farmer or livestock producer may take a credit against the tax due under 
10.9    this chapter for participation in a financial management program according to section 
10.10   41B.0391, subdivision 3.
10.11   (b) The credit may be claimed only after approval and certification by the Rural 
10.12   Finance Authority according to section 41B.0391.
10.13   (c) The credit is limited to the liability for tax, as computed under this chapter, for 
10.14   the taxable year.  If the amount of the credit determined under this subdivision for any 
10.15   taxable year exceeds this limitation, the excess is a beginning farmer management credit 
10.16   carryover to each of the three succeeding taxable years.  The entire amount of the excess 
10.17   unused credit for the taxable year is carried first to the earliest of the taxable years to 
10.18   which the credit may be carried and then to each successive year to which the credit may 
10.19   be carried.  The amount of the unused credit which may be added under this paragraph 
10.20   must not exceed the taxpayer's liability for tax less the beginning farmer management 
10.21   credit for the taxable year.
10.22   EFFECTIVE DATE.This section is effective for taxable years beginning after 
10.23   December 31, 2006.

10.24       Sec. 7. Minnesota Statutes 2004, section 290.06, is amended by adding a subdivision 
10.25   to read:
10.26       Subd. 36. Bovine testing credit. (a) An owner of cattle in Minnesota may take a 
10.27   credit against the tax due under this chapter for an amount equal to one-half the expenses 
10.28   incurred during the taxable year to conduct tuberculosis testing on those cattle. 
10.29   (b) If the amount of credit which the taxpayer is eligible to receive under this 
10.30   subdivision exceeds the taxpayer's tax liability under this chapter, the commissioner of 
10.31   revenue shall refund the excess to the taxpayer.
10.32   (c) The amount necessary to pay claims for the refund provided in this subdivision is 
10.33   appropriated from the general fund to the commissioner of revenue.
11.1    EFFECTIVE DATE.This section is effective for taxable years beginning after 
11.2    December 31, 2005.

11.3        Sec. 8. Minnesota Statutes 2004, section 290.06, is amended by adding a subdivision 
11.4    to read:
11.5        Subd. 37. Dairy investment credit.  (a) A dairy investment credit is allowed against 
11.6    the tax due under this chapter equal to ten percent of the amount paid or incurred by the 
11.7    taxpayer, on the first $500,000 of qualifying expenditures made in the qualifying period. 
11.8    (b) "Qualifying expenditures" means for purposes of this subdivision the amount 
11.9    spent by a person who raises dairy animals for the acquisition, construction, or 
11.10   improvement of buildings or facilities; or the development of pasture; or the acquisition of 
11.11   equipment; for dairy animal housing, confinement, animal feeding, production of milk 
11.12   and other dairy products, and waste management, including the following, if related to 
11.13   dairy animals in this state: 
11.14   (1) freestall barns; 
11.15   (2) fences; 
11.16   (3) watering facilities; 
11.17   (4) feed storage and handling equipment; 
11.18   (5) milking parlors; 
11.19   (6) robotic equipment; 
11.20   (7) scales; 
11.21   (8) milk storage and cooling facilities; 
11.22   (9) bulk tanks; 
11.23   (10) manure pumping and storage facilities; 
11.24   (11) digesters; 
11.25   (12) equipment used to produce energy; 
11.26   (13) on-farm processing of milk and other dairy products; and
11.27   (14) development of pasture owned or rented by the taxpayer for the use of dairy 
11.28   animals.
11.29   Qualified expenditures only include amounts that are capitalized and deducted under either 
11.30   section 167 or 179 of the Internal Revenue Code in computing federal taxable income. 
11.31   (c) The credit is limited to the liability for tax, as computed under this chapter, 
11.32   for qualifying expenditures, other than expenditures for development of pasture, only 
11.33   include amounts that are capitalized and deducted under either section 167 or 179 of the 
11.34   Internal Revenue Code in computing federal taxable income. Qualifying expenditures 
11.35   for development of pasture must not include land acquisition and are limited to soil 
12.1    preparation expenses, seed costs, planting costs, and weed control, which are allowed once 
12.2    for each acre owned or rented by the taxpayer for the use of dairy animals and developed 
12.3    into pasture during the qualifying period.  The amount of the unused credit which may 
12.4    be added under this paragraph must not exceed the taxpayer's liability for tax less the 
12.5    dairy investment credit for the taxable year. 
12.6    (d) The qualifying period is that time after December 31, 2005, and before January 
12.7    1, 2012. 
12.8    (e) The $50,000 maximum credit applies at the entity level for partnerships, S 
12.9    corporations, trusts, and estates as well as at the individual level.  In the case of married 
12.10   individuals, the credit is limited to $50,000 for a married couple. 
12.11   EFFECTIVE DATE.This section is effective for tax years beginning after 
12.12   December 31, 2005.

12.13       Sec. 9. [290.0677] CREDIT FOR HISTORIC STRUCTURE REHABILITATION.
12.14       Subdivision 1. Definitions. (a) As used in this section, the terms defined in this 
12.15   subdivision have the meanings given. 
12.16   (b) "Certified historic structure" means a property located  in Minnesota and listed 
12.17   individually on the National Register of  Historic Places or a historic property designated 
12.18   by either a certified local government or a heritage preservation commission created 
12.19   under the National Historic Preservation Act of 1966 and whose designation is approved 
12.20   by the state historic preservation officer. 
12.21   (c) "Eligible property" means a certified historic  structure or a structure in a certified 
12.22   historic district that is offered or used for residential or business purposes.
12.23   (d) "Structure in a certified historic district" means a structure located in Minnesota 
12.24   that is certified by the State Historic Preservation Office as contributing to the historic 
12.25   significance of a certified historic district listed on the National Register of Historic Places 
12.26   or a local district that  has been certified by the United States Department of the  Interior.
12.27       Subd. 2. Credit allowed. A taxpayer who incurs costs for the rehabilitation of 
12.28   eligible property may take a credit against the tax imposed under this chapter in an amount 
12.29   equal to ten percent of the total costs of rehabilitation. Costs of rehabilitation include, 
12.30   but are not limited to, qualified rehabilitation expenditures as defined under section 
12.31   47(c)(2)(A) of the Internal Revenue Code, provided that the costs of   rehabilitation must 
12.32   exceed 50 percent of the total basis in the property at the time the rehabilitation activity 
12.33   begins and the rehabilitation must meet standards consistent with the standards of the 
12.34   Secretary of the Interior for rehabilitation as   determined by the State Historic Preservation 
12.35   Office of the Minnesota Historical Society. 
13.1        Subd. 3. Carryback and carryforward. If the amount of the credit under 
13.2    subdivision 2 exceeds the tax liability under  this chapter for the year in which the cost is 
13.3    incurred, the   amount that exceeds the tax liability may be carried back to any of the three 
13.4    preceding taxable years or carried forward to each of the ten taxable years succeeding the 
13.5    taxable year in which the expense was incurred. The entire amount of the credit must 
13.6    be carried to the earliest taxable year to which the amount may be carried.  The unused 
13.7    portion of the credit must be carried to the following taxable year. 
13.8        Subd. 4. Partnerships; multiple owners; transfers. (a) Credits granted to a 
13.9    partnership, a limited liability company taxed as a partnership, or multiple owners of 
13.10   property shall be   passed through to the partners, members, or owners, respectively, pro 
13.11   rata or pursuant to an executed agreement among the partners, members, or owners 
13.12   documenting an alternate distribution method. 
13.13        (b) Taxpayers eligible for credits may transfer, sell, or assign the credits in whole 
13.14   or part.  Any assignee may use acquired credits to offset up to 100 percent of the taxes 
13.15   otherwise imposed by this chapter. The assignee shall perfect such transfer by notifying 
13.16   the Department of Revenue in writing within 30 calendar days following the effective 
13.17   date of the transfer in such form and manner as shall be prescribed by the Department 
13.18   of Revenue. The proceeds of any sale or assignment of a credit shall be exempt from 
13.19   taxation under this chapter.
13.20       Subd. 5. Process. To claim the credit, the taxpayer must apply to the State Historic 
13.21   Preservation Office of the Minnesota Historical Society before a historic rehabilitation 
13.22   project  begins.  The State Historic Preservation Office shall determine the amount of 
13.23   eligible rehabilitation costs and whether the rehabilitation meets the standards of the 
13.24   United States Department of the Interior. The State Historic Preservation   Office shall issue 
13.25   certificates verifying eligibility for and the amount of credit. The taxpayer shall attach 
13.26   the certificate   to any income tax return on which the credit is claimed. The State Historic 
13.27   Preservation Office of the Minnesota Historical Society may collect fees for applications 
13.28   for the historic preservation tax credit. Fees shall be set at an amount that does not exceed 
13.29   the costs of administering the tax credit program. 
13.30       Subd. 6. Mortgage certificates; credit for lending institutions. (a) The taxpayer 
13.31   may elect, in lieu of the credit otherwise allowed under this section, to receive a historic 
13.32   rehabilitation mortgage credit certificate.
13.33   (b) For purposes of this subdivision, a historic rehabilitation mortgage credit is a 
13.34   certificate that is issued   to the taxpayer according to procedures prescribed by the State 
13.35   Historic Preservation Office with respect to the certified rehabilitation and which meets 
13.36   the requirements of this paragraph.  The face amount of the certificate must be equal to 
14.1    the credit that would be allowable under subdivision 2 to the taxpayer with respect to 
14.2    the rehabilitation. The certificate may only be transferred by the taxpayer to a lending 
14.3    institution, including a nondepository home mortgage lending institution, in connection 
14.4    with a loan: 
14.5    (1) that is secured by the building with respect to which the credit is issued; and 
14.6    (2) the proceeds of which may not be used for any purpose other than the acquisition 
14.7    or rehabilitation of the building.
14.8    (c) In exchange for the certificate, the lending institution must provide to the 
14.9    taxpayer an amount equal to the face amount of the certificate discounted by the amount 
14.10   by which the federal income tax liability of the lending institution is increased due to its 
14.11   use of the certificate in the manner provided in this section. That amount must be applied, 
14.12   as directed by the taxpayer, in whole or in part, to reduce:
14.13   (1) the principal amount of the loan; 
14.14   (2) the rate of interest on the loan; or
14.15   (3) the taxpayer's cost of purchasing the building, but only in the case of a qualified 
14.16   historic home that is located in a poverty-impacted area as designated by the State Historic 
14.17   Preservation Office. The lending institution may take as a credit against the tax due under 
14.18   this chapter an amount equal to the amount specified in the certificate. If the amount of 
14.19   the discount retained by the lender exceeds the amount by which the lending institution's 
14.20   federal income tax liability is increased due to the use of a mortgage credit certificate, the 
14.21   excess shall be refunded to the borrower with interest at the rate prescribed by the State 
14.22   Historic Preservation Office. The lending institution may carry forward all unused credits 
14.23   under this subdivision until exhausted. Nothing in this subdivision requires a lending 
14.24   institution to accept a historic rehabilitation certificate from any person. 
14.25   EFFECTIVE DATE.This section is effective for taxable years beginning after 
14.26   December 31, 2005.

14.27       Sec. 10. Minnesota Statutes 2004, section 290.10, is amended to read:
14.28   290.10 NONDEDUCTIBLE ITEMS.
14.29       Subdivision 1. Expenses, interest, and taxes. Except as provided in section  290.17, 
14.30   subdivision 4, paragraph (i), in computing the net income of a taxpayer no deduction shall 
14.31   in any case be allowed for expenses, interest and taxes connected with or allocable against 
14.32   the production or receipt of all income not included in the measure of the tax imposed by 
14.33   this chapter, except that for corporations engaged in the business of mining or producing 
14.34   iron ore, the mining of which is subject to the occupation tax imposed by section  298.01, 
15.1    subdivision 4, this shall not prevent the deduction of expenses and other items to the extent 
15.2    that the expenses and other items are allowable under this chapter and are not deductible, 
15.3    capitalizable, retainable in basis, or taken into account by allowance or otherwise in 
15.4    computing the occupation tax and do not exceed the amounts taken for federal income 
15.5    tax purposes for that year. Occupation taxes imposed under chapter 298, royalty taxes 
15.6    imposed under chapter 299, or depletion expenses may not be deducted under this clause. 
15.7        Subd. 2. Fines, penalties, damages, and expenses. (a) No deduction from taxable 
15.8    income for a trade or business expense under section 162(a) of the Internal Revenue Code 
15.9    shall be allowed for any fine, penalty, damages, or expenses paid to:
15.10   (1) the government of the United States, a state, a territory or possession of the 
15.11   United States, the District of Columbia, or the Commonwealth of Puerto Rico;
15.12   (2) the government of a foreign country; or
15.13   (3) a political subdivision of, or corporation or other entity serving as an agency or 
15.14   instrumentality of, any government described in clause (1) or (2).
15.15   (b) For purposes of this subdivision, "fine, penalty, damages, or expenses" include, 
15.16   but are not limited to, any amount:
15.17   (1) paid pursuant to a conviction or a plea of guilty or nolo contendere for any 
15.18   crime in a criminal proceeding; 
15.19   (2) paid as a civil penalty imposed by federal, state, or local law, including tax 
15.20   penalties and interest; 
15.21   (3) paid in settlement of the taxpayer's actual or potential liability for a civil or 
15.22   criminal fine or penalty;
15.23   (4) forfeited as collateral posted in connection with a proceeding that could result in 
15.24   imposition of a fine or penalty; or
15.25   (5) legal fees and related expenses paid or incurred in the prosecution or civil action 
15.26   arising from a violation of the law imposing the fine or civil penalty, court costs assessed 
15.27   against the taxpayer, or stenographic and printing charges, compensatory damages, 
15.28   punitive damages, or restitution.
15.29   EFFECTIVE DATE.This section is effective for taxable years beginning after 
15.30   December 31, 2005.

15.31                                          ARTICLE 2
15.32                                      INCOME TAX REFORM

15.33       Section 1. Minnesota Statutes 2005 Supplement, section 289A.02, subdivision 7, 
15.34   is amended to read:
16.1        Subd. 7. Internal Revenue Code. Unless specifically defined otherwise, "Internal 
16.2    Revenue Code" means the Internal Revenue Code of 1986, as amended through April 
16.3    15 December 31, 2005.
16.4    EFFECTIVE DATE.This section is effective the day following final enactment.

16.5        Sec. 2. Minnesota Statutes 2005 Supplement, section 290.01, subdivision 19, is 
16.6    amended to read:
16.7        Subd. 19. Net income. The term "net income" means the federal taxable income, 
16.8    as defined in section 63 of the Internal Revenue Code of 1986, as amended through the 
16.9    date named in this subdivision, incorporating the federal effective dates of changes to the 
16.10   Internal Revenue Code and any elections made by the taxpayer in accordance with the 
16.11   Internal Revenue Code in determining federal taxable income for federal income tax 
16.12   purposes, and with the modifications provided in subdivisions 19a to 19f.
16.13   In the case of a regulated investment company or a fund thereof, as defined in section 
16.14   851(a) or 851(g) of the Internal Revenue Code, federal taxable income means investment 
16.15   company taxable income as defined in section 852(b)(2) of the Internal Revenue Code, 
16.16   except that:
16.17   (1) the exclusion of net capital gain provided in section 852(b)(2)(A) of the Internal 
16.18   Revenue Code does not apply;
16.19   (2) the deduction for dividends paid under section 852(b)(2)(D) of the Internal 
16.20   Revenue Code must be applied by allowing a deduction for capital gain dividends and 
16.21   exempt-interest dividends as defined in sections 852(b)(3)(C) and 852(b)(5) of the Internal 
16.22   Revenue Code; and
16.23   (3) the deduction for dividends paid must also be applied in the amount of any 
16.24   undistributed capital gains which the regulated investment company elects to have treated 
16.25   as provided in section 852(b)(3)(D) of the Internal Revenue Code.
16.26   The net income of a real estate investment trust as defined and limited by section 
16.27   856(a), (b), and (c) of the Internal Revenue Code means the real estate investment trust 
16.28   taxable income as defined in section 857(b)(2) of the Internal Revenue Code.
16.29   The net income of a designated settlement fund as defined in section 468B(d) of 
16.30   the Internal Revenue Code means the gross income as defined in section 468B(b) of the 
16.31   Internal Revenue Code.
16.32   The Internal Revenue Code of 1986, as amended through April 15 December 31, 
16.33   2005, shall be in effect for taxable years beginning after December 31, 1996.
17.1    Except as otherwise provided, references to the Internal Revenue Code in 
17.2    subdivisions 19 to 19f mean the code in effect for purposes of determining net income for 
17.3    the applicable year.
17.4    EFFECTIVE DATE.This section is effective the day following final enactment. 

17.5        Sec. 3. Minnesota Statutes 2005 Supplement, section 290.01, subdivision 19a, is 
17.6    amended to read:
17.7        Subd. 19a. Additions to federal taxable income. For individuals, estates, and 
17.8    trusts, there shall be added to federal taxable income:
17.9    (1)(i) interest income on obligations of any state other than Minnesota or a political 
17.10   or governmental subdivision, municipality, or governmental agency or instrumentality 
17.11   of any state other than Minnesota exempt from federal income taxes under the Internal 
17.12   Revenue Code or any other federal statute; and
17.13   (ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue 
17.14   Code, except the portion of the exempt-interest dividends derived from interest income 
17.15   on obligations of the state of Minnesota or its political or governmental subdivisions, 
17.16   municipalities, governmental agencies or instrumentalities, but only if the portion of the 
17.17   exempt-interest dividends from such Minnesota sources paid to all shareholders represents 
17.18   95 percent or more of the exempt-interest dividends that are paid by the regulated 
17.19   investment company as defined in section 851(a) of the Internal Revenue Code, or the 
17.20   fund of the regulated investment company as defined in section 851(g) of the Internal 
17.21   Revenue Code, making the payment; and
17.22   (iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal 
17.23   government described in section 7871(c) of the Internal Revenue Code shall be treated as 
17.24   interest income on obligations of the state in which the tribe is located;
17.25   (2) the amount of income or sales and use taxes paid or accrued within the taxable 
17.26   year under this chapter and the amount of taxes based on net income paid or sales and 
17.27   use taxes paid to any other state or to any province or territory of Canada, to the extent 
17.28   allowed as a deduction under section 63(d) of the Internal Revenue Code, but the addition 
17.29   may not be more than the amount by which the itemized deductions as allowed under 
17.30   section 63(d) of the Internal Revenue Code exceeds the amount of the standard deduction 
17.31   as defined in section 63(c) of the Internal Revenue Code minus the addition which would 
17.32   have been required under clause (10) if the taxpayer had claimed the standard deduction. 
17.33   For the purpose of this paragraph, the disallowance of itemized deductions under section 
17.34   68 of the Internal Revenue Code of 1986, income or sales and use tax is the last itemized 
17.35   deduction disallowed;
18.1    (3) the capital gain amount of a lump sum distribution to which the special tax under 
18.2    section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;
18.3    (4) the amount of income taxes paid or accrued within the taxable year under this 
18.4    chapter and taxes based on net income paid to any other state or any province or territory 
18.5    of Canada, to the extent allowed as a deduction in determining federal adjusted gross 
18.6    income. For the purpose of this paragraph, income taxes do not include the taxes imposed 
18.7    by sections 290.0922, subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729;
18.8    (5) the amount of expense, interest, or taxes disallowed pursuant to section 290.10 
18.9    other than expenses or interest used in computing net interest income for the subtraction 
18.10   allowed under subdivision 19b, clause (1);
18.11   (6) the amount of a partner's pro rata share of net income which does not flow 
18.12   through to the partner because the partnership elected to pay the tax on the income under 
18.13   section 6242(a)(2) of the Internal Revenue Code;
18.14   (7) 80 percent of the depreciation deduction allowed under section 168(k) of the 
18.15   Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that 
18.16   in the taxable year generates a deduction for depreciation under section 168(k) and the 
18.17   activity generates a loss for the taxable year that the taxpayer is not allowed to claim for 
18.18   the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is 
18.19   limited to excess of the depreciation claimed by the activity under section 168(k) over the 
18.20   amount of the loss from the activity that is not allowed in the taxable year. In succeeding 
18.21   taxable years when the losses not allowed in the taxable year are allowed, the depreciation 
18.22   under section 168(k) is allowed;
18.23   (8) 80 percent of the amount by which the deduction allowed by section 179 of the 
18.24   Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal 
18.25   Revenue Code of 1986, as amended through December 31, 2003;
18.26   (9) to the extent deducted in computing federal taxable income, the amount of the 
18.27   deduction allowable under section 199 of the Internal Revenue Code; and
18.28   (10) for tax years beginning after December 31, 2004, to the extent deducted in 
18.29   computing federal taxable income, the amount by which the standard deduction allowed 
18.30   under section 63(c) of the Internal Revenue Code exceeds the standard deduction 
18.31   allowable under section 63(c) of the Internal Revenue Code of 1986, as amended through 
18.32   December 31, 2003; and
18.33   (11) (10) the exclusion allowed under section 139A of the Internal Revenue Code 
18.34   for federal subsidies for prescription drug plans.
18.35   EFFECTIVE DATE.This section is effective for taxable years beginning after 
18.36   December 31, 2005.

19.1        Sec. 4. Minnesota Statutes 2005 Supplement, section 290.01, subdivision 31, is 
19.2    amended to read:
19.3        Subd. 31. Internal Revenue Code. Unless specifically defined otherwise, "Internal 
19.4    Revenue Code" means the Internal Revenue Code of 1986, as amended through April 
19.5    15 December 31, 2005.
19.6    EFFECTIVE DATE.This section is effective the day following final enactment, 
19.7    except the changes incorporated by federal changes are effective at the same times as the 
19.8    changes were effective for federal purposes.

19.9        Sec. 5. Minnesota Statutes 2005 Supplement, section 290.0675, subdivision 1, is 
19.10   amended to read:
19.11       Subdivision 1. Definitions. (a) For purposes of this section the following terms 
19.12   have the meanings given.
19.13   (b) "Earned income" means the sum of the following, to the extent included in 
19.14   Minnesota taxable income:
19.15   (1) earned income as defined in section 32(c)(2) of the Internal Revenue Code;
19.16   (2) income received from a retirement pension, profit-sharing, stock bonus, or 
19.17   annuity plan; and
19.18   (3) Social Security benefits as defined in section 86(d)(1) of the Internal Revenue 
19.19   Code.
19.20   (c) "Taxable income" means net income as defined in section 290.01, subdivision 19.
19.21   (d) "Earned income of lesser-earning spouse" means the earned income of the 
19.22   spouse with the lesser amount of earned income as defined in paragraph (b) for the taxable 
19.23   year minus the sum of (i) the amount for one exemption under section 151(d) of the 
19.24   Internal Revenue Code and (ii) one-half the amount of the standard deduction under 
19.25   section 63(c)(2)(A) and (4) of the Internal Revenue Code minus one-half of any addition 
19.26   required under section 290.01, subdivision 19a, clause (10), and one-half of the addition 
19.27   which would have been required under section 290.01, subdivision 19a, clause (10), if the 
19.28   taxpayer had claimed the standard deduction.
19.29   EFFECTIVE DATE.This section is effective for taxable years beginning after 
19.30   December 31, 2005.

19.31       Sec. 6. Minnesota Statutes 2004, section 290.091, subdivision 3, is amended to read:
19.32       Subd. 3. Exemption amount. (a) For purposes of computing the alternative 
19.33   minimum tax, the exemption amount is:
20.1    (1) for taxable years beginning before January 1, 2006, the exemption determined 
20.2    under section 55(d) of the Internal Revenue Code, as amended through December 31, 
20.3    1992; and
20.4    (2) for taxable years beginning after December 31, 2005, $60,000 for married 
20.5    couples filing joint returns, $30,000 for married individuals filing separate returns, estates, 
20.6    and trusts, and $45,000 for unmarried individuals.
20.7    (b) The exemption amount determined under this subdivision is subject to the phase 
20.8    out under section 55(d)(3) of the Internal Revenue Code, except that alternative minimum 
20.9    taxable income as determined under this section must be substituted in the computation 
20.10   of the phase out under section 55(d)(3).
20.11   (c) For taxable years beginning after December 31, 2006, the exemption amount 
20.12   under paragraph (a), clause (2), must be adjusted for inflation. The commissioner shall 
20.13   make the inflation adjustments in accordance with section 1(f) of the Internal Revenue 
20.14   Code except that for the purposes of this subdivision the percentage increase must be 
20.15   determined from the year starting September 1, 2005, and ending August 31, 2006, as the 
20.16   base year for adjusting for inflation for the tax year beginning after December 31, 2006. 
20.17   The determination of the commissioner under this subdivision is not a rule under the 
20.18   Administrative Procedure Act.
20.19   EFFECTIVE DATE.This section is effective for taxable years beginning after 
20.20   December 31, 2005.

20.21       Sec. 7. Minnesota Statutes 2004, section 290.17, subdivision 2, is amended to read:
20.22       Subd. 2. Income not derived from conduct of a trade or business. The income of 
20.23   a taxpayer subject to the allocation rules that is not derived from the conduct of a trade or 
20.24   business must be assigned in accordance with paragraphs (a) to (f):
20.25   (a)(1) Subject to paragraphs (a)(2), and (a)(3), and (a)(4), income from wages as 
20.26   defined in section 3401(a) and (f) of the Internal Revenue Code is assigned to this state if, 
20.27   and to the extent that, the work of the employee is performed within it; all other income 
20.28   from such sources is treated as income from sources without this state.
20.29   Severance pay shall be considered income from labor or personal or professional 
20.30   services.
20.31   (2) In the case of an individual who is a nonresident of Minnesota and who is an 
20.32   athlete or entertainer, income from compensation for labor or personal services performed 
20.33   within this state shall be determined in the following manner:
20.34   (i) The amount of income to be assigned to Minnesota for an individual who is a 
20.35   nonresident salaried athletic team employee shall be determined by using a fraction in 
21.1    which the denominator contains the total number of days in which the individual is under 
21.2    a duty to perform for the employer, and the numerator is the total number of those days 
21.3    spent in Minnesota. For purposes of this paragraph, off-season training activities, unless 
21.4    conducted at the team's facilities as part of a team imposed program, are not included in 
21.5    the total number of duty days. Bonuses earned as a result of play during the regular season 
21.6    or for participation in championship, play-off, or all-star games must be allocated under 
21.7    the formula. Signing bonuses are not subject to allocation under the formula if they are 
21.8    not conditional on playing any games for the team, are payable separately from any other 
21.9    compensation, and are nonrefundable; and
21.10   (ii) The amount of income to be assigned to Minnesota for an individual who is a 
21.11   nonresident, and who is an athlete or entertainer not listed in clause (i), for that person's 
21.12   athletic or entertainment performance in Minnesota shall be determined by assigning to 
21.13   this state all income from performances or athletic contests in this state.
21.14   (3) For purposes of this section, amounts received by a nonresident as "retirement 
21.15   income" as defined in section (b)(1) of the State Income Taxation of Pension Income 
21.16   Act, Public Law 104-95, are not considered income derived from carrying on a trade 
21.17   or business or from wages or other compensation for work an employee performed in 
21.18   Minnesota, and are not taxable under this chapter.
21.19   (4) Wages, otherwise assigned to this state under clause (1) and not qualifying under 
21.20   clause (3), are not taxable under this chapter if the following conditions are met:
21.21   (i) the recipient was not a resident of this state for any part of the taxable year in 
21.22   which the wages were received; and
21.23   (ii) the wages are for work performed while the recipient was a resident of this state.
21.24   (b) Income or gains from tangible property located in this state that is not employed 
21.25   in the business of the recipient of the income or gains must be assigned to this state.
21.26   (c) Income or gains from intangible personal property not employed in the business 
21.27   of the recipient of the income or gains must be assigned to this state if the recipient of the 
21.28   income or gains is a resident of this state or is a resident trust or estate.
21.29   Gain on the sale of a partnership interest is allocable to this state in the ratio of the 
21.30   original cost of partnership tangible property in this state to the original cost of partnership 
21.31   tangible property everywhere, determined at the time of the sale. If more than 50 percent 
21.32   of the value of the partnership's assets consists of intangibles, gain or loss from the sale 
21.33   of the partnership interest is allocated to this state in accordance with the sales factor of 
21.34   the partnership for its first full tax period immediately preceding the tax period of the 
21.35   partnership during which the partnership interest was sold.
22.1    Gain on the sale of goodwill or income from a covenant not to compete that is 
22.2    connected with a business operating all or partially in Minnesota is allocated to this state 
22.3    to the extent that the income from the business in the year preceding the year of sale was 
22.4    assignable to Minnesota under subdivision 3.
22.5    When an employer pays an employee for a covenant not to compete, the income 
22.6    allocated to this state is in the ratio of the employee's service in Minnesota in the calendar 
22.7    year preceding leaving the employment of the employer over the total services performed 
22.8    by the employee for the employer in that year.
22.9    (d) Income from winnings on a bet made by an individual while in Minnesota is 
22.10   assigned to this state. In this paragraph, "bet" has the meaning given in section  609.75, 
22.11   subdivision 2, as limited by section  609.75, subdivision 3, clauses (1), (2), and (3). 
22.12   (e) All items of gross income not covered in paragraphs (a) to (d) and not part of the 
22.13   taxpayer's income from a trade or business shall be assigned to the taxpayer's domicile.
22.14   (f) For the purposes of this section, working as an employee shall not be considered 
22.15   to be conducting a trade or business.
22.16   EFFECTIVE DATE.This section is effective for taxable years beginning after 
22.17   December 31, 2005.

22.18       Sec. 8. Minnesota Statutes 2005 Supplement, section 290A.03, subdivision 15, is 
22.19   amended to read:
22.20       Subd. 15. Internal Revenue Code. "Internal Revenue Code" means the Internal 
22.21   Revenue Code of 1986, as amended through April 15 December 31, 2005.
22.22   EFFECTIVE DATE.This section is effective for property taxes payable on or after 
22.23   December 31, 2005, and rent paid on or after December 31, 2004.

22.24       Sec. 9. NET INCOME; FEDERAL CONFORMITY.
22.25   For taxable years beginning after December 31, 2004, and before December 31, 
22.26   2006, the definition of "net income" in Minnesota Statutes, section 290.01, subdivision 19, 
22.27   must be interpreted by the Department of Revenue to conform to the position taken by 
22.28   the Internal Revenue Service in Revenue Notice 2005-68.

22.29       Sec. 10. MARRIED JOINT FILERS; TAXABLE YEAR 2005.
22.30   For taxable years beginning after December 31, 2004, and before January 1, 2006, 
22.31   the liability for tax under Minnesota Statutes, chapter 290, must be determined as if the 
23.1    addition to federal taxable income under Minnesota Statutes 2005 Supplement, section 
23.2    290.01, subdivision 19a, clause (10), did not apply.
23.3    EFFECTIVE DATE.This section is effective the day following final enactment.

23.4        Sec. 11. REFUNDS.
23.5    The commissioner of revenue must review individual income tax returns that may be 
23.6    subject to section 10 and adjust the tax liability accordingly. If the tax paid for the taxable 
23.7    year beginning after December 31, 2004, and before January 1, 2006, by any taxpayer 
23.8    under Minnesota Statutes, chapter 290, as amended through December 31, 2005, to the 
23.9    commissioner of revenue is greater than the tax liability determined under section 10, 
23.10   the commissioner must pay the taxpayer a refund of the difference. If the tax paid for 
23.11   that taxable year by any taxpayer under Minnesota Statutes, chapter 290, as amended 
23.12   through December 31, 2005, is less than the tax liability determined under section 10, no 
23.13   additional payment is required of the taxpayer. The refunds issued under this section are 
23.14   not subject to accrual of interest.
23.15   EFFECTIVE DATE.This section is effective the day following final enactment.

23.16       Sec. 12. APPROPRIATION.
23.17   The amount necessary to issue refunds under section 11 and the administrative costs 
23.18   associated with the issuance of refunds is appropriated from the Tax Relief Account under 
23.19   Minnesota Statutes, section 16A.1522, subdivision 4, to the commissioner of revenue. 
23.20   Notwithstanding Minnesota Statutes, section 16A.285, the commissioner of revenue may 
23.21   not use this appropriation for any purpose other than administering the refunds under 
23.22   section 11. This is a onetime appropriation and may not be added to the agency's budget 
23.23   base.
23.24   EFFECTIVE DATE.This section is effective the day following final enactment.

23.25                                          ARTICLE 3
23.26                                      SALES AND USE TAX

23.27       Section 1. Minnesota Statutes 2005 Supplement, section 270C.722, subdivision 2, 
23.28   is amended to read:
23.29       Subd. 2. New permits after revocation. (a) The commissioner shall not issue a 
23.30   new permit after revocation or reinstate a revoked permit unless the taxpayer applies for a 
23.31   permit and provides reasonable evidence of intention to comply with the sales and use 
24.1    tax laws and rules. The commissioner may require the applicant to provide security, in 
24.2    addition to that authorized by section 297A.92, in an amount reasonably necessary to 
24.3    ensure compliance with the sales and use tax laws and rules. If the commissioner issues 
24.4    or reinstates a permit not in conformance with the requirements of this subdivision or 
24.5    applicable rules, the commissioner may cancel the permit upon notice to the permit holder. 
24.6    The notice must be served by first class and certified mail at the permit holder's last known 
24.7    address. The cancellation shall be effective immediately, subject to the right of the permit 
24.8    holder to show that the permit was issued in conformance with the requirements of this 
24.9    subdivision and applicable rules. Upon such showing, the permit must be reissued.
24.10   (b) If a taxpayer has had a permit or permits revoked three times in a five-year 
24.11   period, the commissioner shall not may refuse to issue a new permit or reinstate the 
24.12   revoked permit until 24 months have elapsed after revocation and the taxpayer has 
24.13   satisfied the conditions for reinstatement of a revoked permit or issuance of a new permit 
24.14   imposed by this section and rules adopted under this section.
24.15   (c) For purposes of this subdivision, "taxpayer" means:
24.16   (1) an individual, if a revoked permit was issued to or in the name of an individual, 
24.17   or a corporation or partnership, if a revoked permit was issued to or in the name of a 
24.18   corporation or partnership; and
24.19   (2) an officer of a corporation, a member of a partnership, or an individual who is 
24.20   liable for delinquent sales taxes, either for the entity for which the new or reinstated 
24.21   permit is at issue, or for another entity for which a permit was previously revoked, or 
24.22   personally as a permit holder.

24.23       Sec. 2. Minnesota Statutes 2005 Supplement, section 297A.61, subdivision 3, is 
24.24   amended to read:
24.25       Subd. 3. Sale and purchase. (a) "Sale" and "purchase" include, but are not limited 
24.26   to, each of the transactions listed in this subdivision.
24.27   (b) Sale and purchase include:
24.28   (1) any transfer of title or possession, or both, of tangible personal property, whether 
24.29   absolutely or conditionally, for a consideration in money or by exchange or barter; and
24.30   (2) the leasing of or the granting of a license to use or consume, for a consideration 
24.31   in money or by exchange or barter, tangible personal property, other than a manufactured 
24.32   home used for residential purposes for a continuous period of 30 days or more.
24.33   (c) Sale and purchase include the production, fabrication, printing, or processing of 
24.34   tangible personal property for a consideration for consumers who furnish either directly or 
24.35   indirectly the materials used in the production, fabrication, printing, or processing.
25.1    (d) Sale and purchase include the preparing for a consideration of food. 
25.2    Notwithstanding section 297A.67, subdivision 2, taxable food includes, but is not limited 
25.3    to, the following:
25.4    (1) prepared food sold by the retailer;
25.5    (2) soft drinks;
25.6    (3) candy;
25.7    (4) dietary supplements; and
25.8    (5) all food sold through vending machines, except milk.
25.9    (e) A sale and a purchase includes the furnishing for a consideration of electricity, 
25.10   gas, water, or steam for use or consumption within this state.
25.11   (f) A sale and a purchase includes the transfer for a consideration of prewritten 
25.12   computer software whether delivered electronically, by load and leave, or otherwise.
25.13   (g) A sale and a purchase includes the furnishing for a consideration of the following 
25.14   services:
25.15   (1) the privilege of admission to places of amusement, recreational areas, or athletic 
25.16   events, and the making available of amusement devices, tanning facilities, reducing 
25.17   salons, steam baths, turkish baths, health clubs, and spas or athletic facilities;
25.18   (2) lodging and related services by a hotel, rooming house, resort, campground, 
25.19   motel, or trailer camp and the granting of any similar license to use real property in a 
25.20   specific facility, other than the renting or leasing of it for a continuous period of 30 days 
25.21   or more under an enforceable written agreement that may not be terminated without 
25.22   prior notice;
25.23   (3) nonresidential parking services, whether on a contractual, hourly, or other 
25.24   periodic basis, except for parking at a meter;
25.25   (4) the granting of membership in a club, association, or other organization if:
25.26   (i) the club, association, or other organization makes available for the use of its 
25.27   members sports and athletic facilities, without regard to whether a separate charge is 
25.28   assessed for use of the facilities; and
25.29   (ii) use of the sports and athletic facility is not made available to the general public 
25.30   on the same basis as it is made available to members.
25.31   Granting of membership means both onetime initiation fees and periodic membership 
25.32   dues. Sports and athletic facilities include golf courses; tennis, racquetball, handball, and 
25.33   squash courts; basketball and volleyball facilities; running tracks; exercise equipment; 
25.34   swimming pools; and other similar athletic or sports facilities;
26.1    (5) delivery of aggregate materials and concrete block by a third party if the delivery 
26.2    would be subject to the sales tax if provided by the seller of the aggregate material or 
26.3    concrete block; and
26.4    (6) services as provided in this clause:
26.5    (i) laundry and dry cleaning services including cleaning, pressing, repairing, altering, 
26.6    and storing clothes, linen services and supply, cleaning and blocking hats, and carpet, 
26.7    drapery, upholstery, and industrial cleaning. Laundry and dry cleaning services do not 
26.8    include services provided by coin operated facilities operated by the customer;
26.9    (ii) motor vehicle washing, waxing, and cleaning services, including services 
26.10   provided by coin operated facilities operated by the customer, and rustproofing, 
26.11   undercoating, and towing of motor vehicles;
26.12   (iii) building and residential cleaning, maintenance, and disinfecting and 
26.13   exterminating services;
26.14   (iv) detective, security, burglar, fire alarm, and armored car services; but not 
26.15   including services performed within the jurisdiction they serve by off-duty licensed peace 
26.16   officers as defined in section 626.84, subdivision 1, or services provided by a nonprofit 
26.17   organization for monitoring and electronic surveillance of persons placed on in-home 
26.18   detention pursuant to court order or under the direction of the Minnesota Department 
26.19   of Corrections;
26.20   (v) pet grooming services;
26.21   (vi) lawn care, fertilizing, mowing, spraying and sprigging services; garden planting 
26.22   and maintenance; tree, bush, and shrub pruning, bracing, spraying, and surgery; indoor 
26.23   plant care; tree, bush, shrub, and stump removal, except when performed as part of a land 
26.24   clearing contract as defined in section 297A.68, subdivision 40; and tree trimming for 
26.25   public utility lines. Services performed under a construction contract for the installation of 
26.26   shrubbery, plants, sod, trees, bushes, and similar items are not taxable;
26.27   (vii) massages, except when provided by a licensed health care facility or 
26.28   professional or upon written referral from a licensed health care facility or professional for 
26.29   treatment of illness, injury, or disease; and
26.30   (viii) the furnishing of lodging, board, and care services for animals in kennels and 
26.31   other similar arrangements, but excluding veterinary and horse boarding services.
26.32   In applying the provisions of this chapter, the terms "tangible personal property" 
26.33   and "sales at retail" include taxable services listed in clause (6), items (i) to (vi) and 
26.34   (viii), and the provision of these taxable services, unless specifically provided otherwise. 
26.35   Services performed by an employee for an employer are not taxable. Services performed 
26.36   by a partnership or association for another partnership or association are not taxable if 
27.1    one of the entities owns or controls more than 80 percent of the voting power of the 
27.2    equity interest in the other entity. Services performed between members of an affiliated 
27.3    group of corporations are not taxable. For purposes of the preceding sentence, "affiliated 
27.4    group of corporations" includes those entities that would be classified as members of an 
27.5    affiliated group under United States Code, title 26, section 1504, and that are eligible to 
27.6    file a consolidated tax return for federal income tax purposes.
27.7    (h) A sale and a purchase includes the furnishing for a consideration of tangible 
27.8    personal property or taxable services by the United States or any of its agencies or 
27.9    instrumentalities, or the state of Minnesota, its agencies, instrumentalities, or political 
27.10   subdivisions.
27.11   (i) A sale and a purchase includes the furnishing for a consideration of 
27.12   telecommunications services, including cable television services and direct satellite 
27.13   services. Telecommunications services are taxed to the extent allowed under federal law.
27.14   (j) A sale and a purchase includes the furnishing for a consideration of installation if 
27.15   the installation charges would be subject to the sales tax if the installation were provided 
27.16   by the seller of the item being installed.
27.17   (k) A sale and a purchase includes the rental of a vehicle by a motor vehicle dealer 
27.18   to a customer when (1) the vehicle is rented by the customer for a consideration, or (2) 
27.19   the motor vehicle dealer is reimbursed pursuant to a service contract as defined in section 
27.20   65B.29, subdivision 1, clause (1).
27.21   EFFECTIVE DATE.This section is effective for purchases and sales made after 
27.22   June 30, 2006.

27.23       Sec. 3. Minnesota Statutes 2005 Supplement, section 297A.64, subdivision 4, is 
27.24   amended to read:
27.25       Subd. 4. Exemptions. (a) The tax and the fee imposed by this section do not apply 
27.26   to a lease or rental of (1) a vehicle to be used by the lessee to provide a licensed taxi 
27.27   service; (2) a hearse or limousine used in connection with a burial or funeral service; or 
27.28   (3) a van designed or adapted primarily for transporting property rather than passengers; 
27.29   or (4) a vehicle under a car sharing agreement where the lessee is a dues-paying member 
27.30   of a nonprofit car sharing organization that leases vehicles only on an hourly or mileage 
27.31   basis. The tax and the fee imposed under this section do not apply when the lease or rental 
27.32   of a vehicle is exempt from the tax imposed under section 297A.62, subdivision 1.
27.33   (b) The lessor may elect not to charge the fee imposed in subdivision 2 if in the 
27.34   previous calendar year the lessor had no more than 20 vehicles available for lease that 
28.1    would have been subject to tax under this section, or no more than $50,000 in gross 
28.2    receipts that would have been subject to tax under this section.
28.3    EFFECTIVE DATE.This section is effective for leases made after June 30, 2006.

28.4        Sec. 4. Minnesota Statutes 2004, section 297A.67, subdivision 18, is amended to read:
28.5        Subd. 18. Used and re-refined motor oils. Used motor oils are exempt. Re-refined 
28.6    motor oils that meet American Petroleum Institute specifications for gasoline or diesel 
28.7    engines are exempt.
28.8    EFFECTIVE DATE.This section is effective for sales and purchases made after 
28.9    June 30, 2006.

28.10       Sec. 5. Minnesota Statutes 2004, section 297A.67, is amended by adding a subdivision 
28.11   to read:
28.12       Subd. 33. Recycled copier and printing papers. Copier paper with a minimum 
28.13   postconsumer recycled content of 30 percent by weight is exempt. Uncoated printing 
28.14   paper with a minimum of 30 percent postconsumer recycled content by weight is exempt. 
28.15   Coated printing paper with a minimum of ten percent of postconsumer recycled content by 
28.16   weight is exempt.
28.17   EFFECTIVE DATE.This section is effective for sales and purchases made after 
28.18   June 30, 2006.

28.19       Sec. 6. Minnesota Statutes 2004, section 297A.68, subdivision 19, is amended to read:
28.20       Subd. 19. Petroleum products. The following petroleum products are exempt:
28.21   (1) products upon which a tax has been imposed and paid under chapter 296A, 
28.22   and for which no refund has been or will be allowed because the buyer used the fuel 
28.23   for nonhighway use;
28.24   (2) products that are used in the improvement of agricultural land by constructing, 
28.25   maintaining, and repairing drainage ditches, tile drainage systems, grass waterways, water 
28.26   impoundment, and other erosion control structures;
28.27   (3) products purchased by a transit system receiving financial assistance under 
28.28   section  174.24,  256B.0625, subdivision 17, or  473.384; 
28.29   (4) products purchased by an ambulance service licensed under chapter 144E;
28.30   (5) products used in a passenger snowmobile, as defined in section  296A.01, 
28.31   subdivision 39, for off-highway business use as part of the operations of a resort as 
28.32   provided under section  296A.16, subdivision 2, clause (2); or 
29.1    (6) products purchased by a state or a political subdivision of a state for use in motor 
29.2    vehicles exempt from registration under section  168.012, subdivision 1, paragraph (b); or
29.3    (7) products purchased for use as fuel for a commuter rail system operating under 
29.4    sections 174.80 to 174.90. The tax must be imposed and collected as if the rate under 
29.5    section 297A.62, subdivision 1, applied, and then refunded in the manner provided 
29.6    in section 297A.75. 
29.7    EFFECTIVE DATE.This section is effective for purchases made after June 30, 
29.8    2006.

29.9        Sec. 7. Minnesota Statutes 2004, section 297A.68, is amended by adding a subdivision 
29.10   to read:
29.11       Subd. 42. Commuter rail materials, supplies, and equipment. (a) Materials, 
29.12   supplies, and equipment used or consumed in the construction, equipment, or improvement 
29.13   of a commuter rail transportation system operated under sections 174.80 to 174.90 are 
29.14   exempt. This exemption includes railroad cars, engines, and related equipment. The tax 
29.15   must be imposed and collected as if the rate under section 297A.62, subdivision 1, applied, 
29.16   and then refunded in the manner provided in section 297A.75.
29.17   (b) $7,500,000 is appropriated from the general fund to the commissioner of revenue 
29.18   to be used to pay refunds of the tax paid for items that are exempt from taxation under this 
29.19   subdivision. This appropriation does not cancel, but remains available until expended. 
29.20   This exemption terminates when the commissioner of revenue determines that no amount 
29.21   of this appropriation remains.
29.22   EFFECTIVE DATE.This section is effective for purchases made after June 30, 
29.23   2006.

29.24       Sec. 8. Minnesota Statutes 2004, section 297A.70, subdivision 3, is amended to read:
29.25       Subd. 3. Sales of certain goods and services to government. (a) The following 
29.26   sales to or use by the specified governments and political subdivisions of the state are 
29.27   exempt:
29.28   (1) repair and replacement parts for emergency rescue vehicles, fire trucks, and 
29.29   fire apparatus to a political subdivision;
29.30   (2) machinery and equipment, except for motor vehicles, used directly for mixed 
29.31   municipal solid waste management services at a solid waste disposal facility as defined in 
29.32   section  115A.03, subdivision 10; 
30.1    (3) chore and homemaking services to a political subdivision of the state to be 
30.2    provided to elderly or disabled individuals;
30.3    (4) telephone services to the Department of Administration that are used to provide 
30.4    telecommunications services through the intertechnologies revolving fund;
30.5    (5) firefighter personal protective equipment as defined in paragraph (b), if purchased 
30.6    or authorized by and for the use of an organized fire department, fire protection district, or 
30.7    fire company regularly charged with the responsibility of providing fire protection to the 
30.8    state or a political subdivision;
30.9    (6) bullet-resistant body armor that provides the wearer with ballistic and trauma 
30.10   protection, if purchased by a law enforcement agency of the state or a political subdivision 
30.11   of the state, or a licensed peace officer, as defined in section  626.84, subdivision 1; 
30.12   (7) motor vehicles purchased or leased by political subdivisions of the state if the 
30.13   vehicles are exempt from registration under section  168.012, subdivision 1, paragraph (b), 
30.14   exempt from taxation under section  473.448, or exempt from the motor vehicle sales tax 
30.15   under section  297B.03, clause (12); 
30.16   (8) equipment designed to process, dewater, and recycle biosolids for wastewater 
30.17   treatment facilities of political subdivisions, and materials incidental to installation of 
30.18   that equipment; and
30.19   (9) sales to a town of gravel and of machinery, equipment, and accessories, except 
30.20   motor vehicles, used exclusively for road and bridge maintenance, and leases by a town of 
30.21   motor vehicles exempt from tax under section  297B.03, clause (10); and 
30.22   (10) voting equipment purchased between January 1, 2006, and January 1, 2008, 
30.23   by a county to comply with United States Code, title 42, section 15481, ("Help America 
30.24   Vote Act of 2002"). 
30.25   (b) For purposes of this subdivision, "firefighters personal protective equipment" 
30.26   means helmets, including face shields, chin straps, and neck liners; bunker coats and 
30.27   pants, including pant suspenders; boots; gloves; head covers or hoods; wildfire jackets; 
30.28   protective coveralls; goggles; self-contained breathing apparatus; canister filter masks; 
30.29   personal alert safety systems; spanner belts; optical or thermal imaging search devices; 
30.30   and all safety equipment required by the Occupational Safety and Health Administration.
30.31   EFFECTIVE DATE.This section is effective retroactively from January 1, 2006. 

30.32       Sec. 9. Minnesota Statutes 2005 Supplement, section 297A.70, subdivision 8, is 
30.33   amended to read:
30.34       Subd. 8. Regionwide public safety radio communication system; products and 
30.35   services. Products and services including, but not limited to, end user equipment used 
31.1    for construction, ownership, operation, maintenance, and enhancement of the backbone 
31.2    system of the regionwide public safety radio communication system established under 
31.3    sections 403.21 to 403.34 403.40, are exempt. For purposes of this subdivision, backbone 
31.4    system is defined in section 403.21, subdivision 9. This subdivision is effective for 
31.5    purchases, sales, storage, use, or consumption for use in the first and second phases of the 
31.6    system, as defined in section 403.21, subdivisions 3, 10, and 11, and that portion of the 
31.7    third phase of the system that is located in the southeast district of the State Patrol and 
31.8    the counties of Benton, Sherburne, Stearns, and Wright, and that portion of the system 
31.9    that is located in Itasca County.

31.10       Sec. 10. Minnesota Statutes 2004, section 297A.71, subdivision 23, is amended to read:
31.11       Subd. 23. Construction materials for qualified low-income housing projects. (a) 
31.12   Purchases of materials and supplies used or consumed in and equipment incorporated into 
31.13   the construction, improvement, or expansion of qualified low-income housing projects are 
31.14   exempt from the tax imposed under this chapter if the owner of the qualified low-income 
31.15   housing project is:
31.16   (1) the public housing agency or housing and redevelopment authority of a political 
31.17   subdivision;
31.18   (2) an entity exercising the powers of a housing and redevelopment authority within 
31.19   a political subdivision;
31.20   (3) a limited partnership in which the sole general partner is an authority under 
31.21   clause (1) or an entity under clause (2);
31.22   (4) a nonprofit corporation subject to the provisions of chapter 317A, and qualifying 
31.23   under section 501(c)(3) or 501(c)(4) of the Internal Revenue Code of 1986, as amended; or
31.24   (5) an owner entity, as defined in Code of Federal Regulations, title 24, part 941.604, 
31.25   for a qualified low-income housing project described in paragraph (b), clause (5).; or
31.26   (6) a limited partnership in which either:
31.27   (i) the sole general partner is an entity under clause (4); or
31.28   (ii) the managing partner is an entity under clause (4) and makes the following 
31.29   disclosures in writing to an entity under clause (1) or (2):
31.30   (A) the names of all members of the partnership;
31.31   (B) the address for service of process of each member of the partnership; and
31.32   (C) the financing plan for the low-income housing project.
31.33   This exemption applies regardless of whether the purchases are made by the owner 
31.34   of the facility or a contractor.
31.35   (b) For purposes of this exemption, "qualified low-income housing project" means:
32.1    (1) a housing or mixed use project in which at least 20 percent of the residential units 
32.2    are qualifying low-income rental housing units as defined in section  273.126; 
32.3    (2) a federally assisted low-income housing project financed by a mortgage insured 
32.4    or held by the United States Department of Housing and Urban Development under 
32.5    United States Code, title 12, section 1701s, 1715l(d)(3), 1715l(d)(4), or 1715z-1; United 
32.6    States Code, title 42, section 1437f; the Native American Housing Assistance and 
32.7    Self-Determination Act, United States Code, title 25, section 4101 et seq.; or any similar 
32.8    successor federal low-income housing program;
32.9    (3) a qualified low-income housing project as defined in United States Code, title 
32.10   26, section 42(g), meeting all of the requirements for a low-income housing credit under 
32.11   section 42 of the Internal Revenue Code regardless of whether the project actually applies 
32.12   for or receives a low-income housing credit;
32.13   (4) a project that will be operated in compliance with Internal Revenue Service 
32.14   revenue procedure 96-32; or
32.15   (5) a housing or mixed use project in which all or a portion of the residential units 
32.16   are subject to the requirements of section 5 of the United States Housing Act of 1937.
32.17   (c) For a project, a portion of which is not used for low-income housing units, 
32.18   the amount of purchases that are exempt under this subdivision must be determined by 
32.19   multiplying the total purchases, as specified in paragraph (a), by the ratio of:
32.20   (1) the total gross square footage of units subject to the income limits under section  
32.21   273.126, the financing for the project, the federal low-income housing tax credit, revenue 
32.22   procedure 96-32, or section 5 of the United States Housing Act of 1937, as applicable 
32.23   to the project; and 
32.24   (2) the total gross square footage of all units in the project.
32.25   (d) The tax must be imposed and collected as if the rate under section  297A.62, 
32.26   subdivision 1, applied, and then refunded in the manner provided in section  297A.75. 
32.27   EFFECTIVE DATE.This section is effective for sales and purchases made after 
32.28   June 30, 2006.

32.29       Sec. 11. Minnesota Statutes 2004, section 297A.71, is amended by adding a 
32.30   subdivision to read:
32.31       Subd. 37. Hydroelectric generating facility. Materials and supplies used or 
32.32   consumed in the construction of a 10.3 megawatt run-of-the-river hydroelectric generating 
32.33   facility that meets the requirements of this subdivision are exempt. To qualify for the 
32.34   exemption under this subdivision, a hydroelectric generating facility must:
33.1    (1) utilize between 12 and 16 turbine generators at a dam site existing on March 
33.2    31, 1994;
33.3    (2) be located on land within 3,000 feet of a 13.8 kilovolt distribution circuit; and
33.4    (3) be eligible to receive a renewable energy production incentive payment under 
33.5    section 216C.41.
33.6    EFFECTIVE DATE.This section is effective for sales and purchases made after 
33.7    April 30, 2006, and on or before December 31, 2009.

33.8        Sec. 12. Minnesota Statutes 2005 Supplement, section 297A.75, subdivision 1, is 
33.9    amended to read:
33.10       Subdivision 1. Tax collected. The tax on the gross receipts from the sale of the 
33.11   following exempt items must be imposed and collected as if the sale were taxable and the 
33.12   rate under section 297A.62, subdivision 1, applied. The exempt items include:
33.13   (1) capital equipment exempt under section 297A.68, subdivision 5;
33.14   (2) building materials for an agricultural processing facility exempt under section 
33.15   297A.71, subdivision 13;
33.16   (3) building materials for mineral production facilities exempt under section 
33.17   297A.71, subdivision 14;
33.18   (4) building materials for correctional facilities under section 297A.71, subdivision 
33.19   3;
33.20   (5) building materials used in a residence for disabled veterans exempt under section 
33.21   297A.71, subdivision 11;
33.22   (6) elevators and building materials exempt under section 297A.71, subdivision 12;
33.23   (7) building materials for the Long Lake Conservation Center exempt under section 
33.24   297A.71, subdivision 17;
33.25   (8) materials, supplies, fixtures, furnishings, and equipment for a county law 
33.26   enforcement and family service center under section 297A.71, subdivision 26;
33.27   (9) materials and supplies for qualified low-income housing under section 297A.71, 
33.28   subdivision 23; and
33.29   (10) materials, supplies, and equipment for municipal electric utility facilities under 
33.30   section 297A.71, subdivision 35; 
33.31   (11) products purchased for use as fuel for a commuter rail system exempt under 
33.32   section 297A.68, subdivision 19, clause (7); and
33.33   (12) commuter rail construction materials, supplies, and equipment exempt under 
33.34   section 297A.68, subdivision 42.

