1.1 	A bill for an act
1.2 	relating to natural resources and land acquisition;
1.3 	proposing an amendment to the Minnesota Constitution,
1.4 	article XI, section 14; creating a Minnesota
1.5 	Conservation Heritage Council; imposing a cigarette
1.6 	fee; proposing coding for new law as Minnesota
1.7 	Statutes, chapter 116V.
1.8 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.9 	ARTICLE 1
1.10 	CONSTITUTIONAL AMENDMENT

1.11 	Section 1. CONSTITUTIONAL AMENDMENT.
 1.12 	An amendment to the Minnesota Constitution, article XI,
1.13 	section 14, is proposed to the people.  If the amendment is
1.14 	adopted, the section will read:

1.15 	Sec. 14. A permanent environment and natural resources
1.16 	trust fund is established in the state treasury.  Loans may be
1.17 	made of up to five percent of the principal of the fund for
1.18 	water system improvements as provided by law.  The assets of the
1.19 	fund shall be appropriated by law for the public purpose of
1.20 	protection, conservation, preservation, and enhancement of the
1.21 	state's air, water, land, fish, wildlife, and other natural
1.22 	resources.  The amount appropriated each year of a biennium,
1.23 	commencing on July 1 in each odd-numbered year and ending on and
1.24 	including June 30 in the next odd-numbered year, may be up to
1.25 	5-1/2 percent of the market value of the fund on June 30 one
1.26 	year before the start of the biennium.  Not less than 40 percent
2.1 	of the net proceeds from any state-operated lottery must be
2.2 	credited to the fund until the year 2025. Twenty-five percent
2.3 	of the lottery net proceeds credited annually must be used for
2.4 	land acquisition.

2.5 	Sec. 2. SUBMISSION TO VOTERS.
 2.6 	The proposed amendment shall be submitted to the people at
2.7 	the 2006 general election.  The question submitted shall be:
2.8 	"Shall the Minnesota Constitution be amended so that 25
2.9 	percent of the annual amount of the environment and natural
2.10 	resources trust fund proceeds be spent on land acquisition for
2.11 	environmental enhancement? 
2.12 	Yes .......
2.13 	                                   No ........" 

2.14 	Sec. 3. EFFECTIVE DATE.
 2.15 	Sections 1 and 2 are effective the day after approval of
2.16 	the voters in section 2.

2.17 	ARTICLE 2
2.18 	MINNESOTA CONSERVATION HERITAGE COUNCIL

2.19 	Section 1. [116V.01] COUNCIL.
2.20 	"Council" means the Minnesota Conservation Heritage Council.

2.21 	Sec. 2. [116V.02] MINNESOTA CONSERVATION HERITAGE
2.22 	COUNCIL.
2.23 		Subdivision 1.Membership. (a) The Minnesota
2.24 	Conservation Heritage Council is created pursuant to section
2.25 	15.012, paragraph (a), and is governed by a council of 11
2.26 	members.  The terms of members are six years and until their
2.27 	successors have been appointed.  Each member shall be appointed
2.28 	by the governor with the advice and consent of the senate.  Not
2.29 	more than six members shall belong to the same political party.
2.30 	The governor shall select at least one member from each
2.31 	congressional district.
2.32 	(b) To be eligible for appointment to the council, a
2.33 	prospective member must:  (1) demonstrate expertise and
2.34 	experience in the science, policy, or practice of the
2.35 	protection, conservation, preservation, and enhancement of the
2.36 	state's air, water, land, fish, wildlife, and other natural
3.1 	resources; and (2) not be a paid employee of an organization
3.2 	whose primary mission is the protection, conservation,
3.3 	preservation, and enhancement of natural resources.  Prior
3.4 	service on multimember boards with grant-making responsibilities
3.5 	or prior experience in the management of a business enterprise
3.6 	is also recommended.
3.7 	(c) Except as provided in this section, the terms,
3.8 	compensation, and removal of members and filling of vacancies on
3.9 	the council shall be as provided in section 15.0575.  A member
3.10 	may be removed from the council upon a supermajority of eight
3.11 	votes in favor of the removal of that member.
3.12 		Subd. 2.Chair; vice-chair. The governor shall select a
3.13 	member to serve as chair for a term concurrent with that of the
3.14 	governor.  If a vacancy occurs in the position of chair, the
3.15 	governor shall select a new chair to complete the unexpired
3.16 	term.  The chair shall be the principal executive officer of the
3.17 	council and shall preside at meetings of the council.  The chair
3.18 	shall organize the work of the council and may make assignments
3.19 	to members, appoint committees, and give direction to the
3.20 	staff.  The members of the council shall select a vice chair.
3.21 		Subd. 3.Staff. The council may employ an executive
3.22 	director and other staff as may be necessary.
3.23 		Subd. 4.Quorum. Except when otherwise specified, a
3.24 	majority of the council shall constitute a quorum and the act or
3.25 	decision of a majority of members present, if at least a quorum
3.26 	is present, shall be the act or decision of the council.  If a
3.27 	vacancy exists on the council, a majority of the remaining
3.28 	members constitutes a quorum.  A supermajority of eight members
3.29 	in favor is required for:  (1) hiring or removing an executive
3.30 	director for the council, if any; or (2) using funds for debt
3.31 	service on bonds.
3.32 		Subd. 5.Gifts. The council may accept and use grants of
3.33 	money or property from the United States or other grantors for
3.34 	any purpose pertaining to the activities of the council.  Any
3.35 	money or property so received is appropriated and dedicated for
3.36 	the purposes for which it is granted and shall be expended or
4.1 	used solely for such purposes according to federal laws and
4.2 	regulations pertaining thereto, subject to applicable state laws
4.3 	and rules as to manner of expenditure or use.  The council may
4.4 	make grants of any money received to other agencies, units of
4.5 	local government, private individuals, private organizations,
4.6 	and private nonprofit corporations.  Appropriate funds and
4.7 	accounts shall be maintained by the commissioner of finance to
4.8 	comply with this section.  Lands and interests in lands received
4.9 	may be sold or exchanged according to chapter 94.

