1.1 	A bill for an act
1.2 	relating to taxation; increasing education funding;
1.3 	eliminating the dedication of a portion of motor
1.4 	vehicle sales tax proceeds to transit; authorizing a
1.5 	property tax levy for transit; appropriating money;
1.6 	amending Minnesota Statutes 2004, sections 126C.10, by
1.7 	adding a subdivision; 174.24, subdivision 3b; 297B.09,
1.8 	subdivision 1; 473.388, subdivisions 4, 7; 473.446,
1.9 	subdivision 1, by adding subdivisions.
1.10 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.11 	Section 1. Minnesota Statutes 2004, section 126C.10, is
1.12 	amended by adding a subdivision to read:
1.13 		Subd. 2b.Additional basic revenue. For fiscal year
1.14 	2006, the formula allowance in subdivision 2 is increased by
1.15 	$70.  For fiscal year 2007 and subsequent years, the formula
1.16 	allowance in subdivision 2 is increased by $140.
1.17 	
EFFECTIVE DATE. This section is effective for revenue
1.18 	beginning in fiscal year 2006.

1.19 	Sec. 2. Minnesota Statutes 2004, section 174.24,
1.20 	subdivision 3b, is amended to read:
1.21 		Subd. 3b.Operating assistance; recipient
1.22 	classifications.  (a) The commissioner shall determine the total
1.23 	operating cost of any public transit system receiving or
1.24 	applying for assistance in accordance with generally accepted
1.25 	accounting principles.  To be eligible for financial assistance,
1.26 	an applicant or recipient shall provide to the commissioner all
1.27 	financial records and other information and shall permit any
2.1 	inspection reasonably necessary to determine total operating
2.2 	cost and correspondingly the amount of assistance that may be
2.3 	paid to the applicant or recipient.  Where more than one county
2.4 	or municipality contributes assistance to the operation of a
2.5 	public transit system, the commissioner shall identify one as
2.6 	lead agency for the purpose of receiving money under this
2.7 	section.
2.8 	(b) Prior to distributing operating assistance to eligible
2.9 	recipients for any contract period, the commissioner shall place
2.10 	all recipients into one of the following classifications:
2.11 	urbanized area service, small urban area service, rural area
2.12 	service, and elderly and handicapped service.  The commissioner
2.13 	shall distribute funds under this section so that the percentage
2.14 	of total operating cost paid by any recipient from local sources
2.15 	will not exceed the percentage for that recipient's
2.16 	classification, except as provided in an undue hardship case.
2.17 	The percentages must be:  for urbanized area service and , 44
2.18 	percent; for small urban area service, 20 65 percent; for rural
2.19 	area service, 15 33 percent; and for elderly and handicapped
2.20 	service, 15 19 percent.  The remainder of the total operating
2.21 	cost will be paid from state funds less any assistance received
2.22 	by the recipient from any federal source.  For purposes of this
2.23 	subdivision, "local sources" means all local sources of funds
2.24 	and includes all operating revenue, tax levies, and
2.25 	contributions from public funds, except that the commissioner
2.26 	may exclude from the total assistance contract revenues derived
2.27 	from operations the cost of which is excluded from the
2.28 	computation of total operating cost.  Total operating costs of
2.29 	the Duluth Transit Authority or a successor agency does not
2.30 	include costs related to the Superior, Wisconsin service
2.31 	contract and the Independent School District No. 709 service
2.32 	contract.  For calendar years 2004 and 2005, to enable public
2.33 	transit systems to meet the provisions of this section, the
2.34 	commissioner may adjust payments of financial assistance to
2.35 	recipients that were under a contract with the department on
2.36 	January 1, 2003.  Payments to such a recipient in calendar years
3.1 	2004 and 2005 from the greater Minnesota transit fund may not be
3.2 	less than the payment to the recipient from that fund in
3.3 	calendar year 2003, except for reductions made necessary by
3.4 	reductions in base funding for those years.
3.5 	(c) If a recipient informs the commissioner in writing
3.6 	after the establishment of these percentages but prior to the
3.7 	distribution of financial assistance for any year that paying
3.8 	its designated percentage of total operating cost from local
3.9 	sources will cause undue hardship, the commissioner may reduce
3.10 	the percentage to be paid from local sources by the recipient
3.11 	and increase the percentage to be paid from local sources by one
3.12 	or more other recipients inside or outside the classification.
3.13 	However, the commissioner may not reduce or increase any
3.14 	recipient's percentage under this paragraph for more than two
3.15 	years successively.  If for any year the funds appropriated to
3.16 	the commissioner to carry out the purposes of this section are
3.17 	insufficient to allow the commissioner to pay the state share of
3.18 	total operating cost as provided in this paragraph, the
3.19 	commissioner shall reduce the state share in each classification
3.20 	to the extent necessary.
3.21 	
EFFECTIVE DATE. This section is effective for grants in
3.22 	2006 and thereafter.

