1.1 	A bill for an act
1.2 	relating to financing and operation of state and local government; making 
1.3 	policy, technical, administrative, enforcement, collection, refund, and other 
1.4 	changes to income, franchise, property, sales and use, mortgage and deed, health 
1.5 	care provider, cigarette and tobacco products, liquor, insurance premiums, 
1.6 	aggregate removal, occupation, net proceeds, and production taxes, the property 
1.7 	tax refund, and other taxes and tax-related provisions; providing income tax 
1.8 	credits and subtraction; providing for taxation of foreign operating corporations; 
1.9 	providing a refund for transit passes; modifying and authorizing sales tax 
1.10 	exemptions; modifying and authorizing local government sales taxes; modifying 
1.11 	the homestead market value credit; modifying certain levies; changing and 
1.12 	providing property tax exemptions and value exclusions; modifying the state 
1.13 	general levy; providing for aids and payments to local governments; modifying 
1.14 	international economic development zone authority; authorizing distributions 
1.15 	of tax proceeds; changing provisions relating to fiscal disparities and education 
1.16 	financing; changing and imposing powers, duties, and requirements on ceratin 
1.17 	local governments and authorities and state departments or agencies; providing 
1.18 	for issuance of obligations by local governments and other public authorities, and 
1.19 	use of the proceeds of the debt; changing tax increment financing and abatement 
1.20 	provisions, and providing authorities to certain districts; providing for studies 
1.21 	and reports; providing penalties; establishing accounts and providing funding; 
1.22 	providing for allocation and transfers of funds; appropriating money;amending 
1.23 	Minnesota Statutes 2004, sections 103E.635, subdivision 7; 116A.20, subdivision 
1.24 	3; 116J.993, subdivision 3; 123B.53, subdivision 5; 144F.01, subdivision 4; 
1.25 	162.18, subdivision 1; 162.181, subdivision 1; 216B.2424, subdivision 5; 
1.26 	270A.03, subdivision 2; 272.02, subdivisions 12, 45, 54, 55, by adding a 
1.27 	subdivision; 273.032; 273.11, by adding a subdivision; 273.124, subdivision 
1.28 	12, by adding a subdivision; 273.13, subdivision 23; 273.1384, subdivision 2; 
1.29 	273.1398, subdivision 3; 281.23, subdivision 9; 289A.09, subdivision 2; 290.06, 
1.30 	subdivision 28, by adding subdivisions; 290.10; 290.17, subdivision 1; 290.34, 
1.31 	subdivision 1; 295.50, subdivision 4; 295.53, subdivisions 3, 4a; 297A.61, 
1.32 	subdivisions 12, 17, by adding subdivisions; 297A.63; 297A.668, subdivision 
1.33 	6; 297A.669, subdivision 11; 297A.67, subdivisions 4, 5, 14, 18, 27, by adding 
1.34 	a subdivision; 297A.68, subdivision 19, by adding a subdivision; 297A.70, 
1.35 	subdivisions 2, 3, 4, 7, 13, 14, 15; 297A.71, subdivision 23, by adding a 
1.36 	subdivision; 297A.99, subdivision 7; 297F.01, by adding a subdivision; 297G.01, 
1.37 	subdivision 7, by adding a subdivision; 298.001, by adding a subdivision; 
1.38 	298.01, subdivisions 3a, 3b, 4a, 4b, by adding a subdivision; 298.17; 298.28, by 
2.1 	adding a subdivision; 298.2961, by adding a subdivision; 298.75, by adding a 
2.2 	subdivision; 365A.08; 365A.095; 373.45, subdivision 1; 383A.80, subdivision 4; 
2.3 	383B.80, subdivision 4; 469.035; 469.103, subdivision 2; 469.176, subdivision 
2.4 	3; 469.1763, subdivisions 3, 4; 469.1813, subdivisions 1, 6b, 8, 9, by adding a 
2.5 	subdivision; 469.312, subdivision 5; 473.39, by adding a subdivision; 473F.08, 
2.6 	by adding a subdivision; 474A.062; 477A.013, subdivision 9; 477A.014, 
2.7 	subdivision 1; Minnesota Statutes 2005 Supplement, sections 115B.49, 
2.8 	subdivision 4; 123B.54; 126C.10, subdivision 13a; 270C.01, subdivision 4; 
2.9 	270C.304; 270C.33, subdivision 4; 270C.57, subdivision 3; 270C.67, subdivision 
2.10 	1, by adding a subdivision; 270C.722, subdivision 2; 271.12; 272.02, subdivision 
2.11 	83; 273.128, subdivision 1; 273.13, subdivisions 22, 25; 273.1384, subdivision 
2.12 	1; 275.025, subdivisions 1, 4; 276.04, subdivision 2; 284.07; 289A.121, 
2.13 	subdivision 5; 290.01, subdivisions 6b, 19b, 19c, 19d; 290.0922, subdivisions 
2.14 	2, 3; 297A.61, subdivision 3; 297A.64, subdivision 4; 297A.67, subdivision 6; 
2.15 	297A.68, subdivisions 37, 38, 41; 297A.70, subdivision 8; 297A.72, subdivision 
2.16 	2; 297A.75, subdivisions 1, 2, 3; 297A.815, subdivision 1; 298.01, subdivisions 
2.17 	3, 4; 298.223, subdivision 1; 298.2961, subdivision 4; 469.1763, subdivision 2; 
2.18 	469.178, subdivision 7; 469.1813, subdivision 6; 469.322; 469.323, subdivision 
2.19 	2; 469.327; 475.521, subdivision 4; 477A.011, subdivision 36; 477A.013, 
2.20 	subdivision 8; 477A.03, subdivision 2a;  Laws 1980, chapter 511, article 0, 
2.21 	section 1, subdivision 2, as amended; Laws 1994, chapter 587, article 9, section 
2.22 	20, subdivisions 1, 2; Laws 1996, chapter 471, article 2, section 29; Laws 1999, 
2.23 	chapter 243, article 4, section 18, subdivisions 1, 3, 4; Laws 2005, chapter 152, 
2.24 	article 1, section 39, subdivision 1; Laws 2001, First Special Session chapter 
2.25 	5, article 3, section 8, as amended; Laws 2005, First Special Session chapter 
2.26 	3, article 2, section 5; article 5, sections 3; 43, subdivision 3; 44, subdivision 
2.27 	1; article 10, section 23; proposing coding for new law in Minnesota Statutes, 
2.28 	chapters 41B; 270C; 273; 287; 290; 383C; 383D; 469; repealing Minnesota 
2.29 	Statutes 2004, sections 297A.68, subdivisions 15, 18; 298.01, subdivisions 3c, 
2.30 	3d, 4d, 4e; Laws 1998, chapter 389, article 11, section 18; Minnesota Rules, 
2.31 	parts 8130.0400, subpart 3; 8130.4800, subparts 1, 3, 4, 5, 6, 7, 8; 8130.5100; 
2.32 	8130.5400; 8130.5800, subpart 6.
2.33 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

2.34 	ARTICLE 1
2.35 	INCOME TAX

2.36 	Section 1. [41B.0391] BEGINNING FARMER PROGRAM; TAX CREDITS.
2.37 		Subdivision 1.Definitions. (a) For purposes of this section, the following terms 
2.38 	have the meanings given.
2.39 	(b) "Farm" means any tract of land over ten acres in area used for or devoted to the 
2.40 	commercial production of farm products.
2.41 	(c) "Farm product" means those plants and animals useful to humans and includes, 
2.42 	but is not limited to, forage and sod crops, grain and feed crops, dairy and dairy products, 
2.43 	poultry and poultry products, livestock, fruits, and vegetables.
2.44 	(d) "Farming or livestock production" means the active use, management, and 
2.45 	operation of real and personal property for the production of a farm product.
2.46 	(e) "Beginning farmer or livestock producer" means a resident of Minnesota who:
3.1 	(1) is seeking entry or has entered within the last two years into farming or livestock 
3.2 	production; 
3.3 	(2) intends to farm or raise crops or livestock on land located within the state borders 
3.4 	of Minnesota; and
3.5 	(3) meets the following eligibility requirements as determined by the authority:
3.6 	(i) has a net worth of not more than $200,000, including any holdings by a spouse 
3.7 	or dependent, based on fair market value;
3.8 	(ii) provides the majority of the day-to-day physical labor and management of the 
3.9 	farm;
3.10 	(iii) has, by the judgment of the Rural Finance Authority ("authority"), adequate 
3.11 	farming or livestock production experience or demonstrates knowledge in the type of 
3.12 	farming or livestock production for which the beginning farmer seeks assistance from 
3.13 	the authority;
3.14 	(iv) demonstrates to the authority a profit potential by submitting projected earnings 
3.15 	statements;
3.16 	(v) asserts to the satisfaction of the authority that farming or livestock production 
3.17 	will be a significant source of income for the beginning farmer or livestock producer; 
3.18 	(vi) participates in a financial management program approved by the authority 
3.19 	or the commissioner of agriculture; and
3.20 	(vii) has other such qualifications as specified by the authority.
3.21 		Subd. 2.Beginning farmer management tax credit. (a) A beginning farmer or 
3.22 	livestock producer may take a credit against the tax due under chapter 290 for participating 
3.23 	in a financial management program approved by the authority. The credit is equal to 100 
3.24 	percent of the cost of participating in the program or $500, whichever is less. The credit 
3.25 	is available for up to three years while the farmer is in the program. The authority shall 
3.26 	maintain a list of approved financial management programs and establish a procedure for 
3.27 	approving equivalent programs that are not on the list.
3.28 	(b) The credit is limited to the liability for tax, as computed under chapter 290 for 
3.29 	the taxable year. If the amount of the credit determined under this section for any taxable 
3.30 	year exceeds this limitation, the excess is a beginning farmer management credit carryover 
3.31 	according to section 290.06, subdivision 35.
3.32 		Subd. 3.Authority's duties. The authority shall:
3.33 	(1) approve and certify beginning farmers and livestock producers as eligible for 
3.34 	the program under this section;
4.1 	(2) provide necessary and reasonable assistance and support to beginning farmers 
4.2 	and livestock producers for qualification and participation in financial management 
4.3 	programs approved by the authority; and
4.4 	(3) refer beginning farmers and livestock producers to agencies and organizations 
4.5 	that may provide additional pertinent information and assistance.

4.6 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
4.7 	December 31, 2006.

4.8 	Sec. 2. Minnesota Statutes 2005 Supplement, section 290.01, subdivision 19b, is 
4.9 	amended to read:
4.10 		Subd. 19b.Subtractions from federal taxable income. For individuals, estates, 
4.11 	and trusts, there shall be subtracted from federal taxable income:
4.12 	(1) net interest income on obligations of any authority, commission, or 
4.13 	instrumentality of the United States to the extent includable in taxable income for federal 
4.14 	income tax purposes but exempt from state income tax under the laws of the United States;
4.15 	(2) if included in federal taxable income, the amount of any overpayment of income 
4.16 	tax to Minnesota or to any other state, for any previous taxable year, whether the amount 
4.17 	is received as a refund or as a credit to another taxable year's income tax liability;
4.18 	(3) the amount paid to others, less the amount used to claim the credit allowed under 
4.19 	section 290.0674, not to exceed $1,625 for each qualifying child in grades kindergarten 
4.20 	to 6 and $2,500 for each qualifying child in grades 7 to 12, for tuition, textbooks, and 
4.21 	transportation of each qualifying child in attending an elementary or secondary school 
4.22 	situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a 
4.23 	resident of this state may legally fulfill the state's compulsory attendance laws, which 
4.24 	is not operated for profit, and which adheres to the provisions of the Civil Rights Act 
4.25 	of 1964 and chapter 363A. For the purposes of this clause, "tuition" includes fees or 
4.26 	tuition as defined in section 290.0674, subdivision 1, clause (1). As used in this clause, 
4.27 	"textbooks" includes books and other instructional materials and equipment purchased 
4.28 	or leased for use in elementary and secondary schools in teaching only those subjects 
4.29 	legally and commonly taught in public elementary and secondary schools in this state. 
4.30 	Equipment expenses qualifying for deduction includes expenses as defined and limited in 
4.31 	section 290.0674, subdivision 1, clause (3). "Textbooks" does not include instructional 
4.32 	books and materials used in the teaching of religious tenets, doctrines, or worship, the 
4.33 	purpose of which is to instill such tenets, doctrines, or worship, nor does it include books 
4.34 	or materials for, or transportation to, extracurricular activities including sporting events, 
4.35 	musical or dramatic events, speech activities, driver's education, or similar programs. For 
5.1 	purposes of the subtraction provided by this clause, "qualifying child" has the meaning 
5.2 	given in section 32(c)(3) of the Internal Revenue Code;
5.3 	(4) income as provided under section 290.0802;
5.4 	(5) to the extent included in federal adjusted gross income, income realized on 
5.5 	disposition of property exempt from tax under section 290.491;
5.6 	(6) to the extent not deducted in determining federal taxable income by an individual 
5.7 	who does not itemize deductions for federal income tax purposes for the taxable year, an 
5.8 	amount equal to 50 percent of the excess of charitable contributions over $500 allowable 
5.9 	as a deduction for the taxable year under section 170(a) of the Internal Revenue Code and 
5.10 	under the provisions of Public Law 109-1;
5.11 	(7) for taxable years beginning before January 1, 2008, the amount of the federal 
5.12 	small ethanol producer credit allowed under section 40(a)(3) of the Internal Revenue Code 
5.13 	which is included in gross income under section 87 of the Internal Revenue Code;
5.14 	(8) for individuals who are allowed a federal foreign tax credit for taxes that do not 
5.15 	qualify for a credit under section 290.06, subdivision 22, an amount equal to the carryover 
5.16 	of subnational foreign taxes for the taxable year, but not to exceed the total subnational 
5.17 	foreign taxes reported in claiming the foreign tax credit. For purposes of this clause, 
5.18 	"federal foreign tax credit" means the credit allowed under section 27 of the Internal 
5.19 	Revenue Code, and "carryover of subnational foreign taxes" equals the carryover allowed 
5.20 	under section 904(c) of the Internal Revenue Code minus national level foreign taxes to 
5.21 	the extent they exceed the federal foreign tax credit;
5.22 	(9) in each of the five tax years immediately following the tax year in which an 
5.23 	addition is required under subdivision 19a, clause (7), or 19c, clause (15), in the case 
5.24 	of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth 
5.25 	of the delayed depreciation. For purposes of this clause, "delayed depreciation" means 
5.26 	the amount of the addition made by the taxpayer under subdivision 19a, clause (7), or 
5.27 	subdivision 19c, clause (15), in the case of a shareholder of an S corporation, minus the 
5.28 	positive value of any net operating loss under section 172 of the Internal Revenue Code 
5.29 	generated for the tax year of the addition. The resulting delayed depreciation cannot be 
5.30 	less than zero;
5.31 	(10) job opportunity building zone income as provided under section 469.316;
5.32 	(11) the amount of compensation paid to members of the Minnesota National Guard 
5.33 	or other reserve components of the United States military for active service performed 
5.34 	in Minnesota, excluding compensation for services performed under the Active Guard 
5.35 	Reserve (AGR) program. For purposes of this clause, "active service" means (i) state 
5.36 	active service as defined in section 190.05, subdivision 5a, clause (1); (ii) federally 
6.1 	funded state active service as defined in section 190.05, subdivision 5b; or (iii) federal 
6.2 	active service as defined in section 190.05, subdivision 5c, but "active service" excludes 
6.3 	services performed exclusively for purposes of basic combat training, advanced individual 
6.4 	training, annual training, and periodic inactive duty training; special training periodically 
6.5 	made available to reserve members; and service performed in accordance with section 
6.6 	190.08, subdivision 3;
6.7 	(12) the amount of compensation paid to Minnesota residents who are members 
6.8 	of the armed forces of the United States or United Nations for active duty performed 
6.9 	outside Minnesota;
6.10 	(13) an amount, not to exceed $10,000, equal to qualified expenses related to a 
6.11 	qualified donor's donation, while living, of one or more of the qualified donor's organs 
6.12 	to another person for human organ transplantation. For purposes of this clause, "organ" 
6.13 	means all or part of an individual's liver, pancreas, kidney, intestine, lung, or bone marrow; 
6.14 	"human organ transplantation" means the medical procedure by which transfer of a human 
6.15 	organ is made from the body of one person to the body of another person; "qualified 
6.16 	expenses" means unreimbursed expenses for both the individual and the qualified donor 
6.17 	for (i) travel, (ii) lodging, and (iii) lost wages net of sick pay, except that such expenses 
6.18 	may be subtracted under this clause only once; and "qualified donor" means the individual 
6.19 	or the individual's dependent, as defined in section 152 of the Internal Revenue Code. An 
6.20 	individual may claim the subtraction in this clause for each instance of organ donation for 
6.21 	transplantation during the taxable year in which the qualified expenses occur;
6.22 	(14) in each of the five tax years immediately following the tax year in which an 
6.23 	addition is required under subdivision 19a, clause (8), or 19c, clause (16), in the case of a 
6.24 	shareholder of a corporation that is an S corporation, an amount equal to one-fifth of the 
6.25 	addition made by the taxpayer under subdivision 19a, clause (8), or 19c, clause (16), in the 
6.26 	case of a shareholder of a corporation that is an S corporation, minus the positive value of 
6.27 	any net operating loss under section 172 of the Internal Revenue Code generated for the 
6.28 	tax year of the addition. If the net operating loss exceeds the addition for the tax year, a 
6.29 	subtraction is not allowed under this clause;
6.30 	(15) to the extent included in federal taxable income, compensation paid to a 
6.31 	nonresident who is a service member as defined in United States Code, title 10, section 
6.32 	101(a)(5), for military service as defined in the Service Member Civil Relief Act, Public 
6.33 	Law 108-189, section 101(2); and
6.34 	(16) international economic development zone income as provided under section 
6.35 	469.325; and
7.1 	(17) to the extent included in federal taxable income, a percentage of compensation 
7.2 	received from a pension or other retirement pay from the government for service in the 
7.3 	armed forces of the United States, up to a maximum amount.
7.4 	For taxable years beginning after December 31, 2005, and before January 1, 2007, the 
7.5 	percentage is 25 percent and the maximum amount is $7,500; for taxable years beginning 
7.6 	after December 31, 2006, and before January 1, 2008, the percentage is 50 percent and 
7.7 	the maximum amount is $15,000; for taxable years beginning after December 31, 2007, 
7.8 	and before January 1, 2009, the percentage is 75 percent and the maximum amount is 
7.9 	$22,500; and for taxable years beginning after December 31, 2008, the percentage is 100 
7.10 	percent and there is no maximum amount.

7.11 	EFFECTIVE DATE. This section is effective for tax years beginning after 
7.12 	December 31, 2005.

7.13 	Sec. 3. Minnesota Statutes 2004, section 290.06, subdivision 28, is amended to read:
7.14 		Subd. 28.Credit Credits and refunds for transit passes. (a) A taxpayer may 
7.15 	take a credit against the tax due under this chapter equal to 30 percent of the expense 
7.16 	incurred by the taxpayer to provide transit passes, for use in Minnesota, to employees of 
7.17 	the taxpayer. As used in this subdivision, "transit pass" has the meaning given in section 
7.18 	132(f)(5)(A) of the Internal Revenue Code. If the taxpayer purchases the transit passes 
7.19 	from the transit system operator, and resells them to the employees, the credit is based on 
7.20 	the amount of the difference between the price paid for the passes by the employer and 
7.21 	the amount charged to employees.
7.22 	(b) An employer that is exempt from taxation under section 290.05, but excluding 
7.23 	entities enumerated in section 290.05, subdivision 1, clause (b), may claim a refund equal 
7.24 	to 30 percent of an expense incurred by the employer to provide transit passes to the 
7.25 	employer's employees for use in Minnesota.
7.26 	(c) The commissioner shall prescribe the forms for and the manner in which the 
7.27 	refund may be claimed. The commissioner must provide for paying refunds at least 
7.28 	quarterly. The commissioner may set a minimum amount of qualifying expenses that must 
7.29 	be incurred before a refund may be claimed.
7.30 	(d) An amount sufficient to pay the refunds required by this subdivision is 
7.31 	appropriated to the commissioner of revenue.

7.32 	EFFECTIVE DATE. This section is effective for transit passes purchased after 
7.33 	June 30, 2006.

8.1 	Sec. 4. Minnesota Statutes 2004, section 290.06, is amended by adding a subdivision 
8.2 	to read:
8.3 		Subd. 33.Film production credit. (a) A taxpayer is allowed a credit against the 
8.4 	taxes due under this chapter equal to 15 percent of film production expenditures made in 
8.5 	Minnesota that are directly attributable to film production in Minnesota. For purposes of 
8.6 	this subdivision, "film" means a movie, documentary, or music video, whether on film 
8.7 	or video; and "film production" means all the activities related to (i) the preparation for 
8.8 	shooting, (ii) the shooting, including processing, and (iii) the editing and finishing of a 
8.9 	film. For purposes of this subdivision, the following is not a "film:"
8.10 	(1) news, current events, or public programming or a program that includes weather 
8.11 	or market reports;
8.12 	(2) a talk show;
8.13 	(3) a production with respect to a questionnaire or contest;
8.14 	(4) a sports event or sports activity;
8.15 	(5) a gala representation or awards show;
8.16 	(6) a finished production that solicits funds; or
8.17 	(7) a production for which the production company is required under United States 
8.18 	Code, title 18, section 2257, to maintain records with respect to a performer portrayed 
8.19 	in a single media or multimedia program.
8.20 	(b) Expenditures that qualify for the credit under this subdivision must be subject to 
8.21 	taxation in Minnesota and include:
8.22 	(1) payment of wages, fringe benefits, or fees for talent, management, or labor to a 
8.23 	person who is a Minnesota resident for purposes of this chapter;
8.24 	(2) payment to personal services corporations for the services of a performing artist, 
8.25 	if the performing artist receiving payments from the personal services corporation pays 
8.26 	Minnesota income tax; and 
8.27 	(3) any of the following provided by a vendor:
8.28 	(i) the story and scenario to be used for a film;
8.29 	(ii) set construction and operations, wardrobe, accessories, and related services;
8.30 	(iii) photography, sound synchronization, lighting, and related services;
8.31 	(iv) editing and related services;
8.32 	(v) rental of facilities and equipment;
8.33 	(vi) leasing of vehicles; and 
8.34 	(vii) food and lodging.
8.35 	(c) If the amount of the credit under this subdivision exceeds the taxpayer's tax 
8.36 	liability under this chapter for the taxable year, the amount of the excess must be refunded 
9.1 	to the taxpayer.  The amount necessary to pay the refunds is appropriated annually from 
9.2 	the general fund to the commissioner of revenue.

9.3 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
9.4 	December 31, 2005.

9.5 	Sec. 5. Minnesota Statutes 2004, section 290.06, is amended by adding a subdivision 
9.6 	to read:
9.7 		Subd. 34.Credit for military service. (a) An individual may take a credit against 
9.8 	the tax due under this chapter equal to $59 for each month or portion thereof the individual 
9.9 	was in active military service in a designated area after September 11, 2001.An individual 
9.10 	may take this credit in the taxable year the individual returns to Minnesota residency 
9.11 	following active military service in a designated area. If a Minnesota resident served in 
9.12 	a designated area between September 11, 2001, and December 31, 2005, the individual 
9.13 	may take this credit in the taxable year beginning after December 31, 2005, and before 
9.14 	January 1, 2007.
9.15 	(b) If a Minnesota resident is killed while serving in active military service in a 
9.16 	designated area, the individual's surviving spouse or dependent child may take this credit 
9.17 	in the taxable year of the death. If a Minnesota resident was killed while serving in a 
9.18 	designated area between September 11, 2002, and December 31, 2005, the individual's 
9.19 	surviving spouse or dependent child may take this credit in the taxable year beginning 
9.20 	after December 31, 2005, and before January 1, 2007.
9.21 	(c) For purposes of this section, a "designated area" means a:
9.22 	(1) combat zone designated by Executive Order from the President of the United 
9.23 	States; 
9.24 	(2) qualified hazardous duty area, designated in Public Law; or 
9.25 	(3) location certified by the U.S. Department of Defense as eligible for combat zone 
9.26 	tax benefits due to the location's direct support of military operations.
9.27 	(d) For purposes of this section, active military service includes active duty service 
9.28 	in any of the United States Armed Forces, the National Guard, or reserves.
9.29 	(e) If the amount of the credit which the taxpayer is eligible to receive under this 
9.30 	section exceeds the taxpayer's tax liability under this chapter, the commissioner of revenue 
9.31 	shall refund the excess to the taxpayer.
9.32 	(f) The amount necessary to pay claims for the refund provided in this section is 
9.33 	appropriated from the general fund to the commissioner of revenue.

10.1 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
10.2 	December 31, 2005.

10.3 	Sec. 6. Minnesota Statutes 2004, section 290.06, is amended by adding a subdivision 
10.4 	to read:
10.5 		Subd. 35.Beginning farmer management credit. (a) A taxpayer who is a 
10.6 	beginning farmer or livestock producer may take a credit against the tax due under 
10.7 	this chapter for participation in a financial management program according to section 
10.8 	41B.0391, subdivision 3.
10.9 	(b) The credit may be claimed only after approval and certification by the Rural 
10.10 	Finance Authority according to section 41B.0391.
10.11 	(c) The credit is limited to the liability for tax, as computed under this chapter, for 
10.12 	the taxable year.  If the amount of the credit determined under this subdivision for any 
10.13 	taxable year exceeds this limitation, the excess is a beginning farmer management credit 
10.14 	carryover to each of the three succeeding taxable years.  The entire amount of the excess 
10.15 	unused credit for the taxable year is carried first to the earliest of the taxable years to 
10.16 	which the credit may be carried and then to each successive year to which the credit may 
10.17 	be carried.  The amount of the unused credit which may be added under this paragraph 
10.18 	must not exceed the taxpayer's liability for tax less the beginning farmer management 
10.19 	credit for the taxable year.

10.20 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
10.21 	December 31, 2006.

10.22 	Sec. 7. Minnesota Statutes 2004, section 290.06, is amended by adding a subdivision 
10.23 	to read:
10.24 		Subd. 36.Bovine testing credit. (a) An owner of cattle in Minnesota may take a 
10.25 	credit against the tax due under this chapter for an amount equal to one-half the expenses 
10.26 	incurred during the taxable year to conduct tuberculosis testing on those cattle. 
10.27 	(b) If the amount of credit which the taxpayer is eligible to receive under this 
10.28 	subdivision exceeds the taxpayer's tax liability under this chapter, the commissioner of 
10.29 	revenue shall refund the excess to the taxpayer.
10.30 	(c) The amount necessary to pay claims for the refund provided in this subdivision is 
10.31 	appropriated from the general fund to the commissioner of revenue.

10.32 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
10.33 	December 31, 2005.

11.1 	Sec. 8. Minnesota Statutes 2004, section 290.06, is amended by adding a subdivision 
11.2 	to read:
11.3 		Subd. 37.Dairy investment credit.  (a) A dairy investment credit is allowed against 
11.4 	the tax due under this chapter equal to ten percent of the amount paid or incurred by the 
11.5 	taxpayer, on the first $500,000 of qualifying expenditures made in the qualifying period. 
11.6 	(b) "Qualifying expenditures" means for purposes of this subdivision the amount 
11.7 	spent by a person who raises dairy animals for the acquisition, construction, or 
11.8 	improvement of buildings or facilities; or the development of pasture; or the acquisition of 
11.9 	equipment; for dairy animal housing, confinement, animal feeding, production of milk 
11.10 	and other dairy products, and waste management, including the following, if related to 
11.11 	dairy animals in this state: 
11.12 	(1) freestall barns; 
11.13 	(2) fences; 
11.14 	(3) watering facilities; 
11.15 	(4) feed storage and handling equipment; 
11.16 	(5) milking parlors; 
11.17 	(6) robotic equipment; 
11.18 	(7) scales; 
11.19 	(8) milk storage and cooling facilities; 
11.20 	(9) bulk tanks; 
11.21 	(10) manure pumping and storage facilities; 
11.22 	(11) digesters; 
11.23 	(12) equipment used to produce energy. 
11.24 	(13) on-farm processing of milk and other dairy products; and
11.25 	(14) development of pasture owned or rented by the taxpayer for the use of dairy 
11.26 	animals.
11.27 	Qualified expenditures only include amounts that are capitalized and deducted under either 
11.28 	section 167 or 179 of the Internal Revenue Code in computing federal taxable income. 
11.29 	(c) The credit is limited to the liability for tax, as computed under this chapter, 
11.30 	for qualifying expenditures, other than expenditures for development of pasture, only 
11.31 	include amounts that are capitalized and deducted under either section 167 or 179 of the 
11.32 	Internal Revenue Code in computing federal taxable income. Qualifying expenditures 
11.33 	for development of pasture must not include land acquisition and are limited to soil 
11.34 	preparation expenses, seed costs, planting costs, and weed control, which are allowed once 
11.35 	for each acre owned or rented by the taxpayer for the use of dairy animals and developed 
11.36 	into pasture during the qualifying period.  The amount of the unused credit which may 
12.1 	be added under this paragraph must not exceed the taxpayer's liability for tax less the 
12.2 	dairy investment credit for the taxable year. 
12.3 	(d) The qualifying period is that time after December 31, 2005, and before January 
12.4 	1, 2012. 
12.5 	(e) The $50,000 maximum credit applies at the entity level for partnerships, S 
12.6 	corporations, trusts, and estates as well as at the individual level.  In the case of married 
12.7 	individuals, the credit is limited to $50,000 for a married couple. 

12.8 	EFFECTIVE DATE. This section is effective for tax years beginning after 
12.9 	December 31, 2005.

12.10 	Sec. 9. [290.0677] CREDIT FOR HISTORIC STRUCTURE REHABILITATION.
12.11 		Subdivision 1.Definitions. (a) As used in this section, the terms defined in this 
12.12 	subdivision have the meanings given. 
12.13 	(b) "Certified historic structure" means a property located  in Minnesota and listed 
12.14 	individually on the National Register of  Historic Places or a historic property designated 
12.15 	by either a certified local government or a heritage preservation commission created 
12.16 	under the National Historic Preservation Act of 1966 and whose designation is approved 
12.17 	by the state historic preservation officer. 
12.18 	(c) "Eligible property" means a certified historic  structure or a structure in a certified 
12.19 	historic district that is offered or used for residential or business purposes.
12.20 	(d) "Structure in a certified historic district" means a structure located in Minnesota 
12.21 	that is certified by the State Historic Preservation Office as contributing to the historic 
12.22 	significance of a certified historic district listed on the National Register of Historic Places 
12.23 	or a local district that  has been certified by the United States Department of the  Interior.
12.24 		Subd. 2.Credit allowed. A taxpayer who incurs costs for the rehabilitation of 
12.25 	eligible property may take a credit against the tax imposed under this chapter in an amount 
12.26 	equal to   25 percent of the total costs of rehabilitation. Costs of rehabilitation include, 
12.27 	but are not limited to, qualified rehabilitation expenditures as defined under section 
12.28 	47(c)(2)(A) of the Internal Revenue Code, provided that the costs of   rehabilitation must 
12.29 	exceed 50 percent of the total basis in the property at the time the rehabilitation activity 
12.30 	begins and the rehabilitation must meet standards consistent with the standards of the 
12.31 	Secretary of the Interior for rehabilitation as   determined by the State Historic Preservation 
12.32 	Office of the Minnesota Historical Society. 
12.33 		Subd. 3.Carryback and carryforward. If the amount of the credit under 
12.34 	subdivision 2 exceeds the tax liability under  this chapter for the year in which the cost is 
12.35 	incurred, the   amount that exceeds the tax liability may be carried back to any of the three 
13.1 	preceding taxable years or carried forward to each of the ten taxable years succeeding the 
13.2 	taxable year in which the expense was incurred. The entire amount of the credit must 
13.3 	be carried to the earliest taxable year to which the amount may be carried.  The unused 
13.4 	portion of the credit must be carried to the following taxable year. 
13.5 		Subd. 4.Partnerships; multiple owners; transfers. (a) Credits granted to a 
13.6 	partnership, a limited liability company taxed as a partnership, or multiple owners of 
13.7 	property shall be   passed through to the partners, members, or owners, respectively, pro 
13.8 	rata or pursuant to an executed agreement among the partners, members, or owners 
13.9 	documenting an alternate distribution method. 
13.10 	      (b) Taxpayers eligible for credits may transfer, sell, or assign the credits in whole 
13.11 	or part.  Any assignee may use acquired credits to offset up to 100 percent of the taxes 
13.12 	otherwise imposed by this chapter. The assignee shall perfect such transfer by notifying 
13.13 	the Department of Revenue in writing within 30 calendar days following the effective 
13.14 	date of the transfer in such form and manner as shall be prescribed by the Department 
13.15 	of Revenue. The proceeds of any sale or assignment of a credit shall be exempt from 
13.16 	taxation under this chapter.
13.17 		Subd. 5.Process. To claim the credit, the taxpayer must apply to the State Historic 
13.18 	Preservation Office of the Minnesota Historical Society before a historic rehabilitation 
13.19 	project  begins.  The State Historic Preservation Office shall determine the amount of 
13.20 	eligible rehabilitation costs and whether the rehabilitation meets the standards of the 
13.21 	United States Department of the Interior. The State Historic Preservation   Office shall issue 
13.22 	certificates verifying eligibility for and the amount of credit. The taxpayer shall attach 
13.23 	the certificate   to any income tax return on which the credit is claimed. The State Historic 
13.24 	Preservation Office of the Minnesota Historical Society may collect fees for applications 
13.25 	for the historic preservation tax credit. Fees shall be set at an amount that does not exceed 
13.26 	the costs of administering the tax credit program. 
13.27 		Subd. 6.Mortgage certificates; credit for lending institutions. (a) The taxpayer 
13.28 	may elect, in lieu of the credit otherwise allowed under this section, to receive a historic 
13.29 	rehabilitation mortgage credit certificate.
13.30 	 (b) For purposes of this subdivision, a historic rehabilitation mortgage credit is a 
13.31 	certificate that is issued   to the taxpayer according to procedures prescribed by the State 
13.32 	Historic Preservation Office with respect to the certified rehabilitation and which meets 
13.33 	the requirements of this paragraph.  The face amount of the certificate must be equal to 
13.34 	the credit that would be allowable under subdivision 2 to the taxpayer with respect to 
13.35 	the rehabilitation. The certificate may only be transferred by the taxpayer to a lending 
14.1 	institution, including a nondepository home mortgage lending institution, in connection 
14.2 	with a loan: 
14.3 	(1) that is secured by the building with respect to which the credit is issued; and 
14.4 	(2) the proceeds of which may not be used for any purpose other than the acquisition 
14.5 	or rehabilitation of the building.
14.6 	(c) In exchange for the certificate, the lending institution must provide to the 
14.7 	taxpayer an amount equal to the face amount of the certificate discounted by the amount 
14.8 	by which the federal income tax liability of the lending institution is increased due to its 
14.9 	use of the certificate in the manner provided in this section. That amount must be applied, 
14.10 	as directed by the taxpayer, in whole or in part, to reduce:
14.11 	(1) the principal amount of the loan; 
14.12 	(2) the rate of interest on the loan; or
14.13 	(3) the taxpayer's cost of purchasing the building, but only in the case of a qualified 
14.14 	historic home that is located in a poverty-impacted area as designated by the State Historic 
14.15 	Preservation Office. The lending institution may take as a credit against the tax due under 
14.16 	this chapter an amount equal to the amount specified in the certificate. If the amount of 
14.17 	the discount retained by the lender exceeds the amount by which the lending institution's 
14.18 	federal income tax liability is increased due to the use of a mortgage credit certificate, the 
14.19 	excess shall be refunded to the borrower with interest at the rate prescribed by the State 
14.20 	Historic Preservation Office. The lending institution may carry forward all unused credits 
14.21 	under this subdivision until exhausted. Nothing in this subdivision requires a lending 
14.22 	institution to accept a historic rehabilitation certificate from any person. 

14.23 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
14.24 	December 31, 2005.

14.25 	Sec. 10. Minnesota Statutes 2004, section 290.10, is amended to read:
14.26 	290.10 NONDEDUCTIBLE ITEMS.
14.27 		Subdivision 1.Expenses, interest, and taxes.
 14.28 	Except as provided in section  290.17, subdivision 4, paragraph (i), in computing the 
14.29 	net income of a taxpayer no deduction shall in any case be allowed for expenses, interest 
14.30 	and taxes connected with or allocable against the production or receipt of all income not 
14.31 	included in the measure of the tax imposed by this chapter, except that for corporations 
14.32 	engaged in the business of mining or producing iron ore, the mining of which is subject to 
14.33 	the occupation tax imposed by section  298.01, subdivision 4, this shall not prevent the 
14.34 	deduction of expenses and other items to the extent that the expenses and other items are 
15.1 	allowable under this chapter and are not deductible, capitalizable, retainable in basis, or 
15.2 	taken into account by allowance or otherwise in computing the occupation tax and do not 
15.3 	exceed the amounts taken for federal income tax purposes for that year. Occupation 
15.4 	taxes imposed under chapter 298, royalty taxes imposed under chapter 299, or depletion 
15.5 	expenses may not be deducted under this clause. 
15.6 		Subd. 2.Fines, penalties, damages, and expenses. (a) No deduction from taxable 
15.7 	income for a trade or business expense under section 162(a) of the Internal Revenue Code 
15.8 	shall be allowed for any fine, penalty, damages, or expenses paid to:
15.9 	(1) the government of the United States, a state, a territory or possession of the 
15.10 	United States, the District of Columbia, or the Commonwealth of Puerto Rico;
15.11 	(2) the government of a foreign country; or
15.12 	(3) a political subdivision of, or corporation or other entity serving as an agency or 
15.13 	instrumentality of, any government described in clause (1) or (2).
15.14 	(b) For purposes of this subdivision, "fine, penalty, damages, or expenses" include, 
15.15 	but are not limited to, any amount:
15.16 	(1) paid pursuant to a conviction or a plea of guilty or nolo contendere for any 
15.17 	crime in a criminal proceeding; 
15.18 	(2) paid as a civil penalty imposed by federal, state, or local law, including tax 
15.19 	penalties and interest; 
15.20 	(3) paid in settlement of the taxpayer's actual or potential liability for a civil or 
15.21 	criminal fine or penalty;
15.22 	(4) forfeited as collateral posted in connection with a proceeding that could result in 
15.23 	imposition of a fine or penalty; or
15.24 	(5) legal fees and related expenses paid or incurred in the prosecution or civil action 
15.25 	arising from a violation of the law imposing the fine or civil penalty, court costs assessed 
15.26 	against the taxpayer, or stenographic and printing charges, compensatory damages, 
15.27 	punitive damages, or restitution.

15.28 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
15.29 	December 31, 2005.

15.30 	ARTICLE 2
15.31 	SALES AND USE TAX

15.32 	Section 1. Minnesota Statutes 2005 Supplement, section 270C.722, subdivision 2, 
15.33 	is amended to read:
16.1 		Subd. 2.New permits after revocation. (a) The commissioner shall not issue a 
16.2 	new permit after revocation or reinstate a revoked permit unless the taxpayer applies for a 
16.3 	permit and provides reasonable evidence of intention to comply with the sales and use 
16.4 	tax laws and rules. The commissioner may require the applicant to provide security, in 
16.5 	addition to that authorized by section 297A.92, in an amount reasonably necessary to 
16.6 	ensure compliance with the sales and use tax laws and rules. If the commissioner issues 
16.7 	or reinstates a permit not in conformance with the requirements of this subdivision or 
16.8 	applicable rules, the commissioner may cancel the permit upon notice to the permit holder. 
16.9 	The notice must be served by first class and certified mail at the permit holder's last known 
16.10 	address. The cancellation shall be effective immediately, subject to the right of the permit 
16.11 	holder to show that the permit was issued in conformance with the requirements of this 
16.12 	subdivision and applicable rules. Upon such showing, the permit must be reissued.
16.13 	(b) If a taxpayer has had a permit or permits revoked three times in a five-year 
16.14 	period, the commissioner shall not may refuse to issue a new permit or reinstate the 
16.15 	revoked permit until 24 months have elapsed after revocation and the taxpayer has 
16.16 	satisfied the conditions for reinstatement of a revoked permit or issuance of a new permit 
16.17 	imposed by this section and rules adopted under this section.
16.18 	(c) For purposes of this subdivision, "taxpayer" means:
16.19 	(1) an individual, if a revoked permit was issued to or in the name of an individual, 
16.20 	or a corporation or partnership, if a revoked permit was issued to or in the name of a 
16.21 	corporation or partnership; and
16.22 	(2) an officer of a corporation, a member of a partnership, or an individual who is 
16.23 	liable for delinquent sales taxes, either for the entity for which the new or reinstated 
16.24 	permit is at issue, or for another entity for which a permit was previously revoked, or 
16.25 	personally as a permit holder.

16.26 	Sec. 2. Minnesota Statutes 2005 Supplement, section 297A.61, subdivision 3, is 
16.27 	amended to read:
16.28 		Subd. 3.Sale and purchase. (a) "Sale" and "purchase" include, but are not limited 
16.29 	to, each of the transactions listed in this subdivision.
16.30 	(b) Sale and purchase include:
16.31 	(1) any transfer of title or possession, or both, of tangible personal property, whether 
16.32 	absolutely or conditionally, for a consideration in money or by exchange or barter; and
16.33 	(2) the leasing of or the granting of a license to use or consume, for a consideration 
16.34 	in money or by exchange or barter, tangible personal property, other than a manufactured 
16.35 	home used for residential purposes for a continuous period of 30 days or more.
17.1 	(c) Sale and purchase include the production, fabrication, printing, or processing of 
17.2 	tangible personal property for a consideration for consumers who furnish either directly or 
17.3 	indirectly the materials used in the production, fabrication, printing, or processing.
17.4 	(d) Sale and purchase include the preparing for a consideration of food. 
17.5 	Notwithstanding section 297A.67, subdivision 2, taxable food includes, but is not limited 
17.6 	to, the following:
17.7 	(1) prepared food sold by the retailer;
17.8 	(2) soft drinks;
17.9 	(3) candy;
17.10 	(4) dietary supplements; and
17.11 	(5) all food sold through vending machines, except milk.
17.12 	(e) A sale and a purchase includes the furnishing for a consideration of electricity, 
17.13 	gas, water, or steam for use or consumption within this state.
17.14 	(f) A sale and a purchase includes the transfer for a consideration of prewritten 
17.15 	computer software whether delivered electronically, by load and leave, or otherwise.
17.16 	(g) A sale and a purchase includes the furnishing for a consideration of the following 
17.17 	services:
17.18 	(1) the privilege of admission to places of amusement, recreational areas, or athletic 
17.19 	events, and the making available of amusement devices, tanning facilities, reducing 
17.20 	salons, steam baths, turkish baths, health clubs, and spas or athletic facilities;
17.21 	(2) lodging and related services by a hotel, rooming house, resort, campground, 
17.22 	motel, or trailer camp and the granting of any similar license to use real property in a 
17.23 	specific facility, other than the renting or leasing of it for a continuous period of 30 days 
17.24 	or more under an enforceable written agreement that may not be terminated without 
17.25 	prior notice;
17.26 	(3) nonresidential parking services, whether on a contractual, hourly, or other 
17.27 	periodic basis, except for parking at a meter;
17.28 	(4) the granting of membership in a club, association, or other organization if:
17.29 	(i) the club, association, or other organization makes available for the use of its 
17.30 	members sports and athletic facilities, without regard to whether a separate charge is 
17.31 	assessed for use of the facilities; and
17.32 	(ii) use of the sports and athletic facility is not made available to the general public 
17.33 	on the same basis as it is made available to members.
17.34 	Granting of membership means both onetime initiation fees and periodic membership 
17.35 	dues. Sports and athletic facilities include golf courses; tennis, racquetball, handball, and 
18.1 	squash courts; basketball and volleyball facilities; running tracks; exercise equipment; 
18.2 	swimming pools; and other similar athletic or sports facilities;
18.3 	(5) delivery of aggregate materials and concrete block by a third party if the delivery 
18.4 	would be subject to the sales tax if provided by the seller of the aggregate material or 
18.5 	concrete block; and
18.6 	(6) services as provided in this clause:
18.7 	(i) laundry and dry cleaning services including cleaning, pressing, repairing, altering, 
18.8 	and storing clothes, linen services and supply, cleaning and blocking hats, and carpet, 
18.9 	drapery, upholstery, and industrial cleaning. Laundry and dry cleaning services do not 
18.10 	include services provided by coin operated facilities operated by the customer;
18.11 	(ii) motor vehicle washing, waxing, and cleaning services, including services 
18.12 	provided by coin operated facilities operated by the customer, and rustproofing, 
18.13 	undercoating, and towing of motor vehicles;
18.14 	(iii) building and residential cleaning, maintenance, and disinfecting and 
18.15 	exterminating services;
18.16 	(iv) detective, security, burglar, fire alarm, and armored car services; but not 
18.17 	including services performed within the jurisdiction they serve by off-duty licensed peace 
18.18 	officers as defined in section 626.84, subdivision 1, or services provided by a nonprofit 
18.19 	organization for monitoring and electronic surveillance of persons placed on in-home 
18.20 	detention pursuant to court order or under the direction of the Minnesota Department 
18.21 	of Corrections;
18.22 	(v) pet grooming services;
18.23 	(vi) lawn care, fertilizing, mowing, spraying and sprigging services; garden planting 
18.24 	and maintenance; tree, bush, and shrub pruning, bracing, spraying, and surgery; indoor 
18.25 	plant care; tree, bush, shrub, and stump removal, except when performed as part of a land 
18.26 	clearing contract as defined in section 297A.68, subdivision 40; and tree trimming for 
18.27 	public utility lines. Services performed under a construction contract for the installation of 
18.28 	shrubbery, plants, sod, trees, bushes, and similar items are not taxable;
18.29 	(vii) massages, except when provided by a licensed health care facility or 
18.30 	professional or upon written referral from a licensed health care facility or professional for 
18.31 	treatment of illness, injury, or disease; and
18.32 	(viii) the furnishing of lodging, board, and care services for animals in kennels and 
18.33 	other similar arrangements, but excluding veterinary and horse boarding services.
18.34 	In applying the provisions of this chapter, the terms "tangible personal property" 
18.35 	and "sales at retail" include taxable services listed in clause (6), items (i) to (vi) and 
18.36 	(viii), and the provision of these taxable services, unless specifically provided otherwise. 
19.1 	Services performed by an employee for an employer are not taxable. Services performed 
19.2 	by a partnership or association for another partnership or association are not taxable if 
19.3 	one of the entities owns or controls more than 80 percent of the voting power of the 
19.4 	equity interest in the other entity. Services performed between members of an affiliated 
19.5 	group of corporations are not taxable. For purposes of the preceding sentence, "affiliated 
19.6 	group of corporations" includes those entities that would be classified as members of an 
19.7 	affiliated group under United States Code, title 26, section 1504, and that are eligible to 
19.8 	file a consolidated tax return for federal income tax purposes.
19.9 	(h) A sale and a purchase includes the furnishing for a consideration of tangible 
19.10 	personal property or taxable services by the United States or any of its agencies or 
19.11 	instrumentalities, or the state of Minnesota, its agencies, instrumentalities, or political 
19.12 	subdivisions.
19.13 	(i) A sale and a purchase includes the furnishing for a consideration of 
19.14 	telecommunications services, including cable television services and direct satellite 
19.15 	services. Telecommunications services are taxed to the extent allowed under federal law.
19.16 	(j) A sale and a purchase includes the furnishing for a consideration of installation if 
19.17 	the installation charges would be subject to the sales tax if the installation were provided 
19.18 	by the seller of the item being installed.
19.19 	(k) A sale and a purchase includes the rental of a vehicle by a motor vehicle dealer 
19.20 	to a customer when (1) the vehicle is rented by the customer for a consideration, or (2) 
19.21 	the motor vehicle dealer is reimbursed pursuant to a service contract as defined in section 
19.22 	65B.29, subdivision 1, clause (1).

19.23 	EFFECTIVE DATE. This section is effective for purchases and sales made after 
19.24 	June 30, 2006.

19.25 	Sec. 3. Minnesota Statutes 2005 Supplement, section 297A.64, subdivision 4, is 
19.26 	amended to read:
19.27 		Subd. 4.Exemptions. (a) The tax and the fee imposed by this section do not apply 
19.28 	to a lease or rental of (1) a vehicle to be used by the lessee to provide a licensed taxi 
19.29 	service; (2) a hearse or limousine used in connection with a burial or funeral service; or
19.30 	(3) a van designed or adapted primarily for transporting property rather than passengers; 
19.31 	or (4) a vehicle under a car sharing agreement where the lessee is a dues-paying member 
19.32 	of a nonprofit car sharing organization that leases vehicles only on an hourly or mileage 
19.33 	basis. The tax and the fee imposed under this section do not apply when the lease or rental 
19.34 	of a vehicle is exempt from the tax imposed under section 297A.62, subdivision 1.
20.1 	(b) The lessor may elect not to charge the fee imposed in subdivision 2 if in the 
20.2 	previous calendar year the lessor had no more than 20 vehicles available for lease that 
20.3 	would have been subject to tax under this section, or no more than $50,000 in gross 
20.4 	receipts that would have been subject to tax under this section.

20.5 	EFFECTIVE DATE. This section is effective for leases made after June 30, 2006.

20.6 	Sec. 4. Minnesota Statutes 2004, section 297A.67, subdivision 18, is amended to read:
20.7 		Subd. 18.Used and re-refined motor oils. Used motor oils are exempt. Re-refined 
20.8 	motor oils that meet American Petroleum Institute specifications for gasoline or diesel 
20.9 	engines are exempt.

20.10 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
20.11 	June 30, 2006.

20.12 	Sec. 5. Minnesota Statutes 2004, section 297A.67, is amended by adding a subdivision 
20.13 	to read:
20.14 		Subd. 33.Recycled copier and printing papers. Copier paper with a minimum 
20.15 	postconsumer recycled content of 30 percent by weight is exempt. Uncoated printing 
20.16 	paper with a minimum of 30 percent postconsumer recycled content by weight is exempt. 
20.17 	Coated printing paper with a minimum of ten percent of postconsumer recycled content by 
20.18 	weight is exempt.

20.19 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
20.20 	June 30, 2006.

20.21 	Sec. 6. Minnesota Statutes 2004, section 297A.68, subdivision 19, is amended to read:
20.22 		Subd. 19.Petroleum products. The following petroleum products are exempt:
20.23 	(1) products upon which a tax has been imposed and paid under chapter 296A, 
20.24 	and for which no refund has been or will be allowed because the buyer used the fuel 
20.25 	for nonhighway use;
20.26 	(2) products that are used in the improvement of agricultural land by constructing, 
20.27 	maintaining, and repairing drainage ditches, tile drainage systems, grass waterways, water 
20.28 	impoundment, and other erosion control structures;
20.29 	(3) products purchased by a transit system receiving financial assistance under 
20.30 	section  174.24,  256B.0625, subdivision 17, or  473.384; 
20.31 	(4) products purchased by an ambulance service licensed under chapter 144E;
21.1 	(5) products used in a passenger snowmobile, as defined in section  296A.01, 
21.2 	subdivision 39, for off-highway business use as part of the operations of a resort as 
21.3 	provided under section  296A.16, subdivision 2, clause (2); or
21.4 	(6) products purchased by a state or a political subdivision of a state for use in motor 
21.5 	vehicles exempt from registration under section  168.012, subdivision 1, paragraph (b); or
21.6 	(7) products purchased for use as fuel for a commuter rail system operating under 
21.7 	sections 174.80 to 174.90. The tax must be imposed and collected as if the rate under 
21.8 	section 297A.62, subdivision 1, applied, and then refunded in the manner provided 
21.9 	in section 297A.75. 

21.10 	EFFECTIVE DATE. This section is effective for purchases made after June 30, 
21.11 	2006.

21.12 	Sec. 7. Minnesota Statutes 2004, section 297A.68, is amended by adding a subdivision 
21.13 	to read:
21.14 		Subd. 42.Commuter rail materials, supplies, and equipment. Materials, 
21.15 	supplies, and equipment used or consumed in the construction, equipment, or improvement 
21.16 	of a commuter rail transportation system operated under sections 174.80 to 174.90 are 
21.17 	exempt. This exemption includes railroad cars, engines, and related equipment.

21.18 	EFFECTIVE DATE. This section is effective for purchases made after June 30, 
21.19 	2006.

21.20 	Sec. 8. Minnesota Statutes 2004, section 297A.70, subdivision 3, is amended to read:
21.21 		Subd. 3.Sales of certain goods and services to government. (a) The following 
21.22 	sales to or use by the specified governments and political subdivisions of the state are 
21.23 	exempt:
21.24 	(1) repair and replacement parts for emergency rescue vehicles, fire trucks, and 
21.25 	fire apparatus to a political subdivision;
21.26 	(2) machinery and equipment, except for motor vehicles, used directly for mixed 
21.27 	municipal solid waste management services at a solid waste disposal facility as defined in 
21.28 	section  115A.03, subdivision 10; 
21.29 	(3) chore and homemaking services to a political subdivision of the state to be 
21.30 	provided to elderly or disabled individuals;
21.31 	(4) telephone services to the Department of Administration that are used to provide 
21.32 	telecommunications services through the intertechnologies revolving fund;
22.1 	(5) firefighter personal protective equipment as defined in paragraph (b), if purchased 
22.2 	or authorized by and for the use of an organized fire department, fire protection district, or 
22.3 	fire company regularly charged with the responsibility of providing fire protection to the 
22.4 	state or a political subdivision;
22.5 	(6) bullet-resistant body armor that provides the wearer with ballistic and trauma 
22.6 	protection, if purchased by a law enforcement agency of the state or a political subdivision 
22.7 	of the state, or a licensed peace officer, as defined in section  626.84, subdivision 1; 
22.8 	(7) motor vehicles purchased or leased by political subdivisions of the state if the 
22.9 	vehicles are exempt from registration under section  168.012, subdivision 1, paragraph (b), 
22.10 	exempt from taxation under section  473.448, or exempt from the motor vehicle sales tax 
22.11 	under section  297B.03, clause (12); 
22.12 	(8) equipment designed to process, dewater, and recycle biosolids for wastewater 
22.13 	treatment facilities of political subdivisions, and materials incidental to installation of 
22.14 	that equipment; and
22.15 	(9) sales to a town of gravel and of machinery, equipment, and accessories, except 
22.16 	motor vehicles, used exclusively for road and bridge maintenance, and leases by a town of 
22.17 	motor vehicles exempt from tax under section  297B.03, clause (10); and 
22.18 	(10) voting equipment purchased between January 1, 2006, and January 1, 2008, 
22.19 	by a county to comply with United States Code, title 42, section 15481, ("Help America 
22.20 	Vote Act of 2002"). 
22.21 	(b) For purposes of this subdivision, "firefighters personal protective equipment" 
22.22 	means helmets, including face shields, chin straps, and neck liners; bunker coats and 
22.23 	pants, including pant suspenders; boots; gloves; head covers or hoods; wildfire jackets; 
22.24 	protective coveralls; goggles; self-contained breathing apparatus; canister filter masks; 
22.25 	personal alert safety systems; spanner belts; optical or thermal imaging search devices; 
22.26 	and all safety equipment required by the Occupational Safety and Health Administration.

