1.1                          A bill for an act 
  1.2             relating to financing and operation of state and local 
  1.3             government; modifying provisions relating to income, 
  1.4             franchise, sales and use, property, MinnesotaCare, 
  1.5             gross receipts, liquor, insurance, solid waste 
  1.6             management, estate, minerals, and other taxes, 
  1.7             property tax refunds, tax liens, and tax 
  1.8             administration; imposing a wind energy production tax; 
  1.9             modifying property tax and other state aids and 
  1.10            credits; changing education aids and levies; modifying 
  1.11            tax court jurisdiction; authorizing local units of 
  1.12            government to levy, impose, or abate taxes, issue 
  1.13            debt, and exercise other powers; extending and 
  1.14            authorizing certain expenditures from the northeast 
  1.15            Minnesota economic protection trust fund; modifying 
  1.16            levy limits; providing powers to and imposing duties 
  1.17            on the commissioner of revenue and other officials; 
  1.18            clarifying utility rate reduction provisions mandated 
  1.19            by property tax reductions; modifying tax increment 
  1.20            financing and other economic development provisions; 
  1.21            providing a time limit for offset of federal tax 
  1.22            refunds; changing lawful purpose for purposes of 
  1.23            lawful gambling; providing for data privacy and 
  1.24            exchange of data; modifying certain debt limits; 
  1.25            repealing an annexation provision; making technical 
  1.26            corrections; providing for the transfer of funds; 
  1.27            providing for a budget reserve; appropriating money; 
  1.28            amending Minnesota Statutes 2000, sections 16A.152, by 
  1.29            adding a subdivision; 40A.151, subdivision 1; 40A.152, 
  1.30            subdivisions 1, 3; 69.77, by adding a subdivision; 
  1.31            126C.44; 168A.05, by adding subdivisions; 270.063, 
  1.32            subdivision 4; 270.60, subdivision 4; 270B.01, 
  1.33            subdivision 8; 270B.02, subdivision 4; 270B.14, 
  1.34            subdivision 8; 272.02, subdivision 15, by adding 
  1.35            subdivisions; 272.0212, subdivision 4; 273.125, 
  1.36            subdivisions 3, 4; 273.1398, subdivisions 1a, 2, 3; 
  1.37            278.01, subdivision 1; 279.01, subdivision 3; 289A.10, 
  1.38            subdivision 1; 289A.19, subdivision 1; 290.01, 
  1.39            subdivision 19a; 290.067, subdivisions 1, 2a; 290.081; 
  1.40            290.17, subdivisions 2, 3; 290.191, subdivision 4; 
  1.41            290A.03, subdivision 3; 291.03, subdivision 1; 295.53, 
  1.42            subdivision 1; 295.57, by adding a subdivision; 
  1.43            296A.18, subdivision 8; 297A.66, by adding a 
  1.44            subdivision; 297A.67, subdivision 5, by adding a 
  1.45            subdivision; 297A.68, by adding a subdivision; 
  1.46            297A.71, by adding subdivisions; 297A.96; 297G.07, 
  2.1             subdivision 1; 297H.06, subdivision 2; 297I.05, 
  2.2             subdivision 11; 298.27; 298.28, subdivisions 5, 9b, 
  2.3             11; 298.291; 469.1813, by adding a subdivision; 
  2.4             477A.011, subdivision 20; 477A.15; Minnesota Statutes 
  2.5             2001 Supplement, sections 69.021, subdivision 5; 
  2.6             124D.86, subdivision 3; 126C.17, subdivision 7a; 
  2.7             126C.21, subdivision 4; 126C.40, subdivision 1; 
  2.8             126C.43, subdivision 3; 126C.48, subdivision 8; 
  2.9             216B.1646; 270.69, subdivision 2; 270.691, subdivision 
  2.10            8; 270B.02, subdivision 3; 270B.08, subdivision 2; 
  2.11            271.01, subdivision 5; 271.21, subdivision 2; 272.02, 
  2.12            subdivision 22; 272.028; 273.121; 273.124, subdivision 
  2.13            11; 273.13, subdivisions 22, 24, 25; 273.1384, 
  2.14            subdivisions 1, 2; 273.1392; 273.1398, subdivisions 
  2.15            4c, 4d; 275.065, subdivision 3; 275.70, subdivision 5; 
  2.16            275.71, subdivisions 2, 3, 6; 275.74, subdivision 2; 
  2.17            276.04, subdivision 2; 289A.02, subdivision 7; 
  2.18            289A.20, subdivisions 2, 4; 289A.60, subdivision 2; 
  2.19            290.01, subdivisions 19, 19b, 19c, 19d, 31; 290.0675, 
  2.20            subdivisions 1, 3; 290.091, subdivision 2; 290.0921, 
  2.21            subdivisions 2, 3, 6; 290.21, subdivision 4; 290A.03, 
  2.22            subdivision 15; 290A.04, subdivision 2h; 291.005, 
  2.23            subdivision 1; 295.60, subdivisions 2, 7, by adding 
  2.24            subdivisions; 297A.61, subdivisions 3, 26, 31; 
  2.25            297A.66, subdivision 1; 297A.67, subdivisions 25, 29; 
  2.26            297A.68, subdivision 3; 297A.70, subdivisions 3, 10; 
  2.27            297A.71, subdivision 23; 297A.75; 297A.995, 
  2.28            subdivision 4; 298.01, subdivisions 3b, 4c; 298.225, 
  2.29            subdivision 1; 298.28, subdivisions 4, 6, 9a, 10; 
  2.30            298.296, subdivision 2; 349.12, subdivision 25; 
  2.31            469.1734, subdivision 6; 469.1763, subdivision 6; 
  2.32            469.1792, subdivision 1; 477A.011, subdivision 36; 
  2.33            477A.0123; 477A.013, subdivision 9; 477A.03, 
  2.34            subdivision 2; 477A.07, subdivisions 1, 2, 3; Laws 
  2.35            1990, chapter 604, article 6, section 9, subdivision 
  2.36            1, as amended; Laws 1993, chapter 375, article 5, 
  2.37            section 42; Laws 1995, chapter 264, article 5, section 
  2.38            45, subdivision 1, as amended; Laws 1998, chapter 389, 
  2.39            article 3, section 42; Laws 1998, chapter 389, article 
  2.40            8, section 37, subdivision 2; Laws 2001, First Special 
  2.41            Session chapter 5, article 9, section 3; Laws 2001, 
  2.42            First Special Session chapter 5, article 12, sections 
  2.43            11, 82, 95; Laws 2001, First Special Session chapter 
  2.44            6, article 1, section 53; Laws 2001, First Special 
  2.45            Session chapter 6, article 4, sections 25, 27, 
  2.46            subdivision 9; Laws 2001, First Special Session 
  2.47            chapter 6, article 5, section 12; proposing coding for 
  2.48            new law in Minnesota Statutes, chapters 126C; 272; 
  2.49            repealing Minnesota Statutes 2000, sections 272.02, 
  2.50            subdivision 40; 290.01, subdivisions 19g, 32; 
  2.51            290.0921, subdivision 5; 291.03, subdivision 2; 
  2.52            295.44; 297A.68, subdivision 26; Minnesota Statutes 
  2.53            2001 Supplement, sections 469.176, subdivision 1h; 
  2.54            Laws 2001, First Special Session chapter 5, article 3, 
  2.55            section 88; Minnesota Rules, parts 8130.1400; 
  2.56            8130.2100; 8130.2350; 8130.2600; 8130.3000; 8130.3850; 
  2.57            8130.5000. 
  2.58  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  2.59                             ARTICLE 1 
  2.60                     INCOME AND FRANCHISE TAXES
  2.61     Section 1.  Minnesota Statutes 2001 Supplement, section 
  2.62  290.01, subdivision 19d, is amended to read: 
  2.63     Subd. 19d.  [CORPORATIONS; MODIFICATIONS DECREASING FEDERAL 
  2.64  TAXABLE INCOME.] For corporations, there shall be subtracted 
  3.1   from federal taxable income after the increases provided in 
  3.2   subdivision 19c:  
  3.3      (1) the amount of foreign dividend gross-up added to gross 
  3.4   income for federal income tax purposes under section 78 of the 
  3.5   Internal Revenue Code; 
  3.6      (2) the amount of salary expense not allowed for federal 
  3.7   income tax purposes due to claiming the federal jobs credit 
  3.8   under section 51 of the Internal Revenue Code; 
  3.9      (3) any dividend (not including any distribution in 
  3.10  liquidation) paid within the taxable year by a national or state 
  3.11  bank to the United States, or to any instrumentality of the 
  3.12  United States exempt from federal income taxes, on the preferred 
  3.13  stock of the bank owned by the United States or the 
  3.14  instrumentality; 
  3.15     (4) amounts disallowed for intangible drilling costs due to 
  3.16  differences between this chapter and the Internal Revenue Code 
  3.17  in taxable years beginning before January 1, 1987, as follows: 
  3.18     (i) to the extent the disallowed costs are represented by 
  3.19  physical property, an amount equal to the allowance for 
  3.20  depreciation under Minnesota Statutes 1986, section 290.09, 
  3.21  subdivision 7, subject to the modifications contained in 
  3.22  subdivision 19e; and 
  3.23     (ii) to the extent the disallowed costs are not represented 
  3.24  by physical property, an amount equal to the allowance for cost 
  3.25  depletion under Minnesota Statutes 1986, section 290.09, 
  3.26  subdivision 8; 
  3.27     (5) the deduction for capital losses pursuant to sections 
  3.28  1211 and 1212 of the Internal Revenue Code, except that: 
  3.29     (i) for capital losses incurred in taxable years beginning 
  3.30  after December 31, 1986, capital loss carrybacks shall not be 
  3.31  allowed; 
  3.32     (ii) for capital losses incurred in taxable years beginning 
  3.33  after December 31, 1986, a capital loss carryover to each of the 
  3.34  15 taxable years succeeding the loss year shall be allowed; 
  3.35     (iii) for capital losses incurred in taxable years 
  3.36  beginning before January 1, 1987, a capital loss carryback to 
  4.1   each of the three taxable years preceding the loss year, subject 
  4.2   to the provisions of Minnesota Statutes 1986, section 290.16, 
  4.3   shall be allowed; and 
  4.4      (iv) for capital losses incurred in taxable years beginning 
  4.5   before January 1, 1987, a capital loss carryover to each of the 
  4.6   five taxable years succeeding the loss year to the extent such 
  4.7   loss was not used in a prior taxable year and subject to the 
  4.8   provisions of Minnesota Statutes 1986, section 290.16, shall be 
  4.9   allowed; 
  4.10     (6) an amount for interest and expenses relating to income 
  4.11  not taxable for federal income tax purposes, if (i) the income 
  4.12  is taxable under this chapter and (ii) the interest and expenses 
  4.13  were disallowed as deductions under the provisions of section 
  4.14  171(a)(2), 265 or 291 of the Internal Revenue Code in computing 
  4.15  federal taxable income; 
  4.16     (7) in the case of mines, oil and gas wells, other natural 
  4.17  deposits, and timber for which percentage depletion was 
  4.18  disallowed pursuant to subdivision 19c, clause (11), a 
  4.19  reasonable allowance for depletion based on actual cost.  In the 
  4.20  case of leases the deduction must be apportioned between the 
  4.21  lessor and lessee in accordance with rules prescribed by the 
  4.22  commissioner.  In the case of property held in trust, the 
  4.23  allowable deduction must be apportioned between the income 
  4.24  beneficiaries and the trustee in accordance with the pertinent 
  4.25  provisions of the trust, or if there is no provision in the 
  4.26  instrument, on the basis of the trust's income allocable to 
  4.27  each; 
  4.28     (8) for certified pollution control facilities placed in 
  4.29  service in a taxable year beginning before December 31, 1986, 
  4.30  and for which amortization deductions were elected under section 
  4.31  169 of the Internal Revenue Code of 1954, as amended through 
  4.32  December 31, 1985, an amount equal to the allowance for 
  4.33  depreciation under Minnesota Statutes 1986, section 290.09, 
  4.34  subdivision 7; 
  4.35     (9) amounts included in federal taxable income that are due 
  4.36  to refunds of income, excise, or franchise taxes based on net 
  5.1   income or related minimum taxes paid by the corporation to 
  5.2   Minnesota, another state, a political subdivision of another 
  5.3   state, the District of Columbia, or a foreign country or 
  5.4   possession of the United States to the extent that the taxes 
  5.5   were added to federal taxable income under section 290.01, 
  5.6   subdivision 19c, clause (1), in a prior taxable year; 
  5.7      (10) 80 percent of royalties, fees, or other like income 
  5.8   accrued or received from a foreign operating corporation or a 
  5.9   foreign corporation which is part of the same unitary business 
  5.10  as the receiving corporation; 
  5.11     (11) income or gains from the business of mining as defined 
  5.12  in section 290.05, subdivision 1, clause (a), that are not 
  5.13  subject to Minnesota franchise tax; 
  5.14     (12) the amount of handicap access expenditures in the 
  5.15  taxable year which are not allowed to be deducted or capitalized 
  5.16  under section 44(d)(7) of the Internal Revenue Code; 
  5.17     (13) the amount of qualified research expenses not allowed 
  5.18  for federal income tax purposes under section 280C(c) of the 
  5.19  Internal Revenue Code, but only to the extent that the amount 
  5.20  exceeds the amount of the credit allowed under section 290.068; 
  5.21     (14) the amount of salary expenses not allowed for federal 
  5.22  income tax purposes due to claiming the Indian employment credit 
  5.23  under section 45A(a) of the Internal Revenue Code; 
  5.24     (15) the amount of any refund of environmental taxes paid 
  5.25  under section 59A of the Internal Revenue Code; 
  5.26     (16) for taxable years beginning before January 1, 2008, 
  5.27  the amount of the federal small ethanol producer credit allowed 
  5.28  under section 40(a)(3) of the Internal Revenue Code which is 
  5.29  included in gross income under section 87 of the Internal 
  5.30  Revenue Code; and 
  5.31     (17) for a corporation whose foreign sales corporation, as 
  5.32  defined in section 922 of the Internal Revenue Code, constituted 
  5.33  a foreign operating corporation during the any taxable years 
  5.34  year ending during calendar year 1992 before January 1, 1995, 
  5.35  and a return was filed by August 15, 1996, claiming the 
  5.36  deduction under this subdivision for income received from the 
  6.1   foreign operating corporation, an amount equal to 1.23 
  6.2   multiplied by the amount of income excluded under section 114 of 
  6.3   the Internal Revenue Code, provided the income is not income of 
  6.4   a foreign operating company. 
  6.5      <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
  6.6   years beginning after December 31, 2000. 
  6.7      Sec. 2.  Minnesota Statutes 2000, section 290.081, is 
  6.8   amended to read: 
  6.9      290.081 [INCOME OF NONRESIDENTS, RECIPROCITY.] 
  6.10     (a) The compensation received for the performance of 
  6.11  personal or professional services within this state by an 
  6.12  individual whose residence, place of abode, and place 
  6.13  customarily returned to at least once a month is in another 
  6.14  state, shall be excluded from gross income to the extent such 
  6.15  compensation is subject to an income tax imposed by the state of 
  6.16  residence; provided that such state allows a similar exclusion 
  6.17  of compensation received by residents of Minnesota for services 
  6.18  performed therein. 
  6.19     (b) When it is deemed to be in the best interests of the 
  6.20  people of this state, the commissioner may determine that the 
  6.21  provisions of clause paragraph (a) shall not apply.  As long as 
  6.22  the provisions of clause paragraph (a) apply between Minnesota 
  6.23  and Wisconsin, the provisions of clause paragraph (a) shall 
  6.24  apply to any individual who is domiciled in Wisconsin.  
  6.25     (c) For the purposes of clause paragraph (a), whenever the 
  6.26  Wisconsin tax on Minnesota residents which would have been paid 
  6.27  Wisconsin without clause paragraph (a) exceeds the Minnesota tax 
  6.28  on Wisconsin residents which would have been paid Minnesota 
  6.29  without clause paragraph (a), or vice versa, then the state with 
  6.30  the net revenue loss resulting from clause paragraph (a) shall 
  6.31  receive from the other state the amount of such loss.  This 
  6.32  provision shall be effective for all years beginning after 
  6.33  December 31, 1972.  The data used for computing the loss to 
  6.34  either state shall be determined on or before September 30 of 
  6.35  the year following the close of the previous calendar year. 
  6.36     (d) Interest shall be is payable on all delinquent balances 
  7.1   amounts calculated under paragraph (c) relating to taxable years 
  7.2   beginning after December 31, 1977 December 31, 2000.  Interest 
  7.3   accrues from July 1 of the taxable year.  The commissioner of 
  7.4   revenue is authorized to enter into agreements with the state of 
  7.5   Wisconsin specifying the reciprocity payment due date, 
  7.6   conditions constituting delinquency, interest rates, and a 
  7.7   method for computing interest due on any delinquent amounts. 
  7.8      (e) If an agreement cannot be reached as to the amount of 
  7.9   the loss, the commissioner of revenue and the taxing official of 
  7.10  the state of Wisconsin shall each appoint a member of a board of 
  7.11  arbitration and these members shall appoint the third member of 
  7.12  the board.  The board shall select one of its members as chair.  
  7.13  Such board may administer oaths, take testimony, subpoena 
  7.14  witnesses, and require their attendance, require the production 
  7.15  of books, papers and documents, and hold hearings at such places 
  7.16  as are deemed necessary.  The board shall then make a 
  7.17  determination as to the amount to be paid the other state which 
  7.18  determination shall be final and conclusive. 
  7.19     (f) The commissioner may furnish copies of returns, 
  7.20  reports, or other information to the taxing official of the 
  7.21  state of Wisconsin, a member of the board of arbitration, or a 
  7.22  consultant under joint contract with the states of Minnesota and 
  7.23  Wisconsin for the purpose of making a determination as to the 
  7.24  amount to be paid the other state under the provisions of this 
  7.25  section.  Prior to the release of any information under the 
  7.26  provisions of this section, the person to whom the information 
  7.27  is to be released shall sign an agreement which provides that 
  7.28  the person will protect the confidentiality of the returns and 
  7.29  information revealed thereby to the extent that it is protected 
  7.30  under the laws of the state of Minnesota. 
  7.31     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
  7.32  following final enactment.  Income tax reciprocity under 
  7.33  Minnesota Statutes, section 290.081, with the state of Wisconsin 
  7.34  is terminated effective for taxable years beginning after 
  7.35  December 31, 2002, unless the state of Wisconsin agrees, in 
  7.36  writing, by October 1, 2002, that interest will be included in 
  8.1   payments as required by this section, calculated from the date 
  8.2   specified under this section at a rate at least equal to the 
  8.3   rate under Minnesota Statutes, section 270.75, and beginning 
  8.4   with the payment due in December 2002.  If income tax 
  8.5   reciprocity is terminated, the requirement under Minnesota 
  8.6   Statutes, section 136A.08, subdivision 3, that an income tax 
  8.7   reciprocity agreement be in effect as a condition for a higher 
  8.8   education reciprocity is suspended through the 2003-2004 school 
  8.9   year. 
  8.10     Sec. 3.  Minnesota Statutes 2001 Supplement, section 
  8.11  290.0921, subdivision 2, is amended to read: 
  8.12     Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
  8.13  the following terms have the meanings given them. 
  8.14     (b) "Alternative minimum taxable net income" is alternative 
  8.15  minimum taxable income, 
  8.16     (1) less the exemption amount, and 
  8.17     (2) apportioned or allocated to Minnesota under section 
  8.18  290.17, 290.191, or 290.20. 
  8.19     (c) The "exemption amount" is $40,000, reduced, but not 
  8.20  below zero, by 25 percent of the excess of alternative minimum 
  8.21  taxable income over $150,000. 
  8.22     (d) "Minnesota alternative minimum taxable income" is 
  8.23  alternative minimum taxable net income, less the deductions for 
  8.24  alternative tax net operating loss under subdivision 4; 
  8.25  charitable contributions under subdivision 5; and dividends 
  8.26  received under subdivision 6.  The sum of the deductions under 
  8.27  this paragraph may not exceed 90 percent of alternative minimum 
  8.28  taxable net income.  This limitation does not apply to: 
  8.29     (1) a deduction for dividends paid to or received from a 
  8.30  corporation which is subject to tax under section 290.36 and 
  8.31  which is a member of an affiliated group of corporations as 
  8.32  defined by the Internal Revenue Code; or 
  8.33     (2) a deduction for dividends received from a property and 
  8.34  casualty insurer as defined under section 60A.60, subdivision 8, 
  8.35  which is a member of an affiliated group of corporations as 
  8.36  defined by the Internal Revenue Code and either:  (i) the 
  9.1   dividend is eliminated in consolidation under Treasury 
  9.2   Regulation 1.1502-14(a), as amended through December 31, 1989; 
  9.3   or (ii) the dividend is deducted under an election under section 
  9.4   243(b) of the Internal Revenue Code. 
  9.5      <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
  9.6   beginning after December 31, 2002. 
  9.7      Sec. 4.  Minnesota Statutes 2001 Supplement, section 
  9.8   290.0921, subdivision 6, is amended to read: 
  9.9      Subd. 6.  [DIVIDENDS RECEIVED.] (a) A deduction is allowed 
  9.10  from alternative minimum taxable net income equal to the 
  9.11  deduction for dividends received under section 290.21, 
  9.12  subdivision 4, for purposes of calculating taxable income under 
  9.13  section 290.01, subdivision 29. 
  9.14     (b) The amount of the deduction must not exceed 90 percent 
  9.15  of alternative minimum taxable net income. 
  9.16     This limitation does not apply to: 
  9.17     (1) dividends paid to or received from a corporation which 
  9.18  is subject to tax under section 290.36 and which is a member of 
  9.19  an affiliated group of corporations as defined by the Internal 
  9.20  Revenue Code; or 
  9.21     (2) dividends received from a property and casualty insurer 
  9.22  as defined under section 60A.60, subdivision 8, which is a 
  9.23  member of an affiliated group of corporations as defined by the 
  9.24  Internal Revenue Code and either:  (i) the dividend is 
  9.25  eliminated in consolidation under Treasury Regulation 
  9.26  1.1502-14(a), as amended through December 31, 1989; or (ii) the 
  9.27  dividend is deducted under an election under section 243(b) of 
  9.28  the Internal Revenue Code.  
  9.29     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
  9.30  beginning after December 31, 2002. 
  9.31     Sec. 5.  Minnesota Statutes 2000, section 290.191, 
  9.32  subdivision 4, is amended to read: 
  9.33     Subd. 4.  [APPORTIONMENT FORMULA FOR CERTAIN MAIL ORDER 
  9.34  BUSINESSES.] If the business of a corporation, partnership, or 
  9.35  proprietorship consists exclusively of the selling of tangible 
  9.36  personal property and services at retail, as defined in section 
 10.1   297A.61, subdivision 4, paragraph (a), in response to orders 
 10.2   received by United States mail, telephone, facsimile, or other 
 10.3   electronic media, and 99 percent of the taxpayer's property and 
 10.4   payroll is within Minnesota, then the taxpayer may apportion net 
 10.5   income to Minnesota based solely upon the percentage that the 
 10.6   sales made within this state in connection with its trade or 
 10.7   business during the tax period are of the total sales wherever 
 10.8   made in connection with the trade or business during the tax 
 10.9   period.  Property and payroll factors are disregarded.  In 
 10.10  determining eligibility for this subdivision:  
 10.11     (1) the sale not in the ordinary course of business of 
 10.12  tangible or intangible assets used in conducting business 
 10.13  activities must be disregarded; and 
 10.14     (2) property and payroll at a distribution center outside 
 10.15  of Minnesota are disregarded if the sole activity at the 
 10.16  distribution center is the filling of orders, and no 
 10.17  solicitation of orders occurs at the distribution center. 
 10.18     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 10.19  beginning after December 31, 2001. 
 10.20     Sec. 6.  Minnesota Statutes 2001 Supplement, section 
 10.21  290.21, subdivision 4, is amended to read: 
 10.22     Subd. 4.  (a)(1) Eighty percent of dividends received by a 
 10.23  corporation during the taxable year from another corporation, in 
 10.24  which the recipient owns 20 percent or more of the stock, by 
 10.25  vote and value, not including stock described in section 
 10.26  1504(a)(4) of the Internal Revenue Code when the corporate stock 
 10.27  with respect to which dividends are paid does not constitute the 
 10.28  stock in trade of the taxpayer or would not be included in the 
 10.29  inventory of the taxpayer, or does not constitute property held 
 10.30  by the taxpayer primarily for sale to customers in the ordinary 
 10.31  course of the taxpayer's trade or business, or when the trade or 
 10.32  business of the taxpayer does not consist principally of the 
 10.33  holding of the stocks and the collection of the income and gains 
 10.34  therefrom; and 
 10.35     (2)(i) the remaining 20 percent of dividends if the 
 10.36  dividends received are the stock in an affiliated company 
 11.1   transferred in an overall plan of reorganization and the 
 11.2   dividend is eliminated in consolidation under Treasury 
 11.3   Department Regulation 1.1502-14(a), as amended through December 
 11.4   31, 1989; or 
 11.5      (ii) the remaining 20 percent of dividends if the dividends 
 11.6   are received from a corporation which is subject to tax under 
 11.7   section 290.36 and which is a member of an affiliated group of 
 11.8   corporations as defined by the Internal Revenue Code and the 
 11.9   dividend is eliminated in consolidation under Treasury 
 11.10  Department Regulation 1.1502-14(a), as amended through December 
 11.11  31, 1989, or is deducted under an election under section 243(b) 
 11.12  of the Internal Revenue Code; or 
 11.13     (iii) the remaining 20 percent of the dividends if the 
 11.14  dividends are received from a property and casualty insurer as 
 11.15  defined under section 60A.60, subdivision 8, which is a member 
 11.16  of an affiliated group of corporations as defined by the 
 11.17  Internal Revenue Code and either:  (A) the dividend is 
 11.18  eliminated in consolidation under Treasury Regulation 
 11.19  1.1502-14(a), as amended through December 31, 1989; or (B) the 
 11.20  dividend is deducted under an election under section 243(b) of 
 11.21  the Internal Revenue Code. 
 11.22     (b) Seventy percent of dividends received by a corporation 
 11.23  during the taxable year from another corporation in which the 
 11.24  recipient owns less than 20 percent of the stock, by vote or 
 11.25  value, not including stock described in section 1504(a)(4) of 
 11.26  the Internal Revenue Code when the corporate stock with respect 
 11.27  to which dividends are paid does not constitute the stock in 
 11.28  trade of the taxpayer, or does not constitute property held by 
 11.29  the taxpayer primarily for sale to customers in the ordinary 
 11.30  course of the taxpayer's trade or business, or when the trade or 
 11.31  business of the taxpayer does not consist principally of the 
 11.32  holding of the stocks and the collection of income and gain 
 11.33  therefrom.  
 11.34     (c) The dividend deduction provided in this subdivision 
 11.35  shall be allowed only with respect to dividends that are 
 11.36  included in a corporation's Minnesota taxable net income for the 
 12.1   taxable year. 
 12.2      The dividend deduction provided in this subdivision does 
 12.3   not apply to a dividend from a corporation which, for the 
 12.4   taxable year of the corporation in which the distribution is 
 12.5   made or for the next preceding taxable year of the corporation, 
 12.6   is a corporation exempt from tax under section 501 of the 
 12.7   Internal Revenue Code. 
 12.8      The dividend deduction provided in this subdivision applies 
 12.9   to the amount of regulated investment company dividends only to 
 12.10  the extent determined under section 854(b) of the Internal 
 12.11  Revenue Code. 
 12.12     The dividend deduction provided in this subdivision shall 
 12.13  not be allowed with respect to any dividend for which a 
 12.14  deduction is not allowed under the provisions of section 246(c) 
 12.15  of the Internal Revenue Code. 
 12.16     (d) If dividends received by a corporation that does not 
 12.17  have nexus with Minnesota under the provisions of Public Law 
 12.18  Number 86-272 are included as income on the return of an 
 12.19  affiliated corporation permitted or required to file a combined 
 12.20  report under section 290.34, subdivision 2, then for purposes of 
 12.21  this subdivision the determination as to whether the trade or 
 12.22  business of the corporation consists principally of the holding 
 12.23  of stocks and the collection of income and gains therefrom shall 
 12.24  be made with reference to the trade or business of the 
 12.25  affiliated corporation having a nexus with Minnesota. 
 12.26     (e) The deduction provided by this subdivision does not 
 12.27  apply if the dividends are paid by a FSC as defined in section 
 12.28  922 of the Internal Revenue Code. 
 12.29     (f) If one or more of the members of the unitary group 
 12.30  whose income is included on the combined report received a 
 12.31  dividend, the deduction under this subdivision for each member 
 12.32  of the unitary business required to file a return under this 
 12.33  chapter is the product of:  (1) 100 percent of the dividends 
 12.34  received by members of the group; (2) the percentage allowed 
 12.35  pursuant to paragraph (a) or (b); and (3) the percentage of the 
 12.36  taxpayer's business income apportionable to this state for the 
 13.1   taxable year under section 290.191 or 290.20. 
 13.2      <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 13.3   beginning after December 31, 2002. 
 13.4                              ARTICLE 2 
 13.5                            FEDERAL UPDATE 
 13.6      Section 1.  Minnesota Statutes 2001 Supplement, section 
 13.7   289A.02, subdivision 7, is amended to read: 
 13.8      Subd. 7.  [INTERNAL REVENUE CODE.] Unless specifically 
 13.9   defined otherwise, "Internal Revenue Code" means the Internal 
 13.10  Revenue Code of 1986, as amended through June 15, 2001 March 15, 
 13.11  2002. 
 13.12     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 13.13  following final enactment. 
 13.14     Sec. 2.  Minnesota Statutes 2001 Supplement, section 
 13.15  289A.20, subdivision 2, is amended to read: 
 13.16     Subd. 2.  [WITHHOLDING FROM WAGES, ENTERTAINER WITHHOLDING, 
 13.17  WITHHOLDING FROM PAYMENTS TO OUT-OF-STATE CONTRACTORS, AND 
 13.18  WITHHOLDING BY PARTNERSHIPS AND SMALL BUSINESS CORPORATIONS.] 
 13.19  (a) A tax required to be deducted and withheld during the 
 13.20  quarterly period must be paid on or before the last day of the 
 13.21  month following the close of the quarterly period, unless an 
 13.22  earlier time for payment is provided.  A tax required to be 
 13.23  deducted and withheld from compensation of an entertainer and 
 13.24  from a payment to an out-of-state contractor must be paid on or 
 13.25  before the date the return for such tax must be filed under 
 13.26  section 289A.18, subdivision 2.  Taxes required to be deducted 
 13.27  and withheld by partnerships and S corporations must be paid on 
 13.28  or before the date the return must be filed under section 
 13.29  289A.18, subdivision 2. 
 13.30     (b) An employer who, during the previous quarter, withheld 
 13.31  more than $1,500 of tax under section 290.92, subdivision 2a or 
 13.32  3, or 290.923, subdivision 2, must deposit tax withheld under 
 13.33  those sections with the commissioner within the time allowed to 
 13.34  deposit the employer's federal withheld employment taxes under 
 13.35  Treasury Regulation Code of Federal Regulations, title 26, 
 13.36  section 31.6302-1, as amended through December 31, 2001, without 
 14.1   regard to the safe harbor or de minimis rules in subparagraph 
 14.2   (f) or the one-day rule in subsection (c), clause (3).  
 14.3   Taxpayers must submit a copy of their federal notice of deposit 
 14.4   status to the commissioner upon request by the commissioner. 
 14.5      (c) The commissioner may prescribe by rule other return 
 14.6   periods or deposit requirements.  In prescribing the reporting 
 14.7   period, the commissioner may classify payors according to the 
 14.8   amount of their tax liability and may adopt an appropriate 
 14.9   reporting period for the class that the commissioner judges to 
 14.10  be consistent with efficient tax collection.  In no event will 
 14.11  the duration of the reporting period be more than one year. 
 14.12     (d) If less than the correct amount of tax is paid to the 
 14.13  commissioner, proper adjustments with respect to both the tax 
 14.14  and the amount to be deducted must be made, without interest, in 
 14.15  the manner and at the times the commissioner prescribes.  If the 
 14.16  underpayment cannot be adjusted, the amount of the underpayment 
 14.17  will be assessed and collected in the manner and at the times 
 14.18  the commissioner prescribes. 
 14.19     (e) If the aggregate amount of the tax withheld during a 
 14.20  fiscal year ending June 30 under section 290.92, subdivision 2a 
 14.21  or 3, is equal to or exceeds the amounts established for 
 14.22  remitting federal withheld taxes pursuant to the regulations 
 14.23  promulgated under section 6302(h) of the Internal Revenue Code, 
 14.24  the employer must remit each required deposit for wages paid in 
 14.25  the subsequent calendar year by electronic means. 
 14.26     (f) A third-party bulk filer as defined in section 290.92, 
 14.27  subdivision 30, paragraph (a), clause (2), who remits 
 14.28  withholding deposits must remit all deposits by electronic means 
 14.29  as provided in paragraph (e), regardless of the aggregate amount 
 14.30  of tax withheld during a fiscal year for all of the employers.  
 14.31     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 14.32  following final enactment. 
 14.33     Sec. 3.  Minnesota Statutes 2001 Supplement, section 
 14.34  290.01, subdivision 19, is amended to read: 
 14.35     Subd. 19.  [NET INCOME.] The term "net income" means the 
 14.36  federal taxable income, as defined in section 63 of the Internal 
 15.1   Revenue Code of 1986, as amended through the date named in this 
 15.2   subdivision, incorporating any elections made by the taxpayer in 
 15.3   accordance with the Internal Revenue Code in determining federal 
 15.4   taxable income for federal income tax purposes, and with the 
 15.5   modifications provided in subdivisions 19a to 19f. 
 15.6      In the case of a regulated investment company or a fund 
 15.7   thereof, as defined in section 851(a) or 851(g) of the Internal 
 15.8   Revenue Code, federal taxable income means investment company 
 15.9   taxable income as defined in section 852(b)(2) of the Internal 
 15.10  Revenue Code, except that:  
 15.11     (1) the exclusion of net capital gain provided in section 
 15.12  852(b)(2)(A) of the Internal Revenue Code does not apply; 
 15.13     (2) the deduction for dividends paid under section 
 15.14  852(b)(2)(D) of the Internal Revenue Code must be applied by 
 15.15  allowing a deduction for capital gain dividends and 
 15.16  exempt-interest dividends as defined in sections 852(b)(3)(C) 
 15.17  and 852(b)(5) of the Internal Revenue Code; and 
 15.18     (3) the deduction for dividends paid must also be applied 
 15.19  in the amount of any undistributed capital gains which the 
 15.20  regulated investment company elects to have treated as provided 
 15.21  in section 852(b)(3)(D) of the Internal Revenue Code.  
 15.22     The net income of a real estate investment trust as defined 
 15.23  and limited by section 856(a), (b), and (c) of the Internal 
 15.24  Revenue Code means the real estate investment trust taxable 
 15.25  income as defined in section 857(b)(2) of the Internal Revenue 
 15.26  Code.  
 15.27     The net income of a designated settlement fund as defined 
 15.28  in section 468B(d) of the Internal Revenue Code means the gross 
 15.29  income as defined in section 468B(b) of the Internal Revenue 
 15.30  Code. 
 15.31     The provisions of sections 1113(a), 1117, 1206(a), 1313(a), 
 15.32  1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612, 
 15.33  1616, 1617, 1704(l), and 1704(m) of the Small Business Job 
 15.34  Protection Act, Public Law Number 104-188, the provisions of 
 15.35  Public Law Number 104-117, the provisions of sections 313(a) and 
 15.36  (b)(1), 602(a), 913(b), 941, 961, 971, 1001(a) and (b), 1002, 
 16.1   1003, 1012, 1013, 1014, 1061, 1062, 1081, 1084(b), 1086, 1087, 
 16.2   1111(a), 1131(b) and (c), 1211(b), 1213, 1530(c)(2), 1601(f)(5) 
 16.3   and (h), and 1604(d)(1) of the Taxpayer Relief Act of 1997, 
 16.4   Public Law Number 105-34, the provisions of section 6010 of the 
 16.5   Internal Revenue Service Restructuring and Reform Act of 1998, 
 16.6   Public Law Number 105-206, the provisions of section 4003 of the 
 16.7   Omnibus Consolidated and Emergency Supplemental Appropriations 
 16.8   Act, 1999, Public Law Number 105-277, and the provisions of 
 16.9   section 318 of the Consolidated Appropriation Act of 2001, 
 16.10  Public Law Number 106-554, shall become effective at the time 
 16.11  they become effective for federal purposes. 
 16.12     The Internal Revenue Code of 1986, as amended through 
 16.13  December 31, 1996, shall be in effect for taxable years 
 16.14  beginning after December 31, 1996. 
 16.15     The provisions of sections 202(a) and (b), 221(a), 225, 
 16.16  312, 313, 913(a), 934, 962, 1004, 1005, 1052, 1063, 1084(a) and 
 16.17  (c), 1089, 1112, 1171, 1204, 1271(a) and (b), 1305(a), 1306, 
 16.18  1307, 1308, 1309, 1501(b), 1502(b), 1504(a), 1505, 1527, 1528, 
 16.19  1530, 1601(d), (e), (f), and (i) and 1602(a), (b), (c), and (e) 
 16.20  of the Taxpayer Relief Act of 1997, Public Law Number 105-34, 
 16.21  the provisions of sections 6004, 6005, 6012, 6013, 6015, 6016, 
 16.22  7002, and 7003 of the Internal Revenue Service Restructuring and 
 16.23  Reform Act of 1998, Public Law Number 105-206, the provisions of 
 16.24  section 3001 of the Omnibus Consolidated and Emergency 
 16.25  Supplemental Appropriations Act, 1999, Public Law Number 
 16.26  105-277, the provisions of section 3001 of the Miscellaneous 
 16.27  Trade and Technical Corrections Act of 1999, Public Law Number 
 16.28  106-36, and the provisions of section 316 of the Consolidated 
 16.29  Appropriation Act of 2001, Public Law Number 106-554, shall 
 16.30  become effective at the time they become effective for federal 
 16.31  purposes. 
 16.32     The Internal Revenue Code of 1986, as amended through 
 16.33  December 31, 1997, shall be in effect for taxable years 
 16.34  beginning after December 31, 1997. 
 16.35     The provisions of sections 5002, 6009, 6011, and 7001 of 
 16.36  the Internal Revenue Service Restructuring and Reform Act of 
 17.1   1998, Public Law Number 105-206, the provisions of section 9010 
 17.2   of the Transportation Equity Act for the 21st Century, Public 
 17.3   Law Number 105-178, the provisions of sections 1004, 4002, and 
 17.4   5301 of the Omnibus Consolidation and Emergency Supplemental 
 17.5   Appropriations Act, 1999, Public Law Number 105-277, the 
 17.6   provision of section 303 of the Ricky Ray Hemophilia Relief Fund 
 17.7   Act of 1998, Public Law Number 105-369, the provisions of 
 17.8   sections 532, 534, 536, 537, and 538 of the Ticket to Work and 
 17.9   Work Incentives Improvement Act of 1999, Public Law Number 
 17.10  106-170, the provisions of the Installment Tax Correction Act of 
 17.11  2000, Public Law Number 106-573, and the provisions of section 
 17.12  309 of the Consolidated Appropriation Act of 2001, Public Law 
 17.13  Number 106-554, shall become effective at the time they become 
 17.14  effective for federal purposes. 
 17.15     The Internal Revenue Code of 1986, as amended through 
 17.16  December 31, 1998, shall be in effect for taxable years 
 17.17  beginning after December 31, 1998.  
 17.18     The provisions of the FSC Repeal and Extraterritorial 
 17.19  Income Exclusion Act of 2000, Public Law Number 106-519, and the 
 17.20  provision of section 412 of the Job Creation and Worker 
 17.21  Assistance Act of 2002, Public Law Number 107-147, shall become 
 17.22  effective at the time it became effective for federal purposes. 
 17.23     The Internal Revenue Code of 1986, as amended through 
 17.24  December 31, 1999, shall be in effect for taxable years 
 17.25  beginning after December 31, 1999.  The provisions of sections 
 17.26  306 and 401 of the Consolidated Appropriation Act of 2001, 
 17.27  Public Law Number 106-554, and the provision of section 
 17.28  632(b)(2)(A) of the Economic Growth and Tax Relief 
 17.29  Reconciliation Act of 2001, Public Law Number 107-16, and 
 17.30  provisions of sections 101 and 402 of the Job Creation and 
 17.31  Worker Assistance Act of 2002, Public Law Number 107-147, shall 
 17.32  become effective at the same time it became effective for 
 17.33  federal purposes. 
 17.34     The Internal Revenue Code of 1986, as amended through 
 17.35  December 31, 2000, shall be in effect for taxable years 
 17.36  beginning after December 31, 2000.  The provisions of sections 
 18.1   659a and 671 of the Economic Growth and Tax Relief 
 18.2   Reconciliation Act of 2001, Public Law Number 107-16, the 
 18.3   provisions of sections 104, 105, and 111 of the Victims of 
 18.4   Terrorism Tax Relief Act of 2001, Public Law Number 107-134, and 
 18.5   the provisions of sections 201, 403, 413, and 606 of the Job 
 18.6   Creation and Worker Assistance Act of 2002, Public Law Number 
 18.7   107-147, shall become effective at the same time it became 
 18.8   effective for federal purposes. 
 18.9      The Internal Revenue Code of 1986, as amended through June 
 18.10  15, 2001 March 15, 2002, shall be in effect for taxable years 
 18.11  beginning after December 31, 2001. 
 18.12     The provisions of sections 101 and 102 of the Victims of 
 18.13  Terrorism Tax Relief Act of 2001, Public Law Number 107-134, 
 18.14  shall become effective at the same time it becomes effective for 
 18.15  federal purposes. 
 18.16     Except as otherwise provided, references to the Internal 
 18.17  Revenue Code in subdivisions 19a to 19g mean the code in effect 
 18.18  for purposes of determining net income for the applicable year. 
 18.19     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 18.20  following final enactment. 
 18.21     Sec. 4.  Minnesota Statutes 2000, section 290.01, 
 18.22  subdivision 19a, is amended to read: 
 18.23     Subd. 19a.  [ADDITIONS TO FEDERAL TAXABLE INCOME.] For 
 18.24  individuals, estates, and trusts, there shall be added to 
 18.25  federal taxable income: 
 18.26     (1)(i) interest income on obligations of any state other 
 18.27  than Minnesota or a political or governmental subdivision, 
 18.28  municipality, or governmental agency or instrumentality of any 
 18.29  state other than Minnesota exempt from federal income taxes 
 18.30  under the Internal Revenue Code or any other federal statute, 
 18.31  and 
 18.32     (ii) exempt-interest dividends as defined in section 
 18.33  852(b)(5) of the Internal Revenue Code, except the portion of 
 18.34  the exempt-interest dividends derived from interest income on 
 18.35  obligations of the state of Minnesota or its political or 
 18.36  governmental subdivisions, municipalities, governmental agencies 
 19.1   or instrumentalities, but only if the portion of the 
 19.2   exempt-interest dividends from such Minnesota sources paid to 
 19.3   all shareholders represents 95 percent or more of the 
 19.4   exempt-interest dividends that are paid by the regulated 
 19.5   investment company as defined in section 851(a) of the Internal 
 19.6   Revenue Code, or the fund of the regulated investment company as 
 19.7   defined in section 851(g) of the Internal Revenue Code, making 
 19.8   the payment; and 
 19.9      (iii) for the purposes of items (i) and (ii), interest on 
 19.10  obligations of an Indian tribal government described in section 
 19.11  7871(c) of the Internal Revenue Code shall be treated as 
 19.12  interest income on obligations of the state in which the tribe 
 19.13  is located; 
 19.14     (2) the amount of income taxes paid or accrued within the 
 19.15  taxable year under this chapter and income taxes paid to any 
 19.16  other state or to any province or territory of Canada, to the 
 19.17  extent allowed as a deduction under section 63(d) of the 
 19.18  Internal Revenue Code, but the addition may not be more than the 
 19.19  amount by which the itemized deductions as allowed under section 
 19.20  63(d) of the Internal Revenue Code exceeds the amount of the 
 19.21  standard deduction as defined in section 63(c) of the Internal 
 19.22  Revenue Code.  For the purpose of this paragraph, the 
 19.23  disallowance of itemized deductions under section 68 of the 
 19.24  Internal Revenue Code of 1986, income tax is the last itemized 
 19.25  deduction disallowed; 
 19.26     (3) the capital gain amount of a lump sum distribution to 
 19.27  which the special tax under section 1122(h)(3)(B)(ii) of the Tax 
 19.28  Reform Act of 1986, Public Law Number 99-514, applies; 
 19.29     (4) the amount of income taxes paid or accrued within the 
 19.30  taxable year under this chapter and income taxes paid to any 
 19.31  other state or any province or territory of Canada, to the 
 19.32  extent allowed as a deduction in determining federal adjusted 
 19.33  gross income.  For the purpose of this paragraph, income taxes 
 19.34  do not include the taxes imposed by sections 290.0922, 
 19.35  subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729; 
 19.36     (5) the amount of expense, interest, or taxes disallowed 
 20.1   pursuant to section 290.10; and 
 20.2      (6) the amount of a partner's pro rata share of net income 
 20.3   which does not flow through to the partner because the 
 20.4   partnership elected to pay the tax on the income under section 
 20.5   6242(a)(2) of the Internal Revenue Code; and 
 20.6      (7) 80 percent of the depreciation deduction allowed under 
 20.7   section 168(k) of the Internal Revenue Code. 
 20.8      <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 20.9   ending after September 10, 2001. 
 20.10     Sec. 5.  Minnesota Statutes 2001 Supplement, section 
 20.11  290.01, subdivision 19b, is amended to read: 
 20.12     Subd. 19b.  [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 
 20.13  individuals, estates, and trusts, there shall be subtracted from 
 20.14  federal taxable income: 
 20.15     (1) interest income on obligations of any authority, 
 20.16  commission, or instrumentality of the United States to the 
 20.17  extent includable in taxable income for federal income tax 
 20.18  purposes but exempt from state income tax under the laws of the 
 20.19  United States; 
 20.20     (2) if included in federal taxable income, the amount of 
 20.21  any overpayment of income tax to Minnesota or to any other 
 20.22  state, for any previous taxable year, whether the amount is 
 20.23  received as a refund or as a credit to another taxable year's 
 20.24  income tax liability; 
 20.25     (3) the amount paid to others, less the amount used to 
 20.26  claim the credit allowed under section 290.0674, not to exceed 
 20.27  $1,625 for each qualifying child in grades kindergarten to 6 and 
 20.28  $2,500 for each qualifying child in grades 7 to 12, for tuition, 
 20.29  textbooks, and transportation of each qualifying child in 
 20.30  attending an elementary or secondary school situated in 
 20.31  Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, 
 20.32  wherein a resident of this state may legally fulfill the state's 
 20.33  compulsory attendance laws, which is not operated for profit, 
 20.34  and which adheres to the provisions of the Civil Rights Act of 
 20.35  1964 and chapter 363.  For the purposes of this clause, 
 20.36  "tuition" includes fees or tuition as defined in section 
 21.1   290.0674, subdivision 1, clause (1).  As used in this clause, 
 21.2   "textbooks" includes books and other instructional materials and 
 21.3   equipment purchased or leased for use in elementary and 
 21.4   secondary schools in teaching only those subjects legally and 
 21.5   commonly taught in public elementary and secondary schools in 
 21.6   this state.  Equipment expenses qualifying for deduction 
 21.7   includes expenses as defined and limited in section 290.0674, 
 21.8   subdivision 1, clause (3).  "Textbooks" does not include 
 21.9   instructional books and materials used in the teaching of 
 21.10  religious tenets, doctrines, or worship, the purpose of which is 
 21.11  to instill such tenets, doctrines, or worship, nor does it 
 21.12  include books or materials for, or transportation to, 
 21.13  extracurricular activities including sporting events, musical or 
 21.14  dramatic events, speech activities, driver's education, or 
 21.15  similar programs.  For purposes of the subtraction provided by 
 21.16  this clause, "qualifying child" has the meaning given in section 
 21.17  32(c)(3) of the Internal Revenue Code; 
 21.18     (4) contributions made in taxable years beginning after 
 21.19  December 31, 1981, and before January 1, 1985, to a qualified 
 21.20  governmental pension plan, an individual retirement account, 
 21.21  simplified employee pension, or qualified plan covering a 
 21.22  self-employed person that were included in Minnesota gross 
 21.23  income in the taxable year for which the contributions were made 
 21.24  but were deducted or were not included in the computation of 
 21.25  federal adjusted gross income, less any amount allowed to be 
 21.26  subtracted as a distribution under this subdivision or a 
 21.27  predecessor provision in taxable years that began before January 
 21.28  1, 2000.  This subtraction applies only for taxable years 
 21.29  beginning after December 31, 1999, and before January 1, 2001.  
 21.30  If an individual's subtraction under this clause exceeds the 
 21.31  individual's taxable income, the excess may be carried forward 
 21.32  to taxable years beginning after December 31, 2000, and before 
 21.33  January 1, 2002; 
 21.34     (5) income as provided under section 290.0802; 
 21.35     (6) (5) to the extent included in federal adjusted gross 
 21.36  income, income realized on disposition of property exempt from 
 22.1   tax under section 290.491; 
 22.2      (7) (6) to the extent not deducted in determining federal 
 22.3   taxable income or used to claim the long-term care insurance 
 22.4   credit under section 290.0672, the amount paid for health 
 22.5   insurance of self-employed individuals as determined under 
 22.6   section 162(l) of the Internal Revenue Code, except that the 
 22.7   percent limit does not apply.  If the individual deducted 
 22.8   insurance payments under section 213 of the Internal Revenue 
 22.9   Code of 1986, the subtraction under this clause must be reduced 
 22.10  by the lesser of: 
 22.11     (i) the total itemized deductions allowed under section 
 22.12  63(d) of the Internal Revenue Code, less state, local, and 
 22.13  foreign income taxes deductible under section 164 of the 
 22.14  Internal Revenue Code and the standard deduction under section 
 22.15  63(c) of the Internal Revenue Code; or 
 22.16     (ii) the lesser of (A) the amount of insurance qualifying 
 22.17  as "medical care" under section 213(d) of the Internal Revenue 
 22.18  Code to the extent not deducted under section 162(1) of the 
 22.19  Internal Revenue Code or excluded from income or (B) the total 
 22.20  amount deductible for medical care under section 213(a); 
 22.21     (8) (7) the exemption amount allowed under Laws 1995, 
 22.22  chapter 255, article 3, section 2, subdivision 3; 
 22.23     (9) (8) to the extent included in federal taxable income, 
 22.24  postservice benefits for youth community service under section 
 22.25  124D.42 for volunteer service under United States Code, title 
 22.26  42, sections 12601 to 12604; 
 22.27     (10) (9) to the extent not deducted in determining federal 
 22.28  taxable income by an individual who does not itemize deductions 
 22.29  for federal income tax purposes for the taxable year, an amount 
 22.30  equal to 50 percent of the excess of charitable contributions 
 22.31  allowable as a deduction for the taxable year under section 
 22.32  170(a) of the Internal Revenue Code over $500; 
 22.33     (11) (10) for taxable years beginning before January 1, 
 22.34  2008, the amount of the federal small ethanol producer credit 
 22.35  allowed under section 40(a)(3) of the Internal Revenue Code 
 22.36  which is included in gross income under section 87 of the 
 23.1   Internal Revenue Code; and 
 23.2      (12) (11) for individuals who are allowed a federal foreign 
 23.3   tax credit for taxes that do not qualify for a credit under 
 23.4   section 290.06, subdivision 22, an amount equal to the carryover 
 23.5   of subnational foreign taxes for the taxable year, but not to 
 23.6   exceed the total subnational foreign taxes reported in claiming 
 23.7   the foreign tax credit.  For purposes of this clause, "federal 
 23.8   foreign tax credit" means the credit allowed under section 27 of 
 23.9   the Internal Revenue Code, and "carryover of subnational foreign 
 23.10  taxes" equals the carryover allowed under section 904(c) of the 
 23.11  Internal Revenue Code minus national level foreign taxes to the 
 23.12  extent they exceed the federal foreign tax credit; and 
 23.13     (12) in each of the five tax years immediately following 
 23.14  the tax year in which an addition is required under subdivision 
 23.15  19a, clause (7), an amount equal to one-fifth of the delayed 
 23.16  depreciation.  For purposes of this clause, "delayed 
 23.17  depreciation" means the amount of the addition made by the 
 23.18  taxpayer under subdivision 19a, clause (7), minus the positive 
 23.19  value of any net operating loss under section 172 of the 
 23.20  Internal Revenue Code generated for the tax year of the 
 23.21  addition.  The resulting delayed depreciation cannot be less 
 23.22  than zero. 
 23.23     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 23.24  following final enactment, except that clause (12) is effective 
 23.25  for tax years ending after September 10, 2001. 
