HF 130

1st Unofficial Engrossment - 87th Legislature (2011 - 2012) Posted on 02/03/2011 01:40pm

1.1A bill for an act

1.2relating to state government finance; making appropriation reductions for fiscal
1.3year 2011, policy changes, and appropriation reductions for fiscal years 2012 and
1.42013; making changes to tax aids and credits and reducing payments; conforming
1.5to certain changes in the Internal Revenue Code;amending Minnesota Statutes
1.62010, sections 256B.766; 270A.03, subdivision 7; 273.1384, subdivision 6, by
1.7adding a subdivision; 289A.02, subdivision 7; 289A.50, subdivision 1; 290.01,
1.8subdivisions 6, 19, 19a, 19c, 31; 290A.03, subdivisions 11, 13, 15; 290C.07;
1.9477A.0124, by adding a subdivision; 477A.013, subdivision 9, by adding a
1.10subdivision; 477A.03; Laws 2010, First Special Session chapter 1, article 5,
1.11sections 4; 5; repealing Minnesota Statutes 2010, sections 10A.322, subdivision
1.124; 13.4967, subdivision 2; 290.06, subdivision 23.
1.13BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.14ARTICLE 1

1.15HIGHER EDUCATION

1.16    Section 1. Laws 2010, First Special Session chapter 1, article 5, section 4, is amended
1.17to read:

1.18 1.19 1.20

Sec. 4. BOARD OF TRUSTEES OF THE MINNESOTA STATE COLLEGES AND UNIVERSITIES

$

-0-

$

(50,000,000)

1.21$2,079,000 of the reduction in 2011 is from
1.22the central offices and shared services unit
1.23appropriation. None of these reductions may
1.24be charged back or allocated to the campuses.
1.25$47,921,000 of the reduction in 2011
1.26is from the operations and maintenance
1.27appropriation.
2.1For fiscal years 2012 and 2013, the base for
2.2operations and maintenance is $580,802,000
2.3$532,881,000 each year.
2.4EFFECTIVE DATE.This section is effective the day following final enactment.

2.5    Sec. 2. Laws 2010, First Special Session chapter 1, article 5, section 5, is amended to
2.6read:

2.7 2.8

Sec. 5. BOARD OF REGENTS OF THE UNIVERSITY OF MINNESOTA

2.9

Subdivision 1.Total Appropriation

$

-0-

$

(50,000,000)

2.10The appropriation reductions for each
2.11purpose are shown in the following
2.12subdivisions.

2.13

Subd. 2.Operations and Maintenance

-0-

(44,606,000)

2.14For fiscal years 2012 and 2013, the base for
2.15operations and maintenance is $578,370,000
2.16$533,764,000 each year.

2.17

Subd. 3.Special Appropriations

2.18

(a) Agriculture and Extension Service

-0-

(3,858,000)

2.19

(b) Health Sciences

-0-

(389,000)

2.20$26,000 of the 2011 reduction is from the St.
2.21Cloud family practice residency program.

2.22

(c) Institute of Technology

-0-

(102,000)

2.23

(d) System Special

-0-

(454,000)

2.24 2.25

(e) University of Minnesota and Mayo Foundation Partnership

-0-

(591,000)

2.26EFFECTIVE DATE.This section is effective the day following final enactment.

3.1ARTICLE 2

3.2HUMAN SERVICES

3.3    Section 1. Minnesota Statutes 2010, section 256B.766, is amended to read:
3.4256B.766 REIMBURSEMENT FOR BASIC CARE SERVICES.
3.5(a) Effective for services provided on or after July 1, 2009, total payments for basic
3.6care services, shall be reduced by three percent, except that for the period July 1, 2009,
3.7through June 30, 2011, total payments shall be reduced by 4.5 percent for the medical
3.8assistance and general assistance medical care programs, prior to third-party liability and
3.9spenddown calculation. Effective July 1, 2010, the commissioner shall classify physical
3.10therapy services, occupational therapy services, and speech-language pathology and
3.11related services as basic care services. The reduction in this paragraph shall apply to
3.12physical therapy services, occupational therapy services, and speech-language pathology
3.13and related services provided on or after July 1, 2010.
3.14(b) Payments made to managed care plans and county-based purchasing plans shall
3.15be reduced for services provided on or after October 1, 2009, to reflect the reduction
3.16effective July 1, 2009, and payments made to the plans shall be reduced effective October
3.171, 2010, to reflect the reduction effective July 1, 2010.
3.18(c) This section does not apply to physician and professional services, inpatient
3.19hospital services, family planning services, mental health services, dental services,
3.20prescription drugs, medical transportation, federally qualified health centers, rural health
3.21centers, Indian health services, and Medicare cost-sharing.
3.22EFFECTIVE DATE.This section is effective the day following final enactment.

3.23 3.24

Sec. 2. DEPARTMENT OF HUMAN SERVICES

3.25				APPROPRIATIONS
3.26				Available for the Year
3.27				Ending June 30
3.28					2012		2013

3.29

Subdivision 1.Total appropriation.

$

(19,659,000)

(19,659,000)

3.30The appropriation reductions for each
3.31purpose are shown in the following
3.32subdivisions. The appropriation reductions
3.33shown are to previously established general
3.34fund bases for the following programs.

4.1 4.2

Subd. 2.Children and Economic Assistance Grants

4.3

(a) Children and Community Services Grants

(13,659,000)

(13,659,000)

4.4

(b) General Assistance Grants

(5,267,000)

(5,267,000)

4.5Emergency General Assistance. This
4.6reduction is to reduce the general fund base
4.7for emergency general assistance in fiscal
4.8years 2012 and 2013.

