1st Engrossment - 83rd Legislature, 2003 1st Special Session (2003 - 2003) Posted on 12/15/2009 12:00am
Engrossments | ||
---|---|---|
Introduction | Posted on 05/20/2003 | |
1st Engrossment | Posted on 05/28/2003 |
1.1 A bill for an act 1.2 relating to the financing and operation of state and 1.3 local government; providing for job opportunity 1.4 building zones; providing for a biotechnology and 1.5 health sciences industry zone; changing income, sales 1.6 and use, motor vehicle sales, motor vehicle 1.7 registration, property, cigarette and tobacco, liquor, 1.8 mortgage registry and deed, and other taxes; updating 1.9 references to the Internal Revenue Code; changing 1.10 accelerated sales tax liability provisions and 1.11 extending the requirements to other taxes; changing or 1.12 providing property tax and sales tax exemptions; 1.13 requiring payment of certain lawful gambling taxes; 1.14 altering the computation and payments of 1.15 intergovernmental aids; imposing levy limits; 1.16 modifying truth in taxation requirements; providing 1.17 economic development incentives; changing tax 1.18 increment financing requirements; providing powers to 1.19 certain cities and counties; authorizing a special 1.20 taxing district; providing for collection of certain 1.21 debts and charges; providing for payments into and 1.22 transfers among certain funds and accounts; providing 1.23 for distribution of certain revenues and funds; 1.24 regulating limited used vehicle licenses; making 1.25 certain changes relating to the taconite assistance 1.26 area; authorizing municipalities to collect certain 1.27 charges as a special assessment; changing certain 1.28 requirements relating to the metropolitan mosquito 1.29 control district; regulating tax preparers; providing 1.30 for studies; providing penalties; appropriating money; 1.31 amending Minnesota Statutes 2002, sections 3.986, 1.32 subdivision 4; 4A.02; 16A.152, subdivisions 1, 1b, 2; 1.33 18B.07, subdivision 2, as amended; 62J.692, 1.34 subdivision 4, by adding a subdivision; 168.27, 1.35 subdivision 4a; 270.60, subdivision 4; 270A.03, 1.36 subdivision 2; 270A.07, subdivisions 1, 2; 272.02, 1.37 subdivision 25, by adding subdivisions; 272.029, by 1.38 adding a subdivision; 273.11, subdivision 13; 273.13, 1.39 subdivision 25; 273.1341, as added; 273.1398, 1.40 subdivisions 4a, 4c, 6, 8; 275.025, subdivision 1; 1.41 275.065, subdivision 3; 275.066; 275.70, subdivision 1.42 5; 275.71, subdivisions 2, 4, 5, 6; 275.72, 1.43 subdivision 3; 275.73, subdivision 2; 275.74, 1.44 subdivision 3; 276A.01, subdivision 2; 287.12; 287.29, 1.45 subdivision 1; 287.31, by adding a subdivision; 1.46 289A.02, subdivision 7, as amended; 289A.08, 2.1 subdivision 16, as amended; 289A.20, subdivision 4; 2.2 289A.31, subdivision 7; 289A.60, subdivision 15; 2.3 290.01, subdivisions 19, as amended, 19b, 29, 31, as 2.4 amended; 290.06, subdivision 2c, by adding 2.5 subdivisions; 290.067, subdivision 1; 290.0671, 2.6 subdivision 1; 290.091, subdivision 2; 290.0921, 2.7 subdivision 3; 290.0922, subdivisions 2, 3; 290A.03, 2.8 subdivision 15, as amended; 297A.68, by adding 2.9 subdivisions; 297A.70, subdivisions 8, 10, 14, 16; 2.10 297A.71, by adding a subdivision; 297B.01, subdivision 2.11 7; 297B.03; 297F.09, subdivisions 1, 2, by adding a 2.12 subdivision; 297F.10, subdivision 1, as amended; 2.13 297G.01, by adding a subdivision; 297G.03, subdivision 2.14 1; 297G.09, by adding a subdivision; 298.018, 2.15 subdivisions 1, 2; 298.22, subdivisions 2, 8; 2.16 298.2211, subdivisions 1, 2; 298.2213, subdivision 3; 2.17 298.2214, subdivisions 1, 3; 298.223, subdivision 1; 2.18 298.28, subdivisions 7, 11; 298.292, subdivision 2; 2.19 298.293; 298.298; 349.16, by adding a subdivision; 2.20 429.101, subdivision 1; 469.169, by adding a 2.21 subdivision; 469.174, subdivisions 6, as amended, 10, 2.22 by adding a subdivision; 469.1763, subdivisions 2, 4; 2.23 469.177, subdivision 1; 473.167, subdivision 3; 2.24 473.249, subdivision 1; 473.253, subdivision 1; 2.25 473.704, subdivision 17, as amended; 474A.061, 2.26 subdivision 1, as amended; 477A.011, subdivisions 34, 2.27 36, by adding subdivisions; 477A.013, subdivisions 8, 2.28 9; 477A.03, subdivision 2, by adding subdivisions; 2.29 611.27, subdivisions 13, 15; Laws 1980, chapter 511, 2.30 section 1, subdivision 2, as amended; Laws 1980, 2.31 chapter 511, section 2, as amended; Laws 1993, chapter 2.32 375, article 9, section 46, subdivision 2, as amended; 2.33 Laws 1998, chapter 389, article 16, section 35, 2.34 subdivision 1, as amended; Laws 1999, chapter 243, 2.35 article 4, section 19, as amended; Laws 2001, First 2.36 Special Session chapter 5, article 12, section 95, as 2.37 amended; Laws 2001, First Special Session chapter 5, 2.38 article 20, section 22; Laws 2002, chapter 377, 2.39 article 3, section 15; 2003 First Special Session H. 2.40 F. No. 1, article 2, section 118, subdivision 6; 2.41 proposing coding for new law in Minnesota Statutes, 2.42 chapters 270; 469; 477A; repealing Minnesota Statutes 2.43 2002, sections 37.13, subdivision 2; 272.02, 2.44 subdivision 26; 273.138, subdivisions 2, 3, 6; 2.45 273.1398, subdivisions 2, 2c, 4d; 273.166; 275.065, 2.46 subdivision 3a; 325E.112, subdivision 2a; 477A.011, 2.47 subdivision 37; 477A.0121; 477A.0122; 477A.0123; 2.48 477A.0132; 477A.03, subdivisions 3, 4; 477A.06; 2.49 477A.07. 2.50 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 2.51 ARTICLE 1 2.52 JOB OPPORTUNITY BUILDING ZONES 2.53 Section 1. Minnesota Statutes 2002, section 272.02, is 2.54 amended by adding a subdivision to read: 2.55 Subd. 56. [JOB OPPORTUNITY BUILDING ZONE PROPERTY.] (a) 2.56 Improvements to real property, and personal property, classified 2.57 under section 273.13, subdivision 24, and located within a job 2.58 opportunity building zone, designated under section 469.314, are 2.59 exempt from ad valorem taxes levied under chapter 275. 2.60 (b) Improvements to real property, and tangible personal 3.1 property, of an agricultural production facility located within 3.2 an agricultural processing facility zone, designated under 3.3 section 469.314, is exempt from ad valorem taxes levied under 3.4 chapter 275. 3.5 (c) For property to qualify for exemption under paragraph 3.6 (a), the occupant must be a qualified business, as defined in 3.7 section 469.310. 3.8 (d) The exemption applies beginning for the first 3.9 assessment year after designation of the job opportunity 3.10 building zone by the commissioner of trade and economic 3.11 development. The exemption applies to each assessment year that 3.12 begins during the duration of the job opportunity building zone 3.13 and to property occupied by July 1 of the assessment year by a 3.14 qualified business. This exemption does not apply to: 3.15 (1) the levy under section 475.61 or similar levy 3.16 provisions under any other law to pay general obligation bonds; 3.17 or 3.18 (2) a levy under section 126C.17, if the levy was approved 3.19 by the voters before the designation of the job opportunity 3.20 building zone. 3.21 [EFFECTIVE DATE.] This section is effective beginning for 3.22 property taxes assessed in 2004, payable in 2005. 3.23 Sec. 2. Minnesota Statutes 2002, section 272.029, is 3.24 amended by adding a subdivision to read: 3.25 Subd. 7. [EXEMPTION.] The tax imposed under this section 3.26 does not apply to electricity produced by wind energy conversion 3.27 systems located in a job opportunity building zone, designated 3.28 under section 469.314, for the duration of the zone. The 3.29 exemption applies beginning for the first calendar year after 3.30 designation of the zone and applies to each calendar year that 3.31 begins during the designation of the zone. 3.32 [EFFECTIVE DATE.] This section is effective the day 3.33 following final enactment. 3.34 Sec. 3. Minnesota Statutes 2002, section 290.01, 3.35 subdivision 19b, is amended to read: 3.36 Subd. 19b. [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 4.1 individuals, estates, and trusts, there shall be subtracted from 4.2 federal taxable income: 4.3 (1) interest income on obligations of any authority, 4.4 commission, or instrumentality of the United States to the 4.5 extent includable in taxable income for federal income tax 4.6 purposes but exempt from state income tax under the laws of the 4.7 United States; 4.8 (2) if included in federal taxable income, the amount of 4.9 any overpayment of income tax to Minnesota or to any other 4.10 state, for any previous taxable year, whether the amount is 4.11 received as a refund or as a credit to another taxable year's 4.12 income tax liability; 4.13 (3) the amount paid to others, less the amount used to 4.14 claim the credit allowed under section 290.0674, not to exceed 4.15 $1,625 for each qualifying child in grades kindergarten to 6 and 4.16 $2,500 for each qualifying child in grades 7 to 12, for tuition, 4.17 textbooks, and transportation of each qualifying child in 4.18 attending an elementary or secondary school situated in 4.19 Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, 4.20 wherein a resident of this state may legally fulfill the state's 4.21 compulsory attendance laws, which is not operated for profit, 4.22 and which adheres to the provisions of the Civil Rights Act of 4.23 1964 and chapter 363. For the purposes of this clause, 4.24 "tuition" includes fees or tuition as defined in section 4.25 290.0674, subdivision 1, clause (1). As used in this clause, 4.26 "textbooks" includes books and other instructional materials and 4.27 equipment purchased or leased for use in elementary and 4.28 secondary schools in teaching only those subjects legally and 4.29 commonly taught in public elementary and secondary schools in 4.30 this state. Equipment expenses qualifying for deduction 4.31 includes expenses as defined and limited in section 290.0674, 4.32 subdivision 1, clause (3). "Textbooks" does not include 4.33 instructional books and materials used in the teaching of 4.34 religious tenets, doctrines, or worship, the purpose of which is 4.35 to instill such tenets, doctrines, or worship, nor does it 4.36 include books or materials for, or transportation to, 5.1 extracurricular activities including sporting events, musical or 5.2 dramatic events, speech activities, driver's education, or 5.3 similar programs. For purposes of the subtraction provided by 5.4 this clause, "qualifying child" has the meaning given in section 5.5 32(c)(3) of the Internal Revenue Code; 5.6 (4) income as provided under section 290.0802; 5.7 (5) to the extent included in federal adjusted gross 5.8 income, income realized on disposition of property exempt from 5.9 tax under section 290.491; 5.10 (6) to the extent not deducted in determining federal 5.11 taxable income or used to claim the long-term care insurance 5.12 credit under section 290.0672, the amount paid for health 5.13 insurance of self-employed individuals as determined under 5.14 section 162(l) of the Internal Revenue Code, except that the 5.15 percent limit does not apply. If the individual deducted 5.16 insurance payments under section 213 of the Internal Revenue 5.17 Code of 1986, the subtraction under this clause must be reduced 5.18 by the lesser of: 5.19 (i) the total itemized deductions allowed under section 5.20 63(d) of the Internal Revenue Code, less state, local, and 5.21 foreign income taxes deductible under section 164 of the 5.22 Internal Revenue Code and the standard deduction under section 5.23 63(c) of the Internal Revenue Code; or 5.24 (ii) the lesser of (A) the amount of insurance qualifying 5.25 as "medical care" under section 213(d) of the Internal Revenue 5.26 Code to the extent not deducted under section 162(1) of the 5.27 Internal Revenue Code or excluded from income or (B) the total 5.28 amount deductible for medical care under section 213(a); 5.29 (7) the exemption amount allowed under Laws 1995, chapter 5.30 255, article 3, section 2, subdivision 3; 5.31 (8) to the extent included in federal taxable income, 5.32 postservice benefits for youth community service under section 5.33 124D.42 for volunteer service under United States Code, title 5.34 42, sections 12601 to 12604; 5.35 (9) to the extent not deducted in determining federal 5.36 taxable income by an individual who does not itemize deductions 6.1 for federal income tax purposes for the taxable year, an amount 6.2 equal to 50 percent of the excess of charitable contributions 6.3 allowable as a deduction for the taxable year under section 6.4 170(a) of the Internal Revenue Code over $500; 6.5 (10) for taxable years beginning before January 1, 2008, 6.6 the amount of the federal small ethanol producer credit allowed 6.7 under section 40(a)(3) of the Internal Revenue Code which is 6.8 included in gross income under section 87 of the Internal 6.9 Revenue Code; 6.10 (11) for individuals who are allowed a federal foreign tax 6.11 credit for taxes that do not qualify for a credit under section 6.12 290.06, subdivision 22, an amount equal to the carryover of 6.13 subnational foreign taxes for the taxable year, but not to 6.14 exceed the total subnational foreign taxes reported in claiming 6.15 the foreign tax credit. For purposes of this clause, "federal 6.16 foreign tax credit" means the credit allowed under section 27 of 6.17 the Internal Revenue Code, and "carryover of subnational foreign 6.18 taxes" equals the carryover allowed under section 904(c) of the 6.19 Internal Revenue Code minus national level foreign taxes to the 6.20 extent they exceed the federal foreign tax credit;and6.21 (12) in each of the five tax years immediately following 6.22 the tax year in which an addition is required under subdivision 6.23 19a, clause (7), an amount equal to one-fifth of the delayed 6.24 depreciation. For purposes of this clause, "delayed 6.25 depreciation" means the amount of the addition made by the 6.26 taxpayer under subdivision 19a, clause (7), minus the positive 6.27 value of any net operating loss under section 172 of the 6.28 Internal Revenue Code generated for the tax year of the 6.29 addition. The resulting delayed depreciation cannot be less 6.30 than zero; and 6.31 (13) job opportunity building zone income as provided under 6.32 section 469.316. 6.33 [EFFECTIVE DATE.] This section is effective for taxable 6.34 years beginning after December 31, 2003. 6.35 Sec. 4. Minnesota Statutes 2002, section 290.01, 6.36 subdivision 29, is amended to read: 7.1 Subd. 29. [TAXABLE INCOME.] The term "taxable income" 7.2 means: 7.3 (1) for individuals, estates, and trusts, the same as 7.4 taxable net income; 7.5 (2) for corporations, the taxable net income less 7.6 (i) the net operating loss deduction under section 290.095; 7.7and7.8 (ii) the dividends received deduction under section 290.21, 7.9 subdivision 4; and 7.10 (iii) the exemption for operating in a job opportunity 7.11 building zone under section 469.317. 7.12 [EFFECTIVE DATE.] This section is effective for taxable 7.13 years beginning after December 31, 2003. 7.14 Sec. 5. Minnesota Statutes 2002, section 290.06, 7.15 subdivision 2c, is amended to read: 7.16 Subd. 2c. [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 7.17 AND TRUSTS.] (a) The income taxes imposed by this chapter upon 7.18 married individuals filing joint returns and surviving spouses 7.19 as defined in section 2(a) of the Internal Revenue Code must be 7.20 computed by applying to their taxable net income the following 7.21 schedule of rates: 7.22 (1) On the first $25,680, 5.35 percent; 7.23 (2) On all over $25,680, but not over $102,030, 7.05 7.24 percent; 7.25 (3) On all over $102,030, 7.85 percent. 7.26 Married individuals filing separate returns, estates, and 7.27 trusts must compute their income tax by applying the above rates 7.28 to their taxable income, except that the income brackets will be 7.29 one-half of the above amounts. 7.30 (b) The income taxes imposed by this chapter upon unmarried 7.31 individuals must be computed by applying to taxable net income 7.32 the following schedule of rates: 7.33 (1) On the first $17,570, 5.35 percent; 7.34 (2) On all over $17,570, but not over $57,710, 7.05 7.35 percent; 7.36 (3) On all over $57,710, 7.85 percent. 8.1 (c) The income taxes imposed by this chapter upon unmarried 8.2 individuals qualifying as a head of household as defined in 8.3 section 2(b) of the Internal Revenue Code must be computed by 8.4 applying to taxable net income the following schedule of rates: 8.5 (1) On the first $21,630, 5.35 percent; 8.6 (2) On all over $21,630, but not over $86,910, 7.05 8.7 percent; 8.8 (3) On all over $86,910, 7.85 percent. 8.9 (d) In lieu of a tax computed according to the rates set 8.10 forth in this subdivision, the tax of any individual taxpayer 8.11 whose taxable net income for the taxable year is less than an 8.12 amount determined by the commissioner must be computed in 8.13 accordance with tables prepared and issued by the commissioner 8.14 of revenue based on income brackets of not more than $100. The 8.15 amount of tax for each bracket shall be computed at the rates 8.16 set forth in this subdivision, provided that the commissioner 8.17 may disregard a fractional part of a dollar unless it amounts to 8.18 50 cents or more, in which case it may be increased to $1. 8.19 (e) An individual who is not a Minnesota resident for the 8.20 entire year must compute the individual's Minnesota income tax 8.21 as provided in this subdivision. After the application of the 8.22 nonrefundable credits provided in this chapter, the tax 8.23 liability must then be multiplied by a fraction in which: 8.24 (1) the numerator is the individual's Minnesota source 8.25 federal adjusted gross income as defined in section 62 of the 8.26 Internal Revenue Code and increased by the additions required 8.27 under section 290.01, subdivision 19a, clauses (1) and (6), and 8.28 reduced by the subtraction under section 290.01, subdivision 8.29 19b, clause (13), and the Minnesota assignable portion of the 8.30 subtraction for United States government interest under section 8.31 290.01, subdivision 19b, clause (1), after applying the 8.32 allocation and assignability provisions of section 290.081, 8.33 clause (a), or 290.17; and 8.34 (2) the denominator is the individual's federal adjusted 8.35 gross income as defined in section 62 of the Internal Revenue 8.36 Code of 1986, increased by the amounts specified in section 9.1 290.01, subdivision 19a, clauses (1) and (6), and reduced by the 9.2 amounts specified in section 290.01, subdivision 19b,clause9.3 clauses (1) and (13). 9.4 [EFFECTIVE DATE.] This section is effective for taxable 9.5 years beginning after December 31, 2003. 9.6 Sec. 6. Minnesota Statutes 2002, section 290.06, is 9.7 amended by adding a subdivision to read: 9.8 Subd. 29. [JOB OPPORTUNITY BUILDING ZONE JOB CREDIT.] A 9.9 taxpayer that is a qualified business, as defined in section 9.10 469.310, subdivision 11, is allowed a credit as determined under 9.11 section 469.318 against the tax imposed by this chapter. 9.12 [EFFECTIVE DATE.] This section is effective the day 9.13 following final enactment. 9.14 Sec. 7. Minnesota Statutes 2002, section 290.067, 9.15 subdivision 1, is amended to read: 9.16 Subdivision 1. [AMOUNT OF CREDIT.] (a) A taxpayer may take 9.17 as a credit against the tax due from the taxpayer and a spouse, 9.18 if any, under this chapter an amount equal to the dependent care 9.19 credit for which the taxpayer is eligible pursuant to the 9.20 provisions of section 21 of the Internal Revenue Code subject to 9.21 the limitations provided in subdivision 2 except that in 9.22 determining whether the child qualified as a dependent, income 9.23 received as a Minnesota family investment program grant or 9.24 allowance to or on behalf of the child must not be taken into 9.25 account in determining whether the child received more than half 9.26 of the child's support from the taxpayer, and the provisions of 9.27 section 32(b)(1)(D) of the Internal Revenue Code do not apply. 9.28 (b) If a child who has not attained the age of six years at 9.29 the close of the taxable year is cared for at a licensed family 9.30 day care home operated by the child's parent, the taxpayer is 9.31 deemed to have paid employment-related expenses. If the child 9.32 is 16 months old or younger at the close of the taxable year, 9.33 the amount of expenses deemed to have been paid equals the 9.34 maximum limit for one qualified individual under section 21(c) 9.35 and (d) of the Internal Revenue Code. If the child is older 9.36 than 16 months of age but has not attained the age of six years 10.1 at the close of the taxable year, the amount of expenses deemed 10.2 to have been paid equals the amount the licensee would charge 10.3 for the care of a child of the same age for the same number of 10.4 hours of care. 10.5 (c) If a married couple: 10.6 (1) has a child who has not attained the age of one year at 10.7 the close of the taxable year; 10.8 (2) files a joint tax return for the taxable year; and 10.9 (3) does not participate in a dependent care assistance 10.10 program as defined in section 129 of the Internal Revenue Code, 10.11 in lieu of the actual employment related expenses paid for that 10.12 child under paragraph (a) or the deemed amount under paragraph 10.13 (b), the lesser of (i) the combined earned income of the couple 10.14 or (ii) the amount of the maximum limit for one qualified 10.15 individual under section 21(c) and (d) of the Internal Revenue 10.16 Code will be deemed to be the employment related expense paid 10.17 for that child. The earned income limitation of section 21(d) 10.18 of the Internal Revenue Code shall not apply to this deemed 10.19 amount. These deemed amounts apply regardless of whether any 10.20 employment-related expenses have been paid. 10.21 (d) If the taxpayer is not required and does not file a 10.22 federal individual income tax return for the tax year, no credit 10.23 is allowed for any amount paid to any person unless: 10.24 (1) the name, address, and taxpayer identification number 10.25 of the person are included on the return claiming the credit; or 10.26 (2) if the person is an organization described in section 10.27 501(c)(3) of the Internal Revenue Code and exempt from tax under 10.28 section 501(a) of the Internal Revenue Code, the name and 10.29 address of the person are included on the return claiming the 10.30 credit. 10.31 In the case of a failure to provide the information required 10.32 under the preceding sentence, the preceding sentence does not 10.33 apply if it is shown that the taxpayer exercised due diligence 10.34 in attempting to provide the information required. 10.35 In the case of a nonresident, part-year resident, or a 10.36 person who has earned income not subject to tax under this 11.1 chapter including earned income excluded pursuant to section 11.2 290.01, subdivision 19b, clause (13), the credit determined 11.3 under section 21 of the Internal Revenue Code must be allocated 11.4 based on the ratio by which the earned income of the claimant 11.5 and the claimant's spouse from Minnesota sources bears to the 11.6 total earned income of the claimant and the claimant's spouse. 11.7 [EFFECTIVE DATE.] This section is effective for taxable 11.8 years beginning after December 31, 2003. 11.9 Sec. 8. Minnesota Statutes 2002, section 290.0671, 11.10 subdivision 1, is amended to read: 11.11 Subdivision 1. [CREDIT ALLOWED.] (a) An individual is 11.12 allowed a credit against the tax imposed by this chapter equal 11.13 to a percentage of earned income. To receive a credit, a 11.14 taxpayer must be eligible for a credit under section 32 of the 11.15 Internal Revenue Code. 11.16 (b) For individuals with no qualifying children, the credit 11.17 equals 1.9125 percent of the first $4,620 of earned income. The 11.18 credit is reduced by 1.9125 percent of earned income or modified 11.19 adjusted gross income, whichever is greater, in excess of 11.20 $5,770, but in no case is the credit less than zero. 11.21 (c) For individuals with one qualifying child, the credit 11.22 equals 8.5 percent of the first $6,920 of earned income and 8.5 11.23 percent of earned income over $12,080 but less than $13,450. 11.24 The credit is reduced by 5.73 percent of earned income or 11.25 modified adjusted gross income, whichever is greater, in excess 11.26 of $15,080, but in no case is the credit less than zero. 11.27 (d) For individuals with two or more qualifying children, 11.28 the credit equals ten percent of the first $9,720 of earned 11.29 income and 20 percent of earned income over $14,860 but less 11.30 than $16,800. The credit is reduced by 10.3 percent of earned 11.31 income or modified adjusted gross income, whichever is greater, 11.32 in excess of $17,890, but in no case is the credit less than 11.33 zero. 11.34 (e) For a nonresident or part-year resident, the credit 11.35 must be allocated based on the percentage calculated under 11.36 section 290.06, subdivision 2c, paragraph (e). 12.1 (f) For a person who was a resident for the entire tax year 12.2 and has earned income not subject to tax under this 12.3 chapter including income excluded under section 290.01, 12.4 subdivision 19b, clause (13), the credit must be allocated based 12.5 on the ratio of federal adjusted gross income reduced by the 12.6 earned income not subject to tax under this chapter over federal 12.7 adjusted gross income. 12.8 (g) For tax years beginning after December 31, 2001, and 12.9 before December 31, 2004, the $5,770 in paragraph (b) is 12.10 increased to $6,770, the $15,080 in paragraph (c) is increased 12.11 to $16,080, and the $17,890 in paragraph (d) is increased to 12.12 $18,890 for married taxpayers filing joint returns. 12.13 (h) For tax years beginning after December 31, 2004, and 12.14 before December 31, 2007, the $5,770 in paragraph (b) is 12.15 increased to $7,770, the $15,080 in paragraph (c) is increased 12.16 to $17,080, and the $17,890 in paragraph (d) is increased to 12.17 $19,890 for married taxpayers filing joint returns. 12.18 (i) For tax years beginning after December 31, 2007, and 12.19 before December 31, 2010, the $5,770 in paragraph (b) is 12.20 increased to $8,770, the $15,080 in paragraph (c) is increased 12.21 to $18,080 and the $17,890 in paragraph (d) is increased to 12.22 $20,890 for married taxpayers filing joint returns. 12.23 (j) The commissioner shall construct tables showing the 12.24 amount of the credit at various income levels and make them 12.25 available to taxpayers. The tables shall follow the schedule 12.26 contained in this subdivision, except that the commissioner may 12.27 graduate the transition between income brackets. 12.28 [EFFECTIVE DATE.] This section is effective for taxable 12.29 years beginning after December 31, 2003. 12.30 Sec. 9. Minnesota Statutes 2002, section 290.091, 12.31 subdivision 2, is amended to read: 12.32 Subd. 2. [DEFINITIONS.] For purposes of the tax imposed by 12.33 this section, the following terms have the meanings given: 12.34 (a) "Alternative minimum taxable income" means the sum of 12.35 the following for the taxable year: 12.36 (1) the taxpayer's federal alternative minimum taxable 13.1 income as defined in section 55(b)(2) of the Internal Revenue 13.2 Code; 13.3 (2) the taxpayer's itemized deductions allowed in computing 13.4 federal alternative minimum taxable income, but excluding: 13.5 (i) the charitable contribution deduction under section 170 13.6 of the Internal Revenue Code to the extent that the deduction 13.7 exceeds 1.3 percent of adjusted gross income, as defined in 13.8 section 62 of the Internal Revenue Code; 13.9 (ii) the medical expense deduction; 13.10 (iii) the casualty, theft, and disaster loss deduction; and 13.11 (iv) the impairment-related work expenses of a disabled 13.12 person; 13.13 (3) for depletion allowances computed under section 613A(c) 13.14 of the Internal Revenue Code, with respect to each property (as 13.15 defined in section 614 of the Internal Revenue Code), to the 13.16 extent not included in federal alternative minimum taxable 13.17 income, the excess of the deduction for depletion allowable 13.18 under section 611 of the Internal Revenue Code for the taxable 13.19 year over the adjusted basis of the property at the end of the 13.20 taxable year (determined without regard to the depletion 13.21 deduction for the taxable year); 13.22 (4) to the extent not included in federal alternative 13.23 minimum taxable income, the amount of the tax preference for 13.24 intangible drilling cost under section 57(a)(2) of the Internal 13.25 Revenue Code determined without regard to subparagraph (E); 13.26 (5) to the extent not included in federal alternative 13.27 minimum taxable income, the amount of interest income as 13.28 provided by section 290.01, subdivision 19a, clause (1); and 13.29 (6) the amount of addition required by section 290.01, 13.30 subdivision 19a, clause (7); 13.31 less the sum of the amounts determined under the following: 13.32 (1) interest income as defined in section 290.01, 13.33 subdivision 19b, clause (1); 13.34 (2) an overpayment of state income tax as provided by 13.35 section 290.01, subdivision 19b, clause (2), to the extent 13.36 included in federal alternative minimum taxable income; 14.1 (3) the amount of investment interest paid or accrued 14.2 within the taxable year on indebtedness to the extent that the 14.3 amount does not exceed net investment income, as defined in 14.4 section 163(d)(4) of the Internal Revenue Code. Interest does 14.5 not include amounts deducted in computing federal adjusted gross 14.6 income; and 14.7 (4) amounts subtracted from federal taxable income as 14.8 provided by section 290.01, subdivision 19b,clauseclauses (12) 14.9 and (13). 14.10 In the case of an estate or trust, alternative minimum 14.11 taxable income must be computed as provided in section 59(c) of 14.12 the Internal Revenue Code. 14.13 (b) "Investment interest" means investment interest as 14.14 defined in section 163(d)(3) of the Internal Revenue Code. 14.15 (c) "Tentative minimum tax" equals 6.4 percent of 14.16 alternative minimum taxable income after subtracting the 14.17 exemption amount determined under subdivision 3. 14.18 (d) "Regular tax" means the tax that would be imposed under 14.19 this chapter (without regard to this section and section 14.20 290.032), reduced by the sum of the nonrefundable credits 14.21 allowed under this chapter. 14.22 (e) "Net minimum tax" means the minimum tax imposed by this 14.23 section. 14.24 [EFFECTIVE DATE.] This section is effective for taxable 14.25 years beginning after December 31, 2003. 14.26 Sec. 10. Minnesota Statutes 2002, section 290.0921, 14.27 subdivision 3, is amended to read: 14.28 Subd. 3. [ALTERNATIVE MINIMUM TAXABLE INCOME.] 14.29 "Alternative minimum taxable income" is Minnesota net income as 14.30 defined in section 290.01, subdivision 19, and includes the 14.31 adjustments and tax preference items in sections 56, 57, 58, and 14.32 59(d), (e), (f), and (h) of the Internal Revenue Code. If a 14.33 corporation files a separate company Minnesota tax return, the 14.34 minimum tax must be computed on a separate company basis. If a 14.35 corporation is part of a tax group filing a unitary return, the 14.36 minimum tax must be computed on a unitary basis. The following 15.1 adjustments must be made. 15.2 (1) For purposes of the depreciation adjustments under 15.3 section 56(a)(1) and 56(g)(4)(A) of the Internal Revenue Code, 15.4 the basis for depreciable property placed in service in a 15.5 taxable year beginning before January 1, 1990, is the adjusted 15.6 basis for federal income tax purposes, including any 15.7 modification made in a taxable year under section 290.01, 15.8 subdivision 19e, or Minnesota Statutes 1986, section 290.09, 15.9 subdivision 7, paragraph (c). 15.10 For taxable years beginning after December 31, 2000, the 15.11 amount of any remaining modification made under section 290.01, 15.12 subdivision 19e, or Minnesota Statutes 1986, section 290.09, 15.13 subdivision 7, paragraph (c), not previously deducted is a 15.14 depreciation allowance in the first taxable year after December 15.15 31, 2000. 15.16 (2) The portion of the depreciation deduction allowed for 15.17 federal income tax purposes under section 168(k) of the Internal 15.18 Revenue Code that is required as an addition under section 15.19 290.01, subdivision 19c, clause (16), is disallowed in 15.20 determining alternative minimum taxable income. 15.21 (3) The subtraction for depreciation allowed under section 15.22 290.01, subdivision 19d, clause (19), is allowed as a 15.23 depreciation deduction in determining alternative minimum 15.24 taxable income. 15.25 (4) The alternative tax net operating loss deduction under 15.26 sections 56(a)(4) and 56(d) of the Internal Revenue Code does 15.27 not apply. 15.28 (5) The special rule for certain dividends under section 15.29 56(g)(4)(C)(ii) of the Internal Revenue Code does not apply. 15.30 (6) The special rule for dividends from section 936 15.31 companies under section 56(g)(4)(C)(iii) does not apply. 15.32 (7) The tax preference for depletion under section 57(a)(1) 15.33 of the Internal Revenue Code does not apply. 15.34 (8) The tax preference for intangible drilling costs under 15.35 section 57(a)(2) of the Internal Revenue Code must be calculated 15.36 without regard to subparagraph (E) and the subtraction under 16.1 section 290.01, subdivision 19d, clause (4). 16.2 (9) The tax preference for tax exempt interest under 16.3 section 57(a)(5) of the Internal Revenue Code does not apply. 16.4 (10) The tax preference for charitable contributions of 16.5 appreciated property under section 57(a)(6) of the Internal 16.6 Revenue Code does not apply. 16.7 (11) For purposes of calculating the tax preference for 16.8 accelerated depreciation or amortization on certain property 16.9 placed in service before January 1, 1987, under section 57(a)(7) 16.10 of the Internal Revenue Code, the deduction allowable for the 16.11 taxable year is the deduction allowed under section 290.01, 16.12 subdivision 19e. 16.13 For taxable years beginning after December 31, 2000, the 16.14 amount of any remaining modification made under section 290.01, 16.15 subdivision 19e, not previously deducted is a depreciation or 16.16 amortization allowance in the first taxable year after December 16.17 31, 2004. 16.18 (12) For purposes of calculating the adjustment for 16.19 adjusted current earnings in section 56(g) of the Internal 16.20 Revenue Code, the term "alternative minimum taxable income" as 16.21 it is used in section 56(g) of the Internal Revenue Code, means 16.22 alternative minimum taxable income as defined in this 16.23 subdivision, determined without regard to the adjustment for 16.24 adjusted current earnings in section 56(g) of the Internal 16.25 Revenue Code. 16.26 (13) For purposes of determining the amount of adjusted 16.27 current earnings under section 56(g)(3) of the Internal Revenue 16.28 Code, no adjustment shall be made under section 56(g)(4) of the 16.29 Internal Revenue Code with respect to (i) the amount of foreign 16.30 dividend gross-up subtracted as provided in section 290.01, 16.31 subdivision 19d, clause (1), (ii) the amount of refunds of 16.32 income, excise, or franchise taxes subtracted as provided in 16.33 section 290.01, subdivision 19d, clause (10), or (iii) the 16.34 amount of royalties, fees or other like income subtracted as 16.35 provided in section 290.01, subdivision 19d, clause (11). 16.36 (14) Alternative minimum taxable income excludes the income 17.1 from operating in a job opportunity building zone as provided 17.2 under section 469.317. 17.3 Items of tax preference must not be reduced below zero as a 17.4 result of the modifications in this subdivision. 17.5 [EFFECTIVE DATE.] This section is effective for taxable 17.6 years beginning after December 31, 2003. 17.7 Sec. 11. Minnesota Statutes 2002, section 290.0922, 17.8 subdivision 2, is amended to read: 17.9 Subd. 2. [EXEMPTIONS.] The following entities are exempt 17.10 from the tax imposed by this section: 17.11 (1) corporations exempt from tax under section 290.05; 17.12 (2) real estate investment trusts; 17.13 (3) regulated investment companies or a fund thereof; and 17.14 (4) entities having a valid election in effect under 17.15 section 860D(b) of the Internal Revenue Code; 17.16 (5) town and farmers' mutual insurance companies;and17.17 (6) cooperatives organized under chapter 308A that provide 17.18 housing exclusively to persons age 55 and over and are 17.19 classified as homesteads under section 273.124, subdivision 3; 17.20 and 17.21 (7) an entity, if for the taxable year all of its property 17.22 is located in a job opportunity building zone designated under 17.23 section 469.314 and all of its payroll is a job opportunity 17.24 building zone payroll under section 469.310. 17.25 Entities not specifically exempted by this subdivision are 17.26 subject to tax under this section, notwithstanding section 17.27 290.05. 17.28 [EFFECTIVE DATE.] This section is effective for taxable 17.29 years beginning after December 31, 2003. 17.30 Sec. 12. Minnesota Statutes 2002, section 290.0922, 17.31 subdivision 3, is amended to read: 17.32 Subd. 3. [DEFINITIONS.] (a) "Minnesota sales or receipts" 17.33 means the total sales apportioned to Minnesota pursuant to 17.34 section 290.191, subdivision 5, the total receipts attributed to 17.35 Minnesota pursuant to section 290.191, subdivisions 6 to 8, 17.36 and/or the total sales or receipts apportioned or attributed to 18.1 Minnesota pursuant to any other apportionment formula applicable 18.2 to the taxpayer. 18.3 (b) "Minnesota property" means total Minnesota tangible 18.4 property as provided in section 290.191, subdivisions 9 to 11, 18.5 and any other tangible property located in Minnesota, but does 18.6 not include property located in a job opportunity building zone 18.7 designated under section 469.314. Intangible property shall not 18.8 be included in Minnesota property for purposes of this section. 18.9 Taxpayers who do not utilize tangible property to apportion 18.10 income shall nevertheless include Minnesota property for 18.11 purposes of this section. On a return for a short taxable year, 18.12 the amount of Minnesota property owned, as determined under 18.13 section 290.191, shall be included in Minnesota property based 18.14 on a fraction in which the numerator is the number of days in 18.15 the short taxable year and the denominator is 365. 18.16 (c) "Minnesota payrolls" means total Minnesota payrolls as 18.17 provided in section 290.191, subdivision 12, but does not 18.18 include job opportunity building zone payrolls under section 18.19 469.310, subdivision 8. Taxpayers who do not utilize payrolls 18.20 to apportion income shall nevertheless include Minnesota 18.21 payrolls for purposes of this section. 18.22 [EFFECTIVE DATE.] This section is effective for taxable 18.23 years beginning after December 31, 2003. 18.24 Sec. 13. Minnesota Statutes 2002, section 297A.68, is 18.25 amended by adding a subdivision to read: 18.26 Subd. 37. [JOB OPPORTUNITY BUILDING ZONES.] (a) Purchases 18.27 of tangible personal property or taxable services by a qualified 18.28 business, as defined in section 469.310, are exempt if the 18.29 property or services are primarily used or consumed in a job 18.30 opportunity building zone designated under section 469.314. 18.31 (b) Purchase and use of construction materials and supplies 18.32 for construction of improvements to real property in a job 18.33 opportunity building zone are exempt if the improvements after 18.34 completion of construction are to be used in the conduct of a 18.35 qualified business, as defined in section 469.310. This 18.36 exemption applies regardless of whether the purchases are made 19.1 by the business or a contractor. 19.2 (c) The exemptions under this subdivision apply to a local 19.3 sales and use tax regardless of whether the local sales tax is 19.4 imposed on the sales taxable as defined under this chapter. 19.5 (d) This subdivision applies to sales, if the purchase was 19.6 made and delivery received during the duration of the zone. 19.7 [EFFECTIVE DATE.] This section is effective for sales made 19.8 on or after the day following final enactment. 19.9 Sec. 14. Minnesota Statutes 2002, section 297B.03, is 19.10 amended to read: 19.11 297B.03 [EXEMPTIONS.] 19.12 There is specifically exempted from the provisions of this 19.13 chapter and from computation of the amount of tax imposed by it 19.14 the following: 19.15 (1) purchase or use, including use under a lease purchase 19.16 agreement or installment sales contract made pursuant to section 19.17 465.71, of any motor vehicle by the United States and its 19.18 agencies and instrumentalities and by any person described in 19.19 and subject to the conditions provided in section 297A.67, 19.20 subdivision 11; 19.21 (2) purchase or use of any motor vehicle by any person who 19.22 was a resident of another state or country at the time of the 19.23 purchase and who subsequently becomes a resident of Minnesota, 19.24 provided the purchase occurred more than 60 days prior to the 19.25 date such person began residing in the state of Minnesota and 19.26 the motor vehicle was registered in the person's name in the 19.27 other state or country; 19.28 (3) purchase or use of any motor vehicle by any person 19.29 making a valid election to be taxed under the provisions of 19.30 section 297A.90; 19.31 (4) purchase or use of any motor vehicle previously 19.32 registered in the state of Minnesota when such transfer 19.33 constitutes a transfer within the meaning of section 118, 331, 19.34 332, 336, 337, 338, 351, 355, 368, 721, 731, 1031, 1033, or 19.35 1563(a) of the Internal Revenue Code of 1986, as amended through 19.36 December 31, 1999; 20.1 (5) purchase or use of any vehicle owned by a resident of 20.2 another state and leased to a Minnesota based private or for 20.3 hire carrier for regular use in the transportation of persons or 20.4 property in interstate commerce provided the vehicle is titled 20.5 in the state of the owner or secured party, and that state does 20.6 not impose a sales tax or sales tax on motor vehicles used in 20.7 interstate commerce; 20.8 (6) purchase or use of a motor vehicle by a private 20.9 nonprofit or public educational institution for use as an 20.10 instructional aid in automotive training programs operated by 20.11 the institution. "Automotive training programs" includes motor 20.12 vehicle body and mechanical repair courses but does not include 20.13 driver education programs; 20.14 (7) purchase of a motor vehicle for use as an ambulance by 20.15 an ambulance service licensed under section 144E.10; 20.16 (8) purchase of a motor vehicle by or for a public library, 20.17 as defined in section 134.001, subdivision 2, as a bookmobile or 20.18 library delivery vehicle; 20.19 (9) purchase of a ready-mixed concrete truck; 20.20 (10) purchase or use of a motor vehicle by a town for use 20.21 exclusively for road maintenance, including snowplows and dump 20.22 trucks, but not including automobiles, vans, or pickup trucks; 20.23 (11) purchase or use of a motor vehicle by a corporation, 20.24 society, association, foundation, or institution organized and 20.25 operated exclusively for charitable, religious, or educational 20.26 purposes, except a public school, university, or library, but 20.27 only if the vehicle is: 20.28 (i) a truck, as defined in section 168.011, a bus, as 20.29 defined in section 168.011, or a passenger automobile, as 20.30 defined in section 168.011, if the automobile is designed and 20.31 used for carrying more than nine persons including the driver; 20.32 and 20.33 (ii) intended to be used primarily to transport tangible 20.34 personal property or individuals, other than employees, to whom 20.35 the organization provides service in performing its charitable, 20.36 religious, or educational purpose; 21.1 (12) purchase of a motor vehicle for use by a transit 21.2 provider exclusively to provide transit service is exempt if the 21.3 transit provider is either (i) receiving financial assistance or 21.4 reimbursement under section 174.24 or 473.384, or (ii) operating 21.5 under section 174.29, 473.388, or 473.405; 21.6 (13) purchase or use of a motor vehicle by a qualified 21.7 business, as defined in section 469.310, located in a job 21.8 opportunity building zone, if the motor vehicle is principally 21.9 garaged in the job opportunity building zone and is primarily 21.10 used as part of or in direct support of the person's operations 21.11 carried on in the job opportunity building zone. The exemption 21.12 under this clause applies to sales, if the purchase was made and 21.13 delivery received during the duration of the job opportunity 21.14 building zone. The exemption under this clause also applies to 21.15 any local sales and use tax. 21.16 [EFFECTIVE DATE.] This section is effective for sales made 21.17 after December 31, 2003. 21.18 Sec. 15. [469.310] [DEFINITIONS.] 21.19 Subdivision 1. [SCOPE.] For purposes of sections 469.310 21.20 to 469.320, the following terms have the meanings given. 21.21 Subd. 2. [AGRICULTURAL PROCESSING FACILITY.] "Agricultural 21.22 processing facility" means one or more facilities or operations 21.23 that transform, package, sort, or grade livestock or livestock 21.24 products, agricultural commodities, or plants or plant products 21.25 into goods that are used for intermediate or final consumption 21.26 including goods for nonfood use, and surrounding property. 21.27 Subd. 3. [APPLICANT.] "Applicant" means a local government 21.28 unit or units applying for designation of an area as a job 21.29 opportunity building zone or a joint powers board, established 21.30 under section 471.59, acting on behalf of two or more local 21.31 government units. 21.32 Subd. 4. [COMMISSIONER.] "Commissioner" means the 21.33 commissioner of trade and economic development. 21.34 Subd. 5. [DEVELOPMENT PLAN.] "Development plan" means a 21.35 plan meeting the requirements of section 469.311. 21.36 Subd. 6. [JOB OPPORTUNITY BUILDING ZONE OR ZONE.] "Job 22.1 opportunity building zone" or "zone" means a zone designated by 22.2 the commissioner under section 469.314, and includes an 22.3 agricultural processing facility zone. 22.4 Subd. 7. [JOB OPPORTUNITY BUILDING ZONE PERCENTAGE OR ZONE 22.5 PERCENTAGE.] "Job opportunity building zone percentage" or "zone 22.6 percentage" means the following fraction reduced to a percentage: 22.7 (1) the numerator of the fraction is: 22.8 (i) the ratio of the taxpayer's property factor under 22.9 section 290.191 located in the zone for the taxable year over 22.10 the property factor numerator determined under section 290.191, 22.11 plus 22.12 (ii) the ratio of the taxpayer's job opportunity building 22.13 zone payroll factor under subdivision 8 over the payroll factor 22.14 numerator determined under section 290.191; and 22.15 (2) the denominator of the fraction is two. 22.16 When calculating the zone percentage for a business that is 22.17 part of a unitary business as defined under section 290.17, 22.18 subdivision 4, the denominator of the payroll and property 22.19 factors is the Minnesota payroll and property of the unitary 22.20 business as reported on the combined report under section 22.21 290.17, subdivision 4, paragraph (j). 22.22 Subd. 8. [JOB OPPORTUNITY BUILDING ZONE PAYROLL 22.23 FACTOR.] "Job opportunity building zone payroll factor" or "job 22.24 opportunity building zone payroll" is that portion of the 22.25 payroll factor under section 290.191 that represents: 22.26 (1) wages or salaries paid to an individual for services 22.27 performed in a job opportunity building zone; or 22.28 (2) wages or salaries paid to individuals working from 22.29 offices within a job opportunity building zone if their 22.30 employment requires them to work outside the zone and the work 22.31 is incidental to the work performed by the individual within the 22.32 zone. 22.33 Subd. 9. [LOCAL GOVERNMENT UNIT.] "Local government unit" 22.34 means a statutory or home rule charter city, county, town, iron 22.35 range resources and rehabilitation agency, regional development 22.36 commission, or a federally designated economic development 23.1 district. 23.2 Subd. 10. [PERSON.] "Person" includes an individual, 23.3 corporation, partnership, limited liability company, 23.4 association, or any other entity. 23.5 Subd. 11. [QUALIFIED BUSINESS.] (a) "Qualified business" 23.6 means a person carrying on a trade or business at a place of 23.7 business located within a job opportunity building zone. 23.8 (b) A person that relocates a trade or business from 23.9 outside a job opportunity building zone into a zone is not a 23.10 qualified business, unless the business: 23.11 (1)(i) increases full-time employment in the first full 23.12 year of operation within the job opportunity building zone by at 23.13 least 20 percent measured relative to the operations that were 23.14 relocated and maintains the required level of employment for 23.15 each year the zone designation applies; or 23.16 (ii) makes a capital investment in the property located 23.17 within a zone equivalent to ten percent of the gross revenues of 23.18 operation that were relocated in the immediately preceding 23.19 taxable year; and 23.20 (2) enters a binding written agreement with the 23.21 commissioner that: 23.22 (i) pledges the business will meet the requirements of 23.23 clause (1); 23.24 (ii) provides for repayment of all tax benefits enumerated 23.25 under section 469.315 to the business under the procedures in 23.26 section 469.319, if the requirements of clause (1) are not met 23.27 for the taxable year or for taxes payable during the year in 23.28 which the requirements were not met; and 23.29 (iii) contains any other terms the commissioner determines 23.30 appropriate. 23.31 Subd. 12. [RELOCATES.] (a) "Relocates" means that the 23.32 trade or business: 23.33 (1) ceases one or more operations or functions at another 23.34 location in Minnesota and begins performing substantially the 23.35 same operations or functions at a location in a job opportunity 23.36 building zone; or 24.1 (2) reduces employment at another location in Minnesota 24.2 during a period starting one year before and ending one year 24.3 after it begins operations in a job opportunity building zone 24.4 and its employees in the job opportunity building zone are 24.5 engaged in the same line of business as the employees at the 24.6 location where it reduced employment. 24.7 (b) "Relocate" does not include an expansion by a business 24.8 that establishes a new facility that does not replace or 24.9 supplant an existing operation or employment, in whole or in 24.10 part. 24.11 (c) "Trade or business" includes any business entity that 24.12 is substantially similar in operation or ownership to the 24.13 business entity seeking to be a qualified business under this 24.14 section. 24.15 [EFFECTIVE DATE.] This section is effective the day 24.16 following final enactment. 24.17 Sec. 16. [469.311] [DEVELOPMENT PLAN.] 24.18 (a) An applicant for designation of a job opportunity 24.19 building zone must adopt a written development plan for the zone 24.20 before submitting the application to the commissioner. 24.21 (b) The development plan must contain, at least, the 24.22 following: 24.23 (1) a map of the proposed zone that indicates the 24.24 geographic boundaries of the zone, the total area, and present 24.25 use and conditions generally of the land and structures within 24.26 those boundaries; 24.27 (2) evidence of community support and commitment from local 24.28 government, local workforce investment boards, school districts, 24.29 and other education institutions, business groups, and the 24.30 public; 24.31 (3) a description of the methods proposed to increase 24.32 economic opportunity and expansion, facilitate infrastructure 24.33 improvement, reduce the local regulatory burden, and identify 24.34 job-training opportunities; 24.35 (4) current social, economic, and demographic 24.36 characteristics of the proposed zone and anticipated 25.1 improvements in education, health, human services, and 25.2 employment if the zone is created; 25.3 (5) a description of anticipated activity in the zone and 25.4 each subzone, including, but not limited to, industrial use, 25.5 industrial site reuse, commercial or retail use, and residential 25.6 use; and 25.7 (6) any other information required by the commissioner. 25.8 [EFFECTIVE DATE.] This section is effective the day 25.9 following final enactment. 25.10 Sec. 17. [469.312] [JOB OPPORTUNITY BUILDING ZONES; 25.11 LIMITATIONS.] 25.12 Subdivision 1. [MAXIMUM SIZE.] A job opportunity building 25.13 zone may not exceed 5,000 acres. For a zone designated as an 25.14 agricultural processing facility zone, the zone also may not 25.15 exceed the size of a site necessary for the agricultural 25.16 processing facility, including ancillary operations and space 25.17 for expansion in the reasonably foreseeable future. 