 23.26     Sec. 6.  Minnesota Statutes 2001 Supplement, section 
 23.27  290.01, subdivision 19c, is amended to read: 
 23.28     Subd. 19c.  [CORPORATIONS; ADDITIONS TO FEDERAL TAXABLE 
 23.29  INCOME.] For corporations, there shall be added to federal 
 23.30  taxable income: 
 23.31     (1) the amount of any deduction taken for federal income 
 23.32  tax purposes for income, excise, or franchise taxes based on net 
 23.33  income or related minimum taxes, including but not limited to 
 23.34  the tax imposed under section 290.0922, paid by the corporation 
 23.35  to Minnesota, another state, a political subdivision of another 
 23.36  state, the District of Columbia, or any foreign country or 
 24.1   possession of the United States; 
 24.2      (2) interest not subject to federal tax upon obligations 
 24.3   of:  the United States, its possessions, its agencies, or its 
 24.4   instrumentalities; the state of Minnesota or any other state, 
 24.5   any of its political or governmental subdivisions, any of its 
 24.6   municipalities, or any of its governmental agencies or 
 24.7   instrumentalities; the District of Columbia; or Indian tribal 
 24.8   governments; 
 24.9      (3) exempt-interest dividends received as defined in 
 24.10  section 852(b)(5) of the Internal Revenue Code; 
 24.11     (4) the amount of any net operating loss deduction taken 
 24.12  for federal income tax purposes under section 172 or 832(c)(10) 
 24.13  of the Internal Revenue Code or operations loss deduction under 
 24.14  section 810 of the Internal Revenue Code; 
 24.15     (5) the amount of any special deductions taken for federal 
 24.16  income tax purposes under sections 241 to 247 of the Internal 
 24.17  Revenue Code; 
 24.18     (6) losses from the business of mining, as defined in 
 24.19  section 290.05, subdivision 1, clause (a), that are not subject 
 24.20  to Minnesota income tax; 
 24.21     (7) the amount of any capital losses deducted for federal 
 24.22  income tax purposes under sections 1211 and 1212 of the Internal 
 24.23  Revenue Code; 
 24.24     (8) the exempt foreign trade income of a foreign sales 
 24.25  corporation under sections 921(a) and 291 of the Internal 
 24.26  Revenue Code; 
 24.27     (9) the amount of percentage depletion deducted under 
 24.28  sections 611 through 614 and 291 of the Internal Revenue Code; 
 24.29     (10) for certified pollution control facilities placed in 
 24.30  service in a taxable year beginning before December 31, 1986, 
 24.31  and for which amortization deductions were elected under section 
 24.32  169 of the Internal Revenue Code of 1954, as amended through 
 24.33  December 31, 1985, the amount of the amortization deduction 
 24.34  allowed in computing federal taxable income for those 
 24.35  facilities; 
 24.36     (11) the amount of any deemed dividend from a foreign 
 25.1   operating corporation determined pursuant to section 290.17, 
 25.2   subdivision 4, paragraph (g); 
 25.3      (12) the amount of any environmental tax paid under section 
 25.4   59(a) of the Internal Revenue Code; 
 25.5      (13) the amount of a partner's pro rata share of net income 
 25.6   which does not flow through to the partner because the 
 25.7   partnership elected to pay the tax on the income under section 
 25.8   6242(a)(2) of the Internal Revenue Code; and 
 25.9      (14) the amount of net income excluded under section 114 of 
 25.10  the Internal Revenue Code; 
 25.11     (15) any increase in subpart F income, as defined in 
 25.12  section 952(a) of the Internal Revenue Code, for the taxable 
 25.13  year when subpart F income is calculated without regard to the 
 25.14  provisions of section 614 of Public Law Number 107-147; and 
 25.15     (16) 80 percent of the depreciation deduction allowed under 
 25.16  section 168(k) of the Internal Revenue Code. 
 25.17     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 25.18  ending after September 10, 2001. 
 25.19     Sec. 7.  Minnesota Statutes 2001 Supplement, section 
 25.20  290.01, subdivision 19d, is amended to read: 
 25.21     Subd. 19d.  [CORPORATIONS; MODIFICATIONS DECREASING FEDERAL 
 25.22  TAXABLE INCOME.] For corporations, there shall be subtracted 
 25.23  from federal taxable income after the increases provided in 
 25.24  subdivision 19c:  
 25.25     (1) the amount of foreign dividend gross-up added to gross 
 25.26  income for federal income tax purposes under section 78 of the 
 25.27  Internal Revenue Code; 
 25.28     (2) the amount of salary expense not allowed for federal 
 25.29  income tax purposes due to claiming the federal jobs credit 
 25.30  under section 51 of the Internal Revenue Code; 
 25.31     (3) any dividend (not including any distribution in 
 25.32  liquidation) paid within the taxable year by a national or state 
 25.33  bank to the United States, or to any instrumentality of the 
 25.34  United States exempt from federal income taxes, on the preferred 
 25.35  stock of the bank owned by the United States or the 
 25.36  instrumentality; 
 26.1      (4) amounts disallowed for intangible drilling costs due to 
 26.2   differences between this chapter and the Internal Revenue Code 
 26.3   in taxable years beginning before January 1, 1987, as follows: 
 26.4      (i) to the extent the disallowed costs are represented by 
 26.5   physical property, an amount equal to the allowance for 
 26.6   depreciation under Minnesota Statutes 1986, section 290.09, 
 26.7   subdivision 7, subject to the modifications contained in 
 26.8   subdivision 19e; and 
 26.9      (ii) to the extent the disallowed costs are not represented 
 26.10  by physical property, an amount equal to the allowance for cost 
 26.11  depletion under Minnesota Statutes 1986, section 290.09, 
 26.12  subdivision 8; 
 26.13     (5) the deduction for capital losses pursuant to sections 
 26.14  1211 and 1212 of the Internal Revenue Code, except that: 
 26.15     (i) for capital losses incurred in taxable years beginning 
 26.16  after December 31, 1986, capital loss carrybacks shall not be 
 26.17  allowed; 
 26.18     (ii) for capital losses incurred in taxable years beginning 
 26.19  after December 31, 1986, a capital loss carryover to each of the 
 26.20  15 taxable years succeeding the loss year shall be allowed; 
 26.21     (iii) for capital losses incurred in taxable years 
 26.22  beginning before January 1, 1987, a capital loss carryback to 
 26.23  each of the three taxable years preceding the loss year, subject 
 26.24  to the provisions of Minnesota Statutes 1986, section 290.16, 
 26.25  shall be allowed; and 
 26.26     (iv) for capital losses incurred in taxable years beginning 
 26.27  before January 1, 1987, a capital loss carryover to each of the 
 26.28  five taxable years succeeding the loss year to the extent such 
 26.29  loss was not used in a prior taxable year and subject to the 
 26.30  provisions of Minnesota Statutes 1986, section 290.16, shall be 
 26.31  allowed; 
 26.32     (6) an amount for interest and expenses relating to income 
 26.33  not taxable for federal income tax purposes, if (i) the income 
 26.34  is taxable under this chapter and (ii) the interest and expenses 
 26.35  were disallowed as deductions under the provisions of section 
 26.36  171(a)(2), 265 or 291 of the Internal Revenue Code in computing 
 27.1   federal taxable income; 
 27.2      (7) in the case of mines, oil and gas wells, other natural 
 27.3   deposits, and timber for which percentage depletion was 
 27.4   disallowed pursuant to subdivision 19c, clause (11), a 
 27.5   reasonable allowance for depletion based on actual cost.  In the 
 27.6   case of leases the deduction must be apportioned between the 
 27.7   lessor and lessee in accordance with rules prescribed by the 
 27.8   commissioner.  In the case of property held in trust, the 
 27.9   allowable deduction must be apportioned between the income 
 27.10  beneficiaries and the trustee in accordance with the pertinent 
 27.11  provisions of the trust, or if there is no provision in the 
 27.12  instrument, on the basis of the trust's income allocable to 
 27.13  each; 
 27.14     (8) for certified pollution control facilities placed in 
 27.15  service in a taxable year beginning before December 31, 1986, 
 27.16  and for which amortization deductions were elected under section 
 27.17  169 of the Internal Revenue Code of 1954, as amended through 
 27.18  December 31, 1985, an amount equal to the allowance for 
 27.19  depreciation under Minnesota Statutes 1986, section 290.09, 
 27.20  subdivision 7; 
 27.21     (9) amounts included in federal taxable income that are due 
 27.22  to refunds of income, excise, or franchise taxes based on net 
 27.23  income or related minimum taxes paid by the corporation to 
 27.24  Minnesota, another state, a political subdivision of another 
 27.25  state, the District of Columbia, or a foreign country or 
 27.26  possession of the United States to the extent that the taxes 
 27.27  were added to federal taxable income under section 290.01, 
 27.28  subdivision 19c, clause (1), in a prior taxable year; 
 27.29     (10) 80 percent of royalties, fees, or other like income 
 27.30  accrued or received from a foreign operating corporation or a 
 27.31  foreign corporation which is part of the same unitary business 
 27.32  as the receiving corporation; 
 27.33     (11) income or gains from the business of mining as defined 
 27.34  in section 290.05, subdivision 1, clause (a), that are not 
 27.35  subject to Minnesota franchise tax; 
 27.36     (12) the amount of handicap access expenditures in the 
 28.1   taxable year which are not allowed to be deducted or capitalized 
 28.2   under section 44(d)(7) of the Internal Revenue Code; 
 28.3      (13) the amount of qualified research expenses not allowed 
 28.4   for federal income tax purposes under section 280C(c) of the 
 28.5   Internal Revenue Code, but only to the extent that the amount 
 28.6   exceeds the amount of the credit allowed under section 290.068; 
 28.7      (14) the amount of salary expenses not allowed for federal 
 28.8   income tax purposes due to claiming the Indian employment credit 
 28.9   under section 45A(a) of the Internal Revenue Code; 
 28.10     (15) the amount of any refund of environmental taxes paid 
 28.11  under section 59A of the Internal Revenue Code; 
 28.12     (16) for taxable years beginning before January 1, 2008, 
 28.13  the amount of the federal small ethanol producer credit allowed 
 28.14  under section 40(a)(3) of the Internal Revenue Code which is 
 28.15  included in gross income under section 87 of the Internal 
 28.16  Revenue Code; and 
 28.17     (17) for a corporation whose foreign sales corporation, as 
 28.18  defined in section 922 of the Internal Revenue Code, constituted 
 28.19  a foreign operating corporation during the taxable years ending 
 28.20  during calendar year 1992 and a return was filed by August 15, 
 28.21  1996, claiming the deduction under this subdivision for income 
 28.22  received from the foreign operating corporation, an amount equal 
 28.23  to 1.23 multiplied by the amount of income excluded under 
 28.24  section 114 of the Internal Revenue Code, provided the income is 
 28.25  not income of a foreign operating company; 
 28.26     (18) any decrease in subpart F income, as defined in 
 28.27  section 952(a) of the Internal Revenue Code, for the taxable 
 28.28  year when subpart F income is calculated without regard to the 
 28.29  provisions of section 614 of Public Law Number 107-147; and 
 28.30     (19) in each of the five tax years immediately following 
 28.31  the tax year in which an addition is required under subdivision 
 28.32  19c, clause (16), an amount equal to one-fifth of the delayed 
 28.33  depreciation.  For purposes of this clause, "delayed 
 28.34  depreciation" means the amount of the addition made by the 
 28.35  taxpayer under subdivision 19c, clause (16).  The resulting 
 28.36  delayed depreciation cannot be less than zero. 
 29.1      <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 29.2   ending after September 10, 2001. 
 29.3      Sec. 8.  Minnesota Statutes 2001 Supplement, section 
 29.4   290.01, subdivision 31, is amended to read: 
 29.5      Subd. 31.  [INTERNAL REVENUE CODE.] Unless specifically 
 29.6   defined otherwise, "Internal Revenue Code" means the Internal 
 29.7   Revenue Code of 1986, as amended through June 15, 2001 March 15, 
 29.8   2002. 
 29.9      <b>[EFFECTIVE DATE.]</b> This section is effective at the same 
 29.10  time and in the same manner as the federal changes made by the 
 29.11  Victims of Terrorism Tax Relief Act of 2001, Public Law Number 
 29.12  107-134, and by the Job Creation and Worker Assistance Act of 
 29.13  2002, Public Law Number 107-147, become effective. 
 29.14     Sec. 9.  Minnesota Statutes 2000, section 290.067, 
 29.15  subdivision 1, is amended to read: 
 29.16     Subdivision 1.  [AMOUNT OF CREDIT.] (a) A taxpayer may take 
 29.17  as a credit against the tax due from the taxpayer and a spouse, 
 29.18  if any, under this chapter an amount equal to the dependent care 
 29.19  credit for which the taxpayer is eligible pursuant to the 
 29.20  provisions of section 21 of the Internal Revenue Code subject to 
 29.21  the limitations provided in subdivision 2 except that in 
 29.22  determining whether the child qualified as a dependent, income 
 29.23  received as a Minnesota family investment program grant or 
 29.24  allowance to or on behalf of the child must not be taken into 
 29.25  account in determining whether the child received more than half 
 29.26  of the child's support from the taxpayer, and the provisions of 
 29.27  section 32(b)(1)(D) of the Internal Revenue Code do not apply. 
 29.28     (b) If a child who has not attained the age of six years at 
 29.29  the close of the taxable year is cared for at a licensed family 
 29.30  day care home operated by the child's parent, the taxpayer is 
 29.31  deemed to have paid employment-related expenses.  If the child 
 29.32  is 16 months old or younger at the close of the taxable year, 
 29.33  the amount of expenses deemed to have been paid equals the 
 29.34  maximum limit for one qualified individual under section 21(c) 
 29.35  and (d) of the Internal Revenue Code.  If the child is older 
 29.36  than 16 months of age but has not attained the age of six years 
 30.1   at the close of the taxable year, the amount of expenses deemed 
 30.2   to have been paid equals the amount the licensee would charge 
 30.3   for the care of a child of the same age for the same number of 
 30.4   hours of care.  
 30.5      (c) If a married couple: 
 30.6      (1) has a child who has not attained the age of one year at 
 30.7   the close of the taxable year; 
 30.8      (2) files a joint tax return for the taxable year; and 
 30.9      (3) does not participate in a dependent care assistance 
 30.10  program as defined in section 129 of the Internal Revenue Code, 
 30.11  in lieu of the actual employment related expenses paid for that 
 30.12  child under paragraph (a) or the deemed amount under paragraph 
 30.13  (b), the lesser of (i) the combined earned income of the couple 
 30.14  or (ii) $2,400 the amount of the maximum limit for one qualified 
 30.15  individual under section 21(c) and (d) of the Internal Revenue 
 30.16  Code will be deemed to be the employment related expense paid 
 30.17  for that child.  The earned income limitation of section 21(d) 
 30.18  of the Internal Revenue Code shall not apply to this deemed 
 30.19  amount.  These deemed amounts apply regardless of whether any 
 30.20  employment-related expenses have been paid.  
 30.21     (d) If the taxpayer is not required and does not file a 
 30.22  federal individual income tax return for the tax year, no credit 
 30.23  is allowed for any amount paid to any person unless: 
 30.24     (1) the name, address, and taxpayer identification number 
 30.25  of the person are included on the return claiming the credit; or 
 30.26     (2) if the person is an organization described in section 
 30.27  501(c)(3) of the Internal Revenue Code and exempt from tax under 
 30.28  section 501(a) of the Internal Revenue Code, the name and 
 30.29  address of the person are included on the return claiming the 
 30.30  credit.  
 30.31  In the case of a failure to provide the information required 
 30.32  under the preceding sentence, the preceding sentence does not 
 30.33  apply if it is shown that the taxpayer exercised due diligence 
 30.34  in attempting to provide the information required. 
 30.35     In the case of a nonresident, part-year resident, or a 
 30.36  person who has earned income not subject to tax under this 
 31.1   chapter, the credit determined under section 21 of the Internal 
 31.2   Revenue Code must be allocated based on the ratio by which the 
 31.3   earned income of the claimant and the claimant's spouse from 
 31.4   Minnesota sources bears to the total earned income of the 
 31.5   claimant and the claimant's spouse. 
 31.6      <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 31.7   beginning after December 31, 2002. 
 31.8      Sec. 10.  Minnesota Statutes 2001 Supplement, section 
 31.9   290.091, subdivision 2, is amended to read: 
 31.10     Subd. 2.  [DEFINITIONS.] For purposes of the tax imposed by 
 31.11  this section, the following terms have the meanings given: 
 31.12     (a) "Alternative minimum taxable income" means the sum of 
 31.13  the following for the taxable year: 
 31.14     (1) the taxpayer's federal alternative minimum taxable 
 31.15  income as defined in section 55(b)(2) of the Internal Revenue 
 31.16  Code; 
 31.17     (2) the taxpayer's itemized deductions allowed in computing 
 31.18  federal alternative minimum taxable income, but excluding: 
 31.19     (i) the Minnesota charitable contribution deduction; 
 31.20     (ii) the medical expense deduction; 
 31.21     (iii) the casualty, theft, and disaster loss deduction; and 
 31.22     (iv) the impairment-related work expenses of a disabled 
 31.23  person; and 
 31.24     (v) holocaust victims' settlement payments to the extent 
 31.25  allowed under section 290.01, subdivision 19b; 
 31.26     (3) for depletion allowances computed under section 613A(c) 
 31.27  of the Internal Revenue Code, with respect to each property (as 
 31.28  defined in section 614 of the Internal Revenue Code), to the 
 31.29  extent not included in federal alternative minimum taxable 
 31.30  income, the excess of the deduction for depletion allowable 
 31.31  under section 611 of the Internal Revenue Code for the taxable 
 31.32  year over the adjusted basis of the property at the end of the 
 31.33  taxable year (determined without regard to the depletion 
 31.34  deduction for the taxable year); 
 31.35     (4) to the extent not included in federal alternative 
 31.36  minimum taxable income, the amount of the tax preference for 
 32.1   intangible drilling cost under section 57(a)(2) of the Internal 
 32.2   Revenue Code determined without regard to subparagraph (E); and 
 32.3      (5) to the extent not included in federal alternative 
 32.4   minimum taxable income, the amount of interest income as 
 32.5   provided by section 290.01, subdivision 19a, clause (1); and 
 32.6      (6) the amount of addition required by section 290.01, 
 32.7   subdivision 19a, clause (7); 
 32.8      less the sum of the amounts determined under the following: 
 32.9      (1) interest income as defined in section 290.01, 
 32.10  subdivision 19b, clause (1); 
 32.11     (2) an overpayment of state income tax as provided by 
 32.12  section 290.01, subdivision 19b, clause (2), to the extent 
 32.13  included in federal alternative minimum taxable income; 
 32.14     (3) the amount of investment interest paid or accrued 
 32.15  within the taxable year on indebtedness to the extent that the 
 32.16  amount does not exceed net investment income, as defined in 
 32.17  section 163(d)(4) of the Internal Revenue Code.  Interest does 
 32.18  not include amounts deducted in computing federal adjusted gross 
 32.19  income; and 
 32.20     (4) amounts subtracted from federal taxable income as 
 32.21  provided by section 290.01, subdivision 19b, clause (4) (12). 
 32.22     In the case of an estate or trust, alternative minimum 
 32.23  taxable income must be computed as provided in section 59(c) of 
 32.24  the Internal Revenue Code. 
 32.25     (b) "Investment interest" means investment interest as 
 32.26  defined in section 163(d)(3) of the Internal Revenue Code. 
 32.27     (c) "Tentative minimum tax" equals 6.4 percent of 
 32.28  alternative minimum taxable income after subtracting the 
 32.29  exemption amount determined under subdivision 3. 
 32.30     (d) "Regular tax" means the tax that would be imposed under 
 32.31  this chapter (without regard to this section and section 
 32.32  290.032), reduced by the sum of the nonrefundable credits 
 32.33  allowed under this chapter.  
 32.34     (e) "Net minimum tax" means the minimum tax imposed by this 
 32.35  section. 
 32.36     (f) "Minnesota charitable contribution deduction" means a 
 33.1   charitable contribution deduction under section 170 of the 
 33.2   Internal Revenue Code to or for the use of an entity described 
 33.3   in Minnesota Statutes 2000, section 290.21, subdivision 3, 
 33.4   clauses (a) to (e).  When the federal deduction for charitable 
 33.5   contributions is limited under section 170(b) of the Internal 
 33.6   Revenue Code, the allowable contributions in the year of 
 33.7   contribution are deemed to be first contributions to entities 
 33.8   described in Minnesota Statutes 2000, section 290.21, 
 33.9   subdivision 3, clauses (a) to (e). 
 33.10     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 33.11  following final enactment, except that clause (6) is effective 
 33.12  for tax years ending after September 10, 2001. 
 33.13     Sec. 11.  Minnesota Statutes 2001 Supplement, section 
 33.14  290.0921, subdivision 3, is amended to read: 
 33.15     Subd. 3.  [ALTERNATIVE MINIMUM TAXABLE INCOME.] 
 33.16  "Alternative minimum taxable income" is Minnesota net income as 
 33.17  defined in section 290.01, subdivision 19, and includes the 
 33.18  adjustments and tax preference items in sections 56, 57, 58, and 
 33.19  59(d), (e), (f), and (h) of the Internal Revenue Code.  If a 
 33.20  corporation files a separate company Minnesota tax return, the 
 33.21  minimum tax must be computed on a separate company basis.  If a 
 33.22  corporation is part of a tax group filing a unitary return, the 
 33.23  minimum tax must be computed on a unitary basis.  The following 
 33.24  adjustments must be made. 
 33.25     (1) For purposes of the depreciation adjustments under 
 33.26  section 56(a)(1) and 56(g)(4)(A) of the Internal Revenue Code, 
 33.27  the basis for depreciable property placed in service in a 
 33.28  taxable year beginning before January 1, 1990, is the adjusted 
 33.29  basis for federal income tax purposes, including any 
 33.30  modification made in a taxable year under section 290.01, 
 33.31  subdivision 19e, or Minnesota Statutes 1986, section 290.09, 
 33.32  subdivision 7, paragraph (c). 
 33.33     For taxable years beginning after December 31, 2000, the 
 33.34  amount of any remaining modification made under section 290.01, 
 33.35  subdivision 19e, or Minnesota Statutes 1986, section 290.09, 
 33.36  subdivision 7, paragraph (c), not previously deducted is a 
 34.1   depreciation allowance in the first taxable year after December 
 34.2   31, 2000. 
 34.3      (2) The portion of the depreciation deduction allowed for 
 34.4   federal income tax purposes under section 168(k) of the Internal 
 34.5   Revenue Code that is required as an addition under section 
 34.6   290.01, subdivision 19c, clause (16), is disallowed in 
 34.7   determining alternative minimum taxable income. 
 34.8      (3) The subtraction for depreciation allowed under section 
 34.9   290.01, subdivision 19d, clause (19), is allowed as a 
 34.10  depreciation deduction in determining alternative minimum 
 34.11  taxable income. 
 34.12     (4) The alternative tax net operating loss deduction under 
 34.13  sections 56(a)(4) and 56(d) of the Internal Revenue Code does 
 34.14  not apply. 
 34.15     (3) (5) The special rule for certain dividends under 
 34.16  section 56(g)(4)(C)(ii) of the Internal Revenue Code does not 
 34.17  apply. 
 34.18     (4) (6) The special rule for dividends from section 936 
 34.19  companies under section 56(g)(4)(C)(iii) does not apply. 
 34.20     (5) (7) The tax preference for depletion under section 
 34.21  57(a)(1) of the Internal Revenue Code does not apply. 
 34.22     (6) (8) The tax preference for intangible drilling costs 
 34.23  under section 57(a)(2) of the Internal Revenue Code must be 
 34.24  calculated without regard to subparagraph (E) and the 
 34.25  subtraction under section 290.01, subdivision 19d, clause (4). 
 34.26     (7) (9) The tax preference for tax exempt interest under 
 34.27  section 57(a)(5) of the Internal Revenue Code does not apply.  
 34.28     (8) (10) The tax preference for charitable contributions of 
 34.29  appreciated property under section 57(a)(6) of the Internal 
 34.30  Revenue Code does not apply. 
 34.31     (9) (11) For purposes of calculating the tax preference for 
 34.32  accelerated depreciation or amortization on certain property 
 34.33  placed in service before January 1, 1987, under section 57(a)(7) 
 34.34  of the Internal Revenue Code, the deduction allowable for the 
 34.35  taxable year is the deduction allowed under section 290.01, 
 34.36  subdivision 19e. 
 35.1      For taxable years beginning after December 31, 2000, the 
 35.2   amount of any remaining modification made under section 290.01, 
 35.3   subdivision 19e, not previously deducted is a depreciation or 
 35.4   amortization allowance in the first taxable year after December 
 35.5   31, 2000 2004. 
 35.6      (10) (12) For purposes of calculating the adjustment for 
 35.7   adjusted current earnings in section 56(g) of the Internal 
 35.8   Revenue Code, the term "alternative minimum taxable income" as 
 35.9   it is used in section 56(g) of the Internal Revenue Code, means 
 35.10  alternative minimum taxable income as defined in this 
 35.11  subdivision, determined without regard to the adjustment for 
 35.12  adjusted current earnings in section 56(g) of the Internal 
 35.13  Revenue Code. 
 35.14     (11) (13) For purposes of determining the amount of 
 35.15  adjusted current earnings under section 56(g)(3) of the Internal 
 35.16  Revenue Code, no adjustment shall be made under section 56(g)(4) 
 35.17  of the Internal Revenue Code with respect to (i) the amount of 
 35.18  foreign dividend gross-up subtracted as provided in section 
 35.19  290.01, subdivision 19d, clause (1), (ii) the amount of refunds 
 35.20  of income, excise, or franchise taxes subtracted as provided in 
 35.21  section 290.01, subdivision 19d, clause (10), or (iii) the 
 35.22  amount of royalties, fees or other like income subtracted as 
 35.23  provided in section 290.01, subdivision 19d, clause (11). 
 35.24     Items of tax preference must not be reduced below zero as a 
 35.25  result of the modifications in this subdivision. 
 35.26     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
 35.27  ending after September 10, 2001. 
 35.28     Sec. 12.  Minnesota Statutes 2001 Supplement, section 
 35.29  290A.03, subdivision 15, is amended to read: 
 35.30     Subd. 15.  [INTERNAL REVENUE CODE.] "Internal Revenue Code" 
 35.31  means the Internal Revenue Code of 1986, as amended through June 
 35.32  15, 2001 March 15, 2002. 
 35.33     <b>[EFFECTIVE DATE.]</b> This section is effective at the same 
 35.34  time and manner as the changes to federal adjusted gross income 
 35.35  made by the Victims of Terrorism Tax Relief Act of 2001, Public 
 35.36  Law Number 107-134, and by the Job Creation and Worker 
 36.1   Assistance Act of 2002, Public Law Number 107-147, become 
 36.2   effective. 
 36.3                              ARTICLE 3
 36.4                         SALES AND USE TAXES
 36.5      Section 1.  Minnesota Statutes 2000, section 270.60, 
 36.6   subdivision 4, is amended to read: 
 36.7      Subd. 4.  [PAYMENTS TO COUNTIES.] (a) The commissioner 
 36.8   shall pay to a county in which an Indian gaming casino is 
 36.9   located ten percent of the state share of all taxes generated 
 36.10  from activities on reservations and collected under a tax 
 36.11  agreement under this section with the tribal government for the 
 36.12  reservation located in the county.  If the tribe has casinos 
 36.13  located in more than one county, the payment must be divided 
 36.14  equally among the counties in which the casinos are located. 
 36.15     (b) A county is a qualified county under this subdivision 
 36.16  if one of the following conditions is met: 
 36.17     (1) the county's per capita income is less than 80 percent 
 36.18  of the state per capita personal income, based on the most 
 36.19  recent estimates made by the United States Bureau of Economic 
 36.20  Analysis; or 
 36.21     (2) 30 percent or more of the total market value of real 
 36.22  property in the county is exempt from ad valorem taxation. 
 36.23     (c) The commissioner shall make the payments required under 
 36.24  this subdivision by February 28 of the year following the year 
 36.25  the taxes are collected. 
 36.26     (d) (c) An amount sufficient to make the payments 
 36.27  authorized by this subdivision, not to exceed $1,100,000 in any 
 36.28  fiscal year, is annually appropriated from the general fund to 
 36.29  the commissioner.  If the authorized payments exceed the amount 
 36.30  of the appropriation, the commissioner shall first 
 36.31  proportionately reduce the payments to counties other than 
 36.32  qualified counties so that the total amount equals the 
 36.33  appropriation.  If the authorized payments to qualified counties 
 36.34  also exceed the amount of the appropriation, the commissioner 
 36.35  shall then proportionately reduce the rate so that the total 
 36.36  amount to be paid to qualified counties equals the appropriation.
 37.1      <b>[EFFECTIVE DATE.]</b> This section is effective for payments 
 37.2   made after December 31, 2002. 
 37.3      Sec. 2.  Minnesota Statutes 2001 Supplement, section 
 37.4   289A.20, subdivision 4, is amended to read: 
 37.5      Subd. 4.  [SALES AND USE TAX.] (a) The taxes imposed by 
 37.6   chapter 297A are due and payable to the commissioner monthly on 
 37.7   or before the 20th day of the month following the month in which 
 37.8   the taxable event occurred, or following another reporting 
 37.9   period as the commissioner prescribes or as allowed under 
 37.10  section 289A.18, subdivision 4, paragraph (f), except that use 
 37.11  taxes due on an annual use tax return as provided under section 
 37.12  289A.11, subdivision 1, are payable by April 15 following the 
 37.13  close of the calendar year. 
 37.14     (b) For a fiscal year ending before July 1, 2002, a vendor 
 37.15  having a liability of $120,000 or more during a fiscal year 
 37.16  ending June 30 must remit the June liability for the next year 
 37.17  in the following manner: 
 37.18     (1) Two business days before June 30 of the year, the 
 37.19  vendor must remit 62 75 percent of the estimated June liability 
 37.20  to the commissioner.  
 37.21     (2) On or before August 20 of the year, the vendor must pay 
 37.22  any additional amount of tax not remitted in June. 
 37.23     (c) A vendor having a liability of $120,000 or more during 
 37.24  a fiscal year ending June 30 must remit all liabilities on 
 37.25  returns due for periods beginning in the subsequent calendar 
 37.26  year by electronic means on or before the 20th day of the month 
 37.27  following the month in which the taxable event occurred, or on 
 37.28  or before the 20th day of the month following the month in which 
 37.29  the sale is reported under section 289A.18, subdivision 4, 
 37.30  except for 62 75 percent of the estimated June liability, which 
 37.31  is due two business days before June 30.  The remaining amount 
 37.32  of the June liability is due on August 20.  
 37.33     <b>[EFFECTIVE DATE.]</b> This section is effective for June 2002 
 37.34  and June 2003 tax liabilities. 
 37.35     Sec. 3.  Minnesota Statutes 2001 Supplement, section 
 37.36  297A.61, subdivision 3, is amended to read: 
 38.1      Subd. 3.  [SALE AND PURCHASE.] (a) "Sale" and "purchase" 
 38.2   include, but are not limited to, each of the transactions listed 
 38.3   in this subdivision. 
 38.4      (b) Sale and purchase include: 
 38.5      (1) any transfer of title or possession, or both, of 
 38.6   tangible personal property, whether absolutely or conditionally, 
 38.7   for a consideration in money or by exchange or barter; and 
 38.8      (2) the leasing of or the granting of a license to use or 
 38.9   consume, for a consideration in money or by exchange or barter, 
 38.10  tangible personal property, other than a manufactured home used 
 38.11  for residential purposes for a continuous period of 30 days or 
 38.12  more. 
 38.13     (c) Sale and purchase include the production, fabrication, 
 38.14  printing, or processing of tangible personal property for a 
 38.15  consideration for consumers who furnish either directly or 
 38.16  indirectly the materials used in the production, fabrication, 
 38.17  printing, or processing. 
 38.18     (d) Sale and purchase include the preparing for a 
 38.19  consideration of food.  Notwithstanding section 297A.67, 
 38.20  subdivision 2, taxable food includes, but is not limited to, the 
 38.21  following: 
 38.22     (1) prepared food sold by the retailer; 
 38.23     (2) soft drinks; 
 38.24     (3) candy; and 
 38.25     (4) all food sold through vending machines. 
 38.26     (e) A sale and a purchase includes the furnishing for a 
 38.27  consideration of electricity, gas, water, or steam for use or 
 38.28  consumption within this state. 
 38.29     (f) A sale and a purchase includes the transfer for a 
 38.30  consideration of computer software.  
 38.31     (g) A sale and a purchase includes the furnishing for a 
 38.32  consideration of the following services: 
 38.33     (1) the privilege of admission to places of amusement, 
 38.34  recreational areas, or athletic events, and the making available 
 38.35  of amusement devices, tanning facilities, reducing salons, steam 
 38.36  baths, turkish baths, health clubs, and spas or athletic 
 39.1   facilities; 
 39.2      (2) lodging and related services by a hotel, rooming house, 
 39.3   resort, campground, motel, or trailer camp and the granting of 
 39.4   any similar license to use real property other than the renting 
 39.5   or leasing of it for a continuous period of 30 days or more; 
 39.6      (3) parking services, whether on a contractual, hourly, or 
 39.7   other periodic basis, except for parking at a meter; 
 39.8      (4) the granting of membership in a club, association, or 
 39.9   other organization if: 
 39.10     (i) the club, association, or other organization makes 
 39.11  available for the use of its members sports and athletic 
 39.12  facilities, without regard to whether a separate charge is 
 39.13  assessed for use of the facilities; and 
 39.14     (ii) use of the sports and athletic facility is not made 
 39.15  available to the general public on the same basis as it is made 
 39.16  available to members.  
 39.17  Granting of membership means both one-time initiation fees and 
 39.18  periodic membership dues.  Sports and athletic facilities 
 39.19  include golf courses; tennis, racquetball, handball, and squash 
 39.20  courts; basketball and volleyball facilities; running tracks; 
 39.21  exercise equipment; swimming pools; and other similar athletic 
 39.22  or sports facilities; and 
 39.23     (5) delivery of aggregate materials and concrete block; and 
 39.24     (6) services as provided in this clause: 
 39.25     (i) laundry and dry cleaning services including cleaning, 
 39.26  pressing, repairing, altering, and storing clothes, linen 
 39.27  services and supply, cleaning and blocking hats, and carpet, 
 39.28  drapery, upholstery, and industrial cleaning.  Laundry and dry 
 39.29  cleaning services do not include services provided by coin 
 39.30  operated facilities operated by the customer; 
 39.31     (ii) motor vehicle washing, waxing, and cleaning services, 
 39.32  including services provided by coin operated facilities operated 
 39.33  by the customer, and rustproofing, undercoating, and towing of 
 39.34  motor vehicles; 
 39.35     (iii) building and residential cleaning, maintenance, and 
 39.36  disinfecting and exterminating services; 
 40.1      (iv) detective, security, burglar, fire alarm, and armored 
 40.2   car services; but not including services performed within the 
 40.3   jurisdiction they serve by off-duty licensed peace officers as 
 40.4   defined in section 626.84, subdivision 1, or services provided 
 40.5   by a nonprofit organization for monitoring and electronic 
 40.6   surveillance of persons placed on in-home detention pursuant to 
 40.7   court order or under the direction of the Minnesota department 
 40.8   of corrections; 
 40.9      (v) pet grooming services; 
 40.10     (vi) lawn care, fertilizing, mowing, spraying and sprigging 
 40.11  services; garden planting and maintenance; tree, bush, and shrub 
 40.12  pruning, bracing, spraying, and surgery; indoor plant care; 
 40.13  tree, bush, shrub, and stump removal; and tree trimming for 
 40.14  public utility lines.  Services performed under a construction 
 40.15  contract for the installation of shrubbery, plants, sod, trees, 
 40.16  bushes, and similar items are not taxable; 
 40.17     (vii) massages, except when provided by a licensed health 
 40.18  care facility or professional or upon written referral from a 
 40.19  licensed health care facility or professional for treatment of 
 40.20  illness, injury, or disease; and 
 40.21     (viii) the furnishing of lodging, board, and care services 
 40.22  for animals in kennels and other similar arrangements, but 
 40.23  excluding veterinary and horse boarding services. 
 40.24     In applying the provisions of this chapter, the terms 
 40.25  "tangible personal property" and "sales at retail" include 
 40.26  taxable services and the provision of taxable services, unless 
 40.27  specifically provided otherwise.  Services performed by an 
 40.28  employee for an employer are not taxable.  Services performed by 
 40.29  a partnership or association for another partnership or 
 40.30  association are not taxable if one of the entities owns or 
 40.31  controls more than 80 percent of the voting power of the equity 
 40.32  interest in the other entity.  Services performed between 
 40.33  members of an affiliated group of corporations are not taxable.  
 40.34  For purposes of this section, "affiliated group of corporations" 
 40.35  includes those entities that would be classified as members of 
 40.36  an affiliated group under United States Code, title 26, section 
 41.1   1504, and that are eligible to file a consolidated tax return 
 41.2   for federal income tax purposes. 
 41.3      (h) A sale and a purchase includes the furnishing for a 
 41.4   consideration of tangible personal property or taxable services 
 41.5   by the United States or any of its agencies or 
 41.6   instrumentalities, or the state of Minnesota, its agencies, 
 41.7   instrumentalities, or political subdivisions. 
 41.8      (i) A sale and a purchase includes the furnishing for a 
 41.9   consideration of telecommunications services, including cable 
 41.10  television services and direct satellite services.  
 41.11  Telecommunications services are taxed to the extent allowed 
 41.12  under federal law if those services: 
 41.13     (1) either (i) originate and terminate in this state; or 
 41.14  (ii) originate in this state and terminate outside the state and 
 41.15  the service is charged to a telephone number customer located in 
 41.16  this state or to the account of any transmission instrument in 
 41.17  this state; or (iii) originate outside this state and terminate 
 41.18  in this state and the service is charged to a telephone number 
 41.19  customer located in this state or to the account of any 
 41.20  transmission instrument in this state; or 
 41.21     (2) are rendered by providing a private communications 
 41.22  service for which the customer has one or more locations within 
 41.23  Minnesota connected to the service and the service is charged to 
 41.24  a telephone number customer located in this state or to the 
 41.25  account of any transmission instrument in this state. 
 41.26     All charges for mobile telecommunications services, as 
 41.27  defined in United States Code, title 4, section 124, are deemed 
 41.28  to be provided by the customer's home service provider and 
 41.29  sourced to the customer's place of primary use and are subject 
 41.30  to tax based upon the customer's place of primary use in 
 41.31  accordance with the Mobile Telecommunications Sourcing Act, 
 41.32  United States Code, title 4, sections 116 to 126.  All other 
 41.33  definitions and provisions of the Mobile Telecommunications 
 41.34  Sourcing Act as provided in United States Code, title 4, are 
 41.35  hereby adopted. 
 41.36     (j) A sale and a purchase includes the furnishing for a 
 42.1   consideration of installation if the installation charges would 
 42.2   be subject to the sales tax if the installation were provided by 
 42.3   the seller of the item being installed. 
 42.4      <b>[EFFECTIVE DATE.]</b> This section is effective for sales made 
 42.5   after June 30, 2002. 
 42.6      Sec. 4.  Minnesota Statutes 2001 Supplement, section 
 42.7   297A.61, subdivision 31, is amended to read: 
 42.8      Subd. 31.  [PREPARED FOOD.] "Prepared food" means (i) food 
 42.9   that meets either of the following conditions: 
 42.10     (1) the food is sold with eating utensils provided by the 
 42.11  seller, including plates, knives, forks, spoons, glasses, cups, 
 42.12  napkins, or straws; or 
 42.13     (2) the food is sold in a heated state or heated by the 
 42.14  seller; (ii) or two or more food ingredients are mixed or 
 42.15  combined by the seller for sale as a single item; or (iii) food 
 42.16  sold with eating utensils provided by the seller, including 
 42.17  plates, knives, forks, spoons, glasses, cups, napkins, or 
 42.18  straws.  Prepared food does not include, except for: 
 42.19     (i) bakery items, including, but not limited to, bread, 
 42.20  rolls, buns, biscuits, bagels, croissants, pastries, donuts, 
 42.21  danish, cakes, tortes, pies, tarts, muffins, bars, cookies, 
 42.22  tortillas; 
 42.23     (ii) ready-to-eat meat and seafood in an unheated state 
 42.24  sold by weight; 
 42.25     (iii) eggs, fish, meat, poultry, and foods containing these 
 42.26  raw animal foods requiring cooking by the consumer as 
 42.27  recommended by the Food and Drug Administration in chapter 3, 
 42.28  part 401.11 of its food code so as to prevent food borne 
 42.29  illnesses; or 
 42.30     (iv) food that is only sliced, repackaged, or pasteurized 
 42.31  by the seller. 
 42.32     <b>[EFFECTIVE DATE.]</b> With the exception of clause (2), item 
 42.33  (ii), this section is effective for sales and purchases made 
 42.34  after June 30, 2002.  Clause (2), item (ii), is effective for 
 42.35  sales and purchases made after June 30, 2002, and before January 
 42.36  1, 2006. 
 43.1      Sec. 5.  Minnesota Statutes 2001 Supplement, section 
 43.2   297A.66, subdivision 1, is amended to read: 
 43.3      Subdivision 1.  [DEFINITIONS.] (a) To the extent allowed by 
 43.4   the United States Constitution and the laws of the United 
 43.5   States, "retailer maintaining a place of business in this 
 43.6   state," or a similar term, means a retailer: 
 43.7      (1) having or maintaining within this state, directly or by 
 43.8   a subsidiary or an affiliate, an office, place of distribution, 
 43.9   sales or sample room or place, warehouse, or other place of 
 43.10  business; or 
 43.11     (2) having a representative, including, but not limited to, 
 43.12  an affiliate agent, salesperson, canvasser, or solicitor 
 43.13  operating in this state under the authority of the retailer or 
 43.14  its subsidiary, for any purpose, including the repairing, 
 43.15  selling, delivering, installing, or soliciting of orders for the 
 43.16  retailer's goods or services, or the leasing of tangible 
 43.17  personal property located in this state, whether the place of 
 43.18  business or agent, representative, affiliate, salesperson, 
 43.19  canvasser, or solicitor is located in the state permanently or 
 43.20  temporarily, or whether or not the retailer or, subsidiary, or 
 43.21  affiliate is authorized to do business in this state. 
 43.22     (b) "Destination of a sale" means the location to which the 
 43.23  retailer makes delivery of the property sold, or causes the 
 43.24  property to be delivered, to the purchaser of the property, or 
 43.25  to the agent or designee of the purchaser.  The delivery may be 
 43.26  made by any means, including the United States Postal Service or 
 43.27  a for-hire carrier. 
 43.28     <b>[EFFECTIVE DATE.]</b> (a) This section is effective the day 
 43.29  following final enactment and is intended to confirm the 
 43.30  original intent of the legislature in enacting Minnesota 
 43.31  Statutes, section 297A.66, and its predecessor provisions. 
 43.32     (b) A retailer may elect that the provisions of this 
 43.33  section apply only to sales it made after August 31, 2002, by 
 43.34  notifying the commissioner and by applying for a permit under 
 43.35  Minnesota Statutes, section 297A.84, by August 15, 2002, to 
 43.36  collect the tax imposed under Minnesota Statutes, chapter 297A.  
 44.1   A retailer qualifies under this paragraph only if it: 
 44.2      (1) did not maintain an office, place of distribution, 
 44.3   sales or sample room or place, warehouse, or other place of 
 44.4   business in Minnesota except through an affiliate or did not 
 44.5   have a representative, agent, salesperson, canvasser, or 
 44.6   solicitor in Minnesota except through an affiliate; and 
 44.7      (2) has not registered to collect tax under Minnesota 
 44.8   Statutes, chapter 297A, as of the date of enactment of this 
 44.9   section. 
 44.10     Sec. 6.  Minnesota Statutes 2000, section 297A.66, is 
 44.11  amended by adding a subdivision to read: 
 44.12     Subd. 4.  [AFFILIATED ENTITIES.] (a) An entity is an 
 44.13  "affiliate" of the retailer for purposes of subdivision 1, 
 44.14  paragraph (a), if: 
 44.15     (1) the entity uses its facilities or employees in this 
 44.16  state to advertise, promote, or facilitate the establishment or 
 44.17  maintenance of a market for sales of items by the retailer to 
 44.18  purchasers in this state or for the provision of services to the 
 44.19  retailer's purchasers in this state, such as accepting returns 
 44.20  of purchases for the retailer, providing assistance in resolving 
 44.21  customer complaints of the retailer, or providing other 
 44.22  services; and 
 44.23     (2) the retailer and the entity are related parties. 
 44.24     (b) Two entities are related parties under this section if 
 44.25  one of the entities meets at least one of the following tests 
 44.26  with respect to the other entity: 
 44.27     (1) one or both entities is a corporation, and one entity 
 44.28  and any party related to that entity in a manner that would 
 44.29  require an attribution of stock from the corporation to the 
 44.30  party or from the party to the corporation under the attribution 
 44.31  rules of section 318 of the Internal Revenue Code owns directly, 
 44.32  indirectly, beneficially, or constructively at least 50 percent 
 44.33  of the value of the corporation's outstanding stock; 
 44.34     (2) one or both entities is a partnership, estate, or trust 
 44.35  and any partner or beneficiary, and the partnership, estate, or 
 44.36  trust and its partners or beneficiaries own directly, 
 45.1   indirectly, beneficially, or constructively, in the aggregate, 
 45.2   at least 50 percent of the profits, capital, stock, or value of 
 45.3   the other entity or both entities; or 
 45.4      (3) an individual stockholder and the members of the 
 45.5   stockholder's family (as defined in section 318 of the Internal 
 45.6   Revenue Code) owns directly, indirectly, beneficially, or 
 45.7   constructively, in the aggregate, at least 50 percent of the 
 45.8   value of both entities' outstanding stock. 
 45.9      (c) An entity is an affiliate under the provisions of this 
 45.10  subdivision if the requirements of paragraphs (a) and (b) are 
 45.11  met during any part of the 12-month period ending on the first 
 45.12  day of the month before the month in which the sale was made. 
 45.13     <b>[EFFECTIVE DATE.]</b> (a) This section is effective the day 
 45.14  following final enactment and is intended to confirm the 
 45.15  original intent of the legislature in enacting Minnesota 
 45.16  Statutes, section 297A.66, and its predecessor provisions. 
 45.17     (b) A retailer may elect that the provisions of this 
 45.18  section apply only to sales it made after August 31, 2002, by 
 45.19  notifying the commissioner and by applying for a permit under 
 45.20  Minnesota Statutes, section 297A.84, by August 15, 2002, to 
 45.21  collect the tax imposed under Minnesota Statutes, chapter 297A. 
 45.22  A retailer qualifies under this paragraph only if it: 
 45.23     (1) did not maintain an office, place of distribution, 
 45.24  sales or sample room or place, warehouse, or other place of 
 45.25  business in Minnesota except through an affiliate or did not 
 45.26  have a representative, agent, salesperson, canvasser, or 
 45.27  solicitor in Minnesota except through an affiliate; and 
 45.28     (2) has not registered to collect tax under Minnesota 
 45.29  Statutes, chapter 297A, as of the date of enactment of this 
 45.30  section. 
 45.31     Sec. 7.  Minnesota Statutes 2000, section 297A.67, 
 45.32  subdivision 5, is amended to read: 
 45.33     Subd. 5.  [EXEMPT MEALS AT SCHOOLS.] Meals and lunches 
 45.34  served at public and private elementary, middle, or secondary 
 45.35  schools, universities, or colleges as defined in section 120A.05 
 45.36  are exempt.  Meals and lunches served to students at a college, 
 46.1   university, or private career school under a board contract are 
 46.2   exempt.  For purposes of this subdivision, "meals and lunches" 
 46.3   does not include sales from vending machines. 
 46.4      <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
 46.5   purchases made after June 30, 2002.  However, for vending 
 46.6   machine contracts entered into by a school, as defined in 
 46.7   section 120A.05, prior to May 30, 2002, food sales from vending 
 46.8   machines continue to be exempt under this subdivision for one 
 46.9   year after the effective date of the contract. 
 46.10     Sec. 8.  Minnesota Statutes 2000, section 297A.67, is 
 46.11  amended by adding a subdivision to read: 
 46.12     Subd. 13a.  [INSTRUCTIONAL MATERIALS.] Instructional 
 46.13  materials, other than textbooks, that are prescribed for use in 
 46.14  conjunction with a course of study in a post-secondary school, 
 46.15  college, university, or private career school to students who 
 46.16  are regularly enrolled at such institutions are exempt.  For 
 46.17  purposes of this subdivision, "instructional materials" means 
 46.18  materials required to be used directly in the completion of the 
 46.19  course of study, including, but not limited to, interactive CDs, 
 46.20  tapes, and computer software. 
 46.21     Instructional materials do not include general reference 
 46.22  works or other items incidental to the instructional process 
 46.23  such as pens, pencils, paper, folders, or computers.  For 
 46.24  purposes of this subdivision, "school" and "private career 
 46.25  school" have the meanings given in subdivision 13. 
 46.26     <b>[EFFECTIVE DATE.]</b> This section is effective for sales after 
 46.27  June 30, 2003. 
 46.28     Sec. 9.  Minnesota Statutes 2001 Supplement, section 
 46.29  297A.67, subdivision 25, is amended to read: 
 46.30     Subd. 25.  [MAINTENANCE OF CEMETERY GROUNDS.] Lawn care and 
 46.31  related services used in the maintenance of cemetery grounds are 
 46.32  exempt.  For purposes of this subdivision, "lawn care and 
 46.33  related services" means the services listed in section 297A.61, 
 46.34  subdivision 3, paragraph (g), clause (5) (6), item (vi), and 
 46.35  "cemetery" means a cemetery for human burial. 
 46.36     Sec. 10.  Minnesota Statutes 2001 Supplement, section 
 47.1   297A.67, subdivision 29, is amended to read: 
 47.2      Subd. 29.  [ENERGY EFFICIENT PRODUCTS.] (a) A residential 
 47.3   lighting fixture or a compact fluorescent bulb is exempt if it 
 47.4   has an energy star label. 
 47.5      (b) The following products are exempt if they have an 
 47.6   energyguide label that indicates that the product meets or 
 47.7   exceeds the standards listed below: 
 47.8      (1) an electric heat pump hot water heater with an energy 
 47.9   factor of at least 1.9; 
 47.10     (2) a natural gas water heater with an energy factor of at 
 47.11  least 0.62; and 
 47.12     (3) a propane gas or fuel oil water heater with an energy 
 47.13  factor of at least 0.62; 
 47.14     (4) a natural gas furnace with an annual fuel utilization 
 47.15  efficiency greater than 92 percent; and 
 47.16     (5) a propane gas or fuel oil furnace with an annual fuel 
 47.17  utilization efficiency greater than 92 percent. 
 47.18     (c) A photovoltaic device is exempt.  For purposes of this 
 47.19  subdivision, "photovoltaic device" means a solid-state 
 47.20  electrical device, such as a solar module, that converts light 
 47.21  directly into direct current electricity of voltage-current 
 47.22  characteristics that are a function of the characteristics of 
 47.23  the light source and the materials in and design of the device.  
 47.24  A "solar module" is a photovoltaic device that produces a 
 47.25  specified power output under defined test conditions, usually 
 47.26  composed of groups of solar cells connected in series, in 
 47.27  parallel, or in series-parallel combinations. 
 47.28     (d) For purposes of this subdivision, "energy star label" 
 47.29  means the label granted to certain products that meet United 
 47.30  States Environmental Protection Agency and United States 
 47.31  Department of Energy criteria for energy efficiency.  For 
 47.32  purposes of this subdivision, "energyguide label" means the 
 47.33  label that the United States Federal Trade Commissioner requires 
 47.34  manufacturers to apply to certain appliances under United States 
 47.35  Code, title 16, part 305. 
 47.36     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
 48.1   purchases made on or after the day following final enactment and 
 48.2   before August 1, 2005. 
 48.3      Sec. 11.  Minnesota Statutes 2001 Supplement, section 
 48.4   297A.68, subdivision 3, is amended to read: 
 48.5      Subd. 3.  [MATERIALS USED IN PROVIDING CERTAIN TAXABLE 
 48.6   SERVICES.] (a) Materials stored, used, or consumed in providing 
 48.7   a taxable service listed in section 297A.61, subdivision 3, 
 48.8   paragraph (g), clause (5) (6), intended to be sold ultimately at 
 48.9   retail are exempt. 
 48.10     (b) This exemption includes, but is not limited to: 
 48.11     (1) chemicals, lubricants, packaging materials, seeds, 
 48.12  trees, fertilizers, and herbicides, if these items are used or 
 48.13  consumed in providing the taxable service; 
 48.14     (2) chemicals used to treat waste generated as a result of 
 48.15  providing the taxable service; 
 48.16     (3) accessory tools, equipment, and other items that are 
 48.17  separate detachable units used in providing the service and that 
 48.18  have an ordinary useful life of less than 12 months; and 
 48.19     (4) fuel, electricity, gas, and steam used or consumed in 
 48.20  the production process, except that electricity, gas, or steam 
 48.21  used for space heating, cooling, or lighting is exempt if (i) it 
 48.22  is in excess of average climate control or lighting, and (ii) it 
 48.23  is necessary to produce that particular service. 
 48.24     (c) This exemption does not include machinery, equipment, 
 48.25  implements, tools, accessories, appliances, contrivances, 
 48.26  furniture, and fixtures used in providing the taxable service. 
 48.27     Sec. 12.  Minnesota Statutes 2001 Supplement, section 
 48.28  297A.70, subdivision 10, is amended to read: 
 48.29     Subd. 10.  [NONPROFIT TICKETS OR ADMISSIONS.] (a) Tickets 
 48.30  or admissions to an event are exempt if all the gross receipts 
 48.31  are recorded as such, in accordance with generally accepted 
 48.32  accounting principles, on the books of one or more organizations 
 48.33  that provide an opportunity for citizens of the state to 
 48.34  participate in the creation, performance, or appreciation of the 
 48.35  arts, and provided that each organization is either:  
 48.36     (1) an organization described in section 501(c)(3) of the 
 49.1   Internal Revenue Code in which voluntary contributions make up 
 49.2   at least the following percent of the organization's annual 
 49.3   revenue in its most recently completed 12-month fiscal year, or 
 49.4   in the current year if the organization has not completed a 
 49.5   12-month fiscal year: 
 49.6      (i) for sales made after July 31, 2001, and before July 1, 
 49.7   2002, for the organization's fiscal year completed in calendar 
 49.8   year 2000, three percent; 
 49.9      (ii) for sales made on or after July 1, 2002, and on or 
 49.10  before June 30, 2003, for the organization's fiscal year 
 49.11  completed in calendar year 2001, three percent; 
 49.12     (iii) for sales made on or after July 1, 2003, and on or 
 49.13  before June 30, 2004, for the organization's fiscal year 
 49.14  completed in calendar year 2002, four percent; and 
 49.15     (iv) for sales made in each 12-month period, beginning on 
 49.16  July 1, 2004, and each subsequent year, for the organization's 
 49.17  fiscal year completed in the preceding calendar year, five 
 49.18  percent; or 
 49.19     (2) a municipal board that promotes cultural and arts 
 49.20  activities; or 
 49.21     (3) the University of Minnesota, provided that the event is 
 49.22  held at a university-owned facility.  
 49.23  The exemption only applies if the entire proceeds, after 
 49.24  reasonable expenses, are used solely to provide opportunities 
 49.25  for citizens of the state to participate in the creation, 
 49.26  performance, or appreciation of the arts. 
 49.27     (b) Tickets or admissions to the premises of the Minnesota 
 49.28  zoological garden are exempt, provided that the exemption under 
 49.29  this paragraph does not apply to tickets or admissions to 
 49.30  performances or events held on the premises unless the 
 49.31  performance or event is sponsored and conducted exclusively by 
 49.32  the Minnesota zoological board or employees of the Minnesota 
 49.33  zoological garden. 
 49.34     <b>[EFFECTIVE DATE.]</b> This section is effective for tickets and 
 49.35  admissions to events held after July 31, 2001, but does not 
 49.36  apply to events for which sales of tickets or admissions were 
 50.1   made prior to August 1, 2001. 
