1.1CONFERENCE COMMITTEE REPORT ON H. F. No. 421.2A bill for an act1.3relating to the financing and operation of state and local government; making 1.4changes to individual income, corporate franchise, property, aids, credits, 1.5payments, refunds, sales and use, tax increment financing, aggregate material, 1.6minerals, local, and other taxes and tax-related provisions; making changes to the 1.7green acres and rural preserve programs; authorizing border city development 1.8zone powers and local taxes; extending levy limits; modifying regional 1.9railroad authority provisions; repealing sustainable forest resource management 1.10incentive; authorizing grants to local governments for cooperation, consolidation, 1.11and service innovation; providing a science and technology program; reducing 1.12certain income rates; allowing capital equipment exemption at time of purchase; 1.13directing commissioner of revenue to negotiate a reciprocity agreement with 1.14state of Wisconsin and permitting its termination only by law; requiring studies; 1.15requiring reports; canceling amounts in the cash flow account; appropriating 1.16money;amending Minnesota Statutes 2010, sections 97A.061, subdivisions 1.171, 3; 126C.01, subdivision 3; 270A.03, subdivision 7; 270B.12, by adding a 1.18subdivision; 270C.13, subdivision 1; 272.02, by adding a subdivision; 273.111, 1.19subdivision 9, by adding a subdivision; 273.114, subdivisions 2, 5, 6; 273.121, 1.20subdivision 1; 273.13, subdivisions 21b, 25, 34; 273.1384, subdivisions 1, 3, 1.214; 273.1393; 273.1398, subdivision 3; 275.025, subdivisions 1, 3, 4; 275.066; 1.22275.08, subdivisions 1a, 1d; 275.70, subdivision 5; 275.71, subdivisions 2, 1.234, 5; 276.04, subdivision 2; 279.01, subdivision 1; 289A.20, subdivision 4; 1.24289A.50, subdivision 1; 290.01, subdivisions 6, 19b; 290.06, subdivision 2c; 1.25290.068, subdivision 1; 290.081; 290.091, subdivision 2; 290A.03, subdivisions 1.2611, 13; 297A.61, subdivision 3; 297A.62, by adding a subdivision; 297A.63, 1.27by adding a subdivision; 297A.668, subdivision 7, by adding a subdivision; 1.28297A.68, subdivision 5; 297A.70, subdivision 3; 297A.75; 297A.99, subdivision 1.291; 298.01, subdivision 3; 298.015, subdivision 1; 298.018, subdivision 1; 1.30298.28, subdivision 3; 298.75, by adding a subdivision; 398A.04, subdivision 1.318; 398A.07, subdivision 2; 469.1763, subdivision 2; 473.757, subdivisions 2, 1.3211; 477A.011, by adding a subdivision; 477A.0124, by adding a subdivision; 1.33477A.013, subdivisions 8, 9, by adding a subdivision; 477A.03; 477A.11, 1.34subdivision 1; 477A.12, subdivision 1; 477A.14, subdivision 1; 477A.17; Laws 1.351996, chapter 471, article 2, section 29, subdivision 1, as amended; Laws 1998, 1.36chapter 389, article 8, section 43, subdivisions 3, as amended, 4, as amended, 1.375, as amended; Laws 2008, chapter 366, article 7, section 19, subdivision 3; 1.38Laws 2010, chapter 389, article 7, section 22; proposing coding for new law in 1.39Minnesota Statutes, chapters 116W; 275; 373; repealing Minnesota Statutes 1.402010, sections 10A.322, subdivision 4; 13.4967, subdivision 2; 273.114, 1.41subdivision 1; 273.1384, subdivision 6; 279.01, subdivision 4; 289A.60, 1.42subdivision 31; 290.06, subdivision 23; 290C.01; 290C.02; 290C.03; 290C.04; 2.1290C.05; 290C.055; 290C.06; 290C.07; 290C.08; 290C.09; 290C.10; 290C.11; 2.2290C.12; 290C.13; 477A.145.2.3May 16, 20112.4The Honorable Kurt Zellers2.5Speaker of the House of Representatives2.6The Honorable Michelle L. Fischbach2.7President of the Senate2.8We, the undersigned conferees for H. F. No. 42 report that we have agreed upon the 2.9items in dispute and recommend as follows:2.10That the Senate recede from its amendments and that H. F. No. 42 be further 2.11amended as follows:2.12Delete everything after the enacting clause and insert:2.13"ARTICLE 12.14INDIVIDUAL INCOME, CORPORATE FRANCHISE, AND ESTATE TAXES2.15    Section 1. Minnesota Statutes 2010, section 270B.12, is amended by adding a 2.16subdivision to read:2.17    Subd. 14.Wisconsin secretary of revenue; income tax reciprocity benchmark 2.18study.The commissioner may disclose return information to the secretary of revenue 2.19of the state of Wisconsin for the purpose of conducting a joint individual income tax 2.20reciprocity study.2.21EFFECTIVE DATE.This section is effective the day following final enactment.2.22    Sec. 2. Minnesota Statutes 2010, section 290.01, subdivision 19b, is amended to read:2.23    Subd. 19b. Subtractions from federal taxable income. For individuals, estates, 2.24and trusts, there shall be subtracted from federal taxable income:2.25    (1) net interest income on obligations of any authority, commission, or 2.26instrumentality of the United States to the extent includable in taxable income for federal 2.27income tax purposes but exempt from state income tax under the laws of the United States;2.28    (2) if included in federal taxable income, the amount of any overpayment of income 2.29tax to Minnesota or to any other state, for any previous taxable year, whether the amount 2.30is received as a refund or as a credit to another taxable year's income tax liability;2.31    (3) the amount paid to others, less the amount used to claim the credit allowed under 2.32section 
         290.0674, not to exceed $1,625 for each qualifying child in grades kindergarten 2.33to 6 and $2,500 for each qualifying child in grades 7 to 12, for tuition, textbooks, and 2.34transportation of each qualifying child in attending an elementary or secondary school 2.35situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a 3.1resident of this state may legally fulfill the state's compulsory attendance laws, which 3.2is not operated for profit, and which adheres to the provisions of the Civil Rights Act 3.3of 1964 and chapter 363A. For the purposes of this clause, "tuition" includes fees or 3.4tuition as defined in section 
         290.0674, subdivision 1, clause (1). As used in this clause, 3.5"textbooks" includes books and other instructional materials and equipment purchased 3.6or leased for use in elementary and secondary schools in teaching only those subjects 3.7legally and commonly taught in public elementary and secondary schools in this state. 3.8Equipment expenses qualifying for deduction includes expenses as defined and limited in 3.9section 
         290.0674, subdivision 1, clause (3). "Textbooks" does not include instructional 3.10books and materials used in the teaching of religious tenets, doctrines, or worship, the 3.11purpose of which is to instill such tenets, doctrines, or worship, nor does it include books 3.12or materials for, or transportation to, extracurricular activities including sporting events, 3.13musical or dramatic events, speech activities, driver's education, or similar programs. No 3.14deduction is permitted for any expense the taxpayer incurred in using the taxpayer's or 3.15the qualifying child's vehicle to provide such transportation for a qualifying child. For 3.16purposes of the subtraction provided by this clause, "qualifying child" has the meaning 3.17given in section 32(c)(3) of the Internal Revenue Code;3.18    (4) income as provided under section 
         290.0802;3.19    (5) to the extent included in federal adjusted gross income, income realized on 3.20disposition of property exempt from tax under section 
         290.491;3.21    (6) to the extent not deducted or not deductible pursuant to section 408(d)(8)(E) 3.22of the Internal Revenue Code in determining federal taxable income by an individual 3.23who does not itemize deductions for federal income tax purposes for the taxable year, an 3.24amount equal to 50 percent of the excess of charitable contributions over $500 allowable 3.25as a deduction for the taxable year under section 170(a) of the Internal Revenue Code, 3.26under the provisions of Public Law 109-1 and Public Law 111-126;3.27    (7) for individuals who are allowed a federal foreign tax credit for taxes that do not 3.28qualify for a credit under section 
         290.06, subdivision 22, an amount equal to the carryover 3.29of subnational foreign taxes for the taxable year, but not to exceed the total subnational 3.30foreign taxes reported in claiming the foreign tax credit. For purposes of this clause, 3.31"federal foreign tax credit" means the credit allowed under section 27 of the Internal 3.32Revenue Code, and "carryover of subnational foreign taxes" equals the carryover allowed 3.33under section 904(c) of the Internal Revenue Code minus national level foreign taxes to 3.34the extent they exceed the federal foreign tax credit;3.35    (8) in each of the five tax years immediately following the tax year in which an 3.36addition is required under subdivision 19a, clause (7), or 19c, clause (15), in the case 4.1of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth 4.2of the delayed depreciation. For purposes of this clause, "delayed depreciation" means 4.3the amount of the addition made by the taxpayer under subdivision 19a, clause (7), or 4.4subdivision 19c, clause (15), in the case of a shareholder of an S corporation, minus the 4.5positive value of any net operating loss under section 172 of the Internal Revenue Code 4.6generated for the tax year of the addition. The resulting delayed depreciation cannot be 4.7less than zero;4.8    (9) job opportunity building zone income as provided under section 
         469.316;4.9    (10) to the extent included in federal taxable income, the amount of compensation 4.10paid to members of the Minnesota National Guard or other reserve components of the 4.11United States military for active service performed in Minnesota, excluding compensation 4.12for services performed under the Active Guard Reserve (AGR) program. For purposes of 4.13this clause, "active service" means (i) state active service as defined in section 
         190.05, 4.14subdivision 5a
         , clause (1); (ii) federally funded state active service as defined in section 4.15190.05, subdivision 5b
         ; or (iii) federal active service as defined in section 
         190.05, 4.16subdivision 5c
         , but "active service" excludes service performed in accordance with section 4.17190.08, subdivision 3
         ;4.18    (11) to the extent included in federal taxable income, the amount of compensation 4.19paid to Minnesota residents who are members of the armed forces of the United States or 4.20United Nations for active duty performed outside Minnesota under United States Code, 4.21title 10, section 101(d); United States Code, title 32, section 101(12); or the authority of 4.22the United Nations;4.23    (12) an amount, not to exceed $10,000, equal to qualified expenses related to a 4.24qualified donor's donation, while living, of one or more of the qualified donor's organs 4.25to another person for human organ transplantation. For purposes of this clause, "organ" 4.26means all or part of an individual's liver, pancreas, kidney, intestine, lung, or bone marrow; 4.27"human organ transplantation" means the medical procedure by which transfer of a human 4.28organ is made from the body of one person to the body of another person; "qualified 4.29expenses" means unreimbursed expenses for both the individual and the qualified donor 4.30for (i) travel, (ii) lodging, and (iii) lost wages net of sick pay, except that such expenses 4.31may be subtracted under this clause only once; and "qualified donor" means the individual 4.32or the individual's dependent, as defined in section 152 of the Internal Revenue Code. An 4.33individual may claim the subtraction in this clause for each instance of organ donation for 4.34transplantation during the taxable year in which the qualified expenses occur;4.35    (13) in each of the five tax years immediately following the tax year in which an 4.36addition is required under subdivision 19a, clause (8), or 19c, clause (16), in the case of a 5.1shareholder of a corporation that is an S corporation, an amount equal to one-fifth of the 5.2addition made by the taxpayer under subdivision 19a, clause (8), or 19c, clause (16), in the 5.3case of a shareholder of a corporation that is an S corporation, minus the positive value of 5.4any net operating loss under section 172 of the Internal Revenue Code generated for the 5.5tax year of the addition. If the net operating loss exceeds the addition for the tax year, a 5.6subtraction is not allowed under this clause;5.7    (14) to the extent included in federal taxable income, compensation paid to a service 5.8member as defined in United States Code, title 10, section 101(a)(5), for military service 5.9as defined in the Servicemembers Civil Relief Act, Public Law 108-189, section 101(2);5.10    (15) international economic development zone income as provided under section 5.11469.325
         ;5.12    (16) to the extent included in federal taxable income, the amount of national service 5.13educational awards received from the National Service Trust under United States Code, 5.14title 42, sections 12601 to 12604, for service in an approved Americorps National Service 5.15program; and5.16(17) to the extent included in federal taxable income, discharge of indebtedness 5.17income resulting from reacquisition of business indebtedness included in federal taxable 5.18income under section 108(i) of the Internal Revenue Code. This subtraction applies only 5.19to the extent that the income was included in net income in a prior year as a result of the 5.20addition under section 
         290.01, subdivision 19a, clause (16).;5.21(18) to the extent not deducted in computing federal taxable income, charitable 5.22contributions of food inventory as determined under the provisions of section 170(e)(3)(C) 5.23of the Internal Revenue Code, determined without regard to the termination date under 5.24section 170(e)(3)(C)(iv); and5.25(19) to the extent included in federal taxable income, 55 percent of compensation 5.26received from a pension or other retirement pay from the federal government for service 5.27in the military, as computed under United States Code, title 10, sections 1401 to 1414, 5.281447 to 1455, and 12733.5.29EFFECTIVE DATE.Clause (18) is effective for taxable years beginning after 5.30December 31, 2010. Clause (19) is effective for taxable years beginning after December 5.3131, 2012.5.32    Sec. 3. Minnesota Statutes 2010, section 290.06, subdivision 2c, is amended to read:5.33    Subd. 2c. Schedules of rates for individuals, estates, and trusts. (a) The income 5.34taxes imposed by this chapter upon married individuals filing joint returns and surviving 6.1spouses as defined in section 2(a) of the Internal Revenue Code must be computed by 6.2applying to their taxable net income the following schedule of rates:6.3    (1) On the first $25,680, 5.35 percent;6.4    (2) On all over $25,680, but not over $102,030, 7.05 percent;6.5    (3) On all over $102,030, 7.85 percent.6.6    Married individuals filing separate returns, estates, and trusts must compute their 6.7income tax by applying the above rates to their taxable income, except that the income 6.8brackets will be one-half of the above amounts.6.9    (b) The income taxes imposed by this chapter upon unmarried individuals must be 6.10computed by applying to taxable net income the following schedule of rates:6.11    (1) On the first $17,570, 5.35 percent;6.12    (2) On all over $17,570, but not over $57,710, 7.05 percent;6.13    (3) On all over $57,710, 7.85 percent.6.14    (c) The income taxes imposed by this chapter upon unmarried individuals qualifying 6.15as a head of household as defined in section 2(b) of the Internal Revenue Code must be 6.16computed by applying to taxable net income the following schedule of rates:6.17    (1) On the first $21,630, 5.35 percent;6.18    (2) On all over $21,630, but not over $86,910, 7.05 percent;6.19    (3) On all over $86,910, 7.85 percent.6.20    (d) In lieu of a tax computed according to the rates set forth in this subdivision, the 6.21tax of any individual taxpayer whose taxable net income for the taxable year is less than 6.22an amount determined by the commissioner must be computed in accordance with tables 6.23prepared and issued by the commissioner of revenue based on income brackets of not 6.24more than $100. The amount of tax for each bracket shall be computed at the rates set 6.25forth in this subdivision, provided that the commissioner may disregard a fractional part of 6.26a dollar unless it amounts to 50 cents or more, in which case it may be increased to $1.6.27    (e) An individual who is not a Minnesota resident for the entire year must compute 6.28the individual's Minnesota income tax as provided in this subdivision. After the 6.29application of the nonrefundable credits provided in this chapter, the tax liability must 6.30then be multiplied by a fraction in which:6.31    (1) the numerator is the individual's Minnesota source federal adjusted gross income 6.32as defined in section 62 of the Internal Revenue Code and increased by the additions 6.33required under section 
         290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), (9), (12), 6.34(13), (16), and (17), and reduced by the Minnesota assignable portion of the subtraction 6.35for United States government interest under section 
         290.01, subdivision 19b, clause (1), 6.36and the subtractions under section 
         290.01, subdivision 19b, clauses (8), (9), (13), (14), 7.1(15), and (17), (18), and (19), after applying the allocation and assignability provisions of 7.2section 
         290.081, clause (a), or 
         290.17; and7.3    (2) the denominator is the individual's federal adjusted gross income as defined in 7.4section 62 of the Internal Revenue Code of 1986, increased by the amounts specified in 7.5section 
         290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), (9), (12), (13), (16), and (17), 7.6and reduced by the amounts specified in section 
         290.01, subdivision 19b, clauses (1), (8), 7.7(9), (13), (14), (15), and (17), (18), and (19).7.8EFFECTIVE DATE.This section is effective for taxable years beginning after 7.9December 31, 2010, except that the new references to Minnesota Statutes, section 290.01, 7.10subdivision 19b, clause (19), in paragraph (e), clauses (1) and (2), are effective for taxable 7.11years beginning after December 31, 2012.7.12    Sec. 4. Minnesota Statutes 2010, section 290.0674, subdivision 1, is amended to read:7.13    Subdivision 1. Credit allowed. An individual is allowed a credit against the 7.14tax imposed by this chapter in an amount equal to 75 percent of the amount paid for 7.15education-related expenses for a qualifying child in kindergarten through grade 12. For 7.16purposes of this section, "education-related expenses" means:7.17(1) fees or tuition for instruction by an instructor under section 
         120A.22, subdivision 7.1810
         , clause (1), (2), (3), (4), or (5), or a member of the Minnesota Music Teachers 7.19Association, and who is not a lineal ancestor or sibling of the dependent for instruction 7.20outside the regular school day or school year, including tutoring, driver's education 7.21offered as part of school curriculum, regardless of whether it is taken from a public or 7.22private entity or summer camps, in grade or age appropriate curricula that supplement 7.23curricula and instruction available during the regular school year, that assists a dependent 7.24to improve knowledge of core curriculum areas or to expand knowledge and skills under 7.25the required academic standards under section 
         120B.021, subdivision 1, and the elective 7.26standard under section 
         120B.022, subdivision 1, clause (2), and that do not include the 7.27teaching of religious tenets, doctrines, or worship, the purpose of which is to instill such 7.28tenets, doctrines, or worship;7.29(2) expenses for textbooks, including books and other instructional materials and 7.30equipment purchased or leased for use in elementary and secondary schools in teaching 7.31only those subjects legally and commonly taught in public elementary and secondary 7.32schools in this state. "Textbooks" does not include instructional books and materials 7.33used in the teaching of religious tenets, doctrines, or worship, the purpose of which is 7.34to instill such tenets, doctrines, or worship, nor does it include books or materials for 8.1extracurricular activities including sporting events, musical or dramatic events, speech 8.2activities, driver's education, or similar programs;8.3(3) a maximum expense of $200 per family for personal computer hardware, 8.4excluding single purpose processors, and educational software that assists a dependent to 8.5improve knowledge of core curriculum areas or to expand knowledge and skills under 8.6the required academic standards under section 
         120B.021, subdivision 1, and the elective 8.7standard under section 
         120B.022, subdivision 1, clause (2), purchased for use in the 8.8taxpayer's home and not used in a trade or business regardless of whether the computer is 8.9required by the dependent's school; and8.10(4) the amount paid to others for tuition and transportation of a qualifying child 8.11attending an elementary or secondary school situated in Minnesota, North Dakota, South 8.12Dakota, Iowa, or Wisconsin, wherein a resident of this state may legally fulfill the state's 8.13compulsory attendance laws, which is not operated for profit, and which adheres to the 8.14provisions of the Civil Rights Act of 1964 and chapter 363A.8.15For purposes of this section, "qualifying child" has the meaning given in section 8.1632(c)(3) of the Internal Revenue Code.8.17EFFECTIVE DATE.This section is effective for taxable years beginning after 8.18December 31, 2012.8.19    Sec. 5. Minnesota Statutes 2010, section 290.068, subdivision 1, is amended to read:8.20    Subdivision 1. Credit allowed. A corporation, partners in a partnership, or 8.21shareholders in a corporation treated as an "S" corporation under section 
         290.9725 are 8.22allowed a credit against the tax computed under this chapter for the taxable year equal to:8.23    (a) ten percent of the first $2,000,000 of the excess (if any) of8.24    (1) the qualified research expenses for the taxable year, over8.25    (2) the base amount; and8.26    (b) 2.5 4.7 percent on all of such excess expenses over $2,000,000.8.27EFFECTIVE DATE.This section is effective for taxable years beginning after 8.28December 31, 2013.8.29    Sec. 6. Minnesota Statutes 2010, section 290.081, is amended to read:8.30290.081 INCOME OF NONRESIDENTS, RECIPROCITY.8.31    Subdivision 1.Reciprocity with other states. (a) The compensation received for 8.32the performance of personal or professional services within this state by an individual 8.33whose residence, place of abode, and place customarily returned to at least once a month 9.1is in another state, shall be excluded from gross income to the extent such compensation is 9.2subject to an income tax imposed by the state of residence; provided that such state allows 9.3a similar exclusion of compensation received by residents of Minnesota for services 9.4performed therein.9.5(b) When it is deemed to be in the best interests of the people of this state, the 9.6commissioner may determine that the provisions of paragraph (a) shall not apply, as they 9.7relate to all states except Wisconsin. The provisions of paragraph (a) apply with respect 9.8to Wisconsin only for taxable years in which a reciprocity agreement with Wisconsin is 9.9in effect as provided by this section. As long as the provisions of paragraph (a) apply 9.10between Minnesota and Wisconsin, the provisions of paragraph (a) shall apply to any 9.11individual who is domiciled in Wisconsin.9.12(c) For the purposes of paragraph (a), whenever the Wisconsin tax on Minnesota 9.13residents which would have been paid Wisconsin without paragraph (a) exceeds the 9.14Minnesota tax on Wisconsin residents which would have been paid Minnesota without 9.15paragraph (a), or vice versa, then the state with the net revenue loss resulting from 9.16paragraph (a) must be compensated by the other state as provided in the agreement under 9.17paragraph (d). This provision shall be effective for all years beginning after December 31, 9.181972. The data used for computing the loss to either state shall be determined on or before 9.19September 30 of the year following the close of the previous calendar year.9.20(d) Interest is payable on all amounts calculated under paragraph (c) relating to 9.21taxable years beginning after December 31, 2000 and before January 1, 2010. Interest 9.22accrues from July 1 of the taxable year. 9.23(e) The commissioner of revenue is authorized to enter into agreements reciprocity 9.24agreement with the state of Wisconsin specifying must specify the compensation required 9.25under paragraph (b), the one or more  reciprocity payment due date,dates for the revenue 9.26loss relating to each taxable year, with one or more estimated payment due dates in the 9.27same fiscal year in which the revenue loss occurred, and a final payment in the following 9.28fiscal year, conditions constituting delinquency, interest rates, and a method for computing 9.29interest due. Interest is payable from July 1 of the taxable year on final payments made in 9.30the following fiscal year. Calculation of compensation under the agreement must specify 9.31if the revenue loss is determined before or after the allowance of each state's credit for 9.32taxes paid to the other state.9.33(e) (f) If an agreement cannot be reached as to the amount of the loss, the 9.34commissioner of revenue and the taxing official of the state of Wisconsin shall each 9.35appoint a member of a board of arbitration and these members shall appoint the third 9.36member of the board. The board shall select one of its members as chair. Such board may 10.1administer oaths, take testimony, subpoena witnesses, and require their attendance, require 10.2the production of books, papers and documents, and hold hearings at such places as are 10.3deemed necessary. The board shall then make a determination as to the amount to be paid 10.4the other state which determination shall be final and conclusive.10.5(f) (g) The commissioner may furnish copies of returns, reports, or other information 10.6to the taxing official of the state of Wisconsin, a member of the board of arbitration, or a 10.7consultant under joint contract with the states of Minnesota and Wisconsin for the purpose 10.8of making a determination as to the amount to be paid the other state under the provisions 10.9of this section. Prior to the release of any information under the provisions of this section, 10.10the person to whom the information is to be released shall sign an agreement which 10.11provides that the person will protect the confidentiality of the returns and information 10.12revealed thereby to the extent that it is protected under the laws of the state of Minnesota.10.13(h) Any reciprocity agreement entered into under this section continues in effect 10.14until terminated by Minnesota or Wisconsin law. The commissioner may agree to modify 10.15the timing or method of calculating the state payments to be made under the agreement, 10.16consistent with the requirements of paragraphs (c) and (e), but may not terminate the 10.17agreement.10.18    Subd. 2.New reciprocity agreement with Wisconsin.(a) The commissioner of 10.19revenue is directed to initiate negotiations with the secretary of revenue of Wisconsin, 10.20with the objective of entering into an income tax reciprocity agreement effective for tax 10.21years beginning after December 31, 2011. The agreement must satisfy the conditions of 10.22subdivision 1, with one or more estimated payment due dates and a final payment due 10.23date specified so that the state with a net revenue loss as a result of the agreement receives 10.24estimated payments from the other state, in the same fiscal year as that in which the net 10.25revenue loss occurred and a final payment with interest in the following fiscal year.10.26(b) The commissioner may not enter into an income tax reciprocity agreement 10.27with Wisconsin under this section until after Wisconsin has paid in full with interest the 10.28amount due to Minnesota under the income tax reciprocity agreement in effect for taxable 10.29years beginning before January 1, 2010.10.30EFFECTIVE DATE.Subdivision 2 is effective the day following final enactment. 10.31The changes to subdivision 1 are effective for taxable years beginning after December 31 10.32of the year of the agreement, contingent upon agreement from the state of Wisconsin to a 10.33reciprocity arrangement in which estimated payments are made in the same fiscal year in 10.34which a change in revenue occurs, and a final payment is made in the following fiscal year.10.35    Sec. 7. Minnesota Statutes 2010, section 290.091, subdivision 2, is amended to read:11.1    Subd. 2. Definitions. For purposes of the tax imposed by this section, the following 11.2terms have the meanings given:11.3    (a) "Alternative minimum taxable income" means the sum of the following for 11.4the taxable year:11.5    (1) the taxpayer's federal alternative minimum taxable income as defined in section 11.655(b)(2) of the Internal Revenue Code;11.7    (2) the taxpayer's itemized deductions allowed in computing federal alternative 11.8minimum taxable income, but excluding:11.9    (i) the charitable contribution deduction under section 170 of the Internal Revenue 11.10Code, including any additional subtraction for charitable contributions of food inventory 11.11under section 290.01, subdivision 19b;11.12    (ii) the medical expense deduction;11.13    (iii) the casualty, theft, and disaster loss deduction; and11.14    (iv) the impairment-related work expenses of a disabled person;11.15    (3) for depletion allowances computed under section 613A(c) of the Internal 11.16Revenue Code, with respect to each property (as defined in section 614 of the Internal 11.17Revenue Code), to the extent not included in federal alternative minimum taxable income, 11.18the excess of the deduction for depletion allowable under section 611 of the Internal 11.19Revenue Code for the taxable year over the adjusted basis of the property at the end of the 11.20taxable year (determined without regard to the depletion deduction for the taxable year);11.21    (4) to the extent not included in federal alternative minimum taxable income, the 11.22amount of the tax preference for intangible drilling cost under section 57(a)(2) of the 11.23Internal Revenue Code determined without regard to subparagraph (E);11.24    (5) to the extent not included in federal alternative minimum taxable income, the 11.25amount of interest income as provided by section 
         290.01, subdivision 19a, clause (1); and11.26    (6) the amount of addition required by section 
         290.01, subdivision 19a, clauses (7) 11.27to (9), (12), (13), (16), and (17);11.28    less the sum of the amounts determined under the following:11.29    (1) interest income as defined in section 
         290.01, subdivision 19b, clause (1);11.30    (2) an overpayment of state income tax as provided by section 
         290.01, subdivision 11.3119b
         , clause (2), to the extent included in federal alternative minimum taxable income;11.32    (3) the amount of investment interest paid or accrued within the taxable year on 11.33indebtedness to the extent that the amount does not exceed net investment income, as 11.34defined in section 163(d)(4) of the Internal Revenue Code. Interest does not include 11.35amounts deducted in computing federal adjusted gross income; and12.1    (4) amounts subtracted from federal taxable income as provided by section 
         290.01, 12.2subdivision 19b
         , clauses (6), (8) to (15), and (17), and (19).12.3    In the case of an estate or trust, alternative minimum taxable income must be 12.4computed as provided in section 59(c) of the Internal Revenue Code.12.5    (b) "Investment interest" means investment interest as defined in section 163(d)(3) 12.6of the Internal Revenue Code.12.7    (c) "Net minimum tax" means the minimum tax imposed by this section.12.8    (d) "Regular tax" means the tax that would be imposed under this chapter (without 12.9regard to this section and section 290.032), reduced by the sum of the nonrefundable 12.10credits allowed under this chapter.12.11    (e) "Tentative minimum tax" equals 6.4 percent of alternative minimum taxable 12.12income after subtracting the exemption amount determined under subdivision 3.12.13EFFECTIVE DATE.This section is effective for taxable years beginning after 12.14December 31, 2010.12.15    Sec. 8. Minnesota Statutes 2010, section 290.191, subdivision 2, is amended to read:12.16    Subd. 2. Apportionment formula of general application.(a) Except for those 12.17trades or businesses required to use a different formula under subdivision 3 or section 12.18290.36
         , and for those trades or businesses that receive permission to use some other 12.19method under section 
         290.20 or under subdivision 4, a trade or business required to 12.20apportion its net income must apportion its income to this state on the basis of the 12.21percentage obtained by taking the sum of:12.22(1) the percent for the sales factor under paragraph (b) of the percentage which 12.23the sales made within this state in connection with the trade or business during the tax 12.24period are of the total sales wherever made in connection with the trade or business during 12.25the tax period;.12.26(2) the percent for the property factor under paragraph (b) of the percentage which 12.27the total tangible property used by the taxpayer in this state in connection with the trade or 12.28business during the tax period is of the total tangible property, wherever located, used by 12.29the taxpayer in connection with the trade or business during the tax period; and12.30(3) the percent for the payroll factor under paragraph (b) of the percentage which 12.31the taxpayer's total payrolls paid or incurred in this state or paid in respect to labor 12.32performed in this state in connection with the trade or business during the tax period are 12.33of the taxpayer's total payrolls paid or incurred in connection with the trade or business 12.34during the tax period.13.1(b) For purposes of paragraph (a) and subdivision 3, the following percentages apply 13.2for the taxable years specified:

13.313.4Taxable years beginning during calendar yearSales factor percentProperty factor percentPayroll factorpercent13.5200778111113.62008819.59.513.72009848813.82010876.56.513.92011905513.102012933.53.513.112013962213.122014 and later calendar years 10000

13.13EFFECTIVE DATE.This section is effective for taxable years beginning after 13.14December 31, 2011.13.15    Sec. 9. Minnesota Statutes 2010, section 290.191, subdivision 3, is amended to read:13.16    Subd. 3. Apportionment formula for financial institutions. Except for an 13.17investment company required to apportion its income under section 
         290.36, a financial 13.18institution that is required to apportion its net income must apportion its net income to this 13.19state on the basis of the percentage obtained by taking the sum of:13.20(1) the percent for the sales factor under subdivision 2, paragraph (b), of the 13.21percentage which the receipts from within this state in connection with the trade or 13.22business during the tax period are of the total receipts in connection with the trade or 13.23business during the tax period, from wherever derived;.13.24(2) the percent for the property factor under subdivision 2, paragraph (b), of the 13.25percentage which the sum of the total tangible property used by the taxpayer in this 13.26state and the intangible property owned by the taxpayer and attributed to this state in 13.27connection with the trade or business during the tax period is of the sum of the total 13.28tangible property, wherever located, used by the taxpayer and the intangible property 13.29owned by the taxpayer and attributed to all states in connection with the trade or business 13.30during the tax period; and13.31(3) the percent for the payroll factor under subdivision 2, paragraph (b), of the 13.32percentage which the taxpayer's total payrolls paid or incurred in this state or paid in 13.33respect to labor performed in this state in connection with the trade or business during 13.34the tax period are of the taxpayer's total payrolls paid or incurred in connection with 13.35the trade or business during the tax period.14.1EFFECTIVE DATE.This section is effective for taxable years beginning after 14.2December 31, 2011.14.3    Sec. 10. Minnesota Statutes 2010, section 291.005, subdivision 1, is amended to read:14.4    Subdivision 1. Scope. Unless the context otherwise clearly requires, the following 14.5terms used in this chapter shall have the following meanings:14.6    (1) "Commissioner" means the commissioner of revenue or any person to whom the 14.7commissioner has delegated functions under this chapter.14.8    (2) "Federal gross estate" means the gross estate of a decedent as required to be 14.9valued and otherwise determined for federal estate tax purposes under the Internal 14.10Revenue Code.14.11    (3) "Internal Revenue Code" means the United States Internal Revenue Code of 14.121986, as amended through March 18, 2010, but without regard to the provisions of 14.13sections 501 and 901 of Public Law 107-16.14.14    (4) "Minnesota adjusted taxable estate" means federal adjusted taxable estate as 14.15defined by section 2011(b)(3) of the Internal Revenue Code, increased by plus14.16(i) the amount of deduction for state death taxes allowed under section 2058 of 14.17the Internal Revenue Code; less14.18(ii) (A) the value of qualified small business property under section 291.03, 14.19subdivision 9, and the value of qualified farm property under section 291.03, subdivision 14.2010, or (B) $4,000,000, whichever is less.14.21    (5) "Minnesota gross estate" means the federal gross estate of a decedent after (a) 14.22excluding therefrom any property included therein which has its situs outside Minnesota, 14.23and (b) including therein any property omitted from the federal gross estate which is 14.24includable therein, has its situs in Minnesota, and was not disclosed to federal taxing 14.25authorities.14.26    (6) "Nonresident decedent" means an individual whose domicile at the time of 14.27death was not in Minnesota.14.28    (7) "Personal representative" means the executor, administrator or other person 14.29appointed by the court to administer and dispose of the property of the decedent. If there 14.30is no executor, administrator or other person appointed, qualified, and acting within this 14.31state, then any person in actual or constructive possession of any property having a situs in 14.32this state which is included in the federal gross estate of the decedent shall be deemed 14.33to be a personal representative to the extent of the property and the Minnesota estate tax 14.34due with respect to the property.15.1    (8) "Resident decedent" means an individual whose domicile at the time of death 15.2was in Minnesota.15.3    (9) "Situs of property" means, with respect to real property, the state or country in 15.4which it is located; with respect to tangible personal property, the state or country in which 15.5it was normally kept or located at the time of the decedent's death; and with respect to 15.6intangible personal property, the state or country in which the decedent was domiciled 15.7at death.15.8EFFECTIVE DATE.This section is effective for decedents dying after December 15.931, 2010.15.10    Sec. 11. Minnesota Statutes 2010, section 291.03, subdivision 1, is amended to read:15.11    Subdivision 1. Tax amount. (a) The tax imposed shall be an amount equal to the 15.12proportion of the maximum credit for state death taxes computed under section 2011 15.13of the Internal Revenue Code, but using Minnesota adjusted taxable estate instead of 15.14federal adjusted taxable estate, as the Minnesota gross estate bears to the value of the 15.15federal gross estate.15.16    (b) The tax determined under this subdivision must not be greater than the sum of 15.17the following amounts multiplied by a fraction, the numerator of which is the Minnesota 15.18gross estate and the denominator of which is the federal gross estate:15.19    (1) the rates and brackets under section 2001(c) of the Internal Revenue Code 15.20multiplied by the sum of:15.21    (i) the taxable estate, as defined under section 2051 of the Internal Revenue Code; 15.22plus15.23    (ii) adjusted taxable gifts, as defined in section 2001(b) of the Internal Revenue 15.24Code; less15.25(iii) the lesser of (A) the sum of the value of qualified small business property 15.26under subdivision 9, and the value of qualified farm property under subdivision 10, 15.27or (B) $4,000,000; less15.28    (2) the amount of tax allowed under section 2001(b)(2) of the Internal Revenue 15.29Code; and less15.30    (3) the federal credit allowed under section 2010 of the Internal Revenue Code.15.31    (c) For purposes of this subdivision, "Internal Revenue Code" means the Internal 15.32Revenue Code of 1986, as amended through December 31, 2000.15.33EFFECTIVE DATE.This section is effective for decedents dying after December 15.3431, 2010.16.1    Sec. 12. Minnesota Statutes 2010, section 291.03, is amended by adding a subdivision 16.2to read:16.3    Subd. 8.Definitions.(a) For purposes of this section, the following terms have the 16.4meanings given in this subdivision.16.5(b) "Family member" means a family member as defined in section 2032A(e)(2) of 16.6the Internal Revenue Code.16.7(c)  "Qualified heir" means a family member who acquired qualified property from 16.8the decedent and satisfies the requirement under subdivision 9, clause (6), or subdivision 16.910, clause (4), for the property.16.10(d)  "Qualified property" means qualified small businesss property under subdivision 16.119 and qualified farm property under subdivision 10.16.12EFFECTIVE DATE.This section is effective for decedents dying after December 16.1331, 2010.16.14    Sec. 13. Minnesota Statutes 2010, section 291.03, is amended by adding a subdivision 16.15to read:16.16    Subd. 9.Qualified small business property.Property satisfying all of the following 16.17requirements is qualified small business property:16.18(1) The value of the property was included in the federal adjusted taxable estate.16.19(2) The property consists of the assets of a trade or business or shares of stock or 16.20other ownership interests in a corporation or other entity engaged in a trade or business. 16.21The decedent or the decedent's spouse must have materially participated in the trade or 16.22business within the meaning of section 469 of the Internal Revenue Code during the 16.23taxable year that ended before the date of the decedent's death. Shares of stock in a 16.24corporation or an ownership interest in another type of entity do not qualify under this 16.25subdivision if the shares or ownership interests are traded on a public stock exchange at 16.26any time during the three-year period ending on the decedent's date of death.16.27(3) The gross annual sales of the trade or business were $10,000,000 or less for the 16.28last taxable year that ended before the date of the death of the decedent.16.29(4) The property does not consist of cash or cash equivalents. For property consisting 16.30of shares of stock or other ownership interests in an entity, the amount of cash or cash 16.31equivalents held by the corporation or other entity must be deducted from the value of 16.32the property qualifying under this subdivision in proportion to the decedent's share of 16.33ownership of the entity on the date of death.16.34(5) The decedent continuously owned the property for the three-year period ending 16.35on the date of death of the decedent.17.1(6) A family member continuously uses the property in the operation of the trade or 17.2business for three years following the date of death of the decedent.17.3(7) The estate and the qualified heir elect to treat the property as qualified small 17.4business property and agree, in the form prescribed by the commissioner, to pay the 17.5recapture tax under subdivision 11, if applicable.17.6EFFECTIVE DATE.This section is effective for decedents dying after December 17.731, 2010.17.8    Sec. 14. Minnesota Statutes 2010, section 291.03, is amended by adding a subdivision 17.9to read:17.10    Subd. 10.Qualified farm property.Property satisfying all of the following 17.11requirements is qualified farm property:17.12(1) The value of the property was included in the federal adjusted taxable estate.17.13(2) The property consists of a farm meeting the requirements of section 500.24, 17.14and was classified for property tax purposes as the homestead of the decedent or the 17.15decedent's spouse or both under section 273.124, and as class 2a property under section 17.16273.13, subdivision 23.17.17(3) The decedent continuously owned the property for the three-year period ending 17.18on the date of death of the decedent.17.19(4) A family member continuously uses the property in the operation of the trade or 17.20business for three years following the date of death of the decedent.17.21(5) The estate and the qualified heir elect to treat the property as qualified farm 17.22property and agree, in a form prescribed by the commissioner, to pay the recapture tax 17.23under subdivision 11, if applicable.17.24EFFECTIVE DATE.This section is effective for decedents dying after December 17.2531, 2010.17.26    Sec. 15. Minnesota Statutes 2010, section 291.03, is amended by adding a subdivision 17.27to read:17.28    Subd. 11.Recapture tax.