25.18 Subd. 2. [SUBZONES.] The area of a job opportunity 25.19 building zone may consist of one or more noncontiguous areas or 25.20 subzones. 25.21 Subd. 3. [OUTSIDE METROPOLITAN AREA.] The area of a job 25.22 opportunity building zone must be located outside of the 25.23 metropolitan area, as defined in section 473.121, subdivision 2. 25.24 Subd. 4. [BORDER CITY DEVELOPMENT ZONES.] (a) The area of 25.25 a job opportunity building zone may not include the area of a 25.26 border city development zone designated under section 469.1731. 25.27 The city may remove property from a border city development zone 25.28 contingent upon the area being designated as a job opportunity 25.29 building zone. Before removing a parcel of property from a 25.30 border city development zone, the city must obtain the written 25.31 consent to the removal from each recipient that is located on 25.32 the parcel and receives incentives under the border city 25.33 development zone. Consent of any other property owner or 25.34 taxpayer in the border city development zone is not required. 25.35 (b) A city may not provide tax incentives under section 25.36 469.1734 to individuals or businesses for operations or activity 26.1 in a job opportunity building zone. 26.2 Subd. 5. [DURATION LIMIT.] The maximum duration of a zone 26.3 is 12 years. The applicant may request a shorter duration. The 26.4 commissioner may specify a shorter duration, regardless of the 26.5 requested duration. 26.6 [EFFECTIVE DATE.] This section is effective the day 26.7 following final enactment. 26.8 Sec. 18. [469.313] [APPLICATION FOR DESIGNATION.] 26.9 Subdivision 1. [WHO MAY APPLY.] One or more local 26.10 government units, or a joint powers board under section 471.59, 26.11 acting on behalf of two or more units, may apply for designation 26.12 of an area as a job opportunity building zone. All or part of 26.13 the area proposed for designation as a zone must be located 26.14 within the boundaries of each of the governmental units. A 26.15 local government unit may not submit or have submitted on its 26.16 behalf more than one application for designation of a job 26.17 opportunity building zone. 26.18 Subd. 2. [APPLICATION CONTENT.] The application must 26.19 include: 26.20 (1) a development plan meeting the requirements of section 26.21 469.311; 26.22 (2) the proposed duration of the zone, not to exceed 12 26.23 years; 26.24 (3) a resolution or ordinance adopted by each of the cities 26.25 or towns and the counties in which the zone is located, agreeing 26.26 to provide all of the local tax exemptions provided under 26.27 section 469.315; 26.28 (4) if the proposed zone includes area in a border city 26.29 development zone, written consent to removal of the property 26.30 from the border city development zone to the extent required by 26.31 section 469.312, subdivision 4; 26.32 (5) an agreement by the applicant to treat incentives 26.33 provided under the zone designation as business subsidies under 26.34 sections 116J.993 to 116J.995 and to comply with the 26.35 requirements of that law; and 26.36 (6) supporting evidence to allow the commissioner to 27.1 evaluate the application under the criteria in section 469.314. 27.2 [EFFECTIVE DATE.] This section is effective the day 27.3 following final enactment. 27.4 Sec. 19. [469.314] [DESIGNATION OF JOB OPPORTUNITY 27.5 BUILDING ZONES.] 27.6 Subdivision 1. [COMMISSIONER TO DESIGNATE.] (a) The 27.7 commissioner, in consultation with the commissioner of revenue, 27.8 shall designate not more than ten job opportunity building 27.9 zones. In making the designations, the commissioner shall 27.10 consider need and likelihood of success to yield the most 27.11 economic development and revitalization of economically 27.12 distressed rural areas of Minnesota. 27.13 (b) In addition to the designations under paragraph (a), 27.14 the commissioner may, in consultation with the commissioners of 27.15 agriculture and revenue, designate up to five agricultural 27.16 processing facility zones. 27.17 (c) The commissioner may, upon designation of a zone, 27.18 modify the development plan, including the boundaries of the 27.19 zone or subzones, if in the commissioner's opinion a modified 27.20 plan would better meet the objectives of the job opportunity 27.21 building zone program. The commissioner shall notify the 27.22 applicant of the modification and provide a statement of the 27.23 reasons for the modifications. 27.24 Subd. 2. [NEED INDICATORS.] (a) In evaluating applications 27.25 to determine the need for designation of a job opportunity 27.26 building zone, the commissioner shall consider the following 27.27 factors as indicators of need: 27.28 (1) the percentage of the population that is below 200 27.29 percent of the poverty rate, compared with the state as a whole; 27.30 (2) the extent to which the area's average weekly wage is 27.31 significantly lower than the state average weekly wage; 27.32 (3) the amount of property in or near the proposed zone 27.33 that is deteriorated or underutilized; 27.34 (4) the extent to which the median sale price of housing 27.35 units in the area is below the state median; 27.36 (5) the extent to which the median household income of the 28.1 area is lower than the state median household income; 28.2 (6) the extent to which the area experienced a population 28.3 loss during the 20-year period ending the year before the 28.4 application is made; 28.5 (7) the extent to which an area has experienced sudden or 28.6 severe job loss as a result of closing of businesses or other 28.7 employers; 28.8 (8) the extent to which property in the area would remain 28.9 underdeveloped or nonperforming due to physical characteristics; 28.10 (9) the extent to which the area has substantial real 28.11 property with adequate infrastructure and energy to support new 28.12 or expanded development; and 28.13 (10) the extent to which the business startup or expansion 28.14 rates are significantly lower than the respective rate for the 28.15 state. 28.16 (b) In applying the need indicators, the best available 28.17 data should be used. If reported data are not available for the 28.18 proposed zone, data for the smallest area that is available and 28.19 includes the area of the proposed zone may be used. The 28.20 commissioner may require applicants to provide data to 28.21 demonstrate how the area meets one or more of the indicators of 28.22 need. 28.23 Subd. 3. [SUCCESS INDICATORS.] In determining the 28.24 likelihood of success of a proposed zone, the commissioner shall 28.25 consider: 28.26 (1) the strength and viability of the proposed development 28.27 goals, objectives, and strategies in the development plan; 28.28 (2) whether the development plan is creative and innovative 28.29 in comparison to other applications; 28.30 (3) local public and private commitment to development of 28.31 the proposed zone and the potential cooperation of surrounding 28.32 communities; 28.33 (4) existing resources available to the proposed zone; 28.34 (5) how the designation of the zone would relate to other 28.35 economic and community development projects and to regional 28.36 initiatives or programs; 29.1 (6) how the regulatory burden will be eased for businesses 29.2 operating in the proposed zone; 29.3 (7) proposals to establish and link job creation and job 29.4 training; and 29.5 (8) the extent to which the development is directed at 29.6 encouraging and that designation of the zone is likely to result 29.7 in the creation of high-paying jobs. 29.8 Subd. 4. [DESIGNATION SCHEDULE.] (a) The schedule in 29.9 paragraphs (b) to (f) applies to the designation of job 29.10 opportunity building zones. 29.11 (b) The commissioner shall publish the form for 29.12 applications and any procedural, form, or content requirements 29.13 for applications by no later than August 1, 2003. The 29.14 commissioner may publish these requirements on the Internet, in 29.15 the State Register, or by any other means the commissioner 29.16 determines appropriate to disseminate the information to 29.17 potential applicants for designation. 29.18 (c) Applications must be submitted by October 15, 2003. 29.19 (d) The commissioner shall designate the zones by no later 29.20 than December 31, 2003. 29.21 (e) The designation of the zones takes effect January 1, 29.22 2004. 29.23 (f) The commissioner may reserve one or more of the ten 29.24 authorized zones for a second round of designations in calendar 29.25 year 2004. If the commissioner chooses to reserve designations 29.26 for this purpose, the commissioner shall establish the schedule 29.27 for the second round of designations, notwithstanding the dates 29.28 in paragraphs (c), (d), and (e). The commissioner shall allow a 29.29 period of at least 90 days for submission of applications after 29.30 notification of the second round. A zone designated in the 29.31 second round takes effect on January 1, 2005. 29.32 Subd. 5. [GEOGRAPHIC DISTRIBUTION.] The commissioner shall 29.33 have as a goal the geographic distribution of zones around the 29.34 state. 29.35 Subd. 6. [RULEMAKING EXEMPTION.] The commissioner's 29.36 actions in establishing procedures, requirements, and making 30.1 determinations to administer sections 469.310 to 469.320 are not 30.2 a rule for purposes of chapter 14 and are not subject to the 30.3 Administrative Procedure Act contained in chapter 14 and are not 30.4 subject to section 14.386. 30.5 [EFFECTIVE DATE.] This section is effective the day 30.6 following final enactment. 30.7 Sec. 20. [469.315] [TAX INCENTIVES AVAILABLE IN ZONES.] 30.8 Qualified businesses that operate in a job opportunity 30.9 building zone, individuals who invest in a qualified business 30.10 that operates in a job opportunity building zone, and property 30.11 located in a job opportunity building zone qualify for: 30.12 (1) exemption from individual income taxes as provided 30.13 under section 469.316; 30.14 (2) exemption from corporate franchise taxes as provided 30.15 under section 469.317; 30.16 (3) exemption from the state sales and use tax and any 30.17 local sales and use taxes on qualifying purchases as provided in 30.18 section 297A.68, subdivision 37; 30.19 (4) exemption from the state sales tax on motor vehicles 30.20 and any local sales tax on motor vehicles as provided under 30.21 section 297B.03; 30.22 (5) exemption from the property tax as provided in section 30.23 272.02, subdivision 56; 30.24 (6) exemption from the wind energy production tax under 30.25 section 272.029, subdivision 7; and 30.26 (7) the jobs credit allowed under section 469.318. 30.27 [EFFECTIVE DATE.] This section is effective the day 30.28 following final enactment. 30.29 Sec. 21. [469.316] [INDIVIDUAL INCOME TAX EXEMPTION.] 30.30 Subdivision 1. [APPLICATION.] An individual operating a 30.31 trade or business in a job opportunity building zone, and an 30.32 individual making a qualifying investment in a qualified 30.33 business operating in a job opportunity building zone qualifies 30.34 for the exemptions from taxes imposed under chapter 290, as 30.35 provided in this section. The exemptions provided under this 30.36 section apply only to the extent that the income otherwise would 31.1 be taxable under chapter 290. Subtractions under this section 31.2 from federal taxable income, alternative minimum taxable income, 31.3 or any other base subject to tax are limited to the amount that 31.4 otherwise would be included in the tax base absent the exemption 31.5 under this section. This section applies only to taxable years 31.6 beginning during the duration of the job opportunity building 31.7 zone. 31.8 Subd. 2. [RENTS.] An individual is exempt from the taxes 31.9 imposed under chapter 290 on net rents derived from real or 31.10 tangible personal property located in a zone for a taxable year 31.11 in which the zone was designated a job opportunity building 31.12 zone. If tangible personal property was used both within and 31.13 outside of the zone, the exemption amount for the net rental 31.14 income must be multiplied by a fraction, the numerator of which 31.15 is the number of days the property was used in the zone and the 31.16 denominator of which is the total days. 31.17 Subd. 3. [BUSINESS INCOME.] An individual is exempt from 31.18 the taxes imposed under chapter 290 on net income from the 31.19 operation of a qualified business in a job opportunity building 31.20 zone. If the trade or business is carried on within and without 31.21 the zone and the individual is not a resident of Minnesota, the 31.22 exemption must be apportioned based on the zone percentage for 31.23 the taxable year. If the trade or business is carried on within 31.24 and without the zone and the individual is a resident of 31.25 Minnesota, the exemption must be apportioned based on the zone 31.26 percentage for the taxable year, except the ratios under section 31.27 469.310, subdivision 7, clause (1), items (i) and (ii), must use 31.28 the denominators of the property and payroll factors determined 31.29 under section 290.191. No subtraction is allowed under this 31.30 section in excess of 20 percent of the sum of the job 31.31 opportunity building zone payroll and the adjusted basis of the 31.32 property at the time that the property is first used in the job 31.33 opportunity building zone by the business. 31.34 Subd. 4. [CAPITAL GAINS.] (a) An individual is exempt from 31.35 the taxes imposed under chapter 290 on: 31.36 (1) net gain derived on a sale or exchange of real property 32.1 located in the zone and used by a qualified business. If the 32.2 property was held by the individual during a period when the 32.3 zone was not designated, the gain must be prorated based on the 32.4 percentage of time, measured in calendar days, that the real 32.5 property was held by the individual during the period the zone 32.6 designation was in effect to the total period of time the real 32.7 property was held by the individual; 32.8 (2) net gain derived on a sale or exchange of tangible 32.9 personal property used by a qualified business in the zone. If 32.10 the property was held by the individual during a period when the 32.11 zone was not designated, the gain must be prorated based on the 32.12 percentage of time, measured in calendar days, that the property 32.13 was held by the individual during the period the zone 32.14 designation was in effect to the total period of time the 32.15 property was held by the individual. If the tangible personal 32.16 property was used outside of the zone during the period of the 32.17 zone's designation, the exemption must be multiplied by a 32.18 fraction, the numerator of which is the number of days the 32.19 property was used in the zone during the time of the designation 32.20 and the denominator of which is the total days the property was 32.21 held during the time of the designation; and 32.22 (3) net gain derived on a sale of an ownership interest in 32.23 a qualified business operating in the job opportunity building 32.24 zone, meeting the requirements of paragraph (b). The exemption 32.25 on the gain must be multiplied by the zone percentage of the 32.26 business for the taxable year prior to the sale. 32.27 (b) A qualified business meets the requirements of 32.28 paragraph (a), clause (3), if it is a corporation, an S 32.29 corporation, or a partnership, and for the taxable year its job 32.30 opportunity building zone percentage exceeds 25 percent. For 32.31 purposes of paragraph (a), clause (3), the zone percentage must 32.32 be calculated by modifying the ratios under section 469.310, 32.33 subdivision 7, clause (1), items (i) and (ii), to use the 32.34 denominators of the property and payroll factors determined 32.35 under section 290.191. Upon the request of an individual 32.36 holding an ownership interest in the entity, the entity must 33.1 certify to the owner, in writing, the job opportunity building 33.2 zone percentage needed to determine the exemption. 33.3 [EFFECTIVE DATE.] This section is effective for taxable 33.4 years beginning after December 31, 2003. 33.5 Sec. 22. [469.317] [CORPORATE FRANCHISE TAX EXEMPTION.] 33.6 (a) A qualified business is exempt from taxation under 33.7 section 290.02, the alternative minimum tax under section 33.8 290.0921, and the minimum fee under section 290.0922, on the 33.9 portion of its income attributable to operations within the 33.10 zone. This exemption is determined as follows: 33.11 (1) for purposes of the tax imposed under section 290.02, 33.12 by multiplying its taxable net income by its zone percentage and 33.13 subtracting the result in determining taxable income; 33.14 (2) for purposes of the alternative minimum tax under 33.15 section 290.0921, by multiplying its alternative minimum taxable 33.16 income by its zone percentage and reducing alternative minimum 33.17 taxable income by this amount; and 33.18 (3) for purposes of the minimum fee under section 290.0922, 33.19 by excluding property and payroll in the zone from the 33.20 computations of the fee or by exempting the entity under section 33.21 290.0922, subdivision 2, clause (7). 33.22 (b) No subtraction is allowed under this section in excess 33.23 of 20 percent of the sum of the corporation's job opportunity 33.24 building zone payroll and the adjusted basis of the property at 33.25 the time that the property is first used in the job opportunity 33.26 building zone by the corporation. 33.27 (c) This section applies only to taxable years beginning 33.28 during the duration of the job opportunity building zone. 33.29 [EFFECTIVE DATE.] This section is effective for taxable 33.30 years beginning after December 31, 2003. 33.31 Sec. 23. [469.318] [JOBS CREDIT.] 33.32 Subdivision 1. [CREDIT ALLOWED.] A qualified business is 33.33 allowed a credit against the taxes imposed under chapter 290. 33.34 The credit equals seven percent of the: 33.35 (1) lesser of: 33.36 (i) zone payroll for the taxable year, less the zone 34.1 payroll for the base year; or 34.2 (ii) total Minnesota payroll for the taxable year, less 34.3 total Minnesota payroll for the base year; minus 34.4 (2) $30,000 multiplied by (the number of full-time 34.5 equivalent employees that the qualified business employs in the 34.6 job opportunity building zone for the taxable year, minus the 34.7 number of full-time equivalent employees the business employed 34.8 in the zone in the base year, but not less than zero). 34.9 Subd. 2. [DEFINITIONS.] (a) For purposes of this section, 34.10 the following terms have the meanings given. 34.11 (b) "Base year" means the taxable year beginning during the 34.12 calendar year prior to the calendar year in which the zone 34.13 designation took effect. 34.14 (c) "Full-time equivalent employees" means the equivalent 34.15 of annualized expected hours of work equal to 2,080 hours. 34.16 (d) "Minnesota payroll" means the wages or salaries 34.17 attributed to Minnesota under section 290.191, subdivision 12, 34.18 for the qualified business or the unitary business of which the 34.19 qualified business is a part, whichever is greater. 34.20 (e) "Zone payroll" means wages or salaries used to 34.21 determine the zone payroll factor for the qualified business, 34.22 less the amount of compensation attributable to any employee 34.23 that exceeds $100,000. 34.24 Subd. 3. [INFLATION ADJUSTMENT.] For taxable years 34.25 beginning after December 31, 2004, the dollar amounts in 34.26 subdivision 1, clause (2), and subdivision 2, paragraph (e), are 34.27 annually adjusted for inflation. The commissioner of revenue 34.28 shall adjust the amounts by the percentage determined under 34.29 section 290.06, subdivision 2d, for the taxable year. 34.30 Subd. 4. [REFUNDABLE.] If the amount of the credit exceeds 34.31 the liability for tax under chapter 290, the commissioner of 34.32 revenue shall refund the excess to the qualified business. 34.33 Subd. 5. [APPROPRIATION.] An amount sufficient to pay the 34.34 refunds authorized by this section is appropriated to the 34.35 commissioner of revenue from the general fund. 34.36 [EFFECTIVE DATE.] This section is effective for taxable 35.1 years beginning after December 31, 2003. 35.2 Sec. 24. [469.319] [REPAYMENT OF TAX BENEFITS.] 35.3 Subdivision 1. [REPAYMENT OBLIGATION.] A business must 35.4 repay the amount of the total tax reduction listed in section 35.5 469.315 and any refund under section 469.318 in excess of tax 35.6 liability, received during the two years immediately before it 35.7 ceased to operate in the zone, if the business: 35.8 (1) received tax reductions authorized by section 469.315; 35.9 and 35.10 (2)(i) did not meet the goals specified in an agreement 35.11 entered into with the applicant that states any obligation the 35.12 qualified business must fulfill in order to be eligible for tax 35.13 benefits. The commissioner may extend for up to one year the 35.14 period for meeting any goals provided in an agreement. The 35.15 applicant may extend the period for meeting other goals by 35.16 documenting in writing the reason for the extension and 35.17 attaching a copy of the document to its next annual report to 35.18 the commissioner; or 35.19 (ii) ceased to operate its facility located within the job 35.20 opportunity building zone or otherwise ceases to be or is not a 35.21 qualified business. 35.22 Subd. 2. [DEFINITIONS.] (a) For purposes of this section, 35.23 the following terms have the meanings given. 35.24 (b) "Business" means any person who received tax benefits 35.25 enumerated in section 469.315. 35.26 (c) "Commissioner" means the commissioner of revenue. 35.27 Subd. 3. [DISPOSITION OR REPAYMENT.] The repayment must be 35.28 paid to the state to the extent it represents a state tax 35.29 reduction and to the county to the extent it represents a 35.30 property tax reduction. Any amount repaid to the state must be 35.31 deposited in the general fund. Any amount repaid to the county 35.32 for the property tax exemption must be distributed to the local 35.33 governments with authority to levy taxes in the zone in the same 35.34 manner provided for distribution of payment of delinquent 35.35 property taxes. Any repayment of local sales taxes must be 35.36 repaid to the city or county imposing the local sales tax. 36.1 Subd. 4. [REPAYMENT PROCEDURES.] (a) For the repayment of 36.2 taxes imposed under chapter 290 or 297A or local taxes collected 36.3 pursuant to section 297A.99, a business must file an amended 36.4 return with the commissioner of revenue and pay any taxes 36.5 required to be repaid within 30 days after ceasing to do 36.6 business in the zone. The amount required to be repaid is 36.7 determined by calculating the tax for the period or periods for 36.8 which repayment is required without regard to the exemptions and 36.9 credits allowed under section 469.315. 36.10 (b) For the repayment of taxes imposed under chapter 297B, 36.11 a business must pay any taxes required to be repaid to the motor 36.12 vehicle registrar, as agent for the commissioner of revenue, 36.13 within 30 days after ceasing to do business in the zone. 36.14 (c) For the repayment of property taxes, the county auditor 36.15 shall prepare a tax statement for the business, applying the 36.16 applicable tax extension rates for each payable year and provide 36.17 a copy to the business. The business must pay the taxes to the 36.18 county treasurer within 30 days after receipt of the tax 36.19 statement. The taxpayer may appeal the valuation and 36.20 determination of the property tax to the tax court within 30 36.21 days after receipt of the tax statement. 36.22 (d) The provisions of chapters 270 and 289A relating to the 36.23 commissioner's authority to audit, assess, and collect the tax 36.24 and to hear appeals are applicable to the repayment required 36.25 under paragraphs (a) and (b). The commissioner may impose civil 36.26 penalties as provided in chapter 289A, and the additional tax 36.27 and penalties are subject to interest at the rate provided in 36.28 section 270.75, from 30 days after ceasing to do business in the 36.29 job opportunity building zone until the date the tax is paid. 36.30 (e) If a property tax is not repaid under paragraph (c), 36.31 the county treasurer shall add the amount required to be repaid 36.32 to the property taxes assessed against the property for payment 36.33 in the year following the year in which the treasurer discovers 36.34 that the business ceased to operate in the job opportunity 36.35 building zone. 36.36 (f) For determining the tax required to be repaid, a tax 37.1 reduction is deemed to have been received on the date that the 37.2 tax would have been due if the taxpayer had not been entitled to 37.3 the exemption or on the date a refund was issued for a 37.4 refundable tax credit. 37.5 (g) The commissioner may assess the repayment of taxes 37.6 under paragraph (d) any time within two years after the business 37.7 ceases to operate in the job opportunity building zone, or 37.8 within any period of limitations for the assessment of tax under 37.9 section 289A.38, whichever period is later. 37.10 Subd. 5. [WAIVER AUTHORITY.] The commissioner may waive 37.11 all or part of a repayment, if the commissioner, in consultation 37.12 with the commissioner of trade and economic development and 37.13 appropriate officials from the local government units in which 37.14 the qualified business is located, determines that requiring 37.15 repayment of the tax is not in the best interest of the state or 37.16 the local government units and the business ceased operating as 37.17 a result of circumstances beyond its control including, but not 37.18 limited to: 37.19 (1) a natural disaster; 37.20 (2) unforeseen industry trends; or 37.21 (3) loss of a major supplier or customer. 37.22 [EFFECTIVE DATE.] This section is effective the day 37.23 following final enactment. 37.24 Sec. 25. [469.320] [ZONE PERFORMANCE; REMEDIES.] 37.25 Subdivision 1. [REPORTING REQUIREMENT.] An applicant 37.26 receiving designation of a job opportunity building zone under 37.27 section 469.314 must annually report to the commissioner on its 37.28 progress in meeting the zone performance goals under the 37.29 development plan for the zone and the applicant's compliance 37.30 with the business subsidy law under sections 116J.993 to 37.31 116J.995. 37.32 Subd. 2. [PROCEDURES.] For reports required by subdivision 37.33 1, the commissioner may prescribe: 37.34 (1) the required time or times by which the reports must be 37.35 filed; 37.36 (2) the form of the report; and 38.1 (3) the information required to be included in the report. 38.2 Subd. 3. [REMEDIES.] If the commissioner determines, based 38.3 on a report filed under subdivision 1 or other available 38.4 information, that a zone or subzone is failing to meet its 38.5 performance goals, the commissioner may take any actions the 38.6 commissioner determines appropriate, including modification of 38.7 the boundaries of the zone or a subzone or termination of the 38.8 zone or a subzone. Before taking any action, the commissioner 38.9 shall consult with the applicant and the affected local 38.10 government units, including notifying them of the proposed 38.11 actions to be taken. The commissioner shall publish any order 38.12 modifying a zone in the State Register and on the Internet. The 38.13 applicant may appeal the commissioner's order under the 38.14 contested case procedures of chapter 14. 38.15 Subd. 4. [EXISTING BUSINESSES.] (a) An action to remove 38.16 area from a zone or to terminate a zone under this section does 38.17 not apply to: 38.18 (1) the property tax on improvements constructed before the 38.19 first January 2 following publication of the commissioner's 38.20 order; 38.21 (2) sales tax on purchases made before the first day of the 38.22 next calendar month beginning at least 30 days after publication 38.23 of the commissioner's order; and 38.24 (3) individual income tax or corporate franchise tax 38.25 attributable to a facility that was in operation before the 38.26 publication of the commissioner's order. 38.27 (b) The tax exemptions specified in paragraph (a) terminate 38.28 on the date on which the zone expires under the original 38.29 designation. 38.30 [EFFECTIVE DATE.] This section is effective the day 38.31 following final enactment. 38.32 Sec. 26. [477A.08] [JOB OPPORTUNITY BUILDING ZONE AID.] 38.33 Subdivision 1. [ELIGIBILITY.] (a) For each assessment year 38.34 that the exemption for job opportunity building zone property is 38.35 in effect under section 272.02, subdivision 56, the assessor 38.36 shall determine the difference between the actual net tax 39.1 capacity and the net tax capacity that would be determined for 39.2 the job opportunity building zone, including any property 39.3 removed from the zone that continues to qualify under section 39.4 469.320, subdivision 4, if the exemption were not in effect. 39.5 (b) Each city and county is eligible for aid equal to 39.6 one-half of: 39.7 (1) the amount by which the sum of the differences 39.8 determined in paragraph (a) for the corresponding assessment 39.9 year exceeds three percent of the city's or county's total 39.10 taxable net tax capacity for taxes payable in 2003, multiplied 39.11 by 39.12 (2) the city's or the county's, as applicable, average 39.13 local tax rate for taxes payable in 2003. 39.14 Subd. 2. [CERTIFICATION.] The county assessor shall notify 39.15 the commissioner of revenue of the amount determined under 39.16 subdivision 1, paragraph (b), clause (1), for any city or county 39.17 that qualifies for aid under this section by June 30 of the 39.18 assessment year, in a form prescribed by the commissioner. The 39.19 commissioner shall notify each city and county of its qualifying 39.20 aid amount by August 15 of the assessment year. 39.21 Subd. 3. [APPROPRIATION; PAYMENT.] The commissioner shall 39.22 pay each city and county its qualifying aid amount by July 20 of 39.23 the following year. An amount sufficient to pay the aid under 39.24 this section is appropriated to the commissioner of revenue from 39.25 the general fund. 39.26 [EFFECTIVE DATE.] This section is effective beginning for 39.27 aid based on property taxes assessed in 2004, payable in 2005. 39.28 Sec. 27. [APPROPRIATION; COST OF ADMINISTRATION.] 39.29 $100,000 in fiscal year 2004 and $30,000 in fiscal year 39.30 2005 are appropriated to the commissioner of trade and economic 39.31 development for the cost of designating job opportunity building 39.32 zones. 39.33 $53,000 in fiscal year 2004 and $29,000 in fiscal year 2005 39.34 are appropriated to the commissioner of revenue for the cost of 39.35 administering the tax provisions of this act. 39.36 [EFFECTIVE DATE.] This section is effective the day 40.1 following final enactment. 40.2 ARTICLE 2 40.3 BIOTECHNOLOGY AND HEALTH SCIENCE ZONES 40.4 Section 1. [LEGISLATIVE FINDINGS.] 40.5 The legislature finds, as a matter of public policy, that 40.6 biotechnology and the health sciences hold immense promise in 40.7 improving the quality of our lives, including curing diseases, 40.8 making our foods safer and more abundant, reducing our 40.9 dependence on fossil fuels and foreign oil, making better use of 40.10 Minnesota agriculture products, and growing tens of thousands of 40.11 new, high-paying jobs. 40.12 The legislature further finds that there are hundreds of 40.13 discoveries made each year at the University of Minnesota, the 40.14 Mayo Clinic, and other research institutions that, if properly 40.15 commercialized, could help provide these benefits. 40.16 The legislature further finds that biotechnology and health 40.17 sciences companies benefit from location in proximity to these 40.18 research institutions and the many faculty, students, and other 40.19 intellectual and physical infrastructure these institutions 40.20 provide. 40.21 The legislature further finds that Minnesota's high-quality 40.22 workforce is attractive to biotechnology and health sciences 40.23 companies that would want to relocate, start up, or expand in 40.24 Minnesota. 40.25 The legislature further finds and declares that it is 40.26 appropriate and necessary, to improve our quality of life and as 40.27 a matter of economic development, that Minnesota take rapid and 40.28 affirmative steps to encourage the development of biotechnology 40.29 and the health sciences and the commercialization of important 40.30 discoveries, especially through expansion of business 40.31 opportunities in proximity to the research institutions where 40.32 those discoveries occur. This must include attention to the 40.33 ethical, legal, and societal impacts of the industry, including 40.34 risk assessment and environmental protection. 40.35 Sec. 2. Minnesota Statutes 2002, section 272.02, is 40.36 amended by adding a subdivision to read: 41.1 Subd. 56. [BIOTECHNOLOGY AND HEALTH SCIENCES INDUSTRY ZONE 41.2 PROPERTY.] (a) Improvements to real property, and personal 41.3 property, classified under section 273.13, subdivision 24, and 41.4 located within a biotechnology and health sciences industry zone 41.5 are exempt from ad valorem taxes levied under chapter 275, as 41.6 provided in this subdivision. 41.7 (b) For property to qualify for exemption under paragraph 41.8 (a), the occupant must be a qualified business, as defined in 41.9 section 469.330. 41.10 (c) The exemption applies beginning for the first 41.11 assessment year after designation of the biotechnology and 41.12 health sciences industry zone by the commissioner of trade and 41.13 economic development. The exemption applies to each assessment 41.14 year that begins during the duration of the biotechnology and 41.15 health sciences industry zone. This exemption does not apply to: 41.16 (1) a levy under section 475.61 or similar levy provisions 41.17 under any other law to pay general obligation bonds; or 41.18 (2) a levy under section 126C.17, if the levy was approved 41.19 by the voters before the designation of the biotechnology and 41.20 health sciences industry zone. 41.21 (d) The exemption does not apply to taxes imposed by a 41.22 city, town, or county, unless the governing body adopts a 41.23 resolution granting the exemption. A city, town, or county may 41.24 provide a complete property tax exemption, partial property tax 41.25 exemption, or no property tax exemption to qualified businesses 41.26 in the biotechnology and health sciences industry zone. "City" 41.27 includes a statutory or home rule charter city. 41.28 (e) For property located in a tax increment financing 41.29 district, the county shall not adjust the original net tax 41.30 capacity of the district under section 469.177, subdivision 1, 41.31 paragraph (a), upon the expiration of an exemption under this 41.32 subdivision. 41.33 [EFFECTIVE DATE.] This section is effective beginning for 41.34 property taxes assessed in 2004, payable in 2005. 41.35 Sec. 3. Minnesota Statutes 2002, section 290.01, 41.36 subdivision 29, is amended to read: 42.1 Subd. 29. [TAXABLE INCOME.] The term "taxable income" 42.2 means: 42.3 (1) for individuals, estates, and trusts, the same as 42.4 taxable net income; 42.5 (2) for corporations, the taxable net income less 42.6 (i) the net operating loss deduction under section 290.095; 42.7and42.8 (ii) the dividends received deduction under section 290.21, 42.9 subdivision 4; and 42.10 (iii) the exemption for operating in a biotechnology and 42.11 health sciences industry zone under section 469.337. 42.12 [EFFECTIVE DATE.] This section is effective for taxable 42.13 years beginning after December 31, 2003. 42.14 Sec. 4. Minnesota Statutes 2002, section 290.06, is 42.15 amended by adding a subdivision to read: 42.16 Subd. 29. [BIOTECHNOLOGY AND HEALTH SCIENCE INDUSTRY ZONE 42.17 JOB CREDIT.] A taxpayer that is a qualified business, as defined 42.18 in section 469.330, subdivision 11, is allowed a credit as 42.19 determined under section 469.338 against the franchise tax 42.20 imposed under section 290.06, subdivision 1, or the alternative 42.21 minimum tax imposed under section 290.0921. 42.22 [EFFECTIVE DATE.] This section is effective for taxable 42.23 years beginning after December 31, 2003. 42.24 Sec. 5. Minnesota Statutes 2002, section 290.06, is 42.25 amended by adding a subdivision to read: 42.26 Subd. 30. [BIOTECHNOLOGY AND HEALTH SCIENCE INDUSTRY ZONE 42.27 RESEARCH AND DEVELOPMENT CREDIT.] A taxpayer that is a qualified 42.28 business, as defined in section 469.330, subdivision 11, is 42.29 allowed a credit as determined under section 469.339 against the 42.30 franchise tax imposed under section 290.06, subdivision 1, or 42.31 the alternative minimum tax imposed under section 290.0921. 42.32 [EFFECTIVE DATE.] This section is effective for taxable 42.33 years beginning after December 31, 2003. 42.34 Sec. 6. Minnesota Statutes 2002, section 290.0921, 42.35 subdivision 3, is amended to read: 42.36 Subd. 3. [ALTERNATIVE MINIMUM TAXABLE INCOME.] 43.1 "Alternative minimum taxable income" is Minnesota net income as 43.2 defined in section 290.01, subdivision 19, and includes the 43.3 adjustments and tax preference items in sections 56, 57, 58, and 43.4 59(d), (e), (f), and (h) of the Internal Revenue Code. If a 43.5 corporation files a separate company Minnesota tax return, the 43.6 minimum tax must be computed on a separate company basis. If a 43.7 corporation is part of a tax group filing a unitary return, the 43.8 minimum tax must be computed on a unitary basis. The following 43.9 adjustments must be made. 43.10 (1) For purposes of the depreciation adjustments under 43.11 section 56(a)(1) and 56(g)(4)(A) of the Internal Revenue Code, 43.12 the basis for depreciable property placed in service in a 43.13 taxable year beginning before January 1, 1990, is the adjusted 43.14 basis for federal income tax purposes, including any 43.15 modification made in a taxable year under section 290.01, 43.16 subdivision 19e, or Minnesota Statutes 1986, section 290.09, 43.17 subdivision 7, paragraph (c). 43.18 For taxable years beginning after December 31, 2000, the 43.19 amount of any remaining modification made under section 290.01, 43.20 subdivision 19e, or Minnesota Statutes 1986, section 290.09, 43.21 subdivision 7, paragraph (c), not previously deducted is a 43.22 depreciation allowance in the first taxable year after December 43.23 31, 2000. 43.24 (2) The portion of the depreciation deduction allowed for 43.25 federal income tax purposes under section 168(k) of the Internal 43.26 Revenue Code that is required as an addition under section 43.27 290.01, subdivision 19c, clause (16), is disallowed in 43.28 determining alternative minimum taxable income. 43.29 (3) The subtraction for depreciation allowed under section 43.30 290.01, subdivision 19d, clause (19), is allowed as a 43.31 depreciation deduction in determining alternative minimum 43.32 taxable income. 43.33 (4) The alternative tax net operating loss deduction under 43.34 sections 56(a)(4) and 56(d) of the Internal Revenue Code does 43.35 not apply. 43.36 (5) The special rule for certain dividends under section 44.1 56(g)(4)(C)(ii) of the Internal Revenue Code does not apply. 44.2 (6) The special rule for dividends from section 936 44.3 companies under section 56(g)(4)(C)(iii) does not apply. 44.4 (7) The tax preference for depletion under section 57(a)(1) 44.5 of the Internal Revenue Code does not apply. 44.6 (8) The tax preference for intangible drilling costs under 44.7 section 57(a)(2) of the Internal Revenue Code must be calculated 44.8 without regard to subparagraph (E) and the subtraction under 44.9 section 290.01, subdivision 19d, clause (4). 44.10 (9) The tax preference for tax exempt interest under 44.11 section 57(a)(5) of the Internal Revenue Code does not apply. 44.12 (10) The tax preference for charitable contributions of 44.13 appreciated property under section 57(a)(6) of the Internal 44.14 Revenue Code does not apply. 44.15 (11) For purposes of calculating the tax preference for 44.16 accelerated depreciation or amortization on certain property 44.17 placed in service before January 1, 1987, under section 57(a)(7) 44.18 of the Internal Revenue Code, the deduction allowable for the 44.19 taxable year is the deduction allowed under section 290.01, 44.20 subdivision 19e. 44.21 For taxable years beginning after December 31, 2000, the 44.22 amount of any remaining modification made under section 290.01, 44.23 subdivision 19e, not previously deducted is a depreciation or 44.24 amortization allowance in the first taxable year after December 44.25 31, 2004. 44.26 (12) For purposes of calculating the adjustment for 44.27 adjusted current earnings in section 56(g) of the Internal 44.28 Revenue Code, the term "alternative minimum taxable income" as 44.29 it is used in section 56(g) of the Internal Revenue Code, means 44.30 alternative minimum taxable income as defined in this 44.31 subdivision, determined without regard to the adjustment for 44.32 adjusted current earnings in section 56(g) of the Internal 44.33 Revenue Code. 44.34 (13) For purposes of determining the amount of adjusted 44.35 current earnings under section 56(g)(3) of the Internal Revenue 44.36 Code, no adjustment shall be made under section 56(g)(4) of the 45.1 Internal Revenue Code with respect to (i) the amount of foreign 45.2 dividend gross-up subtracted as provided in section 290.01, 45.3 subdivision 19d, clause (1), (ii) the amount of refunds of 45.4 income, excise, or franchise taxes subtracted as provided in 45.5 section 290.01, subdivision 19d, clause (10), or (iii) the 45.6 amount of royalties, fees or other like income subtracted as 45.7 provided in section 290.01, subdivision 19d, clause (11). 45.8 (14) Alternative minimum taxable income excludes the income 45.9 from operating in a biotechnology and health sciences industry 45.10 zone as provided under section 469.337. 45.11 Items of tax preference must not be reduced below zero as a 45.12 result of the modifications in this subdivision. 45.13 [EFFECTIVE DATE.] This section is effective for taxable 45.14 years beginning after December 31, 2003. 45.15 Sec. 7. Minnesota Statutes 2002, section 290.0922, 45.16 subdivision 3, is amended to read: 45.17 Subd. 3. [DEFINITIONS.] (a) "Minnesota sales or receipts" 45.18 means the total sales apportioned to Minnesota pursuant to 45.19 section 290.191, subdivision 5, the total receipts attributed to 45.20 Minnesota pursuant to section 290.191, subdivisions 6 to 8, 45.21 and/or the total sales or receipts apportioned or attributed to 45.22 Minnesota pursuant to any other apportionment formula applicable 45.23 to the taxpayer. 45.24 (b) "Minnesota property" means total Minnesota tangible 45.25 property as provided in section 290.191, subdivisions 9 to 11, 45.26andany other tangible property located in Minnesota, but does 45.27 not include property of a qualified business located in a 45.28 biotechnology and health sciences zone designated under section 45.29 469.334. Intangible property shall not be included in Minnesota 45.30 property for purposes of this section. Taxpayers who do not 45.31 utilize tangible property to apportion income shall nevertheless 45.32 include Minnesota property for purposes of this section. On a 45.33 return for a short taxable year, the amount of Minnesota 45.34 property owned, as determined under section 290.191, shall be 45.35 included in Minnesota property based on a fraction in which the 45.36 numerator is the number of days in the short taxable year and 46.1 the denominator is 365. 46.2 (c) "Minnesota payrolls" means total Minnesota payrolls as 46.3 provided in section 290.191, subdivision 12, but does not 46.4 include biotechnology and health sciences zone payroll under 46.5 section 469.330, subdivision 8. Taxpayers who do not utilize 46.6 payrolls to apportion income shall nevertheless include 46.7 Minnesota payrolls for purposes of this section. 46.8 [EFFECTIVE DATE.] This section is effective for taxable 46.9 years beginning after December 31, 2003. 46.10 Sec. 8. Minnesota Statutes 2002, section 297A.68, is 46.11 amended by adding a subdivision to read: 46.12 Subd. 37. [BIOTECHNOLOGY AND HEALTH SCIENCES INDUSTRY 46.13 ZONE.] (a) Purchases of tangible personal property or taxable 46.14 services by a qualified business, as defined in section 469.330, 46.15 are exempt if the property or services are primarily used or 46.16 consumed in a biotechnology and health sciences industry zone 46.17 designated under section 469.334. 46.18 (b) Purchase and use of construction materials and supplies 46.19 for construction of improvements to real property in a 46.20 biotechnology and health sciences industry zone are exempt if 46.21 the improvements after completion of construction are to be used 46.22 in the conduct of a qualified business, as defined in section 46.23 469.330. This exemption applies regardless of whether the 46.24 purchases are made by the business or a contractor. 46.25 (c) The exemptions under this subdivision apply to a local 46.26 sales and use tax regardless of whether the local sales tax is 46.27 imposed on the sales taxable as defined under this chapter. 46.28 (d)(1) The tax on sales of goods or services exempted under 46.29 this subdivision are imposed and collected as if the applicable 46.30 rate under section 297A.62 applied. Upon application by the 46.31 purchaser, on forms prescribed by the commissioner, a refund 46.32 equal to the tax paid must be paid to the purchaser. The 46.33 application must include sufficient information to permit the 46.34 commissioner to verify the sales tax paid and the eligibility of 46.35 the claimant to receive the credit. No more than two 46.36 applications for refunds may be filed under this subdivision in 47.1 a calendar year. The provisions of section 289A.40 apply to the 47.2 refunds payable under this subdivision. 47.3 (2) The amount required to make the refunds is annually 47.4 appropriated to the commissioner of revenue. 47.5 (3) The aggregate amount refunded to a qualified business 47.6 must not exceed the amount allocated to the qualified business 47.7 under section 469.335. 47.8 (e) This subdivision applies only to sales made during the 47.9 duration of the designation of the zone. 47.10 [EFFECTIVE DATE.] This section is effective for sales made 47.11 on or after the day following final enactment. 47.12 Sec. 9. [469.330] [DEFINITIONS.] 47.13 Subdivision 1. [SCOPE.] For purposes of sections 469.330 47.14 to 469.341, the following terms have the meanings given. 47.15 Subd. 2. [APPLICANT.] "Applicant" means a local government 47.16 unit or units applying for designation of an area as a 47.17 biotechnology and health sciences industry zone or a joint 47.18 powers board, established under section 471.59, acting on behalf 47.19 of two or more local government units. 47.20 Subd. 3. [BIOTECHNOLOGY AND HEALTH SCIENCES INDUSTRY 47.21 FACILITY.] "Biotechnology and health sciences industry facility" 47.22 means one or more facilities or operations involved in: 47.23 (1) researching, developing, and/or manufacturing a 47.24 biotechnology product or service or a biotechnology-related 47.25 health sciences product or service; 47.26 (2) researching, developing, and/or manufacturing a 47.27 biotechnology medical device product or service or a 47.28 biotechnology-related medical device product or service; or 47.29 (3) promoting, supplying, or servicing a facility or 47.30 operation involved in clause (1) or (2), if the business derives 47.31 more than 50 percent of its gross receipts from those activities. 47.32 Subd. 4. [COMMISSIONER.] "Commissioner" means the 47.33 commissioner of trade and economic development. 47.34 Subd. 5. [DEVELOPMENT PLAN.] "Development plan" means a 47.35 plan meeting the requirements of section 469.331. 47.36 Subd. 6. [BIOTECHNOLOGY AND HEALTH SCIENCES INDUSTRY ZONE 48.1 OR ZONE.] "Biotechnology and health sciences industry zone" or 48.2 "zone" means a zone designated by the commissioner under section 48.3 469.334. 48.4 Subd. 7. [BIOTECHNOLOGY AND HEALTH SCIENCES INDUSTRY ZONE 48.5 PERCENTAGE OR ZONE PERCENTAGE.] "Biotechnology and health 48.6 sciences industry zone percentage" or "zone percentage" means 48.7 the following fraction reduced to a percentage: 48.8 (1) the numerator of the fraction is: 48.9 (i) the ratio of the taxpayer's property factor under 48.10 section 290.191 located in the zone for the taxable year over 48.11 the property factor numerator determined under section 290.191, 48.12 plus 48.13 (ii) the ratio of the taxpayer's biotechnology and health 48.14 sciences industry zone payroll factor under subdivision 8 over 48.15 the payroll factor numerator determined under section 290.191; 48.16 and 48.17 (2) the denominator of the fraction is two. 48.18 When calculating the zone percentage for a business that is 48.19 part of a unitary business as defined under section 290.17, 48.20 subdivision 4, the denominator of the payroll and property 48.21 factors is the Minnesota payroll and property of the unitary 48.22 business as reported on the combined report under section 48.23 290.17, subdivision 4, paragraph (j). 48.24 Subd. 8. [BIOTECHNOLOGY AND HEALTH SCIENCES INDUSTRY ZONE 48.25 PAYROLL FACTOR.] "Biotechnology and health sciences industry 48.26 zone payroll factor" or "biotechnology and health sciences 48.27 industry zone payroll" is that portion of the payroll factor 48.28 under section 290.191 that represents: 48.29 (1) wages or salaries paid to an individual for services 48.30 performed for a qualified business in a biotechnology and health 48.31 sciences industry zone; or 48.32 (2) wages or salaries paid to individuals working from 48.33 offices of a qualified business within a biotechnology and 48.34 health sciences industry zone if their employment requires them 48.35 to work outside the zone and the work is incidental to the work 48.36 performed by the individual within the zone. 49.1 Subd. 9. [LOCAL GOVERNMENT UNIT.] "Local government unit" 49.2 means a statutory or home rule charter city, county, town, or 49.3 school district. 49.4 Subd. 10. [PERSON.] "Person" includes an individual, 49.5 corporation, partnership, limited liability company, 49.6 association, or any other entity. 49.7 Subd. 11. [QUALIFIED BUSINESS.] (a) "Qualified business" 49.8 means a person carrying on a trade or business at a 49.9 biotechnology and health sciences industry facility located 49.10 within a biotechnology and health sciences industry zone. 49.11 (b) A person that relocates a biotechnology and health 49.12 sciences industry facility from outside a biotechnology and 49.13 health sciences industry zone into a zone is not a qualified 49.14 business, unless the business: 49.15 (1)(i) increases full-time employment in the first full 49.16 year of operation within the biotechnology and health sciences 49.17 industry zone by at least 20 percent measured relative to the 49.18 operations that were relocated and maintains the required level 49.19 of employment for each year the zone designation applies; or 49.20 (ii) makes a capital investment in the property located 49.21 within a zone equivalent to ten percent of the gross revenues of 49.22 operation that were relocated in the immediately preceding 49.23 taxable year; and 49.24 (2) enters a binding written agreement with the 49.25 commissioner that: 49.26 (i) pledges the business will meet the requirements of 49.27 clause (1); 49.28 (ii) provides for repayment of all tax benefits enumerated 49.29 under section 469.336 to the business under the procedures in 49.30 section 469.340, if the requirements of clause (1) are not met; 49.31 and 49.32 (iii) contains any other terms the commissioner determines 49.33 appropriate. 49.34 Subd. 12. [RELOCATES.] (a) "Relocates" means that the 49.35 trade or business: 49.36 (1) ceases one or more operations or functions at another 50.1 location in Minnesota and begins performing substantially the 50.2 same operations or functions at a location in a biotechnology 50.3 and health sciences industry zone; or 50.4 (2) reduces employment at another location in Minnesota 50.5 during a period starting one year before and ending one year 50.6 after it begins operations in a biotechnology and health 50.7 sciences industry zone and its employees in the biotechnology 50.8 and health sciences industry zone are engaged in the same line 50.9 of business as the employees at the location where it reduced 50.10 employment. 50.11 (b) "Relocate" does not include an expansion by a business 50.12 that establishes a new facility that does not replace or 50.13 supplant an existing operation or employment, in whole or in 50.14 part. 50.15 [EFFECTIVE DATE.] This section is effective the day 50.16 following final enactment. 50.17 Sec. 10. [469.331] [DEVELOPMENT PLAN.] 50.18 (a) An applicant for designation of a biotechnology and 50.19 health sciences industry zone must adopt a written development 50.20 plan for the zone before submitting the application to the 50.21 commissioner. 