4.9

(c) Minnesota Supplemental Aid Grants

(733,000)

(733,000)

4.10Emergency Minnesota Supplemental Aid.
4.11This reduction is to reduce the general fund
4.12base for emergency Minnesota supplemental
4.13aid in fiscal years 2012 and 2013.
4.14EFFECTIVE DATE.This section is effective the day following final enactment.

4.15ARTICLE 3

4.162011 REDUCTIONS

4.17    Section 1. FISCAL YEAR 2011 REDUCTIONS.
4.18(a) By March 31, 2011, the commissioner of management and budget must allocate
4.19a reduction of $125,000,000 for the fiscal year ending June 30, 2011, to general fund
4.20appropriations made to executive branch agencies as defined in Minnesota Statutes,
4.21section 16A.011, subdivision 12a. Reductions in fiscal year 2011 appropriations cancel to
4.22the general fund. Executive branch agencies must cooperate with the commissioner of
4.23management and budget in developing and implementing these reductions.
4.24(b) The commissioner may not reduce appropriations for:
4.25(1) general education programs under Minnesota Statutes, section 126C.10, and
4.26special education programs under Minnesota Statutes, sections 125A.76 and 125A.79;
4.27(2) enlistment incentives provided by the adjutant general;
4.28(3) the state soldiers' assistance program under Minnesota Statutes, section 197.03;
4.29(4) the county veterans service office grant program under Minnesota Statutes,
4.30section 197.608;
4.31(5) the higher education grant program under Minnesota Statutes, section 136A.121;
4.32(6) flood and tornado disaster relief in Laws 2010, Second Special Session chapter 1,
4.33article 1, section 3, and article 2, section 3, for use by the commissioner of public safety;
5.1(7) local government flood relief grants in Laws 2010, Second Special Session
5.2chapter 1, article 1, section 5;
5.3(8) the job skills partnership program under Minnesota Statutes, chapter 116L;
5.4(9) the vocational rehabilitation program under Minnesota Statutes, chapter 268A;
5.5and
5.6(10) the facilities division of the Department of Corrections.
5.7The commissioner may not further reduce appropriations to the Board of Trustees
5.8of the Minnesota State Colleges and Universities or to the Board of Regents of the
5.9University of Minnesota below the reduction in Laws 2010, First Special Session
5.10chapter 1, article 5, sections 4 and 5. In allocating the reductions the commissioner
5.11must consider appropriation amounts carried forward from fiscal 2010 into fiscal year
5.122011. The commissioner must report to the chairs and ranking minority members of the
5.13senate Finance Committee and the house of representatives Ways and Means Committee
5.14regarding the amount of reductions in spending by each agency and program under this
5.15section.
5.16(c) Reductions in this section apply to fiscal year 2011 only.
5.17EFFECTIVE DATE.This section is effective the day following final enactment.

5.18    Sec. 2. REDUCTIONS, LEGISLATURE, CONSTITUTIONAL OFFICERS.
5.19    Subdivision 1. Reductions. Appropriations for fiscal year 2011 made in Laws 2009,
5.20chapter 101, article 1, are reduced by the amount listed in this section. Reductions in
5.21this section apply to fiscal year 2011 only.
5.22    Subd. 2. Senate. $72,000.
5.23    Subd. 3. House of representatives. $96,000.
5.24    Subd. 4. State auditor. $41,000.
5.25    Subd. 5. Attorney general. $500,000.
5.26    Subd. 6. Secretary of state. $127,000.
5.27EFFECTIVE DATE.This section is effective the day following final enactment.

5.28ARTICLE 4

5.29TAX AIDS AND CREDITS

5.30    Section 1. Minnesota Statutes 2010, section 270A.03, subdivision 7, is amended to
5.31read:
6.1    Subd. 7. Refund. "Refund" means an individual income tax refund or political
6.2contribution refund, pursuant to chapter 290, or a property tax credit or refund, pursuant to
6.3chapter 290A, or a sustainable forest tax payment to a claimant under chapter 290C.
6.4For purposes of this chapter, lottery prizes, as set forth in section 349A.08,
6.5subdivision 8 , and amounts granted to persons by the legislature on the recommendation
6.6of the joint senate-house of representatives Subcommittee on Claims shall be treated
6.7as refunds.
6.8In the case of a joint property tax refund payable to spouses under chapter 290A,
6.9the refund shall be considered as belonging to each spouse in the proportion of the total
6.10refund that equals each spouse's proportion of the total income determined under section
6.11290A.03, subdivision 3 . In the case of a joint income tax refund under chapter 289A, the
6.12refund shall be considered as belonging to each spouse in the proportion of the total
6.13refund that equals each spouse's proportion of the total taxable income determined under
6.14section 290.01, subdivision 29. The commissioner shall remit the entire refund to the
6.15claimant agency, which shall, upon the request of the spouse who does not owe the debt,
6.16determine the amount of the refund belonging to that spouse and refund the amount to
6.17that spouse. For court fines, fees, and surcharges and court-ordered restitution under
6.18section 611A.04, subdivision 2, the notice provided by the commissioner of revenue under
6.19section 270A.07, subdivision 2, paragraph (b), serves as the appropriate legal notice
6.20to the spouse who does not owe the debt.
6.21EFFECTIVE DATE.This section is effective for refund claims based on
6.22contributions made after June 30, 2011.

6.23    Sec. 2. Minnesota Statutes 2010, section 273.1384, subdivision 6, is amended to read:
6.24    Subd. 6. Credit reduction; towns. In 2011 and each year thereafter, the market
6.25value credit reimbursement amount for each taxing jurisdiction town determined under
6.26this section is reduced by the dollar amount of the reduction in market value credit
6.27reimbursements for that taxing jurisdiction town in 2010 due to the reductions under
6.28section 477A.0133. No taxing jurisdiction's town's market value credit reimbursements
6.29are reduced to less than zero under this subdivision. The commissioner of revenue shall
6.30pay the annual market value credit reimbursement amounts, after reduction under this
6.31subdivision, to the affected taxing jurisdictions towns as provided in this section.
6.32EFFECTIVE DATE.This section is effective for credit reimbursements in 2011
6.33and thereafter.

