Relating to the operation and financing of state and local government, providing for tax reform ARTICLE 1 INDIVIDUAL INCOME TAX REFORM AND RELIEF Limiting the application of the income tax subtraction for certain educational expenses and eliminating the subtraction for the amount of unrecovered accelerated cost recovery system (ACRS) deductions; reducing the income tax rates in stages; modifying the computation formula for part year residents; increasing the working family credit and modifying the education and marriage penalty credits; reducing the alternative minimum tax rate and allowing and providing for a credit in certain future tax years; reducing the employment, horse racing and lottery prize withholding tax rates; repealing the income tax credit for property taxes paid on seasonal residential recreational property (cabins) and the AMT after a certain date ARTICLE 2 FEDERAL UPDATE Updating certain income tax, property tax refund and estate tax provisions to federal income tax changes under the internal revenue code (IRC), the consolidated appropriation act of 2001 and the installment tax correction and FSC repeal and extraterritorial income exclusion acts of 2000 ARTICLE 3 CORPORATE FRANCHISE TAX REFORM Eliminating the additions to corporate federal taxable income for certain special, charitable contribution, percentage depletion and amortization deductions, for certain dividends from foreign operating corporations and for certain environmental taxes, eliminating or modifying certain subtractions; exempting insurance companies with a premium tax liability from the franchise tax; reducing the corporate franchise tax rate; modifying the definition of base amount for research activities credit purposes and extending the credit to certain initial research expenses; modifying the AMT carryover credit; eliminating the inclusion of certain net income and apportionment factors of foreign operating corporations in the net income or apportionment factors of a unitary business; modifying the net income apportionment formulas for corporations and financial institutions; sunsetting the occupation tax AMT credits; repealing the job training program credit, the corporate AMT, the remaining corporate deductions, the separate membership requirements for city substantial residential development districts and the income tax credit for development outside border city development zones ARTICLE 4 PROPERTY TAX REFORM Defining certain terms relating to assessed value for property tax classification and education funding purposes; requiring and providing for certain school district levy adjustments by the commissioner of children, families and learning in consultation with the commissioner of revenue; reducing the general education tax rate to zero and modifying the general education aid formula for full state funding purposes; modifying the referendum equalization revenue and levy formulas and certain referendum notice and ballot content requirements, requiring a statement of the mill rates and eliminating commercial industrial property from referendum mill rate calculations; changing the levy basis from market value to residential assessed value and requiring commissioner of revenue determination of aggregate equalized assessed value in lieu of net tax capacity within each school district; expanding the definition of refund under the revenue recapture act to include sustainable forest tax refunds; modifying the property tax exemption for institutions of public charity and clarifying the exemption for personal property used for pollution control; authorizing the commissioner to grant approval of county assessor appointments on a probationary basis; extending the time limit for county board filling of county assessor vacancies; requiring county assessors to require the attendance of licensed assessors working in the county at instructional meetings; specifying certain training and education requirements for property tax personnel; limiting property tax assessments for agricultural, residential or noncommercial seasonal recreational residential property in certain years; modifying certain real property valuation notice requirements; expanding the first tier of and reducing the property tax classification rates for residential and agricultural homestead property; creating tiers and reducing the classification rates for commercial temporary and seasonal residential recreational property; reducing the classification rates for nonhomestead agricultural property, noncommercial seasonal residential recreational property and certain qualifying low income rental housing and mining property; consolidating, expanding the first tier of and reducing the property tax classification rates for commercial and industrial and certain apartment property; requiring and providing for certain commissioner inflation adjustments; providing for market value homestead credits, specifying certain duties of county auditors and certain local taxing jurisdiction reimbursement responsibilities of the commissioners of revenue and children, families and learning; requiring and providing for permanent homestead and agricultural credit aid reductions to counties and eliminating HACA payments to cities, towns and school and special taxing districts; changing boards of review or equalization to boards of appeal and equalization and eliminating certain noncommercial seasonal residential recreational property countywide informational meetings requirements; requiring the commissioner of revenue to prescribe the factors and methodology for use by county auditors in converting net tax capacity rate limits to mill rate limits; providing for a state tax levy on certain property; modifying certain proposed property tax notice (truth in taxation) and property tax statement content and public hearing requirements and tax rate computation provisions; authorizing and providing for cities to impose a transportation utility fee, specifying certain master plan preparation and adoption requirements; expanding certain county auditor tax list preparation requirements; excluding the general education tax rate from the local tax rate for school district levy apportionment determination purposes; eliminating the authority of the commissioner to convey certain tax-forfeited lands held in trust; providing for the apportionment of tax-forfeited land sale proceeds relating to unpaid state tax levies; modifying the property tax refund schedules for homeowners and renters; enacting the "Sustainable Forest Tax Refund Act" to encourage private forest landowner commitments to sustainable forest management; extending the provision allowing the pooling of tax increments for deficits, excluding state levies from the original local tax rate and increasing the deduction for certain enforcement costs; authorizing and providing for bond payment levies by school districts with certain adopted property tax abatement resolutions; modifying the metropolitan council transit tax levy limit; modifying the date for determination of population, providing population sprawl and density factors for certain cities, defining tax capacity and city aid base and modifying the definition of city revenue need for local government aid purposes; modifying the LGA formulas for towns and cities and