50.22 (b) The development plan must contain, at least, the 50.23 following: 50.24 (1) a map of the proposed zone that indicates the 50.25 geographic boundaries of the zone, the total area, and present 50.26 use and conditions generally of the land and structures within 50.27 those boundaries; 50.28 (2) evidence of community support and commitment from local 50.29 government, local workforce investment boards, school districts, 50.30 and other education institutions, business groups, and the 50.31 public; 50.32 (3) a description of the methods proposed to increase 50.33 economic opportunity and expansion, facilitate infrastructure 50.34 improvement, reduce the local regulatory burden, and identify 50.35 job-training opportunities; 50.36 (4) current social, economic, and demographic 51.1 characteristics of the proposed zone and anticipated 51.2 improvements in education, health, human services, and 51.3 employment if the zone is created; 51.4 (5) a description of anticipated activity in the zone and 51.5 each subzone, including, but not limited to, industrial use and 51.6 industrial site reuse; 51.7 (6) a description of the tax exemptions under section 51.8 469.336 to be provided to each qualifying business based on a 51.9 development agreement between the applicant and each qualified 51.10 business. The development agreement must also state any 51.11 obligations the qualified business must fulfill in order to be 51.12 eligible for tax benefits; and 51.13 (7) any other information required by the commissioner. 51.14 [EFFECTIVE DATE.] This section is effective the day 51.15 following final enactment. 51.16 Sec. 11. [469.332] [BIOTECHNOLOGY AND HEALTH SCIENCES 51.17 INDUSTRY ZONE; LIMITATIONS.] 51.18 Subdivision 1. [MAXIMUM SIZE.] A biotechnology and health 51.19 sciences industry zone may not exceed 5,000 acres. 51.20 Subd. 2. [SUBZONES.] The area of a biotechnology and 51.21 health sciences industry zone may consist of one or more 51.22 noncontiguous areas or subzones. 51.23 Subd. 3. [DURATION LIMIT.] The maximum duration of a zone 51.24 is 12 years. The applicant may request a shorter duration. The 51.25 commissioner may specify a shorter duration, regardless of the 51.26 requested duration. 51.27 [EFFECTIVE DATE.] This section is effective the day 51.28 following final enactment. 51.29 Sec. 12. [469.333] [APPLICATION FOR DESIGNATION.] 51.30 Subdivision 1. [WHO MAY APPLY.] One or more local 51.31 government units, or a joint powers board under section 471.59, 51.32 acting on behalf of two or more units, may apply for designation 51.33 of an area as a biotechnology and health sciences industry 51.34 zone. All or part of the area proposed for designation as a 51.35 zone must be located within the boundaries of each of the 51.36 governmental units. A local government unit may not submit or 52.1 have submitted on its behalf more than one application for 52.2 designation of a biotechnology and health sciences industry zone. 52.3 Subd. 2. [APPLICATION CONTENT.] The application must 52.4 include: 52.5 (1) a development plan meeting the requirements of section 52.6 469.331; 52.7 (2) the proposed duration of the zone, not to exceed 12 52.8 years; 52.9 (3)(i) a resolution or ordinance adopted by each of the 52.10 cities or towns and the counties in which the zone is located, 52.11 agreeing to provide all of the local sales and use tax 52.12 exemptions provided under section 469.336; or (ii) a resolution 52.13 or ordinance adopted by each of the cities or towns and the 52.14 counties in which the zone is located that declares whether it 52.15 will provide property tax exemptions under section 469.336; 52.16 (4) an agreement by the applicant to treat incentives 52.17 provided under the zone designation as business subsidies under 52.18 sections 116J.993 to 116J.995 and to comply with the 52.19 requirements of that law; and 52.20 (5) supporting evidence to allow the commissioner to 52.21 evaluate the application under the criteria in section 469.334. 52.22 [EFFECTIVE DATE.] This section is effective the day 52.23 following final enactment. 52.24 Sec. 13. [469.334] [DESIGNATION OF BIOTECHNOLOGY AND 52.25 HEALTH SCIENCES INDUSTRY ZONE.] 52.26 Subdivision 1. [COMMISSIONER TO DESIGNATE.] (a) The 52.27 commissioner, in consultation with the commissioner of revenue 52.28 and the director of the office of strategic and long-range 52.29 planning, shall designate not more than one biotechnology and 52.30 health sciences industry zone. Priority must be given to 52.31 applicants with a development plan that links a higher 52.32 education/research institution with a biotechnology and health 52.33 sciences industry facility. 52.34 (b) The commissioner may consult with the applicant prior 52.35 to the designation of the zone. The commissioner may modify the 52.36 development plan, including the boundaries of the zone or 53.1 subzones, if in the commissioner's opinion a modified plan would 53.2 better meet the objectives of the biotechnology and health 53.3 sciences industry zone program. The commissioner shall notify 53.4 the applicant of the modifications and provide a statement of 53.5 the reasons for the modifications. 53.6 Subd. 2. [NEED INDICATORS.] (a) In evaluating applications 53.7 to determine the need for designation of a biotechnology and 53.8 health sciences industry zone, the commissioner shall consider 53.9 the following factors as indicators of need: 53.10 (1) the extent to which land in proximity to a significant 53.11 scientific research institution could be developed as a higher 53.12 and better use for biotechnology and health sciences industry 53.13 facilities; 53.14 (2) the amount of property in or near the zone that is 53.15 deteriorated or underutilized; and 53.16 (3) the extent to which property in the area would remain 53.17 underdeveloped or nonperforming due to physical characteristics. 53.18 (b) The commissioner may require applicants to provide data 53.19 to demonstrate how the area meets one or more of the indicators 53.20 of need. 53.21 Subd. 3. [SUCCESS INDICATORS.] In determining the 53.22 likelihood of success of a proposed zone, the commissioner shall 53.23 consider: 53.24 (1) applicants that show a viable link between a higher 53.25 education/research institution, the biotechnology and/or medical 53.26 devices business sectors, and one or more units of local 53.27 government with a development plan; 53.28 (2) the extent to which the area has substantial real 53.29 property with adequate infrastructure and energy to support new 53.30 or expanded development; 53.31 (3) the strength and viability of the proposed development 53.32 goals, objectives, and strategies in the development plan; 53.33 (4) whether the development plan is creative and innovative 53.34 in comparison to other applications; 53.35 (5) local public and private commitment to development of a 53.36 biotechnology and health sciences industry facility or 54.1 facilities in the proposed zone and the potential cooperation of 54.2 surrounding communities; 54.3 (6) existing resources available to the proposed zone; 54.4 (7) how the designation of the zone would relate to other 54.5 economic and community development projects and to regional 54.6 initiatives or programs; 54.7 (8) how the regulatory burden will be eased for 54.8 biotechnology and health sciences industry facilities located in 54.9 the proposed zone; 54.10 (9) proposals to establish and link job creation and job 54.11 training in the biotechnology and health sciences industry with 54.12 research/educational institutions; and 54.13 (10) the extent to which the development is directed at 54.14 encouraging, and that designation of the zone is likely to 54.15 result in, the creation of high-paying jobs. 54.16 Subd. 4. [DESIGNATION SCHEDULE.] (a) The schedule in 54.17 paragraphs (b) to (e) applies to the designation of the 54.18 biotechnology and health sciences industry zone. 54.19 (b) The commissioner shall publish the form for 54.20 applications and any procedural, form, or content requirements 54.21 for applications by no later than August 1, 2003. The 54.22 commissioner may publish these requirements on the Internet, in 54.23 the State Register, or by any other means the commissioner 54.24 determines appropriate to disseminate the information to 54.25 potential applicants for designation. 54.26 (c) Applications must be submitted by October 15, 2003. 54.27 (d) The commissioner shall designate the zones by no later 54.28 than December 31, 2003. 54.29 (e) The designation of the zones takes effect January 1, 54.30 2004. 54.31 [EFFECTIVE DATE.] This section is effective the day 54.32 following final enactment. 54.33 Sec. 14. [469.335] [APPLICATION FOR TAX BENEFITS.] 54.34 (a) To claim a tax credit or exemption against a state tax 54.35 under section 469.336, clauses (2) through (5), a business must 54.36 apply to the commissioner for a tax credit certificate. As a 55.1 condition of its application, the business must agree to furnish 55.2 information to the commissioner that is sufficient to verify the 55.3 eligibility for any credits or exemptions claimed. The total 55.4 amount of the state tax credits and exemptions allowed for the 55.5 specified period may not exceed the amount of the tax credit 55.6 certificates provided by the commissioner to the business. The 55.7 commissioner must verify to the commissioner of revenue the 55.8 amount of tax exemptions or credits for which each business is 55.9 eligible. 55.10 (b) A tax credit certificate issued under this section may 55.11 specify the particular tax exemptions or credits against a state 55.12 tax that the qualified business is eligible to claim under 55.13 section 469.336, clauses (2) through (5), and the amount of each 55.14 exemption or credit allowed. 55.15 (c) The commissioner may issue $1,000,000 of tax credits or 55.16 exemptions in fiscal year 2004. Any tax credits or exemptions 55.17 not awarded in fiscal year 2004 may be awarded in fiscal year 55.18 2005. 55.19 (d) A qualified business must use the tax credits or tax 55.20 exemptions granted under this section by the later of the end of 55.21 the state fiscal year or the taxpayer's tax year in which the 55.22 credits or exemptions are granted. 55.23 [EFFECTIVE DATE.] This section is effective the day 55.24 following final enactment. 55.25 Sec. 15. [469.336] [TAX INCENTIVES AVAILABLE IN ZONES.] 55.26 Qualified businesses that operate in a biotechnology and 55.27 health sciences industry zone, individuals who invest in a 55.28 qualified business that operates in a biotechnology and health 55.29 sciences industry zone, and property of a qualified business 55.30 located in a biotechnology and health sciences industry zone 55.31 qualify for: 55.32 (1) exemption from the property tax as provided in section 55.33 272.02, subdivision 56; 55.34 (2) exemption from corporate franchise taxes as provided 55.35 under section 469.337; 55.36 (3) exemption from the state sales and use tax and any 56.1 local sales and use taxes on qualifying purchases as provided in 56.2 section 297A.68, subdivision 37; 56.3 (4) research and development credits as provided under 56.4 section 469.339; 56.5 (5) jobs credits as provided under section 469.338. 56.6 [EFFECTIVE DATE.] This section is effective the day 56.7 following final enactment. 56.8 Sec. 16. [469.337] [CORPORATE FRANCHISE TAX EXEMPTION.] 56.9 (a) A qualified business is exempt from taxation under 56.10 section 290.02, the alternative minimum tax under section 56.11 290.0921, and the minimum fee under section 290.0922, on the 56.12 portion of its income attributable to operations of a qualified 56.13 business within the biotechnology and health sciences industry 56.14 zone. This exemption is determined as follows: 56.15 (1) for purposes of the tax imposed under section 290.02, 56.16 by multiplying its taxable net income by its zone percentage and 56.17 subtracting the result in determining taxable income; 56.18 (2) for purposes of the alternative minimum tax under 56.19 section 290.0921, by multiplying its alternative minimum taxable 56.20 income by its zone percentage and reducing alternative minimum 56.21 taxable income by this amount; and 56.22 (3) for purposes of the minimum fee under section 290.0922, 56.23 by excluding property and payroll in the zone from the 56.24 computations of the fee. 56.25 (b) No subtraction is allowed under this section in excess 56.26 of 20 percent of the sum of the corporation's biotechnology and 56.27 health sciences industry zone payroll and the adjusted basis of 56.28 the property at the time that the property is first used in the 56.29 biotechnology and health sciences industry zone by the 56.30 corporation. 56.31 (c) No reduction in tax is allowed in excess of the amount 56.32 allocated under section 469.335. 56.33 [EFFECTIVE DATE.] This section is effective for taxable 56.34 years beginning after December 31, 2003. 56.35 Sec. 17. [469.338] [JOBS CREDIT.] 56.36 Subdivision 1. [CREDIT ALLOWED.] A qualified business is 57.1 allowed a credit against the taxes imposed under chapter 290. 57.2 The credit equals seven percent of the: 57.3 (1) lesser of: 57.4 (i) zone payroll for the taxable year, less the zone 57.5 payroll for the base year; or 57.6 (ii) total Minnesota payroll for the taxable year, less 57.7 total Minnesota payroll for the base year; minus 57.8 (2) $30,000 multiplied by the number of full-time 57.9 equivalent employee positions that the qualified business 57.10 employs in the biotechnology and health sciences industry zone 57.11 for the taxable year, minus the number of full-time equivalent 57.12 employees the business employed in the zone in the base year, 57.13 but not less than zero. 57.14 Subd. 2. [DEFINITIONS.] (a) For purposes of this section, 57.15 the following terms have the meaning given. 57.16 (b) "Base year" means the taxable year beginning during the 57.17 calendar year in which the commissioner designated the zone. 57.18 (c) "Full-time equivalent employee position" means the 57.19 equivalent of annualized expected hours of work equal to 2,080 57.20 hours. 57.21 (d) "Minnesota payroll" means the wages or salaries 57.22 attributed to Minnesota under section 290.191, subdivision 12, 57.23 for the qualified business or the unitary business of which the 57.24 qualified business is a part, whichever is greater. 57.25 (e) "Zone payroll" means wages or salaries used to 57.26 determine the zone payroll factor for the qualified business. 57.27 Subd. 3. [INFLATION ADJUSTMENT.] For taxable years 57.28 beginning after December 31, 2004, the dollar amount in 57.29 subdivision 1, clause (2), is annually adjusted for inflation. 57.30 The commissioner of revenue shall adjust the amount by the 57.31 percentage determined under section 290.06, subdivision 2d, for 57.32 the taxable year. 57.33 Subd. 4. [REFUNDABLE.] If the amount of the credit 57.34 calculated under this section and allocated to the qualified 57.35 business under section 14 exceeds the liability for tax under 57.36 chapter 290, the commissioner of revenue shall refund the excess 58.1 to the qualified business. 58.2 [EFFECTIVE DATE.] This section is effective the day 58.3 following final enactment. 58.4 Sec. 18. [469.339] [CREDIT FOR INCREASING RESEARCH 58.5 ACTIVITIES IN A BIOTECHNOLOGY AND HEALTH SCIENCES ZONE.] 58.6 Subdivision 1. [CREDIT ALLOWED.] A corporation, other than 58.7 a corporation treated as an "S" corporation under section 58.8 290.9725, is allowed a credit against the portion of the 58.9 franchise tax computed under section 290.06, subdivision 1, for 58.10 the taxable year equal to: 58.11 (1) five percent of the first $2,000,000 of the excess (if 58.12 any) of (i) the qualified research expenses for the taxable 58.13 year, over (ii) the base amount; and 58.14 (2) 2.5 percent of all such excess expenses over $2,000,000. 58.15 Subd. 2. [DEFINITIONS.] (a) For purposes of this section, 58.16 the following terms have the meanings given. 58.17 (b) "Qualified research expenses" means qualified research 58.18 expenses and basic research payments as defined in section 41(b) 58.19 and (e) of the Internal Revenue Code. 58.20 (c) "Qualified research" means activities in the fields of 58.21 biotechnology or health sciences that are "qualified research" 58.22 as defined in section 41(d) of the Internal Revenue Code, except 58.23 that the term does not include qualified research conducted 58.24 outside the biotechnology and health sciences industry zone. 58.25 (d) "Base amount" means base amount as defined in section 58.26 4(c) of the Internal Revenue Code, except that the average 58.27 annual gross receipts must be calculated using Minnesota sales 58.28 or receipts under section 290.191 and the definitions contained 58.29 in paragraphs (b) and (c) apply. 58.30 (e) "Liability for tax" for purposes of this section means 58.31 the tax imposed under this chapter for the taxable year reduced 58.32 by the sum of the nonrefundable credits allowed under this 58.33 chapter. 58.34 Subd. 3. [REFUNDABLE CREDIT.] If the credit determined 58.35 under this section and allocated to the taxpayer under section 58.36 469.335 for the taxable year exceeds the taxpayer's liability 59.1 for tax for the year, the commissioner shall refund the 59.2 difference to the taxpayer. 59.3 Subd. 4. [PARTNERSHIPS.] For partnerships, the credit is 59.4 allocated in the same manner provided by section 41(f)(2) of the 59.5 Internal Revenue Code. 59.6 Subd. 5. [ADJUSTMENTS; ACQUISITIONS AND DISPOSITIONS.] If 59.7 a taxpayer acquires or disposes of the major portion of a trade 59.8 or business or the major portion of a separate unit of a trade 59.9 or business in a transaction with another taxpayer, the 59.10 taxpayer's qualified research expenses and base amount are 59.11 adjusted in the same manner provided by section 41(f)(3) of the 59.12 Internal Revenue Code. 59.13 Subd. 6. [INTERACTION; REGULAR RESEARCH CREDIT.] Any 59.14 amount used to calculate a credit under this section may not be 59.15 used to generate a credit under section 290.068. 59.16 [EFFECTIVE DATE.] This section is effective the day 59.17 following final enactment. 59.18 Sec. 19. [469.340] [REPAYMENT OF TAX BENEFITS.] 59.19 Subdivision 1. [REPAYMENT OBLIGATION.] A business must 59.20 repay the amount of the tax reduction listed in section 469.336 59.21 and any refunds under sections 469.338 and 469.339 in excess of 59.22 tax liability, received during the two years immediately before 59.23 it ceased to operate in the zone, if the business: 59.24 (1) received tax reductions authorized by section 469.336; 59.25 and 59.26 (2)(i) did not meet the goals specified in an agreement 59.27 entered into with the applicant that states any obligation the 59.28 qualified business must fulfill in order to be eligible for tax 59.29 benefits. The commissioner may extend for up to one year the 59.30 period for meeting any goals provided in an agreement. The 59.31 applicant may extend the period for meeting other goals by 59.32 documenting in writing the reason for the extension and 59.33 attaching a copy of the document to its next annual report to 59.34 the commissioner; or 59.35 (ii) ceased to operate its facility located within the 59.36 biotechnology and health sciences industry zone or otherwise 60.1 ceases to be or is not a qualified business. 60.2 Subd. 2. [DEFINITIONS.] (a) For purposes of this section, 60.3 the following terms have the meanings given. 60.4 (b) "Business" means any person who received tax benefits 60.5 enumerated in section 469.336. 60.6 (c) "Commissioner" means the commissioner of revenue. 60.7 Subd. 3. [DISPOSITION OR REPAYMENT.] The repayment must be 60.8 paid to the state to the extent it represents a state tax 60.9 reduction and to the county to the extent it represents a 60.10 property tax reduction. Any amount repaid to the state must be 60.11 deposited in the general fund. Any amount repaid to the county 60.12 for the property tax exemption must be distributed to the local 60.13 governments with authority to levy taxes in the zone in the same 60.14 manner provided for distribution of payment of delinquent 60.15 property taxes. Any repayment of local sales taxes must be 60.16 repaid to the city or county imposing the local sales tax. 60.17 Subd. 4. [REPAYMENT PROCEDURES.] (a) For the repayment of 60.18 taxes imposed under chapter 290 or 297A or local taxes collected 60.19 pursuant to section 297A.99, a business must file an amended 60.20 return with the commissioner of revenue and pay any taxes 60.21 required to be repaid within 30 days after ceasing to do 60.22 business in the zone. The amount required to be repaid is 60.23 determined by calculating the tax for the period or periods for 60.24 which repayment is required without regard to the exemptions and 60.25 credits allowed under section 469.336. 60.26 (b) For the repayment of property taxes, the county auditor 60.27 shall prepare a tax statement for the business, applying the 60.28 applicable tax extension rates for each payable year and provide 60.29 a copy to the business. The business must pay the taxes to the 60.30 county treasurer within 30 days after receipt of the tax 60.31 statement. The taxpayer may appeal the valuation and 60.32 determination of the property tax to the tax court within 30 60.33 days after receipt of the tax statement. 60.34 (c) The provisions of chapters 270 and 289A relating to the 60.35 commissioner's authority to audit, assess, and collect the tax 60.36 and to hear appeals are applicable to the repayment required 61.1 under paragraph (a). The commissioner may impose civil 61.2 penalties as provided in chapter 289A, and the additional tax 61.3 and penalties are subject to interest at the rate provided in 61.4 section 270.75, from 30 days after ceasing to do business in the 61.5 biotechnology and health sciences industry zone until the date 61.6 the tax is paid. 61.7 (d) If a property tax is not repaid under paragraph (b), 61.8 the county treasurer shall add the amount required to be repaid 61.9 to the property taxes assessed against the property for payment 61.10 in the year following the year in which the treasurer discovers 61.11 that the business ceased to operate in the biotechnology and 61.12 health sciences industry zone. 61.13 (e) For determining the tax required to be repaid, a tax 61.14 reduction is deemed to have been received on the date that the 61.15 tax would have been due if the taxpayer had not been entitled to 61.16 the exemption, or on the date a refund was issued for a 61.17 refundable credit. 61.18 (f) The commissioner may assess the repayment of taxes 61.19 under paragraph (c) any time within two years after the business 61.20 ceases to operate in the biotechnology and health sciences 61.21 industry zone, or within any period of limitations for the 61.22 assessment of tax under section 289A.38, whichever period is 61.23 later. 61.24 Subd. 5. [WAIVER AUTHORITY.] The commissioner may waive 61.25 all or part of a repayment, if the commissioner, in consultation 61.26 with the commissioner of trade and economic development and 61.27 appropriate officials from the local government units in which 61.28 the business is located, determines that requiring repayment of 61.29 the tax is not in the best interest of the state or the local 61.30 government units and the business ceased operating as a result 61.31 of circumstances beyond its control including, but not limited 61.32 to: 61.33 (1) a natural disaster; 61.34 (2) unforeseen industry trends; or 61.35 (3) loss of a major supplier or customer. 61.36 [EFFECTIVE DATE.] This section is effective the day 62.1 following final enactment. 62.2 Sec. 20. [469.341] [ZONE PERFORMANCE; REMEDIES.] 62.3 Subdivision 1. [REPORTING REQUIREMENT.] An applicant 62.4 receiving designation of a biotechnology and health sciences 62.5 industry zone under section 469.334 must annually report to the 62.6 commissioner on its progress in meeting the zone performance 62.7 goals under the development plan for the zone and the 62.8 applicant's compliance with the business subsidy law under 62.9 sections 116J.993 to 116J.995. 62.10 Subd. 2. [PROCEDURES.] For reports required by subdivision 62.11 1, the commissioner may prescribe: 62.12 (1) the required time or times by which the reports must be 62.13 filed; 62.14 (2) the form of the report; and 62.15 (3) the information required to be included in the report. 62.16 Subd. 3. [REMEDIES.] If the commissioner determines, based 62.17 on a report filed under subdivision 1 or other available 62.18 information, that a zone or subzone is failing to meet its 62.19 performance goals, the commissioner may take any actions the 62.20 commissioner determines appropriate, including modification of 62.21 the boundaries of the zone or a subzone or termination of the 62.22 zone or a subzone. Before taking any action, the commissioner 62.23 shall consult with the applicant and the affected local 62.24 government units, including notifying them of the proposed 62.25 actions to be taken. The commissioner shall publish any order 62.26 modifying a zone in the State Register and on the Internet. The 62.27 applicant may appeal the commissioner's order under the 62.28 contested case procedures of chapter 14. 62.29 Subd. 4. [EXISTING BUSINESSES.] (a) An action to remove 62.30 area from a zone or to terminate a zone under this section does 62.31 not apply to: 62.32 (1) the property tax on improvements constructed before the 62.33 first January 2 following publication of the commissioner's 62.34 order; 62.35 (2) sales tax on purchases made before the first day of the 62.36 next calendar month beginning at least 30 days after publication 63.1 of the commissioner's order; and 63.2 (3) individual income tax or corporate franchise tax 63.3 attributable to a facility that was in operation before the 63.4 publication of the commissioner's order. 63.5 (b) The tax exemptions specified in paragraph (a) terminate 63.6 on the date on which the zone expires under the original 63.7 designation. 63.8 [EFFECTIVE DATE.] This section is effective the day 63.9 following final enactment. 63.10 ARTICLE 3 63.11 FEDERAL UPDATE 63.12 Section 1. Minnesota Statutes 2002, section 289A.02, 63.13 subdivision 7, as amended by Laws 2003, chapter 127, article 4, 63.14 section 1, is amended to read: 63.15 Subd. 7. [INTERNAL REVENUE CODE.] Unless specifically 63.16 defined otherwise, "Internal Revenue Code" means the Internal 63.17 Revenue Code of 1986, as amended throughDecember 31, 2002June 63.18 15, 2003. 63.19 [EFFECTIVE DATE.] This section is effective the day 63.20 following final enactment and is intended to adopt the 63.21 provisions of H.R. 2, the Jobs and Growth Tax Relief 63.22 Reconciliation Act of 2003, if it is enacted into law. 63.23 Sec. 2. Minnesota Statutes 2002, section 290.01, 63.24 subdivision 19, as amended by Laws 2003, chapter 127, article 4, 63.25 section 2, is amended to read: 63.26 Subd. 19. [NET INCOME.] The term "net income" means the 63.27 federal taxable income, as defined in section 63 of the Internal 63.28 Revenue Code of 1986, as amended through the date named in this 63.29 subdivision, incorporating any elections made by the taxpayer in 63.30 accordance with the Internal Revenue Code in determining federal 63.31 taxable income for federal income tax purposes, and with the 63.32 modifications provided in subdivisions 19a to 19f. 63.33 In the case of a regulated investment company or a fund 63.34 thereof, as defined in section 851(a) or 851(g) of the Internal 63.35 Revenue Code, federal taxable income means investment company 63.36 taxable income as defined in section 852(b)(2) of the Internal 64.1 Revenue Code, except that: 64.2 (1) the exclusion of net capital gain provided in section 64.3 852(b)(2)(A) of the Internal Revenue Code does not apply; 64.4 (2) the deduction for dividends paid under section 64.5 852(b)(2)(D) of the Internal Revenue Code must be applied by 64.6 allowing a deduction for capital gain dividends and 64.7 exempt-interest dividends as defined in sections 852(b)(3)(C) 64.8 and 852(b)(5) of the Internal Revenue Code; and 64.9 (3) the deduction for dividends paid must also be applied 64.10 in the amount of any undistributed capital gains which the 64.11 regulated investment company elects to have treated as provided 64.12 in section 852(b)(3)(D) of the Internal Revenue Code. 64.13 The net income of a real estate investment trust as defined 64.14 and limited by section 856(a), (b), and (c) of the Internal 64.15 Revenue Code means the real estate investment trust taxable 64.16 income as defined in section 857(b)(2) of the Internal Revenue 64.17 Code. 64.18 The net income of a designated settlement fund as defined 64.19 in section 468B(d) of the Internal Revenue Code means the gross 64.20 income as defined in section 468B(b) of the Internal Revenue 64.21 Code. 64.22 The provisions of sections 1113(a), 1117, 1206(a), 1313(a), 64.23 1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612, 64.24 1616, 1617, 1704(l), and 1704(m) of the Small Business Job 64.25 Protection Act, Public Law Number 104-188, the provisions of 64.26 Public Law Number 104-117, the provisions of sections 313(a) and 64.27 (b)(1), 602(a), 913(b), 941, 961, 971, 1001(a) and (b), 1002, 64.28 1003, 1012, 1013, 1014, 1061, 1062, 1081, 1084(b), 1086, 1087, 64.29 1111(a), 1131(b) and (c), 1211(b), 1213, 1530(c)(2), 1601(f)(5) 64.30 and (h), and 1604(d)(1) of the Taxpayer Relief Act of 1997, 64.31 Public Law Number 105-34, the provisions of section 6010 of the 64.32 Internal Revenue Service Restructuring and Reform Act of 1998, 64.33 Public Law Number 105-206, the provisions of section 4003 of the 64.34 Omnibus Consolidated and Emergency Supplemental Appropriations 64.35 Act, 1999, Public Law Number 105-277, and the provisions of 64.36 section 318 of the Consolidated Appropriation Act of 2001, 65.1 Public Law Number 106-554, shall become effective at the time 65.2 they become effective for federal purposes. 65.3 The Internal Revenue Code of 1986, as amended through 65.4 December 31, 1996, shall be in effect for taxable years 65.5 beginning after December 31, 1996. 65.6 The provisions of sections 202(a) and (b), 221(a), 225, 65.7 312, 313, 913(a), 934, 962, 1004, 1005, 1052, 1063, 1084(a) and 65.8 (c), 1089, 1112, 1171, 1204, 1271(a) and (b), 1305(a), 1306, 65.9 1307, 1308, 1309, 1501(b), 1502(b), 1504(a), 1505, 1527, 1528, 65.10 1530, 1601(d), (e), (f), and (i) and 1602(a), (b), (c), and (e) 65.11 of the Taxpayer Relief Act of 1997, Public Law Number 105-34, 65.12 the provisions of sections 6004, 6005, 6012, 6013, 6015, 6016, 65.13 7002, and 7003 of the Internal Revenue Service Restructuring and 65.14 Reform Act of 1998, Public Law Number 105-206, the provisions of 65.15 section 3001 of the Omnibus Consolidated and Emergency 65.16 Supplemental Appropriations Act, 1999, Public Law Number 65.17 105-277, the provisions of section 3001 of the Miscellaneous 65.18 Trade and Technical Corrections Act of 1999, Public Law Number 65.19 106-36, and the provisions of section 316 of the Consolidated 65.20 Appropriation Act of 2001, Public Law Number 106-554, shall 65.21 become effective at the time they become effective for federal 65.22 purposes. 65.23 The Internal Revenue Code of 1986, as amended through 65.24 December 31, 1997, shall be in effect for taxable years 65.25 beginning after December 31, 1997. 65.26 The provisions of sections 5002, 6009, 6011, and 7001 of 65.27 the Internal Revenue Service Restructuring and Reform Act of 65.28 1998, Public Law Number 105-206, the provisions of section 9010 65.29 of the Transportation Equity Act for the 21st Century, Public 65.30 Law Number 105-178, the provisions of sections 1004, 4002, and 65.31 5301 of the Omnibus Consolidation and Emergency Supplemental 65.32 Appropriations Act, 1999, Public Law Number 105-277, the 65.33 provision of section 303 of the Ricky Ray Hemophilia Relief Fund 65.34 Act of 1998, Public Law Number 105-369, the provisions of 65.35 sections 532, 534, 536, 537, and 538 of the Ticket to Work and 65.36 Work Incentives Improvement Act of 1999, Public Law Number 66.1 106-170, the provisions of the Installment Tax Correction Act of 66.2 2000, Public Law Number 106-573, and the provisions of section 66.3 309 of the Consolidated Appropriation Act of 2001, Public Law 66.4 Number 106-554, shall become effective at the time they become 66.5 effective for federal purposes. 66.6 The Internal Revenue Code of 1986, as amended through 66.7 December 31, 1998, shall be in effect for taxable years 66.8 beginning after December 31, 1998. 66.9 The provisions of the FSC Repeal and Extraterritorial 66.10 Income Exclusion Act of 2000, Public Law Number 106-519, and the 66.11 provision of section 412 of the Job Creation and Worker 66.12 Assistance Act of 2002, Public Law Number 107-147, shall become 66.13 effective at the time it became effective for federal purposes. 66.14 The Internal Revenue Code of 1986, as amended through 66.15 December 31, 1999, shall be in effect for taxable years 66.16 beginning after December 31, 1999. The provisions of sections 66.17 306 and 401 of the Consolidated Appropriation Act of 2001, 66.18 Public Law Number 106-554, and the provision of section 66.19 632(b)(2)(A) of the Economic Growth and Tax Relief 66.20 Reconciliation Act of 2001, Public Law Number 107-16, and 66.21 provisions of sections 101 and 402 of the Job Creation and 66.22 Worker Assistance Act of 2002, Public Law Number 107-147, shall 66.23 become effective at the same time it became effective for 66.24 federal purposes. 66.25 The Internal Revenue Code of 1986, as amended through 66.26 December 31, 2000, shall be in effect for taxable years 66.27 beginning after December 31, 2000. The provisions of sections 66.28 659a and 671 of the Economic Growth and Tax Relief 66.29 Reconciliation Act of 2001, Public Law Number 107-16, the 66.30 provisions of sections 104, 105, and 111 of the Victims of 66.31 Terrorism Tax Relief Act of 2001, Public Law Number 107-134, and 66.32 the provisions of sections 201, 403, 413, and 606 of the Job 66.33 Creation and Worker Assistance Act of 2002, Public Law Number 66.34 107-147, shall become effective at the same time it became 66.35 effective for federal purposes. 66.36 The Internal Revenue Code of 1986, as amended through March 67.1 15, 2002, shall be in effect for taxable years beginning after 67.2 December 31, 2001. 67.3 The provisions of sections 101 and 102 of the Victims of 67.4 Terrorism Tax Relief Act of 2001, Public Law Number 107-134, 67.5 shall become effective at the same time it becomes effective for 67.6 federal purposes. 67.7 The Internal Revenue Code of 1986, as amended through 67.8December 31, 2002June 15, 2003, shall be in effect for taxable 67.9 years beginning after December 31, 2002. The provisions of 67.10 section 201 of the Jobs and Growth Tax Relief and Reconciliation 67.11 Act of 2003, H.R. 2, if it is enacted into law, are effective at 67.12 the same time it became effective for federal purposes. 67.13 Except as otherwise provided, references to the Internal 67.14 Revenue Code in subdivisions 19a to 19g mean the code in effect 67.15 for purposes of determining net income for the applicable year. 67.16 [EFFECTIVE DATE.] This section is effective the day 67.17 following final enactment and is intended to adopt the 67.18 provisions of H.R. 2, the Jobs and Growth Tax Relief 67.19 Reconciliation Act of 2003, if it is enacted into law. 67.20 Sec. 3. Minnesota Statutes 2002, section 290.01, 67.21 subdivision 31, as amended by Laws 2003, chapter 127, article 4, 67.22 section 3, is amended to read: 67.23 Subd. 31. [INTERNAL REVENUE CODE.] Unless specifically 67.24 defined otherwise, "Internal Revenue Code" means the Internal 67.25 Revenue Code of 1986, as amended throughDecember 31, 2002June 67.26 15, 2003. 67.27 [EFFECTIVE DATE.] This section is effective the day 67.28 following final enactment and is intended to adopt the 67.29 provisions of H.R. 2, the Jobs and Growth Tax Relief 67.30 Reconciliation Act of 2003, if it is enacted into law. 67.31 Sec. 4. Minnesota Statutes 2002, section 290A.03, 67.32 subdivision 15, as amended by Laws 2003, chapter 127, article 4, 67.33 section 4, is amended to read: 67.34 Subd. 15. [INTERNAL REVENUE CODE.] "Internal Revenue Code" 67.35 means the Internal Revenue Code of 1986, as amended 67.36 throughDecember 31, 2002June 15, 2003. 68.1 [EFFECTIVE DATE.] This section is effective for refunds 68.2 payable for rents paid in 2003 and thereafter and property taxes 68.3 payable in 2004 and thereafter and is intended to adopt the 68.4 provisions of H.R. 2, the Jobs and Growth Tax Relief 68.5 Reconciliation Act of 2003, if it is enacted into law. 68.6 Sec. 5. [EFFECTIVE DATE.] 68.7 This article is effective only after the state makes a 68.8 certification to the Secretary of the Treasury of the United 68.9 States that satisfies the requirements of section 601(e) of the 68.10 Jobs and Growth Tax Relief and Reconciliation Act of 2003, H.R. 68.11 2. The commissioner of finance shall certify to the 68.12 commissioner of revenue when the requirements of this section 68.13 have been met. 68.14 ARTICLE 4 68.15 PROPERTY TAXES 68.16 Section 1. Minnesota Statutes 2002, section 272.02, 68.17 subdivision 25, is amended to read: 68.18 Subd. 25. [ICE ARENAS; BASEBALL PARKS.] (a) Real and 68.19 personal property is exempt if it is owned and operated by a 68.20 private, nonprofit corporation exempt from federal income 68.21 taxation pursuant to United States Code, title 26, section 68.22 501(c)(3), primarily used for an ice arena or ice rink, and used 68.23 primarily for youth and high school programs. 68.24 (b) Real property is exempt if it is owned and operated by 68.25 a private, nonprofit corporation exempt from federal income 68.26 taxation pursuant to United States Code, title 26, section 68.27 501(c)(3), and primarily used as a baseball park by amateur 68.28 baseball players. 68.29 [EFFECTIVE DATE.] This section is effective for taxes 68.30 levied in 2003, payable in 2004, and thereafter. 68.31 Sec. 2. Minnesota Statutes 2002, section 272.02, is 68.32 amended by adding a subdivision to read: 68.33 Subd. 56. [ELDERLY LIVING FACILITY.] An elderly living 68.34 facility is exempt from taxation if it meets all of the 68.35 following requirements: 68.36 (1) the facility is located in a city of the first class 69.1 with a population of more than 350,000; 69.2 (2) the facility is owned and operated by a nonprofit 69.3 corporation organized under chapter 317A; 69.4 (3) the construction of the facility was commenced after 69.5 January 1, 2002, and before June 1, 2003; 69.6 (4) the facility consists of two buildings, which are 69.7 connected to a church that is exempt from taxation under 69.8 subdivision 6; 69.9 (5) the land for the facility was donated to the nonprofit 69.10 corporation by the church to which the facility is connected; 69.11 (6) the residents of the facility must be (i) at least 62 69.12 years of age or (ii) handicapped; 69.13 (7) the facility operates an on-site congregate dining 69.14 program in which participation by residents is mandatory, and 69.15 provides assisted living or similar social and physical support 69.16 services for residents; and 69.17 (8) at least 30 percent of the units in the facility are 69.18 occupied by persons whose annual income does not exceed 50 69.19 percent of median family income for the area. 69.20 The property is exempt under this subdivision for taxes 69.21 levied in each year or partial year of the term of the 69.22 facility's initial permanent financing or 25 years, whichever is 69.23 later. 69.24 [EFFECTIVE DATE.] This section is effective the day 69.25 following final enactment. 69.26 Sec. 3. Minnesota Statutes 2002, section 273.11, 69.27 subdivision 13, is amended to read: 69.28 Subd. 13. [VALUATION OF INCOME-PRODUCING PROPERTY.] 69.29 Beginning with the 1995 assessment, only accredited assessors or 69.30 senior accredited assessors or other licensed assessors who have 69.31 successfully completed at least two income-producing property 69.32 appraisal courses may value income-producing property for ad 69.33 valorem tax purposes. "Income-producing property" as used in 69.34 this subdivision means the taxable property in class 3a and 3b 69.35 in section 273.13, subdivision 24; class 4a and 4c, except for 69.36 seasonal recreational property not used for commercial purposes,70.1and class 4d in section 273.13, subdivision 25; and class 5 in 70.2 section 273.13, subdivision 31. "Income-producing property" 70.3 includes any property in class 4e in section 273.13, subdivision 70.4 25, that would be income-producing property under the definition 70.5 in this subdivision if it were not substandard. 70.6 "Income-producing property appraisal course" as used in this 70.7 subdivision means a course of study of approximately 30 70.8 instructional hours, with a final comprehensive test. An 70.9 assessor must successfully complete the final examination for 70.10 each of the two required courses. The course must be approved 70.11 by the board of assessors. 70.12 [EFFECTIVE DATE.] This section is effective beginning with 70.13 the 2004 assessment for property taxes payable in 2005. 70.14 Sec. 4. Minnesota Statutes 2002, section 273.13, 70.15 subdivision 25, is amended to read: 70.16 Subd. 25. [CLASS 4.] (a) Class 4a is residential real 70.17 estate containing four or more units and used or held for use by 70.18 the owner or by the tenants or lessees of the owner as a 70.19 residence for rental periods of 30 days or more. Class 4a also 70.20 includes hospitals licensed under sections 144.50 to 144.56, 70.21 other than hospitals exempt under section 272.02, and contiguous 70.22 property used for hospital purposes, without regard to whether 70.23 the property has been platted or subdivided. The market value 70.24 of class 4a property has a class rate of 1.8 percent for taxes 70.25 payable in 2002, 1.5 percent for taxes payable in 2003, and 1.25 70.26 percent for taxes payable in 2004 and thereafter, except that 70.27 class 4a property consisting of a structure for which 70.28 construction commenced after June 30, 2001, has a class rate of 70.29 1.25 percent of market value for taxes payable in 2003 and 70.30 subsequent years. 70.31 (b) Class 4b includes: 70.32 (1) residential real estate containing less than four units 70.33 that does not qualify as class 4bb, other than seasonal 70.34 residential, and recreational; 70.35 (2) manufactured homes not classified under any other 70.36 provision; 71.1 (3) a dwelling, garage, and surrounding one acre of 71.2 property on a nonhomestead farm classified under subdivision 23, 71.3 paragraph (b) containing two or three units; 71.4 (4) unimproved property that is classified residential as 71.5 determined under subdivision 33. 71.6 The market value of class 4b property has a class rate of 71.7 1.5 percent for taxes payable in 2002, and 1.25 percent for 71.8 taxes payable in 2003 and thereafter. 71.9 (c) Class 4bb includes: 71.10 (1) nonhomestead residential real estate containing one 71.11 unit, other than seasonal residential, and recreational; and 71.12 (2) a single family dwelling, garage, and surrounding one 71.13 acre of property on a nonhomestead farm classified under 71.14 subdivision 23, paragraph (b). 71.15 Class 4bb property has the same class rates as class 1a 71.16 property under subdivision 22. 71.17 Property that has been classified as seasonal recreational 71.18 residential property at any time during which it has been owned 71.19 by the current owner or spouse of the current owner does not 71.20 qualify for class 4bb. 71.21 (d) Class 4c property includes: 71.22 (1) except as provided in subdivision 22, paragraph (c), 71.23 real property devoted to temporary and seasonal residential 71.24 occupancy for recreation purposes, including real property 71.25 devoted to temporary and seasonal residential occupancy for 71.26 recreation purposes and not devoted to commercial purposes for 71.27 more than 250 days in the year preceding the year of 71.28 assessment. For purposes of this clause, property is devoted to 71.29 a commercial purpose on a specific day if any portion of the 71.30 property is used for residential occupancy, and a fee is charged 71.31 for residential occupancy. In order for a property to be 71.32 classified as class 4c, seasonal recreational residential for 71.33 commercial purposes, at least 40 percent of the annual gross 71.34 lodging receipts related to the property must be from business 71.35 conducted during 90 consecutive days and either (i) at least 60 71.36 percent of all paid bookings by lodging guests during the year 72.1 must be for periods of at least two consecutive nights; or (ii) 72.2 at least 20 percent of the annual gross receipts must be from 72.3 charges for rental of fish houses, boats and motors, 72.4 snowmobiles, downhill or cross-country ski equipment, or charges 72.5 for marina services, launch services, and guide services, or the 72.6 sale of bait and fishing tackle. For purposes of this 72.7 determination, a paid booking of five or more nights shall be 72.8 counted as two bookings. Class 4c also includes commercial use 72.9 real property used exclusively for recreational purposes in 72.10 conjunction with class 4c property devoted to temporary and 72.11 seasonal residential occupancy for recreational purposes, up to 72.12 a total of two acres, provided the property is not devoted to 72.13 commercial recreational use for more than 250 days in the year 72.14 preceding the year of assessment and is located within two miles 72.15 of the class 4c property with which it is used. Class 4c 72.16 property classified in this clause also includes the remainder 72.17 of class 1c resorts provided that the entire property including 72.18 that portion of the property classified as class 1c also meets 72.19 the requirements for class 4c under this clause; otherwise the 72.20 entire property is classified as class 3. Owners of real 72.21 property devoted to temporary and seasonal residential occupancy 72.22 for recreation purposes and all or a portion of which was 72.23 devoted to commercial purposes for not more than 250 days in the 72.24 year preceding the year of assessment desiring classification as 72.25 class 1c or 4c, must submit a declaration to the assessor 72.26 designating the cabins or units occupied for 250 days or less in 72.27 the year preceding the year of assessment by January 15 of the 72.28 assessment year. Those cabins or units and a proportionate 72.29 share of the land on which they are located will be designated 72.30 class 1c or 4c as otherwise provided. The remainder of the 72.31 cabins or units and a proportionate share of the land on which 72.32 they are located will be designated as class 3a. The owner of 72.33 property desiring designation as class 1c or 4c property must 72.34 provide guest registers or other records demonstrating that the 72.35 units for which class 1c or 4c designation is sought were not 72.36 occupied for more than 250 days in the year preceding the 73.1 assessment if so requested. The portion of a property operated 73.2 as a (1) restaurant, (2) bar, (3) gift shop, and (4) other 73.3 nonresidential facility operated on a commercial basis not 73.4 directly related to temporary and seasonal residential occupancy 73.5 for recreation purposes shall not qualify for class 1c or 4c; 73.6 (2) qualified property used as a golf course if: 73.7 (i) it is open to the public on a daily fee basis. It may 73.8 charge membership fees or dues, but a membership fee may not be 73.9 required in order to use the property for golfing, and its green 73.10 fees for golfing must be comparable to green fees typically 73.11 charged by municipal courses; and 73.12 (ii) it meets the requirements of section 273.112, 73.13 subdivision 3, paragraph (d). 73.14 A structure used as a clubhouse, restaurant, or place of 73.15 refreshment in conjunction with the golf course is classified as 73.16 class 3a property; 73.17 (3) real property up to a maximum of one acre of land owned 73.18 by a nonprofit community service oriented organization; provided 73.19 that the property is not used for a revenue-producing activity 73.20 for more than six days in the calendar year preceding the year 73.21 of assessment and the property is not used for residential 73.22 purposes on either a temporary or permanent basis. For purposes 73.23 of this clause, a "nonprofit community service oriented 73.24 organization" means any corporation, society, association, 73.25 foundation, or institution organized and operated exclusively 73.26 for charitable, religious, fraternal, civic, or educational 73.27 purposes, and which is exempt from federal income taxation 73.28 pursuant to section 501(c)(3), (10), or (19) of the Internal 73.29 Revenue Code of 1986, as amended through December 31, 1990. For 73.30 purposes of this clause, "revenue-producing activities" shall 73.31 include but not be limited to property or that portion of the 73.32 property that is used as an on-sale intoxicating liquor or 3.2 73.33 percent malt liquor establishment licensed under chapter 340A, a 73.34 restaurant open to the public, bowling alley, a retail store, 73.35 gambling conducted by organizations licensed under chapter 349, 73.36 an insurance business, or office or other space leased or rented 74.1 to a lessee who conducts a for-profit enterprise on the 74.2 premises. Any portion of the property which is used for 74.3 revenue-producing activities for more than six days in the 74.4 calendar year preceding the year of assessment shall be assessed 74.5 as class 3a. The use of the property for social events open 74.6 exclusively to members and their guests for periods of less than 74.7 24 hours, when an admission is not charged nor any revenues are 74.8 received by the organization shall not be considered a 74.9 revenue-producing activity; 74.10 (4) post-secondary student housing of not more than one 74.11 acre of land that is owned by a nonprofit corporation organized 74.12 under chapter 317A and is used exclusively by a student 74.13 cooperative, sorority, or fraternity for on-campus housing or 74.14 housing located within two miles of the border of a college 74.15 campus; 74.16 (5) manufactured home parks as defined in section 327.14, 74.17 subdivision 3; 74.18 (6) real property that is actively and exclusively devoted 74.19 to indoor fitness, health, social, recreational, and related 74.20 uses, is owned and operated by a not-for-profit corporation, and 74.21 is located within the metropolitan area as defined in section 74.22 473.121, subdivision 2; 74.23 (7) a leased or privately owned noncommercial aircraft 74.24 storage hangar not exempt under section 272.01, subdivision 2, 74.25 and the land on which it is located, provided that: 74.26 (i) the land is on an airport owned or operated by a city, 74.27 town, county, metropolitan airports commission, or group 74.28 thereof; and 74.29 (ii) the land lease, or any ordinance or signed agreement 74.30 restricting the use of the leased premise, prohibits commercial 74.31 activity performed at the hangar. 74.32 If a hangar classified under this clause is sold after June 74.33 30, 2000, a bill of sale must be filed by the new owner with the 74.34 assessor of the county where the property is located within 60 74.35 days of the sale; and 74.36 (8) residential real estate, a portion of which is used by 75.1 the owner for homestead purposes, and that is also a place of 75.2 lodging, if all of the following criteria are met: 75.3 (i) rooms are provided for rent to transient guests that 75.4 generally stay for periods of 14 or fewer days; 75.5 (ii) meals are provided to persons who rent rooms, the cost 75.6 of which is incorporated in the basic room rate; 75.7 (iii) meals are not provided to the general public except 75.8 for special events on fewer than seven days in the calendar year 75.9 preceding the year of the assessment; and 75.10 (iv) the owner is the operator of the property. 75.11 The market value subject to the 4c classification under this 75.12 clause is limited to five rental units. Any rental units on the 75.13 property in excess of five, must be valued and assessed as class 75.14 3a. The portion of the property used for purposes of a 75.15 homestead by the owner must be classified as class 1a property 75.16 under subdivision 22. 75.17 Class 4c property has a class rate of 1.5 percent of market 75.18 value, except that (i) each parcel of seasonal residential 75.19 recreational property not used for commercial purposes has the 75.20 same class rates as class 4bb property, (ii) manufactured home 75.21 parks assessed under clause (5) have the same class rate as 75.22 class 4b property, (iii) commercial-use seasonal residential 75.23 recreational property has a class rate of one percent for the 75.24 first $500,000 of market value, which includes any market value 75.25 receiving the one percent rate under subdivision 22, and 1.25 75.26 percent for the remaining market value, (iv) the market value of 75.27 property described in clause (4) has a class rate of one 75.28 percent, (v) the market value of property described in clauses 75.29 (2) and (6) has a class rate of 1.25 percent, and (vi) that 75.30 portion of the market value of property in clause (8) qualifying 75.31 for class 4c property has a class rate of 1.25 percent. 