22.27 	EFFECTIVE DATE. This section is effective retroactively from January 1, 2006. 

22.28 	Sec. 9. Minnesota Statutes 2005 Supplement, section 297A.70, subdivision 8, is 
22.29 	amended to read:
22.30 		Subd. 8.Regionwide public safety radio communication system; products and 
22.31 	services. Products and services including, but not limited to, end user equipment used 
22.32 	for construction, ownership, operation, maintenance, and enhancement of the backbone 
22.33 	system of the regionwide public safety radio communication system established under 
22.34 	sections 403.21 to 403.34 403.40, are exempt. For purposes of this subdivision, backbone 
22.35 	system is defined in section 403.21, subdivision 9. This subdivision is effective for 
23.1 	purchases, sales, storage, use, or consumption for use in the first and second phases of the 
23.2 	system, as defined in section 403.21, subdivisions 3, 10, and 11, and that portion of the 
23.3 	third phase of the system that is located in the southeast district of the State Patrol and 
23.4 	the counties of Benton, Sherburne, Stearns, and Wright, and that portion of the system 
23.5 	that is located in Itasca County.

23.6 	Sec. 10. Minnesota Statutes 2004, section 297A.71, subdivision 23, is amended to read:
23.7 		Subd. 23.Construction materials for qualified low-income housing projects. (a) 
23.8 	Purchases of materials and supplies used or consumed in and equipment incorporated into 
23.9 	the construction, improvement, or expansion of qualified low-income housing projects are 
23.10 	exempt from the tax imposed under this chapter if the owner of the qualified low-income 
23.11 	housing project is:
23.12 	(1) the public housing agency or housing and redevelopment authority of a political 
23.13 	subdivision;
23.14 	(2) an entity exercising the powers of a housing and redevelopment authority within 
23.15 	a political subdivision;
23.16 	(3) a limited partnership in which the sole general partner is an authority under 
23.17 	clause (1) or an entity under clause (2);
23.18 	(4) a nonprofit corporation subject to the provisions of chapter 317A, and qualifying 
23.19 	under section 501(c)(3) or 501(c)(4) of the Internal Revenue Code of 1986, as amended; or
23.20 	(5) an owner entity, as defined in Code of Federal Regulations, title 24, part 941.604, 
23.21 	for a qualified low-income housing project described in paragraph (b), clause (5).; or
23.22 	(6) a limited partnership in which either:
23.23 	(i) the sole general partner is an entity under clause (4); or
23.24 	(ii) the managing partner is an entity under clause (4) and makes the following 
23.25 	disclosures in writing to an entity under clause (1) or (2):
23.26 	(A) the names of all members of the partnership;
23.27 	(B) the address for service of process of each member of the partnership; and
23.28 	(C) the financing plan for the low-income housing project.
23.29 	This exemption applies regardless of whether the purchases are made by the owner 
23.30 	of the facility or a contractor.
23.31 	(b) For purposes of this exemption, "qualified low-income housing project" means:
23.32 	(1) a housing or mixed use project in which at least 20 percent of the residential units 
23.33 	are qualifying low-income rental housing units as defined in section  273.126; 
23.34 	(2) a federally assisted low-income housing project financed by a mortgage insured 
23.35 	or held by the United States Department of Housing and Urban Development under 
24.1 	United States Code, title 12, section 1701s, 1715l(d)(3), 1715l(d)(4), or 1715z-1; United 
24.2 	States Code, title 42, section 1437f; the Native American Housing Assistance and 
24.3 	Self-Determination Act, United States Code, title 25, section 4101 et seq.; or any similar 
24.4 	successor federal low-income housing program;
24.5 	(3) a qualified low-income housing project as defined in United States Code, title 
24.6 	26, section 42(g), meeting all of the requirements for a low-income housing credit under 
24.7 	section 42 of the Internal Revenue Code regardless of whether the project actually applies 
24.8 	for or receives a low-income housing credit;
24.9 	(4) a project that will be operated in compliance with Internal Revenue Service 
24.10 	revenue procedure 96-32; or
24.11 	(5) a housing or mixed use project in which all or a portion of the residential units 
24.12 	are subject to the requirements of section 5 of the United States Housing Act of 1937.
24.13 	(c) For a project, a portion of which is not used for low-income housing units, 
24.14 	the amount of purchases that are exempt under this subdivision must be determined by 
24.15 	multiplying the total purchases, as specified in paragraph (a), by the ratio of:
24.16 	(1) the total gross square footage of units subject to the income limits under section  
24.17 	273.126, the financing for the project, the federal low-income housing tax credit, revenue 
24.18 	procedure 96-32, or section 5 of the United States Housing Act of 1937, as applicable 
24.19 	to the project; and 
24.20 	(2) the total gross square footage of all units in the project.
24.21 	(d) The tax must be imposed and collected as if the rate under section  297A.62, 
24.22 	subdivision 1, applied, and then refunded in the manner provided in section  297A.75. 

24.23 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
24.24 	June 30, 2006.

24.25 	Sec. 11. Minnesota Statutes 2004, section 297A.71, is amended by adding a 
24.26 	subdivision to read:
24.27 		Subd. 37.Hydroelectric generating facility. Materials and supplies used or 
24.28 	consumed in the construction of a 10.3 megawatt run-of-the-river hydroelectric generating 
24.29 	facility that meets the requirements of this subdivision are exempt. To qualify for the 
24.30 	exemption under this subdivision, a hydroelectric generating facility must:
24.31 	(1) utilize between 12 and 16 turbine generators at a dam site existing on March 
24.32 	31, 1994;
24.33 	(2) be located on land within 3,000 feet of a 13.8 kilovolt distribution circuit; and
24.34 	(3) be eligible to receive a renewable energy production incentive payment under 
24.35 	section 216C.41.

25.1 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
25.2 	April 30, 2006, and on or before December 31, 2009.

25.3 	Sec. 12. Minnesota Statutes 2005 Supplement, section 297A.75, subdivision 1, is 
25.4 	amended to read:
25.5 		Subdivision 1.Tax collected. The tax on the gross receipts from the sale of the 
25.6 	following exempt items must be imposed and collected as if the sale were taxable and the 
25.7 	rate under section 297A.62, subdivision 1, applied. The exempt items include:
25.8 	(1) capital equipment exempt under section 297A.68, subdivision 5;
25.9 	(2) building materials for an agricultural processing facility exempt under section 
25.10 	297A.71, subdivision 13;
25.11 	(3) building materials for mineral production facilities exempt under section 
25.12 	297A.71, subdivision 14;
25.13 	(4) building materials for correctional facilities under section 297A.71, subdivision 
25.14 	3;
25.15 	(5) building materials used in a residence for disabled veterans exempt under section 
25.16 	297A.71, subdivision 11;
25.17 	(6) elevators and building materials exempt under section 297A.71, subdivision 12;
25.18 	(7) building materials for the Long Lake Conservation Center exempt under section 
25.19 	297A.71, subdivision 17;
25.20 	(8) materials, supplies, fixtures, furnishings, and equipment for a county law 
25.21 	enforcement and family service center under section 297A.71, subdivision 26;
25.22 	(9) materials and supplies for qualified low-income housing under section 297A.71, 
25.23 	subdivision 23; and
25.24 	(10) materials, supplies, and equipment for municipal electric utility facilities under 
25.25 	section 297A.71, subdivision 35; and
25.26 	(11) products purchased for use as fuel for a commuter rail system exempt under 
25.27 	section 297A.68, subdivision 19, clause (7).

25.28 	Sec. 13. Minnesota Statutes 2005 Supplement, section 297A.75, subdivision 2, is 
25.29 	amended to read:
25.30 		Subd. 2.Refund; eligible persons. Upon application on forms prescribed by the 
25.31 	commissioner, a refund equal to the tax paid on the gross receipts of the exempt items 
25.32 	must be paid to the applicant. Only the following persons may apply for the refund:
25.33 	(1) for subdivision 1, clauses (1) to (3), the applicant must be the purchaser;
26.1 	(2) for subdivision 1, clauses (4), (7), and (8), the applicant must be the governmental 
26.2 	subdivision;
26.3 	(3) for subdivision 1, clause (5), the applicant must be the recipient of the benefits 
26.4 	provided in United States Code, title 38, chapter 21;
26.5 	(4) for subdivision 1, clause (6), the applicant must be the owner of the homestead 
26.6 	property;
26.7 	(5) for subdivision 1, clause (9), the owner of the qualified low-income housing 
26.8 	project; and
26.9 	(6) for subdivision 1, clause (10), the applicant must be a municipal electric utility or 
26.10 	a joint venture of municipal electric utilities; and
26.11 	(7) for subdivision 1, clause (11), the applicant must be the purchaser of the fuel.

26.12 	Sec. 14. Laws 1980, chapter 511, section 1, subdivision 2, as amended by Laws 1991, 
26.13 	chapter 291, article 8, section 22; Laws 1998, chapter 389, article 8, section 25; and Laws 
26.14 	2003, First Special Session chapter 21, article 8, section 11, is amended to read:
26.15 	
26.16 	
26.17 	Subd. 2.  Notwithstanding Minnesota Statutes, Section  477A.016, or any other law, 
26.18 	ordinance, or city charter provision  to the contrary, the city of Duluth may, by ordinance, 
26.19 	impose an  additional sales tax of up to one and one-half two and one-quarter percent on 
26.20 	sales  transactions which are described in Minnesota Statutes 2000,  Section 297A.01, 
26.21 	Subdivision 3, Clause (c).  When the city  council determines that the taxes imposed 
26.22 	under this subdivision  and under Laws 1998, chapter 389, article 8, section 26, at a rate 
26.23 	of one-half of one percent have  produced revenue sufficient to pay (1) the debt service 
26.24 	on bonds  in a principal amount of $8,000,000 issued for capital  improvements to the 
26.25 	Duluth Entertainment and Convention Center,  and (2) debt service on outstanding bonds 
26.26 	originally issued in  the principal amount of $4,970,000 to finance capital  improvements to 
26.27 	the Great Lakes Aquarium since the imposition of  the taxes at the rate of one and one-half 
26.28 	percent, the rate of  the tax under this subdivision is reduced to by one-half of one percent.  
26.29 	When the city council determines that the taxes imposed under this subdivision at a rate 
26.30 	of three-quarters of one percent have produced revenue sufficient to pay debt service on 
26.31 	bonds in the principal amount of $33,700,000, plus issuance and discount costs, issued 
26.32 	for capital improvements for a new arena at the Duluth Entertainment and Convention 
26.33 	Center, the rate of tax under this subdivision shall be reduced by three-quarters of one 
26.34 	percent. The  imposition of this tax shall not be subject to voter referendum  under either 
26.35 	state law or city charter provisions.  
27.1 	
27.2 	EFFECTIVE DATE. This section is effective the day after  the governing body of 
27.3 	the city of Duluth and its chief clerical  officer comply with Minnesota Statutes, section 
27.4 	645.021,  subdivisions 2 and 3. 
27.5 	

27.6 	Sec. 15. Laws 1996, chapter 471, article 2, section 29, is amended to read:
27.7 	Sec. 29. CITY OF HERMANTOWN; SALES AND USE TAX.
 27.8 		 Subdivision 1.Sales and use tax authorized. (a)  Notwithstanding Minnesota 
27.9 	Statutes, section 477A.016, or any other contrary provision of law, ordinance, or city 
27.10 	charter, the city of Hermantown may, by ordinance, impose an additional sales and use tax 
27.11 	of up to one percent on sales transactions , storage, and use taxable pursuant to Minnesota 
27.12 	Statutes, chapter 297A, that occur within the city.
27.13 	(b) The proceeds of the first one-half of the one percent  tax imposed under this 
27.14 	section must be used to meet the costs of  by the city for the following projects:
27.15 	 (1) extending a sewer interceptor line;
27.16 	 (2) construction of a booster pump station, reservoirs, and related improvements 
27.17 	to the water system; and
27.18 	 (3) construction of a building containing a  police and fire station and an 
27.19 	administrative services facility.
27.20 	(c) Revenues received from the remaining one-half of the one percent tax 
27.21 	authorized under this section must be used by the city to pay all or part of the capital and 
27.22 	administrative costs of developing, acquiring, constructing, and initially furnishing and 
27.23 	equipping the following projects:
27.24 	(1) construction of a new facility or purchase of an existing facility to be used as 
27.25 	a public works facility;
27.26 	(2) construction, signalization, and rehabilitation of primary collector roads and 
27.27 	commercial frontage roads, within the city; and 
27.28 	(3) extension of a regional trunk sewer.
27.29 	(d) Authorized expenses include, but are not limited to, acquiring property; paying 
27.30 	construction, administrative, and operating expenses related to the development of the 
27.31 	projects listed in paragraph (c); paying debt service on bonds or other obligations, 
27.32 	including lease obligations, issued to finance construction, expansion, or improvement of 
27.33 	the projects listed in paragraph (c); and other compatible uses, including but not limited to, 
27.34 	parking, lighting, and landscaping.
28.1 		 Subd. 2.Referendum. (a) If the Hermantown city council proposes to impose the 
28.2 	sales tax authorized by this section, it shall conduct a referendum on the issue.
28.3 	(b) If the Hermantown city council initially imposes the tax at a rate that is less than 
28.4 	one percent and proposes increasing the tax rate at a later date up to the full one percent, it 
28.5 	shall conduct a referendum on the increase of the tax rate.
28.6 	(c) The question of imposing or increasing the tax must be submitted to the voters at 
28.7 	a special or general election.  The tax may not be imposed unless a majority of votes cast 
28.8 	on the question of imposing the tax are in the affirmative.  The commissioner of revenue 
28.9 	shall prepare a suggested form of question to be presented at the election.  This subdivision 
28.10 	applies notwithstanding any city charter provision to the contrary.
28.11 		 Subd. 3.Enforcement; collection; and administration of taxes. A sales tax 
28.12 	imposed under this section must be reported and paid to the commissioner of revenue 
28.13 	with the state sales taxes, and be subject to the same penalties, interest, and enforcement 
28.14 	provisions.  The proceeds of the tax, less refunds and a proportionate share of the cost of 
28.15 	collection, shall be remitted at least quarterly to the city.  The commissioner shall deduct 
28.16 	from the proceeds remitted an amount that equals the indirect statewide cost as well as the 
28.17 	direct and indirect department costs necessary to administer, audit, and collect the tax.  
28.18 	The amount deducted shall be deposited in the state general fund.
28.19 		Subd. 3a.Bonding authority. (a) The city may issue general obligation bonds 
28.20 	under Minnesota Statutes, chapter 475, to finance the costs in subdivision 1, paragraph (c). 
28.21 	The total amount of bonds issued for the projects under subdivision 1, paragraph (c), may 
28.22 	not exceed $13,000,000 in the aggregate.  An election to approve the bonds is not required.
28.23 	(b) The bonds are not included in computing any debt limitation applicable to the 
28.24 	city, and the levy of taxes under Minnesota Statutes, section 475.61, to pay principal of 
28.25 	and interest on the bonds is not subject to any levy limitation.
28.26 	(c) The taxes authorized under this section may be pledged to and used for the 
28.27 	payment of the bonds and any bonds issued to refund them.
28.28 		 Subd. 4.Termination. The portion of the tax authorized under this section to 
28.29 	finance the improvements described in subdivision 1, paragraph (b), terminates at the later 
28.30 	of (1) ten years after the date of initial imposition of the tax, or (2) on the first day of the 
28.31 	second month next succeeding a determination by the city council that sufficient funds 
28.32 	have been received fromthe taxto finance the improvements described in subdivision 1, 
28.33 	clauses (1) to (3),and to prepay or retire at maturity the principal, interest, and premium 
28.34 	due on any bonds issued for the improvements on March 31, 2026.The portion of the 
28.35 	tax authorized to finance the improvements described in subdivision 1, paragraph (c), 
28.36 	terminates when the revenues raised are sufficient to finance those improvements, up to an 
29.1 	amount equal to $13,000,000 plus any interest, premium, and other costs associated with 
29.2 	the bonds issued under subdivision 3a.  The city council may terminate this portion of the 
29.3 	tax earlier. Any funds remaining after completion of the improvements and retirement or 
29.4 	redemption of the bonds may be placed in the general fund of the city.
29.5 		 Subd. 5.Local approval; effective date. This section is effective the day after final 
29.6 	enactment, upon compliance with Minnesota Statutes, section 645.021, subdivision 3, by 
29.7 	the city of Hermantown.

29.8 	EFFECTIVE DATE. This section is effective the day after the governing body of 
29.9 	the city of Hermantown and its chief clerical officer comply with Minnesota Statutes, 
29.10 	section 645.021, subdivisions 2 and 3.

29.11 	Sec. 16. Laws 1999, chapter 243, article 4, section 18, subdivision 1, is amended to 
29.12 	read:
29.13 		 Subdivision 1.Sales and use tax. (a) Notwithstanding Minnesota Statutes, section 
29.14 	297A.48, subdivision 1a,477A.016, or any other provision of law, ordinance, or city 
29.15 	charter, if approved by the city voters at the first municipal general election held after the 
29.16 	date of final enactment of this act or at a special election held November 2, 1999, the city 
29.17 	of Proctor may impose by ordinance a sales and use tax of up to one-half of one percent 
29.18 	for the purposes specified in subdivision 3, paragraph (a).  The provisions of Minnesota 
29.19 	Statutes, section 297A.48 297A.99, govern the imposition, administration, collection, and 
29.20 	enforcement of the tax authorized under this subdivision.
29.21 	(b) The city of Proctor may impose by ordinance an additional sales and use tax of 
29.22 	up to one-half of one percent if approved by the city voters at a general election or at a 
29.23 	special election held for this purpose.  The revenues received from this additional tax must 
29.24 	be used for the purposes specified in subdivision 3, paragraph (b).

29.25 	EFFECTIVE DATE. This section is effective the day following final enactment, 
29.26 	upon compliance by the city of Proctor with Minnesota Statutes, section 645.021, 
29.27 	subdivision 3.

29.28 	Sec. 17. Laws 1999, chapter 243, article 4, section 18, subdivision 3, is amended to 
29.29 	read:
29.30 		 Subd. 3.Use of revenues. (a) Revenues received from taxes authorized by 
29.31 	subdivisions 1, paragraph (a), and 2 must be used by the city to pay the cost of collecting 
29.32 	the taxes and to pay for construction and improvement of the following city facilities:
29.33 	 (1) streets; and
30.1 	 (2) constructing and equipping the Proctor community activity center.
30.2 	 Authorized expenses include, but are not limited to, acquiring property, paying 
30.3 	construction and operating expenses related to the development of an authorized facility, 
30.4 	and paying debt service on bonds or other obligations, including lease obligations, issued 
30.5 	to finance the construction, expansion, or improvement of an authorized facility.  The 
30.6 	capital expenses for all projects authorized under this paragraph that may be paid with 
30.7 	these taxes is limited to $3,600,000, plus an amount equal to the costs related to issuance 
30.8 	of the bonds.
30.9 	(b) Revenues received from taxes authorized by subdivision 1, paragraph (b), 
30.10 	must be used by the city to pay the cost of collecting the taxes and for construction and 
30.11 	improvements of city streets, public utilities, sidewalks, bikeways, and trails.

30.12 	EFFECTIVE DATE. This section is effective the day following final enactment, 
30.13 	upon compliance by the city of Proctor with Minnesota Statutes, section 645.021, 
30.14 	subdivision 3.

30.15 	Sec. 18. Laws 1999, chapter 243, article 4, section 18, subdivision 4, is amended to 
30.16 	read:
30.17 		 Subd. 4.Bonding authority. (a) The city may issue bonds under Minnesota 
30.18 	Statutes, chapter 475, to finance the capital expenditure and improvement projects 
30.19 	described in subdivision 3.  An election to approve the bonds under Minnesota Statutes, 
30.20 	section 475.58, is not required.
30.21 	 (b) The issuance of bonds under this subdivision is not subject to Minnesota Statutes, 
30.22 	sections 275.60 and 279.61 275.61.
30.23 	 (c) The bonds are not included in computing any debt limitation applicable to the 
30.24 	city, and the levy of taxes under Minnesota Statutes, section 475.61, to pay principal of 
30.25 	and interest on the bonds is not subject to any levy limitation.
30.26 	 (d) For projects described in subdivision 3, paragraph (a), the aggregate principal 
30.27 	amount of bonds, plus the aggregate of the taxes used directly to pay eligible capital 
30.28 	expenditures and improvements, may not exceed $3,600,000, plus an amount equal to 
30.29 	the costs related to issuance of the bonds, including interest on the bonds. For projects 
30.30 	described in subdivision 3, paragraph (b), the aggregate principal amount of bonds may 
30.31 	not exceed $7,200,000, plus an amount equal to the costs related to issuance of the bonds, 
30.32 	including interest on the bonds.
30.33 	 (e) The sales and use and excise taxes authorized in this section may be pledged to 
30.34 	and used for the payment of the bonds and any bonds issued to refund them only if the 
30.35 	bonds and any refunding bonds are general obligations of the city.

31.1 	EFFECTIVE DATE. This section is effective the day following final enactment, 
31.2 	upon compliance by the city of Proctor with Minnesota Statutes, section 645.021, 
31.3 	subdivision 3.

31.4 	Sec. 19. Laws 2005, First Special Session chapter 3, article 5, section 43, subdivision 
31.5 	3, is amended to read:
31.6 	
31.7 	Subd. 3.  Use of revenues. Revenues received from the  taxes authorized by 
31.8 	subdivisions 1 and 2 must be used to pay all  or part of the capital costs of transportation 
31.9 	contained in the  Minnesota Department of Transportation's Winona Intermodal study  
31.10 	dated June 2002 and in the resolution approved by the city  council on January 3, 2005, and 
31.11 	all or a part of the capital costs of flood control projects approved by resolution of the city 
31.12 	council on February 6, 2006, including securing or paying debt  service on bonds issued 
31.13 	under subdivision 4, for the  transportation and flood control projects and to pay the cost 
31.14 	of collecting and  administering the tax.  Authorized costs include, but are not  limited to, 
31.15 	acquiring property and paying construction and  engineering costs related to the projects.  
31.16 	

31.17 	EFFECTIVE DATE. This section is effective the day after compliance by 
31.18 	the governing body of the city of Winona with Minnesota Statutes, section 645.021, 
31.19 	subdivision 3.

31.20 	Sec. 20. Laws 2005, First Special Session chapter 3, article 5, section 44, subdivision 
31.21 	1, is amended to read:
31.22 	
31.23 	Subdivision 1.  [SALES AND USE TAX.] Notwithstanding  Minnesota Statutes, 
31.24 	section 477A.016, or any other provision of  law, ordinance, or city charter, if approved by 
31.25 	the voters  pursuant to Minnesota Statutes, section 297A.99, at the next a   general election
31.26 	held before January 1, 2008, the city of Worthington may impose by  ordinance a sales 
31.27 	and use tax of up to one-half of one percent  for the purpose specified in subdivision 3.  
31.28 	Except as otherwise  provided in this section, the provisions of Minnesota Statutes,  section 
31.29 	297A.99, govern the imposition, administration,  collection, and enforcement of the tax 
31.30 	authorized under this  subdivision.  
31.31 	

31.32 	EFFECTIVE DATE. This section is effective the day following final enactment.

32.1 	Sec. 21. CITY OF AUSTIN; TAXES AUTHORIZED.
 32.2 		Subdivision 1.Sales and use tax. Notwithstanding Minnesota Statutes, section 
32.3 	477A.016, or any other provision of law, ordinance, or city charter, if approved by the 
32.4 	voters pursuant to Minnesota Statutes, section 297A.99, at the next general election or 
32.5 	special election held for that purpose before January 1, 2007, the city of Austin may 
32.6 	impose by ordinance a sales and use tax of up to one-half of one percent for the purpose 
32.7 	specified in subdivision 2. Except as otherwise provided in this section, the provisions of 
32.8 	Minnesota Statutes, section 297A.99, govern the imposition, administration, collection, 
32.9 	and enforcement of the tax authorized under this subdivision.
32.10 		Subd. 2.Use of revenues. Revenues received from taxes authorized by subdivision 
32.11 	1 must be used by the city of Austin to pay all or part of the capital or administrative costs 
32.12 	of flood mitigation projects in the city of Austin. Authorized expenses include, but are not 
32.13 	limited to, acquiring property and paying construction and engineering expenses related 
32.14 	to the flood mitigation projects.
32.15 		Subd. 3.Bonding authority. Pursuant to the approval of the city voters to impose 
32.16 	the tax authorized in subdivision 1, the city of Austin may issue without an additional 
32.17 	election general obligation bonds of the city in an amount not to exceed $14,000,000 to 
32.18 	finance the costs for the projects specified in subdivision 2. The debt represented by the 
32.19 	bonds must not be included in computing any debt limitations applicable to the city, and 
32.20 	the levy of taxes required by Minnesota Statutes, section 475.61, to pay the principal or 
32.21 	any interest on the bonds must not be subject to any levy limitation.
32.22 		Subd. 4.Termination of tax. The tax authorized under subdivision 1 terminates at 
32.23 	the earlier of:
32.24 	(1) 20 years after the date of initial imposition of the tax; or
32.25 	(2) when the Austin City Council determines that the amount described in 
32.26 	subdivision 2 has been received from the tax to finance the capital and administrative costs 
32.27 	for the projects specified in subdivision 2, and to repay or retire at maturity, the principal, 
32.28 	interest, and premium due on any bonds issued for the projects under subdivision 3. 
32.29 	Any funds remaining after completion of the projects specified in subdivision 2, and 
32.30 	retirement or redemption of the bonds in subdivision 3, may be placed in the general fund 
32.31 	of the city. The tax imposed under subdivision 1 may expire at an earlier time if the 
32.32 	city so determines by ordinance.

32.33 	EFFECTIVE DATE. This section is effective the day after compliance by 
32.34 	the governing body of the city of Austin with Minnesota Statutes, section 645.021, 
32.35 	subdivisions 2 and 3.

33.1 	Sec. 22. CITY OF BAXTER; TAXES AUTHORIZED.
 33.2 		Subdivision 1.Sales and use tax authorized. Notwithstanding Minnesota Statutes, 
33.3 	section 477A.016, or any other provision of law, ordinance, or city charter, pursuant to 
33.4 	the approval of the voters on November 2, 2004, and pursuant to Minnesota Statutes, 
33.5 	section 297A.99, the city of Baxter may impose by ordinance a sales and use tax of 
33.6 	one-half of one percent for the purposes specified in subdivision 3. The provisions of 
33.7 	Minnesota Statutes, section 297A.99, govern the imposition, administration, collection, 
33.8 	and enforcement of the tax authorized under this subdivision.
33.9 		Subd. 2.Excise tax authorized. Notwithstanding Minnesota Statutes, section 
33.10 	477A.016, or any other contrary provision of law, ordinance, or city charter, the city of 
33.11 	Baxter may impose by ordinance, for the purposes specified in subdivision 3, an excise tax 
33.12 	of up to $20 per motor vehicle, as defined by ordinance, purchased or acquired from any 
33.13 	person engaged within the city of Baxter in the business of selling motor vehicles at retail.
33.14 		Subd. 3.Use of revenues. Revenues received from the taxes authorized by 
33.15 	subdivisions 1 and 2 must be used to pay the cost of collecting and administering the tax 
33.16 	and to finance all or part of the costs of constructing an upgraded regional wastewater 
33.17 	treatment facility to serve the cities of Brainerd and Baxter, building and equipping a 
33.18 	fire substation, and constructing the Paul Bunyan bridge over Excelsior Road and other 
33.19 	improvements. Authorized costs include, but are not limited to, acquiring property and 
33.20 	paying construction and engineering costs related to the projects.
33.21 		Subd. 4.Bonds. The city of Baxter, pursuant to the approval of the voters at the 
33.22 	November 2, 2004, referendum authorizing the imposition of the taxes in this section, may 
33.23 	issue general obligation bonds of the city, in one or more series, in the aggregate principal 
33.24 	amount not to exceed $15,000,000 to finance the projects listed in subdivision 3. The debt 
33.25 	represented by the bonds is not included in computing any debt limitations applicable to 
33.26 	the city, and the levy of taxes required by Minnesota Statutes, section 475.61, to pay the 
33.27 	principal of and interest on the bonds is not subject to any levy limitation or included in 
33.28 	computing or applying any levy limitation applicable to the city of Baxter.
33.29 		Subd. 5.Termination of taxes. The taxes imposed under subdivisions 1 and 2 
33.30 	expire at the earlier of a date 12 years after the imposition of the tax or when the Baxter 
33.31 	City Council first determines that the amount of revenues raised from the taxes to pay for 
33.32 	the projects equals or exceeds $15,000,000 plus any interest on bonds issued for the 
33.33 	projects under subdivision 3. Any funds remaining after the expiration of the taxes and 
33.34 	retirement of the bonds shall be placed in a capital project fund of the city of Baxter. The 
33.35 	taxes imposed under subdivisions 1 and 2 may expire at an earlier time if the city of 
33.36 	Baxter so determines by ordinance.

34.1 	EFFECTIVE DATE. This section is effective the day after compliance by 
34.2 	the governing body of the city of Baxter with Minnesota Statutes, section 645.021, 
34.3 	subdivision 3.

34.4 	Sec. 23. CITY OF BRAINERD; TAXES AUTHORIZED.
 34.5 		Subdivision 1.Sales and use tax authorized. Notwithstanding Minnesota Statutes, 
34.6 	section 477A.016, or any other provision of law, ordinance, or city charter, contingent 
34.7 	on the approval of the voters on the November 7, 2006, referendum, and pursuant to 
34.8 	Minnesota Statutes, section 297A.99, the city of Brainerd may impose by ordinance a sales 
34.9 	and use tax of one-half of one percent for the purposes specified in subdivision 3. The 
34.10 	provisions of Minnesota Statutes, section 297A.99, govern the imposition, administration, 
34.11 	collection, and enforcement of the tax authorized under this section.
34.12 		Subd. 2.Excise tax authorized. Notwithstanding Minnesota Statutes, section 
34.13 	477A.016, or any other provision of law, ordinance, or city charter, the city of Brainerd 
34.14 	may impose by ordinance, for the purposes specified in subdivision 3, an excise tax of up 
34.15 	to $20 per motor vehicle, as defined by ordinance, purchased, or acquired from any person 
34.16 	engaged within the city of Brainerd in the business of selling motor vehicles at retail.
34.17 		Subd. 3.Use of revenues. Revenues received from the taxes authorized by 
34.18 	subdivisions 1 and 2 must be used to pay the cost of collecting and administering the tax 
34.19 	and to finance all or part of the costs of constructing an upgraded regional wastewater 
34.20 	treatment facility to serve the cities of Brainerd and Baxter, water infrastructure 
34.21 	improvements, and trail development, contingent on approval by Brainerd voters at the 
34.22 	November 7, 2006, referendum. Authorized costs include, but are not limited to, acquiring 
34.23 	property and paying construction and engineering costs related to the projects.
34.24 		Subd. 4.Bonds. The city of Brainerd, contingent on approval of the voters at the 
34.25 	November 7, 2006, referendum authorizing the imposition of taxes in this section, may 
34.26 	issue general obligation bonds of the city, in one or more series, in the aggregate principal 
34.27 	amount not to exceed $22,030,000 to finance the projects listed in subdivision 3. The debt 
34.28 	represented by the bonds is not included in computing any debt limitations applicable to 
34.29 	Brainerd, and the levy of taxes required by Minnesota Statutes, section 475.61, to pay the 
34.30 	principal and interest on the bonds is not subject to any levy limitation or included in 
34.31 	computing any levy limitation applicable to the city of Brainerd.
34.32 		Subd. 5.Termination of taxes. The taxes imposed under subdivisions 1 and 2 
34.33 	expire at the earlier of a date 12 years after the imposition of the tax or when the city 
34.34 	council first determines that the amount of revenues raised from the taxes to pay for 
34.35 	projects equals or exceeds $22,030,000 plus any interest on bonds issued for the projects 
35.1 	under subdivision 3. Any funds remaining after the expiration of the taxes and retirement 
35.2 	of the bonds shall be placed in a capital project fund of the city of Brainerd. The taxes 
35.3 	imposed under subdivision 1 and 2 may expire at an earlier time if the city of Brainerd so 
35.4 	determines by ordinance.

35.5 	EFFECTIVE DATE. This section is effective the day after compliance by the 
35.6 	governing body of the city of Brainerd with Minnesota Statutes, section 645.021, 
35.7 	subdivision 3.

35.8 	Sec. 24. CITY OF BREEZY POINT; TAXES AUTHORIZED.
 35.9 		Subdivision 1.Sales and use tax authorized. Notwithstanding Minnesota Statutes, 
35.10 	section 477A.016, or any other provision of law, ordinance, or city charter, pursuant to 
35.11 	the approval of the voters at the general election on November 7, 2006, and pursuant to 
35.12 	Minnesota Statutes, section 297A.99, the city of Breezy Point may impose by ordinance 
35.13 	a sales and use tax of one-half of one percent for the purposes specified in subdivision 
35.14 	3. The provisions of Minnesota Statutes, section 297A.99, govern the imposition, 
35.15 	administration, collection, and enforcement of the tax authorized under this subdivision.
35.16 		Subd. 2.Excise tax authorized. Notwithstanding Minnesota Statutes, section 
35.17 	477A.016, or any other contrary provision of law, ordinance, or city charter, the city of 
35.18 	Breezy Point may impose by ordinance, for the purposes specified in subdivision 3, an 
35.19 	excise tax of up to $20 per motor vehicle, as defined by ordinance, purchased or acquired 
35.20 	from any person engaged within the city of Breezy Point in the business of selling motor 
35.21 	vehicles at retail.
35.22 		Subd. 3.Use of revenues. Revenues received from the taxes authorized by 
35.23 	subdivisions 1 and 2 must be used to pay the cost of collecting and administering the tax 
35.24 	and to finance sanitary sewer and storm sewer improvements as approved by the voters 
35.25 	at the referendum authorizing the tax. Authorized costs include, but are not limited to, 
35.26 	acquiring property and paying construction and engineering costs related to the projects.
35.27 		Subd. 4.Bonds. The city of Breezy Point, pursuant to the approval of the voters at 
35.28 	the referendum authorizing the imposition of the taxes in this section, may issue general 
35.29 	obligation bonds of the city, in one or more series, in the aggregate principal amount not to 
35.30 	exceed $11,000,000 to finance the projects listed in subdivision 3. The debt represented 
35.31 	by the bonds is not included in computing any debt limitations applicable to the city, and 
35.32 	the levy of taxes required by Minnesota Statutes, section 475.61, to pay the principal of 
35.33 	and interest on the bonds is not subject to any levy limitation or included in computing or 
35.34 	applying any levy limitation applicable to the city.
36.1 		Subd. 5.Termination of taxes. The taxes imposed under subdivisions 1 and 2 
36.2 	expire 15 years after the imposition of the tax or when the Breezy Point City Council 
36.3 	first determines that the amount of revenues raised from the taxes to pay for the projects 
36.4 	equals or exceeds $11,000,000 plus any interest on bonds issued for the projects under 
36.5 	subdivision 3, whichever is earlier. Any funds remaining after the expiration of the taxes 
36.6 	and retirement of the bonds may be placed in the general fund or in a capital project fund 
36.7 	of the city of Breezy Point. The taxes imposed under subdivisions 1 and 2 may expire 
36.8 	at an earlier time if the city so determines by ordinance.

36.9 	EFFECTIVE DATE. This section is effective the day after compliance by the 
36.10 	governing body of the city of Breezy Point with Minnesota Statutes, section 645.021, 
36.11 	subdivision 3.

36.12 	Sec. 25. CITY OF CLOQUET; TAXES AUTHORIZED.
 36.13 		Subdivision 1.Sales and use tax. Notwithstanding Minnesota Statutes, section 
36.14 	477A.016, or any other provision of law, ordinance, or city charter, if approved by the 
36.15 	voters pursuant to Minnesota Statutes, section 297A.99, or at a special election held for 
36.16 	this purpose, the city of Cloquet may impose by ordinance a sales and use tax of up to 
36.17 	one-half of one percent for the purpose specified in subdivision 3.  Except as provided in 
36.18 	this section, the provisions of Minnesota Statutes, section 297A.99, govern the imposition, 
36.19 	administration, collection, and enforcement of the tax authorized under this subdivision.
36.20 		Subd. 2.Excise tax authorized. Notwithstanding Minnesota Statutes, section 
36.21 	477A.016, or any other provision of law, ordinance, or city charter, the city of Cloquet 
36.22 	may impose by ordinance, for the purposes specified in subdivision 3, an excise tax of up 
36.23 	to $20 per motor vehicle, as defined by ordinance, purchased or acquired from any person 
36.24 	engaged within the city in the business of selling motor vehicles at retail.
36.25 		Subd. 3.Use of revenues. Revenues received from taxes authorized by subdivisions 
36.26 	1 and 2 must be used by the city to pay the cost of collecting the taxes and to pay for the 
36.27 	following projects:
36.28 	(1) construction and completion of park improvement projects, including 
36.29 	reconstruction of the Pinehurst Park swimming pool complex, St. Louis River Riverfront 
36.30 	improvements, Veteran's Park construction, and enhancements to the Hilltop Park soccer 
36.31 	complex and Braun Park baseball complex; and
36.32 	(2) extension of utilities and the construction of all improvements associated with 
36.33 	the new Cloquet Industrial Park.
37.1 	Authorized expenses include, but are not limited to, acquiring property and paying 
37.2 	construction expenses related to these improvements, and paying debt service on bonds or 
37.3 	other obligations issued to finance acquisition and construction of these improvements.
37.4 		Subd. 4.Bonding authority. (a) The city may issue bonds under Minnesota 
37.5 	Statutes, chapter 475, to pay capital and administrative expenses for the improvements 
37.6 	described in subdivision 3 in an amount that does not exceed $9,000,000.  An election to 
37.7 	approve the bonds under Minnesota Statutes, section 475.58, is not required.
37.8 	(b) The issuance of bonds under this subdivision is not subject to Minnesota Statutes, 
37.9 	sections 275.60 and 275.61.
37.10 	(c) The debt represented by the bonds is not included in computing any debt 
37.11 	limitation applicable to the city, and any levy of taxes under Minnesota Statutes, section 
37.12 	475.61, to pay principal of and interest on the bonds is not subject to any levy limitation.
37.13 		Subd. 5.Termination of taxes. The taxes imposed under subdivisions 1 and 2 
37.14 	expire at the earlier of (1) 18 years, or (2) when the city council determines that sufficient 
37.15 	funds have been received from the taxes to finance the capital and administrative costs of 
37.16 	the improvements described in subdivision 3, plus the additional amount needed to pay 
37.17 	the costs related to issuance of bonds under subdivision 4, including interest on the bonds. 
37.18 	Any funds remaining after completion of the project and retirement or redemption of the 
37.19 	bonds may be placed in the general fund of the city.  The taxes imposed under subdivisions 
37.20 	1 and 2 may expire at an earlier time if the city so determines by ordinance.

37.21 	EFFECTIVE DATE. This section is effective the day after the governing body of 
37.22 	the city of Cloquet and its chief clerical officer timely comply with Minnesota Statutes, 
37.23 	section 645.021, subdivisions 2 and 3.

37.24 	Sec. 26. CITY OF ELY; TAXES AUTHORIZED.
 37.25 		Subdivision 1.Sales and use tax. Notwithstanding Minnesota Statutes, section 
37.26 	477A.016, or any other provision of law, ordinance, or city charter, if approved by the 
37.27 	voters pursuant to Minnesota Statutes, section 297A.99, the city of Ely may impose by 
37.28 	ordinance a sales and use tax of up to one percent for the purposes specified in subdivision 
37.29 	2. Except as otherwise provided in this section, the provisions of Minnesota Statutes, 
37.30 	section 297A.99, govern the imposition, administration, collection, and enforcement of 
37.31 	the tax authorized under this subdivision.
37.32 		Subd. 2.Use of revenues. The proceeds of the tax imposed under this section 
37.33 	shall be used for the following:
37.34 	(1) land acquisition and site development;
37.35 	(2) installations of improvements authorized by Minnesota Statutes, chapter 429;
38.1 	(3) development or redevelopment activities in the central business district of Ely;
38.2 	(4) business park development;
38.3 	(5) development of a small business incubator;
38.4 	(6) development of a technology center; and 
38.5 	(7) improvements to the Ely Community Center and City Hall needed to bring them 
38.6 	into compliance with the Americans with Disabilities Act.
38.7 		Subd. 3.Bonding authority. The city of Ely may issue bonds in an amount not 
38.8 	to exceed $6,000,000 under Minnesota Statutes, chapter 475, to finance the capital 
38.9 	expenditures and improvements authorized by the referendum under subdivision 4. An 
38.10 	election to approve the bonds under Minnesota Statutes, section 475.58, is not required. 
38.11 	The issuance of bonds under this subdivision is not subject to Minnesota Statutes, section 
38.12 	275.60 or 275.61. The debt represented by the bonds must not be included in computing 
38.13 	any debt limitations applicable to the city, and the levy of taxes required by Minnesota 
38.14 	Statutes, section 475.61, to pay the principal or any interest on the bonds and must not 
38.15 	be subject to any levy limitation.
38.16 		Subd. 4.Termination of tax. The tax authorized under subdivision 1 terminates at 
38.17 	the earlier of (1) 20 years after the date of initial imposition of the tax, or (2) when the Ely 
38.18 	City Council determines that the amount of revenues raised to pay for the projects under 
38.19 	subdivision 2 shall meet or exceed the sum of $6,000,000, plus the amount needed to 
38.20 	finance the capital and administrative costs of the projects specified in subdivision 2, and 
38.21 	to repay or retire at maturity the principal, interest, and premium due on any bonds issued 
38.22 	for the projects under subdivision 3. Any funds remaining after completion of the projects 
38.23 	specified in subdivision 2, and retirement or redemption of the bonds in subdivision 3, 
38.24 	may be placed in the general fund of the city. The tax imposed under subdivision 1 may 
38.25 	expire at an earlier time if the city so determines by ordinance.

38.26 	EFFECTIVE DATE. This section is effective the day after compliance by the 
38.27 	governing body of the city of Ely with Minnesota Statutes, section 645.021, subdivisions 
38.28 	2 and 3.

38.29 	Sec. 27. CITY OF LUVERNE; TAXES AUTHORIZED.
 38.30 		Subdivision 1.Sales and use tax authorized. Notwithstanding Minnesota Statutes, 
38.31 	section 477A.016, or any other provision of law, ordinance, or city charter, if approved 
38.32 	by the voters pursuant to Minnesota Statutes, section 297A.99, the city of Luverne may 
38.33 	impose by ordinance a sales and use tax of one-half of one percent for the purposes 
38.34 	specified in subdivision 3. The provisions of Minnesota Statutes, section 297A.99, govern 
39.1 	the imposition, administration, collection, and enforcement of the tax authorized under 
39.2 	this subdivision.
39.3 		Subd. 2.Excise tax authorized. Notwithstanding Minnesota Statutes, section 
39.4 	477A.016, or any other contrary provision of law, ordinance, or city charter, the city of 
39.5 	Luverne may impose by ordinance, for the purposes specified in subdivision 3, an excise 
39.6 	tax of up to $20 per motor vehicle, as defined by ordinance, purchased or acquired from 
39.7 	any person engaged within the city in the business of selling motor vehicles at retail.
39.8 		Subd. 3.Use of revenues. Revenues received from the taxes authorized by 
39.9 	subdivisions 1 and 2 must be used to pay the cost of collecting and administering the 
39.10 	taxes and to pay all or part of the expenses for capital improvements and renovation of 
39.11 	the Historic Palace Theatre in an amount not to exceed $3,000,000. Authorized expenses 
39.12 	include, but are not limited to, acquiring property and paying construction expenses 
39.13 	related to the project, and paying debt service on bonds or other obligations issued to 
39.14 	finance the acquisition and improvements.
39.15 		Subd. 4.Bonds. If the taxes under subdivisions 1 and 2 are approved by voters 
39.16 	pursuant to Minnesota Statutes, section 297A.99, the city of Luverne may issue, without 
39.17 	an additional election, bonds, in one or more series, in the aggregate principal amount 
39.18 	not to exceed $3,000,000 to pay capital and administrative costs of the projects listed in 
39.19 	subdivision 3. The debt represented by the bonds is not included in computing any debt 
39.20 	limitations applicable to the city, and the levy of taxes required by Minnesota Statutes, 
39.21 	section 475.61, to pay the principal of and interest on the bonds is not subject to any levy 
39.22 	limitation or included in computing or applying any levy limitation applicable to the city.
39.23 		Subd. 5.Termination of taxes. The taxes imposed under subdivisions 1 and 2 
39.24 	expire at the later of 30 years after the imposition of the tax or when the Luverne city 
39.25 	council determines that sufficient funds have been received from the taxes to prepay 
39.26 	or retire at maturity the principal, interest, and premium due on any bonds issued for 
39.27 	the project under subdivision 4. Any funds remaining after expiration of the taxes and 
39.28 	retirement of the bonds may be placed in a capital project fund of the city. The taxes 
39.29 	imposed under subdivisions 1 and 2 may expire at an earlier time if the city so determines 
39.30 	by ordinance.

39.31 	EFFECTIVE DATE. This section is effective the day after compliance by the 
39.32 	governing body of the city of Luverne with Minnesota Statutes, section 645.021, 
39.33 	subdivision 3.

39.34 	Sec. 28. CITY OF MEDFORD; SALES AND USE TAX.
 40.1 		Subdivision 1.Sales and use tax authorized. Notwithstanding Minnesota Statutes, 
40.2 	section 477A.016, or any other provision of law, ordinance, or city charter, if approved by 
40.3 	the voters pursuant to Minnesota Statutes, section 297A.99, at the next general election, 
40.4 	the city of Medford may impose by ordinance a sales and use tax of one-half of one 
40.5 	percent for the purposes specified in subdivision 2. Except as otherwise provided in this 
40.6 	section, the provisions of Minnesota Statutes, section 297A.99, govern the imposition, 
40.7 	administration, collection, and enforcement of the tax authorized under this subdivision.
40.8 		Subd. 2.Use of revenues. The proceeds of the tax imposed under this section must 
40.9 	be used by the city of Medford to pay the costs of collecting and administering the tax and 
40.10 	to pay up to $5,000,000 in costs to improve the city's wastewater system and wastewater 
40.11 	treatment plant. Authorized expenses include, but are not limited to, acquiring property 
40.12 	and paying construction expenses and debt service on bonds or other obligations issued to 
40.13 	finance acquisition and construction of the improvements.
40.14 		Subd. 3.Bonding authority. (a) If the tax authorized under subdivision 1 is 
40.15 	approved by the voters, the city may issue bonds under Minnesota Statutes, chapter 475, 
40.16 	to pay the capital and administrative expenses for the improvement projects authorized 
40.17 	under subdivision 2. The total amount of bonds issued for the projects listed in subdivision 
40.18 	2 may not exceed $5,000,000 in aggregate. An election to approve the bonds under 
40.19 	Minnesota Statutes, section 475.58, is not required.
40.20 	(b) The debt represented by the bonds is not included in computing any debt 
40.21 	limitation applicable to the city of Medford, and the levy of taxes under Minnesota 
40.22 	Statutes, section 475.61, to pay the principal of and interest on the bonds is not subject to 
40.23 	any levy limitation. 
40.24 		Subd. 4.Termination of taxes. The tax imposed under this section expires at the 
40.25 	earlier of (1) 20 years after the date the taxes are first imposed, or (2) when the Medford 
40.26 	City Council determines that the amount of revenues received from the tax equals or 
40.27 	exceeds the sum of $5,000,000, plus an amount equal to the costs related to the issuance of 
40.28 	bonds under subdivision 3, including interest on the bonds. Any funds remaining after 
40.29 	completion of the projects and retirement or redemption of the bonds may be placed in the 
40.30 	general fund of the city. The tax imposed under subdivision 1 may expire at an earlier 
40.31 	time if the city so determines by ordinance.

40.32 	EFFECTIVE DATE. This section is effective the day after compliance by the 
40.33 	governing body of the city of Medford with Minnesota Statutes, section 645.021, 
40.34 	subdivision 3.

40.35 	Sec. 29. CITY OF NORTH MANKATO; TAXES AUTHORIZED.
 41.1 		Subdivision 1.Sales and use tax authorized. Notwithstanding Minnesota Statutes, 
41.2 	section 477A.016, or any other provision of law, ordinance, or city charter, if approved by 
41.3 	the voters pursuant to Minnesota Statutes, section 297A.99, the city of North Mankato 
41.4 	may impose by ordinance a sales and use tax of one-half of one percent for the purposes 
41.5 	specified in subdivision 3. The provisions of Minnesota Statutes, section 297A.99, govern 
41.6 	the imposition, administration, collection, and enforcement of the taxes authorized under 
41.7 	this subdivision.
41.8 		Subd. 2.Use of revenues. Revenues received from the tax authorized by 
41.9 	subdivision 1 must be used to pay all or part of the capital costs of the following projects:
41.10 	(1) the local share of the marked Trunk Highway 14/County State-Aid Highway 
41.11 	41 interchange project, including a connection to the North Port Industrial Park and trail 
41.12 	connections to the scenic byway along the Minnesota River, the Nicollet County Park, 
41.13 	existing trails in the cities of North Mankato, and Mankato and the Sakatah State Trail;
41.14 	(2) development of regional parks and hiking and biking trails in Caswell Park, 
41.15 	Benson Park, and Spring Lake Park;
41.16 	(3) riverfront redevelopment projects; and
41.17 	(4) lake improvement projects.
41.18 	The total amount of revenues from the tax in subdivision 1 that may be used to fund 
41.19 	these projects is $5,250,000 plus any associated bond costs.
41.20 		Subd. 3.Bonds. (a) The city of North Mankato, if approved by voters pursuant to 
41.21 	Minnesota Statutes, section 297A.99, may issue bonds under Minnesota Statutes, chapter 
41.22 	475, to pay capital and administrative expenses for the projects described in subdivision 2, 
41.23 	in an amount that does not exceed $5,250,000. A separate election to approve the bonds 
41.24 	under Minnesota Statutes, section 475.58, is not required.
41.25 	(b) The debt represented by the bonds is not included in computing any debt 
41.26 	limitation applicable to the city, and any levy of taxes under Minnesota Statutes, section 
41.27 	475.61, to pay principal and interest on the bonds is not subject to any levy limitation.
41.28 		Subd. 4.Termination of taxes. The tax imposed under subdivision 1 expires at the 
41.29 	later of (1) 15 years, or (2) when the city council determines that the amount of revenues 
41.30 	received from the taxes to pay for the projects under subdivision 2 first equals or exceeds 
41.31 	the amount authorized to be spent for each project plus the additional amount needed to 
41.32 	pay the costs related to issuance of the bonds under subdivision 3, including interest 
41.33 	on the bonds. Any funds remaining after completion of the projects and retirement or 
41.34 	redemption of the bonds shall be placed in a capital facilities and equipment replacement 
41.35 	fund of the city. The tax imposed under section 1 may expire at an earlier time if the 
41.36 	city so determines by ordinance.

42.1 	EFFECTIVE DATE. This section is effective the day after compliance by the 
42.2 	governing body of the city of North Mankato with Minnesota Statutes, section 645.021, 
42.3 	subdivision 3.

