1.1                          A bill for an act 
  1.2             relating to the financing and operation of government 
  1.3             in this state; providing a sales tax rebate; providing 
  1.4             property tax reform; making changes to income, 
  1.5             franchise, sales and use, property, motor vehicle 
  1.6             sales, motor vehicle registration, mortgage registry, 
  1.7             deed, motor fuels, cigarette and tobacco, liquor, 
  1.8             insurance premiums, lawful gambling, minerals, estate, 
  1.9             and special taxes; changing and allowing tax credits, 
  1.10            subtractions, and exemptions, including an income tax 
  1.11            subtraction for capital gains; providing a biomedical 
  1.12            innovation initiative; conforming with changes in 
  1.13            federal income tax provisions; providing for 
  1.14            allocation and apportionment of income; imposing a 
  1.15            state general tax levy on certain property; providing 
  1.16            a property tax homestead credit; imposing general levy 
  1.17            limits; providing for property tax levy reverse 
  1.18            referenda; changing property tax valuation, 
  1.19            assessment, levy, classification, homestead, credit, 
  1.20            aid, exemption, deferral, review, appeal, abatement, 
  1.21            and distribution provisions; abolishing certain 
  1.22            property tax levies for transit and establishing a 
  1.23            transit fund; providing and modifying certain aids to 
  1.24            local units of government; changing levy authority; 
  1.25            reducing certain utility taxes and requiring a 
  1.26            corresponding rate reduction; changing certain 
  1.27            provisions relating to biomass facilities; providing 
  1.28            for disposition of local lodging tax proceeds; 
  1.29            providing priorities for disposition of production tax 
  1.30            proceeds by the iron range resources and 
  1.31            rehabilitation board; providing for certain payments 
  1.32            in lieu of taxes; reducing rates on lawful gambling 
  1.33            taxes; reducing rates on solid waste management taxes; 
  1.34            providing for state takeover of certain costs of 
  1.35            district court administration and out-of-home 
  1.36            placement; providing for uniform sales and use tax 
  1.37            administration; providing for taxation and incentive 
  1.38            payments on forest lands; providing for electronic 
  1.39            filing and payment of taxes; changing procedures for 
  1.40            disposition of seized contraband; abolishing certain 
  1.41            health care provider taxes and health plan premium 
  1.42            taxes; providing for deposit of certain tobacco 
  1.43            settlement and cigarette tax proceeds to the health 
  1.44            care access fund; changing tax increment financing 
  1.45            provisions and authorizing certain grants, duration 
  1.46            extensions, and expenditures; requiring registration 
  2.1             of tax increment financing consultants; creating a 
  2.2             health care access fund reserve; reducing the tax on 
  2.3             life insurance premiums; increasing property tax 
  2.4             refunds and changing calculation of rent constituting 
  2.5             property taxes for purposes of property tax refunds; 
  2.6             reducing taconite production tax and occupation tax 
  2.7             rates; providing special authority to certain 
  2.8             political subdivisions; authorizing special taxing 
  2.9             districts; changing and clarifying tax administration, 
  2.10            collection, enforcement, interest, and penalty 
  2.11            provisions; changing revenue recapture provisions; 
  2.12            authorizing abatements and waivers of fees and certain 
  2.13            taxes in disaster areas; changing and imposing fees; 
  2.14            changing debt collection provisions for student loans; 
  2.15            providing certain duties and powers to the 
  2.16            commissioner of revenue; authorizing publication of 
  2.17            names of certain delinquent taxpayers; authorizing 
  2.18            border city allocations; changing provisions relating 
  2.19            to tax-forfeited lands and providing for tax-forfeited 
  2.20            lands transfers; defining terms; classifying data; 
  2.21            establishing a legislative commission; requiring 
  2.22            studies; imposing a criminal penalty; appropriating 
  2.23            money; amending Minnesota Statutes 2000, sections 
  2.24            16D.08, subdivision 2; 62J.041, subdivision 1; 
  2.25            62Q.095, subdivision 6; 69.021, subdivision 5; 84.922, 
  2.26            by adding a subdivision; 88.49, subdivisions 5, 9a; 
  2.27            88.491, subdivision 2; 97A.065, subdivision 2; 
  2.28            103D.905, subdivision 3; 115B.24, subdivision 2; 
  2.29            123B.55; 126C.01, subdivision 3; 126C.13, subdivision 
  2.30            4; 126C.17, by adding a subdivision; 144.3831, 
  2.31            subdivision 2; 168.013, subdivision 1a; 174.24, 
  2.32            subdivision 3b; 179A.101, subdivision 1; 179A.102, 
  2.33            subdivision 6; 179A.103, subdivision 1; 214.16, 
  2.34            subdivisions 2, 3; 216B.2424, subdivision 5; 239.101, 
  2.35            subdivision 3; 260.765, by adding a subdivision; 
  2.36            260.771, by adding a subdivision; 270.06; 270.07, 
  2.37            subdivision 3; 270.11, by adding a subdivision; 
  2.38            270.12, subdivision 2; 270.271, subdivisions 1, 3; 
  2.39            270.60, subdivision 4, by adding a subdivision; 
  2.40            270.70, subdivision 13; 270.73, subdivision 1; 
  2.41            270.771; 270.78; 270A.03, subdivisions 5, 7; 270A.11; 
  2.42            270B.01, subdivision 8; 270B.02, subdivisions 2, 3; 
  2.43            270B.03, subdivision 6; 270B.14, subdivision 1; 
  2.44            271.01, subdivision 5; 271.21, subdivision 2; 272.02, 
  2.45            subdivisions 9, 10, 22, by adding subdivisions; 
  2.46            273.061, subdivisions 1, 2, 8; 273.072, subdivision 1; 
  2.47            273.11, subdivisions 1a, 14, by adding subdivisions; 
  2.48            273.1104, subdivision 2; 273.111, subdivision 4; 
  2.49            273.121; 273.124, subdivisions 8, 13, 14; 273.13, 
  2.50            subdivisions 22, 23, 24, 25, 31; 273.1392; 273.1393; 
  2.51            273.1398, subdivisions 1a, 4a, by adding subdivisions; 
  2.52            274.01, subdivision 1; 274.13, subdivision 1; 275.02; 
  2.53            275.065, subdivisions 1, 3, 5a, 6, 8, by adding a 
  2.54            subdivision; 275.066; 275.07, subdivision 1; 275.16; 
  2.55            275.62, subdivision 1; 275.70, subdivision 5, by 
  2.56            adding subdivisions; 276.04, subdivision 2; 276.11, 
  2.57            subdivision 1; 276A.01, subdivision 3; 276A.06, 
  2.58            subdivision 3; 282.01, subdivisions 1a, 1b; 282.04, 
  2.59            subdivision 2; 287.035; 287.04; 287.08; 287.12; 
  2.60            287.13, by adding a subdivision; 287.20, subdivisions 
  2.61            2, 9; 287.21, subdivision 1; 287.28; 289A.02, 
  2.62            subdivision 7, by adding a subdivision; 289A.08, 
  2.63            subdivision 16; 289A.11, subdivision 1; 289A.12, 
  2.64            subdivision 3; 289A.18, subdivision 4; 289A.20, 
  2.65            subdivisions 1, 2, 4; 289A.26, subdivision 2a; 
  2.66            289A.31, subdivision 7; 289A.50, subdivisions 2, 2a; 
  2.67            289A.60, subdivisions 7, 21; 290.01, subdivisions 6b, 
  2.68            7, 19, 19b, 19c, 19d, 22, 29, 31, by adding a 
  2.69            subdivision; 290.014, subdivision 5; 290.05, 
  2.70            subdivision 1; 290.06, subdivisions 2c, 22; 290.067, 
  2.71            subdivisions 1, 2, 2b; 290.0671, subdivisions 1, 1a, 
  3.1             7; 290.0674, subdivisions 1, 2; 290.0675, subdivisions 
  3.2             1, 3; 290.068, subdivisions 1, 3, 4; 290.091, 
  3.3             subdivisions 2, 3; 290.0921, subdivisions 1, 2, 3, 6; 
  3.4             290.0922, subdivision 2; 290.093; 290.095, subdivision 
  3.5             2; 290.17, subdivisions 1, 4; 290.191, subdivisions 2, 
  3.6             3; 290.21, subdivision 4; 290.9725; 290A.03, 
  3.7             subdivisions 6, 11, 12, 13, 15; 290A.04, subdivisions 
  3.8             2, 2a, 4; 290A.15; 291.005, subdivision 1; 295.55, 
  3.9             subdivision 4; 296A.15, subdivisions 1, 7; 296A.16, 
  3.10            subdivision 2; 296A.21, subdivisions 1, 4; 296A.24, 
  3.11            subdivisions 1, 2; 297A.01, subdivision 3; 297A.07, 
  3.12            subdivision 3; 297A.25, subdivisions 3, 11, 28; 
  3.13            297A.61, subdivisions 2, 3, 4, 6, 7, 9, 10, 12, 14, 
  3.14            16, 17, 19, 22, 23, by adding subdivisions; 297A.62, 
  3.15            subdivision 3; 297A.64, subdivisions 3, 4; 297A.66, 
  3.16            subdivisions 1, 3; 297A.67, subdivisions 2, 8, 23, 24, 
  3.17            25, by adding subdivisions; 297A.68, subdivisions 2, 
  3.18            3, 5, 11, 13, 14, 18, 25, by adding subdivisions; 
  3.19            297A.69, subdivision 2; 297A.70, subdivisions 1, 2, 3, 
  3.20            4, 7, 8, 10, 13, 14; 297A.71, subdivisions 3, 6, by 
  3.21            adding subdivisions; 297A.72, subdivision 1; 297A.75; 
  3.22            297A.77, subdivision 1; 297A.80; 297A.82, subdivision 
  3.23            3, by adding a subdivision; 297A.89, subdivision 1; 
  3.24            297A.90, subdivision 1; 297A.91; 297A.92, subdivision 
  3.25            2; 297A.94; 297A.99, subdivisions 7, 9, 11; 297B.03; 
  3.26            297B.09, subdivision 1; 297E.02, subdivisions 1, 4, 6; 
  3.27            297E.16, subdivisions 1, 2; 297F.09, subdivision 7; 
  3.28            297F.10, subdivision 1; 297F.16, subdivision 4; 
  3.29            297F.20, subdivision 3; 297F.21, subdivisions 1, 2, 3; 
  3.30            297G.09, subdivision 6; 297G.15, subdivision 4; 
  3.31            297G.16, subdivisions 5, 7; 297G.20, subdivisions 3, 
  3.32            4; 297H.02, subdivision 2; 297H.03, subdivision 2; 
  3.33            297H.04, subdivision 2, by adding a subdivision; 
  3.34            297H.05; 297H.06, by adding a subdivision; 297H.13, by 
  3.35            adding a subdivision; 297I.05, by adding a 
  3.36            subdivision; 297I.15, by adding a subdivision; 
  3.37            297I.20; 297I.35, subdivision 2; 297I.40, subdivisions 
  3.38            1, 2, 7; 297I.85, subdivision 7; 298.01, subdivisions 
  3.39            3, 3a, 3b, 4, 4a, 4c; 298.22, subdivision 2, by adding 
  3.40            a subdivision; 298.225, subdivision 1; 298.24, 
  3.41            subdivision 1; 298.27; 298.28, subdivisions 6, 9a; 
  3.42            298.2961, subdivision 2; 298.75, subdivisions 1, 2, by 
  3.43            adding a subdivision; 299D.03, subdivision 5; 345.41; 
  3.44            345.42, by adding a subdivision; 349.19, subdivision 
  3.45            2a; 357.021, subdivision 1a; 461.12, by adding a 
  3.46            subdivision; 469.040, subdivision 5; 469.169, by 
  3.47            adding a subdivision; 469.1732, subdivision 1; 
  3.48            469.174, subdivisions 1, 3, 10, 10a, 12, 25; 469.175, 
  3.49            subdivisions 1, 3, 6, 6b, by adding a subdivision; 
  3.50            469.176, subdivisions 1b, 1c, 1e, 3, 4, 4g, by adding 
  3.51            a subdivision; 469.1763, subdivision 6; 469.177, 
  3.52            subdivisions 1, 11, by adding a subdivision; 469.1771, 
  3.53            subdivision 1; 469.178, by adding a subdivision; 
  3.54            469.1791, subdivisions 1, 3, 9; 469.1812, subdivision 
  3.55            2; 469.1813, subdivisions 4, 6; 469.190, subdivision 
  3.56            3; 469.202, subdivision 2; 473.388, subdivisions 4, 7; 
  3.57            473.446, subdivision 1, by adding a subdivision; 
  3.58            473.843, subdivision 3; 473F.08, subdivision 3; 
  3.59            473H.10, subdivision 3; 475.58, subdivision 1; 
  3.60            477A.011, subdivisions 35, 36; 477A.0121, by adding a 
  3.61            subdivision; 477A.0122, by adding a subdivision; 
  3.62            477A.013, subdivisions 1, 9; 477A.03, subdivision 2, 
  3.63            by adding a subdivision; 477A.12; 477A.14; 480.181, 
  3.64            subdivision 1; 487.33, subdivision 5; 574.34, 
  3.65            subdivision 1; Laws 1986, chapter 396, section 5; Laws 
  3.66            1997, chapter 231, article 10, section 25; Laws 1998, 
  3.67            chapter 389, article 16, section 35, subdivision 1; 
  3.68            Laws 1999, chapter 216, article 7, section 46, 
  3.69            subdivision 3; Laws 1999, chapter 243, article 4, 
  3.70            section 19; Laws 2000, chapter 490, article 8, section 
  3.71            17; Laws 2000, chapter 490, article 11, section 26; 
  4.1             proposing coding for new law in Minnesota Statutes, 
  4.2             chapters 3; 12; 16A; 62Q; 103B; 116J; 123B; 144F; 245; 
  4.3             256L; 270; 272; 273; 275; 290; 290A; 295; 296A; 297A; 
  4.4             469; 471; 473; 477A; 480; 484; proposing coding for 
  4.5             new law as Minnesota Statutes, chapters 126C; 216B; 
  4.6             290C; repealing Minnesota Statutes 2000, sections 
  4.7             13.4967, subdivision 3; 16A.1521; 16A.76; 62T.10; 
  4.8             126C.13, subdivisions 1, 2, 3; 144.1484, subdivision 
  4.9             2; 256L.02, subdivision 3; 270.31; 270.32; 270.33; 
  4.10            270.34; 270.35; 270.36; 270.37; 270.38; 270.39; 
  4.11            273.13, subdivision 24a; 273.1382; 273.1399; 275.078; 
  4.12            275.08, subdivision 1e; 289A.60, subdivision 15; 
  4.13            290.06, subdivisions 25, 26; 290.0673; 290.095, 
  4.14            subdivisions 1a, 7; 290.191, subdivision 4; 290.21, 
  4.15            subdivision 3; 290.23; 290.25; 290.31, subdivisions 2, 
  4.16            2a, 3, 4, 5, 19; 290.35; 290.9726, subdivision 7; 
  4.17            290A.04, subdivision 2j; 290A.18, subdivision 2; 
  4.18            295.50; 295.51; 295.52; 295.53; 295.54; 295.55; 
  4.19            295.56; 295.57; 295.58; 295.582; 295.59; 296A.16, 
  4.20            subdivision 6; 296A.24, subdivision 3; 297A.61, 
  4.21            subdivision 16; 297A.62, subdivision 2; 297A.64, 
  4.22            subdivision 1; 297A.68, subdivision 21; 297A.71, 
  4.23            subdivisions 2, 15, 16, 21; 297B.032; 297E.16, 
  4.24            subdivision 3; 297F.21, subdivision 4; 297G.20, 
  4.25            subdivision 5; 297I.05, subdivisions 5, 8; 297I.30, 
  4.26            subdivision 3; 298.01, subdivisions 3c, 3d, 4d, 4e; 
  4.27            469.1732, subdivision 2; 469.1734, subdivision 4; 
  4.28            469.1782, subdivision 1; 473.446, subdivision 8; Laws 
  4.29            1988, chapter 426, section 1; Laws 1988, chapter 702, 
  4.30            section 16; Laws 1992, chapter 511, article 2, section 
  4.31            52, as amended; Laws 1996, chapter 471, article 8, 
  4.32            section 45; Laws 1999, chapter 243, article 6, section 
  4.33            14; Laws 1999, chapter 243, article 6, section 15; 
  4.34            Laws 2000, chapter 490, article 6, section 17; 
  4.35            Minnesota Rules, parts 8120.0200; 8120.0500; 
  4.36            8120.0700; 8120.0900; 8120.1300; 8120.1600; 8120.2000; 
  4.37            8120.2100; 8120.2200; 8120.2300; 8120.2500; 8120.2700; 
  4.38            8120.2800; 8120.3000; 8120.3200; 8120.4300; 8120.4400; 
  4.39            8120.4500; 8120.4600; 8120.4900; 8120.5000; 8120.5100; 
  4.40            8120.5300. 
  4.41  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  4.42                             ARTICLE 1 
  4.43                          SALES TAX REBATE 
  4.44     Section 1.  [STATEMENT OF PURPOSE.] 
  4.45     (a) The state of Minnesota derives revenues from a variety 
  4.46  of taxes, fees, and other sources, including the state sales tax.
  4.47     (b) It is fair and reasonable to refund the existing state 
  4.48  budget surplus in the form of a rebate of nonbusiness consumer 
  4.49  sales taxes paid by individuals in calendar year 1999. 
  4.50     (c) Information concerning the amount of sales tax paid at 
  4.51  various income levels is contained in the Minnesota tax 
  4.52  incidence report, which is written by the commissioner of 
  4.53  revenue and presented to the legislature according to Minnesota 
  4.54  Statutes, section 270.0682. 
  4.55     (d) It is fair and reasonable to use information contained 
  5.1   in the Minnesota tax incidence report to determine the 
  5.2   proportionate share of the sales tax rebate due each eligible 
  5.3   taxpayer since no effective or practical mechanism exists for 
  5.4   determining the amount of actual sales tax paid by each eligible 
  5.5   individual. 
  5.6      Sec. 2.  [SALES TAX REBATE.] 
  5.7      Subdivision 1.  [ELIGIBILITY; REBATE BASED ON INCOME.] An 
  5.8   individual who was a resident of Minnesota for any part of 1999, 
  5.9   and filed a 1999 Minnesota income tax return on or before 
  5.10  November 30, 2001, and had a tax liability before refundable 
  5.11  credits on that return of at least $1 and who was not allowed to 
  5.12  be claimed as a dependent on a 1999 federal income tax return 
  5.13  filed by another person is eligible for a sales tax rebate based 
  5.14  on income under either subdivision 2 or 3. 
  5.15     Subd. 2.  [MARRIED JOINT AND HEAD OF HOUSEHOLD FILERS.] The 
  5.16  sales tax rebate for taxpayers who qualify under subdivision 1 
  5.17  and are married filing joint or head of household filers is 
  5.18  computed according to the following schedule: 
  5.19       Income                                Sales Tax Rebate
  5.20   less than $2,500                                $237
  5.21   at least $2,500 but less than $5,000            $295
  5.22   at least $5,000 but less than $10,000           $309
  5.23   at least $10,000 but less than $15,000          $341
  5.24   at least $15,000 but less than $20,000          $386
  5.25   at least $20,000 but less than $25,000          $417
  5.26   at least $25,000 but less than $30,000          $445
  5.27   at least $30,000 but less than $35,000          $483
  5.28   at least $35,000 but less than $40,000          $526
  5.29   at least $40,000 but less than $45,000          $571
  5.30   at least $45,000 but less than $50,000          $606
  5.31   at least $50,000 but less than $60,000          $621
  5.32   at least $60,000 but less than $70,000          $648
  5.33   at least $70,000 but less than $80,000          $706
  5.34   at least $80,000 but less than $90,000          $762
  5.35   at least $90,000 but less than $100,000         $825
  5.36   at least $100,000 but less than $120,000        $894
  6.1    at least $120,000 but less than $140,000        $979
  6.2    at least $140,000 but less than $160,000      $1,058
  6.3    at least $160,000 but less than $180,000      $1,133
  6.4    at least $180,000 but less than $200,000      $1,204
  6.5    at least $200,000 but less than $400,000      $1,540
  6.6    at least $400,000 but less than $600,000      $2,026
  6.7    at least $600,000 but less than $800,000      $2,431
  6.8    at least $800,000 but less than $1,000,000    $2,787
  6.9    $1,000,000 and over                           $3,250
  6.10     Subd. 3.  [SINGLE AND MARRIED SEPARATE FILERS.] The sales 
  6.11  tax rebate for individuals who qualify under subdivision 1 as 
  6.12  single or married filing separately is computed according to the 
  6.13  following schedule: 
  6.14       Income                                Sales Tax Rebate
  6.15   less than $2,500                                $120
  6.16   at least $2,500 but less than $5,000            $126
  6.17   at least $5,000 but less than $10,000           $168
  6.18   at least $10,000 but less than $15,000          $200
  6.19   at least $15,000 but less than $20,000          $231
  6.20   at least $20,000 but less than $25,000          $258
  6.21   at least $25,000 but less than $30,000          $311
  6.22   at least $30,000 but less than $40,000          $335
  6.23   at least $40,000 but less than $50,000          $370
  6.24   at least $50,000 but less than $70,000          $474
  6.25   at least $70,000 but less than $100,000         $657
  6.26   at least $100,000 but less than $140,000        $792
  6.27   at least $140,000 but less than $200,000        $956
  6.28   at least $200,000 but less than $400,000      $1,295
  6.29   at least $400,000 but less than $600,000      $1,625
  6.30   $600,000 and over                             $1,625
  6.31     Subd. 4.  [NONRESIDENTS.] Individuals who were not 
  6.32  residents of Minnesota for any part of 1999 and who paid more 
  6.33  than $10 in Minnesota sales tax under Minnesota Statutes, 
  6.34  chapter 297A on nonbusiness consumer purchases in that year 
  6.35  qualify for a rebate under this subdivision only.  Qualifying 
  6.36  nonresidents must file a claim for rebate on a form prescribed 
  7.1   by the commissioner by November 30, 2001.  The claim must 
  7.2   include receipts showing the Minnesota sales tax paid and the 
  7.3   date of the sale.  Taxes paid on purchases allowed in the 
  7.4   computation of federal taxable income or reimbursed by an 
  7.5   employer are not eligible for the rebate.  The commissioner 
  7.6   shall determine the qualifying taxes paid and rebate the lesser 
  7.7   of: 
  7.8      (1) 41.25 percent of that amount; or 
  7.9      (2) the maximum amount for which the claimant would have 
  7.10  been eligible as determined under subdivision 2 if the taxpayer 
  7.11  filed the 1999 federal income tax return as a married taxpayer 
  7.12  filing jointly or head of household, or as determined under 
  7.13  subdivision 3 for other taxpayers. 
  7.14     Subd. 5.  [DEFINITION OF INCOME.] "Income," for purposes of 
  7.15  this section other than subdivision 4, is taxable income as 
  7.16  defined in section 63 of the Internal Revenue Code of 1986, as 
  7.17  amended through December 31, 1998, plus the sum of any additions 
  7.18  to federal taxable income for the taxpayer under Minnesota 
  7.19  Statutes, section 290.01, subdivision 19a, and reported on the 
  7.20  original 1999 income tax return, including subsequent 
  7.21  adjustments to that return made within the time limits specified 
  7.22  in subdivision 12.  For an individual who was a resident of 
  7.23  Minnesota for less than the entire year, the sales tax rebate 
  7.24  equals the sales tax rebate calculated under subdivision 2 or 3 
  7.25  multiplied by the percentage determined pursuant to Minnesota 
  7.26  Statutes, section 290.06, subdivision 2c, paragraph (e), as 
  7.27  calculated on the original 1999 income tax return, including 
  7.28  subsequent adjustments to that return made within the time 
  7.29  limits specified in subdivision 12.  For purposes of subdivision 
  7.30  4, "income" is taxable income as defined in section 63 of the 
  7.31  Internal Revenue Code of 1986, as amended through December 31, 
  7.32  1998, and reported on the taxpayer's original federal tax return 
  7.33  for the first taxable year beginning after December 31, 1998. 
  7.34     Subd. 6.  [SOCIAL SECURITY AND PUBLIC PENSION 
  7.35  RECIPIENTS.] (a) An individual qualifies for a rebate of $120 
  7.36  under this subdivision if the individual: 
  8.1      (1) was a resident of Minnesota for all of calendar year 
  8.2   1999; 
  8.3      (2) is not eligible for a rebate under subdivision 7; 
  8.4      (3) attained the age of 18 on or before December 31, 1999; 
  8.5   and 
  8.6      (4)(i) received social security benefits as defined in 
  8.7   section 86(d)(1) of the Internal Revenue Code of 1986, as 
  8.8   amended through December 31, 2000, in calendar year 1999; or 
  8.9      (ii) received federal, state, or local public pension or 
  8.10  disability benefits in calendar year 1999.  
  8.11     (b) An individual or married couple who qualifies for a 
  8.12  rebate under both this subdivision and subdivision 1 is eligible 
  8.13  for the rebate under whichever subdivision provides a larger 
  8.14  amount. 
  8.15     (c) If the Social Security Administration, Railroad 
  8.16  Retirement Board, or the administrator of a public pension is 
  8.17  paying benefits to a recipient by electronic funds transfers in 
  8.18  calendar year 2001, the commissioner may pay the rebate under 
  8.19  this subdivision through electronic funds transfer to the same 
  8.20  financial institution and into the same account into which those 
  8.21  benefits are transferred in calendar year 2001. 
  8.22     (d) For purposes of this subdivision, "public pension plan 
  8.23  administrator" means (1) a state and local public pension 
  8.24  administrator, (2) the federal Civil Service Retirement System, 
  8.25  (3) the United States Department of Defense for the military 
  8.26  retirement and survivors benefit programs, and (4) the Federal 
  8.27  Employees Retirement System. 
  8.28     (e) A state and local public pension administrator is an 
  8.29  entity paying benefits under a pension plan enumerated in 
  8.30  Minnesota Statutes, section 356.20, subdivision 2.  Each state 
  8.31  and local public pension administrator shall provide to the 
  8.32  commissioner of revenue, in a form the commissioner prescribes, 
  8.33  a list of individuals to whom it pays benefits that meet the 
  8.34  requirements of paragraph (a), clauses (1) and (3). 
  8.35     Subd. 7.  [DEPENDENTS.] An individual who: 
  8.36     (1) was allowed to be claimed as a dependent on a 1999 
  9.1   federal income tax return filed by another person; 
  9.2      (2) would have otherwise been eligible for a rebate under 
  9.3   subdivision 1; and 
  9.4      (3) reported earned income as defined in section 
  9.5   32(c)(2)(A)(i) of the Internal Revenue Code, 
  9.6   is eligible for a rebate under this subdivision only.  The 
  9.7   rebate under this subdivision equals 35 percent of the amount 
  9.8   allowed under the schedule in subdivision 3 based on the 
  9.9   individual's income.  For an individual who was a resident of 
  9.10  Minnesota for less than the entire year, the sales tax rebate 
  9.11  equals the rebate calculated under this subdivision multiplied 
  9.12  by the percentage determined pursuant to Minnesota Statutes, 
  9.13  section 290.06, subdivision 2c, paragraph (e), as calculated on 
  9.14  the original 1999 income tax return. 
  9.15     Subd. 8.  [CREDIT RECIPIENTS.] An individual who 
  9.16     (1) was a resident of Minnesota for any part of 1999; 
  9.17     (2) was not eligible for a rebate under subdivision 1, 6, 
  9.18  or 7; 
  9.19     (3) was not allowed to be claimed as a dependent on a 1999 
  9.20  federal income tax return by another person; and 
  9.21     (4)(i) claimed a refund under Minnesota Statutes, chapter 
  9.22  290A, for property taxes paid in 2000 or rent constituting 
  9.23  property taxes paid in 1999 before November 30, 2001; or 
  9.24     (ii) filed a 1999 Minnesota income tax return before 
  9.25  November 30, 2001, in order to 
  9.26     (A) claim a credit under Minnesota Statutes, section 
  9.27  290.067, 290.0671, or 290.0674; 
  9.28     (B) claim a refund of withheld taxes; or 
  9.29     (C) claim a refund of estimated taxes, 
  9.30  is eligible for a rebate under this subdivision only.  For 
  9.31  married couples filing joint returns and heads of households, 
  9.32  the rebate equals the minimum amount in subdivision 2.  For 
  9.33  single filers and married individuals filing separate returns 
  9.34  and for rebates based on refunds under Minnesota Statutes, 
  9.35  chapter 290A, the rebate equals the minimum amount in 
  9.36  subdivision 3.  For an individual who was a resident of 
 10.1   Minnesota for less than the entire year, the sales tax rebate 
 10.2   equals the rebate calculated under this subdivision multiplied 
 10.3   by the percentage determined under Minnesota Statutes, section 
 10.4   290.06, subdivision 2c, paragraph (e), as calculated on the 
 10.5   original 1999 income tax return.  Notwithstanding the provisions 
 10.6   of Minnesota Statutes 2000, section 289A.60, subdivision 12, an 
 10.7   individual who files a property tax refund claim for property 
 10.8   taxes paid in 2000 or rent constituting property taxes paid in 
 10.9   1999 after August 15, 2001, and before November 30, 2001, is 
 10.10  eligible for a refund under Minnesota Statutes, chapter 290A, 
 10.11  and a rebate under this subdivision.  
 10.12     Subd. 9.  [FISCAL YEAR TAXPAYERS.] For a fiscal year 
 10.13  taxpayer, the dates in subdivisions 1 through 4 are extended one 
 10.14  month for each month in calendar year 1999 that occurred prior 
 10.15  to the start of the individual's 1999 fiscal tax year. 
 10.16     Subd. 10.  [PAYMENT TO STATE.] (a) A taxpayer receiving a 
 10.17  rebate under this section may endorse and return the rebate 
 10.18  check to the state and designate that the returned rebate be 
 10.19  deposited in one or more of the following accounts for use only 
 10.20  for the purposes designated in this subdivision: 
 10.21     (1) an account for the basic sliding fee child care program 
 10.22  for child care assistance to families administered by the 
 10.23  commissioner of children, families, and learning under Minnesota 
 10.24  Statutes, section 119B.03; 
 10.25     (2) an account for kindergarten through grade 12 education 
 10.26  purposes, such as reducing instructor-to-student ratios and 
 10.27  paying increased heating fuel costs for school facilities, to be 
 10.28  administered by the commissioner of children, families, and 
 10.29  learning; 
 10.30     (3) the affordable rental investment fund to be used by the 
 10.31  housing finance agency for family rental housing assistance 
 10.32  under Minnesota Statutes, section 462A.21, subdivision 8b; 
 10.33     (4) the contaminated site cleanup and development account 
 10.34  to be used by the commissioner of trade and economic development 
 10.35  for contamination cleanup development grants under Minnesota 
 10.36  Statutes, sections 116J.551 to 116J.556; 
 11.1      (5) an account to provide funding for public transit and 
 11.2   highway improvement projects to reduce congestion to be 
 11.3   administered by the commissioner of transportation; 
 11.4      (6) an account to increase funding for the University of 
 11.5   Minnesota and the Minnesota state colleges and universities 
 11.6   under Minnesota Statutes, section 136F.01, as appropriated by 
 11.7   law; and 
 11.8      (7) an account to provide a fund for reimbursement of 
 11.9   nursing homes, licensed under Minnesota Statutes, chapter 144A, 
 11.10  for increased heating fuel costs to be administered by the 
 11.11  commissioner of human services. 
 11.12     (b) The rebate check must be accompanied by a notice 
 11.13  prepared by the commissioner of revenue that explains the 
 11.14  taxpayer's option to endorse the check to the state and explains 
 11.15  the uses of the funds that the taxpayer may designate.  In 
 11.16  preparing the notice, the commissioner of revenue shall consult 
 11.17  with the commissioners or agencies that administer the funds or 
 11.18  accounts.  The notice must also explain that a taxpayer may cash 
 11.19  the rebate check and mail a contribution of any amount to the 
 11.20  state and that the contribution must be used for the option or 
 11.21  options under paragraph (a) as designated by the taxpayer.  The 
 11.22  notice must contain in bold print the address to which the 
 11.23  endorsed check or a state contribution may be mailed. 
 11.24     (c) Funds endorsed and mailed to the state and 
 11.25  contributions mailed to the state under this subdivision must be 
 11.26  deposited by the commissioner of finance in the fund or account 
 11.27  designated and are appropriated to the agency or commissioner 
 11.28  designated by the taxpayer or contributor for use as provided in 
 11.29  this subdivision.  Funds appropriated under this paragraph are 
 11.30  available until expended. 
 11.31     (d) Funds appropriated under this subdivision are in 
 11.32  addition to any funds appropriated for the purposes given in 
 11.33  this subdivision and may not be used for any other purposes 
 11.34  including the reduction of any other appropriations.  Funds 
 11.35  appropriated to a commissioner or agency under this subdivision 
 11.36  are not included in the department's or agency's budget base. 
 12.1      Subd. 11.  [PAYMENT DATES; INTEREST.] The commissioner of 
 12.2   revenue shall begin paying sales tax rebates by 90 days after 
 12.3   final enactment of this act.  Sales tax rebates not paid by 
 12.4   January 1, 2002, bear interest at the rate specified in 
 12.5   Minnesota Statutes, section 270.75. 
 12.6      Subd. 12.  [NO ADJUSTMENTS AFTER PROCESSING.] A sales tax 
 12.7   rebate may not be adjusted based on changes to a 1999 income tax 
 12.8   return that are made by order of assessment after the date the 
 12.9   rebate is processed, or made by the taxpayer that are filed with 
 12.10  the commissioner of revenue after that date. 
 12.11     Subd. 13.  [JOINT REBATE RULES.] Individuals who filed a 
 12.12  joint income tax return for 1999 must receive a joint sales tax 
 12.13  rebate.  After the sales tax rebate has been issued, but before 
 12.14  the check has been cashed, either joint claimant may request a 
 12.15  separate check for one-half of the joint sales tax rebate.  
 12.16  Notwithstanding anything in this section to the contrary, if 
 12.17  prior to payment, the commissioner has been notified that 
 12.18  persons who filed a joint 1999 income tax return are living at 
 12.19  separate addresses, as indicated on their 2000 income tax return 
 12.20  or otherwise, the commissioner may issue separate checks to each 
 12.21  person.  The amount payable to each person is one-half of the 
 12.22  total joint rebate. 
 12.23     Subd. 14.  [DECEASED INDIVIDUALS.] If a rebate is received 
 12.24  by the estate of a deceased individual after the probate estate 
 12.25  has been closed, and if the original rebate check is returned to 
 12.26  the commissioner with a copy of the decree of descent or final 
 12.27  account of the estate, social security numbers, and addresses of 
 12.28  the beneficiaries, the commissioner may issue separate checks in 
 12.29  proportion to their share in the residuary estate in the names 
 12.30  of the residuary beneficiaries of the estate. 
 12.31     Subd. 15.  [APPLICATION OF OTHER LAW.] (a) The sales tax 
 12.32  rebate is a "Minnesota tax law" for purposes of Minnesota 
 12.33  Statutes, section 270B.01, subdivision 8. 
 12.34     (b) The sales tax rebate is "an overpayment of any tax 
 12.35  collected by the commissioner" for purposes of Minnesota 
 12.36  Statutes, section 270.07, subdivision 5.  For purposes of this 
 13.1   subdivision, a joint sales tax rebate is payable to each spouse 
 13.2   equally. 
 13.3      (c) The sales tax rebate is a refund subject to revenue 
 13.4   recapture under Minnesota Statutes, chapter 270A.  The 
 13.5   commissioner of revenue shall remit the entire refund to the 
 13.6   claimant agency, which shall, upon the request of the spouse who 
 13.7   does not owe the debt, refund one-half of the joint sales tax 
 13.8   rebate to the spouse who does not owe the debt. 
 13.9      Subd. 16.  [LAPSE OF ENTITLEMENT.] If the commissioner of 
 13.10  revenue cannot locate an individual entitled to a sales tax 
 13.11  rebate by July 1, 2003, or if an individual to whom a sales tax 
 13.12  rebate was issued has not cashed the check by July 1, 2003, the 
 13.13  right to the sales tax rebate lapses and the check must be 
 13.14  deposited in the general fund. 
 13.15     Subd. 17.  [CLAIMS FOR UNPAID REBATES.] Individuals 
 13.16  entitled to a sales tax rebate pursuant to subdivision 1, 6, 7, 
 13.17  or 8 but who did not receive one, and individuals who receive a 
 13.18  sales tax rebate that was not correctly computed, must file a 
 13.19  claim with the commissioner before July 1, 2002, in a form 
 13.20  prescribed by the commissioner.  These claims must be treated as 
 13.21  if they are a claim for refund under Minnesota Statutes, section 
 13.22  289A.50, subdivisions 4 and 7. 
 13.23     Subd. 18.  [APPROPRIATION.] The rebate is a reduction of 
 13.24  fiscal year 2001 sales tax revenues.  The amount necessary to 
 13.25  make the sales tax rebates and interest provided in this section 
 13.26  is appropriated from the general fund to the commissioner of 
 13.27  revenue in fiscal year 2001 and is available until June 30, 2003.
 13.28     Subd. 19.  [ILLEGALLY CASHED CHECKS.] If a sales tax rebate 
 13.29  check is cashed by someone other than the payee or payees of the 
 13.30  check, and the commissioner of revenue determines that the check 
 13.31  has been forged or improperly endorsed or the commissioner 
 13.32  determines that a rebate was overstated or erroneously issued, 
 13.33  the commissioner may issue an order of assessment for the amount 
 13.34  of the check or the amount the check is overstated against the 
 13.35  person or persons cashing it.  The assessment must be made 
 13.36  within two years after the check is cashed, but if cashing the 
 14.1   check constitutes theft under Minnesota Statutes, section 
 14.2   609.52, or forgery under Minnesota Statutes, section 609.631, 
 14.3   the assessment can be made at any time.  The assessment may be 
 14.4   appealed administratively and judicially.  The commissioner may 
 14.5   take action to collect the assessment in the same manner as 
 14.6   provided by Minnesota Statutes, chapter 289A, for any other 
 14.7   order of the commissioner assessing tax. 
 14.8      Subd. 20.  [AUTHORITY TO CONTRACT WITH VENDOR.] 
 14.9   Notwithstanding Minnesota Statutes, sections 9.031, 16A.40, 
 14.10  16B.49, 16B.50, and any other law to the contrary, the 
 14.11  commissioner of revenue may take whatever actions the 
 14.12  commissioner deems necessary to pay the rebates required by this 
 14.13  section, and may, in consultation with the commissioner of 
 14.14  finance and the state treasurer, contract with a private vendor 
 14.15  or vendors to process, print, and mail the rebate checks or 
 14.16  warrants required under this section and receive and disburse 
 14.17  state funds to pay those checks or warrants. 
 14.18     Subd. 21.  [ELECTRONIC PAYMENT.] The commissioner may pay 
 14.19  rebates required by this section by electronic funds transfer to 
 14.20  individuals who requested that their 2000 individual income tax 
 14.21  refund be paid through electronic funds transfer.  The 
 14.22  commissioner may make the electronic funds transfer payments to 
 14.23  the same financial institution and into the same account as the 
 14.24  2000 individual income tax refund. 
 14.25     Subd. 22.  [ADJUSTMENTS.] Before payment, the commissioner 
 14.26  of revenue shall adjust the rebate as follows: 
 14.27     the rebates calculated in subdivisions 2, 3, 4, 6, 7, and 8 
 14.28  must be proportionately reduced to account for 1999 income tax 
 14.29  returns that are filed on or after January 1, 2001, but before 
 14.30  June 1, 2001, so that the estimated amount of sales tax rebates 
 14.31  payable under subdivisions 2, 3, 4, 6, 7, and 8 on the date the 
 14.32  rebate is processed does not exceed $856,280,000.  The 
 14.33  adjustment under this subdivision is not a rule subject to 
 14.34  Minnesota Statutes, chapter 14. 
 14.35     Sec. 3.  [APPROPRIATIONS.] 
 14.36     (a) $500,000 for fiscal year 2001 and $800,000 for fiscal 
 15.1   year 2002 is appropriated from the general fund to the 
 15.2   commissioner of revenue to administer the sales tax rebate in 
 15.3   this article.  Any unencumbered balance remaining on June 30, 
 15.4   2001, does not cancel but is available for expenditure by the 
 15.5   commissioner of revenue until June 30, 2002.  Notwithstanding 
 15.6   Minnesota Statutes, section 16A.285, the commissioner of revenue 
 15.7   may not use this appropriation for any purpose other than 
 15.8   administering the sales tax rebate.  This is a one-time 
 15.9   appropriation and may not be added to the agency's budget base. 
 15.10     (b) $278,000 for fiscal year 2001, and $123,000 for fiscal 
 15.11  year 2002 are appropriated from the general fund to the state 
 15.12  treasurer to pay the cost of clearing sales tax rebate checks 
 15.13  through commercial banks.  This is a one-time appropriation and 
 15.14  may not be added to the budget base.  
 15.15     Sec. 4.  [EFFECTIVE DATE.] 
 15.16     Sections 1 to 3 are effective the day following final 
 15.17  enactment. 
 15.18                             ARTICLE 2 
 15.19                        PROPERTY TAX REFORM 
 15.20     Section 1.  [16A.88] [TRANSIT FUND.] 
 15.21     The transit fund is established within the state treasury.  
 15.22  At least 5.5 percent of the appropriations from the fund must be 
 15.23  used for the funding of transit systems outside the metropolitan 
 15.24  area under section 174.24.  Appropriations from the fund may 
 15.25  also be used for the funding of transit systems within the 
 15.26  metropolitan area under sections 473.405 to 473.449.  Revenues 
 15.27  in this fund may not be used for the purposes of funding capital 
 15.28  or operating expenses related to the operation of a light rail 
 15.29  line or a commuter rail line. 
 15.30     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2002. 
 15.31     Sec. 2.  Minnesota Statutes 2000, section 123B.55, is 
 15.32  amended to read: 
 15.33     123B.55 [DEBT SERVICE LEVY.] 
 15.34     A district may levy the amounts necessary to make payments 
 15.35  for bonds issued and for interest on them, including the bonds 
 15.36  and interest on them, issued as authorized by Minnesota Statutes 
 16.1   1974, section 275.125, subdivision 3, clause (7)(C); and the 
 16.2   amounts necessary for repayment of debt service loans and 
 16.3   capital loans, minus the amount of debt service equalization 
 16.4   revenue of the district and the district's tax base replacement 
 16.5   aid under section 123B.551. 
 16.6      <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 16.7   payable in 2003 and subsequent years. 
 16.8      Sec. 3.  [123B.551] [ELECTRIC GENERATION TAX BASE 
 16.9   REPLACEMENT DEBT SERVICE AID.] 
 16.10     Each school district is eligible for tax base replacement 
 16.11  debt service aid for taxes payable in 2003 and subsequent years 
 16.12  equal to 0.5 percent of the assessment year 2001 taxable market 
 16.13  value of property classified as class 3(4) under section 273.13, 
 16.14  subdivision 24, multiplied by the district's local tax rate for 
 16.15  bonded debt for taxes payable in 2002.  In the case of districts 
 16.16  having debt under multiple debt issues, an aid amount must be 
 16.17  separately determined for each issue.  Debt aid for each debt 
 16.18  issue must be paid annually as long as the bonds for the debt 
 16.19  issue remain outstanding. 
 16.20     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 16.21  payable in 2003 and subsequent years. 
 16.22     Sec. 4.  Minnesota Statutes 2000, section 126C.01, 
 16.23  subdivision 3, is amended to read: 
 16.24     Subd. 3.  [REFERENDUM MARKET VALUE.] "Referendum market 
 16.25  value" means the market value of all taxable property, except 
 16.26  that excluding property classified as class 2 or class 4c under 
 16.27  section 273.13.  The portion of class 2a property consisting of 
 16.28  the house, garage, and surrounding one acre of land of an 
 16.29  agricultural homestead is included in referendum market value.  
 16.30  Any class of property, or any portion of a class of 
 16.31  property, with that is included in the definition of referendum 
 16.32  market value and that has a class rate of less than one percent 
 16.33  under section 273.13 shall have a referendum market value equal 
 16.34  to its net tax capacity multiplied by 100. 
 16.35     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 16.36  payable in 2002 and subsequent years. 
 17.1      Sec. 5.  Minnesota Statutes 2000, section 126C.13, 
 17.2   subdivision 4, is amended to read: 
 17.3      Subd. 4.  [GENERAL EDUCATION AID.] A district's general 
 17.4   education aid is the sum of the following amounts:  
 17.5      (1) the product of (i) the difference between the general 
 17.6   education revenue, excluding transition revenue and supplemental 
 17.7   revenue, and the general education levy, times (ii) the ratio of 
 17.8   the actual amount levied to the permitted levy; 
 17.9      (2) transition aid according to section 126C.10, 
 17.10  subdivision 22; 
 17.11     (3) supplemental aid according to section 127A.49; 
 17.12     (4) shared time aid according to section 126C.01, 
 17.13  subdivision 7; and 
 17.14     (5) referendum aid according to section 126C.17. 
 17.15     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 17.16  payable in 2002 and thereafter.  
 17.17     Sec. 6.  Minnesota Statutes 2000, section 126C.17, is 
 17.18  amended by adding a subdivision to read: 
 17.19     Subd. 7a.  [REFERENDUM TAX BASE REPLACEMENT AID.] For each 
 17.20  school district, for each separately authorized referendum levy, 
 17.21  the commissioner of revenue, in consultation with the 
 17.22  commissioner of children, families, and learning, shall certify 
 17.23  the amount of the referendum levy in taxes payable year 2001 
 17.24  levied against property classified as class 2 or class 4c, 
 17.25  excluding the portion of the tax paid by the portion of class 2a 
 17.26  property consisting of the house, garage, and surrounding one 
 17.27  acre of land.  The resulting amount must be used to reduce the 
 17.28  district's referendum levy amount otherwise determined, and must 
 17.29  be paid to the district each year that the referendum authority 
 17.30  remains in effect.  The aid payable under this subdivision must 
 17.31  be subtracted from the district's referendum equalization aid 
 17.32  under subdivision 7. 
 17.33     For the purposes of this subdivision, the referendum levy 
 17.34  with the latest year of expiration is assumed to be at the 
 17.35  highest level of equalization, and the referendum levy with the 
 17.36  earliest year of expiration is assumed to be at the lowest level 
 18.1   of equalization. 
 18.2      <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 18.3   payable in 2002 and subsequent years. 
 18.4      Sec. 7.  Minnesota Statutes 2000, section 174.24, 
 18.5   subdivision 3b, is amended to read: 
 18.6      Subd. 3b.  [OPERATING ASSISTANCE.] (a) The commissioner 
 18.7   shall determine the total operating cost of any public transit 
 18.8   system receiving or applying for assistance in accordance with 
 18.9   generally accepted accounting principles.  To be eligible for 
 18.10  financial assistance, an applicant or recipient shall provide to 
 18.11  the commissioner all financial records and other information and 
 18.12  shall permit any inspection reasonably necessary to determine 
 18.13  total operating cost and correspondingly the amount of 
 18.14  assistance which may be paid to the applicant or recipient.  
 18.15  Where more than one county or municipality contributes 
 18.16  assistance to the operation of a public transit system, the 
 18.17  commissioner shall identify one as lead agency for the purpose 
 18.18  of receiving moneys under this section.  
 18.19     (b) Prior to distributing operating assistance to eligible 
 18.20  recipients for any contract period, the commissioner shall place 
 18.21  all recipients into one of the following classifications:  large 
 18.22  urbanized area service, urbanized area service, small urban area 
 18.23  service, rural area service, and elderly and handicapped 
 18.24  service.  The commissioner shall distribute funds under this 
 18.25  section so that the percentage of total operating cost paid by 
 18.26  any recipient from local sources will not exceed the percentage 
 18.27  for that recipient's classification, except as provided in an 
 18.28  undue hardship case.  The percentages shall be:  for large 
 18.29  urbanized area service, 50 35 percent; for urbanized area 
 18.30  service and small urban area service, 40 25 percent; for rural 
 18.31  area service, 35 25 percent; and for elderly and handicapped 
 18.32  service, 35 25 percent.  The remainder of the total operating 
 18.33  cost will be paid from state funds less any assistance received 
 18.34  by the recipient from any federal source.  For purposes of this 
 18.35  subdivision "local sources" means all local sources of funds and 
 18.36  includes all operating revenue, tax levies, and contributions 
 19.1   from public funds, except that the commissioner may exclude from 
 19.2   the total assistance contract revenues derived from operations 
 19.3   the cost of which is excluded from the computation of total 
 19.4   operating cost.  Any taxing jurisdiction receiving assistance 
 19.5   under this section must not use property tax levies to finance 
 19.6   transit services. 
 19.7      (c) If a recipient informs the commissioner in writing 
 19.8   after the establishment of these percentages but prior to the 
 19.9   distribution of financial assistance for any year that paying 
 19.10  its designated percentage of total operating cost from local 
 19.11  sources will cause undue hardship, the commissioner may reduce 
 19.12  the percentage to be paid from local sources by the recipient 
 19.13  and increase the percentage to be paid from local sources by one 
 19.14  or more other recipients inside or outside the classification, 
 19.15  provided that no recipient shall have its percentage thus 
 19.16  reduced or increased for more than two years successively.  If 
 19.17  for any year the funds appropriated to the commissioner to carry 
 19.18  out the purposes of this section are insufficient to allow the 
 19.19  commissioner to pay the state share of total operating cost as 
 19.20  provided in this paragraph, the commissioner shall reduce the 
 19.21  state share in each classification to the extent necessary. 
 19.22     <b>[EFFECTIVE DATE.]</b> This section is effective for transit 
 19.23  services provided and property taxes payable in calendar year 
 19.24  2002 and subsequent years. 
 19.25     Sec. 8.  [216B.1646] [RATE REDUCTION.] 
 19.26     By March 1, 2002, any electric utility subject to rate 
 19.27  regulation by the public utilities commission shall file with 
 19.28  the commission an amendment to the tariffed rates of the utility 
 19.29  to reflect the reduced amount of the utility's property tax on 
 19.30  the personal property of its electric generation, transmission, 
 19.31  or distribution system from taxes payable in 2001 to taxes 
 19.32  payable in 2002.  The commission shall submit the information 
 19.33  from the utility containing its property tax savings to the 
 19.34  commissioner of revenue for review.  The commissioner of revenue 
 19.35  shall within 30 days notify the commission as to the accuracy of 
 19.36  the property tax data submitted by the utility.  The commission 
 20.1   may only approve the amendment to the tariffed rates if it finds 
 20.2   that, to the extent feasible, each dollar of property tax 
 20.3   reduction retroactive to January 1, 2002, results in a dollar of 
 20.4   savings to the utility's customers. 
 20.5      For purposes of this section, "personal property" means 
 20.6   tools, implements, and machinery of the generating plant, and 
 20.7   also includes transformers, transmission lines, distribution 
 20.8   lines, or any other tools, implements, and machinery that are 
 20.9   part of an electric substation, wherever located. 
 20.10     Sec. 9.  Minnesota Statutes 2000, section 270.12, 
 20.11  subdivision 2, is amended to read: 
 20.12     Subd. 2.  [MEETING DATES; DUTIES.] The board shall meet 
 20.13  annually between April 15 and June 30 at the office of the 
 20.14  commissioner of revenue and examine and compare the returns of 
 20.15  the assessment of the property in the several counties, and 
 20.16  equalize the same so that all the taxable property in the state 
 20.17  shall be assessed at its market value, subject to the following 
 20.18  rules: 
 20.19     (1) The board shall add to the aggregate valuation of the 
 20.20  real property of every county, which the board believes to be 
 20.21  valued below its market value in money, such percent as will 
 20.22  bring the same to its market value in money; 
 20.23     (2) The board shall deduct from the aggregate valuation of 
 20.24  the real property of every county, which the board believes to 
 20.25  be valued above its market value in money, such percent as will 
 20.26  reduce the same to its market value in money; 
 20.27     (3) If the board believes the valuation for a part of a 
 20.28  class determined by a range of market value under clause (8) or 
 20.29  otherwise, a class, or classes of the real property of any town 
 20.30  or district in any county, or the valuation for a part of a 
 20.31  class, a class, or classes of the real property of any county 
 20.32  not in towns or cities, should be raised or reduced, without 
 20.33  raising or reducing the other real property of such county, or 
 20.34  without raising or reducing it in the same ratio, the board may 
 20.35  add to, or take from, the valuation of a part of a class, a 
 20.36  class, or classes in any one or more of such towns or cities, or 
 21.1   of the property not in towns or cities, such percent as the 
 21.2   board believes will raise or reduce the same to its market value 
 21.3   in money; 
 21.4      (4) The board shall add to the aggregate valuation of any 
 21.5   part of a class, a class, or classes of personal property of any 
 21.6   county, town, or city, which the board believes to be valued 
 21.7   below the market value thereof, such percent as will raise the 
 21.8   same to its market value in money; 
 21.9      (5) The board shall take from the aggregate valuation of 
 21.10  any part of a class, a class, or classes of personal property in 
 21.11  any county, town or city, which the board believes to be valued 
 21.12  above the market value thereof, such percent as will reduce the 
 21.13  same to its market value in money; 
 21.14     (6) The board shall not reduce the aggregate valuation of 
 21.15  all the property of the state, as returned by the several county 
 21.16  auditors, more than one percent on the whole valuation thereof; 
 21.17     (7) When it would be of assistance in equalizing values the 
 21.18  board may require any county auditor to furnish statements 
 21.19  showing assessments of real and personal property of any 
 21.20  individuals, firms, or corporations within the county.  The 
 21.21  board shall consider and equalize such assessments and may 
 21.22  increase the assessment of individuals, firms, or corporations 
 21.23  above the amount returned by the county board of equalization 
 21.24  when it shall appear to be undervalued, first giving notice to 
 21.25  such persons of the intention of the board so to do, which 
 21.26  notice shall fix a time and place of hearing.  The board shall 
 21.27  not decrease any such assessment below the valuation placed by 
 21.28  the county board of equalization; 
 21.29     (8) In equalizing values pursuant to this section, the 
 21.30  board shall utilize a 12-month assessment/sales ratio study 
 21.31  conducted by the department of revenue containing only sales 
 21.32  that are filed in the county auditor's office under section 
 21.33  272.115, by November 1 of the previous year and that occurred 
 21.34  between October 1 of the year immediately preceding the previous 
 21.35  year and September 30 of the previous year.  
 21.36     The assessment/sales ratio study may separate the values of 
 22.1   residential property into market value categories.  The board 
 22.2   may adjust the market value categories and the number of 
 22.3   categories as necessary to create an adequate sample size for 
 22.4   each market value category.  The board may determine the 
 22.5   adequate sample size.  The board may adjust the relative share 
 22.6   of market value assigned to land value versus building value, in 
 22.7   the case of property classes subject to the state general tax 
 22.8   under section 275.025.  To the extent practicable, the 
 22.9   methodology used in preparing the assessment/sales ratio study 
 22.10  must be consistent with the most recent Standard on Assessment 
 22.11  Sales Ratio Studies published by the assessment standards 
 22.12  committee of the International Association of Assessing 
 22.13  Officers.  The board may determine the geographic area used in 
 22.14  preparing the study to accurately equalize values.  A sales 
 22.15  ratio study separating residential property into market value 
 22.16  categories may not be used as the basis for a petition under 
 22.17  chapter 278. 
 22.18     The sales prices used in the study must be discounted for 
 22.19  terms of financing.  The board shall use the median ratio as the 
 22.20  statistical measure of the level of assessment for any 
 22.21  particular category of property; and 
 22.22     (9) The board shall receive from each county the estimated 
 22.23  market values on the assessment date falling within the study 
 22.24  period for all parcels by magnetic tape or other medium as 
 22.25  prescribed by the commissioner of revenue. 
 22.26     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2003.
 22.27     Sec. 10.  Minnesota Statutes 2000, section 273.13, 
 22.28  subdivision 22, is amended to read: 
 22.29     Subd. 22.  [CLASS 1.] (a) Except as provided in subdivision 
 22.30  23, real estate which is residential and used for homestead 
 22.31  purposes is class 1.  The market value of class 1a property must 
 22.32  be determined based upon the value of the house, garage, and 
 22.33  land.  
 22.34     The first $76,000 of market value of Class 1a property has 
 22.35  a net class rate of one percent of its market value; and the 
 22.36  market value of class 1a property that exceeds $76,000 has a 
 23.1   class rate of 1.65 percent of its market value. 
 23.2      (b) Class 1b property includes homestead real estate or 
 23.3   homestead manufactured homes used for the purposes of a 
 23.4   homestead by 
 23.5      (1) any blind person, or the blind person and the blind 
 23.6   person's spouse; or 
 23.7      (2) any person, hereinafter referred to as "veteran," who: 
 23.8      (i) served in the active military or naval service of the 
 23.9   United States; and 
 23.10     (ii) is entitled to compensation under the laws and 
 23.11  regulations of the United States for permanent and total 
 23.12  service-connected disability due to the loss, or loss of use, by 
 23.13  reason of amputation, ankylosis, progressive muscular 
 23.14  dystrophies, or paralysis, of both lower extremities, such as to 
 23.15  preclude motion without the aid of braces, crutches, canes, or a 
 23.16  wheelchair; and 
 23.17     (iii) has acquired a special housing unit with special 
 23.18  fixtures or movable facilities made necessary by the nature of 
 23.19  the veteran's disability, or the surviving spouse of the 
 23.20  deceased veteran for as long as the surviving spouse retains the 
 23.21  special housing unit as a homestead; or 
 23.22     (3) any person who: 
 23.23     (i) is permanently and totally disabled and 
 23.24     (ii) receives 90 percent or more of total household income, 
 23.25  as defined in section 290A.03, subdivision 5, from 
 23.26     (A) aid from any state as a result of that disability; or 
 23.27     (B) supplemental security income for the disabled; or 
 23.28     (C) workers' compensation based on a finding of total and 
 23.29  permanent disability; or 
 23.30     (D) social security disability, including the amount of a 
 23.31  disability insurance benefit which is converted to an old age 
 23.32  insurance benefit and any subsequent cost of living increases; 
 23.33  or 
 23.34     (E) aid under the federal Railroad Retirement Act of 1937, 
 23.35  United States Code Annotated, title 45, section 228b(a)5; or 
 23.36     (F) a pension from any local government retirement fund 
 24.1   located in the state of Minnesota as a result of that 
 24.2   disability; or 
 24.3      (G) pension, annuity, or other income paid as a result of 
 24.4   that disability from a private pension or disability plan, 
 24.5   including employer, employee, union, and insurance plans and 
 24.6      (iii) has household income as defined in section 290A.03, 
 24.7   subdivision 5, of $50,000 or less; or 
 24.8      (4) any person who is permanently and totally disabled and 
 24.9   whose household income as defined in section 290A.03, 
 24.10  subdivision 5, is 275 percent or less of the federal poverty 
 24.11  level. 
 24.12     Property is classified and assessed under clause (4) only 
 24.13  if the government agency or income-providing source certifies, 
 24.14  upon the request of the homestead occupant, that the homestead 
 24.15  occupant satisfies the disability requirements of this paragraph.
 24.16     Property is classified and assessed pursuant to clause (1) 
 24.17  only if the commissioner of economic security certifies to the 
 24.18  assessor that the homestead occupant satisfies the requirements 
 24.19  of this paragraph.  
 24.20     Permanently and totally disabled for the purpose of this 
 24.21  subdivision means a condition which is permanent in nature and 
 24.22  totally incapacitates the person from working at an occupation 
 24.23  which brings the person an income.  The first $32,000 market 
 24.24  value of class 1b property has a net class rate of .45 percent 
 24.25  of its market value.  The remaining market value of class 1b 
 24.26  property has a net class rate using the rates for class 1 or 
 24.27  class 2a property, whichever is appropriate, of similar market 
 24.28  value.  
 24.29     (c) Class 1c property is commercial use real property that 
 24.30  abuts a lakeshore line and is devoted to temporary and seasonal 
 24.31  residential occupancy for recreational purposes but not devoted 
 24.32  to commercial purposes for more than 250 days in the year 
 24.33  preceding the year of assessment, and that includes a portion 
 24.34  used as a homestead by the owner, which includes a dwelling 
 24.35  occupied as a homestead by a shareholder of a corporation that 
 24.36  owns the resort or a partner in a partnership that owns the 
 25.1   resort, even if the title to the homestead is held by the 
 25.2   corporation or partnership.  For purposes of this clause, 
 25.3   property is devoted to a commercial purpose on a specific day if 
 25.4   any portion of the property, excluding the portion used 
 25.5   exclusively as a homestead, is used for residential occupancy 
 25.6   and a fee is charged for residential occupancy.  Class 1c 
 25.7   property has a class rate of one percent of total market value 
 25.8   with the following limitation:  the area of the property must 
 25.9   not exceed 100 feet of lakeshore footage for each cabin or 
 25.10  campsite located on the property up to a total of 800 feet and 
 25.11  500 feet in depth, measured away from the lakeshore.  If any 
 25.12  portion of the class 1c resort property is classified as class 
 25.13  4c under subdivision 25, the entire property must meet the 
 25.14  requirements of subdivision 25, paragraph (d), clause (1), to 
 25.15  qualify for class 1c treatment under this paragraph. 
 25.16     (d) Class 1d property includes structures that meet all of 
 25.17  the following criteria: 
 25.18     (1) the structure is located on property that is classified 
 25.19  as agricultural property under section 273.13, subdivision 23; 
 25.20     (2) the structure is occupied exclusively by seasonal farm 
 25.21  workers during the time when they work on that farm, and the 
 25.22  occupants are not charged rent for the privilege of occupying 
 25.23  the property, provided that use of the structure for storage of 
 25.24  farm equipment and produce does not disqualify the property from 
 25.25  classification under this paragraph; 
 25.26     (3) the structure meets all applicable health and safety 
 25.27  requirements for the appropriate season; and 
 25.28     (4) the structure is not salable as residential property 
 25.29  because it does not comply with local ordinances relating to 
 25.30  location in relation to streets or roads. 
 25.31     The market value of class 1d property has the same class 
 25.32  rates as class 1a property under paragraph (a). 
 25.33     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 25.34  payable in 2002 and subsequent years. 
 25.35     Sec. 11.  Minnesota Statutes 2000, section 273.13, 
 25.36  subdivision 23, is amended to read: 
 26.1      Subd. 23.  [CLASS 2.] (a) Class 2a property is agricultural 
 26.2   land including any improvements that is homesteaded.  The market 
 26.3   value of the house and garage and immediately surrounding one 
 26.4   acre of land has the same class rates as class 1a property under 
 26.5   subdivision 22.  The value of the remaining land including 
 26.6   improvements up to $115,000 has a net class rate of 0.35 percent 
 26.7   of market value.  The value of class 2a property over $115,000 
 26.8   of market value up to and including $600,000 market value has a 
 26.9   net class rate of 0.8 0.55 percent of market value.  The 
 26.10  remaining property over $600,000 market value has a class rate 
 26.11  of 1.20 one percent of market value. 
 26.12     (b) Class 2b property is (1) real estate, rural in 
 26.13  character and used exclusively for growing trees for timber, 
 26.14  lumber, and wood and wood products; (2) real estate that is not 
 26.15  improved with a structure and is used exclusively for growing 
 26.16  trees for timber, lumber, and wood and wood products, if the 
 26.17  owner has participated or is participating in a cost-sharing 
 26.18  program for afforestation, reforestation, or timber stand 
 26.19  improvement on that particular property, administered or 
 26.20  coordinated by the commissioner of natural resources; (3) real 
 26.21  estate that is nonhomestead agricultural land; or (4) a landing 
 26.22  area or public access area of a privately owned public use 
 26.23  airport.  Class 2b property has a net class rate of 1.20 one 
 26.24  percent of market value. 
 26.25     (c) Agricultural land as used in this section means 
 26.26  contiguous acreage of ten acres or more, used during the 
 26.27  preceding year for agricultural purposes.  "Agricultural 
 26.28  purposes" as used in this section means the raising or 
 26.29  cultivation of agricultural products or enrollment in the 
 26.30  Reinvest in Minnesota program under sections 103F.501 to 
 26.31  103F.535 or the federal Conservation Reserve Program as 
 26.32  contained in Public Law Number 99-198.  Contiguous acreage on 
 26.33  the same parcel, or contiguous acreage on an immediately 
 26.34  adjacent parcel under the same ownership, may also qualify as 
 26.35  agricultural land, but only if it is pasture, timber, waste, 
 26.36  unusable wild land, or land included in state or federal farm 
 27.1   programs.  Agricultural classification for property shall be 
 27.2   determined excluding the house, garage, and immediately 
 27.3   surrounding one acre of land, and shall not be based upon the 
 27.4   market value of any residential structures on the parcel or 
 27.5   contiguous parcels under the same ownership. 
 27.6      (d) Real estate, excluding the house, garage, and 
 27.7   immediately surrounding one acre of land, of less than ten acres 
 27.8   which is exclusively and intensively used for raising or 
 27.9   cultivating agricultural products, shall be considered as 
 27.10  agricultural land.  
 27.11     Land shall be classified as agricultural even if all or a 
 27.12  portion of the agricultural use of that property is the leasing 
 27.13  to, or use by another person for agricultural purposes. 
 27.14     Classification under this subdivision is not determinative 
 27.15  for qualifying under section 273.111. 
 27.16     The property classification under this section supersedes, 
 27.17  for property tax purposes only, any locally administered 
 27.18  agricultural policies or land use restrictions that define 
 27.19  minimum or maximum farm acreage. 
 27.20     (e) The term "agricultural products" as used in this 
 27.21  subdivision includes production for sale of:  
 27.22     (1) livestock, dairy animals, dairy products, poultry and 
 27.23  poultry products, fur-bearing animals, horticultural and nursery 
 27.24  stock described in sections 18.44 to 18.61, fruit of all kinds, 
 27.25  vegetables, forage, grains, bees, and apiary products by the 
 27.26  owner; 
 27.27     (2) fish bred for sale and consumption if the fish breeding 
 27.28  occurs on land zoned for agricultural use; 
 27.29     (3) the commercial boarding of horses if the boarding is 
 27.30  done in conjunction with raising or cultivating agricultural 
 27.31  products as defined in clause (1); 
 27.32     (4) property which is owned and operated by nonprofit 
 27.33  organizations used for equestrian activities, excluding racing; 
 27.34     (5) game birds and waterfowl bred and raised for use on a 
 27.35  shooting preserve licensed under section 97A.115; 
 27.36     (6) insects primarily bred to be used as food for animals; 
 28.1   and 
 28.2      (7) trees, grown for sale as a crop, and not sold for 
 28.3   timber, lumber, wood, or wood products; and 
 28.4      (8) maple syrup, grown by a person licensed by the 
 28.5   Minnesota department of agriculture under chapter 28A as a food 
 28.6   processor. 
 28.7      (f) If a parcel used for agricultural purposes is also used 
 28.8   for commercial or industrial purposes, including but not limited 
 28.9   to:  
 28.10     (1) wholesale and retail sales; 
 28.11     (2) processing of raw agricultural products or other goods; 
 28.12     (3) warehousing or storage of processed goods; and 
 28.13     (4) office facilities for the support of the activities 
 28.14  enumerated in clauses (1), (2), and (3), 
 28.15  the assessor shall classify the part of the parcel used for 
 28.16  agricultural purposes as class 1b, 2a, or 2b, whichever is 
 28.17  appropriate, and the remainder in the class appropriate to its 
 28.18  use.  The grading, sorting, and packaging of raw agricultural 
 28.19  products for first sale is considered an agricultural purpose.  
 28.20  A greenhouse or other building where horticultural or nursery 
 28.21  products are grown that is also used for the conduct of retail 
 28.22  sales must be classified as agricultural if it is primarily used 
 28.23  for the growing of horticultural or nursery products from seed, 
 28.24  cuttings, or roots and occasionally as a showroom for the retail 
 28.25  sale of those products.  Use of a greenhouse or building only 
 28.26  for the display of already grown horticultural or nursery 
 28.27  products does not qualify as an agricultural purpose.  
 28.28     The assessor shall determine and list separately on the 
 28.29  records the market value of the homestead dwelling and the one 
 28.30  acre of land on which that dwelling is located.  If any farm 
 28.31  buildings or structures are located on this homesteaded acre of 
 28.32  land, their market value shall not be included in this separate 
 28.33  determination.  
 28.34     (g) To qualify for classification under paragraph (b), 
 28.35  clause (4), a privately owned public use airport must be 
 28.36  licensed as a public airport under section 360.018.  For 
 29.1   purposes of paragraph (b), clause (4), "landing area" means that 
 29.2   part of a privately owned public use airport properly cleared, 
 29.3   regularly maintained, and made available to the public for use 
 29.4   by aircraft and includes runways, taxiways, aprons, and sites 
 29.5   upon which are situated landing or navigational aids.  A landing 
 29.6   area also includes land underlying both the primary surface and 
 29.7   the approach surfaces that comply with all of the following:  
 29.8      (i) the land is properly cleared and regularly maintained 
 29.9   for the primary purposes of the landing, taking off, and taxiing 
 29.10  of aircraft; but that portion of the land that contains 
 29.11  facilities for servicing, repair, or maintenance of aircraft is 
 29.12  not included as a landing area; 
 29.13     (ii) the land is part of the airport property; and 
 29.14     (iii) the land is not used for commercial or residential 
 29.15  purposes. 
 29.16  The land contained in a landing area under paragraph (b), clause 
 29.17  (4), must be described and certified by the commissioner of 
 29.18  transportation.  The certification is effective until it is 
 29.19  modified, or until the airport or landing area no longer meets 
 29.20  the requirements of paragraph (b), clause (4).  For purposes of 
 29.21  paragraph (b), clause (4), "public access area" means property 
 29.22  used as an aircraft parking ramp, apron, or storage hangar, or 
 29.23  an arrival and departure building in connection with the airport.
 29.24     (h) Class 2c property consists of any parcel or contiguous 
 29.25  parcels of unimproved real estate, excluding agricultural land 
 29.26  classified under this subdivision that meets all the criteria in 
 29.27  clauses (1) to (5): 
 29.28     (1) the property consists of at least 200 contiguous feet 
 29.29  of unimproved real estate that borders a meandered lake as 
 29.30  defined in section 103G.005, subdivision 15, paragraph (a), 
 29.31  clause (3); 
 29.32     (2) the unimproved real estate is located within 400 feet 
 29.33  from the ordinary high water elevation of the public waters.  
 29.34  For purposes of this clause, "unimproved" means that the 
 29.35  property, or that portion of the property qualifying under this 
 29.36  paragraph, contains no structures, that there are no docks or 
 30.1   landings on its shoreline, and that the natural terrain and 
 30.2   vegetation has not been disturbed, or has been restored to 
 30.3   native vegetation; 
 30.4      (3) the property is either (i) the homestead of the owner, 
 30.5   the owner's spouse, or the owner or spouse's son or daughter, or 
 30.6   (ii) has been in possession of the owner, the owner's spouse, or 
 30.7   the owner or spouse's son or daughter for a period of at least 
 30.8   seven years prior to application for benefits under this 
 30.9   section; 
 30.10     (4) the owner files an application with the county assessor 
 30.11  by July 1 for classification under this paragraph for the 
 30.12  subsequent assessment year; and 
 30.13     (5) the owner of the property signs a covenant agreement 
 30.14  and files the covenant with the county assessor in the county 
 30.15  where the property is located.  The covenant agreement must 
 30.16  include all of the following: 
 30.17     (i) legal description of the area to which the covenant 
 30.18  applies; 
 30.19     (ii) name and address of the owner; 
 30.20     (iii) a statement that the land described in the covenant 
 30.21  must be kept as undeveloped land for the duration of the 
 30.22  covenant; 
 30.23     (iv) a statement that the landowner may initiate expiration 
 30.24  of the covenant agreement by notifying the county assessor, in 
 30.25  writing, with the date of expiration which must be at least 
 30.26  eight years from the date of the expiration notice; 
 30.27     (v) a statement that the covenant is binding on the owner 
 30.28  or owner's successor or assignee and runs with the land; and 
 30.29     (vi) a witnessed signature of the owner covenanting to keep 
 30.30  the land in its undeveloped state as it existed on the date the 
 30.31  covenant was signed. 
 30.32     Upon expiration of a covenant agreement in clause (5), the 
 30.33  property which is sold is subject to additional taxes.  The 
 30.34  amount of additional taxes due on the property equals the 
 30.35  difference between the taxes actually levied and the taxes that 
 30.36  would have been imposed if the property had been valued and 
 31.1   classified as if class 2c did not apply.  The additional taxes 
 31.2   must be extended against the property on the tax list for the 
 31.3   current year, provided, however, that no interest or penalties 
 31.4   shall be levied on the additional taxes if timely paid, and 
 31.5   provided further, that the additional taxes must only be levied 
 31.6   with respect to the last seven years that the property has been 
 31.7   valued and assessed under this section.  For purposes of this 
 31.8   subdivision, "timely paid" means paid (i) within 60 days after 
 31.9   notification from the county that the property no longer 
 31.10  qualifies, or (ii) prior to the recording of the conveyance of 
 31.11  the property, whichever is earlier. 
 31.12     The tax imposed under this paragraph is a lien on the 
 31.13  property assessed to the same extent and for the same duration 
 31.14  as other real property taxes.  The tax must be extended by the 
 31.15  county auditor and, when payable, be collected and distributed 
 31.16  in the same manner provided by law for the collection and 
 31.17  distribution of other property taxes. 
 31.18     Class 2c has a class rate of 0.6 percent of market value. 
 31.19     <b>[EFFECTIVE DATE.]</b> This section is effective for the 2001 
 31.20  assessment and thereafter, for taxes payable in 2002 and 
 31.21  thereafter.  For taxes payable in 2002, the date for filing an 
 31.22  application with the county assessor under this section, 
 31.23  paragraph (h), clause (4), is September 1, 2001. 
 31.24     Sec. 12.  Minnesota Statutes 2000, section 273.13, 
 31.25  subdivision 24, is amended to read: 
 31.26     Subd. 24.  [CLASS 3.] (a) Commercial and industrial 
 31.27  property and utility real and personal property is class 3a.  
 31.28     (1) Except as otherwise provided, each parcel of 
 31.29  commercial, industrial, or utility real property has a class 
 31.30  rate of 2.4 1.5 percent of the first tier of market value, and 
 31.31  3.4 two percent of the remaining market value.  In the case of 
 31.32  contiguous parcels of property owned by the same person or 
 31.33  entity, only the value equal to the first-tier value of the 
 31.34  contiguous parcels qualifies for the reduced class rate, except 
 31.35  that contiguous parcels owned by the same person or entity shall 
 31.36  be eligible for the first-tier value class rate on each separate 
 32.1   business operated by the owner of the property, provided the 
 32.2   business is housed in a separate structure.  For the purposes of 
 32.3   this subdivision, the first tier means the 
 32.4   first $150,000 $200,000 of market value.  Real property owned in 
 32.5   fee by a utility for transmission line right-of-way shall be 
 32.6   classified at the class rate for the higher tier.  
 32.7      For purposes of this subdivision, parcels are considered to 
 32.8   be contiguous even if they are separated from each other by a 
 32.9   road, street, waterway, or other similar intervening type of 
 32.10  property.  Connections between parcels that consist of power 
 32.11  lines or pipelines do not cause the parcels to be contiguous.  
 32.12  Property owners who have contiguous parcels of property that 
 32.13  constitute separate businesses that may qualify for the 
 32.14  first-tier class rate shall notify the assessor by July 1, for 
 32.15  treatment beginning in the following taxes payable year.  
 32.16     (2) Notwithstanding clauses (1) and (2), all railroad 
 32.17  operating property and all personal property that is:  (i) part 
 32.18  of an electric generation, transmission, or distribution system; 
 32.19  or (ii) part of a pipeline system transporting or distributing 
 32.20  water, gas, crude oil, or petroleum products; and (iii) not 
 32.21  described in clause (3) or (4), has a class rate is subject to 
 32.22  the class rates as provided under clause (1) for the first tier 
 32.23  of market value and the remaining market value.  In the case of 
 32.24  multiple parcels in one county that are owned by one person or 
 32.25  entity, only one first tier amount is eligible for the reduced 
 32.26  rate.  
 32.27     (3) The entire market value of personal property that is:  
 32.28  (i) tools, implements, and machinery of an electric generation, 
 32.29  transmission, or distribution system; (ii) tools, implements, 
 32.30  and machinery of a pipeline system transporting or distributing 
 32.31  water, gas, crude oil, or petroleum products; or (iii) the mains 
 32.32  and pipes used in the distribution of steam or hot or chilled 
 32.33  water for heating or cooling buildings, has a class rate as 
 32.34  provided under clause (1) for the remaining market value in 
 32.35  excess of the first tier.  For purposes of this section 
 32.36  "personal property" has the meaning given in section 272.028, 
 33.1   subdivision 4. 
 33.2      (4) The entire market value of personal property consisting 
 33.3   of attached machinery located at an electric generating station 
 33.4   that is part of an electric generating system has a class rate 
 33.5   as provided under clause (1) for the first tier of market value. 
 33.6      (b) Employment property defined in section 469.166, during 
 33.7   the period provided in section 469.170, shall constitute class 
 33.8   3b.  The class rates for class 3b property are determined under 
 33.9   paragraph (a). 
 33.10     (c)(1) Subject to the limitations of clause (2), structures 
 33.11  which are (i) located on property classified as class 3a, (ii) 
 33.12  constructed under an initial building permit issued after 
 33.13  January 2, 1996, (iii) located in a transit zone as defined 
 33.14  under section 473.3915, subdivision 3, (iv) located within the 
 33.15  boundaries of a school district, and (v) not primarily used for 
 33.16  retail or transient lodging purposes, shall have a class rate 
 33.17  equal to the lesser of 2.975 percent or the class rate of the 
 33.18  second tier of the commercial property rate under paragraph (a) 
 33.19  on any portion of the market value that does not qualify for the 
 33.20  first tier class rate under paragraph (a).  As used in item (v), 
 33.21  a structure is primarily used for retail or transient lodging 
 33.22  purposes if over 50 percent of its square footage is used for 
 33.23  those purposes.  A class rate equal to the lesser of 2.975 
 33.24  percent or the class rate of the second tier of the commercial 
 33.25  property class rate under paragraph (a) shall also apply to 
 33.26  improvements to existing structures that meet the requirements 
 33.27  of items (i) to (v) if the improvements are constructed under an 
 33.28  initial building permit issued after January 2, 1996, even if 
 33.29  the remainder of the structure was constructed prior to January 
 33.30  2, 1996.  For the purposes of this paragraph, a structure shall 
 33.31  be considered to be located in a transit zone if any portion of 
 33.32  the structure lies within the zone.  If any property once 
 33.33  eligible for treatment under this paragraph ceases to remain 
 33.34  eligible due to revisions in transit zone boundaries, the 
 33.35  property shall continue to receive treatment under this 
 33.36  paragraph for a period of three years. 
 34.1      (2) This clause applies to any structure qualifying for the 
 34.2   transit zone reduced class rate under clause (1) on January 2, 
 34.3   1999, or any structure meeting any of the qualification criteria 
 34.4   in item (i) and otherwise qualifying for the transit zone 
 34.5   reduced class rate under clause (1).  Such a structure continues 
 34.6   to receive the transit zone reduced class rate until the 
 34.7   occurrence of one of the events in item (ii).  Property 
 34.8   qualifying under item (i)(D), that is located outside of a city 
 34.9   of the first class, qualifies for the transit zone reduced class 
 34.10  rate as provided in that item.  Property qualifying under item 
 34.11  (i)(E) qualifies for the transit zone reduced class rate as 
 34.12  provided in that item. 
 34.13     (i) A structure qualifies for the rate in this clause if it 
 34.14  is: 
 34.15     (A) property for which a building permit was issued before 
 34.16  December 31, 1998; or 
 34.17     (B) property for which a building permit was issued before 
 34.18  June 30, 2001, if: 
 34.19     (I) at least 50 percent of the land on which the structure 
 34.20  is to be built has been acquired or is the subject of signed 
 34.21  purchase agreements or signed options as of March 15, 1998, by 
 34.22  the entity that proposes construction of the project or an 
 34.23  affiliate of the entity; 
 34.24     (II) signed agreements have been entered into with one 
 34.25  entity or with affiliated entities to lease for the account of 
 34.26  the entity or affiliated entities at least 50 percent of the 
 34.27  square footage of the structure or the owner of the structure 
 34.28  will occupy at least 50 percent of the square footage of the 
 34.29  structure; and 
 34.30     (III) one of the following requirements is met: 
 34.31     the project proposer has submitted the completed data 
 34.32  portions of an environmental assessment worksheet by December 
 34.33  31, 1998; or 
 34.34     a notice of determination of adequacy of an environmental 
 34.35  impact statement has been published by April 1, 1999; or 
 34.36     an alternative urban areawide review has been completed by 
 35.1   April 1, 1999; or 
 35.2      (C) property for which a building permit is issued before 
 35.3   July 30, 1999, if: 
 35.4      (I) at least 50 percent of the land on which the structure 
 35.5   is to be built has been acquired or is the subject of signed 
 35.6   purchase agreements as of March 31, 1998, by the entity that 
 35.7   proposes construction of the project or an affiliate of the 
 35.8   entity; 
 35.9      (II) a signed agreement has been entered into between the 
 35.10  building developer and a tenant to lease for its own account at 
 35.11  least 200,000 square feet of space in the building; 
 35.12     (III) a signed letter of intent is entered into by July 1, 
 35.13  1998, between the building developer and the tenant to lease the 
 35.14  space for its own account; and 
 35.15     (IV) the environmental review process required by state law 
 35.16  was commenced by December 31, 1998; 
 35.17     (D) property for which an irrevocable letter of credit with 
 35.18  a housing and redevelopment authority was signed before December 
 35.19  31, 1998.  The structure shall receive the transit zone reduced 
 35.20  class rate during construction and for the duration of time that 
 35.21  the original tenants remain in the building.  Any unoccupied net 
 35.22  leasable square footage that is not leased within 36 months 
 35.23  after the certificate of occupancy has been issued for the 
 35.24  building shall not be eligible to receive the reduced class 
 35.25  rate.  This reduced class rate applies only if a qualifying 
 35.26  entity continues to own the property; 
 35.27     (E) property, located in a city of the first class, and for 
 35.28  which the building permits for the excavation, the parking ramp, 
 35.29  and the office tower were issued prior to April 1, 1999, shall 
 35.30  receive the reduced class rate during construction and for the 
 35.31  first five assessment years immediately following its initial 
 35.32  occupancy provided that, when completed, at least 25 percent of 
 35.33  the net leasable square footage must be occupied by a qualifying 
 35.34  entity each year during this time period.  In order to receive 
 35.35  the reduced class rate on the structure in any subsequent 
 35.36  assessment years, at least 50 percent of the rentable square 
 36.1   footage must be occupied by a qualifying entity.  This reduced 
 36.2   class rate applies only if a qualifying entity continues to own 
 36.3   the property. 
 36.4      (ii) A structure specified by this clause, other than a 
 36.5   structure qualifying under clause (i)(D) or (E), shall continue 
 36.6   to receive the transit zone reduced class rate until the 
 36.7   occurrence of one of the following events: 
 36.8      (A) if the structure upon initial occupancy will be owner 
 36.9   occupied by the entity initially constructing the structure or 
 36.10  an affiliated entity, the structure receives the reduced class 
 36.11  rate until the structure ceases to be at least 50 percent 
 36.12  occupied by the entity or an affiliated entity, provided, if the 
 36.13  portion of the structure occupied by that entity or an affiliate 
 36.14  of the entity is less than 85 percent, the transit zone class 
 36.15  rate reduction for the portion of structure not so occupied 
 36.16  terminates upon the leasing of such space to any nonaffiliated 
 36.17  entity; or 
 36.18     (B) if the structure is leased by a single entity or 
 36.19  affiliated entity at the time of initial occupancy, the 
 36.20  structure shall receive the reduced class rate until the 
 36.21  structure ceases to be at least 50 percent occupied by the 
 36.22  entity or an affiliated entity, provided, if the portion of the 
 36.23  structure occupied by that entity or an affiliate of the entity 
 36.24  is less than 85 percent, the transit zone class rate reduction 
 36.25  for the portion of structure not so occupied shall terminate 
 36.26  upon the leasing of such space to any nonaffiliated entity; or 
 36.27     (C) if the structure meets the criteria in item (i)(C), the 
 36.28  structure shall receive the reduced class rate until the 
 36.29  expiration of the initial lease term of the applicable tenants. 
 36.30     Percentages occupied or leased shall be determined based 
 36.31  upon net leasable square footage in the structure.  The assessor 
 36.32  shall allocate the value of the structure in the same fashion as 
 36.33  provided in the general law for portions of any structure 
 36.34  receiving and not receiving the transit tax class reduction as a 
 36.35  result of this clause. 
 36.36     (3) For purposes of paragraph (c), "qualifying entity" 
 37.1   means the entity owning the property on September 1, 2000, or an 
 37.2   affiliate of an entity that owned the property on September 1, 
 37.3   2000. 
 37.4      <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 37.5   payable in 2002 and subsequent years. 
 37.6      Sec. 13.  Minnesota Statutes 2000, section 273.13, 
 37.7   subdivision 25, is amended to read: 
 37.8      Subd. 25.  [CLASS 4.] (a) Class 4a is residential real 
 37.9   estate containing four or more units and used or held for use by 
 37.10  the owner or by the tenants or lessees of the owner as a 
 37.11  residence for rental periods of 30 days or more.  Class 4a also 
 37.12  includes hospitals licensed under sections 144.50 to 144.56, 
 37.13  other than hospitals exempt under section 272.02, and contiguous 
 37.14  property used for hospital purposes, without regard to whether 
 37.15  the property has been platted or subdivided.  Class 4a property 
 37.16  in a city with a population of 5,000 or less, that is (1) 
 37.17  located outside of the metropolitan area, as defined in section 
 37.18  473.121, subdivision 2, or outside any county contiguous to the 
 37.19  metropolitan area, and (2) whose city boundary is at least 15 
 37.20  miles from the boundary of any city with a population greater 
 37.21  than 5,000 has a class rate of 2.15 percent of market value.  
 37.22  All other class 4a property has a class rate of 2.4 1.5 percent 
 37.23  of market value for taxes payable in 2002, 1.25 percent of 
 37.24  market value for taxes payable in 2003, and one percent of 
 37.25  market value for taxes payable in 2004 and subsequent years, 
 37.26  except that class 4a property consisting of a structure for 
 37.27  which construction commenced after June 30, 2001, has a class 
 37.28  rate of one percent of market value for taxes payable in 2003 
 37.29  and subsequent years.  For purposes of this paragraph, 
 37.30  population has the same meaning given in section 477A.011, 
 37.31  subdivision 3. 
 37.32     (b) Class 4b includes: 
 37.33     (1) residential real estate containing less than four units 
 37.34  that does not qualify as class 4bb, other than seasonal 
 37.35  residential, and recreational; 
 37.36     (2) manufactured homes not classified under any other 
 38.1   provision; 
 38.2      (3) a dwelling, garage, and surrounding one acre of 
 38.3   property on a nonhomestead farm classified under subdivision 23, 
 38.4   paragraph (b) containing two or three units; 
 38.5      (4) unimproved property that is classified residential as 
 38.6   determined under subdivision 33.  
 38.7      Class 4b property has a class rate of 1.65 1.5 percent of 
 38.8   market value for taxes payable in 2002, 1.25 percent of market 
 38.9   value for taxes payable in 2003, and one percent of market value 
 38.10  for taxes payable in 2004 and subsequent years.  
 38.11     (c) Class 4bb includes: 
 38.12     (1) nonhomestead residential real estate containing one 
 38.13  unit, other than seasonal residential, and recreational; and 
 38.14     (2) a single family dwelling, garage, and surrounding one 
 38.15  acre of property on a nonhomestead farm classified under 
 38.16  subdivision 23, paragraph (b). 
 38.17     Class 4bb has a class rate of 1.2 one percent on the first 
 38.18  $76,000 of market value and a class rate of 1.65 1.5 percent of 
 38.19  its market value that exceeds $76,000 for taxes payable in 2002, 
 38.20  1.25 percent of market value for taxes payable in 2003, and one 
 38.21  percent of market value for taxes payable in 2004 and subsequent 
 38.22  years. 
 38.23     Property that has been classified as seasonal recreational 
 38.24  residential property at any time during which it has been owned 
 38.25  by the current owner or spouse of the current owner does not 
 38.26  qualify for class 4bb. 
 38.27     (d) Class 4c property includes: 
 38.28     (1) except as provided in subdivision 22, paragraph (c), 
 38.29  real property devoted to temporary and seasonal residential 
 38.30  occupancy for recreation purposes, including real property 
 38.31  devoted to temporary and seasonal residential occupancy for 
 38.32  recreation purposes and not devoted to commercial purposes for 
 38.33  more than 250 days in the year preceding the year of 
 38.34  assessment.  For purposes of this clause, property is devoted to 
 38.35  a commercial purpose on a specific day if any portion of the 
 38.36  property is used for residential occupancy, and a fee is charged 
 39.1   for residential occupancy.  In order for a property to be 
 39.2   classified as class 4c, seasonal recreational residential for 
 39.3   commercial purposes, at least 40 percent of the annual gross 
 39.4   lodging receipts related to the property must be from business 
 39.5   conducted during 90 consecutive days and either (i) at least 60 
 39.6   percent of all paid bookings by lodging guests during the year 
 39.7   must be for periods of at least two consecutive nights; or (ii) 
 39.8   at least 20 percent of the annual gross receipts must be from 
 39.9   charges for rental of fish houses, boats and motors, 
 39.10  snowmobiles, downhill or cross-country ski equipment, or charges 
 39.11  for marina services, launch services, and guide services, or the 
 39.12  sale of bait and fishing tackle.  For purposes of this 
 39.13  determination, a paid booking of five or more nights shall be 
 39.14  counted as two bookings.  Class 4c also includes commercial use 
 39.15  real property used exclusively for recreational purposes in 
 39.16  conjunction with class 4c property devoted to temporary and 
 39.17  seasonal residential occupancy for recreational purposes, up to 
 39.18  a total of two acres, provided the property is not devoted to 
 39.19  commercial recreational use for more than 250 days in the year 
 39.20  preceding the year of assessment and is located within two miles 
 39.21  of the class 4c property with which it is used.  Class 4c 
 39.22  property classified in this clause also includes the remainder 
 39.23  of class 1c resorts provided that the entire property including 
 39.24  that portion of the property classified as class 1c also meets 
 39.25  the requirements for class 4c under this clause; otherwise the 
 39.26  entire property is classified as class 3.  Owners of real 
 39.27  property devoted to temporary and seasonal residential occupancy 
 39.28  for recreation purposes and all or a portion of which was 
 39.29  devoted to commercial purposes for not more than 250 days in the 
 39.30  year preceding the year of assessment desiring classification as 
 39.31  class 1c or 4c, must submit a declaration to the assessor 
 39.32  designating the cabins or units occupied for 250 days or less in 
 39.33  the year preceding the year of assessment by January 15 of the 
 39.34  assessment year.  Those cabins or units and a proportionate 
 39.35  share of the land on which they are located will be designated 
 39.36  class 1c or 4c as otherwise provided.  The remainder of the 
 40.1   cabins or units and a proportionate share of the land on which 
 40.2   they are located will be designated as class 3a.  The owner of 
 40.3   property desiring designation as class 1c or 4c property must 
 40.4   provide guest registers or other records demonstrating that the 
 40.5   units for which class 1c or 4c designation is sought were not 
 40.6   occupied for more than 250 days in the year preceding the 
 40.7   assessment if so requested.  The portion of a property operated 
 40.8   as a (1) restaurant, (2) bar, (3) gift shop, and (4) other 
 40.9   nonresidential facility operated on a commercial basis not 
 40.10  directly related to temporary and seasonal residential occupancy 
 40.11  for recreation purposes shall not qualify for class 1c or 4c; 
 40.12     (2) qualified property used as a golf course if: 
 40.13     (i) it is open to the public on a daily fee basis.  It may 
 40.14  charge membership fees or dues, but a membership fee may not be 
 40.15  required in order to use the property for golfing, and its green 
 40.16  fees for golfing must be comparable to green fees typically 
 40.17  charged by municipal courses; and 
 40.18     (ii) it meets the requirements of section 273.112, 
 40.19  subdivision 3, paragraph (d). 
 40.20     A structure used as a clubhouse, restaurant, or place of 
 40.21  refreshment in conjunction with the golf course is classified as 
 40.22  class 3a property; 
 40.23     (3) real property up to a maximum of one acre of land owned 
 40.24  by a nonprofit community service oriented organization; provided 
 40.25  that the property is not used for a revenue-producing activity 
 40.26  for more than six days in the calendar year preceding the year 
 40.27  of assessment and the property is not used for residential 
 40.28  purposes on either a temporary or permanent basis.  For purposes 
 40.29  of this clause, a "nonprofit community service oriented 
 40.30  organization" means any corporation, society, association, 
 40.31  foundation, or institution organized and operated exclusively 
 40.32  for charitable, religious, fraternal, civic, or educational 
 40.33  purposes, and which is exempt from federal income taxation 
 40.34  pursuant to section 501(c)(3), (10), or (19) of the Internal 
 40.35  Revenue Code of 1986, as amended through December 31, 1990.  For 
 40.36  purposes of this clause, "revenue-producing activities" shall 
 41.1   include but not be limited to property or that portion of the 
 41.2   property that is used as an on-sale intoxicating liquor or 3.2 
 41.3   percent malt liquor establishment licensed under chapter 340A, a 
 41.4   restaurant open to the public, bowling alley, a retail store, 
 41.5   gambling conducted by organizations licensed under chapter 349, 
 41.6   an insurance business, or office or other space leased or rented 
 41.7   to a lessee who conducts a for-profit enterprise on the 
 41.8   premises.  Any portion of the property which is used for 
 41.9   revenue-producing activities for more than six days in the 
 41.10  calendar year preceding the year of assessment shall be assessed 
 41.11  as class 3a.  The use of the property for social events open 
 41.12  exclusively to members and their guests for periods of less than 
 41.13  24 hours, when an admission is not charged nor any revenues are 
 41.14  received by the organization shall not be considered a 
 41.15  revenue-producing activity; 
 41.16     (4) post-secondary student housing of not more than one 
 41.17  acre of land that is owned by a nonprofit corporation organized 
 41.18  under chapter 317A and is used exclusively by a student 
 41.19  cooperative, sorority, or fraternity for on-campus housing or 
 41.20  housing located within two miles of the border of a college 
 41.21  campus; 
 41.22     (5) manufactured home parks as defined in section 327.14, 
 41.23  subdivision 3; 
 41.24     (6) real property that is actively and exclusively devoted 
 41.25  to indoor fitness, health, social, recreational, and related 
 41.26  uses, is owned and operated by a not-for-profit corporation, and 
 41.27  is located within the metropolitan area as defined in section 
 41.28  473.121, subdivision 2; and 
 41.29     (7) a leased or privately owned noncommercial aircraft 
 41.30  storage hangar not exempt under section 272.01, subdivision 2, 
 41.31  and the land on which it is located, provided that: 
 41.32     (i) the land is on an airport owned or operated by a city, 
 41.33  town, county, metropolitan airports commission, or group 
 41.34  thereof; and 
 41.35     (ii) the land lease, or any ordinance or signed agreement 
 41.36  restricting the use of the leased premise, prohibits commercial 
 42.1   activity performed at the hangar. 
 42.2      If a hangar classified under this clause is sold after June 
 42.3   30, 2000, a bill of sale must be filed by the new owner with the 
 42.4   assessor of the county where the property is located within 60 
 42.5   days of the sale. 
 42.6      Class 4c property has a class rate of 1.65 one percent of 
 42.7   market value, except that (i) each parcel of seasonal 
 42.8   residential recreational property not used for commercial 
 42.9   purposes has the same class rates as class 4bb property, (ii) 
 42.10  manufactured home parks assessed under clause (5) have the same 
 42.11  class rate as class 4b property, and (iii) property described in 
 42.12  paragraph (d), clause (4), has the same class rate as the rate 
 42.13  applicable to the first tier of class 4bb nonhomestead 
 42.14  residential real estate under paragraph (c).  
 42.15     (e) Class 4d property is qualifying low-income rental 
 42.16  housing certified to the assessor by the housing finance agency 
 42.17  under sections 273.126 and 462A.071.  Class 4d includes land in 
 42.18  proportion to the total market value of the building that is 
 42.19  qualifying low-income rental housing.  For all properties 
 42.20  qualifying as class 4d, the market value determined by the 
 42.21  assessor must be based on the normal approach to value using 
 42.22  normal unrestricted rents. 
 42.23     Class 4d property has a class rate of one 0.9 percent of 
 42.24  market value for taxes payable in 2002, 0.95 percent of market 
 42.25  value for taxes payable in 2003, and one percent of market value 
 42.26  for taxes payable in 2004 and thereafter.  
 42.27     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 42.28  payable in 2002 and subsequent years. 
 42.29     Sec. 14.  Minnesota Statutes 2000, section 273.13, 
 42.30  subdivision 31, is amended to read: 
 42.31     Subd. 31.  [CLASS 5.] Class 5 property includes:  
 42.32     (1) unmined iron ore and low-grade iron-bearing formations 
 42.33  as defined in section 273.14; and 
 42.34     (2) all other property not otherwise classified. 
 42.35     Class 5 property has a class rate of 3.4 two percent of 
 42.36  market value. 
 43.1      <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 43.2   payable in 2002 and subsequent years. 
 43.3      Sec. 15.  [273.1384] [HOMESTEAD AND AGRICULTURAL CREDITS.] 
 43.4      Subdivision 1.  [HOMESTEAD CREDIT.] Each county auditor 
 43.5   shall determine a homestead credit amount for each property 
 43.6   classified as class 1 residential homestead or class 2a 
 43.7   agricultural homestead within the county equal to 37 percent of 
 43.8   net tax capacity, to a maximum of $256 per homestead.  In the 
 43.9   case of an agricultural or resort homestead, only the net tax 
 43.10  capacity of the house, garage, and surrounding one acre of land 
 43.11  shall be used in determining the property's homestead credit 
 43.12  amount.  The credit may not exceed the net tax on the property 
 43.13  after subtraction of all other credits under section 273.1393.  
 43.14     Subd. 2.  [AGRICULTURAL CREDIT.] Property classified as 
 43.15  class 2a agricultural homestead is eligible for an agricultural 
 43.16  credit.  The credit is equal to 0.2 percent of the taxable 
 43.17  market value of the property, excluding the market value 
 43.18  attributable to the house, garage, and surrounding one acre of 
 43.19  land, up to a maximum of $368 per homestead. 
 43.20     Subd. 3.  [CREDIT APPLICATION.] The credits under this 
 43.21  section must be used to proportionately reduce the net tax 
 43.22  capacity-based property tax payable to all taxing jurisdictions, 
 43.23  after subtraction of all other credits under section 273.1393. 
 43.24     Subd. 4.  [CREDIT REIMBURSEMENT.] The county auditor shall 
 43.25  certify the amount of tax reductions granted under this section 
 43.26  to the commissioner of revenue on the abstracts of tax lists 
 43.27  submitted under section 275.29.  The commissioner of revenue 
 43.28  shall verify the credit amounts reported, and shall make 
 43.29  payments directly to the affected taxing jurisdictions other 
 43.30  than school districts in two equal installments on September 15 
 43.31  and December 26 each year.  The commissioner of revenue shall 
 43.32  certify the total of the tax reductions granted under this 
 43.33  section for each school district to the commissioner of 
 43.34  children, families, and learning before September 1 of each 
 43.35  taxes payable year.  The commissioner of children, families, and 
 43.36  learning shall reimburse each affected school district for the 
 44.1   amount of the property tax reductions allowed under this section 
 44.2   as provided in section 273.1392. 
 44.3      Subd. 5.  [APPROPRIATION.] An amount sufficient to pay the 
 44.4   credit reimbursements provided under this section for school 
 44.5   districts, intermediate school districts, or any group of school 
 44.6   districts levying as a single taxing entity, is annually 
 44.7   appropriated from the general fund to the commissioner of 
 44.8   children, families, and learning.  An amount sufficient to pay 
 44.9   the credit reimbursements provided under this section for 
 44.10  counties, cities, towns, and special taxing districts is 
 44.11  annually appropriated from the general fund to the commissioner 
 44.12  of revenue.  A jurisdiction's aid amount may be increased or 
 44.13  decreased based on any prior year adjustments for homestead 
 44.14  credit or other property tax credit or aid programs. 
 44.15     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 44.16  payable in 2002 and subsequent years. 
 44.17     Sec. 16.  Minnesota Statutes 2000, section 273.1392, is 
 44.18  amended to read: 
 44.19     273.1392 [PAYMENT; SCHOOL DISTRICTS.] 
 44.20     The amounts of conservation tax credits under section 
 44.21  273.119; disaster or emergency reimbursement under section 
 44.22  273.123; attached machinery aid under section 273.138; homestead 
 44.23  credit under section 273.13 homestead and agricultural credits 
 44.24  under section 273.1384; aids and credits under section 273.1398; 
 44.25  wetlands reimbursement under section 275.295; enterprise zone 
 44.26  property credit payments under section 469.171; and metropolitan 
 44.27  agricultural preserve reduction under section 473H.10 for school 
 44.28  districts, shall be certified to the department of children, 
 44.29  families, and learning by the department of revenue.  The 
 44.30  amounts so certified shall be paid according to section 127A.45, 
 44.31  subdivisions 9 and 13. 
 44.32     <b>[EFFECTIVE DATE.]</b> This section is effective for aids and 
 44.33  credits payable in 2002 and thereafter. 
 44.34     Sec. 17.  Minnesota Statutes 2000, section 273.1393, is 
 44.35  amended to read: 
 44.36     273.1393 [COMPUTATION OF NET PROPERTY TAXES.] 
 45.1      Notwithstanding any other provisions to the contrary, "net" 
 45.2   property taxes are determined by subtracting the credits in the 
 45.3   order listed from the gross tax:  
 45.4      (1) disaster credit as provided in section 273.123; 
 45.5      (2) powerline credit as provided in section 273.42; 
 45.6      (3) agricultural preserves credit as provided in section 
 45.7   473H.10; 
 45.8      (4) enterprise zone credit as provided in section 469.171; 
 45.9      (5) disparity reduction credit; 
 45.10     (6) conservation tax credit as provided in section 273.119; 
 45.11     (7) education homestead credit and agricultural credits as 
 45.12  provided in section 273.1382 273.1384; 
 45.13     (8) taconite homestead credit as provided in section 
 45.14  273.135; and 
 45.15     (9) supplemental homestead credit as provided in section 
 45.16  273.1391.  
 45.17     The combination of all property tax credits must not exceed 
 45.18  the gross tax amount.  
 45.19     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 45.20  payable in 2002 and subsequent years. 
 45.21     Sec. 18.  Minnesota Statutes 2000, section 273.1398, 
 45.22  subdivision 1a, is amended to read: 
 45.23     Subd. 1a.  [TAX BASE DIFFERENTIAL.] (a) For aids payable in 
 45.24  2000 2003, for county governments only, the tax base 
 45.25  differential is: 
 45.26     (1) 0.45 0.5 percent of the assessment year 1998 2001 
 45.27  taxable market value of class 2a agricultural homestead 
 45.28  property, excluding the house, garage, and surrounding one acre 
 45.29  of land, between $115,000 and $600,000 and over 320 acres, minus 
 45.30  the value over $600,000 that is less than 320 acres; plus 
 45.31     (2) 0.5 percent of the assessment year 1998 taxable market 
 45.32  value of noncommercial seasonal recreational residential 
 45.33  property over $75,000 in value; plus 
 45.34     (3) for purposes of computing the fiscal disparity 
 45.35  adjustment only, 0.2 percent of the assessment year 1998 taxable 
 45.36  market value of class 3 commercial-industrial property over 
 46.1   $150,000. 
 46.2      (b) For the purposes of the distribution of homestead and 
 46.3   agricultural credit aid for aids payable in 2000, the 
 46.4   commissioner of revenue shall use the best information available 
 46.5   as of June 30, 1999, to make an estimate of the value described 
 46.6   in paragraph (a), clause (1).  The commissioner shall adjust the 
 46.7   distribution of homestead and agricultural credit aid for aids 
 46.8   payable in 2001 and subsequent years if new information 
 46.9   regarding the value described in paragraph (a), clause (1), 
 46.10  becomes available after June 30, 1999 3(4) electric generation 
 46.11  attached machinery property under section 273.13, subdivision 24.
 46.12     Sec. 19.  Minnesota Statutes 2000, section 273.1398, is 
 46.13  amended by adding a subdivision to read: 
 46.14     Subd. 2e.  [HOMESTEAD AND AGRICULTURAL AID FOR CITIES, 
 46.15  TOWNS, AND SPECIAL TAXING DISTRICTS.] Notwithstanding the 
 46.16  provisions of subdivision 2, the amount of homestead and 
 46.17  agricultural credit aid for a statutory or home rule charter 
 46.18  city, town, school district, or special taxing district for aid 
 46.19  payable in calendar year 2002 and thereafter is zero. 
 46.20     <b>[EFFECTIVE DATE.]</b> This section is effective for aids 
 46.21  payable in 2002 and future years. 
 46.22     Sec. 20.  Minnesota Statutes 2000, section 275.02, is 
 46.23  amended to read: 
 46.24     275.02 [STATE LEVY, EXCEPTIONS FOR BONDED DEBT; 
 46.25  CERTIFICATION OF TAX RATE.] 
 46.26     The A state tax for bonded debt pursuant to the Minnesota 
 46.27  Constitution, article XI, shall be levied on the tax capacity of 
 46.28  all taxable property in the state.  The rate of the tax shall be 
 46.29  certified by the state auditor to each county auditor on or 
 46.30  before November 15 1 annually.  The tax under this section is 
 46.31  not treated as a local tax rate under 469.177.  
 46.32     Sec. 21.  [275.025] [STATE GENERAL TAX.] 
 46.33     Subdivision 1.  [LEVY AMOUNT.] The state general levy is 
 46.34  levied against commercial-industrial property and seasonal 
 46.35  recreational property, as defined in this section.  The state 
 46.36  general levy is $429,400,000 for taxes payable in 2002.  For 
 47.1   taxes payable in subsequent years, the levy is increased each 
 47.2   year by multiplying the amount for the prior year by the sum of 
 47.3   one plus the rate of increase, if any, in the implicit price 
 47.4   deflator for government consumption expenditures and gross 
 47.5   investment for state and local governments prepared by the 
 47.6   Bureau of Economic Analysts of the United States Department of 
 47.7   Commerce for the 12-month period ending March 31 of the year 
 47.8   prior to the year the taxes are payable.  The tax under this 
 47.9   section is not treated as a local tax rate under section 469.177.
 47.10     Subd. 2.  [COMMERCIAL-INDUSTRIAL TAX CAPACITY.] For the 
 47.11  purposes of this section, "commercial-industrial tax capacity" 
 47.12  means the tax capacity of all taxable property classified as 
 47.13  class 3 or class 5(1) under section 273.13, except for electric 
 47.14  generation attached machinery under class 3(4) and property 
 47.15  described in section 473.625.  "Adjusted commercial-industrial 
 47.16  tax capacity" means commercial-industrial tax capacity using 
 47.17  market values for the previous year and class rates for the 
 47.18  current year adjusted by countywide sales ratios for the 
 47.19  relevant classes of property determined under section 127A.48.  
 47.20  County commercial-industrial tax capacity amounts are not 
 47.21  adjusted for the captured net tax capacity of a tax increment 
 47.22  financing district under section 469.177, subdivision 2, the net 
 47.23  tax capacity of transmission lines deducted from a local 
 47.24  government's total net tax capacity under section 273.425, or 
 47.25  fiscal disparities contribution and distribution net tax 
 47.26  capacities under chapter 276A or 473F. 
 47.27     Subd. 3.  [COMMERCIAL-INDUSTRIAL LAND TAX CAPACITY.] For 
 47.28  the purposes of this section, "commercial-industrial land tax 
 47.29  capacity" means the estimated market value of the land value of 
 47.30  all taxable property classified as class 3 or class 5 under 
 47.31  section 273.13 excluding property described in section 473.625.  
 47.32  "Adjusted commercial-industrial land tax capacity" means 
 47.33  commercial-industrial land tax capacity adjusted by countywide 
 47.34  sales ratios for the relevant classes of property determined 
 47.35  under section 127A.48.  County commercial-industrial land tax 
 47.36  capacity amounts are not adjusted for the captured net tax 
 48.1   capacity of a tax increment financing district under section 
 48.2   469.177, subdivision 2, the net tax capacity of transmission 
 48.3   lines deducted from a local government's total net tax capacity 
 48.4   under section 273.425, or fiscal disparities contribution and 
 48.5   distribution net tax capacities under chapter 276A or 473F. 
 48.6      Subd. 4.  [SEASONAL RECREATIONAL TAX CAPACITY.] For the 
 48.7   purposes of this section, "seasonal recreational tax capacity" 
 48.8   means the tax capacity of all class 4c(1) and 4c(2) property 
 48.9   under section 273.13, subdivision 25, except that the first 
 48.10  $80,000 of market value of each noncommercial class 4c(1) 
 48.11  property shall have a tax capacity equal to one-half of the tax 
 48.12  capacity specified in section 273.13, subdivision 25.  "Adjusted 
 48.13  seasonal recreational tax capacity" means seasonal recreational 
 48.14  tax capacity adjusted by countywide sales ratios for the 
 48.15  relevant class of property determined under section 127A.48. 
 48.16     Subd. 5.  [APPORTIONMENT AND LEVY OF STATE GENERAL TAX; 
 48.17  TAXES PAYABLE IN 2002.] For taxes payable in 2002, the state 
 48.18  general tax must be distributed among the counties by applying a 
 48.19  uniform rate to each county's adjusted commercial-industrial tax 
 48.20  capacity and its adjusted seasonal recreational tax capacity.  
 48.21  Within each county, the tax must be levied by applying a uniform 
 48.22  rate against commercial-industrial tax capacity and seasonal 
 48.23  recreational tax capacity. 
 48.24     Subd. 6.  [APPORTIONMENT AND LEVY OF STATE GENERAL TAX; 
 48.25  TAXES PAYABLE IN 2003 AND SUBSEQUENT YEARS.] (a) For taxes 
 48.26  payable in 2003 and subsequent years, the state general levy 
 48.27  must first be apportioned into a commercial-industrial share and 
 48.28  a seasonal recreational share, in proportion to the share of the 
 48.29  state general tax levied on each of those classes in 2002.  The 
 48.30  commercial-industrial apportionment must be further divided into 
 48.31  a regular commercial-industrial share and a 
 48.32  commercial-industrial land share.  For taxes payable in 2003, 
 48.33  100 percent must be apportioned to the regular 
 48.34  commercial-industrial share.  For taxes payable in 2004, 90 
 48.35  percent must be apportioned to the regular commercial-industrial 
 48.36  share and 10 percent to the commercial-industrial land share.  
 49.1   In each succeeding year, an additional ten percent must be 
 49.2   shifted from regular commercial-industrial to 
 49.3   commercial-industrial land; for taxes payable in 2013 and 
 49.4   thereafter the full amount of the commercial-industrial share 
 49.5   must be levied upon commercial-industrial land. 
 49.6      (b) For each of the component shares of the state general 
 49.7   levy determined in paragraph (a), the tax must be distributed 
 49.8   among the counties by applying a uniform rate to each county's 
 49.9   adjusted tax capacity for the relevant class.  Within each 
 49.10  county, each component share of the tax must be levied by 
 49.11  applying a uniform rate against the relevant tax capacity for 
 49.12  that share of the levy. 
 49.13     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 49.14  payable in 2002 and subsequent years. 
 49.15     Sec. 22.  Minnesota Statutes 2000, section 276.11, 
 49.16  subdivision 1, is amended to read: 
 49.17     Subdivision 1.  [GENERALLY.] As soon as practical after the 
 49.18  settlement day determined in section 276.09, the county 
 49.19  treasurer shall pay to the state treasurer or the treasurer of a 
 49.20  town, city, school district, or special district, on the warrant 
 49.21  of the county auditor, all receipts of taxes levied by the 
 49.22  taxing district and deliver up all orders and other evidences of 
 49.23  indebtedness of the taxing district, taking triplicate receipts 
 49.24  for them.  The treasurer shall file one of the receipts with the 
 49.25  county auditor, and shall return one by mail on the day of its 
 49.26  receipt to the clerk of the town, city, school district, or 
 49.27  special district to which payment was made.  The clerk shall 
 49.28  keep the receipt in the clerk's office.  Upon written request of 
 49.29  the taxing district, to the extent practicable, the county 
 49.30  treasurer shall make partial payments of amounts collected 
 49.31  periodically in advance of the next settlement and 
 49.32  distribution.  A statement prepared by the county treasurer must 
 49.33  accompany each payment.  It must state the years for which taxes 
 49.34  included in the payment were collected and, for each year, the 
 49.35  amount of the taxes and any penalties on the tax.  Upon written 
 49.36  request of a taxing district, except school districts, the 
 50.1   county treasurer shall pay at least 70 percent of the estimated 
 50.2   collection within 30 days after the settlement date determined 
 50.3   in section 276.09.  Within seven business days after the due 
 50.4   date, or 28 calendar days after the postmark date on the 
 50.5   envelopes containing real or personal property tax statements, 
 50.6   whichever is latest, the county treasurer shall pay to the 
 50.7   treasurer of the school districts 50 percent of the estimated 
 50.8   collections arising from taxes levied by and belonging to the 
 50.9   school district, unless the school district elects to receive 50 
 50.10  percent of the estimated collections arising from taxes levied 
 50.11  by and belonging to the school district after making a 
 50.12  proportionate reduction to reflect any loss in collections as 
 50.13  the result of any delay in mailing tax statements.  In that 
 50.14  case, 50 percent of those adjusted, estimated collections shall 
 50.15  be paid by the county treasurer to the treasurer of the school 
 50.16  district within seven business days of the due date.  The 
 50.17  remaining 50 percent of the estimated collections must be paid 
 50.18  to the treasurer of the school district within the next seven 
 50.19  business days of the later of the dates in the preceding 
 50.20  sentence, unless the school district elects to receive the 
 50.21  remainder of its estimated collections after a proportionate 
 50.22  reduction has been made to reflect any loss in collections as 
 50.23  the result of any delay in mailing tax statements.  In that 
 50.24  case, the remaining 50 percent of those adjusted, estimated 
 50.25  collections shall be paid by the county treasurer to the 
 50.26  treasurer of the school district within 14 days of the due 
 50.27  date.  The treasurer shall pay the balance of the amounts 
 50.28  collected to the state within 35 days, or to a municipal 
 50.29  corporation or other body within 60 days after the settlement 
 50.30  date determined in section 276.09.  After 45 days interest at an 
 50.31  annual rate of eight percent accrues and must be paid to the 
 50.32  taxing district.  Interest must be paid upon appropriation from 
 50.33  the general revenue fund of the county.  If not paid, it may be 
 50.34  recovered by the taxing district, in a civil action. 
 50.35     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 50.36  payable in 2002 and subsequent years. 
 51.1      Sec. 23.  Minnesota Statutes 2000, section 276A.06, 
 51.2   subdivision 3, is amended to read: 
 51.3      Subd. 3.  [APPORTIONMENT OF LEVY.] The county auditor shall 
 51.4   apportion the levy of each governmental unit in the county in 
 51.5   the manner prescribed by this subdivision.  The auditor shall: 
 51.6      (a) by August 20 of 1997 and each subsequent year, 
 51.7   determine the areawide portion of the levy for each governmental 
 51.8   unit by multiplying the local tax rate of the governmental unit 
 51.9   for the preceding levy year times the distribution value set 
 51.10  forth in subdivision 2, clause (b); and 
 51.11     (b) by September 5 of 1997 and each subsequent year, 
 51.12  determine the local portion of the current year's levy by 
 51.13  subtracting the resulting amount from clause (a) from the 
 51.14  governmental unit's current year's levy; and 
 51.15     (c) for determinations made under paragraph (a) in the case 
 51.16  of school districts, for taxes payable in 2002, exclude the 
 51.17  general education tax rate from the local tax rate for the 
 51.18  preceding levy year. 
 51.19     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 51.20  following final enactment. 
 51.21     Sec. 24.  Minnesota Statutes 2000, section 297B.09, 
 51.22  subdivision 1, is amended to read: 
 51.23     Subdivision 1.  [GENERAL FUND SHARE.] Money collected and 
 51.24  received under this chapter must be deposited as provided in 
 51.25  this subdivision.  
 51.26     Thirty-two percent of the money collected and received must 
 51.27  be deposited in the highway user tax distribution fund, and.  
 51.28  Nineteen and one-half percent must be deposited in the transit 
 51.29  fund under section 16A.88.  The remaining 68 48.5 percent of the 
 51.30  money must be deposited in the general fund.  
 51.31     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2002. 
 51.32     Sec. 25.  Minnesota Statutes 2000, section 473.388, 
 51.33  subdivision 4, is amended to read: 
 51.34     Subd. 4.  [FINANCIAL ASSISTANCE.] The council may must 
 51.35  grant the requested financial assistance if it determines that 
 51.36  the proposed service is intended to replace the service to the 
 52.1   applying city or town or combination thereof by the council and 
 52.2   that the proposed service will meet the needs of the applicant 
 52.3   at least as efficiently and effectively as the existing service. 
 52.4      The amount of assistance which the council may provide 
 52.5   under this section may not exceed the sum of be less than:  
 52.6      (a) the portion of the available local transit funds which 
 52.7   the applicant proposes to use to subsidize the proposed 
 52.8   service the grants received under this subdivision by the 
 52.9   applicant in calendar year 2001 and the tax revenues for transit 
 52.10  services levied within the city or town, whether by the city or 
 52.11  town itself or by the metropolitan council, for taxes payable in 
 52.12  2001; and times 
 52.13     (b) an amount of financial assistance bearing an identical 
 52.14  proportional relationship to the amount under clause (a) as the 
 52.15  total amount of funds used by the council to fund its transit 
 52.16  operations bears to the ratio of the total appropriation to the 
 52.17  council for nondebt transit operations in the current fiscal 
 52.18  year to the sum of the total appropriation to the council for 
 52.19  nondebt transit operations in fiscal year 2001 and the total 
 52.20  amount of taxes collected by the council under section 
 52.21  473.446 and the opt-out municipalities under this section in 
 52.22  calendar year 2001, including the portion of homestead and 
 52.23  agricultural credit aid under section 273.1398 attributable to 
 52.24  the nondebt transit levy.  The council shall pay the amount to 
 52.25  be provided to the recipient from the funds the council would 
 52.26  otherwise use to fund its transit operations.  
 52.27     For purposes of this section, "available local transit 
 52.28  funds" means 90 percent of the tax revenues which would accrue 
 52.29  to the council from the tax it levies under section 473.446 in 
 52.30  the applicant city or town or combination thereof.  
 52.31     For purposes of this section, "tax revenues" in the city or 
 52.32  town means the sum of the following: 
 52.33     (1) the nondebt spread levy, which is the total of the 
 52.34  taxes extended by application of the local tax rate for nondebt 
 52.35  purposes on the taxable net tax capacity; 
 52.36     (2) the portion of the fiscal disparity distribution levy 
 53.1   under section 473F.08, subdivision 3, attributable to nondebt 
 53.2   purposes; and 
 53.3      (3) the portion of the homestead credit and agricultural 
 53.4   credit aid and disparity reduction aid amounts under section 
 53.5   273.1398, subdivisions 2 and 3, attributable to nondebt purposes.
 53.6      Tax revenues do not include the state feathering 
 53.7   reimbursement under section 473.446. 
 53.8      <b>[EFFECTIVE DATE.]</b> This section is effective for calendar 
 53.9   year 2002 and subsequent years. 
 53.10     Sec. 26.  Minnesota Statutes 2000, section 473.388, 
 53.11  subdivision 7, is amended to read: 
 53.12     Subd. 7.  [LOCAL LEVY OPTION.] (a) A statutory or home rule 
 53.13  charter city or town that is eligible for assistance under this 
 53.14  section, in lieu of receiving the assistance, may levy a tax for 
 53.15  payment of the operating and capital expenditures for transit 
 53.16  and other related activities and to provide for payment of 
 53.17  obligations issued by the municipality for such purposes, 
 53.18  provided that the tax must be sufficient to maintain the level 
 53.19  of transit service provided in the municipality in the previous 
 53.20  year capital expenditures for transit and other related 
 53.21  activities, provided that property taxes were pledged to satisfy 
 53.22  the obligations, and provided that legislative appropriations 
 53.23  are insufficient to satisfy the obligations. 
 53.24     (b) The transit tax revenues derived by the municipality 
 53.25  may not exceed: 
 53.26     (1) for the first transit levy year and any subsequent 
 53.27  transit levy year immediately following a year in which the 
 53.28  municipality declines to make the levy, the maximum available 
 53.29  local transit funds for the municipality for taxes payable in 
 53.30  the current year under section 473.446, calculated as if the 
 53.31  percentage of transit tax revenues for the municipality were 88 
 53.32  percent instead of 90 percent, and multiplied by the 
 53.33  municipality's market value adjustment ratio; and 
 53.34     (2) for taxes levied in any year that immediately follows a 
 53.35  year in which the municipality elects to levy under this 
 53.36  subdivision, the maximum transit tax that the municipality may 
 54.1   have levied in the previous year under this subdivision, 
 54.2   multiplied by the municipality's market value adjustment ratio. 
 54.3      The commissioner of revenue shall certify the 
 54.4   municipality's levy limitation under this subdivision to the 
 54.5   municipality by June 1 of the levy year.  The tax must be 
 54.6   accumulated and kept in a separate fund to be known as the 
 54.7   "replacement transit fund." 
 54.8      (c) To enable the municipality to receive revenues 
 54.9   described in clauses (2) and (3) of the definition of "tax 
 54.10  revenues" in subdivision 4, that would otherwise be lost if the 
 54.11  municipality's transit tax levy was not treated as a successor 
 54.12  levy to that made by the council under section 473.446: 
 54.13     (1) in the first transit levy year and any subsequent 
 54.14  transit levy year immediately following a year in which the 
 54.15  municipality declined to make the levy, 88 percent of the 
 54.16  council's nondebt spread levy for the current taxes payable year 
 54.17  shall be treated as levied by the municipality, and not the 
 54.18  council, for purposes of section 473F.08, subdivision 3, for the 
 54.19  purpose of determining its local tax rate for the preceding 
 54.20  year; and 
 54.21     (2) 88 percent of the revenues described in clause (3) of 
 54.22  the definition of "tax revenues" in subdivision 4, payable in 
 54.23  the first transit levy year, or payable in any subsequent 
 54.24  transit levy year following a year in which a municipality 
 54.25  declined to make the levy, shall be permanently transferred from 
 54.26  the council to the municipality.  If a municipality levies a tax 
 54.27  under this subdivision in one year, but declines to levy in a 
 54.28  subsequent year, the aid transferred under this clause shall be 
 54.29  transferred back to the council. 
 54.30     (d) Any transit taxes levied under this subdivision are not 
 54.31  subject to, or counted towards, any limit hereafter imposed by 
 54.32  law on the levy of taxes upon taxable property within any 
 54.33  municipality unless the law specifically includes the transit 
 54.34  tax. 
 54.35     (e) This subdivision is consistent with the transit 
 54.36  redesign plan.  Eligible municipalities opting to levy the 
 55.1   transit tax under this subdivision shall continue to meet the 
 55.2   regional performance standards established by the council. 
 55.3      (f) Within the designated Americans with Disabilities Act 
 55.4   area, metro mobility remains the obligation of the state. 
 55.5      (g) For purposes of this subdivision, "transit levy year" 
 55.6   is any year in which the municipality elects to levy under this 
 55.7   subdivision. 
 55.8      (h) A municipality may not levy taxes under this 
 55.9   subdivision in any year unless it notifies the council and the 
 55.10  commissioner of revenue of its intent to levy before July 1 of 
 55.11  the levy year.  The notification must include the amount of the 
 55.12  municipality's proposed transit tax for the current levy year.  
 55.13  After June 30 in the levy year, a municipality's decision to 
 55.14  levy or not levy taxes under this subdivision is irrevocable for 
 55.15  that levy year. 
 55.16     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 55.17  payable in 2002 and subsequent years. 
 55.18     Sec. 27.  Minnesota Statutes 2000, section 473.446, 
 55.19  subdivision 1, is amended to read: 
 55.20     Subdivision 1.  [WITHIN TRANSIT TAXING DISTRICT.] For the 
 55.21  purposes of sections 473.405 to 473.449 and the metropolitan 
 55.22  transit system, except as otherwise provided in this subdivision 
 55.23  and subdivision 1b, the council shall levy each year upon all 
 55.24  taxable property within the metropolitan transit taxing 
 55.25  district, defined in subdivision 2, a transit tax consisting of: 
 55.26     (a) an amount which shall be used for payment of the 
 55.27  expenses of operating transit and paratransit service and to 
 55.28  provide for payment of obligations issued by the council under 
 55.29  section 473.436, subdivision 6; 
 55.30     (b) an additional amount, if any, the council determines to 
 55.31  be necessary to provide for the full and timely payment of its 
 55.32  certificates of indebtedness and other obligations outstanding 
 55.33  on July 1, 1985, to which property taxes under this section have 
 55.34  been pledged; and 
 55.35     (c) (b) an additional amount necessary to provide full and 
 55.36  timely payment of certificates of indebtedness, bonds, including 
 56.1   refunding bonds or other obligations issued or to be issued 
 56.2   under section 473.39 by the council for purposes of acquisition 
 56.3   and betterment of property and other improvements of a capital 
 56.4   nature and to which the council has specifically pledged tax 
 56.5   levies under this clause. 
 56.6      The property tax levied by the council for general purposes 
 56.7   under paragraph (a) must not exceed the following amount for the 
 56.8   years specified: 
 56.9      (1) for taxes payable in 1995, the council's property tax 
 56.10  levy limitation for general transit purposes is equal to the 
 56.11  former regional transit board's property tax levy limitation for 
 56.12  general transit purposes under this subdivision, for taxes 
 56.13  payable in 1994, multiplied by an index for market valuation 
 56.14  changes equal to the total market valuation of all taxable 
 56.15  property located within the metropolitan transit taxing district 
 56.16  for the current taxes payable year divided by the total market 
 56.17  valuation of all taxable property located within the 
 56.18  metropolitan transit taxing district for the previous taxes 
 56.19  payable year; and 
 56.20     (2) for taxes payable in 1996 and subsequent years, the 
 56.21  product of (i) the council's property tax levy limitation for 
 56.22  general transit purposes for the previous year determined under 
 56.23  this subdivision before reduction by the amount levied by any 
 56.24  municipality in the previous year under section 473.388, 
 56.25  subdivision 7, multiplied by (ii) an index for market valuation 
 56.26  changes equal to the total market valuation of all taxable 
 56.27  property located within the metropolitan transit taxing district 
 56.28  for the current taxes payable year divided by the total market 
 56.29  valuation of all taxable property located within the 
 56.30  metropolitan transit taxing district for the previous taxes 
 56.31  payable year, minus the amount levied by any municipality in the 
 56.32  current levy year under section 473.388, subdivision 7. 
 56.33     The portion of the property tax levy for transit district 
 56.34  operating purposes attributable to a municipality that has 
 56.35  exercised a local levy option under section 473.388, subdivision 
 56.36  7, is the amount as determined under subdivision 1b.  The 
 57.1   portion of the property tax levy for transit district operating 
 57.2   purposes attributable to the remaining municipalities within the 
 57.3   transit district is found by subtracting the portions 
 57.4   attributable to the municipalities that have exercised a local 
 57.5   levy option under section 473.388, subdivision 7. 
 57.6      For the taxes payable year 1995, the index for market 
 57.7   valuation changes shall be multiplied by an amount equal to the 
 57.8   sum of the regional transit board's property tax levy limitation 
 57.9   for the taxes payable year 1994 and $160,665.  The $160,665 
 57.10  increase shall be a permanent adjustment to the levy limit base 
 57.11  used in determining the regional transit board's property tax 
 57.12  levy limitation for general purposes for subsequent taxes 
 57.13  payable years. 
 57.14     For the purpose of determining the council's property tax 
 57.15  levy limitation for general transit purposes under this 
 57.16  subdivision, "total market valuation" means the total market 
 57.17  valuation of all taxable property within the metropolitan 
 57.18  transit taxing district without valuation adjustments for fiscal 
 57.19  disparities (chapter 473F), tax increment financing (sections 
 57.20  469.174 to 469.179), and high voltage transmission lines 
 57.21  (section 273.425). 
 57.22     The county auditor shall reduce the tax levied pursuant to 
 57.23  this section and section 473.388 on all property within 
 57.24  statutory and home rule charter cities and towns that receive 
 57.25  full-peak service and limited off-peak service by an amount 
 57.26  equal to the tax levy that would be produced by applying a rate 
 57.27  of 0.510 percent of net tax capacity on the property.  The 
 57.28  county auditor shall reduce the tax levied pursuant to this 
 57.29  section and section 473.388 on all property within statutory and 
 57.30  home rule charter cities and towns that receive limited peak 
 57.31  service by an amount equal to the tax levy that would be 
 57.32  produced by applying a rate of 0.765 percent of net tax capacity 
 57.33  on the property.  The amounts so computed by the county auditor 
 57.34  shall be submitted to the commissioner of revenue as part of the 
 57.35  abstracts of tax lists required to be filed with the 
 57.36  commissioner under section 275.29.  Any prior year adjustments 
 58.1   shall also be certified in the abstracts of tax lists.  The 
 58.2   commissioner shall review the certifications to determine their 
 58.3   accuracy and may make changes in the certification as necessary 
 58.4   or return a certification to the county auditor for 
 58.5   corrections.  The commissioner shall pay to the council and to 
 58.6   the municipalities levying under section 473.388, subdivision 7, 
 58.7   the amounts certified by the county auditors on the dates 
 58.8   provided in section 273.1398, apportioned between the council 
 58.9   and the municipality in the same proportion as the total transit 
 58.10  levy is apportioned within the municipality.  There is annually 
 58.11  appropriated from the general fund in the state treasury to the 
 58.12  department of revenue the amounts necessary to make these 
 58.13  payments.  
 58.14     For the purposes of this subdivision, "full-peak and 
 58.15  limited off-peak service" means peak period regular route 
 58.16  service, plus weekday midday regular route service at intervals 
 58.17  longer than 60 minutes on the route with the greatest frequency; 
 58.18  and "limited peak period service" means peak period regular 
 58.19  route service only.  
 58.20     For the purposes of property taxes payable in the following 
 58.21  year, the council shall annually determine which cities and 
 58.22  towns qualify for the 0.510 percent or 0.765 percent tax 
 58.23  capacity rate reduction and shall certify this list to the 
 58.24  county auditor of the county wherein such cities and towns are 
 58.25  located on or before September 15.  No changes may be made to 
 58.26  the annual list after September 15. 
 58.27     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 58.28  payable in 2002 and subsequent years. 
 58.29     Sec. 28.  Minnesota Statutes 2000, section 473.446, is 
 58.30  amended by adding a subdivision to read: 
 58.31     Subd. 1c.  [TRANSIT LEVY AFTER 2001.] Notwithstanding any 
 58.32  other provision of this section, beginning with taxes payable in 
 58.33  2002, the council may levy the transit tax authorized under 
 58.34  subdivision 1 only for the purpose of providing for the full and 
 58.35  timely payment of bonds, certificates of indebtedness, and other 
 58.36  obligations issued by the council, to which property taxes have 
 59.1   been pledged. 
 59.2      <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 59.3   payable in 2002 and subsequent years.  
 59.4      Sec. 29.  Minnesota Statutes 2000, section 473F.08, 
 59.5   subdivision 3, is amended to read: 
 59.6      Subd. 3.  [APPORTIONMENT OF LEVY.] The county auditor shall 
 59.7   apportion the levy of each governmental unit in the auditor's 
 59.8   county in the manner prescribed by this subdivision.  The 
 59.9   auditor shall: 
 59.10     (a) by August 20, determine the areawide portion of the 
 59.11  levy for each governmental unit by multiplying the local tax 
 59.12  rate of the governmental unit for the preceding levy year times 
 59.13  the distribution value set forth in subdivision 2, clause (b); 
 59.14  and 
 59.15     (b) by September 5, determine the local portion of the 
 59.16  current year's levy by subtracting the resulting amount from 
 59.17  clause (a) from the governmental unit's current year's levy.; 
 59.18     (c) for determinations made under clause (a) in the case of 
 59.19  school districts, for taxes payable in 2002, exclude the general 
 59.20  education tax rate from the local tax rate for the preceding 
 59.21  levy year; 
 59.22     (d) for determinations made under clause (a) in the case of 
 59.23  the metropolitan council, for taxes payable in 2002, exclude the 
 59.24  transit operating tax rate from the local tax rate for the 
 59.25  preceding levy year; and 
 59.26     (e) for determinations made under clause (a) in the case of 
 59.27  transit opt-out cities, for taxes payable in 2002, exclude the 
 59.28  opt-out transit rate from the local tax rate for the preceding 
 59.29  levy year. 
 59.30     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 59.31  following final enactment. 
 59.32     Sec. 30.  Minnesota Statutes 2000, section 477A.011, 
 59.33  subdivision 35, is amended to read: 
 59.34     Subd. 35.  [TAX EFFORT RATE.] "Tax effort rate" means the 
 59.35  sum of (1) the net levy for all cities plus (2) the total aid 
 59.36  payments to all cities under section 273.1398 in the previous 
 60.1   year; divided by the sum of the city net tax capacity for all 
 60.2   cities.  For purposes of this section, "net levy" means the city 
 60.3   levy, after all adjustments, used for calculating the local tax 
 60.4   rate under section 275.08 for taxes payable in the year prior to 
 60.5   the aid distribution.  The fiscal disparity distribution levy 
 60.6   under chapter 276A or 473F is included in net levy. 
 60.7      <b>[EFFECTIVE DATE.]</b> This section is effective for aids 
 60.8   payable in 2002 and future years. 
 60.9      Sec. 31.  Minnesota Statutes 2000, section 477A.011, 
 60.10  subdivision 36, is amended to read: 
 60.11     Subd. 36.  [CITY AID BASE.] (a) Except as provided in 
 60.12  paragraphs (b) to (n) (q), "city aid base" means, for each city, 
 60.13  the sum of the local government aid and equalization aid it was 
 60.14  originally certified to receive in calendar year 1993 under 
 60.15  Minnesota Statutes 1992, section 477A.013, subdivisions 3 and 5, 
 60.16  and the amount of disparity reduction aid it received in 
 60.17  calendar year 1993 under Minnesota Statutes 1992, section 
 60.18  273.1398, subdivision 3. 
 60.19     (b) For aids payable in 1996 and thereafter, a city that in 
 60.20  1992 or 1993 transferred an amount from governmental funds to 
 60.21  its sewer and water fund, which amount exceeded its net levy for 
 60.22  taxes payable in the year in which the transfer occurred, has a 
 60.23  "city aid base" equal to the sum of (i) its city aid base, as 
 60.24  calculated under paragraph (a), and (ii) one-half of the 
 60.25  difference between its city aid distribution under section 
 60.26  477A.013, subdivision 9, for aids payable in 1995 and its city 
 60.27  aid base for aids payable in 1995. 
 60.28     (c) The city aid base for any city with a population less 
 60.29  than 500 is increased by $40,000 for aids payable in calendar 
 60.30  year 1995 and thereafter, and the maximum amount of total aid it 
 60.31  may receive under section 477A.013, subdivision 9, paragraph 
 60.32  (c), is also increased by $40,000 for aids payable in calendar 
 60.33  year 1995 only, provided that: 
 60.34     (i) the average total tax capacity rate for taxes payable 
 60.35  in 1995 exceeds 200 percent; 
 60.36     (ii) the city portion of the tax capacity rate exceeds 100 
 61.1   percent; and 
 61.2      (iii) its city aid base is less than $60 per capita. 
 61.3      (d) The city aid base for a city is increased by $20,000 in 
 61.4   1998 and thereafter and the maximum amount of total aid it may 
 61.5   receive under section 477A.013, subdivision 9, paragraph (c), is 
 61.6   also increased by $20,000 in calendar year 1998 only, provided 
 61.7   that: 
 61.8      (i) the city has a population in 1994 of 2,500 or more; 
 61.9      (ii) the city is located in a county, outside of the 
 61.10  metropolitan area, which contains a city of the first class; 
 61.11     (iii) the city's net tax capacity used in calculating its 
 61.12  1996 aid under section 477A.013 is less than $400 per capita; 
 61.13  and 
 61.14     (iv) at least four percent of the total net tax capacity, 
 61.15  for taxes payable in 1996, of property located in the city is 
 61.16  classified as railroad property. 
 61.17     (e) The city aid base for a city is increased by $200,000 
 61.18  in 1999 and thereafter and the maximum amount of total aid it 
 61.19  may receive under section 477A.013, subdivision 9, paragraph 
 61.20  (c), is also increased by $200,000 in calendar year 1999 only, 
 61.21  provided that: 
 61.22     (i) the city was incorporated as a statutory city after 
 61.23  December 1, 1993; 
 61.24     (ii) its city aid base does not exceed $5,600; and 
 61.25     (iii) the city had a population in 1996 of 5,000 or more. 
 61.26     (f) The city aid base for a city is increased by $450,000 
 61.27  in 1999 to 2008 and the maximum amount of total aid it may 
 61.28  receive under section 477A.013, subdivision 9, paragraph (c), is 
 61.29  also increased by $450,000 in calendar year 1999 only, provided 
 61.30  that: 
 61.31     (i) the city had a population in 1996 of at least 50,000; 
 61.32     (ii) its population had increased by at least 40 percent in 
 61.33  the ten-year period ending in 1996; and 
 61.34     (iii) its city's net tax capacity for aids payable in 1998 
 61.35  is less than $700 per capita. 
 61.36     (g) Beginning in 2002, the city aid base for a city is 
 62.1   equal to the sum of its city aid base in 2001 and the amount of 
 62.2   additional aid it was certified to receive under section 477A.06 
 62.3   in 2001.  For 2002 only, the maximum amount of total aid a city 
 62.4   may receive under section 477A.013, subdivision 9, paragraph 
 62.5   (c), is also increased by the amount it was certified to receive 
 62.6   under section 477A.06 in 2001. 
 62.7      (h) The city aid base for a city is increased by $150,000 
 62.8   for aids payable in 2000 and thereafter, and the maximum amount 
 62.9   of total aid it may receive under section 477A.013, subdivision 
 62.10  9, paragraph (c), is also increased by $150,000 in calendar year 
 62.11  2000 only, provided that: 
 62.12     (1) the city has a population that is greater than 1,000 
 62.13  and less than 2,500; 
 62.14     (2) its commercial and industrial percentage for aids 
 62.15  payable in 1999 is greater than 45 percent; and 
 62.16     (3) the total market value of all commercial and industrial 
 62.17  property in the city for assessment year 1999 is at least 15 
 62.18  percent less than the total market value of all commercial and 
 62.19  industrial property in the city for assessment year 1998. 
 62.20     (i) The city aid base for a city is increased by $200,000 
 62.21  in 2000 and thereafter, and the maximum amount of total aid it 
 62.22  may receive under section 477A.013, subdivision 9, paragraph 
 62.23  (c), is also increased by $200,000 in calendar year 2000 only, 
 62.24  provided that: 
 62.25     (1) the city had a population in 1997 of 2,500 or more; 
 62.26     (2) the net tax capacity of the city used in calculating 
 62.27  its 1999 aid under section 477A.013 is less than $650 per 
 62.28  capita; 
 62.29     (3) the pre-1940 housing percentage of the city used in 
 62.30  calculating 1999 aid under section 477A.013 is greater than 12 
 62.31  percent; 
 62.32     (4) the 1999 local government aid of the city under section 
 62.33  477A.013 is less than 20 percent of the amount that the formula 
 62.34  aid of the city would have been if the need increase percentage 
 62.35  was 100 percent; and 
 62.36     (5) the city aid base of the city used in calculating aid 
 63.1   under section 477A.013 is less than $7 per capita. 
 63.2      (j) The city aid base for a city is increased by $225,000 
 63.3   in calendar years 2000 to 2002 and the maximum amount of total 
 63.4   aid it may receive under section 477A.013, subdivision 9, 
 63.5   paragraph (c), is also increased by $225,000 in calendar year 
 63.6   2000 only, provided that: 
 63.7      (1) the city had a population of at least 5,000; 
 63.8      (2) its population had increased by at least 50 percent in 
 63.9   the ten-year period ending in 1997; 
 63.10     (3) the city is located outside of the Minneapolis-St. Paul 
 63.11  metropolitan statistical area as defined by the United States 
 63.12  Bureau of the Census; and 
 63.13     (4) the city received less than $30 per capita in aid under 
 63.14  section 477A.013, subdivision 9, for aids payable in 1999. 
 63.15     (k) The city aid base for a city is increased by $102,000 
 63.16  in 2000 and thereafter, and the maximum amount of total aid it 
 63.17  may receive under section 477A.013, subdivision 9, paragraph 
 63.18  (c), is also increased by $102,000 in calendar year 2000 only, 
 63.19  provided that: 
 63.20     (1) the city has a population in 1997 of 2,000 or more; 
 63.21     (2) the net tax capacity of the city used in calculating 
 63.22  its 1999 aid under section 477A.013 is less than $455 per 
 63.23  capita; 
 63.24     (3) the net levy of the city used in calculating 1999 aid 
 63.25  under section 477A.013 is greater than $195 per capita; and 
 63.26     (4) the 1999 local government aid of the city under section 
 63.27  477A.013 is less than 38 percent of the amount that the formula 
 63.28  aid of the city would have been if the need increase percentage 
 63.29  was 100 percent. 
 63.30     (l) The city aid base for a city is increased by $32,000 in 
 63.31  2001 and thereafter, and the maximum amount of total aid it may 
 63.32  receive under section 477A.013, subdivision 9, paragraph (c), is 
 63.33  also increased by $32,000 in calendar year 2001 only, provided 
 63.34  that: 
 63.35     (1) the city has a population in 1998 that is greater than 
 63.36  200 but less than 500; 
 64.1      (2) the city's revenue need used in calculating aids 
 64.2   payable in 2000 was greater than $200 per capita; 
 64.3      (3) the city net tax capacity for the city used in 
 64.4   calculating aids available in 2000 was equal to or less than 
 64.5   $200 per capita; 
 64.6      (4) the city aid base of the city used in calculating aid 
 64.7   under section 477A.013 is less than $65 per capita; and 
 64.8      (5) the city's formula aid for aids payable in 2000 was 
 64.9   greater than zero. 
 64.10     (m) The city aid base for a city is increased by $7,200 in 
 64.11  2001 and thereafter, and the maximum amount of total aid it may 
 64.12  receive under section 477A.013, subdivision 9, paragraph (c), is 
 64.13  also increased by $7,200 in calendar year 2001 only, provided 
 64.14  that: 
 64.15     (1) the city had a population in 1998 that is greater than 
 64.16  200 but less than 500; 
 64.17     (2) the city's commercial industrial percentage used in 
 64.18  calculating aids payable in 2000 was less than ten percent; 
 64.19     (3) more than 25 percent of the city's population was 60 
 64.20  years old or older according to the 1990 census; 
 64.21     (4) the city aid base of the city used in calculating aid 
 64.22  under section 477A.013 is less than $15 per capita; and 
 64.23     (5) the city's formula aid for aids payable in 2000 was 
 64.24  greater than zero. 
 64.25     (n) The city aid base for a city is increased by $45,000 in 
 64.26  2001 and thereafter, and the maximum amount of total aid it may 
 64.27  receive under section 477A.013, subdivision 9, paragraph (c), is 
 64.28  also increased by $45,000 in calendar year 2001 only, provided 
 64.29  that: 
 64.30     (1) the net tax capacity of the city used in calculating 
 64.31  its 2000 aid under section 477A.013 is less than $810 per 
 64.32  capita; 
 64.33     (2) the population of the city declined more than two 
 64.34  percent between 1988 and 1998; 
 64.35     (3) the net levy of the city used in calculating 2000 aid 
 64.36  under section 477A.013 is greater than $240 per capita; and 
 65.1      (4) the city received less than $36 per capita in aid under 
 65.2   section 477A.013, subdivision 9, for aids payable in 2000. 