(a) If, within three years after the decedent's death and 17.29before the death of the qualified heir, the qualified heir disposes of any interest in the 17.30qualified property, other than by a disposition to a family member, or a family member 17.31ceases to use the qualified property which was acquired or passed from the decedent, an 17.32additional estate tax is imposed on the property.18.1(b) The amount of the additional tax equals the amount of the exclusion claimed by 18.2the estate under subdivision 8, paragraph (d), multiplied by 16 percent.18.3(c) The additional tax under this subdivision is due on the day which is six months 18.4after the date of the disposition or cessation in paragraph (a).18.5EFFECTIVE DATE.This section is effective for decedents dying after December 18.631, 2010.18.7    Sec. 16. INCOME TAX RECIPROCITY BENCHMARK STUDY.18.8(a) The Department of Revenue, in conjunction with the Wisconsin Department of 18.9Revenue, must conduct a study to determine at least the following:18.10(1) the number of residents of each state who earn income from personal services in 18.11the other state;18.12(2) the total amount of income earned by residents of each state who earn income 18.13from personal services in the other state; and18.14(3) the change in tax revenue in each state if an income tax reciprocity arrangement 18.15were resumed between the two states under which the taxpayers were required to pay 18.16income taxes on the income only in their state of residence.18.17(b) The study must be conducted as soon as practicable, using information obtained 18.18from each state's income tax returns for tax year 2011, and from any other source of 18.19information the departments determine is necessary to complete the study.18.20(c) No later than March 1, 2013, the Department of Revenue must submit a report 18.21containing the results of the study to the governor and to the chairs and ranking minority 18.22members of the legislative committees having jurisdiction over taxes.18.23EFFECTIVE DATE.This section is effective the day following final enactment.18.24    Sec. 17. ESTATE TAX; STUDY.18.25(a) The commissioner of revenue shall conduct a study of the Minnesota estate tax. 18.26The study must include at least the following elements:18.27(1) evaluation of the estate tax using standard tax policy principles and methods of 18.28analysis;18.29(2) consideration of the implications of recent federal estate tax changes, including 18.30the repeal of the federal credit for state death taxes, the increase in the federal exclusion 18.31amount, and the portability of the federal exclusion, for state estate and inheritance taxes;19.1(3) consideration of the advantages and disadvantages of revenue neutral alternatives 19.2to the estate tax, such as an inheritance tax, a complementary gift tax, or imposition of 19.3the income tax on bequests; and19.4(4) analysis of the available empirical evidence on the effects of the present and 19.5alternative tax structures of a Minnesota tax on estates or inheritances on domicile and 19.6migration decisions of residents and the implications for state revenues.19.7(b) In preparing the study, the commissioner shall consult with and seek advice from 19.8the probate and estate section of the Minnesota State Bar Association.19.9(c) By February 1, 2012, the commissioner shall submit a report to the chairs and 19.10ranking minority members of the house of representatives and senate committees with 19.11jurisdiction over taxation, of the findings of the study and identification of issues for policy 19.12makers to consider in deciding whether to revise, reform, replace, or repeal the estate tax.19.13    Sec. 18. APPROPRIATIONS.19.14$291,000 in fiscal year 2012 and $314,000 in fiscal year 2013 are appropriated from 19.15the general fund to the commissioner of revenue for the income reciprocity benchmark 19.16study required under section 16. The appropriation under this section is onetime and 19.17is not added to the agency's base budget.19.18ARTICLE 219.19FEDERAL UPDATE19.20    Section 1. Minnesota Statutes 2010, section 289A.02, subdivision 7, as amended by 19.21Laws 2011, chapter 8, section 1, is amended to read:19.22    Subd. 7. Internal Revenue Code. Unless specifically defined otherwise, for taxable 19.23years beginning before January 1, 2010, and after December 31, 2010, "Internal Revenue 19.24Code" means the Internal Revenue Code of 1986, as amended through March 18, 2010; 19.25and for taxable years beginning after December 31, 2009, and before January 1, 2011, 19.26"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended through 19.27December 31, 2010.19.28EFFECTIVE DATE.This section is effective the day following final enactment for 19.29taxable years beginning after December 31, 2009.19.30    Sec. 2. Minnesota Statutes 2010, section 290.01, subdivision 19, as amended by Laws 19.312011, chapter 8, section 2, is amended to read:19.32    Subd. 19. Net income. The term "net income" means the federal taxable income, 19.33as defined in section 63 of the Internal Revenue Code of 1986, as amended through the 20.1date named in this subdivision, incorporating the federal effective dates of changes to the 20.2Internal Revenue Code and any elections made by the taxpayer in accordance with the 20.3Internal Revenue Code in determining federal taxable income for federal income tax 20.4purposes, and with the modifications provided in subdivisions 19a to 19f.20.5    In the case of a regulated investment company or a fund thereof, as defined in section 20.6851(a) or 851(g) of the Internal Revenue Code, federal taxable income means investment 20.7company taxable income as defined in section 852(b)(2) of the Internal Revenue Code, 20.8except that:20.9    (1) the exclusion of net capital gain provided in section 852(b)(2)(A) of the Internal 20.10Revenue Code does not apply;20.11    (2) the deduction for dividends paid under section 852(b)(2)(D) of the Internal 20.12Revenue Code must be applied by allowing a deduction for capital gain dividends and 20.13exempt-interest dividends as defined in sections 852(b)(3)(C) and 852(b)(5) of the Internal 20.14Revenue Code; and20.15    (3) the deduction for dividends paid must also be applied in the amount of any 20.16undistributed capital gains which the regulated investment company elects to have treated 20.17as provided in section 852(b)(3)(D) of the Internal Revenue Code.20.18    The net income of a real estate investment trust as defined and limited by section 20.19856(a), (b), and (c) of the Internal Revenue Code means the real estate investment trust 20.20taxable income as defined in section 857(b)(2) of the Internal Revenue Code.20.21    The net income of a designated settlement fund as defined in section 468B(d) of 20.22the Internal Revenue Code means the gross income as defined in section 468B(b) of the 20.23Internal Revenue Code.20.24    The Internal Revenue Code of 1986, as amended through March 18 December 31, 20.252010, shall be in effect for taxable years beginning after December 31, 1996, except 20.26that for taxable years beginning after December 31, 2009, and before January 1, 2011, 20.27"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended through 20.28December 31, 2010. The provisions of the act of January 22, 2010, Public Law 111-126, 20.29to accelerate the benefits for charitable cash contributions for the relief of victims of the 20.30Haitian earthquake, are effective at the same time it became effective for federal purposes 20.31and apply to the subtraction under subdivision 19b, clause (6). The provisions of title II, 20.32section 2112, of the act of September 27, 2010, Public Law 111-240, rollovers from 20.33elective deferral plans to designated Roth accounts, are effective at the same time they 20.34became effective for federal purposes and taxable rollovers are included in net income at 20.35the same time they are included in gross income for federal purposes.21.1    Except as otherwise provided, references to the Internal Revenue Code in 21.2subdivisions 19 to 19f mean the code in effect for purposes of determining net income for 21.3the applicable year.21.4EFFECTIVE DATE.This section is effective the day following final enactment, 21.5except that the changes incorporated by federal changes are effective at the same time as 21.6the changes were effective for federal purposes.21.7    Sec. 3. Minnesota Statutes 2010, section 290.01, subdivision 19a, as amended by Laws 21.82011, chapter 8, section 3, is amended to read:21.9    Subd. 19a. Additions to federal taxable income. For individuals, estates, and 21.10trusts, there shall be added to federal taxable income:21.11    (1)(i) interest income on obligations of any state other than Minnesota or a political 21.12or governmental subdivision, municipality, or governmental agency or instrumentality 21.13of any state other than Minnesota exempt from federal income taxes under the Internal 21.14Revenue Code or any other federal statute; and21.15    (ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue 21.16Code, except:21.17(A) the portion of the exempt-interest dividends exempt from state taxation under 21.18the laws of the United States; and21.19(B) the portion of the exempt-interest dividends derived from interest income 21.20on obligations of the state of Minnesota or its political or governmental subdivisions, 21.21municipalities, governmental agencies or instrumentalities, but only if the portion of the 21.22exempt-interest dividends from such Minnesota sources paid to all shareholders represents 21.2395 percent or more of the exempt-interest dividends, including any dividends exempt 21.24under subitem (A), that are paid by the regulated investment company as defined in section 21.25851(a) of the Internal Revenue Code, or the fund of the regulated investment company as 21.26defined in section 851(g) of the Internal Revenue Code, making the payment; and21.27    (iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal 21.28government described in section 7871(c) of the Internal Revenue Code shall be treated as 21.29interest income on obligations of the state in which the tribe is located;21.30    (2) the amount of income, sales and use, motor vehicle sales, or excise taxes paid 21.31or accrued within the taxable year under this chapter and the amount of taxes based on 21.32net income paid, sales and use, motor vehicle sales, or excise taxes paid to any other 21.33state or to any province or territory of Canada, to the extent allowed as a deduction 21.34under section 63(d) of the Internal Revenue Code, but the addition may not be more 21.35than the amount by which the itemized deductions as allowed under section 63(d) of 22.1the Internal Revenue Code exceeds the amount of the standard deduction as defined in 22.2section 63(c) of the Internal Revenue Code, disregarding the amounts allowed under 22.3sections 63(c)(1)(C) and 63(c)(1)(E) of the Internal Revenue Code. For the purpose of 22.4this paragraph, the disallowance of itemized deductions under section 68 of the Internal 22.5Revenue Code of 1986, income, sales and use, motor vehicle sales, or excise taxes are 22.6the last itemized deductions disallowed;22.7    (3) the capital gain amount of a lump-sum distribution to which the special tax under 22.8section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;22.9    (4) the amount of income taxes paid or accrued within the taxable year under this 22.10chapter and taxes based on net income paid to any other state or any province or territory 22.11of Canada, to the extent allowed as a deduction in determining federal adjusted gross 22.12income. For the purpose of this paragraph, income taxes do not include the taxes imposed 22.13by sections 
         290.0922, subdivision 1, paragraph (b), 
         290.9727, 
         290.9728, and 
         290.9729;22.14    (5) the amount of expense, interest, or taxes disallowed pursuant to section 
         290.10 22.15other than expenses or interest used in computing net interest income for the subtraction 22.16allowed under subdivision 19b, clause (1);22.17    (6) the amount of a partner's pro rata share of net income which does not flow 22.18through to the partner because the partnership elected to pay the tax on the income under 22.19section 6242(a)(2) of the Internal Revenue Code;22.20    (7) 80 percent of the depreciation deduction allowed under section 168(k) of the 22.21Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that 22.22in the taxable year generates a deduction for depreciation under section 168(k) and the 22.23activity generates a loss for the taxable year that the taxpayer is not allowed to claim for 22.24the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is 22.25limited to excess of the depreciation claimed by the activity under section 168(k) over the 22.26amount of the loss from the activity that is not allowed in the taxable year. In succeeding 22.27taxable years when the losses not allowed in the taxable year are allowed, the depreciation 22.28under section 168(k) is allowed;22.29    (8) 80 percent of the amount by which the deduction allowed by section 179 of the 22.30Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal 22.31Revenue Code of 1986, as amended through December 31, 2003;22.32    (9) to the extent deducted in computing federal taxable income, the amount of the 22.33deduction allowable under section 199 of the Internal Revenue Code;22.34    (10) for taxable years beginning before January 1, 2013, the exclusion allowed 22.35under section 139A of the Internal Revenue Code for federal subsidies for prescription 22.36drug plans;23.1(11) the amount of expenses disallowed under section 290.10, subdivision 2;23.2    (12) for taxable years beginning before January 1, 2010, and after December 31, 23.32010, the amount deducted for qualified tuition and related expenses under section 222 of 23.4the Internal Revenue Code, to the extent deducted from gross income;23.5    (13) for taxable years beginning before January 1, 2010, and after December 31, 23.62010, the amount deducted for certain expenses of elementary and secondary school 23.7teachers under section 62(a)(2)(D) of the Internal Revenue Code, to the extent deducted 23.8from gross income;23.9(14) the additional standard deduction for property taxes payable that is allowable 23.10under section 63(c)(1)(C) of the Internal Revenue Code;23.11(15) the additional standard deduction for qualified motor vehicle sales taxes 23.12allowable under section 63(c)(1)(E) of the Internal Revenue Code;23.13(16) discharge of indebtedness income resulting from reacquisition of business 23.14indebtedness and deferred under section 108(i) of the Internal Revenue Code; and23.15(17) the amount of unemployment compensation exempt from tax under section 23.1685(c) of the Internal Revenue Code.;23.17(18) to the extent included in the computation of federal taxable income in taxable 23.18years beginning after December 31, 2010, the amount of disallowed itemized deductions;23.19(i) The amount of disallowed itemized deductions is equal to the lesser of:23.20(A) three percent of the excess of the taxpayer's federal adjusted gross income 23.21over the applicable amount; or 23.22(B) 80 percent of the amount of the itemized deductions otherwise allowable to the 23.23taxpayer under the Internal Revenue Code for the taxable year.23.24(ii) The term "applicable amount" means $100,000, or $50,000 in the case of a 23.25married individual filing a separate return. Each dollar amount shall be increased by 23.26an amount equal to:23.27(A) such dollar amount, multiplied by 23.28(B) the cost-of-living adjustment determined under section 1(f)(3) of the Internal 23.29Revenue Code for the calendar year in which the taxable year begins, by substituting 23.30"calendar year 1990" for "calendar year 1992" in subparagraph (B) thereof.23.31(iii) The term "itemized deductions" does not include:23.32(A) the deduction for medical expenses under section 213 of the Internal Revenue 23.33Code;23.34(B) any deduction for investment interest as defined in section 163(d) of the Internal 23.35Revenue Code; and24.1(C) the deduction under section 165(a) of the Internal Revenue Code for casualty or 24.2theft losses described in paragraph (2) or (3) of section 165(c) of the Internal Revenue 24.3Code or for losses described in section 165(d) of the Internal Revenue Code;24.4(19) to the extent included in federal taxable income in taxable years beginning after 24.5December 31, 2010, the amount of disallowed personal exemptions for taxpayers with 24.6federal adjusted gross income over the threshold amount;24.7(i) The disallowed personal exemption amount is equal to the dollar amount of the 24.8personal exemptions claimed by the taxpayer in the computation of federal taxable income 24.9multiplied by the applicable percentage.24.10(ii) "Applicable percentage" means two percentage points for each $2,500 (or 24.11fraction thereof) by which the taxpayer's federal adjusted gross income for the taxable 24.12year exceeds the threshold amount. In the case of a married individual filing a separate 24.13return, the preceding sentence shall be applied by substituting "$1,250" for "$2,500." In no 24.14event shall the applicable percentage exceed 100 percent.24.15(iii) The term "threshold amount" means:24.16(A) $150,000 in the case of a joint return or a surviving spouse;24.17(B) $125,000 in the case of a head of a household;24.18(C) $100,000 in the case of an individual who is not married and who is not a 24.19surviving spouse or head of a household; and24.20(D) $75,000 in the case of a married individual filing a separate return.24.21(iv) The thresholds shall be increased by an amount equal to:24.22(A) such dollar amount, multiplied by24.23(B) the cost-of-living adjustment determined under section 1(f)(3) of the Internal 24.24Revenue Code for the calendar year in which the taxable year begins, by substituting 24.25"calendar year 1990" for "calendar year 1992" in subparagraph (B) thereof; and24.26(20) for taxable years beginning after December 31, 2010, the amount deducted for 24.27employer-provided educational assistance programs under section 127 of the Internal 24.28Revenue Code.24.29EFFECTIVE DATE.This section is effective for taxable years beginning after 24.30December 31, 2010, except that the change to clause (10) is effective the day following 24.31final enactment.24.32    Sec. 4. Minnesota Statutes 2010, section 290.01, subdivision 19c, as amended by Laws 24.332011, chapter 8, section 4, is amended to read:24.34    Subd. 19c. Corporations; additions to federal taxable income. For corporations, 24.35there shall be added to federal taxable income:25.1    (1) the amount of any deduction taken for federal income tax purposes for income, 25.2excise, or franchise taxes based on net income or related minimum taxes, including but not 25.3limited to the tax imposed under section 
         290.0922, paid by the corporation to Minnesota, 25.4another state, a political subdivision of another state, the District of Columbia, or any 25.5foreign country or possession of the United States;25.6    (2) interest not subject to federal tax upon obligations of: the United States, its 25.7possessions, its agencies, or its instrumentalities; the state of Minnesota or any other 25.8state, any of its political or governmental subdivisions, any of its municipalities, or any 25.9of its governmental agencies or instrumentalities; the District of Columbia; or Indian 25.10tribal governments;25.11    (3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal 25.12Revenue Code;25.13    (4) the amount of any net operating loss deduction taken for federal income tax 25.14purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss 25.15deduction under section 810 of the Internal Revenue Code;25.16    (5) the amount of any special deductions taken for federal income tax purposes 25.17under sections 241 to 247 and 965 of the Internal Revenue Code;25.18    (6) losses from the business of mining, as defined in section 
         290.05, subdivision 1, 25.19clause (a), that are not subject to Minnesota income tax;25.20    (7) the amount of any capital losses deducted for federal income tax purposes under 25.21sections 1211 and 1212 of the Internal Revenue Code;25.22    (8) the exempt foreign trade income of a foreign sales corporation under sections 25.23921(a) and 291 of the Internal Revenue Code;25.24    (9) the amount of percentage depletion deducted under sections 611 through 614 and 25.25291 of the Internal Revenue Code;25.26    (10) for certified pollution control facilities placed in service in a taxable year 25.27beginning before December 31, 1986, and for which amortization deductions were elected 25.28under section 169 of the Internal Revenue Code of 1954, as amended through December 25.2931, 1985, the amount of the amortization deduction allowed in computing federal taxable 25.30income for those facilities;25.31    (11) the amount of any deemed dividend from a foreign operating corporation 25.32determined pursuant to section 
         290.17, subdivision 4, paragraph (g). The deemed dividend 25.33shall be reduced by the amount of the addition to income required by clauses (20), (21), 25.34(22), and (23);26.1    (12) the amount of a partner's pro rata share of net income which does not flow 26.2through to the partner because the partnership elected to pay the tax on the income under 26.3section 6242(a)(2) of the Internal Revenue Code;26.4    (13) the amount of net income excluded under section 114 of the Internal Revenue 26.5Code;26.6    (14) any increase in subpart F income, as defined in section 952(a) of the Internal 26.7Revenue Code, for the taxable year when subpart F income is calculated without regard to 26.8the provisions of Division C, title III, section 303(b) of Public Law 110-343;26.9    (15) 80 percent of the depreciation deduction allowed under section 168(k)(1)(A) 26.10and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if the taxpayer 26.11has an activity that in the taxable year generates a deduction for depreciation under 26.12section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable year 26.13that the taxpayer is not allowed to claim for the taxable year, "the depreciation allowed 26.14under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess of the 26.15depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) over the 26.16amount of the loss from the activity that is not allowed in the taxable year. In succeeding 26.17taxable years when the losses not allowed in the taxable year are allowed, the depreciation 26.18under section 168(k)(1)(A) and (k)(4)(A) is allowed;26.19    (16) 80 percent of the amount by which the deduction allowed by section 179 of the 26.20Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal 26.21Revenue Code of 1986, as amended through December 31, 2003;26.22    (17) to the extent deducted in computing federal taxable income, the amount of the 26.23deduction allowable under section 199 of the Internal Revenue Code;26.24    (18) for taxable years beginning before January 1, 2013, the exclusion allowed 26.25under section 139A of the Internal Revenue Code for federal subsidies for prescription 26.26drug plans;26.27    (19) the amount of expenses disallowed under section 
         290.10, subdivision 2;26.28    (20) an amount equal to the interest and intangible expenses, losses, and costs paid, 26.29accrued, or incurred by any member of the taxpayer's unitary group to or for the benefit 26.30of a corporation that is a member of the taxpayer's unitary business group that qualifies 26.31as a foreign operating corporation. For purposes of this clause, intangible expenses and 26.32costs include:26.33    (i) expenses, losses, and costs for, or related to, the direct or indirect acquisition, 26.34use, maintenance or management, ownership, sale, exchange, or any other disposition of 26.35intangible property;27.1    (ii) losses incurred, directly or indirectly, from factoring transactions or discounting 27.2transactions;27.3    (iii) royalty, patent, technical, and copyright fees;27.4    (iv) licensing fees; and27.5    (v) other similar expenses and costs.27.6For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent 27.7applications, trade names, trademarks, service marks, copyrights, mask works, trade 27.8secrets, and similar types of intangible assets.27.9This clause does not apply to any item of interest or intangible expenses or costs paid, 27.10accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect 27.11to such item of income to the extent that the income to the foreign operating corporation 27.12is income from sources without the United States as defined in subtitle A, chapter 1, 27.13subchapter N, part 1, of the Internal Revenue Code;27.14    (21) except as already included in the taxpayer's taxable income pursuant to clause 27.15(20), any interest income and income generated from intangible property received or 27.16accrued by a foreign operating corporation that is a member of the taxpayer's unitary 27.17group. For purposes of this clause, income generated from intangible property includes:27.18    (i) income related to the direct or indirect acquisition, use, maintenance or 27.19management, ownership, sale, exchange, or any other disposition of intangible property;27.20    (ii) income from factoring transactions or discounting transactions;27.21    (iii) royalty, patent, technical, and copyright fees;27.22    (iv) licensing fees; and27.23    (v) other similar income.27.24For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent 27.25applications, trade names, trademarks, service marks, copyrights, mask works, trade 27.26secrets, and similar types of intangible assets.27.27This clause does not apply to any item of interest or intangible income received or accrued 27.28by a foreign operating corporation with respect to such item of income to the extent that 27.29the income is income from sources without the United States as defined in subtitle A, 27.30chapter 1, subchapter N, part 1, of the Internal Revenue Code;27.31    (22) the dividends attributable to the income of a foreign operating corporation that 27.32is a member of the taxpayer's unitary group in an amount that is equal to the dividends 27.33paid deduction of a real estate investment trust under section 561(a) of the Internal 27.34Revenue Code for amounts paid or accrued by the real estate investment trust to the 27.35foreign operating corporation;28.1    (23) the income of a foreign operating corporation that is a member of the taxpayer's 28.2unitary group in an amount that is equal to gains derived from the sale of real or personal 28.3property located in the United States;28.4    (24) for taxable years beginning before January 1, 2010, and after December 31, 28.52010, the additional amount allowed as a deduction for donation of computer technology 28.6and equipment under section 170(e)(6) of the Internal Revenue Code, to the extent 28.7deducted from taxable income; and28.8(25) discharge of indebtedness income resulting from reacquisition of business 28.9indebtedness and deferred under section 108(i) of the Internal Revenue Code.28.10EFFECTIVE DATE.The change to clause (24) is effective for taxable years 28.11beginning after December 31, 2010. The change to clause (18) is effective the day 28.12following final enactment.28.13    Sec. 5. Minnesota Statutes 2010, section 290.01, subdivision 31, as amended by Laws 28.142011, chapter 8, section 5, is amended to read:28.15    Subd. 31. Internal Revenue Code. Unless specifically defined otherwise, for 28.16taxable years beginning before January 1, 2010, and after December 31, 2010, "Internal 28.17Revenue Code" means the Internal Revenue Code of 1986, as amended through March 28.1818 December 31, 2010; and for taxable years beginning after December 31, 2009, and 28.19before January 1, 2011, "Internal Revenue Code" means the Internal Revenue Code of 28.201986, as amended through December 31, 2010. Internal Revenue Code also includes any 28.21uncodified provision in federal law that relates to provisions of the Internal Revenue 28.22Code that are incorporated into Minnesota law. When used in this chapter, the reference 28.23to "subtitle A, chapter 1, subchapter N, part 1, of the Internal Revenue Code" is to the 28.24Internal Revenue Code as amended through March 18, 2010.28.25EFFECTIVE DATE.This section is effective the day following final enactment, 28.26except the changes incorporated by federal changes are effective at the same time as the 28.27changes were effective for federal purposes.28.28    Sec. 6. Minnesota Statutes 2010, section 290.06, subdivision 2c, is amended to read:28.29    Subd. 2c. Schedules of rates for individuals, estates, and trusts. (a) The income 28.30taxes imposed by this chapter upon married individuals filing joint returns and surviving 28.31spouses as defined in section 2(a) of the Internal Revenue Code must be computed by 28.32applying to their taxable net income the following schedule of rates:28.33    (1) On the first $25,680, 5.35 percent;29.1    (2) On all over $25,680, but not over $102,030, 7.05 percent;29.2    (3) On all over $102,030, 7.85 percent.29.3    Married individuals filing separate returns, estates, and trusts must compute their 29.4income tax by applying the above rates to their taxable income, except that the income 29.5brackets will be one-half of the above amounts.29.6    (b) The income taxes imposed by this chapter upon unmarried individuals must be 29.7computed by applying to taxable net income the following schedule of rates:29.8    (1) On the first $17,570, 5.35 percent;29.9    (2) On all over $17,570, but not over $57,710, 7.05 percent;29.10    (3) On all over $57,710, 7.85 percent.29.11    (c) The income taxes imposed by this chapter upon unmarried individuals qualifying 29.12as a head of household as defined in section 2(b) of the Internal Revenue Code must be 29.13computed by applying to taxable net income the following schedule of rates:29.14    (1) On the first $21,630, 5.35 percent;29.15    (2) On all over $21,630, but not over $86,910, 7.05 percent;29.16    (3) On all over $86,910, 7.85 percent.29.17    (d) In lieu of a tax computed according to the rates set forth in this subdivision, the 29.18tax of any individual taxpayer whose taxable net income for the taxable year is less than 29.19an amount determined by the commissioner must be computed in accordance with tables 29.20prepared and issued by the commissioner of revenue based on income brackets of not 29.21more than $100. The amount of tax for each bracket shall be computed at the rates set 29.22forth in this subdivision, provided that the commissioner may disregard a fractional part of 29.23a dollar unless it amounts to 50 cents or more, in which case it may be increased to $1.29.24    (e) An individual who is not a Minnesota resident for the entire year must compute 29.25the individual's Minnesota income tax as provided in this subdivision. After the 29.26application of the nonrefundable credits provided in this chapter, the tax liability must 29.27then be multiplied by a fraction in which:29.28    (1) the numerator is the individual's Minnesota source federal adjusted gross income 29.29as defined in section 62 of the Internal Revenue Code and increased by the additions 29.30required under section 
         290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), (9), (12), 29.31(13), (16), and (17), and (20), and reduced by the Minnesota assignable portion of the 29.32subtraction for United States government interest under section 
         290.01, subdivision 19b, 29.33clause (1), and the subtractions under section 
         290.01, subdivision 19b, clauses (8), (9), 29.34(13), (14), (15), and (17), after applying the allocation and assignability provisions of 29.35section 
         290.081, clause (a), or 
         290.17; and30.1    (2) the denominator is the individual's federal adjusted gross income as defined in 30.2section 62 of the Internal Revenue Code of 1986, increased by the amounts specified in 30.3section 
         290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), (9), (12), (13), (16), and30.4(17), and (20), and reduced by the amounts specified in section 
         290.01, subdivision 19b, 30.5clauses (1), (8), (9), (13), (14), (15), and (17).30.6EFFECTIVE DATE.This section is effective for taxable years beginning after 30.7December 31, 2010.30.8    Sec. 7. Minnesota Statutes 2010, section 290A.03, subdivision 15, as amended by 30.9Laws 2011, chapter 8, section 6, is amended to read:30.10    Subd. 15. Internal Revenue Code.For taxable years beginning before January 1, 30.112010, and after December 31, 2010, "Internal Revenue Code" means the Internal Revenue 30.12Code of 1986, as amended through March 18 December 31, 2010; and for taxable years 30.13beginning after December 31, 2009, and before January 1, 2011, "Internal Revenue Code" 30.14means the Internal Revenue Code of 1986, as amended through December 31, 2010.30.15EFFECTIVE DATE.This section is effective for property tax refunds based on 30.16property taxes payable on or after December 31, 2011, and rent paid on or after December 30.1731, 2010.30.18    Sec. 8. Minnesota Statutes 2010, section 291.005, subdivision 1, is amended to read:30.19    Subdivision 1. Scope. Unless the context otherwise clearly requires, the following 30.20terms used in this chapter shall have the following meanings:30.21    (1) "Commissioner" means the commissioner of revenue or any person to whom the 30.22commissioner has delegated functions under this chapter.30.23    (2) "Federal gross estate" means the gross estate of a decedent as required to be 30.24valued and otherwise determined for federal estate tax purposes under the Internal 30.25Revenue Code.30.26    (3) "Internal Revenue Code" means the United States Internal Revenue Code of 30.271986, as amended through March 18 December 31, 2010, but without regard to the 30.28provisions of sections 501 and 901 of Public Law 107-16, as amended by Public Law 30.29111-312, and section 301(c) of Public Law 111-312.30.30    (4) "Minnesota adjusted taxable estate" means federal adjusted taxable estate as 30.31defined by section 2011(b)(3) of the Internal Revenue Code, increased by the amount of 30.32deduction for state death taxes allowed under section 2058 of the Internal Revenue Code.31.1    (5) "Minnesota gross estate" means the federal gross estate of a decedent after (a) 31.2excluding therefrom any property included therein which has its situs outside Minnesota, 31.3and (b) including therein any property omitted from the federal gross estate which is 31.4includable therein, has its situs in Minnesota, and was not disclosed to federal taxing 31.5authorities.31.6    (6) "Nonresident decedent" means an individual whose domicile at the time of 31.7death was not in Minnesota.31.8    (7) "Personal representative" means the executor, administrator or other person 31.9appointed by the court to administer and dispose of the property of the decedent. If there 31.10is no executor, administrator or other person appointed, qualified, and acting within this 31.11state, then any person in actual or constructive possession of any property having a situs in 31.12this state which is included in the federal gross estate of the decedent shall be deemed 31.13to be a personal representative to the extent of the property and the Minnesota estate tax 31.14due with respect to the property.31.15    (8) "Resident decedent" means an individual whose domicile at the time of death 31.16was in Minnesota.31.17    (9) "Situs of property" means, with respect to real property, the state or country in 31.18which it is located; with respect to tangible personal property, the state or country in which 31.19it was normally kept or located at the time of the decedent's death; and with respect to 31.20intangible personal property, the state or country in which the decedent was domiciled 31.21at death.31.22EFFECTIVE DATE.This section is effective the day following final enactment.31.23ARTICLE 331.24SALES AND USE TAXES31.25    Section 1. Minnesota Statutes 2010, section 289A.20, subdivision 4, is amended to 31.26read:31.27    Subd. 4. Sales and use tax. (a) The taxes imposed by chapter 297A are due and 31.28payable to the commissioner monthly on or before the 20th day of the month following 31.29the month in which the taxable event occurred, or following another reporting period 31.30as the commissioner prescribes or as allowed under section 
         289A.18, subdivision 4, 31.31paragraph (f) or (g), except that:31.32(1) use taxes due on an annual use tax return as provided under section 
         289A.11, 31.33subdivision 1
         , are payable by April 15 following the close of the calendar year; and.31.34(2) except as provided in paragraph (f), for a vendor having a liability of $120,000 31.35or more during a fiscal year ending June 30, 2009, and fiscal years thereafter, the taxes 32.1imposed by chapter 297A, except as provided in paragraph (b), are due and payable to the 32.2commissioner monthly in the following manner:32.3(i) On or before the 14th day of the month following the month in which the taxable 32.4event occurred, the vendor must remit to the commissioner 90 percent of the estimated 32.5liability for the month in which the taxable event occurred.32.6(ii) On or before the 20th day of the month in which the taxable event occurs, the 32.7vendor must remit to the commissioner a prepayment for the month in which the taxable 32.8event occurs equal to 67 percent of the liability for the previous month.32.9(iii) On or before the 20th day of the month following the month in which the taxable 32.10event occurred, the vendor must pay any additional amount of tax not previously remitted 32.11under either item (i) or (ii ) or, if the payment made under item (i) or (ii) was greater than 32.12the vendor's liability for the month in which the taxable event occurred, the vendor may 32.13take a credit against the next month's liability in a manner prescribed by the commissioner.32.14(iv) Once the vendor first pays under either item (i) or (ii), the vendor is required to 32.15continue to make payments in the same manner, as long as the vendor continues having a 32.16liability of $120,000 or more during the most recent fiscal year ending June 30.32.17(v) Notwithstanding items (i), (ii), and (iv), if a vendor fails to make the required 32.18payment in the first month that the vendor is required to make a payment under either item 32.19(i) or (ii), then the vendor is deemed to have elected to pay under item (ii) and must make 32.20subsequent monthly payments in the manner provided in item (ii).32.21(vi) For vendors making an accelerated payment under item (ii), for the first month 32.22that the vendor is required to make the accelerated payment, on the 20th of that month, the 32.23vendor will pay 100 percent of the liability for the previous month and a prepayment for 32.24the first month equal to 67 percent of the liability for the previous month.32.25    (b) Notwithstanding paragraph (a), A vendor having a liability of $120,000 or more 32.26during a fiscal year ending June 30 must remit the June liability for the next year in the 32.27following manner:32.28    (1) Two business days before June 30 of the year, the vendor must remit 90 percent 32.29of the estimated June liability to the commissioner.32.30    (2) On or before August 20 of the year, the vendor must pay any additional amount 32.31of tax not remitted in June.32.32    (c) A vendor having a liability of:32.33    (1) $10,000 or more, but less than $120,000 during a fiscal year ending June 30, 32.342009, and fiscal years thereafter, must remit by electronic means all liabilities on returns 32.35due for periods beginning in the subsequent calendar year on or before the 20th day of 32.36the month following the month in which the taxable event occurred, or on or before the 33.120th day of the month following the month in which the sale is reported under section 33.2289A.18, subdivision 4
         ; or33.3(2) $120,000 or more, during a fiscal year ending June 30, 2009, and fiscal years 33.4thereafter, must remit by electronic means all liabilities in the manner provided in 33.5paragraph (a), clause (2), on returns due for periods beginning in the subsequent calendar 33.6year, except for 90 percent of the estimated June liability, which is due two business days 33.7before June 30. The remaining amount of the June liability is due on August 20.33.8(d) Notwithstanding paragraph (b) or (c), a person prohibited by the person's 33.9religious beliefs from paying electronically shall be allowed to remit the payment by mail. 33.10The filer must notify the commissioner of revenue of the intent to pay by mail before 33.11doing so on a form prescribed by the commissioner. No extra fee may be charged to a 33.12person making payment by mail under this paragraph. The payment must be postmarked 33.13at least two business days before the due date for making the payment in order to be 33.14considered paid on a timely basis.33.15(e) Whenever the liability is $120,000 or more separately for: (1) the tax imposed 33.16under chapter 297A; (2) a fee that is to be reported on the same return as and paid with the 33.17chapter 297A taxes; or (3) any other tax that is to be reported on the same return as and 33.18paid with the chapter 297A taxes, then the payment of all the liabilities on the return must 33.19be accelerated as provided in this subdivision.33.20(f) At the start of the first calendar quarter at least 90 days after the cash flow 33.21account established in section 16A.152, subdivision 1, and the budget reserve account 33.22established in section 16A.152, subdivision 1a, reach the amounts listed in section 33.2316A.152, subdivision 2, paragraph (a), the remittance of the accelerated payments required 33.24under paragraph (a), clause (2), must be suspended. The commissioner of management 33.25and budget shall notify the commissioner of revenue when the accounts have reached 33.26the required amounts. Beginning with the suspension of paragraph (a), clause (2), for a 33.27vendor with a liability of $120,000 or more during a fiscal year ending June 30, 2009, 33.28and fiscal years thereafter, the taxes imposed by chapter 297A are due and payable to the 33.29commissioner on the 20th day of the month following the month in which the taxable 33.30event occurred. Payments of tax liabilities for taxable events occurring in June under 33.31paragraph (b) are not changed.33.32EFFECTIVE DATE.This section is effective for taxes due and payable after 33.33July 1, 2011.33.34    Sec. 2. Minnesota Statutes 2010, section 297A.61, subdivision 3, is amended to read:34.1    Subd. 3. Sale and purchase. (a) "Sale" and "purchase" include, but are not limited 34.2to, each of the transactions listed in this subdivision.34.3    (b) Sale and purchase include:34.4    (1) any transfer of title or possession, or both, of tangible personal property, whether 34.5absolutely or conditionally, for a consideration in money or by exchange or barter; and34.6    (2) the leasing of or the granting of a license to use or consume, for a consideration 34.7in money or by exchange or barter, tangible personal property, other than a manufactured 34.8home used for residential purposes for a continuous period of 30 days or more.34.9    (c) Sale and purchase include the production, fabrication, printing, or processing of 34.10tangible personal property for a consideration for consumers who furnish either directly or 34.11indirectly the materials used in the production, fabrication, printing, or processing.34.12    (d) Sale and purchase include the preparing for a consideration of food. 34.13Notwithstanding section 
         297A.67, subdivision 2, taxable food includes, but is not limited 34.14to, the following:34.15    (1) prepared food sold by the retailer;34.16    (2) soft drinks;34.17    (3) candy;34.18    (4) dietary supplements; and34.19    (5) all food sold through vending machines.34.20    (e) A sale and a purchase includes the furnishing for a consideration of electricity, 34.21gas, water, or steam for use or consumption within this state.34.22    (f) A sale and a purchase includes the transfer for a consideration of prewritten 34.23computer software whether delivered electronically, by load and leave, or otherwise.34.24    (g) A sale and a purchase includes the furnishing for a consideration of the following 34.25services:34.26    (1) the privilege of admission to places of amusement, recreational areas, or athletic 34.27events, and the making available of amusement devices, tanning facilities, reducing 34.28salons, steam baths, Turkish baths, health clubs, and spas or athletic facilities;34.29    (2) lodging and related services by a hotel, rooming house, resort, campground, 34.30motel, or trailer camp, including furnishing the guest of the facility with access to 34.31telecommunication services, and the granting of any similar license to use real property 34.32in a specific facility, other than the renting or leasing of it for a continuous period of 34.3330 days or more under an enforceable written agreement that may not be terminated 34.34without prior notice;34.35    (3) nonresidential parking services, whether on a contractual, hourly, or other 34.36periodic basis, except for parking at a meter;35.1    (4) the granting of membership in a club, association, or other organization if:35.2    (i) the club, association, or other organization makes available for the use of its 35.3members sports and athletic facilities, without regard to whether a separate charge is 35.4assessed for use of the facilities; and35.5    (ii) use of the sports and athletic facility is not made available to the general public 35.6on the same basis as it is made available to members.35.7Granting of membership means both onetime initiation fees and periodic membership 35.8dues. Sports and athletic facilities include golf courses; tennis, racquetball, handball, and 35.9squash courts; basketball and volleyball facilities; running tracks; exercise equipment; 35.10swimming pools; and other similar athletic or sports facilities;35.11    (5) delivery of aggregate materials by a third party, excluding delivery of aggregate 35.12material used in road construction, and delivery of concrete block by a third party if 35.13the delivery would be subject to the sales tax if provided by the seller of the concrete 35.14block; and35.15    (6) services as provided in this clause:35.16    (i) laundry and dry cleaning services including cleaning, pressing, repairing, altering, 35.17and storing clothes, linen services and supply, cleaning and blocking hats, and carpet, 35.18drapery, upholstery, and industrial cleaning. Laundry and dry cleaning services do not 35.19include services provided by coin operated facilities operated by the customer;35.20    (ii) motor vehicle washing, waxing, and cleaning services, including services 35.21provided by coin operated facilities operated by the customer, and rustproofing, 35.22undercoating, and towing of motor vehicles;35.23    (iii) building and residential cleaning, maintenance, and disinfecting services and 35.24pest control and exterminating services;35.25    (iv) detective, security, burglar, fire alarm, and armored car services; but not 35.26including services performed within the jurisdiction they serve by off-duty licensed peace 35.27officers as defined in section 
         626.84, subdivision 1, or services provided by a nonprofit 35.28organization for monitoring and electronic surveillance of persons placed on in-home 35.29detention pursuant to court order or under the direction of the Minnesota Department 35.30of Corrections;35.31    (v) pet grooming services;35.32    (vi) lawn care, fertilizing, mowing, spraying and sprigging services; garden planting 35.33and maintenance; tree, bush, and shrub pruning, bracing, spraying, and surgery; indoor 35.34plant care; tree, bush, shrub, and stump removal, except when performed as part of a land 35.35clearing contract as defined in section 