3.23 	Sec. 3. Minnesota Statutes 2004, section 297B.09,
3.24 	subdivision 1, is amended to read:
3.25 		Subdivision 1.Deposit of revenues.  (a) Money collected
3.26 	and received under this chapter must be deposited as provided in
3.27 	this subdivision.
3.28 	(b) From July 1, 2002, to June 30, 2003, 32 percent of the
3.29 	money collected and received must be deposited in the highway
3.30 	user tax distribution fund, 20.5 percent must be deposited in
3.31 	the metropolitan area transit fund under section 16A.88, and
3.32 	1.25 percent must be deposited in the greater Minnesota transit
3.33 	fund under section 16A.88.  The remaining money must be
3.34 	deposited in the general fund.
3.35 	(c) From July 1, 2003, to June 30, 2007 December 31, 2005,
3.36 	30 percent of the money collected and received must be deposited
4.1 	in the highway user tax distribution fund, 21.5 percent must be
4.2 	deposited in the metropolitan area transit fund under section
4.3 	16A.88, 1.43 percent must be deposited in the greater Minnesota
4.4 	transit fund under section 16A.88, 0.65 percent must be
4.5 	deposited in the county state-aid highway fund, and 0.17 percent
4.6 	must be deposited in the municipal state-aid street fund.  The
4.7 	remaining money must be deposited in the general fund.
4.8 	(d) From January 1, 2006, to June 30, 2007, 30 percent of
4.9 	the money collected and received must be deposited in the
4.10 	highway user tax distribution fund, 0.65 percent must be
4.11 	deposited in the county state aid highway fund, and 0.17 percent
4.12 	must be deposited in the municipal state aid street fund.  The
4.13 	remaining money must be deposited in the general fund.
4.14 	(e) On and after July 1, 2007, 32 percent of the money
4.15 	collected and received must be deposited in the highway user tax
4.16 	distribution fund, 20.5 percent must be deposited in the
4.17 	metropolitan area transit fund under section 16A.88, and 1.25
4.18 	percent must be deposited in the greater Minnesota transit fund
4.19 	under section 16A.88.  The remaining money must be deposited in
4.20 	the general fund.
4.21 	
EFFECTIVE DATE. This section is effective for collections
4.22 	after December 31, 2005.