7.1    Sec. 3. Minnesota Statutes 2010, section 273.1384, is amended by adding a subdivision
7.2to read:
7.3    Subd. 7. Credit reductions and limitation; counties and cities. (a) In 2011 and
7.42012, the market value credit reimbursement payment to each county and city authorized
7.5under subdivision 4 may not exceed the reimbursement payment received by the county
7.6or city for taxes payable in 2010.
7.7(b) In 2013 and each year thereafter, the market value credit reimbursement amount
7.8for each city and county determined under this section is reduced by the dollar amount of
7.9the reduction in market value credit reimbursements for that city or county in 2010 due
7.10to the reductions under sections 477A.0133 and 477A.0134. No taxing jurisdiction's
7.11market value credit reimbursements are reduced to less than zero under this subdivision.
7.12The commissioner of revenue shall pay the annual market value credit reimbursement
7.13amounts, after reduction under this subdivision, to the affected city or county as provided
7.14in this section.
7.15EFFECTIVE DATE.This section is effective for credit reimbursements in 2011
7.16and thereafter.

7.17    Sec. 4. Minnesota Statutes 2010, section 289A.50, subdivision 1, is amended to read:
7.18    Subdivision 1. General right to refund. (a) Subject to the requirements of this
7.19section and section 289A.40, a taxpayer who has paid a tax in excess of the taxes lawfully
7.20due and who files a written claim for refund will be refunded or credited the overpayment
7.21of the tax determined by the commissioner to be erroneously paid.
7.22(b) The claim must specify the name of the taxpayer, the date when and the period
7.23for which the tax was paid, the kind of tax paid, the amount of the tax that the taxpayer
7.24claims was erroneously paid, the grounds on which a refund is claimed, and other
7.25information relative to the payment and in the form required by the commissioner. An
7.26income tax, estate tax, or corporate franchise tax return, or amended return claiming an
7.27overpayment constitutes a claim for refund.
7.28(c) When, in the course of an examination, and within the time for requesting a
7.29refund, the commissioner determines that there has been an overpayment of tax, the
7.30commissioner shall refund or credit the overpayment to the taxpayer and no demand
7.31is necessary. If the overpayment exceeds $1, the amount of the overpayment must
7.32be refunded to the taxpayer. If the amount of the overpayment is less than $1, the
7.33commissioner is not required to refund. In these situations, the commissioner does not
7.34have to make written findings or serve notice by mail to the taxpayer.
8.1(d) If the amount allowable as a credit for withholding, estimated taxes, or dependent
8.2care exceeds the tax against which the credit is allowable, the amount of the excess is
8.3considered an overpayment. The refund allowed by section 290.06, subdivision 23, is also
8.4considered an overpayment. The requirements of section 270C.33 do not apply to the
8.5refunding of such an overpayment shown on the original return filed by a taxpayer.
8.6(e) If the entertainment tax withheld at the source exceeds by $1 or more the taxes,
8.7penalties, and interest reported in the return of the entertainment entity or imposed by
8.8section 290.9201, the excess must be refunded to the entertainment entity. If the excess is
8.9less than $1, the commissioner need not refund that amount.
8.10(f) If the surety deposit required for a construction contract exceeds the liability of
8.11the out-of-state contractor, the commissioner shall refund the difference to the contractor.
8.12(g) An action of the commissioner in refunding the amount of the overpayment does
8.13not constitute a determination of the correctness of the return of the taxpayer.
8.14(h) There is appropriated from the general fund to the commissioner of revenue the
8.15amount necessary to pay refunds allowed under this section.
8.16EFFECTIVE DATE.This section is effective for refund claims based on
8.17contributions made after June 30, 2011.

8.18    Sec. 5. Minnesota Statutes 2010, section 290.01, subdivision 6, is amended to read:
8.19    Subd. 6. Taxpayer. The term "taxpayer" means any person or corporation subject to
8.20a tax imposed by this chapter. For purposes of section 290.06, subdivision 23, the term
8.21"taxpayer" means an individual eligible to vote in Minnesota under section 201.014.
8.22EFFECTIVE DATE.This section is effective for refund claims based on
8.23contributions made after June 30, 2011.

8.24    Sec. 6. Minnesota Statutes 2010, section 290A.03, subdivision 11, is amended to read:
8.25    Subd. 11. Rent constituting property taxes. "Rent constituting property taxes"
8.26means 19 15 percent of the gross rent actually paid in cash, or its equivalent, or the portion
8.27of rent paid in lieu of property taxes, in any calendar year by a claimant for the right
8.28of occupancy of the claimant's Minnesota homestead in the calendar year, and which
8.29rent constitutes the basis, in the succeeding calendar year of a claim for relief under this
8.30chapter by the claimant.
8.31EFFECTIVE DATE.This section is effective for claims based on rent paid in
8.322010 and following years.