 50.2      Sec. 13.  Minnesota Statutes 2001 Supplement, section 
 50.3   297A.71, subdivision 23, is amended to read: 
 50.4      Subd. 23.  [CONSTRUCTION MATERIALS FOR QUALIFIED LOW-INCOME 
 50.5   HOUSING PROJECTS.] (a) Purchases of materials and supplies used 
 50.6   or consumed in and equipment incorporated into the construction, 
 50.7   improvement, or expansion of qualified low-income housing 
 50.8   projects are exempt from the tax imposed under this chapter if 
 50.9   the owner of the qualified low-income housing project is: 
 50.10     (1) the public housing agency or housing and redevelopment 
 50.11  authority of a political subdivision; 
 50.12     (2) an entity exercising the powers of a housing and 
 50.13  redevelopment authority within a political subdivision; 
 50.14     (3) a limited partnership in which the sole general partner 
 50.15  is an authority under clause (1) or an entity under clause (2); 
 50.16  or 
 50.17     (4) a nonprofit corporation subject to the provisions of 
 50.18  chapter 317A, and qualifying under section 501(c)(3) or 
 50.19  501(c)(4) of the Internal Revenue Code of 1986, as amended; or 
 50.20     (5) an owner entity, as defined in Code of Federal 
 50.21  Regulations, title 24, part 941.604, for a qualified low-income 
 50.22  housing project described in paragraph (b), clause (5). 
 50.23     This exemption applies regardless of whether the purchases 
 50.24  are made by the owner of the facility or a contractor.  
 50.25     (b) For purposes of this exemption, "qualified low-income 
 50.26  housing project" means: 
 50.27     (1) a housing or mixed use project in which at least 20 
 50.28  percent of the residential units are qualifying low-income 
 50.29  rental housing units as defined in section 273.126; 
 50.30     (2) a federally assisted low-income housing project 
 50.31  financed by a mortgage insured or held by the United States 
 50.32  Department of Housing and Urban Development under United States 
 50.33  Code, title 12, section 1701s, 1715l(d)(3), 1715l(d)(4), or 
 50.34  1715z-1; United States Code, title 42, section 1437f; the Native 
 50.35  American Housing Assistance and Self-Determination Act, United 
 50.36  States Code, title 25, section 4101 et seq.; or any similar 
 51.1   successor federal low-income housing program; 
 51.2      (3) a qualified low-income housing project as defined in 
 51.3   United States Code, title 26, section 42(g), meeting all of the 
 51.4   requirements for a low-income housing credit under section 42 of 
 51.5   the Internal Revenue Code regardless of whether the project 
 51.6   actually applies for or receives a low-income housing credit; or 
 51.7      (4) a project that will be operated in compliance with 
 51.8   Internal Revenue Service revenue procedure 96-32; or 
 51.9      (5) a housing or mixed use project in which all or a 
 51.10  portion of the residential units are subject to the requirements 
 51.11  of section 5 of the United States Housing Act of 1937. 
 51.12     (c) For a project, a portion of which is not used for 
 51.13  low-income housing units, the amount of purchases that are 
 51.14  exempt under this subdivision must be determined by multiplying 
 51.15  the total purchases, as specified in paragraph (a), by the ratio 
 51.16  of: 
 51.17     (1) the total gross square footage of units subject to the 
 51.18  income limits under section 273.126, the financing for the 
 51.19  project, the federal low-income housing tax credit, revenue 
 51.20  procedure 96-32, or section 5 of the United States Housing Act 
 51.21  of 1937, as applicable to the project; and 
 51.22     (2) the total gross square footage of all units in the 
 51.23  project. 
 51.24     (d) The tax must be imposed and collected as if the rate 
 51.25  under section 297A.62, subdivision 1, applied, and then refunded 
 51.26  in the manner provided in section 297A.75. 
 51.27     <b>[EFFECTIVE DATE.]</b> Paragraph (a), clause (5), and paragraph 
 51.28  (b), clause (5), are effective retroactive for sales and 
 51.29  purchases made after July 31, 2001.  For sales and purchases 
 51.30  made after July 31, 2001, and before July 1, 2002, an owner 
 51.31  entity under this section must apply to the commissioner of 
 51.32  revenue for a refund of the tax paid on the exempt amount as 
 51.33  determined under this section.  The rest of the section is 
 51.34  effective for sales made after June 30, 2002. 
 51.35     Sec. 14.  Minnesota Statutes 2000, section 297A.71, is 
 51.36  amended by adding a subdivision to read: 
 52.1      Subd. 28.  [CONSTRUCTION MATERIALS AND EQUIPMENT; 
 52.2   REPLACEMENT AGRICULTURAL PROCESSING FACILITY.] Materials and 
 52.3   supplies used or consumed in, and machinery and equipment 
 52.4   incorporated into, the construction of a meat-packing or 
 52.5   meat-processing facility are exempt if: 
 52.6      (1) the cost of the project exceeds $75,000,000; and 
 52.7      (2) the facility replaces a facility that was destroyed by 
 52.8   fire. 
 52.9      <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
 52.10  purchases made after March 31, 2002, and before January 1, 2005. 
 52.11     Sec. 15.  Minnesota Statutes 2000, section 297A.71, is 
 52.12  amended by adding a subdivision to read: 
 52.13     Subd. 29.  [HYDROELECTRIC GENERATING FACILITY.] Materials 
 52.14  and supplies used or consumed in the construction of a 
 52.15  hydroelectric generating facility that meets the requirements of 
 52.16  this subdivision are exempt.  To qualify for the exemption under 
 52.17  this subdivision, a hydroelectric generating facility must: 
 52.18     (1) utilize two turbine generators at a dam site existing 
 52.19  on March 31, 1994; 
 52.20     (2) be located on publicly owned land and within 2,500 feet 
 52.21  of a 13.8 kilovolt distribution circuit; and 
 52.22     (3) be eligible to receive a renewable energy production 
 52.23  incentive payment under section 216C.41. 
 52.24     <b>[EFFECTIVE DATE.]</b> This section is effective for sales made 
 52.25  after August 31, 2002, and on or before December 31, 2003. 
 52.26     Sec. 16.  Minnesota Statutes 2000, section 297A.71, is 
 52.27  amended by adding a subdivision to read: 
 52.28     Subd. 30.  [NONPROFIT ARTS ORGANIZATION.] Materials, 
 52.29  equipment, and supplies incorporated into the construction or 
 52.30  renovation of a state bond financed facility funded in 2002 
 52.31  which is owned or operated by a nonprofit arts organization are 
 52.32  exempt. 
 52.33     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
 52.34  purchases made the day after final enactment and before July 1, 
 52.35  2007. 
 52.36     Sec. 17.  Minnesota Statutes 2001 Supplement, section 
 53.1   297A.75, is amended to read: 
 53.2      297A.75 [REFUND; APPROPRIATION.] 
 53.3      Subdivision 1.  [TAX COLLECTED.] The tax on the gross 
 53.4   receipts from the sale of the following exempt items must be 
 53.5   imposed and collected as if the sale were taxable and the rate 
 53.6   under section 297A.62, subdivision 1, applied.  The exempt items 
 53.7   include: 
 53.8      (1) capital equipment exempt under section 297A.68, 
 53.9   subdivision 5; 
 53.10     (2) building materials for an agricultural processing 
 53.11  facility exempt under section 297A.71, subdivision 13; 
 53.12     (3) building materials for mineral production facilities 
 53.13  exempt under section 297A.71, subdivision 14; 
 53.14     (4) building materials for correctional facilities under 
 53.15  section 297A.71, subdivision 3; 
 53.16     (5) building materials used in a residence for disabled 
 53.17  veterans exempt under section 297A.71, subdivision 11; 
 53.18     (6) chair lifts, ramps, elevators, and associated building 
 53.19  materials exempt under section 297A.71, subdivision 12; 
 53.20     (7) building materials for the Long Lake Conservation 
 53.21  Center exempt under section 297A.71, subdivision 17; and 
 53.22     (8) materials, supplies, fixtures, furnishings, and 
 53.23  equipment for a county law enforcement and family service center 
 53.24  under section 297A.71, subdivision 26; and 
 53.25     (9) materials and supplies for qualified low-income housing 
 53.26  under section 297A.71, subdivision 23. 
 53.27     Subd. 2.  [REFUND; ELIGIBLE PERSONS.] Upon application on 
 53.28  forms prescribed by the commissioner, a refund equal to the tax 
 53.29  paid on the gross receipts of the exempt items must be paid to 
 53.30  the applicant.  Only the following persons may apply for the 
 53.31  refund: 
 53.32     (1) for subdivision 1, clauses (1) to (3), the applicant 
 53.33  must be the purchaser; 
 53.34     (2) for subdivision 1, clauses (4), (7), and (8), the 
 53.35  applicant must be the governmental subdivision; 
 53.36     (3) for subdivision 1, clause (5), the applicant must be 
 54.1   the recipient of the benefits provided in United States Code, 
 54.2   title 38, chapter 21; and 
 54.3      (4) for subdivision 1, clause (6), the applicant must be 
 54.4   the owner of the homestead property; and 
 54.5      (5) for subdivision 1, clause (9), the owner of the 
 54.6   qualified low-income housing project. 
 54.7      Subd. 3.  [APPLICATION.] (a) The application must include 
 54.8   sufficient information to permit the commissioner to verify the 
 54.9   tax paid.  If the tax was paid by a contractor, subcontractor, 
 54.10  or builder, under subdivision 1, clause (4), (5), (6), 
 54.11  (7), or (8), or (9), the contractor, subcontractor, or builder 
 54.12  must furnish to the refund applicant a statement including the 
 54.13  cost of the exempt items and the taxes paid on the items unless 
 54.14  otherwise specifically provided by this subdivision.  The 
 54.15  provisions of sections 289A.40 and 289A.50 apply to refunds 
 54.16  under this section. 
 54.17     (b) An applicant may not file more than two applications 
 54.18  per calendar year for refunds for taxes paid on capital 
 54.19  equipment exempt under section 297A.68, subdivision 5.  
 54.20     Subd. 4.  [INTEREST.] Interest must be paid on the refund 
 54.21  at the rate in section 270.76 from the date the refund claim is 
 54.22  filed for taxes paid under subdivision 1, clauses (1) to (3), 
 54.23  and (5), and from 60 days after the date the refund claim is 
 54.24  filed with the commissioner for claims filed under subdivision 
 54.25  1, clauses (4), (6), (7), and (8), and (9). 
 54.26     Subd. 5.  [APPROPRIATION.] The amount required to make the 
 54.27  refunds is annually appropriated to the commissioner. 
 54.28     <b>[EFFECTIVE DATE.]</b> This section is effective for sales made 
 54.29  after June 30, 2002. 
 54.30     Sec. 18.  Minnesota Statutes 2000, section 297A.96, is 
 54.31  amended to read: 
 54.32     297A.96 [LOCAL ADMISSIONS AND AMUSEMENT TAXES; EXEMPTION 
 54.33  FOR ARTS ORGANIZATIONS.] 
 54.34     If an event is sponsored by a nonprofit arts organization, 
 54.35  then Amounts charged for admission to the an event or to the 
 54.36  organization's premises described in section 297A.70, 
 55.1   subdivision 10, paragraph (a), are not subject to a tax imposed 
 55.2   by a local unit of government or imposed on sales taking place 
 55.3   in a single named local unit of government on sales of 
 55.4   admissions or amusements, under a law other than a general sales 
 55.5   tax law. 
 55.6      <b>[EFFECTIVE DATE.]</b> This section is effective for tickets and 
 55.7   admissions to events held after July 31, 2001, but does not 
 55.8   apply to events for which sales of tickets or admissions were 
 55.9   made prior to August 1, 2001. 
 55.10     Sec. 19.  Minnesota Statutes 2001 Supplement, section 
 55.11  297A.995, subdivision 4, is amended to read: 
 55.12     Subd. 4.  [AUTHORITY TO ENTER AGREEMENT.] The commissioner 
 55.13  of revenue is authorized and directed to enter into the 
 55.14  agreement with one or more states to simplify and modernize 
 55.15  sales and use tax administration in order to substantially 
 55.16  reduce the burden of tax compliance for all sellers and for all 
 55.17  types of commerce.  In furtherance of the agreement, the 
 55.18  commissioner is authorized to act jointly with other states that 
 55.19  are members of the agreement to establish standards for 
 55.20  certification of a certified service provider and certified 
 55.21  automated system and establish performance standards for 
 55.22  multistate sellers. 
 55.23     The commissioner of revenue is further directed to 
 55.24  negotiate the agreement with the express intention of ensuring 
 55.25  uniform sales and use taxation as applied to like-kind 
 55.26  transactions.  
 55.27     The commissioner is further authorized to take other 
 55.28  actions reasonably required to implement the provisions set 
 55.29  forth in this article.  Other actions authorized by this section 
 55.30  include, but are not limited to, the adoption of rules and 
 55.31  regulations and the joint procurement, with other member states, 
 55.32  of goods and services in furtherance of the cooperative 
 55.33  agreement. 
 55.34     The commissioner or the commissioner's designee is 
 55.35  following officials are authorized to represent this state 
 55.36  before the other states that are signatories to the agreement: 
 56.1      (1) the commissioner or the commissioner's designee; 
 56.2      (2) the chair of the house committee with jurisdiction over 
 56.3   taxes or the house chair's designee; and 
 56.4      (3) the chair of the senate committee with jurisdiction 
 56.5   over taxes or the senate chair's designee. 
 56.6      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 56.7   following final enactment. 
 56.8      Sec. 20.  Laws 1990, chapter 604, article 6, section 9, 
 56.9   subdivision 1, as amended by Laws 1991, chapter 291, article 8, 
 56.10  section 25, is amended to read:  
 56.11     Subdivision 1.  [AUTHORIZATION.] Notwithstanding Minnesota 
 56.12  Statutes, section 469.190, 477A.016, or other law, in addition 
 56.13  to the tax authorized in Laws 1986, chapter 391, section 4, the 
 56.14  governing body of the city of Bloomington may impose a tax of up 
 56.15  to one two percent on the gross receipts from the furnishing for 
 56.16  consideration of lodging at a hotel, motel, rooming house, 
 56.17  tourist court, or resort, other than the renting or leasing of 
 56.18  it for a continuous period of 30 days or more, located in the 
 56.19  city.  The city may agree with the commissioner of revenue that 
 56.20  a tax imposed under this section shall be collected by the 
 56.21  commissioner together with the tax imposed by Minnesota 
 56.22  Statutes, chapter 297A, and subject to the same interest, 
 56.23  penalties, and other rules and that its proceeds, less the cost 
 56.24  of collection, shall be remitted to the city.  The proceeds of 
 56.25  the tax must be used by the Bloomington convention bureau only 
 56.26  to market and promote the city as a tourist or convention 
 56.27  center.  If the duties of the convention bureau as they existed 
 56.28  on January 1, 1991, are assigned to another agency, the tax 
 56.29  shall cease.  
 56.30     <b>[EFFECTIVE DATE; LOCAL APPROVAL.]</b> This section takes effect 
 56.31  the day after the governing body of the city of Bloomington 
 56.32  complies with Minnesota Statutes, section 645.021, subdivision 3.
 56.33     Sec. 21.  Laws 1998, chapter 389, article 8, section 37, 
 56.34  subdivision 2, is amended to read: 
 56.35     Subd. 2.  [APPOINTMENT OF MEMBERS.] The citizen review 
 56.36  panel must consist of 17 members, each of whom represents one of 
 57.1   the district councils consists of three residents from each of 
 57.2   the seven city council wards, for a total of 21 members.  The 
 57.3   mayor must appoint the members, and the appointments are subject 
 57.4   to confirmation by a majority vote of the city council.  Members 
 57.5   serve for a term of four years.  Elected officials and employees 
 57.6   of the city are ineligible to serve as members of the panel. 
 57.7      <b>[EFFECTIVE DATE.]</b> This section is effective upon approval 
 57.8   by the governing body of the city of St. Paul and compliance 
 57.9   with Minnesota Statutes, section 645.021. 
 57.10     Sec. 22.  Laws 2001, First Special Session chapter 5, 
 57.11  article 12, section 11, the effective date, is amended to read: 
 57.12     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 
 57.13  2002, however, for contracts entered into before January 1, 
 57.14  2002, the sale price for aggregate materials and concrete block 
 57.15  does not include delivery charges until January 1, 2005. 
 57.16     Sec. 23.  Laws 2001, First Special Session chapter 5, 
 57.17  article 12, section 82, the effective date, is amended to read: 
 57.18     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2003 
 57.19  for sales and purchases made after December 31, 2005. 
 57.20     Sec. 24.  Laws 2001, First Special Session chapter 5, 
 57.21  article 12, section 95, is amended to read: 
 57.22     Sec. 95.  [REPEALER.] 
 57.23     (a) Minnesota Statutes 2000, sections 297A.61, subdivision 
 57.24  16; 297A.68, subdivision 21; and 297A.71, subdivisions 
 57.25  subdivision 2 and 16, are repealed effective for sales and 
 57.26  purchases occurring after June 30, 2001, except that the repeal 
 57.27  of section 297A.61, subdivision 16, paragraph (d), is effective 
 57.28  for sales and purchases occurring after July 31, 2001. 
 57.29     (b) Minnesota Statutes 2000, sections 297A.62, subdivision 
 57.30  2, and 297A.64, subdivision 1, are repealed effective for sales 
 57.31  and purchases made after December 31, 2005. 
 57.32     (c) Minnesota Statutes 2000, section 297A.71, subdivision 
 57.33  15, is repealed effective for sales and purchases made after 
 57.34  June 30, 2002. 
 57.35     (d) Minnesota Statutes 2000, section 289A.60, subdivision 
 57.36  15, is repealed effective for liabilities after January 1, 
 58.1   2003 2004. 
 58.2      (e) Minnesota Statutes 2000, section 297A.71, subdivision 
 58.3   16, is repealed effective for sales and purchases occurring 
 58.4   after December 31, 2002. 
 58.5      <b>[EFFECTIVE DATE.]</b> Paragraph (d) is effective the day after 
 58.6   final enactment.  Paragraphs (a) and (e) are effective for sales 
 58.7   and purchases made on or after June 30, 2001, for projects begun 
 58.8   prior to June 30, 2001. 
 58.9      Sec. 25.  [ROCHESTER LODGING TAX.] 
 58.10     Subdivision 1.  [AUTHORIZATION.] Notwithstanding Minnesota 
 58.11  Statutes, section 469.190 or 477A.016, or any other law, the 
 58.12  city of Rochester may impose an additional tax of one percent on 
 58.13  the gross receipts from the furnishing for consideration of 
 58.14  lodging at a hotel, motel, rooming house, tourist court, or 
 58.15  resort, other than the renting or leasing of it for a continuous 
 58.16  period of 30 days or more. 
 58.17     Subd. 2.  [DISPOSITION OF PROCEEDS.] The gross proceeds 
 58.18  from any tax imposed under subdivision 1 must be used by the 
 58.19  city to fund a local convention or tourism bureau for the 
 58.20  purpose of marketing and promoting the city as a tourist or 
 58.21  convention center.  
 58.22     <b>[EFFECTIVE DATE.]</b> This section is effective for lodging 
 58.23  furnished on or after July 1, 2002. 
 58.24     Sec. 26.  [REPEALER.] 
 58.25     Minnesota Statutes 2000, section 297A.68, subdivision 26, 
 58.26  is repealed effective for sales and purchases made after June 
 58.27  30, 2002. 
 58.28                             ARTICLE 4 
 58.29                           PROPERTY TAXES 
 58.30     Section 1.  Minnesota Statutes 2000, section 168A.05, is 
 58.31  amended by adding a subdivision to read: 
 58.32     Subd. 1a.  [MANUFACTURED HOMES; PROPERTY TAXES MUST BE 
 58.33  PAID.] In the case of a manufactured home as defined in section 
 58.34  327.31, subdivision 6, the department shall not issue a 
 58.35  certificate of title unless the application under section 
 58.36  168A.04 is accompanied with a statement from the county auditor 
 59.1   or county treasurer where the manufactured home is presently 
 59.2   located, stating that all personal property taxes levied on the 
 59.3   unit that are due from the current owner at the time of transfer 
 59.4   for which the application applies, have been paid. 
 59.5      <b>[EFFECTIVE DATE.]</b> This section is effective for 
 59.6   certificates of title issued by the department on or after July 
 59.7   1, 2002. 
 59.8      Sec. 2.  Minnesota Statutes 2000, section 168A.05, is 
 59.9   amended by adding a subdivision to read: 
 59.10     Subd. 1b.  [EXEMPTION.] The provisions of subdivision 1a 
 59.11  shall not apply to:  (i) a manufactured home which is sold or 
 59.12  otherwise disposed of pursuant to section 504B.271 by the owner 
 59.13  of a manufactured home park as defined in section 327.14, 
 59.14  subdivision 3, or (ii) a manufactured home which is sold 
 59.15  pursuant to section 504B.265 by the owner of a manufactured home 
 59.16  park. 
 59.17     <b>[EFFECTIVE DATE.]</b> This section is effective for 
 59.18  certificates of title issued by the department on or after July 
 59.19  1, 2002. 
 59.20     Sec. 3.  Minnesota Statutes 2001 Supplement, section 
 59.21  216B.1646, is amended to read: 
 59.22     216B.1646 [RATE REDUCTION; PROPERTY TAX REDUCTION.] 
 59.23     (a) The commission shall, by any method the commission 
 59.24  finds appropriate, reduce the amounts rates each electric 
 59.25  utility subject to rate regulation by the commission charges its 
 59.26  customers to reflect, on an ongoing basis, the amount by which 
 59.27  each utility's property tax on the personal property of its 
 59.28  electric generation, transmission, or distribution system from 
 59.29  taxes payable in 2001 to taxes payable in 2002 is reduced.  The 
 59.30  commission must ensure that, to the extent feasible, each dollar 
 59.31  of personal property tax reduction allocated to Minnesota 
 59.32  consumers retroactive to January 1, 2002, results in a dollar of 
 59.33  savings to the utility's customers.  A utility may voluntarily 
 59.34  pass on any additional property tax savings in the same manner 
 59.35  as approved by the commission under this paragraph. 
 59.36     (b) By April 10, 2002, each utility shall submit a filing 
 60.1   to the commission containing: 
 60.2      (1) certified information regarding the utility's property 
 60.3   tax savings allocated to Minnesota retail customers; and 
 60.4      (2) a proposed method of passing these savings on to 
 60.5   Minnesota retail customers. 
 60.6      The utility shall provide the information in clause (1) to 
 60.7   the commissioner of revenue at the same time.  The commissioner 
 60.8   shall notify the commission within 30 days as to the accuracy of 
 60.9   the property tax data submitted by the utility. 
 60.10     (c)  For purposes of this section, "personal property" 
 60.11  means tools, implements, and machinery of the generating plant.  
 60.12  It does not apply to transformers, transmission lines, 
 60.13  distribution lines, or any other tools, implements, and 
 60.14  machinery that are part of an electric substation, wherever 
 60.15  located. 
 60.16     <b>[EFFECTIVE DATE.]</b> This section is effective retroactive to 
 60.17  July 1, 2001. 
 60.18     Sec. 4.  Minnesota Statutes 2001 Supplement, section 
 60.19  271.01, subdivision 5, is amended to read: 
 60.20     Subd. 5.  [JURISDICTION.] The tax court shall have 
 60.21  statewide jurisdiction.  Except for an appeal to the supreme 
 60.22  court or any other appeal allowed under this subdivision, the 
 60.23  tax court shall be the sole, exclusive, and final authority for 
 60.24  the hearing and determination of all questions of law and fact 
 60.25  arising under the tax laws of the state, as defined in this 
 60.26  subdivision, in those cases that have been appealed to the tax 
 60.27  court and in any case that has been transferred by the district 
 60.28  court to the tax court.  The tax court shall have no 
 60.29  jurisdiction in any case that does not arise under the tax laws 
 60.30  of the state or in any criminal case or in any case determining 
 60.31  or granting title to real property or in any case that is under 
 60.32  the probate jurisdiction of the district court.  The small 
 60.33  claims division of the tax court shall have no jurisdiction in 
 60.34  any case dealing with property valuation or assessment for 
 60.35  property tax purposes until the taxpayer has appealed the 
 60.36  valuation or assessment to the county board of equalization, and 
 61.1   in those towns and cities which have not transferred their 
 61.2   duties to the county, the town or city board of equalization, 
 61.3   except for:  (i) those taxpayers whose original assessments are 
 61.4   determined by the commissioner of revenue; (ii) those taxpayers 
 61.5   appealing a denial of a current year application for the 
 61.6   homestead classification for their property and the denial was 
 61.7   not reflected on a valuation notice issued in the year; and 
 61.8   (iii) any case dealing with property valuation, assessment, or 
 61.9   taxation for property tax purposes and meeting the 
 61.10  jurisdictional requirements of section 271.21, subdivision 2, 
 61.11  paragraph (c) only as provided in section 271.21, subdivision 2. 
 61.12  The tax court shall have no jurisdiction in any case involving 
 61.13  an order of the state board of equalization unless a taxpayer 
 61.14  contests the valuation of property.  Laws governing taxes, aids, 
 61.15  and related matters administered by the commissioner of revenue, 
 61.16  laws dealing with property valuation, assessment or taxation of 
 61.17  property for property tax purposes, and any other laws that 
 61.18  contain provisions authorizing review of taxes, aids, and 
 61.19  related matters by the tax court shall be considered tax laws of 
 61.20  this state subject to the jurisdiction of the tax court.  This 
 61.21  subdivision shall not be construed to prevent an appeal, as 
 61.22  provided by law, to an administrative agency, board of 
 61.23  equalization, review under section 274.13, subdivision 1c, or to 
 61.24  the commissioner of revenue.  Wherever used in this chapter, the 
 61.25  term commissioner shall mean the commissioner of revenue, unless 
 61.26  otherwise specified. 
 61.27     <b>[EFFECTIVE DATE.]</b> This section is effective for petitions 
 61.28  filed pertaining to the 2002 assessment, and thereafter. 
 61.29     Sec. 5.  Minnesota Statutes 2001 Supplement, section 
 61.30  271.21, subdivision 2, is amended to read: 
 61.31     Subd. 2.  [JURISDICTION.] At the election of the taxpayer, 
 61.32  the small claims division shall have jurisdiction only in the 
 61.33  following matters: 
 61.34     (a) cases involving valuation, assessment, or taxation of 
 61.35  real or personal property, if the taxpayer has satisfied the 
 61.36  requirements of section 271.01, subdivision 5, and:  
 62.1      (i) the issue is a denial of a current year application for 
 62.2   the homestead classification for the taxpayer's property and the 
 62.3   denial was not reflected on a valuation notice issued in the 
 62.4   year; or 
 62.5      (ii) in the case of nonhomestead property, only one parcel 
 62.6   is included in the petition, the entire parcel is classified as 
 62.7   homestead class 1a or 1b under section 273.13 and the parcel 
 62.8   contains no more than one dwelling unit; 
 62.9      (iii) the entire property is classified as agricultural 
 62.10  homestead class 2a or 1b under section 273.13; or 
 62.11     (iv) the assessor's estimated market value of the property 
 62.12  included in the petition is less than $100,000 $300,000; or 
 62.13     (b) any other case concerning the tax laws as defined in 
 62.14  section 271.01, subdivision 5, not involving valuation, 
 62.15  assessment, or taxation of real and personal property in which 
 62.16  the amount in controversy does not exceed $5,000, including 
 62.17  penalty and interest; or. 
 62.18     (c) cases involving valuation, assessment, or taxation of 
 62.19  real or personal property if: 
 62.20     (i) the issue is a denial of a current year application for 
 62.21  the homestead classification for the taxpayer's property; 
 62.22     (ii) only one parcel is included in the petition, the 
 62.23  entire parcel is classified as homestead 1a or 1b pursuant to 
 62.24  section 273.13, and the parcel contains no more than one 
 62.25  dwelling unit; or 
 62.26     (iii) the assessor's estimated market value of the property 
 62.27  included in the petition is less than $300,000. 
 62.28     <b>[EFFECTIVE DATE.]</b> This section is effective for petitions 
 62.29  filed pertaining to the 2002 assessment, and thereafter. 
 62.30     Sec. 6.  Minnesota Statutes 2001 Supplement, section 
 62.31  272.02, subdivision 22, is amended to read: 
 62.32     Subd. 22.  [WIND ENERGY CONVERSION SYSTEMS.] (a) Small 
 62.33  scale wind energy conversion systems installed after January 1, 
 62.34  1991, and used as an electric power source are exempt. 
 62.35     "Small scale wind energy conversion systems" are wind 
 62.36  energy conversion systems, as defined in section 216C.06, 
 63.1   subdivision 12, including the foundation or support pad, which 
 63.2   (i) are used as an electric power source; (ii) are located 
 63.3   within one county and owned by the same owner; and (iii) produce 
 63.4   two megawatts or less of electricity as measured by nameplate 
 63.5   ratings. 
 63.6      (b) Medium scale wind energy conversion systems installed 
 63.7   after January 1, 1991, are treated as follows:  (i) the 
 63.8   foundation and support pad are taxable; (ii) the associated 
 63.9   supporting and protective structures are exempt for the first 
 63.10  five assessment years after they have been constructed, and 
 63.11  thereafter, 30 percent of the market value of the associated 
 63.12  supporting and protective structures are taxable; and (iii) the 
 63.13  turbines, blades, transformers, and its related equipment, are 
 63.14  exempt.  "Medium scale wind energy conversion systems" are wind 
 63.15  energy conversion systems as defined in section 216C.06, 
 63.16  subdivision 12, including the foundation or support pad, which:  
 63.17  (i) are used as an electric power source; (ii) are located 
 63.18  within one county and owned by the same owner; and (iii) produce 
 63.19  more than two but equal to or less than 12 megawatts of energy 
 63.20  as measured by nameplate ratings. 
 63.21     (c) Large scale wind energy conversion systems installed 
 63.22  after January 1, 1991, are treated as follows:  25 percent of 
 63.23  the market value of all property is taxable, including (i) the 
 63.24  foundation and support pad; (ii) the associated supporting and 
 63.25  protective structures; and (iii) the turbines, blades, 
 63.26  transformers, and its related equipment.  "Large scale wind 
 63.27  energy conversion systems" are wind energy conversion systems as 
 63.28  defined in section 216C.06, subdivision 12, including the 
 63.29  foundation or support pad, which (i) are used as an electric 
 63.30  power source; and (ii) produce more than 12 megawatts of energy 
 63.31  as measured by nameplate ratings. 
 63.32     (d) The total size of a wind energy conversion system under 
 63.33  this subdivision shall be determined according to this paragraph.
 63.34  Unless the systems are interconnected with different 
 63.35  distribution systems, the nameplate capacity of one wind energy 
 63.36  conversion system shall be combined with the nameplate capacity 
 64.1   of any other wind energy conversion system that is: 
 64.2      (1) located within five miles of the wind energy conversion 
 64.3   system; 
 64.4      (2) constructed within the same calendar year as the wind 
 64.5   energy conversion system; and 
 64.6      (3) under common ownership.  
 64.7      In the case of a dispute, the commissioner of commerce 
 64.8   shall determine the total size of the system, and shall draw all 
 64.9   reasonable inferences in favor of combining the systems. 
 64.10     (e) In making a determination under paragraph (d), the 
 64.11  commissioner of commerce may determine that two wind energy 
 64.12  conversion systems are under common ownership when the 
 64.13  underlying ownership structure contains similar persons or 
 64.14  entities, even if the ownership shares differ between the two 
 64.15  systems.  Wind energy conversion systems are not under common 
 64.16  ownership solely because the same person or entity provided 
 64.17  equity financing for the systems.  All real and personal 
 64.18  property of a wind energy conversion system as defined in 
 64.19  section 272.029, subdivision 2, is exempt from property tax 
 64.20  except that the land on which the property is located remains 
 64.21  taxable. 
 64.22     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 64.23  payable in 2003 and thereafter. 
 64.24     Sec. 7.  Minnesota Statutes 2000, section 272.02, is 
 64.25  amended by adding a subdivision to read: 
 64.26     Subd. 51.  [ELECTRIC GENERATION FACILITY; PERSONAL 
 64.27  PROPERTY.] Notwithstanding subdivision 9, clause (a), attached 
 64.28  machinery and other personal property which is part of a 
 64.29  combined cycle natural gas turbine electric generation facility 
 64.30  of between 43 and 46 megawatts of installed capacity and that 
 64.31  meets the requirements of this subdivision is exempt.  At the 
 64.32  time of construction, the facility must: 
 64.33     (1) utilize a combined cycle gas turbine generator fueled 
 64.34  by natural gas; 
 64.35     (2) be connected to an existing 115-kilovolt high-voltage 
 64.36  electric transmission line that is within one mile of the 
 65.1   facility; 
 65.2      (3) be located on an underground natural gas storage 
 65.3   aquifer; 
 65.4      (4) be designed as an intermediate load facility; and 
 65.5      (5) have received, by resolution, the approval from the 
 65.6   governing body of the county for the exemption of personal 
 65.7   property under this subdivision. 
 65.8      Construction of the facility must be commenced after 
 65.9   January 1, 2002, and before January 1, 2004.  Property eligible 
 65.10  for this exemption does not include electric transmission lines 
 65.11  and interconnections or gas pipelines and interconnections 
 65.12  appurtenant to the property or the facility. 
 65.13     <b>[EFFECTIVE DATE.]</b> This section is effective for assessment 
 65.14  year 2002 and thereafter. 
 65.15     Sec. 8.  Minnesota Statutes 2000, section 272.02, is 
 65.16  amended by adding a subdivision to read: 
 65.17     Subd. 52.  [ELECTRIC GENERATION FACILITY; PERSONAL 
 65.18  PROPERTY.] Notwithstanding subdivision 9, clause (a), attached 
 65.19  machinery and other personal property which is part of a 
 65.20  simple-cycle combustion-turbine electric generation facility of 
 65.21  more than 40 megawatts and less than 50 megawatts of installed 
 65.22  capacity and that meets the requirements of this subdivision is 
 65.23  exempt.  At the time of construction, the facility must: 
 65.24     (1) utilize natural gas as a primary fuel; 
 65.25     (2) be located within two miles of parallel existing 
 65.26  36-inch natural gas pipelines and an existing 115-kilovolt 
 65.27  high-voltage electric transmission line; 
 65.28     (3) be designed to provide peaking, emergency backup, or 
 65.29  contingency services; and 
 65.30     (4) satisfy a resource deficiency identified in an approved 
 65.31  integrated resource plan filed under section 216B.2422. 
 65.32     Construction of the facility must be commenced after 
 65.33  January 1, 2001, and before January 1, 2005.  Property eligible 
 65.34  for this exemption does not include electric transmission lines 
 65.35  and interconnections or gas pipelines and interconnections 
 65.36  appurtenant to the property or the facility. 
 66.1      <b>[EFFECTIVE DATE.]</b> This section is effective for assessment 
 66.2   year 2002 and thereafter. 
 66.3      Sec. 9.  Minnesota Statutes 2000, section 272.02, is 
 66.4   amended by adding a subdivision to read: 
 66.5      Subd. 53.  [ELECTRIC GENERATION FACILITY; PERSONAL 
 66.6   PROPERTY.] Notwithstanding subdivision 9, clause (a), attached 
 66.7   machinery and other personal property which is part of a 3.2 
 66.8   megawatt run-of-the-river hydroelectric generation facility and 
 66.9   that meets the requirements of this subdivision is exempt.  At 
 66.10  the time of construction, the facility must: 
 66.11     (1) utilize two turbine generators at a dam site existing 
 66.12  on March 31, 1994; 
 66.13     (2) be located on publicly owned land and within 1,500 feet 
 66.14  of a 13.8 kilovolt distribution substation; and 
 66.15     (3) be eligible to receive a renewable energy production 
 66.16  incentive payment under section 216C.41. 
 66.17     Construction of the facility must be commenced after 
 66.18  January 1, 2002, and before January 1, 2004.  Property eligible 
 66.19  for this exemption does not include electric transmission lines 
 66.20  and interconnections or gas pipelines and interconnections 
 66.21  appurtenant to the property or the facility. 
 66.22     <b>[EFFECTIVE DATE.]</b> This section is effective for assessment 
 66.23  year 2002 and thereafter. 
 66.24     Sec. 10.  Minnesota Statutes 2000, section 272.02, is 
 66.25  amended by adding a subdivision to read: 
 66.26     Subd. 54.  [SMALL BIOMASS ELECTRIC GENERATION FACILITY; 
 66.27  PERSONAL PROPERTY.] Notwithstanding subdivision 9, clause (a), 
 66.28  attached machinery and other personal property which is part of 
 66.29  an electrical generating facility that meets the requirements of 
 66.30  this subdivision is exempt.  At the time of construction the 
 66.31  facility must: 
 66.32     (1) have a generation capacity of less than 25 megawatts; 
 66.33     (2) provide process heating needs in addition to electrical 
 66.34  generation; and 
 66.35     (3) utilize agricultural by-products from the malting 
 66.36  process and other biomass fuels as its primary fuel source.  
 67.1      Construction of the facility must be commenced after 
 67.2   January 1, 2002, and before January 1, 2006.  Property eligible 
 67.3   for this exemption does not include electric transmission lines 
 67.4   and interconnections or gas pipelines and interconnections 
 67.5   appurtenant to the property or facility. 
 67.6      <b>[EFFECTIVE DATE.]</b> This section is effective for assessment 
 67.7   year 2003 and thereafter. 
 67.8      Sec. 11.  Minnesota Statutes 2000, section 272.02, is 
 67.9   amended by adding a subdivision to read: 
 67.10     Subd. 55.  [ELECTRIC GENERATION FACILITY; PERSONAL 
 67.11  PROPERTY.] Notwithstanding subdivision 9, clause (a), attached 
 67.12  machinery and other personal property which is part of an 
 67.13  electric generating facility that meets the requirements of this 
 67.14  subdivision is exempt.  At the time of construction, the 
 67.15  facility must be sited on an energy park that (i) is located on 
 67.16  an active mining site, or on a former mining or industrial site 
 67.17  where mining or industrial operations have terminated, (ii) is 
 67.18  within a tax relief area as defined in section 273.134, (iii) 
 67.19  has on-site access to existing railroad infrastructure, (iv) has 
 67.20  direct rail access to a Great Lakes port, (v) has sufficient 
 67.21  private water resources on site, and (vi) is designed to host at 
 67.22  least 500 megawatts of electrical generation.  
 67.23     Construction of the first 250 megawatts of the facility 
 67.24  must be commenced after January 1, 2002, and before January 1, 
 67.25  2005.  Construction of up to an additional 750 megawatts of 
 67.26  generation must be commenced before January 1, 2010.  Property 
 67.27  eligible for this exemption does not include electric 
 67.28  transmission lines and interconnections or gas pipelines and 
 67.29  interconnections appurtenant to the property or the facility. 
 67.30     <b>[EFFECTIVE DATE.]</b> This section is effective for assessment 
 67.31  year 2003 and thereafter. 
 67.32     Sec. 12.  Minnesota Statutes 2001 Supplement, section 
 67.33  272.028, is amended to read: 
 67.34     272.028 [PAYMENT IN LIEU OF PERSONAL PROPERTY PRODUCTION 
 67.35  TAX; WIND GENERATION FACILITIES.] 
 67.36     A developer of a new or existing medium or large scale wind 
 68.1   energy conversion system, as defined under section 272.02, 
 68.2   subdivision 22, paragraphs (b) and (c), 272.029, subdivision 2, 
 68.3   may negotiate with the city or town and the county where the 
 68.4   wind energy conversion system is located to establish a payment 
 68.5   in lieu of tax on personal property used to generate electric 
 68.6   power the wind energy production tax imposed under section 
 68.7   272.029.  The in lieu payment is to provide fees or compensation 
 68.8   to the host jurisdictions to maintain public infrastructure and 
 68.9   services.  A host jurisdiction includes a city or town and the 
 68.10  county in which a facility is located.  The payment in lieu of 
 68.11  personal property the wind energy production tax may be based on 
 68.12  production capacity, historical production, or other factors 
 68.13  agreed upon by the parties.  The payment in lieu of tax 
 68.14  agreement must be signed by the parties and filed with the 
 68.15  commissioner of revenue and the county recorder.  Upon execution 
 68.16  and filing of the agreement, the personal property to which the 
 68.17  in lieu payment applies shall be deemed exempt from tax under 
 68.18  section 272.02, subdivision 22, paragraphs (b) and (c).  This 
 68.19  Exemption from the tax under section 272.029 shall be 
 68.20  effective for the assessment year in which the in lieu payment 
 68.21  is agreed upon and shall remain exempt for the same duration as 
 68.22  the in lieu payments under this section are in effect. 
 68.23     Sec. 13.  [272.029] [WIND ENERGY PRODUCTION TAX.] 
 68.24     Subdivision 1.  [PRODUCTION TAX.] A tax is imposed on the 
 68.25  production of electricity from a wind energy conversion system 
 68.26  installed after January 1, 1991, and used as an electric power 
 68.27  source. 
 68.28     Subd. 2.  [DEFINITIONS.] (a) For the purposes of this 
 68.29  section, the term: 
 68.30     (1) "wind energy conversion system" has the meaning given 
 68.31  it in section 216C.06, subdivision 12; 
 68.32     (2) "large scale wind energy conversion system" means a 
 68.33  wind energy conversion system of more than 12 megawatts, as 
 68.34  measured by the nameplate capacity of the system or as combined 
 68.35  with other systems as provided in paragraph (b); 
 68.36     (3) "medium scale wind energy conversion system" means a 
 69.1   wind energy conversion system of over two and not more than 12 
 69.2   megawatts, as measured by the nameplate capacity of the system 
 69.3   or as combined with other systems as provided in paragraph (b); 
 69.4   and 
 69.5      (4) "small scale wind energy conversion system" means a 
 69.6   wind energy conversion system of two megawatts and under, as 
 69.7   measured by the nameplate capacity of the system or as combined 
 69.8   with other systems as provided in paragraph (b). 
 69.9      (b) For systems installed and contracted for after January 
 69.10  1, 2002, the total size of a wind energy conversion system under 
 69.11  this subdivision shall be determined according to this paragraph.
 69.12  Unless the systems are interconnected with different 
 69.13  distribution systems, the nameplate capacity of one wind energy 
 69.14  conversion system shall be combined with the nameplate capacity 
 69.15  of any other wind energy conversion system that is: 
 69.16     (1) located within five miles of the wind energy conversion 
 69.17  system; 
 69.18     (2) constructed within the same calendar year as the wind 
 69.19  energy conversion system; and 
 69.20     (3) under common ownership.  
 69.21     In the case of a dispute, the commissioner of commerce 
 69.22  shall determine the total size of the system, and shall draw all 
 69.23  reasonable inferences in favor of combining the systems. 
 69.24     (c) In making a determination under paragraph (b), the 
 69.25  commissioner of commerce may determine that two wind energy 
 69.26  conversion systems are under common ownership when the 
 69.27  underlying ownership structure contains similar persons or 
 69.28  entities, even if the ownership shares differ between the two 
 69.29  systems.  Wind energy conversion systems are not under common 
 69.30  ownership solely because the same person or entity provided 
 69.31  equity financing for the systems. 
 69.32     Subd. 3.  [RATE OF TAX.] (a) The owner of a wind energy 
 69.33  conversion system shall pay a tax based on the following 
 69.34  schedule: 
 69.35     (1) for a large scale wind energy conversion system, .12 
 69.36  cents per kilowatt-hour of electricity produced by the system; 
 70.1      (2) for a medium scale wind energy conversion system, .036 
 70.2   cents per kilowatt-hour of electricity produced by the system; 
 70.3   and 
 70.4      (3) for a small scale wind energy conversion system of two 
 70.5   megawatts or less, but greater than .25 megawatts capacity, .012 
 70.6   cents per kilowatt-hour of electricity produced by the system. 
 70.7      (b) Small scale wind energy conversion systems with the 
 70.8   capacity of .25 megawatts or less, and small scale wind energy 
 70.9   conversion systems with a capacity of two megawatts or less that 
 70.10  are owned by a political subdivision, are exempt from the wind 
 70.11  energy production tax. 
 70.12     Subd. 4.  [REPORTS.] (a) An owner of a wind energy 
 70.13  conversion system subject to tax under subdivision 3 shall file 
 70.14  a report with the commissioner of revenue annually on or before 
 70.15  March 1 detailing the amount of electricity in kilowatt-hours 
 70.16  that was produced by the wind energy conversion system for the 
 70.17  previous calendar year.  The commissioner shall prescribe the 
 70.18  form of the report.  The report must contain the information 
 70.19  required by the commissioner to determine the tax due to each 
 70.20  county under this section for the current year.  If an owner of 
 70.21  a wind energy conversion system subject to taxation under this 
 70.22  section fails to file the report by the due date, the 
 70.23  commissioner of revenue shall determine the tax based upon the 
 70.24  nameplate capacity of the system multiplied by a capacity factor 
 70.25  of 40 percent. 
 70.26     (b) On or before March 31, the commissioner of revenue 
 70.27  shall notify the owner of the wind energy conversion systems of 
 70.28  the tax due to each county for the current year and shall 
 70.29  certify to the county auditor of each county in which the 
 70.30  systems are located the tax due from each owner for the current 
 70.31  year. 
 70.32     Subd. 5.  [PAYMENT OF TAX; COLLECTION.] The amount of 
 70.33  production tax determined under subdivision 4 must be paid to 
 70.34  the county treasurer at the time and in the manner provided for 
 70.35  payment of property taxes under section 277.01, subdivision 3, 
 70.36  and, if unpaid, is subject to the same enforcement, collection, 
 71.1   and interest and penalties as delinquent personal property 
 71.2   taxes.  Except to the extent inconsistent with this section, the 
 71.3   provisions of sections 277.01 to 277.24 and 278.01 to 278.13 
 71.4   apply to the taxes imposed under this section, and for purposes 
 71.5   of those provisions, the taxes imposed under this section are 
 71.6   considered personal property taxes. 
 71.7      Subd. 6.  [DISTRIBUTION OF REVENUES.] Revenues from the 
 71.8   taxes imposed under subdivision 5 must be part of the settlement 
 71.9   between the county treasurer and the county auditor under 
 71.10  section 276.09.  The revenue must be distributed by the county 
 71.11  auditor or the county treasurer to all taxing jurisdictions in 
 71.12  which the wind energy conversion system is located, in the same 
 71.13  proportion that each of the taxing jurisdiction's current year's 
 71.14  net tax capacity based tax rate is to the current year's total 
 71.15  net tax capacity based rate. 
 71.16     <b>[EFFECTIVE DATE.]</b> This section is effective for all energy 
 71.17  produced by wind energy conversion systems after December 31, 
 71.18  2002. 
 71.19     Sec. 14.  Minnesota Statutes 2001 Supplement, section 
 71.20  273.124, subdivision 11, is amended to read: 
 71.21     Subd. 11.  [LIMITATION ON HOMESTEAD REDUCTIONS 
 71.22  TREATMENT.] (a) For taxes payable in 2003 through 2005 only, if 
 71.23  the assessor has classified a property as both homestead and 
 71.24  nonhomestead, the greater of: 
 71.25     (1) the value attributable to the portion of the property 
 71.26  used as a homestead; or 
 71.27     (2) the homestead value amount determined under paragraph 
 71.28  (b), is entitled to assessment as a homestead under section 
 71.29  273.13, subdivision 22 or 23. 
 71.30     (b) For taxes payable in 2003 only, the homestead value 
 71.31  amount is $60,000.  For taxes payable in 2004 only, the 
 71.32  homestead value amount is $45,000.  For taxes payable in 2005 
 71.33  only, the homestead value amount is $30,000. 
 71.34     (c) If the assessor has classified a property as both 
 71.35  homestead and nonhomestead, the reductions in tax provided under 
 71.36  sections 273.135 and 273.1391 apply to the value of both the 
 72.1   homestead and the nonhomestead portions of the property. 
 72.2      Sec. 15.  Minnesota Statutes 2000, section 273.125, 
 72.3   subdivision 3, is amended to read: 
 72.4      Subd. 3.  [TAX STATEMENTS; PENALTIES; COLLECTIONS.] Not 
 72.5   later than July 15 in the year of assessment the county 
 72.6   treasurer shall mail to the taxpayer a statement of tax due on a 
 72.7   manufactured home.  The taxes are due on the last day of August, 
 72.8   or 20 days after the postmark date on the envelope containing 
 72.9   the property tax statement, whichever is later, except that if 
 72.10  the tax exceeds $50, one-half of the amount due may be paid on 
 72.11  August 31, or 20 days after the postmark date on the envelope 
 72.12  containing the property tax statement, whichever is later, and 
 72.13  the remainder on November 15.  Taxes remaining unpaid after the 
 72.14  due date are delinquent, and a penalty of eight percent must be 
 72.15  assessed and collected as part of the unpaid taxes.  The tax 
 72.16  statement must contain a sentence notifying the taxpayer that 
 72.17  the title to the manufactured home cannot be transferred unless 
 72.18  the property taxes are paid. 
 72.19     <b>[EFFECTIVE DATE.]</b> This section is effective for tax 
 72.20  statements issued in 2003 and thereafter. 
 72.21     Sec. 16.  Minnesota Statutes 2001 Supplement, section 
 72.22  273.13, subdivision 22, is amended to read: 
 72.23     Subd. 22.  [CLASS 1.] (a) Except as provided in subdivision 
 72.24  23 and in paragraphs (b) and (c), real estate which is 
 72.25  residential and used for homestead purposes is class 1a.  In the 
 72.26  case of a duplex or triplex in which one of the units is used 
 72.27  for homestead purposes, the entire property is deemed to be used 
 72.28  for homestead purposes.  The market value of class 1a property 
 72.29  must be determined based upon the value of the house, garage, 
 72.30  and land.  
 72.31     The first $500,000 of market value of class 1a property has 
 72.32  a net class rate of one percent of its market value; and the 
 72.33  market value of class 1a property that exceeds $500,000 has a 
 72.34  class rate of 1.25 percent of its market value. 
 72.35     (b) Class 1b property includes homestead real estate or 
 72.36  homestead manufactured homes used for the purposes of a 
 73.1   homestead by 
 73.2      (1) any blind person, or the blind person and the blind 
 73.3   person's spouse; or 
 73.4      (2) any person, hereinafter referred to as "veteran," who: 
 73.5      (i) served in the active military or naval service of the 
 73.6   United States; and 
 73.7      (ii) is entitled to compensation under the laws and 
 73.8   regulations of the United States for permanent and total 
 73.9   service-connected disability due to the loss, or loss of use, by 
 73.10  reason of amputation, ankylosis, progressive muscular 
 73.11  dystrophies, or paralysis, of both lower extremities, such as to 
 73.12  preclude motion without the aid of braces, crutches, canes, or a 
 73.13  wheelchair; and 
 73.14     (iii) has acquired a special housing unit with special 
 73.15  fixtures or movable facilities made necessary by the nature of 
 73.16  the veteran's disability, or the surviving spouse of the 
 73.17  deceased veteran for as long as the surviving spouse retains the 
 73.18  special housing unit as a homestead; or 
 73.19     (3) any person who: 
 73.20     (i) is permanently and totally disabled and 
 73.21     (ii) receives 90 percent or more of total household income, 
 73.22  as defined in section 290A.03, subdivision 5, from 
 73.23     (A) aid from any state as a result of that disability; or 
 73.24     (B) supplemental security income for the disabled; or 
 73.25     (C) workers' compensation based on a finding of total and 
 73.26  permanent disability; or 
 73.27     (D) social security disability, including the amount of a 
 73.28  disability insurance benefit which is converted to an old age 
 73.29  insurance benefit and any subsequent cost of living increases; 
 73.30  or 
 73.31     (E) aid under the federal Railroad Retirement Act of 1937, 
 73.32  United States Code Annotated, title 45, section 228b(a)5; or 
 73.33     (F) a pension from any local government retirement fund 
 73.34  located in the state of Minnesota as a result of that 
 73.35  disability; or 
 73.36     (G) pension, annuity, or other income paid as a result of 
 74.1   that disability from a private pension or disability plan, 
 74.2   including employer, employee, union, and insurance plans and 
 74.3      (iii) has household income as defined in section 290A.03, 
 74.4   subdivision 5, of $50,000 or less; or 
 74.5      (4) any person who is permanently and totally disabled and 
 74.6   whose household income as defined in section 290A.03, 
 74.7   subdivision 5, is 275 percent or less of the federal poverty 
 74.8   level. 
 74.9      Property is classified and assessed under clause (4) only 
 74.10  if the government agency or income-providing source certifies, 
 74.11  upon the request of the homestead occupant, that the homestead 
 74.12  occupant satisfies the disability requirements of this paragraph.
 74.13     Property is classified and assessed pursuant to clause (1) 
 74.14  only if the commissioner of economic security certifies to the 
 74.15  assessor that the homestead occupant satisfies the requirements 
 74.16  of this paragraph.  
 74.17     Permanently and totally disabled for the purpose of this 
 74.18  subdivision means a condition which is permanent in nature and 
 74.19  totally incapacitates the person from working at an occupation 
 74.20  which brings the person an income.  The first $32,000 market 
 74.21  value of class 1b property has a net class rate of .45 percent 
 74.22  of its market value.  The remaining market value of class 1b 
 74.23  property has a class rate using the rates for class 1a or class 
 74.24  2a property, whichever is appropriate, of similar market value.  
 74.25     (c) Class 1c property is commercial use real property that 
 74.26  abuts a lakeshore line and is devoted to temporary and seasonal 
 74.27  residential occupancy for recreational purposes but not devoted 
 74.28  to commercial purposes for more than 250 days in the year 
 74.29  preceding the year of assessment, and that includes a portion 
 74.30  used as a homestead by the owner, which includes a dwelling 
 74.31  occupied as a homestead by a shareholder of a corporation that 
 74.32  owns the resort or a partner in a partnership that owns the 
 74.33  resort, even if the title to the homestead is held by the 
 74.34  corporation or partnership.  For purposes of this clause, 
 74.35  property is devoted to a commercial purpose on a specific day if 
 74.36  any portion of the property, excluding the portion used 
 75.1   exclusively as a homestead, is used for residential occupancy 
 75.2   and a fee is charged for residential occupancy.  The first 
 75.3   $500,000 of market value of class 1c property has a class rate 
 75.4   of one percent, and the remaining market value of class 1c 
 75.5   property has a class rate of one percent, with the following 
 75.6   limitation:  the area of the property must not exceed 100 feet 
 75.7   of lakeshore footage for each cabin or campsite located on the 
 75.8   property up to a total of 800 feet and 500 feet in depth, 
 75.9   measured away from the lakeshore.  If any portion of the class 
 75.10  1c resort property is classified as class 4c under subdivision 
 75.11  25, the entire property must meet the requirements of 
 75.12  subdivision 25, paragraph (d), clause (1), to qualify for class 
 75.13  1c treatment under this paragraph. 