         297A.68, subdivision 40; and tree trimming for 36.1public utility lines. Services performed under a construction contract for the installation of 36.2shrubbery, plants, sod, trees, bushes, and similar items are not taxable;36.3    (vii) massages, except when provided by a licensed health care facility or 36.4professional or upon written referral from a licensed health care facility or professional for 36.5treatment of illness, injury, or disease; and36.6    (viii) the furnishing of lodging, board, and care services for animals in kennels and 36.7other similar arrangements, but excluding veterinary and horse boarding services.36.8    In applying the provisions of this chapter, the terms "tangible personal property" 36.9and "retail sale" include taxable services listed in clause (6), items (i) to (vi) and (viii), 36.10and the provision of these taxable services, unless specifically provided otherwise. 36.11Services performed by an employee for an employer are not taxable. Services performed 36.12by a partnership or association for another partnership or association are not taxable if 36.13one of the entities owns or controls more than 80 percent of the voting power of the 36.14equity interest in the other entity. Services performed between members of an affiliated 36.15group of corporations are not taxable. For purposes of the preceding sentence, "affiliated 36.16group of corporations" means those entities that would be classified as members of an 36.17affiliated group as defined under United States Code, title 26, section 1504, disregarding 36.18the exclusions in section 1504(b).36.19    For purposes of clause (5), "road construction" means construction of (1) public 36.20roads, (2) cartways, and (3) private roads in townships located outside of the seven-county 36.21metropolitan area up to the point of the emergency response location sign.36.22    (h) A sale and a purchase includes the furnishing for a consideration of tangible 36.23personal property or taxable services by the United States or any of its agencies or 36.24instrumentalities, or the state of Minnesota, its agencies, instrumentalities, or political 36.25subdivisions.36.26    (i) A sale and a purchase includes the furnishing for a consideration of 36.27telecommunications services, ancillary services associated with telecommunication 36.28services, cable television services, and direct satellite services, and ring tones. 36.29Telecommunication services include, but are not limited to, the following services, 36.30as defined in section 
         297A.669: air-to-ground radiotelephone service, mobile 36.31telecommunication service, postpaid calling service, prepaid calling service, prepaid 36.32wireless calling service, and private communication services. The services in this 36.33paragraph are taxed to the extent allowed under federal law.36.34    (j) A sale and a purchase includes the furnishing for a consideration of installation if 36.35the installation charges would be subject to the sales tax if the installation were provided 36.36by the seller of the item being installed.37.1    (k) A sale and a purchase includes the rental of a vehicle by a motor vehicle dealer 37.2to a customer when (1) the vehicle is rented by the customer for a consideration, or (2) 37.3the motor vehicle dealer is reimbursed pursuant to a service contract as defined in section 37.459B.02, subdivision
          11.37.5EFFECTIVE DATE.This section is effective for sales and purchases made after 37.6June 30, 2011.37.7    Sec. 3. Minnesota Statutes 2010, section 297A.62, is amended by adding a subdivision 37.8to read:37.9    Subd. 5.Transitional period for services.When there is a change in the rate of tax 37.10imposed by this section, the following transitional period shall apply to the retail sale of 37.11services covering a billing period starting before and ending after the statutory effective 37.12date of the rate change:37.13(1) for a rate increase, the new rate shall apply to the first billing period starting 37.14on or after the effective date; and37.15(2) for a rate decrease, the new rate shall apply to bills rendered on or after the 37.16effective date.37.17EFFECTIVE DATE.This section is effective the day following final enactment.37.18    Sec. 4. Minnesota Statutes 2010, section 297A.63, is amended by adding a subdivision 37.19to read:37.20    Subd. 3.Transitional period for services.When there is a change in the rate of 37.21tax imposed by this section, the following transitional period shall apply to the taxable 37.22services purchased for use, storage, distribution, or consumption in this state when the 37.23service purchased covers a billing period starting before and ending after the statutory 37.24effective date of the rate change:37.25(1) for a rate increase, the new rate shall apply to the first billing period starting 37.26on or after the effective date; and37.27(2) for a rate decrease, the new rate shall apply to bills rendered on or after the 37.28effective date.37.29EFFECTIVE DATE.This section is effective the day following final enactment.37.30    Sec. 5. Minnesota Statutes 2010, section 297A.668, subdivision 7, is amended to read:37.31    Subd. 7. Advertising and promotional direct mail. (a) Notwithstanding other 37.32subdivisions of this section, the provisions in paragraphs (b) to (e) apply to the sale of 38.1advertising and promotional direct mail. "Advertising and promotional direct mail" means 38.2printed material that is direct mail as defined in section 297A.61, subdivision 35, the 38.3primary purpose of which is to attract public attention to a product, person, business, or 38.4organization, or to attempt to sell, popularize, or secure financial support for a person, 38.5business, organization, or product. "Product" includes tangible personal property, a digital 38.6product transferred electronically, or a service.38.7(b) A purchaser of advertising and promotional direct mail that is not a holder of 38.8a direct pay permit shall provide to the seller, in conjunction with the purchase, either a 38.9direct mail form or may provide the seller with either:38.10(1) a fully completed exemption certificate as described in section 297A.72 38.11indicating that the purchaser is authorized to pay any sales or use tax due on purchases 38.12made by the purchaser directly to the commissioner under section 297A.89;38.13(2) a fully completed exemption certificate claiming an exemption for direct mail; or38.14(3) information to show showing the jurisdictions to which the advertising and 38.15promotional direct mail is to be delivered to recipients.38.16(1) Upon receipt of the direct mail form, (c) In the absence of bad faith, if the 38.17purchaser provides one of the exemption certificates indicated in paragraph (b), clauses (1) 38.18and (2), the seller is relieved of all obligations to collect, pay, or remit the applicable tax 38.19and the purchaser is obligated to pay or remit the applicable tax on a direct pay basis. A 38.20direct mail form remains in effect for all future sales of direct mail by the seller to the 38.21purchaser until it is revoked in writing. tax on any transaction involving advertising and 38.22promotional direct mail to which the certificate applies. The purchaser shall source the 38.23sale to the jurisdictions to which the advertising and promotional direct mail is to be 38.24delivered to the recipients of the mail, and shall report and pay any applicable tax due.38.25(2) Upon receipt of (d) If the purchaser provides the seller information from the 38.26purchaser showing the jurisdictions to which the advertising and promotional direct mail 38.27is to be delivered to recipients, the seller shall source the sale to the jurisdictions to which 38.28the advertising and promotional direct mail is to be delivered and shall collect and remit38.29the applicable tax according to the delivery information provided by the purchaser. In 38.30the absence of bad faith, the seller is relieved of any further obligation to collect any 38.31additional tax on any transaction for which the sale of advertising and promotional direct 38.32mail where the seller has collected tax pursuant sourced the sale according to the delivery 38.33information provided by the purchaser.38.34(b) (e) If the purchaser of direct mail does not have a direct pay permit and does 38.35not provide the seller with either a direct mail form or delivery information, as required 38.36by paragraph (a), the seller shall collect the tax according to any of the items listed in 39.1paragraph (b), the sale shall be sourced under subdivision 2, paragraph (f). Nothing in 39.2this paragraph limits a purchaser's obligation for sales or use tax to any state to which the 39.3direct mail is delivered.39.4(c) If a purchaser of direct mail provides the seller with documentation of direct 39.5pay authority, the purchaser is not required to provide a direct mail form or delivery 39.6information to the seller.39.7(f) This subdivision does not apply to printed materials that result from developing 39.8billing information or providing any data processing service that is more than incidental 39.9to producing the printed materials, regardless of whether advertising and promotional 39.10direct mail is included in the same mailing.39.11(g) If a transaction is a bundled transaction that includes advertising and promotional 39.12direct mail, this subdivision applies only if the primary purpose of the transaction is the sale 39.13of products or services that meet the definition of advertising and promotional direct mail.39.14EFFECTIVE DATE.This section is effective for sales and purchases made after 39.15June 30, 2011.39.16    Sec. 6. Minnesota Statutes 2010, section 297A.668, is amended by adding a 39.17subdivision to read:39.18    Subd. 7a.Other direct mail.(a) Notwithstanding other subdivisions of this section, 39.19the provisions in paragraphs (b) and (c) apply to the sale of other direct mail. "Other direct 39.20mail" means printed material that is direct mail as defined in section 297A.61, subdivision 39.2135, but is not advertising and promotional direct mail as described in subdivision 7, 39.22regardless of whether advertising and promotional direct mail is included in the same 39.23mailing. Other direct mail includes, but is not limited to:39.24(1) direct mail pertaining to a transaction between the purchaser and addressee, 39.25where the mail contains personal information specific to the addressee including, but not 39.26limited to, invoices, bills, statements of account, and payroll advices;39.27(2) any legally required mailings including, but not limited to, privacy notices, 39.28tax reports, and stockholder reports; and39.29(3) other nonpromotional direct mail delivered to existing or former shareholders, 39.30customers, employees, or agents including, but not limited to, newsletters and 39.31informational pieces.39.32Other direct mail does not include printed materials that result from developing 39.33billing information or providing any data processing service that is more than incidental to 39.34producing the other direct mail.40.1(b) A purchaser of other direct mail may provide the seller with either a fully 40.2completed exemption certificate as described in section 297A.72 indicating that the 40.3purchaser is authorized to pay any sales or use tax due on purchases made by the purchaser 40.4directly to the commissioner under section 297A.89, or a fully completed exemption 40.5certificate claiming an exemption for direct mail. If the purchaser provides one of the 40.6exemption certificates listed, then the seller, in the absence of bad faith, is relieved of all 40.7obligations to collect, pay, or remit the tax on any transaction involving other direct mail 40.8to which the certificate applies. The purchaser shall source the sale to the jurisdictions to 40.9which the other direct mail is to be delivered to the recipients of the mail, and shall report 40.10and pay any applicable tax due.40.11(c) If the purchaser does not provide the seller with a fully completed exemption 40.12certificate claiming either exemption listed in paragraph (b), the sale shall be sourced 40.13according to subdivision 2, paragraph (d).40.14EFFECTIVE DATE.This section is effective for sales and purchases made after 40.15June 30, 2011.40.16    Sec. 7. Minnesota Statutes 2010, section 297A.68, is amended by adding a subdivision 40.17to read:40.18    Subd. 42.Resold admission tickets.(a) When a ticket reseller who purchased 40.19a ticket from a seller who is in the business of selling tickets resells the ticket, the 40.20ticket reseller must charge tax on the total amount for which the ticket is resold and the 40.21following rules apply:40.22(1) if the ticket reseller did not use a fully completed exemption certificate to claim 40.23the exemption from tax for resale, but instead paid tax on the original purchase, then the 40.24ticket reseller may do one of the following:40.25(i) seek a refund of that tax under section 289A.50; or40.26(ii) pass through to the purchaser the amount of the tax the ticket reseller paid on 40.27the original purchase, by giving the purchaser credit for the Minnesota state and local tax 40.28paid by the ticket reseller on the ticket reseller's original purchase of the ticket. Credit 40.29for the tax cannot exceed either the sales tax paid on the original price of the ticket or the 40.30sales tax charged by the ticket reseller to the final purchaser;40.31(2) if the ticket reseller did not pay tax on the original purchase, tax is due on the full 40.32amount of the ticket when resold, without a credit given to the final purchaser; or40.33(3) the ticket reseller must retain records documenting the price and tax paid by the 40.34ticket reseller when purchasing the ticket and the price and tax collected when the ticket 40.35reseller resells the ticket.41.1(b) When a ticket reseller who purchased a ticket from a seller who is not in the 41.2business of selling tickets resells the ticket, the ticket reseller must charge tax on the total 41.3amount for which the ticket is resold and the following rules apply:41.4(1) the ticket reseller may credit its purchaser an amount equal to the tax the ticket 41.5reseller would have paid its seller, had the seller been registered to collect tax on its 41.6sale of the ticket to the ticket reseller. Credit for the tax cannot exceed either the sales 41.7tax paid on the original price of the ticket or the sales tax charged by the ticket reseller 41.8to the final purchaser. It is presumed that the original purchase price of the ticket is the 41.9face amount of the ticket;41.10(2) if no tax was paid on the original purchase, tax is due on the full amount of the 41.11ticket when resold, without a credit given to the ticket reseller's purchaser; and41.12(3) the ticket reseller must retain records documenting the price and tax paid by the 41.13ticket reseller when purchasing the ticket and the price and tax collected when the ticket 41.14reseller resells the ticket.41.15(c) For purposes of this subdivision, "ticket reseller" means a person who:41.16(1) purchases admission tickets to a sporting event, theater, musical performance, or 41.17place of public entertainment or amusement of any kind;41.18(2) resells admission tickets to events under clause (1); and41.19(3) is registered to collect tax under this chapter.41.20EFFECTIVE DATE.This section is effective for sales and purchases made after 41.21June 30, 2011.41.22    Sec. 8. Minnesota Statutes 2010, section 297A.70, subdivision 1, is amended to read:41.23    Subdivision 1. Scope. (a) To the extent provided in this section, the gross receipts 41.24from sales of items to or by, and storage, distribution, use, or consumption of items by the 41.25organizations or units of local government listed in this section are specifically exempted 41.26from the taxes imposed by this chapter.41.27(b) Notwithstanding any law to the contrary enacted before 1992, only sales to 41.28governments and political subdivisions listed in this section are exempt from the taxes 41.29imposed by this chapter.41.30(c) "Sales" includes purchases under an installment contract or lease purchase 41.31agreement under section 
         465.71.41.32EFFECTIVE DATE.This section is effective for sales and purchases made after 41.33June 30, 2011.42.1    Sec. 9. Minnesota Statutes 2010, section 297A.70, subdivision 2, is amended to read:42.2    Subd. 2. Sales to government. (a) All sales, except those listed in paragraph (b), 42.3to the following governments and political subdivisions, or to the listed agencies or 42.4instrumentalities of governments and political subdivisions, are exempt:42.5(1) the United States and its agencies and instrumentalities;42.6(2) school districts, the University of Minnesota, state universities, community 42.7colleges, technical colleges, state academies, the Perpich Minnesota Center for Arts 42.8Education, and an instrumentality of a political subdivision that is accredited as an 42.9optional/special function school by the North Central Association of Colleges and Schools;42.10(3) hospitals and nursing homes owned and operated by political subdivisions of 42.11the state of tangible personal property and taxable services used at or by hospitals and 42.12nursing homes;42.13(4) the Metropolitan Council, for its purchases of vehicles and repair parts to equip 42.14operations provided for in section 
         473.4051;42.15(5) other states or political subdivisions of other states, if the sale would be exempt 42.16from taxation if it occurred in that state; and42.17(6) sales to public libraries, public library systems, multicounty, multitype library 42.18systems as defined in section 
         134.001, county law libraries under chapter 134A, state 42.19agency libraries, the state library under section 
         480.09, and the Legislative Reference 42.20Library; and42.21(7) towns.42.22(b) This exemption does not apply to the sales of the following products and services:42.23(1) building, construction, or reconstruction materials purchased by a contractor 42.24or a subcontractor as a part of a lump-sum contract or similar type of contract with a 42.25guaranteed maximum price covering both labor and materials for use in the construction, 42.26alteration, or repair of a building or facility;42.27(2) construction materials purchased by tax exempt entities or their contractors to 42.28be used in constructing buildings or facilities which will not be used principally by the 42.29tax exempt entities;42.30(3) the leasing of a motor vehicle as defined in section 
         297B.01, subdivision 11, 42.31except for leases entered into by the United States or its agencies or instrumentalities; or42.32(4) lodging as defined under section 
         297A.61, subdivision 3, paragraph (g), 42.33clause (2), and prepared food, candy, soft drinks, and alcoholic beverages as defined in 42.34section 
         297A.67, subdivision 2, except for lodging, prepared food, candy, soft drinks, 42.35and alcoholic beverages purchased directly by the United States or its agencies or 42.36instrumentalities; or 43.1(5) goods or services purchased by a town that are generally provided by a private 43.2business and the purchases would be taxable if made by a private business engaged in the 43.3same activity.43.4(c) As used in this subdivision, "school districts" means public school entities and 43.5districts of every kind and nature organized under the laws of the state of Minnesota, and 43.6any instrumentality of a school district, as defined in section 
         471.59.43.7(d) As used in this subdivision, "goods or services generally provided by a private 43.8business" include, but are not limited to, goods or services provided by liquor stores, gas 43.9and electric utilities, golf courses, marinas, health and fitness centers, campgrounds, cafes, 43.10and laundromats. "Goods or services generally provided by a private business" do not 43.11include housing services, sewer and water services, wastewater treatment, ambulance and 43.12other public safety services, correctional services, chore or homemaking services provided 43.13to elderly or disabled individuals, or road and street maintenance or lighting.43.14EFFECTIVE DATE.This section is effective for sales and purchases made after 43.15June 30, 2011.43.16    Sec. 10. Minnesota Statutes 2010, section 297A.70, subdivision 3, is amended to read:43.17    Subd. 3. Sales of certain goods and services to government. (a) The following 43.18sales to or use by the specified governments and political subdivisions of the state are 43.19exempt:43.20    (1) repair and replacement parts for emergency rescue vehicles, fire trucks, and 43.21fire apparatus to a political subdivision;43.22    (2) machinery and equipment, except for motor vehicles, used directly for mixed 43.23municipal solid waste management services at a solid waste disposal facility as defined in 43.24section 
         115A.03, subdivision 10;43.25    (3) chore and homemaking services to a political subdivision of the state to be 43.26provided to elderly or disabled individuals;43.27    (4) telephone services to the Office of Enterprise Technology that are used to provide 43.28telecommunications services through the enterprise technology revolving fund;43.29    (5) firefighter personal protective equipment as defined in paragraph (b), if purchased 43.30or authorized by and for the use of an organized fire department, fire protection district, or 43.31fire company regularly charged with the responsibility of providing fire protection to the 43.32state or a political subdivision;43.33    (6) bullet-resistant body armor that provides the wearer with ballistic and trauma 43.34protection, if purchased by a law enforcement agency of the state or a political subdivision 43.35of the state, or a licensed peace officer, as defined in section 
         626.84, subdivision 1;44.1    (7) motor vehicles purchased or leased by political subdivisions of the state if the 44.2vehicles are exempt from registration under section 
         168.012, subdivision 1, paragraph (b), 44.3exempt from taxation under section 
         473.448, or exempt from the motor vehicle sales tax 44.4under section 
         297B.03, clause (12);44.5    (8) equipment designed to process, dewater, and recycle biosolids for wastewater 44.6treatment facilities of political subdivisions, and materials incidental to installation of 44.7that equipment;44.8    (9) sales to a town of gravel and of machinery, equipment, and accessories, except 44.9motor vehicles, used exclusively for road and bridge maintenance, and leases by a town of 44.10motor vehicles exempt from tax under section 297B.03, clause (10);44.11    (10) the removal of trees, bushes, or shrubs for the construction and maintenance 44.12of roads, trails, or firebreaks when purchased by an agency of the state or a political 44.13subdivision of the state; and44.14    (11) (10) purchases by the Metropolitan Council or the Department of Transportation 44.15of vehicles and repair parts to equip operations provided for in section 
         174.90, including, 44.16but not limited to, the Northstar Corridor Rail project.; and44.17(11) purchases of water used directly in providing public safety services by an 44.18organized fire department, fire protection district, or fire company regularly charged with 44.19the responsibility of providing fire protection to the state or a political subdivision.44.20    (b) For purposes of this subdivision, "firefighters personal protective equipment" 44.21means helmets, including face shields, chin straps, and neck liners; bunker coats and 44.22pants, including pant suspenders; boots; gloves; head covers or hoods; wildfire jackets; 44.23protective coveralls; goggles; self-contained breathing apparatus; canister filter masks; 44.24personal alert safety systems; spanner belts; optical or thermal imaging search devices; 44.25and all safety equipment required by the Occupational Safety and Health Administration.44.26    (c) For purchases of items listed in paragraph (a), clause (11), the tax must be 44.27imposed and collected as if the rate under section 
         297A.62, subdivision 1, applied and 44.28then refunded in the manner provided in section 
         297A.75.44.29EFFECTIVE DATE.This section is effective for sales and purchases made after 44.30June 30, 2011, except that the new clause (11) is effective retroactively for sales and 44.31purchases made after June 30, 2007; however, for purposes of the new clause (11), 44.32no refunds may be made for amounts already paid on water purchased between June 44.3330, 2007, and January 30, 2010.44.34    Sec. 11. Minnesota Statutes 2010, section 297A.70, subdivision 8, is amended to read:45.1    Subd. 8. Regionwide Public safety radio communication system systems; 45.2products and services. Products and services including, but not limited to, end user 45.3equipment used for construction, ownership, operation, maintenance, and enhancement 45.4of the backbone system of the regionwide public safety radio communication system 45.5established under sections 403.21 to 403.40 systems, including public safety radio 45.6dispatch centers, are exempt. For purposes of this subdivision, backbone system is defined 45.7in section 403.21, subdivision 9. This subdivision is effective for purchases, sales, storage, 45.8use, or consumption for use in the first and second phases of the system, as defined in 45.9section 403.21, subdivisions 3, 10, and 11, that portion of the third phase of the system that 45.10is located in the southeast district of the State Patrol and the counties of Benton, Sherburne, 45.11Stearns, and Wright, and that portion of the system that is located in Itasca County.45.12EFFECTIVE DATE.This section is effective for sales and purchases made after 45.13December 31, 2009. After July 1, 2013, purchasers may apply for a refund of tax paid for 45.14qualifying purchases under this subdivision made after December 31, 2009, and before 45.15July 1, 2013, in the manner provided in section 297A.75.45.16    Sec. 12. Minnesota Statutes 2010, section 297A.75, subdivision 1, is amended to read:45.17    Subdivision 1. Tax collected. The tax on the gross receipts from the sale of the 45.18following exempt items must be imposed and collected as if the sale were taxable and the 45.19rate under section 
         297A.62, subdivision 1, applied. The exempt items include:45.20    (1) capital equipment exempt under section 
         297A.68, subdivision 5;45.21    (2) building materials for an agricultural processing facility exempt under section 45.22297A.71, subdivision 13
         ;45.23    (3) building materials for mineral production facilities exempt under section 45.24297A.71, subdivision 14
         ;45.25    (4) building materials for correctional facilities under section 
         297A.71, subdivision 45.263
         ;45.27    (5) building materials used in a residence for disabled veterans exempt under section 45.28297A.71, subdivision 11
         ;45.29    (6) elevators and building materials exempt under section 
         297A.71, subdivision 12;45.30    (7) building materials for the Long Lake Conservation Center exempt under section 45.31297A.71, subdivision 17
         ;45.32    (8) materials and supplies for qualified low-income housing under section 
         297A.71, 45.33subdivision 23
         ;45.34    (9) materials, supplies, and equipment for municipal electric utility facilities under 45.35section 
         297A.71, subdivision 35;46.1    (10) equipment and materials used for the generation, transmission, and distribution 46.2of electrical energy and an aerial camera package exempt under section 
         297A.68, 46.3subdivision 37;46.4    (11) tangible personal property and taxable services and construction materials, 46.5supplies, and equipment exempt under section 
         297A.68, subdivision 41;46.6    (12) commuter rail vehicle and repair parts under section 
         297A.70, subdivision 46.73, clause (11);46.8    (13) materials, supplies, and equipment for construction or improvement of projects 46.9and facilities under section 
         297A.71, subdivision 40;46.10(14) materials, supplies, and equipment for construction or improvement of a meat 46.11processing facility exempt under section 
         297A.71, subdivision 41; and46.12(15) materials, supplies, and equipment for construction, improvement, or expansion 46.13of an aerospace defense manufacturing facility exempt under section 
         297A.71, subdivision 46.1442; and46.15(16) products and services for a regionwide public safety radio communication 46.16system exempt under section 297A.70, subdivision 8, purchased after December 31, 46.172009, and before July 1, 2013.46.18EFFECTIVE DATE.This section is effective for sales and purchases made after 46.19December 31, 2009. After July 1, 2013, purchasers may apply for a refund of tax paid for 46.20qualifying purchases under this subdivision made after December 31, 2009, and before 46.21July 1, 2013, in the manner provided in section 297A.75.46.22    Sec. 13. Minnesota Statutes 2010, section 297A.75, subdivision 2, is amended to read:46.23    Subd. 2. Refund; eligible persons. Upon application on forms prescribed by the 46.24commissioner, a refund equal to the tax paid on the gross receipts of the exempt items 46.25must be paid to the applicant. Only the following persons may apply for the refund:46.26    (1) for subdivision 1, clauses (1) to (3), the applicant must be the purchaser;46.27    (2) for subdivision 1, clauses (4) and (7), the applicant must be the governmental 46.28subdivision;46.29    (3) for subdivision 1, clause (5), the applicant must be the recipient of the benefits 46.30provided in United States Code, title 38, chapter 21;46.31    (4) for subdivision 1, clause (6), the applicant must be the owner of the homestead 46.32property;46.33    (5) for subdivision 1, clause (8), the owner of the qualified low-income housing 46.34project;47.1    (6) for subdivision 1, clause (9), the applicant must be a municipal electric utility or 47.2a joint venture of municipal electric utilities;47.3    (7) for subdivision 1, clauses (10), (11), (14), and (15), the owner of the qualifying 47.4business; and47.5    (8) for subdivision 1, clauses (12) and, (13), and (16), the applicant must be the 47.6governmental entity that owns or contracts for the project or facility.47.7EFFECTIVE DATE.This section is effective for sales and purchases made after 47.8December 31, 2009. After July 1, 2013, purchasers may apply for a refund of tax paid for 47.9qualifying purchases under this subdivision made after December 31, 2009, and before 47.10July 1, 2013, in the manner provided in section 297A.75.47.11    Sec. 14. Minnesota Statutes 2010, section 297A.75, subdivision 3, is amended to read:47.12    Subd. 3. Application. (a) The application must include sufficient information 47.13to permit the commissioner to verify the tax paid. If the tax was paid by a contractor, 47.14subcontractor, or builder, under subdivision 1, clause (4), (5), (6), (7), (8), (9), (10), (11), 47.15(12), (13), (14), or (15), or (16), the contractor, subcontractor, or builder must furnish to 47.16the refund applicant a statement including the cost of the exempt items and the taxes paid 47.17on the items unless otherwise specifically provided by this subdivision. The provisions of 47.18sections 
         289A.40 and 
         289A.50 apply to refunds under this section.47.19    (b) An applicant may not file more than two applications per calendar year for 47.20refunds for taxes paid on capital equipment exempt under section 
         297A.68, subdivision 5.47.21    (c) Total refunds for purchases of items in section 
         297A.71, subdivision 40, must not 47.22exceed $5,000,000 in fiscal years 2010 and 2011. Applications for refunds for purchases 47.23of items in sections 
         297A.70, subdivision 3, paragraph (a), clause (11), and 
         297A.71, 47.24subdivision 40, must not be filed until after June 30, 2009.47.25EFFECTIVE DATE.This section is effective for sales and purchases made after 47.26December 31, 2009. After July 1, 2013, purchasers may apply for a refund of tax paid for 47.27qualifying purchases under this subdivision made after December 31, 2009, and before 47.28July 1, 2013, in the manner provided in section 297A.75.47.29    Sec. 15. Minnesota Statutes 2010, section 297A.82, subdivision 4, is amended to read:47.30    Subd. 4. Exemptions. (a) The following transactions are exempt from the tax 47.31imposed in this chapter to the extent provided.48.1(b) The purchase or use of aircraft previously registered in Minnesota by a 48.2corporation or partnership is exempt if the transfer constitutes a transfer within the 48.3meaning of section 351 or 721 of the Internal Revenue Code.48.4(c) The sale to or purchase, storage, use, or consumption by a licensed aircraft dealer 48.5of an aircraft for which a commercial use permit has been issued pursuant to section 48.6360.654
          is exempt, if the aircraft is resold while the permit is in effect. 48.7(d) Airflight equipment when sold to, or purchased, stored, used, or consumed by 48.8airline companies, as defined in section 
         270.071, subdivision 4, is exempt. For purposes of 48.9this subdivision, "airflight equipment" includes airplanes and parts necessary for the repair 48.10and maintenance of such airflight equipment, and flight simulators, but does not include 48.11airplanes with a gross weight of less than 30,000 pounds that are used on intermittent or 48.12irregularly timed flights. 48.13(e) Sales of, and the storage, distribution, use, or consumption of aircraft, as defined 48.14in section 
         360.511 and approved by the Federal Aviation Administration, and which the 48.15seller delivers to a purchaser outside Minnesota or which, without intermediate use, is 48.16shipped or transported outside Minnesota by the purchaser are exempt, but only if the 48.17purchaser is not a resident of Minnesota and provided that the aircraft is not thereafter 48.18returned to a point within Minnesota, except in the course of interstate commerce or 48.19isolated and occasional use, and will be registered in another state or country upon its 48.20removal from Minnesota. This exemption applies even if the purchaser takes possession of 48.21the aircraft in Minnesota and uses the aircraft in the state exclusively for training purposes 48.22for a period not to exceed ten days prior to removing the aircraft from this state. 48.23(f) The sale or purchase of aircraft and aircraft equipment, including parts necessary 48.24for repair and maintenance of such airflight equipment, as defined under Federal Aviation 48.25Regulations, Part 135, that has a maximum certified takeoff weight of 6,000 pounds or 48.26more are exempt.48.27EFFECTIVE DATE.This section is effective for sales and purchases made after 48.28June 30, 2011.48.29    Sec. 16.  REPEALER.48.30Minnesota Statutes 2010, section 289A.60, subdivision 31, is repealed.48.31EFFECTIVE DATE.This section is effective for taxes due and payable after 48.32July 1, 2011.49.1ARTICLE 449.2ECONOMIC DEVELOPMENT49.3    Section 1. [116W.25] CITATION.49.4Sections 116W.26 to 116W.34 may be cited as the "Minnesota science and 49.5technology program." 49.6    Sec. 2. [116W.26] DEFINITIONS.49.7    Subdivision 1.Applicability.For the purposes of sections 116W.26 to 116W.34, 49.8the terms in this section have the meanings given them. 49.9    Subd. 2.Authority."Authority" means the Minnesota Science and Technology 49.10Authority established under this chapter. 49.11    Subd. 3.College or university."College or university" means an institution of 49.12postsecondary education, public or private, that grants undergraduate or postgraduate 49.13academic degrees, conducts significant research or development activities in the areas of 49.14science and technology.49.15    Subd. 4.Commercialization."Commercialization" means any of the full spectrum 49.16of activities required for a new technology, product, or process to be developed from 49.17its basic research of conceptual stage through applied research or development to the 49.18marketplace including, without limitation, the steps leading up to and including licensure, 49.19sales, and services.49.20    Subd. 5.Commercialized research project."Commercialized research project" 49.21means research conducted within a college or university or nonprofit research institution 49.22or by a qualified science and technology company that has shown advanced commercial 49.23potential through license agreements, patents, or other forms of invention disclosure, and 49.24by which a qualified science and technology company has been or is being currently 49.25formed. 49.26    Subd. 6.Fund."Fund" means the Minnesota science and technology fund.49.27    Subd. 7.Nonprofit research institution."Nonprofit research institution" means an 49.28entity with its principle place of business in Minnesota, that qualifies under section 501(c) 49.29of the Internal Revenue Code, and that conducts significant research or development 49.30activities in this state in the areas of science and technology.49.31    Subd. 8.Program."Program" means the Minnesota science and technology 49.32program.49.33    Subd. 9.Qualified science and technology company."Qualified science and 49.34technology company" means a corporation, limited liability company, S corporation, 49.35partnership, limited liability partnership, or sole proprietorship with fewer than 100 50.1employees that is engaged in research, development, or production of science or 50.2technology in this state including, without limitation, research, development, or production 50.3directed toward developing or providing science and technology products, processes, or 50.4services for specific commercial or public purposes.50.5    Sec. 3. [116W.27] MINNESOTA SCIENCE AND TECHNOLOGY FUND.50.6A Minnesota science and technology fund is created in the state treasury. The fund 50.7is a direct-appropriated special revenue fund. Money of the authority must be paid to the 50.8commissioner of management and budget as agent of the authority and the commissioner 50.9shall not commingle the money with other money. The money in the fund must be paid out 50.10only on warrants drawn by the commissioner of management and budget on requisition of 50.11the executive director of the authority or designee.50.12    Sec. 4. [116W.28] MINNESOTA SCIENCE AND TECHNOLOGY FUND; 50.13AUTHORIZED USES.50.14The Minnesota science and technology fund may be used for the following to:50.15(1) establish the commercialized research program authorized under section 50.16116W.29;50.17(2) establish the federal research and development support program under section 50.18116W.30;50.19(3) establish the industry technology and competitiveness program under section 50.20116W.31; and 50.21(4) carry out the powers of the authority authorized under sections 116W.04 and 50.22116W.32 that are in support of the programs in clauses (1) to (3).50.23    Sec. 5. [116W.29] COMMERCIALIZED RESEARCH PROGRAM.50.24(a) The authority may establish a commercialized research program. The purpose of 50.25the program is to accelerate the commercialization of science and technology products, 50.26processes, or services from colleges or universities, nonprofit research institutions or 50.27qualified science and technology companies that lead to an increase in science and 50.28technology businesses and jobs. The program shall:50.29(1) provide science and technology gap funding of up to $250,000 per science and 50.30technology research project to assist in the commercialization and transfer of science and 50.31technology research projects from a college or university or nonprofit research institution 50.32to a qualified science and technology company; and51.1(2) provide funding of up to $250,000 for early stage development for qualified 51.2science and technology companies to conduct commercialized research projects.51.3(b) All activities under the commercialized research program must require:51.4(1) written criteria set by the authority for the application, award, and use of the 51.5funds;51.6(2) matching funds by the participating qualified science and technology company, 51.7college or university, or nonprofit research institution;51.8(3) no more than 15 percent of the funds awarded by the authority may be used 51.9for overhead costs; and51.10(4) a report by the participating qualified science and technology company, college 51.11or university, or nonprofit research institution that provides documentation of the use of 51.12funds and outcomes of the award. The report must be submitted to the authority within 51.13one calendar year of the date of the award.51.14    Sec. 6. [116W.30] FEDERAL RESEARCH AND DEVELOPMENT SUPPORT 51.15PROGRAM.51.16The authority may establish a federal research and development support program. 51.17The purpose of the program is to increase and coordinate efforts to procure federal funding 51.18for research projects of primary benefit to qualified science and technology companies, 51.19colleges or universities, and nonprofit research institutions. The program shall:51.20(1) develop and execute a strategy to identify specific federal agencies and programs 51.21that support the growth of science and technology industries in this state; and51.22(2) provide grants to qualified science and technology companies:51.23(i) to assist in the development of federal Small Business Innovation (SBIR) or 51.24Small Business Technology Transfer (STTR) proposals; and51.25(ii) to match funds received through SBIR or STTR awards. No more than 51.26$1,500,000 may be awarded in a year for matching grants under this clause.51.27    Sec. 7. [116W.31] INDUSTRY INNOVATION AND COMPETITIVENESS 51.28PROGRAM.51.29(a) The authority may establish an industry technology and competitiveness program. 51.30The purpose of the program is to advance the technological capacity and competitiveness 51.31of existing and emerging science and technology industries. The program shall:51.32(1) provide matching funds to programs and organizations that assist entrepreneurs 51.33in starting and growing qualified science and technology companies including, but not 52.1limited to, matching funds for mentoring programs, consulting and technical services, 52.2and related activities;52.3(2) fund initiatives that retain engineering, science, technology, and mathematical 52.4occupations in the state including, but not limited to, internships, mentoring, and support 52.5of industry and professional organizations; and52.6(3) fund initiatives that support the growth of targeted industry clusters and the 52.7competitiveness of existing qualified science and technology companies in developing 52.8and marketing new products and services.52.9(b) All activities under the industry innovation and competitiveness program shall 52.10require:52.11(i) written criteria set by the authority for the application, award, and use of the funds;52.12(ii) matching funds by the participating qualified science and technology company, 52.13college or university, or nonprofit research institution; and52.14(iii) a report by the participating qualified science and technology company, college 52.15or university, or nonprofit research institution providing documentation on the use of the 52.16funds and outcomes of the award. The report must be submitted to the authority within 52.17one calendar year from the date of the award.52.18    Sec. 8. [116W.32] MINNESOTA SCIENCE AND TECHNOLOGY AUTHORITY; 52.19POWERS UNDER FUND.52.20    Subdivision 1.General powers.The authority shall have all of the powers 52.21necessary to carry out the purposes and provisions of sections 116W.26 to 116W.34, 52.22including, but not limited to, those provided under section 116W.04 and the following:52.23(1) The authority may make awards in the forms of grants or loans, and charge and 52.24receive a reasonable interest for the loans, or take an equity position in form of stock, a 52.25convertible note, or other securities in consideration of an award. Interests, revenues, or 52.26other proceeds received as a result of a transaction authorized by use of this fund shall be 52.27deposited to the corpus of the fund and used in the same manner as the corpus of the fund.52.28(2) In awarding money from the fund, priority shall be given to proposals from 52.29qualified science and technology companies that have demonstrable economic benefit to 52.30the state in terms of the formation of a new private sector business entity, the creation of 52.31jobs, or the attraction of federal and private funding.52.32(3) In awarding money from the fund, priority shall be given to proposals from 52.33colleges or universities and nonprofit research institutions that:52.34(i) promote collaboration between any combination of colleges or universities, 52.35nonprofit research institutions, and private industry;53.1(ii) enhance existing research superiority by attracting new research entities, 53.2research talent, or resources to the state; and53.3(iii) create new research superiority that attracts significant researchers and resources 53.4from outside the state.53.5(4) Subject to the limits in this clause, money within the fund may be used 53.6for reasonable administrative expenses by the authority including staffing and direct 53.7operational expenses, and professional fees for accounting, legal, and other technical 53.8services required to carry out the intent of the program and administration of the fund. 53.9Administrative expenses may not exceed five percent of the first $5,000,000 in the fund 53.10and two percent of any amount in excess of $5,000,000.53.11(5) Before making an award, the authority shall enter into a written agreement with 53.12the entity receiving the award that specifies the uses of the award.53.13(6) If the award recipient has not used the award received for the purposes intended, 53.14as of the date provided in the agreement, the recipient shall repay that amount and any 53.15interest applicable under the agreement to the authority. All repayments must be deposited 53.16to the corpus of the fund.53.17    Subd. 2.Rules.The authority may adopt rules to implement the programs 53.18authorized under sections 116W.29 to 116W.31.53.19    Sec. 9. [116W.33] REPAYMENT.53.20An entity must repay all or a portion of the amount of any award, grant, loan, or 53.21financial assistance of any type paid by the authority under sections 116W.29 to 116W.32 53.22if the entity relocates outside the state or ceases operation in Minnesota within four years 53.23from the date the authority provided the financial award. If the entity relocates outside of 53.24this state or ceases operation in Minnesota within three years of the financial award, the 53.25entity must repay 100 percent of the award. If the entity relocates or ceases operation in 53.26Minnesota after a period of three years but before four years from the date of the financial 53.27award, the entity must repay 75 percent of the financial award. 53.28    Sec. 10. [116W.34] EXPIRATION.53.29Sections 116W.26 to 116W.33 expire on the expiration date of the authority under 53.30section 116W.03, subdivision 7. Any unused money in the fund shall be deposited in the 53.31general fund.53.32    Sec. 11. Minnesota Statutes 2010, section 469.176, subdivision 4c, is amended to read:54.1    Subd. 4c. Economic development districts. (a) Revenue derived from tax 54.2increment from an economic development district may not be used to provide 54.3improvements, loans, subsidies, grants, interest rate subsidies, or assistance in any form 54.4to developments consisting of buildings and ancillary facilities, if more than 15 percent 54.5of the buildings and facilities (determined on the basis of square footage) are used for a 54.6purpose other than:54.7(1) the manufacturing or production of tangible personal property, including 54.8processing resulting in the change in condition of the property;54.9(2) warehousing, storage, and distribution of tangible personal property, excluding 54.10retail sales;54.11(3) research and development related to the activities listed in clause (1) or (2);54.12(4) telemarketing if that activity is the exclusive use of the property;54.13(5) tourism facilities;54.14(6) qualified border retail facilities; or54.15(7) space necessary for and related to the activities listed in clauses (1) to (6).54.16(b) Notwithstanding the provisions of this subdivision, revenues derived from tax 54.17increment from an economic development district may be used to provide improvements, 54.18loans, subsidies, grants, interest rate subsidies, or assistance in any form for up to 15,000 54.19square feet of any separately owned commercial facility located within the municipal 54.20jurisdiction of a small city, if the revenues derived from increments are spent only to 54.21assist the facility directly or for administrative expenses, the assistance is necessary to 54.22develop the facility, and all of the increments, except those for administrative expenses, 54.23are spent only for activities within the district.54.24(c) A city is a small city for purposes of this subdivision if the city was a small city 54.25in the year in which the request for certification was made and applies for the rest of 54.26the duration of the district, regardless of whether the city qualifies or ceases to qualify 54.27as a small city.54.28(d) Notwithstanding the requirements of paragraph (a) and the finding requirements 54.29of section 