42.4 	Sec. 30. CITY OF OWATONNA; TAXES AUTHORIZED.
 42.5 		Subdivision 1.Sales and use tax authorized. Notwithstanding Minnesota Statutes, 
42.6 	section 477A.016, or any other provision of law, ordinance, or city charter, if approved 
42.7 	by the voters pursuant to Minnesota Statutes, section 297A.99, the city of Owatonna 
42.8 	may impose by ordinance a sales and use tax of one-half of one percent for the purposes 
42.9 	specified in subdivision 3. The provisions of Minnesota Statutes, section 297A.99, govern 
42.10 	the imposition, administration, collection, and enforcement of the taxes authorized under 
42.11 	this subdivision.
42.12 		Subd. 2.Excise tax authorized. Notwithstanding Minnesota Statutes, section 
42.13 	477A.016, or any other provision of law, ordinance, or city charter, the city of Owatonna 
42.14 	may impose by ordinance, for the purposes specified in subdivision 3, an excise tax of 
42.15 	$20 per motor vehicle, as defined by ordinance, purchased or acquired from any person 
42.16 	engaged within the city in the business of selling motor vehicles at retail.
42.17 		Subd. 3.Use of revenues. Revenues received from the taxes authorized by 
42.18 	subdivisions 1 and 2 must be used to pay all or part of the capital costs of transportation 
42.19 	projects included in the 2004 U.S. Highway 14-Owatonna Beltline Study by the Minnesota 
42.20 	Department of Transportation, Steele County, and the city of Owatonna; regional parks 
42.21 	and trail developments, West Hills complex, firehall, and library improvement projects; 
42.22 	and a public safety radio system; as described in the city resolution No. 4-06, Exhibit 
42.23 	A, as adopted by the city on January 17, 2006. The amount paid from these revenues 
42.24 	for transportation projects may not exceed $4,450,000 plus associated bond costs. The 
42.25 	amount paid from these revenues for park and trail projects may not exceed $5,400,000 
42.26 	plus associated bond costs. The amount paid from these revenues for West Hills complex, 
42.27 	fire hall, and library improvement projects may not exceed $2,823,000 plus associated 
42.28 	bond costs. The amount paid from these revenues for a public safety radio system may not 
42.29 	exceed $500,000 plus associated bond costs. 
42.30 		Subd. 4.Bonds. (a) The city of Owatonna, if approved by voters pursuant to 
42.31 	Minnesota Statutes, section 297A.99, may issue bonds under Minnesota Statutes, chapter 
42.32 	475, to pay capital and administrative expenses for the projects described in subdivision 3, 
42.33 	in an amount that does not exceed $13,200,000. A separate election to approve the bonds 
42.34 	under Minnesota Statutes, section 475.58, is not required.
43.1 	(b) The debt represented by the bonds is not included in computing any debt 
43.2 	limitation applicable to the city, and any levy of taxes under Minnesota Statutes, section 
43.3 	475.61, to pay principal and interest on the bonds, is not subject to any levy limitation.
43.4 		Subd. 5.Termination of taxes. The taxes imposed under subdivisions 1 and 2 
43.5 	expire at the earlier of (1) ten years, or (2) when the city council determines that the 
43.6 	amount of revenues received from the taxes to pay for the projects under subdivision 3 first 
43.7 	equals or exceeds the amount authorized to be spent for each project plus the additional 
43.8 	amount needed to pay the costs related to issuance of the bonds under subdivision 4, 
43.9 	including interest on the bonds. Any funds remaining after completion of the projects 
43.10 	and retirement or redemption of the bonds shall be placed in a capital project fund of 
43.11 	the city. The taxes imposed under sections 1 and 2 may expire at an earlier time if the 
43.12 	city so determines by ordinance.

43.13 	EFFECTIVE DATE. This section is effective the day after compliance by the 
43.14 	governing body of the city of Owatonna with Minnesota Statutes, section 645.021, 
43.15 	subdivision 3.

43.16 	Sec. 31. CITY OF PARK RAPIDS.
 43.17 		Subdivision 1.Sales and use tax authorized.  Notwithstanding Minnesota Statutes, 
43.18 	section 477A.016, or any other provision of law, ordinance, or city charter, pursuant to 
43.19 	the approval of the city voters at the next general election or at a special election held for 
43.20 	this purpose, the city of Park Rapids may impose by ordinance a sales and use tax of one 
43.21 	percent for the purposes specified in subdivision 2.  The provisions of Minnesota Statutes, 
43.22 	section 297A.99, govern the imposition, administration, collection, and enforcement of 
43.23 	the tax authorized under this subdivision.
43.24 		Subd. 2.Use of revenues. Revenues received from the tax authorized by 
43.25 	subdivision 1 must be used for the cost of collecting and administering the tax and to 
43.26 	pay all or part of the capital or administrative costs of the development, acquisition, 
43.27 	construction, and improvement of the following projects:
43.28 	(1) two-thirds of the cost of construction and operation of a community center that 
43.29 	may include a senior citizen center, fitness center, swimming pool, meeting rooms, indoor 
43.30 	track, and racquetball, basketball, and tennis courts, provided that an amount equal to 
43.31 	one-third of the cost of construction is received from private sources;
43.32 	(2) capital improvement projects including, but not limited to, installation of water, 
43.33 	sewer, storm sewer, street improvements, new city water tower and well, costs related to 
43.34 	improvements to marked trunk highway 34; and 
43.35 	(3) park improvements.
44.1 	Authorized expenses include, but are not limited to, acquiring property, paying 
44.2 	construction expenses related to the development of these facilities and improvements, 
44.3 	and securing and paying debt service on bonds or other obligations issued to finance 
44.4 	acquisition, construction, improvement, or development.
44.5 		Subd. 3.Bonds. Pursuant to the approval of the city voters to impose the tax 
44.6 	authorized in subdivision 1, the city of Park Rapids may issue without an additional 
44.7 	election general obligation bonds of the city to pay capital and administrative expenses 
44.8 	for the acquisition, construction, improvement, and development of the projects specified 
44.9 	in subdivision 2.  The debt represented by the bonds must not be included in computing 
44.10 	any debt limitations applicable to the city, and the levy of taxes required by Minnesota 
44.11 	Statutes, section 475.61, to pay the principal or any interest on the bonds must not be 
44.12 	subject to any levy limitations or be included in computing or applying any levy limitation 
44.13 	applicable to the city.
44.14 		Subd. 4.Termination of tax. The tax imposed under subdivision 1 expires July 
44.15 	1, 2025.  Any funds remaining after completion of the projects specified in subdivision 
44.16 	2 and retirement or redemption of the bonds may be placed in the general fund of the 
44.17 	city.  The tax imposed under subdivision 1 may expire at an earlier time if the city so 
44.18 	determines by ordinance.

44.19 	EFFECTIVE DATE. This section is effective the day after compliance by the 
44.20 	governing body of the city of Park Rapids with Minnesota Statutes, section 645.021, 
44.21 	subdivision 3.

44.22 	Sec. 32. THIEF RIVER FALLS COMMUNITY CENTER.
 44.23 	The city of Thief River Falls may incorporate or authorize the incorporation of a 
44.24 	nonprofit corporation to operate a community or regional center in the city. A nonprofit 
44.25 	corporation incorporated under this section is exempt from payment of sales and use tax 
44.26 	on materials, equipment, and supplies consumed or incorporated into the construction of 
44.27 	the community or regional center. The exemption under this section applies to purchases 
44.28 	by the nonprofit corporation, a contractor, subcontractor, or builder. A contractor, 
44.29 	subcontractor, or builder that does not pay sales tax on purchases for construction of the 
44.30 	community or regional center shall not charge sales or use tax to the nonprofit corporation. 
44.31 	The nonprofit corporation may file a claim for refund for any sales taxes paid on the 
44.32 	construction costs of the community or regional center, and the commissioner of revenue 
44.33 	shall pay the refunded amount directly to the nonprofit corporation.

45.1 	EFFECTIVE DATE. This section is effective retroactively for purchases made 
45.2 	on and after July 1, 2002.

45.3 	ARTICLE 3
45.4 	FOREIGN OPERATING CORPORATIONS

45.5 	Section 1. Minnesota Statutes 2005 Supplement, section 290.01, subdivision 6b, 
45.6 	is amended to read:
45.7 		Subd. 6b.Foreign operating corporation. The term "foreign operating 
45.8 	corporation," when applied to a corporation, means a domestic corporation with the 
45.9 	following characteristics:
45.10 	(1) it is part of a unitary business at least one member of which is taxable in this state;
45.11 	(2) it is not a foreign sales corporation under section 922 of the Internal Revenue 
45.12 	Code, as amended through December 31, 1999, for the taxable year;
45.13 	(3) either (i) the average of the percentages of its property and payrolls, including 
45.14 	the pro rata share of its unitary partnerships' property and payrolls, assigned to locations 
45.15 	outside the United States, where the United States includes the District of Columbia and 
45.16 	excludes the commonwealth of Puerto Rico and possessions of the United States, as 
45.17 	determined under section 290.191 or 290.20, is 80 percent or more; or (ii) it has in effect a 
45.18 	valid election under section 936 of the Internal Revenue Code; or (ii) at least 80 percent 
45.19 	of the gross income from all sources of the corporation in the tax year is active foreign 
45.20 	business income; and
45.21 	(4) it has $1,000,000 of payroll and $2,000,000 of property, as determined under 
45.22 	section 290.191 or 290.20, that are located outside the United States. If the domestic 
45.23 	corporation does not have payroll as determined under section 290.191 or 290.20, but it 
45.24 	or its partnerships have paid $1,000,000 for work, performed directly for the domestic 
45.25 	corporation or the partnerships, outside the United States, then paragraph (3)(i) shall not 
45.26 	require payrolls to be included in the average calculation for purposes of this subdivision, 
45.27 	active foreign business income means gross income that is (i) derived from sources 
45.28 	without the United States, as defined in subtitle A, chapter 1, subchapter N, part 1, of the 
45.29 	Internal Revenue Code; and (ii) attributable to the active conduct of a trade or business in 
45.30 	a foreign country.

45.31 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
45.32 	December 31, 2005.

46.1 	Sec. 2. Minnesota Statutes 2005 Supplement, section 290.01, subdivision 19c, is 
46.2 	amended to read:
46.3 		Subd. 19c.Corporations; additions to federal taxable income. For corporations, 
46.4 	there shall be added to federal taxable income:
46.5 	(1) the amount of any deduction taken for federal income tax purposes for income, 
46.6 	excise, or franchise taxes based on net income or related minimum taxes, including but not 
46.7 	limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota, 
46.8 	another state, a political subdivision of another state, the District of Columbia, or any 
46.9 	foreign country or possession of the United States;
46.10 	(2) interest not subject to federal tax upon obligations of: the United States, its 
46.11 	possessions, its agencies, or its instrumentalities; the state of Minnesota or any other 
46.12 	state, any of its political or governmental subdivisions, any of its municipalities, or any 
46.13 	of its governmental agencies or instrumentalities; the District of Columbia; or Indian 
46.14 	tribal governments;
46.15 	(3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal 
46.16 	Revenue Code;
46.17 	(4) the amount of any net operating loss deduction taken for federal income tax 
46.18 	purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss 
46.19 	deduction under section 810 of the Internal Revenue Code;
46.20 	(5) the amount of any special deductions taken for federal income tax purposes 
46.21 	under sections 241 to 247 of the Internal Revenue Code;
46.22 	(6) losses from the business of mining, as defined in section 290.05, subdivision 1, 
46.23 	clause (a), that are not subject to Minnesota income tax;
46.24 	(7) the amount of any capital losses deducted for federal income tax purposes under 
46.25 	sections 1211 and 1212 of the Internal Revenue Code;
46.26 	(8) the exempt foreign trade income of a foreign sales corporation under sections 
46.27 	921(a) and 291 of the Internal Revenue Code;
46.28 	(9) the amount of percentage depletion deducted under sections 611 through 614 and 
46.29 	291 of the Internal Revenue Code;
46.30 	(10) for certified pollution control facilities placed in service in a taxable year 
46.31 	beginning before December 31, 1986, and for which amortization deductions were elected 
46.32 	under section 169 of the Internal Revenue Code of 1954, as amended through December 
46.33 	31, 1985, the amount of the amortization deduction allowed in computing federal taxable 
46.34 	income for those facilities;
46.35 	(11) the amount of any deemed dividend from a foreign operating corporation 
46.36 	determined pursuant to section 290.17, subdivision 4, paragraph (g). The deemed dividend 
47.1 	shall be reduced by the amount of the addition to income required by clauses (19), (20), 
47.2 	(21), and (22);
47.3 	(12) the amount of a partner's pro rata share of net income which does not flow 
47.4 	through to the partner because the partnership elected to pay the tax on the income under 
47.5 	section 6242(a)(2) of the Internal Revenue Code;
47.6 	(13) the amount of net income excluded under section 114 of the Internal Revenue 
47.7 	Code;
47.8 	(14) any increase in subpart F income, as defined in section 952(a) of the Internal 
47.9 	Revenue Code, for the taxable year when subpart F income is calculated without regard 
47.10 	to the provisions of section 614 of Public Law 107-147;
47.11 	(15) 80 percent of the depreciation deduction allowed under section 168(k)(1)(A) 
47.12 	and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if the taxpayer 
47.13 	has an activity that in the taxable year generates a deduction for depreciation under 
47.14 	section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable year 
47.15 	that the taxpayer is not allowed to claim for the taxable year, "the depreciation allowed 
47.16 	under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess of the 
47.17 	depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) over the 
47.18 	amount of the loss from the activity that is not allowed in the taxable year. In succeeding 
47.19 	taxable years when the losses not allowed in the taxable year are allowed, the depreciation 
47.20 	under section 168(k)(1)(A) and (k)(4)(A) is allowed;
47.21 	(16) 80 percent of the amount by which the deduction allowed by section 179 of the 
47.22 	Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal 
47.23 	Revenue Code of 1986, as amended through December 31, 2003;
47.24 	(17) to the extent deducted in computing federal taxable income, the amount of the 
47.25 	deduction allowable under section 199 of the Internal Revenue Code; and
47.26 	(18) the exclusion allowed under section 139A of the Internal Revenue Code for 
47.27 	federal subsidies for prescription drug plans.;
47.28 	(19) an amount equal to the interest and intangible expenses, losses, and costs paid, 
47.29 	accrued, or incurred by any member of the taxpayer's unitary group to or for the benefit 
47.30 	of a corporation that is a member of the taxpayer's unitary business group that qualifies 
47.31 	as a foreign operating corporation. For purposes of this clause, intangible expenses and 
47.32 	costs include:
47.33 	(i) expenses, losses, and costs for, or related to, the direct or indirect acquisition, 
47.34 	use, maintenance or management, ownership, sale, exchange, or any other disposition of 
47.35 	intangible property;
48.1 	(ii) losses incurred, directly or indirectly, from factoring transactions or discounting 
48.2 	transactions;
48.3 	(iii) royalty, patent, technical, and copyright fees;
48.4 	(iv) licensing fees; and
48.5 	(v) other similar expenses and costs.
48.6 	For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent 
48.7 	applications, trade names, trademarks, service marks, copyrights, mask works, trade 
48.8 	secrets, and similar types of intangible assets.
48.9 	This clause does not apply to any item of interest or intangible expenses or costs paid, 
48.10 	accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect 
48.11 	to such item of income to the extent that the income to the foreign operating corporation 
48.12 	is income from sources without the United States as defined in subtitle A, chapter 1, 
48.13 	subchapter N, part 1, of the Internal Revenue Code;
48.14 	(20) except as already included in the taxpayer's taxable income pursuant to clause 
48.15 	(19), any interest income and income generated from intangible property received or 
48.16 	accrued by a foreign operating corporation that is a member of the taxpayer's unitary 
48.17 	group. For purposes of this clause, income generated from intangible property includes:
48.18 	(i) income related to the direct or indirect acquisition, use, maintenance or 
48.19 	management, ownership, sale, exchange, or any other disposition of intangible property;
48.20 	(ii) income from factoring transactions or discounting transactions;
48.21 	(iii) royalty, patent, technical, and copyright fees;
48.22 	(iv) licensing fees; and
48.23 	(v) other similar income.
48.24 	For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent 
48.25 	applications, trade names, trademarks, service marks, copyrights, mask works, trade 
48.26 	secrets, and similar types of intangible assets. 
48.27 	This clause does not apply to any item of interest or intangible income received or accrued 
48.28 	by a foreign operating corporation with respect to such item of income to the extent that 
48.29 	the income is income from sources without the United States as defined in subtitle A, 
48.30 	chapter 1, subchapter N, part 1, of the Internal Revenue Code;
48.31 	(21) the dividends attributable to the income of a foreign operating corporation that 
48.32 	is a member of the taxpayer's unitary group in an amount that is equal to the dividends 
48.33 	paid deduction of a real estate investment trust under section 561(a) of the Internal 
48.34 	Revenue Code for amounts paid or accrued by the real estate investment trust to the 
48.35 	foreign operating corporation; and
49.1 	(22) the income of a foreign operating corporation that is a member of the taxpayer's 
49.2 	unitary group in an amount that is equal to gains derived from the sale of real or personal 
49.3 	property located in the United States.

49.4 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
49.5 	December 31, 2005.

49.6 	Sec. 3. Minnesota Statutes 2005 Supplement, section 290.01, subdivision 19d, is 
49.7 	amended to read:
49.8 		Subd. 19d.Corporations; modifications decreasing federal taxable income. For 
49.9 	corporations, there shall be subtracted from federal taxable income after the increases 
49.10 	provided in subdivision 19c:
49.11 	(1) the amount of foreign dividend gross-up added to gross income for federal 
49.12 	income tax purposes under section 78 of the Internal Revenue Code;
49.13 	(2) the amount of salary expense not allowed for federal income tax purposes due to 
49.14 	claiming the federal jobs credit under section 51 of the Internal Revenue Code;
49.15 	(3) any dividend (not including any distribution in liquidation) paid within the 
49.16 	taxable year by a national or state bank to the United States, or to any instrumentality of 
49.17 	the United States exempt from federal income taxes, on the preferred stock of the bank 
49.18 	owned by the United States or the instrumentality;
49.19 	(4) amounts disallowed for intangible drilling costs due to differences between 
49.20 	this chapter and the Internal Revenue Code in taxable years beginning before January 
49.21 	1, 1987, as follows:
49.22 	(i) to the extent the disallowed costs are represented by physical property, an amount 
49.23 	equal to the allowance for depreciation under Minnesota Statutes 1986, section 290.09, 
49.24 	subdivision 7, subject to the modifications contained in subdivision 19e; and
49.25 	(ii) to the extent the disallowed costs are not represented by physical property, an 
49.26 	amount equal to the allowance for cost depletion under Minnesota Statutes 1986, section 
49.27 	290.09, subdivision 8;
49.28 	(5) the deduction for capital losses pursuant to sections 1211 and 1212 of the 
49.29 	Internal Revenue Code, except that:
49.30 	(i) for capital losses incurred in taxable years beginning after December 31, 1986, 
49.31 	capital loss carrybacks shall not be allowed;
49.32 	(ii) for capital losses incurred in taxable years beginning after December 31, 1986, 
49.33 	a capital loss carryover to each of the 15 taxable years succeeding the loss year shall be 
49.34 	allowed;
50.1 	(iii) for capital losses incurred in taxable years beginning before January 1, 1987, a 
50.2 	capital loss carryback to each of the three taxable years preceding the loss year, subject to 
50.3 	the provisions of Minnesota Statutes 1986, section 290.16, shall be allowed; and
50.4 	(iv) for capital losses incurred in taxable years beginning before January 1, 1987, 
50.5 	a capital loss carryover to each of the five taxable years succeeding the loss year to the 
50.6 	extent such loss was not used in a prior taxable year and subject to the provisions of 
50.7 	Minnesota Statutes 1986, section 290.16, shall be allowed;
50.8 	(6) an amount for interest and expenses relating to income not taxable for federal 
50.9 	income tax purposes, if (i) the income is taxable under this chapter and (ii) the interest and 
50.10 	expenses were disallowed as deductions under the provisions of section 171(a)(2), 265 or 
50.11 	291 of the Internal Revenue Code in computing federal taxable income;
50.12 	(7) in the case of mines, oil and gas wells, other natural deposits, and timber for 
50.13 	which percentage depletion was disallowed pursuant to subdivision 19c, clause (11), a 
50.14 	reasonable allowance for depletion based on actual cost. In the case of leases the deduction 
50.15 	must be apportioned between the lessor and lessee in accordance with rules prescribed 
50.16 	by the commissioner. In the case of property held in trust, the allowable deduction must 
50.17 	be apportioned between the income beneficiaries and the trustee in accordance with the 
50.18 	pertinent provisions of the trust, or if there is no provision in the instrument, on the basis 
50.19 	of the trust's income allocable to each;
50.20 	(8) for certified pollution control facilities placed in service in a taxable year 
50.21 	beginning before December 31, 1986, and for which amortization deductions were elected 
50.22 	under section 169 of the Internal Revenue Code of 1954, as amended through December 
50.23 	31, 1985, an amount equal to the allowance for depreciation under Minnesota Statutes 
50.24 	1986, section 290.09, subdivision 7;
50.25 	(9) amounts included in federal taxable income that are due to refunds of income, 
50.26 	excise, or franchise taxes based on net income or related minimum taxes paid by the 
50.27 	corporation to Minnesota, another state, a political subdivision of another state, the 
50.28 	District of Columbia, or a foreign country or possession of the United States to the extent 
50.29 	that the taxes were added to federal taxable income under section 290.01, subdivision 19c, 
50.30 	clause (1), in a prior taxable year;
50.31 	(10) 80 percent of royalties, fees, or other like income accrued or received from a 
50.32 	foreign operating corporation or a foreign corporation which is part of the same unitary 
50.33 	business as the receiving corporation, unless the income resulting from such payments or 
50.34 	accruals is income from sources within the United States as defined in subtitle A, chapter 
50.35 	1, subchapter N, part 1, of the Internal Revenue Code;
51.1 	(11) income or gains from the business of mining as defined in section 290.05, 
51.2 	subdivision 1, clause (a), that are not subject to Minnesota franchise tax;
51.3 	(12) the amount of handicap access expenditures in the taxable year which are not 
51.4 	allowed to be deducted or capitalized under section 44(d)(7) of the Internal Revenue Code;
51.5 	(13) the amount of qualified research expenses not allowed for federal income tax 
51.6 	purposes under section 280C(c) of the Internal Revenue Code, but only to the extent that 
51.7 	the amount exceeds the amount of the credit allowed under section 290.068;
51.8 	(14) the amount of salary expenses not allowed for federal income tax purposes due 
51.9 	to claiming the Indian employment credit under section 45A(a) of the Internal Revenue 
51.10 	Code;
51.11 	(15) the amount of any refund of environmental taxes paid under section 59A of the 
51.12 	Internal Revenue Code;
51.13 	(16) for taxable years beginning before January 1, 2008, the amount of the federal 
51.14 	small ethanol producer credit allowed under section 40(a)(3) of the Internal Revenue Code 
51.15 	which is included in gross income under section 87 of the Internal Revenue Code;
51.16 	(17) for a corporation whose foreign sales corporation, as defined in section 922 
51.17 	of the Internal Revenue Code, constituted a foreign operating corporation during any 
51.18 	taxable year ending before January 1, 1995, and a return was filed by August 15, 1996, 
51.19 	claiming the deduction under section 290.21, subdivision 4, for income received from 
51.20 	the foreign operating corporation, an amount equal to 1.23 multiplied by the amount of 
51.21 	income excluded under section 114 of the Internal Revenue Code, provided the income is 
51.22 	not income of a foreign operating company;
51.23 	(18) any decrease in subpart F income, as defined in section 952(a) of the Internal 
51.24 	Revenue Code, for the taxable year when subpart F income is calculated without regard 
51.25 	to the provisions of section 614 of Public Law 107-147;
51.26 	(19) in each of the five tax years immediately following the tax year in which an 
51.27 	addition is required under subdivision 19c, clause (15), an amount equal to one-fifth of 
51.28 	the delayed depreciation. For purposes of this clause, "delayed depreciation" means the 
51.29 	amount of the addition made by the taxpayer under subdivision 19c, clause (15). The 
51.30 	resulting delayed depreciation cannot be less than zero; and
51.31 	(20) in each of the five tax years immediately following the tax year in which an 
51.32 	addition is required under subdivision 19c, clause (16), an amount equal to one-fifth of the 
51.33 	amount of the addition.

51.34 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
51.35 	December 31, 2005.

52.1 	Sec. 4. Minnesota Statutes 2004, section 290.34, subdivision 1, is amended to read:
52.2 		Subdivision 1.Business conducted in such a way as to create losses or improper 
52.3 	taxable net income. (a) When any corporation liable to taxation under this chapter 
52.4 	conducts its business in such a manner as, directly or indirectly, to benefit its members 
52.5 	or stockholders or any person or corporation interested in such business or to reduce the 
52.6 	income attributable to this state by selling the commodities or services in which it deals 
52.7 	at less than the fair price which might be obtained therefor, or buying such commodities 
52.8 	or services at more than the fair price for which they might have been obtained, or when 
52.9 	any corporation, a substantial portion of whose shares is owned directly or indirectly by 
52.10 	another corporation, deals in the commodities or services of the latter corporation in such 
52.11 	a manner as to create a loss or improper net income or to reduce the taxable net income 
52.12 	attributable to this state, the commissioner of revenue may determine the amount of its 
52.13 	income so as to reflect what would have been its reasonable taxable net income but for the 
52.14 	arrangements causing the understatement of its taxable net income or the overstatement of 
52.15 	its losses, having regard to the fair profits which, but for any agreement, arrangement, or 
52.16 	understanding, might have been or could have been obtained from such business.
52.17 	(b) When any corporation engages in a transaction or series of transactions whose 
52.18 	primary business purpose is the avoidance of tax, or engages in a transaction or series of 
52.19 	transactions without economic substance, that transaction or series of transactions shall be 
52.20 	disregarded and the commissioner shall determine taxable net income without regard for 
52.21 	any such transaction or series of transactions.

52.22 	Sec. 5. INTENT OF LEGISLATURE.
 52.23 	Section 4 does not change Minnesota law, but merely clarifies the legislature's 
52.24 	intention with respect to transactions without economic substance or business purpose.

52.25 	ARTICLE 4
52.26 	PROPERTY TAXES

52.27 	Section 1. Minnesota Statutes 2004, section 116J.993, subdivision 3, is amended to 
52.28 	read:
52.29 		Subd. 3.Business subsidy. "Business subsidy" or "subsidy" means a state or local 
52.30 	government agency grant, contribution of personal property, real property, infrastructure, 
52.31 	the principal amount of a loan at rates below those commercially available to the recipient, 
52.32 	any reduction or deferral of any tax or any fee, any guarantee of any payment under any 
52.33 	loan, lease, or other obligation, or any preferential use of government facilities given 
52.34 	to a business.
53.1 	The following forms of financial assistance are not a business subsidy:
53.2 	(1) a business subsidy of less than $25,000;
53.3 	(2) assistance that is generally available to all businesses or to a general class of 
53.4 	similar businesses, such as a line of business, size, location, or similar general criteria;
53.5 	(3) public improvements to buildings or lands owned by the state or local 
53.6 	government that serve a public purpose and do not principally benefit a single business or 
53.7 	defined group of businesses at the time the improvements are made;
53.8 	(4) redevelopment property polluted by contaminants as defined in section  116J.552, 
53.9 	subdivision 3; 
53.10 	(5) assistance provided for the sole purpose of renovating old or decaying building 
53.11 	stock or bringing it up to code and assistance provided for designated historic preservation 
53.12 	districts, provided that the assistance is equal to or less than 50 percent of the total cost;
53.13 	(6) assistance to provide job readiness and training services if the sole purpose of 
53.14 	the assistance is to provide those services;
53.15 	(7) assistance for housing;
53.16 	(8) assistance for pollution control or abatement, including assistance for a tax 
53.17 	increment financing hazardous substance subdistrict as defined under section  469.174, 
53.18 	subdivision 23; 
53.19 	(9) assistance for energy conservation;
53.20 	(10) tax reductions resulting from conformity with federal tax law;
53.21 	(11) workers' compensation and unemployment insurance;
53.22 	(12) benefits derived from regulation;
53.23 	(13) indirect benefits derived from assistance to educational institutions;
53.24 	(14) funds from bonds allocated under chapter 474A, bonds issued to refund 
53.25 	outstanding bonds, and bonds issued for the benefit of an organization described in section 
53.26 	501(c)(3) of the Internal Revenue Code of 1986, as amended through December 31, 1999;
53.27 	(15) assistance for a collaboration between a Minnesota higher education institution 
53.28 	and a business;
53.29 	(16) assistance for a tax increment financing soils condition district as defined under 
53.30 	section  469.174, subdivision 19; 
53.31 	(17) redevelopment when the recipient's investment in the purchase of the site 
53.32 	and in site preparation is 70 percent or more of the assessor's current year's estimated 
53.33 	market value;
53.34 	(18) general changes in tax increment financing law and other general tax law 
53.35 	changes of a principally technical nature;
54.1 	(19) federal assistance until the assistance has been repaid to, and reinvested by, the 
54.2 	state or local government agency;
54.3 	(20) funds from dock and wharf bonds issued by a seaway port authority;
54.4 	(21) business loans and loan guarantees of $75,000 or less; and
54.5 	(22) federal loan funds provided through the United States Department of 
54.6 	Commerce, Economic Development Administration; and
54.7 	(23) property tax abatements granted under section 469.1813 to property that is 
54.8 	subject to valuation under Minnesota Rules, chapter 8100.

54.9 	Sec. 2. Minnesota Statutes 2004, section 123B.53, subdivision 5, is amended to read:
54.10 		Subd. 5.Equalized debt service levy. (a) The equalized debt service levy of a 
54.11 	district equals the sum of the first tier equalized debt service levy and the second tier 
54.12 	equalized debt service levy.
54.13 	(b) A district's first tier equalized debt service levy equals the district's first tier debt 
54.14 	service equalization revenue times the lesser of one or the ratio of:
54.15 	(1) the quotient derived by dividing the adjusted net tax capacity of the district for 
54.16 	the year before the year the levy is certified by the adjusted pupil units in the district for 
54.17 	the school year ending in the year prior to the year the levy is certified; to
54.18 	(2) $3,200 $5,000.
54.19 	(c) A district's second tier equalized debt service levy equals the district's second 
54.20 	tier debt service equalization revenue times the lesser of one or the ratio of:
54.21 	(1) the quotient derived by dividing the adjusted net tax capacity of the district for 
54.22 	the year before the year the levy is certified by the adjusted pupil units in the district for 
54.23 	the school year ending in the year prior to the year the levy is certified; to
54.24 	(2) $8,000.

54.25 	EFFECTIVE DATE. This section is effective for revenue for fiscal year 2008 
54.26 	and later. 

54.27 	Sec. 3. Minnesota Statutes 2005 Supplement, section 123B.54, is amended to read:
54.28 	123B.54 DEBT SERVICE APPROPRIATION.
54.29 	(a) $21,624,000$22,701,000 in fiscal year 2008 and $20,403,000$22,269,000 in 
54.30 	fiscal year 2009 and later are appropriated from the general fund to the commissioner of 
54.31 	education for payment of debt service equalization aid under section 123B.53.
54.32 	(b) The appropriations in paragraph (a) must be reduced by the amount of any 
54.33 	money specifically appropriated for the same purpose in any year from any state fund.

55.1 	Sec. 4. Minnesota Statutes 2005 Supplement, section 126C.10, subdivision 13a, 
55.2 	is amended to read:
55.3 		Subd. 13a.Operating capital levy. To obtain operating capital revenue for fiscal 
55.4 	year 2007 and later, a district may levy an amount not more than the product of its 
55.5 	operating capital revenue for the fiscal year times the lesser of one or the ratio of its 
55.6 	adjusted net tax capacity per adjusted marginal cost pupil unit to the operating capital 
55.7 	equalizing factor. The operating capital equalizing factor equals $22,222 for fiscal year 
55.8 	2006, and $10,700 for fiscal year 2007, and $22,222 for fiscal year 2008  and later.

55.9 	EFFECTIVE DATE. This section is effective for revenue for fiscal year 2008 
55.10 	and later.

55.11 	Sec. 5. Minnesota Statutes 2004, section 144F.01, subdivision 4, is amended to read:
55.12 		Subd. 4.Property tax levy authority. The district's board may levy a tax on 
55.13 	the taxable real and personal property in the district. The ad valorem tax levy may not 
55.14 	exceed 0.048 percent of the taxable market value of the district or $250,000 $400,000, 
55.15 	whichever is less. The proceeds of the levy must be used as provided in subdivision 5. 
55.16 	The board shall certify the levy at the times as provided under section  275.07. The board 
55.17 	shall provide the county with whatever information is necessary to identify the property 
55.18 	that is located within the district. If the boundaries include a part of a parcel, the entire 
55.19 	parcel shall be included in the district. The county auditors must spread, collect, and 
55.20 	distribute the proceeds of the tax at the same time and in the same manner as provided by 
55.21 	law for all other property taxes.

55.22 	Sec. 6. Minnesota Statutes 2004, section 216B.2424, subdivision 5, is amended to read:
55.23 		Subd. 5.Mandate. (a) A public utility, as defined in section  216B.02, subdivision 4, 
55.24 	that operates a nuclear-powered electric generating plant within this state must construct 
55.25 	and operate, purchase, or contract to construct and operate (1) by December 31, 1998, 
55.26 	50 megawatts of electric energy installed capacity generated by farm-grown closed-loop 
55.27 	biomass scheduled to be operational by December 31, 2001; and (2) by December 31, 
55.28 	1998, an additional 75 megawatts of installed capacity so generated scheduled to be 
55.29 	operational by December 31, 2002. 
55.30 	(b) Of the 125 megawatts of biomass electricity installed capacity required under 
55.31 	this subdivision, no more than 55 megawatts of this capacity may be provided by a facility 
55.32 	that uses poultry litter as its primary fuel source and any such facility:
55.33 	(1) need not use biomass that complies with the definition in subdivision 1;
56.1 	(2) must enter into a contract with the public utility for such capacity, that has an 
56.2 	average purchase price per megawatt hour over the life of the contract that is equal to or 
56.3 	less than the average purchase price per megawatt hour over the life of the contract in 
56.4 	contracts approved by the Public Utilities Commission before April 1, 2000, to satisfy 
56.5 	the mandate of this section, and file that contract with the Public Utilities Commission 
56.6 	prior to September 1, 2000; and
56.7 	(3) must schedule such capacity to be operational by December 31, 2002.
56.8 	(c) Of the total 125 megawatts of biomass electric energy installed capacity required 
56.9 	under this section, no more than 75 megawatts may be provided by a single project.
56.10 	(d) Of the 75 megawatts of biomass electric energy installed capacity required under 
56.11 	paragraph (a), clause (2), no more than 33 megawatts of this capacity may be provided by 
56.12 	a St. Paul district heating and cooling system cogeneration facility utilizing waste wood 
56.13 	as a primary fuel source. The St. Paul district heating and cooling system cogeneration 
56.14 	facility need not use biomass that complies with the definition in subdivision 1.
56.15 	(e) The public utility must accept and consider on an equal basis with other biomass 
56.16 	proposals:
56.17 	(1) a proposal to satisfy the requirements of this section that includes a project that 
56.18 	exceeds the megawatt capacity requirements of either paragraph (a), clause (1) or (2), and 
56.19 	that proposes to sell the excess capacity to the public utility or to other purchasers; and
56.20 	(2) a proposal for a new facility to satisfy more than ten but not more than 20 
56.21 	megawatts of the electrical generation requirements by a small business-sponsored 
56.22 	independent power producer facility to be located within the northern quarter of the state, 
56.23 	which means the area located north of Constitutional Route No. 8 as described in section  
56.24 	161.114, subdivision 2, and that utilizes biomass residue wood, sawdust, bark, chipped 
56.25 	wood, or brush to generate electricity. A facility described in this clause is not required 
56.26 	to utilize biomass complying with the definition in subdivision 1, but must be under 
56.27 	construction by December 31, 2005. 
56.28 	(f) If a public utility files a contract with the commission for electric energy installed 
56.29 	capacity that uses poultry litter as its primary fuel source, the commission must do a 
56.30 	preliminary review of the contract to determine if it meets the purchase price criteria 
56.31 	provided in paragraph (b), clause (2), of this subdivision. The commission shall perform 
56.32 	its review and advise the parties of its determination within 30 days of filing of such a 
56.33 	contract by a public utility. A public utility may submit by September 1, 2000, a revised 
56.34 	contract to address the commission's preliminary determination.
57.1 	(g) The commission shall finally approve, modify, or disapprove no later than July 
57.2 	1, 2001, all contracts submitted by a public utility as of September 1, 2000, to meet the 
57.3 	mandate set forth in this subdivision.
57.4 	(h) If a public utility subject to this section exercises an option to increase the 
57.5 	generating capacity of a project in a contract approved by the commission prior to April 
57.6 	25, 2000, to satisfy the mandate in this subdivision, the public utility must notify the 
57.7 	commission by September 1, 2000, that it has exercised the option and include in the 
57.8 	notice the amount of additional megawatts to be generated under the option exercised. 
57.9 	Any review by the commission of the project after exercise of such an option shall be 
57.10 	based on the same criteria used to review the existing contract.
57.11 	(i) A facility specified in this subdivision qualifies for exemption from property 
57.12 	taxation under section  272.02, subdivision 43 45. 

57.13 	EFFECTIVE DATE. This section is effective for property taxes levied in 2006, 
57.14 	payable in 2007, and thereafter.

57.15 	Sec. 7. Minnesota Statutes 2004, section 272.02, subdivision 12, is amended to read:
57.16 		Subd. 12.Native prairie. Native prairie lands are exempt. The commissioner of the 
57.17 	Department of natural resources shall determine lands in the state which are native prairie 
57.18 	and shall notify the county assessor of each county in which the lands are located. Pasture 
57.19 	land used for livestock grazing purposes shall not be considered native prairie for the 
57.20 	purposes of this subdivision unless the pasture is covered by a grazing plan approved by 
57.21 	the commissioner of natural resources. Upon receipt of an application for the exemption 
57.22 	provided in this subdivision for lands for which the assessor has no determination from 
57.23 	the commissioner of natural resources, the assessor shall refer the application to the 
57.24 	commissioner of natural resources who shall determine within 30 180  days whether the 
57.25 	land is native prairie and notify the county assessor of the decision. Exemption of native 
57.26 	prairie pursuant to this subdivision shall not grant the public any additional or greater right 
57.27 	of access to the native prairie or diminish any right of ownership to it.

57.28 	EFFECTIVE DATE. This section is effective for taxes levied in 2006, payable 
57.29 	in 2007, and thereafter.

57.30 	Sec. 8. Minnesota Statutes 2004, section 272.02, subdivision 45, is amended to read:
57.31 		Subd. 45.Biomass electrical generation facility; personal property.
 57.32 	Notwithstanding subdivision 9, clause (a), attached machinery and other personal property 
58.1 	which is part of an electrical generating facility that meets the requirements of this 
58.2 	subdivision is exempt. At the time of construction, the facility must:
58.3 	(1) be designed to utilize biomass as established in section  216B.2424 as a primary 
58.4 	fuel source; and 
58.5 	(2) be constructed for the purpose of generating power at the facility that will be sold 
58.6 	pursuant to a contract approved by the Public Utilities Commission in accordance with 
58.7 	the biomass mandate imposed under section  216B.2424. 
58.8 	Construction of the facility must be commenced after January 1, 2000, and before 
58.9 	December 31, 2002 2005. Property eligible for this exemption does not include electric 
58.10 	transmission lines and interconnections or gas pipelines and interconnections appurtenant 
58.11 	to the property or facility.

58.12 	EFFECTIVE DATE. This section is effective for taxes levied in 2006, payable 
58.13 	in 2007, and thereafter.

58.14 	Sec. 9. Minnesota Statutes 2004, section 272.02, subdivision 54, is amended to read:
58.15 		Subd. 54.Small biomass electric generation facility; personal property. (a) 
58.16 	Subject to paragraph (b), notwithstanding subdivision 9, clause (a), attached machinery 
58.17 	and other personal property which is part of an electrical generating facility that meets the 
58.18 	requirements of this subdivision is exempt. At the time of construction the facility must:
58.19 	(1) have a generation capacity of less than 25 megawatts;
58.20 	(2) provide process heating needs in addition to electrical generation; and
58.21 	(3) utilize agricultural by-products from the malting process and other biomass 
58.22 	fuels as its primary fuel source.
58.23 	Construction of the facility must be commenced after January 1, 2002, and before 
58.24 	January 1, 2006 June 30, 2007. Property eligible for this exemption does not include 
58.25 	electric transmission lines and interconnections or gas pipelines and interconnections 
58.26 	appurtenant to the property or facility.
58.27 	(b) The exemption under this subdivision is contingent on approval by the governing 
58.28 	bodies of the municipality and county in which the electric generation facility is located.

58.29 	EFFECTIVE DATE. This section is effective for taxes levied in 2008, payable 
58.30 	in 2009, and thereafter.

58.31 	Sec. 10. Minnesota Statutes 2004, section 272.02, subdivision 55, is amended to read:
58.32 		Subd. 55.Electric generation facility; personal property. Notwithstanding 
58.33 	subdivision 9, clause (a), attached machinery and other personal property which is part of 
59.1 	an electric generating facility that meets the requirements of this subdivision is exempt. At 
59.2 	the time of construction, the facility must be sited on an energy park that (i) is located on 
59.3 	an active mining site, or on a former mining or industrial site where mining or industrial 
59.4 	operations have terminated be designated as an innovative energy project as defined in 
59.5 	section 216B.1694, (ii) isbe within a tax relief area as defined in section  273.134, (iii) 
59.6 	has on-site have access to existing railroad infrastructure within less than three miles, (iv) 
59.7 	has direct rail access to a Great Lakes port, (v) has sufficient private water resources 
59.8 	on site, and (vi) ishave received by resolution approval from the governing body of 
59.9 	the county and township or city in which the proposed facility is to be located for the 
59.10 	exemption of personal property under this subdivision, and (v) be designed to host at 
59.11 	least 500 megawatts of electrical generation.
59.12 	Construction of the first 250 500 megawatts of the facility must be commenced 
59.13 	after January 1, 2002 2006, and before January 1, 2005 2010. Construction of up to an 
59.14 	additional 750 megawatts of generation must be commenced before January 1, 2010
59.15 	2015. Property eligible for this exemption does not include electric transmission lines and 
59.16 	interconnections or gas pipelines and interconnections appurtenant to the property or the 
59.17 	facility. To qualify for an exemption under this subdivision, the owner of the electric 
59.18 	generation facility must have an agreement with the host county, township or city, and 
59.19 	school district, for payment in lieu of personal property taxes to the host county, township 
59.20 	or city, and school district.

59.21 	EFFECTIVE DATE. This section is effective the day following final enactment.

59.22 	Sec. 11. Minnesota Statutes 2004, section 272.02, is amended by adding a subdivision 
59.23 	to read:
59.24 		Subd. 84.Electric generation facility; personal property. Notwithstanding 
59.25 	subdivision 9, clause (a), attached machinery and other personal property which is part 
59.26 	of a 10.3 megawatt run-of-the-river hydroelectric generation facility and that meets the 
59.27 	requirements of this subdivision is exempt. At the time of construction, the facility must:
59.28 	(1) utilize between 12 and 16 turbine generators at a dam site existing on March 
59.29 	31, 1994;
59.30 	(2) be located on land within 3,000 feet of a 13.8 kilovolt distribution substation; and
59.31 	(3) be eligible to receive a renewable energy production incentive payment under 
59.32 	section 216C.41.
59.33 	Construction of the facility must be commenced after April 30, 2006, and 
59.34 	before January 1, 2009. Property eligible for this exemption does not include electric 
60.1 	transmission lines and interconnections or gas pipelines and interconnections appurtenant 
60.2 	to the property or the facility.

60.3 	EFFECTIVE DATE. This section is effective for property taxes levied in 2006, 
60.4 	payable in 2007, and thereafter.

60.5 	Sec. 12. Minnesota Statutes 2004, section 273.11, is amended by adding a subdivision 
60.6 	to read:
60.7 		Subd. 23.First tier valuation limit; agricultural homestead property. (a) 
60.8 	Beginning with assessment year 2006, the commissioner of revenue shall annually certify 
60.9 	the first tier limit for agricultural homestead property as the product of (i) $600,000, and 
60.10 	(ii) the ratio of the statewide average taxable market value of agricultural property per acre 
60.11 	of deeded farm land in the preceding assessment year to the statewide average taxable 
60.12 	market value of agricultural property per acre of deeded farm land for assessment year 
60.13 	1999. The limit shall be rounded to the nearest $10,000.
60.14 	(b) For the purposes of this subdivision, "agricultural property" means all class 2 
60.15 	property under section 273.13, subdivision 23, except for (1) timberland, (2) a landing 
60.16 	area or public access area of a privately owned public use airport, and (3) property 
60.17 	consisting of the house, garage and immediately surrounding one acre of land of an 
60.18 	agricultural homestead.
60.19 	(c) The commissioner shall certify the limit by January 2 of each assessment year, 
60.20 	except that for assessment year 2006 the commissioner shall certify the limit by June 
60.21 	1, 2006.

60.22 	EFFECTIVE DATE. This section is effective for assessment year 2006 and 
60.23 	thereafter.

60.24 	Sec. 13. [273.1115] AGGREGATE RESOURCE PRESERVATION PROPERTY 
60.25 	TAX LAW.
60.26 		Subdivision 1.Requirements. Real estate is entitled to valuation under this section 
60.27 	only if all of the following requirements are met:
60.28 	(1) the property is classified 1a, 1b, 2a, or 2b property under section 273.13, 
60.29 	subdivisions 22 and 23;
60.30 	(2) the property is at least ten contiguous acres, when the application is filed under 
60.31 	subdivision 2;
60.32 	(3) the owner has filed a completed application for deferment as specified in 
60.33 	subdivision 2 with the county assessor in the county in which the property is located;
61.1 	(4) there are no delinquent taxes on the property; and 
61.2 	(5) a covenant on the land restricts its use as provided in subdivision 2, clause (4).
61.3 		Subd. 2.Application. Application for valuation deferment under this section 
61.4 	must be filed by May 1 of the assessment year.  Any application filed and granted 
61.5 	continues in effect for subsequent years until the property no longer qualifies, provided 
61.6 	that supplemental affidavits under subdivision 6 are timely filed.  The application must 
61.7 	be filed with the assessor of the county in which the real property is located on such 
61.8 	form as may be prescribed by the commissioner of revenue.  The application must be 
61.9 	executed and acknowledged in the manner required by law to execute and acknowledge a 
61.10 	deed and must contain at least the following information and any other information the 
61.11 	commissioner deems necessary:
61.12 	(1) the legal description of the area;
61.13 	(2) the name and address of owner;
61.14 	(3) a copy of the affidavit filed under section 273.13, subdivision 23, paragraph (h), 
61.15 	in the case of property classified class 2b, clause (5); or in the case of property classified 
61.16 	1a, 1b, 2a, and 2b, clauses (1) to (3), the application must include a similar document with 
61.17 	the same information as contained in the affidavit under section 273.13, subdivision 23, 
61.18 	paragraph (h); and 
61.19 	(4) a statement of proof from the owner that the land contains a restrictive covenant 
61.20 	limiting its use for the property's surface to that which exists on the date of the application 
61.21 	and limiting its future use to the preparation and removal of the aggregate commercial 
61.22 	deposit under its surface.
61.23 	To qualify under this clause, the covenant must be binding on the owner or the 
61.24 	owner's successor or assignee, and run with the land, except as provided in subdivision 4 
61.25 	allowing for the cancellation of the covenant under certain conditions.
61.26 		Subd. 3.Determination of value. Upon timely application by the owner as 
61.27 	provided in subdivision 2, notwithstanding sections 272.03, subdivision 8, and 273.11, 
61.28 	the value of any qualifying land described in subdivision 2 must be valued as if it were 
61.29 	agricultural property, using a per acre valuation equal to the current year's per acre 
61.30 	valuation of agricultural land in the county.  The assessor shall not consider any additional 
61.31 	value resulting from potential alternative and future uses of the property.  The buildings 
61.32 	located on the land shall be valued by the assessor in the normal manner.
61.33 		Subd. 4.Cancellation of covenant. The covenant required under subdivision 
61.34 	2 may be canceled in two ways:
62.1 	(1) by the owner beginning with the next subsequent assessment year provided 
62.2 	that the additional taxes as determined under subdivision 5 are paid by the owner at the 
62.3 	time of cancellation; and 
62.4 	(2) by the city or town in which the property is located beginning with the next 
62.5 	subsequent assessment year, if the city council or town board:
62.6 	(i) changes the conditional use of the property;
62.7 	(ii) revokes the mining permit; or 
62.8 	(iii) changes the zoning to disallow mining.
62.9 	No additional taxes are imposed on the property under this clause.
62.10 		 Subd. 4a.County termination. Within two years of the effective date of this 
62.11 	section, a county may, following notice and public hearing, terminate application of this 
62.12 	section in the county.  The termination is effective upon adoption of a resolution of the 
62.13 	county board.  A county has 60 days from receipt of the first application for enrollment 
62.14 	under this section to notify the applicant and any subsequent applicants of the county's 
62.15 	intent to begin the process of terminating application of this section in the county. The 
62.16 	county must act on the termination within six months. Upon termination by a vote of the 
62.17 	county board, all applications received during notification of intent to terminate shall be 
62.18 	deemed void. If the county board does not act on the termination within six months of 
62.19 	notification, all applications for valuation for deferment received shall be deemed eligible 
62.20 	to be enrolled under this section. Following this initial 60-day grace period, a termination 
62.21 	applies prospectively and does not affect property enrolled under this section prior to the 
62.22 	termination date.  A county may reauthorize application of this section by a resolution of 
62.23 	the county board revoking the termination.
62.24 		Subd. 5.Additional taxes. When real property which has been valued and assessed 
62.25 	under this section no longer qualifies, the portion of the land classified under subdivision 
62.26 	1, clause (1), is subject to additional taxes.  The additional tax amount is determined by:
62.27 	(1) computing the difference between (i) the current year's taxes determined in 
62.28 	accordance with subdivision 5, and (ii) an amount as determined by the assessor based 
62.29 	upon the property's current year's estimated market value of like real estate at its highest 
62.30 	and best use and the appropriate local tax rate; and 
62.31 	(2) multiplying the amount determined in clause (1) by the number of years the 
62.32 	land was in the program under this section.
62.33 	The current year's estimated market value as determined by the assessor must not 
62.34 	exceed the market value that would result if the property was sold in an arms-length 
62.35 	transaction and must not be greater than it would have been had the actual bona fide sale 
62.36 	price of the property been used in lieu of that market value.  The additional taxes must be 
63.1 	extended against the property on the tax list for the current year, except that interest or 
63.2 	penalties must not be levied on such additional taxes if timely paid.
63.3 	The additional tax under this subdivision must not be imposed on that portion of the 
63.4 	property which has actively been mined and has been removed from the program based 
63.5 	upon the supplemental affidavits filed under subdivision 6.
63.6 		Subd. 6.Supplemental affidavits; mining activity on land. When any portion 
63.7 	of the property begins to be actively mined, the owner must file a supplemental affidavit 
63.8 	within 60 days from the day any aggregate is removed stating the number of acres of the 
63.9 	property that is actively being mined.  The acres actively being mined shall be (1) valued 
63.10 	and classified under section 273.13, subdivision 24, in the next subsequent assessment 
63.11 	year, and (2) removed from the aggregate resource preservation property tax program 
63.12 	under this section.  The additional taxes under subdivision 5 must not be imposed on 
63.13 	the acres that are actively being mined and have been removed from the program under 
63.14 	this section.
63.15 	Copies of the original affidavit and all supplemental affidavits must be filed with the 
63.16 	county assessor, the local zoning administrator, and the Department of Natural Resources, 
63.17 	Division of Land and Minerals.  A supplemental affidavit must be filed each time a 
63.18 	subsequent portion of the property is actively mined, provided that the minimum acreage 
63.19 	change is five acres, even if the actual mining activity constitutes less than five acres. 
63.20 	Failure to file the affidavits timely shall result in the property losing its valuation deferment 
63.21 	under this section, and additional taxes must be imposed as calculated under subdivision 5.
63.22 		Subd. 7.Lien. The additional tax imposed by this section is a lien upon the property 
63.23 	assessed to the same extent and for the same duration as other taxes imposed upon 
63.24 	property within this state and, when collected, must be distributed in the manner provided 
63.25 	by law for the collection and distribution of other property taxes.
63.26 		Subd. 8.Continuation of tax treatment upon sale. When real property qualifying 
63.27 	under subdivision 1 is sold, additional taxes must not be extended against the property 
63.28 	if the property continues to qualify under subdivision 1, and the new owner files an 
63.29 	application with the assessor for continued deferment within 30 days after the sale.
63.30 		Subd. 9.Definitions. For purposes of this section, "commercial aggregate deposit" 
63.31 	and "actively mined" have the meanings given them in section 273.13, subdivision 23, 
63.32 	paragraph (h).
63.33 		Subd. 10.County administrative fee. A county may charge the owner of property 
63.34 	that is valued under this section a fee to compensate for its costs of administering this 
63.35 	program.

64.1 	EFFECTIVE DATE. This section is effective for taxes levied in 2007, payable 
64.2 	in 2008, and thereafter, except that for the 2007 assessment year, the application date 
64.3 	under subdivision 4 shall be September 1, 2007, and subdivision 4a is effective the day 
64.4 	following final enactment.

64.5 	Sec. 14. Minnesota Statutes 2004, section 273.124, subdivision 12, is amended to read:
64.6 		Subd. 12.Homestead of member of United States armed forces; Peace Corps; 
64.7 	VISTA.  (a) Real estate actually occupied and used for the purpose of a homestead by 
64.8 	a person, or by a member of that person's immediate family shall be classified as a 
64.9 	homestead even though the person or family is absent if (1) the person or the person's 
64.10 	family is absent solely because the person is on active duty with the armed forces of the 
64.11 	United States, or is serving as a volunteer under the VISTA or Peace Corps program; (2) 
64.12 	the owner intends to return as soon as discharged or relieved from service; and (3) the 
64.13 	owner claims it as a homestead. A person who knowingly makes or submits to an assessor 
64.14 	an affidavit or other statement that is false in any material matter to obtain or aid another 
64.15 	in obtaining a benefit under this subdivision is guilty of a felony.
64.16 	(b) In the case of a person who is absent solely because the person is on active duty 
64.17 	with the United States armed forces, homestead classification must be granted as provided 
64.18 	in this paragraph if the requirements of paragraph (a), clauses (1) to (3), are met, even 
64.19 	if the property has not been occupied as a homestead by the person or a member of the 
64.20 	person's family. To qualify for this classification, the person who acquires the property 
64.21 	must notify the assessor of the acquisition and of the person's absence due to military 
64.22 	service. When the person returns from military service and occupies the property as 
64.23 	a homestead, the person shall notify the assessor, who will provide for abatement of 
64.24 	the difference between the nonhomestead and homestead taxes for the current and two 
64.25 	preceding years, not to exceed the time during which the person owned the property.

