SF 330

1st Engrossment - 83rd Legislature (2003 - 2004)

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

  1.1                          A bill for an act 
  1.2             relating to taxation; prohibiting increases in 
  1.3             property tax levies for taxes payable in 2004 and 
  1.4             2005; amending Minnesota Statutes 2002, section 
  1.5             275.025, subdivision 1. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  [CITATION.] 
  1.8      This act may be cited as the "State/Local Fiscal Relations: 
  1.9   Truth in Taxation Act." 
  1.10     Sec. 2.  [STATEMENT OF PURPOSE.] 
  1.11     The legislature finds that the state of Minnesota is 
  1.12  presently experiencing a substantial budget deficit and that 
  1.13  reductions in state spending may result in increased burdens on 
  1.14  school districts, counties, cities, and other units of local 
  1.15  government.  In order to recognize the implications of 
  1.16  addressing the state budget deficit without increasing tax 
  1.17  rates, and to maintain stability in state and local fiscal 
  1.18  relations, the purpose of this act is to avoid property tax rate 
  1.19  increases and to illuminate the impact of reductions in revenue 
  1.20  to school districts, counties, cities, and other units of local 
  1.21  government. 
  1.22     Sec. 3.  Minnesota Statutes 2002, section 275.025, 
  1.23  subdivision 1, is amended to read: 
  1.24     Subdivision 1.  [LEVY AMOUNT.] The state general levy is 
  1.25  levied against commercial-industrial property and seasonal 
  2.1   recreational property, as defined in this section.  The state 
  2.2   general levy is $592,000,000 for taxes payable in 2002.  For 
  2.3   taxes payable in 2004 and 2005, the amount of the levy must be 
  2.4   the amount levied for taxes levied in 2002, payable in 2003.  
  2.5   For taxes payable in 2003, 2006, and subsequent years, the levy 
  2.6   for the previous year is increased each year by multiplying the 
  2.7   amount for the prior year by the sum of one plus the rate of 
  2.8   increase, if any, in the implicit price deflator for government 
  2.9   consumption expenditures and gross investment for state and 
  2.10  local governments prepared by the Bureau of Economic Analysts of 
  2.11  the United States Department of Commerce for the 12-month period 
  2.12  ending March 31 of the year prior to the year the taxes are 
  2.13  payable.  The tax under this section is not treated as a local 
  2.14  tax rate under section 469.177 and is not the levy of a 
  2.15  governmental unit under chapters 276A and 473F.  Beginning in 
  2.16  fiscal year 2004, and in each year thereafter, the commissioner 
  2.17  of finance shall deposit in an education reserve account, which 
  2.18  account is hereby established, the increased amount of the state 
  2.19  general levy received for deposit in the general fund for that 
  2.20  year over the amount of the state general levy received for 
  2.21  deposit in the general fund in fiscal year 2003.  The amounts in 
  2.22  the education reserve account do not lapse or cancel each year, 
  2.23  but remain until appropriated by law for education aid or higher 
  2.24  education funding. 
  2.25     Sec. 4.  [BENEFIT RATIO FOR RURAL SERVICE DISTRICTS.] 
  2.26     Notwithstanding Minnesota Statutes, section 272.67, 
  2.27  subdivision 6, the benefit ratio used for apportioning levies to 
  2.28  a rural service district for taxes payable in 2004 and 2005 
  2.29  shall not be greater than that in effect for taxes payable in 
  2.30  2003. 