75.32(e) Class 4d property is qualifying low-income rental75.33housing certified to the assessor by the housing finance agency75.34under sections 273.126 and 462A.071. Class 4d includes land in75.35proportion to the total market value of the building that is75.36qualifying low-income rental housing. For all properties76.1qualifying as class 4d, the market value determined by the76.2assessor must be based on the normal approach to value using76.3normal unrestricted rents.76.4Class 4d property has a class rate of 0.9 percent for taxes76.5payable in 2002, and one percent for taxes payable in 2003 and76.61.25 percent for taxes payable in 2004 and thereafter.76.7 [EFFECTIVE DATE.] This section is effective beginning with 76.8 the 2004 assessment, for property taxes payable in 2005. 76.9 Sec. 5. Minnesota Statutes 2002, section 275.025, 76.10 subdivision 1, is amended to read: 76.11 Subdivision 1. [LEVY AMOUNT.] The state general levy is 76.12 levied against commercial-industrial property and seasonal 76.13 recreational property, as defined in this section. The state 76.14 general levy is $592,000,000 for taxes payable in 2002. For 76.15 taxes payable in subsequent years, the levy is increased each 76.16 year by multiplying the amount for the prior year by the sum of 76.17 one plus the rate of increase, if any, in the implicit price 76.18 deflator for government consumption expenditures and gross 76.19 investment for state and local governments prepared by the 76.20 Bureau of Economic Analysts of the United States Department of 76.21 Commerce for the 12-month period ending March 31 of the year 76.22 prior to the year the taxes are payable. The tax under this 76.23 section is not treated as a local tax rate under section 469.177 76.24 and is not the levy of a governmental unit under chapters 276A 76.25 and 473F.Beginning in fiscal year 2004, and in each year76.26thereafter, the commissioner of finance shall deposit in an76.27education reserve account, which account is hereby established,76.28the increased amount of the state general levy received for76.29deposit in the general fund for that year over the amount of the76.30state general levy received for deposit in the general fund in76.31fiscal year 2003. The amounts in the education reserve account76.32do not lapse or cancel each year, but remain until appropriated76.33by law for education aid or higher education funding.76.34 The commissioner shall increase or decrease the preliminary 76.35 or final rate for a year as necessary to account for errors and 76.36 tax base changes that affected a preliminary or final rate for 77.1 either of the two preceding years. Adjustments are allowed to 77.2 the extent that the necessary information is available to the 77.3 commissioner at the time the rates for a year must be certified, 77.4 and for the following reasons: 77.5 (1) an erroneous report of taxable value by a local 77.6 official; 77.7 (2) an erroneous calculation by the commissioner; and 77.8 (3) an increase or decrease in taxable value for 77.9 commercial-industrial or seasonal residential recreational 77.10 property reported on the abstracts of tax lists submitted under 77.11 section 275.29 that was not reported on the abstracts of 77.12 assessment submitted under section 270.11, subdivision 2, for 77.13 the same year. 77.14 The commissioner may, but need not, make adjustments if the 77.15 total difference in the tax levied for the year would be less 77.16 than $100,000. 77.17 [EFFECTIVE DATE.] This section is effective June 30, 2003. 77.18 Sec. 6. Minnesota Statutes 2002, section 275.065, 77.19 subdivision 3, is amended to read: 77.20 Subd. 3. [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The 77.21 county auditor shall prepare and the county treasurer shall 77.22 deliver after November 10 and on or before November 24 each 77.23 year, by first class mail to each taxpayer at the address listed 77.24 on the county's current year's assessment roll, a notice of 77.25 proposed property taxes. 77.26 (b) The commissioner of revenue shall prescribe the form of 77.27 the notice. 77.28 (c) The notice must inform taxpayers that it contains the 77.29 amount of property taxes each taxing authority proposes to 77.30 collect for taxes payable the following year. In the case of a 77.31 town, or in the case of the state general tax, the final tax 77.32 amount will be its proposed tax. In the case of taxing 77.33 authorities required to hold a public meeting under subdivision 77.34 6, the notice must clearly state that each taxing authority, 77.35 including regional library districts established under section 77.36 134.201, and including the metropolitan taxing districts as 78.1 defined in paragraph (i), but excluding all other special taxing 78.2 districts and towns, will hold a public meeting to receive 78.3 public testimony on the proposed budget and proposed or final 78.4 property tax levy, or, in case of a school district, on the 78.5 current budget and proposed property tax levy. It must clearly 78.6 state the time and place of each taxing authority's meeting, a 78.7 telephone number for the taxing authority that taxpayers may 78.8 call if they have questions related to the notice, and an 78.9 address where comments will be received by mail. 78.10 (d) The notice must state for each parcel: 78.11 (1) the market value of the property as determined under 78.12 section 273.11, and used for computing property taxes payable in 78.13 the following year and for taxes payable in the current year as 78.14 each appears in the records of the county assessor on November 1 78.15 of the current year; and, in the case of residential property, 78.16 whether the property is classified as homestead or 78.17 nonhomestead. The notice must clearly inform taxpayers of the 78.18 years to which the market values apply and that the values are 78.19 final values; 78.20 (2) the items listed below, shown separately by county, 78.21 city or town, and state general tax, net of the residential and 78.22 agricultural homestead credit under section 273.1384, voter 78.23 approved school levy, other local school levy, and the sum of 78.24 the special taxing districts, and as a total of all taxing 78.25 authorities: 78.26 (i) the actual tax for taxes payable in the current year; 78.27(ii) the tax change due to spending factors, defined as the78.28proposed tax minus the constant spending tax amount;78.29(iii) the tax change due to other factors, defined as the78.30constant spending tax amount minus the actual current year tax;78.31 and 78.32(iv)(ii) the proposed tax amount. 78.33 If the county levy under clause (2) includes an amount for 78.34 a lake improvement district as defined under sections 103B.501 78.35 to 103B.581, the amount attributable for that purpose must be 78.36 separately stated from the remaining county levy amount. 79.1 In the case of a town or the state general tax, the final 79.2 tax shall also be its proposed tax unless the town changes its 79.3 levy at a special town meeting under section 365.52. If a 79.4 school district has certified under section 126C.17, subdivision 79.5 9, that a referendum will be held in the school district at the 79.6 November general election, the county auditor must note next to 79.7 the school district's proposed amount that a referendum is 79.8 pending and that, if approved by the voters, the tax amount may 79.9 be higher than shown on the notice. In the case of the city of 79.10 Minneapolis, the levy for the Minneapolis library board and the 79.11 levy for Minneapolis park and recreation shall be listed 79.12 separately from the remaining amount of the city's levy. In the 79.13 case of the city of St. Paul, the levy for the St. Paul library 79.14 agency must be listed separately from the remaining amount of 79.15 the city's levy. In the case of a parcel where tax increment or 79.16 the fiscal disparities areawide tax under chapter 276A or 473F 79.17 applies, the proposed tax levy on the captured value or the 79.18 proposed tax levy on the tax capacity subject to the areawide 79.19 tax must each be stated separately and not included in the sum 79.20 of the special taxing districts; and 79.21 (3) the increase or decrease between the total taxes 79.22 payable in the current year and the total proposed taxes, 79.23 expressed as a percentage. 79.24 For purposes of this section, the amount of the tax on 79.25 homesteads qualifying under the senior citizens' property tax 79.26 deferral program under chapter 290B is the total amount of 79.27 property tax before subtraction of the deferred property tax 79.28 amount. 79.29 (e) The notice must clearly state that the proposed or 79.30 final taxes do not include the following: 79.31 (1) special assessments; 79.32 (2) levies approved by the voters after the date the 79.33 proposed taxes are certified, including bond referenda,and 79.34 school district levy referenda, and; 79.35 (3) a levy limit increasereferendaapproved by the voters 79.36 by the first Tuesday after the first Monday in November of the 80.1 levy year as provided under section 275.73; 80.2(3)(4) amounts necessary to pay cleanup or other costs due 80.3 to a natural disaster occurring after the date the proposed 80.4 taxes are certified; 80.5(4)(5) amounts necessary to pay tort judgments against the 80.6 taxing authority that become final after the date the proposed 80.7 taxes are certified; and 80.8(5)(6) the contamination tax imposed on properties which 80.9 received market value reductions for contamination. 80.10 (f) Except as provided in subdivision 7, failure of the 80.11 county auditor to prepare or the county treasurer to deliver the 80.12 notice as required in this section does not invalidate the 80.13 proposed or final tax levy or the taxes payable pursuant to the 80.14 tax levy. 80.15 (g) If the notice the taxpayer receives under this section 80.16 lists the property as nonhomestead, and satisfactory 80.17 documentation is provided to the county assessor by the 80.18 applicable deadline, and the property qualifies for the 80.19 homestead classification in that assessment year, the assessor 80.20 shall reclassify the property to homestead for taxes payable in 80.21 the following year. 80.22 (h) In the case of class 4 residential property used as a 80.23 residence for lease or rental periods of 30 days or more, the 80.24 taxpayer must either: 80.25 (1) mail or deliver a copy of the notice of proposed 80.26 property taxes to each tenant, renter, or lessee; or 80.27 (2) post a copy of the notice in a conspicuous place on the 80.28 premises of the property. 80.29 The notice must be mailed or posted by the taxpayer by 80.30 November 27 or within three days of receipt of the notice, 80.31 whichever is later. A taxpayer may notify the county treasurer 80.32 of the address of the taxpayer, agent, caretaker, or manager of 80.33 the premises to which the notice must be mailed in order to 80.34 fulfill the requirements of this paragraph. 80.35 (i) For purposes of this subdivision, subdivisions 5a and 80.36 6, "metropolitan special taxing districts" means the following 81.1 taxing districts in the seven-county metropolitan area that levy 81.2 a property tax for any of the specified purposes listed below: 81.3 (1) metropolitan council under section 473.132, 473.167, 81.4 473.249, 473.325, 473.446, 473.521, 473.547, or 473.834; 81.5 (2) metropolitan airports commission under section 473.667, 81.6 473.671, or 473.672; and 81.7 (3) metropolitan mosquito control commission under section 81.8 473.711. 81.9 For purposes of this section, any levies made by the 81.10 regional rail authorities in the county of Anoka, Carver, 81.11 Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 81.12 398A shall be included with the appropriate county's levy and 81.13 shall be discussed at that county's public hearing. 81.14(j) If a statutory or home rule charter city or a town has81.15exercised the local levy option provided by section 473.388,81.16subdivision 7, it may include in the notice of its proposed81.17taxes the amount of its proposed taxes attributable to its81.18exercise of the option. In the first year of the city or town's81.19exercise of this option, the statement shall include an estimate81.20of the reduction of the metropolitan council's tax on the parcel81.21due to exercise of that option. The metropolitan council's levy81.22shall be adjusted accordingly.81.23 [EFFECTIVE DATE.] This section is effective for notices 81.24 prepared in 2003 for taxes payable in 2004, and thereafter. 81.25 Sec. 7. Minnesota Statutes 2002, section 275.066, is 81.26 amended to read: 81.27 275.066 [SPECIAL TAXING DISTRICTS; DEFINITION.] 81.28 For the purposes of property taxation and property tax 81.29 state aids, the term "special taxing districts" includes the 81.30 following entities: 81.31 (1) watershed districts under chapter 103D; 81.32 (2) sanitary districts under sections 115.18 to 115.37; 81.33 (3) regional sanitary sewer districts under sections 115.61 81.34 to 115.67; 81.35 (4) regional public library districts under section 81.36 134.201; 82.1 (5) park districts under chapter 398; 82.2 (6) regional railroad authorities under chapter 398A; 82.3 (7) hospital districts under sections 447.31 to 447.38; 82.4 (8) St. Cloud metropolitan transit commission under 82.5 sections 458A.01 to 458A.15; 82.6 (9) Duluth transit authority under sections 458A.21 to 82.7 458A.37; 82.8 (10) regional development commissions under sections 82.9 462.381 to 462.398; 82.10 (11) housing and redevelopment authorities under sections 82.11 469.001 to 469.047; 82.12 (12) port authorities under sections 469.048 to 469.068; 82.13 (13) economic development authorities under sections 82.14 469.090 to 469.1081; 82.15 (14) metropolitan council under sections 473.123 to 82.16 473.549; 82.17 (15) metropolitan airports commission under sections 82.18 473.601 to 473.680; 82.19 (16) metropolitan mosquito control commission under 82.20 sections 473.701 to 473.716; 82.21 (17) Morrison county rural development financing authority 82.22 under Laws 1982, chapter 437, section 1; 82.23 (18) Croft Historical Park District under Laws 1984, 82.24 chapter 502, article 13, section 6; 82.25 (19) East Lake county medical clinic district under Laws 82.26 1989, chapter 211, sections 1 to 6; 82.27 (20) Floodwood area ambulance district under Laws 1993, 82.28 chapter 375, article 5, section 39; 82.29 (21) Middle Mississippi river watershed management 82.30 organization under sections 103B.211 and 103B.241; 82.31 (22) emergency medical services special taxing districts 82.32 under section 144F.01; 82.33 (23) a county levying under the authority of section 82.34 103B.241, 103B.245, or 103B.251;and82.35 (24) Southern St. Louis County Special Taxing District; 82.36 Chris Jensen Nursing Home under section 12; and 83.1 (25) any other political subdivision of the state of 83.2 Minnesota, excluding counties, school districts, cities, and 83.3 towns, that has the power to adopt and certify a property tax 83.4 levy to the county auditor, as determined by the commissioner of 83.5 revenue. 83.6 Sec. 8. Minnesota Statutes 2002, section 473.167, 83.7 subdivision 3, is amended to read: 83.8 Subd. 3. [TAX.] The council may levy a tax on all taxable 83.9 property in the metropolitan area, as defined in section 83.10 473.121, to provide funds for loans made pursuant to 83.11 subdivisions 2 and 2a. This tax for the right-of-way 83.12 acquisition loan fund shall be certified by the council, levied, 83.13 and collected in the manner provided by section 473.13. The tax 83.14 shall be in addition to that authorized by section 473.249 and 83.15 any other law and shall not affect the amount or rate of taxes 83.16 which may be levied by the council or any metropolitan agency or 83.17 local governmental unit. The amount of the levy shall be as 83.18 determined and certified by the council, provided that the tax 83.19 levied by the metropolitan council for the right-of-way 83.20 acquisition loan fund shall not exceedthe product of (1) the83.21metropolitan council's property tax levy under this subdivision83.22for taxes payable in 1997 multiplied by (2) an index for market83.23valuation changes equal to the total market valuation of all83.24taxable property located within the metropolitan area for the83.25current taxes payable year divided by the total market valuation83.26of all taxable property located within the metropolitan area for83.27taxes payable in 1997.83.28For the purpose of determining the metropolitan council's83.29property tax levy limitation for the right-of-way acquisition83.30loan fund, "total market valuation" means the total market83.31valuation of all taxable property within the metropolitan area83.32without valuation adjustments for fiscal disparities (chapter83.33473F), tax increment financing (sections 469.174 to 469.179),83.34and high voltage transmission lines (section 273.425)$2,828,379 83.35 for taxes payable in 2004 and $2,828,379 for taxes payable in 83.36 2005. The amount of the levy for taxes payable in 2006 and 84.1 subsequent years shall not exceed the product of (1) the 84.2 metropolitan council's property tax levy limitation under this 84.3 subdivision for the previous year, multiplied by (2) one plus a 84.4 percentage equal to the growth in the implicit price deflator as 84.5 defined in section 275.70, subdivision 2. 84.6 [EFFECTIVE DATE; APPLICATION.] This section is effective 84.7 the day following final enactment and applies in the counties of 84.8 Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington. 84.9 Sec. 9. Minnesota Statutes 2002, section 473.249, 84.10 subdivision 1, is amended to read: 84.11 Subdivision 1. [INDEXED LIMIT.] (a) The metropolitan 84.12 council may levy a tax on all taxable property in the 84.13 metropolitan area defined in section 473.121 to provide funds 84.14 for the purposes of sections 473.121 to 473.249 and for the 84.15 purpose of carrying out other responsibilities of the council as 84.16 provided by law. This tax for general purposes shall be levied 84.17 and collected in the manner provided by section 473.13. 84.18 (b) The property tax levied by the metropolitan council for 84.19 general purposes shall not exceed $10,522,329 for taxes payable 84.20 in 2004 and $10,522,329 for taxes payable in 2005. 84.21 (c) The property tax levy limitation for general purposes 84.22 for taxes payable in 2006 and subsequent years shall not exceed 84.23 the product of: (1) the metropolitan council's property tax 84.24 levy limitation for general purposes for the previous year 84.25 determined under this subdivision multiplied by (2)the lesser84.26of84.27(i) an index for market valuation changes equal to the84.28total market valuation of all taxable property located within84.29the metropolitan area for the current taxes payable year divided84.30by the total market valuation of all taxable property located84.31within the metropolitan area for the previous taxes payable84.32year;84.33(ii) an index equal to the implicit price deflator for84.34government consumption expenditures and gross investment for84.35state and local governments for the most recent month for which84.36data are available divided by the same implicit price deflator85.1for the same month of the previous year; or85.2(iii) 103 percent.85.3(c) For the purpose of determining the metropolitan85.4council's property tax levy limitation for general purposes,85.5"total market valuation" means the total market valuation of all85.6taxable property within the metropolitan area without valuation85.7adjustments for fiscal disparities (chapter 473F), tax increment85.8financing (sections 469.174 to 469.179), and high voltage85.9transmission lines (section 273.425)one plus a percentage equal 85.10 to the growth in the implicit price deflator as defined in 85.11 section 275.70, subdivision 2. 85.12 [EFFECTIVE DATE; APPLICATION.] This section is effective 85.13 the day following final enactment and applies in the counties of 85.14 Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington. 85.15 Sec. 10. Minnesota Statutes 2002, section 473.253, 85.16 subdivision 1, is amended to read: 85.17 Subdivision 1. [SOURCES OF FUNDS.] The council shall 85.18 credit to the livable communities demonstration account the 85.19 revenues provided in this subdivision. This tax shall be levied 85.20 and collected in the manner provided by section 473.13. The 85.21 levy shall not exceed the following amount for the years 85.22 specified: 85.23 (a)(1)for taxes payable in 1996, 50 percent of (i) the85.24metropolitan mosquito control commission's property tax levy for85.25taxes payable in 1995 multiplied by (ii) an index for market85.26valuation changes equal to the total market valuation of all85.27taxable property located within the metropolitan area for the85.28current taxes payable year divided by the total market valuation85.29of all taxable property located in the metropolitan area for the85.30previous taxes payable year; and85.31(2)for taxes payable in 1997and subsequent yearsthrough 85.32 2003, the product of (i) the property tax levy limit under this 85.33 subdivision for the previous year multiplied by (ii) an index 85.34 for market valuation changes equal to the total market valuation 85.35 of all taxable property located within the metropolitan area for 85.36 the current taxes payable year divided by the total market 86.1 valuation of all taxable property located in the metropolitan 86.2 area for the previous taxes payable year; 86.3 (2) for taxes payable in 2004 and 2005, $8,259,070; and 86.4 (3) for taxes payable in 2006 and subsequent years, the 86.5 product of (i) the property tax levy limit under this 86.6 subdivision for the previous year multiplied by (ii) one plus a 86.7 percentage equal to the growth in the implicit price deflator as 86.8 defined in section 275.70, subdivision 2. 86.9For the purposes of this subdivision, "total market86.10valuation" means the total market valuation of all taxable86.11property within the metropolitan area without valuation86.12adjustments for fiscal disparities under chapter 473F, tax86.13increment financing under sections 469.174 to 469.179, and high86.14voltage transmission lines under section 273.425.86.15 (b) The metropolitan council, for the purposes of the fund, 86.16 is considered a unique taxing jurisdiction for purposes of 86.17 receiving aid pursuant to section 273.1398. For aid to be 86.18 received in 1996, the fund's homestead and agricultural credit 86.19 base shall equal 50 percent of the metropolitan mosquito control 86.20 commission's certified homestead and agricultural credit aid for 86.21 1995, determined under section 273.1398, subdivision 2, less any 86.22 permanent aid reduction under section 477A.0132. For aid to be 86.23 received under section 273.1398 in 1997 and subsequent years, 86.24 the fund's homestead and agricultural credit base shall be 86.25 determined in accordance with section 273.1398, subdivision 1. 86.26 [EFFECTIVE DATE; APPLICATION.] This section is effective 86.27 the day following final enactment and applies in the counties of 86.28 Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington. 86.29 Sec. 11. 2003 First Special Session H.F. No. 1, article 2, 86.30 section 118, subdivision 6, if enacted, is amended to read: 86.31 Subd. 6. [OPERATING COSTS OF PHASES THREE TO SIX.] (a) The 86.32 ongoing costs of the commissioner in operating phases three to 86.33 six of the statewide public safety radio communication system 86.34 shall be allocated among and paid by the following users, all in 86.35 accordance with the statewide public safety radio communication 86.36 system plan developed by the planning committee under section 87.1 473.907: 87.2 (1) the state of Minnesota for its operations using the 87.3 system; 87.4 (2) all local government units using the system; and 87.5 (3) other eligible users of the system. 87.6 (b) Each local government and other eligible users of 87.7 phases three to six of the system shall pay to the commissioner 87.8 all sums charged under this section, at the times and in the 87.9 manner determined by the commissioner. The governing body of 87.10 each local government shall take all action that may be 87.11 necessary to provide the funds required for these payments and 87.12 to make the payments when due. 87.13(c) If the governing body of any local government using87.14phase three, four, five, or six of the system fails to meet any87.15payment to the commissioner under this subdivision when due, the87.16commissioner may certify to the auditor of the county in which87.17the government unit is located the amount required for payment87.18of the amount due with interest at six percent per year. The87.19auditor shall levy and extend the amount due, with interest, as87.20a tax upon all taxable property in the government unit for the87.21next calendar year, free from any existing limitations imposed87.22by law or charter. This tax shall be collected in the same87.23manner as the general taxes of the government unit, and the87.24proceeds of the tax, when collected, shall be paid by the county87.25treasurer to the commissioner and credited to the government87.26unit for which the tax was levied.87.27 [EFFECTIVE DATE.] This section is effective the day 87.28 following final enactment. 87.29 Sec. 12. [SOUTHERN ST. LOUIS COUNTY SPECIAL TAXING 87.30 DISTRICT; CHRIS JENSEN NURSING HOME.] 87.31 Subdivision 1. [ESTABLISHED.] The Southern St. Louis 87.32 County Special Taxing District for purposes of the Chris Jensen 87.33 Nursing Home is established. 87.34 Subd. 2. [AREA.] The district in subdivision 1 includes 87.35 all that part of St. Louis county comprising the cities of 87.36 Duluth, Proctor, Hermantown, Brookston, Floodwood, and 88.1 Meadowlands, and the townships of Alborn, Alden, Arrowhead, 88.2 Brevator, Canosia, Culver, Duluth, Elmer, Fine Lakes, Floodwood, 88.3 Fredenberg, Gensen, Grand Lake, Halden, Industrial, Lakewood, 88.4 Meadowlands, Midway, Ness, New Independence, Normanna, 88.5 Northland, North Star, Pequaywan, Prairie Lake, Rice Lake, 88.6 Solway, Stoney Brook, and Van Buren, and unorganized 88.7 congressional townships of 52-21, 53-16, and 53-15. 88.8 Subd. 3. [PURPOSE.] The district established in 88.9 subdivision 1 is established to operate, maintain, and improve 88.10 the Chris Jensen Nursing Home. 88.11 Subd. 4. [LEVY AUTHORITY.] The district established under 88.12 subdivision 1 is a public corporation and political subdivision 88.13 of the state with all the powers, rights, privileges, 88.14 immunities, and duties that may be validly granted to or imposed 88.15 on a municipal corporation as provided in this section, and a 88.16 special taxing district as defined by Minnesota Statutes, 88.17 section 275.066, clause (24), with the power to adopt and 88.18 certify a property tax levy to the county auditor. The maximum 88.19 allowable annual levy for this special taxing district must not 88.20 exceed 1.90 percent of the taxable tax capacity of the district 88.21 in the first year and 1.33 percent of the taxable tax capacity 88.22 of the district in the second year and thereafter. 88.23 Subd. 5. [MEMBERS; SELECTION; TERMS.] The nursing home 88.24 board is composed of nine members selected as follows: 88.25 (1) The mayor of the city of Duluth shall appoint three 88.26 members, subject to approval of the Duluth city council. Each 88.27 member appointed under this clause must live in the city of 88.28 Duluth and at least two must be Duluth city council members. 88.29 All three appointees serve at the pleasure of the mayor, except 88.30 that each member shall serve until a successor has been selected 88.31 and qualified. 88.32 (2) The St. Louis county board shall appoint three county 88.33 board members. Two appointees must reside in the city of Duluth 88.34 and one must reside in the district but outside the city of 88.35 Duluth. The members appointed under this clause serve at the 88.36 pleasure of the county board, except that each member shall 89.1 serve until a successor has been selected and qualified. 89.2 (3) The St. Louis county auditor must convene and preside 89.3 at a meeting of the mayors of the cities of Hermantown and 89.4 Proctor at which the mayors must appoint a city council member 89.5 from one of the two cities to serve on the nursing home board. 89.6 The member appointed under this clause serves at the pleasure of 89.7 each mayor and either mayor may require the member's resignation 89.8 at any time, except that the member shall serve until a 89.9 successor has been selected and qualified. 89.10 (4) The St. Louis county auditor must convene and preside 89.11 at a meeting of the chairs of the town board of supervisors from 89.12 each of the townships of Rice Lake, Grand Lake, Lakewood, and 89.13 Canosia at which the chairs must appoint a resident of one of 89.14 the townships to serve on the nursing home board. The term of 89.15 the first person appointed after the effective date of this 89.16 section shall expire December 31 of the third full year 89.17 following appointment. Thereafter, the term of the person 89.18 appointed under this clause is three years, except that the 89.19 member shall serve until a successor has been selected and 89.20 qualified. 89.21 (5) The St. Louis county auditor must convene and preside 89.22 at a meeting of the mayors of the cities of Brookston, 89.23 Floodwood, and Meadowlands, and the chairs of the town boards of 89.24 supervisors from all of the townships in the district not 89.25 included in clause (4), at which the mayors and town board 89.26 chairs must appoint a resident of one of the cities, townships, 89.27 or unorganized areas to serve on the nursing home board. The 89.28 term of the first person appointed after the effective date of 89.29 this section shall expire December 31 of the third full year 89.30 following appointment. Thereafter, the term of the person 89.31 appointed under this clause is three years, except that the 89.32 member shall serve until a successor has been selected and 89.33 qualified. 89.34 After the initial appointment of members under clauses (3) 89.35 to (5), the nursing home board must notify the St. Louis county 89.36 auditor whenever a member needs to be appointed under these 90.1 clauses, and the county auditor must convene one or more 90.2 meetings as necessary to fill the position. Meetings to make 90.3 appointments under clauses (3) to (5) are subject to the Open 90.4 Meeting Law, Minnesota Statutes, chapter 13D. 90.5 Subd. 6. [TIME LIMITS FOR SELECTION; ALTERNATIVE 90.6 APPOINTMENT BY DISTRICT JUDGE.] The appointing authorities must 90.7 make initial appointments to the nursing home board as soon as 90.8 practicable, but no later than 60 days after the effective date 90.9 of this section. A vacant position on the nursing home board 90.10 for which the member serves at the pleasure of the appointing 90.11 authority, must be filled as soon as practicable, but no later 90.12 than 60 days, after the vacancy occurs. For members who serve 90.13 terms, a successor must be appointed at any time within 60 days 90.14 before the expiration of the term. Each appointment for a 90.15 successor must be made in the same manner as the original 90.16 appointment. If any appointment is not made within the time 90.17 required, the chief judge of the state's sixth judicial district 90.18 shall appoint a person who meets the qualifications for 90.19 appointment to the particular nursing home board seat, if 90.20 notified in writing by any interested person residing in the 90.21 district. A person appointed by the chief judge serves as if 90.22 appointed by the regular appointing authority. 90.23 Subd. 7. [VACANCIES.] A position must be deemed vacant 90.24 under the conditions specified in Minnesota Statutes, section 90.25 351.02, or if the member fails to attend two consecutive regular 90.26 meetings of the board without the consent of the board. The 90.27 board may consent to a second consecutive absence up to 30 days 90.28 after it occurs. A vacancy must be filled in the same manner as 90.29 the original appointment. 90.30 Subd. 8. [OPEN MEETING LAW.] All meetings of the nursing 90.31 home board are subject to the Open Meeting Law, Minnesota 90.32 Statutes, chapter 13D. 90.33 Subd. 9. [PROPERTY.] All assets, liabilities, employees, 90.34 and property of the Chris Jensen Nursing Home shall be 90.35 transferred to the nursing home board from St. Louis county on 90.36 the first day of the year after the formation of the nursing 91.1 home board, but no later than January 1, 2005. 91.2 Subd. 10. [ORGANIZATION AND OPERATION OF THE BOARD.] The 91.3 nursing home board shall elect officers and establish bylaws at 91.4 its first meeting. 91.5 Subd. 11. [EFFECTIVE DATE; LOCAL APPROVAL.] This section 91.6 is effective the day after the governing body of St. Louis 91.7 county and its chief clerical officer timely complete their 91.8 compliance with Minnesota Statutes, section 645.021, 91.9 subdivisions 2 and 3. 91.10 If effective before September 1, 2003, the first levy is 91.11 the payable 2004 levy; if effective between September 1, 2003, 91.12 and September 1, 2004, the first levy is the payable 2005 levy; 91.13 if effective after August 31, 2004, the first levy is the 91.14 payable 2006 levy. 91.15 Sec. 13. [REPEALER.] 91.16 (a) Minnesota Statutes 2002, section 272.02, subdivision 91.17 26, is repealed. 91.18 (b) Minnesota Statutes 2002, section 275.065, subdivision 91.19 3a, is repealed. 91.20 [EFFECTIVE DATE.] Paragraph (a) is effective for the 2003 91.21 assessment and thereafter, for taxes payable in 2004 and 91.22 thereafter. Paragraph (b) is repealed beginning with proposed 91.23 notices prepared in 2003 for taxes payable in 2004. 91.24 ARTICLE 5 91.25 CITY AIDS 91.26 Section 1. Minnesota Statutes 2002, section 4A.02, is 91.27 amended to read: 91.28 4A.02 [STATE DEMOGRAPHER.] 91.29 (a) The director shall appoint a state demographer. The 91.30 demographer must be professionally competent in demography and 91.31 must possess demonstrated ability based upon past performance. 91.32 (b) The demographer shall: 91.33 (1) continuously gather and develop demographic data 91.34 relevant to the state; 91.35 (2) design and test methods of research and data 91.36 collection; 92.1 (3) periodically prepare population projections for the 92.2 state and designated regions and periodically prepare 92.3 projections for each county or other political subdivision of 92.4 the state as necessary to carry out the purposes of this 92.5 section; 92.6 (4) review, comment on, and prepare analysis of population 92.7 estimates and projections made by state agencies, political 92.8 subdivisions, other states, federal agencies, or nongovernmental 92.9 persons, institutions, or commissions; 92.10 (5) serve as the state liaison with the United States 92.11 Bureau of the Census, coordinate state and federal demographic 92.12 activities to the fullest extent possible, and aid the 92.13 legislature in preparing a census data plan and form for each 92.14 decennial census; 92.15 (6) compile an annual study of population estimates on the 92.16 basis of county, regional, or other political or geographical 92.17 subdivisions as necessary to carry out the purposes of this 92.18 section and section 4A.03; 92.19 (7) by January 1 of each year, issue a report to the 92.20 legislature containing an analysis of the demographic 92.21 implications of the annual population study and population 92.22 projections; 92.23 (8) prepare maps for all counties in the state, all 92.24 municipalities with a population of 10,000 or more, and other 92.25 municipalities as needed for census purposes, according to scale 92.26 and detail recommended by the United States Bureau of the 92.27 Census, with the maps of cities showing precinct boundaries; 92.28 (9) prepare an estimate of population and of the number of 92.29 households for each governmental subdivision for which the 92.30 metropolitan council does not prepare an annual estimate, and 92.31 convey the estimates to the governing body of each political 92.32 subdivision by May 1 of each year; 92.33 (10) direct, under section 414.01, subdivision 14, and 92.34 certify population and household estimates of annexed or 92.35 detached areas of municipalities or towns after being notified 92.36 of the order or letter of approval by the Minnesota municipal 93.1 board;and93.2 (11) prepare, for any purpose for which a population 93.3 estimate is required by law or needed to implement a law, a 93.4 population estimate of a municipality or town whose population 93.5 is affected by action under section 379.02 or 414.01, 93.6 subdivision 14; and 93.7 (12) prepare an estimate of average household size for each 93.8 statutory or home rule charter city with a population of 2,500 93.9 or more by May 1 of each year. 93.10 (c) A governing body may challenge an estimate made under 93.11 paragraph (b) by filing their specific objections in writing 93.12 with the state demographer by June 10. If the challenge does 93.13 not result in an acceptable estimate by June 24, the governing 93.14 body may have a special census conducted by the United States 93.15 Bureau of the Census. The political subdivision must notify the 93.16 state demographer by July 1 of its intent to have the special 93.17 census conducted. The political subdivision must bear all costs 93.18 of the special census. Results of the special census must be 93.19 received by the state demographer by the next April 15 to be 93.20 used in that year's May 1 estimate to the political subdivision 93.21 under paragraph (b). 93.22 [EFFECTIVE DATE.] This section is effective beginning July 93.23 1, 2003. 93.24 Sec. 2. Minnesota Statutes 2002, section 477A.011, 93.25 subdivision 34, is amended to read: 93.26 Subd. 34. [CITY REVENUE NEED.] (a) For a city with a 93.27 population equal to or greater than 2,500, "city revenue need" 93.28 is the sum of (1)3.4623125.0734098 times the pre-1940 housing 93.29 percentage; plus (2)2.093826 times the commercial industrial93.30percentage; plus (3) 6.86255219.141678 times the population 93.31 decline percentage; plus(4) .00026 times the city93.32population(3) 2504.06334 times the road accidents factor; 93.33 plus(5) 152.0141(4) 355.0547; minus (5) the metropolitan area 93.34 factor; minus (6) 49.10638 times the household size. 93.35 (b) For a city with a population less than 2,500, "city 93.36 revenue need" is the sum of (1)1.7959192.387 times the 94.1 pre-1940 housing percentage; plus (2)1.5621382.67591 times the 94.2 commercial industrial percentage; plus (3)4.1775683.16042 94.3 times the population decline percentage; plus (4)1.040131.206 94.4 times the transformed population; minus (5)107.47562.772. 94.5 (c) The city revenue need cannot be less than zero. 94.6 (d) For calendar year19982005 and subsequent years, the 94.7 city revenue need for a city, as determined in paragraphs (a) to 94.8 (c), is multiplied by the ratio of the annual implicit price 94.9 deflator for government consumption expenditures and gross 94.10 investment for state and local governments as prepared by the 94.11 United States Department of Commerce, for the most recently 94.12 available year to the19932003 implicit price deflator for 94.13 state and local government purchases. 94.14 [EFFECTIVE DATE.] This section is effective for aid payable 94.15 in 2004 and thereafter. 94.16 Sec. 3. Minnesota Statutes 2002, section 477A.011, 94.17 subdivision 36, is amended to read: 94.18 Subd. 36. [CITY AID BASE.] (a) Except as otherwise 94.19 provided in this subdivision, "city aid base"means, for each94.20city, the sum of the local government aid and equalization aid94.21it was originally certified to receive in calendar year 199394.22under Minnesota Statutes 1992, section 477A.013, subdivisions 394.23and 5, and the amount of disparity reduction aid it received in94.24calendar year 1993 under Minnesota Statutes 1992, section94.25273.1398, subdivision 3is zero. 94.26 (b)For aids payable in 1996 and thereafter, a city that in94.271992 or 1993 transferred an amount from governmental funds to94.28its sewer and water fund, which amount exceeded its net levy for94.29taxes payable in the year in which the transfer occurred, has a94.30"city aid base" equal to the sum of (i) its city aid base, as94.31calculated under paragraph (a), and (ii) one-half of the94.32difference between its city aid distribution under section94.33477A.013, subdivision 9, for aids payable in 1995 and its city94.34aid base for aids payable in 1995.94.35(c)The city aid base for any city with a population less 94.36 than 500 is increased by $40,000 for aids payable in calendar 95.1 year 1995 and thereafter, and the maximum amount of total aid it 95.2 may receive under section 477A.013, subdivision 9, paragraph 95.3 (c), is also increased by $40,000 for aids payable in calendar 95.4 year 1995 only, provided that: 95.5 (i) the average total tax capacity rate for taxes payable 95.6 in 1995 exceeds 200 percent; 95.7 (ii) the city portion of the tax capacity rate exceeds 100 95.8 percent; and 95.9 (iii) its city aid base is less than $60 per capita. 95.10(d)(c) The city aid base for a city is increased by 95.11 $20,000 in 1998 and thereafter and the maximum amount of total 95.12 aid it may receive under section 477A.013, subdivision 9, 95.13 paragraph (c), is also increased by $20,000 in calendar year 95.14 1998 only, provided that: 95.15 (i) the city has a population in 1994 of 2,500 or more; 95.16 (ii) the city is located in a county, outside of the 95.17 metropolitan area, which contains a city of the first class; 95.18 (iii) the city's net tax capacity used in calculating its 95.19 1996 aid under section 477A.013 is less than $400 per capita; 95.20 and 95.21 (iv) at least four percent of the total net tax capacity, 95.22 for taxes payable in 1996, of property located in the city is 95.23 classified as railroad property. 95.24(e)(d) The city aid base for a city is increased by 95.25 $200,000 in 1999 and thereafter and the maximum amount of total 95.26 aid it may receive under section 477A.013, subdivision 9, 95.27 paragraph (c), is also increased by $200,000 in calendar year 95.28 1999 only, provided that: 95.29 (i) the city was incorporated as a statutory city after 95.30 December 1, 1993; 95.31 (ii) its city aid base does not exceed $5,600; and 95.32 (iii) the city had a population in 1996 of 5,000 or more. 95.33(f)(e) The city aid base for a city is increased by 95.34 $450,000 in 1999 to 2008 and the maximum amount of total aid it 95.35 may receive under section 477A.013, subdivision 9, paragraph 95.36 (c), is also increased by $450,000 in calendar year 1999 only, 96.1 provided that: 96.2 (i) the city had a population in 1996 of at least 50,000; 96.3 (ii) its population had increased by at least 40 percent in 96.4 the ten-year period ending in 1996; and 96.5 (iii) its city's net tax capacity for aids payable in 1998 96.6 is less than $700 per capita. 96.7(g)(f) Beginning in 2004, the city aid base for a city is 96.8 equal to the sum of its city aid base in 2003 and the amount of 96.9 additional aid it was certified to receive under section 477A.06 96.10 in 2003. For 2004 only, the maximum amount of total aid a city 96.11 may receive under section 477A.013, subdivision 9, paragraph 96.12 (c), is also increased by the amount it was certified to receive 96.13 under section 477A.06 in 2003. 96.14(h)(g) The city aid base for a city is increased by 96.15 $150,000 for aids payable in 2000 and thereafter, and the 96.16 maximum amount of total aid it may receive under section 96.17 477A.013, subdivision 9, paragraph (c), is also increased by 96.18 $150,000 in calendar year 2000 only, provided that: 96.19 (1) the city has a population that is greater than 1,000 96.20 and less than 2,500; 96.21 (2) its commercial and industrial percentage for aids 96.22 payable in 1999 is greater than 45 percent; and 96.23 (3) the total market value of all commercial and industrial 96.24 property in the city for assessment year 1999 is at least 15 96.25 percent less than the total market value of all commercial and 96.26 industrial property in the city for assessment year 1998. 96.27(i)(h) The city aid base for a city is increased by 96.28 $200,000 in 2000 and thereafter, and the maximum amount of total 96.29 aid it may receive under section 477A.013, subdivision 9, 96.30 paragraph (c), is also increased by $200,000 in calendar year 96.31 2000 only, provided that: 96.32 (1) the city had a population in 1997 of 2,500 or more; 96.33 (2) the net tax capacity of the city used in calculating 96.34 its 1999 aid under section 477A.013 is less than $650 per 96.35 capita; 96.36 (3) the pre-1940 housing percentage of the city used in 97.1 calculating 1999 aid under section 477A.013 is greater than 12 97.2 percent; 97.3 (4) the 1999 local government aid of the city under section 97.4 477A.013 is less than 20 percent of the amount that the formula 97.5 aid of the city would have been if the need increase percentage 97.6 was 100 percent; and 97.7 (5) the city aid base of the city used in calculating aid 97.8 under section 477A.013 is less than $7 per capita. 97.9(j) The city aid base for a city is increased by $225,00097.10in calendar years 2000 to 2002 and the maximum amount of total97.11aid it may receive under section 477A.013, subdivision 9,97.12paragraph (c), is also increased by $225,000 in calendar year97.132000 only, provided that:97.14(1) the city had a population of at least 5,000;97.15(2) its population had increased by at least 50 percent in97.16the ten-year period ending in 1997;97.17(3) the city is located outside of the Minneapolis-St. Paul97.18metropolitan statistical area as defined by the United States97.19Bureau of the Census; and97.20(4) the city received less than $30 per capita in aid under97.21section 477A.013, subdivision 9, for aids payable in 1999.97.22(k)(i) The city aid base for a city is increased by 97.23 $102,000 in 2000 and thereafter, and the maximum amount of total 97.24 aid it may receive under section 477A.013, subdivision 9, 97.25 paragraph (c), is also increased by $102,000 in calendar year 97.26 2000 only, provided that: 97.27 (1) the city has a population in 1997 of 2,000 or more; 97.28 (2) the net tax capacity of the city used in calculating 97.29 its 1999 aid under section 477A.013 is less than $455 per 97.30 capita; 97.31 (3) the net levy of the city used in calculating 1999 aid 97.32 under section 477A.013 is greater than $195 per capita; and 97.33 (4) the 1999 local government aid of the city under section 97.34 477A.013 is less than 38 percent of the amount that the formula 97.35 aid of the city would have been if the need increase percentage 97.36 was 100 percent. 98.1(l)(j) The city aid base for a city is increased by 98.2 $32,000 in 2001 and thereafter, and the maximum amount of total 98.3 aid it may receive under section 477A.013, subdivision 9, 98.4 paragraph (c), is also increased by $32,000 in calendar year 98.5 2001 only, provided that: 98.6 (1) the city has a population in 1998 that is greater than 98.7 200 but less than 500; 98.8 (2) the city's revenue need used in calculating aids 98.9 payable in 2000 was greater than $200 per capita; 98.10 (3) the city net tax capacity for the city used in 98.11 calculating aids available in 2000 was equal to or less than 98.12 $200 per capita; 98.13 (4) the city aid base of the city used in calculating aid 98.14 under section 477A.013 is less than $65 per capita; and 98.15 (5) the city's formula aid for aids payable in 2000 was 98.16 greater than zero. 98.17(m)(k) The city aid base for a city is increased by $7,200 98.18 in 2001 and thereafter, and the maximum amount of total aid it 98.19 may receive under section 477A.013, subdivision 9, paragraph 98.20 (c), is also increased by $7,200 in calendar year 2001 only, 98.21 provided that: 98.22 (1) the city had a population in 1998 that is greater than 98.23 200 but less than 500; 98.24 (2) the city's commercial industrial percentage used in 98.25 calculating aids payable in 2000 was less than ten percent; 98.26 (3) more than 25 percent of the city's population was 60 98.27 years old or older according to the 1990 census; 98.28 (4) the city aid base of the city used in calculating aid 98.29 under section 477A.013 is less than $15 per capita; and 98.30 (5) the city's formula aid for aids payable in 2000 was 98.31 greater than zero. 98.32(n)(l) The city aid base for a city is increased by 98.33 $45,000 in 2001 and thereafter and by an additional $50,000 in 98.34 calendar years 2002 to 2011, and the maximum amount of total aid 98.35 it may receive under section 477A.013, subdivision 9, paragraph 98.36 (c), is also increased by $45,000 in calendar year 2001 only, 99.1 and by $50,000 in calendar year 2002 only, provided that: 99.2 (1) the net tax capacity of the city used in calculating 99.3 its 2000 aid under section 477A.013 is less than $810 per 99.4 capita; 99.5 (2) the population of the city declined more than two 99.6 percent between 1988 and 1998; 99.7 (3) the net levy of the city used in calculating 2000 aid 99.8 under section 477A.013 is greater than $240 per capita; and 99.9 (4) the city received less than $36 per capita in aid under 99.10 section 477A.013, subdivision 9, for aids payable in 2000. 99.11(o)(m) The city aid base for a city with a population of 99.12 10,000 or more which is located outside of the seven-county 99.13 metropolitan area is increased in 2002 and thereafter, and the 99.14 maximum amount of total aid it may receive under section 99.15 477A.013, subdivision 9, paragraph (b) or (c), is also increased 99.16 in calendar year 2002 only, by an amount equal to the lesser of: 99.17 (1)(i) the total population of the city, as determined by 99.18 the United States Bureau of the Census, in the 2000 census, (ii) 99.19 minus 5,000, (iii) times 60; or 99.20 (2) $2,500,000. 99.21(p)(n) The city aid base is increased by $50,000 in 2002 99.22 and thereafter, and the maximum amount of total aid it may 99.23 receive under section 477A.013, subdivision 9, paragraph (c), is 99.24 also increased by $50,000 in calendar year 2002 only, provided 99.25 that: 99.26 (1) the city is located in the seven-county metropolitan 99.27 area; 99.28 (2) its population in 2000 is between 10,000 and 20,000; 99.29 and 99.30 (3) its commercial industrial percentage, as calculated for 99.31 city aid payable in 2001, was greater than 25 percent. 99.32(q)(o) The city aid base for a city is increased by 99.33 $150,000 in calendar years 2002 to 2011 and the maximum amount 99.34 of total aid it may receive under section 477A.013, subdivision 99.35 9, paragraph (c), is also increased by $150,000 in calendar year 99.36 2002 only, provided that: 100.1 (1) the city had a population of at least 3,000 but no more 100.2 than 4,000 in 1999; 100.3 (2) its home county is located within the seven-county 100.4 metropolitan area; 100.5 (3) its pre-1940 housing percentage is less than 15 100.6 percent; and 100.7 (4) its city net tax capacity per capita for taxes payable 100.8 in 2000 is less than $900 per capita. 100.9(r)(p) The city aid base for a city is increased by 100.10 $200,000 beginning in calendar year 2003 and the maximum amount 100.11 of total aid it may receive under section 477A.013, subdivision 100.12 9, paragraph (c), is also increased by $200,000 in calendar year 100.13 2003 only, provided that the city qualified for an increase in 100.14 homestead and agricultural credit aid under Laws 1995, chapter 100.15 264, article 8, section 18. 100.16 (q) The city aid base for a city is increased by $200,000 100.17 in 2004 only and the maximum amount of total aid it may receive 100.18 under section 477A.013, subdivision 9, is also increased by 100.19 $200,000 in calendar year 2004 only, if the city is the site of 100.20 a nuclear dry cask storage facility. 100.21 (r) The city aid base for a city is increased by $10,000 in 100.22 2004 and thereafter and the maximum total aid it may receive 100.23 under section 477A.013, subdivision 9, is also increased by 100.24 $10,000 in calendar year 2004 only, if the city was included in 100.25 a federal major disaster designation issued on April 1, 1998 and 100.26 its pre-1940 housing stock was decreased by more than 40 percent 100.27 between 1990 and 2000. 100.28 [EFFECTIVE DATE.] This section is effective beginning with 100.29 aids payable in 2004. 100.30 Sec. 4. Minnesota Statutes 2002, section 477A.011, is 100.31 amended by adding a subdivision to read: 100.32 Subd. 38. [HOUSEHOLD SIZE.] "Household size" means the 100.33 average number of persons per household in the jurisdiction as 100.34 most recently estimated and reported by the state demographer as 100.35 of July 1 of the aid calculation year. 100.36 [EFFECTIVE DATE.] This section is effective for aid payable 101.1 in 2004 and thereafter. 