4.10 	Sec. 3. [116V.03] INFORMATION GATHERING.
4.11 		Subdivision 1.Public forums. The council may convene
4.12 	public forums or employ other methods to gather information for
4.13 	establishing priorities for funding.
4.14 		Subd. 2.Technical advisory committee. The council shall
4.15 	make use of available expertise from educational, research, and
4.16 	technical organizations, and state and federal environmental
4.17 	agencies, including the University of Minnesota and other higher
4.18 	education institutions, to provide appropriate independent
4.19 	expert advice on identifying natural resource priorities during
4.20 	development of the strategic plan.  The technical advisory
4.21 	committee shall also review funding proposals and advise the
4.22 	council on funding recommendations.  The council shall appoint
4.23 	the technical advisory committee and designate a chair.
4.24 	Compensation of advisory committee members is governed by
4.25 	section 15.059, subdivision 3.
4.26 		Subd. 3.State agency long-term priorities. State
4.27 	agencies with environmental programs and responsibilities shall
4.28 	submit long-term priorities based on agency plans to the
4.29 	council.  The council may integrate agency long-term priorities
4.30 	into the development of its strategic plan.
4.31 		Subd. 4.Public priorities. The council shall ask
4.32 	conservation and environmental organizations to submit their
4.33 	long-term priorities and plans to the council, which may be
4.34 	integrated into the council's strategic plan.

4.35 	Sec. 4. [116V.04] WORK PROGRAM; PROGRESS REPORTS.
4.36 	It is a condition of acceptance of the appropriations made
5.1 	from the Minnesota environment and natural resources trust fund
5.2 	that the agency or entity receiving the appropriation must
5.3 	submit a work program and semiannual progress reports in the
5.4 	form determined by the council.  None of the money provided may
5.5 	be spent unless the council has approved the pertinent work
5.6 	program.

5.7 	Sec. 5. [116V.05] STRATEGIC PLAN REQUIRED.
5.8 	(a) The council shall adopt a strategic plan for making
5.9 	expenditures from the trust fund, including identifying the
5.10 	priority areas for funding for the next ten years.  The
5.11 	strategic plan must be updated every two years.  The council
5.12 	shall make funding allocation recommendations on an annual basis
5.13 	to the governor according to the strategic plan.
5.14 	(b) The council shall submit the plan to the chairs of the
5.15 	house of representatives and senate committees with jurisdiction
5.16 	over environment and natural resources policy and finance by
5.17 	January 15 of each odd-numbered year.