         469.174, subdivision 12, tax increments from an economic development district 54.30may be used to provide improvements, loans, subsidies, grants, interest rate subsidies, or 54.31assistance in any form to developments consisting of buildings and ancillary facilities, if 54.32all the following conditions are met:54.33(1) the municipality finds that the project will create or retain jobs in this state, 54.34including construction jobs, and that construction of the project would not have 54.35commenced before July 1, 2011 2012, without the authority providing assistance under 54.36the provisions of this paragraph;55.1(2) construction of the project begins no later than July 1, 2011 2012; and55.2(3) the request for certification of the district is made no later than June 30, 201155.32012; and55.4(4) for development of housing under this paragraph, the construction must begin 55.5before January 1, 2012.55.6The provisions of this paragraph may not be used to assist housing that is developed 55.7to qualify under section 469.1761, subdivision 2 or 3, or similar requirements of other law, 55.8if construction of the project begins later than July 1, 2011.55.9EFFECTIVE DATE.This section is effective the day following final enactment.55.10    Sec. 12. Minnesota Statutes 2010, section 469.176, subdivision 4m, is amended to read:55.11    Subd. 4m. Temporary authority to stimulate construction. (a) Notwithstanding 55.12the restrictions in any other subdivision of this section or any other law to the contrary, 55.13except the requirement to pay bonds to which the increments are pledged and the 55.14provisions of subdivisions 4g and 4h, the authority may spend tax increments for one or 55.15more of the following purposes:55.16(1) to provide improvements, loans, interest rate subsidies, or assistance in any 55.17form to private development consisting of the construction or substantial rehabilitation 55.18of buildings and ancillary facilities, if doing so will create or retain jobs in this state, 55.19including construction jobs, and that the construction commences before July 1, 201155.202012, and would not have commenced before that date without the assistance; or55.21(2) to make an equity or similar investment in a corporation, partnership, or limited 55.22liability company that the authority determines is necessary to make construction of a 55.23development that meets the requirements of clause (1) financially feasible.55.24(b) The authority may undertake actions under the authority of this subdivision only 55.25after approval by the municipality of a written spending plan that specifically authorizes 55.26the authority to take the actions. The municipality shall approve the spending plan only 55.27after a public hearing after published notice in a newspaper of general circulation in 55.28the municipality at least once, not less than ten days nor more than 30 days prior to the 55.29date of the hearing.55.30(c) The authority to spend tax increments under this subdivision expires December 55.3131, 2011 2012.55.32(d) For a development consisting of housing, the authority to spend tax increments 55.33under this subdivision expires December 31, 2011, and construction must commence 55.34before July 1, 2011, except the authority to spend tax increments on market rate housing 56.1developments under this subdivision expires July 31, 2012, and construction must 56.2commence before January 1, 2012.56.3EFFECTIVE DATE.This section is effective the day following final enactment.56.4    Sec. 13. Minnesota Statutes 2010, section 469.1763, subdivision 2, is amended to read:56.5    Subd. 2.  Expenditures outside district. (a) For each tax increment financing 56.6district, an amount equal to at least 75 percent of the total revenue derived from tax 56.7increments paid by properties in the district must be expended on activities in the district 56.8or to pay bonds, to the extent that the proceeds of the bonds were used to finance activities 56.9in the district or to pay, or secure payment of, debt service on credit enhanced bonds. 56.10For districts, other than redevelopment districts for which the request for certification 56.11was made after June 30, 1995, the in-district percentage for purposes of the preceding 56.12sentence is 80 percent. Not more than 25 percent of the total revenue derived from tax 56.13increments paid by properties in the district may be expended, through a development fund 56.14or otherwise, on activities outside of the district but within the defined geographic area of 56.15the project except to pay, or secure payment of, debt service on credit enhanced bonds. 56.16For districts, other than redevelopment districts for which the request for certification was 56.17made after June 30, 1995, the pooling percentage for purposes of the preceding sentence is 56.1820 percent. The revenue derived from tax increments for the district that are expended on 56.19costs under section 
         469.176, subdivision 4h, paragraph (b), may be deducted first before 56.20calculating the percentages that must be expended within and without the district. 56.21    (b) In the case of a housing district, a housing project, as defined in section 
         469.174, 56.22subdivision 11
         , is an activity in the district. 56.23    (c) All administrative expenses are for activities outside of the district, except that 56.24if the only expenses for activities outside of the district under this subdivision are for 56.25the purposes described in paragraph (d), administrative expenses will be considered as 56.26expenditures for activities in the district. 56.27    (d) The authority may elect, in the tax increment financing plan for the district, 56.28to increase by up to ten percentage points the permitted amount of expenditures for 56.29activities located outside the geographic area of the district under paragraph (a). As 56.30permitted by section 
         469.176, subdivision 4k, the expenditures, including the permitted 56.31expenditures under paragraph (a), need not be made within the geographic area of the 56.32project. Expenditures that meet the requirements of this paragraph are legally permitted 56.33expenditures of the district, notwithstanding section 
         469.176, subdivisions 4b, 4c, and 4j. 56.34To qualify for the increase under this paragraph, the expenditures must: 57.1    (1) be used exclusively to assist housing that meets the requirement for a qualified 57.2low-income building, as that term is used in section 42 of the Internal Revenue Code; and57.3    (2) not exceed the qualified basis of the housing, as defined under section 42(c) of 57.4the Internal Revenue Code, less the amount of any credit allowed under section 42 of 57.5the Internal Revenue Code; and 57.6    (3) be used to: 57.7    (i) acquire and prepare the site of the housing; 57.8    (ii) acquire, construct, or rehabilitate the housing; or 57.9    (iii) make public improvements directly related to the housing.; or57.10(4) be used to develop housing:57.11(i) if the market value of the housing does not exceed the lesser of:57.12(A) 150 percent of the average market of single-family homes in that municipality; or57.13(B) $200,000 for municipalities located in the metropolitan area, as defined in 57.14section 473.121, or $125,000 for all other municipalities; and57.15(ii) if the expenditures are used to pay the cost of site acquisition, relocation, 57.16demolition of existing structures, site preparation, and pollution abatement on one or 57.17more parcels, if the parcel contains a residence containing one to four family dwelling 57.18units that has been vacant for six or more months and is in foreclosure as defined in 57.19section 325N.10, subdivision 7, but without regard to whether the residence is the owner's 57.20principal residence, and only after the redemption period stated in the notice provided 57.21under section 580.06 has expired.57.22    (e) For a district created within a biotechnology and health sciences industry zone 57.23as defined in section 
         469.330, subdivision 6, or for an existing district located within 57.24such a zone, tax increment derived from such a district may be expended outside of the 57.25district but within the zone only for expenditures required for the construction of public 57.26infrastructure necessary to support the activities of the zone, land acquisition, and other 57.27redevelopment costs as defined in section 
         469.176, subdivision 4j. These expenditures are 57.28considered as expenditures for activities within the district. 57.29(f) The authority under paragraph (d), clause (4), expires on December 31, 2016. 57.30Increments may continue to be expended under this authority after that date, if they are 57.31used to pay bonds or binding contracts that would qualify under subdivision 3, paragraph 57.32(a), if December 31, 2016, is considered to be the last date of the five-year period after 57.33certification under that provision.57.34EFFECTIVE DATE.This section is effective for any district that is subject to the 57.35provisions of section 469.1763, regardless of when the request for certification of the 57.36district was made.58.1    Sec. 14. Laws 2010, chapter 389, article 7, section 22, is amended to read:58.2    Sec. 22. CITY OF RAMSEY; TAX INCREMENT FINANCING DISTRICT; 58.3SPECIAL RULES.58.4(a) If the city of Ramsey or an authority of the city elects upon the adoption of a tax 58.5increment financing plan for a district, the rules under this section apply to a redevelopment 58.6tax increment financing district established by the city or an authority of the city. The 58.7redevelopment tax increment district includes parcels within the area bounded on the east 58.8by Ramsey Boulevard, on the north by Bunker Lake Boulevard as extended west to Llama 58.9Street, on the west by Llama Street, and on the south by a line running parallel to and 58.10600 feet south of the southerly right-of-way for U.S. Highway 10, but including Parcels 58.1128-32-25-43-0007 and 28-32-25-34-0002 in their entirety, and excluding the Anoka 58.12County Regional Park property in its entirety. A parcel within this area that is included in 58.13a tax increment financing district that was certified before the date of enactment of this act 58.14may be included in the district created under this act if the initial district is decertified.58.15(b) The requirements for qualifying a redevelopment tax increment district under 58.16Minnesota Statutes, section 
         469.174, subdivision 10, do not apply to the parcels located 58.17within the district.58.18(c) In addition to the costs permitted by Minnesota Statutes, section 
         469.176, 58.19subdivision 4j
         , does not apply to the district. Eligible expenditures within the district 58.20include but are not limited to (1) the city's share of the costs necessary to provide for 58.21the construction of the Northstar Transit Station and related infrastructure, including 58.22structured parking, a pedestrian overpass, and roadway improvements, (2) the cost of 58.23land acquired by the city or the housing and redevelopment authority in and for the city 58.24of Ramsey within the district prior to the establishment of the district, and (3) the cost 58.25of public improvements installed within the tax increment financing district prior to the 58.26establishment of the district.58.27(d) The requirement of Minnesota Statutes, section 
         469.1763, subdivision 3, that 58.28activities must be undertaken within a five-year period from the date of certification of a 58.29tax increment financing district, is considered to be met for the district if the activities 58.30were undertaken within ten years from the date of certification of the district.58.31(e) Except for administrative expenses, the in-district percentage for purposes of 58.32the restriction on pooling under Minnesota Statutes, section 
         469.1763, subdivision 2, for 58.33this district is 100 percent.58.34(f) The requirement of Minnesota Statutes, section 469.177, subdivision 4, does not 58.35apply to Parcels 28-32-25-42-0021 and 28-32-25-41-0014, where development occurred 59.1after enactment of Laws 2010, chapter 389, article 7, section 22, and prior to adoption of 59.2the tax increment financing plan for the district.59.3EFFECTIVE DATE.This section is effective upon approval by the governing 59.4body of the city of Ramsey, and upon compliance by the city with Minnesota Statutes, 59.5section 645.021, subdivision 3.59.6    Sec. 15. CITY OF COHASSET; USE OF TAX INCREMENTS.59.7The authority operating tax increment financing districts No. 2-1 and No. 3-1 in 59.8the city of Cohasset may transfer tax increments from each of those districts to the city 59.9in an amount equal to the advances made by the city from its general fund to finance 59.10expenditures under Minnesota Statutes, section 469.176, subdivision 4, for the benefit 59.11of that district.59.12EFFECTIVE DATE.This section is effective the day following final enactment, 59.13upon approval by the governing body of the city of Cohasset and compliance with 59.14Minnesota Statutes, section 645.021, subdivision 3.59.15    Sec. 16. CITY OF LINO LAKES; TAX INCREMENT FINANCING.59.16    Subdivision 1.Duration of district.Notwithstanding the provisions of Minnesota 59.17Statutes, section 469.176, subdivision 1b, the city of Lino Lakes may collect tax 59.18increments from tax increment financing district no. 1-10 through December 31, 2023, 59.19subject to the conditions in subdivision 2.59.20    Subd. 2.Conditions for extension.All tax increments remaining in the account 59.21for the district after February 1, 2011, and all tax increments collected thereafter, must 59.22be used only to pay debt service on bonds issued to finance the interchange of Anoka 59.23County Highway 23 and marked Interstate Highway 35W, bonds issued to finance public 59.24improvements serving the development known as Legacy at Woods Edge, and any bonds 59.25issued to refund those bonds. Minnesota Statutes, sections 469.176, subdivision 4c, and 59.26469.1763 do not apply to expenditures made under this section.59.27EFFECTIVE DATE.This section is effective upon compliance by the governing 59.28body of the city of Lino Lakes with the requirements of Minnesota Statutes, sections 59.29469.1782, subdivision 2, and 645.021, subdivision 3.59.30    Sec. 17. CITY OF TAYLORS FALLS; BORDER CITY DEVELOPMENT ZONE.60.1    Subdivision 1.Authorization.The governing body of the city of Taylors Falls may 60.2designate all or any part of the city as a border city development zone.60.3    Subd. 2.Application of general law.(a) Minnesota Statutes, sections 469.1731 to 60.4469.1735, apply to the border city development zones designated under this section. The 60.5governing body of the city may exercise the powers granted under Minnesota Statutes, 60.6sections 469.1731 to 469.1735, including powers that apply outside of the zones.60.7(b) The allocation under subdivision 3 for purposes of Minnesota Statutes, section 60.8469.1735, subdivision 2, is appropriated to the commissioner of revenue.60.9    Subd. 3.Allocation of state tax reductions.(a) The cumulative total amount of the 60.10state portion of the tax reductions for all years of the program under Minnesota Statutes, 60.11sections 469.1731 to 469.1735, for the city of Taylors Falls, is limited to $100,000.60.12(b) This allocation may be used for tax reductions provided in Minnesota Statutes, 60.13section 469.1732 or 469.1734, or for reimbursements under Minnesota Statutes, section 60.14469.1735, subdivision 3, but only if the governing body of the city of Taylors Falls 60.15determines that the tax reduction or offset is necessary to enable a business to expand 60.16within the city or to attract a business to the city.60.17(c) The commissioner of revenue may waive the limit under this subdivision using 60.18the same rules and standards provided in Minnesota Statutes, section 469.169, subdivision 60.1912, paragraph (b).60.20EFFECTIVE DATE.This section is effective the day following final enactment.60.21    Sec. 18. APPROPRIATION.60.22Except as otherwise provided by law, $500,000 is appropriated to the Minnesota 60.23science and technology fund for fiscal year 2012 and any unspent money carries over 60.24to fiscal year 2013. Notwithstanding section 116W.32, subdivision 1, clause (4), up to 60.25$107,000 of the appropriation may be used for administrative expenses of the authority. 60.26This is a onetime appropriation and is not added to the authority's base budget.60.27ARTICLE 560.28LOCAL TAXES60.29    Section 1. Minnesota Statutes 2010, section 297A.99, subdivision 1, is amended to 60.30read:60.31    Subdivision 1. Authorization; scope. (a) A political subdivision of this state may 60.32impose a general sales tax (1) under section 
         297A.992, (2) under section 
         297A.993, (3) if 61.1permitted by special law enacted prior to May 20, 2008, or (4) if the political subdivision 61.2enacted and imposed the tax before January 1, 1982, and its predecessor provision.61.3    (b) This section governs the imposition of a general sales tax by the political 61.4subdivision. The provisions of this section preempt the provisions of any special law:61.5    (1) enacted before June 2, 1997, or61.6    (2) enacted on or after June 2, 1997, that does not explicitly exempt the special law 61.7provision from this section's rules by reference.61.8    (c) This section does not apply to or preempt a sales tax on motor vehicles or a 61.9special excise tax on motor vehicles.61.10    (d) Until after May 31, 2010, a political subdivision may not advertise, promote, 61.11expend funds, or hold a referendum to support imposing a local option sales tax unless 61.12it is for extension of an existing tax or the tax was authorized by a special law enacted 61.13prior to May 20, 2008.61.14(d) A political subdivision may not advertise or expend funds for the promotion of a 61.15referendum to support imposing a local option sales tax. A political subdivision may only 61.16expend funds to conduct the referendum.61.17EFFECTIVE DATE.This section is effective the day following final enactment.61.18    Sec. 2. Minnesota Statutes 2010, section 297A.99, subdivision 3, is amended to read:61.19    Subd. 3. Requirements for adoption, use, termination. (a) Imposition of a local 61.20sales tax is subject to approval by voters of the political subdivision at a general election.61.21The election must be conducted before the governing body of the political subdivision 61.22requests legislative approval of the tax.61.23(b) The proceeds of the tax must be dedicated exclusively to payment of the cost of a 61.24specific capital improvement which is designated at least 90 days before the referendum 61.25on imposition of the tax is conducted.61.26(c) The tax must terminate after the improvement designated under paragraph (b) 61.27has been completed.61.28(d) After a sales tax imposed by a political subdivision has expired or been 61.29terminated, the political subdivision is prohibited from imposing a local sales tax for a 61.30period of one year. Notwithstanding subdivision 13, this paragraph applies to all local 61.31sales taxes in effect at the time of or imposed after May 26, 1999.61.32EFFECTIVE DATE.This section is effective the day following final enactment.61.33    Sec. 3. Minnesota Statutes 2010, section 473.757, subdivision 11, is amended to read:62.1    Subd. 11. Uses of tax. (a) Revenues received from the tax imposed under 62.2subdivision 10 may be used:62.3(1) to pay costs of collection;62.4(2) to pay or reimburse or secure the payment of any principal of, premium, or 62.5interest on bonds issued in accordance with this act;62.6(3) to pay costs and make expenditures and grants described in this section, including 62.7financing costs related to them;62.8(4) to maintain reserves for the foregoing purposes deemed reasonable and 62.9appropriate by the county;62.10(5) to pay for operating costs of the ballpark authority other than the cost of 62.11operating or maintaining the ballpark; and62.12(6) to make expenditures and grants for youth activities and amateur sports and 62.13extension of library hours as described in subdivision 2;62.14and for no other purpose.62.15(b) Revenues from the tax designated for use under paragraph (a), clause (5), must 62.16be deposited in the operating fund of the ballpark authority.62.17(c) After completion of the ballpark and public infrastructure, the tax revenues not 62.18required for current payments of the expenditures described in paragraph (a), clauses (1) to 62.19(6), shall be used to (i) redeem or defease the bonds and (ii) prepay or establish a fund for 62.20payment of future obligations under grants or other commitments for future expenditures 62.21which are permitted by this section. Upon the redemption or defeasance of the bonds and 62.22the establishment of reserves adequate to meet such future obligations, the taxes shall 62.23terminate and shall not be reimposed. For purposes of this subdivision, "reserves adequate 62.24to meet such future obligations" means a reserve that does not exceed the net present value 62.25of the county's obligation to make grants under paragraph (a), clauses (5) and (6), and to 62.26fund the reserve for capital improvements required under section 473.759, subdivision 3, 62.27for the 30-year period beginning on the date of the original issuance of the bonds, less 62.28those obligations that the county has already paid.62.29EFFECTIVE DATE.This section is effective the day following final enactment.62.30    Sec. 4. Laws 1996, chapter 471, article 2, section 29, subdivision 1, as amended by 62.31Laws 2006, chapter 259, article 3, section 3, is amended to read:62.32    Subdivision 1. Sales tax authorized.(a) Notwithstanding Minnesota Statutes, 62.33section 477A.016, or any other contrary provision of law, ordinance, or city charter, the 62.34city of Hermantown may, by ordinance, impose an additional sales tax of up to one 62.35percent on sales transactions taxable pursuant to Minnesota Statutes, chapter 297A, that 63.1occur within the city. The proceeds of the tax imposed under this section must be used to 63.2meet the costs of:63.3    (1) extending a sewer interceptor line; 63.4    (2) construction of a booster pump station, reservoirs, and related improvements 63.5to the water system; and63.6    (3) construction of a building containing a police and fire station and an 63.7administrative services facility.63.8(b) If the city imposed a sales tax of only one-half of one percent under paragraph 63.9(a), it may increase the tax to one percent to fund the purposes under paragraph (a) 63.10provided it is approved by the voters at a general election held before December 31, 2012.63.11EFFECTIVE DATE.This section is effective the day following compliance by the 63.12city of Hermantown with Minnesota Statutes, section 645.021, subdivision 3.63.13    Sec. 5. Laws 1998, chapter 389, article 8, section 43, subdivision 3, as amended by 63.14Laws 2005, First Special Session chapter 3, article 5, section 28, is amended to read:63.15    Subd. 3. Use of revenues.(a) Revenues received from the taxes authorized by 63.16subdivisions 1 and 2 must be used by the city to pay for the cost of collecting and 63.17administering the taxes and to pay for the following projects:63.18    (1) transportation infrastructure improvements including regional highway and 63.19airport improvements;63.20    (2) improvements to the civic center complex;63.21    (3) a municipal water, sewer, and storm sewer project necessary to improve regional 63.22ground water quality; and63.23    (4) construction of a regional recreation and sports center and other higher education 63.24facilities available for both community and student use.63.25    (b) The total amount of capital expenditures or bonds for these projects listed in 63.26paragraph (a) that may be paid from the revenues raised from the taxes authorized in this 63.27section may not exceed $111,500,000. The total amount of capital expenditures or bonds 63.28for the project in clause (4) that may be paid from the revenues raised from the taxes 63.29authorized in this section may not exceed $28,000,000.63.30(c) In addition to the projects authorized in paragraph (a) and not subject to the 63.31amount stated in paragraph (b), the city of Rochester may, if approved by the voters at an 63.32election under subdivision 5, paragraph (c), use the revenues received from the taxes and 63.33bonds authorized in this section to pay the costs of or bonds for the following purposes:63.34(1) $17,000,000 for capital expenditures and bonds for the following Olmsted 63.35County transportation infrastructure improvements:64.1(i) County State Aid Highway 34 reconstruction;64.2(ii) Trunk Highway 63 and County State Aid Highway 16 interchange; 64.3(iii) phase II of the Trunk Highway 52 and County State Aid Highway 22 64.4interchange;64.5(iv) widening of County State Aid Highway 22 West Circle Drive; and 64.6(v) 60th Avenue Northwest corridor preservation;64.7(2) $30,000,000 for city transportation projects including:64.8(i) Trunk Highway 52 and 65th Street interchange;64.9(ii) NW transportation corridor acquisition; 64.10(iii) Phase I of the Trunk Highway 52 and County State Aid Highway 22 interchange;64.11(iv) Trunk Highway 14 and Trunk Highway 63 intersection;64.12(v) Southeast transportation corridor acquisition;64.13(vi) Rochester International Airport expansion; and 64.14(vii) a transit operations center bus facility;64.15(3) $14,000,000 for the University of Minnesota Rochester academic and 64.16complementary facilities;64.17(4) $6,500,000 for the Rochester Community and Technical College/Winona State 64.18University career technical education and science and math facilities;64.19(5) $6,000,000 for the Rochester Community and Technical College regional 64.20recreation facilities at University Center Rochester;64.21(6) $20,000,000 for the Destination Medical Community Initiative;64.22(7) $8,000,000 for the regional public safety and 911 dispatch center facilities;64.23(8) $20,000,000 for a regional recreation/senior center;64.24(9) $10,000,000 for an economic development fund; and64.25(10) $8,000,000 for downtown infrastructure.64.26(d) No revenues from the taxes raised from the taxes authorized in subdivisions 1 64.27and 2 may be used to fund transportation improvements related to a railroad bypass that 64.28would divert traffic from the city of Rochester.64.29(e) The city shall use $5,000,000 of the money allocated to the purpose in paragraph 64.30(c), clause (9), for grants to the cities of Byron, Chatfield, Dodge Center, Dover, Elgin, 64.31Eyota, Kasson, Mantorville, Oronoco, Pine Island, Plainview, St. Charles, Stewartville, 64.32Zumbrota, Spring Valley, West Concord, and Hayfield for economic development projects 64.33that these communities would fund through their economic development authority or 64.34housing and redevelopment authority.64.35EFFECTIVE DATE.This section is effective the day following final enactment.65.1    Sec. 6. Laws 1998, chapter 389, article 8, section 43, subdivision 4, as amended by 65.2Laws 2005, First Special Session chapter 3, article 5, section 29, is amended to read:65.3    Subd. 4. Bonding authority. (a) The city may issue bonds under Minnesota 65.4Statutes, chapter 475, to finance the capital expenditure and improvement projects. 65.5An election to approve up to $71,500,000 in bonds under Minnesota Statutes, section 65.6475.58
         , may be held in combination with the election to authorize imposition of the tax 65.7under subdivision 1. Whether to permit imposition of the tax and issuance of bonds 65.8may be posed to the voters as a single question. The question must state that the sales 65.9tax revenues are pledged to pay the bonds, but that the bonds are general obligations 65.10and will be guaranteed by the city's property taxes. An election to approve up to an 65.11additional $40,000,000 of bonds under Minnesota Statutes, section 
         475.58, may be held 65.12in combination with the election to authorize extension of the tax under subdivision 5, 65.13paragraph (b). An election to approve bonds under Minnesota Statutes, section 475.58, 65.14in an amount not to exceed $139,500,000 plus an amount equal to the costs of issuance 65.15of the bonds, may be held in combination with the election to authorize the extension of 65.16the tax under subdivision 5, paragraph (c).65.17    (b) The city may shall enter into an agreement with Olmsted County under which the 65.18city and the county agree to jointly undertake and finance certain roadway infrastructure 65.19improvements. The agreement may shall provide that the city will make available to the 65.20county a portion of the sales tax revenues collected pursuant to the authority granted in 65.21this section and the bonding authority provided in this subdivision. The county may, 65.22pursuant to the agreement, issue its general obligation bonds in a principal amount not 65.23exceeding the amount authorized by its agreement with the city payable primarily from 65.24the sales tax revenues from the city under the agreement. The county's bonds must be 65.25issued in accordance with the provisions of Minnesota Statutes, chapter 475, except that 65.26no election is required for the issuance of the bonds and the bonds are not included in 65.27the net debt of the county.65.28    (b) (c) The issuance of bonds under this subdivision is not subject to Minnesota 65.29Statutes, section 
         275.60.65.30    (c) (d)  The bonds are not included in computing any debt limitation applicable to the 65.31city, and the levy of taxes under Minnesota Statutes, section 
         475.61, to pay principal of 65.32and interest on the bonds is not subject to any levy limitation.65.33    (e) The aggregate principal amount of bonds, plus the aggregate of the taxes used 65.34directly to pay eligible capital expenditures and improvements for projects listed in 65.35subdivision 3, paragraph (a), may not exceed $111,500,000, plus an amount equal to the 65.36costs related to issuance of the bonds. The aggregate principal amount of bonds plus the 66.1aggregate of the taxes used directly to pay the costs of eligible projects under subdivision 66.23, paragraph (c), may not exceed $139,500,000 plus an amount equal to the costs of 66.3issuance of the bonds.66.4    (d) (f) The taxes may be pledged to and used for the payment of the bonds and 66.5any bonds issued to refund them, only if the bonds and any refunding bonds are general 66.6obligations of the city.66.7EFFECTIVE DATE.This section is effective the day following final enactment.66.8    Sec. 7. Laws 1998, chapter 389, article 8, section 43, subdivision 5, as amended by 66.9Laws 2005, First Special Session chapter 3, article 5, section 30, is amended to read:66.10    Subd. 5. Termination of taxes. (a) The taxes imposed under subdivisions 1 and 66.112 expire at the later of (1) December 31, 2009, or (2) when the city council determines 66.12that sufficient funds have been received from the taxes to finance the first $71,500,000 66.13of capital expenditures and bonds for the projects authorized in subdivision 3, including 66.14the amount to prepay or retire at maturity the principal, interest, and premium due on any 66.15bonds issued for the projects under subdivision 4, unless the taxes are extended as allowed 66.16in paragraph (b). Any funds remaining after completion of the project and retirement or 66.17redemption of the bonds shall also be used to fund the projects under subdivision 3. The 66.18taxes imposed under subdivisions 1 and 2 may expire at an earlier time if the city so 66.19determines by ordinance.66.20    (b) Notwithstanding Minnesota Statutes, sections 
         297A.99 and 
         477A.016, or any 66.21other contrary provision of law, ordinance, or city charter, the city of Rochester may, by 66.22ordinance, extend the taxes authorized in subdivisions 1 and 2 beyond December 31, 2009, 66.23if approved by the voters of the city at a special election in 2005 or the general election in 66.242006. The question put to the voters must indicate that an affirmative vote would allow 66.25up to an additional $40,000,000 of sales tax revenues be raised and up to $40,000,000 66.26of bonds to be issued above the amount authorized in the June 23, 1998, referendum for 66.27the projects specified in subdivision 3. If the taxes authorized in subdivisions 1 and 2 are 66.28extended under this paragraph, the taxes expire when the city council determines that 66.29sufficient funds have been received from the taxes to finance the projects and to prepay 66.30or retire at maturity the principal, interest, and premium due on any bonds issued for the 66.31projects under subdivision 4. Any funds remaining after completion of the project and 66.32retirement or redemption of the bonds may be placed in the general fund of the city.66.33(c) Notwithstanding Minnesota Statutes, sections 297A.99 and 477A.016, or any 66.34other contrary provision of law, ordinance, or city charter, the city of Rochester may, by 66.35ordinance, extend the taxes authorized in subdivisions 1 and 2 beyond the date the city 67.1council determines that sufficient funds have been received from the taxes to finance 67.2$111,500,000 of expenditures and bonds for the projects authorized in subdivision 3, 67.3paragraph (a), plus an amount equal to the costs of issuance of the bonds and including 67.4the amount to prepay or retire at maturity the principal, interest, and premiums due on 67.5any bonds issued for the projects under subdivision 4, paragraph (a), if approved by the 67.6voters of the city at the general election in 2012. If the election to authorize the additional 67.7$139,500,000 of bonds plus an amount equal to the costs of the issuance of the bonds is 67.8placed on the general election ballot in 2012, the city may continue to collect the taxes 67.9authorized in subdivisions 1 and 2 until December 31, 2012. The question put to the 67.10voters must indicate that an affirmative vote would allow sales tax revenues be raised for 67.11an extended period of time and an additional $139,500,000 of bonds plus an amount 67.12equal to the costs of issuance of the bonds, to be issued above the amount authorized in 67.13the previous elections required under paragraphs (a) and (b) for the projects and amounts 67.14specified in subdivision 3. If the taxes authorized in subdivisions 1 and 2 are extended 67.15under this paragraph, the taxes expire when the city council determines that $139,500,000 67.16has been received from the taxes to finance the projects plus an amount sufficient to 67.17prepay or retire at maturity the principal, interest, and premium due on any bonds issued 67.18for the projects under subdivision 4, including any bonds issued to refund the bonds. Any 67.19funds remaining after completion of the projects and retirement or redemption of the 67.20bonds may be placed in the general fund of the city.67.21EFFECTIVE DATE.This section is effective the day after compliance by the 67.22governing body of the city of Rochester with Minnesota Statutes, section 645.021, 67.23subdivision 3.67.24    Sec. 8. Laws 2008, chapter 366, article 7, section 19, subdivision 3, is amended to read:67.25    Subd. 3. Use of revenues.Notwithstanding Minnesota Statutes, section 297A.99, 67.26subdivision 3, paragraph (b), the proceeds of the tax imposed under this section shall be 67.27used to pay for the costs of acquisition, construction, improvement, and development of 67.28a regional parks, bicycle trails, park land, open space, and pedestrian bridge walkways, 67.29as described in the city improvement plan adopted by the city council by resolution on 67.30December 12, 2006, and land and buildings for a community and recreation center. The 67.31total amount of revenues from the taxes in subdivisions 1 and 2 that may be used to fund 67.32these projects is $12,000,000 plus any associated bond costs.68.1EFFECTIVE DATE.This section is effective the day after compliance by the 68.2governing body of the city of Clearwater with Minnesota Statutes, section 645.021, 68.3subdivisions 2 and 3.68.4    Sec. 9. Laws 2010, chapter 389, article 5, section 6, subdivision 1, is amended to read:68.5    Subdivision 1. Authorization. Notwithstanding Minnesota Statutes, section 68.6297A.99, subdivisions 1
         , 2, and 3, or 
         477A.016, or any other law, ordinance, or city 68.7charter, the city of Marshall, if imposed within two three years of the date of final 68.8enactment of this section, may impose any or all of the taxes described in this section.68.9EFFECTIVE DATE.This section is effective the day following final enactment.68.10    Sec. 10. CITY OF CLOQUET; TAXES AUTHORIZED.68.11    Subdivision 1.Sales and use tax.Notwithstanding Minnesota Statutes, section 68.12297A.99, subdivision 1, 477A.016, or any other provision of law, ordinance, or city 68.13charter, if approved by the voters pursuant to Minnesota Statutes, section 297A.99, the 68.14city of Cloquet may impose by ordinance a sales and use tax of up to one-half of one 68.15percent for the purposes specified in subdivision 3. Except as provided in this section, the 68.16provisions of Minnesota Statutes, section 297A.99, govern the imposition, administration, 68.17collection, and enforcement of the tax authorized under this subdivision.68.18    Subd. 2.Excise tax authorized.Notwithstanding Minnesota Statutes, section 68.19297A.99, subdivision 1, 477A.016, or any other provision of law, ordinance, or city 68.20charter, the city of Cloquet may impose by ordinance, for the purposes specified in 68.21subdivision 3, an excise tax of up to $20 per motor vehicle, as defined by ordinance, 68.22purchased or acquired from any person engaged within the city in the business of selling 68.23motor vehicles at retail.68.24    Subd. 3.Use of revenues.Revenues received from taxes authorized by subdivisions 68.251 and 2 must be used by the city to pay the cost of collecting the taxes and to pay for the 68.26following projects:68.27    (1) $4,500,000 for construction and completion of park improvement projects, 68.28including St. Louis River riverfront improvements; Veteran's Park construction and 68.29improvements; improvements to the Hilltop Park soccer complex and Braun Park baseball 68.30complex; capital equipment and building and grounds improvements at the Pine Valley 68.31Park/Pine Valley Hockey Arena/Cloquet Area Recreation Center; and development of 68.32pedestrian trails within the city;69.1    (2) $5,800,00 for extension of utilities and the construction of all improvements 69.2associated with the development of property adjacent to Highway 33 and Interstate 69.3Highway 35, including payment of all debt service on bonds issued for these; and69.4(3) $6,200,000 for engineering and construction of infrastructure improvements, 69.5including, but not limited to, storm sewer, sanitary sewer, and water in areas identified as 69.6part of the city's comprehensive land use plan.69.7    Authorized expenses include, but are not limited to, acquiring property and paying 69.8construction expenses related to these improvements, and paying debt service on bonds or 69.9other obligations issued to finance acquisition and construction of these improvements.69.10    Subd. 4.Bonding authority.(a) The city may issue bonds under Minnesota 69.11Statutes, chapter 475, to pay capital and administrative expenses for the improvements 69.12described in subdivision 3 in an amount that does not exceed $16,500,000. An election to 69.13approve the bonds under Minnesota Statutes, section 475.58, is not required.69.14    (b) The issuance of bonds under this subdivision is not subject to Minnesota Statutes, 69.15sections 275.60 and 275.61.69.16    (c) The debt represented by the bonds is not included in computing any debt 69.17limitation applicable to the city, and any levy of taxes under Minnesota Statutes, section 69.18475.61, to pay principal of and interest on the bonds is not subject to any levy limitation.69.19    Subd. 5.Termination of taxes.The taxes imposed under subdivisions 1 and 2 69.20expire at the earlier of (1) 30 years, or (2) when the city council determines that the amount 69.21of revenues received from the taxes to finance the improvements described in subdivision 69.223 first equals or exceeds $16,500,000, plus the additional amount needed to pay the costs 69.23related to issuance of bonds under subdivision 4, including interest on the bonds. Any 69.24funds remaining after completion of the project and retirement or redemption of the bonds 69.25may be placed in the general fund of the city.  The taxes imposed under subdivisions 1 and 69.262 may expire at an earlier time if the city so determines by ordinance.69.27EFFECTIVE DATE.This section is effective the day after the governing body of 69.28the city of Cloquet and its chief clerical officer timely comply with Minnesota Statutes, 69.29section 645.021, subdivisions 2 and 3.69.30    Sec. 11. CITY OF FERGUS FALLS; SALES AND USE TAX AUTHORIZED.69.31    Subdivision 1.Sales and use tax.Notwithstanding Minnesota Statutes, section 69.32297A.99, subdivision 1, or 477A.016, or any other provision of law, ordinance, or city 69.33charter, as approved by the voters at the November 2, 2010 general election, the city 70.1of Fergus Falls may impose by ordinance a sales and use tax of up to one-half of one 70.2percent for the purposes specified in subdivision 2.  Except as provided in this section, the 70.3provisions of Minnesota Statutes, section 297A.99, govern the imposition, administration, 70.4collection, and enforcement of the tax authorized under this subdivision.70.5    Subd. 2.Use of revenues.Revenues received from taxes authorized by subdivision 70.61 must be used by the city of Fergus Falls to pay the cost of collecting the tax and to pay for 70.7all or part of the costs of the acquisition and betterment of a regional community ice arena 70.8facility. Authorized expenses include, but are not limited to, acquiring property, predesign, 70.9design, and paying construction, furnishing, and equipment costs related to the facility and 70.10paying debt service on bonds or other obligations issued by the Fergus Falls Port Authority 70.11to finance the facility. The amount of revenues from the tax imposed under subdivision 1 70.12that may be used to finance the facility and any associated costs is limited to $6,600,000.70.13    Subd. 3.Termination of taxes.The tax imposed under this section expires when 70.14the Fergus Falls City Council determines that sufficient funds have been received from 70.15the taxes to finance the facility and to prepay or retire at maturity the principal, interest, 70.16and premium due on any bonds, including refunding bonds, issued by the Fergus Falls 70.17Port Authority for the facility. Any funds remaining after completion of the facility and 70.18retirement or redemption of the bonds may be placed in the general fund of the city of 70.19Fergus Falls. The tax imposed under subdivision 1 may expire at an earlier time if the 70.20city so determines by ordinance.70.21EFFECTIVE DATE.This section is effective the day after the governing body 70.22of the city of Fergus Falls and its chief clerical officer timely comply with Minnesota 70.23Statutes, section 645.021, subdivisions 2 and 3.70.24    Sec. 12. CITY OF HUTCHINSON; TAXES AUTHORIZED.70.25    Subdivision 1.Sales and use tax.Notwithstanding Minnesota Statutes, section 70.26477A.016, or any other provision of law, ordinance, or city charter, as approved by 70.27the voters at a referendum held at the 2010 general election, the city of Hutchinson 70.28may impose by ordinance a sales and use tax of up to one-half of one percent for the 70.29purposes specified in subdivision 3. Except as otherwise provided in this section, 70.30Minnesota Statutes, section 297A.99, governs the imposition, administration, collection, 70.31and enforcement of the tax authorized under this subdivision. Minnesota Statutes, section 70.32297A.99, subdivision 1, paragraph (d), does not apply to this section.71.1    Subd. 2.Excise tax authorized.Notwithstanding Minnesota Statutes, section 71.2477A.016, or any other provision of law, ordinance, or city charter, the city of Hutchinson 71.3may impose by ordinance, for the purposes specified in subdivision 3, an excise tax of up 71.4to $20 per motor vehicle, as defined by ordinance, purchased or acquired from any person 71.5engaged within the city in the business of selling motor vehicles at retail.71.6    Subd. 3.Use of revenues.Revenues received from the taxes authorized by this 71.7section must be used to pay the cost of collecting and administering the tax and to finance 71.8the costs of constructing the water treatment facility and renovating the wastewater 71.9treatment facility in the city of Hutchinson. Authorized costs include, but are not limited 71.10to, construction and engineering costs of the projects and associated bond costs.71.11    Subd. 4.Termination of tax.The taxes authorized under subdivisions 1 and 2 71.12terminate at the earlier of: (1) 18 years after the date of initial imposition of the tax; or 71.13(2) when the Hutchinson City Council determines that the amount of revenues raised is 71.14sufficient to pay for the projects under subdivision 3, plus the amount needed to finance 71.15the capital and administrative costs for the projects specified in subdivision 3, and to repay 71.16or retire at maturity the principal, interest, and premium due on any bonds issued for the 71.17projects. Any funds remaining after completion of the projects specified in subdivision 71.183 and retirement or redemption of the associated bonds may be placed in the general 71.19fund of the city. The taxes imposed under subdivisions 1 and 2 may expire at an earlier 71.20time if the city so determines by ordinance. 