9.1    Sec. 7. Minnesota Statutes 2010, section 290A.03, subdivision 13, is amended to read:
9.2    Subd. 13. Property taxes payable. "Property taxes payable" means the property tax
9.3exclusive of special assessments, penalties, and interest payable on a claimant's homestead
9.4after deductions made under sections 273.135, 273.1384, 273.1391, 273.42, subdivision 2,
9.5and any other state paid property tax credits in any calendar year, and after any refund
9.6claimed and allowable under section 290A.04, subdivision 2h, that is first payable in
9.7the year that the property tax is payable. In the case of a claimant who makes ground
9.8lease payments, "property taxes payable" includes the amount of the payments directly
9.9attributable to the property taxes assessed against the parcel on which the house is located.
9.10No apportionment or reduction of the "property taxes payable" shall be required for the
9.11use of a portion of the claimant's homestead for a business purpose if the claimant does not
9.12deduct any business depreciation expenses for the use of a portion of the homestead in the
9.13determination of federal adjusted gross income. For homesteads which are manufactured
9.14homes as defined in section 273.125, subdivision 8, and for homesteads which are park
9.15trailers taxed as manufactured homes under section 168.012, subdivision 9, "property
9.16taxes payable" shall also include 19 15 percent of the gross rent paid in the preceding
9.17year for the site on which the homestead is located. When a homestead is owned by
9.18two or more persons as joint tenants or tenants in common, such tenants shall determine
9.19between them which tenant may claim the property taxes payable on the homestead. If
9.20they are unable to agree, the matter shall be referred to the commissioner of revenue
9.21whose decision shall be final. Property taxes are considered payable in the year prescribed
9.22by law for payment of the taxes.
9.23In the case of a claim relating to "property taxes payable," the claimant must have
9.24owned and occupied the homestead on January 2 of the year in which the tax is payable
9.25and (i) the property must have been classified as homestead property pursuant to section
9.26273.124 , on or before December 15 of the assessment year to which the "property taxes
9.27payable" relate; or (ii) the claimant must provide documentation from the local assessor
9.28that application for homestead classification has been made on or before December 15
9.29of the year in which the "property taxes payable" were payable and that the assessor has
9.30approved the application.
9.31EFFECTIVE DATE.This section is effective for claims based on rent paid in
9.322010 and following years.

9.33    Sec. 8. Minnesota Statutes 2010, section 290C.07, is amended to read:
9.34290C.07 CALCULATION OF INCENTIVE PAYMENT.
10.1    (a) An approved claimant under the sustainable forest incentive program is eligible
10.2to receive an annual payment. Subject to the limitation contained in paragraph (b), the
10.3payment shall equal the greater of:
10.4    (1) the difference between the property tax that would be paid on the land using the
10.5previous year's statewide average total township tax rate and a class rate of one percent, if
10.6the land were valued at (i) the average statewide managed forest land market value per
10.7acre calculated under section 290C.06, and (ii) the average statewide managed forest land
10.8current use value per acre calculated under section 290C.02, subdivision 5; or
10.9    (2) two-thirds of the property tax amount determined by using the previous year's
10.10statewide average total township tax rate, the estimated market value per acre as calculated
10.11in section 290C.06, and a class rate of one percent, provided that the payment shall be
10.12no less than $7 $7.75 per acre for each acre enrolled in the sustainable forest incentive
10.13program.
10.14(b) The annual payment under this section per each Social Security number or state
10.15or federal business tax identification number must not exceed $100,000.
10.16EFFECTIVE DATE.This section is effective for payments in calendar year 2011
10.17and thereafter.

10.18    Sec. 9. Minnesota Statutes 2010, section 477A.0124, is amended by adding a
10.19subdivision to read:
10.20    Subd. 6. Aid payments in 2011 and 2012. Notwithstanding total aids calculated or
10.21certified for 2011 under subdivisions 3, 4, and 5, for 2011 and 2012, each county shall
10.22receive an aid distribution under this section equal to the lesser of (1) the total amount of
10.23aid it received under this section in 2010 after the reductions under sections 477A.0133
10.24and 477A.0134, or (2) the total amount the county is certified to receive in 2011 under
10.25subdivisions 3 to 5.
10.26EFFECTIVE DATE.This section is effective for aids payable in calendar years
10.272011 and 2012.

10.28    Sec. 10. Minnesota Statutes 2010, section 477A.013, subdivision 9, is amended to read:
10.29    Subd. 9. City aid distribution. (a) In calendar year 2009 and thereafter, each
10.30city shall receive an aid distribution equal to the sum of (1) the city formula aid under
10.31subdivision 8, and (2) its city aid base.
10.32    (b) For aids payable in 2011 2013 only, the total aid in the previous year for any
10.33city shall mean the amount of aid it was certified to receive for aids payable in 2010 2012
11.1under this section minus the amount of its aid reduction under section 477A.0134. For aids
11.2payable in 2012 2014 and thereafter, the total aid in the previous year for any city means
11.3the amount of aid it was certified to receive under this section in the previous payable year.
11.4    (c) For aids payable in 2010 and thereafter, the total aid for any city shall not exceed
11.5the sum of (1) ten percent of the city's net levy for the year prior to the aid distribution
11.6plus (2) its total aid in the previous year. For aids payable in 2009 and thereafter, the total
11.7aid for any city with a population of 2,500 or more may not be less than its total aid under
11.8this section in the previous year minus the lesser of $10 multiplied by its population, or ten
11.9percent of its net levy in the year prior to the aid distribution.
11.10    (d) For aids payable in 2010 and thereafter, the total aid for a city with a population
11.11less than 2,500 must not be less than the amount it was certified to receive in the
11.12previous year minus the lesser of $10 multiplied by its population, or five percent of its
11.132003 certified aid amount. For aids payable in 2009 only, the total aid for a city with a
11.14population less than 2,500 must not be less than what it received under this section in the
11.15previous year unless its total aid in calendar year 2008 was aid under section 477A.011,
11.16subdivision 36, paragraph (s), in which case its minimum aid is zero.
11.17    (e) A city's aid loss under this section may not exceed $300,000 in any year in
11.18which the total city aid appropriation under section 477A.03, subdivision 2a, is equal or
11.19greater than the appropriation under that subdivision in the previous year, unless the
11.20city has an adjustment in its city net tax capacity under the process described in section
11.21469.174, subdivision 28 .
11.22    (f) If a city's net tax capacity used in calculating aid under this section has decreased
11.23in any year by more than 25 percent from its net tax capacity in the previous year due to
11.24property becoming tax-exempt Indian land, the city's maximum allowed aid increase
11.25under paragraph (c) shall be increased by an amount equal to (1) the city's tax rate in the
11.26year of the aid calculation, multiplied by (2) the amount of its net tax capacity decrease
11.27resulting from the property becoming tax exempt.
11.28EFFECTIVE DATE.This section is effective for aids payable in calendar year
11.292012 and thereafter.