 65.3      (o) The city aid base for a city is increased by $150,000 
 65.4   in calendar years 2002 to 2011 and the maximum amount of total 
 65.5   aid it may receive under section 477A.013, subdivision 9, 
 65.6   paragraph (c), is also increased by $150,000 in calendar year 
 65.7   2002 only, provided that: 
 65.8      (1) the city had a population of at least 3,000 but no more 
 65.9   than 4,000 in 1999; 
 65.10     (2) its home county is located within the seven-county 
 65.11  metropolitan area; 
 65.12     (3) its pre-1940 housing percentage is less than 15 
 65.13  percent; and 
 65.14     (4) its city net tax capacity per capita for taxes payable 
 65.15  in 2000 is less than $900 per capita. 
 65.16     (p) The city aid base for a city with a population greater 
 65.17  than 50,000 which is located outside of the seven-county 
 65.18  metropolitan area is increased in 2002 and thereafter, and the 
 65.19  maximum amount of total aid it may receive under section 
 65.20  477A.013, subdivision 9, paragraph (b) or (c), is also increased 
 65.21  in calendar year 2002 only, by an amount equal to the lesser of: 
 65.22     (1) the total population of the city's metropolitan 
 65.23  statistical area, as defined by the United States Bureau of the 
 65.24  Census, which resides outside of the city, multiplied by $25; or 
 65.25     (2) $1,000,000. 
 65.26     (q) The city aid base for a city for aid payable in 2003 is 
 65.27  increased by 0.5 percent of the assessment year 2001 taxable 
 65.28  market value of property classified as class 3(4) under section 
 65.29  273.13, subdivision 24, multiplied by the city's local tax rate 
 65.30  for taxes payable in 2002. 
 65.31     <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
 65.32  aids payable in 2002. 
 65.33     Sec. 32.  Minnesota Statutes 2000, section 477A.013, 
 65.34  subdivision 1, is amended to read: 
 65.35     Subdivision 1.  [TOWNS.] In 1994 each town that had levied 
 65.36  for taxes payable in the prior year a local tax rate of at least 
 66.1   .008 shall receive a distribution equal to the amount it 
 66.2   received in 1993 under this section before any nonpermanent 
 66.3   reductions made under section 477A.0132.  In 1995 each town that 
 66.4   had levied for taxes payable in 1993 a local tax rate of at 
 66.5   least .008 shall receive a distribution equal to 102 percent of 
 66.6   the amount it received in 1994 under this section before any 
 66.7   increases or reductions under sections 16A.711, subdivision 5, 
 66.8   and 477A.0132.  In 1996 and subsequent years each town that had 
 66.9   levied for taxes payable in 1993 a local tax rate of at least 
 66.10  .008 shall receive a distribution equal to the amount it 
 66.11  received in the previous year under this section, adjusted for 
 66.12  inflation as provided under section 477A.03, subdivision 3 2002, 
 66.13  no town is eligible for a distribution under this subdivision.  
 66.14  In 2003 and subsequent years, each town is eligible to receive 
 66.15  aid under this subdivision equal to 0.5 percent of the 
 66.16  assessment year 2001 taxable market value of property classified 
 66.17  as class 3(4) under section 273.13, subdivision 24, multiplied 
 66.18  by the town's local tax rate for taxes payable in 2002. 
 66.19     <b>[EFFECTIVE DATE.]</b> This section is effective for aids 
 66.20  payable in 2002 and subsequent years. 
 66.21     Sec. 33.  Minnesota Statutes 2000, section 477A.013, 
 66.22  subdivision 9, is amended to read: 
 66.23     Subd. 9.  [CITY AID DISTRIBUTION.] (a) In calendar year 
 66.24  1994 2002 and thereafter, each city shall receive an aid 
 66.25  distribution equal to the sum of (1) the city formula aid under 
 66.26  subdivision 8, and (2) its city aid base. 
 66.27     (b) The percentage increase for a first class city in 
 66.28  calendar year 1995 and thereafter shall not exceed the 
 66.29  percentage increase in the sum of the aid to all cities under 
 66.30  this section in the current calendar year compared to the sum of 
 66.31  the aid to all cities in the previous year.  For aids payable in 
 66.32  2002 only, the amount of the aid paid to a first class city 
 66.33  located in the seven-county metropolitan area, shall not exceed 
 66.34  its aid amount for calendar 2001 by more than 55 percent of its 
 66.35  aid payment in calendar year 2001 under section 273.1398, 
 66.36  subdivision 2. 
 67.1      (c) For aids payable in all years except 2002, the total 
 67.2   aid for any city, except a first class city, shall not exceed 
 67.3   the sum of (1) ten percent of the city's net levy for the year 
 67.4   prior to the aid distribution plus (2) its total aid in the 
 67.5   previous year before any increases or decreases under sections 
 67.6   section 16A.711, subdivision 5, and 477A.0132.  For aids payable 
 67.7   in 2002 only, the total aid for any city, except a first class 
 67.8   city, shall not exceed the sum of (1) 50 percent of the city's 
 67.9   net levy for the year prior to the aid distribution plus (2) its 
 67.10  total aid in the previous year before any increases or decreases 
 67.11  under section 477A.0132. 
 67.12     (d) Notwithstanding paragraph (c), in 1995 only, for cities 
 67.13  which in 1992 or 1993 transferred an amount from governmental 
 67.14  funds to their sewer and water fund in an amount greater than 
 67.15  their net levy for taxes payable in the year in which the 
 67.16  transfer occurred, the total aid shall not exceed the sum of (1) 
 67.17  20 percent of the city's net levy for the year prior to the aid 
 67.18  distribution plus (2) its total aid in the previous year before 
 67.19  any increases or decreases under sections 16A.711, subdivision 
 67.20  5, and 477A.0132. 
 67.21     <b>[EFFECTIVE DATE.]</b> This section is effective for aids 
 67.22  payable in 2002 and future years. 
 67.23     Sec. 34.  Minnesota Statutes 2000, section 477A.03, 
 67.24  subdivision 2, is amended to read: 
 67.25     Subd. 2.  [ANNUAL APPROPRIATION.] (a) A sum sufficient to 
 67.26  discharge the duties imposed by sections 477A.011 to 477A.014 is 
 67.27  annually appropriated from the general fund to the commissioner 
 67.28  of revenue.  
 67.29     (b) Aid payments to counties under section 477A.0121 are 
 67.30  limited to $20,265,000 in 1996.  Aid payments to counties under 
 67.31  section 477A.0121 are limited to $27,571,625 in 1997.  For aid 
 67.32  payable in 1998 and thereafter, the total aids paid under 
 67.33  section 477A.0121 are the amounts certified to be paid in the 
 67.34  previous year, adjusted for inflation as provided under 
 67.35  subdivision 3. 
 67.36     (c)(i) For aids payable in 1998 and thereafter, the total 
 68.1   aids paid to counties under section 477A.0122 are the amounts 
 68.2   certified to be paid in the previous year, adjusted for 
 68.3   inflation as provided under subdivision 3. 
 68.4      (ii) Aid payments to counties under section 477A.0122 in 
 68.5   2000 are further increased by an additional $20,000,000 in 2000. 
 68.6      (d) Aid payments to cities in 1999 2002 under section 
 68.7   477A.013, subdivision 9, are limited 
 68.8   to $380,565,489 $505,000,000.  For aids payable in 2000, the 
 68.9   total aids paid under section 477A.013, subdivision 9, are the 
 68.10  amounts certified to be paid in the previous year, adjusted for 
 68.11  inflation as provided in subdivision 3, and increased by the 
 68.12  amount necessary to effectuate Laws 1999, chapter 243, article 
 68.13  5, section 48, paragraph (b).  For aids payable in 2001 through 
 68.14  2003, the total aids paid under section 477A.013, subdivision 9, 
 68.15  are the amounts certified to be paid in the previous year, 
 68.16  adjusted for inflation as provided under subdivision 3, and 
 68.17  increased by an amount equal to the amounts calculated under 
 68.18  sections 477A.011, subdivision 36, paragraph (q), and 477A.07, 
 68.19  subdivision 3, for 2003.  For aids payable in 2004, the total 
 68.20  aids paid under section 477A.013, subdivision 9, are the amounts 
 68.21  certified to be paid in the previous year, adjusted for 
 68.22  inflation as provided under subdivision 3, and increased by the 
 68.23  amount certified to be paid in 2003 under section 477A.06, and 
 68.24  increased by an amount equal to the amounts calculated under 
 68.25  section 477A.07, subdivision 3, for 2004.  For aids payable in 
 68.26  2005 and thereafter, the total aids paid under section 477A.013, 
 68.27  subdivision 9, are the amounts certified to be paid in the 
 68.28  previous year, adjusted for inflation as provided under 
 68.29  subdivision 3.  The additional amount authorized under 
 68.30  subdivision 4 is not included when calculating the appropriation 
 68.31  limits under this paragraph. 
 68.32     <b>[EFFECTIVE DATE.]</b> This section is effective for aids 
 68.33  payable in 2002 and future years. 
 68.34     Sec. 35.  [477A.07] [RENTAL HOUSING TAX BASE REPLACEMENT 
 68.35  AID.] 
 68.36     Subdivision 1.  [AID AMOUNT.] Each county and city is 
 69.1   eligible for aid equal to the amount by which (i) 0.25 percent 
 69.2   of the assessment year 2001 taxable market value of class 4a, 
 69.3   class 4b, and that portion of class 4bb property in excess of 
 69.4   $76,000 in market value, as defined in section 273.13, 
 69.5   subdivision 25, exceeds (ii) 0.4 percent of the jurisdiction's 
 69.6   total taxable net tax capacity for taxes payable in 2002, 
 69.7   multiplied by the jurisdiction's average tax rate for taxes 
 69.8   payable in 2002. 
 69.9      Subd. 2.  [COUNTY AID.] Each county's aid amount determined 
 69.10  under subdivision 1 must be permanently added to the county's 
 69.11  homestead and agricultural credit aid base under section 
 69.12  273.1398 for aid payable in 2003, and the same amount must be 
 69.13  permanently added to the county's homestead and agricultural 
 69.14  credit aid base for aid payable in 2004. 
 69.15     Subd. 3.  [CITY AID.] Each city's aid amount determined 
 69.16  under subdivision 1 must be permanently added to its city aid 
 69.17  base under section 477A.011, subdivision 36, for aid payable in 
 69.18  2003, and the same amount must be permanently added to its city 
 69.19  aid base for aid payable in 2004. 
 69.20     Subd. 4.  [APPROPRIATION INCREASE.] The total aid amount 
 69.21  payable to cities under section 477A.03, subdivision 2, 
 69.22  paragraph (d), is permanently increased by the total amount 
 69.23  payable to all cities under subdivision 3 for aid payable in 
 69.24  2003 and increased again by the same amount for aid payable in 
 69.25  2004. 
 69.26     <b>[EFFECTIVE DATE.]</b> This section is effective for aids 
 69.27  payable in 2003 and subsequent years. 
 69.28     Sec. 36.  [ELECTRIC GENERATION TAX BASE REPLACEMENT AID.] 
 69.29     For taxes payable in 2002 only, the county auditor shall 
 69.30  compute all local tax rates as if the class rate for class 3(4)  
 69.31  property under Minnesota Statutes, section 273.13, subdivision 
 69.32  24, was two percent.  In determining the actual property tax due 
 69.33  and payable on class 3(4) property, the actual class rate must 
 69.34  be used.  Each local taxing jurisdiction is entitled to aid 
 69.35  equal to the difference between the property tax levied upon 
 69.36  class 3(4) property and the amount that would have been levied 
 70.1   had the class rate been two percent. 
 70.2      The auditor shall report the amount of aid to which each 
 70.3   local jurisdiction is entitled under this subdivision to the 
 70.4   commissioner of revenue in a manner prescribed by the 
 70.5   commissioner.  The commissioner shall verify the accuracy of the 
 70.6   amounts reported and shall make payments to local governments 
 70.7   other than school districts in two equal installments on 
 70.8   September 15, 2002, and on December 26, 2002. Payments to school 
 70.9   districts must be certified to the commissioner of children, 
 70.10  families, and learning and paid under Minnesota Statutes, 
 70.11  section 273.1392. 
 70.12     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 70.13  payable in 2002. 
 70.14     Sec. 37.  [TIF GRANTS; APPROPRIATIONS.] 
 70.15     Subdivision 1.  [TIF GRANTS.] (a) The commissioner of 
 70.16  revenue shall pay grants to municipalities in calendar years 
 70.17  2003, 2004, and 2005 for deficits in tax increment financing 
 70.18  districts caused by the changes in class rates and the 
 70.19  elimination of the state-determined general education property 
 70.20  tax levy under this article.  To qualify for a grant under this 
 70.21  section, a municipality must impose the special tax under 
 70.22  Minnesota Statutes, section 469.1791, to the extent permitted by 
 70.23  law for the taxes payable year for which the application for the 
 70.24  grant is made.  Municipalities must submit applications for the 
 70.25  grants in a form prescribed by the commissioner no later than 
 70.26  August 1 for grants payable during the calendar year.  The 
 70.27  maximum grant equals the lesser of: 
 70.28     (1) for taxes payable in the year before the grant is paid, 
 70.29  the reduction in the tax increment financing district's revenues 
 70.30  derived from increment resulting from the class rate changes and 
 70.31  the elimination of the state-determined general education 
 70.32  property tax levy under this article; or 
 70.33     (2) the amount due during the calendar year to pay: 
 70.34     (i) bonds issued before June 2, 2001, and 
 70.35     (ii) binding contracts entered into before June 2, 2001, 
 70.36  less 
 71.1      (iii) the municipality's total tax increments, including 
 71.2   unspent increments from previous years; and less 
 71.3      (iv) the amount of the special tax imposed under Minnesota 
 71.4   Statutes, section 469.1791. 
 71.5      (b) The commissioner of revenue may require applicants for 
 71.6   grants under this section to provide any information the 
 71.7   commissioner deems appropriate.  The commissioner shall 
 71.8   calculate the amount under paragraph (a), clause (2), based on 
 71.9   the reports for the tax increment financing district or 
 71.10  districts filed with the state auditor on or before August 1 of 
 71.11  the year before the year in which the grant is to be paid and 
 71.12  the special tax information provided by the county auditor. 
 71.13     (c) This section applies only to deficits in tax increment 
 71.14  districts for which: 
 71.15     (1) the request for certification was made before June 2, 
 71.16  2001; and 
 71.17     (2) all timely reports have been filed with the state 
 71.18  auditor, as required by Minnesota Statutes, section 469.175. 
 71.19     (d) The commissioner shall pay the grants under this 
 71.20  section by December 15 of the year. 
 71.21     (e) For the purposes of this section, "tax increments" and 
 71.22  "revenues derived from tax increments" have the meanings given 
 71.23  in Minnesota Statutes, section 469.174, subdivision 25, except 
 71.24  that the definition applies to all tax increment districts, 
 71.25  regardless of when the request for certification was made and 
 71.26  regardless of when the revenues were received, notwithstanding 
 71.27  the effective date of Minnesota Statutes, section 469.174, 
 71.28  subdivision 25. 
 71.29     Subd. 2.  [APPROPRIATION.] $173,500,000 is appropriated 
 71.30  from the general fund to the commissioner of revenue in fiscal 
 71.31  year 2002 and $32,500,000 for fiscal year 2003 to make grants 
 71.32  under this section.  The appropriations do not lapse at the end 
 71.33  of a fiscal year or biennium and are available until this 
 71.34  section expires.  If the amount of grant entitlements for a year 
 71.35  exceeds the amount available for grants, the commissioner shall 
 71.36  reduce each grant proportionately so the total does not exceed 
 72.1   the amount available. 
 72.2      Subd. 3.  [EXPIRATION.] This section expires on January 1, 
 72.3   2006. 
 72.4      <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 
 72.5   2002, and thereafter. 
 72.6      Sec. 38.  [ASSESSMENT GUIDELINES.] 
 72.7      The commissioner of revenue shall develop instructional 
 72.8   materials and issue guidelines by December 31, 2002, to assist 
 72.9   assessors in determining the appropriate split between the 
 72.10  portion of market value attributable to land and the portion 
 72.11  attributable to buildings, in the case of properties subject to 
 72.12  the state general tax on commercial-industrial property under 
 72.13  Minnesota Statutes, section 275.025. 
 72.14     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2001. 
 72.15     Sec. 39.  [APPROPRIATION.] 
 72.16     (a) $6,000,000 is appropriated from the transit fund to the 
 72.17  commissioner of transportation to finance nonmetropolitan 
 72.18  transit systems under Minnesota Statutes, section 174.24, for 
 72.19  fiscal year 2003.  Grants to recipient systems in calendar year 
 72.20  2002 must include all funding necessary to compensate for the 
 72.21  elimination of levy authority under section 7.  
 72.22     (b) $105,200,000 is appropriated from the transit fund to 
 72.23  the metropolitan council to finance transit operating expenses 
 72.24  for fiscal year 2003.  One-half of the appropriation to the 
 72.25  council must be paid on July 15, 2002, and the remaining 
 72.26  one-half must be paid on December 15, 2002. 
 72.27     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2002. 
 72.28     Sec. 40.  [REPEALER.] 
 72.29     Minnesota Statutes 2000, sections 126C.13, subdivisions 1, 
 72.30  2, and 3; 273.13, subdivision 24a; 273.1382; 275.08, subdivision 
 72.31  1e; and 473.446, subdivision 8, are repealed. 
 72.32     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 72.33  payable in 2002 and subsequent years. 
 72.34                             ARTICLE 3  
 72.35                 STATE TAKEOVER OF COUNTY SERVICES 
 72.36     Section 1.  Minnesota Statutes 2000, section 97A.065, 
 73.1   subdivision 2, is amended to read: 
 73.2      Subd. 2.  [FINES AND FORFEITED BAIL.] (a) Fines and 
 73.3   forfeited bail collected from prosecutions of violations of:  
 73.4   the game and fish laws; sections 84.091 to 84.15; sections 84.81 
 73.5   to 84.91; section 169A.20, when the violation involved an 
 73.6   off-road recreational vehicle as defined in section 169A.03, 
 73.7   subdivision 16; chapter 348; and any other law relating to wild 
 73.8   animals or aquatic vegetation, must be paid to the treasurer of 
 73.9   the county where the violation is prosecuted.  The county 
 73.10  treasurer shall submit one-half of the receipts to the 
 73.11  commissioner and credit the balance to the county general 
 73.12  revenue fund except as provided in paragraphs (b), (c), and 
 73.13  (d).  In a county in a judicial district under section 480.181, 
 73.14  subdivision 1, paragraph (b), as added in Laws 1999, chapter 
 73.15  216, article 7, section 26, the share that would otherwise go to 
 73.16  the county under this paragraph must be submitted to the state 
 73.17  treasurer for deposit in the state treasury and credited to the 
 73.18  general fund. 
 73.19     (b) The commissioner must reimburse a county, from the game 
 73.20  and fish fund, for the cost of keeping prisoners prosecuted for 
 73.21  violations under this section if the county board, by 
 73.22  resolution, directs:  (1) the county treasurer to submit all 
 73.23  fines and forfeited bail to the commissioner; and (2) the county 
 73.24  auditor to certify and submit monthly itemized statements to the 
 73.25  commissioner.  
 73.26     (c) The county treasurer shall submit one-half of the 
 73.27  receipts collected under paragraph (a) from prosecutions of 
 73.28  violations of sections 84.81 to 84.91, and 169A.20, except 
 73.29  receipts that are surcharges imposed under section 357.021, 
 73.30  subdivision 6, to the commissioner and credit the balance to the 
 73.31  county general fund.  The commissioner shall credit these 
 73.32  receipts to the snowmobile trails and enforcement account in the 
 73.33  natural resources fund. 
 73.34     (d) The county treasurer shall indicate the amount of the 
 73.35  receipts that are surcharges imposed under section 357.021, 
 73.36  subdivision 6, and shall submit all of those receipts to the 
 74.1   state treasurer. 
 74.2      <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2003, 
 74.3   in the first and fourth districts; July 1, 2004, in the third 
 74.4   and sixth districts; and July 1, 2005, in the second and tenth 
 74.5   districts. 
 74.6      Sec. 2.  Minnesota Statutes 2000, section 179A.101, 
 74.7   subdivision 1, is amended to read: 
 74.8      Subdivision 1.  [COURT EMPLOYEE UNITS.] (a) The state court 
 74.9   administrator shall meet and negotiate with the exclusive 
 74.10  representative of each of the units specified in this section.  
 74.11  The units provided in this section are the only appropriate 
 74.12  units for court employees.  Court employees, unless otherwise 
 74.13  excluded, are included within the units which include the 
 74.14  classifications to which they are assigned for purposes of 
 74.15  compensation.  Initial assignment of classifications to 
 74.16  bargaining units shall be made by the state court administrator 
 74.17  by August 15, 1999 of the year preceding the year in which the 
 74.18  state assumes the cost of court administration in the judicial 
 74.19  district in which the bargaining unit is located.  An exclusive 
 74.20  representative may appeal the initial assignment decision of the 
 74.21  state court administrator by filing a petition with the 
 74.22  commissioner within 45 days of being certified as the exclusive 
 74.23  representative for a judicial district.  The units in this 
 74.24  subdivision are the appropriate units of court employees. 
 74.25     (b) The judicial district unit consists of clerical, 
 74.26  administrative, and technical employees of a judicial district 
 74.27  under section 480.181, subdivision 1, paragraph (b), or of two 
 74.28  or more of these districts that are represented by the same 
 74.29  employee organization or one or more subordinate bodies of the 
 74.30  same employee organization.  The judicial district unit includes 
 74.31  individuals, not otherwise excluded, whose work is typically 
 74.32  clerical or secretarial in nature, including nontechnical data 
 74.33  recording and retrieval and general office work, and 
 74.34  individuals, not otherwise excluded, whose work is not typically 
 74.35  manual and which requires specialized knowledge or skills 
 74.36  acquired through two-year academic programs or equivalent 
 75.1   experience or on-the-job training. 
 75.2      (c) The appellate courts unit consists of clerical, 
 75.3   administrative, and technical employees of the court of appeals 
 75.4   and clerical, administrative, and technical employees of the 
 75.5   supreme court.  The appellate courts unit includes individuals, 
 75.6   not otherwise excluded, whose work is typically clerical or 
 75.7   secretarial in nature, including nontechnical data recording and 
 75.8   retrieval and general office work, and individuals, not 
 75.9   otherwise excluded, whose work is not typically manual and which 
 75.10  requires specialized knowledge or skills acquired through 
 75.11  two-year academic programs or equivalent experience or 
 75.12  on-the-job training. 
 75.13     (d) The court employees professional employee unit consists 
 75.14  of professional employees, not otherwise excluded, that are 
 75.15  employed by the supreme court, the court of appeals, or a 
 75.16  judicial district under section 480.181, subdivision 1, 
 75.17  paragraph (b). 
 75.18     (e) The court employees court reporter unit consists of 
 75.19  court reporters not otherwise excluded who are employed by a 
 75.20  judicial district under section 480.181, subdivision 1, 
 75.21  paragraph (a). 
 75.22     (f) Notwithstanding any provision of this chapter or any 
 75.23  other law to the contrary, judges may appoint and remove court 
 75.24  reporters at their pleasure. 
 75.25     (g) Copies of collective bargaining agreements entered into 
 75.26  under this section must be submitted to the legislative 
 75.27  coordinating commission for the commission's information. 
 75.28     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2003, 
 75.29  in the first and fourth districts; July 1, 2004, in the third 
 75.30  and sixth districts; and July 1, 2005, in the second and tenth 
 75.31  districts. 
 75.32     Sec. 3.  Minnesota Statutes 2000, section 179A.102, 
 75.33  subdivision 6, is amended to read: 
 75.34     Subd. 6.  [CONTRACT AND REPRESENTATION RESPONSIBILITIES.] 
 75.35  (a) Notwithstanding the provisions of section 179A.101, the 
 75.36  exclusive representatives of units of court employees certified 
 76.1   prior to the effective date of the judicial district coming 
 76.2   under section 480.181, subdivision 1, paragraph (b), remain 
 76.3   responsible for administration of their contracts and for other 
 76.4   contractual duties and have the right to dues and fair share fee 
 76.5   deduction and other contractual privileges and rights until a 
 76.6   contract is agreed upon with the state court administrator for a 
 76.7   new unit established under section 179A.101 or until June 30, 
 76.8   2001, whichever is earlier.  Exclusive representatives of court 
 76.9   employees certified after the effective date of this section in 
 76.10  the judicial district are immediately upon certification 
 76.11  responsible for bargaining on behalf of employees within the 
 76.12  unit.  They are also responsible for administering grievances 
 76.13  arising under previous contracts covering employees included 
 76.14  within the unit which remain unresolved on June 30, 2001, or 
 76.15  upon agreement with the state court administrator on a contract 
 76.16  for a new unit established under section 179A.101, whichever is 
 76.17  earlier.  Where the employer does not object, these 
 76.18  responsibilities may be varied by agreement between the outgoing 
 76.19  and incoming exclusive representatives.  All other rights and 
 76.20  duties of representation begin on July 1, 2001 of the year in 
 76.21  which the state assumes the funding of court administration in 
 76.22  the judicial district, except that exclusive representatives 
 76.23  certified after the effective date of this section shall 
 76.24  immediately, upon certification, have the right to all employer 
 76.25  information and all forms of access to employees within the 
 76.26  bargaining unit which would be permitted to the current contract 
 76.27  holder, including the rights in section 179A.07, subdivision 6.  
 76.28  This section does not affect an existing collective bargaining 
 76.29  contract.  Incoming exclusive representatives of court employees 
 76.30  from judicial districts that come under section 480.181, 
 76.31  subdivision 1, paragraph (b), are immediately, upon 
 76.32  certification, responsible for bargaining on behalf of all 
 76.33  previously unrepresented employees assigned to their units.  All 
 76.34  other rights and duties of exclusive representatives begin on 
 76.35  July 1, 2001 of the year in which the state assumes the funding 
 76.36  of court administration in the judicial district. 
 77.1      (b) Nothing in this act or Laws 1999, chapter 216, article 
 77.2   7, sections 3 to 15, prevents an exclusive representative 
 77.3   certified after the effective date of sections 3 to 15 dates of 
 77.4   those provisions from assessing fair share or dues deductions 
 77.5   immediately upon certification for employees in a unit 
 77.6   established under section 179A.101 if the employees were 
 77.7   unrepresented for collective bargaining purposes before that 
 77.8   certification. 
 77.9      <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2003, 
 77.10  in the first and fourth districts; July 1, 2004, in the third 
 77.11  and sixth districts; and July 1, 2005, in the second and tenth 
 77.12  districts. 
 77.13     Sec. 4.  Minnesota Statutes 2000, section 179A.103, 
 77.14  subdivision 1, is amended to read: 
 77.15     Subdivision 1.  [CONTRACTS.] Contracts for the period 
 77.16  commencing July 1, 2000, of the year in which the state assumes 
 77.17  the cost of court administration in the judicial district for 
 77.18  the judicial district court employees of judicial districts that 
 77.19  are under section 480.181, subdivision 1, paragraph (b), must be 
 77.20  negotiated with the state court administrator.  Negotiations for 
 77.21  those contracts may begin any time after July 1, 1999 of the 
 77.22  year before the state assumes the cost, and may be initiated by 
 77.23  either party notifying the other of the desire to begin the 
 77.24  negotiating process.  Negotiations are subject to this chapter. 
 77.25     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2003, 
 77.26  in the first and fourth districts; July 1, 2004, in the third 
 77.27  and sixth districts; and July 1, 2005, in the second and tenth 
 77.28  districts. 
 77.29     Sec. 5.  [245.775] [REIMBURSEMENT OF COUNTY FOR CERTAIN 
 77.30  OUT-OF-HOME PLACEMENTS.] 
 77.31     (a) The commissioner shall reimburse a county for 30 
 77.32  percent of the nonfederal share of the cost of out-of-home 
 77.33  placement.  For purposes of this section, "out-of-home 
 77.34  placement" means the placement of a child in a child caring 
 77.35  institution or shelter licensed under Minnesota Rules, parts 
 77.36  9545.0905 to 9545.1125, in a group home licensed under Minnesota 
 78.1   Rules, parts 9545.1400 to 9545.1500, in family foster care or 
 78.2   group family foster care licensed under Minnesota Rules, parts 
 78.3   9545.0010 to 9545.0260, or a correctional facility pursuant to a 
 78.4   court order when a county social services agency is assigned 
 78.5   financial responsibility for the placement.  For purposes of 
 78.6   this section, "out-of-home placement" includes voluntary and 
 78.7   tribal court-ordered placement of an Indian child under sections 
 78.8   260.765 and 260.771.  For purposes of this section, 
 78.9   "commissioner" means the commissioner of revenue.  
 78.10     (b) The manner for making the reimbursement for costs under 
 78.11  paragraph (a) to the county is as follows: 
 78.12     (1) beginning in July 2002, and annually thereafter, the 
 78.13  commissioner will forecast out-of-home placements for each 
 78.14  calendar year and make payments as follows: 
 78.15     (i) in July of each year, the commissioner will make a 
 78.16  payment to a county to cover 12 percent of the county's 
 78.17  anticipated nonfederal costs of out-of-home placements for that 
 78.18  calendar year; 
 78.19     (ii) in September of each year, the commissioner will make 
 78.20  an additional payment, if necessary, to a county so that this 
 78.21  payment and the payment in item (i) reflect 30 percent of the 
 78.22  actual expenditures by the county of the nonfederal costs of 
 78.23  out-of-home placements for that county for the period January 
 78.24  through June of that calendar year; 
 78.25     (iii) in December of each year, the commissioner will make 
 78.26  a payment to a county which, when added to the payments in items 
 78.27  (i) and (ii), reflects 27 percent of the county's anticipated 
 78.28  nonfederal costs of out-of-home placements for that calendar 
 78.29  year; and 
 78.30     (iv) in March of the calendar year following the payments 
 78.31  made in items (i) to (iii), the commissioner will settle up with 
 78.32  each county by making an additional payment to or recovering 
 78.33  money from the county as necessary to reconcile the net amount 
 78.34  of the payments received by the county under items (i) to (iii) 
 78.35  with the total reimbursement to be made to the county under 
 78.36  paragraph (c). 
 79.1      (c) The total reimbursement to the county under paragraph 
 79.2   (b) shall be the lesser of: 
 79.3      (1) 30 percent; or 
 79.4      (2) a lesser percentage, so that total payments under this 
 79.5   section and sections 260.765, subdivision 2a, and 260.771, 
 79.6   subdivision 4a, equal the maximum appropriation allowed under 
 79.7   section 245.776, 
 79.8   of the actual expenditures by the county of the nonfederal costs 
 79.9   of out-of-home placements for the calendar year. 
 79.10     <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
 79.11  out-of-home placement costs incurred in calendar year 2002. 
 79.12     Sec. 6.  [245.776] [ANNUAL APPROPRIATION.] 
 79.13     A sum sufficient to discharge the duties imposed by 
 79.14  sections 245.775; 260.765, subdivision 2a; and 260.771, 
 79.15  subdivision 4a, is annually appropriated from the general fund 
 79.16  to the commissioner of human services.  The payments under these 
 79.17  sections are limited to $49,400,000 in fiscal year 2003.  The 
 79.18  payments under these sections in fiscal year 2004 and thereafter 
 79.19  are limited to an amount equal to: 
 79.20     (1) the maximum allowed appropriation under this section in 
 79.21  the previous calendar year, multiplied by 
 79.22     (2) one plus the percentage increase in the implicit price 
 79.23  deflator for government consumption expenditures and gross 
 79.24  investment for state and local governments prepared by the 
 79.25  Bureau of Economic Analysis of the United States Department of 
 79.26  Commerce for the 12-month period ending March 31 of the previous 
 79.27  year. 
 79.28     Sec. 7.  Minnesota Statutes 2000, section 260.765, is 
 79.29  amended by adding a subdivision to read: 
 79.30     Subd. 2a.  [REIMBURSEMENT FOR A PORTION OF COSTS.] When an 
 79.31  Indian child is voluntarily placed in foster care by a tribal 
 79.32  social services agency, the commissioner shall reimburse 30 
 79.33  percent of the nonfederal share of the costs of the placement.  
 79.34  The mechanism for reimbursement must be the same used for county 
 79.35  reimbursement of out-of-home placement costs under section 
 79.36  245.775. 
 80.1      <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
 80.2   foster care costs incurred after January 1, 2002. 
 80.3      Sec. 8.  Minnesota Statutes 2000, section 260.771, is 
 80.4   amended by adding a subdivision to read: 
 80.5      Subd. 4a.  [REIMBURSEMENT FOR A PORTION OF COSTS.] When an 
 80.6   Indian child is placed by a tribal social services agency 
 80.7   according to tribal court order, the commissioner shall 
 80.8   reimburse 30 percent of the nonfederal share of the costs of the 
 80.9   placement.  The mechanism for reimbursement must be the same 
 80.10  used for county reimbursement of out-of-home placement costs 
 80.11  under section 245.775. 
 80.12     <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
 80.13  out-of-home placement costs incurred after January 1, 2002. 
 80.14     Sec. 9.  Minnesota Statutes 2000, section 273.1398, 
 80.15  subdivision 4a, is amended to read: 
 80.16     Subd. 4a.  [AID OFFSET FOR COURT COSTS.] (a) By July 15, 
 80.17  1999 of the year preceding the year in which the state assumes 
 80.18  the cost of court administration in the judicial district as 
 80.19  specified under section 480.183, the supreme court shall 
 80.20  determine and certify to the commissioner of revenue for each 
 80.21  county, other than counties located in the eighth judicial 
 80.22  district, the county's share of the costs assumed in the 
 80.23  judicial districts specified under Laws 1999, chapter 216, 
 80.24  article 7, section 480.183, subdivision 1, during the succeeding 
 80.25  fiscal year beginning July 1, 2000,. 
 80.26     (b) The amount certified in paragraph (a) shall be equal to 
 80.27  the following: 
 80.28     (i) 103 percent of the required court administration 
 80.29  expenditures as defined under section 480.183, subdivision 3, 
 80.30  for calendar year 2003, as determined under subdivision 4b, 
 80.31  paragraph (a); plus 
 80.32     (ii) the required mandated court services expenditures as 
 80.33  defined under section 480.183, subdivision 4, for the calendar 
 80.34  year in which the court transfer will occur, as determined under 
 80.35  subdivision 4b, paragraph (b); plus 
 80.36     (iii) an adjustment for any cumulative percentage increase 
 81.1   in salary expenditures as defined under section 480.183, 
 81.2   subdivision 2, in excess of the maintenance of effort percentage 
 81.3   for the county, as determined under subdivision 4b, paragraph 
 81.4   (d); less 
 81.5      (iv) an amount equal to the county's share of transferred 
 81.6   fines collected by the district courts in the county during the 
 81.7   calendar year 1998 2003.  
 81.8      The court and the county may, if both parties agree, 
 81.9   negotiate and certify an amount higher than the amount 
 81.10  calculated under this paragraph. 
 81.11     (c) For purposes of this subdivision, the adjustment in 
 81.12  paragraph (b), clause (iii), shall be equal to: 
 81.13     (1) the sum of the court administration expenditures as 
 81.14  defined under section 480.183, subdivision 3, required under 
 81.15  subdivision 4b, paragraph (a), plus the temporary aid payment 
 81.16  under subdivision 4c; multiplied by 
 81.17     (2) the difference between (i) the cumulative percentage 
 81.18  increase in actual and anticipated salary settlements for court 
 81.19  employees from July 1, 2001, until the date of the court 
 81.20  transfer and (ii) the maintenance of effort percent of the 
 81.21  county for the year in which the court transfer occurs, as 
 81.22  determined under subdivision 4b, paragraph (d).  
 81.23     (b) (d) Payments to a county under subdivision 2 or section 
 81.24  273.166 for the calendar year 2000 in which the state assumes 
 81.25  the cost of court administration and mandated services as 
 81.26  defined under section 480.183, subdivisions 4 and 5, in the 
 81.27  judicial district must be permanently reduced by an amount equal 
 81.28  to 75 percent of the net cost to the state for assumption of 
 81.29  district court costs as certified in paragraph (a). 
 81.30     (c) (e) Payments to a county under subdivision 2 or section 
 81.31  273.166 for the calendar year 2001 after the calendar year in 
 81.32  which the state assumes the cost of court administration and 
 81.33  mandated services as defined under section 480.183, subdivisions 
 81.34  4 and 5, in the judicial district must be permanently reduced by 
 81.35  an amount equal to 25 percent of the net cost to the state for 
 81.36  assumption of district court costs as certified in paragraph (a).
 82.1      (d) (f) Payments to a county under subdivision 2 for 
 82.2   calendar year 2001 are permanently increased by an amount equal 
 82.3   to 7.5 percent of the county's share of transferred fines 
 82.4   collected by the district courts in the county during calendar 
 82.5   year 1998, as determined under paragraph (a).  If the amount 
 82.6   determined in paragraph (a) exceeds the amount of aid a county 
 82.7   is scheduled to be paid under subdivision 2 in 2000, then the 
 82.8   county shall not receive an aid increase under this paragraph. 
 82.9      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 82.10  following final enactment. 
 82.11     Sec. 10.  Minnesota Statutes 2000, section 273.1398, is 
 82.12  amended by adding a subdivision to read: 
 82.13     Subd. 4b.  [COURT EXPENDITURES; MAINTENANCE OF EFFORT.] (a) 
 82.14  Until the costs of court administration as defined under section 
 82.15  480.183, subdivision 3, in a county have been transferred to the 
 82.16  state, each county in a judicial district transferring court 
 82.17  administration costs to state funding after July 1, 2001, shall 
 82.18  budget for the funding of these costs an amount at least equal 
 82.19  to the certified budget amount for calendar year 2001 multiplied 
 82.20  by the maintenance of effort percent for each year from 2001 to 
 82.21  2003.  The county shall budget, fund, and authorize expenditures 
 82.22  not less than the amount calculated under this paragraph plus 
 82.23  the temporary aid amount under subdivision 4c for maintenance of 
 82.24  effort of administrative costs. 
 82.25     (b) Until the costs of mandated court services as defined 
 82.26  under section 480.183, subdivision 4, in a county have been 
 82.27  transferred to the state, each county in a judicial district 
 82.28  transferring the costs of mandated court services to state 
 82.29  funding after July 1, 2001, shall budget for the funding of 
 82.30  these costs an amount at least equal to the certified budgeted 
 82.31  amount for calendar year 2001 multiplied by the maintenance of 
 82.32  effort percent from 2001 to the year of the transfer.  The 
 82.33  county shall budget, fund, and authorize expenditures not less 
 82.34  than the amount calculated under this paragraph for maintenance 
 82.35  of effort of mandated services.  
 82.36     (c) By July 1, 2001, the court shall certify to each county 
 83.1   in the judicial district its cost of court administration and 
 83.2   its cost of mandated services as defined under section 480.183, 
 83.3   subdivisions 3 and 4, based on 2001 budgets.  In making that 
 83.4   determination, the court shall exclude the budget costs of the 
 83.5   county for the following categories: 
 83.6      (1) rent; 
 83.7      (2) examiner of titles; 
 83.8      (3) civil court appointed attorneys for civil matters; and 
 83.9      (4) hospitalization costs. 
 83.10     (d) For purposes of this subdivision, a county's 
 83.11  "maintenance of effort percent" is equal to one plus the average 
 83.12  annual percent increase in court operating expenditures for all 
 83.13  counties in that judicial district for the period from 1996 to 
 83.14  1999, as reported in the annual state auditor reports on 
 83.15  revenues, expenditures, and debt for Minnesota counties, raised 
 83.16  to a power equal to the difference between the budget year and 
 83.17  2001.  The annual percentage under this paragraph must be 
 83.18  rounded to the nearest one-tenth of one percent. 
 83.19     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 83.20  following final enactment. 
 83.21     Sec. 11.  Minnesota Statutes 2000, section 273.1398, is 
 83.22  amended by adding a subdivision to read: 
 83.23     Subd. 4c.  [TEMPORARY AID; COURT ADMINISTRATION COSTS.] For 
 83.24  calendar years 2004 and 2005, each county in a judicial district 
 83.25  that has not been transferred to the state by January 1 of that 
 83.26  year shall receive additional homestead and agricultural credit 
 83.27  aid.  This amount is in addition to the amount calculated under 
 83.28  subdivision 2 and must not be included in the definition of 
 83.29  homestead and agricultural credit base under subdivision 1, 
 83.30  paragraph (j).  The amount of additional aid is equal to the 
 83.31  difference between (1) the amount budgeted for court 
 83.32  administration costs in 2001 as determined under subdivision 4b, 
 83.33  paragraph (c), multiplied by the maintenance of effort percent 
 83.34  for the calendar year as determined under subdivision 4b, 
 83.35  paragraph (d), and (2) the amount calculated under subdivision 
 83.36  4b, paragraph (a), for calendar year 2003.  This additional aid 
 84.1   must be used only to fund court administration expenditures as 
 84.2   defined in section 480.183, subdivision 3.  This amount must be 
 84.3   added to the state court's base budget in the year when the 
 84.4   court in that judicial district in which the county is located 
 84.5   is transferred to the state. 
 84.6      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 84.7   following final enactment.  
 84.8      Sec. 12.  Minnesota Statutes 2000, section 273.1398, is 
 84.9   amended by adding a subdivision to read: 
 84.10     Subd. 4d.  [JUDICIAL DISTRICT MANDATED COURT SERVICES 
 84.11  AID.] (a) Mandated court services aid as provided in section 
 84.12  477A.0121, subdivision 4a, must be used to assist judicial 
 84.13  districts in the transition from the property tax funding to the 
 84.14  state funding of mandated court services as defined in section 
 84.15  480.183, subdivision 3, for the remaining judicial districts. 
 84.16     (b) The mandated court services aid shall be provided only 
 84.17  for aids payable in calendar years 2001 to 2004 to the court for 
 84.18  those judicial districts that have not been transferred to the 
 84.19  state by January 1 of those calendar years.  The mandated court 
 84.20  services aid will be as follows: 
 84.21     (1) for the first judicial district, $372,757 for fiscal 
 84.22  year 2002 and $590,970 for fiscal year 2003; 
 84.23     (2) for the fourth judicial district, $674,264 for fiscal 
 84.24  year 2002 and $1,068,975 for fiscal year 2003; 
 84.25     (3) for the third judicial district, $473,562 for fiscal 
 84.26  year 2002 and $750,785 in each year for fiscal years 2003 and 
 84.27  2004; 
 84.28     (4) for the sixth judicial district, $121,287 for fiscal 
 84.29  year 2002 and $192,288 in each year for fiscal years 2003 and 
 84.30  2004; 
 84.31     (5) for the second judicial district, $277,237 for fiscal 
 84.32  year 2002 and $439,530 in each year for fiscal years 2003 to 
 84.33  2005; and 
 84.34     (6) for the tenth judicial district, $422,891 for fiscal 
 84.35  year 2002 and $670,453 in each year for fiscal years 2003 to 
 84.36  2005. 
 85.1      (c) The mandated court services aid as contained in 
 85.2   paragraph (b) must be added to the state court's base budget for 
 85.3   subsequent fiscal years. 
 85.4      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 85.5   following final enactment. 
 85.6      Sec. 13.  Minnesota Statutes 2000, section 273.1398, is 
 85.7   amended by adding a subdivision to read: 
 85.8      Subd. 4e.  [JUDICIAL DISTRICT STATE TAKEOVER TRANSITION 
 85.9   AID.] (a) Judicial district state takeover transition aid as 
 85.10  provided in section 477A.0121, subdivision 4a, must be used to 
 85.11  assist in the transition from the property tax funding to the 
 85.12  state funding of district court administration costs for the 
 85.13  remaining judicial districts.  This aid is temporary and is 
 85.14  intended to finance those costs for accounting and human 
 85.15  resources which are necessary for the state court to expend to 
 85.16  prepare for the transfer of districts to the state. 
 85.17     (b) The transition aid must be provided only for the two 
 85.18  years prior to the scheduled state takeover under section 
 85.19  480.183, subdivision 1.  The transition aid will be as follows: 
 85.20     (1) $152,000 for fiscal year 2002; 
 85.21     (2) $442,000 for fiscal year 2003; 
 85.22     (3) $428,000 for fiscal year 2004; and 
 85.23     (4) $276,000 for fiscal year 2005. 
 85.24     (c) The transition aid in paragraph (b) must not be added 
 85.25  to the state court's base budget for any subsequent fiscal years.
 85.26     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 85.27  following final enactment. 
 85.28     Sec. 14.  Minnesota Statutes 2000, section 273.1398, is 
 85.29  amended by adding a subdivision to read: 
 85.30     Subd. 4f.  [AID OFFSET FOR OUT-OF-HOME PLACEMENT 
 85.31  COSTS.] For aid payable in 2002, each county's aid under 
 85.32  subdivision 2 must be permanently reduced by an amount equal to 
 85.33  30 percent of the county's estimated 2002 nonfederal 
 85.34  expenditures for out-of-home placements, as defined in section 
 85.35  245.775.  The counties shall provide all information requested 
 85.36  by the commissioner of human services necessary to allow the 
 86.1   commissioner to estimate and certify these nonfederal costs to 
 86.2   the commissioner of revenue by September 1, 2001.  The aid 
 86.3   reduction under this subdivision must be made prior to any aid 
 86.4   reductions for the state takeover of courts contained in this 
 86.5   article. 
 86.6      <b>[EFFECTIVE DATE.]</b> This section is effective the day after 
 86.7   final enactment, for aids payable beginning in 2002. 
 86.8      Sec. 15.  Minnesota Statutes 2000, section 299D.03, 
 86.9   subdivision 5, is amended to read: 
 86.10     Subd. 5.  [FINES AND FORFEITED BAIL MONEY.] (a) All fines 
 86.11  and forfeited bail money, from traffic and motor vehicle law 
 86.12  violations, collected from persons apprehended or arrested by 
 86.13  officers of the state patrol, shall be paid by the person or 
 86.14  officer collecting the fines, forfeited bail money or 
 86.15  installments thereof, on or before the tenth day after the last 
 86.16  day of the month in which these moneys were collected, to the 
 86.17  county treasurer of the county where the violation occurred.  
 86.18  Three-eighths of these receipts shall be credited to the general 
 86.19  revenue fund of the county, except that in a county in a 
 86.20  judicial district under section 480.181, subdivision 1, 
 86.21  paragraph (b), as added in Laws 1999, chapter 216, article 7, 
 86.22  section 26, this three-eighths share must be transmitted to the 
 86.23  state treasurer for deposit in the state treasury and credited 
 86.24  to the general fund.  The other five-eighths of these receipts 
 86.25  shall be transmitted by that officer to the state treasurer 
 86.26  and shall be credited as follows: 
 86.27     (1) In the fiscal year ending June 30, 1991, the first 
 86.28  $275,000 in money received by the state treasurer after June 4, 
 86.29  1991, must be credited to the transportation services fund, and 
 86.30  the remainder in the fiscal year credited to the trunk highway 
 86.31  fund. 
 86.32     (2) In fiscal year 1992, the first $215,000 in money 
 86.33  received by the state treasurer in the fiscal year must be 
 86.34  credited to the transportation services fund, and the remainder 
 86.35  credited to the trunk highway fund. 
 86.36     (3) In fiscal year 1993 and subsequent years, the entire 
 87.1   amount received by the state treasurer must be credited to the 
 87.2   trunk highway fund.  If, however, the violation occurs within a 
 87.3   municipality and the city attorney prosecutes the offense, and a 
 87.4   plea of not guilty is entered, one-third of the receipts shall 
 87.5   be credited to the general revenue fund of the county, one-third 
 87.6   of the receipts shall be paid to the municipality prosecuting 
 87.7   the offense, and one-third shall be transmitted to the state 
 87.8   treasurer as provided in this subdivision.  All costs of 
 87.9   participation in a nationwide police communication system 
 87.10  chargeable to the state of Minnesota shall be paid from 
 87.11  appropriations for that purpose. 
 87.12     (b) Notwithstanding any other provisions of law, all fines 
 87.13  and forfeited bail money from violations of statutes governing 
 87.14  the maximum weight of motor vehicles, collected from persons 
 87.15  apprehended or arrested by employees of the state of Minnesota, 
 87.16  by means of stationary or portable scales operated by these 
 87.17  employees, shall be paid by the person or officer collecting the 
 87.18  fines or forfeited bail money, on or before the tenth day after 
 87.19  the last day of the month in which the collections were made, to 
 87.20  the county treasurer of the county where the violation 
 87.21  occurred.  Five-eighths of these receipts shall be transmitted 
 87.22  by that officer to the state treasurer and shall be credited to 
 87.23  the highway user tax distribution fund.  Three-eighths of these 
 87.24  receipts shall be credited to the general revenue fund of the 
 87.25  county, except that in a county in a judicial district under 
 87.26  section 480.181, subdivision 1, paragraph (b), as added in Laws 
 87.27  1999, chapter 216, article 7, section 26, this three-eighths 
 87.28  share must be transmitted to the state treasurer for deposit in 
 87.29  the state treasury and credited to the general fund. 
 87.30     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2003, 
 87.31  in the first and fourth districts; July 1, 2004, in the third 
 87.32  and sixth districts; and July 1, 2005, in the second and tenth 
 87.33  districts. 
 87.34     Sec. 16.  Minnesota Statutes 2000, section 357.021, 
 87.35  subdivision 1a, is amended to read: 
 87.36     Subd. 1a.  [TRANSMITTAL OF FEES TO STATE TREASURER.] (a) 
 88.1   Every person, including the state of Minnesota and all bodies 
 88.2   politic and corporate, who shall transact any business in the 
 88.3   district court, shall pay to the court administrator of said 
 88.4   court the sundry fees prescribed in subdivision 2.  Except as 
 88.5   provided in paragraph (d), the court administrator shall 
 88.6   transmit the fees monthly to the state treasurer for deposit in 
 88.7   the state treasury and credit to the general fund.  
 88.8      (b) In a county which has a screener-collector position, 
 88.9   fees paid by a county pursuant to this subdivision shall be 
 88.10  transmitted monthly to the county treasurer, who shall apply the 
 88.11  fees first to reimburse the county for the amount of the salary 
 88.12  paid for the screener-collector position.  The balance of the 
 88.13  fees collected shall then be forwarded to the state treasurer 
 88.14  for deposit in the state treasury and credited to the general 
 88.15  fund.  In a county in a judicial district under section 480.181, 
 88.16  subdivision 1, paragraph (b), as added in Laws 1999, chapter 
 88.17  216, article 7, section 26, which has a screener-collector 
 88.18  position, the fees paid by a county shall be transmitted monthly 
 88.19  to the state treasurer for deposit in the state treasury and 
 88.20  credited to the general fund.  A screener-collector position for 
 88.21  purposes of this paragraph is an employee whose function is to 
 88.22  increase the collection of fines and to review the incomes of 
 88.23  potential clients of the public defender, in order to verify 
 88.24  eligibility for that service. 
 88.25     (c) No fee is required under this section from the public 
 88.26  authority or the party the public authority represents in an 
 88.27  action for: 
 88.28     (1) child support enforcement or modification, medical 
 88.29  assistance enforcement, or establishment of parentage in the 
 88.30  district court, or in a proceeding under section 484.702; 
 88.31     (2) civil commitment under chapter 253B; 
 88.32     (3) the appointment of a public conservator or public 
 88.33  guardian or any other action under chapters 252A and 525; 
 88.34     (4) wrongfully obtaining public assistance under section 
 88.35  256.98 or 256D.07, or recovery of overpayments of public 
 88.36  assistance; 
 89.1      (5) court relief under chapter 260; 
 89.2      (6) forfeiture of property under sections 169A.63 and 
 89.3   609.531 to 609.5317; 
 89.4      (7) recovery of amounts issued by political subdivisions or 
 89.5   public institutions under sections 246.52, 252.27, 256.045, 
 89.6   256.25, 256.87, 256B.042, 256B.14, 256B.15, 256B.37, 260B.331, 
 89.7   and 260C.331, or other sections referring to other forms of 
 89.8   public assistance; 
 89.9      (8) restitution under section 611A.04; or 
 89.10     (9) actions seeking monetary relief in favor of the state 
 89.11  pursuant to section 16D.14, subdivision 5. 
 89.12     (d) The fees collected for child support modifications 
 89.13  under subdivision 2, clause (13), must be transmitted to the 
 89.14  county treasurer for deposit in the county general fund.  The 
 89.15  fees must be used by the county to pay for child support 
 89.16  enforcement efforts by county attorneys. 
 89.17     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2003, 
 89.18  in the first and fourth districts; July 1, 2004, in the third 
 89.19  and sixth districts; and July 1, 2005, in the second and tenth 
 89.20  districts. 
 89.21     Sec. 17.  Minnesota Statutes 2000, section 477A.0121, is 
 89.22  amended by adding a subdivision to read: 
 89.23     Subd. 4a.  [COURT TAKEOVER; MANDATED SERVICES AND 
 89.24  TRANSITION COSTS.] For calendar years 2001 to 2004, an amount 
 89.25  equal to the sum of the additional aid in section 477A.03, 
 89.26  subdivision 6, shall be retained by the commissioner of revenue 
 89.27  and transferred to the state court system to fund the mandated 
 89.28  court services aid in section 273.1398, subdivision 4d, and the 
 89.29  judicial district state takeover transition aid in section 
 89.30  273.1398, subdivision 4e. 
 89.31     <b>[EFFECTIVE DATE.]</b> This section is effective for aids 
 89.32  payable in calendar years 2001 to 2004. 
 89.33     Sec. 18.  Minnesota Statutes 2000, section 477A.0122, is 
 89.34  amended by adding a subdivision to read: 
 89.35     Subd. 4a.  [REDUCTIONS FOR INSUFFICIENT HOMESTEAD AND 
 89.36  AGRICULTURAL CREDIT AID.] If the reductions to a county's aid 
 90.1   under section 273.1398, subdivisions 4a and 4f, exceed the 
 90.2   amount of homestead and agricultural credit aid payable to the 
 90.3   county under section 273.1398, subdivision 2, for the year of 
 90.4   the reduction, the county's aid under subdivision 4 must be 
 90.5   permanently reduced by the excess reduction amount in the year 
 90.6   of the reduction.  The aid a county receives under this section 
 90.7   may not be less than zero. 
 90.8      <b>[EFFECTIVE DATE.]</b> This section is effective for aids 
 90.9   payable in 2002 and thereafter. 
 90.10     Sec. 19.  Minnesota Statutes 2000, section 477A.03, 
 90.11  subdivision 2, is amended to read: 
 90.12     Subd. 2.  [ANNUAL APPROPRIATION.] (a) A sum sufficient to 
 90.13  discharge the duties imposed by sections 477A.011 to 477A.014 is 
 90.14  annually appropriated from the general fund to the commissioner 
 90.15  of revenue.  
 90.16     (b) Aid payments to counties under section 477A.0121 are 
 90.17  limited to $20,265,000 in 1996.  Aid payments to counties under 
 90.18  section 477A.0121 are limited to $27,571,625 in 1997.  For aid 
 90.19  payable in 1998 and thereafter, the total aids paid under 
 90.20  section 477A.0121 are the amounts certified to be paid in the 
 90.21  previous year, adjusted for inflation as provided under 
 90.22  subdivision 3.  The additional amount authorized under 
 90.23  subdivision 6 is not included when calculating the appropriation 
 90.24  limits under this paragraph. 
 90.25     (c)(i) For aids payable in 1998 2002 and thereafter, the 
 90.26  total aids paid to counties under section 477A.0122 are the 
 90.27  amounts certified to be paid in the previous year, adjusted for 
 90.28  inflation as provided under subdivision 3, and less any 
 90.29  reduction required under section 477A.0122, subdivision 4a, in 
 90.30  the current year. 
 90.31     (ii) Aid payments to counties under section 477A.0122 in 
 90.32  2000 are further increased by an additional $20,000,000 in 2000. 
 90.33     (d) Aid payments to cities in 1999 under section 477A.013, 
 90.34  subdivision 9, are limited to $380,565,489.  For aids payable in 
 90.35  2000, the total aids paid under section 477A.013, subdivision 9, 
 90.36  are the amounts certified to be paid in the previous year, 
 91.1   adjusted for inflation as provided in subdivision 3, and 
 91.2   increased by the amount necessary to effectuate Laws 1999, 
 91.3   chapter 243, article 5, section 48, paragraph (b).  For aids 
 91.4   payable in 2001 through 2003, the total aids paid under section 
 91.5   477A.013, subdivision 9, are the amounts certified to be paid in 
 91.6   the previous year, adjusted for inflation as provided under 
 91.7   subdivision 3.  For aids payable in 2004, the total aids paid 
 91.8   under section 477A.013, subdivision 9, are the amounts certified 
 91.9   to be paid in the previous year, adjusted for inflation as 
 91.10  provided under subdivision 3, and increased by the amount 
 91.11  certified to be paid in 2003 under section 477A.06.  For aids 
 91.12  payable in 2005 and thereafter, the total aids paid under 
 91.13  section 477A.013, subdivision 9, are the amounts certified to be 
 91.14  paid in the previous year, adjusted for inflation as provided 
 91.15  under subdivision 3.  The additional amount authorized under 
 91.16  subdivision 4 is not included when calculating the appropriation 
 91.17  limits under this paragraph. 
 91.18     <b>[EFFECTIVE DATE.]</b> Paragraph (b) is effective for aids 
 91.19  payable in calendar years 2001 to 2004.  Paragraph (c) is 
 91.20  effective for aids payable in 2002 and thereafter. 
 91.21     Sec. 20.  Minnesota Statutes 2000, section 477A.03, is 
 91.22  amended by adding a subdivision to read: 
 91.23     Subd. 6.  [ADDITIONAL MONEY FOR COUNTY CRIMINAL JUSTICE 
 91.24  AID.] For the calendar years 2001 to 2004, the limit on the 
 91.25  appropriation for aids paid under section 477A.0121, as 
 91.26  determined in subdivision 2, paragraph (b), is increased by: 
 91.27     (1) $2,494,000 in calendar year 2001; 
 91.28     (2) $4,155,000 in calendar year 2002; 
 91.29     (3) $2,481,000 in calendar year 2003; and 
 91.30     (4) $1,386,000 in calendar year 2004. 
 91.31     <b>[EFFECTIVE DATE.]</b> This section is effective for aids 
 91.32  payable in calendar years 2001 to 2004. 
 91.33     Sec. 21.  Minnesota Statutes 2000, section 480.181, 
 91.34  subdivision 1, is amended to read: 
 91.35     Subdivision 1.  [STATE EMPLOYEES; COMPENSATION.] (a) 
 91.36  District court referees, judicial officers, court reporters, law 
 92.1   clerks, district administration staff, other than district 
 92.2   administration staff in the second and fourth judicial 
 92.3   districts, guardian ad litem program coordinators and staff, and 
 92.4   other court employees under paragraph (b), are state employees 
 92.5   and are governed by the judicial branch personnel rules adopted 
 92.6   by the supreme court.  The supreme court, in consultation with 
 92.7   the conference of chief judges, shall establish the salary range 
 92.8   of these employees under the judicial branch personnel rules.  
 92.9   In establishing the salary ranges, the supreme court shall 
 92.10  consider differences in the cost of living in different areas of 
 92.11  the state. 
 92.12     (b) The court administrator and employees of the court 
 92.13  administrator who are in the fifth, seventh, eighth, or ninth 
 92.14  judicial district are state employees.  The court administrator 
 92.15  and employees of the court administrator in the remaining 
 92.16  judicial districts become state employees as follows: 
 92.17     (1) effective July 1, 2003, for the first and fourth 
 92.18  judicial districts; 
 92.19     (2) effective July 1, 2004, for the third and sixth 
 92.20  judicial districts; and 
 92.21     (3) effective July 1, 2005, for the second and tenth 
 92.22  judicial districts. 
 92.23     Sec. 22.  [480.1811] [POST-RETIREMENT BENEFIT COSTS.] 
 92.24     Where court administration, guardian ad litem, or 
 92.25  interpreter employees elect to retain county insurance benefits 
 92.26  under section 480.181 after July 1, 2001, and the county 
 92.27  provides those employees post-retirement insurance benefits 
 92.28  prior to July 1, 2001, the county shall pay the post-retirement 
 92.29  cost of those benefits. 
 92.30     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 92.31  following final enactment. 
 92.32     Sec. 23.  [480.183] [JUDICIAL DISTRICTS; SCHEDULED DATES OF 
 92.33  STATE TRANSFER; DEFINITION OF SERVICES.] 
 92.34     Subdivision 1.  [DATE OF STATE TRANSFER.] The mandated 
 92.35  court services and court administration expenditures as defined 
 92.36  in this section for the remaining judicial districts shall be 
 93.1   transferred to the state according to the following schedule: 
 93.2      (1) effective July 1, 2003, the first and fourth judicial 
 93.3   districts; 
 93.4      (2) effective July 1, 2004, the third and sixth judicial 
 93.5   districts; and 
 93.6      (3) effective July 1, 2005, the second and tenth judicial 
 93.7   districts. 
 93.8      Subd. 2.  [DEFINITION; SALARY EXPENDITURES.] "Salary 
 93.9   expenditures" means the salary of court administration 
 93.10  employees, including salaries, related fringe benefits, and 
 93.11  insurance, granted to court and other county employees in 
 93.12  collective bargaining or county pay plans. 
 93.13     Subd. 3.  [DEFINITION; COURT ADMINISTRATION 
 93.14  EXPENDITURES.] "Court administration expenditures" means the 
 93.15  total expenditures of (1) salary expenditures as defined under 
 93.16  subdivision 2 and (2) other related administrative operating 
 93.17  expenditures. 
 93.18     Subd. 4.  [DEFINITION; MANDATED COURT SERVICES.] "Mandated 
 93.19  court services" means services for: 
 93.20     (1) guardian ad litem; 
 93.21     (2) interpreter; 
 93.22     (3) Minnesota Rules, parts 9525.0900 to 9525.1020 (rule 
 93.23  20); 
 93.24     (4) civil commitment examination, not including 
 93.25  hospitalization or treatment costs, for mental commitments and 
 93.26  related proceedings under chapter 253B; and 
 93.27     (5) in forma pauperis costs. 
 93.28     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 93.29  following final enactment. 
 93.30     Sec. 24.  [484.77] [FACILITIES.] 
 93.31     The county board in each county shall provide suitable 
 93.32  facilities for court purposes at the county seat, or at other 
 93.33  locations agreed upon by the district court and the county.  The 
 93.34  county shall also be responsible for the costs of renting, 
 93.35  maintaining, operating, remodeling, insuring, and renovating 
 93.36  those facilities occupied by the court. 
 94.1      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 94.2   following final enactment. 
 94.3      Sec. 25.  Minnesota Statutes 2000, section 487.33, 
 94.4   subdivision 5, is amended to read: 
 94.5      Subd. 5.  [ALLOCATION.] The court administrator shall 
 94.6   provide the county treasurer with the name of the municipality 
 94.7   or other subdivision of government where the offense was 
 94.8   committed which employed or provided by contract the arresting 
 94.9   or apprehending officer and the name of the municipality or 
 94.10  other subdivision of government which employed the prosecuting 
 94.11  attorney or otherwise provided for prosecution of the offense 
 94.12  for each fine or penalty and the total amount of fines or 
 94.13  penalties collected for each municipality or other subdivision 
 94.14  of government.  On or before the last day of each month, the 
 94.15  county treasurer shall pay over to the treasurer of each 
 94.16  municipality or subdivision of government within the county all 
 94.17  fines or penalties for parking violations for which complaints 
 94.18  and warrants have not been issued and one-third of all fines or 
 94.19  penalties collected during the previous month for offenses 
 94.20  committed within the municipality or subdivision of government 
 94.21  from persons arrested or issued citations by officers employed 
 94.22  by the municipality or subdivision or provided by the 
 94.23  municipality or subdivision by contract.  An additional 
 94.24  one-third of all fines or penalties shall be paid to the 
 94.25  municipality or subdivision of government providing prosecution 
 94.26  of offenses of the type for which the fine or penalty is 
 94.27  collected occurring within the municipality or subdivision, 
 94.28  imposed for violations of state statute or of an ordinance, 
 94.29  charter provision, rule or regulation of a city whether or not a 
 94.30  guilty plea is entered or bail is forfeited.  Except as provided 
 94.31  in section 299D.03, subdivision 5, or as otherwise provided by 
 94.32  law, all other fines and forfeitures and all fees and statutory 
 94.33  court costs collected by the court administrator shall be paid 
 94.34  to the county treasurer of the county in which the funds were 
 94.35  collected who shall dispense them as provided by law.  In a 
 94.36  county in a judicial district under section 480.181, subdivision 
 95.1   1, paragraph (b), as added in Laws 1999, chapter 216, article 7, 
 95.2   section 26, all other fines, forfeitures, fees, and statutory 
 95.3   court costs must be paid to the state treasurer for deposit in 
 95.4   the state treasury and credited to the general fund. 
 95.5      <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2003, 
 95.6   in the first and fourth districts; July 1, 2004, in the third 
 95.7   and sixth districts; and July 1, 2005, in the second and tenth 
 95.8   districts. 
 95.9      Sec. 26.  Minnesota Statutes 2000, section 574.34, 
 95.10  subdivision 1, is amended to read: 
 95.11     Subdivision 1.  [GENERAL.] Fines and forfeitures not 
 95.12  specially granted or appropriated by law shall be paid into the 
 95.13  treasury of the county where they are incurred, except in a 
 95.14  county in a judicial district under section 480.181, subdivision 
 95.15  1, paragraph (b), as added in Laws 1999, chapter 216, article 7, 
 95.16  section 26, or section 480.181, subdivision 1, the fines and 
 95.17  forfeitures must be deposited in the state treasury and credited 
 95.18  to the general fund. 
 95.19     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2003, 
 95.20  in the first and fourth districts; July 1, 2004, in the third 
 95.21  and sixth districts; and July 1, 2005, in the second and tenth 
 95.22  districts. 
 95.23     Sec. 27.  Laws 1999, chapter 216, article 7, section 46, 
 95.24  subdivision 3, is amended to read: 
 95.25     Subd. 3.  [MISCELLANEOUS COST.] The provisions of sections 
 95.26  1, 2, and 18 to 45, relating to the state takeover of court 
 95.27  interpreter costs, guardian ad litem costs, rule 20 and mental 
 95.28  commitment examination costs, and in forma pauperis costs are 
 95.29  effective January 1, 2000, in the eighth judicial district; July 
 95.30  1, 2000, in the fifth, seventh, and ninth judicial districts; 
 95.31  and July 1, 2001, on the date court administration expenditures 
 95.32  and costs of mandated court services as defined under Minnesota 
 95.33  Statutes, section 480.183, subdivisions 4 and 5, are transferred 
 95.34  to the state under Minnesota Statutes, section 480.183, 
 95.35  subdivision 1, in the remaining judicial districts. 
 95.36     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 96.1   following final enactment. 
 96.2      Sec. 28.  [TRANSITIONAL PROVISIONS.] 
 96.3      Subdivision 1.  [TRANSFER OF PROPERTY.] The title to 
 96.4   personal property that is used by employees being transferred to 
 96.5   state employment under this article in the scope of their 
 96.6   employment is transferred to the state when they become state 
 96.7   employees.  
 96.8      Subd. 2.  [RULES.] The supreme court, in consultation with 
 96.9   the conference of chief judges, may adopt rules to implement 
 96.10  this article.  
 96.11     Subd. 3.  [BUDGETS.] Notwithstanding any law to the 
 96.12  contrary, the fiscal year budgets for the year in which the 
 96.13  state assumes the cost of court administration in the judicial 
 96.14  district for the court administrators' offices being transferred 
 96.15  to state employment under this article, including the number of 
 96.16  complement positions and salaries, must be submitted by the 
 96.17  court administrators to the supreme court.  The budgets must 
 96.18  include the current levels of funding and positions at the time 
 96.19  of submission as well as any requests for increases in funding 
 96.20  and positions. 
 96.21     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2003, 
 96.22  in the first and fourth districts; July 1, 2004, in the third 
 96.23  and sixth districts; and July 1, 2005, in the second and tenth 
 96.24  districts. 
 96.25     Sec. 29.  [APPROPRIATION.] 
 96.26     The supreme court general fund appropriation base is 
 96.27  increased by $48,040,000 in fiscal year 2004 and by an 
 96.28  additional $19,452,000 in fiscal year 2005.  In fiscal years 
 96.29  2006 and 2007 the supreme court may request additional base 
 96.30  adjustments to reflect the transfer of the remaining judicial 
 96.31  districts. 
 96.32                             ARTICLE 4 
 96.33                            LEVY LIMITS 
 96.34     Section 1.  Minnesota Statutes 2000, section 275.16, is 
 96.35  amended to read: 
 96.36     275.16 [COUNTY AUDITOR TO FIX AMOUNT OF LEVY.] 
 97.1      If any such municipality shall return to the county auditor 
 97.2   a levy greater than permitted by chapters 123A, 123B, 126C, 
 97.3   136C, and 136D and, sections 275.124 to 275.16, and 275.70 to 
 97.4   275.74, such county auditor shall extend only such amount of 
 97.5   taxes as the limitations herein prescribed will permit; 
 97.6   provided, if such levy shall include any levy for the payment of 
 97.7   bonded indebtedness or judgments, such levies for bonded 
 97.8   indebtedness or judgments shall be extended in full, and the 
 97.9   remainder of the levies shall be reduced so that the total 
 97.10  thereof, including levies for bonds and judgments, shall not 
 97.11  exceed such amount as the limitations herein prescribed will 
 97.12  permit. 
 97.13     Sec. 2.  Minnesota Statutes 2000, section 275.62, 
 97.14  subdivision 1, is amended to read: 
 97.15     Subdivision 1.  [REPORT ON TAXES LEVIED.] The commissioner 
 97.16  of revenue shall establish procedures for the annual reporting 
 97.17  of local government levies.  Each local governmental unit shall 
 97.18  submit a report to the commissioner by December 30 of the year 
 97.19  in which the tax is levied.  A local governmental unit is 
 97.20  required to file this report only for levy years in which it is 
 97.21  not subject to levy limits under sections 275.70 to 275.74.  The 
 97.22  report shall include, but is not limited to, information on the 
 97.23  amount of the tax levied by the governmental unit for the 
 97.24  following purposes: 
 97.25     (1) debt, which includes taxes levied for the purposes 
 97.26  defined in Minnesota Statutes 1991 Supplement, section 275.50, 
 97.27  subdivision 5, clauses (b), (c), (d), and (e); 
 97.28     (2) social services and related programs, which include 
 97.29  taxes levied for the purposes defined in Minnesota Statutes 1991 
 97.30  Supplement, section 275.50, subdivision 5, clauses (a), (j), and 
 97.31  (v); 
 97.32     (3) libraries, which include taxes levied for the purposes 
 97.33  defined in Minnesota Statutes 1991 Supplement, section 275.50, 
 97.34  subdivision 5, clause (n); 
 97.35     (4) for counties only, the amount of levy needed to fund 
 97.36  increased county costs associated with the welfare reform under 
 98.1   Laws 1997, chapter 85, including increased administration and 
 98.2   program costs of the income maintenance programs and also 
 98.3   related support services as they relate directly to the welfare 
 98.4   reform the amounts levied for each of the purposes listed in 
 98.5   section 275.70, subdivision 5; and 
 98.6      (5) (2) other levies, which include the taxes levied for 
 98.7   all purposes not included in clause (1), (2), (3), or (4). 
 98.8      Sec. 3.  Minnesota Statutes 2000, section 275.70, is 
 98.9   amended by adding a subdivision to read: 
 98.10     Subdivision 1.  [APPLICATION.] For the purposes of sections 
 98.11  275.70 to 275.74, the following terms have the meanings given 
 98.12  them, unless provided otherwise. 
 98.13     Sec. 4.  Minnesota Statutes 2000, section 275.70, is 
 98.14  amended by adding a subdivision to read: 
 98.15     Subd. 2.  [IMPLICIT PRICE DEFLATOR.] "Implicit price 
 98.16  deflator" means the implicit price deflator for government 
 98.17  consumption expenditures and gross investment for state and 
 98.18  local governments prepared by the bureau of economic analysis of 
 98.19  the United States Department of Commerce for the 12-month period 
 98.20  ending March 31 of the levy year. 
 98.21     Sec. 5.  Minnesota Statutes 2000, section 275.70, is 
 98.22  amended by adding a subdivision to read: 
 98.23     Subd. 3.  [LOCAL GOVERNMENTAL UNIT.] "Local governmental 
 98.24  unit" means a county, or a statutory or home rule charter city 
 98.25  with a population greater than 2,500. 
 98.26     Sec. 6.  Minnesota Statutes 2000, section 275.70, is 
 98.27  amended by adding a subdivision to read: 
 98.28     Subd. 4.  [POPULATION; NUMBER OF HOUSEHOLDS.] "Population" 
 98.29  or "number of households" means the population or number of 
 98.30  households for the local governmental unit as established by the 
 98.31  last federal census, by a census taken under section 275.14, or 
 98.32  by an estimate made by the metropolitan council or by the state 
 98.33  demographer under section 4A.02, whichever is most recent as to 
 98.34  the stated date of the count or estimate up to and including 
 98.35  June 1 of the current levy year. 
 98.36     Sec. 7.  Minnesota Statutes 2000, section 275.70, 
 99.1   subdivision 5, is amended to read: 
 99.2      Subd. 5.  [SPECIAL LEVIES.] "Special levies" means those 
 99.3   portions of ad valorem taxes levied by a local governmental unit 
 99.4   for the following purposes or in the following manner: 
 99.5      (1) to pay the costs of the principal and interest on 
 99.6   bonded indebtedness or to reimburse for the amount of liquor 
 99.7   store revenues used to pay the principal and interest due on 
 99.8   municipal liquor store bonds in the year preceding the year for 
 99.9   which the levy limit is calculated; 
 99.10     (2) to pay the costs of principal and interest on 
 99.11  certificates of indebtedness issued for any corporate purpose 
 99.12  except for the following: 
 99.13     (i) tax anticipation or aid anticipation certificates of 
 99.14  indebtedness; 
 99.15     (ii) certificates of indebtedness issued under sections 
 99.16  298.28 and 298.282; 
 99.17     (iii) certificates of indebtedness used to fund current 
 99.18  expenses or to pay the costs of extraordinary expenditures that 
 99.19  result from a public emergency; or 
 99.20     (iv) certificates of indebtedness used to fund an 
 99.21  insufficiency in tax receipts or an insufficiency in other 
 99.22  revenue sources; 
 99.23     (3) to provide for the bonded indebtedness portion of 
 99.24  payments made to another political subdivision of the state of 
 99.25  Minnesota; 
 99.26     (4) to fund payments made to the Minnesota state armory 
 99.27  building commission under section 193.145, subdivision 2, to 
 99.28  retire the principal and interest on armory construction bonds; 
 99.29     (5) for unreimbursed expenses related to flooding that 
 99.30  occurred during the first half of calendar year 1997, as allowed 
 99.31  by the commissioner of revenue under section 275.74, paragraph 
 99.32  (b); 
 99.33     (6) for local units of government located in an area 
 99.34  designated by the Federal Emergency Management Agency pursuant 
 99.35  to a major disaster declaration issued for Minnesota by 
 99.36  President Clinton after April 1, 1997, and before June 11, 1997, 
100.1   for the amount of tax dollars lost due to abatements authorized 
100.2   under section 273.123, subdivision 7, and Laws 1997, chapter 
100.3   231, article 2, section 64, to the extent that they are related 
100.4   to the major disaster and to the extent that neither the state 
100.5   or federal government reimburses the local government for the 
100.6   amount lost; 
100.7      (7) property taxes approved by voters which are levied 
100.8   against the referendum market value as provided under section 
100.9   275.61; 
100.10     (8) to fund matching requirements needed to qualify for 
100.11  federal or state grants or programs to the extent that either 
100.12  (i) the matching requirement exceeds the matching requirement in 
100.13  calendar year 1997, or (ii) it is a new matching requirement 
100.14  that didn't exist prior to 1998; 
100.15     (9) (6) to pay the expenses reasonably and necessarily 
100.16  incurred in preparing for or repairing the effects of natural 
100.17  disaster including the occurrence or threat of widespread or 
100.18  severe damage, injury, or loss of life or property resulting 
100.19  from natural causes, in accordance with standards formulated by 
100.20  the emergency services division of the state department of 
100.21  public safety, as allowed by the commissioner of revenue under 
100.22  section 275.74, paragraph (b); 
100.23     (10) for the amount of tax revenue lost due to abatements 
100.24  authorized under section 273.123, subdivision 7, for damage 
100.25  related to the tornadoes of March 29, 1998, to the extent that 
100.26  neither the state or federal government provides reimbursement 
100.27  for the amount lost; 
100.28     (11) (7) pay amounts required to correct an error in the 
100.29  levy certified to the county auditor by a city or county in a 
100.30  levy year, but only to the extent that when added to the 
100.31  preceding year's levy it is not in excess of an applicable 
100.32  statutory, special law or charter limitation, or the limitation 
100.33  imposed on the governmental subdivision by sections 275.70 to 
100.34  275.74 in the preceding levy year; 
100.35     (12) (8) to pay an abatement under section 469.1815; 
100.36     (13) to pay the employer contribution to the local 
101.1   government correctional service retirement plan under section 
101.2   353E.03, subdivision 2, to the extent that the employer 
101.3   contribution exceeds 5.49 percent of total salary; 
101.4      (14) to pay the operating or maintenance costs of a county 
101.5   jail as authorized in section 641.01 or 641.262, or of a 
101.6   correctional facility as defined in section 241.021, subdivision 
101.7   1, paragraph (5), to the extent that the county can demonstrate 
101.8   to the commissioner of revenue that the amount has been included 
101.9   in the county budget as a direct result of a rule, minimum 
101.10  requirement, minimum standard, or directive of the department of 
101.11  corrections, or to pay the operating or maintenance costs of a 
101.12  regional jail as authorized in section 641.262.  For purposes of 
101.13  this clause, a district court order is not a rule, minimum 
101.14  requirement, minimum standard, or directive of the department of 
101.15  corrections.  If the county utilizes this special levy, any 
101.16  amount levied by the county in the previous levy year for the 
101.17  purposes specified under this clause and included in the 
101.18  county's previous year's levy limitation computed under section 
101.19  275.71, shall be deducted from the levy limit base under section 
101.20  275.71, subdivision 2, when determining the county's current 
101.21  year levy limitation.  The county shall provide the necessary 
101.22  information to the commissioner of revenue for making this 
101.23  determination; 
101.24     (15) (9) to pay for operation of a lake improvement 
101.25  district, as authorized under section 103B.555.  If the county 
101.26  utilizes this special levy, any amount levied by the county in 
101.27  the previous levy year for the purposes specified under this 
101.28  clause and included in the county's previous year's levy 
101.29  limitation computed under section 275.71 shall be deducted from 
101.30  the levy limit base under section 275.71, subdivision 2, when 
101.31  determining the county's current year levy limitation.  The 
101.32  county shall provide the necessary information to the 
101.33  commissioner of revenue for making this determination; and 
101.34     (16) (10) to repay a state or federal loan used to fund the 
101.35  direct or indirect required spending by the local government due 
101.36  to a state or federal transportation project or other state or 
102.1   federal capital project.  This authority may only be used if the 
102.2   project is not a local government initiative; and 
102.3      (11) to pay for court administration and mandated court 
102.4   services costs as required under section 273.1398, subdivision 
102.5   4b; however, for taxes levied to pay for these costs in the year 
102.6   in which the court financing is transferred to the state, the 
102.7   amount under this section is limited to one-third of the aid 
102.8   reduction under section 273.1398, subdivision 4a. 
102.9      <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
102.10  taxes levied in 2001, payable in 2002. 
102.11     Sec. 8.  [275.71] [LEVY LIMITS.] 
102.12     Subdivision 1.  [LIMIT ON LEVIES.] Notwithstanding any 
102.13  other provision of law or municipal charter to the contrary 
102.14  which authorize ad valorem taxes in excess of the limits 
102.15  established by sections 275.70 to 275.74, the provisions of this 
102.16  section apply to local governmental units for all purposes other 
102.17  than those for which special levies and special assessments are 
102.18  made. 
102.19     Subd. 2.  [LEVY LIMIT BASE.] (a) The levy limit base for a 
102.20  local governmental unit for taxes levied in 2001 is equal to the 
102.21  sum of its adjusted levy limit base for taxes levied in 1999 
102.22  plus the amount it levied in 1999 under Minnesota Statutes 1999 
102.23  Supplement, section 275.70, subdivision 5, clauses (8), (13), 
102.24  and (14), multiplied by: 
102.25     (1) one plus the percentage growth in the implicit price 
102.26  deflator for the 12-month period ending March 30, 2000; and 
102.27     (2) one plus a percentage equal to the annual percentage 
102.28  increase in the estimated number of households, if any, for the 
102.29  most recent 12-month period that was available on July 1, 2000. 
102.30     For a county in a judicial district for which financing has 
102.31  not been transferred to the state by January 1, 2001, the levy 
102.32  limit base for 2001 is reduced by the amount of the county's 
102.33  2001 budget for court administration costs and mandated services 
102.34  costs, as certified under section 273.1398, subdivision 4b, 
102.35  paragraph (c). 
102.36     For a governmental unit receiving assistance in 2002 under 
103.1   section 174.24, subdivision 3b, the levy limit base for 2001 is 
103.2   reduced by an amount equal to the amount of the governmental 
103.3   unit's levied in 2000 to finance transit services.  The 
103.4   governmental unit must provide the commissioner of revenue with 
103.5   sufficient information to make this determination. 
103.6      If a governmental unit was not subject to levy limits for 
103.7   taxes levied in 1999, the commissioner of revenue shall request 
103.8   information from the local governmental unit and calculate a 
103.9   1999 adjusted levy limit base equal to the amount it levied for 
103.10  nondebt purposes in 1999, plus the amount of aids it was 
103.11  certified to receive in calendar year 1999 under sections 
103.12  273.1398, 298.28, 298.282, and 477A.011 to 477A.03, prior to any 
103.13  aid reductions under section 273.1399, subdivision 5.  
103.14     (b) The levy limit base for a local governmental unit for 
103.15  taxes levied in 2002 is equal to its adjusted levy limit base in 
103.16  the previous year, subject to any adjustments under section 
103.17  275.72. 
103.18     Subd. 3.  [ADJUSTED LEVY LIMIT BASE.] (a) For taxes levied 
103.19  in 2001 and 2002, the adjusted levy limit is equal to the levy 
103.20  limit base computed under subdivision 2 or section 275.72, 
103.21  multiplied by: 
103.22     (1) one plus a percentage equal to the percentage growth in 
103.23  the implicit price deflator; and 
103.24     (2) one plus a percentage equal to the percentage increase 
103.25  in number of households, if any, for the most recent 12-month 
103.26  period for which data is available. 
103.27     (b) For counties only, for taxes levied in 2001, the 
103.28  adjusted levy limit base is permanently reduced by an amount 
103.29  equal to the aid reduction under section 273.1398, subdivision 
103.30  4f.  For counties only, for taxes levied in 2001 and 2002, the 
103.31  adjusted levy limit base is also reduced by any amount of levy 
103.32  reduction required under section 275.07, subdivision 1, 
103.33  paragraph (b), clause (ii). 
103.34     Subd. 4.  [PROPERTY TAX LEVY LIMIT.] Notwithstanding any 
103.35  other provision of a municipal charter which limits ad valorem 
103.36  taxes to a lesser amount, or which would require a separate 
104.1   voter approval for any increase, for taxes levied in 2001 and 
104.2   2002, the property tax levy limit for a local governmental unit 
104.3   is equal to the greater of (1) its adjusted levy limit base 
104.4   determined under subdivision 3 plus any additional levy 
104.5   authorized under section 275.73, which is levied against net tax 
104.6   capacity, reduced by the sum of (i) the total amount of aids 
104.7   that the local governmental unit is certified to receive under 
104.8   sections 477A.011 to 477A.014, except for the amount under 
104.9   section 477A.011, subdivision 36, clause (o), (ii) homestead and 
104.10  agricultural aids it is certified to receive under section 
104.11  273.1398, (iii) taconite aids under sections 298.28 and 298.282 
104.12  including any aid which was required to be placed in a special 
104.13  fund for expenditure in the next succeeding year, and (iv) 
104.14  low-income housing aid under sections 477A.06 and 477A.065; or 
104.15  (2) the amount the local governmental unit levied in 2000 minus 
104.16  the amount of the levy used for the purposes listed in section 
104.17  275.70, subdivision 5, as determined by the commissioner of 
104.18  revenue under section 275.74, subdivision 3. 
104.19     Subd. 5.  [LEVIES IN EXCESS OF LEVY LIMITS.] If the levy 
104.20  made by a city or county exceeds the levy limit provided in 
104.21  sections 275.70 to 275.74, except when the excess levy is due to 
104.22  the rounding of the rate in accordance with section 275.28, the 
104.23  county auditor shall only extend the amount of taxes permitted 
104.24  under sections 275.70 to 275.74, as provided for in section 
104.25  275.16. 
104.26     Sec. 9.  [275.72] [LEVY LIMIT ADJUSTMENTS FOR CONSOLIDATION 
104.27  AND ANNEXATION.] 
104.28     Subdivision 1.  [ADJUSTMENTS FOR CONSOLIDATION.] If all of 
104.29  the area included in two or more local governmental units is 
104.30  consolidated, merged, or otherwise combined to constitute a 
104.31  single governmental unit, the levy limit base for the resulting 
104.32  governmental unit in the first levy year in which the 
104.33  consolidation is effective shall be equal to (1) the highest tax 
104.34  rate in any of the merging governmental units in the previous 
104.35  year multiplied by the net tax capacity of all the merging 
104.36  governmental units in the previous year, minus (2) the sum of 
105.1   all levies in the merging governmental units in the previous 
105.2   year that qualify as special levies under section 275.70, 
105.3   subdivision 5. 
105.4      Subd. 2.  [ADJUSTMENTS FOR ANNEXATION.] If a local 
105.5   governmental unit increases its tax base through annexation of 
105.6   an area which is not the area of an entire local governmental 
105.7   unit and the area of annexation contains a population of 50 or 
105.8   more, the levy limit base of the local governmental unit in the 
105.9   first year in which the annexation is effective shall be equal 
105.10  to its levy limit base established before the adjustment under 
105.11  section 275.71, subdivision 3, for the current levy year 
105.12  multiplied by the ratio of the net tax capacity in the local 
105.13  governmental unit after the annexation compared to its net tax 
105.14  capacity before the annexation.  
105.15     Subd. 3.  [ADJUSTMENTS FOR CHANGES IN SERVICE LEVELS.] If a 
105.16  local governmental unit, as a result of an annexation agreement 
105.17  prior to January 1, 1999, has different tax rates in various 
105.18  parts of the jurisdiction due to different service levels, it 
105.19  may petition the commissioner of revenue to adjust its levy 
105.20  limits established under section 275.71.  The commissioner shall 
105.21  adjust the levy limits to reflect scheduled changes in tax rates 
105.22  related to increasing service levels in areas currently 
105.23  receiving less city services.  The local governmental unit shall 
105.24  provide the commissioner with any information the commissioner 
105.25  deems necessary in making the levy limit adjustment. 
105.26     Subd. 4.  [TRANSFER OF GOVERNMENTAL FUNCTIONS.] If a 
105.27  function or service of one local governmental unit is 
105.28  transferred to another local governmental unit, the levy limits 
105.29  established under section 275.71 must be adjusted by the 
105.30  commissioner of revenue in such manner so as to fairly and 
105.31  equitably reflect the reduced or increased property tax burden 
105.32  resulting from the transfer.  The aggregate of the adjusted 
105.33  limitations must not exceed the aggregate of the limitations 
105.34  prior to adjustment. 
105.35     Subd. 5.  [EFFECTIVE DATE FOR LEVY LIMITS PURPOSES.] 
105.36  Annexations, mergers, and shifts in services and functional 
106.1   responsibilities that are effective by June 30 of the levy year 
106.2   are included in the calculation of the levy limit for that levy 
106.3   year.  Annexations, mergers, and shifts in services and 
106.4   functional responsibilities that are effective after June 30 of 
106.5   a levy year are not included in the calculation of the levy 
106.6   limit until the subsequent levy year. 
106.7      Sec. 10.  [275.73] [ELECTIONS FOR ADDITIONAL LEVIES.] 
106.8      Subdivision 1.  [ADDITIONAL LEVY AUTHORIZATION.] 
106.9   Notwithstanding the provisions of sections 275.70 to 275.72, but 
106.10  subject to other law or charter provisions establishing other 
106.11  limitations on the amount of property taxes a local governmental 
106.12  unit may levy, a local governmental unit may levy an additional 
106.13  levy in any amount which is approved by the majority of voters 
106.14  of the governmental unit voting on the question at a general or 
106.15  special election.  Notwithstanding section 275.61, any levy 
106.16  authorized under this section must be levied against net tax 
106.17  capacity unless the levy required voter approval under another 
106.18  general or special law or any charter provisions.  When the 
106.19  governing body of the local governmental unit resolves to 
106.20  increase the levy pursuant to this section, it shall provide for 
106.21  submission of the proposition of an additional levy at a general 
106.22  or special election.  Notice of the election must be given in 
106.23  the manner required by law.  The notice must state the purpose 
106.24  and the maximum yearly amount of the additional levy. 
106.25     Subd. 2.  [LEVY EFFECTIVE DATE.] An additional levy 
106.26  approved under subdivision 1 at a general or special election 
106.27  held prior to September 1 in any levy year may be levied in that 
106.28  same levy year and subsequent levy years.  An additional levy 
106.29  approved under subdivision 1 at a general or special election 
106.30  held after August 31 in any levy year shall not be levied in 
106.31  that same levy but may be levied in subsequent levy years. 
106.32     Sec. 11.  [275.74] [STATE REGULATION OF LEVIES.] 
106.33     Subdivision 1.  [CALCULATION AND NOTIFICATION.] The 
106.34  commissioner of revenue shall make all necessary calculations 
106.35  for determining levy limits for local governmental units and 
106.36  notify the affected governmental units of their levy limits 
107.1   directly by August 1 of each levy year.  The local governmental 
107.2   units shall, upon request, provide the commissioner with any 
107.3   information needed to make the calculations.  The local 
107.4   governmental unit shall report by August 31, in a manner 
107.5   prescribed by the commissioner, the maximum amount of taxes it 
107.6   plans to levy for each of the purposes listed under special 
107.7   levies and any additional levy authorized under section 275.73, 
107.8   along with any necessary documentation.  The commissioner shall 
107.9   review the proposed special levies and make any adjustments 
107.10  needed.  The commissioner's decision is final.  The final 
107.11  allowed special levy amounts and any levy limit adjustments must 
107.12  be certified back to the local governments by December 10.  In 
107.13  addition, the commissioner of revenue shall notify all county 
107.14  auditors on or before five working days after December 20 of the 
107.15  sum of the levy limit plus the total of allowed special levies 
107.16  for each local governmental unit located within their boundaries 
107.17  so that they may fix the levies as required in section 275.16.  
107.18  The local governmental units shall provide the commissioner of 
107.19  revenue with all information that the commissioner deems 
107.20  necessary to make the calculations provided for in sections 
107.21  275.70 to 275.73. 
107.22     Subd. 2.  [AUTHORIZATION FOR SPECIAL LEVIES.] A local 
107.23  governmental unit may request authorization to levy for 
107.24  unreimbursed costs for other natural disasters under section 
107.25  275.70, subdivision 5, clause (6).  The local governmental unit 
107.26  shall submit a request to levy under section 275.70, subdivision 
107.27  5, clause (6), to the commissioner of revenue by September 15 of 
107.28  the levy year and the request must include information 
107.29  documenting the estimated unreimbursed costs.  The commissioner 
107.30  of revenue may grant levy authority, up to the amount requested 
107.31  based on the documentation submitted.  All decisions of the 
107.32  commissioner are final. 
107.33     Subd. 3.  [AUTHORIZATION TO USE 2000 LEVY AMOUNT.] A local 
107.34  governmental unit may request authorization to levy the amount 
107.35  determined under section 275.71, subdivision 4, clause (2).  The 
107.36  local governmental unit shall submit the request to the 
108.1   commissioner by September 15 of the levy year and shall include 
108.2   the information required by the commissioner to determine the 
108.3   amount of the levy under section 275.71, subdivision 4, clause 
108.4   (2).  The commissioner may grant levy authority up to the amount 
108.5   requested based on the documentation submitted.  All decisions 
108.6   of the commissioner are final. 
108.7                              ARTICLE 5 
108.8                          REVERSE REFERENDA 
108.9                  TAXES PAYABLE 2004 AND THEREAFTER 
108.10     Section 1.  Minnesota Statutes 2000, section 275.065, 
108.11  subdivision 3, is amended to read: 
108.12     Subd. 3.  [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The 
108.13  county auditor shall prepare and the county treasurer shall 
108.14  deliver after November 10 and on or before November 24 17 each 
108.15  year, by first class mail to each taxpayer at the address listed 
108.16  on the county's current year's assessment roll, a notice of 
108.17  proposed property taxes.  
108.18     (b) The commissioner of revenue shall prescribe the form of 
108.19  the notice. 
108.20     (c) The notice must inform taxpayers that it contains the 
108.21  amount of property taxes each taxing authority proposes to 
108.22  collect for taxes payable the following year.  In the case of a 
108.23  town, or in the case of the state determined portion of the 
108.24  school district levy, the final tax amount will be its proposed 
108.25  tax.  The notice must clearly state that each taxing authority, 
108.26  including regional library districts established under section 
108.27  134.201, and including the metropolitan taxing districts as 
108.28  defined in paragraph (i), but excluding all other special taxing 
108.29  districts, cities with a population of 500 or less, and towns, 
108.30  will must hold a public meeting to receive public testimony on 
108.31  the proposed budget and proposed or final property tax levy, or, 
108.32  in case of a school district, on the current budget and proposed 
108.33  property tax levy.  It In the case of a county or a city with a 
108.34  population over 500, a public hearing is not required if the 
108.35  county's or city's proposed property tax levy has not increased 
108.36  over the levy amount certified by the county or city under 
109.1   section 275.07, subdivision 1, for the previous year.  The 
109.2   notice must clearly state the time and place of each taxing 
109.3   authority's meeting and if one is to be held.  It must also 
109.4   state an address where comments will be received by mail, 
109.5   whether or not a public hearing is held.  
109.6      (d) The notice must state for each parcel: 
109.7      (1) the market value of the property as determined under 
109.8   section 273.11, and used for computing property taxes payable in 
109.9   the following year and for taxes payable in the current year as 
109.10  each appears in the records of the county assessor on November 1 
109.11  of the current year; and, in the case of residential property, 
109.12  whether the property is classified as homestead or 
109.13  nonhomestead.  The notice must clearly inform taxpayers of the 
109.14  years to which the market values apply and that the values are 
109.15  final values; 
109.16     (2) the items listed below, shown separately by county, 
109.17  city or town, state determined school tax net of the education 
109.18  homestead credit under section 273.1382, voter approved school 
109.19  levy, other local school levy, and the sum of the special taxing 
109.20  districts, and as a total of all taxing authorities:  
109.21     (i) the actual tax for taxes payable in the current year; 
109.22     (ii) the tax change due to spending factors, defined as the 
109.23  proposed tax minus the constant spending tax amount; 
109.24     (iii) the tax change due to other factors, defined as the 
109.25  constant spending tax amount minus the actual current year tax; 
109.26  and 
109.27     (iv) the proposed tax amount. 
109.28     In the case of a town or the state determined school tax, 
109.29  the final tax shall also be its proposed tax unless the town 
109.30  changes its levy at a special town meeting under section 
109.31  365.52.  If a school district has certified under section 
109.32  126C.17, subdivision 9, that a referendum will be held in the 
109.33  school district at the November general election, the county 
109.34  auditor must note next to the school district's proposed amount 
109.35  that a referendum is pending and that, if approved by the 
109.36  voters, the tax amount may be higher than shown on the notice.  
110.1   In the case of the city of Minneapolis, the levy for the 
110.2   Minneapolis library board and the levy for Minneapolis park and 
110.3   recreation shall be listed separately from the remaining amount 
110.4   of the city's levy.  In the case of a parcel where tax increment 
110.5   or the fiscal disparities areawide tax under chapter 276A or 
110.6   473F applies, the proposed tax levy on the captured value or the 
110.7   proposed tax levy on the tax capacity subject to the areawide 
110.8   tax must each be stated separately and not included in the sum 
110.9   of the special taxing districts; and 
110.10     (3) the increase or decrease between the total taxes 
110.11  payable in the current year and the total proposed taxes, 
110.12  expressed as a percentage. 
110.13     For purposes of this section, the amount of the tax on 
110.14  homesteads qualifying under the senior citizens' property tax 
110.15  deferral program under chapter 290B is the total amount of 
110.16  property tax before subtraction of the deferred property tax 
110.17  amount. 
110.18     (e) The notice must clearly state that the proposed or 
110.19  final taxes do not include the following: 
110.20     (1) special assessments; 
110.21     (2) levies approved by the voters after the date the 
110.22  proposed taxes are certified, including bond referenda, school 
110.23  district levy referenda, and levy limit increase referenda; 
110.24     (3) amounts necessary to pay cleanup or other costs due to 
110.25  a natural disaster occurring after the date the proposed taxes 
110.26  are certified; 
110.27     (4) amounts necessary to pay tort judgments against the 
110.28  taxing authority that become final after the date the proposed 
110.29  taxes are certified; and 
110.30     (5) the contamination tax imposed on properties which 
110.31  received market value reductions for contamination. 
110.32     (f) Except as provided in subdivision 7, failure of the 
110.33  county auditor to prepare or the county treasurer to deliver the 
110.34  notice as required in this section does not invalidate the 
110.35  proposed or final tax levy or the taxes payable pursuant to the 
110.36  tax levy. 
111.1      (g) If the notice the taxpayer receives under this section 
111.2   lists the property as nonhomestead, and satisfactory 
111.3   documentation is provided to the county assessor by the 
111.4   applicable deadline, and the property qualifies for the 
111.5   homestead classification in that assessment year, the assessor 
111.6   shall reclassify the property to homestead for taxes payable in 
111.7   the following year. 
111.8      (h) In the case of class 4 residential property used as a 
111.9   residence for lease or rental periods of 30 days or more, the 
111.10  taxpayer must either: 
111.11     (1) mail or deliver a copy of the notice of proposed 
111.12  property taxes to each tenant, renter, or lessee; or 
111.13     (2) post a copy of the notice in a conspicuous place on the 
111.14  premises of the property.  
111.15     The notice must be mailed or posted by the taxpayer by 
111.16  November 27 18 or within three days of receipt of the notice, 
111.17  whichever is later.  A taxpayer may notify the county treasurer 
111.18  of the address of the taxpayer, agent, caretaker, or manager of 
111.19  the premises to which the notice must be mailed in order to 
111.20  fulfill the requirements of this paragraph. 
111.21     (i) For purposes of this subdivision, subdivisions 5a and 
111.22  6, "metropolitan special taxing districts" means the following 
111.23  taxing districts in the seven-county metropolitan area that levy 
111.24  a property tax for any of the specified purposes listed below: 
111.25     (1) metropolitan council under section 473.132, 473.167, 
111.26  473.249, 473.325, 473.446, 473.521, 473.547, or 473.834; 
111.27     (2) metropolitan airports commission under section 473.667, 
111.28  473.671, or 473.672; and 
111.29     (3) metropolitan mosquito control commission under section 
111.30  473.711. 
111.31     For purposes of this section, any levies made by the 
111.32  regional rail authorities in the county of Anoka, Carver, 
111.33  Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 
111.34  398A shall be included with the appropriate county's levy and 
111.35  shall be discussed at that county's public hearing, if held. 
111.36     (j) If a statutory or home rule charter city or a town has 
112.1   exercised the local levy option provided by section 473.388, 
112.2   subdivision 7, it may include in the notice of its proposed 
112.3   taxes the amount of its proposed taxes attributable to its 
112.4   exercise of the option.  In the first year of the city or town's 
112.5   exercise of this option, the statement shall include an estimate 
112.6   of the reduction of the metropolitan council's tax on the parcel 
112.7   due to exercise of that option.  The metropolitan council's levy 
112.8   shall be adjusted accordingly. 
112.9      <b>[EFFECTIVE DATE.]</b> This section is effective for notices 
112.10  prepared in 2003 and thereafter. 
112.11     Sec. 2.  Minnesota Statutes 2000, section 275.065, 
112.12  subdivision 5a, is amended to read: 
112.13     Subd. 5a.  [PUBLIC ADVERTISEMENT.] (a) A city that has a 
112.14  population of more than 2,500, county, a metropolitan special 
112.15  taxing district as defined in subdivision 3, paragraph (i), a 
112.16  regional library district established under section 134.201, or 
112.17  school district shall advertise in a newspaper a notice of its 
112.18  intent to adopt a budget and property tax levy or, in the case 
112.19  of a school district, to review its current budget and proposed 
112.20  property taxes payable in the following year, at a public 
112.21  hearing.  In the case of a county or city that has a population 
112.22  over 2,500, if its proposed property tax levy has not increased 
112.23  over its levy amount certified under section 275.07, subdivision 
112.24  1, for the previous year, no public hearing is required.  The 
112.25  notice must be published not less than two business days nor 
112.26  more than six business days before the hearing, if required due 
112.27  to a levy increase.  Even if a hearing is not required, counties 
112.28  and cities must continue to place an advertisement in the 
112.29  newspaper informing taxpayers of the proposed budget and levy 
112.30  amounts. 
112.31     The advertisement must be at least one-eighth page in size 
112.32  of a standard-size or a tabloid-size newspaper.  The 
112.33  advertisement must not be placed in the part of the newspaper 
112.34  where legal notices and classified advertisements appear.  The 
112.35  advertisement must be published in an official newspaper of 
112.36  general circulation in the taxing authority.  The newspaper 
113.1   selected must be one of general interest and readership in the 
113.2   community, and not one of limited subject matter.  The 
113.3   advertisement must appear in a newspaper that is published at 
113.4   least once per week.  
113.5      For purposes of this section, the metropolitan special 
113.6   taxing district's advertisement must only be published in the 
113.7   Minneapolis Star and Tribune and the Saint Paul Pioneer Press. 
113.8      (b) The advertisement for school districts, metropolitan 
113.9   special taxing districts, and regional library districts must be 
113.10  in the following form, except that the notice for a school 
113.11  district may include references to the current budget in regard 
113.12  to proposed property taxes. 
113.13                             "NOTICE OF
113.14                      PROPOSED PROPERTY TAXES
113.15                   (School District/Metropolitan
113.16                  Special Taxing District/Regional
113.17                   Library District) of .........
113.18  The governing body of ........ will soon hold budget hearings 
113.19  and vote on the property taxes for (metropolitan special taxing 
113.20  district/regional library district services that will be 
113.21  provided in (year)/school district services that will be 
113.22  provided in (year) and (year)). 
113.23                     NOTICE OF PUBLIC HEARING:
113.24  All concerned citizens are invited to attend a public hearing 
113.25  and express their opinions on the proposed (school 
113.26  district/metropolitan special taxing district/regional library 
113.27  district) budget and property taxes, or in the case of a school 
113.28  district, its current budget and proposed property taxes, 
113.29  payable in the following year.  The hearing will be held on 
113.30  (Month/Day/Year) at (Time) at (Location, Address)." 
113.31     (c)(1) If the city's or county's proposed property tax levy 
113.32  has increased over its previous year's certified levy, the 
113.33  advertisement for cities and counties must be in the following 
113.34  form. 
113.35                        "NOTICE OF PROPOSED
113.36                  TOTAL BUDGET AND PROPERTY TAXES
114.1   The (city/county) governing body or board of commissioners will 
114.2   hold a public hearing to discuss the budget and to vote on the 
114.3   amount of property taxes to collect for services the 
114.4   (city/county) will provide in (year). 
114.5      
114.6   SPENDING:  The total budget amounts below compare 
114.7   (city's/county's) (year) total actual budget with the amount the 
114.8   (city/county) proposes to spend in (year). 
114.9      
114.10  (Year) Total          Proposed (Year)          Change from
114.11  Actual Budget             Budget               (Year)-(Year)
114.12     
114.13    $.......              $.......                ...%
114.14     
114.15  TAXES:  The property tax amounts below compare that portion of 
114.16  the current budget levied in property taxes in (city/county) for 
114.17  (year) with the property taxes the (city/county) proposes to 
114.18  collect in (year). 
114.19     
114.20  (Year) Property       Proposed (Year)          Change from
114.21      Taxes              Property Taxes         (Year)-(Year)
114.22     
114.23    $.......              $.......                ...% 
114.24     
114.25                     ATTEND THE PUBLIC HEARING
114.26  All (city/county) residents are invited to attend the public 
114.27  hearing of the (city/county) to express your opinions on the 
114.28  budget and the proposed amount of (year) property taxes.  The 
114.29  hearing will be held on: 
114.30                       (Month/Day/Year/Time)
114.31                         (Location/Address)
114.32  If the discussion of the budget cannot be completed, a time and 
114.33  place for continuing the discussion will be announced at the 
114.34  hearing.  You are also invited to send your written comments to: 
114.35                           (City/County)
114.36                        (Location/Address)"
115.1      (2) If no hearing is required under this section for the 
115.2   city or county, its advertisement must be in the following 
115.3   form.  The advertisement must clearly state that because the 
115.4   proposed property tax levy amount is equal to or less than the 
115.5   taxing authority's previous year's actual property tax levy, no 
115.6   public hearing is required by law. 
115.7                        "NOTICE OF PROPOSED
115.8                  TOTAL BUDGET AND PROPERTY TAXES
115.9   Although no public hearing will be held, the (city/county) 
115.10  governing body or board of commissioners is planning to adopt 
115.11  the following budget and property tax levy. 
115.12     
115.13  SPENDING:  The total budget amounts below compare 
115.14  (city's/county's) (year) total actual budget with the amount 
115.15  (city/county) proposes to spend in (year). 
115.16     
115.17  (Year) Total          Proposed (Year)          Change from
115.18  Actual Budget             Budget               (Year)-(Year)
115.19     
115.20    $.......              $.......                ...%
115.21     
115.22  TAXES:  The property tax amounts below compare that portion of 
115.23  the current budget levied in property taxes in (city/county) for 
115.24  (year) with the property taxes (city/county) proposes to collect 
115.25  in (year). 
115.26     
115.27  (Year) Property       Proposed (Year)          Change from
115.28      Taxes              Property Taxes         (Year)-(Year)
115.29     
115.30    $.......              $.......                ...% 
115.31     Although no public hearing will be held, you are invited to 
115.32  send any written comments to: 
115.33                          (City/County)
115.34                       (Location/Address)"
115.35     (3) If the city's governing body or county board of 
115.36  commissioners decides to hold a public hearing on the proposed 
116.1   budget and levy, even though the proposed levy is equal to or 
116.2   less than the previous year's certified levy amount, the 
116.3   advertisement format in clause (2) must be used. 
116.4      (d) For purposes of this subdivision, the budget amounts 
116.5   listed on the advertisement mean: 
116.6      (1) for cities, the total government fund expenditures, as 
116.7   defined by the state auditor under section 471.6965, less any 
116.8   expenditures for improvements or services that are specially 
116.9   assessed or charged under chapter 429, 430, 435, or the 
116.10  provisions of any other law or charter; and 
116.11     (2) for counties, the total government fund expenditures, 
116.12  as defined by the state auditor under section 375.169, less any 
116.13  expenditures for direct payments to recipients or providers for 
116.14  the human service aids listed below: 
116.15     (i) Minnesota family investment program under chapters 256J 
116.16  and 256K; 
116.17     (ii) medical assistance under sections 256B.041, 
116.18  subdivision 5, and 256B.19, subdivision 1; 
116.19     (iii) general assistance medical care under section 
116.20  256D.03, subdivision 6; 
116.21     (iv) general assistance under section 256D.03, subdivision 
116.22  2; 
116.23     (v) emergency assistance under section 256J.48; 
116.24     (vi) Minnesota supplemental aid under section 256D.36, 
116.25  subdivision 1; 
116.26     (vii) preadmission screening under section 256B.0911, and 
116.27  alternative care grants under section 256B.0913; 
116.28     (viii) general assistance medical care claims processing, 
116.29  medical transportation and related costs under section 256D.03, 
116.30  subdivision 4; 
116.31     (ix) medical transportation and related costs under section 
116.32  256B.0625, subdivisions 17 to 18a; 
116.33     (x) group residential housing under section 256I.05, 
116.34  subdivision 8, transferred from programs in clauses (iv) and 
116.35  (vi); or 
116.36     (xi) any successor programs to those listed in clauses (i) 
117.1   to (x). 
117.2      (e) A city with a population of over 500 but not more than 
117.3   2,500 must advertise by posted notice as defined in section 
117.4   645.12, subdivision 1.  The advertisement must be posted at the 
117.5   time provided in paragraph (a).  It must be in the form required 
117.6   in paragraph (b). 
117.7      (f) For purposes of this subdivision, the population of a 
117.8   city is the most recent population as determined by the state 
117.9   demographer under section 4A.02. 
117.10     (g) The commissioner of revenue, subject to the approval of 
117.11  the chairs of the house and senate tax committees, shall 
117.12  prescribe the form and format of the advertisement. 
117.13     <b>[EFFECTIVE DATE.]</b> This section is effective for newspaper 
117.14  advertisements in 2003 and thereafter. 
117.15     Sec. 3.  Minnesota Statutes 2000, section 275.065, 
117.16  subdivision 6, is amended to read: 
117.17     Subd. 6.  [PUBLIC HEARING; ADOPTION OF BUDGET AND LEVY.] 
117.18  (a) For purposes of this section, the following terms shall have 
117.19  the meanings given: 
117.20     (1) "Initial hearing" means the first and primary hearing 
117.21  held to discuss the taxing authority's proposed budget and 
117.22  proposed property tax levy for taxes payable in the following 
117.23  year, or, for school districts, the current budget and the 
117.24  proposed property tax levy for taxes payable in the following 
117.25  year. 
117.26     (2) "Continuation hearing" means a hearing held to complete 
117.27  the initial hearing, if the initial hearing is not completed on 
117.28  its scheduled date. 
117.29     (3) "Subsequent hearing" means the hearing held to adopt 
117.30  the taxing authority's final property tax levy, and, in the case 
117.31  of taxing authorities other than school districts, the final 
117.32  budget, for taxes payable in the following year. 
117.33     (b) Between November 29 19 and December 20 10, the 
117.34  governing bodies of a city that has a population over 500, 
117.35  county, metropolitan special taxing districts as defined in 
117.36  subdivision 3, paragraph (i), and regional library districts 
118.1   shall each hold an initial public hearing to discuss and seek 
118.2   public comment on its final budget and property tax levy for 
118.3   taxes payable in the following year, and the governing body of 
118.4   the school district shall hold an initial public hearing to 
118.5   review its current budget and proposed property tax levy for 
118.6   taxes payable in the following year.  The metropolitan special 
118.7   taxing districts shall be required to hold only a single joint 
118.8   initial public hearing, the location of which will be determined 
118.9   by the affected metropolitan agencies. 
118.10     (c) The initial hearing must be held after 5:00 p.m. if 
118.11  scheduled on a day other than Saturday.  No initial hearing may 
118.12  be held on a Sunday.  
118.13     (d) At the initial hearing under this subdivision, the 
118.14  percentage increase in property taxes proposed by the taxing 
118.15  authority, if any, and the specific purposes for which property 
118.16  tax revenues are being increased must be discussed.  During the 
118.17  discussion, the governing body shall hear comments regarding a 
118.18  proposed increase and explain the reasons for the proposed 
118.19  increase.  The public shall be allowed to speak and to ask 
118.20  questions.  At the public hearing, the school district must also 
118.21  provide and discuss information on the distribution of its 
118.22  revenues by revenue source, and the distribution of its spending 
118.23  by program area.  
118.24     (e) If the initial hearing is not completed on its 
118.25  scheduled date, the taxing authority must announce, prior to 
118.26  adjournment of the hearing, the date, time, and place for the 
118.27  continuation of the hearing.  The continuation hearing must be 
118.28  held at least five business days but no more than 14 ten 
118.29  business days after the initial hearing.  A continuation hearing 
118.30  may not be held later than December 20 10 except as provided in 
118.31  paragraphs (f) and (g).  A continuation hearing must be held 
118.32  after 5:00 p.m. if scheduled on a day other than Saturday.  No 
118.33  continuation hearing may be held on a Sunday. 
118.34     (f) The governing body of a county shall hold its initial 
118.35  hearing on the first Thursday Tuesday in December each year, and 
118.36  may hold additional initial hearings on other dates before 
119.1   December 20 10 if necessary for the convenience of county 
119.2   residents.  If the county needs a continuation of its hearing, 
119.3   the continuation hearing shall be held on the third second 
119.4   Tuesday in December even if that second Tuesday is after 
119.5   December 10.  If the third Tuesday in December falls on December 
119.6   21, the county's continuation hearing shall be held on Monday, 
119.7   December 20.  
119.8      (g) The metropolitan special taxing districts shall hold a 
119.9   joint initial public hearing on the first Wednesday of 
119.10  December.  A continuation hearing, if necessary, shall be held 
119.11  on the second Wednesday of December even if that second 
119.12  Wednesday is after December 10. 
119.13     (h) The county auditor shall provide for the coordination 
119.14  of initial and continuation hearing dates for all school 
119.15  districts and cities within the county to prevent conflicts 
119.16  under clauses (i) and (j). 
119.17     (i) By August 10, each school board and the board of the 
119.18  regional library district shall certify to the county auditors 
119.19  of the counties in which the school district or regional library 
119.20  district is located the dates on which it elects to hold its 
119.21  initial hearing and any continuation hearing.  If a school board 
119.22  or regional library district does not certify these dates by 
119.23  August 10, the auditor will assign the initial and continuation 
119.24  hearing dates.  The dates elected or assigned must not conflict 
119.25  with the initial and continuation hearing dates of the county or 
119.26  the metropolitan special taxing districts.  
119.27     (j) By August 20, the county auditor shall notify the 
119.28  clerks of the cities within the county of the dates on which 
119.29  school districts and regional library districts have elected to 
119.30  hold their initial and continuation hearings.  At the time a 
119.31  city certifies its proposed levy under subdivision 1 it shall 
119.32  certify the dates on which it elects to hold its initial hearing 
119.33  and any continuation hearing.  Until September 15, the first and 
119.34  second Mondays of December are reserved for the use of the 
119.35  cities.  If a city does not certify its hearing dates by 
119.36  September 15, the auditor shall assign the initial and 
120.1   continuation hearing dates.  The dates elected or assigned for 
120.2   the initial hearing must not conflict with the initial hearing 
120.3   dates of the county, metropolitan special taxing districts, 
120.4   regional library districts, or school districts within which the 
120.5   city is located.  To the extent possible, the dates of the 
120.6   city's continuation hearing should not conflict with the 
120.7   continuation hearing dates of the county, metropolitan special 
120.8   taxing districts, regional library districts, or school 
120.9   districts within which the city is located.  This paragraph does 
120.10  not apply to cities of 500 population or less. 
120.11     (k) The county initial hearing date and the city, 
120.12  metropolitan special taxing district, regional library district, 
120.13  and school district initial hearing dates must be designated on 
120.14  the notices required under subdivision 3.  The continuation 
120.15  hearing dates need not be stated on the notices.  
120.16     (l) At a subsequent hearing, each county, school district, 
120.17  city over 500 population, and metropolitan special taxing 
120.18  district may amend its proposed property tax levy and must adopt 
120.19  a final property tax levy.  Each county, city over 500 
120.20  population, and metropolitan special taxing district may also 
120.21  amend its proposed budget and must adopt a final budget at the 
120.22  subsequent hearing.  The final property tax levy must be adopted 
120.23  prior to adopting the final budget.  A school district is not 
120.24  required to adopt its final budget at the subsequent hearing.  
120.25  The subsequent hearing of a taxing authority must be held on a 
120.26  date subsequent to the date of the taxing authority's initial 
120.27  public hearing.  If a continuation hearing is held, the 
120.28  subsequent hearing must be held either immediately following the 
120.29  continuation hearing or on a date subsequent to the continuation 
120.30  hearing.  The subsequent hearing may be held at a regularly 
120.31  scheduled board or council meeting or at a special meeting 
120.32  scheduled for the purposes of the subsequent hearing.  The 
120.33  subsequent hearing of a taxing authority does not have to be 
120.34  coordinated by the county auditor to prevent a conflict with an 
120.35  initial hearing, a continuation hearing, or a subsequent hearing 
120.36  of any other taxing authority.  All subsequent hearings must be 
121.1   held prior to five working days after December 20 of the levy 
121.2   year.  The date, time, and place of the subsequent hearing must 
121.3   be announced at the initial public hearing or at the 
121.4   continuation hearing. 
121.5      (m) The property tax levy certified under section 275.07 by 
121.6   a city of any population, county, metropolitan special taxing 
121.7   district, regional library district, or school district must not 
121.8   exceed the proposed levy determined under subdivision 1, except 
121.9   by an amount up to the sum of the following amounts: 
121.10     (1) the amount of a school district levy whose voters 
121.11  approved a referendum to increase taxes under section 123B.63, 
121.12  subdivision 3, or 126C.17, subdivision 9, after the proposed 
121.13  levy was certified; 
121.14     (2) the amount of a city or county levy approved by the 
121.15  voters after the proposed levy was certified; 
121.16     (3) the amount of a levy to pay principal and interest on 
121.17  bonds approved by the voters under section 475.58 after the 
121.18  proposed levy was certified; 
121.19     (4) the amount of a levy to pay costs due to a natural 
121.20  disaster occurring after the proposed levy was certified, if 
121.21  that amount is approved by the commissioner of revenue under 
121.22  subdivision 6a; 
121.23     (5) the amount of a levy to pay tort judgments against a 
121.24  taxing authority that become final after the proposed levy was 
121.25  certified, if the amount is approved by the commissioner of 
121.26  revenue under subdivision 6a; 
121.27     (6) the amount of an increase in levy limits certified to 
121.28  the taxing authority by the commissioner of children, families, 
121.29  and learning or the commissioner of revenue after the proposed 
121.30  levy was certified; and 
121.31     (7) the amount required under section 126C.55. 
121.32     (n) This subdivision does not apply to towns and, special 
121.33  taxing districts other than regional library districts and 
121.34  metropolitan special taxing districts, cities with a population 
121.35  of 500 or less, and counties or cities with a population over 
121.36  500 whose proposed property tax levy is less than or equal to 
122.1   its levy certified under section 275.07, subdivision 1, for the 
122.2   previous year. 
122.3      (o) Notwithstanding the requirements of this section, the 
122.4   employer is required to meet and negotiate over employee 
122.5   compensation as provided for in chapter 179A.  
122.6      <b>[EFFECTIVE DATE.]</b> This section is effective for hearings 
122.7   held in 2003 and thereafter. 
122.8      Sec. 4.  Minnesota Statutes 2000, section 275.065, 
122.9   subdivision 8, is amended to read: 
122.10     Subd. 8.  [HEARING.] Notwithstanding any other provision of 
122.11  law, Ramsey county, the city of St. Paul, and independent school 
122.12  district No. 625 are authorized to and shall hold their initial 
122.13  public hearing jointly.  The hearing must be held on the second 
122.14  first Tuesday of December each year.  The advertisement required 
122.15  in subdivision 5a may be a joint advertisement.  The hearing is 
122.16  otherwise subject to the requirements of this section. 
122.17     Ramsey county is authorized to hold an additional initial 
122.18  hearing or hearings as provided under this section, provided 
122.19  that any additional hearings must not conflict with the initial 
122.20  or continuation hearing dates of the other taxing districts.  
122.21  However, if Ramsey county elects not to hold such additional 
122.22  initial hearing or hearings, the joint initial hearing required 
122.23  by this subdivision must be held in a St. Paul location 
122.24  convenient to residents of Ramsey county. 
122.25     <b>[EFFECTIVE DATE.]</b> This section is effective for hearings 
122.26  held in 2003 and thereafter. 
122.27     Sec. 5.  Minnesota Statutes 2000, section 275.065, is 
122.28  amended by adding a subdivision to read: 
122.29     Subd. 9.  [REVERSE REFERENDUM.] The reverse referendum 
122.30  procedure in this subdivision applies only in the case of a 
122.31  county, or a city that has a population of more than 2,500, that 
122.32  has adopted a property tax levy increase over the levy amount 
122.33  certified under section 275.07, subdivision 1, for the previous 
122.34  year.  The levy subject to the provisions of this subdivision 
122.35  does not include the levy under section 475.61 or another 
122.36  similar provision providing a levy for general obligation bonds. 
123.1      If, within 21 days after the public hearing and adoption of 
123.2   a levy under subdivision 6, a petition signed by voters equal in 
123.3   number to five percent of the votes cast in the county or city 
123.4   in the last general election requesting a referendum on the levy 
123.5   increase is filed with the county auditor or the city clerk, the 
123.6   levy increase shall not be effective until it has been submitted 
123.7   to the voters at a special election to be held on the fourth 
123.8   Tuesday in January, and a majority of votes cast on the question 
123.9   of approving the levy increase are in the affirmative.  The 
123.10  commissioner of revenue shall prepare the form of the question 
123.11  to be presented at the referendum, which shall reference only 
123.12  the amount of the property tax levy increase over the previous 
123.13  year. 
123.14     The county or city shall notify the county auditor of the 
123.15  results of the referendum.  If the majority of the votes cast on 
123.16  the question are in the affirmative, the levy adopted under 
123.17  subdivision 6 shall be certified to the county auditor under 
123.18  section 275.07, subdivision 1.  If the majority of the votes 
123.19  cast on the question are in the negative, an amount equal to the 
123.20  preceding year's levy shall be certified to the county auditor 
123.21  for purposes of section 275.07, subdivision 1. 
123.22     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
123.23  levied in 2003 and thereafter, for taxes payable in 2004 and 
123.24  thereafter. 
123.25     Sec. 6.  Minnesota Statutes 2000, section 275.07, 
123.26  subdivision 1, is amended to read: 
123.27     Subdivision 1.  [CERTIFICATION OF LEVY.] Except as 
123.28  otherwise provided in this subdivision, the taxes voted by 
123.29  cities, counties, school districts, and special districts shall 
123.30  be certified by the proper authorities to the county auditor on 
123.31  or before five working days after December 20 in each year.  A 
123.32  county or city to which the reverse referendum provisions under 
123.33  section 275.065, subdivision 9, apply shall certify the taxes to 
123.34  the county auditor by January 5, except that any county or city 
123.35  for which a petition has been filed under section 275.065, 
123.36  subdivision 9, must certify the day immediately following the 
124.1   election under that section.  A town must certify the levy 
124.2   adopted by the town board to the county auditor by September 15 
124.3   each year.  If the town board modifies the levy at a special 
124.4   town meeting after September 15, the town board must recertify 
124.5   its levy to the county auditor on or before five working days 
124.6   after December 20.  The taxes certified shall not be reduced by 
124.7   the county auditor by the aid received under section 273.1398, 
124.8   subdivision 2, but shall be reduced by the county auditor by the 
124.9   aid received under section 273.1398, subdivision 3.  If a city, 
124.10  town, county, school district, or special district fails to 
124.11  certify its levy by that date, its levy shall be the amount 
124.12  levied by it for the preceding year. 
124.13     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
124.14  levied in 2003 and thereafter, for taxes payable in 2004 and 
124.15  thereafter. 
124.16                             ARTICLE 6 
124.17                         HEALTH CARE TAXES 
124.18     Section 1.  [16A.78] [HEALTH CARE ACCESS FUND RESERVE.] 
124.19     Subdivision 1.  [ESTABLISH RESERVE.] A reserve is 
124.20  established within the health care access fund for uses 
124.21  necessary to preserve access to basic health care services. 
124.22     Subd. 2.  [RESERVE FINANCING.] The funds in the reserve are 
124.23  equal to 15 percent of the expenditures for the MinnesotaCare 
124.24  program in the immediately prior fiscal year. 
124.25     Subd. 3.  [RESERVE USE.] The reserve is established to 
124.26  protect access to basic health care services that are publicly 
124.27  funded. 
124.28     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2001. 
124.29     Sec. 2.  Minnesota Statutes 2000, section 62J.041, 
124.30  subdivision 1, is amended to read: 
124.31     Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
124.32  section, the following definitions apply. 
124.33     (b) "Health plan company" has the definition provided in 
124.34  section 62Q.01. 
124.35     (c) "Total expenditures" means incurred claims or 
124.36  expenditures on health care services, administrative expenses, 
125.1   charitable contributions, and all other payments made by health 
125.2   plan companies out of premium revenues. 
125.3      (d) "Net expenditures" means total expenditures minus 
125.4   exempted taxes and assessments and payments or allocations made 
125.5   to establish or maintain reserves.  
125.6      (e) "Exempted taxes and assessments" means direct payments 
125.7   for taxes to government agencies, contributions to the Minnesota 
125.8   comprehensive health association, the medical assistance 
125.9   provider's surcharge under section 256.9657, the MinnesotaCare 
125.10  provider tax under Minnesota Statutes 2000, section 295.52, 
125.11  assessments by the health coverage reinsurance association, 
125.12  assessments by the Minnesota life and health insurance guaranty 
125.13  association, assessments by the Minnesota risk adjustment 
125.14  association, and any new assessments imposed by federal or state 
125.15  law. 
125.16     (f) "Consumer cost-sharing or subscriber liability" means 
125.17  enrollee coinsurance, copayment, deductible payments, and 
125.18  amounts in excess of benefit plan maximums. 
125.19     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2002.
125.20     Sec. 3.  Minnesota Statutes 2000, section 62Q.095, 
125.21  subdivision 6, is amended to read: 
125.22     Subd. 6.  [EXEMPTION.] A health plan company, to the extent 
125.23  that it operates as a staff model health plan company as defined 
125.24  in section 295.50, subdivision 12b, by employing allied 
125.25  independent health care providers to deliver health care 
125.26  services to enrollees, is exempt from this section.  For 
125.27  purposes of this subdivision, "staff model health plan company" 
125.28  means a health plan company as defined in section 62Q.01, 
125.29  subdivision 4, that employs one or more types of health care 
125.30  provider to deliver health care services to the health plan 
125.31  company's enrollees. 
125.32     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2002.
125.33     Sec. 4.  [62Q.671] [PASS-THROUGH OF SAVINGS TO CONSUMERS.] 
125.34     Subdivision 1.  [REDUCED PREMIUMS.] All health plan 
125.35  companies must pass on to consumers, in the form of reduced 
125.36  premium rates, all savings resulting from: 
126.1      (1) the repeal of the MinnesotaCare provider taxes imposed 
126.2   under Minnesota Statutes 2000, section 295.52, and the resulting 
126.3   reduction in the transfer of additional expenses generated by 
126.4   Minnesota Statutes 2000, section 295.52, obligations to 
126.5   third-party contracts under Minnesota Statutes 2000, section 
126.6   295.582; and 
126.7      (2) the repeal of the one percent premium tax for health 
126.8   maintenance organizations, nonprofit health service plan 
126.9   corporations, and community integrated service networks imposed 
126.10  under Minnesota Statutes 2000, section 297I.05, subdivision 5. 
126.11     Subd. 2.  [DOCUMENTING COMPLIANCE.] Each health plan 
126.12  company must include with its annual renewal for certification 
126.13  of authority or licensure documentation indicating compliance 
126.14  with subdivision 1. 
126.15     Subd. 3.  [ENFORCEMENT.] If the appropriate commissioner 
126.16  finds that a health plan company has not complied with 
126.17  subdivision 1, the commissioner may take enforcement action 
126.18  against that health plan company.  The commissioner may, by 
126.19  order, fine, or censure the health plan company or revoke or 
126.20  suspend the certificate of authority or license of the health 
126.21  plan company to do business in this state if the commissioner 
126.22  finds that the health plan company has not complied with this 
126.23  section.  The health plan company may appeal the commissioner's 
126.24  order through a contested case hearing in accordance with 
126.25  chapter 14. 
126.26     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 
126.27  2002, and applies to premium rates for health plans issued or 
126.28  renewed after that date. 
126.29     Sec. 5.  Minnesota Statutes 2000, section 214.16, 
126.30  subdivision 2, is amended to read: 
126.31     Subd. 2.  [BOARD COOPERATION REQUIRED.] The board shall 
126.32  assist the commissioner of health in data collection activities 
126.33  required under Laws 1992, chapter 549, article 7, and shall 
126.34  assist the commissioner of revenue in activities related to 
126.35  collection of the health care provider tax required under Laws 
126.36  1992, chapter 549, article 9.  Upon the request of the 
127.1   commissioner or the commissioner of revenue, the board shall 
127.2   make available names and addresses of current licensees and 
127.3   provide other information or assistance as needed. 
127.4      <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2002.
127.5      Sec. 6.  Minnesota Statutes 2000, section 214.16, 
127.6   subdivision 3, is amended to read: 
127.7      Subd. 3.  [GROUNDS FOR DISCIPLINARY ACTION.] The board 
127.8   shall take disciplinary action, which may include license 
127.9   revocation, against a regulated person for: 
127.10     (1) intentional failure to provide the commissioner of 
127.11  health with the data required under chapter 62J; and 
127.12     (2) intentional failure to provide the commissioner of 
127.13  revenue with data on gross revenue and other information 
127.14  required for the commissioner to implement sections 295.50 to 
127.15  295.58; 
127.16     (3) intentional failure to pay the health care provider tax 
127.17  required under section 295.52; and 
127.18     (4) entering into a contract or arrangement that is 
127.19  prohibited under sections 62J.70 to 62J.73. 
127.20     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2002.
127.21     Sec. 7.  [256L.021] [USE OF TOBACCO SETTLEMENT PROCEEDS.] 
127.22     (a) The commissioner of finance shall deposit the following 
127.23  amounts of the annual payments due under the terms of the 
127.24  tobacco settlement on December 31 of each year into the health 
127.25  care access fund established under section 16A.724: 
127.26     (1) the first $123,500,000 of the payment due December 31, 
127.27  2001; 
127.28     (2) the first $136,500,000 of the payment due December 31, 
127.29  2003; and 
127.30     (3) all payments due after January 1, 2004. 
127.31     (b) The commissioner of finance shall credit to the health 
127.32  care access fund the one-time tobacco settlement payment due on 
127.33  January 2, 2002. 
127.34     (c) For purposes of this section, "tobacco settlement" 
127.35  means the consent judgment entered in the case of State v. 
127.36  Philip Morris Inc., No. C1-94-8565 (Minnesota District Court, 
128.1   Second Judicial District). 
128.2      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
128.3   following final enactment. 
128.4      Sec. 8.  Minnesota Statutes 2000, section 270B.01, 
128.5   subdivision 8, is amended to read: 
128.6      Subd. 8.  [MINNESOTA TAX LAWS.] For purposes of this 
128.7   chapter only, unless expressly stated otherwise, "Minnesota tax 
128.8   laws" means the taxes, refunds, and fees administered by or paid 
128.9   to the commissioner under chapters 115B (except taxes imposed 
128.10  under sections 115B.21 to 115B.24), 289A (except taxes imposed 
128.11  under sections 298.01, 298.015, and 298.24), 290, 290A, 291, 
128.12  297A, and 297H and sections 295.50 to 295.59, or any similar 
128.13  Indian tribal tax administered by the commissioner pursuant to 
128.14  any tax agreement between the state and the Indian tribal 
128.15  government, and includes any laws for the assessment, 
128.16  collection, and enforcement of those taxes, refunds, and fees. 
128.17     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2002.
128.18     Sec. 9.  Minnesota Statutes 2000, section 270B.14, 
128.19  subdivision 1, is amended to read: 
128.20     Subdivision 1.  [DISCLOSURE TO COMMISSIONER OF HUMAN 
128.21  SERVICES.] (a) On the request of the commissioner of human 
128.22  services, the commissioner shall disclose return information 
128.23  regarding taxes imposed by chapter 290, and claims for refunds 
128.24  under chapter 290A, to the extent provided in paragraph (b) and 
128.25  for the purposes set forth in paragraph (c). 
128.26     (b) Data that may be disclosed are limited to data relating 
128.27  to the identity, whereabouts, employment, income, and property 
128.28  of a person owing or alleged to be owing an obligation of child 
128.29  support. 
128.30     (c) The commissioner of human services may request data 
128.31  only for the purposes of carrying out the child support 
128.32  enforcement program and to assist in the location of parents who 
128.33  have, or appear to have, deserted their children.  Data received 
128.34  may be used only as set forth in section 256.978. 
128.35     (d) The commissioner shall provide the records and 
128.36  information necessary to administer the supplemental housing 
129.1   allowance to the commissioner of human services.  
129.2      (e) At the request of the commissioner of human services, 
129.3   the commissioner of revenue shall electronically match the 
129.4   social security numbers and names of participants in the 
129.5   telephone assistance plan operated under sections 237.69 to 
129.6   237.711, with those of property tax refund filers, and determine 
129.7   whether each participant's household income is within the 
129.8   eligibility standards for the telephone assistance plan. 
129.9      (f) The commissioner may provide records and information 
129.10  collected under Minnesota Statutes 2000, sections 295.50 to 
129.11  295.59 to the commissioner of human services for purposes of the 
129.12  Medicaid Voluntary Contribution and Provider-Specific Tax 
129.13  Amendments of 1991, Public Law Number 102-234.  Upon the written 
129.14  agreement by the United States Department of Health and Human 
129.15  Services to maintain the confidentiality of the data, the 
129.16  commissioner may provide records and information collected under 
129.17  Minnesota Statutes 2000, sections 295.50 to 295.59 to the Health 
129.18  Care Financing Administration section of the United States 
129.19  Department of Health and Human Services for purposes of meeting 
129.20  federal reporting requirements.  
129.21     (g) The commissioner may provide records and information to 
129.22  the commissioner of human services as necessary to administer 
129.23  the early refund of refundable tax credits. 
129.24     (h) The commissioner may disclose information to the 
129.25  commissioner of human services necessary to verify income for 
129.26  eligibility and premium payment under the MinnesotaCare program, 
129.27  under section 256L.05, subdivision 2. 
129.28     (i) The commissioner may disclose information to the 
129.29  commissioner of human services necessary to verify whether 
129.30  applicants or recipients for the Minnesota family investment 
129.31  program, general assistance, food stamps, and Minnesota 
129.32  supplemental aid program have claimed refundable tax credits 
129.33  under chapter 290 and the property tax refund under chapter 
129.34  290A, and the amounts of the credits. 
129.35     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2002.
129.36     Sec. 10.  Minnesota Statutes 2000, section 297F.10, 
130.1   subdivision 1, is amended to read: 
130.2      Subdivision 1.  [TAX AND USE TAX ON CIGARETTES.] Revenue 
130.3   received from cigarette taxes, as well as related penalties, 
130.4   interest, license fees, and miscellaneous sources of revenue 
130.5   shall be deposited by the commissioner in the state treasury and 
130.6   credited as follows: 
130.7      (a) first to the general obligation special tax bond debt 
130.8   service account in each fiscal year the amount required to 
130.9   increase the balance on hand in the account on each December 1 
130.10  to an amount equal to the full amount of principal and interest 
130.11  to come due on all outstanding bonds whose debt service is 
130.12  payable primarily from the proceeds of the tax to and including 
130.13  the second following July 1; and 
130.14     (b) after the requirements of paragraph (a) have been met: 
130.15     (1) the revenue produced by one mill of the tax on 
130.16  cigarettes weighing not more than three pounds a thousand and 
130.17  two mills of the tax on cigarettes weighing more than three 
130.18  pounds a thousand must be credited to the Minnesota future 
130.19  resources fund; and 
130.20     (2) the amount of revenue specified under paragraph (c) 
130.21  must be credited to the health care access fund; and 
130.22     (3) the balance of the revenues derived from taxes, 
130.23  penalties, and interest (under this chapter) and from license 
130.24  fees and miscellaneous sources of revenue shall be credited to 
130.25  the general fund. 
130.26     (c) For fiscal year 2005, $105,000,000 of the revenue under 
130.27  paragraph (b) must be credited to the health care access fund.  
130.28  For each fiscal year after 2005, the amount credited to the 
130.29  health care access fund equals: 
130.30     (1) the amount certified to be paid in the previous year, 
130.31  plus 
130.32     (2) the percentage increase in the medical care of personal 
130.33  consumption expenditures, published by the Bureau of Economic 
130.34  Affairs of the United States Department of Commerce, for the 
130.35  most recent 12-month period available May 31 of the previous 
130.36  fiscal year multiplied by the sum of the amount under clause (1) 
131.1   and the amount of the ongoing tobacco settlement payments 
131.2   deposited in the health care access fund under section 256L.021, 
131.3   paragraph (a), clause (3), for the previous fiscal year. 
131.4      <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
131.5   fiscal year 2004. 
131.6      Sec. 11.  Minnesota Statutes 2000, section 297I.15, is 
131.7   amended by adding a subdivision to read: 
131.8      Subd. 11.  [HEALTH PLAN PREMIUMS.] Premiums received for 
131.9   health plans as defined in section 62A.011, subdivision 3, and 
131.10  premiums received for coverage described in section 62A.011, 
131.11  subdivision 3, clauses (6), (7), (9), (10), and (12), are exempt 
131.12  from the taxes imposed under this chapter. 
131.13     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 
131.14  2002, and applies to tax years beginning on or after that date. 
131.15     Sec. 12.  [REPEALER.] 
131.16     Subdivision 1.  [MINNESOTACARE PROVIDER TAX.] Minnesota 
131.17  Statutes 2000, sections 295.50; 295.51; 295.52; 295.53; 295.54; 
131.18  295.55; 295.56; 295.57; 295.58; 295.582; and 295.59, are 
131.19  repealed. 
131.20     Subd. 2.  [FEDERAL RESERVE; FINANCIAL MANAGEMENT.] 
131.21  Minnesota Statutes 2000, sections 16A.76; and 256L.02, 
131.22  subdivision 3, are repealed. 
131.23     Subd. 3.  [NONPROFIT HEALTH PLAN COMPANY PREMIUM 
131.24  TAX.] Minnesota Statutes 2000, section 297I.05, subdivision 5, 
131.25  is repealed. 
131.26     Subd. 4.  [CONFORMING PROVISIONS.] Minnesota Statutes 2000, 
131.27  sections 13.4967, subdivision 3; 62T.10; and 144.1484, 
131.28  subdivision 2, are repealed. 
131.29     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 
131.30  2002, and applies to tax years beginning on or after that date. 
131.31                             ARTICLE 7 
131.32                     INCOME AND FRANCHISE TAXES
131.33     Section 1.  [116J.885] [BIOMEDICAL INNOVATION AND 
131.34  COMMERCIALIZATION INITIATIVE.] 
131.35     Subdivision 1.  [ESTABLISHED.] The commissioner shall 
131.36  establish the biomedical innovation and commercialization 
132.1   initiative (BICI) as a collaborative economic development 
132.2   initiative between the University of Minnesota, Minnesota's 
132.3   medical technology industry, and investors.  BICI is not a state 
132.4   agency.  
132.5      The board established in subdivision 2 shall organize and 
132.6   operate BICI as a for-profit entity and in a manner and form 
132.7   that the board determines best allows BICI to carry out its 
132.8   objectives.  Total cash investment may not exceed $40,000,000.  
132.9   Any distribution from BICI must be returned to all investors, 
132.10  including the state, in the same proportion as funds were 
132.11  invested.  The amount of credits granted is the amount of the 
132.12  state cash investment and is a reduction in the investor's cash 
132.13  investment for participation in any distribution under this 
132.14  subdivision. 
132.15     Subd. 2.  [BOARD.] BICI is governed by a board of 
132.16  directors, appointed to six-year terms, comprised of: 
132.17     (1) a representative chosen by the governor; 
132.18     (2) a representative chosen by the University of Minnesota; 
132.19  and 
132.20     (3) five representatives from the state's medical 
132.21  technology industry, chosen by private sector investors. 
132.22     The board may use up to five percent of its total 
132.23  capitalization to establish a management and administrative 
132.24  budget, including the hiring of staff and for professional 
132.25  management expenses.  Members of the staff are not state 
132.26  employees. 
132.27     Subd. 3.  [DUTIES OF BICI.] BICI shall: 
132.28     (1) add business and financial expertise to technologies 
132.29  that are being developed by University of Minnesota faculty and 
132.30  staff to enhance commercial value; 
132.31     (2) promote the depth, breadth, and value of technologies 
132.32  being developed by the biomedical academic community; 
132.33     (3) catalyze the development of functional, mutually 
132.34  advantageous relationships between industry, faculty, staff, the 
132.35  university, and extended research community; 
132.36     (4) provide a financial return on commercialization efforts 
133.1   to the stakeholders in BICI; 
133.2      (5) directly commercialize technologies through the startup 
133.3   of new Minnesota companies or enhance the marketing of 
133.4   technologies to existing companies creating expanded economic 
133.5   development opportunities in Minnesota; and 
133.6      (6) adopt corporate bylaws and make them available to the 
133.7   public. 
133.8      Subd. 4.  [STATEWIDE FOCUS.] BICI may contract and 
133.9   collaborate with higher education and other research 
133.10  institutions located throughout the state. 
133.11     Subd. 5.  [POWERS OF BOARD.] The board has the power to do 
133.12  all things reasonable and necessary to carry out the duties of 
133.13  BICI including, without limitation, the power to: 
133.14     (1) enter into contracts; 
133.15     (2) sue and be sued; 
133.16     (3) acquire, hold, lease, and transfer any interest in real 
133.17  and personal property; 
133.18     (4) accept appropriations, gifts, grants, and bequests; 
133.19     (5) hire employees for BICI; and 
133.20     (6) delegate any of its powers. 
133.21     Subd. 6.  [BOARD COMPENSATION.] Compensation and expense 
133.22  reimbursement of board members is as provided in section 
133.23  15.0575, subdivision 1. 
133.24     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
133.25  following final enactment. 
133.26     Sec. 2.  Minnesota Statutes 2000, section 270A.03, 
133.27  subdivision 5, is amended to read: 
133.28     Subd. 5.  [DEBT.] (a) "Debt" means a legal obligation of a 
133.29  natural person to pay a fixed and certain amount of money, which 
133.30  equals or exceeds $25 and which is due and payable to a claimant 
133.31  agency.  The term includes criminal fines imposed under section 
133.32  609.10 or 609.125 and restitution.  A debt may arise under a 
133.33  contractual or statutory obligation, a court order, or other 
133.34  legal obligation, but need not have been reduced to judgment.  
133.35     (b) A debt includes any legal obligation of a current 
133.36  recipient of assistance which is based on overpayment of an 
134.1   assistance grant where that payment is based on a client waiver 
134.2   or an administrative or judicial finding of an intentional 
134.3   program violation; or where the debt is owed to a program 
134.4   wherein the debtor is not a client at the time notification is 
134.5   provided to initiate recovery under this chapter and the debtor 
134.6   is not a current recipient of food stamps, transitional child 
134.7   care, or transitional medical assistance. 
134.8      (c) A debt does not include any legal obligation to pay a 
134.9   claimant agency for medical care, including hospitalization if 
134.10  the income of the debtor at the time when the medical care was 
134.11  rendered does not exceed the following amount: 
134.12     (1) for an unmarried debtor, an income of $6,400 $8,800 or 
134.13  less; 
134.14     (2) for a debtor with one dependent, an income 
134.15  of $8,200 $11,270 or less; 
134.16     (3) for a debtor with two dependents, an income 
134.17  of $9,700 $13,330 or less; 
134.18     (4) for a debtor with three dependents, an income of 
134.19  $11,000 $15,120 or less; 
134.20     (5) for a debtor with four dependents, an income 
134.21  of $11,600 $15,950 or less; and 
134.22     (6) for a debtor with five or more dependents, an income of 
134.23  $12,100 $16,630 or less.  
