1.1 	A bill for an act
1.2 	relating to education finance; determining a district's debt service net tax 
1.3 	capacity; amending Minnesota Statutes 2004, sections 126C.01, by adding 
1.4 	a subdivision; 127A.48, by adding a subdivision; Minnesota Statutes 2005 
1.5 	Supplement, section 273.11, subdivision 1a.
1.6 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.7 	Section 1. Minnesota Statutes 2004, section 126C.01, is amended by adding a 
1.8 	subdivision to read:
1.9 		Subd. 2a.Debt service net tax capacity. A school district's debt service net tax 
1.10 	capacity means the net tax capacity of the taxable property of the district as adjusted by 
1.11 	the commissioner of revenue under section 127A.48, subdivision 17.  The debt service net 
1.12 	tax capacity for any given calendar year must be used to compute the debt service levy 
1.13 	limitations for levies certified in the succeeding calendar year and aid for the school year 
1.14 	beginning in the second succeeding calendar year.

1.15 	EFFECTIVE DATE. This section is effective the day following final enactment for 
1.16 	computing taxes payable in 2007.

1.17 	Sec. 2. Minnesota Statutes 2004, section 127A.48, is amended by adding a subdivision 
1.18 	to read:
1.19 		Subd. 17.Debt service net tax capacity. To calculate each district's debt service 
1.20 	net tax capacity, the commissioner of revenue must recompute the amounts in this section 
1.21 	using an alternative sales ratio comparing the sales price to the estimated market value 
1.22 	of the property.

2.1 	EFFECTIVE DATE. This section is effective the day following final enactment for 
2.2 	computing taxes payable in 2007.

2.3 	Sec. 3. Minnesota Statutes 2005 Supplement, section 273.11, subdivision 1a, is 
2.4 	amended to read:
2.5 		Subd. 1a.Limited market value. In the case of all property classified as 
2.6 	agricultural homestead or nonhomestead, residential homestead or nonhomestead, timber, 
2.7 	or noncommercial seasonal residential recreational, the assessor shall compare the value 
2.8 	with the taxable portion of the value determined in the preceding assessment.
2.9 	For assessment years 2004, 2005, and 2006, the amount of the increase shall not 
2.10 	exceed the greater of (1) 15 percent of the value in the preceding assessment, or (2) 25 
2.11 	percent of the difference between the current assessment and the preceding assessment.
2.12 	For assessment year 2007, the amount of the increase shall not exceed the greater of 
2.13 	(1) 15 percent of the value in the preceding assessment, or (2) 33 percent of the difference 
2.14 	between the current assessment and the preceding assessment.
2.15 	For assessment year 2008, the amount of the increase shall not exceed the greater of 
2.16 	(1) 15 percent of the value in the preceding assessment, or (2) 50 percent of the difference 
2.17 	between the current assessment and the preceding assessment.
2.18 	This limitation shall not apply to increases in value due to improvements. For 
2.19 	purposes of this subdivision, the term "assessment" means the value prior to any exclusion 
2.20 	under subdivision 16.
2.21 	The provisions of this subdivision shall be in effect through assessment year 2008 
2.22 	as provided in this subdivision.
2.23 	For purposes of the assessment/sales ratio study conducted under section 127A.48, 
2.24 	and the computation of state aids paid under chapters 122A, 123A, 123B,excluding 
2.25 	section 123B.53, 124D, 125A, 126C, 127A, and 477A, market values and net tax 
2.26 	capacities determined under this subdivision and subdivision 16, shall be used.

2.27 	EFFECTIVE DATE. This section is effective the day following final enactment for 
2.28 	computing taxes payable in 2007.