5.18 	Sec. 6. [116V.06] PUBLIC MEETINGS.
5.19 	All council meetings must be open to the public.

5.20 	Sec. 7. [116V.07] CONFLICT OF INTEREST.
5.21 	(a) A council member, or an employee of the council, may
5.22 	not participate in or vote on a decision of the council relating
5.23 	to an organization in which the member or employee has either a
5.24 	direct or indirect personal financial interest.  While serving
5.25 	on the council, or while an employee of the council, a person
5.26 	shall avoid any potential conflict of interest.  A conflict of
5.27 	interest exists if the person:
5.28 	(1) would receive a direct or indirect personal financial
5.29 	benefit from an entity proposing a project for funding by the
5.30 	council or from a proposal under review for funding by the
5.31 	council;
5.32 	(2) serves as an employee, consultant, or governing board
5.33 	member of an entity proposing a project for funding by the
5.34 	council; or 
5.35 	(3) has a family relationship with a project proposer or a
5.36 	staff or board member of an entity proposing a project for
6.1 	funding by the council.
6.2 	(b) The council must develop procedures to identify a
6.3 	conflict of interest during the initial proposal review
6.4 	process.  If a conflict is found to exist, the person must
6.5 	notify the council in writing and may not advocate for or
6.6 	against the proposal or vote on the proposal.

6.7 	Sec. 8. [116V.08] RESTRICTIONS; MODIFICATION PROCEDURE.
6.8 	(a) An interest in real property acquired with an
6.9 	appropriation from the trust fund or the Minnesota future
6.10 	resources fund must be used in perpetuity or for the specific
6.11 	term of an easement interest for the purpose for which the
6.12 	appropriation was made.
6.13 	(b) A recipient of funding who acquires an interest in real
6.14 	property subject to this section may not alter the intended use
6.15 	of the interest in real property or convey any interest in the
6.16 	real property acquired with the appropriation without the prior
6.17 	review and approval of the council.  The council shall establish
6.18 	procedures to review requests from recipients to alter the use
6.19 	of or convey an interest in real property.  These procedures
6.20 	shall allow for the replacement of the interest in real property
6.21 	with another interest in real property meeting the following
6.22 	criteria:
6.23 	(1) the interest is at least equal in fair market value, as
6.24 	certified by the commissioner of natural resources, to the
6.25 	interest being replaced; and 
6.26 	(2) the interest is in a reasonably equivalent location,
6.27 	and has a reasonably equivalent usefulness compared to the
6.28 	interest being replaced.
6.29 	(c) A recipient of funding who acquires an interest in real
6.30 	property under paragraph (a) must separately record a notice of
6.31 	funding restrictions in the appropriate local government office
6.32 	where the conveyance of the interest in real property is filed.
6.33 	The notice of funding agreement must contain:
6.34 	(1) a legal description of the interest in real property
6.35 	covered by the funding agreement;
6.36 	(2) a reference to the underlying funding agreement;
7.1 	(3) a reference to this section; and 
7.2 	(4) the following statement:
7.3 	"This interest in real property shall be administered in
7.4 	accordance with the terms, conditions, and purposes of the grant
7.5 	agreement or work program controlling the acquisition of the
7.6 	property.  The interest in real property, or any portion of the
7.7 	interest in real property, shall not be sold, transferred,
7.8 	pledged, or otherwise disposed of or further encumbered without
7.9 	obtaining the prior written approval of the council or its
7.10 	successor.  If the holder of the interest in real property fails
7.11 	to comply with the terms and conditions of the grant agreement
7.12 	or work program, ownership of the interest in real property
7.13 	shall transfer to this state." 

7.14 	Sec. 9. [116V.09] INITIAL CITIZEN APPOINTMENTS.
7.15 	The governor shall make the initial appointments of citizen
7.16 	members to the Minnesota Conservation Heritage Council according
7.17 	to the following schedule of terms:
7.18 	(1) three members to serve for full six-year terms;
7.19 	(2) three members to serve for five-year terms;
7.20 	(3) three members to serve for four-year terms; and 
7.21 	(4) two members to serve for three-year terms.

7.22 	Sec. 10. [116V.10] FUND CREATION.
7.23 	The commissioner of finance must create a Minnesota land
7.24 	resources fund for deposit of revenue under section 116V.12.

7.25 	Sec. 11. [116V.11] MINNESOTA FUTURE RESOURCES FUND.
7.26 		Subdivision 1.Revenue sources. The money in the
7.27 	Minnesota land resources fund consists of revenue credited under
7.28 	section 116V.12, subdivision 8.
7.29 		Subd. 2.Interest. The interest attributable to the
7.30 	investment of the Minnesota land resources fund must be credited
7.31 	to the fund.
7.32 		Subd. 3.Revenue purposes. Revenue in the Minnesota land
7.33 	resources fund may be spent by the Minnesota Heritage
7.34 	Conservation Council for purposes of natural resources and
7.35 	outdoor recreation land acquisition, including but not limited
7.36 	to the purchase, development, maintenance, and operation of the
8.1 	state outdoor recreation system under chapter 86A and regional
8.2 	recreation open space systems as defined under section 473.351,
8.3 	subdivision 1.