71.21EFFECTIVE DATE.This section is effective the day after compliance by the 71.22governing body of the city of Hutchinson with Minnesota Statutes, section 645.021, 71.23subdivisions 2 and 3.71.24    Sec. 13. CITY OF LANESBORO; SALES AND USE TAX AUTHORIZED.71.25    Subdivision 1.Sales and use tax authorized.Notwithstanding Minnesota Statutes, 71.26sections 297A.99, subdivision 1, and 477A.016, or any other provision of law, ordinance, 71.27or city charter, as approved by the voters at the November 2, 2010, general election, the 71.28city of Lanesboro may impose by ordinance a sales and use tax of up to one-half of one 71.29percent for the purposes specified in subdivision 2. Except as provided in this section, 71.30the provisions of Minnesota Statutes, section 297A.99, govern the imposition of the tax 71.31authorized under this subdivision.71.32    Subd. 2.Use of revenues.Revenues received from the tax authorized under 71.33subdivision 1 must be used by the city of Lanesboro to pay the costs of collecting the tax 72.1and to pay for all or a part of the improvements to city streets and utility systems, and the 72.2betterment of city municipal buildings consisting of (i) street and utility improvements to 72.3Calhoun Avenue, Fillmore Avenue, Kenilworth Avenue, Pleasant Street, Kirkwood Street, 72.4Auburn Avenue, and Zenith Street, and street light replacement on State Highways 250 72.5and 16; (ii) improvements to utility systems consisting of wastewater treatment facility 72.6improvements and electric utility improvements to the Lanesboro High Hazard Dam; and 72.7(iii) improvements to the Lanesboro community center, library, and city hall, including 72.8paying debt service on bonds or other obligations issued to fund these projects under 72.9subdivision 3. The total amount of revenues from the taxes in subdivision 1 that may be 72.10used to fund these projects is $800,000 plus any associated bond costs.72.11    Subd. 3.Bonding authority.The city of Lanesboro may issue bonds under 72.12Minnesota Statutes, chapter 475, to pay capital and administrative expenses related to the 72.13projects authorized in subdivision 2. An election to approve the bonds under Minnesota 72.14Statutes, section 475.58, is not required. The issuance of bonds under this subdivision 72.15is not subject to Minnesota Statutes, sections 275.60 and 275.61. The bonds are not 72.16included in computing any debt limitation applicable to the city and the levy of taxes 72.17under Minnesota Statutes, section 475.61, to pay principal and interest on the bonds is 72.18not subject to any levy limitation.72.19The aggregate principal amount of the bonds plus the aggregate of the taxes used 72.20directly to pay costs of the projects listed in subdivision 2 may not exceed $800,000, plus 72.21an amount equal to the costs related to issuance of the bonds and capitalized interest. 72.22The taxes authorized in subdivision 1 may be pledged and used for payments of 72.23the bonds and bonds issued to refund them, only if the bonds and any refunding bonds 72.24are general obligations of the city.72.25    Subd. 4.Termination of tax.The tax imposed under subdivision 1 expires when 72.26the Lanesboro City Council determines that sufficient funds have been raised from the 72.27taxes to finance the projects authorized under subdivision 2 and to prepay or retire at 72.28maturity the principal, interest, and premium due on any bonds issued under subdivision 3. 72.29Any funds remaining after completion of the project and retirement or redemption of the 72.30bonds may be placed in the general fund of the city. The tax imposed under subdivision 1 72.31may expire at an earlier time if the city so determines by ordinance.72.32EFFECTIVE DATE.This section is effective the day after the governing body of 72.33the city of Lanesboro and its chief clerical officer comply with Minnesota Statutes, section 72.34645.021, subdivisions 2 and 3.73.1    Sec. 14. CITY OF MARSHALL; SALES AND USE TAX.73.2    Subdivision 1.Authorization.Notwithstanding Minnesota Statutes, section 73.3297A.99, subdivisions 1 and 2, or 477A.016, or any other law, ordinance, or city charter, 73.4the city of Marshall, if approved by the voters at a general election held within two 73.5years of the date of final enactment of this section, may impose the tax authorized under 73.6subdivision 2. Two separate ballot questions must be presented to the voters, one for each 73.7of the two facility projects named in subdivision 3.73.8    Subd. 2.Sales and use tax authorized.The city of Marshall may impose by 73.9ordinance a sales and use tax of up to one-half of one percent for the purposes specified in 73.10subdivision 3. The provisions of Minnesota Statutes, section 297A.99, except subdivisions 73.111 and 2, govern the imposition, administration, collection, and enforcement of the tax 73.12authorized under this subdivision.73.13    Subd. 3.Use of sales and use tax revenues.The revenues derived from the tax 73.14authorized under subdivision 2 must be used by the city of Marshall to pay the costs of 73.15collecting and administering the sales and use tax and to pay all or part of the costs of the 73.16new and existing facilities of the Minnesota Emergency Response and Industry Training 73.17Center and all or part of the costs of the new facilities of the Southwest Minnesota 73.18Regional Amateur Sports Center. Authorized expenses include, but are not limited to, 73.19acquiring property, predesign, design, and paying construction, furnishing, and equipment 73.20costs related to these facilities and paying debt service on bonds or other obligations issued 73.21by the city of Marshall under subdivision 4 to finance the capital costs of these facilities.73.22    Subd. 4.Bonds.(a) If the imposition of a sales and use tax is approved by the voters, 73.23the city of Marshall may issue bonds under Minnesota Statutes, chapter 475, to finance all 73.24or a portion of the costs of the facilities authorized in subdivision 3, and may issue bonds 73.25to refund bonds previously issued. The aggregate principal amount of bonds issued under 73.26this subdivision may not exceed $17,290,000, plus an amount to be applied to the payment 73.27of the costs of issuing the bonds. The bonds may be paid from or secured by any funds 73.28available to the city of Marshall, including the tax authorized under subdivision 2. 73.29(b) The bonds are not included in computing any debt limitation applicable to the 73.30city of Marshall, and any levy of taxes under Minnesota Statutes, section 475.61, to pay 73.31principal and interest on the bonds, is not subject to any levy limitation. A separate 73.32election to approve the bonds under Minnesota Statutes, section 475.58, is not required. 73.33    Subd. 5.Termination of taxes.The tax imposed under subdivision 2 expires at the 73.34earlier of (1) 15 years after the tax is first imposed, or (2) when the city council determines 74.1that the amount of revenues received from the tax to pay for the capital and administrative 74.2costs of the facilities under subdivision 3 first equals or exceeds the amount authorized to 74.3be spent for the facilities plus the additional amount needed to pay the costs related to 74.4issuance of the bonds under subdivision 4, including interest on the bonds. Any funds 74.5remaining after payment of all such costs and retirement or redemption of the bonds shall 74.6be placed in the general fund of the city. The tax imposed under subdivision 2 may expire 74.7at an earlier time if the city so determines by ordinance.74.8EFFECTIVE DATE.This section is effective the day after compliance by the 74.9governing body of the city of Marshall with Minnesota Statutes, section 645.021, 74.10subdivision 3.74.11    Sec. 15. CITY OF MEDFORD; SALES AND USE TAX.74.12    Subdivision 1.Sales and use tax authorized.Notwithstanding Minnesota Statutes, 74.13sections 297A.99, subdivision 1, and 477A.016, or any other provision of law, ordinance, 74.14or city charter, if approved by the voters pursuant to Minnesota Statutes, section 297A.99, 74.15at the next general election, the city of Medford may impose by ordinance a sales and use 74.16tax of one-half of one percent for the purposes specified in subdivision 2. Except as 74.17otherwise provided in this section, the provisions of Minnesota Statutes, section 297A.99, 74.18govern the imposition, administration, collection, and enforcement of the tax authorized 74.19under this subdivision.74.20    Subd. 2.Use of revenues.The proceeds of the tax imposed under this section must 74.21be used by the city of Medford to pay the costs of collecting and administering the tax 74.22and to repay loans received from the Minnesota Public Facilities Authority since 2007 74.23that were used to finance $4,200,000 of improvements to the city's water and wastewater 74.24systems.74.25    Subd. 3.Termination of taxes.The tax imposed under this section expires at the 74.26earlier of (1) 20 years after the date the taxes are first imposed, or (2) when the Medford 74.27City Council determines that the amount of revenues received from the tax equals or 74.28exceeds the sum of loans made to the city by the Minnesota Public Facilities Authority 74.29as described in subdivision 2, including interest on the loans. Any funds remaining 74.30after completion of the repayment of the loans may be placed in the general fund of the 74.31city. The tax imposed under subdivision 1 may expire at an earlier time if the city so 74.32determines by ordinance.75.1EFFECTIVE DATE.This section is effective the day after compliance by the 75.2governing body of the city of Medford with Minnesota Statutes, section 645.021, 75.3subdivision 3.75.4ARTICLE 675.5PROPERTY TAXES75.6    Section 1. Minnesota Statutes 2010, section 126C.01, subdivision 3, is amended to read:75.7    Subd. 3. Referendum market value. "Referendum market value" means the market 75.8value of all taxable property, excluding property classified as class 2, noncommercial 75.94c(1), or 4c(4), or 4c(12) under section 
         273.13. The portion of class 2a property consisting 75.10of the house, garage, and surrounding one acre of land of an agricultural homestead is 75.11included in referendum market value. Any class of property, or any portion of a class of 75.12property, that is included in the definition of referendum market value and that has a class 75.13rate of less than one percent under section 
         273.13 shall have a referendum market value 75.14equal to its net tax capacity multiplied by 100. 75.15EFFECTIVE DATE.This section is effective for taxes payable in 2012 and 75.16thereafter.75.17    Sec. 2. Minnesota Statutes 2010, section 272.02, subdivision 39, is amended to read:75.18    Subd. 39. Economic development; public purpose. The holding of property by a 75.19political subdivision of the state for later resale for economic development purposes shall 75.20be considered a public purpose in accordance with subdivision 8 for a period not to exceed 75.21eight ten years, except that for property located in a city of 5,000 population or under that 75.22is located outside of the metropolitan area as defined in section 
         473.121, subdivision 2, the 75.23period must not exceed 15 years.75.24The holding of property by a political subdivision of the state for later resale (1) 75.25which is purchased or held for housing purposes, or (2) which meets the conditions 75.26described in section 
         469.174, subdivision 10, shall be considered a public purpose in 75.27accordance with subdivision 8.75.28The governing body of the political subdivision which acquires property which is 75.29subject to this subdivision shall after the purchase of the property certify to the city or 75.30county assessor whether the property is held for economic development purposes or 75.31housing purposes, or whether it meets the conditions of section 
         469.174, subdivision 10. 75.32If the property is acquired for economic development purposes and buildings or other 75.33improvements are constructed after acquisition of the property, and if more than one-half 75.34of the floor space of the buildings or improvements which is available for lease to or use 76.1by a private individual, corporation, or other entity is leased to or otherwise used by 76.2a private individual, corporation, or other entity the provisions of this subdivision shall 76.3not apply to the property. This subdivision shall not create an exemption from section 76.4272.01, subdivision 2
         ; 
         272.68; 
         273.19; or 
         469.040, subdivision 3; or other provision of 76.5law providing for the taxation of or for payments in lieu of taxes for publicly held property 76.6which is leased, loaned, or otherwise made available and used by a private person.76.7EFFECTIVE DATE.This section is effective for taxes levied in 2011, payable 76.8in 2012, and thereafter.76.9    Sec. 3. Minnesota Statutes 2010, section 272.02, is amended by adding a subdivision 76.10to read:76.11    Subd. 95.Electric generation facility; personal property.(a) Notwithstanding 76.12subdivision 9, clause (a), and section 453.54, subdivision 20, attached machinery and other 76.13personal property that is part of a multiple reciprocating engine electric generation facility 76.14that adds more than 20 and less than 30 megawatts of installed capacity at a site where 76.15there is presently more than ten megawatts and fewer than 15 megawatts of installed 76.16capacity and that meets the requirements of this subdivision is exempt from taxation and 76.17from payments in lieu of taxation. At the time of construction, the facility must:76.18(1) be designed to utilize natural gas as a primary fuel;76.19(2) be owned and operated by a municipal power agency as defined in section 76.20453.52, subdivision 8;76.21(3) be located within one mile of an existing natural gas pipeline;76.22(4) be designed to have black start capability and to furnish emergency backup 76.23power service to the city in which it is located;76.24(5) satisfy a resource deficiency identified in an approved integrated resource plan 76.25filed under section 216B.2422; and 76.26(6) have received, by resolution, the approval of the governing bodies of the city 76.27and county in which it is located for the exemption of personal property provided by 76.28this subdivision.76.29(b) Construction of the facility must be commenced after December 31, 2011, and 76.30before January 1, 2015. Property eligible for this exemption does not include (i) electric 76.31transmission lines and interconnections or gas pipelines and interconnections appurtenant 76.32to the property or the facility; or (ii) property located on the site on the enactment date 76.33of this subdivision.77.1EFFECTIVE DATE.This section is effective for assessments in 2012, taxes 77.2payable in 2013, and thereafter.77.3    Sec. 4. Minnesota Statutes 2010, section 273.111, is amended by adding a subdivision 77.4to read:77.5    Subd. 17.Appeal.If an assessor denies an application for valuation under this 77.6section, the applicant may appeal the decision to the local board of appeal and equalization 77.7as provided under section 274.01, subdivision 1, paragraph (h).77.8EFFECTIVE DATE.This section is effective for appeals denied after June 30, 77.92011.77.10    Sec. 5. Minnesota Statutes 2010, section 273.121, subdivision 1, is amended to read:77.11    Subdivision 1. Notice. Any county assessor or city assessor having the powers of a 77.12county assessor, valuing or classifying taxable real property shall in each year notify those 77.13persons whose property is to be included on the assessment roll that year if the person's 77.14address is known to the assessor, otherwise the occupant of the property. The notice shall 77.15be in writing and shall be sent by ordinary mail at least ten days before the meeting of 77.16the local board of appeal and equalization under section 
         274.01 or the review process 77.17established under section 
         274.13, subdivision 1c. Upon written request by the owner of the 77.18property, the assessor may send the notice in electronic form or by electronic mail instead 77.19of on paper or by ordinary mail. It shall contain: (1) the market value for the current and 77.20prior assessment, (2) the limited market value under section 273.11, subdivision 1a, for 77.21the current and prior assessment, (3) the qualifying amount of any improvements under 77.22section 
         273.11, subdivision 16, for the current assessment, (4) (3) the market value subject 77.23to taxation after subtracting the amount of any qualifying improvements for the current 77.24assessment, (5) (4) the classification of the property for the current and prior assessment, 77.25(6) a note that if the property is homestead and at least 45 years old, improvements made 77.26to the property may be eligible for a valuation exclusion under section 273.11, subdivision 77.2716, (7) (5) the assessor's office address, and (8) (6) the dates, places, and times set for the 77.28meetings of the local board of appeal and equalization, the review process established 77.29under section 
         274.13, subdivision 1c, and the county board of appeal and equalization. If 77.30the classification of the property has changed between the current and prior assessments, a 77.31specific note to that effect shall be prominently listed on the statement. The commissioner 77.32of revenue shall specify the form of the notice. The assessor shall attach to the assessment 77.33roll a statement that the notices required by this section have been mailed. Any assessor 77.34who is not provided sufficient funds from the assessor's governing body to provide such 78.1notices, may make application to the commissioner of revenue to finance such notices. 78.2The commissioner of revenue shall conduct an investigation and, if satisfied that the 78.3assessor does not have the necessary funds, issue a certification to the commissioner 78.4of management and budget of the amount necessary to provide such notices. The 78.5commissioner of management and budget shall issue a warrant for such amount and shall 78.6deduct such amount from any state payment to such county or municipality. The necessary 78.7funds to make such payments are hereby appropriated. Failure to receive the notice shall in 78.8no way affect the validity of the assessment, the resulting tax, the procedures of any board 78.9of review or equalization, or the enforcement of delinquent taxes by statutory means.78.10EFFECTIVE DATE.This section is effective for notifications for taxes payable in 78.112013 and thereafter.78.12    Sec. 6. Minnesota Statutes 2010, section 273.13, subdivision 25, is amended to read:78.13    Subd. 25. Class 4. (a) Class 4a is residential real estate containing four or more 78.14units and used or held for use by the owner or by the tenants or lessees of the owner 78.15as a residence for rental periods of 30 days or more, excluding property qualifying for 78.16class 4d. Class 4a also includes hospitals licensed under sections 
         144.50 to 
         144.56, other 78.17than hospitals exempt under section 
         272.02, and contiguous property used for hospital 78.18purposes, without regard to whether the property has been platted or subdivided. The 78.19market value of class 4a property has a class rate of 1.25 percent.78.20    (b) Class 4b includes:78.21    (1) residential real estate containing less than four units that does not qualify as class 78.224bb, other than seasonal residential recreational property;78.23    (2) manufactured homes not classified under any other provision;78.24    (3) a dwelling, garage, and surrounding one acre of property on a nonhomestead 78.25farm classified under subdivision 23, paragraph (b) containing two or three units; and78.26    (4) unimproved property that is classified residential as determined under subdivision 78.2733.78.28    The market value of class 4b property has a class rate of 1.25 percent.78.29    (c) Class 4bb includes:78.30    (1) nonhomestead residential real estate containing one unit, other than seasonal 78.31residential recreational property; and78.32    (2) a single family dwelling, garage, and surrounding one acre of property on a 78.33nonhomestead farm classified under subdivision 23, paragraph (b).78.34    Class 4bb property has the same class rates as class 1a property under subdivision 22.79.1    Property that has been classified as seasonal residential recreational property at 79.2any time during which it has been owned by the current owner or spouse of the current 79.3owner does not qualify for class 4bb.79.4    (d) Class 4c property includes:79.5    (1) except as provided in subdivision 22, paragraph (c), real and personal property 79.6devoted to commercial temporary and seasonal residential occupancy for recreation 79.7purposes, including real and personal property devoted to temporary and seasonal 79.8residential occupancy for recreation purposes and not devoted to commercial purposes for 79.9not more than 250 days in the year preceding the year of assessment. For purposes of this 79.10clause, property is devoted to a commercial purpose on a specific day if any portion of the 79.11property is used for residential occupancy, and a fee is charged for residential occupancy. 79.12Class 4c property under this clause must contain three or more rental units. A "rental unit" 79.13is defined as a cabin, condominium, townhouse, sleeping room, or individual camping site 79.14equipped with water and electrical hookups for recreational vehicles. Class 4c property 79.15under this clause must provide recreational activities such as renting ice fishing houses, 79.16boats and motors, snowmobiles, downhill or cross-country ski equipment; provide marina 79.17services, launch services, or guide services; or sell bait and fishing tackle. A camping pad 79.18offered for rent by a property that otherwise qualifies for class 4c under this clause is also 79.19class 4c under this clause regardless of the term of the rental agreement, as long as the use 79.20of the camping pad does not exceed 250 days. In order for a property to be classified as 79.21class 4c, seasonal residential recreational for commercial purposes under this clause, either 79.22(i) the business located on the property must provide recreational activities, at least 40 79.23percent of the annual gross lodging receipts related to the property must be from business 79.24conducted during 90 consecutive days,  and either (i) (A) at least 60 percent of all paid 79.25bookings by lodging guests during the year must be for periods of at least two consecutive 79.26nights; or (ii) (B) at least 20 percent of the annual gross receipts must be from charges 79.27for rental of fish houses, boats and motors, snowmobiles, downhill or cross-country ski 79.28equipment, or charges for marina services, launch services, and guide services, or the sale 79.29of bait and fishing tackle providing recreational activities, or (ii) the business must contain 79.3020 or fewer rental units, and must be located in a township or a city with a population of 79.312,500 or less located outside the metropolitan area, as defined under section 473.121, 79.32subdivision 2, that contains a portion of a state trail administered by the Department of 79.33Natural Resources. For purposes of this determination item (i)(A), a paid booking of 79.34five or more nights shall be counted as two bookings. Class 4c property classified under 79.35this clause also includes commercial use real property used exclusively for recreational 79.36purposes in conjunction with other class 4c property classified under this clause and 80.1devoted to temporary and seasonal residential occupancy for recreational purposes, up to a 80.2total of two acres, provided the property is not devoted to commercial recreational use for 80.3more than 250 days in the year preceding the year of assessment and is located within two 80.4miles of the class 4c property with which it is used. Owners of real and personal property 80.5devoted to temporary and seasonal residential occupancy for recreation purposes and all 80.6or a portion of which was devoted to commercial purposes for not more than 250 days in 80.7the year preceding the year of assessment desiring classification as class 4c, In order for a 80.8property to qualify for classification under this clause, the owner must submit a declaration 80.9to the assessor designating the cabins or units occupied for 250 days or less in the year 80.10preceding the year of assessment by January 15 of the assessment year. Those cabins or 80.11units and a proportionate share of the land on which they are located must be designated 80.12class 4c under this clause as otherwise provided. The remainder of the cabins or units and 80.13a proportionate share of the land on which they are located will be designated as class 3a. 80.14The owner of property desiring designation as class 4c property under this clause must 80.15provide guest registers or other records demonstrating that the units for which class 4c 80.16designation is sought were not occupied for more than 250 days in the year preceding the 80.17assessment if so requested. The portion of a property operated as a (1) restaurant, (2) bar, 80.18(3) gift shop, (4) conference center or meeting room, and (5) other nonresidential facility 80.19operated on a commercial basis not directly related to temporary and seasonal residential 80.20occupancy for recreation purposes does not qualify for class 4c. For the purposes of this 80.21paragraph, "recreational activities" means renting ice fishing houses, boats and motors, 80.22snowmobiles, downhill or cross-country ski equipment; providing marina services, launch 80.23services, or guide services; or selling bait and fishing tackle;80.24    (2) qualified property used as a golf course if:80.25    (i) it is open to the public on a daily fee basis. It may charge membership fees or 80.26dues, but a membership fee may not be required in order to use the property for golfing, 80.27and its green fees for golfing must be comparable to green fees typically charged by 80.28municipal courses; and80.29    (ii) it meets the requirements of section 
         273.112, subdivision 3, paragraph (d).80.30    A structure used as a clubhouse, restaurant, or place of refreshment in conjunction 80.31with the golf course is classified as class 3a property;80.32    (3) real property up to a maximum of three acres of land owned and used by a 80.33nonprofit community service oriented organization and not used for residential purposes 80.34on either a temporary or permanent basis, provided that:80.35    (i) the property is not used for a revenue-producing activity for more than six days 80.36in the calendar year preceding the year of assessment; or81.1    (ii) the organization makes annual charitable contributions and donations at least 81.2equal to the property's previous year's property taxes and the property is allowed to be 81.3used for public and community meetings or events for no charge, as appropriate to the 81.4size of the facility.81.5    For purposes of this clause,81.6    (A) "charitable contributions and donations" has the same meaning as lawful 81.7gambling purposes under section 
         349.12, subdivision 25, excluding those purposes 81.8relating to the payment of taxes, assessments, fees, auditing costs, and utility payments;81.9    (B) "property taxes" excludes the state general tax;81.10    (C) a "nonprofit community service oriented organization" means any corporation, 81.11society, association, foundation, or institution organized and operated exclusively for 81.12charitable, religious, fraternal, civic, or educational purposes, and which is exempt from 81.13federal income taxation pursuant to section 501(c)(3), (8), (10), or (19) of the Internal 81.14Revenue Code; and81.15    (D) "revenue-producing activities" shall include but not be limited to property or that 81.16portion of the property that is used as an on-sale intoxicating liquor or 3.2 percent malt 81.17liquor establishment licensed under chapter 340A, a restaurant open to the public, bowling 81.18alley, a retail store, gambling conducted by organizations licensed under chapter 349, an 81.19insurance business, or office or other space leased or rented to a lessee who conducts a 81.20for-profit enterprise on the premises.81.21Any portion of the property not qualifying under either item (i) or (ii) is class 3a. The use 81.22of the property for social events open exclusively to members and their guests for periods 81.23of less than 24 hours, when an admission is not charged nor any revenues are received by 81.24the organization shall not be considered a revenue-producing activity.81.25    The organization shall maintain records of its charitable contributions and donations 81.26and of public meetings and events held on the property and make them available upon 81.27request any time to the assessor to ensure eligibility. An organization meeting the 81.28requirement under item (ii) must file an application by May 1 with the assessor for 81.29eligibility for the current year's assessment. The commissioner shall prescribe a uniform 81.30application form and instructions;81.31    (4) postsecondary student housing of not more than one acre of land that is owned by 81.32a nonprofit corporation organized under chapter 317A and is used exclusively by a student 81.33cooperative, sorority, or fraternity for on-campus housing or housing located within two 81.34miles of the border of a college campus;81.35    (5) (i) manufactured home parks as defined in section 
         327.14, subdivision 3, 81.36excluding manufactured home parks described in section 
         273.124, subdivision 3a, and (ii) 82.1manufactured home parks as defined in section 
         327.14, subdivision 3, that are described in 82.2section 
         273.124, subdivision 3a;82.3    (6) real property that is actively and exclusively devoted to indoor fitness, health, 82.4social, recreational, and related uses, is owned and operated by a not-for-profit corporation, 82.5and is located within the metropolitan area as defined in section 
         473.121, subdivision 2;82.6    (7) a leased or privately owned noncommercial aircraft storage hangar not exempt 82.7under section 
         272.01, subdivision 2, and the land on which it is located, provided that:82.8    (i) the land is on an airport owned or operated by a city, town, county, Metropolitan 82.9Airports Commission, or group thereof; and82.10    (ii) the land lease, or any ordinance or signed agreement restricting the use of the 82.11leased premise, prohibits commercial activity performed at the hangar.82.12    If a hangar classified under this clause is sold after June 30, 2000, a bill of sale must 82.13be filed by the new owner with the assessor of the county where the property is located 82.14within 60 days of the sale;82.15    (8) a privately owned noncommercial aircraft storage hangar not exempt under 82.16section 
         272.01, subdivision 2, and the land on which it is located, provided that:82.17    (i) the land abuts a public airport; and82.18    (ii) the owner of the aircraft storage hangar provides the assessor with a signed 82.19agreement restricting the use of the premises, prohibiting commercial use or activity 82.20performed at the hangar; and82.21    (9) residential real estate, a portion of which is used by the owner for homestead 82.22purposes, and that is also a place of lodging, if all of the following criteria are met:82.23    (i) rooms are provided for rent to transient guests that generally stay for periods 82.24of 14 or fewer days;82.25    (ii) meals are provided to persons who rent rooms, the cost of which is incorporated 82.26in the basic room rate;82.27    (iii) meals are not provided to the general public except for special events on fewer 82.28than seven days in the calendar year preceding the year of the assessment; and82.29    (iv) the owner is the operator of the property.82.30The market value subject to the 4c classification under this clause is limited to five rental 82.31units. Any rental units on the property in excess of five, must be valued and assessed as 82.32class 3a. The portion of the property used for purposes of a homestead by the owner must 82.33be classified as class 1a property under subdivision 22;82.34    (10) real property up to a maximum of three acres and operated as a restaurant 82.35as defined under section 
         157.15, subdivision 12, provided it: (A) is located on a lake 82.36as defined under section 
         103G.005, subdivision 15, paragraph (a), clause (3); and (B) 83.1is either devoted to commercial purposes for not more than 250 consecutive days, or 83.2receives at least 60 percent of its annual gross receipts from business conducted during 83.3four consecutive months. Gross receipts from the sale of alcoholic beverages must be 83.4included in determining the property's qualification under subitem (B). The property's 83.5primary business must be as a restaurant and not as a bar. Gross receipts from gift shop 83.6sales located on the premises must be excluded. Owners of real property desiring 4c 83.7classification under this clause must submit an annual declaration to the assessor by 83.8February 1 of the current assessment year, based on the property's relevant information for 83.9the preceding assessment year; and83.10(11) lakeshore and riparian property and adjacent land, not to exceed six acres, used 83.11as a marina, as defined in section 
         86A.20, subdivision 5, which is made accessible to 83.12the public and devoted to recreational use for marina services. The marina owner must 83.13annually provide evidence to the assessor that it provides services, including lake or river 83.14access to the public by means of an access ramp or other facility that is either located on 83.15the property of the marina or at a publicly owned site that abuts the property of the marina. 83.16No more than 800 feet of lakeshore may be included in this classification. Buildings used 83.17in conjunction with a marina for marina services, including but not limited to buildings 83.18used to provide food and beverage services, fuel, boat repairs, or the sale of bait or fishing 83.19tackle, are classified as class 3a property; and83.20(12) real and personal property devoted to noncommercial temporary and seasonal 83.21residential occupancy for recreation purposes.83.22    Class 4c property has a class rate of 1.5 percent of market value, except that (i) 83.23each parcel of noncommercial seasonal residential recreational property not used for 83.24commercial purposes under clause (12)  has the same class rates as class 4bb property, (ii) 83.25manufactured home parks assessed under clause (5), item (i), have the same class rate 83.26as class 4b property, and the market value of manufactured home parks assessed under 83.27clause (5), item (ii), has the same class rate as class 4d property if more than 50 percent 83.28of the lots in the park are occupied by shareholders in the cooperative corporation or 83.29association and a class rate of one percent if 50 percent or less of the lots are so occupied, 83.30(iii) commercial-use seasonal residential recreational property and marina recreational 83.31land as described in clause (11), has a class rate of one percent for the first $500,000 of 83.32market value, and 1.25 percent for the remaining market value, (iv) the market value of 83.33property described in clause (4) has a class rate of one percent, (v) the market value of 83.34property described in clauses (2), (6), and (10) has a class rate of 1.25 percent, and (vi) 83.35that portion of the market value of property in clause (9) qualifying for class 4c property 83.36has a class rate of 1.25 percent.84.1    (e) Class 4d property is qualifying low-income rental housing certified to the assessor 84.2by the Housing Finance Agency under section 
         273.128, subdivision 3. If only a portion 84.3of the units in the building qualify as low-income rental housing units as certified under 84.4section 
         273.128, subdivision 3, only the proportion of qualifying units to the total number 84.5of units in the building qualify for class 4d. The remaining portion of the building shall be 84.6classified by the assessor based upon its use. Class 4d also includes the same proportion of 84.7land as the qualifying low-income rental housing units are to the total units in the building. 84.8For all properties qualifying as class 4d, the market value determined by the assessor must 84.9be based on the normal approach to value using normal unrestricted rents.84.10    Class 4d property has a class rate of 0.75 percent.84.11EFFECTIVE DATE.This section is effective for taxes payable in 2012 and 84.12thereafter.84.13    Sec. 7. Minnesota Statutes 2010, section 273.13, subdivision 34, is amended to read:84.14    Subd. 34. Homestead of disabled veteran or family caregiver. (a) All or a portion 84.15of the market value of property owned by a veteran or by the veteran and theand serving 84.16as the veteran's spouse qualifying for homestead classification under subdivision 22 or 84.1723 under this section is excluded in determining the property's taxable market value if 84.18it serves as the homestead of a military veteran, as defined in section 197.447, who has 84.19a service-connected disability of 70 percent or more as certified by the United States 84.20Department of Veterans Affairs. To qualify for exclusion under this subdivision, the 84.21veteran must have been honorably discharged from the United States armed forces, as 84.22indicated by United States Government Form DD214 or other official military discharge 84.23papers, and must be certified by the United States Veterans Administration as having a 84.24service-connected disability.84.25    (b)(1) For a disability rating of 70 percent or more, $150,000 of market value is 84.26excluded, except as provided in clause (2); and84.27    (2) for a total (100 percent) and permanent disability, $300,000 of market value is 84.28excluded.84.29    (c) If a disabled veteran qualifying for a valuation exclusion under paragraph (b), 84.30clause (2), predeceases the veteran's spouse, and if upon the death of the veteran the 84.31spouse holds the legal or beneficial title to the homestead and permanently resides there, 84.32the exclusion shall carry over to the benefit of the veteran's spouse for one additional 84.33assessment year the current taxes payable year and for five additional taxes payable years84.34or until such time as the spouse remarries, or sells, transfers, or otherwise disposes of the 85.1property, whichever comes first. Qualification under this paragraph requires an annual 85.2application under paragraph (h).85.3(d) If the spouse of a member of any branch or unit of the United States armed 85.4forces who dies due to a service-connected cause while serving honorably in active 85.5service, as indicated on United States Government Form DD1300 or DD2064, holds 85.6the legal or beneficial title to a homestead and permanently resides there, the spouse is 85.7entitled to the benefit described in paragraph (b), clause (2), for five taxes payable years, 85.8or until such time as the spouse remarries or sells, transfers, or otherwise disposes of the 85.9property, whichever comes first.85.10(e) If a veteran meets the disability criteria of paragraph (a) but does not own 85.11property classified as homestead in the state of Minnesota, then the homestead of the 85.12veteran's primary family caregiver, if any, is eligible for the exclusion that the veteran 85.13would otherwise qualify for under paragraph (b).85.14    (d) (f) In the case of an agricultural homestead, only the portion of the property 85.15consisting of the house and garage and immediately surrounding one acre of land qualifies 85.16for the valuation exclusion under this subdivision.85.17    (e) (g) A property qualifying for a valuation exclusion under this subdivision is not 85.18eligible for the credit under section 273.1384, subdivision 1 market value exclusion under 85.19subdivision 35, or classification under subdivision 22, paragraph (b).85.20    (f) (h) To qualify for a valuation exclusion under this subdivision a property owner 85.21must apply to the assessor by July 1 of each assessment year, except that an annual 85.22reapplication is not required once a property has been accepted for a valuation exclusion 85.23under paragraph (a) and qualifies for the benefit described in paragraph (b), clause (2), and 85.24the property continues to qualify until there is a change in ownership. For an application 85.25received after July 1 of any calendar year, the exclusion shall become effective for the 85.26following assessment year.85.27(i) A first-time application by a qualifying spouse for the market value exclusion 85.28under paragraph (d) may be made any time within two years of the death of the service 85.29member.85.30(j) For purposes of this subdivision:85.31(1) "active service" has the meaning given in section 190.05;85.32(2) "own" means that the person's name is present as an owner on the property deed;85.33(3) "primary family caregiver" means a person who is approved by the secretary of 85.34the United States Department of Veterans Affairs for assistance as the primary provider 85.35of personal care services for an eligible veteran under the Program of Comprehensive 86.1Assistance for Family Caregivers, codified as United States Code, title 38, section 1720G; 86.2and86.3(4) "veteran" has the meaning given the term in section 197.447.86.4(k) The purpose of this provision of law providing a level of homestead property tax 86.5relief for gravely disabled veterans, their primary family caregivers, and their surviving 86.6spouses is to help ease the burdens of war for those among our state's citizens who bear 86.7those burdens most heavily.86.8EFFECTIVE DATE.(a) This section is effective for taxes payable in 2012 and 86.9thereafter, and applies to homesteads that initially qualified for the exclusion for taxes 86.10payable in 2009 and thereafter.86.11(b) A qualifier under paragraph (c) that would have been eligible for a market value 86.12exclusion under this section for taxes payable in 2011, if the change under this section had 86.13been effective for that year, shall be eligible to receive the benefit of the exclusion for the 86.14remaining number of total taxes payable years provided under paragraph (c).86.15    Sec. 8. Minnesota Statutes 2010, section 274.01, subdivision 1, is amended to read:86.16    Subdivision 1. Ordinary board; meetings, deadlines, grievances. (a) The town 86.17board of a town, or the council or other governing body of a city, is the board of appeal 86.18and equalization except (1) in cities whose charters provide for a board of equalization or 86.19(2) in any city or town that has transferred its local board of review power and duties to 86.20the county board as provided in subdivision 3. The county assessor shall fix a day and 86.21time when the board or the board of equalization shall meet in the assessment districts 86.22of the county. Notwithstanding any law or city charter to the contrary, a city board of 86.23equalization shall be referred to as a board of appeal and equalization. On or before 86.24February 15 of each year the assessor shall give written notice of the time to the city or 86.25town clerk. Notwithstanding the provisions of any charter to the contrary, the meetings 86.26must be held between April 1 and May 31 each year, provided that the board may review 86.27appeals of denials of green acres treatment as provided in paragraph (h) at any time. 86.28The clerk shall give published and posted notice of the meeting at least ten days before 86.29the date of the meeting.86.30    The board shall meet at the office of the clerk to review the assessment and 86.31classification of property in the town or city. No changes in valuation or classification 86.32which are intended to correct errors in judgment by the county assessor may be made by 86.33the county assessor after the board has adjourned in those cities or towns that hold a 86.34local board of review; however, corrections of errors that are merely clerical in nature or 86.35changes that extend homestead treatment to property are permitted after adjournment until 87.1the tax extension date for that assessment year. The changes must be fully documented and 87.2maintained in the assessor's office and must be available for review by any person. A copy 87.3of the changes made during this period in those cities or towns that hold a local board of 87.4review must be sent to the county board no later than December 31 of the assessment year.87.5    (b) The board shall determine whether the taxable property in the town or city has 87.6been properly placed on the list and properly valued by the assessor. If real or personal 87.7property has been omitted, the board shall place it on the list with its market value, and 87.8correct the assessment so that each tract or lot of real property, and each article, parcel, 87.9or class of personal property, is entered on the assessment list at its market value. No 87.10assessment of the property of any person may be raised unless the person has been 87.11duly notified of the intent of the board to do so. On application of any person feeling 87.12aggrieved, the board shall review the assessment or classification, or both, and correct 87.13it as appears just. The board may not make an individual market value adjustment or 87.14classification change that would benefit the property if the owner or other person having 87.15control over the property has refused the assessor access to inspect the property and the 87.16interior of any buildings or structures as provided in section 
