SF 3000

Introduction - 82nd Legislature (2001 - 2002)

Posted on 12/15/2009 12:00 a.m.

  1.1                          A bill for an act 
  1.2             relating to taxation; providing for income tax 
  1.3             allocation of certain income; eliminating income tax 
  1.4             reciprocity with Wisconsin; changing minimum franchise 
  1.5             tax fees; repealing the income and franchise tax 
  1.6             apportionment formula for certain mail order 
  1.7             businesses; changing computation of the estate tax; 
  1.8             increasing gasoline and special fuel taxes and 
  1.9             providing for annual adjustment of tax rates; imposing 
  1.10            the sales and use tax on certain services; changing 
  1.11            certain sales and use tax exemptions relating to 
  1.12            meals, publications, and school districts; repealing 
  1.13            the sales and use tax exemption for certain 
  1.14            long-distance telephone services; changing certain aid 
  1.15            payment dates; making local government aid and levy 
  1.16            adjustments; providing for allocation of motor vehicle 
  1.17            sales tax revenues and certain mortgage registration 
  1.18            fees; increasing cigarette and tobacco product tax 
  1.19            rates; changing certain appropriations for tax 
  1.20            increment financing grants; repealing local government 
  1.21            aid reform account; providing for transfer of funds 
  1.22            into budget reserve account; amending Minnesota 
  1.23            Statutes 2000, sections 40A.151, subdivision 1; 
  1.24            40A.152, subdivisions 1, 3; 136A.08, subdivision 3; 
  1.25            273.1398, subdivision 6; 289A.10, subdivision 1; 
  1.26            290.081; 290.0922, subdivision 1; 290.17, subdivision 
  1.27            2; 291.03, subdivision 1; 296A.07, subdivision 3; 
  1.28            296A.08, subdivision 2; 297A.67, subdivisions 4, 5; 
  1.29            297A.68, subdivision 10; 297F.05, subdivisions 1, 3, 
  1.30            4; 297F.08, subdivision 7; 297F.09, subdivision 2; 
  1.31            477A.011, subdivision 27; 477A.0121, subdivision 5; 
  1.32            477A.0122, subdivision 5; 477A.015; Minnesota Statutes 
  1.33            2001 Supplement, sections 275.71, subdivision 4; 
  1.34            275.73, by adding a subdivision; 291.005, subdivision 
  1.35            1; 297A.61, subdivision 3; 297A.70, subdivision 2; 
  1.36            297B.09, subdivision 1; 469.1799, subdivision 3; 
  1.37            477A.03, subdivision 2; proposing coding for new law 
  1.38            in Minnesota Statutes, chapters 296A; 477A; repealing 
  1.39            Minnesota Statutes 2000, sections 290.191, subdivision 
  1.40            4; 291.03, subdivision 2; 297A.68, subdivision 26; 
  1.41            Minnesota Statutes 2001 Supplement, section 16A.1523. 
  1.42  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.43                             ARTICLE 1 
  2.1                       STATE FUNDS AND ACCOUNTS 
  2.2      Section 1.  Minnesota Statutes 2000, section 40A.151, 
  2.3   subdivision 1, is amended to read: 
  2.4      Subdivision 1.  [ESTABLISHMENT.] The Minnesota conservation 
  2.5   fund is established as an account in the state treasury.  Money 
  2.6   from counties under section 40A.152 must be deposited in the 
  2.7   state treasury and credited one-half to the Minnesota 
  2.8   conservation fund account and one-half to the general fund. 
  2.9      [EFFECTIVE DATE.] This section is effective for money from 
  2.10  counties received by the commissioner of revenue after June 30, 
  2.11  2002. 
  2.12     Sec. 2.  Minnesota Statutes 2000, section 40A.152, 
  2.13  subdivision 1, is amended to read: 
  2.14     Subdivision 1.  [FEE.] A county that is a metropolitan 
  2.15  county under section 473.121, subdivision 4, has allowed 
  2.16  exclusive agricultural zones to be created under this chapter, 
  2.17  or has elected to become an agricultural land preservation pilot 
  2.18  county, shall impose an additional fee of $5 per transaction on 
  2.19  the recording or registration of a mortgage subject to the tax 
  2.20  under section 287.05 and an additional $5 on the recording or 
  2.21  registration of a deed subject to the tax under section 287.21.  
  2.22  One-half of the fee must be deposited in a special conservation 
  2.23  account to be created in the county general revenue fund and 
  2.24  one-half must be transferred to the commissioner of revenue for 
  2.25  deposit in the state treasury and credited to the Minnesota 
  2.26  conservation fund pursuant to section 40A.151, subdivision 1. 
  2.27     [EFFECTIVE DATE.] This section is effective July 1, 2002, 
  2.28  and thereafter. 
  2.29     Sec. 3.  Minnesota Statutes 2000, section 40A.152, 
  2.30  subdivision 3, is amended to read: 
  2.31     Subd. 3.  [TRANSFER TO STATE FUND.] Money in the county 
  2.32  conservation account that is not encumbered by the county within 
  2.33  one year of deposit in the account must be transferred to the 
  2.34  commissioner of revenue for deposit in the Minnesota 
  2.35  conservation fund state treasury pursuant to section 40A.151, 
  2.36  subdivision 1. 
  3.1      [EFFECTIVE DATE.] This section is effective July 1, 2002, 
  3.2   and thereafter. 
  3.3      Sec. 4.  Minnesota Statutes 2001 Supplement, section 
  3.4   297B.09, subdivision 1, is amended to read: 
  3.5      Subdivision 1.  [DEPOSIT OF REVENUES.] (a) Money collected 
  3.6   and received under this chapter must be deposited as provided in 
  3.7   this subdivision.  
  3.8      (b) From July 1, 2001, to June 30 March 31, 2002, 30.86 
  3.9   percent of the money collected and received must be deposited in 
  3.10  the highway user tax distribution fund, and the remaining money 
  3.11  must be deposited in the general fund.  
  3.12     (c) On and after July 1, 2002, 32 percent of the money 
  3.13  collected and received must be deposited in the highway user tax 
  3.14  distribution fund, 20.5 percent must be deposited in the 
  3.15  metropolitan area transit fund under section 16A.88, and 1.25 
  3.16  percent must be deposited in the greater Minnesota transit fund 
  3.17  under section 16A.88.  In fiscal year 2004 and thereafter, two 
  3.18  percent of the money collected and received must be deposited in 
  3.19  the metropolitan area transit appropriation account under 
  3.20  section 16A.88.  The remaining money must be deposited in the 
  3.21  general fund. From April 1, 2002, to June 30, 2002, 3.78 percent 
  3.22  of the money collected and received must be deposited in the 
  3.23  highway user tax distribution fund and the remaining money must 
  3.24  be deposited in the general fund. 
  3.25     (d) From July 1, 2002, to June 30, 2003, 20.5 percent of 
  3.26  the money collected and received must be deposited in the 
  3.27  metropolitan area transit fund under section 16A.88, 1.25 
  3.28  percent of the money collected and received must be deposited in 
  3.29  the greater Minnesota transit fund under section 16A.88, 5.94 
  3.30  percent of the money collected and received must be deposited in 
  3.31  the highway user tax distribution fund, and the remaining money 
  3.32  must be deposited in the general fund. 
  3.33     (e) From July 1, 2003, to June 30, 2004, 20.5 percent of 
  3.34  the money collected and received must be deposited in the 
  3.35  metropolitan area transit fund under section 16A.88, 1.25 
  3.36  percent of the money collected and received must be deposited in 
  4.1   the greater Minnesota transit fund under section 16A.88, 2.0 
  4.2   percent of the money collected and received must be deposited in 
  4.3   the metropolitan area transit appropriation account under 
  4.4   section 16A.88, 6.46 percent of the money collected and received 
  4.5   must be deposited in the highway user tax distribution fund, and 
  4.6   the remaining money must be deposited in the general fund. 
  4.7      (f) On and after July 1, 2004, 20.5 percent of the money 
  4.8   collected and received must be deposited in the metropolitan 
  4.9   area transit fund under section 16A.88, 1.25 percent of the 
  4.10  money collected and received must be deposited in the greater 
  4.11  Minnesota transit fund under section 16A.88, 2.0 percent of the 
  4.12  money collected and received must be deposited in the 
  4.13  metropolitan area transit appropriation account under section 
  4.14  16A.88, 6.64 percent of the money collected and received must be 
  4.15  deposited in the highway user tax distribution fund, and the 
  4.16  remaining money must be deposited in the general fund. 
  4.17     [EFFECTIVE DATE.] This section is effective for money 
  4.18  collected and received after March 31, 2002. 
  4.19     Sec. 5.  [TRANSFERS OF FUNDS INTO BUDGET RESERVE ACCOUNT.] 
  4.20     Effective July 1, 2003, the commissioner of finance shall 
  4.21  transfer the following funds to the budget reserve account 
  4.22  created under Minnesota Statutes, section 16A.152, subdivision 
  4.23  1a:  
  4.24     (1) the positive unrestricted budgetary general fund 
  4.25  balance as of June 30, 2001, that was transferred to the tax 
  4.26  relief account pursuant to Minnesota Statutes, section 16A.1522, 
  4.27  subdivision 4; and 
  4.28     (2) $200,000,000 of the available balance in the excess 
  4.29  surplus account within the special compensation fund created 
  4.30  under Minnesota Statutes, section 176.129. 
