1.1A bill for an act1.2relating to financing and operation of government in this state; making 1.3policy, technical, administrative, payment, enforcement, collection, proceeds 1.4distribution, refund, and other changes to income, franchise, property, state 1.5and local sales and use, motor vehicle sales, minerals, estate, cigarette and 1.6tobacco products, gasoline, liquor, insurance premiums, mortgage and deed, 1.7healthcare gross revenues, and wheelage taxes, and other taxes and tax-related 1.8provisions; conforming to certain changes in the Internal Revenue Code; 1.9changing accelerated sales tax payments; providing for licensure of assessors; 1.10changing provisions relating to the sustainable forest resource management 1.11incentive program; providing for aids to local governments; providing for 1.12state debt collection; changing border city allocation, tax increment financing, 1.13and economic development, provisions, powers, and incentives; authorizing 1.14and providing terms and conditions related to the issuance of obligations and 1.15the financing of public improvements and services; changing and imposing 1.16powers, duties, and requirements on certain local governments and authorities 1.17and on the commissioner of revenue and other state departments and agencies; 1.18extending the time for certain publications of notices; requiring notices and 1.19publication of information; extending a petrofund fee exemption; providing for 1.20purchase of forest lands; authorizing and validating trusts to pay certain public 1.21postemployment benefits; providing for iron range higher education grants; 1.22changing revenue recapture, local impact notes, and data practices provisions; 1.23providing penalties; appropriating money;amending Minnesota Statutes 2006, 1.24sections 3.987, subdivision 1; 3.988, subdivision 3; 3.989, subdivisions 2, 1.253; 16A.103, subdivision 2; 16D.04, subdivisions 1, 2; 16D.11, subdivisions 1.262, 7; 62I.06, subdivision 6; 71A.04, subdivision 1; 97A.061, subdivision 2; 1.27118A.03, subdivision 3; 123B.61; 127A.48, subdivision 2; 270.071, subdivision 1.287; 270.072, subdivisions 2, 3, 6; 270.074, subdivision 3; 270.076, subdivision 1.291; 270.41, subdivisions 1, 2, 3, 5, by adding a subdivision; 270.44; 270.45; 1.30270.46; 270.47; 270.48; 270.50; 270A.03, subdivision 2; 270A.10; 270C.306; 1.31270C.34, subdivision 1; 270C.446, subdivision 2; 270C.56, subdivision 1; 1.32270C.63, subdivision 9; 272.02, by adding subdivisions; 272.115, subdivision 1.331; 273.05, by adding a subdivision; 273.111, subdivision 3; 273.117; 273.121; 1.34273.124, subdivision 13, by adding a subdivision; 273.125, subdivision 8; 1.35273.128, subdivision 1; 273.13, subdivisions 22, 23, 25, by adding a subdivision; 1.36273.1315; 273.1398, subdivision 4; 273.33, subdivision 2; 273.37, subdivision 2; 1.37273.371, subdivision 1; 274.01, subdivision 1; 274.13, subdivision 1; 275.025, 1.38subdivision 3; 275.065, subdivision 5a, by adding a subdivision; 275.066; 1.39275.067; 275.61, subdivision 1; 276.04, subdivision 2, by adding a subdivision; 2.1276A.01, subdivision 3; 276A.04; 277.01, subdivision 2; 278.05, subdivision 2.26; 279.01, subdivision 1; 279.37, subdivision 1a; 280.39; 287.22; 287.2205; 2.3289A.02, subdivision 7; 289A.08, subdivision 11; 289A.09, subdivision 2; 2.4289A.12, subdivisions 4, 14; 289A.18, subdivision 1; 289A.20, subdivision 2.54; 289A.38, subdivision 7; 289A.40, subdivision 2; 289A.56, by adding a 2.6subdivision; 289A.60, subdivisions 8, 12, 15, 25, 27, by adding subdivisions; 2.7290.01, subdivisions 19a, 19c, 19d; 290.06, subdivisions 2c, 33; 290.067, 2.8subdivision 2b; 290.0671, subdivision 7; 290.0677, subdivision 1; 290.091, 2.9subdivisions 2, 3; 290.0921, subdivision 3; 290.10; 290.17, subdivision 2; 2.10290.191, subdivision 8; 290.92, by adding a subdivision; 290A.03, subdivision 7; 2.11290B.03, subdivision 2; 290C.02, subdivision 3; 290C.04; 290C.05; 290C.07; 2.12290C.11; 291.005, subdivision 1; 291.215, subdivision 1; 295.52, subdivisions 2.134, 4a; 295.54, subdivision 2; 296A.18, subdivision 4; 297A.61, subdivisions 2.143, 4, 7, 10, 24, by adding subdivisions; 297A.63, subdivision 1; 297A.665; 2.15297A.668, by adding a subdivision; 297A.669, subdivisions 3, 13, 14, by adding 2.16subdivisions; 297A.67, subdivisions 7, 8, 9; 297A.68, subdivisions 11, 16, 2.1735; 297A.69, subdivision 2; 297A.70, subdivision 7, by adding a subdivision; 2.18297A.72; 297A.90, subdivision 2; 297B.035, subdivision 1; 297F.06, subdivision 2.194; 297F.09, subdivision 10; 297F.21, subdivision 3; 297F.25, by adding a 2.20subdivision; 297G.09, subdivision 9; 297I.06, subdivisions 1, 2; 297I.15, by 2.21adding a subdivision; 297I.20, subdivision 2; 297I.40, subdivision 5; 298.22, by 2.22adding a subdivision; 298.2214, subdivision 2; 298.24, subdivision 1; 298.25; 2.23298.28, subdivisions 4, 5, by adding a subdivision; 298.282, subdivision 1; 2.24298.292, subdivision 2; 298.296, subdivision 2; 298.2961, subdivisions 4, 5; 2.25298.75, subdivisions 1, 3, 7, by adding a subdivision; 331A.05, subdivision 2.262; 360.031; 365A.02; 365A.04; 365A.08; 365A.095; 373.01, subdivision 3; 2.27373.40, subdivision 4; 375B.09; 383B.117, subdivision 2; 383B.77, subdivisions 2.281, 2; 410.32; 412.301; 435.193; 453A.02, subdivision 3; 469.169, by adding a 2.29subdivision; 469.1734, subdivision 6; 469.174, subdivisions 10, 10a; 469.175, 2.30subdivisions 1, 3; 469.176, subdivisions 1, 2, 4l, 7; 469.1761, subdivision 2.311; 469.1763, subdivision 2; 469.177, subdivision 1; 469.178, subdivision 7; 2.32469.1791, subdivision 3; 473.39, by adding subdivisions; 475.51, subdivision 2.334; 475.52, subdivision 6; 475.53, subdivision 1; 475.58, subdivisions 1, 3b; 2.34477A.011, subdivision 36; 477A.013, subdivisions 8, 9; Minnesota Statutes 2.352007 Supplement, sections 270A.03, subdivision 5; 272.02, subdivision 64; 2.36273.124, subdivision 14; 275.065, subdivision 3; 290.01, subdivisions 19, 19b, 2.3731; 290A.03, subdivision 15; 424A.10, subdivision 3; Laws 1973, chapter 393, 2.38section 1, as amended; Laws 1980, chapter 511, section 1, subdivision 2, as 2.39amended; Laws 1988, chapter 645, section 3, as amended; Laws 1989, chapter 2.40211, section 8, subdivision 4, as amended; Laws 1994, chapter 587, article 9, 2.41section 14, subdivisions 1, 2, 3; Laws 1995, chapter 264, article 5, sections 44, 2.42subdivision 4, as amended; 45, subdivision 1, as amended; Laws 2003, chapter 2.43128, article 1, section 172, as amended; Laws 2005, First Special Session chapter 2.443, article 5, section 39; article 10, section 23, as amended; Laws 2006, chapter 2.45259, article 11, section 3; proposing coding for new law in Minnesota Statutes, 2.46chapters 270; 270C; 273; 274; 290C; 297A; 360; 471; 475; repealing Minnesota 2.47Statutes 2006, sections 16A.1522; 163.051, subdivision 5; 270.073; 270.41, 2.48subdivision 4; 270.43; 270.51; 270.52; 270.53; 295.60; 297A.61, subdivision 2.4920; 297A.668, subdivision 6; 297A.67, subdivision 22; 469.174, subdivision 29; 2.50Laws 1973, chapter 393, section 2; Laws 1994, chapter 587, article 9, section 8, 2.51subdivision 1, as amended; Laws 1998, chapter 389, article 11, section 18.2.52BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:3.1ARTICLE 13.2AIDS TO LOCAL GOVERNMENTS3.3    Section 1. Minnesota Statutes 2006, section 477A.011, subdivision 36, is amended to 3.4read:3.5    Subd. 36. City aid base. (a) Except as otherwise provided in this subdivision, 3.6"city aid base" is zero.3.7    (b) The city aid base for any city with a population less than 500 is increased by 3.8$40,000 for aids payable in calendar year 1995 and thereafter, and the maximum amount 3.9of total aid it may receive under section 
         477A.013, subdivision 9, paragraph (c), is also 3.10increased by $40,000 for aids payable in calendar year 1995 only, provided that:3.11    (i) the average total tax capacity rate for taxes payable in 1995 exceeds 200 percent;3.12    (ii) the city portion of the tax capacity rate exceeds 100 percent; and3.13    (iii) its city aid base is less than $60 per capita.3.14    (c) The city aid base for a city is increased by $20,000 in 1998 and thereafter and 3.15the maximum amount of total aid it may receive under section 
         477A.013, subdivision 9, 3.16paragraph (c), is also increased by $20,000 in calendar year 1998 only, provided that:3.17    (i) the city has a population in 1994 of 2,500 or more;3.18    (ii) the city is located in a county, outside of the metropolitan area, which contains a 3.19city of the first class;3.20    (iii) the city's net tax capacity used in calculating its 1996 aid under section 3.21477A.013
          is less than $400 per capita; and3.22    (iv) at least four percent of the total net tax capacity, for taxes payable in 1996, of 3.23property located in the city is classified as railroad property.3.24    (d) The city aid base for a city is increased by $200,000 in 1999 and thereafter and 3.25the maximum amount of total aid it may receive under section 
         477A.013, subdivision 9, 3.26paragraph (c), is also increased by $200,000 in calendar year 1999 only, provided that:3.27    (i) the city was incorporated as a statutory city after December 1, 1993;3.28    (ii) its city aid base does not exceed $5,600; and3.29    (iii) the city had a population in 1996 of 5,000 or more.3.30    (e) The city aid base for a city is increased by $450,000 in 1999 to 2008 and the 3.31maximum amount of total aid it may receive under section 
         477A.013, subdivision 9, 3.32paragraph (c), is also increased by $450,000 in calendar year 1999 only, provided that:3.33    (i) the city had a population in 1996 of at least 50,000;3.34    (ii) its population had increased by at least 40 percent in the ten-year period ending 3.35in 1996; and4.1    (iii) its city's net tax capacity for aids payable in 1998 is less than $700 per capita.4.2    (f) The city aid base for a city is increased by $150,000 for aids payable in 2000 and 4.3thereafter, and the maximum amount of total aid it may receive under section 
         477A.013, 4.4subdivision 9
         , paragraph (c), is also increased by $150,000 in calendar year 2000 only, 4.5provided that:4.6    (1) the city has a population that is greater than 1,000 and less than 2,500;4.7    (2) its commercial and industrial percentage for aids payable in 1999 is greater 4.8than 45 percent; and4.9    (3) the total market value of all commercial and industrial property in the city 4.10for assessment year 1999 is at least 15 percent less than the total market value of all 4.11commercial and industrial property in the city for assessment year 1998.4.12    (g) The city aid base for a city is increased by $200,000 in 2000 and thereafter, and 4.13the maximum amount of total aid it may receive under section 
         477A.013, subdivision 9, 4.14paragraph (c), is also increased by $200,000 in calendar year 2000 only, provided that:4.15    (1) the city had a population in 1997 of 2,500 or more;4.16    (2) the net tax capacity of the city used in calculating its 1999 aid under section 4.17477A.013
          is less than $650 per capita;4.18    (3) the pre-1940 housing percentage of the city used in calculating 1999 aid under 4.19section 
         477A.013 is greater than 12 percent;4.20    (4) the 1999 local government aid of the city under section 
         477A.013 is less than 4.2120 percent of the amount that the formula aid of the city would have been if the need 4.22increase percentage was 100 percent; and4.23    (5) the city aid base of the city used in calculating aid under section 
         477A.0134.24is less than $7 per capita.4.25    (h) The city aid base for a city is increased by $102,000 in 2000 and thereafter, and 4.26the maximum amount of total aid it may receive under section 
         477A.013, subdivision 9, 4.27paragraph (c), is also increased by $102,000 in calendar year 2000 only, provided that:4.28    (1) the city has a population in 1997 of 2,000 or more;4.29    (2) the net tax capacity of the city used in calculating its 1999 aid under section 4.30477A.013
          is less than $455 per capita;4.31    (3) the net levy of the city used in calculating 1999 aid under section 
         477A.013 is 4.32greater than $195 per capita; and4.33    (4) the 1999 local government aid of the city under section 
         477A.013 is less than 4.3438 percent of the amount that the formula aid of the city would have been if the need 4.35increase percentage was 100 percent.5.1    (i) The city aid base for a city is increased by $32,000 in 2001 and thereafter, and 5.2the maximum amount of total aid it may receive under section 
         477A.013, subdivision 9, 5.3paragraph (c), is also increased by $32,000 in calendar year 2001 only, provided that:5.4    (1) the city has a population in 1998 that is greater than 200 but less than 500;5.5    (2) the city's revenue need used in calculating aids payable in 2000 was greater 5.6than $200 per capita;5.7    (3) the city net tax capacity for the city used in calculating aids available in 2000 5.8was equal to or less than $200 per capita;5.9    (4) the city aid base of the city used in calculating aid under section 
         477A.0135.10is less than $65 per capita; and5.11    (5) the city's formula aid for aids payable in 2000 was greater than zero.5.12    (j) The city aid base for a city is increased by $7,200 in 2001 and thereafter, and 5.13the maximum amount of total aid it may receive under section 
         477A.013, subdivision 9, 5.14paragraph (c), is also increased by $7,200 in calendar year 2001 only, provided that:5.15    (1) the city had a population in 1998 that is greater than 200 but less than 500;5.16    (2) the city's commercial industrial percentage used in calculating aids payable in 5.172000 was less than ten percent;5.18    (3) more than 25 percent of the city's population was 60 years old or older according 5.19to the 1990 census;5.20    (4) the city aid base of the city used in calculating aid under section 
         477A.0135.21is less than $15 per capita; and5.22    (5) the city's formula aid for aids payable in 2000 was greater than zero.5.23    (k) The city aid base for a city is increased by $45,000 in 2001 and thereafter and 5.24by an additional $50,000 in calendar years 2002 to 2011, and the maximum amount of 5.25total aid it may receive under section 
         477A.013, subdivision 9, paragraph (c), is also 5.26increased by $45,000 in calendar year 2001 only, and by $50,000 in calendar year 2002 5.27only, provided that:5.28    (1) the net tax capacity of the city used in calculating its 2000 aid under section 5.29477A.013
          is less than $810 per capita;5.30    (2) the population of the city declined more than two percent between 1988 and 1998;5.31    (3) the net levy of the city used in calculating 2000 aid under section 
         477A.013 is 5.32greater than $240 per capita; and5.33    (4) the city received less than $36 per capita in aid under section 
         477A.013, 5.34subdivision 9
         , for aids payable in 2000.5.35    (l) The city aid base for a city with a population of 10,000 or more which is located 5.36outside of the seven-county metropolitan area is increased in 2002 and thereafter, and the 6.1maximum amount of total aid it may receive under section 
         477A.013, subdivision 9, 6.2paragraph (b) or (c), is also increased in calendar year 2002 only, by an amount equal to 6.3the lesser of:6.4    (1)(i) the total population of the city, as determined by the United States Bureau of 6.5the Census, in the 2000 census, (ii) minus 5,000, (iii) times 60; or6.6    (2) $2,500,000.6.7    (m) The city aid base is increased by $50,000 in 2002 and thereafter, and the 6.8maximum amount of total aid it may receive under section 
         477A.013, subdivision 9, 6.9paragraph (c), is also increased by $50,000 in calendar year 2002 only, provided that:6.10    (1) the city is located in the seven-county metropolitan area;6.11    (2) its population in 2000 is between 10,000 and 20,000; and6.12    (3) its commercial industrial percentage, as calculated for city aid payable in 2001, 6.13was greater than 25 percent.6.14    (n) The city aid base for a city is increased by $150,000 in calendar years 2002 to 6.152011 and by an additional $75,000 in calendar years 2009 to 2014 and the maximum 6.16amount of total aid it may receive under section 
         477A.013, subdivision 9, paragraph (c), is 6.17also increased by $150,000 in calendar year 2002 only and by $75,000 in calendar year 6.182009 only, provided that:6.19    (1) the city had a population of at least 3,000 but no more than 4,000 in 1999;6.20    (2) its home county is located within the seven-county metropolitan area;6.21    (3) its pre-1940 housing percentage is less than 15 percent; and6.22    (4) its city net tax capacity per capita for taxes payable in 2000 is less than $900 6.23per capita.6.24    (o) The city aid base for a city is increased by $200,000 beginning in calendar 6.25year 2003 and the maximum amount of total aid it may receive under section 
         477A.013, 6.26subdivision 9
         , paragraph (c), is also increased by $200,000 in calendar year 2003 only, 6.27provided that the city qualified for an increase in homestead and agricultural credit aid 6.28under Laws 1995, chapter 264, article 8, section 18.6.29    (p) The city aid base for a city is increased by $200,000 in 2004 only and the 6.30maximum amount of total aid it may receive under section 
         477A.013, subdivision 9, is 6.31also increased by $200,000 in calendar year 2004 only, if the city is the site of a nuclear 6.32dry cask storage facility.6.33    (q) The city aid base for a city is increased by $10,000 in 2004 and thereafter and the 6.34maximum total aid it may receive under section 
         477A.013, subdivision 9, is also increased 6.35by $10,000 in calendar year 2004 only, if the city was included in a federal major disaster 7.1designation issued on April 1, 1998, and its pre-1940 housing stock was decreased by 7.2more than 40 percent between 1990 and 2000.7.3    (r) The city aid base for a city is increased by $25,000$30,000  in 2006 only7.42009 and thereafter  and the maximum total aid it may receive under section 
         477A.013, 7.5subdivision 9
         , is also increased by $25,000 in calendar year 2006 only if the city had a 7.6population in 2003 of at least 1,000 and has a state park for which the city provides rescue 7.7services and which comprised at least 14 percent of the total geographic area included 7.8within the city boundaries in 2000.7.9    (s) The city aid base for a city with a population less than 5,000 is increased in 7.102006 and thereafter and the minimum and maximum amount of total aid it may receive 7.11under this section is also increased in calendar year 2006 only by an amount equal to 7.12$6 multiplied by its population.7.13    (t) The city aid base for a city is increased by $80,000 in 2007 only 2009 and 7.14thereafter and the minimum and maximum amount of total aid it may receive under section 7.15477A.013
         , subdivision 9, is also increased by $80,000 in calendar year 2007 2009 only, if:7.16    (1) as of May 1, 2006, at least 25 percent of the tax capacity of the city is proposed 7.17to be placed in trust status as tax-exempt Indian land;7.18    (2) the placement of the land is being challenged administratively or in court; and 7.19    (3) due to the challenge, the land proposed to be placed in trust is still on the tax 7.20rolls as of May 1, 2006.7.21    (u) The city aid base for a city is increased by $100,000 in 2007 and thereafter and 7.22the minimum and maximum total amount of aid it may receive under this section is also 7.23increased in calendar year 2007 only, provided that:7.24    (1) the city has a 2004 estimated population greater than 200 but less than 2,000;7.25    (2) its city net tax capacity for aids payable in 2006 was less than $300 per capita;7.26    (3) the ratio of its pay 2005 tax levy compared to its city net tax capacity for aids 7.27payable in 2006 was greater than 110 percent; and7.28    (4) it is located in a county where at least 15,000 acres of land are classified as 7.29tax-exempt Indian reservations according to the 2004 abstract of tax-exempt property.7.30    (v) The city aid base for a city is increased by $30,000 in 2009 only, and the 7.31maximum total aid it may receive under section 477A.013, subdivision 9, is also increased 7.32by $30,000 in calendar year 2009, only if the city had a population in 2005 of less than 7.333,000 and the city's boundaries as of 2007 were formed by the consolidation of two cities 7.34and one township in 2002.7.35EFFECTIVE DATE.This section is effective for aids payable in calendar year 7.362009 and thereafter.8.1    Sec. 2. Minnesota Statutes 2006, section 477A.013, subdivision 8, is amended to read:8.2    Subd. 8. City formula aid. In calendar year 2004 and subsequent years, the 8.3formula aid for a city is equal to the need increase percentage multiplied by the difference 8.4between (1) the city's revenue need multiplied by its population, and (2) the sum of the 8.5city's net tax capacity multiplied by the tax effort rate; the taconite aids under sections 8.6298.28 and 298.282 to any city except a city directly impacted by a taconite mine or plant, 8.7multiplied by the following percentages:.8.8    (i) zero percent for aids payable in 2004;8.9    (ii) 25 percent for aids payable in 2005;8.10    (iii) 50 percent for aids payable in 2006;8.11    (iv) 75 percent for aids payable in 2007; and8.12    (v) 100 percent for aids payable in 2008 and thereafter.8.13    For purposes of this subdivision, "a city directly impacted by a taconite mine or 8.14plant" means: (1) Babbit, (2) Eveleth, (3) Hibbing, (4) Keewatin, (5) Mountain Iron, (6) 8.15Silver Bay, or (7) Virginia.8.16No city may have a formula aid amount less than zero. The need increase percentage 8.17must be the same for all cities.8.18    The applicable need increase percentage must be calculated by the Department of 8.19Revenue so that the total of the aid under subdivision 9 equals the total amount available 8.20for aid under section 
         477A.03 after the subtraction under section 
         477A.014, subdivisions 8.214 and 5
         .8.22EFFECTIVE DATE.This section is effective for aids payable in calendar year 8.232009 and thereafter.8.24    Sec. 3. Minnesota Statutes 2006, section 477A.013, subdivision 9, is amended to read:8.25    Subd. 9. City aid distribution. (a) In calendar year 2002 and thereafter, each 8.26city shall receive an aid distribution equal to the sum of (1) the city formula aid under 8.27subdivision 8, and (2) its city aid base. In calendar year 2009, each city shall receive an 8.28aid distribution equal to the sum of (1) the city formula aid under subdivision 8, (2) its city 8.29aid base, and (3) one-half of the difference between its total aid in the previous year under 8.30this subdivision and its city aid base in the previous year. 8.31(b) For aids payable in 2010 and thereafter, each city shall receive an aid distribution 8.32equal to (1) the city aid formula under subdivision 8, (2) its city aid base, and (3) its 8.33formula aid under subdivision 8 in the previous year, prior to any adjustments under 8.34this subdivision.9.1    (b) (c) For aids payable in 2005 2009 and thereafter, the total aid for any city shall 9.2not exceed the sum of (1) ten percent of the city's net levy for the year prior to the aid 9.3distribution plus (2) its total aid in the previous year. For aids payable in 2005 2009 and 9.4thereafter, the total aid for any city with a population of 2,500 or more may not decrease 9.5from be less than its total aid under this section in the previous year by an amount greater 9.6than minus the lesser of $15 multiplied by its population, or ten percent of its net levy in 9.7the year prior to the aid distribution.9.8    (c) For aids payable in 2004 only, the total aid for a city with a population less than 9.92,500 may not be less than the amount it was certified to receive in 2003 minus the greater 9.10of (1) the reduction to this aid payment in 2003 under Laws 2003, First Special Session 9.11chapter 21, article 5, or (2) five percent of its 2003 aid amount. (d) For aids payable in 9.122005 2009 and thereafter, the total aid for a city with a population less than 2,500 must not 9.13be less than the amount it was certified to receive in the previous year minus the lesser of 9.14$15 multiplied by its population, or five percent of its 2003 certified aid amount.9.15    (d) (e) If a city's net tax capacity used in calculating aid under this section has 9.16decreased in any year by more than 25 percent from its net tax capacity in the previous 9.17year due to property becoming tax-exempt Indian land, the city's maximum allowed aid 9.18increase under paragraph (b) (c) shall be increased by an amount equal to (1) the city's tax 9.19rate in the year of the aid calculation, multiplied by (2) the amount of its net tax capacity 9.20decrease resulting from the property becoming tax exempt.9.21EFFECTIVE DATE.This section is effective for aids payable in calendar year 9.222009 and thereafter.9.23    Sec. 4. Laws 2006, chapter 259, article 11, section 3, is amended to read:9.24    Sec. 3. MAHNOMEN COUNTY; COUNTY, CITY, SCHOOL DISTRICT, 9.25PROPERTY TAX REIMBURSEMENT; 2006 ONLY.9.26    Subdivision 1.  Aid appropriation. $600,000 is appropriated annually from the 9.27general fund to the commissioner of revenue to be used to make payments to compensate 9.28for the loss of property tax revenue due to the placement of land located in the city of 9.29Mahnomen that was put in trust status by the United Stated Department of the Interior, 9.30Bureau of Indian Affairs, during calendar year 2006 related to the trust conversion 9.31application of the Shooting Star Casino. The commissioner shall pay the county of 9.32Mahnomen, $450,000; the city of Mahnomen, $80,000; and Independent School District 9.33No. 432, Mahnomen, $70,000. The payments shall be made on July 20, 2006 of 2008 9.34and each subsequent year. 10.1    Subd. 2. School district tax base adjustments.The Department of Revenue 10.2must reduce the referendum market value and the adjusted net tax capacity certified 10.3for assessment year 2005 used to calculate school levies for taxes payable in 2007 10.4for Independent School District No. 432, Mahnomen, by the amounts of any values 10.5attributable to property that is no longer subject to property taxation because the land has 10.6been placed in trust in calendar year 2006 through action of the United States Department 10.7of Interior, Bureau of Indian Affairs. The Mahnomen County auditor must certify the 10.8reductions in value to the Department of Revenue in the form and manner specified by the 10.9Department of Revenue. 10.10EFFECTIVE DATE.This section is effective for aids payable in calendar year 10.112008 and thereafter.10.12    Sec. 5. MAHNOMEN COUNTY; CITY, COUNTY, AND SCHOOL DISTRICT 10.13TAX BASE ADJUSTMENTS.10.14    (a) The commissioner of revenue must reduce the referendum market value and 10.15adjusted net tax capacity used to calculate school levies beginning with taxes payable in 10.162009 and subsequent years for Independent School District No. 432, Mahnomen, by 10.17the amounts attributable to the Shooting Star Casino, which is pending placement into 10.18trust status by the United States Department of the Interior, Bureau of Indian Affairs. 10.19This adjustment shall be made for each assessment year that the property remains on 10.20the tax rolls. The Mahnomen County auditor must certify the reductions in value to the 10.21Department of Revenue in the form and manner specified by the commissioner of revenue.10.22    (b) The commissioner of revenue must reduce the county and city net tax capacities 10.23used to calculate aids under Minnesota Statutes, sections 477A.011 to 477A.03, beginning 10.24with aids payable in 2009 for the county of Mahnomen and the city of Mahnomen, by the 10.25amounts attributable to property that is pending placement into trust status by the United 10.26States Department of the Interior, Bureau of Indian Affairs. This adjustment shall be made 10.27for each assessment year that the property remains on the tax rolls.10.28EFFECTIVE DATE.This section is effective for aids and levies payable in 2009 10.29and thereafter.10.30    Sec. 6. UTILITY PROPERTY; TAX BASE ADJUSTMENTS FOR 10.31CALCULATION OF SCHOOL DISTRICT AIDS AND LEVIES.10.32    For purposes of calculating school levies and aids for fiscal years 2010 and 2011 10.33only, the commissioner of revenue shall compute the adjusted net tax capacity and 11.1referendum market value as if the tax base changes resulting from the amendments to 11.2Minnesota Rules, chapter 8100, including the phase-in provisions of Minnesota Rules, 11.3part 8100.0800, were effective one year earlier.11.4    Sec. 7. UTILITY PROPERTY; TAX BASE ADJUSTMENTS FOR 11.5CALCULATION OF COUNTY, CITY, AND TOWN AIDS.11.6    For purposes of calculating aid for towns and cities under section 477A.013, and for 11.7counties under section 477A.0124, for payment in 2009 and 2010 only, the commissioner 11.8of revenue shall calculate the adjusted net tax capacity of cities and counties, as defined 11.9in sections 477A.011 and 477A.0124, as if the tax base changes resulting from the 11.10amendments to Minnesota Rules, chapter 8100, including the phase-in provisions of 11.11Minnesota Rules, part 8100.0800, were effective one year earlier.11.12ARTICLE 211.13PROPERTY TAXES11.14    Section 1. Minnesota Statutes 2006, section 97A.061, subdivision 2, is amended to 11.15read:11.16    Subd. 2. Allocation. (a) Except as provided in subdivision 3, the county treasurer 11.17shall allocate the payment among the county, towns, and school districts on the same basis 11.18as if the payments were taxes on the land received in the year. Payment of a town's or a 11.19school district's allocation must be made by the county treasurer to the town or school 11.20district within 30 days of receipt of the payment to the county. The county's share of the 11.21payment shall be deposited in the county general revenue fund.11.22    (b) The county treasurer of a county with a population over 39,000 but less than 11.2342,000 in the 1950 federal census shall allocate the payment only among the towns and 11.24school districts on the same basis as if the payments were taxes on the lands received 11.25in the current year.11.26    (c) If a town received a payment in calendar year 2006 or thereafter under this 11.27subdivision, and subsequently incorporated as a city, the city will continue to receive any 11.28future year's allocations that would have been made to the town had it not incorporated, 11.29provided that the payments will terminate if the governing body of the city passes an 11.30ordinance that prohibits hunting within the boundaries of the city.11.31EFFECTIVE DATE.This section is effective retroactively for aid payments made 11.32in 2007 and thereafter.12.1    Sec. 2. Minnesota Statutes 2006, section 127A.48, subdivision 2, is amended to read:12.2    Subd. 2. Methodology. In making its annual assessment/sales ratio studies, the 12.3Department of Revenue must use a methodology consistent with the most recent Standard 12.4on Assessment Ratio Studies published by the assessment standards committee of the 12.5International Association of Assessing Officers. The commissioner of revenue shall 12.6supplement this general methodology with specific procedures necessary for execution of 12.7the study in accordance with other Minnesota laws impacting the assessment/sales ratio 12.8study. The commissioner shall document these specific procedures in writing and shall 12.9publish the procedures in the State Register, but these procedures will not be considered 12.10"rules" pursuant to the Minnesota Administrative Procedure Act. When property is 12.11sold and the purchaser changes its use in a manner that would result in a change of 12.12classification of the property, the assessment sales ratio study under this subdivision must 12.13take into account that changed classification as soon as practicable. A change in status 12.14from homestead to nonhomestead or from nonhomestead to homestead is not a change 12.15under this subdivision. For purposes of this section, sections 
         270.12, subdivision 2, 12.16clause (8), and 
         278.05, subdivision 4, the commissioner of revenue shall exclude from 12.17the assessment/sales ratio study the sale of any nonagricultural property which does not 12.18contain an improvement, if (1) the statutory basis on which the property's taxable value 12.19as most recently assessed is less than market value as defined in section 
         273.11, or (2) 12.20the property has undergone significant physical change or a change of use since the most 12.21recent assessment. 12.22EFFECTIVE DATE.This section is effective the day following final enactment.12.23    Sec. 3. Minnesota Statutes 2006, section 272.02, is amended by adding a subdivision 12.24to read:12.25    Subd. 85.Modular homes used as models by dealers.(a) A modular home 12.26is exempt if it:12.27    (1) is owned by a modular home dealer and is located on land owned or leased 12.28by that dealer;12.29    (2) is a single-family model home;12.30    (3) is not available for sale and is used exclusively as a model;12.31    (4) is not permanently connected to any utilities except electricity; and12.32    (5) is situated on a temporary foundation.12.33    (b) The exemption under this subdivision is allowable for up to five assessment 12.34years after the date it becomes located on the property, provided that the modular home 12.35continues to meet all of the criteria under this subdivision each year. The owner of a 13.1modular model home must notify the county assessor within 60 days that it has been 13.2constructed or located on the property and must again notify the assessor if the modular 13.3home ceases to meet any of the criteria. If more than one modular home is constructed or 13.4situated on a property, the owner must notify the assessor within 60 days for each of the 13.5models placed on the property.13.6    (c) For purposes of this subdivision, a "modular home" means a building or 13.7structural unit that has been in whole or substantial part manufactured or constructed at an 13.8off-site location to be wholly or partially assembled on-site as a single family dwelling. 13.9Construction of the modular home must comply with applicable standards adopted in 13.10Minnesota Rules authorized under Minnesota Statutes, chapter 16B. A modular home does 13.11not include a structure subject to the requirements of the National Manufactured Home 13.12Construction and Safety Standards Act of 1974 or prefabricated buildings, as defined in 13.13Minnesota Statutes, section 327.31, subdivision 6.13.14EFFECTIVE DATE.This section is effective for assessment year 2008 and 13.15thereafter, for taxes payable in 2009 and thereafter. The five-year assessment time period 13.16begins with the 2008 assessment for a modular model home currently situated provided 13.17it meets all of the criteria and the county assessor is notified within 90 days of the day 13.18following final enactment.13.19    Sec. 4. Minnesota Statutes 2006, section 272.02, is amended by adding a subdivision 13.20to read:13.21    Subd. 86.Apprenticeship training facilities.All or a portion of a building used 13.22exclusively for a state-approved apprenticeship program through the Department of Labor 13.23and Industry is exempt if (1) it is owned and operated by a nonprofit corporation, (2) the 13.24program participants receive no compensation, and (3) it is located in the Minneapolis and 13.25St. Paul standard metropolitan statistical area as determined by the 2000 federal census or 13.26in a city outside the Minneapolis and St. Paul standard metropolitan statistical area that 13.27has a population of 7,500 or greater according to the most recent federal census. This 13.28exemption does not include land.13.29EFFECTIVE DATE.This section is effective for assessment year 2008 and 13.30thereafter, for taxes payable in 2009 and thereafter.13.31    Sec. 5. Minnesota Statutes 2006, section 272.02, is amended by adding a subdivision 13.32to read:14.1    Subd. 87.Monosloped roofs for feedlots and manure storage areas.A 14.2monosloped, single-pitched roof installed over a feedlot or manure storage area to prevent 14.3runoff is exempt.14.4EFFECTIVE DATE.This section is effective for assessment year 2008 for property 14.5taxes payable in 2009, and thereafter.14.6    Sec. 6. Minnesota Statutes 2006, section 272.115, subdivision 1, is amended to read:14.7    Subdivision 1. Requirement. Except as otherwise provided in subdivision 5, 14.8whenever any real estate is sold for a consideration in excess of $1,000, whether by 14.9warranty deed, quitclaim deed, contract for deed or any other method of sale, the grantor, 14.10grantee or the legal agent of either shall file a certificate of value with the county 14.11auditor in the county in which the property is located when the deed or other document 14.12is presented for recording. Contract for deeds are subject to recording under section 14.13507.235, subdivision 1
         . Value shall, in the case of any deed not a gift, be the amount of 14.14the full actual consideration thereof, paid or to be paid, including the amount of any lien 14.15or liens assumed. The items and value of personal property transferred with the real 14.16property must be listed and deducted from the sale price. The certificate of value shall 14.17include the classification to which the property belongs for the purpose of determining 14.18the fair market value of the property, and shall include any proposed change in use of the 14.19property known to the person filing the certificate that could change the classification 14.20of the property. The certificate shall include financing terms and conditions of the sale 14.21which are necessary to determine the actual, present value of the sale price for purposes 14.22of the sales ratio study. If the property is being acquired as part of a like-kind exchange 14.23under section 1031 of the Internal Revenue Code of 1986, as amended through December 14.2431, 2006, that must be indicated on the certificate. The commissioner of revenue shall 14.25promulgate administrative rules specifying the financing terms and conditions which must 14.26be included on the certificate. Pursuant to the authority of the commissioner of revenue in 14.27section 
         270C.306, the certificate of value must include the Social Security number or the 14.28federal employer identification number of the grantors and grantees. The identification 14.29numbers of the grantors and grantees are private data on individuals or nonpublic data 14.30as defined in section 
         13.02, subdivisions 9 and 12, but, notwithstanding that section, the 14.31private or nonpublic data may be disclosed to the commissioner of revenue for purposes of 14.32tax administration. The information required to be shown on the certificate of value is 14.33limited to the information required as of the date of the acknowledgment on the deed or 14.34other document to be recorded.15.1EFFECTIVE DATE.This section is effective for certificates filed after June 30, 15.22008.15.3    Sec. 7. Minnesota Statutes 2007 Supplement, section 273.124, subdivision 14, is 15.4amended to read:15.5    Subd. 14.  Agricultural homesteads; special provisions.  (a) Real estate of less than 15.6ten acres that is the homestead of its owner must be classified as class 2a under section 15.7273.13, subdivision 23
         , paragraph (a), if: 15.8    (1) the parcel on which the house is located is contiguous on at least two sides to (i) 15.9agricultural land, (ii) land owned or administered by the United States Fish and Wildlife 15.10Service, or (iii) land administered by the Department of Natural Resources on which in 15.11lieu taxes are paid under sections 
         477A.11 to 
         477A.14; 15.12    (2) its owner also owns a noncontiguous parcel of agricultural land that is at least 15.1320 acres; 15.14    (3) the noncontiguous land is located not farther than four townships or cities, or a 15.15combination of townships or cities from the homestead; and 15.16    (4) the agricultural use value of the noncontiguous land and farm buildings is equal 15.17to at least 50 percent of the market value of the house, garage, and one acre of land. 15.18    Homesteads initially classified as class 2a under the provisions of this paragraph shall 15.19remain classified as class 2a, irrespective of subsequent changes in the use of adjoining 15.20properties, as long as the homestead remains under the same ownership, the owner owns a 15.21noncontiguous parcel of agricultural land that is at least 20 acres, and the agricultural use 15.22value qualifies under clause (4). Homestead classification under this paragraph is limited 15.23to property that qualified under this paragraph for the 1998 assessment. 15.24    (b)(i) Agricultural property consisting of at least 40 acres shall be classified as the 15.25owner's homestead, to the same extent as other agricultural homestead property, if all 15.26of the following criteria are met: 15.27(1) the property consists of at least 40 acres including undivided government lots 15.28and correctional 40's;15.29    (1) (2) the owner, the owner's spouse, the son or daughter of the owner or owner's 15.30spouse, or the grandson or granddaughter of the owner or the owner's spouse, is actively 15.31farming the agricultural property, either on the person's own behalf as an individual or 15.32on behalf of a partnership operating a family farm, family farm corporation, joint family 15.33farm venture, or limited liability company of which the person is a partner, shareholder, or 15.34member; 16.1    (2) (3) both the owner of the agricultural property and the person who is actively 16.2farming the agricultural property under clause (1) (2), are Minnesota residents; 16.3    (3) (4) neither the owner nor the spouse of the owner claims another agricultural 16.4homestead in Minnesota; and 16.5    (4) (5) neither the owner nor the person actively farming the property lives farther 16.6than four townships or cities, or a combination of four townships or cities, from the 16.7agricultural property, except that if the owner or the owner's spouse is required to live in 16.8employer-provided housing, the owner or owner's spouse, whichever is actively farming 16.9the agricultural property, may live more than four townships or cities, or combination of 16.10four townships or cities from the agricultural property. 16.11    The relationship under this paragraph may be either by blood or marriage. 16.12    (ii) Real property held by a trustee under a trust is eligible for agricultural homestead 16.13classification under this paragraph if the qualifications in clause (i) are met, except that 16.14"owner" means the grantor of the trust. 16.15    (iii) Property containing the residence of an owner who owns qualified property 16.16under clause (i) shall be classified as part of the owner's agricultural homestead, if that 16.17property is also used for noncommercial storage or drying of agricultural crops. 16.18    (c) Noncontiguous land shall be included as part of a homestead under section 16.19273.13, subdivision 23
         , paragraph (a), only if the homestead is classified as class 2a 16.20and the detached land is located in the same township or city, or not farther than four 16.21townships or cities or combination thereof from the homestead. Any taxpayer of these 16.22noncontiguous lands must notify the county assessor that the noncontiguous land is part of 16.23the taxpayer's homestead, and, if the homestead is located in another county, the taxpayer 16.24must also notify the assessor of the other county. 16.25    (d) Agricultural land used for purposes of a homestead and actively farmed by a 16.26person holding a vested remainder interest in it must be classified as a homestead under 16.27section 
         273.13, subdivision 23, paragraph (a). If agricultural land is classified class 2a, 16.28any other dwellings on the land used for purposes of a homestead by persons holding 16.29vested remainder interests who are actively engaged in farming the property, and up to 16.30one acre of the land surrounding each homestead and reasonably necessary for the use of 16.31the dwelling as a home, must also be assessed class 2a. 16.32    (e) Agricultural land and buildings that were class 2a homestead property under 16.33section 
         273.13, subdivision 23, paragraph (a), for the 1997 assessment shall remain 16.34classified as agricultural homesteads for subsequent assessments if: 16.35    (1) the property owner abandoned the homestead dwelling located on the agricultural 16.36homestead as a result of the April 1997 floods; 17.1    (2) the property is located in the county of Polk, Clay, Kittson, Marshall, Norman, 17.2or Wilkin; 17.3    (3) the agricultural land and buildings remain under the same ownership for the 17.4current assessment year as existed for the 1997 assessment year and continue to be used 17.5for agricultural purposes; 17.6    (4) the dwelling occupied by the owner is located in Minnesota and is within 30 17.7miles of one of the parcels of agricultural land that is owned by the taxpayer; and 17.8    (5) the owner notifies the county assessor that the relocation was due to the 1997 17.9floods, and the owner furnishes the assessor any information deemed necessary by the 17.10assessor in verifying the change in dwelling. Further notifications to the assessor are not 17.11required if the property continues to meet all the requirements in this paragraph and any 17.12dwellings on the agricultural land remain uninhabited. 17.13    (f) Agricultural land and buildings that were class 2a homestead property under 17.14section 
         273.13, subdivision 23, paragraph (a), for the 1998 assessment shall remain 17.15classified agricultural homesteads for subsequent assessments if: 17.16    (1) the property owner abandoned the homestead dwelling located on the agricultural 17.17homestead as a result of damage caused by a March 29, 1998, tornado; 17.18    (2) the property is located in the county of Blue Earth, Brown, Cottonwood, 17.19LeSueur, Nicollet, Nobles, or Rice; 17.20    (3) the agricultural land and buildings remain under the same ownership for the 17.21current assessment year as existed for the 1998 assessment year; 17.22    (4) the dwelling occupied by the owner is located in this state and is within 50 miles 17.23of one of the parcels of agricultural land that is owned by the taxpayer; and 17.24    (5) the owner notifies the county assessor that the relocation was due to a March 29, 17.251998, tornado, and the owner furnishes the assessor any information deemed necessary by 17.26the assessor in verifying the change in homestead dwelling. For taxes payable in 1999, the 17.27owner must notify the assessor by December 1, 1998. Further notifications to the assessor 17.28are not required if the property continues to meet all the requirements in this paragraph 17.29and any dwellings on the agricultural land remain uninhabited. 17.30    (g) Agricultural property consisting of at least 40 acres of a family farm corporation, 17.31joint family farm venture, family farm limited liability company, or partnership operating 17.32a family farm as described under subdivision 8 shall be classified homestead, to the same 17.33extent as other agricultural homestead property, if all of the following criteria are met: 17.34(1) the property consists of at least 40 acres including undivided government lots 17.35and correctional 40's;18.1    (1) (2) a shareholder, member, or partner of that entity is actively farming the 18.2agricultural property; 18.3    (2) (3) that shareholder, member, or partner who is actively farming the agricultural 18.4property is a Minnesota resident; 18.5    (3) (4) neither that shareholder, member, or partner, nor the spouse of that 18.6shareholder, member, or partner claims another agricultural homestead in Minnesota; and 18.7    (4) (5) that shareholder, member, or partner does not live farther than four townships 18.8or cities, or a combination of four townships or cities, from the agricultural property. 18.9    Homestead treatment applies under this paragraph for property leased to a family 18.10farm corporation, joint farm venture, limited liability company, or partnership operating a 18.11family farm if legal title to the property is in the name of an individual who is a member, 18.12shareholder, or partner in the entity. 18.13    (h) To be eligible for the special agricultural homestead under this subdivision, an 18.14initial full application must be submitted to the county assessor where the property is 18.15located. Owners and the persons who are actively farming the property shall be required 18.16to complete only a one-page abbreviated version of the application in each subsequent 18.17year provided that none of the following items have changed since the initial application: 18.18    (1) the day-to-day operation, administration, and financial risks remain the same; 18.19    (2) the owners and the persons actively farming the property continue to live within 18.20the four townships or city criteria and are Minnesota residents; 18.21    (3) the same operator of the agricultural property is listed with the Farm Service 18.22Agency; 18.23    (4) a Schedule F or equivalent income tax form was filed for the most recent year; 18.24    (5) the property's acreage is unchanged; and 18.25    (6) none of the property's acres have been enrolled in a federal or state farm program 18.26since the initial application. 18.27    The owners and any persons who are actively farming the property must include 18.28the appropriate Social Security numbers, and sign and date the application. If any of the 18.29specified information has changed since the full application was filed, the owner must 18.30notify the assessor, and must complete a new application to determine if the property 18.31continues to qualify for the special agricultural homestead. The commissioner of revenue 18.32shall prepare a standard reapplication form for use by the assessors. 18.33    (i) Agricultural land and buildings that were class 2a homestead property under 18.34section 
         273.13, subdivision 23, paragraph (a), for the 2007 assessment shall remain 18.35classified agricultural homesteads for subsequent assessments if: 19.1    (1) the property owner abandoned the homestead dwelling located on the agricultural 19.2homestead as a result of damage caused by the August 2007 floods; 19.3    (2) the property is located in the county of Dodge, Fillmore, Houston, Olmsted, 19.4Steele, Wabasha, or Winona; 19.5    (3) the agricultural land and buildings remain under the same ownership for the 19.6current assessment year as existed for the 2007 assessment year; 19.7    (4) the dwelling occupied by the owner is located in this state and is within 50 miles 19.8of one of the parcels of agricultural land that is owned by the taxpayer; and 19.9    (5) the owner notifies the county assessor that the relocation was due to the August 19.102007 floods, and the owner furnishes the assessor any information deemed necessary by 19.11the assessor in verifying the change in homestead dwelling. For taxes payable in 2009, the 19.12owner must notify the assessor by December 1, 2008. Further notifications to the assessor 19.13are not required if the property continues to meet all the requirements in this paragraph 19.14and any dwellings on the agricultural land remain uninhabited. 19.15EFFECTIVE DATE.This section is effective for assessment year 2008, taxes 19.16payable in 2009 and thereafter.19.17    Sec. 8. Minnesota Statutes 2006, section 273.124, is amended by adding a subdivision 19.18to read:19.19    Subd. 22.Annual registration of certain relative homesteads.If the owner of 19.20property or the owner's relative who occupies property that is classified as a homestead 19.21under subdivision 1, paragraph (c), receives compensation for allowing occupancy of any 19.22part of that property for a period that exceeds 31 consecutive days during the calendar 19.23year, the recipient of the compensation must register the property with the city in which 19.24it is located no later than 60 days after the initial rental period began. This requirement 19.25applies to property located in a city that has a population over 25,000. Each city must 19.26maintain a file of these property registrations that is open to the public, and retain the 19.27registrations for one year after the date of filing.19.28EFFECTIVE DATE.This section is effective July 1, 2008.19.29    Sec. 9. Minnesota Statutes 2006, section 273.125, subdivision 8, is amended to read:19.30    Subd. 8. Manufactured homes; sectional structures. (a) In this section, 19.31"manufactured home" means a structure transportable in one or more sections, which is 19.32built on a permanent chassis, and designed to be used as a dwelling with or without a 19.33permanent foundation when connected to the required utilities, and contains the plumbing, 20.1heating, air conditioning, and electrical systems in it. Manufactured home includes any 20.2accessory structure that is an addition or supplement to the manufactured home and, when 20.3installed, becomes a part of the manufactured home.20.4    (b) Except as provided in paragraph (c), a manufactured home that meets each of the 20.5following criteria must be valued and assessed as an improvement to real property, the 20.6appropriate real property classification applies, and the valuation is subject to review and 20.7the taxes payable in the manner provided for real property:20.8    (1) the owner of the unit holds title to the land on which it is situated;20.9    (2) the unit is affixed to the land by a permanent foundation or is installed at its 20.10location in accordance with the Manufactured Home Building Code in sections 
         327.3120.11to 
         327.34, and rules adopted under those sections, or is affixed to the land like other real 20.12property in the taxing district; and20.13    (3) the unit is connected to public utilities, has a well and septic tank system, or is 20.14serviced by water and sewer facilities comparable to other real property in the taxing 20.15district.20.16    (c) A manufactured home that meets each of the following criteria must be assessed 20.17at the rate provided by the appropriate real property classification but must be treated as 20.18personal property, and the valuation is subject to review and the taxes payable in the 20.19manner provided in this section:20.20    (1) the owner of the unit is a lessee of the land under the terms of a lease, or the unit 20.21is located in a manufactured home park but is not the homestead of the park owner;20.22    (2) the unit is affixed to the land by a permanent foundation or is installed at its 20.23location in accordance with the Manufactured Home Building Code contained in sections 20.24327.31
          to 
         327.34, and the rules adopted under those sections, or is affixed to the land like 20.25other real property in the taxing district; and20.26    (3) the unit is connected to public utilities, has a well and septic tank system, or is 20.27serviced by water and sewer facilities comparable to other real property in the taxing 20.28district.20.29    (d) Sectional structures must be valued and assessed as an improvement to real 20.30property if the owner of the structure holds title to the land on which it is located or is a 20.31qualifying lessee of the land under section 
         273.19. In this paragraph "sectional structure" 20.32means a building or structural unit that has been in whole or substantial part manufactured 20.33or constructed at an off-site location to be wholly or partially assembled on-site alone or 20.34with other units and attached to a permanent foundation.21.1    (e) The commissioner of revenue may adopt rules under the Administrative 21.2Procedure Act to establish additional criteria for the classification of manufactured homes 21.3and sectional structures under this subdivision.21.4    (f) A storage shed, deck, or similar improvement constructed on property that is 21.5leased or rented as a site for a manufactured home, sectional structure, park trailer, or 21.6travel trailer is taxable as provided in this section. In the case of property that is leased or 21.7rented as a site for a travel trailer, a storage shed, deck, or similar improvement on the 21.8site that is considered personal property under this paragraph is taxable only if its total 21.9estimated market value is over $500 $1,000. The property is taxable as personal property 21.10to the lessee of the site if it is not owned by the owner of the site. The property is taxable 21.11as real estate if it is owned by the owner of the site. As a condition of permitting the owner 21.12of the manufactured home, sectional structure, park trailer, or travel trailer to construct 21.13improvements on the leased or rented site, the owner of the site must obtain the permanent 21.14home address of the lessee or user of the site. The site owner must provide the name 21.15and address to the assessor upon request.21.16EFFECTIVE DATE.This section is effective for assessment year 2008 and 21.17thereafter, for taxes payable in 2009 and thereafter.21.18    Sec. 10. Minnesota Statutes 2006, section 273.128, subdivision 1, is amended to read:21.19    Subdivision 1. Requirement. Low-income rental property classified as class 4d 21.20under section 
         273.13, subdivision 25, is entitled to valuation under this section if at 21.21least 7520 percent of the units in the rental housing property meet any of the following 21.22qualifications:21.23    (1) the units are subject to a housing assistance payments contract under Section 8 21.24of the United States Housing Act of 1937, as amended;21.25    (2) the units are rent-restricted and income-restricted units of a qualified low-income 21.26housing project receiving tax credits under section 42(g) of the Internal Revenue Code of 21.271986, as amended;21.28    (3) the units are financed by the Rural Housing Service of the United States 21.29Department of Agriculture and receive payments under the rental assistance program 21.30pursuant to section 521(a) of the Housing Act of 1949, as amended; or21.31    (4) the units are subject to rent and income restrictions under the terms of financial 21.32assistance provided to the rental housing property by the federal government or the 21.33state of Minnesota, or a local unit of government, as evidenced by a document recorded 21.34against the property.22.1    The restrictions must require assisted units to be occupied by residents whose 22.2household income at the time of initial occupancy does not exceed 60 percent of the 22.3greater of area or state median income, adjusted for family size, as determined by the 22.4United States Department of Housing and Urban Development. The restriction must also 22.5require the rents for assisted units to not exceed 30 percent of 60 percent of the greater of 22.6area or state median income, adjusted for family size, as determined by the United States 22.7Department of Housing and Urban Development.22.8EFFECTIVE DATE.This section is effective for property taxes payable in 2009, 22.9and thereafter.22.10    Sec. 11. Minnesota Statutes 2006, section 273.13, subdivision 22, is amended to read:22.11    Subd. 22. Class 1. (a) Except as provided in subdivision 23 and in paragraphs (b) 22.12and (c), real estate which is residential and used for homestead purposes is class 1a. In the 22.13case of a duplex or triplex in which one of the units is used for homestead purposes, the 22.14entire property is deemed to be used for homestead purposes. The market value of class 1a 22.15property must be determined based upon the value of the house, garage, and land.22.16    The first $500,000 of market value of class 1a property has a net class rate of 22.17one percent of its market value; and the market value of class 1a property that exceeds 22.18$500,000 has a class rate of 1.25 percent of its market value.22.19    (b) Class 1b property includes homestead real estate or homestead manufactured 22.20homes used for the purposes of a homestead by22.21    (1) any person who is blind as defined in section 
         256D.35, or the blind person and 22.22the blind person's spouse; or22.23    (2) any person, hereinafter referred to as "veteran," who:22.24    (i) served in the active military or naval service of the United States; and22.25    (ii) is entitled to compensation under the laws and regulations of the United States 22.26for permanent and total service-connected disability due to the loss, or loss of use, by 22.27reason of amputation, ankylosis, progressive muscular dystrophies, or paralysis, of both 22.28lower extremities, such as to preclude motion without the aid of braces, crutches, canes, or 22.29a wheelchair; and22.30    (iii) has acquired a special housing unit with special fixtures or movable facilities 22.31made necessary by the nature of the veteran's disability, or the surviving spouse of the 22.32deceased veteran for as long as the surviving spouse retains the special housing unit 22.33as a homestead; or22.34    (3) any person who is permanently and totally disabled.23.1    Property is classified and assessed under clause (3)(2)  only if the government 23.2agency or income-providing source certifies, upon the request of the homestead occupant, 23.3that the homestead occupant satisfies the disability requirements of this paragraph.23.4    Property is classified and assessed pursuant to clause (1)under paragraph (b)  only if 23.5the commissioner of revenue certifies to the assessoror the county assessor certifies  that 23.6the homestead occupant satisfies the requirements of this paragraph.23.7    Permanently and totally disabled for the purpose of this subdivision means a 23.8condition which is permanent in nature and totally incapacitates the person from working 23.9at an occupation which brings the person an income. The first $32,000 $50,000 market 23.10value of class 1b property has a net class rate of .45 percent of its market value. The 23.11remaining market value of class 1b property has a class rate using the rates for class 1a or 23.12class 2a property, whichever is appropriate, of similar market value.23.13    (c) Class 1c property is commercial use real and personal property that abuts 23.14a lakeshore linepublic water as defined in section 103G.005, subdivision 15, and is 23.15devoted to temporary and seasonal residential occupancy for recreational purposes but 23.16not devoted to commercial purposes for more than 250 days in the year preceding the 23.17year of assessment, and that includes a portion used as a homestead by the owner, which 23.18includes a dwelling occupied as a homestead by a shareholder of a corporation that owns 23.19the resort, a partner in a partnership that owns the resort, or a member of a limited liability 23.20company that owns the resort even if the title to the homestead is held by the corporation, 23.21partnership, or limited liability company. For purposes of this clause, property is devoted 23.22to a commercial purpose on a specific day if any portion of the property, excluding the 23.23portion used exclusively as a homestead, is used for residential occupancy and a fee is 23.24charged for residential occupancy. Class 1c property must contain three or more rental 23.25units. A "rental unit" is defined as a cabin, condominium, townhouse, sleeping room, 23.26or individual camping site equipped with water and electrical hookups for recreational 23.27vehicles. Class 1c property must provide recreational activities such as the rental of ice 23.28fishing houses, boats and motors, snowmobiles, downhill or cross-country ski equipment; 23.29provide marina services, launch services, or guide services; or sell bait and fishing tackle. 23.30Any unit in which the right to use the property is transferred to an individual or entity 23.31by deeded interest, or the sale of shares or stock, no longer qualifies for class 1c even 23.32though it may remain available for rent. A camping pad offered for rent by a property 23.33that otherwise qualifies for class 1c is also class 1c, regardless of the term of the rental 23.34agreement, as long as the use of the camping pad does not exceed 250 days. The portion of 23.35the property used as a homestead is class 1a property under paragraph (a). The remainder 23.36of the property is classified as follows: the first $500,000$600,000  of market value is tier 24.1I, the next $1,700,000 of market value is tier II, and any remaining market value is tier 24.2III. The class rates for class 1c are: tier I, 0.550.50  percent; tier II, 1.0 percent; and tier 24.3III, 1.25 percent. If a class 1c resort property has any market value in tier III, the entire 24.4property must meet the requirements of subdivision 25, paragraph (d), clause (1), to 24.5qualify for class 1c treatment under this paragraph. Owners of real and personal property 24.6devoted to temporary and seasonal residential occupancy for recreation purposes in which 24.7all or a portion of the property was devoted to commercial purposes for not more than 250 24.8days in the year preceding the year of assessment desiring classification as class 1c, must 24.9submit a declaration to the assessor designating the cabins or units occupied for 250 days 24.10or less in the year preceding the year of assessment by January 15 of the assessment year. 24.11Those cabins or units and a proportionate share of the land on which they are located must 24.12be designated as class 1c as otherwise provided. The remainder of the cabins or units and 24.13a proportionate share of the land on which they are located must be designated as class 24.143a commercial. The owner of property desiring designation as class 1c property must 24.15provide guest registers or other records demonstrating that the units for which class 1c 24.16designation is sought were not occupied for more than 250 days in the year preceding the 24.17assessment if so requested. The portion of a property operated as a (1) restaurant, (2) bar, 24.18(3) gift shop, (4) conference center or meeting room, and (5) other nonresidential facility 24.19operated on a commercial basis not directly related to temporary and seasonal residential 24.20occupancy for recreation purposes does not qualify for class 1c.24.21    (d) Class 1d property includes structures that meet all of the following criteria:24.22    (1) the structure is located on property that is classified as agricultural property under 24.23section 
         273.13, subdivision 23;24.24    (2) the structure is occupied exclusively by seasonal farm workers during the time 24.25when they work on that farm, and the occupants are not charged rent for the privilege of 24.26occupying the property, provided that use of the structure for storage of farm equipment 24.27and produce does not disqualify the property from classification under this paragraph;24.28    (3) the structure meets all applicable health and safety requirements for the 24.29appropriate season; and24.30    (4) the structure is not salable as residential property because it does not comply 24.31with local ordinances relating to location in relation to streets or roads.24.32    The market value of class 1d property has the same class rates as class 1a property 24.33under paragraph (a).24.34EFFECTIVE DATE.The amendments of this section to paragraph (b) are effective 24.35for taxes payable in 2009 and thereafter. The rest of this section is effective for taxes 24.36payable in 2010 and thereafter.25.1    Sec. 12. Minnesota Statutes 2006, section 273.13, subdivision 23, is amended to read:25.2    Subd. 23. Class 2. (a) Class 2a property is agricultural land including any 25.3improvements that is homesteaded. The market value of the house and garage and 25.4immediately surrounding one acre of land has the same class rates as class 1a property 25.5under subdivision 22. The value of the remaining land including improvements up to 25.6the first tier valuation limit of agricultural homestead property has a net class rate of 25.70.55 percent of market value. The remaining property over the first tier has a class rate 25.8of one percent of market value. For purposes of this subdivision, the "first tier valuation 25.9limit of agricultural homestead property" and "first tier" means the limit certified under 25.10section 
         273.11, subdivision 23.25.11    (b) Class 2b property is (1) real estate, rural in character and used exclusively for 25.12growing trees for timber, lumber, and wood and wood products; (2) real estate that is not 25.13improved with a structure and is used exclusively for growing trees for timber, lumber, and 25.14wood and wood products, if the owner has participated or is participating in a cost-sharing 25.15program for afforestation, reforestation, or timber stand improvement on that particular 25.16property, administered or coordinated by the commissioner of natural resources; (3) real 25.17estate that is nonhomestead agricultural land; or (4) a landing area or public access area of 25.18a privately owned public use airport. Class 2b property has a net class rate of one percent 25.19of market value, except that unplatted property described in clause (1) or (2) has a net 25.20class rate of .65 percent if it consists of no less than ten and no more than 1,920 acres 25.21and is being managed under a forest management plan that meets the requirements of 25.22chapter 290C, but is not enrolled in the sustainable forest resource management incentive 25.23program, provided that the owner of the property must apply to the assessor annually to 25.24receive the reduced class rate and provide the information required by the assessor to 25.25verify that the property qualifies for the reduced rate.25.26    (c) Agricultural land as used in this section means contiguous acreage of ten acres or 25.27more, used during the preceding year for agricultural purposes. "Agricultural purposes" as 25.28used in this section means the raising or cultivation of agricultural products. "Agricultural 25.29purposes" also includes enrollment in the Reinvest in Minnesota program under sections 25.30103F.501
          to 
         103F.535 or the federal Conservation Reserve Program as contained in Public 25.31Law 99-198 if the property was classified as agricultural (i) under this subdivision for 25.32the assessment year 2002 or (ii) in the year prior to its enrollment. Contiguous acreage 25.33on the same parcel, or contiguous acreage on an immediately adjacent parcel under the 25.34same ownership, may also qualify as agricultural land, but only if it is pasture, timber, 25.35waste, unusable wild land, or land included in state or federal farm programs. Agricultural 25.36classification for property shall be determined excluding the house, garage, and 26.1immediately surrounding one acre of land, and shall not be based upon the market value of 26.2any residential structures on the parcel or contiguous parcels under the same ownership. 26.3    (d) Real estate, excluding the house, garage, and immediately surrounding one acre 26.4of land, of less than ten acres which is exclusively and intensively used for raising or 26.5cultivating agricultural products, shall be considered as agricultural land.26.6    Land shall be classified as agricultural even if all or a portion of the agricultural use 26.7of that property is the leasing to, or use by another person for agricultural purposes.26.8    Classification under this subdivision is not determinative for qualifying under 26.9section 
         273.111. 26.10    The property classification under this section supersedes, for property tax purposes 26.11only, any locally administered agricultural policies or land use restrictions that define 26.12minimum or maximum farm acreage.26.13    (e) The term "agricultural products" as used in this subdivision includes production 26.14for sale of:26.15    (1) livestock, dairy animals, dairy products, poultry and poultry products, fur-bearing 26.16animals, horticultural and nursery stock, fruit of all kinds, vegetables, forage, grains, 26.17bees, and apiary products by the owner;26.18    (2) fish bred for sale and consumption if the fish breeding occurs on land zoned 26.19for agricultural use;26.20    (3) the commercial boarding of horses if the boarding is done in conjunction with 26.21raising or cultivating agricultural products as defined in clause (1);26.22    (4) property which is owned and operated by nonprofit organizations used for 26.23equestrian activities, excluding racing;26.24    (5) game birds and waterfowl bred and raised for use on a shooting preserve licensed 26.25under section 
         97A.115; 26.26    (6) insects primarily bred to be used as food for animals;26.27    (7) trees, grown for sale as a crop, and not sold for timber, lumber, wood, or wood 26.28products; and26.29    (8) maple syrup taken from trees grown by a person licensed by the Minnesota 26.30Department of Agriculture under chapter 28A as a food processor.26.31    (f) If a parcel used for agricultural purposes is also used for commercial or industrial 26.32purposes, including but not limited to:26.33    (1) wholesale and retail sales;26.34    (2) processing of raw agricultural products or other goods;26.35    (3) warehousing or storage of processed goods; and27.1    (4) office facilities for the support of the activities enumerated in clauses (1), (2), 27.2and (3),27.3the assessor shall classify the part of the parcel used for agricultural purposes as class 27.41b, 2a, or 2b, whichever is appropriate, and the remainder in the class appropriate to its 27.5use. The grading, sorting, and packaging of raw agricultural products for first sale is 27.6considered an agricultural purpose. A greenhouse or other building where horticultural 27.7or nursery products are grown that is also used for the conduct of retail sales must be 27.8classified as agricultural if it is primarily used for the growing of horticultural or nursery 27.9products from seed, cuttings, or roots and occasionally as a showroom for the retail sale of 27.10those products. Use of a greenhouse or building only for the display of already grown 27.11horticultural or nursery products does not qualify as an agricultural purpose.27.12    The assessor shall determine and list separately on the records the market value of 27.13the homestead dwelling and the one acre of land on which that dwelling is located. If any 27.14farm buildings or structures are located on this homesteaded acre of land, their market 27.15value shall not be included in this separate determination.27.16    (g) To qualify for classification under paragraph (b), clause (4), a privately owned 27.17public use airport must be licensed as a public airport under section 
         360.018. For purposes 27.18of paragraph (b), clause (4), "landing area" means that part of a privately owned public use 27.19airport properly cleared, regularly maintained, and made available to the public for use by 27.20aircraft and includes runways, taxiways, aprons, and sites upon which are situated landing 27.21or navigational aids. A landing area also includes land underlying both the primary surface 27.22and the approach surfaces that comply with all of the following: 27.23    (i) the land is properly cleared and regularly maintained for the primary purposes of 27.24the landing, taking off, and taxiing of aircraft; but that portion of the land that contains 27.25facilities for servicing, repair, or maintenance of aircraft is not included as a landing area;27.26    (ii) the land is part of the airport property; and27.27    (iii) the land is not used for commercial or residential purposes.27.28The land contained in a landing area under paragraph (b), clause (4), must be described 27.29and certified by the commissioner of transportation. The certification is effective until 27.30it is modified, or until the airport or landing area no longer meets the requirements of 27.31paragraph (b), clause (4). For purposes of paragraph (b), clause (4), "public access area" 27.32means property used as an aircraft parking ramp, apron, or storage hangar, or an arrival 27.33and departure building in connection with the airport.27.34EFFECTIVE DATE.This section is effective for taxes payable in 2009 and 27.35thereafter.28.1    Sec. 13. Minnesota Statutes 2006, section 273.13, subdivision 25, is amended to read:28.2    Subd. 25. Class 4. (a) Class 4a is residential real estate containing four or more 28.3units and used or held for use by the owner or by the tenants or lessees of the owner 28.4as a residence for rental periods of 30 days or more, excluding property qualifying for 28.5class 4d. Class 4a also includes hospitals licensed under sections 
         144.50 to 
         144.56, other 28.6than hospitals exempt under section 
         272.02, and contiguous property used for hospital 28.7purposes, without regard to whether the property has been platted or subdivided. The 28.8market value of class 4a property has a class rate of 1.25 percent.28.9    (b) Class 4b includes:28.10    (1) residential real estate containing less than four units that does not qualify as class 28.114bb, other than seasonal residential recreational property;28.12    (2) manufactured homes not classified under any other provision;28.13    (3) a dwelling, garage, and surrounding one acre of property on a nonhomestead 28.14farm classified under subdivision 23, paragraph (b) containing two or three units; and28.15    (4) unimproved property that is classified residential as determined under subdivision 28.1633.28.17    The market value of class 4b property has a class rate of 1.25 percent.28.18    (c) Class 4bb includes:28.19    (1) nonhomestead residential real estate containing one unit, other than seasonal 28.20residential recreational property; and28.21    (2) a single family dwelling, garage, and surrounding one acre of property on a 28.22nonhomestead farm classified under subdivision 23, paragraph (b).28.23    Class 4bb property has the same class rates as class 1a property under subdivision 22.28.24    Property that has been classified as seasonal residential recreational property at 28.25any time during which it has been owned by the current owner or spouse of the current 28.26owner does not qualify for class 4bb.28.27    (d) Class 4c property includes:28.28    (1) except as provided in subdivision 22, paragraph (c), or subdivision 23, paragraph 28.29(b), clause (1), real and personal property devoted to temporary and seasonal residential 28.30occupancy for recreation purposes, including real and personal property devoted to 28.31temporary and seasonal residential occupancy for recreation purposes and not devoted to 28.32commercial purposes for more than 250 days in the year preceding the year of assessment. 28.33For purposes of this clause, property is devoted to a commercial purpose on a specific 28.34day if any portion of the property is used for residential occupancy, and a fee is charged 28.35for residential occupancy. Class 4c property must contain three or more rental units. A 28.36"rental unit" is defined as a cabin, condominium, townhouse, sleeping room, or individual 29.1camping site equipped with water and electrical hookups for recreational vehicles. Class 29.24c property must provide recreational activities such as renting ice fishing houses, boats 29.3and motors, snowmobiles, downhill or cross-country ski equipment; provide marina 29.4services, launch services, or guide services; or sell bait and fishing tackle. A camping 29.5pad offered for rent by a property that otherwise qualifies for class 4c is also class 4c 29.6regardless of the term of the rental agreement, as long as the use of the camping pad 29.7does not exceed 250 days. In order for a property to be classified as class 4c, seasonal 29.8residential recreational for commercial purposes, at least 40 percent of the annual gross 29.9lodging receipts related to the property must be from business conducted during 90 29.10consecutive days and either (i) at least 60 percent of all paid bookings by lodging guests 29.11during the year must be for periods of at least two consecutive nights; or (ii) at least 20 29.12percent of the annual gross receipts must be from charges for rental of fish houses, boats 29.13and motors, snowmobiles, downhill or cross-country ski equipment, or charges for marina 29.14services, launch services, and guide services, or the sale of bait and fishing tackle. For 29.15purposes of this determination, a paid booking of five or more nights shall be counted as 29.16two bookings. Class 4c also includes commercial use real property used exclusively 29.17for recreational purposes in conjunction with class 4c property devoted to temporary 29.18and seasonal residential occupancy for recreational purposes, up to a total of two acres, 29.19provided the property is not devoted to commercial recreational use for more than 250 29.20days in the year preceding the year of assessment and is located within two miles of the 29.21class 4c property with which it is used. Owners of real and personal property devoted to 29.22temporary and seasonal residential occupancy for recreation purposes and all or a portion 29.23of which was devoted to commercial purposes for not more than 250 days in the year 29.24preceding the year of assessment desiring classification as class 1c or 4c, must submit a 29.25declaration to the assessor designating the cabins or units occupied for 250 days or less in 29.26the year preceding the year of assessment by January 15 of the assessment year. Those 29.27cabins or units and a proportionate share of the land on which they are located willmust be 29.28designated class 1c or 4c as otherwise provided. The remainder of the cabins or units and 29.29a proportionate share of the land on which they are located will be designated as class 3a. 29.30The owner of property desiring designation as class 1c or 4c property must provide guest 29.31registers or other records demonstrating that the units for which class 1c or 4c designation 29.32is sought were not occupied for more than 250 days in the year preceding the assessment if 29.33so requested. The portion of a property operated as a (1) restaurant, (2) bar, (3) gift shop, 29.34(4) conference center or meeting room, and (4)(5) other nonresidential facility operated 29.35on a commercial basis not directly related to temporary and seasonal residential occupancy 29.36for recreation purposes shalldoes not qualify for class 1c or 4c;30.1    (2) qualified property used as a golf course if:30.2    (i) it is open to the public on a daily fee basis. It may charge membership fees or 30.3dues, but a membership fee may not be required in order to use the property for golfing, 30.4and its green fees for golfing must be comparable to green fees typically charged by 30.5municipal courses; and30.6    (ii) it meets the requirements of section 
         273.112, subdivision 3, paragraph (d).30.7    A structure used as a clubhouse, restaurant, or place of refreshment in conjunction 30.8with the golf course is classified as class 3a property;30.9    (3) real property up to a maximum of one acrethree acres of land owned and used 30.10by a nonprofit community service oriented organization; provided thatand that is not used 30.11for residential purposes on either a temporary or permanent basis, qualifies for class 4c 30.12provided that it meets either of the following:30.13    (i) the property is not used for a revenue-producing activity for more than six days 30.14in the calendar year preceding the year of assessment and the property is not used for 30.15residential purposes on either a temporary or permanent basis; or30.16    (ii) the organization makes annual charitable contributions and donations at least 30.17equal to the property's previous year's property taxes and the property is allowed to be 30.18used for public and community meetings or events for no charge, as appropriate to the 30.19size of the facility. 30.20    For purposes of this clause, 30.21    (A) "charitable contributions and donations" has the same meaning as lawful 30.22gambling purposes under section 349.12, subdivision 25, excluding those purposes 30.23relating to the payment of taxes, assessments, fees, auditing costs, and utility payments;30.24    (B) "property taxes" excludes the state general tax;30.25    (C) a "nonprofit community service oriented organization" means any corporation, 30.26society, association, foundation, or institution organized and operated exclusively for 30.27charitable, religious, fraternal, civic, or educational purposes, and which is exempt from 30.28federal income taxation pursuant to section 501(c)(3), (10), or (19) of the Internal Revenue 30.29Code of 1986, as amended through December 31, 1990. For purposes of this clause,; and30.30    (D) "revenue-producing activities" shall include but not be limited to property or that 30.31portion of the property that is used as an on-sale intoxicating liquor or 3.2 percent malt 30.32liquor establishment licensed under chapter 340A, a restaurant open to the public, bowling 30.33alley, a retail store, gambling conducted by organizations licensed under chapter 349, an 30.34insurance business, or office or other space leased or rented to a lessee who conducts a 30.35for-profit enterprise on the premises. 31.1Any portion of the property qualifying under item (i) which is used for revenue-producing 31.2activities for more than six days in the calendar year preceding the year of assessment 31.3shall be assessed as class 3a. The use of the property for social events open exclusively 31.4to members and their guests for periods of less than 24 hours, when an admission is 31.5not charged nor any revenues are received by the organization shall not be considered a 31.6revenue-producing activity;.31.7    The organization shall maintain records of its charitable contributions and donations 31.8and of public meetings and events held on the property and make them available upon 31.9request any time to the assessor to ensure eligibility. An organization meeting the 31.10requirement under item (ii) must file an application by May 1 with the assessor for 31.11eligibility for the current year's assessment. The commissioner shall prescribe a uniform 31.12application form and instructions;31.13    (4) postsecondary student housing of not more than one acre of land that is owned by 31.14a nonprofit corporation organized under chapter 317A and is used exclusively by a student 31.15cooperative, sorority, or fraternity for on-campus housing or housing located within two 31.16miles of the border of a college campus;31.17    (5) manufactured home parks as defined in section 
         327.14, subdivision 3;31.18    (6) real property that is actively and exclusively devoted to indoor fitness, health, 31.19social, recreational, and related uses, is owned and operated by a not-for-profit corporation, 31.20and is located within the metropolitan area as defined in section 
         473.121, subdivision 2;31.21    (7) a leased or privately owned noncommercial aircraft storage hangar not exempt 31.22under section 
         272.01, subdivision 2, and the land on which it is located, provided that:31.23    (i) the land is on an airport owned or operated by a city, town, county, Metropolitan 31.24Airports Commission, or group thereof; and31.25    (ii) the land lease, or any ordinance or signed agreement restricting the use of the 31.26leased premise, prohibits commercial activity performed at the hangar.31.27    If a hangar classified under this clause is sold after June 30, 2000, a bill of sale must 31.28be filed by the new owner with the assessor of the county where the property is located 31.29within 60 days of the sale;31.30    (8) a privately owned noncommercial aircraft storage hangar not exempt under 31.31section 
         272.01, subdivision 2, and the land on which it is located, provided that:31.32    (i) the land abuts a public airport; and31.33    (ii) the owner of the aircraft storage hangar provides the assessor with a signed 31.34agreement restricting the use of the premises, prohibiting commercial use or activity 31.35performed at the hangar; and32.1    (9) residential real estate, a portion of which is used by the owner for homestead 32.2purposes, and that is also a place of lodging, if all of the following criteria are met:32.3    (i) rooms are provided for rent to transient guests that generally stay for periods 32.4of 14 or fewer days;32.5    (ii) meals are provided to persons who rent rooms, the cost of which is incorporated 32.6in the basic room rate;32.7    (iii) meals are not provided to the general public except for special events on fewer 32.8than seven days in the calendar year preceding the year of the assessment; and32.9    (iv) the owner is the operator of the property.32.10The market value subject to the 4c classification under this clause is limited to five rental 32.11units. Any rental units on the property in excess of five, must be valued and assessed as 32.12class 3a. The portion of the property used for purposes of a homestead by the owner must 32.13be classified as class 1a property under subdivision 22.32.14    Class 4c property has a class rate of 1.5 percent of market value, except that (i) each 32.15parcel of seasonal residential recreational property not used for commercial purposes has 32.16the same class rates as class 4bb property, (ii) manufactured home parks assessed under 32.17clause (5) have the same class rate as class 4b property, (iii) commercial-use seasonal 32.18residential recreational property has a class rate of one percent for the first $500,000 of 32.19market value, and 1.25 percent for the remaining market value, (iv) the market value of 32.20property described in clause (4) has a class rate of one percent, (v) the market value of 32.21property described in clauses (2) and (6) has a class rate of 1.25 percent, and (vi) that 32.22portion of the market value of property in clause (9) qualifying for class 4c property 32.23has a class rate of 1.25 percent.32.24    (e) Class 4d property is qualifying low-income rental housing certified to the assessor 32.25by the Housing Finance Agency under section 
         273.128, subdivision 3. If only a portion 32.26of the units in the building qualify as low-income rental housing units as certified under 32.27section 
         273.128, subdivision 3, only the proportion of qualifying units to the total number 32.28of units in the building qualify for class 4d. The remaining portion of the building shall be 32.29classified by the assessor based upon its use. Class 4d also includes the same proportion of 32.30land as the qualifying low-income rental housing units are to the total units in the building. 32.31For all properties qualifying as class 4d, the market value determined by the assessor must 32.32be based on the normal approach to value using normal unrestricted rents.32.33    Class 4d property has a class rate of 0.75 percent.32.34EFFECTIVE DATE.The part of this section relating to class 4c resorts in 32.35paragraph (d), clause (1), is effective for assessment year 2009 and thereafter, for taxes 33.1payable in 2010 and thereafter. The part of this section relating to nonprofit community 33.2service oriented organizations is effective for assessment year 2008 and thereafter, for 33.3taxes payable in 2009 and thereafter, except that the application date in paragraph (d), 33.4clause (3), item (ii), for the 2008 assessment is extended to September 1, 2008.33.5    Sec. 14. Minnesota Statutes 2006, section 273.13, is amended by adding a subdivision 33.6to read:33.7    Subd. 34.Homestead of disabled veteran.(a) All or a portion of the market value 33.8of property qualifying for homestead classification under subdivision 22 or 23 is excluded 33.9in determining the property's taxable market value if it serves as the homestead of a 33.10military veteran, as defined in section 197.447, who has a service-connected disability of 33.1170 percent or more. To qualify for exclusion under this subdivision, the veteran must have 33.12been honorably discharged from the United States armed forces, as indicated by United 33.13States Government Form DD214 or other official military discharge papers, and must be 33.14certified by the United States Veterans Administration as having a service-connected 33.15disability.33.16    (b)(1) For a disability rating of 70 percent or more, $150,000 of market value is 33.17excluded, except as provided in clause (2); and33.18    (2) for a total (100 percent) and permanent disability, $300,000 of market value is 33.19excluded.33.20    (c) If a disabled veteran qualifying for a valuation exclusion under paragraph (b), 33.21clause (2), predeceases the veteran's spouse, and if upon the death of the veteran the 33.22spouse holds the legal or beneficial title to the homestead and permanently resides there, 33.23the exclusion shall carry over to the benefit of the veteran's spouse until such time as the 33.24spouse sells, transfers, or otherwise disposes of the property.33.25    (d) In the case of an agricultural homestead, only the portion of the property 33.26consisting of the house and garage and immediately surrounding one acre of land qualifies 33.27for the valuation exclusion under this subdivision.33.28    (e) A property qualifying for a valuation exclusion under this subdivision is not 33.29eligible for the credit under section 273.1384, subdivision 1.33.30    (f) To qualify for a valuation exclusion under this subdivision a property owner must 33.31apply to the assessor by July 1 of each assessment year, except that an annual reapplication 33.32is not required once a property has been accepted for a valuation exclusion under paragraph 33.33(b), clause (2), and the property continues to qualify until there is a change in ownership.33.34EFFECTIVE DATE.This section is effective for assessment year 2008 and 33.35thereafter, for taxes payable in 2009 and thereafter.34.1    Sec. 15. Minnesota Statutes 2006, section 273.1315, is amended to read:34.2273.1315 CERTIFICATION OF CLASS 1B PROPERTY.34.3    Subdivision 1.Class 1b homestead declaration before 2009. Any property owner 34.4seeking classification and assessment of the owner's homestead as class 1b property 34.5pursuant to section 
         273.13, subdivision 22, paragraph (b), on or before October 1, 2008, 34.6shall file with the commissioner of revenue a 1b homestead declaration, on a form 34.7prescribed by the commissioner. The declaration shall contain the following information:34.8    (a) the information necessary to verify that on or before June 30 of the filing year, 34.9the property owner or the owner's spouse satisfies the requirements of section 
         273.13, 34.10subdivision 22
         , paragraph (b), for 1b classification; and34.11    (b) any additional information prescribed by the commissioner.34.12    The declaration must be filed on or before October 1 to be effective for property 34.13taxes payable during the succeeding calendar year. The declaration and any supplementary 34.14information received from the property owner pursuant to this sectionsubdivision shall 34.15be subject to chapter 270B. If approved by the commissioner, the declaration remains 34.16in effect until the property no longer qualifies under section 
         273.13, subdivision 22, 34.17paragraph (b). Failure to notify the commissioner within 30 days that the property no 34.18longer qualifies under that paragraph because of a sale, change in occupancy, or change 34.19in the status or condition of an occupant shall result in the penalty provided in section 34.20273.124, subdivision 13
         , computed on the basis of the class 1b benefits for the property, 34.21and the property shall lose its current class 1b classification.34.22    The commissioner shall provide to the assessor on or before November 1 a listing 34.23of the parcels of property qualifying for 1b classification.34.24    Subd. 2.Class 1b homestead declaration 2009 and thereafter.(a) Any property 34.25owner seeking classification and assessment of the owner's homestead as class 1b property 34.26pursuant to section 273.13, subdivision 22, paragraph (b), after October 1, 2008, shall file 34.27with the county assessor a class 1b homestead declaration, on a form prescribed by the 34.28commissioner of revenue. The declaration must contain the following information:34.29    (1) the information necessary to verify that, on or before June 30 of the filing year, 34.30the property owner or the owner's spouse satisfies the requirements of section 273.13, 34.31subdivision 22, paragraph (b), for class 1b classification; and34.32    (2) any additional information prescribed by the commissioner.34.33    (b) The declaration must be filed on or before October 1 to be effective for property 34.34taxes payable during the succeeding calendar year. The Social Security numbers and 34.35income and medical information received from the property owner pursuant to this 34.36subdivision are private data on individuals as defined in section 13.02. If approved by 35.1the assessor, the declaration remains in effect until the property no longer qualifies under 35.2section 273.13, subdivision 22, paragraph (b). Failure to notify the assessor within 30 35.3days that the property no longer qualifies under that paragraph because of a sale, change in 35.4occupancy, or change in the status or condition of an occupant shall result in the penalty 35.5provided in section 273.124, subdivision 13, computed on the basis of the class 1b benefits 35.6for the property, and the property shall lose its current class 1b classification.35.7EFFECTIVE DATE.This section is effective the day following final enactment.35.8    Sec. 16. Minnesota Statutes 2006, section 275.025, subdivision 3, is amended to read:35.9    Subd. 3. Seasonal residential recreational tax capacity. For the purposes of this 35.10section, "seasonal residential recreational tax capacity" means the tax capacity of tier III of 35.11class 1c under section 
         273.13, subdivision 22, and all class 4c(1) and 4c(3)(ii) property 35.12under section 
         273.13, subdivision 25, except that the first $76,000 of market value of each 35.13noncommercial class 4c(1) property has a tax capacity for this purpose equal to 40 percent 35.14of its tax capacity under section 
         273.13.35.15EFFECTIVE DATE.This section is effective for taxes payable in 2009 and 35.16thereafter.35.17    Sec. 17. Minnesota Statutes 2006, section 275.065, is amended by adding a subdivision 35.18to read:35.19    Subd. 6c.Joint public hearing; nonmetropolitan county, cities, and school 35.20districts.(a) Notwithstanding any other provision of law, the county board may hold a 35.21joint hearing with the governing bodies of all taxing authorities located wholly or partially 35.22within the county that are required to hold a public hearing under this section, excluding 35.23special taxing districts. The primary purpose of the joint hearing is for taxpayer efficiency 35.24by allowing taxpayers to come to a single public hearing to discuss the budgets and 35.25proposed property tax levies of most taxing authorities that impact the taxes on their 35.26property.35.27    (b) This subdivision applies only to counties located outside the metropolitan area 35.28as defined under section 473.121, subdivision 2. If a city or school district is located 35.29partially within the metropolitan area, that taxing jurisdiction may participate in its 35.30nonmetropolitan county's joint hearing, if it so chooses.35.31    (c) Upon the adoption of a resolution by the county board to hold a joint public 35.32hearing, the county shall notify each city with a population over 500 and each school 35.33district located wholly or partially within the county of its intention to hold the joint 36.1hearing and ask each of the taxing authorities if it would like to participate. Participation 36.2is voluntary, and participation in the joint hearing is in lieu of the requirement for the 36.3governing body to hold a separate public hearing under subdivision 6. If a participating 36.4city or school district is located in more than one county, the hearing under this subdivision 36.5is in lieu of the requirement to hold a separate public hearing if 75 percent or more 36.6of that city or school district's previous year's net tax capacity is in the county where 36.7the hearing is held.36.8    (d) The initial joint hearing must be held on the first Thursday in December. The 36.9county may hold an additional joint hearing on another date before December 20 if the 36.10majority of the participating taxing authorities want an additional hearing.36.11    The county board shall obtain a meeting space to hold the joint hearing, preferably 36.12at a public building such as the courthouse, school, or community center. The location 36.13shall be as centrally located within the county as possible. The meeting shall generally be 36.14structured in the following general manner:36.15    (1) 30 to 60 minutes must be devoted to discussion of the county's budget and levy;36.16    (2) 30 to 60 minutes must be devoted to discussion of the city's budget and levy, 36.17with each city's discussion held in a separate room, preferably in the same building;36.18    (3) 30 to 60 minutes must be devoted to discussion of the school district's levy, 36.19with each school district's discussion held in a separate room, preferably in the same 36.20building; and36.21    (4) during the last 30 minutes the governing bodies must reassemble in a joint 36.22meeting to entertain any follow-up questions that have arisen from the separate discussions.36.23    The county shall attempt to keep the total public hearing to within three hours.36.24    (e) In lieu of the public advertisement requirement in subdivision 5a, the county shall 36.25have a single advertisement listing the county, each city with a population of over 500, and 36.26each school district participating in the joint public hearing listing. Any taxing authority 36.27participating under this subdivision is exempt from the separate public advertisement 36.28requirement under subdivision 5a. The cost of the joint hearing advertisement shall be 36.29apportioned in the same manner provided in subdivision 4. The notice must be published 36.30not less than two business days nor more than six business days before the hearing. The 36.31newspaper selected must be one of general interest and readership in the county, and not 36.32one of limited subject matter. The advertisement must appear in a newspaper that is 36.33published at least once per week. The advertisement must be in the following form:36.34"NOTICE OF JOINT PUBLIC HEARING36.35PROPOSED TOTAL PROPERTY TAXES36.36FOR PARTICIPATING TAXING AUTHORITIES37.1The property tax amounts below compare that portion of the current budget levied in 37.2property taxes in the county, cities, and school districts for (year) with the property 37.3taxes the county, cities, and school districts propose to collect in (year) for those taxing 37.4authorities participating in the joint public hearing.