11.30    Sec. 11. Minnesota Statutes 2010, section 477A.013, is amended by adding a
11.31subdivision to read:
11.32    Subd. 11. Aid payments in 2011 and 2012. Notwithstanding aids calculated or
11.33certified for 2011 under subdivision 9, for 2011 and 2012, each city shall receive an aid
11.34distribution under this section equal to the lesser of (1) the total amount of aid it received
11.35under this section in 2010 after the reductions under sections 477A.0133 and 477A.0134,
12.1and reduced by the amount of payments made under section 477A.011, subdivision 36,
12.2paragraphs (y) and (z), and, for 2011 only, increased by the aid base adjustment under
12.3section 477A.011, subdivision 36, paragraph (aa), or (2) the amount it was certified to
12.4receive in 2011 under subdivision 9.
12.5EFFECTIVE DATE.This section is effective for aids payable in calendar years
12.62011 and 2012.

12.7    Sec. 12. Minnesota Statutes 2010, section 477A.03, is amended to read:
12.8477A.03 APPROPRIATION.
12.9    Subd. 2. Annual appropriation. A sum sufficient to discharge the duties imposed
12.10by sections 477A.011 to 477A.014 is annually appropriated from the general fund to the
12.11commissioner of revenue.
12.12    Subd. 2a. Cities. For aids payable in 2011 2013 and thereafter, the total aid paid
12.13under section 477A.013, subdivision 9, is $527,100,646 $426,438,012.
12.14    Subd. 2b. Counties. (a) For aids payable in 2011 2013 and thereafter, the total aid
12.15payable under section 477A.0124, subdivision 3, is $96,395,000 $80,795,000. Each
12.16calendar year, $500,000 shall be retained by the commissioner of revenue to make
12.17reimbursements to the commissioner of management and budget for payments made
12.18under section 611.27. For calendar year 2004, the amount shall be in addition to the
12.19payments authorized under section 477A.0124, subdivision 1. For calendar year 2005
12.20and subsequent years, the amount shall be deducted from the appropriation under
12.21this paragraph. The reimbursements shall be to defray the additional costs associated
12.22with court-ordered counsel under section 611.27. Any retained amounts not used for
12.23reimbursement in a year shall be included in the next distribution of county need aid
12.24that is certified to the county auditors for the purpose of property tax reduction for the
12.25next taxes payable year.
12.26    (b) For aids payable in 2011 2013 and thereafter, the total aid under section
12.27477A.0124, subdivision 4 , is $101,309,575 $84,909,575. The commissioner of
12.28management and budget shall bill the commissioner of revenue for the cost of preparation
12.29of local impact notes as required by section 3.987, not to exceed $207,000 in fiscal year
12.302004 and thereafter. The commissioner of education shall bill the commissioner of
12.31revenue for the cost of preparation of local impact notes for school districts as required by
12.32section 3.987, not to exceed $7,000 in fiscal year 2004 and thereafter. The commissioner
12.33of revenue shall deduct the amounts billed under this paragraph from the appropriation
12.34under this paragraph. The amounts deducted are appropriated to the commissioner of
13.1management and budget and the commissioner of education for the preparation of local
13.2impact notes.
13.3EFFECTIVE DATE.This section is effective for aids payable in calendar year
13.42012 and thereafter.

13.5    Sec. 13. ADMINISTRATION OF PROPERTY TAX REFUND CLAIMS; 2011.
13.6In administering sections 6 and 7 for claims for refunds submitted using 19 percent
13.7of gross rent as rent constituting property taxes under prior law, the commissioner shall
13.8recalculate and pay the refund amounts using 15 percent of gross rent. The commissioner
13.9shall notify the claimant that the recalculation was mandated by action of the 2011
13.10legislature.
13.11EFFECTIVE DATE.This section is effective the day following final enactment.

13.12    Sec. 14. REPEALER.
13.13(a) Minnesota Statutes 2010, sections 10A.322, subdivision 4; and 13.4967,
13.14subdivision 2, are repealed.
13.15(b) Minnesota Statutes 2010, section 290.06, subdivision 23, is repealed.
13.16EFFECTIVE DATE.Paragraph (a) is effective the day following final enactment.
13.17Paragraph (b) is effective for refund claims based on contributions made after June 30,
13.182011.

13.19ARTICLE 5

13.20FEDERAL UPDATE

13.21    Section 1. Minnesota Statutes 2010, section 289A.02, subdivision 7, is amended to
13.22read:
13.23    Subd. 7. Internal Revenue Code. Unless specifically defined otherwise, "Internal
13.24Revenue Code" means the Internal Revenue Code of 1986, as amended through March 18,
13.252010 September 27, 2010.
13.26EFFECTIVE DATE.This section is effective the day following final enactment.