134.24     The income amounts in this subdivision shall be adjusted 
134.25  for inflation for debts incurred in calendar years 1991 2001 and 
134.26  thereafter.  The dollar amount of each income level that applied 
134.27  to debts incurred in the prior year shall be increased in the 
134.28  same manner as provided in section 290.06, subdivision 2d, for 
134.29  the expansion of the tax rate brackets 1f of the Internal 
134.30  Revenue Code of 1986, as amended through December 31, 2000, 
134.31  except that for the purposes of this subdivision the percentage 
134.32  increase shall be determined from the year starting September 1, 
134.33  1999, and ending August 31, 2000, as the base year for adjusting 
134.34  for inflation for debts incurred after December 31, 2000. 
134.35     (d) Debt also includes an agreement to pay a MinnesotaCare 
134.36  premium, regardless of the dollar amount of the premium 
135.1   authorized under section 256L.15, subdivision 1a. 
135.2      <b>[EFFECTIVE DATE.]</b> This section is effective for debts 
135.3   incurred after December 31, 2000. 
135.4      Sec. 3.  Minnesota Statutes 2000, section 289A.12, 
135.5   subdivision 3, is amended to read: 
135.6      Subd. 3.  [RETURNS OR REPORTS BY PARTNERSHIPS, FIDUCIARIES, 
135.7   AND S CORPORATIONS.] (a) Partnerships must file a return with 
135.8   the commissioner for each taxable year.  The return must conform 
135.9   to the requirements of section 290.31 290.311, and must include 
135.10  the names and addresses of the partners entitled to a 
135.11  distributive share in their taxable net income, gain, loss, or 
135.12  credit, and the amount of the distributive share to which each 
135.13  is entitled.  A partnership required to file a return for a 
135.14  partnership taxable year must furnish a copy of the information 
135.15  required to be shown on the return to a person who is a partner 
135.16  at any time during the taxable year, on or before the day on 
135.17  which the return for the taxable year was filed. 
135.18     (b) The fiduciary of an estate or trust making the return 
135.19  required to be filed under section 289A.08, subdivision 2, for a 
135.20  taxable year must give a beneficiary who receives a distribution 
135.21  from the estate or trust with respect to the taxable year or to 
135.22  whom any item with respect to the taxable year is allocated, a 
135.23  statement containing the information required to be shown on the 
135.24  return, on or before the date on which the return was filed. 
135.25     (c) An S corporation must file a return with the 
135.26  commissioner for a taxable year during which an election under 
135.27  section 290.9725 is in effect, stating specifically the names 
135.28  and addresses of the persons owning stock in the corporation at 
135.29  any time during the taxable year, the number of shares of stock 
135.30  owned by a shareholder at all times during the taxable year, the 
135.31  shareholder's pro rata share of each item of the corporation for 
135.32  the taxable year, and other information the commissioner 
135.33  requires.  An S corporation required to file a return under this 
135.34  paragraph for any taxable year must furnish a copy of the 
135.35  information shown on the return to the person who is a 
135.36  shareholder at any time during the taxable year, on or before 
136.1   the day on which the return for the taxable year was filed. 
136.2      (d) The partnership or S corporation return must be signed 
136.3   by someone designated by the partnership or S corporation. 
136.4      <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
136.5   years beginning after December 31, 2000. 
136.6      Sec. 4.  Minnesota Statutes 2000, section 290.01, is 
136.7   amended by adding a subdivision to read: 
136.8      Subd. 5b.  [INSURANCE COMPANY.] The terms "insurance 
136.9   company," "life insurance company," and "insurance company other 
136.10  than life," have the meanings given in the Internal Revenue Code.
136.11     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
136.12  beginning after December 31, 2000. 
136.13     Sec. 5.  Minnesota Statutes 2000, section 290.01, 
136.14  subdivision 6b, is amended to read: 
136.15     Subd. 6b.  [FOREIGN OPERATING CORPORATION.] The term 
136.16  "foreign operating corporation," when applied to a corporation, 
136.17  means a domestic corporation with the following characteristics: 
136.18     (1) it is part of a unitary business at least one member of 
136.19  which is taxable in this state; 
136.20     (2) it is not a foreign sales corporation under section 922 
136.21  of the Internal Revenue Code, as amended through December 31, 
136.22  1999, for the taxable year; and 
136.23     (2) (3) either (i) the average of the percentages of its 
136.24  property and payrolls assigned to locations inside the United 
136.25  States and the District of Columbia, excluding the commonwealth 
136.26  of Puerto Rico and possessions of the United States, as 
136.27  determined under section 290.191 or 290.20, is 20 percent or 
136.28  less; or (ii) it has in effect a valid election under section 
136.29  936 of the Internal Revenue Code. 
136.30     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
136.31  years beginning after December 31, 2001. 
136.32     Sec. 6.  Minnesota Statutes 2000, section 290.01, 
136.33  subdivision 7, is amended to read: 
136.34     Subd. 7.  [RESIDENT.] The term "resident" means (1) any 
136.35  individual domiciled in Minnesota, except that an individual is 
136.36  not a "resident" for the period of time that the individual is a 
137.1   "qualified individual" as defined in section 911(d)(1) of the 
137.2   Internal Revenue Code, if the qualified individual notifies the 
137.3   county within three months of moving out of the country that 
137.4   homestead status be revoked for the Minnesota residence of the 
137.5   qualified individual, and the property is not classified as a 
137.6   homestead while the individual remains a qualified individual; 
137.7   and (2) any individual domiciled outside the state who maintains 
137.8   a place of abode in the state and spends in the aggregate more 
137.9   than one-half of the tax year in Minnesota, unless the 
137.10  individual or the spouse of the individual is in the armed 
137.11  forces of the United States, or the individual is covered under 
137.12  the reciprocity provisions in section 290.081. 
137.13     For purposes of this subdivision, presence within the state 
137.14  for any part of a calendar day constitutes a day spent in the 
137.15  state.  Individuals shall keep adequate records to substantiate 
137.16  the days spent outside the state. 
137.17     The term "abode" means a dwelling maintained by an 
137.18  individual, whether or not owned by the individual and whether 
137.19  or not occupied by the individual, and includes a dwelling place 
137.20  owned or leased by the individual's spouse. 
137.21     In determining if the individual is domiciled in Minnesota, 
137.22  neither the commissioner nor any court shall may consider: 
137.23     (1) charitable contributions made by an the individual 
137.24  within or without the state in determining if the individual is 
137.25  domiciled in Minnesota; or 
137.26     (2) the location of a bank, other financial institution, 
137.27  broker-dealer, as defined in section 80A.14, subdivision 4, or 
137.28  investment adviser, as defined in section 80A.14, subdivision 9, 
137.29  with which the individual has an account, loan, or other 
137.30  contractual relationship. 
137.31     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
137.32  following final enactment. 
137.33     Sec. 7.  Minnesota Statutes 2000, section 290.01, 
137.34  subdivision 19b, is amended to read: 
137.35     Subd. 19b.  [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 
137.36  individuals, estates, and trusts, there shall be subtracted from 
138.1   federal taxable income: 
138.2      (1) interest income on obligations of any authority, 
138.3   commission, or instrumentality of the United States to the 
138.4   extent includable in taxable income for federal income tax 
138.5   purposes but exempt from state income tax under the laws of the 
138.6   United States; 
138.7      (2) if included in federal taxable income, the amount of 
138.8   any overpayment of income tax to Minnesota or to any other 
138.9   state, for any previous taxable year, whether the amount is 
138.10  received as a refund or as a credit to another taxable year's 
138.11  income tax liability; 
138.12     (3) the amount paid to others, less the credit allowed 
138.13  under section 290.0674, not to exceed $1,625 for each qualifying 
138.14  child in grades kindergarten to 6 and $2,500 for each qualifying 
138.15  child in grades 7 to 12, for tuition, textbooks, and 
138.16  transportation of each qualifying child in attending an 
138.17  elementary or secondary school situated in Minnesota, North 
138.18  Dakota, South Dakota, Iowa, or Wisconsin, wherein a resident of 
138.19  this state may legally fulfill the state's compulsory attendance 
138.20  laws, which is not operated for profit, and which adheres to the 
138.21  provisions of the Civil Rights Act of 1964 and chapter 363.  For 
138.22  the purposes of this clause, "tuition" includes fees or tuition 
138.23  as defined in section 290.0674, subdivision 1, clause 
138.24  clauses (1), (6), and (7).  As used in this clause, "textbooks" 
138.25  includes books and other instructional materials and equipment 
138.26  used in elementary and secondary schools in teaching only those 
138.27  subjects legally and commonly taught in public elementary and 
138.28  secondary schools in this state.  Equipment expenses qualifying 
138.29  for deduction includes expenses as defined and limited in 
138.30  section 290.0674, subdivision 1, clause clauses (3) and (5).  
138.31  "Textbooks" does not include instructional books and materials 
138.32  used in the teaching of religious tenets, doctrines, or worship, 
138.33  the purpose of which is to instill such tenets, doctrines, or 
138.34  worship, nor does it include books or materials for, or 
138.35  transportation to, extracurricular activities including sporting 
138.36  events, musical or dramatic events, speech activities, driver's 
139.1   education, or similar programs.  For purposes of the subtraction 
139.2   provided by this clause, "qualifying child" has the meaning 
139.3   given in section 32(c)(3) of the Internal Revenue Code; 
139.4      (4) contributions made in taxable years beginning after 
139.5   December 31, 1981, and before January 1, 1985, to a qualified 
139.6   governmental pension plan, an individual retirement account, 
139.7   simplified employee pension, or qualified plan covering a 
139.8   self-employed person that were included in Minnesota gross 
139.9   income in the taxable year for which the contributions were made 
139.10  but were deducted or were not included in the computation of 
139.11  federal adjusted gross income, less any amount allowed to be 
139.12  subtracted as a distribution under this subdivision or a 
139.13  predecessor provision in taxable years that began before January 
139.14  1, 2000.  This subtraction applies only for taxable years 
139.15  beginning after December 31, 1999, and before January 1, 2001.  
139.16  If an individual's subtraction under this clause exceeds the 
139.17  individual's taxable income, the excess may be carried forward 
139.18  to taxable years beginning after December 31, 2000, and before 
139.19  January 1, 2002; 
139.20     (5) income as provided under section 290.0802; 
139.21     (6) the amount of unrecovered accelerated cost recovery 
139.22  system deductions allowed under subdivision 19g; 
139.23     (7) (6) to the extent included in federal adjusted gross 
139.24  income, income realized on disposition of property exempt from 
139.25  tax under section 290.491; 
139.26     (8) (7) to the extent not deducted in determining federal 
139.27  taxable income or used to claim the long-term care insurance 
139.28  credit under section 290.0672, the amount paid for health 
139.29  insurance of self-employed individuals as determined under 
139.30  section 162(l) of the Internal Revenue Code, except that the 
139.31  percent limit does not apply.  If the individual deducted 
139.32  insurance payments under section 213 of the Internal Revenue 
139.33  Code of 1986, the subtraction under this clause must be reduced 
139.34  by the lesser of: 
139.35     (i) the total itemized deductions allowed under section 
139.36  63(d) of the Internal Revenue Code, less state, local, and 
140.1   foreign income taxes deductible under section 164 of the 
140.2   Internal Revenue Code and the standard deduction under section 
140.3   63(c) of the Internal Revenue Code; or 
140.4      (ii) the lesser of (A) the amount of insurance qualifying 
140.5   as "medical care" under section 213(d) of the Internal Revenue 
140.6   Code to the extent not deducted under section 162(1) of the 
140.7   Internal Revenue Code or excluded from income or (B) the total 
140.8   amount deductible for medical care under section 213(a); 
140.9      (9) (8) the exemption amount allowed under Laws 1995, 
140.10  chapter 255, article 3, section 2, subdivision 3; 
140.11     (10) (9) to the extent included in federal taxable income, 
140.12  postservice benefits for youth community service under section 
140.13  124D.42 for volunteer service under United States Code, title 
140.14  42, sections 12601 to 12604; 
140.15     (11) (10) to the extent not deducted in determining federal 
140.16  taxable income by an individual who does not itemize deductions 
140.17  for federal income tax purposes for the taxable year, an amount 
140.18  equal to 50 100 percent of the excess of charitable 
140.19  contributions allowable as a deduction for the taxable year 
140.20  under section 170(a) of the Internal Revenue Code over $500; 
140.21     (12) (11) to the extent included in federal taxable income, 
140.22  holocaust victims' settlement payments for any injury incurred 
140.23  as a result of the holocaust, if received by an individual who 
140.24  was persecuted for racial or religious reasons by Nazi Germany 
140.25  or any other Axis regime or an heir of such a person; and 
140.26     (13) (12) for taxable years beginning before January 1, 
140.27  2008, the amount of the federal small ethanol producer credit 
140.28  allowed under section 40(a)(3) of the Internal Revenue Code 
140.29  which is included in gross income under section 87 of the 
140.30  Internal Revenue Code.; 
140.31     (13) to the extent included in federal taxable income, the 
140.32  compensation received for active duty in the armed forces of the 
140.33  United States or the United Nations for personal services wholly 
140.34  performed outside of the state of Minnesota; 
140.35     (14) to the extent included in federal taxable income, the 
140.36  first $3,000 of compensation received for (i) personal services 
141.1   in the Minnesota national guard or armed forces reserves, or (ii)
141.2   active duty in the armed forces of the United States or the 
141.3   United Nations for personal services wholly performed inside the 
141.4   state of Minnesota; 
141.5      (15) for individuals who are allowed a federal foreign tax 
141.6   credit for taxes that do not qualify for a credit under section 
141.7   290.06, subdivision 22, an amount equal to the carryover of 
141.8   subnational foreign taxes for the taxable year, but not to 
141.9   exceed the total subnational foreign taxes reported in claiming 
141.10  the foreign tax credit.  For purposes of this clause, "federal 
141.11  foreign tax credit" means the credit allowed under section 27 of 
141.12  the Internal Revenue Code, and "carryover of subnational foreign 
141.13  taxes" equals the carryover allowed under section 904(c) of the 
141.14  Internal Revenue Code minus national level foreign taxes to the 
141.15  extent they exceed the federal foreign tax credit; and 
141.16     (16) to the extent the gain was included in federal taxable 
141.17  income, the capital gain exclusion under section 290.0803. 
141.18     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
141.19  years beginning after December 31, 2000. 
141.20     Sec. 8.  Minnesota Statutes 2000, section 290.01, 
141.21  subdivision 19c, is amended to read: 
141.22     Subd. 19c.  [CORPORATIONS; ADDITIONS TO FEDERAL TAXABLE 
141.23  INCOME.] For corporations, there shall be added to federal 
141.24  taxable income: 
141.25     (1) the amount of any deduction taken for federal income 
141.26  tax purposes for income, excise, or franchise taxes based on net 
141.27  income or related minimum taxes, including but not limited to 
141.28  the tax imposed under section 290.0922, paid by the corporation 
141.29  to Minnesota, another state, a political subdivision of another 
141.30  state, the District of Columbia, or any foreign country or 
141.31  possession of the United States; 
141.32     (2) interest not subject to federal tax upon obligations 
141.33  of:  the United States, its possessions, its agencies, or its 
141.34  instrumentalities; the state of Minnesota or any other state, 
141.35  any of its political or governmental subdivisions, any of its 
141.36  municipalities, or any of its governmental agencies or 
142.1   instrumentalities; the District of Columbia; or Indian tribal 
142.2   governments; 
142.3      (3) exempt-interest dividends received as defined in 
142.4   section 852(b)(5) of the Internal Revenue Code; 
142.5      (4) the amount of any net operating loss deduction taken 
142.6   for federal income tax purposes under section 172 or 832(c)(10) 
142.7   of the Internal Revenue Code or operations loss deduction under 
142.8   section 810 of the Internal Revenue Code; 
142.9      (5) the amount of any special deductions taken for federal 
142.10  income tax purposes under sections 241 to 247 of the Internal 
142.11  Revenue Code; 
142.12     (6) losses from the business of mining, as defined in 
142.13  section 290.05, subdivision 1, clause (a), that are not subject 
142.14  to Minnesota income tax; 
142.15     (7) the amount of any capital losses deducted for federal 
142.16  income tax purposes under sections 1211 and 1212 of the Internal 
142.17  Revenue Code; 
142.18     (8) the amount of any charitable contributions deducted for 
142.19  federal income tax purposes under section 170 of the Internal 
142.20  Revenue Code; 
142.21     (9) (8) the exempt foreign trade income of a foreign sales 
142.22  corporation under sections 921(a) and 291 of the Internal 
142.23  Revenue Code; 
142.24     (10) the amount of percentage depletion deducted under 
142.25  sections 611 through 614 and 291 of the Internal Revenue Code; 
142.26     (11) for certified pollution control facilities placed in 
142.27  service in a taxable year beginning before December 31, 1986, 
142.28  and for which amortization deductions were elected under section 
142.29  169 of the Internal Revenue Code of 1954, as amended through 
142.30  December 31, 1985, the amount of the amortization deduction 
142.31  allowed in computing federal taxable income for those 
142.32  facilities; 
142.33     (12) (9) the amount of any deemed dividend from a foreign 
142.34  operating corporation determined pursuant to section 290.17, 
142.35  subdivision 4, paragraph (g); 
142.36     (13) the amount of any environmental tax paid under section 
143.1   59(a) of the Internal Revenue Code; and 
143.2      (14) (10) the amount of a partner's pro rata share of net 
143.3   income which does not flow through to the partner because the 
143.4   partnership elected to pay the tax on the income under section 
143.5   6242(a)(2) of the Internal Revenue Code; and 
143.6      (11) the amount of net income excluded under section 114 of 
143.7   the Internal Revenue Code. 
143.8      <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
143.9   years beginning after December 31, 2000. 
143.10     Sec. 9.  Minnesota Statutes 2000, section 290.01, 
143.11  subdivision 19d, is amended to read: 
143.12     Subd. 19d.  [CORPORATIONS; MODIFICATIONS DECREASING FEDERAL 
143.13  TAXABLE INCOME.] For corporations, there shall be subtracted 
143.14  from federal taxable income after the increases provided in 
143.15  subdivision 19c:  
143.16     (1) the amount of foreign dividend gross-up added to gross 
143.17  income for federal income tax purposes under section 78 of the 
143.18  Internal Revenue Code; 
143.19     (2) the amount of salary expense not allowed for federal 
143.20  income tax purposes due to claiming the federal jobs credit 
143.21  under section 51 of the Internal Revenue Code; 
143.22     (3) any dividend (not including any distribution in 
143.23  liquidation) paid within the taxable year by a national or state 
143.24  bank to the United States, or to any instrumentality of the 
143.25  United States exempt from federal income taxes, on the preferred 
143.26  stock of the bank owned by the United States or the 
143.27  instrumentality; 
143.28     (4) amounts disallowed for intangible drilling costs due to 
143.29  differences between this chapter and the Internal Revenue Code 
143.30  in taxable years beginning before January 1, 1987, as follows: 
143.31     (i) to the extent the disallowed costs are represented by 
143.32  physical property, an amount equal to the allowance for 
143.33  depreciation under Minnesota Statutes 1986, section 290.09, 
143.34  subdivision 7, subject to the modifications contained in 
143.35  subdivision 19e; and 
143.36     (ii) to the extent the disallowed costs are not represented 
144.1   by physical property, an amount equal to the allowance for cost 
144.2   depletion under Minnesota Statutes 1986, section 290.09, 
144.3   subdivision 8; except that 
144.4      (iii) this subtraction is permitted for the tax year ending 
144.5   before December 31, 2002.  Disallowed amounts remaining after 
144.6   the tax year ending December 31, 2000, must be subtracted from 
144.7   federal taxable income under this subdivision in two equal 
144.8   portions in tax years 2001 and 2002; 
144.9      (5) the deduction for capital losses pursuant to sections 
144.10  1211 and 1212 of the Internal Revenue Code, except that: 
144.11     (i) for capital losses incurred in taxable years beginning 
144.12  after December 31, 1986, capital loss carrybacks shall not be 
144.13  allowed; and 
144.14     (ii) for capital losses incurred in taxable years beginning 
144.15  after December 31, 1986, a capital loss carryover to each of the 
144.16  15 taxable years succeeding the loss year shall be allowed; 
144.17     (iii) for capital losses incurred in taxable years 
144.18  beginning before January 1, 1987, a capital loss carryback to 
144.19  each of the three taxable years preceding the loss year, subject 
144.20  to the provisions of Minnesota Statutes 1986, section 290.16, 
144.21  shall be allowed; and 
144.22     (iv) for capital losses incurred in taxable years beginning 
144.23  before January 1, 1987, a capital loss carryover to each of the 
144.24  five taxable years succeeding the loss year to the extent such 
144.25  loss was not used in a prior taxable year and subject to the 
144.26  provisions of Minnesota Statutes 1986, section 290.16, shall be 
144.27  allowed; 
144.28     (6) an amount for interest and expenses relating to income 
144.29  not taxable for federal income tax purposes, if (i) the income 
144.30  is taxable under this chapter and (ii) the interest and expenses 
144.31  were disallowed as deductions under the provisions of section 
144.32  171(a)(2), 265 or 291 of the Internal Revenue Code in computing 
144.33  federal taxable income; 
144.34     (7) in the case of mines, oil and gas wells, other natural 
144.35  deposits, and timber for which percentage depletion was 
144.36  disallowed pursuant to subdivision 19c, clause (11), a 
145.1   reasonable allowance for depletion based on actual cost.  In the 
145.2   case of leases the deduction must be apportioned between the 
145.3   lessor and lessee in accordance with rules prescribed by the 
145.4   commissioner.  In the case of property held in trust, the 
145.5   allowable deduction must be apportioned between the income 
145.6   beneficiaries and the trustee in accordance with the pertinent 
145.7   provisions of the trust, or if there is no provision in the 
145.8   instrument, on the basis of the trust's income allocable to 
145.9   each; 
145.10     (8) for (7) certified pollution control facilities placed 
145.11  in service in a taxable year beginning before December 31, 1986, 
145.12  and for which amortization deductions were elected under section 
145.13  169 of the Internal Revenue Code of 1954, as amended through 
145.14  December 31, 1985, an amount equal to the allowance for 
145.15  depreciation under Minnesota Statutes 1986, section 290.09, 
145.16  subdivision 7 amortization deduction amounts remaining after the 
145.17  tax year ending December 31, 2000, must be subtracted from 
145.18  federal taxable income under this subdivision in two equal 
145.19  portions in tax years 2001 and 2002; 
145.20     (9) the amount included in federal taxable income 
145.21  attributable to the credits provided in Minnesota Statutes 1986, 
145.22  section 273.1314, subdivision 9, or Minnesota Statutes, section 
145.23  469.171, subdivision 6; 
145.24     (10) (8) amounts included in federal taxable income that 
145.25  are due to refunds of income, excise, or franchise taxes based 
145.26  on net income or related minimum taxes paid by the corporation 
145.27  to Minnesota, another state, a political subdivision of another 
145.28  state, the District of Columbia, or a foreign country or 
145.29  possession of the United States to the extent that the taxes 
145.30  were added to federal taxable income under section 290.01, 
145.31  subdivision 19c, clause (1), in a prior taxable year; 
145.32     (11) (9) 80 percent of royalties, fees, or other like 
145.33  income accrued or received from a foreign operating corporation 
145.34  or a foreign corporation which is part of the same unitary 
145.35  business as the receiving corporation; 
145.36     (12) (10) income or gains from the business of mining as 
146.1   defined in section 290.05, subdivision 1, clause (a), that are 
146.2   not subject to Minnesota franchise tax; 
146.3      (13) (11) the amount of handicap access expenditures in the 
146.4   taxable year which are not allowed to be deducted or capitalized 
146.5   under section 44(d)(7) of the Internal Revenue Code; 
146.6      (14) (12) the amount of qualified research expenses not 
146.7   allowed for federal income tax purposes under section 280C(c) of 
146.8   the Internal Revenue Code, but only to the extent that the 
146.9   amount exceeds the amount of the credit allowed under section 
146.10  290.068; 
146.11     (15) (13) the amount of salary expenses not allowed for 
146.12  federal income tax purposes due to claiming the Indian 
146.13  employment credit under section 45A(a) of the Internal Revenue 
146.14  Code; 
146.15     (16) (14) the amount of any refund of environmental taxes 
146.16  paid under section 59A of the Internal Revenue Code; and 
146.17     (17) (15) for taxable years beginning before January 1, 
146.18  2008, the amount of the federal small ethanol producer credit 
146.19  allowed under section 40(a)(3) of the Internal Revenue Code 
146.20  which is included in gross income under section 87 of the 
146.21  Internal Revenue Code; and 
146.22     (16) for a corporation whose foreign sales corporation, as 
146.23  defined in section 922 of the Internal Revenue Code, constituted 
146.24  a foreign operating company during the taxable years ending 
146.25  during calendar year 2000, an amount equal to 1.23 multiplied by 
146.26  the amount of income excluded under section 114 of the Internal 
146.27  Revenue Code, provided the income is not income of a foreign 
146.28  operating company. 
146.29     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
146.30  years beginning after December 31, 2000. 
146.31     Sec. 10.  Minnesota Statutes 2000, section 290.01, 
146.32  subdivision 22, is amended to read: 
146.33     Subd. 22.  [TAXABLE NET INCOME.] For tax years beginning 
146.34  after December 31, 1986, the term "taxable net income" means:  
146.35     (1) for resident individuals the same as net income; 
146.36     (2) for individuals who were not residents of Minnesota for 
147.1   the entire year, the same as net income except that the tax is 
147.2   imposed only on the Minnesota apportioned share of that income 
147.3   as determined pursuant to section 290.06, subdivision 2c, 
147.4   paragraph (e); 
147.5      (3) for all other taxpayers, the part of net income that is 
147.6   allocable to Minnesota by assignment or apportionment under one 
147.7   or more of sections 290.17, 290.191, 290.20, 290.35, and 290.36. 
147.8      For tax years beginning before January 1, 1987, the term 
147.9   "taxable net income"  means the net income assignable to this 
147.10  state pursuant to sections 290.17 to 290.20.  For corporations, 
147.11  taxable net income is then reduced by the deductions contained 
147.12  in section 290.21.  
147.13     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
147.14  years beginning after December 31, 2000. 
147.15     Sec. 11.  Minnesota Statutes 2000, section 290.01, 
147.16  subdivision 29, is amended to read: 
147.17     Subd. 29.  [TAXABLE INCOME.] For tax years beginning after 
147.18  December 31, 1986, The term "taxable income" means:  
147.19     (1) for individuals, estates, and trusts, the same as 
147.20  taxable net income; 
147.21     (2) for corporations, including insurance companies, the 
147.22  taxable net income less 
147.23     (i) the net operating loss deduction under section 290.095; 
147.24  and 
147.25     (ii) the dividends received deduction under section 290.21, 
147.26  subdivision 4; and 
147.27     (iii) the charitable contribution deduction under section 
147.28  290.21, subdivision 3. 
147.29     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
147.30  years beginning after December 31, 2000. 
147.31     Sec. 12.  Minnesota Statutes 2000, section 290.014, 
147.32  subdivision 5, is amended to read: 
147.33     Subd. 5.  [CORPORATIONS.] Except as provided in section 
147.34  290.015, corporations are subject to the return filing 
147.35  requirements and to tax as provided in this chapter if the 
147.36  corporation so exercises its franchise as to engage in such 
148.1   contacts with this state as to cause part of the income of the 
148.2   corporation to be:  
148.3      (1) allocable to this state under section 290.17, 290.191, 
148.4   290.20, 290.35, or 290.36; 
148.5      (2) taxed to the corporation under the Internal Revenue 
148.6   Code (or not taxed under the Internal Revenue Code by reason of 
148.7   its character but of a character which is taxable under this 
148.8   chapter) in its capacity as a beneficiary of an estate with 
148.9   income allocable to this state under section 290.17, 290.191, or 
148.10  290.20 and the income, taking into account the income character 
148.11  provisions of section 662(b) of the Internal Revenue Code, would 
148.12  be allocable to this state under section 290.17, 290.191, or 
148.13  290.20 if realized by the corporation directly from the source 
148.14  from which realized by the estate; 
148.15     (3) taxed to the corporation under the Internal Revenue 
148.16  Code (or not taxed under the Internal Revenue Code by reason of 
148.17  its character but of a character which is taxable under this 
148.18  chapter) in its capacity as a beneficiary or grantor or other 
148.19  person treated as a substantial owner of a trust with income 
148.20  allocable to this state under section 290.17, 290.191, or 290.20 
148.21  and the income, taking into account the income character 
148.22  provisions of section 652(b), 662(b), or 664(b) of the Internal 
148.23  Revenue Code, would be allocable to this state under section 
148.24  290.17, 290.191, or 290.20 if realized by the corporation 
148.25  directly from the source from which realized by the trust; or 
148.26     (4) taxed to the corporation under the Internal Revenue 
148.27  Code (or not taxed under the Internal Revenue Code by reason of 
148.28  its character but of a character which is taxable under this 
148.29  chapter) in its capacity as a limited or general partner in a 
148.30  partnership with income allocable to this state under section 
148.31  290.17, 290.191, or 290.20 and the income, taking into account 
148.32  the income character provisions of section 702(b) of the 
148.33  Internal Revenue Code, would be allocable to this state under 
148.34  section 290.17, 290.191, or 290.20 if realized by the 
148.35  corporation directly from the source from which realized by the 
148.36  partnership. 
149.1      <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
149.2   years beginning after December 31, 2000. 
149.3      Sec. 13.  Minnesota Statutes 2000, section 290.05, 
149.4   subdivision 1, is amended to read: 
149.5      Subdivision 1.  [EXEMPT ENTITIES.] The following 
149.6   corporations, individuals, estates, trusts, and organizations 
149.7   shall be exempted from taxation under this chapter, provided 
149.8   that every such person or corporation claiming exemption under 
149.9   this chapter, in whole or in part, must establish to the 
149.10  satisfaction of the commissioner the taxable status of any 
149.11  income or activity: 
149.12     (a) corporations, individuals, estates, and trusts engaged 
149.13  in the business of mining or producing iron ore and other ores 
149.14  the mining or production of which is subject to the occupation 
149.15  tax imposed by section 298.01; but if any such corporation, 
149.16  individual, estate, or trust engages in any other business or 
149.17  activity or has income from any property not used in such 
149.18  business it shall be subject to this tax computed on the net 
149.19  income from such property or such other business or activity.  
149.20  Royalty shall not be considered as income from the business of 
149.21  mining or producing iron ore within the meaning of this section; 
149.22     (b) the United States of America, the state of Minnesota or 
149.23  any political subdivision of either agencies or 
149.24  instrumentalities, whether engaged in the discharge of 
149.25  governmental or proprietary functions; and 
149.26     (c) any insurance company that is domiciled in a state or 
149.27  country other than Minnesota that imposes retaliatory taxes, 
149.28  fines, deposits, penalties, licenses, or fees and that does not 
149.29  grant, on a reciprocal basis, exemption from such retaliatory 
149.30  taxes to insurance companies or their agents domiciled in 
149.31  Minnesota.  "Retaliatory taxes" means taxes imposed on insurance 
149.32  companies organized in another state or country that result from 
149.33  the fact that an insurance company organized in the taxing 
149.34  jurisdiction and doing business in the other jurisdiction is 
149.35  subject to taxes, fines, deposits, penalties, licenses, or fees 
149.36  in an amount exceeding that imposed by the taxing jurisdiction 
150.1   upon an insurance company organized in the other state or 
150.2   country and doing business to the same extent in the taxing 
150.3   jurisdiction; and 
150.4      (d) town and farmers' mutual insurance companies and mutual 
150.5   property and casualty insurance companies, other than those (1) 
150.6   writing life insurance or (2) whose total assets on December 31, 
150.7   1989, exceeded $1,600,000,000. 
150.8      <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
150.9   years beginning after December 31, 2000. 
150.10     Sec. 14.  Minnesota Statutes 2000, section 290.06, 
150.11  subdivision 2c, is amended to read: 
150.12     Subd. 2c.  [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 
150.13  AND TRUSTS.] (a) The income taxes imposed by this chapter upon 
150.14  married individuals filing joint returns and surviving spouses 
150.15  as defined in section 2(a) of the Internal Revenue Code must be 
150.16  computed by applying to their taxable net income the following 
150.17  schedule of rates: 
150.18     (1) On the first $25,680, 5.35 percent; 
150.19     (2) On all over $25,680, but not over $102,030, 7.05 
150.20  percent; 
150.21     (3) On all over $102,030, 7.85 percent. 
150.22     Married individuals filing separate returns, estates, and 
150.23  trusts must compute their income tax by applying the above rates 
150.24  to their taxable income, except that the income brackets will be 
150.25  one-half of the above amounts.  
150.26     (b) The income taxes imposed by this chapter upon unmarried 
150.27  individuals must be computed by applying to taxable net income 
150.28  the following schedule of rates: 
150.29     (1) On the first $17,570, 5.35 percent; 
150.30     (2) On all over $17,570, but not over $57,710, 7.05 
150.31  percent; 
150.32     (3) On all over $57,710, 7.85 percent. 
150.33     (c) The income taxes imposed by this chapter upon unmarried 
150.34  individuals qualifying as a head of household as defined in 
150.35  section 2(b) of the Internal Revenue Code must be computed by 
150.36  applying to taxable net income the following schedule of rates: 
151.1      (1) On the first $21,630, 5.35 percent; 
151.2      (2) On all over $21,630, but not over $86,910, 7.05 
151.3   percent; 
151.4      (3) On all over $86,910, 7.85 percent. 
151.5      (d) In lieu of a tax computed according to the rates set 
151.6   forth in this subdivision, the tax of any individual taxpayer 
151.7   whose taxable net income for the taxable year is less than an 
151.8   amount determined by the commissioner must be computed in 
151.9   accordance with tables prepared and issued by the commissioner 
151.10  of revenue based on income brackets of not more than $100.  The 
151.11  amount of tax for each bracket shall be computed at the rates 
151.12  set forth in this subdivision, provided that the commissioner 
151.13  may disregard a fractional part of a dollar unless it amounts to 
151.14  50 cents or more, in which case it may be increased to $1. 
151.15     (e) An individual who is not a Minnesota resident for the 
151.16  entire year must compute the individual's Minnesota income tax 
151.17  as provided in this subdivision.  After the application of the 
151.18  nonrefundable credits provided in this chapter, the tax 
151.19  liability must then be multiplied by a fraction in which:  
151.20     (1) the numerator is the individual's Minnesota source 
151.21  federal adjusted gross income as defined in section 62 of the 
151.22  Internal Revenue Code and increased by the additions required 
151.23  under section 290.01, subdivision 19a, clauses (1) and (6), and 
151.24  reduced by the Minnesota assignable portion of the subtraction 
151.25  for United States government interest under section 290.01, 
151.26  subdivision 19b, clause (1), after applying the allocation and 
151.27  assignability provisions of section 290.081, clause (a), or 
151.28  290.17; and 
151.29     (2) the denominator is the individual's federal adjusted 
151.30  gross income as defined in section 62 of the Internal Revenue 
151.31  Code of 1986, increased by the amounts specified in section 
151.32  290.01, subdivision 19a, clauses (1) and (6), and reduced by the 
151.33  amounts specified in section 290.01, subdivision 19b, clause (1).
151.34     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
151.35  years beginning after December 31, 2000. 
151.36     Sec. 15.  Minnesota Statutes 2000, section 290.06, 
152.1   subdivision 22, is amended to read: 
152.2      Subd. 22.  [CREDIT FOR TAXES PAID TO ANOTHER STATE.] (a) A 
152.3   taxpayer who is liable for taxes on or measured by net income to 
152.4   another state or province or territory of Canada, as provided in 
152.5   paragraphs (b) through (f), upon income allocated or apportioned 
152.6   to Minnesota, is entitled to a credit for the tax paid to 
152.7   another state or province or territory of Canada if the tax is 
152.8   actually paid in the taxable year or a subsequent taxable year.  
152.9   A taxpayer who is a resident of this state pursuant to section 
152.10  290.01, subdivision 7, clause (2), and who is subject to income 
152.11  tax as a resident in the state of the individual's domicile is 
152.12  not allowed this credit unless the state of domicile does not 
152.13  allow a similar credit. 
152.14     (b) For an individual, estate, or trust, the credit is 
152.15  determined by multiplying the tax payable under this chapter by 
152.16  the ratio derived by dividing the income subject to tax in the 
152.17  other state or province or territory of Canada that is also 
152.18  subject to tax in Minnesota while a resident of Minnesota by the 
152.19  taxpayer's federal adjusted gross income, as defined in section 
152.20  62 of the Internal Revenue Code, modified by the addition 
152.21  required by section 290.01, subdivision 19a, clause (1), and the 
152.22  subtraction allowed by section 290.01, subdivision 19b, clause 
152.23  (1), to the extent the income is allocated or assigned to 
152.24  Minnesota under sections 290.081 and 290.17.  
152.25     (c) If the taxpayer is an athletic team that apportions all 
152.26  of its income under section 290.17, subdivision 5, the credit is 
152.27  determined by multiplying the tax payable under this chapter by 
152.28  the ratio derived from dividing the total net income subject to 
152.29  tax in the other state or province or territory of Canada by the 
152.30  taxpayer's Minnesota taxable income. 
152.31     (d) The credit determined under paragraph (b) or (c) shall 
152.32  not exceed the amount of tax so paid to the other state or 
152.33  province or territory of Canada on the gross income earned 
152.34  within the other state or province or territory of Canada 
152.35  subject to tax under this chapter, nor shall the allowance of 
152.36  the credit reduce the taxes paid under this chapter to an amount 
153.1   less than what would be assessed if such income amount was 
153.2   excluded from taxable net income. 
153.3      (e) In the case of the tax assessed on a lump sum 
153.4   distribution under section 290.032, the credit allowed under 
153.5   paragraph (a) is the tax assessed by the other state or province 
153.6   or territory of Canada on the lump sum distribution that is also 
153.7   subject to tax under section 290.032, and shall not exceed the 
153.8   tax assessed under section 290.032.  To the extent the total 
153.9   lump sum distribution defined in section 290.032, subdivision 1, 
153.10  includes lump sum distributions received in prior years or is 
153.11  all or in part an annuity contract, the reduction to the tax on 
153.12  the lump sum distribution allowed under section 290.032, 
153.13  subdivision 2, includes tax paid to another state that is 
153.14  properly apportioned to that distribution. 
153.15     (f) If a Minnesota resident reported an item of income to 
153.16  Minnesota and is assessed tax in such other state or province or 
153.17  territory of Canada on that same income after the Minnesota 
153.18  statute of limitations has expired, the taxpayer shall receive a 
153.19  credit for that year under paragraph (a), notwithstanding any 
153.20  statute of limitations to the contrary.  The claim for the 
153.21  credit must be submitted within one year from the date the taxes 
153.22  were paid to the other state or province or territory of 
153.23  Canada.  The taxpayer must submit sufficient proof to show 
153.24  entitlement to a credit. 
153.25     (g) For the purposes of this subdivision, a resident 
153.26  shareholder of a corporation treated as an "S" corporation under 
153.27  section 290.9725, must be considered to have paid a tax imposed 
153.28  on the shareholder in an amount equal to the shareholder's pro 
153.29  rata share of any net income tax paid by the S corporation to 
153.30  another state.  For the purposes of the preceding sentence, the 
153.31  term "net income tax" means any tax imposed on or measured by a 
153.32  corporation's net income. 
153.33     (h) For the purposes of this subdivision, a resident 
153.34  partner of an entity taxed as a partnership under the Internal 
153.35  Revenue Code must be considered to have paid a tax imposed on 
153.36  the partner in an amount equal to the partner's pro rata share 
154.1   of any net income tax paid by the partnership to another state.  
154.2   For purposes of the preceding sentence, the term "net income" 
154.3   tax means any tax imposed on or measured by a partnership's net 
154.4   income. 
154.5      (i) For the purposes of this subdivision, "another state": 
154.6      (1) includes: 
154.7      (i) the District of Columbia, but does not include; and 
154.8      (ii) a province or territory of Canada; but 
154.9      (2) excludes Puerto Rico or and the several territories 
154.10  organized by Congress. 
154.11     (j) The limitations on the credit in paragraphs (b), (c), 
154.12  and (d), are imposed on a state by state basis. 
154.13     (k) For a tax imposed by a province or territory of Canada, 
154.14  the tax for purposes of this subdivision is the excess of the 
154.15  tax over the amount of the foreign tax credit allowed under 
154.16  section 27 of the Internal Revenue Code.  In determining the 
154.17  amount of the foreign tax credit allowed, the net income taxes 
154.18  imposed by Canada on the income are deducted first.  Any 
154.19  remaining amount of the allowable foreign tax credit reduces the 
154.20  provincial or territorial tax that qualifies for the credit 
154.21  under this subdivision. 
154.22     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
154.23  years beginning after December 31, 2000. 
154.24     Sec. 16.  Minnesota Statutes 2000, section 290.067, 
154.25  subdivision 1, is amended to read: 
154.26     Subdivision 1.  [AMOUNT OF CREDIT.] (a) A taxpayer may take 
154.27  as a credit against the tax due from the taxpayer and a spouse, 
154.28  if any, under this chapter an amount equal to the dependent care 
154.29  credit for which the taxpayer is eligible pursuant to the 
154.30  provisions of section 21 of the Internal Revenue Code subject to 
154.31  the limitations provided in subdivision 2 except that in 
154.32  determining whether the child qualified as a dependent, income 
154.33  received as a Minnesota family investment program grant or 
154.34  allowance to or on behalf of the child must not be taken into 
154.35  account in determining whether the child received more than half 
154.36  of the child's support from the taxpayer, and the provisions of 
155.1   section 32(b)(1)(D) of the Internal Revenue Code do not apply. 
155.2      (b) If a child who has not attained the age of six years at 
155.3   the close of the taxable year is cared for at a licensed family 
155.4   day care home operated by the child's parent, the taxpayer is 
155.5   deemed to have paid employment-related expenses.  If the child 
155.6   is 16 months old or younger at the close of the taxable year, 
155.7   the amount of expenses deemed to have been paid equals the 
155.8   maximum limit for one qualified individual under section 21(c) 
155.9   and (d) of the Internal Revenue Code.  If the child is older 
155.10  than 16 months of age but has not attained the age of six years 
155.11  at the close of the taxable year, the amount of expenses deemed 
155.12  to have been paid equals the amount the licensee would charge 
155.13  for the care of a child of the same age for the same number of 
155.14  hours of care.  
155.15     (c) If a married couple: 
155.16     (1) has a child who has not attained the age of one year at 
155.17  the close of the taxable year; 
155.18     (2) files a joint tax return for the taxable year; and 
155.19     (3) does not participate in a dependent care assistance 
155.20  program as defined in section 129 of the Internal Revenue Code, 
155.21  in lieu of the actual employment related expenses paid for that 
155.22  child under paragraph (a) or the deemed amount under paragraph 
155.23  (b), the lesser of (i) the combined earned income of the couple 
155.24  or (ii) $2,400 will be deemed to be the employment related 
155.25  expense paid for that child.  The earned income limitation of 
155.26  section 21(d) of the Internal Revenue Code shall not apply to 
155.27  this deemed amount.  These deemed amounts apply regardless of 
155.28  whether any employment-related expenses have been paid.  
155.29     (d) An individual who: 
155.30     (1) incurs employment-related expenses for the care of one 
155.31  or more dependents who have attained the age of 13 years but not 
155.32  attained the age of 15 years at the close of the taxable year; 
155.33  and 
155.34     (2) is not eligible for a credit under section 21 of the 
155.35  Internal Revenue Code for the employment-related expenses 
155.36  incurred after the dependent or dependents attained the age of 
156.1   13 years; 
156.2   is eligible for a credit under this paragraph only. 
156.3   The credit under this paragraph equals the credit that would 
156.4   have been allowed under this section if the dependent or 
156.5   dependents had not attained the age of 13 years at the close of 
156.6   the taxable year.  The credit under this paragraph in 
156.7   combination with any other credits allowed under this section is 
156.8   subject to the limitations in subdivision 2. 
156.9      (d) (e) If the taxpayer is not required and does not file a 
156.10  federal individual income tax return for the tax year, no credit 
156.11  is allowed for any amount paid to any person unless: 
156.12     (1) the name, address, and taxpayer identification number 
156.13  of the person are included on the return claiming the credit; or 
156.14     (2) if the person is an organization described in section 
156.15  501(c)(3) of the Internal Revenue Code and exempt from tax under 
156.16  section 501(a) of the Internal Revenue Code, the name and 
156.17  address of the person are included on the return claiming the 
156.18  credit.  
156.19  In the case of a failure to provide the information required 
156.20  under the preceding sentence, the preceding sentence does not 
156.21  apply if it is shown that the taxpayer exercised due diligence 
156.22  in attempting to provide the information required. 
156.23     In the case of a nonresident, part-year resident, or a 
156.24  person who has earned income not subject to tax under this 
156.25  chapter, the credit determined under section 21 of the Internal 
156.26  Revenue Code must be allocated based on the ratio by which the 
156.27  earned income of the claimant and the claimant's spouse from 
156.28  Minnesota sources bears to the total earned income of the 
156.29  claimant and the claimant's spouse. 
156.30     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
156.31  years beginning after December 31, 2000. 
156.32     Sec. 17.  Minnesota Statutes 2000, section 290.067, 
156.33  subdivision 2, is amended to read: 
156.34     Subd. 2.  [LIMITATIONS.] The credit for expenses incurred 
156.35  for the care of each dependent shall not exceed $720 in any 
156.36  taxable year, and the total credit for all dependents of a 
157.1   claimant shall not exceed $1,440 in a taxable year.  The maximum 
157.2   total credit shall be reduced according to the amount of the 
157.3   income of the claimant and a spouse, if any, minus the earned 
157.4   income of the lesser-earning spouse, as follows:  
157.5      income up to $13,350 $18,040, $720 maximum for one 
157.6   dependent, $1,440 for all dependents; 
157.7      income over $13,350 $18,040, the maximum credit for one 
157.8   dependent shall be reduced by $18 for every $350 of additional 
157.9   income, $36 for all dependents. 
157.10     The commissioner shall construct and make available to 
157.11  taxpayers tables showing the amount of the credit at various 
157.12  levels of income and expenses.  The tables shall follow the 
157.13  schedule contained in this subdivision, except that the 
157.14  commissioner may graduate the transitions between expenses and 
157.15  income brackets.  
157.16     For purposes of this section, "earned income of the 
157.17  lesser-earning spouse" has the meaning given in section 
157.18  290.0675, subdivision 1, paragraph (d). 
157.19     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
157.20  years beginning after December 31, 1999. 
157.21     Sec. 18.  Minnesota Statutes 2000, section 290.067, 
157.22  subdivision 2b, is amended to read: 
157.23     Subd. 2b.  [INFLATION ADJUSTMENT.] The dollar amount of the 
157.24  income threshold at which the maximum credit begins to be 
157.25  reduced under subdivision 2 must be adjusted for inflation.  The 
157.26  commissioner shall adjust the threshold amount by the percentage 
157.27  determined under section 290.06, subdivision 2d, for the taxable 
157.28  year. make the inflation adjustments in accordance with section 
157.29  1f of the Internal Revenue Code except that for the purposes of 
157.30  this subdivision the percentage increase must be determined from 
157.31  the year starting September 1, 1999, and ending August 31, 2000, 
157.32  as the base year for adjusting for inflation for the tax year 
157.33  beginning after December 31, 2000.  The determination of the 
157.34  commissioner under this subdivision is not a rule under the 
157.35  Administrative Procedure Act. 
157.36     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
158.1   years beginning after December 31, 2000. 
158.2      Sec. 19.  Minnesota Statutes 2000, section 290.0671, 
158.3   subdivision 1, is amended to read: 
158.4      Subdivision 1.  [CREDIT ALLOWED.] (a) An individual is 
158.5   allowed a credit against the tax imposed by this chapter equal 
158.6   to a percentage of earned income.  To receive a credit, a 
158.7   taxpayer must be eligible for a credit under section 32 of the 
158.8   Internal Revenue Code.  An individual who would have been 
158.9   eligible for a credit under section 32 of the Internal Revenue 
158.10  Code if the phaseout in section 32(b) were calculated based on 
158.11  the individual's earned income or modified adjusted gross 
158.12  income, whichever is greater, minus the earned income of the 
158.13  lesser-earning spouse, is also eligible for a credit under this 
158.14  section. 
158.15     (b) For individuals with no qualifying children, the credit 
158.16  equals 1.9125 percent of the first $4,460 $4,620 of earned 
158.17  income.  The credit is reduced by 1.9125 percent of earned 
158.18  income or modified adjusted gross income, whichever is 
158.19  greater, minus the earned income of the lesser-earning spouse, 
158.20  in excess of $5,570 $5,770, but in no case is the credit less 
158.21  than zero. 
158.22     (c) For individuals with one qualifying child, the credit 
158.23  equals 8.5 percent of the first $6,680 $6,920 of earned income 
158.24  and 8.5 percent of earned income over $11,650 $12,080 but less 
158.25  than $12,990 $13,450. The credit is reduced by 5.73 percent of 
158.26  earned income or modified adjusted gross income, whichever is 
158.27  greater, minus the earned income of the lesser-earning spouse, 
158.28  in excess of $14,560 $15,080, but in no case is the credit less 
158.29  than zero. 
158.30     (d) For individuals with two or more qualifying children, 
158.31  the credit equals ten percent of the first $9,390 $9,720 of 
158.32  earned income and 20 percent of earned income 
158.33  over $14,350 $14,860 but less than $16,230 $16,800.  The credit 
158.34  is reduced by 10.3 percent of earned income or modified adjusted 
158.35  gross income, whichever is greater, minus the earned income of 
158.36  the lesser-earning spouse, in excess of $17,280 $17,890, but in 
159.1   no case is the credit less than zero. 
159.2      (e) For a nonresident or part-year resident, the credit 
159.3   must be allocated based on the percentage calculated under 
159.4   section 290.06, subdivision 2c, paragraph (e). 
159.5      (f) For a person who was a resident for the entire tax year 
159.6   and has earned income not subject to tax under this chapter, the 
159.7   credit must be allocated based on the ratio of federal adjusted 
159.8   gross income reduced by the earned income not subject to tax 
159.9   under this chapter over federal adjusted gross income. 
159.10     (g) The commissioner shall construct tables showing the 
159.11  amount of the credit at various income levels and make them 
159.12  available to taxpayers.  The tables shall follow the schedule 
159.13  contained in this subdivision, except that the commissioner may 
159.14  graduate the transition between income brackets. 
159.15     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
159.16  years beginning after December 31, 2000. 
159.17     Sec. 20.  Minnesota Statutes 2000, section 290.0671, 
159.18  subdivision 1a, is amended to read: 
159.19     Subd. 1a.  [DEFINITIONS.] For purposes of this section, the 
159.20  terms "qualifying child," "earned income," and "modified 
159.21  adjusted gross income" have the meanings given in section 32(c) 
159.22  of the Internal Revenue Code.  "Earned income of the 
159.23  lesser-earning spouse" has the meaning given in section 
159.24  290.0675, subdivision 1, paragraph (d). 
159.25     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
159.26  years beginning after December 31, 2000. 
159.27     Sec. 21.  Minnesota Statutes 2000, section 290.0671, 
159.28  subdivision 7, is amended to read: 
159.29     Subd. 7.  [INFLATION ADJUSTMENT.] The earned income amounts 
159.30  used to calculate the credit and the income thresholds at which 
159.31  the maximum credit begins to be reduced in subdivision 1 must be 
159.32  adjusted for inflation.  The commissioner shall adjust the 
159.33  earned income and threshold amounts by the percentage determined 
159.34  under section 290.06, subdivision 2d, for the taxable year. make 
159.35  the inflation adjustments in accordance with section 1f of the 
159.36  Internal Revenue Code except that for the purposes of this 
160.1   subdivision the percentage increase shall be determined from the 
160.2   year starting September 1, 1999, and ending August 31, 2000, as 
160.3   the base year for adjusting for inflation for the tax year 
160.4   beginning after December 31, 2000.  The determination of the 
160.5   commissioner under this subdivision is not a rule under the 
160.6   Administrative Procedure Act. 
160.7      <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
160.8   years beginning after December 31, 2000. 
160.9      Sec. 22.  Minnesota Statutes 2000, section 290.0674, 
160.10  subdivision 1, is amended to read: 
160.11     Subdivision 1.  [CREDIT ALLOWED.] An individual is allowed 
160.12  a credit against the tax imposed by this chapter in an amount 
160.13  equal to the amount paid for education-related expenses for a 
160.14  qualifying child in kindergarten through grade 12.  For purposes 
160.15  of this section, "education-related expenses" means: 
160.16     (1) fees or tuition for instruction by an instructor under 
160.17  who meets one of the requirements of section 120A.22, 
160.18  subdivision 10, clause (1), (2), (3), (4), or (5), or by who is 
160.19  a member of the Minnesota music teachers association, and is not 
160.20  a lineal ancestor or sibling of the dependent for instruction 
160.21  outside the regular school day or school year, including 
160.22  tutoring, driver's education offered as part of school 
160.23  curriculum, regardless of whether it is taken from a public or 
160.24  private entity or summer camps, in grade or age appropriate 
160.25  curricula that supplement curricula and instruction available 
160.26  during the regular school year, that assists a dependent to 
160.27  improve knowledge of core curriculum areas or to expand 
160.28  knowledge and skills under the graduation rule under section 
160.29  120B.02, paragraph (e), clauses (1) to (7), (9), and (10), and 
160.30  that do not include the teaching of religious tenets, doctrines, 
160.31  or worship, the purpose of which is to instill such tenets, 
160.32  doctrines, or worship; 
160.33     (2) expenses for textbooks, including books and other 
160.34  instructional materials and equipment used in elementary and 
160.35  secondary schools in teaching only those subjects legally and 
160.36  commonly taught in public elementary and secondary schools in 
161.1   this state.  "Textbooks" does not include instructional books 
161.2   and materials used in the teaching of religious tenets, 
161.3   doctrines, or worship, the purpose of which is to instill such 
161.4   tenets, doctrines, or worship, nor does it include books or 
161.5   materials for extracurricular activities including sporting 
161.6   events, musical or dramatic events, speech activities, driver's 
161.7   education, or similar programs; 
161.8      (3) a maximum expense of $200 per family for personal 
161.9   computer hardware, excluding single purpose processors, and 
161.10  educational software that assists a dependent to improve 
161.11  knowledge of core curriculum areas or to expand knowledge and 
161.12  skills under the graduation rule under section 120B.02, 
161.13  paragraph (e), clauses (1) to (7), (9), and (10), purchased for 
161.14  use in the taxpayer's home and not used in a trade or business 
161.15  regardless of whether the computer is required by the 
161.16  dependent's school; and 
161.17     (4) the amount paid to others for transportation of a 
161.18  qualifying child attending an elementary or secondary school 
161.19  situated in Minnesota, North Dakota, South Dakota, Iowa, or 
161.20  Wisconsin, wherein a resident of this state may legally fulfill 
161.21  the state's compulsory attendance laws, which is not operated 
161.22  for profit, and which adheres to the provisions of the Civil 
161.23  Rights Act of 1964 and chapter 363.; 
161.24     (5) expenses for the purchase or lease of musical 
161.25  instruments used in classes offered as part of the school 
161.26  curriculum; 
161.27     (6) the amount paid to a public school for participation in 
161.28  extracurricular activities for which fees are authorized under 
161.29  section 123B.36, subdivision 1, paragraph (b), clauses (2), (7), 
161.30  and (10); and 
161.31     (7) the amount paid to a nonpublic school for participation 
161.32  in activities listed in section 123B.36, subdivision 1, 
161.33  paragraph (b), clauses (2), (7), and (10). 
161.34     For purposes of this section, "qualifying child" has the 
161.35  meaning given in section 32(c)(3) of the Internal Revenue Code. 
161.36     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
162.1   years beginning after December 31, 2000. 
162.2      Sec. 23.  Minnesota Statutes 2000, section 290.0674, 
162.3   subdivision 2, is amended to read: 
162.4      Subd. 2.  [LIMITATIONS.] (a) For claimants with income not 
162.5   greater than $33,500, the maximum credit allowed is $1,000 per 
162.6   qualifying child and $2,000 per family.  No credit is allowed 
162.7   for education-related expenses for claimants with income greater 
162.8   than $37,500.  The maximum credit for each claimant is $1,000 
162.9   multiplied by the number of qualifying children for whom the 
162.10  individual claims the credit.  The maximum credit per child for 
162.11  a claimant is reduced by $1 for each $4 of household income over 
162.12  $33,500, and the maximum credit per family is reduced by $2 for 
162.13  each $4 of household income over $33,500 for claimants with one 
162.14  qualifying child, and by $1 for each $3 of household income over 
162.15  $33,500 for all other claimants, but in no case is the credit 
162.16  less than zero. 
162.17     For purposes of this section "income" has the meaning given 
162.18  in section 290.067, subdivision 2a.  In the case of a married 
162.19  claimant, a credit is not allowed unless a joint income tax 
162.20  return is filed. 
162.21     (b) For a nonresident or part-year resident, the credit 
162.22  determined under subdivision 1 and the maximum credit amount in 
162.23  paragraph (a) must be allocated using the percentage calculated 
162.24  in section 290.06, subdivision 2c, paragraph (e). 
162.25     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
162.26  years beginning after December 31, 2000. 
162.27     Sec. 24.  Minnesota Statutes 2000, section 290.0675, 
162.28  subdivision 1, is amended to read: 
162.29     Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
162.30  section the following terms have the meanings given. 
162.31     (b) "Earned income" means the sum of the following, to the 
162.32  extent included in Minnesota taxable income: 
162.33     (1) earned income as defined in section 32(c)(2) of the 
162.34  Internal Revenue Code; 
162.35     (2) to the extent included in Minnesota taxable income, 
162.36  income received from a retirement pension, profit-sharing, stock 
163.1   bonus, or annuity plan; and 
163.2      (3) to the extent included in Minnesota taxable income, 
163.3   social security benefits as defined in section 86(d)(1) of the 
163.4   Internal Revenue Code. 
163.5      (c) "Taxable income" means net income as defined in section 
163.6   290.01, subdivision 19. 
163.7      (d) "Earned income of lesser-earning spouse" means the 
163.8   earned income of the spouse with the lesser amount of earned 
163.9   income as defined in paragraph (b) for the taxable year.  
163.10     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
163.11  years beginning after December 31, 2000. 
163.12     Sec. 25.  Minnesota Statutes 2000, section 290.0675, 
163.13  subdivision 3, is amended to read: 
163.14     Subd. 3.  [CREDIT AMOUNT.] The credit amount is as shown in 
163.15  the table in this subdivision, based on the couple's taxable 
163.16  income for the tax year and on the earned income of the 
163.17  lesser-earning spouse the difference between the tax on the 
163.18  couple's joint Minnesota taxable income under the rates in 
163.19  section 290.06, subdivision 2c, paragraph (a), and the sum of 
163.20  the tax under the rates of section 290.06, subdivision 2c, 
163.21  paragraph (b), on the earned income of the lesser-earning 
163.22  spouse, and the tax under the rates of section 290.06, 
163.23  subdivision 2c, paragraph (b), on the couple's joint Minnesota 
163.24  taxable income, minus the earned income of the lesser-earning 
163.25  spouse. 
163.26                               Credit For          Credit For
163.27    Earned Income of           Taxable Income      Taxable Income
163.28    Lesser Earning Spouse      $25,680-$102,029    $102,030-over
163.29    $14,250 - $15,249          $7                  $0    
163.30    $15,250 - $16,249          $24                 $0    
163.31    $16,250 - $17,249          $41                 $0    
163.32    $17,250 - $18,249          $58                 $0    
163.33    $18,250 - $19,249          $75                 $0    
163.34    $19,250 - $20,249          $92                 $0  
163.35    $20,250 - $21,249          $109                $0  
163.36    $21,250 - $22,249          $126                $0 
164.1     $22,250 - $23,249          $143                $0
164.2     $23,250 - $24,249          $160                $0 
164.3     $24,250 - $25,249          $161                $0   
164.4     $25,250 - $26,249          $161                $0  
164.5     $26,250 - $27,249          $161                $0   
164.6     $27,250 - $28,249          $161                $0
164.7     $28,250 - $29,249          $161                $0
164.8     $29,250 - $30,249          $161                $0
164.9     $30,250 - $31,249          $161                $0
164.10    $31,250 - $32,249          $161                $6
164.11    $32,250 - $33,249          $161                $14
164.12    $33,250 - $34,249          $161                $22
164.13    $34,250 - $35,249          $161                $30
164.14    $35,250 - $36,249          $161                $38
164.15    $36,250 - $37,249          $161                $46
164.16    $37,250 - $38,249          $161                $54
164.17    $38,250 - $39,249          $161                $62
164.18    $39,250 - $40,249          $161                $70
164.19    $40,250 - $41,249          $161                $78
164.20    $41,250 - $42,249          $161                $86
164.21    $42,250 - $43,249          $161                $94
164.22    $43,250 - $44,249          $161                $102
164.23    $44,250 - $45,249          $161                $110
164.24    $45,250 - $46,249          $161                $118
164.25    $46,250 - $47,249          $161                $126
164.26    $47,250 - $48,249          $161                $134
164.27    $48,250 - $49,249          $161                $142
164.28    $49,250 - $50,249          $161                $150
164.29    $50,250 - $51,249          $161                $158
164.30    $51,250 - $52,249          $161                $166
164.31    $52,250 - $53,249          $161                $174
164.32    $53,250 - $54,249          $161                $182
164.33    $54,250 - $55,249          $161                $190
164.34    $55,250 - $56,249          $161                $198
164.35    $56,250 - $57,249          $161                $206
164.36    $57,250 - $58,249          $161                $214
165.1     $58,250 - $59,249          $161                $222
165.2     $59,250 - $60,249          $161                $230
165.3     $60,250 - $61,249          $161                $238
165.4     $61,250 - $62,249          $161                $246
165.5     $62,250 - $63,249          $161                $254
165.6     $63,250 - $64,249          $161                $262
165.7     $64,250 and over           $161                $268
165.8      For taxable years beginning after December 31, 2001, the 
165.9   commissioner of revenue shall prepare and make available to 
165.10  taxpayers a comprehensive table showing the credit under this 
165.11  section at brackets of earnings of the lesser-earning spouse and 
165.12  joint taxable income.  The brackets of earnings shall not be 
165.13  more than $2,000. 
165.14     For taxable years beginning after December 31, 2000 2002, 
165.15  the commissioner shall update the table as necessary to provide 
165.16  a credit that reflects the relationship between the marginal tax 
165.17  rates imposed under section 290.06, subdivision 2c. 
165.18     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
165.19  years beginning after December 31, 2000. 
165.20     Sec. 26.  [290.0676] [CREDIT FOR LAND DONATED FOR 
165.21  CONSERVATION PURPOSES.] 
165.22     Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
165.23  section, the following terms have the meanings given. 
165.24     (b) "Interest in real property" means fee title or 
165.25  qualified real property interest as defined in section 170(h) of 
165.26  the Internal Revenue Code and the United States Treasury 
165.27  Regulations promulgated thereunder. 
165.28     (c) "Fair market value" of an interest in real property 
165.29  means the value as determined by a "qualified appraisal" 
165.30  prepared by a "qualified appraiser" as those terms are defined 
165.31  in United States Treasury Regulations, section 1.170A-13, as 
165.32  amended through December 31, 2000.  If the taxpayer does not 
165.33  obtain an appraisal, "fair market value" means the estimated 
165.34  market value of the property as determined by the assessor for 
165.35  property tax purposes. 
165.36     (d) "Discount of the sale price" means the difference 
166.1   between the fair market value of an interest in real property at 
166.2   the time of sale and the sale price, if the price the property 
166.3   is sold for is lower. 
166.4      (e) "Conservation purposes" means the conservation purposes 
166.5   as defined in section 170(h)(4)(A)(i), (ii), and (iii) of the 
166.6   Internal Revenue Code. 
166.7      Subd. 2.  [CREDIT ALLOWED.] A taxpayer who donates an 
166.8   interest in real property in this state for conservation 
166.9   purposes to a qualified organization described in subdivision 3, 
166.10  paragraph (a), may take a credit against the tax imposed by this 
166.11  chapter in an amount equal to 50 percent of the fair market 
166.12  value of the interest in real property.  A taxpayer who sells an 
166.13  interest in real property at a discount for conservation 
166.14  purposes may take a credit against the tax imposed by this 
166.15  chapter in an amount equal to 50 percent of the value of the 
166.16  discount of the sale price in the interest in real property. 
166.17     Subd. 3.  [QUALIFICATION.] (a) To qualify for a credit 
166.18  under this section, the taxpayer must convey the interest in 
166.19  real property to: 
166.20     (1) the state of Minnesota, a local government conservation 
166.21  agency, or a special purpose unit of government; or 
166.22     (2) a private organization as provided in section 501(c) of 
166.23  the Internal Revenue Code that: 
166.24     (i) meets the requirements of section 170(h)(3) of the 
166.25  Internal Revenue Code; and 
166.26     (ii) is organized and operated for one of the conservation 
166.27  purposes specified in section 170(h)(4)(A)(i), (ii), and (iii) 
166.28  of the Internal Revenue Code.  
166.29     (b) A taxpayer claiming the credit under this section shall 
166.30  attach the following to the tax returns on which the credit is 
166.31  claimed:  
166.32     (1) a certificate of acceptance from an organization 
166.33  described in paragraph (a) verifying that the organization has 
166.34  accepted the contribution; and 
166.35     (2) a copy of a qualified appraisal by a qualified 
166.36  appraiser as those terms are defined in United States Treasury 
167.1   Regulations, section 1.170A-13, as amended through December 31, 
167.2   2000, or a copy of the most recent notice of estimated market 
167.3   value provided by the assessor. 
167.4      (c) Conveyances of real property for open space for the 
167.5   purpose of fulfilling density requirements or other requirements 
167.6   to obtain subdivision or building permits are not eligible for a 
167.7   credit under this section. 
167.8      Subd. 4.  [LIMITATION; CARRYOVER.] (a) The credit for the 
167.9   taxable year may not exceed the taxpayer's liability for tax 
167.10  before the credit under this section or $100,000, whichever is 
167.11  less. 
167.12     (b) If the amount of the credit determined under this 
167.13  section for any taxable year exceeds the limitation in paragraph 
167.14  (a), the excess is a carryover to each of the five succeeding 
167.15  taxable years.  All of the excess unused credit for the taxable 
167.16  year must be carried first to the earliest of the taxable years 
167.17  to which the credit may be carried and then to each successive 
167.18  year to which the credit may be carried.  The unused credit that 
167.19  may be added under this paragraph in any year may not exceed the 
167.20  lesser of the taxpayer's liability for tax less the land 
167.21  donation credit for the taxable year or $100,000. 
167.22     Subd. 5.  [EXPIRATION.] The credit under this section 
167.23  expires for contributions made after December 31, 2004.  
167.24     <b>[EFFECTIVE DATE.]</b> This section is effective for 
167.25  contributions made after the day following final enactment in 
167.26  taxable years beginning after December 31, 2000. 
167.27     Sec. 27.  [290.0679] [ASSIGNMENT OF REFUND.] 
167.28     Subdivision 1.  [DEFINITIONS.] (a) "Qualifying taxpayer" 
167.29  means a taxpayer who has a child in kindergarten through grade 
167.30  12 in the current tax year and who met all other eligibility 
167.31  requirements for receiving the education credit in the tax year 
167.32  preceding the assignment of the taxpayer's refund. 
167.33     (b) "Education credit" means the credit allowed under 
167.34  section 290.0674. 
167.35     (c) "Refund" means an individual income tax refund or 
167.36  political contribution refund under this chapter, or a property 
168.1   tax refund under chapter 290A. 
168.2      (d) "Financial institution" means a state or federally 
168.3   chartered bank, savings bank, savings association, or credit 
168.4   union. 
168.5      (e) "Qualifying organization" means a tax-exempt 
168.6   organization under section 501(c)(3) of the Internal Revenue 
168.7   Code. 
168.8      (f) "Assignee" means a financial institution or qualifying 
168.9   organization that is entitled to receive payment of a refund 
168.10  assigned under this section. 
168.11     Subd. 2.  [CONDITIONS FOR ASSIGNMENT.] A qualifying 
168.12  taxpayer may assign all or part of a refund for the current and 
168.13  future taxable years to a financial institution or a qualifying 
168.14  organization.  The amount assigned may not exceed the maximum 
168.15  allowable education credit.  Both the taxpayer and spouse must 
168.16  consent to the assignment of a refund from a joint return. 
168.17     Subd. 3.  [CONSENT FOR DISCLOSURE.] When the taxpayer 
168.18  applies to the financial institution or the qualifying 
168.19  organization for a loan to be secured by the assignment under 
168.20  subdivision 2, the taxpayer must sign a written consent on a 
168.21  form prescribed by the commissioner.  The consent must authorize 
168.22  the commissioner to disclose to the financial institution or 
168.23  qualifying organization the total amount of state taxes owed or 
168.24  revenue recapture claims filed under chapter 270A against the 
168.25  taxpayer, and the total amount of outstanding assignments made 
168.26  by the taxpayer under this section.  For a refund from a joint 
168.27  return, the consent must also authorize the disclosure of taxes, 
168.28  revenue recapture claims, and assignments relating to the 
168.29  taxpayer's spouse, and must be signed by the spouse.  The 
168.30  financial institution or qualifying organization may request 
168.31  that the taxpayer provide a copy of the taxpayer's previous 
168.32  year's income tax return, if any, and may assist the taxpayer in 
168.33  requesting a copy of the previous year's return from the 
168.34  commissioner. 
168.35     Subd. 4.  [CONSUMER DISCLOSURE.] (a) If the loan secured by 
168.36  the assignment involves payment by the assignee to a third-party 
169.1   vendor or provider of a product or service, the purchase of 
169.2   which qualifies for the education credit, the third-party vendor 
169.3   must comply with the disclosure requirements of this subdivision.
169.4      (b) The third-party vendor must disclose to the taxpayer, 
169.5   in plain language: 
169.6      (1) the cost of each product or service for which the 
169.7   third-party vendor separately charges the taxpayer; 
169.8      (2) any fees charged to the taxpayer for tax preparation 
169.9   services; and 
169.10     (3) for qualifying low-income taxpayers, information on the 
169.11  availability of free tax preparation services. 
169.12     (c) The third-party vendor must provide to the taxpayer 
169.13  executed copies of any documents signed by the taxpayer. 
169.14     Subd. 5.  [FILING OF ASSIGNMENT.] The commissioner shall 
169.15  prescribe the form of and manner for filing an assignment of a 
169.16  refund under this section. 
169.17     Subd. 6.  [EFFECT OF ASSIGNMENT.] The taxpayer may not 
169.18  revoke an assignment after it has been filed.  The assignee must 
169.19  notify the commissioner if the loan secured by the assignment 
169.20  has been paid in full, in which case the assignment is 
169.21  canceled.  An assignment is in effect until the amount assigned 
169.22  is refunded in full to the assignee, or until the assignee 
169.23  cancels the assignment. 
169.24     Subd. 7.  [PAYMENT OF REFUND.] When a refund assigned under 
169.25  this section is issued by the commissioner, the proceeds of the 
169.26  refund must be distributed in the following order: 
169.27     (1) to satisfy any delinquent tax obligations of the 
169.28  taxpayer which are owed to the commissioner; 
169.29     (2) to claimant agencies to satisfy any revenue recapture 
169.30  claims filed against the taxpayer, in the order of priority of 
169.31  the claims set forth in section 270A.10; 
169.32     (3) to assignees to satisfy assignments under this section, 
169.33  based on the order in time in which the commissioner received 
169.34  the assignments; and 
169.35     (4) to the taxpayer. 
169.36     Subd. 8.  [LEGAL ACTION.] If there is a dispute between the 
170.1   taxpayer and the assignee after the commissioner has remitted 
170.2   the taxpayer's refund to the assignee, the taxpayer's only 
170.3   remedy is to bring an action against the assignee in court to 
170.4   recover the refund.  The action must be brought within two years 
170.5   after the commissioner remits the refund to the assignee.  The 
170.6   commissioner may not be a party to the proceeding. 
170.7      Subd. 9.  [ASSIGNMENTS PRIVATE DATA.] Information regarding 
170.8   assignments under this section is classified as private data on 
170.9   individuals. 
170.10     <b>[EFFECTIVE DATE.]</b> This section is effective for assignment 
170.11  of refunds for taxable years beginning after December 31, 2000.  
170.12  The commissioner may begin accepting assignments after August 1, 
170.13  2001.  
170.14     Sec. 28.  Minnesota Statutes 2000, section 290.068, 
170.15  subdivision 1, is amended to read: 
170.16     Subdivision 1.  [CREDIT ALLOWED.] A corporation, other than 
170.17  a corporation treated as an "S" corporation under section 
170.18  290.9725, taxpayer is allowed a credit against the portion of 
170.19  the franchise tax computed under section 290.06, subdivision 1, 
170.20  for the taxable year equal to: 
170.21     (a) 5 percent of the first $2,000,000 of the excess (if 
170.22  any) of: 
170.23     (1) the qualified research expenses for the taxable year, 
170.24  over 
170.25     (2) the base amount; and 
170.26     (b) 2.5 4 percent on all of such excess expenses over 
170.27  $2,000,000. 
170.28     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
170.29  years beginning after December 31, 2000. 
170.30     Sec. 29.  Minnesota Statutes 2000, section 290.068, 
170.31  subdivision 3, is amended to read: 
170.32     Subd. 3.  [LIMITATION; CARRYOVER.] (a)(1) The credit for 
170.33  the taxable year shall may not exceed the liability for tax.  
170.34  "Liability for tax" for purposes of this section means the tax 
170.35  imposed under this chapter section 290.06 for the taxable year 
170.36  reduced by the sum of the nonrefundable credits allowed under 
171.1   this chapter. 
171.2      (2) In the case of a corporation which is For a partner in 
171.3   a partnership, the credit allowed for the taxable year shall may 
171.4   not exceed the lesser of the amount determined under clause (1) 
171.5   for the taxable year or an amount (separately computed with 
171.6   respect to the corporation's taxpayer's interest in the trade or 
171.7   business or entity) equal to the amount of tax attributable to 
171.8   that portion of taxable income which is allocable or 
171.9   apportionable to the corporation's taxpayer's interest in the 
171.10  trade or business or entity.  
171.11     (b) If the amount of the credit determined under this 
171.12  section for any taxable year exceeds the limitation under clause 
171.13  (a), the excess shall be is a research credit carryover to each 
171.14  of the 15 succeeding taxable years.  The entire amount of the 
171.15  excess unused credit for the taxable year shall must be carried 
171.16  first to the earliest of the taxable years to which the credit 
171.17  may be carried and then to each successive year to which the 
171.18  credit may be carried.  The amount of the unused credit which 
171.19  may be added under this clause shall may not exceed the 
171.20  taxpayer's liability for tax less the research credit for the 
171.21  taxable year.  
171.22     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
171.23  years beginning after December 31, 2000. 
171.24     Sec. 30.  Minnesota Statutes 2000, section 290.068, 
171.25  subdivision 4, is amended to read: 
171.26     Subd. 4.  [PARTNERSHIPS.] In the case of partnerships 
171.27  taxpayers other than corporations, the credit shall be allocated 
171.28  in the same manner provided by section is subject to sections 
171.29  41(f)(2) and 41(g) of the Internal Revenue Code. 
171.30     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
171.31  years beginning after December 31, 2000. 
171.32     Sec. 31.  [290.0692] [BIOMEDICAL INNOVATION AND 
171.33  COMMERCIALIZATION INITIATIVE CREDIT.] 
171.34     (a) A tax credit is allowed for cash investments in the 
171.35  biomedical innovation and commercialization initiative pursuant 
171.36  to section 116J.885.  A credit is allowed against the tax 
172.1   imposed by sections 290.03 and 290.06 equal to 25 percent of the 
172.2   amount of the investment by the taxpayer for the year of the 
172.3   investment. 
172.4      (b) The amount of tax credits for a taxable year shall not 
172.5   exceed the liability for tax.  For purposes of this section, 
172.6   "liability for tax," means the tax imposed by sections 290.03 
172.7   and 290.06 for the taxable year reduced by the amount of 
172.8   nonrefundable credits allowed under this chapter.  The unused 
172.9   portion of the credits shall be a biomedical innovation and 
172.10  commercialization credit carryover for the tax year and each of 
172.11  the subsequent nine succeeding taxable years.  The commissioner 
172.12  shall prescribe the manner in which the credit may be claimed.  
172.13  This may include allowing the credit only as a separately 
172.14  processed claim for refund. 
172.15     (c) The biomedical innovation and commercialization 
172.16  initiative or any for-profit entity that is formed under section 
172.17  116J.885, subdivision 3, clause (5), must file, in writing, an 
172.18  information return with the commissioner no later than February 
172.19  15 of each year.  The information return must contain the total 
172.20  amount of investments in the biomedical innovation and 
172.21  commercialization initiative or the for-profit entity, the 
172.22  amount of investment made by each taxpayer, and the taxpayer's 
172.23  name and Minnesota tax identification number. 
172.24     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
172.25  beginning after December 31, 2000.  
172.26     Sec. 32.  [290.0803] [GAIN ON QUALIFIED STOCK.] 
172.27     (a) An individual is allowed a subtraction for 50 percent 
172.28  of any gain from the sale or exchange of qualified stock held 
172.29  for more than five years.  To qualify for the subtraction under 
172.30  this section, the stock must be: 
172.31     (1) acquired after the day following final enactment of 
172.32  this section; 
172.33     (2) in a business that was a qualified business for the 
172.34  taxable year in which the individual acquired the stock and for 
172.35  the taxable year prior to the year in which the individual sold 
172.36  or exchanged the stock. 
173.1      (b) Stock means common or preferred stock or an ownership 
173.2   interest in an entity taxed as a partnership. 
173.3      (c) A business is a qualified business only if it: 
173.4      (1) meets the active business requirements of section 
173.5   1202(e) of the Internal Revenue Code, except the business need 
173.6   not be a C corporation; 
173.7      (2) meets the jurisdiction requirements of section 297A.66 
173.8   or agrees voluntarily to collect tax under chapter 297A; and 
173.9      (3) has filed a certification with the commissioner of 
173.10  trade and economic development for the taxable year under 
173.11  paragraph (d). 
173.12     (d) To be a qualified business for a taxable year, the 
173.13  business must file a certification with the commissioner of 
173.14  trade and economic development that it meets the requirements of 
173.15  paragraph (c), clauses (1) and (2), by 15 days before the start 
173.16  of a taxable year.  The certification must be made in the form 
173.17  prescribed by the commissioner of trade and economic development 
173.18  and must be annually renewed, in the manner prescribed by the 
173.19  commissioner of trade and economic development, to be in effect 
173.20  for a taxable year.  The commissioner of trade and economic 
173.21  development shall make available to the public, through the 
173.22  Internet or in any other way the commissioner determines 
173.23  appropriate, a list of the qualifying businesses for each 
173.24  taxable year. 
173.25     Sec. 33.  Minnesota Statutes 2000, section 290.091, 
173.26  subdivision 2, is amended to read: 
173.27     Subd. 2.  [DEFINITIONS.] For purposes of the tax imposed by 
173.28  this section, the following terms have the meanings given: 
173.29     (a) "Alternative minimum taxable income" means the sum of 
173.30  the following for the taxable year: 
173.31     (1) the taxpayer's federal alternative minimum taxable 
173.32  income as defined in section 55(b)(2) of the Internal Revenue 
173.33  Code; 
173.34     (2) the taxpayer's itemized deductions allowed in computing 
173.35  federal alternative minimum taxable income, but excluding: 
173.36     (i) the Minnesota charitable contribution deduction; 
174.1      (ii) the medical expense deduction; 
174.2      (iii) the casualty, theft, and disaster loss deduction; 
174.3      (iv) the impairment-related work expenses of a disabled 
174.4   person; and 
174.5      (v) holocaust victims' settlement payments to the extent 
174.6   allowed under section 290.01, subdivision 19b; 
174.7      (3) for depletion allowances computed under section 613A(c) 
174.8   of the Internal Revenue Code, with respect to each property (as 
174.9   defined in section 614 of the Internal Revenue Code), to the 
174.10  extent not included in federal alternative minimum taxable 
174.11  income, the excess of the deduction for depletion allowable 
174.12  under section 611 of the Internal Revenue Code for the taxable 
174.13  year over the adjusted basis of the property at the end of the 
174.14  taxable year (determined without regard to the depletion 
174.15  deduction for the taxable year); 
174.16     (4) to the extent not included in federal alternative 
174.17  minimum taxable income, the amount of the tax preference for 
174.18  intangible drilling cost under section 57(a)(2) of the Internal 
174.19  Revenue Code determined without regard to subparagraph (E); and 
174.20     (5) to the extent not included in federal alternative 
174.21  minimum taxable income, the amount of interest income as 
174.22  provided by section 290.01, subdivision 19a, clause (1); 
174.23     less the sum of the amounts determined under the following: 
174.24     (1) interest income as defined in section 290.01, 
174.25  subdivision 19b, clause (1); 
174.26     (2) an overpayment of state income tax as provided by 
174.27  section 290.01, subdivision 19b, clause (2), to the extent 
174.28  included in federal alternative minimum taxable income; 
174.29     (3) the amount of investment interest paid or accrued 
174.30  within the taxable year on indebtedness to the extent that the 
174.31  amount does not exceed net investment income, as defined in 
174.32  section 163(d)(4) of the Internal Revenue Code.  Interest does 
174.33  not include amounts deducted in computing federal adjusted gross 
174.34  income; and 
174.35     (4) amounts subtracted from federal taxable income as 
174.36  provided by section 290.01, subdivision 19b, clauses clause (4); 
175.1   and (6) 
175.2      (5) to the extent the gain was included in federal taxable 
175.3   income, the capital gains exclusion under section 290.0803. 
175.4      In the case of an estate or trust, alternative minimum 
175.5   taxable income must be computed as provided in section 59(c) of 
175.6   the Internal Revenue Code. 
175.7      (b) "Investment interest" means investment interest as 
175.8   defined in section 163(d)(3) of the Internal Revenue Code. 
175.9      (c) "Tentative minimum tax" equals 6.4 percent of 
175.10  alternative minimum taxable income after subtracting the 
175.11  exemption amount determined under subdivision 3. 
175.12     (d) "Regular tax" means the tax that would be imposed under 
175.13  this chapter (without regard to this section and section 
175.14  290.032), reduced by the sum of the nonrefundable credits 
175.15  allowed under this chapter.  
175.16     (e) "Net minimum tax" means the minimum tax imposed by this 
175.17  section. 
175.18     (f) "Minnesota charitable contribution deduction" means a 
175.19  charitable contribution deduction under section 170 of the 
175.20  Internal Revenue Code to or for the use of an entity described 
175.21  in section 290.21, subdivision 3, clauses (a) to (e).  When the 
175.22  federal deduction for charitable contributions is limited under 
175.23  section 170(b) of the Internal Revenue Code, the allowable 
175.24  contributions in the year of contribution are deemed to be first 
175.25  contributions to entities described in section 290.21, 
175.26  subdivision 3, clauses (a) to (e). 
175.27     Sec. 34.  Minnesota Statutes 2000, section 290.091, 
175.28  subdivision 3, is amended to read: 
175.29     Subd. 3.  [EXEMPTION AMOUNT.] For purposes of computing the 
175.30  alternative minimum tax, the exemption amount is the exemption 
175.31  determined under section 55(d) of the Internal Revenue Code, as 
175.32  amended through December 31, 1992, except that (i) for married 
175.33  couples filing joint returns, the exemption amount equals two 
175.34  times the amount allowed in section 55(d)(1)(B) of the Internal 
175.35  Revenue Code as amended through December 31, 1992, and the 
175.36  phaseout threshold equals two times the amount provided in 
176.1   section 55(d)(3)(B) of the Internal Revenue Code as amended 
176.2   through December 31, 1992; (ii) for married couples filing 
176.3   separate returns, the exemption amount and phaseout threshold 
176.4   equal one-half the amounts provided for married couples filing 
176.5   joint returns; and (iii) for all filers, alternative minimum 
176.6   taxable income as determined under this section must be 
176.7   substituted in the computation of the phase out under section 
176.8   55(d)(3). 
176.9      <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
176.10  years beginning after December 31, 2000. 
176.11     Sec. 35.  Minnesota Statutes 2000, section 290.0921, 
176.12  subdivision 1, is amended to read: 
176.13     Subdivision 1.  [TAX IMPOSED.] In addition to the taxes 
176.14  computed under this chapter without regard to this section, the 
176.15  franchise tax imposed on corporations includes a tax equal to 
176.16  the excess, if any, for the taxable year of:  
176.17     (1) 5.8 percent of Minnesota alternative minimum taxable 
176.18  income less the credit allowed under section 290.35, subdivision 
176.19  3; over 
176.20     (2) the tax imposed under section 290.06, subdivision 1, 
176.21  without regard to this section.  
176.22     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
176.23  years beginning after December 31, 2000. 
176.24     Sec. 36.  Minnesota Statutes 2000, section 290.0921, 
176.25  subdivision 2, is amended to read: 
176.26     Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
176.27  the following terms have the meanings given them. 
176.28     (b) "Alternative minimum taxable net income" is alternative 
176.29  minimum taxable income, 
176.30     (1) less the exemption amount, and 
176.31     (2) apportioned or allocated to Minnesota under section 
176.32  290.17, 290.191, or 290.20. 
176.33     (c) The "exemption amount" is $40,000, reduced, but not 
176.34  below zero, by 25 percent of the excess of alternative minimum 
176.35  taxable income over $150,000. 
176.36     (d) "Minnesota alternative minimum taxable income" is 
177.1   alternative minimum taxable net income, less the deductions for 
177.2   alternative tax net operating loss under subdivision 4; 
177.3   charitable contributions under subdivision 5; and dividends 
177.4   received under subdivision 6.  The sum of the deductions under 
177.5   this paragraph may not exceed 90 percent of alternative minimum 
177.6   taxable net income.  This limitation does not apply to a 
177.7   deduction for dividends paid to or received from a corporation 
177.8   which is subject to tax under section 290.35 or 290.36 and which 
177.9   is a member of an affiliated group of corporations as defined by 
177.10  the Internal Revenue Code. 
177.11     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
177.12  years beginning after December 31, 2000. 
177.13     Sec. 37.  Minnesota Statutes 2000, section 290.0921, 
177.14  subdivision 3, is amended to read: 
177.15     Subd. 3.  [ALTERNATIVE MINIMUM TAXABLE INCOME.] 
177.16  "Alternative minimum taxable income" is Minnesota net income as 
177.17  defined in section 290.01, subdivision 19, and includes the 
177.18  adjustments and tax preference items in sections 56, 57, 58, and 
177.19  59(d), (e), (f), and (h) of the Internal Revenue Code.  If a 
177.20  corporation files a separate company Minnesota tax return, the 
177.21  minimum tax must be computed on a separate company basis.  If a 
177.22  corporation is part of a tax group filing a unitary return, the 
177.23  minimum tax must be computed on a unitary basis.  The following 
177.24  adjustments must be made. 
177.25     (1) For purposes of the depreciation adjustments under 
177.26  section 56(a)(1) and 56(g)(4)(A) of the Internal Revenue Code, 
177.27  the basis for depreciable property placed in service in a 
177.28  taxable year beginning before January 1, 1990, is the adjusted 
177.29  basis for federal income tax purposes, including any 
177.30  modification made in a taxable year under section 290.01, 
177.31  subdivision 19e, or Minnesota Statutes 1986, section 290.09, 
177.32  subdivision 7, paragraph (c). 
177.33     (2) For taxable years beginning after December 31, 2000, 
177.34  the amount of any remaining modification made under section 
177.35  290.01, subdivision 19e, or Minnesota Statutes 1986, section 
177.36  290.09, subdivision 7, paragraph (c), not previously deducted is 
178.1   a depreciation allowance in the first taxable year after 
178.2   December 31, 2000. 
178.3      (3) The alternative tax net operating loss deduction under 
178.4   sections 56(a)(4) and 56(d) of the Internal Revenue Code does 
178.5   not apply. 
178.6      (3) (4) The special rule for certain dividends under 
178.7   section 56(g)(4)(C)(ii) of the Internal Revenue Code does not 
178.8   apply. 
178.9      (4) (5) The special rule for dividends from section 936 
178.10  companies under section 56(g)(4)(C)(iii) does not apply. 
178.11     (5) (6) The tax preference for depletion under section 
178.12  57(a)(1) of the Internal Revenue Code does not apply. 
178.13     (6) (7) The tax preference for intangible drilling costs 
178.14  under section 57(a)(2) of the Internal Revenue Code must be 
178.15  calculated without regard to subparagraph (E) and the 
178.16  subtraction under section 290.01, subdivision 19d, clause (4). 
178.17     (7) (8) The tax preference for tax exempt interest under 
178.18  section 57(a)(5) of the Internal Revenue Code does not apply.  
178.19     (8) (9) The tax preference for charitable contributions of 
178.20  appreciated property under section 57(a)(6) of the Internal 
178.21  Revenue Code does not apply. 
178.22     (9) (10) For purposes of calculating the tax preference for 
178.23  accelerated depreciation or amortization on certain property 
178.24  placed in service before January 1, 1987, under section 57(a)(7) 
178.25  of the Internal Revenue Code, the deduction allowable for the 
178.26  taxable year is the deduction allowed under section 290.01, 
178.27  subdivision 19e. 
178.28     (11) For taxable years beginning after December 31, 2000, 
178.29  the amount of any remaining modification made under section 
178.30  290.01, subdivision 19e, not previously deducted is a 
178.31  depreciation or amortization allowance in the first taxable year 
178.32  after December 31, 2000. 
178.33     (10) (12) For purposes of calculating the adjustment for 
178.34  adjusted current earnings in section 56(g) of the Internal 
178.35  Revenue Code, the term "alternative minimum taxable income" as 
178.36  it is used in section 56(g) of the Internal Revenue Code, means 
179.1   alternative minimum taxable income as defined in this 
179.2   subdivision, determined without regard to the adjustment for 
179.3   adjusted current earnings in section 56(g) of the Internal 
179.4   Revenue Code. 
179.5      (11) (13) For purposes of determining the amount of 
179.6   adjusted current earnings under section 56(g)(3) of the Internal 
179.7   Revenue Code, no adjustment shall be made under section 56(g)(4) 
179.8   of the Internal Revenue Code with respect to (i) the amount of 
179.9   foreign dividend gross-up subtracted as provided in section 
179.10  290.01, subdivision 19d, clause (1), (ii) the amount of refunds 
179.11  of income, excise, or franchise taxes subtracted as provided in 
179.12  section 290.01, subdivision 19d, clause (10), or (iii) the 
179.13  amount of royalties, fees or other like income subtracted as 
179.14  provided in section 290.01, subdivision 19d, clause (11). 
179.15     Items of tax preference must not be reduced below zero as a 
179.16  result of the modifications in this subdivision. 
179.17     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
179.18  following final enactment. 
179.19     Sec. 38.  Minnesota Statutes 2000, section 290.0921, 
179.20  subdivision 6, is amended to read: 
179.21     Subd. 6.  [DIVIDENDS RECEIVED.] (a) A deduction is allowed 
179.22  from alternative minimum taxable net income equal to the 
179.23  deduction for dividends received under section 290.21, 
179.24  subdivision 4, for purposes of calculating taxable income under 
179.25  section 290.01, subdivision 29. 
179.26     (b) The amount of the deduction must not exceed 90 percent 
179.27  of alternative minimum taxable net income.  This limitation does 
179.28  not apply to dividends paid to or received from a corporation 
179.29  which is subject to tax under section 290.35 or 290.36 and which 
179.30  is a member of an affiliated group of corporations as defined by 
179.31  the Internal Revenue Code. 
179.32     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
179.33  years beginning after December 31, 2000. 
179.34     Sec. 39.  Minnesota Statutes 2000, section 290.0922, 
179.35  subdivision 2, is amended to read: 
179.36     Subd. 2.  [EXEMPTIONS.] The following entities are exempt 
180.1   from the tax imposed by this section: 
180.2      (1) corporations exempt from tax under section 290.05 other 
180.3   than insurance companies exempt under subdivision 1, paragraph 
180.4   (d); 
180.5      (2) real estate investment trusts; 
180.6      (3) regulated investment companies or a fund thereof; and 
180.7      (4) entities having a valid election in effect under 
180.8   section 860D(b) of the Internal Revenue Code; 
180.9      (5) town and farmers' mutual insurance companies; and 
180.10     (6) cooperatives organized under chapter 308A that provide 
180.11  housing exclusively to persons age 55 and over and are 
180.12  classified as homesteads under section 273.124, subdivision 3. 
180.13     Entities not specifically exempted by this subdivision are 
180.14  subject to tax under this section, notwithstanding section 
180.15  290.05.  
180.16     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
180.17  years beginning after December 31, 2000. 
180.18     Sec. 40.  Minnesota Statutes 2000, section 290.093, is 
180.19  amended to read: 
180.20     290.093 [TAX COMPUTATION FOR MUTUAL SAVINGS BANKS 
180.21  CONDUCTING LIFE INSURANCE BUSINESS.] 
180.22     Mutual savings banks as defined in section 594 of the 
180.23  Internal Revenue Code are subject to a tax consisting of the sum 
180.24  of the taxes determined under clauses (1) and (2):  
180.25     (1) a tax computed on the taxable income determined without 
180.26  regard to any items of gross income or deductions properly 
180.27  allocable to the business of the life insurance department, at 
180.28  the rates and in the manner as if this section did not apply; 
180.29  and 
180.30     (2) a tax computed on the income of the life insurance 
180.31  department determined without regard to any items of gross 
180.32  income or deductions not properly allocable to the department 
180.33  computed in the manner provided in section 290.35 and at the 
180.34  rate provided in section 290.06 for a corporation not engaged in 
180.35  the business of issuing life insurance contracts.  
180.36     This section applies only if the life insurance department 
181.1   would, if it were treated as a separate corporation, qualify as 
181.2   a life insurance company under section 816 of the Internal 
181.3   Revenue Code. 
181.4      <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
181.5   years beginning after December 31, 2000. 
181.6      Sec. 41.  Minnesota Statutes 2000, section 290.095, 
181.7   subdivision 2, is amended to read: 
181.8      Subd. 2.  [DEFINED AND LIMITED.] (a) The term "net 
181.9   operating loss" as used in this section shall mean a net 
181.10  operating loss as defined in section 172(c) or 810(a), in the 
181.11  case of life insurance companies, of the Internal Revenue Code, 
181.12  with the modifications specified in subdivision 4.  The 
181.13  deductions provided in section 290.21 and the modification 
181.14  provided in section 290.01, subdivision 19d, clause (11) (9), 
181.15  cannot be used in the determination of a net operating loss.  
181.16     (b) The term "net operating loss deduction" as used in this 
181.17  section means the aggregate of the net operating loss carryovers 
181.18  to the taxable year, computed in accordance with subdivision 3.  
181.19  The provisions of section 172(b) or 810(b), in the case of life 
181.20  insurance companies, of the Internal Revenue Code relating to 
181.21  the carryback of net operating losses, do not apply. 
181.22     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
181.23  years beginning after December 31, 2000. 
181.24     Sec. 42.  Minnesota Statutes 2000, section 290.17, 
181.25  subdivision 1, is amended to read: 
181.26     Subdivision 1.  [SCOPE OF ALLOCATION RULES.] (a) The income 
181.27  of resident individuals is not subject to allocation outside 
181.28  this state.  The allocation rules apply to nonresident 
181.29  individuals, estates, trusts, nonresident partners of 
181.30  partnerships, nonresident shareholders of corporations treated 
181.31  as "S" corporations under section 290.9725, and all corporations 
181.32  not having such an election in effect.  If a partnership or 
181.33  corporation would not otherwise be subject to the allocation 
181.34  rules, but conducts a trade or business that is part of a 
181.35  unitary business involving another legal entity that is subject 
181.36  to the allocation rules, the partnership or corporation is 
182.1   subject to the allocation rules. 
182.2      (b) Expenses, losses, and other deductions (referred to 
182.3   collectively in this paragraph as "deductions") must be 
182.4   allocated along with the item or class of gross income to which 
182.5   they are definitely related for purposes of assignment under 
182.6   this section or apportionment under section 290.191, 290.20, 
182.7   290.35, or 290.36.  Deductions not definitely related to any 
182.8   item or class of gross income are assigned to the taxpayer's 
182.9   domicile. 
182.10     (c) In the case of an individual who is a resident for only 
182.11  part of a taxable year, the individual's income, gains, losses, 
182.12  and deductions from the distributive share of a partnership, S 
182.13  corporation, trust, or estate are not subject to allocation 
182.14  outside this state to the extent of the distributive share 
182.15  multiplied by a ratio, the numerator of which is the number of 
182.16  days the individual was a resident of this state during the tax 
182.17  year of the partnership, S corporation, trust, or estate, and 
182.18  the denominator of which is the number of days in the taxable 
182.19  year of the partnership, S corporation, trust, or estate. 
182.20     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
182.21  years beginning after December 31, 2000. 
182.22     Sec. 43.  Minnesota Statutes 2000, section 290.17, 
182.23  subdivision 4, is amended to read: 
182.24     Subd. 4.  [UNITARY BUSINESS PRINCIPLE.] (a) If a trade or 
182.25  business conducted wholly within this state or partly within and 
182.26  partly without this state is part of a unitary business, the 
182.27  entire income of the unitary business is subject to 
182.28  apportionment pursuant to section 290.191.  Notwithstanding 
182.29  subdivision 2, paragraph (c), none of the income of a unitary 
182.30  business is considered to be derived from any particular source 
182.31  and none may be allocated to a particular place except as 
182.32  provided by the applicable apportionment formula.  The 
182.33  provisions of this subdivision do not apply to business income 
182.34  subject to subdivision 5, income of an insurance company 
182.35  determined under section 290.35, or income of an investment 
182.36  company determined under section 290.36. 
183.1      (b) The term "unitary business" means business activities 
183.2   or operations which result in a flow of value between them.  The 
183.3   term may be applied within a single legal entity or between 
183.4   multiple entities and without regard to whether each entity is a 
183.5   sole proprietorship, a corporation, a partnership or a trust.  
183.6      (c) Unity is presumed whenever there is unity of ownership, 
183.7   operation, and use, evidenced by centralized management or 
183.8   executive force, centralized purchasing, advertising, 
183.9   accounting, or other controlled interaction, but the absence of 
183.10  these centralized activities will not necessarily evidence a 
183.11  nonunitary business.  Unity is also presumed when business 
183.12  activities or operations are of mutual benefit, dependent upon 
183.13  or contributory to one another, either individually or as a 
183.14  group. 
183.15     (d) Where a business operation conducted in Minnesota is 
183.16  owned by a business entity that carries on business activity 
183.17  outside the state different in kind from that conducted within 
183.18  this state, and the other business is conducted entirely outside 
183.19  the state, it is presumed that the two business operations are 
183.20  unitary in nature, interrelated, connected, and interdependent 
183.21  unless it can be shown to the contrary.  
183.22     (e) Unity of ownership is not deemed to exist when a 
183.23  corporation is involved unless that corporation is a member of a 
183.24  group of two or more business entities and more than 50 percent 
183.25  of the voting stock of each member of the group is directly or 
183.26  indirectly owned by a common owner or by common owners, either 
183.27  corporate or noncorporate, or by one or more of the member 
183.28  corporations of the group.  For this purpose, the term "voting 
183.29  stock" shall include membership interests of mutual insurance 
183.30  holding companies formed under section 60A.077.  
183.31     (f) The net income and apportionment factors under section 
183.32  290.191 or 290.20 of foreign corporations and other foreign 
183.33  entities which are part of a unitary business shall not be 
183.34  included in the net income or the apportionment factors of the 
183.35  unitary business.  A foreign corporation or other foreign entity 
183.36  which is required to file a return under this chapter shall file 
184.1   on a separate return basis.  The net income and apportionment 
184.2   factors under section 290.191 or 290.20 of foreign operating 
184.3   corporations shall not be included in the net income or the 
184.4   apportionment factors of the unitary business except as provided 
184.5   in paragraph (g). 
184.6      (g) The adjusted net income of a foreign operating 
184.7   corporation shall be deemed to be paid as a dividend on the last 
184.8   day of its taxable year to each shareholder thereof, in 
184.9   proportion to each shareholder's ownership, with which such 
184.10  corporation is engaged in a unitary business.  Such deemed 
184.11  dividend shall be treated as a dividend under section 290.21, 
184.12  subdivision 4. 
184.13     Dividends actually paid by a foreign operating corporation 
184.14  to a corporate shareholder which is a member of the same unitary 
184.15  business as the foreign operating corporation shall be 
184.16  eliminated from the net income of the unitary business in 
184.17  preparing a combined report for the unitary business.  The 
184.18  adjusted net income of a foreign operating corporation shall be 
184.19  its net income adjusted as follows: 
184.20     (1) any taxes paid or accrued to a foreign country, the 
184.21  commonwealth of Puerto Rico, or a United States possession or 
184.22  political subdivision of any of the foregoing shall be a 
184.23  deduction; and 
184.24     (2) the subtraction from federal taxable income for 
184.25  payments received from foreign corporations or foreign operating 
184.26  corporations under section 290.01, subdivision 19d, 
184.27  clause (11) (9), shall not be allowed. 
184.28     If a foreign operating corporation incurs a net loss, 
184.29  neither income nor deduction from that corporation shall be 
184.30  included in determining the net income of the unitary business. 
184.31     (h) For purposes of determining the net income of a unitary 
184.32  business and the factors to be used in the apportionment of net 
184.33  income pursuant to section 290.191 or 290.20, there must be 
184.34  included only the income and apportionment factors of domestic 
184.35  corporations or other domestic entities other than foreign 
184.36  operating corporations that are determined to be part of the 
185.1   unitary business pursuant to this subdivision, notwithstanding 
185.2   that foreign corporations or other foreign entities might be 
185.3   included in the unitary business.  
185.4      (i) Deductions for expenses, interest, or taxes otherwise 
185.5   allowable under this chapter that are connected with or 
185.6   allocable against dividends, deemed dividends described in 
185.7   paragraph (g), or royalties, fees, or other like income 
185.8   described in section 290.01, subdivision 19d, clause (11) (9), 
185.9   shall not be disallowed. 
185.10     (j) Each corporation or other entity, except a sole 
185.11  proprietorship, that is part of a unitary business must file 
185.12  combined reports as the commissioner determines.  On the 
185.13  reports, all intercompany transactions between entities included 
185.14  pursuant to paragraph (h) must be eliminated and the entire net 
185.15  income of the unitary business determined in accordance with 
185.16  this subdivision is apportioned among the entities by using each 
185.17  entity's Minnesota factors for apportionment purposes in the 
185.18  numerators of the apportionment formula and the total factors 
185.19  for apportionment purposes of all entities included pursuant to 
185.20  paragraph (h) in the denominators of the apportionment formula. 
185.21     (k) If a corporation has been divested from a unitary 
185.22  business and is included in a combined report for a fractional 
185.23  part of the common accounting period of the combined report:  
185.24     (1) its income includable in the combined report is its 
185.25  income incurred for that part of the year determined by 
185.26  proration or separate accounting; and 
185.27     (2) its sales, property, and payroll included in the 
185.28  apportionment formula must be prorated or accounted for 
185.29  separately. 
185.30     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
185.31  years beginning after December 31, 2000. 
185.32     Sec. 44.  Minnesota Statutes 2000, section 290.191, 
185.33  subdivision 2, is amended to read: 
185.34     Subd. 2.  [APPORTIONMENT FORMULA OF GENERAL APPLICATION.] 
185.35  Except for those trades or businesses required to use a 
185.36  different formula under subdivision 3 or section 290.35 or 
186.1   290.36, and for those trades or businesses that receive 
186.2   permission to use some other method under section 290.20 or 
186.3   under subdivision 4, a trade or business required to apportion 
186.4   its net income must apportion its income to this state on the 
186.5   basis of: 
186.6      (1) for taxable years beginning after December 31, 2000, 
186.7   and before January 1, 2004, the percentage obtained by taking 
186.8   the sum of:  
186.9      (1) 75 (i) 90 percent of the percentage which the sales 
186.10  made within this state in connection with the trade or business 
186.11  during the tax period are of the total sales wherever made in 
186.12  connection with the trade or business during the tax period; 
186.13     (2) 12.5 (ii) five percent of the percentage which the 
186.14  total tangible property used by the taxpayer in this state in 
186.15  connection with the trade or business during the tax period is 
186.16  of the total tangible property, wherever located, used by the 
186.17  taxpayer in connection with the trade or business during the tax 
186.18  period; and 
186.19     (3) 12.5 (iii) five percent of the percentage which the 
186.20  taxpayer's total payrolls paid or incurred in this state or paid 
186.21  in respect to labor performed in this state in connection with 
186.22  the trade or business during the tax period are of the 
186.23  taxpayer's total payrolls paid or incurred in connection with 
186.24  the trade or business during the tax period; and 
186.25     (2) for taxable years beginning after December 31, 2003, 
186.26  the percentage that the sales made within this state in 
186.27  connection with the trade or business during the tax period are 
186.28  of the total sales wherever made in connection with the trade or 
186.29  business during the tax period.  
186.30     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
186.31  years beginning after December 31, 2000. 
186.32     Sec. 45.  Minnesota Statutes 2000, section 290.191, 
186.33  subdivision 3, is amended to read: 
186.34     Subd. 3.  [APPORTIONMENT FORMULA FOR FINANCIAL 
186.35  INSTITUTIONS.] Except for an investment company required to 
186.36  apportion its income under section 290.36, a financial 
187.1   institution that is required to apportion its net income must 
187.2   apportion its net income to this state on the basis of: 
187.3      (1) for taxable years beginning after December 31, 2000, 
187.4   and before January 1, 2004, the percentage obtained by taking 
187.5   the sum of:  
187.6      (1) 75 (i) 90 percent of the percentage which the receipts 
187.7   from within this state in connection with the trade or business 
187.8   during the tax period are of the total receipts in connection 
187.9   with the trade or business during the tax period, from wherever 
187.10  derived; 
187.11     (2) 12.5 (ii) five percent of the percentage which the sum 
187.12  of the total tangible property used by the taxpayer in this 
187.13  state and the intangible property owned by the taxpayer and 
187.14  attributed to this state in connection with the trade or 
187.15  business during the tax period is of the sum of the total 
187.16  tangible property, wherever located, used by the taxpayer and 
187.17  the intangible property owned by the taxpayer and attributed to 
187.18  all states in connection with the trade or business during the 
187.19  tax period; and 
187.20     (3) 12.5 (iii) five percent of the percentage which the 
187.21  taxpayer's total payrolls paid or incurred in this state or paid 
187.22  in respect to labor performed in this state in connection with 
187.23  the trade or business during the tax period are of the 
187.24  taxpayer's total payrolls paid or incurred in connection with 
187.25  the trade or business during the tax period; and 
187.26     (2) for taxable years beginning after December 31, 2003, 
187.27  the percentage that the receipts from within this state in 
187.28  connection with the trade or business during the tax period are 
187.29  of the total receipts in connection with the trade or business 
187.30  during the tax period, from wherever derived. 
187.31     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
187.32  years beginning after December 31, 2000. 
187.33     Sec. 46.  Minnesota Statutes 2000, section 290.21, 
187.34  subdivision 4, is amended to read: 
187.35     Subd. 4.  (a)(1) Eighty percent of dividends received by a 
187.36  corporation during the taxable year from another corporation, in 
188.1   which the recipient owns 20 percent or more of the stock, by 
188.2   vote and value, not including stock described in section 
188.3   1504(a)(4) of the Internal Revenue Code when the corporate stock 
188.4   with respect to which dividends are paid does not constitute the 
188.5   stock in trade of the taxpayer or would not be included in the 
188.6   inventory of the taxpayer, or does not constitute property held 
188.7   by the taxpayer primarily for sale to customers in the ordinary 
188.8   course of the taxpayer's trade or business, or when the trade or 
188.9   business of the taxpayer does not consist principally of the 
188.10  holding of the stocks and the collection of the income and gains 
188.11  therefrom; and 
188.12     (2)(i) The remaining 20 percent of dividends if the 
188.13  dividends received are the stock in an affiliated company 
188.14  transferred in an overall plan of reorganization and the 
188.15  dividend is eliminated in consolidation under Treasury 
188.16  Department Regulation 1.1502-14(a), as amended through December 
188.17  31, 1989; or 
188.18     (ii) The remaining 20 percent of dividends if the dividends 
188.19  are received from a corporation which is subject to tax under 
188.20  section 290.35 or 290.36 and which is a member of an affiliated 
188.21  group of corporations as defined by the Internal Revenue Code 
188.22  and the dividend is eliminated in consolidation under Treasury 
188.23  Department Regulation 1.1502-14(a), as amended through December 
188.24  31, 1989, or is deducted under an election under section 243(b) 
188.25  of the Internal Revenue Code. 
188.26     (b) Seventy percent of dividends received by a corporation 
188.27  during the taxable year from another corporation in which the 
188.28  recipient owns less than 20 percent of the stock, by vote or 
188.29  value, not including stock described in section 1504(a)(4) of 
188.30  the Internal Revenue Code when the corporate stock with respect 
188.31  to which dividends are paid does not constitute the stock in 
188.32  trade of the taxpayer, or does not constitute property held by 
188.33  the taxpayer primarily for sale to customers in the ordinary 
188.34  course of the taxpayer's trade or business, or when the trade or 
188.35  business of the taxpayer does not consist principally of the 
188.36  holding of the stocks and the collection of income and gain 
189.1   therefrom.  
189.2      (c) The dividend deduction provided in this subdivision 
189.3   shall be allowed only with respect to dividends that are 
189.4   included in a corporation's Minnesota taxable net income for the 
189.5   taxable year. 
189.6      The dividend deduction provided in this subdivision does 
189.7   not apply to a dividend from a corporation which, for the 
189.8   taxable year of the corporation in which the distribution is 
189.9   made or for the next preceding taxable year of the corporation, 
189.10  is a corporation exempt from tax under section 501 of the 
189.11  Internal Revenue Code. 
189.12     The dividend deduction provided in this subdivision applies 
189.13  to the amount of regulated investment company dividends only to 
189.14  the extent determined under section 854(b) of the Internal 
189.15  Revenue Code. 
189.16     The dividend deduction provided in this subdivision shall 
189.17  not be allowed with respect to any dividend for which a 
189.18  deduction is not allowed under the provisions of section 246(c) 
189.19  of the Internal Revenue Code. 
189.20     (d) If dividends received by a corporation that does not 
189.21  have nexus with Minnesota under the provisions of Public Law 
189.22  Number 86-272 are included as income on the return of an 
189.23  affiliated corporation permitted or required to file a combined 
189.24  report under section 290.34, subdivision 2, then for purposes of 
189.25  this subdivision the determination as to whether the trade or 
189.26  business of the corporation consists principally of the holding 
189.27  of stocks and the collection of income and gains therefrom shall 
189.28  be made with reference to the trade or business of the 
189.29  affiliated corporation having a nexus with Minnesota. 
189.30     (e) The deduction provided by this subdivision does not 
189.31  apply if the dividends are paid by a FSC as defined in section 
189.32  922 of the Internal Revenue Code. 
189.33     (f) If one or more of the members of the unitary group 
189.34  whose income is included on the combined report received a 
189.35  dividend, the deduction under this subdivision for each member 
189.36  of the unitary business required to file a return under this 
190.1   chapter is the product of:  (1) 100 percent of the dividends 
190.2   received by members of the group; (2) the percentage allowed 
190.3   pursuant to paragraph (a) or (b); and (3) the percentage of the 
190.4   taxpayer's business income apportionable to this state for the 
190.5   taxable year under section 290.191 or 290.20. 
190.6      <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
190.7   years beginning after December 31, 2000. 
190.8      Sec. 47.  Minnesota Statutes 2000, section 290.9725, is 
190.9   amended to read: 
190.10     290.9725 [S CORPORATION.] 
190.11     For purposes of this chapter, the term "S corporation" 
190.12  means any corporation having a valid election in effect for the 
190.13  taxable year under section 1362 of the Internal Revenue Code.  
190.14  An S corporation shall not be subject to the taxes imposed by 
190.15  this chapter, except:  
190.16     (1) the taxes imposed under sections 290.0922, 290.92, 
190.17  290.9727, 290.9728, and 290.9729; and 
190.18     (2) the tax under sections 290.06, subdivision 1, and 
190.19  290.0921 apply to a financial institution to which either 
190.20  section 585 or 593 of the Internal Revenue Code applies or that 
190.21  has a wholly owned subsidiary as described in section 
190.22  1361(b)(3)(B) of the Internal Revenue Code which is a financial 
190.23  institution under section 585 or 593 of the Internal Revenue 
190.24  Code. 
190.25     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
190.26  years beginning after December 31, 2000. 
190.27     Sec. 48.  Minnesota Statutes 2000, section 297I.20, is 
190.28  amended to read: 
190.29     297I.20 [GUARANTY ASSOCIATION ASSESSMENT OFFSET.] 
190.30     (a) An insurance company may offset against its premium tax 
190.31  liability to this state any amount paid for assessments made for 
190.32  insolvencies which occur after July 31, 1994, under sections 
190.33  60C.01 to 60C.22; and any amount paid for assessments made after 
190.34  July 31, 1994, under Minnesota Statutes 1992, sections 61B.01 to 
190.35  61B.16, or under sections 61B.18 to 61B.32 as follows: 
190.36     (1) Each such assessment shall give rise to an amount of 
191.1   offset equal to 20 percent of the amount of the assessment for 
191.2   each of the five calendar years following the year in which the 
191.3   assessment was paid. 
191.4      (2) The amount of offset initially determined for each 
191.5   taxable year is the sum of the amounts determined under clause 
191.6   (1) for that taxable year. 
191.7      (b)(1) Each year the commissioner shall compare total 
191.8   guaranty association assessments levied over the preceding five 
191.9   calendar years to the sum of all premium tax and corporate 
191.10  franchise tax revenues collected from insurance companies, 
191.11  without reduction for any guaranty association assessment offset 
191.12  in the preceding calendar year, referred to in this subdivision 
191.13  as "preceding year insurance tax revenues." 
191.14     (2) If total guaranty association assessments levied over 
191.15  the preceding five years exceed the preceding year insurance tax 
191.16  revenues, insurance companies must be allowed only a 
191.17  proportionate part of the premium tax offset calculated under 
191.18  paragraph (a) for the current calendar year. 
191.19     (3) The proportionate part of the premium tax offset 
191.20  allowed in the current calendar year is determined by 
191.21  multiplying the amount calculated under paragraph (a) by a 
191.22  fraction.  The numerator of the fraction equals the preceding 
191.23  year insurance tax revenues, and its denominator equals total 
191.24  guaranty association assessments levied over the preceding 
191.25  five-year period. 
191.26     (4) The proportionate part of the premium tax offset that 
191.27  is not allowed must be carried forward to subsequent tax years 
191.28  and added to the amount of premium tax offset calculated under 
191.29  paragraph (a) prior to application of the limitation imposed by 
191.30  this paragraph. 
191.31     (5) Any amount carried forward from prior years must be 
191.32  allowed before allowance of the offset for the current year 
191.33  calculated under paragraph (a). 
191.34     (6) The premium tax offset limitation must be calculated 
191.35  separately for (i) insurance companies subject to assessment 
191.36  under sections 60C.01 to 60C.22, and (ii) insurance companies 
192.1   subject to assessment under Minnesota Statutes 1992, sections 
192.2   61B.01 to 61B.16, or 61B.18 to 61B.32. 
192.3      (7) When the premium tax offset is limited by this 
192.4   provision, the commissioner shall notify affected insurance 
192.5   companies on a timely basis for purposes of completing premium 
192.6   and corporate franchise tax returns.  
192.7      (8) The guaranty associations created under sections 60C.01 
192.8   to 60C.22, Minnesota Statutes 1992, sections 61B.01 to 61B.16, 
192.9   and 61B.18 to 61B.32, shall provide the commissioner with the 
192.10  necessary information on guaranty association assessments. 
192.11     (c)(1) If the offset determined by the application of 
192.12  paragraphs (a) and (b) exceeds the greater of the insurance 
192.13  company's premium tax liability under this section or its 
192.14  corporate franchise tax liability under chapter 290 prior to 
192.15  allowance of the credit for premium taxes, then the insurance 
192.16  company may carry forward the excess, referred to in this 
192.17  subdivision as the "carryforward credit" to subsequent taxable 
192.18  years. 
192.19     (2) The carryforward credit is allowed as an offset against 
192.20  premium tax liability for the first succeeding year to the 
192.21  extent that the premium tax liability for that year exceeds the 
192.22  amount of the allowable offset for the year determined under 
192.23  paragraphs (a) and (b). 
192.24     (3) The carryforward credit must be reduced, but not below 
192.25  zero, by the greater of the amount of the carryforward credit 
192.26  allowed as an offset against the premium tax under this 
192.27  paragraph or the amount of the carryforward credit allowed as an 
192.28  offset against the insurance company's corporate franchise tax 
192.29  liability under section 290.35, subdivision 6, paragraph (d).  
192.30  The remainder, if any, of the carryforward credit must be 
192.31  carried forward to succeeding taxable years until the entire 
192.32  carryforward credit has been credited against the insurance 
192.33  company's liability for premium tax under this chapter and 
192.34  corporate franchise tax under chapter 290 if applicable for that 
192.35  taxable year. 
192.36     (d) When an insurer has offset against taxes its payment of 
193.1   an assessment of the Minnesota life and health guaranty 
193.2   association, and the association pays the insurer a refund with 
193.3   respect to the assessment under Minnesota Statutes 1992, section 
193.4   61B.07, subdivision 6, or 61B.24, subdivision 6, then the refund 
193.5   reduces the insurer's carryforward credit under paragraph (c).  
193.6   If the refund exceeds the amount of the carryforward credit, the 
193.7   excess amount must be repaid to the state by the insurers to the 
193.8   extent of the offset in the manner the commissioner requires. 
193.9      <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
193.10  years beginning after December 31, 2000. 
193.11     Sec. 49.  Minnesota Statutes 2000, section 298.01, 
193.12  subdivision 3b, is amended to read: 
193.13     Subd. 3b.  [DEDUCTIONS.] (a) For purposes of determining 
193.14  taxable income under subdivision 3, the deductions from gross 
193.15  income include only those expenses necessary to convert raw ores 
193.16  to marketable quality.  Such expenses include costs associated 
193.17  with refinement but do not include expenses such as 
193.18  transportation, stockpiling, marketing, or marine insurance that 
193.19  are incurred after marketable ores are produced, unless the 
193.20  expenses are included in gross income. 
193.21     (b) The provisions of section 290.01, subdivisions 19c, 
193.22  clauses (7) and (11) clause (6), and 19d, clauses (7) and 
193.23  (12) clause (10), are not used to determine taxable income. 
193.24     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
193.25  payable May 1, 2002, and thereafter. 
193.26     Sec. 50.  Minnesota Statutes 2000, section 298.01, 
193.27  subdivision 4c, is amended to read: 
193.28     Subd. 4c.  [SPECIAL DEDUCTIONS DEDUCTION FOR DEPRECIATION; 
193.29  NET OPERATING LOSS.] (a) For purposes of determining taxable 
193.30  income under subdivision 4, the following modifications are 
193.31  allowed: 
193.32     (1) the provisions of section 290.01, subdivisions 19c, 
193.33  clauses (7) and (11) clause (6), and 19d, clauses (7) and 
193.34  (12) clause (10), are not used to determine taxable income; and. 
193.35     (2) for assets placed in service before January 1, 1990, 
193.36  the deduction for depreciation will be the same amount allowed 
194.1   under chapter 290, except that after an asset has been fully 
194.2   depreciated for federal income tax purposes any remaining 
194.3   depreciable basis is allowed as a deduction using the 
194.4   straight-line method over the following number of years: 
194.5      (i) three-year property, one year; 
194.6      (ii) five- and seven-year property, two years; 
194.7      (iii) ten-year property, five years; and 
194.8      (iv) all other property, seven years. 
194.9      No deduction is allowed if an asset is fully depreciated 
194.10  for occupation tax purposes before January 1990. 
194.11     (b) For purposes of determining the deduction allowed under 
194.12  paragraph (a), clause (2), the remaining depreciable basis of 
194.13  property placed in service before January 1, 1990, is calculated 
194.14  as follows: 
194.15     (1) the adjusted basis of the property on December 31, 
194.16  1989, which was used to calculate the hypothetical corporate 
194.17  franchise tax under Minnesota Statutes 1988, section 298.40, 
194.18  including salvage value; less 
194.19     (2) deductions for depreciation allowed under section 
194.20  290.01, subdivision 19e. 
194.21     (c) The basis for determining gain or loss on sale or 
194.22  disposition of assets placed in service before January 1, 1990, 
194.23  is the basis determined under paragraph (b), less the deductions 
194.24  allowed under paragraph (a), clause (2). 
194.25     (d) (b) The amount of net operating loss incurred in a 
194.26  taxable year beginning before January 1, 1990, that may be 
194.27  carried over to a taxable year beginning after December 31, 
194.28  1989, is the amount of net operating loss carryover determined 
194.29  in the calculation of the hypothetical corporate franchise tax 
194.30  under Minnesota Statutes 1988, sections 298.40 and 298.402. 
194.31     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
194.32  payable May 1, 2002, and thereafter. 
194.33     Sec. 51.  Minnesota Statutes 2000, section 469.1732, 
194.34  subdivision 1, is amended to read: 
194.35     Subdivision 1.  [AUTHORITY.] A business that conducts 
194.36  business activity within a border city development zone 
195.1   designated under section 469.1731 may qualify for the property 
195.2   tax exemption under section 272.0212, the corporate franchise 
195.3   tax credit under subdivision 2, and the sales tax exemption 
195.4   under section 469.1734, subdivision 6. 
195.5      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
195.6   following final enactment. 
195.7      Sec. 52.  [REPORT ON INCOME TAX RECIPROCITY WITH 
195.8   WISCONSIN.] 
195.9      By March 1, 2002, the commissioner of revenue must report 
195.10  to house and senate committees dealing with taxes on the 
195.11  advisability of terminating individual income tax reciprocity 
195.12  with the state of Wisconsin under Minnesota Statutes, section 
195.13  290.081. 
195.14     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
195.15  following final enactment. 
195.16     Sec. 53.  [APPROPRIATION; TAXPAYER ASSISTANCE.] 
195.17     (a) $150,000 is appropriated for fiscal year 2002 from the 
195.18  general fund to the commissioner of revenue to make grants to 
195.19  one or more nonprofit organizations, qualifying under section 
195.20  501(c)(3) of the Internal Revenue Code of 1986, to coordinate, 
195.21  facilitate, encourage, and aid in the provision of taxpayer 
195.22  assistance services.  This appropriation is available for fiscal 
195.23  years 2002 and 2003 and does not become a part of the base.  
195.24     (b) For purposes of this section, "taxpayer assistance 
195.25  services" means accounting and tax preparation services provided 
195.26  by volunteers to low-income and disadvantaged Minnesota 
195.27  residents to help them file federal and state income tax returns 
195.28  and Minnesota property tax refund claims and to provide personal 
195.29  representation before the department of revenue and Internal 
195.30  Revenue Service. 
195.31     Sec. 54.  [REPEALER.] 
195.32     (a) Minnesota Statutes 2000, sections 290.06, subdivision 
195.33  25; and 290.0673, are repealed. 
195.34     (b) Minnesota Statutes 2000, sections 290.06, subdivision 
195.35  26; 290.095, subdivision 1a; 290.21, subdivision 3; 290.35; and 
195.36  290.9726, subdivision 7, are repealed. 
196.1      (c) Minnesota Statutes 2000, sections 469.1732, subdivision 
196.2   2; and 469.1734, subdivision 4, are repealed. 
196.3      (d) Minnesota Statutes 2000, sections 290.095, subdivision 
196.4   7; 290.23; 290.25; and 290.31, subdivisions 2, 2a, 3, 4, 5, and 
196.5   19, are repealed. 
196.6      (e) Minnesota Statutes 2000, section 290.191, subdivision 
196.7   4, is repealed. 
196.8      <b>[EFFECTIVE DATE.]</b> Paragraph (a) of this section is 
196.9   effective for taxable years beginning after December 31, 2001.  
196.10  Paragraphs (b) and (d) of this section are effective for taxable 
196.11  years beginning after December 31, 2000.  Paragraph (c) of this 
196.12  section is effective the day following final enactment.  
196.13  Paragraph (e) of this section is effective for tax years 
196.14  beginning after December 31, 2003. 
196.15                             ARTICLE 8 
196.16                        SALES AND USE TAXES 
196.17     Section 1.  Minnesota Statutes 2000, section 84.922, is 
196.18  amended by adding a subdivision to read: 
196.19     Subd. 11.  [PROOF OF SALES TAX PAYMENT.] A person applying 
196.20  for initial registration in Minnesota of an all-terrain vehicle 
196.21  shall provide a purchaser's certificate showing a complete 
196.22  description of the all-terrain vehicle, the seller's name and 
196.23  address, the full purchase price of the all-terrain vehicle, and 
196.24  the trade-in allowance, if any.  The certificate also must 
196.25  include information showing either that (1) the sales and use 
196.26  tax under chapter 297A was paid, or (2) the purchase was exempt 
196.27  from tax under chapter 297A.  The certificate is not required if 
196.28  the applicant provides a receipt, invoice, or other document 
196.29  that shows the all-terrain vehicle was purchased from a retailer 
196.30  maintaining a place of business in this state as defined in 
196.31  section 297A.66, subdivision 1. 
196.32     <b>[EFFECTIVE DATE.]</b> This section is effective for 
196.33  registrations occurring on or after July 1, 2001. 
196.34     Sec. 2.  Minnesota Statutes 2000, section 289A.11, 
196.35  subdivision 1, is amended to read: 
196.36     Subdivision 1.  [RETURN REQUIRED.] Except as provided in 
197.1   section 289A.18, subdivision 4, For the month period in which 
197.2   taxes imposed by chapter 297A are payable, or for which a return 
197.3   is due, a return for the preceding reporting period must be 
197.4   filed with the commissioner in the form and manner the 
197.5   commissioner prescribes.  A person making sales at retail at two 
197.6   or more places of business may file a consolidated return 
197.7   subject to rules prescribed by the commissioner.  In computing 
197.8   the dollar amount of items on the return, the amounts are 
197.9   rounded off to the nearest whole dollar, disregarding amounts 
197.10  less than 50 cents and increasing amounts of 50 cents to 99 
197.11  cents to the next highest dollar. 
197.12     Notwithstanding this subdivision, a person who is not 
197.13  required to hold a sales tax permit under chapter 297A and who 
197.14  makes annual purchases of less than $18,500 that are subject to 
197.15  the use tax imposed by section 297A.14, may file an annual use 
197.16  tax return on a form prescribed by the commissioner.  If a 
197.17  person who qualifies for an annual use tax reporting period is 
197.18  required to obtain a sales tax permit or makes use tax purchases 
197.19  in excess of $18,500 during the calendar year, the reporting 
197.20  period must be considered ended at the end of the month in which 
197.21  the permit is applied for or the purchase in excess of $18,500 
197.22  is made and a return must be filed for the preceding reporting 
197.23  period. 
197.24     <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
197.25  returns filed after January 1, 2002. 
197.26     Sec. 3.  Minnesota Statutes 2000, section 289A.18, 
197.27  subdivision 4, is amended to read: 
197.28     Subd. 4.  [SALES AND USE TAX RETURNS.] (a) Sales and use 
197.29  tax returns must be filed on or before the 20th day of the month 
197.30  following the close of the preceding reporting period, except 
197.31  that annual use tax returns provided for under section 289A.11, 
197.32  subdivision 1, must be filed by April 15 following the close of 
197.33  the calendar year, in the case of individuals.  Annual use tax 
197.34  returns of businesses, including sole proprietorships, and 
197.35  annual sales tax returns must be filed by February 5 following 
197.36  the close of the calendar year.  
198.1      (b) Except for the return for the June reporting period, 
198.2   which is due on the following August 25, returns filed by 
198.3   retailers required to remit liabilities by means of funds 
198.4   transfer under section 289A.20, subdivision 4, paragraph (d), 
198.5   are due on or before the 25th day of the month following the 
198.6   close of the preceding reporting period.  
198.7      (c) If a retailer has an average sales and use tax 
198.8   liability, including local sales and use taxes administered by 
198.9   the commissioner, equal to or less than $500 per month in any 
198.10  quarter of a calendar year, and has substantially complied with 
198.11  the tax laws during the preceding four calendar quarters, the 
198.12  retailer may request authorization to file and pay the taxes 
198.13  quarterly in subsequent calendar quarters.  The authorization 
198.14  remains in effect during the period in which the retailer's 
198.15  quarterly returns reflect sales and use tax liabilities of less 
198.16  than $1,500 and there is continued compliance with state tax 
198.17  laws. 
198.18     (d) (c) If a retailer has an average sales and use tax 
198.19  liability, including local sales and use taxes administered by 
198.20  the commissioner, equal to or less than $100 per month during a 
198.21  calendar year, and has substantially complied with the tax laws 
198.22  during that period, the retailer may request authorization to 
198.23  file and pay the taxes annually in subsequent years.  The 
198.24  authorization remains in effect during the period in which the 
198.25  retailer's annual returns reflect sales and use tax liabilities 
198.26  of less than $1,200 and there is continued compliance with state 
198.27  tax laws. 
198.28     (e) (d) The commissioner may also grant quarterly or annual 
198.29  filing and payment authorizations to retailers if the 
198.30  commissioner concludes that the retailers' future tax 
198.31  liabilities will be less than the monthly totals identified in 
198.32  paragraphs (b) and (c) and (d).  An authorization granted under 
198.33  this paragraph is subject to the same conditions as an 
198.34  authorization granted under paragraphs (b) and (c) and (d). 
198.35     (f) (e) A taxpayer who is a materials supplier may report 
198.36  gross receipts either on: 
199.1      (1) the cash basis as the consideration is received; or 
199.2      (2) the accrual basis as sales are made.  
199.3   As used in this paragraph, "materials supplier" means a person 
199.4   who provides materials for the improvement of real property; who 
199.5   is primarily engaged in the sale of lumber and building 
199.6   materials-related products to owners, contractors, 
199.7   subcontractors, repairers, or consumers; who is authorized to 
199.8   file a mechanics lien upon real property and improvements under 
199.9   chapter 514; and who files with the commissioner an election to 
199.10  file sales and use tax returns on the basis of this paragraph. 
199.11     <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
199.12  returns filed after January 1, 2002. 
199.13     Sec. 4.  Minnesota Statutes 2000, section 289A.20, 
199.14  subdivision 4, is amended to read: 
199.15     Subd. 4.  [SALES AND USE TAX.] (a) The taxes imposed by 
199.16  chapter 297A are due and payable to the commissioner monthly on 
199.17  or before the 20th day of the month following the month in which 
199.18  the taxable event occurred, or following another reporting 
199.19  period as the commissioner prescribes or as allowed under 
199.20  section 289A.18, subdivision 4, paragraph (f), except that use 
199.21  taxes due on an annual use tax return as provided under section 
199.22  289A.11, subdivision 1, are payable by April 15 following the 
199.23  close of the calendar year. 
199.24     (b) A vendor having a liability of $120,000 or more during 
199.25  a fiscal year ending June 30 must remit the June liability for 
199.26  the next year in the following manner: 
199.27     (1) Two business days before June 30 of the year, the 
199.28  vendor must remit 62 percent of the estimated June liability to 
199.29  the commissioner.  
199.30     (2) On or before August 14 of the year, the vendor must pay 
199.31  any additional amount of tax not remitted in June. 
199.32     (c) A vendor having a liability of $120,000 or more during 
199.33  a fiscal year ending June 30 must remit all liabilities on 
199.34  returns due for periods beginning in the subsequent calendar 
199.35  year by means of a funds transfer as defined in section 
199.36  336.4A-104, paragraph (a).  The funds transfer payment date, as 
200.1   defined in section 336.4A-401, must be on or before the 14th day 
200.2   of the month following the month in which the taxable event 
200.3   occurred, or on or before the 14th day of the month following 
200.4   the month in which the sale is reported under section 289A.18, 
200.5   subdivision 4, except for 62 percent of the estimated June 
200.6   liability, which is due two business days before June 30.  The 
200.7   remaining amount of the June liability is due on August 14.  If 
200.8   the date the tax is due is not a funds transfer business day, as 
200.9   defined in section 336.4A-105, paragraph (a), clause (4), the 
200.10  payment date must be on or before the funds transfer business 
200.11  day next following the date the tax is due. 
200.12     (d) (c) If the vendor required to remit by electronic funds 
200.13  transfer as provided in paragraph (c) (b) is unable due to 
200.14  reasonable cause to determine the actual sales and use tax due 
200.15  on or before the due date for payment, the vendor may remit an 
200.16  estimate of the tax owed using one of the following options: 
200.17     (1) 100 percent of the tax reported on the previous month's 
200.18  sales and use tax return; 
200.19     (2) 100 percent of the tax reported on the sales and use 
200.20  tax return for the same month in the previous calendar year; or 
200.21     (3) 95 percent of the actual tax due. 
200.22     Any additional amount of tax that is not remitted on or 
200.23  before the due date for payment, must be remitted with the 
200.24  return.  If a vendor fails to remit the actual liability or does 
200.25  not remit using one of the estimate options by the due date for 
200.26  payment, the vendor must remit actual liability as provided in 
200.27  paragraph (c) (b) in all subsequent periods.  This paragraph 
200.28  does not apply to the June sales and use tax liability. 
200.29     <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
200.30  returns filed after January 1, 2002. 
200.31     Sec. 5.  Minnesota Statutes 2000, section 289A.50, 
200.32  subdivision 2a, is amended to read: 
200.33     Subd. 2a.  [REFUND OF SALES TAX TO PURCHASERS.] If a vendor 
200.34  has collected from a purchaser a tax on a transaction that is 
200.35  not subject to the tax imposed by chapter 297A, the purchaser 
200.36  may apply directly to the commissioner for a refund under this 
201.1   section if: 
201.2      (a) the purchaser is currently registered to collect and 
201.3   remit the sales and tax or to remit the use tax; and 
201.4      (b) the amount of the refund applied for exceeds $500. 
201.5      The purchaser may not file more than two applications for 
201.6   refund under this subdivision in a calendar year. 
201.7      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
201.8   following final enactment. 
201.9      Sec. 6.  Minnesota Statutes 2000, section 297A.01, 
201.10  subdivision 3, is amended to read: 
201.11     Subd. 3.  A "sale" and a "purchase" includes, but is not 
201.12  limited to, each of the following transactions: 
201.13     (a) Any transfer of title or possession, or both, of 
201.14  tangible personal property, whether absolutely or conditionally, 
201.15  and the leasing of or the granting of a license to use or 
201.16  consume tangible personal property other than manufactured homes 
201.17  used for residential purposes for a continuous period of 30 days 
201.18  or more, for a consideration in money or by exchange or barter; 
201.19     (b) The production, fabrication, printing, or processing of 
201.20  tangible personal property for a consideration for consumers who 
201.21  furnish either directly or indirectly the materials used in the 
201.22  production, fabrication, printing, or processing; 
201.23     (c) The furnishing, preparing, or serving for a 
201.24  consideration of food, meals, or drinks.  "Sale" or "purchase" 
201.25  does not include: 
201.26     (1) meals or drinks served to patients, inmates, or persons 
201.27  residing at hospitals, sanitariums, nursing homes, senior 
201.28  citizens homes, and correctional, detention, and detoxification 
201.29  facilities; 
201.30     (2) meals or drinks purchased for and served exclusively to 
201.31  individuals who are 60 years of age or over and their spouses or 
201.32  to the handicapped and their spouses by governmental agencies, 
201.33  nonprofit organizations, agencies, or churches or pursuant to 
201.34  any program funded in whole or part through 42 USCA sections 
201.35  3001 through 3045, wherever delivered, prepared or served; or 
201.36     (3) meals and lunches served at public and private schools, 
202.1   universities, or colleges. 
202.2   Notwithstanding section 297A.25, subdivision 2, taxable food or 
202.3   meals include, but are not limited to, the following:  
202.4      (i) food or drinks sold by the retailer for immediate 
202.5   consumption on the retailer's premises.  Food and drinks sold 
202.6   within a building or grounds which require an admission charge 
202.7   for entrance are presumed to be sold for consumption on the 
202.8   premises; 
202.9      (ii) food or drinks prepared by the retailer for immediate 
202.10  consumption either on or off the retailer's premises.  For 
202.11  purposes of this subdivision, "food or drinks prepared for 
202.12  immediate consumption" includes any food product upon which an 
202.13  act of preparation including, but not limited to, cooking, 
202.14  mixing, sandwich making, blending, heating, or pouring has been 
202.15  performed by the retailer so the food product may be immediately 
202.16  consumed by the purchaser; 
202.17     (iii) ice cream, ice milk, frozen yogurt products, or 
202.18  frozen novelties sold in single or individual servings including 
202.19  cones, sundaes, and snow cones.  For purposes of this 
202.20  subdivision, "single or individual servings" does not include 
202.21  products when sold in bulk containers or bulk packaging; 
202.22     (iv) soft drinks and other beverages including all 
202.23  carbonated and noncarbonated beverages or drinks sold in liquid 
202.24  form except nonalcoholic beverages or drinks which contain milk 
202.25  or milk products, nonalcoholic beverages or drinks containing 15 
202.26  or more percent fruit juice, and noncarbonated and 
202.27  noneffervescent bottled water sold in individual containers of 
202.28  one-half gallon or more in size; 
202.29     (v) gum, candy, and candy products, except when sold for 
202.30  fundraising purposes by a nonprofit organization that provides 
202.31  educational and social activities primarily for young people 18 
202.32  years of age and under; 
202.33     (vi) ice; 
202.34     (vii) all food sold from vending machines; 
202.35     (viii) all food for immediate consumption sold from 
202.36  concession stands and vehicles; 
203.1      (ix) party trays; 
203.2      (x) all meals and single servings of packaged snack food 
203.3   sold in restaurants and bars; and 
203.4      (xi) bakery products: 
203.5      (A) prepared by the retailer for consumption on the 
203.6   retailer's premises; 
203.7      (B) sold at a place that charges admission; 
203.8      (C) sold from vending machines; or 
203.9      (D) sold in single or individual servings from concession 
203.10  stands, vehicles, bars, and restaurants.  For purposes of this 
203.11  subdivision, "single or individual servings" does not include 
203.12  products when sold in bulk containers or bulk packaging.  
203.13     For purposes of this subdivision, "premises" means the 
203.14  total space and facilities, including buildings, grounds, and 
203.15  parking lots that are made available or that are available for 
203.16  use by the retailer or customer for the purpose of sale or 
203.17  consumption of prepared food and drinks.  The premises of a 
203.18  caterer is the place where the catered food or drinks are 
203.19  served; 
203.20     (d) The granting of the privilege of admission to places of 
203.21  amusement, recreational areas, or athletic events, except a 
203.22  world championship football game sponsored by the national 
203.23  football league, and the privilege of having access to and the 
203.24  use of amusement devices, tanning facilities, reducing salons, 
203.25  steam baths, turkish baths, health clubs, and spas or athletic 
203.26  facilities; 
203.27     (e) The furnishing for a consideration of lodging and 
203.28  related services by a hotel, rooming house, tourist court, motel 
203.29  or trailer camp and of the granting of any similar license to 
203.30  use real property other than the renting or leasing thereof for 
203.31  a continuous period of 30 days or more; 
203.32     (f) The furnishing for a consideration of electricity, gas, 
203.33  water, or steam for use or consumption within this state, or 
203.34  local exchange telephone service, intrastate toll service, and 
203.35  interstate toll service, if that service originates from and is 
203.36  charged to a telephone located in this state.  Telephone service 
204.1   does not include services purchased with prepaid telephone 
204.2   calling cards.  Telephone service includes paging services and 
204.3   private communication service, as defined in United States Code, 
204.4   title 26, section 4252(d), as amended through December 31, 1991, 
204.5   except for private communication service purchased by an agent 
204.6   acting on behalf of the state lottery.  The furnishing for a 
204.7   consideration of access to telephone services by a hotel to its 
204.8   guests is a sale under this clause.  Sales by municipal 
204.9   corporations in a proprietary capacity are included in the 
204.10  provisions of this clause.  The furnishing of water and sewer 
204.11  services for residential use shall not be considered a sale.  
204.12  The sale of natural gas to be used as a fuel in vehicles 
204.13  propelled by natural gas shall not be considered a sale for the 
204.14  purposes of this section; 
204.15     (g) The furnishing for a consideration of cable television 
204.16  services, including charges for basic service, charges for 
204.17  premium service, and any other charges for any other 
204.18  pay-per-view, monthly, or similar television services; 
204.19     (h) The furnishing for a consideration of parking services, 
204.20  whether on a contractual, hourly, or other periodic basis, 
204.21  except for parking at a meter; 
204.22     (i) The furnishing for a consideration of services listed 
204.23  in this paragraph: 
204.24     (i) laundry and dry cleaning services including cleaning, 
204.25  pressing, repairing, altering, and storing clothes, linen 
204.26  services and supply, cleaning and blocking hats, and carpet, 
204.27  drapery, upholstery, and industrial cleaning.  Laundry and dry 
204.28  cleaning services do not include services provided by coin 
204.29  operated facilities operated by the customer; 
204.30     (ii) motor vehicle washing, waxing, and cleaning services, 
204.31  including services provided by coin-operated facilities operated 
204.32  by the customer, and rustproofing, undercoating, and towing of 
204.33  motor vehicles; 
204.34     (iii) building and residential cleaning, maintenance, and 
204.35  disinfecting and exterminating services; 
204.36     (iv) detective services, security services, burglar, fire 
205.1   alarm, and armored car services; but not including services 
205.2   performed within the jurisdiction they serve by off-duty 
205.3   licensed peace officers as defined in section 626.84, 
205.4   subdivision 1, or services provided by a nonprofit organization 
205.5   for monitoring and electronic surveillance of persons placed on 
205.6   in-home detention pursuant to court order or under the direction 
205.7   of the Minnesota department of corrections; 
205.8      (v) pet grooming services; 
205.9      (vi) lawn care, fertilizing, mowing, spraying and sprigging 
205.10  services; garden planting and maintenance; tree, bush, and shrub 
205.11  pruning, bracing, spraying, and surgery; indoor plant care; 
205.12  tree, bush, shrub and stump removal; and tree trimming for 
205.13  public utility lines.  Services performed under a construction 
205.14  contract for the installation of shrubbery, plants, sod, trees, 
205.15  bushes, and similar items are not taxable; 
205.16     (vii) massages, except when provided by a licensed health 
205.17  care facility or professional or upon written referral from a 
205.18  licensed health care facility or professional for treatment of 
205.19  illness, injury, or disease; and 
205.20     (viii) the furnishing for consideration of lodging, board 
205.21  and care services for animals in kennels and other similar 
205.22  arrangements, but excluding veterinary and horse boarding 
205.23  services. 
205.24  The services listed in this paragraph are taxable under section 
205.25  297A.02 if the service is performed wholly within Minnesota or 
205.26  if the service is performed partly within and partly without 
205.27  Minnesota and the greater proportion of the service is performed 
205.28  in Minnesota, based on the cost of performance.  In applying the 
205.29  provisions of this chapter, the terms "tangible personal 
205.30  property" and "sales at retail" include taxable services and the 
205.31  provision of taxable services, unless specifically provided 
205.32  otherwise.  Services performed by an employee for an employer 
205.33  are not taxable under this paragraph.  Services performed by a 
205.34  partnership or association for another partnership or 
205.35  association are not taxable under this paragraph if one of the 
205.36  entities owns or controls more than 80 percent of the voting 
206.1   power of the equity interest in the other entity.  Services 
206.2   performed between members of an affiliated group of corporations 
206.3   are not taxable.  For purposes of this section, "affiliated 
206.4   group of corporations" includes those entities that would be 
206.5   classified as a member of an affiliated group under United 
206.6   States Code, title 26, section 1504, as amended through December 
206.7   31, 1987, and who are eligible to file a consolidated tax return 
206.8   for federal income tax purposes; 
206.9      (j) A "sale" and a "purchase" includes the transfer of 
206.10  computer software, meaning information and directions that 
206.11  dictate the function performed by data processing equipment.  A 
206.12  "sale" and a "purchase" does not include the design, 
206.13  development, writing, translation, fabrication, lease, or 
206.14  transfer for a consideration of title or possession of a custom 
206.15  computer program; and 
206.16     (k) The granting of membership in a club, association, or 
206.17  other organization if: 
206.18     (1) the club, association, or other organization makes 
206.19  available for the use of its members sports and athletic 
206.20  facilities (without regard to whether a separate charge is 
206.21  assessed for use of the facilities); and 
206.22     (2) use of the sports and athletic facilities is not made 
206.23  available to the general public on the same basis as it is made 
206.24  available to members.  