37.537.6Taxing Authority(Year) Property TaxesProposed (Year) Property TaxesChange (Year) - (Year)37.7$.......$.......$..........%37.8$.......$.......$..........%37.9$.......$.......$..........%

37.10ATTEND THE JOINT PUBLIC HEARING37.11All residents are invited to attend the joint public hearing of the county/cities/school 37.12districts to express your opinions on the proposed amount of (year) property taxes. The 37.13hearing will be held on:37.14(Month/Day/Year/Time)37.15(Location/Address)37.16If the discussion cannot be completed, and another hearing is scheduled, a time and place 37.17for that hearing will be announced at this hearing. You are also invited to send your 37.18written comments to the county auditor. If the comments relate to the city or school 37.19district's levy, please identify that on the envelope so the county auditor can direct the 37.20correspondence to the right jurisdiction."37.21    The formal adoption of the taxing authority's levy must not be made at the joint 37.22public hearing held under this subdivision. The formal adoption must be made at one of 37.23the regularly scheduled meetings of the taxing authority's governing body. However, the 37.24property tax levy amount that is subsequently adopted cannot exceed the amount shown to 37.25taxpayers at the joint public hearing.37.26EFFECTIVE DATE.This section is effective for hearings held in 2008 and 37.27thereafter.37.28    Sec. 18. Minnesota Statutes 2006, section 275.066, is amended to read:37.29275.066 SPECIAL TAXING DISTRICTS; DEFINITION.37.30    For the purposes of property taxation and property tax state aids, the term "special 37.31taxing districts" includes the following entities:37.32    (1) watershed districts under chapter 103D;37.33    (2) sanitary districts under sections 
         115.18 to 
         115.37; 37.34    (3) regional sanitary sewer districts under sections 
         115.61 to 
         115.67; 37.35    (4) regional public library districts under section 
         134.201; 38.1    (5) park districts under chapter 398;38.2    (6) regional railroad authorities under chapter 398A;38.3    (7) hospital districts under sections 
         447.31 to 
         447.38; 38.4    (8) St. Cloud Metropolitan Transit Commission under sections 
         458A.01 to 
         458A.15; 38.5    (9) Duluth Transit Authority under sections 
         458A.21 to 
         458A.37; 38.6    (10) regional development commissions under sections 
         462.381 to 
         462.398; 38.7    (11) housing and redevelopment authorities under sections 
         469.001 to 
         469.047; 38.8    (12) port authorities under sections 
         469.048 to 
         469.068; 38.9    (13) economic development authorities under sections 
         469.090 to 
         469.1081; 38.10    (14) Metropolitan Council under sections 
         473.123 to 
         473.549; 38.11    (15) Metropolitan Airports Commission under sections 
         473.601 to 
         473.680; 38.12    (16) Metropolitan Mosquito Control Commission under sections 
         473.701 to 
         473.716; 38.13    (17) Morrison County Rural Development Financing Authority under Laws 1982, 38.14chapter 437, section 1;38.15    (18) Croft Historical Park District under Laws 1984, chapter 502, article 13, section 38.166;38.17    (19) East Lake County Medical Clinic District under Laws 1989, chapter 211, 38.18sections 1 to 6;38.19    (20) Floodwood Area Ambulance District under Laws 1993, chapter 375, article 38.205, section 39;38.21    (21) Middle Mississippi River Watershed Management Organization under sections 38.22103B.211
          and 
         103B.241; 38.23    (22) emergency medical services special taxing districts under section 
         144F.01; 38.24    (23) a county levying under the authority of section 
         103B.241, 
         103B.245, or 38.25103B.251
         ; 38.26    (24) Southern St. Louis County Special Taxing District; Chris Jensen Nursing Home 38.27under Laws 2003, First Special Session chapter 21, article 4, section 12; and38.28    (25) an airport authority created under section 360.0426; and38.29    (26) any other political subdivision of the state of Minnesota, excluding counties, 38.30school districts, cities, and towns, that has the power to adopt and certify a property tax 38.31levy to the county auditor, as determined by the commissioner of revenue.38.32EFFECTIVE DATE.This section is effective for taxes payable in 2009, and 38.33thereafter.38.34    Sec. 19. Minnesota Statutes 2006, section 276.04, subdivision 2, is amended to read:39.1    Subd. 2. Contents of tax statements. (a) The treasurer shall provide for the 39.2printing of the tax statements. The commissioner of revenue shall prescribe the form 39.3of the property tax statement and its contents. The statement must contain a tabulated 39.4statement of the dollar amount due to each taxing authority and the amount of the state 39.5tax from the parcel of real property for which a particular tax statement is prepared. The 39.6dollar amounts attributable to the county, the state tax, the voter approved school tax, the 39.7other local school tax, the township or municipality, and the total of the metropolitan 39.8special taxing districts as defined in section 
         275.065, subdivision 3, paragraph (i), must 39.9be separately stated. The amounts due all other special taxing districts, if any, may be 39.10aggregated except that any levies made by the regional rail authorities in the county of 39.11Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 398A 39.12shall be listed on a separate line directly under the appropriate county's levy. If the county 39.13levy under this paragraph includes an amount for a lake improvement district as defined 39.14under sections 
         103B.501 to 
         103B.581, the amount attributable for that purpose must be 39.15separately stated from the remaining county levy amount. In the case of Ramsey County, 39.16if the county levy under this paragraph includes an amount for public library service 39.17under section 
         134.07, the amount attributable for that purpose may be separated from the 39.18remaining county levy amount. The amount of the tax on homesteads qualifying under the 39.19senior citizens' property tax deferral program under chapter 290B is the total amount of 39.20property tax before subtraction of the deferred property tax amount. The amount of the 39.21tax on contamination value imposed under sections 
         270.91 to 
         270.98, if any, must also 39.22be separately stated. The dollar amounts, including the dollar amount of any special 39.23assessments, may be rounded to the nearest even whole dollar. For purposes of this section 39.24whole odd-numbered dollars may be adjusted to the next higher even-numbered dollar. 39.25The amount of market value excluded under section 
         273.11, subdivision 16, if any, must 39.26also be listed on the tax statement.39.27    (b) The property tax statements for manufactured homes and sectional structures 39.28taxed as personal property shall contain the same information that is required on the 39.29tax statements for real property.39.30    (c) Real and personal property tax statements must contain the following information 39.31in the order given in this paragraph. The information must contain the current year tax 39.32information in the right column with the corresponding information for the previous year 39.33in a column on the left:39.34    (1) the property's estimated market value under section 
         273.11, subdivision 1;39.35    (2) the property's taxable market value after reductions under section 
         273.11, 39.36subdivisions 1a and 16
         ;40.1    (3) the property's gross tax, calculated by adding the property's total property tax to 40.2the sum of the aids enumerated in clause (4) before credits;40.3    (4) a total of the following aids:40.4    (i) education aids payable under chapters 122A, 123A, 123B, 124D, 125A, 126C, 40.5and 127A;40.6    (ii) local government aids for cities, towns, and counties under sections 477A.011 to 40.7477A.04; and40.8    (iii) disparity reduction aid under section 273.1398;40.9    (5) (4) for homestead residential and agricultural properties, the credits under 40.10section 
         273.1384;40.11    (6) (5) any credits received under sections 
         273.119; 
         273.123; 
         273.135; 
         273.1391; 40.12273.1398, subdivision 4
         ; 
         469.171; and 
         473H.10, except that the amount of credit received 40.13under section 
         273.135 must be separately stated and identified as "taconite tax relief"; and40.14    (7)(6) the net tax payable in the manner required in paragraph (a).40.15    (d) If the county uses envelopes for mailing property tax statements and if the county 40.16agrees, a taxing district may include a notice with the property tax statement notifying 40.17taxpayers when the taxing district will begin its budget deliberations for the current 40.18year, and encouraging taxpayers to attend the hearings. If the county allows notices to 40.19be included in the envelope containing the property tax statement, and if more than 40.20one taxing district relative to a given property decides to include a notice with the tax 40.21statement, the county treasurer or auditor must coordinate the process and may combine 40.22the information on a single announcement.40.23    The commissioner of revenue shall certify to the county auditor the actual or 40.24estimated aids enumerated in paragraph (c), clause (4), that local governments will receive 40.25in the following year. The commissioner must certify this amount by January 1 of each 40.26year.40.27EFFECTIVE DATE.This section is effective for property tax statements for 40.28property taxes payable in 2009 and thereafter.40.29    Sec. 20. Minnesota Statutes 2006, section 278.05, subdivision 6, is amended to read:40.30    Subd. 6. Dismissal of petition; exclusion of certain evidence. (a) In cases where 40.31the petitioner contests the valuation of income-producing property, information, including 40.32income and expense figures in the form of (1) year-end financial statements for the 40.33year prior to the assessment date, (2) year-end financial statements for the year of the 40.34assessment date, and (3) rent rolls on the assessment date including tenant name, lease start 40.35and end dates, option terms, base rent, square footage leased and vacant space, verified net 41.1rentable areas in the form of net rentable square footage of the building or buildings, and 41.2anticipated income and expenses in the form of proposed budgets for the year subsequent 41.3to the year of the assessment date, for income-producing property must be provided to 41.4the county assessor no later than 60 days after the applicable filing deadline contained 41.5in section 
         278.01, subdivision 1 or 4. Failure to provide the information required in this 41.6paragraph shall result in the dismissal of the petition, unless (1) the failure to provide it was 41.7due to the unavailability of the evidence at the time that the information was due, or (2) 41.8the petitioner was not aware of or informed of the requirement to provide the information. 41.9If the petitioner proves that the requirements under clause (2) are met, the petitioner has 41.10an additional 30 days to provide the information from the time the petitioner became 41.11aware of or was informed of the requirement to provide the information, otherwise the 41.12petition shall be dismissed.41.13    (b) Provided that the information as contained in paragraph (a) is timely submitted to 41.14the county assessor, the county assessor shall furnish the petitioner at least five days before 41.15the hearing under this chapter with the property's appraisal, if any, which will be presented 41.16to the court at the hearing. The petitioner shall furnish to the county assessor at least five 41.17days before the hearing under this chapter with the property's appraisal, if any, which 41.18will be presented to the court at the hearing. An appraisal of the petitioner's property 41.19done by or for the county shall not be admissible as evidence if the county assessor does 41.20not comply with the provisions in this paragraph. The petition shall be dismissed if the 41.21petitioner does not comply with the provisions in this paragraph.41.22EFFECTIVE DATE.This section is effective for petitions filed on or after July 41.231, 2008.41.24    Sec. 21. Minnesota Statutes 2006, section 279.37, subdivision 1a, is amended to read:41.25    Subd. 1a. Class 3a property. (a) The delinquent taxes upon a parcel of property 41.26which was classified class 3a, for the previous year's assessment and had a total market 41.27value of $200,000$500,000 or less for that same assessment shall be eligible to be 41.28composed into a confession of judgment. Property qualifying under this subdivision 41.29shall be subject to the same provisions as provided in this section except as provided 41.30in paragraphs (b) to (d).41.31    (b) Current year taxes and penalty due at the time the confession of judgment 41.32is entered must be paid.41.33    (c) The down payment must include all special assessments due in the current tax 41.34year, all delinquent special assessments, and 20 percent of the ad valorem tax, penalties, 42.1and interest accrued against the parcel. The balance remaining is payable in four equal 42.2annual installments.42.3    (d) The amounts entered in judgment bear interest at the rate provided in section 42.4279.03, subdivision 1a
         , commencing with the date the judgment is entered. The interest 42.5rate is subject to change each year on the unpaid balance in the manner provided in section 42.6279.03, subdivision 1a
         . 42.7EFFECTIVE DATE.This section is effective the day following final enactment.42.8    Sec. 22. Minnesota Statutes 2006, section 280.39, is amended to read:42.9280.39 DELINQUENT TAXES MAY BE PAID IN INVERSE ORDER.42.10    In any case where taxes for two or more years are delinquent against a parcel of 42.11land, such taxes for one or more entire years the taxes, or a portion of them, if held by 42.12the state, may be paid in the inverse order to that in which the taxes were levied, with 42.13accrued penalties, interest, and costs upon the taxes so paid, without payment of the 42.14taxes for the first of such years; provided, that such payment shall not affect the lien of 42.15any unpaid taxes or tax judgment.42.16EFFECTIVE DATE.This section is effective the day following final enactment.42.17    Sec. 23. Minnesota Statutes 2006, section 290C.07, is amended to read:42.18290C.07 CALCULATION OF INCENTIVE PAYMENT.42.19    An approved claimant under the sustainable forest incentive program is eligible to 42.20receive an annual payment. The payment shall equal the greater of:42.21    (1) the difference between the property tax that would be paid on the land using the 42.22previous year's statewide average total township tax rate and the class rate for class 2b 42.23timberland under section 
         273.13, subdivision 23, paragraph (b), if the land were valued 42.24at (i) the average statewide timberland market value per acre calculated under section 42.25290C.06
         , and (ii) the average statewide timberland current use value per acre calculated 42.26under section 
         290C.02, subdivision 5; or42.27    (2) two-thirds of the property tax amount determined by using the previous year's 42.28statewide average total township tax rate, the estimated market value per acre as calculated 42.29in section 
         290C.06, and the class rate for 2b timberland under section 
         273.13, subdivision 42.3023
         , paragraph (b); or42.31    (3) $1.50, provided that the payment shall be no less than $7 per acre for each acre 42.32enrolled in the sustainable forest incentive program.43.1EFFECTIVE DATE.This section is effective for payments made after June 30, 43.22008.43.3    Sec. 24. Minnesota Statutes 2006, section 360.031, is amended to read:43.4360.031 DEFINITION OF MUNICIPALITY.43.5    For the purposes of sections 
         360.031 to 
         360.045, inclusive (except section 360.042), 43.6only, "municipality" means any county, city, or town, or airport authority of this state. 43.7    Sec. 25. [360.0425] GENERAL POWERS OF AUTHORITY.43.8    An airport authority created under section 360.0426 has all the powers granted a 43.9municipality under sections 360.032 to 360.046.43.10    Sec. 26. [360.0426] CREATION OF AN AIRPORT AUTHORITY; 43.11DISSOLUTION.43.12    Subdivision 1.Members; definition.A city together with another city, county, 43.13town, or an Indian tribe may create an airport authority. For purposes of this chapter, 43.14"airport authority" means a governmental entity created pursuant to this section for the 43.15purpose of acquiring, establishing, constructing, maintaining, improving, and operating 43.16airports and other air navigation facilities.43.17    Subd. 2.Process to establish authority.A city that owns an airport by joint 43.18resolution together with other willing governmental units may create an airport authority 43.19that is authorized to exercise its functions upon passage of a joint resolution by each of 43.20their governing bodies, including a proposed date for the first meeting of the authority.43.21    Subd. 3.Airport authority commission.The powers of the airport authority shall 43.22be vested in the airport authority commissioners. The commission shall consist of at 43.23least five commissioners. Each governmental unit that is a member of the authority shall 43.24be represented by at least one commissioner. If fewer than five governmental units are 43.25members of the authority, there must be two commissioners appointed from each member 43.26unit of government. The terms of each commissioner are three years, provided that the 43.27length of the initial appointments must be staggered so that the terms of approximately 43.28one-third of the commissioners expire each calendar year.43.29    Subd. 4.Appointment of commissioners.The governmental body of each member 43.30governmental unit shall appoint a resident of that governmental unit to be a commissioner 43.31of the airport authority. Upon vacancy of a commissioner prior to the end of a normal term, 43.32the appropriate governmental body shall appoint a commissioner to fill the unexpired term.44.1    Subd. 5.Compensation; meetings; officers.Commissioners shall receive no 44.2compensation for services, but are entitled to payment for necessary expenses, including 44.3travel expenses, incurred in the discharge of the commissioners' duties.44.4    The commission shall establish a regular meeting schedule. A majority of the 44.5commissioners of the authority constitutes a quorum for purposes of conducting business 44.6of the authority. Action may be taken by the majority vote of not less than a majority of 44.7the commissioners present, providing there is a quorum.44.8    The commission shall elect a chair, a vice-chair, a secretary, and a treasurer at its 44.9organizational meeting. The authority may hire an executive director, a legal advisor, 44.10technical experts, and other employees, permanent and temporary, as it may require.44.11    Subd. 6.Process to increase size of authority.An airport authority may be 44.12increased in size by adding additional governmental entities if each of the additional 44.13entities and each of the governmental entities currently included in the existing authority 44.14adopt a resolution agreeing to the size increase.44.15    Subd. 7.Process to decrease size of authority.An airport authority may be 44.16decreased in size if each of the governmental entities that are members of the authority 44.17and the current commissioners consent to change and make provisions for the retention 44.18or disposition of its assets and liabilities.44.19    Subd. 8.Process to dissolve authority.An airport authority may be dissolved after 44.20payment of all debts and adoption of a joint resolution of the governing bodies of all of 44.21the participating units of government. Before dissolution, the property of the airport 44.22authority must be sold, transferred, or distributed as agreed to by the participating units 44.23of government. Any remaining funds must be distributed to the general funds of the 44.24participating units of government in proportion to their relative shares of the most recent 44.25levy under section 360.0427.44.26    Sec. 27. [360.0427] TAX LEVY MAY BE CERTIFIED BY AN AIRPORT 44.27AUTHORITY.44.28    In any year in which it imposes a property tax levy under sections 275.065 to 44.29275.07, which requires an affirmative vote of at least two-thirds of the members of the 44.30authority, an airport authority must submit its proposed levy to the governing body of the 44.31municipality that contains the airport. The municipal governing body may approve or 44.32modify the amount of the levy, and, when it has determined the amount, the authority must 44.33certify to the auditor of the county where the airport is located the amount to be levied on 44.34all taxable property within the boundaries of the airport authority.45.1EFFECTIVE DATE.This section is effective for taxes payable in 2009, and 45.2thereafter.45.3    Sec. 28. Minnesota Statutes 2006, section 435.193, is amended to read:45.4435.193 HARDSHIP ASSESSMENT DEFERRAL FOR SENIORS OR,45.5DISABLED, OR MILITARY PERSONS.45.6    (a) Notwithstanding the provisions of any law to the contrary, any county, statutory 45.7or home rule charter city, or town, making a special assessment may, at its discretion, defer 45.8the payment of that assessment for any homestead property:45.9    (1) owned by a person 65 years of age or older or retired by virtue of a permanent 45.10and total disability for whom it would be a hardship to make the payments; or45.11    (2) owned by a person who is a member of the Minnesota National Guard or other 45.12military reserves who is ordered into active military service, as defined in section 190.05, 45.13subdivision 5b or 5c, as stated in the person's military orders, for whom it would be a 45.14hardship to make the payments.45.15    (b) Any county, statutory or home rule charter city, or town electing to defer 45.16special assessments shall adopt an ordinance or resolution establishing standards and 45.17guidelines for determining the existence of a hardship and for determining the existence of 45.18a disability, but nothing herein shall be construed to prohibit the determination of hardship 45.19on the basis of exceptional and unusual circumstances not covered by the standards and 45.20guidelines where the determination is made in a nondiscriminatory manner and does not 45.21give the applicant an unreasonable preference or advantage over other applicants.45.22EFFECTIVE DATE.This section is effective the day following final enactment, 45.23and applies to any special assessment for which payment is due on or after that date.45.24    Sec. 29. Laws 1973, chapter 393, section 1, as amended by Laws 1974, chapter 153, 45.25section 1, is amended to read:45.26    Section 1. MINNEAPOLIS, CITY OF; STREET MAINTENANCE AND 45.27LIGHTING.45.28    Notwithstanding the provisions of any statute or the charter of the city of 45.29Minneapolis to the contrary, the city council of said city may provide that all or part of the 45.30costs of construction, operation, and maintenance of streets and street lighting within the 45.31city may hereafter be paid from the general revenues of the city of Minneapolis; provided 45.32that the portion of the costs assessable against nongovernmental real property exempt from 45.33ad valorem taxation may be levied as a special assessment against the property.46.1    Sec. 30. Laws 1988, chapter 645, section 3, as amended by Laws 1999, chapter 243, 46.2article 6, section 9, and Laws 2000, chapter 490, article 6, section 15, is amended to read:46.3    Sec. 3. TAX; PAYMENT OF EXPENSES.46.4    (a) The tax levied by the hospital district under Minnesota Statutes, section 
         447.34, 46.5must not be levied at a rate that exceeds 0.063 percent of taxable market value the amount 46.6authorized to be levied under that section. The proceeds of the tax may be used for all 46.7purposes of the hospital district, except as provided in paragraph (b).46.8    (b) 0.048 percent of taxable market value of tax in paragraph (a) may be used only 46.9for acquisition, betterment, and maintenance of the district's hospital and nursing home 46.10facilities and equipment, and not for administrative or salary expenses.46.11    (c) 0.015 percent of taxable market value of the tax in paragraph (a) may be used 46.12solely for the purpose of capital expenditures as it relates to ambulance acquisitions for 46.13the Cook ambulance service and the Orr ambulance service and not for administrative 46.14or salary expenses.46.15    The part of the levy referred to in paragraph (c) (b) must be administered by the 46.16Cook Hospital and passed on directly to the Cook area ambulance service board and the 46.17city of Orr to be held in trust until funding for a new ambulance is needed by either the 46.18Cook ambulance service or the Orr ambulance service.46.19EFFECTIVE DATE.This section is effective upon compliance with Minnesota 46.20Statutes, section 645.021, subdivision 3, by the governing body of the Cook-Orr Hospital 46.21District.46.22    Sec. 31. Laws 1989, chapter 211, section 8, subdivision 4, as amended by Laws 2002, 46.23chapter 390, section 24, and Laws 2003, chapter 127, article 2, section 22, subdivision 4, 46.24is amended to read:46.25    Subd. 4. Tax levy. The tax levied under Minnesota Statutes, section 
         447.34, shall 46.26not exceed $300,000 for taxes levied in 2002. For taxes levied in 2003 and subsequent 46.27years, the tax must not exceed the lesser of:46.28    (1) the product of the hospital district's property tax levy limitation for the previous 46.29year determined under this subdivision, multiplied by 103 percent; or 46.30    (2) the product of the hospital district's property tax levy limitation for the previous 46.31year determined under this subdivision multiplied by the ratio of the most recent available 46.32annual medical care expenditure category of the revised Consumer Price Index, U.S. 46.33citywide average, for all urban consumers prepared by the United States Department of 46.34Labor to the same annual index for the previous year the amount authorized to be levied 46.35under that section.47.1    The proceeds of the tax may be used for all purposes of the hospital district.47.2EFFECTIVE DATE.This section is effective upon compliance with Minnesota 47.3Statutes, section 645.021, subdivision 3, by the governing body of the Cook County 47.4Hospital District.47.5    Sec. 32. LAKEVIEW CEMETERY ASSOCIATION.47.6    Subdivision 1.Authorized.Any two or more of the following cities and towns in 47.7Itasca County may enter into a joint powers agreement under Minnesota Statutes, section 47.8471.59, to establish the Lakeview Cemetery Association with the powers and duties of a 47.9cemetery association under Minnesota Statutes, chapter 306: the cities of Bovey, Calumet, 47.10Coleraine, Marble, and Taconite, and the towns of Greenway, Iron Range, Lawrence, 47.11and Trout Lake.47.12    Subd. 2.Additions; withdrawals.(a) A city or town listed in subdivision 1 that 47.13does not join the association at the time of the initial agreement may join as provided in 47.14the joint powers agreement, or if the joint powers agreement does not provide for later 47.15additions, by providing the association a copy of the adopted resolution to join. If the 47.16joint powers agreement does not provide for adding members, a city or town that joins 47.17after the initial agreement is effective, may join prior to July 1 of the levy year, for taxes 47.18payable in the following year.47.19    (b) A city or town may withdraw from the association as otherwise provided in the 47.20joint powers agreement, or providing to the association a copy of the adopted resolution of 47.21the city or town, prior to July 1 of the levy year for taxes payable in the following year.47.22    Subd. 3.Operation; tax levy.The joint powers agreement for the association may 47.23provide for a uniform tax rate to be levied against all taxable properties located within each 47.24participating city or town. The maximum amount that may be levied by all participating 47.25cities and towns combined shall not exceed a total of $200,000 per year. If levied, the 47.26tax is in addition to all other taxes permitted to be levied on the property, including taxes 47.27permitted to be levied for cemetery purposes by a participating city or town. The levy 47.28under this section must be disregarded in the calculation of all other rate or per capita levy 47.29limitations imposed by law. One of the cities or towns within the association, chosen by 47.30the members of the association, shall certify a tax levy to the Itasca County auditor. When 47.31collected, the Itasca County auditor shall pay the Lakeview Cemetery Association directly.47.32EFFECTIVE DATE.This section is effective for taxes payable in 2009 and 47.33thereafter.48.1    Sec. 33. REPEALER.48.2(a) Laws 1973, chapter 393, section 2, is repealed.48.3(b) Laws 1994, chapter 587, article 9, section 8, subdivision 1, as amended by Laws 48.42005, First Special Session chapter 3, article 1, section 36, is repealed, effective for the 48.5same levy year in which the association initially levies under section 32.48.6(c) Minnesota Statutes 2006, section 163.051, subdivision 5, is repealed, effective 48.7for taxes payable in 2007 and thereafter.48.8ARTICLE 348.9INCOME TAXES48.10    Section 1. Minnesota Statutes 2006, section 289A.12, subdivision 4, is amended to 48.11read:48.12    Subd. 4. Returns by persons, corporations, cooperatives, governmental entities, 48.13or school districts.(a) The commissioner may by notice and demand require to the 48.14extent required by section 6041 of the Internal Revenue Code, a person, corporation, 48.15or cooperative, the state of Minnesota and its political subdivisions, and a city, county, 48.16and school district in Minnesota, making payments in the regular course of a trade or 48.17business during the taxable year to any person or corporation of $600 or more on account 48.18of rents or royalties, or of $10 or more on account of interest, or $10 or more on account 48.19of dividends or patronage dividends, or $600 or more on account of either wages, salaries, 48.20commissions, fees, prizes, awards, pensions, annuities, or any other fixed or determinable 48.21gains, profits or income, not otherwise reportable under section 
         289A.09, subdivision 2, or 48.22on account of earnings of $10 or more distributed to its members by savings associations 48.23or credit unions chartered under the laws of this state or the United States, (1) to file with 48.24the commissioner a return (except in cases where a valid agreement to participate in the 48.25combined federal and state information reporting system has been entered into, and the 48.26return is filed only with the commissioner of internal revenue under the applicable filing 48.27and informational reporting requirements of the Internal Revenue Code) with respect to 48.28the payments in excess of the amounts named, giving the names and addresses of the 48.29persons to whom the payments were made, the amounts paid to each, and (2) to make 48.30a return with respect to the total number of payments and total amount of payments, 48.31for each category of income named, which were in excess of the amounts named. This 48.32subdivision does not apply to the payment of interest or dividends to a person who was a 48.33nonresident of Minnesota for the entire year. 49.1    (b) For payments for which a return is covered by paragraph (a), regardless of 49.2whether the commissioner has required filing under paragraph (a), the payor must file a 49.3copy of the return with the commissioner if: 49.4    (i) the return is for a payment made to a Minnesota resident, to a recipient with a 49.5Minnesota address, or for activity occurring in the state of Minnesota; and 49.6    (ii) the payment is for wages, salaries, or other compensation for services provided. 49.7The commissioner may require this information to be filed in electronic or another form 49.8that the commissioner determines is appropriate, notwithstanding the provisions of 49.9paragraph (c).49.10    (c) A person, corporation, or cooperative required to file returns under this 49.11subdivision must file the returns on magnetic media if magnetic media was used to satisfy 49.12the federal reporting requirement under section 6011(e) of the Internal Revenue Code, 49.13unless the person establishes to the satisfaction of the commissioner that compliance with 49.14this requirement would be an undue hardship.49.15EFFECTIVE DATE.This section is effective for forms required to be filed by 49.16federal law after December 31, 2009.49.17    Sec. 2. Minnesota Statutes 2006, section 290.01, subdivision 19a, is amended to read:49.18    Subd. 19a. Additions to federal taxable income. For individuals, estates, and 49.19trusts, there shall be added to federal taxable income:49.20    (1)(i) interest income on obligations of any state other than Minnesota or a political 49.21or governmental subdivision, municipality, or governmental agency or instrumentality 49.22of any state other than Minnesota exempt from federal income taxes under the Internal 49.23Revenue Code or any other federal statute; and49.24    (ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue 49.25Code, except the portion of the exempt-interest dividends derived from interest income 49.26on obligations of the state of Minnesota or its political or governmental subdivisions, 49.27municipalities, governmental agencies or instrumentalities, but only if the portion of the 49.28exempt-interest dividends from such Minnesota sources paid to all shareholders represents 49.2995 percent or more of the exempt-interest dividends that are paid by the regulated 49.30investment company as defined in section 851(a) of the Internal Revenue Code, or the 49.31fund of the regulated investment company as defined in section 851(g) of the Internal 49.32Revenue Code, making the payment; and49.33    (iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal 49.34government described in section 7871(c) of the Internal Revenue Code shall be treated as 49.35interest income on obligations of the state in which the tribe is located;50.1    (2) the amount of income or sales and use taxes paid or accrued within the taxable 50.2year under this chapter and the amount of taxes based on net income paid or sales and use 50.3taxes paid to any other state or to any province or territory of Canada, to the extent allowed 50.4as a deduction under section 63(d) of the Internal Revenue Code, but the addition may not 50.5be more than the amount by which the itemized deductions as allowed under section 63(d) 50.6of the Internal Revenue Code exceeds the amount of the standard deduction as defined 50.7in section 63(c) of the Internal Revenue Code. For the purpose of this paragraph, the 50.8disallowance of itemized deductions under section 68 of the Internal Revenue Code of 50.91986, income or sales and use tax is the last itemized deduction disallowed;50.10    (3) the capital gain amount of a lump sum distribution to which the special tax under 50.11section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;50.12    (4) the amount of income taxes paid or accrued within the taxable year under this 50.13chapter and taxes based on net income paid to any other state or any province or territory 50.14of Canada, to the extent allowed as a deduction in determining federal adjusted gross 50.15income. For the purpose of this paragraph, income taxes do not include the taxes imposed 50.16by sections 
         290.0922, subdivision 1, paragraph (b), 
         290.9727, 
         290.9728, and 
         290.9729;50.17    (5) the amount of expense, interest, or taxes disallowed pursuant to section 
         290.1050.18other than expenses or interest used in computing net interest income for the subtraction 50.19allowed under subdivision 19b, clause (1);50.20    (6) the amount of a partner's pro rata share of net income which does not flow 50.21through to the partner because the partnership elected to pay the tax on the income under 50.22section 6242(a)(2) of the Internal Revenue Code;50.23    (7) 80 percent of the depreciation deduction allowed under section 168(k) of the 50.24Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that 50.25in the taxable year generates a deduction for depreciation under section 168(k) and the 50.26activity generates a loss for the taxable year that the taxpayer is not allowed to claim for 50.27the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is 50.28limited to excess of the depreciation claimed by the activity under section 168(k) over the 50.29amount of the loss from the activity that is not allowed in the taxable year. In succeeding 50.30taxable years when the losses not allowed in the taxable year are allowed, the depreciation 50.31under section 168(k) is allowed;50.32    (8) 80 percent of the amount by which the deduction allowed by section 179 of the 50.33Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal 50.34Revenue Code of 1986, as amended through December 31, 2003;50.35    (9) to the extent deducted in computing federal taxable income, the amount of the 50.36deduction allowable under section 199 of the Internal Revenue Code; and51.1    (10) the exclusion allowed under section 139A of the Internal Revenue Code for 51.2federal subsidies for prescription drug plans; and51.3    (11) the amount of expenses disallowed under section 290.10, subdivision 2.51.4EFFECTIVE DATE.This section is effective for taxable years beginning after 51.5December 31, 2007, for disallowed expenses assessed after the date of final enactment 51.6of this act.51.7    Sec. 3. Minnesota Statutes 2007 Supplement, section 290.01, subdivision 19b, is 51.8amended to read:51.9    Subd. 19b. Subtractions from federal taxable income. For individuals, estates, 51.10and trusts, there shall be subtracted from federal taxable income:51.11    (1) net interest income on obligations of any authority, commission, or 51.12instrumentality of the United States to the extent includable in taxable income for federal 51.13income tax purposes but exempt from state income tax under the laws of the United States;51.14    (2) if included in federal taxable income, the amount of any overpayment of income 51.15tax to Minnesota or to any other state, for any previous taxable year, whether the amount 51.16is received as a refund or as a credit to another taxable year's income tax liability;51.17    (3) the amount paid to others, less the amount used to claim the credit allowed under 51.18section 
         290.0674, not to exceed $1,625 for each qualifying child in grades kindergarten 51.19to 6 and $2,500 for each qualifying child in grades 7 to 12, for tuition, textbooks, and 51.20transportation of each qualifying child in attending an elementary or secondary school 51.21situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a 51.22resident of this state may legally fulfill the state's compulsory attendance laws, which 51.23is not operated for profit, and which adheres to the provisions of the Civil Rights Act 51.24of 1964 and chapter 363A. For the purposes of this clause, "tuition" includes fees or 51.25tuition as defined in section 
         290.0674, subdivision 1, clause (1). As used in this clause, 51.26"textbooks" includes books and other instructional materials and equipment purchased 51.27or leased for use in elementary and secondary schools in teaching only those subjects 51.28legally and commonly taught in public elementary and secondary schools in this state. 51.29Equipment expenses qualifying for deduction includes expenses as defined and limited in 51.30section 
         290.0674, subdivision 1, clause (3). "Textbooks" does not include instructional 51.31books and materials used in the teaching of religious tenets, doctrines, or worship, the 51.32purpose of which is to instill such tenets, doctrines, or worship, nor does it include books 51.33or materials for, or transportation to, extracurricular activities including sporting events, 51.34musical or dramatic events, speech activities, driver's education, or similar programs. For 52.1purposes of the subtraction provided by this clause, "qualifying child" has the meaning 52.2given in section 32(c)(3) of the Internal Revenue Code;52.3    (4) income as provided under section 
         290.0802;52.4    (5) to the extent included in federal adjusted gross income, income realized on 52.5disposition of property exempt from tax under section 
         290.491;52.6    (6) to the extent not deducted or not deductible pursuant to section 408(d)(8)(E) 52.7of the Internal Revenue Code in determining federal taxable income by an individual 52.8who does not itemize deductions for federal income tax purposes for the taxable year, an 52.9amount equal to 50 percent of the excess of charitable contributions over $500 allowable 52.10as a deduction for the taxable year under section 170(a) of the Internal Revenue Code and 52.11under the provisions of Public Law 109-1;52.12    (7) for taxable years beginning before January 1, 2008, the amount of the federal 52.13small ethanol producer credit allowed under section 40(a)(3) of the Internal Revenue Code 52.14which is included in gross income under section 87 of the Internal Revenue Code;52.15    (8) for individuals who are allowed a federal foreign tax credit for taxes that do not 52.16qualify for a credit under section 
         290.06, subdivision 22, an amount equal to the carryover 52.17of subnational foreign taxes for the taxable year, but not to exceed the total subnational 52.18foreign taxes reported in claiming the foreign tax credit. For purposes of this clause, 52.19"federal foreign tax credit" means the credit allowed under section 27 of the Internal 52.20Revenue Code, and "carryover of subnational foreign taxes" equals the carryover allowed 52.21under section 904(c) of the Internal Revenue Code minus national level foreign taxes to 52.22the extent they exceed the federal foreign tax credit;52.23    (9) in each of the five tax years immediately following the tax year in which an 52.24addition is required under subdivision 19a, clause (7), or 19c, clause (15), in the case 52.25of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth 52.26of the delayed depreciation. For purposes of this clause, "delayed depreciation" means 52.27the amount of the addition made by the taxpayer under subdivision 19a, clause (7), or 52.28subdivision 19c, clause (15), in the case of a shareholder of an S corporation, minus the 52.29positive value of any net operating loss under section 172 of the Internal Revenue Code 52.30generated for the tax year of the addition. The resulting delayed depreciation cannot be 52.31less than zero;52.32    (10) job opportunity building zone income as provided under section 
         469.316;52.33    (11) to the extent included in federal taxable income, the amount of compensation 52.34paid to members of the Minnesota National Guard or other reserve components of the 52.35United States military for active service performed in Minnesota, excluding compensation 52.36for services performed under the Active Guard Reserve (AGR) program. For purposes of 53.1this clause, "active service" means (i) state active service as defined in section 
         190.05, 53.2subdivision 5a
         , clause (1); (ii) federally funded state active service as defined in section 53.3190.05, subdivision 5b
         ; or (iii) federal active service as defined in section 
         190.05, 53.4subdivision 5c
         , but "active service" excludes services performed exclusively for purposes 53.5of basic combat training, advanced individual training, annual training, and periodic 53.6inactive duty training; special training periodically made available to reserve members; 53.7and service performed in accordance with section 
         190.08, subdivision 3;53.8    (12) to the extent included in federal taxable income, the amount of compensation 53.9paid to Minnesota residents who are members of the armed forces of the United States or 53.10United Nations for active duty performed outside Minnesota under United States Code, 53.11title 10, section 101(d); United States Code, title 32, section 101(12); or the authority of 53.12the United Nations;53.13    (13) an amount, not to exceed $10,000, equal to qualified expenses related to a 53.14qualified donor's donation, while living, of one or more of the qualified donor's organs 53.15to another person for human organ transplantation. For purposes of this clause, "organ" 53.16means all or part of an individual's liver, pancreas, kidney, intestine, lung, or bone marrow; 53.17"human organ transplantation" means the medical procedure by which transfer of a human 53.18organ is made from the body of one person to the body of another person; "qualified 53.19expenses" means unreimbursed expenses for both the individual and the qualified donor 53.20for (i) travel, (ii) lodging, and (iii) lost wages net of sick pay, except that such expenses 53.21may be subtracted under this clause only once; and "qualified donor" means the individual 53.22or the individual's dependent, as defined in section 152 of the Internal Revenue Code. An 53.23individual may claim the subtraction in this clause for each instance of organ donation for 53.24transplantation during the taxable year in which the qualified expenses occur;53.25    (14) in each of the five tax years immediately following the tax year in which an 53.26addition is required under subdivision 19a, clause (8), or 19c, clause (16), in the case of a 53.27shareholder of a corporation that is an S corporation, an amount equal to one-fifth of the 53.28addition made by the taxpayer under subdivision 19a, clause (8), or 19c, clause (16), in the 53.29case of a shareholder of a corporation that is an S corporation, minus the positive value of 53.30any net operating loss under section 172 of the Internal Revenue Code generated for the 53.31tax year of the addition. If the net operating loss exceeds the addition for the tax year, a 53.32subtraction is not allowed under this clause;53.33    (15) to the extent included in federal taxable income, compensation paid to a 53.34nonresident who is a service member as defined in United States Code, title 10, section 53.35101(a)(5), for military service as defined in the Service Member Civil Relief Act, Public 53.36Law 108-189, section 101(2); and54.1    (16) international economic development zone income as provided under section 54.2469.325
         .54.3EFFECTIVE DATE.This section is effective for tax years beginning after 54.4December 31, 2007.54.5    Sec. 4. Minnesota Statutes 2006, section 290.01, subdivision 19c, is amended to read:54.6    Subd. 19c. Corporations; additions to federal taxable income. For corporations, 54.7there shall be added to federal taxable income:54.8    (1) the amount of any deduction taken for federal income tax purposes for income, 54.9excise, or franchise taxes based on net income or related minimum taxes, including but not 54.10limited to the tax imposed under section 
         290.0922, paid by the corporation to Minnesota, 54.11another state, a political subdivision of another state, the District of Columbia, or any 54.12foreign country or possession of the United States;54.13    (2) interest not subject to federal tax upon obligations of: the United States, its 54.14possessions, its agencies, or its instrumentalities; the state of Minnesota or any other 54.15state, any of its political or governmental subdivisions, any of its municipalities, or any 54.16of its governmental agencies or instrumentalities; the District of Columbia; or Indian 54.17tribal governments;54.18    (3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal 54.19Revenue Code;54.20    (4) the amount of any net operating loss deduction taken for federal income tax 54.21purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss 54.22deduction under section 810 of the Internal Revenue Code;54.23    (5) the amount of any special deductions taken for federal income tax purposes 54.24under sections 241 to 247 and 965 of the Internal Revenue Code;54.25    (6) losses from the business of mining, as defined in section 
         290.05, subdivision 1, 54.26clause (a), that are not subject to Minnesota income tax;54.27    (7) the amount of any capital losses deducted for federal income tax purposes under 54.28sections 1211 and 1212 of the Internal Revenue Code;54.29    (8) the exempt foreign trade income of a foreign sales corporation under sections 54.30921(a) and 291 of the Internal Revenue Code;54.31    (9) the amount of percentage depletion deducted under sections 611 through 614 and 54.32291 of the Internal Revenue Code;54.33    (10) for certified pollution control facilities placed in service in a taxable year 54.34beginning before December 31, 1986, and for which amortization deductions were elected 54.35under section 169 of the Internal Revenue Code of 1954, as amended through December 55.131, 1985, the amount of the amortization deduction allowed in computing federal taxable 55.2income for those facilities;55.3    (11) the amount of any deemed dividend from a foreign operating corporation 55.4determined pursuant to section 
         290.17, subdivision 4, paragraph (g);55.5    (12) the amount of a partner's pro rata share of net income which does not flow 55.6through to the partner because the partnership elected to pay the tax on the income under 55.7section 6242(a)(2) of the Internal Revenue Code;55.8    (13) the amount of net income excluded under section 114 of the Internal Revenue 55.9Code;55.10    (14) any increase in subpart F income, as defined in section 952(a) of the Internal 55.11Revenue Code, for the taxable year when subpart F income is calculated without regard 55.12to the provisions of section 103 of Public Law 109-222;55.13    (15) 80 percent of the depreciation deduction allowed under section 168(k)(1)(A) 55.14and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if the taxpayer 55.15has an activity that in the taxable year generates a deduction for depreciation under 55.16section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable year 55.17that the taxpayer is not allowed to claim for the taxable year, "the depreciation allowed 55.18under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess of the 55.19depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) over the 55.20amount of the loss from the activity that is not allowed in the taxable year. In succeeding 55.21taxable years when the losses not allowed in the taxable year are allowed, the depreciation 55.22under section 168(k)(1)(A) and (k)(4)(A) is allowed;55.23    (16) 80 percent of the amount by which the deduction allowed by section 179 of the 55.24Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal 55.25Revenue Code of 1986, as amended through December 31, 2003;55.26    (17) to the extent deducted in computing federal taxable income, the amount of the 55.27deduction allowable under section 199 of the Internal Revenue Code; and55.28    (18) the exclusion allowed under section 139A of the Internal Revenue Code for 55.29federal subsidies for prescription drug plans.; and55.30    (19) the amount of expenses disallowed under section 290.10, subdivision 2.55.31EFFECTIVE DATE.This section is effective for taxable years beginning after 55.32December 31, 2007, for disallowed expenses assessed after the date of final enactment 55.33of this act.55.34    Sec. 5. Minnesota Statutes 2006, section 290.0677, subdivision 1, is amended to read:56.1    Subdivision 1. Credit allowed.  (a) An individual is allowed a credit against the tax 56.2due under this chapter equal to $59 for each month or portion thereof that the individual 56.3was in active military service in a designated area after September 11, 2001, while a 56.4Minnesota domiciliary. 56.5    (b) For active service performed after September 11, 2001, and before December 31, 56.62006, the individual may claim the credit in the taxable year beginning after December 31, 56.72005, and before January 1, 2007. 56.8    (c) For active service performed after December 31, 2006, the individual may claim 56.9the credit for the taxable year in which the active service was performed. 56.10    (d) If a Minnesota domiciliary is killed while performing active military service in a 56.11designated area, the individual's surviving spouse or dependent child may take the credit 56.12in the taxable year of the death. If a Minnesota domiciliary was killed while performing 56.13active military service in a designated area between September 11, 2001, and December 56.1431, 2006, the individual's surviving spouse or dependent child may claim this credit in 56.15the taxable year beginning after December 31, 2005, and before January 1, 2007 an 56.16individual entitled to the credit died prior to January 1, 2006, the individual's estate or 56.17heirs at law, if the individual's probate estate has closed or the estate was not probated, 56.18may claim the credit. 56.19EFFECTIVE DATE.This section is effective retroactively for tax years beginning 56.20after December 31, 2005.56.21    Sec. 6. Minnesota Statutes 2006, section 290.10, is amended to read:56.22290.10 NONDEDUCTIBLE ITEMS.56.23    Subdivision 1.Expenses, interest, and taxes. Except as provided in section 
         290.17, 56.24subdivision 4
         , paragraph (i), in computing the net income of a taxpayer no deduction 56.25shall in any case be allowed for expenses, interest and taxes connected with or allocable 56.26against the production or receipt of all income not included in the measure of the tax 56.27imposed by this chapter, except that for corporations engaged in the business of mining 56.28or producing iron ore, the mining of which is subject to the occupation tax imposed by 56.29section 
         298.01, subdivision 4, this shall not prevent the deduction of expenses and other 56.30items to the extent that the expenses and other items are allowable under this chapter and 56.31are not deductible, capitalizable, retainable in basis, or taken into account by allowance 56.32or otherwise in computing the occupation tax and do not exceed the amounts taken for 56.33federal income tax purposes for that year.  Occupation taxes imposed under chapter 298, 57.1royalty taxes imposed under chapter 299, or depletion expenses may not be deducted 57.2under this clause  subdivision.57.3    Subd. 2.Fines, fees, and penalties.(a) Except as provided in this subdivision, no 57.4deduction from taxable income for a trade or business expense under section 162(a) of 57.5the Internal Revenue Code shall be allowed for any amount paid or incurred, whether by 57.6suit, agreement, or otherwise, to, or at the direction of, a government or entity described in 57.7paragraph (d) in relation to the violation of any law or the investigation or inquiry by such 57.8government or entity into the potential violation of any law.57.9    (b) Exception for amounts constituting restitution or paid to come into compliance 57.10with the law. Paragraph (a) does not apply to any amount which:57.11    (1) the taxpayer establishes:57.12    (i) constitutes restitution, including remediation of property for damage or harm 57.13caused by or which may be caused by the violation of any law or the potential violation 57.14of any law; or57.15    (ii) is paid to come into compliance with any law which was violated or involved in 57.16the investigation or inquiry; and57.17    (2) is identified as restitution or as an amount paid to come into compliance with the 57.18law, as the case may be, in the court order or settlement agreement.57.19    This paragraph does not apply to any amount paid or incurred as reimbursement to 57.20the government or entity for the costs of any investigation or litigation.57.21    (c) Paragraph (a) does not apply to any amount paid or incurred by order of a court 57.22in a suit in which no government or entity described in paragraph (d) is a party.57.23    (d) An entity is described in this paragraph if it is:57.24    (1) a nongovernmental entity which exercises self-regulatory powers, including 57.25imposing sanctions, in connection with a qualified board or exchange, as defined in section 57.261256(g)(7) of the Internal Revenue Code, or;57.27    (2) to the extent provided in federal regulations, a nongovernmental entity which 57.28exercises self-regulatory powers, including imposing sanctions, as part of performing an 57.29essential governmental function.57.30    (e) Paragraph (a) does not apply to any amount paid or incurred as taxes due.57.31EFFECTIVE DATE.This section is effective for taxable years beginning after 57.32December 31, 2007, and for fines, fees, and penalties assessed after the date of enactment.57.33    Sec. 7. Minnesota Statutes 2006, section 290.17, subdivision 2, is amended to read:58.1    Subd. 2. Income not derived from conduct of a trade or business. The income of 58.2a taxpayer subject to the allocation rules that is not derived from the conduct of a trade or 58.3business must be assigned in accordance with paragraphs (a) to (f):58.4    (a)(1) Subject to paragraphs (a)(2),and (a)(3), and (a)(4), income from wages as 58.5defined in section 3401(a) and (f) of the Internal Revenue Code is assigned to this state if, 58.6and to the extent that, the work of the employee is performed within it; all other income 58.7from such sources is treated as income from sources without this state.58.8    Severance pay shall be considered income from labor or personal or professional 58.9services.58.10    (2) In the case of an individual who is a nonresident of Minnesota and who is an 58.11athlete or entertainer, income from compensation for labor or personal services performed 58.12within this state shall be determined in the following manner:58.13    (i) The amount of income to be assigned to Minnesota for an individual who is a 58.14nonresident salaried athletic team employee shall be determined by using a fraction in 58.15which the denominator contains the total number of days in which the individual is under 58.16a duty to perform for the employer, and the numerator is the total number of those days 58.17spent in Minnesota. For purposes of this paragraph, off-season training activities, unless 58.18conducted at the team's facilities as part of a team imposed program, are not included in 58.19the total number of duty days. Bonuses earned as a result of play during the regular season 58.20or for participation in championship, play-off, or all-star games must be allocated under 58.21the formula. Signing bonuses are not subject to allocation under the formula if they are 58.22not conditional on playing any games for the team, are payable separately from any other 58.23compensation, and are nonrefundable; and58.24    (ii) The amount of income to be assigned to Minnesota for an individual who is a 58.25nonresident, and who is an athlete or entertainer not listed in clause (i), for that person's 58.26athletic or entertainment performance in Minnesota shall be determined by assigning to 58.27this state all income from performances or athletic contests in this state.58.28    (3) For purposes of this section, amounts received by a nonresident as "retirement 58.29income" as defined in section (b)(1) of the State Income Taxation of Pension Income 58.30Act, Public Law 104-95, are not considered income derived from carrying on a trade 58.31or business or from wages or other compensation for work an employee performed in 58.32Minnesota, and are not taxable under this chapter.58.33    (4) Wages, otherwise assigned to this state under clause (1) and not qualifying under 58.34clause (3), are not taxable under this chapter if the following conditions are met:58.35    (i) the recipient was not a resident of this state for any part of the taxable year in 58.36which the wages were received; and59.1    (ii) the wages are for work performed while the recipient was a resident of this state.59.2    (b) Income or gains from tangible property located in this state that is not employed 59.3in the business of the recipient of the income or gains must be assigned to this state.59.4    (c) Income or gains from intangible personal property not employed in the business 59.5of the recipient of the income or gains must be assigned to this state if the recipient of the 59.6income or gains is a resident of this state or is a resident trust or estate.59.7    Gain on the sale of a partnership interest is allocable to this state in the ratio of the 59.8original cost of partnership tangible property in this state to the original cost of partnership 59.9tangible property everywhere, determined at the time of the sale. If more than 50 percent 59.10of the value of the partnership's assets consists of intangibles, gain or loss from the sale 59.11of the partnership interest is allocated to this state in accordance with the sales factor of 59.12the partnership for its first full tax period immediately preceding the tax period of the 59.13partnership during which the partnership interest was sold.59.14    Gain on the sale of goodwill or income from a covenant not to compete that is 59.15connected with a business operating all or partially in Minnesota is allocated to this state 59.16to the extent that the income from the business in the year preceding the year of sale was 59.17assignable to Minnesota under subdivision 3.59.18    When an employer pays an employee for a covenant not to compete, the income 59.19allocated to this state is in the ratio of the employee's service in Minnesota in the calendar 59.20year preceding leaving the employment of the employer over the total services performed 59.21by the employee for the employer in that year.59.22    (d) Income from winnings on a bet made by an individual while in Minnesota is 59.23assigned to this state. In this paragraph, "bet" has the meaning given in section 
         609.75, 59.24subdivision 2
         , as limited by section 
         609.75, subdivision 3, clauses (1), (2), and (3). 59.25    (e) All items of gross income not covered in paragraphs (a) to (d) and not part of the 59.26taxpayer's income from a trade or business shall be assigned to the taxpayer's domicile.59.27    (f) For the purposes of this section, working as an employee shall not be considered 59.28to be conducting a trade or business.59.29EFFECTIVE DATE.This section is effective for taxable years beginning after 59.30December 31, 2007.59.31    Sec. 8. Minnesota Statutes 2006, section 290.92, is amended by adding a subdivision 59.32to read:59.33    Subd. 31.Payments to persons who are not employees.(a) For purposes of this 59.34subdivision, "contractor" means a person carrying on a trade or business described in 60.1industry code numbers 23 through 238990 of the North American Industry Classification 60.2System. 60.3    (b) A contractor or a third-party bulk filer acting on behalf of a contractor, who 60.4makes payments to an individual, carrying on a trade or business described in paragraph 60.5(a) as a sole proprietorship, must deduct and withhold two percent of the payment as 60.6Minnesota withholding tax when the amount the contractor paid to that individual during 60.7the calendar year exceeds $600.60.8    (c) A payment subject to withholding under this subdivision must be treated as if 60.9the payment were a wage paid by an employer to an employee. The requirements in the 60.10definitions of "employee" and "employer" in subdivision 1 relating to geographic location 60.11apply in determining whether withholding tax applies under this subdivision, but without 60.12regard to whether the contractor or the individual otherwise satisfy the definition of an 60.13employer or an employee. Each recipient of a payment subject to withholding under this 60.14subdivision must furnish the contractor with a statement of the recipient's name, address, 60.15and Social Security account number.60.16EFFECTIVE DATE.This section is effective for payments made after December 60.1731, 2008.60.18    Sec. 9. AUDIT AND REPORT TO LEGISLATURE.60.19    The commissioner must conduct a random sample audit of withholdings under 60.20Minnesota Statutes, section 290.92, subdivision 31, and returns associated with those 60.21withholdings. The commissioner must report on the findings of the audit to the committees 60.22of the senate and house of representatives with jurisdiction over taxes, in compliance with 60.23Minnesota Statutes, sections 3.195 and 3.197, no later than February 1, 2011. The report 60.24must also include information on the number and amount of payments received, and on 60.25the types of contractors making payments, grouped by specialty skills definitions provided 60.26in the North American Industry Classification System.60.27ARTICLE 460.28FEDERAL UPDATE60.29    Section 1. Minnesota Statutes 2006, section 289A.02, subdivision 7, is amended to 60.30read:60.31    Subd. 7. Internal Revenue Code. Unless specifically defined otherwise, "Internal 60.32Revenue Code" means the Internal Revenue Code of 1986, as amended through May 18, 60.332006 February 13, 2008.61.1EFFECTIVE DATE.This section is effective the day following final enactment.61.2    Sec. 2. Minnesota Statutes 2007 Supplement, section 290.01, subdivision 19, is 61.3amended to read:61.4    Subd. 19. Net income. The term "net income" means the federal taxable income, 61.5as defined in section 63 of the Internal Revenue Code of 1986, as amended through the 61.6date named in this subdivision, incorporating the federal effective dates of changes to the 61.7Internal Revenue Code and any elections made by the taxpayer in accordance with the 61.8Internal Revenue Code in determining federal taxable income for federal income tax 61.9purposes, and with the modifications provided in subdivisions 19a to 19f.61.10    In the case of a regulated investment company or a fund thereof, as defined in section 61.11851(a) or 851(g) of the Internal Revenue Code, federal taxable income means investment 61.12company taxable income as defined in section 852(b)(2) of the Internal Revenue Code, 61.13except that:61.14    (1) the exclusion of net capital gain provided in section 852(b)(2)(A) of the Internal 61.15Revenue Code does not apply;61.16    (2) the deduction for dividends paid under section 852(b)(2)(D) of the Internal 61.17Revenue Code must be applied by allowing a deduction for capital gain dividends and 61.18exempt-interest dividends as defined in sections 852(b)(3)(C) and 852(b)(5) of the Internal 61.19Revenue Code; and61.20    (3) the deduction for dividends paid must also be applied in the amount of any 61.21undistributed capital gains which the regulated investment company elects to have treated 61.22as provided in section 852(b)(3)(D) of the Internal Revenue Code.61.23    The net income of a real estate investment trust as defined and limited by section 61.24856(a), (b), and (c) of the Internal Revenue Code means the real estate investment trust 61.25taxable income as defined in section 857(b)(2) of the Internal Revenue Code.61.26    The net income of a designated settlement fund as defined in section 468B(d) of 61.27the Internal Revenue Code means the gross income as defined in section 468B(b) of the 61.28Internal Revenue Code.61.29    The Internal Revenue Code of 1986, as amended through May 18, 2006 February 61.3013, 2008, shall be in effect for taxable years beginning after December 31, 1996, and 61.31before January 1, 2006, and for taxable years beginning after December 31, 2006. The 61.32Internal Revenue Code of 1986, as amended through December 31, 2006, is in effect for 61.33taxable years beginning after December 31, 2005, and before January 1, 2007.62.1    Except as otherwise provided, references to the Internal Revenue Code in 62.2subdivisions 19 to 19f mean the code in effect for purposes of determining net income for 62.3the applicable year.62.4EFFECTIVE DATE.This section is effective for taxable years beginning after 62.5December 31, 2006.62.6    Sec. 3. Minnesota Statutes 2006, section 290.01, subdivision 19a, is amended to read:62.7    Subd. 19a. Additions to federal taxable income. For individuals, estates, and 62.8trusts, there shall be added to federal taxable income:62.9    (1)(i) interest income on obligations of any state other than Minnesota or a political 62.10or governmental subdivision, municipality, or governmental agency or instrumentality 62.11of any state other than Minnesota exempt from federal income taxes under the Internal 62.12Revenue Code or any other federal statute; and62.13    (ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue 62.14Code, except the portion of the exempt-interest dividends derived from interest income 62.15on obligations of the state of Minnesota or its political or governmental subdivisions, 62.16municipalities, governmental agencies or instrumentalities, but only if the portion of the 62.17exempt-interest dividends from such Minnesota sources paid to all shareholders represents 62.1895 percent or more of the exempt-interest dividends that are paid by the regulated 62.19investment company as defined in section 851(a) of the Internal Revenue Code, or the 62.20fund of the regulated investment company as defined in section 851(g) of the Internal 62.21Revenue Code, making the payment; and62.22    (iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal 62.23government described in section 7871(c) of the Internal Revenue Code shall be treated as 62.24interest income on obligations of the state in which the tribe is located;62.25    (2) the amount of income or sales and use taxes paid or accrued within the taxable 62.26year under this chapter and the amount of taxes based on net income paid or sales and use 62.27taxes paid to any other state or to any province or territory of Canada, to the extent allowed 62.28as a deduction under section 63(d) of the Internal Revenue Code, but the addition may not 62.29be more than the amount by which the itemized deductions as allowed under section 63(d) 62.30of the Internal Revenue Code exceeds the amount of the standard deduction as defined 62.31in section 63(c) of the Internal Revenue Code. For the purpose of this paragraph, the 62.32disallowance of itemized deductions under section 68 of the Internal Revenue Code of 62.331986, income or sales and use tax is the last itemized deduction disallowed;62.34    (3) the capital gain amount of a lump sum distribution to which the special tax under 62.35section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;63.1    (4) the amount of income taxes paid or accrued within the taxable year under this 63.2chapter and taxes based on net income paid to any other state or any province or territory 63.3of Canada, to the extent allowed as a deduction in determining federal adjusted gross 63.4income. For the purpose of this paragraph, income taxes do not include the taxes imposed 63.5by sections 
         290.0922, subdivision 1, paragraph (b), 
         290.9727, 
         290.9728, and 
         290.9729;63.6    (5) the amount of expense, interest, or taxes disallowed pursuant to section 
         290.1063.7other than expenses or interest used in computing net interest income for the subtraction 63.8allowed under subdivision 19b, clause (1);63.9    (6) the amount of a partner's pro rata share of net income which does not flow 63.10through to the partner because the partnership elected to pay the tax on the income under 63.11section 6242(a)(2) of the Internal Revenue Code;63.12    (7) 80 percent of the depreciation deduction allowed under section 168(k) of the 63.13Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that 63.14in the taxable year generates a deduction for depreciation under section 168(k) and the 63.15activity generates a loss for the taxable year that the taxpayer is not allowed to claim for 63.16the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is 63.17limited to excess of the depreciation claimed by the activity under section 168(k) over the 63.18amount of the loss from the activity that is not allowed in the taxable year. In succeeding 63.19taxable years when the losses not allowed in the taxable year are allowed, the depreciation 63.20under section 168(k) is allowed;63.21    (8) 80 percent of the amount by which the deduction allowed by section 179 of the 63.22Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal 63.23Revenue Code of 1986, as amended through December 31, 2003;63.24    (9) to the extent deducted in computing federal taxable income, the amount of the 63.25deduction allowable under section 199 of the Internal Revenue Code; and63.26    (10) the exclusion allowed under section 139A of the Internal Revenue Code for 63.27federal subsidies for prescription drug plans.;63.28    (11) for taxable years beginning after December 31, 2006, and before January 1, 63.292008, the amount deducted for qualified tuition and related expenses under section 222 of 63.30the Internal Revenue Code, to the extent deducted from gross income; and63.31    (12) for taxable years beginning after December 31, 2006, and before January 1, 63.322008, the amount deducted for certain expenses of elementary and secondary school 63.33teachers under section 62(a)(2)(D) of the Internal Revenue Code, to the extent deducted 63.34from gross income.63.35EFFECTIVE DATE.This section is effective for taxable years beginning after 63.36December 31, 2006.64.1    Sec. 4. Minnesota Statutes 2006, section 290.01, subdivision 19c, is amended to read:64.2    Subd. 19c. Corporations; additions to federal taxable income. For corporations, 64.3there shall be added to federal taxable income:64.4    (1) the amount of any deduction taken for federal income tax purposes for income, 64.5excise, or franchise taxes based on net income or related minimum taxes, including but not 64.6limited to the tax imposed under section 
         290.0922, paid by the corporation to Minnesota, 64.7another state, a political subdivision of another state, the District of Columbia, or any 64.8foreign country or possession of the United States;64.9    (2) interest not subject to federal tax upon obligations of: the United States, its 64.10possessions, its agencies, or its instrumentalities; the state of Minnesota or any other 64.11state, any of its political or governmental subdivisions, any of its municipalities, or any 64.12of its governmental agencies or instrumentalities; the District of Columbia; or Indian 64.13tribal governments;64.14    (3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal 64.15Revenue Code;64.16    (4) the amount of any net operating loss deduction taken for federal income tax 64.17purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss 64.18deduction under section 810 of the Internal Revenue Code;64.19    (5) the amount of any special deductions taken for federal income tax purposes 64.20under sections 241 to 247 and 965 of the Internal Revenue Code;64.21    (6) losses from the business of mining, as defined in section 
         290.05, subdivision 1, 64.22clause (a), that are not subject to Minnesota income tax;64.23    (7) the amount of any capital losses deducted for federal income tax purposes under 64.24sections 1211 and 1212 of the Internal Revenue Code;64.25    (8) the exempt foreign trade income of a foreign sales corporation under sections 64.26921(a) and 291 of the Internal Revenue Code;64.27    (9) the amount of percentage depletion deducted under sections 611 through 614 and 64.28291 of the Internal Revenue Code;64.29    (10) for certified pollution control facilities placed in service in a taxable year 64.30beginning before December 31, 1986, and for which amortization deductions were elected 64.31under section 169 of the Internal Revenue Code of 1954, as amended through December 64.3231, 1985, the amount of the amortization deduction allowed in computing federal taxable 64.33income for those facilities;64.34    (11) the amount of any deemed dividend from a foreign operating corporation 64.35determined pursuant to section 
         290.17, subdivision 4, paragraph (g);65.1    (12) the amount of a partner's pro rata share of net income which does not flow 65.2through to the partner because the partnership elected to pay the tax on the income under 65.3section 6242(a)(2) of the Internal Revenue Code;65.4    (13) the amount of net income excluded under section 114 of the Internal Revenue 65.5Code;65.6    (14) any increase in subpart F income, as defined in section 952(a) of the Internal 65.7Revenue Code, for the taxable year when subpart F income is calculated without regard 65.8to the provisions of section 103 of Public Law 109-222;65.9    (15) 80 percent of the depreciation deduction allowed under section 168(k)(1)(A) 65.10and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if the taxpayer 65.11has an activity that in the taxable year generates a deduction for depreciation under 65.12section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable year 65.13that the taxpayer is not allowed to claim for the taxable year, "the depreciation allowed 65.14under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess of the 65.15depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) over the 65.16amount of the loss from the activity that is not allowed in the taxable year. In succeeding 65.17taxable years when the losses not allowed in the taxable year are allowed, the depreciation 65.18under section 168(k)(1)(A) and (k)(4)(A) is allowed;65.19    (16) 80 percent of the amount by which the deduction allowed by section 179 of the 65.20Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal 65.21Revenue Code of 1986, as amended through December 31, 2003;65.22    (17) to the extent deducted in computing federal taxable income, the amount of the 65.23deduction allowable under section 199 of the Internal Revenue Code; and65.24    (18) the exclusion allowed under section 139A of the Internal Revenue Code for 65.25federal subsidies for prescription drug plans.; and65.26    (19) for taxable years beginning after December 31, 2006, and before January 1, 65.272008, the additional amount allowed as a deduction for donation of computer technology 65.28and equipment under section 170(e)(6) of the Internal Revenue Code, to the extent 65.29deducted from taxable income.65.30EFFECTIVE DATE.This section is effective for taxable years beginning after 65.31December 31, 2006.65.32    Sec. 5. Minnesota Statutes 2007 Supplement, section 290.01, subdivision 31, is 65.33amended to read:65.34    Subd. 31. Internal Revenue Code. Unless specifically defined otherwise, for 65.35taxable years beginning before January 1, 2006, and after December 31, 2006, "Internal 66.1Revenue Code" means the Internal Revenue Code of 1986, as amended through May 18, 66.22006; and for taxable years beginning after December 31, 2005, and before January 1, 66.32007, "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended 66.4through December 31, 2006 February 13, 2008.66.5EFFECTIVE DATE.This section is effective the day following final enactment 66.6except the changes incorporated by federal changes are effective at the same time as the 66.7changes were effective for federal purposes.66.8    Sec. 6. Minnesota Statutes 2006, section 290.06, subdivision 2c, is amended to read:66.9    Subd. 2c. Schedules of rates for individuals, estates, and trusts. (a) The income 66.10taxes imposed by this chapter upon married individuals filing joint returns and surviving 66.11spouses as defined in section 2(a) of the Internal Revenue Code must be computed by 66.12applying to their taxable net income the following schedule of rates:66.13    (1) On the first $25,680, 
         5.35 percent;66.14    (2) On all over $25,680, but not over $102,030, 
         7.05 percent;66.15    (3) On all over $102,030, 
         7.85 percent.66.16    Married individuals filing separate returns, estates, and trusts must compute their 66.17income tax by applying the above rates to their taxable income, except that the income 66.18brackets will be one-half of the above amounts.66.19    (b) The income taxes imposed by this chapter upon unmarried individuals must be 66.20computed by applying to taxable net income the following schedule of rates:66.21    (1) On the first $17,570, 
         5.35 percent;66.22    (2) On all over $17,570, but not over $57,710, 
         7.05 percent;66.23    (3) On all over $57,710, 
         7.85 percent.66.24    (c) The income taxes imposed by this chapter upon unmarried individuals qualifying 66.25as a head of household as defined in section 2(b) of the Internal Revenue Code must be 66.26computed by applying to taxable net income the following schedule of rates:66.27    (1) On the first $21,630, 
         5.35 percent;66.28    (2) On all over $21,630, but not over $86,910, 
         7.05 percent;66.29    (3) On all over $86,910, 
         7.85 percent.66.30    (d) In lieu of a tax computed according to the rates set forth in this subdivision, the 66.31tax of any individual taxpayer whose taxable net income for the taxable year is less than 66.32an amount determined by the commissioner must be computed in accordance with tables 66.33prepared and issued by the commissioner of revenue based on income brackets of not 66.34more than $100. The amount of tax for each bracket shall be computed at the rates set 67.1forth in this subdivision, provided that the commissioner may disregard a fractional part of 67.2a dollar unless it amounts to 50 cents or more, in which case it may be increased to $1.67.3    (e) An individual who is not a Minnesota resident for the entire year must compute 67.4the individual's Minnesota income tax as provided in this subdivision. After the 67.5application of the nonrefundable credits provided in this chapter, the tax liability must 67.6then be multiplied by a fraction in which:67.7    (1) the numerator is the individual's Minnesota source federal adjusted gross income 67.8as defined in section 62 of the Internal Revenue Code and increased by the additions 67.9required under section 
         290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), and (9), 67.10(11), and (12) and reduced by the Minnesota assignable portion of the subtraction for 67.11United States government interest under section 
         290.01, subdivision 19b, clause (1), 67.12and the subtractions under section 
         290.01, subdivision 19b, clauses (9), (10), (14), (15), 67.13and (16), after applying the allocation and assignability provisions of section 