 75.14     (d) Class 1d property includes structures that meet all of 
 75.15  the following criteria: 
 75.16     (1) the structure is located on property that is classified 
 75.17  as agricultural property under section 273.13, subdivision 23; 
 75.18     (2) the structure is occupied exclusively by seasonal farm 
 75.19  workers during the time when they work on that farm, and the 
 75.20  occupants are not charged rent for the privilege of occupying 
 75.21  the property, provided that use of the structure for storage of 
 75.22  farm equipment and produce does not disqualify the property from 
 75.23  classification under this paragraph; 
 75.24     (3) the structure meets all applicable health and safety 
 75.25  requirements for the appropriate season; and 
 75.26     (4) the structure is not salable as residential property 
 75.27  because it does not comply with local ordinances relating to 
 75.28  location in relation to streets or roads. 
 75.29     The market value of class 1d property has the same class 
 75.30  rates as class 1a property under paragraph (a). 
 75.31     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 75.32  payable in 2003 and subsequent years. 
 75.33     Sec. 17.  Minnesota Statutes 2001 Supplement, section 
 75.34  273.13, subdivision 25, is amended to read: 
 75.35     Subd. 25.  [CLASS 4.] (a) Class 4a is residential real 
 75.36  estate containing four or more units and used or held for use by 
 76.1   the owner or by the tenants or lessees of the owner as a 
 76.2   residence for rental periods of 30 days or more.  Class 4a also 
 76.3   includes hospitals licensed under sections 144.50 to 144.56, 
 76.4   other than hospitals exempt under section 272.02, and contiguous 
 76.5   property used for hospital purposes, without regard to whether 
 76.6   the property has been platted or subdivided.  The market value 
 76.7   of class 4a property has a class rate of 1.8 percent for taxes 
 76.8   payable in 2002, 1.5 percent for taxes payable in 2003, and 1.25 
 76.9   percent for taxes payable in 2004 and thereafter, except that 
 76.10  class 4a property consisting of a structure for which 
 76.11  construction commenced after June 30, 2001, has a class rate of 
 76.12  1.25 percent of market value for taxes payable in 2003 and 
 76.13  subsequent years. 
 76.14     (b) Class 4b includes: 
 76.15     (1) residential real estate containing less than four units 
 76.16  that does not qualify as class 4bb, other than seasonal 
 76.17  residential, and recreational; 
 76.18     (2) manufactured homes not classified under any other 
 76.19  provision; 
 76.20     (3) a dwelling, garage, and surrounding one acre of 
 76.21  property on a nonhomestead farm classified under subdivision 23, 
 76.22  paragraph (b) containing two or three units; 
 76.23     (4) unimproved property that is classified residential as 
 76.24  determined under subdivision 33.  
 76.25     The market value of class 4b property has a class rate of 
 76.26  1.5 percent for taxes payable in 2002, and 1.25 percent for 
 76.27  taxes payable in 2003 and thereafter. 
 76.28     (c) Class 4bb includes: 
 76.29     (1) nonhomestead residential real estate containing one 
 76.30  unit, other than seasonal residential, and recreational; and 
 76.31     (2) a single family dwelling, garage, and surrounding one 
 76.32  acre of property on a nonhomestead farm classified under 
 76.33  subdivision 23, paragraph (b). 
 76.34     Class 4bb property has the same class rates as class 1a 
 76.35  property under subdivision 22. 
 76.36     Property that has been classified as seasonal recreational 
 77.1   residential property at any time during which it has been owned 
 77.2   by the current owner or spouse of the current owner does not 
 77.3   qualify for class 4bb. 
 77.4      (d) Class 4c property includes: 
 77.5      (1) except as provided in subdivision 22, paragraph (c), 
 77.6   real property devoted to temporary and seasonal residential 
 77.7   occupancy for recreation purposes, including real property 
 77.8   devoted to temporary and seasonal residential occupancy for 
 77.9   recreation purposes and not devoted to commercial purposes for 
 77.10  more than 250 days in the year preceding the year of 
 77.11  assessment.  For purposes of this clause, property is devoted to 
 77.12  a commercial purpose on a specific day if any portion of the 
 77.13  property is used for residential occupancy, and a fee is charged 
 77.14  for residential occupancy.  In order for a property to be 
 77.15  classified as class 4c, seasonal recreational residential for 
 77.16  commercial purposes, at least 40 percent of the annual gross 
 77.17  lodging receipts related to the property must be from business 
 77.18  conducted during 90 consecutive days and either (i) at least 60 
 77.19  percent of all paid bookings by lodging guests during the year 
 77.20  must be for periods of at least two consecutive nights; or (ii) 
 77.21  at least 20 percent of the annual gross receipts must be from 
 77.22  charges for rental of fish houses, boats and motors, 
 77.23  snowmobiles, downhill or cross-country ski equipment, or charges 
 77.24  for marina services, launch services, and guide services, or the 
 77.25  sale of bait and fishing tackle.  For purposes of this 
 77.26  determination, a paid booking of five or more nights shall be 
 77.27  counted as two bookings.  Class 4c also includes commercial use 
 77.28  real property used exclusively for recreational purposes in 
 77.29  conjunction with class 4c property devoted to temporary and 
 77.30  seasonal residential occupancy for recreational purposes, up to 
 77.31  a total of two acres, provided the property is not devoted to 
 77.32  commercial recreational use for more than 250 days in the year 
 77.33  preceding the year of assessment and is located within two miles 
 77.34  of the class 4c property with which it is used.  Class 4c 
 77.35  property classified in this clause also includes the remainder 
 77.36  of class 1c resorts provided that the entire property including 
 78.1   that portion of the property classified as class 1c also meets 
 78.2   the requirements for class 4c under this clause; otherwise the 
 78.3   entire property is classified as class 3.  Owners of real 
 78.4   property devoted to temporary and seasonal residential occupancy 
 78.5   for recreation purposes and all or a portion of which was 
 78.6   devoted to commercial purposes for not more than 250 days in the 
 78.7   year preceding the year of assessment desiring classification as 
 78.8   class 1c or 4c, must submit a declaration to the assessor 
 78.9   designating the cabins or units occupied for 250 days or less in 
 78.10  the year preceding the year of assessment by January 15 of the 
 78.11  assessment year.  Those cabins or units and a proportionate 
 78.12  share of the land on which they are located will be designated 
 78.13  class 1c or 4c as otherwise provided.  The remainder of the 
 78.14  cabins or units and a proportionate share of the land on which 
 78.15  they are located will be designated as class 3a.  The owner of 
 78.16  property desiring designation as class 1c or 4c property must 
 78.17  provide guest registers or other records demonstrating that the 
 78.18  units for which class 1c or 4c designation is sought were not 
 78.19  occupied for more than 250 days in the year preceding the 
 78.20  assessment if so requested.  The portion of a property operated 
 78.21  as a (1) restaurant, (2) bar, (3) gift shop, and (4) other 
 78.22  nonresidential facility operated on a commercial basis not 
 78.23  directly related to temporary and seasonal residential occupancy 
 78.24  for recreation purposes shall not qualify for class 1c or 4c; 
 78.25     (2) qualified property used as a golf course if: 
 78.26     (i) it is open to the public on a daily fee basis.  It may 
 78.27  charge membership fees or dues, but a membership fee may not be 
 78.28  required in order to use the property for golfing, and its green 
 78.29  fees for golfing must be comparable to green fees typically 
 78.30  charged by municipal courses; and 
 78.31     (ii) it meets the requirements of section 273.112, 
 78.32  subdivision 3, paragraph (d). 
 78.33     A structure used as a clubhouse, restaurant, or place of 
 78.34  refreshment in conjunction with the golf course is classified as 
 78.35  class 3a property; 
 78.36     (3) real property up to a maximum of one acre of land owned 
 79.1   by a nonprofit community service oriented organization; provided 
 79.2   that the property is not used for a revenue-producing activity 
 79.3   for more than six days in the calendar year preceding the year 
 79.4   of assessment and the property is not used for residential 
 79.5   purposes on either a temporary or permanent basis.  For purposes 
 79.6   of this clause, a "nonprofit community service oriented 
 79.7   organization" means any corporation, society, association, 
 79.8   foundation, or institution organized and operated exclusively 
 79.9   for charitable, religious, fraternal, civic, or educational 
 79.10  purposes, and which is exempt from federal income taxation 
 79.11  pursuant to section 501(c)(3), (10), or (19) of the Internal 
 79.12  Revenue Code of 1986, as amended through December 31, 1990.  For 
 79.13  purposes of this clause, "revenue-producing activities" shall 
 79.14  include but not be limited to property or that portion of the 
 79.15  property that is used as an on-sale intoxicating liquor or 3.2 
 79.16  percent malt liquor establishment licensed under chapter 340A, a 
 79.17  restaurant open to the public, bowling alley, a retail store, 
 79.18  gambling conducted by organizations licensed under chapter 349, 
 79.19  an insurance business, or office or other space leased or rented 
 79.20  to a lessee who conducts a for-profit enterprise on the 
 79.21  premises.  Any portion of the property which is used for 
 79.22  revenue-producing activities for more than six days in the 
 79.23  calendar year preceding the year of assessment shall be assessed 
 79.24  as class 3a.  The use of the property for social events open 
 79.25  exclusively to members and their guests for periods of less than 
 79.26  24 hours, when an admission is not charged nor any revenues are 
 79.27  received by the organization shall not be considered a 
 79.28  revenue-producing activity; 
 79.29     (4) post-secondary student housing of not more than one 
 79.30  acre of land that is owned by a nonprofit corporation organized 
 79.31  under chapter 317A and is used exclusively by a student 
 79.32  cooperative, sorority, or fraternity for on-campus housing or 
 79.33  housing located within two miles of the border of a college 
 79.34  campus; 
 79.35     (5) manufactured home parks as defined in section 327.14, 
 79.36  subdivision 3; 
 80.1      (6) real property that is actively and exclusively devoted 
 80.2   to indoor fitness, health, social, recreational, and related 
 80.3   uses, is owned and operated by a not-for-profit corporation, and 
 80.4   is located within the metropolitan area as defined in section 
 80.5   473.121, subdivision 2; and 
 80.6      (7) a leased or privately owned noncommercial aircraft 
 80.7   storage hangar not exempt under section 272.01, subdivision 2, 
 80.8   and the land on which it is located, provided that: 
 80.9      (i) the land is on an airport owned or operated by a city, 
 80.10  town, county, metropolitan airports commission, or group 
 80.11  thereof; and 
 80.12     (ii) the land lease, or any ordinance or signed agreement 
 80.13  restricting the use of the leased premise, prohibits commercial 
 80.14  activity performed at the hangar. 
 80.15     If a hangar classified under this clause is sold after June 
 80.16  30, 2000, a bill of sale must be filed by the new owner with the 
 80.17  assessor of the county where the property is located within 60 
 80.18  days of the sale; and 
 80.19     (8) residential real estate, a portion of which is used by 
 80.20  the owner for homestead purposes, and that is also a place of 
 80.21  lodging, if all of the following criteria are met: 
 80.22     (i) rooms are provided for rent to transient guests that 
 80.23  generally stay for periods of 14 or fewer days; 
 80.24     (ii) meals are provided to persons who rent rooms, the cost 
 80.25  of which is incorporated in the basic room rate; 
 80.26     (iii) meals are not provided to the general public except 
 80.27  for special events on fewer than seven days in the calendar year 
 80.28  preceding the year of the assessment; and 
 80.29     (iv) the owner is the operator of the property. 
 80.30  The market value subject to the 4c classification under this 
 80.31  clause is limited to five rental units.  Any rental units on the 
 80.32  property in excess of five, must be valued and assessed as class 
 80.33  3a.  The portion of the property used for purposes of a 
 80.34  homestead by the owner must be classified as class 1a property 
 80.35  under subdivision 22. 
 80.36     Class 4c property has a class rate of 1.5 percent of market 
 81.1   value, except that (i) each parcel of seasonal residential 
 81.2   recreational property not used for commercial purposes has the 
 81.3   same class rates as class 4bb property, (ii) manufactured home 
 81.4   parks assessed under clause (5) have the same class rate as 
 81.5   class 4b property, (iii) commercial-use seasonal residential 
 81.6   recreational property has a class rate of one percent for the 
 81.7   first $500,000 of market value, which includes any market value 
 81.8   receiving the one percent rate under subdivision 22, and 1.25 
 81.9   percent for the remaining market value, (iv) the market value of 
 81.10  property described in clause (4) has a class rate of one 
 81.11  percent, and (v) the market value of property described in 
 81.12  clauses (2) and (6) has a class rate of 1.25 percent, and (vi) 
 81.13  that portion of the market value of property in clause (8) 
 81.14  qualifying for class 4c property has a class rate of 1.25 
 81.15  percent.  
 81.16     (e) Class 4d property is qualifying low-income rental 
 81.17  housing certified to the assessor by the housing finance agency 
 81.18  under sections 273.126 and 462A.071.  Class 4d includes land in 
 81.19  proportion to the total market value of the building that is 
 81.20  qualifying low-income rental housing.  For all properties 
 81.21  qualifying as class 4d, the market value determined by the 
 81.22  assessor must be based on the normal approach to value using 
 81.23  normal unrestricted rents. 
 81.24     Class 4d property has a class rate of 0.9 percent for taxes 
 81.25  payable in 2002, and one percent for taxes payable in 2003 and 
 81.26  1.25 percent for taxes payable in 2004 and thereafter.  
 81.27     <b>[EFFECTIVE DATE.]</b> This section is effective for assessment 
 81.28  year 2002 and thereafter, for taxes payable in 2003 and 
 81.29  thereafter. 
 81.30     Sec. 18.  Minnesota Statutes 2001 Supplement, section 
 81.31  273.1384, subdivision 1, is amended to read: 
 81.32     Subdivision 1.  [RESIDENTIAL HOMESTEAD MARKET VALUE 
 81.33  CREDIT.] Each county auditor shall determine a homestead credit 
 81.34  for each class 1a, 1b, 1c, and 2a homestead property within the 
 81.35  county equal to 0.4 percent of the market value of the 
 81.36  property.  The amount of homestead credit for a homestead may 
 82.1   not exceed $304 and is reduced by .09 percent of the market 
 82.2   value in excess of $76,000.  In the case of an agricultural or 
 82.3   resort homestead, only the market value of the house, garage, 
 82.4   and immediately surrounding one acre of land is eligible in 
 82.5   determining the property's homestead credit.  In the case of a 
 82.6   property which is classified as part homestead and part 
 82.7   nonhomestead, the credit shall apply only to the homestead 
 82.8   portion of the property. 
 82.9      <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 82.10  payable in 2003 and subsequent years. 
 82.11     Sec. 19.  Minnesota Statutes 2001 Supplement, section 
 82.12  273.1384, subdivision 2, is amended to read: 
 82.13     Subd. 2.  [AGRICULTURAL HOMESTEAD MARKET VALUE CREDIT.] 
 82.14  Property classified as class 2a agricultural homestead is 
 82.15  eligible for an agricultural credit.  The credit is equal to 0.2 
 82.16  0.3 percent of the first $115,000 of the property's market 
 82.17  value.  The credit under this subdivision is limited 
 82.18  to $230 $345 for each homestead.  The credit is reduced by .05 
 82.19  percent of the market value in excess of $115,000, subject to a 
 82.20  maximum reduction of $115.  
 82.21     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 82.22  payable in 2003 and thereafter. 
 82.23     Sec. 20.  Minnesota Statutes 2000, section 273.1398, 
 82.24  subdivision 1a, is amended to read: 
 82.25     Subd. 1a.  [TAX BASE DIFFERENTIAL.] (a) For aids payable in 
 82.26  2000 2003, the tax base differential is: 
 82.27     (1) 0.45 percent of the assessment year 1998 taxable market 
 82.28  value of class 2a agricultural homestead property, excluding the 
 82.29  house, garage, and surrounding one acre of land, between 
 82.30  $115,000 and $600,000 and over 320 acres, minus the value over 
 82.31  $600,000 that is less than 320 acres 31 percent of the 
 82.32  assessment year 2000 net tax capacity of public utility property 
 82.33  reported by the county on the 2000 abstract of assessment as 
 82.34  public utility land and buildings valued up to $150,000; plus 
 82.35     (2) 0.5 percent of the assessment year 1998 taxable market 
 82.36  value of noncommercial seasonal recreational residential 
 83.1   property over $75,000 in value 34 percent of the assessment year 
 83.2   2000 net tax capacity of public utility property reported by the 
 83.3   county on the 2000 abstract of assessment as public utility land 
 83.4   and buildings valued over $150,000; plus 
 83.5      (3) for purposes of computing the fiscal disparity 
 83.6   adjustment only, 0.2 percent of the assessment year 1998 taxable 
 83.7   market value of class 3 commercial-industrial property over 
 83.8   $150,000 34 percent of the assessment year 2000 net tax capacity 
 83.9   of public utility property reported by the county on the 2000 
 83.10  abstract of assessment as public utility machinery, systems of 
 83.11  electric utilities-transmission, systems of electric 
 83.12  utilities-distribution, and systems of gas utilities. 
 83.13     (b) For the purposes of the distribution of homestead and 
 83.14  agricultural credit aid for aids payable in 2000, the 
 83.15  commissioner of revenue shall use the best information available 
 83.16  as of June 30, 1999, to make an estimate of the value described 
 83.17  in paragraph (a), clause (1).  The commissioner shall adjust the 
 83.18  distribution of homestead and agricultural credit aid for aids 
 83.19  payable in 2001 and subsequent years if new information 
 83.20  regarding the value described in paragraph (a), clause (1), 
 83.21  becomes available after June 30, 1999 Notwithstanding the 
 83.22  computation in paragraph (a), the tax base differential shall be 
 83.23  zero in all counties in which the sum of the net tax capacities 
 83.24  of properties described in paragraph (a) does not exceed 40 
 83.25  percent of the total assessment year 2000 net tax capacity of 
 83.26  the county. 
 83.27     Sec. 21.  Minnesota Statutes 2000, section 273.1398, 
 83.28  subdivision 2, is amended to read: 
 83.29     Subd. 2.  [HOMESTEAD AND AGRICULTURAL CREDIT AID.] (a) 
 83.30  Homestead and agricultural credit aid for each unique taxing 
 83.31  jurisdiction equals the product of (1) the homestead and 
 83.32  agricultural credit aid base, and (2) the growth adjustment 
 83.33  factor, plus the net tax capacity adjustment and the fiscal 
 83.34  disparity adjustment.  
 83.35     (b) For the purposes of determining the net tax capacity 
 83.36  adjustment for aids payable in 2003, the "current local tax 
 84.1   rate" and the "previous net tax capacity" as defined under 
 84.2   subdivision 1 shall be determined using tax capacities and tax 
 84.3   rates in effect for taxes payable in 2001. 
 84.4      Sec. 22.  Minnesota Statutes 2001 Supplement, section 
 84.5   275.065, subdivision 3, is amended to read: 
 84.6      Subd. 3.  [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The 
 84.7   county auditor shall prepare and the county treasurer shall 
 84.8   deliver after November 10 and on or before November 24 each 
 84.9   year, by first class mail to each taxpayer at the address listed 
 84.10  on the county's current year's assessment roll, a notice of 
 84.11  proposed property taxes.  
 84.12     (b) The commissioner of revenue shall prescribe the form of 
 84.13  the notice. 
 84.14     (c) The notice must inform taxpayers that it contains the 
 84.15  amount of property taxes each taxing authority proposes to 
 84.16  collect for taxes payable the following year.  In the case of a 
 84.17  town, or in the case of the state determined portion of the 
 84.18  school district levy general tax, the final tax amount will be 
 84.19  its proposed tax.  In the case of taxing authorities required to 
 84.20  hold a public meeting under subdivision 6, the notice must 
 84.21  clearly state that each taxing authority, including regional 
 84.22  library districts established under section 134.201, and 
 84.23  including the metropolitan taxing districts as defined in 
 84.24  paragraph (i), but excluding all other special taxing districts 
 84.25  and towns, will hold a public meeting to receive public 
 84.26  testimony on the proposed budget and proposed or final property 
 84.27  tax levy, or, in case of a school district, on the current 
 84.28  budget and proposed property tax levy.  It must clearly state 
 84.29  the time and place of each taxing authority's meeting, a 
 84.30  telephone number for the taxing authority that taxpayers may 
 84.31  call if they have questions related to the notice, and an 
 84.32  address where comments will be received by mail.  
 84.33     (d) The notice must state for each parcel: 
 84.34     (1) the market value of the property as determined under 
 84.35  section 273.11, and used for computing property taxes payable in 
 84.36  the following year and for taxes payable in the current year as 
 85.1   each appears in the records of the county assessor on November 1 
 85.2   of the current year; and, in the case of residential property, 
 85.3   whether the property is classified as homestead or 
 85.4   nonhomestead.  The notice must clearly inform taxpayers of the 
 85.5   years to which the market values apply and that the values are 
 85.6   final values; 
 85.7      (2) the items listed below, shown separately by county, 
 85.8   city or town, and state determined school general tax, net of 
 85.9   the education residential and agricultural homestead credit 
 85.10  under section 273.1382 273.1384, voter approved school levy, 
 85.11  other local school levy, and the sum of the special taxing 
 85.12  districts, and as a total of all taxing authorities:  
 85.13     (i) the actual tax for taxes payable in the current year; 
 85.14     (ii) the tax change due to spending factors, defined as the 
 85.15  proposed tax minus the constant spending tax amount; 
 85.16     (iii) the tax change due to other factors, defined as the 
 85.17  constant spending tax amount minus the actual current year tax; 
 85.18  and 
 85.19     (iv) the proposed tax amount. 
 85.20     If the county levy under clause (2) includes an amount for 
 85.21  a lake improvement district as defined under sections 103B.501 
 85.22  to 103B.581, the amount attributable for that purpose must be 
 85.23  separately stated from the remaining county levy amount.  
 85.24     In the case of a town or the state determined school 
 85.25  general tax, the final tax shall also be its proposed tax unless 
 85.26  the town changes its levy at a special town meeting under 
 85.27  section 365.52.  If a school district has certified under 
 85.28  section 126C.17, subdivision 9, that a referendum will be held 
 85.29  in the school district at the November general election, the 
 85.30  county auditor must note next to the school district's proposed 
 85.31  amount that a referendum is pending and that, if approved by the 
 85.32  voters, the tax amount may be higher than shown on the notice.  
 85.33  In the case of the city of Minneapolis, the levy for the 
 85.34  Minneapolis library board and the levy for Minneapolis park and 
 85.35  recreation shall be listed separately from the remaining amount 
 85.36  of the city's levy.  In the case of a parcel where tax increment 
 86.1   or the fiscal disparities areawide tax under chapter 276A or 
 86.2   473F applies, the proposed tax levy on the captured value or the 
 86.3   proposed tax levy on the tax capacity subject to the areawide 
 86.4   tax must each be stated separately and not included in the sum 
 86.5   of the special taxing districts; and 
 86.6      (3) the increase or decrease between the total taxes 
 86.7   payable in the current year and the total proposed taxes, 
 86.8   expressed as a percentage. 
 86.9      For purposes of this section, the amount of the tax on 
 86.10  homesteads qualifying under the senior citizens' property tax 
 86.11  deferral program under chapter 290B is the total amount of 
 86.12  property tax before subtraction of the deferred property tax 
 86.13  amount. 
 86.14     (e) The notice must clearly state that the proposed or 
 86.15  final taxes do not include the following: 
 86.16     (1) special assessments; 
 86.17     (2) levies approved by the voters after the date the 
 86.18  proposed taxes are certified, including bond referenda, school 
 86.19  district levy referenda, and levy limit increase referenda; 
 86.20     (3) amounts necessary to pay cleanup or other costs due to 
 86.21  a natural disaster occurring after the date the proposed taxes 
 86.22  are certified; 
 86.23     (4) amounts necessary to pay tort judgments against the 
 86.24  taxing authority that become final after the date the proposed 
 86.25  taxes are certified; and 
 86.26     (5) the contamination tax imposed on properties which 
 86.27  received market value reductions for contamination. 
 86.28     (f) Except as provided in subdivision 7, failure of the 
 86.29  county auditor to prepare or the county treasurer to deliver the 
 86.30  notice as required in this section does not invalidate the 
 86.31  proposed or final tax levy or the taxes payable pursuant to the 
 86.32  tax levy. 
 86.33     (g) If the notice the taxpayer receives under this section 
 86.34  lists the property as nonhomestead, and satisfactory 
 86.35  documentation is provided to the county assessor by the 
 86.36  applicable deadline, and the property qualifies for the 
 87.1   homestead classification in that assessment year, the assessor 
 87.2   shall reclassify the property to homestead for taxes payable in 
 87.3   the following year. 
 87.4      (h) In the case of class 4 residential property used as a 
 87.5   residence for lease or rental periods of 30 days or more, the 
 87.6   taxpayer must either: 
 87.7      (1) mail or deliver a copy of the notice of proposed 
 87.8   property taxes to each tenant, renter, or lessee; or 
 87.9      (2) post a copy of the notice in a conspicuous place on the 
 87.10  premises of the property.  
 87.11     The notice must be mailed or posted by the taxpayer by 
 87.12  November 27 or within three days of receipt of the notice, 
 87.13  whichever is later.  A taxpayer may notify the county treasurer 
 87.14  of the address of the taxpayer, agent, caretaker, or manager of 
 87.15  the premises to which the notice must be mailed in order to 
 87.16  fulfill the requirements of this paragraph. 
 87.17     (i) For purposes of this subdivision, subdivisions 5a and 
 87.18  6, "metropolitan special taxing districts" means the following 
 87.19  taxing districts in the seven-county metropolitan area that levy 
 87.20  a property tax for any of the specified purposes listed below: 
 87.21     (1) metropolitan council under section 473.132, 473.167, 
 87.22  473.249, 473.325, 473.446, 473.521, 473.547, or 473.834; 
 87.23     (2) metropolitan airports commission under section 473.667, 
 87.24  473.671, or 473.672; and 
 87.25     (3) metropolitan mosquito control commission under section 
 87.26  473.711. 
 87.27     For purposes of this section, any levies made by the 
 87.28  regional rail authorities in the county of Anoka, Carver, 
 87.29  Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 
 87.30  398A shall be included with the appropriate county's levy and 
 87.31  shall be discussed at that county's public hearing. 
 87.32     (j) If a statutory or home rule charter city or a town has 
 87.33  exercised the local levy option provided by section 473.388, 
 87.34  subdivision 7, it may include in the notice of its proposed 
 87.35  taxes the amount of its proposed taxes attributable to its 
 87.36  exercise of the option.  In the first year of the city or town's 
 88.1   exercise of this option, the statement shall include an estimate 
 88.2   of the reduction of the metropolitan council's tax on the parcel 
 88.3   due to exercise of that option.  The metropolitan council's levy 
 88.4   shall be adjusted accordingly. 
 88.5      <b>[EFFECTIVE DATE.]</b> This section is effective for notices of 
 88.6   proposed property taxes prepared in 2002, for taxes payable in 
 88.7   2003, and thereafter.  
 88.8      Sec. 23.  Minnesota Statutes 2001 Supplement, section 
 88.9   276.04, subdivision 2, is amended to read: 
 88.10     Subd. 2.  [CONTENTS OF TAX STATEMENTS.] (a) The treasurer 
 88.11  shall provide for the printing of the tax statements.  The 
 88.12  commissioner of revenue shall prescribe the form of the property 
 88.13  tax statement and its contents.  The statement must contain a 
 88.14  tabulated statement of the dollar amount due to each taxing 
 88.15  authority and the amount of the state tax from the parcel of 
 88.16  real property for which a particular tax statement is prepared.  
 88.17  The dollar amounts attributable to the county, the state tax, 
 88.18  the voter approved school tax, the other local school tax, the 
 88.19  township or municipality, and the total of the metropolitan 
 88.20  special taxing districts as defined in section 275.065, 
 88.21  subdivision 3, paragraph (i), must be separately stated.  The 
 88.22  amounts due all other special taxing districts, if any, may be 
 88.23  aggregated.  If the county levy under this paragraph includes an 
 88.24  amount for a lake improvement district as defined under sections 
 88.25  103B.501 to 103B.581, the amount attributable for that purpose 
 88.26  must be separately stated from the remaining county levy 
 88.27  amount.  The amount of the tax on homesteads qualifying under 
 88.28  the senior citizens' property tax deferral program under chapter 
 88.29  290B is the total amount of property tax before subtraction of 
 88.30  the deferred property tax amount.  The amount of the tax on 
 88.31  contamination value imposed under sections 270.91 to 270.98, if 
 88.32  any, must also be separately stated.  The dollar amounts, 
 88.33  including the dollar amount of any special assessments, may be 
 88.34  rounded to the nearest even whole dollar.  For purposes of this 
 88.35  section whole odd-numbered dollars may be adjusted to the next 
 88.36  higher even-numbered dollar.  The amount of market value 
 89.1   excluded under section 273.11, subdivision 16, if any, must also 
 89.2   be listed on the tax statement. 
 89.3      (b) The property tax statements for manufactured homes and 
 89.4   sectional structures taxed as personal property shall contain 
 89.5   the same information that is required on the tax statements for 
 89.6   real property.  
 89.7      (c) Real and personal property tax statements must contain 
 89.8   the following information in the order given in this paragraph.  
 89.9   The information must contain the current year tax information in 
 89.10  the right column with the corresponding information for the 
 89.11  previous year in a column on the left: 
 89.12     (1) the property's estimated market value under section 
 89.13  273.11, subdivision 1; 
 89.14     (2) the property's taxable market value after reductions 
 89.15  under section 273.11, subdivisions 1a and 16; 
 89.16     (3) the property's gross tax, calculated by adding the 
 89.17  property's total property tax to the sum of the aids enumerated 
 89.18  in clause (4); 
 89.19     (4) a total of the following aids: 
 89.20     (i) education aids payable under chapters 122A, 123A, 123B, 
 89.21  124D, 125A, 126C, and 127A; 
 89.22     (ii) local government aids for cities, towns, and counties 
 89.23  under chapter 477A; 
 89.24     (iii) disparity reduction aid under section 273.1398; and 
 89.25     (iv) homestead and agricultural credit aid under section 
 89.26  273.1398; 
 89.27     (5) for homestead residential and agricultural properties, 
 89.28  the credits under section 273.1384; 
 89.29     (6) any credits received under sections 273.119; 273.123; 
 89.30  273.135; 273.1391; 273.1398, subdivision 4; 469.171; and 
 89.31  473H.10, except that the amount of credit received under section 
 89.32  273.135 must be separately stated and identified as "taconite 
 89.33  tax relief"; and 
 89.34     (7) the net tax payable in the manner required in paragraph 
 89.35  (a). 
 89.36     (d) If the county uses envelopes for mailing property tax 
 90.1   statements and if the county agrees, a taxing district may 
 90.2   include a notice with the property tax statement notifying 
 90.3   taxpayers when the taxing district will begin its budget 
 90.4   deliberations for the current year, and encouraging taxpayers to 
 90.5   attend the hearings.  If the county allows notices to be 
 90.6   included in the envelope containing the property tax statement, 
 90.7   and if more than one taxing district relative to a given 
 90.8   property decides to include a notice with the tax statement, the 
 90.9   county treasurer or auditor must coordinate the process and may 
 90.10  combine the information on a single announcement.  
 90.11     The commissioner of revenue shall certify to the county 
 90.12  auditor the actual or estimated aids enumerated in clause (4) 
 90.13  that local governments will receive in the following year.  The 
 90.14  commissioner must certify this amount by January 1 of each year. 
 90.15     <b>[EFFECTIVE DATE.]</b> This section is effective for property 
 90.16  tax statements prepared in 2003 and thereafter. 
 90.17     Sec. 24.  Laws 1998, chapter 389, article 3, section 42, is 
 90.18  amended to read: 
 90.19     Sec. 42.  [TRANSFER OF PROPERTY; PAYMENT OF DEFERRED 
 90.20  TAXES.] 
 90.21     Subdivision 1.  [ADDITIONAL TAX.] The assessor shall make a 
 90.22  separate determination of the market value and net tax capacity 
 90.23  of a property qualifying under section 38 as if sections 39 and 
 90.24  40 did not apply.  The tax based upon the appropriate local tax 
 90.25  rate applicable to such property in the taxing district shall be 
 90.26  recorded on the property assessment records. 
 90.27     Subd. 2.  [RECAPTURE.] (a) Property or any portion thereof 
 90.28  qualifying under section 38 is subject to additional taxes if: 
 90.29     (1) ownership of the property is transferred to anyone 
 90.30  other than the spouse or child of the current owner, or; 
 90.31     (2) the current owner or the spouse or child of the current 
 90.32  owner has not conveyed or entered into a contract before July 1, 
 90.33  2002 2007, to convey the property to a nonprofit foundation or 
 90.34  corporation created to own and operate operating the property as 
 90.35  an art park providing the services included in section 38, 
 90.36  clauses (2) to (5); or 
 91.1      (3) the nonprofit foundation or corporation to which the 
 91.2   property was transferred ceases to provide the services included 
 91.3   in section 38, clauses (2) to (5), earlier than ten years 
 91.4   following the effective date of the conveyance or of the 
 91.5   execution of the contract to convey. 
 91.6      (b) The additional taxes are imposed at the earlier of (1) 
 91.7   the year following transfer of ownership to anyone other than 
 91.8   the spouse or child of the current owner or a nonprofit 
 91.9   foundation or corporation created to own and operate operating 
 91.10  the property as an art park, or (2) for taxes payable in 2003 
 91.11  2008, or in the event the nonprofit foundation or corporation to 
 91.12  which the property was conveyed ceases to provide the required 
 91.13  services within ten years after the conveyance, for taxes 
 91.14  payable in the year following the year when it ceased to do so.  
 91.15  The additional taxes are equal to the difference between the 
 91.16  taxes determined under sections 39 and 40 and the amount 
 91.17  determined under subdivision 1 for all years that the property 
 91.18  qualified under section 38.  The additional taxes must be 
 91.19  extended against the property on the tax list for the current 
 91.20  year; provided, however, that no interest or penalties may be 
 91.21  levied on the additional taxes if timely paid. 
 91.22     Subd. 3.  [CURRENT OWNER.] For purposes of this section, 
 91.23  "current owner" means the owner of property qualifying under 
 91.24  section 38 on the date of final enactment of this act or that 
 91.25  owner's spouse or child.  
 91.26     Subd. 4.  [NONPROFIT FOUNDATION OR CORPORATION.] For 
 91.27  purposes of this act, "nonprofit foundation or corporation" 
 91.28  means a nonprofit entity created to own and operate as defined 
 91.29  under section 501(c)(3) of the Internal Revenue Code that is 
 91.30  operating the property as an art park providing the services 
 91.31  included in section 38, clauses (2) to (5). 
 91.32     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 91.33  following final enactment. 
 91.34     Sec. 25.  [COOK COUNTY; EXPENDITURE OF ROAD AND BRIDGE 
 91.35  LEVY.] 
 91.36     Notwithstanding Minnesota Statutes, section 163.06, 
 92.1   subdivisions 4 and 5, the county board of Cook county, by 
 92.2   resolution, may expend the proceeds of the levy under Minnesota 
 92.3   Statutes, section 163.06, in any organized or unorganized 
 92.4   township or portion thereof in the county. 
 92.5      <b>[EFFECTIVE DATE.]</b> This section is effective the day after 
 92.6   the governing body of Cook county and its chief clerical officer 
 92.7   timely complete their compliance with Minnesota Statutes, 
 92.8   section 645.021, subdivisions 2 and 3. 
 92.9      Sec. 26.  [REPEALER.] 
 92.10     Laws 2001, First Special Session chapter 5, article 3, 
 92.11  section 88, is repealed effective July 1, 2002. 
 92.12                             ARTICLE 5
 92.13                   EDUCATION LEVIES AND REVENUES
 92.14     Section 1.  Minnesota Statutes 2001 Supplement, section 
 92.15  124D.86, subdivision 3, is amended to read: 
 92.16     Subd. 3.  [INTEGRATION REVENUE.] Integration revenue equals 
 92.17  the following amounts: 
 92.18     (1) for independent school district No. 709, Duluth, $207 
 92.19  times the adjusted pupil units for the school year; 
 92.20     (2) for independent school district No. 625, St. Paul, and 
 92.21  for special school district No. 1, Minneapolis, $446 times the 
 92.22  adjusted pupil units for the school year; 
 92.23     (3) for special school district No. 1, Minneapolis, the sum 
 92.24  of $446 times the adjusted pupil units for the school year and 
 92.25  an additional $35 times the adjusted pupil units for the school 
 92.26  year that is provided entirely through a local levy; 
 92.27     (4) for a district not listed in clause (1) or, (2), or 
 92.28  (3), that must implement a plan under Minnesota Rules, parts 
 92.29  3535.0100 to 3535.0180, where the district's enrollment of 
 92.30  protected students, as defined under Minnesota Rules, part 
 92.31  3535.0110, exceeds 15 percent, the lesser of (i) the actual cost 
 92.32  of implementing the plan during the fiscal year minus the aid 
 92.33  received under subdivision 6, or (ii) $130 times the adjusted 
 92.34  pupil units for the school year; 
 92.35     (4) (5) for a district not listed in clause (1), (2), 
 92.36  or (3), or (4), that is required to implement a plan according 
 93.1   to the requirements of Minnesota Rules, parts 3535.0100 to 
 93.2   3535.0180, the lesser of 
 93.3      (i) the actual cost of implementing the plan during the 
 93.4   fiscal year minus the aid received under subdivision 6, or 
 93.5      (ii) $93 times the adjusted pupil units for the school year.
 93.6      Any money received by districts in clauses (1) to (3) (4) 
 93.7   which exceeds the amount received in fiscal year 2000 shall be 
 93.8   subject to the budget requirements in subdivision 1a; and 
 93.9      (5) (6) for a member district of a multidistrict 
 93.10  integration collaborative that files a plan with the 
 93.11  commissioner, but is not contiguous to a racially isolated 
 93.12  district, integration revenue equals the amount defined in 
 93.13  clause (4) (5). 
 93.14     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 93.15  following final enactment for revenue for fiscal year 2003. 
 93.16     Sec. 2.  Minnesota Statutes 2001 Supplement, section 
 93.17  126C.40, subdivision 1, is amended to read: 
 93.18     Subdivision 1.  [TO LEASE BUILDING OR LAND.] (a) When a an 
 93.19  independent or a special school district or a group of 
 93.20  independent or special school districts finds it economically 
 93.21  advantageous to rent or lease a building or land for any 
 93.22  instructional purposes or for school storage or furniture 
 93.23  repair, and it determines that the operating capital revenue 
 93.24  authorized under section 126C.10, subdivision 13, is 
 93.25  insufficient for this purpose, it may apply to the commissioner 
 93.26  for permission to make an additional capital expenditure levy 
 93.27  for this purpose.  An application for permission to levy under 
 93.28  this subdivision must contain financial justification for the 
 93.29  proposed levy, the terms and conditions of the proposed lease, 
 93.30  and a description of the space to be leased and its proposed use.
 93.31     (b) The criteria for approval of applications to levy under 
 93.32  this subdivision must include:  the reasonableness of the price, 
 93.33  the appropriateness of the space to the proposed activity, the 
 93.34  feasibility of transporting pupils to the leased building or 
 93.35  land, conformity of the lease to the laws and rules of the state 
 93.36  of Minnesota, and the appropriateness of the proposed lease to 
 94.1   the space needs and the financial condition of the district.  
 94.2   The commissioner must not authorize a levy under this 
 94.3   subdivision in an amount greater than the cost to the district 
 94.4   of renting or leasing a building or land for approved purposes.  
 94.5   The proceeds of this levy must not be used for custodial or 
 94.6   other maintenance services.  A district may not levy under this 
 94.7   subdivision for the purpose of leasing or renting a 
 94.8   district-owned building or site to itself. 
 94.9      (c) For agreements finalized after July 1, 1997, a district 
 94.10  may not levy under this subdivision for the purpose of leasing:  
 94.11  (1) a newly constructed building used primarily for regular 
 94.12  kindergarten, elementary, or secondary instruction; or (2) a 
 94.13  newly constructed building addition or additions used primarily 
 94.14  for regular kindergarten, elementary, or secondary instruction 
 94.15  that contains more than 20 percent of the square footage of the 
 94.16  previously existing building. 
 94.17     (d) Notwithstanding paragraph (b), a district may levy 
 94.18  under this subdivision for the purpose of leasing or renting a 
 94.19  district-owned building or site to itself only if the amount is 
 94.20  needed by the district to make payments required by a lease 
 94.21  purchase agreement, installment purchase agreement, or other 
 94.22  deferred payments agreement authorized by law, and the levy 
 94.23  meets the requirements of paragraph (c).  A levy authorized for 
 94.24  a district by the commissioner under this paragraph may be in 
 94.25  the amount needed by the district to make payments required by a 
 94.26  lease purchase agreement, installment purchase agreement, or 
 94.27  other deferred payments agreement authorized by law, provided 
 94.28  that any agreement include a provision giving the school 
 94.29  districts the right to terminate the agreement annually without 
 94.30  penalty. 
 94.31     (e) The total levy under this subdivision for a district 
 94.32  for any year must not exceed $100 times the resident pupil units 
 94.33  for the fiscal year to which the levy is attributable. 
 94.34     (f) For agreements for which a review and comment have been 
 94.35  submitted to the department of children, families, and learning 
 94.36  after April 1, 1998, the term "instructional purpose" as used in 
 95.1   this subdivision excludes expenditures on stadiums. 
 95.2      (g) The commissioner of children, families, and learning 
 95.3   may authorize a school district to exceed the limit in paragraph 
 95.4   (e) if the school district petitions the commissioner for 
 95.5   approval.  The commissioner shall grant approval to a school 
 95.6   district to exceed the limit in paragraph (e) for not more than 
 95.7   five years if the district meets the following criteria: 
 95.8      (1) the school district has been experiencing pupil 
 95.9   enrollment growth in the preceding five years; 
 95.10     (2) the purpose of the increased levy is in the long-term 
 95.11  public interest; 
 95.12     (3) the purpose of the increased levy promotes colocation 
 95.13  of government services; and 
 95.14     (4) the purpose of the increased levy is in the long-term 
 95.15  interest of the district by avoiding over construction of school 
 95.16  facilities. 
 95.17     (h) A school district that is a member of an intermediate 
 95.18  school district may include in its authority under this section 
 95.19  the costs associated with leases of administrative and classroom 
 95.20  space for intermediate school district programs.  This authority 
 95.21  must not exceed $25 times the adjusted marginal cost pupil units 
 95.22  of the member districts.  This authority is in addition to any 
 95.23  other authority authorized under this section. 
 95.24     (i) In addition to the allowable capital levies in 
 95.25  paragraph (a), a district that is a member of the "Technology 
 95.26  and Information Education Systems" data processing joint board, 
 95.27  that finds it economically advantageous to enter into a lease 
 95.28  purchase agreement for a building for a group of school 
 95.29  districts or special school districts for staff development 
 95.30  purposes, may levy for its portion of lease costs attributed to 
 95.31  the district within the total levy limit in paragraph (e). 
 95.32     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 95.33  payable in 2003. 
 95.34     Sec. 3.  Minnesota Statutes 2001 Supplement, section 
 95.35  126C.43, subdivision 3, is amended to read: 
 95.36     Subd. 3.  [TAX LEVY FOR JUDGMENT.] A district may levy the 
 96.1   amounts necessary to pay judgments against the district under 
 96.2   section 123B.25 that became final after the date the district 
 96.3   certified its proposed levy in the previous year.  With the 
 96.4   approval of the commissioner, a district may spread this levy 
 96.5   over a period not to exceed three years.  Upon approval through 
 96.6   the adoption of a resolution by each of an intermediate 
 96.7   district's member school district boards, a member school 
 96.8   district may include its proportionate share of the costs of a 
 96.9   judgment against an intermediate school district that became 
 96.10  final under section 123B.25 after the date that the earliest 
 96.11  member school district certified its proposed levy in the 
 96.12  previous year.  With the approval of the commissioner, an 
 96.13  intermediate school district member school district may spread 
 96.14  this levy over a period not to exceed three years. 
 96.15     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 96.16  payable in 2003. 
 96.17     Sec. 4.  Minnesota Statutes 2000, section 126C.44, is 
 96.18  amended to read: 
 96.19     126C.44 [CRIME-RELATED COSTS SAFE SCHOOLS LEVY.] 
 96.20     Each district may make a levy on all taxable property 
 96.21  located within the district for the purposes specified in this 
 96.22  section.  The maximum amount which may be levied for all costs 
 96.23  under this section shall be equal to $11 $30 multiplied by the 
 96.24  district's adjusted marginal cost pupil units for the school 
 96.25  year.  The proceeds of the levy must be used for directly 
 96.26  funding the following purposes or for reimbursing the cities and 
 96.27  counties who contract with the district for the following 
 96.28  purposes:  (1) to pay the costs incurred for the salaries, 
 96.29  benefits, and transportation costs of peace officers and 
 96.30  sheriffs for liaison in services in the district's schools; (2) 
 96.31  to pay the costs for a drug abuse prevention program as defined 
 96.32  in section 609.101, subdivision 3, paragraph (e), in the 
 96.33  elementary schools; (3) to pay the costs for a gang resistance 
 96.34  education training curriculum in the district's schools; (4) to 
 96.35  pay the costs for security in the district's schools and on 
 96.36  school property; or (5) to pay the costs for other crime 
 97.1   prevention, drug abuse, student and staff safety, and violence 
 97.2   prevention measures taken by the school district.  The district 
 97.3   must initially attempt to contract for services to be provided 
 97.4   by peace officers or sheriffs with the police department of each 
 97.5   city or the sheriff's department of the county within the 
 97.6   district containing the school receiving the services.  If a 
 97.7   local police department or a county sheriff's department does 
 97.8   not wish to provide the necessary services, the district may 
 97.9   contract for these services with any other police or sheriff's 
 97.10  department located entirely or partially within the school 
 97.11  district's boundaries.  The levy authorized under this section 
 97.12  is not included in determining the school district's levy 
 97.13  limitations. 
 97.14     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
 97.15  payable in 2003. 
 97.16     Sec. 5.  Laws 2001, First Special Session chapter 6, 
 97.17  article 1, section 53, is amended to read: 
 97.18     Sec. 53.  [REFERENDUM CONVERSION ADJUSTMENT FOR INTEREST 
 97.19  EARNED.] 
 97.20     (a) The commissioner of children, families, and learning 
 97.21  shall calculate the change in estimated net interest earnings 
 97.22  for each district attributable to the repeal of the general 
 97.23  education levy as provided in this section. 
 97.24     (b) The interest calculations must assume an annual 
 97.25  interest rate of five percent, and must be based on the amount 
 97.26  by which the district's cumulative net general education levy 
 97.27  receipts for taxes payable in 2000, based on the assumptions 
 97.28  specified in Minnesota Statutes, section 127A.45, subdivision 8, 
 97.29  exceeds the cumulative amount that would have been guaranteed 
 97.30  for each payment in fiscal year 2001, as defined in Minnesota 
 97.31  Statutes, section 127A.45, subdivisions 2 and 3, calculated 
 97.32  using data as of the June 20, 2001, payment, and assuming that 
 97.33  the repeal of the general education levy was effective for 
 97.34  fiscal year 2001.  The commissioner shall divide the interest 
 97.35  revenue in fiscal year 2001 by the number of resident marginal 
 97.36  cost pupil units in fiscal year 2001.  The interest calculations 
 98.1   must assume an annual interest rate of five percent, and must be 
 98.2   based on the difference between (1) the district's estimated aid 
 98.3   payments and levy receipts for fiscal year 2003, based upon the 
 98.4   payment schedule specified in Minnesota Statutes, section 
 98.5   127A.45, and (2) the amount that the district's estimated aid 
 98.6   payments and levy receipts for fiscal year 2003 would have been 
 98.7   had the general education levy for fiscal year 2003 been set at 
 98.8   the amount of the district's general education levy for taxes 
 98.9   payable in 2001.  For the purposes of this section, the general 
 98.10  education levy must not include the education homestead credit 
 98.11  or the education agricultural credit. 
 98.12     (c) The amount calculated in paragraph (a) may be converted 
 98.13  to an additional referendum allowance according to Minnesota 
 98.14  Statutes, section 126C.17, subdivision 11.  The amount 
 98.15  calculated in paragraph (b), less any interest conversion 
 98.16  revenue calculated for the district under Laws 2001, First 
 98.17  Special Session chapter 6, article 1, section 53, is added to 
 98.18  the district's levy limitation for taxes payable in 2003 through 
 98.19  2006. 
 98.20     (d) Any additional referendum allowance as a result of a 
 98.21  conversion under paragraph (b) shall be included in the 
 98.22  referendum conversion allowance used to determine the referendum 
 98.23  allowance limit under Minnesota Statutes, section 126C.17, 
 98.24  subdivision 2.  If the state total levy under paragraph (c) 
 98.25  exceeds $3,000,000, the commissioner shall reduce the levy 
 98.26  authority proportionately for each eligible district such that 
 98.27  the state total levy equals $3,000,000. 
 98.28     (e) The commissioner must calculate an adjustment for taxes 
 98.29  payable in 2002 for each school district as though this section 
 98.30  were in effect for that tax year. 
 98.31     <b>[EFFECTIVE DATE.]</b> This section is effective for revenue for 
 98.32  taxes payable in 2003 and later. 
 98.33     Sec. 6.  Laws 2001, First Special Session chapter 6, 
 98.34  article 4, section 25, is amended to read: 
 98.35     Sec. 25.  [INTERACTIVE WEB-BASED AND INDEPENDENT STUDY 
 98.36  PROGRAMS.] 
 99.1      Subdivision 1.  [PUPIL REVENUE.] (a) General education 
 99.2   revenue for an eligible pupil in an approved interactive 
 99.3   Web-based program offered by a school district or a charter 
 99.4   school, or an approved alternative program that has an 
 99.5   independent study component offered by a charter school, under 
 99.6   the supervision of a teacher with a Minnesota license, must be 
 99.7   paid for each hour of completed coursework needed for grade 
 99.8   progression, credit, or alignment with state graduation 
 99.9   standards.  For purposes of this section, an eligible pupil is a 
 99.10  public school pupil concurrently enrolled in the district or 
 99.11  charter school or concurrently enrolled in another district or 
 99.12  charter school and participating in the program by agreement 
 99.13  with the district or charter school of enrollment.  The course 
 99.14  of study must be approved by the commissioner of children, 
 99.15  families, and learning for alignment with the state graduation 
 99.16  standards and compliance with Minnesota Statutes, chapter 125A.  
 99.17  An alternative program that has an independent study component 
 99.18  must also meet the requirements of Minnesota Statutes, section 
 99.19  126C.05, subdivision 15, paragraph (b), clauses (i) and (iv).  
 99.20  Average daily membership for a pupil shall equal the number of 
 99.21  hours of coursework completed divided by the number of hours 
 99.22  required for a full-time student in the district or charter 
 99.23  school.  Pupils enrolled in the program must not be counted as 
 99.24  more than 1.0 pupil in average daily membership.  A school 
 99.25  district or charter school is not required to provide a pupil 
 99.26  enrolled in the program with access to a computer or to the 
 99.27  Internet. 
 99.28     (b) Notwithstanding paragraph (a), pupils enrolled in a 
 99.29  Web-based public alternative program approved by the 
 99.30  commissioner before June 1, 2001, are not required to be 
 99.31  concurrently enrolled in the district and may be counted as more 
 99.32  than 1.0 pupil in average daily membership under Minnesota 
 99.33  Statutes, section 126C.05, subdivision 15. 
 99.34     (c) Notwithstanding paragraph (a), pupils enrolled in a 
 99.35  charter school with a Web-based program, approved by the 
 99.36  commissioner before June 1, 2001, are not required to be 
100.1   concurrently enrolled in the charter school. 
100.2      (d) Notwithstanding paragraph (a), pupils enrolled in a 
100.3   charter school with an alternative program that has an 
100.4   independent study component, approved by the commissioner for 
100.5   fiscal year 2001, may be counted as more than 1.0 pupil in 
100.6   average daily membership under Minnesota Statutes, section 
100.7   126C.05, subdivision 15, paragraph (b), clause (iii). 
100.8      Subd. 2.  [REIMBURSEMENT.] Notwithstanding Minnesota 
100.9   Statutes, section 126C.19, subdivision 4, for fiscal year years 
100.10  2002 and 2003 only, the commissioner shall establish a process 
100.11  for providing additional revenue to school districts or charter 
100.12  schools for: 
100.13     (1) an eligible pupil in an approved interactive Web-based 
100.14  program under subdivision 1, paragraph (a), that may be counted 
100.15  as more than 1.0 pupil in average daily membership; or 
100.16     (2) a nonpublic pupil in an approved interactive Web-based 
100.17  program in a public school under subdivision 1, paragraph (a).  
100.18  The commissioner may award additional general education revenue 
100.19  to school districts and charter schools up to the amount 
100.20  appropriated for this section.  The amount of additional revenue 
100.21  awarded to a school district under this section shall be based 
100.22  on additional pupils in average daily membership that are 
100.23  generated according to this subdivision with the prior approval 
100.24  from the commissioner.  The commissioner shall establish a 
100.25  process to prioritize the awards under this subdivision based on 
100.26  the estimated number of students the school district or charter 
100.27  school expects to serve under this section. 
100.28     <b>[EFFECTIVE DATE.]</b> This section is effective for revenue for 
100.29  fiscal year 2003 only. 
100.30     Sec. 7.  Laws 2001, First Special Session chapter 6, 
100.31  article 4, section 27, subdivision 9, is amended to read: 
100.32     Subd. 9.  [REIMBURSEMENT FOR WEB-BASED AND INDEPENDENT 
100.33  STUDY COURSES.] For grants to school districts and charter 
100.34  schools for additional pupils taking on-line courses according 
100.35  to section 25: 
100.36       $100,000     .....     2002 
101.1      This appropriation is available until June 30, 2003. 
101.2      Sec. 8.  [DISABLED ACCESS LEVY AUTHORITY; WESTBROOK-WALNUT 
101.3   GROVE.] 
101.4      Notwithstanding the time limit in Minnesota Statutes, 
101.5   section 123B.58, subdivision 3, independent school district No. 
101.6   2898, Westbrook-Walnut Grove, may levy its remaining disabled 
101.7   access levy authority over five or fewer years. 
101.8      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
101.9   following final enactment. 