34.1        Sec. 13. Minnesota Statutes 2005 Supplement, section 297A.75, subdivision 2, is 
34.2    amended to read:
34.3        Subd. 2. Refund; eligible persons. Upon application on forms prescribed by the 
34.4    commissioner, a refund equal to the tax paid on the gross receipts of the exempt items 
34.5    must be paid to the applicant. Only the following persons may apply for the refund:
34.6    (1) for subdivision 1, clauses (1) to (3), the applicant must be the purchaser;
34.7    (2) for subdivision 1, clauses (4), (7), and (8), the applicant must be the governmental 
34.8    subdivision;
34.9    (3) for subdivision 1, clause (5), the applicant must be the recipient of the benefits 
34.10   provided in United States Code, title 38, chapter 21;
34.11   (4) for subdivision 1, clause (6), the applicant must be the owner of the homestead 
34.12   property;
34.13   (5) for subdivision 1, clause (9), the owner of the qualified low-income housing 
34.14   project; and
34.15   (6) for subdivision 1, clause (10), the applicant must be a municipal electric utility or 
34.16   a joint venture of municipal electric utilities; and
34.17   (7) for subdivision 1, clauses (11) and (12), the applicant must be the purchaser of 
34.18   the fuel or construction materials, as applicable.

34.19       Sec. 14. Laws 1980, chapter 511, section 1, subdivision 2, as amended by Laws 1991, 
34.20   chapter 291, article 8, section 22; Laws 1998, chapter 389, article 8, section 25; and Laws 
34.21   2003, First Special Session chapter 21, article 8, section 11, is amended to read:
34.22   Subd. 2.  Notwithstanding Minnesota Statutes, Section  477A.016, or any other law, 
34.23   ordinance, or city charter provision  to the contrary, the city of Duluth may, by ordinance, 
34.24   impose an  additional sales tax of up to one and one-half two and one-quarter percent on 
34.25   sales  transactions which are described in Minnesota Statutes 2000,  Section 297A.01, 
34.26   Subdivision 3, Clause (c).  When the city  council determines that the taxes imposed 
34.27   under this subdivision  and under Laws 1998, chapter 389, article 8, section 26, at a rate 
34.28   of one-half of one percent have  produced revenue sufficient to pay (1) the debt service 
34.29   on bonds  in a principal amount of $8,000,000 issued for capital  improvements to the 
34.30   Duluth Entertainment and Convention Center,  and (2) debt service on outstanding bonds 
34.31   originally issued in  the principal amount of $4,970,000 to finance capital  improvements to 
34.32   the Great Lakes Aquarium since the imposition of  the taxes at the rate of one and one-half 
34.33   percent, the rate of  the tax under this subdivision is reduced to by one-half of one percent.  
34.34   When the city council determines that the taxes imposed under this subdivision at a rate 
34.35   of three-quarters of one percent have produced revenue sufficient to pay debt service on 
35.1    bonds in the principal amount of $33,700,000, plus issuance and discount costs, issued 
35.2    for capital improvements for a new arena at the Duluth Entertainment and Convention 
35.3    Center, the rate of tax under this subdivision shall be reduced by three-quarters of one 
35.4    percent. The  imposition of this tax shall not be subject to voter referendum  under either 
35.5    state law or city charter provisions.  
35.6    EFFECTIVE DATE. This section is effective the day after  the governing body of 
35.7    the city of Duluth and its chief clerical  officer comply with Minnesota Statutes, section 
35.8    645.021,  subdivisions 2 and 3.  

35.9        Sec. 15. Laws 1996, chapter 471, article 2, section 29, is amended to read:
35.10   Sec. 29.  CITY OF HERMANTOWN; SALES AND USE TAX.  
35.11        Subdivision 1. Sales and use tax authorized. (a)  Notwithstanding Minnesota 
35.12   Statutes, section 477A.016, or any other contrary provision of law, ordinance, or city 
35.13   charter, the city of Hermantown may, by ordinance, impose an additional sales and use tax 
35.14   of up to one percent on sales transactions, storage, and use taxable pursuant to Minnesota 
35.15   Statutes, chapter 297A, that occur within the city.
35.16   (b) The proceeds of the first one-half of the one percent  tax imposed under this 
35.17   section must be used to meet the costs of  by the city for the following projects:
35.18    (1) extending a sewer interceptor line;
35.19    (2) construction of a booster pump station, reservoirs, and related improvements 
35.20   to the water system; and
35.21    (3) construction of a building containing a  police and fire station and an 
35.22   administrative services facility.
35.23   (c) Revenues received from the remaining one-half of the one percent tax 
35.24   authorized under this section must be used by the city to pay all or part of the capital and 
35.25   administrative costs of developing, acquiring, constructing, and initially furnishing and 
35.26   equipping the following projects:
35.27   (1) construction of a new facility or purchase of an existing facility to be used as 
35.28   a public works facility;
35.29   (2) construction, signalization, and rehabilitation of primary collector roads and 
35.30   commercial frontage roads, within the city; and 
35.31   (3) extension of a regional trunk sewer.
35.32   (d) Authorized expenses include, but are not limited to, acquiring property; paying 
35.33   construction, administrative, and operating expenses related to the development of the 
35.34   projects listed in paragraph (c); paying debt service on bonds or other obligations, 
35.35   including lease obligations, issued to finance construction, expansion, or improvement of 
36.1    the projects listed in paragraph (c); and other compatible uses, including but not limited to, 
36.2    parking, lighting, and landscaping.
36.3         Subd. 2. Referendum. (a) If the Hermantown city council proposes to impose the 
36.4    sales tax authorized by this section, it shall conduct a referendum on the issue.
36.5    (b) If the Hermantown city council initially imposes the tax at a rate that is less than 
36.6    one percent and proposes increasing the tax rate at a later date up to the full one percent, it 
36.7    shall conduct a referendum on the increase of the tax rate.
36.8    (c) The question of imposing or increasing the tax must be submitted to the voters at 
36.9    a special or general election.  The tax may not be imposed unless a majority of votes cast 
36.10   on the question of imposing the tax are in the affirmative.  The commissioner of revenue 
36.11   shall prepare a suggested form of question to be presented at the election.  This subdivision 
36.12   applies notwithstanding any city charter provision to the contrary.
36.13        Subd. 3. Enforcement; collection; and administration of taxes. A sales tax 
36.14   imposed under this section must be reported and paid to the commissioner of revenue 
36.15   with the state sales taxes, and be subject to the same penalties, interest, and enforcement 
36.16   provisions.  The proceeds of the tax, less refunds and a proportionate share of the cost of 
36.17   collection, shall be remitted at least quarterly to the city.  The commissioner shall deduct 
36.18   from the proceeds remitted an amount that equals the indirect statewide cost as well as the 
36.19   direct and indirect department costs necessary to administer, audit, and collect the tax.  
36.20   The amount deducted shall be deposited in the state general fund.
36.21       Subd. 3a. Bonding authority. (a) The city may issue general obligation bonds 
36.22   under Minnesota Statutes, chapter 475, to finance the costs in subdivision 1, paragraph (c). 
36.23   The total amount of bonds issued for the projects under subdivision 1, paragraph (c), may 
36.24   not exceed $13,000,000 in the aggregate.  An election to approve the bonds is not required.
36.25   (b) The bonds are not included in computing any debt limitation applicable to the 
36.26   city, and the levy of taxes under Minnesota Statutes, section 475.61, to pay principal of 
36.27   and interest on the bonds is not subject to any levy limitation.
36.28   (c) The taxes authorized under this section may be pledged to and used for the 
36.29   payment of the bonds and any bonds issued to refund them.
36.30        Subd. 4. Termination. The portion of the tax authorized under this section to 
36.31   finance the improvements described in subdivision 1, paragraph (b), terminates at the later 
36.32   of (1) ten years after the date of initial imposition of the tax, or (2) on the first day of the 
36.33   second month next succeeding a determination by the city council that sufficient funds 
36.34   have been received from the tax to finance the improvements described in subdivision 1, 
36.35   clauses (1) to (3),and to prepay or retire at maturity the principal, interest, and premium 
36.36   due on any bonds issued for the improvements on March 31, 2026. The portion of the 
37.1    tax authorized to finance the improvements described in subdivision 1, paragraph (c), 
37.2    terminates when the revenues raised are sufficient to finance those improvements, up to an 
37.3    amount equal to $13,000,000 plus any interest, premium, and other costs associated with 
37.4    the bonds issued under subdivision 3a.  The city council may terminate this portion of the 
37.5    tax earlier. Any funds remaining after completion of the improvements and retirement or 
37.6    redemption of the bonds may be placed in the general fund of the city.
37.7         Subd. 5. Local approval; effective date. This section is effective the day after final 
37.8    enactment, upon compliance with Minnesota Statutes, section 645.021, subdivision 3, by 
37.9    the city of Hermantown.
37.10   EFFECTIVE DATE.This section is effective the day after the governing body of 
37.11   the city of Hermantown and its chief clerical officer comply with Minnesota Statutes, 
37.12   section 645.021, subdivisions 2 and 3. 

37.13       Sec. 16. Laws 1999, chapter 243, article 4, section 18, subdivision 1, is amended to 
37.14   read:
37.15        Subdivision 1. Sales and use tax. (a) Notwithstanding Minnesota Statutes, section 
37.16   297A.48, subdivision 1a, 477A.016, or any other provision of law, ordinance, or city 
37.17   charter, if approved by the city voters at the first municipal general election held after the 
37.18   date of final enactment of this act or at a special election held November 2, 1999, the city 
37.19   of Proctor may impose by ordinance a sales and use tax of up to one-half of one percent 
37.20   for the purposes specified in subdivision 3, paragraph (a).  The provisions of Minnesota 
37.21   Statutes, section 297A.48 297A.99, govern the imposition, administration, collection, and 
37.22   enforcement of the tax authorized under this subdivision.
37.23   (b) The city of Proctor may impose by ordinance an additional sales and use tax of 
37.24   up to one-half of one percent if approved by the city voters at a general election or at a 
37.25   special election held for this purpose.  The revenues received from this additional tax must 
37.26   be used for the purposes specified in subdivision 3, paragraph (b).
37.27   EFFECTIVE DATE.This section is effective the day following final enactment, 
37.28   upon compliance by the city of Proctor with Minnesota Statutes, section 645.021, 
37.29   subdivision 3.

37.30       Sec. 17. Laws 1999, chapter 243, article 4, section 18, subdivision 3, is amended to 
37.31   read:
38.1         Subd. 3. Use of revenues. (a) Revenues received from taxes authorized by 
38.2    subdivisions 1, paragraph (a), and 2 must be used by the city to pay the cost of collecting 
38.3    the taxes and to pay for construction and improvement of the following city facilities:
38.4     (1) streets; and
38.5     (2) constructing and equipping the Proctor community activity center.
38.6     Authorized expenses include, but are not limited to, acquiring property, paying 
38.7    construction and operating expenses related to the development of an authorized facility, 
38.8    and paying debt service on bonds or other obligations, including lease obligations, issued 
38.9    to finance the construction, expansion, or improvement of an authorized facility.  The 
38.10   capital expenses for all projects authorized under this paragraph that may be paid with 
38.11   these taxes is limited to $3,600,000, plus an amount equal to the costs related to issuance 
38.12   of the bonds.
38.13   (b) Revenues received from taxes authorized by subdivision 1, paragraph (b), 
38.14   must be used by the city to pay the cost of collecting the taxes and for construction and 
38.15   improvements of city streets, public utilities, sidewalks, bikeways, and trails.
38.16   EFFECTIVE DATE.This section is effective the day following final enactment, 
38.17   upon compliance by the city of Proctor with Minnesota Statutes, section 645.021, 
38.18   subdivision 3.

38.19       Sec. 18. Laws 1999, chapter 243, article 4, section 18, subdivision 4, is amended to 
38.20   read:
38.21        Subd. 4. Bonding authority. (a) The city may issue bonds under Minnesota 
38.22   Statutes, chapter 475, to finance the capital expenditure and improvement projects 
38.23   described in subdivision 3.  An election to approve the bonds under Minnesota Statutes, 
38.24   section 475.58, is not required.
38.25    (b) The issuance of bonds under this subdivision is not subject to Minnesota Statutes, 
38.26   sections 275.60 and 279.61 275.61.
38.27    (c) The bonds are not included in computing any debt limitation applicable to the 
38.28   city, and the levy of taxes under Minnesota Statutes, section 475.61, to pay principal of 
38.29   and interest on the bonds is not subject to any levy limitation.
38.30    (d) For projects described in subdivision 3, paragraph (a), the aggregate principal 
38.31   amount of bonds, plus the aggregate of the taxes used directly to pay eligible capital 
38.32   expenditures and improvements, may not exceed $3,600,000, plus an amount equal to 
38.33   the costs related to issuance of the bonds, including interest on the bonds. For projects 
38.34   described in subdivision 3, paragraph (b), the aggregate principal amount of bonds may 
39.1    not exceed $7,200,000, plus an amount equal to the costs related to issuance of the bonds, 
39.2    including interest on the bonds.
39.3     (e) The sales and use and excise taxes authorized in this section may be pledged to 
39.4    and used for the payment of the bonds and any bonds issued to refund them only if the 
39.5    bonds and any refunding bonds are general obligations of the city.
39.6    EFFECTIVE DATE.This section is effective the day following final enactment, 
39.7    upon compliance by the city of Proctor with Minnesota Statutes, section 645.021, 
39.8    subdivision 3.

39.9        Sec. 19. Laws 2005, First Special Session chapter 3, article 5, section 43, subdivision 
39.10   3, is amended to read:
39.11   Subd. 3.  Use of revenues. Revenues received from the  taxes authorized by 
39.12   subdivisions 1 and 2 must be used to pay all  or part of the capital costs of transportation 
39.13   contained in the  Minnesota Department of Transportation's Winona Intermodal study  
39.14   dated June 2002 and in the resolution approved by the city  council on January 3, 2005, and 
39.15   all or a part of the capital costs of flood control projects approved by resolution of the city 
39.16   council on February 6, 2006, including securing or paying debt  service on bonds issued 
39.17   under subdivision 4, for the  transportation and flood control projects and to pay the cost 
39.18   of collecting and  administering the tax.  Authorized costs include, but are not  limited to, 
39.19   acquiring property and paying construction and  engineering costs related to the projects.  
39.20   EFFECTIVE DATE.This section is effective the day after compliance by 
39.21   the governing body of the city of Winona with Minnesota Statutes, section 645.021, 
39.22   subdivision 3.

39.23       Sec. 20. Laws 2005, First Special Session chapter 3, article 5, section 44, subdivision 
39.24   1, is amended to read:
39.25    
39.26   Subdivision 1. Sales and use tax. Notwithstanding  Minnesota Statutes, section 
39.27   477A.016, or any other provision of  law, ordinance, or city charter, if approved by the 
39.28   voters  pursuant to Minnesota Statutes, section 297A.99, at the next a   general election 
39.29   held before January 1, 2008, the city of Worthington may impose by  ordinance a sales 
39.30   and use tax of up to one-half of one percent  for the purpose specified in subdivision 3.  
39.31   Except as otherwise  provided in this section, the provisions of Minnesota Statutes,  section 
39.32   297A.99, govern the imposition, administration,  collection, and enforcement of the tax 
39.33   authorized under this  subdivision.  
40.1     
40.2    EFFECTIVE DATE.This section is effective the day following final enactment.

40.3        Sec. 21. CITY OF AUSTIN; TAXES AUTHORIZED.
40.4        Subdivision 1. Sales and use tax. Notwithstanding Minnesota Statutes, section 
40.5    477A.016, or any other provision of law, ordinance, or city charter, if approved by the 
40.6    voters pursuant to Minnesota Statutes, section 297A.99, at the next general election or 
40.7    special election held for that purpose before January 1, 2007, the city of Austin may 
40.8    impose by ordinance a sales and use tax of up to one-half of one percent for the purpose 
40.9    specified in subdivision 2. Except as otherwise provided in this section, the provisions of 
40.10   Minnesota Statutes, section 297A.99, govern the imposition, administration, collection, 
40.11   and enforcement of the tax authorized under this subdivision.
40.12       Subd. 2. Use of revenues. Revenues received from taxes authorized by subdivision 
40.13   1 must be used by the city of Austin to pay all or part of the capital or administrative costs 
40.14   of flood mitigation projects in the city of Austin. Authorized expenses include, but are not 
40.15   limited to, acquiring property and paying construction and engineering expenses related 
40.16   to the flood mitigation projects.
40.17       Subd. 3. Bonding authority. Pursuant to the approval of the city voters to impose 
40.18   the tax authorized in subdivision 1, the city of Austin may issue without an additional 
40.19   election general obligation bonds of the city in an amount not to exceed $14,000,000 to 
40.20   finance the costs for the projects specified in subdivision 2. The debt represented by the 
40.21   bonds must not be included in computing any debt limitations applicable to the city, and 
40.22   the levy of taxes required by Minnesota Statutes, section 475.61, to pay the principal or 
40.23   any interest on the bonds must not be subject to any levy limitation.
40.24       Subd. 4. Termination of tax. The tax authorized under subdivision 1 terminates at 
40.25   the earlier of:
40.26   (1) 20 years after the date of initial imposition of the tax; or
40.27   (2) when the Austin City Council determines that the amount described in 
40.28   subdivision 2 has been received from the tax to finance the capital and administrative costs 
40.29   for the projects specified in subdivision 2, and to repay or retire at maturity, the principal, 
40.30   interest, and premium due on any bonds issued for the projects under subdivision 3. 
40.31   Any funds remaining after completion of the projects specified in subdivision 2, and 
40.32   retirement or redemption of the bonds in subdivision 3, may be placed in the general fund 
40.33   of the city. The tax imposed under subdivision 1 may expire at an earlier time if the 
40.34   city so determines by ordinance.
41.1    EFFECTIVE DATE.This section is effective the day after compliance by 
41.2    the governing body of the city of Austin with Minnesota Statutes, section 645.021, 
41.3    subdivisions 2 and 3.

41.4        Sec. 22. CITY OF BAXTER; TAXES AUTHORIZED.
41.5        Subdivision 1. Sales and use tax authorized. Notwithstanding Minnesota Statutes, 
41.6    section 477A.016, or any other provision of law, ordinance, or city charter, pursuant to 
41.7    the approval of the voters on November 2, 2004, and pursuant to Minnesota Statutes, 
41.8    section 297A.99, the city of Baxter may impose by ordinance a sales and use tax of 
41.9    one-half of one percent for the purposes specified in subdivision 3. The provisions of 
41.10   Minnesota Statutes, section 297A.99, govern the imposition, administration, collection, 
41.11   and enforcement of the tax authorized under this subdivision.
41.12       Subd. 2. Excise tax authorized. Notwithstanding Minnesota Statutes, section 
41.13   477A.016, or any other contrary provision of law, ordinance, or city charter, the city of 
41.14   Baxter may impose by ordinance, for the purposes specified in subdivision 3, an excise tax 
41.15   of up to $20 per motor vehicle, as defined by ordinance, purchased or acquired from any 
41.16   person engaged within the city of Baxter in the business of selling motor vehicles at retail.
41.17       Subd. 3. Use of revenues. Revenues received from the taxes authorized by 
41.18   subdivisions 1 and 2 must be used to pay the cost of collecting and administering the tax 
41.19   and to finance all or part of the costs of constructing an upgraded regional wastewater 
41.20   treatment facility to serve the cities of Brainerd and Baxter, building and equipping a 
41.21   fire substation, and constructing the Paul Bunyan bridge over Excelsior Road and other 
41.22   improvements. Authorized costs include, but are not limited to, acquiring property and 
41.23   paying construction and engineering costs related to the projects.
41.24       Subd. 4. Bonds. The city of Baxter, pursuant to the approval of the voters at the 
41.25   November 2, 2004, referendum authorizing the imposition of the taxes in this section, may 
41.26   issue general obligation bonds of the city, in one or more series, in the aggregate principal 
41.27   amount not to exceed $15,000,000 to finance the projects listed in subdivision 3. The debt 
41.28   represented by the bonds is not included in computing any debt limitations applicable to 
41.29   the city, and the levy of taxes required by Minnesota Statutes, section 475.61, to pay the 
41.30   principal of and interest on the bonds is not subject to any levy limitation or included in 
41.31   computing or applying any levy limitation applicable to the city of Baxter.
41.32       Subd. 5. Termination of taxes. The taxes imposed under subdivisions 1 and 2 
41.33   expire at the earlier of a date 12 years after the imposition of the tax or when the Baxter 
41.34   City Council first determines that the amount of revenues raised from the taxes to pay for 
41.35   the projects equals or exceeds $15,000,000 plus any interest on bonds issued for the 
42.1    projects under subdivision 3. Any funds remaining after the expiration of the taxes and 
42.2    retirement of the bonds shall be placed in a capital project fund of the city of Baxter. The 
42.3    taxes imposed under subdivisions 1 and 2 may expire at an earlier time if the city of 
42.4    Baxter so determines by ordinance.
42.5    EFFECTIVE DATE.This section is effective the day after compliance by 
42.6    the governing body of the city of Baxter with Minnesota Statutes, section 645.021, 
42.7    subdivision 3.

42.8        Sec. 23. CITY OF BRAINERD; TAXES AUTHORIZED.
42.9        Subdivision 1. Sales and use tax authorized. Notwithstanding Minnesota Statutes, 
42.10   section 477A.016, or any other provision of law, ordinance, or city charter, contingent 
42.11   on the approval of the voters on the November 7, 2006, referendum, and pursuant to 
42.12   Minnesota Statutes, section 297A.99, the city of Brainerd may impose by ordinance a sales 
42.13   and use tax of one-half of one percent for the purposes specified in subdivision 3. The 
42.14   provisions of Minnesota Statutes, section 297A.99, govern the imposition, administration, 
42.15   collection, and enforcement of the tax authorized under this section.
42.16       Subd. 2. Excise tax authorized. Notwithstanding Minnesota Statutes, section 
42.17   477A.016, or any other provision of law, ordinance, or city charter, the city of Brainerd 
42.18   may impose by ordinance, for the purposes specified in subdivision 3, an excise tax of up 
42.19   to $20 per motor vehicle, as defined by ordinance, purchased, or acquired from any person 
42.20   engaged within the city of Brainerd in the business of selling motor vehicles at retail.
42.21       Subd. 3. Use of revenues. Revenues received from the taxes authorized by 
42.22   subdivisions 1 and 2 must be used to pay the cost of collecting and administering the tax 
42.23   and to finance all or part of the costs of constructing an upgraded regional wastewater 
42.24   treatment facility to serve the cities of Brainerd and Baxter, water infrastructure 
42.25   improvements, and trail development, contingent on approval by Brainerd voters at the 
42.26   November 7, 2006, referendum. Authorized costs include, but are not limited to, acquiring 
42.27   property and paying construction and engineering costs related to the projects.
42.28       Subd. 4. Bonds. The city of Brainerd, contingent on approval of the voters at the 
42.29   November 7, 2006, referendum authorizing the imposition of taxes in this section, may 
42.30   issue general obligation bonds of the city, in one or more series, in the aggregate principal 
42.31   amount not to exceed $22,030,000 to finance the projects listed in subdivision 3. The debt 
42.32   represented by the bonds is not included in computing any debt limitations applicable to 
42.33   Brainerd, and the levy of taxes required by Minnesota Statutes, section 475.61, to pay the 
42.34   principal and interest on the bonds is not subject to any levy limitation or included in 
42.35   computing any levy limitation applicable to the city of Brainerd.
43.1        Subd. 5. Termination of taxes. The taxes imposed under subdivisions 1 and 2 
43.2    expire at the earlier of a date 12 years after the imposition of the tax or when the city 
43.3    council first determines that the amount of revenues raised from the taxes to pay for 
43.4    projects equals or exceeds $22,030,000 plus any interest on bonds issued for the projects 
43.5    under subdivision 3. Any funds remaining after the expiration of the taxes and retirement 
43.6    of the bonds shall be placed in a capital project fund of the city of Brainerd. The taxes 
43.7    imposed under subdivisions 1 and 2 may expire at an earlier time if the city of Brainerd so 
43.8    determines by ordinance.
43.9    EFFECTIVE DATE.This section is effective the day after compliance by the 
43.10   governing body of the city of Brainerd with Minnesota Statutes, section 645.021, 
43.11   subdivision 3.

43.12       Sec. 24. CITY OF BREEZY POINT; TAXES AUTHORIZED.
43.13       Subdivision 1. Sales and use tax authorized. Notwithstanding Minnesota Statutes, 
43.14   section 477A.016, or any other provision of law, ordinance, or city charter, pursuant to 
43.15   the approval of the voters at the general election on November 7, 2006, and pursuant to 
43.16   Minnesota Statutes, section 297A.99, the city of Breezy Point may impose by ordinance 
43.17   a sales and use tax of one-half of one percent for the purposes specified in subdivision 
43.18   3. The provisions of Minnesota Statutes, section 297A.99, govern the imposition, 
43.19   administration, collection, and enforcement of the tax authorized under this subdivision.
43.20       Subd. 2. Excise tax authorized. Notwithstanding Minnesota Statutes, section 
43.21   477A.016, or any other contrary provision of law, ordinance, or city charter, the city of 
43.22   Breezy Point may impose by ordinance, for the purposes specified in subdivision 3, an 
43.23   excise tax of up to $20 per motor vehicle, as defined by ordinance, purchased or acquired 
43.24   from any person engaged within the city of Breezy Point in the business of selling motor 
43.25   vehicles at retail.
43.26       Subd. 3. Use of revenues. Revenues received from the taxes authorized by 
43.27   subdivisions 1 and 2 must be used to pay the cost of collecting and administering the tax 
43.28   and to finance sanitary sewer and storm sewer improvements as approved by the voters 
43.29   at the referendum authorizing the tax. Authorized costs include, but are not limited to, 
43.30   acquiring property and paying construction and engineering costs related to the projects.
43.31       Subd. 4. Bonds. The city of Breezy Point, pursuant to the approval of the voters at 
43.32   the referendum authorizing the imposition of the taxes in this section, may issue general 
43.33   obligation bonds of the city, in one or more series, in the aggregate principal amount not to 
43.34   exceed $11,000,000 to finance the projects listed in subdivision 3. The debt represented 
43.35   by the bonds is not included in computing any debt limitations applicable to the city, and 
44.1    the levy of taxes required by Minnesota Statutes, section 475.61, to pay the principal of 
44.2    and interest on the bonds is not subject to any levy limitation or included in computing or 
44.3    applying any levy limitation applicable to the city.
44.4        Subd. 5. Termination of taxes. The taxes imposed under subdivisions 1 and 2 
44.5    expire 15 years after the imposition of the tax or when the Breezy Point City Council 
44.6    first determines that the amount of revenues raised from the taxes to pay for the projects 
44.7    equals or exceeds $11,000,000 plus any interest on bonds issued for the projects under 
44.8    subdivision 3, whichever is earlier. Any funds remaining after the expiration of the taxes 
44.9    and retirement of the bonds may be placed in the general fund or in a capital project fund 
44.10   of the city of Breezy Point. The taxes imposed under subdivisions 1 and 2 may expire 
44.11   at an earlier time if the city so determines by ordinance.
44.12   EFFECTIVE DATE.This section is effective the day after compliance by the 
44.13   governing body of the city of Breezy Point with Minnesota Statutes, section 645.021, 
44.14   subdivision 3.

44.15       Sec. 25. CITY OF CLOQUET; TAXES AUTHORIZED.
44.16       Subdivision 1. Sales and use tax. Notwithstanding Minnesota Statutes, section 
44.17   477A.016, or any other provision of law, ordinance, or city charter, if approved by the 
44.18   voters pursuant to Minnesota Statutes, section 297A.99, or at a special election held for 
44.19   this purpose, the city of Cloquet may impose by ordinance a sales and use tax of up to 
44.20   one-half of one percent for the purpose specified in subdivision 3.  Except as provided in 
44.21   this section, the provisions of Minnesota Statutes, section 297A.99, govern the imposition, 
44.22   administration, collection, and enforcement of the tax authorized under this subdivision.
44.23       Subd. 2. Excise tax authorized. Notwithstanding Minnesota Statutes, section 
44.24   477A.016, or any other provision of law, ordinance, or city charter, the city of Cloquet 
44.25   may impose by ordinance, for the purposes specified in subdivision 3, an excise tax of up 
44.26   to $20 per motor vehicle, as defined by ordinance, purchased or acquired from any person 
44.27   engaged within the city in the business of selling motor vehicles at retail.
44.28       Subd. 3. Use of revenues. Revenues received from taxes authorized by subdivisions 
44.29   1 and 2 must be used by the city to pay the cost of collecting the taxes and to pay for the 
44.30   following projects:
44.31   (1) construction and completion of park improvement projects, including 
44.32   reconstruction of the Pinehurst Park swimming pool complex, St. Louis River Riverfront 
44.33   improvements, Veteran's Park construction, and enhancements to the Hilltop Park soccer 
44.34   complex and Braun Park baseball complex; and
45.1    (2) extension of utilities and the construction of all improvements associated with 
45.2    the new Cloquet Industrial Park.
45.3    Authorized expenses include, but are not limited to, acquiring property and paying 
45.4    construction expenses related to these improvements, and paying debt service on bonds or 
45.5    other obligations issued to finance acquisition and construction of these improvements.
45.6        Subd. 4. Bonding authority. (a) The city may issue bonds under Minnesota 
45.7    Statutes, chapter 475, to pay capital and administrative expenses for the improvements 
45.8    described in subdivision 3 in an amount that does not exceed $9,000,000.  An election to 
45.9    approve the bonds under Minnesota Statutes, section 475.58, is not required.
45.10   (b) The issuance of bonds under this subdivision is not subject to Minnesota Statutes, 
45.11   sections 275.60 and 275.61.
45.12   (c) The debt represented by the bonds is not included in computing any debt 
45.13   limitation applicable to the city, and any levy of taxes under Minnesota Statutes, section 
45.14   475.61, to pay principal of and interest on the bonds is not subject to any levy limitation.
45.15       Subd. 5. Termination of taxes. The taxes imposed under subdivisions 1 and 2 
45.16   expire at the earlier of (1) 18 years, or (2) when the city council determines that sufficient 
45.17   funds have been received from the taxes to finance the capital and administrative costs of 
45.18   the improvements described in subdivision 3, plus the additional amount needed to pay 
45.19   the costs related to issuance of bonds under subdivision 4, including interest on the bonds. 
45.20   Any funds remaining after completion of the project and retirement or redemption of the 
45.21   bonds may be placed in the general fund of the city.  The taxes imposed under subdivisions 
45.22   1 and 2 may expire at an earlier time if the city so determines by ordinance.
45.23   EFFECTIVE DATE.This section is effective the day after the governing body of 
45.24   the city of Cloquet and its chief clerical officer timely comply with Minnesota Statutes, 
45.25   section 645.021, subdivisions 2 and 3. 

45.26       Sec. 26. CITY OF ELY; TAXES AUTHORIZED.
45.27       Subdivision 1. Sales and use tax. Notwithstanding Minnesota Statutes, section 
45.28   477A.016, or any other provision of law, ordinance, or city charter, if approved by the 
45.29   voters pursuant to Minnesota Statutes, section 297A.99, the city of Ely may impose by 
45.30   ordinance a sales and use tax of up to one percent for the purposes specified in subdivision 
45.31   2. Except as otherwise provided in this section, the provisions of Minnesota Statutes, 
45.32   section 297A.99, govern the imposition, administration, collection, and enforcement of 
45.33   the tax authorized under this subdivision.
45.34       Subd. 2. Use of revenues. The proceeds of the tax imposed under this section 
45.35   shall be used for the following:
46.1    (1) land acquisition and site development;
46.2    (2) installations of improvements authorized by Minnesota Statutes, chapter 429;
46.3    (3) development or redevelopment activities in the central business district of Ely;
46.4    (4) business park development;
46.5    (5) development of a small business incubator;
46.6    (6) development of a technology center; and 
46.7    (7) improvements to the Ely Community Center and City Hall needed to bring them 
46.8    into compliance with the Americans with Disabilities Act.
46.9        Subd. 3. Bonding authority. The city of Ely may issue bonds in an amount not 
46.10   to exceed $6,000,000 under Minnesota Statutes, chapter 475, to finance the capital 
46.11   expenditures and improvements authorized by the referendum under subdivision 4. An 
46.12   election to approve the bonds under Minnesota Statutes, section 475.58, is not required. 
46.13   The issuance of bonds under this subdivision is not subject to Minnesota Statutes, section 
46.14   275.60 or 275.61. The debt represented by the bonds must not be included in computing 
46.15   any debt limitations applicable to the city, and the levy of taxes required by Minnesota 
46.16   Statutes, section 475.61, to pay the principal or any interest on the bonds and must not 
46.17   be subject to any levy limitation.
46.18       Subd. 4. Termination of tax. The tax authorized under subdivision 1 terminates at 
46.19   the earlier of (1) 20 years after the date of initial imposition of the tax, or (2) when the Ely 
46.20   City Council determines that the amount of revenues raised to pay for the projects under 
46.21   subdivision 2 shall meet or exceed the sum of $6,000,000, plus the amount needed to 
46.22   finance the capital and administrative costs of the projects specified in subdivision 2, and 
46.23   to repay or retire at maturity the principal, interest, and premium due on any bonds issued 
46.24   for the projects under subdivision 3. Any funds remaining after completion of the projects 
46.25   specified in subdivision 2, and retirement or redemption of the bonds in subdivision 3, 
46.26   may be placed in the general fund of the city. The tax imposed under subdivision 1 may 
46.27   expire at an earlier time if the city so determines by ordinance.
46.28   EFFECTIVE DATE.This section is effective the day after compliance by the 
46.29   governing body of the city of Ely with Minnesota Statutes, section 645.021, subdivisions 
46.30   2 and 3.

46.31       Sec. 27. CITY OF LUVERNE; TAXES AUTHORIZED.
46.32       Subdivision 1. Sales and use tax authorized. Notwithstanding Minnesota Statutes, 
46.33   section 477A.016, or any other provision of law, ordinance, or city charter, if approved 
46.34   by the voters pursuant to Minnesota Statutes, section 297A.99, the city of Luverne may 
46.35   impose by ordinance a sales and use tax of one-half of one percent for the purposes 
47.1    specified in subdivision 3. The provisions of Minnesota Statutes, section 297A.99, govern 
47.2    the imposition, administration, collection, and enforcement of the tax authorized under 
47.3    this subdivision.
47.4        Subd. 2. Excise tax authorized. Notwithstanding Minnesota Statutes, section 
47.5    477A.016, or any other contrary provision of law, ordinance, or city charter, the city of 
47.6    Luverne may impose by ordinance, for the purposes specified in subdivision 3, an excise 
47.7    tax of up to $20 per motor vehicle, as defined by ordinance, purchased or acquired from 
47.8    any person engaged within the city in the business of selling motor vehicles at retail.
47.9        Subd. 3. Use of revenues. Revenues received from the taxes authorized by 
47.10   subdivisions 1 and 2 must be used to pay the cost of collecting and administering the 
47.11   taxes and to pay all or part of the expenses for capital improvements and renovation of 
47.12   the Historic Palace Theatre in an amount not to exceed $3,000,000. Authorized expenses 
47.13   include, but are not limited to, acquiring property and paying construction expenses 
47.14   related to the project, and paying debt service on bonds or other obligations issued to 
47.15   finance the acquisition and improvements.
47.16       Subd. 4. Bonds. If the taxes under subdivisions 1 and 2 are approved by voters 
47.17   pursuant to Minnesota Statutes, section 297A.99, the city of Luverne may issue, without 
47.18   an additional election, bonds, in one or more series, in the aggregate principal amount 
47.19   not to exceed $3,000,000 to pay capital and administrative costs of the projects listed in 
47.20   subdivision 3. The debt represented by the bonds is not included in computing any debt 
47.21   limitations applicable to the city, and the levy of taxes required by Minnesota Statutes, 
47.22   section 475.61, to pay the principal of and interest on the bonds is not subject to any levy 
47.23   limitation or included in computing or applying any levy limitation applicable to the city.
47.24       Subd. 5. Termination of taxes. The taxes imposed under subdivisions 1 and 2 
47.25   expire at the later of 30 years after the imposition of the tax or when the Luverne city 
47.26   council determines that sufficient funds have been received from the taxes to prepay 
47.27   or retire at maturity the principal, interest, and premium due on any bonds issued for 
47.28   the project under subdivision 4. Any funds remaining after expiration of the taxes and 
47.29   retirement of the bonds may be placed in a capital project fund of the city. The taxes 
47.30   imposed under subdivisions 1 and 2 may expire at an earlier time if the city so determines 
47.31   by ordinance.
47.32   EFFECTIVE DATE.This section is effective the day after compliance by the 
47.33   governing body of the city of Luverne with Minnesota Statutes, section 645.021, 
47.34   subdivision 3.

47.35       Sec. 28. CITY OF MEDFORD; SALES AND USE TAX.
48.1        Subdivision 1. Sales and use tax authorized. Notwithstanding Minnesota Statutes, 
48.2    section 477A.016, or any other provision of law, ordinance, or city charter, if approved by 
48.3    the voters pursuant to Minnesota Statutes, section 297A.99, at the next general election, 
48.4    the city of Medford may impose by ordinance a sales and use tax of one-half of one 
48.5    percent for the purposes specified in subdivision 2. Except as otherwise provided in this 
48.6    section, the provisions of Minnesota Statutes, section 297A.99, govern the imposition, 
48.7    administration, collection, and enforcement of the tax authorized under this subdivision.
48.8        Subd. 2. Use of revenues. The proceeds of the tax imposed under this section must 
48.9    be used by the city of Medford to pay the costs of collecting and administering the tax and 
48.10   to pay up to $5,000,000 in costs to improve the city's wastewater system and wastewater 
48.11   treatment plant. Authorized expenses include, but are not limited to, acquiring property 
48.12   and paying construction expenses and debt service on bonds or other obligations issued to 
48.13   finance acquisition and construction of the improvements.
48.14       Subd. 3. Bonding authority. (a) If the tax authorized under subdivision 1 is 
48.15   approved by the voters, the city may issue bonds under Minnesota Statutes, chapter 475, 
48.16   to pay the capital and administrative expenses for the improvement projects authorized 
48.17   under subdivision 2. The total amount of bonds issued for the projects listed in subdivision 
48.18   2 may not exceed $5,000,000 in aggregate. An election to approve the bonds under 
48.19   Minnesota Statutes, section 475.58, is not required.
48.20   (b) The debt represented by the bonds is not included in computing any debt 
48.21   limitation applicable to the city of Medford, and the levy of taxes under Minnesota 
48.22   Statutes, section 475.61, to pay the principal of and interest on the bonds is not subject to 
48.23   any levy limitation. 
48.24       Subd. 4. Termination of taxes. The tax imposed under this section expires at the 
48.25   earlier of (1) 20 years after the date the taxes are first imposed, or (2) when the Medford 
48.26   City Council determines that the amount of revenues received from the tax equals or 
48.27   exceeds the sum of $5,000,000, plus an amount equal to the costs related to the issuance of 
48.28   bonds under subdivision 3, including interest on the bonds. Any funds remaining after 
48.29   completion of the projects and retirement or redemption of the bonds may be placed in the 
48.30   general fund of the city. The tax imposed under subdivision 1 may expire at an earlier 
48.31   time if the city so determines by ordinance.
48.32   EFFECTIVE DATE.This section is effective the day after compliance by the 
48.33   governing body of the city of Medford with Minnesota Statutes, section 645.021, 
48.34   subdivision 3.

48.35       Sec. 29. CITY OF NORTH MANKATO; TAXES AUTHORIZED.
49.1        Subdivision 1. Sales and use tax authorized. Notwithstanding Minnesota Statutes, 
49.2    section 477A.016, or any other provision of law, ordinance, or city charter, if approved by 
49.3    the voters pursuant to Minnesota Statutes, section 297A.99, the city of North Mankato 
49.4    may impose by ordinance a sales and use tax of one-half of one percent for the purposes 
49.5    specified in subdivision 3. The provisions of Minnesota Statutes, section 297A.99, govern 
49.6    the imposition, administration, collection, and enforcement of the taxes authorized under 
49.7    this subdivision.
49.8        Subd. 2. Use of revenues. Revenues received from the tax authorized by 
49.9    subdivision 1 must be used to pay all or part of the capital costs of the following projects:
49.10   (1) the local share of the marked Trunk Highway 14/County State-Aid Highway 
49.11   41 interchange project, including a connection to the North Port Industrial Park and trail 
49.12   connections to the scenic byway along the Minnesota River, the Nicollet County Park, 
49.13   existing trails in the cities of North Mankato, and Mankato and the Sakatah State Trail;
49.14   (2) development of regional parks and hiking and biking trails in Caswell Park, 
49.15   Benson Park, and Spring Lake Park;
49.16   (3) riverfront redevelopment projects; and
49.17   (4) lake improvement projects.
49.18   The total amount of revenues from the tax in subdivision 1 that may be used to fund 
49.19   these projects is $5,250,000 plus any associated bond costs.
49.20       Subd. 3. Bonds. (a) The city of North Mankato, if approved by voters pursuant to 
49.21   Minnesota Statutes, section 297A.99, may issue bonds under Minnesota Statutes, chapter 
49.22   475, to pay capital and administrative expenses for the projects described in subdivision 2, 
49.23   in an amount that does not exceed $5,250,000. A separate election to approve the bonds 
49.24   under Minnesota Statutes, section 475.58, is not required.
49.25   (b) The debt represented by the bonds is not included in computing any debt 
49.26   limitation applicable to the city, and any levy of taxes under Minnesota Statutes, section 
49.27   475.61, to pay principal and interest on the bonds is not subject to any levy limitation.
49.28       Subd. 4. Termination of taxes. The tax imposed under subdivision 1 expires at the 
49.29   later of (1) 15 years, or (2) when the city council determines that the amount of revenues 
49.30   received from the taxes to pay for the projects under subdivision 2 first equals or exceeds 
49.31   the amount authorized to be spent for each project plus the additional amount needed to 
49.32   pay the costs related to issuance of the bonds under subdivision 3, including interest 
49.33   on the bonds. Any funds remaining after completion of the projects and retirement or 
49.34   redemption of the bonds shall be placed in a capital facilities and equipment replacement 
49.35   fund of the city. The tax imposed under section 1 may expire at an earlier time if the 
49.36   city so determines by ordinance.
50.1    EFFECTIVE DATE.This section is effective the day after compliance by the 
50.2    governing body of the city of North Mankato with Minnesota Statutes, section 645.021, 
50.3    subdivision 3.

50.4        Sec. 30. CITY OF OWATONNA; TAXES AUTHORIZED.
50.5        Subdivision 1. Sales and use tax authorized. Notwithstanding Minnesota Statutes, 
50.6    section 477A.016, or any other provision of law, ordinance, or city charter, if approved 
50.7    by the voters pursuant to Minnesota Statutes, section 297A.99, the city of Owatonna 
50.8    may impose by ordinance a sales and use tax of one-half of one percent for the purposes 
50.9    specified in subdivision 3. The provisions of Minnesota Statutes, section 297A.99, govern 
50.10   the imposition, administration, collection, and enforcement of the taxes authorized under 
50.11   this subdivision.
50.12       Subd. 2. Excise tax authorized. Notwithstanding Minnesota Statutes, section 
50.13   477A.016, or any other provision of law, ordinance, or city charter, the city of Owatonna 
50.14   may impose by ordinance, for the purposes specified in subdivision 3, an excise tax of 
50.15   $20 per motor vehicle, as defined by ordinance, purchased or acquired from any person 
50.16   engaged within the city in the business of selling motor vehicles at retail.
50.17       Subd. 3. Use of revenues. Revenues received from the taxes authorized by 
50.18   subdivisions 1 and 2 must be used to pay all or part of the capital costs of transportation 
50.19   projects included in the 2004 U.S. Highway 14-Owatonna Beltline Study by the Minnesota 
50.20   Department of Transportation, Steele County, and the city of Owatonna; regional parks 
50.21   and trail developments, West Hills complex, firehall, and library improvement projects; 
50.22   and a public safety radio system; as described in the city resolution No. 4-06, Exhibit 
50.23   A, as adopted by the city on January 17, 2006. The amount paid from these revenues 
50.24   for transportation projects may not exceed $4,450,000 plus associated bond costs. The 
50.25   amount paid from these revenues for park and trail projects may not exceed $5,400,000 
50.26   plus associated bond costs. The amount paid from these revenues for West Hills complex, 
50.27   fire hall, and library improvement projects may not exceed $2,823,000 plus associated 
50.28   bond costs. The amount paid from these revenues for a public safety radio system may not 
50.29   exceed $500,000 plus associated bond costs. 
50.30       Subd. 4. Bonds. (a) The city of Owatonna, if approved by voters pursuant to 
50.31   Minnesota Statutes, section 297A.99, may issue bonds under Minnesota Statutes, chapter 
50.32   475, to pay capital and administrative expenses for the projects described in subdivision 3, 
50.33   in an amount that does not exceed $13,200,000. A separate election to approve the bonds 
50.34   under Minnesota Statutes, section 475.58, is not required.
51.1    (b) The debt represented by the bonds is not included in computing any debt 
51.2    limitation applicable to the city, and any levy of taxes under Minnesota Statutes, section 
51.3    475.61, to pay principal and interest on the bonds, is not subject to any levy limitation.
51.4        Subd. 5. Termination of taxes. The taxes imposed under subdivisions 1 and 2 
51.5    expire at the earlier of (1) ten years, or (2) when the city council determines that the 
51.6    amount of revenues received from the taxes to pay for the projects under subdivision 3 first 
51.7    equals or exceeds the amount authorized to be spent for each project plus the additional 
51.8    amount needed to pay the costs related to issuance of the bonds under subdivision 4, 
51.9    including interest on the bonds. Any funds remaining after completion of the projects 
51.10   and retirement or redemption of the bonds shall be placed in a capital project fund of 
51.11   the city. The taxes imposed under sections 1 and 2 may expire at an earlier time if the 
51.12   city so determines by ordinance.
51.13   EFFECTIVE DATE.This section is effective the day after compliance by the 
51.14   governing body of the city of Owatonna with Minnesota Statutes, section 645.021, 
51.15   subdivision 3.

51.16       Sec. 31. CITY OF PARK RAPIDS.
51.17       Subdivision 1. Sales and use tax authorized.  Notwithstanding Minnesota Statutes, 
51.18   section 477A.016, or any other provision of law, ordinance, or city charter, pursuant to 
51.19   the approval of the city voters at the next general election or at a special election held for 
51.20   this purpose, the city of Park Rapids may impose by ordinance a sales and use tax of one 
51.21   percent for the purposes specified in subdivision 2.  The provisions of Minnesota Statutes, 
51.22   section 297A.99, govern the imposition, administration, collection, and enforcement of 
51.23   the tax authorized under this subdivision.
51.24       Subd. 2. Use of revenues. Revenues received from the tax authorized by 
51.25   subdivision 1 must be used for the cost of collecting and administering the tax and to 
51.26   pay all or part of the capital or administrative costs of the development, acquisition, 
51.27   construction, and improvement of the following projects:
51.28   (1) two-thirds of the cost of construction and operation of a community center that 
51.29   may include a senior citizen center, fitness center, swimming pool, meeting rooms, indoor 
51.30   track, and racquetball, basketball, and tennis courts, provided that an amount equal to 
51.31   one-third of the cost of construction is received from private sources;
51.32   (2) capital improvement projects including, but not limited to, installation of water, 
51.33   sewer, storm sewer, street improvements, new city water tower and well, costs related to 
51.34   improvements to marked trunk highway 34; and 
51.35   (3) park improvements.
52.1    Authorized expenses include, but are not limited to, acquiring property, paying 
52.2    construction expenses related to the development of these facilities and improvements, 
52.3    and securing and paying debt service on bonds or other obligations issued to finance 
52.4    acquisition, construction, improvement, or development.
52.5        Subd. 3. Bonds. Pursuant to the approval of the city voters to impose the tax 
52.6    authorized in subdivision 1, the city of Park Rapids may issue without an additional 
52.7    election general obligation bonds of the city to pay capital and administrative expenses 
52.8    for the acquisition, construction, improvement, and development of the projects specified 
52.9    in subdivision 2.  The debt represented by the bonds must not be included in computing 
52.10   any debt limitations applicable to the city, and the levy of taxes required by Minnesota 
52.11   Statutes, section 475.61, to pay the principal or any interest on the bonds must not be 
52.12   subject to any levy limitations or be included in computing or applying any levy limitation 
52.13   applicable to the city.
52.14       Subd. 4. Termination of tax. The tax imposed under subdivision 1 expires July 
52.15   1, 2025.  Any funds remaining after completion of the projects specified in subdivision 
52.16   2 and retirement or redemption of the bonds may be placed in the general fund of the 
52.17   city.  The tax imposed under subdivision 1 may expire at an earlier time if the city so 
52.18   determines by ordinance.
52.19   EFFECTIVE DATE.This section is effective the day after compliance by the 
52.20   governing body of the city of Park Rapids with Minnesota Statutes, section 645.021, 
52.21   subdivision 3.

52.22       Sec. 32. THIEF RIVER FALLS COMMUNITY CENTER.
52.23   The city of Thief River Falls may incorporate or authorize the incorporation of a 
52.24   nonprofit corporation to operate a community or regional center in the city. A nonprofit 
52.25   corporation incorporated under this section is exempt from payment of sales and use tax 
52.26   on materials, equipment, and supplies consumed or incorporated into the construction of 
52.27   the community or regional center. The exemption under this section applies to purchases 
52.28   by the nonprofit corporation, a contractor, subcontractor, or builder. A contractor, 
52.29   subcontractor, or builder that does not pay sales tax on purchases for construction of the 
52.30   community or regional center shall not charge sales or use tax to the nonprofit corporation. 
52.31   The nonprofit corporation may file a claim for refund for any sales taxes paid on the 
52.32   construction costs of the community or regional center, and the commissioner of revenue 
52.33   shall pay the refunded amount directly to the nonprofit corporation.
53.1    EFFECTIVE DATE.This section is effective retroactively for purchases made 
53.2    on and after July 1, 2002.

53.3                                           ARTICLE 4
53.4                                 FOREIGN OPERATING CORPORATIONS

53.5        Section 1. Minnesota Statutes 2005 Supplement, section 290.01, subdivision 6b, 
53.6    is amended to read:
53.7        Subd. 6b. Foreign operating corporation. The term "foreign operating 
53.8    corporation," when applied to a corporation, means a domestic corporation with the 
53.9    following characteristics:
53.10   (1) it is part of a unitary business at least one member of which is taxable in this state;
53.11   (2) it is not a foreign sales corporation under section 922 of the Internal Revenue 
53.12   Code, as amended through December 31, 1999, for the taxable year;
53.13   (3) either (i) the average of the percentages of its property and payrolls, including 
53.14   the pro rata share of its unitary partnerships' property and payrolls, assigned to locations 
53.15   outside the United States, where the United States includes the District of Columbia and 
53.16   excludes the commonwealth of Puerto Rico and possessions of the United States, as 
53.17   determined under section 290.191 or 290.20, is 80 percent or more; or (ii) it has in effect a 
53.18   valid election under section 936 of the Internal Revenue Code; or (ii) at least 80 percent 
53.19   of the gross income from all sources of the corporation in the tax year is active foreign 
53.20   business income; and
53.21   (4) it has $1,000,000 of payroll and $2,000,000 of property, as determined under 
53.22   section 290.191 or 290.20, that are located outside the United States. If the domestic 
53.23   corporation does not have payroll as determined under section 290.191 or 290.20, but it 
53.24   or its partnerships have paid $1,000,000 for work, performed directly for the domestic 
53.25   corporation or the partnerships, outside the United States, then paragraph (3)(i) shall not 
53.26   require payrolls to be included in the average calculation for purposes of this subdivision, 
53.27   active foreign business income means gross income that is (i) derived from sources 
53.28   without the United States, as defined in subtitle A, chapter 1, subchapter N, part 1, of the 
53.29   Internal Revenue Code; and (ii) attributable to the active conduct of a trade or business in 
53.30   a foreign country.
53.31   EFFECTIVE DATE.This section is effective for taxable years beginning after 
53.32   December 31, 2005.