206.25  Granting of membership includes both one-time initiation fees 
206.26  and periodic membership dues.  Sports and athletic facilities 
206.27  include golf courses, tennis, racquetball, handball and squash 
206.28  courts, basketball and volleyball facilities, running tracks, 
206.29  exercise equipment, swimming pools, and other similar athletic 
206.30  or sports facilities.  The provisions of this paragraph do not 
206.31  apply to camps or other recreation facilities owned and operated 
206.32  by an exempt organization under section 501(c)(3) of the 
206.33  Internal Revenue Code of 1986, as amended through December 31, 
206.34  1992, for educational and social activities for young people 
206.35  primarily age 18 and under.  
206.36     <b>[EFFECTIVE DATE; INSTRUCTION TO REVISOR.]</b> This section is 
207.1   effective the day following final enactment.  In the next 
207.2   edition of Minnesota Statutes, the revisor of statutes shall 
207.3   codify the amendment in this section in Minnesota Statutes, 
207.4   section 297A.61, subdivision 3. 
207.5      Sec. 7.  Minnesota Statutes 2000, section 297A.07, 
207.6   subdivision 3, is amended to read: 
207.7      Subd. 3.  [NEW PERMITS AFTER REVOCATION.] The commissioner 
207.8   shall not issue a new permit or reinstate a revoked permit after 
207.9   revocation unless the taxpayer applies for a permit and provides 
207.10  reasonable evidence of intention to comply with the sales and 
207.11  use tax laws and rules.  The commissioner may require the 
207.12  applicant to supply security, in addition to that authorized by 
207.13  section 297A.28, as is reasonably necessary to insure compliance 
207.14  with the sales and use tax laws and rules.  If the commissioner 
207.15  issues or reinstates a permit not in conformance with the 
207.16  requirements of this subdivision or applicable rules, the 
207.17  commissioner may cancel the permit upon notice to the permit 
207.18  holder.  The notice must be served by first class and certified 
207.19  mail at the permit holder's last known address.  The 
207.20  cancellation shall be effective immediately, subject to the 
207.21  right of the permit holder to show that the permit was issued in 
207.22  conformance with the requirements of this subdivision and 
207.23  applicable rules.  Upon such showing, the permit must be 
207.24  reissued. 
207.25     If a taxpayer has had a permit or permits revoked three 
207.26  times in a five-year period, the commissioner shall not issue a 
207.27  new permit or reinstate the revoked permit until 24 months have 
207.28  elapsed after revocation and the taxpayer has satisfied the 
207.29  conditions for reinstatement of a revoked permit or issuance of 
207.30  a new permit imposed by this section and rules adopted hereunder.
207.31     For purposes of this subdivision, the term "taxpayer" means 
207.32  an individual, if a revoked permit was issued to or in the name 
207.33  of an individual, or a corporation or partnership, if a revoked 
207.34  permit was issued to or in the name of a corporation or 
207.35  partnership.  Taxpayer also means an officer of a corporation, a 
207.36  member of a partnership, or an individual who is liable for 
208.1   delinquent sales taxes, either for the entity for which the new 
208.2   or reinstated permit is at issue, or for another entity for 
208.3   which a permit was previously revoked, or personally as a permit 
208.4   holder. 
208.5      <b>[EFFECTIVE DATE; INSTRUCTION TO REVISOR.]</b> (a) This section 
208.6   is effective the day following final enactment.  
208.7      (b) In the next edition of Minnesota Statutes, the revisor 
208.8   shall codify the amendments to this section in Minnesota 
208.9   Statutes, section 297A.86, subdivision 2. 
208.10     Sec. 8.  Minnesota Statutes 2000, section 297A.25, 
208.11  subdivision 3, is amended to read: 
208.12     Subd. 3.  [MEDICINES; MEDICAL DEVICES.] The gross receipts 
208.13  from the sale of and storage, use, or consumption of prescribed 
208.14  drugs, prescribed medicine and insulin, intended for use, 
208.15  internal or external, in the cure, mitigation, treatment or 
208.16  prevention of illness or disease in human beings are exempt, 
208.17  together with prescription glasses, fever thermometers, 
208.18  therapeutic, and prosthetic devices.  "Prescribed drugs" or 
208.19  "prescribed medicine" includes over-the-counter drugs or 
208.20  medicine prescribed by a licensed physician health care 
208.21  professional.  "Therapeutic devices" includes reusable finger 
208.22  pricking devices for the extraction of blood, blood glucose 
208.23  monitoring machines, and other diagnostic agents used in 
208.24  diagnosing, monitoring, or treating diabetes.  Nonprescription 
208.25  analgesics consisting principally (determined by the weight of 
208.26  all ingredients) of acetaminophen, acetylsalicylic acid, 
208.27  ibuprofen, ketoprofen, naproxen, and other nonprescription 
208.28  analgesics that are approved by the United States Food and Drug 
208.29  Administration for internal use by human beings, or a 
208.30  combination thereof, are exempt. 
208.31     Medical supplies purchased by a licensed health care 
208.32  facility or licensed health care professional to provide medical 
208.33  treatment to residents or patients are exempt.  The exemption 
208.34  does not apply to medical equipment or components of medical 
208.35  equipment, laboratory supplies, radiological supplies, and other 
208.36  items used in providing medical services.  For purposes of this 
209.1   subdivision, "medical supplies" means adhesive and nonadhesive 
209.2   bandages, gauze pads and strips, cotton applicators, 
209.3   antiseptics, nonprescription drugs, eye solution, and other 
209.4   similar supplies used directly on the resident or patient in 
209.5   providing medical services. 
209.6      <b>[EFFECTIVE DATE; INSTRUCTION TO REVISOR.]</b> This section is 
209.7   effective the day following final enactment.  In the next 
209.8   edition of Minnesota Statutes, the revisor of statutes shall 
209.9   codify the amendment in this section in Minnesota Statutes, 
209.10  section 297A.67, subdivision 6. 
209.11     Sec. 9.  Minnesota Statutes 2000, section 297A.25, 
209.12  subdivision 11, is amended to read: 
209.13     Subd. 11.  [SALES TO GOVERNMENT.] The gross receipts from 
209.14  all sales, including sales in which title is retained by a 
209.15  seller or a vendor or is assigned to a third party under an 
209.16  installment sale or lease purchase agreement under section 
209.17  465.71, of tangible personal property to, and all storage, use 
209.18  or consumption of such property by, the United States and its 
209.19  agencies and instrumentalities, the University of Minnesota, 
209.20  state universities, community colleges, technical colleges, 
209.21  state academies, the Perpich center for arts education, an 
209.22  instrumentality of a political subdivision that is accredited as 
209.23  an optional/special function school by the North Central 
209.24  Association of Colleges and Schools, school districts, public 
209.25  libraries, public library systems, multicounty, multitype 
209.26  library systems as defined in section 134.001, county law 
209.27  libraries under chapter 134A, state agency libraries, the state 
209.28  library under section 480.09, and the legislative reference 
209.29  library are exempt. 
209.30     As used in this subdivision, "school districts" means 
209.31  public school entities and districts of every kind and nature 
209.32  organized under the laws of the state of Minnesota, including, 
209.33  without limitation, school districts, intermediate school 
209.34  districts, education districts, service cooperatives, secondary 
209.35  vocational cooperative centers, special education cooperatives, 
209.36  joint purchasing cooperatives, telecommunication cooperatives, 
210.1   regional management information centers, and any instrumentality 
210.2   of a school district, as defined in section 471.59. 
210.3      Sales exempted by this subdivision include sales under 
210.4   section 297A.01, subdivision 3, paragraph (f).  
210.5      Sales to hospitals and nursing homes owned and operated by 
210.6   political subdivisions of the state of tangible personal 
210.7   property and taxable services used at or by the hospitals and 
210.8   nursing homes are exempt under this subdivision.  
210.9      Sales of supplies and equipment used in the operation of an 
210.10  ambulance service owned and operated by a political subdivision 
210.11  of the state are exempt under this subdivision provided that the 
210.12  supplies and equipment are used in the course of providing 
210.13  medical care.  Sales to a political subdivision of repair and 
210.14  replacement parts for emergency rescue vehicles and fire trucks 
210.15  and apparatus are exempt under this subdivision.  
210.16     Sales to a political subdivision of machinery and 
210.17  equipment, except for motor vehicles, used directly for mixed 
210.18  municipal solid waste management services at a solid waste 
210.19  disposal facility as defined in section 115A.03, subdivision 10, 
210.20  are exempt under this subdivision.  
210.21     Sales to political subdivisions of chore and homemaking 
210.22  services to be provided to elderly or disabled individuals are 
210.23  exempt. 
210.24     Sales to a town of gravel and of machinery, equipment, and 
210.25  accessories, except motor vehicles, used exclusively for road 
210.26  and bridge maintenance, and leases of motor vehicles exempt from 
210.27  tax under section 297B.03, clause (10), are exempt. 
210.28     Sales of telephone services to the department of 
210.29  administration that are used to provide telecommunications 
210.30  services through the intertechnologies revolving fund are exempt 
210.31  under this subdivision. 
210.32     This exemption shall not apply to building, construction or 
210.33  reconstruction materials purchased by a contractor or a 
210.34  subcontractor as a part of a lump-sum contract or similar type 
210.35  of contract with a guaranteed maximum price covering both labor 
210.36  and materials for use in the construction, alteration, or repair 
211.1   of a building or facility.  This exemption does not apply to 
211.2   construction materials purchased by tax exempt entities or their 
211.3   contractors to be used in constructing buildings or facilities 
211.4   which will not be used principally by the tax exempt entities. 
211.5      This exemption does not apply to the leasing of a motor 
211.6   vehicle as defined in section 297B.01, subdivision 5, except for 
211.7   leases entered into by the United States or its agencies or 
211.8   instrumentalities. 
211.9      The tax imposed on sales to political subdivisions of the 
211.10  state under this section applies to all political subdivisions 
211.11  other than those explicitly exempted under this subdivision, 
211.12  notwithstanding section 115A.69, subdivision 6, 116A.25, 
211.13  360.035, 458A.09, 458A.30, 458D.23, 469.101, subdivision 2, 
211.14  469.127, 473.448, 473.545, or 473.608 or any other law to the 
211.15  contrary enacted before 1992. 
211.16     Sales exempted by this subdivision include sales made to 
211.17  other states or political subdivisions of other states, if the 
211.18  sale would be exempt from taxation if it occurred in that state, 
211.19  but do not include sales under section 297A.01, subdivision 3, 
211.20  paragraphs (c) and (e). 
211.21     <b>[EFFECTIVE DATE; INSTRUCTION TO REVISOR.]</b> This section is 
211.22  effective the day following final enactment.  In the next 
211.23  edition of Minnesota Statutes, the revisor of statutes shall 
211.24  codify the amendment in this section in Minnesota Statutes, 
211.25  section 297A.70, subdivision 2. 
211.26     Sec. 10.  Minnesota Statutes 2000, section 297A.25, 
211.27  subdivision 28, is amended to read: 
211.28     Subd. 28.  [WASTE PROCESSING EQUIPMENT.] The gross receipts 
211.29  from the sale of and storage, use, or consumption of equipment 
211.30  used for processing solid or hazardous waste at a resource 
211.31  recovery facility, as defined in section 115A.03, subdivision 
211.32  28, are exempt, including pollution control equipment at a 
211.33  resource recovery facility that burns refuse-derived fuel or 
211.34  mixed municipal solid waste as its primary fuel.  An electric 
211.35  generation facility that processes and utilizes waste tires as 
211.36  its primary fuel is a resource recovery facility for the 
212.1   purposes of this section.  
212.2      <b>[EFFECTIVE DATE; INSTRUCTION TO REVISOR.]</b> This section is 
212.3   effective for purchases and sales made on or after June 1, 2001. 
212.4   In the next edition of Minnesota Statutes, the revisor of 
212.5   statutes shall codify the amendment to this section in section 
212.6   297A.68, subdivision 24. 
212.7      Sec. 11.  Minnesota Statutes 2000, section 297A.61, 
212.8   subdivision 3, is amended to read: 
212.9      Subd. 3.  [SALE AND PURCHASE.] (a) "Sale" and "purchase" 
212.10  include, but are not limited to, each of the transactions listed 
212.11  in this subdivision. 
212.12     (b) Sale and purchase include any transfer of title or 
212.13  possession, or both, of tangible personal property, whether 
212.14  absolutely or conditionally, and the leasing of or the granting 
212.15  of a license to use or consume, for a consideration, tangible 
212.16  personal property, other than a manufactured home used for 
212.17  residential purposes for a continuous period of 30 days or more. 
212.18     (c) Sale and purchase include the production, fabrication, 
212.19  printing, or processing of tangible personal property for a 
212.20  consideration for consumers who furnish either directly or 
212.21  indirectly the materials used in the production, fabrication, 
212.22  printing, or processing. 
212.23     (d) Sale and purchase include the furnishing, preparing, or 
212.24  serving for a consideration of food or drinks.  Notwithstanding 
212.25  section 297A.67, subdivision 2, taxable food or drinks include, 
212.26  but are not limited to, the following: 
212.27     (1) food or drinks sold by the retailer for immediate 
212.28  consumption on the retailer's premises.  Food and drinks sold 
212.29  within a building or grounds that require an admission charge 
212.30  for entrance are presumed to be sold for consumption on the 
212.31  premises; 
212.32     (2) food or drinks prepared by the retailer for immediate 
212.33  consumption either on or off the retailer's premises.  For 
212.34  purposes of this subdivision, "food or drinks prepared for 
212.35  immediate consumption" means any food product upon which an act 
212.36  of preparation including, but not limited to, cooking, mixing, 
213.1   sandwich making, blending, heating, or pouring has been 
213.2   performed by the retailer so the food product may be immediately 
213.3   consumed by the purchaser; 
213.4      (3) ice cream, ice milk, frozen yogurt products, or frozen 
213.5   novelties sold in single or individual servings including, but 
213.6   not limited to, cones, sundaes, and snow cones; 
213.7      (4) soft drinks and other beverages, including all 
213.8   carbonated and noncarbonated beverages or drinks sold in liquid 
213.9   form, but not including beverages or drinks which contain milk 
213.10  or milk products, beverages or drinks containing 15 or more 
213.11  percent fruit juice, and noncarbonated and noneffervescent 
213.12  bottled water sold in individual containers of one-half gallon 
213.13  or more in size; 
213.14     (5) gum, candy, and candy products; 
213.15     (6) ice; 
213.16     (7) all food sold from vending machines; 
213.17     (8) all food for immediate consumption sold from concession 
213.18  stands and vehicles; 
213.19     (9) party trays; 
213.20     (10) all meals and single servings of packaged snack food 
213.21  sold in restaurants and bars; and 
213.22     (11) bakery products that are: 
213.23     (i) prepared by the retailer for consumption on the 
213.24  retailer's premises; 
213.25     (ii) sold at a place that charges admission; 
213.26     (iii) sold from vending machines; or 
213.27     (iv) sold in single or individual servings from concession 
213.28  stands, vehicles, bars, and restaurants.  
213.29     For purposes of this paragraph, "single or individual 
213.30  servings" does not include products when sold in bulk containers 
213.31  or bulk packaging.  
213.32     For purposes of this paragraph, "premises" means the total 
213.33  space and facilities, including buildings, grounds, and parking 
213.34  lots that are made available or that are available for use by 
213.35  the retailer or customer for the purpose of sale or consumption 
213.36  of prepared food and drinks.  The premises of a caterer is the 
214.1   place where the catered food or drinks are served. 
214.2      (e) A sale and a purchase includes the furnishing for a 
214.3   consideration of electricity, gas, water, or steam for use or 
214.4   consumption within this state or local exchange telephone 
214.5   service, intrastate toll service, and interstate toll service, 
214.6   if that service originates from and is charged to a telephone 
214.7   located in this state.  Telephone service includes (1) paging 
214.8   services, and (2) private communication service, as defined in 
214.9   United States Code, title 26, section 4252(d), except for 
214.10  private communication service purchased by an agent acting on 
214.11  behalf of the state lottery.  Telephone service does not include 
214.12  services purchased with a prepaid telephone calling card.  The 
214.13  furnishing for a consideration of access to telephone services 
214.14  by a hotel to its guests is a sale.  The furnishing for a 
214.15  consideration of items listed in this paragraph by a municipal 
214.16  corporation is a sale. 
214.17     (f) A sale and a purchase includes the transfer for a 
214.18  consideration of computer software.  
214.19     (g) A sale and a purchase includes the furnishing for a 
214.20  consideration of taxable services as defined in subdivision 16. 
214.21     (h) A sale and a purchase includes the furnishing for a 
214.22  consideration of tangible personal property or taxable services 
214.23  by the United States or any of its agencies or 
214.24  instrumentalities, or the state of Minnesota, its agencies, 
214.25  instrumentalities, or political subdivisions. 
214.26     (i) A sale and a purchase includes the furnishing for a 
214.27  consideration of telecommunications services, including cable 
214.28  television services and direct satellite services.  
214.29  Telecommunications services are taxed to the extent allowed 
214.30  under federal law if those services: 
214.31     (1) either (i) originate and terminate in this state; or 
214.32  (ii) originate in this state and terminate outside the state and 
214.33  the service is charged to a telephone number customer located in 
214.34  this state or to the account of any transmission instrument in 
214.35  this state; or (iii) originate outside this state and terminate 
214.36  in this state and the service is charged to a telephone number 
215.1   customer located in this state or to the account of any 
215.2   transmission instrument in this state; or 
215.3      (2) are rendered by providing a private communications 
215.4   service for which the customer has one or more locations within 
215.5   Minnesota connected to the service and the service is charged to 
215.6   a telephone number customer located in this state or to the 
215.7   account of any transmission instrument in this state. 
215.8      All charges for mobile telecommunications services, as 
215.9   defined in United States Code, title 4, section 124, are deemed 
215.10  to be provided by the customer's home service provider and 
215.11  sourced to the customer's place of primary use and are subject 
215.12  to tax based upon the customer's place of primary use in 
215.13  accordance with the Mobile Telecommunications Sourcing Act, 
215.14  United States Code, title 4, sections 116 to 126. 
215.15     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
215.16  purchases made after June 30, 2001. 
215.17     Sec. 12.  Minnesota Statutes 2000, section 297A.61, 
215.18  subdivision 12, is amended to read: 
215.19     Subd. 12.  [FARM MACHINERY.] (a) "Farm machinery" means new 
215.20  or used machinery, equipment, implements, accessories, and 
215.21  contrivances used directly and principally in the production for 
215.22  sale, but not including the processing, of livestock, dairy 
215.23  animals, dairy products, poultry and poultry products, fruits, 
215.24  vegetables, trees and shrubs, plants, forage, grains, and bees 
215.25  and apiary products.  
215.26     (b) Farm machinery includes: 
215.27     (1) machinery for the preparation, seeding, or cultivation 
215.28  of soil for growing agricultural crops and sod, for the 
215.29  harvesting and threshing of agricultural products, or for the 
215.30  harvesting or mowing of sod; 
215.31     (2) barn cleaners, milking systems, grain dryers, automatic 
215.32  feeding systems including stationary feed bunks, and similar 
215.33  installations, whether or not the equipment is installed by the 
215.34  seller and becomes part of the real property; 
215.35     (3) irrigation equipment sold for exclusively agricultural 
215.36  use, including pumps, pipe fittings, valves, sprinklers, and 
216.1   other equipment necessary to the operation of an irrigation 
216.2   system when sold as part of an irrigation system, whether or not 
216.3   the equipment is installed by the seller and becomes part of the 
216.4   real property; 
216.5      (4) logging equipment, including chain saws used for 
216.6   commercial logging; 
216.7      (5) fencing used for the containment of farmed cervidae, as 
216.8   defined in section 17.451, subdivision 2; 
216.9      (6) primary and backup generator units used to generate 
216.10  electricity for the purpose of operating farm machinery, as 
216.11  defined in this subdivision, or providing light or space heating 
216.12  necessary for the production of livestock, dairy animals, dairy 
216.13  products, or poultry and poultry products; 
216.14     (7) aquaculture production equipment as defined in 
216.15  subdivision 13; and 
216.16     (8) equipment used for maple syrup harvesting.  
216.17     (c) Farm machinery does not include: 
216.18     (1) repair or replacement parts; 
216.19     (2) tools, shop equipment, grain bins, feed bunks, fencing 
216.20  material except fencing material covered by paragraph (b), 
216.21  clause (5), communication equipment, and other farm supplies; 
216.22     (3) motor vehicles taxed under chapter 297B; 
216.23     (4) snowmobiles or snow blowers; or 
216.24     (5) lawn mowers except those used in the production of sod 
216.25  for sale, or garden-type tractors or garden tillers. 
216.26     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
216.27  purchases made after June 30, 2001. 
216.28     Sec. 13.  Minnesota Statutes 2000, section 297A.61, 
216.29  subdivision 16, is amended to read: 
216.30     Subd. 16.  [TAXABLE SERVICES.] (a) "Taxable services" means 
216.31  the services listed in this subdivision and other services 
216.32  listed in subdivision 3. 
216.33     (b) Taxable services includes the granting of the privilege 
216.34  of admission to places of amusement, recreational areas, or 
216.35  athletic events, and the making available of amusement devices, 
216.36  tanning facilities, reducing salons, steam baths, turkish baths, 
217.1   health clubs, and spas or athletic facilities. 
217.2      (c) Taxable services includes the furnishing of lodging and 
217.3   related services by a hotel, rooming house, resort, campground, 
217.4   motel, or trailer camp and the granting of any similar license 
217.5   to use real property other than the renting or leasing thereof 
217.6   for a continuous period of 30 days or more. 
217.7      (d) Taxable services includes the furnishing of cable 
217.8   television services or similar television services, including, 
217.9   but not limited to, charges for basic, premium, pay-per-view, 
217.10  and any other similar service. 
217.11     (e) Taxable services includes the furnishing of parking 
217.12  services, whether on a contractual, hourly, or other periodic 
217.13  basis, except for parking at a meter. 
217.14     (f) (e) Taxable services includes the granting of 
217.15  membership in a club, association, or other organization if: 
217.16     (1) the club, association, or other organization makes 
217.17  available for the use of its members sports and athletic 
217.18  facilities, without regard to whether a separate charge is 
217.19  assessed for use of the facilities; and 
217.20     (2) use of the sports and athletic facility is not made 
217.21  available to the general public on the same basis as it is made 
217.22  available to members.  
217.23  Granting of membership means both one-time initiation fees and 
217.24  periodic membership dues.  Sports and athletic facilities 
217.25  include golf courses; tennis, racquetball, handball, and squash 
217.26  courts; basketball and volleyball facilities; running tracks; 
217.27  exercise equipment; swimming pools; and other similar athletic 
217.28  or sports facilities. 
217.29     (g) (f) Taxable services includes the furnishing of the 
217.30  following services as provided in this paragraph: 
217.31     (1) laundry and dry cleaning services including cleaning, 
217.32  pressing, repairing, altering, and storing clothes, linen 
217.33  services and supply, cleaning and blocking hats, and carpet, 
217.34  drapery, upholstery, and industrial cleaning.  Laundry and dry 
217.35  cleaning services do not include services provided by coin 
217.36  operated facilities operated by the customer; 
218.1      (2) motor vehicle washing, waxing, and cleaning services, 
218.2   including services provided by coin operated facilities operated 
218.3   by the customer, and rustproofing, undercoating, and towing of 
218.4   motor vehicles; 
218.5      (3) building and residential cleaning, maintenance, and 
218.6   disinfecting and exterminating services; 
218.7      (4) detective, security, burglar, fire alarm, and armored 
218.8   car services; but not including services performed within the 
218.9   jurisdiction they serve by off-duty licensed peace officers as 
218.10  defined in section 626.84, subdivision 1, or services provided 
218.11  by a nonprofit organization for monitoring and electronic 
218.12  surveillance of persons placed on in-home detention pursuant to 
218.13  court order or under the direction of the Minnesota department 
218.14  of corrections; 
218.15     (5) pet grooming services; 
218.16     (6) lawn care, fertilizing, mowing, spraying and sprigging 
218.17  services; garden planting and maintenance; tree, bush, and shrub 
218.18  pruning, bracing, spraying, and surgery; indoor plant care; 
218.19  tree, bush, shrub, and stump removal; and tree trimming for 
218.20  public utility lines.  Services performed under a construction 
218.21  contract for the installation of shrubbery, plants, sod, trees, 
218.22  bushes, and similar items are not taxable; 
218.23     (7) massages, except when provided by a licensed health 
218.24  care facility or professional or upon written referral from a 
218.25  licensed health care facility or professional for treatment of 
218.26  illness, injury, or disease; and 
218.27     (8) the furnishing of lodging, board, and care services for 
218.28  animals in kennels and other similar arrangements, but excluding 
218.29  veterinary and horse boarding services. 
218.30     The services listed in this paragraph are taxable under 
218.31  section 297A.62 if the service is performed wholly within 
218.32  Minnesota or if the service is performed partly within and 
218.33  partly outside Minnesota and the greater proportion of the 
218.34  service is performed in Minnesota, based on the cost of 
218.35  performance.  In applying the provisions of this chapter, the 
218.36  terms "tangible personal property" and "sales at retail" include 
219.1   taxable services and the provision of taxable services, unless 
219.2   specifically provided otherwise.  Services performed by an 
219.3   employee for an employer are not taxable.  Services performed by 
219.4   a partnership or association for another partnership or 
219.5   association are not taxable if one of the entities owns or 
219.6   controls more than 80 percent of the voting power of the equity 
219.7   interest in the other entity.  Services performed between 
219.8   members of an affiliated group of corporations are not taxable.  
219.9   For purposes of this section, "affiliated group of corporations" 
219.10  includes those entities that would be classified as members of 
219.11  an affiliated group under United States Code, title 26, section 
219.12  1504, and that are eligible to file a consolidated tax return 
219.13  for federal income tax purposes. 
219.14     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
219.15  purchases made after June 30, 2001. 
219.16     Sec. 14.  Minnesota Statutes 2000, section 297A.61, is 
219.17  amended by adding a subdivision to read: 
219.18     Subd. 24.  [TELECOMMUNICATIONS SERVICES.] (a) 
219.19  "Telecommunications services" means the transmission, 
219.20  conveyance, or routing of voice, data, audio, video, or any 
219.21  other information or signals to a point, or between or among 
219.22  points, by or through any electronic, satellite, optical, 
219.23  microwave, or other medium or method now in existence or 
219.24  hereafter devised, regardless of the protocol used for such 
219.25  transmission, conveyance, or routing.  
219.26     (b) Telecommunications services includes the furnishing for 
219.27  consideration of access to telephone services by a hotel to its 
219.28  guests.  
219.29     (c) Telecommunications services do not include: 
219.30     (1) services purchased with a prepaid telephone calling 
219.31  card; 
219.32     (2) private communication service purchased by an agent 
219.33  acting on behalf of the state lottery; 
219.34     (3) information services; and 
219.35     (4) purchases of telecommunications when the purchaser uses 
219.36  the purchased services as a component part of or integrates such 
220.1   service into another telecommunications service that is sold by 
220.2   the purchaser in the normal course of business.  
220.3      (d) For purposes of this subdivision, "information 
220.4   services" means the offering of the capability for generating, 
220.5   acquiring, storing, transforming, processing, retrieving, 
220.6   utilizing, or making available information. 
220.7      <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
220.8   purchases occurring after June 30, 2001. 
220.9      Sec. 15.  Minnesota Statutes 2000, section 297A.61, is 
220.10  amended by adding a subdivision to read: 
220.11     Subd. 25.  [CABLE TELEVISION SERVICE.] "Cable television 
220.12  service" means the transmission of video, audio, or other 
220.13  programming service to purchasers, and the subscriber 
220.14  interaction, if any, required for the selection or use of the 
220.15  programming service, regardless of whether the programming is 
220.16  transmitted over facilities owned or operated by the cable 
220.17  service provider or over facilities owned or operated by one or 
220.18  more dealers of communications services.  The term includes 
220.19  point-to-multipoint distribution services by which programming 
220.20  is transmitted or broadcast by microwave or other equipment 
220.21  directly to the subscriber's premises.  The term includes basic, 
220.22  extended, premium, pay-per-view, digital, and music services. 
220.23     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
220.24  purchases occurring after June 30, 2001. 
220.25     Sec. 16.  Minnesota Statutes 2000, section 297A.61, is 
220.26  amended by adding a subdivision to read: 
220.27     Subd. 26.  [PRIVATE COMMUNICATION SERVICE.] "Private 
220.28  communication service" means a communication service furnished 
220.29  to a subscriber which entitles the subscriber to:  
220.30     (1) exclusive or priority use of any communication channel 
220.31  or group of channels; 
220.32     (2) the use of an intercommunication system for the 
220.33  subscriber's stations, or regardless of whether the channel, 
220.34  group of channels, or intercommunication system may be connected 
220.35  through switching; 
220.36     (3) the switching capacity, extension lines and stations, 
221.1   or other associated services that are provided in connection 
221.2   with, and are necessary or unique to the use of, channels or 
221.3   systems described in clause (1); or 
221.4      (4) any combination of tunneling, encryption, 
221.5   authentication, and access control technologies and services 
221.6   used to carry traffic over the Internet, a managed Internet 
221.7   provider network or provider's backbone. 
221.8      <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
221.9   purchases occurring after June 30, 2001. 
221.10     Sec. 17.  Minnesota Statutes 2000, section 297A.61, is 
221.11  amended by adding a subdivision to read: 
221.12     Subd. 27.  [DIRECT SATELLITE SERVICE.] "Direct satellite 
221.13  service" means programming transmitted or broadcast by satellite 
221.14  directly to the subscriber's premises without the use of ground 
221.15  receiving or distribution equipment, except at the subscriber's 
221.16  premises or in the uplink process to the satellite. 
221.17     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
221.18  purchases occurring after June 30, 2001. 
221.19     Sec. 18.  Minnesota Statutes 2000, section 297A.62, 
221.20  subdivision 3, is amended to read: 
221.21     Subd. 3.  [MANUFACTURED HOUSING AND; PARK TRAILERS; 
221.22  PREFABRICATED HOMES.] (a) For retail sales of manufactured homes 
221.23  as defined in section 327.31, subdivision 6, for residential 
221.24  uses, the sales tax under subdivision 1 is imposed on 65 percent 
221.25  of the dealer's cost of the manufactured home.  
221.26     (b) For retail sales of new or used park trailers, as 
221.27  defined in section 168.011, subdivision 8, paragraph (b), the 
221.28  sales tax under subdivision 1 is imposed on 65 percent of the 
221.29  sales price of the park trailer.  
221.30     (c) For retail sales of prefabricated homes, the sales tax 
221.31  under subdivision 1 is imposed on 65 percent of the 
221.32  manufacturer's wholesale list price of the prefabricated home 
221.33  for sales to dealers.  As used in this paragraph, a 
221.34  "prefabricated home" is a prefabricated building subject to 
221.35  Minnesota Rules, chapter 1360 or 1361, that is intended for use 
221.36  as a single-family or multifamily dwelling. 
222.1      <b>[EFFECTIVE DATE.]</b> This section is effective for sales made 
222.2   after June 30, 2001. 
222.3      Sec. 19.  Minnesota Statutes 2000, section 297A.67, 
222.4   subdivision 25, is amended to read: 
222.5      Subd. 25.  [MAINTENANCE OF CEMETERY GROUNDS.] Lawn care and 
222.6   related services used in the maintenance of cemetery grounds are 
222.7   exempt.  For purposes of this subdivision, "lawn care and 
222.8   related services" means the services listed in section 297A.61, 
222.9   subdivision 16, paragraph (g) (f), clause (6), and "cemetery" 
222.10  means a cemetery for human burial. 
222.11     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
222.12  purchases made after June 30, 2001. 
222.13     Sec. 20.  Minnesota Statutes 2000, section 297A.67, is 
222.14  amended by adding a subdivision to read: 
222.15     Subd. 26.  [AMBULANCE SUPPLIES, PARTS, AND EQUIPMENT.] The 
222.16  following sales to or use by an ambulance service licensed under 
222.17  section 144E.10 are exempt: 
222.18     (1) supplies and equipment used to provide medical care; 
222.19  and 
222.20     (2) repair and replacement parts for ambulances. 
222.21     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
222.22  purchases made after June 30, 2001. 
222.23     Sec. 21.  Minnesota Statutes 2000, section 297A.67, is 
222.24  amended by adding a subdivision to read: 
222.25     Subd. 27.  [ENERGY EFFICIENT PRODUCTS.] (a) A residential 
222.26  lighting fixture or a compact fluorescent bulb is exempt if it 
222.27  has an energy star label. 
222.28     (b) The following products are exempt if they have an 
222.29  energyguide label that indicates that the product meets or 
222.30  exceeds the standards listed below: 
222.31     (1) an electric heat pump hot water heater with an energy 
222.32  factor of at least 1.9; 
222.33     (2) a natural gas water heater with an energy factor of at 
222.34  least 0.62; 
222.35     (3) a window air conditioner with an energy efficiency 
222.36  rating greater than 11.0; 
223.1      (4) a clothes washer that uses less than 250 kilowatt-hours 
223.2   per year or any horizontal axis washer; 
223.3      (5) a central air conditioner with a seasonal energy 
223.4   efficiency rating greater than 14.0; and 
223.5      (6) a natural gas furnace with an annual fuel utilization 
223.6   efficiency greater than 92 percent. 
223.7      (c) For purposes of this subdivision, "energy star label" 
223.8   means the label granted to certain products that meet United 
223.9   States Environmental Protection Agency and United States 
223.10  Department of Energy criteria for energy efficiency.  For 
223.11  purposes of this subdivision, "energyguide label" means the 
223.12  label that the United State Federal Trade Commissioner requires 
223.13  manufacturers to apply to certain appliances under United States 
223.14  Code, title 16, part 305. 
223.15     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
223.16  purchases made after June 30, 2001, and before July 1, 2005. 
223.17     Sec. 22.  Minnesota Statutes 2000, section 297A.68, 
223.18  subdivision 3, is amended to read: 
223.19     Subd. 3.  [MATERIALS USED IN PROVIDING CERTAIN TAXABLE 
223.20  SERVICES.] (a) Materials stored, used, or consumed in providing 
223.21  a taxable service listed in section 297A.61, subdivision 16, 
223.22  paragraph (g) (f), intended to be sold ultimately at retail are 
223.23  exempt. 
223.24     (b) This exemption includes, but is not limited to: 
223.25     (1) chemicals, lubricants, packaging materials, seeds, 
223.26  trees, fertilizers, and herbicides, if these items are used or 
223.27  consumed in providing the taxable service; 
223.28     (2) chemicals used to treat waste generated as a result of 
223.29  providing the taxable service; 
223.30     (3) accessory tools, equipment, and other items that are 
223.31  separate detachable units used in providing the service and that 
223.32  have an ordinary useful life of less than 12 months; and 
223.33     (4) fuel, electricity, gas, and steam used or consumed in 
223.34  the production process, except that electricity, gas, or steam 
223.35  used for space heating or lighting is exempt only if it is 
223.36  necessary to produce that particular taxable service. 
224.1      (c) This exemption does not include machinery, equipment, 
224.2   implements, tools, accessories, appliances, contrivances, 
224.3   furniture, and fixtures used in providing the taxable service. 
224.4      <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
224.5   purchases made after June 30, 2001. 
224.6      Sec. 23.  Minnesota Statutes 2000, section 297A.68, 
224.7   subdivision 5, is amended to read: 
224.8      Subd. 5.  [CAPITAL EQUIPMENT.] (a) Capital equipment is 
224.9   exempt.  The tax must be imposed and collected as if the rate 
224.10  under section 297A.62, subdivision 1, applied, and then refunded 
224.11  in the manner provided in section 297A.75. 
224.12     "Capital equipment" means machinery and equipment purchased 
224.13  or leased and used in this state by the purchaser or lessee 
224.14  primarily for manufacturing, fabricating, mining, or refining 
224.15  tangible personal property to be sold ultimately at retail. 
224.16     Capital equipment means machinery and equipment essential 
224.17  to the integrated production process.  Capital equipment also 
224.18  includes machinery and equipment used to electronically transmit 
224.19  results retrieved by a customer of an online computerized data 
224.20  retrieval system. 
224.21     (b) Capital equipment includes, but is not limited to: 
224.22     (1) machinery and equipment used to operate, control, or 
224.23  regulate the production equipment; 
224.24     (2) machinery and equipment used for research and 
224.25  development, design, quality control, and testing activities; 
224.26     (3) environmental control devices that are used to maintain 
224.27  conditions such as temperature, humidity, light, or air pressure 
224.28  when those conditions are essential to and are part of the 
224.29  production process; 
224.30     (4) materials and supplies used to construct and install 
224.31  machinery or equipment; 
224.32     (5) repair and replacement parts, including accessories, 
224.33  whether purchased as spare parts, repair parts, or as upgrades 
224.34  or modifications to machinery or equipment; 
224.35     (6) materials used for foundations that support machinery 
224.36  or equipment; 
225.1      (7) materials used to construct and install special purpose 
225.2   buildings used in the production process; and 
225.3      (8) ready-mixed concrete trucks in which the ready-mixed 
225.4   concrete is mixed as part of the delivery process.  
225.5      (c) Capital equipment does not include the following: 
225.6      (1) motor vehicles taxed under chapter 297B; 
225.7      (2) machinery or equipment used to receive or store raw 
225.8   materials; 
225.9      (3) building materials, except for materials included in 
225.10  paragraph (b), clauses (6) and (7); 
225.11     (4) machinery or equipment used for nonproduction purposes, 
225.12  including, but not limited to, the following:  plant security,; 
225.13  fire prevention,; first aid, and hospital stations; support 
225.14  operations or administration; pollution control; and plant 
225.15  cleaning,; disposal of scrap and waste,; plant communications 
225.16  ,; space heating, and lighting, or; and safety; 
225.17     (5) farm machinery and aquaculture production equipment as 
225.18  defined by section 297A.61, subdivisions 12 and 13; 
225.19     (6) machinery or equipment purchased and installed by a 
225.20  contractor as part of an improvement to real property; or 
225.21     (7) any other item that is not essential to the integrated 
225.22  process of manufacturing, fabricating, mining, or refining. 
225.23     (d) For purposes of this subdivision: 
225.24     (1) "Machinery" means mechanical, electronic, or electrical 
225.25  devices, including computers and computer software, that are 
225.26  purchased or constructed to be used for the activities set forth 
225.27  in paragraph (a). 
225.28     (2) "Equipment" means independent devices or tools separate 
225.29  from machinery, including computers and computer software, used 
225.30  in operating, controlling, or regulating machinery and 
225.31  equipment; and any subunit or assembly comprising a component of 
225.32  any machinery or accessory or attachment parts of machinery, 
225.33  such as tools, dies, jigs, patterns, and molds.  
225.34     (3) "Primarily" means machinery and equipment used 50 
225.35  percent or more of the time in an activity described in 
225.36  paragraph (a). 
226.1      (4) "Manufacturing" means an operation or series of 
226.2   operations where raw materials are changed in form, composition, 
226.3   or condition by machinery and equipment and which results in the 
226.4   production of a new article of tangible personal property.  For 
226.5   purposes of this subdivision, "manufacturing" includes the 
226.6   generation of electricity or steam to be sold at retail. 
226.7      (5) "Fabricating" means to make, build, create, produce, or 
226.8   assemble components or property to work in a new or different 
226.9   manner. 
226.10     (6) "Mining" means the extraction of minerals, ores, stone, 
226.11  or peat. 
226.12     (7) "Refining" means the process of converting a natural 
226.13  resource to a product, including the treatment of water to be 
226.14  sold at retail. 
226.15     (8) "Integrated production process" means a process 
226.16  beginning with the removal of raw materials from inventory 
226.17  through the completion of the product, including packaging of 
226.18  the product. 
226.19     (9) "Online data retrieval system" means a system whose 
226.20  cumulation of information is equally available and accessible to 
226.21  all its customers. 
226.22     (10) "Machinery and equipment used for pollution control" 
226.23  means machinery and equipment used solely to eliminate, prevent, 
226.24  or reduce pollution resulting from an activity described in 
226.25  paragraph (a).  
226.26     <b>[EFFECTIVE DATE.]</b> This section is effective for purchases 
226.27  made after June 30, 2001. 
226.28     Sec. 24.  Minnesota Statutes 2000, section 297A.68, is 
226.29  amended by adding a subdivision to read: 
226.30     Subd. 35.  [TELECOMMUNICATIONS EQUIPMENT.] (a) 
226.31  Telecommunications machinery and equipment purchased or leased 
226.32  for use directly by a telecommunications service provider 
226.33  primarily in the provision of telecommunications services that 
226.34  are ultimately to be sold at retail are exempt, regardless of 
226.35  whether purchased by the owner, a contractor, or a subcontractor.
226.36     (b) For purposes of this subdivision, "telecommunications 
227.1   machinery and equipment" includes, but is not limited to: 
227.2      (1) machinery, equipment, and fixtures utilized in 
227.3   receiving, initiating, amplifying, processing, transmitting, 
227.4   retransmitting, recording, switching, or monitoring 
227.5   telecommunications services, such as computers, transformers, 
227.6   amplifiers, routers, bridges, repeaters, multiplexers, and other 
227.7   items performing comparable functions; 
227.8      (2) machinery, equipment, and fixtures used in the 
227.9   transportation of telecommunications services, radio 
227.10  transmitters and receivers, satellite equipment, microwave 
227.11  equipment, and other transporting media, but not wire, cable, 
227.12  fiber, poles, or conduit; 
227.13     (3) ancillary machinery, equipment, and fixtures that 
227.14  regulate, control, protect, or enable the machinery in clauses 
227.15  (1) and (2) to accomplish its intended function, such as 
227.16  auxiliary power supply, test equipment, towers, heating, 
227.17  ventilating and air conditioning equipment necessary to the 
227.18  operation of the telecommunications equipment; and software 
227.19  necessary to the operation of the telecommunications equipment; 
227.20  and 
227.21     (4) repair and replacement parts, including accessories, 
227.22  whether purchased as spare parts, repair parts, or as upgrades 
227.23  or modifications to qualified machinery or equipment. 
227.24     (c) For purposes of this subdivision, "telecommunications 
227.25  services" means telecommunications services as defined in 
227.26  section 297A.61, subdivision 24, paragraph (a), only. 
227.27     <b>[EFFECTIVE DATE.]</b> This section is effective for purchases 
227.28  and lease payments, including payments made on existing leases, 
227.29  made after June 30, 2001. 
227.30     Sec. 25.  Minnesota Statutes 2000, section 297A.68, is 
227.31  amended by adding a subdivision to read: 
227.32     Subd. 36.  [RESEARCH SUPPLIES AND EQUIPMENT.] Tangible 
227.33  personal property and taxable services are exempt if: 
227.34     (1) the purchase was made by or to be used by a person 
227.35  engaged in a trade or business; 
227.36     (2) the expenditure by the person qualified as a deductible 
228.1   expense under section 174 of the Internal Revenue Code or the 
228.2   expenditures would have qualified as a deductible expense under 
228.3   section 174, if the disallowance of items subject to allowance 
228.4   under section 167 or 611 of the Internal Revenue Code were not 
228.5   in effect; and 
228.6      (3) the items purchased or used do not constitute an 
228.7   improvement to real property. 
228.8      <b>[EFFECTIVE DATE.]</b> This section is effective for sales made 
228.9   after June 30, 2001. 
228.10     Sec. 26.  Minnesota Statutes 2000, section 297A.68, is 
228.11  amended by adding a subdivision to read: 
228.12     Subd. 37.  [COIN-OPERATED AMUSEMENT DEVICES.] Coin, 
228.13  currency, and token-operated amusement devices are exempt if 
228.14  they are purchased or leased by a person for the purpose of 
228.15  making the device available to the general public for a fee. 
228.16     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
228.17  purchases made after June 30, 2001. 
228.18     Sec. 27.  Minnesota Statutes 2000, section 297A.70, 
228.19  subdivision 2, is amended to read: 
228.20     Subd. 2.  [SALES TO GOVERNMENT.] (a) All sales, except 
228.21  those listed in paragraph (b), to the following governments and 
228.22  political subdivisions, or to the listed agencies or 
228.23  instrumentalities of governments and political subdivisions, are 
228.24  exempt: 
228.25     (1) the United States and its agencies and 
228.26  instrumentalities; 
228.27     (2) school districts, the University of Minnesota, state 
228.28  universities, community colleges, technical colleges, state 
228.29  academies, the Perpich Minnesota center for arts education, and 
228.30  an instrumentality of a political subdivision that is accredited 
228.31  as an optional/special function school by the North Central 
228.32  Association of Colleges and Schools; 
228.33     (3) hospitals and nursing homes owned and operated by 
228.34  political subdivisions of the state; 
228.35     (4) other states or political subdivisions of other states, 
228.36  if the sale would be exempt from taxation if it occurred in that 
229.1   state; and 
229.2      (5) sales to public libraries, public library systems, 
229.3   multicounty, multitype library systems as defined in section 
229.4   134.001, county law libraries under chapter 134A, state agency 
229.5   libraries, the state library under section 480.09, and the 
229.6   legislative reference library.  
229.7      (b) This exemption does not apply to the sales of the 
229.8   following products and services: 
229.9      (1) building, construction, or reconstruction materials 
229.10  purchased by a contractor or a subcontractor as a part of a 
229.11  lump-sum contract or similar type of contract with a guaranteed 
229.12  maximum price covering both labor and materials for use in the 
229.13  construction, alteration, or repair of a building or facility, 
229.14  except for correctional facilities for which construction 
229.15  materials are exempt under section 297A.71, subdivision 3; 
229.16     (2) construction materials purchased by tax exempt entities 
229.17  or their contractors to be used in constructing buildings or 
229.18  facilities which will not be used principally by the tax exempt 
229.19  entities; 
229.20     (3) the leasing of a motor vehicle as defined in section 
229.21  297B.01, subdivision 5, except for leases entered into by the 
229.22  United States or its agencies or instrumentalities; or 
229.23     (4) meals and lodging as defined under section 297A.61, 
229.24  subdivisions 3, paragraph (d), and 16, paragraph (c), except for 
229.25  meals and lodging purchased directly by the United States or its 
229.26  agencies or instrumentalities. 
229.27     (c) As used in this subdivision, "school districts" means 
229.28  public school entities and districts of every kind and nature 
229.29  organized under the laws of the state of Minnesota, and any 
229.30  instrumentality of a school district, as defined in section 
229.31  471.59. 
229.32     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
229.33  purchases occurring after June 30, 2001. 
229.34     Sec. 28.  Minnesota Statutes 2000, section 297A.70, 
229.35  subdivision 3, is amended to read: 
229.36     Subd. 3.  [SALES OF CERTAIN GOODS AND SERVICES TO 
230.1   GOVERNMENT.] (a) The following sales to or use by the specified 
230.2   governments and political subdivisions of the state are exempt: 
230.3      (1) supplies and equipment used to provide medical care in 
230.4   the operation of an ambulance service owned and operated by a 
230.5   political subdivision of the state; 
230.6      (2) repair and replacement parts for emergency rescue 
230.7   vehicles, fire trucks, and fire apparatus to a political 
230.8   subdivision; 
230.9      (3) (2) machinery and equipment, except for motor vehicles, 
230.10  used directly for mixed municipal solid waste management 
230.11  services at a solid waste disposal facility as defined in 
230.12  section 115A.03, subdivision 10; 
230.13     (4) (3) chore and homemaking services to a political 
230.14  subdivision of the state to be provided to elderly or disabled 
230.15  individuals; 
230.16     (5) (4) telephone services to the department of 
230.17  administration that are used to provide telecommunications 
230.18  services through the intertechnologies revolving fund; 
230.19     (6) (5) firefighter personal protective equipment as 
230.20  defined in paragraph (b), if purchased or authorized by and for 
230.21  the use of an organized fire department, fire protection 
230.22  district, or fire company regularly charged with the 
230.23  responsibility of providing fire protection to the state or a 
230.24  political subdivision; 
230.25     (7) (6) bullet-resistant body armor that provides the 
230.26  wearer with ballistic and trauma protection, if purchased by a 
230.27  law enforcement agency of the state or a political subdivision 
230.28  of the state, or a licensed peace officer, as defined in section 
230.29  626.84, subdivision 1; 
230.30     (8) (7) motor vehicles purchased or leased by political 
230.31  subdivisions of the state if the vehicles are exempt from 
230.32  registration under section 168.012, subdivision 1, paragraph 
230.33  (b), or exempt from taxation under section 473.448; 
230.34     (9) (8)  equipment designed to process, dewater, and 
230.35  recycle biosolids for wastewater treatment facilities of 
230.36  political subdivisions, and materials incidental to installation 
231.1   of that equipment; and materials used to construct buildings to 
231.2   house the equipment, if the materials are purchased after June 
231.3   30, 1998, and before July 1, 2001; and 
231.4      (10) (9) sales to a town of gravel and of machinery, 
231.5   equipment, and accessories, except motor vehicles, used 
231.6   exclusively for road and bridge maintenance, and leases by a 
231.7   town of motor vehicles exempt from tax under section 297B.03, 
231.8   clause (10). 
231.9      (b) For purposes of this subdivision, "firefighters 
231.10  personal protective equipment" means helmets, including face 
231.11  shields, chin straps, and neck liners; bunker coats and pants, 
231.12  including pant suspenders; boots; gloves; head covers or hoods; 
231.13  wildfire jackets; protective coveralls; goggles; self-contained 
231.14  breathing apparatus; canister filter masks; personal alert 
231.15  safety systems; spanner belts; optical or thermal imaging search 
231.16  devices; and all safety equipment required by the Occupational 
231.17  Safety and Health Administration. 
231.18     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
231.19  purchases made after June 30, 2001. 
231.20     Sec. 29.  Minnesota Statutes 2000, section 297A.70, 
231.21  subdivision 4, is amended to read: 
231.22     Subd. 4.  [SALES TO NONPROFIT GROUPS.] (a) All sales, 
231.23  except those listed in paragraph (b), to the following 
231.24  "nonprofit organizations" are exempt: 
231.25     (1) an entity organized and operated exclusively for 
231.26  charitable, religious, or educational purposes if the item 
231.27  purchased is used in the performance of charitable, religious, 
231.28  or educational functions; 
231.29     (2) any senior citizen group or association of groups that: 
231.30     (i) in general limits membership to persons who are either 
231.31  age 55 or older, or physically disabled; and 
231.32     (ii) is organized and operated exclusively for pleasure, 
231.33  recreation, and other nonprofit purposes, no part of the net 
231.34  earnings of which inures to the benefit of any private 
231.35  shareholders; and 
231.36     (3) an entity organized and operated exclusively to 
232.1   maintain a cemetery owned by a religious organization. 
232.2      (b) This exemption does not apply to the following sales: 
232.3      (1) building, construction, or reconstruction materials 
232.4   purchased by a contractor or a subcontractor as a part of a 
232.5   lump-sum contract or similar type of contract with a guaranteed 
232.6   maximum price covering both labor and materials for use in the 
232.7   construction, alteration, or repair of a building or facility; 
232.8      (2) construction materials purchased by tax-exempt entities 
232.9   or their contractors to be used in constructing buildings or 
232.10  facilities that will not be used principally by the tax-exempt 
232.11  entities; and 
232.12     (3) meals and lodging as defined under section 297A.61, 
232.13  subdivisions 3, paragraph (d), and 16, paragraph (c); and 
232.14     (4) leasing of a motor vehicle as defined in section 
232.15  297B.01, subdivision 5, except as provided in paragraph (c). 
232.16     (c) This exemption applies to the leasing of a motor 
232.17  vehicle as defined in section 297B.01, subdivision 5, only if 
232.18  the vehicle is: 
232.19     (1) a truck, as defined in section 168.011, a bus, as 
232.20  defined in section 168.011, or a passenger automobile, as 
232.21  defined in section 168.011, if the automobile is designed and 
232.22  used for carrying more than nine persons including the driver; 
232.23  and 
232.24     (2) intended to be used primarily to transport tangible 
232.25  personal property or individuals, other than employees, to whom 
232.26  the organization provides service in performing its charitable, 
232.27  religious, or educational purpose. 
232.28     (d) A limited liability company also qualifies for 
232.29  exemption under this subdivision if (1) it consists of a sole 
232.30  member that would qualify for the exemption, and (2) the items 
232.31  purchased qualify for the exemption. 
232.32     Sec. 30.  Minnesota Statutes 2000, section 297A.70, 
232.33  subdivision 7, is amended to read: 
232.34     Subd. 7.  [HOSPITALS AND OUTPATIENT SURGICAL CENTERS.] (a) 
232.35  Sales, except for those listed in paragraph (c), to a hospital 
232.36  are exempt, if the items purchased are used in providing 
233.1   hospital services.  For purposes of this subdivision, "hospital" 
233.2   means a hospital organized and operated for charitable purposes 
233.3   within the meaning of section 501(c)(3) of the Internal Revenue 
233.4   Code, and licensed under chapter 144 or by any other 
233.5   jurisdiction, and "hospital services" are services authorized or 
233.6   required to be performed by a "hospital" under chapter 144. 
233.7      (b) Sales, except for those listed in paragraph (c), to an 
233.8   outpatient surgical center are exempt, if the items purchased 
233.9   are used in providing outpatient surgical services.  For 
233.10  purposes of this subdivision, "outpatient surgical center" means 
233.11  an outpatient surgical center organized and operated for 
233.12  charitable purposes within the meaning of section 501(c)(3) of 
233.13  the Internal Revenue Code, and licensed under chapter 144 or by 
233.14  any other jurisdiction.  For the purposes of this subdivision, 
233.15  "outpatient surgical services" means:  (1) services authorized 
233.16  or required to be performed by an outpatient surgical center 
233.17  under chapter 144 or under the applicable licensure law of any 
233.18  other jurisdiction; and (2) urgent care.  For purposes of this 
233.19  subdivision, "urgent care" means health services furnished to a 
233.20  person whose medical condition is sufficiently acute to require 
233.21  treatment unavailable through, or inappropriate to be provided 
233.22  by, a clinic or physician's office, but not so acute as to 
233.23  require treatment in a hospital emergency room.  
233.24     (c) This exemption does not apply to the following products 
233.25  and services: 
233.26     (1) purchases made by a clinic, physician's office, or any 
233.27  other medical facility not operating as a hospital or outpatient 
233.28  surgical center, even though the clinic, office, or facility may 
233.29  be owned and operated by a hospital or outpatient surgical 
233.30  center; 
233.31     (2) sales under section 297A.61, subdivisions 3, paragraph 
233.32  (d), and 16, paragraph (c); 
233.33     (3) building and construction materials used in 
233.34  constructing buildings or facilities that will not be used 
233.35  principally by the hospital or outpatient surgical center; 
233.36     (4) building, construction, or reconstruction materials 
234.1   purchased by a contractor or a subcontractor as a part of a 
234.2   lump-sum contract or similar type of contract with a guaranteed 
234.3   maximum price covering both labor and materials for use in the 
234.4   construction, alteration, or repair of a hospital or outpatient 
234.5   surgical center; or 
234.6      (5) the leasing of a motor vehicle as defined in section 
234.7   297B.01, subdivision 5. 
234.8      (d) A limited liability company also qualifies for 
234.9   exemption under this subdivision if (1) it consists of a sole 
234.10  member that would qualify for the exemption, and (2) the items 
234.11  purchased qualify for the exemption. 
234.12     Sec. 31.  Minnesota Statutes 2000, section 297A.70, 
234.13  subdivision 10, is amended to read: 
234.14     Subd. 10.  [NONPROFIT TICKETS OR ADMISSIONS.] Tickets or 
234.15  admissions to the premises of or events sponsored by an 
234.16  organization that provides an event are exempt if all the gross 
234.17  receipts are recorded as such, in accordance with generally 
234.18  accepted accounting principles, on the books of one or more 
234.19  organizations that provide an opportunity for citizens of the 
234.20  state to participate in the creation, performance, or 
234.21  appreciation of the arts are exempt if the, and provided that 
234.22  each organization is either:  
234.23     (1) a tax-exempt an organization within the meaning of 
234.24  Minnesota Statutes 1980, section 290.05, subdivision 1, clause 
234.25  (i), described in section 501(c)(3) of the Internal Revenue Code 
234.26  and at least five percent of the organization's annual revenue 
234.27  in its most recently completed 12-month fiscal year, or in the 
234.28  current year if the organization has not completed a 12-month 
234.29  fiscal year, consisted of voluntary contributions; or 
234.30     (2) a municipal board that promotes cultural and arts 
234.31  activities.  The exemption provided with respect to a municipal 
234.32  board applies only to tickets and admissions to events sponsored 
234.33  by the board. 
234.34  The exemption only applies if the entire proceeds, after 
234.35  reasonable expenses, are used solely to provide opportunities 
234.36  for citizens of the state to participate in the creation, 
235.1   performance, or appreciation of the arts. 
235.2      <b>[EFFECTIVE DATE.]</b> This section is effective for tickets and 
235.3   admissions to events held after June 30, 2001, but does not 
235.4   apply to events for which sales of tickets or admissions were 
235.5   made prior to July 1, 2001. 
235.6      Sec. 32.  Minnesota Statutes 2000, section 297A.70, 
235.7   subdivision 13, is amended to read: 
235.8      Subd. 13.  [FUNDRAISING SALES BY OR FOR NONPROFIT GROUPS.] 
235.9   (a) The following sales by the specified organizations for 
235.10  fundraising purposes are exempt, subject to the limitations 
235.11  listed in paragraph (b): 
235.12     (1) all sales made by an organization that exists solely 
235.13  for the purpose of providing educational or social activities 
235.14  for young people primarily age 18 and under; 
235.15     (2) all sales made by an organization that is a senior 
235.16  citizen group or association of groups if (i) in general it 
235.17  limits membership to persons age 55 or older; (ii) it is 
235.18  organized and operated exclusively for pleasure, recreation, and 
235.19  other nonprofit purposes; and (iii) no part of its net earnings 
235.20  inures to the benefit of any private shareholders; 
235.21     (3) the sale or use of tickets or admissions to a golf 
235.22  tournament held in Minnesota if the beneficiary of the 
235.23  tournament's net proceeds qualifies as a tax-exempt organization 
235.24  under section 501(c)(3) of the Internal Revenue Code; and 
235.25     (4) sales of gum, candy, and candy products sold for 
235.26  fundraising purposes by a nonprofit organization that provides 
235.27  educational and social activities primarily for young people 18 
235.28  years of age and under. 
235.29     (b) The exemptions listed in paragraph (a) are limited in 
235.30  the following manner: 
235.31     (1) the exemption under paragraph (a), clauses (1) and (2), 
235.32  applies only if the gross annual receipts of the organization 
235.33  from fundraising do not exceed $10,000; and 
235.34     (2) the exemption under paragraph (a), clause (1), does not 
235.35  apply if the sales are derived from admission charges or from 
235.36  activities for which the money must be deposited with the school 
236.1   district treasurer under section 123B.49, subdivision 2, or be 
236.2   recorded in the same manner as other revenues or expenditures of 
236.3   the school district under section 123B.49, subdivision 4. 
236.4      (c) Sales of tangible personal property are exempt if the 
236.5   entire proceeds, less the necessary expenses for obtaining the 
236.6   property, will be contributed to a registered combined 
236.7   charitable organization described in section 309.501, to be used 
236.8   exclusively for charitable, religious, or educational purposes, 
236.9   and the registered combined charitable organization has given 
236.10  its written permission for the sale.  Sales that occur over a 
236.11  period of more than 24 days per year are not exempt under this 
236.12  paragraph. 
236.13     (d) For purposes of this subdivision, a club, association, 
236.14  or other organization of elementary or secondary school students 
236.15  organized for the purpose of carrying on sports, educational, or 
236.16  other extracurricular activities is a separate organization from 
236.17  the school district or school for purposes of applying the 
236.18  $10,000 limit. 
236.19     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
236.20  purchases made after June 30, 2001. 
236.21     Sec. 33.  Minnesota Statutes 2000, section 297A.70, 
236.22  subdivision 14, is amended to read: 
236.23     Subd. 14.  [FUNDRAISING EVENTS SPONSORED BY NONPROFIT 
236.24  GROUPS.] (a) Sales of tangible personal property at, and 
236.25  admission charges for fundraising events sponsored by, a 
236.26  nonprofit organization are exempt if the entire proceeds, less 
236.27  the necessary expenses for the event, will be used solely and 
236.28  exclusively for charitable, religious, or educational purposes.  
236.29  Exempt sales include the sale of food, meals, drinks, and 
236.30  taxable services at the fundraising event. 
236.31     (b) This exemption is limited in the following manner: 
236.32     (1) it does not apply to admission charges for events 
236.33  involving bingo or other gambling activities or to charges for 
236.34  use of amusement devices involving bingo or other gambling 
236.35  activities; 
236.36     (2) all gross receipts are taxable if the profits are not 
237.1   used solely and exclusively for charitable, religious, or 
237.2   educational purposes; 
237.3      (3) it does not apply unless the organization keeps a 
237.4   separate accounting record, including receipts and disbursements 
237.5   from each fundraising event that all the gross receipts and 
237.6   disbursements from the event are recorded as such, in accordance 
237.7   with generally accepted accounting principles, on the books of 
237.8   the sponsoring organization, and the organization documents all 
237.9   deductions from gross receipts with receipts and other records; 
237.10     (4) it does not apply to any sale made by or in the name of 
237.11  a nonprofit corporation as the active or passive agent of a 
237.12  person that is not a nonprofit corporation; 
237.13     (5) all gross receipts are taxable if fundraising events 
237.14  exceed 24 days per year; and 
237.15     (6) it does not apply to fundraising events conducted on 
237.16  premises leased for more than five days but less than 30 days. 
237.17     (c) For purposes of this subdivision, a "nonprofit 
237.18  organization" means any unit of government, corporation, 
237.19  society, association, foundation, or institution organized and 
237.20  operated for charitable, religious, educational, civic, 
237.21  fraternal, and senior citizens' or veterans' purposes, no part 
237.22  of the net earnings of which inures to the benefit of a private 
237.23  individual. 
237.24     <b>[EFFECTIVE DATE.]</b> This section is effective for tickets and 
237.25  admissions to events held after June 30, 2001. 
237.26     Sec. 34.  Minnesota Statutes 2000, section 297A.71, 
237.27  subdivision 3, is amended to read: 
237.28     Subd. 3.  [CORRECTIONAL FACILITIES.] Building materials and 
237.29  supplies for constructing or improving an adult or juvenile 
237.30  correctional facility by a county, home rule charter city, or 
237.31  statutory city are exempt if the project is mandated by state or 
237.32  federal law, rule, or regulation.  The tax must be imposed and 
237.33  collected as if the rate under section 297A.62, subdivision 1, 
237.34  applied and then refunded in the manner provided in section 
237.35  297A.75. 
237.36     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
238.1   purchases occurring after June 30, 2001. 
238.2      Sec. 35.  Minnesota Statutes 2000, section 297A.71, 
238.3   subdivision 6, is amended to read: 
238.4      Subd. 6.  [BUSINESS INCUBATOR AND INDUSTRIAL PARK.] 
238.5   Building materials and supplies for construction of a facility 
238.6   that includes a business incubator and industrial park are 
238.7   exempt if the facility: 
238.8      (1) is owned and operated by a nonprofit charitable 
238.9   organization that qualifies for tax exemption under section 
238.10  501(c)(3) of the Internal Revenue Code; 
238.11     (2) is used for the development of nonretail businesses, 
238.12  offering access to equipment, space, services, and advice to the 
238.13  tenant businesses, for the purpose of encouraging economic 
238.14  development and job creation in the area served by the 
238.15  organization, and emphasizes development of businesses that 
238.16  manufacture products from materials found in the waste stream, 
238.17  or manufacture alternative energy and conservation systems, or 
238.18  make use of emerging environmental technologies; 
238.19     (3) includes in its structure systems of material and 
238.20  energy exchanges that use waste products from one industrial 
238.21  process as sources of energy and material for other processes; 
238.22  and 
238.23     (4) makes use of solar and wind energy technology and 
238.24  incorporates salvaged materials in its construction. 
238.25     A limited liability company also qualifies for exemption 
238.26  under this subdivision if (1) it consists of a sole member that 
238.27  would qualify for the exemption, and (2) the items purchased 
238.28  qualify for the exemption. 
238.29     Sec. 36.  Minnesota Statutes 2000, section 297A.71, is 
238.30  amended by adding a subdivision to read: 
238.31     Subd. 23.  [CONSTRUCTION MATERIALS AND EQUIPMENT; 
238.32  AGRICULTURAL PROCESSING MATERIALS.] Materials and supplies used 
238.33  or consumed in, and machinery and equipment incorporated into 
238.34  the construction, improvement, or expansion of an agricultural 
238.35  processing facility are exempt if: 
238.36     (1) the facility is owned and operated by a cooperative 
239.1   organized under chapter 308A; and 
239.2      (2) the total capital investment in the processing facility 
239.3   is at least $1,000,000 but no more than $100,000,000. 
239.4      The tax must be imposed and collected as if the rate under 
239.5   section 297A.62, subdivision 1, applied, and then refunded in 
239.6   the manner provided in section 297A.75. 
239.7      <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
239.8   purchases made after June 30, 2001. 
239.9      Sec. 37.  Minnesota Statutes 2000, section 297A.71, is 
239.10  amended by adding a subdivision to read: 
239.11     Subd. 24.  [CONSTRUCTION MATERIALS; YELLOW MEDICINE COUNTY 
239.12  LAW ENFORCEMENT AND FAMILY SERVICE CENTER.] Materials and 
239.13  supplies used or consumed in, and fixtures, furnishings, and 
239.14  equipment incorporated into, the construction, improvement, or 
239.15  expansion of the Yellow Medicine county law enforcement and 
239.16  family service center are exempt.  The tax must be imposed and 
239.17  collected as if the rate under section 297A.62, subdivision 1, 
239.18  applied and then refunded in the manner prescribed for refunds 
239.19  in section 297A.75. 
239.20     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
239.21  purchases made after June 30, 2000, and before January 1, 2003. 
239.22     Sec. 38.  Minnesota Statutes 2000, section 297A.71, is 
239.23  amended by adding a subdivision to read: 
239.24     Subd. 25.  [POULTRY LITTER BIOMASS GENERATION FACILITY 
239.25  CONSTRUCTION MATERIALS AND EQUIPMENT.] Materials and supplies 
239.26  used or consumed in, and equipment incorporated into, the 
239.27  construction, improvement, or expansion of a facility using 
239.28  biomass to generate electricity are exempt if: 
239.29     (1) the facility is designed to utilize poultry litter 
239.30  biomass as a primary fuel source; and 
239.31     (2) the facility generates power under a contract approved 
239.32  by the public utilities commission in accordance with the 
239.33  biomass mandate imposed under section 216B.2424. 
239.34     <b>[EFFECTIVE DATE.]</b> This section is effective for purchases 
239.35  and sales after June 30, 2001, and before January 1, 2003. 
239.36     Sec. 39.  Minnesota Statutes 2000, section 297A.71, is 
240.1   amended by adding a subdivision to read: 
240.2      Subd. 26.  [CONSTRUCTION MATERIALS AND EQUIPMENT; WASTE 
240.3   TIRES COGENERATION ELECTRIC GENERATING FACILITY.] Materials and 
240.4   supplies used or consumed in, and equipment incorporated into, 
240.5   the construction, improvement, or expansion of a facility using 
240.6   waste tires to generate electricity are exempt if: 
240.7      (1) the facility utilizes waste tires as a primary fuel in 
240.8   generating electricity; 
240.9      (2) the facility is a cogeneration facility; and 
240.10     (3) the installed capacity of the facility is 1 to 25 
240.11  megawatts. 
240.12     <b>[EFFECTIVE DATE.]</b> This section is effective for purchases 
240.13  and sales made on or after June 1, 2001. 
240.14     Sec. 40.  Minnesota Statutes 2000, section 297A.75, is 
240.15  amended to read: 
240.16     297A.75 [REFUND; APPROPRIATION.] 
240.17     Subdivision 1.  [TAX COLLECTED.] The tax on the gross 
240.18  receipts from the sale of the following exempt items must be 
240.19  imposed and collected as if the sale were taxable and the rate 
240.20  under section 297A.62, subdivision 1, applied.  The exempt items 
240.21  include: 
240.22     (1) capital equipment exempt under section 297A.68, 
240.23  subdivision 5; 
240.24     (2) building materials for an agricultural processing 
240.25  facility exempt under section 297A.71, subdivision 13; 
240.26     (3) (2) building materials for mineral production 
240.27  facilities exempt under section 297A.71, subdivision 14; 
240.28     (4) building materials for correctional facilities under 
240.29  section 297A.71, subdivision 3; 
240.30     (5) (3) building materials used in a residence for disabled 
240.31  veterans exempt under section 297A.71, subdivision 11; and 
240.32     (6) (4) chair lifts, ramps, elevators, and associated 
240.33  building materials exempt under section 297A.71, subdivision 12; 
240.34     (5) building materials, supplies, machinery, and equipment 
240.35  for an agricultural processing facility under section 297A.71, 
240.36  subdivision 23; and 
241.1      (6) materials, supplies, fixtures, furnishings, and 
241.2   equipment for a county law enforcement and family service center 
241.3   under section 297A.71, subdivision 24. 
241.4      Subd. 2.  [REFUND; ELIGIBLE PERSONS.] Upon application on 
241.5   forms prescribed by the commissioner, a refund equal to the tax 
241.6   paid on the gross receipts of the exempt items must be paid to 
241.7   the applicant.  Only the following persons may apply for the 
241.8   refund: 
241.9      (1) for subdivision 1, clauses (1) to (3) and (2), the 
241.10  applicant must be the purchaser; 
241.11     (2) for subdivision 1, clause (4) (6), the applicant must 
241.12  be the governmental subdivision; 
241.13     (3) for subdivision 1, clause (5) (3), the applicant must 
241.14  be the recipient of the benefits provided in United States Code, 
241.15  title 38, chapter 21; and 
241.16     (4) for subdivision 1, clause (6) (4), the applicant must 
241.17  be the owner of the homestead property; and 
241.18     (5) for subdivision 1, clause (5), the applicant must be 
241.19  the owner of the agricultural processing facility. 
241.20     Subd. 3.  [APPLICATION.] (a) The application must include 
241.21  sufficient information to permit the commissioner to verify the 
241.22  tax paid.  If the tax was paid by a contractor, subcontractor, 
241.23  or builder, under subdivision 1, clause (3), (4), (5), or (6), 
241.24  the contractor, subcontractor, or builder must furnish to the 
241.25  refund applicant a statement including the cost of the exempt 
241.26  items and the taxes paid on the items unless otherwise 
241.27  specifically provided by this subdivision.  The provisions of 
241.28  sections 289A.40 and 289A.50 apply to refunds under this section.
241.29     (b) An applicant may not file more than two applications 
241.30  per calendar year for refunds for taxes paid on capital 
241.31  equipment exempt under section 297A.68, subdivision 5.  
241.32     Subd. 4.  [INTEREST.] Interest must be paid on the refund 
241.33  at the rate in section 270.76 from the date the refund claim is 
241.34  filed for taxes paid under subdivision 1, clauses (1) to, 
241.35  (2), (3), and (5), and from 60 days after the date the refund 
241.36  claim is filed with the commissioner for claims filed under 
242.1   subdivision 1, clauses (4) and (6). 
242.2      Subd. 5.  [APPROPRIATION.] The amount required to make the 
242.3   refunds is annually appropriated to the commissioner. 
242.4      <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
242.5   purchases made after June 30, 2001, except that clause (6) and 
242.6   references to clause (6) are effective June 30, 2001, for 
242.7   purchases made after June 30, 2000, and before January 1, 2003. 
242.8      Sec. 41.  Minnesota Statutes 2000, section 297A.80, is 
242.9   amended to read: 
242.10     297A.80 [TAXES IN OTHER STATES; OFFSET AGAINST USE TAX.] 
242.11     If an article of tangible personal property or an item 
242.12  listed in section 297A.63 has already been taxed by another 
242.13  state and any subdivision thereof for its sale, storage, use, or 
242.14  other consumption in an amount less than the tax imposed by this 
242.15  chapter, then as to the person who paid the tax in the other 
242.16  state or any subdivision thereof, section 297A.63 applies only 
242.17  at a rate measured by the difference between the rate imposed 
242.18  under section 297A.62 and the rate by which the previous tax was 
242.19  computed.  If the tax imposed in the other state or any 
242.20  subdivision thereof is equal to or greater than the tax imposed 
242.21  in this state, then no tax is due from that person under section 
242.22  297A.63.  The credit shall be applied first against the amount 
242.23  of any use tax due the state, and any unused portion of the 
242.24  credit shall then be applied against any use tax due a 
242.25  subdivision. 
242.26     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
242.27  purchases occurring after December 31, 2001. 
242.28     Sec. 42.  Minnesota Statutes 2000, section 297A.82, 
242.29  subdivision 3, is amended to read: 
242.30     Subd. 3.  [PAYMENT OF TAX TO COMMISSIONER.] If the aircraft 
242.31  is purchased from a person who is not the holder of a valid 
242.32  sales and use tax permit under this chapter, the purchaser shall 
242.33  pay the tax to the commissioner of revenue prior to registering 
242.34  or licensing the aircraft in this state.  The commissioner of 
242.35  revenue shall issue a certificate stating that the sales and use 
242.36  tax in respect to the transaction has been paid. 
243.1      <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
243.2   purchases occurring after the day following final enactment. 
243.3      Sec. 43.  Minnesota Statutes 2000, section 297A.82, is 
243.4   amended by adding a subdivision to read: 
243.5      Subd. 7.  [AGREEMENT WITH COMMISSIONER OF 
243.6   TRANSPORTATION.] Notwithstanding subdivisions 1 to 4, the 
243.7   commissioner may enter into an agreement with the commissioner 
243.8   of transportation whereby, upon approval of both commissioners, 
243.9   the commissioner of transportation will collect the sales tax on 
243.10  aircraft from persons required to register or license aircraft 
243.11  in this state.  For purposes of collecting the tax, the 
243.12  commissioner of transportation shall act as agent of the 
243.13  commissioner of revenue and shall be subject to all rules not 
243.14  inconsistent with the provisions of this chapter, that may be 
243.15  prescribed by the commissioner. 
243.16     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
243.17  following final enactment. 
243.18     Sec. 44.  Minnesota Statutes 2000, section 297A.94, is 
243.19  amended to read: 
243.20     297A.94 [DEPOSIT OF REVENUES.] 
243.21     (a) Except as provided in this section, the commissioner 
243.22  shall deposit the revenues, including interest and penalties, 
243.23  derived from the taxes imposed by this chapter in the state 
243.24  treasury and credit them to the general fund.  
243.25     (b) The commissioner shall deposit taxes in the Minnesota 
243.26  agricultural and economic account in the special revenue fund if:
243.27     (1) the taxes are derived from sales and use of property 
243.28  and services purchased for the construction and operation of an 
243.29  agricultural resource project; and 
243.30     (2) the purchase was made on or after the date on which a 
243.31  conditional commitment was made for a loan guaranty for the 
243.32  project under section 41A.04, subdivision 3. 
243.33  The commissioner of finance shall certify to the commissioner 
243.34  the date on which the project received the conditional 
243.35  commitment.  The amount deposited in the loan guaranty account 
243.36  must be reduced by any refunds and by the costs incurred by the 
244.1   department of revenue to administer and enforce the assessment 
244.2   and collection of the taxes.  
244.3      (c) The commissioner shall deposit the revenues, including 
244.4   interest and penalties, derived from the taxes imposed on sales 
244.5   and purchases included in section 297A.61, subdivision 16, 
244.6   paragraphs (b) and (f) (e), in the state treasury, and credit 
244.7   them as follows: 
244.8      (1) first to the general obligation special tax bond debt 
244.9   service account in each fiscal year the amount required by 
244.10  section 16A.661, subdivision 3, paragraph (b); and 
244.11     (2) after the requirements of clause (1) have been met, the 
244.12  balance to the general fund. 
244.13     (d) The commissioner shall deposit the revenues, including 
244.14  interest and penalties, collected under section 297A.64, 
244.15  subdivision 5, in the state treasury and credit them to the 
244.16  general fund.  By July 15 of each year the commissioner shall 
244.17  transfer to the highway user tax distribution fund an amount 
244.18  equal to the excess fees collected under section 297A.64, 
244.19  subdivision 5, for the previous calendar year. 
244.20     (e) For fiscal year 2001, 97 percent, and for fiscal year 
244.21  2002 and thereafter, 87 percent of the revenues, including 
244.22  interest and penalties, transmitted to the commissioner under 
244.23  section 297A.65, must be deposited by the commissioner in the 
244.24  state treasury as follows: 
244.25     (1) 50 percent of the receipts must be deposited in the 
244.26  heritage enhancement account in the game and fish fund, and may 
244.27  be spent only on activities that improve, enhance, or protect 
244.28  fish and wildlife resources, including conservation, 
244.29  restoration, and enhancement of land, water, and other natural 
244.30  resources of the state; 
244.31     (2) 22.5 percent of the receipts must be deposited in the 
244.32  natural resources fund, and may be spent only for state parks 
244.33  and trails; 
244.34     (3) 22.5 percent of the receipts must be deposited in the 
244.35  natural resources fund, and may be spent only on metropolitan 
244.36  park and trail grants; 
245.1      (4) three percent of the receipts must be deposited in the 
245.2   natural resources fund, and may be spent only on local trail 
245.3   grants; and 
245.4      (5) two percent of the receipts must be deposited in the 
245.5   natural resources fund, and may be spent only for the Minnesota 
245.6   zoological garden, the Como park zoo and conservatory, and the 
245.7   Duluth zoo. 
245.8      (f) The revenue dedicated under paragraph (e) may not be 
245.9   used as a substitute for traditional sources of funding for the 
245.10  purposes specified, but the dedicated revenue shall supplement 
245.11  traditional sources of funding for those purposes.  Land 
245.12  acquired with money deposited in the game and fish fund under 
245.13  paragraph (e) must be open to public hunting and fishing during 
245.14  the open season.  At least 87 percent of the money deposited in 
245.15  the game and fish fund for improvement, enhancement, or 
245.16  protection of fish and wildlife resources under paragraph (e) 
245.17  must be allocated for field operations. 
245.18     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
245.19  purchases made after June 30, 2001. 
245.20     Sec. 45.  Minnesota Statutes 2000, section 297B.03, is 
245.21  amended to read: 
245.22     297B.03 [EXEMPTIONS.] 
245.23     There is specifically exempted from the provisions of this 
245.24  chapter and from computation of the amount of tax imposed by it 
245.25  the following:  
245.26     (1) purchase or use, including use under a lease purchase 
245.27  agreement or installment sales contract made pursuant to section 
245.28  465.71, of any motor vehicle by the United States and its 
245.29  agencies and instrumentalities and by any person described in 
245.30  and subject to the conditions provided in section 297A.25, 
245.31  subdivision 18; 
245.32     (2) purchase or use of any motor vehicle by any person who 
245.33  was a resident of another state or country at the time of the 
245.34  purchase and who subsequently becomes a resident of Minnesota, 
245.35  provided the purchase occurred more than 60 days prior to the 
245.36  date such person began residing in the state of Minnesota and 
246.1   the motor vehicle was registered in the person's name in the 
246.2   other state or country; 
246.3      (3) purchase or use of any motor vehicle by any person 
246.4   making a valid election to be taxed under the provisions of 
246.5   section 297A.211; 
246.6      (4) purchase or use of any motor vehicle previously 
246.7   registered in the state of Minnesota when such transfer 
246.8   constitutes a transfer within the meaning of section 118, 331, 
246.9   332, 336, 337, 338, 351, 355, 368, 721, 731, 1031, 1033, or 
246.10  1563(a) of the Internal Revenue Code of 1986, as amended through 
246.11  December 31, 1999; 
246.12     (5) purchase or use of any vehicle owned by a resident of 
246.13  another state and leased to a Minnesota based private or for 
246.14  hire carrier for regular use in the transportation of persons or 
246.15  property in interstate commerce provided the vehicle is titled 
246.16  in the state of the owner or secured party, and that state does 
246.17  not impose a sales tax or sales tax on motor vehicles used in 
246.18  interstate commerce; 
246.19     (6) purchase or use of a motor vehicle by a private 
246.20  nonprofit or public educational institution for use as an 
246.21  instructional aid in automotive training programs operated by 
246.22  the institution.  "Automotive training programs" includes motor 
246.23  vehicle body and mechanical repair courses but does not include 
246.24  driver education programs; 
246.25     (7) purchase of a motor vehicle for use as an ambulance by 
246.26  an ambulance service licensed under section 144E.10; 
246.27     (8) purchase of a motor vehicle by or for a public library, 
246.28  as defined in section 134.001, subdivision 2, as a bookmobile or 
246.29  library delivery vehicle; 
246.30     (9) purchase of a ready-mixed concrete truck; 
246.31     (10) purchase or use of a motor vehicle by a town for use 
246.32  exclusively for road maintenance, including snowplows and dump 
246.33  trucks, but not including automobiles, vans, or pickup trucks; 
246.34     (11) purchase or use of a motor vehicle by a corporation, 
246.35  society, association, foundation, or institution organized and 
246.36  operated exclusively for charitable, religious, or educational 
247.1   purposes, except a public school, university, or library, but 
247.2   only if the vehicle is: 
247.3      (i) a truck, as defined in section 168.011, a bus, as 
247.4   defined in section 168.011, or a passenger automobile, as 
247.5   defined in section 168.011, if the automobile is designed and 
247.6   used for carrying more than nine persons including the driver; 
247.7   and 
247.8      (ii) intended to be used primarily to transport tangible 
247.9   personal property or individuals, other than employees, to whom 
247.10  the organization provides service in performing its charitable, 
247.11  religious, or educational purpose.; and 
247.12     (12) a purchase or use of a motor vehicle that draws its 
247.13  propulsion energy either: 
247.14     (i) solely from an alternative fuel source; or 
247.15     (ii) from a rechargeable energy storage system and either 
247.16  unleaded gasoline, diesel fuel, or an alternative fuel or a 
247.17  mixture of two or more of these fuels. 
247.18     For purposes of this clause, "alternative fuel source" 
247.19  means a fuel that the United States Department of Energy 
247.20  recognizes and classifies as an alternative fuel, including, but 
247.21  not limited to: 
247.22     (1) alcohol fuels where the fuel mixture consists of at 
247.23  least 70 percent by volume of an alcohol product such as 
247.24  methanol or denatured alcohol; 
247.25     (2) natural gas, whether compressed or liquefied; 
247.26     (3) liquefied petroleum gas; 
247.27     (4) hydrogen; 
247.28     (5) coal-derived liquid fuels; 
247.29     (6) fuels derived from biological materials; and 
247.30     (7) electricity, including solar power. 
247.31     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
247.32  following final enactment, except that the amendment to clause 
247.33  (11) is effective for sales and purchases occurring after June 
247.34  30, 2000, and except that clause (12) is effective for sales and 
247.35  purchases made after June 30, 2001, and before January 1, 2005. 
247.36     Sec. 46.  Minnesota Statutes 2000, section 469.190, 
248.1   subdivision 3, is amended to read: 
248.2      Subd. 3.  [DISPOSITION OF PROCEEDS.] Ninety-five percent of 
248.3   the gross proceeds from any tax imposed under subdivision 1 
248.4   shall be used by the statutory or home rule charter city or town 
248.5   either: 
248.6      (1) to fund a local convention or tourism bureau for the 
248.7   purpose of marketing and promoting the city or town as a tourist 
248.8   or convention center; or 
248.9      (2) to be transferred to the regional development 
248.10  commission established under section 462.387 operating in the 
248.11  region in which the city or town is located for use by the 
248.12  commission exclusively to promote tourism in the region.  
248.13     This subdivision shall not apply to any statutory or home 
248.14  rule charter city or town that has a lodging tax authorized by 
248.15  special law or enacted prior to 1972 at the time of enactment of 
248.16  this section. 
248.17     <b>[EFFECTIVE DATE.]</b> This section is effective for tax 
248.18  proceeds received by the city or town after December 31, 2000. 
248.19     Sec. 47.  Laws 1986, chapter 396, section 5, is amended to 
248.20  read: 
248.21     Sec. 5.  [LIQUOR, LODGING, AND RESTAURANT TAXES.] 
248.22     The city may, by resolution, levy in addition to taxes 
248.23  authorized by other law: 
248.24     (1) a sales tax of not more than three percent on the gross 
248.25  receipts on retail on-sales of intoxicating liquor and fermented 
248.26  malt beverages described in section 473.592 occurring in the 
248.27  downtown taxing area, provided that this tax may not be imposed 
248.28  if sales of intoxicating liquor and fermented malt beverages are 
248.29  exempt from taxation under chapter 297A; 
248.30     (2) a sales tax of not more than three percent on the gross 
248.31  receipts from the furnishing for consideration of lodging 
248.32  described in section 473.592 by a hotel or motel which has more 
248.33  than 50 rooms available for lodging; the tax imposed under this 
248.34  clause shall be at a rate that, when added to the sum of the 
248.35  rate of the sales tax imposed under Minnesota Statutes, chapter 
248.36  297A, the rate of the sales tax imposed under section 4, and the 
249.1   rate of any other taxes on lodging in the city of Minneapolis, 
249.2   equals 12 13 percent; and 
249.3      (3) a sales tax of not more than three percent on the gross 
249.4   receipts on all sales of food primarily for consumption on or 
249.5   off the premises by restaurants and places of refreshment as 
249.6   defined by resolution of the city that occur within the downtown 
249.7   taxing area. 
249.8   These taxes shall be applied solely to pay costs of collection 
249.9   and to pay or secure the payment of any principal of, premium 
249.10  and interest on any bonds or any costs referred to in section 4, 
249.11  subdivision 3.  The commissioner of revenue may enter into 
249.12  appropriate agreements with the city to provide for the 
249.13  collection of these taxes by the state on behalf of the city.  
249.14  The commissioner may charge the city a reasonable fee for its 
249.15  collection from the proceeds of any taxes.  These taxes shall be 
249.16  subject to the same interest penalties and enforcement 
249.17  provisions as the taxes imposed under section 473.592. 
249.18     Sec. 48.  Laws 1999, chapter 243, article 4, section 19, is 
249.19  amended to read: 
249.20     Sec. 19.  [EFFECTIVE DATES.] 
249.21     Sections 1, 2, 5, 7, 9, and 11 are effective for sales and 
249.22  purchases made after June 30, 1999.  
249.23     Section 3 is effective for amended returns and refund 
249.24  claims filed on or after July 1, 1999. 
249.25     Section 4 is effective the day following final enactment 
249.26  and applies retroactively to all open tax years and to 
249.27  assessments and appeals under Minnesota Statutes, sections 
249.28  289A.38 and 289A.65, for which the time limits have not expired 
249.29  on the date of final enactment of this act.  The provisions of 
249.30  Minnesota Statutes, section 289A.50, apply to refunds claimed 
249.31  under section 4.  Refunds claimed under section 4 must be filed 
249.32  by the later of December 31, 1999, or the time limit under 
249.33  Minnesota Statutes, section 289A.40, subdivision 1. 
249.34     Section 6 is effective retroactively for sales and 
249.35  purchases made after June 30, 1998. 
249.36     Section 8 is effective for purchases and sales made after 
250.1   the date of final enactment.  
250.2      Section 10 is effective for purchases made after the date 
250.3   of final enactment and before July 1, 2001 2003. 
250.4      Section 12 is effective the day after final enactment.  
250.5   Section 12, paragraphs (a) to (c), apply to all local sales 
250.6   taxes enacted after July 1, 1999.  Section 12, paragraph (d), 
250.7   applies to all local sales taxes in effect at the time of, or 
250.8   imposed after the day of, the enactment of this section. 
250.9      Section 13 is effective the day following final enactment. 
250.10     <b>[EFFECTIVE DATE.]</b> This section is effective the day after 
250.11  final enactment. 
250.12     Sec. 49.  Laws 2000, chapter 490, article 8, section 17, 
250.13  the effective date, is amended to read: 
250.14     <b>EFFECTIVE DATE:</b> This section is effective for sales and 
250.15  purchases made after January 1, 2000, and before December 
250.16  31, 2000 2001. 
250.17     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
250.18  following final enactment and applies retroactively to sales and 
250.19  purchases made on or after December 31, 2000. 
250.20     Sec. 50.  [REPORT.] 
250.21     By December 1, 2004, the commissioner of commerce, in 
250.22  consultation with the commissioner of revenue, shall report to 
250.23  the legislative committees over energy and efficiency and tax 
250.24  issues, the impact and effectiveness of the exemptions 
250.25  authorized in Minnesota Statutes, sections 297A.67, subdivision 
250.26  27 and 297B.03, clause (12).  This report shall include an 
250.27  estimate of the revenue loss to the state as well as an estimate 
250.28  on changes in energy consumption.  The commissioner shall 
250.29  include in the report legislative recommendations as to whether 
250.30  and how to reform or extend these exemptions. 
250.31     Sec. 51.  [REPEALER.] 
250.32     (a) Minnesota Statutes 2000, section 289A.60, subdivision 
250.33  15, is repealed effective beginning with returns filed after 
250.34  January 1, 2002. 
250.35     (b) Minnesota Statutes 2000, section 297A.71, subdivisions 
250.36  2, 15, and 16, are repealed effective for sales and purchases 
251.1   made after June 30, 2002.  
251.2      (c) Minnesota Statutes 2000, section 297B.032, is repealed 
251.3   effective the day following final enactment. 
251.4                              ARTICLE 9 
251.5                            PROPERTY TAXES 
251.6      Section 1.  [3.99] [LEGISLATIVE COMMISSION ON METROPOLITAN 
251.7   GOVERNMENT.] 
251.8      Subdivision 1.  [ESTABLISHED.] The legislative commission 
251.9   on metropolitan government is established to oversee the 
251.10  metropolitan council's operating and capital budgets, work 
251.11  program, and capital improvement program. 
251.12     Subd. 2.  [MEMBERSHIP.] The commission consists of four 
251.13  senators appointed by the senate subcommittee on committees of 
251.14  the committee on rules and administration, three senators 
251.15  appointed by the senate minority leader, four state 
251.16  representatives appointed by the speaker of the house, and three 
251.17  state representatives appointed by the house minority leader. 
251.18  All members must reside in or represent a portion of the 
251.19  seven-county metropolitan area.  The appointing authorities must 
251.20  ensure balanced geographic representation.  Each appointing 
251.21  authority must make appointments as soon as possible after the 
251.22  opening of the next regular session of the legislature in each 
251.23  odd-numbered year. 
251.24     Subd. 3.  [TERMS; VACANCIES.] Members of the commission 
251.25  serve for a two-year term beginning upon appointment and 
251.26  expiring upon appointment of a successor after the opening of 
251.27  the next regular session of the legislature in the odd-numbered 
251.28  year.  A vacancy in the membership of the commission must be 
251.29  filled for the unexpired term in a manner that will preserve the 
251.30  representation established by this section. 
251.31     Subd. 4.  [CHAIR.] The commission must meet as soon as 
251.32  practicable after members are appointed in each odd-numbered 
251.33  year to elect its chair and other officers as it may determine 
251.34  necessary.  A chair serves a two-year term, expiring in the 
251.35  odd-numbered year after a successor is elected.  The chair 
251.36  alternates biennially between the senate and the house. 
252.1      Subd. 5.  [COMPENSATION.] Members serve without 
252.2   compensation but may be reimbursed for their reasonable expenses 
252.3   as members of the legislature. 
252.4      Subd. 6.  [STAFF.] Legislative staff must provide 
252.5   administrative and research assistance to the commission. 
252.6      Subd. 7.  [MEETINGS; PROCEDURES.] The commission must meet 
252.7   at the call of the chair.  If there is a quorum, the commission 
252.8   may take action by a simple majority vote of commission members 
252.9   present. 
252.10     Subd. 8.  [POWERS; DUTIES; METROPOLITAN COUNCIL LEVY, 
252.11  BUDGET OVERSIGHT.] The commission must monitor, review, and make 
252.12  recommendations to the metropolitan council and to the 
252.13  legislature for the following calendar year on: 
252.14     (1) the tax rate and dollar amount of the metropolitan 
252.15  council's property tax levies and any proposed increases in the 
252.16  rate or dollar amount of tax; 
252.17     (2) any request for an increase in the debt of the 
252.18  metropolitan council; 
252.19     (3) the overall work and role of the metropolitan council; 
252.20     (4) the metropolitan council's proposed operating and 
252.21  capital budgets, work program, and capital improvement program; 
252.22  and 
252.23     (5) the metropolitan council's implementation of the 
252.24  operating and capital budgets, work program, and capital 
252.25  improvement program. 
252.26     Subd. 9.  [POWERS; DUTIES; METROPOLITAN COUNCIL 
252.27  APPOINTMENTS OVERSIGHT.] The commission must monitor 
252.28  appointments to the metropolitan council and may make 
252.29  recommendations on appointments to the nominating committee 
252.30  under section 473.123, subdivision 3, or to the governor before 
252.31  the governor makes the appointments.  The commission may also 
252.32  make recommendations to the senate before appointments are 
252.33  presented to the senate for its advice and consent. 
252.34     Subd. 10.  [EXPIRATION.] This section expires July 1, 2007. 
252.35     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2001. 
252.36     Sec. 2.  [103B.253] [COUNTY LEVY AUTHORITY.] 
253.1      Notwithstanding any other law to the contrary, a county 
253.2   levying a tax under section 103B.241, 103B.245, or 103B.251 
253.3   shall not include any taxes levied under those authorities in 
253.4   the levy certified under section 275.07, subdivision 1, 
253.5   paragraph (a).  A county levying under section 103B.241, 
253.6   103B.245, or 103B.251 shall separately certify that amount and 
253.7   the auditor shall extend that levy as a special taxing district 
253.8   levy under sections 275.066 and 275.07, subdivision 1, paragraph 
253.9   (b). 
253.10     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
253.11  levied in 2001, payable in 2002, and thereafter. 
253.12     Sec. 3.  Minnesota Statutes 2000, section 103D.905, 
253.13  subdivision 3, is amended to read: 
253.14     Subd. 3.  [ADMINISTRATIVE GENERAL FUND.] An administrative 
253.15  A general fund, consisting of an ad valorem tax levy, may not 
253.16  exceed 0.02418 0.048 percent of taxable market value, or 
253.17  $125,000 $250,000, whichever is less.  The money in the fund 
253.18  shall be used for general administrative expenses and for the 
253.19  construction or implementation and maintenance of projects of 
253.20  common benefit to the watershed district.  The managers may make 
253.21  an annual levy for the administrative general fund as provided 
253.22  in section 103D.911.  In addition to the annual administrative 
253.23  general levy, the managers may annually levy a tax not to exceed 
253.24  0.00798 percent of taxable market value for a period not to 
253.25  exceed 15 consecutive years to pay the cost attributable to the 
253.26  basic water management features of projects initiated by 
253.27  petition of a municipality of political subdivision within the 
253.28  watershed district or by petition of at least 50 resident owners 
253.29  whose property is within the watershed district.  
253.30     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
253.31  levied in 2001, payable in 2002, and thereafter. 
253.32     Sec. 4.  [126C.455] [SWIMMING POOL LEVY.] 
253.33     Each year, a school district with its home office located 
253.34  in a county that has (i) a population density of ten or fewer 
253.35  persons per square mile according to the 2000 census of 
253.36  population; (ii) an international border; and (iii) more than 
254.1   one school district within its boundaries, may levy for the net 
254.2   operational costs of a swimming pool.  The levy may not exceed 
254.3   the net actual costs of operation of the swimming pool for the 
254.4   previous year.  Net actual costs are defined as operating costs 
254.5   less any operating revenues and less any payments from other 
254.6   local governmental units. 
254.7      <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
254.8   payable in 2002 and later. 
254.9      Sec. 5.  [144F.01] [EMERGENCY MEDICAL SERVICES SPECIAL 
254.10  TAXING DISTRICTS.] 
254.11     Subdivision 1.  [POLITICAL SUBDIVISION DEFINED.] In this 
254.12  section, "political subdivision" means a county, a statutory or 
254.13  home rule charter city, or a township organized to provide town 
254.14  government. 
254.15     Subd. 2.  [WHO MAY ESTABLISH.] Two or more political 
254.16  subdivisions, or parts of them, may establish by resolution of 
254.17  their governing bodies a special taxing district for emergency 
254.18  medical services.  The participating territory of a 
254.19  participating political subdivision need not abut any other 
254.20  participating territory to be in the special taxing district. 
254.21     Subd. 3.  [BOARD.] The special taxing district under this 
254.22  section is governed by a board made up initially of 
254.23  representatives of each participating political subdivision in 
254.24  the proportions set out in the establishing resolution, subject 
254.25  to change as provided in the district's charter, if any, or in 
254.26  the district's bylaws.  Each participant's representative serves 
254.27  at the pleasure of that participant's governing body. 
254.28     Subd. 4.  [PROPERTY TAX LEVY AUTHORITY.] The district's 
254.29  board may levy a tax on the taxable real and personal property 
254.30  in the district.  The ad valorem tax levy may not exceed 0.048 
254.31  percent of the taxable market value of the district or $250,000, 
254.32  whichever is less.  The proceeds of the levy must be used as 
254.33  provided in subdivision 5.  The board shall certify the levy at 
254.34  the times as provided under section 275.07.  The board shall 
254.35  provide the county with whatever information is necessary to 
254.36  identify the property that is located within the district.  If 
255.1   the boundaries include a part of a parcel, the entire parcel 
255.2   shall be included in the district.  The county auditors must 
255.3   spread, collect, and distribute the proceeds of the tax at the 
255.4   same time and in the same manner as provided by law for all 
255.5   other property taxes. 
255.6      Subd. 5.  [USE OF LEVY PROCEEDS.] The proceeds of property 
255.7   taxes levied under this section must be used to support the 
255.8   providing of out-of-hospital emergency medical services 
255.9   including, but not limited to, first responder or rescue squads 
255.10  recognized by the district, ambulance services licensed under 
255.11  chapter 144E and recognized by the district, medical control 
255.12  functions set out in chapter 144E, communications equipment and 
255.13  systems, and programs of regional emergency medical services 
255.14  authorized by regional boards described in section 144E.52. 
255.15     Subd. 6.  [ADVISORY COMMITTEE.] A special taxing district 
255.16  board under this section must have an advisory committee to 
255.17  advise the board on issues involving emergency medical services 
255.18  and EMS communications.  The committee's membership must be 
255.19  comprised of representatives of first responders, ambulance 
255.20  services, ambulance medical directors, and EMS communication 
255.21  experts.  The advisory committee members serve at the pleasure 
255.22  of the appointing board. 
255.23     Subd. 7.  [POWERS.] (a) In addition to authority expressly 
255.24  granted in this section, a special taxing district under this 
255.25  section may exercise any power that may be exercised by any of 
255.26  its participating political subdivisions, except that the board 
255.27  may not incur debt.  The special taxing district may only use 
255.28  the power to do what is necessary or reasonable to support the 
255.29  services set out in subdivision 5. 
255.30     (b) Notwithstanding paragraph (a), the district may only 
255.31  levy the taxes authorized in this section. 
255.32     Subd. 8.  [ADDITIONS AND WITHDRAWALS.] (a) Additional 
255.33  eligible political subdivisions may be added to a special taxing 
255.34  district under this section as provided by the board of the 
255.35  district and agreed to in a resolution of the governing body of 
255.36  the political subdivision proposed to be added. 
256.1      (b) A political subdivision may withdraw from a special 
256.2   taxing district under this section by resolution of its 
256.3   governing body.  The political subdivision must notify the board 
256.4   of the special taxing district of the withdrawal by providing a 
256.5   copy of the resolution at least one year in advance of the 
256.6   proposed withdrawal.  The taxable property of the withdrawing 
256.7   member is subject to the property tax levy under subdivision 4 
256.8   for the taxes payable year following the notice of the 
256.9   withdrawal, unless the board and the withdrawing member agree 
256.10  otherwise by action of their governing bodies. 
256.11     (c) Notwithstanding subdivision 2, if the district is 
256.12  comprised of only two political subdivisions and one of the 
256.13  political subdivisions withdraws, the district can continue to 
256.14  exist. 
256.15     Subd. 9.  [DISSOLUTION.] If the special taxing district is 
256.16  dissolved, the assets and liabilities may be assigned to a 
256.17  successor entity, if any, or otherwise disposed of for public 
256.18  purposes as provided by law.  
256.19     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
256.20  levied in 2002, payable in 2003, through taxes levied in 2007, 
256.21  payable in 2008. 
256.22     Sec. 6.  Minnesota Statutes 2000, section 216B.2424, 
256.23  subdivision 5, is amended to read: 
256.24     Subd. 5.  [MANDATE.] (a) A public utility, as defined in 
256.25  section 216B.02, subdivision 4, that operates a nuclear-powered 
256.26  electric generating plant within this state must construct and 
256.27  operate, purchase, or contract to construct and operate (1) by 
256.28  December 31, 1998, 50 megawatts of electric energy installed 
256.29  capacity generated by farm-grown closed-loop biomass scheduled 
256.30  to be operational by December 31, 2001; and (2) by December 31, 
256.31  1998, an additional 75 megawatts of installed capacity so 
256.32  generated scheduled to be operational by December 31, 2002.  
256.33     (b) Of the 125 megawatts of biomass electricity installed 
256.34  capacity required under this subdivision, no more than 50 
256.35  megawatts of this capacity may be provided by a facility that 
256.36  uses poultry litter as its primary fuel source and any such 
257.1   facility:  
257.2      (1) need not use biomass that complies with the definition 
257.3   in subdivision 1; 
257.4      (2) must enter into a contract with the public utility for 
257.5   such capacity, that has an average purchase price per megawatt 
257.6   hour over the life of the contract that is equal to or less than 
257.7   the average purchase price per megawatt hour over the life of 
257.8   the contract in contracts approved by the public utilities 
257.9   commission before April 1, 2000, to satisfy the mandate of this 
257.10  section, and file that contract with the public utilities 
257.11  commission prior to September 1, 2000; and 
257.12     (3) such capacity must be scheduled to be operational by 
257.13  December 31, 2002.  
257.14     (c) Of the total 125 megawatts of biomass electric energy 
257.15  installed capacity required under this section, no more than 75 
257.16  megawatts may be provided by a single project.  
257.17     (d) Of the 75 megawatts of biomass electric energy 
257.18  installed capacity required under paragraph (a), clause (2), no 
257.19  more than 25 megawatts of this capacity may be provided by a St. 
257.20  Paul district heating and cooling system cogeneration facility 
257.21  utilizing waste wood as a primary fuel source.  The St. Paul 
257.22  district heating and cooling system cogeneration facility need 
257.23  not use biomass that complies with the definition in subdivision 
257.24  1.  
257.25     (e) The public utility must accept and consider on an equal 
257.26  basis with other biomass proposals: 
257.27     (1) a proposal to satisfy the requirements of this section 
257.28  that includes a project that exceeds the megawatt capacity 
257.29  requirements of either paragraph (a), clause (1) or (2), and 
257.30  that proposes to sell the excess capacity to the public utility 
257.31  or to other purchasers; and 
257.32     (2) a proposal for a new facility to satisfy more than ten 
257.33  but not more than 20 megawatts of the electrical generation 
257.34  requirements by a small business-sponsored independent power 
257.35  producer facility to be located within the northern quarter of 
257.36  the state, which means the area located north of Constitutional 
258.1   Route No. 8 as described in section 161.114, subdivision 2, and 
258.2   that utilizes biomass residue wood, sawdust, bark, chipped wood, 
258.3   or brush to generate electricity.  A facility described in this 
258.4   clause is not required to utilize biomass complying with the 
258.5   definition in subdivision 1, but must have the capacity required 
258.6   by this clause operational by December 31, 2002. 
258.7      (e) (f) If a public utility files a contract with the 
258.8   commission for electric energy installed capacity that uses 
258.9   poultry litter as its primary fuel source, the commission must 
258.10  do a preliminary review of the contract to determine if it meets 
258.11  the purchase price criteria provided in paragraph (b), clause 
258.12  (2), of this subdivision.  The commission shall perform its 
258.13  review and advise the parties of its determination within 30 
258.14  days of filing of such a contract by a public utility.  A public 
258.15  utility may submit by September 1, 2000, a revised contract to 
258.16  address the commission's preliminary determination.  
258.17     (f) (g) The commission shall finally approve, modify, or 
258.18  disapprove no later than July 1, 2001, all contracts submitted 
258.19  by a public utility as of September 1, 2000, to meet the mandate 
258.20  set forth in this subdivision.  
258.21     (g) (h) If a public utility subject to this section 
258.22  exercises an option to increase the generating capacity of a 
258.23  project in a contract approved by the commission prior to April 
258.24  25, 2000, to satisfy the mandate in this subdivision, the public 
258.25  utility must notify the commission by September 1, 2000, that it 
258.26  has exercised the option and include in the notice the amount of 
258.27  additional megawatts to be generated under the option 
258.28  exercised.  Any review by the commission of the project after 
258.29  exercise of such an option shall be based on the same criteria 
258.30  used to review the existing contract. 
258.31     (i) A facility specified in this subdivision qualifies for 
258.32  exemption from property taxation under section 272.02, 
258.33  subdivision 43. 
258.34     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
258.35  following final enactment. 
258.36     Sec. 7.  Minnesota Statutes 2000, section 270.11, is 
259.1   amended by adding a subdivision to read: 
259.2      Subd. 8.  [SPECIALIZED ASSISTANCE TO ASSESSORS.] Upon 
259.3   request of a county assessor, the commissioner of revenue shall, 
259.4   through the commissioner's regional representatives, advise and 
259.5   assist the assessor in assessing commercial and industrial 
259.6   single-use property, preparing for tax court proceedings, and 
259.7   performing other functions or duties requiring specialized 
259.8   knowledge or experience. 
259.9      Sec. 8.  Minnesota Statutes 2000, section 271.01, 
259.10  subdivision 5, is amended to read: 
259.11     Subd. 5.  [JURISDICTION.] The tax court shall have 
259.12  statewide jurisdiction.  Except for an appeal to the supreme 
259.13  court or any other appeal allowed under this subdivision, the 
259.14  tax court shall be the sole, exclusive, and final authority for 
259.15  the hearing and determination of all questions of law and fact 
259.16  arising under the tax laws of the state, as defined in this 
259.17  subdivision, in those cases that have been appealed to the tax 
259.18  court and in any case that has been transferred by the district 
259.19  court to the tax court.  The tax court shall have no 
259.20  jurisdiction in any case that does not arise under the tax laws 
259.21  of the state or in any criminal case or in any case determining 
259.22  or granting title to real property or in any case that is under 
259.23  the probate jurisdiction of the district court.  The small 
259.24  claims division of the tax court shall have no jurisdiction in 
259.25  any case dealing with property valuation or assessment for 
259.26  property tax purposes until the taxpayer has appealed the 
259.27  valuation or assessment to the county board of equalization, and 
259.28  in those towns and cities which have not transferred their 
259.29  duties to the county, the town or city board of equalization, 
259.30  except for:  (i) those taxpayers whose original assessments are 
259.31  determined by the commissioner of revenue; and (ii) those 
259.32  taxpayers appealing a denial of a current year application for 
259.33  the homestead classification for their property and the denial 
259.34  was not reflected on a valuation notice issued in the year; and 
259.35  (iii) any case dealing with property valuation, assessment, or 
259.36  taxation for property tax purposes and meeting the 
260.1   jurisdictional requirements of section 271.21, subdivision 2, 
260.2   paragraph (c).  The tax court shall have no jurisdiction in any 
260.3   case involving an order of the state board of equalization 
260.4   unless a taxpayer contests the valuation of property.  Laws 
260.5   governing taxes, aids, and related matters administered by the 
260.6   commissioner of revenue, laws dealing with property valuation, 
260.7   assessment or taxation of property for property tax purposes, 
260.8   and any other laws that contain provisions authorizing review of 
260.9   taxes, aids, and related matters by the tax court shall be 
260.10  considered tax laws of this state subject to the jurisdiction of 
260.11  the tax court.  This subdivision shall not be construed to 
260.12  prevent an appeal, as provided by law, to an administrative 
260.13  agency, board of equalization, review under section 274.13, 
260.14  subdivision 1c, or to the commissioner of revenue.  Wherever 
260.15  used in this chapter, the term commissioner shall mean the 
260.16  commissioner of revenue, unless otherwise specified. 
260.17     Sec. 9.  Minnesota Statutes 2000, section 271.21, 
260.18  subdivision 2, is amended to read: 
260.19     Subd. 2.  [JURISDICTION.] At the election of the taxpayer, 
260.20  the small claims division shall have jurisdiction only in the 
260.21  following matters: 
260.22     (a) cases involving valuation, assessment, or taxation of 
260.23  real or personal property, if the taxpayer has satisfied the 
260.24  requirements of section 271.01, subdivision 5, and:  (i) the 
260.25  issue is a denial of a current year application for the 
260.26  homestead classification for the taxpayer's property and the 
260.27  denial was not reflected on a valuation notice issued in the 
260.28  year; or (ii) in the case of nonhomestead property, the 
260.29  assessor's estimated market value is less than $100,000; or 
260.30     (b) any other case concerning the tax laws as defined in 
260.31  section 271.01, subdivision 5, in which the amount in 
260.32  controversy does not exceed $5,000, including penalty and 
260.33  interest; or 
260.34     (c) cases involving valuation, assessment, or taxation of 
260.35  real or personal property if: 
260.36     (i) the issue is a denial of a current year application for 
261.1   the homestead classification for the taxpayer's property; 
261.2      (ii) only one parcel is included in the petition, the 
261.3   entire parcel is classified as homestead 1a or 1b pursuant to 
261.4   section 273.13, and the parcel contains no more than one 
261.5   dwelling unit; or 
261.6      (iii) the assessor's estimated market value of the property 
261.7   included in the petition is less than $300,000. 
261.8      Sec. 10.  Minnesota Statutes 2000, section 272.02, 
261.9   subdivision 9, is amended to read: 
261.10     Subd. 9.  [PERSONAL PROPERTY; EXCEPTIONS.] Except for the 
261.11  taxable personal property enumerated below, all personal 
261.12  property and the property described in section sections 272.03, 
261.13  subdivision 1, paragraphs (c) and (d), and 272.028 shall be 
261.14  exempt.  
261.15     The following personal property shall be taxable:  
261.16     (a) except as provided in section 272.028, personal 
261.17  property which is part of an electric generating, transmission, 
261.18  or distribution system or a pipeline system transporting or 
261.19  distributing water, gas, crude oil, or petroleum products or 
261.20  mains and pipes used in the distribution of steam or hot or 
261.21  chilled water for heating or cooling buildings and structures; 
261.22     (b) railroad docks and wharves which are part of the 
261.23  operating property of a railroad company as defined in section 
261.24  270.80; 
261.25     (c) personal property defined in section 272.03, 
261.26  subdivision 2, clause (3); 
261.27     (d) leasehold or other personal property interests which 
261.28  are taxed pursuant to section 272.01, subdivision 2; 273.124, 
261.29  subdivision 7; or 273.19, subdivision 1; or any other law 
261.30  providing the property is taxable as if the lessee or user were 
261.31  the fee owner; 
261.32     (e) manufactured homes and sectional structures, including 
261.33  storage sheds, decks, and similar removable improvements 
261.34  constructed on the site of a manufactured home, sectional 
261.35  structure, park trailer or travel trailer as provided in section 
261.36  273.125, subdivision 8, paragraph (f); and 
262.1      (f) flight property as defined in section 270.071.  
262.2      <b>[EFFECTIVE DATE.]</b> This section is effective for the 2001 
262.3   assessment and thereafter. 
262.4      Sec. 11.  Minnesota Statutes 2000, section 272.02, 
262.5   subdivision 10, is amended to read: 
262.6      Subd. 10.  [PERSONAL PROPERTY USED FOR POLLUTION CONTROL.] 
262.7   Personal property used primarily for the abatement and control 
262.8   of air, water, or land pollution is exempt to the extent that it 
262.9   is so used, and real property is exempt if it is used primarily 
262.10  for abatement and control of air, water, or land pollution as 
262.11  part of an agricultural operation, as a part of a centralized 
262.12  treatment and recovery facility operating under a permit issued 
262.13  by the Minnesota pollution control agency pursuant to chapters 
262.14  115 and 116 and Minnesota Rules, parts 7001.0500 to 7001.0730, 
262.15  and 7045.0020 to 7045.1260, as a wastewater treatment facility 
262.16  and for the treatment, recovery, and stabilization of metals, 
262.17  oils, chemicals, water, sludges, or inorganic materials from 
262.18  hazardous industrial wastes, or as part of an electric 
262.19  generation system.  For purposes of this subdivision, personal 
262.20  property includes ponderous machinery and equipment used in a 
262.21  business or production activity that at common law is considered 
262.22  real property. 
262.23     Any taxpayer requesting exemption of all or a portion of 
262.24  any real property or any equipment or device, or part thereof, 
262.25  operated primarily for the control or abatement of air or, 
262.26  water, or land pollution shall file an application with the 
262.27  commissioner of revenue.  The equipment or device shall meet 
262.28  standards, rules, or criteria prescribed by the Minnesota 
262.29  pollution control agency, and must be installed or operated in 
262.30  accordance with a permit or order issued by that agency.  The 
262.31  Minnesota pollution control agency shall upon request of the 
262.32  commissioner furnish information or and advice to the 
262.33  commissioner.  
262.34     The information and advice furnished by the Minnesota 
262.35  pollution control agency must include statements as to whether 
262.36  the equipment, device, or real property meets a standard, rule, 
263.1   criteria, guideline, policy, or order of the Minnesota pollution 
263.2   control agency, and whether the equipment, device, or real 
263.3   property is installed or operated in accordance with it.  On 
263.4   determining that property qualifies for exemption, the 
263.5   commissioner shall issue an order exempting the property from 
263.6   taxation.  The equipment or, device, or real property shall 
263.7   continue to be exempt from taxation as long as the permit order 
263.8   issued by the Minnesota pollution control agency commissioner 
263.9   remains in effect. 
263.10     <b>[EFFECTIVE DATE.]</b> This section is effective for exemption 
263.11  applications received on or after July 1, 2001.  
263.12     Sec. 12.  Minnesota Statutes 2000, section 272.02, 
263.13  subdivision 22, is amended to read: 
263.14     Subd. 22.  [WIND ENERGY CONVERSION SYSTEMS.] (a) Small 
263.15  scale wind energy conversion systems installed after January 1, 
263.16  1991, and used as an electric power source are exempt. 
263.17     "Small scale wind energy conversion systems" are wind 
263.18  energy conversion systems, as defined in section 216C.06, 
263.19  subdivision 12, including the foundation or support pad, which 
263.20  (i) are used as an electric power source; (ii) are located 
263.21  within one county and owned by the same owner; and (iii) produce 
263.22  two megawatts or less of electricity as measured by nameplate 
263.23  ratings. 
263.24     (b) Medium scale wind energy conversion systems installed 
263.25  after January 1, 1991, are treated as follows:  (i) the 
263.26  foundation and support pad are taxable; (ii) the associated 
263.27  supporting and protective structures are exempt for the first 
263.28  five assessment years after they have been constructed, and 
263.29  thereafter, 30 percent of the market value of the associated 
263.30  supporting and protective structures are taxable; and (iii) the 
263.31  turbines, blades, transformers, and its related equipment, are 
263.32  exempt.  "Medium scale wind energy conversion systems" are wind 
263.33  energy conversion systems as defined in section 216C.06, 
263.34  subdivision 12, including the foundation or support pad, which:  
263.35  (i) are used as an electric power source; (ii) are located 
263.36  within one county and owned by the same owner; and (iii) produce 
264.1   more than two but equal to or less than 12 megawatts of energy 
264.2   as measured by nameplate ratings. 
264.3      (c) Large scale wind energy conversion systems installed 
264.4   after January 1, 1991, are treated as follows:  25 percent of 
264.5   the market value of all property is taxable, including (i) the 
264.6   foundation and support pad; (ii) the associated supporting and 
264.7   protective structures; and (iii) the turbines, blades, 
264.8   transformers, and its related equipment.  "Large scale wind 
264.9   energy conversion systems" are wind energy conversion systems as 
264.10  defined in section 216C.06, subdivision 12, including the 
264.11  foundation or support pad, which (i) are used as an electric 
264.12  power source; and (ii) produce more than 12 megawatts of energy 
264.13  as measured by nameplate ratings. 
264.14     (d) The total size of a wind energy conversion system under 
264.15  this subdivision shall be determined according to this paragraph.
264.16  Unless the systems are interconnected with different 
264.17  distribution systems, the nameplate capacity of one wind energy 
264.18  conversion system shall be combined with the nameplate capacity 
264.19  of any other wind energy conversion system that is: 
264.20     (1) located within five miles of the wind energy conversion 
264.21  system; 
264.22     (2) constructed within the same calendar year as the wind 
264.23  energy conversion system; and 
264.24     (3) under common ownership.  
264.25     In the case of a dispute, the commissioner of commerce 
264.26  shall determine the total size of the system, and shall draw all 
264.27  reasonable inferences in favor of combining the systems. 
264.28     (e) In making a determination under paragraph (d), the 
264.29  commissioner of commerce may determine that two wind energy 
264.30  conversion systems are under common ownership when the 
264.31  underlying ownership structure contains similar persons or 
264.32  entities, even if the ownership shares differ between the two 
264.33  systems.  Wind energy conversion systems are not under common 
264.34  ownership solely because the same person or entity provided 
264.35  equity financing for the systems. 
264.36     <b>[EFFECTIVE DATE.]</b> This section is effective for wind energy 
265.1   conversion systems installed after January 1, 2001. 
265.2      Sec. 13.  Minnesota Statutes 2000, section 272.02, is 
265.3   amended by adding a subdivision to read: 
265.4      Subd. 45.  [PUBLICLY OWNED PARKING FACILITIES.] Parking 
265.5   lots, ramps, structures, garages, and other facilities for 
265.6   vehicle parking owned by a municipality or authority established 
265.7   under chapter 469 or any affiliate nonprofit corporate entity 
265.8   organized by a municipality or authority are exempt, including 
265.9   those parking lots, ramps, structures, garages, and other 
265.10  facilities that are in whole or in part operated by, used by, 
265.11  leased, or subleased to an individual or nonprofit or for-profit 
265.12  entity. 
265.13     <b>[EFFECTIVE DATE.]</b> This section is effective for assessment 
265.14  year 2001 and thereafter. 
265.15     Sec. 14.  Minnesota Statutes 2000, section 272.02, is 
265.16  amended by adding a subdivision to read: 
265.17     Subd. 46.  [RESIDENTIAL BUILDINGS ON TEMPORARY SITES.] A 
265.18  newly constructed building that is situated on real property is 
265.19  exempt if it is: 
265.20     (1) intended for future residential occupancy; 
265.21     (2) on a temporary foundation and intended to be moved; 
265.22     (3) not used as a model or for any other business purposes; 
265.23     (4) not connected to any utilities; and 
265.24     (5) located on land that will not be sold with the building.
265.25     The exemption under this subdivision is allowable for only 
265.26  one assessment year after the date of the initial construction 
265.27  of the building. 
265.28     <b>[EFFECTIVE DATE.]</b> This section is effective for assessment 
265.29  year 2001 and thereafter. 
265.30     Sec. 15.  Minnesota Statutes 2000, section 272.02, is 
265.31  amended by adding a subdivision to read: 
265.32     Subd. 47.  [POULTRY LITTER BIOMASS GENERATION FACILITY; 
265.33  PERSONAL PROPERTY.] Notwithstanding subdivision 9, clause (a), 
265.34  attached machinery and other personal property which is part of 
265.35  an electrical generating facility that meets the requirements of 
265.36  this subdivision is exempt.  At the time of construction, the 
266.1   facility must: 
266.2      (1) be designed to utilize poultry litter as a primary fuel 
266.3   source; and 
266.4      (2) be constructed for the purpose of generating power at 
266.5   the facility that will be sold pursuant to a contract approved 
266.6   by the public utilities commission in accordance with the 
266.7   biomass mandate imposed under section 216B.2424. 
266.8      Construction of the facility must be commenced after 
266.9   January 1, 2000, and before December 31, 2002.  Property 
266.10  eligible for this exemption does not include electric 
266.11  transmission lines and interconnections or gas pipelines and 
266.12  interconnections appurtenant to the property or the facility. 
266.13     <b>[EFFECTIVE DATE.]</b> This section is effective for assessment 
266.14  year 2001 and thereafter. 
266.15     Sec. 16.  Minnesota Statutes 2000, section 272.02, is 
266.16  amended by adding a subdivision to read: 
266.17     Subd. 48.  [WASTE TIRE COGENERATION FACILITY; PERSONAL 
266.18  PROPERTY.] Notwithstanding subdivision 9, clause (a), attached 
266.19  machinery and other personal property which is part of an 
266.20  electric generating facility that meets the requirements of this 
266.21  subdivision is exempt.  At the time of construction, the 
266.22  facility must: 
266.23     (1) be designed to utilize waste tires as a primary fuel 
266.24  source; and 
266.25     (2) be a cogeneration electric generating facility of 15 to 
266.26  25 megawatts of installed capacity. 
266.27     Construction of the facility must be commenced after 
266.28  January 1, 2000, and before January 1, 2004.  Property eligible 
266.29  for this exemption does not include electric transmission lines 
266.30  and interconnections or gas pipelines and interconnections 
266.31  appurtenant to the property or the facility. 
266.32     <b>[EFFECTIVE DATE.]</b> This section is effective for assessment 
266.33  year 2001 and thereafter. 
266.34     Sec. 17.  Minnesota Statutes 2000, section 272.02, is 
266.35  amended by adding a subdivision to read: 
266.36     Subd. 49.  [BIOMASS ELECTRICAL GENERATION FACILITY; 
267.1   PERSONAL PROPERTY.] Notwithstanding subdivision 9, clause (a), 
267.2   attached machinery and other personal property which is part of 
267.3   an electrical generating facility that meets the requirements of 
267.4   this subdivision is exempt.  At the time of construction, the 
267.5   facility must: 
267.6      (1) be designed to utilize biomass as established in 
267.7   section 216B.2424 as a primary fuel source; and 
267.8      (2) be constructed for the purpose of generating power at 
267.9   the facility that will be sold pursuant to a contract approved 
267.10  by the public utilities commission in accordance with the 
267.11  biomass mandate imposed under section 216B.2424.  
267.12     Construction of the facility must be commenced after 
267.13  January 1, 2000, and before December 31, 2002.  Property 
267.14  eligible for this exemption does not include electric 
267.15  transmission lines and interconnections or gas pipelines and 
267.16  interconnections appurtenant to the property or facility.  
267.17     <b>[EFFECTIVE DATE.]</b> This section is effective for assessment 
267.18  year 2001 and thereafter. 
267.19     Sec. 18.  Minnesota Statutes 2000, section 272.02, is 
267.20  amended by adding a subdivision to read: 
267.21     Subd. 50.  [AGRICULTURAL HISTORICAL SOCIETY PROPERTY; 
267.22  EDUCATIONAL PURPOSES.] Property is exempt from taxation if it: 
267.23     (1) is owned and operated by a nonprofit charitable 
267.24  organization that qualifies for tax exemption under section 
267.25  501(c)(3) of the Internal Revenue Code of 1986, as amended; and 
267.26     (2) is primarily used for agricultural educational purposes 
267.27  including acquiring, preserving, restoring, and exhibiting 
267.28  artifacts and other items useful in providing an understanding 
267.29  of local or regional agricultural history. 
267.30     The exemption under this subdivision is limited to a 
267.31  maximum of $100,000 market value for a nonprofit charitable 
267.32  organization. 
267.33     <b>[EFFECTIVE DATE.]</b> This section is effective for assessment 
267.34  year 2001 and thereafter. 
267.35     Sec. 19.  [272.028] [PERSONAL PROPERTY USED TO GENERATE 
267.36  ELECTRICITY.] 
268.1      Subdivision 1.  [NEW PLANT CONSTRUCTION AFTER JANUARY 1, 
268.2   2001.] For a new generating plant or a new natural gas peaking 
268.3   storage facility built and placed in service after January 1, 
268.4   2001, personal property used to generate electric power or used 
268.5   to store natural gas or similar fuels is exempt if an exemption 
268.6   of generation personal property form, with an attached siting 
268.7   agreement, signed by the utility and the host taxing authorities 
268.8   is filed with the department of revenue.  The siting agreement 
268.9   may include a plan to provide fees or compensation to the host 
268.10  jurisdictions.  
268.11     Subd. 2.  [EXISTING PLANT; INCREASE IN NAMEPLATE CAPACITY.] 
268.12  For a plant existing or under construction on the day of final 
268.13  enactment of this act, a partial exemption applies if (1) an 
268.14  exemption of generation personal property form, with an attached 
268.15  siting agreement, signed by the utility and the host taxing 
268.16  authorities is filed with the department of revenue; (2) the 
268.17  nameplate capacity of the plant is increased from that existing 
268.18  on the day of final enactment of this act; and (3) the 
268.19  construction has the effect of increasing the facility's 
268.20  compliance with the new source performance standards and maximum 
268.21  achievable control technology standards of the federal Clean Air 
268.22  Act, title 42, United States Code, section 7401 et seq.  The 
268.23  siting agreement may include a plan to provide fees or 
268.24  compensation to the host jurisdictions.  This partial exemption 
268.25  must be computed by taking the increase in megawatts over the 
268.26  total megawatt nameplate capacity after construction is 
268.27  complete, multiplied by the market value of all taxable tools, 
268.28  implements, and machinery of the generating plant as determined 
268.29  by the commissioner of revenue.  The resulting exemption is 
268.30  effective beginning in the next assessment year. 
268.31     Subd. 3.  [DEFINITION; APPLICABILITY.] For purposes of this 
268.32  section, "personal property" means tools, implements, and 
268.33  machinery of the generating plant.  The exemption under this 
268.34  section does not apply to transformers, transmission lines, 
268.35  distribution lines, or any other tools, implements, and 
268.36  machinery that are part of an electric substation, wherever 
269.1   located. 
269.2      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
269.3   following final enactment. 
269.4      Sec. 20.  Minnesota Statutes 2000, section 273.061, 
269.5   subdivision 1, is amended to read: 
269.6      Subdivision 1.  [OFFICE CREATED; APPOINTMENT, 
269.7   QUALIFICATIONS.] Every county in this state shall have a county 
269.8   assessor.  The county assessor shall be appointed by the board 
269.9   of county commissioners.  The assessor shall be selected and 
269.10  appointed because of knowledge and training in the field of 
269.11  property taxation and appointment shall be approved by the 
269.12  commissioner of revenue before the same shall become effective.  
269.13  Upon receipt by the county commissioners of the commissioner of 
269.14  revenue's refusal to approve an appointment, the term of the 
269.15  appointee shall terminate at the end of that day.  
269.16     The commissioner of revenue may grant approval on a 
269.17  probationary basis for a period of two years.  The commissioner 
269.18  must base the decision to impose a probationary period on 
269.19  objective and consistent criteria.  At the end of the two-year 
269.20  probationary period, the commissioner may either refuse to 
269.21  approve the person's appointment for the remainder of the 
269.22  person's four-year term, approve the person's appointment but 
269.23  only for another two-year probationary period, or 
269.24  unconditionally approve the person's appointment for the 
269.25  remainder of the four-year term for which the person was 
269.26  originally appointed by the county board.  The criteria shall 
269.27  not be considered rules and are not subject to the 
269.28  Administrative Procedure Act. 
269.29     Notwithstanding any law to the contrary, a county assessor 
269.30  must have senior accreditation from the state board of assessors 
269.31  by January 1, 1992, or within two years of the assessor's first 
269.32  appointment under this section, whichever is later. 
269.33     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
269.34  following final enactment. 
269.35     Sec. 21.  Minnesota Statutes 2000, section 273.061, 
269.36  subdivision 2, is amended to read: 
270.1      Subd. 2.  [TERM; VACANCY.] (a) The terms of county 
270.2   assessors appointed under this section shall be four years.  A 
270.3   new term shall begin on January 1 of every fourth year after 
270.4   1973.  When any vacancy in the office occurs, the board of 
270.5   county commissioners, within 30 90 days thereafter, shall fill 
270.6   the same by appointment for the remainder of the term, following 
270.7   the procedure prescribed in subdivision 1.  The term of the 
270.8   county assessor may be terminated by the board of county 
270.9   commissioners at any time, on charges of inefficiency or neglect 
270.10  of duty malfeasance, misfeasance, or nonfeasance by the 
270.11  commissioner of revenue.  If the board of county commissioners 
270.12  does not intend to reappoint a county assessor who has been 
270.13  certified by the state board of assessors, the board shall 
270.14  present written notice to the county assessor not later than 90 
270.15  days prior to the termination of the assessor's term, that it 
270.16  does not intend to reappoint the assessor.  If written notice is 
270.17  not timely made, the county assessor will automatically be 
270.18  reappointed by the board of county commissioners. 
270.19     The commissioner of revenue may recommend to the state 
270.20  board of assessors the nonrenewal, suspension, or revocation of 
270.21  an assessor's license as provided in sections 270.41 to 270.53.  
270.22     (b) In the event of a vacancy in the office of county 
270.23  assessor, through death, resignation or other reasons, the 
270.24  deputy (or chief deputy, if more than one) shall perform the 
270.25  functions of the office.  If there is no deputy, the county 
270.26  auditor shall designate a person to perform the duties of the 
270.27  office until an appointment is made as provided in clause (a).  
270.28  Such person shall perform the duties of the office for a period 
270.29  not exceeding 30 90 days during which the county board must 
270.30  appoint a county assessor.  Such 30-day 90-day period may, 
270.31  however, be extended by written approval of the commissioner of 
270.32  revenue. 
270.33     (c) In the case of the first appointment under paragraph 
270.34  (a) of a county assessor who is accredited but who does not have 
270.35  senior accreditation, an approval of the appointment by the 
270.36  commissioner shall be provisional, provided that a county 
271.1   assessor appointed to a provisional term under this paragraph 
271.2   must reapply to the commissioner at the end of the provisional 
271.3   term.  A provisional term may not exceed two years.  The 
271.4   commissioner shall not approve the appointment for the remainder 
271.5   of the four-year term unless the assessor has obtained senior 
271.6   accreditation. 
271.7      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
271.8   following final enactment. 
271.9      Sec. 22.  Minnesota Statutes 2000, section 273.061, 
271.10  subdivision 8, is amended to read: 
271.11     Subd. 8.  [POWERS AND DUTIES.] The county assessor shall 
271.12  have the following powers and duties: 
271.13     (1) To call upon and confer with the township and city 
271.14  assessors in the county, and advise and give them the necessary 
271.15  instructions and directions as to their duties under the laws of 
271.16  this state, to the end that a uniform assessment of all real 
271.17  property in the county will be attained. 
271.18     (2) To assist and instruct the local assessors in the 
271.19  preparation and proper use of land maps and record cards, in the 
271.20  property classification of real and personal property, and in 
271.21  the determination of proper standards of value. 
271.22     (3) To keep the local assessors in the county advised of 
271.23  all changes in assessment laws and all instructions which the 
271.24  assessor receives from the commissioner of revenue relating to 
271.25  their duties. 
271.26     (4) To have authority to require the attendance of groups 
271.27  of local assessors at sectional meetings called by the assessor 
271.28  for the purpose of giving them further assistance and 
271.29  instruction as to their duties. 
271.30     (5) To require the attendance of all licensed assessors 
271.31  working in that county at annual instructional meetings 
271.32  presented in part by the department of revenue regional 
271.33  representative to provide assistance and instruction as to their 
271.34  duties under the law and the proper implementation of assessment 
271.35  procedures. 
271.36     (6) To immediately commence the preparation of a large 
272.1   scale topographical land map of the county, in such form as may 
272.2   be prescribed by the commissioner of revenue, showing thereon 
272.3   the location of all railroads, highways and roads, bridges, 
272.4   rivers and lakes, swamp areas, wooded tracts, stony ridges and 
272.5   other features which might affect the value of the land.  
272.6   Appropriate symbols shall be used to indicate the best, the 
272.7   fair, and the poor land of the county.  For use in connection 
272.8   with the topographical land map, the assessor shall prepare and 
272.9   keep available in the assessor's office tables showing fair 
272.10  average minimum and maximum market values per acre of 
272.11  cultivated, meadow, pasture, cutover, timber and waste lands of 
272.12  each township.  The assessor shall keep the map and tables 
272.13  available in the office for the guidance of town assessors, 
272.14  boards of review, and the county board of equalization. 
272.15     (6) (7) To also prepare and keep available in the office 
272.16  for the guidance of town assessors, boards of review and the 
272.17  county board of equalization, a land valuation map of the 
272.18  county, in such form as may be prescribed by the commissioner of 
272.19  revenue.  This map, which shall include the bordering tier of 
272.20  townships of each county adjoining, shall show the average 
272.21  market value per acre, both with and without improvements, as 
272.22  finally equalized in the last assessment of real estate, of all 
272.23  land in each town or unorganized township which lies outside the 
272.24  corporate limits of cities.  
272.25     (7) (8) To regularly examine all conveyances of land 
272.26  outside the corporate limits of cities of the first and second 
272.27  class, filed with the county recorder of the county, and keep a 
272.28  file, by descriptions, of the considerations shown thereon.  
272.29  From the information obtained by comparing the considerations 
272.30  shown with the market values assessed, the assessor shall make 
272.31  recommendations to the county board of equalization of necessary 
272.32  changes in individual assessments or aggregate valuations. 
272.33     (8) (9) To become familiar with the values of the different 
272.34  items of personal property so as to be in a position when called 
272.35  upon to advise the boards of review and the county board of 
272.36  equalization concerning property, market values thereof. 
273.1      (9) (10) While the county board of equalization is in 
273.2   session, to give it every possible assistance to enable it to 
273.3   perform its duties.  The assessor shall furnish the board with 
273.4   all necessary charts, tables, comparisons, and data which it 
273.5   requires in its deliberations, and shall make whatever 
273.6   investigations the board may desire. 
273.7      (10) (11) At the request of either the board of county 
273.8   commissioners or the commissioner of revenue, to investigate 
273.9   applications for reductions of valuation and abatements and 
273.10  settlements of taxes, examine the real or personal property 
273.11  involved, and submit written reports and recommendations with 
273.12  respect to the applications, in such form as may be prescribed 
273.13  by the board of county commissioners and commissioner of revenue.
273.14     (11) (12) To make diligent search each year for real and 
273.15  personal property which has been omitted from assessment in the 
273.16  county, and report all such omissions to the county auditor. 
273.17     (12) (13) To regularly confer with county assessors in all 
273.18  adjacent counties about the assessment of property in order to 
273.19  uniformly assess and equalize the value of similar properties 
273.20  and classes of property located in adjacent counties.  The 
273.21  conference shall emphasize the assessment of agricultural and 
273.22  commercial and industrial property or other properties that may 
273.23  have an inadequate number of sales in a single county. 
273.24     (13) (14) To render such other services pertaining to the 
273.25  assessment of real and personal property in the county as are 
273.26  not inconsistent with the duties set forth in this section, and 
273.27  as may be required by the board of county commissioners or by 
273.28  the commissioner of revenue. 
273.29     (14) (15) To maintain a record, in conjunction with other 
273.30  county offices, of all transfers of property to assist in 
273.31  determining the proper classification of property, including but 
273.32  not limited to, transferring homestead property and name changes 
273.33  on homestead property. 
273.34     (15) (16) To determine if a homestead application is 
273.35  required due to the transfer of homestead property or an owner's 
273.36  name change on homestead property. 
274.1      <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2001, 
274.2   and thereafter. 
274.3      Sec. 23.  Minnesota Statutes 2000, section 273.072, 
274.4   subdivision 1, is amended to read: 
274.5      Subdivision 1.  Any county and any city or town lying 
274.6   wholly or partially within the county and constituting a 
274.7   separate assessment district may, by agreement entered into 
274.8   under section 471.59 and approved by the commissioner of 
274.9   revenue, provide for the assessment of property in the 
274.10  municipality or town by the county assessor.  Any two or more 
274.11  cities or towns constituting separate assessment districts, 
274.12  whether their assessors are elective or appointive, may enter 
274.13  into an agreement under section 471.59 for the assessment of 
274.14  property in the contracting units by the assessor of one of the 
274.15  units or by an assessor who is jointly employed.  
274.16     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
274.17  following final enactment. 
274.18     Sec. 24.  [273.0755] [TRAINING AND EDUCATION OF PROPERTY 
274.19  TAX PERSONNEL.] 
274.20     (a) Beginning with the four-year period starting on July 1, 
274.21  2000, every person licensed by the state board of assessors at 
274.22  the Accredited Minnesota Assessor level or higher, shall 
274.23  successfully complete at least once in every four-year licensing 
274.24  period a week-long Minnesota laws course sponsored by the 
274.25  department of revenue.  An assessor need not attend the course 
274.26  if they successfully pass the test for the course. 
274.27     (b) The commissioner of revenue may require that each 
274.28  county, and each city for which the city assessor performs the 
274.29  duties of county assessor, have (i) a person on the assessor's 
274.30  staff who is certified by the department of revenue in sales 
274.31  ratio calculations, (ii) an officer or employee who is certified 
274.32  by the department of revenue in tax calculations, and (iii) an 
274.33  officer or employee who is certified by the department of 
274.34  revenue in the proper preparation of abstracts of assessment.  
274.35     (c) The commissioner of revenue may require that each 
274.36  county have an officer or employee who is certified by the 
275.1   department of revenue in the proper preparation of abstracts of 
275.2   tax lists. 
275.3      <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2001, 
275.4   and thereafter. 
275.5      Sec. 25.  Minnesota Statutes 2000, section 273.11, 
275.6   subdivision 1a, is amended to read: 
275.7      Subd. 1a.  [LIMITED MARKET VALUE.] In the case of all 
275.8   property classified as agricultural homestead or nonhomestead, 
275.9   residential homestead or nonhomestead, or noncommercial seasonal 
275.10  recreational residential, the assessor shall compare the value 
275.11  with that the taxable portion of the value determined in the 
275.12  preceding assessment.  The amount of the increase entered in the 
275.13  current assessment shall not exceed the greater of (1) 8.5 
275.14  percent of the value in the preceding assessment, or (2) 15 
275.15  percent of the difference between the current assessment and the 
275.16  preceding assessment. 
275.17     For assessment year 2002, the amount of the increase shall 
275.18  not exceed the greater of (1) 12 percent of the value in the 
275.19  preceding assessment, or (2) 20 percent of the difference 
275.20  between the current assessment and the preceding assessment. 
275.21     For assessment year 2003, the amount of the increase shall 
275.22  not exceed the greater of (1) 12 percent of the value in the 
275.23  preceding assessment, or (2) 25 percent of the difference 
275.24  between the current assessment and the preceding assessment. 
275.25     For assessment year 2004, the amount of the increase shall 
275.26  not exceed the greater of (1) 12 percent of the value in the 
275.27  preceding assessment, or (2) 33 percent of the difference 
275.28  between the current assessment and the preceding assessment. 
275.29     For assessment year 2005, the amount of the increase shall 
275.30  not exceed the greater of (1) 12 percent of the value in the 
275.31  preceding assessment, or (2) 50 percent of the difference 
275.32  between the current assessment and the preceding assessment.  
275.33     This limitation shall not apply to increases in value due 
275.34  to improvements.  For purposes of this subdivision, the term 
275.35  "assessment" means the value prior to any exclusion under 
275.36  subdivision 16. 
276.1      The provisions of this subdivision shall be in effect only 
276.2   through assessment year 2001 2005 as provided in this 
276.3   subdivision. 
276.4      For purposes of the assessment/sales ratio study conducted 
276.5   under section 127A.48, and the computation of state aids paid 
276.6   under chapters 122A, 123A, 123B, 124D, 125A, 126C, 127A, and 
276.7   477A, market values and net tax capacities determined under this 
276.8   subdivision and subdivision 16, shall be used. 
276.9      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
276.10  following final enactment. 
276.11     Sec. 26.  Minnesota Statutes 2000, section 273.11, 
276.12  subdivision 14, is amended to read: 
276.13     Subd. 14.  [VACANT LAND PLATTED ON OR AFTER BEFORE AUGUST 
276.14  1, 1991 2001.] (a) All land platted on or after before August 1, 
276.15  1991 2001, and not improved with a permanent structure, shall be 
276.16  assessed as provided in this subdivision.  The assessor shall 
276.17  determine the market value of each individual lot based upon the 
276.18  highest and best use of the property as unplatted land.  In 
276.19  establishing the market value of the property, the assessor 
276.20  shall consider the sale price of the unplatted land or 
276.21  comparable sales of unplatted land of similar use and similar 
276.22  availability of public utilities. 
276.23     (b) The market value determined in paragraph (a) shall be 
276.24  increased as follows for each of the three assessment years 
276.25  immediately following the final approval of the plat:  one-third 
276.26  of the difference between the property's unplatted market value 
276.27  as determined under paragraph (a) and the market value based 
276.28  upon the highest and best use of the land as platted property 
276.29  shall be added in each of the three subsequent assessment years. 
276.30     (c) Any increase in market value after the first assessment 
276.31  year following the plat's final approval shall be added to the 
276.32  property's market value in the next assessment year.  
276.33  Notwithstanding paragraph (b), if construction begins before the 
276.34  expiration of the three years in paragraph (b), that lot shall 
276.35  be eligible for revaluation in the next assessment year.  The 
276.36  market value of a platted lot determined under this subdivision 
277.1   shall not exceed the value of that lot based upon the highest 
277.2   and best use of the property as platted land. 
277.3      <b>[EFFECTIVE DATE.]</b> This section is effective for land 
277.4   platted after July 31, 2001. 
277.5      Sec. 27.  Minnesota Statutes 2000, section 273.11, is 
277.6   amended by adding a subdivision to read: 
277.7      Subd. 14a.  [VACANT LAND PLATTED ON OR AFTER AUGUST 1, 
277.8   2001; LOCATED IN METROPOLITAN COUNTIES.] (a) All land platted on 
277.9   or after August 1, 2001, located in a metropolitan county, and 
277.10  not improved with a permanent structure, shall be assessed as 
277.11  provided in this subdivision.  The assessor shall determine the 
277.12  market value of each individual lot based upon the highest and 
277.13  best use of the property as unplatted land.  In establishing the 
277.14  market value of the property, the assessor shall consider the 
277.15  sale price of the unplatted land or comparable sales of 
277.16  unplatted land of similar use and similar availability of public 
277.17  utilities. 
277.18     (b) The market value determined in paragraph (a) shall be 
277.19  increased as follows for each of the three assessment years 
277.20  immediately following the final approval of the plat:  one-third 
277.21  of the difference between the property's unplatted market value 
277.22  as determined under paragraph (a) and the market value based 
277.23  upon the highest and best use of the land as platted property 
277.24  shall be added in each of the three subsequent assessment years. 
277.25     (c) Any increase in market value after the first assessment 
277.26  year following the plat's final approval shall be added to the 
277.27  property's market value in the next assessment year.  
277.28  Notwithstanding paragraph (b), if construction begins before the 
277.29  expiration of the three years in paragraph (b), that lot shall 
277.30  be eligible for revaluation in the next assessment year.  The 
277.31  market value of a platted lot determined under this subdivision 
277.32  shall not exceed the value of that lot based upon the highest 
277.33  and best use of the property as platted land. 
277.34     (d) For purposes of this section, "metropolitan county" 
277.35  means the counties of Anoka, Carver, Dakota, Hennepin, Ramsey, 
277.36  Scott, and Washington. 
278.1      <b>[EFFECTIVE DATE.]</b> This section is effective for land 
278.2   platted after July 31, 2001. 