         290.081, 67.14clause (a), or 
         290.17; and67.15    (2) the denominator is the individual's federal adjusted gross income as defined in 67.16section 62 of the Internal Revenue Code of 1986, increased by the amounts specified in 67.17section 
         290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), and (9), (11), and (12) and 67.18reduced by the amounts specified in section 
         290.01, subdivision 19b, clauses (1), (9), 67.19(10), (14), (15), and (16).67.20EFFECTIVE DATE.This section is effective for taxable years beginning after 67.21December 31, 2006.67.22    Sec. 7. Minnesota Statutes 2006, section 290.091, subdivision 2, is amended to read:67.23    Subd. 2. Definitions. For purposes of the tax imposed by this section, the following 67.24terms have the meanings given:67.25    (a) "Alternative minimum taxable income" means the sum of the following for 67.26the taxable year:67.27    (1) the taxpayer's federal alternative minimum taxable income as defined in section 67.2855(b)(2) of the Internal Revenue Code;67.29    (2) the taxpayer's itemized deductions allowed in computing federal alternative 67.30minimum taxable income, but excluding:67.31    (i) the charitable contribution deduction under section 170 of the Internal Revenue 67.32Code:67.33    (A) for taxable years beginning before January 1, 2006, to the extent that the 67.34deduction exceeds 1.0 percent of adjusted gross income;68.1    (B) for taxable years beginning after December 31, 2005, to the full extent of the 68.2deduction.68.3    For purposes of this clause, "adjusted gross income" has the meaning given in 68.4section 62 of the Internal Revenue Code;68.5    (ii) the medical expense deduction;68.6    (iii) the casualty, theft, and disaster loss deduction; and68.7    (iv) the impairment-related work expenses of a disabled person;68.8    (3) for depletion allowances computed under section 613A(c) of the Internal 68.9Revenue Code, with respect to each property (as defined in section 614 of the Internal 68.10Revenue Code), to the extent not included in federal alternative minimum taxable income, 68.11the excess of the deduction for depletion allowable under section 611 of the Internal 68.12Revenue Code for the taxable year over the adjusted basis of the property at the end of the 68.13taxable year (determined without regard to the depletion deduction for the taxable year);68.14    (4) to the extent not included in federal alternative minimum taxable income, the 68.15amount of the tax preference for intangible drilling cost under section 57(a)(2) of the 68.16Internal Revenue Code determined without regard to subparagraph (E);68.17    (5) to the extent not included in federal alternative minimum taxable income, the 68.18amount of interest income as provided by section 
         290.01, subdivision 19a, clause (1); and68.19    (6) the amount of addition required by section 
         290.01, subdivision 19a, clauses 68.20(7), (8), and to (9), (11), and (12);68.21    less the sum of the amounts determined under the following:68.22    (1) interest income as defined in section 
         290.01, subdivision 19b, clause (1);68.23    (2) an overpayment of state income tax as provided by section 
         290.01, subdivision 68.2419b
         , clause (2), to the extent included in federal alternative minimum taxable income;68.25    (3) the amount of investment interest paid or accrued within the taxable year on 68.26indebtedness to the extent that the amount does not exceed net investment income, as 68.27defined in section 163(d)(4) of the Internal Revenue Code. Interest does not include 68.28amounts deducted in computing federal adjusted gross income; and68.29    (4) amounts subtracted from federal taxable income as provided by section 
         290.01, 68.30subdivision 19b
         , clauses (9) to (16).68.31    In the case of an estate or trust, alternative minimum taxable income must be 68.32computed as provided in section 59(c) of the Internal Revenue Code.68.33    (b) "Investment interest" means investment interest as defined in section 163(d)(3) 68.34of the Internal Revenue Code.68.35    (c) "Tentative minimum tax" equals 6.4 percent of alternative minimum taxable 68.36income after subtracting the exemption amount determined under subdivision 3.69.1    (d) "Regular tax" means the tax that would be imposed under this chapter (without 69.2regard to this section and section 290.032), reduced by the sum of the nonrefundable 69.3credits allowed under this chapter.69.4    (e) "Net minimum tax" means the minimum tax imposed by this section.69.5EFFECTIVE DATE.This section is effective for taxable years beginning after 69.6December 31, 2006.69.7    Sec. 8. Minnesota Statutes 2007 Supplement, section 290A.03, subdivision 15, is 69.8amended to read:69.9    Subd. 15. Internal Revenue Code.For taxable years beginning before January 1, 69.102006, and after December 31, 2006, "Internal Revenue Code" means the Internal Revenue 69.11Code of 1986, as amended through May 18, 2006; and for taxable years beginning after 69.12December 31, 2005, and before January 1, 2007, "Internal Revenue Code" means the 69.13Internal Revenue Code of 1986, as amended through December 31, 2006 February 13, 69.142008.69.15EFFECTIVE DATE.This section is effective for property tax refunds based on 69.16property taxes payable on or after December 31, 2007, and rent paid on or after December 69.1731, 2006.69.18    Sec. 9. Minnesota Statutes 2006, section 291.005, subdivision 1, is amended to read:69.19    Subdivision 1. Scope. Unless the context otherwise clearly requires, the following 69.20terms used in this chapter shall have the following meanings:69.21    (1) "Federal gross estate" means the gross estate of a decedent as valued and 69.22otherwise determined for federal estate tax purposes by federal taxing authorities pursuant 69.23to the provisions of the Internal Revenue Code.69.24    (2) "Minnesota gross estate" means the federal gross estate of a decedent after (a) 69.25excluding therefrom any property included therein which has its situs outside Minnesota, 69.26and (b) including therein any property omitted from the federal gross estate which is 69.27includable therein, has its situs in Minnesota, and was not disclosed to federal taxing 69.28authorities.69.29    (3) "Personal representative" means the executor, administrator or other person 69.30appointed by the court to administer and dispose of the property of the decedent. If there 69.31is no executor, administrator or other person appointed, qualified, and acting within this 69.32state, then any person in actual or constructive possession of any property having a situs in 69.33this state which is included in the federal gross estate of the decedent shall be deemed 70.1to be a personal representative to the extent of the property and the Minnesota estate tax 70.2due with respect to the property.70.3    (4) "Resident decedent" means an individual whose domicile at the time of death 70.4was in Minnesota.70.5    (5) "Nonresident decedent" means an individual whose domicile at the time of 70.6death was not in Minnesota.70.7    (6) "Situs of property" means, with respect to real property, the state or country in 70.8which it is located; with respect to tangible personal property, the state or country in which 70.9it was normally kept or located at the time of the decedent's death; and with respect to 70.10intangible personal property, the state or country in which the decedent was domiciled 70.11at death.70.12    (7) "Commissioner" means the commissioner of revenue or any person to whom the 70.13commissioner has delegated functions under this chapter.70.14    (8) "Internal Revenue Code" means the United States Internal Revenue Code of 70.151986, as amended through May 18, 2006 February 13, 2008.70.16    (9) "Minnesota adjusted taxable estate" means federal adjusted taxable estate as 70.17defined by section 2011(b)(3) of the Internal Revenue Code, increased by the amount of 70.18deduction for state death taxes allowed under section 2058 of the Internal Revenue Code.70.19EFFECTIVE DATE.This section is effective the day following final enactment.70.20ARTICLE 570.21SALES AND USE TAX70.22    Section 1. Minnesota Statutes 2006, section 297A.668, is amended by adding a 70.23subdivision to read:70.24    Subd. 8.Manufactured and modular housing.(a) Notwithstanding other 70.25subdivisions of this section, a sale of a manufactured or modular home shall be sourced to 70.26the site where the housing is first set up or installed. 70.27    (b) For purposes of this section, "manufactured home" has the meaning given 70.28in section 327.31, subdivision 6. For purposes of this section, "modular home" means 70.29a building or structural unit that has been substantially manufactured or constructed, 70.30in whole or in part, at an off-site location, with the final assembly occurring on-site 70.31alone or with other units and attached to a permanent foundation site and occupied 70.32as a single-family dwelling. Modular home construction must comply with applicable 70.33standards adopted in Minnesota Rules authorized under chapter 16B. A modular home 71.1does not include a structure subject to the requirements of the National Manufactured 71.2Home Construction and Safety Standards Act of 1974 or a manufactured home.71.3EFFECTIVE DATE.This section is effective for sales and purchases made after 71.4June 30, 2008.71.5    Sec. 2. Laws 1980, chapter 511, section 1, subdivision 2, as amended by Laws 1991, 71.6chapter 291, article 8, section 22, and Laws 1998, chapter 389, article 8, section 25, and 71.7Laws 2003, First Special Session chapter 21, article 8, section 11, is amended to read:71.8    Subd. 2. Notwithstanding Minnesota Statutes, Section 
         477A.016, or any other law, 71.9ordinance, or city charter provision to the contrary, the city of Duluth may, by ordinance, 71.10impose an additional sales tax of up to one and one-half two and one-quarter percent on 71.11sales transactions which are described in Minnesota Statutes 2000, Section 
         297A.01, 71.12Subdivision 3, Clause (c). When the city council determines that the taxes imposed 71.13under this subdivision and under Laws 1998, chapter 389, article 8, section 26, at a rate 71.14of one-half of one percent have produced revenue sufficient to pay (1) the debt service 71.15on bonds in a principal amount of $8,000,000 issued for capital improvements to the 71.16Duluth Entertainment and Convention Center, and (2) debt service on outstanding bonds 71.17originally issued in the principal amount of $4,970,000 to finance capital improvements 71.18to the Great Lakes Aquarium since the imposition of the taxes at the rate of one and 71.19one-half percent, the rate of the tax under this subdivision is reduced to by one-half of71.20one percent. The imposition of this tax shall not be subject to voter referendum under 71.21either state law or city charter provisions. When the city council determines that the taxes 71.22imposed under this subdivision at a rate of three-quarters of one percent and other sources 71.23of revenue produce revenue sufficient to pay debt service on bonds in the principal amount 71.24of $40,285,000 plus issuance and discount costs, issued for capital improvements at the 71.25Duluth Entertainment and Convention Center, which include a new arena, the rate of tax 71.26under this subdivision must be reduced by three-quarters of one percent.71.27EFFECTIVE DATE.This section is effective the day after the governing body of 71.28the city of Duluth and its chief clerical officer comply with Minnesota Statutes, section 71.29645.021, subdivisions 2 and 3.71.30    Sec. 3. Laws 2005, First Special Session chapter 3, article 5, section 39, is amended to 71.31read:71.32    Sec. 39. CITY OF BEMIDJI.72.1    Subdivision 1. Sales and use tax authorized. Notwithstanding Minnesota Statutes, 72.2section 
         477A.016, or any other provision of law, ordinance, or city charter, pursuant to the 72.3approval of the city voters at the general election held on November 5, 2002, and at the 72.4general election held November 7, 2006, the city of Bemidji may impose by ordinance 72.5a sales and use tax of one-half of one percent for the purposes specified in subdivision 72.62. The provisions of Minnesota Statutes, section 
         297A.99, govern the imposition, 72.7administration, collection, and enforcement of the tax authorized under this subdivision.72.8    Subd. 2. Use of revenues. Revenues received from the tax authorized by 72.9subdivision 1 must be used for the cost of collecting and administering the tax and to pay 72.10for the projects listed in this subdivision:72.11    (1) To pay all or part of the capital or administrative costs of the acquisition, 72.12construction, and improvement of parks and trails within the city, as provided for in the 72.13city of Bemidji's parks, open space, and trail system plan, adopted by the Bemidji City 72.14Council on November 21, 2001. Authorized expenses include, but are not limited to, 72.15acquiring property, paying construction expenses related to the development of these 72.16facilities and improvements, and securing and paying debt service on bonds or other 72.17obligations issued to finance acquisition, construction, improvement, or development of 72.18parks and trails within the city of Bemidji.72.19    (2) To pay all or part of the city's share of costs, not to exceed $44,000,000, for 72.20acquisition, design, and construction of a regional event center, plus any associated 72.21bond costs. Authorized expenses include, but are not limited to, acquiring property, 72.22paying demolition and construction expenses, improving associated infrastructure, and 72.23purchasing furniture, fixtures, and equipment for the regional event center, and securing 72.24and paying debt service on bonds or other obligations issued to finance the regional event 72.25center project.72.26    Subd. 3. Bonds.(a) Pursuant to the approval of the city voters at the general 72.27election held on November 5, 2002, the city of Bemidji may issue, without an additional 72.28election, general obligation bonds of the city in an amount not to exceed $9,826,000 to 72.29pay capital and administrative expenses for the acquisition, construction, improvement, 72.30and development of parks and trails as specified in subdivision 2. The debt represented by 72.31the bonds must not be included in computing any debt limitations applicable to the city, 72.32and the levy of taxes required by Minnesota Statutes, section 
         475.61, to pay the principal 72.33of any interest on the bonds must not be subject to any levy limitations or be included in 72.34computing or applying any levy limitation applicable to the city.72.35    (b) Pursuant to the approval of the city voters at the general election held on 72.36November 7, 2006, the city of Bemidji may issue, without an additional election, general 73.1obligation bonds of the city in an amount not to exceed $44,000,000 to pay capital and 73.2administrative expenses for the construction of the regional event center specified in 73.3subdivision 2. The debt represented by the bonds must not be included in computing 73.4any debt limitations applicable to the city, and the levy of taxes required by Minnesota 73.5Statutes, section 475.61, to pay the principal of any interest on the bonds must not be 73.6subject to any levy limitations or be included in computing or applying any levy limitation 73.7applicable to the city.73.8    Subd. 4. Termination of tax. The tax imposed under subdivision 1 expires 73.9when the Bemidji City Council determines that the amount described in subdivision 3, 73.10paragraph (a), has been received from the tax to finance the capital and administrative 73.11costs for acquisition, construction, improvement, and development of parks and trails and 73.12to repay or retire at maturity the principal, interest, and premium due on any bonds issued 73.13for the park and trail improvements under subdivision 3, paragraph (a), plus the earlier of 73.14(1) 30 years after the tax extension to pay for the project in subdivision 2, clause (2), is 73.15first imposed, or (2) when the city council first determines that the additional revenues 73.16received from the extension of the tax equals or exceeds the amount authorized to be spent 73.17for the regional event center under subdivision 2, clause (2). Any funds remaining after 73.18completion of the park and trail improvements authorized projects and retirement or 73.19redemption of the bonds may be placed in the general fund of the city. The tax imposed 73.20under subdivision 1 may expire at an earlier time if the city so determines by ordinance.73.21EFFECTIVE DATE.This section is effective the day after compliance by the 73.22governing body of the city of Bemidji and its chief clerical officer with Minnesota 73.23Statutes, section 645.021, subdivisions 2 and 3.73.24ARTICLE 673.25JUNE ACCELERATED TAX PAYMENTS73.26    Section 1. Minnesota Statutes 2006, section 289A.20, subdivision 4, is amended to 73.27read:73.28    Subd. 4. Sales and use tax. (a) The taxes imposed by chapter 297A are due and 73.29payable to the commissioner monthly on or before the 20th day of the month following the 73.30month in which the taxable event occurred, or following another reporting period as the 73.31commissioner prescribes or as allowed under section 
         289A.18, subdivision 4, paragraph 73.32(f) or (g), except that use taxes due on an annual use tax return as provided under section 73.33289A.11, subdivision 1
         , are payable by April 15 following the close of the calendar year.74.1(b) A vendor having a liability of $120,000 or more during a fiscal year ending June 74.230 must remit the June liability for the next year in the following manner:74.3(1) Two business days before June 30 of the year, the vendor must remit 7880 74.4percent of the estimated June liability to the commissioner.74.5(2) On or before August 20 of the year, the vendor must pay any additional amount 74.6of tax not remitted in June.74.7(c) A vendor having a liability of:74.8(1) $20,000 or more in the fiscal year ending June 30, 2005; or74.9(2) $10,000 or more in the fiscal year ending June 30, 2006, and fiscal years 74.10thereafter,74.11must remit all liabilities on returns due for periods beginning in the subsequent calendar 74.12year by electronic means on or before the 20th day of the month following the month in 74.13which the taxable event occurred, or on or before the 20th day of the month following the 74.14month in which the sale is reported under section 
         289A.18, subdivision 4, except for 78 8074.15percent of the estimated June liability, which is due two business days before June 30. The 74.16remaining amount of the June liability is due on August 20.74.17EFFECTIVE DATE.This section is effective beginning with June 2009 tax 74.18liabilities.74.19    Sec. 2. Minnesota Statutes 2006, section 289A.60, subdivision 15, is amended to read:74.20    Subd. 15. Accelerated payment of June sales tax liability; penalty for 74.21underpayment. For payments made after December 31, 2006, if a vendor is required by 74.22law to submit an estimation of June sales tax liabilities and 7880 percent payment by a 74.23certain date, the vendor shall pay a penalty equal to ten percent of the amount of actual 74.24June liability required to be paid in June less the amount remitted in June. The penalty 74.25must not be imposed, however, if the amount remitted in June equals the lesser of 7880 74.26percent of the preceding May's liability or 7880 percent of the average monthly liability 74.27for the previous calendar year.74.28EFFECTIVE DATE.This section is effective beginning with June 2009 tax 74.29liabilities.74.30    Sec. 3. Minnesota Statutes 2006, section 297F.09, subdivision 10, is amended to read:74.31    Subd. 10. Accelerated tax payment; cigarette or tobacco products distributor.74.32A cigarette or tobacco products distributor having a liability of $120,000 or more during a 75.1fiscal year ending June 30, shall remit the June liability for the next year in the following 75.2manner:75.3(a) Two business days before June 30 of the year, the distributor shall remit the 75.4actual May liability and 7880 percent of the estimated June liability to the commissioner 75.5and file the return in the form and manner prescribed by the commissioner.75.6(b) On or before August 18 of the year, the distributor shall submit a return showing 75.7the actual June liability and pay any additional amount of tax not remitted in June. A 75.8penalty is imposed equal to ten percent of the amount of June liability required to be paid 75.9in June, less the amount remitted in June. However, the penalty is not imposed if the 75.10amount remitted in June equals the lesser of:75.11(1) 7880 percent of the actual June liability; or75.12(2) 7880 percent of the preceding May's liability.75.13EFFECTIVE DATE.This section is effective beginning with June 2009 tax 75.14liabilities.75.15    Sec. 4. Minnesota Statutes 2006, section 297G.09, subdivision 9, is amended to read:75.16    Subd. 9. Accelerated tax payment; penalty. A person liable for tax under this 75.17chapter having a liability of $120,000 or more during a fiscal year ending June 30, shall 75.18remit the June liability for the next year in the following manner:75.19(a) Two business days before June 30 of the year, the taxpayer shall remit the actual 75.20May liability and 7880 percent of the estimated June liability to the commissioner and file 75.21the return in the form and manner prescribed by the commissioner.75.22(b) On or before August 18 of the year, the taxpayer shall submit a return showing 75.23the actual June liability and pay any additional amount of tax not remitted in June. A 75.24penalty is imposed equal to ten percent of the amount of June liability required to be paid 75.25in June less the amount remitted in June. However, the penalty is not imposed if the 75.26amount remitted in June equals the lesser of:75.27(1) 7880 percent of the actual June liability; or75.28(2) 7880 percent of the preceding May liability.75.29EFFECTIVE DATE.This section is effective beginning with June 2009 tax 75.30liabilities.75.31ARTICLE 775.32SPECIAL TAXES75.33    Section 1. Minnesota Statutes 2006, section 291.215, subdivision 1, is amended to read:76.1    Subdivision 1. Determination. All property includable in the Minnesota gross estate 76.2of a decedent shall be valued in accordance with the provisions of sections 2031 or 2032 76.3and, if applicable, 2032A, of the Internal Revenue Code and any elections made in valuing 76.4the federal gross estate shall be applicable in valuing the Minnesota gross estate. Values 76.5for purposes of the estate tax on both probate and nonprobate assets shall be the same as 76.6those finally determined for purposes of the federal estate tax on a decedent's estate.76.7The value of all property includable in the Minnesota gross estate of a decedent may be 76.8independently determined under those sections for Minnesota estate tax purposes except:76.9(1) as otherwise provided in section 291.075; or76.10(2) if the Internal Revenue Service, after receiving the estate's federal estate tax 76.11return, either conducts a separate appraisal of an asset reported on the return or proposes 76.12a change in the reported valuation of an asset in the estate, in which case the federal 76.13final determination of the value controls.76.14EFFECTIVE DATE.This section is effective retroactively for estates of decedents 76.15dying after December 31, 2006.76.16    Sec. 2. Minnesota Statutes 2006, section 296A.18, subdivision 4, is amended to read:76.17    Subd. 4. All-terrain vehicle. Approximately 0.15 0.27 of one percent of all gasoline 76.18received in or produced or brought into this state, except gasoline used for aviation 76.19purposes, is being used for the operation of all-terrain vehicles in this state, and of the total 76.20revenue derived from the imposition of the gasoline fuel tax, 0.15 0.27 of one percent is 76.21the amount of tax on fuel used in all-terrain vehicles operated in this state.76.22EFFECTIVE DATE.This section is effective for revenue received after June 76.2330, 2008.76.24    Sec. 3. Minnesota Statutes 2006, section 297F.21, subdivision 3, is amended to read:76.25    Subd. 3. Inventory; judicial determination; appeal; disposition of seized 76.26property. (a) Within ten days after the seizure of any alleged contraband, the person 76.27making the seizure shall serve by certified mail an inventory of the property seized on the 76.28person from whom the seizure was made, if known, and on any person known or believed 76.29to have any right, title, interest, or lien in the property, at the last known address, and file 76.30a copy with the commissioner. The notice must include an explanation of the right to 76.31demand a judicial forfeiture determination.76.32    (b) Within 60 days after the date of service of the inventory, which is the date of 76.33mailing, the person from whom the property was seized or any person claiming an interest 77.1in the property may file a demand for a judicial determination of the question as to whether 77.2the property was lawfully subject to seizure and forfeiture. The demand must be in the 77.3form of a civil complaint and must be filed with the court administrator in the county in 77.4which the seizure occurred, together with proof of service of a copy of the complaint 77.5on the commissioner of revenue, and the standard filing fee for civil actions unless the 77.6petitioner has the right to sue in forma pauperis under section 
         563.01. If the value of the 77.7seized property is $7,500 or less, the claimant may file an action in conciliation court for 77.8recovery of the property. If the value of the seized property is less than $500, the claimant 77.9does not have to pay the conciliation court filing fee. 77.10    (c) The complaint must be captioned in the name of the claimant as plaintiff and 77.11the seized property as defendant, and must state with specificity the grounds on which 77.12the claimant alleges the property was improperly seized and the plaintiff's interest in the 77.13property seized. No responsive pleading is required of the commissioner, and no court 77.14fees may be charged for the commissioner's appearance in the matter. The proceedings 77.15are governed by the Rules of Civil Procedure. Notwithstanding any law to the contrary, 77.16an action for the return of property seized under this section may not be maintained by 77.17or on behalf of any person who has been served with an inventory unless the person has 77.18complied with this subdivision. The court shall decide whether the alleged contraband is 77.19contraband, as defined in subdivision 1. The court shall hear the action without a jury and 77.20shall try and determine the issues of fact and law involved.77.21    (d) When a judgment of forfeiture is entered, the commissioner may, unless the 77.22judgment is stayed pending an appeal, either the commissioner:77.23    (1) deliver the forfeited cigarette packages or tobacco products to the commissioner 77.24of human services for use by patients in state institutions may authorize the forfeited 77.25property to be used for the purpose of enforcing a criminal provision of state or federal law;77.26    (2) shall cause the property in clause (1) forfeited cigarette packages or tobacco 77.27products not used under clause (1) to be destroyed; or and products used under clause (1) 77.28to be destroyed upon the completion of use; and77.29    (3) may cause the forfeited property, other than forfeited cigarette packages or 77.30tobacco products, to be sold at public auction as provided by law.77.31The person making a sale, after deducting the expense of keeping the property, the fee 77.32for seizure, and the costs of the sale, shall pay all liens according to their priority, which 77.33are established as being bona fide and as existing without the lienor having any notice 77.34or knowledge that the property was being used or was intended to be used for or in 77.35connection with the violation. The balance of the proceeds must be paid 75 percent to the 77.36Department of Revenue for deposit as a supplement to its operating fund or similar fund 78.1for official use, and 25 percent to the county attorney or other prosecuting agency that 78.2handled the court proceeding, if there is one, for deposit as a supplement to its operating 78.3fund or similar fund for prosecutorial purposes. If there is no prosecuting authority 78.4involved in the forfeiture, the 25 percent of the proceeds otherwise designated for the 78.5prosecuting authority must be deposited into the general fund.78.6    (e) If no demand for judicial determination is made, the property seized is considered 78.7forfeited to the state by operation of law and may be disposed of by the commissioner as 78.8provided in the case of a judgment of forfeiture.78.9EFFECTIVE DATE.This section is effective the day following final enactment.78.10    Sec. 4. Minnesota Statutes 2006, section 297I.15, is amended by adding a subdivision 78.11to read:78.12    Subd. 11.Premiums paid to certain foreign insurance companies.With respect 78.13to the state employees group insurance program established under sections 43A.23 to 78.1443A.31, premiums paid for life insurance and accidental death and dismemberment 78.15insurance for eligible employees and dependents, including premiums paid by employees 78.16or dependents for optional coverage, are exempt from the taxes imposed under this chapter 78.17to the extent the premiums are paid to a foreign insurance company domiciled in a state 78.18that exempts its state employee group life insurance program from premium taxes.78.19EFFECTIVE DATE.This section is effective for premiums paid after December 78.2031, 2007.78.21    Sec. 5. Laws 2003, chapter 128, article 1, section 172, as amended by Laws 2005, First 78.22Special Session chapter 1, article 4, section 118, is amended to read:78.23    Sec. 172. TEMPORARY PETROFUND FEE EXEMPTION FOR 78.24MINNESOTA COMMERCIAL AIRLINES.78.25    (a) A commercial airline providing regularly scheduled jet service and with its 78.26corporate headquarters in Minnesota is exempt from the fee established in Minnesota 78.27Statutes, section 
         115C.08, subdivision 3, until July 1, 2007 2009, provided the airline 78.28develops a plan approved by the commissioner of commerce demonstrating that the 78.29savings from this exemption will go towards minimizing job losses in Minnesota, and to 78.30support the airline's efforts to avoid filing for resolve federal bankruptcy protections78.31proceedings.78.32    (b) A commercial airline exempted from the fee is ineligible to receive 78.33reimbursement under Minnesota Statutes, chapter 115C, until July 1, 2007 2009. A 79.1commercial airline that has a release during the fee exemption period is ineligible to 79.2receive reimbursement under Minnesota Statutes, chapter 115C, for the costs incurred in 79.3response to that release.79.4EFFECTIVE DATE.This section is effective the day following final enactment.79.5ARTICLE 879.6MINERALS79.7    Section 1. Minnesota Statutes 2006, section 276A.01, subdivision 3, is amended to 79.8read:79.9    Subd. 3. Commercial-industrial property. "Commercial-industrial property" 79.10means the following categories of property, as defined in section 
         273.13, excluding that 79.11portion of the property (i) that may, by law, constitute the tax base for a tax increment 79.12pledged pursuant to section 
         469.042 or 
         469.162 or sections 
         469.174 to 
         469.178, 79.13certification of which was requested prior to May 1, 1996, to the extent and while the tax 79.14increment is so pledged; or (ii) that is exempt from taxation under section 
         272.02: 79.15    (1) that portion of class 5 property consisting of unmined iron ore and low-grade 79.16iron-bearing formations as defined in section 
         273.14, tools, implements, and machinery, 79.17except the portion of high voltage transmission lines, the value of which is deducted from 79.18net tax capacity under section 
         273.425; and 79.19    (2) that portion of class 3 and class 5 property which is either used or zoned for 79.20use for any commercial or industrial purpose, including property that becomes taxable 79.21under section 298.25, except for such property which is, or, in the case of property under 79.22construction, will when completed be used exclusively for residential occupancy and 79.23the provision of services to residential occupants thereof. Property must be considered 79.24as used exclusively for residential occupancy only if each of not less than 80 percent 79.25of its occupied residential units is, or, in the case of property under construction, will 79.26when completed be occupied under an oral or written agreement for occupancy over a 79.27continuous period of not less than 30 days.79.28    If the classification of property prescribed by section 
         273.13 is modified by 79.29legislative amendment, the references in this subdivision are to the successor class or 79.30classes of property, or portions thereof, that include the kinds of property designated 79.31in this subdivision. 79.32EFFECTIVE DATE.This section is effective for the 2008 assessment and 79.33thereafter.80.1    Sec. 2. Minnesota Statutes 2006, section 276A.04, is amended to read:80.2276A.04 INCREASE IN NET TAX CAPACITY.80.3    By July 15 of 1997 and each subsequent year, the auditor of each county in the 80.4area shall determine the amount, if any, by which the net tax capacity determined in 80.5the preceding year pursuant to section 
         276A.03, of commercial-industrial property 80.6subject to taxation within each municipality in the county exceeds the net tax capacity 80.7in 1995 of commercial-industrial property subject to taxation within that municipality, 80.8including the total net tax capacity of property that becomes taxable under section 298.25. 80.9If a municipality is located in two or more counties within the area, the auditors of 80.10those counties shall certify the data required by section 
         276A.03 to the county auditor 80.11responsible for allocating the levies of that municipality between or among the affected 80.12counties. That county auditor shall determine the amount of the net excess, if any, for the 80.13municipality under this section, and certify that amount under section 
         276A.05. The 80.14increase in total net tax capacity determined by this section must be reduced by the amount 80.15of any decreases in the net tax capacity of commercial-industrial property resulting from 80.16any court decisions, court-related stipulation agreements, or abatements for a prior year, 80.17and only in the amount of such decreases made during the 12-month period ending on 80.18May 1 of the current assessment year, where the decreases, if originally reflected in the 80.19determination of a prior year's net tax capacity under section 
         276A.03, would have 80.20resulted in a smaller contribution from the municipality in that year. An adjustment for the 80.21decreases shall be made only if the municipality made a contribution in a prior year based 80.22on the higher net tax capacity of the commercial-industrial property. 80.23EFFECTIVE DATE.This section is effective for the 2008 assessment and 80.24thereafter.80.25    Sec. 3. Minnesota Statutes 2006, section 298.22, is amended by adding a subdivision 80.26to read:80.27    Subd. 5a.Forest trust.The commissioner, upon the affirmative vote of a majority 80.28of the members of the board, may purchase forest lands in the taconite assistance area 80.29defined in under section 273.1341 with funds specifically authorized for the purchase. The 80.30acquired forest lands must be held in trust for the benefit of the citizens of the taconite 80.31assistance area as the Iron Range Miners' Memorial Forest. The forest trust lands shall be 80.32managed and developed for recreation and economic development purposes. Proceeds 80.33derived from the management of the lands and from the sale of timber or removal of 80.34gravel or other minerals from these forest lands shall be deposited into an Iron Range 81.1Miners' Memorial Forest account that is established within the state financial accounts. 81.2Funds may be expended from the account upon approval of a majority of the members of 81.3the board to purchase, manage, administer, convey interests in, and improve the forest 81.4lands. By majority vote of the members of the board, money in the Iron Range Miners' 81.5Memorial Forest account may be transferred into the corpus of the Douglas J. Johnson 81.6economic protection trust fund established under sections 298.291 to 298.294. The 81.7property acquired under the authority granted by this subdivision and income derived from 81.8the property or the operation or management of the property are exempt from taxation 81.9by the state or its political subdivisions.81.10EFFECTIVE DATE.This section is effective the day following final enactment.81.11    Sec. 4. Minnesota Statutes 2006, section 298.2214, subdivision 2, is amended to read:81.12    Subd. 2. Iron Range Higher Education Committee; membership. The members 81.13of the committee shall consist of:81.14    (1) one member appointed by the governor;81.15    (2) one member appointed by the president of the University of Minnesota;81.16    (3) two four members appointed by the commissioner of the Iron Range Resources 81.17and Rehabilitation Board appointed by the chair; and81.18    (4) the commissioner of Iron Range resources and rehabilitation; and81.19    (5) the president of the Northeast Higher Education District or its successor.81.20    Sec. 5. Minnesota Statutes 2006, section 298.24, subdivision 1, is amended to read:81.21    Subdivision 1. Imposed; calculation. (a) For concentrate produced in 2001, 2002, 81.22and 2003, there is imposed upon taconite and iron sulphides, and upon the mining and 81.23quarrying thereof, and upon the production of iron ore concentrate therefrom, and upon 81.24the concentrate so produced, a tax of $2.103 per gross ton of merchantable iron ore 81.25concentrate produced therefrom. For concentrates produced in 2005, the tax rate is the 81.26same rate imposed for concentrates produced in 2004.81.27    (b) For concentrates produced in 2006 and subsequent years, the tax rate shall be 81.28equal to the preceding year's tax rate plus an amount equal to the preceding year's tax rate 81.29multiplied by the percentage increase in the implicit price deflator from the fourth quarter 81.30of the second preceding year to the fourth quarter of the preceding year. "Implicit price 81.31deflator" means the implicit price deflator for the gross domestic product prepared by the 81.32Bureau of Economic Analysis of the United States Department of Commerce.81.33    (c) On concentrates produced in 1997 and thereafter, an additional tax is imposed 81.34equal to three cents per gross ton of merchantable iron ore concentrate for each one 82.1percent that the iron content of the product exceeds 72 percent, when dried at 212 degrees 82.2Fahrenheit.82.3    (d) The tax shall be imposed on the average of the production for the current year 82.4and the previous two years. The rate of the tax imposed will be the current year's tax rate. 82.5This clause shall not apply in the case of the closing of a taconite facility if the property 82.6taxes on the facility would be higher if this clause and section 
         298.25 were not applicable.82.7    (e) If the tax or any part of the tax imposed by this subdivision is held to be 82.8unconstitutional, a tax of $2.103 per gross ton of merchantable iron ore concentrate 82.9produced shall be imposed.82.10    (f) Consistent with the intent of this subdivision to impose a tax based upon the 82.11weight of merchantable iron ore concentrate, the commissioner of revenue may indirectly 82.12determine the weight of merchantable iron ore concentrate included in fluxed pellets by 82.13subtracting the weight of the limestone, dolomite, or olivine derivatives or other basic 82.14flux additives included in the pellets from the weight of the pellets. For purposes of this 82.15paragraph, "fluxed pellets" are pellets produced in a process in which limestone, dolomite, 82.16olivine, or other basic flux additives are combined with merchantable iron ore concentrate. 82.17No subtraction from the weight of the pellets shall be allowed for binders, mineral and 82.18chemical additives other than basic flux additives, or moisture.82.19    (g)(1) Notwithstanding any other provision of this subdivision, for the first two years 82.20of a plant's commercial production of direct reduced ore, no tax is imposed under this 82.21section. As used in this paragraph, "commercial production" is production of more than 82.2250,000 tons of direct reduced ore in the current year or in any prior year, "noncommercial 82.23production" is production of 50,000 tons or less of direct reduced ore in any year, and 82.24"direct reduced ore" is ore that results in a product that has an iron content of at least 75 82.25percent. For the third year of a plant's commercial production of direct reduced ore, the 82.26rate to be applied to direct reduced ore is 25 percent of the rate otherwise determined 82.27under this subdivision. For the fourth commercial production year, the rate is 50 percent of 82.28the rate otherwise determined under this subdivision; for the fifth commercial production 82.29year, the rate is 75 percent of the rate otherwise determined under this subdivision; and for 82.30all subsequent commercial production years, the full rate is imposed.82.31    (2) Subject to clause (1), production of direct reduced ore in this state is subject to 82.32the tax imposed by this section, but if that production is not produced by a producer 82.33of taconite or iron sulfides, the production of taconite or iron sulfides consumed in the 82.34production of direct reduced iron in this state is not subject to the tax imposed by this 82.35section on taconite or iron sulfides.83.1    (3) Notwithstanding any other provision of this subdivision, no tax is imposed 83.2on direct reduced ore under this section during the facility's noncommercial production 83.3of direct reduced ore. The taconite or iron sulphides consumed in the noncommercial 83.4production of direct reduced ore is subject to the tax imposed by this section on taconite 83.5and iron sulphides. Three-year average production of direct reduced ore does not 83.6include production of direct reduced ore in any noncommercial year. Three-year average 83.7production for a direct reduced ore facility that has noncommercial production is the 83.8average of the commercial production of direct reduced ore for the current year and the 83.9previous two commercial years.83.10    (4) This paragraph applies only to plants for which all environmental permits have 83.11been obtained and construction has begun before July 1, 2008.83.12EFFECTIVE DATE.This section is effective the day following final enactment.83.13    Sec. 6. Minnesota Statutes 2006, section 298.25, is amended to read:83.14298.25 TAXES ADDITIONAL TO OCCUPATION TAX; IN LIEU OF OTHER 83.15TAXES.83.16    The taxes imposed under section 
         298.24 shall be in addition to the occupation tax 83.17imposed upon the business of mining and producing iron ore. Except as herein otherwise 83.18provided, such taxes shall be in lieu of all other taxes upon such taconite, iron sulphides, 83.19and direct reduced ore or the lands in which they are contained, or upon the mining or 83.20quarrying thereof, or the production of concentrate or direct reduced ore therefrom, or 83.21upon the concentrate or direct reduced ore produced, or upon the machinery, equipment, 83.22tools, supplies and buildings used in such mining, quarrying or production, or upon the 83.23lands occupied by, or used in connection with, such mining, quarrying or production 83.24facilities. If electric or steam power for the mining, transportation or concentration of 83.25such taconite, concentrates or direct reduced ore produced therefrom is generated in 83.26plants principally devoted to the generation of power for such purposes, the plants in 83.27which such power is generated and all machinery, equipment, tools, supplies, transmission 83.28and distribution lines used in the generation and distribution of such power, shall not be 83.29considered to be machinery, equipment, tools, supplies and buildings used in the mining, 83.30quarrying, or production of taconite, taconite concentrates or direct reduced ore within 83.31the meaning of this section, and shall be subject to general property taxation. If part 83.32of the power generated in such a plant is used for purposes other than the mining or 83.33concentration of taconite or direct reduced ore or the transportation or loading of taconite, 83.34the concentrates thereof or direct reduced ore, a proportionate share of the value of such 84.1generating facilities, equal to the proportion that the power used for such other purpose 84.2bears to the generating capacity of the plant, shall be subject to the general property tax 84.3in the same manner as other property; provided, power generated in such a plant and 84.4exchanged for an equivalent amount of power which is used for the mining, transportation, 84.5or concentration of such taconite, concentrates or direct reduced ore produced therefrom, 84.6shall be considered as used for such purposes within the meaning of this section. Nothing 84.7herein shall prevent the assessment and taxation of the surface of reserve land containing 84.8taconite and not occupied by such facilities or used in connection therewith at the value 84.9thereof without regard to the taconite or iron sulphides therein, nor the assessment and 84.10taxation of merchantable iron ore or other minerals, or iron-bearing materials other than 84.11taconite or iron sulphides in such lands in the manner provided by law, nor the assessment 84.12and taxation of facilities used in producing sulphur or sulphur products from iron sulphide 84.13concentrates, or in refining such sulphur products, under the general property tax laws. 84.14Nothing herein shall except from general taxation or from taxation as provided by other 84.15laws any property used for residential or townsite purposes, including utility services 84.16thereto. This section does not provide an exemption from general property taxation for ore 84.17docks even if located at the site of a taconite production facility.84.18EFFECTIVE DATE.This section is effective for taxes levied in 2008, payable 84.19in 2009, and thereafter.84.20    Sec. 7. Minnesota Statutes 2006, section 298.28, subdivision 4, is amended to read:84.21    Subd. 4. School districts. (a) 
         17.15 23.15 cents per taxable ton, plus the increase 84.22provided in paragraph (d) must be allocated to qualifying school districts to be distributed, 84.23based upon the certification of the commissioner of revenue, under paragraphs (b) and,84.24(c), except as otherwise provided in paragraphand (f). 84.25    (b) 
         (i) 3.43 cents per taxable ton must be distributed to the school districts in which 84.26the lands from which taconite was mined or quarried were located or within which the 84.27concentrate was produced. The distribution must be based on the apportionment formula 84.28prescribed in subdivision 2. 84.29    (ii) Four cents per taxable ton from each taconite facility must be distributed to 84.30each affected school district for deposit in a fund dedicated to building maintenance 84.31and repairs, as follows:84.32    (1) proceeds from Keewatin Taconite or its successor are distributed to Independent 84.33School Districts Nos. 316, Coleraine, and 319, Nashwauk-Keewatin, or their successor 84.34districts;85.1    (2) proceeds from the Hibbing Taconite Company or its successor are distributed to 85.2Independent School Districts Nos. 695, Chisholm, and 701, Hibbing, or their successor 85.3districts;85.4    (3) proceeds from the Mittal Steel Company and Minntac or their successors are 85.5distributed to Independent School Districts Nos. 712, Mountain Iron-Buhl, 706, Virginia, 85.62711, Mesabi East, and 2154, Eveleth-Gilbert, or their successor districts; 85.7    (4) proceeds from the Northshore Mining Company or its successor are distributed 85.8to Independent School Districts Nos. 2142, St. Louis County, and 381, Lake Superior, 85.9or their successor districts; and85.10    (5) proceeds from United Taconite or its successor are distributed to Independent 85.11School Districts Nos. 2142, St. Louis County, and 2154, Eveleth-Gilbert, or their 85.12successor districts.85.13    Revenues that are required to be distributed to more than one district shall be 85.14apportioned according to the number of pupil units identified in section 126C.05, 85.15subdivision 1, enrolled in the second previous year.85.16    (c)(i) 
         13.7215.72 cents per taxable ton, less any amount distributed under paragraph 85.17(e), shall be distributed to a group of school districts comprised of those school districts 85.18which qualify as a tax relief area under section 
         273.134, paragraph (b), or in which there is 85.19a qualifying municipality as defined by section 
         273.134, paragraph (a), in direct proportion 85.20to school district indexes as follows: for each school district, its pupil units determined 85.21under section 
         126C.05 for the prior school year shall be multiplied by the ratio of the 85.22average adjusted net tax capacity per pupil unit for school districts receiving aid under 85.23this clause as calculated pursuant to chapters 122A, 126C, and 127A for the school year 85.24ending prior to distribution to the adjusted net tax capacity per pupil unit of the district. 85.25Each district shall receive that portion of the distribution which its index bears to the sum 85.26of the indices for all school districts that receive the distributions. 85.27    (ii) Notwithstanding clause (i), each school district that receives a distribution 85.28under sections 
         298.018; 
         298.23 to 
         298.28, exclusive of any amount received under this 85.29clause; 
         298.34 to 
         298.39; 
         298.391 to 
         298.396; 
         298.405; or any law imposing a tax on 85.30severed mineral values after reduction for any portion distributed to cities and towns under 85.31section 
         126C.48, subdivision 8, paragraph (5), that is less than the amount of its levy 85.32reduction under section 
         126C.48, subdivision 8, for the second year prior to the year of the 85.33distribution shall receive a distribution equal to the difference; the amount necessary to 85.34make this payment shall be derived from proportionate reductions in the initial distribution 85.35to other school districts under clause (i). 86.1    (d) Any school district described in paragraph (c) where a levy increase pursuant to 86.2section 
         126C.17, subdivision 9, was authorized by referendum for taxes payable in 2001, 86.3shall receive a distribution of 21.3 cents per ton. Each district shall receive $175 times the 86.4pupil units identified in section 
         126C.05, subdivision 1, enrolled in the second previous 86.5year or the 1983-1984 school year, whichever is greater, less the product of 1.8 percent 86.6times the district's taxable net tax capacity in the second previous year. 86.7    If the total amount provided by paragraph (d) is insufficient to make the payments 86.8herein required then the entitlement of $175 per pupil unit shall be reduced uniformly 86.9so as not to exceed the funds available. Any amounts received by a qualifying school 86.10district in any fiscal year pursuant to paragraph (d) shall not be applied to reduce general 86.11education aid which the district receives pursuant to section 
         126C.13 or the permissible 86.12levies of the district. Any amount remaining after the payments provided in this paragraph 86.13shall be paid to the commissioner of Iron Range resources and rehabilitation who shall 86.14deposit the same in the taconite environmental protection fund and the Douglas J. Johnson 86.15economic protection trust fund as provided in subdivision 11. 86.16    Each district receiving money according to this paragraph shall reserve the lesser of 86.17the amount received under this paragraph or $25 times the number of pupil units served 86.18in the district. It may use the money for early childhood programs or for outcome-based 86.19learning programs that enhance the academic quality of the district's curriculum. The 86.20outcome-based learning programs must be approved by the commissioner of education.86.21    (e) There shall be distributed to any school district the amount which the school 86.22district was entitled to receive under section 
         298.32 in 1975. 86.23    (f) Effective for the distribution in 2003 only, five percent of the distributions to 86.24school districts under paragraphs (b), (c), and (e); subdivision 6, paragraph (c); subdivision 86.2511; and section 298.225, shall be distributed to the general fund. The remainder less any 86.26portion distributed to cities and towns under section 126C.48, subdivision 8, paragraph 86.27(5), shall be distributed to the Douglas J. Johnson economic protection trust fund created 86.28in section 298.292. Fifty percent of the amount distributed to the Douglas J. Johnson 86.29economic protection trust fund shall be made available for expenditure under section 86.30298.293 as governed by section 298.296. Effective in 2003 only, 100 percent of the 86.31distributions to school districts under section 477A.15 less any portion distributed to cities 86.32and towns under section 126C.48, subdivision 8, paragraph (5), shall be distributed to the 86.33general fund. Four cents per taxable ton must be distributed to qualifying school districts 86.34according to the distribution specified in paragraph (b), clause (ii), and two cents per 86.35taxable ton must be distributed according to the distribution specified in paragraph (c). 86.36These amounts are not subject to section 126C.48, subdivision 8.87.1EFFECTIVE DATE.This section is effective for distributions in 2009 and 87.2thereafter.87.3    Sec. 8. Minnesota Statutes 2006, section 298.28, subdivision 5, is amended to read:87.4    Subd. 5. Counties. (a) 
         26.05 cents per taxable ton is allocated to counties to be 87.5distributed, based upon certification by the commissioner of revenue, under paragraphs 87.6(b) to (d). 87.7    (b) 
         20.525 15.525 cents per taxable ton shall be distributed to the county in which 87.8the taconite is mined or quarried or in which the concentrate is produced, less any 87.9amount which is to be distributed pursuant to paragraph (c). The apportionment formula 87.10prescribed in subdivision 2 is the basis for the distribution. 87.11    (c) If an electric power plant owned by and providing the primary source of power 87.12for a taxpayer mining and concentrating taconite is located in a county other than the 87.13county in which the mining and the concentrating processes are conducted, one cent per 87.14taxable ton of the tax distributed to the counties pursuant to paragraph (b) and imposed 87.15on and collected from such taxpayer shall be paid to the county in which the power plant 87.16is located.87.17    (d) 5.525 10.525 cents per taxable ton shall be paid to the county from which the 87.18taconite was mined, quarried or concentrated to be deposited in the county road and 87.19bridge fund. If the mining, quarrying and concentrating, or separate steps in any of those 87.20processes are carried on in more than one county, the commissioner shall follow the 87.21apportionment formula prescribed in subdivision 2. 87.22EFFECTIVE DATE.This section is effective for distributions in 2009 and 87.23thereafter.87.24    Sec. 9. Minnesota Statutes 2006, section 298.28, is amended by adding a subdivision 87.25to read:87.26    Subd. 9d.Iron Range higher education account.Two cents per taxable ton must 87.27be allocated to the Iron Range Resources and Rehabilitation Board to be deposited in 87.28an Iron Range higher education account that is hereby created, to be used for higher 87.29education programs conducted at educational institutions in the taconite assistance area 87.30defined in section 273.1341. The Iron Range Higher Education committee under section 87.31298.2214 and the Iron Range Resources and Rehabilitation Board must approve all 87.32expenditures from the account.88.1EFFECTIVE DATE.This section is effective for production in 2007, distributions 88.2in 2008, and thereafter.88.3    Sec. 10. Minnesota Statutes 2006, section 298.282, subdivision 1, is amended to read:88.4    Subdivision 1. Distribution of taconite municipal aid account. The amount 88.5deposited with the county as provided in section 
         298.28, subdivision 3, must be distributed 88.6as provided by this section among: (1) the municipalities comprising a tax relief area 88.7under section 
         273.134, paragraph (b),; (2) a township that contains a state park consisting 88.8primarily of an underground iron ore mine; and (3) a city located within five miles of that 88.9state park, each being referred to in this section as a qualifying municipality. 88.10EFFECTIVE DATE.This section is effective for distributions in 2008 and 88.11thereafter.88.12    Sec. 11. Minnesota Statutes 2006, section 298.292, subdivision 2, is amended to read:88.13    Subd. 2. Use of money. Money in the Douglas J. Johnson economic protection trust 88.14fund may be used for the following purposes:88.15    (1) to provide loans, loan guarantees, interest buy-downs and other forms of 88.16participation with private sources of financing, but a loan to a private enterprise shall be 88.17for a principal amount not to exceed one-half of the cost of the project for which financing 88.18is sought, and the rate of interest on a loan to a private enterprise shall be no less than the 88.19lesser of eight percent or an interest rate three percentage points less than a full faith 88.20and credit obligation of the United States government of comparable maturity, at the 88.21time that the loan is approved;88.22    (2) to fund reserve accounts established to secure the payment when due of the 88.23principal of and interest on bonds issued pursuant to section 
         298.2211; 88.24    (3) to pay in periodic payments or in a lump sum payment any or all of the interest 88.25on bonds issued pursuant to chapter 474 for the purpose of constructing, converting, 88.26or retrofitting heating facilities in connection with district heating systems or systems 88.27utilizing alternative energy sources; and88.28    (4) to invest in a venture capital fund or enterprise that will provide capital to other 88.29entities that are engaging in, or that will engage in, projects or programs that have the 88.30purposes set forth in subdivision 1. No investments may be made in a venture capital fund 88.31or enterprise unless at least two other unrelated investors make investments of at least 88.32$500,000 in the venture capital fund or enterprise, and the investment by the Douglas 88.33J. Johnson economic protection trust fund may not exceed the amount of the largest 88.34investment by an unrelated investor in the venture capital fund or enterprise. For purposes 89.1of this subdivision, an "unrelated investor" is a person or entity that is not related to 89.2the entity in which the investment is made or to any individual who owns more than 40 89.3percent of the value of the entity, in any of the following relationships: spouse, parent, 89.4child, sibling, employee, or owner of an interest in the entity that exceeds ten percent of 89.5the value of all interests in it. For purposes of determining the limitations under this 89.6clause, the amount of investments made by an investor other than the Douglas J. Johnson 89.7economic protection trust fund is the sum of all investments made in the venture capital 89.8fund or enterprise during the period beginning one year before the date of the investment 89.9by the Douglas J. Johnson economic protection trust fund; and89.10    (5) to purchase forest land in the taconite assistance area defined in section 273.1341 89.11to be held and managed as a public trust for the benefit of the area for the purposes 89.12authorized in section 298.22, subdivision 5a.89.13    Money from the trust fund shall be expended only in or for the benefit of the taconite 89.14assistance area defined in section 
         273.1341. 89.15EFFECTIVE DATE.This section is effective the day following final enactment.89.16    Sec. 12. Minnesota Statutes 2006, section 298.296, subdivision 2, is amended to read:89.17    Subd. 2. Expenditure of funds. (a) Before January 1, 2028, funds may be expended 89.18on projects and for administration of the trust fund only from the net interest, earnings, 89.19and dividends arising from the investment of the trust at any time, including net interest, 89.20earnings, and dividends that have arisen prior to July 13, 1982, plus $10,000,000 made 89.21available for use in fiscal year 1983, except that any amount required to be paid out of the 89.22trust fund to provide the property tax relief specified in Laws 1977, chapter 423, article 89.23X, section 4, and to make school bond payments and payments to recipients of taconite 89.24production tax proceeds pursuant to section 
         298.225, may be taken from the corpus of 89.25the trust. 89.26    (b) Additionally, upon recommendation by the board, up to $13,000,000 from the 89.27corpus of the trust may be made available for use as provided in subdivision 4, and up to 89.28$10,000,000 from the corpus of the trust may be made available for use as provided in 89.29section 
         298.2961. 89.30    (c) Additionally, an amount equal to 20 percent of the value of the corpus of the trust 89.31on May 18, 2002, not including the funds authorized in paragraph (b), plus the amounts 89.32made available under section 
         298.28, subdivision 4, and Laws 2002, chapter 377, article 89.338, section 17, may be expended on projects. Funds may be expended for projects under 89.34this paragraph only if the project: 90.1    (1) is for the purposes established under section 
         298.292, subdivision 1, clause 90.2(1) or (2); and 90.3    (2) is approved by the board upon an affirmative vote of at least ten of its members.90.4No money made available under this paragraph or paragraph (d) can be used for 90.5administrative or operating expenses of the Iron Range Resources and Rehabilitation 90.6Board or expenses relating to any facilities owned or operated by the board on May 18, 90.72002.90.8    (d) Upon recommendation by a unanimous vote of all members of the board, 90.9amounts in addition to those authorized under paragraphs (a), (b), and (c) may be 90.10expended on projects described in section 
         298.292, subdivision 1. 90.11    (e) Annual administrative costs, not including detailed engineering expenses for the 90.12projects, shall not exceed five percent of the net interest, dividends, and earnings arising 90.13from the trust in the preceding fiscal year.90.14    (f) Principal and interest received in repayment of loans made pursuant to this 90.15section, and earnings on other investments made under section 
         298.292, subdivision 2, 90.16clause (4), shall be deposited in the state treasury and credited to the trust. These receipts 90.17are appropriated to the board for the purposes of sections 
         298.291 to 
         298.298. 90.18    (g) Additionally, notwithstanding section 298.293, upon affirmative vote of a 90.19majority of the members of the board, money from the corpus of the trust may be expanded 90.20to purchase forest lands within the taconite assistance area as provided in sections 298.22, 90.21subdivision 5a, and 298.292, subdivision 2, clause (5).90.22EFFECTIVE DATE.This section is effective the day following final enactment.90.23    Sec. 13. Minnesota Statutes 2006, section 298.2961, subdivision 4, is amended to read:90.24    Subd. 4. Grant and loan fund. (a) A fund is established to receive distributions 90.25under section 
         298.28, subdivision 9b, and to make grants or loans as provided in this 90.26subdivision. Any grant or loan made under this subdivision must be approved by 90.27a majority of the members of the Iron Range Resources and Rehabilitation Board, 90.28established under section 
         298.22.90.29    (b) Distributions received in calendar year 2005 are allocated to the city of Virginia 90.30for improvements and repairs to the city's steam heating system.90.31    (c) Distributions received in calendar year 2006 are allocated to a project of the 90.32public utilities commissions of the cities of Hibbing and Virginia to convert their electrical 90.33generating plants to the use of biomass products, such as wood.91.1    (d) Distributions received in calendar year 2007 must be paid to the city of Tower to 91.2be used for the East Two Rivers project in or near the city of Tower.91.3    (e) For distributions received in 2008, the first $2,000,000 of the 2008 distribution 91.4must be paid to St. Louis County for deposit in its county road and bridge fund to be 91.5used for relocation of St. Louis County Road 715, commonly referred to as Pike River 91.6Road. The remainder of the 2008 distribution and the full amount of the distributions91.7must be paid to St. Louis County for a grant to the city of Virginia for connecting sewer 91.8and water lines to the St. Louis County maintenance garage on Highway 135, further 91.9extending the lines to interconnect with the city of Gilbert's sewer and water lines. All 91.10distributions received in 2009 and subsequent years isare allocated for projects under 91.11section 
         298.223, subdivision 1.91.12EFFECTIVE DATE.This section is effective the day following final enactment.91.13    Sec. 14. Minnesota Statutes 2006, section 298.2961, subdivision 5, is amended to read:91.14    Subd. 5. Public works and local economic development fund. For distributions in 91.152007 only, a special fund is established to receive 
         38.4 cents per ton that otherwise would 91.16be allocated under section 
         298.28, subdivision 6. The following amounts are allocated to 91.17St. Louis County acting as the fiscal agent for the recipients for the specific purposes:91.18    (1) 
         13.4 cents per ton for the Central Iron Range Sanitary Sewer District for 91.19construction of a combined wastewater facility and notwithstanding section 298.28, 91.20subdivision 11, paragraph (a), or any other law, interest accrued on this money while held 91.21by St. Louis County shall also be distributed to the recipient;91.22    (2) six cents per ton to the city of Eveleth to redesign and design and construct 91.23improvements to renovate its water treatment facility;91.24    (3) one cent per ton for the East Range Joint Powers Board to acquire land for and to 91.25design a central wastewater collection and treatment system;91.26    (4) 0.5 cents per ton to the city of Hoyt Lakes to repair Leeds Road;91.27    (5) 0.7 cents per ton to the city of Virginia to extend Eighth Street South;91.28    (6) 0.7 cents per ton to the city of Mountain Iron to repair Hoover Road;91.29    (7) 0.9 cents per ton to the city of Gilbert for alley repairs between Michigan and 91.30Indiana Avenues and for repayment of a loan to the Minnesota Department of Employment 91.31and Economic Development;91.32    (8) 0.4 cents per ton to the city of Keewatin for a new city well;91.33    (9) 0.3 cents per ton to the city of Grand Rapids for planning for a fire and hazardous 91.34materials center;92.1    (10) 0.9 cents per ton to Aitkin County Growth for an economic development 92.2project for peat harvesting;92.3    (11) 0.4 cents per ton to the city of Nashwauk to develop a comprehensive city plan;92.4    (12) 0.4 cents per ton to the city of Taconite for development of a city comprehensive 92.5plan;92.6    (13) 0.3 cents per ton to the city of Marble for water and sewer infrastructure;92.7    (14) 0.8 cents per ton to Aitkin County for improvements to the Long Lake 92.8Environmental Learning Center; 92.9    (15) 0.3 cents per ton to the city of Coleraine for the Coleraine Technology Center;92.10    (16) 0.5 cents per ton to the Economic Development Authority of the city of Grand 92.11Rapids for planning for the North Central Research and Technology Laboratory;92.12    (17) 0.6 cents per ton to the city of Bovey for sewer and water extension;92.13    (18) 0.3 cents per ton to the city of Calumet for infrastructure improvements; and92.14    (19) ten cents per ton to an economic development authority in a city through which 92.15State Highway 1 passes, or a city in Independent School District No. 2142 that has an 92.16active mine, the commissioner of Iron Range Resources and Rehabilitation for deposit 92.17in a Highway 1 Corridor Account established by the commissioner, to be distributed by 92.18the commissioner to any of the cities of Babbitt, Cook, Ely, or Tower,  for an economic 92.19development project projects approved by the Iron Range Resources and Rehabilitation 92.20Board; notwithstanding section 298.28, subdivision 11, paragraph (a), or any other law, 92.21interest accrued on this money while held by St. Louis County or the commissioner 92.22shall also be distributed to the recipient.92.23EFFECTIVE DATE.This section is effective for distributions made in 2008 and 92.24thereafter.92.25    Sec. 15. Minnesota Statutes 2006, section 298.75, subdivision 1, is amended to read:92.26    Subdivision 1. Definitions. Except as may otherwise be provided, the following 92.27words, when used in this section, shall have the meanings herein ascribed to them.92.28    (1)  (a) "Aggregate material" shall mean means:92.29    (1)  nonmetallic natural mineral aggregate including, but not limited to sand, silica 92.30sand, gravel, crushed rock, limestone, granite, and borrow, but only if the borrow is 92.31transported on a public road, street, or highway., provided that nonmetallic aggregate 92.32material shall does not include dimension stone and dimension granite; and 92.33    (2) taconite tailings, crushed rock, and architectural or dimension stone and 92.34dimension granite removed from a taconite mine or the site of a previously operated 92.35taconite mine. 93.1    Aggregate material must be measured or weighed after it has been extracted from 93.2the pit, quarry, or deposit.93.3    (2) (b)  "Person" shall mean means any individual, firm, partnership, corporation, 93.4organization, trustee, association, or other entity.93.5    (3)  (c) "Operator" shall mean means any person engaged in the business of removing 93.6aggregate material from the surface or subsurface of the soil, for the purpose of sale, 93.7either directly or indirectly, through the use of the aggregate material in a marketable 93.8product or service.93.9    (4) (d) "Extraction site" shall mean means a pit, quarry, or deposit containing 93.10aggregate material and any contiguous property to the pit, quarry, or deposit which is used 93.11by the operator for stockpiling the aggregate material.93.12    (5)  (e) "Importer" shall mean means any person who buys aggregate material 93.13produced from a county not listed in paragraph (6)  (f) or another state and causes the 93.14aggregate material to be imported into a county in this state which imposes a tax on 93.15aggregate material.93.16    (6)  (f) "County" shall mean means the counties of Pope, Stearns, Benton, Sherburne, 93.17Carver, Scott, Dakota, Le Sueur, Kittson, Marshall, Pennington, Red Lake, Polk, Norman, 93.18Mahnomen, Clay, Becker, Carlton, St. Louis, Rock, Murray, Wilkin, Big Stone, Sibley, 93.19Hennepin, Washington, Chisago, and Ramsey. County also means any other county whose 93.20board has voted after a public hearing to impose the tax under this section and has notified 93.21the commissioner of revenue of the imposition of the tax.93.22    (7) (g) "Borrow" shall mean means granular borrow, consisting of durable particles 93.23of gravel and sand, crushed quarry or mine rock, crushed gravel or stone, or any 93.24combination thereof, the ratio of the portion passing the (#200) sieve divided by the 93.25portion passing the (1 inch) sieve may not exceed 20 percent by mass.93.26EFFECTIVE DATE.This section is effective for aggregate material removed 93.27beginning June 1, 2008.93.28    Sec. 16. Minnesota Statutes 2006, section 298.75, subdivision 3, is amended to read:93.29    Subd. 3. Report and remittance.(a) By the 14th day following the last day of each 93.30calendar quarter, every operator or importer shall make and file with the county auditor of 93.31the county in which the aggregate material is removed or imported, a correct report under 93.32oath, in such form and containing such information as the auditor shall require relative to 93.33the quantity of aggregate material removed or imported during the preceding calendar 93.34quarter. The report shall be accompanied by a remittance of the amount of tax due.94.1    (b) If any of the proceeds of the tax is to be apportioned as provided in subdivision 94.22, the operator or importer shall also include on the report any relevant information 94.3concerning the amount of aggregate material transported, the tax and the county of 94.4destination. The county auditor shall notify the county treasurer of the amount of such 94.5tax and the county to which it is due. The county treasurer shall remit the tax to the 94.6appropriate county within 30 days, except as provided in paragraph (c).94.7    (c) The proceeds of the tax on aggregate material as defined in subdivision 1, 94.8paragraph (a), clause (2), must be remitted to the commissioner of iron range resources 94.9and rehabilitation to be deposited in the taconite area environmental protection fund under 94.10section 298.223, and used for the purposes of that fund.94.11EFFECTIVE DATE.This section is effective for aggregate material removed 94.12beginning June 1, 2008.94.13    Sec. 17. Minnesota Statutes 2006, section 298.75, subdivision 7, is amended to read:94.14    Subd. 7. Proceeds of taxes. All money collected as taxes under this section on 94.15aggregate material as defined in subdivision 1, paragraph (a), clause (1), shall be deposited 94.16in the county treasury and credited as follows, for expenditure by the county board:94.17    (a) Sixty percent to the county road and bridge fund for expenditure for the 94.18maintenance, construction and reconstruction of roads, highways and bridges;94.19    (b) Thirty percent to the road and bridge fund of those towns as determined by the 94.20county board and to the general fund or other designated fund of those cities as determined 94.21by the county board, to be expended for maintenance, construction and reconstruction of 94.22roads, highways and bridges; and94.23    (c) Ten percent to a special reserve fund which is hereby established, for expenditure 94.24for the restoration of abandoned pits, quarries, or deposits located upon public and tax 94.25forfeited lands within the county.94.26    If there are no abandoned pits, quarries or deposits located upon public or tax 94.27forfeited lands within the county, this portion of the tax shall be deposited in the county 94.28road and bridge fund for expenditure for the maintenance, construction and reconstruction 94.29of roads, highways and bridges.94.30EFFECTIVE DATE.This section is effective for aggregate material removed 94.31beginning June 1, 2008.94.32    Sec. 18. IRON RANGE RESOURCES AND REHABILITATION BOARD; 94.33APPROPRIATION; RETIRE BONDS.95.1    Commencing with taxes payable in 2008 there is annually appropriated from 95.2the distribution of the taconite production tax revenues to the taconite environmental 95.3protection fund under Minnesota Statutes, section 298.28, subdivision 11, and to the 95.4Douglas J. Johnson economic protection trust fund under Minnesota Statutes, section 95.5298.28, subdivisions 9 and 11, in equal shares, an amount of $500,000 per year.95.6    The revenue received under this section shall be used only to retire Mesabi East 95.7School District No. 2711 bonds in the amount of $9,000,000 issued September 1, 2006, 95.8and in the amount of $6,250,000 issued March 1, 2007. The payments shall continue 95.9for a period of ten years ending with taxes payable in 2017. Payments to the school 95.10district shall be made annually on March 1, except that the initial annual payment shall 95.11be made by September 1, 2008.95.12EFFECTIVE DATE.This section is effective the day following final enactment.95.13ARTICLE 995.14ECONOMIC DEVELOPMENT95.15    Section 1. Minnesota Statutes 2006, section 469.169, is amended by adding a 95.16subdivision to read:95.17    Subd. 18.Additional border city allocations; 2008.(a) In addition to tax 95.18reductions authorized in subdivisions 7 to 17, the commissioner shall allocate $352,500 95.19for tax reductions to border city enterprise zones in cities located on the western border 95.20of the state. The commissioner shall make allocations to zones in cities on the western 95.21border on a per capita basis. Allocations made under this subdivision may be used for 95.22tax reductions as provided in section 469.171, or for other offsets of taxes imposed on 95.23or remitted by businesses located in the enterprise zone, but only if the municipality 95.24determines that the granting of the tax reduction or offset is necessary in order to retain a 95.25business within or attract a business to the zone. The city alternatively may elect to use 95.26any portion of the allocation provided in this paragraph for tax reductions under section 95.27469.1732 or 469.1734.95.28    (b) The commissioner shall allocate $352,500 for tax reductions under section 95.29469.1732 or 469.1734 to cities with border city enterprise zones located on the western 95.30border of the state. The commissioner shall allocate this amount among the cities on a per 95.31capita basis. The city alternatively may elect to use any portion of the allocation provided 95.32in this paragraph for tax reductions as provided in section 469.171.95.33EFFECTIVE DATE.This section is effective the day following final enactment.96.1    Sec. 2. Minnesota Statutes 2006, section 469.174, subdivision 10, is amended to read:96.2    Subd. 10. Redevelopment district. (a) "Redevelopment district" means a type of 96.3tax increment financing district consisting of a project, or portions of a project, within 96.4which the authority finds by resolution that one or more of the following conditions, 96.5reasonably distributed throughout the district, exists:96.6    (1) parcels consisting of 70 percent of the area of the district are occupied by 96.7buildings, streets, utilities, paved or gravel parking lots, or other similar structures 96.8and more than 50 percent of the buildings, not including outbuildings, are structurally 96.9substandard to a degree requiring substantial renovation or clearance;96.10    (2) the property consists of vacant, unused, underused, inappropriately used, 96.11or infrequently used railyards, rail storage facilities, or excessive or vacated railroad 96.12rights-of-way;96.13    (3) tank facilities, or property whose immediately previous use was for tank 96.14facilities, as defined in section 
         115C.02, subdivision 15, if the tank facilities: 96.15    (i) have or had a capacity of more than 1,000,000 gallons;96.16    (ii) are located adjacent to rail facilities; and96.17    (iii) have been removed or are unused, underused, inappropriately used, or 96.18infrequently used; or96.19    (4) a qualifying disaster area, as defined in subdivision 10b.96.20    (b) For purposes of this subdivision, "structurally substandard" shall mean 96.21containing defects in structural elements or a combination of deficiencies in essential 96.22utilities and facilities, light and ventilation, fire protection including adequate egress, 96.23layout and condition of interior partitions, or similar factors, which defects or deficiencies 96.24are of sufficient total significance to justify substantial renovation or clearance.96.25    (c) A building is not structurally substandard if it is in compliance with the building 96.26code applicable to new buildings or could be modified to satisfy the building code at 96.27a cost of less than 15 percent of the cost of constructing a new structure of the same 96.28square footage and type on the site. The municipality may find that a building is not 96.29disqualified as structurally substandard under the preceding sentence on the basis of 96.30reasonably available evidence, such as the size, type, and age of the building, the average 96.31cost of plumbing, electrical, or structural repairs, or other similar reliable evidence. The 96.32municipality may not make such a determination without an interior inspection of the 96.33property, but need not have an independent, expert appraisal prepared of the cost of repair 96.34and rehabilitation of the building. An interior inspection of the property is not required, 96.35if the municipality finds that (1) the municipality or authority is unable to gain access to 96.36the property after using its best efforts to obtain permission from the party that owns or 97.1controls the property; and (2) the evidence otherwise supports a reasonable conclusion that 97.2the building is structurally substandard. Items of evidence that support such a conclusion 97.3include recent fire or police inspections, on-site property tax appraisals or housing 97.4inspections, exterior evidence of deterioration, or other similar reliable evidence. Written 97.5documentation of the findings and reasons why an interior inspection was not conducted 97.6must be made and retained under section 
         469.175, subdivision 3, clause (1). Failure of a 97.7building to be disqualified under the provisions of this paragraph is a necessary, but not a 97.8sufficient, condition to determining that the building is substandard. 97.9    (d) A parcel is deemed to be occupied by a structurally substandard building 97.10for purposes of the finding under paragraph (a) or by the improvements described in 97.11paragraph (e) if all of the following conditions are met:97.12    (1) the parcel was occupied by a substandard building or met the requirements 97.13of paragraph (e), as the case may be, within three years of the filing of the request for 97.14certification of the parcel as part of the district with the county auditor;97.15    (2) the substandard building was or the improvements described in paragraph (e) 97.16were demolished or removed by the authority or the demolition or removal was financed 97.17by the authority or was done by a developer under a development agreement with the 97.18authority;97.19    (3) the authority found by resolution before the demolition or removal that the 97.20parcel was occupied by a structurally substandard building or met the requirements of 97.21paragraph (e) and that after demolition and clearance the authority intended to include 97.22the parcel within a district; and97.23    (4) upon filing the request for certification of the tax capacity of the parcel as part 97.24of a district, the authority notifies the county auditor that the original tax capacity of the 97.25parcel must be adjusted as provided by section 
