Relating to the financing and operation of state and local government ARTICLE 1 INCOME AND FRANCHISE TAXESExpanding the income exclusion for foreign operating corporations (FOCs) formerly operating as foreign sales corporations (FSCs); requiring the payment of interest on Wisconsin income tax reciprocity payments, terminating the reciprocity agreement for failure of Wisconsin to agree; exempting dividends received from property and casualty insurer subsidiaries from the deductions limit for corporate alternative minimum tax (AMT) determination purposes under certain federal elimination conditions; clarifying the exclusive application of the single sales factor apportionment formula to mail order businesses making retail sales ARTICLE 2 FEDERAL UPDATEUpdating certain state income tax and property tax refund provisions to changes in the internal revenue code (IRC) under the victims of terrorism tax relief act of 2001 and the job creation and worker assistance act of 2002 with certain exceptions; updating the definition of internal revenue code; correcting a certain reference to federal regulations for certain income tax withholding purposes; requiring individuals and corporations to add to taxable income a certain percentage of the federal bonus depreciation allowed under the job creation and worker assistance act of 2002, authorizing subtraction of the percentage for a certain number of tax years following the year of add back; incorporating the income exemptions for victims of terrorism into the state individual alternative minimum tax; increasing the amount of deemed expenses used in calculating the dependent care credit; providing a depreciation adjustment for individual and corporate AMT ARTICLE 3 SALES AND USE TAXESQualifying all counties with Indian casinos for payment of the state share of taxes generated from activities on Indian reservations and eliminating the limit on the payments; reinstating the previous percentage requirement for accelerated payment of June sales tax liability by retailers; imposing the sales tax on the delivery and installation of aggregate materials and concrete block and on certain other installation charges, providing a transition period for certain contracts; modifying the definition of prepared food for sales tax exemption purposes, exempting bakery products and unheated ready to eat meat and seafood prepared by the seller and sold without utensils and certain food requiring cooking by the consumer to prevent food borne illness from the tax; expanding the definition of retailer to include retailers with affiliates with a place of business in the state for sales tax collection and remittance purposes, defining affiliated entities; narrowing the sales tax exemption for meals served at colleges, universities or private career schools; exempting certain higher or vocational education instructional materials and certain energy efficient propane gas or fuel oil water heaters and furnaces from the sales tax; expanding the sales tax exemption for admissions to nonprofit arts events to arts events at the university of Minnesota and the exemption for construction materials, supplies, machinery and equipment to certain replacement meat packing or meat processing, certain hydroelectric generating and certain state bond financed nonprofit arts organization facilities and clarifying the exemption for materials, supplies and equipment used in the construction of low income housing projects, including certain mixed use public housing projects in the exemption; requiring the commissioner of revenue to negotiate the streamlined sales tax agreement with the express intent of ensuring uniform sales and use tax treatment of similar transactions and expanding the officials authorized to represent the state on the voting body of the project; authorizing the city of Bloomington to increase the lodging tax rate; modifying the membership of the St. Paul neighborhood projects sales tax revenue expenditures citizen review panel; delaying the effective date of a certain provision requiring the commissioner to collect the local sales tax in the city of Duluth and the repeal of the penalty for the underpayment of accelerated June sales tax liability and of the sales tax exemption for RiverCentre arena construction materials and supplies; authorizing the city of Rochester to impose an additional lodging tax to fund a local convention or tourism bureau; repealing the sales tax exemption for interstate WATS telephone lines ARTICLE 4 PROPERTY TAXESRequiring proof of payment of personal property taxes on manufactured homes before motor vehicle registrar issuance of certificates of title, exempting certain manufactured home park owner sales; clarifying the public utility rate reduction requirement, authorizing greater reductions than the mandated amount; modifying the jurisdiction of the small claims division of the tax court; exempting wind energy conversion systems from the property tax, land of location to remain taxable; exempting personal property of certain electric generation facilities from the property tax; imposing a production tax on electricity from wind energy conversion systems installed after a certain date, prescribing a tax rate schedule for large, medium and small scale systems; providing for homestead property tax treatment of certain property used for nonhomestead purposes; clarifying homestead treatment of duplexes and triplexes; modifying the property tax classification for bread and breakfast establishments; clarifying the application of the residential homestead market value credit to properties classified as part homestead and part nonhomestead; increasing the agricultural homestead market value credit and providing a credit reduction and reduction limit; increasing the homestead and agricultural credit aid for certain counties; requiring the amount of county levies for lake improvement districts to be stated separately from the remaining county levy amount on proposed property tax (truth in taxation) notices and property tax statements; extending