54.1        Sec. 2. Minnesota Statutes 2005 Supplement, section 290.01, subdivision 19c, is 
54.2    amended to read:
54.3        Subd. 19c. Corporations; additions to federal taxable income. For corporations, 
54.4    there shall be added to federal taxable income:
54.5    (1) the amount of any deduction taken for federal income tax purposes for income, 
54.6    excise, or franchise taxes based on net income or related minimum taxes, including but not 
54.7    limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota, 
54.8    another state, a political subdivision of another state, the District of Columbia, or any 
54.9    foreign country or possession of the United States;
54.10   (2) interest not subject to federal tax upon obligations of: the United States, its 
54.11   possessions, its agencies, or its instrumentalities; the state of Minnesota or any other 
54.12   state, any of its political or governmental subdivisions, any of its municipalities, or any 
54.13   of its governmental agencies or instrumentalities; the District of Columbia; or Indian 
54.14   tribal governments;
54.15   (3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal 
54.16   Revenue Code;
54.17   (4) the amount of any net operating loss deduction taken for federal income tax 
54.18   purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss 
54.19   deduction under section 810 of the Internal Revenue Code;
54.20   (5) the amount of any special deductions taken for federal income tax purposes 
54.21   under sections 241 to 247 of the Internal Revenue Code;
54.22   (6) losses from the business of mining, as defined in section 290.05, subdivision 1, 
54.23   clause (a), that are not subject to Minnesota income tax;
54.24   (7) the amount of any capital losses deducted for federal income tax purposes under 
54.25   sections 1211 and 1212 of the Internal Revenue Code;
54.26   (8) the exempt foreign trade income of a foreign sales corporation under sections 
54.27   921(a) and 291 of the Internal Revenue Code;
54.28   (9) the amount of percentage depletion deducted under sections 611 through 614 and 
54.29   291 of the Internal Revenue Code;
54.30   (10) for certified pollution control facilities placed in service in a taxable year 
54.31   beginning before December 31, 1986, and for which amortization deductions were elected 
54.32   under section 169 of the Internal Revenue Code of 1954, as amended through December 
54.33   31, 1985, the amount of the amortization deduction allowed in computing federal taxable 
54.34   income for those facilities;
54.35   (11) the amount of any deemed dividend from a foreign operating corporation 
54.36   determined pursuant to section 290.17, subdivision 4, paragraph (g). The deemed dividend 
55.1    shall be reduced by the amount of the addition to income required by clauses (19), (20), 
55.2    (21), and (22);
55.3    (12) the amount of a partner's pro rata share of net income which does not flow 
55.4    through to the partner because the partnership elected to pay the tax on the income under 
55.5    section 6242(a)(2) of the Internal Revenue Code;
55.6    (13) the amount of net income excluded under section 114 of the Internal Revenue 
55.7    Code;
55.8    (14) any increase in subpart F income, as defined in section 952(a) of the Internal 
55.9    Revenue Code, for the taxable year when subpart F income is calculated without regard 
55.10   to the provisions of section 614 of Public Law 107-147;
55.11   (15) 80 percent of the depreciation deduction allowed under section 168(k)(1)(A) 
55.12   and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if the taxpayer 
55.13   has an activity that in the taxable year generates a deduction for depreciation under 
55.14   section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable year 
55.15   that the taxpayer is not allowed to claim for the taxable year, "the depreciation allowed 
55.16   under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess of the 
55.17   depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) over the 
55.18   amount of the loss from the activity that is not allowed in the taxable year. In succeeding 
55.19   taxable years when the losses not allowed in the taxable year are allowed, the depreciation 
55.20   under section 168(k)(1)(A) and (k)(4)(A) is allowed;
55.21   (16) 80 percent of the amount by which the deduction allowed by section 179 of the 
55.22   Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal 
55.23   Revenue Code of 1986, as amended through December 31, 2003;
55.24   (17) to the extent deducted in computing federal taxable income, the amount of the 
55.25   deduction allowable under section 199 of the Internal Revenue Code; and
55.26   (18) the exclusion allowed under section 139A of the Internal Revenue Code for 
55.27   federal subsidies for prescription drug plans.;
55.28   (19) an amount equal to the interest and intangible expenses, losses, and costs paid, 
55.29   accrued, or incurred by any member of the taxpayer's unitary group to or for the benefit 
55.30   of a corporation that is a member of the taxpayer's unitary business group that qualifies 
55.31   as a foreign operating corporation. For purposes of this clause, intangible expenses and 
55.32   costs include:
55.33   (i) expenses, losses, and costs for, or related to, the direct or indirect acquisition, 
55.34   use, maintenance or management, ownership, sale, exchange, or any other disposition of 
55.35   intangible property;
56.1    (ii) losses incurred, directly or indirectly, from factoring transactions or discounting 
56.2    transactions;
56.3    (iii) royalty, patent, technical, and copyright fees;
56.4    (iv) licensing fees; and
56.5    (v) other similar expenses and costs.
56.6    For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent 
56.7    applications, trade names, trademarks, service marks, copyrights, mask works, trade 
56.8    secrets, and similar types of intangible assets.
56.9    This clause does not apply to any item of interest or intangible expenses or costs paid, 
56.10   accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect 
56.11   to such item of income to the extent that the income to the foreign operating corporation 
56.12   is income from sources without the United States as defined in subtitle A, chapter 1, 
56.13   subchapter N, part 1, of the Internal Revenue Code;
56.14   (20) except as already included in the taxpayer's taxable income pursuant to clause 
56.15   (19), any interest income and income generated from intangible property received or 
56.16   accrued by a foreign operating corporation that is a member of the taxpayer's unitary 
56.17   group. For purposes of this clause, income generated from intangible property includes:
56.18   (i) income related to the direct or indirect acquisition, use, maintenance or 
56.19   management, ownership, sale, exchange, or any other disposition of intangible property;
56.20   (ii) income from factoring transactions or discounting transactions;
56.21   (iii) royalty, patent, technical, and copyright fees;
56.22   (iv) licensing fees; and
56.23   (v) other similar income.
56.24   For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent 
56.25   applications, trade names, trademarks, service marks, copyrights, mask works, trade 
56.26   secrets, and similar types of intangible assets. 
56.27   This clause does not apply to any item of interest or intangible income received or accrued 
56.28   by a foreign operating corporation with respect to such item of income to the extent that 
56.29   the income is income from sources without the United States as defined in subtitle A, 
56.30   chapter 1, subchapter N, part 1, of the Internal Revenue Code;
56.31   (21) the dividends attributable to the income of a foreign operating corporation that 
56.32   is a member of the taxpayer's unitary group in an amount that is equal to the dividends 
56.33   paid deduction of a real estate investment trust under section 561(a) of the Internal 
56.34   Revenue Code for amounts paid or accrued by the real estate investment trust to the 
56.35   foreign operating corporation; and
57.1    (22) the income of a foreign operating corporation that is a member of the taxpayer's 
57.2    unitary group in an amount that is equal to gains derived from the sale of real or personal 
57.3    property located in the United States.
57.4    EFFECTIVE DATE.This section is effective for taxable years beginning after 
57.5    December 31, 2005.

57.6        Sec. 3. Minnesota Statutes 2005 Supplement, section 290.01, subdivision 19d, is 
57.7    amended to read:
57.8        Subd. 19d. Corporations; modifications decreasing federal taxable income. For 
57.9    corporations, there shall be subtracted from federal taxable income after the increases 
57.10   provided in subdivision 19c:
57.11   (1) the amount of foreign dividend gross-up added to gross income for federal 
57.12   income tax purposes under section 78 of the Internal Revenue Code;
57.13   (2) the amount of salary expense not allowed for federal income tax purposes due to 
57.14   claiming the federal jobs credit under section 51 of the Internal Revenue Code;
57.15   (3) any dividend (not including any distribution in liquidation) paid within the 
57.16   taxable year by a national or state bank to the United States, or to any instrumentality of 
57.17   the United States exempt from federal income taxes, on the preferred stock of the bank 
57.18   owned by the United States or the instrumentality;
57.19   (4) amounts disallowed for intangible drilling costs due to differences between 
57.20   this chapter and the Internal Revenue Code in taxable years beginning before January 
57.21   1, 1987, as follows:
57.22   (i) to the extent the disallowed costs are represented by physical property, an amount 
57.23   equal to the allowance for depreciation under Minnesota Statutes 1986, section 290.09, 
57.24   subdivision 7, subject to the modifications contained in subdivision 19e; and
57.25   (ii) to the extent the disallowed costs are not represented by physical property, an 
57.26   amount equal to the allowance for cost depletion under Minnesota Statutes 1986, section 
57.27   290.09, subdivision 8;
57.28   (5) the deduction for capital losses pursuant to sections 1211 and 1212 of the 
57.29   Internal Revenue Code, except that:
57.30   (i) for capital losses incurred in taxable years beginning after December 31, 1986, 
57.31   capital loss carrybacks shall not be allowed;
57.32   (ii) for capital losses incurred in taxable years beginning after December 31, 1986, 
57.33   a capital loss carryover to each of the 15 taxable years succeeding the loss year shall be 
57.34   allowed;
58.1    (iii) for capital losses incurred in taxable years beginning before January 1, 1987, a 
58.2    capital loss carryback to each of the three taxable years preceding the loss year, subject to 
58.3    the provisions of Minnesota Statutes 1986, section 290.16, shall be allowed; and
58.4    (iv) for capital losses incurred in taxable years beginning before January 1, 1987, 
58.5    a capital loss carryover to each of the five taxable years succeeding the loss year to the 
58.6    extent such loss was not used in a prior taxable year and subject to the provisions of 
58.7    Minnesota Statutes 1986, section 290.16, shall be allowed;
58.8    (6) an amount for interest and expenses relating to income not taxable for federal 
58.9    income tax purposes, if (i) the income is taxable under this chapter and (ii) the interest and 
58.10   expenses were disallowed as deductions under the provisions of section 171(a)(2), 265 or 
58.11   291 of the Internal Revenue Code in computing federal taxable income;
58.12   (7) in the case of mines, oil and gas wells, other natural deposits, and timber for 
58.13   which percentage depletion was disallowed pursuant to subdivision 19c, clause (11), a 
58.14   reasonable allowance for depletion based on actual cost. In the case of leases the deduction 
58.15   must be apportioned between the lessor and lessee in accordance with rules prescribed 
58.16   by the commissioner. In the case of property held in trust, the allowable deduction must 
58.17   be apportioned between the income beneficiaries and the trustee in accordance with the 
58.18   pertinent provisions of the trust, or if there is no provision in the instrument, on the basis 
58.19   of the trust's income allocable to each;
58.20   (8) for certified pollution control facilities placed in service in a taxable year 
58.21   beginning before December 31, 1986, and for which amortization deductions were elected 
58.22   under section 169 of the Internal Revenue Code of 1954, as amended through December 
58.23   31, 1985, an amount equal to the allowance for depreciation under Minnesota Statutes 
58.24   1986, section 290.09, subdivision 7;
58.25   (9) amounts included in federal taxable income that are due to refunds of income, 
58.26   excise, or franchise taxes based on net income or related minimum taxes paid by the 
58.27   corporation to Minnesota, another state, a political subdivision of another state, the 
58.28   District of Columbia, or a foreign country or possession of the United States to the extent 
58.29   that the taxes were added to federal taxable income under section 290.01, subdivision 19c, 
58.30   clause (1), in a prior taxable year;
58.31   (10) 80 percent of royalties, fees, or other like income accrued or received from a 
58.32   foreign operating corporation or a foreign corporation which is part of the same unitary 
58.33   business as the receiving corporation, unless the income resulting from such payments or 
58.34   accruals is income from sources within the United States as defined in subtitle A, chapter 
58.35   1, subchapter N, part 1, of the Internal Revenue Code;
59.1    (11) income or gains from the business of mining as defined in section 290.05, 
59.2    subdivision 1, clause (a), that are not subject to Minnesota franchise tax;
59.3    (12) the amount of handicap access expenditures in the taxable year which are not 
59.4    allowed to be deducted or capitalized under section 44(d)(7) of the Internal Revenue Code;
59.5    (13) the amount of qualified research expenses not allowed for federal income tax 
59.6    purposes under section 280C(c) of the Internal Revenue Code, but only to the extent that 
59.7    the amount exceeds the amount of the credit allowed under section 290.068;
59.8    (14) the amount of salary expenses not allowed for federal income tax purposes due 
59.9    to claiming the Indian employment credit under section 45A(a) of the Internal Revenue 
59.10   Code;
59.11   (15) the amount of any refund of environmental taxes paid under section 59A of the 
59.12   Internal Revenue Code;
59.13   (16) for taxable years beginning before January 1, 2008, the amount of the federal 
59.14   small ethanol producer credit allowed under section 40(a)(3) of the Internal Revenue Code 
59.15   which is included in gross income under section 87 of the Internal Revenue Code;
59.16   (17) for a corporation whose foreign sales corporation, as defined in section 922 
59.17   of the Internal Revenue Code, constituted a foreign operating corporation during any 
59.18   taxable year ending before January 1, 1995, and a return was filed by August 15, 1996, 
59.19   claiming the deduction under section 290.21, subdivision 4, for income received from 
59.20   the foreign operating corporation, an amount equal to 1.23 multiplied by the amount of 
59.21   income excluded under section 114 of the Internal Revenue Code, provided the income is 
59.22   not income of a foreign operating company;
59.23   (18) any decrease in subpart F income, as defined in section 952(a) of the Internal 
59.24   Revenue Code, for the taxable year when subpart F income is calculated without regard 
59.25   to the provisions of section 614 of Public Law 107-147;
59.26   (19) in each of the five tax years immediately following the tax year in which an 
59.27   addition is required under subdivision 19c, clause (15), an amount equal to one-fifth of 
59.28   the delayed depreciation. For purposes of this clause, "delayed depreciation" means the 
59.29   amount of the addition made by the taxpayer under subdivision 19c, clause (15). The 
59.30   resulting delayed depreciation cannot be less than zero; and
59.31   (20) in each of the five tax years immediately following the tax year in which an 
59.32   addition is required under subdivision 19c, clause (16), an amount equal to one-fifth of the 
59.33   amount of the addition.
59.34   EFFECTIVE DATE.This section is effective for taxable years beginning after 
59.35   December 31, 2005.

60.1        Sec. 4. Minnesota Statutes 2004, section 290.34, subdivision 1, is amended to read:
60.2        Subdivision 1. Business conducted in such a way as to create losses or improper 
60.3    taxable net income. (a) When any corporation liable to taxation under this chapter 
60.4    conducts its business in such a manner as, directly or indirectly, to benefit its members 
60.5    or stockholders or any person or corporation interested in such business or to reduce the 
60.6    income attributable to this state by selling the commodities or services in which it deals 
60.7    at less than the fair price which might be obtained therefor, or buying such commodities 
60.8    or services at more than the fair price for which they might have been obtained, or when 
60.9    any corporation, a substantial portion of whose shares is owned directly or indirectly by 
60.10   another corporation, deals in the commodities or services of the latter corporation in such 
60.11   a manner as to create a loss or improper net income or to reduce the taxable net income 
60.12   attributable to this state, the commissioner of revenue may determine the amount of its 
60.13   income so as to reflect what would have been its reasonable taxable net income but for the 
60.14   arrangements causing the understatement of its taxable net income or the overstatement of 
60.15   its losses, having regard to the fair profits which, but for any agreement, arrangement, or 
60.16   understanding, might have been or could have been obtained from such business.
60.17   (b) When any corporation engages in a transaction or series of transactions whose 
60.18   primary business purpose is the avoidance of tax, or engages in a transaction or series of 
60.19   transactions without economic substance, that transaction or series of transactions shall be 
60.20   disregarded and the commissioner shall determine taxable net income without regard for 
60.21   any such transaction or series of transactions.

60.22       Sec. 5. INTENT OF LEGISLATURE.
60.23   Section 4 does not change Minnesota law, but merely clarifies the legislature's 
60.24   intention with respect to transactions without economic substance or business purpose.

60.25                                          ARTICLE 5
60.26                                        PROPERTY TAXES

60.27       Section 1. Minnesota Statutes 2004, section 116J.993, subdivision 3, is amended to 
60.28   read:
60.29       Subd. 3. Business subsidy. "Business subsidy" or "subsidy" means a state or local 
60.30   government agency grant, contribution of personal property, real property, infrastructure, 
60.31   the principal amount of a loan at rates below those commercially available to the recipient, 
60.32   any reduction or deferral of any tax or any fee, any guarantee of any payment under any 
60.33   loan, lease, or other obligation, or any preferential use of government facilities given 
60.34   to a business.
61.1    The following forms of financial assistance are not a business subsidy:
61.2    (1) a business subsidy of less than $25,000;
61.3    (2) assistance that is generally available to all businesses or to a general class of 
61.4    similar businesses, such as a line of business, size, location, or similar general criteria;
61.5    (3) public improvements to buildings or lands owned by the state or local 
61.6    government that serve a public purpose and do not principally benefit a single business or 
61.7    defined group of businesses at the time the improvements are made;
61.8    (4) redevelopment property polluted by contaminants as defined in section  116J.552, 
61.9    subdivision 3; 
61.10   (5) assistance provided for the sole purpose of renovating old or decaying building 
61.11   stock or bringing it up to code and assistance provided for designated historic preservation 
61.12   districts, provided that the assistance is equal to or less than 50 percent of the total cost;
61.13   (6) assistance to provide job readiness and training services if the sole purpose of 
61.14   the assistance is to provide those services;
61.15   (7) assistance for housing;
61.16   (8) assistance for pollution control or abatement, including assistance for a tax 
61.17   increment financing hazardous substance subdistrict as defined under section  469.174, 
61.18   subdivision 23; 
61.19   (9) assistance for energy conservation;
61.20   (10) tax reductions resulting from conformity with federal tax law;
61.21   (11) workers' compensation and unemployment insurance;
61.22   (12) benefits derived from regulation;
61.23   (13) indirect benefits derived from assistance to educational institutions;
61.24   (14) funds from bonds allocated under chapter 474A, bonds issued to refund 
61.25   outstanding bonds, and bonds issued for the benefit of an organization described in section 
61.26   501(c)(3) of the Internal Revenue Code of 1986, as amended through December 31, 1999;
61.27   (15) assistance for a collaboration between a Minnesota higher education institution 
61.28   and a business;
61.29   (16) assistance for a tax increment financing soils condition district as defined under 
61.30   section  469.174, subdivision 19; 
61.31   (17) redevelopment when the recipient's investment in the purchase of the site 
61.32   and in site preparation is 70 percent or more of the assessor's current year's estimated 
61.33   market value;
61.34   (18) general changes in tax increment financing law and other general tax law 
61.35   changes of a principally technical nature;
62.1    (19) federal assistance until the assistance has been repaid to, and reinvested by, the 
62.2    state or local government agency;
62.3    (20) funds from dock and wharf bonds issued by a seaway port authority;
62.4    (21) business loans and loan guarantees of $75,000 or less; and
62.5    (22) federal loan funds provided through the United States Department of 
62.6    Commerce, Economic Development Administration; and
62.7    (23) property tax abatements granted under section 469.1813 to property that is 
62.8    subject to valuation under Minnesota Rules, chapter 8100.

62.9        Sec. 2. Minnesota Statutes 2004, section 123B.53, subdivision 5, is amended to read:
62.10       Subd. 5. Equalized debt service levy. (a) The equalized debt service levy of a 
62.11   district equals the sum of the first tier equalized debt service levy and the second tier 
62.12   equalized debt service levy.
62.13   (b) A district's first tier equalized debt service levy equals the district's first tier debt 
62.14   service equalization revenue times the lesser of one or the ratio of:
62.15   (1) the quotient derived by dividing the adjusted net tax capacity of the district for 
62.16   the year before the year the levy is certified by the adjusted pupil units in the district for 
62.17   the school year ending in the year prior to the year the levy is certified; to
62.18   (2) $3,200 $5,000.
62.19   (c) A district's second tier equalized debt service levy equals the district's second 
62.20   tier debt service equalization revenue times the lesser of one or the ratio of:
62.21   (1) the quotient derived by dividing the adjusted net tax capacity of the district for 
62.22   the year before the year the levy is certified by the adjusted pupil units in the district for 
62.23   the school year ending in the year prior to the year the levy is certified; to
62.24   (2) $8,000.
62.25   EFFECTIVE DATE.This section is effective for revenue for fiscal year 2008 
62.26   and later. 

62.27       Sec. 3. Minnesota Statutes 2005 Supplement, section 123B.54, is amended to read:
62.28   123B.54 DEBT SERVICE APPROPRIATION.
62.29   (a) $21,624,000 $22,701,000 in fiscal year 2008 and $20,403,000 $22,269,000 in 
62.30   fiscal year 2009 and later are appropriated from the general fund to the commissioner of 
62.31   education for payment of debt service equalization aid under section 123B.53.
62.32   (b) The appropriations in paragraph (a) must be reduced by the amount of any 
62.33   money specifically appropriated for the same purpose in any year from any state fund.

63.1        Sec. 4. Minnesota Statutes 2005 Supplement, section 126C.10, subdivision 13a, 
63.2    is amended to read:
63.3        Subd. 13a. Operating capital levy. To obtain operating capital revenue for fiscal 
63.4    year 2007 and later, a district may levy an amount not more than the product of its 
63.5    operating capital revenue for the fiscal year times the lesser of one or the ratio of its 
63.6    adjusted net tax capacity per adjusted marginal cost pupil unit to the operating capital 
63.7    equalizing factor. The operating capital equalizing factor equals $22,222 for fiscal year 
63.8    2006, and $10,700 for fiscal year 2007, and $22,222 for fiscal year 2008  and later.
63.9    EFFECTIVE DATE.This section is effective for revenue for fiscal year 2008 
63.10   and later.

63.11       Sec. 5. Minnesota Statutes 2004, section 144F.01, subdivision 4, is amended to read:
63.12       Subd. 4. Property tax levy authority. The district's board may levy a tax on 
63.13   the taxable real and personal property in the district. The ad valorem tax levy may not 
63.14   exceed 0.048 percent of the taxable market value of the district or $250,000 $400,000, 
63.15   whichever is less. The proceeds of the levy must be used as provided in subdivision 5. 
63.16   The board shall certify the levy at the times as provided under section  275.07. The board 
63.17   shall provide the county with whatever information is necessary to identify the property 
63.18   that is located within the district. If the boundaries include a part of a parcel, the entire 
63.19   parcel shall be included in the district. The county auditors must spread, collect, and 
63.20   distribute the proceeds of the tax at the same time and in the same manner as provided by 
63.21   law for all other property taxes.

63.22       Sec. 6. Minnesota Statutes 2004, section 216B.2424, subdivision 5, is amended to read:
63.23       Subd. 5. Mandate. (a) A public utility, as defined in section  216B.02, subdivision 4, 
63.24   that operates a nuclear-powered electric generating plant within this state must construct 
63.25   and operate, purchase, or contract to construct and operate (1) by December 31, 1998, 
63.26   50 megawatts of electric energy installed capacity generated by farm-grown closed-loop 
63.27   biomass scheduled to be operational by December 31, 2001; and (2) by December 31, 
63.28   1998, an additional 75 megawatts of installed capacity so generated scheduled to be 
63.29   operational by December 31, 2002. 
63.30   (b) Of the 125 megawatts of biomass electricity installed capacity required under 
63.31   this subdivision, no more than 55 megawatts of this capacity may be provided by a facility 
63.32   that uses poultry litter as its primary fuel source and any such facility:
63.33   (1) need not use biomass that complies with the definition in subdivision 1;
64.1    (2) must enter into a contract with the public utility for such capacity, that has an 
64.2    average purchase price per megawatt hour over the life of the contract that is equal to or 
64.3    less than the average purchase price per megawatt hour over the life of the contract in 
64.4    contracts approved by the Public Utilities Commission before April 1, 2000, to satisfy 
64.5    the mandate of this section, and file that contract with the Public Utilities Commission 
64.6    prior to September 1, 2000; and
64.7    (3) must schedule such capacity to be operational by December 31, 2002.
64.8    (c) Of the total 125 megawatts of biomass electric energy installed capacity required 
64.9    under this section, no more than 75 megawatts may be provided by a single project.
64.10   (d) Of the 75 megawatts of biomass electric energy installed capacity required under 
64.11   paragraph (a), clause (2), no more than 33 megawatts of this capacity may be provided by 
64.12   a St. Paul district heating and cooling system cogeneration facility utilizing waste wood 
64.13   as a primary fuel source. The St. Paul district heating and cooling system cogeneration 
64.14   facility need not use biomass that complies with the definition in subdivision 1.
64.15   (e) The public utility must accept and consider on an equal basis with other biomass 
64.16   proposals:
64.17   (1) a proposal to satisfy the requirements of this section that includes a project that 
64.18   exceeds the megawatt capacity requirements of either paragraph (a), clause (1) or (2), and 
64.19   that proposes to sell the excess capacity to the public utility or to other purchasers; and
64.20   (2) a proposal for a new facility to satisfy more than ten but not more than 20 
64.21   megawatts of the electrical generation requirements by a small business-sponsored 
64.22   independent power producer facility to be located within the northern quarter of the state, 
64.23   which means the area located north of Constitutional Route No. 8 as described in section  
64.24   161.114, subdivision 2, and that utilizes biomass residue wood, sawdust, bark, chipped 
64.25   wood, or brush to generate electricity. A facility described in this clause is not required 
64.26   to utilize biomass complying with the definition in subdivision 1, but must be under 
64.27   construction by December 31, 2005. 
64.28   (f) If a public utility files a contract with the commission for electric energy installed 
64.29   capacity that uses poultry litter as its primary fuel source, the commission must do a 
64.30   preliminary review of the contract to determine if it meets the purchase price criteria 
64.31   provided in paragraph (b), clause (2), of this subdivision. The commission shall perform 
64.32   its review and advise the parties of its determination within 30 days of filing of such a 
64.33   contract by a public utility. A public utility may submit by September 1, 2000, a revised 
64.34   contract to address the commission's preliminary determination.
65.1    (g) The commission shall finally approve, modify, or disapprove no later than July 
65.2    1, 2001, all contracts submitted by a public utility as of September 1, 2000, to meet the 
65.3    mandate set forth in this subdivision.
65.4    (h) If a public utility subject to this section exercises an option to increase the 
65.5    generating capacity of a project in a contract approved by the commission prior to April 
65.6    25, 2000, to satisfy the mandate in this subdivision, the public utility must notify the 
65.7    commission by September 1, 2000, that it has exercised the option and include in the 
65.8    notice the amount of additional megawatts to be generated under the option exercised. 
65.9    Any review by the commission of the project after exercise of such an option shall be 
65.10   based on the same criteria used to review the existing contract.
65.11   (i) A facility specified in this subdivision qualifies for exemption from property 
65.12   taxation under section  272.02, subdivision 43 45. 
65.13   EFFECTIVE DATE.This section is effective for property taxes levied in 2006, 
65.14   payable in 2007, and thereafter.

65.15       Sec. 7. Minnesota Statutes 2004, section 272.02, subdivision 12, is amended to read:
65.16       Subd. 12. Native prairie. Native prairie lands are exempt. The commissioner of the 
65.17   Department of natural resources shall determine lands in the state which are native prairie 
65.18   and shall notify the county assessor of each county in which the lands are located. Pasture 
65.19   land used for livestock grazing purposes shall not be considered native prairie for the 
65.20   purposes of this subdivision unless the pasture is covered by a grazing plan approved by 
65.21   the commissioner of natural resources. Upon receipt of an application for the exemption 
65.22   provided in this subdivision for lands for which the assessor has no determination from 
65.23   the commissioner of natural resources, the assessor shall refer the application to the 
65.24   commissioner of natural resources who shall determine within 30 180  days whether the 
65.25   land is native prairie and notify the county assessor of the decision. Exemption of native 
65.26   prairie pursuant to this subdivision shall not grant the public any additional or greater right 
65.27   of access to the native prairie or diminish any right of ownership to it.
65.28   EFFECTIVE DATE.This section is effective for taxes levied in 2006, payable 
65.29   in 2007, and thereafter.

65.30       Sec. 8. Minnesota Statutes 2004, section 272.02, subdivision 45, is amended to read:
65.31       Subd. 45. Biomass electrical generation facility; personal property.
 65.32   Notwithstanding subdivision 9, clause (a), attached machinery and other personal property 
66.1    which is part of an electrical generating facility that meets the requirements of this 
66.2    subdivision is exempt. At the time of construction, the facility must:
66.3    (1) be designed to utilize biomass as established in section  216B.2424 as a primary 
66.4    fuel source; and 
66.5    (2) be constructed for the purpose of generating power at the facility that will be sold 
66.6    pursuant to a contract approved by the Public Utilities Commission in accordance with 
66.7    the biomass mandate imposed under section  216B.2424. 
66.8    Construction of the facility must be commenced after January 1, 2000, and before 
66.9    December 31, 2002 2005. Property eligible for this exemption does not include electric 
66.10   transmission lines and interconnections or gas pipelines and interconnections appurtenant 
66.11   to the property or facility.
66.12   EFFECTIVE DATE.This section is effective for taxes levied in 2006, payable 
66.13   in 2007, and thereafter.

66.14       Sec. 9. Minnesota Statutes 2004, section 272.02, subdivision 54, is amended to read:
66.15       Subd. 54. Small biomass electric generation facility; personal property. (a) 
66.16   Subject to paragraph (b), notwithstanding subdivision 9, clause (a), attached machinery 
66.17   and other personal property which is part of an electrical generating facility that meets the 
66.18   requirements of this subdivision is exempt. At the time of construction the facility must:
66.19   (1) have a generation capacity of less than 25 megawatts;
66.20   (2) provide process heating needs in addition to electrical generation; and
66.21   (3) utilize agricultural by-products from the malting process and other biomass 
66.22   fuels as its primary fuel source.
66.23   Construction of the facility must be commenced after January 1, 2002, and before 
66.24   January 1, 2006 June 30, 2007. Property eligible for this exemption does not include 
66.25   electric transmission lines and interconnections or gas pipelines and interconnections 
66.26   appurtenant to the property or facility.
66.27   (b) The exemption under this subdivision is contingent on approval by the governing 
66.28   bodies of the municipality and county in which the electric generation facility is located.
66.29   EFFECTIVE DATE.This section is effective for taxes levied in 2008, payable 
66.30   in 2009, and thereafter.

66.31       Sec. 10. Minnesota Statutes 2004, section 272.02, subdivision 55, is amended to read:
66.32       Subd. 55. Electric generation facility; personal property. Notwithstanding 
66.33   subdivision 9, clause (a), attached machinery and other personal property which is part of 
67.1    an electric generating facility that meets the requirements of this subdivision is exempt. At 
67.2    the time of construction, the facility must be sited on an energy park that (i) is located on 
67.3    an active mining site, or on a former mining or industrial site where mining or industrial 
67.4    operations have terminated be designated as an innovative energy project as defined in 
67.5    section 216B.1694, (ii) is be within a tax relief area as defined in section  273.134, (iii) 
67.6    has on-site have access to existing railroad infrastructure within less than three miles, (iv) 
67.7    has direct rail access to a Great Lakes port, (v) has sufficient private water resources 
67.8    on site, and (vi) is have received by resolution approval from the governing body of 
67.9    the county and township or city in which the proposed facility is to be located for the 
67.10   exemption of personal property under this subdivision, and (v) be designed to host at 
67.11   least 500 megawatts of electrical generation.
67.12   Construction of the first 250 500 megawatts of the facility must be commenced 
67.13   after January 1, 2002 2006, and before January 1, 2005 2010. Construction of up to an 
67.14   additional 750 megawatts of generation must be commenced before January 1, 2010 
67.15   2015. Property eligible for this exemption does not include electric transmission lines and 
67.16   interconnections or gas pipelines and interconnections appurtenant to the property or the 
67.17   facility. To qualify for an exemption under this subdivision, the owner of the electric 
67.18   generation facility must have an agreement with the host county, township or city, and 
67.19   school district, for payment in lieu of personal property taxes to the host county, township 
67.20   or city, and school district.
67.21   EFFECTIVE DATE.This section is effective the day following final enactment.

67.22       Sec. 11. Minnesota Statutes 2004, section 272.02, is amended by adding a subdivision 
67.23   to read:
67.24       Subd. 84. Electric generation facility; personal property. Notwithstanding 
67.25   subdivision 9, clause (a), attached machinery and other personal property which is part 
67.26   of a 10.3 megawatt run-of-the-river hydroelectric generation facility and that meets the 
67.27   requirements of this subdivision is exempt. At the time of construction, the facility must:
67.28   (1) utilize between 12 and 16 turbine generators at a dam site existing on March 
67.29   31, 1994;
67.30   (2) be located on land within 3,000 feet of a 13.8 kilovolt distribution substation; and
67.31   (3) be eligible to receive a renewable energy production incentive payment under 
67.32   section 216C.41.
67.33   Construction of the facility must be commenced after April 30, 2006, and 
67.34   before January 1, 2009. Property eligible for this exemption does not include electric 
68.1    transmission lines and interconnections or gas pipelines and interconnections appurtenant 
68.2    to the property or the facility.
68.3    EFFECTIVE DATE.This section is effective for property taxes levied in 2006, 
68.4    payable in 2007, and thereafter.

68.5        Sec. 12. Minnesota Statutes 2004, section 272.029, subdivision 2, is amended to read:
68.6        Subd. 2. Definitions. (a) For the purposes of this section, the term:
68.7    (1) "wind energy conversion system" has the meaning given it in section  216C.06, 
68.8    subdivision 19, and also includes a substation that is used and owned by one or more 
68.9    wind energy conversion facilities; 
68.10   (2) "large scale wind energy conversion system" means a wind energy conversion 
68.11   system of more than 12 megawatts, as measured by the nameplate capacity of the system 
68.12   or as combined with other systems as provided in paragraph (b);
68.13   (3) "medium scale wind energy conversion system" means a wind energy conversion 
68.14   system of over two and not more than 12 megawatts, as measured by the nameplate 
68.15   capacity of the system or as combined with other systems as provided in paragraph (b); and
68.16   (4) "small scale wind energy conversion system" means a wind energy conversion 
68.17   system of two megawatts and under, as measured by the nameplate capacity of the system 
68.18   or as combined with other systems as provided in paragraph (b).
68.19   (b) For systems installed and contracted for after January 1, 2002, the total size of a 
68.20   wind energy conversion system under this subdivision shall be determined according to 
68.21   this paragraph. Unless the systems are interconnected with different distribution systems, 
68.22   the nameplate capacity of one wind energy conversion system shall be combined with the 
68.23   nameplate capacity of any other wind energy conversion system that is:
68.24   (1) located within five miles of the wind energy conversion system;
68.25   (2) constructed within the same calendar year as the wind energy conversion system; 
68.26   and
68.27   (3) under common ownership.
68.28   In the case of a dispute, the commissioner of commerce shall determine the total size 
68.29   of the system, and shall draw all reasonable inferences in favor of combining the systems.
68.30   (c) In making a determination under paragraph (b), the commissioner of commerce 
68.31   may determine that two wind energy conversion systems are under common ownership 
68.32   when the underlying ownership structure contains similar persons or entities, even if the 
68.33   ownership shares differ between the two systems. Wind energy conversion systems are 
68.34   not under common ownership solely because the same person or entity provided equity 
68.35   financing for the systems.
69.1    EFFECTIVE DATE.This section is effective for taxes levied in 2006, payable 
69.2    in 2007, and thereafter.

69.3        Sec. 13. Minnesota Statutes 2004, section 273.11, is amended by adding a subdivision 
69.4    to read:
69.5        Subd. 23. First tier valuation limit; agricultural homestead property. (a) 
69.6    Beginning with assessment year 2006, the commissioner of revenue shall annually certify 
69.7    the first tier limit for agricultural homestead property as the product of (i) $600,000, and 
69.8    (ii) the ratio of the statewide average taxable market value of agricultural property per acre 
69.9    of deeded farm land in the preceding assessment year to the statewide average taxable 
69.10   market value of agricultural property per acre of deeded farm land for assessment year 
69.11   1999. The limit shall be rounded to the nearest $10,000.
69.12   (b) For the purposes of this subdivision, "agricultural property" means all class 2 
69.13   property under section 273.13, subdivision 23, except for (1) timberland, (2) a landing 
69.14   area or public access area of a privately owned public use airport, and (3) property 
69.15   consisting of the house, garage and immediately surrounding one acre of land of an 
69.16   agricultural homestead.
69.17   (c) The commissioner shall certify the limit by January 2 of each assessment year, 
69.18   except that for assessment year 2006 the commissioner shall certify the limit by June 
69.19   1, 2006.
69.20   EFFECTIVE DATE.This section is effective for assessment year 2006 and 
69.21   thereafter.

69.22       Sec. 14. [273.1115] AGGREGATE RESOURCE PRESERVATION PROPERTY 
69.23   TAX LAW.
69.24       Subdivision 1. Requirements. Real estate is entitled to valuation under this section 
69.25   only if all of the following requirements are met:
69.26   (1) the property is classified 1a, 1b, 2a, or 2b property under section 273.13, 
69.27   subdivisions 22 and 23;
69.28   (2) the property is at least ten contiguous acres, when the application is filed under 
69.29   subdivision 2;
69.30   (3) the owner has filed a completed application for deferment as specified in 
69.31   subdivision 2 with the county assessor in the county in which the property is located;
69.32   (4) there are no delinquent taxes on the property; and 
69.33   (5) a covenant on the land restricts its use as provided in subdivision 2, clause (4).
70.1        Subd. 2. Application. Application for valuation deferment under this section 
70.2    must be filed by May 1 of the assessment year.  Any application filed and granted 
70.3    continues in effect for subsequent years until the property no longer qualifies, provided 
70.4    that supplemental affidavits under subdivision 6 are timely filed.  The application must 
70.5    be filed with the assessor of the county in which the real property is located on such 
70.6    form as may be prescribed by the commissioner of revenue.  The application must be 
70.7    executed and acknowledged in the manner required by law to execute and acknowledge a 
70.8    deed and must contain at least the following information and any other information the 
70.9    commissioner deems necessary:
70.10   (1) the legal description of the area;
70.11   (2) the name and address of owner;
70.12   (3) a copy of the affidavit filed under section 273.13, subdivision 23, paragraph (h), 
70.13   in the case of property classified class 2b, clause (5); or in the case of property classified 
70.14   1a, 1b, 2a, and 2b, clauses (1) to (3), the application must include a similar document with 
70.15   the same information as contained in the affidavit under section 273.13, subdivision 23, 
70.16   paragraph (h); and 
70.17   (4) a statement of proof from the owner that the land contains a restrictive covenant 
70.18   limiting its use for the property's surface to that which exists on the date of the application 
70.19   and limiting its future use to the preparation and removal of the aggregate commercial 
70.20   deposit under its surface.
70.21   To qualify under this clause, the covenant must be binding on the owner or the 
70.22   owner's successor or assignee, and run with the land, except as provided in subdivision 4 
70.23   allowing for the cancellation of the covenant under certain conditions.
70.24       Subd. 3. Determination of value. Upon timely application by the owner as 
70.25   provided in subdivision 2, notwithstanding sections 272.03, subdivision 8, and 273.11, 
70.26   the value of any qualifying land described in subdivision 2 must be valued as if it were 
70.27   agricultural property, using a per acre valuation equal to the current year's per acre 
70.28   valuation of agricultural land in the county.  The assessor shall not consider any additional 
70.29   value resulting from potential alternative and future uses of the property.  The buildings 
70.30   located on the land shall be valued by the assessor in the normal manner.
70.31       Subd. 4. Cancellation of covenant. The covenant required under subdivision 
70.32   2 may be canceled in two ways:
70.33   (1) by the owner beginning with the next subsequent assessment year provided 
70.34   that the additional taxes as determined under subdivision 5 are paid by the owner at the 
70.35   time of cancellation; and 
71.1    (2) by the city or town in which the property is located beginning with the next 
71.2    subsequent assessment year, if the city council or town board:
71.3    (i) changes the conditional use of the property;
71.4    (ii) revokes the mining permit; or 
71.5    (iii) changes the zoning to disallow mining.
71.6    No additional taxes are imposed on the property under this clause.
71.7         Subd. 4a. County termination. Within two years of the effective date of this 
71.8    section, a county may, following notice and public hearing, terminate application of this 
71.9    section in the county.  The termination is effective upon adoption of a resolution of the 
71.10   county board.  A county has 60 days from receipt of the first application for enrollment 
71.11   under this section to notify the applicant and any subsequent applicants of the county's 
71.12   intent to begin the process of terminating application of this section in the county. The 
71.13   county must act on the termination within six months. Upon termination by a vote of the 
71.14   county board, all applications received during notification of intent to terminate shall be 
71.15   deemed void. If the county board does not act on the termination within six months of 
71.16   notification, all applications for valuation for deferment received shall be deemed eligible 
71.17   to be enrolled under this section. Following this initial 60-day grace period, a termination 
71.18   applies prospectively and does not affect property enrolled under this section prior to the 
71.19   termination date.  A county may reauthorize application of this section by a resolution of 
71.20   the county board revoking the termination.
71.21       Subd. 5. Additional taxes. When real property which has been valued and assessed 
71.22   under this section no longer qualifies, the portion of the land classified under subdivision 
71.23   1, clause (1), is subject to additional taxes.  The additional tax amount is determined by:
71.24   (1) computing the difference between (i) the current year's taxes determined in 
71.25   accordance with subdivision 3, and (ii) an amount as determined by the assessor based 
71.26   upon the property's current year's estimated market value of like real estate at its highest 
71.27   and best use and the appropriate local tax rate; and 
71.28   (2) multiplying the amount determined in clause (1) by the number of years the 
71.29   land was in the program under this section.
71.30   The current year's estimated market value as determined by the assessor must not 
71.31   exceed the market value that would result if the property was sold in an arms-length 
71.32   transaction and must not be greater than it would have been had the actual bona fide sale 
71.33   price of the property been used in lieu of that market value.  The additional taxes must be 
71.34   extended against the property on the tax list for the current year, except that interest or 
71.35   penalties must not be levied on such additional taxes if timely paid.
72.1    The additional tax under this subdivision must not be imposed on that portion of the 
72.2    property which has actively been mined and has been removed from the program based 
72.3    upon the supplemental affidavits filed under subdivision 6.
72.4        Subd. 6. Supplemental affidavits; mining activity on land. When any portion 
72.5    of the property begins to be actively mined, the owner must file a supplemental affidavit 
72.6    within 60 days from the day any aggregate is removed stating the number of acres of the 
72.7    property that is actively being mined.  The acres actively being mined shall be (1) valued 
72.8    and classified under section 273.13, subdivision 24, in the next subsequent assessment 
72.9    year, and (2) removed from the aggregate resource preservation property tax program 
72.10   under this section.  The additional taxes under subdivision 5 must not be imposed on 
72.11   the acres that are actively being mined and have been removed from the program under 
72.12   this section.
72.13   Copies of the original affidavit and all supplemental affidavits must be filed with the 
72.14   county assessor, the local zoning administrator, and the Department of Natural Resources, 
72.15   Division of Land and Minerals.  A supplemental affidavit must be filed each time a 
72.16   subsequent portion of the property is actively mined, provided that the minimum acreage 
72.17   change is five acres, even if the actual mining activity constitutes less than five acres. 
72.18   Failure to file the affidavits timely shall result in the property losing its valuation deferment 
72.19   under this section, and additional taxes must be imposed as calculated under subdivision 5.
72.20       Subd. 7. Lien. The additional tax imposed by this section is a lien upon the property 
72.21   assessed to the same extent and for the same duration as other taxes imposed upon 
72.22   property within this state and, when collected, must be distributed in the manner provided 
72.23   by law for the collection and distribution of other property taxes.
72.24       Subd. 8. Continuation of tax treatment upon sale. When real property qualifying 
72.25   under subdivision 1 is sold, additional taxes must not be extended against the property 
72.26   if the property continues to qualify under subdivision 1, and the new owner files an 
72.27   application with the assessor for continued deferment within 30 days after the sale.
72.28       Subd. 9. Definitions. For purposes of this section, "commercial aggregate deposit" 
72.29   and "actively mined" have the meanings given them in section 273.13, subdivision 23, 
72.30   paragraph (h).
72.31       Subd. 10. County administrative fee. A county may charge the owner of property 
72.32   that is valued under this section a fee to compensate for its costs of administering this 
72.33   program.
72.34   EFFECTIVE DATE.This section is effective for taxes levied in 2007, payable 
72.35   in 2008, and thereafter, except that for the 2007 assessment year, the application date 
73.1    under subdivision 4 shall be September 1, 2007, and subdivision 4a is effective the day 
73.2    following final enactment.

73.3        Sec. 15. Minnesota Statutes 2004, section 273.124, subdivision 12, is amended to read:
73.4        Subd. 12. Homestead of member of United States armed forces; Peace Corps; 
73.5    VISTA.  (a) Real estate actually occupied and used for the purpose of a homestead by 
73.6    a person, or by a member of that person's immediate family shall be classified as a 
73.7    homestead even though the person or family is absent if (1) the person or the person's 
73.8    family is absent solely because the person is on active duty with the armed forces of the 
73.9    United States, or is serving as a volunteer under the VISTA or Peace Corps program; (2) 
73.10   the owner intends to return as soon as discharged or relieved from service; and (3) the 
73.11   owner claims it as a homestead. A person who knowingly makes or submits to an assessor 
73.12   an affidavit or other statement that is false in any material matter to obtain or aid another 
73.13   in obtaining a benefit under this subdivision is guilty of a felony.
73.14   (b) In the case of a person who is absent solely because the person is on active duty 
73.15   with the United States armed forces, homestead classification must be granted as provided 
73.16   in this paragraph if the requirements of paragraph (a), clauses (1) to (3), are met, even 
73.17   if the property has not been occupied as a homestead by the person or a member of the 
73.18   person's family. To qualify for this classification, the person who acquires the property 
73.19   must notify the assessor of the acquisition and of the person's absence due to military 
73.20   service. When the person returns from military service and occupies the property as 
73.21   a homestead, the person shall notify the assessor, who will provide for abatement of 
73.22   the difference between the nonhomestead and homestead taxes for the current and two 
73.23   preceding years, not to exceed the time during which the person owned the property.
73.24   EFFECTIVE DATE.This section is effective for assessments in 2006, taxes 
73.25   payable in 2007, and thereafter.

73.26       Sec. 16. Minnesota Statutes 2004, section 273.124, is amended by adding a subdivision 
73.27   to read:
73.28       Subd. 22. Annual registration of certain relative homesteads. If the owner of 
73.29   property or the owner's relative who occupies property that is classified as a homestead 
73.30   under subdivision 1, paragraph (c), receives compensation for allowing occupancy of any 
73.31   part of that property for a period that exceeds 31 consecutive days during the calendar 
73.32   year, the recipient of the compensation must register the property with the city in which 
73.33   it is located no later than 60 days after the initial rental period began. This requirement 
73.34   applies to property located in a city that has a population over 25,000. Each such city must 
74.1    maintain a file of these property registrations that is open to the public, and retain the 
74.2    registrations for one year after the date of filing.
74.3    EFFECTIVE DATE.This section is effective July 1, 2006.

74.4        Sec. 17. Minnesota Statutes 2005 Supplement, section 273.128, subdivision 1, is 
74.5    amended to read:
74.6        Subdivision 1. Requirement. Low-income rental property classified as class 4d 
74.7    under section 273.13, subdivision 25, is entitled to valuation under this section if at least 
74.8    75 percent of for  the units in the rental housing property that meet any of the following 
74.9    qualifications:
74.10   (1) the units are subject to a housing assistance payments contract under section 8 
74.11   of the United States Housing Act of 1937, as amended;
74.12   (2) the units are rent-restricted and income-restricted units of a qualified low-income 
74.13   housing project receiving tax credits under section 42(g) of the Internal Revenue Code of 
74.14   1986, as amended;
74.15   (3) the units are financed by the Rural Housing Service of the United States 
74.16   Department of Agriculture and receive payments under the rental assistance program 
74.17   pursuant to section 521(a) of the Housing Act of 1949, as amended; or
74.18   (4) the units are subject to rent and income restrictions under the terms of financial 
74.19   assistance provided to the rental housing property by the federal government or, the 
74.20   state of Minnesota, or a local unit of government  as evidenced by a document recorded 
74.21   against the property.
74.22   The restrictions must require assisted units to be occupied by residents whose 
74.23   household income at the time of initial occupancy does not exceed 60 percent of the 
74.24   greater of area or state median income, adjusted for family size, as determined by the 
74.25   United States Department of Housing and Urban Development. The restriction must also 
74.26   require the rents for assisted units to not exceed 30 percent of 60 percent of the greater of 
74.27   area or state median income, adjusted for family size, as determined by the United States 
74.28   Department of Housing and Urban Development.
74.29   EFFECTIVE DATE.This section is effective for taxes levied in 2006, payable 
74.30   in 2007, and thereafter.

74.31       Sec. 18. Minnesota Statutes 2004, section 273.13, subdivision 23, is amended to read:
74.32       Subd. 23. Class 2. (a) Class 2a property is agricultural land including any 
74.33   improvements that is homesteaded. The market value of the house and garage and 
75.1    immediately surrounding one acre of land has the same class rates as class 1a property 
75.2    under subdivision 22. The value of the remaining land including improvements up to and 
75.3    including $600,000 market value the first tier valuation limit of agricultural homestead 
75.4    property  has a net class rate of 0.55 percent of market value. The remaining property 
75.5    over $600,000 market value the first tier  has a class rate of one percent of market value. 
75.6    For purposes of this subdivision, the "first tier valuation limit of agricultural homestead 
75.7    property" and "first tier" means the limit certified under section 273.11, subdivision 23.
75.8    (b) Class 2b property is (1) real estate, rural in character and used exclusively for 
75.9    growing trees for timber, lumber, and wood and wood products; (2) real estate that is not 
75.10   improved with a structure and is used exclusively for growing trees for timber, lumber, and 
75.11   wood and wood products, if the owner has participated or is participating in a cost-sharing 
75.12   program for afforestation, reforestation, or timber stand improvement on that particular 
75.13   property, administered or coordinated by the commissioner of natural resources; (3) real 
75.14   estate that is nonhomestead agricultural land; or (4) a landing area or public access area of 
75.15   a privately owned public use airport; or (5) land with a commercial aggregate deposit that 
75.16   is not actively being mined and is not otherwise classified as class 2a or 2b, clauses (1) to 
75.17   (3). Class 2b property has a net class rate of one percent of market value.
75.18   (c) Agricultural land as used in this section means contiguous acreage of ten 
75.19   acres or more, used during the preceding year for agricultural purposes. "Agricultural 
75.20   purposes" as used in this section means the raising or cultivation of agricultural products. 
75.21   "Agricultural purposes" also includes enrollment in the Reinvest in Minnesota program 
75.22   under sections  103F.501 to  103F.535, the native prairie bank under section 84.96,  or the 
75.23   federal Conservation Reserve Program as contained in Public Law 99-198 if the property 
75.24   was classified as agricultural (i) under this subdivision for the assessment year 2002 or (ii) 
75.25   in the year prior to its enrollment. Contiguous acreage on the same parcel, or contiguous 
75.26   acreage on an immediately adjacent parcel under the same ownership, may also qualify 
75.27   as agricultural land, but only if it is pasture, timber, waste, unusable wild land, or land 
75.28   included in state or federal farm programs. Agricultural classification for property shall be 
75.29   determined excluding the house, garage, and immediately surrounding one acre of land, 
75.30   and shall not be based upon the market value of any residential structures on the parcel or 
75.31   contiguous parcels under the same ownership. 
75.32   (d) Real estate, excluding the house, garage, and immediately surrounding one acre 
75.33   of land, of less than ten acres which is exclusively and intensively used for raising or 
75.34   cultivating agricultural products, shall be considered as agricultural land.
75.35   Land shall be classified as agricultural even if all or a portion of the agricultural use 
75.36   of that property is the leasing to, or use by another person for agricultural purposes.
76.1    Classification under this subdivision is not determinative for qualifying under 
76.2    section  273.111. 
76.3    The property classification under this section supersedes, for property tax purposes 
76.4    only, any locally administered agricultural policies or land use restrictions that define 
76.5    minimum or maximum farm acreage.
76.6    (e) The term "agricultural products" as used in this subdivision includes production 
76.7    for sale of:
76.8    (1) livestock, dairy animals, dairy products, poultry and poultry products, fur-bearing 
76.9    animals, horticultural and nursery stock, fruit of all kinds, vegetables, forage, grains, 
76.10   bees, and apiary products by the owner;
76.11   (2) fish bred for sale and consumption if the fish breeding occurs on land zoned 
76.12   for agricultural use;
76.13   (3) the commercial boarding of horses if the boarding is done in conjunction with 
76.14   raising or cultivating agricultural products as defined in clause (1);
76.15   (4) property which is owned and operated by nonprofit organizations used for 
76.16   equestrian activities, excluding racing;
76.17   (5) game birds and waterfowl bred and raised for use on a shooting preserve licensed 
76.18   under section  97A.115; 
76.19   (6) insects primarily bred to be used as food for animals;
76.20   (7) trees, grown for sale as a crop, and not sold for timber, lumber, wood, or wood 
76.21   products, except that short rotation woody crops that are cultivated using agricultural 
76.22   practices to produce timber or forest products are agricultural products; and
76.23   (8) maple syrup taken from trees grown by a person licensed by the Minnesota 
76.24   Department of Agriculture under chapter 28A as a food processor.
76.25   (f) If a parcel used for agricultural purposes is also used for commercial or industrial 
76.26   purposes, including but not limited to:
76.27   (1) wholesale and retail sales;
76.28   (2) processing of raw agricultural products or other goods;
76.29   (3) warehousing or storage of processed goods; and
76.30   (4) office facilities for the support of the activities enumerated in clauses (1), (2), 
76.31   and (3),
76.32   the assessor shall classify the part of the parcel used for agricultural purposes as class 
76.33   1b, 2a, or 2b, whichever is appropriate, and the remainder in the class appropriate to its 
76.34   use. The grading, sorting, and packaging of raw agricultural products for first sale is 
76.35   considered an agricultural purpose. A greenhouse or other building where horticultural 
76.36   or nursery products are grown that is also used for the conduct of retail sales must be 
77.1    classified as agricultural if it is primarily used for the growing of horticultural or nursery 
77.2    products from seed, cuttings, or roots and occasionally as a showroom for the retail sale of 
77.3    those products. Use of a greenhouse or building only for the display of already grown 
77.4    horticultural or nursery products does not qualify as an agricultural purpose.
77.5    The assessor shall determine and list separately on the records the market value of 
77.6    the homestead dwelling and the one acre of land on which that dwelling is located. If any 
77.7    farm buildings or structures are located on this homesteaded acre of land, their market 
77.8    value shall not be included in this separate determination.
77.9    (g) To qualify for classification under paragraph (b), clause (4), a privately owned 
77.10   public use airport must be licensed as a public airport under section  360.018. For purposes 
77.11   of paragraph (b), clause (4), "landing area" means that part of a privately owned public use 
77.12   airport properly cleared, regularly maintained, and made available to the public for use by 
77.13   aircraft and includes runways, taxiways, aprons, and sites upon which are situated landing 
77.14   or navigational aids. A landing area also includes land underlying both the primary surface 
77.15   and the approach surfaces that comply with all of the following: 
77.16   (i) the land is properly cleared and regularly maintained for the primary purposes of 
77.17   the landing, taking off, and taxiing of aircraft; but that portion of the land that contains 
77.18   facilities for servicing, repair, or maintenance of aircraft is not included as a landing area;
77.19   (ii) the land is part of the airport property; and
77.20   (iii) the land is not used for commercial or residential purposes.
77.21   The land contained in a landing area under paragraph (b), clause (4), must be described 
77.22   and certified by the commissioner of transportation. The certification is effective until 
77.23   it is modified, or until the airport or landing area no longer meets the requirements of 
77.24   paragraph (b), clause (4). For purposes of paragraph (b), clause (4), "public access area" 
77.25   means property used as an aircraft parking ramp, apron, or storage hangar, or an arrival 
77.26   and departure building in connection with the airport.
77.27   (h) To qualify for classification under paragraph (b), clause (5), the property must be 
77.28   at least ten contiguous acres in size and the owner of the property must record with the 
77.29   county recorder of the county in which the property is located an affidavit containing:
77.30   (1) a legal description of the property;
77.31   (2) a disclosure that the property contains a commercial aggregate deposit that is not 
77.32   actively being mined but is present on the entire parcel enrolled;
77.33   (3) documentation that the conditional use under the county or local zoning 
77.34   ordinance of this property is for mining; and 
77.35   (4) documentation that a permit has been issued by the local unit of government 
77.36   or the mining activity is allowed under local ordinance.  The disclosure must include a 
78.1    statement from a registered professional geologist, engineer, or soil scientist delineating 
78.2    the deposit and certifying that it is a commercial aggregate deposit.
78.3    For purposes of this section and section 273.1115, "commercial aggregate deposit" 
78.4    means a deposit that will yield crushed stone or sand and gravel that is suitable for use 
78.5    as a construction aggregate; and "actively mined" means the removal of top soil and 
78.6    overburden in preparation for excavation or excavation of a commercial deposit.
78.7    (i) When any portion of the property under this subdivision or section 273.13, 
78.8    subdivision 22, begins to be actively mined, the owner must file a supplemental affidavit 
78.9    within 60 days from the day any aggregate is removed stating the number of acres of the 
78.10   property that is actively being mined.  The acres actively being mined must be (1) valued 
78.11   and classified under section 273.13, subdivision 24, in the next subsequent assessment 
78.12   year, and (2) removed from the aggregate resource preservation property tax program 
78.13   under section 273.1115, if the land was enrolled in that program.  Copies of the original 
78.14   affidavit and all supplemental affidavits must be filed with the county assessor, the local 
78.15   zoning administrator, and the Department of Natural Resources, Division of Land and 
78.16   Minerals.  A supplemental affidavit must be filed each time a subsequent portion of the 
78.17   property is actively mined, provided that the minimum acreage change is five acres, even 
78.18   if the actual mining activity constitutes less than five acres.
78.19   EFFECTIVE DATE.This section is effective for taxes levied in 2006, payable in 
78.20   2007, and thereafter, except that the provisions relating to land with aggregate deposits is 
78.21   effective for taxes levied in 2007, payable in 2008, and thereafter.

78.22       Sec. 19. [273.323] EFFECTIVE DATE FOR RULES FOR VALUATION OF 
78.23   ELECTRIC AND TRANSMISSION PIPELINE UTILITY PROPERTY.
78.24   Rules adopted by the commissioner of revenue that prescribe the method of valuing 
78.25   property of electric and transmission pipeline utilities may not take effect before the end 
78.26   of the regular legislative session in the calendar year following adoption of the rules.
78.27   EFFECTIVE DATE.This section is effective the day following final enactment.