  4.31     Sec. 6.  [REPEALER.] 
  4.32     Minnesota Statutes 2001 Supplement, section 16A.1523, is 
  4.33  repealed effective the day following final enactment. 
  4.34                             ARTICLE 2 
  4.35                CIGARETTE AND TOBACCO PRODUCTS TAXES 
  4.36     Section 1.  Minnesota Statutes 2000, section 297F.05, 
  5.1   subdivision 1, is amended to read: 
  5.2      Subdivision 1.  [RATES; CIGARETTES.] A tax is imposed upon 
  5.3   the sale of cigarettes in this state, upon having cigarettes in 
  5.4   possession in this state with intent to sell, upon any person 
  5.5   engaged in business as a distributor, and upon the use or 
  5.6   storage by consumers, at the following rates, subject to the 
  5.7   discount provided in this chapter: 
  5.8      (1) on cigarettes weighing not more than three pounds per 
  5.9   thousand, 24 38.5 mills on each such cigarette; and 
  5.10     (2) on cigarettes weighing more than three pounds per 
  5.11  thousand, 48 77 mills on each such cigarette. 
  5.12     [EFFECTIVE DATE.] This section is effective for cigarette 
  5.13  stamp purchases occurring after February 28, 2002, and for use 
  5.14  and storage of cigarettes acquired by consumers after February 
  5.15  28, 2002. 
  5.16     Sec. 2.  Minnesota Statutes 2000, section 297F.05, 
  5.17  subdivision 3, is amended to read: 
  5.18     Subd. 3.  [RATES; TOBACCO PRODUCTS.] A tax is imposed upon 
  5.19  all tobacco products in this state and upon any person engaged 
  5.20  in business as a distributor, at the rate of 35 49 percent of 
  5.21  the wholesale sales price of the tobacco products.  The tax is 
  5.22  imposed at the time the distributor: 
  5.23     (1) brings, or causes to be brought, into this state from 
  5.24  outside the state tobacco products for sale; 
  5.25     (2) makes, manufactures, or fabricates tobacco products in 
  5.26  this state for sale in this state; or 
  5.27     (3) ships or transports tobacco products to retailers in 
  5.28  this state, to be sold by those retailers. 
  5.29     [EFFECTIVE DATE.] This section is effective for tobacco 
  5.30  products brought into the state, or made or manufactured in the 
  5.31  state, or for shipments to retailers in this state occurring 
  5.32  after February 28, 2002. 
  5.33     Sec. 3.  Minnesota Statutes 2000, section 297F.05, 
  5.34  subdivision 4, is amended to read: 
  5.35     Subd. 4.  [USE TAX; TOBACCO PRODUCTS.] A tax is imposed 
  5.36  upon the use or storage by consumers of tobacco products in this 
  6.1   state, and upon such consumers, at the rate of 35 49 percent of 
  6.2   the cost to the consumer of the tobacco products. 
  6.3      [EFFECTIVE DATE.] This section is effective for use or 
  6.4   storage of tobacco products acquired by consumers after February 
  6.5   28, 2002. 
  6.6      Sec. 4.  Minnesota Statutes 2000, section 297F.08, 
  6.7   subdivision 7, is amended to read: 
  6.8      Subd. 7.  [PRICE OF STAMPS.] The commissioner shall sell 
  6.9   stamps to any person licensed as a distributor at a discount 
  6.10  of 1.0 0.65 percent from the face amount of the stamps for the 
  6.11  first $1,500,000 $2,400,000 of such stamps purchased in any 
  6.12  fiscal year; and at a discount of 0.6 0.4 percent on the 
  6.13  remainder of such stamps purchased in any fiscal year.  The 
  6.14  commissioner shall not sell stamps to any other person.  The 
  6.15  commissioner may prescribe the method of shipment of the stamps 
  6.16  to the distributor as well as the quantities of stamps purchased.
  6.17     [EFFECTIVE DATE.] This section is effective for cigarette 
  6.18  stamp purchases occurring after February 28, 2002. 
  6.19     Sec. 5.  Minnesota Statutes 2000, section 297F.09, 
  6.20  subdivision 2, is amended to read: 
  6.21     Subd. 2.  [MONTHLY RETURN; TOBACCO PRODUCTS DISTRIBUTOR.] 
  6.22  On or before the 18th day of each calendar month, a distributor 
  6.23  with a place of business in this state shall file a return with 
  6.24  the commissioner showing the quantity and wholesale sales price 
  6.25  of each tobacco product: 
  6.26     (1) brought, or caused to be brought, into this state for 
  6.27  sale; and 
  6.28     (2) made, manufactured, or fabricated in this state for 
  6.29  sale in this state, during the preceding calendar month.  
  6.30  Every licensed distributor outside this state shall in like 
  6.31  manner file a return showing the quantity and wholesale sales 
  6.32  price of each tobacco product shipped or transported to 
  6.33  retailers in this state to be sold by those retailers, during 
  6.34  the preceding calendar month.  Returns must be made in the form 
  6.35  and manner prescribed by the commissioner and must contain any 
  6.36  other information required by the commissioner.  The return must 
  7.1   be accompanied by a remittance for the full tax liability shown, 
  7.2   less 1.5 1.0 percent of the liability as compensation to 
  7.3   reimburse the distributor for expenses incurred in the 
  7.4   administration of this chapter.  
  7.5      [EFFECTIVE DATE.] This section is effective for tobacco 
  7.6   products brought into the state, or made or manufactured in the 
  7.7   state, after February 28, 2002. 
  7.8                              ARTICLE 3 
  7.9                INDIVIDUAL INCOME TAX, ESTATE TAX, AND 
  7.10                       CORPORATE FRANCHISE TAX 
  7.11     Section 1.  Minnesota Statutes 2000, section 136A.08, 
  7.12  subdivision 3, is amended to read: 
  7.13     Subd. 3.  [WISCONSIN.] A higher education reciprocity 
  7.14  agreement with the state of Wisconsin may include provision for 
  7.15  the transfer of funds between Minnesota and Wisconsin provided 
  7.16  that an income tax reciprocity agreement between Minnesota and 
  7.17  Wisconsin is in effect for the period of time included under the 
  7.18  higher education reciprocity agreement.  If this provision is 
  7.19  included, the amount of funds to be transferred shall be 
  7.20  determined according to a formula which is mutually acceptable 
  7.21  to the office and a duly designated agency representing 
  7.22  Wisconsin.  The formula shall recognize differences in tuition 
  7.23  rates between the two states and the number of students 
  7.24  attending institutions in each state under the agreement.  Any 
  7.25  payments to Minnesota by Wisconsin shall be deposited by the 
  7.26  office in the general fund of the state treasury.  The amount 
  7.27  required for the payments shall be certified by the director of 
  7.28  the office to the commissioner of finance annually. 
  7.29     [EFFECTIVE DATE.] This section is effective the day 
  7.30  following final enactment. 
  7.31     Sec. 2.  Minnesota Statutes 2000, section 289A.10, 
  7.32  subdivision 1, is amended to read: 
  7.33     Subdivision 1.  [RETURN REQUIRED.] In the case of a 
  7.34  decedent who has an interest in property with a situs in 
  7.35  Minnesota, the personal representative must submit a Minnesota 
  7.36  estate tax return to the commissioner, on a form prescribed by 
  8.1   the commissioner, in instances in which a federal estate tax 
  8.2   return is required to be filed if the federal gross estate 
  8.3   exceeds $1,000,000.  If an estate does not meet the requirement 
  8.4   to file a return under this section, the Minnesota estate tax 
  8.5   imposed by chapter 291 is zero. 
  8.6      The return must contain a computation of the Minnesota 
  8.7   estate tax due.  The return must be signed by the personal 
  8.8   representative. 
  8.9      [EFFECTIVE DATE.] This section is effective for estates of 
  8.10  decedents dying after December 31, 2001. 
  8.11     Sec. 3.  Minnesota Statutes 2000, section 290.081, is 
  8.12  amended to read: 
  8.13     290.081 [INCOME OF NONRESIDENTS, RECIPROCITY.] 
  8.14     (a) The compensation received for the performance of 
  8.15  personal or professional services within this state by an 
  8.16  individual whose residence, place of abode, and place 
  8.17  customarily returned to at least once a month is in another 
  8.18  state, shall be excluded from gross income to the extent such 
  8.19  compensation is subject to an income tax imposed by the state of 
  8.20  residence; provided that such state allows a similar exclusion 
  8.21  of compensation received by residents of Minnesota for services 
  8.22  performed therein. 
  8.23     (b) When it is deemed to be in the best interests of the 
  8.24  people of this state, the commissioner may determine that the 
  8.25  provisions of clause paragraph (a) shall not apply.  As long as 
  8.26  the provisions of clause (a) apply between Minnesota and 
  8.27  Wisconsin, the provisions of clause (a) shall apply to any 
  8.28  individual who is domiciled in Wisconsin.  
  8.29     (c) For the purposes of clause (a), whenever the Wisconsin 
  8.30  tax on Minnesota residents which would have been paid Wisconsin 
  8.31  without clause (a) exceeds the Minnesota tax on Wisconsin 
  8.32  residents which would have been paid Minnesota without clause 
  8.33  (a), or vice versa, then the state with the net revenue loss 
  8.34  resulting from clause (a) shall receive from the other state the 
  8.35  amount of such loss.  This provision shall be effective for all 
  8.36  years beginning after December 31, 1972.  The data used for 
  9.1   computing the loss to either state shall be determined on or 
  9.2   before September 30 of the year following the close of the 
  9.3   previous calendar year. 