101.10     Sec. 9.  [DISABLED ACCESS LEVY AUTHORITY; PINE CITY.] 
101.11     Notwithstanding the time limits in Minnesota Statutes, 
101.12  section 123B.58, subdivision 3, independent school district No. 
101.13  578, Pine City, may levy its remaining disabled access levy 
101.14  authority over five or fewer years.  
101.15     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
101.16  following final enactment. 
101.17                             ARTICLE 6
101.18                          AIDS AND LEVIES
101.19     Section 1.  Minnesota Statutes 2000, section 69.77, is 
101.20  amended by adding a subdivision to read: 
101.21     Subd. 12.  [APPLICATION OF OTHER LAWS TO CONTRIBUTION 
101.22  RATE.] In the absence of any specific provision to the contrary, 
101.23  no general or special law previously enacted may be construed as 
101.24  reducing the levy amount or rate of contribution to a police or 
101.25  firefighters relief association to which subdivision 1a applies, 
101.26  by a municipality or member of the association, which is 
101.27  required as a condition for the use of public funds or the levy 
101.28  of taxes for the support of the association.  Each association, 
101.29  the municipality in which it is organized, and the officers of 
101.30  each, are authorized to do all things required by this section 
101.31  as a condition for the use of public funds or the levy of taxes 
101.32  for the support of the association. 
101.33     Sec. 2.  [126C.445] [TREE GROWTH REPLACEMENT REVENUE.] 
101.34     For taxes payable in 2003 and later, a school district may 
101.35  levy an amount not to exceed its miscellaneous revenue for tree 
101.36  growth revenue for taxes payable in 2001.  
102.1      <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
102.2   taxes levied in 2002, payable in 2003.  
102.3      Sec. 3.  Minnesota Statutes 2000, section 273.1398, 
102.4   subdivision 3, is amended to read: 
102.5      Subd. 3.  [DISPARITY REDUCTION AID.] (a) For taxes payable 
102.6   in 1995, 2003 and subsequent years, the amount of disparity aid 
102.7   certified for each taxing district within each unique taxing 
102.8   jurisdiction for taxes payable in the prior year shall be 
102.9   multiplied by the ratio of (1) the jurisdiction's tax capacity 
102.10  using the class rates for taxes payable in the year for which 
102.11  aid is being computed, to (2) its tax capacity using the class 
102.12  rates for taxes payable in the year prior to that for which aid 
102.13  is being computed, both based upon market values for taxes 
102.14  payable in the year prior to that for which aid is being 
102.15  computed.  For the purposes of this aid determination, disparity 
102.16  reduction aid certified for taxes payable in the prior year for 
102.17  a taxing entity other than a town or school district is deemed 
102.18  to be county government disparity reduction aid.  For taxes 
102.19  payable in 1992 and subsequent years, The amount of disparity 
102.20  aid certified to each taxing jurisdiction shall be reduced by 
102.21  any reductions required in the current year or permanent 
102.22  reductions required in previous years under section 477A.0132. 
102.23     (b) For aid payable in 2003, in each unique taxing 
102.24  jurisdiction where the total tax rate for taxes payable in 2002 
102.25  exceeds 135 percent of taxable net tax capacity, an amount shall 
102.26  be permanently added to the unique taxing jurisdiction's aid 
102.27  amount under paragraph (a) equal to the lesser of:  (i) the 
102.28  amount, if any, by which 87 percent of the aid certified for 
102.29  2001 exceeds the amount certified for 2002, or (ii) the amount 
102.30  that would be necessary to reduce the total payable 2002 tax 
102.31  rate for the unique taxing jurisdiction to 135 percent of 
102.32  taxable net tax capacity.  The amount determined under this 
102.33  paragraph must be added before the class rate adjustment 
102.34  described in paragraph (a). 
102.35     <b>[EFFECTIVE DATE.]</b> This section is effective for aids 
102.36  payable in 2003 and subsequent years. 
103.1      Sec. 4.  Minnesota Statutes 2001 Supplement, section 
103.2   273.1398, subdivision 4d, is amended to read: 
103.3      Subd. 4d.  [AID OFFSET FOR OUT-OF-HOME PLACEMENT COSTS.] 
103.4   For aid payable in 2003 2004, each county's aid under 
103.5   subdivision 2 shall be permanently reduced by an amount equal to 
103.6   the county's 2003 2004 reimbursement for nonfederal expenditures 
103.7   for out-of-home placements, as provided in section 245.775, 
103.8   provided that payments will be made under section 477A.0123 in 
103.9   calendar year 2003 2004.  The counties shall provide all 
103.10  information requested by the commissioner of human services 
103.11  necessary to allow the commissioner to certify the previous 
103.12  three years' average nonfederal costs to the commissioner of 
103.13  revenue by July 15, 2003 2004.  The aid reduction under this 
103.14  subdivision must be made prior to not exceed the difference 
103.15  between (1) the amount of aid calculated for the county for 
103.16  calendar year 2004 under subdivision 2, including any addition 
103.17  under section 477A.07, and (2) the amount of any aid reductions 
103.18  for the state takeover of courts contained in Laws 2001, First 
103.19  Special Session chapter 5, article 5. 
103.20     <b>[EFFECTIVE DATE.]</b> This section is effective for aids 
103.21  payable in 2004.  
103.22     Sec. 5.  Minnesota Statutes 2001 Supplement, section 
103.23  275.70, subdivision 5, is amended to read: 
103.24     Subd. 5.  [SPECIAL LEVIES.] "Special levies" means those 
103.25  portions of ad valorem taxes levied by a local governmental unit 
103.26  for the following purposes or in the following manner: 
103.27     (1) to pay the costs of the principal and interest on 
103.28  bonded indebtedness or to reimburse for the amount of liquor 
103.29  store revenues used to pay the principal and interest due on 
103.30  municipal liquor store bonds in the year preceding the year for 
103.31  which the levy limit is calculated; 
103.32     (2) to pay the costs of principal and interest on 
103.33  certificates of indebtedness issued for any corporate purpose 
103.34  except for the following: 
103.35     (i) tax anticipation or aid anticipation certificates of 
103.36  indebtedness; 
104.1      (ii) certificates of indebtedness issued under sections 
104.2   298.28 and 298.282; 
104.3      (iii) certificates of indebtedness used to fund current 
104.4   expenses or to pay the costs of extraordinary expenditures that 
104.5   result from a public emergency; or 
104.6      (iv) certificates of indebtedness used to fund an 
104.7   insufficiency in tax receipts or an insufficiency in other 
104.8   revenue sources; 
104.9      (3) to provide for the bonded indebtedness portion of 
104.10  payments made to another political subdivision of the state of 
104.11  Minnesota; 
104.12     (4) to fund payments made to the Minnesota state armory 
104.13  building commission under section 193.145, subdivision 2, to 
104.14  retire the principal and interest on armory construction bonds; 
104.15     (5) property taxes approved by voters which are levied 
104.16  against the referendum market value as provided under section 
104.17  275.61; 
104.18     (6) to fund matching requirements needed to qualify for 
104.19  federal or state grants or programs to the extent that either 
104.20  (i) the matching requirement exceeds the matching requirement in 
104.21  calendar year 2001, or (ii) it is a new matching requirement 
104.22  that didn't exist prior to 2002; 
104.23     (7) to pay the expenses reasonably and necessarily incurred 
104.24  in preparing for or repairing the effects of natural disaster 
104.25  including the occurrence or threat of widespread or severe 
104.26  damage, injury, or loss of life or property resulting from 
104.27  natural causes, in accordance with standards formulated by the 
104.28  emergency services division of the state department of public 
104.29  safety, as allowed by the commissioner of revenue under section 
104.30  275.74, paragraph (b); 
104.31     (8) pay amounts required to correct an error in the levy 
104.32  certified to the county auditor by a city or county in a levy 
104.33  year, but only to the extent that when added to the preceding 
104.34  year's levy it is not in excess of an applicable statutory, 
104.35  special law or charter limitation, or the limitation imposed on 
104.36  the governmental subdivision by sections 275.70 to 275.74 in the 
105.1   preceding levy year; 
105.2      (9) to pay an abatement under section 469.1815; 
105.3      (10) to pay any costs attributable to increases in the 
105.4   employer contribution rates under chapter 353 that are effective 
105.5   after June 30, 2001; 
105.6      (11) to pay the operating or maintenance costs of a county 
105.7   jail as authorized in section 641.01 or 641.262, or of a 
105.8   correctional facility as defined in section 241.021, subdivision 
105.9   1, paragraph (5), to the extent that the county can demonstrate 
105.10  to the commissioner of revenue that the amount has been included 
105.11  in the county budget as a direct result of a rule, minimum 
105.12  requirement, minimum standard, or directive of the department of 
105.13  corrections, or to pay the operating or maintenance costs of a 
105.14  regional jail as authorized in section 641.262.  For purposes of 
105.15  this clause, a district court order is not a rule, minimum 
105.16  requirement, minimum standard, or directive of the department of 
105.17  corrections.  If the county utilizes this special levy, any 
105.18  amount levied by the county in the previous levy year for the 
105.19  purposes specified under this clause and included in the 
105.20  county's previous year's levy limitation computed under section 
105.21  275.71, shall be deducted from the levy limit base under section 
105.22  275.71, subdivision 2, when determining the county's current 
105.23  year levy limitation.  The county shall provide the necessary 
105.24  information to the commissioner of revenue for making this 
105.25  determination; 
105.26     (12) to pay for operation of a lake improvement district, 
105.27  as authorized under section 103B.555.  If the county utilizes 
105.28  this special levy, any amount levied by the county in the 
105.29  previous levy year for the purposes specified under this clause 
105.30  and included in the county's previous year's levy limitation 
105.31  computed under section 275.71 shall be deducted from the levy 
105.32  limit base under section 275.71, subdivision 2, when determining 
105.33  the county's current year levy limitation.  The county shall 
105.34  provide the necessary information to the commissioner of revenue 
105.35  for making this determination; 
105.36     (13) to repay a state or federal loan used to fund the 
106.1   direct or indirect required spending by the local government due 
106.2   to a state or federal transportation project or other state or 
106.3   federal capital project.  This authority may only be used if the 
106.4   project is not a local government initiative; 
106.5      (14) for counties only, to pay the costs reasonably 
106.6   expected to be incurred in 2002 related to the redistricting of 
106.7   election districts and establishment of election precincts under 
106.8   sections 204B.135 and 204B.14, the notice required by section 
106.9   204B.14, subdivision 4, and the reassignment of voters in the 
106.10  statewide registration system, not to exceed $1 per capita, 
106.11  provided that the county shall distribute a portion of the 
106.12  amount levied under this clause equal to 25 cents times the 
106.13  population of the city to all cities in the county with a 
106.14  population of 30,000 or more; and 
106.15     (15) to pay for court administration costs as required 
106.16  under section 273.1398, subdivision 4b, less the county's share 
106.17  of transferred fines and fees collected by the district courts 
106.18  in the county for calendar year 2001; however, for taxes levied 
106.19  to pay for these costs in the year in which the court financing 
106.20  is transferred to the state, the amount under this section is 
106.21  limited to one-third of the aid reduction under section 
106.22  273.1398, subdivision 4a; and 
106.23     (16) to fund a police or firefighters relief association as 
106.24  required under section 69.77 to the extent that the required 
106.25  amount exceeds the amount levied for this purpose in 2001. 
106.26     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
106.27  levied beginning in 2002. 
106.28     Sec. 6.  Minnesota Statutes 2001 Supplement, section 
106.29  275.71, subdivision 2, is amended to read: 
106.30     Subd. 2.  [LEVY LIMIT BASE.] (a) The levy limit base for a 
106.31  local governmental unit for taxes levied in 2001 is equal to the 
106.32  greater of: 
106.33     (1) the sum of its adjusted levy limit base for taxes 
106.34  levied in 1999 plus the amount it levied in 1999 under Minnesota 
106.35  Statutes 1999 Supplement, section 275.70, subdivision 5, clauses 
106.36  (8) and (13), multiplied by: 
107.1      (i) one plus the percentage growth in the implicit price 
107.2   deflator for the 12-month period ending March 30, 2000; 
107.3      (ii) one plus a percentage equal to the annual percentage 
107.4   increase in the estimated number of households, if any, for the 
107.5   most recent 12-month period that was available on July 1, 2000; 
107.6   and 
107.7      (iii) one plus a percentage equal to 50 percent of the 
107.8   percentage increase in the taxable market value of the 
107.9   jurisdiction due to new construction of class 3 property, as 
107.10  defined in section 273.13, subdivision 24, except for 
107.11  state-assessed utility and railroad operating property, for the 
107.12  most recent year for which data was available as of July 1, 
107.13  2000; or 
107.14     (2) an amount equal to: 
107.15     (i) the sum of the amount it levied in 2000 plus the amount 
107.16  of aids it was certified to receive in calendar year 2001 under 
107.17  sections 273.1398, 298.282, 477A.011 to 477A.03, prior to any 
107.18  aid reductions under section 273.1399, subdivision 5, 477A.06, 
107.19  and 477A.065; less 
107.20     (ii) the amount it levied in 2000 that would qualify as 
107.21  special levies under section 275.70, subdivision 6, for taxes 
107.22  levied in 2001.  The local governmental unit shall provide the 
107.23  commissioner of revenue with sufficient information to make this 
107.24  calculation. 
107.25     (b) If the governmental unit was not subject to levy limits 
107.26  for taxes levied in 1999, its levy limit base for taxes levied 
107.27  in 2001 is equal to the amount calculated under paragraph (a), 
107.28  clause (2). 
107.29     (c) The levy limit base for a local governmental unit for 
107.30  taxes levied in 2002 is equal to its adjusted levy limit base in 
107.31  the previous year, plus the amount of tree growth tax it 
107.32  received in calendar year 2001 under sections 270.31 to 270.39, 
107.33  and plus, in the case of a city, the amount it was certified to 
107.34  receive in calendar year 2001 under section 273.166, subject to 
107.35  any adjustments under section 275.72. 
107.36     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
108.1   levied in 2002, payable in 2003. 
108.2      Sec. 7.  Minnesota Statutes 2001 Supplement, section 
108.3   275.71, subdivision 3, is amended to read: 
108.4      Subd. 3.  [ADJUSTMENTS FOR STATE TAKEOVERS.] (a) The levy 
108.5   limit base for each local unit of government shall be adjusted 
108.6   to reflect the assumption by the state of financing for certain 
108.7   government functions as indicated in this subdivision. 
108.8      (b) For a county in a judicial district for which financing 
108.9   has not been transferred to the state by January 1, 2001, the 
108.10  levy limit base for 2001 is permanently reduced by the amount of 
108.11  the county's 2001 budget for court administration costs, as 
108.12  certified under section 273.1398, subdivision 4b, paragraph (b), 
108.13  net of the county's share of transferred fines and fees 
108.14  collected by the district courts in the county for the same 
108.15  budget period. 
108.16     (c) For a governmental unit which levied a tax in 2000 
108.17  under section 473.388, subdivision 7, the levy limit base for 
108.18  2001 is permanently reduced by an amount equal to the sum of the 
108.19  governmental unit's taxes payable 2001 nondebt transit services 
108.20  levy plus the portion of its 2001 homestead and agricultural 
108.21  credit aid under section 273.1398, subdivision 2, attributable 
108.22  to nondebt transit services. 
108.23     (d) For counties in a judicial district in which the state 
108.24  assumed financing of mandated services costs as defined in 
108.25  section 480.181, subdivision 4, on July 1, 2001, the levy limit 
108.26  base for taxes levied in 2001 is permanently reduced by an 
108.27  amount equal to one-half of the aid reduction under section 
108.28  273.1398, subdivision 4a, paragraph (g). 
108.29     <b>[EFFECTIVE DATE.]</b> This section is effective retroactively 
108.30  for taxes payable in 2002 and 2003. 
108.31     Sec. 8.  Minnesota Statutes 2001 Supplement, section 
108.32  275.71, subdivision 6, is amended to read: 
108.33     Subd. 6.  [LEVIES IN EXCESS OF LEVY LIMITS.] (a) If the 
108.34  levy made by a city or county exceeds the levy limit provided in 
108.35  sections 275.70 to 275.74, except when the excess levy is due to 
108.36  the rounding of the rate in accordance with section 275.28, the 
109.1   county auditor shall only extend the amount of taxes permitted 
109.2   under sections 275.70 to 275.74, as provided for in section 
109.3   275.16. 
109.4      (b) For taxes levied in 2002, payable in 2003 only, if an 
109.5   error was made in calculating the levy limit adjustment related 
109.6   to a special levy for jails authorized under section 275.70, 
109.7   subdivision 5, clause (11), in the previous year, the following 
109.8   adjustments must be made: 
109.9      (1) the county's levy limit base for taxes levied in 2002 
109.10  must be based on the corrected adjusted levy limit base for 
109.11  taxes levied in 2001; and 
109.12     (2) the county's final levy limit for taxes levied in 2002, 
109.13  payable in 2003, must also be temporarily reduced by an amount 
109.14  equal to the amount of county levy spread in the previous year 
109.15  in excess of the total recalculated levy limit plus authorized 
109.16  special levies for taxes levied in 2001, payable in 2002. 
109.17     (c) The commissioner of revenue shall inform counties 
109.18  affected by paragraph (b) of the levy error and levy adjustments 
109.19  required under this provision by June 15, 2002.  The county may 
109.20  provide additional information to the commissioner indicating 
109.21  why these adjustments may be in error by July 15, 2002.  The 
109.22  commissioner shall certify the final levy adjustment to the 
109.23  affected counties by August 1, 2002.  The levy reduction imposed 
109.24  under paragraph (b), clause (2), may be spread over a period not 
109.25  to exceed three years, upon agreement between the county and the 
109.26  commissioner. 
109.27     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
109.28  levied in 2002, payable in 2003 only. 
109.29     Sec. 9.  Minnesota Statutes 2001 Supplement, section 
109.30  477A.011, subdivision 36, is amended to read: 
109.31     Subd. 36.  [CITY AID BASE.] (a) Except as otherwise 
109.32  provided in paragraphs (b) to (o) this subdivision, "city aid 
109.33  base" means, for each city, the sum of the local government aid 
109.34  and equalization aid it was originally certified to receive in 
109.35  calendar year 1993 under Minnesota Statutes 1992, section 
109.36  477A.013, subdivisions 3 and 5, and the amount of disparity 
110.1   reduction aid it received in calendar year 1993 under Minnesota 
110.2   Statutes 1992, section 273.1398, subdivision 3. 
110.3      (b) For aids payable in 1996 and thereafter, a city that in 
110.4   1992 or 1993 transferred an amount from governmental funds to 
110.5   its sewer and water fund, which amount exceeded its net levy for 
110.6   taxes payable in the year in which the transfer occurred, has a 
110.7   "city aid base" equal to the sum of (i) its city aid base, as 
110.8   calculated under paragraph (a), and (ii) one-half of the 
110.9   difference between its city aid distribution under section 
110.10  477A.013, subdivision 9, for aids payable in 1995 and its city 
110.11  aid base for aids payable in 1995. 
110.12     (c) The city aid base for any city with a population less 
110.13  than 500 is increased by $40,000 for aids payable in calendar 
110.14  year 1995 and thereafter, and the maximum amount of total aid it 
110.15  may receive under section 477A.013, subdivision 9, paragraph 
110.16  (c), is also increased by $40,000 for aids payable in calendar 
110.17  year 1995 only, provided that: 
110.18     (i) the average total tax capacity rate for taxes payable 
110.19  in 1995 exceeds 200 percent; 
110.20     (ii) the city portion of the tax capacity rate exceeds 100 
110.21  percent; and 
110.22     (iii) its city aid base is less than $60 per capita. 
110.23     (d) The city aid base for a city is increased by $20,000 in 
110.24  1998 and thereafter and the maximum amount of total aid it may 
110.25  receive under section 477A.013, subdivision 9, paragraph (c), is 
110.26  also increased by $20,000 in calendar year 1998 only, provided 
110.27  that: 
110.28     (i) the city has a population in 1994 of 2,500 or more; 
110.29     (ii) the city is located in a county, outside of the 
110.30  metropolitan area, which contains a city of the first class; 
110.31     (iii) the city's net tax capacity used in calculating its 
110.32  1996 aid under section 477A.013 is less than $400 per capita; 
110.33  and 
110.34     (iv) at least four percent of the total net tax capacity, 
110.35  for taxes payable in 1996, of property located in the city is 
110.36  classified as railroad property. 
111.1      (e) The city aid base for a city is increased by $200,000 
111.2   in 1999 and thereafter and the maximum amount of total aid it 
111.3   may receive under section 477A.013, subdivision 9, paragraph 
111.4   (c), is also increased by $200,000 in calendar year 1999 only, 
111.5   provided that: 
111.6      (i) the city was incorporated as a statutory city after 
111.7   December 1, 1993; 
111.8      (ii) its city aid base does not exceed $5,600; and 
111.9      (iii) the city had a population in 1996 of 5,000 or more. 
111.10     (f) The city aid base for a city is increased by $450,000 
111.11  in 1999 to 2008 and the maximum amount of total aid it may 
111.12  receive under section 477A.013, subdivision 9, paragraph (c), is 
111.13  also increased by $450,000 in calendar year 1999 only, provided 
111.14  that: 
111.15     (i) the city had a population in 1996 of at least 50,000; 
111.16     (ii) its population had increased by at least 40 percent in 
111.17  the ten-year period ending in 1996; and 
111.18     (iii) its city's net tax capacity for aids payable in 1998 
111.19  is less than $700 per capita. 
111.20     (g) Beginning in 2002 2004, the city aid base for a city is 
111.21  equal to the sum of its city aid base in 2001 2003 and the 
111.22  amount of additional aid it was certified to receive under 
111.23  section 477A.06 in 2001 2003.  For 2002 2004 only, the maximum 
111.24  amount of total aid a city may receive under section 477A.013, 
111.25  subdivision 9, paragraph (c), is also increased by the amount it 
111.26  was certified to receive under section 477A.06 in 2001 2003. 
111.27     (h) The city aid base for a city is increased by $150,000 
111.28  for aids payable in 2000 and thereafter, and the maximum amount 
111.29  of total aid it may receive under section 477A.013, subdivision 
111.30  9, paragraph (c), is also increased by $150,000 in calendar year 
111.31  2000 only, provided that: 
111.32     (1) the city has a population that is greater than 1,000 
111.33  and less than 2,500; 
111.34     (2) its commercial and industrial percentage for aids 
111.35  payable in 1999 is greater than 45 percent; and 
111.36     (3) the total market value of all commercial and industrial 
112.1   property in the city for assessment year 1999 is at least 15 
112.2   percent less than the total market value of all commercial and 
112.3   industrial property in the city for assessment year 1998. 
112.4      (i) The city aid base for a city is increased by $200,000 
112.5   in 2000 and thereafter, and the maximum amount of total aid it 
112.6   may receive under section 477A.013, subdivision 9, paragraph 
112.7   (c), is also increased by $200,000 in calendar year 2000 only, 
112.8   provided that: 
112.9      (1) the city had a population in 1997 of 2,500 or more; 
112.10     (2) the net tax capacity of the city used in calculating 
112.11  its 1999 aid under section 477A.013 is less than $650 per 
112.12  capita; 
112.13     (3) the pre-1940 housing percentage of the city used in 
112.14  calculating 1999 aid under section 477A.013 is greater than 12 
112.15  percent; 
112.16     (4) the 1999 local government aid of the city under section 
112.17  477A.013 is less than 20 percent of the amount that the formula 
112.18  aid of the city would have been if the need increase percentage 
112.19  was 100 percent; and 
112.20     (5) the city aid base of the city used in calculating aid 
112.21  under section 477A.013 is less than $7 per capita. 
112.22     (j) The city aid base for a city is increased by $225,000 
112.23  in calendar years 2000 to 2002 and the maximum amount of total 
112.24  aid it may receive under section 477A.013, subdivision 9, 
112.25  paragraph (c), is also increased by $225,000 in calendar year 
112.26  2000 only, provided that: 
112.27     (1) the city had a population of at least 5,000; 
112.28     (2) its population had increased by at least 50 percent in 
112.29  the ten-year period ending in 1997; 
112.30     (3) the city is located outside of the Minneapolis-St. Paul 
112.31  metropolitan statistical area as defined by the United States 
112.32  Bureau of the Census; and 
112.33     (4) the city received less than $30 per capita in aid under 
112.34  section 477A.013, subdivision 9, for aids payable in 1999. 
112.35     (k) The city aid base for a city is increased by $102,000 
112.36  in 2000 and thereafter, and the maximum amount of total aid it 
113.1   may receive under section 477A.013, subdivision 9, paragraph 
113.2   (c), is also increased by $102,000 in calendar year 2000 only, 
113.3   provided that: 
113.4      (1) the city has a population in 1997 of 2,000 or more; 
113.5      (2) the net tax capacity of the city used in calculating 
113.6   its 1999 aid under section 477A.013 is less than $455 per 
113.7   capita; 
113.8      (3) the net levy of the city used in calculating 1999 aid 
113.9   under section 477A.013 is greater than $195 per capita; and 
113.10     (4) the 1999 local government aid of the city under section 
113.11  477A.013 is less than 38 percent of the amount that the formula 
113.12  aid of the city would have been if the need increase percentage 
113.13  was 100 percent. 
113.14     (l) The city aid base for a city is increased by $32,000 in 
113.15  2001 and thereafter, and the maximum amount of total aid it may 
113.16  receive under section 477A.013, subdivision 9, paragraph (c), is 
113.17  also increased by $32,000 in calendar year 2001 only, provided 
113.18  that: 
113.19     (1) the city has a population in 1998 that is greater than 
113.20  200 but less than 500; 
113.21     (2) the city's revenue need used in calculating aids 
113.22  payable in 2000 was greater than $200 per capita; 
113.23     (3) the city net tax capacity for the city used in 
113.24  calculating aids available in 2000 was equal to or less than 
113.25  $200 per capita; 
113.26     (4) the city aid base of the city used in calculating aid 
113.27  under section 477A.013 is less than $65 per capita; and 
113.28     (5) the city's formula aid for aids payable in 2000 was 
113.29  greater than zero. 
113.30     (m) The city aid base for a city is increased by $7,200 in 
113.31  2001 and thereafter, and the maximum amount of total aid it may 
113.32  receive under section 477A.013, subdivision 9, paragraph (c), is 
113.33  also increased by $7,200 in calendar year 2001 only, provided 
113.34  that: 
113.35     (1) the city had a population in 1998 that is greater than 
113.36  200 but less than 500; 
114.1      (2) the city's commercial industrial percentage used in 
114.2   calculating aids payable in 2000 was less than ten percent; 
114.3      (3) more than 25 percent of the city's population was 60 
114.4   years old or older according to the 1990 census; 
114.5      (4) the city aid base of the city used in calculating aid 
114.6   under section 477A.013 is less than $15 per capita; and 
114.7      (5) the city's formula aid for aids payable in 2000 was 
114.8   greater than zero. 
114.9      (n) The city aid base for a city is increased by $45,000 in 
114.10  2001 and thereafter and by an additional $50,000 in calendar 
114.11  years 2002 to 2011, and the maximum amount of total aid it may 
114.12  receive under section 477A.013, subdivision 9, paragraph (c), is 
114.13  also increased by $45,000 in calendar year 2001 only, and by 
114.14  $50,000 in calendar year 2002 only, provided that: 
114.15     (1) the net tax capacity of the city used in calculating 
114.16  its 2000 aid under section 477A.013 is less than $810 per 
114.17  capita; 
114.18     (2) the population of the city declined more than two 
114.19  percent between 1988 and 1998; 
114.20     (3) the net levy of the city used in calculating 2000 aid 
114.21  under section 477A.013 is greater than $240 per capita; and 
114.22     (4) the city received less than $36 per capita in aid under 
114.23  section 477A.013, subdivision 9, for aids payable in 2000. 
114.24     (o) The city aid base for a city with a population of 
114.25  10,000 or more which is located outside of the seven-county 
114.26  metropolitan area is increased in 2002 and thereafter, and the 
114.27  maximum amount of total aid it may receive under section 
114.28  477A.013, subdivision 9, paragraph (b) or (c), is also increased 
114.29  in calendar year 2002 only, by an amount equal to the lesser of: 
114.30     (1)(i) the total population of the city, as determined by 
114.31  the United States Bureau of the Census, in the 2000 census, (ii) 
114.32  minus 5,000, (iii) times 60; or 
114.33     (2) $2,500,000. 
114.34     (p) The city aid base is increased by $50,000 in 2002 and 
114.35  thereafter, and the maximum amount of total aid it may receive 
114.36  under section 477A.013, subdivision 9, paragraph (c), is also 
115.1   increased by $50,000 in calendar year 2002 only, provided that: 
115.2      (1) the city is located in the seven-county metropolitan 
115.3   area; 
115.4      (2) its population in 2000 is between 10,000 and 20,000; 
115.5   and 
115.6      (3) its commercial industrial percentage, as calculated for 
115.7   city aid payable in 2001, was greater than 25 percent. 
115.8      (q) The city aid base for a city is increased by $150,000 
115.9   in calendar years 2002 to 2011 and the maximum amount of total 
115.10  aid it may receive under section 477A.013, subdivision 9, 
115.11  paragraph (c), is also increased by $150,000 in calendar year 
115.12  2002 only, provided that: 
115.13     (1) the city had a population of at least 3,000 but no more 
115.14  than 4,000 in 1999; 
115.15     (2) its home county is located within the seven-county 
115.16  metropolitan area; 
115.17     (3) its pre-1940 housing percentage is less than 15 
115.18  percent; and 
115.19     (4) its city net tax capacity per capita for taxes payable 
115.20  in 2000 is less than $900 per capita. 
115.21     (r) The city aid base for a city is increased by $200,000 
115.22  beginning in calendar year 2003 and the maximum amount of total 
115.23  aid it may receive under section 477A.013, subdivision 9, 
115.24  paragraph (c), is also increased by $200,000 in calendar year 
115.25  2003 only, provided that the city qualified for an increase in 
115.26  homestead and agricultural credit aid under Laws 1995, chapter 
115.27  264, article 8, section 18. 
115.28     <b>[EFFECTIVE DATE.]</b> This section is effective for aid payable 
115.29  in 2002 and thereafter, except that paragraph (r) is effective 
115.30  beginning with aid payable in 2003. 
115.31     Sec. 10.  Minnesota Statutes 2001 Supplement, section 
115.32  477A.0123, is amended to read: 
115.33     477A.0123 [REIMBURSEMENT OF COUNTY FOR CERTAIN OUT-OF-HOME 
115.34  PLACEMENT.] 
115.35     Subdivision 1.  [AID PAYMENTS.] (a) In calendar year 2003 
115.36  2004 and thereafter, the commissioner of revenue shall reimburse 
116.1   each county for a portion of the nonfederal share of the cost of 
116.2   out-of-home placement provided the commissioner of human 
116.3   services, in consultation with the commissioner of corrections, 
116.4   certifies to the commissioner of revenue that accurate data is 
116.5   available to make the aid determination under this section.  The 
116.6   amount of reimbursement is a percent of the county's average 
116.7   nonfederal share of the cost for out-of-home placement for the 
116.8   most recent three calendar years for which data is available.  
116.9   The commissioner shall pay the aid under the schedule used for 
116.10  local government aid payments under section 477A.015. 
116.11     (b) For aids payable in calendar year 2003 2004, the 
116.12  percent of reimbursement in paragraph (a) shall be equal to the 
116.13  maximum percentage possible, up to 30 percent, that does not 
116.14  cause the payment to any county in the seven county metropolitan 
116.15  area to exceed the difference between (1) the amount of aid it 
116.16  is scheduled to receive calculated for the county in calendar 
116.17  year 2003 2004 under section 273.1398, prior to the offset under 
116.18  section 273.1398, subdivision 4d, and any aid offset under 
116.19  section 273.1398, subdivision 4a, that is scheduled to occur 
116.20  after July 1, 2003 subdivision 2, including any addition 
116.21  determined under section 477A.07, and (2) the amount of any aid 
116.22  reductions for the state takeover of courts contained in Laws 
116.23  2001, First Special Session chapter 5, article 5.  For aids 
116.24  payable in 2004 2005 and thereafter, the percent of 
116.25  reimbursement under paragraph (a) shall be equal to the percent 
116.26  of reimbursement determined for calendar year 2003 2004, 
116.27  adjusted so that the total payments under this section do not 
116.28  exceed the appropriation under section 477A.03, subdivision 2, 
116.29  paragraph (e). 
116.30     (c) For purposes of this section, "out-of-home placement" 
116.31  means the placement of a child in a child caring institution or 
116.32  shelter licensed under Minnesota Rules, parts 9545.0905 to 
116.33  9545.1125, in a group home licensed under Minnesota Rules, parts 
116.34  9545.1400 to 9545.1480, in family foster care or group family 
116.35  foster care licensed under Minnesota Rules, parts 9545.0010 to 
116.36  9545.0260, or a correctional facility pursuant to a court order 
117.1   under which a county social services agency or a county 
117.2   correctional agency has been assigned responsibility for the 
117.3   placement. 
117.4      Subd. 2.  [DETERMINATION OF NONFEDERAL SHARE OF COSTS.] (a) 
117.5   By January 1, 2002, each county shall report the following 
117.6   information to the commissioners of human services and 
117.7   corrections, the separate amounts paid out of its social service 
117.8   agency budget and its corrections budget for out-of-home 
117.9   placement in calendar years 1998, 1999, and 2000, along with the 
117.10  number of case days associated with the expenditures from each 
117.11  budget.  By March 15, 2002, the commissioner of human services, 
117.12  in consultation with the commissioner of corrections, shall 
117.13  certify to the commissioner of revenue and to the legislative 
117.14  committees responsible for local government aids and out-of-home 
117.15  placement funding, whether the data reported under this 
117.16  subdivision accurately reflects total expenditures by counties 
117.17  for out-of-home placement costs. 
117.18     (b) By January 1 of calendar year 2004 2003 and thereafter, 
117.19  each county shall report to the commissioners of human services 
117.20  and corrections the separate amounts paid out of its social 
117.21  service agency budget and its corrections budget for out-of-home 
117.22  placement in the calendar years year two years before the 
117.23  current calendar year along with the number of case days 
117.24  associated with the expenditures from each budget. 
117.25     (c) Until either the commissioner of human services or 
117.26  corrections develops another mechanism for collecting and 
117.27  verifying data on out-of-home placements, and the legislature 
117.28  authorizes the use of that data, the data collected under this 
117.29  subdivision shall be used to calculate payments under 
117.30  subdivision 1.  The commissioner of human services shall certify 
117.31  the information to the commissioner of revenue by July 1 of the 
117.32  year prior to the aid payment. 
117.33     Sec. 11.  Minnesota Statutes 2001 Supplement, section 
117.34  477A.03, subdivision 2, is amended to read: 
117.35     Subd. 2.  [ANNUAL APPROPRIATION.] (a) A sum sufficient to 
117.36  discharge the duties imposed by sections 477A.011 to 477A.014 is 
118.1   annually appropriated from the general fund to the commissioner 
118.2   of revenue.  
118.3      (b) Aid payments to counties under section 477A.0121 are 
118.4   limited to $20,265,000 in 1996.  Aid payments to counties under 
118.5   section 477A.0121 are limited to $27,571,625 in 1997.  For aid 
118.6   payable in 1998 and thereafter, the total aids paid under 
118.7   section 477A.0121 are the amounts certified to be paid in the 
118.8   previous year, adjusted for inflation as provided under 
118.9   subdivision 3. 
118.10     (c)(i) For aids payable in 1998 and thereafter, the total 
118.11  aids paid to counties under section 477A.0122 are the amounts 
118.12  certified to be paid in the previous year, adjusted for 
118.13  inflation as provided under subdivision 3. 
118.14     (ii) Aid payments to counties under section 477A.0122 in 
118.15  2000 are further increased by an additional $20,000,000 in 2000. 
118.16     (d) Aid payments to cities in 2002 under section 477A.013, 
118.17  subdivision 9, are limited to the amounts certified to be paid 
118.18  in the previous year, adjusted for inflation as provided in 
118.19  subdivision 3, and increased by $140,000,000.  For aids payable 
118.20  in 2003, the total aids paid under section 477A.013, subdivision 
118.21  9, are the amounts certified to be paid in the previous year, 
118.22  adjusted for inflation as provided under subdivision 3.  For 
118.23  aids payable in 2004, the total aids paid under section 
118.24  477A.013, subdivision 9, are the amounts certified to be paid in 
118.25  the previous year, adjusted for inflation as provided under 
118.26  subdivision 3, and increased by the amount certified to be paid 
118.27  in 2003 under section 477A.06.  For aids payable in 2005 and 
118.28  thereafter, the total aids paid under section 477A.013, 
118.29  subdivision 9, are the amounts certified to be paid in the 
118.30  previous year, adjusted for inflation as provided under 
118.31  subdivision 3.  The additional amount authorized under 
118.32  subdivision 4 is not included when calculating the appropriation 
118.33  limits under this paragraph. 
118.34     (e) Reimbursements made to counties under section 477A.0123 
118.35  in calendar year 2004 2005 and thereafter are limited to an 
118.36  amount equal to the maximum allowed appropriation under this 
119.1   section in the previous year, multiplied by a percent to be 
119.2   established by law.  If no percent is established by law, the 
119.3   appropriation is limited to the total amount appropriated for 
119.4   this purpose in the previous year. 
119.5      <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
119.6   aids payable in 2004.  
119.7      Sec. 12.  Minnesota Statutes 2001 Supplement, section 
119.8   477A.07, subdivision 2, is amended to read: 
119.9      Subd. 2.  [COUNTY AID.] Each county's aid amount for 2003 
119.10  determined under subdivision 1 must be permanently added to the 
119.11  county's 2003 homestead and agricultural credit aid base 
119.12  determined under section 273.1398 for aid payable, subdivision 
119.13  2, and paid in 2003 as part of the county's homestead and 
119.14  agricultural credit aid.  It then becomes a permanent part of 
119.15  the county's homestead and agricultural credit aid base for aid 
119.16  payable in 2004.  Each county's aid amount for 2004 determined 
119.17  under subdivision 1 must be permanently added to the county's 
119.18  2004 homestead and agricultural credit aid base for aid payable 
119.19  determined under section 273.1398, subdivision 2, and paid in 
119.20  2004 as part of the county's homestead and agricultural credit 
119.21  aid.  It then becomes a permanent part of the county's homestead 
119.22  and agricultural credit aid base for aid payable in 2005. 
119.23     <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
119.24  aids payable in 2003. 
119.25                             ARTICLE 7 
119.26                        ECONOMIC DEVELOPMENT 
119.27     Section 1.  Minnesota Statutes 2000, section 272.0212, 
119.28  subdivision 4, is amended to read: 
119.29     Subd. 4.  [DEFINITIONS.] (a) For purposes of this section, 
119.30  the following terms have the meanings given. 
119.31     (b) "Qualified property" means class 3 and class 1, 3, 4, 
119.32  and 5 property as defined in section 273.13 that is located in a 
119.33  zone and is newly constructed after the zone was designated, 
119.34  including the land that contains the improvements. 
119.35     (c) "Zone" means a border city development zone designated 
119.36  under the provisions of section 469.1731. 
120.1      <b>[EFFECTIVE DATE.]</b> This section is effective beginning for 
120.2   assessment year 2003. 
120.3      Sec. 2.  Minnesota Statutes 2001 Supplement, section 
120.4   469.1734, subdivision 6, is amended to read: 
120.5      Subd. 6.  [SALES TAX EXEMPTION; EQUIPMENT; CONSTRUCTION 
120.6   MATERIALS.] (a) The gross receipts from the sale of machinery 
120.7   and equipment and repair parts are exempt from taxation under 
120.8   chapter 297A, if the machinery and equipment: 
120.9      (1) are used in connection with a trade or business; 
120.10     (2) are placed in service in a city that is authorized to 
120.11  designate a zone under section 469.1731, regardless of whether 
120.12  the machinery and equipment are used in a zone; and 
120.13     (3) have a useful life of 12 months or more. 
120.14     (b) The gross receipts from the sale of construction 
120.15  materials are exempt, if they are used to construct: 
120.16     (1) a facility for use in a trade or business located in a 
120.17  city that is authorized to designate a zone under section 
120.18  469.1731, regardless of whether the facility is located in a 
120.19  zone; or 
120.20     (2) housing that is located in a zone.  
120.21  The exemptions under this paragraph apply regardless of whether 
120.22  the purchase is made by the owner, the user, or a contractor. 
120.23     (c) A purchaser may claim an exemption under this 
120.24  subdivision for tax on the purchases up to, but not exceeding: 
120.25     (1) the amount of the tax credit certificates received from 
120.26  the city, less 
120.27     (2) any tax credit certificates used under the provisions 
120.28  of subdivisions 4 and 5, and section 469.1732, subdivision 2. 
120.29     (d) The tax on sales of items exempted under this 
120.30  subdivision shall be imposed and collected as if the applicable 
120.31  rate under section 297A.62 applied.  Upon application by the 
120.32  purchaser, on forms prescribed by the commissioner, a refund 
120.33  equal to the tax paid shall be paid to the purchaser.  The 
120.34  application must include sufficient information to permit the 
120.35  commissioner to verify the sales tax paid and the eligibility of 
120.36  the claimant to receive the credit.  No more than two 
121.1   applications for refunds may be filed under this subdivision in 
121.2   a calendar year.  The provisions of section 289A.40 apply to the 
121.3   refunds payable under this subdivision.  There is annually 
121.4   appropriated to the commissioner of revenue the amount required 
121.5   to make the refunds, which must be deducted from the amount of 
121.6   the city's allocation under section 469.169, subdivision 12, 
121.7   that remains available and its limitation under section 469.1735.
121.8   The amount to be refunded shall bear interest at the rate in 
121.9   section 270.76 from the date the refund claim is filed with the 
121.10  commissioner. 
121.11     <b>[EFFECTIVE DATE.]</b> This section is effective for sales made 
121.12  after June 30, 2002. 
121.13     Sec. 3.  Minnesota Statutes 2001 Supplement, section 
121.14  469.1763, subdivision 6, is amended to read: 
121.15     Subd. 6.  [POOLING PERMITTED FOR DEFICITS.] (a) This 
121.16  subdivision applies only to districts for which the request for 
121.17  certification was made before August 1, 2001, and without regard 
121.18  to whether the request for certification was made prior to 
121.19  August 1, 1979. 
121.20     (b) The municipality for the district may transfer 
121.21  available increments from another tax increment financing 
121.22  district located in the municipality, if the transfer is 
121.23  necessary to eliminate a deficit in the district to which the 
121.24  increments are transferred.  A deficit in the district for 
121.25  purposes of this subdivision means the lesser of the following 
121.26  two amounts: 
121.27     (1)(i) the amount due during the calendar year to pay 
121.28  preexisting obligations of the district; minus 
121.29     (ii) the total increments to be collected from properties 
121.30  located within the district that are available for the calendar 
121.31  year; plus 
121.32     (iii) total increments from properties located in other 
121.33  districts in the municipality that are available to be used to 
121.34  meet the district's obligations under this section, excluding 
121.35  this subdivision, or other provisions of law (but excluding a 
121.36  special tax under section 469.1791 and the grant program under 
122.1   Laws 1997, chapter 231, article 1, section 19, or Laws 2001, 
122.2   First Special Session chapter 5); or 
122.3      (2) the reduction in increments collected from properties 
122.4   located in the district for the calendar year as a result of the 
122.5   changes in class rates in Laws 1997, chapter 231, article 1; 
122.6   Laws 1998, chapter 389, article 2; and Laws 1999, chapter 243, 
122.7   and Laws 2001, First Special Session chapter 5, or the 
122.8   elimination of the general education tax levy under Laws 2001, 
122.9   First Special Session chapter 5. 
122.10     (c) A preexisting obligation means: 
122.11     (1) bonds issued and sold before August 1, 2001, or bonds 
122.12  issued pursuant to a binding contract requiring the issuance of 
122.13  bonds entered into before July 1, 2001, and bonds issued to 
122.14  refund such bonds or to reimburse expenditures made in 
122.15  conjunction with a signed contractual agreement entered into 
122.16  before August 1, 2001, to the extent that the bonds are secured 
122.17  by a pledge of increments from the tax increment financing 
122.18  district; and 
122.19     (2) binding contracts entered into before August 1, 2001, 
122.20  to the extent that the contracts require payments secured by a 
122.21  pledge of increments from the tax increment financing district. 
122.22     (d) The municipality may require a development authority, 
122.23  other than a seaway port authority, to transfer available 
122.24  increments for any of its tax increment financing districts in 
122.25  the municipality to make up an insufficiency in another district 
122.26  in the municipality, regardless of whether the district was 
122.27  established by the development authority or another development 
122.28  authority.  This authority applies notwithstanding any law to 
122.29  the contrary, but applies only to a development authority that: 
122.30     (1) was established by the municipality; or 
122.31     (2) the governing body of which is appointed, in whole or 
122.32  part, by the municipality or an officer of the municipality or 
122.33  which consists, in whole or part, of members of the governing 
122.34  body of the municipality.  The municipality may use this 
122.35  authority only after it has first used all available increments 
122.36  of the receiving development authority to eliminate the 
123.1   insufficiency and exercised any permitted action under section 
123.2   469.1792, subdivision 3, for preexisting districts of the 
123.3   receiving development authority to eliminate the insufficiency. 
123.4      (e) The authority under this subdivision to spend tax 
123.5   increments outside of the area of the district from which the 
123.6   tax increments were collected: 
123.7      (1) may only be exercised after obtaining approval of the 
123.8   use of the increments, in writing, by the commissioner of 
123.9   revenue; 
123.10     (2) is an exception to the restrictions under section 
123.11  469.176, subdivision 4i, and the other provisions of this 
123.12  section, and the percentage restrictions under subdivision 2 
123.13  must be calculated after deducting increments spent under this 
123.14  subdivision from the total increments for the district; and 
123.15     (3) applies notwithstanding the provisions of the Tax 
123.16  Increment Financing Act in effect for districts for which the 
123.17  request for certification was made before June 30, 1982, or any 
123.18  other law to the contrary. 
123.19     (f) If a preexisting obligation requires the development 
123.20  authority to pay an amount that is limited to the increment from 
123.21  the district or a specific development within the district and 
123.22  if the obligation requires paying a higher amount to the extent 
123.23  that increments are available, the municipality may determine 
123.24  that the amount due under the preexisting obligation equals the 
123.25  higher amount and may authorize the transfer of increments under 
123.26  this subdivision to pay up to the higher amount.  The existence 
123.27  of a guarantee of obligations by the individual or entity that 
123.28  would receive the payment under this paragraph is disregarded in 
123.29  the determination of eligibility to pool under this 
123.30  subdivision.  The authority to transfer increments under this 
123.31  paragraph may only be used to the extent that the payment of all 
123.32  other preexisting obligations in the municipality due during the 
123.33  calendar year have been satisfied. 
123.34     <b>[EFFECTIVE DATE.]</b> This section is effective for increments 
123.35  payable in 2002 and thereafter. 
123.36     Sec. 4.  Minnesota Statutes 2001 Supplement, section 
124.1   469.1792, subdivision 1, is amended to read: 
124.2      Subdivision 1.  [SCOPE.] This section applies only to an 
124.3   authority with a preexisting district for which: 
124.4      (1)(i) the increments from the district were insufficient 
124.5   to pay preexisting obligations as a result of the class rate 
124.6   changes or the elimination of the state-determined general 
124.7   education property tax levy under this act, or both; or 
124.8      (ii) (2)(i) the development authority has a binding 
124.9   contract with a person requiring the authority to pay to the 
124.10  person an amount that may not exceed the increment from the 
124.11  district or a specific development within the district and as a 
124.12  result of the reduction in increment because of the class rate 
124.13  changes or the elimination of the state-determined general 
124.14  education property tax levy under this act, or both,; and 
124.15     (ii) the authority is unable to pay the full amount under 
124.16  the contract from the pledged increments or other increments 
124.17  from the district that would have been due if the class rate 
124.18  changes or elimination of the state-determined general education 
124.19  property tax levy or both had not been made under Laws 2001, 
124.20  First Special Session chapter 5; and 
124.21     (2) the municipality exercised its full authority to pool 
124.22  under section 469.1763, subdivision 6, and the transfer of 
124.23  increments did not eliminate the insufficiency under clause (1), 
124.24  item (i), or the inability to pay the full amount under clause 
124.25  (1), item (ii). 
124.26     <b>[EFFECTIVE DATE.]</b> This section is effective for actions 
124.27  taken and resolutions approved after June 30, 2002. 
124.28     Sec. 5.  Minnesota Statutes 2000, section 469.1813, is 
124.29  amended by adding a subdivision to read: 
124.30     Subd. 6b.  [EXTENDED DURATION LIMIT.] (a) Notwithstanding 
124.31  the provisions of subdivision 6, a political subdivision may 
124.32  grant an abatement for a period of up to 20 years, if the 
124.33  abatement is for a qualified business. 
124.34     (b) To be a qualified business for purposes of this 
124.35  subdivision, at least 50 percent of the payroll of the 
124.36  operations of the business that qualify for the abatement must 
125.1   be for employees engaged in one of the following lines of 
125.2   business or any combination of them: 
125.3      (1) manufacturing; 
125.4      (2) agricultural processing; 
125.5      (3) mining; 
125.6      (4) research and development; 
125.7      (5) warehousing; or 
125.8      (6) qualified high technology. 
125.9      (c)(1) "Manufacturing" means the material staging and 
125.10  production of tangible personal property by procedures commonly 
125.11  regarded as manufacturing, processing, fabrication, or 
125.12  assembling which changes some existing material into new shapes, 
125.13  new qualities, or new combinations. 
125.14     (2) "Mining" has the meaning given in section 613(c) of the 
125.15  Internal Revenue Code of 1986. 
125.16     (3) "Agricultural processing" means transforming, 
125.17  packaging, sorting, or grading livestock or livestock products, 
125.18  agricultural commodities, or plants or plant products into goods 
125.19  that are used for intermediate or final consumption including 
125.20  goods for nonfood use. 
125.21     (4) "Research and development" means qualified research as 
125.22  defined in section 41(d) of the Internal Revenue Code of 1986. 
125.23     (5) "Qualified high technology" means one or more of the 
125.24  following activities: 
125.25     (i) advanced computing, which is any technology used in the 
125.26  design and development of any of the following: 
125.27     (A) computer hardware and software; 
125.28     (B) data communications; and 
125.29     (C) information technologies; 
125.30     (ii) advanced materials, which are materials with 
125.31  engineered properties created through the development of 
125.32  specialized process and synthesis technology; 
125.33     (iii) biotechnology, which is any technology that uses 
125.34  living organisms, cells, macromolecules, microorganisms, or 
125.35  substances from living organisms to make or modify a product, 
125.36  improve plants or animals, or develop microorganisms for useful 
126.1   purposes; 
126.2      (iv) electronic device technology, which is any technology 
126.3   that involves microelectronics, semiconductors, electronic 
126.4   equipment, and instrumentation, radio frequency, microwave, and 
126.5   millimeter electronics, and optical and optic-electrical 
126.6   devices, or data and digital communications and imaging devices; 
126.7      (v) engineering or laboratory testing related to the 
126.8   development of a product; 
126.9      (vi) technology that assists in the assessment or 
126.10  prevention of threats or damage to human health or the 
126.11  environment, including, but not limited to, environmental 
126.12  cleanup technology, pollution prevention technology, or 
126.13  development of alternative energy sources; 
126.14     (vii) medical device technology, which is any technology 
126.15  that involves medical equipment or products other than a 
126.16  pharmaceutical product that has therapeutic or diagnostic value 
126.17  and is regulated; or 
126.18     (viii) advanced vehicles technology which is any technology 
126.19  that involves electric vehicles, hybrid vehicles, or alternative 
126.20  fuel vehicles, or components used in the construction of 
126.21  electric vehicles, hybrid vehicles, or alternative fuel 
126.22  vehicles.  An electric vehicle is a road vehicle that draws 
126.23  propulsion energy only from an on-board source of electrical 
126.24  energy.  A hybrid vehicle is a road vehicle that can draw 
126.25  propulsion energy from both a consumable fuel and a rechargeable 
126.26  energy storage system.  
126.27     (d) The authority to grant new abatements under this 
126.28  subdivision expires on July 1, 2004.  
126.29     Sec. 6.  Laws 1995, chapter 264, article 5, section 45, 
126.30  subdivision 1, as amended by Laws 1996, chapter 471, article 7, 
126.31  section 22, and Laws 1997, chapter 231, article 10, section 13, 
126.32  is amended to read: 
126.33     Subdivision 1.  [CREATION OF PROJECTS.] (a) An authority 
126.34  may create a housing replacement project under sections 44 to 
126.35  47, as provided in this section. 
126.36     (b) For the cities of Crystal, Fridley, Richfield, and 
127.1   Columbia Heights, the authority may designate up to 50 parcels 
127.2   in the city to be included in a housing replacement district.  
127.3   No more than ten parcels may be included in year one of the 
127.4   district, with up to ten additional parcels added to the 
127.5   district in each of the following nine years.  For the cities of 
127.6   Minneapolis, St. Paul, and Duluth, each authority may designate 
127.7   up to 100 not more than 200 parcels in the city to be included 
127.8   in a housing replacement district over the life of the 
127.9   district.  The only parcels that may be included in a district 
127.10  are (1) vacant sites, (2) parcels containing vacant houses, or 
127.11  (3) parcels containing houses that are structurally substandard, 
127.12  as defined in Minnesota Statutes, section 469.174, subdivision 
127.13  10.  
127.14     (c) The city in which the authority is located must pay at 
127.15  least 25 percent of the housing replacement project costs from 
127.16  its general fund, a property tax levy, or other unrestricted 
127.17  money, not including tax increments. 
127.18     (d) The housing replacement district plan must have as its 
127.19  sole object the acquisition of parcels for the purpose of 
127.20  preparing the site to be sold for market rate housing.  As used 
127.21  in this section, "market rate housing" means housing that has a 
127.22  market value that does not exceed 150 percent of the average 
127.23  market value of single-family housing in that municipality. 
127.24     Sec. 7.  [CITY OF ALBERT LEA; TAX INCREMENT FINANCING 
127.25  DISTRICT.] 
127.26     Subdivision 1.  [AUTHORIZATION.] The governing body of the 
127.27  city of Albert Lea may create a redevelopment tax increment 
127.28  financing district as provided in this section.  The city or its 
127.29  port authority may be the "authority" for the purposes of 
127.30  Minnesota Statutes, sections 469.174 to 469.179. 
127.31     Subd. 2.  [DEFINITIONS.] (a) For the purposes of this 
127.32  section, the terms defined in this subdivision have the meanings 
127.33  given them. 