13.27    Sec. 2. Minnesota Statutes 2010, section 290.01, subdivision 19, is amended to read:
13.28    Subd. 19. Net income. The term "net income" means the federal taxable income,
13.29as defined in section 63 of the Internal Revenue Code of 1986, as amended through the
13.30date named in this subdivision, incorporating the federal effective dates of changes to the
14.1Internal Revenue Code and any elections made by the taxpayer in accordance with the
14.2Internal Revenue Code in determining federal taxable income for federal income tax
14.3purposes, and with the modifications provided in subdivisions 19a to 19f.
14.4    In the case of a regulated investment company or a fund thereof, as defined in section
14.5851(a) or 851(g) of the Internal Revenue Code, federal taxable income means investment
14.6company taxable income as defined in section 852(b)(2) of the Internal Revenue Code,
14.7except that:
14.8    (1) the exclusion of net capital gain provided in section 852(b)(2)(A) of the Internal
14.9Revenue Code does not apply;
14.10    (2) the deduction for dividends paid under section 852(b)(2)(D) of the Internal
14.11Revenue Code must be applied by allowing a deduction for capital gain dividends and
14.12exempt-interest dividends as defined in sections 852(b)(3)(C) and 852(b)(5) of the Internal
14.13Revenue Code; and
14.14    (3) the deduction for dividends paid must also be applied in the amount of any
14.15undistributed capital gains which the regulated investment company elects to have treated
14.16as provided in section 852(b)(3)(D) of the Internal Revenue Code.
14.17    The net income of a real estate investment trust as defined and limited by section
14.18856(a), (b), and (c) of the Internal Revenue Code means the real estate investment trust
14.19taxable income as defined in section 857(b)(2) of the Internal Revenue Code.
14.20    The net income of a designated settlement fund as defined in section 468B(d) of
14.21the Internal Revenue Code means the gross income as defined in section 468B(b) of the
14.22Internal Revenue Code.
14.23    The Internal Revenue Code of 1986, as amended through March 18, 2010 September
14.2427, 2010, shall be in effect for taxable years beginning after December 31, 1996. The
14.25provisions of the act of January 22, 2010, Public Law 111-126, to accelerate the benefits
14.26for charitable cash contributions for the relief of victims of the Haitian earthquake, are
14.27effective at the same time it became effective for federal purposes and apply to the
14.28subtraction under subdivision 19b, clause (6).
14.29    Except as otherwise provided, references to the Internal Revenue Code in
14.30subdivisions 19 to 19f mean the code in effect for purposes of determining net income
14.31for the applicable year. For taxable years beginning after December 31, 2009, and before
14.32January 1, 2011, the provisions of the act of December 17, 2010, Public Law 111-312, are
14.33effective at the same time they became effective for federal purposes.
14.34EFFECTIVE DATE.This section is effective the day following final enactment.

14.35    Sec. 3. Minnesota Statutes 2010, section 290.01, subdivision 19a, is amended to read:
15.1    Subd. 19a. Additions to federal taxable income. For individuals, estates, and
15.2trusts, there shall be added to federal taxable income:
15.3    (1)(i) interest income on obligations of any state other than Minnesota or a political
15.4or governmental subdivision, municipality, or governmental agency or instrumentality
15.5of any state other than Minnesota exempt from federal income taxes under the Internal
15.6Revenue Code or any other federal statute; and
15.7    (ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue
15.8Code, except:
15.9(A) the portion of the exempt-interest dividends exempt from state taxation under
15.10the laws of the United States; and
15.11(B) the portion of the exempt-interest dividends derived from interest income
15.12on obligations of the state of Minnesota or its political or governmental subdivisions,
15.13municipalities, governmental agencies or instrumentalities, but only if the portion of the
15.14exempt-interest dividends from such Minnesota sources paid to all shareholders represents
15.1595 percent or more of the exempt-interest dividends, including any dividends exempt
15.16under subitem (A), that are paid by the regulated investment company as defined in section
15.17851(a) of the Internal Revenue Code, or the fund of the regulated investment company as
15.18defined in section 851(g) of the Internal Revenue Code, making the payment; and
15.19    (iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal
15.20government described in section 7871(c) of the Internal Revenue Code shall be treated as
15.21interest income on obligations of the state in which the tribe is located;
15.22    (2) the amount of income, sales and use, motor vehicle sales, or excise taxes paid
15.23or accrued within the taxable year under this chapter and the amount of taxes based on
15.24net income paid, sales and use, motor vehicle sales, or excise taxes paid to any other
15.25state or to any province or territory of Canada, to the extent allowed as a deduction
15.26under section 63(d) of the Internal Revenue Code, but the addition may not be more
15.27than the amount by which the itemized deductions as allowed under section 63(d) of
15.28the Internal Revenue Code exceeds the amount of the standard deduction as defined in
15.29section 63(c) of the Internal Revenue Code, disregarding the amounts allowed under
15.30sections 63(c)(1)(C) and 63(c)(1)(E) of the Internal Revenue Code. For the purpose of
15.31this paragraph, the disallowance of itemized deductions under section 68 of the Internal
15.32Revenue Code of 1986, income, sales and use, motor vehicle sales, or excise taxes are
15.33the last itemized deductions disallowed;
15.34    (3) the capital gain amount of a lump-sum distribution to which the special tax under
15.35section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;
16.1    (4) the amount of income taxes paid or accrued within the taxable year under this
16.2chapter and taxes based on net income paid to any other state or any province or territory
16.3of Canada, to the extent allowed as a deduction in determining federal adjusted gross
16.4income. For the purpose of this paragraph, income taxes do not include the taxes imposed
16.5by sections 290.0922, subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729;
16.6    (5) the amount of expense, interest, or taxes disallowed pursuant to section 290.10
16.7other than expenses or interest used in computing net interest income for the subtraction
16.8allowed under subdivision 19b, clause (1);
16.9    (6) the amount of a partner's pro rata share of net income which does not flow
16.10through to the partner because the partnership elected to pay the tax on the income under
16.11section 6242(a)(2) of the Internal Revenue Code;
16.12    (7) 80 percent of the depreciation deduction allowed under section 168(k) of the
16.13Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that
16.14in the taxable year generates a deduction for depreciation under section 168(k) and the
16.15activity generates a loss for the taxable year that the taxpayer is not allowed to claim for
16.16the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is
16.17limited to excess of the depreciation claimed by the activity under section 168(k) over the
16.18amount of the loss from the activity that is not allowed in the taxable year. In succeeding
16.19taxable years when the losses not allowed in the taxable year are allowed, the depreciation
16.20under section 168(k) is allowed;
16.21    (8) for taxable years beginning before January 1, 2011, 80 percent of the amount by
16.22which the deduction allowed by section 179 of the Internal Revenue Code exceeds the
16.23deduction allowable by section 179 of the Internal Revenue Code of 1986, as amended
16.24through December 31, 2003;
16.25    (9) to the extent deducted in computing federal taxable income, the amount of the
16.26deduction allowable under section 199 of the Internal Revenue Code;
16.27    (10) for taxable years beginning before January 1, 2013, the exclusion allowed
16.28under section 139A of the Internal Revenue Code for federal subsidies for prescription
16.29drug plans;
16.30(11) the amount of expenses disallowed under section 290.10, subdivision 2;
16.31    (12) the amount deducted for qualified tuition and related expenses under section
16.32222 of the Internal Revenue Code, to the extent deducted from gross income;
16.33    (13) the amount deducted for certain expenses of elementary and secondary school
16.34teachers under section 62(a)(2)(D) of the Internal Revenue Code, to the extent deducted
16.35from gross income;
17.1(14) the additional standard deduction for property taxes payable that is allowable
17.2under section 63(c)(1)(C) of the Internal Revenue Code;
17.3(15) the additional standard deduction for qualified motor vehicle sales taxes
17.4allowable under section 63(c)(1)(E) of the Internal Revenue Code;
17.5(16) discharge of indebtedness income resulting from reacquisition of business
17.6indebtedness and deferred under section 108(i) of the Internal Revenue Code; and
17.7(17) the amount of unemployment compensation exempt from tax under section
17.885(c) of the Internal Revenue Code.
17.9EFFECTIVE DATE.This section is effective for taxable years beginning after
17.10December 31, 2009.