78.28       Sec. 20. Minnesota Statutes 2005 Supplement, section 276.04, subdivision 2, is 
78.29   amended to read:
78.30       Subd. 2. Contents of tax statements. (a) The treasurer shall provide for the 
78.31   printing of the tax statements. The commissioner of revenue shall prescribe the form 
78.32   of the property tax statement and its contents. The statement must contain a tabulated 
78.33   statement of the dollar amount due to each taxing authority and the amount of the state 
79.1    tax from the parcel of real property for which a particular tax statement is prepared. The 
79.2    dollar amounts attributable to the county, the state tax, the voter approved school tax, the 
79.3    other local school tax, the township or municipality, and the total of the metropolitan 
79.4    special taxing districts as defined in section 275.065, subdivision 3, paragraph (i), must 
79.5    be separately stated. The amounts due all other special taxing districts, if any, may be 
79.6    aggregated except that any levies made by the regional rail authorities in the county of 
79.7    Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 398A 
79.8    shall be listed on a separate line directly under the appropriate county's levy. If the county 
79.9    levy under this paragraph includes an amount for a lake improvement district as defined 
79.10   under sections 103B.501 to 103B.581, the amount attributable for that purpose must be 
79.11   separately stated from the remaining county levy amount. In the case of Ramsey County, 
79.12   if the county levy under this paragraph includes an amount for public library service 
79.13   under section 134.07, the amount attributable for that purpose may be separated from the 
79.14   remaining county levy amount. The amount of the tax on homesteads qualifying under the 
79.15   senior citizens' property tax deferral program under chapter 290B is the total amount of 
79.16   property tax before subtraction of the deferred property tax amount. The amount of the 
79.17   tax on contamination value imposed under sections 270.91 to 270.98, if any, must also 
79.18   be separately stated. The dollar amounts, including the dollar amount of any special 
79.19   assessments, may be rounded to the nearest even whole dollar. For purposes of this section 
79.20   whole odd-numbered dollars may be adjusted to the next higher even-numbered dollar. 
79.21   The amount of market value excluded under section 273.11, subdivision 16, if any, must 
79.22   also be listed on the tax statement.
79.23   (b) The property tax statements for manufactured homes and sectional structures 
79.24   taxed as personal property shall contain the same information that is required on the 
79.25   tax statements for real property.
79.26   (c) Real and personal property tax statements must contain the following information 
79.27   in the order given in this paragraph. The information must contain the current year tax 
79.28   information in the right column with the corresponding information for the previous year 
79.29   in a column on the left:
79.30   (1) the property's estimated market value under section 273.11, subdivision 1;
79.31   (2) the property's taxable market value after reductions under section 273.11, 
79.32   subdivisions 1a and 16;
79.33   (3) the property's gross tax, calculated by adding the property's total property tax to 
79.34   the sum of the aids enumerated in clause (4);
79.35   (4) a total of the following aids:
80.1    (i) education aids payable under chapters 122A, 123A, 123B, 124D, 125A, 126C, 
80.2    and 127A;
80.3    (ii) local government aids for cities, towns, and counties under sections 477A.011 to 
80.4    477A.04; and
80.5    (iii) disparity reduction aid under section 273.1398;
80.6    (5) for homestead residential and agricultural properties, the credits under section 
80.7    273.1384;
80.8    (6) any credits received under sections 273.119; 273.123; 273.135; 273.1391; 
80.9    273.1398, subdivision 4; 469.171; and 473H.10, except that the amount of credit received 
80.10   under section 273.135 must be separately stated and identified as "taconite tax relief"; and
80.11   (7) the net tax payable in the manner required in paragraph (a).
80.12   (d) If the county uses envelopes for mailing property tax statements and if the county 
80.13   agrees, a taxing district may include a notice with the property tax statement notifying 
80.14   taxpayers when the taxing district will begin its budget deliberations for the current 
80.15   year, and encouraging taxpayers to attend the hearings. If the county allows notices to 
80.16   be included in the envelope containing the property tax statement, and if more than 
80.17   one taxing district relative to a given property decides to include a notice with the tax 
80.18   statement, the county treasurer or auditor must coordinate the process and may combine 
80.19   the information on a single announcement.
80.20   The commissioner of revenue shall certify to the county auditor the actual or 
80.21   estimated aids enumerated in paragraph (c), clause (4), that local governments will receive 
80.22   in the following year. The commissioner must certify this amount by January 1 of each 
80.23   year.
80.24   (e) A notice must be printed on the front side of the property tax statement for 
80.25   homestead property stating that if the total property tax has increased over the previous 
80.26   year's tax by more than the threshold percentage in section 290A.04, subdivision 2h, 
80.27   the taxpayer may be eligible, regardless of income, for a special property tax refund 
80.28   from the state.
80.29   EFFECTIVE DATE.This section is effective for property tax statements prepared 
80.30   in 2006, for property taxes payable in 2007 and thereafter.

80.31       Sec. 21. Minnesota Statutes 2004, section 469.1813, subdivision 1, is amended to read:
80.32       Subdivision 1. Authority. The governing body of a political subdivision may grant 
80.33   an a current or prospective abatement, by contract or otherwise, of the taxes imposed by 
80.34   the political subdivision on a parcel of property, which may include personal property 
81.1    and machinery, or defer the payments of the taxes and abate the interest and penalty 
81.2    that otherwise would apply, if:
81.3    (a) (1) it expects the benefits to the political subdivision of the proposed abatement 
81.4    agreement to at least equal the costs to the political subdivision of the proposed agreement 
81.5    or intends the abatement to phase in a property tax increase, as provided in clause (b)(7); 
81.6    and
81.7    (b) (2) it finds that doing so is in the public interest because it will:
81.8    (1) (i) increase or preserve tax base;
81.9    (2) (ii) provide employment opportunities in the political subdivision;
81.10   (3) (iii) provide or help acquire or construct public facilities;
81.11   (4) (iv) help redevelop or renew blighted areas;
81.12   (5) (v) help provide access to services for residents of the political subdivision;
81.13   (6) (vi) finance or provide public infrastructure; or
81.14   (7) (vii) phase in a property tax increase on the parcel resulting from an increase of 
81.15   50 percent or more in one year on the estimated market value of the parcel, other than 
81.16   increase attributable to improvement of the parcel; or
81.17   (viii) stabilize the tax base through equalization of property tax revenues for a 
81.18   specified period of time with respect to a taxpayer whose real and personal property is 
81.19   subject to valuation under Minnesota Rules, chapter 8100.

81.20       Sec. 22. Minnesota Statutes 2005 Supplement, section 469.1813, subdivision 6, 
81.21   is amended to read:
81.22       Subd. 6. Duration limit. (a) A political subdivision may grant an abatement for a 
81.23   period no longer than 15 years, except as provided under paragraph (b). The abatement 
81.24   period will commence in the first year in which the abatement granted is either paid or 
81.25   retained in accordance with section 469.1815, subdivision 2. The subdivision may specify 
81.26   in the abatement resolution a shorter duration. If the resolution does not specify a period 
81.27   of time, the abatement is for eight years. If an abatement has been granted to a parcel of 
81.28   property and the period of the abatement has expired, the political subdivision that granted 
81.29   the abatement may not grant another abatement for eight years after the expiration of the 
81.30   first abatement. This prohibition does not apply to improvements added after and not 
81.31   subject to the first abatement. Economic abatement agreements for real and personal 
81.32   property subject to valuation under Minnesota Rules, chapter 8100, are not subject to this 
81.33   prohibition and may be granted successively.
81.34   (b) A political subdivision proposing to abate taxes for a parcel may request, in 
81.35   writing, that the other political subdivisions in which the parcel is located grant an 
82.1    abatement for the property. If one of the other political subdivisions declines, in writing, 
82.2    to grant an abatement or if 90 days pass after receipt of the request to grant an abatement 
82.3    without a written response from one of the political subdivisions, the duration limit 
82.4    for an abatement for the parcel by the requesting political subdivision and any other 
82.5    participating political subdivision is increased to 20 years. If the political subdivision 
82.6    which declined to grant an abatement later grants an abatement for the parcel, the 20-year 
82.7    duration limit is reduced by one year for each year that the declining political subdivision 
82.8    grants an abatement for the parcel during the period of the abatement granted by the 
82.9    requesting political subdivision. The duration limit may not be reduced below the limit 
82.10   under paragraph (a).

82.11       Sec. 23. Minnesota Statutes 2004, section 469.1813, subdivision 6b, is amended to 
82.12   read:
82.13       Subd. 6b. Extended duration limit. (a) Notwithstanding the provisions of 
82.14   subdivision 6, a political subdivision may grant an abatement for a period of up to 20 
82.15   years, if the abatement is for a qualified business.
82.16   (b) To be a qualified business for purposes of this subdivision, at least 50 percent of 
82.17   the payroll of the operations of the business that qualify for the abatement must be for 
82.18   employees engaged in one of the following lines of business or any combination of them:
82.19   (1) manufacturing;
82.20   (2) agricultural processing;
82.21   (3) mining;
82.22   (4) research and development;
82.23   (5) warehousing; or
82.24   (6) qualified high technology.
82.25   Alternatively, a qualified business also includes a taxpayer whose real and personal 
82.26   property is subject to valuation under Minnesota Rules, chapter 8100.
82.27   (c)(1) "Manufacturing" means the material staging and production of tangible 
82.28   personal property by procedures commonly regarded as manufacturing, processing, 
82.29   fabrication, or assembling which changes some existing material into new shapes, new 
82.30   qualities, or new combinations.
82.31   (2) "Mining" has the meaning given in section 613(c) of the Internal Revenue Code 
82.32   of 1986.
82.33   (3) "Agricultural processing" means transforming, packaging, sorting, or grading 
82.34   livestock or livestock products, agricultural commodities, or plants or plant products into 
82.35   goods that are used for intermediate or final consumption including goods for nonfood use.
83.1    (4) "Research and development" means qualified research as defined in section 
83.2    41(d) of the Internal Revenue Code of 1986.
83.3    (5) "Qualified high technology" means one or more of the following activities:
83.4    (i) advanced computing, which is any technology used in the design and 
83.5    development of any of the following:
83.6    (A) computer hardware and software;
83.7    (B) data communications; and
83.8    (C) information technologies;
83.9    (ii) advanced materials, which are materials with engineered properties created 
83.10   through the development of specialized process and synthesis technology;
83.11   (iii) biotechnology, which is any technology that uses living organisms, cells, 
83.12   macromolecules, microorganisms, or substances from living organisms to make or modify 
83.13   a product, improve plants or animals, or develop microorganisms for useful purposes;
83.14   (iv) electronic device technology, which is any technology that involves 
83.15   microelectronics, semiconductors, electronic equipment, and instrumentation, radio 
83.16   frequency, microwave, and millimeter electronics, and optical and optic-electrical devices, 
83.17   or data and digital communications and imaging devices;
83.18   (v) engineering or laboratory testing related to the development of a product;
83.19   (vi) technology that assists in the assessment or prevention of threats or damage to 
83.20   human health or the environment, including, but not limited to, environmental cleanup 
83.21   technology, pollution prevention technology, or development of alternative energy sources;
83.22   (vii) medical device technology, which is any technology that involves medical 
83.23   equipment or products other than a pharmaceutical product that has therapeutic or 
83.24   diagnostic value and is regulated; or
83.25   (viii) advanced vehicles technology which is any technology that involves electric 
83.26   vehicles, hybrid vehicles, or alternative fuel vehicles, or components used in the 
83.27   construction of electric vehicles, hybrid vehicles, or alternative fuel vehicles. An electric 
83.28   vehicle is a road vehicle that draws propulsion energy only from an on-board source of 
83.29   electrical energy. A hybrid vehicle is a road vehicle that can draw propulsion energy from 
83.30   both a consumable fuel and a rechargeable energy storage system.
83.31   (d) The authority to grant new abatements under this subdivision expires on July 1, 
83.32   2004, except that the authority to grant new abatements for real and personal property 
83.33   subject to valuation under Minnesota Rules, chapter 8100, does not expire.

83.34       Sec. 24. Minnesota Statutes 2004, section 469.1813, subdivision 8, is amended to read:
84.1        Subd. 8. Limitation on abatements. In any year, the total amount of property taxes 
84.2    abated by a political subdivision under this section may not exceed (1) ten percent of 
84.3    the current levy, or (2) $200,000, whichever is greater. The limit under this subdivision 
84.4    does not apply to:
84.5    (1) an uncollected abatement from a prior year that is added to the abatement levy; or
84.6    (2) a taxpayer whose real and personal property is subject to valuation under 
84.7    Minnesota Rules, chapter 8100.

84.8        Sec. 25. Minnesota Statutes 2004, section 469.1813, subdivision 9, is amended to read:
84.9        Subd. 9. Consent of property owner not required. A political subdivision may 
84.10   abate the taxes on a parcel under sections  469.1812 to  469.1815 without obtaining the 
84.11   consent of the property owner. This subdivision does not apply to abatements granted to a 
84.12   taxpayer whose real and personal property is valued under Minnesota Rules, chapter 8100. 

84.13       Sec. 26. Minnesota Statutes 2004, section 469.1813, is amended by adding a 
84.14   subdivision to read:
84.15       Subd. 10. Applicability to utility properties. When this statute is applied or 
84.16   utilized with respect to a taxpayer whose real and personal property is subject to valuation 
84.17   under Minnesota Rules, chapter 8100, the provisions of this section and sections 469.1814 
84.18   and 469.1815 shall apply only to property specified or described in the abatement contract 
84.19   or agreement.

84.20       Sec. 27. Minnesota Statutes 2004, section 473F.08, is amended by adding a subdivision 
84.21   to read:
84.22       Subd. 3c. Uncompensated care reimbursement. (a) As used in this subdivision, 
84.23   the following terms have the meanings given in this paragraph.
84.24   (1) "Uncompensated care" means the sum of (i) the amount that would have been 
84.25   charged by a facility for rendering free or discounted care to persons who cannot afford to 
84.26   pay and for which the facility did not expect payment and (ii) the amount that had been 
84.27   charged by a facility for rendering care to persons and billed to that person or a third-party 
84.28   payer for which the facility expected but did not receive payment. Uncompensated care 
84.29   does not include contractual write-offs.
84.30   (2) A "qualifying hospital" means a hospital in the area that is:
84.31   (i) owned or operated by a local unit of government, or formerly owned by a 
84.32   university or is a private nonprofit hospital that leases its building from the county in 
84.33   which it is located; and
85.1    (ii) has a licensed bed capacity greater than 400.
85.2    (b) A county that contains a qualifying hospital is eligible for reimbursement of 
85.3    that portion of gross charges for uncompensated care determined by multiplying the 
85.4    hospital's gross charges during the base year by the percentage of uncompensated care 
85.5    provided by the hospital during the base year minus one-half of one percent of those gross 
85.6    charges, dividing the result by two, and adjusting the cost by multiplying that result by the 
85.7    hospital's cost-to-charge ratio during the base year. By July 15, 2007, and each subsequent 
85.8    year, the county shall notify its county auditor, as well as the administrative auditor, of the 
85.9    amount of qualifying uncompensated care provided, adjusted to cost using the hospital's 
85.10   cost-to-charge ratio, during the 12-month period ending on June 30 of the current year.
85.11   (c) The amount certified under paragraph (b) shall be certified annually by the 
85.12   county auditor to the administrative auditor as an addition to the county's areawide levy 
85.13   under subdivision 5.
85.14   (d) The administrative auditor shall pay one-half of the reimbursement to the county 
85.15   auditor of the county that contains the qualifying hospital on or before June 15 and the 
85.16   remaining one-half of the reimbursement on or before November 15. The county auditor 
85.17   receiving the payment shall disburse the reimbursement to the qualifying hospital within 
85.18   15 days of receipt of the reimbursement.
85.19   (e) Prior to the reporting specified in paragraph (b) above, all qualifying hospitals 
85.20   that participate in this program shall agree upon and implement a common standard for 
85.21   reporting uncompensated care, and a common standard for determining eligibility for 
85.22   uncompensated care for all participating hospitals.
85.23   EFFECTIVE DATE.This section is effective for fiscal disparities contribution and 
85.24   distribution tax capacities for taxes payable in 2008 and 2009 only.

85.25       Sec. 28. Laws 2001, First Special Session chapter 5,  article 3, section 8, the effective 
85.26   date, as amended by Laws 2005, chapter 151, article 3, section 19, is amended to read:
85.27   [EFFECTIVE DATE.] This section is effective for taxes  levied in 2002, payable in 
85.28   2003, through taxes levied in   2009, payable in  2010 and thereafter.  

85.29       Sec. 29. PROPERTY TAX CERTIFICATION; ROCHESTER SCHOOL 
85.30   DISTRICT.
85.31   Notwithstanding Minnesota Statutes, sections 126C.48 and 275.065, with the 
85.32   agreement of the school district's home county, Independent School District No. 535, 
85.33   Rochester, on or before October 8, shall certify to the county auditor the district's proposed 
85.34   property tax levy for taxes payable in the following year.
86.1    EFFECTIVE DATE.This section is effective for taxes payable in 2007 only.

86.2        Sec. 30. LEASE LEVY; ADMINISTRATIVE SPACE, ROCORI AND 
86.3    FARIBAULT.
86.4    Independent School Districts Nos. 656, Faribault, and 750, Rocori, may lease 
86.5    administrative space under Minnesota Statutes, section 126C.40, subdivision 1, if the 
86.6    district can demonstrate to the satisfaction of the commissioner of education that the 
86.7    administrative space is less expensive than instructional space that the district would 
86.8    otherwise lease. The commissioner must deny this levy authority unless the district 
86.9    passes a resolution stating its intent to lease instructional space under Minnesota Statutes, 
86.10   section 126C.40, subdivision 1, if the commissioner does not grant authority under this 
86.11   section.  The resolution must also certify that a lease of administrative space under this 
86.12   section is less expensive than the district's proposed instructional lease. Levy authority 
86.13   under this section shall not exceed the total levy authority under Minnesota Statutes, 
86.14   section 126C.40, subdivision 1, paragraph (e). 
86.15   EFFECTIVE DATE.This section is effective for revenue for taxes payable in 2007.

86.16       Sec. 31. MISCELLANEOUS EDUCATION PROPERTY TAX REDUCTION.
86.17   Notwithstanding Minnesota Statutes, section 126C.10, subdivision 13a, the 
86.18   commissioner of education shall increase the operating capital equalizing factor under 
86.19   Minnesota Statutes, section 126C.10, subdivision 13a, to reduce the operating capital levy 
86.20   by $2,593,000 in fiscal year 2008 and $2,259,000 in fiscal year 2009.

86.21                                          ARTICLE 6
86.22                        DEPARTMENT OF REVENUE PROPERTY TAXES AND AIDS

86.23       Section 1. Minnesota Statutes 2005 Supplement, section 273.13, subdivision 22, 
86.24   is amended to read:
86.25       Subd. 22. Class 1. (a) Except as provided in subdivision 23 and in paragraphs (b) 
86.26   and (c), real estate which is residential and used for homestead purposes is class 1a. In the 
86.27   case of a duplex or triplex in which one of the units is used for homestead purposes, the 
86.28   entire property is deemed to be used for homestead purposes. The market value of class 1a 
86.29   property must be determined based upon the value of the house, garage, and land.
86.30   The first $500,000 of market value of class 1a property has a net class rate of 
86.31   one percent of its market value; and the market value of class 1a property that exceeds 
86.32   $500,000 has a class rate of 1.25 percent of its market value.
87.1    (b) Class 1b property includes homestead real estate or homestead manufactured 
87.2    homes used for the purposes of a homestead by
87.3    (1) any person who is blind as defined in section 256D.35, or the blind person and 
87.4    the blind person's spouse; or
87.5    (2) any person, hereinafter referred to as "veteran," who:
87.6    (i) served in the active military or naval service of the United States; and
87.7    (ii) is entitled to compensation under the laws and regulations of the United States 
87.8    for permanent and total service-connected disability due to the loss, or loss of use, by 
87.9    reason of amputation, ankylosis, progressive muscular dystrophies, or paralysis, of both 
87.10   lower extremities, such as to preclude motion without the aid of braces, crutches, canes, or 
87.11   a wheelchair; and
87.12   (iii) has acquired a special housing unit with special fixtures or movable facilities 
87.13   made necessary by the nature of the veteran's disability, or the surviving spouse of the 
87.14   deceased veteran for as long as the surviving spouse retains the special housing unit 
87.15   as a homestead; or
87.16   (3) any person who is permanently and totally disabled.
87.17   Property is classified and assessed under clause (3) only if the government agency or 
87.18   income-providing source certifies, upon the request of the homestead occupant, that the 
87.19   homestead occupant satisfies the disability requirements of this paragraph.
87.20   Property is classified and assessed pursuant to clause (1) only if the commissioner of 
87.21   revenue certifies to the assessor that the homestead occupant satisfies the requirements of 
87.22   this paragraph.
87.23   Permanently and totally disabled for the purpose of this subdivision means a 
87.24   condition which is permanent in nature and totally incapacitates the person from working 
87.25   at an occupation which brings the person an income. The first $32,000 market value of 
87.26   class 1b property has a net class rate of .45 percent of its market value. The remaining 
87.27   market value of class 1b property has a class rate using the rates for class 1a or class 2a 
87.28   property, whichever is appropriate, of similar market value.
87.29   (c) Class 1c property is commercial use real property that abuts a lakeshore line and 
87.30   is devoted to temporary and seasonal residential occupancy for recreational purposes but 
87.31   not devoted to commercial purposes for more than 250 days in the year preceding the 
87.32   year of assessment, and that includes a portion used as a homestead by the owner, which 
87.33   includes a dwelling occupied as a homestead by a shareholder of a corporation that owns 
87.34   the resort, a partner in a partnership that owns the resort, or a member of a limited liability 
87.35   company that owns the resort even if the title to the homestead is held by the corporation, 
87.36   partnership, or limited liability company. For purposes of this clause, property is devoted 
88.1    to a commercial purpose on a specific day if any portion of the property, excluding the 
88.2    portion used exclusively as a homestead, is used for residential occupancy and a fee 
88.3    is charged for residential occupancy. The portion of the property used as a homestead 
88.4    by the owner has the same class rates as is class 1a property under paragraph (a). The 
88.5    remainder of the property is classified as follows: the first $500,000 of market value is tier 
88.6    I, the next $1,700,000 of market value is tier II, and any remaining market value is tier III. 
88.7    The class rates for class 1c are: tier I, 0.55 percent; tier II, 1.0 percent; and tier III, 1.25 
88.8    percent. If a class 1c resort property has any market value in tier III, the entire property 
88.9    must meet the requirements of subdivision 25, paragraph (d), clause (1), to qualify for 
88.10   class 1c treatment under this paragraph.
88.11   (d) Class 1d property includes structures that meet all of the following criteria:
88.12   (1) the structure is located on property that is classified as agricultural property under 
88.13   section 273.13, subdivision 23;
88.14   (2) the structure is occupied exclusively by seasonal farm workers during the time 
88.15   when they work on that farm, and the occupants are not charged rent for the privilege of 
88.16   occupying the property, provided that use of the structure for storage of farm equipment 
88.17   and produce does not disqualify the property from classification under this paragraph;
88.18   (3) the structure meets all applicable health and safety requirements for the 
88.19   appropriate season; and
88.20   (4) the structure is not salable as residential property because it does not comply 
88.21   with local ordinances relating to location in relation to streets or roads.
88.22   The market value of class 1d property has the same class rates as class 1a property 
88.23   under paragraph (a).
88.24   EFFECTIVE DATE.This section is effective for taxes payable in 2006 and 
88.25   thereafter.

88.26       Sec. 2. Minnesota Statutes 2005 Supplement, section 273.13, subdivision 25, is 
88.27   amended to read:
88.28       Subd. 25. Class 4. (a) Class 4a is residential real estate containing four or more 
88.29   units and used or held for use by the owner or by the tenants or lessees of the owner 
88.30   as a residence for rental periods of 30 days or more, excluding property qualifying for 
88.31   class 4d. Class 4a also includes hospitals licensed under sections 144.50 to 144.56, other 
88.32   than hospitals exempt under section 272.02, and contiguous property used for hospital 
88.33   purposes, without regard to whether the property has been platted or subdivided. The 
88.34   market value of class 4a property has a class rate of 1.25 percent.
88.35   (b) Class 4b includes:
89.1    (1) residential real estate containing less than four units that does not qualify as class 
89.2    4bb, other than seasonal residential recreational property;
89.3    (2) manufactured homes not classified under any other provision;
89.4    (3) a dwelling, garage, and surrounding one acre of property on a nonhomestead 
89.5    farm classified under subdivision 23, paragraph (b) containing two or three units; and
89.6    (4) unimproved property that is classified residential as determined under subdivision 
89.7    33.
89.8    The market value of class 4b property has a class rate of 1.25 percent.
89.9    (c) Class 4bb includes:
89.10   (1) nonhomestead residential real estate containing one unit, other than seasonal 
89.11   residential recreational property; and
89.12   (2) a single family dwelling, garage, and surrounding one acre of property on a 
89.13   nonhomestead farm classified under subdivision 23, paragraph (b).
89.14   Class 4bb property has the same class rates as class 1a property under subdivision 22.
89.15   Property that has been classified as seasonal residential recreational property at 
89.16   any time during which it has been owned by the current owner or spouse of the current 
89.17   owner does not qualify for class 4bb.
89.18   (d) Class 4c property includes:
89.19   (1) except as provided in subdivision 22, paragraph (c), real property devoted to 
89.20   temporary and seasonal residential occupancy for recreation purposes, including real 
89.21   property devoted to temporary and seasonal residential occupancy for recreation purposes 
89.22   and not devoted to commercial purposes for more than 250 days in the year preceding 
89.23   the year of assessment. For purposes of this clause, property is devoted to a commercial 
89.24   purpose on a specific day if any portion of the property is used for residential occupancy, 
89.25   and a fee is charged for residential occupancy. In order for a property to be classified as 
89.26   class 4c, seasonal residential recreational for commercial purposes, at least 40 percent of 
89.27   the annual gross lodging receipts related to the property must be from business conducted 
89.28   during 90 consecutive days and either (i) at least 60 percent of all paid bookings by lodging 
89.29   guests during the year must be for periods of at least two consecutive nights; or (ii) at least 
89.30   20 percent of the annual gross receipts must be from charges for rental of fish houses, 
89.31   boats and motors, snowmobiles, downhill or cross-country ski equipment, or charges for 
89.32   marina services, launch services, and guide services, or the sale of bait and fishing tackle. 
89.33   For purposes of this determination, a paid booking of five or more nights shall be counted 
89.34   as two bookings. Class 4c also includes commercial use real property used exclusively 
89.35   for recreational purposes in conjunction with class 4c property devoted to temporary 
89.36   and seasonal residential occupancy for recreational purposes, up to a total of two acres, 
90.1    provided the property is not devoted to commercial recreational use for more than 250 
90.2    days in the year preceding the year of assessment and is located within two miles of the 
90.3    class 4c property with which it is used. Owners of real property devoted to temporary and 
90.4    seasonal residential occupancy for recreation purposes and all or a portion of which was 
90.5    devoted to commercial purposes for not more than 250 days in the year preceding the year 
90.6    of assessment desiring classification as class 1c or 4c, must submit a declaration to the 
90.7    assessor designating the cabins or units occupied for 250 days or less in the year preceding 
90.8    the year of assessment by January 15 of the assessment year. Those cabins or units and a 
90.9    proportionate share of the land on which they are located will be designated class 1c or 4c 
90.10   as otherwise provided. The remainder of the cabins or units and a proportionate share of 
90.11   the land on which they are located will be designated as class 3a. The owner of property 
90.12   desiring designation as class 1c or 4c property must provide guest registers or other 
90.13   records demonstrating that the units for which class 1c or 4c designation is sought were 
90.14   not occupied for more than 250 days in the year preceding the assessment if so requested. 
90.15   The portion of a property operated as a (1) restaurant, (2) bar, (3) gift shop, and (4) other 
90.16   nonresidential facility operated on a commercial basis not directly related to temporary and 
90.17   seasonal residential occupancy for recreation purposes shall not qualify for class 1c or 4c;
90.18   (2) qualified property used as a golf course if:
90.19   (i) it is open to the public on a daily fee basis. It may charge membership fees or 
90.20   dues, but a membership fee may not be required in order to use the property for golfing, 
90.21   and its green fees for golfing must be comparable to green fees typically charged by 
90.22   municipal courses; and
90.23   (ii) it meets the requirements of section 273.112, subdivision 3, paragraph (d).
90.24   A structure used as a clubhouse, restaurant, or place of refreshment in conjunction 
90.25   with the golf course is classified as class 3a property;
90.26   (3) real property up to a maximum of one acre of land owned by a nonprofit 
90.27   community service oriented organization; provided that the property is not used for a 
90.28   revenue-producing activity for more than six days in the calendar year preceding the year 
90.29   of assessment and the property is not used for residential purposes on either a temporary 
90.30   or permanent basis. For purposes of this clause, a "nonprofit community service oriented 
90.31   organization" means any corporation, society, association, foundation, or institution 
90.32   organized and operated exclusively for charitable, religious, fraternal, civic, or educational 
90.33   purposes, and which is exempt from federal income taxation pursuant to section 501(c)(3), 
90.34   (10), or (19) of the Internal Revenue Code of 1986, as amended through December 31, 
90.35   1990. For purposes of this clause, "revenue-producing activities" shall include but not be 
90.36   limited to property or that portion of the property that is used as an on-sale intoxicating 
91.1    liquor or 3.2 percent malt liquor establishment licensed under chapter 340A, a restaurant 
91.2    open to the public, bowling alley, a retail store, gambling conducted by organizations 
91.3    licensed under chapter 349, an insurance business, or office or other space leased or 
91.4    rented to a lessee who conducts a for-profit enterprise on the premises. Any portion of 
91.5    the property which is used for revenue-producing activities for more than six days in the 
91.6    calendar year preceding the year of assessment shall be assessed as class 3a. The use of 
91.7    the property for social events open exclusively to members and their guests for periods of 
91.8    less than 24 hours, when an admission is not charged nor any revenues are received by the 
91.9    organization shall not be considered a revenue-producing activity;
91.10   (4) postsecondary student housing of not more than one acre of land that is owned by 
91.11   a nonprofit corporation organized under chapter 317A and is used exclusively by a student 
91.12   cooperative, sorority, or fraternity for on-campus housing or housing located within two 
91.13   miles of the border of a college campus;
91.14   (5) manufactured home parks as defined in section 327.14, subdivision 3;
91.15   (6) real property that is actively and exclusively devoted to indoor fitness, health, 
91.16   social, recreational, and related uses, is owned and operated by a not-for-profit corporation, 
91.17   and is located within the metropolitan area as defined in section 473.121, subdivision 2;
91.18   (7) a leased or privately owned noncommercial aircraft storage hangar not exempt 
91.19   under section 272.01, subdivision 2, and the land on which it is located, provided that:
91.20   (i) the land is on an airport owned or operated by a city, town, county, Metropolitan 
91.21   Airports Commission, or group thereof; and
91.22   (ii) the land lease, or any ordinance or signed agreement restricting the use of the 
91.23   leased premise, prohibits commercial activity performed at the hangar.
91.24   If a hangar classified under this clause is sold after June 30, 2000, a bill of sale must 
91.25   be filed by the new owner with the assessor of the county where the property is located 
91.26   within 60 days of the sale;
91.27   (8) a privately owned noncommercial aircraft storage hangar not exempt under 
91.28   section 272.01, subdivision 2, and the land on which it is located, provided that:
91.29   (i) the land abuts a public airport; and
91.30   (ii) the owner of the aircraft storage hangar provides the assessor with a signed 
91.31   agreement restricting the use of the premises, prohibiting commercial use or activity 
91.32   performed at the hangar; and
91.33   (9) residential real estate, a portion of which is used by the owner for homestead 
91.34   purposes, and that is also a place of lodging, if all of the following criteria are met:
91.35   (i) rooms are provided for rent to transient guests that generally stay for periods 
91.36   of 14 or fewer days;
92.1    (ii) meals are provided to persons who rent rooms, the cost of which is incorporated 
92.2    in the basic room rate;
92.3    (iii) meals are not provided to the general public except for special events on fewer 
92.4    than seven days in the calendar year preceding the year of the assessment; and
92.5    (iv) the owner is the operator of the property.
92.6    The market value subject to the 4c classification under this clause is limited to five rental 
92.7    units. Any rental units on the property in excess of five, must be valued and assessed as 
92.8    class 3a. The portion of the property used for purposes of a homestead by the owner must 
92.9    be classified as class 1a property under subdivision 22.
92.10   Class 4c property has a class rate of 1.5 percent of market value, except that (i) each 
92.11   parcel of seasonal residential recreational property not used for commercial purposes has 
92.12   the same class rates as class 4bb property, (ii) manufactured home parks assessed under 
92.13   clause (5) have the same class rate as class 4b property, (iii) commercial-use seasonal 
92.14   residential recreational property has a class rate of one percent for the first $500,000 
92.15   of market value, which includes any market value receiving the one percent rate under 
92.16   subdivision 22, and 1.25 percent for the remaining market value, (iv) the market value 
92.17   of property described in clause (4) has a class rate of one percent, (v) the market value 
92.18   of property described in clauses (2) and (6) has a class rate of 1.25 percent, and (vi) that 
92.19   portion of the market value of property in clause (9) qualifying for class 4c property 
92.20   has a class rate of 1.25 percent.
92.21   (e) Class 4d property is qualifying low-income rental housing certified to the assessor 
92.22   by the Housing Finance Agency under section 273.128, subdivision 3. If only a portion 
92.23   of the units in the building qualify as low-income rental housing units as certified under 
92.24   section 273.128, subdivision 3, only the proportion of qualifying units to the total number 
92.25   of units in the building qualify for class 4d. The remaining portion of the building shall be 
92.26   classified by the assessor based upon its use. Class 4d also includes the same proportion of 
92.27   land as the qualifying low-income rental housing units are to the total units in the building. 
92.28   For all properties qualifying as class 4d, the market value determined by the assessor must 
92.29   be based on the normal approach to value using normal unrestricted rents.
92.30   Class 4d property has a class rate of 0.75 percent.
92.31   EFFECTIVE DATE.This section is effective for taxes payable in 2006 and 
92.32   subsequent years.

92.33       Sec. 3. Minnesota Statutes 2005 Supplement, section 273.1384, subdivision 1, is 
92.34   amended to read:
93.1        Subdivision 1. Residential homestead market value credit. Each county auditor 
93.2    shall determine a homestead credit for each class 1a, 1b, 1c, and 2a homestead property 
93.3    within the county equal to 0.4 percent of the first $76,000 of market value of the property 
93.4    minus .09 percent of the market value in excess of $76,000. The credit amount may not 
93.5    be less than zero. In the case of an agricultural or resort homestead, only the market 
93.6    value of the house, garage, and immediately surrounding one acre of land is eligible 
93.7    in determining the property's homestead credit. In the case of a property which that is 
93.8    classified as part homestead and part nonhomestead, (i) the credit shall apply only to 
93.9    the homestead portion of the property, but (ii) if a portion of a property is classified as 
93.10   nonhomestead solely because not all the owners occupy the property, not all the owners 
93.11   have qualifying relatives occupying the property, or solely because both not all the spouses 
93.12   do not of owners occupy the property, the credit amount shall be initially computed as 
93.13   if that nonhomestead portion were also in the homestead class and then prorated to the 
93.14   owner-occupant's percentage of ownership or prorated to one-half if both spouses do not 
93.15   occupy the property. For the purpose of this section, when an owner-occupant's spouse 
93.16   does not occupy the property, the percentage of ownership for the owner-occupant spouse 
93.17   is one-half of the couple's ownership percentage.
93.18   EFFECTIVE DATE.This section is effective for taxes payable in 2007 and 
93.19   thereafter.

93.20       Sec. 4. Minnesota Statutes 2004, section 273.1384, subdivision 2, is amended to read:
93.21       Subd. 2. Agricultural homestead market value credit. Property classified 
93.22   as class 2a agricultural homestead is eligible for an agricultural credit. The credit is 
93.23   computed using the property's agricultural credit market value, defined for this purpose 
93.24   as the property's class 2a market value excluding the market value of the house, garage, 
93.25   and immediately surrounding one acre of land. The credit is equal to 0.3 percent of the 
93.26   first $115,000 of the property's agricultural credit market value. The credit under this 
93.27   subdivision is limited to $345 for each homestead. The credit is reduced by  minus .05 
93.28   percent of the property's agricultural credit market value in excess of $115,000, subject to 
93.29   a maximum reduction of $115. In the case of property that is classified in part as class 2a 
93.30   agricultural homestead and in part as class 2b nonhomestead farm land solely because not 
93.31   all the owners occupy or farm the property, not all the owners have qualifying relatives 
93.32   occupying or farming the property, or solely because not all the spouses of owners occupy 
93.33   the property, the credit must be initially computed as if that nonhomestead agricultural 
93.34   land was also classified as class 2a agricultural homestead and then prorated to the 
93.35   owner-occupant's percentage of ownership.
94.1    EFFECTIVE DATE.This section is effective for taxes payable in 2007 and 
94.2    thereafter.

94.3        Sec. 5. Minnesota Statutes 2004, section 273.1398, subdivision 3, is amended to read:
94.4        Subd. 3. Disparity reduction aid. For taxes payable in 2003 and subsequent years, 
94.5    The amount of disparity aid certified for each taxing district within each unique taxing 
94.6    jurisdiction for taxes payable in the prior year shall be multiplied by the ratio of (1) the 
94.7    jurisdiction's tax capacity using the class rates for taxes payable in the year for which aid 
94.8    is being computed, to (2) its tax capacity using the class rates for taxes payable in the year 
94.9    prior to that for which aid is being computed, both based upon market values for taxes 
94.10   payable in the year prior to that for which aid is being computed. For the purposes of this 
94.11   aid determination, disparity reduction aid certified for taxes payable in the prior year for 
94.12   a taxing entity other than a town or school district is deemed to be county government 
94.13   disparity reduction aid. The amount of disparity aid certified to each taxing jurisdiction 
94.14   shall be reduced by any reductions required in the current year or permanent reductions 
94.15   required in previous years under section  477A.0132.  If the commissioner determines that 
94.16   insufficient information is available to reasonably and timely calculate the numerator 
94.17   in this ratio for the first taxes payable year that a class rate change or new class rate is 
94.18   effective, the commissioner shall omit the effects of that class rate change or new class 
94.19   rate when calculating this ratio for aid payable in that taxes payable year. For aid payable 
94.20   in the year following a year for which such omission was made, the commissioner shall 
94.21   use in the denominator for the class that was changed or created, the tax capacity for taxes 
94.22   payable two years prior to that in which the aid is payable, based on market values for 
94.23   taxes payable in the year prior to that for which aid is being computed.
94.24   EFFECTIVE DATE.This section is effective for taxes payable in 2006 and 
94.25   thereafter.

94.26       Sec. 6. Minnesota Statutes 2004, section 281.23, subdivision 9, is amended to read:
94.27       Subd. 9. Certificate. After the time for redemption of any lands shall have expired 
94.28   after notice given, as provided in subdivisions 2, 3, 5, and 6, the county auditor shall 
94.29   execute a certificate describing the lands, specifying the tax judgment sale at which the 
94.30   same were bid in for the state, and stating that the time for redemption thereof has expired 
94.31   after notice given as provided by law and that absolute title thereto has vested in the 
94.32   state of Minnesota. Such certificate shall be recorded in the office of the county recorder 
94.33   and thereafter filed in the office of the county auditor, except that in case of registered 
94.34   land such certificate shall be filed recorded in the office of the registrar of titles and a 
95.1    duplicate filed in the office of the county auditor. Such certificate and the record thereof 
95.2    shall be prima facie evidence of the facts therein stated, but failure to execute or record or 
95.3    file such certificate shall not affect the validity of any proceedings hereunder respecting 
95.4    such lands or the title of the state thereto.
95.5    EFFECTIVE DATE.This section is effective the day following final enactment.

95.6        Sec. 7. Minnesota Statutes 2005 Supplement, section 284.07, is amended to read:
95.7    284.07 COUNTY AUDITOR'S CERTIFICATE TO BE PRIMA FACIE 
95.8    EVIDENCE.
95.9    The county auditor's certificate of forfeiture filed  recorded by the county auditor 
95.10   as provided by section 281.23, subdivision 9, and acts supplemental thereto, or by any 
95.11   other law hereafter enacted providing for the recording of such a certificate or a certified 
95.12   copy of such certificate or of the record thereof, shall, for all purposes, be prima facie 
95.13   evidence that all requirements of the law respecting the taxation and forfeiture of the 
95.14   lands therein described were complied with, and that at the date of the certificate absolute 
95.15   title to such lands had vested in the state by reason of forfeiture for delinquent taxes, as 
95.16   set forth in the certificate.
95.17   EFFECTIVE DATE.This section is effective the day following final enactment.

95.18       Sec. 8. Minnesota Statutes 2004, section 477A.014, subdivision 1, is amended to read:
95.19       Subdivision 1. Calculations and payments. (a) The commissioner of revenue 
95.20   shall make all necessary calculations and make payments pursuant to sections  477A.013,  
95.21   477A.0132, and  477A.03 directly to the affected taxing authorities annually. In addition, 
95.22   the commissioner shall notify the authorities of their aid amounts, as well as the 
95.23   computational factors used in making the calculations for their authority, and those 
95.24   statewide total figures that are pertinent, before August 1 of the year preceding the aid 
95.25   distribution year.
95.26   (b) For the purposes of this subdivision, aid is determined for a city or town based 
95.27   on its city or town status as of June 30 of the year preceding the aid distribution year. If 
95.28   the effective date for a municipal incorporation, consolidation, annexation, detachment, 
95.29   dissolution, or township organization is on or before June 30 of the year preceding 
95.30   the aid distribution year, such change in boundaries or form of government shall be 
95.31   recognized for aid determinations for the aid distribution year. If the effective date for a 
95.32   municipal incorporation, consolidation, annexation, detachment, dissolution, or township 
95.33   organization is after June 30 of the year preceding the aid distribution year, such change in 
96.1    boundaries or form of government shall not be recognized for aid determinations until 
96.2    the following year. 
96.3    (c) Changes in boundaries or form of government will only be recognized for the 
96.4    purposes of this subdivision, to the extent that: (1) changes in market values are included 
96.5    in market values reported by assessors to the commissioner, and changes in population, 
96.6    household size, and the road accidents factor are included in their respective certifications 
96.7    to the commissioner as referenced in section 477A.011, or (2) an annexation information 
96.8    report as provided in paragraph (d) is received by the commissioner on or before July 15 
96.9    of the aid calculation year. Revisions to estimates or data for use in recognizing changes 
96.10   in boundaries or form of government are not effective for purposes of this subdivision 
96.11   unless received by the commissioner on or before July 15 of the aid calculation year. 
96.12   Clerical errors in the certification or use of estimates and data established as of July 15 in 
96.13   the aid calculation year are subject to correction within the time periods allowed under 
96.14   subdivision 3.
96.15   (d) In the case of an annexation, an annexation information report may be completed 
96.16   by the annexing jurisdiction and submitted to the commissioner for purposes of this 
96.17   subdivision if the net tax capacity of annexed area for the assessment year preceding the 
96.18   effective date of the annexation exceeds five percent of the city's net tax capacity for the 
96.19   same year. The form and contents of the annexation information report shall be prescribed 
96.20   by the commissioner. The commissioner shall change the net tax capacity, the population, 
96.21   the population decline, the commercial industrial percentage, and the transformed 
96.22   population for the annexing jurisdiction only if the annexation information report provides 
96.23   data the commissioner determines to be reliable for all of these factors used to compute city 
96.24   revenue need for the annexing jurisdiction. The commissioner shall adjust the pre-1940 
96.25   housing percentage, the road accidents factor, and household size only if the entire area of 
96.26   an existing city or town is annexed or consolidated and only if reliable data is available for 
96.27   all of these factors used to compute city revenue need for the annexing jurisdiction.
96.28   EFFECTIVE DATE.This section is effective for aid payable in 2007 and thereafter.

96.29                                          ARTICLE 7
96.30                          DEPARTMENT OF REVENUE SALES AND USE TAXES

96.31       Section 1. Minnesota Statutes 2005 Supplement, section 297A.61, subdivision 3, 
96.32   is amended to read:
96.33       Subd. 3. Sale and purchase. (a) "Sale" and "purchase" include, but are not limited 
96.34   to, each of the transactions listed in this subdivision.
97.1    (b) Sale and purchase include:
97.2    (1) any transfer of title or possession, or both, of tangible personal property, whether 
97.3    absolutely or conditionally, for a consideration in money or by exchange or barter; and
97.4    (2) the leasing of or the granting of a license to use or consume, for a consideration 
97.5    in money or by exchange or barter, tangible personal property, other than a manufactured 
97.6    home used for residential purposes for a continuous period of 30 days or more.
97.7    (c) Sale and purchase include the production, fabrication, printing, or processing of 
97.8    tangible personal property for a consideration for consumers who furnish either directly or 
97.9    indirectly the materials used in the production, fabrication, printing, or processing.
97.10   (d) Sale and purchase include the preparing for a consideration of food. 
97.11   Notwithstanding section 297A.67, subdivision 2, taxable food includes, but is not limited 
97.12   to, the following:
97.13   (1) prepared food sold by the retailer;
97.14   (2) soft drinks;
97.15   (3) candy;
97.16   (4) dietary supplements; and
97.17   (5) all food sold through vending machines.
97.18   (e) A sale and a purchase includes the furnishing for a consideration of electricity, 
97.19   gas, water, or steam for use or consumption within this state.
97.20   (f) A sale and a purchase includes the transfer for a consideration of prewritten 
97.21   computer software whether delivered electronically, by load and leave, or otherwise.
97.22   (g) A sale and a purchase includes the furnishing for a consideration of the following 
97.23   services:
97.24   (1) the privilege of admission to places of amusement, recreational areas, or athletic 
97.25   events, and the making available of amusement devices, tanning facilities, reducing 
97.26   salons, steam baths, turkish baths, health clubs, and spas or athletic facilities;
97.27   (2) lodging and related services by a hotel, rooming house, resort, campground, 
97.28   motel, or trailer camp and the granting of any similar license to use real property in a 
97.29   specific facility, other than the renting or leasing of it for a continuous period of 30 days 
97.30   or more under an enforceable written agreement that may not be terminated without 
97.31   prior notice;
97.32   (3) nonresidential parking services, whether on a contractual, hourly, or other 
97.33   periodic basis, except for parking at a meter;
97.34   (4) the granting of membership in a club, association, or other organization if:
98.1    (i) the club, association, or other organization makes available for the use of its 
98.2    members sports and athletic facilities, without regard to whether a separate charge is 
98.3    assessed for use of the facilities; and
98.4    (ii) use of the sports and athletic facility is not made available to the general public 
98.5    on the same basis as it is made available to members.
98.6    Granting of membership means both onetime initiation fees and periodic membership 
98.7    dues. Sports and athletic facilities include golf courses; tennis, racquetball, handball, and 
98.8    squash courts; basketball and volleyball facilities; running tracks; exercise equipment; 
98.9    swimming pools; and other similar athletic or sports facilities;
98.10   (5) delivery of aggregate materials and concrete block by a third party if the delivery 
98.11   would be subject to the sales tax if provided by the seller of the aggregate material or 
98.12   concrete block; and
98.13   (6) services as provided in this clause:
98.14   (i) laundry and dry cleaning services including cleaning, pressing, repairing, altering, 
98.15   and storing clothes, linen services and supply, cleaning and blocking hats, and carpet, 
98.16   drapery, upholstery, and industrial cleaning. Laundry and dry cleaning services do not 
98.17   include services provided by coin operated facilities operated by the customer;
98.18   (ii) motor vehicle washing, waxing, and cleaning services, including services 
98.19   provided by coin operated facilities operated by the customer, and rustproofing, 
98.20   undercoating, and towing of motor vehicles;
98.21   (iii) building and residential cleaning, maintenance, and disinfecting and 
98.22   exterminating services;
98.23   (iv) detective, security, burglar, fire alarm, and armored car services; but not 
98.24   including services performed within the jurisdiction they serve by off-duty licensed peace 
98.25   officers as defined in section 626.84, subdivision 1, or services provided by a nonprofit 
98.26   organization for monitoring and electronic surveillance of persons placed on in-home 
98.27   detention pursuant to court order or under the direction of the Minnesota Department 
98.28   of Corrections;
98.29   (v) pet grooming services;
98.30   (vi) lawn care, fertilizing, mowing, spraying and sprigging services; garden planting 
98.31   and maintenance; tree, bush, and shrub pruning, bracing, spraying, and surgery; indoor 
98.32   plant care; tree, bush, shrub, and stump removal, except when performed as part of a land 
98.33   clearing contract as defined in section 297A.68, subdivision 40; and tree trimming for 
98.34   public utility lines. Services performed under a construction contract for the installation of 
98.35   shrubbery, plants, sod, trees, bushes, and similar items are not taxable;
99.1    (vii) massages, except when provided by a licensed health care facility or 
99.2    professional or upon written referral from a licensed health care facility or professional for 
99.3    treatment of illness, injury, or disease; and
99.4    (viii) the furnishing of lodging, board, and care services for animals in kennels and 
99.5    other similar arrangements, but excluding veterinary and horse boarding services.
99.6    In applying the provisions of this chapter, the terms "tangible personal property" 
99.7    and "sales at retail sale" include taxable services listed in clause (6), items (i) to (vi) and 
99.8    (viii), and the provision of these taxable services, unless specifically provided otherwise. 
99.9    Services performed by an employee for an employer are not taxable. Services performed 
99.10   by a partnership or association for another partnership or association are not taxable if one 
99.11   of the entities owns or controls more than 80 percent of the voting power of the equity 
99.12   interest in the other entity. Services performed between members of an affiliated group of 
99.13   corporations are not taxable. For purposes of the preceding sentence, "affiliated group 
99.14   of corporations" includes means those entities that would be classified as members of an 
99.15   affiliated group as defined under United States Code, title 26, section 1504, and that are 
99.16   eligible to file a consolidated tax return for federal income tax purposes disregarding 
99.17   the exclusions in section 1504(b).
99.18   (h) A sale and a purchase includes the furnishing for a consideration of tangible 
99.19   personal property or taxable services by the United States or any of its agencies or 
99.20   instrumentalities, or the state of Minnesota, its agencies, instrumentalities, or political 
99.21   subdivisions.
99.22   (i) A sale and a purchase includes the furnishing for a consideration of 
99.23   telecommunications services, including cable television services and direct satellite 
99.24   services. Telecommunications services are taxed to the extent allowed under federal law.
99.25   (j) A sale and a purchase includes the furnishing for a consideration of installation if 
99.26   the installation charges would be subject to the sales tax if the installation were provided 
99.27   by the seller of the item being installed.
99.28   (k) A sale and a purchase includes the rental of a vehicle by a motor vehicle dealer 
99.29   to a customer when (1) the vehicle is rented by the customer for a consideration, or (2) 
99.30   the motor vehicle dealer is reimbursed pursuant to a service contract as defined in section 
99.31   65B.29, subdivision 1, clause (1).
99.32   EFFECTIVE DATE.This section is effective the day following final enactment.

99.33       Sec. 2. Minnesota Statutes 2004, section 297A.61, subdivision 12, is amended to read:
99.34       Subd. 12. Farm machinery. (a) "Farm machinery" means new or used machinery, 
99.35   equipment, implements, accessories, and contrivances used directly and principally in 
100.1   agricultural production of tangible personal property intended to be sold ultimately at 
100.2   retail including, but not limited to:
100.3   (1) machinery for the preparation, seeding, or cultivation of soil for growing 
100.4   agricultural crops;
100.5   (2) barn cleaners, milking systems, grain dryers, feeding systems including 
100.6   stationary feed bunks, and similar installations, whether or not the equipment is installed 
100.7   by the seller and becomes part of the real property; and
100.8   (3) irrigation equipment sold for exclusively agricultural use, including pumps, pipe 
100.9   fittings, valves, sprinklers, and other equipment necessary to the operation of an irrigation 
100.10  system when sold as part of an irrigation system, whether or not the equipment is installed 
100.11  by the seller and becomes part of the real property.
100.12  (b) Farm machinery does not include:
100.13  (1) repair or replacement parts;
100.14  (2) tools, shop equipment, grain bins, fencing material, communication equipment, 
100.15  and other farm supplies;
100.16  (3) motor vehicles taxed under chapter 297B;
100.17  (4) snowmobiles or snow blowers;
100.18  (5) lawn mowers except those used in the production of sod for sale, or garden-type 
100.19  tractors or garden tillers; or
100.20  (6) machinery, equipment, implements, accessories, and contrivances used directly in 
100.21  the production of horses not raised for slaughter, fur-bearing animals, or research animals.
100.22  EFFECTIVE DATE.This section is effective the day following final enactment.

100.23      Sec. 3. Minnesota Statutes 2004, section 297A.61, is amended by adding a subdivision 
100.24  to read:
100.25      Subd. 16a. Computer. "Computer" means an electronic device that accepts 
100.26  information in digital or similar form and manipulates it for a result based on a sequence 
100.27  of instructions.
100.28  EFFECTIVE DATE.This section is effective the day following final enactment.

100.29      Sec. 4. Minnesota Statutes 2004, section 297A.61, is amended by adding a subdivision 
100.30  to read:
100.31      Subd. 16b. Electronic. "Electronic" means relating to technology having electrical, 
100.32  digital, magnetic, wireless, optical, electromagnetic, or similar capabilities.
100.33  EFFECTIVE DATE.This section is effective the day following final enactment.

101.1       Sec. 5. Minnesota Statutes 2004, section 297A.61, is amended by adding a subdivision 
101.2   to read:
101.3       Subd. 16c. Computer software. "Computer software" means a set of coded 
101.4   instructions designed to cause a computer or automatic data processing equipment to 
101.5   perform a task.
101.6   EFFECTIVE DATE.This section is effective the day following final enactment.

101.7       Sec. 6. Minnesota Statutes 2004, section 297A.61, subdivision 17, is amended to read:
101.8       Subd. 17. Prewritten computer software. "Prewritten computer software" means 
101.9   computer software, including prewritten upgrades, that is not designed and developed by 
101.10  the author or other creator to the specifications of a specific purchaser. The combining 
101.11  of two or more "prewritten computer software" programs or prewritten portions of the 
101.12  programs does not cause the combination to be other than "prewritten computer software." 
101.13  "Prewritten computer software" includes software designed and developed by the author 
101.14  or other creator to the specifications of a specific purchaser when it is sold to a person 
101.15  other than the specific  purchaser. If a person modifies or enhances computer software 
101.16  of which the person is not the author or creator, the person is deemed to be the author 
101.17  or creator only of such person's modifications or enhancements. "Prewritten computer 
101.18  software" or a prewritten portion of it that is modified or enhanced to any degree, if the 
101.19  modification or enhancement is designed and developed to the specifications of a specific 
101.20  purchaser, remains "prewritten computer software"; provided, however, that if there is a 
101.21  reasonable, separately stated charge or an invoice or other statement of the price given to 
101.22  the purchaser for such modification or enhancement, the modification or enhancement 
101.23  does not constitute "prewritten computer software." For purposes of this subdivision:
101.24  (1) "computer" means an electronic device that accepts information in digital or 
101.25  similar form and manipulates it for a result based on a sequence of instructions;
101.26  (2) "electronic" means relating to technology having electrical, digital, magnetic, 
101.27  wireless, optical, electromagnetic, or similar capabilities; and
101.28  (3) "computer software" means a set of coded instructions designed to cause a 
101.29  "computer" or automatic data processing equipment to perform a task.
101.30  EFFECTIVE DATE.This section is effective the day following final enactment.