101.2 Sec. 5. Minnesota Statutes 2002, section 477A.011, is 101.3 amended by adding a subdivision to read: 101.4 Subd. 39. [ROAD ACCIDENTS FACTOR.] "Road accidents factor" 101.5 means the average annual number of vehicular accidents occurring 101.6 on public roads, streets, and alleys in the jurisdiction as 101.7 reported to the commissioner of revenue by the commissioner of 101.8 public safety by July 1 of the aid calculation year using the 101.9 most recent three-year period for which the commissioner of 101.10 public safety has complete information, divided by the 101.11 jurisdiction's population. 101.12 [EFFECTIVE DATE.] This section is effective for aid payable 101.13 in 2004 and thereafter. 101.14 Sec. 6. Minnesota Statutes 2002, section 477A.011, is 101.15 amended by adding a subdivision to read: 101.16 Subd. 40. [METROPOLITAN AREA FACTOR.] "Metropolitan area 101.17 factor" means 35.20915 for cities located in the metropolitan 101.18 area. 101.19 [EFFECTIVE DATE.] This section is effective for aid payable 101.20 in 2004 and thereafter. 101.21 Sec. 7. Minnesota Statutes 2002, section 477A.013, 101.22 subdivision 8, is amended to read: 101.23 Subd. 8. [CITY FORMULA AID.] In calendar year19942004 101.24 and subsequent years, the formula aid for a city is equal to the 101.25 need increase percentage multiplied by the difference between 101.26 (1) the city's revenue need multiplied by its population, and 101.27 (2) the sum of the city's net tax capacity multiplied by the tax 101.28 effort rate, and the taconite aids under sections 298.28 and 101.29 298.282, multiplied by the following percentages: 101.30 (i) zero percent for aids payable in 2004; 101.31 (ii) 25 percent for aids payable in 2005; 101.32 (iii) 50 percent for aids payable in 2006; 101.33 (iv) 75 percent for aids payable in 2007; and 101.34 (v) 100 percent for aids payable in 2008 and thereafter. 101.35 No city may have a formula aid amount less than zero. The need 101.36 increase percentage must be the same for all cities. 102.1Notwithstanding the prior sentence, in 1995 only, the need102.2increase percentage for a city shall be twice the need increase102.3percentage applicable to other cities if:102.4(1) the city, in 1992 or 1993, transferred an amount from102.5governmental funds to their sewer and water fund, and102.6(2) the amount transferred exceeded their net levy for102.7taxes payable in the year in which the transfer occurred.102.8 The applicable need increase percentageor percentagesmust 102.9 be calculated by the department of revenue so that the total of 102.10 the aid under subdivision 9 equals the total amount available 102.11 for aid under section 477A.03 after the subtraction under 102.12 section 477A.014, subdivisions 4 and 5. 102.13 [EFFECTIVE DATE.] This section is effective for aid payable 102.14 in 2004 and thereafter. 102.15 Sec. 8. Minnesota Statutes 2002, section 477A.013, 102.16 subdivision 9, is amended to read: 102.17 Subd. 9. [CITY AID DISTRIBUTION.] (a) In calendar year 102.18 2002 and thereafter, each city shall receive an aid distribution 102.19 equal to the sum of (1) the city formula aid under subdivision 102.20 8, and (2) its city aid base. 102.21 (b) Thepercentage increaseaid for afirst classcity in 102.22 calendar year1995 and thereafter, except for 2002,2004 shall 102.23 not exceed thepercentage increase in the sum of the aid to all102.24cities under this section in the current calendar year compared102.25to the sum of the aid to all cities in the previous yearamount 102.26 of its aid in calendar year 2003 after the reductions under this 102.27 article.For aids payable in 2002 only, the amount of the aid102.28paid to a first class city shall not exceed the sum of its aid102.29amount for calendar year 2001 under this section and its aid102.30payment in calendar year 2001 under section 273.1398,102.31subdivision 2, by more than 2.5 percent.102.32 (c) For aids payable inall years except 20022005 and 102.33 thereafter, the total aid for any city,except a first class102.34city,shall not exceed the sum of (1) ten percent of the city's 102.35 net levy for the year prior to the aid distribution plus (2) its 102.36 total aid in the previous year.For aids payable in 2002 only,103.1the total aid for any city, except a first class city, shall not103.2exceed the sum of (1) 40 percent of the city's net levy for103.3taxes payable in the year prior to the aid distribution plus (2)103.440 percent of its total aid in the previous year under section103.5273.1398, subdivision 2, plus (3) its total aid in the previous103.6year under this section.For aids payable in 2005 and 103.7 thereafter, the total aid for any city with a population of 103.8 2,500 or more may not decrease from its total aid under this 103.9 section in the previous year by an amount greater than ten 103.10 percent of its net levy in the year prior to the aid 103.11 distribution. 103.12 (d) For aids payable in 2004 only, the total aid for a city 103.13 with a population less than 2,500 may not be less than the 103.14 amount it was certified to receive in 2003 minus the greater of 103.15 (1) the reduction to this aid payment in 2003 under this 103.16 article, or (2) five percent of its 2003 aid amount. For aids 103.17 payable in 2005 and thereafter, the total aid for a city with a 103.18 population less than 2,500 must not be less than the amount it 103.19 was certified to receive in the previous year minus five percent 103.20 of its 2003 certified aid amount. 103.21 [EFFECTIVE DATE.] This section is effective beginning with 103.22 aids payable in 2004. 103.23 Sec. 9. Minnesota Statutes 2002, section 477A.03, 103.24 subdivision 2, is amended to read: 103.25 Subd. 2. [ANNUAL APPROPRIATION.](a)A sum sufficient to 103.26 discharge the duties imposed by sections 477A.011 to 477A.014 is 103.27 annually appropriated from the general fund to the commissioner 103.28 of revenue. 103.29(b) Aid payments to counties under section 477A.0121 are103.30limited to $20,265,000 in 1996. Aid payments to counties under103.31section 477A.0121 are limited to $27,571,625 in 1997. For aid103.32payable in 1998 and thereafter, the total aids paid under103.33section 477A.0121 are the amounts certified to be paid in the103.34previous year, adjusted for inflation as provided under103.35subdivision 3.103.36(c)(i) For aids payable in 1998 and thereafter, the total104.1aids paid to counties under section 477A.0122 are the amounts104.2certified to be paid in the previous year, adjusted for104.3inflation as provided under subdivision 3.104.4(ii) Aid payments to counties under section 477A.0122 in104.52000 are further increased by an additional $20,000,000 in 2000.104.6(d) Aid payments to cities in 2002 under section 477A.013,104.7subdivision 9, are limited to the amounts certified to be paid104.8in the previous year, adjusted for inflation as provided in104.9subdivision 3, and increased by $140,000,000. For aids payable104.10in 2003, the total aids paid under section 477A.013, subdivision104.119, are the amounts certified to be paid in the previous year,104.12adjusted for inflation as provided under subdivision 3. For104.13aids payable in 2004, the total aids paid under section104.14477A.013, subdivision 9, are the amounts certified to be paid in104.15the previous year, adjusted for inflation as provided under104.16subdivision 3, and increased by the amount certified to be paid104.17in 2003 under section 477A.06. For aids payable in 2005 and104.18thereafter, the total aids paid under section 477A.013,104.19subdivision 9, are the amounts certified to be paid in the104.20previous year, adjusted for inflation as provided under104.21subdivision 3. The additional amount authorized under104.22subdivision 4 is not included when calculating the appropriation104.23limits under this paragraph.104.24(e) Reimbursements made to counties under section 477A.0123104.25in calendar year 2005 and thereafter are limited to an amount104.26equal to the maximum allowed appropriation under this section in104.27the previous year, multiplied by a percent to be established by104.28law. If no percent is established by law, the appropriation is104.29limited to the total amount appropriated for this purpose in the104.30previous year.104.31 [EFFECTIVE DATE.] This section is effective for aids 104.32 payable in 2004 and thereafter. 104.33 Sec. 10. Minnesota Statutes 2002, section 477A.03, is 104.34 amended by adding a subdivision to read: 104.35 Subd. 2a. [CITIES.] For aids payable in 2004, the total 104.36 aids paid under section 477A.013, subdivision 9, are limited to 105.1 $429,000,000. For aids payable in 2005 and thereafter, the 105.2 total aids paid under section 477A.013, subdivision 9, are 105.3 increased to $437,052,000. 105.4 [EFFECTIVE DATE.] This section is effective for aids 105.5 payable in 2004 and thereafter. 105.6 Sec. 11. [DEFINITIONS.] 105.7 (a) For purposes of sections 11 to 13, the following terms 105.8 have the meanings given them in this section. 105.9 (b) The 2003 and 2004 "levy plus aid revenue base" for a 105.10 city is the sum of that city's certified property tax levy for 105.11 taxes payable in 2003, plus the sum of the amounts the city was 105.12 certified to receive in 2003 as: 105.13 (1) local government aid under Minnesota Statutes, section 105.14 477A.013; 105.15 (2) existing low-income housing aid under Minnesota 105.16 Statutes, section 477A.06; 105.17 (3) new construction low-income housing aid under Minnesota 105.18 Statutes, section 477A.065; and 105.19 (4) taconite aids under Minnesota Statutes, sections 298.28 105.20 and 298.282, including any aid which was required to be placed 105.21 in a special fund for expenditure in the next succeeding year. 105.22 (c) "Total revenue" for a city for calendar year 2003 is 105.23 the total revenue amount for that city, as reported by the state 105.24 auditor for calendar year 2000, excluding grants between 105.25 political subdivisions and amounts borrowed by the city but 105.26 including net transfers from an enterprise fund. 105.27 [EFFECTIVE DATE.] This section is effective the day 105.28 following final enactment. 105.29 Sec. 12. [2003 CITY AID REDUCTIONS.] 105.30 The commissioner of revenue shall compute an aid reduction 105.31 amount for each city for 2003 equal to 9.3 percent of the city's 105.32 levy plus aid revenue base for 2003. 105.33 The reduction amount is limited to 3.7 percent of the 105.34 city's total revenues for 2003 if a city has a population under 105.35 1,000 or if the city has a three-year levy plus aid revenue base 105.36 increase average of less than two percent. For all other 106.1 cities, the reduction amount is limited to 5.25 percent of the 106.2 city's total revenues for 2003. 106.3 The reduction is further limited to the sum of the city's 106.4 payable 2003 distribution pursuant to Minnesota Statutes, 106.5 section 477A.013, and related sections, and the city's payable 106.6 2003 reimbursement under Minnesota Statutes, section 273.1384. 106.7 The reduction is applied first to the city's distribution 106.8 pursuant to Minnesota Statutes, section 477A.013, and then if 106.9 necessary to the city's reimbursements pursuant to Minnesota 106.10 Statutes, section 273.1384. 106.11 To the extent that sufficient information is available on 106.12 each successive payment date within the year, the commissioner 106.13 of revenue shall pay any remaining 2003 distribution or 106.14 reimbursement amount reduced under this section in equal 106.15 installments on the payment dates provided in law. 106.16 [EFFECTIVE DATE.] This section is effective the day 106.17 following final enactment. 106.18 Sec. 13. [2004 CITY AID REDUCTIONS.] 106.19 The commissioner of revenue shall compute an aid reduction 106.20 amount for 2004 for each city as provided in this section. 106.21 The initial aid reduction amount for each city is the 106.22 amount by which the city's aid distribution under Minnesota 106.23 Statutes, section 477A.013, and related provisions payable in 106.24 2003 exceeds the city's 2004 distribution under those provisions. 106.25 The minimum aid reduction amount for a city is the amount 106.26 of its reduction in 2003 under section 12. If a city receives 106.27 an increase to its city aid base under Minnesota Statutes, 106.28 section 477A.011, subdivision 36, its minimum aid reduction is 106.29 reduced by an equal amount. 106.30 The maximum aid reduction amount for a city is an amount 106.31 equal to 14 percent of the city's total 2004 levy plus aid 106.32 revenue base, except that if the city has a city net tax 106.33 capacity for aids payable in 2004, as defined in Minnesota 106.34 Statutes, section 477A.011, subdivision 20, of $700 per capita 106.35 or less, the maximum aid reduction shall not exceed an amount 106.36 equal to 13 percent of the city's total 2004 levy plus aid 107.1 revenue base. 107.2 If the initial aid reduction amount for a city is less than 107.3 the minimum aid reduction amount for that city, the final aid 107.4 reduction amount for the city is the sum of the initial aid 107.5 reduction amount and the lesser of the amount of the city's 107.6 payable 2004 reimbursement under Minnesota Statutes, section 107.7 273.1384, or the difference between the minimum and initial aid 107.8 reduction amounts for the city. 107.9 If the initial aid reduction amount for a city is greater 107.10 than the maximum aid reduction amount for the city, the city 107.11 receives an additional distribution under this section equal to 107.12 the result of subtracting the maximum aid reduction amount from 107.13 the initial aid reduction amount. This distribution shall be 107.14 paid in equal installments in 2004 on the dates specified in 107.15 Minnesota Statutes, section 477A.015. The amount necessary for 107.16 these additional distributions is appropriated to the 107.17 commissioner of revenue from the general fund in fiscal year 107.18 2005. 107.19 The initial aid reduction is applied to the city's 107.20 distribution pursuant to Minnesota Statutes, section 477A.013, 107.21 and any aid reduction in excess of the initial aid reduction is 107.22 applied to the city's reimbursements pursuant to Minnesota 107.23 Statutes, section 273.1384. 107.24 To the extent that sufficient information is available on 107.25 each payment date in 2004, the commissioner of revenue shall pay 107.26 the reimbursements reduced under this section in equal 107.27 installments on the payment dates provided in law. 107.28 [EFFECTIVE DATE.] This section is effective the day 107.29 following final enactment. 107.30 Sec. 14. [REPEALER.] 107.31 Minnesota Statutes 2002, sections 477A.011, subdivision 37; 107.32 477A.0132; 477A.03, subdivisions 3 and 4; 477A.06; and 477A.07, 107.33 are repealed effective for aids payable in 2004 and thereafter. 107.34 ARTICLE 6 107.35 OTHER INTERGOVERNMENTAL AIDS 107.36 Section 1. Minnesota Statutes 2002, section 273.1398, 108.1 subdivision 4a, is amended to read: 108.2 Subd. 4a. [TEMPORARY AIDOFFSETFOR COURT COSTS.] (a) In 108.3 calendar years 2004 and 2005, the commissioner of revenue shall 108.4 pay the amounts determined in paragraph (d) to the eligible 108.5 counties on the dates specified in subdivision 6. By July 15of108.6the year preceding the year in which the state assumes the cost108.7of court administration in the judicial district as specified108.8under section 480.183, 2003, the supreme court shall determine 108.9 and certify to the commissioner of revenue for each county the 108.10 county's share of the costs to be assumed in the judicial 108.11 districts specified under section 480.183, subdivision 1, during 108.12 each of the succeeding fiscalyearyears. 108.13 (b) The amount certified in paragraph (a) shall be equal to 108.14 the following: 108.15 (1) 103 percent of the required court administration 108.16 expenditures as defined under section 480.183, subdivision 3, 108.17 for calendar year 2003, as determined under subdivision 4b, 108.18 paragraph (a); plus 108.19 (2) an adjustment for any cumulative percentage increase in 108.20 salary expenditures as defined under section 480.183, 108.21 subdivision 2, in excess of a maintenance of effort increase of 108.22 six percent; less 108.23 (3) an amount equal to the county's share of transferred 108.24 fines collected by the district courts in the county duringthe108.25calendar year preceding certification2002, increased by two 108.26 percent for counties in districts one and three, and by 4.04 108.27 percent for counties in districts six and ten. 108.28 The court and the county may, if both parties agree, 108.29 negotiate and certify an amount higher than the amount 108.30 calculated under this paragraph. 108.31 (c) For purposes of this subdivision, the adjustment in 108.32 paragraph (b), clause (2), shall be equal to: 108.33 (1) the sum of the court administration expenditures as 108.34 defined under section 480.183, subdivision 3, required under 108.35 subdivision 4b, paragraph (a), plus the temporary aid payment 108.36 under subdivision 4c; multiplied by 109.1 (2) the difference between (i) the cumulative percentage 109.2 increase in actual and anticipated salary settlements for court 109.3 employees from July 1, 2001, until the date of the court 109.4 transfer and (ii) the percentage specified in subdivision 4b, 109.5 paragraph (a). 109.6 (d)Payments to a county under subdivision 2 or section109.7273.166 for the calendar year in which the state assumes the109.8cost of court administration as defined under section 480.183,109.9subdivision 3, in the judicial district must be permanently109.10reduced by an amount equal to 75 percent of the net cost to the109.11state for assumption of district court costs as certified in109.12paragraph (a).For calendar year 2004, each county in judicial 109.13 districts one and three shall receive an amount equal to 25 109.14 percent of the amount certified under paragraph (b), and each 109.15 county in judicial districts six and ten shall receive an amount 109.16 equal to the amount certified under paragraph (b). For calendar 109.17 year 2005, each county in judicial districts six and ten shall 109.18 receive an amount equal to 25 percent of the amount certified 109.19 under paragraph (b), and each county in judicial districts one 109.20 and three receives zero. 109.21(e) Payments to a county under subdivision 2 or section109.22273.166 for the calendar year after the calendar year in which109.23the state assumes the cost of court administration as defined109.24under section 480.183, subdivision 3, in the judicial district109.25must be permanently reduced by an amount equal to 25 percent of109.26the net cost to the state for assumption of district court costs109.27as certified in paragraph (a), provided that this amount must be109.28increased or decreased by an amount equal to the positive or109.29negative difference between the amount of fee and fine revenue109.30certified under paragraph (b), clause (3), and the actual amount109.31of fee and fine revenue of the county for the calendar year when109.32certification takes place.109.33(f) Payments to a county under subdivision 2 for calendar109.34year 2001 are permanently increased by an amount equal to 7.5109.35percent of the county's share of transferred fines collected by109.36the district courts in the county during calendar year 1998, as110.1determined under paragraph (a). If the amount determined in110.2paragraph (a) exceeds the amount of aid a county is scheduled to110.3be paid under subdivision 2 in 2000, then the county shall not110.4receive an aid increase under this paragraph.110.5(g) Payments to a county under subdivision 2 or section110.6273.166, for the cost of mandated services, as defined in110.7section 480.183, subdivision 4, in the judicial district, must110.8be permanently reduced in 2002 by an amount equal to the cost to110.9the state for assumption of mandated court services as defined110.10in section 480.183, subdivision 4. The supreme court shall110.11determine the amount for each county and certify it to the110.12commissioner of revenue by July 15, 2001.110.13 [EFFECTIVE DATE.] This section is effective for aid payable 110.14 in 2004 and 2005. 110.15 Sec. 2. Minnesota Statutes 2002, section 273.1398, 110.16 subdivision 4c, is amended to read: 110.17 Subd. 4c. [TEMPORARY AID; COURT ADMINISTRATION COSTS.] For 110.18 calendar years 2004 and 2005, each county in a judicial district 110.19 that has not been transferred to the state by January 1 of that 110.20 year shall receiveadditional homestead and agricultural110.21credittemporary court maintenance of effort cost aid. This 110.22 amount is in addition to the amount calculated under subdivision 110.23 2 and must not be included in the definition of homestead and 110.24 agricultural credit base under subdivision 1, paragraph (j). 110.25 The amount ofadditionalaid is equal to the difference between 110.26 (1) the amount budgeted for court administration costs in 2001 110.27 as determined under subdivision 4b, paragraph (b), multiplied by 110.28 the maintenance of effort percent for the calendar year as 110.29 determined under subdivision 4b, paragraph (a), and (2) the 110.30 amount calculated under subdivision 4b, paragraph (a), for 110.31 calendar year 2003, except that the payment under this section 110.32 is reduced by 50 percent in the calendar year in which the 110.33 district is transferred to the state. This additional aid must 110.34 be used only to fund court administration expenditures as 110.35 defined in section 480.183, subdivision 3. This amount must be 110.36 added to the state court's base budget in the year when the 111.1 court in that judicial district in which the county is located 111.2 is transferred to the state. 111.3 [EFFECTIVE DATE.] This section is effective for aid payable 111.4 in 2004 and 2005 for counties in judicial districts one, three, 111.5 six, and ten. 111.6 Sec. 3. Minnesota Statutes 2002, section 273.1398, 111.7 subdivision 6, is amended to read: 111.8 Subd. 6. [PAYMENT.] The commissioner shall certify the 111.9 aids provided insubdivisions 2, 2b, 3, and 5subdivision 3 111.10 before September 1 of the year preceding the distribution year 111.11 to the county auditor of the affected local government. The 111.12 aids provided in subdivisions2, 2b,3, 4a, and54c must be 111.13 paid to local governments other than school districts at the 111.14 times provided in section 477A.015 for payment of local 111.15 government aid to taxing jurisdictions, except that the first 111.16 one-half payment of disparity reduction aid provided in 111.17 subdivision 3 must be paid on or before August 31. The 111.18 disparity reduction credit provided in subdivision 4 must be 111.19 paid to taxing jurisdictions other than school districts at the 111.20 time provided in section 473H.10, subdivision 3. Aids and 111.21 credit reimbursements to school districts must be certified to 111.22 the commissioner of children, families, and learning and paid 111.23 under section 273.1392. Payment shall not be made to any taxing 111.24 jurisdiction that has ceased to levy a property tax. 111.25 [EFFECTIVE DATE.] This section is effective for aid payable 111.26 in 2004 and thereafter. 111.27 Sec. 4. Minnesota Statutes 2002, section 273.1398, 111.28 subdivision 8, is amended to read: 111.29 Subd. 8. [APPROPRIATION.](a)An amount sufficient to pay 111.30 the aids and credits provided under this section for school 111.31 districts, intermediate school districts, or any group of school 111.32 districts levying as a single taxing entity, is annually 111.33 appropriated from the general fund to the commissioner of 111.34 children, families, and learning. An amount sufficient to pay 111.35 the aids and credits provided under this section for counties, 111.36 cities, towns, and special taxing districts is annually 112.1 appropriated from the general fund to the commissioner of 112.2 revenue. A jurisdiction's aid amount may be increased or 112.3 decreased based on any prior year adjustments for homestead 112.4 credit or other property tax credit or aid programs. 112.5(b) The commissioner of finance shall bill the commissioner112.6of revenue for the cost of preparation of local impact notes as112.7required by section 3.987 only to the extent to which those112.8costs exceed those costs incurred in fiscal year 1997 and for112.9any other new costs attributable to the local impact note112.10function required by section 3.987, not to exceed $100,000 in112.11fiscal years 1998 and 1999 and $200,000 in fiscal year 2000 and112.12thereafter.112.13The commissioner of revenue shall deduct the amount billed112.14under this paragraph from aid payments to be made to cities and112.15counties under subdivision 2 on a pro rata basis. The amount112.16deducted under this paragraph is appropriated to the112.17commissioner of finance for the preparation of local impact112.18notes.112.19 [EFFECTIVE DATE.] This section is effective for aid payable 112.20 in 2004 and thereafter. 112.21 Sec. 5. [477A.0124] [COUNTY PROGRAM AID.] 112.22 Subdivision 1. [CALENDAR YEAR 2004.] In 2004, each county 112.23 shall receive program aid in an amount equal to the sum of: 112.24 (1) the amount of county attached machinery aid computed 112.25 for the county for payment in 2003 under section 273.138 prior 112.26 to any reduction under laws enacted in 2003; 112.27 (2) the amount of county homestead and agricultural credit 112.28 aid computed for the county for payment in 2003 under section 112.29 273.1398, subdivision 2, prior to any reduction under laws 112.30 enacted in 2003, minus the amount certified under section 112.31 273.1398, subdivision 4a, paragraph (b), for counties in 112.32 judicial districts one, three, six, and ten, and by 25 percent 112.33 of the amount certified under section 273.1398, subdivision 4a, 112.34 paragraph (b), for counties located in judicial districts two 112.35 and four; 112.36 (3) the amount of county manufactured home homestead and 113.1 agricultural credit aid computed for the county for payment in 113.2 2003 under section 273.166 prior to any reduction under laws 113.3 enacted in 2003; 113.4 (4) the amount of county criminal justice aid computed for 113.5 the county for payment in 2003 under section 477A.0121 prior to 113.6 any reduction under laws enacted in 2003; and 113.7 (5) the amount of county family preservation aid computed 113.8 for the county for payment in 2003 under section 477A.0122 prior 113.9 to any reduction under laws enacted in 2003. 113.10 Subd. 2. [DEFINITIONS.] (a) For the purposes of this 113.11 section, the following terms have the meanings given them. 113.12 (b) "County program aid" means the sum of "county need aid," 113.13 "county tax base equalization aid," and "county transition aid." 113.14 (c) "Age-adjusted population" means a county's population 113.15 multiplied by the county age index. 113.16 (d) "County age index" means the percentage of the 113.17 population over age 65 within the county divided by the 113.18 percentage of the population over age 65 within the state, 113.19 except that the age index for any county may not be greater than 113.20 1.8 nor less than 0.8. 113.21 (e) "Population over age 65" means the population over age 113.22 65 established as of July 1 in an aid calculation year by the 113.23 most recent federal census, by a special census conducted under 113.24 contract with the United States Bureau of the Census, by a 113.25 population estimate made by the metropolitan council, or by a 113.26 population estimate of the state demographer made pursuant to 113.27 section 4A.02, whichever is the most recent as to the stated 113.28 date of the count or estimate for the preceding calendar year. 113.29 (f) "Part I crimes" means the three-year average annual 113.30 number of Part I crimes reported for each county by the 113.31 department of public safety for the most recent years available. 113.32 By July 1 of each year, the commissioner of public safety shall 113.33 certify to the commissioner of revenue the number of Part I 113.34 crimes reported for each county for the three most recent 113.35 calendar years available. 113.36 (g) "Households receiving food stamps" means the average 114.1 monthly number of households receiving food stamps for the three 114.2 most recent years for which data is available. By July 1 of 114.3 each year, the commissioner of human services must certify to 114.4 the commissioner of revenue the average monthly number of 114.5 households in the state and in each county that receive food 114.6 stamps, for the three most recent calendar years available. 114.7 (h) "County net tax capacity" means the net tax capacity of 114.8 the county, computed analogously to city net tax capacity under 114.9 section 477A.011, subdivision 20. 114.10 Subd. 3. [COUNTY NEED AID.] For 2005 and subsequent years, 114.11 the money appropriated to county need aid each calendar year 114.12 shall be allocated as follows: 40 percent based on each 114.13 county's share of age-adjusted population, 40 percent based on 114.14 each county's share of the state total of households receiving 114.15 food stamps, and 20 percent based on each county's share of the 114.16 state total of Part I crimes. 114.17 Subd. 4. [COUNTY TAX-BASE EQUALIZATION AID.] (a) For 2005 114.18 and subsequent years, the money appropriated to county tax-base 114.19 equalization aid each calendar year shall be apportioned among 114.20 the counties according to each county's tax-base equalization 114.21 aid factor. 114.22 (b) A county's tax-base equalization aid factor is equal to 114.23 the amount by which (i) $185 times the county's population, 114.24 exceeds (ii) 9.45 percent of the county's net tax capacity. 114.25 (c) In the case of a county with a population less than 114.26 10,000, the factor determined in paragraph (b) shall be 114.27 multiplied by a factor of three. 114.28 (d) In the case of a county with a population greater than 114.29 or equal to 10,000, but less than 12,500, the factor determined 114.30 in paragraph (b) shall be multiplied by a factor of two. 114.31 (e) In the case of a county with a population greater than 114.32 500,000, the factor determined in paragraph (b) shall be 114.33 multiplied by a factor of 0.25. 114.34 Subd. 5. [COUNTY TRANSITION AID.] (a) For 2005, a county 114.35 is eligible for transition aid equal to the amount, if any, by 114.36 which: 115.1 (1) the difference between: 115.2 (i) the aid the county received under subdivision 1 in 115.3 2004, divided by the total aid paid to all counties under 115.4 subdivision 1, multiplied by $205,000,000; and 115.5 (ii) the amount of aid the county is certified to receive 115.6 in 2005 under subdivisions 3 and 4; 115.7 exceeds: 115.8 (2) three percent of the county's adjusted net tax capacity. 115.9 A county's aid under this paragraph may not be less than zero. 115.10 (b) In 2006, a county is eligible to receive two-thirds of 115.11 the transition aid it received in 2005. 115.12 (c) In 2007, a county is eligible to receive one-third of 115.13 the transition aid it received in 2005. 115.14 (d) No county shall receive aid under this subdivision 115.15 after 2007. 115.16 [EFFECTIVE DATE.] This section is effective for aids 115.17 payable in 2004 and subsequent years. 115.18 Sec. 6. Minnesota Statutes 2002, section 477A.03, is 115.19 amended by adding a subdivision to read: 115.20 Subd. 2b. [COUNTIES.] (a) For aids payable in calendar 115.21 year 2005 and thereafter, the total aids paid to counties under 115.22 section 477A.0124, subdivision 3, are limited to $100,500,000. 115.23 Each calendar year, $500,000 shall be retained by the 115.24 commissioner of revenue to make reimbursements to the 115.25 commissioner of finance for payments made under section 611.27. 115.26 For calendar year 2004, the amount shall be in addition to the 115.27 payments authorized under section 477A.0124, subdivision 1. For 115.28 calendar year 2005 and subsequent years, the amount shall be 115.29 deducted from the appropriation under this paragraph. The 115.30 reimbursements shall be to defray the additional costs 115.31 associated with court-ordered counsel under section 611.27. Any 115.32 retained amounts not used for reimbursement in a year shall be 115.33 included in the next distribution of county need aid that is 115.34 certified to the county auditors for the purpose of property tax 115.35 reduction for the next taxes payable year. 115.36 (b) For aids payable in 2005 and thereafter, the total aids 116.1 under section 477A.0124, subdivision 4, are limited to 116.2 $105,000,000. The commissioner of finance shall bill the 116.3 commissioner of revenue for the cost of preparation of local 116.4 impact notes as required by section 3.987, not to exceed 116.5 $207,000 in fiscal year 2004 and thereafter. The commissioner 116.6 of children, families, and learning shall bill the commissioner 116.7 of revenue for the cost of preparation of local impact notes for 116.8 school districts as required by section 3.987, not to exceed 116.9 $7,000 in fiscal year 2004 and thereafter. The commissioner of 116.10 revenue shall deduct the amounts billed under this paragraph 116.11 from the appropriation under this paragraph. The amounts 116.12 deducted are appropriated to the commissioner of finance and the 116.13 commissioner of children, families, and learning for the 116.14 preparation of local impact notes. 116.15 [EFFECTIVE DATE.] This section is effective for aid payable 116.16 in 2004 and thereafter. 116.17 Sec. 7. Minnesota Statutes 2002, section 611.27, 116.18 subdivision 13, is amended to read: 116.19 Subd. 13. [PUBLIC DEFENSE SERVICES; CORRECTIONAL FACILITY 116.20 INMATES.] All billings for services rendered and ordered under 116.21 subdivision 7 shall require the approval of the chief district 116.22 public defender before being forwarded on a monthly basis to the 116.23 state public defender. In cases where adequate representation 116.24 cannot be provided by the district public defender and where 116.25 counsel has been appointed under a court order, the state public 116.26 defender shall forward to the commissioner of finance all 116.27 billings for services rendered under the court order. The 116.28 commissioner shall pay for services from county criminal justice 116.29 aid retained by the commissioner of revenue for that purpose 116.30 under section 477A.0121, subdivision 4, or from county program 116.31 aid retained by the commissioner of revenue for that purpose 116.32 under section 477A.0124, subdivision 1, clause (4), or 477A.03, 116.33 subdivision 2b, paragraph (a). 116.34 The costs of appointed counsel and associated services in 116.35 cases arising from new criminal charges brought against indigent 116.36 inmates who are incarcerated in a Minnesota state correctional 117.1 facility are the responsibility of the state board of public 117.2 defense. In such cases the state public defender may follow the 117.3 procedures outlined in this section for obtaining court-ordered 117.4 counsel. 117.5 [EFFECTIVE DATE.] This section is effective for payments in 117.6 2004 and subsequent years. 117.7 Sec. 8. Minnesota Statutes 2002, section 611.27, 117.8 subdivision 15, is amended to read: 117.9 Subd. 15. [COSTS OF TRANSCRIPTS.] In appeal cases and 117.10 postconviction cases where the state public defender's office 117.11 does not have sufficient funds to pay for transcripts and other 117.12 necessary expenses because it has spent or committed all of the 117.13 transcript funds in its annual budget, the state public defender 117.14 may forward to the commissioner of finance all billings for 117.15 transcripts and other necessary expenses. The commissioner 117.16 shall pay for these transcripts and other necessary expenses 117.17 from county criminal justice aid retained by the commissioner of 117.18 revenue under section 477A.0121, subdivision 4, or from county 117.19 program aid retained by the commissioner of revenue for that 117.20 purpose under section 477A.0124, subdivision 1, clause (4), or 117.21 477A.03, subdivision 2, paragraph (c). 117.22 [EFFECTIVE DATE.] This section is effective for payments in 117.23 2004 and subsequent years. 117.24 Sec. 9. [DEFINITIONS.] 117.25 (a) For purposes of sections 9 to 15, the following terms 117.26 have the meanings given them in this section. 117.27 (b) The 2003 and 2004 "levy plus aid revenue base" for a 117.28 county is the sum of that county's certified property tax levy 117.29 for taxes payable in 2003, plus the sum of the amounts the 117.30 county was certified to receive in the designated calendar year 117.31 as: 117.32 (1) homestead and agricultural credit aid under Minnesota 117.33 Statutes, section 273.1398, subdivision 2, plus any additional 117.34 aid under section 16, minus the amount calculated under section 117.35 273.1398, subdivision 4a, paragraph (b), for counties in 117.36 judicial districts one, three, six, and ten, and 25 percent of 118.1 the amount calculated under section 273.1398, subdivision 4a, 118.2 paragraph (b), for counties in judicial districts two and four; 118.3 (2) the amount of county manufactured home homestead and 118.4 agricultural credit aid computed for the county for payment in 118.5 2003 under section 273.166; 118.6 (3) criminal justice aid under Minnesota Statutes, section 118.7 477A.0121; 118.8 (4) family preservation aid under Minnesota Statutes, 118.9 section 477A.0122; 118.10 (5) taconite aids under Minnesota Statutes, sections 298.28 118.11 and 298.282, including any aid which was required to be placed 118.12 in a special fund for expenditure in the next succeeding year; 118.13 and 118.14 (6) county program aid under section 477A.0124. 118.15 [EFFECTIVE DATE.] This section is effective the day 118.16 following final enactment. 118.17 Sec. 10. [2003 COUNTY AID REDUCTIONS.] 118.18 The commissioner of revenue shall compute an aid reduction 118.19 amount for each county for 2003 equal to 3.21 percent of the 118.20 county's levy plus aid revenue base for 2003. 118.21 The reduction is limited to the sum of the county's payable 118.22 2003 distributions pursuant to Minnesota Statutes, sections 118.23 273.138; 273.1384; 273.1398, subdivision 2; 273.166; 477A.0121; 118.24 and 477A.0122. 118.25 The aid reduction is applied first to reduce the county's 118.26 2003 distribution pursuant to Minnesota Statutes, section 118.27 273.138, then to reduce, in this sequence, the aid payable in 118.28 2003 under Minnesota Statutes, sections 273.1398, subdivision 2; 118.29 273.166; 477A.0121; and 477A.0122. Then, if necessary, the 118.30 county's reimbursements pursuant to Minnesota Statutes, section 118.31 273.1384, are to be reduced. 118.32 To the extent that sufficient information is available on 118.33 each successive payment date within the year, the commissioner 118.34 of revenue shall pay any remaining 2003 distribution or 118.35 reimbursement amount reduced under this section in equal 118.36 installments on the payment dates provided in law. 119.1 [EFFECTIVE DATE.] This section is effective the day 119.2 following final enactment. 119.3 Sec. 11. [2003 TOWNSHIP AID REDUCTIONS.] 119.4 The commissioner of revenue shall compute an aid reduction 119.5 amount for each township for 2003 equal to two percent of the 119.6 town's certified levy for taxes payable in 2003. 119.7 The reduction is limited to the amount of the town's 119.8 payable 2003 reimbursement pursuant to Minnesota Statutes, 119.9 section 273.1384. 119.10 To the extent that sufficient information is available on 119.11 each successive payment date within the year, the commissioner 119.12 of revenue shall pay any remaining 2003 reimbursement amount for 119.13 the town in equal installments on the payment dates provided in 119.14 law. 119.15 [EFFECTIVE DATE.] This section is effective the day 119.16 following final enactment. 119.17 Sec. 12. [2003 SPECIAL TAXING DISTRICT AID REDUCTIONS.] 119.18 The commissioner of revenue shall compute an aid reduction 119.19 amount for each special taxing district for 2003 equal to 1.5 119.20 percent of the district's certified levy for taxes payable in 119.21 2003. 119.22 The reduction is limited to the amount of the district's 119.23 payable 2003 reimbursement pursuant to Minnesota Statutes, 119.24 section 273.1384. 119.25 To the extent that sufficient information is available on 119.26 each successive payment date within the year, the commissioner 119.27 of revenue shall pay any remaining 2003 reimbursement amount for 119.28 the district in equal installments on the payment dates provided 119.29 in law. 119.30 [EFFECTIVE DATE.] This section is effective the day 119.31 following final enactment. 119.32 Sec. 13. [2004 COUNTY AID REDUCTIONS.] 119.33 The commissioner of revenue shall compute an aid reduction 119.34 amount for 2004 for each county as provided in this section. 119.35 The commissioner of revenue shall compute an aid reduction 119.36 amount for each county for 2004 equal to 5.689 percent of the 120.1 county's levy plus aid revenue base for 2004. 120.2 The reduction is further limited to the sum of the county's 120.3 payable 2004 distributions under Minnesota Statutes, sections 120.4 477A.0124 and 273.1384. 120.5 The aid reduction is applied first to the county's 120.6 distributions pursuant to Minnesota Statutes, section 477A.0124, 120.7 and then, if necessary, to reduce the county's reimbursements 120.8 pursuant to Minnesota Statutes, section 273.1384. 120.9 To the extent that sufficient information is available on 120.10 each payment date in 2004, the commissioner of revenue shall pay 120.11 any remaining 2004 distribution or reimbursement amount reduced 120.12 under this section in equal installments on the payment dates 120.13 provided in law. 120.14 [EFFECTIVE DATE.] This section is effective the day 120.15 following final enactment. 120.16 Sec. 14. [2004 TOWNSHIP AID REDUCTIONS.] 120.17 The commissioner of revenue shall compute an aid reduction 120.18 amount for each township for 2004 equal to three percent of the 120.19 town's certified levy for taxes payable in 2003. 120.20 The reduction is limited to the amount of the town's 120.21 payable 2004 reimbursement pursuant to Minnesota Statutes, 120.22 section 273.1384. 120.23 To the extent that sufficient information is available on 120.24 each successive payment date within the year, the commissioner 120.25 of revenue shall pay any remaining 2004 reimbursement amount for 120.26 the town in equal installments on the payment dates provided in 120.27 law. 120.28 [EFFECTIVE DATE.] This section is effective the day 120.29 following final enactment. 120.30 Sec. 15. [2004 SPECIAL TAXING DISTRICT AID REDUCTIONS.] 120.31 The commissioner of revenue shall compute an aid reduction 120.32 amount for each special taxing district for 2004 equal to two 120.33 percent of the district's certified levy for taxes payable in 120.34 2003. 120.35 The reduction is limited to the amount of the district's 120.36 payable 2004 reimbursement pursuant to Minnesota Statutes, 121.1 section 273.1384. 121.2 To the extent that sufficient information is available on 121.3 each successive payment date within the year, the commissioner 121.4 of revenue shall pay any remaining 2004 reimbursement amount for 121.5 the district in equal installments on the payment dates provided 121.6 in law. 121.7 [EFFECTIVE DATE.] This section is effective the day 121.8 following final enactment. 121.9 Sec. 16. [HACA ADJUSTMENT; COURT TAKEOVER ERROR.] 121.10 In calendar years 2003 and 2004, any county whose 2002 aid 121.11 reduction, related to the state assumption of funding for 121.12 mandated court services, was based on costs not assumed by the 121.13 state shall receive the following aid adjustments; 121.14 (1) in calendar year 2003, a permanent increase of $50,000 121.15 in its aid payment under Minnesota Statutes, section 273.1398, 121.16 subdivision 2, above its certified 2003 aid amount; and 121.17 (2) in calendar year 2004, a permanent increase of an 121.18 additional $50,000 in its county program aid payment under 121.19 Minnesota Statutes, section 477A.0124, subdivision 1, clause (2). 121.20 [EFFECTIVE DATE.] This section is effective for aids 121.21 payable in 2003 and 2004. 121.22 Sec. 17. [REPEALER.] 121.23 (a) Minnesota Statutes 2002, sections 273.138, subdivision 121.24 2, and the parts of subdivisions 5 and 7 relating to counties; 121.25 273.1398, subdivisions 2, 2c, and 4d; 273.166; 477A.0121; 121.26 477A.0122; 477A.0123; 477A.0132; 477A.03, subdivision 3; and 121.27 477A.07, are repealed effective for aid payable in 2004 and 121.28 thereafter. 121.29 (b) Minnesota Statutes 2002, section 273.138, subdivisions 121.30 3 and 6, and the parts of subdivisions 5 and 7 relating to 121.31 school districts are repealed effective for calendar year 2003. 121.32 ARTICLE 7 121.33 LEVY LIMITS 121.34 Section 1. Minnesota Statutes 2002, section 275.70, 121.35 subdivision 5, is amended to read: 121.36 Subd. 5. [SPECIAL LEVIES.] "Special levies" means those 122.1 portions of ad valorem taxes levied by a local governmental unit 122.2 for the following purposes or in the following manner: 122.3 (1) to pay the costs of the principal and interest on 122.4 bonded indebtedness or to reimburse for the amount of liquor 122.5 store revenues used to pay the principal and interest due on 122.6 municipal liquor store bonds in the year preceding the year for 122.7 which the levy limit is calculated; 122.8 (2) to pay the costs of principal and interest on 122.9 certificates of indebtedness issued for any corporate purpose 122.10 except for the following: 122.11 (i) tax anticipation or aid anticipation certificates of 122.12 indebtedness; 122.13 (ii) certificates of indebtedness issued under sections 122.14 298.28 and 298.282; 122.15 (iii) certificates of indebtedness used to fund current 122.16 expenses or to pay the costs of extraordinary expenditures that 122.17 result from a public emergency; or 122.18 (iv) certificates of indebtedness used to fund an 122.19 insufficiency in tax receipts or an insufficiency in other 122.20 revenue sources; 122.21 (3) to provide for the bonded indebtedness portion of 122.22 payments made to another political subdivision of the state of 122.23 Minnesota; 122.24 (4) to fund payments made to the Minnesota state armory 122.25 building commission under section 193.145, subdivision 2, to 122.26 retire the principal and interest on armory construction bonds; 122.27 (5) property taxes approved by voters which are levied 122.28 against the referendum market value as provided under section 122.29 275.61; 122.30 (6) to fund matching requirements needed to qualify for 122.31 federal or state grants or programs to the extent that either 122.32 (i) the matching requirement exceeds the matching requirement in 122.33 calendar year 2001, or (ii) it is a new matching requirement 122.34 that did not exist prior to 2002; 122.35 (7) to pay the expenses reasonably and necessarily incurred 122.36 in preparing for or repairing the effects of natural disaster 123.1 including the occurrence or threat of widespread or severe 123.2 damage, injury, or loss of life or property resulting from 123.3 natural causes, in accordance with standards formulated by the 123.4 emergency services division of the state department of public 123.5 safety, as allowed by the commissioner of revenue under section 123.6 275.74, subdivision 2; 123.7 (8) pay amounts required to correct an error in the levy 123.8 certified to the county auditor by a city or county in a levy 123.9 year, but only to the extent that when added to the preceding 123.10 year's levy it is not in excess of an applicable statutory, 123.11 special law or charter limitation, or the limitation imposed on 123.12 the governmental subdivision by sections 275.70 to 275.74 in the 123.13 preceding levy year; 123.14 (9) to pay an abatement under section 469.1815; 123.15 (10) to pay any costs attributable to increases in the 123.16 employer contribution rates under chapter 353 that are effective 123.17 after June 30, 2001; 123.18 (11) to pay the operating or maintenance costs of a county 123.19 jail as authorized in section 641.01 or 641.262, or of a 123.20 correctional facility as defined in section 241.021, subdivision 123.21 1, paragraph (5), to the extent that the county can demonstrate 123.22 to the commissioner of revenue that the amount has been included 123.23 in the county budget as a direct result of a rule, minimum 123.24 requirement, minimum standard, or directive of the department of 123.25 corrections, or to pay the operating or maintenance costs of a 123.26 regional jail as authorized in section 641.262. For purposes of 123.27 this clause, a district court order is not a rule, minimum 123.28 requirement, minimum standard, or directive of the department of 123.29 corrections. If the county utilizes this special levy, except 123.30 to pay operating or maintenance costs of a new regional jail 123.31 facility under sections 641.262 to 641.264 which will not 123.32 replace an existing jail facility, any amount levied by the 123.33 county in the previous levy year for the purposes specified 123.34 under this clause and included in the county's previous year's 123.35 levy limitation computed under section 275.71, shall be deducted 123.36 from the levy limit base under section 275.71, subdivision 2, 124.1 when determining the county's current year levy limitation. The 124.2 county shall provide the necessary information to the 124.3 commissioner of revenue for making this determination; 124.4 (12) to pay for operation of a lake improvement district, 124.5 as authorized under section 103B.555. If the county utilizes 124.6 this special levy, any amount levied by the county in the 124.7 previous levy year for the purposes specified under this clause 124.8 and included in the county's previous year's levy limitation 124.9 computed under section 275.71 shall be deducted from the levy 124.10 limit base under section 275.71, subdivision 2, when determining 124.11 the county's current year levy limitation. The county shall 124.12 provide the necessary information to the commissioner of revenue 124.13 for making this determination; 124.14 (13) to repay a state or federal loan used to fund the 124.15 direct or indirect required spending by the local government due 124.16 to a state or federal transportation project or other state or 124.17 federal capital project. This authority may only be used if the 124.18 project is not a local government initiative; 124.19 (14)for counties only, to pay the costs reasonably124.20expected to be incurred in 2002 related to the redistricting of124.21election districts and establishment of election precincts under124.22sections 204B.135 and 204B.14, the notice required by section124.23204B.14, subdivision 4, and the reassignment of voters in the124.24statewide registration system, not to exceed $1 per capita,124.25provided that the county shall distribute a portion of the124.26amount levied under this clause equal to 25 cents times the124.27population of the city to all cities in the county with a124.28population of 30,000 or more;124.29(15)to pay for court administration costs as required 124.30 under section 273.1398, subdivision 4b, less the (i) county's 124.31 share of transferred fines and fees collected by the district 124.32 courts in the county for calendar year 2001 and (ii) the aid 124.33 amount certified to be paid to the county in 2004 under section 124.34 273.1398, subdivision 4c; however, for taxes levied to pay for 124.35 these costs in the year in which the court financing is 124.36 transferred to the state, the amount under thissectionclause 125.1 is limited toone-third of the aid reductionthe amount of aid 125.2 the county is certified to receive under section 273.1398, 125.3 subdivision 4a; and 125.4(16)(15) to fund a police or firefighters relief 125.5 association as required under section 69.77 to the extent that 125.6 the required amount exceeds the amount levied for this purpose 125.7 in 2001. 125.8 [EFFECTIVE DATE.] This section is effective for taxes 125.9 payable in 2004 and thereafter. 