the property tax deferral and special assessments on certain property in the metropolitan area dedicated to the arts, modifying the definition of nonprofit foundation or corporation; authorizing Cook county by resolution to expend proceeds from a certain levy for road and bridge purposes in townships; repealing the authority of Chisago City to reimburse the town of Wyoming for orderly annexed property under a joint powers agreement to establish a joint commercial and business park in the annexed area ARTICLE 5 EDUCATION LEVIES AND REVENUESIncreasing integration revenue for special school district 1, Minneapolis; expanding school district building lease levy authority to member school districts of technology and information education systems (TIES) for staff development purposes; expanding certain judgment levy authority to members of intermediate school districts; increasing the maximum and renaming the crime related costs levy to the safe schools levy; modifying the referendum conversion adjustment for interest earned by school districts, specifying certain calculation duties of the commissioner of children, families and learning; extending the availability of reimbursement to school districts and charter schools for interactive web based and independent study programs; extending the disabled access levy authority of independent school districts 2898, Westbrook-Walnut Grove and 578, Pine City ARTICLE 6 AIDS AND LEVIES Clarifying the conditioned municipal support for police and firefighters relief associations, prohibiting reduction by general or special law previously enacted; granting school districts certain tree growth replacement revenue levy authority; increasing the disparity reduction aid for certain unique taxing areas; modifying and delaying the homestead and agricultural aid offset for out of home placement costs and limiting the annual appropriation; modifying the special levy for county court administration costs and authorizing special levies for certain excess police or firefighters relief association costs; including certain tree growth tax amounts and city mobile home HACA payments in the levy limit base for taxes levied in 2002; modifying the levy limit base adjustment for state takeover of county court costs and the levy limits for certain county jail special levy calculation errors; modifying the city aid base for certain cities for local government aid purposes and increasing LGA for a certain city (Hermantown); clarifying and modifying the county rental housing tax base replacement aid amount ARTICLE 7 ECONOMIC DEVELOPMENT Qualifying housing for the property tax exemption under the border city development zone law and exempting construction materials used to construct housing located in the zones from the sales tax; modifying the authority of cities to pool tax increments for deficit payment purposes relating to the existence of a guarantee of obligations and authorizing cities to use deficit reduction provisions relating to tax increment financing districts without first pooling to reduce deficits; authorizing local government units to extend duration abatements for qualified businesses; increasing the maximum number of parcels allowed to be included TIF housing replacement districts in the cities of Minneapolis, St. Paul and Duluth; authorizing and providing for the city of Albert Lea to create a redevelopment TIF district; authorizing the city of Rushford to extend the duration of the downtown redevelopment TIF; authorizing the Minneapolis community development agency upon city council approval to extend the duration of the east Hennepin and University TIF and a certain industrial redevelopment area TIF district in the city of Minneapolis; requiring the commissioner of revenue to pay a one time grant to the MCDA for the Washburn Crosby mill city museum project; authorizing Dakota county to extend the duration of the community development agency south Robert street redevelopment district; repealing the requirement for approval of early decertification of TIF districts by the commissioner ARTICLE 8 MINERALS TAXES Modifying the payment of taconite aids to school districts and reducing the taconite school aids minimum guarantee; modifying the collection and payment of the production tax; increasing the distribution of tax proceeds to counties; modifying the rate of distribution for property tax relief and eliminating the frozen rate formula; temporarily eliminating the industry production floor for distribution to the taconite economic development fund and extending the distribution to the taconite environmental fund; reducing the taconite railroad aid distribution to school districts, providing for a one time payment to a certain town; renaming the northeast Minnesota economic protection trust fund act the Douglas J. Johnson economic protection trust fund act, extending the duration of the fund and authorizing certain expenditures from the corpus of the fund, specifying certain iron range resources and rehabilitation board (IRRRB) approval requirements; providing for certain additional distributions to the fund from the reduced distributions to school districts; specifying certain phrase change instructions to the revisor of statutesARTICLE 9 DEPARTMENT OF REVENUE POLICY PROVISIONSMaking policy and administrative changes to certain tax provisions; setting a time limit for submitting federal tax refund offset claims; extending the requirement for commissioner of revenue publication of names of delinquent taxpayers; modifying the deadlines for filing petitions for redetermination of unfair manufactured home or property assessments; eliminating the qualification on the due date for aggregate taxes and special assessments shown on consolidated agricultural property tax statements; modifying the authority of the commissioner to extend the time for filing fiduciary income tax returns, requiring the commissioner to grant automatic extensions for filing partnership, S corporation or fiduciary income tax returns under certain tax payment conditions; modifying