  9.4      Interest shall be payable on all delinquent balances 
  9.5   relating to taxable years beginning after December 31, 1977.  
  9.6   The commissioner of revenue is authorized to enter into 
  9.7   agreements with the state of Wisconsin specifying the 
  9.8   reciprocity payment due date, conditions constituting 
  9.9   delinquency, interest rates, and a method for computing interest 
  9.10  due on any delinquent amounts. 
  9.11     If an agreement cannot be reached as to the amount of the 
  9.12  loss, the commissioner of revenue and the taxing official of the 
  9.13  state of Wisconsin shall each appoint a member of a board of 
  9.14  arbitration and these members shall appoint the third member of 
  9.15  the board.  The board shall select one of its members as chair.  
  9.16  Such board may administer oaths, take testimony, subpoena 
  9.17  witnesses, and require their attendance, require the production 
  9.18  of books, papers and documents, and hold hearings at such places 
  9.19  as are deemed necessary.  The board shall then make a 
  9.20  determination as to the amount to be paid the other state which 
  9.21  determination shall be final and conclusive. 
  9.22     The commissioner may furnish copies of returns, reports, or 
  9.23  other information to the taxing official of the state of 
  9.24  Wisconsin, a member of the board of arbitration, or a consultant 
  9.25  under joint contract with the states of Minnesota and Wisconsin 
  9.26  for the purpose of making a determination as to the amount to be 
  9.27  paid the other state under the provisions of this section.  
  9.28  Prior to the release of any information under the provisions of 
  9.29  this section, the person to whom the information is to be 
  9.30  released shall sign an agreement which provides that the person 
  9.31  will protect the confidentiality of the returns and information 
  9.32  revealed thereby to the extent that it is protected under the 
  9.33  laws of the state of Minnesota. 
  9.34     [EFFECTIVE DATE.] This section is effective for tax years 
  9.35  beginning after December 31, 2002. 
  9.36     Sec. 4.  Minnesota Statutes 2000, section 290.0922, 
 10.1   subdivision 1, is amended to read: 
 10.2      Subdivision 1.  [IMPOSITION.] (a) In addition to the tax 
 10.3   imposed by this chapter without regard to this section, the 
 10.4   franchise tax imposed on a corporation required to file under 
 10.5   section 289A.08, subdivision 3, other than a corporation treated 
 10.6   as an "S" corporation under section 290.9725 for the taxable 
 10.7   year includes a tax equal to the following amounts: 
 10.8        If the sum of the corporation's
 10.9   Minnesota property, payrolls, and sales
 10.10  or receipts is:                            the tax equals:
 10.11             less than $500,000                    $0 $50
 10.12     $   500,000 to $   999,999                  $100 $150
 10.13     $ 1,000,000 to $ 4,999,999                  $300 $450
 10.14     $ 5,000,000 to $ 9,999,999                $1,000 $1,500 
 10.15     $10,000,000 to $19,999,999                $2,000 $3,000
 10.16     $20,000,000 or more                       $5,000 $7,500
 10.17     (b) A tax is imposed for each taxable year on a corporation 
 10.18  required to file a return under section 289A.12, subdivision 3, 
 10.19  that is treated as an "S" corporation under section 290.9725 and 
 10.20  on a partnership required to file a return under section 
 10.21  289A.12, subdivision 3, other than a partnership that derives 
 10.22  over 80 percent of its income from farming.  The tax imposed 
 10.23  under this paragraph is due on or before the due date of the 
 10.24  return for the taxpayer due under section 289A.18, subdivision 
 10.25  1.  The commissioner shall prescribe the return to be used for 
 10.26  payment of this tax.  The tax under this paragraph is equal to 
 10.27  the following amounts:  
 10.28       If the sum of the S corporation's or partnership's 
 10.29  Minnesota property, payrolls, and sales
 10.30  or receipts is:                        the tax equals:
 10.31               less than $500,000                $0 $50
 10.32       $   500,000 to $   999,999              $100 $150
 10.33       $ 1,000,000 to $ 4,999,999              $300 $450
 10.34       $ 5,000,000 to $ 9,999,999            $1,000 $1,500
 10.35       $10,000,000 to $19,999,999            $2,000 $3,000
 10.36       $20,000,000 or more                   $5,000 $7,500
 11.1      [EFFECTIVE DATE.] This section is effective for tax years 
 11.2   beginning after December 31, 2001. 
 11.3      Sec. 5.  Minnesota Statutes 2000, section 290.17, 
 11.4   subdivision 2, is amended to read: 
 11.5      Subd. 2.  [INCOME NOT DERIVED FROM CONDUCT OF A TRADE OR 
 11.6   BUSINESS.] The income of a taxpayer subject to the allocation 
 11.7   rules that is not derived from the conduct of a trade or 
 11.8   business must be assigned in accordance with paragraphs (a) to 
 11.9   (f):  
 11.10     (a)(1) Subject to paragraphs (a)(2), and (a)(3), and 
 11.11  (a)(4), income from wages as defined in section 3401(a) and (f) 
 11.12  of the Internal Revenue Code is assigned to this state if, and 
 11.13  to the extent that, the work of the employee is performed within 
 11.14  it; all other income from such sources is treated as income from 
 11.15  sources without this state.  
 11.16     Severance pay shall be considered income from labor or 
 11.17  personal or professional services. 
 11.18     (2) In the case of an individual who is a nonresident of 
 11.19  Minnesota and who is an athlete or entertainer, income from 
 11.20  compensation for labor or personal services performed within 
 11.21  this state shall be determined in the following manner:  
 11.22     (i) The amount of income to be assigned to Minnesota for an 
 11.23  individual who is a nonresident salaried athletic team employee 
 11.24  shall be determined by using a fraction in which the denominator 
 11.25  contains the total number of days in which the individual is 
 11.26  under a duty to perform for the employer, and the numerator is 
 11.27  the total number of those days spent in Minnesota.  For purposes 
 11.28  of this paragraph, off-season training activities, unless 
 11.29  conducted at the team's facilities as part of a team imposed 
 11.30  program, are not included in the total number of duty days.  
 11.31  Bonuses earned as a result of play during the regular season or 
 11.32  for participation in championship, play-off, or all-star games 
 11.33  must be allocated under the formula.  Signing bonuses are not 
 11.34  subject to allocation under the formula if they are not 
 11.35  conditional on playing any games for the team, are payable 
 11.36  separately from any other compensation, and are nonrefundable; 
 12.1   and 
 12.2      (ii) The amount of income to be assigned to Minnesota for 
 12.3   an individual who is a nonresident, and who is an athlete or 
 12.4   entertainer not listed in clause (i), for that person's athletic 
 12.5   or entertainment performance in Minnesota shall be determined by 
 12.6   assigning to this state all income from performances or athletic 
 12.7   contests in this state.  
 12.8      (3) For purposes of this section, amounts received by a 
 12.9   nonresident as "retirement income" as defined in section (b)(1) 
 12.10  of the State Income Taxation of Pension Income Act, Public Law 
 12.11  Number 104-95, are not considered income derived from carrying 
 12.12  on a trade or business or from wages or other compensation for 
 12.13  work an employee performed in Minnesota, and are not taxable 
 12.14  under this chapter.  
 12.15     (4) Wages, otherwise assigned to this state under clause 
 12.16  (1) and not qualifying under clause (3), are not taxable under 
 12.17  this chapter if the following conditions are met: 
 12.18     (i) the recipient was not a resident of this state for any 
 12.19  part of the taxable year in which the wages were received; and 
 12.20     (ii) the wages are for work performed while the recipient 
 12.21  was a resident of this state. 
 12.22     (b) Income or gains from tangible property located in this 
 12.23  state that is not employed in the business of the recipient of 
 12.24  the income or gains must be assigned to this state. 
 12.25     (c) Income or gains from intangible personal property not 
 12.26  employed in the business of the recipient of the income or gains 
 12.27  must be assigned to this state if the recipient of the income or 
 12.28  gains is a resident of this state or is a resident trust or 
 12.29  estate.  
 12.30     Gain on the sale of a partnership interest is allocable to 
 12.31  this state in the ratio of the original cost of partnership 
 12.32  tangible property in this state to the original cost of 
 12.33  partnership tangible property everywhere, determined at the time 
 12.34  of the sale.  If more than 50 percent of the value of the 
 12.35  partnership's assets consists of intangibles, gain or loss from 
 12.36  the sale of the partnership interest is allocated to this state 
 13.1   in accordance with the sales factor of the partnership for its 
 13.2   first full tax period immediately preceding the tax period of 
 13.3   the partnership during which the partnership interest was sold. 
 13.4      Gain on the sale of goodwill or income from a covenant not 
 13.5   to compete that is connected with a business operating all or 
 13.6   partially in Minnesota is allocated to this state to the extent 
 13.7   that the income from the business in the year preceding the year 
 13.8   of sale was assignable to Minnesota under subdivision 3.  
 13.9      When an employer pays an employee for a covenant not to 
 13.10  compete, the income allocated to this state is in the ratio of 
 13.11  the employee's service in Minnesota in the calendar year 
 13.12  preceding leaving the employment of the employer over the total 
 13.13  services performed by the employee for the employer in that year.