         469.177, subdivision 1, paragraph (f). 97.26    (e) For purposes of this subdivision, a parcel is not occupied by buildings, streets, 97.27utilities, paved or gravel parking lots, or other similar structures unless 15 percent of the 97.28area of the parcel contains buildings, streets, utilities, paved or gravel parking lots, or 97.29other similar structures.97.30    (f) For districts consisting of two or more noncontiguous areas, each area must 97.31qualify as a redevelopment district under paragraph (a) to be included in the district, and 97.32the entire area of the district must satisfy paragraph (a).97.33EFFECTIVE DATE.This section is effective for requests for certification made 97.34after June 30, 2008.97.35    Sec. 3. Minnesota Statutes 2006, section 469.174, subdivision 10a, is amended to read:98.1    Subd. 10a. Renewal and renovation district. (a) "Renewal and renovation district" 98.2means a type of tax increment financing district consisting of a project, or portions of a 98.3project, within which the authority finds by resolution that:98.4    (1)(i) parcels consisting of 70 percent of the area of the district are occupied by 98.5buildings, streets, utilities, paved or gravel parking lots, or other similar structures; (ii) 98.620 percent of the buildings are structurally substandard; and (iii) 30 percent of the other 98.7buildings require substantial renovation or clearance to remove existing conditions such 98.8as: inadequate street layout, incompatible uses or land use relationships, overcrowding of 98.9buildings on the land, excessive dwelling unit density, obsolete buildings not suitable for 98.10improvement or conversion, or other identified hazards to the health, safety, and general 98.11well-being of the community; and98.12    (2) the conditions described in clause (1) are reasonably distributed throughout the 98.13geographic area of the district.98.14    (b) For purposes of determining whether a building is structurally substandard, 98.15whether parcels are occupied by buildings, streets, utilities, paved or gravel parking lots, 98.16or other similar structures, or whether noncontiguous areas qualify, the provisions of 98.17subdivision 10, paragraphs (c), (e), and (b) through (f) apply.98.18EFFECTIVE DATE.This section is effective for requests for certification made 98.19after June 30, 2008.98.20    Sec. 4. Minnesota Statutes 2006, section 469.175, subdivision 1, is amended to read:98.21    Subdivision 1. Tax increment financing plan.(a) A tax increment financing plan 98.22shall contain:98.23    (1) a statement of objectives of an authority for the improvement of a project;98.24    (2) a statement as to the development program for the project, including the property 98.25within the project, if any, that the authority intends to acquire, identified by parcel number, 98.26identifiable property name, block, or other appropriate means indicating the area in which 98.27the authority intends to acquire properties;98.28    (3) a list of any development activities that the plan proposes to take place within 98.29the project, for which contracts have been entered into at the time of the preparation of 98.30the plan, including the names of the parties to the contract, the activity governed by the 98.31contract, the cost stated in the contract, and the expected date of completion of that activity;98.32    (4) identification or description of the type of any other specific development 98.33reasonably expected to take place within the project, and the date when the development is 98.34likely to occur;98.35    (5) estimates of the following:99.1    (i) cost of the project, including administrative expenses, except that if part of the 99.2cost of the project is paid or financed with increment from the tax increment financing 99.3district, the tax increment financing plan for the district must contain an estimate of the 99.4amount of the cost of the project, including administrative expenses, that will be paid or 99.5financed with tax increments from the district;99.6    (ii) amount of bonded indebtedness to be incurred;99.7    (iii) sources of revenue to finance or otherwise pay public costs;99.8    (iv) the most recent net tax capacity of taxable real property within the tax increment 99.9financing district and within any subdistrict;99.10    (v) the estimated captured net tax capacity of the tax increment financing district 99.11at completion; and99.12    (vi) the duration of the tax increment financing district's and any subdistrict's 99.13existence;99.14    (6) statements of the authority's alternate estimates of the impact of tax increment 99.15financing on the net tax capacities of all taxing jurisdictions in which the tax increment 99.16financing district is located in whole or in part. For purposes of one statement, the 99.17authority shall assume that the estimated captured net tax capacity would be available to 99.18the taxing jurisdictions without creation of the district, and for purposes of the second 99.19statement, the authority shall assume that none of the estimated captured net tax capacity 99.20would be available to the taxing jurisdictions without creation of the district or subdistrict;99.21    (7) identification and description of studies and analyses used to make the 99.22determination set forth in subdivision 3, clause (2); and99.23    (8) identification of all parcels to be included in the district or any subdistrict.99.24    (b) The authority may specify in the tax increment financing plan the first year in 99.25which it elects to receive increment, up to four years following the year of approval of the 99.26district. This paragraph does not apply to an economic development district.99.27EFFECTIVE DATE.This section is effective for districts for which the request for 99.28certification is made after June 30, 2008.99.29    Sec. 5. Minnesota Statutes 2006, section 469.175, subdivision 3, is amended to read:99.30    Subd. 3. Municipality approval. (a) A county auditor shall not certify the original 99.31net tax capacity of a tax increment financing district until the tax increment financing plan 99.32proposed for that district has been approved by the municipality in which the district 99.33is located. If an authority that proposes to establish a tax increment financing district 99.34and the municipality are not the same, the authority shall apply to the municipality in 99.35which the district is proposed to be located and shall obtain the approval of its tax 100.1increment financing plan by the municipality before the authority may use tax increment 100.2financing. The municipality shall approve the tax increment financing plan only after a 100.3public hearing thereon after published notice in a newspaper of general circulation in the 100.4municipality at least once not less than ten days nor more than 30 days prior to the date 100.5of the hearing. The published notice must include a map of the area of the district from 100.6which increments may be collected and, if the project area includes additional area, a map 100.7of the project area in which the increments may be expended. The hearing may be held 100.8before or after the approval or creation of the project or it may be held in conjunction with 100.9a hearing to approve the project.100.10    (b) Before or at the time of approval of the tax increment financing plan, the 100.11municipality shall make the following findings, and shall set forth in writing the reasons 100.12and supporting facts for each determination:100.13    (1) that the proposed tax increment financing district is a redevelopment district, a 100.14renewal or renovation district, a housing district, a soils condition district, or an economic 100.15development district; if the proposed district is a redevelopment district or a renewal or 100.16renovation district, the reasons and supporting facts for the determination that the district 100.17meets the criteria of section 
         469.174, subdivision 10, paragraph (a), clauses (1) and (2), or 100.18subdivision 10a, must be documented in writing and retained and made available to the 100.19public by the authority until the district has been terminated; 100.20    (2) that, in the opinion of the municipality:100.21    (i) the proposed development or redevelopment would not reasonably be expected to 100.22occur solely through private investment within the reasonably foreseeable future; and100.23    (ii) the increased market value of the site that could reasonably be expected to 100.24occur without the use of tax increment financing would be less than the increase in the 100.25market value estimated to result from the proposed development after subtracting the 100.26present value of the projected tax increments for the maximum duration of the district 100.27permitted by the plan. The requirements of this item do not apply if the district is a 100.28qualified housing district;100.29    (3) that the tax increment financing plan conforms to the general plan for the 100.30development or redevelopment of the municipality as a whole;100.31    (4) that the tax increment financing plan will afford maximum opportunity, 100.32consistent with the sound needs of the municipality as a whole, for the development or 100.33redevelopment of the project by private enterprise;100.34    (5) that the municipality elects the method of tax increment computation set forth in 100.35section 
         469.177, subdivision 3, paragraph (b), if applicable. 101.1    (c) When the municipality and the authority are not the same, the municipality shall 101.2approve or disapprove the tax increment financing plan within 60 days of submission by 101.3the authority. When the municipality and the authority are not the same, the municipality 101.4may not amend or modify a tax increment financing plan except as proposed by the 101.5authority pursuant to subdivision 4. Once approved, the determination of the authority 101.6to undertake the project through the use of tax increment financing and the resolution of 101.7the governing body shall be conclusive of the findings therein and of the public need for 101.8the financing.101.9    (d) For a district that is subject to the requirements of paragraph (b), clause (2), 101.10item (ii), the municipality's statement of reasons and supporting facts must include all of 101.11the following:101.12    (1) an estimate of the amount by which the market value of the site will increase 101.13without the use of tax increment financing;101.14    (2) an estimate of the increase in the market value that will result from the 101.15development or redevelopment to be assisted with tax increment financing; and101.16    (3) the present value of the projected tax increments for the maximum duration of 101.17the district permitted by the tax increment financing plan.101.18    (e) For purposes of this subdivision, "site" means the parcels on which the 101.19development or redevelopment to be assisted with tax increment financing will be located.101.20EFFECTIVE DATE.This section is effective the day following final enactment 101.21and applies to all districts, regardless of when the request for certification was made.101.22    Sec. 6. Minnesota Statutes 2006, section 469.176, subdivision 1, is amended to read:101.23    Subdivision 1. Duration of tax increment financing districts. (a) Subject to the 101.24limitations contained in subdivisions 1a to 1f, any tax increment financing district as to 101.25which bonds are outstanding, payment for which the tax increment and other revenues 101.26have been pledged, shall remain in existence at least as long as the bonds continue to be 101.27outstanding. The municipality may, at the time of approval of the initial tax increment 101.28financing plan, provide for one or both of the following:101.29    (1) a shorter maximum duration limit than specified in subdivisions 1a to 1f.;101.30    (2) an election as provided under section 469.175, subdivision 1, paragraph (b).101.31The specified limit applies in place of the otherwise applicable limit, unless the authority 101.32modifies the plan following the procedures under section 
         469.175, subdivision 4, 101.33paragraph (b).102.1    (b) The tax increment pledged to the payment of the bonds and interest thereon may 102.2be discharged and the tax increment financing district may be terminated if sufficient funds 102.3have been irrevocably deposited in the debt service fund or other escrow account held in 102.4trust for all outstanding bonds to provide for the payment of the bonds at maturity or date 102.5of redemption and interest thereon to the maturity or redemption date.102.6    (c) For bonds issued pursuant to section 
         469.178, subdivisions 2 and 3, the full 102.7faith and credit and any taxing powers of the municipality or authority are pledged to the 102.8payment of the bonds until the principal of and interest on the bonds has been paid in full. 102.9EFFECTIVE DATE.This section is effective for districts for which the request for 102.10certification is made after June 30, 2008.102.11    Sec. 7. Minnesota Statutes 2006, section 469.176, subdivision 2, is amended to read:102.12    Subd. 2. Excess increments. (a) The authority shall annually determine the amount 102.13of excess increments for a district, if any. This determination must be based on the tax 102.14increment financing plan in effect on December 31 of the year and the increments and 102.15other revenues received as of December 31 of the year. The authority must spend or return 102.16the excess increments under paragraph (c) within nine months after the end of the year.102.17    (b) For purposes of this subdivision, "excess increments" equals the excess of:102.18    (1) total increments collected from the district since its certification, reduced by any 102.19excess increments paid under paragraph (c), clause (4), for a prior year, over102.20    (2) the total costs authorized by the tax increment financing plan to be paid with 102.21increments from the district, reduced, but not below zero, by the sum of:102.22    (i) the amounts of those authorized costs that have been paid from sources other than 102.23tax increments from the district;102.24    (ii) revenues, other than tax increments from the district, that are dedicated for or 102.25otherwise required to be used to pay those authorized costs and that the authority has 102.26received and that are not included in item (i);102.27    (iii) the amount of principal and interest obligations due on outstanding bonds after 102.28December 31 of the year and not prepaid under paragraph (c) in a prior year; and102.29    (iv) increased by the sum of the transfers of increments made under section 
         469.1763, 102.30subdivision 6
         , to reduce deficits in other districts made by December 31 of the year.102.31    (c) The authority shall use excess increment only to do one or more of the following:102.32    (1) prepay any outstanding bonds;102.33    (2) discharge the pledge of tax increment for any outstanding bonds;102.34    (3) pay into an escrow account dedicated to the payment of any outstanding bonds; or103.1    (4) return the excess amount to the county auditor who shall distribute the excess 103.2amount to the city or town, county, and school district in which the tax increment financing 103.3district is located in direct proportion to their respective local tax rates.103.4    (d) For purposes of a district for which the request for certification was made prior to 103.5August 1, 1979, excess increments equal the amount of increments on hand on December 103.631, less the principal and interest obligations due on outstanding bonds or advances, 103.7qualifying under subdivision 1c, clauses (1), (2), (4), and (5), after December 31 of the 103.8year and not prepaid under paragraph (c).103.9    (e) The county auditor must report to the commissioner of education the amount of 103.10any excess tax increment distributed to a school district within 30 days of the distribution.103.11    (f) For purposes of this subdivision, "outstanding bonds" means bonds which are 103.12secured by increments from the district.103.13    (g) The state auditor may exempt an authority from reporting the amounts calculated 103.14under this subdivision for a calendar year, if the authority certifies to the auditor in 103.15its report that the total amount authorized by the tax increment plan to be paid with 103.16increments from the district exceeds the sum of the total increments collected for the 103.17district for all years by 20 percent.103.18EFFECTIVE DATE.This section is effective the day following final enactment and 103.19applies to all districts regardless of when the request for certification was made, including 103.20districts for which the request for certification was made on or before August 1, 1979.103.21    Sec. 8. Minnesota Statutes 2006, section 469.176, subdivision 4l, is amended to read:103.22    Subd. 4l. Prohibited facilities. (a) No tax increment from any district may be 103.23used for:103.24    (1) a commons area used as a public park; or103.25    (2) a facility used for social, recreational, or conference purposes.103.26    (b) This subdivision does not apply to a privately owned facility for conference 103.27purposes or a parking structure, whether it is public or privately owned or whether it is 103.28ancillary to a use listed in paragraph (a).103.29EFFECTIVE DATE.This section confirms the original intent of the legislature 103.30in enacting Minnesota Statutes, section 469.176, subdivision 4l, and is effective the day 103.31following final enactment and applies to any expenditure subject to Minnesota Statutes, 103.32section 469.176, subdivision 4l.103.33    Sec. 9. Minnesota Statutes 2006, section 469.176, subdivision 7, is amended to read:104.1    Subd. 7. Parcels not includable in districts. (a) The authority may request 104.2inclusion in a tax increment financing district and the county auditor may certify the 104.3original tax capacity of a parcel or a part of a parcel that qualified under the provisions of 104.4section 
         273.111 or 
         273.112 or chapter 473H for taxes payable in any of the five calendar 104.5years before the filing of the request for certification only for: 104.6    (1) a district in which 85 percent or more of the planned buildings and facilities 104.7(determined on the basis of square footage) are a qualified manufacturing facility or a 104.8qualified distribution facility or a combination of both; or104.9    (2) a qualified housing district.104.10    (b)(1) A distribution facility means buildings and other improvements to real 104.11property that are used to conduct activities in at least each of the following categories:104.12    (i) to store or warehouse tangible personal property;104.13    (ii) to take orders for shipment, mailing, or delivery;104.14    (iii) to prepare personal property for shipment, mailing, or delivery; and104.15    (iv) to ship, mail, or deliver property.104.16    (2) A manufacturing facility includes space used for manufacturing or producing 104.17tangible personal property, including processing resulting in the change in condition of the 104.18property, and space necessary for and related to the manufacturing activities.104.19    (3) To be a qualified facility, the owner or operator of a manufacturing or distribution 104.20facility must agree to pay and pay 90 percent or more of the employees of the facility at 104.21a rate equal to or greater than 160 percent of the federal minimum wage for individuals 104.22over the age of 20.104.23EFFECTIVE DATE.This section is effective the day following final enactment 104.24and applies to all districts regardless of when the request for certification was made.104.25    Sec. 10. Minnesota Statutes 2006, section 469.1761, subdivision 1, is amended to read:104.26    Subdivision 1. Requirement imposed. (a) In order for a tax increment financing 104.27district to qualify as a housing district:104.28    (1) the income limitations provided in this section must be satisfied; and104.29    (2) no more than 20 percent of the square footage of buildings that receive assistance 104.30from tax increments may consist of commercial, retail, or other nonresidential uses.104.31    (b) The requirements imposed by this section apply to property receiving assistance 104.32financed with tax increments, including interest reduction, land transfers at less than the 104.33authority's cost of acquisition, utility service or connections, roads, parking facilities, or 104.34other subsidies. The provisions of this section do not apply to districts located in a targeted 104.35area as defined in section 
         462C.02, subdivision 9, clause (e).105.1    (c) For purposes of the requirements of paragraph (a), the authority may elect to treat 105.2an addition to an existing structure as a separate building if:105.3    (1) construction of the addition begins more than three years after construction of 105.4the existing structure was completed; and 105.5    (2) for an addition that does not meet the requirements of paragraph (a), clause (2), if 105.6it is treated as a separate building, the addition was not contemplated by the tax increment 105.7financing plan which includes the existing structure.105.8EFFECTIVE DATE.This section is effective for expenditures of tax increment 105.9authorized and made after the day following final enactment, regardless of when the 105.10request for certification of the district was made.105.11    Sec. 11. Minnesota Statutes 2006, section 469.1763, subdivision 2, is amended to read:105.12    Subd. 2. Expenditures outside district. (a) For each tax increment financing 105.13district, an amount equal to at least 75 percent of the total revenue derived from tax 105.14increments paid by properties in the district must be expended on activities in the district 105.15or to pay bonds, to the extent that the proceeds of the bonds were used to finance activities 105.16in the district or to pay, or secure payment of, debt service on credit enhanced bonds. 105.17For districts, other than redevelopment districts for which the request for certification 105.18was made after June 30, 1995, the in-district percentage for purposes of the preceding 105.19sentence is 80 percent. Not more than 25 percent of the total revenue derived from tax 105.20increments paid by properties in the district may be expended, through a development fund 105.21or otherwise, on activities outside of the district but within the defined geographic area of 105.22the project except to pay, or secure payment of, debt service on credit enhanced bonds. 105.23For districts, other than redevelopment districts for which the request for certification was 105.24made after June 30, 1995, the pooling percentage for purposes of the preceding sentence is 105.2520 percent. The revenue derived from tax increments for the district that are expended on 105.26costs under section 
         469.176, subdivision 4h, paragraph (b), may be deducted first before 105.27calculating the percentages that must be expended within and without the district.105.28    (b) In the case of a housing district, a housing project, as defined in section 
         469.174, 105.29subdivision 11
         , is an activity in the district.105.30    (c) All administrative expenses are for activities outside of the district, except that 105.31if the only expenses for activities outside of the district under this subdivision are for 105.32the purposes described in paragraph (d), administrative expenses will be considered as 105.33expenditures for activities in the district.105.34    (d) The authority may elect, in the tax increment financing plan for the district, 105.35to increase by up to ten percentage points the permitted amount of expenditures for 106.1activities located outside the geographic area of the district under paragraph (a). As 106.2permitted by section 
         469.176, subdivision 4k, the expenditures, including the permitted 106.3expenditures under paragraph (a), need not be made within the geographic area of the 106.4project. Expenditures that meet the requirements of this paragraph are legally permitted 106.5expenditures of the district, notwithstanding section 
         469.176, subdivisions 4b, 4c, and 4j. 106.6To qualify for the increase under this paragraph, the expenditures must:106.7    (1) be used exclusively to assist housing that meets the requirement for a qualified 106.8low-income building, as that term is used in section 42 of the Internal Revenue Code;106.9    (2) not exceed the qualified basis of the housing, as defined under section 42(c) of 106.10the Internal Revenue Code, less the amount of any credit allowed under section 42 of 106.11the Internal Revenue Code; and106.12    (3) be used to:106.13    (i) acquire and prepare the site of the housing;106.14    (ii) acquire, construct, or rehabilitate the housing; or106.15    (iii) make public improvements directly related to the housing.106.16    (e) For a district created within a biotechnology and health sciences industry zone 106.17as defined in section 
         469.330, subdivision 6, or for an existing district located within 106.18such a zone, tax increment derived from such a district may be expended outside of the 106.19district but within the zone only for expenditures required for the construction of public 106.20infrastructure necessary to support the activities of the zone, land acquisition, and other 106.21redevelopment costs as defined in section 469.176, subdivision 4j. Public infrastructure106.22These expenditures are considered as expenditures for activities within the district.106.23EFFECTIVE DATE.This section is effective for all districts located in bioscience 106.24zones, regardless of when the request for certification was made.106.25    Sec. 12. Minnesota Statutes 2006, section 469.177, subdivision 1, is amended to read:106.26    Subdivision 1. Original net tax capacity. (a) Upon or after adoption of a tax 106.27increment financing plan, the auditor of any county in which the district is situated shall, 106.28upon request of the authority, certify the original net tax capacity of the tax increment 106.29financing district and that portion of the district overlying any subdistrict as described in 106.30the tax increment financing plan and shall certify in each year thereafter the amount by 106.31which the original net tax capacity has increased or decreased as a result of a change in tax 106.32exempt status of property within the district and any subdistrict, reduction or enlargement 106.33of the district or changes pursuant to subdivision 4. The auditor shall certify the amount 106.34within 30 days after receipt of the request and sufficient information to identify the parcels 107.1included in the district. The certification relates to the taxes payable year as provided in 107.2subdivision 6.107.3    (b) If the classification under section 
         273.13 of property located in a district changes 107.4to a classification that has a different assessment ratio, the original net tax capacity of that 107.5property must be redetermined at the time when its use is changed as if the property had 107.6originally been classified in the same class in which it is classified after its use is changed.107.7    (c) The amount to be added to the original net tax capacity of the district as a result 107.8of previously tax exempt real property within the district becoming taxable equals the net 107.9tax capacity of the real property as most recently assessed pursuant to section 
         273.18 or, if 107.10that assessment was made more than one year prior to the date of title transfer rendering 107.11the property taxable, the net tax capacity assessed by the assessor at the time of the 107.12transfer. If improvements are made to tax exempt property after the municipality approves 107.13the district and before the parcel becomes taxable, the assessor shall, at the request of 107.14the authority, separately assess the estimated market value of the improvements. If the 107.15property becomes taxable, the county auditor shall add to original net tax capacity, the net 107.16tax capacity of the parcel, excluding the separately assessed improvements. If substantial 107.17taxable improvements were made to a parcel after certification of the district and if the 107.18property later becomes tax exempt, in whole or part, as a result of the authority acquiring 107.19the property through foreclosure or exercise of remedies under a lease or other revenue 107.20agreement or as a result of tax forfeiture, the amount to be added to the original net tax 107.21capacity of the district as a result of the property again becoming taxable is the amount 107.22of the parcel's value that was included in original net tax capacity when the parcel was 107.23first certified. The amount to be added to the original net tax capacity of the district as a 107.24result of enlargements equals the net tax capacity of the added real property as most 107.25recently certified by the commissioner of revenue as of the date of modification of the tax 107.26increment financing plan pursuant to section 
         469.175, subdivision 4.107.27    (d) If the net tax capacity of a property increases because the property no longer 107.28qualifies under the Minnesota Agricultural Property Tax Law, section 
         273.111; the 107.29Minnesota Open Space Property Tax Law, section 
         273.112; or the Metropolitan 107.30Agricultural Preserves Act, chapter 473H, or because platted, unimproved property is 107.31improved or market value is increased after approval of the plat under section 
         273.11, 107.32subdivision 14
         , 14a, or 14b, the increase in net tax capacity must be added to the original 107.33net tax capacity.107.34    (e) The amount to be subtracted from the original net tax capacity of the district 107.35as a result of previously taxable real property within the district becoming tax exempt, 107.36or a reduction in the geographic area of the district, shall be the amount of original net 108.1tax capacity initially attributed to the property becoming tax exempt or being removed 108.2from the district. If the net tax capacity of property located within the tax increment 108.3financing district is reduced by reason of a court-ordered abatement, stipulation agreement, 108.4voluntary abatement made by the assessor or auditor or by order of the commissioner of 108.5revenue, the reduction shall be applied to the original net tax capacity of the district when 108.6the property upon which the abatement is made has not been improved since the date of 108.7certification of the district and to the captured net tax capacity of the district in each year 108.8thereafter when the abatement relates to improvements made after the date of certification. 108.9The county auditor may specify reasonable form and content of the request for certification 108.10of the authority and any modification thereof pursuant to section 
         469.175, subdivision 4.108.11    (f) If a parcel of property contained a substandard building or improvements 108.12described in section 469.174, subdivision 10, paragraph (e), that was were demolished 108.13or removed and if the authority elects to treat the parcel as occupied by a substandard 108.14building under section 
         469.174, subdivision 10, paragraph (b), or by improvements under 108.15section 469.174, subdivision 10, paragraph (e), the auditor shall certify the original net 108.16tax capacity of the parcel using the greater of (1) the current net tax capacity of the 108.17parcel, or (2) the estimated market value of the parcel for the year in which the building 108.18wasor other improvements were demolished or removed, but applying the class rates 108.19for the current year.108.20    (g) For a redevelopment district qualifying under section 
         469.174, subdivision 10, 108.21paragraph (a), clause (4), as a qualified disaster area, the auditor shall certify the value of 108.22the land as the original tax capacity for any parcel in the district that contains a building 108.23that suffered substantial damage as a result of the disaster or emergency.108.24EFFECTIVE DATE.This section is effective for requests for certification made 108.25after June 30, 2008.108.26    Sec. 13. Minnesota Statutes 2006, section 469.178, subdivision 7, is amended to read:108.27    Subd. 7. Interfund loans. The authority or municipality may advance or loan 108.28money to finance expenditures under section 
         469.176, subdivision 4, from its general 108.29fund or any other fund under which it has legal authority to do so. The loan or advance 108.30must be authorized, by resolution of the governing body or of the authority, whichever 108.31has jurisdiction over the fund from which the advance or loan is made, before money 108.32is transferred, advanced, or spent, whichever is earliest. The resolution may generally 108.33grant to the authority the power to make interfund loans under one or more tax increment 108.34financing plans or for one or more districts. The terms and conditions for repayment of the 108.35loan must be provided in writing and include, at a minimum, the principal amount, the 109.1interest rate, and maximum term. The maximum rate of interest permitted to be charged 109.2is limited to the greater of the rates specified under section 
         270C.40 or 
         549.09 as of the 109.3date the loan or advance is made, unless the written agreement states that the maximum 109.4interest rate will fluctuate as the interest rates specified under section 
         270C.40 or 
         549.09109.5are from time to time adjusted.109.6EFFECTIVE DATE.This section is effective the day following final enactment 109.7and applies to all districts subject to Minnesota Statutes, section 469.178, subdivision 7, 109.8regardless of when the request for certification was made.109.9    Sec. 14. Minnesota Statutes 2006, section 469.1791, subdivision 3, is amended to read:109.10    Subd. 3. Preconditions to establish district. (a) A city may establish a special 109.11taxing district within a tax increment financing district under this section only if the 109.12conditions under paragraphs (b) and (c) are met or if the city elects to exercise the 109.13authority under paragraph (d).109.14    (b) The city has determined that:109.15    (1) total tax increments from the district, including unspent increments from 109.16previous years and increments transferred under paragraph (c), will be insufficient to pay 109.17the amounts due in a year on preexisting obligations; and109.18    (2) this insufficiency of increments resulted from the reduction in property tax class 109.19rates enacted in the 1997 and 1998 legislative sessions.109.20    (c) The city has agreed to transfer any available increments from other tax increment 109.21financing districts in the city to pay the preexisting obligations of the district under section 109.22469.1763, subdivision 6
         . This requirement does not apply to any available increments of a 109.23qualified housing district. 109.24    (d) If a tax increment financing district does not qualify under paragraphs (b) and 109.25(c), the governing body may elect to establish a special taxing district under this section. 109.26If the city elects to exercise this authority, increments from the tax increment financing 109.27district and the proceeds of the tax imposed under this section may only be used to pay 109.28preexisting obligations and reasonable administrative expenses of the authority for the tax 109.29increment financing district. The tax increment financing district must be decertified when 109.30all preexisting obligations have been paid.109.31EFFECTIVE DATE.This section is effective the day following final enactment 109.32and applies to districts regardless of when the request for certification was made.110.1    Sec. 15. Laws 1994, chapter 587, article 9, section 14, subdivision 1, is amended to 110.2read:110.3    Subdivision 1. Establishment. The city of Brooklyn Center may establish an110.4a redevelopment tax increment financing district in which 15 percent of the revenues 110.5generated from tax increment in any year is deposited in the housing and environmental 110.6remediation development account of the authority and expended according to the tax 110.7increment financing plan.110.8EFFECTIVE DATE.This section is effective the day following final enactment.110.9    Sec. 16. Laws 1994, chapter 587, article 9, section 14, subdivision 2, is amended to 110.10read:110.11    Subd. 2. Eligible activities. The authority must identify in the plan the housing 110.12activities that will be assisted by the housing and environmental remediation development 110.13account. Housing activities may include rehabilitation, acquisition, construction, 110.14demolition, and financing of new or existing single family or multifamily housing. 110.15Housing and environmental remediation activities listed in the plan need not be located 110.16within the district or project area but must be activities that meet the income requirements 110.17of a qualified housing district under Minnesota Statutes, section 
         273.1399 or469.1761, 110.18subdivision 2.110.19EFFECTIVE DATE.This section is effective the day following final enactment.110.20    Sec. 17. Laws 1994, chapter 587, article 9, section 14, subdivision 3, is amended to 110.21read:110.22    Subd. 3. Housing account. Tax increment to be expended for housing and 110.23environmental remediation activities under this section must be segregated by the 110.24authority into a special account on its official books and records. The account may also 110.25receive funds from other public and private sources.110.26EFFECTIVE DATE.This section is effective the day following final enactment.110.27    Sec. 18. Laws 1995, chapter 264, article 5, section 44, subdivision 4, as amended by 110.28Laws 1996, chapter 471, article 7, section 21, and Laws 1997, chapter 231, article 10, 110.29section 12, is amended to read:110.30    Subd. 4. Authority. For housing replacement projects in the city of Crystal, 110.31"authority" means the Crystal economic development authority. For housing replacement 110.32projects in the city of Fridley, "authority" means the housing and redevelopment authority 111.1in and for the city of Fridley or a successor in interest. For housing replacement 111.2projects in the city of Minneapolis, "authority" means the Minneapolis community 111.3development agency or its successors and assigns. For housing replacement projects 111.4in the city of St. Paul, "authority" means the St. Paul housing and redevelopment 111.5authority. For housing replacement projects in the city of Duluth, "authority" means the 111.6Duluth economic development authority. For housing replacement projects in the city of 111.7Richfield, "authority" is the authority as defined in Minnesota Statutes, section 
         469.174, 111.8subdivision 2
         , that is designated by the governing body of the city of Richfield. For 111.9housing replacement projects in the city of Columbia Heights, "authority" is the authority 111.10as defined in Minnesota Statutes, section 
         469.174, subdivision 2, that is designated by the 111.11governing body of the city of Columbia Heights.111.12EFFECTIVE DATE.This section is effective the day following final enactment 111.13and upon compliance by the governing body of the city of Minneapolis with Minnesota 111.14Statutes, section 645.021, subdivision 3.111.15    Sec. 19. Laws 1995, chapter 264, article 5, section 45, subdivision 1, as amended by 111.16Laws 1996, chapter 471, article 7, section 22, and Laws 1997, chapter 231, article 10, 111.17section 13, and Laws 2002, chapter 377, article 7, section 6, is amended to read:111.18    Subdivision 1. Creation of projects. (a) An authority may create a housing 111.19replacement project under sections 44 to 47, as provided in this section.111.20    (b) For the cities of Crystal, Fridley, Richfield, and Columbia Heights, the authority 111.21may designate up to 50 parcels in the city to be included in a housing replacement 111.22district. No more than ten parcels may be included in year one of the district, with up 111.23to ten additional parcels added to the district in each of the following nine years. For 111.24the cities of Minneapolis, St. Paul, and Duluth, each authority may designate not more 111.25than 200 parcels in the city to be included in a housing replacement district over the life 111.26of the district. For the city of Minneapolis, the authority may designate not more than 111.27400 parcels in the city to be included in housing replacement districts over the life of 111.28the districts. The only parcels that may be included in a district are (1) vacant sites, (2) 111.29parcels containing vacant houses, or (3) parcels containing houses that are structurally 111.30substandard, as defined in Minnesota Statutes, section 
         469.174, subdivision 10.111.31    (c) The city in which the authority is located must pay at least 25 percent of the 111.32housing replacement project costs from its general fund, a property tax levy, or other 111.33unrestricted money, not including tax increments.111.34    (d) The housing replacement district plan must have as its sole object the acquisition 111.35of parcels for the purpose of preparing the site to be sold for market rate housing. As 112.1used in this section, "market rate housing" means housing that has a market value that 112.2does not exceed 150 percent of the average market value of single-family housing in that 112.3municipality.112.4EFFECTIVE DATE.This section is effective the day following final enactment 112.5and upon compliance by the governing body of the city of Minneapolis with Minnesota 112.6Statutes, section 645.021, subdivision 3.112.7    Sec. 20. Laws 2005, First Special Session chapter 3, article 10, section 23, as amended 112.8by Laws 2006, chapter 259, article 13, section 16, is amended to read:112.9    Sec. 23. GRANTS TO QUALIFYING BUSINESSES. 112.10    $750,000 is appropriated in fiscal year 2006 from the general fund to the 112.11commissioner of employment and economic development to be distributed to the 112.12foreign trade zone authority to provide grants to qualified businesses as determined 112.13by the authority, subject to Minnesota Statutes, sections 116J.993 to 116J.995, to 112.14provide incentives for the businesses to locate their operations in an international 112.15economic development zone. Of this appropriation, up to $250,000 may be used by the 112.16commissioner for a study to determine the economic viability of business plans for 112.17international economic development zones. If the money is not distributed during fiscal 112.18year 2006, it remains available for distribution under this section until December 31, 2010.112.19EFFECTIVE DATE.This section is effective the day following final enactment.112.20    Sec. 21. BURNSVILLE; NORTHWEST QUADRANT TAX INCREMENT 112.21FINANCING.112.22    Subdivision 1.Definitions.(a) For the purposes of this section, the words and 112.23phrases defined have the meanings given them in this subdivision.112.24    (b) "City" means the city of Burnsville.112.25    (c) "Project area" means the area in the city bounded on the south, southeast, and 112.26southwest by the southerly right-of-way line of Minnesota Trunk Highway 13; on the east 112.27by the easterly right-of-way line of Interstate Highway I-35W; on the north and northwest 112.28by the Minnesota River; and on the west by the westerly corporate limits of the city, 112.29together with a single parcel to the east of said Interstate Highway I-35W described as 112.30the North 1370 feet of the West 1075 feet of the NW Quarter of Section 34 Township 27 112.31Range 24 in the city of Burnsville, Dakota County, except the North 50 feet thereof; 112.32provided that the project area includes the rights-of-way for all present and future highway 112.33interchanges abutting the area described in this paragraph.113.1    (d) "Soil deficiency district" means a type of tax increment financing district 113.2consisting of a portion of the project area in which the city finds by resolution that the 113.3following conditions exist:113.4    (1) unusual terrain or soil deficiencies for 80 percent of the acreage in the district 113.5require substantial filling, grading, or other physical preparation for use; and113.6    (2) the estimated cost of the physical preparation under clause (1), but excluding 113.7costs directly related to roads as defined in Minnesota Statutes, section 160.01, and 113.8local improvements as described in Minnesota Statutes, sections 429.021, subdivision 1, 113.9clauses (1) to (7), (11), and (12), and 430.01, exceeds the fair market value of the land 113.10before completion of the preparation.113.11    Subd. 2.Special rules.(a) If the city elects, upon the adoption of the tax increment 113.12financing plan for a district, the rules under this section apply to a redevelopment district, 113.13renewal and renovation district, soil condition district, or a soil deficiency district 113.14established by the city or a development authority of the city in the project area.113.15    (b) Prior to or upon the adoption of the first tax increment plan subject to the special 113.16rules under this subdivision, the city must find by resolution that parcels consisting of at 113.17least 80 percent of the acreage of the project area (excluding street and railroad right of 113.18way) are characterized by one or more of the following conditions:113.19    (1) peat or other soils with geotechnical deficiencies that impair development of 113.20residential or commercial buildings or infrastructure;113.21    (2) soils or terrain that requires substantial filling in order to permit the development 113.22of commercial or residential buildings or infrastructure;113.23    (3) landfills, dumps, or similar deposits of municipal or private waste;113.24    (4) quarries or similar resource extraction sites;113.25    (5) floodway; and113.26    (6) substandard buildings within the meaning of Minnesota Statutes, section 113.27469.174, subdivision 10.113.28    (c) For the purposes of paragraph (b), clauses (1) through (5), a parcel is deemed to 113.29be characterized by the relevant condition if at least 70 percent of the area of the parcel 113.30contains the relevant condition. For the purposes of paragraph (b), clause (6), a parcel is 113.31deemed to be characterized by substandard buildings if the buildings occupy at least 30 113.32percent of the area of the parcel.113.33    (d) The five-year rule under Minnesota Statutes, section 469.1763, subdivision 113.343, is extended to ten years for any district, and section 469.1763, subdivision 4, does 113.35not apply to any district.114.1    (e) Notwithstanding anything to the contrary in section 469.1763, subdivision 2, 114.2paragraph (a), not more than 80 percent of the total revenue derived from tax increments 114.3paid by properties in any district (measured over the life of the district) may be expended 114.4on activities outside the district but within the project area.114.5    (f) For a soil deficiency district:114.6    (1) increments may be collected through 20 years after the receipt by the authority of 114.7the first increment from the district; and114.8    (2) except as otherwise provided in this subdivision, increments may be used only to:114.9    (i) acquire parcels on which the improvements described in item (ii) will occur;114.10    (ii) pay for the cost of correcting the unusual terrain or soil deficiencies and the 114.11additional cost of installing public improvements directly caused by the deficiencies; and114.12    (iii) pay for the administrative expenses of the authority allocable to the district.114.13    (g) Increments spent for any infrastructure costs, whether inside a district or outside 114.14a district but within the project area, are deemed to satisfy the requirements of paragraph 114.15(f) and Minnesota Statutes, section 469.176, subdivisions 4b and 4j.114.16    (h) Increments from any district may not be used to pay the costs of landfill closure or 114.17public infrastructure located on the following parcels within the plat known as Burnsville 114.18Amphitheater:  Lot 1, Block 1; Lots 1 and 2, Block 2; and Outlots A, B, C and D.114.19    (i) The authority to approve tax increment financing plans to establish tax increment 114.20financing districts under this section expires on December 31, 2018.114.21EFFECTIVE DATE.This section is effective upon compliance with Minnesota 114.22Statutes, section 645.021, subdivision 3.114.23    Sec. 22. CITY OF EYOTA; TAX INCREMENT FINANCING DISTRICT.114.24    Subdivision 1.Authorization.Notwithstanding the mileage limitation in Minnesota 114.25Statutes, section 469.174, subdivision 27, the city of Eyota is deemed to be a small city for 114.26the purposes of Minnesota Statutes, section 469.174 to 469.1799, as long as its population 114.27does not exceed the population limit in that section.114.28    Subd. 2.Local approval.This section is effective for the city of Eyota upon 114.29approval of Eyota's governing body and compliance with Minnesota Statutes, section 114.30645.021, subdivisions 2 and 3.114.31    Sec. 23. CITY OF FRIDLEY; TAX INCREMENT FINANCING DISTRICT; 114.32SPECIAL RULES.114.33    (a) If the city elects upon the adoption of a tax increment financing plan for a district, 114.34the rules under this section apply to a redevelopment tax increment financing district 115.1established by the city of Fridley or the housing and redevelopment authority of the city. 115.2The redevelopment tax increment district includes the following parcels and adjacent 115.3railroad property and shall be referred to as the Northstar Transit Station District: parcel 115.4numbers 223024120010, 223024120009, 223024120017, 223024120016, 223024120018, 115.5223024120012, 223024120011, 223024120005, 223024120004, 223024120003, 115.6223024120013, 223024120008, 223024120007, 223024120006, 223024130005, 115.7223024130010, 223024130011, 223024130003, 153024440039, 153024440037, 115.8153024440041, 153024440042, 223024110013, 223024110016, 223024110017, 115.9223024140008, 223024130002, 223024420004, 223024410002, 223024410003, 115.10223024110008, 223024110007, 223024110019, 223024110018, 223024110003, 115.11223024140003, 223024140009, 223024140002, 223024140010, and 223024410007.115.12    (b) The requirements for qualifying a redevelopment tax increment district under 115.13Minnesota Statutes, section 469.174, subdivision 10, do not apply to the parcels located 115.14within the Northstar Transit Station District, which are deemed eligible for inclusion 115.15in a redevelopment tax increment district.115.16    (c) In addition to the costs permitted by Minnesota Statutes, section 469.176, 115.17subdivision 4j, eligible expenditures within the Northstar Transit Station District include 115.18those costs necessary to provide for the construction and land acquisition for a tunnel 115.19under the Burlington Northern Santa Fe railroad tracks.115.20    (d) Notwithstanding the provisions of Minnesota Statutes, section 469.1763, 115.21subdivision 2, the city of Fridley may expend increments generated from its tax increment 115.22financing districts Nos. 11, 12, and 13 for costs permitted by paragraph (c) and Minnesota 115.23Statutes, section 469.176, subdivision 4j, outside the boundaries of tax increment financing 115.24districts Nos. 11, 12, and 13, but only within the Northstar Transit Station District.115.25    (e) The five-year rule under Minnesota Statutes, section 469.1763, subdivision 3, 115.26does not apply to the Northstar Transit Station District or to tax increment financing 115.27districts Nos. 11, 12, and 13.115.28    (f) The use of revenues for decertification under Minnesota Statutes, section 115.29469.1763, subdivision 4, does not apply to tax increment financing districts Nos. 11, 115.3012, and 13.115.31EFFECTIVE DATE.This section is effective upon approval by the governing body 115.32of the city of Fridley and upon compliance by the city with Minnesota Statutes, section 115.33645.021, subdivision 3.115.34    Sec. 24. CITY OF NEW BRIGHTON; TAX INCREMENT FINANCING; 115.35EXPENDITURES OUTSIDE DISTRICT.116.1    Notwithstanding the provisions of Minnesota Statutes, section 469.1763, subdivision 116.22, the city of New Brighton may expend increments generated from its tax increment 116.3financing district No. 26 to facilitate eligible activities as permitted by Minnesota Statutes, 116.4section 469.176, subdivision 4e, outside the boundaries of tax increment financing district 116.5No. 26, but only within the area described in Laws 1998, chapter 389, article 11, section 116.624, subdivision 1, and commonly referred to as the Northwest Quadrant. Minnesota 116.7Statutes, section 469.1763, subdivisions 3 and 4, do not apply to expenditures permitted 116.8by this section.116.9EFFECTIVE DATE.This section is effective upon approval by the governing 116.10body of the city of New Brighton and compliance by the city with Minnesota Statutes, 116.11section 645.021, subdivision 3.116.12    Sec. 25.  REPEALER.116.13(a) Minnesota Statutes 2006, section 469.174, subdivision 29, is repealed.116.14(b) Laws 1998, chapter 389, article 11, section 18, is repealed.116.15EFFECTIVE DATE.Paragraph (a) is effective the day following final enactment. 116.16For purposes of any special law authorizing or limiting the use of increments to projects 116.17meeting the requirements of a qualified housing district, expenditures for housing districts 116.18satisfying the requirements of Minnesota Statutes, sections 469.174, subdivision 11; 116.19469.176, subdivision 4d; and 469.1761, as amended, also satisfy the requirements of 116.20the special law.116.21    Paragraph (b) is effective upon compliance with Minnesota Statutes, section 116.22645.021, subdivision 3, by the governing body of the city of Burnsville. The balance of 116.23tax increments derived from tax increment financing district No. 2-1 as of the effective 116.24date of this section must be returned to the county for distribution in accordance with 116.25Minnesota Statutes, section 469.176, subdivision 2.116.26ARTICLE 10116.27PUBLIC FINANCE116.28    Section 1. Minnesota Statutes 2006, section 118A.03, subdivision 3, is amended to read:116.29    Subd. 3. Amount. The total amount of the collateral computed at its market value 116.30shall be at least ten percent more than the amount on deposit plus accrued interest at 116.31the close of the financial institution's banking day, except that where the collateral is 116.32irrevocable standby letters of credit issued by Federal Home Loan Banks, the amount of 116.33collateral shall be at least equal to the amount on deposit plus accrued interest at the close 117.1of the financial institution's banking day. The financial institution may furnish both a 117.2surety bond and collateral aggregating the required amount.117.3    Sec. 2. Minnesota Statutes 2006, section 123B.61, is amended to read:117.4123B.61 PURCHASE OF CERTAIN EQUIPMENT.117.5    The board of a district may issue general obligation certificates of indebtedness 117.6or capital notes subject to the district debt limits to: (a) purchase vehicles, computers, 117.7telephone systems, cable equipment, photocopy and office equipment, technological 117.8equipment for instruction, and other capital equipment having an expected useful life at 117.9least as long as the terms of the certificates or notes; (b) purchase computer hardware and 117.10software, without regard to its expected useful life, whether bundled with machinery or 117.11equipment or unbundled, together with application development services and training 117.12related to the use of the computer; and (c) prepay special assessments. The certificates or 117.13notes must be payable in not more than five ten years and must be issued on the terms 117.14and in the manner determined by the board, except that certificates or notes issued to 117.15prepay special assessments must be payable in not more than 20 years. The certificates 117.16or notes may be issued by resolution and without the requirement for an election. The 117.17certificates or notes are general obligation bonds for purposes of section 
         126C.55. A tax 117.18levy must be made for the payment of the principal and interest on the certificates or 117.19notes, in accordance with section 
         475.61, as in the case of bonds. The sum of the tax 117.20levies under this section and section 
         123B.62 for each year must not exceed the lesser 117.21of the amount of the district's total operating capital revenue or the sum of the district's 117.22levy in the general and community service funds excluding the adjustments under this 117.23section for the year preceding the year the initial debt service levies are certified. The 117.24district's general fund levy for each year must be reduced by the sum of (1) the amount 117.25of the tax levies for debt service certified for each year for payment of the principal and 117.26interest on the certificates or notes issued under this section as required by section 
         475.61, 117.27(2) the amount of the tax levies for debt service certified for each year for payment of the 117.28principal and interest on bonds issued under section 
         123B.62, and (3) any excess amount 117.29in the debt redemption fund used to retire bonds, certificates, or notes issued under this 117.30section or section 
         123B.62 after April 1, 1997, other than amounts used to pay capitalized 117.31interest. If the district's general fund levy is less than the amount of the reduction, the 117.32balance shall be deducted first from the district's community service fund levy, and next 117.33from the district's general fund or community service fund levies for the following year. A 117.34district using an excess amount in the debt redemption fund to retire the certificates or 117.35notes shall report the amount used for this purpose to the commissioner by July 15 of the 118.1following fiscal year. A district having an outstanding capital loan under section 
         126C.69118.2or an outstanding debt service loan under section 
         126C.68 must not use an excess amount 118.3in the debt redemption fund to retire the certificates or notes. 118.4    Sec. 3. Minnesota Statutes 2006, section 275.61, subdivision 1, is amended to read:118.5    Subdivision 1. Market value.(a) For local governmental subdivisions other than 118.6school districts, any levy, including the issuance of debt obligations payable in whole or in 118.7part from property taxes, required to be approved and approved by the voters at a general 118.8or special election for taxes payable in 1993 and thereafter, shall be levied against the 118.9referendum market value of all taxable property within the governmental subdivision, as 118.10defined in section 
         126C.01, subdivision 3. Any levy amount subject to the requirements of 118.11this section shall be certified separately to the county auditor under section 
         275.07. 118.12    (b) The ballot shall state the maximum amount of the increased levy as a percentage 118.13of market value and the amount that will be raised by the new referendum tax rate in the 118.14first year it is to be levied.118.15    (c) This subdivision does not apply to tax levies for the payment of debt obligations 118.16that are approved by the voters after June 30, 2008.118.17EFFECTIVE DATE.This section is effective the day following final enactment.118.18    Sec. 4. Minnesota Statutes 2006, section 331A.05, subdivision 2, is amended to read:118.19    Subd. 2. Time of notice. Unless otherwise specified by a particular statute law, or 118.20by order of a court, publication of a public notice shall be as follows:118.21    (a) the notice shall be published once;118.22    (b) if the notice is intended to inform the public about a future event, the last 118.23publication shall occur not more than 14 30 days and not less than seven days before 118.24the event;118.25    (c) if the notice is intended to inform the public about a past action or event, the last 118.26publication shall occur not more than 45 days after occurrence of the action or event.118.27    Sec. 5. Minnesota Statutes 2006, section 365A.02, is amended to read:118.28365A.02 DEFINITION DEFINITIONS.118.29    Subdivision 1.Subordinate service district. "Subordinate service district" means a 118.30defined area within the town in which one or more governmental services or additions to 118.31townwidespecial services are provided by the town specially for the area and financed 119.1from revenues from the area. The boundaries of a single subordinate service district 119.2may not embrace an entire town.119.3    Subd. 2.Special services."Special services" means one or more governmental 119.4services or additions to townwide services provided by the town specially for the area 119.5and financed from revenues from the area.119.6    Sec. 6. Minnesota Statutes 2006, section 365A.04, is amended to read:119.7365A.04 CREATION BY PETITION.119.8    Subdivision 1. Petition. A petition signed by at least 50 percent of the property 119.9owners in the part of the town proposed for the subordinate service district may be 119.10submitted to the town board requesting the establishment of a subordinate service district 119.11to provide a service that the town is otherwise authorized by law to provide. The petition 119.12must include the territorial boundaries of the proposed district and specify the kinds of 119.13services to be provided within the district.119.14    Subd. 2. Public hearing. Upon receipt of the petition, and the verification of the 119.15signatures by the town clerk, the town board shall, within 30 days following verification, 119.16hold a public hearing on the question of whether or not the requested district shall be 119.17established. The notice of public hearing must specify the special services to be provided 119.18within the subordinate service district and must specify the territorial boundaries of the 119.19requested district. The notice of public hearing must be published once in a newspaper of 119.20general circulation in the town at least 14 days prior to the date of the public hearing.119.21    Subd. 3. Approval; disapproval. Within 30 days after the public hearing, the 119.22town board by resolution shall approve or disapprove the establishment of the requested 119.23district. An approving resolution must specify the special services to be provided within 119.24the subordinate service district and must specify the territorial boundaries of the district. 119.25A resolution approving the establishment of the district may contain amendments or 119.26modifications of the district's boundaries or functions as set forth in the petition.119.27    Sec. 7. Minnesota Statutes 2006, section 365A.08, is amended to read:119.28365A.08 FINANCING.119.29    Subdivision 1.Budget.(a) Upon adoption of the next annual budget following 119.30the creation of a subordinate service district the town board shall include in the budget 119.31appropriate provisions for the operation of the district including either a property tax 119.32levied only on property of the users of the service within the boundaries of the district 119.33or a levy of a service charge against the users of the service within the district, or a 119.34combination of a property tax and a service charge on the users of the service.120.1    (b) A tax or service charge or a combination of them may be imposed to finance a 120.2function or service in the district that the town ordinarily provides throughout the town 120.3only to the extent that there is an increase in the level of the function or service provided 120.4in the service district over that provided throughout the town. In that case, in addition 120.5to the townwide tax levy, an amount necessary to pay for the increase in the level of the 120.6function or service may be imposed in the district.120.7    Subd. 2.Bonds.At any time after the requirements of section 356A.06 have been 120.8met and the subordinate service district created, the town board may issue obligations 120.9in an amount it deems necessary to defray in whole or in part the expense incurred 120.10and estimated to be incurred in making capital improvements necessary to operate the 120.11subordinate service district and provide the special services in the district, including every 120.12item of cost from inception to completion and all fees and expenses incurred in connection 120.13with the capital improvements or the financing. The obligations are payable primarily 120.14out of the proceeds of the taxes and service charges imposed under subdivision 1, net 120.15revenues as described in section 444.075, and special assessments under chapter 429. The 120.16town board may by resolution pledge the full faith credit and taxing power of the town 120.17to ensure payment of the principal and interest on the obligations if the proceeds of the 120.18taxes and service charges are insufficient to pay the principal and interest. Obligations 120.19must be issued in accordance with chapter 475, except that an election is not required, and 120.20the amount of the obligations is not included in determining the net indebtedness of the 120.21town under the provisions of any law limiting indebtedness.120.22    Subd. 3.Covenants to secure obligations.In resolutions authorizing the issuance 120.23of general or special obligations and pledging taxes and service charges imposed under 120.24subdivision 1, net revenues, or special assessments to their payment, the town board 120.25may make covenants for the protection of holders of the obligations and taxpayers of the 120.26town as it deems necessary, including a covenant that the town will impose and collect 120.27charges of the nature authorized by this chapter at the time and in the amounts required to 120.28produce, together with any taxes or special assessments designated as a primary source 120.29of payment of the obligations, funds adequate to pay all principal and interest when due 120.30on the obligations, and to create and maintain reserves securing the payments as may be 120.31provided in the resolutions.120.32    Sec. 8. Minnesota Statutes 2006, section 365A.095, is amended to read:120.33365A.095 PETITION FOR REMOVAL OF DISTRICT; PROCEDURE.120.34    Subdivision 1.Petition. A petition signed by at least 75 percent of the property 120.35owners in the territory of the subordinate service district requesting the removal of the 121.1district may be presented to the town board. Within 30 days after the town board receives 121.2the petition, the town clerk shall determine the validity of the signatures on the petition. If 121.3the requisite number of signatures are certified as valid, the town board must hold a public 121.4hearing on the petitioned matter. Within 30 days after the end of the hearing, the town 121.5board must decide whether to discontinue the subordinate service district, continue as it is, 121.6or take some other action with respect to it.121.7    Subd. 2.Bonds.If obligations have been issued for the benefit of the subordinate 121.8service district, the rates, charges, and tax levies, if any, continue until the obligations and 121.9any obligations issued to refund them have been paid in full.121.10    Sec. 9. Minnesota Statutes 2006, section 373.01, subdivision 3, is amended to read:121.11    Subd. 3. Capital notes. (a) A county board may, by resolution and without 121.12referendum, issue capital notes subject to the county debt limit to purchase capital 121.13equipment useful for county purposes that has an expected useful life at least equal to the 121.14term of the notes. The notes shall be payable in not more than ten years and shall be 121.15issued on terms and in a manner the board determines. A tax levy shall be made for 121.16payment of the principal and interest on the notes, in accordance with section 
         475.61, 121.17as in the case of bonds.121.18    (b) For purposes of this subdivision, "capital equipment" means:121.19    (1) public safety, ambulance, road construction or maintenance, and medical 121.20equipment; and121.21    (2) computer hardware and software, whether bundled with machinery or equipment 121.22or unbundled. The authority to issue capital notes for software expires on July 1, 2007.121.23    Sec. 10. Minnesota Statutes 2006, section 373.40, subdivision 4, is amended to read:121.24    Subd. 4. Limitations on amount. A county, other than Ramsey, may not issue 121.25bonds under this section if the maximum amount of principal and interest to become due in 121.26any year on all the outstanding bonds issued pursuant to this section (including the bonds 121.27to be issued) will equal or exceed 0.05367 0.12 percent of taxable market value of property 121.28in the county. Ramsey county may not issue bonds under this section if the maximum 121.29amount of principal and interest to become due in any year on all the outstanding bonds 121.30issued pursuant to this section (including the bonds to be issued) will equal or exceed 121.310.06455 percent of taxable market value of property in the county. Calculation of the 121.32limit must be made using the taxable market value for the taxes payable year in which 121.33the obligations are issued and sold. This section does not limit the authority to issue 121.34bonds under any other special or general law.122.1EFFECTIVE DATE.This section is effective the day following final enactment.122.2    Sec. 11. Minnesota Statutes 2006, section 375B.09, is amended to read:122.3375B.09 FINANCING.122.4    Subdivision 1.Budget.(a) Upon adoption of the next annual budget following the 122.5creation of a subordinate service district the county board shall include in the budget 122.6appropriate provisions for the operation of the district including, as appropriate, either a 122.7property tax levied only on property within the boundaries of the district or a levy of a 122.8service charge against the users of the service within the district, or any combination of a 122.9property tax and a service charge.122.10    (b) A tax or service charge or a combination thereof shall not be imposed to finance a 122.11function or service in the subordinate service district which the county generally provides 122.12throughout the county unless an increase in the level of the service is to be supplied in the 122.13subordinate service district in which case, in addition to the countywide tax levy, only an 122.14amount necessary to pay for the increased level of service may be imposed.122.15    Subd. 2.Bonds.At any time after the requirements of section 375B.07 have been 122.16met and the subordinate service district created, the county board may issue obligations 122.17in an amount it deems necessary to defray in whole or in part the expense incurred 122.18and estimated to be incurred in making capital improvements necessary to operate the 122.19subordinate service district and provide the special services in the district, including every 122.20item of cost from inception to completion and all fees and expenses incurred in connection 122.21with the capital improvements or the financing. The obligations shall be payable primarily 122.22out of the proceeds of the taxes and service charges imposed pursuant to subdivision 1, net 122.23revenues as described in section 444.075, and special assessments under chapter 429. The 122.24county board may by resolution pledge the full faith credit and taxing power of the county 122.25to ensure payment of the principal and interest on the obligations if the proceeds of the 122.26taxes and service charges are insufficient to pay the principal and interest. Obligations 122.27must be issued in accordance with chapter 475, except that an election is not required, and 122.28the amount of the obligations is not included in determining the net indebtedness of the 122.29county under the provisions of any law limiting indebtedness.122.30    Subd. 3.Covenants to secure obligations.In resolutions authorizing the issuance 122.31of general or special obligations and pledging taxes and service charges imposed under 122.32subdivision 1, net revenues, or special assessments to their payment, the county board 122.33may make covenants for the protection of holders of the obligations and taxpayers of the 122.34county as it deems necessary, including a covenant that the county will impose and collect 122.35charges of the nature authorized by this chapter at the time and in the amounts required to 123.1produce, together with any taxes or special assessments designated as a primary source 123.2of payment of the obligations, funds adequate to pay all principal and interest when due 123.3on the obligations and to create and maintain reserves securing the payments as may be 123.4provided in the resolutions.123.5    Subd. 4.Continuance in the event of withdrawal.If obligations have been issued 123.6for the benefit of the subordinate service district, and the district is withdrawn or removed 123.7pursuant to either section 375B.10 or 375B.11, the rates, charges, and tax levies, if any, in 123.8the withdrawn or removed district must continue until the obligations and any obligations 123.9issued to refund them have been paid in full.123.10EFFECTIVE DATE.This section is effective the day following final enactment.123.11    Sec. 12. Minnesota Statutes 2006, section 383B.117, subdivision 2, is amended to read:123.12    Subd. 2. Equipment acquisition; capital notes. The board may, by resolution and 123.13without public referendum, issue capital notes within existing debt limits for the purpose 123.14of purchasing ambulance and other medical equipment, road construction or maintenance 123.15equipment, public safety equipment and other capital equipment having an expected 123.16useful life at least equal to the term of the notes issued. The notes shall be payable in 123.17not more than five ten years and shall be issued on terms and in a manner as the board 123.18determines. The total principal amount of the notes issued for any fiscal year shall not 123.19exceed one percent of the total annual budget for that year and shall be issued solely for 123.20the purchases authorized in this subdivision. A tax levy shall be made for the payment 123.21of the principal and interest on such notes as in the case of bonds. For purposes of this 123.22subdivision, "equipment" includes computer hardware and software, whether bundled with 123.23machinery or equipment or unbundled. For purposes of this subdivision, the term "medical 123.24equipment" includes computer hardware and software and other intellectual property for 123.25use in medical diagnosis, medical procedures, research, record keeping, billing, and other 123.26hospital applications, together with application development services and training related 123.27to the use of the computer hardware and software and other intellectual property, all 123.28without regard to their useful life. For purposes of determining the amount of capital notes 123.29which the county may issue in any year, the budget of the county and Hennepin Healthcare 123.30System, Inc. shall be combined and the notes issuable under this subdivision shall be in 123.31addition to obligations issuable under section 
         373.01, subdivision 3.123.32EFFECTIVE DATE.This section is effective the day following final enactment.123.33    Sec. 13. Minnesota Statutes 2006, section 383B.77, subdivision 1, is amended to read:124.1    Subdivision 1. Creation. The Hennepin County Housing and Redevelopment 124.2Authority is created in the county of Hennepin. It shall have all of the powers and duties 124.3of a housing and redevelopment authority under sections 
         469.001 to 
         469.047. For the 124.4purposes of applying the municipal housing and redevelopment act to Hennepin County, 124.5the county has all of the powers and duties of a city, the county board has all the powers 124.6and duties of a governing body, the chair of the county board has all of the powers and 124.7duties of a mayor, and, notwithstanding section 469.008, the area of operation includes the 124.8area within the territorial boundaries of the county. 124.9EFFECTIVE DATE.Because the population of Hennepin County is more than 124.101,000,000, under Minnesota Statutes, section 645.023, this section is effective without 124.11local approval.124.12    Sec. 14. Minnesota Statutes 2006, section 383B.77, subdivision 2, is amended to read:124.13    Subd. 2. Limitation. This section does not limit or restrict any existing housing 124.14and redevelopment authority or prevent a municipality from creating an authority. For 124.15purposes of this subdivision, "housing and redevelopment authority" includes any 124.16municipal department, agency, or authority of the city of Minneapolis which exercises the 124.17powers of a housing and redevelopment authority pursuant to section 
         469.003 or other 124.18law. The county authority shall notify a municipal authority by January 31 of each year 124.19as to the activities the county authority plans to participate in within the municipality. 124.20The municipal authority shall notify the county authority within 45 days of the date of 124.21the notice from the county authority, if the municipal authority does not consent to the 124.22activities of the county authority. The county authority shall not exercise its powers in a 124.23municipality where a housing and redevelopment authority was created under Minnesota 124.24Statutes 1969, chapter 462, before June 8, 1971, except as provided in this subdivision. If a 124.25city housing and redevelopment authority requests the county housing and redevelopment 124.26authority to exercise any power or perform any function of the municipal authority, the 124.27county authority may do so. 124.28EFFECTIVE DATE.Because the population of Hennepin County is more than 124.291,000,000, under Minnesota Statutes, section 645.023, this section is effective without 124.30local approval.124.31    Sec. 15. Minnesota Statutes 2006, section 410.32, is amended to read:124.32410.32 CITIES MAY ISSUE CAPITAL NOTES FOR CAPITAL EQUIPMENT.125.1    (a) Notwithstanding any contrary provision of other law or charter, a home rule 125.2charter city may, by resolution and without public referendum, issue capital notes subject 125.3to the city debt limit to purchase capital equipment.125.4    (b) For purposes of this section, "capital equipment" means:125.5    (1) public safety equipment, ambulance and other medical equipment, road 125.6construction and maintenance equipment, and other capital equipment; and125.7    (2) computer hardware and software, whether bundled with machinery or equipment 125.8or unbundled.125.9    (c) The equipment or software must have an expected useful life at least as long as the 125.10term of the notes. The authority to issue capital notes for software expires on July 1, 2007.125.11    (d) The notes shall be payable in not more than ten years and be issued on terms and 125.12in the manner the city determines. The total principal amount of the capital notes issued 125.13in a fiscal year shall not exceed 0.03 percent of the market value of taxable property 125.14in the city for that year.125.15    (e) A tax levy shall be made for the payment of the principal and interest on the 125.16notes, in accordance with section 
         475.61, as in the case of bonds.125.17    (f) Notes issued under this section shall require an affirmative vote of two-thirds of 125.18the governing body of the city.125.19    (g) Notwithstanding a contrary provision of other law or charter, a home rule charter 125.20city may also issue capital notes subject to its debt limit in the manner and subject to the 125.21limitations applicable to statutory cities pursuant to section 
         412.301.125.22EFFECTIVE DATE.This section is effective the day following final enactment.125.23    Sec. 16. Minnesota Statutes 2006, section 412.301, is amended to read:125.24412.301 FINANCING PURCHASE OF CERTAIN EQUIPMENT.125.25    (a) The council may issue certificates of indebtedness or capital notes subject to the 125.26city debt limits to purchase capital equipment.125.27    (b) For purposes of this section, "capital equipment" means:125.28    (1) public safety equipment, ambulance and other medical equipment, road 125.29construction and maintenance equipment, and other capital equipment; and125.30    (2) computer hardware and software, whether bundled with machinery or equipment 125.31or unbundled.125.32    (c) The equipment or software must have an expected useful life at least as long as 125.33the terms of the certificates or notes. The authority to issue capital notes for software 125.34expires on July 1, 2007.126.1    (d) Such certificates or notes shall be payable in not more than ten years and shall be 126.2issued on such terms and in such manner as the council may determine.126.3    (e) If the amount of the certificates or notes to be issued to finance any such purchase 126.4exceeds 0.25 percent of the market value of taxable property in the city, they shall not 126.5be issued for at least ten days after publication in the official newspaper of a council 126.6resolution determining to issue them; and if before the end of that time, a petition asking 126.7for an election on the proposition signed by voters equal to ten percent of the number of 126.8voters at the last regular municipal election is filed with the clerk, such certificates or notes 126.9shall not be issued until the proposition of their issuance has been approved by a majority 126.10of the votes cast on the question at a regular or special election.126.11    (f) A tax levy shall be made for the payment of the principal and interest on such 126.12certificates or notes, in accordance with section 