17.11    Sec. 4. Minnesota Statutes 2010, section 290.01, subdivision 19c, is amended to read:
17.12    Subd. 19c. Corporations; additions to federal taxable income. For corporations,
17.13there shall be added to federal taxable income:
17.14    (1) the amount of any deduction taken for federal income tax purposes for income,
17.15excise, or franchise taxes based on net income or related minimum taxes, including but not
17.16limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota,
17.17another state, a political subdivision of another state, the District of Columbia, or any
17.18foreign country or possession of the United States;
17.19    (2) interest not subject to federal tax upon obligations of: the United States, its
17.20possessions, its agencies, or its instrumentalities; the state of Minnesota or any other
17.21state, any of its political or governmental subdivisions, any of its municipalities, or any
17.22of its governmental agencies or instrumentalities; the District of Columbia; or Indian
17.23tribal governments;
17.24    (3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal
17.25Revenue Code;
17.26    (4) the amount of any net operating loss deduction taken for federal income tax
17.27purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss
17.28deduction under section 810 of the Internal Revenue Code;
17.29    (5) the amount of any special deductions taken for federal income tax purposes
17.30under sections 241 to 247 and 965 of the Internal Revenue Code;
17.31    (6) losses from the business of mining, as defined in section 290.05, subdivision 1,
17.32clause (a), that are not subject to Minnesota income tax;
17.33    (7) the amount of any capital losses deducted for federal income tax purposes under
17.34sections 1211 and 1212 of the Internal Revenue Code;
18.1    (8) the exempt foreign trade income of a foreign sales corporation under sections
18.2921(a) and 291 of the Internal Revenue Code;
18.3    (9) the amount of percentage depletion deducted under sections 611 through 614 and
18.4291 of the Internal Revenue Code;
18.5    (10) for certified pollution control facilities placed in service in a taxable year
18.6beginning before December 31, 1986, and for which amortization deductions were elected
18.7under section 169 of the Internal Revenue Code of 1954, as amended through December
18.831, 1985, the amount of the amortization deduction allowed in computing federal taxable
18.9income for those facilities;
18.10    (11) the amount of any deemed dividend from a foreign operating corporation
18.11determined pursuant to section 290.17, subdivision 4, paragraph (g). The deemed dividend
18.12shall be reduced by the amount of the addition to income required by clauses (20), (21),
18.13(22), and (23);
18.14    (12) the amount of a partner's pro rata share of net income which does not flow
18.15through to the partner because the partnership elected to pay the tax on the income under
18.16section 6242(a)(2) of the Internal Revenue Code;
18.17    (13) the amount of net income excluded under section 114 of the Internal Revenue
18.18Code;
18.19    (14) any increase in subpart F income, as defined in section 952(a) of the Internal
18.20Revenue Code, for the taxable year when subpart F income is calculated without regard to
18.21the provisions of Division C, title III, section 303(b) of Public Law 110-343;
18.22    (15) 80 percent of the depreciation deduction allowed under section 168(k)(1)(A)
18.23and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if the taxpayer
18.24has an activity that in the taxable year generates a deduction for depreciation under
18.25section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable year
18.26that the taxpayer is not allowed to claim for the taxable year, "the depreciation allowed
18.27under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess of the
18.28depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) over the
18.29amount of the loss from the activity that is not allowed in the taxable year. In succeeding
18.30taxable years when the losses not allowed in the taxable year are allowed, the depreciation
18.31under section 168(k)(1)(A) and (k)(4)(A) is allowed;
18.32    (16) for taxable years beginning before January 1, 2011, 80 percent of the amount by
18.33which the deduction allowed by section 179 of the Internal Revenue Code exceeds the
18.34deduction allowable by section 179 of the Internal Revenue Code of 1986, as amended
18.35through December 31, 2003;
19.1    (17) to the extent deducted in computing federal taxable income, the amount of the
19.2deduction allowable under section 199 of the Internal Revenue Code;
19.3    (18) for taxable years beginning before January 1, 2013, the exclusion allowed
19.4under section 139A of the Internal Revenue Code for federal subsidies for prescription
19.5drug plans;
19.6    (19) the amount of expenses disallowed under section 290.10, subdivision 2;
19.7    (20) an amount equal to the interest and intangible expenses, losses, and costs paid,
19.8accrued, or incurred by any member of the taxpayer's unitary group to or for the benefit
19.9of a corporation that is a member of the taxpayer's unitary business group that qualifies
19.10as a foreign operating corporation. For purposes of this clause, intangible expenses and
19.11costs include:
19.12    (i) expenses, losses, and costs for, or related to, the direct or indirect acquisition,
19.13use, maintenance or management, ownership, sale, exchange, or any other disposition of
19.14intangible property;
19.15    (ii) losses incurred, directly or indirectly, from factoring transactions or discounting
19.16transactions;
19.17    (iii) royalty, patent, technical, and copyright fees;
19.18    (iv) licensing fees; and
19.19    (v) other similar expenses and costs.
19.20For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
19.21applications, trade names, trademarks, service marks, copyrights, mask works, trade
19.22secrets, and similar types of intangible assets.
19.23This clause does not apply to any item of interest or intangible expenses or costs paid,
19.24accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect
19.25to such item of income to the extent that the income to the foreign operating corporation
19.26is income from sources without the United States as defined in subtitle A, chapter 1,
19.27subchapter N, part 1, of the Internal Revenue Code;
19.28    (21) except as already included in the taxpayer's taxable income pursuant to clause
19.29(20), any interest income and income generated from intangible property received or
19.30accrued by a foreign operating corporation that is a member of the taxpayer's unitary
19.31group. For purposes of this clause, income generated from intangible property includes:
19.32    (i) income related to the direct or indirect acquisition, use, maintenance or
19.33management, ownership, sale, exchange, or any other disposition of intangible property;
19.34    (ii) income from factoring transactions or discounting transactions;
19.35    (iii) royalty, patent, technical, and copyright fees;
19.36    (iv) licensing fees; and
20.1    (v) other similar income.
20.2For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
20.3applications, trade names, trademarks, service marks, copyrights, mask works, trade
20.4secrets, and similar types of intangible assets.
20.5This clause does not apply to any item of interest or intangible income received or accrued
20.6by a foreign operating corporation with respect to such item of income to the extent that
20.7the income is income from sources without the United States as defined in subtitle A,
20.8chapter 1, subchapter N, part 1, of the Internal Revenue Code;
20.9    (22) the dividends attributable to the income of a foreign operating corporation that
20.10is a member of the taxpayer's unitary group in an amount that is equal to the dividends
20.11paid deduction of a real estate investment trust under section 561(a) of the Internal
20.12Revenue Code for amounts paid or accrued by the real estate investment trust to the
20.13foreign operating corporation;
20.14    (23) the income of a foreign operating corporation that is a member of the taxpayer's
20.15unitary group in an amount that is equal to gains derived from the sale of real or personal
20.16property located in the United States;
20.17    (24) the additional amount allowed as a deduction for donation of computer
20.18technology and equipment under section 170(e)(6) of the Internal Revenue Code, to the
20.19extent deducted from taxable income; and
20.20(25) discharge of indebtedness income resulting from reacquisition of business
20.21indebtedness and deferred under section 108(i) of the Internal Revenue Code.
20.22EFFECTIVE DATE.This section is effective for taxable years beginning after
20.23December 31, 2009.