 13.14     (d) Income from winnings on Minnesota pari-mutuel betting 
 13.15  tickets, the Minnesota state lottery, and lawful gambling as 
 13.16  defined in section 349.12, subdivision 24, conducted within the 
 13.17  boundaries of the state of Minnesota shall be assigned to this 
 13.18  state.  
 13.19     (e) All items of gross income not covered in paragraphs (a) 
 13.20  to (d) and not part of the taxpayer's income from a trade or 
 13.21  business shall be assigned to the taxpayer's domicile. 
 13.22     (f) For the purposes of this section, working as an 
 13.23  employee shall not be considered to be conducting a trade or 
 13.24  business. 
 13.25     [EFFECTIVE DATE.] This section is effective for wages 
 13.26  received in tax years beginning after December 31, 2001. 
 13.27     Sec. 6.  Minnesota Statutes 2001 Supplement, section 
 13.28  291.005, subdivision 1, is amended to read: 
 13.29     Subdivision 1.  Unless the context otherwise clearly 
 13.30  requires, the following terms used in this chapter shall have 
 13.31  the following meanings: 
 13.32     (1) "Federal gross estate" means the gross estate of a 
 13.33  decedent as valued and otherwise determined for federal estate 
 13.34  tax purposes by federal taxing authorities pursuant to the 
 13.35  provisions of the Internal Revenue Code. 
 13.36     (2) "Minnesota gross estate" means the federal gross estate 
 14.1   of a decedent after (a) excluding therefrom any property 
 14.2   included therein which has its situs outside Minnesota and 
 14.3   pensions exempt from tax under this chapter pursuant to section 
 14.4   352.15, subdivision 1; 353.15, subdivision 1; 354.10, 
 14.5   subdivision 1; 354B.30; or 354C.165, and (b) including therein 
 14.6   any property omitted from the federal gross estate which is 
 14.7   includable therein, has its situs in Minnesota, and was not 
 14.8   disclosed to federal taxing authorities.  
 14.9      (3) "Personal representative" means the executor, 
 14.10  administrator or other person appointed by the court to 
 14.11  administer and dispose of the property of the decedent.  If 
 14.12  there is no executor, administrator or other person appointed, 
 14.13  qualified, and acting within this state, then any person in 
 14.14  actual or constructive possession of any property having a situs 
 14.15  in this state which is included in the federal gross estate of 
 14.16  the decedent shall be deemed to be a personal representative to 
 14.17  the extent of the property and the Minnesota estate tax due with 
 14.18  respect to the property. 
 14.19     (4) "Resident decedent" means an individual whose domicile 
 14.20  at the time of death was in Minnesota. 
 14.21     (5) "Nonresident decedent" means an individual whose 
 14.22  domicile at the time of death was not in Minnesota. 
 14.23     (6) "Situs of property" means, with respect to real 
 14.24  property, the state or country in which it is located; with 
 14.25  respect to tangible personal property, the state or country in 
 14.26  which it was normally kept or located at the time of the 
 14.27  decedent's death; and with respect to intangible personal 
 14.28  property, the state or country in which the decedent was 
 14.29  domiciled at death. 
 14.30     (7) "Commissioner" means the commissioner of revenue or any 
 14.31  person to whom the commissioner has delegated functions under 
 14.32  this chapter. 
 14.33     (8) "Internal Revenue Code" means the United States 
 14.34  Internal Revenue Code of 1986, as amended through December 31, 
 14.35  2000. 
 14.36     [EFFECTIVE DATE.] This section is effective for estates of 
 15.1   decedents dying after December 31, 2001. 
 15.2      Sec. 7.  Minnesota Statutes 2000, section 291.03, 
 15.3   subdivision 1, is amended to read: 
 15.4      Subdivision 1.  [TAX AMOUNT.] The tax imposed shall be an 
 15.5   amount equal to the proportion of the maximum credit 
 15.6   allowable computed under section 2011 of the Internal Revenue 
 15.7   Code for state death taxes as the Minnesota gross estate bears 
 15.8   to the value of the federal gross estate.  For a resident 
 15.9   decedent, the tax shall be the maximum credit allowable computed 
 15.10  under section 2011 of the Internal Revenue Code reduced by the 
 15.11  amount of the death tax paid the other state and credited 
 15.12  against the federal estate tax if this results in a larger 
 15.13  amount of tax than the proportionate amount of the credit.  The 
 15.14  tax determined under this paragraph shall not be greater than 
 15.15  the maximum credit allowable under section 2011 of the Internal 
 15.16  Revenue Code federal estate tax computed under section 2001 of 
 15.17  the Internal Revenue Code after the allowance of the federal 
 15.18  credits allowed under sections 2010, 2012, 2013, and 2015 of the 
 15.19  Internal Revenue Code of 1986, as amended through December 31, 
 15.20  2000.  
 15.21     [EFFECTIVE DATE.] This section is effective for estates of 
 15.22  decedents dying after December 31, 2001. 
 15.23     Sec. 8.  [REPEALER.] 
 15.24     (a) Minnesota Statutes 2000, section 290.191, subdivision 
 15.25  4, is repealed effective for tax years beginning after December 
 15.26  31, 2001. 
 15.27     (b) Minnesota Statutes 2000, section 291.03, subdivision 2, 
 15.28  is repealed effective for estates of decedents dying after 
 15.29  December 31, 2001. 
 15.30                             ARTICLE 4 
 15.31                        SALES AND USE TAXES 
 15.32     Section 1.  Minnesota Statutes 2001 Supplement, section 
 15.33  297A.61, subdivision 3, is amended to read: 
 15.34     Subd. 3.  [SALE AND PURCHASE.] (a) "Sale" and "purchase" 
 15.35  include, but are not limited to, each of the transactions listed 
 15.36  in this subdivision. 
 16.1      (b) Sale and purchase include: 
 16.2      (1) any transfer of title or possession, or both, of 
 16.3   tangible personal property, whether absolutely or conditionally, 
 16.4   for a consideration in money or by exchange or barter; and 
 16.5      (2) the leasing of or the granting of a license to use or 
 16.6   consume, for a consideration in money or by exchange or barter, 
 16.7   tangible personal property, other than a manufactured home used 
 16.8   for residential purposes for a continuous period of 30 days or 
 16.9   more. 
 16.10     (c) Sale and purchase include the production, fabrication, 
 16.11  printing, or processing of tangible personal property for a 
 16.12  consideration for consumers who furnish either directly or 
 16.13  indirectly the materials used in the production, fabrication, 
 16.14  printing, or processing. 
 16.15     (d) Sale and purchase include the preparing for a 
 16.16  consideration of food.  Notwithstanding section 297A.67, 
 16.17  subdivision 2, taxable food includes, but is not limited to, the 
 16.18  following: 
 16.19     (1) prepared food sold by the retailer; 
 16.20     (2) soft drinks; 
 16.21     (3) candy; and 
 16.22     (4) all food sold through vending machines.  
 16.23     (e) A sale and a purchase includes the furnishing for a 
 16.24  consideration of electricity, gas, water, or steam for use or 
 16.25  consumption within this state. 
 16.26     (f) A sale and a purchase includes the transfer for a 
 16.27  consideration of computer software.  
 16.28     (g) A sale and a purchase includes the furnishing for a 
 16.29  consideration of the following services: 
 16.30     (1) the privilege of admission to places of amusement, 
 16.31  recreational areas, or athletic events, and the making available 
 16.32  of amusement devices, tanning facilities, reducing salons, steam 
 16.33  baths, turkish baths, health clubs, and spas or athletic 
 16.34  facilities; 
 16.35     (2) lodging and related services by a hotel, rooming house, 
 16.36  resort, campground, motel, or trailer camp and the granting of 
 17.1   any similar license to use real property other than the renting 
 17.2   or leasing of it for a continuous period of 30 days or more; 
 17.3      (3) parking services, whether on a contractual, hourly, or 
 17.4   other periodic basis, except for parking at a meter; 
 17.5      (4) the granting of membership in a club, association, or 
 17.6   other organization if: 
 17.7      (i) the club, association, or other organization makes 
 17.8   available for the use of its members sports and athletic 
 17.9   facilities, without regard to whether a separate charge is 
 17.10  assessed for use of the facilities; and 
 17.11     (ii) use of the sports and athletic facility is not made 
 17.12  available to the general public on the same basis as it is made 
 17.13  available to members.  