64.26 	EFFECTIVE DATE. This section is effective for assessments in 2006, taxes 
64.27 	payable in 2007, and thereafter.

64.28 	Sec. 15. Minnesota Statutes 2004, section 273.124, is amended by adding a subdivision 
64.29 	to read:
64.30 		Subd. 22.Annual registration of certain relative homesteads. If the owner of 
64.31 	property or the owner's relative who occupies property that is classified as a homestead 
64.32 	under subdivision 1, paragraph (c), receives compensation for allowing occupancy of any 
64.33 	part of that property for a period that exceeds 31 consecutive days during the calendar 
64.34 	year, the recipient of the compensation must register the property with the city in which 
65.1 	it is located no later than 60 days after the initial rental period began. This requirement 
65.2 	applies to property located in a city that has a population over 25,000. Each such city must 
65.3 	maintain a file of these property registrations that is open to the public, and retain the 
65.4 	registrations for one year after the date of filing.

65.5 	EFFECTIVE DATE. This section is effective July 1, 2006.

65.6 	Sec. 16. Minnesota Statutes 2005 Supplement, section 273.128, subdivision 1, is 
65.7 	amended to read:
65.8 		Subdivision 1.Requirement. Low-income rental property classified as class 4d 
65.9 	under section 273.13, subdivision 25, is entitled to valuation under this section if at least 
65.10 	75 percent of for  the units in the rental housing property that meet any of the following 
65.11 	qualifications:
65.12 	(1) the units are subject to a housing assistance payments contract under section 8 
65.13 	of the United States Housing Act of 1937, as amended;
65.14 	(2) the units are rent-restricted and income-restricted units of a qualified low-income 
65.15 	housing project receiving tax credits under section 42(g) of the Internal Revenue Code of 
65.16 	1986, as amended;
65.17 	(3) the units are financed by the Rural Housing Service of the United States 
65.18 	Department of Agriculture and receive payments under the rental assistance program 
65.19 	pursuant to section 521(a) of the Housing Act of 1949, as amended; or
65.20 	(4) the units are subject to rent and income restrictions under the terms of financial 
65.21 	assistance provided to the rental housing property by the federal government or, the 
65.22 	state of Minnesota, or a local unit of government  as evidenced by a document recorded 
65.23 	against the property.
65.24 	The restrictions must require assisted units to be occupied by residents whose 
65.25 	household income at the time of initial occupancy does not exceed 60 percent of the 
65.26 	greater of area or state median income, adjusted for family size, as determined by the 
65.27 	United States Department of Housing and Urban Development. The restriction must also 
65.28 	require the rents for assisted units to not exceed 30 percent of 60 percent of the greater of 
65.29 	area or state median income, adjusted for family size, as determined by the United States 
65.30 	Department of Housing and Urban Development.

65.31 	EFFECTIVE DATE. This section is effective for taxes levied in 2006, payable 
65.32 	in 2007, and thereafter.

65.33 	Sec. 17. Minnesota Statutes 2004, section 273.13, subdivision 23, is amended to read:
66.1 		Subd. 23.Class 2. (a) Class 2a property is agricultural land including any 
66.2 	improvements that is homesteaded. The market value of the house and garage and 
66.3 	immediately surrounding one acre of land has the same class rates as class 1a property 
66.4 	under subdivision 22. The value of the remaining land including improvements up to and 
66.5 	including $600,000 market value the first tier valuation limit of agricultural homestead 
66.6 	property  has a net class rate of 0.55 percent of market value. The remaining property 
66.7 	over $600,000 market value the first tier  has a class rate of one percent of market value.
66.8 	For purposes of this subdivision, the "first tier valuation limit of agricultural homestead 
66.9 	property" and "first tier" means the limit certified under section 273.11, subdivision 23.
66.10 	(b) Class 2b property is (1) real estate, rural in character and used exclusively for 
66.11 	growing trees for timber, lumber, and wood and wood products; (2) real estate that is not 
66.12 	improved with a structure and is used exclusively for growing trees for timber, lumber, and 
66.13 	wood and wood products, if the owner has participated or is participating in a cost-sharing 
66.14 	program for afforestation, reforestation, or timber stand improvement on that particular 
66.15 	property, administered or coordinated by the commissioner of natural resources; (3) real 
66.16 	estate that is nonhomestead agricultural land; or (4) a landing area or public access area of 
66.17 	a privately owned public use airport; or (5) land with a commercial aggregate deposit that 
66.18 	is not actively being mined and is not otherwise classified as class 2a or 2b, clauses (1) to 
66.19 	(3). Class 2b property has a net class rate of one percent of market value.
66.20 	(c) Agricultural land as used in this section means contiguous acreage of ten 
66.21 	acres or more, used during the preceding year for agricultural purposes. "Agricultural 
66.22 	purposes" as used in this section means the raising or cultivation of agricultural products. 
66.23 	"Agricultural purposes" also includes enrollment in the Reinvest in Minnesota program 
66.24 	under sections  103F.501 to  103F.535, the native prairie bank under section 84.96,  or the 
66.25 	federal Conservation Reserve Program as contained in Public Law 99-198 if the property 
66.26 	was classified as agricultural (i) under this subdivision for the assessment year 2002 or (ii) 
66.27 	in the year prior to its enrollment. Contiguous acreage on the same parcel, or contiguous 
66.28 	acreage on an immediately adjacent parcel under the same ownership, may also qualify 
66.29 	as agricultural land, but only if it is pasture, timber, waste, unusable wild land, or land 
66.30 	included in state or federal farm programs. Agricultural classification for property shall be 
66.31 	determined excluding the house, garage, and immediately surrounding one acre of land, 
66.32 	and shall not be based upon the market value of any residential structures on the parcel or 
66.33 	contiguous parcels under the same ownership. 
66.34 	(d) Real estate, excluding the house, garage, and immediately surrounding one acre 
66.35 	of land, of less than ten acres which is exclusively and intensively used for raising or 
66.36 	cultivating agricultural products, shall be considered as agricultural land.
67.1 	Land shall be classified as agricultural even if all or a portion of the agricultural use 
67.2 	of that property is the leasing to, or use by another person for agricultural purposes.
67.3 	Classification under this subdivision is not determinative for qualifying under 
67.4 	section  273.111. 
67.5 	The property classification under this section supersedes, for property tax purposes 
67.6 	only, any locally administered agricultural policies or land use restrictions that define 
67.7 	minimum or maximum farm acreage.
67.8 	(e) The term "agricultural products" as used in this subdivision includes production 
67.9 	for sale of:
67.10 	(1) livestock, dairy animals, dairy products, poultry and poultry products, fur-bearing 
67.11 	animals, horticultural and nursery stock, fruit of all kinds, vegetables, forage, grains, 
67.12 	bees, and apiary products by the owner;
67.13 	(2) fish bred for sale and consumption if the fish breeding occurs on land zoned 
67.14 	for agricultural use;
67.15 	(3) the commercial boarding of horses if the boarding is done in conjunction with 
67.16 	raising or cultivating agricultural products as defined in clause (1);
67.17 	(4) property which is owned and operated by nonprofit organizations used for 
67.18 	equestrian activities, excluding racing;
67.19 	(5) game birds and waterfowl bred and raised for use on a shooting preserve licensed 
67.20 	under section  97A.115; 
67.21 	(6) insects primarily bred to be used as food for animals;
67.22 	(7) trees, grown for sale as a crop, and not sold for timber, lumber, wood, or wood 
67.23 	products, except that short rotation woody crops that are cultivated using agricultural 
67.24 	practices to produce timber or forest products are agricultural products; and
67.25 	(8) maple syrup taken from trees grown by a person licensed by the Minnesota 
67.26 	Department of Agriculture under chapter 28A as a food processor.
67.27 	(f) If a parcel used for agricultural purposes is also used for commercial or industrial 
67.28 	purposes, including but not limited to:
67.29 	(1) wholesale and retail sales;
67.30 	(2) processing of raw agricultural products or other goods;
67.31 	(3) warehousing or storage of processed goods; and
67.32 	(4) office facilities for the support of the activities enumerated in clauses (1), (2), 
67.33 	and (3),
67.34 	the assessor shall classify the part of the parcel used for agricultural purposes as class 
67.35 	1b, 2a, or 2b, whichever is appropriate, and the remainder in the class appropriate to its 
67.36 	use. The grading, sorting, and packaging of raw agricultural products for first sale is 
68.1 	considered an agricultural purpose. A greenhouse or other building where horticultural 
68.2 	or nursery products are grown that is also used for the conduct of retail sales must be 
68.3 	classified as agricultural if it is primarily used for the growing of horticultural or nursery 
68.4 	products from seed, cuttings, or roots and occasionally as a showroom for the retail sale of 
68.5 	those products. Use of a greenhouse or building only for the display of already grown 
68.6 	horticultural or nursery products does not qualify as an agricultural purpose.
68.7 	The assessor shall determine and list separately on the records the market value of 
68.8 	the homestead dwelling and the one acre of land on which that dwelling is located. If any 
68.9 	farm buildings or structures are located on this homesteaded acre of land, their market 
68.10 	value shall not be included in this separate determination.
68.11 	(g) To qualify for classification under paragraph (b), clause (4), a privately owned 
68.12 	public use airport must be licensed as a public airport under section  360.018. For purposes 
68.13 	of paragraph (b), clause (4), "landing area" means that part of a privately owned public use 
68.14 	airport properly cleared, regularly maintained, and made available to the public for use by 
68.15 	aircraft and includes runways, taxiways, aprons, and sites upon which are situated landing 
68.16 	or navigational aids. A landing area also includes land underlying both the primary surface 
68.17 	and the approach surfaces that comply with all of the following: 
68.18 	(i) the land is properly cleared and regularly maintained for the primary purposes of 
68.19 	the landing, taking off, and taxiing of aircraft; but that portion of the land that contains 
68.20 	facilities for servicing, repair, or maintenance of aircraft is not included as a landing area;
68.21 	(ii) the land is part of the airport property; and
68.22 	(iii) the land is not used for commercial or residential purposes.
68.23 	The land contained in a landing area under paragraph (b), clause (4), must be described 
68.24 	and certified by the commissioner of transportation. The certification is effective until 
68.25 	it is modified, or until the airport or landing area no longer meets the requirements of 
68.26 	paragraph (b), clause (4). For purposes of paragraph (b), clause (4), "public access area" 
68.27 	means property used as an aircraft parking ramp, apron, or storage hangar, or an arrival 
68.28 	and departure building in connection with the airport.
68.29 	(h) To qualify for classification under paragraph (b), clause (5), the property must be 
68.30 	at least ten contiguous acres in size and the owner of the property must record with the 
68.31 	county recorder of the county in which the property is located an affidavit containing:
68.32 	(1) a legal description of the property;
68.33 	(2) a disclosure that the property contains a commercial aggregate deposit that is not 
68.34 	actively being mined but is present on the entire parcel enrolled;
68.35 	(3) documentation that the conditional use under the county or local zoning 
68.36 	ordinance of this property is for mining; and 
69.1 	(4) documentation that a permit has been issued by the local unit of government 
69.2 	or the mining activity is allowed under local ordinance.  The disclosure must include a 
69.3 	statement from a registered professional geologist, engineer, or soil scientist delineating 
69.4 	the deposit and certifying that it is a commercial aggregate deposit.
69.5 	For purposes of this section and section 273.1115, "commercial aggregate deposit" 
69.6 	means a deposit that will yield crushed stone or sand and gravel that is suitable for use 
69.7 	as a construction aggregate; and "actively mined" means the removal of top soil and 
69.8 	overburden in preparation for excavation or excavation of a commercial deposit.
69.9 	(i) When any portion of the property under this subdivision or section 273.13, 
69.10 	subdivision 22, begins to be actively mined, the owner must file a supplemental affidavit 
69.11 	within 60 days from the day any aggregate is removed stating the number of acres of the 
69.12 	property that is actively being mined.  The acres actively being mined must be (1) valued 
69.13 	and classified under section 273.13, subdivision 24, in the next subsequent assessment 
69.14 	year, and (2) removed from the aggregate resource preservation property tax program 
69.15 	under section 273.1115, if the land was enrolled in that program.  Copies of the original 
69.16 	affidavit and all supplemental affidavits must be filed with the county assessor, the local 
69.17 	zoning administrator, and the Department of Natural Resources, Division of Land and 
69.18 	Minerals.  A supplemental affidavit must be filed each time a subsequent portion of the 
69.19 	property is actively mined, provided that the minimum acreage change is five acres, even 
69.20 	if the actual mining activity constitutes less than five acres.

69.21 	EFFECTIVE DATE. This section is effective for taxes levied in 2006, payable in 
69.22 	2007, and thereafter, except that the provisions relating to land with aggregate deposits is 
69.23 	effective for taxes levied in 2007, payable in 2008, and thereafter.

69.24 	Sec. 18. [273.323] EFFECTIVE DATE FOR RULES FOR VALUATION OF 
69.25 	ELECTRIC AND TRANSMISSION PIPELINE UTILITY PROPERTY.
69.26 	Rules adopted by the commissioner of revenue that prescribe the method of valuing 
69.27 	property of electric and transmission pipeline utilities may not take effect before the end 
69.28 	of the regular legislative session in the calendar year following adoption of the rules.

69.29 	EFFECTIVE DATE. This section is effective the day following final enactment.

69.30 	Sec. 19. Minnesota Statutes 2005 Supplement, section 275.025, subdivision 1, is 
69.31 	amended to read:
69.32 		Subdivision 1.Levy amount. The state general levy is levied against 
69.33 	commercial-industrial property and seasonal residential recreational property, as defined 
70.1 	in this section. The state general levy base amount is $592,000,000 for taxes payable in 
70.2 	2002. For taxes payable in subsequent years, 2006 on seasonal residential recreational 
70.3 	property, the levy base amount is $32,935,134, and for subsequent years the levy base 
70.4 	amount for seasonal residential recreational property  is increased each year by multiplying 
70.5 	the levy base amount for the prior year by the sum of one plus the rate of increase, 
70.6 	if any, in the implicit price deflator for government consumption expenditures and 
70.7 	gross investment for state and local governments prepared by the Bureau of Economic 
70.8 	Analysts of the United States Department of Commerce for the 12-month period ending 
70.9 	March 31 of the year prior to the year the taxes are payable. For taxes payable in 2007 
70.10 	and subsequent years on commercial industrial property, the tax is imposed under this 
70.11 	subdivision at the rate of the tax imposed under this subdivision for taxes payable in 2004.
70.12 	The tax under this section is not treated as a local tax rate under section 469.177 and is not 
70.13 	the levy of a governmental unit under chapters 276A and 473F.
70.14 	The commissioner shall increase or decrease the preliminary or final rate for a year 
70.15 	as necessary to account for errors and tax base changes that affected a preliminary or final 
70.16 	rate for either of the two preceding years. Adjustments are allowed to the extent that the 
70.17 	necessary information is available to the commissioner at the time the rates for a year must 
70.18 	be certified, and for the following reasons:
70.19 	(1) an erroneous report of taxable value by a local official;
70.20 	(2) an erroneous calculation by the commissioner; and
70.21 	(3) an increase or decrease in taxable value for commercial-industrial or seasonal 
70.22 	residential recreational property reported on the abstracts of tax lists submitted under 
70.23 	section 275.29 that was not reported on the abstracts of assessment submitted under 
70.24 	section 270C.89 for the same year.
70.25 	The commissioner may, but need not, make adjustments if the total difference in the tax 
70.26 	levied for the year would be less than $100,000.

70.27 	Sec. 20. Minnesota Statutes 2005 Supplement, section 275.025, subdivision 4, is 
70.28 	amended to read:
70.29 		Subd. 4.Apportionment and levy of state general tax. Ninety-five percent of the 
70.30 	state general tax must be levied by applying a uniform rate to all commercial-industrial tax 
70.31 	capacity and five percent of the state general tax must be levied by applying a uniform 
70.32 	rate to all seasonal residential recreational tax capacity. On or before October 1 each 
70.33 	year, the commissioner of revenue shall certify the preliminary state general levy rates to 
70.34 	each county auditor that must be used to prepare the notices of proposed property taxes 
70.35 	for taxes payable in the following year. By January 1 of each year, the commissioner 
71.1 	shall certify the final state general levy rate rates  to each county auditor that shall be 
71.2 	used in spreading taxes.

71.3 	EFFECTIVE DATE. This section is effective for taxes payable in 2007 and 
71.4 	thereafter.

71.5 	Sec. 21. Minnesota Statutes 2005 Supplement, section 276.04, subdivision 2, is 
71.6 	amended to read:
71.7 		Subd. 2.Contents of tax statements. (a) The treasurer shall provide for the 
71.8 	printing of the tax statements. The commissioner of revenue shall prescribe the form 
71.9 	of the property tax statement and its contents. The statement must contain a tabulated 
71.10 	statement of the dollar amount due to each taxing authority and the amount of the state 
71.11 	tax from the parcel of real property for which a particular tax statement is prepared. The 
71.12 	dollar amounts attributable to the county, the state tax, the voter approved school tax, the 
71.13 	other local school tax, the township or municipality, and the total of the metropolitan 
71.14 	special taxing districts as defined in section 275.065, subdivision 3, paragraph (i), must 
71.15 	be separately stated. The amounts due all other special taxing districts, if any, may be 
71.16 	aggregated except that any levies made by the regional rail authorities in the county of 
71.17 	Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 398A 
71.18 	shall be listed on a separate line directly under the appropriate county's levy. If the county 
71.19 	levy under this paragraph includes an amount for a lake improvement district as defined 
71.20 	under sections 103B.501 to 103B.581, the amount attributable for that purpose must be 
71.21 	separately stated from the remaining county levy amount. In the case of Ramsey County, 
71.22 	if the county levy under this paragraph includes an amount for public library service 
71.23 	under section 134.07, the amount attributable for that purpose may be separated from the 
71.24 	remaining county levy amount. The amount of the tax on homesteads qualifying under the 
71.25 	senior citizens' property tax deferral program under chapter 290B is the total amount of 
71.26 	property tax before subtraction of the deferred property tax amount. The amount of the 
71.27 	tax on contamination value imposed under sections 270.91 to 270.98, if any, must also 
71.28 	be separately stated. The dollar amounts, including the dollar amount of any special 
71.29 	assessments, may be rounded to the nearest even whole dollar. For purposes of this section 
71.30 	whole odd-numbered dollars may be adjusted to the next higher even-numbered dollar. 
71.31 	The amount of market value excluded under section 273.11, subdivision 16, if any, must 
71.32 	also be listed on the tax statement.
71.33 	(b) The property tax statements for manufactured homes and sectional structures 
71.34 	taxed as personal property shall contain the same information that is required on the 
71.35 	tax statements for real property.
72.1 	(c) Real and personal property tax statements must contain the following information 
72.2 	in the order given in this paragraph. The information must contain the current year tax 
72.3 	information in the right column with the corresponding information for the previous year 
72.4 	in a column on the left:
72.5 	(1) the property's estimated market value under section 273.11, subdivision 1;
72.6 	(2) the property's taxable market value after reductions under section 273.11, 
72.7 	subdivisions 1a and 16;
72.8 	(3) the property's gross tax, calculated by adding the property's total property tax to 
72.9 	the sum of the aids enumerated in clause (4);
72.10 	(4) a total of the following aids:
72.11 	(i) education aids payable under chapters 122A, 123A, 123B, 124D, 125A, 126C, 
72.12 	and 127A;
72.13 	(ii) local government aids for cities, towns, and counties under sections 477A.011 to 
72.14 	477A.04; and
72.15 	(iii) disparity reduction aid under section 273.1398;
72.16 	(5) for homestead residential and agricultural properties, the credits under section 
72.17 	273.1384;
72.18 	(6) any credits received under sections 273.119; 273.123; 273.135; 273.1391; 
72.19 	273.1398, subdivision 4; 469.171; and 473H.10, except that the amount of credit received 
72.20 	under section 273.135 must be separately stated and identified as "taconite tax relief"; and
72.21 	(7) the net tax payable in the manner required in paragraph (a).
72.22 	(d) If the county uses envelopes for mailing property tax statements and if the county 
72.23 	agrees, a taxing district may include a notice with the property tax statement notifying 
72.24 	taxpayers when the taxing district will begin its budget deliberations for the current 
72.25 	year, and encouraging taxpayers to attend the hearings. If the county allows notices to 
72.26 	be included in the envelope containing the property tax statement, and if more than 
72.27 	one taxing district relative to a given property decides to include a notice with the tax 
72.28 	statement, the county treasurer or auditor must coordinate the process and may combine 
72.29 	the information on a single announcement.
72.30 	The commissioner of revenue shall certify to the county auditor the actual or 
72.31 	estimated aids enumerated in paragraph (c), clause (4), that local governments will receive 
72.32 	in the following year. The commissioner must certify this amount by January 1 of each 
72.33 	year.
72.34 	(e) A notice must be printed on the front side of the property tax statement for 
72.35 	homestead property stating that if the total property tax has increased over the previous 
72.36 	year's tax by more than the threshold percentage in section 290A.04, subdivision 2h, 
73.1 	the taxpayer may be eligible, regardless of income, for a special property tax refund 
73.2 	from the state.

73.3 	EFFECTIVE DATE. This section is effective for property tax statements prepared 
73.4 	in 2006, for property taxes payable in 2007 and thereafter.

73.5 	Sec. 22. Minnesota Statutes 2004, section 469.1813, subdivision 1, is amended to read:
73.6 		Subdivision 1.Authority. The governing body of a political subdivision may grant 
73.7 	an a current or prospective abatement, by contract or otherwise, of the taxes imposed by 
73.8 	the political subdivision on a parcel of property, which may include personal property 
73.9 	and machinery, or defer the payments of the taxes and abate the interest and penalty 
73.10 	that otherwise would apply, if:
73.11 	(a)(1) it expects the benefits to the political subdivision of the proposed abatement 
73.12 	agreement to at least equal the costs to the political subdivision of the proposed agreement 
73.13 	or intends the abatement to phase in a property tax increase, as provided in clause (b)(7); 
73.14 	and
73.15 	(b)(2) it finds that doing so is in the public interest because it will:
73.16 	(1)(i) increase or preserve tax base;
73.17 	(2)(ii) provide employment opportunities in the political subdivision;
73.18 	(3)(iii) provide or help acquire or construct public facilities;
73.19 	(4)(iv) help redevelop or renew blighted areas;
73.20 	(5)(v) help provide access to services for residents of the political subdivision;
73.21 	(6)(vi) finance or provide public infrastructure; or
73.22 	(7)(vii) phase in a property tax increase on the parcel resulting from an increase of 
73.23 	50 percent or more in one year on the estimated market value of the parcel, other than 
73.24 	increase attributable to improvement of the parcel; or
73.25 	(viii) stabilize the tax base through equalization of property tax revenues for a 
73.26 	specified period of time with respect to a taxpayer whose real and personal property is 
73.27 	subject to valuation under Minnesota Rules, chapter 8100.

73.28 	Sec. 23. Minnesota Statutes 2005 Supplement, section 469.1813, subdivision 6, 
73.29 	is amended to read:
73.30 		Subd. 6.Duration limit. (a) A political subdivision may grant an abatement for a 
73.31 	period no longer than 15 years, except as provided under paragraph (b). The abatement 
73.32 	period will commence in the first year in which the abatement granted is either paid or 
73.33 	retained in accordance with section 469.1815, subdivision 2. The subdivision may specify 
73.34 	in the abatement resolution a shorter duration. If the resolution does not specify a period 
74.1 	of time, the abatement is for eight years. If an abatement has been granted to a parcel of 
74.2 	property and the period of the abatement has expired, the political subdivision that granted 
74.3 	the abatement may not grant another abatement for eight years after the expiration of the 
74.4 	first abatement. This prohibition does not apply to improvements added after and not 
74.5 	subject to the first abatement. Economic abatement agreements for real and personal 
74.6 	property subject to valuation under Minnesota Rules, chapter 8100, are not subject to this 
74.7 	prohibition and may be granted successively.
74.8 	(b) A political subdivision proposing to abate taxes for a parcel may request, in 
74.9 	writing, that the other political subdivisions in which the parcel is located grant an 
74.10 	abatement for the property. If one of the other political subdivisions declines, in writing, 
74.11 	to grant an abatement or if 90 days pass after receipt of the request to grant an abatement 
74.12 	without a written response from one of the political subdivisions, the duration limit 
74.13 	for an abatement for the parcel by the requesting political subdivision and any other 
74.14 	participating political subdivision is increased to 20 years. If the political subdivision 
74.15 	which declined to grant an abatement later grants an abatement for the parcel, the 20-year 
74.16 	duration limit is reduced by one year for each year that the declining political subdivision 
74.17 	grants an abatement for the parcel during the period of the abatement granted by the 
74.18 	requesting political subdivision. The duration limit may not be reduced below the limit 
74.19 	under paragraph (a).

74.20 	Sec. 24. Minnesota Statutes 2004, section 469.1813, subdivision 6b, is amended to 
74.21 	read:
74.22 		Subd. 6b.Extended duration limit. (a) Notwithstanding the provisions of 
74.23 	subdivision 6, a political subdivision may grant an abatement for a period of up to 20 
74.24 	years, if the abatement is for a qualified business.
74.25 	(b) To be a qualified business for purposes of this subdivision, at least 50 percent of 
74.26 	the payroll of the operations of the business that qualify for the abatement must be for 
74.27 	employees engaged in one of the following lines of business or any combination of them:
74.28 	(1) manufacturing;
74.29 	(2) agricultural processing;
74.30 	(3) mining;
74.31 	(4) research and development;
74.32 	(5) warehousing; or
74.33 	(6) qualified high technology.
74.34 	Alternatively, a qualified business also includes a taxpayer whose real and personal 
74.35 	property is subject to valuation under Minnesota Rules, chapter 8100.
75.1 	(c)(1) "Manufacturing" means the material staging and production of tangible 
75.2 	personal property by procedures commonly regarded as manufacturing, processing, 
75.3 	fabrication, or assembling which changes some existing material into new shapes, new 
75.4 	qualities, or new combinations.
75.5 	(2) "Mining" has the meaning given in section 613(c) of the Internal Revenue Code 
75.6 	of 1986.
75.7 	(3) "Agricultural processing" means transforming, packaging, sorting, or grading 
75.8 	livestock or livestock products, agricultural commodities, or plants or plant products into 
75.9 	goods that are used for intermediate or final consumption including goods for nonfood use.
75.10 	(4) "Research and development" means qualified research as defined in section 
75.11 	41(d) of the Internal Revenue Code of 1986.
75.12 	(5) "Qualified high technology" means one or more of the following activities:
75.13 	(i) advanced computing, which is any technology used in the design and 
75.14 	development of any of the following:
75.15 	(A) computer hardware and software;
75.16 	(B) data communications; and
75.17 	(C) information technologies;
75.18 	(ii) advanced materials, which are materials with engineered properties created 
75.19 	through the development of specialized process and synthesis technology;
75.20 	(iii) biotechnology, which is any technology that uses living organisms, cells, 
75.21 	macromolecules, microorganisms, or substances from living organisms to make or modify 
75.22 	a product, improve plants or animals, or develop microorganisms for useful purposes;
75.23 	(iv) electronic device technology, which is any technology that involves 
75.24 	microelectronics, semiconductors, electronic equipment, and instrumentation, radio 
75.25 	frequency, microwave, and millimeter electronics, and optical and optic-electrical devices, 
75.26 	or data and digital communications and imaging devices;
75.27 	(v) engineering or laboratory testing related to the development of a product;
75.28 	(vi) technology that assists in the assessment or prevention of threats or damage to 
75.29 	human health or the environment, including, but not limited to, environmental cleanup 
75.30 	technology, pollution prevention technology, or development of alternative energy sources;
75.31 	(vii) medical device technology, which is any technology that involves medical 
75.32 	equipment or products other than a pharmaceutical product that has therapeutic or 
75.33 	diagnostic value and is regulated; or
75.34 	(viii) advanced vehicles technology which is any technology that involves electric 
75.35 	vehicles, hybrid vehicles, or alternative fuel vehicles, or components used in the 
75.36 	construction of electric vehicles, hybrid vehicles, or alternative fuel vehicles. An electric 
76.1 	vehicle is a road vehicle that draws propulsion energy only from an on-board source of 
76.2 	electrical energy. A hybrid vehicle is a road vehicle that can draw propulsion energy from 
76.3 	both a consumable fuel and a rechargeable energy storage system.
76.4 	(d) The authority to grant new abatements under this subdivision expires on July 1, 
76.5 	2004, except that the authority to grant new abatements for real and personal property 
76.6 	subject to valuation under Minnesota Rules, chapter 8100, does not expire.

76.7 	Sec. 25. Minnesota Statutes 2004, section 469.1813, subdivision 8, is amended to read:
76.8 		Subd. 8.Limitation on abatements. In any year, the total amount of property taxes 
76.9 	abated by a political subdivision under this section may not exceed (1) ten percent of 
76.10 	the current levy, or (2) $200,000, whichever is greater. The limit under this subdivision 
76.11 	does not apply to:
76.12 	(1) an uncollected abatement from a prior year that is added to the abatement levy; or
76.13 	(2) a taxpayer whose real and personal property is subject to valuation under 
76.14 	Minnesota Rules, chapter 8100.

76.15 	Sec. 26. Minnesota Statutes 2004, section 469.1813, subdivision 9, is amended to read:
76.16 		Subd. 9.Consent of property owner not required. A political subdivision may 
76.17 	abate the taxes on a parcel under sections  469.1812 to  469.1815 without obtaining the 
76.18 	consent of the property owner. This subdivision does not apply to abatements granted to a 
76.19 	taxpayer whose real and personal property is valued under Minnesota Rules, chapter 8100.

76.20 	Sec. 27. Minnesota Statutes 2004, section 469.1813, is amended by adding a 
76.21 	subdivision to read:
76.22 		Subd. 10.Applicability to utility properties. When this statute is applied or 
76.23 	utilized with respect to a taxpayer whose real and personal property is subject to valuation 
76.24 	under Minnesota Rules, chapter 8100, the provisions of this section and sections 469.1814 
76.25 	and 469.1815 shall apply only to property specified or described in the abatement contract 
76.26 	or agreement.

76.27 	Sec. 28. Minnesota Statutes 2004, section 473F.08, is amended by adding a subdivision 
76.28 	to read:
76.29 		Subd. 3c.Uncompensated care reimbursement. (a) As used in this subdivision, 
76.30 	the following terms have the meanings given in this paragraph.
76.31 	(1) "Uncompensated care" means the sum of (i) the amount that would have been 
76.32 	charged by a facility for rendering free or discounted care to persons who cannot afford to 
77.1 	pay and for which the facility did not expect payment and (ii) the amount that had been 
77.2 	charged by a facility for rendering care to persons and billed to that person or a third-party 
77.3 	payer for which the facility expected but did not receive payment. Uncompensated care 
77.4 	does not include contractual write-offs.
77.5 	(2) A "qualifying hospital" means a hospital in the area that is:
77.6 	(i) owned or operated by a local unit of government, or formerly owned by a 
77.7 	university or is a private nonprofit hospital that leases its building from the county in 
77.8 	which it is located; and
77.9 	(ii) has a licensed bed capacity greater than 400.
77.10 	(b) A county that contains a qualifying hospital is eligible for reimbursement of 
77.11 	that portion of gross charges for uncompensated care determined by multiplying the 
77.12 	hospital's gross charges during the base year by the percentage of uncompensated care 
77.13 	provided by the hospital during the base year minus one-half of one percent of those gross 
77.14 	charges, dividing the result by two, and adjusting the cost by multiplying that result by the 
77.15 	hospital's cost-to-charge ratio during the base year. By July 15, 2007, and each subsequent 
77.16 	year, the county shall notify its county auditor, as well as the administrative auditor, of the 
77.17 	amount of qualifying uncompensated care provided, adjusted to cost using the hospital's 
77.18 	cost-to-charge ratio, during the 12-month period ending on June 30 of the current year.
77.19 	(c) The amount certified under paragraph (b) shall be certified annually by the 
77.20 	county auditor to the administrative auditor as an addition to the county's areawide levy 
77.21 	under subdivision 5.
77.22 	(d) The administrative auditor shall pay one-half of the reimbursement to the county 
77.23 	auditor of the county that contains the qualifying hospital on or before June 15 and the 
77.24 	remaining one-half of the reimbursement on or before November 15. The county auditor 
77.25 	receiving the payment shall disburse the reimbursement to the qualifying hospital within 
77.26 	15 days of receipt of the reimbursement.
77.27 	(e) Prior to the reporting specified in paragraph (b) above, all qualifying hospitals 
77.28 	that participate in this program shall agree upon and implement a common standard for 
77.29 	reporting uncompensated care, and a common standard for determining eligibility for 
77.30 	uncompensated care for all participating hospitals.

77.31 	EFFECTIVE DATE. This section is effective for fiscal disparities contribution and 
77.32 	distribution tax capacities for taxes payable in 2008 and 2009 only.

77.33 	Sec. 29. Laws 2001, First Special Session chapter 5,  article 3, section 8, the effective 
77.34 	date, as amended by Laws 2005, chapter 151, article 3, section 19, is amended to read:
78.1 	[EFFECTIVE DATE.] This section is effective for taxes  levied in 2002, payable in 
78.2 	2003, through taxes levied in   2009, payable in  2010 and thereafter.  

78.3 	Sec. 30. PROPERTY TAX CERTIFICATION; ROCHESTER SCHOOL 
78.4 	DISTRICT.
 78.5 	Notwithstanding Minnesota Statutes, sections 126C.48 and 275.065, with the 
78.6 	agreement of the school district's home county, Independent School District No. 535, 
78.7 	Rochester, on or before October 8, shall certify to the county auditor the district's proposed 
78.8 	property tax levy for taxes payable in the following year.

78.9 	EFFECTIVE DATE. This section is effective for taxes payable in 2007 only.

78.10 	Sec. 31. LEASE LEVY; ADMINISTRATIVE SPACE, ROCORI AND 
78.11 	FARIBAULT.
 78.12 	Independent School Districts Nos. 656, Faribault, and 750, Rocori, may lease 
78.13 	administrative space under Minnesota Statutes, section 126C.40, subdivision 1, if the 
78.14 	district can demonstrate to the satisfaction of the commissioner of education that the 
78.15 	administrative space is less expensive than instructional space that the district would 
78.16 	otherwise lease. The commissioner must deny this levy authority unless the district 
78.17 	passes a resolution stating its intent to lease instructional space under Minnesota Statutes, 
78.18 	section 126C.40, subdivision 1, if the commissioner does not grant authority under this 
78.19 	section.  The resolution must also certify that a lease of administrative space under this 
78.20 	section is less expensive than the district's proposed instructional lease. Levy authority 
78.21 	under this section shall not exceed the total levy authority under Minnesota Statutes, 
78.22 	section 126C.40, subdivision 1, paragraph (e). 

78.23 	EFFECTIVE DATE. This section is effective for revenue for taxes payable in 2007.

78.24 	Sec. 32. MISCELLANEOUS EDUCATION PROPERTY TAX REDUCTION.
 78.25 	Notwithstanding Minnesota Statutes, section 126C.10, subdivision 13a, the 
78.26 	commissioner of education shall increase the operating capital equalizing factor under 
78.27 	Minnesota Statutes, section 126C.10, subdivision 13a, to reduce the operating capital levy 
78.28 	by $2,593,000 in fiscal year 2008 and $2,259,000 in fiscal year 2009.

79.1 	ARTICLE 5
79.2 	DEPARTMENT OF REVENUE PROPERTY TAXES AND AIDS

79.3 	Section 1. Minnesota Statutes 2005 Supplement, section 273.13, subdivision 22, 
79.4 	is amended to read:
79.5 		Subd. 22.Class 1. (a) Except as provided in subdivision 23 and in paragraphs (b) 
79.6 	and (c), real estate which is residential and used for homestead purposes is class 1a. In the 
79.7 	case of a duplex or triplex in which one of the units is used for homestead purposes, the 
79.8 	entire property is deemed to be used for homestead purposes. The market value of class 1a 
79.9 	property must be determined based upon the value of the house, garage, and land.
79.10 	The first $500,000 of market value of class 1a property has a net class rate of 
79.11 	one percent of its market value; and the market value of class 1a property that exceeds 
79.12 	$500,000 has a class rate of 1.25 percent of its market value.
79.13 	(b) Class 1b property includes homestead real estate or homestead manufactured 
79.14 	homes used for the purposes of a homestead by
79.15 	(1) any person who is blind as defined in section 256D.35, or the blind person and 
79.16 	the blind person's spouse; or
79.17 	(2) any person, hereinafter referred to as "veteran," who:
79.18 	(i) served in the active military or naval service of the United States; and
79.19 	(ii) is entitled to compensation under the laws and regulations of the United States 
79.20 	for permanent and total service-connected disability due to the loss, or loss of use, by 
79.21 	reason of amputation, ankylosis, progressive muscular dystrophies, or paralysis, of both 
79.22 	lower extremities, such as to preclude motion without the aid of braces, crutches, canes, or 
79.23 	a wheelchair; and
79.24 	(iii) has acquired a special housing unit with special fixtures or movable facilities 
79.25 	made necessary by the nature of the veteran's disability, or the surviving spouse of the 
79.26 	deceased veteran for as long as the surviving spouse retains the special housing unit 
79.27 	as a homestead; or
79.28 	(3) any person who is permanently and totally disabled.
79.29 	Property is classified and assessed under clause (3) only if the government agency or 
79.30 	income-providing source certifies, upon the request of the homestead occupant, that the 
79.31 	homestead occupant satisfies the disability requirements of this paragraph.
79.32 	Property is classified and assessed pursuant to clause (1) only if the commissioner of 
79.33 	revenue certifies to the assessor that the homestead occupant satisfies the requirements of 
79.34 	this paragraph.
80.1 	Permanently and totally disabled for the purpose of this subdivision means a 
80.2 	condition which is permanent in nature and totally incapacitates the person from working 
80.3 	at an occupation which brings the person an income. The first $32,000 market value of 
80.4 	class 1b property has a net class rate of .45 percent of its market value. The remaining 
80.5 	market value of class 1b property has a class rate using the rates for class 1a or class 2a 
80.6 	property, whichever is appropriate, of similar market value.
80.7 	(c) Class 1c property is commercial use real property that abuts a lakeshore line and 
80.8 	is devoted to temporary and seasonal residential occupancy for recreational purposes but 
80.9 	not devoted to commercial purposes for more than 250 days in the year preceding the 
80.10 	year of assessment, and that includes a portion used as a homestead by the owner, which 
80.11 	includes a dwelling occupied as a homestead by a shareholder of a corporation that owns 
80.12 	the resort, a partner in a partnership that owns the resort, or a member of a limited liability 
80.13 	company that owns the resort even if the title to the homestead is held by the corporation, 
80.14 	partnership, or limited liability company. For purposes of this clause, property is devoted 
80.15 	to a commercial purpose on a specific day if any portion of the property, excluding the 
80.16 	portion used exclusively as a homestead, is used for residential occupancy and a fee 
80.17 	is charged for residential occupancy. The portion of the property used as a homestead 
80.18 	by the owner has the same class rates asis class 1a property under paragraph (a). The 
80.19 	remainder of the property is classified as follows: the first $500,000 of market value is tier 
80.20 	I, the next $1,700,000 of market value is tier II, and any remaining market value is tier III. 
80.21 	The class rates for class 1c are: tier I, 0.55 percent; tier II, 1.0 percent; and tier III, 1.25
80.22 	percent. If a class 1c resort property has any market value in tier III, the entire property 
80.23 	must meet the requirements of subdivision 25, paragraph (d), clause (1), to qualify for 
80.24 	class 1c treatment under this paragraph.
80.25 	(d) Class 1d property includes structures that meet all of the following criteria:
80.26 	(1) the structure is located on property that is classified as agricultural property under 
80.27 	section 273.13, subdivision 23;
80.28 	(2) the structure is occupied exclusively by seasonal farm workers during the time 
80.29 	when they work on that farm, and the occupants are not charged rent for the privilege of 
80.30 	occupying the property, provided that use of the structure for storage of farm equipment 
80.31 	and produce does not disqualify the property from classification under this paragraph;
80.32 	(3) the structure meets all applicable health and safety requirements for the 
80.33 	appropriate season; and
80.34 	(4) the structure is not salable as residential property because it does not comply 
80.35 	with local ordinances relating to location in relation to streets or roads.
81.1 	The market value of class 1d property has the same class rates as class 1a property 
81.2 	under paragraph (a).

81.3 	EFFECTIVE DATE. This section is effective for taxes payable in 2006 and 
81.4 	thereafter.

81.5 	Sec. 2. Minnesota Statutes 2005 Supplement, section 273.13, subdivision 25, is 
81.6 	amended to read:
81.7 		Subd. 25.Class 4. (a) Class 4a is residential real estate containing four or more 
81.8 	units and used or held for use by the owner or by the tenants or lessees of the owner 
81.9 	as a residence for rental periods of 30 days or more, excluding property qualifying for 
81.10 	class 4d. Class 4a also includes hospitals licensed under sections 144.50 to 144.56, other 
81.11 	than hospitals exempt under section 272.02, and contiguous property used for hospital 
81.12 	purposes, without regard to whether the property has been platted or subdivided. The 
81.13 	market value of class 4a property has a class rate of 1.25 percent.
81.14 	(b) Class 4b includes:
81.15 	(1) residential real estate containing less than four units that does not qualify as class 
81.16 	4bb, other than seasonal residential recreational property;
81.17 	(2) manufactured homes not classified under any other provision;
81.18 	(3) a dwelling, garage, and surrounding one acre of property on a nonhomestead 
81.19 	farm classified under subdivision 23, paragraph (b) containing two or three units; and
81.20 	(4) unimproved property that is classified residential as determined under subdivision 
81.21 	33.
81.22 	The market value of class 4b property has a class rate of 1.25 percent.
81.23 	(c) Class 4bb includes:
81.24 	(1) nonhomestead residential real estate containing one unit, other than seasonal 
81.25 	residential recreational property; and
81.26 	(2) a single family dwelling, garage, and surrounding one acre of property on a 
81.27 	nonhomestead farm classified under subdivision 23, paragraph (b).
81.28 	Class 4bb property has the same class rates as class 1a property under subdivision 22.
81.29 	Property that has been classified as seasonal residential recreational property at 
81.30 	any time during which it has been owned by the current owner or spouse of the current 
81.31 	owner does not qualify for class 4bb.
81.32 	(d) Class 4c property includes:
81.33 	(1) except as provided in subdivision 22, paragraph (c), real property devoted to 
81.34 	temporary and seasonal residential occupancy for recreation purposes, including real 
81.35 	property devoted to temporary and seasonal residential occupancy for recreation purposes 
82.1 	and not devoted to commercial purposes for more than 250 days in the year preceding 
82.2 	the year of assessment. For purposes of this clause, property is devoted to a commercial 
82.3 	purpose on a specific day if any portion of the property is used for residential occupancy, 
82.4 	and a fee is charged for residential occupancy. In order for a property to be classified as 
82.5 	class 4c, seasonal residential recreational for commercial purposes, at least 40 percent of 
82.6 	the annual gross lodging receipts related to the property must be from business conducted 
82.7 	during 90 consecutive days and either (i) at least 60 percent of all paid bookings by lodging 
82.8 	guests during the year must be for periods of at least two consecutive nights; or (ii) at least 
82.9 	20 percent of the annual gross receipts must be from charges for rental of fish houses, 
82.10 	boats and motors, snowmobiles, downhill or cross-country ski equipment, or charges for 
82.11 	marina services, launch services, and guide services, or the sale of bait and fishing tackle. 
82.12 	For purposes of this determination, a paid booking of five or more nights shall be counted 
82.13 	as two bookings. Class 4c also includes commercial use real property used exclusively 
82.14 	for recreational purposes in conjunction with class 4c property devoted to temporary 
82.15 	and seasonal residential occupancy for recreational purposes, up to a total of two acres, 
82.16 	provided the property is not devoted to commercial recreational use for more than 250 
82.17 	days in the year preceding the year of assessment and is located within two miles of the 
82.18 	class 4c property with which it is used. Owners of real property devoted to temporary and 
82.19 	seasonal residential occupancy for recreation purposes and all or a portion of which was 
82.20 	devoted to commercial purposes for not more than 250 days in the year preceding the year 
82.21 	of assessment desiring classification as class 1c or 4c, must submit a declaration to the 
82.22 	assessor designating the cabins or units occupied for 250 days or less in the year preceding 
82.23 	the year of assessment by January 15 of the assessment year. Those cabins or units and a 
82.24 	proportionate share of the land on which they are located will be designated class 1c or 4c 
82.25 	as otherwise provided. The remainder of the cabins or units and a proportionate share of 
82.26 	the land on which they are located will be designated as class 3a. The owner of property 
82.27 	desiring designation as class 1c or 4c property must provide guest registers or other 
82.28 	records demonstrating that the units for which class 1c or 4c designation is sought were 
82.29 	not occupied for more than 250 days in the year preceding the assessment if so requested. 
82.30 	The portion of a property operated as a (1) restaurant, (2) bar, (3) gift shop, and (4) other 
82.31 	nonresidential facility operated on a commercial basis not directly related to temporary and 
82.32 	seasonal residential occupancy for recreation purposes shall not qualify for class 1c or 4c;
82.33 	(2) qualified property used as a golf course if:
82.34 	(i) it is open to the public on a daily fee basis. It may charge membership fees or 
82.35 	dues, but a membership fee may not be required in order to use the property for golfing, 
83.1 	and its green fees for golfing must be comparable to green fees typically charged by 
83.2 	municipal courses; and
83.3 	(ii) it meets the requirements of section 273.112, subdivision 3, paragraph (d).
83.4 	A structure used as a clubhouse, restaurant, or place of refreshment in conjunction 
83.5 	with the golf course is classified as class 3a property;
83.6 	(3) real property up to a maximum of one acre of land owned by a nonprofit 
83.7 	community service oriented organization; provided that the property is not used for a 
83.8 	revenue-producing activity for more than six days in the calendar year preceding the year 
83.9 	of assessment and the property is not used for residential purposes on either a temporary 
83.10 	or permanent basis. For purposes of this clause, a "nonprofit community service oriented 
83.11 	organization" means any corporation, society, association, foundation, or institution 
83.12 	organized and operated exclusively for charitable, religious, fraternal, civic, or educational 
83.13 	purposes, and which is exempt from federal income taxation pursuant to section 501(c)(3), 
83.14 	(10), or (19) of the Internal Revenue Code of 1986, as amended through December 31, 
83.15 	1990. For purposes of this clause, "revenue-producing activities" shall include but not be 
83.16 	limited to property or that portion of the property that is used as an on-sale intoxicating 
83.17 	liquor or 3.2 percent malt liquor establishment licensed under chapter 340A, a restaurant 
83.18 	open to the public, bowling alley, a retail store, gambling conducted by organizations 
83.19 	licensed under chapter 349, an insurance business, or office or other space leased or 
83.20 	rented to a lessee who conducts a for-profit enterprise on the premises. Any portion of 
83.21 	the property which is used for revenue-producing activities for more than six days in the 
83.22 	calendar year preceding the year of assessment shall be assessed as class 3a. The use of 
83.23 	the property for social events open exclusively to members and their guests for periods of 
83.24 	less than 24 hours, when an admission is not charged nor any revenues are received by the 
83.25 	organization shall not be considered a revenue-producing activity;
83.26 	(4) postsecondary student housing of not more than one acre of land that is owned by 
83.27 	a nonprofit corporation organized under chapter 317A and is used exclusively by a student 
83.28 	cooperative, sorority, or fraternity for on-campus housing or housing located within two 
83.29 	miles of the border of a college campus;
83.30 	(5) manufactured home parks as defined in section 327.14, subdivision 3;
83.31 	(6) real property that is actively and exclusively devoted to indoor fitness, health, 
83.32 	social, recreational, and related uses, is owned and operated by a not-for-profit corporation, 
83.33 	and is located within the metropolitan area as defined in section 473.121, subdivision 2;
83.34 	(7) a leased or privately owned noncommercial aircraft storage hangar not exempt 
83.35 	under section 272.01, subdivision 2, and the land on which it is located, provided that:
84.1 	(i) the land is on an airport owned or operated by a city, town, county, Metropolitan 
84.2 	Airports Commission, or group thereof; and
84.3 	(ii) the land lease, or any ordinance or signed agreement restricting the use of the 
84.4 	leased premise, prohibits commercial activity performed at the hangar.
84.5 	If a hangar classified under this clause is sold after June 30, 2000, a bill of sale must 
84.6 	be filed by the new owner with the assessor of the county where the property is located 
84.7 	within 60 days of the sale;
84.8 	(8) a privately owned noncommercial aircraft storage hangar not exempt under 
84.9 	section 272.01, subdivision 2, and the land on which it is located, provided that:
84.10 	(i) the land abuts a public airport; and
84.11 	(ii) the owner of the aircraft storage hangar provides the assessor with a signed 
84.12 	agreement restricting the use of the premises, prohibiting commercial use or activity 
84.13 	performed at the hangar; and
84.14 	(9) residential real estate, a portion of which is used by the owner for homestead 
84.15 	purposes, and that is also a place of lodging, if all of the following criteria are met:
84.16 	(i) rooms are provided for rent to transient guests that generally stay for periods 
84.17 	of 14 or fewer days;
84.18 	(ii) meals are provided to persons who rent rooms, the cost of which is incorporated 
84.19 	in the basic room rate;
84.20 	(iii) meals are not provided to the general public except for special events on fewer 
84.21 	than seven days in the calendar year preceding the year of the assessment; and
84.22 	(iv) the owner is the operator of the property.
84.23 	The market value subject to the 4c classification under this clause is limited to five rental 
84.24 	units. Any rental units on the property in excess of five, must be valued and assessed as 
84.25 	class 3a. The portion of the property used for purposes of a homestead by the owner must 
84.26 	be classified as class 1a property under subdivision 22.
84.27 	Class 4c property has a class rate of 1.5 percent of market value, except that (i) each 
84.28 	parcel of seasonal residential recreational property not used for commercial purposes has 
84.29 	the same class rates as class 4bb property, (ii) manufactured home parks assessed under 
84.30 	clause (5) have the same class rate as class 4b property, (iii) commercial-use seasonal 
84.31 	residential recreational property has a class rate of one percent for the first $500,000 
84.32 	of market value, which includes any market value receiving the one percent rate under 
84.33 	subdivision 22, and 1.25 percent for the remaining market value, (iv) the market value 
84.34 	of property described in clause (4) has a class rate of one percent, (v) the market value 
84.35 	of property described in clauses (2) and (6) has a class rate of 1.25 percent, and (vi) that 
85.1 	portion of the market value of property in clause (9) qualifying for class 4c property 
85.2 	has a class rate of 1.25 percent.
85.3 	(e) Class 4d property is qualifying low-income rental housing certified to the assessor 
85.4 	by the Housing Finance Agency under section 273.128, subdivision 3. If only a portion 
85.5 	of the units in the building qualify as low-income rental housing units as certified under 
85.6 	section 273.128, subdivision 3, only the proportion of qualifying units to the total number 
85.7 	of units in the building qualify for class 4d. The remaining portion of the building shall be 
85.8 	classified by the assessor based upon its use. Class 4d also includes the same proportion of 
85.9 	land as the qualifying low-income rental housing units are to the total units in the building. 
85.10 	For all properties qualifying as class 4d, the market value determined by the assessor must 
85.11 	be based on the normal approach to value using normal unrestricted rents.
85.12 	Class 4d property has a class rate of 0.75 percent.

85.13 	EFFECTIVE DATE. This section is effective for taxes payable in 2006 and 
85.14 	subsequent years.

85.15 	Sec. 3. Minnesota Statutes 2005 Supplement, section 273.1384, subdivision 1, is 
85.16 	amended to read:
85.17 		Subdivision 1.Residential homestead market value credit. Each county auditor 
85.18 	shall determine a homestead credit for each class 1a, 1b, 1c, and 2a homestead property 
85.19 	within the county equal to 0.4 percent of the first $76,000 of market value of the property 
85.20 	minus .09 percent of the market value in excess of $76,000. The credit amount may not 
85.21 	be less than zero. In the case of an agricultural or resort homestead, only the market 
85.22 	value of the house, garage, and immediately surrounding one acre of land is eligible 
85.23 	in determining the property's homestead credit. In the case of a property which that is 
85.24 	classified as part homestead and part nonhomestead, (i) the credit shall apply only to 
85.25 	the homestead portion of the property, but (ii) if a portion of a property is classified as 
85.26 	nonhomestead solely because not all the owners occupy the property, not all the owners 
85.27 	have qualifying relatives occupying the property, or solely because both not all the spouses 
85.28 	do not of owners occupy the property, the credit amount shall be initially computed as 
85.29 	if that nonhomestead portion were also in the homestead class and then prorated to the 
85.30 	owner-occupant's percentage of ownership or prorated to one-half if both spouses do not 
85.31 	occupy the property. For the purpose of this section, when an owner-occupant's spouse 
85.32 	does not occupy the property, the percentage of ownership for the owner-occupant spouse 
85.33 	is one-half of the couple's ownership percentage.

86.1 	EFFECTIVE DATE. This section is effective for taxes payable in 2007 and 
86.2 	thereafter.

86.3 	Sec. 4. Minnesota Statutes 2004, section 273.1384, subdivision 2, is amended to read:
86.4 		Subd. 2.Agricultural homestead market value credit. Property classified 
86.5 	as class 2a agricultural homestead is eligible for an agricultural credit. The credit is 
86.6 	computed using the property's agricultural credit market value, defined for this purpose 
86.7 	as the property's class 2a market value excluding the market value of the house, garage, 
86.8 	and immediately surrounding one acre of land. The credit is equal to 0.3 percent of the 
86.9 	first $115,000 of the property's agricultural credit market value. The credit under this 
86.10 	subdivision is limited to $345 for each homestead. The credit is reduced by minus .05 
86.11 	percent of the property's agricultural credit market value in excess of $115,000, subject to 
86.12 	a maximum reduction of $115. In the case of property that is classified in part as class 2a 
86.13 	agricultural homestead and in part as class 2b nonhomestead farm land solely because not 
86.14 	all the owners occupy or farm the property, not all the owners have qualifying relatives 
86.15 	occupying or farming the property, or solely because not all the spouses of owners occupy 
86.16 	the property, the credit must be initially computed as if that nonhomestead agricultural 
86.17 	land was also classified as class 2a agricultural homestead and then prorated to the 
86.18 	owner-occupant's percentage of ownership.