127.34     (b) "Redevelopment parcel" means the property in the city 
127.35  of Albert Lea bounded by Main Street, Garfield Avenue, Front 
127.36  Street, the Union Pacific railway line, and Albert Lea lake. 
128.1      (c) "Reconstruction parcel" means the property in the city 
128.2   of Albert Lea described as lot 1, block 5, Habben First Addition.
128.3      Subd. 3.  [SPECIAL RULES.] (a) The district established 
128.4   under this section is subject to the provisions of Minnesota 
128.5   Statutes, sections 469.174 to 469.179, except as provided in 
128.6   this subdivision. 
128.7      (b) The district may consist of the redevelopment parcel 
128.8   and the reconstruction parcel. 
128.9      (c) Minnesota Statutes, section 469.174, subdivision 10, 
128.10  paragraph (f), does not apply to the district, and if the city 
128.11  finds that the redevelopment parcel meets the criteria described 
128.12  in Minnesota Statutes, section 469.174, subdivision 10, 
128.13  paragraph (a), clause (1), then both the redevelopment parcel 
128.14  and the reconstruction parcel and the district as a whole are 
128.15  considered to meet those criteria. 
128.16     (d) Expenditures for activities, as defined in Minnesota 
128.17  Statutes, section 469.1763, subdivision 1, paragraph (b), 
128.18  anywhere within the district are considered costs of correcting 
128.19  conditions that allow designation of redevelopment districts 
128.20  within the meaning of Minnesota Statutes, section 469.176, 
128.21  subdivision 4j. 
128.22     (e) For the purposes of Minnesota Statutes, section 
128.23  469.1763, subdivision 3, expenditures on the redevelopment 
128.24  parcel are considered to have been expended on an activity 
128.25  within the district if a qualifying action occurs within ten 
128.26  years after certification of the district. 
128.27     <b>[EFFECTIVE DATE.]</b> This section is effective upon local 
128.28  approval in compliance with the requirements of Minnesota 
128.29  Statutes, section 645.021. 
128.30     Sec. 8.  [RUSHFORD TAX INCREMENT FINANCING EXTENSION.] 
128.31     The governing body of the city of Rushford may elect to 
128.32  extend the duration of its downtown redevelopment tax increment 
128.33  financing district by up to two additional years. 
128.34     <b>[EFFECTIVE DATE.]</b> This section is effective upon compliance 
128.35  with the requirements of Minnesota Statutes, sections 469.1782, 
128.36  subdivision 2; and 645.021. 
129.1      Sec. 9.  [CITY OF MINNEAPOLIS TAX INCREMENT DISTRICT; 
129.2   DURATION EXTENSION.] 
129.3      (a) Upon approval of the city council of the city of 
129.4   Minneapolis, the Minneapolis community development agency may, 
129.5   notwithstanding Minnesota Statutes, section 469.176, subdivision 
129.6   1b, extend the duration of the east Hennepin and University tax 
129.7   increment district for a period of up to seven years, or until 
129.8   all amounts payable to the developers and to the agency to 
129.9   reimburse the agency's provision of $1,100,000 of city of 
129.10  Minneapolis HOME funds to assist low-income housing are repaid, 
129.11  whichever is shorter.  
129.12     (b) The amount of additional increment which may be paid to 
129.13  the district as a result of this section may not exceed: 
129.14     (1) the increment that would have been collected if the 
129.15  class rate changes and elimination of the state-determined 
129.16  general education property tax levy had not been made under Laws 
129.17  2001, First Special Session chapter 5, for the term of the 
129.18  district under general law and if the provisions of section 4 
129.19  did not apply, less 
129.20     (2) the actual increments collected for the term of the 
129.21  district under general law. 
129.22     (c) Notwithstanding any law to the contrary, effective upon 
129.23  approval of this section, no increments may be spent on 
129.24  activities located outside of the area of the district, other 
129.25  than to pay administrative expenses.  
129.26     (d) This section is effective upon compliance with the 
129.27  requirements of Minnesota Statutes, sections 469.1782, 
129.28  subdivision 2, and 645.021.  
129.29     Sec. 10.  [CITY OF MINNEAPOLIS TAX INCREMENT DISTRICT; 
129.30  DURATION EXTENSION.] 
129.31     (a) Upon approval of the city council of the city of 
129.32  Minneapolis, the Minneapolis community development agency may, 
129.33  with respect to the southeast Minneapolis industrial area 
129.34  redevelopment area phase 4 tax increment financing district, 
129.35  notwithstanding Minnesota Statutes, section 469.176, subdivision 
129.36  1b, extend the duration of the district for a period of up to 
130.1   six years. 
130.2      (b) The amount of additional increment which may be paid to 
130.3   the district as a result of this section may not exceed:  
130.4      (1) the increment that would have been collected if the 
130.5   class rate changes and elimination of the state-determined 
130.6   general education property tax levy had not been made under Laws 
130.7   2001, First Special Session chapter 5, for the term of the 
130.8   district under general law and if the provisions of section 4 
130.9   did not apply, less 
130.10     (2) the actual increments collected for the term of the 
130.11  district under general law. 
130.12     (c) Notwithstanding any law to the contrary, effective upon 
130.13  approval of this section, no increments may be spent on 
130.14  activities located outside of the area of the district, other 
130.15  than to pay administrative expenses.  
130.16     (d) Upon payment in full of the Minneapolis community 
130.17  development agency amended and restated tax increment revenue 
130.18  note, in the original face amount of $1,000,000, issued December 
130.19  4, 1997, the district terminates and the authority granted under 
130.20  this section terminates.  
130.21     (e) This section is effective upon compliance with the 
130.22  requirements of Minnesota Statutes, sections 469.1782, 
130.23  subdivision 2, and 645.021.  
130.24     Sec. 11.  [GRANT TO WASHBURN-CROSBY PROJECT.] 
130.25     Notwithstanding the requirements of Minnesota Statutes, 
130.26  section 469.1794, the commissioner of revenue shall pay a 
130.27  one-time grant of $2,600,000 to the Minneapolis community 
130.28  development agency for the Washburn-Crosby Mill City Museum 
130.29  project of the historical society as described in Laws 2001, 
130.30  First Special Session chapter 5, article 15, section 39.  The 
130.31  grant must be disbursed on July 1, 2002.  $2,600,000 is 
130.32  appropriated from the general fund to the commissioner of 
130.33  revenue to make the grant under this section. 
130.34     Sec. 12.  [DAKOTA COUNTY TAX INCREMENT DISTRICT EXTENSION.] 
130.35     (a) The governing body of Dakota county may elect to extend 
130.36  the duration of its C.D.A. South Robert Street redevelopment tax 
131.1   increment financing district number 4 by up to five additional 
131.2   years. 
131.3      (b) The amount of additional increment which may be paid to 
131.4   the district as a result of this section may not exceed: 
131.5      (1) the increment that would have been collected if the 
131.6   class rate changes and elimination of the state-determined 
131.7   general education property tax levy had not been made under Laws 
131.8   2001, First Special Session chapter 5, for the term of the 
131.9   district under general law and if the provisions of section 4 
131.10  did not apply, less 
131.11     (2) the actual increments collected for the term of the 
131.12  district under general law.  
131.13     <b>[EFFECTIVE DATE.]</b> This section is effective upon compliance 
131.14  with Minnesota Statutes, sections 469.1782, subdivision 2, and 
131.15  645.021. 
131.16     Sec. 13.  [REPEALER.] 
131.17     Minnesota Statutes 2001 Supplement, section 469.176, 
131.18  subdivision 1h, is repealed. 
131.19     <b>[EFFECTIVE DATE.]</b> This section is effective retroactive to 
131.20  July 1, 2001, and any early decertification of a tax increment 
131.21  financing district made after July 1, 2001, is ratified. 
131.22                             ARTICLE 8 
131.23                           MINERALS TAXES 
131.24     Section 1.  Minnesota Statutes 2001 Supplement, section 
131.25  126C.21, subdivision 4, is amended to read: 
131.26     Subd. 4.  [TACONITE DEDUCTIONS.] (1) Notwithstanding any 
131.27  provisions of any other law to the contrary, the adjusted net 
131.28  tax capacity used in calculating general education aid may 
131.29  include only that property that is currently taxable in the 
131.30  district.  
131.31     (2) For districts that received payments under sections 
131.32  298.018; 298.225; 298.28; 298.34 to 298.39; 298.391 to 298.396; 
131.33  and 298.405, or any law imposing a tax upon severed mineral 
131.34  values; or recognized revenue under section 477A.15; the general 
131.35  education aid must be reduced in the final adjustment payment by 
131.36  the difference between the dollar amount of the payments 
132.1   received pursuant to those sections, or revenue recognized under 
132.2   section 477A.15 in the fiscal year to which the final adjustment 
132.3   is attributable and the amount that was calculated, pursuant to 
132.4   section 126C.48, subdivision 8, as a reduction of the levy 
132.5   attributable to the fiscal year to which the final adjustment is 
132.6   attributable.  If the final adjustment of a district's general 
132.7   education aid for a fiscal year is a negative amount because of 
132.8   this clause, the next fiscal year's general education aid to 
132.9   that district must be reduced by this negative amount in the 
132.10  following manner:  there must be withheld from each scheduled 
132.11  general education aid payment due the district in such fiscal 
132.12  year, 15 percent of the total negative amount, until the total 
132.13  negative amount has been withheld.  The amount reduced from 
132.14  general education aid pursuant to this clause must be recognized 
132.15  as revenue in the fiscal year to which the final adjustment 
132.16  payment is attributable. 
132.17     Sec. 2.  Minnesota Statutes 2001 Supplement, section 
132.18  126C.48, subdivision 8, is amended to read: 
132.19     Subd. 8.  [TACONITE PAYMENT AND OTHER REDUCTIONS.] (1) 
132.20  Reductions in levies pursuant to sections 126C.48, subdivision 
132.21  1, and 273.138, must be made prior to the reductions in clause 
132.22  (2). 
132.23     (2) Notwithstanding any other law to the contrary, 
132.24  districts which received payments pursuant to sections 298.018; 
132.25  298.225; 298.28, except an amount distributed under section 
132.26  298.28, subdivision 4, paragraph (c), clause (ii); 298.34 to 
132.27  298.39; 298.391 to 298.396; 298.405; and any law imposing a tax 
132.28  upon severed mineral values; or recognized revenue under section 
132.29  477A.15 must not include a portion of these aids in their 
132.30  permissible levies pursuant to those sections, but instead must 
132.31  reduce the permissible levies authorized by this chapter and 
132.32  chapters 120B, 122A, 123A, 123B, 124A, 124D, 125A, and 127A by 
132.33  the greater of the following: 
132.34     (a) an amount equal to 50 percent of the total dollar 
132.35  amount of the payments received pursuant to those sections or 
132.36  revenue recognized under section 477A.15 in the previous fiscal 
133.1   year; or 
133.2      (b) an amount equal to the total dollar amount of the 
133.3   payments received pursuant to those sections or revenue 
133.4   recognized under section 477A.15 in the previous fiscal year 
133.5   less the product of the same dollar amount of payments or 
133.6   revenue times five percent. 
133.7      For levy year 2002 only, 77 percent of the amounts 
133.8   distributed under section 298.225 and 298.28, and 100 percent of 
133.9   the amounts distributed under sections 298.018; 298.34 to 
133.10  298.39; 298.391 to 298.396; 298.405; and any law imposing a tax 
133.11  upon severed mineral values, or recognized revenue under section 
133.12  477A.15, shall be used for purposes of the calculations under 
133.13  this paragraph.  For levy year 2003 only, the levy reductions 
133.14  under this subdivision must be calculated as if section 298.28, 
133.15  subdivision 4, paragraph (f), did not apply for the 2003 
133.16  distribution. 
133.17     (3) The amount of any increased levy authorized by 
133.18  referendum pursuant to section 126C.17, subdivision 9, voter 
133.19  approved referendum, facilities down payment, and debt levies 
133.20  shall not be reduced pursuant to by more than 50 percent under 
133.21  this subdivision.  The amount of any levy authorized by section 
133.22  126C.43, to make payments for bonds issued and for interest 
133.23  thereon, shall not be reduced pursuant to this subdivision.  In 
133.24  administering this paragraph, the commissioner shall first 
133.25  reduce the nonvoter approved levies of a district; then, if any 
133.26  payments, severed mineral value tax revenue or recognized 
133.27  revenue under paragraph (2) remains, the commissioner shall 
133.28  reduce any voter approved referendum levies authorized under 
133.29  section 126C.17; then, if any payments, severed mineral value 
133.30  tax revenue or recognized revenue under paragraph (2) remains, 
133.31  the commissioner shall reduce any voter approved facilities down 
133.32  payment levies authorized under section 123B.63 and then, if any 
133.33  payments, severed mineral value tax revenue or recognized 
133.34  revenue under paragraph (2) remains, the commissioner shall 
133.35  reduce any voter approved debt levies.  
133.36     (4) Before computing the reduction pursuant to this 
134.1   subdivision of the health and safety levy authorized by sections 
134.2   123B.57 and 126C.40, subdivision 5, the commissioner shall 
134.3   ascertain from each affected school district the amount it 
134.4   proposes to levy under each section or subdivision.  The 
134.5   reduction shall be computed on the basis of the amount so 
134.6   ascertained. 
134.7      (5) Notwithstanding any law to the contrary, any amounts 
134.8   received by districts in any fiscal year pursuant to sections 
134.9   298.018; 298.34 to 298.39; 298.391 to 298.396; 298.405; or any 
134.10  law imposing a tax on severed mineral values; and not deducted 
134.11  from general education aid pursuant to section 126C.21, 
134.12  subdivision 4, clause (2), and not applied to reduce levies 
134.13  pursuant to this subdivision shall be paid by the district to 
134.14  the St. Louis county auditor in the following amount by March 15 
134.15  of each year, the amount required to be subtracted from the 
134.16  previous fiscal year's general education aid pursuant to section 
134.17  126C.21, subdivision 4, which is in excess of the general 
134.18  education aid earned for that fiscal year.  The county auditor 
134.19  shall deposit any amounts received pursuant to this clause in 
134.20  the St. Louis county treasury for purposes of paying the 
134.21  taconite homestead credit as provided in section 273.135. To the 
134.22  extent the levy reduction calculated under paragraph (2) exceeds 
134.23  the limitation in paragraph (3), an amount equal to the excess 
134.24  must be distributed from the school district's distribution 
134.25  under sections 298.225, 298.28, and 477A.15 in the following 
134.26  year to the cities and townships within the school district in 
134.27  the proportion that their taxable net tax capacity within the 
134.28  school district bears to the taxable net tax capacity of the 
134.29  school district for property taxes payable in the year prior to 
134.30  distribution.  No city or township shall receive a distribution 
134.31  greater than its levy for taxes payable in the year prior to 
134.32  distribution.  The commissioner of revenue shall certify the 
134.33  distributions of cities and towns under this paragraph to the 
134.34  county auditor by September 30 of the year preceding 
134.35  distribution.  The county auditor shall reduce the proposed and 
134.36  final levies of cities and towns receiving distributions by the 
135.1   amount of their distribution.  Distributions to the cities and 
135.2   towns shall be made at the times provided under section 298.27. 
135.3      Sec. 3.  Minnesota Statutes 2001 Supplement, section 
135.4   298.01, subdivision 3b, is amended to read: 
135.5      Subd. 3b.  [DEDUCTIONS.] (a) For purposes of determining 
135.6   taxable income under subdivision 3, the deductions from gross 
135.7   income include only those expenses necessary to convert raw ores 
135.8   to marketable quality.  Such expenses include costs associated 
135.9   with refinement but do not include expenses such as 
135.10  transportation, stockpiling, marketing, or marine insurance that 
135.11  are incurred after marketable ores are produced, unless the 
135.12  expenses are included in gross income. 
135.13     (b) The provisions of section 290.01, subdivisions 19c, 
135.14  clauses (6) and (10) (9), and 19d, clauses (7) and (11), are not 
135.15  used to determine taxable income. 
135.16     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
135.17  following final enactment. 
135.18     Sec. 4.  Minnesota Statutes 2001 Supplement, section 
135.19  298.01, subdivision 4c, is amended to read: 
135.20     Subd. 4c.  [SPECIAL DEDUCTIONS; NET OPERATING LOSS.] (a) 
135.21  For purposes of determining taxable income under subdivision 
135.22  4, the following modifications are allowed: 
135.23     (1) the provisions of section 290.01, subdivisions 19c, 
135.24  clauses (6) and (10) (9), and 19d, clauses (7) and (11), are not 
135.25  used to determine taxable income; and. 
135.26     (2) for assets placed in service before January 1, 1990, 
135.27  the deduction for depreciation will be the same amount allowed 
135.28  under chapter 290, except that after an asset has been fully 
135.29  depreciated for federal income tax purposes any remaining 
135.30  depreciable basis is allowed as a deduction using the 
135.31  straight-line method over the following number of years: 
135.32     (i) three-year property, one year; 
135.33     (ii) five- and seven-year property, two years; 
135.34     (iii) ten-year property, five years; and 
135.35     (iv) all other property, seven years. 
135.36     No deduction is allowed if an asset is fully depreciated 
136.1   for occupation tax purposes before January 1990. 
136.2      (b) For purposes of determining the deduction allowed under 
136.3   paragraph (a), clause (2), the remaining depreciable basis of 
136.4   property placed in service before January 1, 1990, is calculated 
136.5   as follows: 
136.6      (1) the adjusted basis of the property on December 31, 
136.7   1989, which was used to calculate the hypothetical corporate 
136.8   franchise tax under Minnesota Statutes 1988, section 298.40, 
136.9   including salvage value; less 
136.10     (2) deductions for depreciation allowed under section 
136.11  290.01, subdivision 19e. 
136.12     (c) The basis for determining gain or loss on sale or 
136.13  disposition of assets placed in service before January 1, 1990, 
136.14  is the basis determined under paragraph (b), less the deductions 
136.15  allowed under paragraph (a), clause (2). 
136.16     (d) (b) The amount of net operating loss incurred in a 
136.17  taxable year beginning before January 1, 1990, that may be 
136.18  carried over to a taxable year beginning after December 31, 
136.19  1989, is the amount of net operating loss carryover determined 
136.20  in the calculation of the hypothetical corporate franchise tax 
136.21  under Minnesota Statutes 1988, sections 298.40 and 298.402. 
136.22     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
136.23  payable May 1, 2002, and thereafter. 
136.24     Sec. 5.  Minnesota Statutes 2001 Supplement, section 
136.25  298.225, subdivision 1, is amended to read: 
136.26     Subdivision 1.  (a) The distribution of the taconite 
136.27  production tax as provided in section 298.28, subdivisions 3 to 
136.28  5, 6, paragraph (b), 7, and 8, shall equal the lesser of the 
136.29  following amounts:  
136.30     (1) the amount distributed pursuant to this section and 
136.31  section 298.28, with respect to 1983 production if the 
136.32  production for the year prior to the distribution year is no 
136.33  less than 42,000,000 taxable tons.  If the production is less 
136.34  than 42,000,000 taxable tons, the amount of the distributions 
136.35  shall be reduced proportionately at the rate of two percent for 
136.36  each 1,000,000 tons, or part of 1,000,000 tons by which the 
137.1   production is less than 42,000,000 tons; or 
137.2      (2)(i) for the distributions made pursuant to section 
137.3   298.28, subdivisions 4, paragraphs (b) and (c), and 6, paragraph 
137.4   (c), 40.5 31.2 percent of the amount distributed pursuant to 
137.5   this section and section 298.28, with respect to 1983 
137.6   production; 
137.7      (ii) for the distributions made pursuant to section 298.28, 
137.8   subdivision 5, paragraphs (b) and (d), 75 percent of the amount 
137.9   distributed pursuant to this section and section 298.28, with 
137.10  respect to 1983 production.  
137.11     (b) The distribution of the taconite production tax as 
137.12  provided in section 298.28, subdivision 2, shall equal the 
137.13  following amount: 
137.14     (1) if the production for the year prior to the 
137.15  distribution year is at least 42,000,000 taxable tons, the 
137.16  amount distributed pursuant to this section and section 298.28 
137.17  with respect to 1999 production; or 
137.18     (2) if the production for the year prior to the 
137.19  distribution year is less than 42,000,000 taxable tons, the 
137.20  amount distributed pursuant to this section and section 298.28 
137.21  with respect to 1999 production, reduced proportionately at the 
137.22  rate of two percent for each 1,000,000 tons or part of 1,000,000 
137.23  tons by which the production is less than 42,000,000 tons. 
137.24     Sec. 6.  Minnesota Statutes 2000, section 298.27, is 
137.25  amended to read: 
137.26     298.27 [COLLECTION AND PAYMENT OF TAX.] 
137.27     The taxes provided by section 298.24 shall be paid directly 
137.28  to each eligible county and the iron range resources and 
137.29  rehabilitation board.  The commissioner of revenue shall notify 
137.30  each producer of the amount to be paid each recipient prior to 
137.31  February 15.  Every person subject to taxes imposed by section 
137.32  298.24 shall file a correct report covering the preceding year.  
137.33  The report must contain the information required by the 
137.34  commissioner.  The report shall be filed by each producer on or 
137.35  before February 1.  A remittance equal to 50 percent of the 
137.36  total tax required to be paid hereunder in 2003 and 100 percent 
138.1   of the total tax required to be paid hereunder in 2004 and 
138.2   thereafter shall be paid on or before February 24.  A remittance 
138.3   equal to the remaining total tax required to be paid hereunder 
138.4   in 2003 shall be paid on or before August 24.  On or before 
138.5   February 25, and in 2003, August 25, the county auditor shall 
138.6   make distribution of the payment payments previously received by 
138.7   the county in the manner provided by section 298.28.  Reports 
138.8   shall be made and hearings held upon the determination of the 
138.9   tax in accordance with procedures established by the 
138.10  commissioner of revenue.  The commissioner of revenue shall have 
138.11  authority to make reasonable rules as to the form and manner of 
138.12  filing reports necessary for the determination of the tax 
138.13  hereunder, and by such rules may require the production of such 
138.14  information as may be reasonably necessary or convenient for the 
138.15  determination and apportionment of the tax.  All the provisions 
138.16  of the occupation tax law with reference to the assessment and 
138.17  determination of the occupation tax, including all provisions 
138.18  for appeals from or review of the orders of the commissioner of 
138.19  revenue relative thereto, but not including provisions for 
138.20  refunds, are applicable to the taxes imposed by section 298.24 
138.21  except in so far as inconsistent herewith.  If any person 
138.22  subject to section 298.24 shall fail to make the report provided 
138.23  for in this section at the time and in the manner herein 
138.24  provided, the commissioner of revenue shall in such case, upon 
138.25  information possessed or obtained, ascertain the kind and amount 
138.26  of ore mined or produced and thereon find and determine the 
138.27  amount of the tax due from such person.  There shall be added to 
138.28  the amount of tax due a penalty for failure to report on or 
138.29  before February 1, which penalty shall equal ten percent of the 
138.30  tax imposed and be treated as a part thereof. 
138.31     If any person responsible for making a tax payment at the 
138.32  time and in the manner herein provided fails to do so, there 
138.33  shall be imposed a penalty equal to ten percent of the amount so 
138.34  due, which penalty shall be treated as part of the tax due. 
138.35     In the case of any underpayment of the tax payment required 
138.36  herein, there may be added and be treated as part of the tax due 
139.1   a penalty equal to ten percent of the amount so underpaid. 
139.2      A person having a liability of $120,000 or more during a 
139.3   calendar year must remit all liabilities by means of a funds 
139.4   transfer as defined in section 336.4A-104, paragraph (a).  The 
139.5   funds transfer payment date, as defined in section 336.4A-401, 
139.6   must be on or before the date the tax is due.  If the date the 
139.7   tax is due is not a funds transfer business day, as defined in 
139.8   section 336.4A-105, paragraph (a), clause (4), the payment date 
139.9   must be on or before the funds transfer business day next 
139.10  following the date the tax is due. 
139.11     <b>[EFFECTIVE DATE.]</b> Except as otherwise provided, this 
139.12  section is effective for years beginning after December 31, 2001.
139.13     Sec. 7.  Minnesota Statutes 2001 Supplement, section 
139.14  298.28, subdivision 4, is amended to read: 
139.15     Subd. 4.  [SCHOOL DISTRICTS.] (a) 22.28 17.15 cents per 
139.16  taxable ton plus the increase provided in paragraph (d) must be 
139.17  allocated to qualifying school districts to be distributed, 
139.18  based upon the certification of the commissioner of revenue, 
139.19  under paragraphs (b) and (c), except as otherwise provided in 
139.20  paragraph (f). 
139.21     (b) 4.46 3.43 cents per taxable ton must be distributed to 
139.22  the school districts in which the lands from which taconite was 
139.23  mined or quarried were located or within which the concentrate 
139.24  was produced.  The distribution must be based on the 
139.25  apportionment formula prescribed in subdivision 2. 
139.26     (c)(i) 17.82 13.72 cents per taxable ton, less any amount 
139.27  distributed under paragraph (e), shall be distributed to a group 
139.28  of school districts comprised of those school districts in which 
139.29  the taconite was mined or quarried or the concentrate produced 
139.30  or in which there is a qualifying municipality as defined by 
139.31  section 273.134, paragraph (b), in direct proportion to school 
139.32  district indexes as follows:  for each school district, its 
139.33  pupil units determined under section 126C.05 for the prior 
139.34  school year shall be multiplied by the ratio of the average 
139.35  adjusted net tax capacity per pupil unit for school districts 
139.36  receiving aid under this clause as calculated pursuant to 
140.1   chapters 122A, 126C, and 127A for the school year ending prior 
140.2   to distribution to the adjusted net tax capacity per pupil unit 
140.3   of the district.  Each district shall receive that portion of 
140.4   the distribution which its index bears to the sum of the indices 
140.5   for all school districts that receive the distributions.  
140.6      (ii) Notwithstanding clause (i), each school district that 
140.7   receives a distribution under sections 298.018; 298.23 to 
140.8   298.28, exclusive of any amount received under this clause; 
140.9   298.34 to 298.39; 298.391 to 298.396; 298.405; or any law 
140.10  imposing a tax on severed mineral values after reduction for any 
140.11  portion distributed to cities and towns under section 126C.48, 
140.12  subdivision 8, paragraph (5), that is less than the amount of 
140.13  its levy reduction under section 126C.48, subdivision 8, for the 
140.14  second year prior to the year of the distribution shall receive 
140.15  a distribution equal to the difference; the amount necessary to 
140.16  make this payment shall be derived from proportionate reductions 
140.17  in the initial distribution to other school districts under 
140.18  clause (i).  
140.19     (d) Any school district described in paragraph (c) where a 
140.20  levy increase pursuant to section 126C.17, subdivision 9, was 
140.21  authorized by referendum for taxes payable in 2001, shall 
140.22  receive a distribution from a fund that receives a distribution 
140.23  in 1998 of 21.3 cents per ton.  On July 15 of 1999, and each 
140.24  year thereafter, the increase over the amount established for 
140.25  the prior year shall be determined according to the increase in 
140.26  the implicit price deflator as provided in section 298.24, 
140.27  subdivision 1.  Each district shall receive $175 times the pupil 
140.28  units identified in section 126C.05, subdivision 1, enrolled in 
140.29  the second previous year or the 1983-1984 school year, whichever 
140.30  is greater, less the product of 1.8 percent times the district's 
140.31  taxable net tax capacity in the second previous year. 
140.32     If the total amount provided by paragraph (d) is 
140.33  insufficient to make the payments herein required then the 
140.34  entitlement of $175 per pupil unit shall be reduced uniformly so 
140.35  as not to exceed the funds available.  Any amounts received by a 
140.36  qualifying school district in any fiscal year pursuant to 
141.1   paragraph (d) shall not be applied to reduce general education 
141.2   aid which the district receives pursuant to section 126C.13 or 
141.3   the permissible levies of the district.  Any amount remaining 
141.4   after the payments provided in this paragraph shall be paid to 
141.5   the commissioner of iron range resources and rehabilitation who 
141.6   shall deposit the same in the taconite environmental protection 
141.7   fund and the northeast Minnesota economic protection trust fund 
141.8   as provided in subdivision 11. 
141.9      Each district receiving money according to this paragraph 
141.10  shall reserve $25 times the number of pupil units in the 
141.11  district.  It may use the money for early childhood programs or 
141.12  for outcome-based learning programs that enhance the academic 
141.13  quality of the district's curriculum.  The outcome-based 
141.14  learning programs must be approved by the commissioner of 
141.15  children, families, and learning. 
141.16     (e) There shall be distributed to any school district the 
141.17  amount which the school district was entitled to receive under 
141.18  section 298.32 in 1975. 
141.19     (f) Effective with for the distribution in 2003 and 
141.20  thereafter only, five percent of the distributions to school 
141.21  districts under paragraphs (b), (c), and (e); subdivision 6, 
141.22  paragraph (c); subdivision 11; and section 477A.15 298.225, 
141.23  shall be distributed to the general fund.  The remainder less 
141.24  any portion distributed to cities and towns under section 
141.25  126C.48, subdivision 8, paragraph (5), shall be distributed to 
141.26  the cities and townships within each school district in the 
141.27  proportion that their taxable net tax capacity within the school 
141.28  district bears to the taxable net tax capacity of the school 
141.29  district for property taxes payable in the year prior to 
141.30  distribution.  No city or township shall receive a distribution 
141.31  greater than its levy for taxes payable in the year prior to 
141.32  distribution northeast Minnesota economic protection trust fund 
141.33  created in section 298.292.  Fifty percent of the amount 
141.34  distributed to the northeast Minnesota economic protection trust 
141.35  fund shall be made available for expenditure under section 
141.36  298.293 as governed by section 298.296.  Effective in 2003 only, 
142.1   100 percent of the distributions to school districts under 
142.2   section 477A.15 less any portion distributed to cities and towns 
142.3   under section 126C.48, subdivision 8, paragraph (5), shall be 
142.4   distributed to the general fund. 
142.5      Sec. 8.  Minnesota Statutes 2000, section 298.28, 
142.6   subdivision 5, is amended to read: 
142.7      Subd. 5.  [COUNTIES.] (a) 16.5 26.05 cents per taxable ton 
142.8   is allocated to counties to be distributed, based upon 
142.9   certification by the commissioner of revenue, under paragraphs 
142.10  (b) to (d). 
142.11     (b) 13 20.525 cents per taxable ton shall be distributed to 
142.12  the county in which the taconite is mined or quarried or in 
142.13  which the concentrate is produced, less any amount which is to 
142.14  be distributed pursuant to paragraph (c).  The apportionment 
142.15  formula prescribed in subdivision 2 is the basis for the 
142.16  distribution. 
142.17     (c) If an electric power plant owned by and providing the 
142.18  primary source of power for a taxpayer mining and concentrating 
142.19  taconite is located in a county other than the county in which 
142.20  the mining and the concentrating processes are conducted, one 
142.21  cent per taxable ton of the tax distributed to the counties 
142.22  pursuant to paragraph (b) and imposed on and collected from such 
142.23  taxpayer shall be paid to the county in which the power plant is 
142.24  located. 
142.25     (d) 3.5 5.525 cents per taxable ton shall be paid to the 
142.26  county from which the taconite was mined, quarried or 
142.27  concentrated to be deposited in the county road and bridge 
142.28  fund.  If the mining, quarrying and concentrating, or separate 
142.29  steps in any of those processes are carried on in more than one 
142.30  county, the commissioner shall follow the apportionment formula 
142.31  prescribed in subdivision 2. 
142.32     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
142.33  following final enactment. 
142.34     Sec. 9.  Minnesota Statutes 2001 Supplement, section 
142.35  298.28, subdivision 6, is amended to read: 
142.36     Subd. 6.  [PROPERTY TAX RELIEF.] (a) In 2002 and 
143.1   thereafter, 35.9 33.9 cents per taxable ton, less any amount 
143.2   required to be distributed under paragraphs (b) and (c), and 
143.3   less any amount required to be deducted under paragraph (d), 
143.4   must be allocated to St. Louis county acting as the counties' 
143.5   fiscal agent, to be distributed as provided in sections 273.134 
143.6   to 273.136. 
143.7      (b) If an electric power plant owned by and providing the 
143.8   primary source of power for a taxpayer mining and concentrating 
143.9   taconite is located in a county other than the county in which 
143.10  the mining and the concentrating processes are conducted, .1875 
143.11  cent per taxable ton of the tax imposed and collected from such 
143.12  taxpayer shall be paid to the county. 
143.13     (c) If an electric power plant owned by and providing the 
143.14  primary source of power for a taxpayer mining and concentrating 
143.15  taconite is located in a school district other than a school 
143.16  district in which the mining and concentrating processes are 
143.17  conducted, .7282 .4541 cent per taxable ton of the tax imposed 
143.18  and collected from the taxpayer shall be paid to the school 
143.19  district. 
143.20     (d) Two cents per taxable ton must be deducted from the 
143.21  amount allocated to the St. Louis county auditor under paragraph 
143.22  (a). 
143.23     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
143.24  following final enactment. 
143.25     Sec. 10.  Minnesota Statutes 2001 Supplement, section 
143.26  298.28, subdivision 9a, is amended to read: 
143.27     Subd. 9a.  [TACONITE ECONOMIC DEVELOPMENT FUND.] (a) 30.1 
143.28  cents per ton for distributions in 2002 and thereafter must be 
143.29  paid to the taconite economic development fund.  No distribution 
143.30  shall be made under this paragraph in 2004 or any subsequent 
143.31  year in which total industry production falls below 30 million 
143.32  tons.  Distribution shall only be made to a taconite producer's 
143.33  fund under section 298.227 if the producer timely pays its tax 
143.34  under section 298.24 by the dates provided under section 298.27, 
143.35  or pursuant to the due dates provided by an administrative 
143.36  agreement with the commissioner. 
144.1      (b) An amount equal to 50 percent of the tax under section 
144.2   298.24 for concentrate sold in the form of pellet chips and 
144.3   fines not exceeding 5/16 inch in size and not including crushed 
144.4   pellets shall be paid to the taconite economic development 
144.5   fund.  The amount paid shall not exceed $700,000 annually for 
144.6   all companies.  If the initial amount to be paid to the fund 
144.7   exceeds this amount, each company's payment shall be prorated so 
144.8   the total does not exceed $700,000. 
144.9      Sec. 11.  Minnesota Statutes 2000, section 298.28, 
144.10  subdivision 9b, is amended to read: 
144.11     Subd. 9b.  [TACONITE ENVIRONMENTAL FUND.] Five cents per 
144.12  ton for distributions in 1999, 2000, 2001, and 2002, and 2003 
144.13  must be paid to the taconite environmental fund for use under 
144.14  section 298.2961.  No distribution may be made under this 
144.15  paragraph in any year in which total industry production falls 
144.16  below 30,000,000 tons. 
144.17     Sec. 12.  Minnesota Statutes 2001 Supplement, section 
144.18  298.28, subdivision 10, is amended to read: 
144.19     Subd. 10.  [INCREASE.] Beginning with distributions in 
144.20  2000, the amount determined under subdivision 9 shall be 
144.21  increased in the same proportion as the increase in the implicit 
144.22  price deflator as provided in section 298.24, subdivision 1.  
144.23  Beginning with distributions in 2003, the amount determined 
144.24  under subdivision 6, paragraph (a), shall be increased in the 
144.25  same proportion as the increase in the implicit price deflator 
144.26  as provided in section 298.24, subdivision 1.  
144.27     The distributions per ton determined under subdivisions 5, 
144.28  paragraphs (b) and (d), and 6, paragraph (b), for distribution 
144.29  in 1988 and subsequent years shall be the distribution per ton 
144.30  determined for distribution in 1987.  The distribution per ton 
144.31  under subdivision 6, paragraph (c), for distribution in 2000 and 
144.32  subsequent years shall be 81 percent of the distribution per ton 
144.33  determined for distribution in 1987. 
144.34     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
144.35  following final enactment. 
144.36     Sec. 13.  Minnesota Statutes 2000, section 298.28, 
145.1   subdivision 11, is amended to read: 
145.2      Subd. 11.  [REMAINDER.] (a) The proceeds of the tax imposed 
145.3   by section 298.24 which remain after the distributions and 
145.4   payments in subdivisions 2 to 10a, as certified by the 
145.5   commissioner of revenue, and paragraphs (b), (c), and (d), and 
145.6   (e) have been made, together with interest earned on all money 
145.7   distributed under this section prior to distribution, shall be 
145.8   divided between the taconite environmental protection fund 
145.9   created in section 298.223 and the northeast Minnesota economic 
145.10  protection trust fund created in section 298.292 as follows:  
145.11  Two-thirds to the taconite environmental protection fund and 
145.12  one-third to the northeast Minnesota economic protection trust 
145.13  fund.  The proceeds shall be placed in the respective special 
145.14  accounts. 
145.15     (b) There shall be distributed to each city, town, and 
145.16  county the amount that it received under section 294.26 in 
145.17  calendar year 1977; provided, however, that the amount 
145.18  distributed in 1981 to the unorganized territory number 2 of 
145.19  Lake county and the town of Beaver Bay based on the 
145.20  between-terminal trackage of Erie Mining Company will be 
145.21  distributed in 1982 and subsequent years to the unorganized 
145.22  territory number 2 of Lake county and the towns of Beaver Bay 
145.23  and Stony River based on the miles of track of Erie Mining 
145.24  Company in each taxing district. 
145.25     (c) There shall be distributed to the iron range resources 
145.26  and rehabilitation board the amounts it received in 1977 under 
145.27  section 298.22.  The amount distributed under this paragraph 
145.28  shall be expended within or for the benefit of the tax relief 
145.29  area defined in section 273.134. 
145.30     (d) There shall be distributed to each school district 81 
145.31  62 percent of the amount that it received under section 294.26 
145.32  in calendar year 1977. 
145.33     (e) In 2003 only, $100,000 must be distributed to a 
145.34  township located in a taconite tax relief area as defined in 
145.35  section 273.134, paragraph (a), that received $119,259 of 
145.36  homestead and agricultural credit aid and $182,014 in local 
146.1   government aid in 2001. 
146.2      Sec. 14.  Minnesota Statutes 2000, section 298.291, is 
146.3   amended to read: 
146.4      298.291 [CITATION.] 
146.5      Sections 298.291 to 298.294 shall be known as the 
146.6   "Northeast Minnesota Douglas J. Johnson Economic Protection 
146.7   Trust Fund Act.  
146.8      Sec. 15.  Minnesota Statutes 2001 Supplement, section 
146.9   298.296, subdivision 2, is amended to read: 
146.10     Subd. 2.  [EXPENDITURE OF FUNDS.] (a) Before January 1, 
146.11  2003 2028, funds may be expended on projects and for 
146.12  administration of the trust fund only from the net interest, 
146.13  earnings, and dividends arising from the investment of the trust 
146.14  at any time, including net interest, earnings, and dividends 
146.15  that have arisen prior to July 13, 1982, plus $10,000,000 made 
146.16  available for use in fiscal year 1983, except that any amount 
146.17  required to be paid out of the trust fund to provide the 
146.18  property tax relief specified in Laws 1977, chapter 423, article 
146.19  X, section 4, and to make school bond payments and payments to 
146.20  recipients of taconite production tax proceeds pursuant to 
146.21  section 298.225, may be taken from the corpus of the trust.  
146.22     (b) Additionally, upon recommendation by the board, up to 
146.23  $13,000,000 from the corpus of the trust may be made available 
146.24  for use as provided in subdivision 4, and up to $10,000,000 from 
146.25  the corpus of the trust may be made available for use as 
146.26  provided in section 298.2961.  
146.27     (c) On and after January 1, 2003, Funds may be expended on 
146.28  projects and for administration from any assets of the 
146.29  trust. Additionally, an amount equal to 20 percent of the value 
146.30  of the corpus of the trust on the date of enactment of this act, 
146.31  not including the funds authorized in paragraph (b), plus the 
146.32  amounts made available under sections 7 and 17, may be expended 
146.33  on projects.  Funds may be expended for projects under this 
146.34  paragraph only if the project: 
146.35     (1) is for the purposes established under section 298.292, 
146.36  subdivision 1, clause (1) or (2); and 
147.1      (2) is approved by the board upon an affirmative vote of at 
147.2   least ten of its members. 
147.3   No money made available under this paragraph or paragraph (d) 
147.4   can be used for administrative or operating expenses of the iron 
147.5   range resources and rehabilitation board or expenses relating to 
147.6   any facilities owned or operated by the board on the effective 
147.7   date of this act. 
147.8      (d) Upon recommendation by a unanimous vote of all members 
147.9   of the board, amounts in addition to those authorized under 
147.10  paragraphs (a), (b), and (c) may be expended on projects 
147.11  described in section 298.292, subdivision 1. 
147.12     (e) Annual administrative costs, not including detailed 
147.13  engineering expenses for the projects, shall not exceed five 
147.14  percent of the net interest, dividends, and earnings arising 
147.15  from the trust in the preceding fiscal year.  
147.16     (f) Principal and interest received in repayment of loans 
147.17  made pursuant to this section, and earnings on other investments 
147.18  made under section 298.292, subdivision 2, clause (4), shall be 
147.19  deposited in the state treasury and credited to the trust.  
147.20  These receipts are appropriated to the board for the purposes of 
147.21  sections 298.291 to 298.298. 
147.22     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2003.
147.23     Sec. 16.  Minnesota Statutes 2000, section 477A.15, is 
147.24  amended to read: 
147.25     477A.15 [TACONITE AID REIMBURSEMENT.] 
147.26     Any school district in which is located property which had 
147.27  been entitled to a reduction of tax pursuant to Minnesota 
147.28  Statutes 1978, section 273.135, subdivision 2, clause (c), shall 
147.29  receive in 1981 and subsequent years an amount equal to the 
147.30  amount it received in 1980 pursuant to Minnesota Statutes 1978, 
147.31  section 298.28, subdivision 1, clause (3)(b).  Payments shall be 
147.32  made pursuant to this section and section 126C.48, subdivision 
147.33  8, paragraph (5), by the commissioner of revenue to the taxing 
147.34  jurisdictions on the date in each calendar year when the first 
147.35  installment is paid under section 477A.015. 
147.36     <b>[EFFECTIVE DATE.]</b> This section is effective for payments in 
148.1   2003 and subsequent years. 
148.2      Sec. 17.  [ADDITIONAL DISTRIBUTION.] 
148.3      The difference between the distribution to school districts 
148.4   under Minnesota Statutes, sections 298.225 and 298.28, as 
148.5   amended by this act, and the amount the districts would have 
148.6   received under Minnesota Statutes 2000, sections 298.225 and 
148.7   298.28 for distributions in 2004 only, shall be added to the 
148.8   sums available for expenditure under Minnesota Statutes, section 
148.9   298.293, as governed by Minnesota Statutes, section 298.296. 
148.10     Sec. 18.  [INSTRUCTION TO THE REVISOR.] 
148.11     In the next edition of Minnesota Statutes, the revisor of 
148.12  statutes shall change the phrase "Northeast Minnesota Economic 
148.13  Protection Trust Fund Act" to "Douglas J. Johnson Economic 
148.14  Protection Trust Fund Act" wherever it appears in Minnesota 
148.15  Statutes. 
148.16                             ARTICLE 9 
148.17              DEPARTMENT OF REVENUE POLICY PROVISIONS
148.18     Section 1.  Minnesota Statutes 2000, section 270.063, 
148.19  subdivision 4, is amended to read: 
148.20     Subd. 4.  [FEDERAL TAX REFUND OFFSET FEES; TIME LIMIT FOR 
148.21  SUBMITTING CLAIMS FOR OFFSET.] For fees charged by the 
148.22  department of the treasury of the United States for the offset 
148.23  of federal tax refunds that are deducted from the refund amounts 
148.24  remitted to the commissioner, the unpaid debts of the taxpayers 
148.25  whose refunds are being offset to satisfy the debts are reduced 
148.26  only by the actual amount of the refund payments received by the 
148.27  commissioner.  Notwithstanding any other provision of law to the 
148.28  contrary, a claim for the offset of a federal tax refund must be 
148.29  submitted to the department of the treasury of the United States 
148.30  within ten years after the date of the assessment of the tax 
148.31  owed by the taxpayer whose refund is to be offset to satisfy the 
148.32  debt. 
148.33     <b>[EFFECTIVE DATE.]</b> This section is effective for claims for 
148.34  offset that were submitted before and are pending on the date of 
148.35  final enactment, and for claims submitted on or after the day 
148.36  following final enactment. 
149.1      Sec. 2.  Minnesota Statutes 2001 Supplement, section 
149.2   270.691, subdivision 8, is amended to read: 
149.3      Subd. 8.  [EXPIRATION DATE.] The program authorized under 
149.4   this section terminates on June 30, 2002 2003. 
149.5      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
149.6   following final enactment. 
149.7      Sec. 3.  Minnesota Statutes 2000, section 273.125, 
149.8   subdivision 4, is amended to read: 
149.9      Subd. 4.  [PETITIONS OF GRIEVANCE.] A person who claims 
149.10  that the person's manufactured home has been unfairly or 
149.11  unequally assessed, or that the property has been assessed at a 
149.12  valuation greater than its real or actual value, or that the tax 
149.13  levied against it is illegal, in whole or in part, or has been 
149.14  paid, or that the property is exempt from the tax so levied, may 
149.15  have the validity of the claim, defense, or objection determined 
149.16  in court.  The determination must be made by the district court 
149.17  of the county in which the tax is levied or by the tax court.  A 
149.18  person can request the determination by filing a petition for it 
149.19  in the office of the court administrator of the district court 
149.20  on or before September October 1 of the year in which the tax 
149.21  becomes payable.  A petition for determination under this 
149.22  section may be transferred by the district court to the tax 
149.23  court. 
149.24     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
149.25  payable in 2003 and thereafter. 
149.26     Sec. 4.  Minnesota Statutes 2000, section 278.01, 
149.27  subdivision 1, is amended to read: 
149.28     Subdivision 1.  [DETERMINATION OF VALIDITY.] (a) Any person 
149.29  having personal property, or any estate, right, title, or 
149.30  interest in or lien upon any parcel of land, who claims that 
149.31  such property has been partially, unfairly, or unequally 
149.32  assessed in comparison with other property in the (1) city, or 
149.33  (2) county, or (3) in the case of a county containing a city of 
149.34  the first class, the portion of the county excluding the first 
149.35  class city, or that the parcel has been assessed at a valuation 
149.36  greater than its real or actual value, or that the tax levied 
150.1   against the same is illegal, in whole or in part, or has been 
150.2   paid, or that the property is exempt from the tax so levied, may 
150.3   have the validity of the claim, defense, or objection determined 
150.4   by the district court of the county in which the tax is levied 
150.5   or by the tax court by serving one copy of a petition for such 
150.6   determination upon the county auditor, one copy on the county 
150.7   attorney, one copy on the county treasurer, and three copies on 
150.8   the county assessor.  The county assessor shall immediately 
150.9   forward one copy of the petition to the appropriate governmental 
150.10  authority in a home rule charter or statutory city or town in 
150.11  which the property is located if that city or town employs its 
150.12  own certified assessor.  A copy of the petition shall also be 
150.13  forwarded by the assessor to the school board of the school 
150.14  district in which the property is located. 
150.15     (b) In counties where the office of county treasurer has 
150.16  been combined with the office of county auditor, the county may 
150.17  elect to require the petitioner to serve the number of copies as 
150.18  determined by the county.  The county assessor shall immediately 
150.19  forward one copy of the petition to the appropriate governmental 
150.20  authority in a home rule charter or statutory city or town in 
150.21  which the property is located if that city or town employs its 
150.22  own certified assessor.  A list of petitioned properties, 
150.23  including the name of the petitioner, the identification number 
150.24  of the property, and the estimated market value, shall be sent 
150.25  on or before the first day of July by the county 
150.26  auditor/treasurer to the school board of the school district in 
150.27  which the property is located. 
150.28     (c) For all counties, the petitioner must file the copies 
150.29  with proof of service, in the office of the court administrator 
150.30  of the district court on or before March 31 April 30 of the year 
150.31  in which the tax becomes payable.  A petition for determination 
150.32  under this section may be transferred by the district court to 
150.33  the tax court.  An appeal may also be taken to the tax court 
150.34  under chapter 271 at any time following receipt of the valuation 
150.35  notice required by section 273.121 but prior to April May 1 of 
150.36  the year in which the taxes are payable. 
151.1      <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
151.2   payable in 2003 and thereafter. 
151.3      Sec. 5.  Minnesota Statutes 2000, section 279.01, 
151.4   subdivision 3, is amended to read: 
151.5      Subd. 3.  [AGRICULTURAL PROPERTY.] In the case of class 1b 
151.6   agricultural homestead, class 2a agricultural homestead 
151.7   property, and class 2b(3) agricultural nonhomestead property, no 
151.8   penalties shall attach to the second one-half property tax 
151.9   payment as provided in this section if paid by November 15.  
151.10  Thereafter for class 1b agricultural homestead and class 2a 
151.11  homestead property, on November 16 following, a penalty of six 
151.12  percent shall accrue and be charged on all such unpaid taxes and 
151.13  on December 1 following, an additional two percent shall be 
151.14  charged on all such unpaid taxes.  Thereafter for class 2b(3) 
151.15  agricultural nonhomestead property, on November 16 following, a 
151.16  penalty of eight percent shall accrue and be charged on all such 
151.17  unpaid taxes and on December 1 following, an additional four 
151.18  percent shall be charged on all such unpaid taxes. 
151.19     If the owner of class 1b agricultural homestead, class 2a, 
151.20  or class 2b(3) agricultural property receives a consolidated 
151.21  property tax statement that shows only an aggregate of the taxes 
151.22  and special assessments due on that property and on other 
151.23  property not classified as class 1b agricultural homestead, 
151.24  class 2a, or class 2b(3) agricultural property, the aggregate 
151.25  tax and special assessments shown due on the property by the 
151.26  consolidated statement will be due on November 15 provided that 
151.27  at least 50 percent of the property's market value is classified 
151.28  class 1b agricultural, class 2a, or class 2b(3) agricultural. 
151.29     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
151.30  payable in 2003 and thereafter. 
151.31     Sec. 6.  Minnesota Statutes 2000, section 289A.19, 
151.32  subdivision 1, is amended to read: 
151.33     Subdivision 1.  [FIDUCIARY INCOME, ENTERTAINMENT TAX, AND 
151.34  INFORMATION RETURNS.] When, in the commissioner's judgment, good 
151.35  cause exists, the commissioner may extend the time for filing 
151.36  entertainment tax returns for not more than six months.  If an 
152.1   extension to file the federal fiduciary income tax return or 
152.2   information return has been granted under section 6081 of the 
152.3   Internal Revenue Code, the time for filing the state return is 
152.4   extended for that period.  The commissioner may require the 
152.5   taxpayer to file a tentative return when the regularly required 
152.6   return is due, and to pay a tax on the basis of the tentative 
152.7   return at the times required for the payment of taxes on the 
152.8   basis of the regularly required return from the taxpayer.  The 
152.9   commissioner shall grant an automatic extension of six months to 
152.10  file a partnership, "S" corporation, or fiduciary income tax 
152.11  return if all of the taxes imposed on the entity for the year by 
152.12  chapter 290 and section 289A.08, subdivision 7, have been paid 
152.13  by the date prescribed by section 289A.18, subdivision 1. 
152.14     <b>[EFFECTIVE DATE.]</b> This section is effective for returns due 
152.15  after December 31, 2002. 
152.16     Sec. 7.  Minnesota Statutes 2000, section 295.53, 
152.17  subdivision 1, is amended to read: 
152.18     Subdivision 1.  [EXEMPTIONS.] (a) The following payments 
152.19  are excluded from the gross revenues subject to the hospital, 
152.20  surgical center, or health care provider taxes under sections 
152.21  295.50 to 295.57: 
152.22     (1) payments received for services provided under the 
152.23  Medicare program, including payments received from the 
152.24  government, and organizations governed by sections 1833 and 1876 
152.25  of title XVIII of the federal Social Security Act, United States 
152.26  Code, title 42, section 1395, and enrollee deductibles, 
152.27  coinsurance, and copayments, whether paid by the Medicare 
152.28  enrollee or by a Medicare supplemental coverage as defined in 
152.29  section 62A.011, subdivision 3, clause (10).  Payments for 
152.30  services not covered by Medicare are taxable; 
152.31     (2) medical assistance payments including payments received 
152.32  directly from the government or from a prepaid plan; 
152.33     (3) payments received for home health care services; 
152.34     (4) payments received from hospitals or surgical centers 
152.35  for goods and services on which liability for tax is imposed 
152.36  under section 295.52 or the source of funds for the payment is 
153.1   exempt under clause (1), (2), (7), (8), (10), (13), or (20); 
153.2      (5) payments received from health care providers for goods 
153.3   and services on which liability for tax is imposed under this 
153.4   chapter or the source of funds for the payment is exempt under 
153.5   clause (1), (2), (7), (8), (10), (13), or (20); 
153.6      (6) amounts paid for legend drugs, other than nutritional 
153.7   products, to a wholesale drug distributor who is subject to tax 
153.8   under section 295.52, subdivision 3, reduced by reimbursements 
153.9   received for legend drugs under clauses (1), (2), (7), and 
153.10  (8) otherwise exempt under chapter 295; 
153.11     (7) payments received under the general assistance medical 
153.12  care program including payments received directly from the 
153.13  government or from a prepaid plan; 
153.14     (8) payments received for providing services under the 
153.15  MinnesotaCare program including payments received directly from 
153.16  the government or from a prepaid plan and enrollee deductibles, 
153.17  coinsurance, and copayments.  For purposes of this clause, 
153.18  coinsurance means the portion of payment that the enrollee is 
153.19  required to pay for the covered service; 
153.20     (9) payments received by a health care provider or the 
153.21  wholly owned subsidiary of a health care provider for care 
153.22  provided outside Minnesota; 
153.23     (10) payments received from the chemical dependency fund 
153.24  under chapter 254B; 
153.25     (11) payments received in the nature of charitable 
153.26  donations that are not designated for providing patient services 
153.27  to a specific individual or group; 
153.28     (12) payments received for providing patient services 
153.29  incurred through a formal program of health care research 
153.30  conducted in conformity with federal regulations governing 
153.31  research on human subjects.  Payments received from patients or 
153.32  from other persons paying on behalf of the patients are subject 
153.33  to tax; 
153.34     (13) payments received from any governmental agency for 
153.35  services benefiting the public, not including payments made by 
153.36  the government in its capacity as an employer or insurer; 
154.1      (14) payments received for services provided by community 
154.2   residential mental health facilities licensed under Minnesota 
154.3   Rules, parts 9520.0500 to 9520.0690, community support programs 
154.4   and family community support programs approved under Minnesota 
154.5   Rules, parts 9535.1700 to 9535.1760, and community mental health 
154.6   centers as defined in section 245.62, subdivision 2; 
154.7      (15) government payments received by a regional treatment 
154.8   center; 
154.9      (16) payments received for hospice care services; 
154.10     (17) payments received by a health care provider for 
154.11  hearing aids and related equipment or prescription eyewear 
154.12  delivered outside of Minnesota; 
154.13     (18) payments received by an educational institution from 
154.14  student tuition, student activity fees, health care service 
154.15  fees, government appropriations, donations, or grants.  Fee for 
154.16  service payments and payments for extended coverage are taxable; 
154.17     (19) payments received for services provided by:  assisted 
154.18  living programs and congregate housing programs; and 
154.19     (20) payments received under the federal Employees Health 
154.20  Benefits Act, United States Code, title 5, section 8909(f), as 
154.21  amended by the Omnibus Reconciliation Act of 1990. 