8.4 	Sec. 12. [116V.12] CIGARETTE FEE.
8.5 		Subdivision 1.Imposition of fee. A cigarette fee is
8.6 	imposed on and collected from cigarette distributors.
8.7 		Subd. 2.Definitions. The definitions under section
8.8 	297F.01 apply to this section.
8.9 		Subd. 3.Computation of fee. (a) The fee for fiscal year
8.10 	2006 and for each succeeding fiscal year is five cents per pack.
8.11 	(b) For each fiscal year, the commissioner shall determine
8.12 	each cigarette distributor's fee and notify the distributor by
8.13 	the first day of May preceding the beginning of the fiscal
8.14 	year.  A distributor's fee is determined by multiplying the
8.15 	total fee under paragraph (a) by a fraction, the numerator of
8.16 	which is the number of tax stamps purchased by the distributor
8.17 	under chapter 297F in the calendar year ending during the
8.18 	previous fiscal year and the denominator of which is the total
8.19 	number of tax stamps purchased under chapter 297F in that period
8.20 	by all distributors.
8.21 		Subd. 4.Successors in interest; new entrants. (a)
8.22 	"Distributor" includes any individual or entity that is the
8.23 	successor in interest to a distributor, including any entity
8.24 	that has substantially acquired the business assets of a
8.25 	distributor.  The successor in interest is liable for the fee
8.26 	under this section.  The commissioner shall calculate and impose
8.27 	the fee on a successor in interest on a basis that includes the
8.28 	purchases of tax stamps by its predecessor, as well as any
8.29 	purchases made by the successor entity or person itself, during
8.30 	the relevant period.
8.31 	(b) If a distributor did not purchase tax stamps for at
8.32 	least 500,000 cigarettes in each month of the calendar year
8.33 	ending during the previous fiscal year, the fee under this
8.34 	section must be applied at the rate under subdivision 6 for the
8.35 	fiscal year.  The commissioner shall notify the distributor that
8.36 	its fee will be calculated and imposed under this paragraph by
9.1 	the first day of May preceding the fiscal year and the
9.2 	distributor shall pay the fee with each of its monthly tax
9.3 	returns filed under section 297F.09 for the fiscal year.
9.4 		Subd. 5.Payment. A distributor must pay the fee in
9.5 	equal monthly installments in the same time and manner as
9.6 	provided for payment of tax under chapter 297F.  The
9.7 	commissioner shall bill distributors for the fee.  This may be
9.8 	done at the time the commissioner notifies the distributor of
9.9 	its annual liability for the fee or at another time or in a
9.10 	manner the commissioner determines to be adequate and
9.11 	appropriate.
9.12 		Subd. 6.Administration. The audit, assessment,
9.13 	interest, appeal, refund, and collection provisions applicable
9.14 	to the taxes imposed under chapter 297F apply to the fee imposed
9.15 	under this section.
9.16 		Subd. 7.License revocation. (a) The commissioner may
9.17 	revoke or suspend the license of a distributor for failure to
9.18 	pay the fee or otherwise comply with the requirements under this
9.19 	section.  The provisions and procedures under section 297F.04
9.20 	apply to a suspension or revocation under this subdivision.
9.21 	(b) The commissioner may revoke a retailer's sales or use
9.22 	tax permit under section 297F.185 if:
9.23 	(1) the retailer, directly or indirectly, purchases for
9.24 	resale 20,000 cigarettes or more from a distributor that has not
9.25 	paid the fee under this section; and 
9.26 	(2) the commissioner has notified the person that the
9.27 	distributor has not paid the fee before the purchase was made or
9.28 	the commissioner has posted notice that the distributor is in
9.29 	violation of the fee law on the department's Web site at least
9.30 	15 days before the sale was made.
9.31 		Subd. 8.Deposit of revenues. The commissioner shall
9.32 	deposit the revenues from the fee under this section in the
9.33 	Minnesota land resources fund.
9.34 	
EFFECTIVE DATE. This section is effective July 1, 2005.
9.35 	The fee for fiscal year 2006 applies at five-sixths the amount
9.36 	under subdivision 3, and payments are due in ten equal monthly
10.1 	installments beginning in September 2005.  The commissioner of
10.2 	revenue shall notify distributors of their liability for the fee
10.3 	and monthly payment schedule by no later than August 15, 2005.

10.4 	Sec. 13. EFFECTIVE DATE.
 10.5 	Sections 1 to 11 are effective the day following final
10.6 	enactment.