  2.31     Sec. 5.  [PROHIBITION AGAINST INCURRING NEW DEBT.] 
  2.32     Subdivision 1.  [GENERALLY.] (a) After May 31, 2003, no 
  2.33  municipality as defined in Minnesota Statutes, section 475.51, 
  2.34  or any special taxing district as defined under Minnesota 
  2.35  Statutes, section 275.066, may sell obligations, certificates of 
  2.36  indebtedness, or capital notes under Minnesota Statutes, chapter 
  3.1   475, section 412.301, or any other law authorizing obligations, 
  3.2   certificates of indebtedness, capital notes, or other debt 
  3.3   instruments or enter into installment purchase contracts or 
  3.4   lease purchase agreements under Minnesota Statutes, section 
  3.5   465.71, or any other law authorizing installment purchase 
  3.6   contracts or lease purchase agreements if issuing those debt 
  3.7   instruments or entering into those contracts would require a 
  3.8   levy first becoming payable in 2004 or 2005.  This restriction 
  3.9   does not apply to (1) refunding bonds sold to refund bonds 
  3.10  originally sold before June 1, 2003, or (2) obligations for 
  3.11  which the amount of the levy first becoming due in 2004 would 
  3.12  not exceed the amount by which the municipality's total debt 
  3.13  service levy for taxes payable in 2004 prior to issuance of 
  3.14  those obligations is less than the municipality's total debt 
  3.15  service levy for taxes payable in 2003.  As used in clause (2), 
  3.16  "obligations" includes certificates of indebtedness, capital 
  3.17  notes, or other debt instruments or installment purchase 
  3.18  contracts or lease purchase agreements. 
  3.19     (b) For purposes of this section, bonds will be deemed to 
  3.20  have been sold before June 1, 2003, if: 
  3.21     (1) an agreement has been entered into between the 
  3.22  municipality and a purchaser or underwriter for the sale of the 
  3.23  bonds by that date; 
  3.24     (2) the issuing municipality is a party to a contract or 
  3.25  letter of understanding entered into before June 1, 2003, with 
  3.26  the federal government or the state government that requires the 
  3.27  municipality to pay for a project, and the project will be 
  3.28  funded with the proceeds of the bonds; or 
  3.29     (3) the proceeds of the bonds will be used to fund a 
  3.30  project or acquisition with respect to which the municipality 
  3.31  has entered into a contract with a builder or supplier before 
  3.32  June 1, 2003.  Debt service payments due on bonds described in 
  3.33  this paragraph during calendar years 2004 and 2005 will be paid 
  3.34  by the state.  The amount of those payments must be repaid by 
  3.35  the municipality to the state in three equal annual installments 
  3.36  beginning in 2006.  No interest will be due on those payments if 
  4.1   timely paid by June 15 of the year due. 
  4.2      Subd. 2.  [EXCEPTION.] Notwithstanding subdivision 1, 
  4.3   certificates of indebtedness, capital notes, installment 
  4.4   purchase contracts, lease purchase agreements or any other debt 
  4.5   instruments, and the debt service levies for the obligations 
  4.6   shall, for purposes of this act, be treated as if sold prior to 
  4.7   June 1, 2003, if: 
  4.8      (1) the municipality or other governmental authority has 
  4.9   satisfied any one of the following conditions prior to June 1, 
  4.10  2003: 
  4.11     (i) it has adopted a resolution or ordinance authorizing 
  4.12  the issuance of the obligations; 
  4.13     (ii) it has declared official intent to issue the 
  4.14  obligations under federal tax laws and regulations; or 
  4.15     (iii) it has entered into a binding agreement to design or 
  4.16  construct a project or acquire property to be financed with the 
  4.17  obligations; and 
  4.18     (2) the municipality makes a finding at the time of the 
  4.19  sale of the bonds that no levy will be required for taxes 
  4.20  payable in 2004 or 2005 to pay the debt service on the 
  4.21  obligations because sufficient funds are available from 
  4.22  nonproperty tax sources to pay the debt service. 
  4.23     Sec. 6.  [LEVY LIMITATION FOR TAXES PAYABLE IN 2004 AND 
  4.24  2005.] 
  4.25     Subdivision 1.  [2004 AND 2005 PROPOSED LEVY.] 
  4.26  Notwithstanding any other law to the contrary, for purposes of 
  4.27  the certification required by Minnesota Statutes, section 
  4.28  275.065, subdivision 1, in 2003 and 2004, no taxing authority 
  4.29  shall certify to the county auditor a proposed property tax levy 
  4.30  or, in the case of a township, a final property tax levy, 
  4.31  greater than the levy certified to the county auditor pursuant 
  4.32  to Minnesota Statutes, section 275.07, subdivision 1, in the 
  4.33  prior year, except as provided in subdivisions 3 and 4. 