         475.61, as in the case of bonds.126.13EFFECTIVE DATE.This section is effective the day following final enactment.126.14    Sec. 17. Minnesota Statutes 2006, section 453A.02, subdivision 3, is amended to read:126.15    Subd. 3. City. "City" means a city organized and existing under the laws of 126.16Minnesota or a city charter adopted pursuant thereto, and authorized by such laws or 126.17charter to engage in the local distribution and sale of gas, provided that any city so 126.18engaged on January 1, 1979 is authorized to continue such distribution and sale, and every 126.19city now or hereafter so authorized may exercise, either individually or as a member of a 126.20municipal gas agency, all of the powers granted in sections 
         453A.01 to 
         453A.12. 126.21    City also includes a city organized and existing under the laws of another state or 126.22a city charter adopted pursuant thereto which participates in a municipal gas agency 126.23with Minnesota cities.126.24    Sec. 18. [471.6175] TRUST FOR POSTEMPLOYMENT BENEFITS.126.25    Subdivision 1.Authorization; establishment.A political subdivision or other 126.26public entity that creates or has created an actuarial liability to pay postemployment 126.27benefits to employees or officers after their termination of service may establish a trust to 126.28pay those benefits. For purposes of this section, the term "postemployment benefits" means 126.29benefits giving rise to a liability under Statement No. 45 of the Governmental Accounting 126.30Standards Board and the term "trust" means a trust, a trust account, or a custodial account 126.31or contract authorized under section 401(f) of the Internal Revenue Code.126.32    Subd. 2.Purpose of trust.The trust established under this section may only be 126.33used to pay postemployment benefits and may be either revocable or irrevocable.127.1    Subd. 3.Trust administrator.The trust administrator of a trust established under 127.2this section shall be either:127.3    (1) the Public Employees Retirement Association; 127.4    (2) a bank or banking association incorporated under the laws of the United States or 127.5of any state and authorized by the laws under which it is organized to exercise corporate 127.6trust powers; or 127.7    (3) an insurance company or agency qualified to do business in Minnesota which has 127.8at least five years' experience in investment products and services for group retirement 127.9benefits and which has a specialized department dedicated to services for retirement 127.10investment products. 127.11    A political subdivision or public entity may, in its discretion and in compliance 127.12with any applicable trust document, change trust administrators and transfer trust assets 127.13accordingly.127.14    Subd. 4.Account maintenance.(a) A political subdivision or other public entity 127.15may establish a trust account to be held under the supervision of the trust administrator for 127.16the purposes of this section. A trust administrator shall establish a separate account for 127.17each participating political subdivision or public entity. The trust administrator may charge 127.18participating political subdivisions and public entities fees for reasonable administrative 127.19costs. The amount of any fees charged by the Public Employees Retirement Association is 127.20appropriated to the association from the account. A trust administrator may establish other 127.21reasonable terms and conditions for creation and maintenance of these accounts. 127.22    (b) The trust administrator must report to the political subdivision or other public 127.23entity on the investment returns of invested trust assets and on all investment fees or costs 127.24incurred by the trust. The annual rates of return, along with investment and administrative 127.25fees and costs for the trust, must be disclosed in the political subdivision's or public entity's 127.26annual financial audit in a manner prescribed by the state auditor. 127.27    (c) Effective for fiscal years beginning after December 31, 2009, the trust 127.28administrator must report electronically to the state auditor the portfolio and performance 127.29information specified in section 356.219, subdivision 3, in the manner prescribed by 127.30the state auditor.127.31    Subd. 5.Investment.(a) The assets of a trust or trust account shall be invested and 127.32held as stipulated in paragraphs (b) to (e).127.33    (b) The Public Employees Retirement Association must certify all money in the trust 127.34accounts for which it is trust administrator to the State Board of Investment for investment 127.35under section 11A.14, subject to the policies and procedures established by the State 128.1Board of Investment. Investment earnings must be credited to the trust account of the 128.2individual political subdivision or public entity.128.3    (c) A trust administrator, other than the Public Employees Retirement Association, 128.4must ensure that all money in the trust accounts for which it is trust administrator is 128.5invested by a registered investment adviser, a bank investment trust department, or an 128.6insurance company or  agency retirement investment department. Investment earnings 128.7must be credited to the trust account of the individual political subdivision or public entity.128.8    (d) For trust assets invested by the State Board of Investment, the investment 128.9restrictions shall be the same as those generally applicable to the State Board of 128.10Investment. For trust assets invested by a trust administrator other than the Public 128.11Employees Retirement Association, the assets may only be invested in investments 128.12authorized under chapter 118A or section 356A.06, subdivision 7, in the manner specified 128.13in the applicable trust document.128.14    (e) A political subdivision or public entity may provide investment direction to a 128.15trust administrator in compliance with any applicable trust document.128.16    Subd. 6.Limit on deposit.A political subdivision or public entity may not 128.17deposit money in a trust or trust account created pursuant to this section if the total 128.18amount invested by that political subdivision or public entity would exceed the political 128.19subdivision's or public entity's actuarially determined liabilities for postemployment 128.20benefits due to officers and employees, as determined under the applicable standards of the 128.21Governmental Accounting Standards Board.128.22    Subd. 7.Withdrawal of funds and termination of account.(a) For a revocable 128.23account, a political subdivision or public entity may withdraw some or all of its money 128.24or terminate the trust account. Money and accrued investment earnings withdrawn 128.25from a revocable account must be deposited in a fund separate and distinct from any 128.26other funds of the political subdivision or public entity. This money, with accrued 128.27investment earnings, must be used to pay legally enforceable postemployment benefits 128.28to former officers and employees, unless (i) there has been a change in state or federal 128.29law affecting that political subdivision's or public entity's liabilities for postemployment 128.30benefits, or (ii) there has been a change in the demographic composition of that political 128.31subdivision's or public entity's employees eligible for postemployment benefits, or (iii) 128.32there has been a change in the provisions or terms of the postemployment benefits in that 128.33political subdivision or public entity including, but not limited to, the portion of the costs 128.34eligible employees must pay to receive the benefits, or (iv) other factors exist that have 128.35a material effect on that political subdivision's or public entity's actuarially determined 128.36liabilities for postemployment benefits, in which event any amount in excess of 100 129.1percent of that political subdivision's or public entity's actuarially determined liabilities for 129.2postemployment benefits, as determined under standards of the Government Accounting 129.3Standards Board, may be withdrawn and used for any purpose.129.4    (b) For an irrevocable account, a political subdivision or public entity may withdraw 129.5money only:129.6    (1) as needed to pay postemployment benefits owed to former officers and employees 129.7of the political subdivision or public entity; or129.8    (2) when all postemployment benefit  liability owed to former officers or employees 129.9of the political subdivision or public entity has been satisfied or otherwise defeased.129.10    (c) A political subdivision or public entity requesting withdrawal of money from 129.11an account created under this section must do so at a time and in the manner required by 129.12the executive director of the Public Employees Retirement Association or specified in an 129.13applicable trust document. The political subdivision or public entity that created the trust 129.14must ensure that withdrawals comply with the requirements of this section.129.15    (d) The legislature may not divert funds in these trusts or trust accounts for use 129.16for another purpose.129.17    Subd. 8.Status of irrevocable trust.(a) All money in an irrevocable trust or trust 129.18account created in this section is held in trust for the exclusive benefit of former officers 129.19and employees of the participating political subdivision or public entity, and is not subject 129.20to claims by creditors of the state, the participating political subdivision or public entity, 129.21the current or former officers and employees of the political subdivision or public entity, 129.22or the trust administrator.129.23    (b) An irrevocable trust fund or trust account created in this section shall be deemed 129.24an arrangement equivalent to a trust for all legal purposes.129.25EFFECTIVE DATE.This section is effective the day following final enactment, 129.26and is applicable immediately to all political subdivisions or public entities subject to 129.27Statement No. 45 of the Governmental Accounting Standards Board in 2007, to those 129.28political subdivisions or public entities whose trusts or trust accounts are validated 129.29by section 27, and to those political subdivisions or public entities that have begun 129.30consideration in 2007 of measures to implement Statement No. 45. This section is 129.31applicable on July 1, 2008, for all other political subdivisions or public entities.129.32    Sec. 19. Minnesota Statutes 2006, section 473.39, is amended by adding a subdivision 129.33to read:129.34    Subd. 1m.Obligations.After March 1, 2008, in addition to other authority in this 129.35section, the council may issue certificates of indebtedness, bonds, or other obligations 130.1under this section in an amount not exceeding $33,600,000 for capital expenditures as 130.2prescribed in the council's regional transit master plan and transit capital improvement 130.3program and for related costs, including the costs of issuance and sale of the obligations.130.4APPLICATION AND EFFECTIVE DATE.This section applies in the counties of 130.5Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington, and is effective the 130.6day following final enactment.130.7    Sec. 20. Minnesota Statutes 2006, section 473.39, is amended by adding a subdivision 130.8to read:130.9    Subd. 5.Anticipation of grants.In addition to other authority granted in this 130.10section, the council may exercise the authority granted to an issuing political subdivision 130.11by section 475.522.130.12APPLICATION AND EFFECTIVE DATE.This section applies in the counties of 130.13Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington, and is effective the 130.14day following final enactment.130.15    Sec. 21. Minnesota Statutes 2006, section 475.51, subdivision 4, is amended to read:130.16    Subd. 4. Net debt. "Net debt" means the amount remaining after deducting from its 130.17gross debt the amount of current revenues which are applicable within the current fiscal 130.18year to the payment of any debt and the aggregate of the principal of the following:130.19    (1) Obligations issued for improvements which are payable wholly or partly from the 130.20proceeds of special assessments levied upon property specially benefited thereby, including 130.21those which are general obligations of the municipality issuing them, if the municipality is 130.22entitled to reimbursement in whole or in part from the proceeds of the special assessments.130.23    (2) Warrants or orders having no definite or fixed maturity.130.24    (3) Obligations payable wholly from the income from revenue producing 130.25conveniences.130.26    (4) Obligations issued to create or maintain a permanent improvement revolving 130.27fund.130.28    (5) Obligations issued for the acquisition, and betterment of public waterworks 130.29systems, and public lighting, heating or power systems, and of any combination thereof or 130.30for any other public convenience from which a revenue is or may be derived.130.31    (6) Debt service loans and capital loans made to a school district under the provisions 130.32of sections 
         126C.68 and 
         126C.69.131.1    (7) Amount of all money and the face value of all securities held as a debt service 131.2fund for the extinguishment of obligations other than those deductible under this 131.3subdivision.131.4    (8) Obligations to repay loans made under section 
         216C.37.131.5    (9) Obligations to repay loans made from money received from litigation or 131.6settlement of alleged violations of federal petroleum pricing regulations.131.7    (10) Obligations issued to pay pension fund or other postemployment benefit 131.8liabilities under section 
         475.52, subdivision 6, or any charter authority.131.9    (11) Obligations issued to pay judgments against the municipality under section 131.10475.52, subdivision 6
         , or any charter authority.131.11    (12) All other obligations which under the provisions of law authorizing their 131.12issuance are not to be included in computing the net debt of the municipality.131.13EFFECTIVE DATE.This section is effective for obligations issued after June 131.1430, 2008.131.15    Sec. 22. Minnesota Statutes 2006, section 475.52, subdivision 6, is amended to read:131.16    Subd. 6. Certain purposes. Any municipality may issue bonds for paying 131.17judgments against it; for refunding outstanding bonds; for funding floating indebtedness;131.18for funding actuarial liabilities to pay postemployment benefits to employees or officers 131.19after their termination of service; or for funding all or part of the municipality's current 131.20and future unfunded liability for a pension or retirement fund or plan referred to in 131.21section 
         356.20, subdivision 2, as those liabilities are most recently computed pursuant 131.22to sections 
         356.215 and 
         356.216. The board of trustees or directors of a pension fund or 131.23relief association referred to in section 
         69.77 or chapter 422A must consent and must 131.24be a party to any contract made under this section with respect to the fund held by it 131.25for the benefit of and in trust for its members. For purposes of this section, the term 131.26"postemployment benefits" means benefits giving rise to a liability under Statement No. 131.2745 of the Governmental Accounting Standards Board.131.28    Sec. 23. [475.522] GRANT ANTICIPATION FINANCING OF 131.29TRANSPORTATION OR TRANSIT PROJECTS.131.30    Subdivision 1.Definitions.For purposes of this section, the term "political 131.31subdivision" means a county or a statutory or home rule charter city, and the term 131.32"issuing political subdivision" means a political subdivision that issues obligations under 131.33subdivision 2.132.1    Subd. 2.Authorization.An issuing political subdivision may enter into agreements 132.2with any other political subdivision of the state, within or without its jurisdiction, and any 132.3state agency, with respect to federal grants for transportation or transit projects to be 132.4received directly or indirectly by or on behalf of the political subdivision or agency, 132.5under an executed grant agreement with the relevant federal agency. The agreements 132.6may provide that the political subdivision or agency will pledge to the issuing political 132.7subdivision all or a specified portion of the federal grants received by or on behalf of the 132.8political subdivision or agency for a specified period of years, or until all obligations issued 132.9by the issuing political subdivision under subdivision 3 with respect to those federal grants 132.10have been paid or legally defeased. If the issuing political subdivision issues obligations 132.11under subdivision 3, the agreements must provide the method by which the proceeds of 132.12the obligations will be used to pay or reimburse the costs of the transportation or transit 132.13projects relating to the federal grants described in the executed federal grant agreement.132.14    Subd. 3.Issuance of obligations.In anticipation of any federal grants for 132.15transportation or transit projects to be received directly or indirectly by any political 132.16subdivision or agency as specified in subdivision 1, or by an issuing political subdivision 132.17with respect to any transportation or transit projects within its jurisdiction, an issuing 132.18political subdivision may issue its obligations payable from the collections of those 132.19federal grants. The obligations may be issued in the principal amount the issuing political 132.20subdivision determines provided that the estimated collections of the federal grants under 132.21the relevant executed federal grant agreement in each year in which the obligations will 132.22be outstanding must be at least equal to:132.23    (1) if the obligations are to be issued as revenue obligations, 150 percent of the 132.24maximum annual debt service on the obligations; or132.25    (2) if the obligations are to be issued as general obligations, 110 percent of the 132.26maximum annual debt service on the obligations.132.27    Except as otherwise provided in this section, the issuing political subdivision shall 132.28provide for the issuance, sale, and security of the obligations as provided in chapter 475, 132.29and has the same powers and duties as a municipality issuing bonds under that law, except 132.30that no election is required and the net debt limitations in chapter 475 do not apply to the 132.31obligations. The issuing political subdivision may determine to issue the obligations as 132.32revenue obligations, payable solely from the collections of the federal grants anticipated, 132.33or may pledge its full faith and credit to the payment of the obligations.132.34    Subd. 4.Use of proceeds.The proceeds of the obligations must be used:132.35    (1) to pay or reimburse the costs of the transportation or transit projects relating to 132.36the federal grants being anticipated;133.1    (2) to pay the costs of issuance of the obligations, including credit enhancement; 133.2    (3) to pay interest on the obligations for a period not exceeding three years from 133.3their date of issue; and133.4    (4) if the full faith and credit of the issuing political subdivision is not pledged to the 133.5payment of the obligations, to fund a debt service reserve fund for the obligations.133.6    Sec. 24. Minnesota Statutes 2006, section 475.53, subdivision 1, is amended to read:133.7    Subdivision 1. Generally. Except as otherwise provided in sections 
         475.51 to 133.8475.74
         , no municipality, except a school district or a city of the first class, shall incur or 133.9be subject to a net debt in excess of two three percent of the market value of taxable 133.10property in the municipality. 133.11EFFECTIVE DATE.This section is effective for obligations issued after June 133.1230, 2008.133.13    Sec. 25. Minnesota Statutes 2006, section 475.58, subdivision 1, is amended to read:133.14    Subdivision 1. Approval by electors; exceptions. Obligations authorized by law or 133.15charter may be issued by any municipality upon obtaining the approval of a majority of 133.16the electors voting on the question of issuing the obligations, but an election shall not be 133.17required to authorize obligations issued:133.18    (1) to pay any unpaid judgment against the municipality;133.19    (2) for refunding obligations;133.20    (3) for an improvement or improvement program, which obligation is payable wholly 133.21or partly from the proceeds of special assessments levied upon property specially benefited 133.22by the improvement or by an improvement within the improvement program, or from tax 133.23increments, as defined in section 
         469.174, subdivision 25, including obligations which are 133.24the general obligations of the municipality, if the municipality is entitled to reimbursement 133.25in whole or in part from the proceeds of such special assessments or tax increments and 133.26not less than 20 percent of the cost of the improvement or the improvement program is to 133.27be assessed against benefited property or is to be paid from the proceeds of federal grant 133.28funds or a combination thereof, or is estimated to be received from tax increments;133.29    (4) payable wholly from the income of revenue producing conveniences;133.30    (5) under the provisions of a home rule charter which permits the issuance of 133.31obligations of the municipality without election;133.32    (6) under the provisions of a law which permits the issuance of obligations of a 133.33municipality without an election;134.1    (7) to fund pension or retirement fund or postemployment benefit liabilities pursuant 134.2to section 
         475.52, subdivision 6; 134.3    (8) under a capital improvement plan under section 
         373.40; and 134.4    (9) under sections 
         469.1813 to 
         469.1815 (property tax abatement authority bonds), if 134.5the proceeds of the bonds are not used for a purpose prohibited under section 
         469.176, 134.6subdivision 4g
         , paragraph (b). 134.7    Sec. 26. Minnesota Statutes 2006, section 475.58, subdivision 3b, is amended to read:134.8    Subd. 3b. Street reconstruction. (a) A municipality may, without regard to 134.9the election requirement under subdivision 1, issue and sell obligations for street 134.10reconstruction, if the following conditions are met:134.11    (1) the streets are reconstructed under a street reconstruction plan that describes the 134.12streets to be reconstructed street reconstruction to be financed, the estimated costs, and 134.13any planned reconstruction of other streets in the municipality over the next five years, 134.14and the plan and issuance of the obligations has been approved by a vote of all of the 134.15members of the governing body present at the meeting following a public hearing for 134.16which notice has been published in the official newspaper at least ten days but not more 134.17than 28 days prior to the hearing; and134.18    (2) if a petition requesting a vote on the issuance is signed by voters equal to 134.19five percent of the votes cast in the last municipal general election and is filed with the 134.20municipal clerk within 30 days of the public hearing, the municipality may issue the bonds 134.21only after obtaining the approval of a majority of the voters voting on the question of 134.22the issuance of the obligations.134.23    (b) Obligations issued under this subdivision are subject to the debt limit of the 134.24municipality and are not excluded from net debt under section 
         475.51, subdivision 4.134.25    (c) For purposes of this subdivision, street reconstruction includes utility 134.26replacement and relocation and other activities incidental to the street reconstruction, turn 134.27lanes and other improvements having a substantial public safety function, realignments, 134.28other modifications to intersect with state and county roads, and the local share of state 134.29and county road projects.134.30    (d) Except in the case of turn lanes, safety improvements, realignments, intersection 134.31modifications, and the local share of state and county road projects, street reconstruction 134.32does not include the portion of project cost allocable to widening a street or adding curbs 134.33and gutters where none previously existed.134.34    Sec. 27. VALIDATION.135.1    Any trust or trust account or other custodial account or contract authorized under 135.2section 401(f) of the Internal Revenue Code, created prior to June 6, 2006, to pay 135.3postemployment benefits to employees or officers after termination of service, is hereby 135.4validated, may continue in full force and effect, and shall have continuing authority 135.5to accept new funds; however, this section does not validate or correct defects in any 135.6previously created trust document. Any funds held by a validated trust or account 135.7under this section may be invested as provided in Minnesota Statutes, section 471.6175, 135.8subdivision 5. A validated trust or account shall have until January 1, 2009, to bring 135.9its trust documents and procedures into compliance with Minnesota Statutes, section 135.10471.6175.135.11EFFECTIVE DATE.This section is effective the day following final enactment.135.12    Sec. 28. TOWN OF CRANE LAKE, CERTIFICATES OF INDEBTEDNESS.135.13    Notwithstanding Minnesota Statutes, section 366.095, or any other law to the 135.14contrary, the town board of the town of Crane Lake in St. Louis County may issue one 135.15or more certificates of indebtedness in a total amount not to exceed $250,000, which 135.16are not subject to the debt limits of the town. The proceeds of the certificates must be 135.17used to acquire property and pay other costs related to a land exchange with the United 135.18States Forest Service. The certificates shall be payable in not more than 30 years and be 135.19issued on the terms and in the manner as the board may determine. Minnesota Statutes, 135.20sections 475.54, subdivision 1, and 475.56, paragraph (c), do not apply to the certificates 135.21issued under this section. A tax levy shall be made to pay the principal and interest on the 135.22certificates as in the case of bonds.135.23EFFECTIVE DATE.This section is effective the day after the governing body of 135.24the town of Crane Lake and its chief clerical officer timely complete their compliance with 135.25Minnesota Statutes, section 645.021, subdivisions 2 and 3. 135.26    Sec. 29. CITY OF WINSTED; BONDING AUTHORITY.135.27    (a) The city of Winsted may issue general obligation bonds under Minnesota 135.28Statutes, chapter 475, to finance the acquisition and betterment of a facility consisting of 135.29a city hall, community center, and police station; park improvements, including trails 135.30and an amphitheater; related public improvements; and substantial landscaping for the 135.31improvements. 135.32    (b) The bonds may be issued as general obligations of the city without an election to 135.33approve the bonds under Minnesota Statutes, section 475.58.136.1    (c) The bonds are not included in computing any debt limitation applicable to the 136.2city, including, but not limited to, the net debt limits under Minnesota Statutes, section 136.3475.53, and the levy of taxes under Minnesota Statutes, section 475.61, to pay principal of 136.4and interest on the bonds is not subject to any levy limitation.136.5    (d) The aggregate principal amount of bonds used to pay costs of the acquisition and 136.6betterment of the facility consisting of a city hall, community center, and police station; 136.7park improvements, including trails and an amphitheater; related public improvements; 136.8and substantial landscaping for the improvements may not exceed $4,900,000, plus an 136.9amount equal to the costs related to issuance of the bonds and capitalized interest.136.10EFFECTIVE DATE.This section is effective upon compliance by the governing 136.11body of the city of Winsted with Minnesota Statutes, section 645.021, subdivision 3.136.12ARTICLE 11136.13DEPARTMENT INCOME AND FRANCHISE TAXES136.14    Section 1. Minnesota Statutes 2007 Supplement, section 270A.03, subdivision 5, 136.15is amended to read:136.16    Subd. 5. Debt.(a) "Debt" means a legal obligation of a natural person to pay a fixed 136.17and certain amount of money, which equals or exceeds $25 and which is due and payable 136.18to a claimant agency. The term includes criminal fines imposed under section 
         609.10 or 136.19609.125
         , fines imposed for petty misdemeanors as defined in section 
         609.02, subdivision 136.204a
         , and restitution. A debt may arise under a contractual or statutory obligation, a court 136.21order, or other legal obligation, but need not have been reduced to judgment.136.22    A debt includes any legal obligation of a current recipient of assistance which is 136.23based on overpayment of an assistance grant where that payment is based on a client 136.24waiver or an administrative or judicial finding of an intentional program violation; 136.25or where the debt is owed to a program wherein the debtor is not a client at the time 136.26notification is provided to initiate recovery under this chapter and the debtor is not a 136.27current recipient of food support, transitional child care, or transitional medical assistance.136.28    (b) A debt does not include any legal obligation to pay a claimant agency for medical 136.29care, including hospitalization if the income of the debtor at the time when the medical 136.30care was rendered does not exceed the following amount:136.31    (1) for an unmarried debtor, an income of $8,800 or less;136.32    (2) for a debtor with one dependent, an income of $11,270 or less;136.33    (3) for a debtor with two dependents, an income of $13,330 or less;136.34    (4) for a debtor with three dependents, an income of $15,120 or less;137.1    (5) for a debtor with four dependents, an income of $15,950 or less; and137.2    (6) for a debtor with five or more dependents, an income of $16,630 or less.137.3    The income amounts in this subdivision shall be adjusted for inflation for debts 137.4incurred in calendar years 2001 and thereafter. The dollar amount of each income level 137.5that applied to debts incurred in the prior year shall be increased in the same manner 137.6as provided in section 1(f) of the Internal Revenue Code of 1986, as amended through 137.7December 31, 2000, except that for the purposes of this subdivision the percentage 137.8increase shall be determined from the year starting September 1, 1999, and ending August 137.931, 2000, as the base year for adjusting for inflation for debts incurred after December 137.1031, 2000. (c) The commissioner shall adjust the income amounts in paragraph (b) by the 137.11percentage determined pursuant to the provisions of section 1(f) of the Internal Revenue 137.12Code, except that in section 1(f)(3)(B) the word "1999" shall be substituted for the word 137.13"1992." For 2001, the commissioner shall then determine the percent change from the 12 137.14months ending on August 31, 1999, to the 12 months ending on August 31, 2000, and in 137.15each subsequent year, from the 12 months ending on August 31, 1999, to the 12 months 137.16ending on August 31 of the year preceding the taxable year. The determination of the 137.17commissioner pursuant to this subdivision shall not be considered a "rule" and shall not 137.18be subject to the Administrative Procedure Act contained in chapter 14. The income 137.19amount as adjusted must be rounded to the nearest $10 amount. If the amount ends in 137.20$5, the amount is rounded up to the nearest $10 amount.137.21    (d) Debt also includes an agreement to pay a MinnesotaCare premium, regardless of 137.22the dollar amount of the premium authorized under section 
         256L.15, subdivision 1a.137.23EFFECTIVE DATE.This section is effective for debts incurred after December 137.2431, 2007.137.25    Sec. 2. Minnesota Statutes 2006, section 289A.08, subdivision 11, is amended to read:137.26    Subd. 11. Information included in income tax return.(a) The return must state:137.27    (1) the name of the taxpayer, or taxpayers, if the return is a joint return, and the 137.28address of the taxpayer in the same name or names and same address as the taxpayer has 137.29used in making the taxpayer's income tax return to the United States, and must state;137.30    (2) the date or dates of birth of the taxpayer or taxpayers;137.31    (3) the Social Security number of the taxpayer, or taxpayers, if a Social Security 137.32number has been issued by the United States with respect to the taxpayers, and must 137.33state; and137.34    (4) the amount of the taxable income of the taxpayer as it appears on the federal 137.35return for the taxable year to which the Minnesota state return applies. 138.1    (b) The taxpayer must attach to the taxpayer's Minnesota state income tax return 138.2a copy of the federal income tax return that the taxpayer has filed or is about to file for 138.3the period, unless the taxpayer is eligible to telefile the federal return and does file the 138.4Minnesota return by telefiling.138.5EFFECTIVE DATE.This section is effective for taxable years beginning after 138.6December 31, 2007.138.7    Sec. 3. Minnesota Statutes 2006, section 289A.09, subdivision 2, is amended to read:138.8    Subd. 2. Withholding statement to employee or payee and to commissioner. (a) 138.9A person required to deduct and withhold from an employee a tax under section 
         290.92, 138.10subdivision 2a
          or 3, or 
         290.923, subdivision 2, or who would have been required to 138.11deduct and withhold a tax under section 
         290.92, subdivision 2a or 3, or persons required 138.12to withhold tax under section 
         290.923, subdivision 2, determined without regard to 138.13section 
         290.92, subdivision 19, if the employee or payee had claimed no more than one 138.14withholding exemption, or who paid wages or made payments not subject to withholding 138.15under section 
         290.92, subdivision 2a or 3, or 
         290.923, subdivision 2, to an employee or 138.16person receiving royalty payments in excess of $600, or who has entered into a voluntary 138.17withholding agreement with a payee under section 
         290.92, subdivision 20, must give 138.18every employee or person receiving royalty payments in respect to the remuneration paid 138.19by the person to the employee or person receiving royalty payments during the calendar 138.20year, on or before January 31 of the succeeding year, or, if employment is terminated 138.21before the close of the calendar year, within 30 days after the date of receipt of a written 138.22request from the employee if the 30-day period ends before January 31, a written statement 138.23showing the following: 138.24    (1) name of the person;138.25    (2) the name of the employee or payee and the employee's or payee's Social Security 138.26account number;138.27    (3) the total amount of wages as that term is defined in section 
         290.92, subdivision 138.281
         , paragraph (1); the total amount of remuneration subject to withholding under section 138.29290.92, subdivision 20
         ; the amount of sick pay as required under section 6051(f) of the 138.30Internal Revenue Code; and the amount of royalties subject to withholding under section 138.31290.923, subdivision 2
         ; and 138.32    (4) the total amount deducted and withheld as tax under section 
         290.92, subdivision 138.332a
          or 3, or 
         290.923, subdivision 2. 139.1    (b) The statement required to be furnished by this paragraph (a) with respect to any 139.2remuneration must be furnished at those times, must contain the information required, and 139.3must be in the form the commissioner prescribes.139.4    (c) The commissioner may prescribe rules providing for reasonable extensions of 139.5time, not in excess of 30 days, to employers or payers required to give the statements to 139.6their employees or payees under this subdivision.139.7    (d) A duplicate of any statement made under this subdivision and in accordance 139.8with rules prescribed by the commissioner, along with a reconciliation in the form the 139.9commissioner prescribes of the statements for the calendar year, including a reconciliation 139.10of the quarterly returns required to be filed under subdivision 1, must be filed with the 139.11commissioner on or before February 28 of the year after the payments were made.139.12    (e) If an employer cancels the employer's Minnesota withholding account number 139.13required by section 
         290.92, subdivision 24, the information required by paragraph (d), 139.14must be filed with the commissioner within 30 days of the end of the quarter in which 139.15the employer cancels its account number. 139.16    (f) The employer must submit the statements required to be sent to the commissioner 139.17on magnetic media, if the magnetic media wasin the same manner required to satisfy the 139.18federal reporting requirements of section 6011(e) of the Internal Revenue Code and the 139.19regulations issued under it. For wages paid in calendar year 2008, an employer must 139.20submit statements to the commissioner required by this section by electronic means if the 139.21employer is required to send more than 100 statements to the commissioner, even though 139.22the employer is not required to submit the returns federally by electronic means. For 139.23calendar year 2009, the 100 statements threshold is reduced to 50, and for calendar year 139.242010, the threshold is reduced to 25, and for 2011 and after, the threshold is reduced to ten.139.25    (g) A "third-party bulk filer" as defined in section 
         290.92, subdivision 30, paragraph 139.26(a), clause (2), must submit the returns required by this subdivision and subdivision 1, 139.27paragraph (a), with the commissioner by electronic means. 139.28EFFECTIVE DATE.This section is effective for wages paid after December 31, 139.292007.139.30    Sec. 4. Minnesota Statutes 2006, section 289A.12, subdivision 14, is amended to read:139.31    Subd. 14. Regulated investment companies; reporting exempt-interest 139.32dividends. (a) A regulated investment company paying $10 or more in exempt-interest 139.33dividends to an individual who is a resident of Minnesota must make a return indicating 139.34the amount of the exempt-interest dividends, the name, address, and Social Security 139.35number of the recipient, and any other information that the commissioner specifies. The 140.1return must be provided to the shareholder no later than 30 days after the close of the 140.2taxable year. The return provided to the shareholder must include a clear statement, in the 140.3form prescribed by the commissioner, that the exempt-interest dividends must be included 140.4in the computation of Minnesota taxable income. The commissioner may by notice and 140.5demand require the regulated investment company is required in a manner prescribed by 140.6the commissioner to file a copy of the return with the commissioner.140.7    (b) This subdivision applies to regulated investment companies required to register 140.8under chapter 80A.140.9    (c) For purposes of this subdivision, the following definitions apply.140.10    (1) "Exempt-interest dividends" mean exempt-interest dividends as defined in 140.11section 852(b)(5) of the Internal Revenue Code, but does not include the portion of 140.12exempt-interest dividends that are not required to be added to federal taxable income 140.13under section 
         290.01, subdivision 19a, clause (1)(ii). 140.14    (2) "Regulated investment company" means regulated investment company as 140.15defined in section 851(a) of the Internal Revenue Code or a fund of the regulated 140.16investment company as defined in section 851(g) of the Internal Revenue Code.140.17EFFECTIVE DATE.This section is effective for taxable years beginning after 140.18December 31, 2007.140.19    Sec. 5. Minnesota Statutes 2006, section 289A.18, subdivision 1, is amended to read:140.20    Subdivision 1. Individual income, fiduciary income, corporate franchise, and 140.21entertainment taxes; partnership and S corporation returns; information returns; 140.22mining company returns. The returns required to be made under sections 
         289A.08 and 140.23289A.12
          must be filed at the following times:140.24    (1) returns made on the basis of the calendar year must be filed on April 15 following 140.25the close of the calendar year, except that returns of corporations must be filed on March 140.2615 following the close of the calendar year;140.27    (2) returns made on the basis of the fiscal year must be filed on the 15th day of the 140.28fourth month following the close of the fiscal year, except that returns of corporations 140.29must be filed on the 15th day of the third month following the close of the fiscal year;140.30    (3) returns for a fractional part of a year must be filed on the 15th day of the fourth 140.31month following the end of the month in which falls the last day of the period for which 140.32the return is made, except that the returns of corporations must be filed on the 15th day of 140.33the third month following the end of the tax year of the unitary group in which falls the 140.34last day of the period for which the return is made;141.1    (4) in the case of a final return of a decedent for a fractional part of a year, the return 141.2must be filed on the 15th day of the fourth month following the close of the 12-month 141.3period that began with the first day of that fractional part of a year;141.4    (5) in the case of the return of a cooperative association, returns must be filed on or 141.5before the 15th day of the ninth month following the close of the taxable year;141.6    (6) if a corporation has been divested from a unitary group and files a return for 141.7a fractional part of a year in which it was a member of a unitary business that files a 141.8combined report under section 
         290.34, subdivision 2, the divested corporation's return 141.9must be filed on the 15th day of the third month following the close of the common 141.10accounting period that includes the fractional year;141.11    (7) returns of entertainment entities must be filed on April 15 following the close of 141.12the calendar year;141.13    (8) returns required to be filed under section 
         289A.08, subdivision 4, must be filed 141.14on the 15th day of the fifth month following the close of the taxable year;141.15    (9) returns of mining companies must be filed on May 1 following the close of the 141.16calendar year; and141.17    (10) returns required to be filed with the commissioner under section 
         289A.12, 141.18subdivision 2
         ,or 4 to 10, or 14, must be filed within 30 days after being demanded by 141.19the commissioner.141.20EFFECTIVE DATE.This section is effective for taxable years beginning after 141.21December 31, 2007.141.22    Sec. 6. Minnesota Statutes 2006, section 289A.38, subdivision 7, is amended to read:141.23    Subd. 7. Federal tax changes. If the amount of income, items of tax preference, 141.24deductions, or credits for any year of a taxpayer as reported to the Internal Revenue 141.25Service is changed or corrected by the commissioner of Internal Revenue or other officer 141.26of the United States or other competent authority, or where a renegotiation of a contract or 141.27subcontract with the United States results in a change in income, items of tax preference, 141.28deductions, credits, or withholding tax, or, in the case of estate tax, where there are 141.29adjustments to the taxable estate resulting in a change to the credit for state death taxes, 141.30the taxpayer shall report the change or correction or renegotiation results in writing to the 141.31commissioner. The report must be submitted within 180 days after the final determination 141.32and must be in the form of either an amended Minnesota estate, withholding tax, corporate 141.33franchise tax, or income tax return conceding the accuracy of the federal determination 141.34or a letter detailing how the federal determination is incorrect or does not change the 141.35Minnesota tax. An amended Minnesota income tax return must be accompanied by an 142.1amended property tax refund return, if necessary. A taxpayer filing an amended federal 142.2tax return must also file a copy of the amended return with the commissioner of revenue 142.3within 180 days after filing the amended return.142.4EFFECTIVE DATE.This section is effective the day following final enactment.142.5    Sec. 7. Minnesota Statutes 2006, section 289A.60, subdivision 8, is amended to read:142.6    Subd. 8. Penalty forPenalties; failure to file informational return; incorrect 142.7taxpayer identification number.(a) In the case of a failure to file an informational return 142.8required by section 
         289A.12 with the commissioner on the date prescribed (determined 142.9with regard to any extension of time for filing), the person failing to file the return shall pay 142.10a penalty of $50 for each failure or in the case of a partnership, S corporation, or fiduciary 142.11return, $50 for each partner, shareholder, or beneficiary; but the total amount imposed on 142.12the delinquent person for all failures during any calendar year must not exceed $25,000. If 142.13a failure to file a return is due to intentional disregard of the filing requirement, then the 142.14penalty imposed under the preceding sentence must not be less than an amount equal to: 142.15    (1) in the case of a return not described in clause (2) or (3), ten percent of the 142.16aggregate amount of the items required to be reported;142.17    (2) in the case of a return required to be filed under section 
         289A.12, subdivision 5, 142.18five percent of the gross proceeds required to be reported; and 142.19    (3) in the case of a return required to be filed under section 
         289A.12, subdivision 9, 142.20relating to direct sales, $100 for each failure; however, the total amount imposed on the 142.21delinquent person for intentional failures during a calendar year must not exceed $50,000. 142.22The penalty must be collected in the same manner as a delinquent income tax. 142.23    (b) If a partnership or S corporation files a partnership or S corporation return with 142.24an incorrect tax identification number used for a partner or shareholder after being notified 142.25by the commissioner that the identification number is incorrect, the partnership or S 142.26corporation must pay a penalty of $50 for each such incorrect number.142.27EFFECTIVE DATE.This section is effective for returns filed after December 142.2831, 2008.142.29    Sec. 8. Minnesota Statutes 2006, section 289A.60, subdivision 12, is amended to read:142.30    Subd. 12. Penalties relating to property tax refunds. (a) If it is determined that a 142.31property tax refund claim is excessive and was negligently prepared, a claimant is liable 142.32for a penalty of ten percent of the corrected claim must be disallowed claim. If the claim 142.33has been paid, the amount disallowed must be recovered by assessment and collection.143.1    (b) An owner who without reasonable cause fails to give a certificate of rent 143.2constituting property tax to a renter, as required by section 
         290A.19, paragraph (a), is 143.3liable to the commissioner for a penalty of $100 for each failure.143.4    (c) If the owner or managing agent knowingly gives rent certificates that report total 143.5rent constituting property taxes in excess of the amount of actual rent constituting property 143.6taxes paid on the rented part of a property, the owner or managing agent is liable for a 143.7penalty equal to the greater of (1) $100 or (2) 50 percent of the excess that is reported. An 143.8overstatement of rent constituting property taxes is presumed to be knowingly made if it 143.9exceeds by ten percent or more the actual rent constituting property taxes.143.10EFFECTIVE DATE.This section is effective for property tax refund claims filed 143.11after June 30, 2008.143.12    Sec. 9. Minnesota Statutes 2006, section 289A.60, subdivision 27, is amended to read:143.13    Subd. 27. Reportable transaction understatement. (a) If a taxpayer has a 143.14reportable transaction understatement for any taxable year, an amount equal to 20 percent 143.15of the amount of the reportable transaction understatement must be added to the tax.143.16    (b)(1) For purposes of this subdivision, "reportable transaction understatement" 143.17means the product of:143.18    (i) the amount of the increase, if any, in taxable income that results from a difference 143.19between the proper tax treatment of an item to which this section applies and the taxpayer's 143.20treatment of that item as shown on the taxpayer's tax return; and143.21    (ii) the highest rate of tax imposed on the taxpayer under section 
         290.06 determined 143.22without regard to the understatement.143.23    (2) For purposes of clause (1)(i), any reduction of the excess of deductions allowed 143.24for the taxable year over gross income for that year, and any reduction in the amount of 143.25capital losses which would, without regard to section 1211 of the Internal Revenue Code, 143.26be allowed for that year, must be treated as an increase in taxable income.143.27    (c) This subdivision applies to any item that is attributable to:143.28    (1) any listed transaction under section 
         289A.121; and143.29    (2) any reportable transaction, other than a listed transaction, if a significant purpose 143.30of that transaction is the avoidance or evasion of federal income tax liability.143.31    (d) Paragraph (a) applies by substituting "30 percent" for "20 percent" with respect 143.32to the portion of any reportable transaction understatement with respect to which the 143.33disclosure requirements of section 
         289A.121, subdivision 5, and section 6664(d)(2)(A) 143.34of the Internal Revenue Code are not met.144.1    (e)(1) No penalty applies under this subdivision with respect to any portion of a 144.2reportable transaction understatement if the taxpayer shows that there was reasonable 144.3cause for the portion and that the taxpayer acted in good faith with respect to the portion. 144.4This paragraph applies only if:144.5    (i) the relevant facts affecting the tax treatment of the item are adequately disclosed 144.6as required under section 
         289A.121;144.7    (ii) there is or was substantial authority for the treatment; and144.8    (iii) the taxpayer reasonably believed that the treatment was more likely than not 144.9the proper treatment.144.10    (2) A taxpayer who did not adequately disclose under section 
         289A.121 meets 144.11the requirements of clause (1)(i), if the commissioner abates the penalty imposed by 144.12subdivision 26, paragraph (d), under section 270C.34 subdivision 26, paragraph (g).144.13    (3) For purposes of clause (1)(iii), a taxpayer is treated as having a reasonable belief 144.14with respect to the tax treatment of an item only if the belief:144.15    (i) is based on the facts and law that exist when the return of tax which includes the 144.16tax treatment is filed; and144.17    (ii) relates solely to the taxpayer's chances of success on the merits of the treatment 144.18and does not take into account the possibility that a return will not be audited, the 144.19treatment will not be raised on audit, or the treatment will be resolved through settlement 144.20if it is raised.144.21    (4) An opinion of a tax advisor may not be relied upon to establish the reasonable 144.22belief of a taxpayer if:144.23    (i) the tax advisor:144.24    (A) is a material advisor, as defined in section 
         289A.121, and participates in the 144.25organization, management, promotion, or sale of the transaction or is related (within the 144.26meaning of section 267(b) or 707(b)(1) of the Internal Revenue Code) to any person 144.27who so participates;144.28    (B) is compensated directly or indirectly by a material advisor with respect to the 144.29transaction;144.30    (C) has a fee arrangement with respect to the transaction which is contingent on all 144.31or part of the intended tax benefits from the transaction being sustained; or144.32    (D) has a disqualifying financial interest with respect to the transaction, as 144.33determined under United States Treasury regulations prescribed to implement the 144.34provisions of section 6664(d)(3)(B)(ii)(IV) of the Internal Revenue Code; or144.35    (ii) the opinion:145.1    (A) is based on unreasonable factual or legal assumptions, including assumptions 145.2as to future events;145.3    (B) unreasonably relies on representations, statements, findings, or agreements of 145.4the taxpayer or any other person;145.5    (C) does not identify and consider all relevant facts; or145.6    (D) fails to meet any other requirement as the Secretary of the Treasury may 145.7prescribe under federal law.145.8    (f) The penalty imposed by this subdivision applies in lieu of the penalty imposed 145.9under subdivision 4.145.10EFFECTIVE DATE.This section is effective the day following final enactment.145.11    Sec. 10. Minnesota Statutes 2006, section 289A.60, is amended by adding a 145.12subdivision to read:145.13    Subd. 28.Preparer identification number.Any Minnesota individual income tax 145.14return or claim for refund prepared by a "tax refund or return preparer" as defined in 145.15subdivision 13, paragraph (f), shall bear the identification number the preparer is required 145.16to use federally under section 6109(a)(4) of the Internal Revenue Code. A tax refund 145.17or return preparer who prepares a Minnesota individual income tax return or claim for 145.18refund and fails to include the required number on the return or claim is subject to a 145.19penalty of $50 for each failure.145.20EFFECTIVE DATE.This section is effective for returns prepared for taxable 145.21years beginning after December 31, 2007.145.22    Sec. 11. Minnesota Statutes 2007 Supplement, section 290.01, subdivision 19b, 145.23is amended to read:145.24    Subd. 19b. Subtractions from federal taxable income. For individuals, estates, 145.25and trusts, there shall be subtracted from federal taxable income:145.26    (1) net interest income on obligations of any authority, commission, or 145.27instrumentality of the United States to the extent includable in taxable income for federal 145.28income tax purposes but exempt from state income tax under the laws of the United States;145.29    (2) if included in federal taxable income, the amount of any overpayment of income 145.30tax to Minnesota or to any other state, for any previous taxable year, whether the amount 145.31is received as a refund or as a credit to another taxable year's income tax liability;145.32    (3) the amount paid to others, less the amount used to claim the credit allowed under 145.33section 
         290.0674, not to exceed $1,625 for each qualifying child in grades kindergarten 146.1to 6 and $2,500 for each qualifying child in grades 7 to 12, for tuition, textbooks, and 146.2transportation of each qualifying child in attending an elementary or secondary school 146.3situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a 146.4resident of this state may legally fulfill the state's compulsory attendance laws, which 146.5is not operated for profit, and which adheres to the provisions of the Civil Rights Act 146.6of 1964 and chapter 363A. For the purposes of this clause, "tuition" includes fees or 146.7tuition as defined in section 
         290.0674, subdivision 1, clause (1). As used in this clause, 146.8"textbooks" includes books and other instructional materials and equipment purchased 146.9or leased for use in elementary and secondary schools in teaching only those subjects 146.10legally and commonly taught in public elementary and secondary schools in this state. 146.11Equipment expenses qualifying for deduction includes expenses as defined and limited in 146.12section 
         290.0674, subdivision 1, clause (3). "Textbooks" does not include instructional 146.13books and materials used in the teaching of religious tenets, doctrines, or worship, the 146.14purpose of which is to instill such tenets, doctrines, or worship, nor does it include books 146.15or materials for, or transportation to, extracurricular activities including sporting events, 146.16musical or dramatic events, speech activities, driver's education, or similar programs. For 146.17purposes of the subtraction provided by this clause, "qualifying child" has the meaning 146.18given in section 32(c)(3) of the Internal Revenue Code;146.19    (4) income as provided under section 
         290.0802;146.20    (5) to the extent included in federal adjusted gross income, income realized on 146.21disposition of property exempt from tax under section 
         290.491;146.22    (6) to the extent not deducted or not deductible pursuant to section 408(d)(8)(E) 146.23of the Internal Revenue Code in determining federal taxable income by an individual 146.24who does not itemize deductions for federal income tax purposes for the taxable year, an 146.25amount equal to 50 percent of the excess of charitable contributions over $500 allowable 146.26as a deduction for the taxable year under section 170(a) of the Internal Revenue Code and 146.27under the provisions of Public Law 109-1;146.28    (7) for taxable years beginning before January 1, 2008, the amount of the federal 146.29small ethanol producer credit allowed under section 40(a)(3) of the Internal Revenue Code 146.30which is included in gross income under section 87 of the Internal Revenue Code;146.31    (8) for individuals who are allowed a federal foreign tax credit for taxes that do not 146.32qualify for a credit under section 
         290.06, subdivision 22, an amount equal to the carryover 146.33of subnational foreign taxes for the taxable year, but not to exceed the total subnational 146.34foreign taxes reported in claiming the foreign tax credit. For purposes of this clause, 146.35"federal foreign tax credit" means the credit allowed under section 27 of the Internal 146.36Revenue Code, and "carryover of subnational foreign taxes" equals the carryover allowed 147.1under section 904(c) of the Internal Revenue Code minus national level foreign taxes to 147.2the extent they exceed the federal foreign tax credit;147.3    (9) in each of the five tax years immediately following the tax year in which an 147.4addition is required under subdivision 19a, clause (7), or 19c, clause (15) (14), in the case 147.5of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth 147.6of the delayed depreciation. For purposes of this clause, "delayed depreciation" means 147.7the amount of the addition made by the taxpayer under subdivision 19a, clause (7), or 147.8subdivision 19c, clause (15) (14), in the case of a shareholder of an S corporation, minus 147.9the positive value of any net operating loss under section 172 of the Internal Revenue 147.10Code generated for the tax year of the addition. The resulting delayed depreciation 147.11cannot be less than zero;147.12    (10) job opportunity building zone income as provided under section 
         469.316;147.13    (11) to the extent included in federal taxable income, the amount of compensation 147.14paid to members of the Minnesota National Guard or other reserve components of the 147.15United States military for active service performed in Minnesota, excluding compensation 147.16for services performed under the Active Guard Reserve (AGR) program. For purposes of 147.17this clause, "active service" means (i) state active service as defined in section 
         190.05, 147.18subdivision 5a
         , clause (1); (ii) federally funded state active service as defined in section 147.19190.05, subdivision 5b
         ; or (iii) federal active service as defined in section 
         190.05, 147.20subdivision 5c
         , but "active service" excludes services performed exclusively for purposes 147.21of basic combat training, advanced individual training, annual training, and periodic 147.22inactive duty training; special training periodically made available to reserve members; 147.23and service performed in accordance with section 
         190.08, subdivision 3;147.24    (12) to the extent included in federal taxable income, the amount of compensation 147.25paid to Minnesota residents who are members of the armed forces of the United States or 147.26United Nations for active duty performed outside Minnesota;147.27    (13) an amount, not to exceed $10,000, equal to qualified expenses related to a 147.28qualified donor's donation, while living, of one or more of the qualified donor's organs 147.29to another person for human organ transplantation. For purposes of this clause, "organ" 147.30means all or part of an individual's liver, pancreas, kidney, intestine, lung, or bone marrow; 147.31"human organ transplantation" means the medical procedure by which transfer of a human 147.32organ is made from the body of one person to the body of another person; "qualified 147.33expenses" means unreimbursed expenses for both the individual and the qualified donor 147.34for (i) travel, (ii) lodging, and (iii) lost wages net of sick pay, except that such expenses 147.35may be subtracted under this clause only once; and "qualified donor" means the individual 147.36or the individual's dependent, as defined in section 152 of the Internal Revenue Code. An 148.1individual may claim the subtraction in this clause for each instance of organ donation for 148.2transplantation during the taxable year in which the qualified expenses occur;148.3    (14) in each of the five tax years immediately following the tax year in which an 148.4addition is required under subdivision 19a, clause (8), or 19c, clause (16) (15), in the case 148.5of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth 148.6of the addition made by the taxpayer under subdivision 19a, clause (8), or 19c, clause 148.7(16) (15), in the case of a shareholder of a corporation that is an S corporation, minus the 148.8positive value of any net operating loss under section 172 of the Internal Revenue Code 148.9generated for the tax year of the addition. If the net operating loss exceeds the addition for 148.10the tax year, a subtraction is not allowed under this clause;148.11    (15) to the extent included in federal taxable income, compensation paid to a 148.12nonresident who is a service member as defined in United States Code, title 10, section 148.13101(a)(5), for military service as defined in the Service Member Civil Relief Act, Public 148.14Law 108-189, section 101(2); and148.15    (16) international economic development zone income as provided under section 148.16469.325
         .148.17EFFECTIVE DATE.Clauses (9) and (14) of this section are effective the day 148.18following final enactment. Clauses (11) and (12) are effective retroactively for taxable 148.19years beginning after December 31, 2004.148.20    Sec. 12. Minnesota Statutes 2006, section 290.01, subdivision 19d, is amended to read:148.21    Subd. 19d. Corporations; modifications decreasing federal taxable income. For 148.22corporations, there shall be subtracted from federal taxable income after the increases 148.23provided in subdivision 19c:148.24    (1) the amount of foreign dividend gross-up added to gross income for federal 148.25income tax purposes under section 78 of the Internal Revenue Code;148.26    (2) the amount of salary expense not allowed for federal income tax purposes due 148.27to claiming the federal jobs work opportunity credit under section 51 of the Internal 148.28Revenue Code;148.29    (3) any dividend (not including any distribution in liquidation) paid within the 148.30taxable year by a national or state bank to the United States, or to any instrumentality of 148.31the United States exempt from federal income taxes, on the preferred stock of the bank 148.32owned by the United States or the instrumentality;148.33    (4) amounts disallowed for intangible drilling costs due to differences between 148.34this chapter and the Internal Revenue Code in taxable years beginning before January 148.351, 1987, as follows:149.1    (i) to the extent the disallowed costs are represented by physical property, an amount 149.2equal to the allowance for depreciation under Minnesota Statutes 1986, section 
         290.09, 149.3subdivision 7
         , subject to the modifications contained in subdivision 19e; and149.4    (ii) to the extent the disallowed costs are not represented by physical property, an 149.5amount equal to the allowance for cost depletion under Minnesota Statutes 1986, section 149.6290.09, subdivision 8
         ;149.7    (5) the deduction for capital losses pursuant to sections 1211 and 1212 of the 149.8Internal Revenue Code, except that:149.9    (i) for capital losses incurred in taxable years beginning after December 31, 1986, 149.10capital loss carrybacks shall not be allowed;149.11    (ii) for capital losses incurred in taxable years beginning after December 31, 1986, 149.12a capital loss carryover to each of the 15 taxable years succeeding the loss year shall be 149.13allowed;149.14    (iii) for capital losses incurred in taxable years beginning before January 1, 1987, a 149.15capital loss carryback to each of the three taxable years preceding the loss year, subject to 149.16the provisions of Minnesota Statutes 1986, section 
         290.16, shall be allowed; and149.17    (iv) for capital losses incurred in taxable years beginning before January 1, 1987, 149.18a capital loss carryover to each of the five taxable years succeeding the loss year to the 149.19extent such loss was not used in a prior taxable year and subject to the provisions of 149.20Minnesota Statutes 1986, section 
         290.16, shall be allowed;149.21    (6) an amount for interest and expenses relating to income not taxable for federal 149.22income tax purposes, if (i) the income is taxable under this chapter and (ii) the interest and 149.23expenses were disallowed as deductions under the provisions of section 171(a)(2), 265 or 149.24291 of the Internal Revenue Code in computing federal taxable income;149.25    (7) in the case of mines, oil and gas wells, other natural deposits, and timber for 149.26which percentage depletion was disallowed pursuant to subdivision 19c, clause (11) (9), a 149.27reasonable allowance for depletion based on actual cost. In the case of leases the deduction 149.28must be apportioned between the lessor and lessee in accordance with rules prescribed 149.29by the commissioner. In the case of property held in trust, the allowable deduction must 149.30be apportioned between the income beneficiaries and the trustee in accordance with the 149.31pertinent provisions of the trust, or if there is no provision in the instrument, on the basis 149.32of the trust's income allocable to each;149.33    (8) for certified pollution control facilities placed in service in a taxable year 149.34beginning before December 31, 1986, and for which amortization deductions were elected 149.35under section 169 of the Internal Revenue Code of 1954, as amended through December 150.131, 1985, an amount equal to the allowance for depreciation under Minnesota Statutes 150.21986, section 
         290.09, subdivision 7;150.3    (9) amounts included in federal taxable income that are due to refunds of income, 150.4excise, or franchise taxes based on net income or related minimum taxes paid by the 150.5corporation to Minnesota, another state, a political subdivision of another state, the 150.6District of Columbia, or a foreign country or possession of the United States to the extent 150.7that the taxes were added to federal taxable income under section 
         290.01, subdivision 19c, 150.8clause (1), in a prior taxable year;150.9    (10) 80 percent of royalties, fees, or other like income accrued or received from a 150.10foreign operating corporation or a foreign corporation which is part of the same unitary 150.11business as the receiving corporation;150.12    (11) income or gains from the business of mining as defined in section 
         290.05, 150.13subdivision 1
         , clause (a), that are not subject to Minnesota franchise tax;150.14    (12) the amount of disability access expenditures in the taxable year which are not 150.15allowed to be deducted or capitalized under section 44(d)(7) of the Internal Revenue Code;150.16    (13) the amount of qualified research expenses not allowed for federal income tax 150.17purposes under section 280C(c) of the Internal Revenue Code, but only to the extent that 150.18the amount exceeds the amount of the credit allowed under section 
         290.068;150.19    (14) the amount of salary expenses not allowed for federal income tax purposes due 150.20to claiming the Indian employment credit under section 45A(a) of the Internal Revenue 150.21Code;150.22    (15) the amount of any refund of environmental taxes paid under section 59A of the 150.23Internal Revenue Code;150.24    (16) (15) for taxable years beginning before January 1, 2008, the amount of the 150.25federal small ethanol producer credit allowed under section 40(a)(3) of the Internal 150.26Revenue Code which is included in gross income under section 87 of the Internal Revenue 150.27Code;150.28    (17) (16) for a corporation whose foreign sales corporation, as defined in section 150.29922 of the Internal Revenue Code, constituted a foreign operating corporation during any 150.30taxable year ending before January 1, 1995, and a return was filed by August 15, 1996, 150.31claiming the deduction under section 
         290.21, subdivision 4, for income received from 150.32the foreign operating corporation, an amount equal to 
         1.23 multiplied by the amount of 150.33income excluded under section 114 of the Internal Revenue Code, provided the income is 150.34not income of a foreign operating company;151.1    (18) (17) any decrease in subpart F income, as defined in section 952(a) of the 151.2Internal Revenue Code, for the taxable year when subpart F income is calculated without 151.3regard to the provisions of section 614 103 of Public Law 107-147 109-222;151.4    (19) (16) in each of the five tax years immediately following the tax year in which 151.5an addition is required under subdivision 19c, clause (15), an amount equal to one-fifth 151.6of the delayed depreciation. For purposes of this clause, "delayed depreciation" means 151.7the amount of the addition made by the taxpayer under subdivision 19c, clause (15). The 151.8resulting delayed depreciation cannot be less than zero; and151.9    (20) (17) in each of the five tax years immediately following the tax year in which an 151.10addition is required under subdivision 19c, clause (16), an amount equal to one-fifth of the 151.11amount of the addition.151.12EFFECTIVE DATE.The amendment to clause (2) is effective the day following 151.13final enactment. The rest of this section is effective for taxable years beginning after 151.14December 31, 2007.151.15    Sec. 13. Minnesota Statutes 2006, section 290.06, subdivision 33, is amended to read:151.16    Subd. 33. Bovine testing credit. (a) An owner of cattle in Minnesota may take a 151.17credit against the tax due under this chapter for an amount equal to one-half the expenses 151.18incurred during the taxable year to conduct tuberculosis testing on those cattle. 151.19    (b) If the amount of credit which the taxpayer is eligible to receive under this 151.20subdivision exceeds the taxpayer's tax liability under this chapter, the commissioner of 151.21revenue shall refund the excess to the taxpayer.151.22    (c) The amount necessary to pay claims for the refund provided in this subdivision is 151.23appropriated from the general fund to the commissioner of revenue.151.24    (d) Expenses incurred in a calendar year in which tuberculosis testing of cattle in 151.25Minnesota is not federally required are not allowed in claiming the credit under paragraph 151.26(a).151.27EFFECTIVE DATE.This section is effective for taxable years beginning after 151.28December 31, 2007.151.29    Sec. 14. Minnesota Statutes 2006, section 290.067, subdivision 2b, is amended to read:151.30    Subd. 2b. Inflation adjustment.The commissioner shall adjust the dollar amount 151.31of the income threshold at which the maximum credit begins to be reduced under 151.32subdivision 2 must be adjusted for inflation. The commissioner shall make the inflation 151.33adjustments in accordance with section 1(f) of the Internal Revenue Code except that for 152.1the purposes of this subdivision the percentage increase must be determined from the year 152.2starting September 1, 1999, and ending August 31, 2000, as the base year for adjusting 152.3for inflation for the tax year beginning after December 31, 2000. The determination of 152.4the commissioner under this subdivision is not a rule under the Administrative Procedure 152.5Act. by the percentage determined pursuant to the provisions of section 1(f) of the Internal 152.6Revenue Code, except that in section 1(f)(3)(B) the word "1999" shall be substituted for 152.7the word "1992." For 2001, the commissioner shall then determine the percent change 152.8from the 12 months ending on August 31, 1999, to the 12 months ending on August 31, 152.92000, and in each subsequent year, from the 12 months ending on August 31, 1999, to the 152.1012 months ending on August 31 of the year preceding the taxable year. The determination 152.11of the commissioner pursuant to this subdivision must not be considered a "rule" and is 152.12not subject to the Administrative Procedure Act contained in chapter 14. The threshold 152.13amount as adjusted must be rounded to the nearest $10 amount. If the amount ends in 152.14$5, the amount is rounded up to the nearest $10 amount.152.15EFFECTIVE DATE.This section is effective for taxable years beginning after 152.16December 31, 2007.152.17    Sec. 15. Minnesota Statutes 2006, section 290.0671, subdivision 7, is amended to read:152.18    Subd. 7. Inflation adjustment. The earned income amounts used to calculate the 152.19credit and the income thresholds at which the maximum credit begins to be reduced in 152.20subdivision 1 must be adjusted for inflation. The commissioner shall make the inflation 152.21adjustments in accordance with section 1(f) of the Internal Revenue Code except that for 152.22the purposes of this subdivision the percentage increase shall be determined from the year 152.23starting September 1, 1999, and ending August 31, 2000, as the base year for adjusting for 152.24inflation for the tax year beginning after December 31, 2000.adjust by the percentage 152.25determined pursuant to the provisions of section 1(f) of the Internal Revenue Code, except 152.26that in section 1(f)(3)(B) the word "1999" shall be substituted for the word "1992." For 152.272001, the commissioner shall then determine the percent change from the 12 months 152.28ending on August 31, 1999, to the 12 months ending on August 31, 2000, and in each 152.29subsequent year, from the 12 months ending on August 31, 1999, to the 12 months ending 152.30on August 31 of the year preceding the taxable year. The earned income thresholds as 152.31adjusted for inflation must be rounded to the nearest $10 amount. If the amount ends 152.32in $5, the amount is rounded up to the nearest $10 amount. The determination of the 152.33commissioner under this subdivision is not a rule under the Administrative Procedure Act.153.1EFFECTIVE DATE.This section is effective for taxable years beginning after 153.2December 31, 2007.153.3    Sec. 16. Minnesota Statutes 2006, section 290.091, subdivision 3, is amended to read:153.4    Subd. 3. Exemption amount. (a) For purposes of computing the alternative 153.5minimum tax, the exemption amount is:153.6    (1) for taxable years beginning before January 1, 2006, the exemption determined 153.7under section 55(d) of the Internal Revenue Code, as amended through December 31, 153.81992; and153.9    (2), for taxable years beginning after December 31, 2005, $60,000 for married 153.10couples filing joint returns, $30,000 for married individuals filing separate returns, estates, 153.11and trusts, and $45,000 for unmarried individuals.153.12    (b) The exemption amount determined under this subdivision is subject to the phase 153.13out under section 55(d)(3) of the Internal Revenue Code, except that alternative minimum 153.14taxable income as determined under this section must be substituted in the computation of 153.15the phase out.153.16    (c) For taxable years beginning after December 31, 2006, the exemption amount 153.17under paragraph (a), clause (2), must be adjusted for inflation. The commissioner shall 153.18make the inflation adjustments in accordance with section 1(f) of the Internal Revenue 153.19Code except that for the purposes of this subdivision the percentage increase must be 153.20determined from the year starting September 1, 2005, and ending August 31, 2006, as the 153.21base year for adjusting for inflation for the tax year beginning after December 31, 2006.153.22The commissioner shall adjust the exemption amount by the percentage determined 153.23pursuant to the provisions of section 1(f) of the Internal Revenue Code, except that in 153.24section 1(f)(3)(B) the word "2005" shall be substituted for the word "1992." For 2007, 153.25the commissioner shall then determine the percent change from the 12 months ending on 153.26August 31, 2005, to the 12 months ending on August 31, 2006, and in each subsequent 153.27year, from the 12 months ending on August 31, 2005, to the 12 months ending on August 153.2831 of the year preceding the taxable year. The exemption amount as adjusted must be 153.29rounded to the nearest $10. If the amount ends in $5, it must be rounded up to the nearest 153.30$10 amount. The determination of the commissioner under this subdivision is not a rule 153.31under the Administrative Procedure Act.153.32EFFECTIVE DATE.This section is effective for taxable years beginning after 153.33December 31, 2007.153.34    Sec. 17. Minnesota Statutes 2006, section 290.0921, subdivision 3, is amended to read:154.1    Subd. 3. Alternative minimum taxable income. "Alternative minimum taxable 154.2income" is Minnesota net income as defined in section 
         290.01, subdivision 19, and 154.3includes the adjustments and tax preference items in sections 56, 57, 58, and 59(d), (e), 154.4(f), and (h) of the Internal Revenue Code. If a corporation files a separate company 154.5Minnesota tax return, the minimum tax must be computed on a separate company basis. 154.6If a corporation is part of a tax group filing a unitary return, the minimum tax must be 154.7computed on a unitary basis. The following adjustments must be made.154.8(1) For purposes of the depreciation adjustments under section 56(a)(1) and 154.956(g)(4)(A) of the Internal Revenue Code, the basis for depreciable property placed in 154.10service in a taxable year beginning before January 1, 1990, is the adjusted basis for federal 154.11income tax purposes, including any modification made in a taxable year under section 154.12290.01, subdivision 19e
         , or Minnesota Statutes 1986, section 
         290.09, subdivision 7, 154.13paragraph (c).154.14For taxable years beginning after December 31, 2000, the amount of any remaining 154.15modification made under section 
         290.01, subdivision 19e, or Minnesota Statutes 1986, 154.16section 
         290.09, subdivision 7, paragraph (c), not previously deducted is a depreciation 154.17allowance in the first taxable year after December 31, 2000.154.18(2) The portion of the depreciation deduction allowed for federal income tax 154.19purposes under section 168(k) of the Internal Revenue Code that is required as an addition 154.20under section 
         290.01, subdivision 19c, clause (16) (15), is disallowed in determining 154.21alternative minimum taxable income.154.22(3) The subtraction for depreciation allowed under section 
         290.01, subdivision 154.2319d
         , clause (19) (18), is allowed as a depreciation deduction in determining alternative 154.24minimum taxable income.154.25(4) The alternative tax net operating loss deduction under sections 56(a)(4) and 56(d) 154.26of the Internal Revenue Code does not apply.154.27(5) The special rule for certain dividends under section 56(g)(4)(C)(ii) of the Internal 154.28Revenue Code does not apply.154.29(6) The special rule for dividends from section 936 companies under section 154.3056(g)(4)(C)(iii) does not apply.154.31(7) The tax preference for depletion under section 57(a)(1) of the Internal Revenue 154.32Code does not apply.154.33(8) The tax preference for intangible drilling costs under section 57(a)(2) of the 154.34Internal Revenue Code must be calculated without regard to subparagraph (E) and the 154.35subtraction under section 
         290.01, subdivision 19d, clause (4).155.1(9) The tax preference for tax exempt interest under section 57(a)(5) of the Internal 155.2Revenue Code does not apply.155.3(10) The tax preference for charitable contributions of appreciated property under 155.4section 57(a)(6) of the Internal Revenue Code does not apply.155.5(11) For purposes of calculating the tax preference for accelerated depreciation or 155.6amortization on certain property placed in service before January 1, 1987, under section 155.757(a)(7) of the Internal Revenue Code, the deduction allowable for the taxable year is the 155.8deduction allowed under section 
         290.01, subdivision 19e.155.9For taxable years beginning after December 31, 2000, the amount of any remaining 155.10modification made under section 
         290.01, subdivision 19e, not previously deducted is a 155.11depreciation or amortization allowance in the first taxable year after December 31, 2004.155.12(12) For purposes of calculating the adjustment for adjusted current earnings in 155.13section 56(g) of the Internal Revenue Code, the term "alternative minimum taxable 155.14income" as it is used in section 56(g) of the Internal Revenue Code, means alternative 155.15minimum taxable income as defined in this subdivision, determined without regard to the 155.16adjustment for adjusted current earnings in section 56(g) of the Internal Revenue Code.155.17(13) For purposes of determining the amount of adjusted current earnings under 155.18section 56(g)(3) of the Internal Revenue Code, no adjustment shall be made under section 155.1956(g)(4) of the Internal Revenue Code with respect to (i) the amount of foreign dividend 155.20gross-up subtracted as provided in section 