125.10 Sec. 2. Minnesota Statutes 2002, section 275.71, 125.11 subdivision 2, is amended to read: 125.12 Subd. 2. [LEVY LIMIT BASE.](a) The levy limit base for a125.13local governmental unit for taxes levied in 2001 is equal to the125.14greater of:125.15(1) the sum of its adjusted levy limit base for taxes125.16levied in 1999 plus the amount it levied in 1999 under Minnesota125.17Statutes 1999 Supplement, section 275.70, subdivision 5, clauses125.18(8) and (13), multiplied by:125.19(i) one plus the percentage growth in the implicit price125.20deflator for the 12-month period ending March 30, 2000;125.21(ii) one plus a percentage equal to the annual percentage125.22increase in the estimated number of households, if any, for the125.23most recent 12-month period that was available on July 1, 2000;125.24and125.25(iii) one plus a percentage equal to 50 percent of the125.26percentage increase in the taxable market value of the125.27jurisdiction due to new construction of class 3 property, as125.28defined in section 273.13, subdivision 24, except for125.29state-assessed utility and railroad operating property, for the125.30most recent year for which data was available as of July 1,125.312000; or125.32(2) an amount equal to:125.33(i) the sum of the amount it levied in 2000 plus the amount125.34of aids it was certified to receive in calendar year 2001 under125.35sections 273.1398, 298.282, 477A.011 to 477A.03, prior to any125.36aid reductions under section 273.1399, subdivision 5, 477A.06,126.1and 477A.065; less126.2(ii) the amount it levied in 2000 that would qualify as126.3special levies under section 275.70, subdivision 6, for taxes126.4levied in 2001. The local governmental unit shall provide the126.5commissioner of revenue with sufficient information to make this126.6calculation.126.7(b) If the governmental unit was not subject to levy limits126.8for taxes levied in 1999, its levy limit base for taxes levied126.9in 2001 is equal to the amount calculated under paragraph (a),126.10clause (2).126.11(c)The levy limit base for a local governmental unit for 126.12 taxes levied in20022003 is equal to its adjusted levy limit 126.13 base in the previous year,plus the amount of tree growth tax it126.14received in calendar year 2001 under sections 270.31 to 270.39,126.15and plus, in the case of a city, the amount it was certified to126.16receive in calendar year 2001 under section 273.166,subject to 126.17 any adjustments under section 275.72, plus any aid amounts 126.18 received in 2003 under section 273.138 or 273.166, minus the 126.19 difference between its levy limit under subdivision 5 for taxes 126.20 levied in 2002 and the amount it actually levied under that 126.21 subdivision in that year, and (3) certified property tax 126.22 replacement aid payable in 2003 under section 174.242. 126.23 [EFFECTIVE DATE.] This section is effective for taxes 126.24 levied in 2003. 126.25 Sec. 3. Minnesota Statutes 2002, section 275.71, 126.26 subdivision 4, is amended to read: 126.27 Subd. 4. [ADJUSTED LEVY LIMIT BASE.] (a) For taxes levied 126.28 in2001 and 20022003, the adjusted levy limit base is equal to 126.29 the levy limit base computed under subdivisions 2 and 3 or 126.30 section 275.72,multipliedreduced by:126.31(1) one plus a percentage equal to the percentage growth in126.32the implicit price deflator;126.33(2) one plus a percentage equal to the percentage increase126.34in number of households, if any, for the most recent 12-month126.35period for which data is available; and126.36(3) one plus a percentage equal to 50 percent of the127.1percentage increase in the taxable market value of the127.2jurisdiction due to new construction of class 3 property, as127.3defined in section 273.13, subdivision 24, except for127.4state-assessed utility and railroad operating property, for the127.5most recent year for which data is available40 percent of the 127.6 difference between (1) the sum of 2003 certified aid payments, 127.7 under sections 273.138, 273.1398 except for amounts certified 127.8 under subdivision 4a, paragraph (b), 273.166, 477A.011 to 127.9 477A.03, 477A.06, and 477A.07, before any reduction under 127.10 articles 5 and 6, and (2) the sum of the aids paid in 2004 under 127.11 those same sections, after any reductions in 2004 under articles 127.12 5 and 6. 127.13 (b)For counties only, for taxes levied in 2001 and 2002,127.14the adjusted levy limit base is also reduced by any amount of127.15levy reduction required under section 275.07, subdivision 1,127.16paragraph (b), clause (ii).For taxes levied in 2003 only, the 127.17 adjusted levy limit base is increased by 60 percent of the 127.18 difference between a jurisdiction's market value credit in 2003 127.19 before any reductions under articles 5 and 6, and its market 127.20 value credit in 2004 after reductions in articles 5 and 6. 127.21 [EFFECTIVE DATE.] This section is effective for taxes 127.22 payable in 2004. 127.23 Sec. 4. Minnesota Statutes 2002, section 275.71, 127.24 subdivision 5, is amended to read: 127.25 Subd. 5. [PROPERTY TAX LEVY LIMIT.]Notwithstanding any127.26other provision of a municipal charter which limits ad valorem127.27taxes to a lesser amount, or which would require a separate127.28voter approval for any increase,For taxes levied in2001 and127.2920022003, the property tax levy limit for a local governmental 127.30 unit is equal to its adjusted levy limit base determined under 127.31 subdivision 4 plus any additional levy authorized under section 127.32 275.73, which is levied against net tax capacity, reduced by the 127.33 sum of (i) the total amount of aids and reimbursements that the 127.34 local governmental unit is certified to receive under sections 127.35 477A.011 to 477A.014, except for the increases in city aid bases 127.36 in calendar year 2002 under section 477A.011, subdivision 36, 128.1 paragraphs(n), (p), and (q)(l), (n), and (o), (ii) homestead 128.2 and agricultural aids it is certified to receive under section 128.3 273.1398, (iii) taconite aids under sections 298.28 and 298.282 128.4 including any aid which was required to be placed in a special 128.5 fund for expenditure in the next succeeding year, 128.6 (iv)low-income housing aid under sections 477A.06 and128.7477A.065temporary court aid under section 273.1398, subdivision 128.8 4a, and (v)property tax replacement aids under section128.9174.242estimated payments to the local governmental unit under 128.10 section 272.029, adjusted for any error in estimation in the 128.11 preceding year. 128.12 [EFFECTIVE DATE.] This section is effective for taxes 128.13 payable in 2004. 128.14 Sec. 5. Minnesota Statutes 2002, section 275.71, 128.15 subdivision 6, is amended to read: 128.16 Subd. 6. [LEVIES IN EXCESS OF LEVY LIMITS.](a)If the 128.17 levy made by a city or county exceeds the levy limit provided in 128.18 sections 275.70 to 275.74, except when the excess levy is due to 128.19 the rounding of the rate in accordance with section 275.28, the 128.20 county auditor shall only extend the amount of taxes permitted 128.21 under sections 275.70 to 275.74, as provided for in section 128.22 275.16. 128.23(b) For taxes levied in 2002, payable in 2003 only, if an128.24error was made in calculating the levy limit adjustment related128.25to a special levy for jails authorized under section 275.70,128.26subdivision 5, clause (11), in the previous year, the following128.27adjustments must be made:128.28(1) the county's levy limit base for taxes levied in 2002128.29must be based on the corrected adjusted levy limit base for128.30taxes levied in 2001; and128.31(2) the county's final levy limit for taxes levied in 2002,128.32payable in 2003, must also be temporarily reduced by an amount128.33equal to the amount of county levy spread in the previous year128.34in excess of the total recalculated levy limit plus authorized128.35special levies for taxes levied in 2001, payable in 2002.128.36(c) The commissioner of revenue shall inform counties129.1affected by paragraph (b) of the levy error and levy adjustments129.2required under this provision by June 15, 2002. The county may129.3provide additional information to the commissioner indicating129.4why these adjustments may be in error by July 15, 2002. The129.5commissioner shall certify the final levy adjustment to the129.6affected counties by August 1, 2002. The levy reduction imposed129.7under paragraph (b), clause (2), may be spread over a period not129.8to exceed three years, upon agreement between the county and the129.9commissioner.129.10 [EFFECTIVE DATE.] This section is effective for taxes 129.11 payable in 2004. 129.12 Sec. 6. Minnesota Statutes 2002, section 275.72, 129.13 subdivision 3, is amended to read: 129.14 Subd. 3. [ADJUSTMENTS FOR CHANGES IN SERVICE LEVELS.] If a 129.15 local governmental unit, as a result of an annexation 129.16 agreementprior to January 1, 1999,has different tax rates in 129.17 various parts of the jurisdiction due to different service 129.18 levels, it may petition the commissioner of revenue to adjust 129.19 its levy limits established under section 275.71. The 129.20 commissioner shall adjust the levy limits to reflect scheduled 129.21 changes in tax rates related to increasing service levels in 129.22 areas currently receiving less city services. The local 129.23 governmental unit shall provide the commissioner with any 129.24 information the commissioner deems necessary in making the levy 129.25 limit adjustment. 129.26 [EFFECTIVE DATE.] This section is effective for taxes 129.27 levied in 2003, payable in 2004. 129.28 Sec. 7. Minnesota Statutes 2002, section 275.73, 129.29 subdivision 2, is amended to read: 129.30 Subd. 2. [LEVY EFFECTIVE DATE.] An additional levy 129.31 approved under subdivision 1 at a general or special election 129.32 heldprior to September 1on or before the first Tuesday after 129.33 the first Monday in November in any levy year may be levied in 129.34 that same levy year and subsequent levy years. An additional 129.35 levy approved under subdivision 1 at a general or special 129.36 election held afterAugust 31the first Tuesday after the first 130.1 Monday in November in any levy year shall not be levied in that 130.2 same levy but may be levied in subsequent levy years. 130.3 [EFFECTIVE DATE.] This section is effective for taxes 130.4 payable in 2004. 130.5 Sec. 8. Minnesota Statutes 2002, section 275.74, 130.6 subdivision 3, is amended to read: 130.7 Subd. 3. [INFORMATION NECESSARY TO CALCULATETHE 2001LEVY 130.8 LIMIT BASE.] A local governmental unit must provide the 130.9 commissioner with the information required to calculate the 130.10alternative 2001 levy limit baseamount under section 275.71, 130.11 subdivision 2,paragraph (a), clause (2),by July 20, 2001of 130.12 the levy year. If the information is not received by the 130.13 commissioner by that date, or is not deemed sufficient to make 130.14 the calculation under that clause, the commissioner has the 130.15 discretion to set the local governmental unit's2001levy limit 130.16 for all purposes including those purposes for which special 130.17 levies may be made,baseequal to the amountcalculated under130.18section 275.71, subdivision 2, paragraph (a), clause (1)of the 130.19 local governmental unit's certified levy for the prior year. 130.20 [EFFECTIVE DATE.] This section is effective for taxes 130.21 payable in 2004. 130.22 ARTICLE 8 130.23 SALES AND USE TAX 130.24 Section 1. Minnesota Statutes 2002, section 168.27, 130.25 subdivision 4a, is amended to read: 130.26 Subd. 4a. [LIMITED USED VEHICLE LICENSE.] (a) A limited 130.27 used vehicle license shall be provided to a nonprofit charitable 130.28 organization that qualifies for tax exemption under section 130.29 501(c)(3) of the Internal Revenue Code whose primary business in 130.30 the transfer of vehicles is to raise funds for the corporation, 130.31 who acquires vehicles for sale through donation, and who uses a 130.32 licensed motor vehicle auctioneer to sell vehicles toretail130.33customersindividuals, or who sells and reassigns vehicles to a 130.34 licensed motor vehicle dealer. This license does not apply to 130.35 educational institutions whose primary purpose is to train 130.36 students in the repair, maintenance, and sale of motor 131.1 vehicles. A limited used vehicle license allows the 131.2 organization to accept assignment of vehicles without the 131.3 requirement to transfer title as provided in section 168A.10 131.4 until sold or donated toa retail customeran individual. 131.5 Limited used vehicle license holders are not entitled to dealer 131.6 plates, and shall report all vehicles held for resale to the 131.7 department of public safety in a manner and time prescribed by 131.8 the department. 131.9 (b) A nonprofit charitable organization with a limited used 131.10 vehicle license shall, within 90 days after a vehicle donation, 131.11 send a donor a receipt for the donated vehicle which states its 131.12 model; age; level of use, including, but not limited to, the 131.13 mileage; its condition, and whether a visual inspection 131.14 disclosed any readily apparent defects that would materially 131.15 reduce the value of the property. The receipt must include the 131.16 date of the donation and must state whether the vehicle was 131.17 operable or inoperable at the time of the donation. 131.18 [EFFECTIVE DATE.] This section is effective for sales and 131.19 transfers made after June 30, 2003. 131.20 Sec. 2. Minnesota Statutes 2002, section 289A.20, 131.21 subdivision 4, is amended to read: 131.22 Subd. 4. [SALES AND USE TAX.] (a) The taxes imposed by 131.23 chapter 297A are due and payable to the commissioner monthly on 131.24 or before the 20th day of the month following the month in which 131.25 the taxable event occurred, or following another reporting 131.26 period as the commissioner prescribes or as allowed under 131.27 section 289A.18, subdivision 4, paragraph (f) or (g), except 131.28 that use taxes due on an annual use tax return as provided under 131.29 section 289A.11, subdivision 1, are payable by April 15 131.30 following the close of the calendar year. 131.31 (b)For a fiscal year ending before July 1, 2002,A vendor 131.32 having a liability of $120,000 or more during a fiscal year 131.33 ending June 30 must remit the June liability for the next year 131.34 in the following manner: 131.35 (1) Two business days before June 30 of the year, the 131.36 vendor must remit7585 percent of the estimated June liability 132.1 to the commissioner. 132.2 (2) On or before August 20 of the year, the vendor must pay 132.3 any additional amount of tax not remitted in June. 132.4 (c) A vendor having a liability of $120,000 or more during 132.5 a fiscal year ending June 30 must remit all liabilities on 132.6 returns due for periods beginning in the subsequent calendar 132.7 year by electronic means on or before the 20th day of the month 132.8 following the month in which the taxable event occurred, or on 132.9 or before the 20th day of the month following the month in which 132.10 the sale is reported under section 289A.18, subdivision 4, 132.11 except for7585 percent of the estimated June liability, which 132.12 is due two business days before June 30. The remaining amount 132.13 of the June liability is due on August 20. 132.14 [EFFECTIVE DATE.] This section, paragraph (a), is effective 132.15 for sales and purchases made on or after January 1, 2004. The 132.16 rest of this section is effective for payments made after 132.17 December 31, 2003. 132.18 Sec. 3. Minnesota Statutes 2002, section 289A.31, 132.19 subdivision 7, is amended to read: 132.20 Subd. 7. [SALES AND USE TAX.] (a) The sales and use tax 132.21 required to be collected by the retailer under chapter 297A 132.22 constitutes a debt owed by the retailer to Minnesota, and the 132.23 sums collected must be held as a special fund in trust for the 132.24 state of Minnesota. 132.25 A retailer who does not maintain a place of business within 132.26 this state as defined by section 297A.66, subdivision 1, shall 132.27 not be indebted to Minnesota for amounts of tax that it was 132.28 required to collect but did not collect unless the retailer knew 132.29 or had been advised by the commissioner of its obligation to 132.30 collect the tax. 132.31 (b) The use tax required to be paid by a purchaser is a 132.32 debt owed by the purchaser to Minnesota. 132.33 (c) The tax imposed by chapter 297A, and interest and 132.34 penalties, is a personal debt of the individual required to file 132.35 a return from the time the liability arises, irrespective of 132.36 when the time for payment of that liability occurs. The debt 133.1 is, in the case of the executor or administrator of the estate 133.2 of a decedent and in the case of a fiduciary, that of the 133.3 individual in an official or fiduciary capacity unless the 133.4 individual has voluntarily distributed the assets held in that 133.5 capacity without reserving sufficient assets to pay the tax, 133.6 interest, and penalties, in which case the individual is 133.7 personally liable for the deficiency. 133.8 (d) Liability for payment of sales and use taxes includes 133.9 any responsible person or entity described in the personal 133.10 liability provisions of section 270.101. 133.11 (e) Any amounts collected, even if erroneously or illegally 133.12 collected, from a purchaser under a representation that they are 133.13 taxes imposed under chapter 297A are state funds from the time 133.14 of collection and must be reported on a return filed with the 133.15 commissioner. 133.16(f) The tax imposed under chapter 297A on sales of tickets133.17to the premises of or events sponsored by the state agricultural133.18society and conducted on the state fairgrounds during the period133.19of the annual state fair may be retained by the state133.20agricultural society if the funds are used and matched as133.21required under section 37.13, subdivision 2.133.22 [EFFECTIVE DATE.] This section is effective for sales taxes 133.23 collected on sales occurring after June 30, 2003. 133.24 Sec. 4. Minnesota Statutes 2002, section 289A.60, 133.25 subdivision 15, as amended by Laws 2003, chapter 127, article 6, 133.26 section 2, if enacted, is amended to read: 133.27 Subd. 15. [ACCELERATED PAYMENT OF JUNE SALES TAX 133.28 LIABILITY; PENALTY FOR UNDERPAYMENT.] (a) For payments made 133.29 after December 31, 2002, and before January 1, 2004, if a vendor 133.30 is required by law to submit an estimation of June sales tax 133.31 liabilities and 75 percent payment by a certain date, the vendor 133.32 shall pay a penalty equal to ten percent of the amount of actual 133.33 June liability required to be paid in June less the amount 133.34 remitted in June. The penalty must not be imposed, however, if 133.35 the amount remitted in June equals the lesser of 75 percent of 133.36 the preceding May's liability or 75 percent of the average 134.1 monthly liability for the previous calendar year. 134.2 (b) For payments made after December 31, 2003, if a vendor 134.3 is required by law to submit an estimation of June sales tax 134.4 liabilities and 85 percent payment by a certain date, the vendor 134.5 shall pay a penalty equal to ten percent of the amount of actual 134.6 June liability required to be paid in June less the amount 134.7 remitted in June. The penalty must not be imposed, however, if 134.8 the amount remitted in June equals the lesser of 85 percent of 134.9 the preceding May's liability or 85 percent of the average 134.10 monthly liability for the previous calendar year. 134.11 [EFFECTIVE DATE.] Paragraph (a) of this section is 134.12 effective for payments made after December 31, 2002, and before 134.13 January 1, 2004. Paragraph (b) of this section is effective for 134.14 payments made after December 31, 2003. 134.15 Sec. 5. Minnesota Statutes 2002, section 297A.70, 134.16 subdivision 8, is amended to read: 134.17 Subd. 8. [REGIONWIDE PUBLIC SAFETY RADIO COMMUNICATION 134.18 SYSTEM; PRODUCTS AND SERVICES.] Products and services including, 134.19 but not limited to, end user equipment used for construction, 134.20 ownership, operation, maintenance, and enhancement of the 134.21 backbone system of the regionwide public safety radio 134.22 communication system established under sections 473.891 to 134.23 473.905, are exempt. For purposes of this subdivision, backbone 134.24 system is defined in section 473.891, subdivision 9. This 134.25 subdivision is effective for purchases, sales, storage, use, or 134.26 consumption occurring before August 1,20032005, in the 134.27 counties of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and 134.28 Washington. 134.29 [EFFECTIVE DATE.] This section is effective the day 134.30 following final enactment. 134.31 Sec. 6. Minnesota Statutes 2002, section 297A.70, 134.32 subdivision 10, is amended to read: 134.33 Subd. 10. [NONPROFIT TICKETS OR ADMISSIONS.] (a) Tickets 134.34 or admissions to an event are exempt if all the gross receipts 134.35 are recorded as such, in accordance with generally accepted 134.36 accounting principles, on the books of one or more organizations 135.1thatwhose primary mission is to provide an opportunity for 135.2 citizens of the state to participate in the creation, 135.3 performance, or appreciation of the arts, and provided that each 135.4 organization is: 135.5 (1) an organization described in section 501(c)(3) of the 135.6 Internal Revenue Code in which voluntary contributions make up 135.7 at least the following percent of the organization's annual 135.8 revenue in its most recently completed 12-month fiscal year, or 135.9 in the current year if the organization has not completed a 135.10 12-month fiscal year: 135.11 (i) for sales made after July 31, 2001, and before July 1, 135.12 2002, for the organization's fiscal year completed in calendar 135.13 year 2000, three percent; 135.14 (ii) for sales made on or after July 1, 2002, and on or 135.15 before June 30, 2003, for the organization's fiscal year 135.16 completed in calendar year 2001, three percent; 135.17 (iii) for sales made on or after July 1, 2003, and on or 135.18 before June 30, 2004, for the organization's fiscal year 135.19 completed in calendar year 2002, four percent; and 135.20 (iv) for sales made in each 12-month period, beginning on 135.21 July 1, 2004, and each subsequent year, for the organization's 135.22 fiscal year completed in the preceding calendar year, five 135.23 percent; 135.24 (2) a municipal board that promotes cultural and arts 135.25 activities; or 135.26 (3) the University of Minnesota, provided that the event is 135.27 held at a university-owned facility. 135.28 The exemption only applies if the entire proceeds, after 135.29 reasonable expenses, are used solely to provide opportunities 135.30 for citizens of the state to participate in the creation, 135.31 performance, or appreciation of the arts. 135.32 (b) Tickets or admissions to the premises of the Minnesota 135.33 zoological garden are exempt, provided that the exemption under 135.34 this paragraph does not apply to tickets or admissions to 135.35 performances or events held on the premises unless the 135.36 performance or event is sponsored and conducted exclusively by 136.1 the Minnesota zoological board or employees of the Minnesota 136.2 zoological garden. 136.3 Sec. 7. Minnesota Statutes 2002, section 297A.70, 136.4 subdivision 14, is amended to read: 136.5 Subd. 14. [FUND-RAISING EVENTS SPONSORED BY NONPROFIT 136.6 GROUPS.] (a) Sales of tangible personal property at, and 136.7 admission charges for fund-raising events sponsored by, a 136.8 nonprofit organization are exempt if: 136.9 (1) all gross receipts are recorded as such, in accordance 136.10 with generally accepted accounting practices, on the books of 136.11 the nonprofit organization; and 136.12 (2) the entire proceeds, less the necessary expenses for 136.13 the event, will be used solely and exclusively for charitable, 136.14 religious, or educational purposes. Exempt sales include the 136.15 sale of food, meals, and drinks at the fund-raising event. 136.16 (b) This exemption is limited in the following manner: 136.17 (1) it does not apply to admission charges for events 136.18 involving bingo or other gambling activities or to charges for 136.19 use of amusement devices involving bingo or other gambling 136.20 activities; 136.21 (2) all gross receipts are taxable if the profits are not 136.22 used solely and exclusively for charitable, religious, or 136.23 educational purposes; 136.24 (3) it does not apply unless the organization keeps a 136.25 separate accounting record, including receipts and disbursements 136.26 from each fund-raising event that documents all deductions from 136.27 gross receipts with receipts and other records; 136.28 (4) it does not apply to any sale made by or in the name of 136.29 a nonprofit corporation as the active or passive agent of a 136.30 person that is not a nonprofit corporation; 136.31 (5) all gross receipts are taxable if fund-raising events 136.32 exceed 24 days per year;and136.33 (6) it does not apply to fund-raising events conducted on 136.34 premises leased for more than five days but less than 30 days; 136.35 and 136.36 (7) it does not apply if the risk of the event is not borne 137.1 by the nonprofit organization and the benefit to the nonprofit 137.2 organization is less than the total amount of the state and 137.3 local tax revenues foregone by this exemption. 137.4 (c) For purposes of this subdivision, a "nonprofit 137.5 organization" means any unit of government, corporation, 137.6 society, association, foundation, or institution organized and 137.7 operated for charitable, religious, educational, civic, 137.8 fraternal, and senior citizens' or veterans' purposes, no part 137.9 of the net earnings of which inures to the benefit of a private 137.10 individual. 137.11 Sec. 8. Minnesota Statutes 2002, section 297A.70, 137.12 subdivision 16, is amended to read: 137.13 Subd. 16. [CAMP FEES.]CampFees to camps or other 137.14 recreation facilities are exempt for: 137.15 (1) services primarily for children, adults accompanying 137.16 children, or persons with disabilities; or 137.17 (2) educational or religious activities; 137.18 and the camp or facilities are owned and operated by an exempt 137.19 organization under section 501(c)(3) of the Internal Revenue 137.20 Codeare exempt if the camps or facilities provide educational137.21and social activities for young people primarily age 18 and137.22under. 137.23 Sec. 9. Minnesota Statutes 2002, section 297A.71, is 137.24 amended by adding a subdivision to read: 137.25 Subd. 35. [WALKER ART CENTER.] Materials, equipment, and 137.26 supplies used or consumed in construction of the Walker Art 137.27 Center are exempt if more than $70,000,000 is raised from 137.28 private sources to pay for a portion of the costs of the project. 137.29 [EFFECTIVE DATE.] This section is effective for purchases 137.30 made on or after June 1, 2003. 137.31 Sec. 10. Minnesota Statutes 2002, section 297B.01, 137.32 subdivision 7, is amended to read: 137.33 Subd. 7. [SALE, SELLS, SELLING, PURCHASE, PURCHASED, OR 137.34 ACQUIRED.] (a) "Sale," "sells," "selling," "purchase," 137.35 "purchased," or "acquired" means any transfer of title of any 137.36 motor vehicle, whether absolutely or conditionally, for a 138.1 consideration in money or by exchange or barter for any purpose 138.2 other than resale in the regular course of business. 138.3 (b) Any motor vehicle utilized by the owner only by leasing 138.4 such vehicle to others or by holding it in an effort to so lease 138.5 it, and which is put to no other use by the owner other than 138.6 resale after such lease or effort to lease, shall be considered 138.7 property purchased for resale. 138.8 (c) The terms also shall include any transfer of title or 138.9 ownership of a motor vehicle by other means, for or without 138.10 consideration, except that these terms shall not include: 138.11 (1) the acquisition of a motor vehicle by inheritance from 138.12 or by bequest of, a decedent who owned it; 138.13 (2) the transfer of a motor vehicle which was previously 138.14 licensed in the names of two or more joint tenants and 138.15 subsequently transferred without monetary consideration to one 138.16 or more of the joint tenants; 138.17 (3) the transfer of a motor vehicle by way of gift between 138.18 individuals, or gift from a limited used vehicle dealer licensed 138.19 under section 168.27, subdivision 4a, to an individual, when the 138.20 transfer is with no monetary or other consideration or 138.21 expectation of consideration and the parties to the transfer 138.22 submit an affidavit to that effect at the time the title 138.23 transfer is recorded; 138.24 (4) the voluntary or involuntary transfer of a motor 138.25 vehicle between a husband and wife in a divorce proceeding; or 138.26 (5) the transfer of a motor vehicle by way of a gift to an 138.27 organization that is exempt from federal income taxation under 138.28 section 501(c)(3) of the Internal Revenue Code, as amended 138.29 through December 31, 1996, when the motor vehicle will be used 138.30 exclusively for religious, charitable, or educational purposes. 138.31 [EFFECTIVE DATE.] This section is effective for sales made 138.32 after June 30, 2007. 138.33 Sec. 11. Laws 1980, chapter 511, section 1, subdivision 2, 138.34 as amended by Laws 1991, chapter 291, article 8, section 22, and 138.35 Laws 1998, chapter 389, article 8, section 25, is amended to 138.36 read: 139.1 Subd. 2. Notwithstanding Minnesota Statutes, Section 139.2 477A.016, or any other law, ordinance, or city charter provision 139.3 to the contrary, the city of Duluth may, by ordinance, impose an 139.4 additional sales tax of up to one and one-half percent on sales 139.5 transactions which are described in Minnesota Statutes 2000, 139.6 Section 297A.01, Subdivision 3, Clause (c). When the city 139.7 council determines that the taxes imposed under this subdivision 139.8 and under section 26 at a rate of one-half of one percent have 139.9 produced revenue sufficient to pay (1) the debt service on bonds 139.10 in a principal amount of $8,000,000 issued for capital 139.11 improvements to the Duluth Entertainment and Convention Center, 139.12 and (2) debt service on outstanding bonds originally issued in 139.13 the principal amount of $4,970,000 to finance capital 139.14 improvements to the Great Lakes Aquarium since the imposition of 139.15 the taxes at the rate of one and one-half percent, the rate of 139.16 the tax under this subdivision is reduced to one percent. The 139.17 imposition of this tax shall not be subject to voter referendum 139.18 under either state law or city charter provisions. 139.19 [EFFECTIVE DATE.] This section is effective the day after 139.20 the governing body of the city of Duluth and its chief clerical 139.21 officer comply with Minnesota Statutes, section 645.021, 139.22 subdivisions 2 and 3. 139.23 Sec. 12. Laws 1980, chapter 511, section 2, as amended by 139.24 Laws 1998, chapter 389, article 8, section 26, is amended to 139.25 read: 139.26 Sec. 2. [CITY OF DULUTH; TAX ON RECEIPTS BY HOTELS AND 139.27 MOTELS.] 139.28 Notwithstanding Minnesota Statutes, Section 477A.016, or 139.29 any other law, or ordinance, or city charter provision to the 139.30 contrary, the city of Duluth may, by ordinance, impose an 139.31 additional tax of one and one-half percent upon the gross 139.32 receipts from the sale of lodging for periods of less than 30 139.33 days in hotels and motels located in the city. When the city 139.34 council determines that the taxes imposed under this section and 139.35 section 25 at a rate of one-half of one percent have produced 139.36 revenue sufficient to pay (1) the debt service on bonds in a 140.1 principal amount of $8,000,000 issued for capital improvements 140.2 for the Duluth Entertainment and Convention Center, and (2) the 140.3 debt service on outstanding bonds originally issued in the 140.4 principal amount of $4,970,000 to finance capital improvements 140.5 to the Great Lakes Aquarium since the imposition of the taxes at 140.6 the rate of one and one-half percent, the rate of the tax under 140.7 this section is reduced to one percent. The tax shall be 140.8 collected in the same manner as the tax set forth in the Duluth 140.9 city charter, section 54(d), paragraph one. The imposition of 140.10 this tax shall not be subject to voter referendum under either 140.11 state law or city charter provisions. 140.12 [EFFECTIVE DATE.] This section is effective the day after 140.13 the governing body of the city of Duluth and its chief clerical 140.14 officer comply with Minnesota Statutes, section 645.021, 140.15 subdivisions 2 and 3. 140.16 Sec. 13. Laws 1993, chapter 375, article 9, section 46, 140.17 subdivision 2, as amended by Laws 1997, chapter 231, article 7, 140.18 section 40, and Laws 1998, chapter 389, article 8, section 30, 140.19 is amended to read: 140.20 Subd. 2. [USE OF REVENUES.] Revenues received from the tax 140.21 authorized by subdivision 1 may only be used by the city to pay 140.22 the cost of collecting the tax, and to pay for the following 140.23 projects or to secure or pay any principal, premium, or interest 140.24 on bonds issued in accordance with subdivision 3 for the 140.25 following projects. 140.26 (a) To pay all or a portion of the capital expenses of 140.27 construction, equipment and acquisition costs for the expansion 140.28 and remodeling of the St. Paul Civic Center complex, including 140.29 the demolition of the existing arena and the construction and 140.30 equipping of a new arena. 140.31 (b) The remainder of the funds must be spent for: 140.32 (1) capital projects to further residential, cultural, 140.33 commercial, and economic development in both downtown St. Paul 140.34 and St. Paul neighborhoods. The amount apportioned under this140.35paragraph shall be no less than 60 percent of the revenues140.36derived from the tax each year, except to the extent that a141.1portion of that amount is required to pay debt service on (1)141.2bonds issued for the purposes of paragraph (a) prior to March 1,141.31998; or (2) bonds issued for the purposes of paragraph (a)141.4after March 1, 1998, but only if the city council determines141.5that 40 percent of the revenues derived from the tax together141.6with other revenues pledged to the payment of the bonds,141.7including the proceeds of definitive bonds, is expected to141.8exceed the annual debt service on the bonds; and 141.9 (2)thecapital and operating expenses of cultural 141.10 organizations in the city, provided that the amount spent under 141.11 this clausemay not exceedmust equal ten percent of the total 141.12 amount spent under this paragraph in any year. 141.13 (c) The amount apportioned under paragraph (b) shall be no 141.14 less than 60 percent of the revenues derived from the tax each 141.15 year, except to the extent that a portion of that amount is 141.16 required to pay debt service on (1) bonds issued for the 141.17 purposes of paragraph (a) prior to March 1, 1998; or (2) bonds 141.18 issued for the purposes of paragraph (a) after March 1, 1998, 141.19 but only if the city council determines that 40 percent of the 141.20 revenues derived from the tax together with other revenues 141.21 pledged to the payment of the bonds, including the proceeds of 141.22 definitive bonds, is expected to exceed the annual debt service 141.23 on the bonds. 141.24 (d) If in any year more than 40 percent of the revenue 141.25 derived from the tax authorized by subdivision 1 is used to pay 141.26 debt service on the bonds issued for the purposes of paragraph 141.27 (a) and to fund a reserve for the bonds, the amount of the debt 141.28 service payment that exceeds 40 percent of the revenue must be 141.29 determined for that year. In any year when 40 percent of the 141.30 revenue produced by the sales tax exceeds the amount required to 141.31 pay debt service on the bonds and to fund a reserve for the 141.32 bonds under paragraph (a), the amount of the excess must be made 141.33 available for capital projects to further residential, cultural, 141.34 commercial, and economic development in the neighborhoods and 141.35 downtown until the cumulative amounts determined for all years 141.36 under the preceding sentence have been made available under this 142.1 sentence. The amount made available as reimbursement in the 142.2 preceding sentence is not included in the 60 percent determined 142.3 under paragraph(b)(c). 142.4(d)(e) By January 15 of each odd-numbered year, the mayor 142.5 and the city council must report to the legislature on the use 142.6 of sales tax revenues during the preceding two-year period. 142.7 [EFFECTIVE DATE.] This section is effective for 142.8 distributions after April 30, 2003. 142.9 Sec. 14. Laws 1999, chapter 243, article 4, section 19, as 142.10 amended by Laws 2001, First Special Session chapter 5, article 142.11 12, section 88, is amended to read: 142.12 Sec. 19. [EFFECTIVE DATES.] 142.13 Sections 1, 2, 5, 7, 9, and 11 are effective for sales and 142.14 purchases made after June 30, 1999. 142.15 Section 3 is effective for amended returns and refund 142.16 claims filed on or after July 1, 1999. 142.17 Section 4 is effective the day following final enactment 142.18 and applies retroactively to all open tax years and to 142.19 assessments and appeals under Minnesota Statutes, sections 142.20 289A.38 and 289A.65, for which the time limits have not expired 142.21 on the date of final enactment of this act. The provisions of 142.22 Minnesota Statutes, section 289A.50, apply to refunds claimed 142.23 under section 4. Refunds claimed under section 4 must be filed 142.24 by the later of December 31, 1999, or the time limit under 142.25 Minnesota Statutes, section 289A.40, subdivision 1. 142.26 Section 6 is effective retroactively for sales and 142.27 purchases made after June 30, 1998. 142.28 Section 8 is effective for purchases and sales made after 142.29 the date of final enactment. 142.30 Section 10 is effective for purchases made after the date 142.31 of final enactment and before July 1,20032005. 142.32 Section 12 is effective the day after final enactment. 142.33 Section 12, paragraphs (a) to (c), apply to all local sales 142.34 taxes enacted after July 1, 1999. Section 12, paragraph (d), 142.35 applies to all local sales taxes in effect at the time of, or 142.36 imposed after the day of, the enactment of this section. 143.1 Section 13 is effective the day following final enactment. 143.2 [EFFECTIVE DATE.] This section is effective the day 143.3 following final enactment. 143.4 Sec. 15. Laws 2001, First Special Session chapter 5, 143.5 article 12, section 95, as amended by Laws 2002, chapter 377, 143.6 article 3, section 24, is amended to read: 143.7 Sec. 95. [REPEALER.] 143.8 (a) Minnesota Statutes 2000, sections 297A.61, subdivision 143.9 16; 297A.68, subdivision 21; and 297A.71, subdivision 2, are 143.10 repealed effective for sales and purchases occurring after June 143.11 30, 2001, except that the repeal of section 297A.61, subdivision 143.12 16, paragraph (d), is effective for sales and purchases 143.13 occurring after July 31, 2001. 143.14 (b) Minnesota Statutes 2000, sections 297A.62, subdivision 143.15 2, and 297A.64, subdivision 1, are repealed effective for sales 143.16 and purchases made after December 31, 2005. 143.17 (c) Minnesota Statutes 2000, section 297A.71, subdivision 143.18 15, is repealed effective for sales and purchases made after 143.19 June 30, 2002. 143.20 (d)Minnesota Statutes 2000, section 289A.60, subdivision143.2115, is repealed effective for liabilities after January 1, 2004.143.22(e)Minnesota Statutes 2000, section 297A.71, subdivision 143.23 16, is repealed effective for sales and purchases occurring 143.24 after December 31, 2002. 143.25 Sec. 16. Laws 2002, chapter 377, article 3, section 15, 143.26 the effective date, is amended to read: 143.27 [EFFECTIVE DATE.] This section is effective for sales made 143.28 after August 31, 2002, and on or before December 31,20032004. 143.29 Sec. 17. [STATE CONVENTION CENTER.] 143.30 Subdivision 1. [EXEMPTION.] Building materials, supplies, 143.31 or equipment used or consumed in constructing or equipping 143.32 improvements to a state convention center located in a city 143.33 outside the metropolitan area as defined in section 473.121, 143.34 subdivision 2, and governed by an 11-person board of which four 143.35 are appointed by the governor are exempt if the improvements are 143.36 financed in whole or in part by nonstate resources including, 144.1 but not limited to, revenue or general obligations issued by the 144.2 state convention center board of the city in which the center is 144.3 located. This exemption applies regardless of whether the items 144.4 are purchased by the owner or by a contractor, subcontractor, or 144.5 builder. 144.6 Subd. 2. [LEGISLATIVE INTENT.] This section is intended to 144.7 clarify the original intent of Minnesota Statutes, section 144.8 297A.71, subdivision 2. 144.9 [EFFECTIVE DATE.] This section is effective the day 144.10 following final enactment and applies retroactively to sales and 144.11 purchases made after June 30, 1995, and before July 1, 2001. 144.12 Sec. 18. [LODGING TAX; ITASCA COUNTY AUTHORITY.] 144.13 Notwithstanding Minnesota Statutes, section 469.190, 144.14 subdivisions 1 and 4, no town located in Itasca county may 144.15 impose the local lodging tax authorized in Minnesota Statutes, 144.16 section 469.190, but the county of Itasca may impose the local 144.17 lodging tax authorized in that section in all towns and 144.18 unorganized territories within the county. Any existing taxes 144.19 imposed by a town in that county will expire the day that a 144.20 county tax is imposed under this section. 144.21 If the county board exercises the authority under this 144.22 section, it must determine by resolution that imposition of the 144.23 tax is in the county's interest. The resolution is subject to 144.24 the same notice and reverse referendum requirements that would 144.25 apply under Minnesota Statutes, section 469.190, subdivision 5, 144.26 if the county was only imposing the tax in an unorganized 144.27 territory. The provisions of Minnesota Statutes, section 144.28 469.190, subdivisions 2, 3, 6, and 7, also apply to a tax 144.29 imposed under this section. 144.30 [EFFECTIVE DATE.] This section is effective the day after 144.31 the governing body of Itasca county and its chief clerical 144.32 officer comply with Minnesota Statutes, section 645.021, 144.33 subdivisions 2 and 3. 144.34 Sec. 19. [STUDY OF LOCAL SALES TAX.] 144.35 (a) The commissioner of revenue shall study the local sales 144.36 taxes in Minnesota and provide a written report and 145.1 recommendations to the legislature, in compliance with Minnesota 145.2 Statutes, sections 3.195 and 3.197, by February 1, 2004. The 145.3 study must report on: 145.4 (1) the authorized uses of revenue from local sales taxes 145.5 in effect, and the proposed uses of revenue from local sales 145.6 taxes recently proposed but not enacted; 145.7 (2) the local approval requirements for local sales taxes; 145.8 (3) the duration of local sales taxes and whether the full 145.9 duration authorized in law was necessary to provide sufficient 145.10 revenue for the authorized uses of the local sales tax; 145.11 (4) if the authorized uses of the local sales tax revenues 145.12 are regional in nature or limited in benefit to the jurisdiction 145.13 in which the tax is imposed; 145.14 (5) the estimated portion of revenue raised through the 145.15 local sales taxes that comes from (i) residents of the 145.16 jurisdiction in which the tax is imposed; (ii) Minnesota 145.17 residents who live outside the jurisdiction; and (iii) 145.18 non-Minnesota residents; 145.19 (6) the ability of jurisdictions to raise revenue by other 145.20 means, including the local property tax, and the extent to which 145.21 the jurisdictions assess property taxes in comparison to other 145.22 similar jurisdictions, and the state average, expressed in terms 145.23 of levy as a percent of adjusted net tax capacity; 145.24 (7) how jurisdictions that do not impose local sales taxes 145.25 raise revenue to fund projects similar to those funded through 145.26 local sales taxes; and 145.27 (8) the compatibility of local sales taxes with the 145.28 policies underlying the streamlined sales tax project. 145.29 (b) The study must make recommendations on: 145.30 (1) the appropriate role of local sales taxes as a part of 145.31 Minnesota's state and local revenue system, including: 145.32 (i) the appropriate uses of local sales taxes; and 145.33 (ii) whether local sales taxes should be limited to 145.34 jurisdictions that do not meet minimum thresholds of raising 145.35 revenue through other means, including local property tax; 145.36 (2) criteria to be used in evaluating local sales tax 146.1 proposals, designed to direct the use of local sales taxes 146.2 toward: 146.3 (i) projects that are regional in nature; 146.4 (ii) projects that require capital expenditures; and 146.5 (iii) projects in jurisdictions with inadequate fiscal 146.6 capacity to fund the projects through other means; and 146.7 (3) the feasibility of authorizing the commissioner of 146.8 revenue to approve or deny local sales taxes proposals based on 146.9 a uniform set of criteria, including the advisability of 146.10 requiring local approval by referendum or revocation by reverse 146.11 referendum, and if the referendum should be a criterion 146.12 necessary for a proposal to be considered for authorization or 146.13 should occur after authorization but as a condition of the tax 146.14 being implemented. 146.15 Sec. 20. [REPEALER.] 146.16 (a) Minnesota Statutes 2002, section 37.13, subdivision 2, 146.17 is repealed effective July 1, 2003, but the repealer does not 146.18 apply to sales taxes retained on sales occurring before July 1, 146.19 2003. 146.20 (b) Minnesota Statutes 2002, section 325E.112, subdivision 146.21 2a, is repealed effective July 1, 2003. 146.22 ARTICLE 9 146.23 SPECIAL TAXES 146.24 Section 1. Minnesota Statutes 2002, section 62J.692, 146.25 subdivision 4, is amended to read: 146.26 Subd. 4. [DISTRIBUTION OF FUNDS.] (a) The commissioner 146.27 shall annually distribute medical education funds to all 146.28 qualifying applicants based on the following criteria: 146.29 (1) total medical education funds available for 146.30 distribution; 146.31 (2) total number of eligible trainee FTEs in each clinical 146.32 medical education program; and 146.33 (3) the statewide average cost per trainee as determined by 146.34 the application information provided in the first year of the 146.35 biennium, by type of trainee, in each clinical medical education 146.36 program. 147.1 (b) Funds distributed shall not be used to displace current 147.2 funding appropriations from federal or state sources. 147.3 (c) Funds shall be distributed to the sponsoring 147.4 institutions indicating the amount to be distributed to each of 147.5 the sponsor's clinical medical education programs based on the 147.6 criteria in this subdivision and in accordance with the 147.7 commissioner's approval letter. Each clinical medical education 147.8 program must distribute funds to the training sites as specified 147.9 in the commissioner's approval letter. Sponsoring institutions, 147.10 which are accredited through an organization recognized by the 147.11 department of education or the Centers for Medicare and Medicaid 147.12 Services, may contract directly with training sites to provide 147.13 clinical training. To ensure the quality of clinical training, 147.14 those accredited sponsoring institutions must: 147.15 (1) develop contracts specifying the terms, expectations, 147.16 and outcomes of the clinical training conducted at sites; and 147.17 (2) take necessary action if the contract requirements are 147.18 not met. Action may include the withholding of payments under 147.19 this section or the removal of students from the site. 147.20 (d) Any funds not distributed in accordance with the 147.21 commissioner's approval letter must be returned to the medical 147.22 education and research fund within 30 days of receiving notice 147.23 from the commissioner. The commissioner shall distribute 147.24 returned funds to the appropriate training sites in accordance 147.25 with the commissioner's approval letter. 147.26 (e) The commissioner shall distribute by June 30 of each 147.27 year an amount equal to the funds transferred undersection147.2862J.694, subdivision 2a, paragraph (b)subdivision 10, plus five 147.29 percent interest to the University of Minnesota board of regents 147.30 for thecosts of the academic health center as specified under147.31section 62J.694, subdivision 2a, paragraph (a)instructional 147.32 costs of health professional programs at the academic health 147.33 center and for interdisciplinary academic initiatives within the 147.34 academic health center. 147.35 (f) A maximum of $150,000 of the funds dedicated to the 147.36 commissioner under section 297F.10, subdivision 1, paragraph 148.1 (b), clause (2), may be used by the commissioner for 148.2 administrative expenses associated with implementing this 148.3 section. 148.4 Sec. 2. Minnesota Statutes 2002, section 62J.692, is 148.5 amended by adding a subdivision to read: 148.6 Subd. 10. [TRANSFERS FROM UNIVERSITY OF MINNESOTA.] Of the 148.7 funds dedicated to the academic health center under section 148.8 297F.10, subdivision 1, paragraph (b), clause (1), $4,850,000 148.9 shall be transferred annually to the commissioner of health no 148.10 later than April 15 of each year for distribution under 148.11 subdivision 4, paragraph (e). 148.12 Sec. 3. Minnesota Statutes 2002, section 270.60, 148.13 subdivision 4, is amended to read: 148.14 Subd. 4. [PAYMENTS TO COUNTIES.] (a) The commissioner 148.15 shall pay to a county in which an Indian gaming casino is 148.16 located: 148.17 (1) ten percent of the state share of all taxes generated 148.18 from activities on reservations and collected under a tax 148.19 agreement under this section with the tribal government for the 148.20 reservation located in the county; or 148.21 (2) five percent of excise taxes collected by the state 148.22 that are determined by the department of revenue to have been 148.23 generated from activities on a reservation located in the 148.24 county, the tribal government of which does not have a tax 148.25 agreement under this section and did not have a tax agreement on 148.26 June 30, 2003. 148.27 If the tribe has casinos located in more than one county, 148.28 the payment must be divided equally among the counties in which 148.29 the casinos are located. 148.30 (b) The commissioner shall make the payments required under 148.31 this subdivision by February 28 of the year following the year 148.32 the taxes are collected. 148.33 (c) An amount sufficient to make the payments authorized by 148.34 this subdivision is annually appropriated from the general fund 148.35 to the commissioner. 148.36 [EFFECTIVE DATE.] This section is effective for taxes 149.1 collected after June 30, 2003. 149.2 Sec. 4. Minnesota Statutes 2002, section 287.12, is 149.3 amended to read: 149.4 287.12 [TAXES, HOW APPORTIONED.] 149.5 (a) All taxes paid to the county treasurer under the 149.6 provisions of sections 287.01 to 287.12 must be apportioned, 97 149.7 percent to the general fund of the state, and three percent to 149.8 the county revenue fund. 149.9 (b) On or before the 20th day of each month the county 149.10 treasurer shall determine and pay to the commissioner of revenue 149.11 for deposit in the state treasury and credit to the general fund 149.12 the state's portion of the receipts from the mortgage registry 149.13 tax during the preceding month subject to the electronic payment 149.14 requirements of section 270.771. The county treasurer shall 149.15 provide any related reports requested by the commissioner of 149.16 revenue. 149.17 (c) Counties must remit the state's portion of the June 149.18 receipts collected through June 25 and the estimated state's 149.19 portion of the receipts to be collected during the remainder of 149.20 the month to the commissioner of revenue two business days 149.21 before June 30 of each year. The remaining amount of the June 149.22 receipts is due on August 20. 149.23 [EFFECTIVE DATE.] This section is effective January 1, 2004. 149.24 Sec. 5. Minnesota Statutes 2002, section 287.29, 149.25 subdivision 1, is amended to read: 149.26 Subdivision 1. [APPOINTMENT AND PAYMENT OF TAX PROCEEDS.] 149.27 (a) The proceeds of the taxes levied and collected under 149.28 sections 287.21 to 287.39 must be apportioned, 97 percent to the 149.29 general fund of the state, and three percent to the county 149.30 revenue fund. 149.31 (b) On or before the 20th day of each month, the county 149.32 treasurer shall determine and pay to the commissioner of revenue 149.33 for deposit in the state treasury and credit to the general fund 149.34 the state's portion of the receipts for deed tax from the 149.35 preceding month subject to the electronic transfer requirements 149.36 of section 270.771. The county treasurer shall provide any 150.1 related reports requested by the commissioner of revenue. 150.2 (c) Counties must remit the state's portion of the June 150.3 receipts collected through June 25 and the estimated state's 150.4 portion of the receipts to be collected during the remainder of 150.5 the month to the commissioner of revenue two business days 150.6 before June 30 of each year. The remaining amount of the June 150.7 receipts is due on August 20. 150.8 [EFFECTIVE DATE.] This section is effective January 1, 2004. 150.9 Sec. 6. Minnesota Statutes 2002, section 287.31, is 150.10 amended by adding a subdivision to read: 150.11 Subd. 3. [UNDERPAYMENTS OF ACCELERATED PAYMENT OF JUNE TAX 150.12 RECEIPTS.] If a county fails to timely remit the state portion 150.13 of the actual June tax receipts at the time required by section 150.14 287.12 or 287.29, the county shall pay a penalty equal to ten 150.15 percent of the state portion of actual June receipts less the 150.16 amount remitted to the commissioner of revenue in June. The 150.17 penalty must not be imposed, however, if the amount remitted in 150.18 June equals either: 150.19 (1) 90 percent of the state's portion of the preceding 150.20 May's receipts; or 150.21 (2) 90 percent of the average monthly amount of the state's 150.22 portion for the previous calendar year. 150.23 [EFFECTIVE DATE.] This section is effective January 1, 2004. 