  4.34     Subd. 2.  [2004 AND 2005 FINAL LEVY.] Notwithstanding any 
  4.35  other law to the contrary, for purposes of the certification 
  4.36  required by Minnesota Statutes, section 275.07, subdivision 1, 
  5.1   in 2003 and 2004, no taxing authority shall certify to the 
  5.2   county auditor a property tax levy greater than the amount 
  5.3   certified to the county auditor pursuant to Minnesota Statutes, 
  5.4   section 275.07, subdivision 1, in the prior year, except as 
  5.5   provided in subdivisions 3 and 4. 
  5.6      Subd. 3.  [DEBT SERVICE EXCEPTION.] If a payable 2004 or 
  5.7   2005 levy for debt service on obligations, certificates of 
  5.8   indebtedness, capital notes, or other debt instruments sold 
  5.9   prior to June 1, 2003, or to make payments on installment 
  5.10  purchase contracts or lease purchase agreements entered into 
  5.11  prior to June 1, 2003, exceeds the levy a taxing authority 
  5.12  certified pursuant to Minnesota Statutes, section 275.07, 
  5.13  subdivision 1, for taxes payable in 2003 for the same purpose, 
  5.14  the excess may be levied notwithstanding the limitations of 
  5.15  subdivisions 1 and 2. 
  5.16     Subd. 4.  [ANNEXATION EXCEPTION.] The city tax rate for 
  5.17  taxes payable in 2004 or 2005 on any property annexed under 
  5.18  Minnesota Statutes, chapter 414, may not be increased over the 
  5.19  city or township tax rate in effect on the property in 2003, 
  5.20  notwithstanding any law, municipal board order, or ordinance to 
  5.21  the contrary.  The limit on the annexing city's levy under 
  5.22  subdivisions 1 and 2 may be increased in excess of that limit by 
  5.23  an amount equal to the net tax capacity of the property annexed 
  5.24  times the city or township tax rate in effect on that property 
  5.25  for taxes payable in 2003.  The levy limit of the city or 
  5.26  township from which the property was annexed shall be reduced by 
  5.27  the same amount. 
  5.28     Sec. 7.  [FREEZE ON LOCAL MATCH REQUIREMENTS.] 
  5.29     Notwithstanding any other law to the contrary, the local 
  5.30  funding or local match required from any city, town, or county 
  5.31  for any state grant or program shall not be increased for 
  5.32  calendar year 2004 or 2005 above the dollar amount of the local 
  5.33  funding or local match required for the same grant or program in 
  5.34  2003, regardless of the level of state funding provided.  Any 
  5.35  local match or local funding requirement that first becomes 
  5.36  effective after December 31, 2003, for new or changed state 
  6.1   grants or programs shall not be effective until calendar year 
  6.2   2006.  Nothing in this section shall affect the eligibility of a 
  6.3   city, town, or county for the receipt of state grants or program 
  6.4   funds in 2004 or 2005 or reduce the amount of state funding a 
  6.5   city, town, or county would otherwise receive in 2004 or 2005 if 
  6.6   the local match requirements of the state grant or program were 
  6.7   met in 2003. 
  6.8      Sec. 8.  [SUSPENSION OF SALARY AND BUDGET APPEAL 
  6.9   AUTHORIZATION.] 
  6.10     After February 28, 2003, no county sheriff may exercise the 
  6.11  authority granted under Minnesota Statutes, section 387.20, 
  6.12  subdivision 7, and no county attorney may exercise the authority 
  6.13  granted under Minnesota Statutes, section 388.18, subdivision 6, 
  6.14  to the extent that the salary or budget increase sought in the 
  6.15  appeal would result in an increase in county expenditures in 
  6.16  calendar year 2004 or 2005. 