         273.20. A board member 87.17shall not participate in any actions of the board which result in market value adjustments 87.18or classification changes to property owned by the board member, the spouse, parent, 87.19stepparent, child, stepchild, grandparent, grandchild, brother, sister, uncle, aunt, nephew, 87.20or niece of a board member, or property in which a board member has a financial interest. 87.21The relationship may be by blood or marriage.87.22    (c) A local board may reduce assessments upon petition of the taxpayer but the total 87.23reductions must not reduce the aggregate assessment made by the county assessor by more 87.24than one percent. If the total reductions would lower the aggregate assessments made by 87.25the county assessor by more than one percent, none of the adjustments may be made. The 87.26assessor shall correct any clerical errors or double assessments discovered by the board 87.27without regard to the one percent limitation.87.28    (d) A local board does not have authority to grant an exemption or to order property 87.29removed from the tax rolls.87.30    (e) A majority of the members may act at the meeting, and adjourn from day to day 87.31until they finish hearing the cases presented. The assessor shall attend, with the assessment 87.32books and papers, and take part in the proceedings, but must not vote. The county assessor, 87.33or an assistant delegated by the county assessor shall attend the meetings. The board shall 87.34list separately, on a form appended to the assessment book, all omitted property added 87.35to the list by the board and all items of property increased or decreased, with the market 88.1value of each item of property, added or changed by the board, placed opposite the item. 88.2The county assessor shall enter all changes made by the board in the assessment book.88.3    (f) Except as provided in subdivision 3, if a person fails to appear in person, by 88.4counsel, or by written communication before the board after being duly notified of the 88.5board's intent to raise the assessment of the property, or if a person feeling aggrieved by an 88.6assessment or classification fails to apply for a review of the assessment or classification, 88.7the person may not appear before the county board of appeal and equalization for a review 88.8of the assessment or classification. This paragraph does not apply if an assessment was 88.9made after the local board meeting, as provided in section 
         273.01, or if the person can 88.10establish not having received notice of market value at least five days before the local 88.11board meeting.88.12    (g) The local board must complete its work and adjourn within 20 days from the 88.13time of convening stated in the notice of the clerk, unless a longer period is approved by 88.14the commissioner of revenue. No action taken after that date is valid. All complaints 88.15about an assessment or classification made after the meeting of the board must be heard 88.16and determined by the county board of equalization. A nonresident may, at any time, 88.17before the meeting of the board file written objections to an assessment or classification 88.18with the county assessor. The objections must be presented to the board at its meeting by 88.19the county assessor for its consideration.88.20(h) The local board may, but is not required to, review appeals from property owners 88.21of denials by assessors of applications for valuation under section 273.111. If it intends 88.22to exercise the authority provided in this paragraph, the board must pass a resolution 88.23stating that it will do so, and must then review all such appeals until it passes a subsequent 88.24resolution stating that it will not review such appeals.88.25EFFECTIVE DATE.This section is effective for appeals denied after June 30, 88.262011.88.27    Sec. 9. Minnesota Statutes 2010, section 275.025, subdivision 1, is amended to read:88.28    Subdivision 1. Levy amount. The state general levy is levied against 88.29commercial-industrial property and seasonal residential recreational property, as defined 88.30in this section. The state general levy base amount for commercial-industrial property 88.31is $592,000,000 $739,000,000 for taxes payable in 2002 2012. The state general 88.32levy base amount for seasonal recreational property is $40,600,000 for taxes payable 88.33in 2012. For taxes payable in subsequent years 2013, the each levy base amount 88.34is increased each year by multiplying the levy base amount for the prior year taxes 88.35payable in 2012 by the sum of one plus the rate of increase, if any, in the implicit 89.1price deflator for government consumption expenditures and gross investment for 89.2state and local governments prepared by the Bureau of Economic Analysts of the 89.3United States Department of Commerce for the 12-month period ending March 31 89.4of the year prior to the year the taxes are payable, 2012. For taxes payable in 2014 89.5and 2015, the state general levy is $743,000,000 for commercial-industrial property 89.6and $40,500,000 for seasonal residential recreational property. For taxes payable in 89.72016, the state general levy is $668,700,000 for commercial-industrial property and 89.8$36,450,000 for seasonal residential recreational property. For taxes payable in 2017, the 89.9state general levy is $594,400,000 for commercial-industrial property and $32,400,000 89.10for seasonal residential recreational property. For taxes payable in 2018, the state 89.11general levy is $520,100,000 for commercial-industrial property and $28,350,000 89.12for seasonal residential recreational property. For taxes payable in 2019, the state 89.13general levy is $445,800,000 for commercial-industrial property and $24,300,000 89.14for seasonal residential recreational property. For taxes payable in 2020, the state 89.15general levy is $371,500,000 for commercial-industrial property and $20,250,000 89.16for seasonal residential recreational property. For taxes payable in 2021, the state 89.17general levy is $297,200,000 for commercial-industrial property and $16,200,000 for 89.18seasonal residential recreational property. For taxes payable in 2022, the state general 89.19levy is $222,900,000 for commercial-industrial property and $12,150,000 for seasonal 89.20residential recreational property. For taxes payable in 2023, the state general levy is 89.21$148,600,000 for commercial-industrial property and $8,100,000 for seasonal residential 89.22recreational property. For taxes payable in 2024, the state general levy is $74,300,000 89.23for commercial-industrial property and $4,050,000 for seasonal residential recreational 89.24property. The tax under this section is not treated as a local tax rate under section 
         469.17789.25and is not the levy of a governmental unit under chapters 276A and 473F.89.26The commissioner shall increase or decrease the preliminary or final rate for a year 89.27as necessary to account for errors and tax base changes that affected a preliminary or final 89.28rate for either of the two preceding years. Adjustments are allowed to the extent that the 89.29necessary information is available to the commissioner at the time the rates for a year must 89.30be certified, and for the following reasons:89.31(1) an erroneous report of taxable value by a local official;89.32(2) an erroneous calculation by the commissioner; and89.33(3) an increase or decrease in taxable value for commercial-industrial or seasonal 89.34residential recreational property reported on the abstracts of tax lists submitted under 89.35section 
         275.29 that was not reported on the abstracts of assessment submitted under 89.36section 
         270C.89 for the same year.90.1The commissioner may, but need not, make adjustments if the total difference in the tax 90.2levied for the year would be less than $100,000.90.3EFFECTIVE DATE.This section is effective for taxes payable in 2012 and 90.4thereafter.90.5    Sec. 10. Minnesota Statutes 2010, section 275.025, subdivision 3, is amended to read:90.6    Subd. 3. Seasonal residential recreational tax capacity. For the purposes of this 90.7section, "seasonal residential recreational tax capacity" means the tax capacity of tier III 90.8of class 1c under section 
         273.13, subdivision 22, and all class 4c(1) and, 4c(3)(ii), and 90.94c(12) property under section 
         273.13, subdivision 25, except that the first $76,000 of 90.10market value of each noncommercial class 4c(1) 4c(12) property has a tax capacity for this 90.11purpose equal to 40 percent of its tax capacity under section 
         273.13.90.12EFFECTIVE DATE.This section is effective for taxes payable in 2012 and 90.13thereafter.90.14    Sec. 11. Minnesota Statutes 2010, section 275.025, subdivision 4, is amended to read:90.15    Subd. 4. Apportionment and levy of state general tax.Ninety-five percent of The 90.16state general tax must be levied by applying a uniform rate to all commercial-industrial tax 90.17capacity and five percent of the state general tax must be levied by applying a uniform 90.18rate to all seasonal residential recreational tax capacity. On or before October 1 each 90.19year, the commissioner of revenue shall certify the preliminary state general levy rates to 90.20each county auditor that must be used to prepare the notices of proposed property taxes 90.21for taxes payable in the following year. By January 1 of each year, the commissioner 90.22shall certify the final state general levy rate rates to each county auditor that shall be 90.23used in spreading taxes.90.24EFFECTIVE DATE.This section is effective for taxes payable in 2012 and 90.25thereafter.90.26    Sec. 12. Minnesota Statutes 2010, section 275.70, subdivision 5, is amended to read:90.27    Subd. 5. Special levies. "Special levies" means those portions of ad valorem taxes 90.28levied by a local governmental unit for the following purposes or in the following manner:90.29    (1) to pay the costs of the principal and interest on bonded indebtedness or to 90.30reimburse for the amount of liquor store revenues used to pay the principal and interest 90.31due on municipal liquor store bonds in the year preceding the year for which the levy 90.32limit is calculated;91.1    (2) to pay the costs of principal and interest on certificates of indebtedness issued for 91.2any corporate purpose except for the following:91.3    (i) tax anticipation or aid anticipation certificates of indebtedness;91.4    (ii) certificates of indebtedness issued under sections 
         298.28 and 
         298.282;91.5    (iii) certificates of indebtedness used to fund current expenses or to pay the costs of 91.6extraordinary expenditures that result from a public emergency; or91.7    (iv) certificates of indebtedness used to fund an insufficiency in tax receipts or an 91.8insufficiency in other revenue sources, provided that nothing in this subdivision limits the 91.9special levy authorized under section 
         475.755;91.10    (3) to provide for the bonded indebtedness portion of payments made to another 91.11political subdivision of the state of Minnesota;91.12    (4) to fund payments made to the Minnesota State Armory Building Commission 91.13under section 
         193.145, subdivision 2, to retire the principal and interest on armory 91.14construction bonds;91.15    (5) property taxes approved by voters which are levied against the referendum 91.16market value as provided under section 
         275.61;91.17    (6) to fund matching requirements needed to qualify for federal or state grants or 91.18programs to the extent that either (i) the matching requirement exceeds the matching 91.19requirement in calendar year 2001, or (ii) it is a new matching requirement that did not 91.20exist prior to 2002;91.21    (7) to pay the expenses reasonably and necessarily incurred in preparing for or 91.22repairing the effects of natural disaster including the occurrence or threat of widespread 91.23or severe damage, injury, or loss of life or property resulting from natural causes, in 91.24accordance with standards formulated by the Emergency Services Division of the state 91.25Department of Public Safety, as allowed by the commissioner of revenue under section 91.26275.74, subdivision 2
         ;91.27    (8) pay amounts required to correct an error in the levy certified to the county 91.28auditor by a city or county in a levy year, but only to the extent that when added to the 91.29preceding year's levy it is not in excess of an applicable statutory, special law or charter 91.30limitation, or the limitation imposed on the governmental subdivision by sections 
         275.70 91.31to 
         275.74 in the preceding levy year;91.32    (9) to pay an abatement under section 
         469.1815;91.33    (10) to pay any costs attributable to increases in the employer contribution rates 91.34under chapter 353, or locally administered pension plans, that are effective after June 91.3530, 2001;92.1    (11) to pay the operating or maintenance costs of a county jail as authorized in 92.2section 
         641.01 or 
         641.262, or of a correctional facility as defined in section 
         241.021, 92.3subdivision 1
         , paragraph (f), to the extent that the county can demonstrate to the 92.4commissioner of revenue that the amount has been included in the county budget as 92.5a direct result of a rule, minimum requirement, minimum standard, or directive of the 92.6Department of Corrections, or to pay the operating or maintenance costs of a regional jail 92.7as authorized in section 
         641.262. For purposes of this clause, a district court order is 92.8not a rule, minimum requirement, minimum standard, or directive of the Department of 92.9Corrections. If the county utilizes this special levy, except to pay operating or maintenance 92.10costs of a new regional jail facility under sections 
         641.262 to 
         641.264 which will not 92.11replace an existing jail facility, any amount levied by the county in the previous levy year 92.12for the purposes specified under this clause and included in the county's previous year's 92.13levy limitation computed under section 
         275.71, shall be deducted from the levy limit 92.14base under section 
         275.71, subdivision 2, when determining the county's current year 92.15levy limitation. The county shall provide the necessary information to the commissioner 92.16of revenue for making this determination;92.17    (12) to pay for operation of a lake improvement district, as authorized under section 92.18103B.555
         . If the county utilizes this special levy, any amount levied by the county in the 92.19previous levy year for the purposes specified under this clause and included in the county's 92.20previous year's levy limitation computed under section 
         275.71 shall be deducted from 92.21the levy limit base under section 
         275.71, subdivision 2, when determining the county's 92.22current year levy limitation. The county shall provide the necessary information to the 92.23commissioner of revenue for making this determination;92.24    (13) to repay a state or federal loan used to fund the direct or indirect required 92.25spending by the local government due to a state or federal transportation project or other 92.26state or federal capital project. This authority may only be used if the project is not a 92.27local government initiative;92.28    (14) to pay for court administration costs as required under section 
         273.1398, 92.29subdivision 4b
         , less the (i) county's share of transferred fines and fees collected by the 92.30district courts in the county for calendar year 2001 and (ii) the aid amount certified to be 92.31paid to the county in 2004 under section 
         273.1398, subdivision 4c; however, for taxes 92.32levied to pay for these costs in the year in which the court financing is transferred to the 92.33state, the amount under this clause is limited to the amount of aid the county is certified to 92.34receive under section 
         273.1398, subdivision 4a;92.35    (15) to fund a police or firefighters relief association as required under section 
         69.77 92.36to the extent that the required amount exceeds the amount levied for this purpose in 2001;93.1    (16) for purposes of a storm sewer improvement district under section 
         444.20;93.2    (17) to pay for the maintenance and support of a city or county society for the 93.3prevention of cruelty to animals under section 
         343.11, but not to exceed in any year 93.4$4,800 or the sum of $1 per capita based on the county's or city's population as of the most 93.5recent federal census, whichever is greater. If the city or county uses this special levy, any 93.6amount levied by the city or county in the previous levy year for the purposes specified 93.7in this clause and included in the city's or county's previous year's levy limit computed 93.8under section 
         275.71, must be deducted from the levy limit base under section 
         275.71, 93.9subdivision 2
         , in determining the city's or county's current year levy limit;93.10    (18) for counties, to pay for the increase in their share of health and human service 93.11costs caused by reductions in federal health and human services grants effective after 93.12September 30, 2007;93.13    (19) for a city, for the costs reasonably and necessarily incurred for securing, 93.14maintaining, or demolishing foreclosed or abandoned residential properties, as allowed by 93.15the commissioner of revenue under section 
         275.74, subdivision 2. A city must have either 93.16(i) a foreclosure rate of at least 1.4 percent in 2007, or (ii) a foreclosure rate in 2007 in 93.17the city or in a zip code area of the city that is at least 50 percent higher than the average 93.18foreclosure rate in the metropolitan area, as defined in section 
         473.121, subdivision 2, 93.19to use this special levy. For purposes of this paragraph, "foreclosure rate" means the 93.20number of foreclosures, as indicated by sheriff sales records, divided by the number of 93.21households in the city in 2007;93.22    (20) for a city, for the unreimbursed costs of redeployed traffic-control agents and 93.23lost traffic citation revenue due to the collapse of the Interstate 35W bridge, as certified 93.24to the Federal Highway Administration;93.25    (21) to pay costs attributable to wages and benefits for sheriff, police, and fire 93.26personnel. If a local governmental unit did not use this special levy in the previous year its 93.27levy limit base under section 
         275.71 shall be reduced by the amount equal to the amount it 93.28levied for the purposes specified in this clause in the previous year;93.29    (22) an amount equal to any reductions in the certified aids or credit reimbursements 93.30payable under sections 
         477A.011 to 
         477A.014, and section 
         273.1384, due to unallotment 93.31under section 
         16A.152 or reductions under another provision of law. The amount of the 93.32levy allowed under this clause for each year is limited to the amount unallotted or reduced 93.33from the aids and credit reimbursements certified for payment in the year following the 93.34calendar year in which the tax levy is certified unless the unallotment or reduction amount 93.35is not known by September 1 of the levy certification year, and the local government has 94.1not adjusted its levy under section 
         275.065, subdivision 6, or 
         275.07, subdivision 6, in 94.2which case that unallotment or reduction amount may be levied in the following year;94.3(23) to pay for the difference between one-half of the costs of confining sex offenders 94.4undergoing the civil commitment process and any state payments for this purpose pursuant 94.5to section 
         253B.185, subdivision 5;94.6(24) for a county to pay the costs of the first year of maintaining and operating a new 94.7facility or new expansion, either of which contains courts, corrections, dispatch, criminal 94.8investigation labs, or other public safety facilities and for which all or a portion of the 94.9funding for the site acquisition, building design, site preparation, construction, and related 94.10equipment was issued or authorized prior to the imposition of levy limits in 2008. The 94.11levy limit base shall then be increased by an amount equal to the new facility's first full 94.12year's operating costs as described in this clause; and94.13(25) for the estimated amount of reduction to market value credit reimbursements 94.14under section 
         273.1384 for credits payable in the year in which the levy is payable., except 94.15for a reduction due to the repeal of section 273.1384, subdivision 1; and94.16(26) for the reduction in the county share of payments to the county under sections 94.1797A.061 and 477A.11 to 477A.17 between payments certified in calendar year 2011 and 94.18the estimated amount of the county share in the year in which the levy is payable provided 94.19the reduction is at least one percent of the county's total payable 2011 certified levy.94.20EFFECTIVE DATE.This section is effective for taxes levied in 2011 and 2012.94.21    Sec. 13. Minnesota Statutes 2010, section 275.71, subdivision 2, is amended to read:94.22    Subd. 2. Levy limit base. (a) The levy limit base for a local governmental unit for 94.23taxes levied in 2008 is its levy aid base from the previous year, subject to any adjustments 94.24under section 
         275.72. For taxes levied in 2009 and 2010 through 2012, the levy limit base 94.25for a local governmental unit is its adjusted levy limit base in the previous year, subject 94.26to any adjustments under section 
         275.72.94.27EFFECTIVE DATE.This section is effective for taxes levied in 2011 and 2012.94.28    Sec. 14. Minnesota Statutes 2010, section 275.71, subdivision 4, is amended to read:94.29    Subd. 4. Adjusted levy limit base.(a)  For taxes levied in 2008 through 2010 2012, 94.30the adjusted levy limit base is equal to the levy limit base computed under subdivision 2 94.31or section 
         275.72, multiplied by:94.32    (1) one plus the percentage growth in the implicit price deflator, but the percentage 94.33shall not be less than zero or exceed 3.9 percent;95.1    (2) one plus a percentage equal to 50 percent of the percentage increase in the number 95.2of households, if any, for the most recent 12-month period for which data is available; and95.3    (3) one plus a percentage equal to 50 percent of the percentage increase in the 95.4taxable market value of the jurisdiction due to new construction of class 3 property, as 95.5defined in section 
         273.13, subdivision 4, except for state-assessed utility and railroad 95.6property, for the most recent year for which data is available.95.7(b) If a city decertifies a tax increment finance district in the year in which the levy is 95.8set, the base amount determined under paragraph (a) is increased by an amount equal to 95.9the city's current year tax rate multiplied by the retained captured value for the district for 95.10the year prior to the year in which the levy is set, as reported on the TIF supplement to 95.11the abstract of tax lists.95.12EFFECTIVE DATE.This section is effective for taxes levied in 2011 and 2012.95.13    Sec. 15. Minnesota Statutes 2010, section 275.71, subdivision 5, is amended to read:95.14    Subd. 5. Property tax levy limit. (a) For taxes levied in 2008 through 2010 2012, 95.15the property tax levy limit for a local governmental unit is equal to its adjusted levy limit 95.16base determined under subdivision 4 plus any additional levy authorized under section 95.17275.73
         , which is levied against net tax capacity, reduced by the sum of (i) the total amount 95.18of aids and reimbursements that the local governmental unit is certified to receive under 95.19sections 
         477A.011 to 
         477A.014, (ii) taconite aids under sections 
         298.28 and 
         298.282 95.20including any aid which was required to be placed in a special fund for expenditure in 95.21the next succeeding year, (iii) estimated payments to the local governmental unit under 95.22section 
         272.029, adjusted for any error in estimation in the preceding year, and (iv) aids 95.23under section 
         477A.16.95.24(b) If an aid, payment, or other amount used in paragraph (a) to reduce a local 95.25government unit's levy limit is reduced by an unallotment under section 
         16A.152, the 95.26amount of the aid, payment, or other amount prior to the unallotment is used in the 95.27computations in paragraph (a). In order for a local government unit to levy outside of its 95.28limit to offset the reduction in revenues attributable to an unallotment, it must do so under, 95.29and to the extent authorized by, a special levy authorization.95.30EFFECTIVE DATE.This section is effective for taxes levied in 2011 and 2012.95.31    Sec. 16. [275.761] MAINTENANCE OF EFFORT REQUIREMENTS 95.32SUSPENDED.96.1(a) Notwithstanding any law to the contrary and except as provided in paragraphs 96.2(b) and (c), all maintenance of effort requirements for counties, including but not limited 96.3to those under sections 116L.872, 134.34, 245.4835, 245.4932, 245.714, 256F.10, and 96.4256F.13, are suspended.96.5(b) This section does not permit a county to suspend compliance with maintenance 96.6of effort requirements to the extent that the suspension  would:96.7(1) require the state to expend additional money or incur additional costs; or96.8(2) cause a reduction in the receipt by the state or the county of federal funds.96.9(c) The commissioner of management and budget may determine the maintenance 96.10of effort requirements that are not permitted, in whole or in part, to be suspended under 96.11paragraph (b). The commissioner shall publish these determinations on the department's 96.12Web site and no county may suspend compliance with a maintenance of effort requirement 96.13that the commissioner determines is not subject to suspension.96.14(d) Notwithstanding any law to the contrary, all statutory and home rule charter cities 96.15are exempt from the maintenance of effort requirements under section 134.34.96.16EFFECTIVE DATE.This section is effective for maintenance of effort 96.17requirements in calendar years 2012 and 2013.96.18    Sec. 17.  REPEALER.96.19Minnesota Statutes 2010, section 275.025, is repealed.96.20EFFECTIVE DATE.This section is effective for taxes levied in 2024, payable 96.21in 2025, and thereafter.96.22ARTICLE 796.23 AIDS, CREDITS, PAYMENTS, AND REFUNDS96.24    Section 1. Minnesota Statutes 2010, section 88.49, subdivision 5, is amended to read:96.25    Subd. 5. Cancellation. Upon the failure of the owner faithfully to fulfill and 96.26perform such contract or any provision thereof, or any requirement of sections 
         88.47 to 96.2788.53
         , or any rule adopted by the commissioner thereunder, the commissioner may cancel 96.28the contract in the manner herein provided. The commissioner shall give to the owner, in 96.29the manner prescribed in section 
         88.48, subdivision 4, 60 days' notice of a hearing thereon 96.30at which the owner may appear and show cause, if any, why the contract should not be 96.31canceled. The commissioner shall thereupon determine whether the contract should be 96.32canceled and make an order to that effect. Notice of the commissioner's determination 96.33and the making of the order shall be given to the owner in the manner provided in section 97.188.48, subdivision 4
         . On determining that the contract should be canceled and no appeal 97.2therefrom be taken, the commissioner shall send notice thereof to the auditor of the county 97.3and to the town clerk of the town affected and file with the recorder a certified copy of the 97.4order, who shall forthwith note the cancellation upon the record thereof, and thereupon the 97.5land therein described shall cease to be an auxiliary forest and, together with the timber 97.6thereon, become liable to all taxes and assessments that otherwise would have been levied 97.7against it had it never been an auxiliary forest from the time of the making of the contract, 97.8any provisions of the statutes of limitation to the contrary notwithstanding, less the amount 97.9of taxes paid under the provisions of section 
         88.51, subdivision 1, together with interest on 97.10such taxes and assessments at six percent per annum, but without penalties.97.11    The commissioner may in like manner and with like effect cancel the contract upon 97.12written application of the owner.97.13    The commissioner shall cancel any contract if the owner has made successful 97.14application under sections 290C.01 to 290C.11, the Sustainable Forest Incentive Act, and 97.15has paid to the county treasurer the difference between the amount which would have been 97.16paid had the land under contract been subject to the Minnesota Tree Growth Tax Law and 97.17the Sustainable Forest Incentive Act from the date of the recording of the contract and 97.18the amount actually paid under section 88.51, subdivisions 1 and 2. This tax difference 97.19must be calculated based on the years the lands would have been taxed under the Tree 97.20Growth Tax Law and the Sustainable Forest Incentive Act. The sustainable forest tax 97.21difference is net of the incentive payment of section 290C.07. If the amount which would 97.22have been paid, had the land under contract been under the Minnesota Tree Growth Tax 97.23Law and the Sustainable Forest Incentive Act from the date of the filing of the contract, 97.24is less than the amount actually paid under the contract, the cancellation shall be made 97.25without further payment by the owner.97.26    When the execution of any contract creating an auxiliary forest shall have been 97.27procured through fraud or deception practiced upon the county board or the commissioner 97.28or any other person or body representing the state, it may be canceled upon suit brought by 97.29the attorney general at the direction of the commissioner. This cancellation shall have the 97.30same effect as the cancellation of a contract by the commissioner.97.31EFFECTIVE DATE.This section is effective the day following final enactment.97.32    Sec. 2. Minnesota Statutes 2010, section 88.49, subdivision 9a, is amended to read:97.33    Subd. 9a. Land trades with governmental units. Notwithstanding subdivisions 97.346 and 9, or section 
         88.491, subdivision 2, if an owner trades land under auxiliary forest 97.35contract for land owned by a governmental unit and the owner agrees to use the land 98.1received in trade from the governmental unit for the production of forest products, upon 98.2resolution of the county board, no taxes and assessments shall be levied against the land 98.3traded, except that any current or delinquent annual taxes or yield taxes due on that land 98.4while it was under the auxiliary forest provision must be paid prior to the land exchange. 98.5The land received from the governmental unit in the land trade automatically qualifies for 98.6inclusion in the Sustainable Forest Incentive Act.98.7EFFECTIVE DATE.This section is effective the day following final enactment.98.8    Sec. 3. Minnesota Statutes 2010, section 97A.061, subdivision 1, is amended to read:98.9    Subdivision 1. Applicability; amount. (a) The commissioner shall annually make a 98.10payment to each county having public hunting areas and game refuges. Money to make 98.11the payments is annually appropriated for that purpose from the general fund. Except as 98.12provided in paragraph (b), this section does not apply to state trust fund land and other 98.13state land not purchased for game refuge or public hunting purposes. Except as provided 98.14in paragraph (b), the payment shall be the greatest of:98.15(1) 35 30.8 percent of the gross receipts from all special use permits and leases of 98.16land acquired for public hunting and game refuges;98.17(2) 50 44 cents per acre on land purchased actually used for public hunting or game 98.18refuges; or98.19(3) three-fourths of one.66 percent of the appraised value of purchased land actually 98.20used for public hunting and game refuges.98.21(b) The payment shall be 50 percent of the dollar amount adjusted for inflation as 98.22determined under section 
         477A.12, subdivision 1, paragraph (a), clause (1), multiplied 98.23by the number of acres of land in the county that are owned by another state agency for 98.24military purposes and designated as a game refuge under section 
         97A.085.98.25(c) The payment must be reduced by the amount paid under subdivision 3 for 98.26croplands managed for wild geese.98.27(d) The appraised value is the purchase price for five years after acquisition. 98.28The appraised value shall be determined by the county assessor every five years after 98.29acquisition.98.30EFFECTIVE DATE.This section is effective for aids payable in calendar year 98.312011 and thereafter.98.32    Sec. 4. Minnesota Statutes 2010, section 97A.061, subdivision 3, is amended to read:99.1    Subd. 3. Goose management croplands. (a) The commissioner shall make a 99.2payment on July 1 of each year to each county where the state owns more than 1,000 acres 99.3of crop land, for wild goose management purposes. The payment shall be equal to 88 99.4percent of the taxes assessed on comparable, privately owned, adjacent land. Money to 99.5make the payments is annually appropriated for that purpose from the general fund. The 99.6county treasurer shall allocate and distribute the payment as provided in subdivision 2.99.7(b) The land used for goose management under this subdivision is exempt from 99.8taxation as provided in sections 
         272.01 and 
         273.19.99.9EFFECTIVE DATE.This section is effective for aids payable in calendar year 99.102011 and thereafter.99.11    Sec. 5. Minnesota Statutes 2010, section 126C.01, subdivision 3, is amended to read:99.12    Subd. 3. Referendum market value. "Referendum market value" means the market 99.13value of all taxable property, excluding property classified as class 2, noncommercial 99.144c(1), or 4c(4) under section 
         273.13. The portion of class 2a property consisting of the 99.15house, garage, and surrounding one acre of land of an agricultural homestead is included 99.16in referendum market value. For the purposes of this subdivision, in the case of class 1a, 99.171b, or 2a property, "market value" means the value prior to the exclusion under section 99.18273.13, subdivision 35.Any class of property, or any portion of a class of property, that 99.19is included in the definition of referendum market value and that has a class rate of less 99.20than one percent under section 
         273.13 shall have a referendum market value equal to its 99.21net tax capacity market value times its class rate, multiplied by 100. 99.22EFFECTIVE DATE.This section is effective for taxes payable in 2012 and 99.23thereafter.99.24    Sec. 6. Minnesota Statutes 2010, section 270A.03, subdivision 7, is amended to read:99.25    Subd. 7. Refund. "Refund" means an individual income tax refund or political 99.26contribution refund, pursuant to chapter 290, or a property tax credit or refund, pursuant to 99.27chapter 290A, or a sustainable forest tax payment to a claimant under chapter 290C.99.28For purposes of this chapter, lottery prizes, as set forth in section 
         349A.08, 99.29subdivision 8
         , and amounts granted to persons by the legislature on the recommendation 99.30of the joint senate-house of representatives Subcommittee on Claims shall be treated 99.31as refunds.99.32In the case of a joint property tax refund payable to spouses under chapter 290A, 99.33the refund shall be considered as belonging to each spouse in the proportion of the total 100.1refund that equals each spouse's proportion of the total income determined under section 100.2290A.03, subdivision 3
         . In the case of a joint income tax refund under chapter 289A, the 100.3refund shall be considered as belonging to each spouse in the proportion of the total 100.4refund that equals each spouse's proportion of the total taxable income determined under 100.5section 
         290.01, subdivision 29. The commissioner shall remit the entire refund to the 100.6claimant agency, which shall, upon the request of the spouse who does not owe the debt, 100.7determine the amount of the refund belonging to that spouse and refund the amount to 100.8that spouse. For court fines, fees, and surcharges and court-ordered restitution under 100.9section 
         611A.04, subdivision 2, the notice provided by the commissioner of revenue under 100.10section 
         270A.07, subdivision 2, paragraph (b), serves as the appropriate legal notice 100.11to the spouse who does not owe the debt.100.12EFFECTIVE DATE.This section is effective the day following final enactment.100.13    Sec. 7. Minnesota Statutes 2010, section 273.114, subdivision 2, as amended by Laws 100.142011, chapter 13, section 2, is amended to read:100.15    Subd. 2. Requirements. Class 2b property that had been properly enrolled under 100.16section 273.111 for taxes payable in 2008, or that is part of an agricultural homestead 100.17under section 273.13, subdivision 23, paragraph (a), at least a portion of which is enrolled 100.18under section 
         273.111, is entitled to valuation and tax deferment under this section if:100.19    (1) the property is contiguous to class 2a property enrolled under section 
         273.111100.20under the same ownership;100.21    (2) there are no delinquent property taxes on the land; and100.22    (3) the property is not also enrolled for valuation and deferment under section 100.23273.111 or 273.112, or chapter 290C or 473H.100.24EFFECTIVE DATE.This section is effective the day following final enactment.100.25    Sec. 8. Minnesota Statutes 2010, section 273.13, subdivision 23, is amended to read:100.26    Subd. 23. Class 2. (a) An agricultural homestead consists of class 2a agricultural 100.27land that is homesteaded, along with any class 2b rural vacant land that is contiguous to 100.28the class 2a land under the same ownership. The market value of the house and garage 100.29and immediately surrounding one acre of land has the same class rates as class 1a or 1b 100.30property under subdivision 22. The value of the remaining land including improvements 100.31up to the first tier valuation limit of agricultural homestead property has a net class rate 100.32of 0.5 percent of market value. The remaining property over the first tier has a class rate 100.33of one percent of market value. For purposes of this subdivision, the "first tier valuation 101.1limit of agricultural homestead property" and "first tier" means the limit certified under 101.2section 
         273.11, subdivision 23.101.3    (b) Class 2a agricultural land consists of parcels of property, or portions thereof, that 101.4are agricultural land and buildings. Class 2a property has a net class rate of one percent of 101.5market value, unless it is part of an agricultural homestead under paragraph (a). Class 101.62a property must also include any property that would otherwise be classified as 2b, 101.7but is interspersed with class 2a property, including but not limited to sloughs, wooded 101.8wind shelters, acreage abutting ditches, ravines, rock piles, land subject to a setback 101.9requirement, and other similar land that is impractical for the assessor to value separately 101.10from the rest of the property or that is unlikely to be able to be sold separately from 101.11the rest of the property.101.12    An assessor may classify the part of a parcel described in this subdivision that is used 101.13for agricultural purposes as class 2a and the remainder in the class appropriate to its use.101.14    (c) Class 2b rural vacant land consists of parcels of property, or portions thereof, 101.15that are unplatted real estate, rural in character and not used for agricultural purposes, 101.16including land used for growing trees for timber, lumber, and wood and wood products, 101.17that is not improved with a structure. The presence of a minor, ancillary nonresidential 101.18structure as defined by the commissioner of revenue does not disqualify the property from 101.19classification under this paragraph. Any parcel of 20 acres or more improved with a 101.20structure that is not a minor, ancillary nonresidential structure must be split-classified, and 101.21ten acres must be assigned to the split parcel containing the structure. Class 2b property 101.22has a net class rate of one percent of market value unless it is part of an agricultural 101.23homestead under paragraph (a), or qualifies as class 2c under paragraph (d).101.24    (d) Class 2c managed forest land consists of no less than 20 and no more than 101.251,920 acres statewide per taxpayer that is being managed under a forest management 101.26plan that meets the requirements of chapter 290C, but is not enrolled in the sustainable 101.27forest resource management incentive program. It has a class rate of .65 percent, 101.28provided that the owner of the property must apply to the assessor in order for the 101.29property to initially qualify for the reduced rate and provide the information required 101.30by the assessor to verify that the property qualifies for the reduced rate. If the assessor 101.31receives the application and information before May 1 in an assessment year, the property 101.32qualifies beginning with that assessment year. If the assessor receives the application 101.33and information after April 30 in an assessment year, the property may not qualify until 101.34the next assessment year. The commissioner of natural resources must concur that the 101.35land is qualified. The commissioner of natural resources shall annually provide county 101.36assessors verification information on a timely basis. The presence of a minor, ancillary 102.1nonresidential structure as defined by the commissioner of revenue does not disqualify 102.2the property from classification under this paragraph. For purposes of this paragraph, 102.3a "forest management plan" means a written document providing a framework for 102.4site-specific healthy, productive, and sustainable forest resources. A forest management 102.5plan must include at least the following: (i) forest management goals for the land; (ii) a 102.6reliable field inventory of the individual forest cover types, their age, and density; (iii) a 102.7description of the soil type and quality; (iv) an aerial photo and/or map of the vegetation 102.8and other natural features of the land clearly indicating the boundaries of the land and of 102.9the forest land; (v) the proposed future conditions of the land; (vi) prescriptions to meet 102.10proposed future conditions of the land; (vii) a recommended timetable for implementing 102.11the prescribed activities; and (viii) a legal description of the land encompassing the 102.12parcels included in the plan. All management activities prescribed in a plan must be in 102.13accordance with the recommended timber harvesting and forest management guidelines. 102.14The commissioner of natural resources shall provide a framework for plan content and 102.15updating and revising plans.102.16    (e) Agricultural land as used in this section means contiguous acreage of ten 102.17acres or more, used during the preceding year for agricultural purposes. "Agricultural 102.18purposes" as used in this section means the raising, cultivation, drying, or storage of 102.19agricultural products for sale, or the storage of machinery or equipment used in support 102.20of agricultural production by the same farm entity. For a property to be classified as 102.21agricultural based only on the drying or storage of agricultural products, the products 102.22being dried or stored must have been produced by the same farm entity as the entity 102.23operating the drying or storage facility. "Agricultural purposes" also includes enrollment 102.24in the Reinvest in Minnesota program under sections 
         103F.501 to 
         103F.535 or the federal 102.25Conservation Reserve Program as contained in Public Law 99-198 or a similar state 102.26or federal conservation program if the property was classified as agricultural (i) under 102.27this subdivision for the assessment year 2002 or (ii) in the year prior to its enrollment. 102.28Agricultural classification shall not be based upon the market value of any residential 102.29structures on the parcel or contiguous parcels under the same ownership.102.30    (f) Real estate of less than ten acres, which is exclusively or intensively used for 102.31raising or cultivating agricultural products, shall be considered as agricultural land. To 102.32qualify under this paragraph, property that includes a residential structure must be used 102.33intensively for one of the following purposes:102.34    (i) for drying or storage of grain or storage of machinery or equipment used to 102.35support agricultural activities on other parcels of property operated by the same farming 102.36entity;103.1    (ii) as a nursery, provided that only those acres used to produce nursery stock are 103.2considered agricultural land;103.3    (iii) for livestock or poultry confinement, provided that land that is used only for 103.4pasturing and grazing does not qualify; or103.5    (iv) for market farming; for purposes of this paragraph, "market farming" means the 103.6cultivation of one or more fruits or vegetables or production of animal or other agricultural 103.7products for sale to local markets by the farmer or an organization with which the farmer 103.8is affiliated.103.9    (g) Land shall be classified as agricultural even if all or a portion of the agricultural 103.10use of that property is the leasing to, or use by another person for agricultural purposes.103.11    Classification under this subdivision is not determinative for qualifying under 103.12section 