101.31      Sec. 7. Minnesota Statutes 2004, section 297A.61, is amended by adding a subdivision 
101.32  to read:
102.1       Subd. 37. Logging equipment. (a) "Logging equipment" means new or used 
102.2   machinery, equipment, implements, accessories, and contrivances used directly and 
102.3   principally in the commercial cutting or removal or both of timber or other solid wood 
102.4   forest products, including, but not limited to:
102.5   (1) machinery used for bucking, bunching, debarking, delimbing, felling, forwarding, 
102.6   loading, piling, skidding, topping, and yarding operations performed on timber; and
102.7   (2) chain saws.
102.8   (b) Logging equipment does not include:
102.9   (1) repair or replacement parts;
102.10  (2) tools, shop equipment, communication equipment, and other logging supplies;
102.11  (3) motor vehicles taxed under chapter 297B;
102.12  (4) snowmobiles, snow blowers, or recreational all-terrain vehicles; or
102.13  (5) machinery, equipment, implements, accessories, and contrivances used in the 
102.14  creation of other commercial wood products for sale to others, including, but not limited 
102.15  to, milling, planing, carving, wood chipping, or paper manufacturing.
102.16  EFFECTIVE DATE.This section is effective the day following final enactment.

102.17      Sec. 8. Minnesota Statutes 2004, section 297A.63, is amended to read:
102.18  297A.63 USE TAXES IMPOSED; RATES.
102.19      Subdivision 1. Use of tangible personal property or taxable services. (a) For the 
102.20  privilege of using, storing, distributing, or consuming in Minnesota tangible personal 
102.21  property or taxable services purchased for use, storage, distribution, or consumption in 
102.22  this state, a use tax is imposed on a person in Minnesota. The tax is imposed on the sales 
102.23  purchase price of retail sales of the tangible personal property or taxable services at the 
102.24  rate of tax imposed under section  297A.62. A person that purchases property from a 
102.25  Minnesota retailer and returns the tangible personal property to a point within Minnesota, 
102.26  except in the course of interstate commerce, after it was delivered outside of Minnesota, 
102.27  is subject to the use tax. 
102.28  (b) No tax is imposed under paragraph (a) if the tax imposed by section  297A.62 
102.29  was paid on the sales price of the tangible personal property or taxable services. 
102.30  (c) No tax is imposed under paragraph (a) if the purchase meets the requirements for 
102.31  exemption under section  297A.67, subdivision 21. 
102.32      Subd. 2. Use of tangible personal property made from materials. (a) A use tax 
102.33  is imposed on a person who manufactures, fabricates, or assembles tangible personal 
102.34  property from materials, either within or outside this state and who uses, stores, distributes, 
103.1   or consumes the tangible personal property in Minnesota. The tax is imposed on the sales 
103.2   purchase price of retail sales of the materials contained in the tangible personal property at 
103.3   the rate of tax imposed under section  297A.62. 
103.4   (b) No tax is imposed under paragraph (a) if the tax imposed by section  297A.62 
103.5   was paid on the sales price of materials contained in the tangible personal property. 
103.6   EFFECTIVE DATE.This section is effective the day following final enactment.

103.7       Sec. 9. Minnesota Statutes 2004, section 297A.668, subdivision 6, is amended to read:
103.8       Subd. 6. Multiple points of use. (a) Notwithstanding the provisions of subdivisions 
103.9   2 to 5, a business purchaser that is not a holder of a direct pay permit that knows at the 
103.10  time of its purchase of a digital good, computer software delivered electronically, or a 
103.11  service that the digital good, computer software delivered electronically, or service will 
103.12  be concurrently available for use in more than one taxing jurisdiction shall deliver to 
103.13  the seller in conjunction with its purchase a multiple points of use exemption certificate 
103.14  disclosing this fact.
103.15  (b) Upon receipt of the multiple points of use exemption certificate, the seller is 
103.16  relieved of the obligation to collect, pay, or remit the applicable tax and the purchaser is 
103.17  obligated to collect, pay, or remit the applicable tax on a direct pay basis.
103.18  (c) A purchaser delivering the multiple points of use exemption certificate may use 
103.19  any reasonable, but consistent and uniform, method of apportionment that is supported by 
103.20  the purchaser's business records as they exist at the time of the consummation of the sale.
103.21  (d) The multiple points of use exemption certificate remains in effect for all future 
103.22  sales by the seller to the purchaser until it is revoked in writing, except as to the subsequent 
103.23  sale's specific apportionment that is governed by the principle of paragraph (c) and the 
103.24  facts existing at the time of the sale.
103.25  (e) A holder of a direct pay permit is not required to deliver a multiple points or use 
103.26  exemption certificate to the seller. A direct pay permit holder shall follow the provisions 
103.27  of paragraph (c) in apportioning the tax due on a digital good, computer software delivered 
103.28  electronically, or a service that will be concurrently available for use in more than one 
103.29  taxing jurisdiction.
103.30  EFFECTIVE DATE.This section is effective the day following final enactment.

103.31      Sec. 10. Minnesota Statutes 2004, section 297A.669, subdivision 11, is amended to 
103.32  read:
104.1       Subd. 11. Mobile telecommunications service. "Mobile telecommunications 
104.2   service," for purposes of this section, means the same as that term is defined in Section 
104.3   124(1)  124(7) of Public Law 106-252 (Mobile Telecommunications Sourcing Act).
104.4   EFFECTIVE DATE.This section is effective the day following final enactment.

104.5       Sec. 11. Minnesota Statutes 2004, section 297A.67, subdivision 4, is amended to read:
104.6       Subd. 4. Exempt meals at residential facilities. Meals or Prepared food, candy, 
104.7   and soft drinks served to patients, inmates, or persons residing at hospitals, sanitariums, 
104.8   nursing homes, senior citizen homes, and correctional, detention, and detoxification 
104.9   facilities are exempt. Food sold through vending machines is not exempt.
104.10  EFFECTIVE DATE.This section is effective the day following final enactment.

104.11      Sec. 12. Minnesota Statutes 2004, section 297A.67, subdivision 5, is amended to read:
104.12      Subd. 5. Exempt meals at schools. Meals and lunches Prepared food, candy, 
104.13  and soft drinks served at public and private elementary, middle, or secondary schools as 
104.14  defined in section  120A.05 are exempt. Meals and lunches  Prepared food, candy, and soft 
104.15  drinks served to students at a college, university, or private career school under a board 
104.16  contract are exempt. For purposes of this subdivision, "meals and lunches" does not 
104.17  include sales from vending machines.  Food sold through vending machines is not exempt.
104.18  EFFECTIVE DATE.This section is effective the day following final enactment.

104.19      Sec. 13. Minnesota Statutes 2005 Supplement, section 297A.67, subdivision 6, is 
104.20  amended to read:
104.21      Subd. 6. Other exempt meals. (a) Meals or Prepared food, candy, and soft drinks 
104.22  purchased for and served exclusively to individuals who are 60 years of age or over and 
104.23  their spouses or to handicapped persons and their spouses by governmental agencies, 
104.24  nonprofit organizations, or churches, or pursuant to any program funded in whole or in 
104.25  part through United States Code, title 42, sections 3001 through 3045, wherever delivered, 
104.26  prepared, or served, are exempt. Food sold through vending machines is not exempt.
104.27  (b) Meals or Prepared food, candy, and soft drinks purchased for and served 
104.28  exclusively to children who are less than 14 years of age or disabled children who are less 
104.29  than 16 years of age and who are attending a child care or early childhood education 
104.30  program, are exempt if they are:
105.1   (1) purchased by a nonprofit child care facility that is exempt under section 297A.70, 
105.2   subdivision 4, and that primarily serves families with income of 250 percent or less of 
105.3   federal poverty guidelines; and
105.4   (2) prepared at the site of the child care facility.
105.5   EFFECTIVE DATE.This section is effective the day following final enactment.

105.6       Sec. 14. Minnesota Statutes 2004, section 297A.67, subdivision 14, is amended to read:
105.7       Subd. 14. Personal Computers prescribed for use by school. Personal Computers 
105.8   and related computer software sold by a school, college, university, or private career 
105.9   school to students who are enrolled at the institutions are exempt if:
105.10  (1) the use of the personal computer, or of a substantially similar model of computer, 
105.11  and the related computer software is prescribed by the institution in conjunction with a 
105.12  course of study; and
105.13  (2) each student of the institution, or of a unit of the institution in which the student 
105.14  is enrolled, is required by the institution to have such a personal computer and related 
105.15  software as a condition of enrollment.
105.16  For the purposes of this subdivision, "school" and "private career school" have the 
105.17  meanings given in subdivision 13.
105.18  EFFECTIVE DATE.This section is effective the day following final enactment.

105.19      Sec. 15. Minnesota Statutes 2004, section 297A.67, subdivision 27, is amended to read:
105.20      Subd. 27. Sewing materials. Sewing materials are exempt. For purposes of this 
105.21  subdivision "sewing materials" mean fabric, thread, zippers, interfacing, buttons, trim, 
105.22  and other items that are usually directly incorporated into the construction of clothing, as 
105.23  defined in subdivision 8, regardless of whether it is actually used for making clothing. 
105.24  It does not include batting, foam, or fabric specifically manufactured for arts and craft 
105.25  projects, or other materials for craft projects.
105.26  EFFECTIVE DATE.This section is effective the day following final enactment.

105.27      Sec. 16. Minnesota Statutes 2005 Supplement, section 297A.68, subdivision 37, 
105.28  is amended to read:
105.29      Subd. 37. Job opportunity building zones. (a) Purchases of tangible personal 
105.30  property or taxable services by a qualified business, as defined in section 469.310, are 
105.31  exempt if the property or services are primarily used or consumed in a job opportunity 
105.32  building zone designated under section 469.314. For purposes of this subdivision, an aerial 
106.1   camera package, including any camera, computer, and navigation device contained in the 
106.2   package, that is used in an aircraft that is operated under a Federal Aviation Administration 
106.3   Restricted Airworthiness Certificate according to Code of Federal Regulations, title 14, 
106.4   part 21, section 21.25(b)(3), relating to aerial surveying, and that is based, maintained, and 
106.5   dispatched from a job opportunity building zone, qualifies as primarily used or consumed 
106.6   in a job opportunity building zone if the imagery acquired from the aerial camera package 
106.7   is returned to the job opportunity building zone for processing. The exemption for an 
106.8   aerial camera package is limited to $50,000 in taxes  as provided in this subdivision and 
106.9   the tax must be imposed and collected as if the rate under section 297A.62, subdivision 1, 
106.10  applied and then refunded in the manner provided in section 297A.75. The total amount 
106.11  of the aerial camera package exemption refunded for all taxpayers for all fiscal years is 
106.12  limited to $50,000 in taxes.
106.13  (b) Purchase and use of construction materials, and supplies, or equipment used or 
106.14  consumed in, and equipment incorporated into,  the construction of improvements to 
106.15  real property in a job opportunity building zone are exempt if the improvements after 
106.16  completion of construction are to be used in the conduct of a qualified business, as defined 
106.17  in section 469.310. This exemption applies regardless of whether the purchases are made 
106.18  by the business or a contractor.
106.19  (c) The exemptions under this subdivision apply to a local sales and use tax 
106.20  regardless of whether the local sales tax is imposed on the sales taxable as defined under 
106.21  this chapter.
106.22  (d) This subdivision applies to sales, if the purchase was made and delivery received 
106.23  during the duration of the zone.
106.24  (e) Notwithstanding the restriction in paragraph (a), which requires items purchased 
106.25  to be primarily used or consumed in the zone, purchases by a qualified business that is 
106.26  an electrical cooperative located in Meeker County of equipment and materials used for 
106.27  the generation, transmission, and distribution of electrical energy are exempt under this 
106.28  subdivision, except that:
106.29  (1) the exemption for materials and equipment used or consumed outside the zone 
106.30  must not exceed $200,000 in taxes for all taxpayers for all fiscal years; and
106.31  (2) no sales and use tax exemption is allowed for equipment purchased for resale.
106.32  For purposes of this paragraph, the tax must be imposed and collected as if the rate 
106.33  under section 297A.62, subdivision 1, applied and then refunded in the manner provided 
106.34  in section 297A.75.
107.1   EFFECTIVE DATE.Paragraphs (a) and (e) are effective for sales and purchases 
107.2   made on or after August 1, 2005. Paragraph (b) is effective for sales and purchases made 
107.3   on or after January 1, 2004.

107.4       Sec. 17. Minnesota Statutes 2005 Supplement, section 297A.68, subdivision 38, 
107.5   is amended to read:
107.6       Subd. 38. Biotechnology and health sciences industry zone. (a) Purchases of 
107.7   tangible personal property or taxable services by a qualified business, as defined in section 
107.8   469.330, are exempt if the property or services are primarily used or consumed in a 
107.9   biotechnology and health sciences industry zone designated under section 469.334.
107.10  (b) Purchase and use of construction materials, and supplies, or equipment used 
107.11  or consumed in, and equipment incorporated into,  the construction of improvements 
107.12  to real property in a biotechnology and health sciences industry zone are exempt if the 
107.13  improvements after completion of construction are to be used in the conduct of a qualified 
107.14  business, as defined in section 469.330. This exemption applies regardless of whether the 
107.15  purchases are made by the business or a contractor.
107.16  (c) The exemptions under this subdivision apply to a local sales and use tax 
107.17  regardless of whether the local sales tax is imposed on the sales taxable as defined under 
107.18  this chapter.
107.19  (d)(1) The tax on sales of goods or services exempted under this subdivision are 
107.20  imposed and collected as if the applicable rate under section 297A.62 applied. Upon 
107.21  application by the purchaser, on forms prescribed by the commissioner, a refund equal 
107.22  to the tax paid must be paid to the purchaser. The application must include sufficient 
107.23  information to permit the commissioner to verify the sales tax paid and the eligibility of 
107.24  the claimant to receive the credit. No more than two applications for refunds may be filed 
107.25  under this subdivision in a calendar year. The provisions of section 289A.40 apply to 
107.26  the refunds payable under this subdivision.
107.27  (2) The amount required to make the refunds is annually appropriated to the 
107.28  commissioner of revenue.
107.29  (3) The aggregate amount refunded to a qualified business must not exceed the 
107.30  amount allocated to the qualified business under section 469.335.
107.31  (e) This subdivision applies only to sales made during the duration of the designation 
107.32  of the zone.
107.33  EFFECTIVE DATE.This section is effective for sales and purchases made on 
107.34  or after January 1, 2004.

108.1       Sec. 18. Minnesota Statutes 2004, section 297A.70, subdivision 2, is amended to read:
108.2       Subd. 2. Sales to government. (a) All sales, except those listed in paragraph (b), 
108.3   to the following governments and political subdivisions, or to the listed agencies or 
108.4   instrumentalities of governments and political subdivisions, are exempt:
108.5   (1) the United States and its agencies and instrumentalities;
108.6   (2) school districts, the University of Minnesota, state universities, community 
108.7   colleges, technical colleges, state academies, the Perpich Minnesota Center for Arts 
108.8   Education, and an instrumentality of a political subdivision that is accredited as an 
108.9   optional/special function school by the North Central Association of Colleges and Schools;
108.10  (3) hospitals and nursing homes owned and operated by political subdivisions of 
108.11  the state of tangible personal property and taxable services used at or by hospitals and 
108.12  nursing homes;
108.13  (4) the Metropolitan Council, for its purchases of vehicles and repair parts to equip 
108.14  operations provided for in section  473.4051; 
108.15  (5) other states or political subdivisions of other states, if the sale would be exempt 
108.16  from taxation if it occurred in that state; and
108.17  (6) sales to public libraries, public library systems, multicounty, multitype library 
108.18  systems as defined in section  134.001, county law libraries under chapter 134A, state 
108.19  agency libraries, the state library under section  480.09, and the Legislative Reference 
108.20  Library. 
108.21  (b) This exemption does not apply to the sales of the following products and services:
108.22  (1) building, construction, or reconstruction materials purchased by a contractor 
108.23  or a subcontractor as a part of a lump-sum contract or similar type of contract with a 
108.24  guaranteed maximum price covering both labor and materials for use in the construction, 
108.25  alteration, or repair of a building or facility;
108.26  (2) construction materials purchased by tax exempt entities or their contractors to 
108.27  be used in constructing buildings or facilities which will not be used principally by the 
108.28  tax exempt entities;
108.29  (3) the leasing of a motor vehicle as defined in section  297B.01, subdivision 5, 
108.30  except for leases entered into by the United States or its agencies or instrumentalities; or 
108.31  (4) meals and lodging as defined under section  297A.61, subdivision 3, paragraphs 
108.32  (d) and (g) paragraph (g), clause (2), and prepared food, candy, and soft drinks, except for 
108.33  meals and lodging, prepared food, candy, and soft drinks  purchased directly by the United 
108.34  States or its agencies or instrumentalities. 
109.1   (c) As used in this subdivision, "school districts" means public school entities and 
109.2   districts of every kind and nature organized under the laws of the state of Minnesota, and 
109.3   any instrumentality of a school district, as defined in section  471.59. 
109.4   EFFECTIVE DATE.This section is effective the day following final enactment.

109.5       Sec. 19. Minnesota Statutes 2004, section 297A.70, subdivision 3, is amended to read:
109.6       Subd. 3. Sales of certain goods and services to government. (a) The following 
109.7   sales to or use by the specified governments and political subdivisions of the state are 
109.8   exempt:
109.9   (1) repair and replacement parts for emergency rescue vehicles, fire trucks, and 
109.10  fire apparatus to a political subdivision;
109.11  (2) machinery and equipment, except for motor vehicles, used directly for mixed 
109.12  municipal solid waste management services at a solid waste disposal facility as defined in 
109.13  section  115A.03, subdivision 10; 
109.14  (3) chore and homemaking services to a political subdivision of the state to be 
109.15  provided to elderly or disabled individuals;
109.16  (4) telephone services to the Department of Administration that are used to provide 
109.17  telecommunications services through the intertechnologies revolving fund;
109.18  (5) firefighter personal protective equipment as defined in paragraph (b), if purchased 
109.19  or authorized by and for the use of an organized fire department, fire protection district, or 
109.20  fire company regularly charged with the responsibility of providing fire protection to the 
109.21  state or a political subdivision;
109.22  (6) bullet-resistant body armor that provides the wearer with ballistic and trauma 
109.23  protection, if purchased by a law enforcement agency of the state or a political subdivision 
109.24  of the state, or a licensed peace officer, as defined in section  626.84, subdivision 1; 
109.25  (7) motor vehicles purchased or leased by political subdivisions of the state if the 
109.26  vehicles are exempt from registration under section  168.012, subdivision 1, paragraph (b), 
109.27  exempt from taxation under section  473.448, or exempt from the motor vehicle sales tax 
109.28  under section  297B.03, clause (12); 
109.29  (8) equipment designed to process, dewater, and recycle biosolids for wastewater 
109.30  treatment facilities of political subdivisions, and materials incidental to installation of 
109.31  that equipment; and
109.32  (9) sales to a town of gravel and of machinery, equipment, and accessories, except 
109.33  motor vehicles, used exclusively for road and bridge maintenance, and leases by a town of 
109.34  motor vehicles exempt from tax under section  297B.03, clause (10).; and 
110.1   (10) the removal of trees, bushes, or shrubs for the construction and maintenance 
110.2   of roads, trails, or firebreaks when purchased by an agency of the state or a political 
110.3   subdivision of the state.
110.4   (b) For purposes of this subdivision, "firefighters personal protective equipment" 
110.5   means helmets, including face shields, chin straps, and neck liners; bunker coats and 
110.6   pants, including pant suspenders; boots; gloves; head covers or hoods; wildfire jackets; 
110.7   protective coveralls; goggles; self-contained breathing apparatus; canister filter masks; 
110.8   personal alert safety systems; spanner belts; optical or thermal imaging search devices; 
110.9   and all safety equipment required by the Occupational Safety and Health Administration.
110.10  EFFECTIVE DATE.This section is effective for sales and purchases made after 
110.11  October 28, 2002, but for sales and purchases made after October 28, 2002, and before 
110.12  July 15, 2005, no refunds may be claimed under Minnesota Statutes, section 289A.50, for 
110.13  sales taxes collected and remitted to the state.

110.14      Sec. 20. Minnesota Statutes 2004, section 297A.70, subdivision 4, is amended to read:
110.15      Subd. 4. Sales to nonprofit groups. (a) All sales, except those listed in paragraph 
110.16  (b), to the following "nonprofit organizations" are exempt:
110.17  (1) a corporation, society, association, foundation, or institution organized and 
110.18  operated exclusively for charitable, religious, or educational purposes if the item 
110.19  purchased is used in the performance of charitable, religious, or educational functions; and
110.20  (2) any senior citizen group or association of groups that:
110.21  (i) in general limits membership to persons who are either age 55 or older, or 
110.22  physically disabled; and
110.23  (ii) is organized and operated exclusively for pleasure, recreation, and other 
110.24  nonprofit purposes, no part of the net earnings of which inures to the benefit of any private 
110.25  shareholders.
110.26  For purposes of this subdivision, charitable purpose includes the maintenance of a 
110.27  cemetery owned by a religious organization.
110.28  (b) This exemption does not apply to the following sales:
110.29  (1) building, construction, or reconstruction materials purchased by a contractor 
110.30  or a subcontractor as a part of a lump-sum contract or similar type of contract with a 
110.31  guaranteed maximum price covering both labor and materials for use in the construction, 
110.32  alteration, or repair of a building or facility;
111.1   (2) construction materials purchased by tax-exempt entities or their contractors to 
111.2   be used in constructing buildings or facilities that will not be used principally by the 
111.3   tax-exempt entities; and
111.4   (3) meals and lodging as defined under section  297A.61, subdivision 3, paragraphs 
111.5   (d) and (g) paragraph (g), clause (2), and prepared food, candy, and soft drinks; and 
111.6   (4) leasing of a motor vehicle as defined in section  297B.01, subdivision 5, except as 
111.7   provided in paragraph (c). 
111.8   (c) This exemption applies to the leasing of a motor vehicle as defined in section  
111.9   297B.01, subdivision 5, only if the vehicle is: 
111.10  (1) a truck, as defined in section  168.011, a bus, as defined in section  168.011, or a 
111.11  passenger automobile, as defined in section  168.011, if the automobile is designed and 
111.12  used for carrying more than nine persons including the driver; and 
111.13  (2) intended to be used primarily to transport tangible personal property or 
111.14  individuals, other than employees, to whom the organization provides service in 
111.15  performing its charitable, religious, or educational purpose.
111.16  (d) A limited liability company also qualifies for exemption under this subdivision if 
111.17  (1) it consists of a sole member that would qualify for the exemption, and (2) the items 
111.18  purchased qualify for the exemption.
111.19  EFFECTIVE DATE.This section is effective the day following final enactment.

111.20      Sec. 21. Minnesota Statutes 2004, section 297A.70, subdivision 7, is amended to read:
111.21      Subd. 7. Hospitals and outpatient surgical centers. (a) Sales, except for those 
111.22  listed in paragraph (c), to a hospital are exempt, if the items purchased are used in 
111.23  providing hospital services. For purposes of this subdivision, "hospital" means a hospital 
111.24  organized and operated for charitable purposes within the meaning of section 501(c)(3) of 
111.25  the Internal Revenue Code, and licensed under chapter 144 or by any other jurisdiction, 
111.26  and "hospital services" are services authorized or required to be performed by a "hospital" 
111.27  under chapter 144.
111.28  (b) Sales, except for those listed in paragraph (c), to an outpatient surgical center 
111.29  are exempt, if the items purchased are used in providing outpatient surgical services. For 
111.30  purposes of this subdivision, "outpatient surgical center" means an outpatient surgical 
111.31  center organized and operated for charitable purposes within the meaning of section 
111.32  501(c)(3) of the Internal Revenue Code, and licensed under chapter 144 or by any other 
111.33  jurisdiction. For the purposes of this subdivision, "outpatient surgical services" means: 
111.34  (1) services authorized or required to be performed by an outpatient surgical center under 
111.35  chapter 144; and (2) urgent care. For purposes of this subdivision, "urgent care" means 
112.1   health services furnished to a person whose medical condition is sufficiently acute to 
112.2   require treatment unavailable through, or inappropriate to be provided by, a clinic or 
112.3   physician's office, but not so acute as to require treatment in a hospital emergency room.
112.4   (c) This exemption does not apply to the following products and services:
112.5   (1) purchases made by a clinic, physician's office, or any other medical facility not 
112.6   operating as a hospital or outpatient surgical center, even though the clinic, office, or 
112.7   facility may be owned and operated by a hospital or outpatient surgical center;
112.8   (2) sales under section  297A.61, subdivision 3, paragraphs (d) and (g) paragraph 
112.9   (g), clause (2), and prepared food, candy, and soft drinks; 
112.10  (3) building and construction materials used in constructing buildings or facilities 
112.11  that will not be used principally by the hospital or outpatient surgical center;
112.12  (4) building, construction, or reconstruction materials purchased by a contractor 
112.13  or a subcontractor as a part of a lump-sum contract or similar type of contract with a 
112.14  guaranteed maximum price covering both labor and materials for use in the construction, 
112.15  alteration, or repair of a hospital or outpatient surgical center; or
112.16  (5) the leasing of a motor vehicle as defined in section  297B.01, subdivision 5. 
112.17  (d) A limited liability company also qualifies for exemption under this subdivision if 
112.18  (1) it consists of a sole member that would qualify for the exemption, and (2) the items 
112.19  purchased qualify for the exemption.
112.20  EFFECTIVE DATE.This section is effective the day following final enactment.

112.21      Sec. 22. Minnesota Statutes 2004, section 297A.70, subdivision 13, is amended to read:
112.22      Subd. 13. Fund-raising sales by or for nonprofit groups. (a) The following 
112.23  sales by the specified organizations for fund-raising purposes are exempt, subject to the 
112.24  limitations listed in paragraph (b):
112.25  (1) all sales made by an organization that exists solely for the purpose of providing 
112.26  educational or social activities for young people primarily age 18 and under;
112.27  (2) all sales made by an organization that is a senior citizen group or association of 
112.28  groups if (i) in general it limits membership to persons age 55 or older; (ii) it is organized 
112.29  and operated exclusively for pleasure, recreation, and other nonprofit purposes; and (iii) 
112.30  no part of its net earnings inures to the benefit of any private shareholders;
112.31  (3) the sale or use of tickets or admissions to a golf tournament held in Minnesota if 
112.32  the beneficiary of the tournament's net proceeds qualifies as a tax-exempt organization 
112.33  under section 501(c)(3) of the Internal Revenue Code; and
113.1   (4) sales of gum, candy, and candy products sold for fund-raising purposes by a 
113.2   nonprofit organization that provides educational and social activities primarily for young 
113.3   people age 18 and under.
113.4   (b) The exemptions listed in paragraph (a) are limited in the following manner:
113.5   (1) the exemption under paragraph (a), clauses (1) and (2), applies only if the gross 
113.6   annual receipts of the organization from fund-raising do not exceed $10,000; and
113.7   (2) the exemption under paragraph (a), clause (1), does not apply if the sales are 
113.8   derived from admission charges or from activities for which the money must be deposited 
113.9   with the school district treasurer under section  123B.49, subdivision 2, or be recorded in 
113.10  the same manner as other revenues or expenditures of the school district under section  
113.11  123B.49, subdivision 4. 
113.12  (c) Sales of tangible personal property are exempt if the entire proceeds, less the 
113.13  necessary expenses for obtaining the property, will be contributed to a registered combined 
113.14  charitable organization described in section  309.501, to be used exclusively for charitable, 
113.15  religious, or educational purposes, and the registered combined charitable organization 
113.16  has given its written permission for the sale. Sales that occur over a period of more than 
113.17  24 days per year are not exempt under this paragraph. 
113.18  (d) For purposes of this subdivision, a club, association, or other organization of 
113.19  elementary or secondary school students organized for the purpose of carrying on sports, 
113.20  educational, or other extracurricular activities is a separate organization from the school 
113.21  district or school for purposes of applying the $10,000 limit.
113.22  EFFECTIVE DATE.This section is effective the day following final enactment.

113.23      Sec. 23. Minnesota Statutes 2004, section 297A.70, subdivision 14, is amended to read:
113.24      Subd. 14. Fund-raising events sponsored by nonprofit groups. (a) Sales of 
113.25  tangible personal property at, and admission charges for fund-raising events sponsored 
113.26  by, a nonprofit organization are exempt if:
113.27  (1) all gross receipts are recorded as such, in accordance with generally accepted 
113.28  accounting practices, on the books of the nonprofit organization; and
113.29  (2) the entire proceeds, less the necessary expenses for the event, will be used 
113.30  solely and exclusively for charitable, religious, or educational purposes. Exempt sales 
113.31  include the sale of food, meals, and drinks prepared food, candy, and soft drinks at the 
113.32  fund-raising event.
113.33  (b) This exemption is limited in the following manner:
114.1   (1) it does not apply to admission charges for events involving bingo or other 
114.2   gambling activities or to charges for use of amusement devices involving bingo or other 
114.3   gambling activities;
114.4   (2) all gross receipts are taxable if the profits are not used solely and exclusively for 
114.5   charitable, religious, or educational purposes;
114.6   (3) it does not apply unless the organization keeps a separate accounting record, 
114.7   including receipts and disbursements from each fund-raising event that documents all 
114.8   deductions from gross receipts with receipts and other records;
114.9   (4) it does not apply to any sale made by or in the name of a nonprofit corporation as 
114.10  the active or passive agent of a person that is not a nonprofit corporation;
114.11  (5) all gross receipts are taxable if fund-raising events exceed 24 days per year;
114.12  (6) it does not apply to fund-raising events conducted on premises leased for more 
114.13  than five days but less than 30 days; and
114.14  (7) it does not apply if the risk of the event is not borne by the nonprofit organization 
114.15  and the benefit to the nonprofit organization is less than the total amount of the state and 
114.16  local tax revenues foregone by this exemption.
114.17  (c) For purposes of this subdivision, a "nonprofit organization" means any unit of 
114.18  government, corporation, society, association, foundation, or institution organized and 
114.19  operated for charitable, religious, educational, civic, fraternal, and senior citizens' or 
114.20  veterans' purposes, no part of the net earnings of which inures to the benefit of a private 
114.21  individual.
114.22  EFFECTIVE DATE.This section is effective the day following final enactment.

114.23      Sec. 24. Minnesota Statutes 2004, section 297A.70, subdivision 15, is amended to read:
114.24      Subd. 15. Statewide amateur athletic games. Notwithstanding section  297A.61, 
114.25  subdivision 3, or any other provision of this chapter, the gross receipts from the following 
114.26  sales made to or by a nonprofit corporation designated by the Minnesota Amateur Sports 
114.27  Commission to conduct a series of statewide amateur athletic games and related events, 
114.28  workshops, and clinics are exempt: 
114.29  (1) sales of tangible personal property to or the storage, use, or other consumption of 
114.30  tangible personal property by the nonprofit corporation; and
114.31  (2) sales of tangible personal property, admission charges, and sales of food, 
114.32  meals, and drinks prepared food, candy, and soft drinks by the nonprofit corporation at 
114.33  fund-raising events, athletic events, or athletic facilities.
114.34  EFFECTIVE DATE.This section is effective the day following final enactment.

115.1       Sec. 25. Minnesota Statutes 2005 Supplement, section 297A.72, subdivision 2, is 
115.2   amended to read:
115.3       Subd. 2. Content and form of exemption certificate. An exemption certificate 
115.4   must be substantially in the form prescribed by the commissioner and:
115.5   (1) be signed by the purchaser or meet the requirements of section 270C.304;
115.6   (2) bear the name and address of the purchaser; and
115.7   (3) indicate the sales tax account number, if any, issued to the purchaser;.
115.8   (4) indicate the general character of the property sold by the purchaser in the regular 
115.9   course of business or the activities carried on by the organization; and
115.10  (5) identify the property purchased.
115.11  EFFECTIVE DATE.This section is effective the day following final enactment.

115.12      Sec. 26. Minnesota Statutes 2005 Supplement, section 297A.75, subdivision 1, is 
115.13  amended to read:
115.14      Subdivision 1. Tax collected. The tax on the gross receipts from the sale of the 
115.15  following exempt items must be imposed and collected as if the sale were taxable and the 
115.16  rate under section 297A.62, subdivision 1, applied. The exempt items include:
115.17  (1) capital equipment exempt under section 297A.68, subdivision 5;
115.18  (2) building materials for an agricultural processing facility exempt under section 
115.19  297A.71, subdivision 13;
115.20  (3) building materials for mineral production facilities exempt under section 
115.21  297A.71, subdivision 14;
115.22  (4) building materials for correctional facilities under section 297A.71, subdivision 
115.23  3;
115.24  (5) building materials used in a residence for disabled veterans exempt under section 
115.25  297A.71, subdivision 11;
115.26  (6) elevators and building materials exempt under section 297A.71, subdivision 12;
115.27  (7) building materials for the Long Lake Conservation Center exempt under section 
115.28  297A.71, subdivision 17;
115.29  (8) materials, supplies, fixtures, furnishings, and equipment for a county law 
115.30  enforcement and family service center under section 297A.71, subdivision 26;
115.31  (9) materials and supplies for qualified low-income housing under section 297A.71, 
115.32  subdivision 23; and
115.33  (10) materials, supplies, and equipment for municipal electric utility facilities under 
115.34  section 297A.71, subdivision 35.;
116.1   (11) equipment and materials used for the generation, transmission, and distribution 
116.2   of electrical energy and an aerial camera package exempt under section 297A.68, 
116.3   subdivision 37; and
116.4   (12) tangible personal property and taxable services and construction materials, 
116.5   supplies, and equipment exempt under section 297A.68, subdivision 41.
116.6   EFFECTIVE DATE.This section is effective the day following final enactment.

116.7       Sec. 27. Minnesota Statutes 2005 Supplement, section 297A.75, subdivision 2, is 
116.8   amended to read:
116.9       Subd. 2. Refund; eligible persons. Upon application on forms prescribed by the 
116.10  commissioner, a refund equal to the tax paid on the gross receipts of the exempt items 
116.11  must be paid to the applicant. Only the following persons may apply for the refund:
116.12  (1) for subdivision 1, clauses (1) to (3), the applicant must be the purchaser;
116.13  (2) for subdivision 1, clauses (4), (7), and (8), the applicant must be the governmental 
116.14  subdivision;
116.15  (3) for subdivision 1, clause (5), the applicant must be the recipient of the benefits 
116.16  provided in United States Code, title 38, chapter 21;
116.17  (4) for subdivision 1, clause (6), the applicant must be the owner of the homestead 
116.18  property;
116.19  (5) for subdivision 1, clause (9), the owner of the qualified low-income housing 
116.20  project; and
116.21  (6) for subdivision 1, clause (10), the applicant must be a municipal electric utility or 
116.22  a joint venture of municipal electric utilities.; and 
116.23  (7) for subdivision 1, clauses (11) and (12), the owner of the qualifying business.
116.24  EFFECTIVE DATE.This section is effective the day following final enactment.

116.25      Sec. 28. Minnesota Statutes 2005 Supplement, section 297A.75, subdivision 3, is 
116.26  amended to read:
116.27      Subd. 3. Application. (a) The application must include sufficient information 
116.28  to permit the commissioner to verify the tax paid. If the tax was paid by a contractor, 
116.29  subcontractor, or builder, under subdivision 1, clause (4), (5), (6), (7), (8), (9), or (10), 
116.30   (11), or (12), the contractor, subcontractor, or builder must furnish to the refund applicant 
116.31  a statement including the cost of the exempt items and the taxes paid on the items unless 
116.32  otherwise specifically provided by this subdivision. The provisions of sections 289A.40 
116.33  and 289A.50 apply to refunds under this section.
117.1   (b) An applicant may not file more than two applications per calendar year for 
117.2   refunds for taxes paid on capital equipment exempt under section 297A.68, subdivision 5.
117.3   EFFECTIVE DATE.This section is effective the day following final enactment.

117.4       Sec. 29. Minnesota Statutes 2005 Supplement, section 297A.815, subdivision 1, 
117.5   is amended to read:
117.6       Subdivision 1. Motor vehicle lease price; payment. (a) In the case of a lease of a 
117.7   motor vehicle as provided in section 297A.61, subdivision 4, paragraph (k), clause (2), the 
117.8   tax is imposed on the total amount to be paid by the lessee under the lease agreement. The 
117.9   lessor shall collect the tax in full at the time the lease is executed or, if the tax is included 
117.10  in the lease and the lease is assigned, the tax is due from the original lessor at the time the 
117.11  lease is assigned. The total amount to be paid by the lessee under the lease agreement 
117.12  equals the agreed-upon value of the vehicle less manufacturer's rebates, the stated residual 
117.13  value of the leased vehicle, and the total value allowed for a vehicle owned by the lessee 
117.14  taken in trade by the lessor, plus the price of any taxable goods and services included in 
117.15  the lease and the rent charge as provided by Code of Federal Regulations, title 12, section 
117.16  213.4, excluding any rent charge related to the capitalization of the tax.
117.17  (b) If the total amount paid by the lessee for use of the leased vehicle includes 
117.18  amounts that are not calculated at the time the lease is executed, the tax is imposed and 
117.19  must be collected by the lessor at the time the amounts are paid by the lessee. In the case 
117.20  of a lease which by its terms may be renewed, the sales tax is due and payable on the 
117.21  total amount to be paid during the initial term of the lease, and then for each subsequent 
117.22  renewal period on the total amount to be paid during the renewal period.
117.23  (c) If a lease is canceled or rescinded on or before 90 days of its execution or if a 
117.24  vehicle is returned to the manufacturer under section 325F.665, the lessor may file a claim 
117.25  for a refund of the total tax paid minus the amount of tax due for the period the vehicle is 
117.26  used by the lessee.
117.27  (d) If a lessee's obligation to make payments on a lease is canceled more than 90 
117.28  days after its execution, a credit is allowed against sales tax or motor vehicles sales tax 
117.29  due on a subsequent lease or purchase of a motor vehicle if that lease or purchase is 
117.30  consummated within 30 days of the date the prior lease was canceled. The amount of the 
117.31  credit is equal to (1) the sales tax paid at the inception of the lease, multiplied by (2) 
117.32  the ratio of the number of full months remaining in the lease at the time of termination 
117.33  compared to the term of the lease used in calculating sales tax paid at the inception of the 
117.34  lease. The credit or any part of it cannot be assigned or transferred to another person.
118.1   EFFECTIVE DATE.This section is effective for leases entered into after 
118.2   September 30, 2005.

118.3       Sec. 30. Minnesota Statutes 2004, section 297A.99, subdivision 7, is amended to read:
118.4       Subd. 7. Exemptions. (a) All goods or services that are otherwise exempt from 
118.5   taxation under this chapter are exempt from a political subdivision's tax.
118.6   (b) The gross receipts from the sale of tangible personal property that meets the 
118.7   requirement of section  297A.68, subdivision 15, are exempt, except the qualification 
118.8   test applies based on the boundaries of the political subdivision instead of the state 
118.9   of Minnesota. 
118.10  (c) All mobile transportation equipment, and parts and accessories attached to or 
118.11  to be attached to the equipment are exempt, if purchased by a holder of a motor carrier 
118.12  direct pay permit under section  297A.90. 
118.13  EFFECTIVE DATE.This section is effective the day following final enactment.

118.14      Sec. 31. Laws 2005, First Special Session chapter 3, article 5, section 3, the effective 
118.15  date, is amended to read:
118.16   
118.17   
118.18  EFFECTIVE DATE. This section is effective for sales and  purchases made after 
118.19  October 28, 2002, but for land clearing contracts entered into after October 28, 2002, 
118.20  but before July 15, 2005, no refunds may be claimed under Minnesota Statutes, section 
118.21  289A.50, for sales taxes collected and remitted to the state on the land clearing contracts.  
118.22  EFFECTIVE DATE.This section is effective the day following final enactment.

118.23      Sec. 32.  REPEALER.
118.24  (a) Minnesota Statutes 2004, section 297A.68, subdivisions 15 and 18, are repealed.
118.25  (b) Minnesota Rules, parts 8130.0400, subpart 3; 8130.4800, subparts 1, 3, 4, 5, 6, 7, 
118.26  and 8; 8130.5100; 8130.5400; and 8130.5800, subpart 6, are repealed.
118.27  EFFECTIVE DATE.This section is effective the day following final enactment.

119.1                                          ARTICLE 8
119.2                         DEPARTMENT OF REVENUE SPECIAL TAXES AND FEES

119.3       Section 1. Minnesota Statutes 2005 Supplement, section 115B.49, subdivision 4, is 
119.4   amended to read:
119.5       Subd. 4. Registration; fees. (a) The owner or operator of a dry cleaning facility 
119.6   shall register on or before October 1 of each year with the commissioner of revenue in 
119.7   a manner prescribed by the commissioner of revenue and pay a registration fee for the 
119.8   facility. The amount of the fee is:
119.9   (1) $500, for facilities with a full-time equivalence of fewer than five;
119.10  (2) $1,000, for facilities with a full-time equivalence of five to ten; and
119.11  (3) $1,500, for facilities with a full-time equivalence of more than ten.
119.12  The registration fee must be paid on or before October 18 or the owner or operator 
119.13  of a dry cleaning facility may elect to pay the fee in equal installments. Installment 
119.14  payments must be paid on or before October 18, on or before January 18, on or before 
119.15  April 18, and on or before June 18. All payments made after October 18 bear interest 
119.16  at the rate specified in section 270C.40.
119.17  (b) A person who sells dry cleaning solvents for use by dry cleaning facilities in the 
119.18  state shall collect and remit to the commissioner of revenue in a manner prescribed by the 
119.19  commissioner of revenue, on or before the 20th day of the month following the month in 
119.20  which the sales of dry cleaning solvents are made, a fee of:
119.21  (1) $3.50 for each gallon of perchloroethylene sold for use by dry cleaning facilities 
119.22  in the state;
119.23  (2) 70 cents for each gallon of hydrocarbon-based dry cleaning solvent sold for use 
119.24  by dry cleaning facilities in the state; and
119.25  (3) 35 cents for each gallon of other nonaqueous solvents sold for use by dry 
119.26  cleaning facilities in the state.
119.27  (c) The audit, assessment, appeal, collection, enforcement, and administrative 
119.28  provisions of chapters 270C and 289A apply to the fee imposed by this subdivision. 
119.29  To enforce this subdivision, the commissioner of revenue may grant extensions to file 
119.30  returns and pay fees, impose penalties and interest on the annual registration fee under 
119.31  paragraph (a) and the monthly fee under paragraph (b), and abate penalties and interest in 
119.32  the manner provided in chapters 270C and 289A. The penalties and interest imposed on 
119.33  taxes under chapter 297A apply to the fees imposed under this subdivision. Disclosure 
119.34  of data collected by the commissioner of revenue under this subdivision is governed by 
119.35  chapter 270B.
120.1   EFFECTIVE DATE.This section is effective for returns and payments due on 
120.2   or after October 1, 2006.

120.3       Sec. 2. [287.222] TRANSFER TO OBTAIN FINANCING.
120.4   The deed tax is $1.65 on a deed or other instrument that transfers real property if 
120.5   the transfer is (1) to a person who is a builder or contractor, (2) intended to be temporary, 
120.6   and (3) done solely to enable the builder or contractor to obtain financing to build an 
120.7   improvement on the conveyed property under a contract for improvement with the grantor 
120.8   that calls for the conveyed property to be reconveyed to the grantor upon completion of 
120.9   and payment for the improvement. The deed tax is $1.65 on a deed or other instrument 
120.10  that transfers the real property back from the builder or contractor to the grantor.
120.11  EFFECTIVE DATE.This section is effective for deeds both executed and recorded 
120.12  on or after July 1, 2006.

120.13      Sec. 3. Minnesota Statutes 2004, section 295.50, subdivision 4, is amended to read:
120.14      Subd. 4. Health care provider. (a) "Health care provider" means:
120.15  (1) a person whose health care occupation is regulated or required to be regulated by 
120.16  the state of Minnesota furnishing any or all of the following goods or services directly to a 
120.17  patient or consumer: medical, surgical, optical, visual, dental, hearing, nursing services, 
120.18  drugs, laboratory, diagnostic or therapeutic services;
120.19  (2) a person who provides goods and services not listed in clause (1) that qualify for 
120.20  reimbursement under the medical assistance program provided under chapter 256B;
120.21  (3) a staff model health plan company;
120.22  (4) an ambulance service required to be licensed; or
120.23  (5) a person who sells or repairs hearing aids and related equipment or prescription 
120.24  eyewear.
120.25  (b) Health care provider does not include:
120.26  (1) hospitals; medical supplies distributors, except as specified under paragraph 
120.27  (a), clause (5); nursing homes licensed under chapter 144A or licensed in any other 
120.28  jurisdiction; pharmacies; surgical centers; bus and taxicab transportation, or any other 
120.29  providers of transportation services other than ambulance services required to be licensed; 
120.30  supervised living facilities for persons with mental retardation or related conditions, 
120.31  licensed under Minnesota Rules, parts 4665.0100 to 4665.9900; residential care homes 
120.32  licensed under chapter 144B; housing with services establishments required to be 
120.33  registered under chapter 144D; board and lodging establishments providing only custodial 
120.34  services that are licensed under chapter 157 and registered under section  157.17 to 
121.1   provide supportive services or health supervision services; adult foster homes as defined 
121.2   in Minnesota Rules, part 9555.5105; day training and habilitation services for adults 
121.3   with mental retardation and related conditions as defined in section  252.41, subdivision 
121.4   3; boarding care homes, as defined in Minnesota Rules, part 4655.0100; and adult day 
121.5   care centers as defined in Minnesota Rules, part 9555.9600; 
121.6   (2) home health agencies as defined in Minnesota Rules, part 9505.0175, subpart 
121.7   15; a person providing personal care services and supervision of personal care services 
121.8   as defined in Minnesota Rules, part 9505.0335; a person providing private duty nursing 
121.9   services as defined in Minnesota Rules, part 9505.0360; and home care providers required 
121.10  to be licensed under chapter 144A;
121.11  (3) a person who employs health care providers solely for the purpose of providing 
121.12  patient services to its employees; and
121.13  (4) an educational institution that employs health care providers solely for the 
121.14  purpose of providing patient services to its students if the institution does not receive fee 
121.15  for service payments or payments for extended coverage.
121.16  EFFECTIVE DATE.This section is effective the day following final enactment.

121.17      Sec. 4. Minnesota Statutes 2004, section 295.53, subdivision 3, is amended to read:
121.18      Subd. 3. Separate statement of tax. A hospital, surgical center, or health care 
121.19  provider, or wholesale drug distributor  must not state the tax obligation under section  
121.20  295.52 in a deceptive or misleading manner. It must not separately state tax obligations 
121.21  on bills provided to patients, consumers, or other payers when the amount received for 
121.22  the services or goods is not subject to tax. 
121.23  Pharmacies that separately state the tax obligations on bills provided to consumers 
121.24  or to other payers who purchase legend drugs may state the tax obligation as the wholesale 
121.25  price of the legend drugs multiplied by the tax percentage specified in section  295.52. 
121.26  Pharmacies must not state the tax obligation based on the retail price. 
121.27  Whenever the commissioner determines that a person has engaged in any act or 
121.28  practice constituting a violation of this subdivision, the commissioner may bring an action 
121.29  in the name of the state in the district court of the appropriate county to enjoin the act 
121.30  or practice and to enforce compliance with this subdivision, or the commissioner may 
121.31  refer the matter to the attorney general or the county attorney of the appropriate county. 
121.32  Upon a proper showing, a permanent or temporary injunction, restraining order, or other 
121.33  appropriate relief must be granted.
121.34  EFFECTIVE DATE.This section is effective the day following final enactment.

122.1       Sec. 5. Minnesota Statutes 2004, section 297F.01, is amended by adding a subdivision 
122.2   to read:
122.3       Subd. 22a. Weighted average retail price. "Weighted average retail price" means 
122.4   (1) the average retail price per pack of 20 cigarettes, with the average price weighted by 
122.5   the number of packs sold at each price, (2) reduced by the sales tax included in the retail 
122.6   price, and (3) adjusted for the expected inflation from the time of the survey to the average 
122.7   of the 12 months that the sales tax will be imposed. The commissioner shall make the 
122.8   inflation adjustment in accordance with the Consumer Price Index for all urban consumers 
122.9   inflation indicator as published in the most recent state budget forecast. The inflation 
122.10  factor for the calendar year in which the new tax rate takes effect must be used.
122.11  EFFECTIVE DATE.This section is effective April 30, 2006.

122.12      Sec. 6. Minnesota Statutes 2004, section 297G.01, subdivision 7, is amended to read:
122.13      Subd. 7. Distilled spirits. "Distilled spirits" is means: 
122.14  (1) intoxicating liquors, including ethyl alcohol, hydrated oxide of ethyl, spirits of 
122.15  wine, whiskey, rum, brandy, gin, and other distilled spirits, including all dilutions and 
122.16  mixtures, for nonindustrial use.;
122.17  (2) any beverage that would be classified as a flavored malt beverage except that the 
122.18  alcohol contribution from flavors and other nonbeverage materials exceeds 49 percent 
122.19  of the alcohol content of the product; or 
122.20  (3) any beverage that would be classified as a flavored malt beverage except that the 
122.21  beverage contains more than six percent alcohol by volume, and more than 1.5 percent 
122.22  of the volume of the finished product consists of alcohol derived from flavors and other 
122.23  nonbeverage ingredients that contain alcohol.
122.24  EFFECTIVE DATE.This section is effective July 1, 2006.

122.25      Sec. 7. Minnesota Statutes 2004, section 297G.01, is amended by adding a subdivision 
122.26  to read:
122.27      Subd. 8a. Flavored malt beverage. (a) "Flavored malt beverage" means a 
122.28  fermented malt beverage that:
122.29  (1) contains six percent or less alcohol by volume and derives at least 51 percent of 
122.30  its alcohol content by volume from the fermentation of grain, as long as not more than 49 
122.31  percent of the beverage's overall alcohol content is obtained from flavors and other added 
122.32  nonbeverage ingredients containing alcohol; or
123.1   (2) contains more than six percent alcohol by volume that derives not more than 1.5 
123.2   percent of its overall alcohol content by volume from flavors and other added nonbeverage 
123.3   ingredients containing alcohol.
123.4   (b) Flavored malt beverage does not include cider or an alcoholic beverage obtained 
123.5   primarily by fermentation of rice, such as sake.
123.6   EFFECTIVE DATE.This section is effective July 1, 2006.

123.7                                          ARTICLE 9
123.8                             DEPARTMENT OF REVENUE MISCELLANEOUS

123.9       Section 1. Minnesota Statutes 2005 Supplement, section 270C.01, subdivision 4, is 
123.10  amended to read:
123.11      Subd. 4. Electronic means; electronically. "Electronic means" and "electronically" 
123.12  mean a method that is electronic, as defined in section 325L.02, paragraph (e), and that 
123.13  is prescribed by the commissioner. Electronic means includes the use of a touch-tone 
123.14  telephone to transmit return information in a manner prescribed by the commissioner.
123.15  EFFECTIVE DATE.This section is effective the day following final enactment.

123.16      Sec. 2. Minnesota Statutes 2005 Supplement, section 270C.304, is amended to read:
123.17  270C.304 ELECTRONICALLY FILED RETURNS; SIGNATURES.
123.18  For purposes of a law administered by the commissioner, the name of the taxpayer, 
123.19  the name of the taxpayer's authorized agent, or the taxpayer's identification number, 
123.20  will constitute a signature when transmitted as part of the return information on returns 
123.21  filed by electronic means by the taxpayer or at the taxpayer's direction. "Electronic 
123.22  means" includes, but is not limited to, the use of a touch-tone telephone to transmit return 
123.23  information in a manner prescribed by the commissioner.
123.24  EFFECTIVE DATE.This section is effective the day following final enactment.

123.25      Sec. 3. Minnesota Statutes 2005 Supplement, section 270C.33, subdivision 4, is 
123.26  amended to read:
123.27      Subd. 4. Orders of assessment. (a) The commissioner may issue an order of 
123.28  assessment in any of the following circumstances:
123.29  (1) the commissioner determines that the correct amount of tax is different than that 
123.30  assessed on a return filed with the commissioner;
124.1   (2) no return has been filed and the commissioner determines the amount of tax 
124.2   that should have been assessed;
124.3   (3) the commissioner determines that the correct amount of a refundable credit 
124.4   is different than the amount claimed by a taxpayer. For purposes of this subdivision, 
124.5   "refundable credit" means a refund benefit or credit due a person that is unrelated to the 
124.6   person's liability for a tax. "Refundable credit" does not include estimated tax payments 
124.7   or withholding taxes. An assessment for an overpayment of a refundable credit may be 
124.8   collected in the same manner as a tax collected by the commissioner; and
124.9   (4) the commissioner determines the correct amount of a tax that the taxpayer is not 
124.10  required to assess by a return filed with the commissioner.; and
124.11  (5) the commissioner determines that a penalty other than a penalty for late payment 
124.12  of tax, late filing of a return, or failure to pay tax by electronic means should be imposed, 
124.13  and the penalty is not included on an order of assessment made under clauses (1) to (4).
124.14  (b) An order of assessment must be in writing.
124.15  (c) An order of assessment must be signed by the commissioner or a delegate, or 
124.16  have their facsimile signature, if the change in tax, excluding penalties and interest, 
124.17  exceeds $1,000.
124.18  (d) An order of assessment is final when made but, as applicable, is reviewable 
124.19  administratively under section 270C.35, or appealable to Tax Court under chapter 271.
124.20  EFFECTIVE DATE.This section is effective the day following final enactment.

124.21      Sec. 4. Minnesota Statutes 2005 Supplement, section 270C.57, subdivision 3, is 
124.22  amended to read:
124.23      Subd. 3. Assessment; abatement; review. The commissioner may assess liability 
124.24  against a successor business under this section within the time prescribed for collecting 
124.25  the underlying sales and withholding taxes, interest, and penalties. The assessment is 
124.26  presumed to be valid, and the burden is upon the successor to show it is incorrect or 
124.27  invalid. An order assessing successor liability is reviewable administratively under section 
124.28  270C.35 and is appealable to Tax Court under chapter 271. The commissioner may abate 
124.29  an assessment if the successor's failure to give the notice required under this section is due 
124.30  to reasonable cause. The procedural and appeal provisions under section 270C.34 apply 
124.31  to abatement requests under this subdivision. Collection remedies available against the 
124.32  transferring business are available against the successor from the date of assessment of 
124.33  successor liability.
124.34  EFFECTIVE DATE.This section is effective the day following final enactment.

125.1       Sec. 5. Minnesota Statutes 2005 Supplement, section 270C.67, subdivision 1, is 
125.2   amended to read:
125.3       Subdivision 1. Authority. If any tax payable to the commissioner or to the 
125.4   department is not paid when due, such tax may be collected by the commissioner within 
125.5   five years after the date of assessment of the tax, or if a lien has been filed, during the 
125.6   period the lien is enforceable, or if the tax judgment has been filed, within the statutory 
125.7   period of enforcement of a valid tax judgment, by a levy upon all property and rights 
125.8   to property, including any property in the possession of law enforcement officials, of 
125.9   the person liable for the payment or collection of such tax (except that which is exempt 
125.10  from execution pursuant to section 550.37) or property on which there is a lien provided 
125.11  in section 270C.63. For this purpose, "tax" includes any penalty, interest, and costs, 
125.12  properly payable.
125.13  EFFECTIVE DATE.This section is effective the day following final enactment.

125.14      Sec. 6. Minnesota Statutes 2005 Supplement, section 270C.67, is amended by adding a 
125.15  subdivision to read:
125.16      Subd. 1a. Exempt property.  A levy under this section is not enforceable against:
125.17  (1) a purchaser with respect to tangible personal property purchased at retail in 
125.18  the ordinary course of the seller's trade or business, unless at the time of purchase the 
125.19  purchaser intends the purchase to or knows the purchase will hinder, evade, or defeat 
125.20  the collection of a tax; or
125.21  (2) the personal property listed as exempt in sections 550.37, 550.38, and 550.39.
125.22  EFFECTIVE DATE.This section is effective the day following final enactment.