20.24    Sec. 5. Minnesota Statutes 2010, section 290.01, subdivision 31, is amended to read:
20.25    Subd. 31. Internal Revenue Code. Unless specifically defined otherwise, "Internal
20.26Revenue Code" means the Internal Revenue Code of 1986, as amended through March
20.2718, 2010 September 27, 2010. Internal Revenue Code also includes any uncodified
20.28provision in federal law that relates to provisions of the Internal Revenue Code that are
20.29incorporated into Minnesota law.
20.30EFFECTIVE DATE.This section is effective the day following final enactment
20.31except that the changes incorporated by federal changes are effective at the same time as
20.32the changes were effective for federal purposes.

20.33    Sec. 6. Minnesota Statutes 2010, section 290A.03, subdivision 15, is amended to read:
21.1    Subd. 15. Internal Revenue Code. "Internal Revenue Code" means the Internal
21.2Revenue Code of 1986, as amended through March 18, 2010 September 27, 2010.
21.3EFFECTIVE DATE.This section is effective for property tax refunds based on
21.4property taxes payable on or after December 31, 2010, and rent paid on or after December
21.531, 2009.

21.6    Sec. 7. CORRECTED FORM W-2 NOT REQUIRED.
21.7Employers who have prepared and distributed form W-2, wage and tax statement,
21.8for tax year 2010, that reported to employees the amount of health coverage provided to
21.9adult children under age 27 includable in net income under prior law, are not required to
21.10prepare and distribute corrected tax year 2010 form W-2.
21.11EFFECTIVE DATE.This section is effective the day following final enactment.