         290.01, subdivision 19d, clause (1), (ii) the 155.21amount of refunds of income, excise, or franchise taxes subtracted as provided in section 155.22290.01, subdivision 19d
         , clause (10) (9), or (iii) the amount of royalties, fees or other like 155.23income subtracted as provided in section 
         290.01, subdivision 19d, clause (11) (10).155.24(14) Alternative minimum taxable income excludes the income from operating in a 155.25job opportunity building zone as provided under section 
         469.317.155.26(15) Alternative minimum taxable income excludes the income from operating in a 155.27biotechnology and health sciences industry zone as provided under section 
         469.337.155.28(16) Alternative minimum taxable income excludes the income from operating in an 155.29international economic development zone as provided under section 
         469.326.155.30Items of tax preference must not be reduced below zero as a result of the 155.31modifications in this subdivision.155.32EFFECTIVE DATE.This section is effective for taxable years beginning after 155.33December 31, 2007.155.34    Sec. 18. Minnesota Statutes 2006, section 290.191, subdivision 8, is amended to read:156.1    Subd. 8. Deposit; definition. (a) "Deposit," as used in subdivision 7 6, paragraph 156.2(n), has the meanings in this subdivision.156.3    (b) "Deposit" means the unpaid balance of money or its equivalent received or 156.4held by a financial institution in the usual course of business and for which it has given 156.5or is obligated to give credit, either conditionally or unconditionally, to a commercial, 156.6checking, savings, time, or thrift account whether or not advance notice is required to 156.7withdraw the credited funds, or which is evidenced by its certificate of deposit, thrift 156.8certificate, investment certificate, or certificate of indebtedness, or other similar name, or a 156.9check or draft drawn against a deposit account and certified by the financial institution, 156.10or a letter of credit or a traveler's check on which the financial institution is primarily 156.11liable. However, without limiting the generality of the term "money or its equivalent," any 156.12such account or instrument must be regarded as evidencing the receipt of the equivalent 156.13of money when credited or issued in exchange for checks or drafts or for a promissory 156.14note upon which the person obtaining the credit or instrument is primarily or secondarily 156.15liable, or for a charge against a deposit account, or in settlement of checks, drafts, or other 156.16instruments forwarded to the bank for collection.156.17    (c) "Deposit" means trust funds received or held by the financial institution, whether 156.18held in the trust department or held or deposited in any other department of the financial 156.19institution.156.20    (d) "Deposit" means money received or held by a financial institution, or the credit 156.21given for money or its equivalent received or held by a financial institution, in the usual 156.22course of business for a special or specific purpose, regardless of the legal relationship so 156.23established. Under this paragraph, "deposit" includes, but is not limited to, escrow funds, 156.24funds held as security for an obligation due to the financial institution or others, including 156.25funds held as dealers reserves, or for securities loaned by the financial institution, funds 156.26deposited by a debtor to meet maturing obligations, funds deposited as advance payment 156.27on subscriptions to United States government securities, funds held for distribution or 156.28purchase of securities, funds held to meet its acceptances or letters of credit, and withheld 156.29taxes. It does not include funds received by the financial institution for immediate 156.30application to the reduction of an indebtedness to the receiving financial institution, or 156.31under condition that the receipt of the funds immediately reduces or extinguishes the 156.32indebtedness.156.33    (e) "Deposit" means outstanding drafts, including advice or another such institution, 156.34cashier's checks, money orders, or other officer's checks issued in the usual course 156.35of business for any purpose, but not including those issued in payment for services, 156.36dividends, or purchases or other costs or expenses of the financial institution itself.157.1    (f) "Deposit" means money or its equivalent held as a credit balance by a financial 157.2institution on behalf of its customer if the entity is engaged in soliciting and holding such 157.3balances in the regular course of its business.157.4    (g) Interinstitution fund transfers are not deposits.157.5EFFECTIVE DATE.This section is effective the day following final enactment.157.6    Sec. 19. Minnesota Statutes 2006, section 290A.03, subdivision 7, is amended to read:157.7    Subd. 7. Dependent. "Dependent" means any person who is considered a 157.8dependent under sections 151 and 152 of the Internal Revenue Code. In the case of a son, 157.9stepson, daughter, or stepdaughter of the claimant, amounts received as a Minnesota 157.10family investment program grant, allowance to or on behalf of the child, surplus food, or 157.11other relief in kind supplied by a governmental agency must not be taken into account 157.12in determining whether the child received more than half of the child's support from 157.13the claimant.157.14EFFECTIVE DATE.This section is effective for property tax refunds based on 157.15rents paid after December 31, 2007, and property taxes payable after December 31, 2008.157.16ARTICLE 12157.17DEPARTMENT SALES AND USE TAXES157.18    Section 1. Minnesota Statutes 2006, section 289A.40, subdivision 2, is amended to 157.19read:157.20    Subd. 2. Bad debt loss. If a claim relates to an overpayment because of a failure to 157.21deduct a loss due to a bad debt or to a security becoming worthless, the claim is considered 157.22timely if filed within seven years from the date prescribed for the filing of the return. A 157.23claim relating to an overpayment of taxes under chapter 297A must be filed within 3-1/2 157.24years from the date prescribed for filing the return, plus any extensions granted for filing 157.25the return, but only if filed within the extended time when the bad debt was (1) written off 157.26as uncollectible in the taxpayer's books and records, and (2) either eligible to be deducted 157.27for federal income tax purposes or would have been eligible for a bad debt deduction for 157.28federal income tax purposes if the taxpayer were required to file a federal income tax 157.29return, or within one year from the date the taxpayer's federal income tax return is timely 157.30filed claiming the bad debt deduction, whichever period is later. The refund or credit is 157.31limited to the amount of overpayment attributable to the loss. "Bad debt" for purposes 157.32of this subdivision, has the same meaning as that term is used in United States Code, 157.33title 26, section 166, except that for a claim relating to an overpayment of taxes under 158.1chapter 297A the following are excluded from the calculation of bad debt: financing 158.2charges or interest; sales or use taxes charged on the purchase price; uncollectible amounts 158.3on property that remain in the possession of the seller until the full purchase price is 158.4paid; expenses incurred in attempting to collect any debt; and repossessed property. For 158.5purposes of reporting a payment received on previously claimed bad debt under chapter 158.6297A, any payments made on a debt or account are applied first proportionally to the 158.7taxable price of the property or service and the sales tax on it, and secondly to interest, 158.8service charges, and any other charges.158.9EFFECTIVE DATE.This section is effective the day following final enactment.158.10    Sec. 2. Minnesota Statutes 2006, section 289A.56, is amended by adding a subdivision 158.11to read:158.12    Subd. 8.Border city zone refunds.Notwithstanding subdivision 3, for refunds 158.13payable under section 469.1734, subdivision 6, interest is computed from 90 days after the 158.14refund claim is filed with the commissioner.158.15EFFECTIVE DATE.This section is effective for refund claims filed after June 158.1630, 2008.158.17    Sec. 3. Minnesota Statutes 2006, section 289A.60, subdivision 25, is amended to read:158.18    Subd. 25. Penalty for failure to properly complete sales and use tax return. A 158.19person who fails to report local sales taxtaxes required to be reported on a sales and use 158.20tax return or who fails to report local sales taxtaxes on separate tax lines on the sales 158.21and use tax return is subject to a penalty of five percent of the amount of tax not properly 158.22reported on the return. A person who files a consolidated tax return but fails to report 158.23location information is subject to a $500 penalty for each return not containing location 158.24information. In addition, the commissioner may revoke the privilege for a taxpayer to 158.25file consolidated returns and may require the taxpayer to separately register each location 158.26and to file a tax return for each location.158.27EFFECTIVE DATE.This section is effective for returns filed after June 30, 2008.158.28    Sec. 4. Minnesota Statutes 2006, section 289A.60, is amended by adding a subdivision 158.29to read:158.30    Subd. 29.Penalty for failure to report liquor sales.In the case of a failure to file 158.31an informational report required by section 297A.8155 with the commissioner on or before 159.1the date prescribed, the person failing to file the report shall pay a penalty of $500 each 159.2failure. If a failure to file a report is intentional, the penalty shall be $1,000 each failure.159.3EFFECTIVE DATE.This section is effective for reports filed after December 159.431, 2008.159.5    Sec. 5. Minnesota Statutes 2006, section 297A.61, subdivision 3, is amended to read:159.6    Subd. 3. Sale and purchase. (a) "Sale" and "purchase" include, but are not limited 159.7to, each of the transactions listed in this subdivision.159.8    (b) Sale and purchase include:159.9    (1) any transfer of title or possession, or both, of tangible personal property, whether 159.10absolutely or conditionally, for a consideration in money or by exchange or barter; and159.11    (2) the leasing of or the granting of a license to use or consume, for a consideration 159.12in money or by exchange or barter, tangible personal property, other than a manufactured 159.13home used for residential purposes for a continuous period of 30 days or more.159.14    (c) Sale and purchase include the production, fabrication, printing, or processing of 159.15tangible personal property for a consideration for consumers who furnish either directly or 159.16indirectly the materials used in the production, fabrication, printing, or processing.159.17    (d) Sale and purchase include the preparing for a consideration of food. 159.18Notwithstanding section 
         297A.67, subdivision 2, taxable food includes, but is not limited 159.19to, the following:159.20    (1) prepared food sold by the retailer;159.21    (2) soft drinks;159.22    (3) candy;159.23    (4) dietary supplements; and159.24    (5) all food sold through vending machines.159.25    (e) A sale and a purchase includes the furnishing for a consideration of electricity, 159.26gas, water, or steam for use or consumption within this state.159.27    (f) A sale and a purchase includes the transfer for a consideration of prewritten 159.28computer software whether delivered electronically, by load and leave, or otherwise.159.29    (g) A sale and a purchase includes the furnishing for a consideration of the following 159.30services:159.31    (1) the privilege of admission to places of amusement, recreational areas, or athletic 159.32events, and the making available of amusement devices, tanning facilities, reducing 159.33salons, steam baths, turkish baths, health clubs, and spas or athletic facilities;159.34    (2) lodging and related services by a hotel, rooming house, resort, campground, 159.35motel, or trailer camp, including furnishing the guest of the facility with access to 160.1telecommunication services, and the granting of any similar license to use real property 160.2in a specific facility, other than the renting or leasing of it for a continuous period of 160.330 days or more under an enforceable written agreement that may not be terminated 160.4without prior notice;160.5    (3) nonresidential parking services, whether on a contractual, hourly, or other 160.6periodic basis, except for parking at a meter;160.7    (4) the granting of membership in a club, association, or other organization if:160.8    (i) the club, association, or other organization makes available for the use of its 160.9members sports and athletic facilities, without regard to whether a separate charge is 160.10assessed for use of the facilities; and160.11    (ii) use of the sports and athletic facility is not made available to the general public 160.12on the same basis as it is made available to members.160.13Granting of membership means both onetime initiation fees and periodic membership 160.14dues. Sports and athletic facilities include golf courses; tennis, racquetball, handball, and 160.15squash courts; basketball and volleyball facilities; running tracks; exercise equipment; 160.16swimming pools; and other similar athletic or sports facilities;160.17    (5) delivery of aggregate materials and concrete block by a third party, excluding 160.18delivery of aggregate material used in road construction, and delivery of concrete block by 160.19a third party if the delivery would be subject to the sales tax if provided by the seller of the 160.20aggregate material or concrete block; and160.21    (6) services as provided in this clause:160.22    (i) laundry and dry cleaning services including cleaning, pressing, repairing, altering, 160.23and storing clothes, linen services and supply, cleaning and blocking hats, and carpet, 160.24drapery, upholstery, and industrial cleaning. Laundry and dry cleaning services do not 160.25include services provided by coin operated facilities operated by the customer;160.26    (ii) motor vehicle washing, waxing, and cleaning services, including services 160.27provided by coin operated facilities operated by the customer, and rustproofing, 160.28undercoating, and towing of motor vehicles;160.29    (iii) building and residential cleaning, maintenance, and disinfecting services and 160.30pest control and exterminating services;160.31    (iv) detective, security, burglar, fire alarm, and armored car services; but not 160.32including services performed within the jurisdiction they serve by off-duty licensed peace 160.33officers as defined in section 
         626.84, subdivision 1, or services provided by a nonprofit 160.34organization for monitoring and electronic surveillance of persons placed on in-home 160.35detention pursuant to court order or under the direction of the Minnesota Department 160.36of Corrections;161.1    (v) pet grooming services;161.2    (vi) lawn care, fertilizing, mowing, spraying and sprigging services; garden planting 161.3and maintenance; tree, bush, and shrub pruning, bracing, spraying, and surgery; indoor 161.4plant care; tree, bush, shrub, and stump removal, except when performed as part of a land 161.5clearing contract as defined in section 
         297A.68, subdivision 40; and tree trimming for 161.6public utility lines. Services performed under a construction contract for the installation of 161.7shrubbery, plants, sod, trees, bushes, and similar items are not taxable;161.8    (vii) massages, except when provided by a licensed health care facility or 161.9professional or upon written referral from a licensed health care facility or professional for 161.10treatment of illness, injury, or disease; and161.11    (viii) the furnishing of lodging, board, and care services for animals in kennels and 161.12other similar arrangements, but excluding veterinary and horse boarding services.161.13    In applying the provisions of this chapter, the terms "tangible personal property" 161.14and "retail sale" include taxable services listed in clause (6), items (i) to (vi) and (viii), 161.15and the provision of these taxable services, unless specifically provided otherwise. 161.16Services performed by an employee for an employer are not taxable. Services performed 161.17by a partnership or association for another partnership or association are not taxable if 161.18one of the entities owns or controls more than 80 percent of the voting power of the 161.19equity interest in the other entity. Services performed between members of an affiliated 161.20group of corporations are not taxable. For purposes of the preceding sentence, "affiliated 161.21group of corporations" means those entities that would be classified as members of an 161.22affiliated group as defined under United States Code, title 26, section 1504, disregarding 161.23the exclusions in section 1504(b).161.24    For purposes of clause (5), "road construction" means construction of (1) public 161.25roads, (2) cartways, and (3) private roads in townships located outside of the seven-county 161.26metropolitan area up to the point of the emergency response location sign.161.27    (h) A sale and a purchase includes the furnishing for a consideration of tangible 161.28personal property or taxable services by the United States or any of its agencies or 161.29instrumentalities, or the state of Minnesota, its agencies, instrumentalities, or political 161.30subdivisions.161.31    (i) A sale and a purchase includes the furnishing for a consideration 161.32of telecommunications services, including ancillary services associated with 161.33telecommunication services, cable television services and, direct satellite services, and 161.34ring tones. Telecommunications Telecommunication services include, but are not limited 161.35to, the following services, as defined in section 297A.669: air-to-ground radiotelephone 161.36service, mobile telecommunication service, postpaid calling service, prepaid calling 162.1service, prepaid wireless calling service, and private communication services. The162.2services in this paragraph are taxed to the extent allowed under federal law.162.3    (j) A sale and a purchase includes the furnishing for a consideration of installation if 162.4the installation charges would be subject to the sales tax if the installation were provided 162.5by the seller of the item being installed.162.6    (k) A sale and a purchase includes the rental of a vehicle by a motor vehicle dealer 162.7to a customer when (1) the vehicle is rented by the customer for a consideration, or (2) 162.8the motor vehicle dealer is reimbursed pursuant to a service contract as defined in section 162.965B.29, subdivision 1
         , clause (1).162.10EFFECTIVE DATE.This section is effective for sales and purchases made after 162.11June 30, 2008, except that the amendments to paragraphs (g), clause (2), and (i), are 162.12effective retroactively for sales and purchases made after December 31, 2007.162.13    Sec. 6. Minnesota Statutes 2006, section 297A.61, subdivision 4, is amended to read:162.14    Subd. 4. Retail sale. (a) A "retail sale" means any sale, lease, or rental for any 162.15purpose, other than resale, sublease, or subrent of items by the purchaser in the normal 162.16course of business as defined in subdivision 21.162.17    (b) A sale of property used by the owner only by leasing it to others or by holding it 162.18in an effort to lease it, and put to no use by the owner other than resale after the lease or 162.19effort to lease, is a sale of property for resale.162.20    (c) A sale of master computer software that is purchased and used to make copies for 162.21sale or lease is a sale of property for resale.162.22    (d) A sale of building materials, supplies, and equipment to owners, contractors, 162.23subcontractors, or builders for the erection of buildings or the alteration, repair, or 162.24improvement of real property is a retail sale in whatever quantity sold, whether the sale is 162.25for purposes of resale in the form of real property or otherwise.162.26    (e) A sale of carpeting, linoleum, or similar floor covering to a person who provides 162.27for installation of the floor covering is a retail sale and not a sale for resale since a sale 162.28of floor covering which includes installation is a contract for the improvement of real 162.29property.162.30    (f) A sale of shrubbery, plants, sod, trees, and similar items to a person who provides 162.31for installation of the items is a retail sale and not a sale for resale since a sale of 162.32shrubbery, plants, sod, trees, and similar items that includes installation is a contract for 162.33the improvement of real property.162.34    (g) A sale of tangible personal property that is awarded as prizes is a retail sale and 162.35is not considered a sale of property for resale.163.1    (h) A sale of tangible personal property utilized or employed in the furnishing or 163.2providing of services under subdivision 3, paragraph (g), clause (1), including, but not 163.3limited to, property given as promotional items, is a retail sale and is not considered a 163.4sale of property for resale.163.5    (i) A sale of tangible personal property used in conducting lawful gambling under 163.6chapter 349 or the State Lottery under chapter 349A, including, but not limited to, 163.7property given as promotional items, is a retail sale and is not considered a sale of 163.8property for resale.163.9    (j) A sale of machines, equipment, or devices that are used to furnish, provide, or 163.10dispense goods or services, including, but not limited to, coin-operated devices, is a retail 163.11sale and is not considered a sale of property for resale.163.12    (k) In the case of a lease, a retail sale occurs (1) when an obligation to make a lease 163.13payment becomes due under the terms of the agreement or the trade practices of the 163.14lessor or (2) in the case of a lease of a motor vehicle, as defined in section 
         297B.01, 163.15subdivision 5
         , but excluding vehicles with a manufacturer's gross vehicle weight rating 163.16greater than 10,000 pounds and rentals of vehicles for not more than 28 days, at the time 163.17the lease is executed.163.18    (l) In the case of a conditional sales contract, a retail sale occurs upon the transfer of 163.19title or possession of the tangible personal property.163.20    (m) A sale of a bundled transaction in which one or more of the products included 163.21in the bundle is a taxable product is a retail sale, except that if one of the products 163.22is a telecommunication service, ancillary service, Internet access, or audio or video 163.23programming service, and the seller has maintained books and records identifying through 163.24reasonable and verifiable standards the portions of the price that are attributable to the 163.25distinct and separately identifiable products, then the products are not considered part of a 163.26bundled transaction. For purposes of this paragraph:163.27    (1) the books and records maintained by the seller must be maintained in the regular 163.28course of business, and do not include books and records created and maintained by the 163.29seller primarily for tax purposes; 163.30    (2) books and records maintained in the regular course of business include, but are 163.31not limited to, financial statements, general ledgers, invoicing and billing systems and 163.32reports, and reports for regulatory tariffs and other regulatory matters; and163.33    (3) books and records are maintained primarily for tax purposes when the books 163.34and records identify taxable and nontaxable portions of the price, but the seller maintains 163.35other books and records that identify different prices attributable to the distinct products 163.36included in the same bundled transaction.164.1EFFECTIVE DATE.This section is effective retroactively for sales and purchases 164.2made after December 31, 2007.164.3    Sec. 7. Minnesota Statutes 2006, section 297A.61, subdivision 7, is amended to read:164.4    Subd. 7. Sales price. (a) "Sales price" means the measure subject to sales tax, and 164.5means the total amount of consideration, including cash, credit, personal property, and 164.6services, for which personal property or services are sold, leased, or rented, valued in 164.7money, whether received in money or otherwise, without any deduction for the following:164.8    (1) the seller's cost of the property sold;164.9    (2) the cost of materials used, labor or service cost, interest, losses, all costs of 164.10transportation to the seller, all taxes imposed on the seller, and any other expenses of 164.11the seller;164.12    (3) charges by the seller for any services necessary to complete the sale, other than 164.13delivery and installation charges;164.14    (4) delivery charges, except the percentage of the delivery charge allocated to 164.15delivery of tax exempt property, when the delivery charge is allocated by using either (i) a 164.16percentage based on the total sales price of the taxable property compared to the total sales 164.17price of all property in the shipment, or (ii) a percentage based on the total weight of the 164.18taxable property compared to the total weight of all property in the shipment; and164.19    (5) installation charges; and.164.20    (6) the value of exempt property given to the purchaser when taxable and exempt 164.21personal property have been bundled together and sold by the seller as a single product 164.22or piece of merchandise.164.23    (b) Sales price does not include:164.24    (1) discounts, including cash, terms, or coupons, that are not reimbursed by a third 164.25party and that are allowed by the seller and taken by a purchaser on a sale;164.26    (2) interest, financing, and carrying charges from credit extended on the sale of 164.27personal property or services, if the amount is separately stated on the invoice, bill of sale, 164.28or similar document given to the purchaser; and164.29    (3) any taxes legally imposed directly on the consumer that are separately stated on 164.30the invoice, bill of sale, or similar document given to the purchaser.164.31    (c) Sales price includes consideration received by the seller from third parties if:164.32    (1) the seller actually receives consideration from a party other than the purchaser 164.33and the consideration is directly related to a price reduction or discount on the sale;164.34    (2) the seller has an obligation to pass the price reduction or discount through to 164.35the purchaser; 165.1    (3) the amount of the consideration attributable to the sale is fixed and determinable 165.2by the seller at the time of the sale of the item to the purchaser; and165.3    (4) one of the following criteria is met: 165.4    (i) the purchaser presents a coupon, certificate, or other documentation to the seller 165.5to claim a price reduction or discount when the coupon, certificate, or documentation is 165.6authorized, distributed, or granted by a third party with the understanding that the third 165.7party will reimburse any seller to whom the coupon, certificate, or documentation is 165.8presented; 165.9    (ii) the purchaser identifies himself or herself to the seller as a member of a group or 165.10organization entitled to a price reduction or discount. A "preferred customer" card that is 165.11available to any customer does not constitute membership in such a group; or 165.12    (iii) the price reduction or discount is identified as a third-party price reduction or 165.13discount on the invoice received by the purchaser or on a coupon, certificate, or other 165.14documentation presented by the purchaser.165.15EFFECTIVE DATE.This section is effective retroactively for sales and purchases 165.16made after December 31, 2007, except that the amendment to paragraph (a), clause (4), is 165.17effective the day following final enactment.165.18    Sec. 8. Minnesota Statutes 2006, section 297A.61, subdivision 10, is amended to read:165.19    Subd. 10. Tangible personal property. (a) "Tangible personal property" means 165.20personal property that can be seen, weighed, measured, felt, or touched, or that is in any 165.21other manner perceptible to the senses. "Tangible personal property" includes, but is not 165.22limited to, electricity, water, gas, steam, and prewritten computer software, and prepaid 165.23calling cards.165.24    (b) Tangible personal property does not include:165.25    (1) large ponderous machinery and equipment used in a business or production 165.26activity which at common law would be considered to be real property;165.27    (2) property which is subject to an ad valorem property tax;165.28    (3) property described in section 
         272.02, subdivision 9, clauses (a) to (d); and 165.29    (4) property described in section 
         272.03, subdivision 2, clauses (3) and (5). 165.30EFFECTIVE DATE.This section is effective retroactively for sales and purchases 165.31made after December 31, 2007.165.32    Sec. 9. Minnesota Statutes 2006, section 297A.61, subdivision 24, is amended to read:166.1    Subd. 24. Telecommunications services. (a) "Telecommunications services" means 166.2the electronic transmission, conveyance, or routing of voice, data, audio, video, or any 166.3other information or signals to a point, or between or among points, by or through any 166.4electronic, satellite, optical, microwave, or other medium or method now in existence or 166.5hereafter devised, regardless of the protocol used for such transmission, conveyance, 166.6or routing.166.7    (b) Telecommunications services includes the furnishing for consideration of access 166.8to telephone services by a hotel to its guests. include transmission, conveyance, or routing 166.9in which computer processing applications are used to act on the form, code, or protocol 166.10of the content for purposes of transmission, conveyance, or routing, without regard to 166.11whether the service is referred to as voice over Internet protocol services or is classified by 166.12the Federal Communications Commission as enhanced or value added.166.13    (c) Telecommunications services do not include:166.14    (1) services purchased with a prepaid telephone calling card;166.15    (2) private communication service purchased by an agent acting on behalf of the 166.16State Lottery;166.17    (3) information services; and166.18    (4) purchases of telecommunications when the purchaser uses the purchased services 166.19as a component part of or integrates such service into another telecommunications service 166.20that is sold by the purchaser in the normal course of business.166.21    (d) For purposes of this subdivision, "information services" means the offering of 166.22the capability for generating, acquiring, storing, transforming, processing, retrieving, 166.23utilizing, or making available information.166.24    (1) data processing and information services that allow data to be generated, 166.25acquired, stored, processed, or retrieved and delivered by an electronic transmission to 166.26a purchaser when the purchaser's primary purpose for the underlying transaction is the 166.27processed data or information;166.28    (2) installation or maintenance of wiring or equipment on a customer's premises;166.29    (3) tangible personal property;166.30    (4) advertising, including, but not limited to, directory advertising;166.31    (5) billing and collection services provided to third parties;166.32    (6) Internet access service;166.33    (7) radio and television audio and video programming services, regardless of the 166.34medium, including the furnishing of transmission, conveyance, and routing of such 166.35services by the programming service provider. Radio and television audio and video 166.36programming services includes, but is not limited to, cable service as defined in United 167.1States Code, title 47, section 522(6), and audio and video programming services delivered 167.2by commercial mobile radio service providers, as defined in Code of Federal Regulations, 167.3title 47, section 20.3;167.4    (8) ancillary services; or167.5    (9) digital products delivered electronically, including, but not limited to, software, 167.6music, video, reading materials, or ring tones.167.7EFFECTIVE DATE.This section is effective retroactively for sales and purchases 167.8made after December 31, 2007.167.9    Sec. 10. Minnesota Statutes 2006, section 297A.61, is amended by adding a 167.10subdivision to read:167.11    Subd. 38.Bundled transaction.(a) "Bundled transaction" means the retail sale 167.12of two or more products when the products are otherwise distinct and identifiable, and 167.13the products are sold for one nonitemized price. As used in this subdivision, "product" 167.14includes tangible personal property, services, intangibles, and digital goods, but does not 167.15include real property or services to real property. A bundled transaction does not include 167.16the sale of any products in which the sales price varies, or is negotiable, based on the 167.17selection by the purchaser of the products included in the transaction.167.18    (b) For purposes of this subdivision, "distinct and identifiable" products does not 167.19include:167.20    (1) packaging and other materials, such as containers, boxes, sacks, bags, and 167.21bottles, wrapping, labels, tags, and instruction guides, that accompany the retail sale of the 167.22products and are incidental or immaterial to the retail sale. Examples of packaging that are 167.23incidental or immaterial include grocery sacks, shoe boxes, dry cleaning garment bags, 167.24and express delivery envelopes and boxes;167.25    (2) a promotional product provided free of charge with the required purchase of 167.26another product. A promotional product is provided free of charge if the sales price of 167.27another product, which is required to be purchased in order to receive the promotional 167.28product, does not vary depending on the inclusion of the promotional product; and 167.29    (3) items included in the definition of sales price.167.30    (c) For purposes of this subdivision, the term "one nonitemized price" does not 167.31include a price that is separately identified by product on binding sales or other supporting 167.32sales-related documentation made available to the customer in paper or electronic form 167.33including, but not limited to an invoice, bill of sale, receipt, contract, service agreement, 167.34lease agreement, periodic notice of rates and services, rate card, or price list.168.1    (d) A transaction that otherwise meets the definition of a bundled transaction is 168.2not a bundled transaction if it is: 168.3    (1) the retail sale of tangible personal property and a service and the tangible 168.4personal property is essential to the use of the service, and is provided exclusively in 168.5connection with the service, and the true object of the transaction is the service; 168.6    (2) the retail sale of services if one service is provided that is essential to the use or 168.7receipt of a second service and the first service is provided exclusively in connection with 168.8the second service and the true object of the transaction is the second service; 168.9    (3) a transaction that includes taxable products and nontaxable products and the 168.10purchase price or sales price of the taxable products is de minimis; or 168.11    (4) the retail sale of exempt tangible personal property and taxable tangible personal 168.12property if:168.13    (i) the transaction includes food and food ingredients, drugs, durable medical 168.14equipment, mobility enhancing equipment, over-the-counter drugs, prosthetic devices, 168.15or medical supplies; and168.16    (ii) the seller's purchase price or sales price of the taxable tangible personal property 168.17is 50 percent or less of the total purchase price or sales price of the bundled tangible 168.18personal property. Sellers must not use a combination of the purchase price and sales 168.19price of the tangible personal property when making the 50 percent determination for 168.20a transaction.168.21    (e) For purposes of this subdivision, "purchase price" means the measure subject to 168.22use tax on purchases made by the seller, and "de minimis" means that the seller's purchase 168.23price or sales price of the taxable products is ten percent or less of the total purchase 168.24price or sales price of the bundled products. Sellers shall use either the purchase price 168.25or the sales price of the products to determine if the taxable products are de minimis. 168.26Sellers must not use a combination of the purchase price and sales price of the products 168.27to determine if the taxable products are de minimis. Sellers shall use the full term of a 168.28service contract to determine if the taxable products are de minimis.168.29EFFECTIVE DATE.This section is effective retroactively for sales and purchases 168.30made after December 31, 2007.168.31    Sec. 11. Minnesota Statutes 2006, section 297A.61, is amended by adding a 168.32subdivision to read:168.33    Subd. 39.Ancillary services."Ancillary services" means services that are 168.34associated with or incidental to the provision of telecommunications services, including, 169.1but not limited to, conference bridging service, detailed telecommunications billing, 169.2directory assistance, vertical service, and voice mail services.169.3EFFECTIVE DATE.This section is effective retroactively for sales and purchases 169.4made after December 31, 2007.169.5    Sec. 12. Minnesota Statutes 2006, section 297A.61, is amended by adding a 169.6subdivision to read:169.7    Subd. 40.Conference bridging service."Conference bridging service" means an 169.8ancillary service that links two or more participants of an audio or video conference call 169.9and may include the provision of a telephone number. Conference bridging service does 169.10not include the telecommunications services used to reach the conference bridge.169.11EFFECTIVE DATE.This section is effective retroactively for sales and purchases 169.12made after December 31, 2007.169.13    Sec. 13. Minnesota Statutes 2006, section 297A.61, is amended by adding a 169.14subdivision to read:169.15    Subd. 41.Detailed telecommunications billing service."Detailed 169.16telecommunications billing service" means an ancillary service of separately stating 169.17information pertaining to individual calls on a customer's billing statement.169.18EFFECTIVE DATE.This section is effective retroactively for sales and purchases 169.19made after December 31, 2007.169.20    Sec. 14. Minnesota Statutes 2006, section 297A.61, is amended by adding a 169.21subdivision to read:169.22    Subd. 42.Directory assistance."Directory assistance" means an ancillary service 169.23of providing telephone number information or address information, or both.169.24EFFECTIVE DATE.This section is effective retroactively for sales and purchases 169.25made after December 31, 2007.169.26    Sec. 15. Minnesota Statutes 2006, section 297A.61, is amended by adding a 169.27subdivision to read:169.28    Subd. 43.Vertical service."Vertical service" means an ancillary service that is 169.29offered in connection with one or more telecommunications services and which offers 170.1advanced calling features that allow customers to identify callers and to manage multiple 170.2calls and call connections, including conference bridging services.170.3EFFECTIVE DATE.This section is effective retroactively for sales and purchases 170.4made after December 31, 2007.170.5    Sec. 16. Minnesota Statutes 2006, section 297A.61, is amended by adding a 170.6subdivision to read:170.7    Subd. 44.Voice mail service."Voice mail service" means an ancillary service that 170.8enables the customer to store, send, or receive recorded messages. Voice mail service 170.9does not include any vertical services that the customer may be required to have in order 170.10to utilize the voice mail service.170.11EFFECTIVE DATE.This section is effective retroactively for sales and purchases 170.12made after December 31, 2007.170.13    Sec. 17. Minnesota Statutes 2006, section 297A.61, is amended by adding a 170.14subdivision to read:170.15    Subd. 45.Ring tone."Ring tone" means a digitized sound file that is downloaded 170.16onto a device and that may be used to alert the customer of a telecommunication service 170.17with respect to a communication.170.18EFFECTIVE DATE.This section is effective retroactively for sales and purchases 170.19made after December 31, 2007.170.20    Sec. 18. Minnesota Statutes 2006, section 297A.61, is amended by adding a 170.21subdivision to read:170.22    Subd. 46.Fur clothing."Fur clothing" means human wearing apparel that is 170.23required by the Federal Fur Products Labeling Act, United States Code, title 15, section 170.2469, to be labeled as a fur product, and the value of the fur components in the product 170.25is more than three times the value of the next most valuable tangible component. For 170.26purposes of this subdivision, "fur" means any animal skin or part of an animal skin with 170.27hair, fleece, or fur fibers attached to it, either in its raw or processed state, but does not 170.28include animal skins that have been converted into leather or suede, or from which the 170.29hair, fleece, or fur fiber has been completely removed in processing the skins.170.30EFFECTIVE DATE.This section is effective for sales and purchases made after 170.31June 30, 2008.171.1    Sec. 19. Minnesota Statutes 2006, section 297A.63, subdivision 1, is amended to read:171.2    Subdivision 1. Use of tangible personal property or taxable services. (a) For the 171.3privilege of using, storing, distributing, or consuming in Minnesota tangible personal 171.4property or taxable services purchased for use, storage, distribution, or consumption in 171.5this state, a use tax is imposed on a person in Minnesota. The tax is imposed on the 171.6purchase price of retail sales of the tangible personal property or taxable services at the 171.7rate of tax imposed under section 
         297A.62. A person that purchases property from a 171.8Minnesota retailer and returns the tangible personal property to a point within Minnesota, 171.9except in the course of interstate commerce, after it was delivered outside of Minnesota, 171.10is subject to the use tax. 171.11    (b) No tax is imposed under paragraph (a) if the tax imposed by section 
         297A.62171.12was paid on the sales price of the tangible personal property or taxable services. 171.13    (c) No tax is imposed under paragraph (a) if the purchase meets the requirements for 171.14exemption under section 
         297A.67, subdivision 21. 171.15    (d) When a transaction otherwise meets the definition of a bundled transaction, but 171.16is not a bundled transaction under section 297A.61, subdivision 38, paragraph (d), and 171.17the seller's purchase price of the taxable product or taxable tangible personal property is 171.18equal to or greater than $100, then use tax is imposed on the purchase price of the taxable 171.19product or taxable personal property. For purposes of this paragraph, "purchase price" 171.20means the measure subject to use tax on purchases made by the seller.171.21EFFECTIVE DATE.This section is effective retroactively for sales and purchases 171.22made after December 31, 2007.171.23    Sec. 20. Minnesota Statutes 2006, section 297A.665, is amended to read:171.24297A.665 PRESUMPTION OF TAX; BURDEN OF PROOF.171.25    (a) For the purpose of the proper administration of this chapter and to prevent 171.26evasion of the tax, until the contrary is established, it is presumed that:171.27    (1) all gross receipts are subject to the tax; and171.28    (2) all retail sales for delivery in Minnesota are for storage, use, or other consumption 171.29in Minnesota.171.30    (b) The burden of proving that a sale is not a taxable retail sale is on the seller. 171.31However, the seller may take from the purchaser at the time of the sale a fully completed 171.32exemption certificate which conclusively relieves the seller from collecting and remitting 171.33the tax. This However, a seller is relieved of liability if:172.1    (1) the seller obtains a fully completed exemption certificate or all the relevant 172.2information required by section 297A.72, subdivision 2, at the time of the sale or within 172.390 days after the date of the sale; or172.4    (2) if the seller has not obtained a fully completed exemption certificate or all the 172.5relevant information required by section 297A.72, subdivision 2, within the time provided 172.6in clause (1), within 120 days after a request for substantiation by the commissioner, 172.7the seller either:172.8    (i) obtains in good faith a fully completed exemption certificate or all the relevant 172.9information required by section 297A.72, subdivision 2, from the purchaser; or172.10    (ii) proves by other means that the transaction was not subject to tax.172.11    (c) Notwithstanding paragraph (b), relief from liability does not apply to a seller who:172.12    (1) fraudulently fails to collect the tax; or 172.13    (2) solicits purchasers to participate in the unlawful claim of an exemption. If a 172.14seller claiming that certain sales are exempt is not in possession of the required exemption 172.15certificates within 60 days after receiving written notice from the commissioner that the 172.16certificates are required, deductions claimed by the seller that required delivery of the 172.17certificates must be disallowed. If the certificates are delivered to the commissioner within 172.18the 60-day period, the commissioner may verify the reason or basis for the exemption 172.19claimed in the certificates before allowing any deductions. A deduction must not be 172.20granted on the basis of certificates delivered to the commissioner after the 60-day period.172.21    (c) (d) A purchaser of tangible personal property or any items listed in section 172.22297A.63
          that are shipped or brought to Minnesota by the purchaser has the burden 172.23of proving that the property was not purchased from a retailer for storage, use, or 172.24consumption in Minnesota. 172.25EFFECTIVE DATE.This section is effective retroactively for sales and purchases 172.26made after December 31, 2007.172.27    Sec. 21. Minnesota Statutes 2006, section 297A.669, subdivision 3, is amended to read:172.28    Subd. 3. Defined telecommunications services sourcing. The sale of the following 172.29telecommunication services shall be sourced to each level of taxing jurisdiction in 172.30paragraphs (a) to (d).172.31    (a) A sale of mobile telecommunications services, other than air-to-ground 172.32radiotelephone service and prepaid calling service, is sourced to the customer's place of 172.33primary use as required by the Mobile Telecommunications Sourcing Act.172.34    (b) A sale of postpaid calling service is sourced to the origination point of the 172.35telecommunications signal as first identified by either:173.1    (1) the seller's telecommunications system; or173.2    (2) information received by the seller from its service provider, where the system 173.3used to transport such signals is not that of the seller.173.4    (c) A sale of prepaid calling service or prepaid wireless calling service is sourced in 173.5accordance with section 
         297A.668, subdivision 2. However, in the case of a sale of mobile 173.6telecommunications service that is a prepaid telecommunicationswireless calling service, 173.7the rule provided in section 
         297A.668, subdivision 2, paragraph (f), shall include as an 173.8option the location associated with the mobile telephone number. 173.9    (d) A sale of a private communication service is sourced as follows:173.10    (1) service for a separate charge related to a customer channel termination point is 173.11sourced to each level of jurisdiction in which the customer channel termination point 173.12is located;173.13    (2) service where all customer termination points are located entirely within one 173.14jurisdiction or levels of jurisdiction is sourced in such jurisdiction in which the customer 173.15channel termination points are located;173.16    (3) service for segments of a channel between two customer channel termination 173.17points located in different jurisdictions and which segment of channel are separately 173.18charged is sourced 50 percent in each level of jurisdiction in which the customer channel 173.19termination points are located; and173.20    (4) service for segments of a channel located in more than one jurisdiction or 173.21levels of jurisdiction and which segments are not separately billed is sourced in each 173.22jurisdiction based on the percentage determined by dividing the number of customer 173.23channel termination points in the jurisdiction by the total number of customer channel 173.24termination points.173.25EFFECTIVE DATE.This section is effective retroactively for sales and purchases 173.26made after December 31, 2007.173.27    Sec. 22. Minnesota Statutes 2006, section 297A.669, subdivision 13, is amended to 173.28read:173.29    Subd. 13. Postpaid calling service. "Postpaid calling service," for purposes of 173.30this section, means the telecommunications service obtained by making a payment 173.31on a call-by-call basis either through the use of a credit card or payment mechanism 173.32such as a bank card, travel card, credit card, or debit card, or by a charge made to 173.33a telephone number that is not associated with the origination or termination of the 173.34telecommunications service. A postpaid calling service includes a telecommunications 174.1service, except a prepaid wireless calling service, that would be a prepaid calling service 174.2except it is not exclusively a telecommunication service.174.3EFFECTIVE DATE.This section is effective retroactively for sales and purchases 174.4made after December 31, 2007.174.5    Sec. 23. Minnesota Statutes 2006, section 297A.669, subdivision 14, is amended to 174.6read:174.7    Subd. 14. Prepaid calling service. "Prepaid calling service," for purposes of this 174.8section, means a telecommunications service that:174.9    (1) provides the right to access exclusively telecommunications services, which;174.10    (2) must be paid for in advance and which;174.11    (3) enables the origination of calls using an access number or authorization code, 174.12whether manually or electronically dialed,; and that174.13    (4) is sold in predetermined units or dollars of which the number declines with 174.14use in a known amount.174.15EFFECTIVE DATE.This section is effective retroactively for sales and purchases 174.16made after December 31, 2007.174.17    Sec. 24. Minnesota Statutes 2006, section 297A.669, is amended by adding a 174.18subdivision to read:174.19    Subd. 14a.Prepaid wireless calling service."Prepaid wireless calling service," for 174.20purposes of this section, means a telecommunications service that: 174.21    (1) provides the right to utilize mobile wireless service as well as other 174.22nontelecommunications services, including the download of digital products delivered 174.23electronically, content, and ancillary services; 174.24    (2) must be paid for in advance; and 174.25    (3) is sold in predetermined units or dollars of which the number declines with 174.26use in a known amount.174.27EFFECTIVE DATE.This section is effective retroactively for sales and purchases 174.28made after December 31, 2007.174.29    Sec. 25. Minnesota Statutes 2006, section 297A.669, is amended by adding a 174.30subdivision to read:174.31    Subd. 17.Ancillary service.The sale of an ancillary service is sourced to the 174.32customer's place of primary use.175.1EFFECTIVE DATE.This section is effective retroactively for sales and purchases 175.2made after December 31, 2007.175.3    Sec. 26. Minnesota Statutes 2006, section 297A.67, subdivision 7, is amended to read:175.4    Subd. 7. Drugs; medical devices. (a) Sales of the following drugs and medical 175.5devices are exempt:175.6    (1) drugs for human use, including over-the-counter drugs;175.7    (2) single-use finger-pricking devices for the extraction of blood and other single-use 175.8devices and single-use diagnostic agents used in diagnosing, monitoring, or treating 175.9diabetes;175.10    (3) insulin and medical oxygen for human use, regardless of whether prescribed 175.11or sold over the counter;175.12    (4) prosthetic devices;175.13    (5) durable medical equipment for home use only;175.14    (6) mobility enhancing equipment; and175.15    (7) prescription corrective eyeglasses.; and175.16    (8) kidney dialysis equipment, including repair and replacement parts.175.17    (b) For purposes of this subdivision:175.18    (1) "Drug" means a compound, substance, or preparation, and any component of 175.19a compound, substance, or preparation, other than food and food ingredients, dietary 175.20supplements, or alcoholic beverages that is:175.21    (i) recognized in the official United States Pharmacopoeia, official Homeopathic 175.22Pharmacopoeia of the United States, or official National Formulary, and supplement 175.23to any of them;175.24    (ii) intended for use in the diagnosis, cure, mitigation, treatment, or prevention 175.25of disease; or175.26    (iii) intended to affect the structure or any function of the body.175.27    (2) "Durable medical equipment" means equipment, including repair and 175.28replacement parts, but not including mobility enhancing equipment, that:175.29    (i) can withstand repeated use;175.30    (ii) is primarily and customarily used to serve a medical purpose;175.31    (iii) generally is not useful to a person in the absence of illness or injury; and175.32    (iv) is not worn in or on the body.175.33    (3) "Mobility enhancing equipment" means equipment, including repair and 175.34replacement parts, but not including durable medical equipment, that:176.1    (i) is primarily and customarily used to provide or increase the ability to move from 176.2one place to another and that is appropriate for use either in a home or a motor vehicle;176.3    (ii) is not generally used by persons with normal mobility; and176.4    (iii) does not include any motor vehicle or equipment on a motor vehicle normally 176.5provided by a motor vehicle manufacturer.176.6    (4) "Over-the-counter drug" means a drug that contains a label that identifies the 176.7product as a drug as required by Code of Federal Regulations, title 21, section 
         201.66. The 176.8label must include a "drug facts" panel or a statement of the active ingredients with a list of 176.9those ingredients contained in the compound, substance, or preparation. Over-the-counter 176.10drugs do not include grooming and hygiene products, regardless of whether they otherwise 176.11meet the definition. "Grooming and hygiene products" are soaps, cleaning solutions, 176.12shampoo, toothpaste, mouthwash, antiperspirants, and suntan lotions and sunscreens.176.13    (5) "Prescribed" and "prescription" means a direction in the form of an order, 176.14formula, or recipe issued in any form of oral, written, electronic, or other means of 176.15transmission by a duly licensed health care professional.176.16    (6) "Prosthetic device" means a replacement, corrective, or supportive device, 176.17including repair and replacement parts, worn on or in the body to:176.18    (i) artificially replace a missing portion of the body;176.19    (ii) prevent or correct physical deformity or malfunction; or176.20    (iii) support a weak or deformed portion of the body.176.21Prosthetic device does not include corrective eyeglasses.176.22    (7) "Kidney dialysis equipment" means equipment that:176.23    (i) is used to remove waste products that build up in the blood when the kidneys are 176.24not able to do so on their own; and176.25    (ii) can withstand repeated use, including multiple use by a single patient. 176.26EFFECTIVE DATE.This section is effective the day following final enactment.176.27    Sec. 27. Minnesota Statutes 2006, section 297A.67, subdivision 8, is amended to read:176.28    Subd. 8. Clothing. (a) Clothing is exempt. For purposes of this subdivision, 176.29"clothing" means all human wearing apparel suitable for general use.176.30    (b) Clothing includes, but is not limited to, aprons, household and shop; athletic 176.31supporters; baby receiving blankets; bathing suits and caps; beach capes and coats; belts 176.32and suspenders; boots; coats and jackets; costumes; children and adult diapers, including 176.33disposable; ear muffs; footlets; formal wear; garters and garter belts; girdles; gloves and 176.34mittens for general use; hats and caps; hosiery; insoles for shoes; lab coats; neckties; 177.1overshoes; pantyhose; rainwear; rubber pants; sandals; scarves; shoes and shoe laces; 177.2slippers; sneakers; socks and stockings; steel-toed boots; underwear; uniforms, athletic 177.3and nonathletic; and wedding apparel.177.4    (c) Clothing does not include the following:177.5    (1) belt buckles sold separately;177.6    (2) costume masks sold separately;177.7    (3) patches and emblems sold separately;177.8    (4) sewing equipment and supplies, including but not limited to, knitting needles, 177.9patterns, pins, scissors, sewing machines, sewing needles, tape measures, and thimbles;177.10    (5) sewing materials that become part of clothing, including but not limited to, 177.11buttons, fabric, lace, thread, yarn, and zippers;177.12    (6) clothing accessories or equipment;177.13    (7) sports or recreational equipment; and177.14    (8) protective equipment.177.15Clothing also does not include apparel made from fur if a uniform definition of "apparel 177.16made from fur" is developed by the member states of the Streamlined Sales and Use Tax 177.17Agreement "fur clothing" as defined in section 297A.61, subdivision 46.177.18    For purposes of this subdivision, "clothing accessories or equipment" means 177.19incidental items worn on the person or in conjunction with clothing. Clothing accessories 177.20and equipment include, but are not limited to, briefcases; cosmetics; hair notions, including 177.21barrettes, hair bows, and hairnets; handbags; handkerchiefs; jewelry; nonprescription 177.22sunglasses; umbrellas; wallets; watches; and wigs and hairpieces. "Sports or recreational 177.23equipment" means items designed for human use and worn in conjunction with an athletic 177.24or recreational activity that are not suitable for general use. Sports and recreational 177.25equipment includes, but is not limited to, ballet and tap shoes; cleated or spiked athletic 177.26shoes; gloves, including, but not limited to, baseball, bowling, boxing, hockey, and golf 177.27gloves; goggles; hand and elbow guards; life preservers and vests; mouth guards; roller 177.28and ice skates; shin guards; shoulder pads; ski boots; waders; and wetsuits and fins. 177.29"Protective equipment" means items for human wear and designed as protection of the 177.30wearer against injury or disease or as protection against damage or injury of other persons 177.31or property but not suitable for general use. Protective equipment includes, but is not 177.32limited to, breathing masks; clean room apparel and equipment; ear and hearing protectors; 177.33face shields; finger guards; hard hats; helmets; paint or dust respirators; protective gloves; 177.34safety glasses and goggles; safety belts; tool belts; and welders gloves and masks.178.1EFFECTIVE DATE.This section is effective for sales and purchases made after 178.2June 30, 2008.178.3    Sec. 28. Minnesota Statutes 2006, section 297A.67, subdivision 9, is amended to read:178.4    Subd. 9. Baby products.Breast pumps, baby bottles and nipples, pacifiers, teething 178.5rings, and infant syringes are exempt.178.6EFFECTIVE DATE.This section is effective the day following final enactment.178.7    Sec. 29. Minnesota Statutes 2006, section 297A.68, subdivision 11, is amended to read:178.8    Subd. 11. Advertising materials. Materials designed to advertise and promote the 178.9sale of merchandise or services are exempt if these materials are mailed or transferred to a 178.10person outside the state for use solely outside the state. Mailing and reply envelopes and 178.11cards and other shipping materials including, but not limited to, boxes, labels, containers, 178.12and banding, used exclusively in connection with these advertising and promotional 178.13materials are included in this exemption. The exemption applies regardless of where the 178.14mailing occurs. The storage of these materials in the state for the purpose of subsequently 178.15shipping or otherwise transferring the material out of state is also exempt if the other 178.16conditions in this subdivision are met. For purposes of this subdivision, materials that have 178.17a primary purpose other than advertising, such as fulfilling a legal obligation or furnishing 178.18nonadvertising information, are not materials designed to advertise and promote the sale 178.19of merchandise or services even if they do include advertising content.178.20EFFECTIVE DATE.This section is effective the day following final enactment.178.21    Sec. 30. Minnesota Statutes 2006, section 297A.68, subdivision 16, is amended to read:178.22    Subd. 16. Packing materials. Packing materials used to pack and ship household 178.23goods and that are provided to and remain with the customer of a for-hire carrier are 178.24exempt if the ultimate destination of the goods is outside Minnesota and if the goods178.25packing materials are not later returned to a point within Minnesota, except in the course 178.26of interstate commerce. This exemption does not apply to tools, equipment, pads, or 178.27accessories owned or leased by the for-hire carrier.178.28EFFECTIVE DATE.This section is effective retroactively for sales and purchases 178.29after December 31, 2007.178.30    Sec. 31. Minnesota Statutes 2006, section 297A.68, subdivision 35, is amended to read:179.1    Subd. 35. Telecommunications, cable television, and direct satellite equipment.179.2    (a) Telecommunications, cable television, or direct satellite machinery and equipment 179.3purchased or leased for use directly by a telecommunications, cable television, or 179.4direct satellite service provider primarily in the provision of telecommunications, cable 179.5television, or direct satellite services that are ultimately to be sold at retail are exempt, 179.6regardless of whether purchased by the owner, a contractor, or a subcontractor.179.7    (b) For purposes of this subdivision, "telecommunications, cable television, or direct 179.8satellite machinery and equipment" includes, but is not limited to:179.9    (1) machinery, equipment, and fixtures utilized in receiving, initiating, 179.10amplifying, processing, transmitting, retransmitting, recording, switching, or monitoring 179.11telecommunications, cable television, or direct satellite services, such as computers, 179.12transformers, amplifiers, routers, bridges, repeaters, multiplexers, and other items 179.13performing comparable functions;179.14    (2) machinery, equipment, and fixtures used in the transportation of 179.15telecommunications, cable television, or direct satellite services, radio transmitters and 179.16receivers, satellite equipment, microwave equipment, and other transporting media, but 179.17not wire, cable, fiber, poles, or conduit;179.18    (3) ancillary machinery, equipment, and fixtures that regulate, control, protect, or 179.19enable the machinery in clauses (1) and (2) to accomplish its intended function, such as 179.20auxiliary power supply, test equipment, towers, heating, ventilating, and air conditioning 179.21equipment necessary to the operation of the telecommunications, cable television, or direct 179.22satellite equipment; and software necessary to the operation of the telecommunications, 179.23cable television, or direct satellite equipment; and179.24    (4) repair and replacement parts, including accessories, whether purchased as spare 179.25parts, repair parts, or as upgrades or modifications to qualified machinery or equipment.179.26    (c) For purposes of this subdivision, "telecommunications services" means 179.27telecommunications services as defined in section 297A.61, subdivision 24, paragraphs 179.28(a), (c), and (d).179.29EFFECTIVE DATE.This section is effective retroactively for sales and purchases 179.30made after December 31, 2007.179.31    Sec. 32. Minnesota Statutes 2006, section 297A.69, subdivision 2, is amended to read:179.32    Subd. 2. Materials consumed in agricultural production. Materials stored, used, 179.33or consumed in agricultural production of personal property intended to be sold ultimately 179.34at retail are exempt, whether or not the item becomes an ingredient or constituent part 180.1of the property produced. Materials that qualify for this exemption include, but are not 180.2limited to, the following:180.3    (1) feeds, seeds, trees, fertilizers, and herbicides, including when purchased for use 180.4by farmers in a federal or state farm or conservation program;180.5    (2) materials sold to a veterinarian to be used or consumed in the care, medication, 180.6and treatment of agricultural production animals and horses;180.7    (3) chemicals, including chemicals used for cleaning food processing machinery 180.8and equipment;180.9    (4) materials, including chemicals, fuels, and electricity purchased by persons 180.10engaged in agricultural production to treat waste generated as a result of the production 180.11process;180.12    (5) fuels, electricity, gas, and steam used or consumed in the production process, 180.13except that including electricity, gas, or steam used for space heating, cooling, or lighting 180.14is exempt if (i) it is in excess of the average climate control or lighting for the production 180.15area, and (ii) it is necessary to produce that particular product of facilities housing 180.16agricultural animals;180.17    (6) petroleum products and lubricants;180.18    (7) packaging materials, including returnable containers used in packaging food and 180.19beverage products; and180.20    (8) accessory tools and equipment that are separate detachable units with an ordinary 180.21useful life of less than 12 months used in producing a direct effect upon the product.180.22Machinery, equipment, implements, tools, accessories, appliances, contrivances, and 180.23furniture and fixtures, except those listed in this clause are not included within this 180.24exemption.180.25EFFECTIVE DATE.This section is effective the day following final enactment.180.26    Sec. 33. Minnesota Statutes 2006, section 297A.70, subdivision 7, is amended to read:180.27    Subd. 7. Hospitals and outpatient surgical centers. (a) Sales, except for those 180.28listed in paragraph (c), to a hospital are exempt, if the items purchased are used in 180.29providing hospital services. For purposes of this subdivision, "hospital" means a hospital 180.30organized and operated for charitable purposes within the meaning of section 501(c)(3) of 180.31the Internal Revenue Code, and licensed under chapter 144 or by any other jurisdiction, 180.32and "hospital services" are services authorized or required to be performed by a "hospital" 180.33under chapter 144.181.1    (b) Sales, except for those listed in paragraph (c), to an outpatient surgical center 181.2are exempt, if the items purchased are used in providing outpatient surgical services. For 181.3purposes of this subdivision, "outpatient surgical center" means an outpatient surgical 181.4center organized and operated for charitable purposes within the meaning of section 181.5501(c)(3) of the Internal Revenue Code, and licensed under chapter 144 or by any other 181.6jurisdiction. For the purposes of this subdivision, "outpatient surgical services" means: 181.7(1) services authorized or required to be performed by an outpatient surgical center under 181.8chapter 144; and (2) urgent care. For purposes of this subdivision, "urgent care" means 181.9health services furnished to a person whose medical condition is sufficiently acute to 181.10require treatment unavailable through, or inappropriate to be provided by, a clinic or 181.11physician's office, but not so acute as to require treatment in a hospital emergency room.181.12    (c) This exemption does not apply to the following products and services:181.13    (1) purchases made by a clinic, physician's office, or any other medical facility not 181.14operating as a hospital or outpatient surgical center, even though the clinic, office, or 181.15facility may be owned and operated by a hospital or outpatient surgical center;181.16    (2) sales under section 
         297A.61, subdivision 3, paragraph (g), clause (2), and 181.17prepared food, candy, and soft drinks; 181.18    (3) building and construction materials used in constructing buildings or facilities 181.19that will not be used principally by the hospital or outpatient surgical center;181.20    (4) building, construction, or reconstruction materials purchased by a contractor 181.21or a subcontractor as a part of a lump-sum contract or similar type of contract with a 181.22guaranteed maximum price covering both labor and materials for use in the construction, 181.23alteration, or repair of a hospital or outpatient surgical center; or181.24    (5) the leasing of a motor vehicle as defined in section 
         297B.01, subdivision 5. 181.25    (d) A limited liability company also qualifies for exemption under this subdivision if 181.26(1) it consists of a sole member that would qualify for the exemption, and (2) the items 181.27purchased qualify for the exemption.181.28    (e) An entity that contains both a hospital and a nonprofit unit may claim this 181.29exemption on purchases made for both the hospital and nonprofit unit provided that:181.30    (1) the nonprofit unit would have qualified for exemption under subdivision 4; and181.31    (2) the items purchased would have qualified for the exemption.181.32EFFECTIVE DATE.This section is effective the day following final enactment.181.33    Sec. 34. Minnesota Statutes 2006, section 297A.70, is amended by adding a 181.34subdivision to read:182.1    Subd. 18.Private communication service for State Lottery.Private 182.2communication service, as defined in section 297A.61, subdivision 26, is exempt if the 182.3service is purchased by an agent acting on behalf of the State Lottery.182.4EFFECTIVE DATE.This section is effective retroactively for sales and purchases 182.5made after December 31, 2007.182.6    Sec. 35. Minnesota Statutes 2006, section 297A.72, is amended to read:182.7297A.72 EXEMPTION CERTIFICATES.182.8    Subd. 2. Content and form of exemption certificate. An exemption certificate 182.9must be substantially in the form prescribed by the commissioner and. To be fully 182.10completed, the exemption certificate must:182.11    (1) either be signed by the purchaser if it is a paper form, or meet the requirements 182.12of section 
         270C.304 if in electronic form;182.13    (2) bear the name and address of the purchaser; and182.14    (3) indicate the sales tax account identification number, if any, issued to the 182.15purchaser. as follows:182.16    (i) the purchaser's Minnesota tax identification number;182.17    (ii) if the purchaser does not have a Minnesota tax identification number, then the 182.18purchaser's state tax identification number that is issued by a state other than Minnesota, 182.19and the name of that state;182.20    (iii) if the purchaser does not have an identification number described in either item 182.21(i) or (ii), then the purchaser's federal Employer Identification Number; or182.22    (iv) if the purchaser does not have an identification number described in item (i), (ii), 182.23or (iii), then either the number of the purchaser's state-issued driver's license, if valid in 182.24the state of issue, or if the purchaser does not have a driver's license, a valid state-issued 182.25identification number, and the name of the state of issue;182.26    (4) indicate the purchaser's type of business, using a business-type coding system 182.27prescribed by the commissioner; and182.28    (5) indicate the reason for the exemption, using an exemption reason coding system 182.29prescribed by the commissioner.182.30    Subd. 3.Purchaser requirement.A blanket exemption certificate is an exemption 182.31certificate used for continuing future purchases. A purchaser using a blanket exemption 182.32certificate must update it as needed to accurately reflect the information that is required 182.33under subdivision 2.182.34EFFECTIVE DATE.This section is effective the day following final enactment.183.1    Sec. 36. [297A.8155] LIQUOR REPORTING REQUIREMENTS; PENALTY.183.2    A person who sells liquor, as defined in section 295.75, subdivision 1, in Minnesota 183.3to a retailer that sells liquor, shall file with the commissioner an annual informational 183.4report, in the form and manner prescribed by the commissioner, indicating the name, 183.5address, and Minnesota business identification number of each retailer, and the total dollar 183.6amount of liquor sold to each retailer in the previous calendar year. The report must be 183.7filed on or before March 31 following the close of the calendar year. A person failing to file 183.8this report is subject to the penalty imposed under Minnesota Statutes, section 289A.60.183.9EFFECTIVE DATE.This section is effective for reports filed after December 183.1031, 2008.183.11    Sec. 37. Minnesota Statutes 2006, section 297A.90, subdivision 2, is amended to read:183.12    Subd. 2. Payment of tax. (a) Persons who are registered as retailers may make 183.13purchases in this state or import property into this state without payment of the sales or use 183.14taxes imposed by this chapter at the time of purchase or importation, if the purchases or 183.15importations come within the provisions of this section and are made in strict compliance 183.16with the rules of the commissioner.183.17    (b) A person described in subdivision 1 may elect to pay directly to the commissioner 183.18any sales or use tax that may be due under this chapter for the acquisition of mobile 183.19transportation equipment and parts and accessories attached or to be attached to such 183.20equipment registered under section 
         168.187. 183.21    (c) The total cost of such equipment and parts and accessories attached or to be 183.22attached to such equipment must be multiplied by a fraction. The numerator of the fraction 183.23is the Minnesota mileage as reported on the current pro rata application provided for in 183.24section 
         168.187 and the denominator of the fraction is the total mileage reported on the 183.25current pro rata registration application. The amount so determined must be multiplied by 183.26the tax rate to obtain the tax due. 183.27In computing the tax under this section "sales price" does not include the amount of any 183.28tax, except any manufacturer's or importer's excise tax, imposed by the United States 183.29upon or with respect to retail sales, whethertaxes imposed directly on the retailer or the183.30consumer that are separately stated on the invoice, bill of sale, or similar document given 183.31to the purchaser.183.32    (d) A retailer covered by this section shall make a return and remit to the 183.33commissioner the tax due for the preceding calendar month in accordance with sections 183.34289A.11
          and 
         289A.20, subdivision 4. 184.1EFFECTIVE DATE.This section is effective the day following final enactment.184.2    Sec. 38. Minnesota Statutes 2006, section 297B.035, subdivision 1, is amended to read:184.3    Subdivision 1. Ordinary course of business. Except as provided in this section, 184.4motor vehicles purchased solely for resale in the ordinary course of business by any motor 184.5vehicle dealer, as defined in section 
         168.011, subdivision 21, who is licensed under section 184.6168.27, subdivision 2
          or 3, including vehicles which bear dealer plates as authorized by 184.7section 
         168.27, subdivision 16, shall be exempt from the provisions of this chapter. 184.8EFFECTIVE DATE.This section is effective the day following final enactment.184.9    Sec. 39. Minnesota Statutes 2006, section 469.1734, subdivision 6, is amended to read:184.10    Subd. 6. Sales tax exemption; equipment; construction materials. (a) The gross 184.11receipts from the sale of machinery and equipment and repair parts are exempt from 184.12taxation under chapter 297A, if the machinery and equipment:184.13    (1) are used in connection with a trade or business;184.14    (2) are placed in service in a city that is authorized to designate a zone under section 184.15469.1731
         , regardless of whether the machinery and equipment are used in a zone; and184.16    (3) have a useful life of 12 months or more.184.17    (b) The gross receipts from the sale of construction materials are exempt, if they are 184.18used to construct:184.19    (1) a facility for use in a trade or business located in a city that is authorized to 184.20designate a zone under section 
         469.1731, regardless of whether the facility is located in a 184.21zone; or184.22    (2) housing that is located in a zone.184.23The exemptions under this paragraph apply regardless of whether the purchase is made by 184.24the owner, the user, or a contractor.184.25    (c) A purchaser may claim an exemption under this subdivision for tax on the 184.26purchases up to, but not exceeding:184.27    (1) the amount of the tax credit certificates received from the city, less184.28    (2) any tax credit certificates used under the provisions of subdivisions 4 and 5, and 184.29section 
         469.1732, subdivision 2.184.30    (d) The tax on sales of items exempted under this subdivision shall be imposed and 184.31collected as if the applicable rate under section 
         297A.62 applied. Upon application by the 184.32purchaser, on forms prescribed by the commissioner, a refund equal to the tax paid shall 184.33be paid to the purchaser. The application must include sufficient information to permit 185.1the commissioner to verify the sales tax paid and the eligibility of the claimant to receive 185.2the credit. No more than two applications for refunds may be filed under this subdivision 185.3in a calendar year. The provisions of section 
         289A.40 apply to the refunds payable 185.4under this subdivision. There is annually appropriated to the commissioner of revenue 185.5the amount required to make the refunds, which must be deducted from the amount of 185.6the city's allocation under section 
         469.169, subdivision 12, that remains available and its 185.7limitation under section 
         469.1735. 185.8    (e) The amount to be refunded shall bear interest at the rate in section 
         270C.405185.9from the date90 days after the refund claim is filed with the commissioner.185.10EFFECTIVE DATE.This section is effective for refund claims filed after June 185.1130, 2008.185.12    Sec. 40. FUR TAX PAYMENTS.185.13    (a) Furriers must file the annual return, required by Minnesota Statutes, section 185.14295.60, subdivision 5, which otherwise would be due March 15, 2009, by September 185.1515, 2008.185.16    (b) If a furrier is required by Minnesota Statutes, section 295.60, subdivision 3, to 185.17make installments of quarterly estimates, then the furrier shall make the last installment by 185.18July 15, 2008.185.19EFFECTIVE DATE.This section is effective July 1, 2008, for sales and purchases 185.20made prior to July 1, 2008.185.21    Sec. 41. REPEALER.185.22(a) Minnesota Statutes 2006, section 295.60, is repealed.185.23(b) Minnesota Statutes 2006, section 297A.61, subdivision 20, is repealed.185.24(c) Minnesota Statutes 2006, section 297A.668, subdivision 6, is repealed.185.25(d) Minnesota Statutes 2006, section 297A.67, subdivision 22, is repealed.185.26EFFECTIVE DATE.Paragraph (a) of this section is effective for sales and 185.27purchases made after June 30, 2008; paragraph (b) is effective retroactively for sales and 185.28purchases made after December 31, 2007; and paragraphs (c) and (d) are effective the 185.29day following final enactment.186.1ARTICLE 13186.2DEPARTMENT PROPERTY TAXES186.3    Section 1. Minnesota Statutes 2006, section 270.071, subdivision 7, is amended to read:186.4    Subd. 7. Flight property. "Flight property" means all aircraft and flight equipment 186.5used in connection therewith, including spare flight equipment. Flight property also 186.6includes computers and computer software used in operating, controlling, or regulating 186.7aircraft and flight equipment.186.8EFFECTIVE DATE.This section is effective the day following final enactment.186.9    Sec. 2. Minnesota Statutes 2006, section 270.072, subdivision 2, is amended to read:186.10    Subd. 2. Assessment of flight property.The Flight property of allthat is owned 186.11by, or is leased, loaned, or otherwise made available to an airline companiescompany 186.12operating in Minnesota shall be assessed and appraised annually by the commissioner 186.13with reference to its value on January 2 of the assessment year in the manner prescribed 186.14by sections 
         270.071 to 
         270.079. Aircraft with a gross weight of less than 30,000 pounds 186.15and used on intermittent or irregularly timed flights shall be excluded from the provisions 186.16of sections 
         270.071 to 
         270.079. 186.17EFFECTIVE DATE.This section is effective the day following final enactment.186.18    Sec. 3. Minnesota Statutes 2006, section 270.072, subdivision 3, is amended to read:186.19    Subd. 3. Report by airline company.Each year, on or before July 1, every airline 186.20company engaged in air commerce in this state shall file with the commissioner on or 186.21before the time fixed by the commissioner a report under oath setting forth specifically 186.22the information prescribed by the commissioner to enable the commissioner to make the 186.23assessment required in sections 
         270.071 to 
         270.079, unless the commissioner determines 186.24that the airline company or person should be excluded from filing because its activities do 186.25not constitute air commerce as defined herein. A penalty of five percent of the tax being 186.26assessed is imposed on a late filing of the annual report. If the report is not filed within 186.2730 days, an additional penalty of five percent of the assessed tax is imposed for each 186.28additional 30 days or fraction of 30 days until the return is filed. The penalty imposed 186.29under this section must not exceed the lesser of $25,000 or 25 percent of the assessed tax.186.30EFFECTIVE DATE.This section is effective beginning January 2, 2008, for taxes 186.31payable in 2009 and thereafter.187.1    Sec. 4. Minnesota Statutes 2006, section 270.072, subdivision 6, is amended to read:187.2    Subd. 6. Airflight property tax lien. The tax imposed under sections 