4.23 	Sec. 4. Minnesota Statutes 2004, section 473.388,
4.24 	subdivision 4, is amended to read:
4.25 		Subd. 4.Financial assistance.  (a) The council must may 
4.26 	grant the requested financial assistance if it determines that
4.27 	the proposed service is intended to replace the service to the
4.28 	applying city or town or combination thereof by the council and
4.29 	that the proposed service will meet the needs of the applicant
4.30 	at least as efficiently and effectively as the existing service.
4.31 	(b) The amount of assistance which the council must may 
4.32 	provide to a system under this section may not be less than 
4.33 	exceed the sum of the amounts determined for each municipality
4.34 	comprising the system as follows:
4.35 	(1) the transit operating assistance grants received under
4.36 	this subdivision by the municipality in calendar year 2001 or
5.1 	the tax revenues for transit services levied by the municipality
5.2 	for taxes payable in 2001, including that portion of the levy
5.3 	derived from the areawide pool under section 473F.08,
5.4 	subdivision 3, clause (a), plus the portion of the
5.5 	municipality's aid under section 273.1398, subdivision 2,
5.6 	attributable to the transit levy; times 
5.7 	(2) the ratio of (i) the appropriation from the transit
5.8 	fund to the council for nondebt transit operations for the
5.9 	current fiscal year to (ii) the total levy certified by the
5.10 	council under section 473.446 and the opt-out municipalities
5.11 	under this section for taxes payable in 2001, including the
5.12 	portion of homestead and agricultural credit aid under section
5.13 	273.1398, subdivision 2, attributable to nondebt transit levies,
5.14 	times 
5.15 	(3) the ratio of (i) the municipality's total taxable
5.16 	market value for taxes payable in the most recent year for which
5.17 	data is available divided by the municipality's total taxable
5.18 	market value for taxes payable in 2001, to (ii) the total
5.19 	taxable market value of all property in the metropolitan area
5.20 	for taxes payable in the most recent year for which data is
5.21 	available divided by the total taxable market value of all
5.22 	property in the metropolitan area for taxes payable in 2001.the
5.23 	portion of the available local transit funds which the applicant
5.24 	proposes to use to subsidize the proposed service; and 
5.25 	(2) an amount of financial assistance bearing an identical
5.26 	proportional relationship to the amount under clause (1) as the
5.27 	total amount of funds used by the council to fund its transit
5.28 	operations bears to the total amount of taxes collected by the
5.29 	council under section 473.446, subdivision 1, paragraph (a),
5.30 	clause (2).
5.31 	(c) The council shall pay the amount to be provided to the
5.32 	recipient from the funds the council would otherwise use to fund
5.33 	its transit operations.
5.34 	(d) For purposes of this section, "available local transit
5.35 	funds" means 90 percent of the tax revenues which would accrue
5.36 	to the council from the tax it levies under section 473.446,
6.1 	subdivision 1, paragraph (a), clause (2), in the applicant city
6.2 	or town or combination thereof.
6.3 	
EFFECTIVE DATE. This section is effective for 2006 and
6.4 	thereafter.

6.5 	Sec. 5. Minnesota Statutes 2004, section 473.388,
6.6 	subdivision 7, is amended to read:
6.7 		Subd. 7.Local levy option.  (a) A statutory or home rule
6.8 	charter city or town that is eligible for assistance under this
6.9 	section may levy a tax for payment of the operating and capital
6.10 	expenditures for transit and other related activities and to
6.11 	provide for payment of obligations issued by the municipality
6.12 	for capital expenditures for transit and other related
6.13 	activities, provided that property taxes were pledged to satisfy
6.14 	the obligations, and provided that legislative appropriations
6.15 	are insufficient to satisfy the obligations such purposes,
6.16 	provided that the tax must be sufficient to maintain the level
6.17 	of transit service provided in the municipality in the previous
6.18 	year.
6.19 	(b) The transit tax revenues derived by the municipality
6.20 	may not exceed 88 percent of the tax revenues that would be
6.21 	raised by the council's levy under section 473.446, subdivision
6.22 	1, paragraph (a), clause (2), within the municipality, including
6.23 	the areawide portion of the levy under chapter 473F, if the
6.24 	municipality were not eligible for treatment under this section.
6.25 	The commissioner of revenue shall certify the
6.26 	municipality's levy limitation under this subdivision to the
6.27 	municipality by August 1 of the levy year.  The tax must be
6.28 	accumulated and kept in a separate fund to be known as the
6.29 	"replacement transit fund." 
6.30 	(c) This subdivision is consistent with the transit
6.31 	redesign plan.  Eligible municipalities opting to operate under
6.32 	this subdivision shall continue to meet the regional performance
6.33 	standards established by the council.
6.34 	(c) (d) Within the designated Americans with Disabilities
6.35 	Act area, metro mobility remains the obligation of the state.
6.36 	
EFFECTIVE DATE. This section is effective for taxes
7.1 	payable in 2006 and thereafter.