150.24 Sec. 7. Minnesota Statutes 2002, section 297F.09, 150.25 subdivision 1, is amended to read: 150.26 Subdivision 1. [MONTHLY RETURN; CIGARETTE DISTRIBUTOR.] On 150.27 or before the 18th day of each calendar month, a distributor 150.28 with a place of business in this state shall file a return with 150.29 the commissioner showing the quantity of cigarettes manufactured 150.30 or brought in from outside the state or purchased during the 150.31 preceding calendar month and the quantity of cigarettes sold or 150.32 otherwise disposed of in this state and outside this state 150.33 during that month. A licensed distributor outside this state 150.34 shall in like manner file a return showing the quantity of 150.35 cigarettes shipped or transported into this state during the 150.36 preceding calendar month. Returns must be made in the form and 151.1 manner prescribed by the commissioner and must contain any other 151.2 information required by the commissioner. The return must be 151.3 accompanied by a remittance for the full unpaid tax liability 151.4 shown by it. The return for the May liability and 85 percent of 151.5 the estimated June liability is due on the date payment of the 151.6 tax is due. 151.7 [EFFECTIVE DATE.] This section is effective January 1, 2004. 151.8 Sec. 8. Minnesota Statutes 2002, section 297F.09, 151.9 subdivision 2, is amended to read: 151.10 Subd. 2. [MONTHLY RETURN; TOBACCO PRODUCTS DISTRIBUTOR.] 151.11 On or before the 18th day of each calendar month, a distributor 151.12 with a place of business in this state shall file a return with 151.13 the commissioner showing the quantity and wholesale sales price 151.14 of each tobacco product: 151.15 (1) brought, or caused to be brought, into this state for 151.16 sale; and 151.17 (2) made, manufactured, or fabricated in this state for 151.18 sale in this state, during the preceding calendar month. 151.19 Every licensed distributor outside this state shall in like 151.20 manner file a return showing the quantity and wholesale sales 151.21 price of each tobacco product shipped or transported to 151.22 retailers in this state to be sold by those retailers, during 151.23 the preceding calendar month. Returns must be made in the form 151.24 and manner prescribed by the commissioner and must contain any 151.25 other information required by the commissioner. The return must 151.26 be accompanied by a remittance for the full tax liability shown,151.27less 1.5 percent of the liability as compensation to reimburse151.28the distributor for expenses incurred in the administration of151.29this chapter. The return for the May liability and 85 percent 151.30 of the estimated June liability is due on the date payment of 151.31 the tax is due. 151.32 [EFFECTIVE DATE.] The part of this section abolishing the 151.33 1.5 percent reimbursement is effective for sales made after June 151.34 30, 2003. The rest of this section is effective January 1, 2004. 151.35 Sec. 9. Minnesota Statutes 2002, section 297F.09, is 151.36 amended by adding a subdivision to read: 152.1 Subd. 10. [ACCELERATED TAX PAYMENT; CIGARETTE OR TOBACCO 152.2 PRODUCTS DISTRIBUTOR.] A cigarette or tobacco products 152.3 distributor having a liability of $120,000 or more during a 152.4 fiscal year ending June 30, shall remit the June liability for 152.5 the next year in the following manner: 152.6 (a) Two business days before June 30 of the year, the 152.7 distributor shall remit the actual May liability and 85 percent 152.8 of the estimated June liability to the commissioner and file the 152.9 return in the form and manner prescribed by the commissioner. 152.10 (b) On or before August 18 of the year, the distributor 152.11 shall submit a return showing the actual June liability and pay 152.12 any additional amount of tax not remitted in June. A penalty is 152.13 imposed equal to ten percent of the amount of June liability 152.14 required to be paid in June, less the amount remitted in June. 152.15 However, the penalty is not imposed if the amount remitted in 152.16 June equals the lesser of: 152.17 (1) 85 percent of the actual June liability; or 152.18 (2) 85 percent of the preceding May's liability. 152.19 [EFFECTIVE DATE.] This section is effective for taxpayers 152.20 having a liability of $120,000 or more during the fiscal year 152.21 ending June 30, 2003, and each fiscal year thereafter, and for 152.22 accelerated payments becoming due in 2004 and thereafter. 152.23 Sec. 10. Minnesota Statutes 2002, section 297F.10, 152.24 subdivision 1, as amended by Laws 2003, chapter 128, article 1, 152.25 section 155, if enacted, is amended to read: 152.26 Subdivision 1. [TAX AND USE TAX ON CIGARETTES.] Revenue 152.27 received from cigarette taxes, as well as related penalties, 152.28 interest, license fees, and miscellaneous sources of revenue 152.29 shall be deposited by the commissioner in the state treasury and 152.30 credited as follows: 152.31(a) first to the general obligation special tax bond debt152.32service account in each fiscal year the amount required to152.33increase the balance on hand in the account on each December 1152.34to an amount equal to the full amount of principal and interest152.35to come due on all outstanding bonds whose debt service is152.36payable primarily from the proceeds of the tax to and including153.1the second following July 1; and153.2(b) after the requirements of paragraph (a) have been met,153.3 (1) the revenue produced by 3.25 mills of the tax on 153.4 cigarettes weighing not more than three pounds a thousand and 153.5 6.5 mills of the tax on cigarettes weighing more than three 153.6 pounds a thousand must be credited to the academic health center 153.7 special revenue fund hereby created and is annually appropriated 153.8 to the board of regents at the University of Minnesota for 153.9 academic health center funding at the University of Minnesota; 153.10 and 153.11 (2) the revenue produced by 1.25 mills of the tax on 153.12 cigarettes weighing not more than three pounds a thousand and 153.13 2.5 mills of the tax on cigarettes weighing more than three 153.14 pounds a thousand must be credited to the medical education and 153.15 research costs account hereby created in the special revenue 153.16 fund and is annually appropriated to the commissioner of health 153.17 for distribution under section 62J.692, subdivision 4; and 153.18 (3) the balance of the revenues derived from taxes, 153.19 penalties, and interest (under this chapter) and from license 153.20 fees and miscellaneous sources of revenue shall be credited to 153.21 the general fund. 153.22 [EFFECTIVE DATE.] This section is effective for all 153.23 revenues received after June 30, 2003. 153.24 Sec. 11. Minnesota Statutes 2002, section 297G.01, is 153.25 amended by adding a subdivision to read: 153.26 Subd. 21. [LOW-ALCOHOL DAIRY COCKTAIL.] "Low-alcohol dairy 153.27 cocktail" means a premixed cocktail, or any other product except 153.28 liqueur-filled candy, that: 153.29 (1) consists primarily of milk products; 153.30 (2) contains distilled spirits; 153.31 (3) is drinkable as a beverage or is promoted as an 153.32 alcoholic product; and 153.33 (4) contains less than 3.2 percent alcohol by volume. 153.34 [EFFECTIVE DATE.] This section is effective for sales made 153.35 after June 30, 2003. 153.36 Sec. 12. Minnesota Statutes 2002, section 297G.03, 154.1 subdivision 1, is amended to read: 154.2 Subdivision 1. [GENERAL RATE; DISTILLED SPIRITS AND WINE.] 154.3 The following excise tax is imposed on all distilled spirits and 154.4 wine manufactured, imported, sold, or possessed in this state: 154.5 Standard Metric 154.6 (a) Distilled spirits, $5.03 per gallon $1.33 per liter 154.7 liqueurs, cordials, 154.8 and specialties regardless 154.9 of alcohol content 154.10 (excluding ethyl alcohol) 154.11 (b) Wine containing $ .30 per gallon $ .08 per liter 154.12 14 percent or less 154.13 alcohol by volume 154.14 (except cider as defined 154.15 in section 297G.01, 154.16 subdivision 3a) 154.17 (c) Wine containing $ .95 per gallon $ .25 per liter 154.18 more than 14 percent 154.19 but not more than 21 154.20 percent alcohol by volume 154.21 (d) Wine containing more $1.82 per gallon $ .48 per liter 154.22 than 21 percent but not 154.23 more than 24 percent 154.24 alcohol by volume 154.25 (e) Wine containing more $3.52 per gallon $ .93 per liter 154.26 than 24 percent alcohol 154.27 by volume 154.28 (f) Natural and $1.82 per gallon $ .48 per liter 154.29 artificial sparkling wines 154.30 containing alcohol 154.31 (g) Cider as defined in $ .15 per gallon $ .04 per liter 154.32 section 297G.01, 154.33 subdivision 3a 154.34 (h) Low alcohol dairy $ .08 per gallon $ .02 per liter 154.35 cocktails 154.36 In computing the tax on a package of distilled spirits or 155.1 wine, a proportional tax at a like rate on all fractional parts 155.2 of a gallon or liter must be paid, except that the tax on a 155.3 fractional part of a gallon less than 1/16 of a gallon is the 155.4 same as for 1/16 of a gallon. 155.5 [EFFECTIVE DATE.] This section is effective for sales made 155.6 after June 30, 2003. 155.7 Sec. 13. Minnesota Statutes 2002, section 297G.09, is 155.8 amended by adding a subdivision to read: 155.9 Subd. 9. [ACCELERATED TAX PAYMENT; PENALTY.] A person 155.10 liable for tax under this chapter having a liability of $120,000 155.11 or more during a fiscal year ending June 30, shall remit the 155.12 June liability for the next year in the following manner: 155.13 (a) Two business days before June 30 of the year, the 155.14 taxpayer shall remit the actual May liability and 85 percent of 155.15 the estimated June liability to the commissioner and file the 155.16 return in the form and manner prescribed by the commissioner. 155.17 (b) On or before August 18 of the year, the taxpayer shall 155.18 submit a return showing the actual June liability and pay any 155.19 additional amount of tax not remitted in June. A penalty is 155.20 imposed equal to ten percent of the amount of June liability 155.21 required to be paid in June less the amount remitted in June. 155.22 However, the penalty is not imposed if the amount remitted in 155.23 June equals the lesser of: 155.24 (1) 85 percent of the actual June liability; or 155.25 (2) 85 percent of the preceding May liability. 155.26 [EFFECTIVE DATE.] This section is effective for taxpayers 155.27 having a liability of $120,000 or more during the fiscal year 155.28 ending June 30, 2003, and each fiscal year thereafter, and for 155.29 accelerated payments becoming due in 2004 and thereafter. 155.30 Sec. 14. Minnesota Statutes 2002, section 349.16, is 155.31 amended by adding a subdivision to read: 155.32 Subd. 11. [AGREEMENT TO PAY TAXES.] An organization which 155.33 is recognized by federal law, regulation, or other ruling as a 155.34 quasi-governmental organization that would otherwise be exempt 155.35 from one or more taxes under chapter 297E must agree to pay all 155.36 taxes under chapter 297E on lawful gambling conducted by the 156.1 organization as a condition of receiving or renewing a license 156.2 or premises permit. 156.3 ARTICLE 10 156.4 LOCAL ECONOMIC DEVELOPMENT 156.5 Section 1. Minnesota Statutes 2002, section 469.169, is 156.6 amended by adding a subdivision to read: 156.7 Subd. 16. [ADDITIONAL BORDER CITY ALLOCATIONS.] (a) In 156.8 addition to tax reductions authorized in subdivisions 7 to 15, 156.9 the commissioner shall allocate $750,000 for tax reductions to 156.10 border city enterprise zones in cities located on the western 156.11 border of the state. The commissioner shall make allocations to 156.12 zones in cities on the western border on a per capita basis. 156.13 Allocations made under this subdivision may be used for tax 156.14 reductions as provided in section 469.171, or for other offsets 156.15 of taxes imposed on or remitted by businesses located in the 156.16 enterprise zone, but only if the municipality determines that 156.17 the granting of the tax reduction or offset is necessary in 156.18 order to retain a business within or attract a business to the 156.19 zone. Any portion of the allocation provided in this paragraph 156.20 may alternatively be used for tax reductions under section 156.21 469.1732 or 469.1734. 156.22 (b) The commissioner shall allocate $750,000 for tax 156.23 reductions under section 469.1732 or 469.1734 to cities with 156.24 border city enterprise zones located on the western border of 156.25 the state. The commissioner shall allocate this amount among 156.26 the cities on a per capita basis. Any portion of the allocation 156.27 provided in this paragraph may alternatively be used for tax 156.28 reductions as provided in section 469.171. 156.29 [EFFECTIVE DATE.] This section is effective the day 156.30 following final enactment. 156.31 Sec. 2. Minnesota Statutes 2002, section 469.174, 156.32 subdivision 6, as amended by Laws 2003, chapter 127, article 10, 156.33 section 2, is amended to read: 156.34 Subd. 6. [MUNICIPALITY.] "Municipality" means the city, 156.35 however organized, in which the district is located, with the 156.36 following exceptions: 157.1 (1) for a project undertaken pursuant to sections 469.152 157.2 to 469.165, "municipality" has the meaning given in sections 157.3 469.152 to 469.165; and 157.4 (2) for a project undertaken pursuant to sections 469.142 157.5 to 469.151, or a county or multicounty project undertaken 157.6 pursuant to sections 469.004 to 469.008 or special law, 157.7 "municipality" means the county in which the district is located. 157.8 [EFFECTIVE DATE.] This section is effective for districts 157.9 for which the request for certification was made after July 31, 157.10 1979. 157.11 Sec. 3. Minnesota Statutes 2002, section 469.174, 157.12 subdivision 10, is amended to read: 157.13 Subd. 10. [REDEVELOPMENT DISTRICT.] (a) "Redevelopment 157.14 district" means a type of tax increment financing district 157.15 consisting of a project, or portions of a project, within which 157.16 the authority finds by resolution that one or more of the 157.17 following conditions, reasonably distributed throughout the 157.18 district, exists: 157.19 (1) parcels consisting of 70 percent of the area of the 157.20 district are occupied by buildings, streets, utilities, paved or 157.21 gravel parking lots, or other similar structures and more than 157.22 50 percent of the buildings, not including outbuildings, are 157.23 structurally substandard to a degree requiring substantial 157.24 renovation or clearance;or157.25 (2) the property consists of vacant, unused, underused, 157.26 inappropriately used, or infrequently used railyards, rail 157.27 storage facilities, or excessive or vacated railroad 157.28 rights-of-way;or157.29 (3) tank facilities, or property whose immediately previous 157.30 use was for tank facilities, as defined in section 115C.02, 157.31 subdivision 15, if the tank facilities: 157.32 (i) have or had a capacity of more than 1,000,000 gallons; 157.33 (ii) are located adjacent to rail facilities; and 157.34 (iii) have been removed or are unused, underused, 157.35 inappropriately used, or infrequently used; or 157.36 (4) a qualifying disaster area, as defined in subdivision 158.1 10b. 158.2 (b) For purposes of this subdivision, "structurally 158.3 substandard" shall mean containing defects in structural 158.4 elements or a combination of deficiencies in essential utilities 158.5 and facilities, light and ventilation, fire protection including 158.6 adequate egress, layout and condition of interior partitions, or 158.7 similar factors, which defects or deficiencies are of sufficient 158.8 total significance to justify substantial renovation or 158.9 clearance. 158.10 (c) A building is not structurally substandard if it is in 158.11 compliance with the building code applicable to new buildings or 158.12 could be modified to satisfy the building code at a cost of less 158.13 than 15 percent of the cost of constructing a new structure of 158.14 the same square footage and type on the site. The municipality 158.15 may find that a building is not disqualified as structurally 158.16 substandard under the preceding sentence on the basis of 158.17 reasonably available evidence, such as the size, type, and age 158.18 of the building, the average cost of plumbing, electrical, or 158.19 structural repairs, or other similar reliable evidence. The 158.20 municipality may not make such a determination without an 158.21 interior inspection of the property, but need not have an 158.22 independent, expert appraisal prepared of the cost of repair and 158.23 rehabilitation of the building. An interior inspection of the 158.24 property is not required, if the municipality finds that (1) the 158.25 municipality or authority is unable to gain access to the 158.26 property after using its best efforts to obtain permission from 158.27 the party that owns or controls the property; and (2) the 158.28 evidence otherwise supports a reasonable conclusion that the 158.29 building is structurally substandard. Items of evidence that 158.30 support such a conclusion include recent fire or police 158.31 inspections, on-site property tax appraisals or housing 158.32 inspections, exterior evidence of deterioration, or other 158.33 similar reliable evidence. Written documentation of the 158.34 findings and reasons why an interior inspection was not 158.35 conducted must be made and retained under section 469.175, 158.36 subdivision 3, clause (1). 159.1 (d) A parcel is deemed to be occupied by a structurally 159.2 substandard building for purposes of the finding under paragraph 159.3 (a) if all of the following conditions are met: 159.4 (1) the parcel was occupied by a substandard building 159.5 within three years of the filing of the request for 159.6 certification of the parcel as part of the district with the 159.7 county auditor; 159.8 (2) the substandard building was demolished or removed by 159.9 the authority or the demolition or removal was financed by the 159.10 authority or was done by a developer under a development 159.11 agreement with the authority; 159.12 (3) the authority found by resolution before the demolition 159.13 or removal that the parcel was occupied by a structurally 159.14 substandard building and that after demolition and clearance the 159.15 authority intended to include the parcel within a district; and 159.16 (4) upon filing the request for certification of the tax 159.17 capacity of the parcel as part of a district, the authority 159.18 notifies the county auditor that the original tax capacity of 159.19 the parcel must be adjusted as provided by section 469.177, 159.20 subdivision 1, paragraph (h). 159.21 (e) For purposes of this subdivision, a parcel is not 159.22 occupied by buildings, streets, utilities, paved or gravel 159.23 parking lots, or other similar structures unless 15 percent of 159.24 the area of the parcel contains buildings, streets, utilities, 159.25 paved or gravel parking lots, or other similar structures. 159.26 (f) For districts consisting of two or more noncontiguous 159.27 areas, each area must qualify as a redevelopment district under 159.28 paragraph (a) to be included in the district, and the entire 159.29 area of the district must satisfy paragraph (a). 159.30 [EFFECTIVE DATE.] This section is effective for districts 159.31 for which the request for certification is made after the day 159.32 following final enactment. 159.33 Sec. 4. Minnesota Statutes 2002, section 469.174, is 159.34 amended by adding a subdivision to read: 159.35 Subd. 10b. [QUALIFIED DISASTER AREA.] A "qualified 159.36 disaster area" is an area that meets the following requirements: 160.1 (1) parcels consisting of 70 percent of the area of the 160.2 district were occupied by buildings, streets, utilities, paved 160.3 or gravel parking lots, or other similar structures immediately 160.4 before the disaster or emergency; 160.5 (2) the area of the district was subject to a disaster or 160.6 emergency, as defined in section 273.123, subdivision 1, within 160.7 the 18-month period ending on the day the request for 160.8 certification of the district is made; and 160.9 (3) 50 percent or more of the buildings in the area have 160.10 suffered substantial damage as a result of the disaster or 160.11 emergency. 160.12 [EFFECTIVE DATE.] This section is effective for districts 160.13 for which the request for certification is made after the day 160.14 following final enactment. 160.15 Sec. 5. Minnesota Statutes 2002, section 469.1763, 160.16 subdivision 2, is amended to read: 160.17 Subd. 2. [EXPENDITURES OUTSIDE DISTRICT.] (a) For each tax 160.18 increment financing district, an amount equal to at least 75 160.19 percent of the total revenue derived from tax increments paid by 160.20 properties in the district must be expended on activities in the 160.21 district or to pay bonds, to the extent that the proceeds of the 160.22 bonds were used to finance activities in the district or to pay, 160.23 or secure payment of, debt service on credit enhanced bonds. 160.24 For districts, other than redevelopment districts for which the 160.25 request for certification was made after June 30, 1995, the 160.26 in-district percentage for purposes of the preceding sentence is 160.27 80 percent. Not more than 25 percent of the total revenue 160.28 derived from tax increments paid by properties in the district 160.29 may be expended, through a development fund or otherwise, on 160.30 activities outside of the district but within the defined 160.31 geographic area of the project except to pay, or secure payment 160.32 of, debt service on credit enhanced bonds. For districts, other 160.33 than redevelopment districts for which the request for 160.34 certification was made after June 30, 1995, the pooling 160.35 percentage for purposes of the preceding sentence is 20 160.36 percent. The revenue derived from tax increments for the 161.1 district that are expended on costs under section 469.176, 161.2 subdivision 4h, paragraph (b), may be deducted first before 161.3 calculating the percentages that must be expended within and 161.4 without the district. 161.5 (b) In the case of a housing district, a housing project, 161.6 as defined in section 469.174, subdivision 11, is an activity in 161.7 the district. 161.8 (c) All administrative expenses are for activities outside 161.9 of the district, except that if the only expenses for activities 161.10 outside of the district under this subdivision are for the 161.11 purposes described in paragraph (d), administrative expenses 161.12 will be considered as expenditures for activities in the 161.13 district. 161.14 (d) The authority may elect, in the tax increment financing 161.15 plan for the district, to increase by up to ten percentage 161.16 points the permitted amount of expenditures for activities 161.17 located outside the geographic area of the district under 161.18 paragraph (a). As permitted by section 469.176, subdivision 4k, 161.19 the expenditures, including the permitted expenditures under 161.20 paragraph (a), need not be made within the geographic area of 161.21 the project. Expenditures that meet the requirements of this 161.22 paragraph are legally permitted expenditures of the district, 161.23 notwithstanding section 469.176, subdivisions 4b, 4c, and 4j. 161.24 To qualify for the increase under this paragraph, the 161.25 expenditures must: 161.26 (1) be used exclusively to assist housing that meets the 161.27 requirement for a qualified low-income building, as that term is 161.28 used in section 42 of the Internal Revenue Code; 161.29 (2) not exceed the qualified basis of the housing, as 161.30 defined under section 42(c) of the Internal Revenue Code, less 161.31 the amount of any credit allowed under section 42 of the 161.32 Internal Revenue Code; and 161.33 (3) be used to: 161.34 (i) acquire and prepare the site of the housing; 161.35 (ii) acquire, construct, or rehabilitate the housing; or 161.36 (iii) make public improvements directly related to the 162.1 housing. 162.2 [EFFECTIVE DATE.] This section is effective for districts 162.3 for which the request for certification was made after April 30, 162.4 1990. 162.5 Sec. 6. Minnesota Statutes 2002, section 469.1763, 162.6 subdivision 4, is amended to read: 162.7 Subd. 4. [USE OF REVENUES FOR DECERTIFICATION.] (a) In 162.8 each year beginning with the sixth year following certification 162.9 of the district, if the applicable in-district percent of the 162.10 revenues derived from tax increments paid by properties in the 162.11 districtthat remain afterexceeds the amount of expenditures 162.12 that have been made for costs permitted under subdivision 3, an 162.13 amount equal to the difference between the in-district percent 162.14 of the revenues derived from tax increments paid by properties 162.15 in the district and the amount of expenditures that have been 162.16 made for costs permitted under subdivision 3 must be used and 162.17 only used to pay or defease the following or be set aside to pay 162.18 the following: 162.19 (1) outstanding bonds, as defined in subdivision 3, 162.20 paragraphs (a), clause (2), and (b); 162.21 (2) contracts, as defined in subdivision 3, paragraph (a), 162.22 clauses (3) and (4); or 162.23 (3) credit enhanced bonds to which the revenues derived 162.24 from tax increments are pledged, but only to the extent that 162.25 revenues of the district for which the credit enhanced bonds 162.26 were issued are insufficient to pay the bonds and to the extent 162.27 that the increments from the applicable pooling percent share 162.28 for the district are insufficient. 162.29 (b) When the outstanding bonds have been defeased and when 162.30 sufficient money has been set aside to pay contractual 162.31 obligations as defined in subdivision 3, paragraph (a), clauses 162.32 (3) and (4), the district must be decertified and the pledge of 162.33 tax increment discharged. 162.34 Sec. 7. Minnesota Statutes 2002, section 469.177, 162.35 subdivision 1, is amended to read: 162.36 Subdivision 1. [ORIGINAL NET TAX CAPACITY.] (a) Upon or 163.1 after adoption of a tax increment financing plan, the auditor of 163.2 any county in which the district is situated shall, upon request 163.3 of the authority, certify the original net tax capacity of the 163.4 tax increment financing district and that portion of the 163.5 district overlying any subdistrict as described in the tax 163.6 increment financing plan and shall certify in each year 163.7 thereafter the amount by which the original net tax capacity has 163.8 increased or decreased as a result of a change in tax exempt 163.9 status of property within the district and any subdistrict, 163.10 reduction or enlargement of the district or changes pursuant to 163.11 subdivision 4. 163.12 (b) For districts approved under section 469.175, 163.13 subdivision 3, or parcels added to existing districts after May 163.14 1, 1988, if the classification under section 273.13 of property 163.15 located in a district changes to a classification that has a 163.16 different assessment ratio, the original net tax capacity of 163.17 that property must be redetermined at the time when its use is 163.18 changed as if the property had originally been classified in the 163.19 same class in which it is classified after its use is changed. 163.20 (c) The amount to be added to the original net tax capacity 163.21 of the district as a result of previously tax exempt real 163.22 property within the district becoming taxable equals the net tax 163.23 capacity of the real property as most recently assessed pursuant 163.24 to section 273.18 or, if that assessment was made more than one 163.25 year prior to the date of title transfer rendering the property 163.26 taxable, the net tax capacity assessed by the assessor at the 163.27 time of the transfer. If improvements are made to tax exempt 163.28 property after certification of the district and before the 163.29 parcel becomes taxable, the assessor shall, at the request of 163.30 the authority, separately assess the estimated market value of 163.31 the improvements. If the property becomes taxable, the county 163.32 auditor shall add to original net tax capacity, the net tax 163.33 capacity of the parcel, excluding the separately assessed 163.34 improvements. If substantial taxable improvements were made to 163.35 a parcel after certification of the district and if the property 163.36 later becomes tax exempt, in whole or part, as a result of the 164.1 authority acquiring the property through foreclosure or exercise 164.2 of remedies under a lease or other revenue agreement or as a 164.3 result of tax forfeiture, the amount to be added to the original 164.4 net tax capacity of the district as a result of the property 164.5 again becoming taxable is the amount of the parcel's value that 164.6 was included in original net tax capacity when the parcel was 164.7 first certified. The amount to be added to the original net tax 164.8 capacity of the district as a result of enlargements equals the 164.9 net tax capacity of the added real property as most recently 164.10 certified by the commissioner of revenue as of the date of 164.11 modification of the tax increment financing plan pursuant to 164.12 section 469.175, subdivision 4. 164.13 (d) For districts approved under section 469.175, 164.14 subdivision 3, or parcels added to existing districts after May 164.15 1, 1988, if the net tax capacity of a property increases because 164.16 the property no longer qualifies under the Minnesota 164.17 Agricultural Property Tax Law, section 273.111; the Minnesota 164.18 Open Space Property Tax Law, section 273.112; or the 164.19 Metropolitan Agricultural Preserves Act, chapter 473H, or 164.20 because platted, unimproved property is improved or three years 164.21 pass after approval of the plat under section 273.11, 164.22 subdivision 1, the increase in net tax capacity must be added to 164.23 the original net tax capacity. 164.24 (e) The amount to be subtracted from the original net tax 164.25 capacity of the district as a result of previously taxable real 164.26 property within the district becoming tax exempt, or a reduction 164.27 in the geographic area of the district, shall be the amount of 164.28 original net tax capacity initially attributed to the property 164.29 becoming tax exempt or being removed from the district. If the 164.30 net tax capacity of property located within the tax increment 164.31 financing district is reduced by reason of a court-ordered 164.32 abatement, stipulation agreement, voluntary abatement made by 164.33 the assessor or auditor or by order of the commissioner of 164.34 revenue, the reduction shall be applied to the original net tax 164.35 capacity of the district when the property upon which the 164.36 abatement is made has not been improved since the date of 165.1 certification of the district and to the captured net tax 165.2 capacity of the district in each year thereafter when the 165.3 abatement relates to improvements made after the date of 165.4 certification. The county auditor may specify reasonable form 165.5 and content of the request for certification of the authority 165.6 and any modification thereof pursuant to section 469.175, 165.7 subdivision 4. 165.8 (f) If a parcel of property contained a substandard 165.9 building that was demolished or removed and if the authority 165.10 elects to treat the parcel as occupied by a substandard building 165.11 under section 469.174, subdivision 10, paragraph (b), the 165.12 auditor shall certify the original net tax capacity of the 165.13 parcel using the greater of (1) the current net tax capacity of 165.14 the parcel, or (2) the estimated market value of the parcel for 165.15 the year in which the building was demolished or removed, but 165.16 applying the class rates for the current year. 165.17 (g) For a redevelopment district qualifying under section 165.18 469.174, subdivision 10, paragraph (a), clause (4), as a 165.19 qualified disaster area, the auditor shall certify the value of 165.20 the land as the original tax capacity for any parcel in the 165.21 district that contains a building that suffered substantial 165.22 damage as a result of the disaster or emergency. 165.23 [EFFECTIVE DATE.] This section is effective for districts 165.24 for which the request for certification is made after the day 165.25 following final enactment. 165.26 Sec. 8. [469.1794] [DURATION EXTENSION TO OFFSET 165.27 DEFICITS.] 165.28 Subdivision 1. [AUTHORITY.] Subject to the conditions and 165.29 limitations imposed by this section, an authority may, by 165.30 resolution, extend the duration limit under section 469.176, 165.31 subdivision 1b, 1c, 1e, or 1g, that applies to a preexisting 165.32 district by up to the maximum number of years permitted under 165.33 subdivision 5, plus any amount authorized by the commissioner of 165.34 revenue under subdivision 6. 165.35 Subd. 2. [DEFINITIONS.] (a) For purposes of this section, 165.36 the following terms have the meanings given. 166.1 (b) "Extended district" means a tax increment financing 166.2 district whose duration limit is extended under this section. 166.3 (c) "Preexisting district" has the meaning given in section 166.4 469.1792, subdivision 2. 166.5 (d) "Preexisting obligation" has the meaning given in 166.6 section 469.1792, subdivision 2. 166.7 (e) "Qualifying obligation" means: 166.8 (1) a preexisting obligation that is: 166.9 (i) a general obligation bond of the municipality; 166.10 (ii) a general obligation bond of the authority; 166.11 (iii) a revenue bond of the authority to which other 166.12 revenues or money of the authority in addition to tax increments 166.13 are pledged to pay; 166.14 (iv) an interfund loan, including an advance or payment 166.15 made by the municipality or authority after June 1, 2002, to pay 166.16 an obligation listed in items (i) to (iii); 166.17 (v) an obligation assumed by a developer before January 1, 166.18 2001, to repay a general obligation bond issued by a 166.19 municipality to fund cleanup and development activities, if the 166.20 developer assumed the obligation more than five years after the 166.21 issuance of the bonds; or 166.22 (2) a bond issued to refinance a preexisting obligation 166.23 under clause (1). 166.24 Subd. 3. [PRECONDITIONS.] Before an authority may extend 166.25 the duration of district under this section, the following 166.26 conditions must be met with regard to the district: 166.27 (1) the original local tax rate under section 469.177, 166.28 subdivision 1a, does not apply under an election made under 166.29 section 469.1792, subdivision 3, or under other operation of 166.30 law; 166.31 (2) for a district in the metropolitan area or taconite tax 166.32 relief area, the fiscal disparities contribution is computed 166.33 under section 469.177, subdivision 3, paragraph (a); 166.34 (3) the municipality has transferred any available 166.35 increments in other districts to pay qualified obligations of 166.36 the district or other districts in the municipality under 167.1 section 469.1763, subdivision 6; and 167.2 (4) the authority finds that, taking into account all of 167.3 the increments that are available to pay qualifying obligations 167.4 for the district, the increments from the district will be 167.5 insufficient to pay the amount of qualifying obligations and 167.6 that the insufficiency is a result of (i) the changes in the 167.7 class rates and (ii) elimination of the state-determined general 167.8 education property tax levy under Laws 2001, First Special 167.9 Session chapter 5. 167.10 Subd. 4. [NOTICE; HEARING; AND APPROVALS.] The authority 167.11 may extend the duration of a district under this section only 167.12 after the municipality has approved the extension after 167.13 providing public notice and holding a hearing in the manner 167.14 provided under section 469.175, subdivision 3. 167.15 Subd. 5. [MAXIMUM EXTENSION.] (a) The maximum extension 167.16 for a district under this subdivision equals the lesser of: 167.17 (1) four years; or 167.18 (2) the tax reform percentage for the district, determined 167.19 under paragraph (b), multiplied by the remaining duration of the 167.20 district rounded to the nearest whole number. Fractions in 167.21 excess of one-third are rounded up. 167.22 (b) The tax reform percentage for the district, as 167.23 estimated by the county auditor, equals: 167.24 (1)(i) the total taxes paid by the original tax capacity 167.25 for the district for taxes payable in 2001, minus 167.26 (ii) the average of the total taxes paid by the original 167.27 tax capacity for the district for taxes payable in 2002 and in 167.28 2003, divided by 167.29 (2) the total taxes paid by the original tax capacity for 167.30 the district for taxes payable in 2001. 167.31 (c) In the resolution approving the extension, the 167.32 municipality may elect to treat all preexisting obligations as 167.33 qualified obligations for purposes of this section. If the 167.34 municipality makes an election under this paragraph, the maximum 167.35 duration is reduced by one-half of the amount otherwise 167.36 permitted under paragraph (a). 168.1 (d) The remaining duration of a district is the number of 168.2 calendar years, beginning after December 31, 2001, in which the 168.3 district may collect increment under its duration limit under 168.4 section 469.176, subdivision 1b, 1c, 1e, or 1g, or a special law 168.5 approved before January 1, 2002, as applicable. 168.6 (e) For purposes of this subdivision, "taxes" exclude taxes 168.7 levied against market value, rather than tax capacity, and the 168.8 state general tax under section 275.025. 168.9 Subd. 6. [COMMISSIONER AUTHORITY.] (a) If the municipality 168.10 determines that the extension permitted under subdivision 5 will 168.11 not provide sufficient revenue to pay in full the amount of 168.12 qualifying obligations, the municipality may apply to the 168.13 commissioner of revenue for an additional duration extension. 168.14 The commissioner may authorize an extension of the duration of 168.15 the district of up to two years after determining that: 168.16 (1) the insufficiency of revenues to pay the qualifying 168.17 obligations, which will be offset by the additional extension of 168.18 the duration limit, result from (i) the changes in the class 168.19 rates and (ii) elimination of the state-determined general 168.20 education property tax levy under Laws 2001, First Special 168.21 Session chapter 5; 168.22 (2) the municipality has or is transferring all available 168.23 increments from other preexisting districts and after August 1, 168.24 2001, has not entered into new obligations or authorized new 168.25 spending that reduced the amount of those increments that are 168.26 available for transfer to pay qualifying obligations; and 168.27 (3) increases in increments over the term of the district 168.28 are unlikely to eliminate the insufficiency. 168.29 (b) The commissioner may: 168.30 (1) establish the form of and time for applications under 168.31 this subdivision; and 168.32 (2) require the municipality to provide the information 168.33 that the commissioner determines is necessary or useful in 168.34 evaluating the application. 168.35 (c) This subdivision does not apply to a district if the 168.36 authority has made an election under subdivision 5, paragraph 169.1 (c). 169.2 Subd. 7. [LIMITS ON USE OF INCREMENTS.] (a) Tax increments 169.3 of an extended district may only be used to pay preexisting 169.4 obligations of the district and administrative expenses, 169.5 effective upon the final required approval of the extension 169.6 under this section. All tax increments that are attributable to 169.7 an extension of the duration of a district under this section 169.8 must be used only to pay qualified obligations of the district. 169.9 If increments from a district subject to this subdivision are 169.10 pledged to pay preexisting obligations that are not qualified 169.11 obligations, increments received under the duration limit, 169.12 determined without regard to this section, must be used to pay 169.13 qualified obligations and preexisting obligations that are not 169.14 qualified obligations in proportion to their relative shares of 169.15 all payments due on all preexisting obligations. 169.16 (b) If the authority elects to extend the duration of a 169.17 district under this section and if increments from one or more 169.18 other districts are pledged to pay preexisting obligations of 169.19 the extended district, increments from all of the districts may 169.20 only be used to pay preexisting obligations and administrative 169.21 expenses. 169.22 Subd. 8. [DECERTIFICATION.] An extended district must be 169.23 decertified at the end of the first calendar year when 169.24 sufficient increments have been received to pay the qualified 169.25 obligations of the extended district. Any remaining unspent 169.26 increments must be distributed as excess increments under 169.27 section 469.176, subdivision 2, clause (4). 169.28 [EFFECTIVE DATE.] This section is effective the day 169.29 following final enactment and applies to districts for which the 169.30 request for certification was made on, before, or after August 169.31 1, 1979, and before August 1, 2001. 169.32 Sec. 9. Minnesota Statutes 2002, section 474A.061, 169.33 subdivision 1, as amended by Laws 2003, chapter 127, article 12, 169.34 section 22, is amended to read: 169.35 Subdivision 1. [ALLOCATION APPLICATION.] (a) An issuer may 169.36 apply for an allocation under this section by submitting to the 170.1 department an application on forms provided by the department, 170.2 accompanied by (1) a preliminary resolution, (2) a statement of 170.3 bond counsel that the proposed issue of obligations requires an 170.4 allocation under this chapter and the Internal Revenue Code, (3) 170.5 the type of qualified bonds to be issued, (4) an application 170.6 deposit in the amount of one percent of the requested allocation 170.7 before the last Monday in July, or in the amount of two percent 170.8 of the requested allocation on or after the last Monday in July, 170.9 (5) a public purpose scoring worksheet for manufacturing project 170.10 and enterprise zone facility project applications, and (6) for 170.11 residential rental projects, a statement from the applicant or 170.12 bond counsel as to whether the project preserves existing 170.13 federally subsidized housing for residential rental project 170.14 applications and whether the project is restricted to persons 170.15 who are 55 years of age or older. The issuer must pay the 170.16 application deposit by a check made payable to the department of 170.17 finance. The Minnesota housing finance agency, the Minnesota 170.18 rural finance authority, and the Minnesota higher education 170.19 services office may apply for and receive an allocation under 170.20 this section without submitting an application deposit. 170.21 (b) An entitlement issuer may not apply for an allocation 170.22 from the public facilities pool unless it has either permanently 170.23 issued bonds equal to the amount of its entitlement allocation 170.24 for the current year plus any amount of bonding authority 170.25 carried forward from previous years or returned for reallocation 170.26 all of its unused entitlement allocation. An entitlement issuer 170.27 may not apply for an allocation from the housing pool unless it 170.28 either has permanently issued bonds equal to any amount of 170.29 bonding authority carried forward from a previous year or has 170.30 returned for reallocationall of its unused entitlement170.31allocationany unused bonding authority carried forward from a 170.32 previous year. For purposes of this subdivision, its 170.33 entitlement allocation includes an amount obtained under section 170.34 474A.04, subdivision 6. This paragraph does not apply to an 170.35 application from the Minnesota housing finance agency for an 170.36 allocation under subdivision 2a for cities who choose to have 171.1 the agency issue bonds on their behalf. 171.2 (c) If an application is rejected under this section, the 171.3 commissioner must notify the applicant and return the 171.4 application deposit to the applicant within 30 days unless the 171.5 applicant requests in writing that the application be 171.6 resubmitted. The granting of an allocation of bonding authority 171.7 under this section must be evidenced by a certificate of 171.8 allocation. 171.9 [EFFECTIVE DATE.] This section is effective the day 171.10 following final enactment. 171.11 Sec. 10. [CITY OF NEW HOPE; TAX INCREMENT FINANCING 171.12 DISTRICT.] 171.13 Subdivision 1. [SPECIAL RULES.] (a) At the election of the 171.14 city, upon adoption of the tax increment financing plan for a 171.15 district or districts described in this section, the rules 171.16 provided under this section apply to each such district. 171.17 For purposes of this section, "district" means a 171.18 redevelopment or soils condition tax increment financing 171.19 district established by the city of New Hope or the economic 171.20 development authority of the city within the following area: 171.21 beginning at the intersection of Winnetka Avenue N. and the 171.22 westerly extension of 58th Avenue N., east on the westerly 171.23 extension of 58th Avenue N. to Sumter Avenue N., south on Sumter 171.24 Avenue N. to Bass Lake Road, east on Bass Lake Road to the city 171.25 boundaries of New Hope and Crystal, MN, south along that city 171.26 boundary to St. Raphael Drive, west on St. Raphael Drive to 171.27 Sumter Avenue N., south on Sumter Avenue N. to 53rd Avenue N., 171.28 west on 53rd Avenue N. to Winnetka Avenue N., north on Winnetka 171.29 Avenue N. to 55th Avenue N., west on 55th Avenue N. to Zealand 171.30 Avenue N., north on Zealand Avenue N. to Bass Lake Road, east on 171.31 Bass Lake Road to Yukon Avenue N., north on Yukon Avenue N. to 171.32 Meadow Lake Road E., east on Meadow Lake Road E. to the 171.33 intersection with the west property line of New Hope golf 171.34 course, south along the west property line of New Hope golf 171.35 course to Bass Lake Road, east on Bass Lake Road to Winnetka 171.36 Avenue N., north on Winnetka Avenue N. to the point of 172.1 beginning. The total number of parcels that may be included 172.2 within all such redevelopment or soils condition tax increment 172.3 financing districts must not exceed 131 and the total acreage, 172.4 including roads, easements, and rights-of-way, must not exceed 172.5 130 acres. 172.6 (b) The five-year rule under Minnesota Statutes, section 172.7 469.1763, subdivision 3, applies as if the limit is nine years. 172.8 (c) The limitations on expenditure of increment outside of 172.9 the district under Minnesota Statutes, section 469.1763, 172.10 subdivision 2, apply as follows: 172.11 (1) administrative expenses are treated as expenditures for 172.12 activities within the district; 172.13 (2) the percentage of increments that may be spent on 172.14 activities outside of the district under Minnesota Statutes, 172.15 section 469.1763, subdivision 2, is increased by 15 percentage 172.16 points; 172.17 (3) increments spent outside of the district may only be 172.18 spent on costs, such as property acquisition and public 172.19 improvements, that are fairly apportioned to parcels on which 172.20 the ultimate use is planned for housing; and 172.21 (4) increments may only be expended on improvements within 172.22 the area identified in paragraph (a). 172.23 (d) The requirements for qualifying a redevelopment 172.24 district under Minnesota Statutes, section 469.174, subdivision 172.25 10, do not apply to the parcels identified as 08-118-21-22-0001, 172.26 08-118-21-33-0008, 08-118-21-33-0009, 08-118-21-33-0010, 172.27 08-118-21-33-0011, 08-118-21-33-0013, 08-118-21-33-0018, 172.28 08-118-21-33-0019, 08-118-21-33-0025, 08-118-21-33-0027, 172.29 08-118-21-33-0029, 08-118-21-33-0082, and 08-118-21-33-0087, 172.30 which are deemed substandard for the purpose of qualifying the 172.31 district as a redevelopment district. 172.32 Subd. 2. [EXPIRATION.] (a) The exception under subdivision 172.33 1, paragraph (c), from the limitations of Minnesota Statutes, 172.34 section 469.1763, subdivision 2, expires 20 years after the 172.35 receipt of the first increment from a district for which the 172.36 city has elected that this section applies. 173.1 (b) The authority to approve tax increment financing plans 173.2 to establish a tax increment financing district subject to this 173.3 section expires on December 31, 2013. 173.4 Subd. 3. [EFFECTIVE DATE.] This section is effective upon 173.5 approval by the governing bodies of the city of New Hope and 173.6 Hennepin county and upon compliance by the city with Minnesota 173.7 Statutes, section 645.021, subdivision 3. 173.8 Sec. 11. [EFFECTIVE DATE.] 173.9 Unless specifically provided otherwise in that article, 173.10 Laws 2003, chapter 127, article 12, is effective the day 173.11 following the final enactment of Laws 2003, chapter 127. 173.12 ARTICLE 11 173.13 MISCELLANEOUS 173.14 Section 1. Minnesota Statutes 2002, section 3.986, 173.15 subdivision 4, is amended to read: 173.16 Subd. 4. [POLITICAL SUBDIVISION.] A "political 173.17 subdivision" is a school district, county, or home rule charter 173.18 or statutory city. 173.19 [EFFECTIVE DATE.] This section is effective July 1, 2003. 173.20 Sec. 2. Minnesota Statutes 2002, section 16A.152, 173.21 subdivision 1, is amended to read: 173.22 Subdivision 1. [CASH FLOW ACCOUNT ESTABLISHED.](a)A cash 173.23 flow account is created in the general fund in the state 173.24 treasury.Beginning July 1, 2003, the commissioner of finance173.25shall restrict part or all of the balance before reserves in the173.26general fund as may be necessary to fund the cash flow account,173.27up to $350,000,000.173.28(b) TheAmountsrestricted are transferred toin the cash 173.29 flow accountandshall remain in the account until drawn down 173.30 and used to meet cash flow deficiencies resulting from uneven 173.31 distribution of revenue collections and required expenditures 173.32 during a fiscal year. 173.33 Sec. 3. Minnesota Statutes 2002, section 16A.152, 173.34 subdivision 1b, is amended to read: 173.35 Subd. 1b. [BUDGET RESERVE INCREASE.] OnJune 30July 1, 173.36 2003, the commissioner of finance shall transfer 174.1$3,900,000$300,000,000 to the budget reserve account in the 174.2 general fund. OnJune 30July 1, 2004, the commissioner of 174.3 finance shall transfer$12,300,000$296,000,000 to the budget 174.4 reserve account in the general fund.On June 30, 2005, the174.5commissioner of finance shall transfer $12,000,000 to the budget174.6reserve account in the general fund.The amounts necessary for 174.7 this purpose are appropriated from the general fund. 174.8 Sec. 4. Minnesota Statutes 2002, section 16A.152, 174.9 subdivision 2, is amended to read: 174.10 Subd. 2. [ADDITIONAL REVENUES; PRIORITY.] If on the basis 174.11 of a forecast of general fund revenues and expenditures, the 174.12 commissioner of finance determines that there will be a positive 174.13 unrestricted budgetary general fund balance at the close of the 174.14 biennium, the commissioner of finance must allocate money tothe174.15budget reserve until the total amount in the account equals174.16$653,000,000the following accounts and purposes in priority 174.17 order: 174.18 (1) the cash flow account established in subdivision 1 174.19 until that account reaches $350,000,000; and 174.20 (2) the budget reserve account established in subdivision 174.21 1a until that account reaches $653,000,000. 174.22 The amounts necessary to meet the requirements of this 174.23 section are appropriated from the general fund within two weeks 174.24 after the forecast is released. 174.25 Sec. 5. Minnesota Statutes 2002, section 18B.07, 174.26 subdivision 2, as amended by Laws 2003, chapter 127, article 13, 174.27 section 1, is amended to read: 174.28 Subd. 2. [PROHIBITED PESTICIDE USE.] (a) A person may not 174.29 use, store, handle, distribute, or dispose of a pesticide, 174.30 rinsate, pesticide container, or pesticide application equipment 174.31 in a manner: 174.32 (1) that is inconsistent with a label or labeling as 174.33 defined by FIFRA; 174.34 (2) that endangers humans, damages agricultural products, 174.35 food, livestock, fish, or wildlife; or 174.36 (3) that will cause unreasonable adverse effects on the 175.1 environment. 175.2 (b) A person may not direct a pesticide onto property 175.3 beyond the boundaries of the target site. A person may not 175.4 apply a pesticide resulting in damage to adjacent property. 