278.3      Sec. 28.  Minnesota Statutes 2000, section 273.11, is 
278.4   amended by adding a subdivision to read: 
278.5      Subd. 14b.  [VACANT LAND PLATTED ON OR AFTER AUGUST 1, 
278.6   2001; LOCATED IN NONMETROPOLITAN COUNTIES.] (a) All land platted 
278.7   on or after August 1, 2001, located in a nonmetropolitan county, 
278.8   and not improved with a permanent structure, shall be assessed 
278.9   as provided in this subdivision.  The assessor shall determine 
278.10  the market value of each individual lot based upon the highest 
278.11  and best use of the property as unplatted land.  In establishing 
278.12  the market value of the property, the assessor shall consider 
278.13  the sale price of the unplatted land or comparable sales of 
278.14  unplatted land of similar use and similar availability of public 
278.15  utilities. 
278.16     (b) The market value determined in paragraph (a) shall be 
278.17  increased as follows for each of the five assessment years 
278.18  immediately following the final approval of the plat:  one-fifth 
278.19  of the difference between the property's unplatted market value 
278.20  as determined under paragraph (a) and the market value based 
278.21  upon the highest and best use of the land as platted property 
278.22  shall be added in each of the five subsequent assessment years. 
278.23     (c) Any increase in market value after the first assessment 
278.24  year following the plat's final approval shall be added to the 
278.25  property's market value in the next assessment year.  
278.26  Notwithstanding paragraph (b), if construction begins before the 
278.27  expiration of the five years in paragraph (b), that lot shall be 
278.28  eligible for revaluation in the next assessment year.  The 
278.29  market value of a platted lot determined under this subdivision 
278.30  shall not exceed the value of that lot based upon the highest 
278.31  and best use of the property as platted land. 
278.32     <b>[EFFECTIVE DATE.]</b> This section is effective for land 
278.33  platted after July 31, 2001. 
278.34     Sec. 29.  Minnesota Statutes 2000, section 273.111, 
278.35  subdivision 4, is amended to read: 
278.36     Subd. 4.  [DETERMINATION OF VALUE.] The value of any real 
279.1   estate described in subdivision 3 shall upon timely application 
279.2   by the owner, in the manner provided in subdivision 8, be 
279.3   determined solely with reference to its appropriate agricultural 
279.4   classification and value notwithstanding sections 272.03, 
279.5   subdivision 8, and 273.11.  In determining the value for ad 
279.6   valorem tax purposes, the assessor shall use sales data obtained 
279.7   from for agricultural lands located outside the seven 
279.8   metropolitan counties but within the region used for computing 
279.9   the range of values under section 273.11, subdivision 10.  The 
279.10  sales shall have having similar soil types, number of degree 
279.11  days, and other similar agricultural characteristics as 
279.12  contained in section 273.11, subdivision 10.  Furthermore, the 
279.13  assessor shall not consider any added values resulting from 
279.14  nonagricultural factors. 
279.15     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
279.16  following final enactment. 
279.17     Sec. 30.  [273.1115] [MINNESOTA ENVIRONMENTAL PRESERVATION 
279.18  PROPERTY TAX LAW.] 
279.19     Subdivision 1.  [CITATION.] This section may be cited as 
279.20  the "Minnesota Environmental Preservation Property Tax Law." 
279.21     Subd. 2.  [PUBLIC POLICY.] The present general system of ad 
279.22  valorem property taxation in the state of Minnesota does not 
279.23  provide an equitable basis for the taxation of certain real 
279.24  property and may result in excessive taxes on some land.  It is 
279.25  therefore declared to be the public policy of this state that 
279.26  the public interest would best be served by imposing property 
279.27  tax burdens through appropriate taxing measures upon certain 
279.28  properties within this state based upon their current use and 
279.29  not on their potential alternative or future use. 
279.30     Subd. 3.  [REQUIREMENTS.] (a) Real estate consisting of at 
279.31  least 20 acres classified under section 273.13, subdivision 22 
279.32  or 23, is entitled to valuation and tax deferment under this 
279.33  section only if it meets all of the following criteria: 
279.34     (1) the property is either (i) the homestead of the owner, 
279.35  the owner's spouse, or the owner or spouse's son or daughter, or 
279.36  (ii) has been in possession of the owner, the owner's spouse, or 
280.1   the owner or spouse's son or daughter for a period of at least 
280.2   seven years prior to application for benefits under this 
280.3   section; 
280.4      (2) the land consists of forestland, woodland, meadowland, 
280.5   slough, wasteland, or a combination thereof; 
280.6      (3) revenues derived from the property in the year 
280.7   immediately preceding application for enrollment in the program 
280.8   must not exceed $5 per acre and must continue to be less than $5 
280.9   per acre in each year that the property continues to be enrolled 
280.10  in the program; and 
280.11     (4) the property must border public waters and the land 
280.12  bordering the water must be substantially undeveloped and must 
280.13  not be platted.  For purposes of this clause, "undeveloped" 
280.14  means that the property contains no docks or landings on its 
280.15  shoreline and its natural terrain and vegetation has not been 
280.16  disturbed.  For purposes of this clause, "public waters" has the 
280.17  meaning given in section 103G.005, subdivision 15, paragraph 
280.18  (a), clauses (1) to (5) and (7) to (9). 
280.19     (b) If only a portion of the property meets the 
280.20  qualifications of this subdivision then only that portion 
280.21  qualifies for deferment under this section. 
280.22     (c) Valuation of real estate under this section is limited 
280.23  to parcels owned by noncorporate entities. 
280.24     Subd. 4.  [DETERMINATION OF VALUE.] Notwithstanding 
280.25  sections 272.03, subdivision 8, and 273.11, subdivision 1, upon 
280.26  timely application by the owner, in the manner provided in 
280.27  subdivision 6, the value of any real estate described in 
280.28  subdivision 3 must be determined with reference to its current 
280.29  use, except that in determining its value, the assessor shall 
280.30  ignore any value resulting from proximity to the public waters. 
280.31  The market value determined under this section cannot be less 
280.32  than the market value of the property for the assessment year 
280.33  preceding the year of enrollment. 
280.34     Subd. 5.  [SEPARATE DETERMINATION OF MARKET VALUE AND TAX; 
280.35  HIGHEST AND BEST USE.] The assessor shall annually make a 
280.36  separate determination of the market value of the real estate at 
281.1   its highest and best use.  The tax based upon the appropriate 
281.2   local tax rate and the highest and best use value must be 
281.3   recorded on the property assessment records. 
281.4      Subd. 6.  [APPLICATION.] Application for deferment of taxes 
281.5   and assessment under this section must be filed by May 1 of the 
281.6   assessment year.  Any application filed and granted continues in 
281.7   effect for subsequent years until the property no longer 
281.8   qualifies.  The application must be filed with the assessor of 
281.9   the taxing district in which the real property is located on 
281.10  such form as may be prescribed by the commissioner of revenue.  
281.11  The assessor may require proof by affidavit or otherwise that 
281.12  the property initially qualifies under subdivision 3, and 
281.13  continues to qualify each subsequent year. 
281.14     Subd. 7.  [ADDITIONAL TAXES.] When real property which has 
281.15  been valued and assessed under this section no longer qualifies 
281.16  under subdivision 3, the property is subject to additional 
281.17  taxes, in the amount equal to the difference between the taxes 
281.18  determined in accordance with subdivision 4, and the tax amount 
281.19  determined under subdivision 5, provided, however, that if the 
281.20  property was sold in an arms-length transaction the tax amount 
281.21  determined under subdivision 5 must not be greater than it would 
281.22  have been had the actual bona fide sale price of the property 
281.23  been used in lieu of the market value determined under 
281.24  subdivision 5.  The additional taxes under this subdivision 
281.25  apply to the entire property if any portion of the property is 
281.26  sold, provided that the sold portion does not continue to 
281.27  qualify under this section. 
281.28     The additional taxes must be extended against the property 
281.29  on the tax list for the current year, provided, however, that no 
281.30  interest or penalties shall be levied on the additional taxes if 
281.31  timely paid, and provided further, that the additional taxes 
281.32  must only be levied with respect to the last three years that 
281.33  the property has been valued and assessed under this section.  
281.34  For purposes of this subdivision, "timely paid" means paid (i) 
281.35  within 60 days after notification from the county that the 
281.36  property no longer qualifies, or (ii) prior to the recording of 
282.1   the conveyance of the property, whichever is earlier. 
282.2      Subd. 8.  [LIEN.] The tax imposed by this section is a lien 
282.3   upon the property assessed to the same extent and for the same 
282.4   duration as other taxes imposed upon property within this 
282.5   state.  The tax must be annually extended by the county auditor 
282.6   and if and when payable must be collected and distributed in the 
282.7   manner provided by law for the collection and distribution of 
282.8   other property taxes. 
282.9      Any additional taxes due under subdivision 7 must be paid 
282.10  prior to the recording of the conveyance under section 272.12. 
282.11     Subd. 9.  [CONTINUATION OF TAX TREATMENT UPON 
282.12  SALE.] Notwithstanding subdivision 7, when real property 
282.13  qualifying under subdivision 3 is sold, no additional taxes 
282.14  shall be extended against the property if the property continues 
282.15  to qualify under subdivision 3. 
282.16     Subd. 10.  [APPLICATION.] This section does not apply to 
282.17  property located in the counties of Anoka, Carver, Dakota, 
282.18  Hennepin, Ramsey, Scott, and Washington. 
282.19     <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
282.20  the 2001 assessment year, for taxes payable in 2002 and 
282.21  thereafter, except that for the 2001 assessment year, the 
282.22  application date under subdivision 6 shall be September 1, 2001. 
282.23     Sec. 31.  Minnesota Statutes 2000, section 273.121, is 
282.24  amended to read: 
282.25     273.121 [VALUATION OF REAL PROPERTY, NOTICE.] 
282.26     Any county assessor or city assessor having the powers of a 
282.27  county assessor, valuing or classifying taxable real property 
282.28  shall in each year notify those persons whose property is to be 
282.29  assessed or reclassified included on the assessment roll that 
282.30  year if the person's address is known to the assessor, otherwise 
282.31  the occupant of the property.  The notice shall be in writing 
282.32  and shall be sent by ordinary mail at least ten days before the 
282.33  meeting of the local board of review or equalization under 
282.34  section 274.01 or the review process established under section 
282.35  274.13, subdivision 1c.  It shall contain:  (1) the market value 
282.36  for the current and prior assessment, (2) the limited market 
283.1   value under section 273.11, subdivision 1a for the current and 
283.2   prior assessment, (3) the qualifying amount of any improvements 
283.3   under section 273.11, subdivision 16 for the current assessment, 
283.4   (4) the market value subject to taxation after subtracting the 
283.5   amount of any qualifying improvements for the current 
283.6   assessment, (5) the new classification of the property for the 
283.7   current and prior assessment, (6) a note that if the property is 
283.8   homestead and at least 35 years old, improvements made to the 
283.9   property may be eligible for a valuation exclusion under section 
283.10  273.11, subdivision 16, (7) the assessor's office address, and 
283.11  (8) the dates, places, and times set for the meetings of the 
283.12  local board of review or equalization, the review process 
283.13  established under section 274.13, subdivision 1c, and the county 
283.14  board of appeal and equalization.  If the assessment roll is not 
283.15  complete, the notice shall be sent by ordinary mail at least ten 
283.16  days prior to the date on which the board of review has 
283.17  adjourned The commissioner of revenue shall specify the form of 
283.18  the notice.  The assessor shall attach to the assessment roll a 
283.19  statement that the notices required by this section have been 
283.20  mailed.  Any assessor who is not provided sufficient funds from 
283.21  the assessor's governing body to provide such notices, may make 
283.22  application to the commissioner of revenue to finance such 
283.23  notices.  The commissioner of revenue shall conduct an 
283.24  investigation and, if satisfied that the assessor does not have 
283.25  the necessary funds, issue a certification to the commissioner 
283.26  of finance of the amount necessary to provide such notices.  The 
283.27  commissioner of finance shall issue a warrant for such amount 
283.28  and shall deduct such amount from any state payment to such 
283.29  county or municipality.  The necessary funds to make such 
283.30  payments are hereby appropriated.  Failure to receive the notice 
283.31  shall in no way affect the validity of the assessment, the 
283.32  resulting tax, the procedures of any board of review or 
283.33  equalization, or the enforcement of delinquent taxes by 
283.34  statutory means. 
283.35     <b>[EFFECTIVE DATE.]</b> This section is effective for notices 
283.36  required to be mailed in 2002 and thereafter. 
284.1      Sec. 32.  Minnesota Statutes 2000, section 273.124, 
284.2   subdivision 8, is amended to read: 
284.3      Subd. 8.  [HOMESTEAD OWNED BY OR LEASED TO FAMILY FARM 
284.4   CORPORATION, JOINT FAMILY FARM VENTURE, LIMITED LIABILITY 
284.5   COMPANY, OR PARTNERSHIP.] (a) Each family farm corporation, each 
284.6   joint family farm venture, each limited liability company, and 
284.7   each partnership operating a family farm is entitled to class 1b 
284.8   under section 273.13, subdivision 22, paragraph (b), or class 2a 
284.9   assessment for one homestead occupied by a shareholder, member, 
284.10  or partner thereof who is residing on the land except as 
284.11  provided in subdivision 14, paragraph (g), and actively engaged 
284.12  in farming of the land owned by the family farm corporation, 
284.13  joint family farm venture, limited liability company, or 
284.14  partnership operating a family farm.  Homestead treatment 
284.15  applies even if legal title to the property is in the name of 
284.16  the family farm corporation, joint family farm venture, limited 
284.17  liability company, or partnership operating the family farm, and 
284.18  not in the name of the person residing on it. 
284.19     "Family farm corporation," "family farm," and "farm 
284.20  partnership operating a family farm" have the meanings given in 
284.21  section 500.24, except that the number of allowable 
284.22  shareholders, members, or partners under this subdivision shall 
284.23  not exceed 12.  "Limited liability company" has the meaning 
284.24  contained in section sections 322B.03, subdivision 28, and 
284.25  500.24, subdivision 2, paragraphs (l) and (m).  "Joint family 
284.26  farm venture" means a cooperative agreement among two or more 
284.27  farm enterprises authorized to operate a family farm land under 
284.28  section 500.24. 
284.29     (b) In addition to property specified in paragraph (a), any 
284.30  other residences owned by family farm corporations, joint family 
284.31  farm ventures, limited liability companies, or 
284.32  partnerships operating a family farm described in paragraph (a) 
284.33  which are located on agricultural land and occupied as 
284.34  homesteads by its shareholders, members, or partners who are 
284.35  actively engaged in farming on behalf of the that corporation, 
284.36  joint farm venture, limited liability company, or partnership 
285.1   must also be assessed as class 2a property or as class 1b 
285.2   property under section 273.13, subdivision 22, paragraph (b). 
285.3      (c) Agricultural property that is owned by a member, 
285.4   partner, or shareholder of a family farm corporation or 
285.5   joint family farm venture, as defined in paragraph (a), or by a 
285.6   member of a limited liability company, or by a partner in a 
285.7   partnership operating a family farm and leased to the family 
285.8   farm corporation by the shareholder, or to a member of a, 
285.9   limited liability company, or to the partnership by the partner 
285.10  operating a family farm, or joint farm venture, as defined in 
285.11  paragraph (a), is eligible for classification as class 1b or 
285.12  class 2a under section 273.13, subdivision 22, paragraph (b), or 
285.13  class 2a under section 273.13, subdivision 23, paragraph (a), if 
285.14  the owner is actually residing on the property except as 
285.15  provided in subdivision 14, paragraph (g), and is actually 
285.16  engaged in farming the land on behalf of the that corporation, 
285.17  joint farm venture, limited liability company, or partnership.  
285.18  This paragraph applies without regard to any legal possession 
285.19  rights of the family farm corporation, joint family farm 
285.20  venture, limited liability company, or partnership operating a 
285.21  family farm under the lease. 
285.22     <b>[EFFECTIVE DATE.]</b> This section is effective for the 2001 
285.23  assessment, taxes payable in 2002, and thereafter. 
285.24     Sec. 33.  Minnesota Statutes 2000, section 273.124, 
285.25  subdivision 13, is amended to read: 
285.26     Subd. 13.  [HOMESTEAD APPLICATION.] (a) A person who meets 
285.27  the homestead requirements under subdivision 1 must file a 
285.28  homestead application with the county assessor to initially 
285.29  obtain homestead classification. 
285.30     (b) On or before January 2, 1993, each county assessor 
285.31  shall mail a homestead application to the owner of each parcel 
285.32  of property within the county which was classified as homestead 
285.33  for the 1992 assessment year.  The format and contents of a 
285.34  uniform homestead application shall be prescribed by the 
285.35  commissioner of revenue.  The commissioner shall consult with 
285.36  the chairs of the house and senate tax committees on the 
286.1   contents of the homestead application form.  The application 
286.2   must clearly inform the taxpayer that this application must be 
286.3   signed by all owners who occupy the property or by the 
286.4   qualifying relative and returned to the county assessor in order 
286.5   for the property to continue receiving homestead treatment.  The 
286.6   envelope containing the homestead application shall clearly 
286.7   identify its contents and alert the taxpayer of its necessary 
286.8   immediate response. 
286.9      (c) Every property owner applying for homestead 
286.10  classification must furnish to the county assessor the social 
286.11  security number of each occupant who is listed as an owner of 
286.12  the property on the deed of record, the name and address of each 
286.13  owner who does not occupy the property, and the name and social 
286.14  security number of each owner's spouse who occupies the 
286.15  property.  The application must be signed by each owner who 
286.16  occupies the property and by each owner's spouse who occupies 
286.17  the property, or, in the case of property that qualifies as a 
286.18  homestead under subdivision 1, paragraph (c), by the qualifying 
286.19  relative. 
286.20     If a property owner occupies a homestead, the property 
286.21  owner's spouse may not claim another property as a homestead 
286.22  unless the property owner and the property owner's spouse file 
286.23  with the assessor an affidavit or other proof required by the 
286.24  assessor stating that the property qualifies as a homestead 
286.25  under subdivision 1, paragraph (e). 
286.26     Owners or spouses occupying residences owned by their 
286.27  spouses and previously occupied with the other spouse, either of 
286.28  whom fail to include the other spouse's name and social security 
286.29  number on the homestead application or provide the affidavits or 
286.30  other proof requested, will be deemed to have elected to receive 
286.31  only partial homestead treatment of their residence.  The 
286.32  remainder of the residence will be classified as nonhomestead 
286.33  residential.  When an owner or spouse's name and social security 
286.34  number appear on homestead applications for two separate 
286.35  residences and only one application is signed, the owner or 
286.36  spouse will be deemed to have elected to homestead the residence 
287.1   for which the application was signed. 
287.2      The social security numbers or affidavits or other proofs 
287.3   of the property owners and spouses are private data on 
287.4   individuals as defined by section 13.02, subdivision 12, but, 
287.5   notwithstanding that section, the private data may be disclosed 
287.6   to the commissioner of revenue, or, for purposes of proceeding 
287.7   under the Revenue Recapture Act to recover personal property 
287.8   taxes owing, to the county treasurer. 
287.9      (d) If residential real estate is occupied and used for 
287.10  purposes of a homestead by a relative of the owner and qualifies 
287.11  for a homestead under subdivision 1, paragraph (c), in order for 
287.12  the property to receive homestead status, a homestead 
287.13  application must be filed with the assessor.  The social 
287.14  security number of each relative occupying the property and the 
287.15  social security number of each owner who is related to an 
287.16  occupant of the property shall be required on the homestead 
287.17  application filed under this subdivision.  If a different 
287.18  relative of the owner subsequently occupies the property, the 
287.19  owner of the property must notify the assessor within 30 days of 
287.20  the change in occupancy.  The social security number of a 
287.21  relative occupying the property is private data on individuals 
287.22  as defined by section 13.02, subdivision 12, but may be 
287.23  disclosed to the commissioner of revenue.  
287.24     (e) The homestead application shall also notify the 
287.25  property owners that the application filed under this section 
287.26  will not be mailed annually and that if the property is granted 
287.27  homestead status for the 1993 assessment, or any assessment year 
287.28  thereafter, that same property shall remain classified as 
287.29  homestead until the property is sold or transferred to another 
287.30  person, or the owners, the spouse of the owner, or the relatives 
287.31  no longer use the property as their homestead.  Upon the sale or 
287.32  transfer of the homestead property, a certificate of value must 
287.33  be timely filed with the county auditor as provided under 
287.34  section 272.115.  Failure to notify the assessor within 30 days 
287.35  that the property has been sold, transferred, or that the owner, 
287.36  the spouse of the owner, or the relative is no longer occupying 
288.1   the property as a homestead, shall result in the penalty 
288.2   provided under this subdivision and the property will lose its 
288.3   current homestead status. 
288.4      (f) If the homestead application is not returned within 30 
288.5   days, the county will send a second application to the present 
288.6   owners of record.  The notice of proposed property taxes 
288.7   prepared under section 275.065, subdivision 3, shall reflect the 
288.8   property's classification.  Beginning with assessment year 1993 
288.9   for all properties, if a homestead application has not been 
288.10  filed with the county by December 15, the assessor shall 
288.11  classify the property as nonhomestead for the current assessment 
288.12  year for taxes payable in the following year, provided that the 
288.13  owner may be entitled to receive the homestead classification by 
288.14  proper application under section 375.192. 
288.15     (g) At the request of the commissioner, each county must 
288.16  give the commissioner a list that includes the name and social 
288.17  security number of each property owner and the property owner's 
288.18  spouse occupying the property, or relative of a property owner, 
288.19  applying for homestead classification under this subdivision.  
288.20  The commissioner shall use the information provided on the lists 
288.21  as appropriate under the law, including for the detection of 
288.22  improper claims by owners, or relatives of owners, under chapter 
288.23  290A.  
288.24     (h) If the commissioner finds that a property owner may be 
288.25  claiming a fraudulent homestead, the commissioner shall notify 
288.26  the appropriate counties.  Within 90 days of the notification, 
288.27  the county assessor shall investigate to determine if the 
288.28  homestead classification was properly claimed.  If the property 
288.29  owner does not qualify, the county assessor shall notify the 
288.30  county auditor who will determine the amount of homestead 
288.31  benefits that had been improperly allowed.  For the purpose of 
288.32  this section, "homestead benefits" means the tax reduction 
288.33  resulting from the classification as a homestead under section 
288.34  273.13, the taconite homestead credit under section 273.135, the 
288.35  homestead and agricultural credits under section 273.1384, and 
288.36  the supplemental homestead credit under section 273.1391. 
289.1      The county auditor shall send a notice to the person who 
289.2   owned the affected property at the time the homestead 
289.3   application related to the improper homestead was filed, 
289.4   demanding reimbursement of the homestead benefits plus a penalty 
289.5   equal to 100 percent of the homestead benefits.  The person 
289.6   notified may appeal the county's determination by serving copies 
289.7   of a petition for review with county officials as provided in 
289.8   section 278.01 and filing proof of service as provided in 
289.9   section 278.01 with the Minnesota tax court within 60 days of 
289.10  the date of the notice from the county.  Procedurally, the 
289.11  appeal is governed by the provisions in chapter 271 which apply 
289.12  to the appeal of a property tax assessment or levy, but without 
289.13  requiring any prepayment of the amount in controversy.  If the 
289.14  amount of homestead benefits and penalty is not paid within 60 
289.15  days, and if no appeal has been filed, the county auditor shall 
289.16  certify the amount of taxes and penalty to the county 
289.17  treasurer.  The county treasurer will add interest to the unpaid 
289.18  homestead benefits and penalty amounts at the rate provided in 
289.19  section 279.03 for real property taxes becoming delinquent in 
289.20  the calendar year during which the amount remains unpaid.  
289.21  Interest may be assessed for the period beginning 60 days after 
289.22  demand for payment was made. 
289.23     If the person notified is the current owner of the 
289.24  property, the treasurer may add the total amount of homestead 
289.25  benefits, penalty, interest, and costs to the ad valorem taxes 
289.26  otherwise payable on the property by including the amounts on 
289.27  the property tax statements under section 276.04, subdivision 
289.28  3.  The amounts added under this paragraph to the ad valorem 
289.29  taxes shall include interest accrued through December 31 of the 
289.30  year preceding the taxes payable year for which the amounts are 
289.31  first added.  These amounts, when added to the property tax 
289.32  statement, become subject to all the laws for the enforcement of 
289.33  real or personal property taxes for that year, and for any 
289.34  subsequent year. 
289.35     If the person notified is not the current owner of the 
289.36  property, the treasurer may collect the amounts due under the 
290.1   Revenue Recapture Act in chapter 270A, or use any of the powers 
290.2   granted in sections 277.20 and 277.21 without exclusion, to 
290.3   enforce payment of the homestead benefits, penalty, interest, 
290.4   and costs, as if those amounts were delinquent tax obligations 
290.5   of the person who owned the property at the time the application 
290.6   related to the improperly allowed homestead was filed.  The 
290.7   treasurer may relieve a prior owner of personal liability for 
290.8   the homestead benefits, penalty, interest, and costs, and 
290.9   instead extend those amounts on the tax lists against the 
290.10  property as provided in this paragraph to the extent that the 
290.11  current owner agrees in writing.  On all demands, billings, 
290.12  property tax statements, and related correspondence, the county 
290.13  must list and state separately the amounts of homestead 
290.14  benefits, penalty, interest and costs being demanded, billed or 
290.15  assessed. 
290.16     (i) Any amount of homestead benefits recovered by the 
290.17  county from the property owner shall be distributed to the 
290.18  county, city or town, and school district where the property is 
290.19  located in the same proportion that each taxing district's levy 
290.20  was to the total of the three taxing districts' levy for the 
290.21  current year.  Any amount recovered attributable to taconite 
290.22  homestead credit shall be transmitted to the St. Louis county 
290.23  auditor to be deposited in the taconite property tax relief 
290.24  account.  Any amount recovered that is attributable to 
290.25  supplemental homestead credit is to be transmitted to the 
290.26  commissioner of revenue for deposit in the general fund of the 
290.27  state treasury.  The total amount of penalty collected must be 
290.28  deposited in the county general fund. 
290.29     (j) If a property owner has applied for more than one 
290.30  homestead and the county assessors cannot determine which 
290.31  property should be classified as homestead, the county assessors 
290.32  will refer the information to the commissioner.  The 
290.33  commissioner shall make the determination and notify the 
290.34  counties within 60 days. 
290.35     (k) In addition to lists of homestead properties, the 
290.36  commissioner may ask the counties to furnish lists of all 
291.1   properties and the record owners.  The social security numbers 
291.2   and federal identification numbers that are maintained by a 
291.3   county or city assessor for property tax administration 
291.4   purposes, and that may appear on the lists retain their 
291.5   classification as private or nonpublic data; but may be viewed, 
291.6   accessed, and used by the county auditor or treasurer of the 
291.7   same county for the limited purpose of assisting the 
291.8   commissioner in the preparation of microdata samples under 
291.9   section 270.0681. 
291.10     <b>[EFFECTIVE DATE.]</b> This section is effective for homestead 
291.11  applications submitted on or after the day following final 
291.12  enactment. 
291.13     Sec. 34.  Minnesota Statutes 2000, section 273.124, 
291.14  subdivision 14, is amended to read: 
291.15     Subd. 14.  [AGRICULTURAL HOMESTEADS; SPECIAL PROVISIONS.] 
291.16  (a) Real estate of less than ten acres that is the homestead of 
291.17  its owner must be classified as class 2a under section 273.13, 
291.18  subdivision 23, paragraph (a), if:  
291.19     (1) the parcel on which the house is located is contiguous 
291.20  on at least two sides to (i) agricultural land, (ii) land owned 
291.21  or administered by the United States Fish and Wildlife Service, 
291.22  or (iii) land administered by the department of natural 
291.23  resources on which in lieu taxes are paid under sections 477A.11 
291.24  to 477A.14; 
291.25     (2) its owner also owns a noncontiguous parcel of 
291.26  agricultural land that is at least 20 acres; 
291.27     (3) the noncontiguous land is located not farther than four 
291.28  townships or cities, or a combination of townships or cities 
291.29  from the homestead; and 
291.30     (4) the agricultural use value of the noncontiguous land 
291.31  and farm buildings is equal to at least 50 percent of the market 
291.32  value of the house, garage, and one acre of land. 
291.33     Homesteads initially classified as class 2a under the 
291.34  provisions of this paragraph shall remain classified as class 
291.35  2a, irrespective of subsequent changes in the use of adjoining 
291.36  properties, as long as the homestead remains under the same 
292.1   ownership, the owner owns a noncontiguous parcel of agricultural 
292.2   land that is at least 20 acres, and the agricultural use value 
292.3   qualifies under clause (4).  Homestead classification under this 
292.4   paragraph is limited to property that qualified under this 
292.5   paragraph for the 1998 assessment. 
292.6      (b)(i) Agricultural property consisting of at least 40 
292.7   acres shall be classified as the owner's homestead, to the same 
292.8   extent as other agricultural homestead property, if all of the 
292.9   following criteria are met: 
292.10     (1) the owner, the owner's spouse, or the owner's son or 
292.11  daughter of the owner or owner's spouse, is actively farming the 
292.12  agricultural property, either on the person's own behalf as an 
292.13  individual or on behalf of a partnership operating a family 
292.14  farm, family farm corporation, joint family farm venture, or 
292.15  limited liability company of which the person is a partner, 
292.16  shareholder, or member; 
292.17     (2) both the owner of the agricultural property is a 
292.18  Minnesota resident, and if the owner's son or daughter person 
292.19  who is actively farming the agricultural property under clause 
292.20  (1), that person must also be a are Minnesota 
292.21  resident residents; 
292.22     (3) neither the owner nor the spouse of the owner claims 
292.23  another agricultural homestead in Minnesota; and 
292.24     (4) neither the owner does not live, nor the person 
292.25  actively farming the property, lives farther than four townships 
292.26  or cities, or a combination of four townships or cities, from 
292.27  the agricultural property, and if the owner's son or daughter is 
292.28  actively farming the agricultural property under clause (1), 
292.29  that person must also live within the four townships or cities, 
292.30  or combination of four townships or cities from the agricultural 
292.31  property. 
292.32     The relationship under this paragraph may be either by 
292.33  blood or marriage. 
292.34     (ii) Real property held by a trustee under a trust is 
292.35  eligible for agricultural homestead classification under this 
292.36  paragraph if the qualifications in clause (i) are met, except 
293.1   that "owner" means the grantor of the trust. 
293.2      (ii) (iii) Property containing the residence of an owner 
293.3   who owns qualified property under clause (i) shall be classified 
293.4   as part of the owner's agricultural homestead, if that property 
293.5   is also used for noncommercial storage or drying of agricultural 
293.6   crops. 
293.7      (c) Except as provided in paragraph (e), Noncontiguous land 
293.8   shall be included as part of a homestead under section 273.13, 
293.9   subdivision 23, paragraph (a), only if the homestead is 
293.10  classified as class 2a and the detached land is located in the 
293.11  same township or city, or not farther than four townships or 
293.12  cities or combination thereof from the homestead.  Any taxpayer 
293.13  of these noncontiguous lands must notify the county assessor 
293.14  that the noncontiguous land is part of the taxpayer's homestead, 
293.15  and, if the homestead is located in another county, the taxpayer 
293.16  must also notify the assessor of the other county. 
293.17     (d) Agricultural land used for purposes of a homestead and 
293.18  actively farmed by a person holding a vested remainder interest 
293.19  in it must be classified as a homestead under section 273.13, 
293.20  subdivision 23, paragraph (a).  If agricultural land is 
293.21  classified class 2a, any other dwellings on the land used for 
293.22  purposes of a homestead by persons holding vested remainder 
293.23  interests who are actively engaged in farming the property, and 
293.24  up to one acre of the land surrounding each homestead and 
293.25  reasonably necessary for the use of the dwelling as a home, must 
293.26  also be assessed class 2a. 
293.27     (e) Agricultural land and buildings that were class 2a 
293.28  homestead property under section 273.13, subdivision 23, 
293.29  paragraph (a), for the 1997 assessment shall remain classified 
293.30  as agricultural homesteads for subsequent assessments if:  
293.31     (1) the property owner abandoned the homestead dwelling 
293.32  located on the agricultural homestead as a result of the April 
293.33  1997 floods; 
293.34     (2) the property is located in the county of Polk, Clay, 
293.35  Kittson, Marshall, Norman, or Wilkin; 
293.36     (3) the agricultural land and buildings remain under the 
294.1   same ownership for the current assessment year as existed for 
294.2   the 1997 assessment year and continue to be used for 
294.3   agricultural purposes; 
294.4      (4) the dwelling occupied by the owner is located in 
294.5   Minnesota and is within 30 miles of one of the parcels of 
294.6   agricultural land that is owned by the taxpayer; and 
294.7      (5) the owner notifies the county assessor that the 
294.8   relocation was due to the 1997 floods, and the owner furnishes 
294.9   the assessor any information deemed necessary by the assessor in 
294.10  verifying the change in dwelling.  Further notifications to the 
294.11  assessor are not required if the property continues to meet all 
294.12  the requirements in this paragraph and any dwellings on the 
294.13  agricultural land remain uninhabited. 
294.14     (f) Agricultural land and buildings that were class 2a 
294.15  homestead property under section 273.13, subdivision 23, 
294.16  paragraph (a), for the 1998 assessment shall remain classified 
294.17  agricultural homesteads for subsequent assessments if: 
294.18     (1) the property owner abandoned the homestead dwelling 
294.19  located on the agricultural homestead as a result of damage 
294.20  caused by a March 29, 1998, tornado; 
294.21     (2) the property is located in the county of Blue Earth, 
294.22  Brown, Cottonwood, LeSueur, Nicollet, Nobles, or Rice; 
294.23     (3) the agricultural land and buildings remain under the 
294.24  same ownership for the current assessment year as existed for 
294.25  the 1998 assessment year; 
294.26     (4) the dwelling occupied by the owner is located in this 
294.27  state and is within 50 miles of one of the parcels of 
294.28  agricultural land that is owned by the taxpayer; and 
294.29     (5) the owner notifies the county assessor that the 
294.30  relocation was due to a March 29, 1998, tornado, and the owner 
294.31  furnishes the assessor any information deemed necessary by the 
294.32  assessor in verifying the change in homestead dwelling.  For 
294.33  taxes payable in 1999, the owner must notify the assessor by 
294.34  December 1, 1998.  Further notifications to the assessor are not 
294.35  required if the property continues to meet all the requirements 
294.36  in this paragraph and any dwellings on the agricultural land 
295.1   remain uninhabited. 
295.2      (g) Agricultural property consisting of at least 40 acres 
295.3   of a family farm corporation, joint family farm venture, limited 
295.4   liability company, or partnership operating a family farm as 
295.5   described under subdivision 8 shall be classified homestead, to 
295.6   the same extent as other agricultural homestead property, if all 
295.7   of the following criteria are met: 
295.8      (1) the a shareholder, member, or partner of that entity is 
295.9   actively farming the agricultural property; 
295.10     (2) the that shareholder, member, or partner of who is 
295.11  actively farming the agricultural property is a Minnesota 
295.12  resident; 
295.13     (3) neither the that shareholder, member, or partner, nor 
295.14  the spouse of the that shareholder, member, or partner claims 
295.15  another agricultural homestead in Minnesota; and 
295.16     (4) the that shareholder, member, or partner does not live 
295.17  farther than four townships or cities, or a combination of four 
295.18  townships or cities, from the agricultural property. 
295.19     Homestead treatment applies under this paragraph for 
295.20  property leased to a family farm corporation, joint farm 
295.21  venture, limited liability company, or partnership operating a 
295.22  family farm if legal title to the property is in the name of an 
295.23  individual who is a member, shareholder, or partner in the 
295.24  entity. 
295.25     <b>[EFFECTIVE DATE.]</b> This section is effective for the 2001 
295.26  assessment, taxes payable in 2002, and thereafter. 
295.27     Sec. 35.  Minnesota Statutes 2000, section 274.01, 
295.28  subdivision 1, is amended to read: 
295.29     Subdivision 1.  [ORDINARY BOARD; MEETINGS, DEADLINES, 
295.30  GRIEVANCES.] (a) The town board of a town, or the council or 
295.31  other governing body of a city, is the board of review appeal 
295.32  and equalization except (1) in cities whose charters provide for 
295.33  a board of equalization or (2) in any city or town that has 
295.34  transferred its local board of review power and duties to the 
295.35  county board as provided in subdivision 3.  The county assessor 
295.36  shall fix a day and time when the board or the board of 
296.1   equalization shall meet in the assessment districts of the 
296.2   county.  Notwithstanding any law or city charter to the 
296.3   contrary, a city board of equalization shall be referred to as a 
296.4   board of appeal and equalization.  On or before February 15 of 
296.5   each year the assessor shall give written notice of the time to 
296.6   the city or town clerk.  Notwithstanding the provisions of any 
296.7   charter to the contrary, the meetings must be held between April 
296.8   1 and May 31 each year.  The clerk shall give published and 
296.9   posted notice of the meeting at least ten days before the date 
296.10  of the meeting.  
296.11     If in any county, at least 25 percent of the total net tax 
296.12  capacity of a city or town is noncommercial seasonal residential 
296.13  recreational property classified under section 273.13, 
296.14  subdivision 25, the county must hold two countywide 
296.15  informational meetings on Saturdays.  The meetings will allow 
296.16  noncommercial seasonal residential recreational taxpayers to 
296.17  discuss their property valuation with the appropriate assessment 
296.18  staff.  These Saturday informational meetings must be scheduled 
296.19  to allow the owner of the noncommercial seasonal residential 
296.20  recreational property the opportunity to attend one of the 
296.21  meetings prior to the scheduled board of review for their city 
296.22  or town.  The Saturday meeting dates must be contained on the 
296.23  notice of valuation of real property under section 273.121.  
296.24     The board shall meet at the office of the clerk to review 
296.25  the assessment and classification of property in the town or 
296.26  city.  No changes in valuation or classification which are 
296.27  intended to correct errors in judgment by the county assessor 
296.28  may be made by the county assessor after the board of review has 
296.29  adjourned in those cities or towns that hold a local board of 
296.30  review; however, corrections of errors that are merely clerical 
296.31  in nature or changes that extend homestead treatment to property 
296.32  are permitted after adjournment until the tax extension date for 
296.33  that assessment year.  The changes must be fully documented and 
296.34  maintained in the assessor's office and must be available for 
296.35  review by any person.  A copy of the changes made during this 
296.36  period in those cities or towns that hold a local board of 
297.1   review must be sent to the county board no later than December 
297.2   31 of the assessment year.  
297.3      (b) The board shall determine whether the taxable property 
297.4   in the town or city has been properly placed on the list and 
297.5   properly valued by the assessor.  If real or personal property 
297.6   has been omitted, the board shall place it on the list with its 
297.7   market value, and correct the assessment so that each tract or 
297.8   lot of real property, and each article, parcel, or class of 
297.9   personal property, is entered on the assessment list at its 
297.10  market value.  No assessment of the property of any person may 
297.11  be raised unless the person has been duly notified of the intent 
297.12  of the board to do so.  On application of any person feeling 
297.13  aggrieved, the board shall review the assessment or 
297.14  classification, or both, and correct it as appears just.  The 
297.15  board may not make an individual market value adjustment or 
297.16  classification change that would benefit the property in cases 
297.17  where the owner or other person having control over the property 
297.18  will not permit the assessor to inspect the property and the 
297.19  interior of any buildings or structures.  
297.20     (c) A local board of review may reduce assessments upon 
297.21  petition of the taxpayer but the total reductions must not 
297.22  reduce the aggregate assessment made by the county assessor by 
297.23  more than one percent.  If the total reductions would lower the 
297.24  aggregate assessments made by the county assessor by more than 
297.25  one percent, none of the adjustments may be made.  The assessor 
297.26  shall correct any clerical errors or double assessments 
297.27  discovered by the board of review without regard to the one 
297.28  percent limitation.  
297.29     (d) A majority of the members may act at the meeting, and 
297.30  adjourn from day to day until they finish hearing the cases 
297.31  presented.  The assessor shall attend, with the assessment books 
297.32  and papers, and take part in the proceedings, but must not 
297.33  vote.  The county assessor, or an assistant delegated by the 
297.34  county assessor shall attend the meetings.  The board shall list 
297.35  separately, on a form appended to the assessment book, all 
297.36  omitted property added to the list by the board and all items of 
298.1   property increased or decreased, with the market value of each 
298.2   item of property, added or changed by the board, placed opposite 
298.3   the item.  The county assessor shall enter all changes made by 
298.4   the board in the assessment book.  
298.5      (e) Except as provided in subdivision 3, if a person fails 
298.6   to appear in person, by counsel, or by written communication 
298.7   before the board after being duly notified of the board's intent 
298.8   to raise the assessment of the property, or if a person feeling 
298.9   aggrieved by an assessment or classification fails to apply for 
298.10  a review of the assessment or classification, the person may not 
298.11  appear before the county board of appeal and equalization for a 
298.12  review of the assessment or classification.  This paragraph does 
298.13  not apply if an assessment was made after the local board 
298.14  meeting, as provided in section 273.01, or if the person can 
298.15  establish not having received notice of market value at least 
298.16  five days before the local board of review meeting.  
298.17     (f) The local board of review or the board of equalization 
298.18  must complete its work and adjourn within 20 days from the time 
298.19  of convening stated in the notice of the clerk, unless a longer 
298.20  period is approved by the commissioner of revenue.  No action 
298.21  taken after that date is valid.  All complaints about an 
298.22  assessment or classification made after the meeting of the board 
298.23  must be heard and determined by the county board of 
298.24  equalization.  A nonresident may, at any time, before the 
298.25  meeting of the board of review file written objections to an 
298.26  assessment or classification with the county assessor.  The 
298.27  objections must be presented to the board of review at its 
298.28  meeting by the county assessor for its consideration. 
298.29     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 
298.30  2002, and thereafter. 
298.31     Sec. 36.  Minnesota Statutes 2000, section 274.13, 
298.32  subdivision 1, is amended to read: 
298.33     Subdivision 1.  [MEMBERS; MEETINGS; RULES FOR EQUALIZING 
298.34  ASSESSMENTS.] The county commissioners, or a majority of them, 
298.35  with the county auditor, or, if the auditor cannot be present, 
298.36  the deputy county auditor, or, if there is no deputy, the court 
299.1   administrator of the district court, shall form a board for the 
299.2   equalization of the assessment of the property of the county, 
299.3   including the property of all cities whose charters provide for 
299.4   a board of equalization.  This board shall be referred to as the 
299.5   county board of appeal and equalization.  The board shall meet 
299.6   annually, on the date specified in section 274.14, at the office 
299.7   of the auditor.  Each member shall take an oath to fairly and 
299.8   impartially perform duties as a member.  The board shall examine 
299.9   and compare the returns of the assessment of property of the 
299.10  towns or districts, and equalize them so that each tract or lot 
299.11  of real property and each article or class of personal property 
299.12  is entered on the assessment list at its market value, subject 
299.13  to the following rules: 
299.14     (1) The board shall raise the valuation of each tract or 
299.15  lot of real property which in its opinion is returned below its 
299.16  market value to the sum believed to be its market value.  The 
299.17  board must first give notice of intention to raise the valuation 
299.18  to the person in whose name it is assessed, if the person is a 
299.19  resident of the county.  The notice must fix a time and place 
299.20  for a hearing.  
299.21     (2) The board shall reduce the valuation of each tract or 
299.22  lot which in its opinion is returned above its market value to 
299.23  the sum believed to be its market value. 
299.24     (3) The board shall raise the valuation of each class of 
299.25  personal property which in its opinion is returned below its 
299.26  market value to the sum believed to be its market value.  It 
299.27  shall raise the aggregate value of the personal property of 
299.28  individuals, firms, or corporations, when it believes that the 
299.29  aggregate valuation, as returned, is less than the market value 
299.30  of the taxable personal property possessed by the individuals, 
299.31  firms, or corporations, to the sum it believes to be the market 
299.32  value.  The board must first give notice to the persons of 
299.33  intention to do so.  The notice must set a time and place for a 
299.34  hearing. 
299.35     (4) The board shall reduce the valuation of each class of 
299.36  personal property that is returned above its market value to the 
300.1   sum it believes to be its market value.  Upon complaint of a 
300.2   party aggrieved, the board shall reduce the aggregate valuation 
300.3   of the individual's personal property, or of any class of 
300.4   personal property for which the individual is assessed, which in 
300.5   its opinion has been assessed at too large a sum, to the sum it 
300.6   believes was the market value of the individual's personal 
300.7   property of that class.  
300.8      (5) The board must not reduce the aggregate value of all 
300.9   the property of its county, as submitted to the county board of 
300.10  equalization, with the additions made by the auditor under this 
300.11  chapter, by more than one percent of its whole valuation.  The 
300.12  board may raise the aggregate valuation of real property, and of 
300.13  each class of personal property, of the county, or of any town 
300.14  or district of the county, when it believes it is below the 
300.15  market value of the property, or class of property, to the 
300.16  aggregate amount it believes to be its market value. 
300.17     (6) The board shall change the classification of any 
300.18  property which in its opinion is not properly classified. 
300.19     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 
300.20  2002, and thereafter. 
300.21     Sec. 37.  Minnesota Statutes 2000, section 275.065, 
300.22  subdivision 1, is amended to read: 
300.23     Subdivision 1.  [PROPOSED LEVY.] (a) Notwithstanding any 
300.24  law or charter to the contrary, on or before September 15, each 
300.25  taxing authority, other than a school district, and including 
300.26  the state, shall adopt a proposed budget and shall certify to 
300.27  the county auditor the proposed or, in the case of a town or the 
300.28  state, the final property tax levy for taxes payable in the 
300.29  following year. 
300.30     (b) On or before September 30, each school district shall 
300.31  certify to the county auditor the proposed property tax levy for 
300.32  taxes payable in the following year.  The school district shall 
300.33  certify the proposed levy as: 
300.34     (1) the state determined school levy amount as prescribed 
300.35  under section 126C.13, subdivision 2; 
300.36     (2) voter approved referendum and debt levies; and 
301.1      (3) (2) the sum of the remaining school levies, or the 
301.2   maximum levy limitation certified by the commissioner of 
301.3   children, families, and learning according to section 126C.48, 
301.4   subdivision 1, less the amounts levied under clauses 
301.5   clause (1) and (2). 
301.6      (c) If the board of estimate and taxation or any similar 
301.7   board that establishes maximum tax levies for taxing 
301.8   jurisdictions within a first class city certifies the maximum 
301.9   property tax levies for funds under its jurisdiction by charter 
301.10  to the county auditor by September 15, the city shall be deemed 
301.11  to have certified its levies for those taxing jurisdictions. 
301.12     (d) For purposes of this section, "taxing authority" 
301.13  includes all home rule and statutory cities, towns, counties, 
301.14  school districts, and special taxing districts as defined in 
301.15  section 275.066.  Intermediate school districts that levy a tax 
301.16  under chapter 124 or 136D, joint powers boards established under 
301.17  sections 123A.44 to 123A.446, and common school districts No. 
301.18  323, Franconia, and No. 815, Prinsburg, are also special taxing 
301.19  districts for purposes of this section.  
301.20     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
301.21  payable in 2002 and subsequent years. 
301.22     Sec. 38.  Minnesota Statutes 2000, section 275.065, 
301.23  subdivision 3, is amended to read: 
301.24     Subd. 3.  [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The 
301.25  county auditor shall prepare and the county treasurer shall 
301.26  deliver after November 10 and on or before November 24 each 
301.27  year, by first class mail to each taxpayer at the address listed 
301.28  on the county's current year's assessment roll, a notice of 
301.29  proposed property taxes.  
301.30     (b) The commissioner of revenue shall prescribe the form of 
301.31  the notice. 
301.32     (c) The notice must inform taxpayers that it contains the 
301.33  amount of property taxes each taxing authority proposes to 
301.34  collect for taxes payable the following year.  In the case of a 
301.35  town, or in the case of the state determined portion of the 
301.36  school district general levy, the final tax amount will be its 
302.1   proposed tax.  In the case of taxing authorities required to 
302.2   hold a public meeting under subdivision 6, the notice must 
302.3   clearly state that each taxing authority, including regional 
302.4   library districts established under section 134.201, and 
302.5   including the metropolitan taxing districts as defined in 
302.6   paragraph (i), but excluding all other special taxing districts 
302.7   and towns, will hold a public meeting to receive public 
302.8   testimony on the proposed budget and proposed or final property 
302.9   tax levy, or, in case of a school district, on the current 
302.10  budget and proposed property tax levy.  It must clearly state 
302.11  the time and place of each taxing authority's meeting, a 
302.12  telephone number for the taxing authority that taxpayers may 
302.13  call if they have questions related to the notice, and an 
302.14  address where comments will be received by mail.  
302.15     (d) The notice must state for each parcel: 
302.16     (1) the market value of the property as determined under 
302.17  section 273.11, and used for computing property taxes payable in 
302.18  the following year and for taxes payable in the current year as 
302.19  each appears in the records of the county assessor on November 1 
302.20  of the current year; and, in the case of residential property, 
302.21  whether the property is classified as homestead or 
302.22  nonhomestead.  The notice must clearly inform taxpayers of the 
302.23  years to which the market values apply and that the values are 
302.24  final values; 
302.25     (2) the items listed below, shown separately by county, 
302.26  city or town, state determined school general tax net of the 
302.27  education homestead credit under section 273.1382, voter 
302.28  approved school levy, other local school levy, and the sum of 
302.29  the special taxing districts, and as a total of all taxing 
302.30  authorities in all cases net of the credit amounts determined 
302.31  under section 273.1384:  
302.32     (i) the actual tax for taxes payable in the current year; 
302.33     (ii) the tax change due to spending factors, defined as the 
302.34  proposed tax minus the constant spending tax amount; 
302.35     (iii) the tax change due to other factors, defined as the 
302.36  constant spending tax amount minus the actual current year tax; 
303.1   and 
303.2      (iv) the proposed tax amount. 
303.3      In the case of a town or the state determined school 
303.4   general tax, the final tax shall also be its proposed tax unless 
303.5   the town changes its levy at a special town meeting under 
303.6   section 365.52.  If a school district has certified under 
303.7   section 126C.17, subdivision 9, that a referendum will be held 
303.8   in the school district at the November general election, the 
303.9   county auditor must note next to the school district's proposed 
303.10  amount that a referendum is pending and that, if approved by the 
303.11  voters, the tax amount may be higher than shown on the notice.  
303.12  In the case of the city of Minneapolis, the levy for the 
303.13  Minneapolis library board and the levy for Minneapolis park and 
303.14  recreation shall be listed separately from the remaining amount 
303.15  of the city's levy.  In the case of a parcel where tax increment 
303.16  or the fiscal disparities areawide tax under chapter 276A or 
303.17  473F applies, the proposed tax levy on the captured value or the 
303.18  proposed tax levy on the tax capacity subject to the areawide 
303.19  tax must each be stated separately and not included in the sum 
303.20  of the special taxing districts; and 
303.21     (3) the increase or decrease between the total taxes 
303.22  payable in the current year and the total proposed taxes, 
303.23  expressed as a percentage. 
303.24     For purposes of this section, the amount of the tax on 
303.25  homesteads qualifying under the senior citizens' property tax 
303.26  deferral program under chapter 290B is the total amount of 
303.27  property tax before subtraction of the deferred property tax 
303.28  amount. 
303.29     (e) The notice must clearly state that the proposed or 
303.30  final taxes do not include the following: 
303.31     (1) special assessments; 
303.32     (2) levies approved by the voters after the date the 
303.33  proposed taxes are certified, including bond referenda, school 
303.34  district levy referenda, and levy limit increase referenda; 
303.35     (3) amounts necessary to pay cleanup or other costs due to 
303.36  a natural disaster occurring after the date the proposed taxes 
304.1   are certified; 
304.2      (4) amounts necessary to pay tort judgments against the 
304.3   taxing authority that become final after the date the proposed 
304.4   taxes are certified; and 
304.5      (5) the contamination tax imposed on properties which 
304.6   received market value reductions for contamination. 
304.7      (f) Except as provided in subdivision 7, failure of the 
304.8   county auditor to prepare or the county treasurer to deliver the 
304.9   notice as required in this section does not invalidate the 
304.10  proposed or final tax levy or the taxes payable pursuant to the 
304.11  tax levy. 
304.12     (g) If the notice the taxpayer receives under this section 
304.13  lists the property as nonhomestead, and satisfactory 
304.14  documentation is provided to the county assessor by the 
304.15  applicable deadline, and the property qualifies for the 
304.16  homestead classification in that assessment year, the assessor 
304.17  shall reclassify the property to homestead for taxes payable in 
304.18  the following year. 
304.19     (h) In the case of class 4 residential property used as a 
304.20  residence for lease or rental periods of 30 days or more, the 
304.21  taxpayer must either: 
304.22     (1) mail or deliver a copy of the notice of proposed 
304.23  property taxes to each tenant, renter, or lessee; or 
304.24     (2) post a copy of the notice in a conspicuous place on the 
304.25  premises of the property.  
304.26     The notice must be mailed or posted by the taxpayer by 
304.27  November 27 or within three days of receipt of the notice, 
304.28  whichever is later.  A taxpayer may notify the county treasurer 
304.29  of the address of the taxpayer, agent, caretaker, or manager of 
304.30  the premises to which the notice must be mailed in order to 
304.31  fulfill the requirements of this paragraph. 
304.32     (i) For purposes of this subdivision, subdivisions 5a and 
304.33  6, "metropolitan special taxing districts" means the following 
304.34  taxing districts in the seven-county metropolitan area that levy 
304.35  a property tax for any of the specified purposes listed below: 
304.36     (1) metropolitan council under section 473.132, 473.167, 
305.1   473.249, 473.325, 473.446, 473.521, 473.547, or 473.834; 
305.2      (2) metropolitan airports commission under section 473.667, 
305.3   473.671, or 473.672; and 
305.4      (3) metropolitan mosquito control commission under section 
305.5   473.711. 
305.6      For purposes of this section, any levies made by the 
305.7   regional rail authorities in the county of Anoka, Carver, 
305.8   Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 
305.9   398A shall be included with the appropriate county's levy and 
305.10  shall be discussed at that county's public hearing. 
305.11     (j) If a statutory or home rule charter city or a town has 
305.12  exercised the local levy option provided by section 473.388, 
305.13  subdivision 7, it may include in the notice of its proposed 
305.14  taxes the amount of its proposed taxes attributable to its 
305.15  exercise of the option.  In the first year of the city or town's 
305.16  exercise of this option, the statement shall include an estimate 
305.17  of the reduction of the metropolitan council's tax on the parcel 
305.18  due to exercise of that option.  The metropolitan council's levy 
305.19  shall be adjusted accordingly. 
305.20     <b>[EFFECTIVE DATE.]</b> This section is effective for notices of 
305.21  proposed property taxes required in 2001 for taxes payable in 
305.22  2002, and thereafter. 
305.23     Sec. 39.  Minnesota Statutes 2000, section 275.065, 
305.24  subdivision 5a, is amended to read: 
305.25     Subd. 5a.  [PUBLIC ADVERTISEMENT.] (a) A city that has a 
305.26  population of more than 2,500, county, a metropolitan special 
305.27  taxing district as defined in subdivision 3, paragraph (i), a 
305.28  regional library district established under section 134.201, or 
305.29  school district shall advertise in a newspaper a notice of its 
305.30  intent to adopt a budget and property tax levy or, in the case 
305.31  of a school district, to review its current budget and proposed 
305.32  property taxes payable in the following year, at a public 
305.33  hearing.  The notice must be published not less than two 
305.34  business days nor more than six business days before the hearing.
305.35     The advertisement must be at least one-eighth page in size 
305.36  of a standard-size or a tabloid-size newspaper.  The 
306.1   advertisement must not be placed in the part of the newspaper 
306.2   where legal notices and classified advertisements appear.  The 
306.3   advertisement must be published in an official newspaper of 
306.4   general circulation in the taxing authority.  The newspaper 
306.5   selected must be one of general interest and readership in the 
306.6   community, and not one of limited subject matter.  The 
306.7   advertisement must appear in a newspaper that is published at 
306.8   least once per week.  
306.9      For purposes of this section, the metropolitan special 
306.10  taxing district's advertisement must only be published in the 
306.11  Minneapolis Star and Tribune and the Saint Paul Pioneer Press. 
306.12     In addition to other requirements, a county, a city having 
306.13  a population of more than 2,500, and a school district must show 
306.14  in the public advertisement required under this section, the 
306.15  lobbying expenditures of the county, city, and school district 
306.16  as most recently reported under section 6.76. 
306.17     In addition to other requirements, a county and a city 
306.18  having a population of more than 2,500 must show in the public 
306.19  advertisement required under this subdivision the current tax 
306.20  rate, the proposed tax rate if no property tax levy increase is 
306.21  adopted, and the proposed rate if the proposed levy is adopted.  
306.22  In the case of cities for taxes levied in 2001, payable in 2002, 
306.23  "property tax levy increase" means any levy in excess of the 
306.24  city's payable 2001 levy and the city's 2001 homestead and 
306.25  agricultural credit aid.  In the case of cities for taxes levied 
306.26  in 2002, payable in 2003, "property tax increase" means any levy 
306.27  in excess of the greater of (1) the city's payable 2002 levy, or 
306.28  (2) the sum of the city's payable 2001 levy and the city's 2001 
306.29  homestead and agricultural credit aid. 
306.30     (b) The advertisement for school districts, metropolitan 
306.31  special taxing districts, and regional library districts must be 
306.32  in the following form, except that the notice for a school 
306.33  district may include references to the current budget in regard 
306.34  to proposed property taxes.  
306.35                             "NOTICE OF
306.36                      PROPOSED PROPERTY TAXES
307.1                    (School District/Metropolitan
307.2                   Special Taxing District/Regional
307.3                    Library District) of .........
307.4   The governing body of ........ will soon hold budget hearings 
307.5   and vote on the property taxes for (metropolitan special taxing 
307.6   district/regional library district services that will be 
307.7   provided in (year)/school district services that will be 
307.8   provided in (year) and (year)). 
307.9                      NOTICE OF PUBLIC HEARING:
307.10  All concerned citizens are invited to attend a public hearing 
307.11  and express their opinions on the proposed (school 
307.12  district/metropolitan special taxing district/regional library 
307.13  district) budget and property taxes, or in the case of a school 
307.14  district, its current budget and proposed property taxes, 
307.15  payable in the following year.  The hearing will be held on 
307.16  (Month/Day/Year) at (Time) at (Location, Address)." 
307.17     (c) The advertisement for cities and counties must be in 
307.18  the following form. 
307.19                        "NOTICE OF PROPOSED
307.20                  TOTAL BUDGET AND PROPERTY TAXES
307.21  The (city/county) governing body or board of commissioners will 
307.22  hold a public hearing to discuss the budget and to vote on the 
307.23  amount of property taxes to collect for services the 
307.24  (city/county) will provide in (year). 
307.25     
307.26  SPENDING:  The total budget amounts below compare 
307.27  (city's/county's) (year) total actual budget with the amount the 
307.28  (city/county) proposes to spend in (year). 
307.29     
307.30  (Year) Total          Proposed (Year)         Change from 
307.31  Actual Budget         Budget                  (Year)-(Year)
307.32     
307.33  $.......              $.......                ...%
307.34     
307.35  SPENDING:  Lobbying expenditures (included in the budget amounts 
307.36  listed above). 
308.1      
308.2   (Year)                Proposed (Year)         Change from
308.3   Amount                Amount                  (Year)-(Year)
308.4      
308.5   $.......              $.......                ...%
308.6      
308.7   TAXES:  The property tax amounts below compare that portion of 
308.8   the current budget levied in property taxes in (city/county) for 
308.9   (year) with the property taxes the (city/county) proposes to 
308.10  collect in (year). 
308.11     
308.12  (Year) Property       Proposed (Year)          Change from
308.13  Taxes                 Property Taxes           (Year)-(Year)
308.14     
308.15  $.......              $.......                 ...% 
308.16     
308.17  LOCAL TAX RATE COMPARISON:  The current local tax rate, the 
308.18  local tax rate if no tax levy increase is adopted, and the 
308.19  proposed local tax rate if the proposed levy is adopted. 
308.20     
308.21  (Year)                (Year)                       (Year) 
308.22  Tax Rate              Tax Rate if NO               Proposed 
308.23                        Levy Increase                Tax Rate 
308.25  .......               .......                      ....... 
308.26     
308.27                     ATTEND THE PUBLIC HEARING
308.28  All (city/county) residents are invited to attend the public 
308.29  hearing of the (city/county) to express your opinions on the 
308.30  budget and the proposed amount of (year) property taxes.  The 
308.31  hearing will be held on: 
308.32                       (Month/Day/Year/Time)
308.33                         (Location/Address)
308.34  If the discussion of the budget cannot be completed, a time and 
308.35  place for continuing the discussion will be announced at the 
308.36  hearing.  You are also invited to send your written comments to: 
309.1                            (City/County)
309.2                         (Location/Address)"
309.3      (d) For purposes of this subdivision, the budget amounts 
309.4   listed on the advertisement mean: 
309.5      (1) for cities, the total government fund expenditures, as 
309.6   defined by the state auditor under section 471.6965, less any 
309.7   expenditures for improvements or services that are specially 
309.8   assessed or charged under chapter 429, 430, 435, or the 
309.9   provisions of any other law or charter; and 
309.10     (2) for counties, the total government fund expenditures, 
309.11  as defined by the state auditor under section 375.169, less any 
309.12  expenditures for direct payments to recipients or providers for 
309.13  the human service aids listed below: 
309.14     (i) Minnesota family investment program under chapters 256J 
309.15  and 256K; 
309.16     (ii) medical assistance under sections 256B.041, 
309.17  subdivision 5, and 256B.19, subdivision 1; 
309.18     (iii) general assistance medical care under section 
309.19  256D.03, subdivision 6; 
309.20     (iv) general assistance under section 256D.03, subdivision 
309.21  2; 
309.22     (v) emergency assistance under section 256J.48; 
309.23     (vi) Minnesota supplemental aid under section 256D.36, 
309.24  subdivision 1; 
309.25     (vii) preadmission screening under section 256B.0911, and 
309.26  alternative care grants under section 256B.0913; 
309.27     (viii) general assistance medical care claims processing, 
309.28  medical transportation and related costs under section 256D.03, 
309.29  subdivision 4; 
309.30     (ix) medical transportation and related costs under section 
309.31  256B.0625, subdivisions 17 to 18a; 
309.32     (x) group residential housing under section 256I.05, 
309.33  subdivision 8, transferred from programs in clauses (iv) and 
309.34  (vi); or 
309.35     (xi) any successor programs to those listed in clauses (i) 
309.36  to (x). 
310.1      (e) A city with a population of over 500 but not more than 
310.2   2,500 must advertise by posted notice as defined in section 
310.3   645.12, subdivision 1.  The advertisement must be posted at the 
310.4   time provided in paragraph (a).  It must be in the form required 
310.5   in paragraph (b). 
310.6      (f) For purposes of this subdivision, the population of a 
310.7   city is the most recent population as determined by the state 
310.8   demographer under section 4A.02. 
310.9      (g) The commissioner of revenue, subject to the approval of 
310.10  the chairs of the house and senate tax committees, shall 
310.11  prescribe the form and format of the advertisement. 
310.12     <b>[EFFECTIVE DATE.]</b> This section is effective for newspaper 
310.13  advertisements in 2001 and thereafter. 
310.14     Sec. 40.  Minnesota Statutes 2000, section 275.066, is 
310.15  amended to read: 
310.16     275.066 [SPECIAL TAXING DISTRICTS; DEFINITION.] 
310.17     For the purposes of property taxation and property tax 
310.18  state aids, the term "special taxing districts" includes the 
310.19  following entities: 
310.20     (1) watershed districts under chapter 103D; 
310.21     (2) sanitary districts under sections 115.18 to 115.37; 
310.22     (3) regional sanitary sewer districts under sections 115.61 
310.23  to 115.67; 
310.24     (4) regional public library districts under section 
310.25  134.201; 
310.26     (5) park districts under chapter 398; 
310.27     (6) regional railroad authorities under chapter 398A; 
310.28     (7) hospital districts under sections 447.31 to 447.38; 
310.29     (8) St. Cloud metropolitan transit commission under 
310.30  sections 458A.01 to 458A.15; 
310.31     (9) Duluth transit authority under sections 458A.21 to 
310.32  458A.37; 
310.33     (10) regional development commissions under sections 
310.34  462.381 to 462.398; 
310.35     (11) housing and redevelopment authorities under sections 
310.36  469.001 to 469.047; 
311.1      (12) port authorities under sections 469.048 to 469.068; 
311.2      (13) economic development authorities under sections 
311.3   469.090 to 469.1081; 
311.4      (14) metropolitan council under sections 473.123 to 
311.5   473.549; 
311.6      (15) metropolitan airports commission under sections 
311.7   473.601 to 473.680; 
311.8      (16) metropolitan mosquito control commission under 
311.9   sections 473.701 to 473.716; 
311.10     (17) Morrison county rural development financing authority 
311.11  under Laws 1982, chapter 437, section 1; 
311.12     (18) Croft Historical Park District under Laws 1984, 
311.13  chapter 502, article 13, section 6; 
311.14     (19) East Lake county medical clinic district under Laws 
311.15  1989, chapter 211, sections 1 to 6; 
311.16     (20) Floodwood area ambulance district under Laws 1993, 
311.17  chapter 375, article 5, section 39; 
311.18     (21) Middle Mississippi river watershed management 
311.19  organization under sections 103B.211 and 103B.241; and 
311.20     (22) emergency medical services special taxing districts 
311.21  under section 144F.01; 
311.22     (23) a county levying under the authority of section 
311.23  103B.241, 103B.245, or 103B.251; and 
311.24     (24) any other political subdivision of the state of 
311.25  Minnesota, excluding counties, school districts, cities, and 
311.26  towns, that has the power to adopt and certify a property tax 
311.27  levy to the county auditor, as determined by the commissioner of 
311.28  revenue. 
311.29     <b>[EFFECTIVE DATE.]</b> Clause (22) of this section is effective 
311.30  for taxes levied in 2001, payable in 2002, through taxes levied 
311.31  in 2006, payable in 2007.  Clause (23) of this section is 
311.32  effective for taxes levied in 2001, payable in 2002, and 
311.33  thereafter. 
311.34     Sec. 41.  Minnesota Statutes 2000, section 275.07, 
311.35  subdivision 1, is amended to read: 
311.36     Subdivision 1.  [CERTIFICATION OF LEVY.] (a) Except as 
312.1   provided under paragraph (b), the taxes voted by cities, 
312.2   counties, school districts, and special districts shall be 
312.3   certified by the proper authorities to the county auditor on or 
312.4   before five working days after December 20 in each year.  A town 
312.5   must certify the levy adopted by the town board to the county 
312.6   auditor by September 15 each year.  If the town board modifies 
312.7   the levy at a special town meeting after September 15, the town 
312.8   board must recertify its levy to the county auditor on or before 
312.9   five working days after December 20.  The taxes certified shall 
312.10  not be reduced by the county auditor by the aid received under 
312.11  section 273.1398, subdivision 2, but shall be reduced by the 
312.12  county auditor by the aid received under section 273.1398, 
312.13  subdivision 3.  If a city, town, county, school district, or 
312.14  special district fails to certify its levy by that date, its 
312.15  levy shall be the amount levied by it for the preceding year. 
312.16     (b)(i) The taxes voted by counties under sections 103B.241, 
312.17  103B.245, and 103B.251 shall be separately certified by the 
312.18  county to the county auditor on or before five working days 
312.19  after December 20 in each year.  The taxes certified shall not 
312.20  be reduced by the county auditor by the aid received under 
312.21  section 273.1398, subdivisions 2 and 3.  If a county fails to 
312.22  certify its levy by that date, its levy shall be the amount 
312.23  levied by it for the preceding year.  
312.24     (ii) For purposes of the proposed property tax notice under 
312.25  section 275.065 and the property tax statement under section 
312.26  276.04, for the first year in which the county implements the 
312.27  provisions of this paragraph, the county auditor shall reduce 
312.28  the county's levy for the preceding year to reflect any amount 
312.29  levied for water management purposes under clause (i) included 
312.30  in the county's levy. 
312.31     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
312.32  levied in 2001, payable in 2002, and thereafter. 
312.33     Sec. 42.  Minnesota Statutes 2000, section 276.04, 
312.34  subdivision 2, is amended to read: 
312.35     Subd. 2.  [CONTENTS OF TAX STATEMENTS.] (a) The treasurer 
312.36  shall provide for the printing of the tax statements.  The 
313.1   commissioner of revenue shall prescribe the form of the property 
313.2   tax statement and its contents.  The statement must contain a 
313.3   tabulated statement of the dollar amount due to each taxing 
313.4   authority and the amount of the state determined school general 
313.5   tax from the parcel of real property for which a particular tax 
313.6   statement is prepared.  The dollar amounts attributable to the 
313.7   county, the state determined school general tax, the voter 
313.8   approved school tax, the other local school tax, the township or 
313.9   municipality, and the total of the metropolitan special taxing 
313.10  districts as defined in section 275.065, subdivision 3, 
313.11  paragraph (i), must be separately stated.  The amounts due all 
313.12  other special taxing districts, if any, may be aggregated.  The 
313.13  amount of the tax on homesteads qualifying under the senior 
313.14  citizens' property tax deferral program under chapter 290B is 
313.15  the total amount of property tax before subtraction of the 
313.16  deferred property tax amount.  The amount of the tax on 
313.17  contamination value imposed under sections 270.91 to 270.98, if 
313.18  any, must also be separately stated.  The dollar amounts, 
313.19  including the dollar amount of any special assessments, may be 
313.20  rounded to the nearest even whole dollar.  For purposes of this 
313.21  section whole odd-numbered dollars may be adjusted to the next 
313.22  higher even-numbered dollar.  The amount of market value 
313.23  excluded under section 273.11, subdivision 16, if any, must also 
313.24  be listed on the tax statement.  The statement shall include the 
313.25  following sentences, printed in upper case letters in boldface 
313.26  print:  "EVEN THOUGH THE STATE OF MINNESOTA DOES NOT RECEIVE ANY 
313.27  PROPERTY TAX REVENUES, IT SETS THE AMOUNT OF THE 
313.28  STATE-DETERMINED SCHOOL TAX LEVY.  THE STATE OF MINNESOTA 
313.29  REDUCES YOUR PROPERTY TAX BY PAYING CREDITS AND REIMBURSEMENTS 
313.30  TO LOCAL UNITS OF GOVERNMENT." 
313.31     (b) The property tax statements for manufactured homes and 
313.32  sectional structures taxed as personal property shall contain 
313.33  the same information that is required on the tax statements for 
313.34  real property.  
313.35     (c) Real and personal property tax statements must contain 
313.36  the following information in the order given in this paragraph.  
314.1   The information must contain the current year tax information in 
314.2   the right column with the corresponding information for the 
314.3   previous year in a column on the left: 
314.4      (1) the property's estimated market value under section 
314.5   273.11, subdivision 1; 
314.6      (2) the property's taxable market value after reductions 
314.7   under section 273.11, subdivisions 1a and 16; 
314.8      (3) the property's gross tax, calculated by adding the 
314.9   property's total property tax to the sum of the aids enumerated 
314.10  in clause (4); 
314.11     (4) a total of the following aids: 
314.12     (i) education aids payable under chapters 122A, 123A, 123B, 
314.13  124D, 125A, 126C, and 127A; 
314.14     (ii) local government aids for cities, towns, and counties 
314.15  under chapter 477A; 
314.16     (iii) disparity reduction aid under section 273.1398; and 
314.17     (iv) homestead and agricultural credit aid under section 
314.18  273.1398; 
314.19     (5) for homestead residential and agricultural properties, 
314.20  the education homestead credit under section 273.1382 273.1384; 
314.21     (6) any credits received under sections 273.119; 273.123; 
314.22  273.135; 273.1391; 273.1398, subdivision 4; 469.171; and 
314.23  473H.10, except that the amount of credit received under section 
314.24  273.135 must be separately stated and identified as "taconite 
314.25  tax relief"; and 
314.26     (7) the net tax payable in the manner required in paragraph 
314.27  (a). 
314.28     (d) If the county uses envelopes for mailing property tax 
314.29  statements and if the county agrees, a taxing district may 
314.30  include a notice with the property tax statement notifying 
314.31  taxpayers when the taxing district will begin its budget 
314.32  deliberations for the current year, and encouraging taxpayers to 
314.33  attend the hearings.  If the county allows notices to be 
314.34  included in the envelope containing the property tax statement, 
314.35  and if more than one taxing district relative to a given 
314.36  property decides to include a notice with the tax statement, the 
315.1   county treasurer or auditor must coordinate the process and may 
315.2   combine the information on a single announcement.  
315.3      The commissioner of revenue shall certify to the county 
315.4   auditor the actual or estimated aids enumerated in clause (4) 
315.5   that local governments will receive in the following year.  The 
315.6   commissioner must certify this amount by January 1 of each year. 
315.7      <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2001, 
315.8   and thereafter, for statements required in 2002 and thereafter. 
315.9      Sec. 43.  Minnesota Statutes 2000, section 282.01, 
315.10  subdivision 1, is amended to read: 
315.11     Subdivision 1.  [CLASSIFICATION AS CONSERVATION OR 
315.12  NONCONSERVATION.] It is the general policy of this state to 
315.13  encourage the best use of tax-forfeited lands, recognizing that 
315.14  some lands in public ownership should be retained and managed 
315.15  for public benefits while other lands should be returned to 
315.16  private ownership.  Parcels of land becoming the property of the 
315.17  state in trust under law declaring the forfeiture of lands to 
315.18  the state for taxes must be classified by the county board of 
315.19  the county in which the parcels lie as conservation or 
315.20  nonconservation.  In making the classification the board shall 
315.21  consider the present use of adjacent lands, the productivity of 
315.22  the soil, the character of forest or other growth, accessibility 
315.23  of lands to established roads, schools, and other public 
315.24  services, their peculiar suitability or desirability for 
315.25  particular uses and the suitability of the forest resources on 
315.26  the land for multiple use, sustained yield management.  The 
315.27  classification, furthermore, must encourage and foster a mode of 
315.28  land utilization that will facilitate the economical and 
315.29  adequate provision of transportation, roads, water supply, 
315.30  drainage, sanitation, education, and recreation; facilitate 
315.31  reduction of governmental expenditures; conserve and develop the 
315.32  natural resources; and foster and develop agriculture and other 
315.33  industries in the districts and places best suited to them. 
315.34     In making the classification the county board may use 
315.35  information made available by any office or department of the 
315.36  federal, state, or local governments, or by any other person or 
316.1   agency possessing pertinent information at the time the 
316.2   classification is made.  The lands may be reclassified from time 
316.3   to time as the county board considers necessary or desirable, 
316.4   except for conservation lands held by the state free from any 
316.5   trust in favor of any taxing district.  
316.6      If the lands are located within the boundaries of an 
316.7   organized town, with taxable valuation in excess of $20,000, or 
316.8   incorporated municipality, the classification or 
316.9   reclassification and sale must first be approved by the town 
316.10  board of the town or the governing body of the municipality in 
316.11  which the lands are located.  The town board of the town or the 
316.12  governing body of the municipality is considered to have 
316.13  approved the classification or reclassification and sale if the 
316.14  county board is not notified of the disapproval of the 
316.15  classification or reclassification and sale within 60 days of 
316.16  the date the request for approval was transmitted to the town 
316.17  board of the town or governing body of the municipality.  If the 
316.18  town board or governing body desires to acquire any parcel lying 
316.19  in the town or municipality by procedures authorized in this 
316.20  section, it must file a written application with the county 
316.21  board to withhold the parcel from public sale.  The application 
316.22  must be filed within 60 days of the request for classification 
316.23  or reclassification and sale.  The county board shall then 
316.24  withhold the parcel from public sale for six months.  A 
316.25  municipality or governmental subdivision shall pay maintenance 
316.26  costs incurred by the county during the six-month period while 
316.27  the property is withheld from public sale, provided the property 
316.28  is not offered for public sale after the six-month period.  A 
316.29  clerical error made by county officials does not serve to 
316.30  eliminate the request of the town board or governing body if the 
316.31  board or governing body has forwarded the application to the 
316.32  county auditor.  If the town board or governing body of the 
316.33  municipality fails to submit an application and a resolution of 
316.34  the board or governing body to acquire the property within the 
316.35  withholding period, the county may offer the property for sale 
316.36  upon the expiration of the withholding period. 
317.1      Sec. 44.  Minnesota Statutes 2000, section 282.01, 
317.2   subdivision 1a, is amended to read: 
317.3      Subd. 1a.  [CONVEYANCE; GENERALLY.] Tax-forfeited lands may 
317.4   be sold by the county board to an organized or incorporated 
317.5   governmental subdivision of the state for any public purpose for 
317.6   which the subdivision is authorized to acquire property or may 
317.7   be released from the trust in favor of the taxing districts on 
317.8   application of a state agency for an authorized use at not less 
317.9   than their value as determined by the county board.  The 
317.10  commissioner of revenue may convey by deed in the name of the 
317.11  state a tract of tax-forfeited land held in trust in favor of 
317.12  the taxing districts to a governmental subdivision for an 
317.13  authorized public use, if an application is submitted to the 
317.14  commissioner which includes a statement of facts as to the use 
317.15  to be made of the tract and the need therefor and the 
317.16  recommendation of the county board.  
317.17     <b>[EFFECTIVE DATE.]</b> This section is effective for deeds 
317.18  issued on or after July 1, 2001. 
317.19     Sec. 45.  Minnesota Statutes 2000, section 282.01, 
317.20  subdivision 1b, is amended to read: 
317.21     Subd. 1b.  [CONVEYANCE; TARGETED NEIGHBORHOOD LANDS.] (a) 
317.22  Notwithstanding subdivision 1a, in the case of tax-forfeited 
317.23  lands located in a targeted neighborhood, as defined in section 
317.24  469.201, subdivision 10, outside the metropolitan area, as 
317.25  defined in and section 473.121, subdivision 2, the commissioner 
317.26  of revenue may shall convey by deed in the name of the state any 
317.27  tract of tax-forfeited land held in trust in favor of the taxing 
317.28  districts, to a political subdivision that submits an 
317.29  application to the commissioner of revenue and the 
317.30  recommendation of the county board. 
317.31     (b) Notwithstanding subdivision 1a, in the case of 
317.32  tax-forfeited lands located in a targeted neighborhood, as 
317.33  defined in section 469.201, subdivision 10, in a county in the 
317.34  metropolitan area, as defined in section 473.121, subdivision 2, 
317.35  the commissioner of revenue shall convey by deed in the name of 
317.36  the state any tract of tax-forfeited land held in trust in favor 
318.1   of the taxing districts, to a political subdivision that submits 
318.2   an application to the commissioner of revenue and the county 
318.3   board. 
318.4      (c) The application under paragraph (a) or (b) must include 
318.5   a statement of facts as to the use to be made of the tract, the 
318.6   need therefor, and a resolution, adopted by the governing body 
318.7   of the political subdivision, finding that the conveyance of a 
318.8   tract of tax-forfeited land to the political subdivision is 
318.9   necessary to provide for the redevelopment of land as productive 
318.10  taxable property.  Deeds of conveyance issued under paragraph 
318.11  (a) are not conditioned on continued use of the property for the 
318.12  use stated in the application.  
318.13     <b>[EFFECTIVE DATE.]</b> This section is effective for deeds 
318.14  issued on or after July 1, 2001. 
318.15     Sec. 46.  Minnesota Statutes 2000, section 282.04, 
318.16  subdivision 2, is amended to read: 
318.17     Subd. 2.  [RIGHTS BEFORE SALE; IMPROVEMENTS, INSURANCE, 
318.18  DEMOLITION.] Before the sale of a parcel of forfeited land the 
318.19  county auditor may, with the approval of the county board of 
318.20  commissioners, provide for the repair and improvement of any 
318.21  building or structure located upon the parcel, and may provide 
318.22  for maintenance of tax-forfeited lands, if it is determined by 
318.23  the county board that such repairs, improvements, or maintenance 
318.24  are necessary for the operation, use, preservation and safety of 
318.25  the building or structure.  If so authorized by the county 
318.26  board, the county auditor may insure the building or structure 
318.27  against loss or damage resulting from fire or windstorm, may 
318.28  purchase workers' compensation insurance to insure the county 
318.29  against claims for injury to the persons employed in the 
318.30  building or structure by the county, and may insure the county, 
318.31  its officers and employees against claims for injuries to 
318.32  persons or property because of the management, use or operation 
318.33  of the building or structure.  The county auditor may, with the 
318.34  approval of the county board, provide for the demolition of the 
318.35  building or structure, which has been determined by the county 
318.36  board to be within the purview of section 299F.10, and for the 
319.1   sale of salvaged materials from the building or structure.  The 
319.2   county auditor, with the approval of the county board, may 
319.3   provide for the sale of abandoned personal property under either 
319.4   chapter 345 or 566, as appropriate.  The sale may be made by the 
319.5   sheriff using the procedures for the sale of abandoned property 
319.6   in section 345.15 or by the county auditor using the procedures 
319.7   for the sale of abandoned property in section 504B.271.  The net 
319.8   proceeds from any sale of the personal property, salvaged 
319.9   materials, timber or other products, or leases made under this 
319.10  law must be deposited in the forfeited tax sale fund and must be 
319.11  distributed in the same manner as if the parcel had been sold. 
319.12     The county auditor, with the approval of the county board, 
319.13  may provide for the demolition of any structure on tax-forfeited 
319.14  lands, if in the opinion of the county board, the county 
319.15  auditor, and the land commissioner, if there is one, the sale of 
319.16  the land with the structure on it, or the continued existence of 
319.17  the structure by reason of age, dilapidated condition or 
319.18  excessive size as compared with nearby structures, will result 
319.19  in a material lessening of net tax capacities of real estate in 
319.20  the vicinity of the tax-forfeited lands, or if the demolition of 
319.21  the structure or structures will aid in disposing of the 
319.22  tax-forfeited property. 
319.23     Before the sale of a parcel of forfeited land located in an 
319.24  urban area, the county auditor may with the approval of the 
319.25  county board provide for the grading of the land by filling or 
319.26  the removal of any surplus material from it.  If the physical 
319.27  condition of forfeited lands is such that a reasonable grading 
319.28  of the lands is necessary for the protection and preservation of 
319.29  the property of any adjoining owner, the adjoining property 
319.30  owner or owners may apply to the county board to have the 
319.31  grading done.  If, after considering the application, the county 
319.32  board believes that the grading will enhance the value of the 
319.33  forfeited lands commensurate with the cost involved, it may 
319.34  approve it, and the work must be performed under the supervision 
319.35  of the county or city engineer, as the case may be, and the 
319.36  expense paid from the forfeited tax sale fund. 
320.1      Sec. 47.  Minnesota Statutes 2000, section 469.040, 
320.2   subdivision 5, is amended to read: 
320.3      Subd. 5.  [DESIGNATED HOUSING CORPORATION.] Property 
320.4   located within the exterior boundaries of the White Earth an 
320.5   Indian reservation in the state that is owned by the tribe's 
320.6   designated housing entity as defined in United States Code, 
320.7   title 25, section 4103(21), and that is a housing project or a 
320.8   housing development project, as defined in section 469.002, 
320.9   subdivisions 13 and 15, is exempt from all real and personal 
320.10  property taxes of the city, the county, the state, or any 
320.11  political subdivision thereof, but the property is subject to 
320.12  subdivision 3.  A copy of those portions of the annual reports 
320.13  submitted on behalf of the housing entity to the Secretary of 
320.14  the United States Department of Housing and Urban Development 
320.15  for the project that contain information sufficient to determine 
320.16  the amount due under subdivision 3 satisfies the reporting 
320.17  requirements of subdivision 3 for the project. 
320.18     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
320.19  levied in 2001, payable in 2002, and thereafter. 
320.20     Sec. 48.  Minnesota Statutes 2000, section 469.202, 
320.21  subdivision 2, is amended to read: 
320.22     Subd. 2.  [ELIGIBILITY REQUIREMENTS FOR TARGETED 
320.23  NEIGHBORHOODS.] An area within a city is eligible for 
320.24  designation as a targeted neighborhood if the area meets two of 
320.25  the following three criteria: 
320.26     (a) The area had an unemployment rate that was twice the 
320.27  unemployment rate for the Minneapolis and Saint Paul standard 
320.28  metropolitan statistical area as determined by the 1980 most 
320.29  recent federal decennial census. 
320.30     (b) The median household income in the area was no more 
320.31  than half the median household income for the Minneapolis and 
320.32  Saint Paul standard metropolitan statistical area as determined 
320.33  by the 1980 most recent federal decennial census. 
320.34     (c) The area is characterized by residential dwelling units 
320.35  in need of substantial rehabilitation.  An area qualifies under 
320.36  this paragraph if 25 percent or more of the residential dwelling 
321.1   units are in substandard condition as determined by the city, or 
321.2   if 70 percent or more of the residential dwelling units in the 
321.3   area were built before 1940 as determined by the 1980 most 
321.4   recent federal decennial census. 
321.5      <b>[EFFECTIVE DATE.]</b> This section is effective beginning July 
321.6   1, 2001. 
321.7      Sec. 49.  [473.246] [LEGISLATIVE COMMISSION ON METROPOLITAN 
321.8   GOVERNMENT; REVIEW.] 
321.9      Subdivision 1.  [METROPOLITAN COUNCIL INFORMATION; REVIEW 
321.10  BY LEGISLATIVE COMMISSION ON METROPOLITAN GOVERNMENT.] The 
321.11  metropolitan council must submit to the legislative commission 
321.12  on metropolitan government information on the council's tax 
321.13  rates and dollar amounts levied for the current year, proposed 
321.14  property tax rates and levies, operating and capital budgets, 
321.15  work program, capital improvement program, and any other 
321.16  information requested by the commission, for review by the 
321.17  legislative commission, as provided in section 3.99. 
321.18     Subd. 2.  [EXPIRATION.] This section expires July 1, 2007. 
321.19     <b>[EFFECTIVE DATE; APPLICATION.]</b> This section is effective 
321.20  July 1, 2001, and applies in the counties of Anoka, Carver, 
321.21  Dakota, Hennepin, Ramsey, Scott, and Washington. 
321.22     Sec. 50.  Minnesota Statutes 2000, section 473H.10, 
321.23  subdivision 3, is amended to read: 
321.24     Subd. 3.  [COMPUTATION OF TAX; STATE REIMBURSEMENT.] (a) 
321.25  After having determined the market value of all land valued 
321.26  according to subdivision 2, the assessor shall compute the net 
321.27  tax capacity of those properties by applying the appropriate 
321.28  class rates.  When computing the rate of tax pursuant to section 
321.29  275.08, the county auditor shall include the net tax capacity of 
321.30  land as provided in this clause.  
321.31     (b) The county auditor shall compute the tax on lands 
321.32  valued according to subdivision 2 and nonresidential buildings 
321.33  by multiplying the net tax capacity times the total local tax 
321.34  rate for all purposes as provided in clause (a).  
321.35     (c) The county auditor shall then compute the tax on lands 
321.36  valued according to subdivision 2 and nonresidential buildings 
322.1   by multiplying the net tax capacity times the total local tax 
322.2   rate for all purposes as provided in clause (a), subtracting 
322.3   $1.50 per acre of land in the preserve.  
322.4      (d) The county auditor shall then compute the maximum ad 
322.5   valorem property tax on lands valued according to subdivision 2 
322.6   and nonresidential buildings by multiplying the net tax capacity 
322.7   times 105 percent of the previous year's statewide average local 
322.8   tax rate levied on property located within townships for all 
322.9   purposes.  
322.10     (e) The tax due and payable by the owner of preserve land 
322.11  valued according to subdivision 2 and nonresidential buildings 
322.12  will be the amount determined in clause (c) or (d), whichever is 
322.13  less.  The state shall reimburse the taxing jurisdictions for 
322.14  the amount of the difference between the net tax determined 
322.15  under this clause and the gross tax in clause (b).  Residential 
322.16  buildings shall continue to be valued and classified according 
322.17  to the provisions of sections 273.11 and 273.13, as they would 
322.18  be in the absence of this section, and the tax on those 
322.19  buildings shall not be subject to the limitation contained in 
322.20  this clause.  
322.21     The county may transfer money from the county conservation 
322.22  account created in section 40A.152 to the county revenue fund to 
322.23  reimburse the fund for the tax lost as a result of this 
322.24  subdivision or to pay taxing jurisdictions within the county for 
322.25  the tax lost.  The county auditor shall certify to the 
322.26  commissioner of revenue on or before June 1 the total amount of 
322.27  tax lost to the county and taxing jurisdictions located within 
322.28  the county as a result of this subdivision and the extent that 
322.29  the tax lost exceeds funds available in the county conservation 
322.30  account.  Payment shall be made by the state on December 26 15 
322.31  to each of the affected taxing jurisdictions, other than school 
322.32  districts, in the same proportion that the ad valorem tax is 
322.33  distributed if the county conservation account is insufficient 
322.34  to make the reimbursement.  There is annually appropriated from 
322.35  the Minnesota conservation fund under section 40A.151 to the 
322.36  commissioner of revenue an amount sufficient to make the 
323.1   reimbursement provided in this subdivision.  If the amount 
323.2   available in the Minnesota conservation fund is insufficient, 
323.3   the balance that is needed is appropriated from the general fund.
323.4      Sec. 51.  Minnesota Statutes 2000, section 477A.12, is 
323.5   amended to read: 
323.6      477A.12 [ANNUAL APPROPRIATIONS; LANDS ELIGIBLE; 
323.7   CERTIFICATION OF ACREAGE.] 
323.8      Subdivision 1.  [TYPES OF LAND; PAYMENTS.] (a) As an offset 
323.9   for expenses incurred by counties and towns in support of 
323.10  natural resources lands, the following amounts are annually 
323.11  appropriated to the commissioner of natural resources from the 
323.12  general fund for transfer to the commissioner of revenue.  The 
323.13  commissioner of revenue shall pay the transferred funds to 
323.14  counties as required by sections 477A.11 to 477A.145.  The 
323.15  amounts are: 
323.16     (1) for acquired natural resources land, $3, as adjusted 
323.17  for inflation under section 477A.145, multiplied by the total 
323.18  number of acres of acquired natural resources land or, at the 
323.19  county's option three-fourths of one percent of the appraised 
323.20  value of all acquired natural resources land in the county, 
323.21  whichever is greater; 
323.22     (2) 75 cents, as adjusted for inflation under section 
323.23  477A.145, multiplied by the number of acres of 
323.24  county-administered other natural resources land; and 
323.25     (3) 37.5 cents, as adjusted for inflation under section 
323.26  477A.145, multiplied by the number of acres of 
323.27  commissioner-administered other natural resources land located 
323.28  in each county as of July 1 of each year prior to the payment 
323.29  year. 
323.30     (b) The amount determined under paragraph (a), clause (1), 
323.31  is payable for land that is acquired from a private owner and 
323.32  owned by the department of transportation for the purpose of 
323.33  replacing wetland losses caused by transportation projects, but 
323.34  only if the county contains more than 500 acres of such land at 
323.35  the time the certification is made under subdivision 2. 
323.36     Subd. 2.  [PROCEDURE.] Lands for which payments in lieu are 
324.1   made pursuant to section 97A.061, subdivision 3, and Laws 1973, 
324.2   chapter 567, shall not be eligible for payments under this 
324.3   section.  Each county auditor shall certify to the department of 
324.4   natural resources during July of each year prior to the payment 
324.5   year the number of acres of county-administered other natural 
324.6   resources land within the county.  The department of natural 
324.7   resources may, in addition to the certification of acreage, 
324.8   require descriptive lists of land so certified.  The 
324.9   commissioner of natural resources shall determine and certify to 
324.10  the commissioner of revenue by March 1 of the payment year:  
324.11     (1) the number of acres and most recent appraised value of 
324.12  acquired natural resources land within each county; 
324.13     (2) the number of acres of commissioner-administered 
324.14  natural resources land within each county; and 
324.15     (3) the number of acres of county-administered other 
324.16  natural resources land within each county, based on the reports 
324.17  filed by each county auditor with the commissioner of natural 
324.18  resources. 
324.19     The commissioner of transportation shall determine and 
324.20  certify to the commissioner of revenue by March 1 of the payment 
324.21  year the number of acres of land and the appraised value of the 
324.22  land described in subdivision 1, paragraph (b), but only if it 
324.23  exceeds 500 acres. 
324.24     The commissioner of revenue shall determine the 
324.25  distributions provided for in this section using the number of 
324.26  acres and appraised values certified by the commissioner of 
324.27  natural resources and the commissioner of transportation by 
324.28  March 1 of the payment year. 
324.29     (c) Subd 3.  [DETERMINATION OF APPRAISED VALUE.] For the 
324.30  purposes of this section, the appraised value of acquired 
324.31  natural resources land is the purchase price for the first five 
324.32  years after acquisition.  The appraised value of acquired 
324.33  natural resources land received as a donation is the value 
324.34  determined for the commissioner of natural resources by a 
324.35  licensed appraiser, or the county assessor's estimated market 
324.36  value if no appraisal is done.  The appraised value must be 
325.1   determined by the county assessor every five years after the 
325.2   land is acquired. 
325.3      <b>[EFFECTIVE DATE.]</b> This section is effective for payments in 
325.4   2002 and thereafter. 
325.5      Sec. 52.  Minnesota Statutes 2000, section 477A.14, is 
325.6   amended to read: 
325.7      477A.14 [USE OF FUNDS.] 
325.8      Except as provided in section 97A.061, subdivision 5, 40 
325.9   percent of the total payment to the county shall be deposited in 
325.10  the county general revenue fund to be used to provide property 
325.11  tax levy reduction.  The remainder shall be distributed by the 
325.12  county in the following priority:  
325.13     (a) 37.5 cents, as adjusted for inflation under section 
325.14  477A.145, for each acre of county-administered other natural 
325.15  resources land shall be deposited in a resource development fund 
325.16  to be created within the county treasury for use in resource 
325.17  development, forest management, game and fish habitat 
325.18  improvement, and recreational development and maintenance of 
325.19  county-administered other natural resources land.  Any county 
325.20  receiving less than $5,000 annually for the resource development 
325.21  fund may elect to deposit that amount in the county general 
325.22  revenue fund; 
325.23     (b) From the funds remaining, within 30 days of receipt of 
325.24  the payment to the county, the county treasurer shall pay each 
325.25  organized township 30 cents, as adjusted for inflation under 
325.26  section 477A.145, for each acre of acquired natural resources 
325.27  land and each acre of land described in section 477A.12, 
325.28  subdivision 1, paragraph (b), and 7.5 cents, as adjusted for 
325.29  inflation under section 477A.145, for each acre of other natural 
325.30  resources land located within its boundaries.  Payments for 
325.31  natural resources lands not located in an organized township 
325.32  shall be deposited in the county general revenue fund.  Payments 
325.33  to counties and townships pursuant to this paragraph shall be 
325.34  used to provide property tax levy reduction, except that of the 
325.35  payments for natural resources lands not located in an organized 
325.36  township, the county may allocate the amount determined to be 
326.1   necessary for maintenance of roads in unorganized townships.  
326.2   Provided that, if the total payment to the county pursuant to 
326.3   section 477A.12 is not sufficient to fully fund the distribution 
326.4   provided for in this clause, the amount available shall be 
326.5   distributed to each township and the county general revenue fund 
326.6   on a pro rata basis; and 
326.7      (c) Any remaining funds shall be deposited in the county 
326.8   general revenue fund.  Provided that, if the distribution to the 
326.9   county general revenue fund exceeds $35,000, the excess shall be 
326.10  used to provide property tax levy reduction. 
326.11     <b>[EFFECTIVE DATE.]</b> This section is effective for payments in 
326.12  2002 and thereafter. 
326.13     Sec. 53.  [STUDY REQUIRED; METROPOLITAN FISCAL DISPARITIES 
326.14  PROGRAM.] 
326.15     The commissioner of revenue, in conjunction with one 
326.16  representative from each of the seven metropolitan counties to 
326.17  be appointed by the respective county boards and legislative 
326.18  staff, shall conduct a study of the metropolitan revenue 
326.19  distribution program contained in Minnesota Statutes, chapter 
326.20  473F, commonly known as the fiscal disparities program.  The 
326.21  commissioner shall make a report to the legislature by February 
326.22  1, 2002, consisting of the findings of the study and any 
326.23  recommendations resulting from the study. 
326.24     The study shall primarily address the question of whether 
326.25  the program is achieving the purposes for which it was created.  
326.26  Additionally, the study shall address the following questions: 
326.27     (1) How has the program affected property tax disparities 
326.28  across the Twin Cities metropolitan area? 
326.29     (2) Is the formula for contributing tax base to the 
326.30  areawide pool reasonable?  Should certain commercial-industrial 
326.31  tax base continue to be exempt from contribution to the areawide 
326.32  pool, such as tax base in existence prior to 1979, tax base in 
326.33  tax increment financing districts established before 1979, and 
326.34  tax base located at the Minneapolis-Saint Paul International 
326.35  Airport?  Should contribution amounts be adjusted for 
326.36  differences in sales ratios between communities? 
327.1      (3) Is the formula for distributing tax base from the 
327.2   areawide pool reasonable?  Should the formula reflect measures 
327.3   of need in addition to population?  Should the distribution 
327.4   formula be based on tax capacity rather than market value? 
327.5      (4) Does the program help promote orderly growth and 
327.6   encourage environmentally sound land use? 
327.7      (5) Does the program reduce competition for 
327.8   commercial-industrial tax base between communities?  Is reduced 
327.9   competition for commercial-industrial tax base desirable? 
327.10     (6) Do local governments derive sufficient tax revenues 
327.11  from commercial-industrial property to cover the costs of 
327.12  providing services to the property, considering the tax base 
327.13  that must be contributed to the areawide pool? 
327.14     (7) Could improvements be made in the administration of the 
327.15  program? 
327.16     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2001. 
327.17     Sec. 54.  [LAKES REGION EMS SERVICE CHARGES.] 
327.18     Subdivision 1.  [AUTHORIZATION.] The Lakes Region emergency 
327.19  medical services district may charge and collect through the 
327.20  county with county property taxes, an annual service charge of 
327.21  $7 per unit for properties in the primary service area within 
327.22  Chisago county and $3.50 per unit for properties in the 
327.23  secondary service area within Chisago county according to the 
327.24  schedule in subdivision 2 for emergency medical services 
327.25  authorized as provided in subdivision 3. 
327.26     Subd. 2.  [EMS FEE SCHEDULE.] 
327.27     (a) RESIDENTIAL PROPERTIES          UNIT VALUE 
327.28     (1) Agricultural with Dwelling      1.0 
327.29     (2) Seasonal/Recreational           1.0 
327.30     (3) Residential Homestead           1.0 
327.31     (4) Residential Non-Homestead       1.0 for up to three 
327.32                                             living units 
327.33                                         1.0 for each additional 
327.34                                             living unit 
327.35                                             thereafter 
327.36     (5) Mobile Homes                    1.0 
328.1      (b) COMMERCIAL PROPERTIES 
328.2      (1) Up to $100,000 valuation        1.0 
328.3      (2) $100,001 to $150,000            2.0 
328.4      (3) $150,001 to $200,000            3.0 
328.5      (4) $200,001 to $250,000            4.0 
328.6      (5) $250,001 to $300,000            5.0 
328.7      (6) $300,001 to $350,000            6.0 
328.8      (7) $350,001 to $400,000            7.0 
328.9      (8) $400,001 to $450,000            8.0 
328.10     (9) $450,001 to $500,000            9.0 
328.11     (10) $500,001 to $550,000           10.0 
328.12     (11) $550,001 to $600,000           11.0 
328.13     (12) Over $600,000                  12.0 
328.14     Subd. 3.  [USE OF FEE PROCEEDS.] The proceeds of fees 
328.15  charged and collected under this section must be used to support 
328.16  the providing of out-of-hospital emergency medical services 
328.17  including, but not limited to, first responder or rescue squads 
328.18  recognized by the Lakes Region emergency medical services 
328.19  district, ambulance services licensed under Minnesota Statutes, 
328.20  chapter 144E, and recognized by the district, medical control 
328.21  functions set out in Minnesota Statutes, chapter 144E, and 
328.22  communications equipment and systems. 
328.23     Subd. 4.  [BOARD.] (a) The district is governed by a board 
328.24  made up of the members of the governing bodies including town 
328.25  boards of local governmental units in Chisago county, as follows:
328.26     (1) three members chosen by all of the cities in a manner 
328.27  convenient to them that reflects geographic balance; and 
328.28     (2) three members chosen by all of the town boards in a 
328.29  manner convenient to them that reflects geographic balance. 
328.30     (b) If the members are not selected as provided in 
328.31  paragraph (a), clause (1) or (2), by September 1, 2001, the 
328.32  county board must make the appointments from the governing 
328.33  bodies of cities under paragraph (a), clause (1), or from the 
328.34  governing bodies of town boards under paragraph (a), clause (2), 
328.35  respectively, and, in either case, reflecting geographic balance.
328.36     (c) A representative from the county board chosen by the 
329.1   county board must serve as the chair of the district board. 
329.2      (d) All members of the district board serve a three-year 
329.3   term. 
329.4      (e) A vacancy on the district board must be filled as 
329.5   provided for the initial appointment.  If the vacancy is not 
329.6   filled within 30 days by the initial appointing authority under 
329.7   paragraph (a), clause (1) or (2), the county board must make the 
329.8   appointment as provided in paragraph (b). 
329.9      Subd. 5.  [PROCEDURE.] The Chisago county board must charge 
329.10  and collect, and disburse the fees authorized in this section in 
329.11  the same manner authorized by ordinance for the charging, 
329.12  collection, and disbursing of solid waste management fees within 
329.13  the county.  The county may proceed to collect unpaid fees under 
329.14  this section in the same manner and extent, including interest 
329.15  charges, as provided by ordinance for collection of unpaid solid 
329.16  waste management fees. 
329.17     Subd. 6.  [ADMINISTRATIVE SHARE.] The county may retain up 
329.18  to one percent of the fees collected under this section each 
329.19  year for administration of the fee collection and disbursal. 
329.20     Subd. 7.  [SUNSET.] The fee authorized under this section 
329.21  may be imposed in 2001 through 2003 and collected with property 
329.22  taxes payable in 2002 through 2004 only.  
329.23     Sec. 55.  [CONVEYANCE OF TAX-FORFEITED LAND; DAKOTA 
329.24  COUNTY.] 
329.25     (a) If special school district No. 6 conveys the land 
329.26  described in paragraph (c) to the state according to Minnesota 
329.27  Statutes, section 282.01, subdivision 1d, then, notwithstanding 
329.28  any other provision of Minnesota Statutes, chapter 282, the 
329.29  commissioner of revenue shall reconvey the land described in 
329.30  paragraph (c) to special school district No. 6 for no 
329.31  consideration.  
329.32     (b) The conveyance must be in a form approved by the 
329.33  attorney general.  Notwithstanding Minnesota Statutes, chapter 
329.34  282, or other law to the contrary, special school district No. 6 
329.35  may use or sell the land for other than a public use.  
329.36  Notwithstanding Minnesota Statutes, chapter 282, or other law to 
330.1   the contrary, the state shall not retain a reversionary interest 
330.2   and shall convey the land free of the trust in favor of the 
330.3   taxing district. 
330.4      (c) The land to be conveyed is in the city of South St. 
330.5   Paul, Dakota county, and is described as:  
330.6      (1) Lots 4, 5, 6, and 7, Block 1, Lookout Park Addition; 
330.7      (2) Lots 25 and 26, Block 1, Lookout Park Addition; 
330.8      (3) Lots 11, 12, 13, 14, 15, 16, 17, 18, 19, and 20, Block 
330.9   2, Lookout Park Addition; 
330.10     (4) Lots 1, 2, 3, 4, and 5, Block 1, Bryants First Addition 
330.11  to the city of South St. Paul; and 
330.12     (5) Lot 21, Block 1, Bryants First Addition to the city of 
330.13  South St. Paul, together with that part of the vacated alley and 
330.14  vacated Stanley Place accruing thereto. 
330.15     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
330.16  following final enactment. 
330.17     Sec. 56.  [INDEPENDENT SCHOOL DISTRICT NO. 319, 
330.18  NASHWAUK-KEEWATIN, ADDITIONAL LEVY.] 
330.19     In addition to other levies, independent school district 
330.20  No. 319, Nashwauk-Keewatin, may levy an amount up to $25,000 
330.21  each year to finance the Nashwauk School-Community Library and 
330.22  Community Service Project. 
330.23     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2001. 
330.24     Sec. 57.  [PROPERTY TAX ABATEMENTS; PROPERTY DAMAGED BY 
330.25  TORNADO; YELLOW MEDICINE AND CHIPPEWA COUNTIES.] 
330.26     Subdivision 1.  [AUTHORIZATION.] Notwithstanding the 
330.27  requirements of Minnesota Statutes, section 375.192, a city 
330.28  council by resolution may request the county board of a 
330.29  qualified county to grant abatements on eligible property for 
330.30  taxes payable in 2001 as provided in this section.  Up to 50 
330.31  percent of the taxes payable in 2001 on an eligible property 
330.32  that does not qualify for reimbursement under Minnesota 
330.33  Statutes, section 273.123, subdivision 4, may be abated.  The 
330.34  owner of the eligible property is not required to apply for the 
330.35  abatement. 
330.36     Subd. 2.  [DEFINITIONS.] (a) As used in this section, the 
331.1   terms defined in this subdivision have the meanings given them. 
331.2      (b) "Qualified county" means any county in the area added 
331.3   to the Presidential Declaration of Major Disaster, DR1333, by 
331.4   amendment number 5 dated July 28, 2000, and amendment number 6 
331.5   dated August 14, 2000. 
331.6      (c) "Eligible property" means a parcel of taxable property 
331.7   located in a qualified county that contains a structure that has 
331.8   been determined by the assessor to have lost over 50 percent of 
331.9   its estimated market value due to wind damage.  In the case of 
331.10  agricultural property, the abatement is limited to the taxes on 
331.11  the parcel attributable to the value of the house, garage, and 
331.12  surrounding one acre, if the house has lost over 50 percent of 
331.13  its estimated market value; and the tax attributable to the 
331.14  value of any farm buildings and structures that have lost over 
331.15  50 percent of their estimated market value. 
331.16     Subd. 3.  [ASSESSORS' DUTIES.] As soon as practicable, 
331.17  local and county assessors in qualified counties shall notify 
331.18  the county board and property owners of parcels of eligible 
331.19  property. 
331.20     Subd. 4.  [APPROPRIATION.] $100,000 is appropriated to the 
331.21  commissioner of revenue for fiscal year 2002 to be apportioned 
331.22  among the counties in amendment number 5 and amendment number 6 
331.23  to the Presidential Declaration of Major Disaster, DR1333, to 
331.24  provide reimbursement for abatements granted under this section 
331.25  for taxes payable in 2001 to properties damaged from tornadoes 
331.26  on July 25, 2000.  The apportionment shall be based upon the 
331.27  amount of disaster-related market value loss in each county.  
331.28  Counties must be reimbursed only for property taxes that were 
331.29  actually abated, not to exceed each county's apportioned amount. 
331.30     Sec. 58.  [MINNEHAHA CREEK WATERSHED DISTRICT.] 
331.31     Subdivision 1.  [LEVY AUTHORIZED.] Notwithstanding 
331.32  Minnesota Statutes, section 103D.905, subdivision 3, the 
331.33  Minnehaha Creek watershed district may annually levy an 
331.34  additional amount up to $50,000 for enforcing rules and permits. 
331.35     Subd. 2.  [EFFECTIVE DATE.] This section is effective, 
331.36  without local approval, beginning with taxes levied in 2001, 
332.1   payable in 2002. 
332.2      Sec. 59.  [PRIVATE SALE OF TAX-FORFEITED LAND; ST. LOUIS 
332.3   COUNTY.] 
332.4      (a) Notwithstanding the public sale provisions of Minnesota 
332.5   Statutes, chapter 282, or other law to the contrary, St. Louis 
332.6   county may sell by private sale the tax-forfeited land described 
332.7   in paragraph (c) to one or more of the owners at the time of 
332.8   forfeiture. 
332.9      (b) The conveyance must be in a form approved by the 
332.10  attorney general for a consideration of taxes due on the 
332.11  property and any penalties, interest, and costs. 
332.12     (c) The land to be sold is located in St. Louis county and 
332.13  is described as: 
332.14     (1) Parcel 200-10-1720:  Sec. 11, Twp. 61, Rge 19 NW 1/4 of 
332.15  NW 1/4; and 
332.16     (2) Parcel 200-10-280:  Sec. 2, Twp. 61, Rge 19 SW 1/4 of 
332.17  SW 1/4. 
332.18     (d) The county has determined that the county's land 
332.19  management interests would best be served if the lands were 
332.20  returned to private ownership. 
332.21     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
332.22  following final enactment. 
332.23     Sec. 60.  [REPEALER.] 
332.24     (a) Minnesota Statutes 2000, section 275.078, is repealed. 
332.25     (b) Laws 1988, chapter 426, section 1; Laws 1988, chapter 
332.26  702, section 16; Laws 1992, chapter 511, article 2, section 52, 
332.27  as amended by Laws 1997, chapter 231, article 2, section 50, and 
332.28  Laws 1998, chapter 389, article 3, section 32; Laws 1996, 
332.29  chapter 471, article 8, section 45; Laws 1999, chapter 243, 
332.30  article 6, section 14; Laws 1999, chapter 243, article 6, 
332.31  section 15; and Laws 2000, chapter 490, article 6, section 17, 
332.32  are repealed. 
332.33     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
332.34  levied in 2001, payable in 2002 and thereafter. 
332.35                             ARTICLE 10 
332.36                        PROPERTY TAX REFUND 
333.1      Section 1.  Minnesota Statutes 2000, section 290A.03, 
333.2   subdivision 6, is amended to read: 
333.3      Subd. 6.  [HOMESTEAD.] "Homestead" means the dwelling 
333.4   occupied as the claimant's principal residence and so much of 
333.5   the land surrounding it, not exceeding ten acres, as is 
333.6   reasonably necessary for use of the dwelling as a home and any 
333.7   other property used for purposes of a homestead as defined in 
333.8   section 273.13, subdivision 22, except for agricultural land 
333.9   assessed as part of a homestead pursuant to section 273.13, 
333.10  subdivision 23, "homestead" is limited to the first $600,000 of 
333.11  market value or, where the farm homestead is rented, house and 
333.12  garage and immediately surrounding one acre of land.  The 
333.13  homestead may be owned or rented and may be a part of a 
333.14  multidwelling or multipurpose building and the land on which it 
333.15  is built.  A manufactured home, as defined in section 273.125, 
333.16  subdivision 8, or a park trailer taxed as a manufactured home 
333.17  under section 168.012, subdivision 9, assessed as personal 
333.18  property may be a dwelling for purposes of this subdivision. 
333.19     <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
333.20  refunds based on property taxes payable in 2002. 
333.21     Sec. 2.  Minnesota Statutes 2000, section 290A.03, 
333.22  subdivision 11, is amended to read: 
333.23     Subd. 11.  [RENT CONSTITUTING PROPERTY TAXES.] "Rent 
333.24  constituting property taxes" means 19 the percent of the gross 
333.25  rent, as provided under section 290A.046, actually paid in cash, 
333.26  or its equivalent, or the portion of rent paid in lieu of 
333.27  property taxes, in any calendar year by a claimant for the right 
333.28  of occupancy of the claimant's Minnesota homestead in the 
333.29  calendar year, and which rent constitutes the basis, in the 
333.30  succeeding calendar year of a claim for relief under this 
333.31  chapter by the claimant.  
333.32     <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
333.33  refunds based on rent paid in calendar year 2001. 
333.34     Sec. 3.  Minnesota Statutes 2000, section 290A.03, 
333.35  subdivision 12, is amended to read: 
333.36     Subd. 12.  [GROSS RENT.] (a) "Gross rent" means rental paid 
334.1   for the right of occupancy, at arms-length, of a homestead, 
334.2   exclusive of charges for any medical services furnished by the 
334.3   landlord as a part of the rental agreement, whether expressly 
334.4   set out in the rental agreement or not. 
334.5      (b) The gross rent of a resident of a nursing home or 
334.6   intermediate care facility is $350 per month.  The gross rent of 
334.7   a resident of an adult foster care home is $550 per month.  
334.8   Beginning for rent paid in 2002, the commissioner shall annually 
334.9   adjust for inflation the gross rent amounts stated in this 
334.10  paragraph.  The adjustment must be made in accordance with 
334.11  section 1f of the Internal Revenue Code, except that for 
334.12  purposes of this paragraph the percentage increase shall be 
334.13  determined from the year ending on June 30, 2001, to the year 
334.14  ending on June 30 of the year in which the rent is paid.  The 
334.15  commissioner shall round the gross rents to the nearest $10 
334.16  amount.  If the amount ends in $5, the commissioner shall round 
334.17  it up to the next $10 amount.  The determination of the 
334.18  commissioner under this paragraph is not a rule under the 
334.19  Administrative Procedure Act. 
334.20     (c) If the landlord and tenant have not dealt with each 
334.21  other at arms-length and the commissioner determines that the 
334.22  gross rent charged was excessive, the commissioner may adjust 
334.23  the gross rent to a reasonable amount for purposes of this 
334.24  chapter. 
334.25     (d) Any amount paid by a claimant residing in property 
334.26  assessed pursuant to section 273.124, subdivision 3, 4, 5, or 6 
334.27  for occupancy in that property shall be excluded from gross rent 
334.28  for purposes of this chapter.  However, property taxes imputed 
334.29  to the homestead of the claimant or the dwelling unit occupied 
334.30  by the claimant that qualifies for homestead treatment pursuant 
334.31  to section 273.124, subdivision 3, 4, 5, or 6 shall be included 
334.32  within the term "property taxes payable" as defined in 
334.33  subdivision 13, notwithstanding the fact that ownership is not 
334.34  in the name of the claimant. 
334.35     <b>[EFFECTIVE DATE.]</b> This section is effective for refunds 
334.36  based on rent paid after December 31, 2000. 
335.1      Sec. 4.  Minnesota Statutes 2000, section 290A.03, 
335.2   subdivision 13, is amended to read: 
335.3      Subd. 13.  [PROPERTY TAXES PAYABLE.] "Property taxes 
335.4   payable" means the property tax exclusive of special 
335.5   assessments, penalties, and interest payable on a claimant's 
335.6   homestead after deductions made under sections 273.135, 
335.7   273.1382, 273.1391, 273.42, subdivision 2, and any other state 
335.8   paid property tax credits in any calendar year.  In the case of 
335.9   a claimant who makes ground lease payments, "property taxes 
335.10  payable" includes the amount of the payments directly 
335.11  attributable to the property taxes assessed against the parcel 
335.12  on which the house is located.  No apportionment or reduction of 
335.13  the "property taxes payable" shall be required for the use of a 
335.14  portion of the claimant's homestead for a business purpose if 
335.15  the claimant does not deduct any business depreciation expenses 
335.16  for the use of a portion of the homestead in the determination 
335.17  of federal adjusted gross income.  For homesteads which are 
335.18  manufactured homes as defined in section 273.125, subdivision 8, 
335.19  and for homesteads which are park trailers taxed as manufactured 
335.20  homes under section 168.012, subdivision 9, "property taxes 
335.21  payable" shall also include 19 the percent, as provided under 
335.22  section 290A.046, of the gross rent paid in the preceding year 
335.23  for the site on which the homestead is located.  When a 
335.24  homestead is owned by two or more persons as joint tenants or 
335.25  tenants in common, such tenants shall determine between them 
335.26  which tenant may claim the property taxes payable on the 
335.27  homestead.  If they are unable to agree, the matter shall be 
335.28  referred to the commissioner of revenue whose decision shall be 
335.29  final.  Property taxes are considered payable in the year 
335.30  prescribed by law for payment of the taxes. 
335.31     In the case of a claim relating to "property taxes 
335.32  payable," the claimant must have owned and occupied the 
335.33  homestead on January 2 of the year in which the tax is payable 
335.34  and (i) the property must have been classified as homestead 
335.35  property pursuant to section 273.124, on or before December 15 
335.36  of the assessment year to which the "property taxes payable" 
336.1   relate; or (ii) the claimant must provide documentation from the 
336.2   local assessor that application for homestead classification has 
336.3   been made on or before December 15 of the year in which the 
336.4   "property taxes payable" were payable and that the assessor has 
336.5   approved the application. 
336.6      <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
336.7   refunds based on rent paid in calendar year 2001. 
336.8      Sec. 5.  Minnesota Statutes 2000, section 290A.04, 
336.9   subdivision 2, is amended to read: 
336.10     Subd. 2.  [HOMEOWNERS.] A claimant whose property taxes 
336.11  payable are in excess of the percentage of the household income 
336.12  stated below shall pay an amount equal to the percent of income 
336.13  shown for the appropriate household income level along with the 
336.14  percent to be paid by the claimant of the remaining amount of 
336.15  property taxes payable.  The state refund equals the amount of 
336.16  property taxes payable that remain, up to the state refund 
336.17  amount shown below.  
336.18                        Percent           Percent    Maximum
336.19  Household Income     of Income          Paid by     State
336.20                                          Claimant    Refund
336.21      $0 to 1,029
336.22      $0 to 1,189     1.2 percent        18 percent   $440 $1,190
336.23   1,030 to 2,059
336.24   1,190 to 2,389     1.3 percent        18 percent   $440 $1,190
336.25   2,060 to 3,099
336.26   2,390 to 3,589     1.4 percent        20 percent   $440 $1,190
336.27   3,100 to 4,129
336.28   3,590 to 4,779     1.6 percent        20 percent   $440 $1,190
336.29   4,130 to 5,159
336.30   4,780 to 5,969     1.7 percent        20 percent   $440 $1,190
336.31   5,160 to 7,229
336.32   5,970 to 8,369     1.9 percent        25 percent   $440 $1,190
336.33   7,230 to 8,259
336.34   8,370 to 9,559     2.1 percent        25 percent   $440 $1,190
336.35   8,260 to 9,289
336.36   9,560 to 10,759    2.2 percent        25 percent   $440 $1,190
336.37   9,290 to 10,319
336.38  10,760 to 11,949    2.3 percent        30 percent   $440 $1,190
336.39  10,320 to 11,349
336.40  11,950 to 13,139    2.4 percent        30 percent   $440 $1,190
336.41  11,350 to 12,389
336.42  13,140 to 14,349    2.5 percent        30 percent   $440 $1,190
336.43  12,390 to 14,449
336.44  14,350 to 16,729    2.6 percent        30 percent   $440 $1,190
336.45  14,450 to 15,479
336.46  16,730 to 17,919    2.8 percent        35 percent   $440 $1,190
336.47  15,480 to 16,509
336.48  17,920 to 19,119    3.0 percent        35 percent   $440 $1,190
336.49  16,510 to 17,549
336.50  19,120 to 20,319    3.2 percent        40 percent   $440 $1,190
336.51  17,550 to 21,669
336.52  20,320 to 25,089    3.3 percent        40 percent   $440 $1,190
336.53  21,670 to 24,769
336.54  25,090 to 28,679    3.4 percent        45 percent   $440 $1,190
337.1   24,770 to 30,959
337.2   28,680 to 41,819    3.5 percent        45 percent   $440 $1,190
337.3   30,960 to 36,119    3.5 percent        45 percent   $440
337.4   36,120 to 41,279
337.5   41,820 to 47,789    3.7 percent        50 percent   $440 $1,190
337.6   41,280 to 58,829
337.7   47,790 to 63,329    4.0 percent        50 percent   $440 $1,190
337.8   63,330 to 64,519    4.0 percent        50 percent   $1,080
337.9   64,520 to 65,719    4.0 percent        50 percent   $  960
337.10  65,720 to 66,909    4.0 percent        50 percent   $  830
337.11  66,910 to 68,109    4.0 percent        50 percent   $  720
337.12  58,830 to 59,859
337.13  68,110 to 69,309    4.0 percent        50 percent   $310 $600
337.14  59,860 to 60,889
337.15  69,310 to 70,499    4.0 percent        50 percent   $210 $360
337.16  60,890 to 61,929
337.17  70,500 to 71,699    4.0 percent        50 percent   $100 $120
337.18     The payment made to a claimant shall be the amount of the 
337.19  state refund calculated under this subdivision.  No payment is 
337.20  allowed if the claimant's household income is $61,930 $71,700 or 
337.21  more. 
337.22     <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
337.23  refunds based on property taxes payable in 2002. 
337.24     Sec. 6.  Minnesota Statutes 2000, section 290A.04, 
337.25  subdivision 2a, is amended to read: 
337.26     Subd. 2a.  [RENTERS.] A claimant whose rent constituting 
337.27  property taxes exceeds the percentage of the household income 
337.28  stated below must pay an amount equal to the percent of income 
337.29  shown for the appropriate household income level along with the 
337.30  percent to be paid by the claimant of the remaining amount of 
337.31  rent constituting property taxes.  The state refund equals the 
337.32  amount of rent constituting property taxes that remain, up to 
337.33  the maximum state refund amount shown below.  
337.34                        Percent           Percent      Maximum
337.35  Household Income     of Income          Paid by        State
337.36                                          Claimant      Refund
337.37  $     0 to 3,099
337.38        0 to 3,589     1.0 percent       5 percent    $1,030 $1,190
337.39    3,100 to 4,129
337.40    3,590 to 4,779     1.0 percent      10 percent    $1,030 $1,190
337.41    4,130 to 5,159
337.42    4,780 to 5,969     1.1 percent      10 percent    $1,030 $1,190
337.43    5,160 to 7,229
337.44    5,970 to 8,369     1.2 percent      10 percent    $1,030 $1,190
337.45    7,230 to 9,289
337.46    8,370 to 10,759    1.3 percent      15 percent    $1,030 $1,190
337.47    9,290 to 10,319
337.48   10,760 to 11,949    1.4 percent      15 percent    $1,030 $1,190
337.49   10,320 to 11,349
337.50   11,950 to 13,139    1.4 percent      20 percent    $1,030 $1,190
337.51   11,350 to 13,419
337.52   13,140 to 15,539    1.5 percent      20 percent    $1,030 $1,190
337.53   13,420 to 14,449
337.54   15,540 to 16,729    1.6 percent      20 percent    $1,030 $1,190
338.1    14,450 to 15,479
338.2    16,730 to 17,919    1.7 percent      25 percent    $1,030 $1,190
338.3    15,480 to 17,549
338.4    17,920 to 20,319    1.8 percent      25 percent    $1,030 $1,190
338.5    17,550 to 18,579
338.6    20,320 to 21,509    1.9 percent      30 percent    $1,030 $1,190
338.7    18,580 to 19,609
338.8    21,510 to 22,699    2.0 percent      30 percent    $1,030 $1,190
338.9    19,610 to 20,639
338.10   22,700 to 23,899    2.2 percent      30 percent    $1,030 $1,190
338.11   20,640 to 21,669
338.12   23,900 to 25,089    2.4 percent      30 percent    $1,030 $1,190
338.13   21,670 to 22,709
338.14   25,090 to 26,289    2.6 percent      35 percent    $1,030 $1,190
338.15   22,710 to 23,739
338.16   26,290 to 27,489    2.7 percent      35 percent    $1,030 $1,190
338.17   23,740 to 24,769
338.18   27,490 to 28,679    2.8 percent      35 percent    $1,030 $1,190
338.19   24,770 to 25,799
338.20   28,680 to 29,869    2.9 percent      40 percent    $1,030 $1,190
338.21   25,800 to 26,839
338.22   29,870 to 31,079    3.0 percent      40 percent    $1,030 $1,190
338.23   26,840 to 27,869
338.24   31,080 to 32,269    3.1 percent      40 percent    $1,030 $1,190
338.25   27,870 to 28,899
338.26   32,270 to 33,459    3.2 percent      40 percent    $1,030 $1,190
338.27   28,900 to 29,929
338.28   33,460 to 34,649    3.3 percent      45 percent    $  930 $1,080
338.29   29,930 to 30,959
338.30   34,650 to 35,849    3.4 percent      45 percent    $  830 $  960
338.31   30,960 to 31,999
338.32   35,850 to 37,049    3.5 percent      45 percent    $  720 $  830
338.33   32,000 to 33,029
338.34   37,050 to 38,239    3.5 percent      50 percent    $  620 $  720
338.35   33,030 to 34,059
338.36   38,240 to 39,439    3.5 percent      50 percent    $  520 $  600
338.37   34,060 to 35,089
338.38   39,440 to 40,629    3.5 percent      50 percent    $  310 $  360
338.39   35,090 to 36,119
338.40   40,630 to 41,819    3.5 percent      50 percent    $  100 $  120
338.41     The payment made to a claimant is the amount of the state 
338.42  refund calculated under this subdivision.  No payment is allowed 
338.43  if the claimant's household income is $36,120 $41,820 or more. 
338.44     <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
338.45  refunds based on rent constituting property taxes paid in 2001. 
338.46     Sec. 7.  Minnesota Statutes 2000, section 290A.04, 
338.47  subdivision 4, is amended to read: 
338.48     Subd. 4.  [INFLATION ADJUSTMENT.] Beginning for property 
338.49  tax refunds payable in calendar year 1996 2002, the commissioner 
338.50  shall annually adjust the dollar amounts of the income 
338.51  thresholds and the maximum refunds under subdivisions 2 and 2a 
338.52  for inflation.  The commissioner shall make the inflation 
338.53  adjustments in accordance with section 290.06, subdivision 2d 1f 
338.54  of the Internal Revenue Code, except that for purposes of this 
338.55  subdivision the percentage increase shall be determined from the 
339.1   year ending on June 30, 1994 2000, to the year ending on June 30 
339.2   of the year preceding that in which the refund is payable.  The 
339.3   commissioner shall use the appropriate percentage increase to 
339.4   annually adjust the income thresholds and maximum refunds under 
339.5   subdivisions 2 and 2a for inflation without regard to whether or 
339.6   not the income tax brackets are adjusted for inflation in that 
339.7   year.  The commissioner shall round the thresholds and the 
339.8   maximum amounts, as adjusted to the nearest $10 amount.  If the 
339.9   amount ends in $5, the commissioner shall round it up to the 
339.10  next $10 amount.  
339.11     The commissioner shall annually announce the adjusted 
339.12  refund schedule at the same time provided under section 290.06.  
339.13  The determination of the commissioner under this subdivision is 
339.14  not a rule under the Administrative Procedure Act. 
339.15     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
339.16  following final enactment. 
339.17     Sec. 8.  [290A.046] [RENT CONSTITUTING PROPERTY TAXES.] 
339.18     (a)(1) For claims based on rent paid in calendar years 2001 
339.19  and 2002, the percentage of rent constituting property taxes is 
339.20  19 percent. 
339.21     (2) For claims based on rent paid in calendar year 2003 and 
339.22  later calendar years, the percentage is the percentage 
339.23  determined under paragraph (c), rounded to the nearest whole 
339.24  percent. 
339.25     (b)(1) By September 30, 2002, the commissioner shall 
339.26  estimate the average percentage that property taxes consist of 
339.27  rent paid for occupancy of residential properties in Minnesota 
339.28  for taxes and rents payable in the immediately preceding 
339.29  calendar year and make the estimate available to the public.  In 
339.30  preparing the estimate, the commissioner shall separately 
339.31  estimate the percentage for, at least, the metropolitan area, as 
339.32  defined in section 473.121, and the rest of the state and 
339.33  provide this information to the chairs of the committees of the 
339.34  house and senate with jurisdiction over taxes and tax laws. This 
339.35  percentage must be used in making the determination under 
339.36  paragraph (c) for refunds based on rent paid in calendar years 
340.1   2003 through 2008. 
340.2      (2) Beginning in 2008 and each year after 2008 that is 
340.3   evenly divisible by four, the commissioner shall estimate the 
340.4   average percentage that property taxes consist of rent paid for 
340.5   occupancy of residential properties in Minnesota for taxes and 
340.6   rents payable in the immediately preceding calendar year.  The 
340.7   commissioner shall make the estimate available to the public by 
340.8   September 30 of the year in which it was prepared.  This 
340.9   estimate must be used in making the determination under 
340.10  paragraph (c) for refunds based on rent paid in the four 
340.11  calendar years immediately following the year in which the 
340.12  estimate is published. 
340.13     (c) For claims based on rent paid in calendar year 2004 and 
340.14  later years, the percentage of rent constituting property taxes 
340.15  is the greater of: 
340.16     (1) the percentage estimate determined under paragraph (b); 
340.17  or 
340.18     (2) the percentage used in the immediately previous year 
340.19  minus the greater of (i) one-third of the difference between the 
340.20  percentage determined under paragraph (b) and the percentage 
340.21  used in the year the estimate was prepared or (ii) one 
340.22  percentage point. 
340.23     (d) In preparing the estimates under this section, the 
340.24  commissioner may use surveys of landlords, information obtained 
340.25  from assessors, or any other information that the commissioner 
340.26  considers appropriate.  The estimates are not subject to chapter 
340.27  14. 
340.28     <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
340.29  refunds based on rent paid in calendar year 2001. 
340.30     Sec. 9.  Minnesota Statutes 2000, section 290A.15, is 
340.31  amended to read: 
340.32     290A.15 [CLAIM APPLIED AGAINST OUTSTANDING LIABILITY.] 
340.33     The amount of any claim otherwise payable under this 
340.34  chapter may be applied by the commissioner against any 
340.35  delinquent tax liability of the claimant or spouse of the 
340.36  claimant payable to the department of revenue any member of the 
341.1   household.  If there are two members of the household, the 
341.2   commissioner may apply only one-half of a refund to the separate 
341.3   liability of either member of the household. 
341.4      <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
341.5   refunds paid on or after July 1, 2001. 
341.6      Sec. 10.  [REPEALER.] 
341.7      Minnesota Statutes 2000, section 290A.04, subdivision 2j, 
341.8   is repealed. 
341.9      <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
341.10  years beginning after December 31, 2001. 
341.11                             ARTICLE 11 
341.12                  SUSTAINABLE FOREST INCENTIVE ACT 
341.13     Section 1.  Minnesota Statutes 2000, section 88.49, 
341.14  subdivision 5, is amended to read: 
341.15     Subd. 5.  [CANCELLATION.] Upon the failure of the owner 
341.16  faithfully to fulfill and perform such contract or any provision 
341.17  thereof, or any requirement of sections 88.47 to 88.53, or any 
341.18  rule adopted by the commissioner thereunder, the commissioner 
341.19  may cancel the contract in the manner herein provided.  The 
341.20  commissioner shall give to the owner, in the manner prescribed 
341.21  in section 88.48, subdivision 4, 60 days' notice of a hearing 
341.22  thereon at which the owner may appear and show cause, if any, 
341.23  why the contract should not be canceled.  The commissioner shall 
341.24  thereupon determine whether the contract should be canceled and 
341.25  make an order to that effect.  Notice of the commissioner's 
341.26  determination and the making of the order shall be given to the 
341.27  owner in the manner provided in section 88.48, subdivision 4.  
341.28  On determining that the contract should be canceled and no 
341.29  appeal therefrom be taken, the commissioner shall send notice 
341.30  thereof to the auditor of the county and to the town clerk of 
341.31  the town affected and file with the recorder a certified copy of 
341.32  the order, who shall forthwith note the cancellation upon the 
341.33  record thereof, and thereupon the land therein described shall 
341.34  cease to be an auxiliary forest and, together with the timber 
341.35  thereon, become liable to all taxes and assessments that 
341.36  otherwise would have been levied against it had it never been an 
342.1   auxiliary forest from the time of the making of the contract, 
342.2   any provisions of the statutes of limitation to the contrary 
342.3   notwithstanding, less the amount of taxes paid under the 
342.4   provisions of section 88.51, subdivision 1, together with 
342.5   interest on such taxes and assessments at six percent per annum, 
342.6   but without penalties. 
342.7      The commissioner may in like manner and with like effect 
342.8   cancel the contract upon written application of the owner. 
342.9      The commissioner shall cancel any contract if the owner has 
342.10  made successful application under sections 270.31 to 270.39 
342.11  290C.01 to 290C.11 inclusive, the Minnesota Tree Growth Tax Law 
342.12  Sustainable Forest Incentive Act, and has paid to the county 
342.13  treasurer the difference between the amount which would have 
342.14  been paid had the land under contract been subject to the 
342.15  Minnesota Tree Growth Tax Law and the Sustainable Forest 
342.16  Incentive Act from the date of the filing of the contract and 
342.17  the amount actually paid under section 88.51, subdivisions 1 and 
342.18  2.  This tax difference must be calculated based on the years 
342.19  the lands would have been taxed under the Tree Growth Tax Law 
342.20  and the Sustainable Forest Incentive Act.  The sustainable 
342.21  forest tax difference is net of the refund provision of section 
342.22  290C.07.  If the amount which would have been paid, had the land 
342.23  under contract been under the Minnesota Tree Growth Tax Law and 
342.24  the Sustainable Forest Incentive Act from the date of the filing 
342.25  of the contract, is less than the amount actually paid under the 
342.26  contract, the cancellation shall be made without further payment 
342.27  by the owner. 
342.28     When the execution of any contract creating an auxiliary 
342.29  forest shall have been procured through fraud or deception 
342.30  practiced upon the county board or the commissioner or any other 
342.31  person or body representing the state, it may be canceled upon 
342.32  suit brought by the attorney general at the direction of the 
342.33  commissioner.  This cancellation shall have the same effect as 
342.34  the cancellation of a contract by the commissioner. 
342.35     Sec. 2.  Minnesota Statutes 2000, section 88.49, 
342.36  subdivision 9a, is amended to read: 
343.1      Subd. 9a.  [LAND TRADES WITH GOVERNMENTAL UNITS.] 
343.2   Notwithstanding subdivisions 6 and 9, or section 88.491, 
343.3   subdivision 2, if an owner trades land under auxiliary forest 
343.4   contract for land owned by a governmental unit and the owner 
343.5   agrees to use the land received in trade from the governmental 
343.6   unit for the production of forest products, upon resolution of 
343.7   the county board, no taxes and assessments shall be levied 
343.8   against the land traded, except that any current or delinquent 
343.9   annual taxes or yield taxes due on that land while it was under 
343.10  the auxiliary forest provision must be paid prior to the land 
343.11  exchange.  The land received from the governmental unit in the 
343.12  land trade automatically qualifies for inclusion in the Tree 
343.13  Growth Tax Law Sustainable Forest Incentive Act. 
343.14     Sec. 3.  Minnesota Statutes 2000, section 88.491, 
343.15  subdivision 2, is amended to read: 
343.16     Subd. 2.  [EFFECT OF EXPIRED CONTRACT.] When auxiliary 
343.17  forest contracts expire, or prior to expiration by mutual 
343.18  agreement between the land owner and the appropriate county 
343.19  office, the lands previously covered by an auxiliary forest 
343.20  contract automatically qualify for inclusion in the Tree Growth 
343.21  Tax Law under the provisions of the Sustainable Forest Incentive 
343.22  Act; provided that when such lands are included in the Tree 
343.23  Growth Tax Law Sustainable Forest Incentive Act prior to 
343.24  expiration of the auxiliary forest contract they will be 
343.25  transferred and a tax paid as provided in accordance with the 
343.26  provisions of section 88.49, subdivision 5, upon application and 
343.27  inclusion in the sustainable forest incentive program.  The land 
343.28  owner shall pay taxes in an amount equal to the difference 
343.29  between the amount which would have been paid from the date of 
343.30  the filing of the contract had the land under contract been 
343.31  subject to the Minnesota Tree Growth Tax Law from the date of 
343.32  the filing of the contract and, beginning with taxes payable in 
343.33  2003 enrolled in the sustainable forest incentive program, and 
343.34  the amount actually paid under section 88.51, subdivisions 1 and 
343.35  2. 
343.36     Sec. 4.  Minnesota Statutes 2000, section 270A.03, 
344.1   subdivision 7, is amended to read: 
344.2      Subd. 7.  [REFUND.] "Refund" means an individual income tax 
344.3   refund or political contribution refund, pursuant to chapter 
344.4   290, or a property tax credit or refund, pursuant to chapter 
344.5   290A, or a sustainable forest tax payment to a claimant under 
344.6   chapter 290C.  
344.7      For purposes of this chapter, lottery prizes, as set forth 
344.8   in section 349A.08, subdivision 8, and amounts granted to 
344.9   persons by the legislature on the recommendation of the joint 
344.10  senate-house of representatives subcommittee on claims shall be 
344.11  treated as refunds. 
344.12     In the case of a joint property tax refund payable to 
344.13  spouses under chapter 290A, the refund shall be considered as 
344.14  belonging to each spouse in the proportion of the total refund 
344.15  that equals each spouse's proportion of the total income 
344.16  determined under section 290A.03, subdivision 3.  In the case of 
344.17  a joint income tax refund under chapter 289A, the refund shall 
344.18  be considered as belonging to each spouse in the proportion of 
344.19  the total refund that equals each spouse's proportion of the 
344.20  total taxable income determined under section 290.01, 
344.21  subdivision 29.  The commissioner shall remit the entire refund 
344.22  to the claimant agency, which shall, upon the request of the 
344.23  spouse who does not owe the debt, determine the amount of the 
344.24  refund belonging to that spouse and refund the amount to that 
344.25  spouse.  For court fines, fees, and surcharges and court-ordered 
344.26  restitution under section 611A.04, subdivision 2, the notice 
344.27  provided by the commissioner of revenue under section 270A.07, 
344.28  subdivision 2, paragraph (b), serves as the appropriate legal 
344.29  notice to the spouse who does not owe the debt. 
344.30     <b>[EFFECTIVE DATE.]</b> This section is effective for refunds in 
344.31  2003 and thereafter. 
344.32     Sec. 5.  [290C.01] [PURPOSE.] 
344.33     It is the policy of this state to promote sustainable 
344.34  forest resource management on the state's public and private 
344.35  lands.  Recognizing that private forests comprise approximately 
344.36  one-half of the state forest land resources, that healthy and 
345.1   robust forest land provides significant benefits to the state of 
345.2   Minnesota, and that ad valorem property taxes represent a 
345.3   significant annual cost that can discourage long-term forest 
345.4   management investments, this chapter, hereafter referred to as 
345.5   the "Sustainable Forest Incentive Act," is enacted to encourage 
345.6   the state's private forest landowners to make a long-term 
345.7   commitment to sustainable forest management. 
345.8      <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
345.9   levied in 2002, payable in 2003, and thereafter. 
345.10     Sec. 6.  [290C.02] [DEFINITIONS.] 
345.11     Subdivision 1.  [APPLICATION.] When used in sections 
345.12  290C.01 to 290C.11, the terms in this section have the meanings 
345.13  given them. 
345.14     Subd. 2.  [APPROVED PLAN WRITERS.] "Approved plan writers" 
345.15  are natural resource professionals who are self-employed, 
345.16  employed by private companies or individuals, nonprofit 
345.17  organizations, local units of government, or public agencies, 
345.18  and who are approved by the commissioner of natural resources.  
345.19  Persons determined to be certified foresters by the Society of 
345.20  American Foresters shall be deemed to meet the standards 
345.21  required under this subdivision.  The commissioner of natural 
345.22  resources shall issue a unique identification number to each 
345.23  approved planner. 
345.24     Subd. 3.  [CLAIMANT.] "Claimant" means a person, as that 
345.25  term is defined in section 290.01, subdivision 2, who owns 
345.26  forest land in Minnesota and files an application authorized by 
345.27  the Sustainable Forest Incentive Act.  No more than one claimant 
345.28  is entitled to a payment under this act with respect to any 
345.29  tract, parcel, or piece of land enrolled under this act.  When 
345.30  enrolled forest land is owned by two or more persons, the owners 
345.31  must determine between them which person may claim the refunds 
345.32  provided under sections 290C.01 to 290C.11. 
345.33     Subd. 4.  [COMMISSIONER.] "Commissioner" means the 
345.34  commissioner of revenue. 
345.35     Subd. 5.  [CURRENT USE VALUE.] "Current use value" means 
345.36  the statewide average annual income per acre, multiplied by 90 
346.1   percent and divided by the capitalization rate determined under 
346.2   subdivision 9.  The statewide net annual income shall be a 
346.3   weighted average based on the most recent data as of July 1 of 
346.4   the computation year on stumpage prices and annual tree growth 
346.5   rates and acreage by cover type provided by the department of 
346.6   natural resources and the United States Forest Service. 
346.7      Subd. 6.  [FOREST LAND.] "Forest land" means land 
346.8   containing a minimum of 20 contiguous acres for which the owner 
346.9   has implemented a forest management plan that was prepared or 
346.10  updated within the past ten years by an approved plan writer.  
346.11  At least 50 percent of the contiguous acreage must meet the 
346.12  definition of forest land in section 88.01, subdivision 7.  For 
346.13  the purposes of sections 290C.01 to 209C.11, forest land does 
346.14  not include (i) land used for residential or agricultural 
346.15  purposes, (ii) land enrolled in the reinvest in Minnesota 
346.16  program, a state or federal conservation reserve or easement 
346.17  reserve program under sections 103F.501 to 103F.531, the 
346.18  Minnesota agricultural property tax law under section 273.111, 
346.19  or land subject to agricultural land preservation controls or 
346.20  restrictions as defined in section 40A.02 or under the 
346.21  Metropolitan Agricultural Preserves Act under chapter 473H, or 
346.22  (iii) land improved with a structure, pavement, sewer, campsite, 
346.23  or any road, other than a township road, used for purposes not 
346.24  prescribed in the forest management plan. 
346.25     Subd. 7.  [FOREST MANAGEMENT PLAN.] "Forest management plan"
346.26  means a written document providing a framework for site-specific 
346.27  healthy, productive, and sustainable forest resources.  A forest 
346.28  management plan must include at least the following:  (i) 
346.29  owner-specific forest management goals for the property 
346.30  including, when available, goals for individual cover types; 
346.31  (ii) a reliable field inventory of the individual forest cover 
346.32  types, their age, and density; (iii) a description of the soil 
346.33  type and quality; (iv) an aerial photo and/or map of the 
346.34  vegetation and other natural features of the property clearly 
346.35  indicating the boundaries of the property and of the forest 
346.36  land; (v) the proposed future conditions of the property; (vi) 
347.1   prescriptions to meet proposed future conditions of the 
347.2   property; (vii) a recommended timetable for implementing the 
347.3   prescribed activities; and (viii) a legal description of the 
347.4   parcels encompassing the parcels included in the plan.  All 
347.5   management activities prescribed in a plan must be in accordance 
347.6   with the recommended timber harvesting and forest management 
347.7   guidelines developed under section 89A.05.  The commissioner of 
347.8   natural resources shall provide a framework for plan content and 
347.9   updating and revising plans. 
347.10     Subd. 8.  [TIMBER HARVESTING AND FOREST MANAGEMENT 
347.11  GUIDELINES.] "Timber harvesting and forest management guidelines"
347.12  means guidelines developed under section 89A.05 and adopted by 
347.13  the Minnesota forest resources council in 1998. 
347.14     Subd. 9.  [CAPITALIZATION RATE.] By July 1 of each year, 
347.15  the commissioner shall determine a statewide capitalization rate 
347.16  for use under this act.  The rate shall be the average annual 
347.17  effective interest rate for St. Paul on new loans under the Farm 
347.18  Credit Bank system calculated under section 2032A(e)(7)(A) of 
347.19  the Internal Revenue Code. 
347.20     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
347.21  levied in 2002, payable in 2003, and thereafter. 
347.22     Sec. 7.  [290C.03] [ELIGIBILITY REQUIREMENTS.] 
347.23     (a) Property may be enrolled in the sustainable forest 
347.24  incentive program under this chapter if all of the following 
347.25  conditions are met: 
347.26     (1) property consists of at least 20 contiguous acres and 
347.27  at least 50 percent of the land must meet the definition of 
347.28  forest land in section 88.01, subdivision 7, during the 
347.29  enrollment; 
347.30     (2) a forest management plan for the property must be 
347.31  prepared by an approved plan writer and implemented during the 
347.32  period in which the land is enrolled; 
347.33     (3) timber harvesting and forest management guidelines must 
347.34  be used in conjunction with any timber harvesting or forest 
347.35  management activities conducted on the land during the period in 
347.36  which the land is enrolled; 
348.1      (4) the property must be enrolled for a minimum of eight 
348.2   years; 
348.3      (5) there are no delinquent property taxes on the property; 
348.4   and 
348.5      (6) claimants enrolling at least 80 contiguous acres in the 
348.6   sustainable forest incentive program must allow year-round, 
348.7   nonmotorized access to fish and wildlife resources on enrolled 
348.8   land except within one-fourth mile of a permanent dwelling or 
348.9   during periods of high fire hazard as determined by the 
348.10  commissioner of natural resources.  For purposes of this clause, 
348.11  acres are considered to be contiguous even if they are separated 
348.12  by a road, waterway, railroad track, or other similar 
348.13  intervening type of property. 