  6.17     Sec. 9.  [SUSPENSION OF PUBLICATION AND HEARING 
  6.18  REQUIREMENTS.] 
  6.19     A local taxing authority is not required to comply with the 
  6.20  public advertisement notice of Minnesota Statutes, section 
  6.21  275.065, subdivision 5a, or the public hearing requirement of 
  6.22  Minnesota Statutes, section 275.065, subdivision 6, with respect 
  6.23  to taxes levied in 2003 and 2004, payable in 2004 and 2005, only.
  6.24     Sec. 10.  [FISCAL DISPARITIES FREEZE.] 
  6.25     Notwithstanding Minnesota Statutes, section 276A.06, 
  6.26  subdivision 2, paragraph (a), or 473F.08, subdivision 2, 
  6.27  paragraph (a), the amount to be deducted from a governmental 
  6.28  unit's net tax capacity for taxes payable in 2004 and 2005 under 
  6.29  that clause must equal the amount deducted for taxes payable in 
  6.30  2003.  Notwithstanding Minnesota Statutes, section 276A.06, 
  6.31  subdivision 2, paragraph (b), or 473F.08, subdivision 2, 
  6.32  paragraph (b), the amount to be added to a governmental unit's 
  6.33  net tax capacity for taxes payable in 2004 and 2005 under that 
  6.34  clause must equal the same amount added for taxes payable in 
  6.35  2003.  Notwithstanding Minnesota Statutes, section 276A.06, 
  6.36  subdivision 3, or 473F.08, subdivision 3, the areawide portion 
  7.1   of the levy for each governmental unit must be determined using 
  7.2   the local tax rate for the 2001 levy year.  Notwithstanding 
  7.3   Minnesota Statutes, section 276A.06, subdivision 7, or 473F.08, 
  7.4   subdivision 6, the portion of commercial-industrial property 
  7.5   within a municipality subject to the areawide tax rate shall be 
  7.6   computed using the amount determined under Minnesota Statutes, 
  7.7   sections 276A.04 and 276A.05, or 473F.06 and 473F.07, for taxes 
  7.8   payable in 2003. 
  7.9      Sec. 11.  [TAX RATE FREEZE; REDUCTION OF LEVY.] 
  7.10     If in the course of determining local tax rates for taxes 
  7.11  payable in 2004 or 2005 after reductions for disparity reduction 
  7.12  aid under Minnesota Statutes, section 275.08, subdivisions 1c 
  7.13  and 1d, the county auditor finds the local tax rate exceeds that 
  7.14  in effect for taxes payable in 2003, the county auditor shall 
  7.15  reduce the local government's levy so that the local tax rate 
  7.16  does not exceed that in effect for taxes payable in 2003, 
  7.17  adjusted as provided in section 6, subdivisions 3 and 4. 
  7.18     Sec. 12.  [PENSION LIABILITIES.] 
  7.19     Notwithstanding any other law or charter provision to the 
  7.20  contrary, no levy for taxes payable in 2004 or 2005 for a local 
  7.21  police and fire relief association for the purpose of amortizing 
  7.22  an unfunded pension liability may exceed the levy for that 
  7.23  purpose for taxes payable in 2003. 
  7.24     Sec. 13.  [DUTIES OF TOWNSHIP BOARD OF SUPERVISORS.] 
  7.25     Notwithstanding Minnesota Statutes, section 365.10, in 2003 
  7.26  the township board of supervisors shall adjust the levy and in 
  7.27  2004 the township board of supervisors may adjust the 
  7.28  expenditures of a township below the level authorized by the 
  7.29  electors to adjust for any reduction in the previously 
  7.30  authorized levy of the township pursuant to section 6. 
  7.31     Sec. 14.  [SAVINGS CLAUSE.] 
  7.32     Notwithstanding any provision in this act, nothing in this 
  7.33  act constitutes an impairment of any obligations, certificates 
  7.34  of indebtedness, capital notes, or other debt instruments, 
  7.35  including installment purchase contracts or lease purchase 
  7.36  agreements, issued before the date of final enactment of this 
  8.1   act, by a municipality as defined in Minnesota Statutes, section 
  8.2   469.174, subdivision 6, or a special taxing district as defined 
  8.3   in Minnesota Statutes, section 275.066.