175.5 (c) A person may not directly apply a pesticide on a human 175.6 by overspray or target site spray, except when: 175.7 (1) the pesticide is intended for use on a human; 175.8 (2) the pesticide application is for mosquito control 175.9 operations; 175.10 (3) the pesticide application is for control of gypsy moth, 175.11 forest tent caterpillar, or other pest species, as determined by 175.12 the commissioner, and the pesticide used is a biological agent; 175.13 or 175.14 (4) the pesticide application is for a public health risk, 175.15 as determined by the commissioner of health, and the 175.16 commissioner of health, in consultation with the commissioner of 175.17 agriculture, determines that the application is warranted based 175.18 on the commissioner's balancing of the public health risk with 175.19 the risk that the pesticide application poses to the health of 175.20 the general population, with special attention to the health of 175.21 children. 175.22 (d) For pesticide applications under paragraph (c), clause 175.23 (2), the following conditions apply: 175.24 (1) no practicable and effective alternative method of 175.25 control exists; 175.26 (2) the pesticide is among the least toxic available for 175.27 control of the target pest; and 175.28 (3) notification to residents in the area to be treated is 175.29 provided at least 24 hours before application through direct 175.30 notification, posting daily on the treating organization's Web 175.31 site, if any, and by sending a broadcast e-mail to those persons 175.32 who request notification of such, of those areas to be treated 175.33 by adult mosquito control techniques during the next calendar 175.34 day. For control operations related to human disease, notice 175.35 under this paragraph may be given less than 24 hours in advance. 175.36 (e) For pesticide applications under paragraph (c), clauses 176.1 (3) and (4), the following conditions apply: 176.2 (1) no practicable and effective alternative method of 176.3 control exists; 176.4 (2) the pesticide is among the least toxic available for 176.5 control of the target pest; and 176.6 (3) notification of residents in the area to be treated is 176.7 provided by direct notification and through publication in a 176.8 newspaper of general circulation within the affected area. 176.9 (f) For purposes of this subdivision, "direct notification" 176.10 may include mailings, public meetings, posted placards, 176.11 neighborhood newsletters, or other means of contact designed to 176.12 reach as many residents as possible. 176.13 (g) A person may not apply a pesticide in a manner so as to 176.14 expose a worker in an immediately adjacent, open field. 176.15 Sec. 6. [270.30] [TAX PREPARATION SERVICES.] 176.16 Subdivision 1. [SCOPE.] (a) This section applies to a 176.17 person who offers, provides, or facilitates the provision of 176.18 refund anticipation loans, as part of or in connection with the 176.19 provision of tax preparation services. 176.20 (b) This section does not apply to: 176.21 (1) a tax preparer who provides tax preparation services 176.22 for fewer than six clients in a calendar year; 176.23 (2) the provision by a person of tax preparation services 176.24 to a spouse, parent, grandparent, child, or sibling; and 176.25 (3) the provision of services by an employee for an 176.26 employer. 176.27 Subd. 2. [DEFINITIONS.] (a) For purposes of this section, 176.28 the following terms have the meanings given. 176.29 (b) "Client" means an individual for whom a tax preparer 176.30 performs or agrees to perform tax preparation services. 176.31 (c) "Person" means an individual, corporation, partnership, 176.32 limited liability company, association, trustee, or other legal 176.33 entity. 176.34 (d) "Refund anticipation loan" means a loan, whether 176.35 provided by the tax preparer or another entity such as a 176.36 financial institution, in anticipation of, and whose payment is 177.1 secured by, a client's federal or state income tax refund or 177.2 both. 177.3 (e) "Tax preparation services" means services provided for 177.4 a fee or other consideration to a client to: 177.5 (1) assist with preparing or filing state or federal 177.6 individual income tax returns; 177.7 (2) assume final responsibility for completed work on an 177.8 individual income tax return on which preliminary work has been 177.9 done by another; or 177.10 (3) offer or facilitate the provision of refund 177.11 anticipation loans. 177.12 (f) "Tax preparer" or "preparer" means a person providing 177.13 tax preparation services subject to this section. 177.14 Subd. 3. [STANDARDS OF CONDUCT.] No tax preparer shall: 177.15 (1) without good cause fail to promptly, diligently, and 177.16 without unreasonable delay complete a client's tax return; 177.17 (2) obtain the signature of a client to a tax return or 177.18 authorizing document that contains blank spaces to be filled in 177.19 after it has been signed; 177.20 (3) fail to sign a client's tax return when payment for 177.21 services rendered has been made; 177.22 (4) fail or refuse to give a client a copy of any document 177.23 requiring the client's signature within a reasonable time after 177.24 the client signs the document; 177.25 (5) fail to retain for at least four years a copy of 177.26 individual income tax returns; 177.27 (6) fail to maintain a confidential relationship between 177.28 themselves and their clients or former clients; 177.29 (7) fail to take commercially reasonable measures to 177.30 safeguard a client's nonpublic personal information; 177.31 (8) make, authorize, publish, disseminate, circulate, or 177.32 cause to make, either directly or indirectly, any false, 177.33 deceptive, or misleading statement or representation relating to 177.34 or in connection with the offering or provision of tax 177.35 preparation services; 177.36 (9) require a client to enter into a loan arrangement in 178.1 order to complete a tax return; 178.2 (10) claim credits or deductions on a client's tax return 178.3 for which the tax preparer knows or reasonably should know the 178.4 taxpayer does not qualify; 178.5 (11) charge, offer to accept, or accept a fee based upon a 178.6 percentage of an anticipated refund for tax preparation 178.7 services; 178.8 (12) under any circumstances, withhold or fail to return to 178.9 a client a document provided by the client for use in preparing 178.10 the client's tax return. 178.11 Subd. 4. [REQUIRED DISCLOSURES; REFUND ANTICIPATION 178.12 LOANS.] (a) If a tax preparer offers to make or facilitate a 178.13 refund anticipation loan to the client, the preparer must make 178.14 the disclosures in this subdivision. The disclosures must be 178.15 made before or at the same time the preparer offers the refund 178.16 anticipation loan to the client. 178.17 (b) The tax preparer must provide to a client a written 178.18 notice on a single sheet of paper, separate from any other 178.19 document or writing, containing: 178.20 (1) a legend, centered at the top on the single sheet of 178.21 paper, in bold, capital letters, and in 28-point type stating 178.22 "NOTICE"; 178.23 (2) the following verbatim statements: 178.24 (i) "This a loan. The annual percentage rate (APR), based 178.25 on the estimated payment period, is (fill in the estimated APR)." 178.26 (ii) "Your refund will be used to repay the loan. As a 178.27 result, the amount of your refund will be reduced by (fill in 178.28 appropriate dollar amount) for fees, interest, and other 178.29 charges." 178.30 (iii) "You can get your refund in about two weeks if you 178.31 file your return electronically and have the Internal Revenue 178.32 Service send your refund to your own bank account." and 178.33 (3) if the client is subject to additional interest when a 178.34 refund is delayed, the following verbatim statement must also be 178.35 included in the notice: "If you choose to take this loan and 178.36 your refund is delayed, you may have to pay additional interest." 179.1 (c) All required statements must be in capital and small 179.2 font type fonts, in a minimum of 14-point type, with at least a 179.3 double space between each line in the statement and four spaces 179.4 between each statement. 179.5 (d) The notice must be signed and dated by the tax preparer 179.6 and the client. 179.7 Subd. 5. [ITEMIZED BILL REQUIRED.] A tax preparer must 179.8 provide an itemized statement of the charges for services, at 179.9 least separately stating the charges for: 179.10 (1) return preparation; 179.11 (2) electronic filing; and 179.12 (3) providing or facilitating a refund anticipation loan. 179.13 Subd. 6. [ENFORCEMENT; PENALTIES.] The commissioner may 179.14 impose an administrative penalty of not more than $1,000 per 179.15 violation of subdivision 3, 4, or 5. The commissioner may 179.16 terminate a tax preparer's authority to transmit returns 179.17 electronically to the state, if the commissioner determines the 179.18 tax preparer engaged in a pattern and practice of violating this 179.19 section. Imposition of a penalty under this subdivision is 179.20 subject to the contested case procedure under chapter 14. The 179.21 commissioner shall collect the penalty in the same manner as the 179.22 income tax. 179.23 Subd. 7. [ENFORCEMENT; CIVIL ACTIONS.] (a) Any violation 179.24 of this section is an unfair, deceptive, and unlawful trade 179.25 practice within the meaning of section 8.31. 179.26 (b) A client may bring a civil action seeking redress for a 179.27 violation of this section in the conciliation or the district 179.28 court of the county in which unlawful action is alleged to have 179.29 been committed or where the respondent resides or has a 179.30 principal place of business. 179.31 (c) A district court finding for the plaintiff must award 179.32 actual damages, including incidental and consequential damages, 179.33 reasonable attorney fees, court costs, and any other equitable 179.34 relief as the court considers appropriate. 179.35 Subd. 8. [EXEMPTIONS; ENFORCEMENT PROVISIONS.] The 179.36 provisions of subdivisions 6 and 7 do not apply to: 180.1 (1) an attorney admitted to practice under section 481.01; 180.2 (2) a certified public accountant holding a certificate 180.3 under section 326A.04 or a person issued a permit to practice 180.4 under section 326A.05; 180.5 (3) a person designated as a registered accounting 180.6 practitioner under Minnesota Rules, part 1105.6600, or a 180.7 registered accounting practitioner firm issued a permit under 180.8 Minnesota Rules, part 1105.7100; 180.9 (4) an enrolled agent who has passed the special enrollment 180.10 examination administered by the Internal Revenue Service; and 180.11 (5) any fiduciary, or the regular employees of a fiduciary, 180.12 while acting on behalf of the fiduciary estate, the testator, 180.13 trustor, grantor, or beneficiaries of them. 180.14 Sec. 7. Minnesota Statutes 2002, section 270A.03, 180.15 subdivision 2, is amended to read: 180.16 Subd. 2. [CLAIMANT AGENCY.] "Claimant agency" means any 180.17 state agency, as defined by section 14.02, subdivision 2, the 180.18 regents of the University of Minnesota, any district court of 180.19 the state, any county, any statutory or home rule charter city 180.20 presenting a claim for a municipal hospital or a public library 180.21 or a municipal ambulance service, a hospital district, a private 180.22 nonprofit hospital that leases its building from the county in 180.23 which it is located, any public agency responsible for child 180.24 support enforcement, any public agency responsible for the 180.25 collection of court-ordered restitution, and any public agency 180.26 established by general or special law that is responsible for 180.27 the administration of a low-income housing program. A county 180.28 may act as a claimant agency on behalf of an ambulance service 180.29 licensed under chapter 144E if the ambulance service's primary 180.30 service area is located at least in part within the county, but 180.31 more than one county may not act as a claimant agency for a 180.32 licensed ambulance service with respect to the same debt. 180.33 Sec. 8. Minnesota Statutes 2002, section 270A.07, 180.34 subdivision 1, is amended to read: 180.35 Subdivision 1. [NOTIFICATION REQUIREMENT.] (a) Any 180.36 claimant agency, seeking collection of a debt through setoff 181.1 against a refund due, shall submit to the commissioner 181.2 information indicating the amount of each debt and information 181.3 identifying the debtor, as required by section 270A.04, 181.4 subdivision 3. 181.5 (b) For each setoff of a debt against a refund due, the 181.6 commissioner shall charge a fee of $10. The proceeds of fees 181.7 shall be allocated by depositing $2.55 of each $10 fee collected 181.8 into a department of revenue recapture revolving fund and 181.9 depositing the remaining balance into the general fund. The 181.10 sums deposited into the revolving fund are appropriated to the 181.11 commissioner for the purpose of administering the Revenue 181.12 Recapture Act. 181.13 (c) For each debt for which a county acts as claimant 181.14 agency on behalf of a licensed ambulance service, the county may 181.15 charge the ambulance service a fee not to exceed the cost of 181.16 administering the claim. 181.17 (d) The claimant agency shall notify the commissioner when 181.18 a debt has been satisfied or reduced by at least $200 within 30 181.19 days after satisfaction or reduction. 181.20 Sec. 9. Minnesota Statutes 2002, section 270A.07, 181.21 subdivision 2, is amended to read: 181.22 Subd. 2. [SETOFF PROCEDURES.] (a) The commissioner, upon 181.23 receipt of notification, shall initiate procedures to detect any 181.24 refunds otherwise payable to the debtor. When the commissioner 181.25 determines that a refund is due to a debtor whose debt was 181.26 submitted by a claimant agency, the commissioner shall first 181.27 deduct the fee in subdivision 1, paragraph (b), and then remit 181.28 the refund or the amount claimed, whichever is less, to the 181.29 agency. In transferring or remitting moneys to the claimant 181.30 agency, the commissioner shall provide information indicating 181.31 the amount applied against each debtor's obligation and the 181.32 debtor's address listed on the tax return. 181.33 (b) The commissioner shall remit to the debtor the amount 181.34 of any refund due in excess of the debt submitted for setoff by 181.35 the claimant agency. Notice of the amount setoff and address of 181.36 the claimant agency shall accompany any disbursement to the 182.1 debtor of the balance of a refund, or shall be sent to the 182.2 debtor at the time of setoff if the entire refund is set off. 182.3 The notice shall also advise the debtor of the right to contest 182.4 the validity of the claim, other than a claim based upon child 182.5 support under section 518.171, 518.54, 518.551, or chapter 518C 182.6 at a hearing, subject to the restrictions in this paragraph. 182.7 The debtor must assert this right by written request to the 182.8 claimant agency, which request the claimant agency must receive 182.9 within 45 days of the date of the notice. This right does not 182.10 apply to (1) issues relating to the validity of the claim that 182.11 have been previously raised at a hearing under this section or 182.12 section 270A.09; (2) issues relating to the validity of the 182.13 claim that were not timely raised by the debtor under section 182.14 270A.08, subdivision 2; (3) issues relating to the validity of 182.15 the claim that have been previously raised at a hearing 182.16 conducted under rules promulgated by the United States 182.17 Department of Housing and Urban Development or any public agency 182.18 that is responsible for the administration of a low-income 182.19 housing program, or that were not timely raised by the debtor 182.20 under those rules; or (4) issues relating to the validity of the 182.21 claim for which a hearing is discretionary under section 182.22 270A.09. The notice shall include an explanation of the right 182.23 of the spouse who does not owe the debt to request the claimant 182.24 agency to repay the spouse's portion of a joint refund. 182.25 Sec. 10. Minnesota Statutes 2002, section 273.1341, as 182.26 added by Laws 2003, chapter 127, article 11, section 2, is 182.27 amended to read: 182.28 273.1341 [TACONITE ASSISTANCE AREA.] 182.29 A "taconite assistance area" means the geographic area that 182.30 falls within the boundaries of a school district that contains: 182.31 (1) a municipality in which the assessed valuation of 182.32 unmined iron ore on May 1, 1941, was not less than 40 percent of 182.33 the assessed valuation of all real property; or 182.34 (2) a municipality in which on January 1, 1977, or the 182.35 applicable assessment date, there is a taconite concentrating 182.36 plant or where taconite is mined or quarried or where there is 183.1 located an electric generating plant which qualifies as a 183.2 taconite facility. 183.3 [EFFECTIVE DATE.] This section is effective for taxes 183.4 payable in 2004 and thereafter. 183.5 Sec. 11. Minnesota Statutes 2002, section 276A.01, 183.6 subdivision 2, is amended to read: 183.7 Subd. 2. [AREA.] "Area" means the territory included 183.8 within alltax relieftaconite assistance areas defined in 183.9 section273.134, paragraph (b)273.1341. 183.10 Sec. 12. Minnesota Statutes 2002, section 289A.08, 183.11 subdivision 16, as amended by Laws 2003, First Special Session 183.12 chapter 1, article 2, section 81, is amended to read: 183.13 Subd. 16. [TAX REFUND OR RETURN PREPARERS; ELECTRONIC 183.14 FILING; PAPER FILING FEE IMPOSED.] (a) A "tax refund or return 183.15 preparer," as defined in section 289A.60, subdivision 13, 183.16 paragraph (g), who prepared more than 500 Minnesota individual 183.17 income tax returns for the prior calendar year must file all 183.18 Minnesota individual income tax returns prepared for the current 183.19 calendar year by electronic means. 183.20 (b) For tax returns prepared for the tax year beginning in 183.21 2001, the "500" in paragraph (a) is reduced to 250. 183.22 (c) For tax returns prepared for tax years beginning after 183.23 December 31, 2001, the "500" in paragraph (a) is reduced to 100. 183.24 (d) Paragraph (a) does not apply to a return if the 183.25 taxpayer has indicated on the return that the taxpayer did not 183.26 want the return filed by electronic means. 183.27 (e) For each return that is not filed electronically by a 183.28 tax refund or return preparer under this subdivision, including 183.29 returns filed under paragraph (d), a paper filing fee of $5 is 183.30 imposed upon the preparer. The fee is collected from the 183.31 preparer in the same manner as income tax. The fee does not 183.32 apply to returns that the commissioner requires to be filed in 183.33 paper form. 183.34 [EFFECTIVE DATE.] This section is effective for returns 183.35 filed for tax years beginning after December 31, 2002. 183.36 Sec. 13. Minnesota Statutes 2002, section 290.091, 184.1 subdivision 2, is amended to read: 184.2 Subd. 2. [DEFINITIONS.] For purposes of the tax imposed by 184.3 this section, the following terms have the meanings given: 184.4 (a) "Alternative minimum taxable income" means the sum of 184.5 the following for the taxable year: 184.6 (1) the taxpayer's federal alternative minimum taxable 184.7 income as defined in section 55(b)(2) of the Internal Revenue 184.8 Code; 184.9 (2) the taxpayer's itemized deductions allowed in computing 184.10 federal alternative minimum taxable income, but excluding: 184.11 (i) the charitable contribution deduction under section 170 184.12 of the Internal Revenue Code to the extent that the deduction 184.13 exceeds1.31.0 percent of adjusted gross income, as defined in 184.14 section 62 of the Internal Revenue Code; 184.15 (ii) the medical expense deduction; 184.16 (iii) the casualty, theft, and disaster loss deduction; and 184.17 (iv) the impairment-related work expenses of a disabled 184.18 person; 184.19 (3) for depletion allowances computed under section 613A(c) 184.20 of the Internal Revenue Code, with respect to each property (as 184.21 defined in section 614 of the Internal Revenue Code), to the 184.22 extent not included in federal alternative minimum taxable 184.23 income, the excess of the deduction for depletion allowable 184.24 under section 611 of the Internal Revenue Code for the taxable 184.25 year over the adjusted basis of the property at the end of the 184.26 taxable year (determined without regard to the depletion 184.27 deduction for the taxable year); 184.28 (4) to the extent not included in federal alternative 184.29 minimum taxable income, the amount of the tax preference for 184.30 intangible drilling cost under section 57(a)(2) of the Internal 184.31 Revenue Code determined without regard to subparagraph (E); 184.32 (5) to the extent not included in federal alternative 184.33 minimum taxable income, the amount of interest income as 184.34 provided by section 290.01, subdivision 19a, clause (1); and 184.35 (6) the amount of addition required by section 290.01, 184.36 subdivision 19a, clause (7); 185.1 less the sum of the amounts determined under the following: 185.2 (1) interest income as defined in section 290.01, 185.3 subdivision 19b, clause (1); 185.4 (2) an overpayment of state income tax as provided by 185.5 section 290.01, subdivision 19b, clause (2), to the extent 185.6 included in federal alternative minimum taxable income; 185.7 (3) the amount of investment interest paid or accrued 185.8 within the taxable year on indebtedness to the extent that the 185.9 amount does not exceed net investment income, as defined in 185.10 section 163(d)(4) of the Internal Revenue Code. Interest does 185.11 not include amounts deducted in computing federal adjusted gross 185.12 income; and 185.13 (4) amounts subtracted from federal taxable income as 185.14 provided by section 290.01, subdivision 19b, clause (12). 185.15 In the case of an estate or trust, alternative minimum 185.16 taxable income must be computed as provided in section 59(c) of 185.17 the Internal Revenue Code. 185.18 (b) "Investment interest" means investment interest as 185.19 defined in section 163(d)(3) of the Internal Revenue Code. 185.20 (c) "Tentative minimum tax" equals 6.4 percent of 185.21 alternative minimum taxable income after subtracting the 185.22 exemption amount determined under subdivision 3. 185.23 (d) "Regular tax" means the tax that would be imposed under 185.24 this chapter (without regard to this section and section 185.25 290.032), reduced by the sum of the nonrefundable credits 185.26 allowed under this chapter. 185.27 (e) "Net minimum tax" means the minimum tax imposed by this 185.28 section. 185.29 [EFFECTIVE DATE.] This section is effective for taxable 185.30 years beginning after December 31, 2002. 185.31 Sec. 14. Minnesota Statutes 2002, section 298.018, 185.32 subdivision 1, is amended to read: 185.33 Subdivision 1. [WITHIN THE TACONITETAX RELIEFASSISTANCE 185.34 AREA.] The proceeds of the tax paid under sections 298.015 to 185.35 298.017 on minerals and energy resources mined or extracted 185.36 within the taconitetax reliefassistance area defined in 186.1 section273.134, paragraph (b)273.1341, shall be allocated as 186.2 follows: 186.3 (1) five percent to the city or town within which the 186.4 minerals or energy resources are mined or extracted; 186.5 (2) ten percent to the taconite municipal aid account to be 186.6 distributed as provided in section 298.282; 186.7 (3) ten percent to the school district within which the 186.8 minerals or energy resources are mined or extracted; 186.9 (4) 20 percent to a group of school districts comprised of 186.10 those school districts wherein the mineral or energy resource 186.11 was mined or extracted or in which there is a qualifying 186.12 municipality as defined by section 273.134, paragraph (b), in 186.13 direct proportion to school district indexes as follows: for 186.14 each school district, its pupil units determined under section 186.15 126C.05 for the prior school year shall be multiplied by the 186.16 ratio of the average adjusted net tax capacity per pupil unit 186.17 for school districts receiving aid under this clause as 186.18 calculated pursuant to chapters 122A, 126C, and 127A for the 186.19 school year ending prior to distribution to the adjusted net tax 186.20 capacity per pupil unit of the district. Each district shall 186.21 receive that portion of the distribution which its index bears 186.22 to the sum of the indices for all school districts that receive 186.23 the distributions; 186.24 (5) 20 percent to the county within which the minerals or 186.25 energy resources are mined or extracted; 186.26 (6) 20 percent to St. Louis county acting as the counties' 186.27 fiscal agent to be distributed as provided in sections 273.134 186.28 to 273.136; 186.29 (7) five percent to the iron range resources and 186.30 rehabilitation board for the purposes of section 298.22; 186.31 (8) five percent to the northeast Minnesota economic 186.32 protection trust fund; and 186.33 (9) five percent to the taconite environmental protection 186.34 fund. 186.35 The proceeds of the tax shall be distributed on July 15 186.36 each year. 187.1 Sec. 15. Minnesota Statutes 2002, section 298.018, 187.2 subdivision 2, is amended to read: 187.3 Subd. 2. [OUTSIDE THE TACONITETAX RELIEFASSISTANCE 187.4 AREA.] The proceeds of the tax paid under sections 298.015 to 187.5 298.017 on minerals and energy resources mined or extracted 187.6 outside of the taconitetax reliefassistance area defined in 187.7 section273.134, paragraph (b)273.1341, shall be deposited in 187.8 the general fund. 187.9 Sec. 16. Minnesota Statutes 2002, section 298.22, 187.10 subdivision 2, is amended to read: 187.11 Subd. 2. [IRON RANGE RESOURCES AND REHABILITATION BOARD.] 187.12 There is hereby created the iron range resources and 187.13 rehabilitation board, consisting of 13 members, five of whom are 187.14 state senators appointed by the subcommittee on committees of 187.15 the rules committee of the senate, and five of whom are 187.16 representatives, appointed by the speaker of the house of 187.17 representatives. The remaining members shall be appointed one 187.18 each by the senate majority leader, the speaker of the house of 187.19 representatives, and the governor and must be nonlegislators who 187.20 reside in atax relieftaconite assistance area as defined in 187.21 section273.134, paragraph (b)273.1341. The members shall be 187.22 appointed in January of every odd-numbered year, except that the 187.23 initial nonlegislator members shall be appointed by July 1, 187.24 1999, and shall serve until January of the next odd-numbered 187.25 year. Vacancies on the board shall be filled in the same manner 187.26 as the original members were chosen. At least a majority of the 187.27 legislative members of the board shall be elected from state 187.28 senatorial or legislative districts in which over 50 percent of 187.29 the residents reside within atax relieftaconite assistance 187.30 area as defined in section273.134, paragraph (b)273.1341. All 187.31 expenditures and projects made by the commissioner of iron range 187.32 resources and rehabilitation shall be consistent with the 187.33 priorities established in subdivision 8 and shall first be 187.34 submitted to the iron range resources and rehabilitation board 187.35 for approval by a majority of the board of expenditures and 187.36 projects for rehabilitation purposes as provided by this 188.1 section, and the method, manner, and time of payment of all 188.2 funds proposed to be disbursed shall be first approved or 188.3 disapproved by the board. The board shall biennially make its 188.4 report to the governor and the legislature on or before November 188.5 15 of each even-numbered year. The expenses of the board shall 188.6 be paid by the state from the funds raised pursuant to this 188.7 section. 188.8 Sec. 17. Minnesota Statutes 2002, section 298.22, 188.9 subdivision 8, is amended to read: 188.10 Subd. 8. [SPENDING PRIORITY.] In making or approving any 188.11 expenditures on programs or projects, the commissioner and the 188.12 board shall give the highest priority to programs and projects 188.13 that target relief to those areas of the taconitetax188.14relieftaconite assistance area as defined in section273.134,188.15paragraph (b)273.1341, that have the largest percentages of job 188.16 losses and population losses directly attributable to the 188.17 economic downturn in the taconite industry since the 1980s. The 188.18 commissioner and the board shall compare the 1980 population and 188.19 employment figures with the 2000 population and employment 188.20 figures, and shall specifically consider the job losses in 2000 188.21 and 2001 resulting from the closure of LTV Steel Mining Company, 188.22 in making or approving expenditures consistent with this 188.23 subdivision, as well as the areas of residence of persons who 188.24 suffered job loss for which relief is to be targeted under this 188.25 subdivision. This subdivision supersedes any other conflicting 188.26 provisions of law and does not preclude the commissioner and the 188.27 board from making expenditures for programs and projects in 188.28 other areas. 188.29 Sec. 18. Minnesota Statutes 2002, section 298.2211, 188.30 subdivision 1, is amended to read: 188.31 Subdivision 1. [PURPOSE; GRANT OF AUTHORITY.] In order to 188.32 accomplish the legislative purposes specified in sections 188.33 469.142 to 469.165 and chapter 462C, withintax relief areasthe 188.34 taconite assistance area as defined in section273.134273.1341, 188.35 the commissioner of iron range resources and rehabilitation may 188.36 exercise the following powers: (1) all powers conferred upon a 189.1 rural development financing authority under sections 469.142 to 189.2 469.149; (2) all powers conferred upon a city under chapter 189.3 462C; (3) all powers conferred upon a municipality or a 189.4 redevelopment agency under sections 469.152 to 469.165; (4) all 189.5 powers provided by sections 469.142 to 469.151 to further any of 189.6 the purposes and objectives of chapter 462C and sections 469.152 189.7 to 469.165; and (5) all powers conferred upon a municipality or 189.8 an authority under sections 469.174 to 469.177, 469.178, except 189.9 subdivision 2 thereof, and 469.179, subject to compliance with 189.10 the provisions of section 469.175, subdivisions 1, 2, and 3; 189.11 provided that any tax increments derived by the commissioner 189.12 from the exercise of this authority may be used only to finance 189.13 or pay premiums or fees for insurance, letters of credit, or 189.14 other contracts guaranteeing the payment when due of net rentals 189.15 under a project lease or the payment of principal and interest 189.16 due on or repurchase of bonds issued to finance a project or 189.17 program, to accumulate and maintain reserves securing the 189.18 payment when due on bonds issued to finance a project or 189.19 program, or to provide an interest rate reduction program 189.20 pursuant to section 469.012, subdivision 7. Tax increments and 189.21 earnings thereon remaining in any bond reserve account after 189.22 payment or discharge of any bonds secured thereby shall be used 189.23 within one year thereafter in furtherance of this section or 189.24 returned to the county auditor of the county in which the tax 189.25 increment financing district is located. If returned to the 189.26 county auditor, the county auditor shall immediately allocate 189.27 the amount among all government units which would have shared 189.28 therein had the amount been received as part of the other ad 189.29 valorem taxes on property in the district most recently paid, in 189.30 the same proportions as other taxes were distributed, and shall 189.31 immediately distribute it to the government units in accordance 189.32 with the allocation. 189.33 Sec. 19. Minnesota Statutes 2002, section 298.2211, 189.34 subdivision 2, is amended to read: 189.35 Subd. 2. [AREA OF OPERATION.] Projects undertaken, 189.36 developed, or financed pursuant to this section shall be located 190.1 within thetax relieftaconite assistance area defined in 190.2 section273.134, paragraph (b)273.1341. 190.3 Sec. 20. Minnesota Statutes 2002, section 298.2213, 190.4 subdivision 3, is amended to read: 190.5 Subd. 3. [USE OF MONEY.] The money appropriated under this 190.6 section may be used to provide loans, loan guarantees, interest 190.7 buy-downs, and other forms of participation with private sources 190.8 of financing, provided that a loan to a private enterprise must 190.9 be for a principal amount not to exceed one-half of the cost of 190.10 the project for which financing is sought, and the rate of 190.11 interest on a loan must be no less than the lesser of eight 190.12 percent or the rate of interest that is three percentage points 190.13 less than a full faith and credit obligation of the United 190.14 States government of comparable maturity, at the time that the 190.15 loan is approved. 190.16 Money appropriated in this section must be expended only in 190.17 or for the benefit of thetax relieftaconite assistance area 190.18 defined in section273.134, paragraph (b)273.1341, and as 190.19 otherwise provided in this section. 190.20 Sec. 21. Minnesota Statutes 2002, section 298.2214, 190.21 subdivision 1, is amended to read: 190.22 Subdivision 1. [CREATION OF COMMITTEE; PURPOSE.] A 190.23 committee is created to advise the commissioner of iron range 190.24 resources and rehabilitation on providing higher education 190.25 programs in the taconitetax reliefassistance area defined in 190.26 section273.134, paragraph (b)273.1341. The committee is 190.27 subject to section 15.059. 190.28 Sec. 22. Minnesota Statutes 2002, section 298.2214, 190.29 subdivision 3, is amended to read: 190.30 Subd. 3. [ADVISORY FUNCTION.] The committee shall advise 190.31 the commissioner regarding development of a contract with the 190.32 state university system. The contract would require the system 190.33 to provide courses within the taconitetax reliefassistance 190.34 area defined in section 273.1341. 190.35 Sec. 23. Minnesota Statutes 2002, section 298.223, 190.36 subdivision 1, is amended to read: 191.1 Subdivision 1. [CREATION; PURPOSES.] A fund called the 191.2 taconite environmental protection fund is created for the 191.3 purpose of reclaiming, restoring and enhancing those areas of 191.4 northeast Minnesota located withina tax reliefthe taconite 191.5 assistance area defined in section273.134, paragraph191.6(b)273.1341, that are adversely affected by the environmentally 191.7 damaging operations involved in mining taconite and iron ore and 191.8 producing iron ore concentrate and for the purpose of promoting 191.9 the economic development of northeast Minnesota. The taconite 191.10 environmental protection fund shall be used for the following 191.11 purposes: 191.12 (a) to initiate investigations into matters the iron range 191.13 resources and rehabilitation board determines are in need of 191.14 study and which will determine the environmental problems 191.15 requiring remedial action; 191.16 (b) reclamation, restoration, or reforestation of minelands 191.17 not otherwise provided for by state law; 191.18 (c) local economic development projects including 191.19 construction of sewer and water systems, and other public works 191.20 located withina tax reliefthe taconite assistance area defined 191.21 in section273.134, paragraph (b)273.1341; 191.22 (d) monitoring of mineral industry related health problems 191.23 among mining employees. 191.24 Sec. 24. Minnesota Statutes 2002, section 298.28, 191.25 subdivision 7, is amended to read: 191.26 Subd. 7. [IRON RANGE RESOURCES AND REHABILITATION BOARD.] 191.27 For the 1998 distribution, 6.5 cents per taxable ton shall be 191.28 paid to the iron range resources and rehabilitation board for 191.29 the purposes of section 298.22. That amount shall be increased 191.30 in 1999 and subsequent years in the same proportion as the 191.31 increase in the implicit price deflator as provided in section 191.32 298.24, subdivision 1. The amount distributed pursuant to this 191.33 subdivision shall be expended within or for the benefit ofa tax191.34reliefthe taconite assistance area defined in section273.134,191.35paragraph (b)273.1341. No part of the fund provided in this 191.36 subdivision may be used to provide loans for the operation of 192.1 private business unless the loan is approved by the governor. 192.2 Sec. 25. Minnesota Statutes 2002, section 298.28, 192.3 subdivision 11, is amended to read: 192.4 Subd. 11. [REMAINDER.] (a) The proceeds of the tax imposed 192.5 by section 298.24 which remain after the distributions and 192.6 payments in subdivisions 2 to 10a, as certified by the 192.7 commissioner of revenue, and paragraphs (b), (c), (d), and (e) 192.8 have been made, together with interest earned on all money 192.9 distributed under this section prior to distribution, shall be 192.10 divided between the taconite environmental protection fund 192.11 created in section 298.223 and the northeast Minnesota economic 192.12 protection trust fund created in section 298.292 as follows: 192.13 Two-thirds to the taconite environmental protection fund and 192.14 one-third to the northeast Minnesota economic protection trust 192.15 fund. The proceeds shall be placed in the respective special 192.16 accounts. 192.17 (b) There shall be distributed to each city, town, and 192.18 county the amount that it received under section 294.26 in 192.19 calendar year 1977; provided, however, that the amount 192.20 distributed in 1981 to the unorganized territory number 2 of 192.21 Lake county and the town of Beaver Bay based on the 192.22 between-terminal trackage of Erie Mining Company will be 192.23 distributed in 1982 and subsequent years to the unorganized 192.24 territory number 2 of Lake county and the towns of Beaver Bay 192.25 and Stony River based on the miles of track of Erie Mining 192.26 Company in each taxing district. 192.27 (c) There shall be distributed to the iron range resources 192.28 and rehabilitation board the amounts it received in 1977 under 192.29 section 298.22. The amount distributed under this paragraph 192.30 shall be expended within or for the benefit of thetax relief192.31 taconite assistance area defined in section273.134273.1341. 192.32 (d) There shall be distributed to each school district 62 192.33 percent of the amount that it received under section 294.26 in 192.34 calendar year 1977. 192.35 (e) In 2003 only, $100,000 must be distributed to a 192.36 township located in a taconite tax relief area as defined in 193.1 section 273.134, paragraph (a), that received $119,259 of 193.2 homestead and agricultural credit aid and $182,014 in local 193.3 government aid in 2001. 193.4 Sec. 26. Minnesota Statutes 2002, section 298.292, 193.5 subdivision 2, is amended to read: 193.6 Subd. 2. [USE OF MONEY.] Money in the northeast Minnesota 193.7 economic protection trust fund may be used for the following 193.8 purposes: 193.9 (1) to provide loans, loan guarantees, interest buy-downs 193.10 and other forms of participation with private sources of 193.11 financing, but a loan to a private enterprise shall be for a 193.12 principal amount not to exceed one-half of the cost of the 193.13 project for which financing is sought, and the rate of interest 193.14 on a loan shall be no less than the lesser of eight percent or 193.15 an interest rate three percentage points less than a full faith 193.16 and credit obligation of the United States government of 193.17 comparable maturity, at the time that the loan is approved; 193.18 (2) to fund reserve accounts established to secure the 193.19 payment when due of the principal of and interest on bonds 193.20 issued pursuant to section 298.2211; 193.21 (3) to pay in periodic payments or in a lump sum payment 193.22 any or all of the interest on bonds issued pursuant to chapter 193.23 474 for the purpose of constructing, converting, or retrofitting 193.24 heating facilities in connection with district heating systems 193.25 or systems utilizing alternative energy sources; and 193.26 (4) to invest in a venture capital fund or enterprise that 193.27 will provide capital to other entities that are engaging in, or 193.28 that will engage in, projects or programs that have the purposes 193.29 set forth in subdivision 1. No investments may be made in a 193.30 venture capital fund or enterprise unless at least two other 193.31 unrelated investors make investments of at least $500,000 in the 193.32 venture capital fund or enterprise, and the investment by the 193.33 northeast Minnesota economic protection trust fund may not 193.34 exceed the amount of the largest investment by an unrelated 193.35 investor in the venture capital fund or enterprise. For 193.36 purposes of this subdivision, an "unrelated investor" is a 194.1 person or entity that is not related to the entity in which the 194.2 investment is made or to any individual who owns more than 40 194.3 percent of the value of the entity, in any of the following 194.4 relationships: spouse, parent, child, sibling, employee, or 194.5 owner of an interest in the entity that exceeds ten percent of 194.6 the value of all interests in it. For purposes of determining 194.7 the limitations under this clause, the amount of investments 194.8 made by an investor other than the northeast Minnesota economic 194.9 protection trust fund is the sum of all investments made in the 194.10 venture capital fund or enterprise during the period beginning 194.11 one year before the date of the investment by the northeast 194.12 Minnesota economic protection trust fund. 194.13 Money from the trust fund shall be expended only in or for 194.14 the benefit of thetax relieftaconite assistance area defined 194.15 in section273.134, paragraph (b)273.1341. 194.16 Sec. 27. Minnesota Statutes 2002, section 298.293, is 194.17 amended to read: 194.18 298.293 [EXPENDING FUNDS.] 194.19 The funds provided by section 298.28, subdivision 11, 194.20 relating to the northeast Minnesota economic protection trust 194.21 fund, except money expended pursuant to Laws 1982, Second 194.22 Special Session, chapter 2, sections 8 to 14, shall be expended 194.23 only in an amount that does not exceed the sum of the net 194.24 interest, dividends, and earnings arising from the investment of 194.25 the trust for the preceding 12 calendar months from the date of 194.26 the authorization plus, for fiscal year 1983, $10,000,000 from 194.27 the corpus of the fund. The funds may be spent only in or for 194.28 the benefit ofthose areas that are tax relief areasthe 194.29 taconite assistance area as defined in section273.134,194.30paragraph (b)273.1341. If during any year the taconite 194.31 property tax account under sections 273.134 to 273.136 does not 194.32 contain sufficient funds to pay the property tax relief 194.33 specified in Laws 1977, chapter 423, article X, section 4, there 194.34 is appropriated from this trust fund to the relief account 194.35 sufficient funds to pay the relief specified in Laws 1977, 194.36 chapter 423, article X, section 4. 195.1 Sec. 28. Minnesota Statutes 2002, section 298.298, is 195.2 amended to read: 195.3 298.298 [LONG-RANGE PLAN.] 195.4 Consistent with the policy established in sections 298.291 195.5 to 298.298, the iron range resources and rehabilitation board 195.6 shall prepare and present to the governor and the legislature by 195.7 January 1, 1984 a long-range plan for the use of the northeast 195.8 Minnesota economic protection trust fund for the economic 195.9 development and diversification of thetax relieftaconite 195.10 assistance area defined in section273.134, paragraph195.11(b)273.1341. The iron range resources and rehabilitation board 195.12 shall, before November 15 of each even numbered year, prepare a 195.13 report to the governor and legislature updating and revising 195.14 this long-range plan and reporting on the iron range resources 195.15 and rehabilitation board's progress on those matters assigned to 195.16 it by law. After January 1, 1984, no project shall be approved 195.17 by the iron range resources and rehabilitation board which is 195.18 not consistent with the goals and objectives established in the 195.19 long-range plan. 195.20 Sec. 29. Minnesota Statutes 2002, section 429.101, 195.21 subdivision 1, is amended to read: 195.22 Subdivision 1. [ORDINANCES.] (a) In addition to any other 195.23 method authorized by law or charter, the governing body of any 195.24 municipality may provide for the collection of unpaid special 195.25 charges for all or any part of the cost of: 195.26 (1) snow, ice, or rubbish removal from sidewalks,; 195.27 (2) weed elimination from streets or private property,; 195.28 (3) removal or elimination of public health or safety 195.29 hazards from private property, excluding any structure included 195.30 under the provisions of sections 463.15 to 463.26,; 195.31 (4) installation or repair of water service lines, street 195.32 sprinkling or other dust treatment of streets,; 195.33 (5) the trimming and care of trees and the removal of 195.34 unsound trees from any street,; 195.35 (6) the treatment and removal of insect infested or 195.36 diseased trees on private property, the repair of sidewalks and 196.1 alleys,; 196.2 (7) the operation of a street lighting system, or; 196.3 (8) the operation and maintenance of a fire protection or a 196.4 pedestrian skyway system,; or 196.5 (9) reinspections which find noncompliance after the due 196.6 date for compliance with an order to correct a municipal housing 196.7 maintenance code violation; 196.8 as a special assessment against the property benefited. 196.9 (b) The council may by ordinance adopt regulations 196.10 consistent with this section to make this authority effective, 196.11 including, at the option of the council, provisions for placing 196.12 primary responsibility upon the property owner or occupant to do 196.13 the work personally(except in the case of street sprinkling or 196.14 other dust treatment, alley repair, tree trimming, care, and 196.15 removal or the operation of a street lighting system) upon 196.16 notice before the work is undertaken, and for collection from 196.17 the property owner or other person served of the charges when 196.18 due before unpaid charges are made a special assessment. 196.19 [EFFECTIVE DATE.] This section is effective the day 196.20 following final enactment. 196.21 Sec. 30. Minnesota Statutes 2002, section 473.704, 196.22 subdivision 17, as amended by Laws 2003, chapter 127, article 196.23 13, section 4, is amended to read: 196.24 Subd. 17. [ENTRY TO PROPERTY.] (a) Members of the 196.25 commission, its officers, and employees, while on the business 196.26 of the commission, may enter upon any property within or outside 196.27 the district at reasonable times to determine the need for 196.28 control programs. They may take all necessary and proper steps 196.29 for the control programs on property within the district as the 196.30 director of the commission may designate. Subject to the 196.31 paramount control of the county and state authorities, 196.32 commission members and officers and employees of the commission 196.33 may enter upon any property and clean up any stagnant pool of 196.34 water, the shores of lakes and streams, and other breeding 196.35 places for mosquitoes within the district. The commission may 196.36 apply insecticides approved by the director to any area within 197.1 or outside the district that is found to be a breeding place for 197.2 mosquitoes. The commission shall give reasonable notification 197.3 to the governing body of the local unit of government prior to 197.4 applying insecticides outside of the district on land located 197.5 within the jurisdiction of the local unit of government. The 197.6 commission shall not enter upon private property if the owner 197.7 objects except (1) to monitor for disease-bearing mosquitoes, 197.8 ticks, or black gnats, or (2) for control of mosquito species 197.9 capable of carrying a human disease in the local area of a human 197.10 disease outbreak regardless of whether there has been an 197.11 occurrence of the disease in a human being. The commission 197.12 shall make a reasonable attempt to contact an objecting owner 197.13 before entering on the owner's private property. 197.14 (b) The commissioner of natural resources must approve 197.15 mosquito control plans or make modifications as the commissioner 197.16 of natural resources deems necessary for the protection of 197.17 public water, wild animals, and natural resources before control 197.18 operations are started on state lands administered by the 197.19 commissioner of natural resources. 197.20 Sec. 31. Laws 1998, chapter 389, article 16, section 35, 197.21 subdivision 1, as amended by Laws 2001, First Special Session 197.22 chapter 5, article 20, section 19, is amended to read: 197.23 Subdivision 1. [BAT STUDY.] $100,000 is appropriated from 197.24 the general fund for fiscal year 1999 to the legislative 197.25 coordinating commission to study alternative methods of taxing 197.26 business. The appropriations under this section and under Laws 197.27 1997, chapter 231, article 5, section 18, subdivision 3, are 197.28 available in fiscal years 2000 and 2001. Any portion of this 197.29 appropriation that cancels in 2001 is appropriated in 2002 and 197.30 is available until June 30, 2003. The date for completion of 197.31 this study is extended through December 31, 2004, and the 197.32 portion of the appropriation encumbered by the contracts between 197.33 the legislative coordinating commission and the department of 197.34 revenue and between the department of revenue and the University 197.35 of Minnesota may be spent during the 2004-2005 biennium to pay 197.36 obligations under the contracts. 198.1 Sec. 32. Laws 2001, First Special Session chapter 5, 198.2 article 20, section 22, is amended to read: 198.3 Sec. 22. [BUDGET RESERVE INCREASE.] 198.4 The commissioner of finance shall transfer the amount 198.5 necessary to increase the budget reserve account in the general 198.6 fund to $653,000,000 on July 1, 2001.On July 1, 2003, the198.7commissioner of finance shall transfer $31,000,000 to the budget198.8reserve account in the general fund.The amounts necessary for 198.9 this purpose are appropriated from the general fund. 198.10 Sec. 33. [TRANSFER OF ENDOWMENT FUNDS.] 198.11 On July 1, 2003, the commissioner of finance shall transfer 198.12 the tobacco use prevention and local public health endowment 198.13 fund and the medical education endowment fund to the general 198.14 fund. 198.15 Sec. 34. [BUDGET RESERVE ADJUSTMENT.] 198.16 If, prior to July 1, 2003, on the basis of the February 198.17 2003 forecast and revenue and expenditure measures enacted into 198.18 law in the 2003 regular and special legislative sessions, the 198.19 commissioner of finance determines there will be a negative 198.20 unrestricted budgetary balance in the general fund for the 198.21 biennium ending June 30, 2005, the commissioner shall reduce the 198.22 July 1, 2004, appropriation to the budget reserve account in 198.23 Minnesota Statutes, section 16A.152, subdivision 1b, by the 198.24 amount necessary to balance revenues and expenditures in the 198.25 biennium ending June 30, 2005. 198.26 [EFFECTIVE DATE.] This section is effective the day 198.27 following final enactment. 198.28 Sec. 35. [TEMPORARY STATE FISCAL RELIEF.] 198.29 Any temporary state fiscal relief received under Title VI 198.30 of the Jobs Growth and Tax Relief Reconciliation Act of 2003 198.31 must be deposited in the state treasury and credited to the 198.32 general fund. 198.33 [EFFECTIVE DATE.] This section is effective the day 198.34 following final enactment. 198.35 Sec. 36. [APPROPRIATION.] 198.36 (a) $100,000 in fiscal year 2004 and $100,000 in fiscal 199.1 year 2005 are appropriated from the general fund to the 199.2 commissioner of revenue to make grants to one or more nonprofit 199.3 organizations, qualifying under section 501(c)(3) of the 199.4 Internal Revenue Code of 1986, to coordinate, facilitate, 199.5 encourage, and aid in the provision of taxpayer assistance 199.6 services. This appropriation does not become a part of the base. 199.7 (b) "Taxpayer assistance services" mean accounting and tax 199.8 preparation services provided by volunteers to low-income and 199.9 disadvantaged Minnesota residents to help them file federal and 199.10 state income tax returns and Minnesota property tax refund 199.11 claims and to provide personal representation before the 199.12 department of revenue and Internal Revenue Service. 199.13 Sec. 37. [APPROPRIATION; COST OF ADMINISTRATION.] 199.14 $200,000 in fiscal year 2004 is appropriated from the 199.15 general fund to the commissioner of revenue for the cost of 199.16 administering tax law changes enacted in 2003. 199.17 [EFFECTIVE DATE.] This section is effective the day 199.18 following final enactment.