         273.111.103.13    (h) The property classification under this section supersedes, for property tax 103.14purposes only, any locally administered agricultural policies or land use restrictions that 103.15define minimum or maximum farm acreage.103.16    (i) The term "agricultural products" as used in this subdivision includes production 103.17for sale of:103.18    (1) livestock, dairy animals, dairy products, poultry and poultry products, fur-bearing 103.19animals, horticultural and nursery stock, fruit of all kinds, vegetables, forage, grains, 103.20bees, and apiary products by the owner;103.21    (2) fish bred for sale and consumption if the fish breeding occurs on land zoned 103.22for agricultural use;103.23    (3) the commercial boarding of horses, which may include related horse training and 103.24riding instruction, if the boarding is done on property that is also used for raising pasture 103.25to graze horses or raising or cultivating other agricultural products as defined in clause (1);103.26    (4) property which is owned and operated by nonprofit organizations used for 103.27equestrian activities, excluding racing;103.28    (5) game birds and waterfowl bred and raised for use on a shooting preserve licensed 103.29under section 
         97A.115;103.30    (6) insects primarily bred to be used as food for animals;103.31    (7) trees, grown for sale as a crop, including short rotation woody crops, and not 103.32sold for timber, lumber, wood, or wood products; and103.33    (8) maple syrup taken from trees grown by a person licensed by the Minnesota 103.34Department of Agriculture under chapter 28A as a food processor.103.35    (j) If a parcel used for agricultural purposes is also used for commercial or industrial 103.36purposes, including but not limited to:104.1    (1) wholesale and retail sales;104.2    (2) processing of raw agricultural products or other goods;104.3    (3) warehousing or storage of processed goods; and104.4    (4) office facilities for the support of the activities enumerated in clauses (1), (2), 104.5and (3),104.6the assessor shall classify the part of the parcel used for agricultural purposes as class 104.71b, 2a, or 2b, whichever is appropriate, and the remainder in the class appropriate to its 104.8use. The grading, sorting, and packaging of raw agricultural products for first sale is 104.9considered an agricultural purpose. A greenhouse or other building where horticultural 104.10or nursery products are grown that is also used for the conduct of retail sales must be 104.11classified as agricultural if it is primarily used for the growing of horticultural or nursery 104.12products from seed, cuttings, or roots and occasionally as a showroom for the retail sale of 104.13those products. Use of a greenhouse or building only for the display of already grown 104.14horticultural or nursery products does not qualify as an agricultural purpose.104.15    (k) The assessor shall determine and list separately on the records the market value 104.16of the homestead dwelling and the one acre of land on which that dwelling is located. If 104.17any farm buildings or structures are located on this homesteaded acre of land, their market 104.18value shall not be included in this separate determination.104.19    (l) Class 2d airport landing area consists of a landing area or public access area of 104.20a privately owned public use airport. It has a class rate of one percent of market value. 104.21To qualify for classification under this paragraph, a privately owned public use airport 104.22must be licensed as a public airport under section 
         360.018. For purposes of this paragraph, 104.23"landing area" means that part of a privately owned public use airport properly cleared, 104.24regularly maintained, and made available to the public for use by aircraft and includes 104.25runways, taxiways, aprons, and sites upon which are situated landing or navigational aids. 104.26A landing area also includes land underlying both the primary surface and the approach 104.27surfaces that comply with all of the following:104.28    (i) the land is properly cleared and regularly maintained for the primary purposes of 104.29the landing, taking off, and taxiing of aircraft; but that portion of the land that contains 104.30facilities for servicing, repair, or maintenance of aircraft is not included as a landing area;104.31    (ii) the land is part of the airport property; and104.32    (iii) the land is not used for commercial or residential purposes.104.33The land contained in a landing area under this paragraph must be described and certified 104.34by the commissioner of transportation. The certification is effective until it is modified, 104.35or until the airport or landing area no longer meets the requirements of this paragraph. 104.36For purposes of this paragraph, "public access area" means property used as an aircraft 105.1parking ramp, apron, or storage hangar, or an arrival and departure building in connection 105.2with the airport.105.3    (m) Class 2e consists of land with a commercial aggregate deposit that is not actively 105.4being mined and is not otherwise classified as class 2a or 2b, provided that the land is not 105.5located in a county that has elected to opt-out of the aggregate preservation program as 105.6provided in section 
         273.1115, subdivision 6. It has a class rate of one percent of market 105.7value. To qualify for classification under this paragraph, the property must be at least 105.8ten contiguous acres in size and the owner of the property must record with the county 105.9recorder of the county in which the property is located an affidavit containing:105.10    (1) a legal description of the property;105.11    (2) a disclosure that the property contains a commercial aggregate deposit that is not 105.12actively being mined but is present on the entire parcel enrolled;105.13    (3) documentation that the conditional use under the county or local zoning 105.14ordinance of this property is for mining; and105.15    (4) documentation that a permit has been issued by the local unit of government 105.16or the mining activity is allowed under local ordinance. The disclosure must include a 105.17statement from a registered professional geologist, engineer, or soil scientist delineating 105.18the deposit and certifying that it is a commercial aggregate deposit.105.19    For purposes of this section and section 
         273.1115, "commercial aggregate deposit" 105.20means a deposit that will yield crushed stone or sand and gravel that is suitable for use 105.21as a construction aggregate; and "actively mined" means the removal of top soil and 105.22overburden in preparation for excavation or excavation of a commercial deposit.105.23    (n) When any portion of the property under this subdivision or subdivision 22 begins 105.24to be actively mined, the owner must file a supplemental affidavit within 60 days from 105.25the day any aggregate is removed stating the number of acres of the property that is 105.26actively being mined. The acres actively being mined must be (1) valued and classified 105.27under subdivision 24 in the next subsequent assessment year, and (2) removed from the 105.28aggregate resource preservation property tax program under section 
         273.1115, if the 105.29land was enrolled in that program. Copies of the original affidavit and all supplemental 105.30affidavits must be filed with the county assessor, the local zoning administrator, and the 105.31Department of Natural Resources, Division of Land and Minerals. A supplemental 105.32affidavit must be filed each time a subsequent portion of the property is actively mined, 105.33provided that the minimum acreage change is five acres, even if the actual mining activity 105.34constitutes less than five acres.106.1(o) The definitions prescribed by the commissioner under paragraphs (c) and (d) are 106.2not rules and are exempt from the rulemaking provisions of chapter 14, and the provisions 106.3in section 
         14.386 concerning exempt rules do not apply.106.4EFFECTIVE DATE.This section is effective for taxes levied in 2011, payable 106.5in 2012, and thereafter.106.6    Sec. 9. Minnesota Statutes 2010, section 273.13, is amended by adding a subdivision 106.7to read:106.8    Subd. 35.Homestead market value exclusion.(a) Prior to determining a property's 106.9net tax capacity under this section, property classified as class 1a or 1b under subdivision 106.1022, and the portion of property classified as class 2a under subdivision 23 consisting of 106.11the house, garage, and surrounding one acre of land, shall be eligible for a market value 106.12exclusion as determined under paragraph (b).106.13(b) For a homestead valued at $76,000 or less, the exclusion is 40 percent of market 106.14value. For a homestead valued between $76,000 and $413,800, the exclusion is $30,400 106.15minus nine percent of the valuation over $76,000. For a homestead valued at $413,800 or 106.16more, there is no valuation exclusion. The valuation exclusion shall be rounded to the 106.17nearest whole dollar, and may not be less than zero.106.18(c) Any valuation exclusions or adjustments under section 273.11 shall be applied 106.19prior to determining the amount of the valuation exclusion under this subdivision. 106.20(d) In the case of a property that is classified as part homestead and part 106.21nonhomestead, (i) the exclusion shall apply only to the homestead portion of the property, 106.22but (ii) if a portion of a property is classified as nonhomestead solely because not all 106.23the owners occupy the property, not all the owners have qualifying relatives occupying 106.24the property, or solely because not all the spouses of owners occupy the property, the 106.25exclusion amount shall be initially computed as if that nonhomestead portion were also in 106.26the homestead class and then prorated to the owner-occupant's percentage of ownership. 106.27For the purpose of this section, when an owner-occupant's spouse does not occupy the 106.28property, the percentage of ownership for the owner-occupant spouse is one-half of the 106.29couple's ownership percentage.106.30EFFECTIVE DATE.This section is effective for taxes payable in 2012 and 106.31thereafter.106.32    Sec. 10. Minnesota Statutes 2010, section 273.1384, subdivision 3, is amended to read:107.1    Subd. 3. Credit reimbursements. The county auditor shall determine the tax 107.2reductions allowed under this section subdivision 2 within the county for each taxes 107.3payable year and shall certify that amount to the commissioner of revenue as a part of the 107.4abstracts of tax lists submitted by the county auditors under section 
         275.29. Any prior 107.5year adjustments shall also be certified on the abstracts of tax lists. The commissioner 107.6shall review the certifications for accuracy, and may make such changes as are deemed 107.7necessary, or return the certification to the county auditor for correction. The credits107.8credit under this section must be used to proportionately reduce the net tax capacity-based 107.9property tax payable to each local taxing jurisdiction as provided in section 
         273.1393.107.10EFFECTIVE DATE.This section is effective for taxes payable in 2012 and 107.11thereafter.107.12    Sec. 11. Minnesota Statutes 2010, section 273.1384, subdivision 4, is amended to read:107.13    Subd. 4. Payment. (a) The commissioner of revenue shall reimburse each local 107.14taxing jurisdiction, other than school districts, for the tax reductions granted under this 107.15section subdivision 2 in two equal installments on October 31 and December 26 of the 107.16taxes payable year for which the reductions are granted, including in each payment 107.17the prior year adjustments certified on the abstracts for that taxes payable year. The 107.18reimbursements related to tax increments shall be issued in one installment each year on 107.19December 26.107.20(b) The commissioner of revenue shall certify the total of the tax reductions granted 107.21under this section subdivision 2 for each taxes payable year within each school district to 107.22the commissioner of the Department of Education and the commissioner of education shall 107.23pay the reimbursement amounts to each school district as provided in section 
         273.1392.107.24EFFECTIVE DATE.This section is effective for taxes payable in 2012 and 107.25thereafter.107.26    Sec. 12. Minnesota Statutes 2010, section 273.1393, is amended to read:107.27273.1393 COMPUTATION OF NET PROPERTY TAXES.107.28    Notwithstanding any other provisions to the contrary, "net" property taxes are 107.29determined by subtracting the credits in the order listed from the gross tax:107.30    (1) disaster credit as provided in sections 
         273.1231 to 
         273.1235;107.31    (2) powerline credit as provided in section 
         273.42;107.32    (3) agricultural preserves credit as provided in section 
         473H.10;107.33    (4) enterprise zone credit as provided in section 
         469.171;108.1    (5) disparity reduction credit;108.2    (6) conservation tax credit as provided in section 
         273.119;108.3    (7) homestead and agricultural credits credit as provided in section 
         273.1384;108.4    (8) taconite homestead credit as provided in section 
         273.135;108.5    (9) supplemental homestead credit as provided in section 
         273.1391; and108.6    (10) the bovine tuberculosis zone credit, as provided in section 
         273.113.108.7    The combination of all property tax credits must not exceed the gross tax amount.108.8EFFECTIVE DATE.This section is effective for taxes payable in 2012 and 108.9thereafter.108.10    Sec. 13. Minnesota Statutes 2010, section 273.1398, subdivision 3, is amended to read:108.11    Subd. 3. Disparity reduction aid.  The amount of disparity aid certified in 2012 and 108.12subsequent years for each taxing school district within each unique taxing jurisdiction 108.13for taxes payable in the prior year shall be multiplied by the ratio of (1) the jurisdiction's 108.14tax capacity using the class rates for taxes payable in the year for which aid is being 108.15computed, to (2) its tax capacity using the class rates for taxes payable in the year prior to 108.16that for which aid is being computed, both based upon market values for taxes payable in 108.17the year prior to that for which aid is being computed. If the commissioner determines 108.18that insufficient information is available to reasonably and timely calculate the numerator 108.19in this ratio for the first taxes payable year that a class rate change or new class rate is 108.20effective, the commissioner shall omit the effects of that class rate change or new class 108.21rate when calculating this ratio for aid payable in that taxes payable year. For aid payable 108.22in the year following a year for which such omission was made, the commissioner shall 108.23use in the denominator for the class that was changed or created, the tax capacity for taxes 108.24payable two years prior to that in which the aid is payable, based on market values for 108.25taxes payable in the year prior to that for which aid is being computed is equal to the 108.26amount certified for aid payable in 2011.108.27EFFECTIVE DATE.This section is effective for aid payable in 2012 and thereafter.108.28    Sec. 14. Minnesota Statutes 2010, section 276.04, subdivision 2, is amended to read:108.29    Subd. 2. Contents of tax statements. (a) The treasurer shall provide for the 108.30printing of the tax statements. The commissioner of revenue shall prescribe the form of 108.31the property tax statement and its contents. The tax statement must not state or imply 108.32that property tax credits are paid by the state of Minnesota. The statement must contain 108.33a tabulated statement of the dollar amount due to each taxing authority and the amount 109.1of the state tax from the parcel of real property for which a particular tax statement is 109.2prepared. The dollar amounts attributable to the county, the state tax, the voter approved 109.3school tax, the other local school tax, the township or municipality, and the total of 109.4the metropolitan special taxing districts as defined in section 
         275.065, subdivision 3, 109.5paragraph (i), must be separately stated. The amounts due all other special taxing districts, 109.6if any, may be aggregated except that any levies made by the regional rail authorities in the 109.7county of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 109.8398A shall be listed on a separate line directly under the appropriate county's levy. If the 109.9county levy under this paragraph includes an amount for a lake improvement district as 109.10defined under sections 
         103B.501 to 
         103B.581, the amount attributable for that purpose 109.11must be separately stated from the remaining county levy amount. In the case of Ramsey 109.12County, if the county levy under this paragraph includes an amount for public library 109.13service under section 
         134.07, the amount attributable for that purpose may be separated 109.14from the remaining county levy amount. The amount of the tax on homesteads qualifying 109.15under the senior citizens' property tax deferral program under chapter 290B is the total 109.16amount of property tax before subtraction of the deferred property tax amount. The 109.17amount of the tax on contamination value imposed under sections 
         270.91 to 
         270.98, if any, 109.18must also be separately stated. The dollar amounts, including the dollar amount of any 109.19special assessments, may be rounded to the nearest even whole dollar. For purposes of this 109.20section whole odd-numbered dollars may be adjusted to the next higher even-numbered 109.21dollar. The amount of market value excluded under section 
         273.11, subdivision 16, if any, 109.22must also be listed on the tax statement.109.23    (b) The property tax statements for manufactured homes and sectional structures 109.24taxed as personal property shall contain the same information that is required on the 109.25tax statements for real property.109.26    (c) Real and personal property tax statements must contain the following information 109.27in the order given in this paragraph. The information must contain the current year tax 109.28information in the right column with the corresponding information for the previous year 109.29in a column on the left:109.30    (1) the property's estimated market value under section 
         273.11, subdivision 1;109.31(2) the property's homestead market value exclusion under section 273.13, 109.32subdivision 35;109.33    (2) (3) the property's taxable market value after reductions under section sections109.34273.11
         , subdivisions 1a and 16, and 273.13, subdivision 35;109.35    (3) (4) the property's gross tax, before credits;110.1    (4) (5) for homestead residential and agricultural properties, the credits credit  under 110.2section 
         273.1384;110.3    (5) (6) any credits received under sections 
         273.119; 
         273.1234 or 
         273.1235; 
         273.135; 110.4273.1391
         ; 
         273.1398, subdivision 4; 
         469.171; and 
         473H.10, except that the amount of 110.5credit received under section 
         273.135 must be separately stated and identified as "taconite 110.6tax relief"; and110.7    (6) (7) the net tax payable in the manner required in paragraph (a).110.8    (d) If the county uses envelopes for mailing property tax statements and if the county 110.9agrees, a taxing district may include a notice with the property tax statement notifying 110.10taxpayers when the taxing district will begin its budget deliberations for the current 110.11year, and encouraging taxpayers to attend the hearings. If the county allows notices to 110.12be included in the envelope containing the property tax statement, and if more than 110.13one taxing district relative to a given property decides to include a notice with the tax 110.14statement, the county treasurer or auditor must coordinate the process and may combine 110.15the information on a single announcement.110.16EFFECTIVE DATE.This section is effective for taxes payable in 2012 and 110.17thereafter.110.18    Sec. 15. Minnesota Statutes 2010, section 289A.50, subdivision 1, is amended to read:110.19    Subdivision 1. General right to refund. (a) Subject to the requirements of this 110.20section and section 
         289A.40, a taxpayer who has paid a tax in excess of the taxes lawfully 110.21due and who files a written claim for refund will be refunded or credited the overpayment 110.22of the tax determined by the commissioner to be erroneously paid.110.23(b) The claim must specify the name of the taxpayer, the date when and the period 110.24for which the tax was paid, the kind of tax paid, the amount of the tax that the taxpayer 110.25claims was erroneously paid, the grounds on which a refund is claimed, and other 110.26information relative to the payment and in the form required by the commissioner. An 110.27income tax, estate tax, or corporate franchise tax return, or amended return claiming an 110.28overpayment constitutes a claim for refund.110.29(c) When, in the course of an examination, and within the time for requesting a 110.30refund, the commissioner determines that there has been an overpayment of tax, the 110.31commissioner shall refund or credit the overpayment to the taxpayer and no demand 110.32is necessary. If the overpayment exceeds $1, the amount of the overpayment must 110.33be refunded to the taxpayer. If the amount of the overpayment is less than $1, the 110.34commissioner is not required to refund. In these situations, the commissioner does not 110.35have to make written findings or serve notice by mail to the taxpayer.111.1(d) If the amount allowable as a credit for withholding, estimated taxes, or dependent 111.2care exceeds the tax against which the credit is allowable, the amount of the excess is 111.3considered an overpayment. The refund allowed by section 290.06, subdivision 23, is also 111.4considered an overpayment. The requirements of section 
         270C.33 do not apply to the 111.5refunding of such an overpayment shown on the original return filed by a taxpayer.111.6(e) If the entertainment tax withheld at the source exceeds by $1 or more the taxes, 111.7penalties, and interest reported in the return of the entertainment entity or imposed by 111.8section 
         290.9201, the excess must be refunded to the entertainment entity. If the excess is 111.9less than $1, the commissioner need not refund that amount.111.10(f) If the surety deposit required for a construction contract exceeds the liability of 111.11the out-of-state contractor, the commissioner shall refund the difference to the contractor.111.12(g) An action of the commissioner in refunding the amount of the overpayment does 111.13not constitute a determination of the correctness of the return of the taxpayer.111.14(h) There is appropriated from the general fund to the commissioner of revenue the 111.15amount necessary to pay refunds allowed under this section.111.16EFFECTIVE DATE.This section is effective for refund claims based on 111.17contributions made after June 30, 2011.111.18    Sec. 16. Minnesota Statutes 2010, section 290.01, subdivision 6, is amended to read:111.19    Subd. 6. Taxpayer. The term "taxpayer" means any person or corporation subject to 111.20a tax imposed by this chapter. For purposes of section 290.06, subdivision 23, the term 111.21"taxpayer" means an individual eligible to vote in Minnesota under section 201.014.111.22EFFECTIVE DATE.This section is effective for refund claims based on 111.23contributions made after June 30, 2011.111.24    Sec. 17. Minnesota Statutes 2010, section 290A.03, subdivision 11, is amended to read:111.25    Subd. 11. Rent constituting property taxes. "Rent constituting property taxes" 111.26means 19 15 percent of the gross rent actually paid in cash, or its equivalent, or the portion 111.27of rent paid in lieu of property taxes, in any calendar year by a claimant for the right 111.28of occupancy of the claimant's Minnesota homestead in the calendar year, and which 111.29rent constitutes the basis, in the succeeding calendar year of a claim for relief under this 111.30chapter by the claimant.111.31EFFECTIVE DATE.This section is effective for claims based on rent paid in 111.322010 and thereafter.112.1    Sec. 18. Minnesota Statutes 2010, section 290A.03, subdivision 13, is amended to read:112.2    Subd. 13. Property taxes payable. "Property taxes payable" means the property tax 112.3exclusive of special assessments, penalties, and interest payable on a claimant's homestead 112.4after deductions made under sections 
         273.135, 
         273.1384, 
         273.1391, 
         273.42, subdivision 2, 112.5and any other state paid property tax credits in any calendar year, and after any refund 112.6claimed and allowable under section 
         290A.04, subdivision 2h, that is first payable in 112.7the year that the property tax is payable. In the case of a claimant who makes ground 112.8lease payments, "property taxes payable" includes the amount of the payments directly 112.9attributable to the property taxes assessed against the parcel on which the house is located. 112.10No apportionment or reduction of the "property taxes payable" shall be required for the 112.11use of a portion of the claimant's homestead for a business purpose if the claimant does not 112.12deduct any business depreciation expenses for the use of a portion of the homestead in the 112.13determination of federal adjusted gross income. For homesteads which are manufactured 112.14homes as defined in section 
         273.125, subdivision 8, and for homesteads which are park 112.15trailers taxed as manufactured homes under section 
         168.012, subdivision 9, "property 112.16taxes payable" shall also include 19 15 percent of the gross rent paid in the preceding 112.17year for the site on which the homestead is located. When a homestead is owned by 112.18two or more persons as joint tenants or tenants in common, such tenants shall determine 112.19between them which tenant may claim the property taxes payable on the homestead. If 112.20they are unable to agree, the matter shall be referred to the commissioner of revenue 112.21whose decision shall be final. Property taxes are considered payable in the year prescribed 112.22by law for payment of the taxes.112.23In the case of a claim relating to "property taxes payable," the claimant must have 112.24owned and occupied the homestead on January 2 of the year in which the tax is payable 112.25and (i) the property must have been classified as homestead property pursuant to section 112.26273.124
         , on or before December 15 of the assessment year to which the "property taxes 112.27payable" relate; or (ii) the claimant must provide documentation from the local assessor 112.28that application for homestead classification has been made on or before December 15 112.29of the year in which the "property taxes payable" were payable and that the assessor has 112.30approved the application.112.31EFFECTIVE DATE.This section is effective for claims based on rent paid in 112.322010 and following years.112.33    Sec. 19. Minnesota Statutes 2010, section 290A.04, subdivision 2, is amended to read:112.34    Subd. 2. Homeowners. A claimant whose property taxes payable are in excess 112.35of the percentage of the household income stated below shall pay an amount equal to 113.1the percent of income shown for the appropriate household income level along with the 113.2percent to be paid by the claimant of the remaining amount of property taxes payable. 113.3The state refund equals the amount of property taxes payable that remain, up to the state 113.4refund amount shown below.

113.5113.6113.7Household IncomePercent of IncomePercent Paid byClaimantMaximum StateRefund113.8$0 to 1,1891.0 percent15 percent$1,850113.91,190 to 2,3791.1 percent15 percent$1,850113.102,380 to 3,5891.2 percent15 percent$1,800113.113,590 to 4,7891.3 percent20 percent$1,800113.124,790 to 5,9791.4 percent20 percent$1,730113.135,980 to 8,3691.5 percent20 percent$1,730113.148,370 to 9,5591.6 percent25 percent$1,670113.159,560 to 10,7591.7 percent25 percent$1,670113.1610,760 to 11,9491.8 percent25 percent$1,610113.1711,950 to 13,1391.9 percent30 percent$1,610113.1813,140 to 14,3492.0 percent30 percent$1,540113.1914,350 to 16,7392.1 percent30 percent$1,540113.2016,740 to 17,9292.2 percent35 percent$1,480113.2117,930 to 19,1192.3 percent35 percent$1,480113.2219,120 to 20,3192.4 percent35 percent$1,420113.2320,320 to 25,0992.5 percent40 percent$1,420113.2425,100 to 28,6792.6 percent40 percent$1,360113.2528,680 to 35,8492.7 percent40 percent$1,360113.2635,850 to 41,8192.8 percent45 percent$1,240113.2741,820 to 47,7993.0 percent45 percent$1,240113.2847,800 to 53,7793.2 percent45 percent$1,110113.2953,780 to 59,7493.5 percent50 percent$990113.3059,750 to 65,7293.5 percent50 percent$870113.3165,730 to 69,3193.5 percent50 percent$740113.3269,320 to 71,7193.5 percent50 percent$610113.3371,720 to 74,6193.5 percent50 percent$500113.3474,620 to 77,5193.5 percent50 percent$370

113.35113.36113.37Household IncomePercent of IncomePercent Paid byClaimantMaximum StateRefund113.38$0 to 1,5491.0 percent15 percent$2,460113.391,550 to 3,0891.1 percent15 percent$2,460113.403,090 to 4,6691.2 percent15 percent$2,460113.414,670 to 6,2291.3 percent20 percent$2,460113.426,230 to 7,7691.4 percent20 percent$2,460114.17,770 to 10,8791.5 percent20 percent$2,460114.210,880 to 12,4291.6 percent20 percent$2,460114.312,430 to 13,9891.7 percent20 percent$2,460114.413,990 to 15,5391.8 percent20 percent$2,460114.515,540 to 17,0791.9 percent25 percent$2,460114.617,080 to 18,6592.0 percent25 percent$2,460114.718,660 to 21,7592.1 percent25 percent$2,460114.821,760 to 23,3092.2 percent30 percent$2,460114.923,310 to 24,8592.3 percent30 percent$2,460114.1024,860 to 26,4192.4 percent30 percent$2,460114.1126,420 to 32,6292.5 percent35 percent$2,460114.1232,630 to 37,2792.6 percent35 percent$2,460114.1337,280 to 46,6092.7 percent35 percent$2,000114.1446,610 to 54,3692.8 percent35 percent$2,000114.1554,370 to 62,1392.8 percent40 percent$1,750114.1662,140 to 69,9093.0 percent40 percent$1,440114.1769,910 to 77,6793.0 percent40 percent$1,290114.1877,680 to 85,4493.0 percent40 percent$1,130114.1985,450 to 90,1193.5 percent45 percent$960114.2090,120 to 93,2393.5 percent45 percent$790114.2193,240 to 97,0093.5 percent50 percent$650114.2297,010 to 100,7793.5 percent50 percent$480

114.23    The payment made to a claimant shall be the amount of the state refund calculated 114.24under this subdivision. No payment is allowed if the claimant's household income is 114.25$77,520 $100,780 or more.114.26EFFECTIVE DATE.This section is effective beginning with refunds based on 114.27taxes payable in 2012.114.28    Sec. 20. Minnesota Statutes 2010, section 290A.04, subdivision 2a, is amended to read:114.29    Subd. 2a. Renters; senior or disabled. A claimant whose rent constituting property 114.30taxes exceeds the percentage of the household income stated below must pay an amount 114.31equal to the percent of income shown for the appropriate household income level along 114.32with the percent to be paid by the claimant of the remaining amount of rent constituting 114.33property taxes. The state refund equals the amount of rent constituting property taxes that 114.34remain, up to the maximum state refund amount shown below. This subdivision applies 114.35only if the claimant or claimant's spouse was disabled or attained the age of 65 on or 114.36before December 31 of the year for which the rent was paid.

115.1115.2115.3Household IncomePercent of IncomePercent Paid by
                  		ClaimantMaximum 
                  		State
                  		Refund115.4115.5$0 to 3,589 4,5991.0 percent5 percent$1,1901,520115.6115.73,590 to 4,779 4,600 to 6,1191.0 percent10 percent$1,1901,520115.8115.94,780 to 5,969 6,120 to 7,6391.1 percent10 percent$1,1901,520115.10115.115,970 to 8,369 7,640 to 10,7191.2 percent10 percent$1,1901,520115.12115.138,370 to 10,759 10,720 to 13,7791.3 percent15 percent$1,1901,520115.14115.1510,760 to 11,949 13,780 to 15,2991.4 percent15 percent$1,1901,520115.16115.1711,950 to 13,139 15,300 to 16,8191.4 percent20 percent$1,1901,520115.18115.1913,140 to 15,539 16,820 to 19,8991.5 percent20 percent$1,1901,520115.20115.2115,540 to 16,729 19,900 to 21,4191.6 percent20 percent$1,1901,520115.22115.2316,730 to 17,919 21,420 to 22,9391.7 percent25 percent$1,1901,520115.24115.2517,920 to 20,319 22,940 to 26,0091.8 percent25 percent$1,1901,520115.26115.2720,320 to 21,509 26,010 to 27,5391.9 percent30 percent$1,1901,500115.28115.2921,510 to 22,699 27,540 to 29,0592.0 percent30 percent$1,1901,400115.30115.3122,700 to 23,899 29,060 to 30,5992.2 percent30 percent$1,1901,300115.32115.3323,900 to 25,089 30,600 to 32,1192.4 percent30 percent$1,1901,200115.34115.3525,090 to 26,289 32,120 to 33,6592.6 percent35 percent$1,1901,000115.36115.3726,290 to 27,489 33,660 to 35,1892.7 percent35 percent$1,1901,000115.38115.3927,490 to 28,679 35,190 to 36,7192.8 percent35 percent$1,190750115.40115.4128,680 to 29,869 36,720 to 38,2392.9 percent40 percent$1,190500115.42115.4329,870 to 31,079 38,240 to 39,9993.0 percent40 percent$1,190250115.4431,080 to 32,2693.1 percent40 percent$1,190115.4532,270 to 33,4593.2 percent40 percent$1,190115.4633,460 to 34,6493.3 percent45 percent$1,080115.4734,650 to 35,8493.4 percent45 percent$960115.4835,850 to 37,0493.5 percent45 percent$830116.137,050 to 38,2393.5 percent50 percent$720116.238,240 to 39,4393.5 percent50 percent$600116.338,440 to 40,6293.5 percent50 percent$360116.440,630 to 41,8193.5 percent50 percent$120

116.5The payment made to a claimant is the amount of the state refund calculated under 116.6this subdivision. No payment is allowed if the claimant's household income is $41,820116.7$40,000 or more.116.8EFFECTIVE DATE.This section is effective for claims based on rent paid in 116.92010 and following years.116.10    Sec. 21. Minnesota Statutes 2010, section 290A.04, is amended by adding a 116.11subdivision to read:116.12    Subd. 2k.Renters; nonsenior nondisabled.A claimant whose rent constituting 116.13property taxes exceeds the percentage of the household income stated below must pay 116.14an amount equal to the percent of income shown for the appropriate household income 116.15level along with the percent to be paid by the claimant of the remaining amount of rent 116.16constituting property taxes. The state refund equals the amount of rent constituting 116.17property taxes that remain, up to the maximum state refund amount shown below. This 116.18subdivision applies only if the claimant or claimant's spouse is not eligible for a refund 116.19under subdivision 2a.

116.20116.21116.22Household IncomePercent of IncomePercent Paid byClaimantMaximum StateRefund116.23$0 to 4,5991.0 percent15 percent$1,000116.244,600 to 6,1191.0 percent15 percent$1,000116.256,120 to 7,6391.1 percent20 percent$1,000116.267,640 to 10,7191.2 percent20 percent$900116.2710,720 to 13,7791.3 percent25 percent$800116.2813,780 to 15,2991.4 percent25 percent$800116.2915,300 to 16,8191.4 percent30 percent$600116.3016,820 to 19,8991.5 percent30 percent$600116.3119,900 to 21,4191.6 percent35 percent$400116.3221,420 to 22,9391.7 percent35 percent$400116.3322,940 to 24,9991.8 percent40 percent$200

116.34The payment made to a claimant is the amount of the state refund calculated under 116.35this subdivision. No payment is allowed if the claimant's household income is $25,000 116.36or more.117.1EFFECTIVE DATE.This section is effective for claims based on rent paid in 117.22010 and following years.117.3    Sec. 22. Minnesota Statutes 2010, section 290A.04, subdivision 4, is amended to read:117.4    Subd. 4. Inflation adjustment.(a) Beginning for property tax refunds payable in 117.5calendar year 2002, the commissioner shall annually adjust the dollar amounts of the 117.6income thresholds and the maximum refunds under subdivisions subdivision 2 and 2a for 117.7inflation. The commissioner shall make the inflation adjustments in accordance with 117.8section 1(f) of the Internal Revenue Code, except that for purposes of this subdivision the 117.9percentage increase shall be determined from the year ending on June 30, 2000 2011, to 117.10the year ending on June 30 of the year preceding that in which the refund is payable.117.11(b) The commissioner shall use the appropriate percentage increase to annually 117.12adjust the income thresholds and maximum refunds under subdivisions subdivision117.132 and 2a for inflation without regard to whether or not the income tax brackets are 117.14adjusted for inflation in that year. The commissioner shall round the thresholds and the 117.15maximum amounts, as adjusted to the nearest $10 amount. If the amount ends in $5, the 117.16commissioner shall round it up to the next $10 amount.117.17(c) The commissioner shall annually announce the adjusted refund schedule at the 117.18same time provided under section 
         290.06. The determination of the commissioner under 117.19this subdivision is not a rule under the Administrative Procedure Act.117.20EFFECTIVE DATE.The changes to this section relating to refunds under 117.21subdivision 2 are effective beginning for refunds based on taxes payable in 2013 and 117.22the changes relating to refunds under subdivision 2a are effective beginning for refunds 117.23based on rent paid in 2011.117.24    Sec. 23. [373.51] ALTERNATIVE PROCESS FOR CONSOLIDATION.117.25Notwithstanding the provisions relating to petitions in sections 371.02 and 371.03, 117.26two or more counties may begin the process for consolidation by filing with the secretary 117.27of state a resolution unanimously adopted by the board of each affected county to seek 117.28voter approval for consolidation of the counties following the procedures in chapter 371. 117.29    Sec. 24. Minnesota Statutes 2010, section 477A.011, is amended by adding a 117.30subdivision to read:117.31    Subd. 1c.First class city."First class city" means a city of the first class as of 117.322009 as defined in section 410.01.118.1EFFECTIVE DATE.This section is effective for aids payable in calendar year 118.22011 and thereafter.118.3    Sec. 25. Minnesota Statutes 2010, section 477A.011, subdivision 20, is amended to 118.4read:118.5    Subd. 20. City net tax capacity. "City net tax capacity" means (1) the net tax 118.6capacity computed using the net tax capacity rates in section 
         273.13 for taxes payable 118.7in the year of the aid distribution, and the market values, after the exclusion in section 118.8273.13, subdivision 35, for taxes payable in the year prior to the aid distribution plus (2) 118.9a city's fiscal disparities distribution tax capacity under section 
         276A.06, subdivision 2, 118.10paragraph (b), or 
         473F.08, subdivision 2, paragraph (b), for taxes payable in the year prior 118.11to that for which aids are being calculated. The market value utilized in computing city 118.12net tax capacity shall be reduced by the sum of (1) a city's market value of commercial 118.13industrial property as defined in section 
         276A.01, subdivision 3, or 
         473F.02, subdivision 3, 118.14multiplied by the ratio determined pursuant to section 
         276A.06, subdivision 2, paragraph 118.15(a), or 
         473F.08, subdivision 2, paragraph (a), (2) the market value of the captured value 118.16of tax increment financing districts as defined in section 
         469.177, subdivision 2, and (3) 118.17the market value of transmission lines deducted from a city's total net tax capacity under 118.18section 
         273.425. The city net tax capacity will be computed using equalized market values. 118.19EFFECTIVE DATE.This section is effective for aids payable in calendar year 118.202013 and thereafter.118.21    Sec. 26. Minnesota Statutes 2010, section 477A.0124, is amended by adding a 118.22subdivision to read:118.23    Subd. 6.Aid payments in 2011 and 2012.Notwithstanding total aids calculated or 118.24certified for 2011 under subdivisions 3, 4, and 5, for 2011 and 2012, each county shall 118.25receive an aid distribution under this section equal to the lesser of (1) the total amount of 118.26aid it received under this section in 2010 after the reductions under sections 477A.0133 118.27and 477A.0134, or (2) the total amount the county is certified to receive in 2011 under 118.28subdivisions 3 to 5.118.29EFFECTIVE DATE.This section is effective for aids payable in calendar year 118.302011 and 2012.118.31    Sec. 27. Minnesota Statutes 2010, section 477A.013, subdivision 8, is amended to read:119.1    Subd. 8. City formula aid.  The formula aid for a city is equal to the sum of (1) its 119.2city jobs base, (2) its small city aid base, and (3) the need increase percentage multiplied 119.3by the average of its unmet need for the most recently available two years.119.4No city may have a formula aid amount less than zero. The need increase percentage must 119.5be the same for all cities. For first class cities, the formula aid is 25 percent of its base 119.6aid as defined in subdivision 11, paragraph (a), for aids payable in 2013 and zero for aids 119.7payable in 2014 and thereafter.119.8    The applicable need increase percentage must be calculated by the Department of 119.9Revenue so that the total of the aid under subdivision 9 equals the total amount available 119.10for aid under section 
         477A.03. Data used in calculating aids to cities under sections 119.11477A.011
          to 
         477A.013 shall be the most recently available data as of January 1 in the 119.12year in which the aid is calculated except that the data used to compute "net levy" in 119.13subdivision 9 is the data most recently available at the time of the aid computation.119.14EFFECTIVE DATE.This section is effective for aids payable in calendar year 119.152013 and thereafter.119.16    Sec. 28. Minnesota Statutes 2010, section 477A.013, subdivision 9, is amended to read:119.17    Subd. 9. City aid distribution. (a) In calendar year 2009 and thereafter, each 119.18city shall receive an aid distribution equal to the sum of (1) the city formula aid under 119.19subdivision 8, and (2) its city aid base.119.20    (b) For aids payable in 2011 2013 only, the total aid in the previous year for any 119.21city shall mean the amount of aid it was certified to receive for aids payable in 2010119.222012 under this section minus the amount of its aid reduction under section 477A.0134119.23subdivision 11. For aids payable in 2012 2014 and thereafter, the total aid in the previous 119.24year for any city means the amount of aid it was certified to receive under this section in 119.25the previous payable year.119.26    (c) For aids payable in 2010 and thereafter, the total aid for any city shall not exceed 119.27the sum of (1) ten percent of the city's net levy for the year prior to the aid distribution 119.28plus (2) its total aid in the previous year. For aids payable in 2009 and thereafter, the total 119.29aid for any city with a population of 2,500 or more may not be less than its total aid under 119.30this section in the previous year minus the lesser of $10 multiplied by its population, or ten 119.31percent of its net levy in the year prior to the aid distribution.119.32    (d) For aids payable in 2010 and thereafter, the total aid for a city with a population 119.33less than 2,500 must not be less than the amount it was certified to receive in the 119.34previous year minus the lesser of $10 multiplied by its population, or five percent of its 119.352003 certified aid amount. For aids payable in 2009 only, the total aid for a city with a 120.1population less than 2,500 must not be less than what it received under this section in the 120.2previous year unless its total aid in calendar year 2008 was aid under section 
         477A.011, 120.3subdivision 36, paragraph (s), in which case its minimum aid is zero.120.4    (e) A city's aid loss under this section may not exceed $300,000 in any year in 120.5which the total city aid appropriation under section 
         477A.03, subdivision 2a, is equal or 120.6greater than the appropriation under that subdivision in the previous year, unless the 120.7city has an adjustment in its city net tax capacity under the process described in section 120.8469.174, subdivision 28
         .120.9    (f) If a city's net tax capacity used in calculating aid under this section has decreased 120.10in any year by more than 25 percent from its net tax capacity in the previous year due to 120.11property becoming tax-exempt Indian land, the city's maximum allowed aid increase 120.12under paragraph (c) shall be increased by an amount equal to (1) the city's tax rate in the 120.13year of the aid calculation, multiplied by (2) the amount of its net tax capacity decrease 120.14resulting from the property becoming tax exempt.120.15(g) Notwithstanding paragraphs (a) to (f), the total aid for a first class city is its 120.16formula aid under subdivision 8.120.17EFFECTIVE DATE.This section is effective for aids payable in calendar year 120.182013 and thereafter.120.19    Sec. 29. Minnesota Statutes 2010, section 477A.013, is amended by adding a 120.20subdivision to read:120.21    Subd. 11.Aid payments in 2011 and 2012.(a) For purposes of this subdivision, 120.22"base aid" means the lesser of (1) the total amount of aid it received under this section 120.23in 2010, after the reductions under sections 477A.0133 and 477A.0134 and reduced by 120.24the amount of payments under section 477A.011, subdivision 36, paragraphs (y) and (z), 120.25or (2) the amount it was certified to receive in 2011 under subdivision 9. In 2011 only, 120.26a city that qualifies for the aid base adjustment under section 477A.011, subdivision 36, 120.27paragraph (aa), shall receive the amount that it was certified to receive in 2011. In 2012, 120.28a city that qualifies for the aid base adjustment under section 477A.011, subdivision 36, 120.29paragraph (aa), shall receive the amount that it was certified to receive in 2011, minus the 120.30aid base adjustment provided under section 477A.011, subdivision 36, paragraph (aa).120.31(b) Notwithstanding aids calculated or certified for aids payable in 2011 under 120.32subdivision 9, in 2011 each city shall receive an aid distribution under this section as 120.33follows:120.34(1) for a first class city, 75 percent of its base aid as defined in paragraph (a); and120.35(2) for any other city, its base aid as determined under paragraph (a).121.1(c) Notwithstanding aids calculated or certified for aids payable in 2012 under 121.2subdivision 9, in 2012 each city shall receive an aid distribution under this section as 121.3follows:121.4(1) for a first class city, 50 percent of its base aid as defined in paragraph (a); and121.5(2) for any other city, its base aid as defined under paragraph (a).121.6EFFECTIVE DATE.This section is effective for aids payable in calendar years 121.72011 and 2012.121.8    Sec. 30. Minnesota Statutes 2010, section 477A.03, is amended to read:121.9477A.03 APPROPRIATION.121.10    Subd. 2. Annual appropriation. A sum sufficient to discharge the duties imposed 121.11by sections 