348.14     (b) Claimants required to allow access under clause (6) do 
348.15  not by that action: 
348.16     (1) extend any assurance that the land is safe for any 
348.17  purpose; 
348.18     (2) confer upon the person the legal status of an invitee 
348.19  or licensee to whom a duty of care is owed; or 
348.20     (3) assume responsibility for or incur liability for any 
348.21  injury to the person or property caused by an act or omission of 
348.22  the person. 
348.23     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
348.24  levied in 2002, payable in 2003, and thereafter. 
348.25     Sec. 8.  [290C.04] [APPLICATIONS.] 
348.26     (a) A landowner may apply to enroll forest land for the 
348.27  sustainable forest incentive program under this act.  The 
348.28  claimant must complete, sign, and submit an application to the 
348.29  commissioner by September 30 in order for the land to become 
348.30  eligible beginning in the next year.  The application shall be 
348.31  on a form prescribed by the commissioner and must include the 
348.32  information the commissioner deems necessary.  At a minimum, the 
348.33  application must show the following information for the land and 
348.34  the claimant:  (i) the claimant's social security number or 
348.35  state or federal business tax registration number and date of 
348.36  birth, (ii) the claimant's address, (iii) the claimant's 
349.1   signature, (iv) the county's parcel identification numbers for 
349.2   the tax parcels that completely contain the claimant's forest 
349.3   land that is sought to be enrolled, (v) the number of acres 
349.4   eligible for enrollment in the program, (vi) the approved plan 
349.5   writer's signature and identification number, and (vii) proof, 
349.6   in a form specified by the commissioner, that the claimant has 
349.7   executed and acknowledged in the manner required by law for a 
349.8   deed, and recorded, a covenant that the land is not and shall 
349.9   not be developed in a manner inconsistent with the requirements 
349.10  and conditions of chapter 290C.  The covenant shall state in 
349.11  writing that the covenant is binding on the claimant and the 
349.12  claimant's successor or assignee, and that it runs with the land 
349.13  for a period of not less than eight years.  The commissioner 
349.14  shall specify the form of the covenant and provide copies upon 
349.15  request.  The covenant must include a legal description that 
349.16  encompasses all the forest land that the claimant wishes to 
349.17  enroll under this section or the certificate of title number for 
349.18  that land if it is registered land. 
349.19     (b) In all cases, the commissioner shall notify the 
349.20  claimant within 90 days after receipt of a completed application 
349.21  that either the land has or has not been approved for enrollment.
349.22  The claimant for which the application is denied may, within 60 
349.23  days of receipt of a notice of denial, appeal the denial to the 
349.24  commissioner. 
349.25     (c) Within 45 days after the denial of an application, or 
349.26  within 45 days after the denial of an appeal, the commissioner 
349.27  shall execute and acknowledge a document releasing the land from 
349.28  the covenant required under this chapter.  The document must be 
349.29  mailed to the claimant and is entitled to be recorded. 
349.30     (d) The social security numbers collected from individuals 
349.31  under this section are private data as provided in section 13.49.
349.32  The state or federal business tax registration number and date 
349.33  of birth data collected under this section are also private data 
349.34  but may be shared with county assessors for purposes of tax 
349.35  administration and with county treasurers for purposes of the 
349.36  revenue recapture under chapter 270A. 
350.1      <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
350.2   levied in 2002, payable in 2003, and thereafter. 
350.3      Sec. 9.  [290C.05] [ANNUAL CERTIFICATION.] 
350.4      On or before July 1 of each year, beginning with the year 
350.5   after the claimant has received an approved application, the 
350.6   commissioner shall send each claimant enrolled under the 
350.7   sustainable forest incentive program a certification form.  The 
350.8   claimant must sign the certification, attesting that the 
350.9   requirements and conditions for continued enrollment in the 
350.10  program are currently being met, and must return the signed 
350.11  certification form to the commissioner by August 15 of that same 
350.12  year.  Failure to return an annual certification form by the due 
350.13  date shall result in removal of the lands from the provisions of 
350.14  the sustainable forest incentive program, and the imposition of 
350.15  any applicable removal penalty.  The claimant may appeal the 
350.16  removal and any associated penalty according to the procedures 
350.17  and within the time allowed under this chapter. 
350.18     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
350.19  levied in 2002, payable in 2003, and thereafter. 
350.20     Sec. 10.  [290C.06] [CALCULATION OF AVERAGE TAXABLE MARKET 
350.21  VALUE; TIMBERLAND.] 
350.22     The commissioner shall annually calculate a statewide 
350.23  average taxable market value per acre for class 2b timberland 
350.24  under section 273.13, subdivision 23, paragraph (b). 
350.25     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
350.26  levied in 2002, payable in 2003, and thereafter. 
350.27     Sec. 11.  [290C.07] [CALCULATION OF INCENTIVE PAYMENT.] 
350.28     An approved claimant under the sustainable forest incentive 
350.29  program is eligible to receive an annual payment.  The payment 
350.30  shall equal the greater of: 
350.31     (1) the difference between the property tax that would be 
350.32  paid on the property using the previous year's statewide average 
350.33  total township tax rate and the class rate for class 2b 
350.34  timberland under section 273.13, subdivision 23, paragraph (b), 
350.35  if the property were valued at (i) the average statewide 
350.36  timberland market value per acre calculated under section 
351.1   290C.06, and (ii) the average statewide timberland current use 
351.2   value per acre calculated under section 290C.02, subdivision 5; 
351.3      (2) two-thirds of the property tax amount determined by 
351.4   using the previous year's statewide average total township tax 
351.5   rate, the estimated market value per acre as calculated in 
351.6   section 290C.06, and the class rate for 2b timberland under 
351.7   section 273.13, subdivision 23, paragraph (b); or 
351.8      (3) $1.50 per acre for each acre enrolled in the 
351.9   sustainable forest incentive program. 
351.10     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
351.11  levied in 2002, payable in 2003, and thereafter. 
351.12     Sec. 12.  [290C.08] [ANNUAL INCENTIVE PAYMENT; 
351.13  APPROPRIATION.] 
351.14     Subdivision 1.  [ANNUAL PAYMENT.] An incentive payment on 
351.15  enrolled land will be made annually to each claimant in the 
351.16  amount determined under section 290C.07.  The incentive payment 
351.17  shall be paid on or before October 1 each year based on the 
351.18  certifications due August 15 of that year.  Interest at the 
351.19  annual rate determined under section 270.75 shall be included 
351.20  with any incentive payment not paid by the later of October 1 of 
351.21  the year the certification was due, or 45 days after the 
351.22  completed certification was returned or filed if the 
351.23  commissioner accepts a certification filed after August 15 of 
351.24  the taxes payable year as the resolution of an appeal. 
351.25     Subd. 2.  [APPROPRIATION.] The amount necessary to make the 
351.26  payments under this section is annually appropriated to the 
351.27  commissioner from the general fund. 
351.28     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
351.29  levied in 2002, payable in 2003, and thereafter. 
351.30     Sec. 13.  [290C.09] [REMOVAL FOR PROPERTY TAX DELINQUENCY.] 
351.31     The commissioner shall immediately remove any property 
351.32  enrolled in the sustainable forest incentive program for which 
351.33  taxes are determined to be delinquent as provided in chapter 279 
351.34  and shall notify the claimant of such action.  Lands terminated 
351.35  from the sustainable forest incentive program under this section 
351.36  are not entitled to any payments provided in this chapter and 
352.1   are subject to removal penalties prescribed in section 290C.11.  
352.2   The claimant has 90 days from the receipt of notice from the 
352.3   commissioner under this section to pay the delinquent taxes.  If 
352.4   the delinquent taxes are paid within this 90-day period, the 
352.5   lands shall be reinstated in the program as if they had not been 
352.6   withdrawn and without the payment of a penalty. 
352.7      <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
352.8   levied in 2002, payable in 2003, and thereafter. 
352.9      Sec. 14.  [290C.10] [WITHDRAWAL PROCEDURES.] 
352.10     An approved claimant under the sustainable forest incentive 
352.11  program for a minimum of four years may notify the commissioner 
352.12  of the intent to terminate enrollment.  Within 90 days of 
352.13  receipt of notice to terminate enrollment, the commissioner 
352.14  shall inform the claimant in writing, acknowledging receipt of 
352.15  this notice and indicating the effective date of termination 
352.16  from the sustainable forest incentive program.  Termination of 
352.17  enrollment in the sustainable forest incentive program occurs on 
352.18  January 1 of the fifth calendar year that begins after receipt 
352.19  by the commissioner of the termination notice.  After the 
352.20  commissioner issues an effective date of termination, a claimant 
352.21  wishing to continue the property's enrollment in the sustainable 
352.22  forest incentive program beyond the termination date must apply 
352.23  for enrollment as prescribed in section 290C.04.  A claimant who 
352.24  withdraws a parcel of land from this program may not reenroll 
352.25  the parcel for a period of three years.  Within 45 days after 
352.26  the termination date, the commissioner shall execute and 
352.27  acknowledge a document releasing the land from the covenant 
352.28  required under this chapter.  The document must be mailed to the 
352.29  claimant and is entitled to be recorded.  The commissioner may 
352.30  allow early withdrawal from the Sustainable Forest Incentive Act 
352.31  without penalty in cases of condemnation for a public purpose 
352.32  notwithstanding the provisions of this section. 
352.33     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
352.34  levied in 2002, payable in 2003, and thereafter. 
352.35     Sec. 15.  [290C.11] [PENALTIES FOR REMOVAL.] 
352.36     (a) If the commissioner determines that property enrolled 
353.1   in the sustainable forest incentive program is in violation of 
353.2   the conditions for enrollment as specified in section 290C.03, 
353.3   the commissioner shall notify the claimant of the intent to 
353.4   remove all enrolled land from the sustainable forest incentive 
353.5   program.  The claimant has 90 days to appeal this determination. 
353.6   The appeal must be made in writing to the commissioner, who 
353.7   shall, within 60 days, notify the claimant as to the outcome of 
353.8   the appeal.  Within 60 days after the commissioner denies an 
353.9   appeal, or within 120 days after the commissioner received a 
353.10  written appeal if the commissioner has not made a determination 
353.11  in that time, the owner may appeal to tax court under chapter 
353.12  271 as if the appeal is from an order of the commissioner. 
353.13     (b) If the commissioner determines the property is to be 
353.14  removed from the sustainable forest incentive program, the 
353.15  claimant is liable for payment to the commissioner in the amount 
353.16  equal to the payments received under this chapter for the 
353.17  previous four-year period, plus interest.  The claimant has 90 
353.18  days to satisfy the payment for removal of land from the 
353.19  sustainable forest incentive program under this section.  If the 
353.20  penalty is not paid within the 90-day period under paragraph 
353.21  (a), the commissioner shall certify the amount to the county 
353.22  auditor for collection as a part of the general ad valorem real 
353.23  property taxes on the land in the following taxes payable year.  
353.24     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
353.25  levied in 2002, payable in 2003, and thereafter. 
353.26     Sec. 16.  [REPEALER.] 
353.27     Minnesota Statutes 2000, sections 270.31; 270.32; 270.33; 
353.28  270.34; 270.35; 270.36; 270.37; 270.38; and 270.39, are repealed.
353.29     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
353.30  levied in 2002, payable in 2003, and thereafter. 
353.31                             ARTICLE 12
353.32                         LOCAL DEVELOPMENT 
353.33     Section 1.  Minnesota Statutes 2000, section 276A.01, 
353.34  subdivision 3, is amended to read: 
353.35     Subd. 3.  [COMMERCIAL-INDUSTRIAL PROPERTY.] 
353.36  "Commercial-industrial property" means the following categories 
354.1   of property, as defined in section 273.13, excluding that 
354.2   portion of the property (i) that may, by law, constitute the tax 
354.3   base for a tax increment pledged pursuant to section 469.042 or 
354.4   469.162 or sections 469.174 to 469.178, certification of which 
354.5   was requested prior to May 1, 1996, to the extent and while the 
354.6   tax increment is so pledged; or (ii) that is exempt from 
354.7   taxation under section 272.02:  
354.8      (1) that portion of class 5 property consisting of unmined 
354.9   iron ore and low-grade iron-bearing formations as defined in 
354.10  section 273.14, tools, implements, and machinery, except the 
354.11  portion of high voltage transmission lines, the value of which 
354.12  is deducted from net tax capacity under section 273.425; and 
354.13     (2) that portion of class 3 and class 5 property which is 
354.14  either used or zoned for use for any commercial or industrial 
354.15  purpose, except for such property which is, or, in the case of 
354.16  property under construction, will when completed be used 
354.17  exclusively for residential occupancy and the provision of 
354.18  services to residential occupants thereof.  Property must be 
354.19  considered as used exclusively for residential occupancy only if 
354.20  each of not less than 80 percent of its occupied residential 
354.21  units is, or, in the case of property under construction, will 
354.22  when completed be occupied under an oral or written agreement 
354.23  for occupancy over a continuous period of not less than 30 days. 
354.24     If the classification of property prescribed by section 
354.25  273.13 is modified by legislative amendment, the references in 
354.26  this subdivision are to the successor class or classes of 
354.27  property, or portions thereof, that include the kinds of 
354.28  property designated in this subdivision.  
354.29     <b>[EFFECTIVE DATE.]</b> This section is effective retroactive to 
354.30  July 1, 1997, for taxes levied in 1997, payable in 1998, and 
354.31  subsequent years. 
354.32     Sec. 2.  Minnesota Statutes 2000, section 469.169, is 
354.33  amended by adding a subdivision to read: 
354.34     Subd. 15.  [ADDITIONAL BORDER CITY ALLOCATIONS.] In 
354.35  addition to tax reductions authorized in subdivisions 7 to 14, 
354.36  the commissioner shall allocate $1,500,000 for tax reductions to 
355.1   border city enterprise zones in cities located on the western 
355.2   border of the state.  The commissioner shall make allocations to 
355.3   zones in cities on the western border on a per capita basis.  
355.4   Allocations made under this subdivision may be used for tax 
355.5   reductions as provided in section 469.171, or for other offsets 
355.6   of taxes imposed on or remitted by businesses located in the 
355.7   enterprise zone, but only if the municipality determines that 
355.8   the granting of the tax reduction or offset is necessary in 
355.9   order to retain a business within or attract a business to the 
355.10  zone.  Limitations on allocations under subdivision 7 do not 
355.11  apply to this allocation. 
355.12     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
355.13  following final enactment. 
355.14     Sec. 3.  Minnesota Statutes 2000, section 469.174, 
355.15  subdivision 1, is amended to read: 
355.16     Subdivision 1.  [GENERALLY.] In sections 469.174 to 469.179 
355.17  469.1799, the terms defined in this section have the meanings 
355.18  given them herein, unless the context indicates a different 
355.19  meaning. 
355.20     <b>[EFFECTIVE DATE.]</b> This section is effective for all tax 
355.21  increment financing districts, regardless of when the request 
355.22  for certification was made. 
355.23     Sec. 4.  Minnesota Statutes 2000, section 469.174, 
355.24  subdivision 3, is amended to read: 
355.25     Subd. 3.  [BONDS.] "Bonds" means any bonds, including 
355.26  refunding bonds, notes, interim certificates, 
355.27  debentures, interfund loans or advances, or other obligations 
355.28  issued by an authority under section 469.178 or which were 
355.29  issued in aid of a project under any other law, except revenue 
355.30  bonds issued pursuant to sections 469.152 to 469.165, prior to 
355.31  August 1, 1979. 
355.32     Sec. 5.  Minnesota Statutes 2000, section 469.174, 
355.33  subdivision 10, is amended to read: 
355.34     Subd. 10.  [REDEVELOPMENT DISTRICT.] (a) "Redevelopment 
355.35  district" means a type of tax increment financing district 
355.36  consisting of a project, or portions of a project, within which 
356.1   the authority finds by resolution that one or more of the 
356.2   following conditions, reasonably distributed throughout the 
356.3   district, exists: 
356.4      (1) parcels consisting of 70 percent of the area of the 
356.5   district are occupied by buildings, streets, utilities, paved or 
356.6   gravel parking lots, or other improvements similar structures 
356.7   and more than 50 percent of the buildings, not including 
356.8   outbuildings, are structurally substandard to a degree requiring 
356.9   substantial renovation or clearance; or 
356.10     (2) the property consists of vacant, unused, underused, 
356.11  inappropriately used, or infrequently used railyards, rail 
356.12  storage facilities, or excessive or vacated railroad 
356.13  rights-of-way; or 
356.14     (3) tank facilities, or property whose immediately previous 
356.15  use was for tank facilities, as defined in section 115C.02, 
356.16  subdivision 15, if the tank facilities: 
356.17     (i) have or had a capacity of more than 1,000,000 gallons; 
356.18     (ii) are located adjacent to rail facilities; and 
356.19     (iii) have been removed or are unused, underused, 
356.20  inappropriately used, or infrequently used. 
356.21     (b) For purposes of this subdivision, "structurally 
356.22  substandard" shall mean containing defects in structural 
356.23  elements or a combination of deficiencies in essential utilities 
356.24  and facilities, light and ventilation, fire protection including 
356.25  adequate egress, layout and condition of interior partitions, or 
356.26  similar factors, which defects or deficiencies are of sufficient 
356.27  total significance to justify substantial renovation or 
356.28  clearance means a building that: 
356.29     (1) is in an advanced state of disrepair or neglect of 
356.30  necessary repairs to the primary and structural components of 
356.31  the building that a documented building condition analysis 
356.32  determines that major repair is required or the defects are so 
356.33  serious and so extensive that the building must be removed; or 
356.34     (2) has major defects in secondary building components, 
356.35  such as doors, windows, porches, gutters and downspouts, and 
356.36  fascia, requiring repairs costing 25 percent of the estimated 
357.1   market value of the building.  
357.2      (c) A building is not structurally substandard if it is in 
357.3   compliance with the building code applicable to new buildings or 
357.4   could be modified to satisfy the building code at a cost of less 
357.5   than 15 percent of the cost of constructing a new structure of 
357.6   the same square footage and type on the site.  The municipality 
357.7   may find that a building is not disqualified as structurally 
357.8   substandard under the preceding sentence on the basis of 
357.9   reasonably available evidence, such as the size, type, and age 
357.10  of the building, the average cost of plumbing, electrical, or 
357.11  structural repairs, or other similar reliable evidence.  The 
357.12  municipality may not make such a determination without an 
357.13  interior inspection of the property, but need not have an 
357.14  independent, expert appraisal prepared of the cost of repair and 
357.15  rehabilitation of the building.  An interior inspection of the 
357.16  property is not required, if the municipality finds that (1) the 
357.17  municipality or authority is unable to gain access to the 
357.18  property after using its best efforts to obtain permission from 
357.19  the party that owns or controls the property; and (2) the 
357.20  evidence otherwise supports a reasonable conclusion that the 
357.21  building is structurally substandard.  Items of evidence that 
357.22  support such a conclusion include recent fire or police 
357.23  inspections, on-site property tax appraisals or housing 
357.24  inspections, exterior evidence of deterioration, or other 
357.25  similar reliable evidence.  Written documentation of the 
357.26  findings and reasons why an interior inspection was not 
357.27  conducted must be made and retained under section 469.175, 
357.28  subdivision 3, clause (1). 
357.29     (d) A parcel is deemed to be occupied by a structurally 
357.30  substandard building for purposes of the finding under paragraph 
357.31  (a) if all of the following conditions are met: 
357.32     (1) the parcel was occupied by a substandard building 
357.33  within three years of the filing of the request for 
357.34  certification of the parcel as part of the district with the 
357.35  county auditor; 
357.36     (2) the substandard building was demolished or removed by 
358.1   the authority or the demolition or removal was financed by the 
358.2   authority or was done by a developer under a development 
358.3   agreement with the authority; 
358.4      (3) the authority found by resolution before the demolition 
358.5   or removal that the parcel was occupied by a structurally 
358.6   substandard building and that after demolition and clearance the 
358.7   authority intended to include the parcel within a district; and 
358.8      (4) upon filing the request for certification of the tax 
358.9   capacity of the parcel as part of a district, the authority 
358.10  notifies the county auditor that the original tax capacity of 
358.11  the parcel must be adjusted as provided by section 469.177, 
358.12  subdivision 1, paragraph (h). 
358.13     (e) For purposes of this subdivision, a parcel is not 
358.14  occupied by buildings, streets, utilities, paved or gravel 
358.15  parking lots, or other improvements similar structures unless 15 
358.16  percent of the area of the parcel contains improvements 
358.17  buildings, streets, utilities, paved or gravel parking lots, or 
358.18  other similar structures. 
358.19     (f) For districts consisting of two or more noncontiguous 
358.20  areas, each area must qualify as a redevelopment district under 
358.21  paragraph (a) to be included in the district, and the entire 
358.22  area of the district must satisfy paragraph (a). 
358.23     <b>[EFFECTIVE DATE.]</b> This section is effective for districts 
358.24  for which the request for certification is made after June 30, 
358.25  2001, except that the amendments to paragraph (b) are effective 
358.26  for districts for which the request for certification is made 
358.27  after September 30, 2001. 
358.28     Sec. 6.  Minnesota Statutes 2000, section 469.174, 
358.29  subdivision 10a, is amended to read: 
358.30     Subd. 10a.  [RENEWAL AND RENOVATION DISTRICT.] (a) "Renewal 
358.31  and renovation district" means a type of tax increment financing 
358.32  district consisting of a project, or portions of a project, 
358.33  within which the authority finds by resolution that: 
358.34     (1)(i) parcels consisting of 70 percent of the area of the 
358.35  district are occupied by buildings, streets, utilities, paved or 
358.36  gravel parking lots, or other improvements similar structures; 
359.1   (ii) 20 percent of the buildings are structurally substandard; 
359.2   and (iii) 30 percent of the other buildings require substantial 
359.3   renovation or clearance to remove existing conditions such as:  
359.4   inadequate street layout, incompatible uses or land use 
359.5   relationships, overcrowding of buildings on the land, excessive 
359.6   dwelling unit density, obsolete buildings not suitable for 
359.7   improvement or conversion, or other identified hazards to the 
359.8   health, safety, and general well-being of the community; and 
359.9      (2) the conditions described in clause (1) are reasonably 
359.10  distributed throughout the geographic area of the district. 
359.11     (b) For purposes of determining whether a building is 
359.12  structurally substandard, whether parcels are occupied by 
359.13  buildings, streets, utilities, paved or gravel parking lots, or 
359.14  other improvements similar structures, or whether noncontiguous 
359.15  areas qualify, the provisions of subdivision 10, 
359.16  paragraphs (b), (c), (e), and (d) (f) apply.  
359.17     <b>[EFFECTIVE DATE.]</b> This section is effective for districts 
359.18  for which the requests for certification are made after June 30, 
359.19  1997, except the provision requiring parcels to be occupied by 
359.20  structures is effective for districts for which the request for 
359.21  certification is made after June 30, 2001. 
359.22     Sec. 7.  Minnesota Statutes 2000, section 469.174, 
359.23  subdivision 12, is amended to read: 
359.24     Subd. 12.  [ECONOMIC DEVELOPMENT DISTRICT.] "Economic 
359.25  development district" means a type of tax increment financing 
359.26  district which consists of any project, or portions of a 
359.27  project, not meeting the requirements found in the definition of 
359.28  redevelopment district, renewal and renovation district, soils 
359.29  condition district, or housing district, but which the authority 
359.30  finds to be in the public interest because: 
359.31     (1) it will discourage commerce, industry, or manufacturing 
359.32  from moving their operations to another state or municipality; 
359.33  or 
359.34     (2) it will result in increased employment in the state; or 
359.35     (3) it will result in preservation and enhancement of the 
359.36  tax base of the state. 
360.1      <b>[EFFECTIVE DATE.]</b> This section is effective for districts 
360.2   for which the request for certification is made after June 30, 
360.3   2001. 
360.4      Sec. 8.  Minnesota Statutes 2000, section 469.174, 
360.5   subdivision 25, is amended to read: 
360.6      Subd. 25.  [INCREMENT.] "Increment," "tax increment," "tax 
360.7   increment revenues," "revenues derived from tax increment," and 
360.8   other similar terms for a district include: 
360.9      (1) taxes paid by the captured net tax capacity, but 
360.10  excluding any excess taxes, as computed under section 469.177; 
360.11     (2) the proceeds from the sale or lease of property, 
360.12  tangible or intangible, purchased by the authority with tax 
360.13  increments; 
360.14     (3) repayments of debt service payments received on loans 
360.15  or other advances made by the authority with tax increments; and 
360.16     (4) interest or other investment earnings, other than 
360.17  payments under loans or other advances within the meaning of 
360.18  clause (3), on or from tax increments. 
360.19     <b>[EFFECTIVE DATE.]</b> This section is effective retroactive to 
360.20  the effective date of Minnesota Statutes, section 469.174, 
360.21  subdivision 25. 
360.22     Sec. 9.  Minnesota Statutes 2000, section 469.175, 
360.23  subdivision 1, is amended to read: 
360.24     Subdivision 1.  [TAX INCREMENT FINANCING PLAN.] (a) A tax 
360.25  increment financing plan shall contain:  
360.26     (1) a statement of objectives of an authority for the 
360.27  improvement of a project; 
360.28     (2) a statement as to the development program for the 
360.29  project, including the property within the project, if any, that 
360.30  the authority intends to acquire; 
360.31     (3) a list of any development activities that the plan 
360.32  proposes to take place within the project, for which contracts 
360.33  have been entered into at the time of the preparation of the 
360.34  plan, including the names of the parties to the contract, the 
360.35  activity governed by the contract, the cost stated in the 
360.36  contract, and the expected date of completion of that activity; 
361.1      (4) identification or description of the type of any other 
361.2   specific development reasonably expected to take place within 
361.3   the project, and the date when the development is likely to 
361.4   occur; 
361.5      (5) estimates of the following:  
361.6      (i) cost of the project, including administration expenses; 
361.7      (ii) amount of bonded indebtedness to be incurred; 
361.8      (iii) sources of revenue to finance or otherwise pay public 
361.9   costs; 
361.10     (iv) (ii) the most recent net tax capacity of taxable real 
361.11  property within the tax increment financing district and within 
361.12  any subdistrict; 
361.13     (v) (iii) the estimated captured net tax capacity of the 
361.14  tax increment financing district at completion; and 
361.15     (vi) (iv) the duration of the tax increment financing 
361.16  district's and any subdistrict's existence; 
361.17     (6) a budget specifying the following items for the project 
361.18  to be paid with tax increments from the district: 
361.19     (i) the total cost of the district, broken down by at least 
361.20  the following items (to the extent the plan permits spending for 
361.21  items within these categories and subcategories within an item, 
361.22  if the authority so elects): 
361.23     (A) administrative expenses; 
361.24     (B) property acquisition and site preparation, including 
361.25  but not limited to clearance and soils preparation; 
361.26     (C) public improvements (other than public improvements 
361.27  that are part of site preparation); and 
361.28     (D) amounts for assistance to construct, acquire, or 
361.29  improve other improvements or other eligible forms of 
361.30  assistance; and 
361.31     (ii) the amount of bonded indebtedness to be incurred; 
361.32     (6) (7) statements of the authority's alternate estimates 
361.33  of the impact of tax increment financing on the net tax 
361.34  capacities of all taxing jurisdictions in which the tax 
361.35  increment financing district is located in whole or in part.  
361.36  For purposes of one statement, the authority shall assume that 
362.1   the estimated captured net tax capacity would be available to 
362.2   the taxing jurisdictions without creation of the district, and 
362.3   for purposes of the second statement, the authority shall assume 
362.4   that none of the estimated captured net tax capacity would be 
362.5   available to the taxing jurisdictions without creation of the 
362.6   district or subdistrict; 
362.7      (7) (8) identification and description of studies and 
362.8   analyses used to make the determination set forth in subdivision 
362.9   3, clause (2); and 
362.10     (8) (9) identification of all parcels to be included in the 
362.11  district or any subdistrict. 
362.12     (b) For a housing district, redevelopment district, or a 
362.13  hazardous substance subdistrict, the authority may elect in the 
362.14  tax increment financing plan to provide for the identification 
362.15  of a minimum market value in the plan, development agreement, or 
362.16  assessment agreement, and provide that increment is first 
362.17  received by the authority when (1) the market value of the 
362.18  improvements as determined by the assessor reaches or exceeds 
362.19  the minimum market value, or (2) four years has elapsed from the 
362.20  date of certification of the original net tax capacity of the 
362.21  taxable real property in the district or subdistrict by the 
362.22  county auditor, whichever is earlier. 
362.23     <b>[EFFECTIVE DATE.]</b> The amendments to paragraph (a) are 
362.24  effective for tax increment financing plans approved after June 
362.25  30, 2001, and for amendments to tax increment financing plans 
362.26  modifying the total estimated tax increment expenditures 
362.27  approved after June 30, 2001.  The amendments to paragraph (b) 
362.28  are effective for requests for certification of tax increment 
362.29  financing districts received after June 30, 2001. 
362.30     Sec. 10.  Minnesota Statutes 2000, section 469.175, 
362.31  subdivision 3, is amended to read: 
362.32     Subd. 3.  [MUNICIPALITY APPROVAL.] A county auditor shall 
362.33  not certify the original net tax capacity of a tax increment 
362.34  financing district until the tax increment financing plan 
362.35  proposed for that district has been approved by the municipality 
362.36  in which the district is located.  If an authority that proposes 
363.1   to establish a tax increment financing district and the 
363.2   municipality are not the same, the authority shall apply to the 
363.3   municipality in which the district is proposed to be located and 
363.4   shall obtain the approval of its tax increment financing plan by 
363.5   the municipality before the authority may use tax increment 
363.6   financing.  The municipality shall approve the tax increment 
363.7   financing plan only after a public hearing thereon after 
363.8   published notice in a newspaper of general circulation in the 
363.9   municipality at least once not less than ten days nor more than 
363.10  30 days prior to the date of the hearing.  The published notice 
363.11  must include a map of the area of the district from which 
363.12  increments may be collected and, if the project area includes 
363.13  additional area, a map of the project area in which the 
363.14  increments may be expended.  The hearing may be held before or 
363.15  after the approval or creation of the project or it may be held 
363.16  in conjunction with a hearing to approve the project.  Before or 
363.17  at the time of approval of the tax increment financing plan, the 
363.18  municipality shall make the following findings, and shall set 
363.19  forth in writing the reasons and supporting facts for each 
363.20  determination: 
363.21     (1) that the proposed tax increment financing district is a 
363.22  redevelopment district, a renewal or renovation district, a 
363.23  housing district, a soils condition district, or an economic 
363.24  development district; if the proposed district is a 
363.25  redevelopment district or a renewal or renovation district, the 
363.26  reasons and supporting facts for the determination that the 
363.27  district meets the criteria of section 469.174, subdivision 10, 
363.28  paragraph (a), clauses (1) and (2), or subdivision 10a, must be 
363.29  documented in writing and retained and made available to the 
363.30  public by the authority until the district has been terminated. 
363.31     (2) that the proposed development or redevelopment, in the 
363.32  opinion of the municipality, would not reasonably be expected to 
363.33  occur solely through private investment within the reasonably 
363.34  foreseeable future and that the increased market value of the 
363.35  site that could reasonably be expected to occur without the use 
363.36  of tax increment financing would be less than the increase in 
364.1   the market value estimated to result from the proposed 
364.2   development after subtracting the present value of the projected 
364.3   tax increments for the maximum duration of the district 
364.4   permitted by the plan.  The requirements of this clause do not 
364.5   apply if the district is a qualified housing district, as 
364.6   defined in section 273.1399, subdivision 1. 
364.7      (3) that the tax increment financing plan conforms to the 
364.8   general plan for the development or redevelopment of the 
364.9   municipality as a whole. 
364.10     (4) that the tax increment financing plan will afford 
364.11  maximum opportunity, consistent with the sound needs of the 
364.12  municipality as a whole, for the development or redevelopment of 
364.13  the project by private enterprise. 
364.14     (5) that the municipality elects the method of tax 
364.15  increment computation set forth in section 469.177, subdivision 
364.16  3, clause (b), if applicable. 
364.17     When the municipality and the authority are not the same, 
364.18  the municipality shall approve or disapprove the tax increment 
364.19  financing plan within 60 days of submission by the authority.  
364.20  When the municipality and the authority are not the same, the 
364.21  municipality may not amend or modify a tax increment financing 
364.22  plan except as proposed by the authority pursuant to subdivision 
364.23  4.  Once approved, the determination of the authority to 
364.24  undertake the project through the use of tax increment financing 
364.25  and the resolution of the governing body shall be conclusive of 
364.26  the findings therein and of the public need for the financing. 
364.27     <b>[EFFECTIVE DATE.]</b> This section is effective for districts 
364.28  for which the request for certification is made after September 
364.29  30, 2001.  
364.30     Sec. 11.  Minnesota Statutes 2000, section 469.175, is 
364.31  amended by adding a subdivision to read: 
364.32     Subd. 4a.  [FILING PLAN WITH STATE.] (a) The authority must 
364.33  file a copy of the tax increment financing plan and amendments 
364.34  to the plan with the commissioner of revenue.  The authority 
364.35  must also file a copy of the development plan or the project 
364.36  plan for the project area with the commissioner of revenue.  The 
365.1   commissioner of revenue shall provide a copy of a plan to the 
365.2   state auditor upon request. 
365.3      (b) Filing under this subdivision must be made within 60 
365.4   days after the latest of: 
365.5      (1) the filing of the request for certification of the 
365.6   district; 
365.7      (2) approval of the plan by the municipality; or 
365.8      (3) adoption of the plan by the authority. 
365.9      <b>[EFFECTIVE DATE.]</b> This section is effective for plans and 
365.10  amendments approved after July 1, 2000. 
365.11     Sec. 12.  Minnesota Statutes 2000, section 469.175, 
365.12  subdivision 6, is amended to read: 
365.13     Subd. 6.  [ANNUAL FINANCIAL REPORTING.] (a) The state 
365.14  auditor shall develop a uniform system of accounting and 
365.15  financial reporting for tax increment financing districts.  The 
365.16  system of accounting and financial reporting shall, as nearly as 
365.17  possible: 
365.18     (1) provide for full disclosure of the sources and uses of 
365.19  public funds in the district; 
365.20     (2) permit comparison and reconciliation with the affected 
365.21  local government's accounts and financial reports; 
365.22     (3) permit auditing of the funds expended on behalf of a 
365.23  district, including a single district that is part of a 
365.24  multidistrict project or that is funded in part or whole through 
365.25  the use of a development account funded with tax increments from 
365.26  other districts or with other public money; 
365.27     (4) be consistent with generally accepted accounting 
365.28  principles. 
365.29     (b) The authority must annually submit to the state auditor 
365.30  a financial report in compliance with paragraph (a).  Copies of 
365.31  the report must also be provided to the county auditor and to 
365.32  the governing body of the municipality, if the authority is not 
365.33  the municipality.  To the extent necessary to permit compliance 
365.34  with the requirement of financial reporting, the county and any 
365.35  other appropriate local government unit or private entity must 
365.36  provide the necessary records or information to the authority or 
366.1   the state auditor as provided by the system of accounting and 
366.2   financial reporting developed pursuant to paragraph (a).  The 
366.3   authority must submit the annual report for a year on or before 
366.4   August 1 of the next year. 
366.5      (c) The annual financial report must also include the 
366.6   following items: 
366.7      (1) the original net tax capacity of the district and any 
366.8   subdistrict under section 469.177, subdivision 1; 
366.9      (2) the net tax capacity for the reporting period of the 
366.10  district and any subdistrict; 
366.11     (3) the captured net tax capacity of the district; 
366.12     (4) any fiscal disparity deduction from the captured net 
366.13  tax capacity under section 469.177, subdivision 3; 
366.14     (5) the captured net tax capacity retained for tax 
366.15  increment financing under section 469.177, subdivision 2, 
366.16  paragraph (a), clause (1); 
366.17     (6) any captured net tax capacity distributed among 
366.18  affected taxing districts under section 469.177, subdivision 2, 
366.19  paragraph (a), clause (2); 
366.20     (7) the type of district; 
366.21     (8) the date the municipality approved the tax increment 
366.22  financing plan and the date of approval of any modification of 
366.23  the tax increment financing plan, the approval of which requires 
366.24  notice, discussion, a public hearing, and findings under 
366.25  subdivision 4, paragraph (a); 
366.26     (9) the date the authority first requested certification of 
366.27  the original net tax capacity of the district and the date of 
366.28  the request for certification regarding any parcel added to the 
366.29  district; 
366.30     (10) the date the county auditor first certified the 
366.31  original net tax capacity of the district and the date of 
366.32  certification of the original net tax capacity of any parcel 
366.33  added to the district; 
366.34     (11) the month and year in which the authority has received 
366.35  or anticipates it will receive the first increment from the 
366.36  district; 
367.1      (12) the date the district must be decertified; 
367.2      (13) for the reporting period and prior years of the 
367.3   district, the actual amount received from, at least, the 
367.4   following categories: 
367.5      (i) tax increments paid by the captured net tax capacity 
367.6   retained for tax increment financing under section 469.177, 
367.7   subdivision 2, paragraph (a), clause (1), but excluding any 
367.8   excess taxes; 
367.9      (ii) tax increments that are interest or other investment 
367.10  earnings on or from tax increments; 
367.11     (iii) tax increments that are proceeds from the sale or 
367.12  lease of property, tangible or intangible, purchased by the 
367.13  authority with tax increments; 
367.14     (iv) tax increments that are repayments of loans or other 
367.15  advances made by the authority with tax increments; 
367.16     (v) bond or loan proceeds; 
367.17     (vi) special assessments; 
367.18     (vii) grants; and 
367.19     (viii) transfers from funds not exclusively associated with 
367.20  the district; 
367.21     (14) for the reporting period and for the prior years of 
367.22  the district, the amount budgeted under the tax increment 
367.23  financing plan, and the actual amount expended for, at least, 
367.24  the following categories: 
367.25     (i) acquisition of land and buildings through condemnation 
367.26  or purchase; 
367.27     (ii)  site improvements or preparation costs; 
367.28     (iii) installation of public utilities, parking facilities, 
367.29  streets, roads, sidewalks, or other similar public improvements; 
367.30     (iv) administrative costs, including the allocated cost of 
367.31  the authority; 
367.32     (v) public park facilities, facilities for social, 
367.33  recreational, or conference purposes, or other similar public 
367.34  improvements; and 
367.35     (vi) transfers to funds not exclusively associated with the 
367.36  district; 
368.1      (15) for properties sold to developers, the total cost of 
368.2   the property to the authority and the price paid by the 
368.3   developer; 
368.4      (16) the amount of any payments and the value of any 
368.5   in-kind benefits, such as physical improvements and the use of 
368.6   building space, that are paid or financed with tax increments 
368.7   and are provided to another governmental unit other than the 
368.8   municipality during the reporting period; 
368.9      (17) the amount of any payments for activities and 
368.10  improvements located outside of the district that are paid for 
368.11  or financed with tax increments; 
368.12     (18) the amount of payments of principal and interest that 
368.13  are made during the reporting period on any nondefeased: 
368.14     (i) general obligation tax increment financing bonds; 
368.15     (ii) other tax increment financing bonds; and 
368.16     (iii) notes and pay-as-you-go contracts; 
368.17     (19) the principal amount, at the end of the reporting 
368.18  period, of any nondefeased: 
368.19     (i) general obligation tax increment financing bonds; 
368.20     (ii) other tax increment financing bonds; and 
368.21     (iii) notes and pay-as-you-go contracts; 
368.22     (20) the amount of principal and interest payments that are 
368.23  due for the current calendar year on any nondefeased: 
368.24     (i) general obligation tax increment financing bonds; 
368.25     (ii) other tax increment financing bonds; and 
368.26     (iii) notes and pay-as-you-go contracts; 
368.27     (21) if the fiscal disparities contribution under chapter 
368.28  276A or 473F for the district is computed under section 469.177, 
368.29  subdivision 3, paragraph (a), the amount of increased property 
368.30  taxes imposed on other properties in the municipality that 
368.31  approved the tax increment financing plan as a result of the 
368.32  fiscal disparities contribution; 
368.33     (22) whether the tax increment financing plan or other 
368.34  governing document permits increment revenues to be expended: 
368.35     (i) to pay bonds, the proceeds of which were or may be 
368.36  expended on activities outside of the district; 
369.1      (ii) for deposit into a common bond fund from which money 
369.2   may be expended on activities located outside of the district; 
369.3   or 
369.4      (iii) to otherwise finance activities located outside of 
369.5   the tax increment financing district; and 
369.6      (23) any additional information the state auditor may 
369.7   require. 
369.8      (d) The commissioner of revenue shall prescribe the method 
369.9   of calculating the increased property taxes under paragraph (c), 
369.10  clause (21), and the form of the statement disclosing this 
369.11  information on the annual statement under subdivision 5. 
369.12     (e) The reporting requirements imposed by this subdivision 
369.13  apply to districts certified before, on, and after August 1, 
369.14  1979. 
369.15     <b>[EFFECTIVE DATE.]</b> This section is effective for reports 
369.16  filed after January 1, 2002. 
369.17     Sec. 13.  Minnesota Statutes 2000, section 469.175, 
369.18  subdivision 6b, is amended to read: 
369.19     Subd. 6b.  [DURATION OF DISCLOSURE AND REPORTING 
369.20  REQUIREMENTS.] The disclosure and reporting requirements imposed 
369.21  by subdivisions 5, and 6, and 6a apply with respect to a tax 
369.22  increment financing district beginning with the annual 
369.23  disclosure and reports for the year in which the original net 
369.24  tax capacity of the district was certified and ending with the 
369.25  annual disclosure and reports for the year in which both of the 
369.26  following events have occurred: 
369.27     (1) decertification of the district; and 
369.28     (2) expenditure or return to the county auditor of all 
369.29  remaining revenues derived from tax increments paid by 
369.30  properties in the district. 
369.31     <b>[EFFECTIVE DATE.]</b> This section is effective for reports 
369.32  filed after December 31, 2000. 
369.33     Sec. 14.  Minnesota Statutes 2000, section 469.176, 
369.34  subdivision 1b, is amended to read: 
369.35     Subd. 1b.  [DURATION LIMITS; TERMS.] (a) No tax increment 
369.36  shall in any event be paid to the authority 
370.1      (1) after 15 years after receipt by the authority of the 
370.2   first increment for a renewal and renovation district, 
370.3      (2) after 20 years after receipt by the authority of the 
370.4   first increment for a soils condition district, 
370.5      (3) after eight years after receipt by the authority of the 
370.6   first increment for an economic development district, 
370.7      (4) for a housing district or a redevelopment district, 
370.8   after 20 years from the date of receipt by the authority of the 
370.9   first tax increment by the authority pursuant to section 
370.10  469.175, subdivision 1, paragraph (b); or, if no provision is 
370.11  made under section 469.175, subdivision 1, paragraph (b), after 
370.12  25 years from the date of receipt by the authority of the first 
370.13  increment. 
370.14     (b) For purposes of determining a duration limit under this 
370.15  subdivision or subdivision 1e that is based on the receipt of an 
370.16  increment, any increments from taxes payable in the year in 
370.17  which the district terminates shall be paid to the authority.  
370.18  This paragraph does not affect a duration limit calculated from 
370.19  the date of approval of the tax increment financing plan or 
370.20  based on the recovery of costs or to a duration limit under 
370.21  subdivision 1c.  This paragraph does not supersede the 
370.22  restrictions on payment of delinquent taxes in subdivision 1f. 
370.23     (c) Except as authorized by section 469.175, subdivision 1, 
370.24  paragraph (b), An action by the authority to waive or decline to 
370.25  accept an increment has no effect for purposes of computing a 
370.26  duration limit based on the receipt of increment under this 
370.27  subdivision or any other provision of law.  The authority is 
370.28  deemed to have received an increment for any year in which it 
370.29  waived or declined to accept an increment, regardless of whether 
370.30  the increment was paid to the authority. 
370.31     (d) Receipt by a hazardous substance subdistrict of an 
370.32  increment as a result of a reduction in original net tax 
370.33  capacity under section 469.174, subdivision 7, paragraph (b), 
370.34  does not constitute receipt of increment by the overlying 
370.35  district for purpose of calculating the duration limit under 
370.36  this section. 
371.1      <b>[EFFECTIVE DATE.]</b> This section is effective for districts 
371.2   for which the request for certification is made after June 30, 
371.3   2001. 
371.4      Sec. 15.  Minnesota Statutes 2000, section 469.176, 
371.5   subdivision 1c, is amended to read: 
371.6      Subd. 1c.  [DURATION LIMITS; PRE-1979 DISTRICTS.] For tax 
371.7   increment financing districts created prior to August 1, 1979, 
371.8   no tax increment shall be paid to the authority after April 1, 
371.9   2001, or the term of a nondefeased bond or obligation 
371.10  outstanding on April 1, 1990, secured by increments from the 
371.11  district or project area, whichever time is greater, provided 
371.12  that in no case will a tax increment be paid to an authority 
371.13  after August 1, 2009, from such a district.  If a district's 
371.14  termination date is extended beyond April 1, 2001, because bonds 
371.15  were outstanding on April 1, 1990, with maturities extending 
371.16  beyond April 1, 2001, the following restrictions apply.  No 
371.17  Increment collected from the district may at any time, and 
371.18  interest earned on increment from the district and received 
371.19  after December 31, 2001, must be expended after April 1, 
371.20  2001, except only to pay or defease (i) bonds issued before 
371.21  April 1, 1990, or (ii) bonds issued to refund the principal of 
371.22  the outstanding bonds and pay associated issuance costs, 
371.23  provided the average maturity of the refunding bonds does not 
371.24  exceed the bonds refunded.  When sufficient money has been 
371.25  received to defease or pay the bonds, the tax increment project 
371.26  or district must be decertified. 
371.27     <b>[EFFECTIVE DATE.]</b> This section is effective for tax 
371.28  increment financing districts and projects for which the request 
371.29  for certification was made before August 1, 1979. 
371.30     Sec. 16.  Minnesota Statutes 2000, section 469.176, 
371.31  subdivision 1e, is amended to read: 
371.32     Subd. 1e.  [DURATION LIMITS; HAZARDOUS SUBSTANCE 
371.33  SUBDISTRICTS.] If a parcel of a district is part of a designated 
371.34  hazardous substance site or a hazardous substance subdistrict, 
371.35  tax increment may be paid to the authority from the parcel for 
371.36  longer than the period otherwise provided by subdivisions 1 to 
372.1   1f for the overlying district.  The extended period for 
372.2   collection of tax increment begins on the date of receipt of the 
372.3   first tax increment from the parcel that is more than any tax 
372.4   increment received from the parcel before the date of the 
372.5   certification under section 469.174, subdivision 7, paragraph 
372.6   (b), and received after the date of certification to the county 
372.7   auditor described in section 469.174, subdivision 7, paragraph 
372.8   (b).  The extended period for collection of tax increment is the 
372.9   lesser of:  (1) 25 years from the date of commencement of the 
372.10  extended period or 20 years if the authority elects under 
372.11  section 469.175, subdivision 1, paragraph (b), to defer receipt 
372.12  of the first increment; or (2) the period necessary to recover 
372.13  the costs of removal actions or remedial actions specified in a 
372.14  development response action plan. 
372.15     <b>[EFFECTIVE DATE.]</b> This section is effective for requests 
372.16  for certification of subdistricts made after June 30, 2001. 
372.17     Sec. 17.  Minnesota Statutes 2000, section 469.176, 
372.18  subdivision 3, is amended to read: 
372.19     Subd. 3.  [LIMITATION ON ADMINISTRATIVE EXPENSES.] (a) For 
372.20  districts for which certification was requested before August 1, 
372.21  1979, or after June 30, 1982, no tax increment shall be used to 
372.22  pay any administrative expenses for a project which exceed ten 
372.23  percent of the total tax increment expenditures authorized by 
372.24  the tax increment financing plan or the total tax increment 
372.25  expenditures for the project, whichever is less.  
372.26     (b) For districts for which certification was requested 
372.27  after July 31, 1979, and before July 1, 1982, no tax increment 
372.28  shall be used to pay administrative expenses, as defined in 
372.29  Minnesota Statutes 1980, section 273.73, for a project district 
372.30  which exceeds five percent of the total tax increment 
372.31  expenditures authorized by the tax increment financing plan or 
372.32  the total tax increment expenditures for the project district, 
372.33  whichever is less. 
372.34     (c) For districts for which certification was requested 
372.35  after June 30, 2001, no tax increment may be used to pay any 
372.36  administrative expenses for a project which exceed ten percent 
373.1   of total tax increment expenditures authorized by the tax 
373.2   increment financing plan or the total tax increments from the 
373.3   district, whichever is less. 
373.4      <b>[EFFECTIVE DATE.]</b> This section is effective for districts 
373.5   for which the request for certification is received after June 
373.6   30, 2001. 
373.7      Sec. 18.  Minnesota Statutes 2000, section 469.176, 
373.8   subdivision 4, is amended to read: 
373.9      Subd. 4.  [LIMITATION ON USE OF TAX INCREMENT; GENERAL 
373.10  RULE.] (a) All revenues derived from Tax increment shall 
373.11  increments must be used in accordance with the tax increment 
373.12  financing plan, including the separate line items amounts 
373.13  required by section 469.175, subdivision 1, clause (6), but 
373.14  excluding any subcategories within the required items that the 
373.15  authority elects to include.  If a tax increment financing plan 
373.16  does not include an amount for a separate line item required by 
373.17  section 469.175, subdivision 1, clause (6), the amount for the 
373.18  line item is zero. 
373.19     (b) The revenues shall tax increments may be used solely 
373.20  for the following purposes: 
373.21     (1) to pay the principal of and interest on bonds issued to 
373.22  finance a project; 
373.23     (2) as permitted by an enabling development authority law, 
373.24  whether made by the authority or the municipality or another 
373.25  entity authorized to exercise the powers of the respective 
373.26  authority, as specified in paragraph (c). 
373.27     (c) The following purposes are permitted: 
373.28     (1) by a rural development financing authority for the 
373.29  purposes stated in section 469.142,; 
373.30     (2) by a port authority or municipality exercising the 
373.31  powers of a port authority to finance or otherwise pay the cost 
373.32  of redevelopment pursuant to under sections 469.048 to 469.068,; 
373.33     (3) by an economic development authority to finance or 
373.34  otherwise pay the cost of redevelopment pursuant to under 
373.35  sections 469.090 to 469.108,; 
373.36     (4) by a housing and redevelopment authority or economic 
374.1   development authority to finance or otherwise pay public 
374.2   redevelopment costs pursuant to under sections 469.001 to 
374.3   469.047,; 
374.4      (5) by a municipality or economic development authority to 
374.5   finance or otherwise pay the capital and administration costs of 
374.6   a development district pursuant to under sections 469.124 to 
374.7   469.134,; 
374.8      (6) by a municipality or authority to finance or otherwise 
374.9   pay the costs of developing and implementing a development 
374.10  action response plan,; 
374.11     (7) by a municipality or redevelopment agency to finance or 
374.12  otherwise pay premiums for insurance or other security 
374.13  guaranteeing the payment when due of principal of and interest 
374.14  on the bonds pursuant to under chapter 462C, sections 469.152 to 
374.15  469.165, or both, or to accumulate and maintain a reserve 
374.16  securing the payment when due of the principal of and interest 
374.17  on the bonds pursuant to under chapter 462C, sections 469.152 to 
374.18  469.165, or both, which revenues in the reserve shall may not 
374.19  exceed, subsequent to after the fifth anniversary of the date of 
374.20  issue of the first bond issue secured by the reserve, an amount 
374.21  equal to 20 percent of the aggregate principal amount of the 
374.22  outstanding and nondefeased bonds secured by the reserve. 
374.23     <b>[EFFECTIVE DATE.]</b> This section is effective for tax 
374.24  increment financing plans approved after June 30, 2001, and for 
374.25  amendments to tax increment financing plans modifying the total 
374.26  estimated tax increment expenditures approved after June 30, 
374.27  2001.  Amounts spent in excess of the estimates or budget items 
374.28  in the tax increment financing plan are deemed to be spent in 
374.29  accordance within the plan, notwithstanding that they exceeded 
374.30  the estimates or budget items, for purposes of this section if 
374.31  the plan and amendments to it were approved before July 1, 2001, 
374.32  and if the total amounts spent are within the total estimated 
374.33  tax increment expenditures under the plan for the district. 
374.34     Sec. 19.  Minnesota Statutes 2000, section 469.176, 
374.35  subdivision 4g, is amended to read: 
374.36     Subd. 4g.  [GENERAL GOVERNMENT USE PROHIBITED.] (a) These 
375.1   revenues shall Tax increments may not be used to circumvent 
375.2   existing levy limit law.  
375.3      (b) No revenues derived from tax increment from any 
375.4   district, whether certified before or after August 1, 1979, 
375.5   shall may be used for the acquisition, construction, renovation, 
375.6   operation, or maintenance of a building to be used primarily and 
375.7   regularly for conducting the business of a municipality, county, 
375.8   school district, or any other local unit of government or the 
375.9   state or federal government or for a commons area used as a 
375.10  public park, or a facility used for social, recreational, or 
375.11  conference purposes.  This provision shall does not prohibit the 
375.12  use of revenues derived from tax increments for the construction 
375.13  or renovation of a parking structure or of a privately owned 
375.14  facility for conference purposes.  
375.15     (b) If any publicly owned facility used for social, 
375.16  recreational, or conference purposes and financed in whole or in 
375.17  part from revenues derived from a district is operated or 
375.18  managed by an entity other than the authority, the operating and 
375.19  management policies of the facility must be approved by the 
375.20  governing body of the authority. 
375.21     (c)(1) Tax increments may not be used to pay for the cost 
375.22  of public improvements, equipment, or other items, if: 
375.23     (i) the improvements, equipment, or other items are located 
375.24  outside of the area of the tax increment financing district from 
375.25  which the increments were collected; and 
375.26     (ii) the improvements, equipment, or items that (A) 
375.27  primarily serve a decorative or aesthetic purpose, or (B) serve 
375.28  a functional purpose, but their cost is increased by more than 
375.29  100 percent as a result of the selection of materials, design, 
375.30  or type as compared with more commonly used materials, designs, 
375.31  or types for similar improvements, equipment, or items. 
375.32     (2) The provisions of this paragraph do not apply to 
375.33  expenditures related to the rehabilitation of historic 
375.34  structures that are: 
375.35     (i) individually listed on the National Register of 
375.36  Historic Places; or 
376.1      (ii) a contributing element to a historic district listed 
376.2   on the National Register of Historic Places. 
376.3      <b>[EFFECTIVE DATE.]</b> This section is effective for 
376.4   expenditures of increment made after June 30, 2001. 
376.5      Sec. 20.  Minnesota Statutes 2000, section 469.176, is 
376.6   amended by adding a subdivision to read: 
376.7      Subd. 41.  [PROHIBITED FACILITIES.] (a) No tax increment 
376.8   from any district may be used for: 
376.9      (1) a commons area used as a public park; or 
376.10     (2) a facility used for social, recreational, or conference 
376.11  purposes. 
376.12     (b) This subdivision does not apply to a privately owned 
376.13  facility for conference purposes or a parking structure. 
376.14     <b>[EFFECTIVE DATE.]</b> This section is effective for 
376.15  expenditures of increment made after June 30, 2001, but does not 
376.16  apply to (1) expenditures made before January 1, 2000; (2) 
376.17  expenditures made under a binding contract entered before 
376.18  January 1, 2000; or (3) expenditures made under a binding 
376.19  contract entered pursuant to a letter of intent with the 
376.20  developer or contractor or its assigns if the letter of intent 
376.21  was entered before January 1, 2000. 
376.22     Sec. 21.  Minnesota Statutes 2000, section 469.1763, 
376.23  subdivision 6, is amended to read: 
376.24     Subd. 6.  [POOLING PERMITTED FOR DEFICITS.] (a) This 
376.25  subdivision applies only to districts for which the request for 
376.26  certification was made before June 2, 1997 2001. 
376.27     (b) The municipality for the district may transfer 
376.28  available increments from another tax increment financing 
376.29  district located in the municipality, if the transfer is 
376.30  necessary to eliminate a deficit in the district to which the 
376.31  increments are transferred.  A deficit in the district for 
376.32  purposes of this subdivision means the lesser of the following 
376.33  two amounts: 
376.34     (1)(i) the amount due during the calendar year to pay 
376.35  preexisting obligations of the district; minus 
376.36     (ii) the total increments to be collected from properties 
377.1   located within the district that are available for the calendar 
377.2   year; plus 
377.3      (iii) total increments from properties located in other 
377.4   districts in the municipality that are available to be used to 
377.5   meet the district's obligations under this section, excluding 
377.6   this subdivision, or other provisions of law (but excluding a 
377.7   special tax under section 469.1791 and the grant program under 
377.8   Laws 1997, chapter 231, article 1, section 19, or this act); or 
377.9      (2) the reduction in increments collected from properties 
377.10  located in the district for the calendar year as a result of the 
377.11  changes in class rates in Laws 1997, chapter 231, article 1; 
377.12  Laws 1998, chapter 389, article 2; and Laws 1999, chapter 
377.13  243 and this act or the elimination of the general education tax 
377.14  levy under this act. 
377.15     (c) A preexisting obligation means: 
377.16     (1) bonds issued and sold before June 2, 1997 2001, and 
377.17  bonds issued to refund such bonds or to reimburse expenditures 
377.18  made in conjunction with a signed contractual agreement entered 
377.19  into before June 2, 1997 2001, to the extent that the bonds are 
377.20  secured by a pledge of increments from the tax increment 
377.21  financing district.  For purposes of this subdivision, bonds 
377.22  exclude an obligation to reimburse or pay a developer or owner 
377.23  of property located in the district for amounts incurred or paid 
377.24  by the developer or owner; and 
377.25     (2) binding contracts entered into before June 2, 2001, to 
377.26  the extent that the contracts require payments secured by a 
377.27  pledge of increments from the tax increment financing district. 
377.28     (d) The municipality may require a development authority, 
377.29  other than a seaway port authority, to transfer available 
377.30  increments for any of its tax increment financing districts in 
377.31  the municipality to make up an insufficiency in another district 
377.32  in the municipality, regardless of whether the district was 
377.33  established by the development authority or another development 
377.34  authority.  This authority applies notwithstanding any law to 
377.35  the contrary, but applies only to a development authority that: 
377.36     (1) was established by the municipality; or 
378.1      (2) the governing body of which is appointed, in whole or 
378.2   part, by the municipality or an officer of the municipality or 
378.3   which consists, in whole or part, of members of the governing 
378.4   body of the municipality. 
378.5      (e) The authority under this subdivision to spend tax 
378.6   increments outside of the area of the district from which the 
378.7   tax increments were collected: 
378.8      (1) may only be exercised after obtaining approval of the 
378.9   use of the increments, in writing, by the commissioner of 
378.10  revenue; 
378.11     (2) is an exception to the restrictions under section 
378.12  469.176, subdivision 4i, and the other provisions of this 
378.13  section, and the percentage restrictions under subdivision 2 
378.14  must be calculated after deducting increments spent under this 
378.15  subdivision from the total increments for the district; and 
378.16     (3) applies notwithstanding the provisions of the Tax 
378.17  Increment Financing Act in effect for districts for which the 
378.18  request for certification was made before June 30, 1982, or any 
378.19  other law to the contrary. 
378.20     <b>[EFFECTIVE DATE.]</b> This section is effective January 2, 
378.21  2003, and thereafter. 
378.22     Sec. 22.  Minnesota Statutes 2000, section 469.177, 
378.23  subdivision 1, is amended to read: 
378.24     Subdivision 1.  [ORIGINAL NET TAX CAPACITY.] (a) Upon or 
378.25  after adoption of a tax increment financing plan, the auditor of 
378.26  any county in which the district is situated shall, upon request 
378.27  of the authority, certify the original net tax capacity of the 
378.28  tax increment financing district and that portion of the 
378.29  district overlying any subdistrict as described in the tax 
378.30  increment financing plan and shall certify in each year 
378.31  thereafter the amount by which the original net tax capacity has 
378.32  increased or decreased as a result of a change in tax exempt 
378.33  status of property within the district and any subdistrict, 
378.34  reduction or enlargement of the district or changes pursuant to 
378.35  subdivision 4.  
378.36     (b) For districts approved under section 469.175, 
379.1   subdivision 3, or parcels added to existing districts after May 
379.2   1, 1988, if the classification under section 273.13 of property 
379.3   located in a district changes to a classification that has a 
379.4   different assessment ratio, the original net tax capacity of 
379.5   that property must be redetermined at the time when its use is 
379.6   changed as if the property had originally been classified in the 
379.7   same class in which it is classified after its use is changed. 
379.8      (c) The amount to be added to the original net tax capacity 
379.9   of the district as a result of previously tax exempt real 
379.10  property within the district becoming taxable equals the net tax 
379.11  capacity of the real property as most recently assessed pursuant 
379.12  to section 273.18 or, if that assessment was made more than one 
379.13  year prior to the date of title transfer rendering the property 
379.14  taxable, the net tax capacity assessed by the assessor at the 
379.15  time of the transfer.  If improvements are made to tax exempt 
379.16  property after certification of the district and before the 
379.17  parcel becomes taxable, the assessor shall, at the request of 
379.18  the authority, separately assess the estimated market value of 
379.19  the improvements.  If the property becomes taxable, the county 
379.20  auditor shall add to original net tax capacity, the net tax 
379.21  capacity of the parcel, excluding the separately assessed 
379.22  improvements.  If substantial taxable improvements were made to 
379.23  a parcel after certification of the district and if the property 
379.24  later becomes tax exempt, in whole or part, as a result of the 
379.25  authority acquiring the property through foreclosure or exercise 
379.26  of remedies under a lease or other revenue agreement or as a 
379.27  result of tax forfeiture, the amount to be added to the original 
379.28  net tax capacity of the district as a result of the property 
379.29  again becoming taxable is the amount of the parcel's value that 
379.30  was included in original net tax capacity when the parcel was 
379.31  first certified.  The amount to be added to the original net tax 
379.32  capacity of the district as a result of enlargements equals the 
379.33  net tax capacity of the added real property as most recently 
379.34  certified by the commissioner of revenue as of the date of 
379.35  modification of the tax increment financing plan pursuant to 
379.36  section 469.175, subdivision 4. 
380.1      (d) For districts approved under section 469.175, 
380.2   subdivision 3, or parcels added to existing districts after May 
380.3   1, 1988, if the net tax capacity of a property increases because 
380.4   the property no longer qualifies under the Minnesota 
380.5   Agricultural Property Tax Law, section 273.111; the Minnesota 
380.6   Open Space Property Tax Law, section 273.112; or the 
380.7   Metropolitan Agricultural Preserves Act, chapter 473H, or 
380.8   because platted, unimproved property is improved or three years 
380.9   pass after approval of the plat under section 273.11, 
380.10  subdivision 1, the increase in net tax capacity must be added to 
380.11  the original net tax capacity.  
380.12     (e) The amount to be subtracted from the original net tax 
380.13  capacity of the district as a result of previously taxable real 
380.14  property within the district becoming tax exempt, or a reduction 
380.15  in the geographic area of the district, shall be the amount of 
380.16  original net tax capacity initially attributed to the property 
380.17  becoming tax exempt or being removed from the district.  If the 
380.18  net tax capacity of property located within the tax increment 
380.19  financing district is reduced by reason of a court-ordered 
380.20  abatement, stipulation agreement, voluntary abatement made by 
380.21  the assessor or auditor or by order of the commissioner of 
380.22  revenue, the reduction shall be applied to the original net tax 
380.23  capacity of the district when the property upon which the 
380.24  abatement is made has not been improved since the date of 
380.25  certification of the district and to the captured net tax 
380.26  capacity of the district in each year thereafter when the 
380.27  abatement relates to improvements made after the date of 
380.28  certification.  The county auditor may specify reasonable form 
380.29  and content of the request for certification of the authority 
380.30  and any modification thereof pursuant to section 469.175, 
380.31  subdivision 4.  
380.32     (f) If a parcel of property contained a substandard 
380.33  building that was demolished or removed and if the authority 
380.34  elects to treat the parcel as occupied by a substandard building 
380.35  under section 469.174, subdivision 10, paragraph (b), the 
380.36  auditor shall certify the original net tax capacity of the 
381.1   parcel using the greater of (1) the current net tax capacity of 
381.2   the parcel, or (2) the estimated market value of the parcel for 
381.3   the year in which the building was demolished or removed, but 
381.4   applying the class rates for the current year. 
381.5      <b>[EFFECTIVE DATE.]</b> This section is effective for parcels 
381.6   that become taxable after June 30, 2001, and applies to tax 
381.7   increment financing districts, regardless of when the request 
381.8   for certification was made. 
381.9      Sec. 23.  Minnesota Statutes 2000, section 469.177, is 
381.10  amended by adding a subdivision to read: 
381.11     Subd. 1b.  [STATE TAX AND INCREMENT COMPUTATION.] The 
381.12  original local tax rate and any other tax rate or amount used to 
381.13  calculate the amount of tax increment does not include any rate 
381.14  or amount attributable to a state levy, whether the state levy 
381.15  is imposed by section 275.02 or another provision of law. 
381.16     Sec. 24.  Minnesota Statutes 2000, section 469.177, 
381.17  subdivision 11, is amended to read: 
381.18     Subd. 11.  [DEDUCTION FOR ENFORCEMENT COSTS; 
381.19  APPROPRIATION.] (a) The county treasurer shall deduct an amount 
381.20  equal to 0.25 0.34 percent of any increment distributed to an 
381.21  authority or municipality.  The county treasurer shall pay the 
381.22  amount deducted to the state treasurer for deposit in the state 
381.23  general fund. 
381.24     (b) The amounts deducted and paid under paragraph (a) are 
381.25  appropriated to the state auditor for the cost of (1) the 
381.26  financial reporting of tax increment financing information and 
381.27  (2) the cost of examining and auditing of authorities' use of 
381.28  tax increment financing as provided under section 469.1771, 
381.29  subdivision 1.  Notwithstanding section 16A.28 or any other law 
381.30  to the contrary, this appropriation does not cancel and remains 
381.31  available until spent.  
381.32     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
381.33  payable in 2002 and thereafter. 
381.34     Sec. 25.  Minnesota Statutes 2000, section 469.1771, 
381.35  subdivision 1, is amended to read: 
381.36     Subdivision 1.  [ENFORCEMENT.] (a) The owner of taxable 
382.1   property located in the city, town, school district, or county 
382.2   in which the tax increment financing district is located may 
382.3   bring suit for equitable relief or for damages, as provided in 
382.4   subdivisions 2, 3, and 4, arising out of a failure of a 
382.5   municipality or authority to comply with the provisions of 
382.6   sections 469.174 to 469.179 469.1799, or related provisions of 
382.7   this chapter.  The prevailing party in a suit filed under the 
382.8   preceding sentence is entitled to costs, including reasonable 
382.9   attorney fees. 
382.10     (b) The state auditor may examine and audit political 
382.11  subdivisions' use of tax increment financing.  Without previous 
382.12  notice, the state auditor may examine or audit accounts and 
382.13  records on a random basis as the auditor deems to be in the 
382.14  public interest.  If the state auditor finds evidence that an 
382.15  authority or municipality has violated a provision of the law 
382.16  for which a remedy is provided under this section, the state 
382.17  auditor shall forward the relevant information to the county 
382.18  attorney.  The county attorney may bring an action to enforce 
382.19  the provisions of sections 469.174 to 469.179 469.1799 or 
382.20  related provisions of this chapter, for matters referred by the 
382.21  state auditor or on behalf of the county.  If the county 
382.22  attorney determines not to bring an action or if the county 
382.23  attorney has not brought an action within 12 months after 
382.24  receipt of the initial notification by the state auditor of the 
382.25  violation, the county attorney shall notify the state auditor in 
382.26  writing. 
382.27     (c) If the state auditor finds an authority is not in 
382.28  compliance with sections 469.174 to 469.179 469.1799 or related 
382.29  provisions of law, the auditor shall notify the governing body 
382.30  of the municipality that approved the tax increment financing 
382.31  district of its findings.  The governing body of the 
382.32  municipality must respond in writing to the state auditor within 
382.33  60 days after receiving the notification.  Its written response 
382.34  must state whether the municipality accepts, in whole or part, 
382.35  the auditor's findings.  If the municipality does not accept the 
382.36  findings, the statement must indicate the basis for its 
383.1   disagreement.  The state auditor shall annually summarize the 
383.2   responses it receives under this section and send the summary 
383.3   and copies of the responses to the chairs of the committees of 
383.4   the legislature with jurisdiction over tax increment financing. 
383.5      (d) The state auditor shall notify the attorney general in 
383.6   writing and provide supporting materials for a violation found 
383.7   by the auditor, if the: 
383.8      (1) auditor receives notification from the county attorney 
383.9   under paragraph (b) or receives no notification for a 12-month 
383.10  period after initially notifying the county attorney and the 
383.11  state auditor confirms with the county attorney or the 
383.12  municipality that no action has been brought regarding the 
383.13  matter; and 
383.14     (2) municipality or development authority have not 
383.15  eliminated or resolved the violation to the satisfaction of the 
383.16  state auditor. 
383.17  The auditor shall provide the municipality and development 
383.18  authority a copy of the notification sent to the attorney 
383.19  general. 
383.20     <b>[EFFECTIVE DATE.]</b> This section applies to violations 
383.21  occurring after July 1, 2001. 
383.22     Sec. 26.  Minnesota Statutes 2000, section 469.178, is 
383.23  amended by adding a subdivision to read: 
383.24     Subd. 7.  [INTERFUND LOANS.] The authority or municipality 
383.25  may advance or loan money to finance expenditures under section 
383.26  469.176, subdivision 4, from its general fund or any other fund 
383.27  regarding which it has legal authority to do so.  The loan or 
383.28  advance must be approved, by resolution of the governing body, 
383.29  before money is transferred, advanced, or spent, whichever is 
383.30  earliest.  The terms and conditions for repayment of the loan 
383.31  must be provided in writing and include, at a minimum, the 
383.32  principal amount, the interest rate, maturity, and repayment 
383.33  schedule.  The maximum rate of interest permitted to be charged 
383.34  is limited to the greater of the rates specified under section 
383.35  270.75 or 549.09. 
383.36     <b>[EFFECTIVE DATE.]</b> This section is effective for loans and 
384.1   advances made after June 30, 2001.  Interfund loans and advances 
384.2   made before July 1, 2001, are ratified and approved, subject to 
384.3   the requirement that interest accrued or paid after July 1, 
384.4   2001, may not exceed the limit in this section.  An authority or 
384.5   municipality may modify the terms of an interfund loan or 
384.6   advance made before July 1, 2001, to comply with any of the 
384.7   requirements of this section as the authority or municipality 
384.8   deems appropriate.  
384.9      Sec. 27.  Minnesota Statutes 2000, section 469.1791, 
384.10  subdivision 1, is amended to read: 
384.11     Subdivision 1.  [DEFINITIONS.] (a) As used in this section, 
384.12  the terms defined in this subdivision have the meanings given 
384.13  them. 
384.14     (b) "City" means a city municipality containing a tax 
384.15  increment financing district, the request for certification of 
384.16  which was made before June 2, 1997 2001. 
384.17     (c) "Enabling ordinance" means an ordinance adopted by a 
384.18  city council establishing a special taxing district. 
384.19     (d) "Special taxing district" means all or any portion of 
384.20  the property located within a tax increment financing district, 
384.21  the request for certification of which was made before June 2, 
384.22  1997 2001. 
384.23     (e) "Development or redevelopment services" has the meaning 
384.24  given in the city's enabling ordinance, and may include any 
384.25  services or expenditures the city or its economic development 
384.26  authority or housing and redevelopment authority or port 
384.27  authority may provide or incur under sections 469.001 to 
384.28  469.1081 and 469.124 to 469.134, including, without limitation, 
384.29  amounts necessary to pay the principal of or interest on bonds 
384.30  issued by the city or its economic development authority or 
384.31  housing and redevelopment authority or port authority under 
384.32  section 469.178, for the tax increment financing districts 
384.33  contained within the special taxing district or projects to be 
384.34  funded with increments from tax increment financing districts 
384.35  contained within the special taxing district. 
384.36     (f) "Preexisting obligations" means bonds issued and sold 
385.1   before June 2, 1997 2001, and binding contracts entered into 
385.2   before June 2, 1997 2001, to the extent that the bonds and 
385.3   contracts are secured by a pledge of increments from the tax 
385.4   increment financing district contained within the special taxing 
385.5   district. 
385.6      <b>[EFFECTIVE DATE.]</b> This section is effective for all tax 
385.7   increment financing districts, regardless of when the request 
385.8   for certification was made. 
385.9      Sec. 28.  Minnesota Statutes 2000, section 469.1791, 
385.10  subdivision 3, is amended to read: 
385.11     Subd. 3.  [PRECONDITIONS TO ESTABLISH DISTRICT.] (a) A city 
385.12  may establish a special taxing district within a tax increment 
385.13  financing district under this section only if the conditions 
385.14  under paragraphs (b) and (c) are met or if the city elects to 
385.15  exercise the authority under paragraph (d). 
385.16     (b) The city has determined that: 
385.17     (1) total tax increments from the district, including 
385.18  unspent increments from previous years and increments 
385.19  transferred under paragraph (c), will be insufficient to pay the 
385.20  amounts due in a year on preexisting obligations; and 
385.21     (2) this insufficiency of increments resulted from the 
385.22  reduction in property tax class rates enacted in the 1997 and, 
385.23  1998, and 2001 legislative sessions. 
385.24     (c) The city has agreed to transfer any available 
385.25  increments from other tax increment financing districts in the 
385.26  city to pay the preexisting obligations of the district under 
385.27  section 469.1763, subdivision 6.  This requirement does not 
385.28  apply to any available increments of a qualified housing 
385.29  district, as defined in Minnesota Statutes 2000, section 
385.30  273.1399, subdivision 1.  
385.31     (d) If a tax increment financing district does not qualify 
385.32  under paragraphs (b) and (c), the governing body may elect to 
385.33  establish a special taxing district under this section.  If the 
385.34  city elects to exercise this authority, increments from the tax 
385.35  increment financing district and the proceeds of the tax imposed 
385.36  under this section may only be used to pay preexisting 
386.1   obligations and reasonable administrative expenses of the 
386.2   authority for the tax increment financing district.  The tax 
386.3   increment financing district must be decertified when all 
386.4   preexisting obligations have been paid.  
386.5      <b>[EFFECTIVE DATE.]</b> This section is effective for all tax 
386.6   increment financing districts, regardless of when the request 
386.7   for certification was made. 
386.8      Sec. 29.  Minnesota Statutes 2000, section 469.1791, 
386.9   subdivision 9, is amended to read: 
386.10     Subd. 9.  [LIMITS ON TAX.] (a) The maximum levy for any 
386.11  year may not exceed the least of: 
386.12     (1) the amount specified in the assessment agreement or 
386.13  development agreement; 
386.14     (2) the amount needed to pay preexisting obligations, less 
386.15  available increments including increments transferred from other 
386.16  districts; and 
386.17     (3) the amount of the general ad valorem tax that would 
386.18  have been paid by the captured net tax capacity of the tax 
386.19  increment financing district, if the property tax class rates 
386.20  for taxes payable in 1997 2001 were in effect, less the amount 
386.21  of the general ad valorem tax imposed for the payable year on 
386.22  the captured net tax capacity. 
386.23     (b) If the city uses the proceeds of a tax imposed under 
386.24  this section to pay preexisting obligations secured by 
386.25  increments from more than one tax increment financing district, 
386.26  the city must establish a special taxing district in each of the 
386.27  districts and impose a uniform rate upon all the districts.  The 
386.28  maximum limits under paragraph (a) must be calculated in 
386.29  aggregate for all of the affected districts.  
386.30     (c) If neither the assessment agreement nor the development 
386.31  agreement specify a tax amount but state an agreed market value 
386.32  for the property, the amount specified for purposes of paragraph 
386.33  (a), clause (1), is the market value of the property under the 
386.34  agreement multiplied by the class rate for taxes payable in 1997 
386.35  2001 and multiplied by the sum of the ad valorem tax rates for 
386.36  all the taxing jurisdictions. 
387.1      (d) If neither the assessment agreement nor the development 
387.2   agreement specify a tax amount or an agreed market value for the 
387.3   property, the amount for purposes of paragraph (a), clause (1), 
387.4   is the amount specified in the development agreement to be paid 
387.5   or provided by the development authority on behalf of 
387.6   development of the district, less the amount of increment paid 
387.7   or collected in prior years and estimated to be collected in the 
387.8   current year and any tax imposed under this section in prior 
387.9   years. 
387.10     (e) If neither the assessment agreement nor the development 
387.11  agreement specify a tax amount, an agreed market value for the 
387.12  property, or an amount to be paid or provided by the development 
387.13  authority on behalf of development of the district, the 
387.14  provisions of paragraph (a), clause (1), do not apply. 
387.15     <b>[EFFECTIVE DATE.]</b> This section is effective for all tax 
387.16  increment financing districts, regardless of when the request 
387.17  for certification was made. 
387.18     Sec. 30.  [469.1792] [CERTAIN DISTRICTS; LIMITATIONS.] 
387.19     Subdivision 1.  [TAX INCREMENT FINANCING PLAN MODIFICATION 
387.20  PROHIBITED.] Notwithstanding any other law to the contrary, no 
387.21  tax increment financing district the certification of which was 
387.22  requested before May 1, 1990, may modify its tax increment 
387.23  financing plan after April 30, 2001. 
387.24     Subd. 2.  [LIMITS ON USE OF TAX INCREMENT REVENUES.] (a) 
387.25  After April 30, 2001, tax increments from a tax increment 
387.26  financing district the certification of which was requested 
387.27  after July 31, 1979, and before May 1, 1990, may be expended on 
387.28  an activity as defined under section 469.1763, subdivision 2, 
387.29  only if one of the following occurs: 
387.30     (1) on or before April 30, 2002, the revenues are actually 
387.31  paid to a third party with respect to the activity; 
387.32     (2) bonds, the proceeds of which must be used to finance 
387.33  the activity, are issued and sold to a third party on or before 
387.34  April 30, 2002, the revenues are spent to repay the bonds, and 
387.35  the proceeds of the bonds either are, on the date of issuance, 
387.36  reasonably expected to be spent on or before April 30, 2002, or 
388.1   are deposited in a reasonably required reserve or replacement 
388.2   fund; 
388.3      (3) binding contracts with a third party are entered into 
388.4   for performance of the activity on or before April 30, 2002, and 
388.5   the revenues are spent under the contractual obligation; or 
388.6      (4) costs with respect to the activity are paid on or 
388.7   before April 30, 2002, and the revenues are spent to reimburse a 
388.8   party for payment of the costs, including interest on 
388.9   unreimbursed costs. 
388.10     (b) For purposes of this section, bonds include subsequent 
388.11  refunding bonds if the original refunded bonds meet the 
388.12  requirements of paragraph (a), clause (2). 
388.13     (c) Nothing in this section extends the duration of a 
388.14  district beyond the earlier of: 
388.15     (1) the duration limit of the district as established in 
388.16  its tax increment financing plan; or 
388.17     (2) the duration limit of the district as established by 
388.18  law. 
388.19     Subd. 3.  [USE OF REVENUES FOR DECERTIFICATION.] (a) For 
388.20  any tax increment financing district subject to subdivision 2, 
388.21  any revenues derived from tax increments paid by properties in 
388.22  the district that remain after the expenditures permitted under 
388.23  subdivision 2 must be used only to pay: 
388.24     (1) outstanding bonds, as defined in subdivision 2, 
388.25  paragraphs (a), clause (2), and (b); 
388.26     (2) contractual obligations, as defined in subdivision 2, 
388.27  paragraph (a), clauses (3) and (4); or 
388.28     (3) credit enhanced bonds as defined in section 469.1763, 
388.29  subdivision 5, to which the revenues derived from tax increments 
388.30  are pledged, but only to the extent that revenues of the 
388.31  district for which the credit enhanced bonds were issued are 
388.32  insufficient to pay the bonds and to the extent that the 
388.33  increments from the applicable pooling percent share for the 
388.34  district are insufficient. 
388.35     (b) When the outstanding bonds have been defeased and when 
388.36  sufficient money has been set aside to pay contractual 
389.1   obligations as defined in subdivision 2, paragraph (a), clauses 
389.2   (3) and (4), the district must be decertified and the pledge of 
389.3   tax increment discharged. 
389.4      Subd. 4.  [EXEMPTIONS.] The provisions of this section do 
389.5   not apply if any of the following apply: 
389.6      (1) the county board approves, by resolution, a request by 
389.7   the authority and municipality to exempt the district from this 
389.8   section by April 1, 2002; 
389.9      (2) the increments are spent to obtain matching federal 
389.10  funds for a portion of the project; 
389.11     (3) a special law applies to authorize the spending; or 
389.12     (4) a special law extended the duration of the district and 
389.13  the district is subject to section 469.1782, subdivision 1, and 
389.14  was approved under section 469.1782, subdivision 2. 
389.15     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
389.16  following final enactment for districts for which the request 
389.17  for certification was made before May 1, 1990. 
389.18     Sec. 31.  [469.1793] [TIF CONSULTANTS.] 
389.19     Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
389.20  section, the definitions under section 469.174 apply and the 
389.21  following terms have the meanings given. 
389.22     (b) "Act" means sections 469.174 to 469.1791. 
389.23     (c) "Commissioner" means the commissioner of revenue. 
389.24     (d) "Consultant" means an individual, partnership, 
389.25  association, private corporation, or any other legal entity that 
389.26  provides consulting services. 
389.27     (e) "Consulting services" include the rendering of 
389.28  professional opinion, advice, or analysis regarding application 
389.29  of the act for a municipality or authority, including legal, 
389.30  accounting, and fiscal services. 
389.31     Subd. 2.  [REGISTRATION.] (a) All consultants who provide 
389.32  consulting services to municipalities or development authorities 
389.33  must register with the commissioner.  Registrations must be 
389.34  annually renewed.  In order to register, consultants must meet 
389.35  and demonstrate compliance with the following criteria: 
389.36     (1) provide a signed statement agreeing to abide by the 
390.1   act; 
390.2      (2) provide a signed statement agreeing to make available 
390.3   for inspection any records requested by the commissioner, state 
390.4   auditor, or commissioner of commerce for field or financial 
390.5   audits under the scope of the act; 
390.6      (3) certify knowledge of the requirements of the act and 
390.7   guidelines published by the state auditor; 
390.8      (4) obtain and maintain professional liability coverage; 
390.9   and 
390.10     (5) agree to submit to the commissioner a certificate or 
390.11  certificates verifying the existence of the required insurance 
390.12  coverage. 
390.13     (b) The commissioner shall maintain a list of all 
390.14  registered consultants. 
390.15     (c) All consulting services must be performed by registered 
390.16  consultants.  A municipality or authority may not contract for 
390.17  consulting services other than with registered consultants.  
390.18  This requirement does not apply to employees of the municipality 
390.19  or development authority.  Reimbursement for services performed 
390.20  by an unregistered consultant does not qualify for payment using 
390.21  tax increments.  Consulting services performed by a consultant 
390.22  before the consultant's removal from the registration list may 
390.23  be paid with tax increments.  A municipality or development 
390.24  authority may not enter into a contract or other arrangement 
390.25  with a consultant that provides that the consultant's 
390.26  compensation is contingent upon establishment of a tax increment 
390.27  district or completion of a financing arrangement to be paid 
390.28  with tax increments or that provides compensation to the 
390.29  consultant is based on a percentage of increments or eligible 
390.30  costs of a tax increment financing district. 
390.31     (d) If the information in an application for registration 
390.32  becomes inaccurate or incomplete in any material respect, the 
390.33  registered consultant must promptly file a corrected application 
390.34  with the commissioner. 
390.35     (e) Registration is effective 30 days after a complete 
390.36  application is received by the commissioner. 
391.1      (f) Registration under this section remains in force until 
391.2   voluntarily terminated by the registrant, until the registrant 
391.3   fails to renew, or until suspended or revoked by the 
391.4   commissioner of revenue.  All registrants must comply with 
391.5   registration criteria under this subdivision. 
391.6      (g) The fee for filing an application for registration 
391.7   under this section is $100.  The fee for filing an application 
391.8   for renewal of registration under this section is $50.  The 
391.9   commissioner shall deposit the fees in the general fund. 
391.10     Subd. 3.  [CONSULTANT AND CONTRACTOR SANCTIONS.] (a) The 
391.11  commissioner of commerce may, by order, revoke a registration, 
391.12  censure or suspend a registrant and require payment of all costs 
391.13  of proceedings resulting in an action instituted under this 
391.14  section and impose a civil penalty of not more than $10,000 if 
391.15  the commissioner of commerce finds: 
391.16     (1) that the order is in the public interest; and 
391.17     (2) that the registrant or, in the case of a registrant 
391.18  that is not a natural person, any partner, officer, or director, 
391.19  any person occupying a similar status or performing similar 
391.20  functions, or any person directly or indirectly controlling the 
391.21  registrant committed a violation enumerated in paragraph (b). 
391.22     (b) A consultant violates the provisions of this section if 
391.23  the consultant: 
391.24     (1) has engaged in conduct that departs from or fails to 
391.25  conform to the minimal standards of acceptable and prevailing 
391.26  legal, accounting, or fiscal practices under the act within the 
391.27  reasonable control of the consultant; 
391.28     (2) has committed fraud, embezzlement, theft, forgery, 
391.29  bribery, falsified or destroyed records, made false statements, 
391.30  received stolen property, made false claims, or obstructed 
391.31  justice; 
391.32     (3) is the subject of an order revoking, suspending, 
391.33  restricting, limiting, or imposing other disciplinary action 
391.34  against the consultant's license or certification in this or 
391.35  another state or jurisdiction; 
391.36     (4) has failed to comply with any of the ongoing 
392.1   obligations for registration; 
392.2      (5) has failed to comply with any provision or order under 
392.3   the act or chapter 45; 
392.4      (6) has provided consulting services without having an 
392.5   accurate and complete registration on file with the 
392.6   commissioner; 
392.7      (7) has been shown to be incompetent, untrustworthy, or 
392.8   financially irresponsible; 
392.9      (8) has made or assisted another in making any material 
392.10  misrepresentation or omission to the governing body or staff of 
392.11  the authority or the municipality or to the commissioner or upon 
392.12  reasonable request has withheld or concealed information from, 
392.13  or refused to furnish information to, the authority, 
392.14  municipality, commissioner, or the commissioner of commerce; or 
392.15     (9) has entered into a compensation arrangement for 
392.16  consulting services that is contingent upon establishment of a 
392.17  tax increment financing district or completion of a financing 
392.18  arrangement to be paid with tax increments or that provides 
392.19  compensation to the consultant based on a percentage of 
392.20  increments or eligible costs of a tax increment financing 
392.21  district. 
392.22     Subd. 4.  [ORDERS.] The commissioner of commerce may issue 
392.23  an order requiring a registrant or applicant for registration to 
392.24  show cause why the registration should not be revoked or 
392.25  suspended, the registrant censured, the application denied, or 
392.26  other sanction imposed under this section.  The order must be 
392.27  calculated to give reasonable notice of the time and place for 
392.28  hearing on the matter and must state the reasons for the entry 
392.29  of the order.  The commissioner of commerce may, by order, 
392.30  summarily suspend a registration pending final determination of 
392.31  an order to show cause.  A hearing on the merits must be held 
392.32  within 30 days of the issuance of the order of summary 
392.33  suspension.  All hearings must be conducted under chapter 14.  
392.34  After the hearing, the commissioner of commerce shall enter an 
392.35  order disposing of the matter as the facts require.  If the 
392.36  registrant or applicant for registration fails to appear at a 
393.1   hearing after having been duly notified of it, the person is in 
393.2   default and the proceeding may be determined against the 
393.3   registrant or applicant for registration upon consideration of 
393.4   the order to show cause, the allegations of which may be 
393.5   considered to be true. 
393.6      <b>[EFFECTIVE DATE.]</b> This section is effective for consulting 
393.7   services provided after July 1, 2002. 
393.8      Sec. 32.  Minnesota Statutes 2000, section 469.1812, 
393.9   subdivision 2, is amended to read: 
393.10     Subd. 2.  [GOVERNING BODY.] "Governing body" means, for a 
393.11  city, the city council; for a school district, the school board; 
393.12  for a county, the county board; and for a town, the annual 
393.13  meeting of the town board of supervisors. 
393.14     <b>[EFFECTIVE DATE.]</b> This section is effective retroactive to 
393.15  May 26, 1999. 
393.16     Sec. 33.  Minnesota Statutes 2000, section 469.1813, 
393.17  subdivision 4, is amended to read: 
393.18     Subd. 4.  [PROPERTY LOCATED IN TAX INCREMENT FINANCING 
393.19  DISTRICTS.] The governing body of a political subdivision may 
393.20  not enter into a property tax abatement agreement under sections 
393.21  469.1812 to 469.1815 that provides for abatement of taxes on a 
393.22  parcel, if the abatement will occur either: 
393.23     (1) while the parcel is located in a tax increment 
393.24  financing district; or 
393.25     (2) within two years after the parcel was eliminated from a 
393.26  tax increment financing district, other than by decertification 
393.27  of the entire district. 
393.28     <b>[EFFECTIVE DATE.]</b> This section is effective for abatement 
393.29  resolutions approved after June 30, 2001. 
393.30     Sec. 34.  Minnesota Statutes 2000, section 469.1813, 
393.31  subdivision 6, is amended to read: 
393.32     Subd. 6.  [DURATION LIMIT.] (a) A political subdivision may 
393.33  grant an abatement for a period no longer than ten years, except 
393.34  as provided under paragraph (b).  The subdivision may specify in 
393.35  the abatement resolution a shorter duration.  If the resolution 
393.36  does not specify a period of time, the abatement is for eight 
394.1   years.  If an abatement has been granted to a parcel of property 
394.2   and the period of the abatement has expired, the political 
394.3   subdivision that granted the abatement may not grant another 
394.4   abatement for eight years after the expiration of the first 
394.5   abatement.  This prohibition does not apply to improvements 
394.6   added after and not subject to the first abatement. 
394.7      (b) A political subdivision proposing to abate taxes for a 
394.8   parcel may request, in writing, that the other political 
394.9   subdivisions in which the parcel is located grant an abatement 
394.10  for the property.  If one of the other political subdivisions 
394.11  declines, in writing, to grant an abatement or if 90 days pass 
394.12  after receipt of the request to grant an abatement without a 
394.13  written response from one of the political subdivisions, the 
394.14  duration limit for an abatement for the parcel by the requesting 
394.15  political subdivision and any other participating political 
394.16  subdivision is increased to 15 years.  If the political 
394.17  subdivision which declined to grant an abatement later grants an 
394.18  abatement for the parcel, the 15-year duration limit is reduced 
394.19  by one year for each year that the declining political 
394.20  subdivision grants an abatement for the parcel during the period 
394.21  of the abatement granted by the requesting political 
394.22  subdivision.  The duration limit may not be reduced below the 
394.23  limit under paragraph (a).  
394.24     <b>[EFFECTIVE DATE.]</b> This section is effective for abatements 
394.25  approved after the day following final enactment. 
394.26     Sec. 35.  Minnesota Statutes 2000, section 475.58, 
394.27  subdivision 1, is amended to read: 
394.28     Subdivision 1.  [APPROVAL BY ELECTORS; EXCEPTIONS.] 
394.29  Obligations authorized by law or charter may be issued by any 
394.30  municipality upon obtaining the approval of a majority of the 
394.31  electors voting on the question of issuing the obligations, but 
394.32  an election shall not be required to authorize obligations 
394.33  issued: 
394.34     (1) to pay any unpaid judgment against the municipality; 
394.35     (2) for refunding obligations; 
394.36     (3) for an improvement or improvement program, which 
395.1   obligation is payable wholly or partly from the proceeds of 
395.2   special assessments levied upon property specially benefited by 
395.3   the improvement or by an improvement within the improvement 
395.4   program, or of taxes levied upon the increased value of property 
395.5   within a district for the development of which the improvement 
395.6   is undertaken, including obligations which are the general 
395.7   obligations of the municipality, if the municipality is entitled 
395.8   to reimbursement in whole or in part from the proceeds of such 
395.9   special assessments or taxes and not less than 20 percent of the 
395.10  cost of the improvement or the improvement program is to be 
395.11  assessed against benefited property or is to be paid from the 
395.12  proceeds of federal grant funds or a combination thereof, or is 
395.13  estimated to be received from such taxes within the district; 
395.14     (4) payable wholly from the income of revenue producing 
395.15  conveniences; 
395.16     (5) under the provisions of a home rule charter which 
395.17  permits the issuance of obligations of the municipality without 
395.18  election; 
395.19     (6) under the provisions of a law which permits the 
395.20  issuance of obligations of a municipality without an election; 
395.21     (7) to fund pension or retirement fund liabilities pursuant 
395.22  to section 475.52, subdivision 6; 
395.23     (8) under a capital improvement plan under section 373.40; 
395.24     (9) to fund facilities as provided in subdivision 3; and 
395.25     (10) under sections 469.1813 to 469.1815 (property tax 
395.26  abatement authority bonds), if the proceeds of the bonds are not 
395.27  used for a purpose prohibited under section 469.176, subdivision 
395.28  4g, paragraph (b). 
395.29     <b>[EFFECTIVE DATE.]</b> This section is effective for bonds 
395.30  issued or sold after the day following final enactment. 
395.31     Sec. 36.  Laws 1997, chapter 231, article 10, section 25, 
395.32  is amended to read: 
395.33     Sec. 25.  [EFFECTIVE DATE.] 
395.34     Sections 1, 3 to 6, 7, and 10, are effective for districts 
395.35  for which the requests for certification are made after June 30, 
395.36  1997. 
396.1      Section 2, clauses clause (1) and (4), are is effective for 
396.2   all districts for which regardless of when the requests for 
396.3   certification were made after July 31, 1979, and for payments 
396.4   and investment earnings received after July 1, 1997 and 
396.5   regardless of when the increments were received.  Section 2, 
396.6   clauses (2) and (3), are effective for districts for which the 
396.7   request for certification was made after June 30, 1982, and 
396.8   proceeds from sales and leases of properties purchased by the 
396.9   authority after June 30, 1997, and repayments of advances and 
396.10  loans that were made after June 30, 1997.  Section 2, clause 
396.11  (4), is effective for districts for which the requests for 
396.12  certification were made (i) after July 31, 1979, and for 
396.13  investment earnings received after July 1, 1997, and (ii) before 
396.14  August 1, 1979, and for interest and investment earnings 
396.15  received after December 31, 2001. 
396.16     Sections 8 and 9 apply to all tax increment districts, 
396.17  whenever certified, insofar as the underlying law applies to 
396.18  them, and any uses of tax increment expended prior to the date 
396.19  of enactment of this act which are in compliance with the 
396.20  provisions of those sections are deemed valid. 
396.21     Sections 12 and 13 are effective on the day the chief 
396.22  clerical officer of the city of Columbia Heights complies with 
396.23  Minnesota Statutes, sections 645.021, subdivision 3. 
396.24     Sections 17 to 20 are effective the day following final 
396.25  enactment and upon compliance by the governing body with 
396.26  Minnesota Statutes, section 645.021, subdivision 3. 
396.27     Section 24 is effective the day following final enactment. 
396.28     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
396.29  following final enactment. 
396.30     Sec. 37.  Laws 2000, chapter 490, article 11, section 26, 
396.31  the effective date, is amended to read: 
396.32     <b>EFFECTIVE DATE:</b>  This section is effective for increments 
396.33  spent after July 1, 2000, from districts for which certification 
396.34  was requested after May 1, 1990 June 30, 1982. 
396.35     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
396.36  following final enactment. 
397.1      Sec. 38.  [HOLLMAN DECREE HOUSING.] 
397.2      To implement a federal court order or decree relating to 
397.3   the provision of low-rent public housing finance, in whole or in 
397.4   part, with federal financial assistance under section 5 of the 
397.5   United States Housing Act, or any successor legislation, the 
397.6   Minneapolis public housing authority or the metropolitan 
397.7   council, acting under the powers of Minnesota Statutes, sections 
397.8   469.001 to 469.047, may enter a cooperation agreement with the 
397.9   governing body of any municipality or county within the 
397.10  metropolitan area, as defined in Minnesota Statutes, section 
397.11  473.121, subdivision 2, to provide exemption from all real and 
397.12  personal taxes levied or imposed by the state, city, county, or 
397.13  other political subdivision, for which the Minneapolis public 
397.14  housing authority or the metropolitan council shall make, or 
397.15  cause to be made, payments in lieu of taxes as provided under 
397.16  Minnesota Statutes, section 469.040.  This exemption and 
397.17  obligation to make payments in lieu of taxes continues until the 
397.18  housing is no longer subject to the provisions of section 5 of 
397.19  the United States Housing Act, or any successor legislation. 
397.20     <b>[EFFECTIVE DATE.]</b> This section is effective with respect to 
397.21  any cooperation agreement entered into on or after November 1, 
397.22  1997.  Any owner of low-rent public housing acquired and 
397.23  renovated or constructed under a cooperation agreement under 
397.24  this section may apply for abatement of the real or personal 
397.25  property taxes under Minnesota Statutes, section 375.192, 
397.26  notwithstanding the time limitation for filing application under 
397.27  section 375.192.  This section applies in counties of Anoka, 
397.28  Carver, Dakota, Hennepin, Ramsey, Scott, and Washington. 
397.29     Sec. 39.  [AURORA; TAX INCREMENT DISTRICT EXTENSION.] 
397.30     Subdivision 1.  [DISTRICT EXTENSION.] Notwithstanding the 
397.31  provisions of Minnesota Statutes, section 469.176, subdivision 
397.32  1c, upon approval of the governing body of the city of Aurora by 
397.33  resolution, the housing and redevelopment authority in and for 
397.34  the city of Aurora may extend to December 31, 2009, the duration 
397.35  of its downtown tax increment financing district originally 
397.36  certified in 1978.  
398.1      Subd. 2.  [SPECIAL RULES.] Increments permitted to be paid 
398.2   to and retained by the authority by subdivision 1 may only be 
398.3   used to: 
398.4      (1) pay or defease bonds or other contractual obligations; 
398.5      (2) fund public redevelopment costs within the 
398.6   redevelopment project or costs provided for in the tax increment 
398.7   financing plan; or 
398.8      (3) pay or defease bonds issued to refund the bonds.  
398.9      <b>[EFFECTIVE DATE.]</b> This section is effective the day after 
398.10  compliance with Minnesota Statutes, sections 469.1782, 
398.11  subdivision 2, and 645.021, subdivision 2. 
398.12     Sec. 40.  [GAYLORD; TIF DISTRICT EXTENSION.] 
398.13     Notwithstanding the provisions of Minnesota Statutes, 
398.14  section 469.176, subdivision 1c, or any other law, the city of 
398.15  Gaylord may, by resolution, extend the duration of a tax 
398.16  increment financing district originally certified in 1978.  If 
398.17  the city extends the district, the district is deemed to 
398.18  continue to be in effect, beginning for taxes payable in 2002, 
398.19  and notwithstanding the decertification of the district for 
398.20  taxes payable in 2001.  The city may not extend the duration 
398.21  beyond December 31, 2008.  Notwithstanding the provisions of 
398.22  Minnesota Statutes, section 469.176, subdivision 1c, the city 
398.23  may spend increments from the district on project costs other 
398.24  than bonds issued before April 1, 1990. 
398.25     <b>[EFFECTIVE DATE.]</b> This section is effective upon completion 
398.26  with the requirements of Minnesota Statutes, sections 469.1782 
398.27  and 645.021. 
398.28     Sec. 41.  [CITY OF NORTH ST. PAUL; TIF GRANT.] 
398.29     Notwithstanding Laws 1997, chapter 231, article 1, sections 
398.30  19 and 22, as amended by Laws 1997, First Special Session 
398.31  chapter 5, section 36, Laws 1999, chapter 243, article 10, 
398.32  sections 16, 17, 27, and 28, and Laws 2000, chapter 490, article 
398.33  11, section 36, the commissioner of revenue shall pay to the 
398.34  city of North St. Paul the amount of $12,800 as a tax increment 
398.35  financing grant provided for under those laws.  This amount 
398.36  compensates the city for the aggregate amount of the calendar 
399.1   year 1999 deficits in the tax increment financing districts 
399.2   within the city, as determined under the laws cited in this 
399.3   section using the accrual method of accounting.  The amount 
399.4   authorized to be paid under this section for the calendar year 
399.5   1999 tax increment financing deficits may not also be paid under 
399.6   any other provision of law.  The commissioner shall pay the 
399.7   amount authorized under this section to the city by warrant 
399.8   issued on or before 60 days after the enactment of this 
399.9   section.  The warrant must be drawn on the state treasury from 
399.10  the appropriations made in Laws 1997, chapter 231, article 1, 
399.11  section 19, and Laws 1999, chapter 243, article 10, section 27. 
399.12     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
399.13  following final enactment without local approval. 
399.14     Sec. 42.  [CITY OF PARK RAPIDS; EXTENSION OF TIME FOR 
399.15  ACTIVITY IN A TAX INCREMENT FINANCING DISTRICT.] 
399.16     The requirement in Minnesota Statutes, section 469.1763, 
399.17  subdivision 3, that activities must be undertaken within a 
399.18  five-year period from the date of certification of a tax 
399.19  increment financing district must be considered to be met in the 
399.20  case of redevelopment district No. 4 in the city of Park Rapids 
399.21  if the activities are undertaken within six years from the date 
399.22  of certification of the district. 
399.23     <b>[EFFECTIVE DATE.]</b> This section is effective upon approval 
399.24  by the governing body of the city of Park Rapids and compliance 
399.25  with Minnesota Statutes, section 645.021, subdivision 3. 
399.26     Sec. 43.  [ROBBINSDALE; TAX INCREMENT FINANCING DISTRICT.] 
399.27     Notwithstanding the provisions of Minnesota Statutes, 
399.28  section 469.176, subdivision 1c, tax increment may be expended 
399.29  until June 30, 2001, for project costs other than bonds 
399.30  outstanding on April 1, 1990, for the tax increment financing 
399.31  district designated as Project 4 in the city of Robbinsdale.  
399.32     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
399.33  following final enactment, and after approval by the governing 
399.34  body of the city of Robbinsdale and compliance with Minnesota 
399.35  Statutes, section 645.021, subdivision 3. 
399.36     Sec. 44.  [CITY OF LUVERNE; BORDER CITY DEVELOPMENT ZONES.] 
400.1      Subdivision 1.  [AUTHORIZATION.] The governing body of the 
400.2   city of Luverne may designate between one and six areas of the 
400.3   city as border city development zones.  The total area of the 
400.4   zones may not exceed 100 acres. 
400.5      Subd. 2.  [APPLICATION OF GENERAL LAW.] (a) The provisions 
400.6   of Minnesota Statutes, sections 469.1731 to 469.1735, apply to 
400.7   the border city development zones designated under this 
400.8   section.  The governing body of the city may exercise the powers 
400.9   granted under Minnesota Statutes, sections 469.1731 to 469.1735, 
400.10  including powers that apply outside of the zones. 
400.11     (b) The allocation under subdivision 3 for purposes of 
400.12  Minnesota Statutes, section 469.1735, subdivision 2, and the 
400.13  necessary amount of the allocation is appropriated to the 
400.14  commissioner of revenue. 
400.15     Subd. 3.  [ALLOCATION OF STATE TAX REDUCTIONS.] (a) The 
400.16  cumulative total amount of tax reductions for all years of the 
400.17  program under Minnesota Statutes, sections 469.1731 to 469.1735, 
400.18  is limited to $183,000. 
400.19     (b) This allocation may be used for tax reductions provided 
400.20  in Minnesota Statutes, section 469.1732 or 469.1734, or for 
400.21  reimbursements under Minnesota Statutes, section 469.1735, 
400.22  subdivision 3, but only if the governing body of the city of 
400.23  Luverne determines that the tax reduction or offset is necessary 
400.24  to enable a business to expand within a city or to attract a 
400.25  business to the city. 
400.26     (c) The commissioner of revenue may waive the limit under 
400.27  this subdivision using the same rules and standards provided in 
400.28  Minnesota Statutes, section 469.169, subdivision 12, paragraph 
400.29  (b). 
400.30     <b>[EFFECTIVE DATE.]</b> This section is effective upon compliance 
400.31  by the governing body of the city of Luverne with the 
400.32  requirements of Minnesota Statutes, section 645.021. 
400.33     Sec. 45.  [REPEALER.] 
400.34     Minnesota Statutes 2000, sections 273.1399, and 469.1782, 
400.35  subdivision 1, are repealed. 
400.36     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2002.
401.1                              ARTICLE 13
401.2                        STREAMLINED SALES TAX
401.3      Section 1.  [295.60] [SPECIAL FUR CLOTHING TAX.] 
401.4      Subdivision 1.  [IMPOSITION.] If clothing made of fur is 
401.5   not subject to the sales tax under chapter 297A, a tax is 
401.6   imposed on each furrier equal to 6.5 percent of gross revenues 
401.7   from the sale of clothing made from fur made in Minnesota during 
401.8   the calendar year. 
401.9      Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
401.10  the following terms have the meanings given. 
401.11     (b) "Commissioner" means the commissioner of revenue. 
401.12     (c) "Furrier" means a retailer that sells clothing made of 
401.13  fur. 
401.14     (d) "Clothing made of fur" means articles of clothing made 
401.15  of fur on the hide or pelt, and articles of clothing of which 
401.16  such fur is the component material of chief value, but only if 
401.17  such value is more than three times the value of the next most 
401.18  valuable material.  
401.19     Subd. 3.  [PAYMENT.] (a) Each furrier shall make estimated 
401.20  payments of the taxes for the calendar year in quarterly 
401.21  installments to the commissioner by April 15, July 15, October 
401.22  15, and January 15 of the following calendar year. 
401.23     (b) Estimated tax payments are not required if: 
401.24     (1) the tax for the current calendar year is less than 
401.25  $500; or 
401.26     (2) the tax for the previous calendar year is less than 
401.27  $500, if the taxpayer had a tax liability and was doing business 
401.28  the entire year. 
401.29     (c) Underpayment of estimated installments bear interest at 
401.30  the rate specified in section 270.75, from the due date of the 
401.31  payment until paid or until the due date of the annual return, 
401.32  whichever comes first.  An underpayment of an estimated 
401.33  installment is the difference between the amount paid and the 
401.34  lesser of (1) 90 percent of one-quarter of the tax for the 
401.35  calendar year or (2) one-quarter of the total tax for the 
401.36  previous calendar year if the taxpayer had a tax liability and 
402.1   was doing business the entire year. 
402.2      Subd. 4.  [ELECTRONIC FUNDS TRANSFER PAYMENTS.] A taxpayer 
402.3   with an aggregate tax liability of $120,000 or more during a 
402.4   fiscal year ending June 30 must remit all liabilities by means 
402.5   of a funds transfer as defined in section 336.4A-104, paragraph 
402.6   (a), in the subsequent calendar year.  The funds transfer 
402.7   payment date, as defined in section 336.4A-401, is on or before 
402.8   the date the tax is due.  If the date the tax is due is not a 
402.9   funds-transfer business day, as defined in section 336.4A-105, 
402.10  paragraph (a), clause (4), the payment date is on or before the 
402.11  first funds-transfer business day after the date the tax is due. 
402.12     Subd. 5.  [ANNUAL RETURN.] The taxpayer must file an annual 
402.13  return reconciling the estimated payments by March 15 of the 
402.14  following calendar year. 
402.15     Subd. 6.  [FORM OF RETURNS.] The estimated payments and 
402.16  annual return must contain the information and be in the form 
402.17  prescribed by the commissioner. 
402.18     Subd. 7.  [APPLICATION OF OTHER CHAPTERS.] Unless 
402.19  specifically provided otherwise by this section, the 
402.20  enforcement, interest, and penalty provisions under chapter 294, 
402.21  appeal provisions in sections 289A.43 and 289A.65, criminal 
402.22  penalties in section 289A.63, refunds provisions in section 
402.23  289A.50, and collection and rulemaking provisions under chapter 
402.24  270, apply to a liability for the taxes imposed under this 
402.25  section. 
402.26     Subd. 8.  [INTEREST ON OVERPAYMENTS.] Interest must be paid 
402.27  on an overpayment refunded or credited to the taxpayer from the 
402.28  date of payment of the tax until the date the refund is paid or 
402.29  credited.  For purposes of this subdivision, the date of payment 
402.30  is the due date of the return or the date of actual payment of 
402.31  the tax, whichever is later. 
402.32     Subd. 9.  [DEPOSIT OF REVENUES.] The commissioner shall 
402.33  deposit all revenues, including penalties and interest, derived 
402.34  from the tax imposed by this section in the general fund. 
402.35     <b>[EFFECTIVE DATE.]</b> This section is effective for sales made 
402.36  after December 31, 2001. 
403.1      Sec. 2.  Minnesota Statutes 2000, section 297A.61, 
403.2   subdivision 3, is amended to read: 
403.3      Subd. 3.  [SALE AND PURCHASE.] (a) "Sale" and "purchase" 
403.4   include, but are not limited to, each of the transactions listed 
403.5   in this subdivision. 
403.6      (b) Sale and purchase include any transfer of title or 
403.7   possession, or both, of tangible personal property, whether 
403.8   absolutely or conditionally, and the leasing of or the granting 
403.9   of a license to use or consume, for a consideration, tangible 
403.10  personal property, other than a manufactured home used for 
403.11  residential purposes for a continuous period of 30 days or more. 
403.12     (c) Sale and purchase include the production, fabrication, 
403.13  printing, or processing of tangible personal property for a 
403.14  consideration for consumers who furnish either directly or 
403.15  indirectly the materials used in the production, fabrication, 
403.16  printing, or processing. 
403.17     (d) Sale and purchase include the furnishing, preparing, or 
403.18  serving for a consideration of food or drinks.  Notwithstanding 
403.19  section 297A.67, subdivision 2, taxable food or drinks 
403.20  include includes, but are is not limited to, the following: 
403.21     (1) prepared food or drinks sold by the retailer for 
403.22  immediate consumption on the retailer's premises.  Food and 
403.23  drinks sold within a building or grounds that require an 
403.24  admission charge for entrance are presumed to be sold for 
403.25  consumption on the premises; 
403.26     (2) food or drinks prepared by the retailer for immediate 
403.27  consumption either on or off the retailer's premises.  For 
403.28  purposes of this subdivision, "food or drinks prepared for 
403.29  immediate consumption" means any food product upon which an act 
403.30  of preparation including, but not limited to, cooking, mixing, 
403.31  sandwich making, blending, heating, or pouring has been 
403.32  performed by the retailer so the food product may be immediately 
403.33  consumed by the purchaser; 
403.34     (3) ice cream, ice milk, frozen yogurt products, or frozen 
403.35  novelties sold in single or individual servings including, but 
403.36  not limited to, cones, sundaes, and snow cones; 
404.1      (4) (2) soft drinks and other beverages, including all 
404.2   carbonated and noncarbonated beverages or drinks sold in liquid 
404.3   form, but not including beverages or drinks which contain milk 
404.4   or milk products, beverages or drinks containing 15 or more 
404.5   percent fruit juice, and noncarbonated and noneffervescent 
404.6   bottled water sold in individual containers of one-half gallon 
404.7   or more in size; 
404.8      (5) gum, (3) candy, and candy products; and 
404.9      (6) ice; 
404.10     (7) (4) all food sold from through vending machines;.  
404.11     (8) all food for immediate consumption sold from concession 
404.12  stands and vehicles; 
404.13     (9) party trays; 
404.14     (10) all meals and single servings of packaged snack food 
404.15  sold in restaurants and bars; and 
404.16     (11) bakery products that are: 
404.17     (i) prepared by the retailer for consumption on the 
404.18  retailer's premises; 
404.19     (ii) sold at a place that charges admission; 
404.20     (iii) sold from vending machines; or 
404.21     (iv) sold in single or individual servings from concession 
404.22  stands, vehicles, bars, and restaurants.  
404.23     For purposes of this paragraph, "single or individual 
404.24  servings" does not include products when sold in bulk containers 
404.25  or bulk packaging.  
404.26     For purposes of this paragraph, "premises" means the total 
404.27  space and facilities, including buildings, grounds, and parking 
404.28  lots that are made available or that are available for use by 
404.29  the retailer or customer for the purpose of sale or consumption 
404.30  of prepared food and drinks.  The premises of a caterer is the 
404.31  place where the catered food or drinks are served. 
404.32     (e) A sale and a purchase includes the furnishing for a 
404.33  consideration of electricity, gas, water, or steam for use or 
404.34  consumption within this state or local exchange telephone 
404.35  service, intrastate toll service, and interstate toll service, 
404.36  if that service originates from and is charged to a telephone 
405.1   located in this state.  Telephone service includes (1) paging 
405.2   services, and (2) private communication service, as defined in 
405.3   United States Code, title 26, section 4252(d), except for 
405.4   private communication service purchased by an agent acting on 
405.5   behalf of the state lottery.  Telephone service does not include 
405.6   services purchased with a prepaid telephone calling card.  The 
405.7   furnishing for a consideration of access to telephone services 
405.8   by a hotel to its guests is a sale.  The furnishing for a 
405.9   consideration of items listed in this paragraph by a municipal 
405.10  corporation is a sale. 
405.11     (f) A sale and a purchase includes the transfer for a 
405.12  consideration of computer software.  
405.13     (g) A sale and a purchase includes the furnishing for a 
405.14  consideration of taxable services as defined in subdivision 16. 
405.15     (h) A sale and a purchase includes the furnishing for a 
405.16  consideration of tangible personal property or taxable services 
405.17  by the United States or any of its agencies or 
405.18  instrumentalities, or the state of Minnesota, its agencies, 
405.19  instrumentalities, or political subdivisions. 
405.20     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
405.21  purchases occurring after December 31, 2001. 
405.22     Sec. 3.  Minnesota Statutes 2000, section 297A.61, 
405.23  subdivision 4, is amended to read: 
405.24     Subd. 4.  [RETAIL SALE.] (a) A "retail sale" means a any 
405.25  sale, lease, or rental for any purpose other than resale in the 
405.26  regular course of business, sublease, or subrent.  
405.27     (b) A sale of property used by the owner only by leasing it 
405.28  to others or by holding it in an effort to lease it, and put to 
405.29  no use by the owner other than resale after the lease or effort 
405.30  to lease, is a sale of property for resale.  
405.31     (c) A sale of master computer software that is purchased 
405.32  and used to make copies for sale or lease is a sale of property 
405.33  for resale.  
405.34     (d) A sale of building materials, supplies, and equipment 
405.35  to owners, contractors, subcontractors, or builders for the 
405.36  erection of buildings or the alteration, repair, or improvement 
406.1   of real property is a retail sale in whatever quantity sold, 
406.2   whether the sale is for purposes of resale in the form of real 
406.3   property or otherwise.  
406.4      (e) A sale of carpeting, linoleum, or similar floor 
406.5   covering to a person who provides for installation of the floor 
406.6   covering is a retail sale and not a sale for resale since a sale 
406.7   of floor covering which includes installation is a contract for 
406.8   the improvement of real property. 
406.9      (f) A sale of shrubbery, plants, sod, trees, and similar 
406.10  items to a person who provides for installation of the items is 
406.11  a retail sale and not a sale for resale since a sale of 
406.12  shrubbery, plants, sod, trees, and similar items that includes 
406.13  installation is a contract for the improvement of real property. 
406.14     (g) A sale of tangible personal property that is awarded as 
406.15  prizes is a retail sale and is not considered a sale of property 
406.16  for resale. 
406.17     (h) A sale of tangible personal property utilized or 
406.18  employed in the furnishing or providing of services under 
406.19  subdivision 16, paragraph (b), including, but not limited to, 
406.20  property given as promotional items, is a retail sale and is not 
406.21  considered a sale of property for resale. 
406.22     (i) A sale of tangible personal property used in conducting 
406.23  lawful gambling under chapter 349 or the state lottery under 
406.24  chapter 349A, including, but not limited to, property given as 
406.25  promotional items, is a retail sale and is not considered a sale 
406.26  of property for resale. 
406.27     (j) A sale of machines, equipment, or devices that are used 
406.28  to furnish, provide, or dispense goods or services, including, 
406.29  but not limited to, coin-operated devices, is a retail sale and 
406.30  is not considered a sale of property for resale. 
406.31     (k) In the case of a lease, a retail sale occurs when an 
406.32  obligation to make a lease payment becomes due under the terms 
406.33  of the agreement or the trade practices of the lessor. 
406.34     (l) In the case of a conditional sales contract, a retail 
406.35  sale occurs upon the transfer of title or possession of the 
406.36  tangible personal property. 
407.1      <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2002.
407.2      Sec. 4.  Minnesota Statutes 2000, section 297A.61, 
407.3   subdivision 7, is amended to read: 
407.4      Subd. 7.  [SALES PRICE.] (a) "Sales price" means the total 
407.5   consideration for a retail sale, valued in money, whether paid 
407.6   in money or by barter or exchange. the measure subject to sales 
407.7   tax, and means the total amount of consideration, including 
407.8   cash, credit, property, and services, for which personal 
407.9   property or services are sold, leased, or rented, valued in 
407.10  money, whether received in money or otherwise, without any 
407.11  deduction for the following: 
407.12     (1) the seller's cost of the property sold; 
407.13     (2) the cost of materials used, labor or service cost, 
407.14  interest, losses, all costs of transportation to the seller, all 
407.15  taxes imposed on the seller, and any other expenses of the 
407.16  seller; 
407.17     (3) charges by the seller for any services necessary to 
407.18  complete the sale, other than delivery and installation charges; 
407.19  and 
407.20     (4) the value of exempt property given to the purchaser 
407.21  when taxable and exempt personal property have been bundled 
407.22  together and sold by the seller as a single product or piece of 
407.23  merchandise. 
407.24     (b) Sales price includes: 
407.25     (1) the cost of the property sold, cost of materials used, 
407.26  labor or service cost, interest, or discount allowed after the 
407.27  sale is consummated; 
407.28     (2) the cost of transportation incurred prior to the time 
407.29  of sale; 
407.30     (3) any amount for which credit is given by the seller to 
407.31  the purchaser; 
407.32     (4) charges for services that are part of a sale; or 
407.33     (5) any other expense whatsoever. 
407.34     (c) (b) Sales price does not include the following: 
407.35     (1) an amount allowed as credit for tangible personal 
407.36  property taken in trade for resale discounts, including cash, 
408.1   terms, or coupons that are not reimbursed by a third party and 
408.2   that are allowed by the seller and taken by a purchaser on a 
408.3   sale; 
408.4      (2) charges of up to 15 percent in lieu of tips if the 
408.5   charges are separately stated interest, financing, and carrying 
408.6   charges from credit extended on the sale of personal property or 
408.7   services, if the amount is separately stated on the invoice, 
408.8   bill of sale, or similar document given to the purchaser; 
408.9      (3) interest, financing, or carrying charges if the charges 
408.10  are separately stated any taxes legally imposed directly on the 
408.11  consumer that are separately stated on the invoice, bill of 
408.12  sale, or similar document given to the purchaser; 
408.13     (4) charges for labor or services used in installing or 
408.14  applying the property sold if the charges are separately stated; 
408.15  and 
408.16     (5) transportation charges if the transportation occurs 
408.17  after the retail sale of the property delivery charges if the 
408.18  charges are separately stated; 
408.19     (6) cash discounts allowed and taken on sales or the amount 
408.20  refunded either in cash or in credit for property returned by 
408.21  purchasers; 
408.22     (7) the rental motor vehicle tax imposed under section 
408.23  297A.64; or 
408.24     (8) the amount of any tax imposed by the United States on 
408.25  communications services under United States Code, title 26, 
408.26  section 4251(a). 
408.27     (d) Notwithstanding paragraph (c), "sales price," for 
408.28  purposes of sales of ready-mixed concrete sold from a 
408.29  ready-mixed concrete truck, includes any transportation, 
408.30  delivery, or other service charges, and no deduction is allowed 
408.31  for those charges, whether or not the charges are separately 
408.32  stated.  
408.33     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2002.
408.34     Sec. 5.  Minnesota Statutes 2000, section 297A.61, 
408.35  subdivision 9, is amended to read: 
408.36     Subd. 9.  [RETAILER AND SELLER.] "Retailer" and "seller" 
409.1   means every any person engaged in making retail sales, leases, 
409.2   or rentals of personal property or services. 
409.3      <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2002.
409.4      Sec. 6.  Minnesota Statutes 2000, section 297A.61, is 
409.5   amended by adding a subdivision to read: 
409.6      Subd. 24.  [PURCHASE PRICE.] "Purchase price" means the 
409.7   measure subject to the use tax and has the same meaning as 
409.8   "sales price." 
409.9      <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2002.
409.10     Sec. 7.  Minnesota Statutes 2000, section 297A.61, is 
409.11  amended by adding a subdivision to read: 
409.12     Subd. 25.  [STATE.] Unless specifically provided otherwise, 
409.13  "state" means any state of the United States and the District of 
409.14  Columbia. 
409.15     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2002.
409.16     Sec. 8.  Minnesota Statutes 2000, section 297A.61, is 
409.17  amended by adding a subdivision to read: 
409.18     Subd. 26.  [DELIVERY CHARGES.] "Delivery charges" means 
409.19  charges by the seller for preparation and delivery to a location 
409.20  designated by the purchaser of personal property or services 
409.21  including, but not limited to, transportation, shipping, 
409.22  postage, handling, crating, and packing. 
409.23     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2002.
409.24     Sec. 9.  Minnesota Statutes 2000, section 297A.61, is 
409.25  amended by adding a subdivision to read: 
409.26     Subd. 27.  [PREPARED FOOD.] "Prepared food" means (i) food 
409.27  sold in a heated state or heated by the seller; (ii) two or more 
409.28  food ingredients mixed or combined by the seller for sale as a 
409.29  single item; or (iii) food sold with eating utensils provided by 
409.30  the seller, including plates, knives, forks, spoons, glasses, 
409.31  cups, napkins, or straws.  Prepared food does not include food 
409.32  that is sliced, repackaged, or pasteurized by the seller. 
409.33     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2002.
409.34     Sec. 10.  Minnesota Statutes 2000, section 297A.61, is 
409.35  amended by adding a subdivision to read: 
409.36     Subd. 28.  [SOFT DRINKS.] "Soft drinks" means nonalcoholic 
410.1   beverages that contain natural or artificial sweeteners.  Soft 
410.2   drinks do not include beverages that contain milk or milk 
410.3   products; soy, rice, or similar milk substitutes; or greater 
410.4   than 50 percent vegetable or fruit juice by volume. 
410.5      <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2002.
410.6      Sec. 11.  Minnesota Statutes 2000, section 297A.61, is 
410.7   amended by adding a subdivision to read:  
410.8      Subd. 29.  [CANDY.] "Candy" means a preparation of sugar, 
410.9   honey, or other natural or artificial sweeteners in combination 
410.10  with chocolate, fruits, nuts, or other ingredients or flavorings 
410.11  in the form of bars, drops, or pieces.  Candy does not include 
410.12  any preparation containing flour and must require no 
410.13  refrigeration. 
410.14     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2002.
410.15     Sec. 12.  Minnesota Statutes 2000, section 297A.61, is 
410.16  amended by adding a subdivision to read: 
410.17     Subd. 30.  [FOOD SOLD THROUGH VENDING MACHINES.] "Food sold 
410.18  through vending machines" means food dispensed from a machine or 
410.19  other mechanical device that accepts payment. 
410.20     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2002.
410.21     Sec. 13.  Minnesota Statutes 2000, section 297A.64, 
410.22  subdivision 3, is amended to read: 
410.23     Subd. 3.  [ADMINISTRATION.] The retailer shall report and 
410.24  pay the tax imposed in subdivision 1 to the commissioner of 
410.25  revenue with the taxes imposed in this chapter.  The tax imposed 
410.26  in subdivision 1 and the fee imposed in subdivision 2 are is 
410.27  subject to the same interest, penalty, and other provisions 
410.28  provided for sales and use taxes under chapter 289A and this 
410.29  chapter.  The commissioner has the same powers to assess and 
410.30  collect the tax and fee that are given the commissioner in 
410.31  chapters 270 and 289A and this chapter to assess and collect 
410.32  sales and use tax. 
410.33     <b>[EFFECTIVE DATE.]</b> This section is effective for leases 
410.34  entered into after December 31, 2005. 
410.35     Sec. 14.  Minnesota Statutes 2000, section 297A.64, 
410.36  subdivision 4, is amended to read: 
411.1      Subd. 4.  [EXEMPTIONS.] (a) The tax and the fee imposed by 
411.2   this section do does not apply to a lease or rental of (1) a 
411.3   vehicle to be used by the lessee to provide a licensed taxi 
411.4   service; (2) a hearse or limousine used in connection with a 
411.5   burial or funeral service; or (3) a van designed or adapted 
411.6   primarily for transporting property rather than passengers. 
411.7      (b) The lessor may elect not to charge the fee imposed in 
411.8   subdivision 2 if in the previous calendar year the lessor had no 
411.9   more than 20 vehicles available for lease that would have been 
411.10  subject to tax under this section, or no more than $50,000 in 
411.11  gross receipts that would have been subject to tax under this 
411.12  section.  
411.13     <b>[EFFECTIVE DATE.]</b> This section is effective for leases 
411.14  entered into after December 31, 2005. 
411.15     Sec. 15.  [297A.668] [SOURCING OF SALE; SITUS IN THIS 
411.16  STATE.] 
411.17     Subdivision 1.  [SOURCING RULES.] (a) The following 
411.18  provisions apply regardless of the characterization of a product 
411.19  as tangible personal property, a digital good, or a service; but 
411.20  do not apply to telecommunications services, or the sales of 
411.21  motor vehicles, watercraft, aircraft, modular homes, 
411.22  manufactured homes, or mobile homes.  These provisions only 
411.23  apply to determine a seller's obligation to pay or collect and 
411.24  remit a sales or use tax with respect to the seller's sale of a 
411.25  product.  These provisions do not affect the obligation of a 
411.26  seller as purchaser to remit tax on the use of the product. 
411.27     (b) When the product is received by the purchaser at a 
411.28  business location of the seller, the sale is sourced to that 
411.29  business location. 
411.30     (c) When the product is not received by the purchaser at a 
411.31  business location of the seller, the sale is sourced to the 
411.32  location where receipt by the purchaser or the donee designated 
411.33  by the purchaser occurs, including the location indicated by 
411.34  instructions for delivery to the purchasers or the purchaser's 
411.35  donee, known to the seller. 
411.36     (d) When paragraphs (b) and (c) do not apply, the sale is 
412.1   sourced to the location indicated by an address for the 
412.2   purchaser that is available from the business records of the 
412.3   seller that are maintained in the ordinary course of the 
412.4   seller's business, when use of this address does not constitute 
412.5   bad faith. 
412.6      (e) When paragraphs (b), (c), and (d) do not apply, the 
412.7   sale is sourced to the location indicated by an address for the 
412.8   purchaser obtained during the consummation of the sale, 
412.9   including the address of a purchaser's payment instrument if no 
412.10  other address is available, when use of this address does not 
412.11  constitute bad faith. 
412.12     (f) When paragraphs (b), (c), (d), and (e) do not apply, 
412.13  including the circumstance where the seller is without 
412.14  sufficient information to apply the previous paragraphs, then 
412.15  the location is determined by the address from which tangible 
412.16  personal property was shipped, from which the digital good was 
412.17  first available for transmission by the seller, or from which 
412.18  the service was provided. 
412.19     Subd. 2.  [MULTIPLE POINTS OF USE.] (a) Notwithstanding the 
412.20  provisions of subdivision 1, a business purchaser that is not a 
412.21  holder of a direct pay permit that knows at the time of its 
412.22  purchase of a digital good or service that the digital good or 
412.23  service will be concurrently available for use in more than one 
412.24  taxing jurisdiction shall deliver to the seller in conjunction 
412.25  with its purchase a multiple points of use exemption certificate 
412.26  disclosing this fact. 
412.27     (b) Upon receipt of the multiple points of use exemption 
412.28  certificate, the seller is relieved of the obligation to 
412.29  collect, pay, or remit the applicable tax and the purchaser is 
412.30  obligated to collect, pay, or remit the applicable tax on a 
412.31  direct pay basis. 
412.32     (c) A purchaser delivering the multiple points of use 
412.33  exemption certificate may use any reasonable, but consistent and 
412.34  uniform, method of apportionment that is supported by the 
412.35  purchaser's business records as they exist at the time of the 
412.36  consummation of the sale. 
413.1      (d) The multiple points of use exemption certificate 
413.2   remains in effect for all future sales by the seller to the 
413.3   purchaser until it is revoked in writing. 
413.4      (e) A holder of a direct pay permit is not required to 
413.5   deliver a multiple points or use exemption certificate to the 
413.6   seller.  A direct pay permit holder shall follow the provisions 
413.7   of paragraph (c) in apportioning the tax due on a digital good 
413.8   or a service that will be concurrently available for use in more 
413.9   than one taxing jurisdiction. 
413.10     Subd. 3.  [DEFINITION OF TERMS.] For purposes of this 
413.11  section, the terms "receive" and "receipt" mean taking 
413.12  possession of tangible personal property, making first use of 
413.13  services, or taking possession of making first use of digital 
413.14  goods, whichever occurs first.  The terms receive and receipt do 
413.15  not include possession by a carrier for hire on behalf of the 
413.16  purchaser. 
413.17     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
413.18  purchases occurring after December 31, 2001. 
413.19     Sec. 16.  Minnesota Statutes 2000, section 297A.67, 
413.20  subdivision 2, is amended to read: 
413.21     Subd. 2.  [FOOD PRODUCTS AND FOOD INGREDIENTS.] 
413.22  Food products including, but not limited to, cereal and cereal 
413.23  products, butter, cheese, milk and milk products, oleomargarine, 
413.24  meat and meat products, fish and fish products, eggs and egg 
413.25  products, vegetables and vegetable products, fruit and fruit 
413.26  products, spices and salt, sugar and sugar products, coffee and 
413.27  coffee substitutes, tea, and cocoa and cocoa products and food 
413.28  ingredients are exempt.  For purposes of this subdivision, 
413.29  "food" and "food ingredients" mean substances, whether in 
413.30  liquid, concentrated, solid, frozen, dried, or dehydrated form, 
413.31  that are sold for ingestion or chewing by humans and are 
413.32  consumed for their taste or nutritional value.  Food and food 
413.33  ingredients do not include candy, soft drinks, food sold through 
413.34  vending machines, and prepared foods.  Food and food ingredients 
413.35  do not include alcoholic beverages, dietary supplements, and 
413.36  tobacco.  For purposes of this subdivision, "alcoholic 
414.1   beverages" means beverages that are suitable for human 
414.2   consumption and contain one-half of one percent or more of 
414.3   alcohol by volume.  For purposes of this subdivision, "tobacco" 
414.4   means cigarettes, cigars, chewing or pipe tobacco, or any other 
414.5   item that contains tobacco.  For purposes of this subdivision, 
414.6   "dietary supplements" means any product, other than tobacco, 
414.7   intended to supplement the diet that: 
414.8      (1) contains one or more of the following dietary 
414.9   ingredients: 
414.10     (i) a vitamin; 
414.11     (ii) a mineral; 
414.12     (iii) an herb or other botanical; 
414.13     (iv) an amino acid; 
414.14     (v) a dietary substance for use by humans to supplement the 
414.15  diet by increasing the total dietary intake; and 
414.16     (vi) a concentrate, metabolite, constituent, extract, or 
414.17  combination of any ingredient described in items (i) to (v); 
414.18     (2) is intended for ingestion in tablet, capsule, powder, 
414.19  softgel, gelcap, or liquid form, or if not intended for 
414.20  ingestion in such form, is not represented as conventional food 
414.21  and is not represented for use as a sole item of a meal or of 
414.22  the diet; and 
414.23     (3) is required to be labeled as a dietary supplement, 
414.24  identifiable by the supplement facts box found on the label and 
414.25  as required pursuant to Code of Federal Regulations, title 21, 
414.26  section 101.36. 
414.27     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
414.28  purchases occurring after December 31, 2001. 
414.29     Sec. 17.  Minnesota Statutes 2000, section 297A.67, 
414.30  subdivision 8, is amended to read: 
414.31     Subd. 8.  [CLOTHING.] (a) Clothing and wearing apparel, 
414.32  including sewing materials to be directly incorporated into 
414.33  wearing apparel, are is exempt.  For purposes of this 
414.34  subdivision, clothing and wearing apparel do not include the 
414.35  following: 
414.36     (1) articles designed primarily for use while engaging in a 
415.1   specific sport or recreational activity that are not also worn 
415.2   for general use; 
415.3      (2) articles designed primarily to provide safety or 
415.4   protection against injury while the user is engaged in 
415.5   industrial or general job activities; 
415.6      (3) all articles commonly or commercially known as jewelry 
415.7   including, but not limited to, watches; 
415.8      (4) nonprescription optical glasses of any sort; 
415.9      (5) articles made entirely of fur on the hide or pelt, or 
415.10  partially of such fur if the value of the fur is more than three 
415.11  times the value of the next most valuable component material; 
415.12     (6) perfume, lotions, creams, dyes, or other substances 
415.13  that are applied to the skin or the hair; and 
415.14     (7) luggage, bags, purses, wallets, or cases of any 
415.15  sort. "clothing" means all human wearing apparel suitable for 
415.16  general use. 
415.17     (b) Clothing includes, but is not limited to, aprons, 
415.18  household and shop; athletic supporters; baby receiving 
415.19  blankets; bathing suits and caps; beach capes and coats; belts 
415.20  and suspenders; boots; coats and jackets; costumes; children and 
415.21  adult diapers, including disposable; ear muffs; footlets; formal 
415.22  wear; garters and garter belts; girdles; gloves and mittens for 
415.23  general use; hats and caps; hosiery; insoles for shoes; lab 
415.24  coats; neckties; overshoes; pantyhose; rainwear; rubber pants; 
415.25  sandals; scarves; shoes and shoe laces; slippers; sneakers; 
415.26  socks and stockings; steel-toed boots; underwear; uniforms, 
415.27  athletic and nonathletic; and wedding apparel. 
415.28     (c) Clothing does not include the following: 
415.29     (1) belt buckles sold separately; 
415.30     (2) costume masks sold separately; 
415.31     (3) patches and emblems sold separately; 
415.32     (4) sewing equipment and supplies, including but not 
415.33  limited to, knitting needles, patterns, pins, scissors, sewing 
415.34  machines, sewing needles, tape measures, and thimbles; 
415.35     (5) sewing materials that become part of clothing, 
415.36  including but not limited to, buttons, fabric, lace, thread, 
416.1   yarn, and zippers; 
416.2      (6) clothing accessories or equipment; 
416.3      (7) sports or recreational equipment; and 
416.4      (8) protective equipment. 
416.5   Clothing also does not include apparel made from fur if a 
416.6   uniform definition of "apparel made from fur" is developed by 
416.7   the member states of the Streamlined Sales and Use Tax Agreement.
416.8      For purposes of this subdivision, "clothing accessories or 
416.9   equipment" means incidental items worn on the person or in 
416.10  conjunction with clothing.  Clothing accessories include, but 
416.11  are not limited to, briefcases; cosmetics; hair notions, 
416.12  including barrettes, hair bows, and hairnets; handbags; 
416.13  handkerchiefs; jewelry; nonprescription sunglasses; umbrellas; 
416.14  wallets; watches; and wigs and hairpieces.  "Sports or 
416.15  recreational equipment" means items designed for human use and 
416.16  worn in conjunction with an athletic or recreational activity 
416.17  that are not suitable for general use.  Sports and recreational 
416.18  equipment includes, but is not limited to, ballet and tap shoes; 
416.19  cleated or spiked athletic shoes; baseball, bowling, boxing, 
416.20  hockey, and golf gloves; goggles; hand and elbow guards; life 
416.21  preservers and vests; mouth guards; roller and ice skates; shin 
416.22  guards; shoulder pads; ski boots; waders; and wetsuits and 
416.23  fins.  "Protective equipment" means items for human wear and 
416.24  designed as protection of the wearer against injury or disease 
416.25  or as protection against damage or injury of other persons or 
416.26  property but not suitable for general use.  Protective equipment 
416.27  includes, but is not limited to, breathing masks; clean room 
416.28  apparel and equipment; ear and hearing protectors; face shields; 
416.29  finger guards; hard hats; helmets; paint or dust respirators; 
416.30  protective gloves; safety glasses and goggles; safety belts; 
416.31  tool belts; and welders gloves and masks. 
416.32     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
416.33  purchases occurring after December 31, 2001. 
416.34     Sec. 18.  Minnesota Statutes 2000, section 297A.67, is 
416.35  amended by adding a subdivision to read: 
416.36     Subd. 26.  [TRADE ALLOWANCE.] The amount allowed as a 
417.1   credit against the sales price for tangible personal property 
417.2   taken in trade for resale is exempt. 
417.3      <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
417.4   purchases occurring after December 31, 2001. 
417.5      Sec. 19.  Minnesota Statutes 2000, section 297A.67, is 
417.6   amended by adding a subdivision to read: 
417.7      Subd. 27.  [SEWING MATERIALS.] Sewing materials are exempt. 
417.8   For purposes of this subdivision "sewing materials" mean fabric, 
417.9   thread, zippers, interfacing, buttons, trim, and other items 
417.10  that are usually directly incorporated into the construction of 
417.11  clothing, regardless of whether it is actually used for making 
417.12  clothing.  It does not include batting, foam, or fabric 
417.13  specifically manufactured for arts and craft projects, or other 
417.14  materials for craft projects. 
417.15     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
417.16  purchases made after December 31, 2001. 
417.17     Sec. 20.  Minnesota Statutes 2000, section 297A.72, 
417.18  subdivision 1, is amended to read: 
417.19     Subdivision 1.  [DUTY OF RETAILER.] An A fully completed 
417.20  exemption certificate conclusively relieves the retailer from 
417.21  collecting and remitting the tax only if taken in good faith 
417.22  from the purchaser at the time of sale. 
417.23     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
417.24  purchases occurring after December 31, 2001. 
417.25     Sec. 21.  Minnesota Statutes 2000, section 297A.99, 
417.26  subdivision 9, is amended to read: 
417.27     Subd. 9.  [ENFORCEMENT; COLLECTION; AND ADMINISTRATION.] 
417.28  (a) The commissioner of revenue shall collect the taxes subject 
417.29  to this section.  The commissioner may collect the tax with the 
417.30  state sales and use tax.  All taxes under this section are 
417.31  subject to the same penalties, interest, and enforcement 
417.32  provisions as apply to the state sales and use tax. 
417.33     (b) A request for a refund of state sales tax paid in 
417.34  excess of the amount of tax legally due includes a request for a 
417.35  refund of the political subdivision taxes paid on the goods or 
417.36  services.  The commissioner shall refund to the taxpayer the 
418.1   full amount of the political subdivision taxes paid on exempt 
418.2   sales or use. 
418.3      (c) A political subdivision that is collecting and 
418.4   administering its own sales and use tax before January 1, 1998, 
418.5   may elect to be exempt from this subdivision and subdivision 11. 
418.6      <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2002.
418.7      Sec. 22.  Minnesota Statutes 2000, section 297A.99, 
418.8   subdivision 11, is amended to read: 
418.9      Subd. 11.  [REVENUES; COST OF COLLECTION.] The commissioner 
418.10  shall remit the proceeds of the tax, less refunds and a 
418.11  proportionate share of the cost of collection, at least 
418.12  quarterly, to the political subdivision.  The commissioner shall 
418.13  deduct from the proceeds remitted an amount that equals 
418.14     (1) the direct and indirect costs of the department to 
418.15  administer, audit, and collect the political subdivision's tax, 
418.16  plus 
418.17     (2) the political subdivision's proportionate share of the 
418.18  indirect cost of administering all taxes under this section, 
418.19  plus 
418.20     (3) the cost of constructing and maintaining a zip code or 
418.21  geo-code data base necessary for local sales tax collections 
418.22  under the Streamlined Sales and Use Tax Agreement in section 
418.23  297A.995. 
418.24     The initial cost of constructing a data base under clause 
418.25  (3) shall be distributed among the cities with a local sales tax 
418.26  based on each city's population.  The commissioner shall develop 
418.27  a method for distributing the cost of maintaining the data base 
418.28  among the cities with a local sales tax based on the number of 
418.29  boundary changes for each city. 
418.30     <b>[EFFECTIVE DATE.]</b> This section is effective for payments to 
418.31  the counties after June 30, 2001, for costs incurred after June 
418.32  30, 2001. 
418.33     Sec. 23.  [297A.995] [UNIFORM SALES AND USE TAX 
418.34  ADMINISTRATION ACT.] 
418.35     Subdivision 1.  [TITLE.] This section may be cited as the 
418.36  Uniform Sales and Use Tax Administration Act. 
419.1      Subd. 2.  [DEFINITIONS.] As used in this section: 
419.2      (a) "Agreement" means the Streamlined Sales and Use Tax 
419.3   Agreement. 
419.4      (b) "Certified automated system" means software certified 
419.5   jointly by the states that are signatories to the agreement to 
419.6   calculate the tax imposed by each jurisdiction on a transaction, 
419.7   determine the amount of tax to remit to the appropriate state, 
419.8   and maintain a record of the transaction. 
419.9      (c) "Certified service provider" means an agent certified 
419.10  jointly by the states that are signatories to the agreement to 
419.11  perform all of the seller's sales tax functions. 
419.12     Subd. 3.  [LEGISLATIVE FINDING.] The legislature finds that 
419.13  this state should enter into an agreement with one or more 
419.14  states to simplify and modernize sales and use tax 
419.15  administration in order to substantially reduce the burden of 
419.16  tax compliance for all sellers and for all types of commerce. 
419.17     Subd. 4.  [AUTHORITY TO ENTER AGREEMENT.] The commissioner 
419.18  of revenue is authorized and directed to enter into the 
419.19  agreement with one or more states to simplify and modernize 
419.20  sales and use tax administration in order to substantially 
419.21  reduce the burden of tax compliance for all sellers and for all 
419.22  types of commerce.  In furtherance of the agreement, the 
419.23  commissioner is authorized to act jointly with other states that 
419.24  are members of the agreement to establish standards for 
419.25  certification of a certified service provider and certified 
419.26  automated system and establish performance standards for 
419.27  multistate sellers. 
419.28     The commissioner is further authorized to take other 
419.29  actions reasonably required to implement the provisions set 
419.30  forth in this article.  Other actions authorized by this section 
419.31  include, but are not limited to, the adoption of rules and 
419.32  regulations and the joint procurement, with other member states, 
419.33  of goods and services in furtherance of the cooperative 
419.34  agreement. 
419.35     The commissioner or the commissioner's designee is 
419.36  authorized to represent this state before the other states that 
420.1   are signatories to the agreement. 
420.2      Subd. 5.  [RELATIONSHIP TO STATE LAW.] No provision of the 
420.3   agreement authorized by this bill in whole or part invalidates 
420.4   or amends any provision of the law of this state.  Adoption of 
420.5   the agreement by this state does not amend or modify any law of 
420.6   this state.  Implementation of any condition of the agreement in 
420.7   this state, whether adopted before, at, or after membership of 
420.8   this state in the agreement, must be by the action of this state.
420.9      Subd. 6.  [AGREEMENT REQUIREMENTS.] The commissioner of 
420.10  revenue shall not enter into the agreement unless the agreement 
420.11  requires each state to abide by the following requirements: 
420.12     (a) [UNIFORM STATE RATE.] The agreement must set 
420.13  restrictions to achieve more uniform state rates through the 
420.14  following: 
420.15     (1) limiting the number of state rates; 
420.16     (2) eliminating maximums on the amount of state tax that is 
420.17  due on a transaction; and 
420.18     (3) eliminating thresholds on the application of state tax. 
420.19     (b) [UNIFORM STANDARDS.] The agreement must establish 
420.20  uniform standards for the following: 
420.21     (1) the sourcing of transactions to taxing jurisdictions; 
420.22     (2) the administration of exempt sales; 
420.23     (3) the allowances a seller can take for bad debts; and 
420.24     (4) sales and use tax returns and remittances. 