 17.14  Granting of membership means both one-time initiation fees and 
 17.15  periodic membership dues.  Sports and athletic facilities 
 17.16  include golf courses; tennis, racquetball, handball, and squash 
 17.17  courts; basketball and volleyball facilities; running tracks; 
 17.18  exercise equipment; swimming pools; and other similar athletic 
 17.19  or sports facilities; and 
 17.20     (5) services as provided in this clause: 
 17.21     (i) laundry and dry cleaning services including cleaning, 
 17.22  pressing, repairing, altering, and storing clothes, linen 
 17.23  services and supply, cleaning and blocking hats, and carpet, 
 17.24  drapery, upholstery, and industrial cleaning.  Laundry and dry 
 17.25  cleaning services do not include services provided by coin 
 17.26  operated facilities operated by the customer; 
 17.27     (ii) motor vehicle washing, waxing, and cleaning services, 
 17.28  including services provided by coin operated facilities operated 
 17.29  by the customer, and rustproofing, undercoating, and towing of 
 17.30  motor vehicles; 
 17.31     (iii) building and residential cleaning, maintenance, and 
 17.32  disinfecting and exterminating services; 
 17.33     (iv) detective, security, burglar, fire alarm, and armored 
 17.34  car services; but not including services performed within the 
 17.35  jurisdiction they serve by off-duty licensed peace officers as 
 17.36  defined in section 626.84, subdivision 1, or services provided 
 18.1   by a nonprofit organization for monitoring and electronic 
 18.2   surveillance of persons placed on in-home detention pursuant to 
 18.3   court order or under the direction of the Minnesota department 
 18.4   of corrections; 
 18.5      (v) pet grooming services; 
 18.6      (vi) lawn care, fertilizing, mowing, spraying and sprigging 
 18.7   services; garden planting and maintenance; tree, bush, and shrub 
 18.8   pruning, bracing, spraying, and surgery; indoor plant care; 
 18.9   tree, bush, shrub, and stump removal; and tree trimming for 
 18.10  public utility lines.  Services performed under a construction 
 18.11  contract for the installation of shrubbery, plants, sod, trees, 
 18.12  bushes, and similar items are not taxable; 
 18.13     (vii) massages, except when provided by a licensed health 
 18.14  care facility or professional or upon written referral from a 
 18.15  licensed health care facility or professional for treatment of 
 18.16  illness, injury, or disease; and 
 18.17     (viii) the furnishing of lodging, board, and care services 
 18.18  for animals in kennels and other similar arrangements, but 
 18.19  excluding veterinary and horse boarding services. 
 18.20     In applying the provisions of this chapter, the terms 
 18.21  "tangible personal property" and "sales at retail" include 
 18.22  taxable services and the provision of taxable services, unless 
 18.23  specifically provided otherwise.  Services performed by an 
 18.24  employee for an employer are not taxable.  Services performed by 
 18.25  a partnership or association for another partnership or 
 18.26  association are not taxable if one of the entities owns or 
 18.27  controls more than 80 percent of the voting power of the equity 
 18.28  interest in the other entity.  Services performed between 
 18.29  members of an affiliated group of corporations are not taxable.  
 18.30  For purposes of this section, "affiliated group of corporations" 
 18.31  includes those entities that would be classified as members of 
 18.32  an affiliated group under United States Code, title 26, section 
 18.33  1504, and that are eligible to file a consolidated tax return 
 18.34  for federal income tax purposes.; 
 18.35     (6) motor vehicle repair and maintenance services, 
 18.36  including the gross receipts from sales of optional service and 
 19.1   warranty contracts that provide for the furnishing of labor and 
 19.2   materials to provide services taxable under this clause; and 
 19.3      (7) legal services, except legal services provided for use 
 19.4   in a trade or business, and except legal services purchased by a 
 19.5   unit of government or by an organization exempt from federal 
 19.6   taxation under Internal Revenue Code, subchapter F. 
 19.7      (h) A sale and a purchase includes the furnishing for a 
 19.8   consideration of tangible personal property or taxable services 
 19.9   by the United States or any of its agencies or 
 19.10  instrumentalities, or the state of Minnesota, its agencies, 
 19.11  instrumentalities, or political subdivisions. 
 19.12     (i) A sale and a purchase includes the furnishing for a 
 19.13  consideration of telecommunications services, including cable 
 19.14  television services and direct satellite services.  
 19.15  Telecommunications services are taxed to the extent allowed 
 19.16  under federal law if those services: 
 19.17     (1) either (i) originate and terminate in this state; or 
 19.18  (ii) originate in this state and terminate outside the state and 
 19.19  the service is charged to a telephone number customer located in 
 19.20  this state or to the account of any transmission instrument in 
 19.21  this state; or (iii) originate outside this state and terminate 
 19.22  in this state and the service is charged to a telephone number 
 19.23  customer located in this state or to the account of any 
 19.24  transmission instrument in this state; or 
 19.25     (2) are rendered by providing a private communications 
 19.26  service for which the customer has one or more locations within 
 19.27  Minnesota connected to the service and the service is charged to 
 19.28  a telephone number customer located in this state or to the 
 19.29  account of any transmission instrument in this state. 
 19.30     All charges for mobile telecommunications services, as 
 19.31  defined in United States Code, title 4, section 124, are deemed 
 19.32  to be provided by the customer's home service provider and 
 19.33  sourced to the customer's place of primary use and are subject 
 19.34  to tax based upon the customer's place of primary use in 
 19.35  accordance with the Mobile Telecommunications Sourcing Act, 
 19.36  United States Code, title 4, sections 116 to 126.  All other 
 20.1   definitions and provisions of the Mobile Telecommunications 
 20.2   Sourcing Act as provided in United States Code, title 4, are 
 20.3   hereby adopted. 
 20.4      [EFFECTIVE DATE.] This section is effective for sales and 
 20.5   purchases made after June 30, 2003. 
 20.6      Sec. 2.  Minnesota Statutes 2000, section 297A.67, 
 20.7   subdivision 4, is amended to read: 
 20.8      Subd. 4.  [EXEMPT MEALS AT RESIDENTIAL FACILITIES.] Meals 
 20.9   or drinks served to patients, inmates, or persons residing at 
 20.10  hospitals, sanitariums, nursing homes, and senior citizen homes, 
 20.11  and correctional, detention, and detoxification facilities are 
 20.12  exempt.  
 20.13     [EFFECTIVE DATE.] This section is effective for sales and 
 20.14  purchases made after June 30, 2003. 
 20.15     Sec. 3.  Minnesota Statutes 2000, section 297A.67, 
 20.16  subdivision 5, is amended to read: 
 20.17     Subd. 5.  [EXEMPT MEALS AT SCHOOLS.] Meals and lunches 
 20.18  served at public and private elementary, middle, or secondary 
 20.19  schools, universities, or colleges as defined in section 120A.05 
 20.20  are exempt.  Meals and lunches served at a college, university, 
 20.21  and private career school, including meals and lunches served 
 20.22  under a board contract, are not included within this exemption.  
 20.23  Meals provided under a lump sum room and board contract are 
 20.24  considered to represent 50 percent of the contract amount. 
 20.25     [EFFECTIVE DATE.] This section is effective for sales and 
 20.26  purchases made after June 30, 2003. 
 20.27     Sec. 4.  Minnesota Statutes 2000, section 297A.68, 
 20.28  subdivision 10, is amended to read: 
 20.29     Subd. 10.  [PUBLICATIONS; PUBLICATION MATERIALS.] Tangible 
 20.30  personal property that is used or consumed in producing any 
 20.31  publication regularly issued at average intervals not exceeding 
 20.32  three months is exempt, and any such publication is 
 20.33  exempt.  "Publication" includes, but is not limited to, a 
 20.34  qualified newspaper as defined by section 331A.02, together with 
 20.35  any supplements or enclosures.  "Publication" does not include 
 20.36  magazines and periodicals sold over the counter, newspapers, or 
 21.1   shoppers guides sold at retail.  Tangible personal property that 
 21.2   is used or consumed in producing a publication does not include 
 21.3   machinery, equipment, implements, tools, accessories, 
 21.4   appliances, contrivances, furniture, and fixtures used in the 
 21.5   publication, or fuel, electricity, gas, or steam used for space 
 21.6   heating or lighting.  
 21.7      Advertising contained in a publication is a nontaxable 
 21.8   service and is exempt.  Persons who publish or sell newspapers 
 21.9   are engaging in a nontaxable service with respect to gross 
 21.10  receipts realized from such news-gathering or news-publishing 
 21.11  activities, including the sale of advertising.  
 21.12     [EFFECTIVE DATE.] This section is effective for sales and 
 21.13  purchases made after June 30, 2003. 
 21.14     Sec. 5.  Minnesota Statutes 2001 Supplement, section 
 21.15  297A.70, subdivision 2, is amended to read: 
 21.16     Subd. 2.  [SALES TO GOVERNMENT.] (a) All sales, except 
 21.17  those listed in paragraph (b), to the following governments and 
 21.18  political subdivisions, or to the listed agencies or 
 21.19  instrumentalities of governments and political subdivisions, are 
 21.20  exempt: 
 21.21     (1) the United States and its agencies and 
 21.22  instrumentalities; 
 21.23     (2) school districts, the University of Minnesota, state 
 21.24  universities, community colleges, technical colleges, state 
 21.25  academies, the Perpich Minnesota center for arts education, and 
 21.26  an instrumentality of a political subdivision that is accredited 
 21.27  as an optional/special function school by the North Central 
 21.28  Association of Colleges and Schools; 
 21.29     (3) hospitals and nursing homes owned and operated by 
 21.30  political subdivisions of the state of tangible personal 
 21.31  property and taxable services used at or by hospitals and 
 21.32  nursing homes; 
 21.33     (4) the metropolitan council, for its purchases of vehicles 
 21.34  and repair parts to equip operations provided for in section 
 21.35  473.4051; 
 21.36     (5) other states or political subdivisions of other states, 
 22.1   if the sale would be exempt from taxation if it occurred in that 
 22.2   state; and 
 22.3      (6) sales to public libraries, public library systems, 
 22.4   multicounty, multitype library systems as defined in section 
 22.5   134.001, county law libraries under chapter 134A, state agency 
 22.6   libraries, the state library under section 480.09, and the 
 22.7   legislative reference library.  