         477A.011 to 
         477A.014 is annually appropriated from the general fund to the 121.12commissioner of revenue.121.13    Subd. 2a. Cities.For aids payable in 2013 only, the total aid paid under section 121.14477A.013, subdivision 9, is $318,774,184. For aids payable in 2011 2014 and thereafter, 121.15the total aid paid under section 
         477A.013, subdivision 9, is $527,100,646 $283,292,875.121.16    Subd. 2b. Counties. (a) For aids payable in 2011 2013 and thereafter, the total aid 121.17payable under section 
         477A.0124, subdivision 3, is $96,395,000 $78,218,000. Each 121.18calendar year, $500,000 shall be retained by the commissioner of revenue to make 121.19reimbursements to the commissioner of management and budget for payments made 121.20under section 
         611.27. For calendar year 2004, the amount shall be in addition to the 121.21payments authorized under section 477A.0124, subdivision 1. For calendar year 2005 121.22and subsequent years, The amount shall be deducted from the appropriation under 121.23this paragraph. The reimbursements shall be to defray the additional costs associated 121.24with court-ordered counsel under section 
         611.27. Any retained amounts not used for 121.25reimbursement in a year shall be included in the next distribution of county need aid 121.26that is certified to the county auditors for the purpose of property tax reduction for the 121.27next taxes payable year.121.28    (b) For aids payable in 2011 2013 and thereafter, the total aid under section 121.29477A.0124, subdivision 4
         , is $101,309,575 $83,133,000. The commissioner of 121.30management and budget shall bill the commissioner of revenue for the cost of preparation 121.31of local impact notes as required by section 
         3.987, not to exceed $207,000 in fiscal year 121.322004 and thereafter. The commissioner of education shall bill the commissioner of 121.33revenue for the cost of preparation of local impact notes for school districts as required by 121.34section 
         3.987, not to exceed $7,000 in fiscal year 2004 and thereafter. The commissioner 122.1of revenue shall deduct the amounts billed under this paragraph from the appropriation 122.2under this paragraph. The amounts deducted are appropriated to the commissioner of 122.3management and budget and the commissioner of education for the preparation of local 122.4impact notes.122.5EFFECTIVE DATE.This section is effective for aids payable in calendar year 122.62012 and thereafter.122.7    Sec. 31. Minnesota Statutes 2010, section 477A.11, subdivision 1, is amended to read:122.8    Subdivision 1. Terms. For the purpose of sections 
         477A.11 to 
         477A.145 477A.14, 122.9the terms defined in this section have the meanings given them. 122.10EFFECTIVE DATE.This section is effective for aids payable in calendar year 122.112011 and thereafter.122.12    Sec. 32. Minnesota Statutes 2010, section 477A.12, subdivision 1, is amended to read:122.13    Subdivision 1. Types of land; payments. (a) As an offset for expenses incurred 122.14by counties and towns in support of natural resources lands, the following amounts are 122.15annually appropriated to the commissioner of natural resources from the general fund for 122.16transfer to the commissioner of revenue. The commissioner of revenue shall pay the 122.17transferred funds to counties as required by sections 
         477A.11 to 
         477A.145 477A.14. 122.18The amounts are:122.19(1) for acquired natural resources land, $3, as adjusted for inflation under section 122.20477A.145, $4.517 multiplied by the total number of acres of acquired natural resources 122.21land or, at the county's option three-fourths of one 0.66 percent of the appraised value of 122.22all acquired natural resources land in the county, whichever is greater;122.23(2) 75 cents, as adjusted for inflation under section 477A.145, $1.129 multiplied by 122.24the number of acres of county-administered other natural resources land;122.25(3) 75 cents, as adjusted for inflation under section 477A.145, $1.129 multiplied by 122.26the total number of acres of land utilization project land; and122.27(4) 37.5 cents, as adjusted for inflation under section 477A.145, 56.5 cents multiplied 122.28by the number of acres of commissioner-administered other natural resources land located 122.29in each county as of July 1 of each year prior to the payment year.122.30(b) The amount determined under paragraph (a), clause (1), is payable for land 122.31that is acquired from a private owner and owned by the Department of Transportation 122.32for the purpose of replacing wetland losses caused by transportation projects, but only 123.1if the county contains more than 500 acres of such land at the time the certification is 123.2made under subdivision 2.123.3EFFECTIVE DATE.This section is effective for aids payable in calendar year 123.42011 and thereafter.123.5    Sec. 33. Minnesota Statutes 2010, section 477A.14, subdivision 1, is amended to read:123.6    Subdivision 1. General distribution. Except as provided in subdivision 2 or in 123.7section 
         97A.061, subdivision 5, 40 percent of the total payment to the county shall be 123.8deposited in the county general revenue fund to be used to provide property tax levy 123.9reduction. The remainder shall be distributed by the county in the following priority:123.10(a) 37.5 cents, as adjusted for inflation under section 477A.145,56.5 cents for 123.11each acre of county-administered other natural resources land shall be deposited in a 123.12resource development fund to be created within the county treasury for use in resource 123.13development, forest management, game and fish habitat improvement, and recreational 123.14development and maintenance of county-administered other natural resources land. Any 123.15county receiving less than $5,000 annually for the resource development fund may elect to 123.16deposit that amount in the county general revenue fund;123.17(b) From the funds remaining, within 30 days of receipt of the payment to the 123.18county, the county treasurer shall pay each organized township 30 cents, as adjusted for 123.19inflation under section 477A.145, 45.2 cents for each acre of acquired natural resources 123.20land and each acre of land described in section 
         477A.12, subdivision 1, paragraph (b), and 123.217.5 cents, as adjusted for inflation under section 477A.145, 11.3 cents for each acre of 123.22other natural resources land and each acre of land utilization project land located within its 123.23boundaries. Payments for natural resources lands not located in an organized township 123.24shall be deposited in the county general revenue fund. Payments to counties and townships 123.25pursuant to this paragraph shall be used to provide property tax levy reduction, except 123.26that of the payments for natural resources lands not located in an organized township, the 123.27county may allocate the amount determined to be necessary for maintenance of roads in 123.28unorganized townships. Provided that, if the total payment to the county pursuant to 123.29section 
         477A.12 is not sufficient to fully fund the distribution provided for in this clause, 123.30the amount available shall be distributed to each township and the county general revenue 123.31fund on a pro rata basis; and123.32(c) Any remaining funds shall be deposited in the county general revenue fund. 123.33Provided that, if the distribution to the county general revenue fund exceeds $35,000, the 123.34excess shall be used to provide property tax levy reduction.124.1EFFECTIVE DATE.This section is effective for aids payable in calendar year 124.22011 and thereafter.124.3    Sec. 34. Minnesota Statutes 2010, section 477A.17, is amended to read:124.4477A.17 LAKE VERMILION STATE PARK AND SOUDAN 124.5UNDERGROUND MINE STATE PARK; ANNUAL PAYMENTS.124.6    (a) Beginning in fiscal year 2012, in lieu of the payment amount provided under 124.7section 
         477A.12, subdivision 1, clause (1), the county shall receive an annual payment for 124.8land acquired for Lake Vermilion State Park, established in section 
         85.012, subdivision 124.938a, and land within the boundary of Soudan Underground Mine State Park, established 124.10in section 
         85.012, subdivision 53a, equal to 1.5 1.32 percent of the appraised value of 124.11the land.124.12    (b) For the purposes of this section, the appraised value of the land acquired for 124.13Lake Vermilion State Park for the first five years after acquisition shall be the purchase 124.14price of the land, plus the value of any portion of the land that is acquired by donation. 124.15The appraised value must be redetermined by the county assessor every five years after 124.16the land is acquired.124.17    (c) The annual payments under this section shall be distributed to the taxing 124.18jurisdictions containing the property as follows: one-third to the school districts; one-third 124.19to the town; and one-third to the county. The payment to school districts is not a county 124.20apportionment under section 
         127A.34 and is not subject to aid recapture. Each of those 124.21taxing jurisdictions may use the payments for their general purposes.124.22    (d) Except as provided in this section, the payments shall be made as provided 124.23in sections 
         477A.11 to 
         477A.13.124.24EFFECTIVE DATE.This section is effective for aids payable in calendar year 124.252011 and thereafter.124.26    Sec. 35. ADMINISTRATION OF PROPERTY TAX REFUND CLAIMS; 2011.124.27In administering this bill for claims for refunds submitted using 19 percent of gross 124.28rent as rent constituting property taxes under prior law, the commissioner shall recalculate 124.29and pay the refund amounts using 15 percent of gross rent, subject to the reduced 124.30maximum income limits, maximum refunds, and increased copayment percentages in this 124.31bill. The commissioner shall notify the claimant that the recalculation was mandated by 124.32action of the 2011 Legislature.124.33EFFECTIVE DATE.This section is effective the day following final enactment.125.1    Sec. 36. CREDIT REDUCTIONS AND LIMITATION; COUNTIES AND 125.2CITIES.125.3    In 2011, the market value credit reimbursement payment to each county and city 125.4authorized under Minnesota Statutes, section 273.1384, subdivision 4, may not exceed the 125.5reimbursement payment received by the county or city for taxes payable in 2010. 125.6EFFECTIVE DATE.This section is effective for credit reimbursements in 2011.125.7    Sec. 37. PROPERTY TAX STATEMENT FOR TAXES PAYABLE IN 2012 ONLY.125.8For the purposes of the property tax statements required under Minnesota Statutes, 125.9section 276.04, subdivision 2, for taxes payable in 2012 only, the gross tax amount shown 125.10for the previous year is the gross tax minus the residential homestead market value credit.125.11EFFECTIVE DATE.This section is effective for taxes payable in 2012 only.125.12    Sec. 38. REPORT ON PAYMENT IN LIEU OF TAXES FOR STATE NATURAL 125.13RESOURCE LANDS.125.14By December 1, 2011, the commissioner of natural resources, after consultation with 125.15the commissioners of revenue and management and budget, and stakeholders, including 125.16representatives from affected local units of government and other interested parties, shall 125.17report to the chairs and ranking minority caucus members of the senate and house of 125.18representatives natural resources and tax policy and finance committees with recommended 125.19changes to payment in lieu of taxes for natural resource lands under Minnesota Statutes, 125.20sections 97A.061 and 477A.11 to 477A.145. The report shall include an analysis of the 125.21current payment and distribution system, and any recommended changes to:125.22(1) the purpose of the payment system and the criteria for payments;125.23(2) the rate of payments for specific classes of natural resource lands;125.24(3) the formula for distribution of the payments to local units of government; and125.25(4) recognition in the amount of the payments of the tax capacity foregone by the 125.26local government due to the loss of the future development potential of the land.125.27    Sec. 39. COOPERATION AND CONSOLIDATION GRANTS.125.28    Subdivision 1.Definition.For the purposes of this section, "local government" 125.29means a town, county, or home rule charter or statutory city.125.30    Subd. 2.Grants.The commissioner of administration may make a cooperation and 125.31consolidation grant to a local government that is participating with at least one other 126.1local government in planning for or implementing provision of services cooperatively or 126.2in planning and implementing consolidation of services, functions, or governance. The 126.3grants shall be made on a first-come first-served basis. The commissioner shall determine 126.4the form and content of the application and grant agreements. At a minimum, an 126.5application must contain a resolution adopted by the governing body of each participating 126.6local government supporting the cooperation or consolidation effort that identifies the 126.7services and functions the local government is considering providing cooperatively with 126.8one or more other local governments or that identifies the functions the local governments 126.9seek to consolidate. The maximum grant amount is $100,000 per local government.126.10    Subd. 3.Report.The commissioner of administration must report to the governor 126.11and legislative committees with jurisdiction over local government governance and local 126.12government taxes and finance on the cooperation and consolidation grants made and 126.13how the money was used, what services and functions have been provided by local 126.14governments in cooperation with each other, what programs or governance structures have 126.15been proposed for consolidation or consolidated, and what impediments remain that 126.16prevent cooperation, consolidation, and service innovation. An interim report is due 126.17February 1, 2012, and a final report is due December 15, 2012.126.18    Subd. 4.Appropriation.$1,000,000 in fiscal year 2012, and $2,500,000 in fiscal 126.19year 2013, are appropriated from the general fund to the commissioner of administration 126.20to make grants to counties as provided in this section.126.21    Sec. 40. SUSTAINABLE FOREST INCENTIVE ACT REPEAL; TRANSITION 126.22PAYMENTS; APPROPRIATION.126.23(a) Given the limits on state budgetary resources for the coming and future fiscal 126.24biennia, the projected cost of the sustainable forest resource management incentive 126.25program under Minnesota Statutes, chapter 290C, of over $31,000,000 for the fiscal 2012 126.26and 2013 biennium, and the minimal amount of tangible public benefits of that program, 126.27the legislature determines that it is prudent and necessary to repeal that program effective 126.28immediately to help balance the state budget for the fiscal 2012 and 2013 biennium and to 126.29help provide permanent structural balance to the state budget. The legislature takes notice 126.30of and finds that many of the eligibility requirements for participants in the sustainable 126.31forest incentive program are in the participants' own financial interests, determined without 126.32regard to whether they receive state payments for doing so, and that the participants with 126.33the largest amounts of acreage in the program do follow and would likely continue to 126.34follow similar or more stringent management practices, regardless of whether the program 127.1exists. The legislature further finds that the modification of the sustainable forest incentive 127.2program made by Laws 2009, chapter 88, article 10, section 16, increased the per acre 127.3payments made to program claimants for fiscal year 2011 by approximately 80 percent, 127.4even though it was intended by the 2009 legislature to have little or no effect on the per 127.5acre amount of the payments. As a result, this legislative change provided unintended and 127.6windfall benefits to almost all the claimants. 127.7(b) On or before October 1, 2011, the commissioner of revenue shall pay to:127.8(1) each claimant whose fiscal year 2011 payment was $100,000 under Laws 2010, 127.9First Special Session chapter 1, article 13, section 4, subdivision 3, a transition payment 127.10equal to one-twelfth for each month, or part of a month, of calendar year 2011 in which the 127.11claimant's covenant was in effect, multiplied by $100,000, except that this payment must 127.12be reduced, but not below zero, by the increase, if any, in the claimant's 2010 total payment 127.13resulting from the increase in the per acre payment rates between 2009 and 2010; and127.14(2) each claimant who was eligible for a payment in calendar year 2011 and who 127.15received no payment for calendar year 2010, a transition payment of $3.75 per acre of land 127.16enrolled in the program, but not to exceed the amount allowed per claimant to claimants 127.17receiving payments under clause (1).127.18Because claimants not covered by clauses (1) or (2) received much larger per acre 127.19payments than intended for calendar year 2010, no transition payments are provided 127.20to them.127.21For purposes of this paragraph (b), "claimant" refers to each Social Security number 127.22or state or federal business tax identification number.127.23(c) An amount sufficient to make the transition payments required under paragraph 127.24(b) is appropriated to the commissioner of revenue from the general fund.127.25(d) Land that had been enrolled in the sustainable forest incentive program on May 127.261, 2011, may be reclassified as class 2(c) managed forest land for taxes payable in 2012 127.27if the owner applies to the assessor for the reclassification before September 1, 2011, 127.28notwithstanding the application date in Minnesota Statutes, section 273.13, subdivision 127.2923, paragraph (d).127.30EFFECTIVE DATE.This section is effective the day following final enactment.127.31    Sec. 41.  REPEALER.127.32(a) Minnesota Statutes 2010, sections 10A.322, subdivision 4; and 13.4967, 127.33subdivision 2, are repealed.127.34(b) Minnesota Statutes 2010, section 290.06, subdivision 23, is repealed.127.35(c) Minnesota Statutes 2010, sections 275.295; and 477A.145, are repealed.128.1(d) Minnesota Statutes 2010, section 273.1384, subdivisions 1 and 6, are repealed.128.2(e) Minnesota Statutes 2010, sections 13.4967, subdivision 2b; 290C.01; 290C.02; 128.3290C.03; 290C.04; 290C.05; 290C.055; 290C.06; 290C.07; 290C.08; 290C.09; 290C.10; 128.4290C.11; 290C.12; and 290C.13, are repealed.128.5EFFECTIVE DATE.Paragraph (a) is effective the day following final enactment. 128.6Paragraph (b) is effective for refund claims based on contributions made after June 30, 128.72011. Paragraph (c) is effective for aids payable in 2011 and thereafter. Paragraph (d) 128.8is effective for taxes payable in 2012 and thereafter. Paragraph (e) is effective the day 128.9following final enactment, and the covenants under the program are void on that date. No 128.10later than 90 days after enactment of this section, the commissioner of revenue shall issue 128.11a document to each enrollee releasing the land from the covenant as provided in Minnesota 128.12Statutes 2010, section 290C.04, paragraph (e), effective the day following final enactment.128.13ARTICLE 8128.14MINERALS128.15    Section 1. Minnesota Statutes 2010, section 272.02, is amended by adding a 128.16subdivision to read:128.17    Subd. 95.Property used in the business of mining subject to the net proceeds 128.18tax.The following property used in the business of mining that is subject to the net 128.19proceeds tax under section 298.015 is exempt:128.20(1) deposits of ores, metals, and minerals and the lands in which they are contained;128.21(2) all real and personal property used in mining, quarrying, producing, or refining 128.22ores, minerals, or metals, including lands occupied by or used in connection with the 128.23mining, quarrying, production, or ore refining facilities; and128.24(3) concentrate or direct reduced ore.128.25This exemption applies for each year that a person subject to tax under section 128.26298.015 uses the property for mining, quarrying, producing, or refining ores, metals, or 128.27minerals.128.28EFFECTIVE DATE.This section is effective for taxes payable in 2012 and 128.29thereafter.128.30    Sec. 2. Minnesota Statutes 2010, section 290.05, subdivision 1, is amended to read:128.31    Subdivision 1. Exempt entities. The following corporations, individuals, estates, 128.32trusts, and organizations shall be exempted from taxation under this chapter, provided 128.33that every such person or corporation claiming exemption under this chapter, in whole 129.1or in part, must establish to the satisfaction of the commissioner the taxable status of 129.2any income or activity:129.3(a) corporations, individuals, estates, and trusts engaged in the business of mining or 129.4producing iron ore and mining, producing, or refining other ores, metals, and minerals,129.5the mining or, production, or refining of which is subject to the occupation tax imposed 129.6by section 
         298.01; but if any such corporation, individual, estate, or trust engages in any 129.7other business or activity or has income from any property not used in such business it 129.8shall be subject to this tax computed on the net income from such property or such other 129.9business or activity. Royalty shall not be considered as income from the business of 129.10mining or producing iron ore within the meaning of this section;129.11(b) the United States of America, the state of Minnesota or any political subdivision 129.12of either agencies or instrumentalities, whether engaged in the discharge of governmental 129.13or proprietary functions; and129.14(c) any insurance company.129.15EFFECTIVE DATE.This section is effective for taxable years beginning after 129.16December 31, 2010.129.17    Sec. 3. Minnesota Statutes 2010, section 298.001, is amended by adding a subdivision 129.18to read:129.19    Subd. 10.Refining."Refining" means and is limited to refining:129.20(1) of ores, metals, or mineral products, the mining, extraction, or quarrying of 129.21which were subject to tax under section 298.015; and129.22(2) carried out by the entity, or an affiliated entity, that mined, extracted, or quarried 129.23the metal or mineral products.129.24EFFECTIVE DATE.This section is effective for taxable years beginning after 129.25December 31, 2010.129.26    Sec. 4. Minnesota Statutes 2010, section 298.01, subdivision 3, is amended to read:129.27    Subd. 3. Occupation tax; other ores.  Every person engaged in the business of 129.28mining, refining, or producing ores, metals, or minerals in this state, except iron ore or 129.29taconite concentrates, shall pay an occupation tax to the state of Minnesota as provided 129.30in this subdivision. For purposes of this subdivision, mining includes the application 129.31of hydrometallurgical processes. The tax is determined in the same manner as the tax 129.32imposed by section 
         290.02, except that sections 
         290.05, subdivision 1, clause (a), 
         290.17, 129.33subdivision 4
         , and 
         290.191, subdivision 2, do not apply, and the occupation tax must 130.1be computed by applying to taxable income the rate of 2.45 percent. A person subject 130.2to occupation tax under this section shall apportion its net income on the basis of the 130.3percentage obtained by taking the sum of:130.4(1) 75 percent of the percentage which the sales made within this state in connection 130.5with the trade or business during the tax period are of the total sales wherever made in 130.6connection with the trade or business during the tax period;130.7(2) 12.5 percent of the percentage which the total tangible property used by the 130.8taxpayer in this state in connection with the trade or business during the tax period is of 130.9the total tangible property, wherever located, used by the taxpayer in connection with the 130.10trade or business during the tax period; and130.11(3) 12.5 percent of the percentage which the taxpayer's total payrolls paid or incurred 130.12in this state or paid in respect to labor performed in this state in connection with the trade 130.13or business during the tax period are of the taxpayer's total payrolls paid or incurred in 130.14connection with the trade or business during the tax period.130.15The tax is in addition to all other taxes.130.16EFFECTIVE DATE.This section is effective for taxable years beginning after 130.17December 31, 2010.130.18    Sec. 5. Minnesota Statutes 2010, section 298.01, subdivision 3a, is amended to read:130.19    Subd. 3a. Gross income. (a) For purposes of determining a person's taxable income 130.20under subdivision 3, gross income is determined by the amount of gross proceeds from 130.21mining in this state under section 
         298.016 and includes any gain or loss recognized 130.22from the sale or disposition of assets used in the business in this state. If more than one 130.23ore, mineral, or metal, or energy resource referred to in section 
         298.016 is mined and 130.24processed at the same mine and plant, a gross income for each ore, mineral, or metal, or 130.25energy resource must be determined separately. The gross incomes may be combined on 130.26one occupation tax return to arrive at the gross income of all production.130.27(b) In applying section 
         290.191, subdivision 5, transfers of ores, metals, or minerals 130.28that are subject to tax under this chapter are deemed to be sales in this state.130.29EFFECTIVE DATE.This section is effective for taxable years beginning after 130.30December 31, 2010.130.31    Sec. 6. Minnesota Statutes 2010, section 298.015, subdivision 1, is amended to read:130.32    Subdivision 1. Tax imposed. A person engaged in the business of mining shall pay 130.33to the state of Minnesota for distribution as provided in section 
         298.018 a net proceeds tax 131.1equal to two percent of the net proceeds from mining in Minnesota. The tax applies to all 131.2mineral and energy resources ores, metals, and minerals mined or, extracted, produced, 131.3or refined within the state of Minnesota except for sand, silica sand, gravel, building 131.4stone, crushed rock, limestone, granite, dimension granite, dimension stone, horticultural 131.5peat, clay, soil, iron ore, and taconite concentrates. The tax is in addition to all other 131.6taxes provided for by law. 131.7EFFECTIVE DATE.This section is effective for taxable years beginning after 131.8December 31, 2010.131.9    Sec. 7. Minnesota Statutes 2010, section 298.015, subdivision 2, is amended to read:131.10    Subd. 2. Net proceeds. For purposes of this section, the term "net proceeds" means 131.11the gross proceeds from mining, as defined in section 
         298.016, less the deductions allowed 131.12in section 298.017 for purposes of determining taxable income under section 298.01, 131.13subdivision 3b, applied to the mining, production, processing, beneficiation, smelting, or 131.14refining of metal or mineral products. No other credits or deductions shall apply to this tax 131.15except for those provided in section 298.017. 131.16EFFECTIVE DATE.This section is effective for taxes payable in 2012 and 131.17thereafter.131.18    Sec. 8. Minnesota Statutes 2010, section 298.016, subdivision 4, is amended to read:131.19    Subd. 4. Definitions Metal or mineral products; definition. For the purposes of 131.20sections 298.015 and 298.017 this section, the terms defined in this subdivision have the 131.21meaning given them unless the context clearly indicates otherwise. 131.22(a) "metal or mineral products" means all those mineral and energy resources ores, 131.23metals, and minerals subject to the tax provided in section 
         298.015. 131.24(b) "Exploration" means activities designed and engaged in to ascertain the 131.25existence, location, extent, or quality of any deposit of metal or mineral products prior to 131.26the development of a mining site.131.27(c) "Development" means activities designed and engaged in to prepare or develop 131.28a potential mining site for mining after the existence of metal or mineral products in 131.29commercially marketable quantities has been disclosed including, but not limited to, 131.30the clearing of forestation, the building of roads, removal of overburden, or the sinking 131.31of shafts.132.1(d) "Research" means activities designed and engaged in to create new or improved 132.2methods of mining, producing, processing, beneficiating, smelting, or refining metal 132.3or mineral products.132.4EFFECTIVE DATE.This section is effective for taxable years beginning after 132.5December 31, 2010. 132.6    Sec. 9. Minnesota Statutes 2010, section 298.225, subdivision 1, is amended to read:132.7    Subdivision 1. Guaranteed distribution. (a) The distribution of the taconite 132.8production tax as provided in section 
         298.28, subdivisions 3 to 5, 6, paragraph (b), and 132.97, and 8, shall equal the lesser of the following amounts: 132.10(1) the amount distributed pursuant to this section and section 
         298.28, with respect 132.11to 1983 production if the production for the year prior to the distribution year is no less 132.12than 42,000,000 taxable tons. If the production is less than 42,000,000 taxable tons, the 132.13amount of the distributions shall be reduced proportionately at the rate of two percent 132.14for each 1,000,000 tons, or part of 1,000,000 tons by which the production is less than 132.1542,000,000 tons; or 132.16(2)(i) for the distributions made pursuant to section 
         298.28, subdivisions 4, 132.17paragraphs (b)
          and (c), and 6, paragraph (c), 31.2 percent of the amount distributed 132.18pursuant to this section and section 
         298.28, with respect to 1983 production; 132.19(ii) for the distributions made pursuant to section 
         298.28, subdivision 5, paragraphs 132.20(b) and (d), 75 percent of the amount distributed pursuant to this section and section 132.21298.28
         , with respect to 1983 production. 132.22(b) The distribution of the taconite production tax as provided in section 
         298.28, 132.23subdivision 2
         , shall equal the following amount: 132.24(1) if the production for the year prior to the distribution year is at least 42,000,000 132.25taxable tons, the amount distributed pursuant to this section and section 
         298.28 with 132.26respect to 1999 production; or 132.27(2) if the production for the year prior to the distribution year is less than 42,000,000 132.28taxable tons, the amount distributed pursuant to this section and section 
         298.28 with respect 132.29to 1999 production, reduced proportionately at the rate of two percent for each 1,000,000 132.30tons or part of 1,000,000 tons by which the production is less than 42,000,000 tons. 132.31EFFECTIVE DATE.This section is effective for distributions in 2012 and 132.32thereafter.132.33    Sec. 10. Minnesota Statutes 2010, section 298.24, subdivision 1, is amended to read:133.1    Subdivision 1. Imposed; calculation. (a) For concentrate produced in 2001, 2002, 133.2and 2003 2011 and 2012, there is imposed upon taconite and iron sulphides, and upon the 133.3mining and quarrying thereof, and upon the production of iron ore concentrate therefrom, 133.4and upon the concentrate so produced, and upon other iron-bearing material, a tax of 133.5$2.103 $2.380 per gross ton of merchantable iron ore concentrate produced therefrom. 133.6For concentrates produced in 2005, the tax rate is the same rate imposed for concentrates 133.7produced in 2004. For concentrates produced in 2009 and subsequent years, the tax is also 133.8imposed upon other iron-bearing material.133.9    (b) For concentrates produced in 20062013 and subsequent years, the tax rate shall 133.10be equal to the preceding year's tax rate plus an amount equal to the preceding year's tax 133.11rate multiplied by the percentage increase in the implicit price deflator from the fourth 133.12quarter of the second preceding year to the fourth quarter of the preceding year. "Implicit 133.13price deflator" means the implicit price deflator for the gross domestic product prepared by 133.14the Bureau of Economic Analysis of the United States Department of Commerce.133.15    (c) An additional tax is imposed equal to three cents per gross ton of merchantable 133.16iron ore concentrate for each one percent that the iron content of the product exceeds 72 133.17percent, when dried at 212 degrees Fahrenheit.133.18    (d) The tax on taconite and iron sulphides shall be imposed on the average of the 133.19production for the current year and the previous two years. The rate of the tax imposed 133.20will be the current year's tax rate. This clause shall not apply in the case of the closing 133.21of a taconite facility if the property taxes on the facility would be higher if this clause 133.22and section 
         298.25 were not applicable. The tax on other iron-bearing material shall be 133.23imposed on the current year production.133.24    (e) If the tax or any part of the tax imposed by this subdivision is held to be 133.25unconstitutional, a tax of $2.103 $2.380 per gross ton of merchantable iron ore concentrate 133.26produced shall be imposed.133.27    (f) Consistent with the intent of this subdivision to impose a tax based upon the 133.28weight of merchantable iron ore concentrate, the commissioner of revenue may indirectly 133.29determine the weight of merchantable iron ore concentrate included in fluxed pellets by 133.30subtracting the weight of the limestone, dolomite, or olivine derivatives or other basic 133.31flux additives included in the pellets from the weight of the pellets. For purposes of this 133.32paragraph, "fluxed pellets" are pellets produced in a process in which limestone, dolomite, 133.33olivine, or other basic flux additives are combined with merchantable iron ore concentrate. 133.34No subtraction from the weight of the pellets shall be allowed for binders, mineral and 133.35chemical additives other than basic flux additives, or moisture.134.1    (g)(1) Notwithstanding any other provision of this subdivision, for the first two years 134.2of a plant's commercial production of direct reduced ore from ore mined in this state, no 134.3tax is imposed under this section. As used in this paragraph, "commercial production" is 134.4production of more than 50,000 tons of direct reduced ore in the current year or in any 134.5prior year, "noncommercial production" is production of 50,000 tons or less of direct 134.6reduced ore in any year, and "direct reduced ore" is ore that results in a product that has an 134.7iron content of at least 75 percent. For the third year of a plant's commercial production of 134.8direct reduced ore, the rate to be applied to direct reduced ore is 25 percent of the rate 134.9otherwise determined under this subdivision. For the fourth commercial production year, 134.10the rate is 50 percent of the rate otherwise determined under this subdivision; for the fifth 134.11commercial production year, the rate is 75 percent of the rate otherwise determined under 134.12this subdivision; and for all subsequent commercial production years, the full rate is 134.13imposed.134.14    (2) Subject to clause (1), production of direct reduced ore in this state is subject to 134.15the tax imposed by this section, but if that production is not produced by a producer of 134.16taconite, iron sulfides, or other iron-bearing material, the production of taconite, iron 134.17sulfides, or other iron-bearing material, that is consumed in the production of direct 134.18reduced iron in this state is not subject to the tax imposed by this section on taconite, 134.19iron sulfides, or other iron-bearing material.134.20    (3) Notwithstanding any other provision of this subdivision, no tax is imposed 134.21on direct reduced ore under this section during the facility's noncommercial production 134.22of direct reduced ore. The taconite or iron sulphides consumed in the noncommercial 134.23production of direct reduced ore is subject to the tax imposed by this section on taconite 134.24and iron sulphides. Three-year average production of direct reduced ore does not 134.25include production of direct reduced ore in any noncommercial year. Three-year average 134.26production for a direct reduced ore facility that has noncommercial production is the 134.27average of the commercial production of direct reduced ore for the current year and the 134.28previous two commercial years.134.29    (4) This paragraph applies only to plants for which all environmental permits have 134.30been obtained and construction has begun before July 1, 2008.134.31EFFECTIVE DATE.This section is effective for production in 2011 and thereafter.134.32    Sec. 11. Minnesota Statutes 2010, section 298.28, subdivision 3, is amended to read:134.33    Subd. 3. Cities; towns. (a) 12.5 12.2 cents per taxable ton, less any amount 134.34distributed under subdivision 8, and paragraph (b), must be allocated to the taconite 134.35municipal aid account to be distributed as provided in section 
         298.282.135.1    (b) An amount must be allocated to towns or cities that is annually certified by 135.2the county auditor of a county containing a taconite tax relief area as defined in section 135.3273.134, paragraph (b)
         , within which there is (1) an organized township if, as of January 135.42, 1982, more than 75 percent of the assessed valuation of the township consists of iron 135.5ore or (2) a city if, as of January 2, 1980, more than 75 percent of the assessed valuation 135.6of the city consists of iron ore.135.7    (c) The amount allocated under paragraph (b) will be the portion of a township's or 135.8city's certified levy equal to the proportion of (1) the difference between 50 percent of 135.9January 2, 1982, assessed value in the case of a township and 50 percent of the January 2, 135.101980, assessed value in the case of a city and its current assessed value to (2) the sum of 135.11its current assessed value plus the difference determined in (1), provided that the amount 135.12distributed shall not exceed $55 per capita in the case of a township or $75 per capita in 135.13the case of a city. For purposes of this limitation, population will be determined according 135.14to the 1980 decennial census conducted by the United States Bureau of the Census. If the 135.15current assessed value of the township exceeds 50 percent of the township's January 2, 135.161982, assessed value, or if the current assessed value of the city exceeds 50 percent of the 135.17city's January 2, 1980, assessed value, this paragraph shall not apply. For purposes of this 135.18paragraph, "assessed value," when used in reference to years other than 1980 or 1982, 135.19means the appropriate net tax capacities multiplied by 10.2.135.20    (d) In addition to other distributions under this subdivision, three cents per taxable 135.21ton for distributions in 2009 must be allocated for distribution to towns that are entirely 135.22located within the taconite tax relief area defined in section 
         273.134, paragraph (b). 135.23For distribution in 2010 and subsequent years, the three-cent amount must be annually 135.24increased in the same proportion as the increase in the implicit price deflator as provided 135.25in section 
         298.24, subdivision 1. The amount available under this paragraph will be 135.26distributed to eligible towns on a per capita basis, provided that no town may receive more 135.27than $50,000 in any year under this paragraph. Any amount of the distribution that exceeds 135.28the $50,000 limitation for a town under this paragraph must be redistributed on a per 135.29capita basis among the other eligible towns, to whose distributions do not exceed $50,000.135.30    Sec. 12.  REPEALER.135.31(a) Minnesota Statutes 2010, section 298.28, subdivisions 8 and 9c, are repealed.135.32(b) Minnesota Statutes 2010, section 298.285, is repealed.135.33(c) Minnesota Statutes 2010, section 298.017, is repealed.136.1EFFECTIVE DATE.Paragraph (a) is effective for distributions in 2012 and 136.2thereafter of taxes on production in 2011 and thereafter. Paragraph (b) is effective June 30, 136.32011. Paragraph (c) is effective for taxable years beginning after December 31, 2010.136.4ARTICLE 9136.5MISCELLANEOUS136.6    Section 1. Minnesota Statutes 2010, section 270C.13, subdivision 1, is amended to read:136.7    Subdivision 1. Biennial report. The commissioner shall report to the legislature 136.8by March 1 of each odd-numbered year on the overall incidence of the income tax, 136.9sales and excise taxes, and property tax. The report shall present information on the 136.10distribution of the tax burden as follows: (1) for the overall income distribution, using 136.11a systemwide incidence measure such as the Suits index or other appropriate measures 136.12of equality and inequality; (2) by income classes, including at a minimum deciles of the 136.13income distribution; and (3) by other appropriate taxpayer characteristics. The report 136.14must also include information on the distribution of the burden of federal taxes borne 136.15by Minnesota residents.136.16EFFECTIVE DATE.This section is effective beginning with the report due in 136.17March 2013.136.18    Sec. 2. BUDGET RESERVE REDUCTION.136.19On July 1, 2011, the commissioner of management and budget shall cancel 136.20$8,665,000 of the balance in the budget reserve account in Minnesota Statutes, section 136.2116A.152, to the general fund.136.22    Sec. 3. CASH FLOW ACCOUNT REDUCTION.136.23On July 1, 2011, the commissioner of management and budget shall cancel 136.24$166,000,000 of the balance in the cash flow account in Minnesota Statutes, section 136.2516A.152, to the general fund.

136.26Sec. 4. TRANSFER

136.27    Prior to June 30, 2012, the commissioner of iron range resources shall transfer 136.28$60,000,000 from the Douglas J. Johnson economic protection trust fund to the general 136.29fund. This is a onetime transfer."136.30Delete the title and insert:136.31"A bill for an act136.32relating to the financing of state and local government; making changes to 136.33individual income, corporate franchise, estate, property, aids, credits, payments, 137.1refunds, sales and use, tax increment financing, minerals, local, and other 137.2taxes and tax-related provisions; authorizing border city development zone 137.3powers and local taxes; extending levy limits; repealing sustainable forest 137.4resource management incentive; authorizing grants to local governments for 137.5cooperation and consolidation; providing a science and technology program; 137.6conforming to changes made to the Internal Revenue Code; permitting certain 137.7appeals; modifying provision allowing for a reciprocity agreement with state of 137.8Wisconsin; setting the levels of the cash flow account and the budget reserve 137.9account; suspending certain maintenance of effort requirements; requiring 137.10studies; requiring reports; appropriating money;amending Minnesota Statutes 137.112010, sections 88.49, subdivisions 5, 9a; 97A.061, subdivisions 1, 3; 126C.01, 137.12subdivision 3; 270A.03, subdivision 7; 270B.12, by adding a subdivision; 137.13270C.13, subdivision 1; 272.02, subdivision 39, by adding a subdivision; 137.14273.111, by adding a subdivision; 273.114, subdivision 2, as amended; 273.121, 137.15subdivision 1; 273.13, subdivisions 23, 25, 34, by adding a subdivision; 137.16273.1384, subdivisions 3, 4; 273.1393; 273.1398, subdivision 3; 274.01, 137.17subdivision 1; 275.025, subdivisions 1, 3, 4; 275.70, subdivision 5; 275.71, 137.18subdivisions 2, 4, 5; 276.04, subdivision 2; 289A.02, subdivision 7, as amended; 137.19289A.20, subdivision 4; 289A.50, subdivision 1; 290.01, subdivisions 6, 19, as 137.20amended, 19a, as amended, 19b, 19c, as amended, 31, as amended; 290.05, 137.21subdivision 1; 290.06, subdivision 2c; 290.0674, subdivision 1; 290.068, 137.22subdivision 1; 290.081; 290.091, subdivision 2; 290.191, subdivisions 2, 3; 137.23290A.03, subdivisions 11, 13, 15, as amended; 290A.04, subdivisions 2, 2a, 137.244, by adding a subdivision; 291.005, subdivision 1; 291.03, subdivision 1, by 137.25adding subdivisions; 297A.61, subdivision 3; 297A.62, by adding a subdivision; 137.26297A.63, by adding a subdivision; 297A.668, subdivision 7, by adding a 137.27subdivision; 297A.68, by adding a subdivision; 297A.70, subdivisions 1, 2, 3, 8; 137.28297A.75, subdivisions 1, 2, 3; 297A.82, subdivision 4; 297A.99, subdivisions 137.291, 3; 298.001, by adding a subdivision; 298.01, subdivisions 3, 3a; 298.015, 137.30subdivisions 1, 2; 298.016, subdivision 4; 298.225, subdivision 1; 298.24, 137.31subdivision 1; 298.28, subdivision 3; 469.176, subdivisions 4c, 4m; 469.1763, 137.32subdivision 2; 473.757, subdivision 11; 477A.011, subdivision 20, by adding 137.33a subdivision; 477A.0124, by adding a subdivision; 477A.013, subdivisions 137.348, 9, by adding a subdivision; 477A.03; 477A.11, subdivision 1; 477A.12, 137.35subdivision 1; 477A.14, subdivision 1; 477A.17; Laws 1996, chapter 471, article 137.362, section 29, subdivision 1, as amended; Laws 1998, chapter 389, article 8, 137.37section 43, subdivisions 3, as amended, 4, as amended, 5, as amended; Laws 137.382008, chapter 366, article 7, section 19, subdivision 3; Laws 2010, chapter 389, 137.39article 5, section 6, subdivision 1; article 7, section 22; proposing coding for 137.40new law in Minnesota Statutes, chapters 116W; 275; 373; repealing Minnesota 137.41Statutes 2010, sections 10A.322, subdivision 4; 13.4967, subdivisions 2, 2b; 137.42273.1384, subdivisions 1, 6; 275.025; 275.295; 289A.60, subdivision 31; 290.06, 137.43subdivision 23; 290C.01; 290C.02; 290C.03; 290C.04; 290C.05; 290C.055; 137.44290C.06; 290C.07; 290C.08; 290C.09; 290C.10; 290C.11; 290C.12; 290C.13; 137.45298.017; 298.28, subdivisions 8, 9c; 298.285; 477A.145."

138.1We request the adoption of this report and repassage of the bill.138.2House Conferees:138.3
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                     						138.4Greg DavidsSarah Anderson138.5
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                     						138.6Jenifer LoonLinda Runbeck138.7
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                     						138.8Ann Lenczewski138.9Senate Conferees:138.10
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                     						138.11Julianne E. OrtmanDavid H. Senjem138.12
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                     						138.13Warren LimmerRoger C. Chamberlain138.14
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                     						138.15Julie A. Rosen