86.19 	EFFECTIVE DATE. This section is effective for taxes payable in 2007 and 
86.20 	thereafter.

86.21 	Sec. 5. Minnesota Statutes 2004, section 273.1398, subdivision 3, is amended to read:
86.22 		Subd. 3.Disparity reduction aid. For taxes payable in 2003 and subsequent years,
86.23 	The amount of disparity aid certified for each taxing district within each unique taxing 
86.24 	jurisdiction for taxes payable in the prior year shall be multiplied by the ratio of (1) the 
86.25 	jurisdiction's tax capacity using the class rates for taxes payable in the year for which aid 
86.26 	is being computed, to (2) its tax capacity using the class rates for taxes payable in the year 
86.27 	prior to that for which aid is being computed, both based upon market values for taxes 
86.28 	payable in the year prior to that for which aid is being computed. For the purposes of this 
86.29 	aid determination, disparity reduction aid certified for taxes payable in the prior year for 
86.30 	a taxing entity other than a town or school district is deemed to be county government 
86.31 	disparity reduction aid. The amount of disparity aid certified to each taxing jurisdiction 
86.32 	shall be reduced by any reductions required in the current year or permanent reductions 
86.33 	required in previous years under section  477A.0132.  If the commissioner determines that 
86.34 	insufficient information is available to reasonably and timely calculate the numerator 
87.1 	in this ratio for the first taxes payable year that a class rate change or new class rate is 
87.2 	effective, the commissioner shall omit the effects of that class rate change or new class 
87.3 	rate when calculating this ratio for aid payable in that taxes payable year. For aid payable 
87.4 	in the year following a year for which such omission was made, the commissioner shall 
87.5 	use in the denominator for the class that was changed or created, the tax capacity for taxes 
87.6 	payable two years prior to that in which the aid is payable, based on market values for 
87.7 	taxes payable in the year prior to that for which aid is being computed.

87.8 	EFFECTIVE DATE. This section is effective for taxes payable in 2006 and 
87.9 	thereafter.

87.10 	Sec. 6. Minnesota Statutes 2004, section 281.23, subdivision 9, is amended to read:
87.11 		Subd. 9.Certificate. After the time for redemption of any lands shall have expired 
87.12 	after notice given, as provided in subdivisions 2, 3, 5, and 6, the county auditor shall 
87.13 	execute a certificate describing the lands, specifying the tax judgment sale at which the 
87.14 	same were bid in for the state, and stating that the time for redemption thereof has expired 
87.15 	after notice given as provided by law and that absolute title thereto has vested in the 
87.16 	state of Minnesota. Such certificate shall be recorded in the office of the county recorder 
87.17 	and thereafter filed in the office of the county auditor, except that in case of registered 
87.18 	land such certificate shall be filedrecorded in the office of the registrar of titles and a 
87.19 	duplicate filed in the office of the county auditor. Such certificate and the record thereof 
87.20 	shall be prima facie evidence of the facts therein stated, but failure to execute or record or 
87.21 	file such certificate shall not affect the validity of any proceedings hereunder respecting 
87.22 	such lands or the title of the state thereto.

87.23 	EFFECTIVE DATE. This section is effective the day following final enactment.

87.24 	Sec. 7. Minnesota Statutes 2005 Supplement, section 284.07, is amended to read:
87.25 	284.07 COUNTY AUDITOR'S CERTIFICATE TO BE PRIMA FACIE 
87.26 	EVIDENCE.
87.27 	The county auditor's certificate of forfeiture filed recorded by the county auditor 
87.28 	as provided by section 281.23, subdivision 9, and acts supplemental thereto, or by any 
87.29 	other law hereafter enacted providing for the recording of such a certificate or a certified 
87.30 	copy of such certificate or of the record thereof, shall, for all purposes, be prima facie 
87.31 	evidence that all requirements of the law respecting the taxation and forfeiture of the 
87.32 	lands therein described were complied with, and that at the date of the certificate absolute 
88.1 	title to such lands had vested in the state by reason of forfeiture for delinquent taxes, as 
88.2 	set forth in the certificate.

88.3 	EFFECTIVE DATE. This section is effective the day following final enactment.

88.4 	Sec. 8. Minnesota Statutes 2004, section 477A.014, subdivision 1, is amended to read:
88.5 		Subdivision 1.Calculations and payments. (a) The commissioner of revenue 
88.6 	shall make all necessary calculations and make payments pursuant to sections  477A.013,  
88.7 	477A.0132, and  477A.03 directly to the affected taxing authorities annually. In addition, 
88.8 	the commissioner shall notify the authorities of their aid amounts, as well as the 
88.9 	computational factors used in making the calculations for their authority, and those 
88.10 	statewide total figures that are pertinent, before August 1 of the year preceding the aid 
88.11 	distribution year.
88.12 	(b) For the purposes of this subdivision, aid is determined for a city or town based 
88.13 	on its city or town status as of June 30 of the year preceding the aid distribution year. If 
88.14 	the effective date for a municipal incorporation, consolidation, annexation, detachment, 
88.15 	dissolution, or township organization is on or before June 30 of the year preceding 
88.16 	the aid distribution year, such change in boundaries or form of government shall be 
88.17 	recognized for aid determinations for the aid distribution year. If the effective date for a 
88.18 	municipal incorporation, consolidation, annexation, detachment, dissolution, or township 
88.19 	organization is after June 30 of the year preceding the aid distribution year, such change in 
88.20 	boundaries or form of government shall not be recognized for aid determinations until 
88.21 	the following year. 
88.22 	(c) Changes in boundaries or form of government will only be recognized for the 
88.23 	purposes of this subdivision, to the extent that: (1) changes in market values are included 
88.24 	in market values reported by assessors to the commissioner, and changes in population, 
88.25 	household size, and the road accidents factor are included in their respective certifications 
88.26 	to the commissioner as referenced in section 477A.011, or (2) an annexation information 
88.27 	report as provided in paragraph (d) is received by the commissioner on or before July 15 
88.28 	of the aid calculation year. Revisions to estimates or data for use in recognizing changes 
88.29 	in boundaries or form of government are not effective for purposes of this subdivision 
88.30 	unless received by the commissioner on or before July 15 of the aid calculation year. 
88.31 	Clerical errors in the certification or use of estimates and data established as of July 15 in 
88.32 	the aid calculation year are subject to correction within the time periods allowed under 
88.33 	subdivision 3.
88.34 	(d) In the case of an annexation, an annexation information report may be completed 
88.35 	by the annexing jurisdiction and submitted to the commissioner for purposes of this 
89.1 	subdivision if the net tax capacity of annexed area for the assessment year preceding the 
89.2 	effective date of the annexation exceeds five percent of the city's net tax capacity for the 
89.3 	same year. The form and contents of the annexation information report shall be prescribed 
89.4 	by the commissioner. The commissioner shall change the net tax capacity, the population, 
89.5 	the population decline, the commercial industrial percentage, and the transformed 
89.6 	population for the annexing jurisdiction only if the annexation information report provides 
89.7 	data the commissioner determines to be reliable for all of these factors used to compute city 
89.8 	revenue need for the annexing jurisdiction. The commissioner shall adjust the pre-1940 
89.9 	housing percentage, the road accidents factor, and household size only if the entire area of 
89.10 	an existing city or town is annexed or consolidated and only if reliable data is available for 
89.11 	all of these factors used to compute city revenue need for the annexing jurisdiction.

89.12 	EFFECTIVE DATE. This section is effective for aid payable in 2007 and thereafter.

89.13 	ARTICLE 6
89.14 	DEPARTMENT OF REVENUESALES AND USE TAXES

89.15 	Section 1. Minnesota Statutes 2005 Supplement, section 297A.61, subdivision 3, 
89.16 	is amended to read:
89.17 		Subd. 3.Sale and purchase. (a) "Sale" and "purchase" include, but are not limited 
89.18 	to, each of the transactions listed in this subdivision.
89.19 	(b) Sale and purchase include:
89.20 	(1) any transfer of title or possession, or both, of tangible personal property, whether 
89.21 	absolutely or conditionally, for a consideration in money or by exchange or barter; and
89.22 	(2) the leasing of or the granting of a license to use or consume, for a consideration 
89.23 	in money or by exchange or barter, tangible personal property, other than a manufactured 
89.24 	home used for residential purposes for a continuous period of 30 days or more.
89.25 	(c) Sale and purchase include the production, fabrication, printing, or processing of 
89.26 	tangible personal property for a consideration for consumers who furnish either directly or 
89.27 	indirectly the materials used in the production, fabrication, printing, or processing.
89.28 	(d) Sale and purchase include the preparing for a consideration of food. 
89.29 	Notwithstanding section 297A.67, subdivision 2, taxable food includes, but is not limited 
89.30 	to, the following:
89.31 	(1) prepared food sold by the retailer;
89.32 	(2) soft drinks;
89.33 	(3) candy;
89.34 	(4) dietary supplements; and
90.1 	(5) all food sold through vending machines.
90.2 	(e) A sale and a purchase includes the furnishing for a consideration of electricity, 
90.3 	gas, water, or steam for use or consumption within this state.
90.4 	(f) A sale and a purchase includes the transfer for a consideration of prewritten 
90.5 	computer software whether delivered electronically, by load and leave, or otherwise.
90.6 	(g) A sale and a purchase includes the furnishing for a consideration of the following 
90.7 	services:
90.8 	(1) the privilege of admission to places of amusement, recreational areas, or athletic 
90.9 	events, and the making available of amusement devices, tanning facilities, reducing 
90.10 	salons, steam baths, turkish baths, health clubs, and spas or athletic facilities;
90.11 	(2) lodging and related services by a hotel, rooming house, resort, campground, 
90.12 	motel, or trailer camp and the granting of any similar license to use real property in a 
90.13 	specific facility, other than the renting or leasing of it for a continuous period of 30 days 
90.14 	or more under an enforceable written agreement that may not be terminated without 
90.15 	prior notice;
90.16 	(3) nonresidential parking services, whether on a contractual, hourly, or other 
90.17 	periodic basis, except for parking at a meter;
90.18 	(4) the granting of membership in a club, association, or other organization if:
90.19 	(i) the club, association, or other organization makes available for the use of its 
90.20 	members sports and athletic facilities, without regard to whether a separate charge is 
90.21 	assessed for use of the facilities; and
90.22 	(ii) use of the sports and athletic facility is not made available to the general public 
90.23 	on the same basis as it is made available to members.
90.24 	Granting of membership means both onetime initiation fees and periodic membership 
90.25 	dues. Sports and athletic facilities include golf courses; tennis, racquetball, handball, and 
90.26 	squash courts; basketball and volleyball facilities; running tracks; exercise equipment; 
90.27 	swimming pools; and other similar athletic or sports facilities;
90.28 	(5) delivery of aggregate materials and concrete block by a third party if the delivery 
90.29 	would be subject to the sales tax if provided by the seller of the aggregate material or 
90.30 	concrete block; and
90.31 	(6) services as provided in this clause:
90.32 	(i) laundry and dry cleaning services including cleaning, pressing, repairing, altering, 
90.33 	and storing clothes, linen services and supply, cleaning and blocking hats, and carpet, 
90.34 	drapery, upholstery, and industrial cleaning. Laundry and dry cleaning services do not 
90.35 	include services provided by coin operated facilities operated by the customer;
91.1 	(ii) motor vehicle washing, waxing, and cleaning services, including services 
91.2 	provided by coin operated facilities operated by the customer, and rustproofing, 
91.3 	undercoating, and towing of motor vehicles;
91.4 	(iii) building and residential cleaning, maintenance, and disinfecting and 
91.5 	exterminating services;
91.6 	(iv) detective, security, burglar, fire alarm, and armored car services; but not 
91.7 	including services performed within the jurisdiction they serve by off-duty licensed peace 
91.8 	officers as defined in section 626.84, subdivision 1, or services provided by a nonprofit 
91.9 	organization for monitoring and electronic surveillance of persons placed on in-home 
91.10 	detention pursuant to court order or under the direction of the Minnesota Department 
91.11 	of Corrections;
91.12 	(v) pet grooming services;
91.13 	(vi) lawn care, fertilizing, mowing, spraying and sprigging services; garden planting 
91.14 	and maintenance; tree, bush, and shrub pruning, bracing, spraying, and surgery; indoor 
91.15 	plant care; tree, bush, shrub, and stump removal, except when performed as part of a land 
91.16 	clearing contract as defined in section 297A.68, subdivision 40; and tree trimming for 
91.17 	public utility lines. Services performed under a construction contract for the installation of 
91.18 	shrubbery, plants, sod, trees, bushes, and similar items are not taxable;
91.19 	(vii) massages, except when provided by a licensed health care facility or 
91.20 	professional or upon written referral from a licensed health care facility or professional for 
91.21 	treatment of illness, injury, or disease; and
91.22 	(viii) the furnishing of lodging, board, and care services for animals in kennels and 
91.23 	other similar arrangements, but excluding veterinary and horse boarding services.
91.24 	In applying the provisions of this chapter, the terms "tangible personal property" 
91.25 	and "sales at retail sale" include taxable services listed in clause (6), items (i) to (vi) and 
91.26 	(viii), and the provision of these taxable services, unless specifically provided otherwise. 
91.27 	Services performed by an employee for an employer are not taxable. Services performed 
91.28 	by a partnership or association for another partnership or association are not taxable if one 
91.29 	of the entities owns or controls more than 80 percent of the voting power of the equity 
91.30 	interest in the other entity. Services performed between members of an affiliated group of 
91.31 	corporations are not taxable. For purposes of the preceding sentence, "affiliated group 
91.32 	of corporations" includesmeans those entities that would be classified as members of an 
91.33 	affiliated group as defined under United States Code, title 26, section 1504, and that are 
91.34 	eligible to file a consolidated tax return for federal income tax purposes disregarding 
91.35 	the exclusions in section 1504(b).
92.1 	(h) A sale and a purchase includes the furnishing for a consideration of tangible 
92.2 	personal property or taxable services by the United States or any of its agencies or 
92.3 	instrumentalities, or the state of Minnesota, its agencies, instrumentalities, or political 
92.4 	subdivisions.
92.5 	(i) A sale and a purchase includes the furnishing for a consideration of 
92.6 	telecommunications services, including cable television services and direct satellite 
92.7 	services. Telecommunications services are taxed to the extent allowed under federal law.
92.8 	(j) A sale and a purchase includes the furnishing for a consideration of installation if 
92.9 	the installation charges would be subject to the sales tax if the installation were provided 
92.10 	by the seller of the item being installed.
92.11 	(k) A sale and a purchase includes the rental of a vehicle by a motor vehicle dealer 
92.12 	to a customer when (1) the vehicle is rented by the customer for a consideration, or (2) 
92.13 	the motor vehicle dealer is reimbursed pursuant to a service contract as defined in section 
92.14 	65B.29, subdivision 1, clause (1).

92.15 	EFFECTIVE DATE. This section is effective the day following final enactment.

92.16 	Sec. 2. Minnesota Statutes 2004, section 297A.61, subdivision 12, is amended to read:
92.17 		Subd. 12.Farm machinery. (a) "Farm machinery" means new or used machinery, 
92.18 	equipment, implements, accessories, and contrivances used directly and principally in 
92.19 	agricultural production of tangible personal property intended to be sold ultimately at 
92.20 	retail including, but not limited to:
92.21 	(1) machinery for the preparation, seeding, or cultivation of soil for growing 
92.22 	agricultural crops;
92.23 	(2) barn cleaners, milking systems, grain dryers, feeding systems including 
92.24 	stationary feed bunks, and similar installations, whether or not the equipment is installed 
92.25 	by the seller and becomes part of the real property; and
92.26 	(3) irrigation equipment sold for exclusively agricultural use, including pumps, pipe 
92.27 	fittings, valves, sprinklers, and other equipment necessary to the operation of an irrigation 
92.28 	system when sold as part of an irrigation system, whether or not the equipment is installed 
92.29 	by the seller and becomes part of the real property.
92.30 	(b) Farm machinery does not include:
92.31 	(1) repair or replacement parts;
92.32 	(2) tools, shop equipment, grain bins, fencing material, communication equipment, 
92.33 	and other farm supplies;
92.34 	(3) motor vehicles taxed under chapter 297B;
92.35 	(4) snowmobiles or snow blowers;
93.1 	(5) lawn mowers except those used in the production of sod for sale, or garden-type 
93.2 	tractors or garden tillers; or
93.3 	(6) machinery, equipment, implements, accessories, and contrivances used directly in 
93.4 	the production of horses not raised for slaughter, fur-bearing animals, or research animals.

93.5 	EFFECTIVE DATE. This section is effective the day following final enactment.

93.6 	Sec. 3. Minnesota Statutes 2004, section 297A.61, is amended by adding a subdivision 
93.7 	to read:
93.8 		Subd. 16a.Computer. "Computer" means an electronic device that accepts 
93.9 	information in digital or similar form and manipulates it for a result based on a sequence 
93.10 	of instructions.

93.11 	EFFECTIVE DATE. This section is effective the day following final enactment.

93.12 	Sec. 4. Minnesota Statutes 2004, section 297A.61, is amended by adding a subdivision 
93.13 	to read:
93.14 		Subd. 16b.Electronic. "Electronic" means relating to technology having electrical, 
93.15 	digital, magnetic, wireless, optical, electromagnetic, or similar capabilities.

93.16 	EFFECTIVE DATE. This section is effective the day following final enactment.

93.17 	Sec. 5. Minnesota Statutes 2004, section 297A.61, is amended by adding a subdivision 
93.18 	to read:
93.19 		Subd. 16c.Computer software. "Computer software" means a set of coded 
93.20 	instructions designed to cause a computer or automatic data processing equipment to 
93.21 	perform a task.

93.22 	EFFECTIVE DATE. This section is effective the day following final enactment.

93.23 	Sec. 6. Minnesota Statutes 2004, section 297A.61, subdivision 17, is amended to read:
93.24 		Subd. 17.Prewritten computer software. "Prewritten computer software" means 
93.25 	computer software, including prewritten upgrades, that is not designed and developed by 
93.26 	the author or other creator to the specifications of a specific purchaser. The combining 
93.27 	of two or more "prewritten computer software" programs or prewritten portions of the 
93.28 	programs does not cause the combination to be other than "prewritten computer software." 
93.29 	"Prewritten computer software" includes software designed and developed by the author 
93.30 	or other creator to the specifications of a specific purchaser when it is sold to a person 
94.1 	other than the specific  purchaser. If a person modifies or enhances computer software 
94.2 	of which the person is not the author or creator, the person is deemed to be the author 
94.3 	or creator only of such person's modifications or enhancements. "Prewritten computer 
94.4 	software" or a prewritten portion of it that is modified or enhanced to any degree, if the 
94.5 	modification or enhancement is designed and developed to the specifications of a specific 
94.6 	purchaser, remains "prewritten computer software"; provided, however, that if there is a 
94.7 	reasonable, separately stated charge or an invoice or other statement of the price given to 
94.8 	the purchaser for such modification or enhancement, the modification or enhancement 
94.9 	does not constitute "prewritten computer software." For purposes of this subdivision:
94.10 	(1) "computer" means an electronic device that accepts information in digital or 
94.11 	similar form and manipulates it for a result based on a sequence of instructions;
94.12 	(2) "electronic" means relating to technology having electrical, digital, magnetic, 
94.13 	wireless, optical, electromagnetic, or similar capabilities; and
94.14 	(3) "computer software" means a set of coded instructions designed to cause a 
94.15 	"computer" or automatic data processing equipment to perform a task.

94.16 	EFFECTIVE DATE. This section is effective the day following final enactment.

94.17 	Sec. 7. Minnesota Statutes 2004, section 297A.61, is amended by adding a subdivision 
94.18 	to read:
94.19 		Subd. 37.Logging equipment. (a) "Logging equipment" means new or used 
94.20 	machinery, equipment, implements, accessories, and contrivances used directly and 
94.21 	principally in the commercial cutting or removal or both of timber or other solid wood 
94.22 	forest products, including, but not limited to:
94.23 	(1) machinery used for bucking, bunching, debarking, delimbing, felling, forwarding, 
94.24 	loading, piling, skidding, topping, and yarding operations performed on timber; and
94.25 	(2) chain saws.
94.26 	(b) Logging equipment does not include:
94.27 	(1) repair or replacement parts;
94.28 	(2) tools, shop equipment, communication equipment, and other logging supplies;
94.29 	(3) motor vehicles taxed under chapter 297B;
94.30 	(4) snowmobiles, snow blowers, or recreational all-terrain vehicles; or
94.31 	(5) machinery, equipment, implements, accessories, and contrivances used in the 
94.32 	creation of other commercial wood products for sale to others, including, but not limited 
94.33 	to, milling, planing, carving, wood chipping, or paper manufacturing.

94.34 	EFFECTIVE DATE. This section is effective the day following final enactment.

95.1 	Sec. 8. Minnesota Statutes 2004, section 297A.63, is amended to read:
95.2 	297A.63 USE TAXES IMPOSED; RATES.
95.3 		Subdivision 1.Use of tangible personal property or taxable services. (a) For the 
95.4 	privilege of using, storing, distributing, or consuming in Minnesota tangible personal 
95.5 	property or taxable services purchased for use, storage, distribution, or consumption in 
95.6 	this state, a use tax is imposed on a person in Minnesota. The tax is imposed on the sales
95.7 	purchase price of retail sales of the tangible personal property or taxable services at the 
95.8 	rate of tax imposed under section  297A.62. A person that purchases property from a 
95.9 	Minnesota retailer and returns the tangible personal property to a point within Minnesota, 
95.10 	except in the course of interstate commerce, after it was delivered outside of Minnesota, 
95.11 	is subject to the use tax.
95.12 	(b) No tax is imposed under paragraph (a) if the tax imposed by section  297A.62
95.13 	was paid on the sales price of the tangible personal property or taxable services. 
95.14 	(c) No tax is imposed under paragraph (a) if the purchase meets the requirements for 
95.15 	exemption under section  297A.67, subdivision 21. 
95.16 		Subd. 2.Use of tangible personal property made from materials. (a) A use tax 
95.17 	is imposed on a person who manufactures, fabricates, or assembles tangible personal 
95.18 	property from materials, either within or outside this state and who uses, stores, distributes, 
95.19 	or consumes the tangible personal property in Minnesota. The tax is imposed on the sales
95.20 	purchase price of retail sales of the materials contained in the tangible personal property at 
95.21 	the rate of tax imposed under section  297A.62. 
95.22 	(b) No tax is imposed under paragraph (a) if the tax imposed by section  297A.62
95.23 	was paid on the sales price of materials contained in the tangible personal property. 

95.24 	EFFECTIVE DATE. This section is effective the day following final enactment.

95.25 	Sec. 9. Minnesota Statutes 2004, section 297A.668, subdivision 6, is amended to read:
95.26 		Subd. 6.Multiple points of use. (a) Notwithstanding the provisions of subdivisions 
95.27 	2 to 5, a business purchaser that is not a holder of a direct pay permit that knows at the 
95.28 	time of its purchase of a digital good, computer software delivered electronically, or a 
95.29 	service that the digital good, computer software delivered electronically, or service will 
95.30 	be concurrently available for use in more than one taxing jurisdiction shall deliver to 
95.31 	the seller in conjunction with its purchase a multiple points of use exemption certificate 
95.32 	disclosing this fact.
96.1 	(b) Upon receipt of the multiple points of use exemption certificate, the seller is 
96.2 	relieved of the obligation to collect, pay, or remit the applicable tax and the purchaser is 
96.3 	obligated to collect, pay, or remit the applicable tax on a direct pay basis.
96.4 	(c) A purchaser delivering the multiple points of use exemption certificate may use 
96.5 	any reasonable, but consistent and uniform, method of apportionment that is supported by 
96.6 	the purchaser's business records as they exist at the time of the consummation of the sale.
96.7 	(d) The multiple points of use exemption certificate remains in effect for all future 
96.8 	sales by the seller to the purchaser until it is revoked in writing, except as to the subsequent 
96.9 	sale's specific apportionment that is governed by the principle of paragraph (c) and the 
96.10 	facts existing at the time of the sale.
96.11 	(e) A holder of a direct pay permit is not required to deliver a multiple points or use 
96.12 	exemption certificate to the seller. A direct pay permit holder shall follow the provisions 
96.13 	of paragraph (c) in apportioning the tax due on a digital good, computer software delivered 
96.14 	electronically, or a service that will be concurrently available for use in more than one 
96.15 	taxing jurisdiction.

96.16 	EFFECTIVE DATE. This section is effective the day following final enactment.

96.17 	Sec. 10. Minnesota Statutes 2004, section 297A.669, subdivision 11, is amended to 
96.18 	read:
96.19 		Subd. 11.Mobile telecommunications service. "Mobile telecommunications 
96.20 	service," for purposes of this section, means the same as that term is defined in Section 
96.21 	124(1) 124(7) of Public Law 106-252 (Mobile Telecommunications Sourcing Act).

96.22 	EFFECTIVE DATE. This section is effective the day following final enactment.

96.23 	Sec. 11. Minnesota Statutes 2004, section 297A.67, subdivision 4, is amended to read:
96.24 		Subd. 4.Exempt meals at residential facilities. Meals orPrepared food, candy, 
96.25 	and soft drinks served to patients, inmates, or persons residing at hospitals, sanitariums, 
96.26 	nursing homes, senior citizen homes, and correctional, detention, and detoxification 
96.27 	facilities are exempt. Food sold through vending machines is not exempt.

96.28 	EFFECTIVE DATE. This section is effective the day following final enactment.

96.29 	Sec. 12. Minnesota Statutes 2004, section 297A.67, subdivision 5, is amended to read:
96.30 		Subd. 5.Exempt meals at schools. Meals and lunches Prepared food, candy, 
96.31 	and soft drinks served at public and private elementary, middle, or secondary schools as 
96.32 	defined in section  120A.05 are exempt. Meals and lunches  Prepared food, candy, and soft 
97.1 	drinks served to students at a college, university, or private career school under a board 
97.2 	contract are exempt. For purposes of this subdivision, "meals and lunches" does not 
97.3 	include sales from vending machines.  Food sold through vending machines is not exempt.

97.4 	EFFECTIVE DATE. This section is effective the day following final enactment.

97.5 	Sec. 13. Minnesota Statutes 2005 Supplement, section 297A.67, subdivision 6, is 
97.6 	amended to read:
97.7 		Subd. 6.Other exempt meals. (a) Meals orPrepared food, candy, and soft drinks 
97.8 	purchased for and served exclusively to individuals who are 60 years of age or over and 
97.9 	their spouses or to handicapped persons and their spouses by governmental agencies, 
97.10 	nonprofit organizations, or churches, or pursuant to any program funded in whole or in 
97.11 	part through United States Code, title 42, sections 3001 through 3045, wherever delivered, 
97.12 	prepared, or served, are exempt. Food sold through vending machines is not exempt.
97.13 	(b) Meals or Prepared food, candy, and soft drinks purchased for and served 
97.14 	exclusively to children who are less than 14 years of age or disabled children who are less 
97.15 	than 16 years of age and who are attending a child care or early childhood education 
97.16 	program, are exempt if they are:
97.17 	(1) purchased by a nonprofit child care facility that is exempt under section 297A.70, 
97.18 	subdivision 4, and that primarily serves families with income of 250 percent or less of 
97.19 	federal poverty guidelines; and
97.20 	(2) prepared at the site of the child care facility.

97.21 	EFFECTIVE DATE. This section is effective the day following final enactment.

97.22 	Sec. 14. Minnesota Statutes 2004, section 297A.67, subdivision 14, is amended to read:
97.23 		Subd. 14.Personal Computers prescribed for use by school. Personal Computers 
97.24 	and related computer software sold by a school, college, university, or private career 
97.25 	school to students who are enrolled at the institutions are exempt if:
97.26 	(1) the use of the personal computer, or of a substantially similar model of computer, 
97.27 	and the related computer software is prescribed by the institution in conjunction with a 
97.28 	course of study; and
97.29 	(2) each student of the institution, or of a unit of the institution in which the student 
97.30 	is enrolled, is required by the institution to have such a personal computer and related 
97.31 	software as a condition of enrollment.
97.32 	For the purposes of this subdivision, "school" and "private career school" have the 
97.33 	meanings given in subdivision 13.

98.1 	EFFECTIVE DATE. This section is effective the day following final enactment.

98.2 	Sec. 15. Minnesota Statutes 2004, section 297A.67, subdivision 27, is amended to read:
98.3 		Subd. 27.Sewing materials. Sewing materials are exempt. For purposes of this 
98.4 	subdivision "sewing materials" mean fabric, thread, zippers, interfacing, buttons, trim, 
98.5 	and other items that are usually directly incorporated into the construction of clothing, as 
98.6 	defined in subdivision 8, regardless of whether it is actually used for making clothing. 
98.7 	It does not include batting, foam, or fabric specifically manufactured for arts and craft 
98.8 	projects, or other materials for craft projects.

98.9 	EFFECTIVE DATE. This section is effective the day following final enactment.

98.10 	Sec. 16. Minnesota Statutes 2005 Supplement, section 297A.68, subdivision 37, 
98.11 	is amended to read:
98.12 		Subd. 37.Job opportunity building zones. (a) Purchases of tangible personal 
98.13 	property or taxable services by a qualified business, as defined in section 469.310, are 
98.14 	exempt if the property or services are primarily used or consumed in a job opportunity 
98.15 	building zone designated under section 469.314. For purposes of this subdivision, an aerial 
98.16 	camera package, including any camera, computer, and navigation device contained in the 
98.17 	package, that is used in an aircraft that is operated under a Federal Aviation Administration 
98.18 	Restricted Airworthiness Certificate according to Code of Federal Regulations, title 14, 
98.19 	part 21, section 21.25(b)(3), relating to aerial surveying, and that is based, maintained, and 
98.20 	dispatched from a job opportunity building zone, qualifies as primarily used or consumed 
98.21 	in a job opportunity building zone if the imagery acquired from the aerial camera package 
98.22 	is returned to the job opportunity building zone for processing. The exemption for an 
98.23 	aerial camera package is limited to$50,000 in taxes  as provided in this subdivision and 
98.24 	the tax must be imposed and collected as if the rate under section 297A.62, subdivision 1, 
98.25 	applied and then refunded in the manner provided in section 297A.75. The total amount 
98.26 	of the aerial camera package exemption refunded for all taxpayers for all fiscal years is 
98.27 	limited to $50,000 in taxes.
98.28 	(b) Purchase and use of construction materials,and supplies, or equipment used or 
98.29 	consumed in, and equipment incorporated into,  the construction of improvements to 
98.30 	real property in a job opportunity building zone are exempt if the improvements after 
98.31 	completion of construction are to be used in the conduct of a qualified business, as defined 
98.32 	in section 469.310. This exemption applies regardless of whether the purchases are made 
98.33 	by the business or a contractor.
99.1 	(c) The exemptions under this subdivision apply to a local sales and use tax 
99.2 	regardless of whether the local sales tax is imposed on the sales taxable as defined under 
99.3 	this chapter.
99.4 	(d) This subdivision applies to sales, if the purchase was made and delivery received 
99.5 	during the duration of the zone.
99.6 	(e) Notwithstanding the restriction in paragraph (a), which requires items purchased 
99.7 	to be primarily used or consumed in the zone, purchases by a qualified business that is 
99.8 	an electrical cooperative located in Meeker County of equipment and materials used for 
99.9 	the generation, transmission, and distribution of electrical energy are exempt under this 
99.10 	subdivision, except that:
99.11 	(1) the exemption for materials and equipment used or consumed outside the zone 
99.12 	must not exceed $200,000 in taxes for all taxpayers for all fiscal years; and
99.13 	(2) no sales and use tax exemption is allowed for equipment purchased for resale.
99.14 	For purposes of this paragraph, the tax must be imposed and collected as if the rate 
99.15 	under section 297A.62, subdivision 1, applied and then refunded in the manner provided 
99.16 	in section 297A.75.

99.17 	EFFECTIVE DATE. Paragraphs (a) and (e) are effective for sales and purchases 
99.18 	made on or after August 1, 2005. Paragraph (b) is effective for sales and purchases made 
99.19 	on or after January 1, 2004.

99.20 	Sec. 17. Minnesota Statutes 2005 Supplement, section 297A.68, subdivision 38, 
99.21 	is amended to read:
99.22 		Subd. 38.Biotechnology and health sciences industry zone. (a) Purchases of 
99.23 	tangible personal property or taxable services by a qualified business, as defined in section 
99.24 	469.330, are exempt if the property or services are primarily used or consumed in a 
99.25 	biotechnology and health sciences industry zone designated under section 469.334.
99.26 	(b) Purchase and use of construction materials,and supplies, or equipment used 
99.27 	or consumed in, and equipment incorporated into,  the construction of improvements 
99.28 	to real property in a biotechnology and health sciences industry zone are exempt if the 
99.29 	improvements after completion of construction are to be used in the conduct of a qualified 
99.30 	business, as defined in section 469.330. This exemption applies regardless of whether the 
99.31 	purchases are made by the business or a contractor.
99.32 	(c) The exemptions under this subdivision apply to a local sales and use tax 
99.33 	regardless of whether the local sales tax is imposed on the sales taxable as defined under 
99.34 	this chapter.
100.1 	(d)(1) The tax on sales of goods or services exempted under this subdivision are 
100.2 	imposed and collected as if the applicable rate under section 297A.62 applied. Upon 
100.3 	application by the purchaser, on forms prescribed by the commissioner, a refund equal 
100.4 	to the tax paid must be paid to the purchaser. The application must include sufficient 
100.5 	information to permit the commissioner to verify the sales tax paid and the eligibility of 
100.6 	the claimant to receive the credit. No more than two applications for refunds may be filed 
100.7 	under this subdivision in a calendar year. The provisions of section 289A.40 apply to 
100.8 	the refunds payable under this subdivision.
100.9 	(2) The amount required to make the refunds is annually appropriated to the 
100.10 	commissioner of revenue.
100.11 	(3) The aggregate amount refunded to a qualified business must not exceed the 
100.12 	amount allocated to the qualified business under section 469.335.
100.13 	(e) This subdivision applies only to sales made during the duration of the designation 
100.14 	of the zone.

100.15 	EFFECTIVE DATE. This section is effective for sales and purchases made on 
100.16 	or after January 1, 2004.

100.17 	Sec. 18. Minnesota Statutes 2004, section 297A.70, subdivision 2, is amended to read:
100.18 		Subd. 2.Sales to government. (a) All sales, except those listed in paragraph (b), 
100.19 	to the following governments and political subdivisions, or to the listed agencies or 
100.20 	instrumentalities of governments and political subdivisions, are exempt:
100.21 	(1) the United States and its agencies and instrumentalities;
100.22 	(2) school districts, the University of Minnesota, state universities, community 
100.23 	colleges, technical colleges, state academies, the Perpich Minnesota Center for Arts 
100.24 	Education, and an instrumentality of a political subdivision that is accredited as an 
100.25 	optional/special function school by the North Central Association of Colleges and Schools;
100.26 	(3) hospitals and nursing homes owned and operated by political subdivisions of 
100.27 	the state of tangible personal property and taxable services used at or by hospitals and 
100.28 	nursing homes;
100.29 	(4) the Metropolitan Council, for its purchases of vehicles and repair parts to equip 
100.30 	operations provided for in section  473.4051; 
100.31 	(5) other states or political subdivisions of other states, if the sale would be exempt 
100.32 	from taxation if it occurred in that state; and
100.33 	(6) sales to public libraries, public library systems, multicounty, multitype library 
100.34 	systems as defined in section  134.001, county law libraries under chapter 134A, state 
101.1 	agency libraries, the state library under section  480.09, and the Legislative Reference 
101.2 	Library. 
101.3 	(b) This exemption does not apply to the sales of the following products and services:
101.4 	(1) building, construction, or reconstruction materials purchased by a contractor 
101.5 	or a subcontractor as a part of a lump-sum contract or similar type of contract with a 
101.6 	guaranteed maximum price covering both labor and materials for use in the construction, 
101.7 	alteration, or repair of a building or facility;
101.8 	(2) construction materials purchased by tax exempt entities or their contractors to 
101.9 	be used in constructing buildings or facilities which will not be used principally by the 
101.10 	tax exempt entities;
101.11 	(3) the leasing of a motor vehicle as defined in section  297B.01, subdivision 5, 
101.12 	except for leases entered into by the United States or its agencies or instrumentalities; or 
101.13 	(4) meals and lodging as defined under section  297A.61, subdivision 3, paragraphs 
101.14 	(d) and (g) paragraph (g), clause (2), and prepared food, candy, and soft drinks, except for 
101.15 	meals and lodging, prepared food, candy, and soft drinks  purchased directly by the United 
101.16 	States or its agencies or instrumentalities. 
101.17 	(c) As used in this subdivision, "school districts" means public school entities and 
101.18 	districts of every kind and nature organized under the laws of the state of Minnesota, and 
101.19 	any instrumentality of a school district, as defined in section  471.59. 

101.20 	EFFECTIVE DATE. This section is effective the day following final enactment.

101.21 	Sec. 19. Minnesota Statutes 2004, section 297A.70, subdivision 3, is amended to read:
101.22 		Subd. 3.Sales of certain goods and services to government. (a) The following 
101.23 	sales to or use by the specified governments and political subdivisions of the state are 
101.24 	exempt:
101.25 	(1) repair and replacement parts for emergency rescue vehicles, fire trucks, and 
101.26 	fire apparatus to a political subdivision;
101.27 	(2) machinery and equipment, except for motor vehicles, used directly for mixed 
101.28 	municipal solid waste management services at a solid waste disposal facility as defined in 
101.29 	section  115A.03, subdivision 10; 
101.30 	(3) chore and homemaking services to a political subdivision of the state to be 
101.31 	provided to elderly or disabled individuals;
101.32 	(4) telephone services to the Department of Administration that are used to provide 
101.33 	telecommunications services through the intertechnologies revolving fund;
101.34 	(5) firefighter personal protective equipment as defined in paragraph (b), if purchased 
101.35 	or authorized by and for the use of an organized fire department, fire protection district, or 
102.1 	fire company regularly charged with the responsibility of providing fire protection to the 
102.2 	state or a political subdivision;
102.3 	(6) bullet-resistant body armor that provides the wearer with ballistic and trauma 
102.4 	protection, if purchased by a law enforcement agency of the state or a political subdivision 
102.5 	of the state, or a licensed peace officer, as defined in section  626.84, subdivision 1; 
102.6 	(7) motor vehicles purchased or leased by political subdivisions of the state if the 
102.7 	vehicles are exempt from registration under section  168.012, subdivision 1, paragraph (b), 
102.8 	exempt from taxation under section  473.448, or exempt from the motor vehicle sales tax 
102.9 	under section  297B.03, clause (12); 
102.10 	(8) equipment designed to process, dewater, and recycle biosolids for wastewater 
102.11 	treatment facilities of political subdivisions, and materials incidental to installation of 
102.12 	that equipment; and
102.13 	(9) sales to a town of gravel and of machinery, equipment, and accessories, except 
102.14 	motor vehicles, used exclusively for road and bridge maintenance, and leases by a town of 
102.15 	motor vehicles exempt from tax under section  297B.03, clause (10).; and
102.16 	(10) the removal of trees, bushes, or shrubs for the construction and maintenance 
102.17 	of roads, trails, or firebreaks when purchased by an agency of the state or a political 
102.18 	subdivision of the state.
102.19 	(b) For purposes of this subdivision, "firefighters personal protective equipment" 
102.20 	means helmets, including face shields, chin straps, and neck liners; bunker coats and 
102.21 	pants, including pant suspenders; boots; gloves; head covers or hoods; wildfire jackets; 
102.22 	protective coveralls; goggles; self-contained breathing apparatus; canister filter masks; 
102.23 	personal alert safety systems; spanner belts; optical or thermal imaging search devices; 
102.24 	and all safety equipment required by the Occupational Safety and Health Administration.

102.25 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
102.26 	October 28, 2002, but for sales and purchases made after October 28, 2002, and before 
102.27 	July 15, 2005, no refunds may be claimed under Minnesota Statutes, section 289A.50, for 
102.28 	sales taxes collected and remitted to the state.

102.29 	Sec. 20. Minnesota Statutes 2004, section 297A.70, subdivision 4, is amended to read:
102.30 		Subd. 4.Sales to nonprofit groups. (a) All sales, except those listed in paragraph 
102.31 	(b), to the following "nonprofit organizations" are exempt:
102.32 	(1) a corporation, society, association, foundation, or institution organized and 
102.33 	operated exclusively for charitable, religious, or educational purposes if the item 
102.34 	purchased is used in the performance of charitable, religious, or educational functions; and
102.35 	(2) any senior citizen group or association of groups that:
103.1 	(i) in general limits membership to persons who are either age 55 or older, or 
103.2 	physically disabled; and
103.3 	(ii) is organized and operated exclusively for pleasure, recreation, and other 
103.4 	nonprofit purposes, no part of the net earnings of which inures to the benefit of any private 
103.5 	shareholders.
103.6 	For purposes of this subdivision, charitable purpose includes the maintenance of a 
103.7 	cemetery owned by a religious organization.
103.8 	(b) This exemption does not apply to the following sales:
103.9 	(1) building, construction, or reconstruction materials purchased by a contractor 
103.10 	or a subcontractor as a part of a lump-sum contract or similar type of contract with a 
103.11 	guaranteed maximum price covering both labor and materials for use in the construction, 
103.12 	alteration, or repair of a building or facility;
103.13 	(2) construction materials purchased by tax-exempt entities or their contractors to 
103.14 	be used in constructing buildings or facilities that will not be used principally by the 
103.15 	tax-exempt entities; and
103.16 	(3) meals and lodging as defined under section  297A.61, subdivision 3, paragraphs 
103.17 	(d) and (g) paragraph (g), clause (2), and prepared food, candy, and soft drinks; and 
103.18 	(4) leasing of a motor vehicle as defined in section  297B.01, subdivision 5, except as 
103.19 	provided in paragraph (c). 
103.20 	(c) This exemption applies to the leasing of a motor vehicle as defined in section  
103.21 	297B.01, subdivision 5, only if the vehicle is: 
103.22 	(1) a truck, as defined in section  168.011, a bus, as defined in section  168.011, or a 
103.23 	passenger automobile, as defined in section  168.011, if the automobile is designed and 
103.24 	used for carrying more than nine persons including the driver; and 
103.25 	(2) intended to be used primarily to transport tangible personal property or 
103.26 	individuals, other than employees, to whom the organization provides service in 
103.27 	performing its charitable, religious, or educational purpose.
103.28 	(d) A limited liability company also qualifies for exemption under this subdivision if 
103.29 	(1) it consists of a sole member that would qualify for the exemption, and (2) the items 
103.30 	purchased qualify for the exemption.

103.31 	EFFECTIVE DATE. This section is effective the day following final enactment.

103.32 	Sec. 21. Minnesota Statutes 2004, section 297A.70, subdivision 7, is amended to read:
103.33 		Subd. 7.Hospitals and outpatient surgical centers. (a) Sales, except for those 
103.34 	listed in paragraph (c), to a hospital are exempt, if the items purchased are used in 
104.1 	providing hospital services. For purposes of this subdivision, "hospital" means a hospital 
104.2 	organized and operated for charitable purposes within the meaning of section 501(c)(3) of 
104.3 	the Internal Revenue Code, and licensed under chapter 144 or by any other jurisdiction, 
104.4 	and "hospital services" are services authorized or required to be performed by a "hospital" 
104.5 	under chapter 144.
104.6 	(b) Sales, except for those listed in paragraph (c), to an outpatient surgical center 
104.7 	are exempt, if the items purchased are used in providing outpatient surgical services. For 
104.8 	purposes of this subdivision, "outpatient surgical center" means an outpatient surgical 
104.9 	center organized and operated for charitable purposes within the meaning of section 
104.10 	501(c)(3) of the Internal Revenue Code, and licensed under chapter 144 or by any other 
104.11 	jurisdiction. For the purposes of this subdivision, "outpatient surgical services" means: 
104.12 	(1) services authorized or required to be performed by an outpatient surgical center under 
104.13 	chapter 144; and (2) urgent care. For purposes of this subdivision, "urgent care" means 
104.14 	health services furnished to a person whose medical condition is sufficiently acute to 
104.15 	require treatment unavailable through, or inappropriate to be provided by, a clinic or 
104.16 	physician's office, but not so acute as to require treatment in a hospital emergency room.
104.17 	(c) This exemption does not apply to the following products and services:
104.18 	(1) purchases made by a clinic, physician's office, or any other medical facility not 
104.19 	operating as a hospital or outpatient surgical center, even though the clinic, office, or 
104.20 	facility may be owned and operated by a hospital or outpatient surgical center;
104.21 	(2) sales under section  297A.61, subdivision 3, paragraphs (d) and (g) paragraph 
104.22 	(g), clause (2), and prepared food, candy, and soft drinks; 
104.23 	(3) building and construction materials used in constructing buildings or facilities 
104.24 	that will not be used principally by the hospital or outpatient surgical center;
104.25 	(4) building, construction, or reconstruction materials purchased by a contractor 
104.26 	or a subcontractor as a part of a lump-sum contract or similar type of contract with a 
104.27 	guaranteed maximum price covering both labor and materials for use in the construction, 
104.28 	alteration, or repair of a hospital or outpatient surgical center; or
104.29 	(5) the leasing of a motor vehicle as defined in section  297B.01, subdivision 5. 
104.30 	(d) A limited liability company also qualifies for exemption under this subdivision if 
104.31 	(1) it consists of a sole member that would qualify for the exemption, and (2) the items 
104.32 	purchased qualify for the exemption.

104.33 	EFFECTIVE DATE. This section is effective the day following final enactment.

104.34 	Sec. 22. Minnesota Statutes 2004, section 297A.70, subdivision 13, is amended to read:
105.1 		Subd. 13.Fund-raising sales by or for nonprofit groups. (a) The following 
105.2 	sales by the specified organizations for fund-raising purposes are exempt, subject to the 
105.3 	limitations listed in paragraph (b):
105.4 	(1) all sales made by an organization that exists solely for the purpose of providing 
105.5 	educational or social activities for young people primarily age 18 and under;
105.6 	(2) all sales made by an organization that is a senior citizen group or association of 
105.7 	groups if (i) in general it limits membership to persons age 55 or older; (ii) it is organized 
105.8 	and operated exclusively for pleasure, recreation, and other nonprofit purposes; and (iii) 
105.9 	no part of its net earnings inures to the benefit of any private shareholders;
105.10 	(3) the sale or use of tickets or admissions to a golf tournament held in Minnesota if 
105.11 	the beneficiary of the tournament's net proceeds qualifies as a tax-exempt organization 
105.12 	under section 501(c)(3) of the Internal Revenue Code; and
105.13 	(4) sales of gum, candy, and candy products sold for fund-raising purposes by a 
105.14 	nonprofit organization that provides educational and social activities primarily for young 
105.15 	people age 18 and under.
105.16 	(b) The exemptions listed in paragraph (a) are limited in the following manner:
105.17 	(1) the exemption under paragraph (a), clauses (1) and (2), applies only if the gross 
105.18 	annual receipts of the organization from fund-raising do not exceed $10,000; and
105.19 	(2) the exemption under paragraph (a), clause (1), does not apply if the sales are 
105.20 	derived from admission charges or from activities for which the money must be deposited 
105.21 	with the school district treasurer under section  123B.49, subdivision 2, or be recorded in 
105.22 	the same manner as other revenues or expenditures of the school district under section  
105.23 	123B.49, subdivision 4. 
105.24 	(c) Sales of tangible personal property are exempt if the entire proceeds, less the 
105.25 	necessary expenses for obtaining the property, will be contributed to a registered combined 
105.26 	charitable organization described in section  309.501, to be used exclusively for charitable, 
105.27 	religious, or educational purposes, and the registered combined charitable organization 
105.28 	has given its written permission for the sale. Sales that occur over a period of more than 
105.29 	24 days per year are not exempt under this paragraph. 
105.30 	(d) For purposes of this subdivision, a club, association, or other organization of 
105.31 	elementary or secondary school students organized for the purpose of carrying on sports, 
105.32 	educational, or other extracurricular activities is a separate organization from the school 
105.33 	district or school for purposes of applying the $10,000 limit.

105.34 	EFFECTIVE DATE. This section is effective the day following final enactment.

105.35 	Sec. 23. Minnesota Statutes 2004, section 297A.70, subdivision 14, is amended to read:
106.1 		Subd. 14.Fund-raising events sponsored by nonprofit groups. (a) Sales of 
106.2 	tangible personal property at, and admission charges for fund-raising events sponsored 
106.3 	by, a nonprofit organization are exempt if:
106.4 	(1) all gross receipts are recorded as such, in accordance with generally accepted 
106.5 	accounting practices, on the books of the nonprofit organization; and
106.6 	(2) the entire proceeds, less the necessary expenses for the event, will be used 
106.7 	solely and exclusively for charitable, religious, or educational purposes. Exempt sales 
106.8 	include the sale of food, meals, and drinksprepared food, candy, and soft drinks at the 
106.9 	fund-raising event.
106.10 	(b) This exemption is limited in the following manner:
106.11 	(1) it does not apply to admission charges for events involving bingo or other 
106.12 	gambling activities or to charges for use of amusement devices involving bingo or other 
106.13 	gambling activities;
106.14 	(2) all gross receipts are taxable if the profits are not used solely and exclusively for 
106.15 	charitable, religious, or educational purposes;
106.16 	(3) it does not apply unless the organization keeps a separate accounting record, 
106.17 	including receipts and disbursements from each fund-raising event that documents all 
106.18 	deductions from gross receipts with receipts and other records;
106.19 	(4) it does not apply to any sale made by or in the name of a nonprofit corporation as 
106.20 	the active or passive agent of a person that is not a nonprofit corporation;
106.21 	(5) all gross receipts are taxable if fund-raising events exceed 24 days per year;
106.22 	(6) it does not apply to fund-raising events conducted on premises leased for more 
106.23 	than five days but less than 30 days; and
106.24 	(7) it does not apply if the risk of the event is not borne by the nonprofit organization 
106.25 	and the benefit to the nonprofit organization is less than the total amount of the state and 
106.26 	local tax revenues foregone by this exemption.
106.27 	(c) For purposes of this subdivision, a "nonprofit organization" means any unit of 
106.28 	government, corporation, society, association, foundation, or institution organized and 
106.29 	operated for charitable, religious, educational, civic, fraternal, and senior citizens' or 
106.30 	veterans' purposes, no part of the net earnings of which inures to the benefit of a private 
106.31 	individual.

106.32 	EFFECTIVE DATE. This section is effective the day following final enactment.

106.33 	Sec. 24. Minnesota Statutes 2004, section 297A.70, subdivision 15, is amended to read:
106.34 		Subd. 15.Statewide amateur athletic games. Notwithstanding section  297A.61, 
106.35 	subdivision 3, or any other provision of this chapter, the gross receipts from the following 
107.1 	sales made to or by a nonprofit corporation designated by the Minnesota Amateur Sports 
107.2 	Commission to conduct a series of statewide amateur athletic games and related events, 
107.3 	workshops, and clinics are exempt: 
107.4 	(1) sales of tangible personal property to or the storage, use, or other consumption of 
107.5 	tangible personal property by the nonprofit corporation; and
107.6 	(2) sales of tangible personal property, admission charges, and sales of food, 
107.7 	meals, and drinksprepared food, candy, and soft drinks by the nonprofit corporation at 
107.8 	fund-raising events, athletic events, or athletic facilities.

107.9 	EFFECTIVE DATE. This section is effective the day following final enactment.

107.10 	Sec. 25. Minnesota Statutes 2005 Supplement, section 297A.72, subdivision 2, is 
107.11 	amended to read:
107.12 		Subd. 2.Content and form of exemption certificate. An exemption certificate 
107.13 	must be substantially in the form prescribed by the commissioner and:
107.14 	(1) be signed by the purchaser or meet the requirements of section 270C.304;
107.15 	(2) bear the name and address of the purchaser; and
107.16 	(3) indicate the sales tax account number, if any, issued to the purchaser;.
107.17 	(4) indicate the general character of the property sold by the purchaser in the regular 
107.18 	course of business or the activities carried on by the organization; and
107.19 	(5) identify the property purchased.

107.20 	EFFECTIVE DATE. This section is effective the day following final enactment.

107.21 	Sec. 26. Minnesota Statutes 2005 Supplement, section 297A.75, subdivision 1, is 
107.22 	amended to read:
107.23 		Subdivision 1.Tax collected. The tax on the gross receipts from the sale of the 
107.24 	following exempt items must be imposed and collected as if the sale were taxable and the 
107.25 	rate under section 297A.62, subdivision 1, applied. The exempt items include:
107.26 	(1) capital equipment exempt under section 297A.68, subdivision 5;
107.27 	(2) building materials for an agricultural processing facility exempt under section 
107.28 	297A.71, subdivision 13;
107.29 	(3) building materials for mineral production facilities exempt under section 
107.30 	297A.71, subdivision 14;
107.31 	(4) building materials for correctional facilities under section 297A.71, subdivision 
107.32 	3;
108.1 	(5) building materials used in a residence for disabled veterans exempt under section 
108.2 	297A.71, subdivision 11;
108.3 	(6) elevators and building materials exempt under section 297A.71, subdivision 12;
108.4 	(7) building materials for the Long Lake Conservation Center exempt under section 
108.5 	297A.71, subdivision 17;
108.6 	(8) materials, supplies, fixtures, furnishings, and equipment for a county law 
108.7 	enforcement and family service center under section 297A.71, subdivision 26;
108.8 	(9) materials and supplies for qualified low-income housing under section 297A.71, 
108.9 	subdivision 23; and
108.10 	(10) materials, supplies, and equipment for municipal electric utility facilities under 
108.11 	section 297A.71, subdivision 35.;
108.12 	(11) equipment and materials used for the generation, transmission, and distribution 
108.13 	of electrical energy and an aerial camera package exempt under section 297A.68, 
108.14 	subdivision 37; and
108.15 	(12) tangible personal property and taxable services and construction materials, 
108.16 	supplies, and equipment exempt under section 297A.68, subdivision 41.