 22.8      (b) This exemption does not apply to the sales of the 
 22.9   following products and services: 
 22.10     (1) building, construction, or reconstruction materials 
 22.11  purchased by a contractor or a subcontractor as a part of a 
 22.12  lump-sum contract or similar type of contract with a guaranteed 
 22.13  maximum price covering both labor and materials for use in the 
 22.14  construction, alteration, or repair of a building or facility; 
 22.15     (2) construction materials purchased by tax exempt entities 
 22.16  or their contractors to be used in constructing buildings or 
 22.17  facilities which will not be used principally by the tax exempt 
 22.18  entities; 
 22.19     (3) the leasing of a motor vehicle as defined in section 
 22.20  297B.01, subdivision 5, except for leases entered into by the 
 22.21  United States or its agencies or instrumentalities; or 
 22.22     (4) meals and lodging as defined under section 297A.61, 
 22.23  subdivision 3, paragraphs (d) and (g), clause (2), except for 
 22.24  meals and lodging purchased directly by the United States or its 
 22.25  agencies or instrumentalities. 
 22.26     (c) As used in this subdivision, "school districts" means 
 22.27  public school entities and districts of every kind and nature 
 22.28  organized under the laws of the state of Minnesota, and any 
 22.29  instrumentality of a school district, as defined in section 
 22.30  471.59. 
 22.31     [EFFECTIVE DATE.] This section is effective for sales and 
 22.32  purchases made after December 31, 2002, but does not apply to 
 22.33  such sales or purchases if they are made pursuant to a written 
 22.34  agreement signed and enforceable before January 1, 2003. 
 22.35     Sec. 6.  [REPEALER.] 
 22.36     Minnesota Statutes 2000, section 297A.68, subdivision 26, 
 23.1   is repealed effective for sales and purchases made after June 
 23.2   30, 2003. 
 23.3                              ARTICLE 5 
 23.4                           PETROLEUM TAXES 
 23.5      Section 1.  Minnesota Statutes 2000, section 296A.07, 
 23.6   subdivision 3, is amended to read: 
 23.7      Subd. 3.  [RATE OF TAX.] The gasoline excise tax is imposed 
 23.8   at the following rates: 
 23.9      (1) E85 is taxed at the rate of 14.2 17.8 cents per gallon; 
 23.10     (2) M85 is taxed at the rate of 11.4 14.3 cents per gallon; 
 23.11  and 
 23.12     (3) all other gasoline is taxed at the rate of 20 25 cents 
 23.13  per gallon. 
 23.14     [EFFECTIVE DATE.] This section is effective for product 
 23.15  received by a licensed distributor after February 28, 2002. 
 23.16     Sec. 2.  Minnesota Statutes 2000, section 296A.08, 
 23.17  subdivision 2, is amended to read: 
 23.18     Subd. 2.  [RATE OF TAX.] The special fuel excise tax is 
 23.19  imposed at the following rates: 
 23.20     (1) Liquefied petroleum gas or propane is taxed at the rate 
 23.21  of 15 18.8 cents per gallon. 
 23.22     (2) Liquefied natural gas is taxed at the rate of 12 15 
 23.23  cents per gallon. 
 23.24     (3) Compressed natural gas is taxed at the rate 
 23.25  of $1.739 $2.174 per thousand cubic feet; or 20 25 cents per 
 23.26  gasoline equivalent, as defined by the National Conference on 
 23.27  Weights and Measures, which is 5.66 pounds of natural gas. 
 23.28     (4) All other special fuel is taxed at the same rate as the 
 23.29  gasoline excise tax as specified in section 296A.07, subdivision 
 23.30  2 3.  The tax is payable in the form and manner prescribed by 
 23.31  the commissioner. 
 23.32     [EFFECTIVE DATE.] This section is effective for product 
 23.33  received by a licensed distributor, special fuel dealer, or bulk 
 23.34  purchaser after February 28, 2002, except that the change in 
 23.35  clause (4) is effective the day following final enactment. 
 23.36     Sec. 3.  [296A.081] [ANNUAL ADJUSTMENT OF TAX RATE.] 
 24.1      (a) Before June 1 of each year the commissioner shall 
 24.2   recompute and publish the rate for the taxes imposed under 
 24.3   section 296A.07, subdivision 3, and 296A.08, subdivision 2.  The 
 24.4   new rate per gallon must be calculated by multiplying the rate 
 24.5   in effect at the time of the calculation by the ratio obtained 
 24.6   under paragraph (b). 
 24.7      (b) Divide the annual average U.S. Consumer Price Index for 
 24.8   all urban consumers, as determined by the U.S. Department of 
 24.9   Labor, for the previous calendar year, by the annual average for 
 24.10  the calendar year before the previous year. 
 24.11     (c) The rate calculated under this section must be rounded 
 24.12  to the nearest 0.1 cent. 
 24.13     (d) The new rate calculated under this section is effective 
 24.14  for product received by a licensed distributor, special fuel 
 24.15  dealer, or bulk purchaser after May 31.  The determination of 
 24.16  the commissioner pursuant to this section must not be considered 
 24.17  a "rule" and is not subject to the Administrative Procedure Act 
 24.18  contained in chapter 14. 
 24.19     [EFFECTIVE DATE.] This section is effective January 1, 2003.
 24.20                             ARTICLE 6 
 24.21                   PROPERTY TAXES AND LOCAL AIDS 
 24.22     Section 1.  Minnesota Statutes 2000, section 273.1398, 
 24.23  subdivision 6, is amended to read: 
 24.24     Subd. 6.  [PAYMENT.] The commissioner shall certify the 
 24.25  aids provided in subdivisions 2, 2b, and 3, and 5 before 
 24.26  September 1 of the year preceding the distribution year to the 
 24.27  county auditor of the affected local government.  The annual 
 24.28  amount of aid provided in subdivision 2 must be paid to counties 
 24.29  in installments of 25 percent on March 15, 25 percent on July 
 24.30  20, and 50 percent on December 15.  The aids annual amount of 
 24.31  aid provided in subdivisions 2, 2b, subdivision 3, and 5 must be 
 24.32  paid to local governments other than school districts at the 
 24.33  times provided in section 477A.015 for payment of local 
 24.34  government aid to taxing jurisdictions, except that the first 
 24.35  one-half payment of disparity reduction aid provided in 
 24.36  subdivision 3 must be paid on or before August 31 and one-half 
 25.1   on December 26.  The disparity reduction credit provided in 
 25.2   subdivision 4 must be paid to taxing jurisdictions other than 
 25.3   school districts at the time provided in section 473H.10, 
 25.4   subdivision 3.  Aids and credit reimbursements to school 
 25.5   districts must be certified to the commissioner of children, 
 25.6   families, and learning and paid under section 273.1392.  Payment 
 25.7   shall not be made to any taxing jurisdiction that has ceased to 
 25.8   levy a property tax.  
 25.9      [EFFECTIVE DATE.] This section is effective for aids 
 25.10  payable in 2003 and thereafter. 
 25.11     Sec. 2.  Minnesota Statutes 2001 Supplement, section 
 25.12  275.71, subdivision 4, is amended to read: 
 25.13     Subd. 4.  [ADJUSTED LEVY LIMIT BASE.] (a) For taxes levied 
 25.14  in 2001 and 2002, the adjusted levy limit base is equal to the 
 25.15  levy limit base computed under subdivisions 2 and 3 or section 
 25.16  275.72, multiplied by: 
 25.17     (1) one plus a percentage equal to the percentage growth in 
 25.18  the implicit price deflator; 
 25.19     (2) one plus a percentage equal to the percentage increase 
 25.20  in number of households, if any, for the most recent 12-month 
 25.21  period for which data is available; and 
 25.22     (3) one plus a percentage equal to 50 percent of the 
 25.23  percentage increase in the taxable market value of the 
 25.24  jurisdiction due to new construction of class 3 property, as 
 25.25  defined in section 273.13, subdivision 24, except for 
 25.26  state-assessed utility and railroad operating property, for the 
 25.27  most recent year for which data is available. 
 25.28     (b) For counties only, for taxes levied in 2001 and 2002, 
 25.29  the adjusted levy limit base is also reduced by any amount of 
 25.30  levy reduction required under section 275.07, subdivision 1, 
 25.31  paragraph (b), clause (ii). 
 25.32     (c) For cities and counties for taxes levied in 2002, the 
 25.33  adjusted levy limit base is also reduced by the amount of aid 
 25.34  and credit losses certified under section 477A.0133, subdivision 
 25.35  3, paragraph (a), or subdivision 5, paragraph (a); and increased 
 25.36  by any adjustment authorized under section 275.73, subdivision 3.
 26.1      [EFFECTIVE DATE.] This section is effective for taxes 
 26.2   levied in 2002, payable in 2003. 
 26.3      Sec. 3.  Minnesota Statutes 2001 Supplement, section 
 26.4   275.73, is amended by adding a subdivision to read: 
 26.5      Subd. 3.  [ELECTION TO RESTORE LEVY AUTHORITY DUE TO THE 
 26.6   2002 AID REDUCTIONS.] For taxes levied in 2002, a local 
 26.7   governmental unit may increase its adjusted levy limit base 
 26.8   under section 275.71, subdivision 2, by the amount of aid and 
 26.9   credit losses certified in section 477A.0133, subdivision 3, 
 26.10  paragraph (a), or subdivision 5, paragraph (a), if approved by 
 26.11  the majority of voters of the governmental unit voting on the 
 26.12  question at the general election held in November 2002.  In 
 26.13  order to place the question on the ballot, the governing body of 
 26.14  the governmental unit must pass a resolution to that effect at 
 26.15  least 30 days prior to the date of the general election.  Notice 
 26.16  of the election must be given in the manner required by law.  