         270.071 to 187.3270.079
          is a lien on all real and personal property within this state of the airline company 187.4in whose name the property is assessed. For purposes of sections 270C.62 and 270C.63, 187.5the date of assessment for the tax imposed under sections 270.071 to 270.079 isThe lien 187.6attaches on January 2 of each year for the taxes payable in the following year.187.7EFFECTIVE DATE.This section is effective beginning January 2, 2008, for taxes 187.8payable in 2009 and thereafter.187.9    Sec. 5. [270.0725] PENALTIES.187.10    Subdivision 1.Penalty for late filing.If an airline company does not file its annual 187.11report by the date designated in section 270.072, subdivision 3, a penalty of five percent 187.12of the tax being assessed is imposed on that company. On August 1, and on the first day 187.13of each succeeding calendar month, an additional five percent penalty is imposed if the 187.14report has not yet been filed. For each airline company, the penalties imposed under 187.15this subdivision for any one year are limited to the lesser of $25,000 or 25 percent of 187.16the assessed tax. 187.17    Subd. 2.Penalty for repeated instances of late filing.If there is a pattern of 187.18repeated failures by an airline company to timely file the report required by this section, a 187.19penalty of ten percent of the tax being assessed is imposed on that company.187.20    Subd. 3.Penalty for frivolous report.If an airline company files a frivolous annual 187.21report, a penalty of 25 percent of the tax being assessed is imposed on that company. A 187.22frivolous report under this section is a report that would fulfill the criteria for a frivolous 187.23return under section 289A.60, subdivision 7, notwithstanding the restriction in section 187.24289A.01. In a proceeding involving the issue of whether or not an airline company is 187.25liable for this penalty, the burden of proof is on the commissioner.187.26    Subd. 4.Penalty for fraudulent report.If an airline company files a false or 187.27fraudulent annual report with intent to evade or defeat the tax, a penalty equal to 50 187.28percent of the tax being assessed is imposed on that company.187.29    Subd. 5.Penalties added to tax.Penalties imposed under this section are added to 187.30the tax and collected as a part of it.187.31EFFECTIVE DATE.This section is effective for annual reports due after June 187.3230, 2008.187.33    Sec. 6. [270.0735] EXAMINATION; INVESTIGATIONS; SUBPOENAS.188.1    In addition to the powers granted to the commissioner in this chapter, and in order to 188.2determine net tax capacities and issue notices of net tax capacity and tax under sections 188.3270.071 to 270.079, the commissioner has the powers contained in sections 270C.31 and 188.4270C.32, for which purpose the word "taxpayer" as defined in section 270C.01 includes 188.5an airline company.188.6EFFECTIVE DATE.This section is effective the day following final enactment.188.7    Sec. 7. Minnesota Statutes 2006, section 270.074, subdivision 3, is amended to read:188.8    Subd. 3. Tax capacity. (a) The net tax capacity of the flight property of every airline 188.9company shall have a tax capacity ofis 70 percent of the value thereof apportioned to this 188.10state under subdivision 1, except that the net tax capacity of quiet aircraft shall have a 188.11tax capacity ofis 40 percent of the value determined under subdivision 1. Quiet aircraft 188.12shall include "Quiet aircraft" means turboprops and aircraft defined as stage III or IV by 188.13the Federal Aeronautics Administration. If, in the opinion of the commissioner, other 188.14aircraft may be qualified as quiet aircraft, the commissioner may adopt rules providing 188.15additional qualifications.188.16    (b) The flight property of an airline company that owns or leases aircraft the majority 188.17of which are turboprops, and which provides, during six months or more of the year that 188.18taxes are levied, scheduled passenger service to three or more airports inside or outside of 188.19this state that serve small or medium sized communities, shall be assessed at 50 percent of 188.20the assessment percentage otherwise set by paragraph (a).188.21EFFECTIVE DATE.This section is effective the day following final enactment.188.22    Sec. 8. Minnesota Statutes 2006, section 270.076, subdivision 1, is amended to read:188.23    Subdivision 1. Appeal.Any airline company against which a tax has been imposed 188.24under sections 270.071 to 270.079 shall have the right to appeal within 60 days from the 188.25date of notice of the levy of the taxThe notices of net tax capacity and of tax required 188.26under section 270.075, subdivision 2, are orders of the commissioner. These orders must 188.27be issued in conformance with section 270C.33, subdivisions 1 and 2, but are not subject 188.28to administrative review under section 270C.35. These orders may be appealed to the Tax 188.29Court in the manner provided by law in section 271.06 for appealing official orders of 188.30the commissioner that do not deal with valuation, assessment, or taxation for property 188.31tax purposes, and the provisions of section 273.125, subdivisions 4 and 5, and chapter 188.32278 do not apply. 188.33EFFECTIVE DATE.This section is effective the day following final enactment.189.1    Sec. 9. Minnesota Statutes 2006, section 270.41, subdivision 1, is amended to read:189.2    Subdivision 1. Creation; purpose; powers. A Board of Assessors is created. 189.3The board shall establish, conduct, review, supervise, coordinate, and approve courses 189.4in assessment practices, and establish criteria for determining assessor's qualifications. 189.5The board shall also consider other matters relating to assessment administration brought 189.6before it by the commissioner of revenue. The board may grant, renew, suspend, or revoke 189.7an assessor's license.189.8EFFECTIVE DATE.This section is effective the day following final enactment.189.9    Sec. 10. Minnesota Statutes 2006, section 270.41, is amended by adding a subdivision 189.10to read:189.11    Subd. 1a.Definition.For purposes of sections 270.41 to 270.50, "board" means 189.12the Board of Assessors.189.13EFFECTIVE DATE.This section is effective the day following final enactment.189.14    Sec. 11. Minnesota Statutes 2006, section 270.41, subdivision 2, is amended to read:189.15    Subd. 2. Members. The board shall consist of nine members, who shall be 189.16appointed by the commissioner of revenue, in the manner provided herein. The members 189.17shall include:189.18    (1) two from the Department of Revenue;189.19    (2) two county assessors;189.20    (3) two assessors who are not county assessors, one of whom shall be a township 189.21assessor;189.22    (4) one from the private appraisal field holding a professional appraisal designation; 189.23and189.24    (5) two public members as defined by section 
         214.02. 189.25    The appointment provided in clauses (2) and (3) may be made from two listsa list 189.26of not less than three names each, one submitted to the commissioner of revenue by the 189.27Minnesota Association of Assessing Officers or its successor organization containing 189.28recommendations for the appointment of appointees described in clause clauses (2), 189.29and one by the Minnesota Association of Assessors, Inc. or its successor organization 189.30containing recommendations for the appointees described in clause (3) and (3). The lists189.31list must be submitted 30 days before the commencement of the term. In the case of a 189.32vacancy, a new list shall be furnished to the commissioner by the respective organization190.1immediately. A member of the board who is no longer engaged in the capacity listed 190.2abovethat was the basis of appointment is disqualified from membership in the board.190.3    The board shall annually elect a chair and a secretaryvice-chair of the board.190.4EFFECTIVE DATE.This section is effective the day following final enactment.190.5    Sec. 12. Minnesota Statutes 2006, section 270.41, subdivision 3, is amended to read:190.6    Subd. 3. Licenses; refusal or revocation. The board may refuse to grant or renew, 190.7or may suspend or revoke, a license of an applicant or licensee for any of the following 190.8causes or acts:190.9    (1) failure to complete required training;190.10    (2) inefficiency or neglect of duty;190.11    (3) "unprofessional conduct" which means knowingly neglecting to perform a duty 190.12required by law, or violation of the laws of this state relating to the assessment of property 190.13or unlawfully exempting property or knowingly and intentionally listing property on the 190.14tax list at substantially less than its market value or the level required by law in order to 190.15gain favor or benefit, or knowingly and intentionally misclassifying property in order to 190.16gain favor or benefit failure to comply with the Code of Conduct and Ethics for Licensed 190.17Minnesota Assessors adopted by the board pursuant to Laws 2005, First Special Session 190.18chapter 3, article 1, section 38;190.19    (4) conviction of a crime involving moral turpitude; or190.20    (5) any other cause or act that in the board's opinion warrants a refusal to issue 190.21or suspension or revocation of a license.190.22EFFECTIVE DATE.This section is effective the day following final enactment.190.23    Sec. 13. Minnesota Statutes 2006, section 270.41, subdivision 5, is amended to read:190.24    Subd. 5. Prohibited activity.An assessor, deputy assessor, assistant assessor, 190.25appraiser,A licensed assessor or other person employed by an assessment jurisdiction 190.26or contracting with an assessment jurisdiction for the purpose of valuing or classifying 190.27property for property tax purposes is prohibited from making appraisals or analyses, 190.28accepting an appraisal assignment, or preparing an appraisal report as defined in section 190.2982B.02, subdivisions 2 to 5
         , on any property within the assessment jurisdiction where the 190.30individual is employed or performing the duties of the assessor under contract. Violation 190.31of this prohibition shall result in immediate revocation of the individual's license to assess 190.32property for property tax purposes. This prohibition must not be construed to prohibit an 190.33individual from carrying out any duties required for the proper assessment of property 191.1for property tax purposes. If a formal resolution has been adopted by the governing body 191.2of a governmental unit, which specifies the purposes for which such work will be done, 191.3this prohibition does not apply to appraisal activities undertaken on behalf of and at the 191.4request of the governmental unit that has employed or contracted with the individual. 191.5The resolution may only allow appraisal activities which are related to condemnations, 191.6right-of-way acquisitions, or special assessments. 191.7EFFECTIVE DATE.This section is effective the day following final enactment.191.8    Sec. 14. Minnesota Statutes 2006, section 270.44, is amended to read:191.9270.44 CHARGES FOR COURSES, EXAMINATIONS OR MATERIALS.191.10    The board shall charge the following fees:191.11    (1) $105 for a senior accredited Minnesota assessor license;191.12    (2) $80 for an accredited Minnesota assessor license;191.13    (3) $65 for a certified Minnesota assessor specialist license;191.14    (4) $55 for a certified Minnesota assessor license;191.15    (5) $50 for a course challenge examination;191.16    (6)(5) $35 for grading a form appraisal;191.17    (7)(6) $60 for grading a narrative appraisal;191.18    (8)(7) $30 for a reinstatement fee;191.19    (9)(8) $25 for a record retention fee; and191.20    (10)(9) $20 for an educational transcript; and.191.21    (11) $30 for all retests of board-sponsored educational courses.191.22EFFECTIVE DATE.This section is effective the day following final enactment.191.23    Sec. 15. Minnesota Statutes 2006, section 270.45, is amended to read:191.24270.45 DISPOSITION OF FEES.191.25    All fees so established and collected shall be paid to the commissioner of finance for 191.26deposit in the general fund. The expenses of carrying out the provisions of sections 
         270.41191.27to 
         270.53 shall be paid from appropriations made to the board of Assessors. 191.28EFFECTIVE DATE.This section is effective the day following final enactment.191.29    Sec. 16. Minnesota Statutes 2006, section 270.46, is amended to read:191.30270.46 TRAINING COURSES, ESTABLISHMENT; OTHER COURSES,191.31REGULATION.192.1    The board shall establishreview and approve training courses on assessment 192.2practices and shall review and approve courses on assessment practices, techniques of 192.3assessment, and ethics offered by schools, colleges and,  universities as well as courses that 192.4are offered by any units of government on techniques of assessment. Courses shall be 192.5established in various places throughout the state and be offered on regular intervals, units 192.6of government, and other entities.192.7EFFECTIVE DATE.This section is effective the day following final enactment.192.8    Sec. 17. Minnesota Statutes 2006, section 270.47, is amended to read:192.9270.47 RULES.192.10    The board shall establish theadopt rules necessary to accomplish the purpose of 192.11sectionsections 270.41 to 270.51, and shall establish criteria required of assessing officials 192.12in the state. Separate criteria may be established depending upon the responsibilities of the 192.13assessor. The board shall prepare and give examinations from time to time to determine 192.14whether assessing officials possess the necessary qualifications for performing the 192.15functions of the office. Such tests shall be given immediately upon completion of courses 192.16required by the board, or to persons who already possess the requisite qualifications under 192.17the rules of the board. An action of the board in refusing to grant or renew a license or in 192.18suspending or revoking a license is subject to review in accordance with chapter 14.192.19EFFECTIVE DATE.This section is effective the day following final enactment.192.20    Sec. 18. Minnesota Statutes 2006, section 270.48, is amended to read:192.21270.48 LICENSURE OF QUALIFIED PERSONS.192.22    The board shall may license persons as possessing the necessary qualifications of an 192.23assessing official. Different levels of licensure may be established as to classes of property 192.24which assessors may be certified to assess at the discretion of the board. Every person, 192.25except a local or county assessor, regularly employed by the assessor to assist in making 192.26decisions regarding valuing and classifying property for assessment purposes shall be 192.27required tomust become licensed within three years of the date of employment. Licensure 192.28shall be required for local and county assessors as otherwise provided in sections 
         270.41192.29to 270.53 270.50 and 273.061, and rules adopted by the board. 192.30EFFECTIVE DATE.This section is effective the day following final enactment.193.1    Sec. 19. Minnesota Statutes 2006, section 270.50, is amended to read:193.2270.50 EMPLOYMENT OF LICENSED ASSESSORS.193.3    No assessor shall be employed who has not been licensed as qualified by the board, 193.4provided the time to comply may be extended after application to the board upon a 193.5showing that licensed assessors are not available for employment. The board may license 193.6that a county or local assessor who has not received the training, but possesses the 193.7necessary qualifications for performing the functions of the office by the passage of an 193.8approved examination or may waive the examination if such person has demonstrated 193.9competence in performing the functions of the office for a period of time the board deems 193.10reasonable. The county or local assessing district shall assume the cost of training of its 193.11assessors in courses approved by the board for the purpose of obtaining the assessor's 193.12license to the extent of course fees, mileage, meals and lodging, and recognized travel 193.13expenses not paid by the state. If the governing body of any township or city fails to 193.14employ an assessor as required by sections 270.41 to 270.53, the assessment shall be 193.15made by the county assessor. 193.16    In the case of cities incorporated or townships organized after April 11, 1974, except 193.17cities or towns located in Ramsey county or which have elected a county assessor system 193.18in accordance with section 273.055, the board shall allow the city or town 90 days from 193.19the date of incorporation or organization to employ a licensed assessor.193.20EFFECTIVE DATE.This section is effective the day following final enactment.193.21    Sec. 20. Minnesota Statutes 2006, section 270C.306, is amended to read:193.22270C.306 COMMISSIONER MAY REQUIRE SOCIAL SECURITY OR 193.23IDENTIFYING NUMBERS ON FORMS.193.24    Notwithstanding the provisions of any other law except section 272.115, the 193.25commissioner may require that a form required to be filed with the commissioner include 193.26the Social Security number, federal employer identification number, or Minnesota 193.27taxpayer identification number of the taxpayer or applicant.193.28EFFECTIVE DATE.This section is effective beginning after June 30, 2008.193.29    Sec. 21. Minnesota Statutes 2006, section 270C.34, subdivision 1, is amended to read:193.30    Subdivision 1. Authority. (a) The commissioner may abate, reduce, or refund any 193.31penalty or interest that is imposed by a law administered by the commissioner as a result 193.32of the late payment of tax or late filing of a return, if the failure to timely pay the tax or 194.1failure to timely file the return is due to reasonable cause, or if the taxpayer is located 194.2in a presidentially declared disaster area.194.3    (b) The commissioner shall abate any part of a penalty or additional tax charge 194.4under section 
         289A.25, subdivision 2, or 
         289A.26, subdivision 4, attributable to erroneous 194.5advice given to the taxpayer in writing by an employee of the department acting in 194.6an official capacity, if the advice:194.7    (1) was reasonably relied on and was in response to a specific written request of the 194.8taxpayer; and194.9    (2) was not the result of failure by the taxpayer to provide adequate or accurate 194.10information.194.11    (c) The commissioner may abate a penalty imposed under section 270.0725, 194.12subdivision 1 or 2, if the failure to timely file is due to reasonable cause, or if the airline 194.13company is located in a presidentially declared disaster area.194.14EFFECTIVE DATE.This section is effective for penalties imposed after June 194.1530, 2008.194.16    Sec. 22. Minnesota Statutes 2007 Supplement, section 272.02, subdivision 64, is 194.17amended to read:194.18    Subd. 64. Job opportunity building zone property. (a) Improvements to real 194.19property, and personal property, classified under section 
         273.13, subdivision 24, and 194.20located within a job opportunity building zone, designated under section 
         469.314, are 194.21exempt from ad valorem taxes levied under chapter 275.194.22    (b) Improvements to real property, and tangible personal property, of an agricultural 194.23production facility located within an agricultural processing facility zone, designated 194.24under section 
         469.314, is exempt from ad valorem taxes levied under chapter 275.194.25    (c) For property to qualify for exemption under paragraph (a), the occupant must be 194.26a qualified business, as defined in section 
         469.310.194.27    (d) The exemption applies beginning for the first assessment year after designation 194.28of the job opportunity building zone by the commissioner of employment and economic 194.29development. The exemption applies to each assessment year that begins during the 194.30duration of the job opportunity building zone. To be exempt, the property must be 194.31occupied by July 1 of the assessment year by a qualified business that has signed the 194.32business subsidy agreement and relocation agreement, if required, by July 1 of the 194.33assessment year. This exemption does not apply to:194.34    (1) the levy under section 
         475.61 or similar levy provisions under any other law to 194.35pay general obligation bonds; or195.1    (2) other school district levies included in the debt service levy of the district 195.2under section 
         123B.55.195.3    (e) Except for property of a business that was exempt under this subdivision for 195.4taxes payable in 2008, a business must notify the county assessor in writing of eligibility 195.5under this subdivision by July 1 in order to begin receiving the exemption under this 195.6subdivision for taxes payable in the following year. The business need not annually notify 195.7the county assessor of its continued exemption under this subdivision, but must notify the 195.8county assessor immediately if the exemption no longer applies.195.9EFFECTIVE DATE.This section is effective the day following final enactment.195.10    Sec. 23. Minnesota Statutes 2006, section 272.115, subdivision 1, is amended to read:195.11    Subdivision 1. Requirement. Except as otherwise provided in subdivision 5, 195.12whenever any real estate is sold for a consideration in excess of $1,000, whether by 195.13warranty deed, quitclaim deed, contract for deed or any other method of sale, the grantor, 195.14grantee or the legal agent of either shall file a certificate of value with the county auditor 195.15in the county in which the property is located when the deed or other document is 195.16presented for recording. Contract for deeds are subject to recording under section 
         507.235, 195.17subdivision 1
         . Value shall, in the case of any deed not a gift, be the amount of the full 195.18actual consideration thereof, paid or to be paid, including the amount of any lien or liens 195.19assumed. The items and value of personal property transferred with the real property 195.20must be listed and deducted from the sale price. The certificate of value shall include 195.21the classification to which the property belongs for the purpose of determining the fair 195.22market value of the property. The certificate shall include financing terms and conditions 195.23of the sale which are necessary to determine the actual, present value of the sale price 195.24for purposes of the sales ratio study. The commissioner of revenue shall promulgate 195.25administrative rules specifying the financing terms and conditions which must be included 195.26on the certificate. Pursuant to the authority of the commissioner of revenue in section 195.27270C.306, The certificate of value must include the Social Security number or the federal 195.28employer identification number of the grantors and grantees. However, a married person 195.29who is not an owner of record and who is signing a conveyance instrument along with 195.30the person's spouse solely to release and convey their marital interest, if any, in the real 195.31property being conveyed is not a grantor for the purpose of the preceding sentence. A 195.32statement in the deed that is substantially in the following form is sufficient to allow the 195.33county auditor to accept a certificate for filing without the Social Security number of the 195.34named spouse: " (Name) claims no ownership interest in the real property being conveyed 195.35and is executing this instrument solely to release and convey a marital interest, if any, in 196.1that real property." The identification numbers of the grantors and grantees are private 196.2data on individuals or nonpublic data as defined in section 
         13.02, subdivisions 9 and 12, 196.3but, notwithstanding that section, the private or nonpublic data may be disclosed to the 196.4commissioner of revenue for purposes of tax administration. The information required to 196.5be shown on the certificate of value is limited to the information required as of the date of 196.6the acknowledgment on the deed or other document to be recorded.196.7EFFECTIVE DATE.This section is effective for certificates of value filed after 196.8June 30, 2008.196.9    Sec. 24. Minnesota Statutes 2006, section 273.05, is amended by adding a subdivision 196.10to read:196.11    Subd. 3.Cities and townships; employment of licensed assessor.In the case 196.12of cities or townships, except cities or towns located in Ramsey County or which have 196.13elected a county assessor system in accordance with section 273.055, the commissioner 196.14shall allow the city or town 90 days from the date of incorporation or organization to 196.15employ a licensed assessor.196.16EFFECTIVE DATE.This section is effective the day following final enactment.196.17    Sec. 25. [273.0535] COUNTY OR LOCAL ASSESSING DISTRICT TO ASSUME 196.18COST OF TRAINING.196.19    The county or local assessing district must assume the cost of training its assessors 196.20in courses approved by the board for the purpose of obtaining the assessor's license to 196.21the extent of course fees, mileage, meals, and lodging, and recognized travel expenses 196.22not paid by the state.196.23EFFECTIVE DATE.This section is effective the day following final enactment.196.24    Sec. 26. Minnesota Statutes 2006, section 273.111, subdivision 3, is amended to read:196.25    Subd. 3. Requirements. (a) Real estate consisting of ten acres or more or a nursery 196.26or greenhouse, and qualifying for classification as class 1b, 2a, or 2b under section 
         273.13, 196.27shall be entitled to valuation and tax deferment under this section only if it is primarily 196.28devoted to agricultural use, and meets the qualifications in subdivision 6, and either: 196.29    (1) is the homestead of the owner, or of a surviving spouse, child, or sibling of the 196.30owner or is real estate which is farmed with the real estate which contains the homestead 196.31property; or197.1    (2) has been in possession of the applicant, the applicant's spouse, parent, or sibling, 197.2or any combination thereof, for a period of at least seven years prior to application for 197.3benefits under the provisions of this section, or is real estate which is farmed with the 197.4real estate which qualifies under this clause and is within four townships or cities or 197.5combination thereof from the qualifying real estate; or197.6    (3) is the homestead of a shareholder in a family farm corporation as defined in 197.7section 
         500.24, notwithstanding the fact that legal title to the real estate may be held in the 197.8name of the family farm corporation; or 197.9    (4) is in the possession of a nursery or greenhouse or an entity owned by a proprietor, 197.10partnership, or corporation which also owns the nursery or greenhouse operations on 197.11the parcel or parcels.197.12    (b) Valuation of real estate under this section is limited to parcels the ownership of 197.13which is in noncorporate entities except for:197.14    (1) family farm corporations organized pursuant to section 
         500.24; and 197.15    (2) corporations that derive 80 percent or more of their gross receipts from the 197.16wholesale or retail sale of horticultural or nursery stock.197.17    Corporate entities who previously qualified for tax deferment pursuant to this section 197.18and who continue to otherwise qualify under subdivisions 3 and 6 for a period of at least 197.19three years following the effective date of Laws 1983, chapter 222, section 8, will not be 197.20required to make payment of the previously deferred taxes, notwithstanding the provisions 197.21of subdivision 9. Special assessments are payable at the end of the three-year period 197.22or at time of sale, whichever comes first.197.23    (c) Land that previously qualified for tax deferment under this section and no longer 197.24qualifies because it is not primarily used for agricultural purposes but would otherwise 197.25qualify under subdivisions 3 and 6 for a period of at least three years will not be required 197.26to make payment of the previously deferred taxes, notwithstanding the provisions of 197.27subdivision 9. Sale of the land prior to the expiration of the three-year period requires 197.28payment of deferred taxes as follows: sale in the year the land no longer qualifies requires 197.29payment of the current year's deferred taxes plus payment of deferred taxes for the two 197.30prior years; sale during the second year the land no longer qualifies requires payment of 197.31the current year's deferred taxes plus payment of the deferred taxes for the prior year; and 197.32sale during the third year the land no longer qualifies requires payment of the current 197.33year's deferred taxes. Deferred taxes shall be paid even if the land qualifies pursuant to 197.34subdivision 11a. When such property is sold or no longer qualifies under this paragraph, or 197.35at the end of the three-year period, whichever comes first, all deferred special assessments 197.36plus interest are payable in equal installments spread over the time remaining until the last 198.1maturity date of the bonds issued to finance the improvement for which the assessments 198.2were levied. If the bonds have matured, the deferred special assessments plus interest 198.3are payable within 90 days. The provisions of section 
         429.061, subdivision 2, apply 198.4to the collection of these installments. Penalties are not imposed on any such special 198.5assessments if timely paid. 198.6EFFECTIVE DATE.This section is effective the day following final enactment.198.7    Sec. 27. Minnesota Statutes 2006, section 273.117, is amended to read:198.8273.117 CONSERVATION PROPERTY TAX VALUATION.198.9    The value of real property which is subject to a conservation restriction or easement 198.10shall be entitled to reduced valuation under this section may be adjusted by the assessor if:198.11    (a) The restriction or easement is for a conservation purpose as defined in section 198.1284.64, subdivision 2
         , and is recorded on the property; 198.13    (b) The property is being used in accordance with the terms of the conservation 198.14restriction or easement.198.15EFFECTIVE DATE.This section is effective the day following final enactment.198.16    Sec. 28. Minnesota Statutes 2006, section 273.121, is amended to read:198.17273.121 VALUATION OF REAL PROPERTY, NOTICE.198.18    Any county assessor or city assessor having the powers of a county assessor, valuing 198.19or classifying taxable real property shall in each year notify those persons whose property 198.20is to be included on the assessment roll that year if the person's address is known to the 198.21assessor, otherwise the occupant of the property. The notice shall be in writing and shall be 198.22sent by ordinary mail at least ten days before the meeting of the local board of appeal and 198.23equalization under section 
         274.01 or the review process established under section 
         274.13, 198.24subdivision 1c
         . Upon written request by the owner of the property, the assessor may send 198.25the notice in electronic form or by electronic mail instead of on paper or by ordinary mail. 198.26It shall contain: (1) the market value for the current and prior assessment, (2) the limited 198.27market value under section 
         273.11, subdivision 1a, for the current and prior assessment, 198.28(3) the qualifying amount of any improvements under section 
         273.11, subdivision 16, 198.29for the current assessment, (4) the market value subject to taxation after subtracting the 198.30amount of any qualifying improvements for the current assessment, (5) the classification 198.31of the property for the current and prior assessment, (6) a note that if the property is 198.32homestead and at least 45 years old, improvements made to the property may be eligible 198.33for a valuation exclusion under section 
         273.11, subdivision 16, (7) the assessor's office 199.1address, and (8) the dates, places, and times set for the meetings of the local board of 199.2appeal and equalization, the review process established under section 
         274.13, subdivision 199.31c
         , and the county board of appeal and equalization. The commissioner of revenue shall 199.4specify the form of the notice. The assessor shall attach to the assessment roll a statement 199.5that the notices required by this section have been mailed. Any assessor who is not 199.6provided sufficient funds from the assessor's governing body to provide such notices, 199.7may make application to the commissioner of revenue to finance such notices. The 199.8commissioner of revenue shall conduct an investigation and, if satisfied that the assessor 199.9does not have the necessary funds, issue a certification to the commissioner of finance 199.10of the amount necessary to provide such notices. The commissioner of finance shall 199.11issue a warrant for such amount and shall deduct such amount from any state payment 199.12to such county or municipality. The necessary funds to make such payments are hereby 199.13appropriated. Failure to receive the notice shall in no way affect the validity of the 199.14assessment, the resulting tax, the procedures of any board of review or equalization, or 199.15the enforcement of delinquent taxes by statutory means. 199.16EFFECTIVE DATE.This section is effective the day following final enactment.199.17    Sec. 29. Minnesota Statutes 2006, section 273.124, subdivision 13, is amended to read:199.18    Subd. 13. Homestead application. (a) A person who meets the homestead 199.19requirements under subdivision 1 must file a homestead application with the county 199.20assessor to initially obtain homestead classification.199.21    (b) On or before January 2, 1993, each county assessor shall mail a homestead 199.22application to the owner of each parcel of property within the county which was 199.23classified as homestead for the 1992 assessment year. The format and contents of a 199.24uniform homestead application shall be prescribed by the commissioner of revenue. The 199.25commissioner shall consult with the chairs of the house and senate tax committees on the 199.26contents of the homestead application form. The application must clearly inform the 199.27taxpayer that this application must be signed by all owners who occupy the property or 199.28by the qualifying relative and returned to the county assessor in order for the property to 199.29continue receivingreceive homestead treatment. The envelope containing the homestead 199.30application shall clearly identify its contents and alert the taxpayer of its necessary 199.31immediate response.199.32    (c) Every property owner applying for homestead classification must furnish to the 199.33county assessor the Social Security number of each occupant who is listed as an owner 199.34of the property on the deed of record, the name and address of each owner who does not 199.35occupy the property, and the name and Social Security number of each owner's spouse who 200.1occupies the property. The application must be signed by each owner who occupies the 200.2property and by each owner's spouse who occupies the property, or, in the case of property 200.3that qualifies as a homestead under subdivision 1, paragraph (c), by the qualifying relative.200.4    If a property owner occupies a homestead, the property owner's spouse may not 200.5claim another property as a homestead unless the property owner and the property owner's 200.6spouse file with the assessor an affidavit or other proof required by the assessor stating that 200.7the property qualifies as a homestead under subdivision 1, paragraph (e).200.8    Owners or spouses occupying residences owned by their spouses and previously 200.9occupied with the other spouse, either of whom fail to include the other spouse's name 200.10and Social Security number on the homestead application or provide the affidavits or 200.11other proof requested, will be deemed to have elected to receive only partial homestead 200.12treatment of their residence. The remainder of the residence will be classified as 200.13nonhomestead residential. When an owner or spouse's name and Social Security number 200.14appear on homestead applications for two separate residences and only one application is 200.15signed, the owner or spouse will be deemed to have elected to homestead the residence for 200.16which the application was signed.200.17    The Social Security numbers or affidavits or other proofs of the property owners 200.18and spouses, and the federal income tax schedule F required by this section, are private 200.19data on individuals as defined by section 
         13.02, subdivision 12, but, notwithstanding 200.20that section, the private data may be disclosed to the commissioner of revenue, or, for 200.21purposes of proceeding under the Revenue Recapture Act to recover personal property 200.22taxes owing, to the county treasurer.200.23    (d) If residential real estate is occupied and used for purposes of a homestead by a 200.24relative of the owner and qualifies for a homestead under subdivision 1, paragraph (c), in 200.25order for the property to receive homestead status, a homestead application must be filed 200.26with the assessor. The Social Security number of each relative and spouse of a relative200.27occupying the property and the Social Security number of each owner who is related to an 200.28occupant of the property shall be required on the homestead application filed under this 200.29subdivision. If a different relative of the owner subsequently occupies the property, the 200.30owner of the property must notify the assessor within 30 days of the change in occupancy. 200.31The Social Security number of a relative or relative's spouse occupying the property 200.32is private data on individuals as defined by section 
         13.02, subdivision 12, but may be 200.33disclosed to the commissioner of revenue, or, for the purposes of proceeding under the 200.34Revenue Recapture Act to recover personal property taxes owing, to the county treasurer.200.35    (e) The homestead application shall also notify the property owners that the 200.36application filed under this section will not be mailed annually and that if the property 201.1is granted homestead status for the 1993 assessment, or any assessment year thereafter, 201.2that same property shall remain classified as homestead until the property is sold or 201.3transferred to another person, or the owners, the spouse of the owner, or the relatives no 201.4longer use the property as their homestead. Upon the sale or transfer of the homestead 201.5property, a certificate of value must be timely filed with the county auditor as provided 201.6under section 
         272.115. Failure to notify the assessor within 30 days that the property has 201.7been sold, transferred, or that the owner, the spouse of the owner, or the relative is no 201.8longer occupying the property as a homestead, shall result in the penalty provided under 201.9this subdivision and the property will lose its current homestead status.201.10    (f) If the homestead application is not returned within 30 days, the county will send a 201.11second application to the present owners of record. The notice of proposed property taxes 201.12prepared under section 
         275.065, subdivision 3, shall reflect the property's classification. 201.13Beginning with assessment year 1993 for all properties, If a homestead application has 201.14not been filed with the county by December 15, the assessor shall classify the property 201.15as nonhomestead for the current assessment year for taxes payable in the following year, 201.16provided that the owner may be entitled to receive the homestead classification by proper 201.17application under section 
         375.192.201.18    (g) At the request of the commissioner, each county must give the commissioner a 201.19list that includes the name and Social Security number of each occupant of homestead 201.20property who is the property owner and the, property owner's spouse occupying the 201.21property, or, qualifying relative of a property owner, applying for homestead classification 201.22under this subdivision or a spouse of a qualifying relative. The commissioner shall use the 201.23information provided on the lists as appropriate under the law, including for the detection 201.24of improper claims by owners, or relatives of owners, under chapter 290A.201.25    (h) If the commissioner finds that a property owner may be claiming a fraudulent 201.26homestead, the commissioner shall notify the appropriate counties. Within 90 days of 201.27the notification, the county assessor shall investigate to determine if the homestead 201.28classification was properly claimed. If the property owner does not qualify, the county 201.29assessor shall notify the county auditor who will determine the amount of homestead 201.30benefits that had been improperly allowed. For the purpose of this section, "homestead 201.31benefits" means the tax reduction resulting from the classification as a homestead under 201.32section 
         273.13, the taconite homestead credit under section 
         273.135, the residential 201.33homestead and agricultural homestead credits under section 
         273.1384, and the 201.34supplemental homestead credit under section 
         273.1391.201.35    The county auditor shall send a notice to the person who owned the affected property 201.36at the time the homestead application related to the improper homestead was filed, 202.1demanding reimbursement of the homestead benefits plus a penalty equal to 100 percent 202.2of the homestead benefits. The person notified may appeal the county's determination 202.3by serving copies of a petition for review with county officials as provided in section 202.4278.01
          and filing proof of service as provided in section 
         278.01 with the Minnesota Tax 202.5Court within 60 days of the date of the notice from the county. Procedurally, the appeal 202.6is governed by the provisions in chapter 271 which apply to the appeal of a property tax 202.7assessment or levy, but without requiring any prepayment of the amount in controversy. If 202.8the amount of homestead benefits and penalty is not paid within 60 days, and if no appeal 202.9has been filed, the county auditor shall certify the amount of taxes and penalty to the county 202.10treasurer. The county treasurer will add interest to the unpaid homestead benefits and 202.11penalty amounts at the rate provided in section 
         279.03 for real property taxes becoming 202.12delinquent in the calendar year during which the amount remains unpaid. Interest may be 202.13assessed for the period beginning 60 days after demand for payment was made.202.14    If the person notified is the current owner of the property, the treasurer may add the 202.15total amount of homestead benefits, penalty, interest, and costs to the ad valorem taxes 202.16otherwise payable on the property by including the amounts on the property tax statements 202.17under section 
         276.04, subdivision 3. The amounts added under this paragraph to the ad 202.18valorem taxes shall include interest accrued through December 31 of the year preceding 202.19the taxes payable year for which the amounts are first added. These amounts, when added 202.20to the property tax statement, become subject to all the laws for the enforcement of real or 202.21personal property taxes for that year, and for any subsequent year.202.22    If the person notified is not the current owner of the property, the treasurer may 202.23collect the amounts due under the Revenue Recapture Act in chapter 270A, or use any of 202.24the powers granted in sections 
         277.20 and 
         277.21 without exclusion, to enforce payment 202.25of the homestead benefits, penalty, interest, and costs, as if those amounts were delinquent 202.26tax obligations of the person who owned the property at the time the application related 202.27to the improperly allowed homestead was filed. The treasurer may relieve a prior owner 202.28of personal liability for the homestead benefits, penalty, interest, and costs, and instead 202.29extend those amounts on the tax lists against the property as provided in this paragraph 202.30to the extent that the current owner agrees in writing. On all demands, billings, property 202.31tax statements, and related correspondence, the county must list and state separately the 202.32amounts of homestead benefits, penalty, interest and costs being demanded, billed or 202.33assessed.202.34    (i) Any amount of homestead benefits recovered by the county from the property 202.35owner shall be distributed to the county, city or town, and school district where the 202.36property is located in the same proportion that each taxing district's levy was to the total 203.1of the three taxing districts' levy for the current year. Any amount recovered attributable 203.2to taconite homestead credit shall be transmitted to the St. Louis County auditor to be 203.3deposited in the taconite property tax relief account. Any amount recovered that is 203.4attributable to supplemental homestead credit is to be transmitted to the commissioner of 203.5revenue for deposit in the general fund of the state treasury. The total amount of penalty 203.6collected must be deposited in the county general fund.203.7    (j) If a property owner has applied for more than one homestead and the county 203.8assessors cannot determine which property should be classified as homestead, the county 203.9assessors will refer the information to the commissioner. The commissioner shall make 203.10the determination and notify the counties within 60 days.203.11    (k) In addition to lists of homestead properties, the commissioner may ask the 203.12counties to furnish lists of all properties and the record owners. The Social Security 203.13numbers and federal identification numbers that are maintained by a county or city 203.14assessor for property tax administration purposes, and that may appear on the lists retain 203.15their classification as private or nonpublic data; but may be viewed, accessed, and used by 203.16the county auditor or treasurer of the same county for the limited purpose of assisting the 203.17commissioner in the preparation of microdata samples under section 
         270C.12.203.18    (l) On or before April 30 each year beginning in 2007, each county must provide the 203.19commissioner with the following data for each parcel of homestead property by electronic 203.20means as defined in section 
         289A.02, subdivision 8:203.21    (i) the property identification number assigned to the parcel for purposes of taxes 203.22payable in the current year;203.23    (ii) the name and Social Security number of each occupant of homestead property 203.24who is the property owner and, property owner's spouse, as shown on the tax rolls for the 203.25current and the prior assessment year qualifying relative of a property owner, or spouse 203.26of a qualifying relative;203.27    (iii) the classification of the property under section 
         273.13 for taxes payable in the 203.28current year and in the prior year;203.29    (iv) an indication of whether the property was classified as a homestead for taxes 203.30payable in the current year or for taxes payable in the prior year because of occupancy by 203.31a relative of the owner or by a spouse of a relative;203.32    (v) the property taxes payable as defined in section 
         290A.03, subdivision 13, for the 203.33current year and the prior year;203.34    (vi) the market value of improvements to the property first assessed for tax purposes 203.35for taxes payable in the current year;204.1    (vii) the assessor's estimated market value assigned to the property for taxes payable 204.2in the current year and the prior year;204.3    (viii) the taxable market value assigned to the property for taxes payable in the 204.4current year and the prior year;204.5    (ix) whether there are delinquent property taxes owing on the homestead;204.6    (x) the unique taxing district in which the property is located; and204.7    (xi) such other information as the commissioner decides is necessary.204.8    The commissioner shall use the information provided on the lists as appropriate 204.9under the law, including for the detection of improper claims by owners, or relatives 204.10of owners, under chapter 290A.204.11EFFECTIVE DATE.This section is effective the day following final enactment.204.12    Sec. 30. Minnesota Statutes 2006, section 273.1398, subdivision 4, is amended to read:204.13    Subd. 4. Disparity reduction credit. (a) Beginning with taxes payable in 1989, 204.14class 4a, class 3a, and class 3b property qualifies for a disparity reduction credit if: (1) 204.15the property is located in a border city that has an enterprise zone designated pursuant 204.16to section 
         469.168, subdivision 4; (2) the property is located in a city with a population 204.17greater than 2,500 and less than 35,000 according to the 1980 decennial census; (3) the 204.18city is adjacent to a city in another state or immediately adjacent to a city adjacent to a city 204.19in another state; and (4) the adjacent city in the other state has a population of greater than 204.205,000 and less than 75,000 according to the 1980 decennial census. 204.21    (b) The credit is an amount sufficient to reduce (i) the taxes levied on class 4a 204.22property to 2.3 percent of the property's market value and (ii) the tax on class 3a and class 204.233b property to 2.3 percent of market value.204.24    (c) The county auditor shall annually certify the costs of the credits to the 204.25Department of Revenue. The department shall reimburse local governments for the 204.26property taxes foregone as the result of the credits in proportion to their total levies.204.27EFFECTIVE DATE.This section is effective retroactively for taxes payable in 204.282001 and thereafter.204.29    Sec. 31. Minnesota Statutes 2006, section 273.33, subdivision 2, is amended to read:204.30    Subd. 2. Listing and assessment by commissioner. The personal property, 204.31consisting of the pipeline system of mains, pipes, and equipment attached thereto, of 204.32pipeline companies and others engaged in the operations or business of transporting 204.33natural gas, gasoline, crude oil, or other petroleum products by pipelines, shall be listed 205.1with and assessed by the commissioner of revenue and the values provided to the city 205.2or county assessor by order. This subdivision shall not apply to the assessment of 205.3the products transported through the pipelines nor to the lines of local commercial gas 205.4companies engaged primarily in the business of distributing gas to consumers at retail nor 205.5to pipelines used by the owner thereof to supply natural gas or other petroleum products 205.6exclusively for such owner's own consumption and not for resale to others. If more than 205.785 percent of the natural gas or other petroleum products actually transported over the 205.8pipeline is used for the owner's own consumption and not for resale to others, then this 205.9subdivision shall not apply; provided, however, that in that event, the pipeline shall be 205.10assessed in proportion to the percentage of gas actually transported over such pipeline that 205.11is not used for the owner's own consumption. On or before June 30, the commissioner 205.12shall certify to the auditor of each county, the amount of such personal property assessment 205.13against each company in each district in which such property is located.205.14EFFECTIVE DATE.This section is effective the day following final enactment.205.15    Sec. 32. Minnesota Statutes 2006, section 273.37, subdivision 2, is amended to read:205.16    Subd. 2. Listing and assessment by commissioner. Transmission lines of less 205.17than 69 kv, transmission lines of 69 kv and above located in an unorganized township, 205.18and distribution lines, and equipment attached thereto, having a fixed situs outside the 205.19corporate limits of cities except distribution lines taxed as provided in sections 
         273.40205.20and 
         273.41, shall be listed with and assessed by the commissioner of revenue in the 205.21county where situated and the values provided to the city or county assessor by order. 205.22The commissioner shall assess such property at the percentage of market value fixed by 205.23law; and, on or before June 30, shall certify to the auditor of each county in which such 205.24property is located the amount of the assessment made against each company and person 205.25owning such property. 205.26EFFECTIVE DATE.This section is effective the day following final enactment.205.27    Sec. 33. Minnesota Statutes 2006, section 273.371, subdivision 1, is amended to read:205.28    Subdivision 1. Report required. Every electric light, power, gas, water, express, 205.29stage, and transportation company and pipeline doing business in Minnesota shall 205.30annually file with the commissioner on or before March 31 a report under oath setting 205.31forth the information prescribed by the commissioner to enable the commissioner to make 205.32valuations, recommended valuations, and equalization required under sections 
         273.33, 205.33273.35
         , 
         273.36, and273.37, and 273.3711. If all the required information is not available 206.1on March 31, the company or pipeline shall file the information that is available on or 206.2before March 31, and the balance of the information as soon as it becomes available. 206.3EFFECTIVE DATE.This section is effective the day following final enactment.206.4    Sec. 34. [273.3711] RECOMMENDED AND ORDERED VALUES.206.5    For purposes of sections 273.33, 273.35, 273.36, 273.37, 273.371, and 273.372, 206.6all values not required to be listed and assessed by the commissioner of revenue are 206.7recommended values.206.8EFFECTIVE DATE.This section is effective the day following final enactment.206.9    Sec. 35. Minnesota Statutes 2006, section 274.01, subdivision 1, is amended to read:206.10    Subdivision 1. Ordinary board; meetings, deadlines, grievances. (a) The town 206.11board of a town, or the council or other governing body of a city, is the board of appeal 206.12and equalization except (1) in cities whose charters provide for a board of equalization or 206.13(2) in any city or town that has transferred its local board of review power and duties to 206.14the county board as provided in subdivision 3. The county assessor shall fix a day and 206.15time when the board or the board of equalization shall meet in the assessment districts 206.16of the county. Notwithstanding any law or city charter to the contrary, a city board of 206.17equalization shall be referred to as a board of appeal and equalization. On or before 206.18February 15 of each year the assessor shall give written notice of the time to the city or 206.19town clerk. Notwithstanding the provisions of any charter to the contrary, the meetings 206.20must be held between April 1 and May 31 each year. The clerk shall give published and 206.21posted notice of the meeting at least ten days before the date of the meeting.206.22    The board shall meet at the office of the clerk to review the assessment and 206.23classification of property in the town or city. No changes in valuation or classification 206.24which are intended to correct errors in judgment by the county assessor may be made by 206.25the county assessor after the board has adjourned in those cities or towns that hold a 206.26local board of review; however, corrections of errors that are merely clerical in nature or 206.27changes that extend homestead treatment to property are permitted after adjournment until 206.28the tax extension date for that assessment year. The changes must be fully documented and 206.29maintained in the assessor's office and must be available for review by any person. A copy 206.30of the changes made during this period in those cities or towns that hold a local board of 206.31review must be sent to the county board no later than December 31 of the assessment year.206.32    (b) The board shall determine whether the taxable property in the town or city has 206.33been properly placed on the list and properly valued by the assessor. If real or personal 207.1property has been omitted, the board shall place it on the list with its market value, and 207.2correct the assessment so that each tract or lot of real property, and each article, parcel, 207.3or class of personal property, is entered on the assessment list at its market value. No 207.4assessment of the property of any person may be raised unless the person has been 207.5duly notified of the intent of the board to do so. On application of any person feeling 207.6aggrieved, the board shall review the assessment or classification, or both, and correct 207.7it as appears just. The board may not make an individual market value adjustment or 207.8classification change that would benefit the property if the owner or other person having 207.9control over the property has refused the assessor access to inspect the property and the 207.10interior of any buildings or structures as provided in section 
         273.20. A board member 207.11shall not participate in any actions of the board which result in market value adjustments 207.12or classification changes to property owned by the board member, the spouse, parent, 207.13stepparent, child, stepchild, grandparent, grandchild, brother, sister, uncle, aunt, nephew, 207.14or niece of a board member, or property in which a board member has a financial interest. 207.15The relationship may be by blood or marriage.207.16    (c) A local board may reduce assessments upon petition of the taxpayer but the total 207.17reductions must not reduce the aggregate assessment made by the county assessor by more 207.18than one percent. If the total reductions would lower the aggregate assessments made by 207.19the county assessor by more than one percent, none of the adjustments may be made. The 207.20assessor shall correct any clerical errors or double assessments discovered by the board 207.21without regard to the one percent limitation.207.22    (d) A local board does not have authority to grant an exemption or to order property 207.23removed from the tax rolls.207.24    (e) A majority of the members may act at the meeting, and adjourn from day to day 207.25until they finish hearing the cases presented. The assessor shall attend, with the assessment 207.26books and papers, and take part in the proceedings, but must not vote. The county assessor, 207.27or an assistant delegated by the county assessor shall attend the meetings. The board shall 207.28list separately, on a form appended to the assessment book, all omitted property added 207.29to the list by the board and all items of property increased or decreased, with the market 207.30value of each item of property, added or changed by the board, placed opposite the item. 207.31The county assessor shall enter all changes made by the board in the assessment book.207.32    (f) Except as provided in subdivision 3, if a person fails to appear in person, by 207.33counsel, or by written communication before the board after being duly notified of the 207.34board's intent to raise the assessment of the property, or if a person feeling aggrieved by an 207.35assessment or classification fails to apply for a review of the assessment or classification, 207.36the person may not appear before the county board of appeal and equalization for a review 208.1of the assessment or classification. This paragraph does not apply if an assessment was 208.2made after the local board meeting, as provided in section 
         273.01, or if the person can 208.3establish not having received notice of market value at least five days before the local 208.4board meeting.208.5    (g) The local board must complete its work and adjourn within 20 days from the 208.6time of convening stated in the notice of the clerk, unless a longer period is approved by 208.7the commissioner of revenue. No action taken after that date is valid. All complaints 208.8about an assessment or classification made after the meeting of the board must be heard 208.9and determined by the county board of equalization. A nonresident may, at any time, 208.10before the meeting of the board file written objections to an assessment or classification 208.11with the county assessor. The objections must be presented to the board at its meeting by 208.12the county assessor for its consideration.208.13EFFECTIVE DATE.This section is effective the day following final enactment.208.14    Sec. 36. Minnesota Statutes 2006, section 274.13, subdivision 1, is amended to read:208.15    Subdivision 1. Members; meetings; rules for equalizing assessments. The county 208.16commissioners, or a majority of them, with the county auditor, or, if the auditor cannot be 208.17present, the deputy county auditor, or, if there is no deputy, the court administrator of the 208.18district court, shall form a board for the equalization of the assessment of the property 208.19of the county, including the property of all cities whose charters provide for a board of 208.20equalization. This board shall be referred to as the county board of appeal and equalization. 208.21The board shall meet annually, on the date specified in section 
         274.14, at the office of the 208.22auditor. Each member shall take an oath to fairly and impartially perform duties as a 208.23member. Members shall not participate in any actions of the board which result in market 208.24value adjustments or classification changes to property owned by the board member, the 208.25spouse, parent, stepparent, child, stepchild, grandparent, grandchild, brother, sister, uncle, 208.26aunt, nephew, or niece of a board member, or property in which a board member has a 208.27financial interest. The relationship may be by blood or marriage. The board shall examine 208.28and compare the returns of the assessment of property of the towns or districts, and 208.29equalize them so that each tract or lot of real property and each article or class of personal 208.30property is entered on the assessment list at its market value, subject to the following rules: 208.31    (1) The board shall raise the valuation of each tract or lot of real property which 208.32in its opinion is returned below its market value to the sum believed to be its market 208.33value. The board must first give notice of intention to raise the valuation to the person in 208.34whose name it is assessed, if the person is a resident of the county. The notice must fix 208.35a time and place for a hearing.209.1    (2) The board shall reduce the valuation of each tract or lot which in its opinion is 209.2returned above its market value to the sum believed to be its market value.209.3    (3) The board shall raise the valuation of each class of personal property which 209.4in its opinion is returned below its market value to the sum believed to be its market 209.5value. It shall raise the aggregate value of the personal property of individuals, firms, or 209.6corporations, when it believes that the aggregate valuation, as returned, is less than the 209.7market value of the taxable personal property possessed by the individuals, firms, or 209.8corporations, to the sum it believes to be the market value. The board must first give notice 209.9to the persons of intention to do so. The notice must set a time and place for a hearing.209.10    (4) The board shall reduce the valuation of each class of personal property that 209.11is returned above its market value to the sum it believes to be its market value. Upon 209.12complaint of a party aggrieved, the board shall reduce the aggregate valuation of the 209.13individual's personal property, or of any class of personal property for which the individual 209.14is assessed, which in its opinion has been assessed at too large a sum, to the sum it believes 209.15was the market value of the individual's personal property of that class.209.16    (5) The board must not reduce the aggregate value of all the property of its county, as 209.17submitted to the county board of equalization, with the additions made by the auditor under 209.18this chapter, by more than one percent of its whole valuation. The board may raise the 209.19aggregate valuation of real property, and of each class of personal property, of the county, 209.20or of any town or district of the county, when it believes it is below the market value of the 209.21property, or class of property, to the aggregate amount it believes to be its market value.209.22    (6) The board shall change the classification of any property which in its opinion 209.23is not properly classified.209.24    (7) The board does not have the authority to grant an exemption or to order property 209.25removed from the tax rolls.209.26EFFECTIVE DATE.This section is effective the day following final enactment.209.27    Sec. 37. [274.135] COUNTY BOARDS; APPEALS AND EQUALIZATION 209.28COURSE AND MEETING REQUIREMENTS.209.29    Subdivision 1.Handbook for county boards.By no later than January 1, 2009, the 209.30commissioner of revenue must develop a handbook detailing procedures, responsibilities, 209.31and requirements for county boards of appeal and equalization. The handbook must 209.32include, but need not be limited to, the role of the county board in the assessment process, 209.33the legal and policy reasons for fair and impartial appeal and equalization hearings, county 209.34board meeting procedures that foster fair and impartial assessment reviews and other best 210.1practices recommendations, quorum requirements for county boards, and explanations 210.2of alternate methods of appeal.210.3    Subd. 2.Appeals and equalization course.Beginning in 2009, and each year 210.4thereafter, there must be at least one member at each meeting of a county board of appeal 210.5and equalization who has attended an appeals and equalization course developed or 210.6approved by the commissioner within the last four years, as certified by the commissioner. 210.7The course may be offered in conjunction with a meeting of the Minnesota Association 210.8of Assessment Officers. The course content must include, but need not be limited to, a 210.9review of the handbook developed by the commissioner under subdivision 1.210.10    Subd. 3.Proof of compliance; transfer of duties.(a) Any county that 210.11conducts county boards of appeal and equalization meetings must provide proof to the 210.12commissioner by December 1, 2009, and each year thereafter, that it is in compliance 210.13with the requirements of subdivision 2. Beginning in 2009, this notice must also verify 210.14that there was a quorum of voting members at each meeting of the board of appeal and 210.15equalization in the current year. A county that does not comply with these requirements 210.16is deemed to have transferred its board of appeal and equalization powers to the special 210.17board of equalization appointed pursuant to section 274.13, subdivision 2, beginning 210.18with the following year's assessment and continuing unless the powers are reinstated 210.19under paragraph (c). A county that does not comply with the requirements of subdivision 210.202 and has not appointed a special board of equalization shall appoint a special board of 210.21equalization before the following year's assessment.210.22    (b) The county shall notify the taxpayers when the board of appeal and equalization 210.23for a county has been transferred to the special board of equalization under this subdivision 210.24and, prior to the meeting time of the special board of equalization, the county shall make 210.25available to those taxpayers a procedure for a review of the assessments, including, but 210.26not limited to, open book meetings. This alternate review process must take place in 210.27April and May.210.28    (c) A county board whose powers are transferred to the special board of equalization 210.29under this subdivision may be reinstated by resolution of the county board and upon proof 210.30of compliance with the requirements of subdivision 2. The resolution and proofs must be 210.31provided to the commissioner by December 1 in order to be effective for the following 210.32year's assessment.210.33EFFECTIVE DATE.This section is effective the day following final enactment.210.34    Sec. 38. Minnesota Statutes 2007 Supplement, section 275.065, subdivision 3, is 210.35amended to read:211.1    Subd. 3. Notice of proposed property taxes. (a) The county auditor shall prepare 211.2and the county treasurer shall deliver after November 10 and on or before November 24 211.3each year, by first class mail to each taxpayer at the address listed on the county's current 211.4year's assessment roll, a notice of proposed property taxes. Upon written request by 211.5the taxpayer, the treasurer may send the notice in electronic form or by electronic mail 211.6instead of on paper or by ordinary mail.211.7    (b) The commissioner of revenue shall prescribe the form of the notice.211.8    (c) The notice must inform taxpayers that it contains the amount of property taxes 211.9each taxing authority proposes to collect for taxes payable the following year. In the case 211.10of a town, or in the case of the state general tax, the final tax amount will be its proposed 211.11tax. In the case of taxing authorities required to hold a public meeting under subdivision 6, 211.12the notice must clearly state that each taxing authority, including regional library districts 211.13established under section 
         134.201, and including the metropolitan taxing districts as 211.14defined in paragraph (i), but excluding all other special taxing districts and towns, will 211.15hold a public meeting to receive public testimony on the proposed budget and proposed or 211.16final property tax levy, or, in case of a school district, on the current budget and proposed 211.17property tax levy. It must clearly state the time and place of each taxing authority's 211.18meeting, a telephone number for the taxing authority that taxpayers may call if they have 211.19questions related to the notice, and an address where comments will be received by mail.211.20    (d) The notice must state for each parcel:211.21    (1) the market value of the property as determined under section 
         273.11, and used 211.22for computing property taxes payable in the following year and for taxes payable in the 211.23current year as each appears in the records of the county assessor on November 1 of the 211.24current year; and, in the case of residential property, whether the property is classified as 211.25homestead or nonhomestead. The notice must clearly inform taxpayers of the years to 211.26which the market values apply and that the values are final values;211.27    (2) the items listed below, shown separately by county, city or town, and state general 211.28tax, net of the residential and agricultural homestead credit under section 
         273.1384, voter 211.29approved school levy, other local school levy, and the sum of the special taxing districts, 211.30and as a total of all taxing authorities:211.31    (i) the actual tax for taxes payable in the current year; and211.32    (ii) the proposed tax amount.211.33    If the county levy under clause (2) includes an amount for a lake improvement 211.34district as defined under sections 
         103B.501 to 
         103B.581, the amount attributable for that 211.35purpose must be separately stated from the remaining county levy amount.212.1    In the case of a town or the state general tax, the final tax shall also be its proposed 212.2tax unless the town changes its levy at a special town meeting under section 
         365.52. If a 212.3school district has certified under section 
         126C.17, subdivision 9, that a referendum will 212.4be held in the school district at the November general election, the county auditor must 212.5note next to the school district's proposed amount that a referendum is pending and that, if 212.6approved by the voters, the tax amount may be higher than shown on the notice. In the 212.7case of the city of Minneapolis, the levy for Minneapolis Park and Recreation shall be 212.8listed separately from the remaining amount of the city's levy. In the case of the city of 212.9St. Paul, the levy for the St. Paul Library Agency must be listed separately from the 212.10remaining amount of the city's levy. In the case of Ramsey County, any amount levied 212.11under section 
         134.07 may be listed separately from the remaining amount of the county's 212.12levy. In the case of a parcel where tax increment or the fiscal disparities areawide tax 212.13under chapter 276A or 473F applies, the proposed tax levy on the captured value or the 212.14proposed tax levy on the tax capacity subject to the areawide tax must each be stated 212.15separately and not included in the sum of the special taxing districts; and212.16    (3) the increase or decrease between the total taxes payable in the current year and 212.17the total proposed taxes, expressed as a percentage.212.18    For purposes of this section, the amount of the tax on homesteads qualifying under 212.19the senior citizens' property tax deferral program under chapter 290B is the total amount 212.20of property tax before subtraction of the deferred property tax amount.212.21    (e) The notice must clearly state that the proposed or final taxes do not include 212.22the following:212.23    (1) special assessments;212.24    (2) levies approved by the voters after the date the proposed taxes are certified, 212.25including bond referenda and school district levy referenda;212.26    (3) a levy limit increase approved by the voters by the first Tuesday after the first 212.27Monday in November of the levy year as provided under section 
         275.73;212.28    (4) amounts necessary to pay cleanup or other costs due to a natural disaster 212.29occurring after the date the proposed taxes are certified;212.30    (5) amounts necessary to pay tort judgments against the taxing authority that become 212.31final after the date the proposed taxes are certified; and212.32    (6) the contamination tax imposed on properties which received market value 212.33reductions for contamination.212.34    (f) Except as provided in subdivision 7, failure of the county auditor to prepare or 212.35the county treasurer to deliver the notice as required in this section does not invalidate the 212.36proposed or final tax levy or the taxes payable pursuant to the tax levy.213.1    (g) If the notice the taxpayer receives under this section lists the property as 213.2nonhomestead, and satisfactory documentation is provided to the county assessor by the 213.3applicable deadline, and the property qualifies for the homestead classification in that 213.4assessment year, the assessor shall reclassify the property to homestead for taxes payable 213.5in the following year.213.6    (h) In the case of class 4 residential property used as a residence for lease or rental 213.7periods of 30 days or more, the taxpayer must either:213.8    (1) mail or deliver a copy of the notice of proposed property taxes to each tenant, 213.9renter, or lessee; or213.10    (2) post a copy of the notice in a conspicuous place on the premises of the property.213.11    The notice must be mailed or posted by the taxpayer by November 27 or within 213.12three days of receipt of the notice, whichever is later. A taxpayer may notify the county 213.13treasurer of the address of the taxpayer, agent, caretaker, or manager of the premises to 213.14which the notice must be mailed in order to fulfill the requirements of this paragraph.213.15    (i) For purposes of this subdivision, subdivisions 5a and 6, "metropolitan special 213.16taxing districts" means the following taxing districts in the seven-county metropolitan area 213.17that levy a property tax for any of the specified purposes listed below:213.18    (1) Metropolitan Council under section 
         473.132, 
         473.167, 
         473.249, 
         473.325, 213.19473.446
         , 
         473.521, 
         473.547, or 
         473.834;213.20    (2) Metropolitan Airports Commission under section 
         473.667, 
         473.671, or 
         473.672; 213.21and213.22    (3) Metropolitan Mosquito Control Commission under section 
         473.711.213.23    For purposes of this section, any levies made by the regional rail authorities in the 213.24county of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 213.25398A shall be included with the appropriate county's levy and shall be discussed at that 213.26county's public hearing.213.27    (j) The governing body of a county, city, or school district may, with the consent 213.28of the county board, include supplemental information with the statement of proposed 213.29property taxes about the impact of state aid increases or decreases on property tax 213.30increases or decreases and on the level of services provided in the affected jurisdiction. 213.31This supplemental information may include information for the following year, the current 213.32year, and for as many consecutive preceding years as deemed appropriate by the governing 213.33body of the county, city, or school district. It may include only information regarding:213.34    (1) the impact of inflation as measured by the implicit price deflator for state and 213.35local government purchases;213.36    (2) population growth and decline;214.1    (3) state or federal government action; and214.2    (4) other financial factors that affect the level of property taxation and local services 214.3that the governing body of the county, city, or school district may deem appropriate to 214.4include.214.5    The information may be presented using tables, written narrative, and graphic 214.6representations and may contain instruction toward further sources of information or 214.7opportunity for comment.214.8EFFECTIVE DATE.This section is effective for notices required in 2008 and 214.9thereafter, for taxes payable in 2009 and thereafter.214.10    Sec. 39. Minnesota Statutes 2006, section 275.065, subdivision 5a, is amended to read:214.11    Subd. 5a. Public advertisement. (a) A city that has a population of more than 214.122,500, county, a metropolitan special taxing district as defined in subdivision 3, paragraph 214.13(i), a regional library district established under section   
         134.201, or school district shall 214.14advertise in a newspaper a notice of its intent to adopt a budget and property tax levy or, 214.15in the case of a school district, to review its current budget and proposed property taxes 214.16payable in the following year, at a public hearing, if a public hearing is required under 214.17subdivision 6. The notice must be published not less than two business days nor more 214.18than six business days before the hearing. 214.19    The advertisement must be at least one-eighth page in size of a standard-size or a 214.20tabloid-size newspaper. The advertisement must not be placed in the part of the newspaper 214.21where legal notices and classified advertisements appear. The advertisement must be 214.22published in an official newspaper of general circulation in the taxing authority. The 214.23newspaper selected must be one of general interest and readership in the community, and 214.24not one of limited subject matter. The advertisement must appear in a newspaper that is 214.25published at least once per week.214.26    For purposes of this section, the metropolitan special taxing district's advertisement 214.27must only be published in the Minneapolis Star and Tribune and the Saint Paul Pioneer 214.28Press.214.29    In addition to other requirements, a county and a city having a population of 214.30more than 2,500 must show in the public advertisement required under this subdivision 214.31the current local tax rate, the proposed local tax rate if no property tax levy increase 214.32is adopted, and the proposed rate if the proposed levy is adopted. For purposes of this 214.33subdivision, "local tax rate" means the city's or county's net tax capacity levy divided by 214.34the city's or county's taxable net tax capacity.215.1    (b) Subject to the provisions of paragraph (g), the advertisement for school districts, 215.2metropolitan special taxing districts, and regional library districts must be in the following 215.3form, except that the notice for a school district may include references to the current 215.4budget in regard to proposed property taxes.215.5"NOTICE OF215.6PROPOSED PROPERTY TAXES215.7(School District/Metropolitan215.8Special Taxing District/Regional215.9Library District) of .........215.10The governing body of ........ will soon hold budget hearings and vote on the property 215.11taxes for (metropolitan special taxing district/regional library district services that will be 215.12provided in (year)/school district services that will be provided in (year) and (year)).215.13NOTICE OF PUBLIC HEARING:215.14All concerned citizens are invited to attend a public hearing and express their opinions 215.15on the proposed (school district/metropolitan special taxing district/regional library 215.16district) budget and property taxes, or in the case of a school district, its current budget 215.17and proposed property taxes, payable in the following year. The hearing will be held on 215.18(Month/Day/Year) at (Time) at (Location, Address)."215.19    (c) Subject to the provisions of paragraph (g), the advertisement for cities and 215.20counties must be in the following form.215.21"NOTICE OF PROPOSED215.22TOTAL BUDGET AND PROPERTY TAXES215.23The (city/county) governing body or board of commissioners will hold a public hearing to 215.24discuss the budget and to vote on the amount of property taxes to collect for services the 215.25(city/county) will provide in (year).215.26SPENDING: The total budget amounts below compare (city's/county's) (year) total actual 215.27budget with the amount the (city/county) proposes to spend in (year).