7.2 	Sec. 6. Minnesota Statutes 2004, section 473.446,
7.3 	subdivision 1, is amended to read:
7.4 		Subdivision 1.Metropolitan area transit tax.  (a) For
7.5 	the purposes of sections 473.405 to 473.449 and the metropolitan
7.6 	transit system, except as otherwise provided in this
7.7 	subdivision, the council shall levy each year upon all taxable
7.8 	property within the metropolitan area, defined in section
7.9 	473.121, subdivision 2, a transit tax consisting of:
7.10 	(1) an amount necessary to provide full and timely payment
7.11 	of certificates of indebtedness, bonds, including refunding
7.12 	bonds or other obligations issued or to be issued under section
7.13 	473.39 by the council for purposes of acquisition and betterment
7.14 	of property and other improvements of a capital nature and to
7.15 	which the council has specifically pledged tax levies under this
7.16 	clause; and
7.17 	(2) an additional amount necessary to provide full and
7.18 	timely payment of certificates of indebtedness issued by the
7.19 	council, after consultation with the commissioner of finance, if
7.20 	revenues to the metropolitan area transit fund in the fiscal
7.21 	year in which the indebtedness is issued increase over those
7.22 	revenues in the previous fiscal year by a percentage less than
7.23 	the percentage increase for the same period in the revised
7.24 	Consumer Price Index for all urban consumers for the St.
7.25 	Paul-Minneapolis metropolitan area prepared by the United States
7.26 	Department of Labor an amount which shall be used for payment of
7.27 	the expenses of operating transit and paratransit services.
7.28 	(b) Indebtedness to which property taxes have been pledged
7.29 	under paragraph (a), clause (2), that is incurred in any fiscal
7.30 	year may not exceed the amount necessary to make up the
7.31 	difference between (1) the amount that the council received or
7.32 	expects to receive in that fiscal year from the metropolitan
7.33 	area transit fund and (2) the amount the council received from
7.34 	that fund in the previous fiscal year multiplied by the
7.35 	percentage increase for the same period in the revised Consumer
7.36 	Price Index for all urban consumers for the St. Paul-Minneapolis
8.1 	metropolitan area prepared by the United States Department of
8.2 	Labor.The property tax levied by the council under paragraph
8.3 	(a), clause (2), must not exceed the following amount for the
8.4 	years specified:
8.5 	(1) for taxes payable in 2006, the amount received by the
8.6 	council and municipalities for that purpose from the
8.7 	metropolitan area transit fund under section 16A.88, subdivision
8.8 	2, in fiscal year 2005, adjusted for inflation, minus (i) any
8.9 	amounts to be levied for taxes payable in 2006 under section
8.10 	473.388, subdivision 7, and (ii) any amounts to be levied for
8.11 	taxes payable in 2006 under subdivision 1c; and 
8.12 	(2) for taxes payable in 2007 and subsequent years, the
8.13 	council's property tax levy limitation for the previous year
8.14 	determined under this subdivision before reductions by any
8.15 	amounts levied in the previous year under section 473.388,
8.16 	subdivision 7, and subdivision 1c, adjusted for inflation, minus
8.17 	any amounts to be levied in the current levy year under section
8.18 	473.388, subdivision 7, and subdivision 1c.
8.19 	(c) For the purposes of this subdivision, "adjusted for
8.20 	inflation" means multiplied by the percentage increase in the
8.21 	revised Consumer Price Index for all urban consumers in the St.
8.22 	Paul-Minneapolis metropolitan area prepared by the United States
8.23 	Department of Labor for the most recent 12-month period
8.24 	available compared to the previous 12-month period.
8.25 	
EFFECTIVE DATE. This section is effective for taxes
8.26 	payable in 2006 and thereafter.

8.27 	Sec. 7. Minnesota Statutes 2004, section 473.446, is
8.28 	amended by adding a subdivision to read:
8.29 		Subd. 1c.Taxation within transit area. For the purposes
8.30 	of sections 473.405 to 473.449, the council shall levy a transit
8.31 	tax upon all taxable property within the metropolitan transit
8.32 	area but outside of the metropolitan transit taxing district, as
8.33 	defined in subdivision 2, at a rate equal to ten percent of the
8.34 	rate within the transit district.  The proceeds of this tax
8.35 	shall be used only for paratransit services or ride sharing
8.36 	programs designed to serve persons located within the transit
9.1 	area but outside of the transit taxing district.
9.2 	
EFFECTIVE DATE. This section is effective for taxes
9.3 	payable in 2006 and thereafter.

9.4 	Sec. 8. Minnesota Statutes 2004, section 473.446, is
9.5 	amended by adding a subdivision to read:
9.6 		Subd. 1d.Levy within eligible municipalities. The
9.7 	council's levy upon taxable property within a municipality
9.8 	levying taxes under section 473.388, subdivision 7, is the tax
9.9 	that would be levied within the municipality if it were not
9.10 	levying under section 473.388, subdivision 7, minus the amount
9.11 	to be levied by the municipality under section 473.388,
9.12 	subdivision 7, for the current levy year.
9.13 	
EFFECTIVE DATE. This section is effective for taxes
9.14 	payable in 2006 and thereafter.