 26.17  Notwithstanding section 275.61, any levy authorized under this 
 26.18  section must be levied against net tax capacity. 
 26.19     [EFFECTIVE DATE.] This section is effective for taxes 
 26.20  levied in 2002, payable in 2003. 
 26.21     Sec. 4.  Minnesota Statutes 2001 Supplement, section 
 26.22  469.1799, subdivision 3, is amended to read: 
 26.23     Subd. 3.  [APPROPRIATION.] $91,000,000 in fiscal year 2002, 
 26.24  and $38,000,000 in fiscal year 2004 and in each fiscal year 
 26.25  thereafter is appropriated to the commissioner of revenue from 
 26.26  the general fund to make grants under this section.  The 
 26.27  appropriated amounts do not lapse at the end of a fiscal year.  
 26.28  Each amount is available until the later of when expended or 
 26.29  when this section is repealed.  If the amount of grant 
 26.30  entitlements under subdivision 1 for a year exceeds the amount 
 26.31  available for grants, the commissioner of revenue shall reduce 
 26.32  each grant proportionately so the total does not exceed the 
 26.33  amount available. 
 26.34     [EFFECTIVE DATE.] This section is effective the day 
 26.35  following final enactment. 
 26.36     Sec. 5.  Minnesota Statutes 2000, section 477A.011, 
 27.1   subdivision 27, is amended to read: 
 27.2      Subd. 27.  [REVENUE BASE.] "Revenue base" means: 
 27.3      (1) the amount levied by a governmental unit for taxes 
 27.4   payable in the previous a specific year, including the levy on 
 27.5   the fiscal disparity distribution under section 276A.06, 
 27.6   subdivision 3, paragraph clause (a), or 473F.08, subdivision 
 27.7   3, paragraph clause (a), and before reduction for the homestead 
 27.8   and agricultural credit aid under section 273.1398, subdivision 
 27.9   2, equalization aid under section 477A.013, subdivision 5, and 
 27.10  disparity reduction aid under section 273.1398, subdivision 3; 
 27.11  plus 
 27.12     (2) the originally certified amount the governmental unit 
 27.13  received in the same year for property tax replacement transit 
 27.14  aid under section 174.242, county criminal justice aid under 
 27.15  section 477A.0121, family preservation aid under section 
 27.16  477A.0122, local government aid in the previous year under 
 27.17  sections 477A.011 and 477A.013; low-income housing aids under 
 27.18  sections 477A.06 and 477A.065, and the taconite aids received in 
 27.19  the previous year under sections 298.28 and 298.282, and Laws 
 27.20  2001, First Special Session chapter 5, article 6, section 38.  
 27.21     The amounts in clause (2) are before any reductions 
 27.22  provided for in section 477A.0133. 
 27.23     [EFFECTIVE DATE.] This section is effective the day 
 27.24  following final enactment. 
 27.25     Sec. 6.  Minnesota Statutes 2000, section 477A.0121, 
 27.26  subdivision 5, is amended to read: 
 27.27     Subd. 5.  [PAYMENT DATES.] The aid amounts for each 
 27.28  calendar year shall be paid as provided in section 477A.015 to 
 27.29  each county in installments of 25 percent on March 15, 25 
 27.30  percent on July 20, and 50 percent on December 15. 
 27.31     [EFFECTIVE DATE.] This section is effective for aids 
 27.32  payable in 2003 and thereafter. 
 27.33     Sec. 7.  Minnesota Statutes 2000, section 477A.0122, 
 27.34  subdivision 5, is amended to read: 
 27.35     Subd. 5.  [PAYMENT.] The commissioner of revenue shall pay 
 27.36  the annual amounts determined under this section as provided in 
 28.1   section 477A.015 to each county in installments of 25 percent on 
 28.2   March 15, 25 percent on July 20, and 50 percent on December 15. 
 28.3      [EFFECTIVE DATE.] This section is effective for aids 
 28.4   payable in 2003 and thereafter.  
 28.5      Sec. 8.  [477A.0133] [AID AND CREDIT REIMBURSEMENT 
 28.6   REDUCTIONS TO LOCAL GOVERNMENTS.] 
 28.7      Subdivision 1.  [DEFINITIONS.] (a) For the purposes of this 
 28.8   section, the following terms have the meanings given them. 
 28.9      (b) "Adjusted net tax capacity," in the case of a city, 
 28.10  means city net tax capacity under section 477A.011, subdivision 
 28.11  20, and in the case of a county means the corresponding number 
 28.12  for the county using the same methodology. 
 28.13     (c) "Commissioner" means the commissioner of revenue. 
 28.14     (d) "Household and inflation growth factor," for a city or 
 28.15  county, means: 
 28.16     (1) the greater of zero or the average annual growth rate 
 28.17  in the number of households for the city or county for the three 
 28.18  previous full calendar years determined as of July 1, 2001, as 
 28.19  determined by the commissioner; plus 
 28.20     (2) 0.0295.  
 28.21     (e) The "statewide household and inflation growth factor" 
 28.22  is 0.045. 
 28.23     Subd. 2.  [MUNICIPAL AID AND LEVY ADJUSTMENTS FOR 
 28.24  2002.] (a) For aids payable in 2002, the commissioner shall 
 28.25  compute an aid reduction amount for each city having a revenue 
 28.26  base percentage increase between taxes payable in 2001 and taxes 
 28.27  payable in 2002 greater than 4.5 percent.  Cities with a 
 28.28  population of less than 1,000 are exempt from this computation.  
 28.29  This aid reduction amount for aid payable in 2002 is equal to 
 28.30  the amount by which the city's revenue base for taxes payable in 
 28.31  2002 exceeds the product of (1) the city's revenue base for 
 28.32  taxes payable in 2001; (2) one plus the city's household and 
 28.33  inflation growth factor; and (3) 1.25.  This aid reduction 
 28.34  amount must be deducted first from a city's local government aid 
 28.35  payable in 2002 as otherwise computed under section 477A.013; 
 28.36  and then, if necessary, from its market value homestead credit 
 29.1   reimbursement payable in 2002 as otherwise computed under 
 29.2   section 273.1384.  
 29.3      (b) In addition to the reduction amounts computed under 
 29.4   paragraph (a), the commissioner shall compute for each city 
 29.5   regardless of population an aid reduction amount for aid payable 
 29.6   in 2002 equal to two percent of the difference between the 
 29.7   city's revenue base for taxes payable in 2002 and its aid 
 29.8   reduction under paragraph (a).  The commissioner shall deduct 
 29.9   this aid reduction amount first from a city's local government 
 29.10  aid payable in 2002 as otherwise computed under section 477A.013 
 29.11  and as reduced under paragraph (a); and then, if necessary, from 
 29.12  its market value homestead credit reimbursement payable in 2002 
 29.13  as otherwise computed under section 273.1384 and as reduced 
 29.14  under paragraph (a). 
 29.15     (c) For aids payable in 2002, the commissioner shall 
 29.16  compute an aid reduction amount for each town and special taxing 
 29.17  district equal to two percent of the town's or district's 
 29.18  certified levy for taxes payable in 2002.  The commissioner 
 29.19  shall deduct this aid reduction amount from the town's or 
 29.20  district's market value homestead credit reimbursement payable 
 29.21  in 2002 as otherwise computed under section 273.1384. 
 29.22     Subd. 3.  [CITY AID AND LEVY ADJUSTMENTS FOR 2003 AND 
 29.23  THEREAFTER.] (a) For aids payable in 2003 and thereafter, the 
 29.24  commissioner shall reduce each city's local government aid as 
 29.25  otherwise computed under section 477A.013 by the amount under 
 29.26  subdivision 2, paragraph (a), that was deducted from the city's 
 29.27  payable 2002 local government aid, and shall reduce each city's 
 29.28  market value homestead credit reimbursement as otherwise 
 29.29  computed under section 273.1384 by the amount under subdivision 
 29.30  2, paragraph (a), that was deducted from the city's payable 2002 
 29.31  market value homestead credit reimbursement.  The total amount 
 29.32  deducted under this paragraph must not exceed six percent of the 
 29.33  city's adjusted net tax capacity for taxes payable in 2002. 
 29.34     (b) In addition to the aid reduction amounts under 
 29.35  paragraph (a), the commissioner shall compute for each city, 
 29.36  regardless of population, an aid reduction amount for aid 
 30.1   payable in 2003 and thereafter equal to 1.75 percent of the 
 30.2   city's adjusted net tax capacity for taxes payable in 2002.  
 30.3   This aid reduction must not exceed the difference between six 
 30.4   percent of the city's adjusted net tax capacity for taxes 
 30.5   payable in 2002 and the city's reductions under paragraph (a). 
 30.6      For aids payable in 2003 and thereafter, the commissioner 
 30.7   shall deduct this aid reduction amount first from a city's local 
 30.8   government aid as otherwise computed under section 477A.013 and 
 30.9   as reduced under paragraph (a); and then, if necessary, from its 
 30.10  market value homestead credit reimbursement as otherwise 
 30.11  computed under section 273.1384 and as reduced under paragraph 
 30.12  (a). 