125.23      Sec. 7. Minnesota Statutes 2005 Supplement, section 271.12, is amended to read:
125.24  271.12 WHEN ORDER EFFECTIVE.
125.25  No order for refundment by the commissioner of revenue, the appropriate unit of 
125.26  government, or the Tax Court shall take effect until the time for appeal therefrom or 
125.27  review thereof by all parties entitled thereto has expired. Otherwise every order of the 
125.28  commissioner, the appropriate unit of government, or the Tax Court shall take effect 
125.29  immediately upon the filing thereof, and no appeal therefrom or review thereof shall 
125.30  stay the execution thereof or extend the time for payment of any tax or other obligation 
125.31  unless otherwise expressly provided by law; provided, that in case an order which has 
125.32  been acted upon, in whole or in part, shall thereafter be set aside or modified upon appeal, 
125.33  the determination upon appeal or review shall supersede the order appealed from and be 
126.1   binding upon all parties affected thereby, and such adjustments as may be necessary 
126.2   to give effect thereto shall be made accordingly; and provided further, the Tax Court 
126.3   may enjoin enforcement of the order of the commissioner being appealed. If it be finally 
126.4   determined upon such appeal or review that any person is entitled to refundment of any 
126.5   amount which has been paid for a tax or other obligation, such amount, unless otherwise 
126.6   provided by law, shall be paid to the person by the commissioner of finance, or other 
126.7   proper officer, out of funds derived from taxes of the same kind, if available for the 
126.8   purpose, or out of other available funds, if any, with interest at the rate specified in section 
126.9   270C.405 from the date of payment of the tax, unless a different rate or date of accrual 
126.10  of interest is otherwise provided by law, in which case such other rate or date of accrual 
126.11  shall apply, upon certification by the commissioner of revenue, the appropriate unit of 
126.12  government, the Tax Court or the Supreme Court.
126.13  If, within 120 days after a decision of the Tax Court becomes final, the commissioner 
126.14  does not refund the overpayment determined by the court, together with interest, on 
126.15  motion by the taxpayer, the Tax Court shall have jurisdiction to order the refund of 
126.16  the overpayment and interest, and to award reasonable litigation costs for bringing the 
126.17  motion. If any tax, assessment, or other obligation be increased upon such appeal or 
126.18  review, the increase shall be added to the original amount, and may be enforced and 
126.19  collected therewith.
126.20  EFFECTIVE DATE.This section is effective the day following final enactment.

126.21      Sec. 8. Minnesota Statutes 2005 Supplement, section 289A.121, subdivision 5, is 
126.22  amended to read:
126.23      Subd. 5. Reportable transactions. (a) For each taxable year in which a taxpayer 
126.24  must make a return or a statement under Code of Federal Regulations, title 26, section 
126.25  1.6011-4, for a reportable transaction, including a listed transaction, in which the taxpayer 
126.26  participated in a taxable year for which a return is required under chapter 290, the taxpayer 
126.27  must file a copy of the disclosure with the commissioner.
126.28  (b) Any taxpayer that is a member of a unitary business group that includes any 
126.29  person that must make a disclosure statement under Code of Federal Regulations, title 26, 
126.30  section 1.6011-4, must file a disclosure under this subdivision.
126.31  (c) Disclosure under this subdivision is required for any transaction entered into after 
126.32  December 31, 2001, that the Internal Revenue Service determines is a listed transaction 
126.33  at any time, and must be made in the manner prescribed by the commissioner. For 
126.34  transactions in which the taxpayer participated for taxable years ending before December 
126.35  31, 2005, disclosure must be made by the extended due date of the first return required 
127.1   under chapter 290 that occurs 60 days or more after July 14, 2005. With respect to 
127.2   transactions in which the taxpayer participated for taxable years ending on and after 
127.3   December 31, 2005, disclosure must be made in the time and manner prescribed in Code 
127.4   of Federal Regulations, title 26, section 1.6011-4(e).
127.5   (d) Notwithstanding paragraphs (a) to (c), no disclosure is required for transactions 
127.6   entered into after December 31, 2001, and before January 1, 2006, if (1) the taxpayer 
127.7   has filed an amended income tax return which reverses the tax benefits of the tax 
127.8   shelter transaction, or (2) as a result of a federal audit the Internal Revenue Service has 
127.9   determined the tax treatment of the transaction and an amended return has been filed 
127.10  to reflect the federal treatment.
127.11  EFFECTIVE DATE.This section is effective for disclosures of reportable 
127.12  transactions in which the taxpayer participated for taxable years ending before December 
127.13  31, 2005.

127.14      Sec. 9. Minnesota Statutes 2004, section 290.17, subdivision 1, is amended to read:
127.15      Subdivision 1. Scope of allocation rules. (a) The income of resident individuals 
127.16  is not subject to allocation outside this state. The allocation rules apply to nonresident 
127.17  individuals, estates, trusts, nonresident partners of partnerships, nonresident shareholders 
127.18  of corporations treated as "S" corporations under section  290.9725, and all corporations 
127.19  not having such an election in effect. If a partnership or corporation would not otherwise 
127.20  be subject to the allocation rules, but conducts a trade or business that is part of a 
127.21  unitary business involving another legal entity that is subject to the allocation rules, the 
127.22  partnership or corporation is subject to the allocation rules. 
127.23  (b) Expenses, losses, and other deductions (referred to collectively in this paragraph 
127.24  as "deductions") must be allocated along with the item or class of gross income to which 
127.25  they are definitely related for purposes of assignment under this section or apportionment 
127.26  under section  290.191,  290.20, or  290.36. Deductions not definitely related to any item 
127.27  or class of gross income are assigned under subdivision 2, paragraph (e), are assigned to 
127.28  the taxpayer's domicile. 
127.29  (c) In the case of an individual who is a resident for only part of a taxable year, 
127.30  the individual's income, gains, losses, and deductions from the distributive share of a 
127.31  partnership, S corporation, trust, or estate are not subject to allocation outside this state 
127.32  to the extent of the distributive share multiplied by a ratio, the numerator of which is 
127.33  the number of days the individual was a resident of this state during the tax year of the 
127.34  partnership, S corporation, trust, or estate, and the denominator of which is the number of 
127.35  days in the taxable year of the partnership, S corporation, trust, or estate.
128.1   EFFECTIVE DATE.This section is effective the day following final enactment.

128.2                                          ARTICLE 10
128.3                                        PUBLIC FINANCE

128.4       Section 1. Minnesota Statutes 2004, section 103E.635, subdivision 7, is amended to 
128.5   read:
128.6       Subd. 7. Sale of definitive drainage bonds. The board must sell and negotiate the 
128.7   definitive drainage bonds for at least their par value. The definitive bonds must be sold 
128.8   in accordance with section according to sections 475.56 and   475.60. 

128.9       Sec. 2. Minnesota Statutes 2004, section 116A.20, subdivision 3, is amended to read:
128.10      Subd. 3. How payable. The bonds shall be payable at such time or times, not to 
128.11  exceed (1) 30 years from their date or (2) 40 years or the useful life of the asset, whichever 
128.12  is less, if financed or guaranteed by the United States Department of Agriculture, and bear 
128.13  such rate or rates of interest not exceeding eight percent per annum, payable annually or 
128.14  semiannually as the county board shall by resolution determine. The years and amounts 
128.15  of principal maturities shall be such as in the opinion of the county board are warranted 
128.16  by the anticipated collections of the water and sewer improvement assessments without 
128.17  regard to any limitations on such maturities imposed by section  475.54. 

128.18      Sec. 3. Minnesota Statutes 2004, section 162.18, subdivision 1, is amended to read:
128.19      Subdivision 1. Limitation on amount. Any city having a population of 5,000 or 
128.20  more may in accordance with chapter 475, except as otherwise provided herein, issue and 
128.21  sell its obligations for the purpose of establishing, locating, relocating, constructing, 
128.22  reconstructing, and improving municipal state-aid streets therein. In the resolution 
128.23  providing for the issuance of the obligations, the governing body of the municipality 
128.24  shall irrevocably pledge and appropriate to the sinking fund from which the obligations 
128.25  are payable, an amount of the moneys allotted or to be allotted to the municipality from 
128.26  its account in the municipal state-aid street fund sufficient to pay the principal of and the 
128.27  interest on the obligations as they respectively come due. The obligations shall be issued 
128.28  in amounts and on terms such that the average annual amount of principal and interest due 
128.29  in all subsequent calendar years on the obligations, including any similar obligations of 
128.30  the municipality which are outstanding, shall not exceed 50 90  percent of the amount of 
128.31  the last annual allotment preceding the bond issue received by the municipality from the 
128.32  construction account in the municipal state-aid street fund; except that the municipality 
128.33  may issue general obligation bonds for said purpose, to be purchased by it for the account 
129.1   of any one or more of its own funds, including debt redemption funds, in which case such 
129.2   bonds shall mature in not exceeding five years from their respective dates of issue, in 
129.3   principal amounts not exceeding in any calendar year, with the principal amount of all 
129.4   other municipal state-aid street obligations maturing in such year, the total amount of the 
129.5   last annual allotment preceding the bond issue received by the municipality from the 
129.6   construction account in the municipal state-aid street fund. All interest on the obligations 
129.7   shall be paid out of the municipality's normal maintenance account in the municipal 
129.8   state-aid street fund. Any such obligations may be made general obligations, but if 
129.9   moneys of the municipality other than moneys received from the municipal state-aid street 
129.10  fund, are used for payment of the obligations, the moneys so used shall be restored to the 
129.11  appropriate fund from the moneys next received by the municipality from the construction 
129.12  or maintenance account in the municipal state-aid street fund which are not required to be 
129.13  paid into a sinking fund for obligations.

129.14      Sec. 4. Minnesota Statutes 2004, section 162.181, subdivision 1, is amended to read:
129.15      Subdivision 1. Limitation on amount. Except as otherwise provided herein, any 
129.16  county may, in accordance with chapter 475, issue and sell its obligations, the total 
129.17  amount thereof not to exceed the total of the preceding two years state-aid allotments, 
129.18  for the purpose of establishing, locating, relocating, constructing, reconstructing, and 
129.19  improving county state-aid highways and constructing buildings and other facilities for 
129.20  maintaining county state-aid highways. In the resolution providing for the issuance of the 
129.21  obligations, the county board of the county shall irrevocably pledge and appropriate to the 
129.22  sinking fund from which the obligations are payable, an amount of the money allotted 
129.23  or to be allotted to the county from its account in the county state-aid highway fund 
129.24  sufficient to pay the principal of and the interest on the obligations as they respectively 
129.25  come due. The obligations shall be issued in the amounts and on terms such that the 
129.26  amount of principal and interest due in any calendar year on the obligations, including 
129.27  any similar obligations of the county which are outstanding, shall not exceed 50 90 
129.28   percent of the amount of the last annual allotment preceding the bond issue received 
129.29  by the county from the construction account in the county state-aid highway fund. All 
129.30  interest on the obligations shall be paid out of the county's normal maintenance account 
129.31  in the county state-aid highway fund. The obligations may be made general obligations, 
129.32  but if money of the county other than money received from the county state-aid highway 
129.33  fund, is used for payment of the obligations, the money so used shall be restored to the 
129.34  appropriate fund from the money next received by the county from the construction or 
130.1   maintenance account in the county state-aid highway fund which is not required to be 
130.2   paid into a sinking fund for obligations.

130.3       Sec. 5. Minnesota Statutes 2004, section 273.032, is amended to read:
130.4   273.032 MARKET VALUE DEFINITION.
130.5   For the purpose of determining any property tax levy limitation based on market 
130.6   value, any net debt limit based on market value, any limit on the issuance of bonds, 
130.7   certificates of indebtedness, or capital notes based on market value, any qualification 
130.8   to receive state aid based on market value, or any state aid amount based on market 
130.9   value, the terms "market value," "taxable market value," and "market valuation," whether 
130.10  equalized or unequalized, mean the total taxable market value of property within the local 
130.11  unit of government before any adjustments for tax increment, fiscal disparity, powerline 
130.12  credit, or wind energy values, but after the limited market adjustments under section  
130.13  273.11, subdivision 1a, and after the market value exclusions of certain improvements to 
130.14  homestead property under section  273.11, subdivision 16. Unless otherwise provided, 
130.15  "market value," "taxable market value," and "market valuation" for purposes of this 
130.16  paragraph,  refer to the taxable market value for the previous assessment year. 
130.17  For the purpose of determining any net debt limit based on market value, or any limit 
130.18  on the issuance of bonds, certificates of indebtedness, or capital notes based on market 
130.19  value, the terms "market value," "taxable market value," and "market valuation," whether 
130.20  equalized or unequalized, mean the total taxable market value of property within the local 
130.21  unit of government before any adjustments for tax increment, fiscal disparity, powerline 
130.22  credit, or wind energy values, but after the limited market adjustments under section 
130.23  273.11, subdivision 1a, and after the market value exclusions of certain improvements to 
130.24  homestead property under section 273.11, subdivision 16. Unless otherwise provided, 
130.25  "market value," "taxable market value," and "market valuation" for purposes of this 
130.26  paragraph, mean the taxable market value as last finally equalized.

130.27      Sec. 6. Minnesota Statutes 2004, section 365A.08, is amended to read:
130.28  365A.08 FINANCING.
130.29  Upon adoption of the next annual budget following the creation of a subordinate 
130.30  service district the town board shall include in the budget appropriate provisions for the 
130.31  operation of the district including either a property tax levied only on property of the users 
130.32  of the service within the boundaries of the district or a levy of a service charge against the 
130.33  users of the service within the district, or a combination of a property tax and a service 
130.34  charge on the users of the service.
131.1   A tax or service charge or a combination of them may be imposed to finance a 
131.2   function or service in the district that the town ordinarily provides throughout the town 
131.3   only to the extent that there is an increase in the level of the function or service provided 
131.4   in the service district over that provided throughout the town. In that case, in addition 
131.5   to the townwide tax levy, an amount necessary to pay for the increase in the level of the 
131.6   function or service may be imposed in the district.
131.7   In the proceedings for establishment of a subordinate service district, the town may 
131.8   prepare a street reconstruction plan that describes the streets within the district to be 
131.9   reconstructed, the estimated costs, and any planned reconstruction of streets within the 
131.10  district over the next five years and may include the approval of the street reconstruction 
131.11  plan and the issuance of obligations for street reconstruction in the notice of public hearing 
131.12  for the public hearing required by section 365A.04, subdivision 2. The town board shall 
131.13  approve or disapprove the plan and the issuance of obligations in the resolution adopted 
131.14  pursuant to section 365A.04, subdivision 3, and the issuance of street reconstruction 
131.15  obligations shall be subject to the provisions for reverse referendum contained in section 
131.16  365A.06. Following the creation of the subordinate service district and approval of the 
131.17  plan and the street reconstruction obligations and compliance with section 365A.06, the 
131.18  town may, without regard to the election requirement under section 475.58, subdivision 1, 
131.19  issue and sell general obligations for street reconstruction as defined in section 475.58, 
131.20  subdivision 3b. Obligations issued under this section are subject to the debt limit of the 
131.21  town and are not excluded from net debt under section 475.51, subdivision 4.

131.22      Sec. 7. Minnesota Statutes 2004, section 365A.095, is amended to read:
131.23  365A.095 PETITION FOR REMOVAL OF DISTRICT; PROCEDURE.
131.24  Except when obligations are outstanding under section 365A.08, a petition signed by 
131.25  at least 75 percent of the property owners in the territory of the subordinate service district 
131.26  requesting the removal of the district may be presented to the town board. Within 30 days 
131.27  after the town board receives the petition, the town clerk shall determine the validity of the 
131.28  signatures on the petition. If the requisite number of signatures are certified as valid, the 
131.29  town board must hold a public hearing on the petitioned matter. Within 30 days after the 
131.30  end of the hearing, the town board must decide whether to discontinue the subordinate 
131.31  service district, continue as it is, or take some other action with respect to it.

131.32      Sec. 8. Minnesota Statutes 2004, section 373.45, subdivision 1, is amended to read:
131.33      Subdivision 1. Definitions. (a) As used in this section, the following terms have 
131.34  the meanings given.
132.1   (b) "Authority" means the Minnesota Public Facilities Authority.
132.2   (c) "Commissioner" means the commissioner of finance.
132.3   (d) "Debt obligation" means a general obligation bond issued by a county, a bond to 
132.4   which the general obligation of a county is pledged under section 469.034, subdivision 2, 
132.5   or a bond payable from a county lease obligation under section  641.24, to provide funds 
132.6   for the construction of: 
132.7   (1) jails;
132.8   (2) correctional facilities;
132.9   (3) law enforcement facilities;
132.10  (4) social services and human services facilities; or
132.11  (5) solid waste facilities; or
132.12  (6) qualified housing development projects as defined in section 469.034, subdivision 
132.13  2.

132.14      Sec. 9. Minnesota Statutes 2004, section 469.035, is amended to read:
132.15  469.035 MANNER OF BOND ISSUANCE; SALE.
132.16  Bonds of an authority shall be authorized by its resolution. They may be issued in 
132.17  one or more series and shall bear the date or dates, mature at the time or times, bear interest 
132.18  at the rate or rates, be in the denomination or denominations, be in the form either coupon 
132.19  or registered, carry the conversion or registration privileges, have the rank or priority, be 
132.20  executed in the manner, be payable in the medium of payment at the place or places, and 
132.21  be subject to the terms of redemption with or without premium, as the resolution, its trust 
132.22  indenture or mortgage provides. The bonds may be sold at public or private sale at not 
132.23  less than par in the manner and for the price that the authority determines to be in the best 
132.24  interest of the authority. Notwithstanding any other law, bonds issued pursuant to sections  
132.25  469.001 to  469.047 shall be fully negotiable. In any suit, action, or proceedings involving 
132.26  the validity or enforceability of any bonds of an authority or the security for the bonds, 
132.27  any bond reciting in substance that it has been issued by the authority to aid in financing a 
132.28  project shall be conclusively deemed to have been issued for that purpose, and the project 
132.29  shall be conclusively deemed to have been planned, located, and carried out in accordance 
132.30  with the purposes and provisions of sections  469.001 to  469.047. 
132.31  In cities of the first class, the governing body of the city must approve all notes 
132.32  executed with the Minnesota Housing Finance Agency pursuant to this section if the 
132.33  interest rate on the note exceeds seven percent.

132.34      Sec. 10. Minnesota Statutes 2004, section 469.103, subdivision 2, is amended to read:
133.1       Subd. 2. Form. The bonds of each series issued by the authority under this section 
133.2   shall bear interest at a rate or rates, shall mature at the time or times within 20 30  years 
133.3   from the date of issuance, and shall be in the form, whether payable to bearer, registrable 
133.4   as to principal, or fully registrable, as determined by the authority. Section  469.102, 
133.5   subdivision 6, applies to all bonds issued under this section, and the bonds and their 
133.6   coupons, if any, when payable to bearer, shall be negotiable instruments. 

133.7       Sec. 11. Minnesota Statutes 2005 Supplement, section 469.178, subdivision 7, is 
133.8   amended to read:
133.9       Subd. 7. Interfund loans. The authority or municipality may advance or loan 
133.10  money to finance expenditures under section 469.176, subdivision 4, from its general 
133.11  fund or any other fund under which it has legal authority to do so. The loan or advance 
133.12  must be authorized, by resolution of the governing body or of the authority, whichever 
133.13  has jurisdiction over the fund from which the advance or loan is made, before money 
133.14  is transferred, advanced, or spent, whichever is earliest. The resolution may generally 
133.15  grant to the authority the power to make interfund loans under one or more tax increment 
133.16  financing plans or for one or more districts. The terms and conditions for repayment of 
133.17  the loan must be provided in writing and include, at a minimum, the principal amount, 
133.18  the interest rate, and maximum term. The maximum rate of interest permitted to be 
133.19  charged is limited to the greater of the rates specified under section 270C.40 or 549.09 
133.20  as of the date or advance is made, unless the written agreement states that the maximum 
133.21  interest rate will fluctuate as the interest rates specified under section 270C.40 or 549.09 
133.22  are from time to time adjusted.

133.23      Sec. 12. Minnesota Statutes 2004, section 473.39, is amended by adding a subdivision 
133.24  to read:
133.25      Subd. 11. Obligations. After July 1, 2006, in addition to the authority in 
133.26  subdivisions 1a, 1b, 1c, 1d, 1e, 1g, 1h, 1i, 1j, and 1k, the council may issue certificates of 
133.27  indebtedness, bonds, or other obligations under this section in an amount not exceeding 
133.28  $32,800,000 for capital expenditures as prescribed in the council's regional transit master 
133.29  plan and transit capital improvement program and for related costs, including the costs of 
133.30  issuance and sale of the obligations.
133.31  EFFECTIVE DATE.This section is effective the day following final enactment.

134.1       Sec. 13. Minnesota Statutes 2004, section 474A.062, is amended to read:
134.2   474A.062 HESO 120-DAY ISSUANCE EXEMPTION.
134.3   The Minnesota Higher Education Services Office is exempt from the 120-day 
134.4   issuance requirements in this chapter and may carry forward allocations for student loan 
134.5   bonds into three one  successive calendar years year, subject to carryforward notice 
134.6   requirements of section  474A.131, subdivision 2. The maximum cumulative carryforward 
134.7   is limited to $25,000,000. 
134.8   EFFECTIVE DATE.This section is effective for bond allocations made in 2006 
134.9   and thereafter.

134.10      Sec. 14. Minnesota Statutes 2005 Supplement, section 475.521, subdivision 4, is 
134.11  amended to read:
134.12      Subd. 4. Limitations on amount. A municipality may not issue bonds under this 
134.13  section if the maximum amount of principal and interest to become due in any year on 
134.14  all the outstanding bonds issued under this section, including the bonds to be issued, 
134.15  will equal or exceed (1) 0.16 percent of the taxable market value of property in the 
134.16  municipality, or (2) $100,000, whichever is greater. Calculation of the limit must be 
134.17  made using the taxable market value for the taxes payable year in which the obligations 
134.18  are issued and sold. In the case of a municipality with a population of 2,500 or more, the 
134.19  bonds are subject to the net debt limits under section 475.53. In the case of a shared facility 
134.20  in which more than one municipality participates, upon compliance by each participating 
134.21  municipality with the requirements of subdivision 2, the limitations in this subdivision and 
134.22  the net debt represented by the bonds shall be allocated to each participating municipality 
134.23  in proportion to its required financial contribution to the financing of the shared facility, as 
134.24  set forth in the joint powers agreement relating to the shared facility. This section does not 
134.25  limit the authority to issue bonds under any other special or general law.

134.26      Sec. 15. Laws 2005, chapter 152, article 1, section 39, subdivision 1, is amended to 
134.27  read:
134.28   
134.29  Subdivision 1.  [ISSUANCE; PURPOSE.] Notwithstanding any  provision of 
134.30  Minnesota Statutes, chapter 298, to the contrary,  the commissioner of Iron Range 
134.31  resources and rehabilitation may shall issue revenue bonds in a principal amount of 
134.32  $15,000,000 plus an amount sufficient to pay costs of issuance,  in one  or more series, 
134.33  and thereafter may issue bonds to refund those bonds.  The proceeds  of the bonds must be 
135.1   used to pay costs of issuance and to make grants to school districts  located in the taconite 
135.2   tax relief area defined in Minnesota  Statutes, section 273.134, or the taconite assistance 
135.3   area  defined in Minnesota Statutes, section 273.1341, to be used by  the school districts 
135.4   to pay for health, safety, and maintenance  improvements but only if the school district 
135.5   has levied the maximum amount allowable under law for those purposes. The amounts of 
135.6   proceeds to be distributed to each district are as follows:
135.7   (1) Independent School District No. 511, Aitkin, $600,000;
135.8   (2) Independent School District No. 695, Chisholm, $700,000;
135.9   (3) Independent School District No. 166, Cook County, $600,000;
135.10  (4) Independent School District No. 182, Crosby-Ironton, $600,000;
135.11  (5) Independent School District No. 696, Ely, $600,000;
135.12  (6) Independent School District No. 2154, Eveleth-Gilbert, $1,000,000;
135.13  (7) Independent School District No. 318, Grand Rapids, $600,000;
135.14  (8) Independent School District No. 316, Greenway, $1,100,000;
135.15  (9) Independent School District No. 701, Hibbing, $2,100,000;
135.16  (10) Independent School District No. 381, Lake Superior, $600,000;
135.17  (11) Independent School District No. 2711, Mesabi East, $3,600,000;
135.18  (12) Independent School District No. 712, Mt. Iron-Buhl, $700,000;
135.19  (13) Independent School District No. 319, Nashwauk/Keewatin, $700,000;
135.20  (14) Independent School District No. 2142, St. Louis County, $600,000; and
135.21  (15) Independent School District No. 706, Virginia, $900,000.  
135.22   

135.23      Sec. 16. CARVER COUNTY AUTHORITY NAME CHANGE.
135.24  The Carver County Housing and Redevelopment Authority created under Laws 
135.25  1980, chapter 482, is renamed the Carver County Community Development Agency.

135.26      Sec. 17. CITY OF WINSTED; BONDING AUTHORITY.
135.27  (a) The city of Winsted may issue general obligation bonds under Minnesota 
135.28  Statutes, chapter 475, to finance the acquisition and betterment of a public works facility 
135.29  and a facility consisting of a city hall, community center and police station, including 
135.30  landscaping.
135.31  (b) The bonds may be issued as general obligations of the city without an election to 
135.32  approve the bonds under Minnesota Statutes, section 475.58.
135.33  (c) The bonds are not included in computing any debt limitation applicable to the 
135.34  city, including the net debt limits under Minnesota Statutes, section 475.53, and the levy 
136.1   of taxes under Minnesota Statutes, section 475.61, to pay principal of and interest on the 
136.2   bonds is not subject to any levy limitation.
136.3   (d) The aggregate principal amount of bonds used to pay costs of the acquisition and 
136.4   betterment of the public works facility and the facility consisting of a city hall, community 
136.5   center and police station, including landscaping, may not exceed $5,000,000, plus an 
136.6   amount equal to the costs related to issuance of the bonds and capitalized interest.
136.7   EFFECTIVE DATE.This section is effective upon compliance by the governing 
136.8   body of the city of Winsted with Minnesota Statutes, section 645.021, subdivision 3.

136.9       Sec. 18. UNIFIED POOL; OFFICE OF HIGHER EDUCATION; TEMPORARY 
136.10  PRIORITY.
136.11  Notwithstanding Minnesota Statutes, section 474A.091, subdivision 3, paragraph 
136.12  (b), prior to October 1, 2006, only the following applications shall be awarded allocations 
136.13  from the unified pool. Allocations shall be awarded in the following order of priority:
136.14  (1) applications for student loan bonds issued by or on behalf of the Office of 
136.15  Higher Education;
136.16  (2) applications for residential rental project bonds;
136.17  (3) applications for small issue bonds for manufacturing projects; and
136.18  (4) applications for small issue bonds for agricultural development bond loan 
136.19  projects.
136.20  EFFECTIVE DATE.This section is effective July 1, 2006.

136.21      Sec. 19. UNIFIED POOL; TEMPORARY PRIORITY CHANGE.
136.22  Notwithstanding Minnesota Statutes, section 474A.091, subdivision 3, paragraph 
136.23  (c), on the first Monday in October 2006, through the last Monday in November 2006, 
136.24  allocations shall be awarded from the unified pool in the following order of priority:
136.25  (1) applications for mortgage bonds;
136.26  (2) applications for public facility projects funded by public facility bonds;
136.27  (3) applications for small issue bonds for manufacturing projects;
136.28  (4) applications for small issue bonds for agricultural development bond loan 
136.29  projects;
136.30  (5) applications for residential rental project bonds;
136.31  (6) applications for enterprise zone facility bonds;
136.32  (7) applications for governmental bonds; and
136.33  (8) applications for redevelopment bonds.
137.1   EFFECTIVE DATE.This section is effective July 1, 2006.

137.2       Sec. 20. UNIFIED POOL; OFFICE OF HIGHER EDUCATION TOTAL 
137.3   ALLOCATION.
137.4   Notwithstanding Minnesota Statutes, section 474A.091, subdivision 3, paragraph (i), 
137.5   the total amount of allocations for student loan bonds from the unified pool in calendar 
137.6   year 2006 may not exceed 50 percent of the total in the unified pool on the day after the 
137.7   last Monday in July, 2006.
137.8   EFFECTIVE DATE.This section is effective July 1, 2006.

137.9       Sec. 21. CITY OF PENNOCK; ACQUIRE REAL ESTATE, EXPEND CITY 
137.10  FUNDS, AND CONVEY TO PRIVATE ENTITY.
137.11      Subdivision 1. Authorization. The city of Pennock may purchase a parcel of real 
137.12  estate in the city consisting of four city lots and an appurtenant building formerly operated 
137.13  as a convenience store known as Phil's Corner on the terms and conditions that may be 
137.14  agreed upon between the city and the current owner of the parcel, and the city may expend 
137.15  city funds to make necessary improvements to the building. Once acquired and improved 
137.16  and in order to ensure the continued economic vitality of the city, the city may convey 
137.17  the parcel and building by sale or lease to a private person, firm, partnership, corporation 
137.18  or other entity for a nominal consideration or on whatever terms and conditions the 
137.19  city and the private entity may agree upon in order for the building to be operated as a 
137.20  commercial establishment.
137.21      Subd. 2. Bonds. The city of Pennock may issue general obligation bonds of the 
137.22  city in the aggregate principal amount not to exceed $250,000 to finance the project 
137.23  authorized by subdivision 1. The bonds must be issued in compliance with Minnesota 
137.24  Statutes, chapter 475, except that a referendum under Minnesota Statutes, section 475.58, 
137.25  is not required. The debt represented by the bonds is not included in computing any debt 
137.26  limitations applicable to the city, and the levy of taxes required by Minnesota Statutes, 
137.27  section 475.61, to pay the principal of and interest on the bonds is not subject to any levy 
137.28  limitation otherwise applicable to the city.
137.29  EFFECTIVE DATE.Under Minnesota Statutes 2004, section 645.023, subdivision 
137.30  1, paragraph (a), this section is effective without local approval on the day following 
137.31  final enactment.

137.32      Sec. 22. APPLICATION.
138.1   Section 12 applies in the counties of Anoka, Carver, Dakota, Hennepin, Ramsey, 
138.2   Scott, and Washington.

138.3                                          ARTICLE 11
138.4                                      LOCAL DEVELOPMENT

138.5       Section 1. Minnesota Statutes 2004, section 383A.80, subdivision 4, is amended to 
138.6   read:
138.7       Subd. 4. Expiration. The authority to impose the tax under this section expires 
138.8   January 1, 2008 2013.

138.9       Sec. 2. Minnesota Statutes 2004, section 383B.80, subdivision 4, is amended to read:
138.10      Subd. 4. Expiration. The authority to impose the tax under this section expires 
138.11  January 1, 2008 2013.

138.12      Sec. 3. [383C.558] ST. LOUIS COUNTY DEED AND MORTGAGE TAX.
138.13      Subdivision 1. Authority to impose; rate. (a) The governing body of St. Louis 
138.14  County may impose a mortgage registry and deed tax.
138.15  (b) The rate of the mortgage registry tax equals .0001 of the principal.
138.16  (c) The rate of the deed tax equals .0001 of the amount.
138.17      Subd. 2. General law provisions apply. The taxes under this section apply to 
138.18  the same base and must be imposed, collected, administered, and enforced in the same 
138.19  manner as provided under chapter 287 for the state mortgage registry and deed taxes. 
138.20  All the provisions of chapter 287 apply to these taxes, except the rate is as specified in 
138.21  subdivision 1, the term "St. Louis County" must be substituted for "the state," and the 
138.22  revenue must be deposited as provided in subdivision 3.
138.23      Subd. 3. Deposit of revenues. All revenues from the tax are for the use of the 
138.24  St. Louis County Board of Commissioners and must be deposited in the county's 
138.25  environmental response fund under section 383C.559.
138.26      Subd. 4. Expiration. The authority to impose the tax under this section expires 
138.27  January 1, 2013.

138.28      Sec. 4. [383C.559] ST. LOUIS COUNTY ENVIRONMENTAL RESPONSE 
138.29  FUND.
138.30      Subdivision 1. Creation. An environmental response fund is created for the 
138.31  purposes specified in this section. The taxes imposed by section 383C.558 must be 
139.1   deposited in the fund. The board of county commissioners shall administer the fund either 
139.2   as a county board, a housing and redevelopment authority, or a regional rail authority.
139.3       Subd. 2. Uses of fund. The fund created in subdivision 1 must be used for the 
139.4   following purposes:
139.5   (1) acquisition through purchase or condemnation of lands or property which are 
139.6   polluted or contaminated with hazardous substances;
139.7   (2) paying the costs associated with indemnifying or holding harmless the 
139.8   entity taking title to lands or property from any liability arising out of the ownership, 
139.9   remediation, or use of the land or property;
139.10  (3) paying for the costs of remediating the acquired land or property;
139.11  (4) paying the costs associated with remediating lands or property which are polluted 
139.12  or contaminated with hazardous substances; or
139.13  (5) paying for the costs associated with improving the property for economic 
139.14  development, recreational, housing, transportation or rail traffic.
139.15      Subd. 3. Matching funds. In expending funds under this section, the county shall 
139.16  seek matching funds from contamination cleanup funds administered by the commissioner 
139.17  of the Department of Employment and Economic Development, the federal government, 
139.18  the private sector, and any other source.
139.19      Subd. 4. Bonds. The county may pledge the proceeds from the taxes imposed by 
139.20  section  383C.558  to bonds issued under this chapter and chapters 398A, 462, 469, and 475. 
139.21      Subd. 5. Land sales. Land or property acquired under this section may be resold 
139.22  at fair market value. Proceeds from the sale of the land must be deposited in the 
139.23  environmental response fund.
139.24      Subd. 6. DOT assistance. The commissioner of transportation shall collaborate with 
139.25  the county and any affected municipality by providing technical assistance and support in 
139.26  cleaning up a contaminated site related to a trunk highway or railroad improvement.

139.27      Sec. 5. [383D.75] COUNTY DEED AND MORTGAGE TAX.
139.28      Subdivision 1. Authority to impose; rate. (a) The governing body of Dakota 
139.29  County may impose a mortgage registry and deed tax.
139.30  (b) The rate of the mortgage registry tax equals .0001 of the principal.
139.31  (c) The rate of the deed tax equals .0001 of the amount.
139.32      Subd. 2. General law provisions apply. The taxes under this section apply to 
139.33  the same base and must be imposed, collected, administered, and enforced in the same 
139.34  manner as provided under chapter 287 for the state mortgage registry and deed taxes. 
139.35  All the provisions of chapter 287 apply to these taxes, except the rate is as specified in 
140.1   subdivision 1, the term "Dakota County" must be substituted for "the state," and the 
140.2   revenue must be deposited as provided in subdivision 3.
140.3       Subd. 3. Deposit of revenues. All revenues from the tax are for the use of 
140.4   the Dakota County Board of Commissioners and must be deposited in the county's 
140.5   environmental response fund under section  383D.76.
140.6       Subd. 4. Expiration. The authority to impose the tax under this section expires 
140.7   January 1, 2013.

140.8       Sec. 6. [383D.76] ENVIRONMENTAL RESPONSE FUND.
140.9       Subdivision 1. Creation. An environmental response fund is created for the purposes 
140.10  specified in this section. The taxes imposed by section 383D.75 must be deposited in the 
140.11  fund. The Board of County Commissioners shall administer the fund either as a county 
140.12  board, a housing and redevelopment authority, or a regional rail authority.
140.13      Subd. 2. Uses of fund. The fund created in subdivision 1 must be used for the 
140.14  following purposes:
140.15  (1) acquisition through purchase or condemnation of lands or property which are 
140.16  polluted or contaminated with hazardous substances;
140.17  (2) paying the costs associated with indemnifying or holding harmless the 
140.18  entity taking title to lands or property from any liability arising out of the ownership, 
140.19  remediation, or use of the land or property;
140.20  (3) paying for the costs of remediating the acquired land or property;
140.21  (4) paying the costs associated with remediating lands or property which are polluted 
140.22  or contaminated with hazardous substances; or
140.23  (5) paying for the costs associated with improving the property for economic 
140.24  development, recreational, housing, transportation or rail traffic.
140.25      Subd. 3. Matching funds. In expending funds under this section, the county shall 
140.26  seek matching funds from contamination cleanup funds administered by the commissioner 
140.27  of the Department of Employment and Economic Development, the Metropolitan Council, 
140.28  the federal government, the private sector, and any other source.
140.29      Subd. 4. Bonds. The county may pledge the proceeds from the taxes imposed by 
140.30  section  383D.75 to bonds issued under this chapter and chapters 398A, 462, 469, and 475. 
140.31      Subd. 5. Land sales. Land or property acquired under this section may be resold 
140.32  at fair market value. Proceeds from the sale of the land must be deposited in the 
140.33  environmental response fund.
141.1       Subd. 6. DOT assistance. The commissioner of transportation shall collaborate with 
141.2   the county and any affected municipality by providing technical assistance and support in 
141.3   cleaning up a contaminated site related to a trunk highway or railroad improvement.

141.4       Sec. 7. Minnesota Statutes 2005 Supplement, section 469.175, subdivision 2, is 
141.5   amended to read:
141.6       Subd. 2. Consultations; comment and filing. (a) Before formation of a tax 
141.7   increment financing district, the authority shall provide the county auditor and clerk of 
141.8   the school board with the proposed tax increment financing plan for the district and the 
141.9   authority's estimate of the fiscal and economic implications of the proposed tax increment 
141.10  financing district. The authority must provide the proposed tax increment financing plan 
141.11  and the information on the fiscal and economic implications of the plan to the county 
141.12  auditor and the clerk of the school district board at least 30 days before the public hearing 
141.13  required by subdivision 3. The information on the fiscal and economic implications may 
141.14  be included in or as part of the tax increment financing plan. The county auditor and 
141.15  clerk of the school board shall provide copies to the members of the boards, as directed 
141.16  by their respective boards. The 30-day requirement is waived if the boards of the county 
141.17  and school district submit written comments on the proposal and any modification of the 
141.18  proposal to the authority after receipt of the information.
141.19  (b) For purposes of this subdivision, "fiscal and economic implications of the 
141.20  proposed tax increment financing district" includes:
141.21  (1) an estimate of the total amount of tax increment that will be generated over the 
141.22  life of the district;
141.23  (2) a description of the probable impact of the district on city-provided services such 
141.24  as police and fire protection, public infrastructure, and borrowing costs the impact of 
141.25  any general obligation tax increment bonds attributable to the district upon the ability to 
141.26  issue other debt for general fund purposes;
141.27  (3) the estimated amount of tax increments over the life of the district that would 
141.28  be attributable to school district levies, assuming the school district's share of the total 
141.29  local tax rate for all taxing jurisdictions remained the same;
141.30  (4) the estimated amount of tax increments over the life of the district that would be 
141.31  attributable to county levies, assuming the county's share of the total local tax rate for all 
141.32  taxing jurisdictions remained the same; and
141.33  (5) any additional information regarding the size, timing, or type of development in 
141.34  the district requested by the county or the school district that would enable it to determine 
141.35  additional costs that will accrue to it due to the development proposed for the district. 
142.1   If a county or school district has not adopted standard questions in a written policy on 
142.2   information requested for fiscal and economic implications, a county or school district 
142.3   must request additional information no later than 15 days after receipt of the tax increment 
142.4   financing plan and the request does not require an additional 30 days of notice before 
142.5   the public hearing.
142.6   EFFECTIVE DATE.This section is effective for proposed tax increment financing 
142.7   plans provided after June 30, 2006.

142.8       Sec. 8. Minnesota Statutes 2004, section 469.175, subdivision 4, is amended to read:
142.9       Subd. 4. Modification of plan. (a) A tax increment financing plan may be modified 
142.10  by an authority.
142.11  (b) The authority may make the following modifications only upon the notice and 
142.12  after the discussion, public hearing, and findings required for approval of the original plan:
142.13  (1) any reduction or enlargement of geographic area of the project or tax increment 
142.14  financing district that does not meet the requirements of paragraph (e);
142.15  (2) increase in amount of bonded indebtedness to be incurred;
142.16  (3) a determination to capitalize interest on the debt if that determination was not a 
142.17  part of the original plan, or to increase or decrease the amount of interest on the debt to 
142.18  be capitalized;
142.19  (4) increase in the portion of the captured net tax capacity to be retained by the 
142.20  authority;
142.21  (5) increase in the estimate of the cost of the project, including administrative 
142.22  expenses, that will be paid or financed with tax increment from the district; or
142.23  (6) designation of additional property to be acquired by the authority.
142.24  (c) If an authority changes the type of district to another type of district, this change 
142.25  is not a modification but requires the authority to follow the procedure set forth in sections  
142.26  469.174 to  469.179 for adoption of a new plan, including certification of the net tax 
142.27  capacity of the district by the county auditor. 
142.28  (d) If a redevelopment district or a renewal and renovation district is enlarged, 
142.29  the reasons and supporting facts for the determination that the addition to the district 
142.30  meets the criteria of section  469.174, subdivision 10, paragraph (a), clauses (1) and (2), 
142.31  or subdivision 10a, must be documented. 
142.32  (e) The requirements of paragraph (b) do not apply if (1) the only modification is 
142.33  elimination of parcels from the project or district and (2)(A) the current net tax capacity 
142.34  of the parcels eliminated from the district equals or exceeds the net tax capacity of 
142.35  those parcels in the district's original net tax capacity or (B) the authority agrees that, 
143.1   notwithstanding section  469.177, subdivision 1, the original net tax capacity will be 
143.2   reduced by no more than the current net tax capacity of the parcels eliminated from the 
143.3   district. The authority must notify the county auditor of any modification that reduces or 
143.4   enlarges the geographic area of a district or a project area. 
143.5   (f) The geographic area of a tax increment financing district may be reduced, but 
143.6   shall not be enlarged after five years following the date of certification of the original net 
143.7   tax capacity by the county auditor or after August 1, 1984, for tax increment financing 
143.8   districts authorized prior to August 1, 1979.
143.9   EFFECTIVE DATE.This section is effective for all districts, regardless of when 
143.10  the request for certification was made, and applies to plan amendments adopted after the 
143.11  day following final enactment.

143.12      Sec. 9. Minnesota Statutes 2005 Supplement, section 469.175, subdivision 5, is 
143.13  amended to read:
143.14      Subd. 5. Annual disclosure. An annual statement showing for each district the 
143.15  information required to be reported under subdivision 6, paragraph (c), clauses (1), (2), 
143.16  (3), (11), (12), (18), and (19); the amounts of tax increment received and expended in the 
143.17  reporting period; and any additional information the authority deems necessary must be 
143.18  published in a newspaper of general circulation in the municipality that approved the 
143.19  tax increment financing plan. The annual statement must inform readers that additional 
143.20  information regarding each district may be obtained from the authority, and must explain 
143.21  how the additional information may be requested. The authority must publish the annual 
143.22  statement for a year no later than August 15 of the next year. The authority must identify 
143.23  the newspaper of general circulation in the municipality to which the annual statement has 
143.24  been or will be submitted for publication and provide a copy of the annual statement to the 
143.25  county board, the county auditor, the school board, the state auditor, and, if the authority is 
143.26  other than the municipality, the governing body of the municipality on or before August 
143.27  1 of the year in which the statement must be published.
143.28  The disclosure requirements imposed by this subdivision apply to districts certified 
143.29  before, on, or after August 1, 1979.
143.30  EFFECTIVE DATE.This section is effective for disclosures required to be 
143.31  provided after June 30, 2006.

143.32      Sec. 10. Minnesota Statutes 2004, section 469.176, subdivision 1, is amended to read:
144.1       Subdivision 1. Duration of tax increment financing districts. (a) Subject to the 
144.2   limitations contained in subdivisions 1a to 1f, any tax increment financing district as to 
144.3   which bonds are outstanding, payment for which the tax increment and other revenues 
144.4   have been pledged, shall remain in existence at least as long as the bonds continue to be 
144.5   outstanding. The municipality may, at the time of approval of the initial tax increment 
144.6   financing plan, provide for a shorter maximum duration limit than specified in subdivisions 
144.7   1a to 1f. The specified limit applies in place of the otherwise applicable limit, unless the 
144.8   authority modifies the plan following the procedures under section 469.175, subdivision 4, 
144.9   paragraph (b).
144.10  (b) The tax increment pledged to the payment of the bonds and interest thereon may 
144.11  be discharged and the tax increment financing district may be terminated if sufficient funds 
144.12  have been irrevocably deposited in the debt service fund or other escrow account held in 
144.13  trust for all outstanding bonds to provide for the payment of the bonds at maturity or date 
144.14  of redemption and interest thereon to the maturity or redemption date.
144.15  (c) For bonds issued pursuant to section  469.178, subdivisions 2 and 3, the full 
144.16  faith and credit and any taxing powers of the municipality or authority are pledged to the 
144.17  payment of the bonds until the principal of and interest on the bonds has been paid in full. 
144.18  EFFECTIVE DATE.This section is effective for all districts, regardless of when 
144.19  the request for certification was made, and applies to plan amendments adopted after the 
144.20  day following final enactment.

144.21      Sec. 11. Minnesota Statutes 2004, section 469.176, subdivision 3, is amended to read:
144.22      Subd. 3. Limitation on administrative expenses. (a) For districts for which 
144.23  certification was requested before August 1, 1979, or after June 30, 1982 and before 
144.24  August 1, 2001, no tax increment shall be used to pay any administrative expenses for 
144.25  a project which exceed ten percent of the total estimated tax increment expenditures 
144.26  authorized by the tax increment financing plan or the total tax increment expenditures 
144.27  for the project, whichever is less.
144.28  (b) For districts for which certification was requested after July 31, 1979, and before 
144.29  July 1, 1982, no tax increment shall be used to pay administrative expenses, as defined in 
144.30  Minnesota Statutes 1980, section  273.73, for a district which exceeds five percent of the 
144.31  total tax increment expenditures authorized by the tax increment financing plan or the total 
144.32  estimated tax increment expenditures for the district, whichever is less. 
144.33  (c) For districts for which certification was requested after July 31, 2001, no tax 
144.34  increment may be used to pay any administrative expenses for a project which exceed 
144.35  ten percent of total estimated tax increment expenditures authorized by the tax increment 
145.1   financing plan or the total tax increments, as defined in section  469.174, subdivision 25, 
145.2   clause (1), from the district, whichever is less. 
145.3   (d) No administrative expenses or consulting costs incurred before certification of a 
145.4   district may be paid from tax increments.

145.5       Sec. 12. Minnesota Statutes 2005 Supplement, section 469.1763, subdivision 2, 
145.6   is amended to read:
145.7       Subd. 2. Expenditures outside district. (a) For each tax increment financing 
145.8   district, an amount equal to at least 75 percent of the total revenue derived from tax 
145.9   increments paid by properties in the district must be expended on activities in the district 
145.10  or to pay bonds, to the extent that the proceeds of the bonds were used to finance activities 
145.11  in the district or to pay, or secure payment of, debt service on credit enhanced bonds. 
145.12  For districts, other than redevelopment districts for which the request for certification 
145.13  was made after June 30, 1995, the in-district percentage for purposes of the preceding 
145.14  sentence is 80 percent. Not more than 25 percent of the total revenue derived from tax 
145.15  increments paid by properties in the district may be expended, through a development fund 
145.16  or otherwise, on activities outside of the district but within the defined geographic area of 
145.17  the project except to pay, or secure payment of, debt service on credit enhanced bonds. 
145.18  For districts, other than redevelopment districts for which the request for certification was 
145.19  made after June 30, 1995, the pooling percentage for purposes of the preceding sentence is 
145.20  20 percent. The revenue derived from tax increments for the district that are expended on 
145.21  costs under section 469.176, subdivision 4h, paragraph (b), may be deducted first before 
145.22  calculating the percentages that must be expended within and without the district.
145.23  (b) In the case of a housing district, a housing project, as defined in section 469.174, 
145.24  subdivision 11, is an activity in the district.
145.25  (c) All administrative expenses are for activities outside of the district, except that 
145.26  if the only expenses for activities outside of the district under this subdivision are for 
145.27  the purposes described in paragraph (d), administrative expenses will be considered as 
145.28  expenditures for activities in the district.
145.29  (d) The authority may elect, in the tax increment financing plan for the district, 
145.30  to increase by up to ten percentage points the permitted amount of expenditures for 
145.31  activities located outside the geographic area of the district under paragraph (a). As 
145.32  permitted by section 469.176, subdivision 4k, the expenditures, including the permitted 
145.33  expenditures under paragraph (a), need not be made within the geographic area of the 
145.34  project. Expenditures that meet the requirements of this paragraph are legally permitted 
146.1   expenditures of the district, notwithstanding section 469.176, subdivisions 4b, 4c, and 4j. 
146.2   To qualify for the increase under this paragraph, the expenditures must:
146.3   (1) be used exclusively to assist housing that meets the requirement for a qualified 
146.4   low-income building, as that term is used in section 42 of the Internal Revenue Code;
146.5   (2) not exceed the qualified basis of the housing, as defined under section 42(c) of 
146.6   the Internal Revenue Code, less the amount of any credit allowed under section 42 of 
146.7   the Internal Revenue Code; and
146.8   (3) be used to:
146.9   (i) acquire and prepare the site of the housing;
146.10  (ii) acquire, construct, or rehabilitate the housing; or
146.11  (iii) make public improvements directly related to the housing.
146.12  (e) For a district created within a biotechnology and health sciences industry zone 
146.13  as defined in section 469.330, subdivision 6, or for an existing district located within 
146.14  such a zone,  tax increment derived from such a district may be expended outside of 
146.15  the district but within the zone only for expenditures required for the construction of 
146.16  public infrastructure necessary to support the activities of the zone. Public infrastructure 
146.17  expenditures are considered as expenditures for activities within the district.

146.18      Sec. 13. Minnesota Statutes 2004, section 469.1763, subdivision 3, is amended to read:
146.19      Subd. 3. Five-year rule. (a) Revenues derived from tax increments are considered 
146.20  to have been expended on an activity within the district under subdivision 2 only if one 
146.21  of the following occurs:
146.22  (1) before or within five years after certification of the district, the revenues are 
146.23  actually paid to a third party with respect to the activity;
146.24  (2) bonds, the proceeds of which must be used to finance the activity, are issued and 
146.25  sold to a third party before or within five years after certification, the revenues are spent 
146.26  to repay the bonds, and the proceeds of the bonds either are, on the date of issuance, 
146.27  reasonably expected to be spent before the end of the later of (i) the five-year period, or 
146.28  (ii) a reasonable temporary period within the meaning of the use of that term under section 
146.29  148(c)(1) of the Internal Revenue Code, or are deposited in a reasonably required reserve 
146.30  or replacement fund;
146.31  (3) binding contracts with a third party are entered into for performance of the 
146.32  activity before or within five years after certification of the district and the revenues are 
146.33  spent under the contractual obligation;
147.1   (4) costs with respect to the activity are paid before or within five years after 
147.2   certification of the district and the revenues are spent to reimburse a party for payment 
147.3   of the costs, including interest on unreimbursed costs; or
147.4   (5) expenditures are made for housing purposes as permitted by subdivision 2, 
147.5   paragraph paragraphs (b) and (d), or for public infrastructure purposes within a zone as 
147.6   permitted by subdivision 2, paragraph (e).
147.7   (b) For purposes of this subdivision, bonds include subsequent refunding bonds if 
147.8   the original refunded bonds meet the requirements of paragraph (a), clause (2).

147.9       Sec. 14. Minnesota Statutes 2004, section 469.1763, subdivision 4, is amended to read:
147.10      Subd. 4. Use of revenues for decertification. (a) In each year beginning with the 
147.11  sixth year following certification of the district, if the applicable in-district percent of the 
147.12  revenues derived from tax increments paid by properties in the district exceeds the amount 
147.13  of expenditures that have been made for costs permitted under subdivision 3, an amount 
147.14  equal to the difference between the in-district percent of the revenues derived from tax 
147.15  increments paid by properties in the district and the amount of expenditures that have 
147.16  been made for costs permitted under subdivision 3 must be used and only used to pay or 
147.17  defease the following or be set aside to pay the following:
147.18  (1) outstanding bonds, as defined in subdivision 3, paragraphs (a), clause (2), and (b);
147.19  (2) contracts, as defined in subdivision 3, paragraph (a), clauses (3) and (4); or
147.20  (3) credit enhanced bonds to which the revenues derived from tax increments are 
147.21  pledged, but only to the extent that revenues of the district for which the credit enhanced 
147.22  bonds were issued are insufficient to pay the bonds and to the extent that the increments 
147.23  from the applicable pooling percent share for the district are insufficient; or
147.24  (4) the amount provided by the tax increment financing plan to be paid under 
147.25  subdivision 2, paragraphs (b), (d), and (e).
147.26  (b) The district must be decertified and the pledge of tax increment discharged 
147.27  when the outstanding bonds have been defeased and when sufficient money has been set 
147.28  aside to pay, based on the increment to be collected through the end of the calendar year, 
147.29  the following amounts: 
147.30  (1) contractual obligations as defined in subdivision 3, paragraph (a), clauses (3) and 
147.31  (4), the district must be decertified and the pledge of tax increment discharged.;
147.32  (2) the amount specified in the tax increment financing plan for activities qualifying 
147.33  under subdivision 2, paragraph (b), that have not been funded with the proceeds of 
147.34  bonds; and
148.1   (3) the additional expenditures permitted by the tax increment financing plan for 
148.2   housing activities under an election under subdivision 2, paragraph (d), that have not 
148.3   been funded with the proceeds of bonds.
148.4   EFFECTIVE DATE.This section is effective for districts for which the request for 
148.5   certification was made after April 30, 1990.