108.17 	EFFECTIVE DATE. This section is effective the day following final enactment.

108.18 	Sec. 27. Minnesota Statutes 2005 Supplement, section 297A.75, subdivision 2, is 
108.19 	amended to read:
108.20 		Subd. 2.Refund; eligible persons. Upon application on forms prescribed by the 
108.21 	commissioner, a refund equal to the tax paid on the gross receipts of the exempt items 
108.22 	must be paid to the applicant. Only the following persons may apply for the refund:
108.23 	(1) for subdivision 1, clauses (1) to (3), the applicant must be the purchaser;
108.24 	(2) for subdivision 1, clauses (4), (7), and (8), the applicant must be the governmental 
108.25 	subdivision;
108.26 	(3) for subdivision 1, clause (5), the applicant must be the recipient of the benefits 
108.27 	provided in United States Code, title 38, chapter 21;
108.28 	(4) for subdivision 1, clause (6), the applicant must be the owner of the homestead 
108.29 	property;
108.30 	(5) for subdivision 1, clause (9), the owner of the qualified low-income housing 
108.31 	project; and
108.32 	(6) for subdivision 1, clause (10), the applicant must be a municipal electric utility or 
108.33 	a joint venture of municipal electric utilities.; and 
108.34 	(7) for subdivision 1, clauses (11) and (12), the owner of the qualifying business.

109.1 	EFFECTIVE DATE. This section is effective the day following final enactment.

109.2 	Sec. 28. Minnesota Statutes 2005 Supplement, section 297A.75, subdivision 3, is 
109.3 	amended to read:
109.4 		Subd. 3.Application. (a) The application must include sufficient information 
109.5 	to permit the commissioner to verify the tax paid. If the tax was paid by a contractor, 
109.6 	subcontractor, or builder, under subdivision 1, clause (4), (5), (6), (7), (8), (9), or (10), 
109.7 	 (11), or (12), the contractor, subcontractor, or builder must furnish to the refund applicant 
109.8 	a statement including the cost of the exempt items and the taxes paid on the items unless 
109.9 	otherwise specifically provided by this subdivision. The provisions of sections 289A.40
109.10 	and 289A.50 apply to refunds under this section.
109.11 	(b) An applicant may not file more than two applications per calendar year for 
109.12 	refunds for taxes paid on capital equipment exempt under section 297A.68, subdivision 5.

109.13 	EFFECTIVE DATE. This section is effective the day following final enactment.

109.14 	Sec. 29. Minnesota Statutes 2005 Supplement, section 297A.815, subdivision 1, 
109.15 	is amended to read:
109.16 		Subdivision 1.Motor vehicle lease price; payment. (a) In the case of a lease of a 
109.17 	motor vehicle as provided in section 297A.61, subdivision 4, paragraph (k), clause (2), the 
109.18 	tax is imposed on the total amount to be paid by the lessee under the lease agreement. The 
109.19 	lessor shall collect the tax in full at the time the lease is executed or, if the tax is included 
109.20 	in the lease and the lease is assigned, the tax is due from the original lessor at the time the 
109.21 	lease is assigned. The total amount to be paid by the lessee under the lease agreement 
109.22 	equals the agreed-upon value of the vehicle less manufacturer's rebates, the stated residual 
109.23 	value of the leased vehicle, and the total value allowed for a vehicle owned by the lessee 
109.24 	taken in trade by the lessor, plus the price of any taxable goods and services included in 
109.25 	the lease and the rent charge as provided by Code of Federal Regulations, title 12, section 
109.26 	213.4, excluding any rent charge related to the capitalization of the tax.
109.27 	(b) If the total amount paid by the lessee for use of the leased vehicle includes 
109.28 	amounts that are not calculated at the time the lease is executed, the tax is imposed and 
109.29 	must be collected by the lessor at the time the amounts are paid by the lessee. In the case 
109.30 	of a lease which by its terms may be renewed, the sales tax is due and payable on the 
109.31 	total amount to be paid during the initial term of the lease, and then for each subsequent 
109.32 	renewal period on the total amount to be paid during the renewal period.
109.33 	(c) If a lease is canceled or rescinded on or before 90 days of its execution or if a 
109.34 	vehicle is returned to the manufacturer under section 325F.665, the lessor may file a claim 
110.1 	for a refund of the total tax paid minus the amount of tax due for the period the vehicle is 
110.2 	used by the lessee.
110.3 	(d) If a lessee's obligation to make payments on a lease is canceled more than 90 
110.4 	days after its execution, a credit is allowed against sales tax or motor vehicles sales tax 
110.5 	due on a subsequent lease or purchase of a motor vehicle if that lease or purchase is 
110.6 	consummated within 30 days of the date the prior lease was canceled. The amount of the 
110.7 	credit is equal to (1) the sales tax paid at the inception of the lease, multiplied by (2) 
110.8 	the ratio of the number of full months remaining in the lease at the time of termination 
110.9 	compared to the term of the lease used in calculating sales tax paid at the inception of the 
110.10 	lease. The credit or any part of it cannot be assigned or transferred to another person.

110.11 	EFFECTIVE DATE. This section is effective for leases entered into after 
110.12 	September 30, 2005.

110.13 	Sec. 30. Minnesota Statutes 2004, section 297A.99, subdivision 7, is amended to read:
110.14 		Subd. 7.Exemptions. (a) All goods or services that are otherwise exempt from 
110.15 	taxation under this chapter are exempt from a political subdivision's tax.
110.16 	(b) The gross receipts from the sale of tangible personal property that meets the 
110.17 	requirement of section  297A.68, subdivision 15, are exempt, except the qualification 
110.18 	test applies based on the boundaries of the political subdivision instead of the state 
110.19 	of Minnesota.
110.20 	(c) All mobile transportation equipment, and parts and accessories attached to or 
110.21 	to be attached to the equipment are exempt, if purchased by a holder of a motor carrier 
110.22 	direct pay permit under section  297A.90. 

110.23 	EFFECTIVE DATE. This section is effective the day following final enactment.

110.24 	Sec. 31. Laws 2005, First Special Session chapter 3, article 5, section 3, the effective 
110.25 	date, is amended to read:
110.26 	
110.27 	
110.28 	EFFECTIVE DATE. This section is effective for sales and  purchases made after 
110.29 	October 28, 2002, but for land clearing contracts entered into after October 28, 2002, 
110.30 	but before July 15, 2005, no refunds may be claimed under Minnesota Statutes, section 
110.31 	289A.50, for sales taxes collected and remitted to the state on the land clearing contracts.  

110.32 	EFFECTIVE DATE. This section is effective the day following final enactment.

111.1 	Sec. 32.  REPEALER.
 111.2 	(a) Minnesota Statutes 2004, section 297A.68, subdivisions 15 and 18, are repealed.
111.3 	(b) Minnesota Rules, parts 8130.0400, subpart 3; 8130.4800, subparts 1, 3, 4, 5, 6, 7, 
111.4 	and 8; 8130.5100; 8130.5400; and 8130.5800, subpart 6, are repealed.

111.5 	EFFECTIVE DATE. This section is effective the day following final enactment.

111.6 	ARTICLE 7
111.7 	DEPARTMENT OF REVENUESPECIAL TAXES AND FEES

111.8 	Section 1. Minnesota Statutes 2005 Supplement, section 115B.49, subdivision 4, is 
111.9 	amended to read:
111.10 		Subd. 4.Registration; fees. (a) The owner or operator of a dry cleaning facility 
111.11 	shall register on or before October 1 of each year with the commissioner of revenue in 
111.12 	a manner prescribed by the commissioner of revenue and pay a registration fee for the 
111.13 	facility. The amount of the fee is:
111.14 	(1) $500, for facilities with a full-time equivalence of fewer than five;
111.15 	(2) $1,000, for facilities with a full-time equivalence of five to ten; and
111.16 	(3) $1,500, for facilities with a full-time equivalence of more than ten.
111.17 	The registration fee must be paid on or before October 18 or the owner or operator 
111.18 	of a dry cleaning facility may elect to pay the fee in equal installments. Installment 
111.19 	payments must be paid on or before October 18, on or before January 18, on or before 
111.20 	April 18, and on or before June 18. All payments made after October 18 bear interest 
111.21 	at the rate specified in section 270C.40.
111.22 	(b) A person who sells dry cleaning solvents for use by dry cleaning facilities in the 
111.23 	state shall collect and remit to the commissioner of revenue in a manner prescribed by the 
111.24 	commissioner of revenue, on or before the 20th day of the month following the month in 
111.25 	which the sales of dry cleaning solvents are made, a fee of:
111.26 	(1) $3.50 for each gallon of perchloroethylene sold for use by dry cleaning facilities 
111.27 	in the state;
111.28 	(2) 70 cents for each gallon of hydrocarbon-based dry cleaning solvent sold for use 
111.29 	by dry cleaning facilities in the state; and
111.30 	(3) 35 cents for each gallon of other nonaqueous solvents sold for use by dry 
111.31 	cleaning facilities in the state.
111.32 	(c) The audit, assessment, appeal, collection, enforcement, and administrative 
111.33 	provisions of chapters 270C and 289A apply to the fee imposed by this subdivision. 
111.34 	To enforce this subdivision, the commissioner of revenue may grant extensions to file 
112.1 	returns and pay fees, impose penalties and interest on the annual registration fee under 
112.2 	paragraph (a) and the monthly fee under paragraph (b), and abate penalties and interest in 
112.3 	the manner provided in chapters 270C and 289A. The penalties and interest imposed on 
112.4 	taxes under chapter 297A apply to the fees imposed under this subdivision. Disclosure 
112.5 	of data collected by the commissioner of revenue under this subdivision is governed by 
112.6 	chapter 270B.

112.7 	EFFECTIVE DATE. This section is effective for returns and payments due on 
112.8 	or after October 1, 2006.

112.9 	Sec. 2. [287.222] TRANSFER TO OBTAIN FINANCING.
112.10 	The deed tax is $1.65 on a deed or other instrument that transfers real property if 
112.11 	the transfer is (1) to a person who is a builder or contractor, (2) intended to be temporary, 
112.12 	and (3) done solely to enable the builder or contractor to obtain financing to build an 
112.13 	improvement on the conveyed property under a contract for improvement with the grantor 
112.14 	that calls for the conveyed property to be reconveyed to the grantor upon completion of 
112.15 	and payment for the improvement. The deed tax is $1.65 on a deed or other instrument 
112.16 	that transfers the real property back from the builder or contractor to the grantor.

112.17 	EFFECTIVE DATE. This section is effective for deeds both executed and recorded 
112.18 	on or after July 1, 2006.

112.19 	Sec. 3. Minnesota Statutes 2004, section 295.50, subdivision 4, is amended to read:
112.20 		Subd. 4.Health care provider. (a) "Health care provider" means:
112.21 	(1) a person whose health care occupation is regulated or required to be regulated by 
112.22 	the state of Minnesota furnishing any or all of the following goods or services directly to a 
112.23 	patient or consumer: medical, surgical, optical, visual, dental, hearing, nursing services, 
112.24 	drugs, laboratory, diagnostic or therapeutic services;
112.25 	(2) a person who provides goods and services not listed in clause (1) that qualify for 
112.26 	reimbursement under the medical assistance program provided under chapter 256B;
112.27 	(3) a staff model health plan company;
112.28 	(4) an ambulance service required to be licensed; or
112.29 	(5) a person who sells or repairs hearing aids and related equipment or prescription 
112.30 	eyewear.
112.31 	(b) Health care provider does not include:
112.32 	(1) hospitals; medical supplies distributors, except as specified under paragraph 
112.33 	(a), clause (5); nursing homes licensed under chapter 144A or licensed in any other 
113.1 	jurisdiction; pharmacies; surgical centers; bus and taxicab transportation, or any other 
113.2 	providers of transportation services other than ambulance services required to be licensed; 
113.3 	supervised living facilities for persons with mental retardation or related conditions, 
113.4 	licensed under Minnesota Rules, parts 4665.0100 to 4665.9900; residential care homes 
113.5 	licensed under chapter 144B; housing with services establishments required to be 
113.6 	registered under chapter 144D; board and lodging establishments providing only custodial 
113.7 	services that are licensed under chapter 157 and registered under section  157.17 to 
113.8 	provide supportive services or health supervision services; adult foster homes as defined 
113.9 	in Minnesota Rules, part 9555.5105; day training and habilitation services for adults 
113.10 	with mental retardation and related conditions as defined in section  252.41, subdivision 
113.11 	3; boarding care homes, as defined in Minnesota Rules, part 4655.0100; and adult day 
113.12 	care centers as defined in Minnesota Rules, part 9555.9600; 
113.13 	(2) home health agencies as defined in Minnesota Rules, part 9505.0175, subpart 
113.14 	15; a person providing personal care services and supervision of personal care services 
113.15 	as defined in Minnesota Rules, part 9505.0335; a person providing private duty nursing 
113.16 	services as defined in Minnesota Rules, part 9505.0360; and home care providers required 
113.17 	to be licensed under chapter 144A;
113.18 	(3) a person who employs health care providers solely for the purpose of providing 
113.19 	patient services to its employees; and
113.20 	(4) an educational institution that employs health care providers solely for the 
113.21 	purpose of providing patient services to its students if the institution does not receive fee 
113.22 	for service payments or payments for extended coverage.

113.23 	EFFECTIVE DATE. This section is effective the day following final enactment.

113.24 	Sec. 4. Minnesota Statutes 2004, section 295.53, subdivision 3, is amended to read:
113.25 		Subd. 3.Separate statement of tax. A hospital, surgical center, or health care 
113.26 	provider, or wholesale drug distributor  must not state the tax obligation under section  
113.27 	295.52 in a deceptive or misleading manner. It must not separately state tax obligations 
113.28 	on bills provided to patients, consumers, or other payers when the amount received for 
113.29 	the services or goods is not subject to tax. 
113.30 	Pharmacies that separately state the tax obligations on bills provided to consumers 
113.31 	or to other payers who purchase legend drugs may state the tax obligation as the wholesale 
113.32 	price of the legend drugs multiplied by the tax percentage specified in section  295.52. 
113.33 	Pharmacies must not state the tax obligation based on the retail price. 
113.34 	Whenever the commissioner determines that a person has engaged in any act or 
113.35 	practice constituting a violation of this subdivision, the commissioner may bring an action 
114.1 	in the name of the state in the district court of the appropriate county to enjoin the act 
114.2 	or practice and to enforce compliance with this subdivision, or the commissioner may 
114.3 	refer the matter to the attorney general or the county attorney of the appropriate county. 
114.4 	Upon a proper showing, a permanent or temporary injunction, restraining order, or other 
114.5 	appropriate relief must be granted.

114.6 	EFFECTIVE DATE. This section is effective the day following final enactment.

114.7 	Sec. 5. Minnesota Statutes 2004, section 297F.01, is amended by adding a subdivision 
114.8 	to read:
114.9 		Subd. 22a.Weighted average retail price. "Weighted average retail price" means 
114.10 	(1) the average retail price per pack of 20 cigarettes, with the average price weighted by 
114.11 	the number of packs sold at each price, (2) reduced by the sales tax included in the retail 
114.12 	price, and (3) adjusted for the expected inflation from the time of the survey to the average 
114.13 	of the 12 months that the sales tax will be imposed. The commissioner shall make the 
114.14 	inflation adjustment in accordance with the Consumer Price Index for all urban consumers 
114.15 	inflation indicator as published in the most recent state budget forecast. The inflation 
114.16 	factor for the calendar year in which the new tax rate takes effect must be used.

114.17 	EFFECTIVE DATE. This section is effective April 30, 2006.

114.18 	Sec. 6. Minnesota Statutes 2004, section 297G.01, subdivision 7, is amended to read:
114.19 		Subd. 7.Distilled spirits. "Distilled spirits" is means:
114.20 	(1) intoxicating liquors, including ethyl alcohol, hydrated oxide of ethyl, spirits of 
114.21 	wine, whiskey, rum, brandy, gin, and other distilled spirits, including all dilutions and 
114.22 	mixtures, for nonindustrial use.;
114.23 	(2) any beverage that would be classified as a flavored malt beverage except that the 
114.24 	alcohol contribution from flavors and other nonbeverage materials exceeds 49 percent 
114.25 	of the alcohol content of the product; or 
114.26 	(3) any beverage that would be classified as a flavored malt beverage except that the 
114.27 	beverage contains more than six percent alcohol by volume, and more than 1.5 percent 
114.28 	of the volume of the finished product consists of alcohol derived from flavors and other 
114.29 	nonbeverage ingredients that contain alcohol.

114.30 	EFFECTIVE DATE. This section is effective July 1, 2006.

114.31 	Sec. 7. Minnesota Statutes 2004, section 297G.01, is amended by adding a subdivision 
114.32 	to read:
115.1 		Subd. 8a.Flavored malt beverage. (a) "Flavored malt beverage" means a 
115.2 	fermented malt beverage that:
115.3 	(1) contains six percent or less alcohol by volume and derives at least 51 percent of 
115.4 	its alcohol content by volume from the fermentation of grain, as long as not more than 49 
115.5 	percent of the beverage's overall alcohol content is obtained from flavors and other added 
115.6 	nonbeverage ingredients containing alcohol; or
115.7 	(2) contains more than six percent alcohol by volume that derives not more than 1.5 
115.8 	percent of its overall alcohol content by volume from flavors and other added nonbeverage 
115.9 	ingredients containing alcohol.
115.10 	(b) Flavored malt beverage does not include cider or an alcoholic beverage obtained 
115.11 	primarily by fermentation of rice, such as sake.

115.12 	EFFECTIVE DATE. This section is effective July 1, 2006.

115.13 	ARTICLE 8
115.14 	DEPARTMENT OF REVENUEMISCELLANEOUS

115.15 	Section 1. Minnesota Statutes 2005 Supplement, section 270C.01, subdivision 4, is 
115.16 	amended to read:
115.17 		Subd. 4.Electronic means; electronically. "Electronic means" and "electronically" 
115.18 	mean a method that is electronic, as defined in section 325L.02, paragraph (e), and that 
115.19 	is prescribed by the commissioner. Electronic means includes the use of a touch-tone 
115.20 	telephone to transmit return information in a manner prescribed by the commissioner.

115.21 	EFFECTIVE DATE. This section is effective the day following final enactment.

115.22 	Sec. 2. Minnesota Statutes 2005 Supplement, section 270C.304, is amended to read:
115.23 	270C.304 ELECTRONICALLY FILED RETURNS; SIGNATURES.
115.24 	For purposes of a law administered by the commissioner, the name of the taxpayer, 
115.25 	the name of the taxpayer's authorized agent, or the taxpayer's identification number, 
115.26 	will constitute a signature when transmitted as part of the return information on returns 
115.27 	filed by electronic means by the taxpayer or at the taxpayer's direction. "Electronic 
115.28 	means" includes, but is not limited to, the use of a touch-tone telephone to transmit return 
115.29 	information in a manner prescribed by the commissioner.

115.30 	EFFECTIVE DATE. This section is effective the day following final enactment.

116.1 	Sec. 3. Minnesota Statutes 2005 Supplement, section 270C.33, subdivision 4, is 
116.2 	amended to read:
116.3 		Subd. 4.Orders of assessment. (a) The commissioner may issue an order of 
116.4 	assessment in any of the following circumstances:
116.5 	(1) the commissioner determines that the correct amount of tax is different than that 
116.6 	assessed on a return filed with the commissioner;
116.7 	(2) no return has been filed and the commissioner determines the amount of tax 
116.8 	that should have been assessed;
116.9 	(3) the commissioner determines that the correct amount of a refundable credit 
116.10 	is different than the amount claimed by a taxpayer. For purposes of this subdivision, 
116.11 	"refundable credit" means a refund benefit or credit due a person that is unrelated to the 
116.12 	person's liability for a tax. "Refundable credit" does not include estimated tax payments 
116.13 	or withholding taxes. An assessment for an overpayment of a refundable credit may be 
116.14 	collected in the same manner as a tax collected by the commissioner; and
116.15 	(4) the commissioner determines the correct amount of a tax that the taxpayer is not 
116.16 	required to assess by a return filed with the commissioner.; and
116.17 	(5) the commissioner determines that a penalty other than a penalty for late payment 
116.18 	of tax, late filing of a return, or failure to pay tax by electronic means should be imposed, 
116.19 	and the penalty is not included on an order of assessment made under clauses (1) to (4).
116.20 	(b) An order of assessment must be in writing.
116.21 	(c) An order of assessment must be signed by the commissioner or a delegate, or 
116.22 	have their facsimile signature, if the change in tax, excluding penalties and interest, 
116.23 	exceeds $1,000.
116.24 	(d) An order of assessment is final when made but, as applicable, is reviewable 
116.25 	administratively under section 270C.35, or appealable to Tax Court under chapter 271.

116.26 	EFFECTIVE DATE. This section is effective the day following final enactment.

116.27 	Sec. 4. Minnesota Statutes 2005 Supplement, section 270C.57, subdivision 3, is 
116.28 	amended to read:
116.29 		Subd. 3.Assessment; abatement; review. The commissioner may assess liability 
116.30 	against a successor business under this section within the time prescribed for collecting 
116.31 	the underlying sales and withholding taxes, interest, and penalties. The assessment is 
116.32 	presumed to be valid, and the burden is upon the successor to show it is incorrect or 
116.33 	invalid. An order assessing successor liability is reviewable administratively under section 
116.34 	270C.35 and is appealable to Tax Court under chapter 271. The commissioner may abate 
116.35 	an assessment if the successor's failure to give the notice required under this section is due 
117.1 	to reasonable cause. The procedural and appeal provisions under section 270C.34 apply 
117.2 	to abatement requests under this subdivision. Collection remedies available against the 
117.3 	transferring business are available against the successor from the date of assessment of 
117.4 	successor liability.

117.5 	EFFECTIVE DATE. This section is effective the day following final enactment.

117.6 	Sec. 5. Minnesota Statutes 2005 Supplement, section 270C.67, subdivision 1, is 
117.7 	amended to read:
117.8 		Subdivision 1.Authority. If any tax payable to the commissioner or to the 
117.9 	department is not paid when due, such tax may be collected by the commissioner within 
117.10 	five years after the date of assessment of the tax, or if a lien has been filed, during the 
117.11 	period the lien is enforceable, or if the tax judgment has been filed, within the statutory 
117.12 	period of enforcement of a valid tax judgment, by a levy upon all property and rights 
117.13 	to property, including any property in the possession of law enforcement officials, of 
117.14 	the person liable for the payment or collection of such tax (except that which is exempt 
117.15 	from execution pursuant to section 550.37) or property on which there is a lien provided 
117.16 	in section 270C.63. For this purpose, "tax" includes any penalty, interest, and costs, 
117.17 	properly payable.

117.18 	EFFECTIVE DATE. This section is effective the day following final enactment.

117.19 	Sec. 6. Minnesota Statutes 2005 Supplement, section 270C.67, is amended by adding a 
117.20 	subdivision to read:
117.21 		Subd. 1a.Exempt property.  A levy under this section is not enforceable against:
117.22 	(1) a purchaser with respect to tangible personal property purchased at retail in 
117.23 	the ordinary course of the seller's trade or business, unless at the time of purchase the 
117.24 	purchaser intends the purchase to or knows the purchase will hinder, evade, or defeat 
117.25 	the collection of a tax; or
117.26 	(2) the personal property listed as exempt in sections 550.37, 550.38, and 550.39.

117.27 	EFFECTIVE DATE. This section is effective the day following final enactment.

117.28 	Sec. 7. Minnesota Statutes 2005 Supplement, section 271.12, is amended to read:
117.29 	271.12 WHEN ORDER EFFECTIVE.
117.30 	No order for refundment by the commissioner of revenue, the appropriate unit of 
117.31 	government, or the Tax Court shall take effect until the time for appeal therefrom or 
118.1 	review thereof by all parties entitled thereto has expired. Otherwise every order of the 
118.2 	commissioner, the appropriate unit of government, or the Tax Court shall take effect 
118.3 	immediately upon the filing thereof, and no appeal therefrom or review thereof shall 
118.4 	stay the execution thereof or extend the time for payment of any tax or other obligation 
118.5 	unless otherwise expressly provided by law; provided, that in case an order which has 
118.6 	been acted upon, in whole or in part, shall thereafter be set aside or modified upon appeal, 
118.7 	the determination upon appeal or review shall supersede the order appealed from and be 
118.8 	binding upon all parties affected thereby, and such adjustments as may be necessary 
118.9 	to give effect thereto shall be made accordingly; and provided further, the Tax Court 
118.10 	may enjoin enforcement of the order of the commissioner being appealed. If it be finally 
118.11 	determined upon such appeal or review that any person is entitled to refundment of any 
118.12 	amount which has been paid for a tax or other obligation, such amount, unless otherwise 
118.13 	provided by law, shall be paid to the person by the commissioner of finance, or other 
118.14 	proper officer, out of funds derived from taxes of the same kind, if available for the 
118.15 	purpose, or out of other available funds, if any, with interest at the rate specified in section 
118.16 	270C.405 from the date of payment of the tax, unless a different rate or date of accrual 
118.17 	of interest is otherwise provided by law, in which case such other rate or date of accrual 
118.18 	shall apply, upon certification by the commissioner of revenue, the appropriate unit of 
118.19 	government, the Tax Court or the Supreme Court.
118.20 	If, within 120 days after a decision of the Tax Court becomes final, the commissioner 
118.21 	does not refund the overpayment determined by the court, together with interest, on 
118.22 	motion by the taxpayer, the Tax Court shall have jurisdiction to order the refund of 
118.23 	the overpayment and interest, and to award reasonable litigation costs for bringing the 
118.24 	motion. If any tax, assessment, or other obligation be increased upon such appeal or 
118.25 	review, the increase shall be added to the original amount, and may be enforced and 
118.26 	collected therewith.

118.27 	EFFECTIVE DATE. This section is effective the day following final enactment.

118.28 	Sec. 8. Minnesota Statutes 2005 Supplement, section 289A.121, subdivision 5, is 
118.29 	amended to read:
118.30 		Subd. 5.Reportable transactions. (a) For each taxable year in which a taxpayer 
118.31 	must make a return or a statement under Code of Federal Regulations, title 26, section 
118.32 	1.6011-4, for a reportable transaction, including a listed transaction, in which the taxpayer 
118.33 	participated in a taxable year for which a return is required under chapter 290, the taxpayer 
118.34 	must file a copy of the disclosure with the commissioner.
119.1 	(b) Any taxpayer that is a member of a unitary business group that includes any 
119.2 	person that must make a disclosure statement under Code of Federal Regulations, title 26, 
119.3 	section 1.6011-4, must file a disclosure under this subdivision.
119.4 	(c) Disclosure under this subdivision is required for any transaction entered into after 
119.5 	December 31, 2001, that the Internal Revenue Service determines is a listed transaction 
119.6 	at any time, and must be made in the manner prescribed by the commissioner. For 
119.7 	transactions in which the taxpayer participated for taxable years ending before December 
119.8 	31, 2005, disclosure must be made by the extended due date of the first return required 
119.9 	under chapter 290 that occurs 60 days or more after July 14, 2005. With respect to 
119.10 	transactions in which the taxpayer participated for taxable years ending on and after 
119.11 	December 31, 2005, disclosure must be made in the time and manner prescribed in Code 
119.12 	of Federal Regulations, title 26, section 1.6011-4(e).
119.13 	(d) Notwithstanding paragraphs (a) to (c), no disclosure is required for transactions 
119.14 	entered into after December 31, 2001, and before January 1, 2006, if (1) the taxpayer 
119.15 	has filed an amended income tax return which reverses the tax benefits of the tax 
119.16 	shelter transaction, or (2) as a result of a federal audit the Internal Revenue Service has 
119.17 	determined the tax treatment of the transaction and an amended return has been filed 
119.18 	to reflect the federal treatment.

119.19 	EFFECTIVE DATE. This section is effective for disclosures of reportable 
119.20 	transactions in which the taxpayer participated for taxable years ending before December 
119.21 	31, 2005.

119.22 	Sec. 9. Minnesota Statutes 2004, section 290.17, subdivision 1, is amended to read:
119.23 		Subdivision 1.Scope of allocation rules. (a) The income of resident individuals 
119.24 	is not subject to allocation outside this state. The allocation rules apply to nonresident 
119.25 	individuals, estates, trusts, nonresident partners of partnerships, nonresident shareholders 
119.26 	of corporations treated as "S" corporations under section  290.9725, and all corporations 
119.27 	not having such an election in effect. If a partnership or corporation would not otherwise 
119.28 	be subject to the allocation rules, but conducts a trade or business that is part of a 
119.29 	unitary business involving another legal entity that is subject to the allocation rules, the 
119.30 	partnership or corporation is subject to the allocation rules. 
119.31 	(b) Expenses, losses, and other deductions (referred to collectively in this paragraph 
119.32 	as "deductions") must be allocated along with the item or class of gross income to which 
119.33 	they are definitely related for purposes of assignment under this section or apportionment 
119.34 	under section  290.191,  290.20, or  290.36. Deductions not definitely related to any item 
120.1 	or class of gross income are assigned under subdivision 2, paragraph (e), are assigned to 
120.2 	the taxpayer's domicile. 
120.3 	(c) In the case of an individual who is a resident for only part of a taxable year, 
120.4 	the individual's income, gains, losses, and deductions from the distributive share of a 
120.5 	partnership, S corporation, trust, or estate are not subject to allocation outside this state 
120.6 	to the extent of the distributive share multiplied by a ratio, the numerator of which is 
120.7 	the number of days the individual was a resident of this state during the tax year of the 
120.8 	partnership, S corporation, trust, or estate, and the denominator of which is the number of 
120.9 	days in the taxable year of the partnership, S corporation, trust, or estate.

120.10 	EFFECTIVE DATE. This section is effective the day following final enactment.

120.11 	ARTICLE 9
120.12 	PUBLIC FINANCE

120.13 	Section 1. Minnesota Statutes 2004, section 103E.635, subdivision 7, is amended to 
120.14 	read:
120.15 		Subd. 7.Sale of definitive drainage bonds. The board must sell and negotiate the 
120.16 	definitive drainage bonds for at least their par value. The definitive bonds must be sold
120.17 	in accordance with section according to sections 475.56 and 475.60. 

120.18 	Sec. 2. Minnesota Statutes 2004, section 116A.20, subdivision 3, is amended to read:
120.19 		Subd. 3.How payable. The bonds shall be payable at such time or times, not to 
120.20 	exceed (1) 30 years from their date or (2) 40 years or the useful life of the asset, whichever 
120.21 	is less, if financed or guaranteed by the United States Department of Agriculture, and bear 
120.22 	such rate or rates of interest not exceeding eight percent per annum, payable annually or 
120.23 	semiannually as the county board shall by resolution determine. The years and amounts 
120.24 	of principal maturities shall be such as in the opinion of the county board are warranted 
120.25 	by the anticipated collections of the water and sewer improvement assessments without 
120.26 	regard to any limitations on such maturities imposed by section  475.54. 

120.27 	Sec. 3. Minnesota Statutes 2004, section 162.18, subdivision 1, is amended to read:
120.28 		Subdivision 1.Limitation on amount. Any city having a population of 5,000 or 
120.29 	more may in accordance with chapter 475, except as otherwise provided herein, issue and 
120.30 	sell its obligations for the purpose of establishing, locating, relocating, constructing, 
120.31 	reconstructing, and improving municipal state-aid streets therein. In the resolution 
120.32 	providing for the issuance of the obligations, the governing body of the municipality 
121.1 	shall irrevocably pledge and appropriate to the sinking fund from which the obligations 
121.2 	are payable, an amount of the moneys allotted or to be allotted to the municipality from 
121.3 	its account in the municipal state-aid street fund sufficient to pay the principal of and the 
121.4 	interest on the obligations as they respectively come due. The obligations shall be issued 
121.5 	in amounts and on terms such that the average annual amount of principal and interest due 
121.6 	in all subsequent calendar years on the obligations, including any similar obligations of 
121.7 	the municipality which are outstanding, shall not exceed 50 90  percent of the amount of 
121.8 	the last annual allotment preceding the bond issue received by the municipality from the 
121.9 	construction account in the municipal state-aid street fund; except that the municipality 
121.10 	may issue general obligation bonds for said purpose, to be purchased by it for the account 
121.11 	of any one or more of its own funds, including debt redemption funds, in which case such 
121.12 	bonds shall mature in not exceeding five years from their respective dates of issue, in 
121.13 	principal amounts not exceeding in any calendar year, with the principal amount of all 
121.14 	other municipal state-aid street obligations maturing in such year, the total amount of the 
121.15 	last annual allotment preceding the bond issue received by the municipality from the 
121.16 	construction account in the municipal state-aid street fund. All interest on the obligations 
121.17 	shall be paid out of the municipality's normal maintenance account in the municipal 
121.18 	state-aid street fund. Any such obligations may be made general obligations, but if 
121.19 	moneys of the municipality other than moneys received from the municipal state-aid street 
121.20 	fund, are used for payment of the obligations, the moneys so used shall be restored to the 
121.21 	appropriate fund from the moneys next received by the municipality from the construction 
121.22 	or maintenance account in the municipal state-aid street fund which are not required to be 
121.23 	paid into a sinking fund for obligations.

121.24 	Sec. 4. Minnesota Statutes 2004, section 162.181, subdivision 1, is amended to read:
121.25 		Subdivision 1.Limitation on amount. Except as otherwise provided herein, any 
121.26 	county may, in accordance with chapter 475, issue and sell its obligations, the total 
121.27 	amount thereof not to exceed the total of the preceding two years state-aid allotments, 
121.28 	for the purpose of establishing, locating, relocating, constructing, reconstructing, and 
121.29 	improving county state-aid highways and constructing buildings and other facilities for 
121.30 	maintaining county state-aid highways. In the resolution providing for the issuance of the 
121.31 	obligations, the county board of the county shall irrevocably pledge and appropriate to the 
121.32 	sinking fund from which the obligations are payable, an amount of the money allotted 
121.33 	or to be allotted to the county from its account in the county state-aid highway fund 
121.34 	sufficient to pay the principal of and the interest on the obligations as they respectively 
121.35 	come due. The obligations shall be issued in the amounts and on terms such that the 
122.1 	amount of principal and interest due in any calendar year on the obligations, including 
122.2 	any similar obligations of the county which are outstanding, shall not exceed 50 90 
122.3 	 percent of the amount of the last annual allotment preceding the bond issue received 
122.4 	by the county from the construction account in the county state-aid highway fund. All 
122.5 	interest on the obligations shall be paid out of the county's normal maintenance account 
122.6 	in the county state-aid highway fund. The obligations may be made general obligations, 
122.7 	but if money of the county other than money received from the county state-aid highway 
122.8 	fund, is used for payment of the obligations, the money so used shall be restored to the 
122.9 	appropriate fund from the money next received by the county from the construction or 
122.10 	maintenance account in the county state-aid highway fund which is not required to be 
122.11 	paid into a sinking fund for obligations.

122.12 	Sec. 5. Minnesota Statutes 2004, section 273.032, is amended to read:
122.13 	273.032 MARKET VALUE DEFINITION.
122.14 	For the purpose of determining any property tax levy limitation based on market 
122.15 	value, any net debt limit based on market value, any limit on the issuance of bonds, 
122.16 	certificates of indebtedness, or capital notes based on market value, any qualification 
122.17 	to receive state aid based on market value, or any state aid amount based on market 
122.18 	value, the terms "market value," "taxable market value," and "market valuation," whether 
122.19 	equalized or unequalized, mean the total taxable market value of property within the local 
122.20 	unit of government before any adjustments for tax increment, fiscal disparity, powerline 
122.21 	credit, or wind energy values, but after the limited market adjustments under section  
122.22 	273.11, subdivision 1a, and after the market value exclusions of certain improvements to 
122.23 	homestead property under section  273.11, subdivision 16. Unless otherwise provided, 
122.24 	"market value," "taxable market value," and "market valuation" for purposes of this 
122.25 	paragraph,  refer to the taxable market value for the previous assessment year. 
122.26 	For the purpose of determining any net debt limit based on market value, or any limit 
122.27 	on the issuance of bonds, certificates of indebtedness, or capital notes based on market 
122.28 	value, the terms "market value," "taxable market value," and "market valuation," whether 
122.29 	equalized or unequalized, mean the total taxable market value of property within the local 
122.30 	unit of government before any adjustments for tax increment, fiscal disparity, powerline 
122.31 	credit, or wind energy values, but after the limited market adjustments under section 
122.32 	273.11, subdivision 1a, and after the market value exclusions of certain improvements to 
122.33 	homestead property under section 273.11, subdivision 16. Unless otherwise provided, 
122.34 	"market value," "taxable market value," "market valuation" for purposes of this paragraph, 
122.35 	mean the taxable market value as last finally equalized.

123.1 	Sec. 6. Minnesota Statutes 2004, section 365A.08, is amended to read:
123.2 	365A.08 FINANCING.
123.3 	Upon adoption of the next annual budget following the creation of a subordinate 
123.4 	service district the town board shall include in the budget appropriate provisions for the 
123.5 	operation of the district including either a property tax levied only on property of the users 
123.6 	of the service within the boundaries of the district or a levy of a service charge against the 
123.7 	users of the service within the district, or a combination of a property tax and a service 
123.8 	charge on the users of the service.
123.9 	A tax or service charge or a combination of them may be imposed to finance a 
123.10 	function or service in the district that the town ordinarily provides throughout the town 
123.11 	only to the extent that there is an increase in the level of the function or service provided 
123.12 	in the service district over that provided throughout the town. In that case, in addition 
123.13 	to the townwide tax levy, an amount necessary to pay for the increase in the level of the 
123.14 	function or service may be imposed in the district.
123.15 	In the proceedings for establishment of a subordinate service district, the town may 
123.16 	prepare a street reconstruction plan that describes the streets within the district to be 
123.17 	reconstructed, the estimated costs, and any planned reconstruction of streets within the 
123.18 	district over the next five years and may include the approval of the street reconstruction 
123.19 	plan and the issuance of obligations for street reconstruction in the notice of public hearing 
123.20 	for the public hearing required by section 365A.04, subdivision 2. The town board shall 
123.21 	approve or disapprove the plan and the issuance of obligations in the resolution adopted 
123.22 	pursuant to section 365A.04, subdivision 3, and the issuance of street reconstruction 
123.23 	obligations shall be subject to the provisions for reverse referendum contained in section 
123.24 	365A.06. Following the creation of the subordinate service district and approval of the 
123.25 	plan and the street reconstruction obligations and compliance with section 365A.06, the 
123.26 	town may, without regard to the election requirement under section 475.58, subdivision 1, 
123.27 	issue and sell general obligations for street reconstruction as defined in section 475.58, 
123.28 	subdivision 3b. Obligations issued under this section are subject to the debt limit of the 
123.29 	town and are not excluded from net debt under section 475.51, subdivision 4.

123.30 	Sec. 7. Minnesota Statutes 2004, section 365A.095, is amended to read:
123.31 	365A.095 PETITION FOR REMOVAL OF DISTRICT; PROCEDURE.
123.32 	Except when obligations are outstanding under section 365A.08, a petition signed by 
123.33 	at least 75 percent of the property owners in the territory of the subordinate service district 
123.34 	requesting the removal of the district may be presented to the town board. Within 30 days 
123.35 	after the town board receives the petition, the town clerk shall determine the validity of the 
124.1 	signatures on the petition. If the requisite number of signatures are certified as valid, the 
124.2 	town board must hold a public hearing on the petitioned matter. Within 30 days after the 
124.3 	end of the hearing, the town board must decide whether to discontinue the subordinate 
124.4 	service district, continue as it is, or take some other action with respect to it.

124.5 	Sec. 8. Minnesota Statutes 2004, section 373.45, subdivision 1, is amended to read:
124.6 		Subdivision 1.Definitions. (a) As used in this section, the following terms have 
124.7 	the meanings given.
124.8 	(b) "Authority" means the Minnesota Public Facilities Authority.
124.9 	(c) "Commissioner" means the commissioner of finance.
124.10 	(d) "Debt obligation" means a general obligation bond issued by a county, a bond to 
124.11 	which the general obligation of a county is pledged under section 469.034, subdivision 2, 
124.12 	or a bond payable from a county lease obligation under section  641.24, to provide funds 
124.13 	for the construction of: 
124.14 	(1) jails;
124.15 	(2) correctional facilities;
124.16 	(3) law enforcement facilities;
124.17 	(4) social services and human services facilities; or
124.18 	(5) solid waste facilities; or
124.19 	(6) qualified housing development projects as defined in section 469.034, subdivision 
124.20 	2.

124.21 	Sec. 9. Minnesota Statutes 2004, section 469.035, is amended to read:
124.22 	469.035 MANNER OF BOND ISSUANCE; SALE.
124.23 	Bonds of an authority shall be authorized by its resolution. They may be issued in 
124.24 	one or more series and shall bear the date or dates, mature at the time or times, bear interest 
124.25 	at the rate or rates, be in the denomination or denominations, be in the form either coupon 
124.26 	or registered, carry the conversion or registration privileges, have the rank or priority, be 
124.27 	executed in the manner, be payable in the medium of payment at the place or places, and 
124.28 	be subject to the terms of redemption with or without premium, as the resolution, its trust 
124.29 	indenture or mortgage provides. The bonds may be sold at public or private sale at not 
124.30 	less than par in the manner and for the price that the authority determines to be in the best 
124.31 	interest of the authority. Notwithstanding any other law, bonds issued pursuant to sections  
124.32 	469.001 to  469.047 shall be fully negotiable. In any suit, action, or proceedings involving 
124.33 	the validity or enforceability of any bonds of an authority or the security for the bonds, 
124.34 	any bond reciting in substance that it has been issued by the authority to aid in financing a 
125.1 	project shall be conclusively deemed to have been issued for that purpose, and the project 
125.2 	shall be conclusively deemed to have been planned, located, and carried out in accordance 
125.3 	with the purposes and provisions of sections  469.001 to  469.047. 
125.4 	In cities of the first class, the governing body of the city must approve all notes 
125.5 	executed with the Minnesota Housing Finance Agency pursuant to this section if the 
125.6 	interest rate on the note exceeds seven percent.

125.7 	Sec. 10. Minnesota Statutes 2004, section 469.103, subdivision 2, is amended to read:
125.8 		Subd. 2.Form. The bonds of each series issued by the authority under this section 
125.9 	shall bear interest at a rate or rates, shall mature at the time or times within 20 30  years 
125.10 	from the date of issuance, and shall be in the form, whether payable to bearer, registrable 
125.11 	as to principal, or fully registrable, as determined by the authority. Section  469.102, 
125.12 	subdivision 6, applies to all bonds issued under this section, and the bonds and their 
125.13 	coupons, if any, when payable to bearer, shall be negotiable instruments. 

125.14 	Sec. 11. Minnesota Statutes 2005 Supplement, section 469.178, subdivision 7, is 
125.15 	amended to read:
125.16 		Subd. 7.Interfund loans. The authority or municipality may advance or loan 
125.17 	money to finance expenditures under section 469.176, subdivision 4, from its general 
125.18 	fund or any other fund under which it has legal authority to do so. The loan or advance 
125.19 	must be authorized, by resolution of the governing body or of the authority, whichever 
125.20 	has jurisdiction over the fund from which the advance or loan is made, before money 
125.21 	is transferred, advanced, or spent, whichever is earliest. The resolution may generally 
125.22 	grant to the authority the power to make interfund loans under one or more tax increment 
125.23 	financing plans or for one or more districts. The terms and conditions for repayment of 
125.24 	the loan must be provided in writing and include, at a minimum, the principal amount, 
125.25 	the interest rate, and maximum term. The maximum rate of interest permitted to be 
125.26 	charged is limited to the greater of the rates specified under section 270C.40 or 549.09
125.27 	as of the date or advance is made, unless the written agreement states that the maximum 
125.28 	interest rate will fluctuate as the interest rates specified under section 270C.40 or 549.09
125.29 	are from time to time adjusted.

125.30 	Sec. 12. Minnesota Statutes 2004, section 473.39, is amended by adding a subdivision 
125.31 	to read:
125.32 		Subd. 11.Obligations. After July 1, 2006, in addition to the authority in 
125.33 	subdivisions 1a, 1b, 1c, 1d, 1e, 1g, 1h, 1i, 1j, and 1k, the council may issue certificates of 
126.1 	indebtedness, bonds, or other obligations under this section in an amount not exceeding 
126.2 	$32,800,000 for capital expenditures as prescribed in the council's regional transit master 
126.3 	plan and transit capital improvement program and for related costs, including the costs of 
126.4 	issuance and sale of the obligations.

126.5 	EFFECTIVE DATE. This section is effective the day following final enactment.

126.6 	Sec. 13. Minnesota Statutes 2004, section 474A.062, is amended to read:
126.7 	474A.062 HESO 120-DAY ISSUANCE EXEMPTION.
126.8 	The Minnesota Higher Education Services Office is exempt from the 120-day 
126.9 	issuance requirements in this chapter and may carry forward allocations for student loan 
126.10 	bonds into three one  successive calendar years year, subject to carryforward notice 
126.11 	requirements of section  474A.131, subdivision 2. The maximum cumulative carryforward 
126.12 	is limited to $25,000,000.

126.13 	EFFECTIVE DATE. This section is effective for bond allocations made in 2006 
126.14 	and thereafter.

126.15 	Sec. 14. Minnesota Statutes 2005 Supplement, section 475.521, subdivision 4, is 
126.16 	amended to read:
126.17 		Subd. 4.Limitations on amount. A municipality may not issue bonds under this 
126.18 	section if the maximum amount of principal and interest to become due in any year on 
126.19 	all the outstanding bonds issued under this section, including the bonds to be issued, 
126.20 	will equal or exceed (1) 0.16 percent of the taxable market value of property in the 
126.21 	municipality, or (2) $100,000, whichever is greater. Calculation of the limit must be 
126.22 	made using the taxable market value for the taxes payable year in which the obligations 
126.23 	are issued and sold. In the case of a municipality with a population of 2,500 or more, the 
126.24 	bonds are subject to the net debt limits under section 475.53. In the case of a shared facility 
126.25 	in which more than one municipality participates, upon compliance by each participating 
126.26 	municipality with the requirements of subdivision 2, the limitations in this subdivision and 
126.27 	the net debt represented by the bonds shall be allocated to each participating municipality 
126.28 	in proportion to its required financial contribution to the financing of the shared facility, as 
126.29 	set forth in the joint powers agreement relating to the shared facility. This section does not 
126.30 	limit the authority to issue bonds under any other special or general law.

126.31 	Sec. 15. Laws 2005, chapter 152, article 1, section 39, subdivision 1, is amended to 
126.32 	read:
127.1 	
127.2 	Subdivision 1.  [ISSUANCE; PURPOSE.] Notwithstanding any  provision of 
127.3 	Minnesota Statutes, chapter 298, to the contrary,  the commissioner of Iron Range 
127.4 	resources and rehabilitation may shall issue revenue bonds in a principal amount of 
127.5 	$15,000,000 plus an amount sufficient to pay costs of issuance,  in one  or more series, 
127.6 	and thereafter may issue bonds to refund those bonds.  The proceeds  of the bonds must be 
127.7 	used to pay costs of issuance and to make grants to school districts  located in the taconite 
127.8 	tax relief area defined in Minnesota  Statutes, section 273.134, or the taconite assistance 
127.9 	area  defined in Minnesota Statutes, section 273.1341, to be used by  the school districts 
127.10 	to pay for health, safety, and maintenance  improvements but only if the school district 
127.11 	has levied the maximum amount allowable under law for those purposes. The amounts of 
127.12 	proceeds to be distributed to each district are as follows:
127.13 	(1) Independent School District No. 511, Aitkin, $600,000;
127.14 	(2) Independent School District No. 695, Chisholm, $700,000;
127.15 	(3) Independent School District No. 166, Cook County, $600,000;
127.16 	(4) Independent School District No. 182, Crosby-Ironton, $600,000;
127.17 	(5) Independent School District No. 696, Ely, $600,000;
127.18 	(6) Independent School District No. 2154, Eveleth-Gilbert, $1,000,000;
127.19 	(7) Independent School District No. 318, Grand Rapids, $600,000;
127.20 	(8) Independent School District No. 316, Greenway, $1,100,000;
127.21 	(9) Independent School District No. 701, Hibbing, $2,100,000;
127.22 	(10) Independent School District No. 381, Lake Superior, $600,000;
127.23 	(11) Independent School District No. 2711, Mesabi East, $3,600,000;
127.24 	(12) Independent School District No. 712, Mt. Iron-Buhl, $700,000;
127.25 	(13) Independent School District No. 319, Nashwauk/Keewatin, $700,000;
127.26 	(14) Independent School District No. 2142, St. Louis County, $600,000; and
127.27 	(15) Independent School District No. 706, Virginia, $900,000.
127.28 	

127.29 	Sec. 16. CARVER COUNTY AUTHORITY NAME CHANGE.
 127.30 	The Carver County Housing and Redevelopment Authority created under Laws, 
127.31 	1980, chapter 482, is renamed the Carver County Community Development Agency.

127.32 	Sec. 17. CITY OF WINSTED; BONDING AUTHORITY.
 127.33 	(a) The city of Winsted may issue general obligation bonds under Minnesota 
127.34 	Statutes, chapter 475, to finance the acquisition and betterment of a public works facility 
128.1 	and a facility consisting of a city hall, community center and police station, including 
128.2 	landscaping.
128.3 	(b) The bonds may be issued as general obligations of the city without an election to 
128.4 	approve the bonds under Minnesota Statutes, section 475.58.
128.5 	(c) The bonds are not included in computing any debt limitation applicable to the 
128.6 	city, including the net debt limits under Minnesota Statutes, section 475.53, and the levy 
128.7 	of taxes under Minnesota Statutes, section 475.61, to pay principal of and interest on the 
128.8 	bonds is not subject to any levy limitation.
128.9 	(d) The aggregate principal amount of bonds used to pay costs of the acquisition and 
128.10 	betterment of the public works facility and the facility consisting of a city hall, community 
128.11 	center and police station, including landscaping, may not exceed $5,000,000, plus an 
128.12 	amount equal to the costs related to issuance of the bonds and capitalized interest.

128.13 	EFFECTIVE DATE. This section is effective upon compliance by the governing 
128.14 	body of the city of Winsted with Minnesota Statutes, section 645.021, subdivision 3.

128.15 	Sec. 18. UNIFIED POOL; OFFICE OF HIGHER EDUCATION; TEMPORARY 
128.16 	PRIORITY.
 128.17 	Notwithstanding Minnesota Statutes, section 474A.091, subdivision 3, paragraph 
128.18 	(b), prior to October 1, 2006, only the following applications shall be awarded allocations 
128.19 	from the unified pool. Allocations shall be awarded in the following order of priority:
128.20 	(1) applications for student loan bonds issued by or on behalf of the Office of 
128.21 	Higher Education;
128.22 	(2) applications for residential rental project bonds;
128.23 	(3) applications for small issue bonds for manufacturing projects; and
128.24 	(4) applications for small issue bonds for agricultural development bond loan 
128.25 	projects.

128.26 	EFFECTIVE DATE. This section is effective July 1, 2006.

128.27 	Sec. 19. UNIFIED POOL; TEMPORARY PRIORITY CHANGE.
 128.28 	Notwithstanding Minnesota Statutes, section 474A.091, subdivision 3, paragraph 
128.29 	(c), on the first Monday in October, 2006, through the last Monday in November, 2006, 
128.30 	allocations shall be awarded from the unified pool in the following order of priority:
128.31 	(1) applications for mortgage bonds;
128.32 	(2) applications for public facility projects funded by public facility bonds;
128.33 	(3) applications for small issue bonds for manufacturing projects;
129.1 	(4) applications for small issue bonds for agricultural development bond loan 
129.2 	projects;
129.3 	(5) applications for residential rental project bonds;
129.4 	(6) applications for enterprise zone facility bonds;
129.5 	(7) applications for governmental bonds; and
129.6 	(8) applications for redevelopment bonds.

129.7 	EFFECTIVE DATE. This section is effective July 1, 2006.

129.8 	Sec. 20. UNIFIED POOL; OFFICE OF HIGHER EDUCATION TOTAL 
129.9 	ALLOCATION.
 129.10 	Notwithstanding Minnesota Statutes, section 474A.091, subdivision 3, paragraph (i), 
129.11 	the total amount of allocations for student loan bonds from the unified pool in calendar 
129.12 	year 2006 may not exceed 50 percent of the total in the unified pool on the day after the 
129.13 	last Monday in July, 2006.

129.14 	EFFECTIVE DATE. This section is effective July 1, 2006.

129.15 	Sec. 21. CITY OF PENNOCK; ACQUIRE REAL ESTATE, EXPEND CITY 
129.16 	FUNDS, AND CONVEY TO PRIVATE ENTITY.
 129.17 		Subdivision 1.Authorization. The city of Pennock may purchase a parcel of real 
129.18 	estate in the city consisting of four city lots and an appurtenant building formerly operated 
129.19 	as a convenience store known as Phil's Corner on the terms and conditions that may be 
129.20 	agreed upon between the city and the current owner of the parcel, and the city may expend 
129.21 	city funds to make necessary improvements to the building. Once acquired and improved 
129.22 	and in order to ensure the continued economic vitality of the city, the city may convey 
129.23 	the parcel and building by sale or lease to a private person, firm, partnership, corporation 
129.24 	or other entity for a nominal consideration or on whatever terms and conditions the 
129.25 	city and the private entity may agree upon in order for the building to be operated as a 
129.26 	commercial establishment.
129.27 		Subd. 2.Bonds. The city of Pennock may issue general obligation bonds of the 
129.28 	city in the aggregate principal amount not to exceed $250,000 to finance the project 
129.29 	authorized by subdivision 1. The bonds must be issued in compliance with Minnesota 
129.30 	Statutes, chapter 475, except that a referendum under Minnesota Statutes, section 475.58, 
129.31 	is not required. The debt represented by the bonds is not included in computing any debt 
129.32 	limitations applicable to the city, and the levy of taxes required by Minnesota Statutes, 
130.1 	section 475.61, to pay the principal of and interest on the bonds is not subject to any levy 
130.2 	limitation otherwise applicable to the city.

