2E Relating to financing and operation of state and local government

ARTICLE 1 - INDIVIDUAL INCOME TAX

Expanding the priority list for allocation by the commissioner of finance of positive unrestricted budgetary general fund balances to amounts necessary to eliminate accelerated payments of certain June tax liabilities and to provide for the payment of interest on claims for refund of sales taxes paid on exempt capital equipment and for installment payments of local government aids (LGA) and taconite aid reimbursements; expanding the definition of resident trust for income tax purposes; eliminating the addition of certain standard deduction excesses to federal taxable income; temporarily increasing the income tax rate on income over a certain amount and adjusting the brackets for the lower tax rates, providing for continuing inflation adjustments of the brackets; providing a dairy investment credit against the income tax; eliminating the exclusion of certain wages from allocation to the state of income not derived from a trade or business

ARTICLE 2 - CORPORATE FRANCHISE TAX

Modifying the definition of foreign operating corporation; eliminating the subtraction for royalties or fees received from foreign corporations; excluding certain intangible income from the deemed dividend deduction for foreign operating corporation income under the unitary business principle

ARTICLE 3 - SALES TAX

Exempting certain meals and drinks purchased for and served exclusively to certain children attending child care or early childhood education programs; modifying the sales tax exemption for certain medicines and medical devices; excluding event souvenir clothing from the sales tax exemption on clothing, defining event souvenir clothing; changing the sales tax exemption for energy efficient products to an exemption for solar energy products and making permanent the exemption for certain energy efficient products; clarifying the sales tax exemption for medical equipment and excluding nonprescription drugs from the definition of medical supplies for exemption purposes; clarifying the sales tax exemption for chair lifts, ramps and elevators; exempting from the sales tax materials and supplies used in the construction of certain hydroelectric generating facilities; restricting the use of revenues from the local sales tax in the city of St. Paul; authorizing and providing for Mower county and the city of Worthington to impose local sales taxes for certain purposes

ARTICLE 4 - PROPERTY TAX AND AIDS

Modifying the tax base used to calculate school district debt service levies; defining debt service net tax capacity, requiring use to compute debt service levy limits and aid; requiring the commissioner of revenue to recompute debt service net tax capacity amounts using an alterative sales ratio comparing the sale price to the estimated market value of the property; gradually reducing the county match requirement for the allocation of chemical dependency treatment funds; clarifying the property tax exemption for personal property of certain hydroelectric generation facilities and exempting from the tax personal property of certain combustion turbine electric facilities; modifying and clarifying the market value exclusion for electric power generation facility efficiency; setting the state general tax rate for commercial industrial property; modifying certain proposed property tax (truth in taxation) provisions, providing for inclusion of certain supplemental information on the impact of state aid increases or decreases; modifying the levy limit basis for housing and redevelopment authorities (HRA); extending the metropolitan fiscal disparities (revenue distribution) repayment schedule for the city of Bloomington; modifying the definition of city revenue need for certain cities for local government aid purposes and increasing the city aid base for certain cities; annually allocating certain amounts of county program aid and providing a court aid adjustment to Anoka and Washington counties to pay postretirement costs of health insurance premiums for court employees and reducing the general fund appropriation for the district courts accordingly; eliminating taconite aids from the city LGA formula and modifying certain city aid distribution limits; codifying and providing for county criminal justice aid; increasing the appropriation limits for payment of city and county LGA; increasing the maximum levy limit of certain cities and towns in Itasca county for appropriations to the Lakeview cemetery association; providing for a sewer district pilot project in Crow Wing county; authorizing the Dakota county regional railroad authority to establish a bus rapid transit (BRT) system located within the Cedar avenue transitway corridor; requiring the commissioner to make certain payments to the city of White Bear Lake; appropriating money to the commissioner of human services for the consolidated chemical dependency treatment fund

ARTICLE 5 - INTERNATIONAL ECONOMIC DEVELOPMENT ZONE

Providing for designation of foreign trade zones as international economic development zones by certain foreign trade zone authorities under certain conditions, specifying certain powers of the authorities; requiring and providing for creation of regional distribution center development plans and preparation of a business plan; providing certain tax incentives; creating a jobs credit for qualified businesses and appropriating money to the commissioner of revenue for the credit; requiring and providing for repayment of certain tax incentives upon ceasing operation in the zones; authorizing the governor to designate the zones as job opportunity building zones (JOBZ) under certain conditions; requiring the commissioner of employment and economic development (DEED) to study and analyze the benefit to the state of additional international economic development zones and report the results to the legislature by a certain date

ARTICLE 6 - MISCELLANEOUS

Clarifying the effect of failure to receive the taxpayers rights statement and the application of the property tax exemption for job opportunity building zone (JOBZ) property improvements to certain agricultural processing zone property; authorizing cities, towns and counties to assess affected property owners for agreed to costs for electric utilities, telecommunications carriers or cable system operators to bury or alter new or existing distribution systems within public rights-of-way exceeding design and construction standards upon petition by the property owners; providing a temporary exception to competitive bidding requirements of housing and redevelopment authorities (HRA) for construction of certain public transit facilities financed with certain bond proceeds or federal subsidies; defining fiscal and economic implications of the proposed tax increment financing district for TIF financing plan development purposes; defining tax and fee for statutory interpretation purposes; extending the temporary petrofund fee exemption for commercial airlines headquartered in the state; authorizing the city of Rosemount to spend increments from a certain TIF district to acquire certain property acquired by the department of transportation (DOT) or Dakota county in connection with the realignment of trunk highway #3; appropriating money to the commissioner of revenue for grants to nonprofit organizations providing volunteer income tax preparation assistance services to low income and disadvantaged residents, to the commissioner of employment and economic development (DEED) for distribution to the city of Duluth for grants to enterprises for environmental cleanup of Lake Superior and long term community health care and to the commissioner of finance for transfer to the clean water legacy account and for buyback of certain school districts aid payment shifts; providing for the payment of deferred maintenance aid to school districts; appropriating money to the commissioner of education for deferred maintenance aid and to the higher education services office (HESO) for Rochester higher education program development

ARTICLE 7 - TAX SHELTER AND VOLUNTARY COMPLIANCE INITIATIVES

Requiring and providing the commissioner of revenue to develop and administer a tax shelter voluntary compliance initiative; specifying eligibility requirements; providing for the registration of tax shelters; specifying certain material advisors tax shelter or reportable transaction reporting requirements; providing for assessment; imposing penalties for registration or reporting failure

ARTICLE 8 - PROPERTY TAX FREEZE

"Truth and Fairness in Taxation Act" (TAFTA) or "State/Local Fiscal Relations: Truth in Taxation Act", recognizing the implications of addressing the state budget deficit without increasing general tax rates by preventing local property tax rate increases; freezing the benefit ratio used for city apportionment of levies to rural service districts; prohibiting local government units from incurring new debt by issuing obligations or entering into installment or lease purchase contracts or agreements after a certain date, exceptions; imposing certain levy limits for taxes payable in 2007 and subsequent years, providing exceptions for debt service, annexation and school district statutory operating debt; freezing local match requirements; suspending local salary or budget increase appeals authority and proposed property tax notice (truth in taxation) and hearing requirements; requiring levy reductions or adjustments under certain conditions; prohibiting unfunded pension liabilities of local police and fire relief associations from exceeding levies; requiring township boards of supervisors to adjust levies before the freeze termination year, authorizing reduction of expenditures to adjust for levy reductions; prohibiting local government units, special taxing districts or state agencies from imposing new or increasing the rates or amounts of existing fees; savings clause; providing for termination of the freeze
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