148.6       Sec. 15. Minnesota Statutes 2005 Supplement, section 469.1763, subdivision 6, 
148.7   is amended to read:
148.8       Subd. 6. Pooling permitted for deficits. (a) This subdivision applies only to 
148.9   districts for which the request for certification was made before August 1, 2001, and 
148.10  without regard to whether the request for certification was made prior to August 1, 1979.
148.11  (b) The municipality for the district may transfer available increments from another 
148.12  tax increment financing district located in the municipality, if the transfer is necessary to 
148.13  eliminate a deficit in the district to which the increments are transferred. The municipality 
148.14  may transfer increments as provided by this subdivision without regard to whether the 
148.15  transfer or expenditure is authorized by the tax increment financing plan for the district 
148.16  from which the transfer is made. A deficit in the district for purposes of this subdivision 
148.17  means the lesser of the following two amounts:
148.18  (1)(i) the amount due during the calendar year to pay preexisting obligations of 
148.19  the district; minus
148.20  (ii) the total increments collected or to be collected from properties located within 
148.21  the district that are available for the calendar year including amounts collected in prior 
148.22  years that are currently available; plus
148.23  (iii) total increments from properties located in other districts in the municipality 
148.24  including amounts collected in prior years that are available to be used to meet the 
148.25  district's obligations under this section, excluding this subdivision, or other provisions of 
148.26  law (but excluding a special tax under section 469.1791 and the grant program under Laws 
148.27  1997, chapter 231, article 1, section 19, or Laws 2001, First Special Session chapter 5); or
148.28  (2) the reduction in increments collected from properties located in the district for 
148.29  the calendar year as a result of the changes in class rates in Laws 1997, chapter 231, article 
148.30  1; Laws 1998, chapter 389, article 2; and Laws 1999, chapter 243, and Laws 2001, First 
148.31  Special Session chapter 5, or the elimination of the general education tax levy under 
148.32  Laws 2001, First Special Session chapter 5.
148.33  The authority may compute the deficit amount under clause (1) only (without regard 
148.34  to the limit under clause (2)) if the authority makes an irrevocable commitment, by 
148.35  resolution, to use increments from the district to which increments are to be transferred and 
149.1   any transferred increments are only used to pay preexisting obligations and administrative 
149.2   expenses for the district that are required to be paid under section 469.176, subdivision 
149.3   4h, paragraph (a).
149.4   (c) A preexisting obligation means:
149.5   (1) bonds issued and sold before August 1, 2001, or bonds issued pursuant to a 
149.6   binding contract requiring the issuance of bonds entered into before July 1, 2001, and 
149.7   bonds issued to refund such bonds or to reimburse expenditures made in conjunction with 
149.8   a signed contractual agreement entered into before August 1, 2001, to the extent that the 
149.9   bonds are secured by a pledge of increments from the tax increment financing district; and
149.10  (2) binding contracts entered into before August 1, 2001, to the extent that the 
149.11  contracts require payments secured by a pledge of increments from the tax increment 
149.12  financing district.
149.13  (d) The municipality may require a development authority, other than a seaway port 
149.14  authority, to transfer available increments including amounts collected in prior years that 
149.15  are currently available for any of its tax increment financing districts in the municipality to 
149.16  make up an insufficiency in another district in the municipality, regardless of whether the 
149.17  district was established by the development authority or another development authority. 
149.18  This authority applies notwithstanding any law to the contrary, but applies only to a 
149.19  development authority that:
149.20  (1) was established by the municipality; or
149.21  (2) the governing body of which is appointed, in whole or part, by the municipality 
149.22  or an officer of the municipality or which consists, in whole or part, of members of 
149.23  the governing body of the municipality. The municipality may use this authority only 
149.24  after it has first used all available increments of the receiving development authority to 
149.25  eliminate the insufficiency and exercised any permitted action under section 469.1792, 
149.26  subdivision 3, for preexisting districts of the receiving development authority to eliminate 
149.27  the insufficiency.
149.28  (e) The authority under this subdivision to spend tax increments outside of the area 
149.29  of the district from which the tax increments were collected:
149.30  (1) is an exception to the restrictions under section 469.176, subdivisions 4b, 4c, 
149.31  4d, 4e, 4i, and 4j; the expenditure limits under section 469.176, subdivision 1c; and the 
149.32  other provisions of this section; and the percentage restrictions under subdivision 2 must 
149.33  be calculated after deducting increments spent under this subdivision from the total 
149.34  increments for the district; and
150.1   (2) applies notwithstanding the provisions of the Tax Increment Financing Act in 
150.2   effect for districts for which the request for certification was made before June 30, 1982, 
150.3   or any other law to the contrary.
150.4   (f) If a preexisting obligation requires the development authority to pay an amount 
150.5   that is limited to the increment from the district or a specific development within the 
150.6   district and if the obligation requires paying a higher amount to the extent that increments 
150.7   are available, the municipality may determine that the amount due under the preexisting 
150.8   obligation equals the higher amount and may authorize the transfer of increments 
150.9   under this subdivision to pay up to the higher amount. The existence of a guarantee of 
150.10  obligations by the individual or entity that would receive the payment under this paragraph 
150.11  is disregarded in the determination of eligibility to pool under this subdivision. The 
150.12  authority to transfer increments under this paragraph may only be used to the extent 
150.13  that the payment of all other preexisting obligations in the municipality due during the 
150.14  calendar year have been satisfied.
150.15  (g) For transfers of increments made in calendar year 2005 and later, the reduction in 
150.16  increments as a result of the elimination of the general education tax levy for purposes of 
150.17  paragraph (b), clause (2), for a taxes payable year equals the general education tax rate 
150.18  for the school district under Minnesota Statutes 2000, section 273.1382, subdivision 1, 
150.19  for taxes payable in 2001, multiplied by the captured tax capacity of the district for the 
150.20  current taxes payable year.
150.21  EFFECTIVE DATE.This section is effective for all districts, regardless of when 
150.22  the request for certification was made, and applies retroactively to any transfer made 
150.23  under subdivision 6.

150.24      Sec. 16. Minnesota Statutes 2005 Supplement, section 469.177, subdivision 1, is 
150.25  amended to read:
150.26      Subdivision 1. Original net tax capacity. (a) Upon or after adoption of a tax 
150.27  increment financing plan, the auditor of any county in which the district is situated shall, 
150.28  upon request of the authority, certify the original net tax capacity of the tax increment 
150.29  financing district and that portion of the district overlying any subdistrict as described in 
150.30  the tax increment financing plan and shall certify in each year thereafter the amount by 
150.31  which the original net tax capacity has increased or decreased as a result of a change in tax 
150.32  exempt status of property within the district and any subdistrict, reduction or enlargement 
150.33  of the district or changes pursuant to subdivision 4.
150.34  (b) If the classification under section 273.13 of property located in a district changes 
150.35  to a classification that has a different assessment ratio, the original net tax capacity of that 
151.1   property must be redetermined at the time when its use is changed as if the property had 
151.2   originally been classified in the same class in which it is classified after its use is changed.
151.3   (c) The amount to be added to the original net tax capacity of the district as a result of 
151.4   previously tax exempt real property within the district becoming taxable equals the net tax 
151.5   capacity of the real property as most recently assessed pursuant to section 273.18 or, if that 
151.6   assessment was made more than one year prior to the date of title transfer rendering the 
151.7   property taxable, the net tax capacity assessed by the assessor at the time of the transfer. 
151.8   If improvements are made to tax exempt property after certification of the municipality 
151.9   approves the district and before the parcel becomes taxable, the assessor shall, at the 
151.10  request of the authority, separately assess the estimated market value of the improvements. 
151.11  If the property becomes taxable, the county auditor shall add to original net tax capacity, 
151.12  the net tax capacity of the parcel, excluding the separately assessed improvements. If 
151.13  substantial taxable improvements were made to a parcel after certification of the district 
151.14  and if the property later becomes tax exempt, in whole or part, as a result of the authority 
151.15  acquiring the property through foreclosure or exercise of remedies under a lease or other 
151.16  revenue agreement or as a result of tax forfeiture, the amount to be added to the original 
151.17  net tax capacity of the district as a result of the property again becoming taxable is the 
151.18  amount of the parcel's value that was included in original net tax capacity when the parcel 
151.19  was first certified. The amount to be added to the original net tax capacity of the district 
151.20  as a result of enlargements equals the net tax capacity of the added real property as most 
151.21  recently certified by the commissioner of revenue as of the date of modification of the tax 
151.22  increment financing plan pursuant to section 469.175, subdivision 4.
151.23  (d) If the net tax capacity of a property increases because the property no longer 
151.24  qualifies under the Minnesota Agricultural Property Tax Law, section 273.111; the 
151.25  Minnesota Open Space Property Tax Law, section 273.112; or the Metropolitan 
151.26  Agricultural Preserves Act, chapter 473H, or because platted, unimproved property is 
151.27  improved or market value is increased after approval of the plat under section 273.11, 
151.28  subdivision 14, 14a, or 14b, the increase in net tax capacity must be added to the original 
151.29  net tax capacity.
151.30  (e) The amount to be subtracted from the original net tax capacity of the district 
151.31  as a result of previously taxable real property within the district becoming tax exempt, 
151.32  or a reduction in the geographic area of the district, shall be the amount of original net 
151.33  tax capacity initially attributed to the property becoming tax exempt or being removed 
151.34  from the district. If the net tax capacity of property located within the tax increment 
151.35  financing district is reduced by reason of a court-ordered abatement, stipulation agreement, 
151.36  voluntary abatement made by the assessor or auditor or by order of the commissioner of 
152.1   revenue, the reduction shall be applied to the original net tax capacity of the district when 
152.2   the property upon which the abatement is made has not been improved since the date of 
152.3   certification of the district and to the captured net tax capacity of the district in each year 
152.4   thereafter when the abatement relates to improvements made after the date of certification. 
152.5   The county auditor may specify reasonable form and content of the request for certification 
152.6   of the authority and any modification thereof pursuant to section 469.175, subdivision 4.
152.7   (f) If a parcel of property contained a substandard building that was demolished 
152.8   or removed and if the authority elects to treat the parcel as occupied by a substandard 
152.9   building under section 469.174, subdivision 10, paragraph (b), the auditor shall certify the 
152.10  original net tax capacity of the parcel using the greater of (1) the current net tax capacity 
152.11  of the parcel, or (2) the estimated market value of the parcel for the year in which the 
152.12  building was demolished or removed, but applying the class rates for the current year.
152.13  (g) For a redevelopment district qualifying under section 469.174, subdivision 10, 
152.14  paragraph (a), clause (4), as a qualified disaster area, the auditor shall certify the value of 
152.15  the land as the original tax capacity for any parcel in the district that contains a building 
152.16  that suffered substantial damage as a result of the disaster or emergency.
152.17  EFFECTIVE DATE.This section is effective for improvements made to tax 
152.18  exempt property made after June 30, 2006.

152.19      Sec. 17. Minnesota Statutes 2004, section 469.1771, subdivision 2a, is amended to 
152.20  read:
152.21      Subd. 2a. Suspension of distribution of tax increment. (a) If an authority fails to 
152.22  make a disclosure or to submit a report containing the information required by section  
152.23  469.175, subdivisions 5 and 6, regarding a tax increment financing district within the 
152.24  time provided in section  469.175, subdivisions 5 and 6, the state auditor shall mail to 
152.25  the authority a written notice that it or the municipality has failed to make the required 
152.26  disclosure or to submit a required report with respect to a particular district. The state 
152.27  auditor shall mail the notice on or before the third Tuesday of August of the year in which 
152.28  the disclosure or report was required to be made or submitted. The notice must describe 
152.29  the consequences of failing to disclose or submit a report as provided in paragraph (b). 
152.30  If the state auditor has not received a copy of a disclosure or a report described in this 
152.31  paragraph on or before the third Tuesday of November first day of October of the year 
152.32  in which the disclosure or report was required to be made or submitted, the state auditor 
152.33  shall mail a written notice to the county auditor to hold the distribution of tax increment 
152.34  from a particular district. 
153.1   (b) Upon receiving written notice from the state auditor to hold the distribution of 
153.2   tax increment, the county auditor shall hold:
153.3   (1) 25 100 percent of the amount of tax increment that otherwise would be 
153.4   distributed, if the distribution is made after the third Friday in November first day of 
153.5   October but during the year in which the disclosure or report was required to be made or 
153.6   submitted; or
153.7   (2) 100 percent of the amount of tax increment that otherwise would be distributed, 
153.8   if the distribution is made after December 31 of the year in which the disclosure or report 
153.9   was required to be made or submitted.
153.10  (c) Upon receiving the copy of the disclosure and all of the reports described in 
153.11  paragraph (a) with respect to a district regarding which the state auditor has mailed to the 
153.12  county auditor a written notice to hold distribution of tax increment, the state auditor shall 
153.13  mail to the county auditor a written notice lifting the hold and authorizing the county 
153.14  auditor to distribute to the authority or municipality any tax increment that the county 
153.15  auditor had held pursuant to paragraph (b). The state auditor shall mail the written notice 
153.16  required by this paragraph within five working days after receiving the last outstanding 
153.17  item. The county auditor shall distribute the tax increment to the authority or municipality 
153.18  within 15 working days after receiving the written notice required by this paragraph.
153.19  (d) Notwithstanding any law to the contrary, any interest that accrues on tax 
153.20  increment while it is being held by the county auditor pursuant to paragraph (b) is not tax 
153.21  increment and may be retained by the county.
153.22  (e) For purposes of sections  469.176, subdivisions 1a to 1g, and  469.177, subdivision 
153.23  11, tax increment being held by the county auditor pursuant to paragraph (b) is considered 
153.24  distributed to or received by the authority or municipality as of the time that it would have 
153.25  been distributed or received but for paragraph (b). 
153.26  EFFECTIVE DATE.This section is effective for disclosures and reports required 
153.27  to be filed after December 30, 2006.

153.28      Sec. 18. Minnesota Statutes 2004, section 469.312, subdivision 5, is amended to read:
153.29      Subd. 5. Duration limit. (a) The maximum duration of a zone is 12 years. The 
153.30  applicant may request a shorter duration. The commissioner may specify a shorter 
153.31  duration, regardless of the requested duration.
153.32  (b) The duration limit under this subdivision and the duration of the zone for 
153.33  purposes of allowance of tax incentives described in section 469.315 is extended by three 
153.34  calendar years for each parcel of property that meets the following requirements:
154.1   (1) the qualified business operates an ethanol plant, as defined in section 41A.09, on 
154.2   the site that includes the parcel; and 
154.3   (2) the business subsidy agreement was executed after April 30, 2006.
154.4   EFFECTIVE DATE.This section is effective the day following final enactment.

154.5       Sec. 19. Minnesota Statutes 2004, section 475.58, subdivision 1, is amended to read:
154.6       Subdivision 1. Approval by electors; exceptions. Obligations authorized by law or 
154.7   charter may be issued by any municipality upon obtaining the approval of a majority of 
154.8   the electors voting on the question of issuing the obligations, but an election shall not be 
154.9   required to authorize obligations issued:
154.10  (1) to pay any unpaid judgment against the municipality;
154.11  (2) for refunding obligations;
154.12  (3) for an improvement or improvement program, which obligation is payable 
154.13  wholly or partly from the proceeds of special assessments levied upon property specially 
154.14  benefited by the improvement or by an improvement within the improvement program, or 
154.15  of taxes levied upon the increased value of property within a district for the development of 
154.16  which the improvement is undertaken from tax increments, as defined in section 469.174, 
154.17  subdivision 25, including obligations which are the general obligations of the municipality, 
154.18  if the municipality is entitled to reimbursement in whole or in part from the proceeds of 
154.19  such special assessments or taxes tax increments and not less than 20 percent of the cost of 
154.20  the improvement or the improvement program is to be assessed against benefited property 
154.21  or is to be paid from the proceeds of federal grant funds or a combination thereof, or is 
154.22  estimated to be received from such taxes within the district tax increments;
154.23  (4) payable wholly from the income of revenue producing conveniences;
154.24  (5) under the provisions of a home rule charter which permits the issuance of 
154.25  obligations of the municipality without election;
154.26  (6) under the provisions of a law which permits the issuance of obligations of a 
154.27  municipality without an election;
154.28  (7) to fund pension or retirement fund liabilities pursuant to section  475.52, 
154.29  subdivision 6; 
154.30  (8) under a capital improvement plan under section  373.40; and 
154.31  (9) under sections  469.1813 to  469.1815 (property tax abatement authority bonds), if 
154.32  the proceeds of the bonds are not used for a purpose prohibited under section  469.176, 
154.33  subdivision 4g, paragraph (b). 
154.34  EFFECTIVE DATE.This section is effective the day following final enactment.

155.1       Sec. 20. Laws 1994, chapter 587, article 9, section 20, subdivision 1, is amended to 
155.2   read:
155.3    
155.4       Subdivision 1. Establishment. The city of Brooklyn Park may establish an 
155.5   economic development tax increment financing district in which 15 percent all of the 
155.6   revenue generated from tax increment in any year that is not expended pursuant to a 
155.7   pledge given or encumbrance created before January 1, 2006, is deposited in the housing 
155.8   development account of the authority and expended according to the tax increment 
155.9   financing plan.

155.10      Sec. 21. Laws 1994, chapter 587, article 9, section 20, subdivision 2, is amended to 
155.11  read:
155.12   
155.13      Subd. 2. Eligible activities. The authority must identify in the plan the housing 
155.14  activities that will be assisted by the housing development account.  Housing activities 
155.15  may include rehabilitation, acquisition, demolition, and financing of new or existing 
155.16  single family or multifamily housing.  Housing activities listed in the plan need not be 
155.17  located within the district or project area but must be activities that meet the requirements 
155.18  of a qualified housing district under Minnesota Statutes, section 273.1399 or 469.1761, 
155.19  subdivision 2, for owner-occupied housing or 469.174, subdivision 29, clause (1), for 
155.20  rental housing.

155.21      Sec. 22. ANOKA COUNTY DEED AND MORTGAGE TAX.
155.22      Subdivision 1. Authority to impose; rate. (a) The governing body of Anoka 
155.23  County may impose a mortgage registry and deed tax.
155.24  (b) The rate of the mortgage registry tax equals .0001 of the principal.
155.25  (c) The rate of the deed tax equals .0001 of the amount.
155.26      Subd. 2. General law provisions apply. The taxes under this section apply to 
155.27  the same base and must be imposed, collected, administered, and enforced in the same 
155.28  manner as provided under chapter 287 for the state mortgage registry and deed taxes. 
155.29  All the provisions of chapter 287 apply to these taxes, except the rate is as specified 
155.30  in subdivision 1, the term "Anoka County" must be substituted for "the state," and the 
155.31  revenue must be deposited as provided in subdivision 3.
155.32      Subd. 3. Deposit of revenues. All revenues from the tax are for the use of the Anoka 
155.33  County Board of Commissioners and must be deposited in the county's environmental 
155.34  response fund under section 15.
156.1       Subd. 4. Expiration. The authority to impose the tax under this section expires 
156.2   January 1, 2013.

156.3       Sec. 23. ANOKA COUNTY ENVIRONMENTAL RESPONSE FUND.
156.4       Subdivision 1. Creation. An environmental response fund is created for the 
156.5   purposes specified in this section. The taxes imposed by section 14 must be deposited 
156.6   in the fund. The Board of County Commissioners shall administer the fund either as a 
156.7   county board, a housing and redevelopment authority, or a regional rail authority.
156.8       Subd. 2. Uses of fund. The fund created in subdivision 1 must be used for the 
156.9   following purposes:
156.10  (1) acquisition through purchase or condemnation of lands or property which are 
156.11  polluted or contaminated with hazardous substances;
156.12  (2) paying the costs associated with indemnifying or holding harmless the 
156.13  entity taking title to lands or property from any liability arising out of the ownership, 
156.14  remediation, or use of the land or property;
156.15  (3) paying for the costs of remediating the acquired land or property;
156.16  (4) paying the costs associated with remediating lands or property which are polluted 
156.17  or contaminated with hazardous substances; or
156.18  (5) paying for the costs associated with improving the property for economic 
156.19  development, recreation, housing, transportation, or rail traffic.
156.20      Subd. 3. Matching funds. In expending funds under this section, the county shall 
156.21  seek matching funds from contamination cleanup funds administered by the commissioner 
156.22  of the Department of Employment and Economic Development, the Metropolitan Council, 
156.23  the federal government, the private sector, and any other source.
156.24      Subd. 4. Bonds. The county may pledge the proceeds from the taxes imposed by 
156.25  section 14 to bonds issued under this section and Minnesota Statutes, chapters 398A, 
156.26  462, 469, and 475. 
156.27      Subd. 5. Land sales. Land or property acquired under this section may be resold 
156.28  at fair market value. Proceeds from the sale of the land must be deposited in the 
156.29  environmental response fund.
156.30      Subd. 6. DOT assistance. The commissioner of transportation shall collaborate with 
156.31  the county and any affected municipality by providing technical assistance and support in 
156.32  cleaning up a contaminated site related to a trunk highway or railroad improvement.

156.33      Sec. 24. CITY OF BROOKLYN PARK TAX INCREMENT FINANCING 
156.34  DISTRICT EXTENSION.
157.1   Notwithstanding Minnesota Statutes, section 469.176, subdivision 1b, or any other 
157.2   law to the contrary, the duration limit that applies to the economic development tax 
157.3   increment financing district established under Laws 1994, chapter 587, article 9, section 
157.4   20, is extended to December 31, 2020.

157.5       Sec. 25. BURNSVILLE; NORTHWEST QUADRANT TAX INCREMENT 
157.6   FINANCING.
157.7       Subdivision 1. Definitions. (a) For the purposes of this section, the words and 
157.8   phrases defined have the meanings given them in this subdivision.
157.9   (b) "Project area" means the area in the city bounded on the south, southeast, and 
157.10  southwest by the southerly right-of-way line of Minnesota Trunk Highway 13; on the east 
157.11  by the easterly right-of-way line of Interstate Highway I-35W; on the north and northwest 
157.12  by the Minnesota River; and on the west by the westerly corporate limits of the city; 
157.13  together with a single parcel to the east of said Interstate Highway I-35W described as the 
157.14  North 1370 feet of the West 1075 feet of the NW 1/4 of Section 34 Township 27 Range 24 
157.15  in the city of Burnsville, Dakota County, except the North 50 feet thereof; provided that 
157.16  the project area includes the rights-of-way for all present and future highway interchanges 
157.17  abutting the area described in this paragraph.
157.18  (c) "Soils deficiency district" means a type of tax increment financing district 
157.19  consisting of a portion of the project area in which the city finds by resolution that the 
157.20  following conditions exist:
157.21  (1) unusual terrain or soil deficiencies for 80 percent of the acreage in the district 
157.22  require substantial filling, grading, or other physical preparation for use;
157.23  (2) the estimated cost of the physical preparation under clause (1), but excluding 
157.24  costs directly related to roads as defined in Minnesota Statutes, section 160.01, and local 
157.25  improvement as described in Minnesota Statutes, sections 429.021, subdivision 1, clauses 
157.26  (1) to (7), (11) and (12), and 430.01, exceeds the fair market value of the land before 
157.27  completion of the preparation.
157.28      Subd. 2. Special rules. (a) If the city elects, upon the adoption of the tax increment 
157.29  financing plan for a district, the rules under this section apply to a redevelopment district, 
157.30  renewal and renovation district, soils condition district, or soils deficiency district 
157.31  established by the city of Burnsville or a development authority of the city in the project 
157.32  area.
157.33  (b) The five-year rule under Minnesota Statutes, section 469.1763, subdivisions 3 
157.34  and 4, is extended to ten years for any district.
158.1   (c) The limitations on spending tax increment outside of the district under Minnesota 
158.2   Statutes, section 469.1763, subdivision 2, do not apply, but increments may only be 
158.3   expended on improvements or activities within the project area.
158.4   (d) In the case of a soil deficiency district:
158.5   (1) increments may be collected through 20 years after the receipt by the authority of 
158.6   the first increment from the district; and
158.7   (2) except as otherwise provided in this subdivision, increments may be used only 
158.8   to: (i) acquire parcels on which the improvements described in clause (ii) will occur; (ii) 
158.9   pay for the cost of correcting the unusual terrain or soil deficiencies and the additional cost 
158.10  of installing public improvements directly caused by the deficiencies; and (iii) pay for the 
158.11  administrative expenses of the authority allocable to the district.
158.12  (e) Increments spent for any infrastructure costs (whether inside a district or outside 
158.13  a district but within the project area) are deemed to satisfy the requirements of paragraph 
158.14  (d) and Minnesota Statutes, section 469.176, subdivisions 4b and 4j.
158.15  (f) The authority to approve tax increment financing plans to establish tax increment 
158.16  financing districts under this section expires December 31, 2026.
158.17  EFFECTIVE DATE.This section is effective upon compliance with Minnesota 
158.18  Statutes, section 645.021, subdivision 3.

158.19      Sec. 26. BURNSVILLE; HEART OF THE CITY TAX INCREMENT 
158.20  FINANCING DISTRICT.
158.21  Notwithstanding any contrary provision of law, the five-year rule under Minnesota 
158.22  Statutes, section 469.1763, subdivisions 3 and 4, is extended to ten years for tax increment 
158.23  derived from the parcel described as Lot 2, Block 1, Nicollet Commons Park within tax 
158.24  increment financing District No. 6 established by the city and its economic development 
158.25  authority on April 15, 2002.
158.26  EFFECTIVE DATE.This section is effective upon compliance with Minnesota 
158.27  Statutes, section 645.021, subdivision 3.

158.28      Sec. 27. CITY OF DETROIT LAKES; REDEVELOPMENT TAX INCREMENT 
158.29  FINANCING DISTRICT.
158.30      Subdivision 1. Authorization. At the election of the governing body of the city of 
158.31  Detroit Lakes, upon adoption of the tax increment financing plan for the district described 
158.32  in this section, the rules provided under this section apply to each such district.
159.1       Subd. 2. Definition. In this section, "district" means a redevelopment district 
159.2   established by the city of Detroit Lakes or the Detroit Lakes Development Authority 
159.3   within the following area:
159.4   Beginning at the intersection of Washington Avenue and the Burlington Northern 
159.5   Santa Fe railroad then east to the intersection of Roosevelt Avenue then south to the 
159.6   intersection of Highway 10/Frazee Street then west to the intersection of Frazee Street and 
159.7   the alley that parallels Washington Avenue then north to the point of beginning.
159.8   More than one district may be created under this section.
159.9       Subd. 3. Qualification as redevelopment district; special rules. The district shall 
159.10  be a redevelopment district under Minnesota Statutes, section 469.174, subdivision 10. All 
159.11  buildings that are removed to facilitate the Highway 10 Realignment Project are deemed 
159.12  to be "structurally substandard." The three-year limit after demolition of the buildings to 
159.13  request tax increment financing certification provided in Minnesota Statutes, section 
159.14  469.174, subdivision 10, paragraph (d), clause (1), does not apply.
159.15      Subd. 4. Expiration. The authority to approve tax increment financing plans to 
159.16  establish a tax increment financing redevelopment district subject to this section expires 
159.17  on December 31, 2014.
159.18      Subd. 5. Effective date. This section is effective upon approval of the governing 
159.19  body of the city of Detroit Lakes and compliance with Minnesota Statutes, section 
159.20  645.021, subdivision 3.

159.21      Sec. 28. CITIES OF ELGIN, EYOTA, BYRON, AND ORONOCO; TAX 
159.22  INCREMENT FINANCING DISTRICTS.
159.23      Subdivision 1. Authorization. Notwithstanding the mileage limitation in Minnesota 
159.24  Statutes, section 469.174, subdivision 27, the cities of Elgin, Eyota, Byron, and Oronoco 
159.25  are deemed to be small cities for purposes of Minnesota Statutes, sections 469.174 to 
159.26  469.1799, as long as they do not exceed the population limit in that section.
159.27      Subd. 2. Local approval. This section is effective for each of the cities of Elgin, 
159.28  Eyota, Byron, and Oronoco upon approval of that city's governing body and compliance 
159.29  with Minnesota Statutes, section 645.021, subdivisions 2 and 3.

159.30      Sec. 29. CITY OF MINNEAPOLIS; HOMELESS ASSISTANCE TAX 
159.31  INCREMENT DISTRICT.
159.32      Subdivision 1. Definitions. (a) "City" means the city of Minneapolis.
159.33  (b) "Homeless assistance tax increment district" means a contiguous area of the 
159.34  city that:
160.1   (1) is no larger than six acres;
160.2   (2) is located within the boundaries of a city municipal development district; and
160.3   (3) contains at least two shelters for homeless persons that have been owned or 
160.4   operated by nonprofit corporations that (i) are qualified charitable organizations under 
160.5   section 501(c)(3) of the United States Internal Revenue Code, (ii) have operated such 
160.6   homeless facilities within the district for at least five years, and (iii) have been recipients 
160.7   of emergency services grants under Minnesota Statutes, section 256E.36.
160.8       Subd. 2. Establishment of tax increment district. The city may create one 
160.9   homeless assistance tax increment district. To establish the homeless assistance tax 
160.10  increment district, the city shall adopt a homeless assistance tax increment plan and 
160.11  otherwise comply with the requirements of Minnesota Statutes, section 469.175, except 
160.12  that the determinations required in Minnesota Statutes, section 469.175, subdivision 3, 
160.13  paragraph (b), clauses (1) and (2), items (i) and (ii), are not required.
160.14      Subd. 3. Application of tax increment law. Minnesota Statutes, sections 469.174 
160.15  to 469.179, shall apply to the administration of the district, except:
160.16  (1) as this section provides otherwise; and
160.17  (2) with respect to the portion of the increment to be expended for homeless shelter 
160.18  and services pursuant to subdivision 5, paragraph (b):
160.19  (i) the use for which tax increment that may be expended is as provided by 
160.20  subdivision 5; and
160.21  (ii) Minnesota Statutes, sections 469.1761 and 469.1763, do not apply.
160.22      Subd. 4. Duration limitation. No tax increment generated by the district shall 
160.23  be paid to the city after the expiration of 25 years from the receipt by the city of the 
160.24  first increment from that district.
160.25      Subd. 5. Limitations on use of increment. (a) All increment received by the city 
160.26  from the district shall be used in accordance with the homeless assistance tax increment 
160.27  district plan.
160.28  (b) No less than 40 percent of the increment, after deduction of allowable 
160.29  administrative expenses under Minnesota Statutes, section 469.176, subdivision 3, shall 
160.30  be used to provide emergency shelter and services for homeless persons within and 
160.31  outside the district.
160.32  (c) The remainder of the tax increment derived from the district shall be used for 
160.33  purposes allowed under Minnesota Statutes, section 469.176, subdivision 4.
160.34      Subd. 6. Applicability of other laws. References in Minnesota Statutes to tax 
160.35  increment financing districts created and tax increment generated under Minnesota 
161.1   Statutes, sections 469.174 to 469.179, include the homeless assistance district and tax 
161.2   increment subject to this section.
161.3   EFFECTIVE DATE.This section is effective upon compliance by the city of 
161.4   Minneapolis with Minnesota Statutes, section 645.021.

161.5       Sec. 30. CITY OF NEW BRIGHTON; TAX INCREMENT FINANCING; 
161.6   EXPENDITURES OUTSIDE DISTRICT.
161.7   Notwithstanding the provisions of Minnesota Statutes, section 469.1763, subdivision 
161.8   2, the city of New Brighton may expend tax increments from District No. 26 for eligible 
161.9   activities described in Minnesota Statutes, section 469.176, subdivision 4e, outside of Tax 
161.10  Increment District No. 26, but only within the area described in Laws 1998, chapter 389, 
161.11  article 11, section 24, subdivision 1. Minnesota Statutes, section 469.1763, subdivision 3, 
161.12  and Minnesota Statutes, section 469.1763, subdivision 4, shall not apply to expenditures 
161.13  permitted in this section.
161.14  EFFECTIVE DATE.This section is effective upon approval by the governing body 
161.15  of the city of New Brighton and compliance with Minnesota Statutes, section 645.021, 
161.16  subdivision 3.

161.17      Sec. 31. CITY OF RAMSEY; TAX INCREMENT FINANCING.
161.18      Subdivision 1. Authority. The governing body of the city of Ramsey or a 
161.19  development authority established by the city may create a tax increment financing 
161.20  district, consisting of the property defined as outlot L, Ramsey Town Center Addition and 
161.21  lot 2, block 1, Ramsey Town Center Addition.
161.22      Subd. 2. Special rules. Establishment of the district is subject to the requirements 
161.23  of Minnesota Statutes, sections 469.174 to 469.1799, with the following exceptions:
161.24  (1) the district is deemed to be a redevelopment district without regard to the 
161.25  requirements of Minnesota Statutes, section 469.174, subdivision 10;
161.26  (2) the provisions of Minnesota Statutes, section 469.176, subdivision 7, do not 
161.27  apply to the district;
161.28  (3) housing receiving assistance, directly or indirectly, from the expenditures of 
161.29  the district's increments must meet the requirements of Minnesota Statutes, sections 
161.30  469.174, subdivision 11, and 469.1761; 
161.31  (4) the district's increments must be used only to pay for costs related to the Sunwood 
161.32  on Grand project, including land acquisition, public infrastructure, parking ramps, and 
162.1   administrative expenses, whether paid directly to reimburse for payment of those costs or 
162.2   to repay bonds or other obligations issued and sold to pay those costs initially; and
162.3   (5) general obligations bonds issued to pay for costs related to the project subject 
162.4   to this section are not subject to the net debt limit of the city under Minnesota Statutes, 
162.5   section 475.53, or any other law or charter provision.
162.6   EFFECTIVE DATE.This section is effective upon local approval by the governing 
162.7   body of the city of Ramsey in compliance with the requirement of Minnesota Statutes, 
162.8   section 645.021.

162.9       Sec. 32. CITY OF ST. MICHAEL; TAX INCREMENT FINANCING DISTRICT.
162.10       Subdivision 1. Establishment of district. The city of St. Michael may establish 
162.11  a redevelopment tax increment financing district subject to Minnesota Statutes, sections 
162.12  469.174 to 469.179, except as provided in this section.  The district must be established 
162.13  within an area that includes the downtown and town center areas as designated by the city 
162.14  as well as all parcels adjacent to marked Trunk Highway 241 within the city.
162.15       Subd. 2. Special rules. (a) Notwithstanding the requirements of Minnesota 
162.16  Statutes, section 469.174, subdivision 10, the district may be established and operated as 
162.17  a redevelopment district.
162.18  (b) Notwithstanding the restrictions of Minnesota Statutes, sections 469.176, 
162.19  subdivisions 4 and 4j, and 469.1763, subdivision 2, revenues derived from tax increments 
162.20  from the district created under this section may be used to meet the cost of land 
162.21  acquisition, removal of buildings in the right-of-way acquisition area, and other costs 
162.22  incurred by the city of St. Michael in the expansion and improvement of marked Trunk 
162.23  Highway 241 within the city.
162.24  (c) Minnesota Statutes, section 469.176, subdivision 5, does not apply to the district.
162.25  EFFECTIVE DATE.This section is effective the day after the governing body of 
162.26  the city of St. Michael complies with Minnesota Statutes, section 645.021, subdivision 3.

162.27      Sec. 33. QUALIFIED BUSINESS; SMALL DECLINING POPULATION 
162.28  COUNTY.
162.29  Notwithstanding Minnesota Statutes, section 469.310, subdivision 11, paragraph 
162.30  (f), a qualified business for purposes of Minnesota Statutes, section 469.310, subdivision 
162.31  11, includes a food service business if the business is located solely in a qualified county, 
162.32  and if the business began operations in January 2004, with employment of between 15 
162.33  and 20 part-time and full-time employees. For the purpose of this section, a "qualified 
163.1   county" is a county having an estimated population of less than 5,000 in 2004 and that 
163.2   experienced a reduction in population of at least 7.5 percent between 2000 and 2004, 
163.3   according to the state demographer.
163.4   EFFECTIVE DATE.This section is effective the day following final enactment.

163.5       Sec. 34.  REPEALER.
163.6   (a) Laws 1994, chapter 587, article 9, section 20, subdivision 4, is repealed.
163.7   (b) Laws 1996, chapter 464, article 1, section 8, subdivision 5, is repealed.

163.8       Sec. 35.  REPEALER; DISTRIBUTION OF CERTAIN BURNSVILLE TAX 
163.9   INCREMENTS.
163.10  Laws 1998, chapter 389, article 11, section 18, is repealed. The balance of tax 
163.11  increments derived from tax increment financing district no. 2-1 as of the effective date 
163.12  of this act must be returned to the county for distribution in accordance with Minnesota 
163.13  Statutes, section 469.176, subdivision 2.
163.14  EFFECTIVE DATE.This section is effective upon compliance with Minnesota 
163.15  Statutes, section 645.021, subdivision 3.

163.16                                         ARTICLE 12
163.17                                      AIDS AND CREDITS

163.18      Section 1. Minnesota Statutes 2005 Supplement, section 477A.011, subdivision 36, 
163.19  is amended to read:
163.20      Subd. 36. City aid base. (a) Except as otherwise provided in this subdivision, 
163.21  "city aid base" is zero.
163.22  (b) The city aid base for any city with a population less than 500 is increased by 
163.23  $40,000 for aids payable in calendar year 1995 and thereafter, and the maximum amount 
163.24  of total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is also 
163.25  increased by $40,000 for aids payable in calendar year 1995 only, provided that:
163.26  (i) the average total tax capacity rate for taxes payable in 1995 exceeds 200 percent;
163.27  (ii) the city portion of the tax capacity rate exceeds 100 percent; and
163.28  (iii) its city aid base is less than $60 per capita.
163.29  (c) The city aid base for a city is increased by $20,000 in 1998 and thereafter and 
163.30  the maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
163.31  paragraph (c), is also increased by $20,000 in calendar year 1998 only, provided that:
163.32  (i) the city has a population in 1994 of 2,500 or more;
164.1   (ii) the city is located in a county, outside of the metropolitan area, which contains a 
164.2   city of the first class;
164.3   (iii) the city's net tax capacity used in calculating its 1996 aid under section 
164.4   477A.013 is less than $400 per capita; and
164.5   (iv) at least four percent of the total net tax capacity, for taxes payable in 1996, of 
164.6   property located in the city is classified as railroad property.
164.7   (d) The city aid base for a city is increased by $200,000 in 1999 and thereafter and 
164.8   the maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
164.9   paragraph (c), is also increased by $200,000 in calendar year 1999 only, provided that:
164.10  (i) the city was incorporated as a statutory city after December 1, 1993;
164.11  (ii) its city aid base does not exceed $5,600; and
164.12  (iii) the city had a population in 1996 of 5,000 or more.
164.13  (e) The city aid base for a city is increased by $450,000 in 1999 to 2008 and the 
164.14  maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
164.15  paragraph (c), is also increased by $450,000 in calendar year 1999 only, provided that:
164.16  (i) the city had a population in 1996 of at least 50,000;
164.17  (ii) its population had increased by at least 40 percent in the ten-year period ending 
164.18  in 1996; and
164.19  (iii) its city's net tax capacity for aids payable in 1998 is less than $700 per capita.
164.20  (f) The city aid base for a city is increased by $150,000 for aids payable in 2000 and 
164.21  thereafter, and the maximum amount of total aid it may receive under section 477A.013, 
164.22  subdivision 9, paragraph (c), is also increased by $150,000 in calendar year 2000 only, 
164.23  provided that:
164.24  (1) the city has a population that is greater than 1,000 and less than 2,500;
164.25  (2) its commercial and industrial percentage for aids payable in 1999 is greater 
164.26  than 45 percent; and
164.27  (3) the total market value of all commercial and industrial property in the city 
164.28  for assessment year 1999 is at least 15 percent less than the total market value of all 
164.29  commercial and industrial property in the city for assessment year 1998.
164.30  (g) The city aid base for a city is increased by $200,000 in 2000 and thereafter, and 
164.31  the maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
164.32  paragraph (c), is also increased by $200,000 in calendar year 2000 only, provided that:
164.33  (1) the city had a population in 1997 of 2,500 or more;
164.34  (2) the net tax capacity of the city used in calculating its 1999 aid under section 
164.35  477A.013 is less than $650 per capita;
165.1   (3) the pre-1940 housing percentage of the city used in calculating 1999 aid under 
165.2   section 477A.013 is greater than 12 percent;
165.3   (4) the 1999 local government aid of the city under section 477A.013 is less than 
165.4   20 percent of the amount that the formula aid of the city would have been if the need 
165.5   increase percentage was 100 percent; and
165.6   (5) the city aid base of the city used in calculating aid under section 477A.013 
165.7   is less than $7 per capita.
165.8   (h) The city aid base for a city is increased by $102,000 in 2000 and thereafter, and 
165.9   the maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
165.10  paragraph (c), is also increased by $102,000 in calendar year 2000 only, provided that:
165.11  (1) the city has a population in 1997 of 2,000 or more;
165.12  (2) the net tax capacity of the city used in calculating its 1999 aid under section 
165.13  477A.013 is less than $455 per capita;
165.14  (3) the net levy of the city used in calculating 1999 aid under section 477A.013 is 
165.15  greater than $195 per capita; and
165.16  (4) the 1999 local government aid of the city under section 477A.013 is less than 
165.17  38 percent of the amount that the formula aid of the city would have been if the need 
165.18  increase percentage was 100 percent.
165.19  (i) The city aid base for a city is increased by $32,000 in 2001 and thereafter, and 
165.20  the maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
165.21  paragraph (c), is also increased by $32,000 in calendar year 2001 only, provided that:
165.22  (1) the city has a population in 1998 that is greater than 200 but less than 500;
165.23  (2) the city's revenue need used in calculating aids payable in 2000 was greater 
165.24  than $200 per capita;
165.25  (3) the city net tax capacity for the city used in calculating aids available in 2000 
165.26  was equal to or less than $200 per capita;
165.27  (4) the city aid base of the city used in calculating aid under section 477A.013 
165.28  is less than $65 per capita; and
165.29  (5) the city's formula aid for aids payable in 2000 was greater than zero.
165.30  (j) The city aid base for a city is increased by $7,200 in 2001 and thereafter, and 
165.31  the maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
165.32  paragraph (c), is also increased by $7,200 in calendar year 2001 only, provided that:
165.33  (1) the city had a population in 1998 that is greater than 200 but less than 500;
165.34  (2) the city's commercial industrial percentage used in calculating aids payable in 
165.35  2000 was less than ten percent;
166.1   (3) more than 25 percent of the city's population was 60 years old or older according 
166.2   to the 1990 census;
166.3   (4) the city aid base of the city used in calculating aid under section 477A.013 
166.4   is less than $15 per capita; and
166.5   (5) the city's formula aid for aids payable in 2000 was greater than zero.
166.6   (k) The city aid base for a city is increased by $45,000 in 2001 and thereafter and by 
166.7   an additional $50,000 in calendar years 2002 to 2011, and by an additional $89,000 in 
166.8   calendar years 2007 to 2011, and the maximum amount of total aid it may receive under 
166.9   section 477A.013, subdivision 9, paragraph (c), is also increased by $45,000 in calendar 
166.10  year 2001 only, and by $50,000 in calendar year 2002 only, and by an additional $89,000 
166.11  in calendar year 2007 only,  provided that:
166.12  (1) the net tax capacity of the city used in calculating its 2000 aid under section 
166.13  477A.013 is less than $810 per capita;
166.14  (2) the population of the city declined more than two percent between 1988 and 1998;
166.15  (3) the net levy of the city used in calculating 2000 aid under section 477A.013 is 
166.16  greater than $240 per capita; and
166.17  (4) the city received less than $36 per capita in aid under section 477A.013, 
166.18  subdivision 9, for aids payable in 2000.
166.19  (l) The city aid base for a city with a population of 10,000 or more which is located 
166.20  outside of the seven-county metropolitan area is increased in 2002 and thereafter, and the 
166.21  maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
166.22  paragraph (b) or (c), is also increased in calendar year 2002 only, by an amount equal to 
166.23  the lesser of:
166.24  (1)(i) the total population of the city, as determined by the United States Bureau of 
166.25  the Census, in the 2000 census, (ii) minus 5,000, (iii) times 60; or
166.26  (2) $2,500,000.
166.27  (m) The city aid base is increased by $50,000 in 2002 and thereafter, and the 
166.28  maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
166.29  paragraph (c), is also increased by $50,000 in calendar year 2002 only, provided that:
166.30  (1) the city is located in the seven-county metropolitan area;
166.31  (2) its population in 2000 is between 10,000 and 20,000; and
166.32  (3) its commercial industrial percentage, as calculated for city aid payable in 2001, 
166.33  was greater than 25 percent.
166.34  (n) The city aid base for a city is increased by $150,000 in calendar years 2002 to 
166.35  2011, and by an additional $50,000 in calendar years 2007 to 2016,  and the maximum 
166.36  amount of total aid it may receive under section 477A.013, subdivision 9, paragraph (c), 
167.1   is also increased by $150,000 in calendar year 2002 only, and by an additional $50,000 
167.2   in calendar year 2007 only,  provided that:
167.3   (1) the city had a population of at least 3,000 but no more than 4,000 in 1999;
167.4   (2) its home county is located within the seven-county metropolitan area;
167.5   (3) its pre-1940 housing percentage is less than 15 percent; and
167.6   (4) its city net tax capacity per capita for taxes payable in 2000 is less than $900 
167.7   per capita.
167.8   (o) The city aid base for a city is increased by $200,000 beginning in calendar 
167.9   year 2003 and the maximum amount of total aid it may receive under section 477A.013, 
167.10  subdivision 9, paragraph (c), is also increased by $200,000 in calendar year 2003 only, 
167.11  provided that the city qualified for an increase in homestead and agricultural credit aid 
167.12  under Laws 1995, chapter 264, article 8, section 18.
167.13  (p) The city aid base for a city is increased by $200,000 in 2004 only and the 
167.14  maximum amount of total aid it may receive under section 477A.013, subdivision 9, is 
167.15  also increased by $200,000 in calendar year 2004 only, if the city is the site of a nuclear 
167.16  dry cask storage facility.
167.17  (q) The city aid base for a city is increased by $10,000 in 2004 and thereafter and the 
167.18  maximum total aid it may receive under section 477A.013, subdivision 9, is also increased 
167.19  by $10,000 in calendar year 2004 only, if the city was included in a federal major disaster 
167.20  designation issued on April 1, 1998, and its pre-1940 housing stock was decreased by 
167.21  more than 40 percent between 1990 and 2000.
167.22  (r) The city aid base for a city is increased by $25,000 in 2006 only and the 
167.23  maximum total aid it may receive under section 477A.013, subdivision 9, is also increased 
167.24  by $25,000 in calendar year 2006 only if the city had a population in 2003 of at least 1,000 
167.25  and has a state park for which the city provides rescue services and which comprised at 
167.26  least 14 percent of the total geographic area included within the city boundaries in 2000.
167.27  (s) The city aid base for a city with a population less than 5,000 is increased in 
167.28  2006 and thereafter and the minimum and maximum amount of total aid it may receive 
167.29  under this section is also increased in calendar year 2006 only by an amount equal to 
167.30  $6 multiplied by its population.
167.31  EFFECTIVE DATE.This section is effective beginning with aids payable in 2007.

167.32      Sec. 2. Minnesota Statutes 2005 Supplement, section 477A.013, subdivision 8, is 
167.33  amended to read:
167.34      Subd. 8. City formula aid. In calendar year 2004 and subsequent years, the 
167.35  formula aid for a city is equal to the need increase percentage multiplied by the difference 
168.1   between (1) the city's revenue need multiplied by its population, and (2) the sum of the 
168.2   city's net tax capacity multiplied by the tax effort rate; the taconite aids under sections 
168.3   298.28 and 298.282 to any city except a city directly impacted by a taconite mine or plant, 
168.4   multiplied by the following percentages:
168.5   (i) zero percent for aids payable in 2004;
168.6   (ii) 25 percent for aids payable in 2005;
168.7   (iii) 50 percent for aids payable in 2006;
168.8   (iv) 75 percent for aids payable in 2007; and
168.9   (v) 100 percent for aids payable in 2008 and thereafter.
168.10  For purposes of this subdivision, "a city directly impacted by a taconite mine or 
168.11  plant" means: (1) Babbit, (2) Eveleth, (3) Hibbing, (4) Keewatin, (5) Mountain Iron, (6) 
168.12  Silver Bay, or (7) Virginia.
168.13  No city may have a formula aid amount less than zero. The need increase percentage 
168.14  must be the same for all cities.
168.15  The applicable need increase percentage must be calculated by the Department of 
168.16  Revenue so that the total of the aid under subdivision 9 equals the total amount available 
168.17  for aid under section 477A.03 after the subtraction under section 477A.014, subdivisions 4 
168.18  and 5 is 100 percent for aids payable in 2007 and thereafter.

168.19      Sec. 3. Minnesota Statutes 2004, section 477A.013, subdivision 9, is amended to read:
168.20      Subd. 9. City aid distribution. (a) In calendar year 2002 and thereafter, each 
168.21  city shall receive an aid distribution equal to the sum of (1) the city formula aid under 
168.22  subdivision 8, and (2) its city aid base.
168.23  (b) The aid for a city in calendar year 2004 shall not exceed the amount of its aid in 
168.24  calendar year 2003 after the reductions under Laws 2003, First Special Session chapter 21, 
168.25  article 5.
168.26  (c) For aids payable in 2005 and thereafter, and 2006, the total aid for any city 
168.27  shall not exceed the sum of (1) ten percent of the city's net levy for the year prior to the 
168.28  aid distribution plus (2) its total aid in the previous year. For aids payable in 2005 and 
168.29  thereafter, the total aid for any city with a population of 2,500 or more may not decrease 
168.30  from its total aid under this section in the previous year by an amount greater than ten 
168.31  percent of its net levy in the year prior to the aid distribution.
168.32  (d) For aids payable in 2004 only, the total aid for a city with a population less than 
168.33  2,500 may not be less than the amount it was certified to receive in 2003 minus the greater 
168.34  of (1) the reduction to this aid payment in 2003 under Laws 2003, First Special Session 
168.35  chapter 21, article 5, or (2) five percent of its 2003 aid amount. (c)  For aids payable in 
169.1   2005 and thereafter, the total aid for a city with a population less than 2,500 must not be 
169.2   less than the amount it was certified to receive in the previous year minus five percent 
169.3   of its 2003 certified aid amount.
169.4   EFFECTIVE DATE.This section is effective beginning with aids payable in 2007.

169.5       Sec. 4. Minnesota Statutes 2004, section 477A.03, subdivision 2, is amended to read:
169.6       Subd. 2. Annual appropriation. (a) A sum sufficient to discharge the duties 
169.7   imposed by sections  477A.011 to  477A.014 is annually appropriated from the general 
169.8   fund to the commissioner of revenue. 
169.9   (b) In fiscal year 2007, $41,000,000 is appropriated from the general fund to the 
169.10  commissioner of revenue to be used for the purposes of paragraph (a) for distributions 
169.11  in calendar years 2007 and 2008. These amounts do not cancel, and remain available 
169.12  until expended.

169.13      Sec. 5. Minnesota Statutes 2005 Supplement, section 477A.03, subdivision 2a, is 
169.14  amended to read:
169.15      Subd. 2a. Cities. For aids payable in 2004, the total aids paid under section 
169.16  477A.013, subdivision 9, are limited to $429,000,000. For aids payable in 2005, the total 
169.17  aids paid under section 477A.013, subdivision 9, are limited to $437,052,000. For aids 
169.18  payable in 2006 and thereafter, the total aids paid under section 477A.013, subdivision 9, 
169.19  is limited to $485,052,000, plus the amount of the payments provided in section 5.
169.20  EFFECTIVE DATE.This section is effective beginning with aids payable in 2006.

169.21      Sec. 6. Laws 2005, First Special Session chapter 3, article 2, section 5, is amended to 
169.22  read:
169.23  Sec. 5.  2005 AND 2006 CITY AID PAYMENTS.
169.24    
169.25  In 2005 and 2006, market value credit reimbursements for  each city payable under 
169.26  Minnesota Statutes, section 273.1384,  are reduced by the dollar amount of the 2003 
169.27  reduction in market  value credit reimbursements for that city due to Laws 2003,  First 
169.28  Special Session chapter 21, article 5, section 12.  No  city's 2005 or 2006 market value 
169.29  credit reimbursements are  reduced to less than zero under this section.  To the extent  
169.30  sufficient information is available on each payment date, the  commissioner shall pay the 
169.31  annual 2005 and 2006 market value  credit reimbursement amounts, after reduction under 
170.1   this  section, to cities in equal installments on the dates specified  in Minnesota Statutes, 
170.2   section 273.1384.  
170.3    

170.4       Sec. 7. ONETIME 2006 ADDITIONAL CITY AID.
170.5       Subdivision 1. Computation. For aid payable in 2006 only, the aid payable to 
170.6   each city under Minnesota Statutes, section 477A.013, subdivision 9, is increased by the 
170.7   difference between the amount that would have been paid to the city under that provision 
170.8   and the amount that would be payable to the city if the aid were determined as follows:
170.9   (1) the city revenue need under Minnesota Statutes, section 477A.011, subdivision 
170.10  34, must be multiplied by the ratio of the annual implicit price deflator for government 
170.11  consumption expenditures and gross investment for state and local governments as 
170.12  prepared by the United States Department of Commerce for 2004 to the 2002 implicit 
170.13  price deflator for state and local government purchases;
170.14  (2) taconite aids under Minnesota Statutes, sections 298.28 and 298.282, must 
170.15  not be added to the city net tax capacity under Minnesota Statutes, section 477A.013, 
170.16  subdivision 8;
170.17  (3) the need increase percentage under Minnesota Statutes, section 477A.013, 
170.18  subdivision 8, shall be equal to 100 percent;
170.19  (4) the restriction under Minnesota Statutes, section 477A.013, subdivision 9, that 
170.20  the total aid for any city shall not exceed the sum of ten percent of the city's net levy in the 
170.21  previous year plus its total aid in the previous year shall not apply; and 
170.22  (5) no city shall receive less aid than it was originally certified to receive for aids 
170.23  payable in 2006.
170.24  The aid payable under this section must be used by cities for debt reduction, pension 
170.25  funding, capital improvements, deferred maintenance, fee reduction, or to pay costs 
170.26  related to public safety.
170.27      Subd. 2. Appropriation; payment. The commissioner of revenue shall make the 
170.28  payments of the additional 2006 city aid in three installments on May 1, July 20, and 
170.29  December 26, 2006. An amount sufficient to pay the aid under this section is appropriated 
170.30  to the commissioner of revenue from the general fund.
170.31  EFFECTIVE DATE.This section is effective for aids payable in 2006.

170.32      Sec. 8. COUNTY TARGETED CASE MANAGEMENT AID.
170.33      Subdivision 1. Distribution. For 2006 and 2007 only, county targeted case 
170.34  management aid shall be allocated to counties based on each county's share of the state 
171.1   total of children's social services and mental health services administered by the counties 
171.2   under the jurisdiction of the Minnesota Department of Human Services. The aid payable 
171.3   under this section must be used by counties to offset reductions in federal funding under 
171.4   the Deficit Reduction Act of 2005 for targeted case management.
171.5       Subd. 2. Appropriation; payment. For aids payable in 2006, the total aid under 
171.6   this section is limited to $40,000,000. For aids payable in 2007, the total aid under this 
171.7   section is limited to $20,000,000. The commissioner of revenue shall make the payments 
171.8   of the county targeted case management aid in two installments on July 20 and December 
171.9   26 in 2006, and on March 31 and May 31 in 2007. An amount sufficient to pay the aid 
171.10  under this section is appropriated to the commissioner of revenue from the general fund.
171.11  EFFECTIVE DATE.This section is effective for aids payable in 2006 and 2007.

171.12      Sec. 9. MAHNOMEN COUNTY; TEMPORARY COUNTY AND CITY AIDS.
171.13  $600,000 is appropriated from the general fund to the commissioner of revenue to be 
171.14  used to make payments to Mahnomen County and the city of Mahnomen to compensate 
171.15  them for the loss of property tax revenue due to the placement of land located in the 
171.16  city of Mahnomen in trust status during calendar year 2006. The appropriation shall be 
171.17  reduced by the amount of any payment in lieu of tax received by Mahnomen County 
171.18  or the city of Mahnomen for the property placed in trust status. The payment shall be 
171.19  made on July 20, 2006.

171.20      Sec. 10. COUNTY REFERENDUM COST REIMBURSEMENT; 
171.21  APPROPRIATION.
171.22  If one or more bills are enacted during the 2006 session of the legislature that 
171.23  provides for a referendum in 2006 on a proposed constitutional amendment, $122,000 is 
171.24  appropriated from the general fund to the commissioner of revenue to be distributed to 
171.25  the counties in proportion to each county's share of the state's registered voters. This is a 
171.26  onetime payment, to be paid on July 20, 2006, to compensate the counties for the cost of 
171.27  preparing ballots for the constitutional amendment or amendments.

171.28      Sec. 11. LOCAL TRUNK HIGHWAY IMPROVEMENTS; APPROPRIATION.
171.29  $5,000,000 is appropriated from the general fund to the commissioner of 
171.30  transportation to be distributed, $2,500,000 to the City of Nisswa and $2,500,000 to the 
171.31  City of Pequot Lakes, to be used to pay the local share of trunk highway improvement 
171.32  projects. The advisory committee established under Minnesota Statutes, section 174.52, 
171.33  shall provide recommendations to the cities on the most efficient use of the funds provided.

172.1                                          ARTICLE 13
172.2                                           MINERALS

172.3       Section 1. Minnesota Statutes 2004, section 298.001, is amended by adding a 
172.4   subdivision to read:
172.5       Subd. 3a. Producer. "Producer" means a person engaged in the business of mining 
172.6   or producing iron ore, taconite concentrate, or direct reduced ore in this state.
172.7   EFFECTIVE DATE.This section is effective for tax years beginning after 
172.8   December 31, 2005.