154.22     (b) Payments received by wholesale drug distributors for 
154.23  legend drugs sold directly to veterinarians or veterinary bulk 
154.24  purchasing organizations are excluded from the gross revenues 
154.25  subject to the wholesale drug distributor tax under sections 
154.26  295.50 to 295.59. 
154.27     <b>[EFFECTIVE DATE.]</b> This section is effective for payments 
154.28  received after December 31, 2001. 
154.29     Sec. 8.  Minnesota Statutes 2000, section 295.57, is 
154.30  amended by adding a subdivision to read: 
154.31     Subd. 5.  [EXEMPTION FOR AMOUNTS PAID FOR LEGEND DRUGS.] If 
154.32  a hospital or health care provider cannot determine the actual 
154.33  cost or reimbursement of legend drugs under the exemption 
154.34  provided in section 295.53, subdivision 1, paragraph (a), clause 
154.35  (6), the following method must be used: 
154.36     A hospital or health care provider must determine the 
155.1   amount paid for legend drugs used during the month or quarter 
155.2   and multiply that amount by a ratio, the numerator of which is 
155.3   the total amount received for taxable patient services, and the 
155.4   denominator of which is the total amount received for all 
155.5   patient services, including amounts exempt under section 295.53, 
155.6   subdivision 1.  The result represents the allowable exemption 
155.7   for the monthly or quarterly cost of drugs. 
155.8      <b>[EFFECTIVE DATE.]</b> This section is effective for payments 
155.9   received on or after July 1, 2002. 
155.10     Sec. 9.  Minnesota Statutes 2001 Supplement, section 
155.11  295.60, subdivision 2, is amended to read: 
155.12     Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
155.13  the following terms have the meanings given. 
155.14     (b) "Commissioner" means the commissioner of revenue. 
155.15     (c) "Furrier" means a retailer that sells clothing made of 
155.16  fur. 
155.17     (d) "Clothing made of fur" means articles of clothing made 
155.18  of fur on the hide or pelt, and articles of clothing of which 
155.19  such fur is the component material of chief value, but only if 
155.20  such value is more than three times the value of the next most 
155.21  valuable material.  
155.22     (e) "Retail sale" has the meaning given in section 297A.61, 
155.23  subdivision 4. 
155.24     (f) "Delivered outside of Minnesota" means fur clothing 
155.25  which the furrier delivers to a common carrier for delivery 
155.26  outside Minnesota, places in the United States mail or parcel 
155.27  post directed to the purchaser outside Minnesota, or delivers to 
155.28  the purchaser outside Minnesota by means of the seller's own 
155.29  delivery vehicles, and which is not returned to a point within 
155.30  Minnesota, except in the course of interstate commerce. 
155.31     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2002.
155.32     Sec. 10.  Minnesota Statutes 2001 Supplement, section 
155.33  295.60, is amended by adding a subdivision to read: 
155.34     Subd. 2a.  [EXEMPTIONS.] Payments received by a furrier for 
155.35  clothing made of fur delivered outside of Minnesota are exempt 
155.36  from gross revenues subject to the fur clothing tax. 
156.1      <b>[EFFECTIVE DATE.]</b> This section is effective for payments 
156.2   received on or after January 1, 2002. 
156.3      Sec. 11.  Minnesota Statutes 2001 Supplement, section 
156.4   297A.61, subdivision 26, is amended to read: 
156.5      Subd. 26.  [PRIVATE COMMUNICATION SERVICE.] "Private 
156.6   communication service" means a communication telecommunication 
156.7   service furnished to a subscriber which that entitles the 
156.8   subscriber customer to:  
156.9      (1) exclusive or priority use of any a communication 
156.10  channel or group of channels; 
156.11     (2) the use of an intercommunication system for the 
156.12  subscriber's stations, or regardless of whether the channel, 
156.13  group of channels, or intercommunication system may be connected 
156.14  through switching; 
156.15     (3) the between or among termination points, regardless of 
156.16  the manner in which the channel or channels are connected, and 
156.17  includes switching capacity, extension lines and, stations, 
156.18  or and any other associated services that are provided in 
156.19  connection with, and are necessary or unique to the use of, the 
156.20  use of the channel or channels or systems described in clause 
156.21  (1); or 
156.22     (4) any combination of tunneling, encryption, 
156.23  authentication, and access control technologies and services 
156.24  used to carry traffic over the Internet, a managed Internet 
156.25  provider network or provider's backbone. 
156.26     <b>[EFFECTIVE DATE.]</b> This section is effective retroactively 
156.27  for sales and purchases occurring after July 31, 2001. 
156.28     Sec. 12.  Minnesota Statutes 2000, section 297A.68, is 
156.29  amended by adding a subdivision to read: 
156.30     Subd. 37.  [DELIVERY OR DISTRIBUTION CHARGES; PRINTED 
156.31  MATERIALS.] Charges for the delivery or distribution of printed 
156.32  materials, including individual account information, are exempt 
156.33  if (1) the charges are separately stated, (2) the delivery or 
156.34  distribution is to a mass audience or to a mailing list provided 
156.35  at the direction of the customer, and (3) the cost of the 
156.36  materials is not billed directly to the recipients. 
157.1      <b>[EFFECTIVE DATE.]</b> This section is effective retroactive to 
157.2   delivery charges on sales and purchases made after December 31, 
157.3   2001, and before January 1, 2006. 
157.4      Sec. 13.  Minnesota Statutes 2000, section 297G.07, 
157.5   subdivision 1, is amended to read: 
157.6      Subdivision 1.  [EXEMPTIONS.] The following are not subject 
157.7   to the excise tax: 
157.8      (1) Sales by a manufacturer, brewer, or wholesaler for 
157.9   shipment outside the state in interstate commerce. 
157.10     (2) Alcoholic beverages sold or transferred between 
157.11  Minnesota wholesalers. 
157.12     (3) Sales to common carriers engaged in interstate 
157.13  transportation of passengers, except as provided in this chapter.
157.14     (4) Malt beverages served by a brewery for on-premise 
157.15  consumption at no charge, or distributed to brewery employees 
157.16  for on-premise consumption under a labor contract. 
157.17     (5) Shipments of wine to Minnesota residents under section 
157.18  340A.417. 
157.19     (6) Fruit juices naturally fermented or beer naturally 
157.20  brewed in the home for family use. 
157.21     (7) Sales of wine for sacramental purposes under section 
157.22  340A.316. 
157.23     (8) Alcoholic beverages sold to authorized manufacturers of 
157.24  food products or pharmaceutical firms.  The alcoholic beverage 
157.25  must be used exclusively in the manufacture of food products or 
157.26  medicines.  For purposes of this clause, "manufacturer" means a 
157.27  person who manufactures food products intended for sale to 
157.28  wholesalers or retailers for ultimate sale to the consumer. 
157.29     (9) Liqueur-filled candy. 
157.30     (10) Sales to a federal agency, that the state of Minnesota 
157.31  is prohibited from taxing under the constitution or laws of the 
157.32  United States or under the constitution of Minnesota. 
157.33     (11) Sales to Indian tribes as defined in section 297G.08. 
157.34     (12) Shipments of intoxicating liquor from foreign 
157.35  countries to diplomatic personnel of foreign countries assigned 
157.36  to service in this state. 
158.1      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
158.2   following final enactment. 
158.3      Sec. 14.  Minnesota Statutes 2001 Supplement, section 
158.4   469.1763, subdivision 6, is amended to read: 
158.5      Subd. 6.  [POOLING PERMITTED FOR DEFICITS.] (a) This 
158.6   subdivision applies only to districts for which the request for 
158.7   certification was made before August 1, 2001, and without regard 
158.8   to whether the request for certification was made prior to 
158.9   August 1, 1979. 
158.10     (b) The municipality for the district may transfer 
158.11  available increments from another tax increment financing 
158.12  district located in the municipality, if the transfer is 
158.13  necessary to eliminate a deficit in the district to which the 
158.14  increments are transferred.  A deficit in the district for 
158.15  purposes of this subdivision means the lesser of the following 
158.16  two amounts: 
158.17     (1)(i) the amount due during the calendar year to pay 
158.18  preexisting obligations of the district; minus 
158.19     (ii) the total increments collected or to be collected from 
158.20  properties located within the district that are available for 
158.21  the calendar year including amounts collected in prior years 
158.22  that are currently available; plus 
158.23     (iii) total increments from properties located in other 
158.24  districts in the municipality including amounts collected in 
158.25  prior years that are available to be used to meet the district's 
158.26  obligations under this section, excluding this subdivision, or 
158.27  other provisions of law (but excluding a special tax under 
158.28  section 469.1791 and the grant program under Laws 1997, chapter 
158.29  231, article 1, section 19, or Laws 2001, First Special Session 
158.30  chapter 5); or 
158.31     (2) the reduction in increments collected from properties 
158.32  located in the district for the calendar year as a result of the 
158.33  changes in class rates in Laws 1997, chapter 231, article 1; 
158.34  Laws 1998, chapter 389, article 2; and Laws 1999, chapter 243, 
158.35  and Laws 2001, First Special Session chapter 5, or the 
158.36  elimination of the general education tax levy under Laws 2001, 
159.1   First Special Session chapter 5. 
159.2      (c) A preexisting obligation means: 
159.3      (1) bonds issued and sold before August 1, 2001, or bonds 
159.4   issued pursuant to a binding contract requiring the issuance of 
159.5   bonds entered into before July 1, 2001, and bonds issued to 
159.6   refund such bonds or to reimburse expenditures made in 
159.7   conjunction with a signed contractual agreement entered into 
159.8   before August 1, 2001, to the extent that the bonds are secured 
159.9   by a pledge of increments from the tax increment financing 
159.10  district; and 
159.11     (2) binding contracts entered into before August 1, 2001, 
159.12  to the extent that the contracts require payments secured by a 
159.13  pledge of increments from the tax increment financing district. 
159.14     (d) The municipality may require a development authority, 
159.15  other than a seaway port authority, to transfer available 
159.16  increments including amounts collected in prior years that are 
159.17  currently available for any of its tax increment financing 
159.18  districts in the municipality to make up an insufficiency in 
159.19  another district in the municipality, regardless of whether the 
159.20  district was established by the development authority or another 
159.21  development authority.  This authority applies notwithstanding 
159.22  any law to the contrary, but applies only to a development 
159.23  authority that: 
159.24     (1) was established by the municipality; or 
159.25     (2) the governing body of which is appointed, in whole or 
159.26  part, by the municipality or an officer of the municipality or 
159.27  which consists, in whole or part, of members of the governing 
159.28  body of the municipality.  The municipality may use this 
159.29  authority only after it has first used all available increments 
159.30  of the receiving development authority to eliminate the 
159.31  insufficiency and exercised any permitted action under section 
159.32  469.1792, subdivision 3, for preexisting districts of the 
159.33  receiving development authority to eliminate the insufficiency. 
159.34     (e) The authority under this subdivision to spend tax 
159.35  increments outside of the area of the district from which the 
159.36  tax increments were collected: 
160.1      (1) may only be exercised after obtaining approval of the 
160.2   use of the increments, in writing, by the commissioner of 
160.3   revenue; 
160.4      (2) is an exception to the restrictions under section 
160.5   469.176, subdivision 4i, and the other provisions of this 
160.6   section, and the percentage restrictions under subdivision 2 
160.7   must be calculated after deducting increments spent under this 
160.8   subdivision from the total increments for the district; and 
160.9      (3) applies notwithstanding the provisions of the Tax 
160.10  Increment Financing Act in effect for districts for which the 
160.11  request for certification was made before June 30, 1982, or any 
160.12  other law to the contrary. 
160.13     (f) If a preexisting obligation requires the development 
160.14  authority to pay an amount that is limited to the increment from 
160.15  the district or a specific development within the district and 
160.16  if the obligation requires paying a higher amount to the extent 
160.17  that increments are available, the municipality may determine 
160.18  that the amount due under the preexisting obligation equals the 
160.19  higher amount and may authorize the transfer of increments under 
160.20  this subdivision to pay up to the higher amount.  The authority 
160.21  to transfer increments under this paragraph may only be used to 
160.22  the extent that the payment of all other preexisting obligations 
160.23  in the municipality due during the calendar year have been 
160.24  satisfied. 
160.25     <b>[EFFECTIVE DATE.]</b> This section is effective retroactively 
160.26  to January 2, 2002, and thereafter. 
160.27                             ARTICLE 10 
160.28             DEPARTMENT OF REVENUE TECHNICAL PROVISIONS
160.29     Section 1.  Minnesota Statutes 2001 Supplement, section 
160.30  69.021, subdivision 5, is amended to read: 
160.31     Subd. 5.  [CALCULATION OF STATE AID.] (a) The amount of 
160.32  fire state aid available for apportionment, before the addition 
160.33  of the minimum fire state aid allocation amount under 
160.34  subdivision 7, is equal to 107 percent of the amount of premium 
160.35  taxes paid to the state upon the fire, lightning, sprinkler 
160.36  leakage, and extended coverage premiums reported to the 
161.1   commissioner by insurers on the Minnesota Firetown Premium 
161.2   Report.  This amount shall be reduced by the amount required to 
161.3   pay the state auditor's costs and expenses of the audits or 
161.4   exams of the firefighters relief associations. 
161.5      The total amount for apportionment in respect to fire state 
161.6   aid must not be less than two percent of the premiums reported 
161.7   to the commissioner by insurers on the Minnesota Firetown 
161.8   Premium Report after subtracting the following amounts: 
161.9      (1) the amount required to pay the state auditor's costs 
161.10  and expenses of the audits or exams of the firefighters relief 
161.11  associations; and 
161.12     (2) one percent of the premiums reported by town and 
161.13  farmers' mutual insurance companies and mutual property and 
161.14  casualty companies with total assets of $5,000,000 or less.  
161.15     (b) The total amount for apportionment as police state aid 
161.16  is equal to 104 percent of the amount of premium taxes paid to 
161.17  the state on the premiums reported to the commissioner by 
161.18  insurers on the Minnesota Aid to Police Premium Report, plus the 
161.19  payment amounts received under section 297I.05, subdivision 8, 
161.20  since the last aid apportionment, and reduced by the amount 
161.21  required to pay the costs and expenses of the state auditor for 
161.22  audits or exams of police relief associations.  The total amount 
161.23  for apportionment in respect to the police state aid program 
161.24  must not be less than two percent of the amount of premiums 
161.25  reported to the commissioner by insurers on the Minnesota Aid to 
161.26  Police Premium Report after subtracting the amount required to 
161.27  pay the state auditor's cost and expenses of the audits or exams 
161.28  of the police relief associations.  
161.29     (c) The commissioner shall calculate the percentage of 
161.30  increase or decrease reflected in the apportionment over or 
161.31  under the previous year's available state aid using the same 
161.32  premiums as a basis for comparison. 
161.33     (d) The amount for apportionment in respect to peace 
161.34  officer state aid under paragraph (b) must be further reduced by 
161.35  $1,779,000 in fiscal year 1999, $2,077,000 in fiscal year 2000, 
161.36  and $2,404,000 in fiscal year 2001.  These reductions in this 
162.1   paragraph cancel to the general fund. 
162.2      (e) In addition to the amount for apportionment of police 
162.3   state aid under paragraph (b) is annually increased by an amount 
162.4   equal to the revenues under the tax on automobile risk 
162.5   self-insurance under Minnesota Statutes 2000, section 297I.05, 
162.6   subdivision 8, that were collected in fiscal year 2001, each 
162.7   year $100,000 shall be apportioned for police state aid.  An 
162.8   amount sufficient to pay this increase is annually appropriated 
162.9   from the general fund. 
162.10     <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
162.11  fiscal year 2003. 
162.12     Sec. 2.  Minnesota Statutes 2001 Supplement, section 
162.13  126C.17, subdivision 7a, is amended to read: 
162.14     Subd. 7a.  [REFERENDUM TAX BASE REPLACEMENT AID.] For each 
162.15  school district that had a referendum allowance for fiscal year 
162.16  2002 exceeding $415, for each separately authorized referendum 
162.17  levy, the commissioner of revenue, in consultation with the 
162.18  commissioner of children, families, and learning, shall certify 
162.19  the amount of the referendum levy in taxes payable year 2001 
162.20  attributable to the portion of the referendum allowance 
162.21  exceeding $415 levied against property classified as class 2, 
162.22  noncommercial 4c(1), or 4c(4), under section 273.13, excluding 
162.23  the portion of the tax paid by the portion of class 2a property 
162.24  consisting of the house, garage, and surrounding one acre of 
162.25  land.  The resulting amount must be used to reduce the 
162.26  district's referendum levy amount otherwise determined, and must 
162.27  be paid to the district each year that the referendum authority 
162.28  remains in effect.  The aid payable under this subdivision must 
162.29  be subtracted from the district's referendum equalization aid 
162.30  under subdivision 7.  The referendum equalization aid after the 
162.31  subtraction must not be less than zero. 
162.32     For the purposes of this subdivision, the referendum levy 
162.33  with the latest year of expiration is assumed to be at the 
162.34  highest level of equalization, and the referendum levy with the 
162.35  earliest year of expiration is assumed to be at the lowest level 
162.36  of equalization. 
163.1      <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
163.2   payable in 2002 and thereafter. 
163.3      Sec. 3.  Minnesota Statutes 2001 Supplement, section 
163.4   270.69, subdivision 2, is amended to read: 
163.5      Subd. 2.  [FILING OF LIENS NECESSARY FOR ENFORCEABILITY 
163.6   AGAINST CERTAIN PERSONS; METHODS OF FILING; FEES.] (a) The lien 
163.7   imposed by subdivision 1 is not enforceable against any 
163.8   purchaser, mortgagee, pledgee, holder of a Uniform Commercial 
163.9   Code security interest, mechanic's lienor, or judgment lien 
163.10  creditor whose interest has been duly perfected or is a 
163.11  conveyance or interest entitled to protection against judgments 
163.12  and attachments under section 507.34 or under any other 
163.13  applicable provisions of state law, until a notice of lien has 
163.14  been filed by the commissioner of revenue in the office of the 
163.15  county recorder of the county in which real property is 
163.16  situated, or in the case of personal property belonging to an 
163.17  individual who is not a resident of this state or to a 
163.18  corporation, partnership, or other organization, in the office 
163.19  of the secretary of state, or in the case of personal property 
163.20  belonging to a resident individual, in the office of the county 
163.21  recorder of the county of residence of the individual. 
163.22     (b)(1) Notices of liens, and lien releases, transcriptions, 
163.23  and renewals, in a form prescribed by the commissioner of 
163.24  revenue, may be filed with the county recorder or the secretary 
163.25  of state by mail, personal delivery, or by electronic 
163.26  transmission by the commissioner or a delegate into the 
163.27  computerized filing system of the secretary of state.  The 
163.28  secretary of state shall transmit the notice electronically to 
163.29  the office of the county recorder, if that is the place of 
163.30  filing, in the county or counties shown on the computer entry.  
163.31  The filing officer, whether the county recorder or the secretary 
163.32  of state, shall endorse and index a printout of the notice in 
163.33  the same manner as if the notice had been mailed or delivered.  
163.34     (2) County recorders and the secretary of state shall enter 
163.35  information relative to lien notices, transcriptions, renewals, 
163.36  and releases filed in their offices into the central database of 
164.1   the secretary of state.  For notices filed electronically with 
164.2   the county recorders, the date and time of receipt of the notice 
164.3   and county recorder's file number, and for notices filed 
164.4   electronically with the secretary of state, the secretary of 
164.5   state's recording information, must be entered by the filing 
164.6   officer into the central database before the close of the 
164.7   working day following the day of the original data entry by the 
164.8   department of revenue.  
164.9      The filing and indexing of all notices must be in 
164.10  accordance with the filing and indexing of notices of federal 
164.11  liens, certificates of release, and refiled notices under 
164.12  section 272.483.  
164.13     (c) Notwithstanding any other law to the contrary, the 
164.14  department of revenue is exempt from payment of fees when a 
164.15  lien, lien renewal, or lien transcription is offered for 
164.16  recording.  The recording fees must be paid along with the 
164.17  release fee at the end of the month in which the release of lien 
164.18  is recorded, after receipt of a monthly statement from a county 
164.19  recorder or the secretary of state.  The department of revenue 
164.20  shall add the recording fees to the delinquent tax liability of 
164.21  the taxpayer.  Notwithstanding any other law to the contrary, 
164.22  the fee for filing or recording a notice of lien, or lien 
164.23  release, transcription, or renewal is $15.  
164.24     (d) There is appropriated to the commissioner of revenue an 
164.25  amount representing the cost of payment of recording fees to the 
164.26  county recorders and the secretary of state.  The commissioner 
164.27  shall keep a separate accounting of the costs and of payments 
164.28  for recording fees remitted by taxpayers, and make the records 
164.29  available to the legislature upon request.  
164.30     <b>[EFFECTIVE DATE.]</b> As to the protection of interests in 
164.31  property of third parties, this section is effective for liens 
164.32  of record and enforceable as of the day following final 
164.33  enactment, and for liens filed thereafter.  As to the place of 
164.34  filing of liens against personal property, this section is 
164.35  effective for liens filed on or after the day following final 
164.36  enactment. 
165.1      Sec. 4.  Minnesota Statutes 2000, section 272.02, 
165.2   subdivision 15, is amended to read: 
165.3      Subd. 15.  [PROPERTY USED TO GENERATE HYDROELECTRIC OR 
165.4   HYDROMECHANICAL POWER.] To the extent provided by section 295.44 
165.5   Notwithstanding the provisions of subdivision 39, and sections 
165.6   272.01, subdivision 2, and 273.19, subdivision 1, real and 
165.7   personal property used or to be used primarily for the 
165.8   production of hydroelectric or hydromechanical power on a site 
165.9   owned by the federal government, the state, or a local 
165.10  governmental unit which is and developed and operated pursuant 
165.11  to the provisions of section 103G.535 is exempt from property 
165.12  tax for all years during which the site is developed and 
165.13  operated under the terms of a lease or agreement authorized by 
165.14  section 103G.535. 
165.15     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
165.16  following final enactment. 
165.17     Sec. 5.  Minnesota Statutes 2001 Supplement, section 
165.18  273.121, is amended to read: 
165.19     273.121 [VALUATION OF REAL PROPERTY, NOTICE.] 
165.20     Any county assessor or city assessor having the powers of a 
165.21  county assessor, valuing or classifying taxable real property 
165.22  shall in each year notify those persons whose property is to be 
165.23  included on the assessment roll that year if the person's 
165.24  address is known to the assessor, otherwise the occupant of the 
165.25  property.  The notice shall be in writing and shall be sent by 
165.26  ordinary mail at least ten days before the meeting of the local 
165.27  board of appeal and equalization under section 274.01 or the 
165.28  review process established under section 274.13, subdivision 
165.29  1c.  It shall contain:  (1) the market value for the current and 
165.30  prior assessment, (2) the limited market value under section 
165.31  273.11, subdivision 1a, for the current and prior assessment, (3)
165.32  the qualifying amount of any improvements under section 273.11, 
165.33  subdivision 16, for the current assessment, (4) the market value 
165.34  subject to taxation after subtracting the amount of any 
165.35  qualifying improvements for the current assessment, (5) the 
165.36  classification of the property for the current and prior 
166.1   assessment, (6) a note that if the property is homestead and at 
166.2   least 35 45 years old, improvements made to the property may be 
166.3   eligible for a valuation exclusion under section 273.11, 
166.4   subdivision 16, (7) the assessor's office address, and (8) the 
166.5   dates, places, and times set for the meetings of the local board 
166.6   of appeal and equalization, the review process established under 
166.7   section 274.13, subdivision 1c, and the county board of appeal 
166.8   and equalization.  The commissioner of revenue shall specify the 
166.9   form of the notice.  The assessor shall attach to the assessment 
166.10  roll a statement that the notices required by this section have 
166.11  been mailed.  Any assessor who is not provided sufficient funds 
166.12  from the assessor's governing body to provide such notices, may 
166.13  make application to the commissioner of revenue to finance such 
166.14  notices.  The commissioner of revenue shall conduct an 
166.15  investigation and, if satisfied that the assessor does not have 
166.16  the necessary funds, issue a certification to the commissioner 
166.17  of finance of the amount necessary to provide such notices.  The 
166.18  commissioner of finance shall issue a warrant for such amount 
166.19  and shall deduct such amount from any state payment to such 
166.20  county or municipality.  The necessary funds to make such 
166.21  payments are hereby appropriated.  Failure to receive the notice 
166.22  shall in no way affect the validity of the assessment, the 
166.23  resulting tax, the procedures of any board of review or 
166.24  equalization, or the enforcement of delinquent taxes by 
166.25  statutory means. 
166.26     <b>[EFFECTIVE DATE.]</b> This section is effective for notices 
166.27  required to be mailed in 2002 and thereafter. 
166.28     Sec. 6.  Minnesota Statutes 2001 Supplement, section 
166.29  273.13, subdivision 24, is amended to read: 
166.30     Subd. 24.  [CLASS 3.] (a) Commercial and industrial 
166.31  property and utility real and personal property is class 3a.  
166.32     (1) Except as otherwise provided, each parcel of 
166.33  commercial, industrial, or utility real property has a class 
166.34  rate of 1.5 percent of the first tier of market value, and 2.0 
166.35  percent of the remaining market value.  In the case of 
166.36  contiguous parcels of property owned by the same person or 
167.1   entity, only the value equal to the first-tier value of the 
167.2   contiguous parcels qualifies for the reduced class rate, except 
167.3   that contiguous parcels owned by the same person or entity shall 
167.4   be eligible for the first-tier value class rate on each separate 
167.5   business operated by the owner of the property, provided the 
167.6   business is housed in a separate structure.  For the purposes of 
167.7   this subdivision, the first tier means the first $150,000 of 
167.8   market value.  Real property owned in fee by a utility for 
167.9   transmission line right-of-way shall be classified at the class 
167.10  rate for the higher tier.  
167.11     For purposes of this subdivision, parcels are considered to 
167.12  be contiguous even if they are separated from each other by a 
167.13  road, street, waterway, or other similar intervening type of 
167.14  property.  Connections between parcels that consist of power 
167.15  lines or pipelines do not cause the parcels to be contiguous.  
167.16  Property owners who have contiguous parcels of property that 
167.17  constitute separate businesses that may qualify for the 
167.18  first-tier class rate shall notify the assessor by July 1, for 
167.19  treatment beginning in the following taxes payable year.  
167.20     (2) All railroad operating property and All personal 
167.21  property that is:  (i) part of an electric generation, 
167.22  transmission, or distribution system; or (ii) part of a pipeline 
167.23  system transporting or distributing water, gas, crude oil, or 
167.24  petroleum products; and (iii) not described in clause (3), and 
167.25  all railroad operating property has a class rate as provided 
167.26  under clause (1) for the first tier of market value and the 
167.27  remaining market value.  In the case of multiple parcels in one 
167.28  county that are owned by one person or entity, only one first 
167.29  tier amount is eligible for the reduced rate.  
167.30     (3) The entire market value of personal property that is:  
167.31  (i) tools, implements, and machinery of an electric generation, 
167.32  transmission, or distribution system; (ii) tools, implements, 
167.33  and machinery of a pipeline system transporting or distributing 
167.34  water, gas, crude oil, or petroleum products; or (iii) the mains 
167.35  and pipes used in the distribution of steam or hot or chilled 
167.36  water for heating or cooling buildings, has a class rate as 
168.1   provided under clause (1) for the remaining market value in 
168.2   excess of the first tier. 
168.3      (b) Employment property defined in section 469.166, during 
168.4   the period provided in section 469.170, shall constitute class 
168.5   3b.  The class rates for class 3b property are determined under 
168.6   paragraph (a). 
168.7      <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
168.8   payable in 2002 and thereafter. 
168.9      Sec. 7.  Minnesota Statutes 2001 Supplement, section 
168.10  273.1392, is amended to read: 
168.11     273.1392 [PAYMENT; SCHOOL DISTRICTS.] 
168.12     The amounts of conservation tax credits under section 
168.13  273.119; disaster or emergency reimbursement under section 
168.14  273.123; attached machinery aid under section 273.138; homestead 
168.15  and agricultural credits under section 273.1384; aids and 
168.16  credits under section 273.1398; wetlands reimbursement under 
168.17  section 275.295; enterprise zone property credit payments under 
168.18  section 469.171; and metropolitan agricultural preserve 
168.19  reduction under section 473H.10 for school districts, shall be 
168.20  certified to the department of children, families, and learning 
168.21  by the department of revenue.  The amounts so certified shall be 
168.22  paid according to section 127A.45, subdivisions 9 and 13. 
168.23     <b>[EFFECTIVE DATE.]</b> This section is effective for aids and 
168.24  credits payable in 2002 and thereafter. 
168.25     Sec. 8.  Minnesota Statutes 2001 Supplement, section 
168.26  273.1398, subdivision 4c, is amended to read: 
168.27     Subd. 4c.  [TEMPORARY AID; COURT ADMINISTRATION COSTS.] For 
168.28  calendar years 2004 and 2005, each county in a judicial district 
168.29  that has not been transferred to the state by January 1 of that 
168.30  year shall receive additional homestead and agricultural credit 
168.31  aid.  This amount is in addition to the amount calculated under 
168.32  subdivision 2 and must not be included in the definition of 
168.33  homestead and agricultural credit base under subdivision 1, 
168.34  paragraph (j).  The amount of additional aid is equal to the 
168.35  difference between (1) the amount budgeted for court 
168.36  administration costs in 2001 as determined under subdivision 4b, 
169.1   paragraph (c) (b), multiplied by the maintenance of effort 
169.2   percent for the calendar year as determined under subdivision 
169.3   4b, paragraph (d) (a), and (2) the amount calculated under 
169.4   subdivision 4b, paragraph (a), for calendar year 2003.  This 
169.5   additional aid must be used only to fund court administration 
169.6   expenditures as defined in section 480.183, subdivision 3.  This 
169.7   amount must be added to the state court's base budget in the 
169.8   year when the court in that judicial district in which the 
169.9   county is located is transferred to the state. 
169.10     <b>[EFFECTIVE DATE.]</b> This section is effective retroactively 
169.11  to July 1, 2001, and thereafter. 
169.12     Sec. 9.  Minnesota Statutes 2001 Supplement, section 
169.13  275.74, subdivision 2, is amended to read: 
169.14     Subd. 2.  [AUTHORIZATION FOR SPECIAL LEVIES.] A local 
169.15  governmental unit may request authorization to levy for 
169.16  unreimbursed costs for other natural disasters under section 
169.17  275.70, subdivision 5, clause (6) (7).  The local governmental 
169.18  unit shall submit a request to levy under section 275.70, 
169.19  subdivision 5, clause (6) (7), to the commissioner of revenue by 
169.20  September 30 of the levy year and the request must include 
169.21  information documenting the estimated unreimbursed costs.  The 
169.22  commissioner of revenue may grant levy authority, up to the 
169.23  amount requested based on the documentation submitted.  All 
169.24  decisions of the commissioner are final. 
169.25     <b>[EFFECTIVE DATE.]</b> This section is effective for taxes 
169.26  payable in 2002 and 2003. 
169.27     Sec. 10.  Minnesota Statutes 2001 Supplement, section 
169.28  289A.60, subdivision 2, is amended to read: 
169.29     Subd. 2.  [PENALTY FOR FAILURE TO MAKE AND FILE RETURN.] If 
169.30  a taxpayer fails to make and file a tax return within the time 
169.31  prescribed, including an extension, or fails to file an 
169.32  individual income tax return within six months after the due 
169.33  date, a penalty of five percent of the amount of tax not paid by 
169.34  the end of that period is added to the tax.  
169.35     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
169.36  following final enactment. 
170.1      Sec. 11.  Minnesota Statutes 2000, section 290.067, 
170.2   subdivision 2a, is amended to read: 
170.3      Subd. 2a.  [INCOME.] (a) For purposes of this section, 
170.4   "income" means the sum of the following: 
170.5      (1) federal adjusted gross income as defined in section 62 
170.6   of the Internal Revenue Code; and 
170.7      (2) the sum of the following amounts to the extent not 
170.8   included in clause (1): 
170.9      (i) all nontaxable income; 
170.10     (ii) the amount of a passive activity loss that is not 
170.11  disallowed as a result of section 469, paragraph (i) or (m) of 
170.12  the Internal Revenue Code and the amount of passive activity 
170.13  loss carryover allowed under section 469(b) of the Internal 
170.14  Revenue Code; 
170.15     (iii) an amount equal to the total of any discharge of 
170.16  qualified farm indebtedness of a solvent individual excluded 
170.17  from gross income under section 108(g) of the Internal Revenue 
170.18  Code; 
170.19     (iv) cash public assistance and relief; 
170.20     (v) any pension or annuity (including railroad retirement 
170.21  benefits, all payments received under the federal Social 
170.22  Security Act, supplemental security income, and veterans 
170.23  benefits), which was not exclusively funded by the claimant or 
170.24  spouse, or which was funded exclusively by the claimant or 
170.25  spouse and which funding payments were excluded from federal 
170.26  adjusted gross income in the years when the payments were made; 
170.27     (vi) interest received from the federal or a state 
170.28  government or any instrumentality or political subdivision 
170.29  thereof; 
170.30     (vii) workers' compensation; 
170.31     (viii) nontaxable strike benefits; 
170.32     (ix) the gross amounts of payments received in the nature 
170.33  of disability income or sick pay as a result of accident, 
170.34  sickness, or other disability, whether funded through insurance 
170.35  or otherwise; 
170.36     (x) a lump sum distribution under section 402(e)(3) of the 
171.1   Internal Revenue Code; 
171.2      (xi) contributions made by the claimant to an individual 
171.3   retirement account, including a qualified voluntary employee 
171.4   contribution; simplified employee pension plan; self-employed 
171.5   retirement plan; cash or deferred arrangement plan under section 
171.6   401(k) of the Internal Revenue Code; or deferred compensation 
171.7   plan under section 457 of the Internal Revenue Code; and 
171.8      (xii) nontaxable scholarship or fellowship grants. 
171.9      In the case of an individual who files an income tax return 
171.10  on a fiscal year basis, the term "federal adjusted gross income" 
171.11  means federal adjusted gross income reflected in the fiscal year 
171.12  ending in the next calendar year.  Federal adjusted gross income 
171.13  may not be reduced by the amount of a net operating loss 
171.14  carryback or carryforward or a capital loss carryback or 
171.15  carryforward allowed for the year. 
171.16     (b) "Income" does not include: 
171.17     (1) amounts excluded pursuant to the Internal Revenue Code, 
171.18  sections 101(a) and 102; 
171.19     (2) amounts of any pension or annuity that were exclusively 
171.20  funded by the claimant or spouse if the funding payments were 
171.21  not excluded from federal adjusted gross income in the years 
171.22  when the payments were made; 
171.23     (3) surplus food or other relief in kind supplied by a 
171.24  governmental agency; 
171.25     (4) relief granted under chapter 290A; and 
171.26     (5) child support payments received under a temporary or 
171.27  final decree of dissolution or legal separation; and 
171.28     (6) restitution payments received by eligible individuals 
171.29  and excludable interest as defined in section 803 of the 
171.30  Economic Growth and Tax Relief Reconciliation Act of 2001, 
171.31  Public Law Number 107-16. 
171.32     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
171.33  beginning after December 31, 2000. 
171.34     Sec. 12.  Minnesota Statutes 2001 Supplement, section 
171.35  290.0675, subdivision 1, is amended to read: 
171.36     Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
172.1   section the following terms have the meanings given. 
172.2      (b) "Earned income" means the sum of the following, to the 
172.3   extent included in Minnesota taxable income: 
172.4      (1) earned income as defined in section 32(c)(2) of the 
172.5   Internal Revenue Code; 
172.6      (2) income received from a retirement pension, 
172.7   profit-sharing, stock bonus, or annuity plan; and 
172.8      (3) social security benefits as defined in section 86(d)(1) 
172.9   of the Internal Revenue Code. 
172.10     (c) "Taxable income" means net income as defined in section 
172.11  290.01, subdivision 19. 
172.12     (d) "Earned income of lesser-earning spouse" means the 
172.13  earned income of the spouse with the lesser amount of earned 
172.14  income as defined in paragraph (b) for the taxable year minus 
172.15  the sum of (i) the amount for one exemption under section 151(d) 
172.16  of the Internal Revenue Code and (ii) one-half the amount of the 
172.17  standard deduction under section 63(c)(2)(A) and (4) of the 
172.18  Internal Revenue Code.  
172.19     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
172.20  beginning after December 31, 2000. 
172.21     Sec. 13.  Minnesota Statutes 2001 Supplement, section 
172.22  290.0675, subdivision 3, is amended to read: 
172.23     Subd. 3.  [CREDIT AMOUNT.] The credit amount is the 
172.24  difference between the tax on the couple's joint Minnesota 
172.25  taxable income under the rates in section 290.06, subdivision 
172.26  2c, paragraph (a), and the sum of the tax under the rates of 
172.27  section 290.06, subdivision 2c, paragraph (b), on the earned 
172.28  income of the lesser-earning spouse, and the tax under the rates 
172.29  of section 290.06, subdivision 2c, paragraph (b), on the 
172.30  couple's joint Minnesota taxable income, minus the earned income 
172.31  of the lesser-earning spouse. 
172.32     For taxable years beginning after December 31, 2001, The 
172.33  commissioner of revenue shall prepare and make available to 
172.34  taxpayers a comprehensive table showing the credit under this 
172.35  section at brackets of earnings of the lesser-earning spouse and 
172.36  joint taxable income.  The brackets of earnings shall not be 
173.1   more than $2,000. 
173.2      For taxable years beginning after December 31, 2002, the 
173.3   commissioner shall update the table as necessary to provide a 
173.4   credit that reflects the relationship between the marginal tax 
173.5   rates imposed under section 290.06, subdivision 2c. 
173.6      <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
173.7   beginning after December 31, 2000. 
173.8      Sec. 14.  Minnesota Statutes 2001 Supplement, section 
173.9   290.0921, subdivision 2, is amended to read: 
173.10     Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
173.11  the following terms have the meanings given them. 
173.12     (b) "Alternative minimum taxable net income" is alternative 
173.13  minimum taxable income, 
173.14     (1) less the exemption amount, and 
173.15     (2) apportioned or allocated to Minnesota under section 
173.16  290.17, 290.191, or 290.20. 
173.17     (c) The "exemption amount" is $40,000, reduced, but not 
173.18  below zero, by 25 percent of the excess of alternative minimum 
173.19  taxable income over $150,000. 
173.20     (d) "Minnesota alternative minimum taxable income" is 
173.21  alternative minimum taxable net income, less the deductions for 
173.22  alternative tax net operating loss under subdivision 4; 
173.23  charitable contributions under subdivision 5; and dividends 
173.24  received under subdivision 6.  The sum of the deductions under 
173.25  this paragraph may not exceed 90 percent of alternative minimum 
173.26  taxable net income.  This limitation does not apply to a 
173.27  deduction for dividends paid to or received from a corporation 
173.28  which is subject to tax under section 290.36 and which is a 
173.29  member of an affiliated group of corporations as defined by the 
173.30  Internal Revenue Code. 
173.31     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
173.32  years beginning after December 31, 2001. 
173.33     Sec. 15.  Minnesota Statutes 2000, section 290.17, 
173.34  subdivision 2, is amended to read: 
173.35     Subd. 2.  [INCOME NOT DERIVED FROM CONDUCT OF A TRADE OR 
173.36  BUSINESS.] The income of a taxpayer subject to the allocation 
174.1   rules that is not derived from the conduct of a trade or 
174.2   business must be assigned in accordance with paragraphs (a) to 
174.3   (f):  
174.4      (a)(1) Subject to paragraphs (a)(2), (a)(3), and (a)(4), 
174.5   income from wages as defined in section 3401(a) and (f) of the 
174.6   Internal Revenue Code is assigned to this state if, and to the 
174.7   extent that, the work of the employee is performed within it; 
174.8   all other income from such sources is treated as income from 
174.9   sources without this state.  
174.10     Severance pay shall be considered income from labor or 
174.11  personal or professional services. 
174.12     (2) In the case of an individual who is a nonresident of 
174.13  Minnesota and who is an athlete or entertainer, income from 
174.14  compensation for labor or personal services performed within 
174.15  this state shall be determined in the following manner:  
174.16     (i) The amount of income to be assigned to Minnesota for an 
174.17  individual who is a nonresident salaried athletic team employee 
174.18  shall be determined by using a fraction in which the denominator 
174.19  contains the total number of days in which the individual is 
174.20  under a duty to perform for the employer, and the numerator is 
174.21  the total number of those days spent in Minnesota.  For purposes 
174.22  of this paragraph, off-season training activities, unless 
174.23  conducted at the team's facilities as part of a team imposed 
174.24  program, are not included in the total number of duty days.  
174.25  Bonuses earned as a result of play during the regular season or 
174.26  for participation in championship, play-off, or all-star games 
174.27  must be allocated under the formula.  Signing bonuses are not 
174.28  subject to allocation under the formula if they are not 
174.29  conditional on playing any games for the team, are payable 
174.30  separately from any other compensation, and are nonrefundable; 
174.31  and 
174.32     (ii) The amount of income to be assigned to Minnesota for 
174.33  an individual who is a nonresident, and who is an athlete or 
174.34  entertainer not listed in clause (i), for that person's athletic 
174.35  or entertainment performance in Minnesota shall be determined by 
174.36  assigning to this state all income from performances or athletic 
175.1   contests in this state.  
175.2      (3) For purposes of this section, amounts received by a 
175.3   nonresident as "retirement income" as defined in section (b)(1) 
175.4   of the State Income Taxation of Pension Income Act, Public Law 
175.5   Number 104-95, are not considered income derived from carrying 
175.6   on a trade or business or from wages or other compensation for 
175.7   work an employee performed in Minnesota, and are not taxable 
175.8   under this chapter.  
175.9      (4) Wages, otherwise assigned to this state under clause 
175.10  (1) and not qualifying under clause (3), are not taxable under 
175.11  this chapter if the following conditions are met: 
175.12     (i) the recipient was not a resident of this state for any 
175.13  part of the taxable year in which the wages were received; and 
175.14     (ii) the wages are for work performed while the recipient 
175.15  was a resident of this state. 
175.16     (b) Income or gains from tangible property located in this 
175.17  state that is not employed in the business of the recipient of 
175.18  the income or gains must be assigned to this state. 
175.19     (c) Income or gains from intangible personal property not 
175.20  employed in the business of the recipient of the income or gains 
175.21  must be assigned to this state if the recipient of the income or 
175.22  gains is a resident of this state or is a resident trust or 
175.23  estate.  
175.24     Gain on the sale of a partnership interest is allocable to 
175.25  this state in the ratio of the original cost of partnership 
175.26  tangible property in this state to the original cost of 
175.27  partnership tangible property everywhere, determined at the time 
175.28  of the sale.  If more than 50 percent of the value of the 
175.29  partnership's assets consists of intangibles, gain or loss from 
175.30  the sale of the partnership interest is allocated to this state 
175.31  in accordance with the sales factor of the partnership for its 
175.32  first full tax period immediately preceding the tax period of 
175.33  the partnership during which the partnership interest was sold. 
175.34     Gain on the sale of goodwill or income from a covenant not 
175.35  to compete that is connected with a business operating all or 
175.36  partially in Minnesota is allocated to this state to the extent 
176.1   that the income from the business in the year preceding the year 
176.2   of sale was assignable to Minnesota under subdivision 3.  
176.3      When an employer pays an employee for a covenant not to 
176.4   compete, the income allocated to this state is in the ratio of 
176.5   the employee's service in Minnesota in the calendar year 
176.6   preceding leaving the employment of the employer over the total 
176.7   services performed by the employee for the employer in that year.
176.8      (d) Income from winnings on Minnesota pari-mutuel betting 
176.9   tickets, the Minnesota state lottery, and lawful gambling as 
176.10  defined in section 349.12, subdivision 24, conducted within the 
176.11  boundaries of the state of Minnesota shall be assigned to this 
176.12  state a bet made by an individual while in Minnesota is assigned 
176.13  to this state.  In this paragraph, "bet" has the meaning given 
176.14  in section 609.75, subdivision 2, as limited by section 609.75, 
176.15  subdivision 3, clauses (1), (2), and (3).  
176.16     (e) All items of gross income not covered in paragraphs (a) 
176.17  to (d) and not part of the taxpayer's income from a trade or 
176.18  business shall be assigned to the taxpayer's domicile. 
176.19     (f) For the purposes of this section, working as an 
176.20  employee shall not be considered to be conducting a trade or 
176.21  business. 
176.22     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
176.23  beginning after December 31, 2001. 
176.24     Sec. 16.  Minnesota Statutes 2000, section 290.17, 
176.25  subdivision 3, is amended to read: 
176.26     Subd. 3.  [TRADE OR BUSINESS INCOME; GENERAL RULE.] All 
176.27  income of a trade or business is subject to apportionment except 
176.28  nonbusiness income.  Income derived from carrying on a trade or 
176.29  business must be assigned to this state if the trade or business 
176.30  is conducted wholly within this state, assigned outside this 
176.31  state if conducted wholly without this state and apportioned 
176.32  between this state and other states and countries under this 
176.33  subdivision if conducted partly within and partly without this 
176.34  state.  For purposes of determining whether a trade or business 
176.35  is carried on exclusively within or without this state:  
176.36     (a) A trade or business physically located exclusively 
177.1   within this state is nevertheless carried on partly within and 
177.2   partly without this state if any of the principles set forth in 
177.3   section 290.191 for the allocation of sales or receipts within 
177.4   or without this state when applied to the taxpayer's situation 
177.5   result in the allocation of any sales or receipts without this 
177.6   state.  
177.7      (b) A trade or business physically located exclusively 
177.8   without this state is nevertheless carried on partly within and 
177.9   partly without this state if any of the principles set forth in 
177.10  section 290.191 for the allocation of sales or receipts within 
177.11  or without this state when applied to the taxpayer's situation 
177.12  result in the allocation of any sales or receipts without within 
177.13  this state.  The jurisdiction to tax such a business under this 
177.14  chapter must be determined in accordance with sections 290.014 
177.15  and 290.015. 
177.16     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
177.17  beginning after December 31, 2001. 
177.18     Sec. 17.  Minnesota Statutes 2000, section 290A.03, 
177.19  subdivision 3, is amended to read: 
177.20     Subd. 3.  [INCOME.] (1) "Income" means the sum of the 
177.21  following:  
177.22     (a) federal adjusted gross income as defined in the 
177.23  Internal Revenue Code; and 
177.24     (b) the sum of the following amounts to the extent not 
177.25  included in clause (a):  
177.26     (i) all nontaxable income; 
177.27     (ii) the amount of a passive activity loss that is not 
177.28  disallowed as a result of section 469, paragraph (i) or (m) of 
177.29  the Internal Revenue Code and the amount of passive activity 
177.30  loss carryover allowed under section 469(b) of the Internal 
177.31  Revenue Code; 
177.32     (iii) an amount equal to the total of any discharge of 
177.33  qualified farm indebtedness of a solvent individual excluded 
177.34  from gross income under section 108(g) of the Internal Revenue 
177.35  Code; 
177.36     (iv) cash public assistance and relief; 
178.1      (v) any pension or annuity (including railroad retirement 
178.2   benefits, all payments received under the federal Social 
178.3   Security Act, supplemental security income, and veterans 
178.4   benefits), which was not exclusively funded by the claimant or 
178.5   spouse, or which was funded exclusively by the claimant or 
178.6   spouse and which funding payments were excluded from federal 
178.7   adjusted gross income in the years when the payments were made; 
178.8      (vi) interest received from the federal or a state 
178.9   government or any instrumentality or political subdivision 
178.10  thereof; 
178.11     (vii) workers' compensation; 
178.12     (viii) nontaxable strike benefits; 
178.13     (ix) the gross amounts of payments received in the nature 
178.14  of disability income or sick pay as a result of accident, 
178.15  sickness, or other disability, whether funded through insurance 
178.16  or otherwise; 
178.17     (x) a lump sum distribution under section 402(e)(3) of the 
178.18  Internal Revenue Code; 
178.19     (xi) contributions made by the claimant to an individual 
178.20  retirement account, including a qualified voluntary employee 
178.21  contribution; simplified employee pension plan; self-employed 
178.22  retirement plan; cash or deferred arrangement plan under section 
178.23  401(k) of the Internal Revenue Code; or deferred compensation 
178.24  plan under section 457 of the Internal Revenue Code; and 
178.25     (xii) nontaxable scholarship or fellowship grants.  
178.26     In the case of an individual who files an income tax return 
178.27  on a fiscal year basis, the term "federal adjusted gross income" 
178.28  shall mean federal adjusted gross income reflected in the fiscal 
178.29  year ending in the calendar year.  Federal adjusted gross income 
178.30  shall not be reduced by the amount of a net operating loss 
178.31  carryback or carryforward or a capital loss carryback or 
178.32  carryforward allowed for the year.  
178.33     (2) "Income" does not include:  
178.34     (a) amounts excluded pursuant to the Internal Revenue Code, 
178.35  sections 101(a) and 102; 
178.36     (b) amounts of any pension or annuity which was exclusively 
179.1   funded by the claimant or spouse and which funding payments were 
179.2   not excluded from federal adjusted gross income in the years 
179.3   when the payments were made; 
179.4      (c) surplus food or other relief in kind supplied by a 
179.5   governmental agency; 
179.6      (d) relief granted under this chapter; 
179.7      (e) child support payments received under a temporary or 
179.8   final decree of dissolution or legal separation; or 
179.9      (f) holocaust settlement payments as defined in section 
179.10  290.01, subdivision 32 restitution payments received by eligible 
179.11  individuals and excludable interest as defined in section 803 of 
179.12  the Economic Growth and Tax Relief Reconciliation Act of 2001, 
179.13  Public Law Number 107-16.  
179.14     (3) The sum of the following amounts may be subtracted from 
179.15  income:  
179.16     (a) for the claimant's first dependent, the exemption 
179.17  amount multiplied by 1.4; 
179.18     (b) for the claimant's second dependent, the exemption 
179.19  amount multiplied by 1.3; 
179.20     (c) for the claimant's third dependent, the exemption 
179.21  amount multiplied by 1.2; 
179.22     (d) for the claimant's fourth dependent, the exemption 
179.23  amount multiplied by 1.1; 
179.24     (e) for the claimant's fifth dependent, the exemption 
179.25  amount; and 
179.26     (f) if the claimant or claimant's spouse was disabled or 
179.27  attained the age of 65 on or before December 31 of the year for 
179.28  which the taxes were levied or rent paid, the exemption amount.  
179.29     For purposes of this subdivision, the "exemption amount" 
179.30  means the exemption amount under section 151(d) of the Internal 
179.31  Revenue Code for the taxable year for which the income is 
179.32  reported.  
179.33     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
179.34  following final enactment. 
179.35     Sec. 18.  Minnesota Statutes 2001 Supplement, section 
179.36  290A.04, subdivision 2h, is amended to read: 
180.1      Subd. 2h.  [ADDITIONAL REFUND.] (a) Beginning with gross 
180.2   property taxes payable in 2003, If the gross property taxes 
180.3   payable on a homestead increase more than 12 percent over the 
180.4   property taxes payable in the prior year on the same property 
180.5   that is owned and occupied by the same owner on January 2 of 
180.6   both years, and the amount of that increase is $100 or more, a 
180.7   claimant who is a homeowner shall be allowed an additional 
180.8   refund equal to 60 percent of the amount of the increase over 
180.9   the greater of 12 percent of the prior year's property taxes 
180.10  payable or $100.  This subdivision shall not apply to any 
180.11  increase in the gross property taxes payable attributable to 
180.12  improvements made to the homestead after the assessment date for 
180.13  the prior year's taxes.  This subdivision shall not apply to any 
180.14  increase in the gross property taxes payable attributable to the 
180.15  termination of valuation exclusions under section 273.11, 
180.16  subdivision 16. 
180.17     The maximum refund allowed under this subdivision is $1,000.
180.18     (b) For purposes of this subdivision "gross property taxes 
180.19  payable" means property taxes payable determined without regard 
180.20  to the refund allowed under this subdivision. 
180.21     (c) In addition to the other proofs required by this 
180.22  chapter, each claimant under this subdivision shall file with 
180.23  the property tax refund return a copy of the property tax 
180.24  statement for taxes payable in the preceding year or other 
180.25  documents required by the commissioner. 
180.26     (d) Upon request, the appropriate county official shall 
180.27  make available the names and addresses of the property taxpayers 
180.28  who may be eligible for the additional property tax refund under 
180.29  this section.  The information shall be provided on a magnetic 
180.30  computer disk.  The county may recover its costs by charging the 
180.31  person requesting the information the reasonable cost for 
180.32  preparing the data.  The information may not be used for any 
180.33  purpose other than for notifying the homeowner of potential 
180.34  eligibility and assisting the homeowner, without charge, in 
180.35  preparing a refund claim. 
180.36     <b>[EFFECTIVE DATE.]</b> This section is effective beginning with 
181.1   refunds based on gross property taxes payable in 2002. 
181.2      Sec. 19.  Minnesota Statutes 2001 Supplement, section 
181.3   295.60, is amended by adding a subdivision to read: 
181.4      Subd. 1a.  [USE TAX; CREDIT FOR TAXES PAID.] (a) A person 
181.5   that receives fur clothing for use or storage in Minnesota, 
181.6   other than from a furrier that paid the tax under subdivision 1, 
181.7   is subject to tax at the rate imposed under subdivision 1.  
181.8   Liability for the tax is incurred when the person has possession 
181.9   of the fur clothing in Minnesota.  The tax must be remitted to 
181.10  the commissioner in the manner prescribed by subdivision 3. 
