1.1 	A bill for an act
1.2 	 relating to taxation; income; providing for economic growth in rural counties 
1.3 	of the state by allowing a credit against the income tax of an employer for the 
1.4 	creation and retention of certain jobs; appropriating money; proposing coding for 
1.5 	new law in Minnesota Statutes, chapter 290.
1.6 	 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.7 	Section 1. [290.0681] RURAL ECONOMIC GROWTH CREDIT.
1.8 		Subdivision 1.Credit name. The credit allowed by this  section shall be known as 
1.9 	the "Rural Minnesota Catch-Up Credit."
1.10 		Subd. 2.Definitions. (a) For purposes of this section,  the following terms have 
1.11 	the meanings given.
1.12 	(b) "Eligible county" means a county, located outside the  metropolitan area, as 
1.13 	defined in section 473.121, subdivision 2,  that experienced, between 1994 and 2004, a net 
1.14 	new job growth  rate of less than 15.6 percent, or a county that has a  population of less 
1.15 	than 25,000 according to the 2000 census.
1.16 	(c) "Qualifying job" means a job in an industry that  produces goods or services 
1.17 	that bring outside wealth into an  eligible county.  A qualifying job includes jobs in 
1.18 	the  following industries:  value-added manufacturing, technologically innovative and 
1.19 	information industries, forestry,  mining, agriprocessing, and tourism attractions.  At a 
1.20 	minimum,  a qualifying job must provide full-time employment and pay not  less than $12 
1.21 	per hour, or $10 per hour plus health insurance  benefits, or its equivalent.  A qualifying job 
1.22 	does not include  any job for which a tax credit is received under section 469.318  or for 
1.23 	which a grant is made under section 469.309.
2.1 		Subd. 3.Credit allowed. A taxpayer that is awarded a  credit under subdivision 4 
2.2 	may take a credit against the tax  imposed by this chapter, equal to $4,000 per qualifying 
2.3 	job created by the taxpayer, per year for three years, and $3,000 in  the fourth year.
2.4 		Subd. 4.Qualification; application. (a) To qualify for  a credit under this section, a 
2.5 	taxpayer must create a new  qualifying job within an eligible county.  The taxpayer must 
2.6 	create the qualifying job within 12 months of being awarded the  credit.  If a taxpayer does 
2.7 	not create the qualifying job within  12 months, the credit is forfeited and, if claimed by 
2.8 	the  taxpayer, subject to recapture, and the credit amount accrues  back to the eligible 
2.9 	county for allocation under subdivision 5.
2.10 	(b) A taxpayer seeking a credit under this section must  apply to an eligible county at 
2.11 	least 60 days before the award  date in paragraph (c) on a form and in a manner prescribed 
2.12 	by  the commissioner.
2.13 	(c) Eligible counties shall award credits under this  section twice each year, by March 
2.14 	15 and September 15.  An eligible county shall publish a notice advertising the award 
2.15 	date, at least 90 days before the date.  The county board of  commissioners of an eligible 
2.16 	county, or the duly appointed  representatives of the county board of commissioners, shall 
2.17 	award credits under this section to applicants using uniform  criteria established by the 
2.18 	commissioner.  In selecting among  applicants for awarding credits under this section, 
2.19 	criteria  must contemplate and place greater weight on the following  factors:  whether the 
2.20 	qualifying job provides higher wages,  better benefits, or on-the-job training; whether the 
2.21 	taxpayer's  business is locally owned and owns, rather than leases, its own  facilities or 
2.22 	buildings; whether the taxpayer's business  provides employee stock ownership plans or 
2.23 	employee profit  sharing; and whether a higher percentage of the business's  employees are 
2.24 	hired with tax credits under this section.  For  purposes of this section, "duly appointed 
2.25 	representatives"  include a county or regional economic development agency or authority.
2.26 		Subd. 5.Limitation; carryforward. (a) The total amount  of credits under this 
2.27 	section may not exceed $150,000 per  eligible county over two years.  If a county fails to 
2.28 	award  $150,000 within a year, it may carry forward the amount that  remains unawarded 
2.29 	to the following year.  Unawarded amounts may  not be carried beyond the following 
2.30 	year and are lost.
2.31 	(b) A taxpayer may claim the credit under this section for  the year following the 
2.32 	year in which the new qualifying job is  created and for each year the new qualifying job 
2.33 	remains in  existence, up to a maximum of four years or $15,000 per  qualifying job created. 
2.34 	The taxpayer may claim the credit under  this section for years in which the qualifying job 
2.35 	was in  existence for the entire year.  A credit under this section is  awarded to the taxpayer 
2.36 	for, and attaches to, a designated  employee.  If the designated employee for whom a credit 
3.1 	under  this section was awarded leaves the employment of the taxpayer  for any reason, 
3.2 	the remaining credit the taxpayer would  otherwise be eligible to receive is forfeited and 
3.3 	may not be  claimed by the taxpayer unless a replacement employee is hired  to fill the 
3.4 	qualifying job within a reasonable period, not to  exceed three months.  Credit amounts 
3.5 	forfeited under this  paragraph accrue back to and may be awarded by an eligible  county as 
3.6 	if the amount had been unawarded, as provided in  paragraph (a).
3.7 		Subd. 6.Credit refundable. If the amount of credit that  the taxpayer is eligible to 
3.8 	receive under this section exceeds  the liability for tax under this chapter, the commissioner 
3.9 	shall  refund the excess to the claimant.  An amount sufficient to pay  the refunds authorized 
3.10 	by this subdivision is appropriated to  the commissioner from the general fund.
3.11 		Subd. 7.Manner of claiming. The commissioner shall  prescribe the manner in 
3.12 	which the credit may be issued and  claimed.  This may include providing for the issuance of 
3.13 	credit  certificates or allowing the credit only as a separately  processed claim for a refund.
3.14 		Subd. 8.Report. The commissioner shall report to the  legislature by February 15, 
3.15 	2009, on credits claimed under this  section and shall evaluate the feasibility and benefit 
3.16 	of  continuing the program.  The commissioner may consult with the  commissioner of 
3.17 	economic security and the commissioner of trade  and economic development in preparing 
3.18 	this report.
3.19 		Subd. 9.Expiration. This section expires for taxable  years beginning after 
3.20 	December 31, 2011.

3.21 	EFFECTIVE DATE. This section is effective January 1, 2007.