420.25     (c) [UNIFORM DEFINITIONS.] The agreement must require 
420.26  states to develop and adopt uniform definitions of sales and use 
420.27  tax terms.  The definitions must enable a state to preserve its 
420.28  ability to make policy choices not inconsistent with the uniform 
420.29  definitions. 
420.30     (d) [CENTRAL REGISTRATION.] The agreement must provide a 
420.31  central, electronic registration system that allows a seller to 
420.32  register to collect and remit sales and use taxes for all 
420.33  signatory states. 
420.34     (e) [NO NEXUS ATTRIBUTION.] The agreement must provide that 
420.35  registration with the central registration system and the 
420.36  collection of sales and use taxes in the signatory states will 
421.1   not be used as a factor in determining whether the seller has 
421.2   nexus with a state for any tax. 
421.3      (f) [LOCAL SALES AND USE TAXES.] The agreement must provide 
421.4   for reduction of the burdens of complying with local sales and 
421.5   use taxes through the following: 
421.6      (1) restricting and eliminating variances between the state 
421.7   and local tax bases; 
421.8      (2) requiring states to administer any sales and use taxes 
421.9   levied by local jurisdictions within the state so that sellers 
421.10  collecting and remitting these taxes will not have to register 
421.11  or file returns with, remit funds to, or be subject to 
421.12  independent audits from local taxing jurisdictions; 
421.13     (3) restricting the frequency of changes in the local sales 
421.14  and use tax rates and setting effective dates for the 
421.15  application of local jurisdictional boundary changes to local 
421.16  sales and use taxes; and 
421.17     (4) providing notice of changes in local sales and use tax 
421.18  rates and of changes in the boundaries of local taxing 
421.19  jurisdictions. 
421.20     (g) [MONETARY ALLOWANCES.] The agreement must outline any 
421.21  monetary allowances that are to be provided by the states to 
421.22  sellers or certified service providers. 
421.23     (h) [STATE COMPLIANCE.] The agreement must require each 
421.24  state to certify compliance with the terms of the agreement 
421.25  prior to joining and to maintain compliance, under the laws of 
421.26  the member state, with all provisions of the agreement while a 
421.27  member. 
421.28     (i) [CONSUMER PRIVACY.] The agreement must require each 
421.29  state to adopt a uniform policy for certified service providers 
421.30  that protects the privacy of consumers and maintains the 
421.31  confidentiality of tax information. 
421.32     (j) [ADVISORY COUNCILS.] The agreement must provide for the 
421.33  appointment of an advisory council of private sector 
421.34  representatives and an advisory council of nonmember state 
421.35  representatives to consult with in the administration of the 
421.36  agreement. 
422.1      Subd. 7.  [COOPERATING SOVEREIGNS.] The agreement 
422.2   authorized by this bill is an accord among individual 
422.3   cooperating sovereigns in furtherance of their governmental 
422.4   functions.  The agreement provides a mechanism among the member 
422.5   states to establish and maintain a cooperative, simplified 
422.6   system for the application and administration of sales and use 
422.7   taxes under the duly adopted law of each member state. 
422.8      Subd. 8.  [LIMITED BINDING AND BENEFICIAL EFFECT.] (a) The 
422.9   agreement authorized by this bill binds and inures only to the 
422.10  benefit of this state and the other member states.  No person, 
422.11  other than a member state, is an intended beneficiary of the 
422.12  agreement.  Any benefit to a person other than a state is 
422.13  established by the law of this state and the other member states 
422.14  and not by the terms of the agreement. 
422.15     (b) Consistent with paragraph (a), no person shall have any 
422.16  cause of action or defense under the agreement or by virtue of 
422.17  this state's approval of the agreement.  No person may 
422.18  challenge, in any action brought under any provision of law, any 
422.19  action or inaction by any department, agency, or other 
422.20  instrumentality of this state, or any political subdivision of 
422.21  this state, on the ground that the action or inaction is 
422.22  inconsistent with the agreement. 
422.23     (c) No law of this state, or its application, may be 
422.24  declared invalid as to any person or circumstance on the ground 
422.25  that the provision or application is inconsistent with the 
422.26  agreement. 
422.27     Subd. 9.  [SELLER AND THIRD-PARTY LIABILITY.] (a) A 
422.28  certified service provider is the agent of a seller, with whom 
422.29  the certified service provider has contracted, for the 
422.30  collection and remittance of sales and use taxes.  As the 
422.31  seller's agent, the certified service provider is liable for 
422.32  sales and use tax due each member state on all sales 
422.33  transactions it processes for the seller except as set out in 
422.34  this section. 
422.35     A seller that contracts with a certified service provider 
422.36  is not liable to the state for sales or use tax due on 
423.1   transactions processed by the certified service provider unless 
423.2   the seller misrepresented the type of items it sells or 
423.3   committed fraud.  In the absence of probable cause to believe 
423.4   that the seller has committed fraud or made a material 
423.5   misrepresentation, the seller is not subject to audit on the 
423.6   transactions processed by the certified service provider.  A 
423.7   seller is subject to audit for transactions not processed by the 
423.8   certified service provider.  The member states acting jointly 
423.9   may perform a system check of the seller and review the seller's 
423.10  procedures to determine if the certified service provider's 
423.11  system is functioning properly and the extent to which the 
423.12  seller's transactions are being processed by the certified 
423.13  service provider. 
423.14     (b) A person that provides a certified automated system is 
423.15  responsible for the proper functioning of that system and is 
423.16  liable to the state for underpayments of tax attributable to 
423.17  errors in the functioning of the certified automated system.  A 
423.18  seller that uses a certified automated system remains 
423.19  responsible and is liable to the state for reporting and 
423.20  remitting tax. 
423.21     (c) A seller that has a proprietary system for determining 
423.22  the amount of tax due on transactions and has signed an 
423.23  agreement establishing a performance standard for that system is 
423.24  liable for the failure of the system to meet the performance 
423.25  standard. 
423.26     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
423.27  following final enactment. 
423.28     Sec. 24.  [PLAN FOR REPLACEMENT OF REVENUES RAISED BY 
423.29  CURRENT TAXES ON ALCOHOL.] 
423.30     The commissioner of revenue, in consultation with 
423.31  interested parties from the alcohol beverage industry, shall 
423.32  prepare a plan to replace the current higher sales tax on liquor 
423.33  and beer under Minnesota Statutes, section 297A.62, subdivision 
423.34  2, and the liquor tax under Minnesota Statutes, chapter 297G, 
423.35  with a single tax on liquor.  The commissioner shall report the 
423.36  plan to the legislature by January 1, 2003.  The plan should 
424.1   include recommendations for tax rates, tax base, and tax 
424.2   administration, and should be structured so that the revenue 
424.3   raised is equivalent to the revenue lost from the repeal of the 
424.4   current taxes.  The plan should also, to the extent practical, 
424.5   mirror the current incidence of the tax as it relates to 
424.6   different types of liquor, and whether the liquor is consumed 
424.7   on-site or off-site. 
424.8      <b>[EFFECTIVE DATE.]</b> This section is effective the day after 
424.9   final enactment. 
424.10     Sec. 25.  [PLAN FOR REPLACEMENT OF REVENUES RAISED BY TAXES 
424.11  ON SHORT-TERM MOTOR VEHICLE RENTAL.] 
424.12     The commissioner of revenue, in consultation with 
424.13  interested parties from the industry, shall prepare a plan to 
424.14  replace the current sales tax on short-term motor vehicle 
424.15  rentals under Minnesota Statutes, section 297A.64, with a single 
424.16  tax or fee on motor vehicle rentals.  The commissioner shall 
424.17  report the plan to the legislature by January 1, 2003.  The plan 
424.18  should include recommendations for tax rates, tax base, and tax 
424.19  administration, and should be structured so that the state 
424.20  revenue raised is equivalent to the state revenue lost from the 
424.21  repeal of the current taxes. 
424.22     <b>[EFFECTIVE DATE.]</b> This section is effective the day after 
424.23  final enactment. 
424.24     Sec. 26.  [DIRECTIONS TO COMMISSIONER OF REVENUE.] 
424.25     The commissioner of revenue shall request that the member 
424.26  states of the Streamlined Sales and Use Tax Agreement adopt at 
424.27  their earliest convenience a uniform definition of clothing made 
424.28  from fur. 
424.29     <b>[EFFECTIVE DATE.]</b> This section is effective the day after 
424.30  final enactment. 
424.31     Sec. 27.  [REPEALER.] 
424.32     Minnesota Statutes 2000, sections 297A.62, subdivision 2 
424.33  and 297A.64, subdivision 1, are repealed. 
424.34     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
424.35  purchases made after December 31, 2005. 
424.36                             ARTICLE 14 
425.1                  SALES TAX RECODIFICATION TECHNICAL 
425.2      Section 1.  Minnesota Statutes 2000, section 289A.31, 
425.3   subdivision 7, is amended to read: 
425.4      Subd. 7.  [SALES AND USE TAX.] (a) The sales and use tax 
425.5   required to be collected by the retailer under chapter 297A 
425.6   constitutes a debt owed by the retailer to Minnesota, and the 
425.7   sums collected must be held as a special fund in trust for the 
425.8   state of Minnesota. 
425.9      A retailer who does not maintain a place of business within 
425.10  this state as defined by section 297A.21, subdivision 1, shall 
425.11  not be indebted to Minnesota for amounts of tax that it was 
425.12  required to collect but did not collect unless the retailer knew 
425.13  or had been advised by the commissioner of its obligation to 
425.14  collect the tax.  
425.15     (b) The use tax required to be paid by a purchaser is a 
425.16  debt owed by the purchaser to Minnesota. 
425.17     (c) The tax imposed by chapter 297A, and interest and 
425.18  penalties, is a personal debt of the individual required to file 
425.19  a return from the time the liability arises, irrespective of 
425.20  when the time for payment of that liability occurs.  The debt 
425.21  is, in the case of the executor or administrator of the estate 
425.22  of a decedent and in the case of a fiduciary, that of the 
425.23  individual in an official or fiduciary capacity unless the 
425.24  individual has voluntarily distributed the assets held in that 
425.25  capacity without reserving sufficient assets to pay the tax, 
425.26  interest, and penalties, in which case the individual is 
425.27  personally liable for the deficiency. 
425.28     (d) Liability for payment of sales and use taxes includes 
425.29  any responsible person or entity described in the personal 
425.30  liability provisions of section 270.101. 
425.31     (e) Any amounts collected, even if erroneously or illegally 
425.32  collected, from a purchaser under a representation that they are 
425.33  taxes imposed under chapter 297A are state funds from the time 
425.34  of collection and must be reported on a return filed with the 
425.35  commissioner.  The amounts collected are not subject to refund 
425.36  unless the seller submits written evidence to the commissioner 
426.1   that the tax and any interest earned on the tax has been or will 
426.2   be refunded or credited to the purchaser by the seller. 
426.3      (f) The tax imposed under chapter 297A on sales of tickets 
426.4   to the premises of or events sponsored by the state agricultural 
426.5   society and conducted on the state fairgrounds during the period 
426.6   of the annual state fair may be retained by the state 
426.7   agricultural society if the funds are used and matched as 
426.8   required under section 37.13, subdivision 2. 
426.9      Sec. 2.  Minnesota Statutes 2000, section 289A.50, 
426.10  subdivision 2, is amended to read: 
426.11     Subd. 2.  [REFUND OF SALES TAX TO VENDORS; LIMITATION.] If 
426.12  a vendor has collected from a purchaser and remitted to the 
426.13  state a tax on a transaction that is not subject to the tax 
426.14  imposed by chapter 297A, the tax is refundable to the vendor 
426.15  only if and to the extent that it the tax and any interest 
426.16  earned on the tax is credited to amounts due to the vendor by 
426.17  the purchaser or returned to the purchaser by the vendor.  In 
426.18  addition to the requirements of subdivision 1, a claim for 
426.19  refund under this subdivision must state in writing that the tax 
426.20  and interest earned on the tax has been or will be refunded or 
426.21  credited to the purchaser by the vendor. 
426.22     Sec. 3.  Minnesota Statutes 2000, section 297A.61, 
426.23  subdivision 2, is amended to read: 
426.24     Subd. 2.  [PERSON.] (a) "Person" includes any individual, 
426.25  and any or group or and any combination of individuals, 
426.26  groups, or individuals and groups acting as a unit, and the 
426.27  plural as well as the singular number.  
426.28     (b) Person includes a firm, partnership, joint venture, 
426.29  limited liability company, association, cooperative, social 
426.30  club, fraternal organization, municipal or private corporation 
426.31  whether or not organized for profit, estates, trusts, business 
426.32  trusts estate, trust, business trust, receiver, trustee, 
426.33  syndicate, the United States, and a state and its political 
426.34  subdivisions.  
426.35     (c) Person includes, but is not limited to, directors and 
426.36  officers of corporations, governors and managers of a limited 
427.1   liability company, or members of partnerships who, either 
427.2   individually or jointly with others, have the control, 
427.3   supervision, or responsibility of filing returns and making 
427.4   payment of the amount of tax imposed by this chapter. 
427.5      (d) Person also includes any agent or consignee of any 
427.6   individual or organization enumerated listed in this subdivision.
427.7      Sec. 4.  Minnesota Statutes 2000, section 297A.61, 
427.8   subdivision 3, is amended to read: 
427.9      Subd. 3.  [SALE AND PURCHASE.] (a) "Sale" and "purchase" 
427.10  include, but are not limited to, each of the transactions listed 
427.11  in this subdivision. 
427.12     (b) Sale and purchase include: 
427.13     (1) any transfer of title or possession, or both, of 
427.14  tangible personal property, whether absolutely or conditionally, 
427.15  for a consideration in money or by exchange or barter; and 
427.16     (2) the leasing of or the granting of a license to use or 
427.17  consume, for a consideration in money or by exchange or barter, 
427.18  tangible personal property, other than a manufactured home used 
427.19  for residential purposes for a continuous period of 30 days or 
427.20  more. 
427.21     (c) Sale and purchase include the production, fabrication, 
427.22  printing, or processing of tangible personal property for a 
427.23  consideration for consumers who furnish either directly or 
427.24  indirectly the materials used in the production, fabrication, 
427.25  printing, or processing. 
427.26     (d) Sale and purchase include the furnishing, preparing, or 
427.27  serving for a consideration of food or drinks.  Notwithstanding 
427.28  section 297A.67, subdivision 2, taxable food or drinks include, 
427.29  but are not limited to, the following: 
427.30     (1) food or drinks sold by the retailer for immediate 
427.31  consumption on the retailer's premises.  Food and drinks sold 
427.32  within a building or grounds that require an admission charge 
427.33  for entrance are presumed to be sold for consumption on the 
427.34  premises; 
427.35     (2) food or drinks prepared by the retailer for immediate 
427.36  consumption either on or off the retailer's premises.  For 
428.1   purposes of this subdivision, "food or drinks prepared for 
428.2   immediate consumption" means any food product upon which an act 
428.3   of preparation including, but not limited to, cooking, mixing, 
428.4   sandwich making, blending, heating, or pouring has been 
428.5   performed by the retailer so the food product may be immediately 
428.6   consumed by the purchaser; 
428.7      (3) ice cream, ice milk, frozen yogurt products, or frozen 
428.8   novelties sold in single or individual servings including, but 
428.9   not limited to, cones, sundaes, and snow cones; 
428.10     (4) soft drinks and other beverages, including all 
428.11  carbonated and noncarbonated beverages or drinks sold in liquid 
428.12  form, but not including beverages or drinks which contain milk 
428.13  or milk products, beverages or drinks containing 15 or more 
428.14  percent fruit juice, and noncarbonated and noneffervescent 
428.15  bottled water sold in individual containers of one-half gallon 
428.16  or more in size; 
428.17     (5) gum, candy, and candy products; 
428.18     (6) ice; 
428.19     (7) all food sold from vending machines; 
428.20     (8) all food for immediate consumption sold from concession 
428.21  stands and vehicles; 
428.22     (9) party trays; 
428.23     (10) all meals and single servings of packaged snack food 
428.24  sold in restaurants and bars; and 
428.25     (11) bakery products that are: 
428.26     (i) prepared by the retailer for consumption on the 
428.27  retailer's premises; 
428.28     (ii) sold at a place that charges admission; 
428.29     (iii) sold from vending machines; or 
428.30     (iv) sold in single or individual servings from concession 
428.31  stands, vehicles, bars, and restaurants.  
428.32     For purposes of this paragraph, "single or individual 
428.33  servings" does not include products when sold in bulk containers 
428.34  or bulk packaging.  
428.35     For purposes of this paragraph, "premises" means the total 
428.36  space and facilities, including buildings, grounds, and parking 
429.1   lots that are made available or that are available for use by 
429.2   the retailer or customer for the purpose of sale or consumption 
429.3   of prepared food and drinks.  The premises of a caterer is the 
429.4   place where the catered food or drinks are served. 
429.5      (e) A sale and a purchase includes the furnishing for a 
429.6   consideration of electricity, gas, water, or steam for use or 
429.7   consumption within this state or local exchange telephone 
429.8   service, intrastate toll service, and interstate toll service, 
429.9   if that service originates from and is charged to a telephone 
429.10  located in this state.  Telephone service includes (1) paging 
429.11  services, and (2) private communication service, as defined in 
429.12  United States Code, title 26, section 4252(d), except for 
429.13  private communication service purchased by an agent acting on 
429.14  behalf of the state lottery.  Telephone service does not include 
429.15  services purchased with a prepaid telephone calling card.  The 
429.16  furnishing for a consideration of access to telephone services 
429.17  by a hotel to its guests is a sale.  The furnishing for a 
429.18  consideration of items listed in this paragraph by a municipal 
429.19  corporation is a sale. 
429.20     (f) A sale and a purchase includes the transfer for a 
429.21  consideration of computer software.  
429.22     (g) A sale and a purchase includes the furnishing for a 
429.23  consideration of taxable services as defined in subdivision 
429.24  16. the following services: 
429.25     (1) the privilege of admission to places of amusement, 
429.26  recreational areas, or athletic events, and the making available 
429.27  of amusement devices, tanning facilities, reducing salons, steam 
429.28  baths, turkish baths, health clubs, and spas or athletic 
429.29  facilities; 
429.30     (2) lodging and related services by a hotel, rooming house, 
429.31  resort, campground, motel, or trailer camp and the granting of 
429.32  any similar license to use real property other than the renting 
429.33  or leasing of it for a continuous period of 30 days or more; 
429.34     (3) cable television services or similar television 
429.35  services, including, but not limited to, charges for basic, 
429.36  premium, pay-per-view, and any other similar service; 
430.1      (4) parking services, whether on a contractual, hourly, or 
430.2   other periodic basis, except for parking at a meter; 
430.3      (5) the granting of membership in a club, association, or 
430.4   other organization if: 
430.5      (i) the club, association, or other organization makes 
430.6   available for the use of its members sports and athletic 
430.7   facilities, without regard to whether a separate charge is 
430.8   assessed for use of the facilities; and 
430.9      (ii) use of the sports and athletic facility is not made 
430.10  available to the general public on the same basis as it is made 
430.11  available to members.  
430.12  Granting of membership means both one-time initiation fees and 
430.13  periodic membership dues.  Sports and athletic facilities 
430.14  include golf courses; tennis, racquetball, handball, and squash 
430.15  courts; basketball and volleyball facilities; running tracks; 
430.16  exercise equipment; swimming pools; and other similar athletic 
430.17  or sports facilities; and 
430.18     (6) services as provided in this clause: 
430.19     (i) laundry and dry cleaning services including cleaning, 
430.20  pressing, repairing, altering, and storing clothes, linen 
430.21  services and supply, cleaning and blocking hats, and carpet, 
430.22  drapery, upholstery, and industrial cleaning.  Laundry and dry 
430.23  cleaning services do not include services provided by coin 
430.24  operated facilities operated by the customer; 
430.25     (ii) motor vehicle washing, waxing, and cleaning services, 
430.26  including services provided by coin operated facilities operated 
430.27  by the customer, and rustproofing, undercoating, and towing of 
430.28  motor vehicles; 
430.29     (iii) building and residential cleaning, maintenance, and 
430.30  disinfecting and exterminating services; 
430.31     (iv) detective, security, burglar, fire alarm, and armored 
430.32  car services; but not including services performed within the 
430.33  jurisdiction they serve by off-duty licensed peace officers as 
430.34  defined in section 626.84, subdivision 1, or services provided 
430.35  by a nonprofit organization for monitoring and electronic 
430.36  surveillance of persons placed on in-home detention pursuant to 
431.1   court order or under the direction of the Minnesota department 
431.2   of corrections; 
431.3      (v) pet grooming services; 
431.4      (vi) lawn care, fertilizing, mowing, spraying and sprigging 
431.5   services; garden planting and maintenance; tree, bush, and shrub 
431.6   pruning, bracing, spraying, and surgery; indoor plant care; 
431.7   tree, bush, shrub, and stump removal; and tree trimming for 
431.8   public utility lines.  Services performed under a construction 
431.9   contract for the installation of shrubbery, plants, sod, trees, 
431.10  bushes, and similar items are not taxable; 
431.11     (vii) massages, except when provided by a licensed health 
431.12  care facility or professional or upon written referral from a 
431.13  licensed health care facility or professional for treatment of 
431.14  illness, injury, or disease; and 
431.15     (viii) the furnishing of lodging, board, and care services 
431.16  for animals in kennels and other similar arrangements, but 
431.17  excluding veterinary and horse boarding services. 
431.18     The services listed in this clause (6) are taxable under 
431.19  section 297A.62 if the service is performed wholly within 
431.20  Minnesota or if the service is performed partly within and 
431.21  partly outside Minnesota and the greater proportion of the 
431.22  service is performed in Minnesota, based on the cost of 
431.23  performance.  In applying the provisions of this chapter, the 
431.24  terms "tangible personal property" and "sales at retail" include 
431.25  taxable services and the provision of taxable services, unless 
431.26  specifically provided otherwise.  Services performed by an 
431.27  employee for an employer are not taxable.  Services performed by 
431.28  a partnership or association for another partnership or 
431.29  association are not taxable if one of the entities owns or 
431.30  controls more than 80 percent of the voting power of the equity 
431.31  interest in the other entity.  Services performed between 
431.32  members of an affiliated group of corporations are not taxable.  
431.33  For purposes of this section, "affiliated group of corporations" 
431.34  includes those entities that would be classified as members of 
431.35  an affiliated group under United States Code, title 26, section 
431.36  1504, and that are eligible to file a consolidated tax return 
432.1   for federal income tax purposes. 
432.2      (h) A sale and a purchase includes the furnishing for a 
432.3   consideration of tangible personal property or taxable services 
432.4   by the United States or any of its agencies or 
432.5   instrumentalities, or the state of Minnesota, its agencies, 
432.6   instrumentalities, or political subdivisions. 
432.7      Sec. 5.  Minnesota Statutes 2000, section 297A.61, 
432.8   subdivision 4, is amended to read: 
432.9      Subd. 4.  [RETAIL SALE.] (a) A "retail sale" means a sale 
432.10  for any purpose other than resale in the regular course of 
432.11  business.  
432.12     (b) A sale of property used by the owner only by leasing it 
432.13  to others or by holding it in an effort to lease it, and put to 
432.14  no use by the owner other than resale after the lease or effort 
432.15  to lease, is a sale of property for resale.  
432.16     (c) A sale of master computer software that is purchased 
432.17  and used to make copies for sale or lease is a sale of property 
432.18  for resale.  
432.19     (d) A sale of building materials, supplies, and equipment 
432.20  to owners, contractors, subcontractors, or builders for the 
432.21  erection of buildings or the alteration, repair, or improvement 
432.22  of real property is a retail sale in whatever quantity sold, 
432.23  whether the sale is for purposes of resale in the form of real 
432.24  property or otherwise.  
432.25     (e) A sale of carpeting, linoleum, or similar floor 
432.26  covering to a person who provides for installation of the floor 
432.27  covering is a retail sale and not a sale for resale since a sale 
432.28  of floor covering which includes installation is a contract for 
432.29  the improvement of real property. 
432.30     (f) A sale of shrubbery, plants, sod, trees, and similar 
432.31  items to a person who provides for installation of the items is 
432.32  a retail sale and not a sale for resale since a sale of 
432.33  shrubbery, plants, sod, trees, and similar items that includes 
432.34  installation is a contract for the improvement of real property. 
432.35     (g) A sale of tangible personal property that is awarded as 
432.36  prizes is a retail sale and is not considered a sale of property 
433.1   for resale. 
433.2      (h) A sale of tangible personal property utilized or 
433.3   employed in the furnishing or providing of services under 
433.4   subdivision 16 3, paragraph (b) (g), clause (1), including, but 
433.5   not limited to, property given as promotional items, is a retail 
433.6   sale and is not considered a sale of property for resale. 
433.7      (i) A sale of tangible personal property used in conducting 
433.8   lawful gambling under chapter 349 or the state lottery under 
433.9   chapter 349A, including, but not limited to, property given as 
433.10  promotional items, is a retail sale and is not considered a sale 
433.11  of property for resale. 
433.12     (j) A sale of machines, equipment, or devices that are used 
433.13  to furnish, provide, or dispense goods or services, including, 
433.14  but not limited to, coin-operated devices, is a retail sale and 
433.15  is not considered a sale of property for resale. 
433.16     (k) In the case of a lease, a retail sale occurs when an 
433.17  obligation to make a lease payment becomes due under the terms 
433.18  of the agreement or the trade practices of the lessor. 
433.19     (l) In the case of a conditional sales contract, a retail 
433.20  sale occurs upon the transfer of title or possession of the 
433.21  tangible personal property. 
433.22     Sec. 6.  Minnesota Statutes 2000, section 297A.61, 
433.23  subdivision 6, is amended to read: 
433.24     Subd. 6.  [USE.] (a) "Use" includes the exercise of a right 
433.25  or power incident to the ownership of any interest in tangible 
433.26  personal property, or taxable services, purchased from a 
433.27  retailer, other than the sale of that property in the regular 
433.28  course of business.  
433.29     (b) Use includes the consumption of printed materials in 
433.30  the creation of nontaxable advertising that is distributed, 
433.31  either directly or indirectly, within Minnesota. 
433.32     Sec. 7.  Minnesota Statutes 2000, section 297A.61, 
433.33  subdivision 10, is amended to read: 
433.34     Subd. 10.  [TANGIBLE PERSONAL PROPERTY.] (a) "Tangible 
433.35  personal property" means corporeal personal property of any 
433.36  kind, including property that is to become real property as a 
434.1   result of incorporation, attachment, or installation following 
434.2   its acquisition. 
434.3      (b) Tangible personal property includes, but is not limited 
434.4   to: 
434.5      (1) computer software, whether contained on tape, discs, 
434.6   cards, or other devices; and 
434.7      (2) prepaid telephone calling cards.  
434.8      (c) Tangible personal property does not include: 
434.9      (1) large ponderous machinery and equipment used in a 
434.10  business or production activity which at common law would be 
434.11  considered to be real property; 
434.12     (2) property which is subject to an ad valorem property 
434.13  tax; 
434.14     (3) property described in section 272.02, subdivision 9, 
434.15  clauses (a) to (d); and 
434.16     (4) property described in section 272.03, subdivision 2, 
434.17  clauses (3) and (5). 
434.18     Sec. 8.  Minnesota Statutes 2000, section 297A.61, 
434.19  subdivision 14, is amended to read: 
434.20     Subd. 14.  [LEASING; LEASE.] "Leasing" includes all 
434.21  transfers of possession or the use of tangible personal property 
434.22  by the lessee for a consideration, if title remains with the 
434.23  lessor at the end of the lease.  For purposes of this chapter, A 
434.24  lease of tangible personal property is a series of sales 
434.25  transactions that impose upon the lessee multiple payment 
434.26  obligations.  "Leasing" does not include a transaction defined 
434.27  under subdivision 15.  
434.28     Sec. 9.  Minnesota Statutes 2000, section 297A.61, 
434.29  subdivision 17, is amended to read: 
434.30     Subd. 17.  [COMPUTER SOFTWARE.] "Computer software" means a 
434.31  computer program, either in the form of written procedures or in 
434.32  the form of storage media on which, or in which, the program is 
434.33  recorded contained on tapes, discs, cards, or another device, or 
434.34  any required documentation or manuals designed to facilitate the 
434.35  use of the computer program.  For purposes of this subdivision: 
434.36     (1) "Storage media" includes punched cards, tapes, discs, 
435.1   diskettes, or drums on which computer programs may be embodied 
435.2   or stored; 
435.3      (2) "Computer" does not include tape-controlled automatic 
435.4   drilling, milling, or other manufacturing machinery or 
435.5   equipment; and 
435.6      (3) (2) "Computer program" means information and directions 
435.7   that dictate the function performed by data processing 
435.8   equipment.  It includes the complete plan for the solution of a 
435.9   problem, such as the complete sequence of automatic data 
435.10  processing equipment instructions necessary to solve a problem 
435.11  and includes both systems and application programs and 
435.12  subdivisions, such as assemblers, compilers, routines, 
435.13  generators, and utility programs.  Computer program includes a 
435.14  "canned" or prewritten computer program that is held or existing 
435.15  for general or repeated sale or lease, even if the prewritten or 
435.16  "canned" program was initially developed on a custom basis or 
435.17  for in-house use. 
435.18     Sec. 10.  Minnesota Statutes 2000, section 297A.61, 
435.19  subdivision 19, is amended to read: 
435.20     Subd. 19.  [COMMON FOR-HIRE CARRIER.] "Common For-hire 
435.21  carrier" means a person engaged in transportation for hire of 
435.22  tangible personal property by motor vehicle, if the person:. 
435.23     (1) has a certificate or permit or has completed a 
435.24  registration process that authorizes for-hire transportation of 
435.25  property from the United States Department of Transportation, 
435.26  the transportation regulation board, or the department of 
435.27  transportation; 
435.28     (2) is transporting commodities defined as "exempt" in 
435.29  for-hire transportation; or 
435.30     (3) transports tangible personal property pursuant to a 
435.31  contract with a person described in clause (1) or (2). 
435.32     Sec. 11.  Minnesota Statutes 2000, section 297A.61, 
435.33  subdivision 22, is amended to read: 
435.34     Subd. 22.  [INTERNAL REVENUE CODE.] Unless specifically 
435.35  provided otherwise, "Internal Revenue Code" means the Internal 
435.36  Revenue Code of 1986, as amended through December 31, 1999 2000. 
436.1      Sec. 12.  Minnesota Statutes 2000, section 297A.61, 
436.2   subdivision 23, is amended to read: 
436.3      Subd. 23.  [UNITED STATES CODE.] Unless specifically 
436.4   provided otherwise, "United States Code" means the United States 
436.5   Code as amended through December 31, 1999 2000. 
436.6      Sec. 13.  Minnesota Statutes 2000, section 297A.66, 
436.7   subdivision 1, is amended to read: 
436.8      Subdivision 1.  [DEFINITIONS.] (a) "Retailer maintaining a 
436.9   place of business in this state," or a similar term, means a 
436.10  retailer: 
436.11     (1) having or maintaining within this state, directly or by 
436.12  a subsidiary, an office, place of distribution, sales or sample 
436.13  room or place, warehouse, or other place of business; or 
436.14     (2) having a representative, agent, salesperson, canvasser, 
436.15  or solicitor operating in this state under the authority of the 
436.16  retailer or its subsidiary, for any purpose, including the 
436.17  repairing, selling, delivering, installing, or soliciting of 
436.18  orders for the retailer's goods or services, or the leasing of 
436.19  tangible personal property located in this state, whether the 
436.20  place of business or agent, representative, salesperson, 
436.21  canvasser, or solicitor is located in the state permanently or 
436.22  temporarily, or whether or not the retailer or subsidiary is 
436.23  authorized to do business in this state. 
436.24     (b) "Destination of a sale" means the location to which the 
436.25  retailer makes delivery of the property sold, or causes the 
436.26  property to be delivered, to the purchaser of the property, or 
436.27  to the agent or designee of the purchaser.  The delivery may be 
436.28  made by any means, including the United States Postal Service, a 
436.29  common carrier, or a contract for-hire carrier. 
436.30     Sec. 14.  Minnesota Statutes 2000, section 297A.66, 
436.31  subdivision 3, is amended to read: 
436.32     Subd. 3.  [RETAILER NOT MAINTAINING A PLACE OF BUSINESS IN 
436.33  THIS STATE.] (a) To the extent allowed by the United States 
436.34  Constitution and the laws of the United States, a retailer 
436.35  making retail sales from outside this state to a destination 
436.36  within this state and not maintaining a place of business in 
437.1   this state shall collect sales and use taxes and remit them to 
437.2   the commissioner under section 297A.77, if the retailer engages 
437.3   in the regular or systematic soliciting of sales from potential 
437.4   customers in this state by: 
437.5      (1) distribution, by mail or otherwise, of catalogs, 
437.6   periodicals, advertising flyers, or other written solicitations 
437.7   of business to customers in this state; 
437.8      (2) display of advertisements on billboards or other 
437.9   outdoor advertising in this state; 
437.10     (3) advertisements in newspapers published in this state; 
437.11     (4) advertisements in trade journals or other periodicals 
437.12  the circulation of which is primarily within this state; 
437.13     (5) advertisements in a Minnesota edition of a national or 
437.14  regional publication or a limited regional edition in which this 
437.15  state is included as part of a broader regional or national 
437.16  publication which are not placed in other geographically defined 
437.17  editions of the same issue of the same publication; 
437.18     (6) advertisements in regional or national publications in 
437.19  an edition which is not by its contents geographically targeted 
437.20  to Minnesota but which is sold over the counter in Minnesota or 
437.21  by subscription to Minnesota residents; 
437.22     (7) advertisements broadcast on a radio or television 
437.23  station located in Minnesota; or 
437.24     (8) any other solicitation by telegraphy, telephone, 
437.25  computer database, cable, optic, microwave, or other 
437.26  communication system. 
437.27     This paragraph (a) must be construed without regard to the 
437.28  state from which distribution of the materials originated or in 
437.29  which they were prepared.  
437.30     (b) The location within or without this state of 
437.31  independent vendors independent of the retailer that provide 
437.32  products or services to the retailer in connection with its 
437.33  solicitation of customers within this state, including such 
437.34  products and services as creation of copy, printing, 
437.35  distribution, and recording, is not considered in determining 
437.36  whether the retailer is required to collect tax.  
438.1      (c) A retailer not maintaining a place of business in this 
438.2   state is presumed, subject to rebuttal, to be engaged in regular 
438.3   solicitation within this state if it engages in any of the 
438.4   activities in paragraph (a) and: 
438.5      (1) makes 100 or more retail sales from outside this state 
438.6   to destinations in this state during a period of 12 consecutive 
438.7   months; or 
438.8      (2) makes ten or more retail sales totaling more than 
438.9   $100,000 from outside this state to destinations in this state 
438.10  during a period of 12 consecutive months. 
438.11     Sec. 15.  Minnesota Statutes 2000, section 297A.67, 
438.12  subdivision 8, is amended to read: 
438.13     Subd. 8.  [CLOTHING.] Clothing and wearing apparel, 
438.14  including sewing materials to be directly incorporated into 
438.15  wearing apparel, are exempt.  For purposes of this subdivision, 
438.16  clothing and wearing apparel do not include the following: 
438.17     (1) articles designed primarily for use while engaging in a 
438.18  specific sport or recreational activity that are not also worn 
438.19  for general use; 
438.20     (2) articles designed primarily to provide safety or 
438.21  protection against injury while the user is engaged in 
438.22  industrial or general job activities; 
438.23     (3) all articles commonly or commercially known as jewelry 
438.24  including, but not limited to, watches; 
438.25     (4) nonprescription optical glasses of any sort; 
438.26     (5) articles made entirely of fur on the hide or pelt, or 
438.27  partially of such fur if the value of the fur is more than three 
438.28  times the value of the next most valuable component material; 
438.29     (6) perfume, lotions, creams, dyes, or other substances 
438.30  that are applied to the skin, nails, or the hair; and 
438.31     (7) luggage, bags, purses, wallets, or cases of any sort. 
438.32     Sec. 16.  Minnesota Statutes 2000, section 297A.67, 
438.33  subdivision 23, is amended to read: 
438.34     Subd. 23.  [OCCASIONAL SALES.] Isolated and occasional 
438.35  sales in Minnesota not made in the normal course of business, 
438.36  and of selling that kind of property or service are exempt.  The 
439.1   storage, use, or consumption of property or services resulting 
439.2   from such sales, are acquired as a result of such a sale is 
439.3   exempt.  This exemption does not apply to sales of tangible 
439.4   personal property primarily used in a trade or business. 
439.5      Sec. 17.  Minnesota Statutes 2000, section 297A.67, 
439.6   subdivision 24, is amended to read: 
439.7      Subd. 24.  [CONSTITUTIONAL PROHIBITIONS.] The gross 
439.8   receipts from The sale of and the storage, use, or other 
439.9   consumption in Minnesota of tangible personal property, tickets, 
439.10  or admissions, electricity, gas, or local exchange telephone 
439.11  service or services, that the state of Minnesota is prohibited 
439.12  from taxing under the Constitution or laws of the United States 
439.13  or under the Constitution of Minnesota, are exempt. 
439.14     Sec. 18.  Minnesota Statutes 2000, section 297A.67, 
439.15  subdivision 25, is amended to read: 
439.16     Subd. 25.  [MAINTENANCE OF CEMETERY GROUNDS.] Lawn care and 
439.17  related services used in the maintenance of cemetery grounds are 
439.18  exempt.  For purposes of this subdivision, "lawn care and 
439.19  related services" means the services listed in section 297A.61, 
439.20  subdivision 16 3, paragraph (g), clause (6), item (vi), and 
439.21  "cemetery" means a cemetery for human burial. 
439.22     Sec. 19.  Minnesota Statutes 2000, section 297A.68, 
439.23  subdivision 2, is amended to read: 
439.24     Subd. 2.  [MATERIALS CONSUMED IN INDUSTRIAL PRODUCTION.] 
439.25  (a) Materials stored, used, or consumed in industrial production 
439.26  of personal property intended to be sold ultimately at retail 
439.27  are exempt, whether or not the item so used becomes an 
439.28  ingredient or constituent part of the property produced.  
439.29  Materials that qualify for this exemption include, but are not 
439.30  limited to, the following: 
439.31     (1) chemicals, including chemicals used for cleaning food 
439.32  processing machinery and equipment; 
439.33     (2) materials, including chemicals, fuels, and electricity 
439.34  purchased by persons engaged in industrial production to treat 
439.35  waste generated as a result of the production process; 
439.36     (3) fuels, electricity, gas, and steam used or consumed in 
440.1   the production process, except that electricity, gas, or steam 
440.2   used for space heating, cooling, or lighting is exempt only if 
440.3   (i) it is in excess of the average climate control or lighting 
440.4   for the production area, and (ii) it is necessary to produce 
440.5   that particular industrial product; 
440.6      (4) petroleum products and lubricants; 
440.7      (5) packaging materials, including returnable containers 
440.8   used in packaging food and beverage products; 
440.9      (6) accessory tools, equipment, and other items that are 
440.10  separate detachable units with an ordinary useful life of less 
440.11  than 12 months used in producing a direct effect upon the 
440.12  product; and 
440.13     (7) the following materials, tools, and equipment used in 
440.14  metalcasting:  crucibles, thermocouple protection sheaths and 
440.15  tubes, stalk tubes, refractory materials, molten metal filters 
440.16  and filter boxes, degassing lances, and base blocks. 
440.17     (b) This exemption does not include: 
440.18     (1) machinery, equipment, implements, tools, accessories, 
440.19  appliances, contrivances and furniture and fixtures, except 
440.20  those listed in paragraph (a), clause (6); and 
440.21     (2) petroleum and special fuels used in producing or 
440.22  generating power for propelling ready-mixed concrete trucks on 
440.23  the public highways of this state. 
440.24     (c) Industrial production includes, but is not limited to, 
440.25  research, development, design or production of any tangible 
440.26  personal property, manufacturing, processing (other than by 
440.27  restaurants and consumers) of agricultural products (whether 
440.28  vegetable or animal), commercial fishing, refining, smelting, 
440.29  reducing, brewing, distilling, printing, mining, quarrying, 
440.30  lumbering, generating electricity and the production of road 
440.31  building materials.  Industrial production does not include 
440.32  painting, cleaning, repairing or similar processing of property 
440.33  except as part of the original manufacturing process.  
440.34     Sec. 20.  Minnesota Statutes 2000, section 297A.68, 
440.35  subdivision 3, is amended to read: 
440.36     Subd. 3.  [MATERIALS USED IN PROVIDING CERTAIN TAXABLE 
441.1   SERVICES.] (a) Materials stored, used, or consumed in providing 
441.2   a taxable service listed in section 297A.61, subdivision 16 3, 
441.3   paragraph (g), clause (6), intended to be sold ultimately at 
441.4   retail are exempt. 
441.5      (b) This exemption includes, but is not limited to: 
441.6      (1) chemicals, lubricants, packaging materials, seeds, 
441.7   trees, fertilizers, and herbicides, if these items are used or 
441.8   consumed in providing the taxable service; 
441.9      (2) chemicals used to treat waste generated as a result of 
441.10  providing the taxable service; 
441.11     (3) accessory tools, equipment, and other items that are 
441.12  separate detachable units used in providing the service and that 
441.13  have an ordinary useful life of less than 12 months; and 
441.14     (4) fuel, electricity, gas, and steam used or consumed in 
441.15  the production process, except that electricity, gas, or steam 
441.16  used for space heating, cooling, or lighting is exempt only if 
441.17  (i) it is in excess of average climate control or lighting, and 
441.18  (ii) it is necessary to produce that particular taxable service. 
441.19     (c) This exemption does not include machinery, equipment, 
441.20  implements, tools, accessories, appliances, contrivances, 
441.21  furniture, and fixtures used in providing the taxable service. 
441.22     Sec. 21.  Minnesota Statutes 2000, section 297A.68, 
441.23  subdivision 5, is amended to read: 
441.24     Subd. 5.  [CAPITAL EQUIPMENT.] (a) Capital equipment is 
441.25  exempt.  The tax must be imposed and collected as if the rate 
441.26  under section 297A.62, subdivision 1, applied, and then refunded 
441.27  in the manner provided in section 297A.75. 
441.28     "Capital equipment" means machinery and equipment purchased 
441.29  or leased, and used in this state by the purchaser or lessee 
441.30  primarily for manufacturing, fabricating, mining, or refining 
441.31  tangible personal property to be sold ultimately at retail. 
441.32     Capital equipment means if the machinery and equipment is 
441.33  essential to the integrated production process of manufacturing, 
441.34  fabricating, mining, or refining.  Capital equipment also 
441.35  includes machinery and equipment used to electronically transmit 
441.36  results retrieved by a customer of an online computerized data 
442.1   retrieval system. 
442.2      (b) Capital equipment includes, but is not limited to: 
442.3      (1) machinery and equipment used to operate, control, or 
442.4   regulate the production equipment; 
442.5      (2) machinery and equipment used for research and 
442.6   development, design, quality control, and testing activities; 
442.7      (3) environmental control devices that are used to maintain 
442.8   conditions such as temperature, humidity, light, or air pressure 
442.9   when those conditions are essential to and are part of the 
442.10  production process; 
442.11     (4) materials and supplies used to construct and install 
442.12  machinery or equipment; 
442.13     (5) repair and replacement parts, including accessories, 
442.14  whether purchased as spare parts, repair parts, or as upgrades 
442.15  or modifications to machinery or equipment; 
442.16     (6) materials used for foundations that support machinery 
442.17  or equipment; 
442.18     (7) materials used to construct and install special purpose 
442.19  buildings used in the production process; and 
442.20     (8) ready-mixed concrete trucks in which the ready-mixed 
442.21  concrete is mixed as part of the delivery process.  
442.22     (c) Capital equipment does not include the following: 
442.23     (1) motor vehicles taxed under chapter 297B; 
442.24     (2) machinery or equipment used to receive or store raw 
442.25  materials; 
442.26     (3) building materials, except for materials included in 
442.27  paragraph (b), clauses (6) and (7); 
442.28     (4) machinery or equipment used for nonproduction purposes, 
442.29  including, but not limited to, the following:  plant security, 
442.30  fire prevention, first aid, and hospital stations; support 
442.31  operations or administration; pollution control; and plant 
442.32  cleaning, disposal of scrap and waste, plant communications, 
442.33  space heating, cooling, lighting, or safety; 
442.34     (5) farm machinery and aquaculture production equipment as 
442.35  defined by section 297A.61, subdivisions 12 and 13; 
442.36     (6) machinery or equipment purchased and installed by a 
443.1   contractor as part of an improvement to real property; or 
443.2      (7) any other item that is not essential to the integrated 
443.3   process of manufacturing, fabricating, mining, or refining. 
443.4      (d) For purposes of this subdivision: 
443.5      (1) "Machinery" means mechanical, electronic, or electrical 
443.6   devices, including computers and computer software, that are 
443.7   purchased or constructed to be used for the activities set forth 
443.8   in paragraph (a), beginning with the removal of raw materials 
443.9   from inventory through completion of the product, including 
443.10  packaging of the product. 
443.11     (2) "Equipment" means independent devices or tools separate 
443.12  from machinery but essential to an integrated production 
443.13  process, including computers and computer software, used in 
443.14  operating, controlling, or regulating machinery and equipment; 
443.15  and any subunit or assembly comprising a component of any 
443.16  machinery or accessory or attachment parts of machinery, such as 
443.17  tools, dies, jigs, patterns, and molds.  
443.18     (3) "Primarily" means machinery and equipment used 50 
443.19  percent or more of the time in an activity described in 
443.20  paragraph (a). 
443.21     (4) "Manufacturing" means an operation or series of 
443.22  operations where raw materials are changed in form, composition, 
443.23  or condition by machinery and equipment and which results in the 
443.24  production of a new article of tangible personal property.  For 
443.25  purposes of this subdivision, "manufacturing" includes the 
443.26  generation of electricity or steam to be sold at retail. 
443.27     (5) "Fabricating" means to make, build, create, produce, or 
443.28  assemble components or property to work in a new or different 
443.29  manner. 
443.30     (6) "Mining" means the extraction of minerals, ores, stone, 
443.31  or peat. 
443.32     (7) "Refining" means the process of converting a natural 
443.33  resource to a product, including the treatment of water to be 
443.34  sold at retail. 
443.35     (8) "Integrated production process" means a process 
443.36  beginning with the removal of raw materials from inventory 
444.1   through the completion of the product, including packaging of 
444.2   the product. 
444.3      (9) "Online data retrieval system" means a system whose 
444.4   cumulation of information is equally available and accessible to 
444.5   all its customers. 
444.6      (10) (9) "Machinery and equipment used for pollution 
444.7   control" means machinery and equipment used solely to eliminate, 
444.8   prevent, or reduce pollution resulting from an activity 
444.9   described in paragraph (a).  
444.10     Sec. 22.  Minnesota Statutes 2000, section 297A.68, 
444.11  subdivision 11, is amended to read: 
444.12     Subd. 11.  [ADVERTISING MATERIALS.] Material Materials 
444.13  designed to advertise and promote the sale of merchandise or 
444.14  services is are exempt if the material is purchased and stored 
444.15  for the purpose of subsequently shipping or otherwise 
444.16  transferring outside the state by the purchaser for later these 
444.17  materials are mailed or transferred to a person outside the 
444.18  state for use solely outside the state of Minnesota.  Mailing 
444.19  and reply envelopes and cards used exclusively in connection 
444.20  with these advertising and promotional materials are included in 
444.21  this exemption.  The exemption applies regardless of where the 
444.22  mailing occurs.  The storage of these materials in the state for 
444.23  the purpose of subsequently shipping or otherwise transferring 
444.24  the material out of state is also exempt if the other conditions 
444.25  in this subdivision are met. 
444.26     Sec. 23.  Minnesota Statutes 2000, section 297A.68, 
444.27  subdivision 13, is amended to read: 
444.28     Subd. 13.  [OUTSTATE TRANSPORT OR DELIVERY.] (a) Tangible 
444.29  personal property is exempt if the property, without 
444.30  intermediate use, is all of the following conditions are met:  
444.31     (1) the property, without intermediate use, is shipped or 
444.32  transported outside Minnesota by the purchaser or is stored, 
444.33  processed, fabricated or manufactured into, attached to or 
444.34  incorporated into other tangible personal property that is 
444.35  transported or shipped outside Minnesota; and 
444.36     (2) the property is used in a trade or business outside 
445.1   Minnesota after being shipped or transported outside of 
445.2   Minnesota, and is not returned to Minnesota, except in the 
445.3   course of interstate commerce; and 
445.4      (3) the property is either (i) not subject to tax in the 
445.5   state or country to which it is transported for storage or use, 
445.6   or (ii) to be used in other states or countries as part of a 
445.7   maintenance contract. 
445.8      (b) For purposes of this subdivision, storage or 
445.9   processing, fabricating, manufacturing, attaching to, or 
445.10  incorporating into other property is not intermediate use. 
445.11     Sec. 24.  Minnesota Statutes 2000, section 297A.68, 
445.12  subdivision 14, is amended to read: 
445.13     Subd. 14.  [TEMPORARY STORAGE PROPERTY IN TRANSIT.] 
445.14  Tangible personal property is exempt if all of the following 
445.15  conditions are met: 
445.16     (1) it is shipped or brought into Minnesota by a common 
445.17  for-hire carrier; 
445.18     (2) without intermediate use, it is kept in a public 
445.19  warehouse; 
445.20     (3) it is kept for the purpose of being later transported 
445.21  outside Minnesota; and 
445.22     (4) after storage, it is used solely outside Minnesota, 
445.23  except in the course of interstate commerce. 
445.24     Sec. 25.  Minnesota Statutes 2000, section 297A.68, 
445.25  subdivision 18, is amended to read: 
445.26     Subd. 18.  [CUSTOM COMPUTER SOFTWARE.] The design, 
445.27  development, writing, translation, fabrication, lease, or 
445.28  transfer for a consideration of title or possession of a custom 
445.29  computer program is exempt.  "Custom computer program" means a 
445.30  computer program prepared to the special order of the customer, 
445.31  either in the form of written procedures or in the form of 
445.32  storage media on which, or in which, the program is 
445.33  recorded contained on tapes, discs, cards, or another device, or 
445.34  any required documentation or manuals designed to facilitate the 
445.35  use of the custom computer program transferred.  It includes 
445.36  those services represented by separately stated charges for 
446.1   modifications to an existing prewritten program that are 
446.2   prepared to the special order of the customer.  It does not 
446.3   include a "canned" or prewritten computer program that is held 
446.4   or existing for general or repeated sale or lease, even if the 
446.5   prewritten or "canned" program was initially developed on a 
446.6   custom basis or for in-house use.  Modification to an existing 
446.7   prewritten program to meet the customer's needs is custom 
446.8   computer programming only to the extent of the modification.  
446.9      Sec. 26.  Minnesota Statutes 2000, section 297A.68, 
446.10  subdivision 25, is amended to read: 
446.11     Subd. 25.  [OCCASIONAL SALES SALE OF PROPERTY USED IN A 
446.12  TRADE OR BUSINESS.] (a) Isolated or occasional sales of The sale 
446.13  of tangible personal property in Minnesota primarily used in a 
446.14  trade or business is exempt if the sale is not made in the 
446.15  normal course of business of selling that kind of property are 
446.16  exempt.  The storage, use, or consumption of property acquired 
446.17  as a result of such a sale is exempt. 
446.18     (b) This exemption applies to a sale of tangible personal 
446.19  property primarily used in a trade or business only and if one 
446.20  of the following conditions is satisfied:  
446.21     (1) the sale occurs in a transaction subject to or 
446.22  described in section 118, 331, 332, 336, 337, 338, 351, 355, 
446.23  368, 721, 731, 1031, or 1033 of the Internal Revenue Code; 
446.24     (2) the sale is between members of a controlled group as 
446.25  defined in section 1563(a) of the Internal Revenue Code; 
446.26     (3) the sale is a sale of farm machinery; 
446.27     (4) the sale is a farm auction sale; 
446.28     (5) the sale is a sale of substantially all of the assets 
446.29  of a trade or business; or 
446.30     (6) the total amount of gross receipts from the sale of 
446.31  trade or business property made during the calendar month of the 
446.32  sale and the preceding 11 calendar months does not exceed $1,000.
446.33     The use, storage, distribution, or consumption of tangible 
446.34  personal property acquired as a result of a sale exempt under 
446.35  this subdivision is also exempt. 
446.36     (c) (b) For purposes of this subdivision, the following 
447.1   terms have the meanings given.  
447.2      (1) A "farm auction" is a public auction conducted by a 
447.3   licensed auctioneer if substantially all of the property sold 
447.4   consists of property used in the trade or business of farming 
447.5   and property not used primarily in a trade or business. 
447.6      (2) "Trade or business" includes the assets of a separate 
447.7   division, branch, or identifiable segment of a trade or business 
447.8   if, before the sale, the income and expenses attributable to the 
447.9   separate division, branch, or identifiable segment could be 
447.10  separately ascertained from the books of account or record (the 
447.11  lease or rental of an identifiable segment does not qualify for 
447.12  the exemption). 
447.13     (3) A "sale of substantially all of the assets of a trade 
447.14  or business" must occur as a single transaction or a series of 
447.15  related transactions within the 12-month period beginning on the 
447.16  date of the first sale of assets intended to qualify for the 
447.17  exemption provided in paragraph (b) (a), clause (5). 
447.18     Sec. 27.  Minnesota Statutes 2000, section 297A.69, 
447.19  subdivision 2, is amended to read: 
447.20     Subd. 2.  [MATERIALS CONSUMED IN AGRICULTURAL PRODUCTION.] 
447.21  (a) Materials stored, used, or consumed in agricultural 
447.22  production of personal property intended to be sold ultimately 
447.23  at retail are exempt, whether or not the item becomes an 
447.24  ingredient or constituent part of the property produced.  
447.25  Materials that qualify for this exemption include, but are not 
447.26  limited to, the following: 
447.27     (1) feeds, seeds, trees, fertilizers, and herbicides, 
447.28  including when purchased for use by farmers in a federal or 
447.29  state farm or conservation program; 
447.30     (2) materials sold to a veterinarian to be used or consumed 
447.31  in the care, medication, and treatment of agricultural 
447.32  production animals and horses; 
447.33     (3) chemicals, including chemicals used for cleaning food 
447.34  processing machinery and equipment; 
447.35     (4) materials, including chemicals, fuels, and electricity 
447.36  purchased by persons engaged in agricultural production to treat 
448.1   waste generated as a result of the production process; 
448.2      (5) fuels, electricity, gas, and steam used or consumed in 
448.3   the production process, except that electricity, gas, or steam 
448.4   used for space heating, cooling, or lighting is exempt only if 
448.5   (i) it is in excess of the average climate control or lighting 
448.6   for the production area, and (ii) it is necessary to produce 
448.7   that particular agricultural product; 
448.8      (6) petroleum products and lubricants; 
448.9      (7) packaging materials, including returnable containers 
448.10  used in packaging food and beverage products; and 
448.11     (8) accessory tools and equipment that are separate 
448.12  detachable units with an ordinary useful life of less than 12 
448.13  months used in producing a direct effect upon the product. 
448.14  Machinery, equipment, implements, tools, accessories, 
448.15  appliances, contrivances, and furniture and fixtures, except 
448.16  those listed in this clause are not included within this 
448.17  exemption. 
448.18     (b) For purposes of this subdivision, "agricultural 
448.19  production" includes, but is not limited to, horticulture, 
448.20  floriculture, maple syrup harvesting, and the raising of pets, 
448.21  fur-bearing animals, research animals, horses, farmed cervidae 
448.22  as defined in section 17.451, subdivision 2, llamas as defined 
448.23  in section 17.455, subdivision 2, and ratitae as defined in 
448.24  section 17.453, subdivision 3. 
448.25     Sec. 28.  Minnesota Statutes 2000, section 297A.70, 
448.26  subdivision 1, is amended to read: 
448.27     Subdivision 1.  [SCOPE.] (a) To the extent provided in this 
448.28  section, the gross receipts from sales of items to or by, and 
448.29  storage, distribution, use, or consumption of items by the 
448.30  organizations listed in this section are specifically exempted 
448.31  from the taxes imposed by this chapter. 
448.32     (b) Notwithstanding any law to the contrary enacted before 
448.33  1992, only sales to governments and political subdivisions 
448.34  listed in this section are exempt from the taxes imposed by this 
448.35  chapter.  
448.36     (c) "Sales" includes purchases under an installment 
449.1   contract or lease purchase agreement under section 465.71. 
449.2      Sec. 29.  Minnesota Statutes 2000, section 297A.70, 
449.3   subdivision 2, is amended to read: 
449.4      Subd. 2.  [SALES TO GOVERNMENT.] (a) All sales, except 
449.5   those listed in paragraph (b), to the following governments and 
449.6   political subdivisions, or to the listed agencies or 
449.7   instrumentalities of governments and political subdivisions, are 
449.8   exempt: 
449.9      (1) the United States and its agencies and 
449.10  instrumentalities; 
449.11     (2) school districts, the University of Minnesota, state 
449.12  universities, community colleges, technical colleges, state 
449.13  academies, the Perpich Minnesota center for arts education, and 
449.14  an instrumentality of a political subdivision that is accredited 
449.15  as an optional/special function school by the North Central 
449.16  Association of Colleges and Schools; 
449.17     (3) hospitals and nursing homes owned and operated by 
449.18  political subdivisions of the state; 
449.19     (4) other states or political subdivisions of other states, 
449.20  if the sale would be exempt from taxation if it occurred in that 
449.21  state; and 
449.22     (5) sales to public libraries, public library systems, 
449.23  multicounty, multitype library systems as defined in section 
449.24  134.001, county law libraries under chapter 134A, state agency 
449.25  libraries, the state library under section 480.09, and the 
449.26  legislative reference library.  
449.27     (b) This exemption does not apply to the sales of the 
449.28  following products and services: 
449.29     (1) building, construction, or reconstruction materials 
449.30  purchased by a contractor or a subcontractor as a part of a 
449.31  lump-sum contract or similar type of contract with a guaranteed 
449.32  maximum price covering both labor and materials for use in the 
449.33  construction, alteration, or repair of a building or facility; 
449.34     (2) construction materials purchased by tax exempt entities 
449.35  or their contractors to be used in constructing buildings or 
449.36  facilities which will not be used principally by the tax exempt 
450.1   entities; 
450.2      (3) the leasing of a motor vehicle as defined in section 
450.3   297B.01, subdivision 5, except for leases entered into by the 
450.4   United States or its agencies or instrumentalities; or 
450.5      (4) meals and lodging as defined under section 297A.61, 
450.6   subdivisions subdivision 3, paragraph paragraphs (d), and 16 
450.7   (g), paragraph (c) clause (2), except for meals and lodging 
450.8   purchased directly by the United States or its agencies or 
450.9   instrumentalities. 
450.10     (c) As used in this subdivision, "school districts" means 
450.11  public school entities and districts of every kind and nature 
450.12  organized under the laws of the state of Minnesota, and any 
450.13  instrumentality of a school district, as defined in section 
450.14  471.59. 
450.15     Sec. 30.  Minnesota Statutes 2000, section 297A.70, 
450.16  subdivision 4, is amended to read: 
450.17     Subd. 4.  [SALES TO NONPROFIT GROUPS.] (a) All sales, 
450.18  except those listed in paragraph (b), to the following 
450.19  "nonprofit organizations" are exempt: 
450.20     (1) an entity a corporation, society, association, 
450.21  foundation, or institution organized and operated exclusively 
450.22  for charitable, religious, or educational purposes if the item 
450.23  purchased is used in the performance of charitable, religious, 
450.24  or educational functions; and 
450.25     (2) any senior citizen group or association of groups that: 
450.26     (i) in general limits membership to persons who are either 
450.27  age 55 or older, or physically disabled; and 
450.28     (ii) is organized and operated exclusively for pleasure, 
450.29  recreation, and other nonprofit purposes, no part of the net 
450.30  earnings of which inures to the benefit of any private 
450.31  shareholders; and. 
450.32     (3) an entity organized and operated exclusively to 
450.33  maintain 
450.34  For purposes of this subdivision, charitable purpose includes 
450.35  the maintenance of a cemetery owned by a religious organization. 
450.36     (b) This exemption does not apply to the following sales: 
451.1      (1) building, construction, or reconstruction materials 
451.2   purchased by a contractor or a subcontractor as a part of a 
451.3   lump-sum contract or similar type of contract with a guaranteed 
451.4   maximum price covering both labor and materials for use in the 
451.5   construction, alteration, or repair of a building or facility; 
451.6      (2) construction materials purchased by tax-exempt entities 
451.7   or their contractors to be used in constructing buildings or 
451.8   facilities that will not be used principally by the tax-exempt 
451.9   entities; and 
451.10     (3) meals and lodging as defined under section 297A.61, 
451.11  subdivisions subdivision 3, paragraph paragraphs (d), and 
451.12  16 (g), paragraph (c) clause (2); and 
451.13     (4) leasing of a motor vehicle as defined in section 
451.14  297B.01, subdivision 5, except as provided in paragraph (c). 
451.15     (c) This exemption applies to the leasing of a motor 
451.16  vehicle as defined in section 297B.01, subdivision 5, only if 
451.17  the vehicle is: 
451.18     (1) a truck, as defined in section 168.011, a bus, as 
451.19  defined in section 168.011, or a passenger automobile, as 
451.20  defined in section 168.011, if the automobile is designed and 
451.21  used for carrying more than nine persons including the driver; 
451.22  and 
451.23     (2) intended to be used primarily to transport tangible 
451.24  personal property or individuals, other than employees, to whom 
451.25  the organization provides service in performing its charitable, 
451.26  religious, or educational purpose. 
451.27     Sec. 31.  Minnesota Statutes 2000, section 297A.70, 
451.28  subdivision 7, is amended to read: 
451.29     Subd. 7.  [HOSPITALS AND OUTPATIENT SURGICAL CENTERS.] (a) 
451.30  Sales, except for those listed in paragraph (c), to a hospital 
451.31  are exempt, if the items purchased are used in providing 
451.32  hospital services.  For purposes of this subdivision, "hospital" 
451.33  means a hospital organized and operated for charitable purposes 
451.34  within the meaning of section 501(c)(3) of the Internal Revenue 
451.35  Code, and licensed under chapter 144 or by any other 
451.36  jurisdiction, and "hospital services" are services authorized or 
452.1   required to be performed by a "hospital" under chapter 144. 
452.2      (b) Sales, except for those listed in paragraph (c), to an 
452.3   outpatient surgical center are exempt, if the items purchased 
452.4   are used in providing outpatient surgical services.  For 
452.5   purposes of this subdivision, "outpatient surgical center" means 
452.6   an outpatient surgical center organized and operated for 
452.7   charitable purposes within the meaning of section 501(c)(3) of 
452.8   the Internal Revenue Code, and licensed under chapter 144 or by 
452.9   any other jurisdiction.  For the purposes of this subdivision, 
452.10  "outpatient surgical services" means:  (1) services authorized 
452.11  or required to be performed by an outpatient surgical center 
452.12  under chapter 144 or under the applicable licensure law of any 
452.13  other jurisdiction; and (2) urgent care.  For purposes of this 
452.14  subdivision, "urgent care" means health services furnished to a 
452.15  person whose medical condition is sufficiently acute to require 
452.16  treatment unavailable through, or inappropriate to be provided 
452.17  by, a clinic or physician's office, but not so acute as to 
452.18  require treatment in a hospital emergency room.  
452.19     (c) This exemption does not apply to the following products 
452.20  and services: 
452.21     (1) purchases made by a clinic, physician's office, or any 
452.22  other medical facility not operating as a hospital or outpatient 
452.23  surgical center, even though the clinic, office, or facility may 
452.24  be owned and operated by a hospital or outpatient surgical 
452.25  center; 
452.26     (2) sales under section 297A.61, subdivisions 3, paragraph 
452.27  (d), and 16, paragraph (c); 
452.28     (3) building and construction materials used in 
452.29  constructing buildings or facilities that will not be used 
452.30  principally by the hospital or outpatient surgical center; 
452.31     (4) building, construction, or reconstruction materials 
452.32  purchased by a contractor or a subcontractor as a part of a 
452.33  lump-sum contract or similar type of contract with a guaranteed 
452.34  maximum price covering both labor and materials for use in the 
452.35  construction, alteration, or repair of a hospital or outpatient 
452.36  surgical center; or 
453.1      (5) the leasing of a motor vehicle as defined in section 
453.2   297B.01, subdivision 5. 
453.3      Sec. 32.  Minnesota Statutes 2000, section 297A.70, 
453.4   subdivision 8, is amended to read: 
453.5      Subd. 8.  [REGIONWIDE PUBLIC SAFETY RADIO COMMUNICATION 
453.6   SYSTEM; PRODUCTS AND SERVICES.] Products and services including, 
453.7   but not limited to, end user equipment used for construction, 
453.8   ownership, operation, maintenance, and enhancement of the 
453.9   backbone system of the regionwide public safety radio 
453.10  communication system established under sections 473.891 to 
453.11  473.905, are exempt.  For purposes of this subdivision, backbone 
453.12  system is defined in section 473.891, subdivision 9.  This 
453.13  subdivision is effective for purchases, sales, storage, use, or 
453.14  consumption occurring before August 1, 2003, in the counties of 
453.15  Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington. 
453.16     Sec. 33.  Minnesota Statutes 2000, section 297A.70, 
453.17  subdivision 10, is amended to read: 
453.18     Subd. 10.  [NONPROFIT TICKETS OR ADMISSIONS.] Tickets or 
453.19  admissions to the premises of or events sponsored by an 
453.20  organization that provides an opportunity for citizens of the 
453.21  state to participate in the creation, performance, or 
453.22  appreciation of the arts are exempt if the organization is 
453.23  either: 
453.24     (1) a tax-exempt organization within the meaning of 
453.25  Minnesota Statutes 1980, section 290.05, subdivision 1, clause 
453.26  (i), a corporation, fund, foundation, trust, or association if 
453.27  (i) it is organized for exclusively scientific, literary, 
453.28  religious, charitable, educational, or artistic purposes, or for 
453.29  the purpose of making contributions to or for the use of the 
453.30  United States of America, the state of Minnesota or any of its 
453.31  political subdivisions for exclusively public purposes, or for 
453.32  any combination of the purposes listed in this clause, and (ii) 
453.33  no part of the net income of the corporation, fund, foundation, 
453.34  trust, or association inures to the benefit of any private 
453.35  member, stockholder, or individual; or 
453.36     (2) a municipal board that promotes cultural and arts 
454.1   activities. 
454.2   The exemption provided with respect to a municipal board applies 
454.3   only to tickets and admissions to events sponsored by the board. 
454.4      Sec. 34.  Minnesota Statutes 2000, section 297A.70, 
454.5   subdivision 13, is amended to read: 
454.6      Subd. 13.  [FUNDRAISING SALES BY OR FOR NONPROFIT GROUPS.] 
454.7   (a) The following sales by the specified organizations for 
454.8   fundraising purposes are exempt, subject to the limitations 
454.9   listed in paragraph (b): 
454.10     (1) all sales made by an organization that exists solely 
454.11  for the purpose of providing educational or social activities 
454.12  for young people primarily age 18 and under; 
454.13     (2) all sales made by an organization that is a senior 
454.14  citizen group or association of groups if (i) in general it 
454.15  limits membership to persons age 55 or older; (ii) it is 
454.16  organized and operated exclusively for pleasure, recreation, and 
454.17  other nonprofit purposes; and (iii) no part of its net earnings 
454.18  inures to the benefit of any private shareholders; 
454.19     (3) the sale or use of tickets or admissions to a golf 
454.20  tournament held in Minnesota if the beneficiary of the 
454.21  tournament's net proceeds qualifies as a tax-exempt organization 
454.22  under section 501(c)(3) of the Internal Revenue Code; and 
454.23     (4) sales of gum, candy, and candy products sold for 
454.24  fundraising purposes by a nonprofit organization that provides 
454.25  educational and social activities primarily for young people age 
454.26  18 years of age and under. 
454.27     (b) The exemptions listed in paragraph (a) are limited in 
454.28  the following manner: 
454.29     (1) the exemption under paragraph (a), clauses (1) and (2), 
454.30  applies only if the gross annual receipts of the organization 
454.31  from fundraising do not exceed $10,000; and 
454.32     (2) the exemption under paragraph (a), clause (1), does not 
454.33  apply if the sales are derived from admission charges or from 
454.34  activities for which the money must be deposited with the school 
454.35  district treasurer under section 123B.49, subdivision 2, or be 
454.36  recorded in the same manner as other revenues or expenditures of 
455.1   the school district under section 123B.49, subdivision 4. 
455.2      (c) For purposes of this subdivision, a club, association, 
455.3   or other organization of elementary or secondary school students 
455.4   organized for the purpose of carrying on sports, educational, or 
455.5   other extracurricular activities is a separate organization from 
455.6   the school district or school for purposes of applying the 
455.7   $10,000 limit. 
455.8      Sec. 35.  Minnesota Statutes 2000, section 297A.70, 
455.9   subdivision 14, is amended to read: 
455.10     Subd. 14.  [FUNDRAISING EVENTS SPONSORED BY NONPROFIT 
455.11  GROUPS.] (a) Sales of tangible personal property at, and 
455.12  admission charges for fundraising events sponsored by, a 
455.13  nonprofit organization are exempt if the entire proceeds, less 
455.14  the necessary expenses for the event, will be used solely and 
455.15  exclusively for charitable, religious, or educational purposes.  
455.16  Exempt sales include the sale of food, meals, and drinks, and 
455.17  taxable services at the fundraising event. 
455.18     (b) This exemption is limited in the following manner: 
455.19     (1) it does not apply to admission charges for events 
455.20  involving bingo or other gambling activities or to charges for 
455.21  use of amusement devices involving bingo or other gambling 
455.22  activities; 
455.23     (2) all gross receipts are taxable if the profits are not 
455.24  used solely and exclusively for charitable, religious, or 
455.25  educational purposes; 
455.26     (3) it does not apply unless the organization keeps a 
455.27  separate accounting record, including receipts and disbursements 
455.28  from each fundraising event that documents all deductions from 
455.29  gross receipts with receipts and other records; 
455.30     (4) it does not apply to any sale made by or in the name of 
455.31  a nonprofit corporation as the active or passive agent of a 
455.32  person that is not a nonprofit corporation; 
455.33     (5) all gross receipts are taxable if fundraising events 
455.34  exceed 24 days per year; and 
455.35     (6) it does not apply to fundraising events conducted on 
455.36  premises leased for more than five days but less than 30 days. 
456.1      (c) For purposes of this subdivision, a "nonprofit 
456.2   organization" means any unit of government, corporation, 
456.3   society, association, foundation, or institution organized and 
456.4   operated for charitable, religious, educational, civic, 
456.5   fraternal, and senior citizens' or veterans' purposes, no part 
456.6   of the net earnings of which inures to the benefit of a private 
456.7   individual. 
456.8      Sec. 36.  Minnesota Statutes 2000, section 297A.75, is 
456.9   amended to read: 
456.10     297A.75 [REFUND; APPROPRIATION.] 
456.11     Subdivision 1.  [TAX COLLECTED.] The tax on the gross 
456.12  receipts from the sale of the following exempt items must be 
456.13  imposed and collected as if the sale were taxable and the rate 
456.14  under section 297A.62, subdivision 1, applied.  The exempt items 
456.15  include: 
456.16     (1) capital equipment exempt under section 297A.68, 
456.17  subdivision 5; 
456.18     (2) building materials for an agricultural processing 
456.19  facility exempt under section 297A.71, subdivision 13; 
456.20     (3) building materials for mineral production facilities 
456.21  exempt under section 297A.71, subdivision 14; 
456.22     (4) building materials for correctional facilities under 
456.23  section 297A.71, subdivision 3; 
456.24     (5) building materials used in a residence for disabled 
456.25  veterans exempt under section 297A.71, subdivision 11; and 
456.26     (6) chair lifts, ramps, elevators, and associated building 
456.27  materials exempt under section 297A.71, subdivision 12; and 
456.28     (7) building materials for the Long Lake Conservation 
456.29  Center exempt under section 297A.71, subdivision 17. 
456.30     Subd. 2.  [REFUND; ELIGIBLE PERSONS.] Upon application on 
456.31  forms prescribed by the commissioner, a refund equal to the tax 
456.32  paid on the gross receipts of the exempt items must be paid to 
456.33  the applicant.  Only the following persons may apply for the 
456.34  refund: 
456.35     (1) for subdivision 1, clauses (1) to (3), the applicant 
456.36  must be the purchaser; 
457.1      (2) for subdivision 1, clause clauses (4) and (7), the 
457.2   applicant must be the governmental subdivision; 
457.3      (3) for subdivision 1, clause (5), the applicant must be 
457.4   the recipient of the benefits provided in United States Code, 
457.5   title 38, chapter 21; and 
457.6      (4) for subdivision 1, clause (6), the applicant must be 
457.7   the owner of the homestead property. 
457.8      Subd. 3.  [APPLICATION.] (a) The application must include 
457.9   sufficient information to permit the commissioner to verify the 
457.10  tax paid.  If the tax was paid by a contractor, subcontractor, 
457.11  or builder, under subdivision 1, clause (4), (5), or (6), or 
457.12  (7), the contractor, subcontractor, or builder must furnish to 
457.13  the refund applicant a statement including the cost of the 
457.14  exempt items and the taxes paid on the items unless otherwise 
457.15  specifically provided by this subdivision.  The provisions of 
457.16  sections 289A.40 and 289A.50 apply to refunds under this section.
457.17     (b) An applicant may not file more than two applications 
457.18  per calendar year for refunds for taxes paid on capital 
457.19  equipment exempt under section 297A.68, subdivision 5.  
457.20     Subd. 4.  [INTEREST.] Interest must be paid on the refund 
457.21  at the rate in section 270.76 from the date the refund claim is 
457.22  filed for taxes paid under subdivision 1, clauses (1) to (3), 
457.23  and (5), and from 60 days after the date the refund claim is 
457.24  filed with the commissioner for claims filed under subdivision 
457.25  1, clauses (4) and, (6), and (7). 
457.26     Subd. 5.  [APPROPRIATION.] The amount required to make the 
457.27  refunds is annually appropriated to the commissioner. 
457.28     Sec. 37.  Minnesota Statutes 2000, section 297A.77, 
457.29  subdivision 1, is amended to read: 
457.30     Subdivision 1.  [COLLECTION OF TAX AT TIME OF SALE.] The 
457.31  tax must be stated and charged separately from the sales 
457.32  price or charge for service insofar as practicable and must be 
457.33  collected by the seller from the purchaser.  
457.34     Sec. 38.  Minnesota Statutes 2000, section 297A.80, is 
457.35  amended to read: 
457.36     297A.80 [TAXES IN OTHER STATES; OFFSET AGAINST USE 
458.1   TAX CREDIT.] 
458.2      Subdivision 1.  [MULTISTATE TAX COMPACT STATES.] If an 
458.3   article of tangible personal property or an item listed in 
458.4   section 297A.63 has already been taxed for its sale, 
458.5   distribution, storage, use, or other consumption by another 
458.6   state, or a subdivision of another state, that is a member of 
458.7   the multistate tax compact, a tax credit is allowed to the 
458.8   person who paid the tax in the other state or subdivision of the 
458.9   other state under the provisions of section 290.171, article V. 
458.10     Subd. 2.  [OTHER STATES; GENERALLY.] If an article of 
458.11  tangible personal property or an item listed in section 297A.63 
458.12  has already been taxed by another state for its sale, 
458.13  distribution, storage, use, or other consumption in an amount 
458.14  less than the tax imposed by this chapter, then as to the person 
458.15  who paid the tax in the other state, section 297A.63 applies 
458.16  only at a rate measured by the difference between the rate 
458.17  imposed under section 297A.62 and the rate by which the previous 
458.18  tax was computed by another state not included in subdivision 1, 
458.19  a tax credit is allowed against the tax imposed in section 
458.20  297A.63 to the person who paid the tax in the amount of tax paid 
458.21  to the other state.  If the tax imposed in the other state is 
458.22  equal to or greater than The credit cannot exceed the tax 
458.23  imposed in this state, then no tax is due from that person under 
458.24  section 297A.63. 
458.25     Sec. 39.  Minnesota Statutes 2000, section 297A.82, 
458.26  subdivision 3, is amended to read: 
458.27     Subd. 3.  [PAYMENT OF TAX TO COMMISSIONER.] If the an 
458.28  aircraft is purchased from a person who is not the holder of a 
458.29  valid sales and use tax permit under this chapter, the purchaser 
458.30  shall pay the tax to the commissioner of revenue prior to 
458.31  registering or licensing the aircraft in this state.  The 
458.32  commissioner of revenue shall issue a certificate stating that 
458.33  the sales and use tax in respect to the transaction has been 
458.34  paid.  
458.35     Sec. 40.  Minnesota Statutes 2000, section 297A.89, 
458.36  subdivision 1, is amended to read: 
459.1      Subdivision 1.  [COMMISSIONER MAY PERMIT.] The commissioner 
459.2   may permit purchasers to pay taxes imposed by this chapter 
459.3   directly to the commissioner.  Any taxes paid by purchasers 
459.4   under this section are considered use taxes, except for local 
459.5   sales taxes when no corresponding local use tax is imposed.  
459.6      Sec. 41.  Minnesota Statutes 2000, section 297A.90, 
459.7   subdivision 1, is amended to read: 
459.8      Subdivision 1.  [REGISTRATION; RECORDS.] (a) A person who 
459.9   is engaged in interstate for-hire transportation of tangible 
459.10  personal property or passengers by motor vehicle may, under 
459.11  rules prescribed by the commissioner, register as a retailer and 
459.12  pay the taxes imposed by this chapter in accordance with this 
459.13  section.  Any taxes paid under this section are use taxes, 
459.14  except local sales taxes when no corresponding local use tax is 
459.15  imposed. 
459.16     (b) As used in this section, "person" means:  
459.17     (1) one who possesses a certificate or permit or has 
459.18  completed a registration process that authorizes for-hire 
459.19  transportation of property or passengers from the United States 
459.20  Department of Transportation, the transportation regulation 
459.21  board, or the department of transportation; 
459.22     (2) one who transports commodities defined as "exempt" in 
459.23  for-hire transportation in interstate commerce; or 
459.24     (3) one who transports tangible personal property in 
459.25  interstate commerce, pursuant to contracts with persons 
459.26  described in clause (1) or (2).  
459.27  Persons qualifying under clause (2) or (3) must maintain on a 
459.28  current basis the same type of mileage records that are required 
459.29  by persons specified in clause (1) by the United States 
459.30  Department of Transportation.  
459.31     (c) Persons who in the course of their business are 
459.32  transporting solely their own goods in interstate commerce may 
459.33  also register as retailers under rules prescribed by the 
459.34  commissioner and pay the taxes imposed by this chapter in 
459.35  accordance with this section.  
459.36     Sec. 42.  Minnesota Statutes 2000, section 297A.91, 
460.1   subdivision 1, is amended to read: 
460.2      Subdivision 1.  [SEIZURE OF PROPERTY USED IN ILLEGAL 
460.3   TRANSPORT.] (a) If the retailer does not have a sales or use tax 
460.4   permit and has been engaging in transporting personal property 
460.5   into the state without payment of the tax, the commissioner of 
460.6   revenue or the commissioner's agents may seize in the name of 
460.7   the state any truck, automobile, or means of transportation not 
460.8   owned or operated by a common for-hire carrier, used in the 
460.9   illegal importation and transportation of any tangible personal 
460.10  property by a retailer or the retailer's agent or employee.  The 
460.11  commissioner may demand the forfeiture and sale of the truck, 
460.12  automobile, or other means of transportation together with the 
460.13  property being transported illegally, unless the owner 
460.14  establishes to the satisfaction of the commissioner or the court 
460.15  that the owner had no notice or knowledge or reason to believe 
460.16  that the vehicle was used or intended to be used in any such 
460.17  violation. 
460.18     (b) Within two days after the seizure, the person making 
460.19  the seizure shall deliver an inventory of the vehicle and 
460.20  property seized to the person from whom the seizure was made, if 
460.21  known, and to any person known or believed to have any right, 
460.22  title, interest, or lien on the vehicle or property.  The person 
460.23  making the seizure shall also file a copy of the inventory with 
460.24  the commissioner.  
460.25     Sec. 43.  Minnesota Statutes 2000, section 297A.92, 
460.26  subdivision 2, is amended to read: 
460.27     Subd. 2.  [AUCTIONS OF SECURITY.] The commissioner may sell 
460.28  property deposited as security at public auction if necessary to 
460.29  recover the amount required to be collected, including any 
460.30  interest and penalties.  Notice of the sale must be served upon 
460.31  the person who deposited the security.  It must be served 
460.32  personally, or by mail as prescribed for the service of a notice 
460.33  of a deficiency an order of assessment under section 289A.37, 
460.34  subdivision 5.  After a sale any surplus above the amount due 
460.35  not required as security under this section must be returned to 
460.36  the person who deposited the security. 
461.1      Sec. 44.  Minnesota Statutes 2000, section 297A.94, is 
461.2   amended to read: 
461.3      297A.94 [DEPOSIT OF REVENUES.] 
461.4      (a) Except as provided in this section, the commissioner 
461.5   shall deposit the revenues, including interest and penalties, 
461.6   derived from the taxes imposed by this chapter in the state 
461.7   treasury and credit them to the general fund.  
461.8      (b) The commissioner shall deposit taxes in the Minnesota 
461.9   agricultural and economic account in the special revenue fund if:
461.10     (1) the taxes are derived from sales and use of property 
461.11  and services purchased for the construction and operation of an 
461.12  agricultural resource project; and 
461.13     (2) the purchase was made on or after the date on which a 
461.14  conditional commitment was made for a loan guaranty for the 
461.15  project under section 41A.04, subdivision 3. 
461.16  The commissioner of finance shall certify to the commissioner 
461.17  the date on which the project received the conditional 
461.18  commitment.  The amount deposited in the loan guaranty account 
461.19  must be reduced by any refunds and by the costs incurred by the 
461.20  department of revenue to administer and enforce the assessment 
461.21  and collection of the taxes.  
461.22     (c) The commissioner shall deposit the revenues, including 
461.23  interest and penalties, derived from the taxes imposed on sales 
461.24  and purchases included in section 297A.61, subdivision 16, 
461.25  paragraphs (b) and (f) 3, paragraph (g), clauses (1) and (5), in 
461.26  the state treasury, and credit them as follows: 
461.27     (1) first to the general obligation special tax bond debt 
461.28  service account in each fiscal year the amount required by 
461.29  section 16A.661, subdivision 3, paragraph (b); and 
461.30     (2) after the requirements of clause (1) have been met, the 
461.31  balance to the general fund. 
461.32     (d) The commissioner shall deposit the revenues, including 
461.33  interest and penalties, collected under section 297A.64, 
461.34  subdivision 5, in the state treasury and credit them to the 
461.35  general fund.  By July 15 of each year the commissioner shall 
461.36  transfer to the highway user tax distribution fund an amount 
462.1   equal to the excess fees collected under section 297A.64, 
462.2   subdivision 5, for the previous calendar year. 
462.3      (e) For fiscal year 2001, 97 percent, and for fiscal year 
462.4   2002 and thereafter, 87 percent of the revenues, including 
462.5   interest and penalties, transmitted to the commissioner under 
462.6   section 297A.65, must be deposited by the commissioner in the 
462.7   state treasury as follows: 
462.8      (1) 50 percent of the receipts must be deposited in the 
462.9   heritage enhancement account in the game and fish fund, and may 
462.10  be spent only on activities that improve, enhance, or protect 
462.11  fish and wildlife resources, including conservation, 
462.12  restoration, and enhancement of land, water, and other natural 
462.13  resources of the state; 
462.14     (2) 22.5 percent of the receipts must be deposited in the 
462.15  natural resources fund, and may be spent only for state parks 
462.16  and trails; 
462.17     (3) 22.5 percent of the receipts must be deposited in the 
462.18  natural resources fund, and may be spent only on metropolitan 
462.19  park and trail grants; 
462.20     (4) three percent of the receipts must be deposited in the 
462.21  natural resources fund, and may be spent only on local trail 
462.22  grants; and 
462.23     (5) two percent of the receipts must be deposited in the 
462.24  natural resources fund, and may be spent only for the Minnesota 
462.25  zoological garden, the Como park zoo and conservatory, and the 
462.26  Duluth zoo. 
462.27     (f) The revenue dedicated under paragraph (e) may not be 
462.28  used as a substitute for traditional sources of funding for the 
462.29  purposes specified, but the dedicated revenue shall supplement 
462.30  traditional sources of funding for those purposes.  Land 
462.31  acquired with money deposited in the game and fish fund under 
462.32  paragraph (e) must be open to public hunting and fishing during 
462.33  the open season.  At least 87 percent of the money deposited in 
462.34  the game and fish fund for improvement, enhancement, or 
462.35  protection of fish and wildlife resources under paragraph (e) 
462.36  must be allocated for field operations. 
463.1      Sec. 45.  Minnesota Statutes 2000, section 297A.99, 
463.2   subdivision 7, is amended to read: 
463.3      Subd. 7.  [EXEMPTIONS.] (a) All goods or services that are 
463.4   otherwise exempt from taxation under this chapter are exempt 
463.5   from a political subdivision's tax. 
463.6      (b) The gross receipts from the sale of tangible personal 
463.7   property that meets the requirement of section 297A.68, 
463.8   subdivision 13 or 14 15, are exempt, except the qualification 
463.9   test applies based on the boundaries of the political 
463.10  subdivision instead of the state of Minnesota. 
463.11     (c) All mobile transportation equipment, and parts and 
463.12  accessories attached to or to be attached to the equipment are 
463.13  exempt, if purchased by a holder of a motor carrier direct pay 
463.14  permit under section 297A.90.  
463.15     Sec. 46.  [INSTRUCTIONS TO REVISOR.] 
463.16     (a) In the next edition of Minnesota Statutes, the revisor 
463.17  of statutes shall put the definitions in section 297A.68, 
463.18  subdivision 5, paragraph (d), in alphabetical order and correct 
463.19  any references to the reordered definitions. 
463.20     (b) In the next edition of Minnesota Statutes, the revisor 
463.21  of statutes shall renumber section 297A.68, subdivision 27, as 
463.22  297A.67, subdivision 25, and correct any references to the 
463.23  renumbered section. 
463.24     Sec. 47.  [REPEALER.] 
463.25     Minnesota Statutes 2000, sections 297A.61, subdivision 16; 
463.26  297A.68, subdivision 21; and 297A.71, subdivision 21, are 
463.27  repealed. 
463.28     Sec. 48.  [EFFECTIVE DATE.] 
463.29     Each section of this act takes effect at the time the 
463.30  section it amends is effective under Laws 2000, chapter 418, 
463.31  article 1, section 46. 
463.32                             ARTICLE 15
463.33                           SPECIAL TAXES
463.34     Section 1.  Minnesota Statutes 2000, section 69.021, 
463.35  subdivision 5, is amended to read: 
463.36     Subd. 5.  [CALCULATION OF STATE AID.] (a) The amount of 
464.1   fire state aid available for apportionment, before the addition 
464.2   of the minimum fire state aid allocation amount under 
464.3   subdivision 7, is equal to 107 percent of the amount of premium 
464.4   taxes paid to the state upon the fire, lightning, sprinkler 
464.5   leakage, and extended coverage premiums reported to the 
464.6   commissioner by insurers on the Minnesota Firetown Premium 
464.7   Report.  This amount shall be reduced by the amount required to 
464.8   pay the state auditor's costs and expenses of the audits or 
464.9   exams of the firefighters relief associations. 
464.10     The total amount for apportionment in respect to fire state 
464.11  aid must not be less than two percent of the premiums reported 
464.12  to the commissioner by insurers on the Minnesota Firetown 
464.13  Premium Report after subtracting the following amounts: 
464.14     (1) the amount required to pay the state auditor's costs 
464.15  and expenses of the audits or exams of the firefighters relief 
464.16  associations; and 
464.17     (2) one percent of the premiums reported by town and 
464.18  farmers' mutual insurance companies and mutual property and 
464.19  casualty companies with total assets of $5,000,000 or less.  
464.20     (b) The total amount for apportionment as police state aid 
464.21  is equal to 104 percent of the amount of premium taxes paid to 
464.22  the state on the premiums reported to the commissioner by 
464.23  insurers on the Minnesota Aid to Police Premium Report, plus the 
464.24  payment amounts received under section 60A.152 since the last 
464.25  aid apportionment, and reduced by the amount required to pay the 
464.26  costs and expenses of the state auditor for audits or exams of 
464.27  police relief associations.  The total amount for apportionment 
464.28  in respect to the police state aid program must not be less than 
464.29  two percent of the amount of premiums reported to the 
464.30  commissioner by insurers on the Minnesota Aid to Police Premium 
464.31  Report after subtracting the amount required to pay the state 
464.32  auditor's cost and expenses of the audits or exams of the police 
464.33  relief associations.  
464.34     (c) The commissioner shall calculate the percentage of 
464.35  increase or decrease reflected in the apportionment over or 
464.36  under the previous year's available state aid using the same 
465.1   premiums as a basis for comparison. 
465.2      (d) The amount for apportionment in respect to peace 
465.3   officer state aid under paragraph (b) must be further reduced by 
465.4   $1,779,000 in fiscal year 1999, $2,077,000 in fiscal year 2000, 
465.5   and $2,404,000 in fiscal year 2001.  These reductions in this 
465.6   paragraph cancel to the general fund. 
465.7      (e) The amount for apportionment of police state aid under 
465.8   paragraph (b) is annually increased by an amount equal to the 
465.9   revenues under the tax on automobile risk self-insurance under 
465.10  Minnesota Statutes 2000, section 297I.05, subdivision 8, that 
465.11  were collected in fiscal year 2001.  An amount sufficient to pay 
465.12  this increase is annually appropriated from the general fund. 
465.13     <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
465.14  fiscal year 2002. 
465.15     Sec. 2.  Minnesota Statutes 2000, section 168.013, 
465.16  subdivision 1a, is amended to read: 
465.17     Subd. 1a.  [PASSENGER AUTOMOBILE; HEARSE.] (a) On passenger 
465.18  automobiles as defined in section 168.011, subdivision 7, and 
465.19  hearses, except as otherwise provided, the tax shall be $10 plus 
465.20  an additional tax equal to 1.25 percent of the base value.  
465.21     (b) Subject to the classification provisions herein, "base 
465.22  value" means the manufacturer's suggested retail price of the 
465.23  vehicle including destination charge using list price 
465.24  information published by the manufacturer or determined by the 
465.25  registrar if no suggested retail price exists, and shall not 
465.26  include the cost of each accessory or item of optional equipment 
465.27  separately added to the vehicle and the suggested retail price. 
465.28     (c) If the manufacturer's list price information contains a 
465.29  single vehicle identification number followed by various 
465.30  descriptions and suggested retail prices, the registrar shall 
465.31  select from those listings only the lowest price for determining 
465.32  base value. 
465.33     (d) If unable to determine the base value because the 
465.34  vehicle is specially constructed, or for any other reason, the 
465.35  registrar may establish such value upon the cost price to the 
465.36  purchaser or owner as evidenced by a certificate of cost but not 
466.1   including Minnesota sales or use tax or any local sales or other 
466.2   local tax. 
466.3      (e) The registrar shall classify every vehicle in its 
466.4   proper base value class as follows: 
466.5                         FROM                   TO
466.6                         $  0                $199.99
466.7                          200                 399.99
466.8   and thereafter a series of classes successively set in brackets 
466.9   having a spread of $200 consisting of such number of classes as 
466.10  will permit classification of all vehicles. 
466.11     (f) The base value for purposes of this section shall be 
466.12  the middle point between the extremes of its class. 
466.13     (g) The registrar shall establish the base value, when new, 
466.14  of every passenger automobile and hearse registered prior to the 
466.15  effective date of Extra Session Laws 1971, chapter 31, using 
466.16  list price information published by the manufacturer or any 
466.17  nationally recognized firm or association compiling such data 
466.18  for the automotive industry.  If unable to ascertain the base 
466.19  value of any registered vehicle in the foregoing manner, the 
466.20  registrar may use any other available source or method.  The tax 
466.21  on all previously registered vehicles shall be computed upon the 
466.22  base value thus determined taking into account the depreciation 
466.23  provisions of paragraph (h). 
466.24     (h) Except as provided in paragraph (i), The annual 
466.25  additional tax computed upon the base value as provided herein, 
466.26  during the first and second years of vehicle life shall be 
466.27  computed upon 100 percent of the base value; for the third and 
466.28  fourth years, 90 percent of such value; for the fifth and sixth 
466.29  years, 75 percent of such value; for the seventh year, 60 
466.30  percent of such value; for the eighth year, 40 percent of such 
466.31  value; for the ninth year, 30 percent of such value; for the 
466.32  tenth year, ten percent of such value; for the 11th and each 
466.33  succeeding year, the sum of $25.  
466.34  In no event shall the annual additional tax be less than $25.  
466.35  The total tax under this subdivision shall not exceed $189 for 
466.36  the first renewal period and shall not exceed $99 for subsequent 
467.1   renewal periods.  The total tax under this subdivision on any 
467.2   vehicle filing its initial registration in Minnesota in the 
467.3   second year of vehicle life shall not exceed $189 and shall not 
467.4   exceed $99 for subsequent renewal periods.  The total tax under 
467.5   this subdivision on any vehicle filing its initial registration 
467.6   in Minnesota in the third or subsequent year of vehicle life 
467.7   shall not exceed $99 and shall not exceed $99 in any subsequent 
467.8   renewal period. 
467.9      (i) The annual additional tax under paragraph (h) on a 
467.10  motor vehicle on which the first annual tax was paid before 
467.11  January 1, 1990, must not exceed the tax that was paid on that 
467.12  vehicle the year before.  The total tax due for the first 
467.13  renewal period on any vehicle whose initial registration in 
467.14  Minnesota was for a period of less than 12 months under section 
467.15  168.017, subdivision 3, paragraph (a), clause (2), shall be the 
467.16  ad valorem rate for the remainder of the initial 12-month period 
467.17  plus $16 per month on each remaining month.  The total tax due 
467.18  on the second renewal period shall be $16 per month for the 
467.19  remainder of the first 12-month renewal period and $8 per month 
467.20  thereafter for a total of 12 months. 
467.21     <b>[EFFECTIVE DATE.]</b> This section is effective June 1, 2001, 
467.22  for taxes payable on and after that date. 
467.23     Sec. 3.  Minnesota Statutes 2000, section 239.101, 
467.24  subdivision 3, is amended to read: 
467.25     Subd. 3.  [PETROLEUM INSPECTION FEE.] A person who owns 
467.26  petroleum products held in storage at a pipeline terminal, river 
467.27  terminal, or refinery shall pay a petroleum inspection fee of 85 
467.28  cents for every 1,000 gallons sold or withdrawn from the 
467.29  terminal or refinery storage An inspection fee is imposed on 
467.30  petroleum products when received by the first licensed 
467.31  distributor, and on petroleum products received and held for 
467.32  sale or use by any person when the petroleum products have not 
467.33  previously been received by a licensed distributor.  The 
467.34  petroleum inspection fee is 85 cents for every 1,000 gallons 
467.35  received.  The commissioner of revenue shall collect the fee.  
467.36  The revenue from the fee must first be applied to cover the 
468.1   amounts appropriated for petroleum product quality inspection 
468.2   expenses, for the inspection and testing of petroleum product 
468.3   measuring equipment, and for petroleum supply monitoring under 
468.4   chapter 216C.  
468.5      The commissioner of revenue shall credit a person for 
468.6   inspection fees previously paid in error or for any material 
468.7   exported or sold for export from the state upon filing of a 
468.8   report as prescribed by the commissioner of revenue.  The 
468.9   commissioner of revenue may collect the inspection fee along 
468.10  with any taxes due under chapter 296A.  
468.11     <b>[EFFECTIVE DATE.]</b> This section is effective for petroleum 
468.12  products received on or after July 1, 2001. 
468.13     Sec. 4.  Minnesota Statutes 2000, section 287.035, is 
468.14  amended to read: 
468.15     287.035 [IMPOSITION OF TAX.] 
468.16     A tax of 23 cents is imposed upon each $100, or fraction 
468.17  thereof, is imposed on the privilege of recording a mortgage.  
468.18  The tax rate is .0023 of the debt or portion of a debt that is 
468.19  secured by any recorded mortgage of real property located in 
468.20  this state.  The person liable for the tax is the mortgagee.  If 
468.21  the mortgagee is a governmental agency, the tax is imposed on 
468.22  and must be paid by the mortgagor.  A governmental agency 
468.23  includes a federal, state, or local government or an 
468.24  instrumentality of a federal, state, or local government.  The 
468.25  tax is not imposed on the lawful interest amounts that may 
468.26  accrue with respect to a debt. 
468.27     <b>[EFFECTIVE DATE.]</b> This section is effective for mortgages 
468.28  recorded after June 30, 2001. 
468.29     Sec. 5.  Minnesota Statutes 2000, section 287.04, is 
468.30  amended to read: 
468.31     287.04 [EXEMPTIONS.] 
468.32     The tax imposed by section 287.035 does not apply to:  
468.33     (a) A decree of marriage dissolution or an instrument made 
468.34  pursuant to it.  
468.35     (b) A mortgage given to correct a misdescription of the 
468.36  mortgaged property. 
469.1      (c) A mortgage or other instrument that adds additional 
469.2   security for the same debt for which mortgage registry tax has 
469.3   been paid.  
469.4      (d) A contract for the conveyance of any interest in real 
469.5   property, including a contract for deed. 
469.6      (e) A mortgage secured by real property subject to the 
469.7   minerals production tax of sections 298.24 to 298.28. 
469.8      (f) The principal amount of bonds or other obligations 
469.9   issued by the St. Paul port authority under its common revenue 
469.10  bond fund if each of the following conditions are met. 
469.11     (1) The bonds or other obligations are secured by a 
469.12  mortgage on property, title to which is held by the political 
469.13  subdivision. 
469.14     (2) The mortgage is recorded after May 19, 1993. 
469.15     (3) The bonds or other obligations are either (i)  
469.16  outstanding on May 19, 1993, or (ii) issued in exchange for or 
469.17  to otherwise refund bonds or other obligations the original 
469.18  series of which were issued before May 19, 1993 a mortgage loan 
469.19  made under a low and moderate income or other affordable housing 
469.20  program, if the mortgagee is a federal, state, or local 
469.21  government agency. 
469.22     (g) Mortgages taken in good faith by persons or 
469.23  corporations whose property is expressly exempted from taxation 
469.24  by section 272.02, subdivisions 2 to 8 7, or mortgagees that are 
469.25  fraternal benefit societies subject to section 64B.24. 
469.26     (h) A mortgage amendment or extension, as defined in 
469.27  section 287.01. 
469.28     <b>[EFFECTIVE DATE.]</b> This section is effective for mortgages 
469.29  recorded after June 30, 2001. 
469.30     Sec. 6.  Minnesota Statutes 2000, section 287.08, is 
469.31  amended to read: 
469.32     287.08 [TAX, HOW PAYABLE; RECEIPTS.] 
469.33     (a) The tax imposed by sections 287.01 to 287.12 must be 
469.34  paid to the treasurer of any county in this state in which the 
469.35  real property or some part is located at or before the time of 
469.36  filing the mortgage for record.  The treasurer shall endorse 
470.1   receipt on the mortgage and the receipt is conclusive proof that 
470.2   the tax has been paid in the amount stated and authorizes any 
470.3   county recorder or registrar of titles to record the mortgage.  
470.4   Its form, in substance, shall be "registration tax hereon of 
470.5   ..................... dollars paid."  If the mortgage is exempt 
470.6   from taxation the endorsement shall, in substance, be "exempt 
470.7   from registration tax."  In either case the receipt must be 
470.8   signed by the treasurer.  In case the treasurer is unable to 
470.9   determine whether a claim of exemption should be allowed, the 
470.10  tax must be paid as in the case of a taxable mortgage.  
470.11     (b) Upon written application of the taxpayer, The county 
470.12  treasurer may refund in whole or in part any mortgage registry 
470.13  tax that has been erroneously paid, or a person having paid a 
470.14  mortgage registry tax amount may seek a refund of the tax, or 
470.15  other appropriate relief, overpayment if a written application 
470.16  by the taxpayer is submitted to the county treasurer within 
470.17  three and one-half years from the date of the overpayment.  If 
470.18  the county has not issued a denial of the application, the 
470.19  taxpayer may bring an action in tax court in the county in which 
470.20  the tax was paid at any time after the expiration of six months 
470.21  from the time that the application was submitted.  A denial of 
470.22  refund may be appealed within 60 days from the date of the 
470.23  denial by bringing an action in tax court in the county in which 
470.24  the tax was paid, within 60 days of the payment.  The action is 
470.25  commenced by the serving of a petition for relief on the county 
470.26  treasurer, and by filing a copy with the court.  The county 
470.27  attorney shall defend the action.  The county treasurer shall 
470.28  notify the treasurer of each county that has or would receive a 
470.29  portion of the tax as paid.  
470.30     (c) If the county treasurer determines a refund should be 
470.31  paid, or if a refund is ordered by the court, the county 
470.32  treasurer of each county that actually received a portion of the 
470.33  tax shall immediately pay a proportionate share of three percent 
470.34  of the refund using any available county funds.  The county 
470.35  treasurer of each county that received, or would have received, 
470.36  a portion of the tax shall also pay their county's proportionate 
471.1   share of the remaining 97 percent of the court-ordered refund on 
471.2   or before the 20th day of the following month using solely the 
471.3   mortgage registry tax funds that would be paid to the 
471.4   commissioner of revenue on that date under section 287.12.  If 
471.5   the funds on hand under this procedure are insufficient to fully 
471.6   fund 97 percent of the court-ordered refund, the county 
471.7   treasurer of the county in which the action was brought shall 
471.8   file a claim with the commissioner of revenue under section 
471.9   16A.48 for the remaining portion of 97 percent of the refund, 
471.10  and shall pay over the remaining portion upon receipt of a 
471.11  warrant from the state issued pursuant to the claim. 
471.12     (d) When any mortgage covers real property located in more 
471.13  than one county in this state the total tax must be paid to the 
471.14  treasurer of the county where the mortgage is first presented 
471.15  for recording, and the payment must be receipted as provided in 
471.16  paragraph (a).  If the principal debt or obligation secured by 
471.17  such a multiple county mortgage exceeds $1,000,000, the nonstate 
471.18  portion of the tax must be divided and paid over by the county 
471.19  treasurer receiving it, on or before the 20th day of each month 
471.20  after receipt, to the county or counties entitled in the ratio 
471.21  that the market value of the real property covered by the 
471.22  mortgage in each county bears to the market value of all the 
471.23  real property in this state described in the mortgage.  In 
471.24  making the division and payment the county treasurer shall send 
471.25  a statement giving the description of the real property 
471.26  described in the mortgage and the market value of the part 
471.27  located in each county.  For this purpose, the treasurer of any 
471.28  county may require the treasurer of any other county to certify 
471.29  to the former the market valuation of any tract of real property 
471.30  in any mortgage. 
471.31     (e) If the mortgagee is a governmental agency as defined in 
471.32  section 287.035, the mortgagor must pay the tax imposed by 
471.33  sections 287.01 to 287.12.  The mortgagee may undertake to 
471.34  collect and remit the tax on behalf of the mortgagor.  If the 
471.35  mortgagee collects money from the mortgagor to remit the tax on 
471.36  behalf of the mortgagor, the mortgagee has a fiduciary duty to 
472.1   remit the tax on behalf of the mortgagor as to the amount of the 
472.2   tax collected for that purpose and the mortgagor is relieved of 
472.3   any further obligation to pay the tax as to the amount collected 
472.4   by the mortgagee for this purpose. 
472.5      <b>[EFFECTIVE DATE.]</b> This section is effective for 
472.6   overpayments made after June 30, 2001, and for documents 
472.7   executed, recorded, or registered after June 30, 2001. 
472.8      Sec. 7.  Minnesota Statutes 2000, section 287.13, is 
472.9   amended by adding a subdivision to read: 
472.10     Subd. 3.  [PAYMENT TO MORTGAGEE.] If a mortgagee undertakes 
472.11  to collect from the mortgagor the amount of the tax due under 
472.12  sections 287.01 to 287.12 as provided in section 287.08, 
472.13  paragraph (e), the mortgagor is not subject to the penalties 
472.14  under this section and the mortgagee is subject to the 
472.15  provisions of this section. 
472.16     <b>[EFFECTIVE DATE.]</b> This section is effective for documents 
472.17  executed, recorded, or registered after June 30, 2001. 
472.18     Sec. 8.  Minnesota Statutes 2000, section 287.20, 
472.19  subdivision 2, is amended to read: 
472.20     Subd. 2.  [CONSIDERATION.] (a) "Consideration" means 
472.21  generally the total monetary value that is given in return for a 
472.22  conveyance of real property in this state and includes all 
472.23  lump-sum payments, all prior or future installment payments that 
472.24  are required under the agreement between the parties, and the 
472.25  fair market value of any property taken, or to be taken, in 
472.26  exchange. 
472.27     (b) Consideration does not include the reasonable and 
472.28  lawful amounts of interest paid for the privilege of paying the 
472.29  purchase price in installments and the fair market value of any 
472.30  items of intangible personal property that are conveyed by the 
472.31  taxable instrument. 
472.32     (c) Consideration does not include the amount paid for the 
472.33  personal property located on the real property being conveyed 
472.34  and transferred as a part of the total consideration, except 
472.35  that the amount paid for the personal property located on the 
472.36  real property being conveyed must be included if the real 
473.1   property being conveyed is a one-, two-, or three-unit 
473.2   residential structure. 
473.3      (d) When a conveyance of real property is made pursuant to 
473.4   a contract for deed, the consideration is the price for the real 
473.5   property reflected in the contract; except that, subject to the 
473.6   limitations under section 287.221, when the conveyance is made 
473.7   by a person engaged in the business of land sales or 
473.8   construction of buildings and other improvements, or by an 
473.9   affiliated person if the contract for deed, or other agreement 
473.10  entered into as a condition to the seller executing the 
473.11  contract, requires the property to be improved during the term 
473.12  of the contract and the price of the real property as reflected 
473.13  in the contract does not include the consideration for the 
473.14  required improvements, then the consideration is the amount paid 
473.15  for the land price for the real property as reflected in the 
473.16  contract and the consideration for the required improvements 
473.17  added during the term of the contract.  By January 1, 2001, the 
473.18  commissioner shall adopt rules that define the phrases "engaged 
473.19  in the business of land sales or construction of buildings and 
473.20  other improvements" and "affiliated person" as those phrases are 
473.21  used in this paragraph. 
473.22     (e) "Total consideration" has the same meaning as 
473.23  consideration. 
473.24     (f) "Consideration, exclusive of the value of any lien or 
473.25  encumbrance remaining at the time of sale" or "net 
473.26  consideration" means the amount of consideration as reduced by 
473.27  the amount outstanding under any lien that attached to the real 
473.28  property prior to the time of sale and that is not released or 
473.29  satisfied as a result of the sale. 
473.30     <b>[EFFECTIVE DATE.]</b> This section is effective for deeds 
473.31  recorded after June 30, 2001. 
473.32     Sec. 9.  Minnesota Statutes 2000, section 287.20, 
473.33  subdivision 9, is amended to read: 
473.34     Subd. 9.  [REORGANIZATION.] "Reorganization" means the 
473.35  transfer of substantially all of the assets of a corporation, a 
473.36  limited liability company, or a partnership not in the usual or 
474.1   regular course of business if at the time of the transfer the 
474.2   transfer qualifies as:  (i) a corporate reorganization under 
474.3   section 368(a) of the Internal Revenue Code of 1986, as amended 
474.4   through December 31, 2000; or (ii) a transfer pursuant to the 
474.5   continuation of an existing partnership under section 708 of the 
474.6   Internal Revenue Code of 1986, as amended through December 31, 
474.7   2000. 
474.8      <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
474.9   deeds recorded or registered on or after July 1, 2001. 
474.10     Sec. 10.  Minnesota Statutes 2000, section 287.21, 
474.11  subdivision 1, is amended to read: 
474.12     Subdivision 1.  [DETERMINATION OF TAX.] (a) A tax is 
474.13  imposed on each deed or instrument by which any real property in 
474.14  this state is granted, assigned, transferred, or otherwise 
474.15  conveyed.  The tax applies against the net consideration. 
474.16     (b) The tax is determined in the following manner:  (1) 
474.17  when transfers are made by instruments pursuant to mergers, 
474.18  consolidations, sales, or transfers of substantially all of the 
474.19  assets of the entities as defined in section 287.20, subdivision 
474.20  9, pursuant to plans of reorganization, the tax is $1.65; (2) 
474.21  when there is no consideration or when the consideration, 
474.22  exclusive of the value of any lien or encumbrance remaining 
474.23  thereon at the time of sale, is $500 or less, the tax is $1.65; 
474.24  or (3) when the consideration, exclusive of the value of any 
474.25  lien or encumbrance remaining at the time of sale, exceeds $500, 
474.26  the tax is $1.65 plus $1.65 for each additional $500 or fraction 
474.27  of that amount .0033 of the net consideration. 
474.28     (c) The tax is due at the time a taxable deed or instrument 
474.29  is presented for recording. 
474.30     <b>[EFFECTIVE DATE.]</b> This section is effective for documents 
474.31  executed, recorded, or registered after June 30, 2001. 
474.32     Sec. 11.  Minnesota Statutes 2000, section 287.28, is 
474.33  amended to read: 
474.34     287.28 [REFUNDS OR REDEMPTION.] 
474.35     (a) The county treasurer may refund in whole or in part any 
474.36  tax which has been erroneously paid and may allow for or redeem 
475.1   such of the stamps, issued under the authority of sections 
475.2   287.20 to 287.31 as may that have been spoiled, destroyed, or 
475.3   rendered useless or unfit for the purpose intended or for which 
475.4   the owner may have no use or which through mistake may have been 
475.5   improperly or unnecessarily used.  Such order Redemption shall 
475.6   be made only upon written application of the taxpayer.  
475.7      (b) A person having paid a deed tax amount may seek a 
475.8   refund of the tax, or other appropriate relief, The county 
475.9   treasurer may refund any deed tax overpayment if a written 
475.10  application by the taxpayer is submitted to the county treasurer 
475.11  within three and one-half years from the date of the 
475.12  overpayment.  If the county has not issued a denial of the 
475.13  application, the taxpayer may bring an action in tax court in 
475.14  the county in which the tax was paid at any time after the 
475.15  expiration of six months from the time that the application was 
475.16  submitted.  A denial of refund may be appealed within 60 days 
475.17  from the date of the denial by commencing an action in tax court 
475.18  in the county where the tax was paid, within 60 days of the 
475.19  payment.  The action is commenced by serving a petition for 
475.20  relief on the county treasurer, and filing a copy with the 
475.21  court.  The county attorney shall defend the action.  The county 
475.22  treasurer shall notify the treasurer of each county that has, or 
475.23  would receive a portion of the tax as paid.  Any refund of deed 
475.24  tax which the county treasurer determines should be made, and 
475.25  any court ordered refund of deed tax, shall be accomplished 
475.26  using the refund procedures in section 287.08. 
475.27     <b>[EFFECTIVE DATE.]</b> This section is effective for 
475.28  overpayments made on or after July 1, 2001. 
475.29     Sec. 12.  Minnesota Statutes 2000, section 296A.15, 
475.30  subdivision 1, is amended to read: 
475.31     Subdivision 1.  [MONTHLY GASOLINE REPORT; SHRINKAGE 
475.32  ALLOWANCE.] (a) Except as provided in paragraph (e), on or 
475.33  before the 23rd day of each month, every person who is required 
475.34  to pay a gasoline tax shall file with the commissioner a report, 
475.35  in the form and manner prescribed by the commissioner, showing 
475.36  the number of gallons of petroleum products received by the 
476.1   reporter during the preceding calendar month, and other 
476.2   information the commissioner may require.  A written report is 
476.3   deemed to have been filed as required in this subdivision if 
476.4   postmarked on or before the 23rd day of the month in which the 
476.5   tax is payable. 
476.6      (b) The number of gallons of gasoline must be reported in 
476.7   United States standard liquid gallons, 231 cubic inches, except 
476.8   that the commissioner may upon written application and for cause 
476.9   shown permit the distributor to report the number of gallons of 
476.10  gasoline as corrected to a temperature of 60-degrees 
476.11  Fahrenheit.  If the application is granted, all gasoline covered 
476.12  in the application and allowed by the commissioner must continue 
476.13  to be reported by the distributor on the adjusted basis for a 
476.14  period of one year from the date of the granting of the 
476.15  application.  The number of gallons of petroleum products other 
476.16  than gasoline must be reported as originally invoiced.  Each 
476.17  report must show separately the number of gallons of aviation 
476.18  gasoline received by the reporter during each calendar month. 
476.19     (c) Each report must also include the amount of gasoline 
476.20  tax on gasoline received by the reporter during the preceding 
476.21  month.  In computing the tax a deduction of three 2.5 percent of 
476.22  the quantity of gasoline received by a distributor shall be made 
476.23  for evaporation and loss.  At the time of reporting, the 
476.24  reporter shall submit satisfactory evidence that one-third of 
476.25  the three 2.5 percent deduction has been credited or paid to 
476.26  dealers on quantities sold to them. 
476.27     (d) Each report shall contain a confession of judgment for 
476.28  the amount of the tax shown due to the extent not timely paid. 
476.29     (e) Under certain circumstances and with the approval of 
476.30  the commissioner, taxpayers may be allowed to file reports 
476.31  annually. 
476.32     <b>[EFFECTIVE DATE.]</b> This section is effective for reports due 
476.33  on or after July 1, 2001. 
476.34     Sec. 13.  Minnesota Statutes 2000, section 296A.16, 
476.35  subdivision 2, is amended to read: 
476.36     Subd. 2.  [FUEL USED IN OTHER VEHICLE; CLAIM FOR REFUND.] 
477.1   Any person who shall buy buys and use uses gasoline for a 
477.2   qualifying purpose other than use in motor vehicles, snowmobiles 
477.3   except as provided in clause (2), or motorboats, or special fuel 
477.4   for a qualifying purpose other than use in licensed motor 
477.5   vehicles, and who shall have paid the tax directly or indirectly 
477.6   through the amount of the tax being included in the price of the 
477.7   gasoline or special fuel, or otherwise, shall be reimbursed and 
477.8   repaid the amount of the tax paid upon filing with the 
477.9   commissioner a claim for refund in the form and manner 
477.10  prescribed by the commissioner, and containing the information 
477.11  the commissioner shall require.  By signing any such claim which 
477.12  is false or fraudulent, the applicant shall be subject to the 
477.13  penalties provided in this chapter for knowingly making a false 
477.14  claim.  The claim shall set forth the total amount of the 
477.15  gasoline so purchased and used by the applicant other than in 
477.16  motor vehicles, or special fuel purchased and used by the 
477.17  applicant other than in licensed motor vehicles, and shall state 
477.18  when and for what purpose it was used.  When a claim contains an 
477.19  error in computation or preparation, the commissioner is 
477.20  authorized to adjust the claim in accordance with the evidence 
477.21  shown on the claim or other information available to the 
477.22  commissioner.  The commissioner, on being satisfied that the 
477.23  claimant is entitled to the payments, shall approve the claim 
477.24  and transmit it to the commissioner of finance.  The words 
477.25  "gasoline" or "special fuel" as used in this subdivision do not 
477.26  include aviation gasoline or special fuel for aircraft.  
477.27  Gasoline or special fuel bought and used for a "qualifying 
477.28  purpose" means: 
477.29     (1) Gasoline or special fuel used in carrying on a trade or 
477.30  business, used on a farm situated in Minnesota, and used for a 
477.31  farming purpose.  "Farm" and "farming purpose" have the meanings 
477.32  given them in section 6420(c)(2), (3), and (4) of the Internal 
477.33  Revenue Code of 1986, as amended through December 31, 1997. 
477.34     (2) Gasoline or special fuel used for off-highway business 
477.35  use.  "Off-highway business use" means any use off the public 
477.36  highway by a person in that person's trade, business, or 
478.1   activity for the production of income.  Off-highway business use 
478.2   includes: 
478.3      (i) use of a passenger snowmobile off the public highways 
478.4   as part of the operations of a resort as defined in section 
478.5   157.15, subdivision 11; and 
478.6      (ii) use of gasoline or special fuel to operate a power 
478.7   takeoff unit on a vehicle, but not including fuel consumed 
478.8   during idling time.  
478.9   Off-highway business use does not include: 
478.10     (i) use as a fuel in a motor vehicle which, at the time of 
478.11  use, is registered or is required to be registered for highway 
478.12  use under the laws of any state or foreign country; or 
478.13     (ii) use of a licensed motor vehicle fuel tank in lieu of a 
478.14  separate storage tank for storing fuel to be used for a 
478.15  qualifying purpose, as defined in this section.  Fuel purchased 
478.16  to be used for a qualifying purpose cannot be placed in the fuel 
478.17  tank of a licensed motor vehicle and must be stored in a 
478.18  separate supply tank. 
478.19     (3) Gasoline or special fuel placed in the fuel tanks of 
478.20  new motor vehicles, manufactured in Minnesota, and shipped by 
478.21  interstate carrier to destinations in other states or foreign 
478.22  countries.  
478.23     By July 1, 1998, the commissioner shall adopt rules that 
478.24  determine the rates and percentages necessary to develop 
478.25  formulas for calculating the refund under clause (2), item (ii). 
478.26     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
478.27  following final enactment. 
478.28     Sec. 14.  [296A.201] [ASSESSMENTS.] 
478.29     Subdivision 1.  [GENERAL RULE.] The commissioner may make 
478.30  determinations, corrections, and assessments with respect to any 
478.31  tax or fee under this chapter, including interest, additions to 
478.32  taxes and fees, and assessable penalties. 
478.33     Subd. 2.  [COMMISSIONER FILED RETURNS.] If a taxpayer fails 
478.34  to file a required return, the commissioner, from information in 
478.35  the commissioner's possession or obtainable by the commissioner, 
478.36  may make a return for the taxpayer.  The return is prima facie 
479.1   correct and valid.  The commissioner may use statistical or 
479.2   other sampling techniques consistent with generally accepted 
479.3   auditing standards in examining returns or records and making 
479.4   assessments. 
479.5      Subd. 3.  [ORDER OF ASSESSMENT; NOTICE AND DEMAND TO 
479.6   TAXPAYER.] (a) If a return has been filed and the commissioner 
479.7   determines that the tax or fee disclosed by the return is 
479.8   different than the tax or fee determined by the examination, the 
479.9   commissioner shall send an order of assessment to the taxpayer.  
479.10  If no return has been filed, the commissioner may make a return 
479.11  for the taxpayer under subdivision 2 or may send an order of 
479.12  assessment under this subdivision.  The order must explain the 
479.13  basis for the assessment and must explain the taxpayer's appeal 
479.14  rights.  An order of assessment is final when made but may be 
479.15  reconsidered by the commissioner under section 296A.25. 
479.16     (b) Penalties under this chapter are not imposed and no 
479.17  collection action can be taken, including the filing of liens 
479.18  under section 270.69, if the amount shown on the order is paid 
479.19  to the commissioner: 
479.20     (1) within 60 days after notice of the amount and demand 
479.21  for its payment have been mailed to the taxpayer by the 
479.22  commissioner; or 
479.23     (2) if an administrative appeal is filed under this 
479.24  chapter, or a tax court appeal is filed under chapter 271, 
479.25  within 60 days following final determination of the appeal if 
479.26  the appeal is based upon a constitutional challenge to the tax 
479.27  or fee, and if not, when the decision of the tax court is made. 
479.28     Subd. 4.  [ERRONEOUS REFUNDS.] An erroneous refund is 
479.29  considered an underpayment of tax or fee on the date made.  An 
479.30  assessment of a deficiency arising out of an erroneous refund 
479.31  may be made at any time within two years from the making of the 
479.32  refund.  If part of the refund was induced by fraud or 
479.33  misrepresentation of a material fact, the assessment may be made 
479.34  at any time. 
479.35     Subd. 5.  [ASSESSMENT PRESUMED VALID.] A return or 
479.36  assessment of tax or fee made by the commissioner is prima facie 
480.1   correct and valid.  The taxpayer has the burden of establishing 
480.2   its incorrectness or invalidity in any related action or 
480.3   proceeding. 
480.4      Subd. 6.  [AGGREGATE REFUND OR ASSESSMENT.] The 
480.5   commissioner, on examining returns of a taxpayer for more than 
480.6   one year or period, may issue one order covering the period 
480.7   under examination that reflects the aggregate refund or 
480.8   additional tax or fee due. 
480.9      Subd. 7.  [SUFFICIENCY OF NOTICE.] An order of assessment, 
480.10  sent postage prepaid by United States mail to the taxpayer at 
480.11  the taxpayer's last known address, is sufficient even if the 
480.12  taxpayer is deceased or is under a legal disability, or, in the 
480.13  case of a corporation, even if the corporation has terminated 
480.14  its existence, unless the department has been provided with a 
480.15  new address by a party authorized to receive notices of 
480.16  assessment. 
480.17     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
480.18  following final enactment. 
480.19     Sec. 15.  Minnesota Statutes 2000, section 296A.21, 
480.20  subdivision 1, is amended to read: 
480.21     Subdivision 1.  [GENERAL RULE RULES.] (a) The commissioner 
480.22  shall make determinations, corrections, and assessments, and 
480.23  refunds with respect to taxes and fees under this chapter, 
480.24  including interest, additions to taxes, and assessable 
480.25  penalties.  Except as otherwise provided in this section, the 
480.26  amount of taxes assessable must be assessed within 3-1/2 years 
480.27  after the date the return is filed. 
480.28     (b) A claim for a refund of an overpayment of state tax or 
480.29  fees must be filed within 3-1/2 years from the date prescribed 
480.30  for filing the return, plus any extension of time granted for 
480.31  filing the return, but only if filed within the extended time; 
480.32  or the claim must be filed within one year from the date of an 
480.33  order assessing tax or fees, or from the date of a return filed 
480.34  by the commissioner, upon payment in full of the tax, fees, 
480.35  penalties, and interest shown on the order or return, whichever 
480.36  period expires later. 
481.1      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
481.2   following final enactment. 
481.3      Sec. 16.  Minnesota Statutes 2000, section 296A.21, 
481.4   subdivision 4, is amended to read: 
481.5      Subd. 4.  [TIME LIMIT FOR REPAYMENT CERTAIN REFUNDS.] No 
481.6   repayment Notwithstanding subdivision 1, paragraph (b), no 
481.7   refund under section 296A.16, subdivision 2, shall be made 
481.8   unless the claim for refund and invoice shall be are filed with 
481.9   the commissioner within one year from the date of purchase.  The 
481.10  postmark on the envelope in which a written claim is mailed 
481.11  shall determine its date of filing. 
481.12     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
481.13  following final enactment. 
481.14     Sec. 17.  Minnesota Statutes 2000, section 297E.02, 
481.15  subdivision 1, is amended to read: 
481.16     Subdivision 1.  [IMPOSITION.] A tax is imposed on all 
481.17  lawful gambling other than (1) pull-tab deals or games; (2) 
481.18  tipboard deals or games; and (3) items listed in section 
481.19  297E.01, subdivision 8, clauses (4) and (5), at the rate of 8.5 
481.20  7.5 percent on the gross receipts as defined in section 297E.01, 
481.21  subdivision 8, less prizes actually paid.  The tax imposed by 
481.22  this subdivision is in lieu of the tax imposed by section 
481.23  297A.02 and all local taxes and license fees except a fee 
481.24  authorized under section 349.16, subdivision 8, or a tax 
481.25  authorized under subdivision 5.  
481.26     The tax imposed under this subdivision is payable by the 
481.27  organization or party conducting, directly or indirectly, the 
481.28  gambling.  
481.29     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2001. 
481.30     Sec. 18.  Minnesota Statutes 2000, section 297E.02, 
481.31  subdivision 4, is amended to read: 
481.32     Subd. 4.  [PULL-TAB AND TIPBOARD TAX.] (a) A tax is imposed 
481.33  on the sale of each deal of pull-tabs and tipboards sold by a 
481.34  distributor.  The rate of the tax is 1.7 1.5 percent of the 
481.35  ideal gross of the pull-tab or tipboard deal.  The sales tax 
481.36  imposed by chapter 297A on the sale of the pull-tabs and 
482.1   tipboards by the distributor is imposed on the retail sales 
482.2   price less the tax imposed by this subdivision.  The retail sale 
482.3   of pull-tabs or tipboards by the organization is exempt from 
482.4   taxes imposed by chapter 297A and is exempt from all local taxes 
482.5   and license fees except a fee authorized under section 349.16, 
482.6   subdivision 8.  
482.7      (b) The liability for the tax imposed by this section is 
482.8   incurred when the pull-tabs and tipboards are delivered by the 
482.9   distributor to the customer or to a common or contract carrier 
482.10  for delivery to the customer, or when received by the customer's 
482.11  authorized representative at the distributor's place of 
482.12  business, regardless of the distributor's method of accounting 
482.13  or the terms of the sale.  
482.14     The tax imposed by this subdivision is imposed on all sales 
482.15  of pull-tabs and tipboards, except the following:  
482.16     (1) sales to the governing body of an Indian tribal 
482.17  organization for use on an Indian reservation; 
482.18     (2) sales to distributors licensed under the laws of 
482.19  another state or of a province of Canada, as long as all 
482.20  statutory and regulatory requirements are met in the other state 
482.21  or province; 
482.22     (3) sales of promotional tickets as defined in section 
482.23  349.12; and 
482.24     (4) pull-tabs and tipboards sold to an organization that 
482.25  sells pull-tabs and tipboards under the exemption from licensing 
482.26  in section 349.166, subdivision 2.  A distributor shall require 
482.27  an organization conducting exempt gambling to show proof of its 
482.28  exempt status before making a tax-exempt sale of pull-tabs or 
482.29  tipboards to the organization.  A distributor shall identify, on 
482.30  all reports submitted to the commissioner, all sales of 
482.31  pull-tabs and tipboards that are exempt from tax under this 
482.32  subdivision.  
482.33     (c) A distributor having a liability of $120,000 or more 
482.34  during a fiscal year ending June 30 must remit all liabilities 
482.35  in the subsequent calendar year by a funds transfer as defined 
482.36  in section 336.4A-104, paragraph (a).  The funds transfer 
483.1   payment date, as defined in section 336.4A-401, must be on or 
483.2   before the date the tax is due.  If the date the tax is due is 
483.3   not a funds transfer business day, as defined in section 
483.4   336.4A-105, paragraph (a), clause (4), the payment date must be 
483.5   on or before the funds transfer business day next following the 
483.6   date the tax is due. 
483.7      (d) Any customer who purchases deals of pull-tabs or 
483.8   tipboards from a distributor may file an annual claim for a 
483.9   refund or credit of taxes paid pursuant to this subdivision for 
483.10  unsold pull-tab and tipboard tickets.  The claim must be filed 
483.11  with the commissioner on a form prescribed by the commissioner 
483.12  by March 20 of the year following the calendar year for which 
483.13  the refund is claimed.  The refund must be filed as part of the 
483.14  customer's February monthly return.  The refund or credit is 
483.15  equal to 1.7 1.5 percent of the face value of the unsold 
483.16  pull-tab or tipboard tickets, provided that the refund or credit 
483.17  will be 1.75 1.6 percent of the face value of the unsold 
483.18  pull-tab or tipboard tickets for claims for a refund or credit 
483.19  of taxes filed on the February 2001 2002 monthly return.  The 
483.20  refund claimed will be applied as a credit against tax owing 
483.21  under this chapter on the February monthly return.  If the 
483.22  refund claimed exceeds the tax owing on the February monthly 
483.23  return, that amount will be refunded.  The amount refunded will 
483.24  bear interest pursuant to section 270.76 from 90 days after the 
483.25  claim is filed.  
483.26     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2001. 
483.27     Sec. 19.  Minnesota Statutes 2000, section 297E.02, 
483.28  subdivision 6, is amended to read: 
483.29     Subd. 6.  [COMBINED RECEIPTS TAX.] In addition to the taxes 
483.30  imposed under subdivisions 1 and 4, a tax is imposed on the 
483.31  combined receipts of the organization.  As used in this section, 
483.32  "combined receipts" is the sum of the organization's gross 
483.33  receipts from lawful gambling less gross receipts directly 
483.34  derived from the conduct of bingo, raffles, and paddlewheels, as 
483.35  defined in section 297E.01, subdivision 8, for the fiscal year.  
483.36  The combined receipts of an organization are subject to a tax 
484.1   computed according to the following schedule: 
484.2      If the combined receipts for the          The tax is:
484.3      fiscal year are:
484.4      Not over $500,000                   zero
484.5      Over $500,000, but not over
484.6      $700,000                            1.7 1.5 percent of the 
484.7                                          amount over $500,000, but 
484.8                                          not over $700,000
484.9      Over $700,000, but not over
484.10     $900,000                            $3,400 $3,000 plus 3.4 3.0
484.11                                         percent of the amount 
484.12                                         over $700,000, but 
484.13                                         not over $900,000
484.14     Over $900,000                       $10,200 $9,000 plus 5.1 
484.15                                         4.5 percent of the amount 
484.16                                         over $900,000
484.17     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2001. 
484.18     Sec. 20.  Minnesota Statutes 2000, section 297F.16, 
484.19  subdivision 4, is amended to read: 
484.20     Subd. 4.  [ERRONEOUS REFUNDS OR CREDITS.] An erroneous 
484.21  refund or credit is considered an underpayment of tax on the 
484.22  date made.  An assessment of a deficiency arising out of an 
484.23  erroneous refund or credit must be made within 3-1/2 years from 
484.24  the date prescribed for filing the return, plus any extension of 
484.25  time granted for filing the return, but only if filed within the 
484.26  extended time, or two years from the time the tax is paid in 
484.27  full, whichever period expires later two years from the making 
484.28  of the refund.  If part of the refund was induced by fraud or 
484.29  misrepresentation of a material fact, the assessment may be made 
484.30  at any time. 
484.31     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
484.32  following final enactment. 
484.33     Sec. 21.  Minnesota Statutes 2000, section 297F.20, 
484.34  subdivision 3, is amended to read: 
484.35     Subd. 3.  [FALSE OR FRAUDULENT RETURNS; PENALTIES.] (a) A 
484.36  person who files with the commissioner a return, report, or 
485.1   other document, or who maintains or provides invoices subject to 
485.2   review by the commissioner under this chapter, known by the 
485.3   person to be fraudulent or false concerning a material matter, 
485.4   is guilty of a felony. 
485.5      (b) A person who knowingly aids or assists in, or advises 
485.6   in the preparation or presentation of a return, report, invoice, 
485.7   or other document that is fraudulent or false concerning a 
485.8   material matter, whether or not the falsity or fraud is 
485.9   committed with the knowledge or consent of the person authorized 
485.10  or required to present the return, report, invoice, or other 
485.11  document, is guilty of a felony. 
485.12     <b>[EFFECTIVE DATE.]</b> This section is effective for crimes 
485.13  occurring on or after July 1, 2001. 
485.14     Sec. 22.  Minnesota Statutes 2000, section 297G.15, 
485.15  subdivision 4, is amended to read: 
485.16     Subd. 4.  [ERRONEOUS REFUNDS OR CREDITS.] An erroneous 
485.17  refund or credit is considered an underpayment of tax on the 
485.18  date made.  An assessment of a deficiency arising out of an 
485.19  erroneous refund or credit must be made within 3-1/2 years from 
485.20  the date prescribed for filing the return, plus any extension of 
485.21  time granted for filing the return, but only if filed within the 
485.22  extended time, or two years from the time the tax is paid in 
485.23  full, whichever period expires later two years from the making 
485.24  of the refund.  If part of the refund was induced by fraud or 
485.25  misrepresentation of a material fact, the assessment may be made 
485.26  at any time. 
485.27     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
485.28  following final enactment. 
485.29     Sec. 23.  Minnesota Statutes 2000, section 297G.16, 
485.30  subdivision 5, is amended to read: 
485.31     Subd. 5.  [TIME LIMIT FOR REFUNDS.] Unless otherwise 
485.32  provided in this chapter, a claim for a refund of an overpayment 
485.33  of tax must be filed within 3-1/2 years from the date prescribed 
485.34  for filing the return, plus any extension of time granted for 
485.35  filing the return, but only if filed within the extended time, 
485.36  or two years from the time the tax is paid in full, whichever 
486.1   period expires later.  Claimants under this section are subject 
486.2   to the notice requirements of section 289A.38, subdivision 7 or 
486.3   within one year from the date of an order assessing tax or from 
486.4   the date of a return filed by the commissioner, upon payment in 
486.5   full of the tax, penalties, and interest shown on the order or 
486.6   return made by the commissioner, whichever period expires later. 
486.7      <b>[EFFECTIVE DATE.]</b> This section is effective for returns 
486.8   becoming due or orders assessing tax issued on or after the day 
486.9   following final enactment. 
486.10     Sec. 24.  Minnesota Statutes 2000, section 297G.16, 
486.11  subdivision 7, is amended to read: 
486.12     Subd. 7.  [TIME LIMIT FOR A BAD DEBT DEDUCTION.] Claims for 
486.13  refund must be filed with the commissioner within one year of 
486.14  the filing of the taxpayer's income tax return containing the 
486.15  bad debt deduction that is being claimed.  Claimants under this 
486.16  subdivision are subject to the notice requirements of section 
486.17  289A.38, subdivision 7. 
486.18     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
486.19  following final enactment. 
486.20     Sec. 25.  Minnesota Statutes 2000, section 297H.02, 
486.21  subdivision 2, is amended to read: 
486.22     Subd. 2.  [RATES.] The rate of tax under this section 
486.23  is 9.75 8.8 percent. 
486.24     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 
486.25  2002, and thereafter. 
486.26     Sec. 26.  Minnesota Statutes 2000, section 297H.03, 
486.27  subdivision 2, is amended to read: 
486.28     Subd. 2.  [RATE.] The rate of the tax under this section is 
486.29  17 15.4 percent. 
486.30     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 
486.31  2002, and thereafter. 
486.32     Sec. 27.  Minnesota Statutes 2000, section 297H.04, 
486.33  subdivision 2, is amended to read: 
486.34     Subd. 2.  [RATE.] (a) Commercial generators that generate 
486.35  non-mixed-municipal solid waste shall pay a solid waste 
486.36  management tax of 60 54 cents per noncompacted cubic yard of 
487.1   periodic waste collection capacity purchased by the generator, 
487.2   based on the size of the container for the non-mixed-municipal 
487.3   solid waste, the actual volume, or the weight-to-volume 
487.4   conversion schedule in paragraph (c).  However, the tax must be 
487.5   calculated by the waste management service provider using the 
487.6   same method for calculating the waste management service fee so 
487.7   that both are calculated according to container capacity, actual 
487.8   volume, or weight. 
487.9      (b) Notwithstanding section 297H.02, a residential 
487.10  generator that generates non-mixed-municipal solid waste shall 
487.11  pay a solid waste management tax in the same manner as provided 
487.12  in paragraph (a). 
487.13     (c) The weight-to-volume conversion schedule for: 
487.14     (1) construction debris as defined in section 115A.03, 
487.15  subdivision 7, is one ton equals 3.33 cubic yards, or $2 $1.80 
487.16  per ton; 
487.17     (2) industrial waste as defined in section 115A.03, 
487.18  subdivision 13a, is equal to 60 54 cents per cubic yard.  The 
487.19  commissioner of revenue after consultation with the commissioner 
487.20  of the pollution control agency, shall determine, and may 
487.21  publish by notice, a conversion schedule for various industrial 
487.22  wastes; and 
487.23     (3) infectious waste as defined in section 116.76, 
487.24  subdivision 12, and pathological waste as defined in section 
487.25  116.76, subdivision 14, is 150 pounds equals one cubic yard, or 
487.26  60 54 cents per 150 pounds. 
487.27     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 
487.28  2002, and thereafter. 
487.29     Sec. 28.  Minnesota Statutes 2000, section 297H.04, is 
487.30  amended by adding a subdivision to read: 
487.31     Subd. 4.  [DISPOSAL WITH MIXED WASTE; RATE.] Nonmixed 
487.32  municipal solid waste that is separately collected or processed, 
487.33  but is disposed of within the permitted boundaries of a land 
487.34  disposal facility that is also actively accepting and disposing 
487.35  of mixed municipal solid waste, shall be taxed at the rate for 
487.36  mixed municipal solid waste, unless the facility owner and 
488.1   operator can demonstrate a physical separation between the mixed 
488.2   municipal solid waste disposal area and nonmixed municipal solid 
488.3   waste disposal area, such that any air or liquid emissions being 
488.4   collected from the disposal areas are collected separately. 
488.5      <b>[EFFECTIVE DATE.]</b> This section is effective for waste 
488.6   disposed of after June 30, 2001. 
488.7      Sec. 29.  Minnesota Statutes 2000, section 297H.05, is 
488.8   amended to read: 
488.9      297H.05 [SELF-HAULERS.] 
488.10     (a) A self-hauler of mixed municipal solid waste shall pay 
488.11  the tax to the operator of the waste management facility to 
488.12  which the waste is delivered at the rate imposed under section 
488.13  297H.03, based on the sales price of the waste management 
488.14  services. 
488.15     (b) A self-hauler of non-mixed-municipal solid waste shall 
488.16  pay the tax to the operator of the waste management facility to 
488.17  which the waste is delivered at the rate imposed under section 
488.18  297H.04. 
488.19     (c) The tax imposed on the self-hauler of 
488.20  non-mixed-municipal solid waste may be based either on the 
488.21  capacity of the container, the actual volume, or the 
488.22  weight-to-volume conversion schedule in paragraph (d).  However, 
488.23  the tax must be calculated by the operator using the same method 
488.24  for calculating the tipping fee so that both are calculated 
488.25  according to container capacity, actual volume, or weight. 
488.26     (d) The weight-to-volume conversion schedule for: 
488.27     (1) construction debris as defined in section 115A.03, 
488.28  subdivision 7, is one ton equals 3.33 cubic yards, or $2 $1.80 
488.29  per ton; 
488.30     (2) industrial waste as defined in section 115A.03, 
488.31  subdivision 13a, is equal to 60 54 cents per cubic yard.  The 
488.32  commissioner of revenue, after consultation with the 
488.33  commissioner of the pollution control agency, shall determine, 
488.34  and may publish by notice, a conversion schedule for various 
488.35  industrial wastes; and 
488.36     (3) infectious waste as defined in section 116.76, 
489.1   subdivision 12, and pathological waste as defined in section 
489.2   116.76, subdivision 14, is 150 pounds equals one cubic yard, or 
489.3   60 54 cents per 150 pounds. 
489.4      (e) For mixed municipal solid waste the tax is imposed upon 
489.5   the difference between the market price and the tip fee at a 
489.6   processing or disposal facility if the tip fee is less than the 
489.7   market price and the political subdivision subsidizes the cost 
489.8   of service at the facility.  The political subdivision is liable 
489.9   for the tax. 
489.10     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 
489.11  2002, and thereafter. 
489.12     Sec. 30.  Minnesota Statutes 2000, section 297H.13, is 
489.13  amended by adding a subdivision to read: 
489.14     Subd. 6.  [NOTICE OF RATE CHANGE.] Waste management service 
489.15  providers shall provide notice to each customer of the rate 
489.16  decreases provided in this section no later than 90 days after 
489.17  the rate decreases take effect. 
489.18     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 
489.19  2002, and thereafter. 
489.20     Sec. 31.  Minnesota Statutes 2000, section 297H.06, is 
489.21  amended by adding a subdivision to read: 
489.22     Subd. 3.  [CONSTRUCTION DEBRIS IN A DISASTER AREA.] The tax 
489.23  is not imposed on construction debris generated from repair and 
489.24  demolition activities caused by a disaster occurring in a 
489.25  presidentially declared disaster area, provided that the 
489.26  construction debris is disposed of in a waste management 
489.27  facility designated by the commissioner of the pollution control 
489.28  agency.  To be exempt, the debris must be disposed of within 18 
489.29  months following the presidential declaration. 
489.30     <b>[EFFECTIVE DATE.]</b> This section is effective for disaster 
489.31  areas declarations made after April 15, 2001. 
489.32     Sec. 32.  Minnesota Statutes 2000, section 297I.05, is 
489.33  amended by adding a subdivision to read: 
489.34     Subd. 14.  [LIFE INSURANCE.] A tax is imposed on every 
489.35  domestic and foreign insurance company equal to 1.75 percent of 
489.36  gross premiums less return premiums on all direct business 
490.1   received by the insurer or agents of the insurer in Minnesota 
490.2   for life insurance, in cash or otherwise, during the year. 
490.3      <b>[EFFECTIVE DATE.]</b> This section is effective for premiums 
490.4   received after June 30, 2001. 
490.5      Sec. 33.  Minnesota Statutes 2000, section 297I.40, 
490.6   subdivision 1, is amended to read: 
490.7      Subdivision 1.  [REQUIREMENT TO PAY.] On or before April 1 
490.8   March 15, June 1 15, September 15, and December 1 of each year 
490.9   15 of the current year, every taxpayer subject to tax under 
490.10  section 297I.05, subdivisions 1 to 6, and 12, paragraphs (a), 
490.11  clauses (1) to (5), (b), and (e), must pay to the commissioner 
490.12  an installment equal to one-third one-fourth of the insurer's 
490.13  total estimated tax for the current year. 
490.14     <b>[EFFECTIVE DATE.]</b> This section is effective for payments 
490.15  required to be made after December 31, 2001. 
490.16     Sec. 34.  Minnesota Statutes 2000, section 297I.40, 
490.17  subdivision 2, is amended to read: 
490.18     Subd. 2.  [AMOUNT OF REQUIRED INSTALLMENT.] The amount of 
490.19  any required installment is one-third one-fourth of the lesser 
490.20  of 
490.21     (1) 80 percent of the tax imposed for the current year, or 
490.22     (2) 100 percent of the tax paid for the previous year. 
490.23     <b>[EFFECTIVE DATE.]</b> This section is effective for payments 
490.24  required to be made after December 31, 2001. 
490.25     Sec. 35.  Minnesota Statutes 2000, section 297I.40, 
490.26  subdivision 7, is amended to read: 
490.27     Subd. 7.  [APRIL MARCH ESTIMATED PAYMENT.] A taxpayer who 
490.28  claims a refund of an overpayment on an original return may 
490.29  elect to have all or any portion of the overpayment applied as a 
490.30  credit to the April 1 March 15 estimated tax payment for the 
490.31  year following the year of the return.  The credit is considered 
490.32  applied on April 1 March 15.  Notwithstanding section 297I.80, 
490.33  the amount credited does not bear interest. 
490.34     <b>[EFFECTIVE DATE.]</b> This section is effective for payments 
490.35  required to be made after December 31, 2001. 
490.36     Sec. 36.  Minnesota Statutes 2000, section 349.19, 
491.1   subdivision 2a, is amended to read: 
491.2      Subd. 2a.  [TAX REFUND OR CREDIT.] (a) Each organization 
491.3   that receives a refund or credit under section 297E.02, 
491.4   subdivision 4, paragraph (d), must within four business days of 
491.5   receiving a refund under that paragraph deposit the refund in 
491.6   the organization's gambling account.  
491.7      (b) In addition, each organization must annually calculate 
491.8   5.26 percent of the sum of the amount of tax it paid under: 
491.9      (1) section 297E.02, subdivision 1, on gross receipts, less 
491.10  prizes paid, after August 1, 1998; and 
491.11     (2) section 297E.02, subdivision 6, on combined receipts 
491.12  received after August 1, 1998. 
491.13     (c) The calculated amount must be reported to the board on 
491.14  a form prescribed by the board by March 20 of the year after the 
491.15  calendar year for which the calculated amount is made.  The 
491.16  calculated amount must be filed as part of the organization's 
491.17  report of expenditure of profits from lawful gambling required 
491.18  under section 349.19, subdivision 5. 