181.11     (b) A person that has paid taxes to another jurisdiction on 
181.12  the same transaction and is subject to tax under this section is 
181.13  entitled to a credit for the tax legally due and paid to another 
181.14  jurisdiction to the extent of the lesser of (1) the tax actually 
181.15  paid to the other jurisdiction, or (2) the amount of tax imposed 
181.16  by Minnesota on the transaction subject to tax in the other 
181.17  jurisdiction. 
181.18     <b>[EFFECTIVE DATE.]</b> This section is effective for fur 
181.19  clothing purchased and brought into Minnesota on or after 
181.20  January 1, 2002. 
181.21     Sec. 20.  Minnesota Statutes 2001 Supplement, section 
181.22  295.60, is amended by adding a subdivision to read: 
181.23     Subd. 1b.  [TAX COLLECTION REQUIRED.] A furrier with nexus 
181.24  in Minnesota, who is not subject to tax under subdivision 1, is 
181.25  required to collect the tax imposed under subdivision 1a from 
181.26  the purchaser of the clothing made from fur and give the 
181.27  purchaser a receipt for the tax paid.  The tax collected must be 
181.28  remitted to the commissioner in the manner prescribed by 
181.29  subdivision 3. 
181.30     <b>[EFFECTIVE DATE.]</b> This section is effective for fur 
181.31  clothing purchased and brought into Minnesota on or after 
181.32  January 1, 2002. 
181.33     Sec. 21.  Minnesota Statutes 2001 Supplement, section 
181.34  295.60, is amended by adding a subdivision to read: 
181.35     Subd. 1c.  [TAXES PAID TO ANOTHER JURISDICTION; CREDIT.] A 
181.36  furrier that has paid taxes to another jurisdiction measured by 
182.1   gross revenue and is subject to tax under this section on the 
182.2   same gross revenues is entitled to a credit for the tax legally 
182.3   due and paid to another jurisdiction to the extent of the lesser 
182.4   of (1) the tax actually paid to the other jurisdiction, or (2) 
182.5   the amount of tax imposed by Minnesota on the gross revenues 
182.6   subject to tax in the other taxing jurisdictions. 
182.7      <b>[EFFECTIVE DATE.]</b> This section is effective for gross 
182.8   revenues received on or after January 1, 2002. 
182.9      Sec. 22.  Minnesota Statutes 2001 Supplement, section 
182.10  295.60, subdivision 7, is amended to read: 
182.11     Subd. 7.  [APPLICATION OF OTHER CHAPTERS.] Unless 
182.12  specifically provided otherwise by this section, the 
182.13  enforcement, interest, and penalty provisions under chapter 294, 
182.14  appeal provisions in sections 289A.43 and 289A.65, criminal 
182.15  penalties in section 289A.63, and refunds provisions in section 
182.16  289A.50 chapter 289A, civil penalty provisions applicable to 
182.17  withholding and sales taxes under section 289A.60, and 
182.18  collection and rulemaking provisions under chapter 270, apply to 
182.19  a liability for the taxes imposed under this section. 
182.20     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2002.
182.21     Sec. 23.  Minnesota Statutes 2000, section 296A.18, 
182.22  subdivision 8, is amended to read: 
182.23     Subd. 8.  [AVIATION FUEL TAX STATE AIRPORTS FUND.] The 
182.24  revenues derived from the excise taxes on aviation gasoline and 
182.25  on special fuel received, sold, stored, or withdrawn from 
182.26  storage as substitutes for aviation gasoline, shall be paid into 
182.27  the state treasury and credited to the aviation fuel tax state 
182.28  airports fund.  There is hereby appropriated such sums as are 
182.29  needed to carry out the provisions of this subdivision. 
182.30     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
182.31  following final enactment. 
182.32     Sec. 24.  Minnesota Statutes 2001 Supplement, section 
182.33  297A.70, subdivision 3, is amended to read: 
182.34     Subd. 3.  [SALES OF CERTAIN GOODS AND SERVICES TO 
182.35  GOVERNMENT.] (a) The following sales to or use by the specified 
182.36  governments and political subdivisions of the state are exempt: 
183.1      (1) repair and replacement parts for emergency rescue 
183.2   vehicles, fire trucks, and fire apparatus to a political 
183.3   subdivision; 
183.4      (2) machinery and equipment, except for motor vehicles, 
183.5   used directly for mixed municipal solid waste management 
183.6   services at a solid waste disposal facility as defined in 
183.7   section 115A.03, subdivision 10; 
183.8      (3) chore and homemaking services to a political 
183.9   subdivision of the state to be provided to elderly or disabled 
183.10  individuals; 
183.11     (4) telephone services to the department of administration 
183.12  that are used to provide telecommunications services through the 
183.13  intertechnologies revolving fund; 
183.14     (5) firefighter personal protective equipment as defined in 
183.15  paragraph (b), if purchased or authorized by and for the use of 
183.16  an organized fire department, fire protection district, or fire 
183.17  company regularly charged with the responsibility of providing 
183.18  fire protection to the state or a political subdivision; 
183.19     (6) bullet-resistant body armor that provides the wearer 
183.20  with ballistic and trauma protection, if purchased by a law 
183.21  enforcement agency of the state or a political subdivision of 
183.22  the state, or a licensed peace officer, as defined in section 
183.23  626.84, subdivision 1; 
183.24     (7) motor vehicles purchased or leased by political 
183.25  subdivisions of the state if the vehicles are exempt from 
183.26  registration under section 168.012, subdivision 1, paragraph 
183.27  (b), exempt from taxation under section 473.448, or exempt from 
183.28  the motor vehicle sales tax under section 297B.03, clause (12); 
183.29     (8) equipment designed to process, dewater, and recycle 
183.30  biosolids for wastewater treatment facilities of political 
183.31  subdivisions, and materials incidental to installation of that 
183.32  equipment; and materials used to construct buildings to house 
183.33  the equipment, if the materials are purchased after June 30, 
183.34  1998, and before July 1, 2001; and 
183.35     (9) sales to a town of gravel and of machinery, equipment, 
183.36  and accessories, except motor vehicles, used exclusively for 
184.1   road and bridge maintenance, and leases by a town of motor 
184.2   vehicles exempt from tax under section 297B.03, clause (10). 
184.3      (b) For purposes of this subdivision, "firefighters 
184.4   personal protective equipment" means helmets, including face 
184.5   shields, chin straps, and neck liners; bunker coats and pants, 
184.6   including pant suspenders; boots; gloves; head covers or hoods; 
184.7   wildfire jackets; protective coveralls; goggles; self-contained 
184.8   breathing apparatus; canister filter masks; personal alert 
184.9   safety systems; spanner belts; optical or thermal imaging search 
184.10  devices; and all safety equipment required by the Occupational 
184.11  Safety and Health Administration. 
184.12     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
184.13  following final enactment. 
184.14     Sec. 25.  Minnesota Statutes 2000, section 297I.05, 
184.15  subdivision 11, is amended to read: 
184.16     Subd. 11.  [RETALIATORY PROVISIONS.] (a) If any other state 
184.17  or country imposes any taxes, fines, deposits, penalties, 
184.18  licenses, or fees upon any insurance companies of this state and 
184.19  their agents doing business in another state or country that are 
184.20  in addition to or in excess of those imposed by the laws of this 
184.21  state upon foreign insurance companies and their agents doing 
184.22  business in this state, the same taxes, fines, deposits, 
184.23  penalties, licenses, and fees are imposed upon every similar 
184.24  insurance company of that state or country and their agents 
184.25  doing or applying to do business in this state. 
184.26     (b) If any conditions precedent to the right to do business 
184.27  in any other state or country are imposed by the laws of that 
184.28  state or country, beyond those imposed upon foreign companies by 
184.29  the laws of this state, the same conditions precedent are 
184.30  imposed upon every similar insurance company of that state or 
184.31  country and their agents doing or applying to do business in 
184.32  that state. 
184.33     (c) For purposes of this subdivision, "taxes, fines, 
184.34  deposits, penalties, licenses, or fees" means an amount of money 
184.35  that is deposited in the general revenue fund of the state or 
184.36  other similar fund in another state or country and is not 
185.1   dedicated to a special purpose or use or money deposited in the 
185.2   general revenue fund of the state or other similar fund in 
185.3   another state or country and appropriated to the commissioner of 
185.4   commerce or insurance for the operation of the department of 
185.5   commerce or other similar agency with jurisdiction over 
185.6   insurance.  Taxes, fines, deposits, penalties, licenses, or fees 
185.7   do not include: 
185.8      (1) special purpose obligations or assessments imposed in 
185.9   connection with particular kinds of insurance, including but not 
185.10  limited to assessments imposed in connection with residual 
185.11  market mechanisms; or 
185.12     (2) assessments made by the insurance guaranty association, 
185.13  life and health guarantee association, or similar association. 
185.14     (d) This subdivision applies to taxes imposed under 
185.15  subdivisions 1, 3, 4, 6, and 12, paragraph (a), clauses (1) and 
185.16  (3) (2). 
185.17     (e) This subdivision does not apply to insurance companies 
185.18  organized or domiciled in a state or country, the laws of which 
185.19  do not impose retaliatory taxes, fines, deposits, penalties, 
185.20  licenses, or fees or which grant, on a reciprocal basis, 
185.21  exemptions from retaliatory taxes, fines, deposits, penalties, 
185.22  licenses, or fees to insurance companies domiciled in this state.
185.23     <b>[EFFECTIVE DATE.]</b> This section is effective retroactively 
185.24  to tax years beginning on or after January 1, 2001. 
185.25     Sec. 26.  Minnesota Statutes 2000, section 477A.011, 
185.26  subdivision 20, is amended to read: 
185.27     Subd. 20.  [CITY NET TAX CAPACITY.] "City net tax capacity" 
185.28  means (1) the net tax capacity computed using the net tax 
185.29  capacity rates in section 273.13 for taxes payable in the year 
185.30  of the aid distribution, and the market values for taxes payable 
185.31  in the year prior to the aid distribution plus (2) a city's 
185.32  fiscal disparities distribution tax capacity under section 
185.33  276A.06, subdivision 2, paragraph (b), or 473F.08, subdivision 
185.34  2, paragraph (b), for taxes payable in the year prior to that 
185.35  for which aids are being calculated.  The market value utilized 
185.36  in computing city net tax capacity shall be reduced by the sum 
186.1   of (1) a city's market value of commercial industrial property 
186.2   as defined in section 276A.01, subdivision 3, or 473F.02, 
186.3   subdivision 3, multiplied by the ratio determined pursuant to 
186.4   section 276A.06, subdivision 2, paragraph (a), or 473F.08, 
186.5   subdivision 2, paragraph (a), (2) the market value of the 
186.6   captured value of tax increment financing districts as defined 
186.7   in section 469.177, subdivision 2, and (3) the market value of 
186.8   transmission lines deducted from a city's total net tax capacity 
186.9   under section 273.425.  The city net tax capacity will be 
186.10  computed using equalized market values.  
186.11     <b>[EFFECTIVE DATE.]</b> This section is effective for aid payable 
186.12  in 2002 and thereafter. 
186.13     Sec. 27.  Minnesota Statutes 2001 Supplement, section 
186.14  477A.013, subdivision 9, is amended to read: 
186.15     Subd. 9.  [CITY AID DISTRIBUTION.] (a) In calendar year 
186.16  2002 and thereafter, each city shall receive an aid distribution 
186.17  equal to the sum of (1) the city formula aid under subdivision 
186.18  8, and (2) its city aid base. 
186.19     (b) The percentage increase for a first class city in 
186.20  calendar year 1995 and thereafter, except for 2002, shall not 
186.21  exceed the percentage increase in the sum of the aid to all 
186.22  cities under this section in the current calendar year compared 
186.23  to the sum of the aid to all cities in the previous year.  For 
186.24  aids payable in 2002 only, the amount of the aid paid to a first 
186.25  class city shall not exceed the sum of its aid amount for 
186.26  calendar year 2001 under this section and its aid payment in 
186.27  calendar year 2001 under section 273.1398, subdivision 2, by 
186.28  more than 2.5 percent. 
186.29     (c) For aids payable in all years except 2002, the total 
186.30  aid for any city, except a first class city, shall not exceed 
186.31  the sum of (1) ten percent of the city's net levy for the year 
186.32  prior to the aid distribution plus (2) its total aid in the 
186.33  previous year before any increases or decreases under sections 
186.34  16A.711, subdivision 5, and 477A.0132.  For aids payable in 2002 
186.35  only, the total aid for any city, except a first class city, 
186.36  shall not exceed 40 percent of the sum of (1) 40 percent of the 
187.1   city's net levy for taxes payable in the year prior to the aid 
187.2   distribution plus (2) 40 percent of its total aid in the 
187.3   previous year under section 273.1398, subdivision 2, before any 
187.4   increases or decreases under sections 16A.711, subdivision 5, 
187.5   and 477A.0132 plus (3) its total aid in the previous year under 
187.6   this section. 
187.7      <b>[EFFECTIVE DATE.]</b> This section is effective for aid payable 
187.8   in 2002 and thereafter. 
187.9      Sec. 28.  Minnesota Statutes 2001 Supplement, section 
187.10  477A.07, subdivision 1, is amended to read: 
187.11     Subdivision 1.  [AID AMOUNT.] (a) For aid payable in 2003, 
187.12  each county and city is eligible for aid equal to the amount by 
187.13  which (i) 0.3 percent of the assessment year 2001 taxable market 
187.14  value of class 4a property, plus 0.25 percent of the assessment 
187.15  year 2001 market value of class 4b property, as defined in 
187.16  section 273.13, subdivision 25, multiplied by the jurisdiction's 
187.17  average tax rate for taxes payable in 2002, exceeds (ii) 0.4 
187.18  percent of the jurisdiction's total taxable net tax capacity for 
187.19  taxes payable in 2002, multiplied by the jurisdiction's average 
187.20  tax rate for taxes payable in 2002. 
187.21     (b) For aid payable in 2004, each county and city is 
187.22  eligible for aid equal to the amount by which (i) 0.25 percent 
187.23  of the assessment year 2002 taxable market value of class 4a 
187.24  property, as defined in section 273.13, subdivision 
187.25  25, multiplied by the jurisdiction's average tax rate for taxes 
187.26  payable in 2003, exceeds (ii) 0.4 percent of the jurisdiction's 
187.27  total taxable net tax capacity for taxes payable in 2003, 
187.28  multiplied by the jurisdiction's average tax rate for taxes 
187.29  payable in 2003. 
187.30     <b>[EFFECTIVE DATE.]</b> This section is effective for aid payable 
187.31  in 2003 and thereafter. 
187.32     Sec. 29.  Minnesota Statutes 2001 Supplement, section 
187.33  477A.07, subdivision 3, is amended to read: 
187.34     Subd. 3.  [CITY AID.] Each city's 2003 aid amount 
187.35  determined under subdivision 1 must be permanently added to its 
187.36  city aid base under section 477A.011, subdivision 36, and the 
188.1   maximum amount of total aid it may receive under section 
188.2   477A.013, subdivision 9, paragraph (b) or (c), is increased by 
188.3   the same amount for aid payable in 2003.  Each city's 2004 aid 
188.4   amount determined under subdivision 1 must be permanently added 
188.5   to its city aid base under section 477A.011, subdivision 36, and 
188.6   the maximum amount of total aid it may receive under section 
188.7   477A.013, subdivision 9, paragraph (b) or _(c), is increased by 
188.8   the same amount for aid payable in 2004. 
188.9      <b>[EFFECTIVE DATE.]</b> This section is effective for aids 
188.10  payable in calendar years 2003 and 2004. 
188.11     Sec. 30.  Laws 1993, chapter 375, article 5, section 42, is 
188.12  amended to read: 
188.13     Sec. 42. [REPORT TO LEGISLATURE.] 
188.14     By February March 1 of each year, the commissioner of 
188.15  revenue shall make a report to the legislature on the use of 
188.16  limited market value under section 273.13, subdivision 1a, and 
188.17  the valuation exclusion under section 273.13, subdivision 16.  
188.18  For the limited market value provision, the report shall include 
188.19  the total value excluded from taxation by type of property for 
188.20  each city and town.  For the valuation exclusion provision, the 
188.21  report shall include the total market value excluded from 
188.22  taxation for each city and town, as well as a breakdown of the 
188.23  excluded improvement amounts by age and value of the property 
188.24  being improved and the amount of the qualifying improvement.  
188.25  The county assessors shall provide the information necessary for 
188.26  the commissioner to compile the report in a manner prescribed by 
188.27  the commissioner. 
188.28     Sec. 31.  Laws 2001, First Special Session chapter 5, 
188.29  article 9, section 3, the effective date, is amended to read: 
188.30     <b>[EFFECTIVE DATE.]</b> This section is effective for tax years 
188.31  beginning after December 31, 2001, except that the amendment 
188.32  to clause clauses (3) is and (12) are effective for tax years 
188.33  beginning after December 31, 2000. 
188.34     Sec. 32.  [REPEALER.] 
188.35     (a) Minnesota Statutes 2000, sections 272.02, subdivision 
188.36  40; 290.01, subdivisions 19g and 32; and 295.44, are repealed 
189.1   effective the day following final enactment. 
189.2      (b) Minnesota Statutes 2000, section 290.0921, subdivision 
189.3   5, is repealed effective for taxable years beginning after 
189.4   December 31, 2001. 
189.5      (c) Minnesota Rules, parts 8130.1400; 8130.2100; 8130.2350; 
189.6   8130.2600; 8130.3000; 8130.3850; and 8130.5000, are repealed 
189.7   effective the day following final enactment. 
189.8                              ARTICLE 11 
189.9                              LOCAL LAWS 
189.10     Section 1.  [CITY OF MOORHEAD; TAX LEVY AUTHORIZED.] 
189.11     (a) Each year the city of Moorhead may impose a tax on all 
189.12  class 3a and class 3b property located in the city in an amount 
189.13  which the city determines is equal to the reduction in revenues 
189.14  from increment from all tax increment financing districts in the 
189.15  city resulting from the class rate changes and the elimination 
189.16  of the state-determined general education property levy under 
189.17  Laws 2001, First Special Session chapter 5.  The proceeds of 
189.18  this tax may only be used to pay preexisting obligations as 
189.19  defined in Minnesota Statutes, section 469.1763, subdivision 6, 
189.20  whether general obligations or payable wholly from tax 
189.21  increments.  The tax must be levied and collected in the same 
189.22  manner and as part of the property tax levied by the city and is 
189.23  subject to the same administrative, penalty, and enforcement 
189.24  provisions.  A tax imposed under this section is a special levy 
189.25  and is not subject to levy limitations under Minnesota Statutes, 
189.26  section 275.71. 
189.27     (b) This section expires December 31, 2005. 
189.28     <b>[EFFECTIVE DATE.]</b> This section is effective upon approval 
189.29  by and compliance with Minnesota Statutes, section 645.021, 
189.30  subdivision 3, by the governing body of the city of Moorhead. 
189.31     Sec. 2.  [ST. CLOUD AREA CITIES; TAXES AUTHORIZED.] 
189.32     Subdivision 1.  [SALES AND USE TAX.] (a) Notwithstanding 
189.33  Minnesota Statutes, section 477A.016, or any other provision of 
189.34  law, ordinance, or city charter, the following cities may, by 
189.35  ordinance, impose a sales and use tax of one-half of one percent 
189.36  for the purposes specified in subdivision 2: 
190.1      (1) the city of St. Cloud, pursuant to the approval of the 
190.2   city voters at the general election held on November 7, 2000; 
190.3      (2) the city of Sartell, pursuant to the approval of the 
190.4   city voters at an election held in November 1999; and 
190.5      (3) each of the cities of Sauk Rapids, Waite Park, St. 
190.6   Joseph, and St. Augusta, pursuant to the approval of the voters 
190.7   of that city at the next general election following the date of 
190.8   final enactment of this act, as provided for in subdivision 3. 
190.9      (b) The provisions of Minnesota Statutes, section 297A.99, 
190.10  govern the imposition, administration, collection, and 
190.11  enforcement of the taxes authorized under this subdivision. 
190.12     (c) The tax in Sartell must be used for the purposes listed 
190.13  in subdivision 2, notwithstanding other purposes listed in the 
190.14  referendum, and are not subject to the requirements of Minnesota 
190.15  Statutes, section 297A.99, subdivision 3.  
190.16     Subd. 2.  [USE OF REVENUES.] (a) Revenues received from the 
190.17  taxes authorized under subdivision 1 must be used for the cost 
190.18  of collecting and administering the taxes and to pay all or part 
190.19  of the capital or administrative costs of the acquisition, 
190.20  construction, and improvement of the main runway improvements to 
190.21  the St. Cloud Regional Airport, as provided for in the city of 
190.22  St. Cloud capital improvement program 2000 to 2005, adopted by 
190.23  the St. Cloud planning commission on July 14, 1999.  Authorized 
190.24  expenses include, but are not limited to, acquiring property, 
190.25  paying construction expenses related to the development of these 
190.26  facilities, and securing and paying debt service on bonds or 
190.27  other obligations issued to finance construction or improvement 
190.28  of the authorized facility. 
190.29     (b) If revenues collected from the taxes imposed under 
190.30  subdivision 1 are greater than the amount needed to meet 
190.31  obligations under paragraph (a) in any year, the surplus may be 
190.32  returned to the cities in a manner agreed upon by the 
190.33  participating cities under this section, to be used by the 
190.34  cities for projects of regional significance, limited to:  the 
190.35  acquisition and improvement of park land and open space; the 
190.36  purchase, renovation, and construction of public buildings and 
191.1   land primarily used for the arts, libraries, and community 
191.2   centers; major roadway improvements; and for debt service on 
191.3   bonds issued for these purposes.  Authorized expenses include, 
191.4   but are not limited to, acquiring property, paying construction 
191.5   expenses related to the development of these facilities, and 
191.6   securing and paying debt service on bonds or other obligations 
191.7   issued to finance construction or improvement of the authorized 
191.8   facility.  The distribution of surplus revenues raised by the 
191.9   tax must be determined by an applicable joint powers agreement. 
191.10  The revenues returned to each city may only be used to fund 
191.11  projects that have been approved by voters at the referendum 
191.12  authorizing the tax. 
191.13     (c) Pursuant to the approval of the St. Cloud voters at the 
191.14  general election held on November 7, 2000, the surplus returned 
191.15  to St. Cloud under paragraph (b) must be used for the following 
191.16  projects: 
191.17     (1) intersection improvements to the 25th Avenue and trunk 
191.18  highway No. 23, I-94 interchange at county road 75, 10th Street 
191.19  South improvements, the West Metro corridor improvements, and 
191.20  other regionally significant road projects; and 
191.21     (2) park and nature land purchase, trail development, and 
191.22  improvements and expansions of existing regional park 
191.23  facilities, as provided for in the city of St. Cloud capital 
191.24  improvement program 2000 to 2005, adopted by the St. Cloud 
191.25  planning commission on July 14, 1999. 
191.26     (d) Pursuant to approval of the Sartell voters at the 
191.27  election held in November 1999, the surplus returned to the city 
191.28  of Sartell under paragraph (b) must be used to fund 
191.29  construction, expansion, and improvements to a community center 
191.30  and for park land acquisition and improvement. 
191.31     Subd. 3.  [SEPARATE REFERENDA REQUIRED.] Notwithstanding 
191.32  Minnesota Statutes, section 297A.99, subdivision 3, each city 
191.33  listed in subdivision 1, clause (3), shall have a separate vote 
191.34  on each project that it proposes to fund with the surplus tax 
191.35  revenues it receives under subdivision 2, paragraph (b).  For 
191.36  these cities, the cost of each project to be funded by the taxes 
192.1   authorized in subdivision 1 must be listed.  Revenue may be used 
192.2   to repay debt for a project that the city has already funded if 
192.3   the project meets one of the authorized uses listed in 
192.4   subdivision 2, paragraph (b), and the referenda states the 
192.5   maximum amount of debt that will be repaid from the revenue.  
192.6   The referendum must state that approval of using the tax 
192.7   authorized in subdivision 1 for any project shall also indicate 
192.8   approval to share the revenues collected from the tax with the 
192.9   other cities in the area which have also passed a sales tax.  
192.10  The sharing must be done in a manner agreed upon by all affected 
192.11  cities under a joint powers agreement. 
192.12     Subd. 4.  [IMPOSITION AND TERMINATION OF TAX.] The tax 
192.13  authorized by each city under subdivision 1 shall be imposed 
192.14  beginning January 1, 2003, and shall expire December 31, 2005. 
192.15     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2002, 
192.16  with respect to any city listed in subdivision 1, upon 
192.17  compliance of the governing body of that city with Minnesota 
192.18  Statutes, section 645.021, subdivision 3. 
192.19                             ARTICLE 12 
192.20                           MISCELLANEOUS 
192.21     Section 1.  Minnesota Statutes 2000, section 16A.152, is 
192.22  amended by adding a subdivision to read:  
192.23     Subd. 1b.  [BUDGET RESERVE INCREASE.] On June 30, 2003, the 
192.24  commissioner of finance shall transfer $3,900,000 to the budget 
192.25  reserve account in the general fund.  On June 30, 2004, the 
192.26  commissioner of finance shall transfer $12,300,000 to the budget 
192.27  reserve account in the general fund.  On June 30, 2005, the 
192.28  commissioner of finance shall transfer $12,000,000 to the budget 
192.29  reserve account in the general fund.  The amounts necessary for 
192.30  this purpose are appropriated from the general fund. 
192.31     Sec. 2.  Minnesota Statutes 2000, section 40A.151, 
192.32  subdivision 1, is amended to read: 
192.33     Subdivision 1.  [ESTABLISHMENT.] The Minnesota conservation 
192.34  fund is established as an account in the state treasury.  Money 
192.35  from counties under section 40A.152 must be deposited in the 
192.36  state treasury and credited one-half to the Minnesota 
193.1   conservation fund account and one-half to the general fund. 
193.2      <b>[EFFECTIVE DATE.]</b> This section is effective for money from 
193.3   counties deposited in the state treasury after June 30, 2002. 
193.4      Sec. 3.  Minnesota Statutes 2000, section 40A.152, 
193.5   subdivision 1, is amended to read: 
193.6      Subdivision 1.  [FEE.] A county that is a metropolitan 
193.7   county under section 473.121, subdivision 4, has allowed 
193.8   exclusive agricultural zones to be created under this chapter, 
193.9   or has elected to become an agricultural land preservation pilot 
193.10  county, shall impose an additional fee of $5 per transaction on 
193.11  the recording or registration of a mortgage subject to the tax 
193.12  under section 287.05 and an additional $5 on the recording or 
193.13  registration of a deed subject to the tax under section 287.21.  
193.14  One-half of the fee must be deposited in a special conservation 
193.15  account to be created in the county general revenue fund and 
193.16  one-half must be transferred to the commissioner of revenue for 
193.17  deposit in the state treasury and credited to the Minnesota 
193.18  conservation fund pursuant to section 40A.151, subdivision 1. 
193.19     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2002, 
193.20  and thereafter. 
193.21     Sec. 4.  Minnesota Statutes 2000, section 40A.152, 
193.22  subdivision 3, is amended to read: 
193.23     Subd. 3.  [TRANSFER TO STATE FUND.] Money in the county 
193.24  conservation account that is not encumbered by the county within 
193.25  one year of deposit in the account must be transferred to the 
193.26  commissioner of revenue for deposit in the Minnesota 
193.27  conservation fund state treasury pursuant to section 40A.151, 
193.28  subdivision 1. 
193.29     Sec. 5.  Minnesota Statutes 2000, section 270B.01, 
193.30  subdivision 8, is amended to read: 
193.31     Subd. 8.  [MINNESOTA TAX LAWS.] For purposes of this 
193.32  chapter only, unless expressly stated otherwise, "Minnesota tax 
193.33  laws" means the taxes, refunds, and fees administered by or paid 
193.34  to the commissioner under chapters 115B (except taxes imposed 
193.35  under sections 115B.21 to 115B.24), 289A (except taxes imposed 
193.36  under sections 298.01, 298.015, and 298.24), 290, 290A, 
194.1   291, 295, 297A, and 297H and sections 295.50 to 295.59, or any 
194.2   similar Indian tribal tax administered by the commissioner 
194.3   pursuant to any tax agreement between the state and the Indian 
194.4   tribal government, and includes any laws for the assessment, 
194.5   collection, and enforcement of those taxes, refunds, and fees. 
194.6      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
194.7   following final enactment. 
194.8      Sec. 6.  Minnesota Statutes 2001 Supplement, section 
194.9   270B.02, subdivision 3, is amended to read: 
194.10     Subd. 3.  [CONFIDENTIAL DATA ON INDIVIDUALS; PROTECTED 
194.11  NONPUBLIC DATA.] (a) Except as provided in paragraph (b), the 
194.12  name or existence of an informer, informer letters, and other 
194.13  data, in whatever form, given to the department of revenue by a 
194.14  person, other than the data subject, who informs that a specific 
194.15  taxpayer person is not or may not be in compliance with tax 
194.16  laws, or nontax laws administered by the department of revenue, 
194.17  including laws other than those relating to property taxes not 
194.18  listed in section 270B.01, subdivision 8, are confidential data 
194.19  on individuals or protected nonpublic data as defined in section 
194.20  13.02, subdivisions 3 and 13. 
194.21     (b) Data under paragraph (a) may be disclosed with the 
194.22  consent of the informer or upon a written finding by a court 
194.23  that the information provided by the informer was false and that 
194.24  there is evidence that the information was provided in bad 
194.25  faith.  This subdivision does not alter disclosure 
194.26  responsibilities or obligations under the rules of criminal 
194.27  procedure. 
194.28     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
194.29  following final enactment. 
194.30     Sec. 7.  Minnesota Statutes 2000, section 270B.02, 
194.31  subdivision 4, is amended to read: 
194.32     Subd. 4.  [PUBLIC DATA.] Information required to be filed 
194.33  by exempt individuals, corporations, organizations, estates, and 
194.34  trusts under section 290.05, subdivisions 1 and 4, or that 
194.35  relates to exempt status under section 290.05, subdivision 2, is 
194.36  public data on individuals or public data not on individuals, as 
195.1   defined in section 13.02, subdivisions 14 and 15.  The 
195.2   commissioner may publish a list of organizations exempt from 
195.3   taxation under section 290.05, except that the name or address 
195.4   of any contributor to any organization that is or was exempt, or 
195.5   that has applied for tax exempt status, or any other information 
195.6   that could not be disclosed under section 6104 of the Internal 
195.7   Revenue Code of 1986, as amended through December 31, 1988, is 
195.8   classified as private data on individuals or nonpublic data as 
195.9   defined in section 13.02, subdivisions 9 and 12. 
195.10     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
195.11  following final enactment. 
195.12     Sec. 8.  Minnesota Statutes 2001 Supplement, section 
195.13  270B.08, subdivision 2, is amended to read: 
195.14     Subd. 2.  [REVOCATION.] When a taxpayer's sales tax permit 
195.15  has been revoked under section 297A.86, the commissioner may 
195.16  disclose data identifying the holder of the revoked permit and, 
195.17  stating the basis for the revocation, and stating whether the 
195.18  permit has been reinstated. 
195.19     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
195.20  following final enactment. 
195.21     Sec. 9.  Minnesota Statutes 2000, section 270B.14, 
195.22  subdivision 8, is amended to read: 
195.23     Subd. 8.  [EXCHANGE BETWEEN DEPARTMENTS OF LABOR AND 
195.24  INDUSTRY AND REVENUE.] The departments of labor and industry and 
195.25  revenue may exchange information as follows:  
195.26     (1) data used in determining whether a business is an 
195.27  employer or a contracting agent; 
195.28     (2) taxpayer identity information relating to employers and 
195.29  employees for purposes of supporting tax administration and 
195.30  chapter chapters 176, 177, and 181; and 
195.31     (3) data to the extent provided in and for the purpose set 
195.32  out in section 176.181, subdivision 8. 
195.33     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
195.34  following final enactment. 
195.35     Sec. 10.  Minnesota Statutes 2000, section 289A.10, 
195.36  subdivision 1, is amended to read: 
196.1      Subdivision 1.  [RETURN REQUIRED.] In the case of a 
196.2   decedent who has an interest in property with a situs in 
196.3   Minnesota, the personal representative must submit a Minnesota 
196.4   estate tax return to the commissioner, on a form prescribed by 
196.5   the commissioner, in instances in which a federal estate tax 
196.6   return is required to be filed if the federal gross estate 
196.7   exceeds $700,000 for estates of decedents dying after December 
196.8   31, 2001, and before January 1, 2004; $850,000 for estates of 
196.9   decedents dying after December 31, 2003, and before January 1, 
196.10  2005; $950,000 for estates of decedents dying after December 31, 
196.11  2004, and before January 1, 2006; and $1,000,000 for estates of 
196.12  decedents dying after December 31, 2005. 
196.13     The return must contain a computation of the Minnesota 
196.14  estate tax due.  The return must be signed by the personal 
196.15  representative. 
196.16     <b>[EFFECTIVE DATE.]</b> This section is effective for estates of 
196.17  decedents dying after December 31, 2001. 
196.18     Sec. 11.  Minnesota Statutes 2001 Supplement, section 
196.19  291.005, subdivision 1, is amended to read: 
196.20     Subdivision 1.  Unless the context otherwise clearly 
196.21  requires, the following terms used in this chapter shall have 
196.22  the following meanings: 
196.23     (1) "Federal gross estate" means the gross estate of a 
196.24  decedent as valued and otherwise determined for federal estate 
196.25  tax purposes by federal taxing authorities pursuant to the 
196.26  provisions of the Internal Revenue Code. 
196.27     (2) "Minnesota gross estate" means the federal gross estate 
196.28  of a decedent after (a) excluding therefrom any property 
196.29  included therein which has its situs outside Minnesota and 
196.30  pensions exempt from tax under this chapter pursuant to section 
196.31  352.15, subdivision 1; 353.15, subdivision 1; 354.10, 
196.32  subdivision 1; 354B.30; or 354C.165, and (b) including therein 
196.33  any property omitted from the federal gross estate which is 
196.34  includable therein, has its situs in Minnesota, and was not 
196.35  disclosed to federal taxing authorities.  
196.36     (3) "Personal representative" means the executor, 
197.1   administrator or other person appointed by the court to 
197.2   administer and dispose of the property of the decedent.  If 
197.3   there is no executor, administrator or other person appointed, 
197.4   qualified, and acting within this state, then any person in 
197.5   actual or constructive possession of any property having a situs 
197.6   in this state which is included in the federal gross estate of 
197.7   the decedent shall be deemed to be a personal representative to 
197.8   the extent of the property and the Minnesota estate tax due with 
197.9   respect to the property. 
197.10     (4) "Resident decedent" means an individual whose domicile 
197.11  at the time of death was in Minnesota. 
197.12     (5) "Nonresident decedent" means an individual whose 
197.13  domicile at the time of death was not in Minnesota. 
197.14     (6) "Situs of property" means, with respect to real 
197.15  property, the state or country in which it is located; with 
197.16  respect to tangible personal property, the state or country in 
197.17  which it was normally kept or located at the time of the 
197.18  decedent's death; and with respect to intangible personal 
197.19  property, the state or country in which the decedent was 
197.20  domiciled at death. 
197.21     (7) "Commissioner" means the commissioner of revenue or any 
197.22  person to whom the commissioner has delegated functions under 
197.23  this chapter. 
197.24     (8) "Internal Revenue Code" means the United States 
197.25  Internal Revenue Code of 1986, as amended through December 31, 
197.26  2000. 
197.27     <b>[EFFECTIVE DATE.]</b> This section is effective for estates of 
197.28  decedents dying after December 31, 2001. 
197.29     Sec. 12.  Minnesota Statutes 2000, section 291.03, 
197.30  subdivision 1, is amended to read: 
197.31     Subdivision 1.  [TAX AMOUNT.] The tax imposed shall be an 
197.32  amount equal to the proportion of the maximum credit 
197.33  allowable computed under section 2011 of the Internal Revenue 
197.34  Code for state death taxes as the Minnesota gross estate bears 
197.35  to the value of the federal gross estate.  For a resident 
197.36  decedent, the tax shall be the maximum credit allowable computed 
198.1   under section 2011 of the Internal Revenue Code reduced by the 
198.2   amount of the death tax paid the other state and credited 
198.3   against the federal estate tax if this results in a larger 
198.4   amount of tax than the proportionate amount of the credit.  The 
198.5   tax determined under this paragraph shall not be greater than 
198.6   the maximum credit allowable under section 2011 of the Internal 
198.7   Revenue Code federal estate tax computed under section 2001 of 
198.8   the Internal Revenue Code after the allowance of the federal 
198.9   credits allowed under sections 2010, 2012, 2013, and 2015 of the 
198.10  Internal Revenue Code of 1986, as amended through December 31, 
198.11  2000.  
198.12     <b>[EFFECTIVE DATE.]</b> This section is effective for estates of 
198.13  decedents dying after December 31, 2001. 
198.14     Sec. 13.  Minnesota Statutes 2000, section 297H.06, 
198.15  subdivision 2, is amended to read: 
198.16     Subd. 2.  [MATERIALS.] The tax is not imposed upon charges 
198.17  to generators of mixed municipal solid waste or upon the volume 
198.18  of non-mixed-municipal solid waste for waste management services 
198.19  to manage the following materials: 
198.20     (1) mixed municipal solid waste and non-mixed-municipal 
198.21  solid waste generated outside of Minnesota; 
198.22     (2) recyclable materials that are separated for recycling 
198.23  by the generator, collected separately from other waste, and 
198.24  recycled, to the extent the price of the service for handling 
198.25  recyclable material is separately itemized; 
198.26     (3) recyclable non-mixed-municipal solid waste that is 
198.27  separated for recycling by the generator, collected separately 
198.28  from other waste, delivered to a waste facility for the purpose 
198.29  of recycling, and recycled; 
198.30     (4) industrial waste, when it is transported to a facility 
198.31  owned and operated by the same person that generated it; 
198.32     (5) mixed municipal solid waste from a recycling facility 
198.33  that separates or processes recyclable materials and reduces the 
198.34  volume of the waste by at least 85 percent, provided that the 
198.35  exempted waste is managed separately from other waste; 
198.36     (6) recyclable materials that are separated from mixed 
199.1   municipal solid waste by the generator, collected and delivered 
199.2   to a waste facility that recycles at least 85 percent of its 
199.3   waste, and are collected with mixed municipal solid waste that 
199.4   is segregated in leakproof bags, provided that the mixed 
199.5   municipal solid waste does not exceed five percent of the total 
199.6   weight of the materials delivered to the facility and is 
199.7   ultimately delivered to a waste facility identified as a 
199.8   preferred waste management facility in county solid waste plans 
199.9   under section 115A.46; 
199.10     (7) through December 31, 2002, source-separated compostable 
199.11  waste, if the waste is delivered to a facility exempted as 
199.12  described in this clause.  To initially qualify for an 
199.13  exemption, a facility must apply for an exemption in its 
199.14  application for a new or amended solid waste permit to the 
199.15  pollution control agency.  The first time a facility applies to 
199.16  the agency it must certify in its application that it will 
199.17  comply with the criteria in items (i) to (v) and the 
199.18  commissioner of the agency shall so certify to the commissioner 
199.19  of revenue who must grant the exemption.  For each subsequent 
199.20  calendar year, by October 1 of the preceding year, the facility 
199.21  must apply to the agency for certification to renew its 
199.22  exemption for the following year.  The application must be filed 
199.23  according to the procedures of, and contain the information 
199.24  required by, the agency.  The commissioner of revenue shall 
199.25  grant the exemption if the commissioner of the pollution control 
199.26  agency finds and certifies to the commissioner of revenue that 
199.27  based on an evaluation of the composition of incoming waste and 
199.28  residuals and the quality and use of the product: 
199.29     (i) generators separate materials at the source; 
199.30     (ii) the separation is performed in a manner appropriate to 
199.31  the technology specific to the facility that: 
199.32     (A) maximizes the quality of the product; 
199.33     (B) minimizes the toxicity and quantity of residuals; and 
199.34     (C) provides an opportunity for significant improvement in 
199.35  the environmental efficiency of the operation; 
199.36     (iii) the operator of the facility educates generators, in 
200.1   coordination with each county using the facility, about 
200.2   separating the waste to maximize the quality of the waste stream 
200.3   for technology specific to the facility; 
200.4      (iv) process residuals do not exceed 15 percent of the 
200.5   weight of the total material delivered to the facility; and 
200.6      (v) the final product is accepted for use; 
200.7      (8) waste and waste by-products for which the tax has been 
200.8   paid; and 
200.9      (9) daily cover for landfills that has been approved in 
200.10  writing by the Minnesota pollution control agency. 
200.11     Sec. 14.  Minnesota Statutes 2001 Supplement, section 
200.12  349.12, subdivision 25, is amended to read: 
200.13     Subd. 25.  [LAWFUL PURPOSE.] (a) "Lawful purpose" means one 
200.14  or more of the following:  
200.15     (1) any expenditure by or contribution to a 501(c)(3) or 
200.16  festival organization, as defined in subdivision 15a, provided 
200.17  that the organization and expenditure or contribution are in 
200.18  conformity with standards prescribed by the board under section 
200.19  349.154, which standards must apply to both types of 
200.20  organizations in the same manner and to the same extent; 
200.21     (2) a contribution to an individual or family suffering 
200.22  from poverty, homelessness, or physical or mental disability, 
200.23  which is used to relieve the effects of that poverty, 
200.24  homelessness, or disability; 
200.25     (3) a contribution to an individual for treatment for 
200.26  delayed posttraumatic stress syndrome or a contribution to a 
200.27  program recognized by the Minnesota department of human services 
200.28  for the education, prevention, or treatment of compulsive 
200.29  gambling; 
200.30     (4) a contribution to or expenditure on a public or private 
200.31  nonprofit educational institution registered with or accredited 
200.32  by this state or any other state; 
200.33     (5) a contribution to a scholarship fund for defraying the 
200.34  cost of education to individuals where the funds are awarded 
200.35  through an open and fair selection process; 
200.36     (6) activities by an organization or a government entity 
201.1   which recognize humanitarian or military service to the United 
201.2   States, the state of Minnesota, or a community, subject to rules 
201.3   of the board, provided that the rules must not include mileage 
201.4   reimbursements in the computation of the per occasion 
201.5   reimbursement limit and must impose no aggregate annual limit on 
201.6   the amount of reasonable and necessary expenditures made to 
201.7   support: 
201.8      (i) members of a military marching or color guard unit for 
201.9   activities conducted within the state; 
201.10     (ii) members of an organization solely for services 
201.11  performed by the members at funeral services; or 
201.12     (iii) members of military marching, color guard, or honor 
201.13  guard units may be reimbursed for participating in color guard, 
201.14  honor guard, or marching unit events within the state or states 
201.15  contiguous to Minnesota at a per participant rate of up to $35 
201.16  per occasion; 
201.17     (7) recreational, community, and athletic facilities and 
201.18  activities intended primarily for persons under age 21, provided 
201.19  that such facilities and activities do not discriminate on the 
201.20  basis of gender and the organization complies with section 
201.21  349.154; 
201.22     (8) payment of local taxes authorized under this chapter, 
201.23  taxes imposed by the United States on receipts from lawful 
201.24  gambling, the taxes imposed by section 297E.02, subdivisions 1, 
201.25  4, 5, and 6, and the tax imposed on unrelated business income by 
201.26  section 290.05, subdivision 3; 
201.27     (9) payment of real estate taxes and assessments on 
201.28  permitted gambling premises wholly owned by the licensed 
201.29  organization paying the taxes, or wholly leased by a licensed 
201.30  veterans organization under a national charter organized under 
201.31  section 501(c)(19) of the Internal Revenue Code, not to exceed: 
201.32     (i) for premises used for bingo, the amount that an 
201.33  organization may expend under board rules on rent for bingo; and 
201.34     (ii) $35,000 per year for premises used for other forms of 
201.35  lawful gambling; 
201.36     (10) a contribution to the United States, this state or any 
202.1   of its political subdivisions, or any agency or instrumentality 
202.2   thereof other than a direct contribution to a law enforcement or 
202.3   prosecutorial agency; 
202.4      (11) a contribution to or expenditure by a nonprofit 
202.5   organization which is a church or body of communicants gathered 
202.6   in common membership for mutual support and edification in 
202.7   piety, worship, or religious observances; 
202.8      (12) payment of the reasonable costs of an audit required 
202.9   in section 297E.06, subdivision 4, provided the annual audit is 
202.10  filed in a timely manner with the department of revenue; 
202.11     (13) a contribution to or expenditure on a wildlife 
202.12  management project that benefits the public at-large, provided 
202.13  that the state agency with authority over that wildlife 
202.14  management project approves the project before the contribution 
202.15  or expenditure is made; 
202.16     (14) expenditures, approved by the commissioner of natural 
202.17  resources, by an organization for grooming and maintaining 
202.18  snowmobile trails and all-terrain vehicle trails that are (1) 
202.19  grant-in-aid trails established under section 85.019, or (2) 
202.20  other trails open to public use, including purchase or lease of 
202.21  equipment for this purpose; or 
202.22     (15) conducting nutritional programs, food shelves, and 
202.23  congregate dining programs primarily for persons who are age 62 
202.24  or older or disabled; or 
202.25     (16) a contribution to a community arts organization, or an 
202.26  expenditure to sponsor arts programs in the community, including 
202.27  but not limited to visual, literary, performing, or musical arts.
202.28     (b) Notwithstanding paragraph (a), "lawful purpose" does 
202.29  not include: 
202.30     (1) any expenditure made or incurred for the purpose of 
202.31  influencing the nomination or election of a candidate for public 
202.32  office or for the purpose of promoting or defeating a ballot 
202.33  question; 
202.34     (2) any activity intended to influence an election or a 
202.35  governmental decision-making process; 
202.36     (3) the erection, acquisition, improvement, expansion, 
203.1   repair, or maintenance of real property or capital assets owned 
203.2   or leased by an organization, unless the board has first 
203.3   specifically authorized the expenditures after finding that (i) 
203.4   the real property or capital assets will be used exclusively for 
203.5   one or more of the purposes in paragraph (a); (ii) with respect 
203.6   to expenditures for repair or maintenance only, that the 
203.7   property is or will be used extensively as a meeting place or 
203.8   event location by other nonprofit organizations or community or 
203.9   service groups and that no rental fee is charged for the use; 
203.10  (iii) with respect to expenditures, including a mortgage payment 
203.11  or other debt service payment, for erection or acquisition only, 
203.12  that the erection or acquisition is necessary to replace with a 
203.13  comparable building, a building owned by the organization and 
203.14  destroyed or made uninhabitable by fire or natural disaster, 
203.15  provided that the expenditure may be only for that part of the 
203.16  replacement cost not reimbursed by insurance; (iv) with respect 
203.17  to expenditures, including a mortgage payment or other debt 
203.18  service payment, for erection or acquisition only, that the 
203.19  erection or acquisition is necessary to replace with a 
203.20  comparable building a building owned by the organization that 
203.21  was acquired from the organization by eminent domain or sold by 
203.22  the organization to a purchaser that the organization reasonably 
203.23  believed would otherwise have acquired the building by eminent 
203.24  domain, provided that the expenditure may be only for that part 
203.25  of the replacement cost that exceeds the compensation received 
203.26  by the organization for the building being replaced; or (v) with 
203.27  respect to an expenditure to bring an existing building into 
203.28  compliance with the Americans with Disabilities Act under item 
203.29  (ii), an organization has the option to apply the amount of the 
203.30  board-approved expenditure to the erection or acquisition of a 
203.31  replacement building that is in compliance with the Americans 
203.32  with Disabilities Act; 
203.33     (4) an expenditure by an organization which is a 
203.34  contribution to a parent organization, foundation, or affiliate 
203.35  of the contributing organization, if the parent organization, 
203.36  foundation, or affiliate has provided to the contributing 
204.1   organization within one year of the contribution any money, 
204.2   grants, property, or other thing of value; 
204.3      (5) a contribution by a licensed organization to another 
204.4   licensed organization unless the board has specifically 
204.5   authorized the contribution.  The board must authorize such a 
204.6   contribution when requested to do so by the contributing 
204.7   organization unless it makes an affirmative finding that the 
204.8   contribution will not be used by the recipient organization for 
204.9   one or more of the purposes in paragraph (a); or 
204.10     (6) a contribution to a statutory or home rule charter 
204.11  city, county, or town by a licensed organization with the 
204.12  knowledge that the governmental unit intends to use the 
204.13  contribution for a pension or retirement fund. 
204.14     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
204.15  following final enactment. 
204.16     Sec. 15. Laws 2001, First Special Session chapter 6, 
204.17  article 5, section 12, is amended to read: 
204.18     Sec. 12.  [SCHOOL DISTRICT FORMULA ADJUSTMENTS.] 
204.19     Subdivision 1.  [TAX RATE ADJUSTMENT.] The commissioner of 
204.20  children, families, and learning must adjust each tax rate 
204.21  established under Minnesota Statutes, chapters 120A to 127A, by 
204.22  multiplying the rate by the ratio of the statewide net tax 
204.23  capacity as calculated using the class rates in effect for 
204.24  assessment year 2000 to the statewide total net tax capacity as 
204.25  calculated using the class rates in effect for assessment year 
204.26  2001, in both cases using taxable market values for assessment 
204.27  year 2000. 
204.28     Subd. 2.  [EQUALIZING FACTORS.] The commissioner of 
204.29  children, families, and learning must adjust each equalizing 
204.30  factor based upon adjusted net tax capacity per actual pupil 
204.31  unit established under Minnesota Statutes, chapters 120A to 
204.32  127A, by multiplying the equalizing factor by the ratio of the 
204.33  statewide net tax capacity as calculated using the class rates 
204.34  in effect for assessment year 2001 to the statewide total net 
204.35  tax capacity as calculated using the class rates in effect for 
204.36  assessment year 2000, in both cases using taxable market values 
205.1   for assessment year 2000. 
205.2      Subd. 3.  [DEBT SERVICE TAX RATES AND EQUALIZING FACTORS.] 
205.3   The provisions in subdivisions 1 and 2 do not apply to the 
205.4   equalizing factors and tax rates of the debt service 
205.5   equalization aid program under Minnesota Statutes, section 
205.6   123B.53. 
205.7      Subd. 4.  [SCHOOL DISTRICT BONDS.] The commissioner of 
205.8   children, families, and learning must adjust the net debt limit 
205.9   percentage for special school district No. 1, Minneapolis, based 
205.10  upon net tax capacity established under Minnesota Statutes, 
205.11  section 128D.11, subdivision 8, by multiplying the net debt 
205.12  limit percentage by the ratio of the district's net tax capacity 
205.13  as calculated using the class rates in effect for assessment 
205.14  year 2000 to the district's total net tax capacity as calculated 
205.15  using the class rates in effect for assessment year 2001, in 
205.16  both cases using taxable market values for assessment year 2000. 
205.17     <b>[EFFECTIVE DATE.]</b> This section is effective retroactively 
205.18  for bonds issued after July 1, 2001. 
205.19     Sec. 16.  [CITY OF THIEF RIVER FALLS; NONPROFIT 
205.20  CORPORATION.] 
205.21     Subdivision 1.  [NONPROFIT CORPORATION MAY BE ESTABLISHED.] 
205.22  The city of Thief River Falls may incorporate or authorize the 
205.23  incorporation of a nonprofit corporation to operate a community 
205.24  or regional center in the city.  
205.25     Subd. 2.  [BOARD OF DIRECTORS.] The corporation must be 
205.26  governed by a board of five directors.  The directors must be 
205.27  named by the Thief River Falls city council.  No more than three 
205.28  of the directors may be persons currently serving on the Thief 
205.29  River Falls city council.  Board members must not be compensated 
205.30  for their services but may be reimbursed for reasonable expenses 
205.31  incurred in connection with their duties as board members.  
205.32     Subd. 3.  [ARTICLES AND BYLAWS.] The entity must be 
205.33  incorporated under Minnesota Statutes, chapter 317A, and 
205.34  otherwise must comply with Minnesota Statutes, chapter 317A, 
205.35  except to the extent Minnesota Statutes, chapter 317A, is 
205.36  inconsistent with this section.  
206.1      Subd. 4.  [EMPLOYEES.] Persons employed by the nonprofit 
206.2   corporation are not public employees and must not participate in 
206.3   retirement, deferred compensation, insurance, or other plans 
206.4   that apply to public employees generally.  
206.5      Subd. 5.  [STATUTORY COMPLIANCE.] The nonprofit corporation 
206.6   must comply with Minnesota Statutes, section 465.719, 
206.7   subdivisions 9, 10, 11, 12, 13, and 14. 
206.8      Sec. 17.  [APPROPRIATION.] 
206.9      (a) $585,000 in fiscal year 2002 and $7,015,000 in fiscal 
206.10  year 2003 are appropriated to the commissioner of revenue from 
206.11  the general fund for tax compliance activities, including 
206.12  identification and collection of tax liabilities from 
206.13  individuals and businesses that currently do not pay all taxes 
206.14  owed, and audit and collection activity in the income tax, sales 
206.15  tax, lawful gambling, insurance, and corporate areas.  The base 
206.16  funding for these activities in fiscal years 2004 and 2005 is 
206.17  increased by $4,750,000 each year. 
206.18     (b) The commissioner must include these tax compliance 
206.19  activities in the report required by Laws 2001, First Special 
206.20  Session chapter 10, article 1, section 16, subdivision 2, 
206.21  paragraph (c). 
206.22     (c) Laws 2002, chapter 220, article 10, section 38, does 
206.23  not apply to the positions necessary to carry out the compliance 
206.24  activities identified in this section. 
206.25     (d) If the legislative auditor determines that: 
206.26     (1) actual revenue collections generated from tax 
206.27  compliance activities funded by Laws 2001, First Special Session 
206.28  chapter 10, article 1, section 16, subdivision 2, paragraphs (a) 
206.29  and (b), will not generate at least $52,000,000 in additional 
206.30  general fund revenue for the biennium ending June 30, 2003; or 
206.31     (2) actual revenue collections generated from new tax 
206.32  compliance activities funded by the appropriation in this 
206.33  section will not generate at least $7,600,000 in additional 
206.34  general fund revenue for the biennium ending June 30, 2003; 
206.35  then the commissioner of finance must cancel from the budget 
206.36  reserve account to the general fund the difference between the 
207.1   $52,000,000 or the $7,600,000 and the actual additional general 
207.2   fund revenue.  The legislative auditor's determination under 
207.3   this paragraph must be made in the February 1, 2003, report to 
207.4   the legislature required by Laws 2001, First Special Session 
207.5   chapter 10, article 1, section 16. 
207.6      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
207.7   following final enactment. 
207.8      Sec. 18.  [REPEALER.] 
207.9      Minnesota Statutes 2000, section 291.03, subdivision 2, is 
207.10  repealed effective for estates of decedents dying after December 
207.11  31, 2001.