130.3 	EFFECTIVE DATE. Under Minnesota Statutes 2004, section 645.023, subdivision 
130.4 	1, paragraph (a), this section is effective without local approval on the day following 
130.5 	final enactment.

130.6 	Sec. 22. APPLICATION.
 130.7 	Section 12 applies in the counties of Anoka, Carver, Dakota, Hennepin, Ramsey, 
130.8 	Scott, and Washington.

130.9 	ARTICLE 10
130.10 	LOCAL DEVELOPMENT

130.11 	Section 1. Minnesota Statutes 2004, section 383A.80, subdivision 4, is amended to 
130.12 	read:
130.13 		Subd. 4.Expiration. The authority to impose the tax under this section expires 
130.14 	January 1, 2008 2013.

130.15 	Sec. 2. Minnesota Statutes 2004, section 383B.80, subdivision 4, is amended to read:
130.16 		Subd. 4.Expiration. The authority to impose the tax under this section expires 
130.17 	January 1, 2008 2013.

130.18 	Sec. 3. [383C.558] ST. LOUIS COUNTY DEED AND MORTGAGE TAX.
130.19 		Subdivision 1.Authority to impose; rate. (a) The governing body of St. Louis 
130.20 	County may impose a mortgage registry and deed tax.
130.21 	(b) The rate of the mortgage registry tax equals .0001 of the principal.
130.22 	(c) The rate of the deed tax equals .0001 of the amount.
130.23 		Subd. 2.General law provisions apply. The taxes under this section apply to 
130.24 	the same base and must be imposed, collected, administered, and enforced in the same 
130.25 	manner as provided under chapter 287 for the state mortgage registry and deed taxes. 
130.26 	All the provisions of chapter 287 apply to these taxes, except the rate is as specified in 
130.27 	subdivision 1, the term "St. Louis County" must be substituted for "the state," and the 
130.28 	revenue must be deposited as provided in subdivision 3.
130.29 		Subd. 3.Deposit of revenues. All revenues from the tax are for the use of the 
130.30 	St. Louis County Board of Commissioners and must be deposited in the county's 
130.31 	environmental response fund under section 383C.559.
131.1 		Subd. 4.Expiration. The authority to impose the tax under this section expires 
131.2 	January 1, 2013.

131.3 	Sec. 4. [383C.559] ST. LOUIS COUNTY ENVIRONMENTAL RESPONSE 
131.4 	FUND.
131.5 		Subdivision 1.Creation. An environmental response fund is created for the 
131.6 	purposes specified in this section. The taxes imposed by section 383C.558 must be 
131.7 	deposited in the fund. The board of county commissioners shall administer the fund either 
131.8 	as a county board, a housing and redevelopment authority, or a regional rail authority.
131.9 		Subd. 2.Uses of fund. The fund created in subdivision 1 must be used for the 
131.10 	following purposes:
131.11 	(1) acquisition through purchase or condemnation of lands or property which are 
131.12 	polluted or contaminated with hazardous substances;
131.13 	(2) paying the costs associated with indemnifying or holding harmless the 
131.14 	entity taking title to lands or property from any liability arising out of the ownership, 
131.15 	remediation, or use of the land or property;
131.16 	(3) paying for the costs of remediating the acquired land or property;
131.17 	(4) paying the costs associated with remediating lands or property which are polluted 
131.18 	or contaminated with hazardous substances; or
131.19 	(5) paying for the costs associated with improving the property for economic 
131.20 	development, recreational, housing, transportation or rail traffic.
131.21 		Subd. 3.Matching funds. In expending funds under this section, the county shall 
131.22 	seek matching funds from contamination cleanup funds administered by the commissioner 
131.23 	of the Department of Employment and Economic Development, the federal government, 
131.24 	the private sector, and any other source.
131.25 		Subd. 4.Bonds. The county may pledge the proceeds from the taxes imposed by 
131.26 	section  383C.558  to bonds issued under this chapter and chapters 398A, 462, 469, and 475. 
131.27 		Subd. 5.Land sales. Land or property acquired under this section may be resold 
131.28 	at fair market value. Proceeds from the sale of the land must be deposited in the 
131.29 	environmental response fund.
131.30 		Subd. 6.DOT assistance. The commissioner of transportation shall collaborate with 
131.31 	the county and any affected municipality by providing technical assistance and support in 
131.32 	cleaning up a contaminated site related to a trunk highway or railroad improvement.

131.33 	Sec. 5. [383D.75] COUNTY DEED AND MORTGAGE TAX.
132.1 		Subdivision 1.Authority to impose; rate. (a) The governing body of Dakota 
132.2 	County may impose a mortgage registry and deed tax.
132.3 	(b) The rate of the mortgage registry tax equals .0001 of the principal.
132.4 	(c) The rate of the deed tax equals .0001 of the amount.
132.5 		Subd. 2.General law provisions apply. The taxes under this section apply to 
132.6 	the same base and must be imposed, collected, administered, and enforced in the same 
132.7 	manner as provided under chapter 287 for the state mortgage registry and deed taxes. 
132.8 	All the provisions of chapter 287 apply to these taxes, except the rate is as specified in 
132.9 	subdivision 1, the term "Dakota County" must be substituted for "the state," and the 
132.10 	revenue must be deposited as provided in subdivision 3.
132.11 		Subd. 3.Deposit of revenues. All revenues from the tax are for the use of 
132.12 	the Dakota County Board of Commissioners and must be deposited in the county's 
132.13 	environmental response fund under section  383D.76.
132.14 		Subd. 4.Expiration. The authority to impose the tax under this section expires 
132.15 	January 1, 2013.

132.16 	Sec. 6. [383D.76] ENVIRONMENTAL RESPONSE FUND.
132.17 		Subdivision 1.Creation. An environmental response fund is created for the purposes 
132.18 	specified in this section. The taxes imposed by section 383D.75 must be deposited in the 
132.19 	fund. The Board of County Commissioners shall administer the fund either as a county 
132.20 	board, a housing and redevelopment authority, or a regional rail authority.
132.21 		Subd. 2.Uses of fund. The fund created in subdivision 1 must be used for the 
132.22 	following purposes:
132.23 	(1) acquisition through purchase or condemnation of lands or property which are 
132.24 	polluted or contaminated with hazardous substances;
132.25 	(2) paying the costs associated with indemnifying or holding harmless the 
132.26 	entity taking title to lands or property from any liability arising out of the ownership, 
132.27 	remediation, or use of the land or property;
132.28 	(3) paying for the costs of remediating the acquired land or property;
132.29 	(4) paying the costs associated with remediating lands or property which are polluted 
132.30 	or contaminated with hazardous substances; or
132.31 	(5) paying for the costs associated with improving the property for economic 
132.32 	development, recreational, housing, transportation or rail traffic.
132.33 		Subd. 3.Matching funds. In expending funds under this section, the county shall 
132.34 	seek matching funds from contamination cleanup funds administered by the commissioner 
133.1 	of the Department of Employment and Economic Development, the Metropolitan Council, 
133.2 	the federal government, the private sector, and any other source.
133.3 		Subd. 4.Bonds. The county may pledge the proceeds from the taxes imposed by 
133.4 	section  383D.75 to bonds issued under this chapter and chapters 398A, 462, 469, and 475. 
133.5 		Subd. 5.Land sales. Land or property acquired under this section may be resold 
133.6 	at fair market value. Proceeds from the sale of the land must be deposited in the 
133.7 	environmental response fund.
133.8 		Subd. 6.DOT assistance. The commissioner of transportation shall collaborate with 
133.9 	the county and any affected municipality by providing technical assistance and support in 
133.10 	cleaning up a contaminated site related to a trunk highway or railroad improvement.

133.11 	Sec. 7. Minnesota Statutes 2004, section 469.176, subdivision 3, is amended to read:
133.12 		Subd. 3.Limitation on administrative expenses. (a) For districts for which 
133.13 	certification was requested before August 1, 1979, or after June 30, 1982 and before 
133.14 	August 1, 2001, no tax increment shall be used to pay any administrative expenses for 
133.15 	a project which exceed ten percent of the total estimated tax increment expenditures 
133.16 	authorized by the tax increment financing plan or the total tax increment expenditures 
133.17 	for the project, whichever is less.
133.18 	(b) For districts for which certification was requested after July 31, 1979, and before 
133.19 	July 1, 1982, no tax increment shall be used to pay administrative expenses, as defined in 
133.20 	Minnesota Statutes 1980, section  273.73, for a district which exceeds five percent of the 
133.21 	total tax increment expenditures authorized by the tax increment financing plan or the total 
133.22 	estimated tax increment expenditures for the district, whichever is less. 
133.23 	(c) For districts for which certification was requested after July 31, 2001, no tax 
133.24 	increment may be used to pay any administrative expenses for a project which exceed 
133.25 	ten percent of total estimated tax increment expenditures authorized by the tax increment 
133.26 	financing plan or the total tax increments, as defined in section  469.174, subdivision 25, 
133.27 	clause (1), from the district, whichever is less. 
133.28 	(d) No administrative expenses or consulting costs incurred before certification of a 
133.29 	district may be paid from tax increments.

133.30 	Sec. 8. Minnesota Statutes 2005 Supplement, section 469.1763, subdivision 2, is 
133.31 	amended to read:
133.32 		Subd. 2.Expenditures outside district. (a) For each tax increment financing 
133.33 	district, an amount equal to at least 75 percent of the total revenue derived from tax 
133.34 	increments paid by properties in the district must be expended on activities in the district 
134.1 	or to pay bonds, to the extent that the proceeds of the bonds were used to finance activities 
134.2 	in the district or to pay, or secure payment of, debt service on credit enhanced bonds. 
134.3 	For districts, other than redevelopment districts for which the request for certification 
134.4 	was made after June 30, 1995, the in-district percentage for purposes of the preceding 
134.5 	sentence is 80 percent. Not more than 25 percent of the total revenue derived from tax 
134.6 	increments paid by properties in the district may be expended, through a development fund 
134.7 	or otherwise, on activities outside of the district but within the defined geographic area of 
134.8 	the project except to pay, or secure payment of, debt service on credit enhanced bonds. 
134.9 	For districts, other than redevelopment districts for which the request for certification was 
134.10 	made after June 30, 1995, the pooling percentage for purposes of the preceding sentence is 
134.11 	20 percent. The revenue derived from tax increments for the district that are expended on 
134.12 	costs under section 469.176, subdivision 4h, paragraph (b), may be deducted first before 
134.13 	calculating the percentages that must be expended within and without the district.
134.14 	(b) In the case of a housing district, a housing project, as defined in section 469.174, 
134.15 	subdivision 11, is an activity in the district.
134.16 	(c) All administrative expenses are for activities outside of the district, except that 
134.17 	if the only expenses for activities outside of the district under this subdivision are for 
134.18 	the purposes described in paragraph (d), administrative expenses will be considered as 
134.19 	expenditures for activities in the district.
134.20 	(d) The authority may elect, in the tax increment financing plan for the district, 
134.21 	to increase by up to ten percentage points the permitted amount of expenditures for 
134.22 	activities located outside the geographic area of the district under paragraph (a). As 
134.23 	permitted by section 469.176, subdivision 4k, the expenditures, including the permitted 
134.24 	expenditures under paragraph (a), need not be made within the geographic area of the 
134.25 	project. Expenditures that meet the requirements of this paragraph are legally permitted 
134.26 	expenditures of the district, notwithstanding section 469.176, subdivisions 4b, 4c, and 4j. 
134.27 	To qualify for the increase under this paragraph, the expenditures must:
134.28 	(1) be used exclusively to assist housing that meets the requirement for a qualified 
134.29 	low-income building, as that term is used in section 42 of the Internal Revenue Code;
134.30 	(2) not exceed the qualified basis of the housing, as defined under section 42(c) of 
134.31 	the Internal Revenue Code, less the amount of any credit allowed under section 42 of 
134.32 	the Internal Revenue Code; and
134.33 	(3) be used to:
134.34 	(i) acquire and prepare the site of the housing;
134.35 	(ii) acquire, construct, or rehabilitate the housing; or
134.36 	(iii) make public improvements directly related to the housing.
135.1 	(e) For a district created within a biotechnology and health sciences industry zone 
135.2 	as defined in section 469.330, subdivision 6, or for an existing district located within 
135.3 	such a zone,  tax increment derived from such a district may be expended outside of 
135.4 	the district but within the zone only for expenditures required for the construction of 
135.5 	public infrastructure necessary to support the activities of the zone. Public infrastructure 
135.6 	expenditures are considered as expenditures for activities within the district.

135.7 	Sec. 9. Minnesota Statutes 2004, section 469.1763, subdivision 3, is amended to read:
135.8 		Subd. 3.Five-year rule. (a) Revenues derived from tax increments are considered 
135.9 	to have been expended on an activity within the district under subdivision 2 only if one 
135.10 	of the following occurs:
135.11 	(1) before or within five years after certification of the district, the revenues are 
135.12 	actually paid to a third party with respect to the activity;
135.13 	(2) bonds, the proceeds of which must be used to finance the activity, are issued and 
135.14 	sold to a third party before or within five years after certification, the revenues are spent 
135.15 	to repay the bonds, and the proceeds of the bonds either are, on the date of issuance, 
135.16 	reasonably expected to be spent before the end of the later of (i) the five-year period, or 
135.17 	(ii) a reasonable temporary period within the meaning of the use of that term under section 
135.18 	148(c)(1) of the Internal Revenue Code, or are deposited in a reasonably required reserve 
135.19 	or replacement fund;
135.20 	(3) binding contracts with a third party are entered into for performance of the 
135.21 	activity before or within five years after certification of the district and the revenues are 
135.22 	spent under the contractual obligation;
135.23 	(4) costs with respect to the activity are paid before or within five years after 
135.24 	certification of the district and the revenues are spent to reimburse a party for payment 
135.25 	of the costs, including interest on unreimbursed costs; or
135.26 	(5) expenditures are made for housing purposes as permitted by subdivision 2, 
135.27 	paragraph (b), or for public infrastructure purposes within a zone as permitted by 
135.28 	subdivision 2, paragraph (e).
135.29 	(b) For purposes of this subdivision, bonds include subsequent refunding bonds if 
135.30 	the original refunded bonds meet the requirements of paragraph (a), clause (2).

135.31 	Sec. 10. Minnesota Statutes 2004, section 469.1763, subdivision 4, is amended to read:
135.32 		Subd. 4.Use of revenues for decertification. (a) In each year beginning with the 
135.33 	sixth year following certification of the district, if the applicable in-district percent of the 
135.34 	revenues derived from tax increments paid by properties in the district exceeds the amount 
136.1 	of expenditures that have been made for costs permitted under subdivision 3, an amount 
136.2 	equal to the difference between the in-district percent of the revenues derived from tax 
136.3 	increments paid by properties in the district and the amount of expenditures that have 
136.4 	been made for costs permitted under subdivision 3 must be used and only used to pay or 
136.5 	defease the following or be set aside to pay the following:
136.6 	(1) outstanding bonds, as defined in subdivision 3, paragraphs (a), clause (2), and (b);
136.7 	(2) contracts, as defined in subdivision 3, paragraph (a), clauses (3) and (4); or
136.8 	(3) credit enhanced bonds to which the revenues derived from tax increments are 
136.9 	pledged, but only to the extent that revenues of the district for which the credit enhanced 
136.10 	bonds were issued are insufficient to pay the bonds and to the extent that the increments 
136.11 	from the applicable pooling percent share for the district are insufficient; or
136.12 	(4) the amount provided by the tax increment financing plan to be paid under 
136.13 	subdivision 2, paragraph (e).
136.14 	(b) When the outstanding bonds have been defeased and when sufficient money 
136.15 	has been set aside to pay contractual obligations as defined in subdivision 3, paragraph 
136.16 	(a), clauses (3) and (4), the district must be decertified and the pledge of tax increment 
136.17 	discharged.

136.18 	Sec. 11. Minnesota Statutes 2004, section 469.312, subdivision 5, is amended to read:
136.19 		Subd. 5.Duration limit. (a) The maximum duration of a zone is 12 years. The 
136.20 	applicant may request a shorter duration. The commissioner may specify a shorter 
136.21 	duration, regardless of the requested duration.
136.22 	(b) The duration limit under this subdivision and the duration of the zone for 
136.23 	purposes of allowance of tax incentives described in section 469.315 is extended by three 
136.24 	calendar years for each parcel of property that meets the following requirements:
136.25 	(1) the qualified business operates an ethanol plant, as defined in section 41A.09, on 
136.26 	the site that includes the parcel; and 
136.27 	(2) the business subsidy agreement was executed after April 30, 2006.

136.28 	EFFECTIVE DATE. This section is effective the day following final enactment.

136.29 	Sec. 12. Laws 1994, chapter 587, article 9, section 20, subdivision 1, is amended to 
136.30 	read:
136.31 	
136.32 		Subdivision 1.Establishment. The city of Brooklyn Park may establish an 
136.33 	economic development tax increment financing district in which 15 percent all of the 
136.34 	revenue generated from tax increment in any year that is not expended pursuant to a 
137.1 	pledge given or encumbrance created before January 1, 2006, is deposited in the housing 
137.2 	development account of the authority and expended according to the tax increment 
137.3 	financing plan.

137.4 	Sec. 13. Laws 1994, chapter 587, article 9, section 20, subdivision 2, is amended to 
137.5 	read:
137.6 	
137.7 		Subd. 2.Eligible activities. The authority must identify in the plan the housing 
137.8 	activities that will be assisted by the housing development account.  Housing activities 
137.9 	may include rehabilitation, acquisition, demolition, and financing of new or existing 
137.10 	single family or multifamily housing.  Housing activities listed in the plan need not be 
137.11 	located within the district or project area but must be activities that meet the requirements 
137.12 	of a qualified housing district under Minnesota Statutes, section 273.1399 or 469.1761, 
137.13 	subdivision 2, for owner-occupied housing or 469.174, subdivision 29, clause (1), for 
137.14 	rental housing.

137.15 	Sec. 14. ANOKA COUNTY DEED AND MORTGAGE TAX.
 137.16 		Subdivision 1.Authority to impose; rate. (a) The governing body of Anoka 
137.17 	County may impose a mortgage registry and deed tax.
137.18 	(b) The rate of the mortgage registry tax equals .0001 of the principal.
137.19 	(c) The rate of the deed tax equals .0001 of the amount.
137.20 		Subd. 2.General law provisions apply. The taxes under this section apply to 
137.21 	the same base and must be imposed, collected, administered, and enforced in the same 
137.22 	manner as provided under chapter 287 for the state mortgage registry and deed taxes. 
137.23 	All the provisions of chapter 287 apply to these taxes, except the rate is as specified 
137.24 	in subdivision 1, the term "Anoka County" must be substituted for "the state," and the 
137.25 	revenue must be deposited as provided in subdivision 3.
137.26 		Subd. 3.Deposit of revenues. All revenues from the tax are for the use of the Anoka 
137.27 	County Board of Commissioners and must be deposited in the county's environmental 
137.28 	response fund under section 15.
137.29 		Subd. 4.Expiration. The authority to impose the tax under this section expires 
137.30 	January 1, 2013.

137.31 	Sec. 15. ANOKA COUNTY ENVIRONMENTAL RESPONSE FUND.
 137.32 		Subdivision 1.Creation. An environmental response fund is created for the 
137.33 	purposes specified in this section. The taxes imposed by section 14 must be deposited 
138.1 	in the fund. The Board of County Commissioners shall administer the fund either as a 
138.2 	county board, a housing and redevelopment authority, or a regional rail authority.
138.3 		Subd. 2.Uses of fund. The fund created in subdivision 1 must be used for the 
138.4 	following purposes:
138.5 	(1) acquisition through purchase or condemnation of lands or property which are 
138.6 	polluted or contaminated with hazardous substances;
138.7 	(2) paying the costs associated with indemnifying or holding harmless the 
138.8 	entity taking title to lands or property from any liability arising out of the ownership, 
138.9 	remediation, or use of the land or property;
138.10 	(3) paying for the costs of remediating the acquired land or property;
138.11 	(4) paying the costs associated with remediating lands or property which are polluted 
138.12 	or contaminated with hazardous substances; or
138.13 	(5) paying for the costs associated with improving the property for economic 
138.14 	development, recreational, housing, transportation or rail traffic.
138.15 		Subd. 3.Matching funds. In expending funds under this section, the county shall 
138.16 	seek matching funds from contamination cleanup funds administered by the commissioner 
138.17 	of the Department of Employment and Economic Development, the Metropolitan Council, 
138.18 	the federal government, the private sector, and any other source.
138.19 		Subd. 4.Bonds. The county may pledge the proceeds from the taxes imposed by 
138.20 	section 14 to bonds issued under this chapter and chapters 398A, 462, 469, and 475. 
138.21 		Subd. 5.Land sales. Land or property acquired under this section may be resold 
138.22 	at fair market value. Proceeds from the sale of the land must be deposited in the 
138.23 	environmental response fund.
138.24 		Subd. 6.DOT assistance. The commissioner of transportation shall collaborate with 
138.25 	the county and any affected municipality by providing technical assistance and support in 
138.26 	cleaning up a contaminated site related to a trunk highway or railroad improvement.

138.27 	Sec. 16. CITY OF BLOOMINGTON; TIF DISTRICT EXTENSION.
 138.28 	Notwithstanding the provisions of Minnesota Statutes, section 469.176, or Laws 
138.29 	1996, chapter 464, article 1, section 8, or any other law to the contrary, the city of 
138.30 	Bloomington and its port authority may elect to extend the duration limits of tax increment 
138.31 	financing district No. 1-G, containing the former Met Center property, for a period through 
138.32 	December 31, 2033, and tax increment financing district No. 1-C, containing the Mall of 
138.33 	America development, for a period through December 31, 2033.

138.34 	EFFECTIVE DATE. This section is effective upon compliance by the governing 
138.35 	body of the city of Bloomington with the requirements of Minnesota Statutes, section 
139.1 	645.021, and by the governing bodies of the county, city, and school district as required 
139.2 	by Minnesota Statutes, section 469.1782, subdivision 2.

139.3 	Sec. 17. CITY OF BROOKLYN PARK TAX INCREMENT FINANCING 
139.4 	DISTRICT EXTENSION.
 139.5 	Notwithstanding Minnesota Statutes, section 469.176, subdivision 1b, or any other 
139.6 	law to the contrary, the duration limit that applies to the economic development tax 
139.7 	increment financing district established under Laws 1994, chapter 587, article 9, section 
139.8 	20, is extended to December 31, 2020.

139.9 	Sec. 18. BURNSVILLE; NORTHWEST QUADRANT TAX INCREMENT 
139.10 	FINANCING.
 139.11 		Subdivision 1.Definitions. (a) For the purposes of this section, the words and 
139.12 	phrases defined have the meanings given them in this subdivision.
139.13 	(b) "Project area" means the area in the city bounded on the south, southeast, and 
139.14 	southwest by the southerly right-of-way line of Minnesota Trunk Highway 13; on the east 
139.15 	by the easterly right-of-way line of Interstate Highway I-35W; on the north and northwest 
139.16 	by the Minnesota River; and on the west by the westerly corporate limits of the city; 
139.17 	together with a single parcel to the east of said Interstate Highway I-35W described as the 
139.18 	North 1370 feet of the West 1075 feet of the NW 1/4 of Section 34 Township 27 Range 24 
139.19 	in the city of Burnsville, Dakota County, except the North 50 feet thereof; provided that 
139.20 	the project area includes the rights-of-way for all present and future highway interchanges 
139.21 	abutting the area described in this paragraph.
139.22 	(c) "Soils deficiency district" means a type of tax increment financing district 
139.23 	consisting of a portion of the project area in which the city finds by resolution that the 
139.24 	following conditions exist:
139.25 	(1) unusual terrain or soil deficiencies for 80 percent of the acreage in the district 
139.26 	require substantial filling, grading, or other physical preparation for use;
139.27 	(2) the estimated cost of the physical preparation under clause (1), but excluding 
139.28 	costs directly related to roads as defined in Minnesota Statutes, section 160.01, and local 
139.29 	improvement as described in Minnesota Statutes, section 429.021, subdivision 1, clauses 
139.30 	(1) to (7), (11) and (12), and 430.01, exceeds the fair market value of the land before 
139.31 	completion of the preparation.
139.32 		Subd. 2.Special rules. (a) If the city elects, upon the adoption of the tax increment 
139.33 	financing plan for a district, the rules under this section apply to a redevelopment district, 
139.34 	renewal and renovation district, soils condition district, or soils deficiency district 
140.1 	established by the city of Burnsville or a development authority of the city in the project 
140.2 	area.
140.3 	(b) The five-year rule under Minnesota Statutes, section 469.1763, subdivisions 3 
140.4 	and 4, is extended to ten years for any district.
140.5 	(c) The limitations on spending tax increment outside of the district under Minnesota 
140.6 	Statutes, section 469.1763, subdivision 2, do not apply, but increments may only be 
140.7 	expended on improvements or activities within the project area.
140.8 	(d) In the case of a soil deficiency district:
140.9 	(1) increments may be collected through 20 years after the receipt by the authority of 
140.10 	the first increment from the district; and
140.11 	(2) except as otherwise provided in this subdivision, increments may be used only 
140.12 	to: (i) acquire parcels on which the improvements described in clause (ii) will occur; (ii) 
140.13 	pay for the cost of correcting the unusual terrain or soil deficiencies and the additional cost 
140.14 	of installing public improvements directly caused by the deficiencies; and (iii) pay for the 
140.15 	administrative expenses of the authority allocable to the district.
140.16 	(e) Increments spent for any infrastructure costs (whether inside a district or outside 
140.17 	a district but within the project area) are deemed to satisfy the requirements of paragraph 
140.18 	(d) and Minnesota Statutes, section 469.176, subdivisions 4b and 4j.
140.19 	(f) The authority to approve tax increment financing plans to establish tax increment 
140.20 	financing districts under this section expires December 31, 2026.

140.21 	EFFECTIVE DATE. This section is effective upon compliance with Minnesota 
140.22 	Statutes, section 645.021, subdivision 3.

140.23 	Sec. 19. BURNSVILLE; HEART OF THE CITY TAX INCREMENT 
140.24 	FINANCING DISTRICT.
 140.25 	Notwithstanding any contrary provision of law, the five-year rule under Minnesota 
140.26 	Statutes, section 469.1763, subdivisions 3 and 4, is extended to ten years for tax increment 
140.27 	derived from the parcel described as Lot 2, Block 1, Nicollet Commons Park within tax 
140.28 	increment financing District No. 6 established by the city and its economic development 
140.29 	authority on April 15, 2002.

140.30 	EFFECTIVE DATE. This section is effective upon compliance with Minnesota 
140.31 	Statutes, section 645.021, subdivision 3.

140.32 	Sec. 20. CITY OF DETROIT LAKES; REDEVELOPMENT TAX INCREMENT 
140.33 	FINANCING DISTRICT.
 141.1 		Subdivision 1.Authorization. At the election of the governing body of the city of 
141.2 	Detroit Lakes, upon adoption of the tax increment financing plan for the district described 
141.3 	in this section, the rules provided under this section apply to each such district.
141.4 		Subd. 2.Definition. In this section, "district" means a redevelopment district 
141.5 	established by the city of Detroit Lakes or the Detroit Lakes Development Authority 
141.6 	within the following area:
141.7 	Beginning at the intersection of Washington Avenue and the Burlington Northern 
141.8 	Santa Fe railroad then east to the intersection of Roosevelt Avenue then south to the 
141.9 	intersection of Highway 10/Frazee Street then west to the intersection of Frazee Street and 
141.10 	the alley that parallels Washington Avenue then north to the point of beginning.
141.11 	More than one district may be created under this section.
141.12 		Subd. 3.Qualification as redevelopment district; special rules. The district shall 
141.13 	be a redevelopment district under Minnesota Statutes, section 469.174, subdivision 10. All 
141.14 	buildings that are removed to facilitate the Highway 10 Realignment Project are deemed 
141.15 	to be "structurally substandard." The three-year limit after demolition of the buildings to 
141.16 	request tax increment financing certification provided in Minnesota Statutes, section 
141.17 	469.174, subdivision 10, paragraph (d), clause (1), does not apply.
141.18 		Subd. 4.Expiration. The authority to approve tax increment financing plans to 
141.19 	establish a tax increment financing redevelopment district subject to this section expires 
141.20 	on December 31, 2014.
141.21 		Subd. 5.Effective date. This section is effective upon approval of the governing 
141.22 	body of the city of Detroit Lakes and compliance with Minnesota Statutes, section 
141.23 	645.021, subdivision 3.

141.24 	Sec. 21. CITIES OF ELGIN, EYOTA, BYRON, AND ORONOCO; TAX 
141.25 	INCREMENT FINANCING DISTRICTS.
 141.26 		Subdivision 1.Authorization. Notwithstanding the mileage limitation in Minnesota 
141.27 	Statutes, section 469.174, subdivision 27, the cities of Elgin, Eyota, Byron, and Oronoco 
141.28 	are deemed to be small cities for purposes of Minnesota Statutes, sections 469.174 to 
141.29 	469.1799, as long as they do not exceed the population limit in that section.
141.30 		Subd. 2.Local approval. This section is effective for each of the cities of Elgin, 
141.31 	Eyota, Byron, and Oronoco upon approval of that city's governing body and compliance 
141.32 	with Minnesota Statutes, section 645.021, subdivisions 2 and 3.

141.33 	Sec. 22. CITY OF MINNEAPOLIS; HOMELESS ASSISTANCE TAX 
141.34 	INCREMENT DISTRICT.
 142.1 		Subdivision 1.Definitions. (a) "City" means the city of Minneapolis.
142.2 	(b) "Homeless assistance tax increment district" means a contiguous area of the 
142.3 	city that:
142.4 	(1) is no larger than six acres;
142.5 	(2) is located within the boundaries of a city municipal development district; and
142.6 	(3) contains at least two shelters for homeless persons that have been owned or 
142.7 	operated by nonprofit corporations that (i) are qualified charitable organizations under 
142.8 	section 501(c)(3) of the United States Internal Revenue Code, (ii) have operated such 
142.9 	homeless facilities within the district for at least five years, and (iii) have been recipients 
142.10 	of emergency services grants under Minnesota Statutes, section 256E.36.
142.11 		Subd. 2.Establishment of tax increment district. The city may create one 
142.12 	homeless assistance tax increment district. To establish the homeless assistance tax 
142.13 	increment district, the city shall adopt a homeless assistance tax increment plan and 
142.14 	otherwise comply with the requirements of Minnesota Statutes, section 469.175, except 
142.15 	that the determinations required in Minnesota Statutes, section 469.175, subdivision 3, 
142.16 	paragraph (b), clauses (1) and (2), items (i) and (ii), are not required.
142.17 		Subd. 3.Application of tax increment law. Minnesota Statutes, sections 469.174 
142.18 	to 469.179, shall apply to the administration of the district, except:
142.19 	(1) as this section provides otherwise; and
142.20 	(2) with respect to the portion of the increment to be expended for homeless shelter 
142.21 	and services pursuant to subdivision 5, paragraph (b):
142.22 	(i) the use for which tax increment that may be expended is as provided by 
142.23 	subdivision 5; and
142.24 	(ii) Minnesota Statutes, sections 469.1761 and 469.1763, do not apply.
142.25 		Subd. 4.Duration limitation. No tax increment generated by the district shall 
142.26 	be paid to the city after the expiration of 25 years from the receipt by the city of the 
142.27 	first increment from that district.
142.28 		Subd. 5.Limitations on use of increment. (a) All increment received by the city 
142.29 	from the district shall be used in accordance with the homeless assistance tax increment 
142.30 	district plan.
142.31 	(b) No less than 40 percent of the increment, after deduction of allowable 
142.32 	administrative expenses under Minnesota Statutes, section 469.176, subdivision 3, shall 
142.33 	be used to provide emergency shelter and services for homeless persons within and 
142.34 	outside the district.
142.35 	(c) The remainder of the tax increment derived from the district shall be used for 
142.36 	purposes allowed under Minnesota Statutes, section 469.176, subdivision 4.
143.1 		Subd. 6.Applicability of other laws. References in Minnesota Statutes to tax 
143.2 	increment financing districts created and tax increment generated under Minnesota 
143.3 	Statutes, sections 469.174 to 469.179, include the homeless assistance district and tax 
143.4 	increment subject to this section.

143.5 	EFFECTIVE DATE. This section is effective upon compliance by the city of 
143.6 	Minneapolis with Minnesota Statutes, section 645.021.

143.7 	Sec. 23. CITY OF NEW BRIGHTON; TAX INCREMENT FINANCING; 
143.8 	EXPENDITURES OUTSIDE DISTRICT.
 143.9 	Notwithstanding the provisions of Minnesota Statutes, section 469.1763, subdivision 
143.10 	2, the city of New Brighton may expend tax increments from District No. 26 for eligible 
143.11 	activities described in Minnesota Statutes, section 469.176, subdivision 4e, outside of Tax 
143.12 	Increment District No. 26, but only within the area described in Laws 1998, chapter 389, 
143.13 	article 11, section 24, subdivision 1. Minnesota Statutes, section 469.1763, subdivision 3, 
143.14 	and Minnesota Statutes, section 469.1763, subdivision 4, shall not apply to expenditures 
143.15 	permitted in this section.

143.16 	EFFECTIVE DATE. This section is effective upon approval by the governing body 
143.17 	of the city of New Brighton and compliance with Minnesota Statutes, section 645.021, 
143.18 	subdivision 3.

143.19 	Sec. 24. CITY OF RAMSEY; TAX INCREMENT FINANCING.
 143.20 		Subdivision 1.Authority. The governing body of the city of Ramsey or a 
143.21 	development authority established by the city may create a tax increment financing 
143.22 	district, consisting of the property defined as outlot L, Ramsey Town Center Addition and 
143.23 	lot 2, block 1, Ramsey Town Center Addition.
143.24 		Subd. 2.Special rules. Establishment of the district is subject to the requirements 
143.25 	of Minnesota Statutes, sections 469.174 to 469.1799 with the following exceptions:
143.26 	(1) the district is deemed to be a redevelopment district without regard to the 
143.27 	requirements of Minnesota Statutes, section 469.174, subdivision 10;
143.28 	(2) the provisions of Minnesota Statutes, section 469.176, subdivision 7, do not 
143.29 	apply to the district;
143.30 	(3) housing receiving assistance, directly or indirectly, from the expenditures of 
143.31 	the district's increments must meet the requirements of Minnesota Statutes, sections 
143.32 	469.174, subdivision 11, and 469.1761; 
144.1 	(4) the district's increments must be used only to pay for costs related to the Sunwood 
144.2 	on Grand project, including land acquisition, public infrastructure, parking ramps, and 
144.3 	administrative expenses, whether paid directly to reimburse for payment of those costs or 
144.4 	to repay bonds or other obligations issued and sold to pay those costs initially; and
144.5 	(5) general obligations bonds issued to pay for costs related to the project subject 
144.6 	to this section are not subject to the net debt limit of the city under Minnesota Statutes, 
144.7 	section 475.53, or any other law or charter provision.

144.8 	EFFECTIVE DATE. This section is effective upon local approval by the governing 
144.9 	body of the city of Ramsey in compliance with the requirement of Minnesota Statutes, 
144.10 	section 645.021.

144.11 	Sec. 25. CITY OF ST. MICHAEL; TAX INCREMENT FINANCING DISTRICT.
 144.12 		 Subdivision 1.Establishment of district. The city of St. Michael may establish 
144.13 	a redevelopment tax increment financing district subject to Minnesota Statutes, sections 
144.14 	469.174 to 469.179, except as provided in this section.  The district must be established 
144.15 	within an area that includes the downtown and town center areas as designated by the city 
144.16 	as well as all parcels adjacent to marked Trunk Highway 241 within the city.
144.17 		 Subd. 2.Special rules. (a) Notwithstanding the requirements of Minnesota 
144.18 	Statutes, section 469.174, subdivision 10, the district may be established and operated as 
144.19 	a redevelopment district.
144.20 	(b) Notwithstanding the restrictions of Minnesota Statutes, sections 469.176, 
144.21 	subdivisions 4 and 4j, and 469.1763, subdivision 2, revenues derived from tax increments 
144.22 	from the district created under this section may be used to meet the cost of land 
144.23 	acquisition, removal of buildings in the right-of-way acquisition area, and other costs 
144.24 	incurred by the city of St. Michael in the expansion and improvement of marked Trunk 
144.25 	Highway 241 within the city.
144.26 	(c) Minnesota Statutes, section 469.176, subdivision 5, does not apply to the district.

144.27 	EFFECTIVE DATE. This section is effective the day after the governing body of 
144.28 	the city of St. Michael complies with Minnesota Statutes, section 645.021, subdivision 3.

144.29 	Sec. 26. QUALIFIED BUSINESS; SMALL DECLINING POPULATION 
144.30 	COUNTY.
 144.31 	Notwithstanding Minnesota Statutes, section 469.310, subdivision 11, paragraph 
144.32 	(f), a qualified business for purposes of Minnesota Statutes, section 469.310, subdivision 
144.33 	11, includes a food service business if the business is located solely in a qualified county, 
145.1 	and if the business began operations in January 2004, with employment of between 15 
145.2 	and 20 part-time and full-time employees. For the purpose of this section, a "qualified 
145.3 	county" is a county having an estimated population of less than 5,000 in 2004 and that 
145.4 	experienced a reduction in population of at least 7.5 percent between 2000 and 2004, 
145.5 	according to the state demographer.

145.6 	EFFECTIVE DATE. This section is effective the day following final enactment.

145.7 	Sec. 27. REPEALER.
 145.8 	(a) Laws 1994, chapter 587, article 9, section 20, subdivision 4, is repealed.
145.9 	(b) Laws 1996, chapter 464, article 1, section 8, subdivision 5, is repealed.

145.10 	Sec. 28.  REPEALER; DISTRIBUTION OF CERTAIN BURNSVILLE TAX 
145.11 	INCREMENTS.
 145.12 	Laws 1998, chapter 389, article 11, section 18, is repealed. The balance of tax 
145.13 	increments derived from tax increment financing district no. 2-1 as of the effective date 
145.14 	of this act must be returned to the county for distribution in accordance with Minnesota 
145.15 	Statutes, section 469.176, subdivision 2.

145.16 	EFFECTIVE DATE. This section is effective upon compliance with Minnesota 
145.17 	Statutes, section 645.021, subdivision 3.

145.18 	ARTICLE 11
145.19 	AIDS AND CREDITS

145.20 	Section 1. Minnesota Statutes 2005 Supplement, section 477A.011, subdivision 36, 
145.21 	is amended to read:
145.22 		Subd. 36.City aid base. (a) Except as otherwise provided in this subdivision, 
145.23 	"city aid base" is zero.
145.24 	(b) The city aid base for any city with a population less than 500 is increased by 
145.25 	$40,000 for aids payable in calendar year 1995 and thereafter, and the maximum amount 
145.26 	of total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is also 
145.27 	increased by $40,000 for aids payable in calendar year 1995 only, provided that:
145.28 	(i) the average total tax capacity rate for taxes payable in 1995 exceeds 200 percent;
145.29 	(ii) the city portion of the tax capacity rate exceeds 100 percent; and
145.30 	(iii) its city aid base is less than $60 per capita.
146.1 	(c) The city aid base for a city is increased by $20,000 in 1998 and thereafter and 
146.2 	the maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
146.3 	paragraph (c), is also increased by $20,000 in calendar year 1998 only, provided that:
146.4 	(i) the city has a population in 1994 of 2,500 or more;
146.5 	(ii) the city is located in a county, outside of the metropolitan area, which contains a 
146.6 	city of the first class;
146.7 	(iii) the city's net tax capacity used in calculating its 1996 aid under section 
146.8 	477A.013 is less than $400 per capita; and
146.9 	(iv) at least four percent of the total net tax capacity, for taxes payable in 1996, of 
146.10 	property located in the city is classified as railroad property.
146.11 	(d) The city aid base for a city is increased by $200,000 in 1999 and thereafter and 
146.12 	the maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
146.13 	paragraph (c), is also increased by $200,000 in calendar year 1999 only, provided that:
146.14 	(i) the city was incorporated as a statutory city after December 1, 1993;
146.15 	(ii) its city aid base does not exceed $5,600; and
146.16 	(iii) the city had a population in 1996 of 5,000 or more.
146.17 	(e) The city aid base for a city is increased by $450,000 in 1999 to 2008 and the 
146.18 	maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
146.19 	paragraph (c), is also increased by $450,000 in calendar year 1999 only, provided that:
146.20 	(i) the city had a population in 1996 of at least 50,000;
146.21 	(ii) its population had increased by at least 40 percent in the ten-year period ending 
146.22 	in 1996; and
146.23 	(iii) its city's net tax capacity for aids payable in 1998 is less than $700 per capita.
146.24 	(f) The city aid base for a city is increased by $150,000 for aids payable in 2000 and 
146.25 	thereafter, and the maximum amount of total aid it may receive under section 477A.013, 
146.26 	subdivision 9, paragraph (c), is also increased by $150,000 in calendar year 2000 only, 
146.27 	provided that:
146.28 	(1) the city has a population that is greater than 1,000 and less than 2,500;
146.29 	(2) its commercial and industrial percentage for aids payable in 1999 is greater 
146.30 	than 45 percent; and
146.31 	(3) the total market value of all commercial and industrial property in the city 
146.32 	for assessment year 1999 is at least 15 percent less than the total market value of all 
146.33 	commercial and industrial property in the city for assessment year 1998.
146.34 	(g) The city aid base for a city is increased by $200,000 in 2000 and thereafter, and 
146.35 	the maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
146.36 	paragraph (c), is also increased by $200,000 in calendar year 2000 only, provided that:
147.1 	(1) the city had a population in 1997 of 2,500 or more;
147.2 	(2) the net tax capacity of the city used in calculating its 1999 aid under section 
147.3 	477A.013 is less than $650 per capita;
147.4 	(3) the pre-1940 housing percentage of the city used in calculating 1999 aid under 
147.5 	section 477A.013 is greater than 12 percent;
147.6 	(4) the 1999 local government aid of the city under section 477A.013 is less than 
147.7 	20 percent of the amount that the formula aid of the city would have been if the need 
147.8 	increase percentage was 100 percent; and
147.9 	(5) the city aid base of the city used in calculating aid under section 477A.013
147.10 	is less than $7 per capita.
147.11 	(h) The city aid base for a city is increased by $102,000 in 2000 and thereafter, and 
147.12 	the maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
147.13 	paragraph (c), is also increased by $102,000 in calendar year 2000 only, provided that:
147.14 	(1) the city has a population in 1997 of 2,000 or more;
147.15 	(2) the net tax capacity of the city used in calculating its 1999 aid under section 
147.16 	477A.013 is less than $455 per capita;
147.17 	(3) the net levy of the city used in calculating 1999 aid under section 477A.013 is 
147.18 	greater than $195 per capita; and
147.19 	(4) the 1999 local government aid of the city under section 477A.013 is less than 
147.20 	38 percent of the amount that the formula aid of the city would have been if the need 
147.21 	increase percentage was 100 percent.
147.22 	(i) The city aid base for a city is increased by $32,000 in 2001 and thereafter, and 
147.23 	the maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
147.24 	paragraph (c), is also increased by $32,000 in calendar year 2001 only, provided that:
147.25 	(1) the city has a population in 1998 that is greater than 200 but less than 500;
147.26 	(2) the city's revenue need used in calculating aids payable in 2000 was greater 
147.27 	than $200 per capita;
147.28 	(3) the city net tax capacity for the city used in calculating aids available in 2000 
147.29 	was equal to or less than $200 per capita;
147.30 	(4) the city aid base of the city used in calculating aid under section 477A.013
147.31 	is less than $65 per capita; and
147.32 	(5) the city's formula aid for aids payable in 2000 was greater than zero.
147.33 	(j) The city aid base for a city is increased by $7,200 in 2001 and thereafter, and 
147.34 	the maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
147.35 	paragraph (c), is also increased by $7,200 in calendar year 2001 only, provided that:
147.36 	(1) the city had a population in 1998 that is greater than 200 but less than 500;
148.1 	(2) the city's commercial industrial percentage used in calculating aids payable in 
148.2 	2000 was less than ten percent;
148.3 	(3) more than 25 percent of the city's population was 60 years old or older according 
148.4 	to the 1990 census;
148.5 	(4) the city aid base of the city used in calculating aid under section 477A.013
148.6 	is less than $15 per capita; and
148.7 	(5) the city's formula aid for aids payable in 2000 was greater than zero.
148.8 	(k) The city aid base for a city is increased by $45,000 in 2001 and thereafter and by 
148.9 	an additional $50,000 in calendar years 2002 to 2011, and by an additional $89,000 in 
148.10 	calendar years 2007 to 2011, and the maximum amount of total aid it may receive under 
148.11 	section 477A.013, subdivision 9, paragraph (c), is also increased by $45,000 in calendar 
148.12 	year 2001 only, and by $50,000 in calendar year 2002 only, and by an additional $89,000 
148.13 	in calendar year 2007 only,  provided that:
148.14 	(1) the net tax capacity of the city used in calculating its 2000 aid under section 
148.15 	477A.013 is less than $810 per capita;
148.16 	(2) the population of the city declined more than two percent between 1988 and 1998;
148.17 	(3) the net levy of the city used in calculating 2000 aid under section 477A.013 is 
148.18 	greater than $240 per capita; and
148.19 	(4) the city received less than $36 per capita in aid under section 477A.013, 
148.20 	subdivision 9, for aids payable in 2000.
148.21 	(l) The city aid base for a city with a population of 10,000 or more which is located 
148.22 	outside of the seven-county metropolitan area is increased in 2002 and thereafter, and the 
148.23 	maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
148.24 	paragraph (b) or (c), is also increased in calendar year 2002 only, by an amount equal to 
148.25 	the lesser of:
148.26 	(1)(i) the total population of the city, as determined by the United States Bureau of 
148.27 	the Census, in the 2000 census, (ii) minus 5,000, (iii) times 60; or
148.28 	(2) $2,500,000.
148.29 	(m) The city aid base is increased by $50,000 in 2002 and thereafter, and the 
148.30 	maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
148.31 	paragraph (c), is also increased by $50,000 in calendar year 2002 only, provided that:
148.32 	(1) the city is located in the seven-county metropolitan area;
148.33 	(2) its population in 2000 is between 10,000 and 20,000; and
148.34 	(3) its commercial industrial percentage, as calculated for city aid payable in 2001, 
148.35 	was greater than 25 percent.
149.1 	(n) The city aid base for a city is increased by $150,000 in calendar years 2002 to 
149.2 	2011, and by an additional $50,000 in calendar years 2007 to 2016,  and the maximum 
149.3 	amount of total aid it may receive under section 477A.013, subdivision 9, paragraph (c), 
149.4 	is also increased by $150,000 in calendar year 2002 only, and by an additional $50,000 
149.5 	in calendar year 2007 only,  provided that:
149.6 	(1) the city had a population of at least 3,000 but no more than 4,000 in 1999;
149.7 	(2) its home county is located within the seven-county metropolitan area;
149.8 	(3) its pre-1940 housing percentage is less than 15 percent; and
149.9 	(4) its city net tax capacity per capita for taxes payable in 2000 is less than $900 
149.10 	per capita.
149.11 	(o) The city aid base for a city is increased by $200,000 beginning in calendar 
149.12 	year 2003 and the maximum amount of total aid it may receive under section 477A.013, 
149.13 	subdivision 9, paragraph (c), is also increased by $200,000 in calendar year 2003 only, 
149.14 	provided that the city qualified for an increase in homestead and agricultural credit aid 
149.15 	under Laws 1995, chapter 264, article 8, section 18.
149.16 	(p) The city aid base for a city is increased by $200,000 in 2004 only and the 
149.17 	maximum amount of total aid it may receive under section 477A.013, subdivision 9, is 
149.18 	also increased by $200,000 in calendar year 2004 only, if the city is the site of a nuclear 
149.19 	dry cask storage facility.
149.20 	(q) The city aid base for a city is increased by $10,000 in 2004 and thereafter and the 
149.21 	maximum total aid it may receive under section 477A.013, subdivision 9, is also increased 
149.22 	by $10,000 in calendar year 2004 only, if the city was included in a federal major disaster 
149.23 	designation issued on April 1, 1998, and its pre-1940 housing stock was decreased by 
149.24 	more than 40 percent between 1990 and 2000.
149.25 	(r) The city aid base for a city is increased by $25,000 in 2006 only and the 
149.26 	maximum total aid it may receive under section 477A.013, subdivision 9, is also increased 
149.27 	by $25,000 in calendar year 2006 only if the city had a population in 2003 of at least 1,000 
149.28 	and has a state park for which the city provides rescue services and which comprised at 
149.29 	least 14 percent of the total geographic area included within the city boundaries in 2000.
149.30 	(s) The city aid base for a city with a population less than 5,000 is increased in 
149.31 	2006 and thereafter and the minimum and maximum amount of total aid it may receive 
149.32 	under this section is also increased in calendar year 2006 only by an amount equal to 
149.33 	$6 multiplied by its population.

149.34 	EFFECTIVE DATE. This section is effective beginning with aids payable in 2007.

150.1 	Sec. 2. Minnesota Statutes 2005 Supplement, section 477A.013, subdivision 8, is 
150.2 	amended to read:
150.3 		Subd. 8.City formula aid. In calendar year 2004 and subsequent years, the 
150.4 	formula aid for a city is equal to the need increase percentage multiplied by the difference 
150.5 	between (1) the city's revenue need multiplied by its population, and (2) the sum of the 
150.6 	city's net tax capacity multiplied by the tax effort rate; the taconite aids under sections 
150.7 	298.28 and 298.282 to any city except a city directly impacted by a taconite mine or plant, 
150.8 	multiplied by the following percentages:
150.9 	(i) zero percent for aids payable in 2004;
150.10 	(ii) 25 percent for aids payable in 2005;
150.11 	(iii) 50 percent for aids payable in 2006;
150.12 	(iv) 75 percent for aids payable in 2007; and
150.13 	(v) 100 percent for aids payable in 2008 and thereafter.
150.14 	For purposes of this subdivision, "a city directly impacted by a taconite mine or 
150.15 	plant" means: (1) Babbit, (2) Eveleth, (3) Hibbing, (4) Keewatin, (5) Mountain Iron, (6) 
150.16 	Silver Bay, or (7) Virginia.
150.17 	No city may have a formula aid amount less than zero. The need increase percentage 
150.18 	must be the same for all cities.
150.19 	The applicable need increase percentage must be calculated by the Department of 
150.20 	Revenue so that the total of the aid under subdivision 9 equals the total amount available 
150.21 	for aid under section 477A.03 after the subtraction under section 477A.014, subdivisions 4 
150.22 	and 5 is 100 percent for aids payable in 2007 and thereafter.

150.23 	Sec. 3. Minnesota Statutes 2004, section 477A.013, subdivision 9, is amended to read:
150.24 		Subd. 9.City aid distribution. (a) In calendar year 2002 and thereafter, each 
150.25 	city shall receive an aid distribution equal to the sum of (1) the city formula aid under 
150.26 	subdivision 8, and (2) its city aid base.
150.27 	(b) The aid for a city in calendar year 2004 shall not exceed the amount of its aid in 
150.28 	calendar year 2003 after the reductions under Laws 2003, First Special Session chapter 21, 
150.29 	article 5.
150.30 	(c) For aids payable in 2005 and thereafter,and 2006, the total aid for any city 
150.31 	shall not exceed the sum of (1) ten percent of the city's net levy for the year prior to the 
150.32 	aid distribution plus (2) its total aid in the previous year. For aids payable in 2005 and 
150.33 	thereafter, the total aid for any city with a population of 2,500 or more may not decrease 
150.34 	from its total aid under this section in the previous year by an amount greater than ten 
150.35 	percent of its net levy in the year prior to the aid distribution.
151.1 	(d)For aids payable in 2004 only, the total aid for a city with a population less than 
151.2 	2,500 may not be less than the amount it was certified to receive in 2003 minus the greater 
151.3 	of (1) the reduction to this aid payment in 2003 under Laws 2003, First Special Session 
151.4 	chapter 21, article 5, or (2) five percent of its 2003 aid amount.(c)  For aids payable in 
151.5 	2005 and thereafter, the total aid for a city with a population less than 2,500 must not be 
151.6 	less than the amount it was certified to receive in the previous year minus five percent 
151.7 	of its 2003 certified aid amount.

151.8 	EFFECTIVE DATE. This section is effective beginning with aids payable in 2007.

151.9 	Sec. 4. Minnesota Statutes 2005 Supplement, section 477A.03, subdivision 2a, is 
151.10 	amended to read:
151.11 		Subd. 2a.Cities. For aids payable in 2004, the total aids paid under section 
151.12 	477A.013, subdivision 9, are limited to $429,000,000. For aids payable in 2005, the total 
151.13 	aids paid under section 477A.013, subdivision 9, are limited to $437,052,000. For aids 
151.14 	payable in 2006 and thereafter, the total aids paid under section 477A.013, subdivision 9, 
151.15 	is limited to $485,052,000, plus the amount of the payments provided in section 5.