the exemption from the health care providers gross earnings tax imposed on wholesale drug distributors for legend drugs, providing an alternative method for determining the exemption for hospitals or health care providers under certain conditions; exempting payments received by furriers for clothing made of fur delivered outside the state from the special fur clothing gross earnings tax; modifying the definition of private telecommunication service for sales and use tax purposes;exempting charges for the delivery or distribution of printed materials by businesses from the sales tax under certain conditions; exempting shipments of intoxicating liquor from foreign countries to foreign diplomatic personnel from the liquor tax; modifying the formula for determining tax increment financing district (TIF) deficits for increments pooling purposes ARTICLE 10 DEPARTMENT OF REVENUE TECHNICAL PROVISIONSMaking technical and administrative changes and corrections to certain tax provisions; modifying the amount annually added to police state aid; clarifying the referendum levy for school district referendum tax base replacement aid purposes; modifying certain notice of tax lien filing requirements of the commissioner of revenue for lien enforcement purposes; clarifying the exempt status of property used to generate hydroelectric or hydromechanical power; increasing the age of homes qualifying for valuation exclusion for improvements (this old house provision); clarifying the property tax classification for railroad personal property; adding attached machinery aid to the list of aids required to be certified to the department of children, families and learning by the department of revenue; imposing a penalty for failure to file an individual income tax return within a certain period of time of the due date; excluding certain restitution payments and interest from the definition of income for dependent care credit eligibility purposes; modifying the definition of earned income of the lesser earning spouse for marriage penalty income tax credit purposes and eliminating certain table updating requirements of the commissioner of revenue; generalizing the income on gambling winnings required to be allocated to the state; changing the exclusion of holocaust settlement payments from the definition of income for property tax refund calculation purposes to an exclusion for certain restitution payments and interest and accelerating certain payments under the circuit breaker provision; specifying the gross earnings tax liability of persons receiving fur clothing for use or storage in the state and certain tax collection requirements of certain furriers, providing a credit for taxes paid to other jurisdictions and clarifying the application of certain other enforcement, penalty and refund provisions to fur tax liability provisions; changing the term aviation fuel tax fund to state airports fund under a certain gas tax apportionment provision; clarifying the application of certain retaliatory provisions to the imposition of insurance taxes; clarifying certain definitions for local government aid (LGA) purposes; clarifying the total aid distribution for certain cities and the calculation of rental housing tax base replacement aid; changing the date for annual reports by the commissioner of revenue to the legislature on the use of limited market value and the valuation exclusion; correcting the effective date for a certain provision modifying subtractions from federal taxable income for income tax purposes; eliminating certain obsolete provisions; repealing the accelerated cost recovery system (ACRS) modification for individuals and the definition of holocaust victims settlement payments for income tax purposes and the charitable contributions deduction from the corporate AMT and certain sales tax rules ARTICLE 11 LOCAL LAWS Authorizing and providing for the city of Moorhead to impose a tax levy on certain property to pay for certain preexisting obligations issued to eliminate a tax increment financing district deficit and for the cities of St. Cloud, Sartell, Sauk Rapids, Waite Park, St. Joseph and St. Augusta to by ordinance impose local sales and use taxes to pay for main runway improvements at the St. Cloud regional airport ARTICLE 12 MISCELLANEOUSRequiring the commissioner of finance to periodically transfer certain amounts to the budget reserve account in the general fund for balance increase purposes; requiring the deposit of a certain portion of the metropolitan county conservation fee imposed on the recording or registration of mortgages and deeds under the agricultural land preservation program in the general fund; making certain technical modifications to tax data classification and disclosure provisions relating to the special fur clothing tax, informant data, data on exempt organizations and sales tax permit information; authorizing the exchange of certain wage and employment information between the departments of labor and industry and revenue; modifying estate tax payment liability and the computation formula; eliminating the sunset of the exemption of compost waste from the solid waste management tax; expanding the definition of lawful gambling expenditures to include the payment of real estate taxes and assessments on premises leased by licensed veterans organizations; requiring the commissioner of children, families and learning to adjust net debt limit percentage for special school district 1, Minneapolis; authorizing and providing for the city of Thief River Falls to establish a nonprofit corporation to operate a community or regional center in the city; appropriating money to the commissioner of revenue for tax compliance activities, specifying certain reporting requirements, state employee hiring freeze not to apply to the compliance activities, providing for a certain cancellation from the budget reserve account to the general fund under certain legislative auditor revenue collections determination conditions; repealing the estate tax intent statement (Ch. 377, 2002)