215.28215.29(Year) Total Actual 
                  		BudgetProposed (Year) 
                  		BudgetChange from 
                  		(Year)-(Year)215.30$...........$................%

215.31TAXES: The property tax amounts below compare that portion of the current budget 215.32levied in property taxes in (city/county) for (year) with the property taxes the (city/county) 215.33proposes to collect in (year).

215.34215.35(Year) Property 
                  		TaxesProposed (Year) 
                  		Property TaxesChange from 
                  		(Year)-(Year)215.36$...........$................%

216.1LOCAL TAX RATE COMPARISON: The current local tax rate, the local tax rate if no tax 216.2levy increase is adopted, and the proposed local tax rate if the proposed levy is adopted.

216.3216.4(Year) Tax Rate(Year) Tax Rate if NO 
                  		Levy Increase(Year) Proposed 
                  		Tax Rate216.5...........................

216.6ATTEND THE PUBLIC HEARING216.7All (city/county) residents are invited to attend the public hearing of the (city/county) to 216.8express your opinions on the budget and the proposed amount of (year) property taxes. 216.9The hearing will be held on:216.10(Month/Day/Year/Time)216.11(Location/Address)216.12If the discussion of the budget cannot be completed, a time and place for continuing the 216.13discussion will be announced at the hearing. You are also invited to send your written 216.14comments to:216.15(City/County)216.16(Location/Address)"216.17    (d) For purposes of this subdivision, the budget amounts listed on the advertisement 216.18mean:216.19    (1) for cities, the total government fund expenditures, as defined by the state auditor 216.20under section   
         471.6965, less any expenditures for improvements or services that are 216.21specially assessed or charged under chapter 429, 430, 435, or the provisions of any other 216.22law or charter; and 216.23    (2) for counties, the total government fund expenditures, as defined by the state 216.24auditor under section   
         375.169, less any expenditures for direct payments to recipients or 216.25providers for the human service aids listed below: 216.26    (i) Minnesota family investment program under chapters 256J and 256K;216.27    (ii) medical assistance under sections   
         256B.041, subdivision 5, and   
         256B.19, 216.28subdivision 1
         ; 216.29    (iii) general assistance medical care under section   
         256D.03, subdivision 6; 216.30    (iv) general assistance under section   
         256D.03, subdivision 2; 216.31    (v) emergency assistance under section   
         256J.48; 216.32    (vi) Minnesota supplemental aid under section   
         256D.36, subdivision 1; 216.33    (vii) preadmission screening under section   
         256B.0911, and alternative care grants 216.34under section   
         256B.0913; 216.35    (viii) general assistance medical care claims processing, medical transportation and 216.36related costs under section   
         256D.03, subdivision 4; 217.1    (ix) medical transportation and related costs under section   
         256B.0625, subdivisions 217.217 to 18a
         ; 217.3    (x) group residential housing under section   
         256I.05, subdivision 8, transferred from 217.4programs in clauses (iv) and (vi); or 217.5    (xi) any successor programs to those listed in clauses (i) to (x).217.6    (e) A city with a population of over 500 but not more than 2,500 that is required to 217.7hold a public hearing under subdivision 6 must advertise by posted notice as defined in 217.8section   
         645.12, subdivision 1. The advertisement must be posted at the time provided in 217.9paragraph (a). It must be in the form required in paragraph (b). 217.10    (f) For purposes of this subdivision, the population of a city is the most recent 217.11population as determined by the state demographer under section   
         4A.02. 217.12    (g) The commissioner of revenue, subject to the approval of the chairs of the house 217.13and senate tax committees, shall annually prescribe the specific form and format of the 217.14advertisements required under this subdivision, including such details as font size and 217.15style, and spacing for the required items. The commissioner may prescribe alternate and 217.16additional language for the advertisement for a taxing authority or for groups of taxing 217.17authorities. At least two weeks before November 29 each year, the commissioner shall 217.18provide a copy of the prescribed advertisements to the chairs of the committees of the 217.19house of representatives and the senate with jurisdiction over taxes.217.20EFFECTIVE DATE.This section is effective for advertisements in 2008 and 217.21thereafter, for proposed taxes payable in 2009 and thereafter.217.22    Sec. 40. Minnesota Statutes 2006, section 275.067, is amended to read:217.23275.067 SPECIAL TAXING DISTRICTS; ORGANIZATION DATE; 217.24CERTIFICATION OF LEVY OR SPECIAL ASSESSMENTS.217.25    Special taxing districts as defined in section 
         275.066 organized on or before July 1 in 217.26athe current calendar year may, and special taxing districts organized in a prior year that 217.27have not previously certified a levy to the county auditor, are allowed to certify a levy to 217.28the county auditor in that samethe current year for property taxes or special assessments 217.29to be payable in the following calendar year to the extent that the special taxing district is 217.30authorized by statute or special act to levy taxes or special assessments, but only if the 217.31county auditor receives written notice from the district on or before July 1 of the current 217.32year that the district may be certifying a levy in the current year, and the notice includes a 217.33complete list or other description of the tax parcels in the district and a map showing the 217.34boundaries of the district. Special taxing districts organized after July 1 in a calendar year 218.1may not certify a levy of property taxes or special assessments to the county auditor under 218.2the powers granted to them by statute or special act and subject to the requirements of 218.3this section until the following calendar year. All special taxing districts must notify the 218.4county auditor by July 1 in order for its boundaries for the levy to be certified that year 218.5to be different than its boundaries for levies certified in prior years, and the notice must 218.6include a complete list or other description of the tax parcels within the new boundaries 218.7and a map showing the new boundaries of the district.218.8EFFECTIVE DATE.This section is effective for taxes payable in 2009 and 218.9thereafter.218.10    Sec. 41. Minnesota Statutes 2006, section 276.04, is amended by adding a subdivision 218.11to read:218.12    Subd. 5.Electronic tax statements.Upon written request by the owner of real 218.13property located in the county, or by the owner's agent, a county may send tax statements 218.14by electronic means instead of by mailing. For the purposes of the payment deadlines 218.15specified in section 279.01, the postmark date on the envelope containing these property 218.16tax statements is the date the statements were sent by electronic means.218.17EFFECTIVE DATE.This section is effective for tax statements for taxes payable 218.18in 2009 and thereafter.218.19    Sec. 42. Minnesota Statutes 2006, section 277.01, subdivision 2, is amended to read:218.20    Subd. 2. Partial payments. The county treasurer may accept payments of more or 218.21less than the exact amount of a tax installment due. Payments must be applied first to the 218.22oldest installment that is due but which has not been fully paid. If the accepted payment is 218.23less than the amount due, payments must bethe payment is applied first to the penalty 218.24accrued for the year the payment is made or the installment being paid. Acceptance of 218.25partial payment of tax does not constitute a waiver of the minimum payment required as a 218.26condition for filing an appeal under section 
         278.03 or any other law, nor does it affect the 218.27order of payment of delinquent taxes under section 
         280.39. 218.28EFFECTIVE DATE.This section is effective for payments made after the day 218.29of final enactment.218.30    Sec. 43. Minnesota Statutes 2006, section 279.01, subdivision 1, is amended to read:218.31    Subdivision 1. Due dates; penalties. Except as provided in subdivision 3 or 4, on 218.32May 16 or 21 days after the postmark date on the envelope containing the property tax 219.1statement, whichever is later, a penalty shall accrueaccrues and thereafter beis charged 219.2upon all unpaid taxes on real estate on the current lists in the hands of the county treasurer. 219.3The penalty shall beis at a rate of two percent on homestead property until May 31 and 219.4four percent on June 1. The penalty on nonhomestead property shall beis at a rate of four 219.5percent until May 31 and eight percent on June 1. This penalty shalldoes not accrue until 219.6June 1 of each year, or 21 days after the postmark date on the envelope containing the 219.7property tax statements, whichever is later, on commercial use real property used for 219.8seasonal residential recreational purposes and classified as class 1c or 4c, and on other 219.9commercial use real property classified as class 3a, provided that over 60 percent of the 219.10gross income earned by the enterprise on the class 3a property is earned during the months 219.11of May, June, July, and August. Any property owner of such class 3a property who pays219.12In order for the first half of the tax due on theclass 3a property to be paid after May 15 219.13and before June 1, or 21 days after the postmark date on the envelope containing the 219.14property tax statement, whichever is later, shallwithout penalty, the owner of the property 219.15must attach an affidavit to the payment attesting to compliance with the income provision 219.16of this subdivision. Thereafter, for both homestead and nonhomestead property, on the 219.17first day of each month beginning July 1, up to and including October 1 following, an 219.18additional penalty of one percent for each month shall accrueaccrues and beis charged on 219.19all such unpaid taxes provided that if the due date was extended beyond May 15 as the 219.20result of any delay in mailing property tax statements no additional penalty shall accrue 219.21if the tax is paid by the extended due date. If the tax is not paid by the extended due 219.22date, then all penalties that would have accrued if the due date had been May 15 shall be 219.23charged. When the taxes against any tract or lot exceed $50, one-half thereof may be paid 219.24prior to May 16 or 21 days after the postmark date on the envelope containing the property 219.25tax statement, whichever is later; and, if so paid, no penalty shall attach attaches; the 219.26remaining one-half shallmay be paid at any time prior to October 16 following, without 219.27penalty; but, if not so paid, then a penalty of two percent shall accrueaccrues thereon for 219.28homestead property and a penalty of four percent on nonhomestead property. Thereafter, 219.29for homestead property, on the first day of November an additional penalty of four percent 219.30shall accrueaccrues and on the first day of December following, an additional penalty of 219.31two percent shall accrueaccrues and beis charged on all such unpaid taxes. Thereafter, 219.32for nonhomestead property, on the first day of November and December following, an 219.33additional penalty of four percent for each month shall accrueaccrues and beis charged 219.34on all such unpaid taxes. If one-half of such taxes shallare not be paid prior to May 16 or 219.3521 days after the postmark date on the envelope containing the property tax statement, 219.36whichever is later, the same may be paid at any time prior to October 16, with accrued 220.1penalties to the date of payment added, and thereupon no penalty shall attachattaches to 220.2the remaining one-half until October 16 following.220.3    This section applies to payment of personal property taxes assessed against 220.4improvements to leased property, except as provided by section 
         277.01, subdivision 3. 220.5    A county may provide by resolution that in the case of a property owner that has 220.6multiple tracts or parcels with aggregate taxes exceeding $50, payments may be made in 220.7installments as provided in this subdivision.220.8    The county treasurer may accept payments of more or less than the exact amount of 220.9a tax installment due. Payments must be applied first to the oldest installment that is due 220.10but which has not been fully paid. If the accepted payment is less than the amount due, 220.11payments must be applied first to the penalty accrued for the year the payment is made220.12or the installment being paid. Acceptance of partial payment of tax does not constitute 220.13a waiver of the minimum payment required as a condition for filing an appeal under 220.14section 
         278.03 or any other law, nor does it affect the order of payment of delinquent 220.15taxes under section 
         280.39. 220.16EFFECTIVE DATE.This section is effective for payments made after the day 220.17of final enactment.220.18    Sec. 44. Minnesota Statutes 2006, section 290B.03, subdivision 2, is amended to read:220.19    Subd. 2. Qualifying homestead; defined. Qualifying homestead property is defined 220.20as the dwelling located in this state that is taxed as real property and that is occupied as the 220.21homeowner's principal residence and so much of the land surrounding it as is reasonably 220.22necessary for use of the dwelling as a home and any other property used for purposes of a 220.23homestead as defined in section 
         273.13, subdivisions 22 and 23, but not to exceed one 220.24acre. The homestead may be part of a multidwelling building and the land on which it is 220.25built.  Property is not qualifying homestead property if a person or entity other than the 220.26applicant or the applicant's spouse holds an interest in the property as the vendor under a 220.27contract for deed or as a remainderperson.220.28EFFECTIVE DATE.This section is effective retroactively for applications 220.29submitted after December 31, 2007.220.30    Sec. 45. Minnesota Statutes 2006, section 290C.02, subdivision 3, is amended to read:220.31    Subd. 3. Claimant. (a) "Claimant" means:221.1    (1) a person, as that term is defined in section 
         290.01, subdivision 2, who owns 221.2forest land in Minnesota and files an application authorized by the Sustainable Forest 221.3Incentive Act. Claimant includes;221.4    (2) a purchaser or grantee if property enrolled in the program was sold or transferred 221.5after the original application was filed and prior to the annual incentive payment being 221.6made.; or221.7    (3) an owner of land previously covered by an auxiliary forest contract that 221.8automatically qualifies for inclusion in the Sustainable Forest Incentive Act program 221.9pursuant to section 88.49, subdivision 9a, or 88.491, subdivision 2.221.10     The purchaser or grantee must notify the commissioner in writing of the sale or 221.11transfer of the property. Owners of land that qualifies for inclusion pursuant to section 221.1288.49, subdivision 9a, or 88.491, subdivision 2, must notify the commissioner in writing 221.13of the expiration of the auxiliary forest contract or land trade with a governmental unit and 221.14submit an application to the commissioner by August 15 in order to be eligible to receive a 221.15payment by October 1 of that same year. For purposes of section 
         290C.11, claimant also 221.16includes any person bound by the covenant required in section 
         290C.04. 221.17    (b) No more than one claimant is entitled to a payment under this chapter with 221.18respect to any tract, parcel, or piece of land enrolled under this chapter that has been 221.19assigned the same parcel identification number. When enrolled forest land is owned by 221.20two or more persons, the owners must determine between them which person is eligible to 221.21claim the payments provided under sections 
         290C.01 to 
         290C.11. In the case of property 221.22sold or transferred, the former owner and the purchaser or grantee must determine between 221.23them which person is eligible to claim the payments provided under sections 
         290C.01 to 221.24290C.11
         . The owners, transferees, or grantees must notify the commissioner in writing 221.25which person is eligible to claim the payments. 221.26EFFECTIVE DATE.This section is effective the day following final enactment.221.27    Sec. 46. Minnesota Statutes 2006, section 290C.04, is amended to read:221.28290C.04 APPLICATIONS.221.29    (a) A landowner may apply to enroll forest land for the sustainable forest incentive 221.30program under this chapter. The claimant must complete, sign, and submit an application 221.31to the commissioner by September 30 in order for the land to become eligible beginning 221.32in the next year. The application shall be on a form prescribed by the commissioner and 221.33must include the information the commissioner deems necessary. At a minimum, the 221.34application must show the following information for the land and the claimant: (i) the 222.1claimant's Social Security number or state or federal business tax registration number and 222.2date of birth, (ii) the claimant's address, (iii) the claimant's signature, (iv) the county's 222.3parcel identification numbers for the tax parcels that completely contain the claimant's 222.4forest land that is sought to be enrolled, (v) the number of acres eligible for enrollment 222.5in the program, (vi) the approved plan writer's signature and identification number, and 222.6(vii) proof, in a form specified by the commissioner, that the claimant has executed and 222.7acknowledged in the manner required by law for a deed, and recorded, a covenant that the 222.8land is not and shall not be developed in a manner inconsistent with the requirements and 222.9conditions of this chapter. The covenant shall state in writing that the covenant is binding 222.10on the claimant and the claimant's successor or assignee, and that it runs with the land 222.11for a period of not less than eight years. The commissioner shall specify the form of the 222.12covenant and provide copies upon request. The covenant must include a legal description 222.13that encompasses all the forest land that the claimant wishes to enroll under this section or 222.14the certificate of title number for that land if it is registered land.222.15    (b) In all cases, the commissioner shall notify the claimant within 90 days after 222.16receipt of a completed application that either the land has or has not been approved for 222.17enrollment. A claimant whose application is denied may appeal the denial as provided in 222.18section 
         290C.11, paragraph (a) 290C.13. 222.19    (c) Within 90 days after the denial of an application, or within 90 days after the 222.20final resolution of any appeal related to the denial, the commissioner shall execute and 222.21acknowledge a document releasing the land from the covenant required under this chapter. 222.22The document must be mailed to the claimant and is entitled to be recorded.222.23    (d) The Social Security numbers collected from individuals under this section are 222.24private data as provided in section 
         13.355. The federal business tax registration number 222.25and date of birth data collected under this section are also private data on individuals or 222.26nonpublic data, as defined in section 
         13.02, subdivisions 9 and 12, but may be shared 222.27with county assessors for purposes of tax administration and with county treasurers for 222.28purposes of the revenue recapture under chapter 270A. 222.29EFFECTIVE DATE.This section is effective the day following final enactment.222.30    Sec. 47. Minnesota Statutes 2006, section 290C.05, is amended to read:222.31290C.05 ANNUAL CERTIFICATION.222.32    On or before July 1 of each year, beginning with the year after the original claimant 222.33has received an approved application, the commissioner shall send each claimant enrolled 222.34under the sustainable forest incentive program a certification form. For purposes of this 223.1section, the original claimant is the person that filed the first application under section 223.2290C.04 to enroll the land in the program. The claimant must sign the certification, 223.3attesting that the requirements and conditions for continued enrollment in the program are 223.4currently being met, and must return the signed certification form to the commissioner by 223.5August 15 of that same year. If the claimant does not return an annual certification form 223.6by the due date, the provisions in section 
         290C.11 apply.223.7EFFECTIVE DATE.This section is effective the day following final enactment.223.8    Sec. 48. Minnesota Statutes 2006, section 290C.11, is amended to read:223.9290C.11 PENALTIES FOR REMOVAL.223.10    (a) If the commissioner determines that land enrolled in the sustainable forest 223.11incentive program is in violation of the conditions for enrollment as specified in section 223.12290C.03
         , the commissioner shall notify the claimant of the intent to remove all enrolled 223.13land from the sustainable forest incentive program. The claimant has 60 days to appeal 223.14this determination under the provisions of section 290C.13. The appeal must be made 223.15in writing to the commissioner, who shall, within 60 days, notify the claimant as to the 223.16outcome of the appeal. Within 60 days after the commissioner denies an appeal, or within 223.17120 days after the commissioner received a written appeal if the commissioner has not 223.18made a determination in that time, the owner may appeal to Tax Court under chapter 271 223.19as if the appeal is from an order of the commissioner.223.20    (b) If the commissioner determines the land is to be removed from the sustainable 223.21forest incentive program, the claimant is liable for payment to the commissioner in the 223.22amount equal to the payments received under this chapter for the previous four-year 223.23period, plus interest. The claimant has 90 days to satisfy the payment for removal of land 223.24from the sustainable forest incentive program under this section. If the penalty is not paid 223.25within the 90-day period under this paragraph, the commissioner shall certify the amount 223.26to the county auditor for collection as a part of the general ad valorem real property taxes 223.27on the land in the following taxes payable year.223.28EFFECTIVE DATE.This section is effective the day following final enactment.223.29    Sec. 49. [290C.13] APPEALS.223.30    Subdivision 1.Claimant right to reconsideration.A claimant may obtain 223.31reconsideration by the commissioner of a determination removing enrolled land from the 223.32sustainable forest incentive program, a determination denying an application to enroll land 223.33in the program, or a denial of part or all of an incentive payment by filing an administrative 224.1appeal under subdivision 4. A claimant cannot obtain reconsideration under this section if 224.2the action taken by the commissioner is the outcome of an administrative appeal.224.3    Subd. 2.Appeal by claimant.A claimant who wishes to seek administrative review 224.4must follow the procedures in subdivision 4.224.5    Subd. 3.Notice date.For purposes of this section, the term "notice date" means 224.6the date of the determination removing enrolled land or the date of the notice denying an 224.7application to enroll land or denying part or all of an incentive payment.224.8    Subd. 4.Time and content for administrative appeal.Within 60 days after the 224.9notice date, the claimant must file a written appeal with the commissioner. The appeal 224.10need not be in any particular form but must contain the following information:224.11    (1) name and address of the claimant;224.12    (2) if a corporation, the state of incorporation of the claimant, and the principal 224.13place of business of the corporation;224.14    (3) the Minnesota or federal business identification number or Social Security 224.15number of the claimant;224.16    (4) the date;224.17    (5) the periods involved and the amount of payment involved for each year or period;224.18    (6) the findings in the notice that the claimant disputes;224.19    (7) a summary statement that the claimant relies on for each exception; and224.20    (8) the claimant's signature or signature of the claimant's duly authorized agent.224.21    Subd. 5.Extensions.When requested in writing and within the time allowed for 224.22filing an administrative appeal, the commissioner may extend the time for filing an appeal 224.23for a period not more than 30 days from the expiration of the 60 days from the notice date.224.24    Subd. 6.Determination of appeal.On the basis of applicable law and available 224.25information, the commissioner shall determine the validity, if any, in whole or in part, 224.26of the appeal and notify the claimant of the decision. This notice must be in writing 224.27and contain the basis for the determination.224.28    Subd. 7.Agreement determining issues under appeal.When it appears to be in 224.29the best interests of the state, the commissioner may settle the amount of any incentive 224.30payments, payments owed by the claimant under section 290C.11, paragraph (b), penalties, 224.31or interest that the commissioner has under consideration by virtue of an appeal filed 224.32under this section. An agreement must be in writing and signed by the commissioner and 224.33the claimant, or the claimant's representative authorized by the claimant to enter into an 224.34agreement. The agreement is final and conclusive and, except upon a showing of fraud or 224.35malfeasance, or misrepresentation of a material fact, the case must not be reopened as to 224.36the matters agreed upon.225.1    Subd. 8.Appeal to Tax Court.Within 60 days after the commissioner denies 225.2an appeal, or within 120 days after the commissioner received a written appeal if the 225.3commissioner has not made a determination in that time, the claimant may appeal to Tax 225.4Court under chapter 271 as if the appeal is from an order of the commissioner.225.5    Subd. 9.Exemption from Administrative Procedure Act.This section is not 225.6subject to chapter 14.225.7EFFECTIVE DATE.This section is effective the day following final enactment.225.8    Sec. 50. REPEALER.225.9(a) Minnesota Statutes 2006, section 270.073, is repealed.225.10(b) Minnesota Statutes 2006, sections 270.41, subdivision 4; 270.43; 270.51; 270.52; 225.11and 270.53, are repealed.225.12EFFECTIVE DATE.This section is effective the day following final enactment.225.13ARTICLE 14225.14DEPARTMENT SPECIAL TAXES225.15    Section 1. Minnesota Statutes 2006, section 62I.06, subdivision 6, is amended to read:225.16    Subd. 6. Deficits Deficit assessments. The association shall certify to the 225.17commissioner the estimated amount of any deficit remaining after the stabilization reserve 225.18fund has been exhausted and payment of the maximum final premium for all policyholders 225.19of the association. Within 60 days after the certification, the commissioner shall authorize 225.20the association to recover the members' respective shares of the deficit by assessing 225.21all members an amount sufficient to fully fund the obligations of the association. The 225.22assessment of each member shall be determined in the manner provided in section 
         62I.07. 225.23An assessment made pursuant to this section shall be deductible by the member from past 225.24or future premium taxes due the state as provided in section 297I.20, subdivision 2. 225.25EFFECTIVE DATE.This section is effective for tax returns due after December 225.2631, 2008.225.27    Sec. 2. Minnesota Statutes 2006, section 71A.04, subdivision 1, is amended to read:225.28    Subdivision 1. Premium tax. The attorney-in-fact, in lieu of all taxes, state, county, 225.29and municipal, shall file with the commissioner of revenue all returns and pay to the 225.30commissioner of revenue all amounts required under chapter 297I.225.31EFFECTIVE DATE.This section is effective the day following final enactment.226.1    Sec. 3. Minnesota Statutes 2006, section 287.22, is amended to read:226.2287.22 EXEMPTIONS.226.3    The tax imposed by section 
         287.21 does not apply to: 226.4    (1) An executory contract for the sale of real property under which the purchaser is 226.5entitled to or does take possession of the real property, or any assignment or cancellation 226.6of the contract;226.7    (2) A mortgage or an amendment, assignment, extension, partial release, or 226.8satisfaction of a mortgage;226.9    (3) A will;226.10    (4) A plat;226.11    (5) A lease, amendment of lease, assignment of lease, or memorandum of lease;226.12    (6) A deed, instrument, or writing in which the United States or any agency or 226.13instrumentality thereof is the grantor, assignor, transferor, conveyor, grantee, or assignee;226.14    (7) A deed for a cemetery lot or lots;226.15    (8) A deed of distribution by a personal representative;226.16    (9) A deed to or from a co-owner partitioning their undivided interest in the same 226.17piece of real property;226.18    (10) A deed or other instrument of conveyance issued pursuant to a permanent 226.19school fund land exchange under section 
         92.121 and related laws; 226.20    (11) A referee's or sheriff's certificate of sale in a mortgage or lien foreclosure sale;226.21    (12) A referee's, sheriff's, or certificate holder's certificate of redemption from a 226.22mortgage or lien foreclosure sale issued to the redeeming mortgagor or lienee under 226.23section 580.23 or other statute applicable to redemption by an owner of real property;226.24    (13) A deed, instrument, or writing which grants, creates, modifies, or terminates an 226.25easement; and226.26    (14) A decree of marriage dissolution, as defined in section 
         287.01, subdivision 4, 226.27or a deed or other instrument between the parties to the dissolution made pursuant to 226.28the terms of the decree. 226.29EFFECTIVE DATE.This section is effective the day following final enactment.226.30    Sec. 4. Minnesota Statutes 2006, section 287.2205, is amended to read:226.31287.2205 TAX-FORFEITED LAND.226.32    Before a state deed for tax-forfeited land may be issued, the deed tax must be paid 226.33by the purchaser of tax-forfeited land whether the purchase is the result of a public 226.34auction or private sale or a repurchase of tax-forfeited land. State agencies and local 227.1units of government that acquire tax-forfeited land by purchase or any other means are 227.2subject to this section. The deed tax is $1.65 for a conveyance of tax-forfeited lands to a 227.3governmental subdivision for an authorized public use under section 282.01, subdivision 227.41a, or for redevelopment purposes under section 282.01, subdivision 1b.227.5EFFECTIVE DATE.This section is effective the day following final enactment.227.6    Sec. 5. Minnesota Statutes 2006, section 295.52, subdivision 4, is amended to read:227.7    Subd. 4. Use tax; prescription drugs. (a) A person that receives prescription drugs 227.8for resale or use in Minnesota, other than from a wholesale drug distributor that is subject 227.9to tax under subdivision 3, is subject to a tax equal to the price paid to the wholesale drug 227.10distributor multiplied by the tax percentage specified in this section. Liability for the tax is 227.11incurred when prescription drugs are received or delivered in Minnesota by the person.227.12    (b) A person that receives prescription drugs for use in Minnesota from a nonresident 227.13pharmacy required to be registered under section 151.19 is subject to a tax equal to 227.14the price paid by the nonresident pharmacy to the wholesale drug distributor or the 227.15price received by the nonresident pharmacy, whichever is lower, multiplied by the tax 227.16percentage specified in this section. Liability for the tax is incurred when prescription 227.17drugs are received in Minnesota by the person.227.18    (c) (b) A tax imposed under this subdivision does not apply to purchases by an 227.19individual for personal consumption.227.20EFFECTIVE DATE.This section is effective the day following final enactment.227.21    Sec. 6. Minnesota Statutes 2006, section 295.52, subdivision 4a, is amended to read:227.22    Subd. 4a. Tax collection. A wholesale drug distributor with nexus in Minnesota, 227.23who is not subject to tax under subdivision 3, on all or a particular transaction or a 227.24nonresident pharmacy with nexus in Minnesota, is required to collect the tax imposed 227.25under subdivision 4, from the purchaser of the drugs and give the purchaser a receipt 227.26for the tax paid. The tax collected shall be remitted to the commissioner in the manner 227.27prescribed by section 
         295.55, subdivision 3. 227.28EFFECTIVE DATE.This section is effective the day following final enactment.227.29    Sec. 7. Minnesota Statutes 2006, section 295.54, subdivision 2, is amended to read:227.30    Subd. 2. Pharmacy refund. A pharmacy may claim an annual refund against the 227.31total amount of tax, if any, the pharmacy owes during that calendar year under section 227.32295.52, subdivision 2 4. The refund shall equal the amount paid by the pharmacy to a 228.1wholesale drug distributor subject to tax under section 
         295.52, subdivision 3, for legend 228.2drugs delivered by the pharmacy outside of Minnesota, multiplied by the tax percentage 228.3specified in section 
         295.52, subdivision 3. If the amount of the refund exceeds the tax 228.4liability of the pharmacy under section 
         295.52, subdivision 1b 4, the commissioner 228.5shall provide the pharmacy with a refund equal to the excess amount. Each qualifying 228.6pharmacy must apply for the refund on the annual return as provided under section 
         295.55, 228.7subdivision 5
         . The refund must be claimed within one year of the due date of the return 18 228.8months from the date the drugs were delivered outside of Minnesota. Interest on refunds 228.9paid under this subdivision will begin to accrue 60 days after the date a claim for refund is 228.10filed. For purposes of this subdivision, the date a claim is filed is the due date of the return 228.11if a return is due or the date of the actual claim for refund, whichever is later. 228.12EFFECTIVE DATE.This section is effective the day following final enactment.228.13    Sec. 8. Minnesota Statutes 2006, section 297F.06, subdivision 4, is amended to read:228.14    Subd. 4. Tobacco products use tax. The tobacco products use tax does not apply to 228.15the possession, use, or storage of tobacco products thatif (1) the tobacco products have an 228.16aggregate cost in any calendar month to the consumer of $100 $50 or less, and (2) the 228.17tobacco products were carried into this state by that consumer.228.18EFFECTIVE DATE.This section is effective for the possession, use, or storage 228.19of tobacco products after June 30, 2008.228.20    Sec. 9. Minnesota Statutes 2006, section 297F.25, is amended by adding a subdivision 228.21to read:228.22    Subd. 3a.Consumer use tax; use tax return; cigarette consumer.(a) On or before 228.23the 18th day of each calendar month, a consumer who, during the preceding calendar 228.24month, has acquired title to or possession of cigarettes for use or storage in this state, upon 228.25which the sales tax imposed by this section has not been paid, shall file a return with the 228.26commissioner showing the quantity of cigarettes so acquired or possessed. The return 228.27must be made in the form and manner prescribed by the commissioner, and must contain 228.28any other information required by the commissioner. The return must be accompanied by 228.29a remittance for the full unpaid sales tax liability shown by it.228.30    (b) The tax imposed under paragraph (a) does not apply if (1) the consumer has 228.31acquired title to or possession of cigarettes for use or storage in this state in quantities 228.32of 200 or fewer in the month, and (2) the cigarettes were carried into this state by that 228.33consumer.229.1EFFECTIVE DATE.This section is effective for cigarettes which a consumer has 229.2acquired title to or possession of after June 30, 2008.229.3    Sec. 10. Minnesota Statutes 2006, section 297I.06, subdivision 1, is amended to read:229.4    Subdivision 1. Insurance policies surcharge. (a) Except as otherwise provided in 229.5subdivision 2, each licensed insurer engaged in writing policies of homeowner's insurance 229.6authorized in section 60A.06, subdivision 1, clause (1)(c), or commercial fire policies or 229.7commercial nonliability policies shall collect a surcharge equal to 0.65 percent of the 229.8gross premiums and assessments, less return premiums, on direct business received by 229.9the company, or by its agents for it, for homeowner's insurance policies, commercial fire 229.10policies, and commercial nonliability insurance policies in this state.229.11    (b) The surcharge amount collected under paragraph (a) or subdivision 2, paragraph 229.12(b), may not be considered premium for any other purpose. The surcharge amount 229.13under paragraph (a) must be separately stated on either a billing or policy declaration or 229.14document containing similar information sent to an insured.229.15    (c) Amounts collected by the commissioner under this section must be deposited in 229.16the fire safety account established pursuant to subdivision 3.229.17EFFECTIVE DATE.This section is effective retroactively from July 1, 2007, and 229.18applies to policies written or renewed on or after that date.229.19    Sec. 11. Minnesota Statutes 2006, section 297I.06, subdivision 2, is amended to read:229.20    Subd. 2. Exemptions. (a) This section does not apply to a farmers' mutual fire 229.21insurance company or township mutual fire insurance company in Minnesota organized 229.22under chapter 67A.229.23    (b) An insurer described in section 297I.05, subdivisions 3 and 4, authorized to 229.24transact business in Minnesota shall elect to remit to the Department of Revenue for 229.25deposit in the fire safety account either (1) the surcharge amount collected imposed under 229.26this section subdivision 1 on all premiums subject to that surcharge, or (2) a surcharge of 229.27one-half of one percent on the gross fire premiums and assessments, less return premiums, 229.28on all direct business received by the insurer or agents of the insurer in Minnesota, in 229.29cash or otherwise, during the year. 229.30    (c) The election must be made by December 31 of each year for insurance policies 229.31written or renewed in the succeeding calendar year. An insurer who elects to remit the 229.32one-half of one percent surcharge on gross fire premiums and assessments must not charge 229.33the insured the surcharge imposed under subdivision 1.230.1    (c)(d) For purposes of this subdivision, "gross fire premiums and assessments" 230.2includes premiums on policies covering fire risks only on automobiles, whether written or 230.3under floater form or otherwise.230.4EFFECTIVE DATE.This section is effective retroactively from July 1, 2007, and 230.5applies to insurance policies written or renewed on or after that date.230.6    Sec. 12. Minnesota Statutes 2006, section 297I.20, subdivision 2, is amended to read:230.7    Subd. 2. Joint Underwriting Association offset. An insurance company may offset 230.8against its premium tax liability to this state any amount paid for an assessment made 230.9pursuant to section 
         62I.06, subdivision 6, shall be deductible by the member from past 230.10or future premium taxes due the state. The offset against premium tax liability must be 230.11claimed beginning with the taxable year that the assessment is paid. To the extent that the 230.12allowable offset exceeds the tax liability, the remaining offset must be carried forward to 230.13succeeding taxable years until the entire offset has been credited against the insurance 230.14company's liability for premium tax under this chapter.230.15EFFECTIVE DATE.This section is effective for tax returns due after December 230.1631, 2008.230.17    Sec. 13. Minnesota Statutes 2006, section 297I.40, subdivision 5, is amended to read:230.18    Subd. 5. Definition of tax. The term "tax" as used in this section means the tax 230.19imposed by section 
         297I.05, subdivisions 1 to 6, 11, and 12, paragraphs (a), clauses (1) 230.20to (5), (b), and (e) (d), without regard to the retaliatory provisions of section 297I.05, 230.21subdivision 11, and the less any offset in section 
         297I.20. 230.22EFFECTIVE DATE.This section is effective for tax returns due after December 230.2331, 2008.230.24ARTICLE 15230.25DEPARTMENT MISCELLANEOUS230.26    Section 1. Minnesota Statutes 2006, section 16D.04, subdivision 1, is amended to read:230.27    Subdivision 1. Duties. The commissioner shall provide services to the state and its230.28referring agencies to collect debts owed the state referred for collection under this chapter. 230.29The commissioner is not a collection agency as defined by section 
         332.31, subdivision 3, 230.30and is not licensed, bonded, or regulated by the commissioner of commerce under sections 230.31332.31
          to 
         332.35 or 
         332.38 to 
         332.45. The commissioner is subject to section 
         332.37, 231.1except clause (9), (10), (12), or (19). Debts referred to the commissioner for collection 231.2under section 
         256.9792 may in turn be referred by the commissioner to the enterprise. 231.3An audited financial statement may not be required as a condition of debt placement with 231.4a private agency if the private agency: (1) has errors and omissions coverage under a 231.5professional liability policy in an amount of at least $1,000,000; or (2) has a fidelity bond 231.6to cover actions of its employees, in an amount of at least $100,000. In cases of debts 231.7referred under section 
         256.9792, the provisions of this chapter and section 
         256.9792 apply 231.8to the extent they are not in conflict. If they are in conflict, the provisions of section 231.9256.9792
          control. For purposes of this chapter, the referring agency for such debts remains 231.10the Department of Human Services. 231.11EFFECTIVE DATE.This section is effective the day following final enactment.231.12    Sec. 2. Minnesota Statutes 2006, section 16D.04, subdivision 2, is amended to read:231.13    Subd. 2. Agency participation. (a) A referring agency may, at its option, must231.14refer, by electronic means, debts to the commissioner for collection. The ultimate231.15Responsibility for the debt, including the reporting of the debt to the commissioner of 231.16finance and the decision with regard to the continuing collection and uncollectibility of the 231.17debt, remains with the referring agency.231.18    (b) Before a debt becomes 121 days past due, a referring agency may refer the 231.19debt to the commissioner for collection at any time after a debt becomes delinquent and 231.20uncontested and the debtor has no further administrative appeal of the amount of the 231.21debt. When a debt owed to a statereferring agency becomes 121 days past due, the state231.22referring agency must refer the debt to the commissioner for collection. This requirement 231.23does not apply if there is a dispute over the amount or validity of the debt, if the debt is the 231.24subject of legal action or administrative proceedings, or the agency determines that the 231.25debtor is adhering to acceptable payment arrangements. The commissioner, in consultation 231.26with the commissioner of finance, may provide that certain types of debt need not be 231.27referred to the commissioner for collection under this paragraph. Methods and procedures 231.28for referral must follow internal guidelines prepared by the commissioner of finance.231.29    (c) If the referring agency is a court, the court must furnish a debtor's Social Security 231.30number to the commissioner when the court refers the debt.231.31EFFECTIVE DATE.This section is effective for debts referred after December 231.3231, 2008.231.33    Sec. 3. Minnesota Statutes 2006, section 16D.11, subdivision 2, is amended to read:232.1    Subd. 2. Computation. At the time a debt is referred, the amount of collection 232.2costs is equal to 1517 percent of the debt, or 25 percent of the debt remaining unpaid if 232.3the commissioner or private collection agency has to take enforced collection action 232.4by serving a summons and complaint on or entering judgment against the debtor, or by 232.5utilizing any of the remedies authorized under section 16D.08, subdivision 2, except for 232.6the remedies in sections 270C.32 and 270C.65 or when referred by the commissioner for 232.7additional collection activity by a private collection agency. If, after referral of a debt to 232.8a private collection agency, the debtor requests cancellation of collection costs under 232.9subdivision 3, the debt must be returned to the commissioner for resolution of the request.232.10EFFECTIVE DATE.This section is effective for debts referred after December 232.1131, 2008.232.12    Sec. 4. Minnesota Statutes 2006, section 16D.11, subdivision 7, is amended to read:232.13    Subd. 7. Adjustment of rate. By June 1 of each year, the commissioner of finance232.14shall determine the rate of collection costs for debts referred to the enterprise during 232.15the next fiscal year. The rate is a percentage of the debts in an amount that most nearly 232.16equals the costs of the enterprise necessary to process and collect referred debts under this 232.17chapter. In no event shall the rate of collection costs when a debt is first referred exceed 232.18three-fifths of the maximum collection costs, and in no event shall the rate of the maximum232.19collection costs exceed 25 percent of the debt. Determination of the rate of collection costs 232.20under this section is not subject to the fee setting requirements of section 
         16A.1285. 232.21EFFECTIVE DATE.This section is effective January 1, 2009.232.22    Sec. 5. [270C.435] REFUNDS NOT SUBJECT TO ATTACHMENT OR 232.23GARNISHMENT.232.24    No amount of a tax refund or other payment payable by the commissioner to 232.25a taxpayer is assignable or subject to execution, levy, attachment, garnishment, lien 232.26foreclosure, or other legal process, except as specifically provided by law.232.27EFFECTIVE DATE.This section is effective the day following final enactment.232.28    Sec. 6. Minnesota Statutes 2006, section 270C.446, subdivision 2, is amended to read:232.29    Subd. 2. Required and excluded tax preparers. (a) Subject to the limitations 232.30of paragraph (b), the commissioner must publish lists of tax preparers as defined in 232.31section 289A.60, subdivision 13, paragraph (f), who have been convicted under section 233.1289A.63
          or assessed penalties in excess of $1,000 under section 289A.60, subdivision 233.213, paragraph (a).233.3    (b) For the purposes of this section, tax preparers are not subject to publication if:233.4    (1) an administrative or court action contesting the penalty has been filed or served 233.5and is unresolved at the time when notice would be given under subdivision 3;233.6    (2) an appeal period to contest the penalty has not expired; or233.7    (3) the commissioner has been notified that the tax preparer is deceased.233.8EFFECTIVE DATE.This section is effective for penalties on returns filed after 233.9December 31, 2008.233.10    Sec. 7. Minnesota Statutes 2006, section 270C.56, subdivision 1, is amended to read:233.11    Subdivision 1. Liability imposed. A person who, either singly or jointly with 233.12others, has the control of, supervision of, or responsibility for filing returns or reports, 233.13paying taxes, or collecting or withholding and remitting taxes and who fails to do so, or 233.14a person who is liable under any other law, is liable for the payment of taxes, penalties, 233.15and interest arising under chapters 295, 296A, 297A, 297F, and 297G, or sections 
         290.92233.16and 
         297E.02, and, for the taxes listed in this subdivision, the applicable penalties for 233.17nonpayment under section 289A.60.233.18EFFECTIVE DATE.This section is effective for personal liability assessments 233.19made after the day of final enactment.233.20    Sec. 8. Minnesota Statutes 2006, section 270C.63, subdivision 9, is amended to read:233.21    Subd. 9. Period of limitations. The lien imposed by this section shall, 233.22notwithstanding any other provision of law to the contrary, be enforceable from the time 233.23the lien arises and for ten years from the date of filing the notice of lien, which must be 233.24filed by the commissioner within five years after the date of assessment of the tax or final 233.25administrative or judicial determination of the assessment. A notice of lien filed at the 233.26Office of the Secretary of State may be transcribed to any county within ten years after the 233.27date of its filing, but the transcription does not extend the period during which the lien is 233.28enforceable. A notice of lien filed in one county may be transcribed to the secretary of 233.29state or to any other county within ten years after the date of its filing, but the transcription 233.30shall not extend the period during which the lien is enforceable. A notice of lien may be 233.31renewed by the commissioner before the expiration of the ten-year period for an additional 233.32ten years. The taxpayer must receive written notice of the renewal.234.1EFFECTIVE DATE.This section is effective for liens transcribed after the day 234.2of final enactment.234.3    Sec. 9. Minnesota Statutes 2007 Supplement, section 424A.10, subdivision 3, is 234.4amended to read:234.5    Subd. 3. State reimbursement. (a) By February 15 of each year, the treasurer of 234.6the relief association shall apply to the commissioner of revenue Each year, to be eligible234.7for state reimbursement of the amount of supplemental benefits paid under subdivision 2 234.8during the preceding calendar year, the relief association must apply to the commissioner 234.9of revenue by February 15. By March 15, the commissioner shall reimburse the relief 234.10association for the amount of the supplemental benefits paid to qualified recipients and to 234.11survivors of deceased active or deferred volunteer firefighters. 234.12    (b) The commissioner of revenue shall prescribe the form of and supporting 234.13information that must be supplied as part of the application for state reimbursement. 234.14The commissioner of revenue shall reimburse the relief association by paying the 234.15reimbursement amount to the treasurer of the municipality where the association is located. 234.16Within 30 days after receipt, the municipal treasurer shall transmit the state reimbursement 234.17to the treasurer of the association if the association has filed a financial report with the 234.18municipality. If the relief association has not filed a financial report with the municipality, 234.19the municipal treasurer shall delay transmission of the reimbursement payment to the 234.20association until the complete financial report is filed. If the association has dissolved or 234.21has been removed as a trustee of state aid, the treasurer shall deposit the money in a 234.22special account in the municipal treasury, and the money may be disbursed only for the 234.23purposes and in the manner provided in section 424A.08. When paid to the association,234.24    (c) the reimbursement payment must be deposited in the special fund of the relief 234.25association. 234.26    (d) (c) A sum sufficient to make the payments is appropriated from the general fund 234.27to the commissioner of revenue.234.28EFFECTIVE DATE.This section is effective the day following final enactment.234.29ARTICLE 16234.30MISCELLANEOUS234.31    Section 1. Minnesota Statutes 2006, section 3.987, subdivision 1, is amended to read:234.32    Subdivision 1. Local impact notes. The commissioner of finance shall coordinate 234.33the development of a local impact note for any proposed legislation introduced after June 235.130, 1997, or any rule proposed after December 31, 1999, upon request of the chair or the 235.2ranking minority member of either legislative Tax Committee. Upon receipt of a request 235.3to prepare a local impact note, the commissioner must notify the authors of the proposed 235.4legislation or, for an administrative rule, the head of the relevant executive agency or 235.5department, that the request has been made. The local impact note must be made available 235.6to the public upon request. If the action is among the exceptions listed in section 
         3.988, 235.7a local impact note need not be requested nor prepared. The commissioner shall make 235.8a reasonable and timely estimate of the local fiscal impact on each type of political 235.9subdivision that would result from the proposed legislation. The commissioner of finance 235.10may require any political subdivision or the commissioner of an administrative agency 235.11of the state to supply in a timely manner any information determined to be necessary to 235.12determine local fiscal impact. The political subdivision, its representative association, or 235.13commissioner shall convey the requested information to the commissioner of finance with 235.14a signed statement to the effect that the information is accurate and complete to the best 235.15of its ability. The political subdivision, its representative association, or commissioner, 235.16when requested, shall update its determination of local fiscal impact based on actual 235.17cost or revenue figures, improved estimates, or both. Upon completion of the note, the 235.18commissioner must provide a copy to the authors of the proposed legislation or, for an 235.19administrative rule, to the head of the relevant executive agency or department. 235.20    Sec. 2. Minnesota Statutes 2006, section 3.988, subdivision 3, is amended to read:235.21    Subd. 3. Miscellaneous exceptions. A local impact note or an attachment as 235.22provided in section 
         3.987, subdivision 2, need not be prepared for the cost of a mandated 235.23action if the law, including a rulemaking, containing the mandate: 235.24    (1) accommodates a specific local request;235.25    (2) results in no new local government duties;235.26    (3) leads to revenue losses from exemptions to taxes;235.27    (4) provided only clarifying or conforming, nonsubstantive charges on local 235.28government;235.29    (5) imposes additional net local costs that are minor (an amount less than or equal 235.30to one-half of one percent of the local revenue base as defined in section 
         477A.011, 235.31subdivision 27
         , or $50,000, whichever is less for any single local government if the 235.32mandate does not apply statewide or less than $1,000,000 if the mandate is statewide); 235.33    (6) is a law or executive order enacted before July 1, 1997, or a rule initially 235.34implementing a law enacted before July 1, 1997;236.1    (7) implements something other than a law or executive order, such as a federal, 236.2court, or voter-approved mandate;236.3    (8) results in savings that equal or exceed costs;236.4    (9) requires the holding of elections;236.5    (10) ensures due process or equal protection;236.6    (11) provides for the notification and conduct of public meetings;236.7    (12) establishes the procedures for administrative and judicial review of actions 236.8taken by political subdivisions;236.9    (13) protects the public from malfeasance, misfeasance, or nonfeasance by officials 236.10of political subdivisions;236.11    (14) relates directly to financial administration, including the levy, assessment, 236.12and collection of taxes;236.13    (15) relates directly to the preparation and submission of financial audits necessary 236.14to the administration of state laws; or236.15    (16) requires uniform standards to apply to public and private institutions without 236.16differentiation.236.17    Sec. 3. Minnesota Statutes 2006, section 3.989, subdivision 2, is amended to read:236.18    Subd. 2. Report Compilation of local impact notes. The commissioner of finance 236.19shall prepare by September 1, 2000, and by September 1 of each even-numbered year 236.20thereafter, a report compilation of the costs of local mandates established after June 30, 236.211997 key impact notes requested by the legislature during the previous biennial session 236.22as provided in section 3.987. The commissioner may consult with local government 236.23representatives and legislative fiscal staff to determine which local impact notes were key.236.24    The commissioner shall include the statewide total of the statement of costs of local 236.25mandates after June 30, 1997, as a notation in the state biennial budget.236.26    Sec. 4. Minnesota Statutes 2006, section 3.989, subdivision 3, is amended to read:236.27    Subd. 3. Certain political subdivisions; report. The political subdivisions that 236.28have opted to administer class B state mandates shall report to the commissioner of 236.29finance by September 1, 1998, and by September 1 of each year thereafter, identifying 236.30each instance when revenue for a class B state mandate has fallen below 85 percent of 236.31the total cost of the program and the political subdivision intends to cease administration 236.32of the program.237.1    The commissioner shall forward a copy of the report to the chairs of the appropriate 237.2funding committees of the senate and the house for proposed inclusion of the shortfall as a 237.3line item appropriation in the state budget for the next fiscal year.237.4    The political subdivision may exercise its option to cease administration only if the 237.5legislature has failed to include the shortfall as an appropriation in the state budget for 237.6the next fiscal year.237.7    Sec. 5. Minnesota Statutes 2006, section 16A.103, subdivision 2, is amended to read:237.8    Subd. 2. Local revenue. In February and November of each year, the commissioner 237.9of revenue shall prepare and deliver to the governor and the legislature forecasts of 237.10revenue to be received by school districts as a group, counties as a group, and the group of 237.11cities and towns that have a population of more than 2,500. The forecasts must assume 237.12the continuation of current laws, projections of valuation changes in real property, and 237.13reasonable estimates of projected growth in the national and state economies and affected 237.14populations. Revenue must be estimated for property taxes, state and federal aids, local 237.15sales taxes, if any, and a single projection for all other revenue for each group of affected 237.16local governmental units. As part of the February forecast, the commissioner of revenue 237.17shall report to the governor and legislature on which groups of local government units 237.18exceeded the revenue targets of the governor and legislature in the most recent biennium.237.19    Sec. 6. Minnesota Statutes 2006, section 270A.03, subdivision 2, is amended to read:237.20    Subd. 2. Claimant agency. "Claimant agency" means any state agency, as defined 237.21by section 
         14.02, subdivision 2, the regents of the University of Minnesota, any district 237.22court of the state, any county, any statutory or home rule charter city, including a city that 237.23is  presenting a claim for a municipal hospital or a public library or a municipal ambulance 237.24service, a hospital district, a private nonprofit hospital that leases its building from the 237.25county or city in which it is located, any public agency responsible for child support 237.26enforcement, any public agency responsible for the collection of court-ordered restitution, 237.27and any public agency established by general or special law that is responsible for the 237.28administration of a low-income housing program, and the Minnesota collection enterprise 237.29as defined in section 
         16D.02, subdivision 8, for the purpose of collecting the costs imposed 237.30under section 
         16D.11. A county may act as a claimant agency on behalf of an ambulance 237.31service licensed under chapter 144E if the ambulance service's primary service area is 237.32located at least in part within the county, but more than one county may not act as a 237.33claimant agency for a licensed ambulance service with respect to the same debt. 238.1    Sec. 7. Minnesota Statutes 2006, section 270A.10, is amended to read:238.2270A.10 PRIORITY OF CLAIMS.238.3    If two or more debts, in a total amount exceeding the debtor's refund, are submitted 238.4for setoff, the priority of payment shall be as follows: First, any238.5    (1) delinquent tax obligations of the debtor which are owed to the department shall 238.6be satisfied. Secondly, the refund shall be applied to;238.7    (2) debts for child support based on the order in time in which the commissioner 238.8received the debts. Thirdly, the refund shall be applied to;238.9    (3) payment of restitution obligations. Fourthly, the refund shall be applied to;238.10    (4) claims brought for a hospital or an ambulance service;238.11    (5) the remaining debts based on the order in time in which the commissioner 238.12received the debts.238.13    Sec. 8. Minnesota Statutes 2006, section 298.75, is amended by adding a subdivision 238.14to read:238.15    Subd. 11.Tax may be imposed; Otter Tail County.(a) If Otter Tail County 238.16does not impose a tax under this section and approves imposition of the tax under this 238.17subdivision, the town of Scambler in Otter Tail County may impose the aggregate 238.18materials tax under this section.238.19    (b) For purposes of exercising the powers contained in this section, the "town" is 238.20deemed to be the "county."238.21    (c) All provisions in this section apply to the town of Scambler, except that all 238.22proceeds of the tax must be retained by the town and used for the purposes described in 238.23subdivision 7.238.24    (d) If Otter Tail County imposes an aggregate materials tax under this section, the 238.25tax imposed by the town of Scambler under this subdivision is repealed on the effective 238.26date of the Otter Tail County tax.238.27EFFECTIVE DATE.This section is effective the day after the governing body 238.28of the town of Scambler and its chief clerical officer comply with section 645.021, 238.29subdivisions 2 and 3.238.30    Sec. 9.  REPEALER.238.31Minnesota Statutes 2006, section 16A.1522, is repealed.