491.19     (d) The organization may expend the tax refund or credit 
491.20  issued under section 297E.02, subdivision 4, paragraph (d), plus 
491.21  the amount calculated under paragraph (b), only for lawful 
491.22  purposes, other than lawful purposes described in section 
491.23  349.12, subdivision 25, paragraph (a), clauses (8), (9), and 
491.24  (12).  Amounts subject to this paragraph must be spent for 
491.25  qualifying lawful purposes no later than one year after the 
491.26  refund or credit is received or the tax savings calculated under 
491.27  paragraph (b). 
491.28     Sec. 37.  Minnesota Statutes 2000, section 461.12, is 
491.29  amended by adding a subdivision to read: 
491.30     Subd. 8.  [NOTICE TO COMMISSIONER.] The licensing authority 
491.31  under this section shall, within 30 days of the issuance of a 
491.32  license, inform the commissioner of revenue of the licensee's 
491.33  name, address, trade name, and the effective and expiration 
491.34  dates of the license.  The commissioner of revenue must also be 
491.35  informed of a license renewal, transfer, cancellation, 
491.36  suspension, or revocation during the license period. 
492.1      <b>[EFFECTIVE DATE.]</b> This section is effective for licenses 
492.2   issued, renewed, transferred, canceled, suspended, or revoked on 
492.3   or after January 1, 2002. 
492.4      Sec. 38.  [REPEALER.] 
492.5      (a) Minnesota Statutes 2000, section 296A.16, subdivision 
492.6   6, is repealed effective the day following final enactment. 
492.7      (b) Minnesota Statutes 2000, sections 297I.05, subdivision 
492.8   8; and 297I.30, subdivision 3, are repealed effective for 
492.9   calendar years beginning after December 31, 1999. 
492.10     (c) Minnesota Rules, parts 8120.0200; 8120.0500; 8120.0700; 
492.11  8120.0900; 8120.1300; 8120.1600; 8120.2000; 8120.2100; 
492.12  8120.2200; 8120.2300; 8120.2500; 8120.2700; 8120.2800; 
492.13  8120.3000; 8120.3200; 8120.4300; 8120.4400; 8120.4500; 
492.14  8120.4600; 8120.4900; 8120.5000; 8120.5100; and 8120.5300, are 
492.15  repealed effective the day following final enactment. 
492.16                             ARTICLE 16
492.17                           MINERALS TAXES
492.18     Section 1.  Minnesota Statutes 2000, section 273.1104, 
492.19  subdivision 2, is amended to read: 
492.20     Subd. 2.  [NOTICE OF MARKET VALUE.] On or before May 1 in 
492.21  each year, the commissioner shall send to each person subject to 
492.22  the tax on unmined iron ores and to each taxing district 
492.23  affected, a notice of the market value of the unmined ores as 
492.24  determined by the commissioner prior to adjustment under 
492.25  subdivision 1.  Said notice shall be sent by mail directed to 
492.26  such person at the address given in the report filed and the 
492.27  assessor of such taxing district, but the validity of the tax 
492.28  shall not be affected by the failure of the commissioner of 
492.29  revenue to mail such notice or the failure of the person subject 
492.30  to the tax to receive it. 
492.31     On the first secular day following May 20, the commissioner 
492.32  of revenue shall hold a hearing which may be adjourned from day 
492.33  to day.  All relevant and material evidence having probative 
492.34  value with respect to the issues shall be submitted at the 
492.35  hearing and such hearing shall not be a "contested case" within 
492.36  the meaning of section 14.02, subdivision 3.  Every person 
493.1   subject to such tax may at such hearing present evidence and 
493.2   argument on any matter bearing upon the validity or correctness 
493.3   of the tax determined to be due, and the commissioner of revenue 
493.4   shall review the determination of such tax. 
493.5      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
493.6   following final enactment. 
493.7      Sec. 2.  Minnesota Statutes 2000, section 298.01, 
493.8   subdivision 3, is amended to read: 
493.9      Subd. 3.  [OCCUPATION TAX; OTHER ORES.] Every person 
493.10  engaged in the business of mining or producing ores in this 
493.11  state, except iron ore or taconite concentrates, shall pay an 
493.12  occupation tax to the state of Minnesota as provided in this 
493.13  subdivision.  The tax is determined in the same manner as the 
493.14  tax imposed by section 290.02, except that sections 290.05, 
493.15  subdivision 1, clause (a), 290.0921, and 290.17, subdivision 4, 
493.16  do not apply, and except that the tax rate is 2.45 percent of a 
493.17  person's taxable income.  The tax is in addition to all other 
493.18  taxes. 
493.19     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
493.20  payable May 1, 2002, and thereafter. 
493.21     Sec. 3.  Minnesota Statutes 2000, section 298.01, 
493.22  subdivision 3a, is amended to read: 
493.23     Subd. 3a.  [GROSS INCOME.] (a) For purposes of determining 
493.24  a person's taxable income under subdivision 3, gross income is 
493.25  determined by the amount of gross proceeds from mining in this 
493.26  state under section 298.016 and includes any gain or loss 
493.27  recognized from the sale or disposition of assets used in the 
493.28  business in this state. 
493.29     (b) In applying section 290.191, subdivision 5, all 
493.30  transfers of ores are deemed to be sales outside inside this 
493.31  state if the ores are transported out of this state after the 
493.32  ores have been converted to a marketable quality. 
493.33     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
493.34  payable May 1, 2002, and thereafter. 
493.35     Sec. 4.  Minnesota Statutes 2000, section 298.01, 
493.36  subdivision 4, is amended to read: 
494.1      Subd. 4.  [OCCUPATION TAX; IRON ORE; TACONITE 
494.2   CONCENTRATES.] A person engaged in the business of mining or 
494.3   producing of iron ore, taconite concentrates or direct reduced 
494.4   ore in this state shall pay an occupation tax to the state of 
494.5   Minnesota.  The tax is determined in the same manner as the tax 
494.6   imposed by section 290.02, except that sections 290.05, 
494.7   subdivision 1, clause (a), 290.0921, and 290.17, subdivision 4, 
494.8   do not apply, and except that the tax rate is 2.45 percent of a 
494.9   person's taxable income.  The tax is in addition to all other 
494.10  taxes. 
494.11     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
494.12  payable May 1, 2002, and thereafter. 
494.13     Sec. 5.  Minnesota Statutes 2000, section 298.01, 
494.14  subdivision 4a, is amended to read: 
494.15     Subd. 4a.  [GROSS INCOME.] (a) For purposes of determining 
494.16  a person's taxable income under subdivision 4, gross income is 
494.17  determined by the mine value of the ore mined in Minnesota and 
494.18  includes any gain or loss recognized from the sale or 
494.19  disposition of assets used in the business in this state. 
494.20     (b) Mine value is the value, or selling price, of iron ore 
494.21  or taconite concentrates, f.o.b. mine.  The mine value is 
494.22  calculated by multiplying the iron unit price for the period, as 
494.23  determined by the commissioner, by the tons produced and the 
494.24  weighted average analysis. 
494.25     (c) In applying section 290.191, subdivision 5, all 
494.26  transfers of iron ore and taconite concentrates are deemed to be 
494.27  sales outside inside this state if the iron ore or taconite 
494.28  concentrates are transported out of this state after the raw 
494.29  iron ore and taconite concentrates have been converted to a 
494.30  marketable quality. 
494.31     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
494.32  payable May 1, 2002, and thereafter. 
494.33     Sec. 6.  Minnesota Statutes 2000, section 298.22, 
494.34  subdivision 2, is amended to read: 
494.35     Subd. 2.  [IRON RANGE RESOURCES AND REHABILITATION BOARD.] 
494.36  There is hereby created the iron range resources and 
495.1   rehabilitation board, consisting of 13 members, five of whom are 
495.2   state senators appointed by the subcommittee on committees of 
495.3   the rules committee of the senate, and five of whom are 
495.4   representatives, appointed by the speaker of the house of 
495.5   representatives.  The remaining members shall be appointed one 
495.6   each by the senate majority leader, the speaker of the house of 
495.7   representatives, and the governor and must be nonlegislators who 
495.8   reside in a tax relief area as defined in section 273.134.  The 
495.9   members shall be appointed in January of every odd-numbered 
495.10  year, except that the initial nonlegislator members shall be 
495.11  appointed by July 1, 1999, and shall serve until January of the 
495.12  next odd-numbered year.  Vacancies on the board shall be filled 
495.13  in the same manner as the original members were chosen.  At 
495.14  least a majority of the legislative members of the board shall 
495.15  be elected from state senatorial or legislative districts in 
495.16  which over 50 percent of the residents reside within a tax 
495.17  relief area as defined in section 273.134.  All expenditures and 
495.18  projects made by the commissioner of iron range resources and 
495.19  rehabilitation shall be consistent with the priorities 
495.20  established in subdivision 8 and shall first be submitted to the 
495.21  iron range resources and rehabilitation board for approval by a 
495.22  majority of the board of expenditures and projects for 
495.23  rehabilitation purposes as provided by this section, and the 
495.24  method, manner, and time of payment of all funds proposed to be 
495.25  disbursed shall be first approved or disapproved by the board.  
495.26  The board shall biennially make its report to the governor and 
495.27  the legislature on or before November 15 of each even-numbered 
495.28  year.  The expenses of the board shall be paid by the state from 
495.29  the funds raised pursuant to this section. 
495.30     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
495.31  following final enactment. 
495.32     Sec. 7.  Minnesota Statutes 2000, section 298.22, is 
495.33  amended by adding a subdivision to read: 
495.34     Subd. 8.  [SPENDING PRIORITY.] In making or approving any 
495.35  expenditures on programs or projects, the commissioner and the 
495.36  board shall give the highest priority to programs and projects 
496.1   that target relief to those areas of the taconite tax relief 
496.2   area defined in section 273.134 that have the largest 
496.3   percentages of job losses and population losses directly 
496.4   attributable to the economic downturn in the taconite industry 
496.5   since the 1980's.  The commissioner and the board shall compare 
496.6   the 1980 population and employment figures with the 2000 
496.7   population and employment figures, and shall specifically 
496.8   consider the job losses in 2000 and 2001 resulting from the 
496.9   closure of LTV Steel Mining Company, in making or approving 
496.10  expenditures consistent with this subdivision, as well as the 
496.11  areas of residence of persons who suffered job loss for which 
496.12  relief is to be targeted under this subdivision.  This 
496.13  subdivision supersedes any other conflicting provisions of law. 
496.14     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
496.15  following final enactment. 
496.16     Sec. 8.  Minnesota Statutes 2000, section 298.225, 
496.17  subdivision 1, is amended to read: 
496.18     Subdivision 1.  (a) The distribution of the taconite 
496.19  production tax as provided in section 298.28, subdivisions 2 3 
496.20  to 5, 6, paragraph (b), 7, and 8, shall equal the lesser of the 
496.21  following amounts:  
496.22     (1) the amount distributed pursuant to this section and 
496.23  section 298.28, with respect to 1983 production if the 
496.24  production for the year prior to the distribution year is no 
496.25  less than 42,000,000 taxable tons.  If the production is less 
496.26  than 42,000,000 taxable tons, the amount of the distributions 
496.27  shall be reduced proportionately at the rate of two percent for 
496.28  each 1,000,000 tons, or part of 1,000,000 tons by which the 
496.29  production is less than 42,000,000 tons; or 
496.30     (2)(i) for the distributions made pursuant to section 
496.31  298.28, subdivisions 4, paragraphs (b) and (c), and 6, paragraph 
496.32  (c), 40.5 percent of the amount distributed pursuant to this 
496.33  section and section 298.28, with respect to 1983 production; 
496.34     (ii) for the distributions made pursuant to section 298.28, 
496.35  subdivision 5, paragraphs (b) and (d), 75 percent of the amount 
496.36  distributed pursuant to this section and section 298.28, with 
497.1   respect to 1983 production.  
497.2      (b) The distribution of the taconite production tax as 
497.3   provided in section 298.28, subdivision 2, shall equal the 
497.4   following amount: 
497.5      (1) if the production for the year prior to the 
497.6   distribution year is at least 42,000,000 taxable tons, the 
497.7   amount distributed pursuant to this section and section 298.28, 
497.8   with respect to 1999 production; or 
497.9      (2) if the production for the year prior to the 
497.10  distribution year is less than 42,000,000 taxable tons, the 
497.11  amount distributed pursuant to this section and section 298.28 
497.12  with respect to 1999 production, reduced proportionately at the 
497.13  rate of two percent for each 1,000,000 tons or part of 1,000,000 
497.14  tons by which the production is less than 42,000,000 tons. 
497.15     <b>[EFFECTIVE DATE; RETROACTIVE APPLICATION.]</b> This section is 
497.16  effective for distributions in 2001 and thereafter.  For the 
497.17  distribution paid in February 2001 only, as soon as practicable 
497.18  after the date of final enactment of this act, the commissioner 
497.19  of Iron Range Resources and Rehabilitation shall pay two-thirds 
497.20  of any additional amounts required under this section from the 
497.21  taconite environmental protection fund and one-third of any 
497.22  additional amounts required under this section from the 
497.23  northeast Minnesota economic protection trust fund, as directed 
497.24  by the commissioner of revenue. 
497.25     Sec. 9.  Minnesota Statutes 2000, section 298.24, 
497.26  subdivision 1, is amended to read: 
497.27     Subdivision 1.  (a) For concentrate produced in 1999 2001, 
497.28  2002, and 2003, there is imposed upon taconite and iron 
497.29  sulphides, and upon the mining and quarrying thereof, and upon 
497.30  the production of iron ore concentrate therefrom, and upon the 
497.31  concentrate so produced, a tax of $2.141 $2.013 per gross ton of 
497.32  merchantable iron ore concentrate produced therefrom.  
497.33     (b) For concentrates produced in 2000 2004 and subsequent 
497.34  years, the tax rate shall be equal to the preceding year's tax 
497.35  rate plus an amount equal to the preceding year's tax rate 
497.36  multiplied by the percentage increase in the implicit price 
498.1   deflator from the fourth quarter of the second preceding year to 
498.2   the fourth quarter of the preceding year.  "Implicit price 
498.3   deflator" means the implicit price deflator for the gross 
498.4   domestic product prepared by the bureau of economic analysis of 
498.5   the United States Department of Commerce.  
498.6      (c) On concentrates produced in 1997 and thereafter, an 
498.7   additional tax is imposed equal to three cents per gross ton of 
498.8   merchantable iron ore concentrate for each one percent that the 
498.9   iron content of the product exceeds 72 percent, when dried at 
498.10  212 degrees Fahrenheit. 
498.11     (d) (c) The tax shall be imposed on the average of the 
498.12  production for the current year and the previous two years.  The 
498.13  rate of the tax imposed will be the current year's tax rate.  
498.14  This clause shall not apply in the case of the closing of a 
498.15  taconite facility if the property taxes on the facility would be 
498.16  higher if this clause and section 298.25 were not applicable.  
498.17     (e) (d) If the tax or any part of the tax imposed by this 
498.18  subdivision is held to be unconstitutional, a tax 
498.19  of $2.141 $2.013 per gross ton of merchantable iron ore 
498.20  concentrate produced shall be imposed.  
498.21     (f) (e) Consistent with the intent of this subdivision to 
498.22  impose a tax based upon the weight of merchantable iron ore 
498.23  concentrate, the commissioner of revenue may indirectly 
498.24  determine the weight of merchantable iron ore concentrate 
498.25  included in fluxed pellets by subtracting the weight of the 
498.26  limestone, dolomite, or olivine derivatives or other basic flux 
498.27  additives included in the pellets from the weight of the 
498.28  pellets.  For purposes of this paragraph, "fluxed pellets" are 
498.29  pellets produced in a process in which limestone, dolomite, 
498.30  olivine, or other basic flux additives are combined with 
498.31  merchantable iron ore concentrate.  No subtraction from the 
498.32  weight of the pellets shall be allowed for binders, mineral and 
498.33  chemical additives other than basic flux additives, or moisture. 
498.34     (g) (f)(1) Notwithstanding any other provision of this 
498.35  subdivision, for the first two years of a plant's production of 
498.36  direct reduced ore, no tax is imposed under this section.  As 
499.1   used in this paragraph, "direct reduced ore" is ore that results 
499.2   in a product that has an iron content of at least 75 percent.  
499.3   For the third year of a plant's production of direct reduced 
499.4   ore, the rate to be applied to direct reduced ore is 25 percent 
499.5   of the rate otherwise determined under this subdivision.  For 
499.6   the fourth such production year, the rate is 50 percent of the 
499.7   rate otherwise determined under this subdivision; for the fifth 
499.8   such production year, the rate is 75 percent of the rate 
499.9   otherwise determined under this subdivision; and for all 
499.10  subsequent production years, the full rate is imposed. 
499.11     (2) Subject to clause (1), production of direct reduced ore 
499.12  in this state is subject to the tax imposed by this section, but 
499.13  if that production is not produced by a producer of taconite or 
499.14  iron sulfides, the production of taconite or iron sulfides 
499.15  consumed in the production of direct reduced iron in this state 
499.16  is not subject to the tax imposed by this section on taconite or 
499.17  iron sulfides. 
499.18     Sec. 10.  Minnesota Statutes 2000, section 298.27, is 
499.19  amended to read: 
499.20     298.27 [COLLECTION AND PAYMENT OF TAX.] 
499.21     The taxes provided by section 298.24 shall be paid directly 
499.22  to each eligible county and the iron range resources and 
499.23  rehabilitation board.  The commissioner of revenue shall notify 
499.24  each producer of the amount to be paid each recipient prior to 
499.25  February 15.  Every person subject to taxes imposed by section 
499.26  298.24 shall file a correct report covering the preceding year.  
499.27  The report must contain the information required by the 
499.28  commissioner.  The report shall be filed on or before February 
499.29  1.  A remittance equal to 100 50 percent of the total tax 
499.30  required to be paid hereunder shall be paid on or before 
499.31  February 24 and June 15.  On or before February 25, The county 
499.32  auditor shall make distribution of the payment received by the 
499.33  county in the manner provided by section 298.28 on March 1 and 
499.34  June 24.  Reports shall be made and hearings held upon the 
499.35  determination of the tax in accordance with procedures 
499.36  established by the commissioner of revenue.  The commissioner of 
500.1   revenue shall have authority to make reasonable rules as to the 
500.2   form and manner of filing reports necessary for the 
500.3   determination of the tax hereunder, and by such rules may 
500.4   require the production of such information as may be reasonably 
500.5   necessary or convenient for the determination and apportionment 
500.6   of the tax.  All the provisions of the occupation tax law with 
500.7   reference to the assessment and determination of the occupation 
500.8   tax, including all provisions for appeals from or review of the 
500.9   orders of the commissioner of revenue relative thereto, but not 
500.10  including provisions for refunds, are applicable to the taxes 
500.11  imposed by section 298.24 except in so far as inconsistent 
500.12  herewith.  If any person subject to section 298.24 shall fail to 
500.13  make the report provided for in this section at the time and in 
500.14  the manner herein provided, the commissioner of revenue shall in 
500.15  such case, upon information possessed or obtained, ascertain the 
500.16  kind and amount of ore mined or produced and thereon find and 
500.17  determine the amount of the tax due from such person.  There 
500.18  shall be added to the amount of tax due a penalty for failure to 
500.19  report on or before February 1, which penalty shall equal ten 
500.20  percent of the tax imposed and be treated as a part thereof. 
500.21     If any person responsible for making a tax payment at the 
500.22  time and in the manner herein provided fails to do so, there 
500.23  shall be imposed a penalty equal to ten percent of the amount so 
500.24  due, which penalty shall be treated as part of the tax due. 
500.25     In the case of any underpayment of the tax payment required 
500.26  herein, there may be added and be treated as part of the tax due 
500.27  a penalty equal to ten percent of the amount so underpaid. 
500.28     A person having a liability of $120,000 or more during a 
500.29  calendar year must remit all liabilities by means of a funds 
500.30  transfer as defined in section 336.4A-104, paragraph (a).  The 
500.31  funds transfer payment date, as defined in section 336.4A-401, 
500.32  must be on or before the date the tax is due.  If the date the 
500.33  tax is due is not a funds transfer business day, as defined in 
500.34  section 336.4A-105, paragraph (a), clause (4), the payment date 
500.35  must be on or before the funds transfer business day next 
500.36  following the date the tax is due. 
501.1      <b>[EFFECTIVE DATE.]</b> This section is effective for the 2001 
501.2   production year and thereafter. 
501.3      Sec. 11.  Minnesota Statutes 2000, section 298.28, 
501.4   subdivision 6, is amended to read: 
501.5      Subd. 6.  [PROPERTY TAX RELIEF.] (a) In 1999 2001, 2002, 
501.6   and 2003, 38.81 22.81 cents per taxable ton, and in 2004 and 
501.7   thereafter, 38.81 cents per taxable ton, less any amount 
501.8   required to be distributed under paragraphs (b) and (c), and 
501.9   less any amount required to be deducted under paragraph (d), 
501.10  must be allocated to St. Louis county acting as the counties' 
501.11  fiscal agent, to be distributed as provided in sections 273.134 
501.12  to 273.136. 
501.13     (b) If an electric power plant owned by and providing the 
501.14  primary source of power for a taxpayer mining and concentrating 
501.15  taconite is located in a county other than the county in which 
501.16  the mining and the concentrating processes are conducted, .1875 
501.17  cent per taxable ton of the tax imposed and collected from such 
501.18  taxpayer shall be paid to the county. 
501.19     (c) If an electric power plant owned by and providing the 
501.20  primary source of power for a taxpayer mining and concentrating 
501.21  taconite is located in a school district other than a school 
501.22  district in which the mining and concentrating processes are 
501.23  conducted, .7282 cent per taxable ton of the tax imposed and 
501.24  collected from the taxpayer shall be paid to the school district.
501.25     (d) Two cents per taxable ton must be deducted from the 
501.26  amount allocated to the St. Louis county auditor under paragraph 
501.27  (a). 
501.28     Sec. 12.  Minnesota Statutes 2000, section 298.28, 
501.29  subdivision 9a, is amended to read: 
501.30     Subd. 9a.  [TACONITE ECONOMIC DEVELOPMENT FUND.] (a) 
501.31  15.4 31.4 cents per ton for distributions in 1999, 2000, 2001, 
501.32  and 2002, 2003, and 2004, and 15.4 cents per ton for 
501.33  distributions in 2005 and thereafter must be paid to the 
501.34  taconite economic development fund.  No distribution shall be 
501.35  made under this paragraph in any year in which total industry 
501.36  production falls below 30 million tons. 
502.1      (b) An amount equal to 50 percent of the tax under section 
502.2   298.24 for concentrate sold in the form of pellet chips and 
502.3   fines not exceeding 5/16 inch in size and not including crushed 
502.4   pellets shall be paid to the taconite economic development 
502.5   fund.  The amount paid shall not exceed $700,000 annually for 
502.6   all companies.  If the initial amount to be paid to the fund 
502.7   exceeds this amount, each company's payment shall be prorated so 
502.8   the total does not exceed $700,000. 
502.9      Sec. 13.  Minnesota Statutes 2000, section 298.2961, 
502.10  subdivision 2, is amended to read: 
502.11     Subd. 2.  [PROJECTS; APPROVAL.] (a) Projects funded must be 
502.12  for: 
502.13     (1) environmentally unique reclamation projects; or 
502.14     (2) pit or plant expansions or modernizations other than 
502.15  for a value added iron products plant that extend the life of 
502.16  the plant; or 
502.17     (3) haulage trucks and equipment and mining shovels. 
502.18     (b) To be proposed by the board, a project must be approved 
502.19  by at least eight iron range resources and rehabilitation board 
502.20  members.  The money for a project may be spent only upon 
502.21  approval of the project by the governor.  The board may submit 
502.22  supplemental projects for approval at any time. 
502.23     (c) The board may require that it receive an equity 
502.24  percentage in any project to which it contributes under this 
502.25  section.  
502.26     Sec. 14.  Minnesota Statutes 2000, section 298.75, 
502.27  subdivision 1, is amended to read: 
502.28     Subdivision 1.  [DEFINITIONS.] Except as may otherwise be 
502.29  provided, the following words, when used in this section, shall 
502.30  have the meanings herein ascribed to them.  
502.31     (1) "Aggregate material" shall mean nonmetallic natural 
502.32  mineral aggregate including, but not limited to sand, silica 
502.33  sand, gravel, building stone, crushed rock, limestone, and 
502.34  granite.  Aggregate material shall not include dimension stone 
502.35  and dimension granite.  Aggregate material must be measured or 
502.36  weighed after it has been extracted from the pit, quarry, or 
503.1   deposit.  
503.2      (2) "Person" shall mean any individual, firm, partnership, 
503.3   corporation, organization, trustee, association, or other entity.
503.4      (3) "Operator" shall mean any person engaged in the 
503.5   business of removing aggregate material from the surface or 
503.6   subsurface of the soil, for the purpose of sale, either directly 
503.7   or indirectly, through the use of the aggregate material in a 
503.8   marketable product or service.  
503.9      (4) "Extraction site" shall mean a pit, quarry, or deposit 
503.10  containing aggregate material and any contiguous property to the 
503.11  pit, quarry, or deposit which is used by the operator for 
503.12  stockpiling the aggregate material.  
503.13     (5) "Importer" shall mean any person who buys aggregate 
503.14  material produced from a county not listed in paragraph (6) or 
503.15  another state and causes the aggregate material to be imported 
503.16  into a county in this state which imposes a tax on aggregate 
503.17  material.  
503.18     (6)(a) "County" shall mean the counties of Pope, Stearns, 
503.19  Benton, Sherburne, Carver, Scott, Dakota, Le Sueur, Kittson, 
503.20  Marshall, Pennington, Red Lake, Polk, Norman, Mahnomen, Clay, 
503.21  Becker, Carlton, St. Louis, Rock, Murray, Wilkin, Big Stone, 
503.22  Sibley, Hennepin, Washington, Chisago, and Ramsey. 
503.23     (b) "County" also means any other county whose board has 
503.24  voted after a public hearing to impose the tax under this 
503.25  section, has notified the commissioner of the imposition of the 
503.26  tax, and either (1) no reverse referendum under subdivision 9 
503.27  has been requested, or (2) a referendum has been held and the 
503.28  majority of the votes cast are in the affirmative. 
503.29     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
503.30  following final enactment. 
503.31     Sec. 15.  Minnesota Statutes 2000, section 298.75, 
503.32  subdivision 2, is amended to read: 
503.33     Subd. 2.  A county shall impose upon every importer and 
503.34  operator a production tax equal up to ten cents per cubic yard 
503.35  or up to seven cents per ton of aggregate material removed 
503.36  except that the county board may decide not to impose this tax 
504.1   if it determines that in the previous year operators removed 
504.2   less than 20,000 tons or 14,000 cubic yards of aggregate 
504.3   material from that county.  The tax shall be imposed on 
504.4   aggregate material produced in the county when the aggregate 
504.5   material is transported from the extraction site or sold.  When 
504.6   aggregate material is stored in a stockpile within the state of 
504.7   Minnesota and a public highway, road or street is not used for 
504.8   transporting the aggregate material, the tax shall be imposed 
504.9   either when the aggregate material is sold, or when it is 
504.10  transported from the stockpile site, or when it is used from the 
504.11  stockpile, whichever occurs first.  The tax shall be imposed on 
504.12  an importer when the aggregate material is imported into the 
504.13  county that imposes the tax.  
504.14     If the aggregate material is transported directly from the 
504.15  extraction site to a waterway, railway, or another mode of 
504.16  transportation other than a highway, road or street, the tax 
504.17  imposed by this section shall be apportioned equally between the 
504.18  county where the aggregate material is extracted and the county 
504.19  to which the aggregate material is originally transported.  If 
504.20  that destination is not located in Minnesota, then the county 
504.21  where the aggregate material was extracted shall receive all of 
504.22  the proceeds of the tax.  
504.23     <b>[EFFECTIVE DATE.]</b> This section is effective for aggregate 
504.24  material sold, imported, transported, or used from a stockpile 
504.25  after June 30, 2001. 
504.26     Sec. 16.  Minnesota Statutes 2000, section 298.75, is 
504.27  amended by adding a subdivision to read: 
504.28     Subd. 9.  [REVERSE REFERENDUM.] The reverse referendum 
504.29  procedure in this subdivision applies only if a county has 
504.30  adopted an aggregate material removal production tax under 
504.31  subdivision 1, paragraph (6)(b). 
504.32     If, within 21 days after the public hearing and adoption of 
504.33  the tax under subdivision 1, a petition signed by voters equal 
504.34  in number to five percent of the votes cast in the county in the 
504.35  last general election requesting a referendum on the imposition 
504.36  of the tax is filed with the county auditor, the tax is not 
505.1   effective until it has been submitted to the voters at a special 
505.2   election and a majority of votes cast on the question of 
505.3   approving the imposition of the tax are in the affirmative.  The 
505.4   commissioner of revenue shall prepare the form of the question 
505.5   to be presented at the referendum. 
505.6      The county shall notify the county auditor of the results 
505.7   of the referendum.  If the majority of the votes cast on the 
505.8   question are in the affirmative, the tax imposed under 
505.9   subdivision 1 takes effect.  If the majority of the votes cast 
505.10  on the question are in the negative, the tax does not take 
505.11  effect. 
505.12     <b>[EFFECTIVE DATE.]</b> This section is effective for aggregate 
505.13  material removal production taxes first imposed after the day 
505.14  following final enactment. 
505.15     Sec. 17.  [APPROPRIATION.] 
505.16     The commissioner of revenue shall determine a state aid 
505.17  amount equal to a tax of 16 cents per taxable ton of iron ore 
505.18  concentrates for production years 2001, 2002, and 2003.  There 
505.19  is appropriated from the general fund to the commissioner an 
505.20  amount equal to the state aid determined under this section in 
505.21  each of fiscal years 2002, 2003, and 2004 and must be 
505.22  distributed in 2002, 2003, and 2004 under Minnesota Statutes, 
505.23  section 298.28, as if the aid were production tax revenues. 
505.24     Sec. 18.  [REPEALER.] 
505.25     Minnesota Statutes 2000, section 298.01, subdivisions 3c, 
505.26  3d, 4d, and 4e, are repealed. 
505.27     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
505.28  payable May 1, 2002, and thereafter. 
505.29                             ARTICLE 17 
505.30                           FEDERAL UPDATE
505.31     Section 1.  Minnesota Statutes 2000, section 289A.02, 
505.32  subdivision 7, is amended to read: 
505.33     Subd. 7.  [INTERNAL REVENUE CODE.] Unless specifically 
505.34  defined otherwise, "Internal Revenue Code" means the Internal 
505.35  Revenue Code of 1986, as amended through December 31, 1999 2000. 
505.36     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
506.1   following final enactment. 
506.2      Sec. 2.  Minnesota Statutes 2000, section 290.01, 
506.3   subdivision 19, is amended to read: 
506.4      Subd. 19.  [NET INCOME.] The term "net income" means the 
506.5   federal taxable income, as defined in section 63 of the Internal 
506.6   Revenue Code of 1986, as amended through the date named in this 
506.7   subdivision, incorporating any elections made by the taxpayer in 
506.8   accordance with the Internal Revenue Code in determining federal 
506.9   taxable income for federal income tax purposes, and with the 
506.10  modifications provided in subdivisions 19a to 19f. 
506.11     In the case of a regulated investment company or a fund 
506.12  thereof, as defined in section 851(a) or 851(g) of the Internal 
506.13  Revenue Code, federal taxable income means investment company 
506.14  taxable income as defined in section 852(b)(2) of the Internal 
506.15  Revenue Code, except that:  
506.16     (1) the exclusion of net capital gain provided in section 
506.17  852(b)(2)(A) of the Internal Revenue Code does not apply; 
506.18     (2) the deduction for dividends paid under section 
506.19  852(b)(2)(D) of the Internal Revenue Code must be applied by 
506.20  allowing a deduction for capital gain dividends and 
506.21  exempt-interest dividends as defined in sections 852(b)(3)(C) 
506.22  and 852(b)(5) of the Internal Revenue Code; and 
506.23     (3) the deduction for dividends paid must also be applied 
506.24  in the amount of any undistributed capital gains which the 
506.25  regulated investment company elects to have treated as provided 
506.26  in section 852(b)(3)(D) of the Internal Revenue Code.  
506.27     The net income of a real estate investment trust as defined 
506.28  and limited by section 856(a), (b), and (c) of the Internal 
506.29  Revenue Code means the real estate investment trust taxable 
506.30  income as defined in section 857(b)(2) of the Internal Revenue 
506.31  Code.  
506.32     The net income of a designated settlement fund as defined 
506.33  in section 468B(d) of the Internal Revenue Code means the gross 
506.34  income as defined in section 468B(b) of the Internal Revenue 
506.35  Code. 
506.36     The provisions of sections 1113(a), 1117, 1206(a), 1313(a), 
507.1   1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612, 
507.2   1616, 1617, 1704(l), and 1704(m) of the Small Business Job 
507.3   Protection Act, Public Law Number 104-188, the provisions of 
507.4   Public Law Number 104-117, the provisions of sections 313(a) and 
507.5   (b)(1), 602(a), 913(b), 941, 961, 971, 1001(a) and (b), 1002, 
507.6   1003, 1012, 1013, 1014, 1061, 1062, 1081, 1084(b), 1086, 1087, 
507.7   1111(a), 1131(b) and (c), 1211(b), 1213, 1530(c)(2), 1601(f)(5) 
507.8   and (h), and 1604(d)(1) of the Taxpayer Relief Act of 1997, 
507.9   Public Law Number 105-34, the provisions of section 6010 of the 
507.10  Internal Revenue Service Restructuring and Reform Act of 1998, 
507.11  Public Law Number 105-206, and the provisions of section 4003 of 
507.12  the Omnibus Consolidated and Emergency Supplemental 
507.13  Appropriations Act, 1999, Public Law Number 105-277, and the 
507.14  provisions of section 318 of the Consolidated Appropriation Act 
507.15  of 2001, Public Law Number 106-554, shall become effective at 
507.16  the time they become effective for federal purposes. 
507.17     The Internal Revenue Code of 1986, as amended through 
507.18  December 31, 1996, shall be in effect for taxable years 
507.19  beginning after December 31, 1996. 
507.20     The provisions of sections 202(a) and (b), 221(a), 225, 
507.21  312, 313, 913(a), 934, 962, 1004, 1005, 1052, 1063, 1084(a) and 
507.22  (c), 1089, 1112, 1171, 1204, 1271(a) and (b), 1305(a), 1306, 
507.23  1307, 1308, 1309, 1501(b), 1502(b), 1504(a), 1505, 1527, 1528, 
507.24  1530, 1601(d), (e), (f), and (i) and 1602(a), (b), (c), and (e) 
507.25  of the Taxpayer Relief Act of 1997, Public Law Number 105-34, 
507.26  the provisions of sections 6004, 6005, 6012, 6013, 6015, 6016, 
507.27  7002, and 7003 of the Internal Revenue Service Restructuring and 
507.28  Reform Act of 1998, Public Law Number 105-206, the provisions of 
507.29  section 3001 of the Omnibus Consolidated and Emergency 
507.30  Supplemental Appropriations Act, 1999, Public Law Number 
507.31  105-277, and the provisions of section 3001 of the Miscellaneous 
507.32  Trade and Technical Corrections Act of 1999, Public Law Number 
507.33  106-36, and the provisions of section 316 of the Consolidated 
507.34  Appropriation Act of 2001, Public Law Number 106-554, shall 
507.35  become effective at the time they become effective for federal 
507.36  purposes. 
508.1      The Internal Revenue Code of 1986, as amended through 
508.2   December 31, 1997, shall be in effect for taxable years 
508.3   beginning after December 31, 1997. 
508.4      The provisions of sections 5002, 6009, 6011, and 7001 of 
508.5   the Internal Revenue Service Restructuring and Reform Act of 
508.6   1998, Public Law Number 105-206, the provisions of section 9010 
508.7   of the Transportation Equity Act for the 21st Century, Public 
508.8   Law Number 105-178, the provisions of sections 1004, 4002, and 
508.9   5301 of the Omnibus Consolidation and Emergency Supplemental 
508.10  Appropriations Act, 1999, Public Law Number 105-277, the 
508.11  provision of section 303 of the Ricky Ray Hemophilia Relief Fund 
508.12  Act of 1998, Public Law Number 105-369, and the provisions of 
508.13  sections 532, 534, 536, 537, and 538 of the Ticket to Work and 
508.14  Work Incentives Improvement Act of 1999, Public Law Number 
508.15  106-170, the provisions of the Installment Tax Correction Act of 
508.16  2000, Public Law Number 106-573, and the provisions of section 
508.17  309 of the Consolidated Appropriation Act of 2001, Public Law 
508.18  Number 106-554, shall become effective at the time they become 
508.19  effective for federal purposes. 
508.20     The Internal Revenue Code of 1986, as amended through 
508.21  December 31, 1998, shall be in effect for taxable years 
508.22  beginning after December 31, 1998.  
508.23     The provisions of the FSC Repeal and Extraterritorial 
508.24  Income Exclusion Act of 2000, Public Law Number 106-519, shall 
508.25  become effective at the time it became effective for federal 
508.26  purposes. 
508.27     The Internal Revenue Code of 1986, as amended through 
508.28  December 31, 1999, shall be in effect for taxable years 
508.29  beginning after December 31, 1999.  The provisions of sections 
508.30  306 and 401 of the Consolidated Appropriation Act of 2001, 
508.31  Public Law Number 106-554, shall become effective at the same 
508.32  time it became effective for federal purposes. 
508.33     The Internal Revenue Code of 1986, as amended through 
508.34  December 31, 2000, shall be in effect for taxable years 
508.35  beginning after December 31, 2000. 
508.36     Except as otherwise provided, references to the Internal 
509.1   Revenue Code in subdivisions 19a to 19g mean the code in effect 
509.2   for purposes of determining net income for the applicable year. 
509.3      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
509.4   following final enactment. 
509.5      Sec. 3.  Minnesota Statutes 2000, section 290.01, 
509.6   subdivision 31, is amended to read: 
509.7      Subd. 31.  [INTERNAL REVENUE CODE.] Unless specifically 
509.8   defined otherwise, "Internal Revenue Code" means the Internal 
509.9   Revenue Code of 1986, as amended through December 31, 1999 2000. 
509.10     <b>[EFFECTIVE DATE.]</b> This section is effective at the same 
509.11  time and in the same manner as the federal changes made by the 
509.12  FSC Repeal and Extraterritorial Income Exclusion Act of 2000, 
509.13  Public Law Number 106-519, and the Consolidated Appropriation 
509.14  Act of 2001, Public Law Number 106-554, becomes effective. 
509.15     Sec. 4.  Minnesota Statutes 2000, section 290A.03, 
509.16  subdivision 15, is amended to read: 
509.17     Subd. 15.  [INTERNAL REVENUE CODE.] "Internal Revenue Code" 
509.18  means the Internal Revenue Code of 1986, as amended through 
509.19  December 31, 1999 2000. 
509.20     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
509.21  following final enactment. 
509.22     Sec. 5.  Minnesota Statutes 2000, section 291.005, 
509.23  subdivision 1, is amended to read: 
509.24     Subdivision 1.  Unless the context otherwise clearly 
509.25  requires, the following terms used in this chapter shall have 
509.26  the following meanings: 
509.27     (1) "Federal gross estate" means the gross estate of a 
509.28  decedent as valued and otherwise determined for federal estate 
509.29  tax purposes by federal taxing authorities pursuant to the 
509.30  provisions of the Internal Revenue Code. 
509.31     (2) "Minnesota gross estate" means the federal gross estate 
509.32  of a decedent after (a) excluding therefrom any property 
509.33  included therein which has its situs outside Minnesota and (b) 
509.34  including therein any property omitted from the federal gross 
509.35  estate which is includable therein, has its situs in Minnesota, 
509.36  and was not disclosed to federal taxing authorities.  
510.1      (3) "Personal representative" means the executor, 
510.2   administrator or other person appointed by the court to 
510.3   administer and dispose of the property of the decedent.  If 
510.4   there is no executor, administrator or other person appointed, 
510.5   qualified, and acting within this state, then any person in 
510.6   actual or constructive possession of any property having a situs 
510.7   in this state which is included in the federal gross estate of 
510.8   the decedent shall be deemed to be a personal representative to 
510.9   the extent of the property and the Minnesota estate tax due with 
510.10  respect to the property. 
510.11     (4) "Resident decedent" means an individual whose domicile 
510.12  at the time of death was in Minnesota. 
510.13     (5) "Nonresident decedent" means an individual whose 
510.14  domicile at the time of death was not in Minnesota. 
510.15     (6) "Situs of property" means, with respect to real 
510.16  property, the state or country in which it is located; with 
510.17  respect to tangible personal property, the state or country in 
510.18  which it was normally kept or located at the time of the 
510.19  decedent's death; and with respect to intangible personal 
510.20  property, the state or country in which the decedent was 
510.21  domiciled at death. 
510.22     (7) "Commissioner" means the commissioner of revenue or any 
510.23  person to whom the commissioner has delegated functions under 
510.24  this chapter. 
510.25     (8) "Internal Revenue Code" means the United States 
510.26  Internal Revenue Code of 1986, as amended through December 31, 
510.27  1999 2000. 
510.28     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
510.29  following final enactment. 
510.30                             ARTICLE 18 
510.31                       SEIZURES OF CONTRABAND 
510.32     Section 1.  Minnesota Statutes 2000, section 296A.24, 
510.33  subdivision 1, is amended to read: 
510.34     Subdivision 1.  [SEIZURE.] The commissioner or authorized 
510.35  agents may seize gasoline or special fuel being transported for 
510.36  delivery in violation of section 296A.03, subdivision 1, and any 
511.1   vehicle or other method of conveyance used for transporting the 
511.2   gasoline or special fuel.  Any untaxed motor vehicle fuel that 
511.3   is received by a person other than a licensee is subject to 
511.4   seizure along with the vehicle or other means of transportation 
511.5   used to transport the motor vehicle fuel.  Any motor vehicle 
511.6   fuel, along with the transporting vehicle, brought into the 
511.7   state of Minnesota by a transporter for use, distribution, 
511.8   storage, or sale that is not supported by a manifest, bill of 
511.9   lading, or invoice, reflecting the licensed distributor 
511.10  responsible for the tax and/or fees is subject to seizure by the 
511.11  Minnesota department of revenue.  Property seized under this 
511.12  subdivision is subject to forfeiture as provided in subdivisions 
511.13  subdivision 2 and 3. 
511.14     <b>[EFFECTIVE DATE.]</b> This section is effective for seizures 
511.15  made on or after July 1, 2001. 
511.16     Sec. 2.  Minnesota Statutes 2000, section 296A.24, 
511.17  subdivision 2, is amended to read: 
511.18     Subd. 2.  [DISPOSITION OF SEIZED PROPERTY.] (a) Within ten 
511.19  days after the seizure of gasoline or special fuel, the person 
511.20  making the seizure shall deliver serve by certified mail an 
511.21  inventory of the vehicle or property seized to on the person 
511.22  from whom the seizure was made, if known, and on any person 
511.23  known or believed to have any right, title, interest, or lien on 
511.24  the vehicle or property, at the last known address, and file a 
511.25  copy with the office of the commissioner.  The notice must 
511.26  include an explanation of the right to demand a judicial 
511.27  forfeiture determination. 
511.28     (b) Within ten 60 days after the date of service of the 
511.29  inventory, which is the date of mailing, the person from whom 
511.30  the vehicle or property was seized or any person claiming an 
511.31  interest in the property it may file with the commissioner a 
511.32  demand for a judicial determination of whether the vehicle or 
511.33  property was lawfully subject to seizure and forfeiture.  The 
511.34  commissioner, within 60 days of demand for a judicial 
511.35  determination, shall begin an action in the district court of 
511.36  the county where the seizure was made to determine the issue of 
512.1   forfeiture. 
512.2      (b) The action must be brought in the name of the state and 
512.3   prosecuted by the county attorney or by the attorney 
512.4   general.  The demand must be in the form of a civil complaint 
512.5   and must be filed with the court administrator in the county in 
512.6   which the seizure occurred, together with proof of service of a 
512.7   copy of the complaint on the commissioner of revenue, and the 
512.8   standard filing fee for civil actions unless the petitioner has 
512.9   the right to sue in forma pauperis under section 563.01.  If the 
512.10  value of the seized property or vehicle is $7,500 or less, the 
512.11  claimant may file an action in conciliation court for its 
512.12  recovery.  If the value of the seized property or vehicle is 
512.13  less than $500, the claimant does not have to pay the 
512.14  conciliation court filing fee. 
512.15     (c) The complaint must be captioned in the name of the 
512.16  claimant as plaintiff and the seized property or vehicle as 
512.17  defendant, and must state with specificity the grounds on which 
512.18  the claimant alleges the property or vehicle was improperly 
512.19  seized and the plaintiff's interest in the property or vehicle 
512.20  seized.  No responsive pleading is required of the commissioner 
512.21  and no court fees may be charged for the commissioner's 
512.22  appearance in the matter.  The proceedings are governed by the 
512.23  Rules of Civil Procedure.  Notwithstanding any law to the 
512.24  contrary, an action for the return of property or a vehicle 
512.25  seized under this section may not be maintained by or on behalf 
512.26  of any person who has been served with an inventory unless the 
512.27  person has complied with this subdivision.  The court shall hear 
512.28  the action without a jury and shall try and determine the issues 
512.29  of fact and law involved. 
512.30     (c) (d) When a judgment of forfeiture is entered, the 
512.31  commissioner may, unless the judgment is stayed pending an 
512.32  appeal, either: 
512.33     (1) cause the forfeited property gasoline or special fuel 
512.34  to be destroyed; or 
512.35     (2) cause it the forfeited property in clause (1) or 
512.36  vehicle to be sold at public auction as provided by 
513.1   law.  Proceeds of a sale, after deducting the expense of keeping 
513.2   the gasoline or special fuel and costs of the sale, must be paid 
513.3   into the state treasury.  The commissioner shall reimburse 
513.4   designees for costs incurred.  After deducting the expense of 
513.5   keeping the property and vehicle and the costs of the sale, the 
513.6   commissioner shall pay from the funds collected all liens 
513.7   according to their priority, which are established as being bona 
513.8   fide and as existing without the lienor having any notice or 
513.9   knowledge that the property or vehicle was being used or was 
513.10  intended to be used for or in connection with any violation, and 
513.11  shall pay the balance of the proceeds into the general fund.  
513.12     (d) If a demand for judicial determination is made and no 
513.13  action is commenced as provided in this subdivision, the 
513.14  property must be released by the commissioner and redelivered to 
513.15  the person entitled to it.  (e) If no demand for judicial 
513.16  determination is made, the property or vehicle seized must be 
513.17  considered forfeited to the state by operation of law and may be 
513.18  disposed of by the commissioner as provided where there has been 
513.19  a judgment of forfeiture.  When the commissioner is satisfied 
513.20  that a person from whom property is seized under this chapter 
513.21  was acting in good faith and without intent to evade the tax, 
513.22  the commissioner shall release the property seized, without 
513.23  further legal proceedings. 
513.24     <b>[EFFECTIVE DATE.]</b> This section is effective for seizures 
513.25  made on or after July 1, 2001. 
513.26     Sec. 3.  Minnesota Statutes 2000, section 297A.91, is 
513.27  amended to read: 
513.28     297A.91 [SEIZURE; COURT REVIEW.] 
513.29     Subdivision 1.  [SEIZURE OF PROPERTY USED IN ILLEGAL 
513.30  TRANSPORT.] (a) If the retailer does not have a sales or use tax 
513.31  permit and has been engaging in transporting personal property 
513.32  into the state without payment of the tax, the commissioner of 
513.33  revenue or the commissioner's agents may seize in the name of 
513.34  the state any truck, automobile, or means of transportation not 
513.35  owned or operated by a common carrier, used in the illegal 
513.36  importation and transportation of any tangible personal property 
514.1   by a retailer or the retailer's agent or employee.  The 
514.2   commissioner may demand the forfeiture and sale of the truck, 
514.3   automobile, or other means of transportation together with the 
514.4   property being transported illegally, unless the owner 
514.5   establishes to the satisfaction of the commissioner or the court 
514.6   that the owner had no notice or knowledge or reason to believe 
514.7   that the vehicle was used or intended to be used in any such 
514.8   violation. 
514.9      (b) Within two ten days after the seizure, the person 
514.10  making the seizure shall deliver serve by certified mail an 
514.11  inventory of the vehicle and property seized to on the person 
514.12  from whom the seizure was made, if known, and to on any person 
514.13  known or believed to have any right, title, interest, or lien on 
514.14  the vehicle or property, at the last known address.  The person 
514.15  making the seizure shall also file a copy of the inventory with 
514.16  the commissioner.  The notice must include an explanation of the 
514.17  right to demand a judicial forfeiture determination.  
514.18     Subd. 2.  [COURT REVIEW OF FORFEITURE.] (a) Within ten 60 
514.19  days after the date of service of the inventory, which is the 
514.20  date of mailing, the person from whom the vehicle and property 
514.21  were seized or any person claiming an interest in the vehicle or 
514.22  property may file with the commissioner a demand for a judicial 
514.23  determination of the question of whether the vehicle or property 
514.24  was lawfully subject to seizure and forfeiture.  The 
514.25  commissioner, within 30 days, shall institute an action in the 
514.26  district court of the county where the seizure was made to 
514.27  determine the issue of forfeiture. 
514.28     (b) The action must be brought in the name of the state and 
514.29  prosecuted by the county attorney or the attorney general.  The 
514.30  demand must be in the form of a civil complaint and must be 
514.31  filed with the court administrator in the county in which the 
514.32  seizure occurred, together with proof of service or a copy of 
514.33  the complaint on the commissioner of revenue, and the standard 
514.34  filing fee for civil actions unless the petitioner has the right 
514.35  to sue in forma pauperis under section 563.01.  If the value of 
514.36  the seized property or vehicle is $7,500 or less, the claimant 
515.1   may file an action in conciliation court for its recovery.  If 
515.2   the value of the seized property or vehicle is less than $500, 
515.3   the claimant does not have to pay the conciliation court filing 
515.4   fee.  
515.5      (c) The complaint must be captioned in the name of the 
515.6   claimant as plaintiff and the seized property or vehicle as 
515.7   defendant, and must state with specificity the grounds on which 
515.8   the claimant alleges the property or vehicle was improperly 
515.9   seized and the plaintiff's interest in the property or vehicle 
515.10  seized.  No responsive pleading is required of the commissioner, 
515.11  and no court fees may be charged for the commissioner's 
515.12  appearance in the matter.  The proceedings are governed by the 
515.13  Rules of Civil Procedure.  Notwithstanding any law to the 
515.14  contrary, an action for the return of property or a vehicle 
515.15  seized under this subdivision may not be maintained by or on 
515.16  behalf of any person who has been served with an inventory 
515.17  unless the person has complied with this subdivision.  The court 
515.18  shall hear the action without a jury and shall determine the 
515.19  issues of fact and law involved.  If a judgment of forfeiture is 
515.20  entered and is not stayed pending an appeal, the commissioner 
515.21  may have the forfeited vehicle and property sold at public 
515.22  auction as provided by law.  
515.23     Subd. 3.  [TREATMENT OF SEIZED PROPERTY.] If a demand for 
515.24  judicial determination is made and no action is commenced as 
515.25  provided in this subdivision, the vehicle and property must be 
515.26  released by the commissioner and redelivered to the person 
515.27  entitled to it.  If no demand for judicial determination is 
515.28  made, the vehicle and property seized are considered forfeited 
515.29  to the state by operation of law and may be disposed of by the 
515.30  commissioner as if there were a judgment of forfeiture.  The 
515.31  forfeiture and sale of the automobile, truck, or other means of 
515.32  transportation, and of the property being transported illegally 
515.33  in it, are a penalty for the violation of this chapter.  After 
515.34  deducting the expense of keeping the vehicle and property, the 
515.35  fee for seizure, and the costs of the sale, the commissioner 
515.36  shall pay liens from the funds collected.  The commissioner 
516.1   shall pay all liens, according to their priority, that are 
516.2   established at the hearing as being bona fide and as existing 
516.3   without the lienor having any notice or knowledge that the 
516.4   vehicle or property was being used or was intended to be used 
516.5   for or in connection with any such violation as specified in the 
516.6   order of the court.  The commissioner shall pay the balance of 
516.7   the proceeds into the state treasury to be credited to the 
516.8   general fund.  The state is not liable for any liens in excess 
516.9   of the proceeds from the sale after allowable deductions.  A 
516.10  sale under this section frees the vehicle and property sold from 
516.11  all liens.  The order of the district court may be appealed as 
516.12  in other civil cases.  
516.13     <b>[EFFECTIVE DATE.]</b> This section is effective for seizures 
516.14  made on or after July 1, 2001. 
516.15     Sec. 4.  Minnesota Statutes 2000, section 297E.16, 
516.16  subdivision 1, is amended to read: 
516.17     Subdivision 1.  [SEIZURE.] Contraband may be seized by the 
516.18  commissioner or by any sheriff or other police officer, 
516.19  hereinafter referred to as the "seizing authority," with or 
516.20  without process, and is subject to forfeiture as provided in 
516.21  subdivisions subdivision 2 and 3.  
516.22     <b>[EFFECTIVE DATE.]</b> This section is effective for seizures 
516.23  made on or after July 1, 2001. 
516.24     Sec. 5.  Minnesota Statutes 2000, section 297E.16, 
516.25  subdivision 2, is amended to read: 
516.26     Subd. 2.  [INVENTORY; JUDICIAL DETERMINATION; APPEAL; 
516.27  DISPOSITION OF SEIZED PROPERTY.] (a) Within ten days after the 
516.28  seizure of alleged contraband described in section 349.2125, 
516.29  subdivision 1, the person making the seizure shall make 
516.30  available serve by certified mail an inventory of the property 
516.31  seized to on the person from whom the property was seized, if 
516.32  known, and on any person known or believed to have any right, 
516.33  title, interest, or lien in the property, at the last known 
516.34  address, and file a copy with the commissioner or the director 
516.35  of alcohol and gambling enforcement.  The notice must include an 
516.36  explanation of the right to demand a judicial forfeiture 
517.1   determination. 
517.2      (b) Within ten 60 days after the date of service of the 
517.3   inventory, which is the date of mailing, the person from whom 
517.4   the property was seized or any person claiming an interest in 
517.5   the property may file with the seizing authority a demand for 
517.6   judicial determination of whether the property was lawfully 
517.7   subject to seizure and forfeiture.  Within 60 days after the 
517.8   date of filing of the demand, the seizing authority must bring 
517.9   an action in the district court of the county where seizure was 
517.10  made to determine the issue of forfeiture.  The action must be 
517.11  brought in the name of the state and be prosecuted by the county 
517.12  attorney or by the attorney general.  The demand must be in the 
517.13  form of a civil complaint and must be filed with the court 
517.14  administrator in the county in which the seizure occurred, 
517.15  together with proof of service of a copy of the complaint on the 
517.16  commissioner of revenue or the director of alcohol and gambling 
517.17  enforcement, and the standard filing fee for civil actions 
517.18  unless the petitioner has the right to sue in forma pauperis 
517.19  under section 563.01.  If the value of the seized property is 
517.20  $7,500 or less, the claimant may file an action in conciliation 
517.21  court for recovery of the property.  If the value of the seized 
517.22  property is less than $500, the claimant does not have to pay 
517.23  the conciliation court filing fee.  
517.24     (c) The complaint must be captioned in the name of the 
517.25  claimant as plaintiff and the seized property as defendant, and 
517.26  must state with specificity the grounds on which the claimant 
517.27  alleges the property was improperly seized and the plaintiff's 
517.28  interest in the property seized.  No responsive pleading is 
517.29  required of the commissioner or director, and no court fees may 
517.30  be charged for the commissioner's or director's appearance in 
517.31  the matter.  The proceedings are governed by the Rules of Civil 
517.32  Procedure.  Notwithstanding any law to the contrary, an action 
517.33  for the return of property seized under this section may not be 
517.34  maintained by or on behalf of any person who has been served 
517.35  with an inventory unless the person has complied with this 
517.36  subdivision.  The court shall hear the action without a jury and 
518.1   determine the issues of fact and law involved.  
518.2      (d) If a judgment of forfeiture is entered, the seizing 
518.3   authority may, unless the judgment is stayed pending an appeal, 
518.4   either (1) cause the forfeited property, other than a vehicle, 
518.5   to be destroyed; or (2) cause it to be sold at a public auction 
518.6   as provided by law.  The person making a sale, after deducting 
518.7   the expense of keeping the property, the fee for seizure, and 
518.8   the costs of the sale, shall pay all liens according to their 
518.9   priority, which are established as being bona fide and as 
518.10  existing without the lienor having any notice or knowledge that 
518.11  the property was being used or was intended to be used for or in 
518.12  connection with the violation.  The balance of the proceeds must 
518.13  be paid 70 percent to the seizing authority for deposit as a 
518.14  supplement to its operating fund or similar fund for official 
518.15  use, and 20 percent to the county attorney or other prosecuting 
518.16  agency that handled the court proceeding, if there is one, for 
518.17  deposit as a supplement to its operating fund or similar fund 
518.18  for prosecutorial purposes.  The remaining ten percent of the 
518.19  proceeds must be forwarded within 60 days after resolution of 
518.20  the forfeiture to the department of human services to fund 
518.21  programs for the treatment of compulsive gamblers.  If there is 
518.22  no prosecuting authority involved in the forfeiture, the 20 
518.23  percent of the proceeds otherwise designated for the prosecuting 
518.24  authority must be deposited into the general fund.  
518.25     If demand for judicial determination is made and no action 
518.26  is commenced by the seizing authority as provided in this 
518.27  subdivision, the property must be released by the seizing 
518.28  authority and delivered to the person entitled to it.  (e) If no 
518.29  demand for judicial determination is made, the property seized 
518.30  is considered forfeited to the seizing authority by operation of 
518.31  law and may be disposed of by the seizing authority as provided 
518.32  where there has been a judgment of forfeiture.  When the seizing 
518.33  authority is satisfied that a person from whom property is 
518.34  seized was acting in good faith and without intent to evade the 
518.35  tax imposed by section 297E.02, the seizing authority shall 
518.36  release the property seized without further legal proceedings. 
519.1      <b>[EFFECTIVE DATE.]</b> This section is effective for seizures 
519.2   made on or after July 1, 2001. 
519.3      Sec. 6.  Minnesota Statutes 2000, section 297F.21, 
519.4   subdivision 1, is amended to read: 
519.5      Subdivision 1.  [CONTRABAND DEFINED.] The following are 
519.6   declared to be contraband and therefore subject to civil and 
519.7   criminal penalties under this chapter: 
519.8      (a) Cigarette packages which do not have stamps affixed to 
519.9   them as provided in this chapter, including but not limited to 
519.10  (i) packages with illegible stamps and packages with stamps that 
519.11  are not complete or whole even if the stamps are legible, and 
519.12  (ii) all devices for the vending of cigarettes in which packages 
519.13  as defined in item (i) are found, including all contents 
519.14  contained within the devices. 
519.15     (b) A device for the vending of cigarettes and all packages 
519.16  of cigarettes, where the device does not afford at least partial 
519.17  visibility of contents.  Where any package exposed to view does 
519.18  not carry the stamp required by this chapter, it shall be 
519.19  presumed that all packages contained in the device are unstamped 
519.20  and contraband. 
519.21     (c) A device for the vending of cigarettes to which the 
519.22  commissioner or authorized agents have been denied access for 
519.23  the inspection of contents.  In lieu of seizure, the 
519.24  commissioner or an agent may seal the device to prevent its use 
519.25  until inspection of contents is permitted. 
519.26     (d) A device for the vending of cigarettes which does not 
519.27  carry the name and address of the owner, plainly marked and 
519.28  visible from the front of the machine. 
519.29     (e) A device including, but not limited to, motor vehicles, 
519.30  trailers, snowmobiles, airplanes, and boats used with the 
519.31  knowledge of the owner or of a person operating with the consent 
519.32  of the owner for the storage or transportation of more than 
519.33  5,000 cigarettes which are contraband under this subdivision.  
519.34  When cigarettes are being transported in the course of 
519.35  interstate commerce, or are in movement from either a public 
519.36  warehouse to a distributor upon orders from a manufacturer or 
520.1   distributor, or from one distributor to another, the cigarettes 
520.2   are not contraband, notwithstanding the provisions of clause (a).
520.3      (f) A device including, but not limited to, motor vehicles, 
520.4   trailers, snowmobiles, airplanes, and boats used with the 
520.5   knowledge of the owner, or of a person operating with the 
520.6   consent of the owner, for the storage or transportation of 
520.7   untaxed tobacco products intended for sale in Minnesota other 
520.8   than those in the possession of a licensed distributor on or 
520.9   before the due date for payment of the tax under section 
520.10  297F.09, subdivision 2. 
520.11     (g) Cigarette packages or tobacco products obtained from an 
520.12  unlicensed seller. 
520.13     (g) (h) Cigarette packages offered for sale or held as 
520.14  inventory in violation of section 297F.20, subdivision 7. 
520.15     (h) (i) Tobacco products on which the tax has not been paid 
520.16  by a licensed distributor. 
520.17     (i) (j) Any cigarette packages or tobacco products offered 
520.18  for sale or held as inventory for which there is not an invoice 
520.19  from a licensed seller as required under section 297F.13, 
520.20  subdivision 4.  
520.21     (j) (k) Cigarette packages which have been imported into 
520.22  the United States in violation of United States Code, title 26, 
520.23  section 5754.  All cigarettes held in violation of that section 
520.24  shall be presumed to have entered the United States after 
520.25  December 31, 1999, in the absence of proof to the contrary. 
520.26     <b>[EFFECTIVE DATE.]</b> This section is effective for seizures 
520.27  made on or after July 1, 2001. 
520.28     Sec. 7.  Minnesota Statutes 2000, section 297F.21, 
520.29  subdivision 2, is amended to read: 
520.30     Subd. 2.  [SEIZURE.] Cigarettes, tobacco products, or other 
520.31  property made contraband by subdivision 1 may be seized by the 
520.32  commissioner or authorized agents or by any sheriff or other 
520.33  police officer, with or without process, and are subject to 
520.34  forfeiture as provided in subdivisions subdivision 3 and 4. 
520.35     <b>[EFFECTIVE DATE.]</b> This section is effective for seizures 
520.36  made on or after July 1, 2001. 
521.1      Sec. 8.  Minnesota Statutes 2000, section 297F.21, 
521.2   subdivision 3, is amended to read: 
521.3      Subd. 3.  [INVENTORY; JUDICIAL DETERMINATION; APPEAL; 
521.4   DISPOSITION OF SEIZED PROPERTY.] (a) Within ten days after the 
521.5   seizure of any alleged contraband, the person making the seizure 
521.6   shall make available serve by certified mail an inventory of the 
521.7   property seized to on the person from whom the seizure was made, 
521.8   if known, and on any person known or believed to have any right, 
521.9   title, interest, or lien in the property, at the last known 
521.10  address, and file a copy with the commissioner.  The notice must 
521.11  include an explanation of the right to demand a judicial 
521.12  forfeiture determination. 
521.13     (b) Within ten 60 days after the date of service of the 
521.14  inventory, which is the date of mailing, the person from whom 
521.15  the property was seized or any person claiming an interest in 
521.16  the property may file with the commissioner a demand for a 
521.17  judicial determination of the question as to whether the 
521.18  property was lawfully subject to seizure and forfeiture.  The 
521.19  commissioner, within 60 days, shall institute an action in the 
521.20  district court of the county where the seizure was made to 
521.21  determine the issue of forfeiture.  The demand must be in the 
521.22  form of a civil complaint and must be filed with the court 
521.23  administrator in the county in which the seizure occurred, 
521.24  together with proof of service of a copy of the complaint on the 
521.25  commissioner of revenue, and the standard filing fee for civil 
521.26  actions unless the petitioner has the right to sue in forma 
521.27  pauperis under section 563.01.  If the value of the seized 
521.28  property is $7,500 or less, the claimant may file an action in 
521.29  conciliation court for recovery of the property.  If the value 
521.30  of the seized property is less than $500, the claimant does not 
521.31  have to pay the conciliation court filing fee. 
521.32     (c) The complaint must be captioned in the name of the 
521.33  claimant as plaintiff and the seized property as defendant, and 
521.34  must state with specificity the grounds on which the claimant 
521.35  alleges the property was improperly seized and the plaintiff's 
521.36  interest in the property seized.  No responsive pleading is 
522.1   required of the commissioner, and no court fees may be charged 
522.2   for the commissioner's appearance in the matter.  The 
522.3   proceedings are governed by the Rules of Civil Procedure.  
522.4   Notwithstanding any law to the contrary, an action for the 
522.5   return of property seized under this section may not be 
522.6   maintained by or on behalf of any person who has been served 
522.7   with an inventory unless the person has complied with this 
522.8   subdivision.  The court shall decide whether the alleged 
522.9   contraband is contraband, as defined in subdivision 1. 
522.10     (b) The action must be brought in the name of the state and 
522.11  must be prosecuted by the county attorney or by the attorney 
522.12  general.  The court shall hear the action without a jury and 
522.13  shall try and determine the issues of fact and law involved. 
522.14     (c) (d) When a judgment of forfeiture is entered, the 
522.15  commissioner may, unless the judgment is stayed pending an 
522.16  appeal, either: 
522.17     (1) deliver the forfeited property cigarette packages or 
522.18  tobacco products to the commissioner of human services for use 
522.19  by patients in state institutions; 
522.20     (2) cause it the property in clause (1) to be destroyed; or 
522.21     (3) cause it the forfeited property to be sold at public 
522.22  auction as provided by law.  
522.23  The person making a sale, after deducting the expense of keeping 
522.24  the property, the fee for seizure, and the costs of the sale, 
522.25  shall pay all liens according to their priority, which are 
522.26  established as being bona fide and as existing without the 
522.27  lienor having any notice or knowledge that the property was 
522.28  being used or was intended to be used for or in connection with 
522.29  the violation.  The balance of the proceeds must be paid 75 
522.30  percent to the department of revenue for deposit as a supplement 
522.31  to its operating fund or similar fund for official use, and 25 
522.32  percent to the county attorney or other prosecuting agency that 
522.33  handled the court proceeding, if there is one, for deposit as a 
522.34  supplement to its operating fund or similar fund for 
522.35  prosecutorial purposes.  If there is no prosecuting authority 
522.36  involved in the forfeiture, the 25 percent of the proceeds 
523.1   otherwise designated for the prosecuting authority must be 
523.2   deposited into the general fund.  
523.3      (d) If a demand for judicial determination is made and no 
523.4   action commenced as provided in this subdivision, the property 
523.5   must be released by the commissioner and returned to the person 
523.6   entitled to it.  (e) If no demand for judicial determination is 
523.7   made, the property seized is considered forfeited to the state 
523.8   by operation of law and may be disposed of by the commissioner 
523.9   as provided in the case of a judgment of forfeiture. 
523.10     <b>[EFFECTIVE DATE.]</b> This section is effective for seizures 
523.11  made on or after July 1, 2001. 
523.12     Sec. 9.  Minnesota Statutes 2000, section 297G.20, 
523.13  subdivision 3, is amended to read: 
523.14     Subd. 3.  [SEIZURE.] Distilled spirits, wine, fermented 
523.15  malt beverages, or other property made contraband by subdivision 
523.16  1 may be seized by the commissioner of revenue or public safety 
523.17  and their authorized agents or by any sheriff or other police 
523.18  officer, with or without process, and are subject to forfeiture 
523.19  as provided in subdivisions subdivision 4 and 5. 
523.20     <b>[EFFECTIVE DATE.]</b> This section is effective for seizures 
523.21  made on or after July 1, 2001. 
523.22     Sec. 10.  Minnesota Statutes 2000, section 297G.20, 
523.23  subdivision 4, is amended to read: 
523.24     Subd. 4.  [INVENTORY; JUDICIAL DETERMINATION; APPEAL; 
523.25  DISPOSITION OF SEIZED PROPERTY.] (a) Within ten days after the 
523.26  seizure of alleged contraband, the person making the seizure 
523.27  shall make available serve by certified mail an inventory of the 
523.28  property seized to on the person from whom the property was 
523.29  seized, if known, and on any person known or believed to have 
523.30  any right, title, interest, or lien in the property, at the last 
523.31  known address, and file a copy with both the commissioners of 
523.32  revenue and public safety.  The notice must include an 
523.33  explanation of the right to demand a judicial forfeiture 
523.34  determination. 
523.35     (b) Within ten 60 days after the date of service of the 
523.36  inventory, which is the date of mailing, the person from whom 
524.1   the property was seized or any person claiming an interest in 
524.2   the property may file with the seizing authority a demand for 
524.3   judicial determination of whether the property was lawfully 
524.4   subject to seizure and forfeiture.  Within 60 days after the 
524.5   date of the filing of the demand, the seizing authority must 
524.6   bring an action in the district court of the county where 
524.7   seizure was made to determine the issue of forfeiture.  The 
524.8   demand must be in the form of a civil complaint and must be 
524.9   filed with the court administrator in the county in which the 
524.10  seizure occurred, together with proof of service of a copy of 
524.11  the complaint on the commissioner of revenue or public safety, 
524.12  and the standard filing fee for civil actions unless the 
524.13  petitioner has the right to sue in forma pauperis under section 
524.14  563.01.  If the value of the seized property or vehicle is 
524.15  $7,500 or less, the claimant may file an action in conciliation 
524.16  court for recovery of the property.  If the value of the seized 
524.17  property is less than $500, the claimant does not have to pay 
524.18  the conciliation court filing fee.  
524.19     (c) The complaint must be captioned in the name of the 
524.20  claimant as plaintiff and the seized property as defendant, and 
524.21  must state with specificity the grounds on which the claimant 
524.22  alleges the property was improperly seized and the plaintiff's 
524.23  interest in the property seized.  No responsive pleading is 
524.24  required of the commissioner of revenue or public safety and no 
524.25  court fees may be charged for either commissioner's appearance 
524.26  in the matter.  The proceedings are governed by the Rules of 
524.27  Civil Procedure.  Notwithstanding any law to the contrary, an 
524.28  action for the return of property seized under this section may 
524.29  not be maintained by or on behalf of any person who has been 
524.30  served with an inventory unless the person has complied with 
524.31  this subdivision.  
524.32     (b) The action must be brought in the name of the state and 
524.33  must be prosecuted by the county attorney or by the attorney 
524.34  general.  The court shall hear the action without a jury and 
524.35  determine the issues of fact and law involved. 
524.36     (c) (d) If a judgment of forfeiture is entered, the seizing 
525.1   authority may, unless the judgment is stayed pending an appeal, 
525.2   either: 
525.3      (1) cause the forfeited property, other than a vehicle, to 
525.4   be destroyed; or 
525.5      (2) cause it to be sold at a public auction as provided by 
525.6   law.  
525.7      The person making a sale, after deducting the expense of 
525.8   keeping the property, the fee for seizure, and the costs of the 
525.9   sale, shall pay all liens according to their priority, which are 
525.10  established as being bona fide and as existing without the 
525.11  lienor having any notice or knowledge that the property was 
525.12  being used or was intended to be used for or in connection with 
525.13  the violation.  The balance of the proceeds must be paid 75 
525.14  percent to the seizing authority for deposit as a supplement to 
525.15  its operating fund or similar fund for official use, and 25 
525.16  percent to the county attorney or other prosecuting agency that 
525.17  handled the court proceeding, if there is one, for deposit as a 
525.18  supplement to its operating fund or similar fund for 
525.19  prosecutorial purposes.  If there is no prosecuting authority 
525.20  involved in the forfeiture, the 25 percent of the proceeds 
525.21  otherwise designated for the prosecuting authority must be 
525.22  deposited into the general fund.  
525.23     (d) If demand for judicial determination is made and no 
525.24  action is commenced by the seizing authority as provided in this 
525.25  subdivision, the property must be released by the seizing 
525.26  authority and delivered to the person entitled to it.  (e) If no 
525.27  demand is made, the property seized is considered forfeited to 
525.28  the seizing authority by operation of law and may be disposed of 
525.29  by the seizing authority as provided for a judgment of 
525.30  forfeiture.  When the seizing authority is satisfied that a 
525.31  person from whom property is seized was acting in good faith and 
525.32  without intent to evade the tax imposed by this chapter, the 
525.33  seizing authority shall release the property seized without 
525.34  further legal proceedings. 
525.35     <b>[EFFECTIVE DATE.]</b> This section is effective for seizures 
525.36  made on or after July 1, 2001. 
526.1      Sec. 11.  [REPEALER.] 
526.2      Minnesota Statutes 2000, sections 296A.24, subdivision 3; 
526.3   297E.16, subdivision 3; 297F.21, subdivision 4; and 297G.20, 
526.4   subdivision 5, are repealed. 
526.5      <b>[EFFECTIVE DATE.]</b> This section is effective for seizures 
526.6   made on or after July 1, 2001. 
526.7                              ARTICLE 19 
526.8                    ELECTRONIC FILING AND PAYMENT
526.9      Section 1.  Minnesota Statutes 2000, section 115B.24, 
526.10  subdivision 2, is amended to read: 
526.11     Subd. 2.  [DECLARATIONS OF ESTIMATED TAX.] For 1983, every 
526.12  generator of hazardous waste required to pay a tax pursuant to 
526.13  section 115B.22 shall make a declaration of estimated hazardous 
526.14  waste generated for the last six months of calendar year 1983 if 
526.15  the tax can reasonably be estimated to exceed $500.  The 
526.16  declaration of the estimated tax shall be filed by October 15, 
526.17  1983.  The amount of estimated tax with respect to which a 
526.18  declaration is required shall be paid in two equal installments 
526.19  by October 15, 1983 and January 15, 1984.  For 1984 and 
526.20  subsequent years, every generator of hazardous waste required to 
526.21  pay a tax pursuant to section 115B.22 shall make a declaration 
526.22  of estimated hazardous waste generated for the calendar year if 
526.23  the tax can reasonably be expected to be in excess of $1,000.  
526.24  The declaration of estimated tax shall be filed by March 15.  
526.25  The amount of estimated tax with respect to which a declaration 
526.26  is required shall be paid in four equal installments on or 
526.27  before the 15th day of March, June, September, and December.  
526.28     An amendment of a declaration may be filed in any interval 
526.29  between installment dates prescribed above but only one 
526.30  amendment may be filed in each interval.  If an amendment of a 
526.31  declaration is filed, the amount of each remaining installment 
526.32  shall be the amount which would have been payable if the new 
526.33  estimate had been made when the first estimate for the calendar 
526.34  year was made, increased or decreased, as the case may be, by 
526.35  the amount computed by dividing 
526.36     (1) the difference between (A) the amount of estimated tax 
527.1   required to be paid before the date on which the amendment was 
527.2   made, and (B) the amount of estimated tax which would have been 
527.3   required to be paid before that date if the new estimate had 
527.4   been made when the first estimate was made, by 
527.5      (2) the number of installments remaining to be paid on or 
527.6   after the date on which the amendment is made.  
527.7      The commissioner of revenue may grant a reasonable 
527.8   extension of time for filing any declaration but the extension 
527.9   shall not be for more than six months.  
527.10     If the aggregate amount of estimated tax payments made 
527.11  during a fiscal year ending June 30 is equal to or exceeds 
527.12  $80,000, all estimated tax payments in the subsequent calendar 
527.13  year must be paid by electronic means of a funds transfer as 
527.14  defined in section 336.4A-104, paragraph (a).  The funds 
527.15  transfer payment date, as defined in section 336.4A-401, must be 
527.16  on or before the date the estimated tax payment is due.  If the 
527.17  date the estimated tax payment is due is not a funds transfer 
527.18  business day, as defined in section 336.4A-105, paragraph (a), 
527.19  clause (4), the payment date must be on or before the funds 
527.20  transfer business day next following the date the estimated tax 
527.21  payment is due. 
527.22     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
527.23  following final enactment. 
527.24     Sec. 2.  Minnesota Statutes 2000, section 270.271, 
527.25  subdivision 1, is amended to read: 
527.26     Subdivision 1.  [DATE OF DELIVERY.] When a document, 
527.27  including a return, claim, or statement, is required to be 
527.28  filed, or a payment is required to be made to the commissioner 
527.29  within a prescribed period, or on or before a prescribed date, 
527.30  and if the document or payment is delivered by electronic means 
527.31  or by United States mail after the period or the date to the 
527.32  place prescribed for filing or payment, then the date of 
527.33  delivery or of payment is the date of the confirmation 
527.34  time-and-date stamp of the transaction, if delivered by 
527.35  electronic means, or the date of the United States postmark 
527.36  stamped on the cover in which the document or payment is mailed, 
528.1   if delivered by United States mail shall be considered the date 
528.2   of delivery or of payment, as the case may be. 
528.3      <b>[EFFECTIVE DATE.]</b> This section is effective for returns and 
528.4   payments due on or after July 1, 2001. 
528.5      Sec. 3.  Minnesota Statutes 2000, section 270.271, 
528.6   subdivision 3, is amended to read: 
528.7      Subd. 3.  [CONFIRMATION OF ELECTRONIC FILING AND PAYMENT 
528.8   AND UNITED STATES POSTAL SERVICE POSTMARK.] The confirmation 
528.9   numbers and confirmation time-and-date stamps received by the 
528.10  taxpayer following electronic payment or filing is proof of the 
528.11  payment authorization and filing dates.  Only the postmark of 
528.12  the United States Postal Service, rather than those of private 
528.13  postage meters, qualifies as proof of timely mailing under this 
528.14  section.  If the document or payment is sent by United States 
528.15  registered mail, the date of registration shall be treated as 
528.16  the postmark date.  If the document or payment is sent by United 
528.17  States certified mail and the sender's receipt is postmarked by 
528.18  the postal employee to whom the envelope containing such 
528.19  document or payment is presented, the date of the United States 
528.20  postmark on the receipt shall be treated as the postmark date of 
528.21  the document or payment. 
528.22     <b>[EFFECTIVE DATE.]</b> This section is effective for returns and 
528.23  payments due on or after July 1, 2001. 
528.24     Sec. 4.  Minnesota Statutes 2000, section 270.771, is 
528.25  amended to read: 
528.26     270.771 [PAYMENTS REQUIRED TO BE MADE BY ELECTRONIC FUNDS 
528.27  TRANSFER ELECTRONICALLY.] 
528.28     (a) If a taxpayer is required to make payment of a tax to 
528.29  the commissioner by electronic means of electronic funds 
528.30  transfer as defined in section 336.4A-104, paragraph (a), the 
528.31  taxpayer shall make all payments of all taxes and fees paid to 
528.32  the commissioner by electronic means of electronic funds 
528.33  transfer. 
528.34     (b) Paragraph (a) does not apply to payments required to be 
528.35  made for individual income taxes under section 289A.20, 
528.36  subdivision 1, paragraph (a), or 289A.25.  
529.1      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
529.2   following final enactment. 
529.3      Sec. 5.  Minnesota Statutes 2000, section 270.78, is 
529.4   amended to read: 
529.5      270.78 [PENALTY FOR FAILURE TO MAKE PAYMENT BY ELECTRONIC 
529.6   FUNDS TRANSFER PAY ELECTRONICALLY.] 
529.7      In addition to other applicable penalties imposed by law, 
529.8   after notification from the commissioner of revenue to the 
529.9   taxpayer that payments for a tax administered by the 
529.10  commissioner are required to be made by electronic means of 
529.11  electronic funds transfer, and the payments are remitted by some 
529.12  other means, there is a penalty in the amount of five percent of 
529.13  each payment that should have been remitted electronically. 
529.14  After the commissioner's initial notification to the taxpayer 
529.15  that payments are required to be made by electronic means, the 
529.16  commissioner is not required to notify the taxpayer in 
529.17  subsequent periods if the initial notification specified the 
529.18  amount of tax liability at which a taxpayer is required to remit 
529.19  payments by electronic means.  The penalty can be abated under 
529.20  the abatement procedures prescribed in section 270.07, 
529.21  subdivision 6, if the failure to remit the payment 
529.22  electronically is due to reasonable cause.  The penalty bears 
529.23  interest at the rate specified in section 270.75 from the due 
529.24  date of the payment of the tax to the date of payment of the 
529.25  penalty. 
529.26     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
529.27  following final enactment. 
529.28     Sec. 6.  Minnesota Statutes 2000, section 287.12, is 
529.29  amended to read: 
529.30     287.12 [TAXES, HOW APPORTIONED.] 
529.31     (a) All taxes paid to the county treasurer under the 
529.32  provisions of sections 287.01 to 287.12 must be apportioned, 97 
529.33  percent to the general fund of the state, and three percent to 
529.34  the county revenue fund. 
529.35     (b) On or before the 20th day of each month the county 
529.36  treasurer shall determine and pay to the commissioner of revenue 
530.1   for deposit in the state treasury and credit to the general fund 
530.2   the state's portion of the receipts from the mortgage registry 
530.3   tax during the preceding month subject to the electronic funds 
530.4   transfer payment requirements of section 270.771.  The county 
530.5   treasurer shall provide any related reports requested by the 
530.6   commissioner of revenue. 
530.7      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
530.8   following final enactment. 
530.9      Sec. 7.  Minnesota Statutes 2000, section 289A.02, is 
530.10  amended by adding a subdivision to read: 
530.11     Subd. 8.  [ELECTRONIC MEANS.] "Electronic means" refers to 
530.12  a method that is electronic, as defined in section 325L.02, 
530.13  paragraph (e), and that is prescribed by the commissioner. 
530.14     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
530.15  following final enactment. 
530.16     Sec. 8.  Minnesota Statutes 2000, section 289A.08, 
530.17  subdivision 16, is amended to read: 
530.18     Subd. 16.  [TAX REFUND OR RETURN PREPARERS.] (a) A "tax 
530.19  refund or return preparer," as defined in section 289A.60, 
530.20  subdivision 13, paragraph (g), who prepared more than 500 
530.21  Minnesota individual income tax returns for the prior calendar 
530.22  year must file all Minnesota individual income tax returns 
530.23  prepared for the current calendar year by electronic means. 
530.24     (b) For tax returns prepared for the tax year beginning in 
530.25  2001, the "500" in paragraph (a) is reduced to 250. 
530.26     (c) For tax returns prepared for tax years beginning after 
530.27  December 31, 2001, the "500" in paragraph (a) is reduced to 100. 
530.28     (d) Paragraph (a) does not apply to a return if the 
530.29  taxpayer has indicated on the return that the taxpayer did not 
530.30  want the return filed by electronic means. 
530.31     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
530.32  years beginning with December 31, 2000. 
530.33     Sec. 9.  Minnesota Statutes 2000, section 289A.20, 
530.34  subdivision 1, is amended to read: 
530.35     Subdivision 1.  [INDIVIDUAL INCOME, FIDUCIARY INCOME, 
530.36  MINING COMPANY, CORPORATE FRANCHISE, AND ENTERTAINMENT TAXES.] 
531.1   (a) Individual income, fiduciary, mining company, and corporate 
531.2   franchise taxes must be paid to the commissioner on or before 
531.3   the date the return must be filed under section 289A.18, 
531.4   subdivision 1, or the extended due date as provided in section 
531.5   289A.19, unless an earlier date for payment is provided.  
531.6      Notwithstanding any other law, a taxpayer whose unpaid 
531.7   liability for income or corporate franchise taxes, as reflected 
531.8   upon the return, is $1 or less need not pay the tax.  
531.9      (b) Entertainment taxes must be paid on or before the date 
531.10  the return must be filed under section 289A.18, subdivision 1. 
531.11     (c) If a fiduciary administers 100 or more trusts, 
531.12  fiduciary income taxes for all trusts administered by the 
531.13  fiduciary must be paid by funds transfer as defined in section 
531.14  336.4A-104, paragraph (a).  The funds transfer payment date, as 
531.15  defined in section 336.4A-401, must be on or before the date the 
531.16  tax payment is due.  If the date the payment is due is not a 
531.17  funds transfer business day, as defined in section 336.4A-105, 
531.18  paragraph (a), clause (4), the payment date must be on or before 
531.19  the funds transfer business day next following the date the 
531.20  payment is due electronic means.  
531.21     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
531.22  following final enactment. 
531.23     Sec. 10.  Minnesota Statutes 2000, section 289A.20, 
531.24  subdivision 2, is amended to read: 
531.25     Subd. 2.  [WITHHOLDING FROM WAGES, ENTERTAINER WITHHOLDING, 
531.26  WITHHOLDING FROM PAYMENTS TO OUT-OF-STATE CONTRACTORS, AND 
531.27  WITHHOLDING BY PARTNERSHIPS AND SMALL BUSINESS CORPORATIONS.] 
531.28  (a) A tax required to be deducted and withheld during the 
531.29  quarterly period must be paid on or before the last day of the 
531.30  month following the close of the quarterly period, unless an 
531.31  earlier time for payment is provided.  A tax required to be 
531.32  deducted and withheld from compensation of an entertainer and 
531.33  from a payment to an out-of-state contractor must be paid on or 
531.34  before the date the return for such tax must be filed under 
531.35  section 289A.18, subdivision 2.  Taxes required to be deducted 
531.36  and withheld by partnerships and S corporations must be paid on 
532.1   or before the date the return must be filed under section 
532.2   289A.18, subdivision 2. 
532.3      (b) An employer who, during the previous quarter, withheld 
532.4   more than $1,500 of tax under section 290.92, subdivision 2a or 
532.5   3, or 290.923, subdivision 2, must deposit tax withheld under 
532.6   those sections with the commissioner within the time allowed to 
532.7   deposit the employer's federal withheld employment taxes under 
532.8   Treasury Regulation, section 31.6302-1, without regard to the 
532.9   safe harbor or de minimis rules in subparagraph (f) or the 
532.10  one-day rule in subsection (c), clause (3).  Taxpayers must 
532.11  submit a copy of their federal notice of deposit status to the 
532.12  commissioner upon request by the commissioner. 
532.13     (c) The commissioner may prescribe by rule other return 
532.14  periods or deposit requirements.  In prescribing the reporting 
532.15  period, the commissioner may classify payors according to the 
532.16  amount of their tax liability and may adopt an appropriate 
532.17  reporting period for the class that the commissioner judges to 
532.18  be consistent with efficient tax collection.  In no event will 
532.19  the duration of the reporting period be more than one year. 
532.20     (d) If less than the correct amount of tax is paid to the 
532.21  commissioner, proper adjustments with respect to both the tax 
532.22  and the amount to be deducted must be made, without interest, in 
532.23  the manner and at the times the commissioner prescribes.  If the 
532.24  underpayment cannot be adjusted, the amount of the underpayment 
532.25  will be assessed and collected in the manner and at the times 
532.26  the commissioner prescribes. 
532.27     (e) If the aggregate amount of the tax withheld during a 
532.28  fiscal year ending June 30 under section 290.92, subdivision 2a 
532.29  or 3, is equal to or exceeds the amounts established for 
532.30  remitting federal withheld taxes pursuant to the regulations 
532.31  promulgated under section 6302(h) of the Internal Revenue Code, 
532.32  the employer must remit each required deposit for wages paid in 
532.33  the subsequent calendar year by electronic means of a funds 
532.34  transfer as defined in section 336.4A-104, paragraph (a).  The 
532.35  funds transfer payment date, as defined in section 336.4A-401, 
532.36  must be on or before the date the deposit is due.  If the date 
533.1   the deposit is due is not a funds transfer business day, as 
533.2   defined in section 336.4A-105, paragraph (a), clause (4), the 
533.3   payment date must be on or before the funds transfer business 
533.4   day next following the date the deposit is due. 
533.5      (f) A third-party bulk filer as defined in section 290.92, 
533.6   subdivision 30, paragraph (a), clause (2), who remits 
533.7   withholding deposits must remit all deposits by electronic means 
533.8   of a funds transfer as provided in paragraph (e), regardless of 
533.9   the aggregate amount of tax withheld during a fiscal year for 
533.10  all of the employers.  
533.11     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
533.12  following final enactment. 
533.13     Sec. 11.  Minnesota Statutes 2000, section 289A.20, 
533.14  subdivision 4, is amended to read: 
533.15     Subd. 4.  [SALES AND USE TAX.] (a) The taxes imposed by 
533.16  chapter 297A are due and payable to the commissioner monthly on 
533.17  or before the 20th day of the month following the month in which 
533.18  the taxable event occurred, or following another reporting 
533.19  period as the commissioner prescribes or as allowed under 
533.20  section 289A.18, subdivision 4, paragraph (f), except that use 
533.21  taxes due on an annual use tax return as provided under section 
533.22  289A.11, subdivision 1, are payable by April 15 following the 
533.23  close of the calendar year. 
533.24     (b) A vendor having a liability of $120,000 or more during 
533.25  a fiscal year ending June 30 must remit the June liability for 
533.26  the next year in the following manner: 
533.27     (1) Two business days before June 30 of the year, the 
533.28  vendor must remit 62 percent of the estimated June liability to 
533.29  the commissioner.  
533.30     (2) On or before August 14 of the year, the vendor must pay 
533.31  any additional amount of tax not remitted in June. 
533.32     (c) A vendor having a liability of $120,000 or more during 
533.33  a fiscal year ending June 30 must remit all liabilities on 
533.34  returns due for periods beginning in the subsequent calendar 
533.35  year by electronic means of a funds transfer as defined in 
533.36  section 336.4A-104, paragraph (a).  The funds transfer payment 
534.1   date, as defined in section 336.4A-401, must be on or before the 
534.2   14th 20th day of the month following the month in which the 
534.3   taxable event occurred, or on or before the 14th 20th day of the 
534.4   month following the month in which the sale is reported under 
534.5   section 289A.18, subdivision 4, except for 62 percent of the 
534.6   estimated June liability, which is due two business days before 
534.7   June 30.  The remaining amount of the June liability is due on 
534.8   August 14.  If the date the tax is due is not a funds transfer 
534.9   business day, as defined in section 336.4A-105, paragraph (a), 
534.10  clause (4), the payment date must be on or before the funds 
534.11  transfer business day next following the date the tax is due. 
534.12     (d) If the vendor required to remit by electronic funds 
534.13  transfer as provided in paragraph (c) is unable due to 
534.14  reasonable cause to determine the actual sales and use tax due 
534.15  on or before the due date for payment, the vendor may remit an 
534.16  estimate of the tax owed using one of the following options: 
534.17     (1) 100 percent of the tax reported on the previous month's 
534.18  sales and use tax return; 
534.19     (2) 100 percent of the tax reported on the sales and use 
534.20  tax return for the same month in the previous calendar year; or 
534.21     (3) 95 percent of the actual tax due. 
534.22     Any additional amount of tax that is not remitted on or 
534.23  before the due date for payment, must be remitted with the 
534.24  return.  If a vendor fails to remit the actual liability or does 
534.25  not remit using one of the estimate options by the due date for 
534.26  payment, the vendor must remit actual liability as provided in 
534.27  paragraph (c) in all subsequent periods.  This paragraph does 
534.28  not apply to the June sales and use tax liability. 
534.29     <b>[EFFECTIVE DATE.]</b> This section is effective for payments 
534.30  due on or after July 1, 2001. 
534.31     Sec. 12.  Minnesota Statutes 2000, section 289A.26, 
534.32  subdivision 2a, is amended to read: 
534.33     Subd. 2a.  [ELECTRONIC FUNDS TRANSFER PAYMENTS.] If the 
534.34  aggregate amount of estimated tax payments made during a 
534.35  calendar year is equal to or exceeds $20,000, all estimated tax 
534.36  payments in the subsequent calendar year must be paid 
535.1   by electronic means of a funds transfer as defined in section 
535.2   336.4A-104, paragraph (a).  The funds transfer payment date, as 
535.3   defined in section 336.4A-401, must be on or before the date the 
535.4   estimated tax payment is due.  If the date the estimated tax 
535.5   payment is due is not a funds transfer business day, as defined 
535.6   in section 336.4A-105, paragraph (a), clause (4), the payment 
535.7   date must be on or before the funds transfer business day next 
535.8   following the date the estimated tax payment is due. 
535.9      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
535.10  following final enactment. 
535.11     Sec. 13.  Minnesota Statutes 2000, section 289A.60, 
535.12  subdivision 21, is amended to read: 
535.13     Subd. 21.  [PENALTY FOR FAILURE TO MAKE PAYMENT BY 
535.14  ELECTRONIC FUNDS TRANSFER MEANS.] In addition to other 
535.15  applicable penalties imposed by this section, after notification 
535.16  from the commissioner to the taxpayer that payments are required 
535.17  to be made by electronic means of electronic funds transfer 
535.18  under section 289A.20, subdivision 2, paragraph (e), or 4, 
535.19  paragraph (d) (c), or 289A.26, subdivision 2a, and the payments 
535.20  are remitted by some other means, there is a penalty in the 
535.21  amount of five percent of each payment that should have been 
535.22  remitted electronically.  After the commissioner's initial 
535.23  notification to the taxpayer that payments are required to be 
535.24  made by electronic means, the commissioner is not required to 
535.25  notify the taxpayer in subsequent periods if the initial 
535.26  notification specified the amount of tax liability at which a 
535.27  taxpayer is required to remit payments by electronic means.  The 
535.28  penalty can be abated under the abatement procedures prescribed 
535.29  in section 270.07, subdivision 6, if the failure to remit the 
535.30  payment electronically is due to reasonable cause. 
535.31     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
535.32  following final enactment. 
535.33     Sec. 14.  Minnesota Statutes 2000, section 295.55, 
535.34  subdivision 4, is amended to read: 
535.35     Subd. 4.  [ELECTRONIC FUNDS TRANSFER PAYMENTS.] A taxpayer 
535.36  with an aggregate tax liability of $120,000 or more during a 
536.1   fiscal year ending June 30, must remit all liabilities by 
536.2   electronic means of a funds transfer as defined in section 
536.3   336.4A-104, paragraph (a), in the subsequent calendar year.  The 
536.4   funds transfer payment date, as defined in section 336.4A-401, 
536.5   is on or before the date the tax is due.  If the date the tax is 
536.6   due is not a funds-transfer business day, as defined in section 
536.7   336.4A-105, paragraph (a), clause (4), the payment date is on or 
536.8   before the first funds-transfer business day after the date the 
536.9   tax is due. 
536.10     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
536.11  following final enactment. 
536.12     Sec. 15.  Minnesota Statutes 2000, section 296A.15, 
536.13  subdivision 7, is amended to read: 
536.14     Subd. 7.  [ELECTRONIC FUNDS TRANSFER PAYMENT REQUIRED.] All 
536.15  remittances must be made by electronic means of electronic funds 
536.16  transfer as defined in section 336.4A-104, paragraph (a).  The 
536.17  funds transfer payment date, as defined in section 336.4A-401, 
536.18  must be on or before the date the remittance is due.  If the 
536.19  date the remittance is due is not a funds transfer business day, 
536.20  as defined in section 336.4A-105, paragraph (a), clause (4), the 
536.21  payment date must be on or before the funds transfer business 
536.22  day next following the date the remittance is due.  
536.23     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
536.24  following final enactment. 
536.25     Sec. 16.  Minnesota Statutes 2000, section 297E.02, 
536.26  subdivision 4, is amended to read: 
536.27     Subd. 4.  [PULL-TAB AND TIPBOARD TAX.] (a) A tax is imposed 
536.28  on the sale of each deal of pull-tabs and tipboards sold by a 
536.29  distributor.  The rate of the tax is 1.7 percent of the ideal 
536.30  gross of the pull-tab or tipboard deal.  The sales tax imposed 
536.31  by chapter 297A on the sale of the pull-tabs and tipboards by 
536.32  the distributor is imposed on the retail sales price less the 
536.33  tax imposed by this subdivision.  The retail sale of pull-tabs 
536.34  or tipboards by the organization is exempt from taxes imposed by 
536.35  chapter 297A and is exempt from all local taxes and license fees 
536.36  except a fee authorized under section 349.16, subdivision 8.  
537.1      (b) The liability for the tax imposed by this section is 
537.2   incurred when the pull-tabs and tipboards are delivered by the 
537.3   distributor to the customer or to a common or contract carrier 
537.4   for delivery to the customer, or when received by the customer's 
537.5   authorized representative at the distributor's place of 
537.6   business, regardless of the distributor's method of accounting 
537.7   or the terms of the sale.  
537.8      The tax imposed by this subdivision is imposed on all sales 
537.9   of pull-tabs and tipboards, except the following:  
537.10     (1) sales to the governing body of an Indian tribal 
537.11  organization for use on an Indian reservation; 
537.12     (2) sales to distributors licensed under the laws of 
537.13  another state or of a province of Canada, as long as all 
537.14  statutory and regulatory requirements are met in the other state 
537.15  or province; 
537.16     (3) sales of promotional tickets as defined in section 
537.17  349.12; and 
537.18     (4) pull-tabs and tipboards sold to an organization that 
537.19  sells pull-tabs and tipboards under the exemption from licensing 
537.20  in section 349.166, subdivision 2.  A distributor shall require 
537.21  an organization conducting exempt gambling to show proof of its 
537.22  exempt status before making a tax-exempt sale of pull-tabs or 
537.23  tipboards to the organization.  A distributor shall identify, on 
537.24  all reports submitted to the commissioner, all sales of 
537.25  pull-tabs and tipboards that are exempt from tax under this 
537.26  subdivision.  
537.27     (c) A distributor having a liability of $120,000 or more 
537.28  during a fiscal year ending June 30 must remit all liabilities 
537.29  in the subsequent calendar year by a funds transfer as defined 
537.30  in section 336.4A-104, paragraph (a).  The funds transfer 
537.31  payment date, as defined in section 336.4A-401, must be on or 
537.32  before the date the tax is due.  If the date the tax is due is 
537.33  not a funds transfer business day, as defined in section 
537.34  336.4A-105, paragraph (a), clause (4), the payment date must be 
537.35  on or before the funds transfer business day next following the 
537.36  date the tax is due electronic means. 
538.1      (d) Any customer who purchases deals of pull-tabs or 
538.2   tipboards from a distributor may file an annual claim for a 
538.3   refund or credit of taxes paid pursuant to this subdivision for 
538.4   unsold pull-tab and tipboard tickets.  The claim must be filed 
538.5   with the commissioner on a form prescribed by the commissioner 
538.6   by March 20 of the year following the calendar year for which 
538.7   the refund is claimed.  The refund must be filed as part of the 
538.8   customer's February monthly return.  The refund or credit is 
538.9   equal to 1.7 percent of the face value of the unsold pull-tab or 
538.10  tipboard tickets, provided that the refund or credit will be 
538.11  1.75 percent of the face value of the unsold pull-tab or 
538.12  tipboard tickets for claims for a refund or credit of taxes 
538.13  filed on the February 2001 monthly return.  The refund claimed 
538.14  will be applied as a credit against tax owing under this chapter 
538.15  on the February monthly return.  If the refund claimed exceeds 
538.16  the tax owing on the February monthly return, that amount will 
538.17  be refunded.  The amount refunded will bear interest pursuant to 
538.18  section 270.76 from 90 days after the claim is filed.  
538.19     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
538.20  following final enactment. 
538.21     Sec. 17.  Minnesota Statutes 2000, section 297F.09, 
538.22  subdivision 7, is amended to read: 
538.23     Subd. 7.  [ELECTRONIC FUNDS TRANSFER PAYMENT.] A cigarette 
538.24  or tobacco products distributor having a liability of $120,000 
538.25  or more during a fiscal year ending June 30 must remit all 
538.26  liabilities in the subsequent calendar year by electronic means 
538.27  of a fund transfer as defined in section 336.4A-104, paragraph 
538.28  (a).  The funds transfer payment date, as defined in section 
538.29  336.4A-401, must be on or before the date the tax is due.  If 
538.30  the date the tax is due is not a funds transfer business day, as 
538.31  defined in section 336.4A-105, paragraph (a), clause (4), the 
538.32  payment date must be on or before the funds transfer day 
538.33  immediately following the date the tax is due. 
538.34     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
538.35  following final enactment. 
538.36     Sec. 18.  Minnesota Statutes 2000, section 297G.09, 
539.1   subdivision 6, is amended to read: 
539.2      Subd. 6.  [ELECTRONIC FUNDS TRANSFER PAYMENTS.] A licensed 
539.3   brewer, importer, or wholesaler having an excise tax liability 
539.4   of $120,000 or more during a fiscal year ending June 30 must 
539.5   remit all excise tax liabilities in the subsequent calendar year 
539.6   by electronic means of a funds transfer as defined in section 
539.7   336.4A-104, paragraph (a).  The funds transfer payment date, as 
539.8   defined in section 336.4A-401, must be on or before the date the 
539.9   excise tax is due.  If the date the excise tax is due is not a 
539.10  funds transfer business day, as defined in section 336.4A-105, 
539.11  paragraph (a), clause (4), the payment date must be on or before 
539.12  the funds transfer business day next following the date the 
539.13  excise tax is due. 
539.14     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
539.15  following final enactment. 
539.16     Sec. 19.  Minnesota Statutes 2000, section 297I.35, 
539.17  subdivision 2, is amended to read: 
539.18     Subd. 2.  [ELECTRONIC FUNDS TRANSFER PAYMENTS.] If the 
539.19  aggregate amount of tax and surcharges due under this chapter 
539.20  during a calendar year is equal to or exceeds $120,000, or if 
539.21  the taxpayer is required to make payment of any other tax to the 
539.22  commissioner by electronic means of electronic funds transfer as 
539.23  defined in section 336.4A-104, paragraph (a), then all tax and 
539.24  surcharge payments in the subsequent calendar year must be paid 
539.25  by electronic means of a funds transfer as defined in section 
539.26  336.4A-104, paragraph (a).  The funds transfer payment date, as 
539.27  defined in section 336.4A-104, must be on or before the date the 
539.28  payment is due.  If the date the payment is due is not a funds 
539.29  transfer business day, as defined in section 336.4A-105, 
539.30  paragraph (a), clause (4), the payment date must be on or before 
539.31  the funds transfer business day next following the date the 
539.32  payment is due. 
539.33     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
539.34  following final enactment. 
539.35     Sec. 20.  Minnesota Statutes 2000, section 297I.85, 
539.36  subdivision 7, is amended to read: 
540.1      Subd. 7.  [PENALTY FOR FAILURE TO MAKE PAYMENT BY 
540.2   ELECTRONIC FUNDS TRANSFER PAY ELECTRONICALLY.] In addition to 
540.3   other applicable penalties imposed by this section, if the 
540.4   commissioner notifies the taxpayer that payments are required to 
540.5   be made by electronic means of electronic funds transfer, and 
540.6   the payments are made by some other means, a penalty is 
540.7   imposed.  The amount of the penalty is equal to five percent of 
540.8   each payment that should have been paid electronically.  After 
540.9   the commissioner's initial notification to the taxpayer that 
540.10  payments are required to be made by electronic means, the 
540.11  commissioner is not required to notify the taxpayer in 
540.12  subsequent periods if the initial notification specified the 
540.13  amount of tax liability at which a taxpayer is required to remit 
540.14  payments by electronic means.  The penalty may be abated under 
540.15  the abatement procedures prescribed in section 270.07, 
540.16  subdivision 6, if the failure to pay electronically is due to 
540.17  reasonable cause. 
540.18     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
540.19  following final enactment. 
540.20     Sec. 21.  Minnesota Statutes 2000, section 473.843, 
540.21  subdivision 3, is amended to read: 
540.22     Subd. 3.  [PAYMENT OF FEE.] On or before the 20th day of 
540.23  each month each operator shall pay the fee due under this 
540.24  section for the previous month, using a form provided by the 
540.25  commissioner of revenue.  
540.26     An operator having a fee of $120,000 or more during a 
540.27  fiscal year ending June 30 must pay all fees in the subsequent 
540.28  calendar year by electronic means of a funds transfer as defined 
540.29  in section 336.4A-104, paragraph (a).  The funds transfer 
540.30  payment date, as defined in section 336.4A-401, must be on or 
540.31  before the date the fee is due.  If the date the fee is due is 
540.32  not a funds transfer business day, as defined in section 
540.33  336.4A-105, paragraph (a), clause (4), the payment date must be 
540.34  on or before the funds transfer business day next following the 
540.35  date the fee is due. 
540.36     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
541.1   following final enactment. 
541.2                              ARTICLE 20 
541.3                            MISCELLANEOUS 
541.4      Section 1.  [12.38] [STATE AGENCIES; TEMPORARY WAIVER OF 
541.5   FEES.] 
541.6      Notwithstanding any law to the contrary, a state agency as 
541.7   defined in section 16B.01, subdivision 2, with the approval of 
541.8   the governor, may waive fees that would otherwise be charged for 
541.9   agency services.  The waiver of fees must be confined to 
541.10  geographic areas within a disaster or emergency area as defined 
541.11  in section 273.123, subdivision 1, and to the minimum periods of 
541.12  time necessary to deal with the emergency situation.  The 
541.13  requirements of section 14.05, subdivision 4, do not apply to a 
541.14  waiver made under this section.  The agency must promptly report 
541.15  the reasons for and the impact of any suspended fees to the 
541.16  chairs of the legislative committees that oversee the policy and 
541.17  budgetary affairs of the agency.  
541.18     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
541.19  following final enactment and applies to disasters or 
541.20  emergencies as defined in Minnesota Statutes, section 273.123, 
541.21  subdivision 1, that occur after March 30, 2001. 
541.22     Sec. 2.  Minnesota Statutes 2000, section 16D.08, 
541.23  subdivision 2, is amended to read: 
541.24     Subd. 2.  [POWERS.] (a) In addition to the collection 
541.25  remedies available to private collection agencies in this state, 
541.26  the commissioner, with legal assistance from the attorney 
541.27  general, may utilize any statutory authority granted to a 
541.28  referring agency for purposes of collecting debt owed to that 
541.29  referring agency.  The commissioner may also delegate to the 
541.30  enterprise the tax collection remedies in sections 270.06, 
541.31  clauses (7) and (17), excluding the power to subpoena witnesses; 
541.32  270.66; 270.69, excluding subdivisions 7 and 13; 270.70, 
541.33  excluding subdivision 14; 270.7001 to 270.72; and 290.92, 
541.34  subdivision 23, except that a continuous wage levy under section 
541.35  290.92, subdivision 23, is only effective for 70 days, unless no 
541.36  competing wage garnishments, executions, or levies are served 
542.1   within the 70-day period, in which case a wage levy is 
542.2   continuous until a competing garnishment, execution, or levy is 
542.3   served in the second or a succeeding 70-day period, in which 
542.4   case a continuous wage levy is effective for the remainder of 
542.5   that period.  A debtor who qualifies for cancellation of 
542.6   collection costs under section 16D.11, subdivision 3, clause 
542.7   (1), can apply to the commissioner for reduction or release of a 
542.8   continuous wage levy, if the debtor establishes that the debtor 
542.9   needs all or a portion of the wages being levied upon to pay for 
542.10  essential living expenses, such as food, clothing, shelter, 
542.11  medical care, or expenses necessary for maintaining employment.  
542.12  The commissioner's determination not to reduce or release a 
542.13  continuous wage levy is appealable to district court.  The word 
542.14  "tax" or "taxes" when used in the tax collection statutes listed 
542.15  in this subdivision also means debts referred under this chapter.
542.16     (b) For debts other than state taxes or, child support, or 
542.17  student loans, before any of the tax collection remedies listed 
542.18  in this subdivision can be used, except for the remedies in 
542.19  section 270.06, clauses (7) and (17), if the referring agency 
542.20  has not already obtained a judgment or filed a lien, the 
542.21  commissioner must first obtain a judgment against the debtor.  
542.22  For student loans when the referring agency has not obtained a 
542.23  judgment or filed a lien, before using the tax collection 
542.24  remedies listed in this subdivision, except for the remedies in 
542.25  section 270.06, clauses (7) and (17), the commissioner shall 
542.26  give the debtor 30 days' notice in writing, which may be served 
542.27  in any manner permitted in section 270.68 for service of a 
542.28  summons and complaint.  The notice must advise the debtor of the 
542.29  debtor's right to request that the commissioner commence a court 
542.30  action, and that if no such request is made within 30 days after 
542.31  service of the notice, the commissioner may use these tax 
542.32  collection remedies.  If a timely request is made, the 
542.33  commissioner shall obtain a judgment before using these tax 
542.34  collection remedies. 
542.35     <b>[EFFECTIVE DATE.]</b> This section is effective for student 
542.36  loans referred to the commissioner for collection on or after 
543.1   July 1, 2001. 
543.2      Sec. 3.  Minnesota Statutes 2000, section 144.3831, 
543.3   subdivision 2, is amended to read: 
543.4      Subd. 2.  [COLLECTION AND PAYMENT OF FEE.] The public water 
543.5   supply described in subdivision 1 shall: 
543.6      (1) collect the fees assessed on its service connections; 
543.7      (2) pay the department of revenue health an amount 
543.8   equivalent to the fees based on the total number of service 
543.9   connections.  The service connections for each public water 
543.10  supply described in subdivision 1 shall be verified every four 
543.11  years by the department of health; and 
543.12     (3) pay one-fourth of the total yearly fee to the 
543.13  department of revenue health each calendar quarter.  The first 
543.14  quarterly payment is due on or before September 30, 1992.  In 
543.15  lieu of quarterly payments, a public water supply described in 
543.16  subdivision 1 with fewer than 50 service connections may make a 
543.17  single annual payment by June 30 each year, starting in 1993.  
543.18  The fees payable to the department of revenue health shall be 
543.19  deposited in the state treasury as nondedicated state government 
543.20  special revenue fund revenues. 
543.21     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
543.22  following final enactment. 
543.23     Sec. 4.  Minnesota Statutes 2000, section 270.06, is 
543.24  amended to read: 
543.25     270.06 [POWERS AND DUTIES.] 
543.26     The commissioner of revenue shall: 
543.27     (1) have and exercise general supervision over the 
543.28  administration of the assessment and taxation laws of the state, 
543.29  over assessors, town, county, and city boards of review and 
543.30  equalization, and all other assessing officers in the 
543.31  performance of their duties, to the end that all assessments of 
543.32  property be made relatively just and equal in compliance with 
543.33  the laws of the state; 
543.34     (2) confer with, advise, and give the necessary 
543.35  instructions and directions to local assessors and local boards 
543.36  of review throughout the state as to their duties under the laws 
544.1   of the state; 
544.2      (3) direct proceedings, actions, and prosecutions to be 
544.3   instituted to enforce the laws relating to the liability and 
544.4   punishment of public officers and officers and agents of 
544.5   corporations for failure or negligence to comply with the 
544.6   provisions of the laws of this state governing returns of 
544.7   assessment and taxation of property, and cause complaints to be 
544.8   made against local assessors, members of boards of equalization, 
544.9   members of boards of review, or any other assessing or taxing 
544.10  officer, to the proper authority, for their removal from office 
544.11  for misconduct or negligence of duty; 
544.12     (4) require county attorneys to assist in the commencement 
544.13  of prosecutions in actions or proceedings for removal, 
544.14  forfeiture and punishment for violation of the laws of this 
544.15  state in respect to the assessment and taxation of property in 
544.16  their respective districts or counties; 
544.17     (5) require town, city, county, and other public officers 
544.18  to report information as to the assessment of property, 
544.19  collection of taxes received from licenses and other sources, 
544.20  and such other information as may be needful in the work of the 
544.21  department of revenue, in such form and upon such blanks as the 
544.22  commissioner may prescribe; 
544.23     (6) require individuals, copartnerships, companies, 
544.24  associations, and corporations to furnish information concerning 
544.25  their capital, funded or other debt, current assets and 
544.26  liabilities, earnings, operating expenses, taxes, as well as all 
544.27  other statements now required by law for taxation purposes; 
544.28     (7) subpoena witnesses, at a time and place reasonable 
544.29  under the circumstances, to appear and give testimony, and to 
544.30  produce books, records, papers and documents for inspection and 
544.31  copying relating to any matter which the commissioner may have 
544.32  authority to investigate or determine; 
544.33     (8) issue a subpoena which does not identify the person or 
544.34  persons with respect to whose liability the subpoena is issued, 
544.35  but only if (a) the subpoena relates to the investigation of a 
544.36  particular person or ascertainable group or class of persons, 
545.1   (b) there is a reasonable basis for believing that such person 
545.2   or group or class of persons may fail or may have failed to 
545.3   comply with any law administered by the commissioner, (c) the 
545.4   information sought to be obtained from the examination of the 
545.5   records (and the identity of the person or persons with respect 
545.6   to whose liability the subpoena is issued) is not readily 
545.7   available from other sources, (d) the subpoena is clear and 
545.8   specific as to the information sought to be obtained, and (e) 
545.9   the information sought to be obtained is limited solely to the 
545.10  scope of the investigation.  Provided further that the party 
545.11  served with a subpoena which does not identify the person or 
545.12  persons with respect to whose tax liability the subpoena is 
545.13  issued shall have the right, within 20 days after service of the 
545.14  subpoena, to petition the district court for the judicial 
545.15  district in which lies the county in which that party is located 
545.16  for a determination as to whether the commissioner of revenue 
545.17  has complied with all the requirements in (a) to (e), and thus, 
545.18  whether the subpoena is enforceable.  If no such petition is 
545.19  made by the party served within the time prescribed, the 
545.20  subpoena shall have the force and effect of a court order; 
545.21     (9) cause the deposition of witnesses residing within or 
545.22  without the state, or absent therefrom, to be taken, upon notice 
545.23  to the interested party, if any, in like manner that depositions 
545.24  of witnesses are taken in civil actions in the district court, 
545.25  in any matter which the commissioner may have authority to 
545.26  investigate or determine; 
545.27     (10) investigate the tax laws of other states and countries 
545.28  and to formulate and submit to the legislature such legislation 
545.29  as the commissioner may deem expedient to prevent evasions of 
545.30  assessment and taxing laws, and secure just and equal taxation 
545.31  and improvement in the system of assessment and taxation in this 
545.32  state; 
545.33     (11) consult and confer with the governor upon the subject 
545.34  of taxation, the administration of the laws in regard thereto, 
545.35  and the progress of the work of the department of revenue, and 
545.36  furnish the governor, from time to time, such assistance and 
546.1   information as the governor may require relating to tax matters; 
546.2      (12) transmit to the governor, on or before the third 
546.3   Monday in December of each even-numbered year, and to each 
546.4   member of the legislature, on or before November 15 of each 
546.5   even-numbered year, the report of the department of revenue for 
546.6   the preceding years, showing all the taxable property in the 
546.7   state and the value of the same, in tabulated form; 
546.8      (13) inquire into the methods of assessment and taxation 
546.9   and ascertain whether the assessors faithfully discharge their 
546.10  duties, particularly as to their compliance with the laws 
546.11  requiring the assessment of all property not exempt from 
546.12  taxation; 
546.13     (14) administer and enforce the assessment and collection 
546.14  of state taxes and fees, including the use of any remedy 
546.15  available to nongovernmental creditors, and, from time to time, 
546.16  make, publish, and distribute rules for the administration and 
546.17  enforcement of assessments and fees administered by the 
546.18  commissioner and state tax laws.  The rules have the force of 
546.19  law; 
546.20     (15) prepare blank forms for the returns required by state 
546.21  tax law and distribute them throughout the state, furnishing 
546.22  them subject to charge on application; 
546.23     (16) prescribe rules governing the qualification and 
546.24  practice of agents, attorneys, or other persons representing 
546.25  taxpayers before the commissioner.  The rules may require that 
546.26  those persons, agents, and attorneys show that they are of good 
546.27  character and in good repute, have the necessary qualifications 
546.28  to give taxpayers valuable services, and are otherwise competent 
546.29  to advise and assist taxpayers in the presentation of their case 
546.30  before being recognized as representatives of taxpayers.  After 
546.31  due notice and opportunity for hearing, the commissioner may 
546.32  suspend and disbar bar from further practice before the 
546.33  commissioner any person, agent, or attorney who is shown to be 
546.34  incompetent or disreputable, who refuses to comply with the 
546.35  rules, or who with intent to defraud, willfully or knowingly 
546.36  deceives, misleads, or threatens a taxpayer or prospective 
547.1   taxpayer, by words, circular, letter, or by advertisement.  This 
547.2   clause does not curtail the rights of individuals to appear in 
547.3   their own behalf or partners or corporations' officers to appear 
547.4   in behalf of their respective partnerships or corporations; 
547.5      (17) appoint agents as the commissioner considers necessary 
547.6   to make examinations and determinations.  The agents have the 
547.7   rights and powers conferred on the commissioner to subpoena, 
547.8   examine, and copy books, records, papers, or memoranda, subpoena 
547.9   witnesses, administer oaths and affirmations, and take 
547.10  testimony.  In addition to administrative subpoenas of the 
547.11  commissioner and the agents, upon demand of the commissioner or 
547.12  an agent, the court administrator of any district court shall 
547.13  issue a subpoena for the attendance of a witness or the 
547.14  production of books, papers, records, or memoranda before the 
547.15  agent for inspection and copying.  Disobedience of a court 
547.16  administrator's subpoena shall be punished by the district court 
547.17  of the district in which the subpoena is issued, or in the case 
547.18  of a subpoena issued by the commissioner or an agent, by the 
547.19  district court of the district in which the party served with 
547.20  the subpoena is located, in the same manner as contempt of the 
547.21  district court; 
547.22     (18) appoint and employ additional help, purchase supplies 
547.23  or materials, or incur other expenditures in the enforcement of 
547.24  state tax laws as considered necessary.  The salaries of all 
547.25  agents and employees provided for in this chapter shall be fixed 
547.26  by the appointing authority, subject to the approval of the 
547.27  commissioner of administration; 
547.28     (19) execute and administer any agreement with the 
547.29  secretary of the treasury of the United States or a 
547.30  representative of another state regarding the exchange of 
547.31  information and administration of the tax laws; 
547.32     (20) administer and enforce the provisions of sections 
547.33  325D.30 to 325D.42, the Minnesota Unfair Cigarette Sales Act; 
547.34     (21) authorize the use of unmarked motor vehicles to 
547.35  conduct seizures or criminal investigations pursuant to the 
547.36  commissioner's authority; and 
548.1      (22) exercise other powers and perform other duties 
548.2   required of or imposed upon the commissioner of revenue by law.  
548.3      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
548.4   following final enactment. 
548.5      Sec. 5.  Minnesota Statutes 2000, section 270.07, 
548.6   subdivision 3, is amended to read: 
548.7      Subd. 3.  [ADDITIONAL POWERS OF COMMISSIONER.] 
548.8   Notwithstanding any other provision of law the commissioner of 
548.9   revenue may, 
548.10     (a) based upon the administrative costs of processing, 
548.11  determine minimum standards for the determination of additional 
548.12  tax for which an order shall be issued, and 
548.13     (b) based upon collection costs as compared to the amount 
548.14  of tax involved, determine minimum standards of collection, and 
548.15     (c) based upon the administrative costs of processing, 
548.16  determine the minimum amount of refunds for which an order shall 
548.17  be issued and refund made where no claim therefor has been 
548.18  filed, and 
548.19     (d) cancel any amounts below these minimum standards 
548.20  determined under (a) and (b) hereof, and 
548.21     (e) based upon the inability of a taxpayer to pay a 
548.22  delinquent tax liability, abate the liability if the taxpayer 
548.23  agrees to perform uncompensated public service work for a state 
548.24  agency, a political subdivision or public corporation of this 
548.25  state, or a nonprofit educational, medical, or social service 
548.26  agency.  The department of corrections shall administer the work 
548.27  program.  No benefits under chapter 176 or 268 shall be 
548.28  available, but a claim authorized under section 3.739 may be 
548.29  made by the taxpayer.  The state may not enter into any 
548.30  agreement that has the purpose of or results in the displacement 
548.31  of public employees by a delinquent taxpayer under this 
548.32  section.  The state must certify to the appropriate bargaining 
548.33  agent or employees, as applicable, that the work performed by a 
548.34  delinquent taxpayer will not result in the displacement of 
548.35  currently employed workers or layoff from a substantially 
548.36  equivalent position, including partial displacement such as 
549.1   reduction in hours of nonovertime work, wages, or other 
549.2   employment benefits, and 
549.3      (f) based on a showing of reasonable cause:  (1) reissue an 
549.4   uncashed rebate warrant or check that has lapsed under any 
549.5   provision of law relating to rebates; or (2) reissue an uncashed 
549.6   tax refund warrant or check that has not lapsed by law, but has 
549.7   been reported to the commissioner of commerce as abandoned 
549.8   property under the Uniform Disposition of Unclaimed Property Act 
549.9   in sections 345.31 to 345.60.  The authority to reissue warrants 
549.10  or checks under this paragraph is limited to five years after 
549.11  the date of issuance of the original warrant or check. 
549.12     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
549.13  following final enactment. 
549.14     Sec. 6.  [270.277] [NOTICES TO HOLDERS OF POWERS OF 
549.15  ATTORNEY.] 
549.16     If a taxpayer has executed a written power of attorney, in 
549.17  a form prescribed by the commissioner, the commissioner shall 
549.18  allow the taxpayer to elect, in writing, that all notices and 
549.19  correspondence between the department of revenue and the 
549.20  taxpayer will be sent to the holder of the power of attorney. 
549.21     Sec. 7.  Minnesota Statutes 2000, section 270.60, 
549.22  subdivision 4, is amended to read: 
549.23     Subd. 4.  [PAYMENTS TO COUNTIES.] (a) The commissioner 
549.24  shall pay to a county in which an Indian gaming casino is 
549.25  located ten percent of the state share of all taxes generated 
549.26  from activities on reservations and collected under a tax 
549.27  agreement under this section with the tribal government for the 
549.28  reservation located in the county.  If the tribe has casinos 
549.29  located in more than one county, the payment must be divided 
549.30  equally among the counties in which the casinos are located. 
549.31     (b) A county is a qualified county under this subdivision 
549.32  if one of the following conditions is met: 
549.33     (1) the county's per capita income is less than 80 percent 
549.34  of the state per capita personal income, based on the most 
549.35  recent estimates made by the United States Bureau of Economic 
549.36  Analysis; or 
550.1      (2) 30 percent or more of the total market value of real 
550.2   property in the county is exempt from ad valorem taxation. 
550.3      (c) The commissioner shall make the payments required under 
550.4   this subdivision by February 28 of the year following the year 
550.5   the taxes are collected. 
550.6      (d) (c) An amount sufficient to make the payments 
550.7   authorized by this subdivision, not to exceed $1,100,000 in any 
550.8   fiscal year, is annually appropriated from the general fund to 
550.9   the commissioner.  If the authorized payments exceed the amount 
550.10  of the appropriation, the commissioner shall first 
550.11  proportionately reduce the payments to counties other than 
550.12  qualified counties so that the total amount equals the 
550.13  appropriation.  If the authorized payments to qualified counties 
550.14  also exceed the amount of the appropriation, the commissioner 
550.15  shall then proportionately reduce the rate so that the total 
550.16  amount to be paid to qualified counties equals the appropriation.
550.17     <b>[EFFECTIVE DATE.]</b> This section is effective for payments 
550.18  made after December 31, 2001. 
550.19     Sec. 8.  Minnesota Statutes 2000, section 270.60, is 
550.20  amended by adding a subdivision to read: 
550.21     Subd. 5.  [FEES; APPROPRIATION.] (a) The commissioner may 
550.22  enter into an agreement with the governing body of any federally 
550.23  recognized Indian reservation in Minnesota concerning fees 
550.24  administered by the commissioner that are paid by the tribe, 
550.25  members of the tribe, or persons who conduct business with the 
550.26  tribe, or otherwise imposed on on-reservation activities.  The 
550.27  agreement may provide for the refund or sharing of the fee.  The 
550.28  commissioner may make any payments required by the agreement 
550.29  from the fees collected. 
550.30     (b) Each head of an agency, board, or other governmental 
550.31  entity that administers a program that is funded by fees 
550.32  administered by the commissioner may sign an agreement entered 
550.33  into by the commissioner under this subdivision.  An agreement 
550.34  is not valid until signed by the head of each agency, board, or 
550.35  other governmental entity that administers a program funded by 
550.36  the particular fee covered in an agreement and by the 
551.1   commissioner of revenue. 
551.2      (c) There is annually appropriated to the commissioner of 
551.3   revenue from the funds for which the fees are collected the 
551.4   amounts necessary to make payments as provided in this 
551.5   subdivision. 
551.6      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
551.7   following final enactment and applies to all fees administered 
551.8   by the commissioner of revenue for which timely claims for 
551.9   refund have been, or can be, filed. 
551.10     Sec. 9.  [270.691] [PUBLICATION OF NAMES OF DELINQUENT 
551.11  TAXPAYERS.] 
551.12     Subdivision 1.  [COMMISSIONER MAY PUBLISH.] (a) 
551.13  Notwithstanding any other law, the commissioner may publish a 
551.14  list or lists of taxpayers who owe delinquent taxes or fees 
551.15  administered by the commissioner, and who meet the requirements 
551.16  of paragraph (b). 
551.17     (b) For purposes of this section, a taxpayer may be 
551.18  included on a list if: 
551.19     (1) the taxes or fees owed remain unpaid at least 180 days 
551.20  after the dates they were due; 
551.21     (2) the taxpayer's total liability for the taxes and fees, 
551.22  including penalties, interest, and other charges, is at least 
551.23  $5,000; and 
551.24     (3) a tax lien has been filed or a judgment for the 
551.25  liability has been entered against the taxpayer before notice is 
551.26  given under subdivision 3. 
551.27     (c) In the case of listed taxpayers that are business 
551.28  entities, the commissioner may also list the names of 
551.29  responsible persons assessed pursuant to section 270.101 for 
551.30  listed liabilities, who are not protected from publication by 
551.31  subdivision 2, and for whom the requirements of paragraph (b) 
551.32  are satisfied with regard to the personal assessment. 
551.33     Subd. 2.  [REQUIRED AND EXCLUDED TAXPAYERS.] (a) The 
551.34  commissioner may publish lists of some or all of the taxpayers 
551.35  described in subdivision 1.  A list must include the taxpayers 
551.36  with the largest unpaid liabilities of the kind used to define 
552.1   the list, subject to the limitations of paragraphs (b) and (c). 
552.2      (b) For the purposes of this section, a tax or fee is not 
552.3   delinquent if: 
552.4      (1) an administrative or court action contesting the amount 
552.5   or validity of the taxpayer's liability has been filed or served 
552.6   and is unresolved at the time when notice would be given under 
552.7   subdivision 3; 
552.8      (2) an appeal period to contest the liability has not 
552.9   expired; or 
552.10     (3) the liability is subject to a payment agreement and 
552.11  there is no delinquency in the payments required under the 
552.12  agreement. 
552.13     (c) Unpaid liabilities are not subject to publication if: 
552.14     (1) the commissioner is in the process of reviewing or 
552.15  adjusting the liability; 
552.16     (2) the taxpayer is a debtor in a bankruptcy proceeding and 
552.17  the automatic stay is in effect; 
552.18     (3) the commissioner has been notified that the taxpayer is 
552.19  deceased; or 
552.20     (4) the time period for collecting the taxes or fees has 
552.21  expired. 
552.22     Subd. 3.  [NOTICE TO TAXPAYER.] (a) At least 30 days before 
552.23  publishing the name of a delinquent taxpayer, the commissioner 
552.24  shall mail a written notice to the taxpayer, detailing the 
552.25  amount and nature of each liability and the intended publication 
552.26  of the information listed in subdivision 4 related to the 
552.27  liability.  The notice must be mailed by first class and 
552.28  certified mail addressed to the last known address of the 
552.29  taxpayer.  The notice must include information regarding the 
552.30  exceptions listed in subdivision 2 and must state that the 
552.31  taxpayer's information will not be published if the taxpayer 
552.32  pays the delinquent obligation, enters into an agreement to pay, 
552.33  or provides information establishing that subdivision 2 
552.34  prohibits publication of the taxpayer's name. 
552.35     (b) After at least 30 days has elapsed since the notice was 
552.36  mailed and the delinquent tax or fee has not been paid and the 
553.1   taxpayer has not proved to the commissioner that subdivision 2 
553.2   prohibits publication, the commissioner may publish in a list of 
553.3   delinquent taxpayers the information about the taxpayer that is 
553.4   listed in subdivision 4. 
553.5      Subd. 4.  [FORM OF LIST.] The list may be published by any 
553.6   medium or method.  The list must contain the name, address, type 
553.7   of tax or fee, and period for which payment is due for each 
553.8   liability, including penalties, interest, and other charges owed 
553.9   by each listed delinquent taxpayer. 
553.10     Subd. 5.  [REMOVAL FROM LIST.] The commissioner shall 
553.11  remove the name of a taxpayer from the list of delinquent 
553.12  taxpayers after the commissioner receives written notice of and 
553.13  verifies any of the following facts about the liability in 
553.14  question: 
553.15     (1) the taxpayer has contacted the commissioner and 
553.16  arranged resolution of the liability; 
553.17     (2) an active bankruptcy proceeding has been initiated for 
553.18  the liability; 
553.19     (3) a bankruptcy proceeding concerning the liability has 
553.20  resulted in discharge of the liability; or 
553.21     (4) the commissioner has written off the liability. 
553.22     Subd. 6.  [NAMES PUBLISHED IN ERROR.] If the commissioner 
553.23  publishes a name under subdivision 1 in error, the taxpayer 
553.24  whose name was erroneously published has a right to request a 
553.25  retraction and apology.  If the taxpayer so requests, the 
553.26  commissioner shall publish a retraction and apology 
553.27  acknowledging that the taxpayer's name was published in error.  
553.28  The retraction and apology must appear in the same medium and 
553.29  the same format as the original list that contained the name 
553.30  listed in error. 
553.31     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
553.32  following final enactment for all liabilities owing on that date 
553.33  for which the statute of limitations for collection has not 
553.34  expired, and all liabilities arising after that date. 
553.35     Sec. 10.  Minnesota Statutes 2000, section 270.70, 
553.36  subdivision 13, is amended to read: 
554.1      Subd. 13.  [LEVY AND SALE BY SHERIFF.] If any tax payable 
554.2   to the commissioner of revenue or to the department of revenue 
554.3   is not paid as provided in subdivision 2, the commissioner may, 
554.4   within five years after the date of assessment of the 
554.5   tax, within the time periods provided in subdivision 1 for 
554.6   collection of taxes, delegate the authority granted by 
554.7   subdivision 1, by means of issuing a warrant to the sheriff of 
554.8   any county of the state commanding the sheriff, as agent for the 
554.9   commissioner, to levy upon and sell the real and personal 
554.10  property of the person liable for the payment or collection of 
554.11  the tax and to levy upon the rights to property of that person 
554.12  within the county, or to levy upon and seize any property within 
554.13  the county on which there is a lien provided in section 270.69, 
554.14  and to return the warrant to the commissioner and pay to the 
554.15  commissioner the money collected by virtue thereof by a time to 
554.16  be therein specified not less than 60 days from the date of the 
554.17  warrant.  The sheriff shall proceed thereunder to levy upon and 
554.18  seize any property of the person and to levy upon the rights to 
554.19  property of the person within the county (except the person's 
554.20  homestead or that property which is exempt from execution 
554.21  pursuant to section 550.37), or to levy upon and seize any 
554.22  property within the county on which there is a lien provided in 
554.23  section 270.69.  For purposes of the preceding sentence, the 
554.24  term "tax" shall include any penalty, interest and costs 
554.25  properly payable.  The sheriff shall then sell so much of the 
554.26  property levied upon as is required to satisfy the taxes, 
554.27  interest, and penalties, together with the sheriff's costs; but 
554.28  the sales, and the time and manner of redemption therefrom, 
554.29  shall, to the extent not provided in sections 270.701 to 
554.30  270.709, be governed by chapter 550.  The proceeds of the sales, 
554.31  less the sheriff's costs, shall be turned over to the 
554.32  commissioner, who shall then apply the proceeds as provided in 
554.33  section 270.708. 
554.34     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
554.35  following final enactment for all taxes for which issuance of a 
554.36  warrant under this subdivision has not been barred as of that 
555.1   date. 
555.2      Sec. 11.  Minnesota Statutes 2000, section 270.73, 
555.3   subdivision 1, is amended to read: 
555.4      Subdivision 1.  [POSTING, NOTICE.] Pursuant to the 
555.5   authority to disclose under section 270B.12, subdivision 4, the 
555.6   commissioner shall, by the 15th of each month, submit to the 
555.7   commissioner of public safety a list of all taxpayers who are 
555.8   required to pay, withhold, or collect the tax imposed by section 
555.9   290.02, 290.0922, 290.92, 290.9727, 290.9728, 290.9729, or 
555.10  297A.02, or local sales and use tax payable to the commissioner 
555.11  of revenue, or a local option tax administered and collected by 
555.12  the commissioner of revenue, and who are ten days or more 
555.13  delinquent in either filing a tax return or paying the tax. 
555.14     The commissioner of revenue is under no obligation to list 
555.15  a taxpayer whose business is inactive.  At least ten days before 
555.16  notifying the commissioner of public safety, the commissioner of 
555.17  revenue shall notify the taxpayer of the intended action. 
555.18     The commissioner of public safety shall post the list in 
555.19  the same manner as provided in section 340A.318, subdivision 3.  
555.20  The list will prominently show the date of posting.  If a 
555.21  taxpayer previously listed files all returns and pays all taxes 
555.22  then due, the commissioner shall notify the commissioner of 
555.23  public safety within two business days. 
555.24     <b>[EFFECTIVE DATE.]</b> This section is effective for lists 
555.25  submitted to the commissioner of public safety on or after the 
555.26  day following final enactment. 
555.27     Sec. 12.  Minnesota Statutes 2000, section 270A.11, is 
555.28  amended to read: 
555.29     270A.11 [DATA PRIVACY.] 
555.30     Private and confidential data on individuals may be 
555.31  exchanged among the department, the taxpayer's rights advocate, 
555.32  the attorney general, the claimant agency, and the debtor as 
555.33  necessary to accomplish and effectuate the intent of sections 
555.34  270A.01 to 270A.12, as provided by section 13.05, subdivision 4, 
555.35  clause (b).  The department may disclose to the claimant agency 
555.36  only the debtor's name, address, social security number and the 
556.1   amount of the refund, and in the case of a joint return, the 
556.2   name of the debtor's spouse.  Any person employed by, or 
556.3   formerly employed by, a claimant agency who discloses any such 
556.4   information for any other purpose, shall be subject to the civil 
556.5   and criminal penalties of section 270B.18.  Data collected by 
556.6   the department from claimant agencies relating to claims filed 
556.7   under this chapter are private data on individuals. 
556.8      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
556.9   following final enactment. 
556.10     Sec. 13.  Minnesota Statutes 2000, section 270B.02, 
556.11  subdivision 2, is amended to read: 
556.12     Subd. 2.  [PROTECTED NONPUBLIC DATA.] The following are 
556.13  protected nonpublic data as defined in section 13.02, 
556.14  subdivision 13: 
556.15     (1) criteria for determining which computer processed 
556.16  returns are selected for audit; 
556.17     (2) criteria for determining which returns are selected for 
556.18  an in-depth audit; and 
556.19     (3) criteria for determining which accounts receivable 
556.20  balances below a stated amount are written off or canceled; and 
556.21     (4) criteria or information used in determining which 
556.22  alleged criminal violations of any law administered by the 
556.23  commissioner are selected for criminal investigation.  
556.24     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
556.25  following final enactment. 
556.26     Sec. 14.  Minnesota Statutes 2000, section 270B.02, 
556.27  subdivision 3, is amended to read: 
556.28     Subd. 3.  [CONFIDENTIAL DATA ON INDIVIDUALS; PROTECTED 
556.29  NONPUBLIC DATA.] (a) Except as provided in paragraph (b), the 
556.30  name or existence of an informer, informer letters, and other 
556.31  unsolicited data, in whatever form, given to the department of 
556.32  revenue by a person, other than the data subject, who informs 
556.33  that a specific taxpayer is not or may not be in compliance with 
556.34  tax laws, or nontax laws administered by the department of 
556.35  revenue, including laws not listed in section 270B.01, 
556.36  subdivision 8, are confidential data on individuals or protected 
557.1   nonpublic data as defined in section 13.02, subdivisions 3 and 
557.2   13. 
557.3      (b) Data under paragraph (a) may be disclosed with the 
557.4   consent of the informer or upon a written finding by a court 
557.5   that the information provided by the informer was false and that 
557.6   there is evidence that the information was provided in bad 
557.7   faith.  This subdivision does not alter disclosure 
557.8   responsibilities or obligations under the rules of criminal 
557.9   procedure. 
557.10     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
557.11  following final enactment. 
557.12     Sec. 15.  Minnesota Statutes 2000, section 270B.03, 
557.13  subdivision 6, is amended to read: 
557.14     Subd. 6.  [INVESTIGATIVE DATA.] For purposes of any law 
557.15  administered by the department of revenue, including laws not 
557.16  listed in section 270B.01, subdivision 8, investigative data 
557.17  collected or created by the department of revenue in order to 
557.18  prepare a case against a person, whether known or unknown, for 
557.19  the commission of a crime is confidential or protected nonpublic 
557.20  during an investigation.  When the investigation becomes 
557.21  inactive, as defined in section 13.82, subdivision 5, the 
557.22  classifications otherwise applicable under any other laws become 
557.23  effective data is private or nonpublic. 
557.24     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
557.25  following final enactment. 
557.26     Sec. 16.  Minnesota Statutes 2000, section 289A.60, 
557.27  subdivision 7, is amended to read: 
557.28     Subd. 7.  [PENALTY FOR FRIVOLOUS RETURN.] If an individual 
557.29  a taxpayer files what purports to be a tax return required by 
557.30  chapter 290 or a claim for refund but which does not contain 
557.31  information on which the substantial correctness of 
557.32  the assessment purported return or claim for refund may be 
557.33  judged or contains information that on its face shows that the 
557.34  assessment purported return or claim for refund is substantially 
557.35  incorrect and the conduct is due to a position that is frivolous 
557.36  or a desire that appears on the purported return or claim for 
558.1   refund to delay or impede the administration of Minnesota tax 
558.2   laws, then the individual shall pay a penalty of $500.  In a 
558.3   proceeding involving the issue of whether or not a person is 
558.4   liable for this penalty, the burden of proof is on the 
558.5   commissioner.  
558.6      <b>[EFFECTIVE DATE.]</b> This section is effective for returns or 
558.7   claims for refunds filed on or after the day following final 
558.8   enactment. 
558.9      Sec. 17.  Minnesota Statutes 2000, section 345.41, is 
558.10  amended to read: 
558.11     345.41 [REPORT OF ABANDONED PROPERTY.] 
558.12     (a) Every person holding funds or other property, tangible 
558.13  or intangible, presumed abandoned under sections 345.31 to 
558.14  345.60 shall report annually to the commissioner with respect to 
558.15  the property as hereinafter provided. 
558.16     (b) The report shall be verified and shall include: 
558.17     (1) except with respect to traveler's checks and money 
558.18  orders, the name, if known, and last known address, if any, of 
558.19  each person appearing from the records of the holder to be the 
558.20  owner of any property of the value of $100 or more presumed 
558.21  abandoned under sections 345.31 to 345.60; 
558.22     (2) in case of unclaimed funds of life insurance 
558.23  corporations, the full name of the policyholder, insured or 
558.24  annuitant and that person's last known address according to the 
558.25  life insurance corporation's records; 
558.26     (3) the nature and identifying number, if any, or 
558.27  description of the property and the amount appearing from the 
558.28  records to be due, except that items of value under $100 each 
558.29  may be reported in aggregate; 
558.30     (4) the date when the property became payable, demandable 
558.31  or returnable, and the date of the last transaction with the 
558.32  owner with respect to the property; and 
558.33     (5) other information which the commissioner prescribes by 
558.34  rule as necessary for the administration of sections 345.31 to 
558.35  345.60. 
558.36     (c) If the person holding property presumed abandoned is a 
559.1   successor to other persons who previously held the property for 
559.2   the owner, or if the holder has changed a name while holding the 
559.3   property, the holder shall file with the report all prior known 
559.4   names and addresses of each holder of the property. 
559.5      (d) The report shall be filed before November 1 of each 
559.6   year as of June 30 next preceding, but the report of life 
559.7   insurance corporations shall be filed before October 1 of each 
559.8   year as of December 31 next preceding.  The commissioner may 
559.9   postpone the reporting date upon written request by any person 
559.10  required to file a report. 
559.11     (e) Not more than 120 days before filing the report 
559.12  required by this section, the holder in possession of property 
559.13  abandoned and subject to custody as unclaimed property under 
559.14  this chapter shall send written notice to the presumed owner at 
559.15  that owner's last known address informing the owner that the 
559.16  holder is in possession of property subject to this chapter and 
559.17  advising the owner of the steps necessary to prevent abandonment 
559.18  if: 
559.19     (1) the holder has in its records an address for the 
559.20  presumed owner that the holder's records do not disclose to be 
559.21  inaccurate; 
559.22     (2) the claim of the apparent owner is not barred by the 
559.23  statute of limitations; and 
559.24     (3) the property has a value of $100 or more. 
559.25     (f) Verification, if made by a partnership, shall be 
559.26  executed by a partner; if made by an unincorporated association 
559.27  or private corporation, by an officer, and if made by a public 
559.28  corporation, by its chief fiscal officer. 
559.29     (g) Holders of property described in section 345.32 shall 
559.30  not impose any charges against property which is described in 
559.31  section 345.32, clause (a), (b) or (c). 
559.32     (h) Any person who has possession of property which the 
559.33  person has reason to believe will be reportable in the future as 
559.34  unclaimed property may, with the permission of the commissioner, 
559.35  report and deliver such property prior to the date required for 
559.36  reporting in accordance with this section. 
560.1      (i) Before the last day of each calendar year, the 
560.2   commissioner of revenue shall report to the commissioner as 
560.3   unclaimed property under this section any uncashed checks or 
560.4   warrants for overpayments of taxes that were issued more than 
560.5   one year before the end of the calendar quarter immediately 
560.6   preceding the end of the calendar year. 
560.7      <b>[EFFECTIVE DATE.]</b> This section is effective August 1, 2001. 
560.8      Sec. 18.  Minnesota Statutes 2000, section 345.42, is 
560.9   amended by adding a subdivision to read: 
560.10     Subd. 5.  [UNCASHED TAX REFUNDS.] The commissioner of 
560.11  revenue shall notify the commissioner of any checks or warrants 
560.12  reported under section 345.41 that the commissioner of revenue 
560.13  has reissued under section 270.07, subdivision 3, clause (f).  
560.14  The commissioner shall remove the item from any future 
560.15  publication of lists or notifications of owners of abandoned 
560.16  property. 
560.17     <b>[EFFECTIVE DATE.]</b> This section is effective August 1, 2001. 
560.18     Sec. 19.  [471.699] [EXTENSION OF FINANCIAL REPORT FILING 
560.19  TIME LIMITS; DISASTER AREAS.] 
560.20     The time limit by which financial reports are required to 
560.21  be filed under section 471.697 or 471.698, is extended by 90 
560.22  days for any city or town located in whole or in part within a 
560.23  disaster or emergency area as defined in section 273.123, 
560.24  subdivision 1, if the time period for which the area is so 
560.25  designated includes at least one of the 30 days immediately 
560.26  preceding the time limit. 
560.27     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
560.28  following final enactment. 
560.29     Sec. 20.  Laws 1998, chapter 389, article 16, section 35, 
560.30  subdivision 1, is amended to read: 
560.31     Subdivision 1.  [BAT STUDY.] $100,000 is appropriated from 
560.32  the general fund for fiscal year 1999 to the legislative 
560.33  coordinating commission to study alternative methods of taxing 
560.34  business.  The appropriations under this section and under Laws 
560.35  1997, chapter 231, article 5, section 18, subdivision 3, are 
560.36  available in fiscal years 2000 and 2001.  Any portion of this 
561.1   appropriation that cancels in 2001 is appropriated in 2002 and 
561.2   is available until June 30, 2003.  
561.3      Sec. 21.  [APPROPRIATION.] 
561.4      The following amounts are appropriated to the commissioner 
561.5   of revenue from the general fund to administer this act:  
561.6      (1) $2,050,000 in fiscal year 2002; and 
561.7      (2) $900,000 in fiscal year 2003. 
561.8      These are one-time appropriations and are not added to the 
561.9   base, except $175,000 for each year for assessment training and 
561.10  education (regional representatives) is added to the budget base.
561.11     Sec. 22.  [REPEALER.] 
561.12     Minnesota Statutes 2000, sections 16A.1521 and 290A.18, 
561.13  subdivision 2, are repealed. 
561.14     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
561.15  following final enactment.