151.16 	EFFECTIVE DATE. This section is effective beginning with aids payable in 2006.

151.17 	Sec. 5. Laws 2005, First Special Session chapter 3, article 2, section 5, is amended to 
151.18 	read:
151.19 	Sec. 5.  2005 AND 2006 CITY AID PAYMENTS.
151.20 	
151.21 	In 2005 and 2006, market value credit reimbursements for  each city payable under 
151.22 	Minnesota Statutes, section 273.1384,  are reduced by the dollar amount of the 2003 
151.23 	reduction in market  value credit reimbursements for that city due to Laws 2003,  First 
151.24 	Special Session chapter 21, article 5, section 12.  No  city's 2005 or 2006 market value 
151.25 	credit reimbursements are  reduced to less than zero under this section.  To the extent  
151.26 	sufficient information is available on each payment date, the  commissioner shall pay the 
151.27 	annual 2005 and 2006 market value  credit reimbursement amounts, after reduction under 
151.28 	this  section, to cities in equal installments on the dates specified  in Minnesota Statutes, 
151.29 	section 273.1384.  
151.30 	

151.31 	Sec. 6. ONETIME 2006 ADDITIONAL CITY AID.
 152.1 		Subdivision 1.Computation. For aid payable in 2006 only, the aid payable to 
152.2 	each city under Minnesota Statutes, section 477A.013, subdivision 9, is increased by the 
152.3 	difference between the amount that would have been paid to the city under that provision 
152.4 	and the amount that would be payable to the city if the aid were determined as follows:
152.5 	(1) the city revenue need under Minnesota Statutes, section 477A.011, subdivision 
152.6 	34, must be multiplied by the ratio of the annual implicit price deflator for government 
152.7 	consumption expenditures and gross investment for state and local governments as 
152.8 	prepared by the United States Department of Commerce for 2004 to the 2002 implicit 
152.9 	price deflator for state and local government purchases;
152.10 	(2) taconite aids under Minnesota Statutes, sections 298.28 and 298.282, must 
152.11 	not be added to the city net tax capacity under Minnesota Statutes, section 477A.013, 
152.12 	subdivision 8;
152.13 	(3) the need increase percentage under Minnesota Statutes, section 477A.013, 
152.14 	subdivision 8, shall be equal to 100 percent;
152.15 	(4) the restriction under Minnesota Statutes, section 477A.013, subdivision 9, that 
152.16 	the total aid for any city shall not exceed the sum of ten percent of the city's net levy in the 
152.17 	previous year plus its total aid in the previous year shall not apply; and 
152.18 	(5) no city shall receive less aid than it was originally certified to receive for aids 
152.19 	payable in 2006.
152.20 	The aid payable under this section must be used by cities for debt reduction, pension 
152.21 	funding, capital improvements, deferred maintenance, fee reduction, or to pay costs 
152.22 	related to public safety.
152.23 		Subd. 2.Appropriation; payment. The commissioner of revenue shall make the 
152.24 	payments of the additional 2006 city aid in three installments on May 1, July 20, and 
152.25 	December 26, 2006. An amount sufficient to pay the aid under this section is appropriated 
152.26 	to the commissioner of revenue from the general fund.

152.27 	EFFECTIVE DATE. This section is effective for aids payable in 2006.

152.28 	Sec. 7. COUNTY TARGETED CASE MANAGEMENT AID.
 152.29 		Subdivision 1.Distribution. For 2006 and 2007 only, county targeted case 
152.30 	management aid shall be allocated to counties based on each county's share of the state 
152.31 	total of children's social services and mental health services administered by the counties 
152.32 	under the jurisdiction of the Minnesota Department of Human Services. The aid payable 
152.33 	under this section must be used by counties to offset reductions in federal funding under 
152.34 	the Deficit Reduction Act of 2005 for targeted case management.
153.1 		Subd. 2.Appropriation; payment. For aids payable in 2006, the total aid under 
153.2 	this section is limited to $40,000,000. For aids payable in 2007, the total aid under this 
153.3 	section is limited to $20,000,000. The commissioner of revenue shall make the payments 
153.4 	of the county targeted case management aid in two installments on July 20 and December 
153.5 	26 in 2006, and on March 31 and May 31 in 2007. An amount sufficient to pay the aid 
153.6 	under this section is appropriated to the commissioner of revenue from the general fund.

153.7 	EFFECTIVE DATE. This section is effective for aids payable in 2006 and 2007.

153.8 	Sec. 8. MAHNOMEN COUNTY; TEMPORARY COUNTY AND CITY AIDS.
 153.9 	$600,000 is appropriated from the general fund to the commissioner of revenue to be 
153.10 	used to make payments to Mahnomen County and the city of Mahnomen to compensate 
153.11 	them for the loss of property tax revenue due to the placement of land located in the 
153.12 	city of Mahnomen in trust status during calendar year 2006. The appropriation shall be 
153.13 	reduced by the amount of any payment in lieu of tax received by Mahnomen County 
153.14 	or the city of Mahnomen for the property placed in trust status. The payment shall be 
153.15 	made on July 20, 2006.

153.16 	Sec. 9. COUNTY REFERENDUM COST REIMBURSEMENT; 
153.17 	APPROPRIATION.
 153.18 	If one or more bills are enacted during the 2006 session of the legislature that 
153.19 	provides for a referendum in 2006 on a proposed constitutional amendment, $122,000 is 
153.20 	appropriated from the general fund to the commissioner of revenue to be distributed to 
153.21 	the counties in proportion to each county's share of the state's registered voters. This is a 
153.22 	onetime payment, to be paid on July 20, 2006, to compensate the counties for the cost of 
153.23 	preparing ballots for the constitutional amendment or amendments.

153.24 	Sec. 10. LOCAL TRUNK HIGHWAY IMPROVEMENTS; APPROPRIATION.
 153.25 	$5,000,000 is appropriated from the general fund to the commissioner of 
153.26 	transportation to be distributed, $2,500,000 to the City of Nisswa and $2,500,000 to the 
153.27 	City of Pequot Lakes, to be used to pay the local share of trunk highway improvement 
153.28 	projects. The advisory committee established under Minnesota Statutes, section 174.52, 
153.29 	shall provide recommendations to the cities on the most efficient use of the funds provided.

154.1 	ARTICLE 12
154.2 	MINERALS

154.3 	Section 1. Minnesota Statutes 2004, section 298.001, is amended by adding a 
154.4 	subdivision to read:
154.5 		Subd. 3a.Producer. "Producer" means a person engaged in the business of mining 
154.6 	or producing iron ore, taconite concentrate, or direct reduced ore in this state.

154.7 	EFFECTIVE DATE. This section is effective for tax years beginning after 
154.8 	December 31, 2005.

154.9 	Sec. 2. Minnesota Statutes 2005 Supplement, section 298.01, subdivision 3, is 
154.10 	amended to read:
154.11 		Subd. 3.Occupation tax; other ores. Every person engaged in the business of 
154.12 	mining or producing ores in this state, except iron ore or taconite concentrates, shall pay 
154.13 	an occupation tax to the state of Minnesota as provided in this subdivision. The tax is 
154.14 	determined in the same manner as the tax imposed by section 290.02, except that sections 
154.15 	290.05, subdivision 1, clause (a), 290.17, subdivision 4, and 290.191, subdivision 2, do 
154.16 	not apply, and the occupation tax must be computed by applying to taxable income the 
154.17 	rate of 2.45 percent. A person subject to occupation tax under this section shall apportion 
154.18 	its net income on the basis of the percentage obtained by taking the sum of:
154.19 	(1) 75 percent of the percentage which the sales made within this state in connection 
154.20 	with the trade or business during the tax period are of the total sales wherever made in 
154.21 	connection with the trade or business during the tax period;
154.22 	(2) 12.5 percent of the percentage which the total tangible property used by the 
154.23 	taxpayer in this state in connection with the trade or business during the tax period is of 
154.24 	the total tangible property, wherever located, used by the taxpayer in connection with the 
154.25 	trade or business during the tax period; and
154.26 	(3) 12.5 percent of the percentage which the taxpayer's total payrolls paid or 
154.27 	incurred in this state or paid in respect to labor performed in this state in connection with 
154.28 	the trade or business during the tax period are of the taxpayer's total payrolls paid or 
154.29 	incurred in connection with the trade or business during the tax period.
154.30 	The tax is in addition to all other taxes.

154.31 	EFFECTIVE DATE. This section is effective for tax years beginning after 
154.32 	December 31, 2005.

155.1 	Sec. 3. Minnesota Statutes 2004, section 298.01, subdivision 3a, is amended to read:
155.2 		Subd. 3a.Gross income. (a) For purposes of determining a person's taxable income 
155.3 	under subdivision 3, gross income is determined by the amount of gross proceeds from 
155.4 	mining in this state under section  298.016 and includes any gain or loss recognized from 
155.5 	the sale or disposition of assets used in the business in this state. If more than one mineral, 
155.6 	metal, or energy resource referred to in section 298.016 is mined and processed at the 
155.7 	same mine and plant, a gross income for each mineral, metal, or energy resource must be 
155.8 	determined separately. The gross incomes may be combined on one occupation tax return 
155.9 	to arrive at the gross income of all production.
155.10 	(b) In applying section  290.191, subdivision 5, transfers of ores are deemed to be 
155.11 	sales outside in this state if the ores are transported out of this state after the ores have 
155.12 	been converted to a marketable quality. 

155.13 	EFFECTIVE DATE. This section is effective for tax years beginning after 
155.14 	December 31, 2005.

155.15 	Sec. 4. Minnesota Statutes 2004, section 298.01, subdivision 3b, is amended to read:
155.16 		Subd. 3b.Deductions. (a) For purposes of determining taxable income under 
155.17 	subdivision 3, the deductions from gross income include only those expenses necessary 
155.18 	to convert raw ores to marketable quality. Such expenses include costs associated with 
155.19 	refinement but do not include expenses such as transportation, stockpiling, marketing, or 
155.20 	marine insurance that are incurred after marketable ores are produced, unless the expenses 
155.21 	are included in gross income. The allowable deductions from a mine or plant that mines 
155.22 	and produces more than one mineral, metal, or energy resource must be determined 
155.23 	separately for the purposes of computing the deduction in section 290.01, subdivision 19c, 
155.24 	clause (9). These deductions may be combined on one occupation tax return to arrive at 
155.25 	the deduction from gross income for all production.
155.26 	(b) The provisions of section  290.01, subdivisions 19c, clauses (6) and (9), and 19d, 
155.27 	clauses (7) and (11), are not used to determine taxable income. 

155.28 	EFFECTIVE DATE. This section is effective for tax years beginning after 
155.29 	December 31, 2005.

155.30 	Sec. 5. Minnesota Statutes 2005 Supplement, section 298.01, subdivision 4, is 
155.31 	amended to read:
155.32 		Subd. 4.Occupation tax; iron ore; taconite concentrates. A person engaged in 
155.33 	the business of mining or producing of iron ore, taconite concentrates or direct reduced ore 
156.1 	in this state shall pay an occupation tax to the state of Minnesota. The tax is determined 
156.2 	in the same manner as the tax imposed by section 290.02, except that sections 290.05, 
156.3 	subdivision 1, clause (a), 290.17, subdivision 4, and 290.191, subdivision 2, do not apply, 
156.4 	and the occupation tax shall be computed by applying to taxable income the rate of 2.45 
156.5 	percent. A person subject to occupation tax under this section shall apportion its net 
156.6 	income on the basis of the percentage obtained by taking the sum of:
156.7 	(1) 75 percent of the percentage which the sales made within this state in connection 
156.8 	with the trade or business during the tax period are of the total sales wherever made in 
156.9 	connection with the trade or business during the tax period;
156.10 	(2) 12.5 percent of the percentage which the total tangible property used by the 
156.11 	taxpayer in this state in connection with the trade or business during the tax period is of 
156.12 	the total tangible property, wherever located, used by the taxpayer in connection with the 
156.13 	trade or business during the tax period; and
156.14 	(3) 12.5 percent of the percentage which the taxpayer's total payrolls paid or 
156.15 	incurred in this state or paid in respect to labor performed in this state in connection with 
156.16 	the trade or business during the tax period are of the taxpayer's total payrolls paid or 
156.17 	incurred in connection with the trade or business during the tax period.
156.18 	The tax is in addition to all other taxes.

156.19 	EFFECTIVE DATE. This section is effective for tax years beginning after 
156.20 	December 31, 2005.

156.21 	Sec. 6. Minnesota Statutes 2004, section 298.01, subdivision 4a, is amended to read:
156.22 		Subd. 4a.Gross income. (a) For purposes of determining a person's taxable income 
156.23 	under subdivision 4, gross income is determined by the mine value of the ore mined in 
156.24 	Minnesota and includes any gain or loss recognized from the sale or disposition of assets 
156.25 	used in the business in this state.
156.26 	(b) Mine value is the value, or selling price, of iron ore or taconite concentrates, f.o.b. 
156.27 	mine. The mine value is calculated by multiplying the iron unit price for the period, as 
156.28 	determined by the commissioner, by the tons produced and the weighted average analysis.
156.29 	(c) In applying section  290.191, subdivision 5, transfers of iron ore and taconite 
156.30 	concentrates are deemed to be sales outside in this state if the iron ore or taconite 
156.31 	concentrates are transported out of this state after the raw iron ore and taconite 
156.32 	concentrates have been converted to a marketable quality. 
156.33 	(d) If iron ore or taconite and a mineral, metal, or energy resource referred to in 
156.34 	section 298.016 is mined and processed at the same mine and plant, a gross income for 
156.35 	each mineral, metal, or energy resource must be determined separately from the mine 
157.1 	value for the iron ore or taconite. The gross income may be combined on one occupation 
157.2 	tax return to arrive at the gross income from all production.

157.3 	EFFECTIVE DATE. This section is effective for tax years beginning after 
157.4 	December 31, 2005.

157.5 	Sec. 7. Minnesota Statutes 2004, section 298.01, subdivision 4b, is amended to read:
157.6 		Subd. 4b.Deductions. For purposes of determining taxable income under 
157.7 	subdivision 4, the deductions from gross income include only those expenses necessary 
157.8 	to convert raw iron ore or taconite concentrates to marketable quality. Such expenses 
157.9 	include costs associated with beneficiation and refinement but do not include expenses 
157.10 	such as transportation, stockpiling, marketing, or marine insurance that are incurred after 
157.11 	marketable iron ore or taconite pellets are produced. The allowable deductions from a 
157.12 	mine or plant that mines and produces iron ore or taconite and one or more mineral or 
157.13 	metal referred to in section 298.016 must be determined separately for the purposes of 
157.14 	computing the deduction in section 290.01, subdivision 19c, clause (9). These deductions 
157.15 	may be combined on one occupation tax return to arrive at the deduction from gross 
157.16 	income for all production.

157.17 	EFFECTIVE DATE. This section is effective for tax years beginning after 
157.18 	December 31, 2005.

157.19 	Sec. 8. Minnesota Statutes 2004, section 298.01, is amended by adding a subdivision 
157.20 	to read:
157.21 		Subd. 6.Deductions applicable to mining both taconite and other ores; ratio 
157.22 	applied. If a person is engaged in the business of mining or producing both iron ores, 
157.23 	taconite concentrates, or direct reduced ore, and other ores from the same mine or 
157.24 	facility, that person must separately determine the mine value of (1) the iron ore, taconite 
157.25 	concentrates, and direct reduced ore, and (2) the amount of gross proceeds from mining 
157.26 	other ores in Minnesota. The ratio of mine value from iron ore, taconite concentrates, 
157.27 	and direct reduced ore to gross proceeds from mining other ores must be applied to 
157.28 	deductions common to both processes to determine taxable income for tax paid pursuant 
157.29 	to subdivisions 3 and 4.

157.30 	EFFECTIVE DATE. This section is effective for tax years beginning after 
157.31 	December 31, 2005.

158.1 	Sec. 9. Minnesota Statutes 2004, section 298.17, is amended to read:
158.2 	298.17 OCCUPATION TAXES TO BE APPORTIONED.
158.3 		Subdivision 1.Apportionment under Constitution. All occupation taxes paid by 
158.4 	persons, copartnerships, companies, joint stock companies, corporations, and associations, 
158.5 	however or for whatever purpose organized, engaged in the business of mining or 
158.6 	producing iron ore or other ores, when collected shall be apportioned and distributed in 
158.7 	accordance with the Constitution of the state of Minnesota, article X, section 3, in the 
158.8 	manner following: 90 percent shall be deposited in the state treasury and credited to 
158.9 	the general fund of which four-ninths shall be used for the support of elementary and 
158.10 	secondary schools; and ten percent of the proceeds of the tax imposed by this section 
158.11 	shall be deposited in the state treasury and credited to the general fund for the general 
158.12 	support of the university. 
158.13 		Subd. 2.Apportionment to IRRRB. Of the moneys apportioned to the general 
158.14 	fund by this section, and not used for the support of elementary and secondary schools or 
158.15 	the university, there is annually appropriated and credited to the Iron Range Resources and 
158.16 	Rehabilitation Board account in the special revenue fund an amount equal to that which 
158.17 	would have been generated by a 1.5 cent tax imposed by section  298.24 on each taxable 
158.18 	ton produced in the preceding calendar year, to be expended for the purposes of section  
158.19 	298.22. The money appropriated pursuant to this section shall be used (1) to provide 
158.20 	environmental development grants to local governments located within any county in 
158.21 	region 3 as defined in governor's executive order number 60, issued on June 12, 1970, 
158.22 	which does not contain a municipality qualifying pursuant to section  273.134, paragraph 
158.23 	(b), or (2) to provide economic development loans or grants to businesses located within 
158.24 	any such county, provided that the county board or an advisory group appointed by 
158.25 	the county board to provide recommendations on economic development shall make 
158.26 	recommendations to the Iron Range Resources and Rehabilitation Board regarding the 
158.27 	loans. Payment to the Iron Range Resources and Rehabilitation Board account shall be 
158.28 	made by May 15 annually. 
158.29 	Of the money allocated to Koochiching County, one-third must be paid to the 
158.30 	Koochiching County Economic Development Commission.
158.31 		Subd. 3.Apportionment to Minnesota minerals 21st century fund. The 
158.32 	money apportioned to the general fund by this section that is not used for the support of 
158.33 	elementary and secondary schools or the university, and that is not apportioned under 
158.34 	subdivision 2, is annually appropriated to the Minnesota minerals 21st century fund 
158.35 	created in section 116J.423.

159.1 	EFFECTIVE DATE. This section is effective for taxes paid in 2007 and subsequent 
159.2 	years.

159.3 	Sec. 10. Minnesota Statutes 2005 Supplement, section 298.223, subdivision 1, is 
159.4 	amended to read:
159.5 		Subdivision 1.Creation; purposes. A fund called the taconite environmental 
159.6 	protection fund is created for the purpose of reclaiming, restoring and enhancing those 
159.7 	areas of northeast Minnesota located within the taconite assistance area defined in section 
159.8 	273.1341, that are adversely affected by the environmentally damaging operations 
159.9 	involved in mining taconite and iron ore and producing iron ore concentrate and for the 
159.10 	purpose of promoting the economic development of northeast Minnesota. The taconite 
159.11 	environmental protection fund shall be used for the following purposes:
159.12 	(a) to initiate investigations into matters the Iron Range Resources and Rehabilitation 
159.13 	Board determines are in need of study and which will determine the environmental 
159.14 	problems requiring remedial action;
159.15 	(b) reclamation, restoration, or reforestation of minelands not otherwise provided 
159.16 	for by state law;
159.17 	(c) local economic development projects but only if those projects are approved by 
159.18 	the board, and public works, including construction of sewer and water systems located 
159.19 	within the taconite assistance area defined in section 273.1341;
159.20 	(d) monitoring of mineral industry related health problems among mining 
159.21 	employees; and
159.22 	(e) local renewable energy investments undertaken in cooperation with local units of 
159.23 	government and mineland areas reforestation, reclamation, or development projects. The 
159.24 	projects must be approved by the Iron Range Resources and Rehabilitation Board and 
159.25 	located within the taconite assistance area as defined in section 273.1341. The board may 
159.26 	enter into joint ventures with private or public entities to advance these project.

159.27 	EFFECTIVE DATE. This section is effective the day following final enactment.

159.28 	Sec. 11. Minnesota Statutes 2004, section 298.28, is amended by adding a subdivision 
159.29 	to read:
159.30 		Subd. 10a.Post-2005 increases. (a) This subdivision applies to determine 
159.31 	distribution of the proceeds of the tax that are attributable to increasing the rate of tax by 
159.32 	the percentage increase in the implicit price deflator under section 298.24, subdivision 1, 
159.33 	paragraph (b). It applies only to increases applicable for production year 2006 and later. 
159.34 	Its provisions supercede the provisions of subdivision 10 for those increases.
160.1 	(b) The proceeds are allocated as follows:
160.2 	(1) .10 cent per taxable ton to the Range Association of Municipalities and Schools;
160.3 	(2) an amount equal to two cents per taxable ton is allocated to the city or town in the 
160.4 	county in which the land from which the taconite was mined or quarried or within which 
160.5 	the concentrate was produced. If the mining, quarrying, and concentration, or different 
160.6 	steps in either thereof are carried on in more than one taxing district, the commissioner 
160.7 	shall apportion equitably the proceeds of the part of the tax going to cities and towns 
160.8 	among the subdivisions by attributing 50 percent of the proceeds of the tax to the operation 
160.9 	of mining or quarrying the taconite, and the remainder to the concentrating plant and to the 
160.10 	processes of concentration, and with respect to each thereof giving due consideration to the 
160.11 	relative extent of such operations performed in each taxing district. The commissioner's 
160.12 	apportionment order is subject to review by the Tax Court upon petition by any of the 
160.13 	interested taxing districts, in the same manner as other orders of the commissioner; and
160.14 	(3) the remainder of the revenue is allocated to the taconite environmental protection 
160.15 	fund for projects under section 298.223, subdivision 1, clause (e).

160.16 	EFFECTIVE DATE. This section is effective the day following final enactment.

160.17 	Sec. 12. Minnesota Statutes 2005 Supplement, section 298.2961, subdivision 4, 
160.18 	is amended to read:
160.19 		Subd. 4.Grant and loan fund. (a) A fund is established to receive distributions 
160.20 	under section 298.28, subdivision 9b, and to make grants or loans as provided in this 
160.21 	subdivision. Any grant or loan made under this subdivision must be approved by 
160.22 	a majority of the members of the Iron Range Resources and Rehabilitation Board, 
160.23 	established under section 298.22.
160.24 	(b) Distributions received in calendar year 2005 are allocated to the city of Virginia 
160.25 	for improvements and repairs to the city's steam heating system.
160.26 	(c) Distributions received in calendar year 2006 are allocated to a project of the 
160.27 	public utilities commissions of the cities of Hibbing and Virginia to convert their electrical 
160.28 	generating plants to the use of biomass products, such as wood.
160.29 	(d) Distributions received in calendar year 2007 must be paid to the city of Tower to 
160.30 	be used for the East Two Rivers project in or near the city of Tower.
160.31 	(e) For distributions received in 2008 and later, amounts may be allocated to joint 
160.32 	ventures with mining companies for reclamation of lands containing abandoned or worked 
160.33 	out mines to convert these lands to marketable properties for residential, recreational, 
160.34 	commercial, or other valuable uses the first $2,000,000 must be paid to St. Louis County 
160.35 	for deposit in its county road and bridge fund to be used for relocation of St. Louis County 
161.1 	Road 715, commonly referred to as Pike River Road, and the remainder is allocated for 
161.2 	projects under section 298.223, subdivision 1, clause (e).

161.3 	Sec. 13. Minnesota Statutes 2004, section 298.2961, is amended by adding a 
161.4 	subdivision to read:
161.5 		Subd. 5.Public works and local economic development fund. For distributions in 
161.6 	2007 only, a special fund is established to receive 38.4 cents per ton that otherwise would 
161.7 	be allocated under section 298.28, subdivision 6. The following amounts are allocated 
161.8 	for the specific purposes:
161.9 	(1) 13.4 cents per ton for the Central Iron Range Sanitary Sewer District for 
161.10 	construction of a combined wastewater facility;
161.11 	(2) six cents per ton to the city of Eveleth to redesign and design and construct 
161.12 	improvements to renovate its water treatment facility;
161.13 	(3) one cent per ton for the East Range Joint Powers Board to acquire land for and to 
161.14 	design a central wastewater collection and treatment system;
161.15 	(4) 0.5 cents per ton to the city of Hoyt Lakes to repair Leeds Road;
161.16 	(5) 0.7 cents per ton to the city of Virginia to extend Eighth Street South;
161.17 	(6) 0.7 cents per ton to the city of Mountain Iron to repair Hoover Road;
161.18 	(7) 0.9 cents per ton to the city of Gilbert for alley repairs between Michigan and 
161.19 	Indiana Avenues and for repayment of the Delta Dental loan to the Minnesota Department 
161.20 	of Employment and Economic Development;
161.21 	(8) 0.4 cents per ton to the city of Keewatin for a new city well;
161.22 	(9) 0.3 cents per ton to the city of Grand Rapids for planning for a fire and hazardous 
161.23 	materials center;
161.24 	(10) 0.9 cents per ton to Aitkin County Growth for an economic development 
161.25 	project for peat harvesting;
161.26 	(11) 0.4 cents per ton to the city of Nashwauk to develop a comprehensive city plan;
161.27 	(12) 0.4 cents per ton to the city of Taconite for development of a city comprehensive 
161.28 	plan;
161.29 	(13) 0.3 cents per ton to the city of Marble for water and sewer infrastructure;
161.30 	(14) 0.8 cents per ton to Aitkin County for improvements to the Long Lake 
161.31 	Environmental Learning Center; 
161.32 	(15) 0.3 cents per ton to the city of Coleraine for the Coleraine Technology Center;
161.33 	(16) 0.5 cents per ton to the Economic Development Authority of the city of Grand 
161.34 	Rapids for planning for the North Central Research and Technology Laboratory;
161.35 	(17) 0.6 cents per ton to the city of Bovey for sewer and water extension;
162.1 	(18) 0.3 cents per ton to the city of Calumet for infrastructure improvements; and 
162.2 	(19) ten cents per ton to an economic development authority in a city through which 
162.3 	State Highway 1 passes, or a city in Independent School District No. 2142 that has an 
162.4 	active mine, for an economic development project approved by the Iron Range Resources 
162.5 	and Rehabilitation Board.

162.6 	EFFECTIVE DATE. This section is effective the day following final enactment.

162.7 	Sec. 14. Minnesota Statutes 2004, section 298.75, is amended by adding a subdivision 
162.8 	to read:
162.9 		Subd. 10.Tax may be imposed; Sylvan Township. (a) If Cass County does not 
162.10 	impose a tax under this section and approves imposition of the tax under this subdivision, 
162.11 	the town of Sylvan in Cass County may impose the aggregate materials tax under this 
162.12 	section. 
162.13 	(b) For purposes of exercising the powers contained in this section, the "town" is 
162.14 	deemed to be the "county." 
162.15 	(c) All provisions in this section apply to the town of Sylvan, except that, in lieu 
162.16 	of the distribution of the tax proceeds under subdivision 7, all proceeds of the tax must 
162.17 	be retained by the town. 
162.18 	(d) If Cass County imposes an aggregate materials tax under this section, the tax 
162.19 	imposed by the town of Sylvan under this subdivision is repealed on the effective date 
162.20 	of the Cass County tax. 

162.21 	EFFECTIVE DATE. This section is effective the day after the governing body of 
162.22 	the town of Sylvan and its chief clerical officer comply with section 645.021, subdivisions 
162.23 	2 and 3. 

162.24 	Sec. 15. TRANSITION PROVISIONS.
 162.25 	Each person with an alternative minimum tax credit on December 31, 2005, pursuant 
162.26 	to Minnesota Statutes 2004, section 298.01, may take that credit against occupation tax 
162.27 	under Minnesota Statutes 2004, section 298.01, subdivisions 3d and 4e.

162.28 	EFFECTIVE DATE. This section is effective the day following final enactment.

162.29 	Sec. 16.  REPEALER.
 162.30 	Minnesota Statutes 2004, section 298.01, subdivisions 3c, 3d, 4d, and 4e, are 
162.31 	repealed effective for tax years beginning after December 31, 2005.

163.1 	ARTICLE 13
163.2 	MISCELLANEOUS

163.3 	Section 1. Minnesota Statutes 2004, section 270A.03, subdivision 2, is amended to 
163.4 	read:
163.5 		Subd. 2.Claimant agency. "Claimant agency" means any state agency, as 
163.6 	defined by section  14.02, subdivision 2, the regents of the University of Minnesota, any 
163.7 	district court of the state, any county, any statutory or home rule charter city presenting 
163.8 	a claim for a municipal hospital or a public library or a municipal ambulance service, a 
163.9 	hospital district, a private nonprofit hospital that leases its building from the county in 
163.10 	which it is located, any public agency responsible for child support enforcement, any 
163.11 	public agency responsible for the collection of court-ordered restitution, and any public 
163.12 	agency established by general or special law that is responsible for the administration of 
163.13 	a low-income housing program, and the Minnesota collection enterprise as defined in 
163.14 	section  16D.02, subdivision 8, for the purpose of collecting the costs imposed under 
163.15 	section  16D.11. A county may act as a claimant agency on behalf of an ambulance service 
163.16 	licensed under chapter 144E if the ambulance service's primary service area is located at 
163.17 	least in part within the county, but more than one county may not act as a claimant agency 
163.18 	for a licensed ambulance service with respect to the same debt.

163.19 	Sec. 2. [270C.415] INCOME TAX RETURN PROCESSING; AGREEMENT 
163.20 	WITH INTERNAL REVENUE SERVICE.
163.21 	The commissioner of revenue shall enter into an agreement with the United States 
163.22 	Internal Revenue Service to participate in a tax processing program whereby the Internal 
163.23 	Revenue Service processes electronically filed state returns together with the federal 
163.24 	returns. If possible, the ability of taxpayers to file property tax refund claims under chapter 
163.25 	290A with state income tax returns must be preserved.

163.26 	Sec. 3. Minnesota Statutes 2005 Supplement, section 272.02, subdivision 83, is 
163.27 	amended to read:
163.28 		Subd. 83.International economic development zone property. (a) Improvements 
163.29 	to real property, and personal property, classified under section 273.13, subdivision 
163.30 	24, and located within the international economic development zone designated under 
163.31 	section 469.322, are exempt from ad valorem taxes levied under chapter 275, if the 
163.32 	improvements are:
163.33 	(1) part of a regional distribution center as defined in section 469.321; or
164.1 	(2) occupied by a qualified business as defined in section 469.321, that uses the 
164.2 	improvements primarily in freight forwarding operations.
164.3 	(b) The exemption applies beginning for the first assessment year after designation of 
164.4 	the international economic development zone. The exemption applies to each assessment 
164.5 	year that begins during the duration of the international economic development zone. To 
164.6 	be exempt under paragraph (a), clause (2), the property must be occupied by July 1 of the 
164.7 	assessment year by a qualified business that has signed the business subsidy agreement 
164.8 	by July 1 of the assessment year.

164.9 	EFFECTIVE DATE. This section is effective the day following final enactment.

164.10 	Sec. 4. Minnesota Statutes 2004, section 289A.09, subdivision 2, is amended to read:
164.11 		Subd. 2.Withholding statement to employee or payee and to commissioner. (a) 
164.12 	A person required to deduct and withhold from an employee a tax under section  290.92, 
164.13 	subdivision 2a or 3, or  290.923, subdivision 2, or who would have been required to 
164.14 	deduct and withhold a tax under section  290.92, subdivision 2a or 3, or persons required 
164.15 	to withhold tax under section  290.923, subdivision 2, determined without regard to 
164.16 	section  290.92, subdivision 19, if the employee or payee had claimed no more than one 
164.17 	withholding exemption, or who paid wages or made payments not subject to withholding 
164.18 	under section  290.92, subdivision 2a or 3, or  290.923, subdivision 2, to an employee or 
164.19 	person receiving royalty payments in excess of $600, or who has entered into a voluntary 
164.20 	withholding agreement with a payee under section  290.92, subdivision 20, must give 
164.21 	every employee or person receiving royalty payments in respect to the remuneration paid 
164.22 	by the person to the employee or person receiving royalty payments during the calendar 
164.23 	year, on or before January 31 of the succeeding year, or, if employment is terminated 
164.24 	before the close of the calendar year, within 30 days after the date of receipt of a written 
164.25 	request from the employee if the 30-day period ends before January 31, a written statement 
164.26 	showing the following: 
164.27 	(1) name of the person;
164.28 	(2) the name of the employee or payee and the employee's or payee's Social 
164.29 	Security account number;
164.30 	(3) the total amount of wages as that term is defined in section  290.92, subdivision 
164.31 	1, paragraph (1); the total amount of remuneration subject to withholding under section  
164.32 	290.92, subdivision 20; the amount of sick pay as required under section 6051(f) of the 
164.33 	Internal Revenue Code; and the amount of royalties subject to withholding under section  
164.34 	290.923, subdivision 2; and 
165.1 	(4) the total amount deducted and withheld as tax under section  290.92, subdivision 
165.2 	2a or 3, or  290.923, subdivision 2. 
165.3 	(b) The statement required to be furnished by this paragraph with respect to any 
165.4 	remuneration must be furnished at those times, must contain the information required, and 
165.5 	must be in the form the commissioner prescribes.
165.6 	(c) The commissioner may prescribe rules providing for reasonable extensions of 
165.7 	time, not in excess of 30 days, to employers or payers required to give the statements to 
165.8 	their employees or payees under this subdivision.
165.9 	(d) A duplicate of any statement made under this subdivision and in accordance 
165.10 	with rules prescribed by the commissioner, along with a reconciliation in the form the 
165.11 	commissioner prescribes of the statements for the calendar year, including a reconciliation 
165.12 	of the quarterly returns required to be filed under subdivision 1, must be filed with the 
165.13 	commissioner on or before February 28 of the year after the payments were made.
165.14 	(e) If an employer cancels the employer's Minnesota withholding account number 
165.15 	required by section  290.92, subdivision 24, the information required by paragraph (d), 
165.16 	must be filed with the commissioner within 30 days of the end of the quarter in which 
165.17 	the employer cancels its account number. 
165.18 	(f) The employer must submit the statements required to be sent to the commissioner 
165.19 	on magnetic media, if the magnetic media was required to satisfy the federal reporting 
165.20 	requirements of section 6011(e) of the Internal Revenue Code and the regulations issued 
165.21 	under it by electronic means.
165.22 	(g) A "third-party bulk filer" as defined in section  290.92, subdivision 30, paragraph 
165.23 	(a), clause (2), must submit the returns required by this subdivision and subdivision 1, 
165.24 	paragraph (a), with the commissioner by electronic means. 

165.25 	EFFECTIVE DATE. This section is effective for returns due after June 30, 2006.

165.26 	Sec. 5. Minnesota Statutes 2005 Supplement, section 290.0922, subdivision 2, is 
165.27 	amended to read:
165.28 		Subd. 2.Exemptions. The following entities are exempt from the tax imposed 
165.29 	by this section:
165.30 	(1) corporations exempt from tax under section 290.05;
165.31 	(2) real estate investment trusts;
165.32 	(3) regulated investment companies or a fund thereof; and
165.33 	(4) entities having a valid election in effect under section 860D(b) of the Internal 
165.34 	Revenue Code;
165.35 	(5) town and farmers' mutual insurance companies;
166.1 	(6) cooperatives organized under chapter 308A or 308B that provide housing 
166.2 	exclusively to persons age 55 and over and are classified as homesteads under section 
166.3 	273.124, subdivision 3;
166.4 	(7) an entity, if for the taxable year all of its property is located in a job opportunity 
166.5 	building zone designated under section 469.314 and all of its payroll is a job opportunity 
166.6 	building zone payroll under section 469.310; and
166.7 	(8) an entity, if for the taxable year all of its property is located in an international 
166.8 	economic development zone designated under section 469.322, and all of its payroll is 
166.9 	international economic development zone payroll under section 469.321. The exemption 
166.10 	under this clause applies to taxable years beginning during the duration of the international 
166.11 	economic development zone.
166.12 	Entities not specifically exempted by this subdivision are subject to tax under this 
166.13 	section, notwithstanding section 290.05.

166.14 	EFFECTIVE DATE. This section is effective the day following final enactment. 

166.15 	Sec. 6. Minnesota Statutes 2005 Supplement, section 290.0922, subdivision 3, is 
166.16 	amended to read:
166.17 		Subd. 3.Definitions. (a) "Minnesota sales or receipts" means the total sales 
166.18 	apportioned to Minnesota pursuant to section 290.191, subdivision 5, the total receipts 
166.19 	attributed to Minnesota pursuant to section 290.191, subdivisions 6 to 8, and/or the 
166.20 	total sales or receipts apportioned or attributed to Minnesota pursuant to any other 
166.21 	apportionment formula applicable to the taxpayer.
166.22 	(b) "Minnesota property" means total Minnesota tangible property as provided in 
166.23 	section 290.191, subdivisions 9 to 11, any other tangible property located in Minnesota, 
166.24 	but does not include: (1) property located in a job opportunity building zone designated 
166.25 	under section 469.314, or (2) property of a qualified business located in a biotechnology 
166.26 	and health sciences industry zone designated under section 469.334, or (3) for taxable 
166.27 	years beginning during the duration of the zone, property of a qualified business located 
166.28 	in the international economic development zone designated under section 469.322. 
166.29 	Intangible property shall not be included in Minnesota property for purposes of this 
166.30 	section. Taxpayers who do not utilize tangible property to apportion income shall 
166.31 	nevertheless include Minnesota property for purposes of this section. On a return for 
166.32 	a short taxable year, the amount of Minnesota property owned, as determined under 
166.33 	section 290.191, shall be included in Minnesota property based on a fraction in which the 
166.34 	numerator is the number of days in the short taxable year and the denominator is 365.
167.1 	(c) "Minnesota payrolls" means total Minnesota payrolls as provided in section 
167.2 	290.191, subdivision 12, but does not include: (1) job opportunity building zone payrolls 
167.3 	under section 469.310, subdivision 8, or (2) biotechnology and health sciences industry 
167.4 	zone payrolls under section 469.330, subdivision 8, or (3) for taxable years beginning 
167.5 	during the duration of the zone, international economic development zone payrolls under 
167.6 	section 469.321, subdivision 9. Taxpayers who do not utilize payrolls to apportion income 
167.7 	shall nevertheless include Minnesota payrolls for purposes of this section.

167.8 	EFFECTIVE DATE. This section is effective the day following final enactment.

167.9 	Sec. 7. Minnesota Statutes 2004, section 295.53, subdivision 4a, is amended to read:
167.10 		Subd. 4a.Credit for research. (a) In addition to the exemptions allowed under 
167.11 	subdivision 1, a hospital or health care provider may claim an annual credit against the 
167.12 	total amount of tax, if any, the hospital or health care provider owes for that calendar 
167.13 	year under sections  295.50 to  295.57. The credit shall equal 2.5 five  percent of revenues 
167.14 	for patient services used to fund expenditures for qualifying research conducted by an 
167.15 	allowable research program. The amount of the credit shall not exceed the tax liability of 
167.16 	the hospital or health care provider under sections  295.50 to  295.57. 
167.17 	(b) For purposes of this subdivision, the following requirements apply:
167.18 	(1) expenditures must be for program costs of qualifying research conducted by 
167.19 	an allowable research program;
167.20 	(2) an allowable research program must be a formal program of medical and 
167.21 	health care research conducted by an entity which is exempt under section 501(c)(3) 
167.22 	of the Internal Revenue Code of 1986 or is owned and operated under authority of a 
167.23 	governmental unit;
167.24 	(3) qualifying research must:
167.25 	(A) be approved in writing by the governing body of the hospital or health care 
167.26 	provider which is taking the deduction under this subdivision;
167.27 	(B) have as its purpose the development of new knowledge in basic or applied 
167.28 	science relating to the diagnosis and treatment of conditions affecting the human body;
167.29 	(C) be subject to review by individuals with expertise in the subject matter of the 
167.30 	proposed study but who have no financial interest in the proposed study and are not 
167.31 	involved in the conduct of the proposed study; and
167.32 	(D) be subject to review and supervision by an institutional review board operating 
167.33 	in conformity with federal regulations if the research involves human subjects or 
167.34 	an institutional animal care and use committee operating in conformity with federal 
167.35 	regulations if the research involves animal subjects. Research expenses are not exempt if 
168.1 	the study is a routine evaluation of health care methods or products used in a particular 
168.2 	setting conducted for the purpose of making a management decision. Costs of clinical 
168.3 	research activities paid directly for the benefit of an individual patient are excluded from 
168.4 	this exemption. Basic research in fields including biochemistry, molecular biology, and 
168.5 	physiology are also included if such programs are subject to a peer review process.
168.6 	(c) No credit shall be allowed under this subdivision for any revenue received by the 
168.7 	hospital or health care provider in the form of a grant, gift, or otherwise, whether from a 
168.8 	government or nongovernment source, on which the tax liability under section  295.52 is 
168.9 	not imposed. 
168.10 	(d) The taxpayer shall apply for the credit under this section on the annual return 
168.11 	under section  295.55, subdivision 5. 
168.12 	(e) Beginning September 1, 2001, if the actual or estimated amount paid under this 
168.13 	section for the calendar year exceeds $2,500,000 $7,000,000, the commissioner of finance 
168.14 	shall determine the rate of the research credit for the following calendar year to the nearest 
168.15 	one-half percent so that refunds paid under this section will most closely equal $2,500,000
168.16 	$7,000,000. The commissioner of finance shall publish in the State Register by October 1 
168.17 	of each year the rate of the credit for the following calendar year. A determination under 
168.18 	this section is not subject to the rulemaking provisions of chapter 14.

168.19 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
168.20 	December 31, 2006.

168.21 	Sec. 8. Minnesota Statutes 2005 Supplement, section 297A.68, subdivision 41, is 
168.22 	amended to read:
168.23 		Subd. 41.International economic development zones. (a) Purchases of tangible 
168.24 	personal property or taxable services by a qualified business, as defined in section 469.321, 
168.25 	are exempt if the property or services are primarily used or consumed in the international 
168.26 	economic development zone designated under section 469.322. This exemption applies 
168.27 	only if the purchase is made and delivery received after the business signed the business 
168.28 	subsidy agreement required under chapter 469.
168.29 	(b) Purchase and use of construction materials, supplies, and equipment incorporated 
168.30 	into the construction of improvements to real property in the international economic 
168.31 	development zone are exempt if the improvements after completion of construction are 
168.32 	to be used as a regional distribution center as defined in section 469.321 or otherwise 
168.33 	used in the conduct of freight forwarding activities of a qualified business as defined in 
168.34 	section 469.321. This exemption applies regardless of whether the purchases are made 
168.35 	by the business or a contractor.
169.1 	(c) The exemptions under this subdivision apply to a local sales and use tax, 
169.2 	regardless of whether the local tax is imposed on sales taxable under this chapter or in 
169.3 	another law, ordinance, or charter provision.
169.4 	(d) The exemption in paragraph (a) applies exemptions in this section apply to sales 
169.5 	during the duration of the zone and after June 30, 2007, if the purchase was made and 
169.6 	delivery received after the business signs the business subsidy agreement required under 
169.7 	chapter 469 and purchases made after the date of final zone designation under section 
169.8 	469.322, paragraph (c), and before the expiration of the zone under section 469.322, 
169.9 	paragraph (d).
169.10 	(e) For purchases made for improvements to real property to be occupied by a 
169.11 	business that has not signed a business subsidy agreement at the time of the purchase, the 
169.12 	tax must be imposed and collected as if the rate under section 297A.62, subdivision 1, 
169.13 	applied, and then refunded in the manner provided in section 297A.75beginning in fiscal 
169.14 	year 2008. The taxpayer must attach to the claim for refund information sufficient for 
169.15 	the commissioner to be able to determine that the improvements are being occupied by 
169.16 	a business that has signed a business subsidy agreement.

169.17 	EFFECTIVE DATE. This section is effective the day following final enactment.

169.18 	Sec. 9. [469.193] FOREIGN TRADE ZONES.
169.19 	A city, county, town, or other political subdivision may apply to the board defined in 
169.20 	United States Code, title 19, section 81a, for the right to use the powers provided in United 
169.21 	States Code, title 19, sections 81a to 81u. If the right is granted, the city, county, town, or 
169.22 	other political subdivision may use the powers within or outside of a port district. Any 
169.23 	city, county, town, or other political subdivision may apply jointly with any other city, 
169.24 	county, town, or other political subdivision.

169.25 	EFFECTIVE DATE. This section is effective the day following final enactment.

169.26 	Sec. 10. Minnesota Statutes 2005 Supplement, section 469.322, is amended to read:
169.27 	469.322 DESIGNATION OF INTERNATIONAL ECONOMIC 
169.28 	DEVELOPMENT ZONE.
169.29 	(a) An area designated as a foreign trade zone may be designated by the foreign 
169.30 	trade zone authority as an international economic development zone if within the zone 
169.31 	a regional distribution center is being developed pursuant to section 469.323. The zone 
169.32 	must consist of contiguous area of not less than 500 acres and not more than 1,000 acres. 
169.33 	The designation authority under this section is limited to one zone.
170.1 	(b) In making the designation, the foreign trade zone authority, in consultation with 
170.2 	the Minnesota Department of Transportation and the Metropolitan Council, shall consider 
170.3 	access to major transportation routes, consistency with current state transportation and 
170.4 	air cargo planning, adequacy of the size of the site, access to airport facilities, present 
170.5 	and future capacity at the designated airport, the capability to meet integrated present 
170.6 	and future air cargo, security, and inspection services, and access to other infrastructure 
170.7 	and financial incentives. The border of the international economic development zone 
170.8 	must be no more than 60 miles distant or 90 minutes drive time from the border of the 
170.9 	Minneapolis-St. Paul International Airport.
170.10 	(c) Before final designation of the zone, the foreign trade zone authority, in 
170.11 	consultation with the applicant, must conduct a transportation impact study based on the 
170.12 	regional model and utilizing traffic forecasting and assignments. The results must be used 
170.13 	to evaluate the effects of the proposed use on the transportation system and identify any 
170.14 	needed improvements. If the site is in the metropolitan area the study must also evaluate 
170.15 	the effect of the transportation impacts on the Metropolitan Transportation System plan 
170.16 	as well as the comprehensive plans of the municipalities that would be affected. The 
170.17 	authority shall provide copies of the study to the legislature under section 3.195 and to the 
170.18 	chairs of the committees with jurisdiction over transportation and economic development. 
170.19 	The applicant must pay the cost of the study.
170.20 	(c)(d) Final zone designation must be made by June 30, 2006 2008.
170.21 	(d)(e) Duration of the zone is a 12-year period beginning on January 1, 2007 2010.

170.22 	EFFECTIVE DATE. This section is effective the day following final enactment.

170.23 	Sec. 11. Minnesota Statutes 2005 Supplement, section 469.323, subdivision 2, is 
170.24 	amended to read:
170.25 		Subd. 2.Business plan. Before designation of an international economic 
170.26 	development zone under section 469.322, the governing body of the foreign trade zone 
170.27 	authority shall prepare a business plan. The findings of the business plan shall be 
170.28 	presented to the legislature pursuant to section 3.195. Copies of the business plan shall be 
170.29 	provided to the chairs of committees with jurisdiction over transportation and economic 
170.30 	development. The plan must include an analysis of the economic feasibility of the regional 
170.31 	distribution center once it becomes operational and of the operations of freight forwarders 
170.32 	and other businesses that choose to locate within the boundaries of the zone. The analysis 
170.33 	must provide profitability models that:
170.34 	(1) include the benefits of the incentives;
170.35 	(2) estimate the amount of time needed to achieve profitability; and
171.1 	(3) analyze the length of time incentives will be necessary to the economic viability 
171.2 	of the regional distribution center.
171.3 	If the governing body of the foreign trade authority determines that the models do 
171.4 	not establish the economic feasibility of the project, the regional distribution center does 
171.5 	not meet the development requirements of this section and section 469.322.

171.6 	Sec. 12. Minnesota Statutes 2005 Supplement, section 469.327, is amended to read:
171.7 	469.327 JOBS CREDIT.
171.8 		Subdivision 1.Credit allowed. (a) A qualified business is allowed a credit against 
171.9 	the taxes imposed under chapter 290. The credit equals seven percent of the:
171.10 	(1) lesser of:
171.11 	(i) zone payroll for the taxable year, less the zone payroll for the base year; or
171.12 	(ii) total Minnesota payroll for the taxable year, less total Minnesota payroll for 
171.13 	the base year; minus
171.14 	(2) $30,000 multiplied by the number of full-time equivalent employees that the 
171.15 	qualified business employs in the international economic development zone for the taxable 
171.16 	year, minus the number of full-time equivalent employees the business employed in the 
171.17 	zone in the base year, but not less than zero.
171.18 	(b) This section applies only to tax years beginning during the duration of the 
171.19 	international economic development zone.
171.20 		Subd. 2.Definitions. (a) For purposes of this section, the following terms have 
171.21 	the meanings given.
171.22 	(b) "Base year" means the taxable year beginning during the calendar year 
171.23 	immediately preceding the calendar year in which the zone designation was made duration 
171.24 	of the zone begins under section 469.322, paragraph (d).
171.25 	(c) "Full-time equivalent employees" means the equivalent of annualized expected 
171.26 	hours of work equal to 2,080 hours.
171.27 	(d) "Minnesota payroll" means the wages or salaries attributed to Minnesota under 
171.28 	section 290.191, subdivision 12, for the qualified business or the unitary business of which 
171.29 	the qualified business is a part, whichever is greater.
171.30 	(e) "Zone payroll" means wages or salaries used to determine the zone payroll 
171.31 	factor for the qualified business, less the amount of compensation attributable to any 
171.32 	employee that exceeds $70,000.
171.33 		Subd. 3.Inflation adjustment. For taxable years beginning after December 31, 
171.34 	2006 2010, the dollar amounts in subdivisions 1, clause (2); and 2, paragraph (e), are 
172.1 	annually adjusted for inflation. The commissioner of revenue shall adjust the amounts by 
172.2 	the percentage determined under section 290.06, subdivision 2d, for the taxable year.
172.3 		Subd. 4.Refundable. If the amount of the credit exceeds the liability for tax under 
172.4 	chapter 290, the commissioner of revenue shall refund the excess to the qualified business.
172.5 		Subd. 5.Appropriation. An amount sufficient to pay the refunds authorized by this 
172.6 	section is appropriated to the commissioner of revenue from the general fund.

172.7 	EFFECTIVE DATE. This section is effective the day following final enactment.

172.8 	Sec. 13. Laws 2005, First Special Session chapter 3, article 10, section 23, is amended 
172.9 	to read:
172.10 	Sec. 23. GRANTS TO QUALIFYING BUSINESSES.
172.11 	
172.12 	$750,000 is appropriated in fiscal year 2006 from the  general fund to the 
172.13 	commissioner of employment and economic  development to be distributed to the foreign 
172.14 	trade zone  authority to provide grants to qualified businesses as  determined by the 
172.15 	authority, subject to Minnesota Statutes,  sections 116J.993 to 116J.995, to provide 
172.16 	incentives for the  businesses to locate their operations in an international  economic 
172.17 	development zone.  If the money is not distributed  during fiscal year 2006, it remains 
172.18 	available for distribution  under this section during fiscal year 2007 until December 31, 
172.19 	2010.  

172.20 	Sec. 14. PROPERTY TAX REFUND COLLECTION ACTION PROHIBITED; 
172.21 	REFUNDS REQUIRED.
 172.22 	Notwithstanding Minnesota Statutes, section 289A.60, subdivision 12, or any other 
172.23 	law to the contrary, the commissioner of revenue shall not disallow any part of a claim 
172.24 	for a property tax refund filed in 2005 or an earlier year to the extent that the claim 
172.25 	was excessive because it did not include in the claimant's income as determined under 
172.26 	Minnesota Statutes, section 290A.03, subdivision 3, the cash value of a tuition discount 
172.27 	provided by a postsecondary education institution. If a claimant was required to repay 
172.28 	any part of a property tax refund based on inclusion of this discount in the claimant's 
172.29 	income on a claim filed in 2005 or an earlier year, the commissioner must refund that 
172.30 	amount to the claimant.

172.31 	EFFECTIVE DATE. This section is effective the day following final enactment.

173.1 	Sec. 15. JOINT STUDY BY COMMISSIONERS OF REVENUE AND 
173.2 	DEPARTMENT OF EMPLOYEE RELATIONS.
 173.3 	In order to increase compliance with income and franchise taxes and tax laws, the 
173.4 	commissioners of the Departments of Revenue and Employee Relations, in consultation 
173.5 	with the affected bargaining units, shall study the competitiveness of compensation of 
173.6 	tax compliance auditors within the Department of Revenue. The study shall consider 
173.7 	the performance of compliance auditors, including training, experience, employment 
173.8 	classification, and duties. The study shall be completed by October 15, 2006, and the 
173.9 	commissioner of employee relations shall implement its recommendations.

173.10 	EFFECTIVE DATE. This section is effective the day following final enactment.

173.11 	Sec. 16. SALES AND USE TAX; SERVICES TO TAXPAYERS WITH LIMITED 
173.12 	ENGLISH PROFICIENCY.
 173.13 	The commissioner of revenue shall study and implement procedures and services 
173.14 	that will assist sales and use taxpayers of limited English proficiency in complying with 
173.15 	sales and use tax laws. The benefits of translating sales and use tax fact sheets, forms, 
173.16 	and instructions into Spanish and other languages must be considered. In addition, the 
173.17 	commissioner shall study how to direct taxpayers of limited English proficiency who 
173.18 	contact the Department of Revenue by telephone to assistance in Spanish and other 
173.19 	languages as determined by the commissioner. The commissioner shall report on the 
173.20 	results of the study and a plan to implement them to the senate and house of representatives 
173.21 	committees with jurisdiction over tax laws by February 1, 2007.

173.22 	EFFECTIVE DATE. This section is effective the day following final enactment.

173.23 	Sec. 17. TRANSFER OF MONEY.
 173.24 	Any money in the tax relief account under Minnesota Statutes, section 16A.1522, 
173.25 	subdivision 4, on the day following final enactment of this act is transferred to the general 
173.26 	fund.

173.27 	Sec. 18. APPROPRIATION.
 173.28 	$2,000,000 is appropriated from the general fund to the commissioner of public 
173.29 	safety to be used to reimburse state and local law enforcement agencies for additional law 
173.30 	enforcement efforts, focused on downtown Minneapolis.