the December payment date; increasing county family preservation aid; requiring and providing for temporary commissioner grants to local government units for deficits in TIF districts due to changes in classification rates and the elimination of the state determined general education property tax levy; specifying certain phrase replacement instructions to the revisor of statutes; repealing the general education tax rate, the expiration of school district referendum levy authority, the personal property tax on transit zone properties; the education homestead and agricultural credits, certain tax rate increase authorization requirements, attached machinery aid, the state TIF aid offset,. certain city LGA definitions and the additional appropriation, the definition of constant spending levy amount for proposed property tax notice purposes, certain tax-forfeited land reversion provisions and the Minnesota tree growth tax law ARTICLE 5 SALES AND USE TAX REFORM Eliminating the accelerated June sales tax payment liability of retailers; providing a direct sales tax exemption for capital equipment; modifying the definition of retail sale relating to certain resales; eliminating the tax on tangible personal property awarded as prizes or used in the furnishing of taxable services; eliminating the use tax on printed materials used in nontaxable advertising; clarifying the sales tax on delivery charges; expanding the definitions of tangible personal property, farm machinery and taxable services for sales tax purposes; reducing the general sales tax rate; providing certain sourcing rules for seller sales tax payment, collection and remittance obligation determination purposes; modifying or clarifying certain sales tax exemptions; expanding business exemptions to motor vehicles used in interstate transportation and railroad rolling stock and the sales tax exemptions for local government units and nonprofit groups; sunsetting the sales tax exemptions for materials used in the construction of certain facilities; clarifying the duty of retailers relating to exemption certificates; providing for the application of the use tax credit for taxes paid in other states; eliminating the requirement for the commissioner of revenue to issue aircraft sales tax payment certificates, modifying the definition of airflight equipment for exemption purposes and authorizing the commissioner to enter into an agreement with the commissioner of transportation (DOT) for collection of the sales tax on aircraft; modifying certain exemptions from the sales tax on motor vehicles; providing a transitional provision relating to the taxation of services; appropriating money to the commissioner of revenue for administration purposes; repealing certain general, business and agricultural sales tax exemptions and the rental motor vehicle fee ARTICLE 6 SPECIAL TAXES REFORM Reducing the mortgage registry and deed tax rates; changing the lawful gambling tax to a tax on bingo and reducing the rate; modifying the combined receipts tax; changing the estimated insurance premium tax installments payment requirement to a quarterly basis; repealing the bottle tax and the separate insurance premium tax equivalent payment requirement for automobile risk self insurers ARTICLE 7 PETROLEUM TAX REFORM Modifying the imposition of the petroleum inspection fee; reducing the gasoline tax deduction for evaporation and loss and eliminating the credit or refund for gasoline stored in on-farm bulk storage tanks; appropriating money to the commissioner of revenue for systems modifications associated with petroleum tax reform ARTICLE 8 MINERALS TAX REFORM Modifying the occupation and iron ore concentrates tax rates and certain factors for taxable income determination purposes; providing for the distribution of taconite tax proceeds to school districts by the commissioner of children, families and learning; increasing the allocation of the proceeds to counties and eliminating the deduction from the allocation to St. Louis county ARTICLE 9 MINNESOTACARE TAX REFORM Establishing a reserve within the health care access fund to protect access to publicly funded basic health care services; reducing the hospital and health care providers gross earnings (MinnesotaCare) tax rate and eliminating the tax on wholesale drug distributors; requiring the crediting of a certain percentage of the tax on cigarettes and tobacco products to the health care access fund; eliminating the insurance premium tax on health maintenance organizations (HMO), nonprofit health service plan corporations and community integrated service networks (CISN); repealing the federal contingency reserve in the health care access fund ARTICLE 10 MOTOR VEHICLE REGISTRATION TAX REFORM Reducing the motor vehicle registration tax on passenger automobiles; modifying the allocation of motor vehicle sales tax revenues, gradually increasing the percentage to be deposited in the highway user tax distribution fund; eliminating the fiscal year 2002 appropriation from the general fund to the highway user tax distribution fund due to the reduction in the motor vehicle registration tax ARTICLE 11 TAX POLICY PROVISIONS Requiring proof of sales tax payment for initial registration of all-terrain vehicles (ATV); authorizing the commissioner of revenue to enter into agreements with federally recognized Indian tribes relating to fees imposed on on-reservation activities for refund or sharing of the fees and heads of governmental entities administering programs funded by fees administered by the commissioner to sign agreements with the commissioner, appropriating money to the commissioner from the fees for the payments; authorizing and providing for the commissioner to publish lists of delinquent taxpayers, requiring advance notice to the taxpayers for payment agreement purposes and removal from the lists under certain conditions; providing for uniformity among certain delinquent tax collection provisions; expanding corporate tax delinquency notice requirements; modifying the mortgage registry or deed tax overpayment refund procedure; providing for requests for refund of contributions to political parties and candidates through the income tax via the Internet or other electronic means; extending the time period for the effect of commissioner notices to employers of taxpayer delinquencies for income withholding purposes; defining gross rent for nursing home or intermediate care facility (ICF MR) residents for property tax refund purposes; modifying the application of property tax refunds to delinquent tax liabilities; excluding adult day care centers from the definition of health care provider for MinnesotaCare gross earnings tax liability purposes; modifying the definition of storage for sales and use tax purposes; authorizing commissioner cancellation of erroneously issued sales tax permits and revocation of permits issued to cigarette or tobacco products retailers for failure to comply with certain rules; clarifying the motor vehicle sales tax exemption for nonresidents; imposing a use tax on the sales price of mixed municipal solid waste management services; requiring county, city or town licensing authorities to provide the commissioner with certain information relating to cigarette or tobacco product retail licensees (ja)