172.9       Sec. 2. Minnesota Statutes 2005 Supplement, section 298.01, subdivision 3, is 
172.10  amended to read:
172.11      Subd. 3. Occupation tax; other ores. Every person engaged in the business of 
172.12  mining or producing ores in this state, except iron ore or taconite concentrates, shall pay 
172.13  an occupation tax to the state of Minnesota as provided in this subdivision. The tax is 
172.14  determined in the same manner as the tax imposed by section 290.02, except that sections 
172.15  290.05, subdivision 1, clause (a), 290.17, subdivision 4, and 290.191, subdivision 2, do 
172.16  not apply, and the occupation tax must be computed by applying to taxable income the 
172.17  rate of 2.45 percent. A person subject to occupation tax under this section shall apportion 
172.18  its net income on the basis of the percentage obtained by taking the sum of:
172.19  (1) 75 percent of the percentage which the sales made within this state in connection 
172.20  with the trade or business during the tax period are of the total sales wherever made in 
172.21  connection with the trade or business during the tax period;
172.22  (2) 12.5 percent of the percentage which the total tangible property used by the 
172.23  taxpayer in this state in connection with the trade or business during the tax period is of 
172.24  the total tangible property, wherever located, used by the taxpayer in connection with the 
172.25  trade or business during the tax period; and
172.26  (3) 12.5 percent of the percentage which the taxpayer's total payrolls paid or 
172.27  incurred in this state or paid in respect to labor performed in this state in connection with 
172.28  the trade or business during the tax period are of the taxpayer's total payrolls paid or 
172.29  incurred in connection with the trade or business during the tax period.
172.30  The tax is in addition to all other taxes.
172.31  EFFECTIVE DATE.This section is effective for tax years beginning after 
172.32  December 31, 2005.

173.1       Sec. 3. Minnesota Statutes 2004, section 298.01, subdivision 3a, is amended to read:
173.2       Subd. 3a. Gross income. (a) For purposes of determining a person's taxable income 
173.3   under subdivision 3, gross income is determined by the amount of gross proceeds from 
173.4   mining in this state under section  298.016 and includes any gain or loss recognized from 
173.5   the sale or disposition of assets used in the business in this state. If more than one mineral, 
173.6   metal, or energy resource referred to in section 298.016 is mined and processed at the 
173.7   same mine and plant, a gross income for each mineral, metal, or energy resource must be 
173.8   determined separately. The gross incomes may be combined on one occupation tax return 
173.9   to arrive at the gross income of all production. 
173.10  (b) In applying section  290.191, subdivision 5, transfers of ores are deemed to be 
173.11  sales outside in this state if the ores are transported out of this state after the ores have 
173.12  been converted to a marketable quality. 
173.13  EFFECTIVE DATE.This section is effective for tax years beginning after 
173.14  December 31, 2005.

173.15      Sec. 4. Minnesota Statutes 2004, section 298.01, subdivision 3b, is amended to read:
173.16      Subd. 3b. Deductions. (a) For purposes of determining taxable income under 
173.17  subdivision 3, the deductions from gross income include only those expenses necessary 
173.18  to convert raw ores to marketable quality. Such expenses include costs associated with 
173.19  refinement but do not include expenses such as transportation, stockpiling, marketing, or 
173.20  marine insurance that are incurred after marketable ores are produced, unless the expenses 
173.21  are included in gross income. The allowable deductions from a mine or plant that mines 
173.22  and produces more than one mineral, metal, or energy resource must be determined 
173.23  separately for the purposes of computing the deduction in section 290.01, subdivision 19c, 
173.24  clause (9). These deductions may be combined on one occupation tax return to arrive at 
173.25  the deduction from gross income for all production.
173.26  (b) The provisions of section  290.01, subdivisions 19c, clauses (6) and (9), and 19d, 
173.27  clauses (7) and (11), are not used to determine taxable income. 
173.28  EFFECTIVE DATE.This section is effective for tax years beginning after 
173.29  December 31, 2005.

173.30      Sec. 5. Minnesota Statutes 2005 Supplement, section 298.01, subdivision 4, is 
173.31  amended to read:
173.32      Subd. 4. Occupation tax; iron ore; taconite concentrates. A person engaged in 
173.33  the business of mining or producing of iron ore, taconite concentrates or direct reduced ore 
174.1   in this state shall pay an occupation tax to the state of Minnesota. The tax is determined 
174.2   in the same manner as the tax imposed by section 290.02, except that sections 290.05, 
174.3   subdivision 1, clause (a), 290.17, subdivision 4, and 290.191, subdivision 2, do not apply, 
174.4   and the occupation tax shall be computed by applying to taxable income the rate of 2.45 
174.5   percent. A person subject to occupation tax under this section shall apportion its net 
174.6   income on the basis of the percentage obtained by taking the sum of:
174.7   (1) 75 percent of the percentage which the sales made within this state in connection 
174.8   with the trade or business during the tax period are of the total sales wherever made in 
174.9   connection with the trade or business during the tax period;
174.10  (2) 12.5 percent of the percentage which the total tangible property used by the 
174.11  taxpayer in this state in connection with the trade or business during the tax period is of 
174.12  the total tangible property, wherever located, used by the taxpayer in connection with the 
174.13  trade or business during the tax period; and
174.14  (3) 12.5 percent of the percentage which the taxpayer's total payrolls paid or 
174.15  incurred in this state or paid in respect to labor performed in this state in connection with 
174.16  the trade or business during the tax period are of the taxpayer's total payrolls paid or 
174.17  incurred in connection with the trade or business during the tax period.
174.18  The tax is in addition to all other taxes.
174.19  EFFECTIVE DATE.This section is effective for tax years beginning after 
174.20  December 31, 2005.

174.21      Sec. 6. Minnesota Statutes 2004, section 298.01, subdivision 4a, is amended to read:
174.22      Subd. 4a. Gross income. (a) For purposes of determining a person's taxable income 
174.23  under subdivision 4, gross income is determined by the mine value of the ore mined in 
174.24  Minnesota and includes any gain or loss recognized from the sale or disposition of assets 
174.25  used in the business in this state.
174.26  (b) Mine value is the value, or selling price, of iron ore or taconite concentrates, f.o.b. 
174.27  mine. The mine value is calculated by multiplying the iron unit price for the period, as 
174.28  determined by the commissioner, by the tons produced and the weighted average analysis.
174.29  (c) In applying section  290.191, subdivision 5, transfers of iron ore and taconite 
174.30  concentrates are deemed to be sales outside in this state if the iron ore or taconite 
174.31  concentrates are transported out of this state after the raw iron ore and taconite 
174.32  concentrates have been converted to a marketable quality. 
174.33  (d) If iron ore or taconite and a mineral, metal, or energy resource referred to in 
174.34  section 298.016 is mined and processed at the same mine and plant, a gross income for 
174.35  each mineral, metal, or energy resource must be determined separately from the mine 
175.1   value for the iron ore or taconite. The gross income may be combined on one occupation 
175.2   tax return to arrive at the gross income from all production.
175.3   EFFECTIVE DATE.This section is effective for tax years beginning after 
175.4   December 31, 2005.

175.5       Sec. 7. Minnesota Statutes 2004, section 298.01, subdivision 4b, is amended to read:
175.6       Subd. 4b. Deductions. For purposes of determining taxable income under 
175.7   subdivision 4, the deductions from gross income include only those expenses necessary 
175.8   to convert raw iron ore or taconite concentrates to marketable quality. Such expenses 
175.9   include costs associated with beneficiation and refinement but do not include expenses 
175.10  such as transportation, stockpiling, marketing, or marine insurance that are incurred after 
175.11  marketable iron ore or taconite pellets are produced. The allowable deductions from a 
175.12  mine or plant that mines and produces iron ore or taconite and one or more mineral or 
175.13  metal referred to in section 298.016 must be determined separately for the purposes of 
175.14  computing the deduction in section 290.01, subdivision 19c, clause (9). These deductions 
175.15  may be combined on one occupation tax return to arrive at the deduction from gross 
175.16  income for all production.
175.17  EFFECTIVE DATE.This section is effective for tax years beginning after 
175.18  December 31, 2005.

175.19      Sec. 8. Minnesota Statutes 2004, section 298.01, is amended by adding a subdivision 
175.20  to read:
175.21      Subd. 6. Deductions applicable to mining both taconite and other ores; ratio 
175.22  applied. If a person is engaged in the business of mining or producing both iron ores, 
175.23  taconite concentrates, or direct reduced ore, and other ores from the same mine or 
175.24  facility, that person must separately determine the mine value of (1) the iron ore, taconite 
175.25  concentrates, and direct reduced ore, and (2) the amount of gross proceeds from mining 
175.26  other ores in Minnesota. The ratio of mine value from iron ore, taconite concentrates, 
175.27  and direct reduced ore to gross proceeds from mining other ores must be applied to 
175.28  deductions common to both processes to determine taxable income for tax paid pursuant 
175.29  to subdivisions 3 and 4.
175.30  EFFECTIVE DATE.This section is effective for tax years beginning after 
175.31  December 31, 2005.

176.1       Sec. 9. Minnesota Statutes 2004, section 298.17, is amended to read:
176.2   298.17 OCCUPATION TAXES TO BE APPORTIONED.
176.3       Subdivision 1. Apportionment under Constitution. All occupation taxes paid by 
176.4   persons, copartnerships, companies, joint stock companies, corporations, and associations, 
176.5   however or for whatever purpose organized, engaged in the business of mining or 
176.6   producing iron ore or other ores, when collected shall be apportioned and distributed in 
176.7   accordance with the Constitution of the state of Minnesota, article X, section 3, in the 
176.8   manner following: 90 percent shall be deposited in the state treasury and credited to 
176.9   the general fund of which four-ninths shall be used for the support of elementary and 
176.10  secondary schools; and ten percent of the proceeds of the tax imposed by this section 
176.11  shall be deposited in the state treasury and credited to the general fund for the general 
176.12  support of the university. 
176.13      Subd. 2. Apportionment to IRRRB. Of the moneys apportioned to the general 
176.14  fund by this section, and not used for the support of elementary and secondary schools or 
176.15  the university, there is annually appropriated and credited to the Iron Range Resources and 
176.16  Rehabilitation Board account in the special revenue fund an amount equal to that which 
176.17  would have been generated by a 1.5 cent tax imposed by section  298.24 on each taxable 
176.18  ton produced in the preceding calendar year, to be expended for the purposes of section  
176.19  298.22. The money appropriated pursuant to this section shall be used (1) to provide 
176.20  environmental development grants to local governments located within any county in 
176.21  region 3 as defined in governor's executive order number 60, issued on June 12, 1970, 
176.22  which does not contain a municipality qualifying pursuant to section  273.134, paragraph 
176.23  (b), or (2) to provide economic development loans or grants to businesses located within 
176.24  any such county, provided that the county board or an advisory group appointed by 
176.25  the county board to provide recommendations on economic development shall make 
176.26  recommendations to the Iron Range Resources and Rehabilitation Board regarding the 
176.27  loans. Payment to the Iron Range Resources and Rehabilitation Board account shall be 
176.28  made by May 15 annually. 
176.29  Of the money allocated to Koochiching County, one-third must be paid to the 
176.30  Koochiching County Economic Development Commission.
176.31      Subd. 3. Apportionment to Minnesota minerals 21st century fund. The 
176.32  money apportioned to the general fund by this section that is not used for the support of 
176.33  elementary and secondary schools or the university, and that is not apportioned under 
176.34  subdivision 2, is annually appropriated to the Minnesota minerals 21st century fund 
176.35  created in section 116J.423.
177.1   EFFECTIVE DATE.This section is effective for taxes paid in 2007 and subsequent 
177.2   years.

177.3       Sec. 10. Minnesota Statutes 2005 Supplement, section 298.223, subdivision 1, is 
177.4   amended to read:
177.5       Subdivision 1. Creation; purposes. A fund called the taconite environmental 
177.6   protection fund is created for the purpose of reclaiming, restoring and enhancing those 
177.7   areas of northeast Minnesota located within the taconite assistance area defined in section 
177.8   273.1341, that are adversely affected by the environmentally damaging operations 
177.9   involved in mining taconite and iron ore and producing iron ore concentrate and for the 
177.10  purpose of promoting the economic development of northeast Minnesota. The taconite 
177.11  environmental protection fund shall be used for the following purposes:
177.12  (a) to initiate investigations into matters the Iron Range Resources and Rehabilitation 
177.13  Board determines are in need of study and which will determine the environmental 
177.14  problems requiring remedial action;
177.15  (b) reclamation, restoration, or reforestation of minelands not otherwise provided 
177.16  for by state law;
177.17  (c) local economic development projects but only if those projects are approved by 
177.18  the board, and public works, including construction of sewer and water systems located 
177.19  within the taconite assistance area defined in section 273.1341;
177.20  (d) monitoring of mineral industry related health problems among mining 
177.21  employees; and
177.22  (e) local renewable energy investments undertaken in cooperation with local units of 
177.23  government and mineland areas reforestation, reclamation, or development projects. The 
177.24  projects must be approved by the Iron Range Resources and Rehabilitation Board and 
177.25  located within the taconite assistance area as defined in section 273.1341. The board may 
177.26  enter into joint ventures with private or public entities to advance these projects.
177.27  EFFECTIVE DATE.This section is effective the day following final enactment.

177.28      Sec. 11. Minnesota Statutes 2004, section 298.227, is amended to read:
177.29  298.227 TACONITE ECONOMIC DEVELOPMENT FUND.
177.30  An amount equal to that distributed pursuant to each taconite producer's taxable 
177.31  production and qualifying sales under section  298.28, subdivision 9a, shall be held by 
177.32  the Iron Range Resources and Rehabilitation Board in a separate taconite economic 
177.33  development fund for each taconite and direct reduced ore producer. Money from the 
178.1   fund for each producer shall be released by the commissioner after review by a joint 
178.2   committee consisting of an equal number of representatives of the salaried employees and 
178.3   the nonsalaried production and maintenance employees of that producer. The District 11 
178.4   director of the United States Steelworkers of America, on advice of each local employee 
178.5   president, shall select the employee members. In nonorganized operations, the employee 
178.6   committee shall be elected by the nonsalaried production and maintenance employees. 
178.7   The review must be completed no later than six months after the producer presents a 
178.8   proposal for expenditure of the funds to the committee. The funds held pursuant to this 
178.9   section may be released only for acquisition of equipment and facilities for the producer 
178.10  or for research and development in Minnesota on new mining, or taconite, iron, or steel 
178.11  production technology, but only if the producer provides a matching expenditure to be 
178.12  used for the same purpose of at least 50 percent of the distribution based on 14.7 cents 
178.13  per ton beginning with distributions in 2002. If a producer uses money from the fund for 
178.14  procuring haulage trucks, mobile equipment, and mining shovels more than once in a 
178.15  three-year period, the second and subsequent purchases of such pieces of equipment must 
178.16  be assembled by employees of the producer on the producer's property in this state. If a 
178.17  taconite production facility is sold after operations at the facility had ceased, any money 
178.18  remaining in the fund for the former producer may be released to the purchaser of the 
178.19  facility on the terms otherwise applicable to the former producer under this section. If a 
178.20  producer fails to provide matching funds for a proposed expenditure within six months 
178.21  after the commissioner approves release of the funds, the funds are available for release to 
178.22  another producer in proportion to the distribution provided and under the conditions of 
178.23  this section. Any portion of the fund which is not released by the commissioner within 
178.24  two years of its deposit in the fund shall be divided between the taconite environmental 
178.25  protection fund created in section  298.223 and the Douglas J. Johnson economic protection 
178.26  trust fund created in section  298.292 for placement in their respective special accounts. 
178.27  Two-thirds of the unreleased funds shall be distributed to the taconite environmental 
178.28  protection fund and one-third to the Douglas J. Johnson economic protection trust fund. 

178.29      Sec. 12. Minnesota Statutes 2004, section 298.28, is amended by adding a subdivision 
178.30  to read:
178.31      Subd. 2a. Cities and towns. Two cents per taxable ton is allocated to the city or 
178.32  town in the county in which the land from which the taconite was mined or quarried or 
178.33  within which the concentrate was produced. If the mining, quarrying, and concentration, 
178.34  or different steps in either thereof are carried on in more than one taxing district, the 
178.35  commissioner shall apportion equitably the proceeds of the part of the tax going to cities 
179.1   and towns among the subdivisions by attributing 50 percent of the proceeds of the tax to 
179.2   the operation of mining or quarrying the taconite, and the remainder to the concentrating 
179.3   plant and to the processes of concentration, and with respect to each thereof giving due 
179.4   consideration to the relative extent of such operations performed in each taxing district. 
179.5   The commissioner's apportionment order is subject to review by the Tax Court upon 
179.6   petition by any of the interested taxing districts, in the same manner as other orders of 
179.7   the commissioner.
179.8   EFFECTIVE DATE.This section is effective for taxes paid in 2007 and subsequent 
179.9   years.

179.10      Sec. 13. Minnesota Statutes 2004, section 298.28, subdivision 6, is amended to read:
179.11      Subd. 6. Property tax relief. (a) In 2002 and thereafter, 33.9 cents per taxable 
179.12  ton, less any amount required to be distributed under paragraphs (b) and (c), or section 
179.13  298.2961, subdivision 5,  must be allocated to St. Louis County acting as the counties' 
179.14  fiscal agent, to be distributed as provided in sections  273.134 to  273.136. 
179.15  (b) If an electric power plant owned by and providing the primary source of power 
179.16  for a taxpayer mining and concentrating taconite is located in a county other than the 
179.17  county in which the mining and the concentrating processes are conducted, .1875 cent per 
179.18  taxable ton of the tax imposed and collected from such taxpayer shall be paid to the county.
179.19  (c) If an electric power plant owned by and providing the primary source of power 
179.20  for a taxpayer mining and concentrating taconite is located in a school district other than 
179.21  a school district in which the mining and concentrating processes are conducted, .4541 
179.22  cent per taxable ton of the tax imposed and collected from the taxpayer shall be paid to 
179.23  the school district.

179.24      Sec. 14. Minnesota Statutes 2004, section 298.28, subdivision 8, is amended to read:
179.25      Subd. 8. Range Association of Municipalities and Schools. .20 .30 cent per 
179.26  taxable ton shall be paid to the Range Association of Municipalities and Schools, for 
179.27  the purpose of providing an areawide approach to problems which demand coordinated 
179.28  and cooperative actions and which are common to those areas of northeast Minnesota 
179.29  affected by operations involved in mining iron ore and taconite and producing concentrate 
179.30  therefrom, and for the purpose of promoting the general welfare and economic 
179.31  development of the cities, towns and school districts within the iron range area of 
179.32  northeast Minnesota.
180.1   EFFECTIVE DATE.This section is effective for taxes paid in 2007 and subsequent 
180.2   years.

180.3       Sec. 15. Minnesota Statutes 2004, section 298.28, is amended by adding a subdivision 
180.4   to read:
180.5       Subd. 9c. Taconite environmental fund-renewable energy. 4.4 cents per taxable 
180.6   ton is allocated to the taconite environmental protection fund for projects under section 
180.7   298.223, subdivision 1, paragraph (e).
180.8   EFFECTIVE DATE.This section is effective for taxes paid in 2007 and subsequent 
180.9   years.

180.10      Sec. 16. Minnesota Statutes 2005 Supplement, section 298.2961, subdivision 4, 
180.11  is amended to read:
180.12      Subd. 4. Grant and loan fund. (a) A fund is established to receive distributions 
180.13  under section 298.28, subdivision 9b, and to make grants or loans as provided in this 
180.14  subdivision. Any grant or loan made under this subdivision must be approved by 
180.15  a majority of the members of the Iron Range Resources and Rehabilitation Board, 
180.16  established under section 298.22.
180.17  (b) Distributions received in calendar year 2005 are allocated to the city of Virginia 
180.18  for improvements and repairs to the city's steam heating system.
180.19  (c) Distributions received in calendar year 2006 are allocated to a project of the 
180.20  public utilities commissions of the cities of Hibbing and Virginia to convert their electrical 
180.21  generating plants to the use of biomass products, such as wood.
180.22  (d) Distributions received in calendar year 2007 must be paid to the city of Tower to 
180.23  be used for the East Two Rivers project in or near the city of Tower.
180.24  (e) For distributions received in 2008 and later, amounts may be allocated to joint 
180.25  ventures with mining companies for reclamation of lands containing abandoned or worked 
180.26  out mines to convert these lands to marketable properties for residential, recreational, 
180.27  commercial, or other valuable uses the first $2,000,000 of the 2008 distribution must be 
180.28  paid to St. Louis County for deposit in its county road and bridge fund to be used for 
180.29  relocation of St. Louis County Road 715, commonly referred to as Pike River Road, 
180.30  $250,000 must be paid to the Hibbing Public Utilities Commission for a new well, and the 
180.31  remainder of the 2008 distribution and the full amount of the distributions in 2009 and 
180.32  subsequent years is allocated for projects under section 298.223, subdivision 1, clause (e).

181.1       Sec. 17. Minnesota Statutes 2004, section 298.2961, is amended by adding a 
181.2   subdivision to read:
181.3       Subd. 5. Public works and local economic development fund. For distributions in 
181.4   2007 only, a special fund is established to receive 38.4 cents per ton that otherwise would 
181.5   be allocated under section 298.28, subdivision 6. The following amounts are allocated to 
181.6   St. Louis County acting as the fiscal agent for the recipients for the specific purposes:
181.7   (1) 13.4 cents per ton for the Central Iron Range Sanitary Sewer District for 
181.8   construction of a combined wastewater facility;
181.9   (2) six cents per ton to the city of Eveleth to redesign and design and construct 
181.10  improvements to renovate its water treatment facility;
181.11  (3) one cent per ton for the East Range Joint Powers Board to acquire land for and to 
181.12  design a central wastewater collection and treatment system;
181.13  (4) 0.5 cents per ton to the city of Hoyt Lakes to repair Leeds Road;
181.14  (5) 0.7 cents per ton to the city of Virginia to extend Eighth Street South;
181.15  (6) 0.7 cents per ton to the city of Mountain Iron to repair Hoover Road;
181.16  (7) 0.9 cents per ton to the city of Gilbert for alley repairs between Michigan and 
181.17  Indiana Avenues and for repayment of a loan to the Minnesota Department of Employment 
181.18  and Economic Development;
181.19  (8) 0.4 cents per ton to the city of Keewatin for a new city well;
181.20  (9) 0.3 cents per ton to the city of Grand Rapids for planning for a fire and hazardous 
181.21  materials center;
181.22  (10) 0.9 cents per ton to Aitkin County Growth for an economic development 
181.23  project for peat harvesting;
181.24  (11) 0.4 cents per ton to the city of Nashwauk to develop a comprehensive city plan;
181.25  (12) 0.4 cents per ton to the city of Taconite for development of a city comprehensive 
181.26  plan;
181.27  (13) 0.3 cents per ton to the city of Marble for water and sewer infrastructure;
181.28  (14) 0.8 cents per ton to Aitkin County for improvements to the Long Lake 
181.29  Environmental Learning Center; 
181.30  (15) 0.3 cents per ton to the city of Coleraine for the Coleraine Technology Center;
181.31  (16) 0.5 cents per ton to the Economic Development Authority of the city of Grand 
181.32  Rapids for planning for the North Central Research and Technology Laboratory;
181.33  (17) 0.6 cents per ton to the city of Bovey for sewer and water extension;
181.34  (18) 0.3 cents per ton to the city of Calumet for infrastructure improvements; and 
181.35  (19) ten cents per ton to an economic development authority in a city through which 
181.36  State Highway 1 passes, or a city in Independent School District No. 2142 that has an 
182.1   active mine, for an economic development project approved by the Iron Range Resources 
182.2   and Rehabilitation Board.
182.3   EFFECTIVE DATE.This section is effective the day following final enactment.

182.4       Sec. 18. Minnesota Statutes 2004, section 298.75, is amended by adding a subdivision 
182.5   to read:
182.6        Subd. 10. Tax may be imposed; Sylvan Township.  (a) If Cass County does not 
182.7   impose a tax under this section and approves imposition of the tax under this subdivision, 
182.8   the town of Sylvan in Cass County may impose the aggregate materials tax under this 
182.9   section. 
182.10   (b) For purposes of exercising the powers contained in this section, the "town" is 
182.11  deemed to be the "county." 
182.12   (c) All provisions in this section apply to the town of Sylvan, except that, in lieu 
182.13  of the distribution of the tax proceeds under subdivision 7, all proceeds of the tax must 
182.14  be retained by the town. 
182.15   (d) If Cass County imposes an aggregate materials tax under this section, the tax 
182.16  imposed by the town of Sylvan under this subdivision is repealed on the effective date 
182.17  of the Cass County tax. 
182.18  EFFECTIVE DATE.This section is effective the day after the governing body of 
182.19  the town of Sylvan and its chief clerical officer comply with section 645.021, subdivisions 
182.20  2 and 3. 

182.21      Sec. 19. TRANSITION PROVISIONS.
182.22  Each person with an alternative minimum tax credit on December 31, 2005, pursuant 
182.23  to Minnesota Statutes 2004, section 298.01, may take that credit against occupation tax 
182.24  under Minnesota Statutes 2004, section 298.01, subdivisions 3d and 4e.
182.25  EFFECTIVE DATE.This section is effective the day following final enactment.

182.26      Sec. 20.  REPEALER.
182.27  Minnesota Statutes 2004, section 298.01, subdivisions 3c, 3d, 4d, and 4e, are 
182.28  repealed effective for tax years beginning after December 31, 2005.

183.1                                          ARTICLE 14
183.2                                        MISCELLANEOUS

183.3       Section 1. Minnesota Statutes 2004, section 256.482, subdivision 8, is amended to read:
183.4       Subd. 8. Sunset. Notwithstanding section  15.059, subdivision 5, the Council on 
183.5   Disability shall not sunset until June 30, 2007 2011. 
183.6   EFFECTIVE DATE.This section is effective upon final enactment.

183.7       Sec. 2. Minnesota Statutes 2004, section 270A.03, subdivision 2, is amended to read:
183.8       Subd. 2. Claimant agency. "Claimant agency" means any state agency, as 
183.9   defined by section  14.02, subdivision 2, the regents of the University of Minnesota, any 
183.10  district court of the state, any county, any statutory or home rule charter city presenting 
183.11  a claim for a municipal hospital or a public library or a municipal ambulance service, a 
183.12  hospital district, a private nonprofit hospital that leases its building from the county in 
183.13  which it is located, any public agency responsible for child support enforcement, any 
183.14  public agency responsible for the collection of court-ordered restitution, and any public 
183.15  agency established by general or special law that is responsible for the administration of 
183.16  a low-income housing program, and the Minnesota collection enterprise as defined in 
183.17  section  16D.02, subdivision 8, for the purpose of collecting the costs imposed under 
183.18  section  16D.11. A county may act as a claimant agency on behalf of an ambulance service 
183.19  licensed under chapter 144E if the ambulance service's primary service area is located at 
183.20  least in part within the county, but more than one county may not act as a claimant agency 
183.21  for a licensed ambulance service with respect to the same debt.

183.22      Sec. 3. [270C.415] INCOME TAX RETURN PROCESSING; AGREEMENT 
183.23  WITH INTERNAL REVENUE SERVICE.
183.24  The commissioner of revenue shall enter into an agreement with the United States 
183.25  Internal Revenue Service to participate in a tax processing program whereby the Internal 
183.26  Revenue Service processes electronically filed state returns together with the federal 
183.27  returns. If possible, the ability of taxpayers to file property tax refund claims under chapter 
183.28  290A with state income tax returns must be preserved.

183.29      Sec. 4. Minnesota Statutes 2005 Supplement, section 272.02, subdivision 83, is 
183.30  amended to read:
184.1       Subd. 83. International economic development zone property. (a) Improvements 
184.2   to real property, and personal property, classified under section 273.13, subdivision 
184.3   24, and located within the international economic development zone designated under 
184.4   section 469.322, are exempt from ad valorem taxes levied under chapter 275, if the 
184.5   improvements are:
184.6   (1) part of a regional distribution center as defined in section 469.321; or
184.7   (2) occupied by a qualified business as defined in section 469.321, that uses the 
184.8   improvements primarily in freight forwarding operations.
184.9   (b) The exemption applies beginning for the first assessment year after designation of 
184.10  the international economic development zone. The exemption applies to each assessment 
184.11  year that begins during the duration of the international economic development zone. To 
184.12  be exempt under paragraph (a), clause (2), the property must be occupied by July 1 of the 
184.13  assessment year by a qualified business that has signed the business subsidy agreement 
184.14  by July 1 of the assessment year.
184.15  EFFECTIVE DATE.This section is effective the day following final enactment.

184.16      Sec. 5. Minnesota Statutes 2004, section 289A.09, subdivision 2, is amended to read:
184.17      Subd. 2. Withholding statement to employee or payee and to commissioner. (a) 
184.18  A person required to deduct and withhold from an employee a tax under section  290.92, 
184.19  subdivision 2a or 3, or  290.923, subdivision 2, or who would have been required to 
184.20  deduct and withhold a tax under section  290.92, subdivision 2a or 3, or persons required 
184.21  to withhold tax under section  290.923, subdivision 2, determined without regard to 
184.22  section  290.92, subdivision 19, if the employee or payee had claimed no more than one 
184.23  withholding exemption, or who paid wages or made payments not subject to withholding 
184.24  under section  290.92, subdivision 2a or 3, or  290.923, subdivision 2, to an employee or 
184.25  person receiving royalty payments in excess of $600, or who has entered into a voluntary 
184.26  withholding agreement with a payee under section  290.92, subdivision 20, must give 
184.27  every employee or person receiving royalty payments in respect to the remuneration paid 
184.28  by the person to the employee or person receiving royalty payments during the calendar 
184.29  year, on or before January 31 of the succeeding year, or, if employment is terminated 
184.30  before the close of the calendar year, within 30 days after the date of receipt of a written 
184.31  request from the employee if the 30-day period ends before January 31, a written statement 
184.32  showing the following: 
184.33  (1) name of the person;
184.34  (2) the name of the employee or payee and the employee's or payee's Social 
184.35  Security account number;
185.1   (3) the total amount of wages as that term is defined in section  290.92, subdivision 
185.2   1, paragraph (1); the total amount of remuneration subject to withholding under section  
185.3   290.92, subdivision 20; the amount of sick pay as required under section 6051(f) of the 
185.4   Internal Revenue Code; and the amount of royalties subject to withholding under section  
185.5   290.923, subdivision 2; and 
185.6   (4) the total amount deducted and withheld as tax under section  290.92, subdivision 
185.7   2a or 3, or  290.923, subdivision 2. 
185.8   (b) The statement required to be furnished by this paragraph with respect to any 
185.9   remuneration must be furnished at those times, must contain the information required, and 
185.10  must be in the form the commissioner prescribes.
185.11  (c) The commissioner may prescribe rules providing for reasonable extensions of 
185.12  time, not in excess of 30 days, to employers or payers required to give the statements to 
185.13  their employees or payees under this subdivision.
185.14  (d) A duplicate of any statement made under this subdivision and in accordance 
185.15  with rules prescribed by the commissioner, along with a reconciliation in the form the 
185.16  commissioner prescribes of the statements for the calendar year, including a reconciliation 
185.17  of the quarterly returns required to be filed under subdivision 1, must be filed with the 
185.18  commissioner on or before February 28 of the year after the payments were made.
185.19  (e) If an employer cancels the employer's Minnesota withholding account number 
185.20  required by section  290.92, subdivision 24, the information required by paragraph (d), 
185.21  must be filed with the commissioner within 30 days of the end of the quarter in which 
185.22  the employer cancels its account number. 
185.23  (f) The employer must submit the statements required to be sent to the commissioner 
185.24  on magnetic media, if the magnetic media was required to satisfy the federal reporting 
185.25  requirements of section 6011(e) of the Internal Revenue Code and the regulations issued 
185.26  under it by electronic means.
185.27  (g) A "third-party bulk filer" as defined in section  290.92, subdivision 30, paragraph 
185.28  (a), clause (2), must submit the returns required by this subdivision and subdivision 1, 
185.29  paragraph (a), with the commissioner by electronic means. 
185.30  EFFECTIVE DATE.This section is effective for returns due after June 30, 2006.

185.31      Sec. 6. Minnesota Statutes 2005 Supplement, section 290.0922, subdivision 2, is 
185.32  amended to read:
185.33      Subd. 2. Exemptions. The following entities are exempt from the tax imposed 
185.34  by this section:
185.35  (1) corporations exempt from tax under section 290.05;
186.1   (2) real estate investment trusts;
186.2   (3) regulated investment companies or a fund thereof; and
186.3   (4) entities having a valid election in effect under section 860D(b) of the Internal 
186.4   Revenue Code;
186.5   (5) town and farmers' mutual insurance companies;
186.6   (6) cooperatives organized under chapter 308A or 308B that provide housing 
186.7   exclusively to persons age 55 and over and are classified as homesteads under section 
186.8   273.124, subdivision 3;
186.9   (7) an entity, if for the taxable year all of its property is located in a job opportunity 
186.10  building zone designated under section 469.314 and all of its payroll is a job opportunity 
186.11  building zone payroll under section 469.310; and
186.12  (8) an entity, if for the taxable year all of its property is located in an international 
186.13  economic development zone designated under section 469.322, and all of its payroll is 
186.14  international economic development zone payroll under section 469.321. The exemption 
186.15  under this clause applies to taxable years beginning during the duration of the international 
186.16  economic development zone.
186.17  Entities not specifically exempted by this subdivision are subject to tax under this 
186.18  section, notwithstanding section 290.05.
186.19  EFFECTIVE DATE.This section is effective the day following final enactment. 

186.20      Sec. 7. Minnesota Statutes 2005 Supplement, section 290.0922, subdivision 3, is 
186.21  amended to read:
186.22      Subd. 3. Definitions. (a) "Minnesota sales or receipts" means the total sales 
186.23  apportioned to Minnesota pursuant to section 290.191, subdivision 5, the total receipts 
186.24  attributed to Minnesota pursuant to section 290.191, subdivisions 6 to 8, and/or the 
186.25  total sales or receipts apportioned or attributed to Minnesota pursuant to any other 
186.26  apportionment formula applicable to the taxpayer.
186.27  (b) "Minnesota property" means total Minnesota tangible property as provided in 
186.28  section 290.191, subdivisions 9 to 11, any other tangible property located in Minnesota, 
186.29  but does not include: (1) property located in a job opportunity building zone designated 
186.30  under section 469.314, or (2) property of a qualified business located in a biotechnology 
186.31  and health sciences industry zone designated under section 469.334, or (3) for taxable 
186.32  years beginning during the duration of the zone, property of a qualified business located 
186.33  in the international economic development zone designated under section 469.322. 
186.34  Intangible property shall not be included in Minnesota property for purposes of this 
186.35  section. Taxpayers who do not utilize tangible property to apportion income shall 
187.1   nevertheless include Minnesota property for purposes of this section. On a return for 
187.2   a short taxable year, the amount of Minnesota property owned, as determined under 
187.3   section 290.191, shall be included in Minnesota property based on a fraction in which the 
187.4   numerator is the number of days in the short taxable year and the denominator is 365.
187.5   (c) "Minnesota payrolls" means total Minnesota payrolls as provided in section 
187.6   290.191, subdivision 12, but does not include: (1) job opportunity building zone payrolls 
187.7   under section 469.310, subdivision 8, or (2) biotechnology and health sciences industry 
187.8   zone payrolls under section 469.330, subdivision 8, or (3) for taxable years beginning 
187.9   during the duration of the zone, international economic development zone payrolls under 
187.10  section 469.321, subdivision 9. Taxpayers who do not utilize payrolls to apportion income 
187.11  shall nevertheless include Minnesota payrolls for purposes of this section.
187.12  EFFECTIVE DATE.This section is effective the day following final enactment.

187.13      Sec. 8. Minnesota Statutes 2004, section 295.53, subdivision 4a, is amended to read:
187.14      Subd. 4a. Credit for research. (a) In addition to the exemptions allowed under 
187.15  subdivision 1, a hospital or health care provider may claim an annual credit against the 
187.16  total amount of tax, if any, the hospital or health care provider owes for that calendar 
187.17  year under sections  295.50 to  295.57. The credit shall equal 2.5 five  percent of revenues 
187.18  for patient services used to fund expenditures for qualifying research conducted by an 
187.19  allowable research program. The amount of the credit shall not exceed the tax liability of 
187.20  the hospital or health care provider under sections  295.50 to  295.57. 
187.21  (b) For purposes of this subdivision, the following requirements apply:
187.22  (1) expenditures must be for program costs of qualifying research conducted by 
187.23  an allowable research program;
187.24  (2) an allowable research program must be a formal program of medical and 
187.25  health care research conducted by an entity which is exempt under section 501(c)(3) 
187.26  of the Internal Revenue Code of 1986 or is owned and operated under authority of a 
187.27  governmental unit;
187.28  (3) qualifying research must:
187.29  (A) be approved in writing by the governing body of the hospital or health care 
187.30  provider which is taking the deduction under this subdivision;
187.31  (B) have as its purpose the development of new knowledge in basic or applied 
187.32  science relating to the diagnosis and treatment of conditions affecting the human body;
187.33  (C) be subject to review by individuals with expertise in the subject matter of the 
187.34  proposed study but who have no financial interest in the proposed study and are not 
187.35  involved in the conduct of the proposed study; and
188.1   (D) be subject to review and supervision by an institutional review board operating 
188.2   in conformity with federal regulations if the research involves human subjects or 
188.3   an institutional animal care and use committee operating in conformity with federal 
188.4   regulations if the research involves animal subjects. Research expenses are not exempt if 
188.5   the study is a routine evaluation of health care methods or products used in a particular 
188.6   setting conducted for the purpose of making a management decision. Costs of clinical 
188.7   research activities paid directly for the benefit of an individual patient are excluded from 
188.8   this exemption. Basic research in fields including biochemistry, molecular biology, and 
188.9   physiology are also included if such programs are subject to a peer review process.
188.10  (c) No credit shall be allowed under this subdivision for any revenue received by the 
188.11  hospital or health care provider in the form of a grant, gift, or otherwise, whether from a 
188.12  government or nongovernment source, on which the tax liability under section  295.52 is 
188.13  not imposed. 
188.14  (d) The taxpayer shall apply for the credit under this section on the annual return 
188.15  under section  295.55, subdivision 5. 
188.16  (e) Beginning September 1, 2001, if the actual or estimated amount paid under this 
188.17  section for the calendar year exceeds $2,500,000 $7,000,000, the commissioner of finance 
188.18  shall determine the rate of the research credit for the following calendar year to the nearest 
188.19  one-half percent so that refunds paid under this section will most closely equal $2,500,000 
188.20  $7,000,000. The commissioner of finance shall publish in the State Register by October 1 
188.21  of each year the rate of the credit for the following calendar year. A determination under 
188.22  this section is not subject to the rulemaking provisions of chapter 14.
188.23  EFFECTIVE DATE.This section is effective for taxable years beginning after 
188.24  December 31, 2006.

188.25      Sec. 9. [295.61] SPORTS MEMORABILIA TAX.
188.26      Subdivision 1. Tax. A tax is imposed on each sale at wholesale of sports memorabilia 
188.27  in the state. The rate of the tax is 13 percent of the gross revenues from the sale.
188.28      Subd. 2. Definitions. (a) For purposes of this section, the following terms have 
188.29  the meanings given them.
188.30  (b) "Buyer" means any person who purchases sports memorabilia at wholesale.
188.31  (c) "Commissioner" means the commissioner of revenue.
188.32  (d) "Sale" means a transfer of title or possession of tangible personal property, 
188.33  whether absolutely or conditionally.
188.34  (e) "Sports memorabilia" means items available for sale to the public that are sold 
188.35  under a license granted by either:
189.1   (1) a professional baseball, football, basketball, or hockey league, association, or 
189.2   team;
189.3   (2) the National Collegiate Athletic Association (NCAA);
189.4   (3) an NCAA Division I college or university, excluding any multidivision 
189.5   classification NCAA member schools that have only one Division I sport; or
189.6   (4) an individual athlete.
189.7   Sports memorabilia includes:
189.8   (1) one-of-a-kind items related to sports figures, teams, or events;
189.9   (2) trading cards;
189.10  (3) photographs;
189.11  (4) clothing;
189.12  (5) sports event licensed items;
189.13  (6) sports equipment; and
189.14  (7) similar items.
189.15  (f) "Wholesale" or "sale at wholesale" means a sale to a retailer, as defined in section 
189.16  297A.61, subdivision 9, for the purpose of reselling the property to a third party.
189.17  (g) "Wholesaler" means any person making wholesale sales of sports memorabilia 
189.18  to purchasers in the state.
189.19      Subd. 3. Quarterly estimated payments. (a) Each wholesaler must make estimated 
189.20  payments of the tax for the calendar year to the commissioner in quarterly installments by 
189.21  April 15, July 15, October 15, and January 15 of the following calendar year.
189.22  (b) Estimated tax payments are not required if the tax for the calendar year is less 
189.23  than $500.
189.24  (c) An underpayment of estimated installments bears interest at the rate specified in 
189.25  section 270C.40, from the due date of the payment until paid or until the due date of the 
189.26  annual return at the rate specified in section 270C.40. An underpayment of an estimated 
189.27  installment is the difference between the amount paid and the lesser of (1) 90 percent of 
189.28  one-quarter of the tax for the calendar year, or (2) the tax for the actual gross revenues 
189.29  received during the quarter.
189.30      Subd. 4. Electronic funds-transfer payments. A taxpayer with an aggregate tax 
189.31  liability of $120,000 or more during a fiscal year ending June 30, must remit all liabilities 
189.32  by funds-transfer as defined in section 336.4A-104, paragraph (a), in the next calendar 
189.33  year. The funds-transfer payment date, as defined in section 336.4A-401, is on or before 
189.34  the first funds-transfer business day after the date the tax is due.
189.35      Subd. 5. Annual return. The taxpayer must file an annual return reconciling the 
189.36  estimated payments by March 15 of the following calendar year.
190.1       Subd. 6. Form of returns. The estimated payments and annual return must contain 
190.2   the information and be in the form prescribed by the commissioner.
190.3       Subd. 7. Use tax. If the tax is not paid under this section, a tax is imposed on 
190.4   possession for sale or use of sports memorabilia in the state. The rate of tax equals the rate 
190.5   under this section, and must be paid by the possessor of the items.
190.6       Subd. 8. Application of other chapters. Unless specifically provided otherwise by 
190.7   this section, the enforcement, interest, and penalty provisions under chapter 270C, appeal 
190.8   provisions in sections 289A.43 and 289A.65, criminal penalties under section 289A.63, 
190.9   refund provisions in section 289A.50, and collection and rulemaking provisions under 
190.10  chapter 270C, apply to the tax under this section. 
190.11      Subd. 9. Disposition of revenues. The commissioner shall deposit all revenues, 
190.12  including interest and penalties, derived from the tax imposed under this section in the 
190.13  state treasury. A portion of the proceeds from the tax imposed in subdivision 1 are 
190.14  intended to fund the continuation of the Council on Disability.
190.15  EFFECTIVE DATE.This section is effective for sales after December 31, 2006.

190.16      Sec. 10. Minnesota Statutes 2005 Supplement, section 297A.68, subdivision 41, 
190.17  is amended to read:
190.18      Subd. 41. International economic development zones. (a) Purchases of tangible 
190.19  personal property or taxable services by a qualified business, as defined in section 469.321, 
190.20  are exempt if the property or services are primarily used or consumed in the international 
190.21  economic development zone designated under section 469.322. This exemption applies 
190.22  only if the purchase is made and delivery received after the business signed the business 
190.23  subsidy agreement required under chapter 469.
190.24  (b) Purchase and use of construction materials, supplies, and equipment incorporated 
190.25  into the construction of improvements to real property in the international economic 
190.26  development zone are exempt if the improvements after completion of construction are 
190.27  to be used as a regional distribution center as defined in section 469.321 or otherwise 
190.28  used in the conduct of freight forwarding activities of a qualified business as defined in 
190.29  section 469.321. This exemption applies regardless of whether the purchases are made 
190.30  by the business or a contractor.
190.31  (c) The exemptions under this subdivision apply to a local sales and use tax, 
190.32  regardless of whether the local tax is imposed on sales taxable under this chapter or in 
190.33  another law, ordinance, or charter provision.
190.34  (d) The exemption in paragraph (a) applies exemptions in this section apply to sales 
190.35  during the duration of the zone and after June 30, 2007, if the purchase was made and 
191.1   delivery received after the business signs the business subsidy agreement required under 
191.2   chapter 469 and purchases made after the date of final zone designation under section 
191.3   469.322, paragraph (c), and before the expiration of the zone under section 469.322, 
191.4   paragraph (d).
191.5   (e) For purchases made for improvements to real property to be occupied by a 
191.6   business that has not signed a business subsidy agreement at the time of the purchase, the 
191.7   tax must be imposed and collected as if the rate under section 297A.62, subdivision 1, 
191.8   applied, and then refunded in the manner provided in section 297A.75 beginning in fiscal 
191.9   year 2008. The taxpayer must attach to the claim for refund information sufficient for 
191.10  the commissioner to be able to determine that the improvements are being occupied by 
191.11  a business that has signed a business subsidy agreement.
191.12  EFFECTIVE DATE.This section is effective the day following final enactment.

191.13      Sec. 11. [469.193] FOREIGN TRADE ZONES.
191.14  A city, county, town, or other political subdivision may apply to the board defined in 
191.15  United States Code, title 19, section 81a, for the right to use the powers provided in United 
191.16  States Code, title 19, sections 81a to 81u. If the right is granted, the city, county, town, or 
191.17  other political subdivision may use the powers within or outside of a port district. Any 
191.18  city, county, town, or other political subdivision may apply jointly with any other city, 
191.19  county, town, or other political subdivision.
191.20  EFFECTIVE DATE.This section is effective the day following final enactment.

191.21      Sec. 12. Minnesota Statutes 2005 Supplement, section 469.322, is amended to read:
191.22  469.322 DESIGNATION OF INTERNATIONAL ECONOMIC 
191.23  DEVELOPMENT ZONE.
191.24  (a) An area designated as a foreign trade zone may be designated by the foreign 
191.25  trade zone authority as an international economic development zone if within the zone 
191.26  a regional distribution center is being developed pursuant to section 469.323. The zone 
191.27  must consist of contiguous area of not less than 500 acres and not more than 1,000 acres. 
191.28  The designation authority under this section is limited to one zone.
191.29  (b) In making the designation, the foreign trade zone authority, in consultation with 
191.30  the Minnesota Department of Transportation and the Metropolitan Council, shall consider 
191.31  access to major transportation routes, consistency with current state transportation and 
191.32  air cargo planning, adequacy of the size of the site, access to airport facilities, present 
191.33  and future capacity at the designated airport, the capability to meet integrated present 
192.1   and future air cargo, security, and inspection services, and access to other infrastructure 
192.2   and financial incentives. The border of the international economic development zone 
192.3   must be no more than 60 miles distant or 90 minutes drive time from the border of the 
192.4   Minneapolis-St. Paul International Airport.
192.5   (c) Before final designation of the zone, the foreign trade zone authority, in 
192.6   consultation with the applicant, must conduct a transportation impact study based on the 
192.7   regional model and utilizing traffic forecasting and assignments. The results must be used 
192.8   to evaluate the effects of the proposed use on the transportation system and identify any 
192.9   needed improvements. If the site is in the metropolitan area the study must also evaluate 
192.10  the effect of the transportation impacts on the Metropolitan Transportation System plan 
192.11  as well as the comprehensive plans of the municipalities that would be affected. The 
192.12  authority shall provide copies of the study to the legislature under section 3.195 and to the 
192.13  chairs of the committees with jurisdiction over transportation and economic development. 
192.14  The applicant must pay the cost of the study.
192.15  (c) (d) Final zone designation must be made by June 30, 2006 2008.
192.16  (d) (e) Duration of the zone is a 12-year period beginning on January 1, 2007 2010.
192.17  EFFECTIVE DATE.This section is effective the day following final enactment.

192.18      Sec. 13. Minnesota Statutes 2005 Supplement, section 469.323, subdivision 2, is 
192.19  amended to read:
192.20      Subd. 2. Business plan. Before designation of an international economic 
192.21  development zone under section 469.322, the governing body of the foreign trade zone 
192.22  authority shall prepare a business plan. The findings of the business plan shall be 
192.23  presented to the legislature pursuant to section 3.195. Copies of the business plan shall be 
192.24  provided to the chairs of committees with jurisdiction over transportation and economic 
192.25  development. The plan must include an analysis of the economic feasibility of the regional 
192.26  distribution center once it becomes operational and of the operations of freight forwarders 
192.27  and other businesses that choose to locate within the boundaries of the zone. The analysis 
192.28  must provide profitability models that:
192.29  (1) include the benefits of the incentives;
192.30  (2) estimate the amount of time needed to achieve profitability; and
192.31  (3) analyze the length of time incentives will be necessary to the economic viability 
192.32  of the regional distribution center.
192.33  If the governing body of the foreign trade authority determines that the models do 
192.34  not establish the economic feasibility of the project, the regional distribution center does 
192.35  not meet the development requirements of this section and section 469.322.

193.1       Sec. 14. Minnesota Statutes 2005 Supplement, section 469.327, is amended to read:
193.2   469.327 JOBS CREDIT.
193.3       Subdivision 1. Credit allowed. (a) A qualified business is allowed a credit against 
193.4   the taxes imposed under chapter 290. The credit equals seven percent of the:
193.5   (1) lesser of:
193.6   (i) zone payroll for the taxable year, less the zone payroll for the base year; or
193.7   (ii) total Minnesota payroll for the taxable year, less total Minnesota payroll for 
193.8   the base year; minus
193.9   (2) $30,000 multiplied by the number of full-time equivalent employees that the 
193.10  qualified business employs in the international economic development zone for the taxable 
193.11  year, minus the number of full-time equivalent employees the business employed in the 
193.12  zone in the base year, but not less than zero.
193.13  (b) This section applies only to tax years beginning during the duration of the 
193.14  international economic development zone.
193.15      Subd. 2. Definitions. (a) For purposes of this section, the following terms have 
193.16  the meanings given.
193.17  (b) "Base year" means the taxable year beginning during the calendar year 
193.18  immediately preceding the calendar year in which the zone designation was made duration 
193.19  of the zone begins under section 469.322, paragraph (d).
193.20  (c) "Full-time equivalent employees" means the equivalent of annualized expected 
193.21  hours of work equal to 2,080 hours.
193.22  (d) "Minnesota payroll" means the wages or salaries attributed to Minnesota under 
193.23  section 290.191, subdivision 12, for the qualified business or the unitary business of which 
193.24  the qualified business is a part, whichever is greater.
193.25  (e) "Zone payroll" means wages or salaries used to determine the zone payroll 
193.26  factor for the qualified business, less the amount of compensation attributable to any 
193.27  employee that exceeds $70,000.
193.28      Subd. 3. Inflation adjustment. For taxable years beginning after December 31, 
193.29  2006 2010, the dollar amounts in subdivisions 1, clause (2); and 2, paragraph (e), are 
193.30  annually adjusted for inflation. The commissioner of revenue shall adjust the amounts by 
193.31  the percentage determined under section 290.06, subdivision 2d, for the taxable year.
193.32      Subd. 4. Refundable. If the amount of the credit exceeds the liability for tax under 
193.33  chapter 290, the commissioner of revenue shall refund the excess to the qualified business.
193.34      Subd. 5. Appropriation. An amount sufficient to pay the refunds authorized by this 
193.35  section is appropriated to the commissioner of revenue from the general fund.
194.1   EFFECTIVE DATE.This section is effective the day following final enactment.

194.2       Sec. 15. Laws 2005, First Special Session chapter 3, article 10, section 23, is amended 
194.3   to read:
194.4   Sec. 23. GRANTS TO QUALIFYING BUSINESSES.  
194.5    
194.6   $750,000 is appropriated in fiscal year 2006 from the  general fund to the 
194.7   commissioner of employment and economic  development to be distributed to the foreign 
194.8   trade zone  authority to provide grants to qualified businesses as  determined by the 
194.9   authority, subject to Minnesota Statutes,  sections 116J.993 to 116J.995, to provide 
194.10  incentives for the  businesses to locate their operations in an international  economic 
194.11  development zone.  If the money is not distributed  during fiscal year 2006, it remains 
194.12  available for distribution  under this section during fiscal year 2007 until December 31, 
194.13  2010.  

194.14      Sec. 16. PROPERTY TAX REFUND COLLECTION ACTION PROHIBITED; 
194.15  REFUNDS REQUIRED.
194.16  Notwithstanding Minnesota Statutes, section 289A.60, subdivision 12, or any other 
194.17  law to the contrary, the commissioner of revenue shall not disallow any part of a claim 
194.18  for a property tax refund filed in 2005 or an earlier year to the extent that the claim 
194.19  was excessive because it did not include in the claimant's income as determined under 
194.20  Minnesota Statutes, section 290A.03, subdivision 3, the cash value of a tuition discount 
194.21  provided by a postsecondary education institution. If a claimant was required to repay 
194.22  any part of a property tax refund based on inclusion of this discount in the claimant's 
194.23  income on a claim filed in 2005 or an earlier year, the commissioner must refund that 
194.24  amount to the claimant.
194.25  EFFECTIVE DATE.This section is effective the day following final enactment.

194.26      Sec. 17. JOINT STUDY BY COMMISSIONERS OF REVENUE AND 
194.27  DEPARTMENT OF EMPLOYEE RELATIONS.
194.28  In order to increase compliance with income and franchise taxes and tax laws, the 
194.29  commissioners of the Departments of Revenue and Employee Relations, in consultation 
194.30  with the affected bargaining units, shall study the competitiveness of compensation of 
194.31  tax compliance auditors within the Department of Revenue. The study shall consider 
194.32  the performance of compliance auditors, including training, experience, employment 
195.1   classification, and duties. The study shall be completed by October 15, 2006, and the 
195.2   commissioner of employee relations shall implement its recommendations.
195.3   EFFECTIVE DATE.This section is effective the day following final enactment.

195.4       Sec. 18. SALES AND USE TAX; SERVICES TO TAXPAYERS WITH LIMITED 
195.5   ENGLISH PROFICIENCY.
195.6   The commissioner of revenue shall study and implement procedures and services 
195.7   that will assist sales and use taxpayers of limited English proficiency in complying with 
195.8   sales and use tax laws. The benefits of translating sales and use tax fact sheets, forms, 
195.9   and instructions into Spanish and other languages must be considered. In addition, the 
195.10  commissioner shall study how to direct taxpayers of limited English proficiency who 
195.11  contact the Department of Revenue by telephone to assistance in Spanish and other 
195.12  languages as determined by the commissioner. The commissioner shall report on the 
195.13  results of the study and a plan to implement them to the senate and house of representatives 
195.14  committees with jurisdiction over tax laws by February 1, 2007.
195.15  EFFECTIVE DATE.This section is effective the day following final enactment.

195.16      Sec. 19. TRANSFER OF MONEY.
195.17  Any money in the tax relief account under Minnesota Statutes, section 16A.1522, 
195.18  subdivision 4, on the day following final enactment of this act is transferred to the general 
195.19  fund.

195.20      Sec. 20. COOK-ORR HOSPITAL DISTRICT; ADDITION OF TERRITORY.
195.21  The board of the hospital district created under Laws 1988, chapter 645, may 
195.22  enter into an agreement with the Tribal Council of the Bois Forte Band of Minnesota 
195.23  Chippewa that would permit the reservation lands of the Bois Forte Band at Nett Lake 
195.24  and Lake Vermilion to be included in the territory of the hospital district. The agreement 
195.25  must establish the terms and conditions under which the territory would be so expanded, 
195.26  including the amount of or means for determining the amount of the contribution by the 
195.27  Bois Forte Band to the district.

195.28      Sec. 21. APPROPRIATION.
195.29  $2,000,000 is appropriated from the general fund to the commissioner of public 
195.30  safety to be used to reimburse state and local law enforcement agencies for additional law 
195.31  enforcement efforts, focused on downtown Minneapolis.