 30.13     (c) For aids payable in 2003, if the amount of amortization 
 30.14  aid is permanently reduced or eliminated beginning with aids 
 30.15  paid in calendar year 2003 and the sum of amortization aid loss 
 30.16  plus the aid and credit reductions under paragraphs (a) and (b) 
 30.17  exceed six percent of the city's adjusted net tax capacity for 
 30.18  taxes payable in 2002, the city's 2003 city aid distribution 
 30.19  under section 477A.013, subdivision 9, must be increased after 
 30.20  the reductions in paragraphs (a) and (b).  The amount of the 
 30.21  increase equals the difference between (1) the sum of the 
 30.22  amortization aid loss plus the aid and credit reductions under 
 30.23  paragraphs (a) and (b); and (2) six percent of the city's 
 30.24  adjusted net tax capacity for taxes payable in 2002.  Beginning 
 30.25  in 2004, the city aid base for the city under section 477A.011, 
 30.26  subdivision 36, is increased by the amount calculated under this 
 30.27  paragraph.  For 2004 only, the maximum amount of total aid a 
 30.28  city may receive under section 477A.013, subdivision 9, is also 
 30.29  increased by the same amount. 
 30.30     Subd. 4.  [COUNTY AID AND LEVY ADJUSTMENTS FOR 2002.] (a) 
 30.31  For aids payable in 2002, the commissioner shall compute an aid 
 30.32  reduction amount for each county having a revenue base increase 
 30.33  between taxes payable in 2001 and taxes payable in 2002 greater 
 30.34  than the statewide household and inflation growth factor.  This 
 30.35  aid reduction amount for aid payable in 2002 is equal to the 
 30.36  amount by which the county's revenue base for taxes payable in 
 31.1   2002 exceeds the product of (1) the county's revenue base for 
 31.2   taxes payable in 2001; (2) one plus the county's household and 
 31.3   inflation growth factor; and (3) 1.25.  This aid reduction 
 31.4   amount must be deducted first from a county's market value 
 31.5   homestead credit reimbursement payable in 2002 as otherwise 
 31.6   computed under section 273.1384; and then, if necessary, from 
 31.7   its homestead and agricultural credit aid payable in 2002 as 
 31.8   otherwise computed under section 273.1398. 
 31.9      (b) In addition to the reduction amounts computed under 
 31.10  paragraph (a), the commissioner shall compute an aid reduction 
 31.11  amount for each county for aid payable in 2002 equal to 1.5 
 31.12  percent of the difference arrived at by taking the county's 
 31.13  revenue base for taxes payable in 2002 and subtracting the aid 
 31.14  reduction under paragraph (a).  The commissioner shall deduct 
 31.15  this aid reduction amount from a county's homestead and 
 31.16  agricultural credit aid payable in 2002 as otherwise computed 
 31.17  under section 273.1398 and as reduced under paragraph (a). 
 31.18     Subd. 5.  [COUNTY AID AND LEVY ADJUSTMENTS FOR 2003 AND 
 31.19  THEREAFTER.] (a) For aids payable in 2003 and thereafter, the 
 31.20  commissioner shall reduce each county's homestead and 
 31.21  agricultural credit aid as otherwise computed under section 
 31.22  273.1398 by the amount computed under subdivision 4, paragraph 
 31.23  (a), that was deducted from the county's payable 2002 market 
 31.24  value homestead credit reimbursement.  This amount must not 
 31.25  exceed five percent of the county's adjusted net tax capacity 
 31.26  for taxes payable in 2002. 
 31.27     (b) In addition to the aid reduction amounts under 
 31.28  paragraph (a), the commissioner shall compute for each county an 
 31.29  aid reduction amount for aid payable in 2003 and thereafter 
 31.30  equal to 1.0 percent of the county's adjusted net tax capacity 
 31.31  for taxes payable in 2002. 
 31.32     For aids payable in 2003 and thereafter, the commissioner 
 31.33  shall deduct this aid reduction amount first from a county's 
 31.34  homestead and agricultural credit aid as otherwise computed 
 31.35  under section 273.1398 and as reduced under paragraph (a); and 
 31.36  then, if necessary, from its market value homestead credit 
 32.1   reimbursement as otherwise computed under section 273.1384. 
 32.2      (c) The total amount deducted from aid for a county in 2003 
 32.3   and thereafter under both paragraphs (a) and (b) must not exceed 
 32.4   five percent of the county's adjusted net tax capacity for taxes 
 32.5   payable in 2002. 
 32.6      Subd. 6.  [GENERAL PROVISIONS.] An aid entitlement, amount, 
 32.7   payment, or levy limit must not be reduced under any provision 
 32.8   of this section to an amount less than $0.  Local government aid 
 32.9   reductions and market value credit reimbursement reductions for 
 32.10  a calendar year under this section must each be divided equally 
 32.11  between the payments to be made within that calendar year. 
 32.12     [EFFECTIVE DATE.] This section is effective the day 
 32.13  following final enactment. 
 32.14     Sec. 9.  Minnesota Statutes 2000, section 477A.015, is 
 32.15  amended to read: 
 32.16     477A.015 [PAYMENT DATES.] 
 32.17     The commissioner of revenue shall make the payments of pay 
 32.18  the annual amounts of the local government aid described in 
 32.19  section 477A.013 to each affected taxing authorities authority 
 32.20  in two installments of 25 percent on March 15, 25 percent on 
 32.21  July 20, and 50 percent on December 15.  For the purpose of any 
 32.22  statute that incorporates by reference the payment dates or 
 32.23  installments provided in this section, the payment dates and 
 32.24  installments so incorporated are two equal installments on July 
 32.25  20 and December 26 annually.  
 32.26     The commissioner may pay all or part of the payment due on 
 32.27  December 15 or 26 at any time after August 15 upon the request 
 32.28  of a city that requests such payment as being necessary for 
 32.29  meeting its cash flow needs. 
 32.30     [EFFECTIVE DATE.] This section is effective for aids 
 32.31  payable in 2003 and thereafter. 
 32.32     Sec. 10.  Minnesota Statutes 2001 Supplement, section 
 32.33  477A.03, subdivision 2, is amended to read: 
 32.34     Subd. 2.  [ANNUAL APPROPRIATION.] (a) A sum sufficient to 
 32.35  discharge the duties imposed by sections 477A.011 to 477A.014 is 
 32.36  annually appropriated from the general fund to the commissioner 
 33.1   of revenue.  
 33.2      (b) Aid payments to counties under section 477A.0121 are 
 33.3   limited to $20,265,000 in 1996.  Aid payments to counties under 
 33.4   section 477A.0121 are limited to $27,571,625 in 1997.  For aid 
 33.5   payable in 1998 and thereafter through 2002, the total aids paid 
 33.6   under section 477A.0121 are the amounts certified to be paid in 
 33.7   the previous year, adjusted for inflation as provided under 
 33.8   subdivision 3.  For aids payable in 2003 and thereafter, the 
 33.9   total aids paid under section 477A.0121 are the amounts 
 33.10  certified to be paid in the prior year. 
 33.11     (c)(i) For aids payable in 1998 and thereafter through 
 33.12  2002, the total aids paid to counties under section 477A.0122 
 33.13  are the amounts certified to be paid in the previous year, 
 33.14  adjusted for inflation as provided under subdivision 3.  For 
 33.15  aids payable in 2003 and thereafter, the total aids paid under 
 33.16  section 477A.0122 are the amounts certified to be paid in the 
 33.17  prior year. 
 33.18     (ii) Aid payments to counties under section 477A.0122 in 
 33.19  2000 are further increased by an additional $20,000,000 in 2000. 
 33.20     (d) Aid payments to cities in 2002 under section 477A.013, 
 33.21  subdivision 9, are limited to the amounts certified to be paid 
 33.22  in the previous year, adjusted for inflation as provided in 
 33.23  subdivision 3, and increased by $140,000,000, and minus the 
 33.24  reductions under section 477A.0133, for the year.  For aids 
 33.25  payable in 2003, the total aids paid under section 477A.013, 
 33.26  subdivision 9, are the amounts certified to be paid in the 
 33.27  previous year, adjusted for inflation as provided under 
 33.28  subdivision 3, and plus or minus the increases or reductions 
 33.29  under section 477A.0133, for the year.  For aids payable in 
 33.30  2004, the total aids paid under section 477A.013, subdivision 9, 
 33.31  are the amounts certified to be paid in the previous year, 
 33.32  adjusted for inflation as provided under subdivision 3, and 
 33.33  increased by the amount certified to be paid in 2003 under 
 33.34  section 477A.06.  For aids payable in 2005 and thereafter, the 
 33.35  total aids paid under section 477A.013, subdivision 9, are the 
 33.36  amounts certified to be paid in the previous year, adjusted for 
 34.1   inflation as provided under subdivision 3.  The additional 
 34.2   amount authorized under subdivision 4 is not included when 
 34.3   calculating the appropriation limits under this paragraph. 
 34.4      (e) Reimbursements made to counties under section 477A.0123 
 34.5   in calendar year 2004 and thereafter are limited to an amount 
 34.6   equal to the maximum allowed appropriation under this section in 
 34.7   the previous year, multiplied by a percent to be established by 
 34.8   law. 
 34.9      [EFFECTIVE DATE.] This section is effective the day 
 34.10  following final enactment. 
 34.11     Sec. 11.  [APPROPRIATIONS CANCELED.] 
 34.12     The appropriations to the commissioner of revenue for 
 34.13  fiscal years 2002 and 2003 to make tax increment financing 
 34.14  grants under Minnesota Statutes 2001 Supplement, section 
 34.15  469.1799, subdivision 3, are canceled. 
 34.16     [EFFECTIVE DATE.] This section is effective the day 
 34.17  following final enactment.