HF 440

as introduced - 89th Legislature (2015 - 2016) Posted on 01/29/2015 01:52pm

A bill for an act
relating to taxation; minerals; taconite production; freezing the rate and modifying
the distribution of revenues; amending Minnesota Statutes 2014, sections 298.24,
subdivision 1; 298.28, subdivisions 3, 7, 7a, by adding a subdivision.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2014, section 298.24, subdivision 1, is amended to read:

Subdivision 1.

Imposed; calculation.

(a) For concentrate produced new text begin beginning new text end in
deleted text begin 2013 deleted text end new text begin 2015 new text end , there is imposed upon taconite and iron sulphides, and upon the mining and
quarrying thereof, and upon the production of iron ore concentrate therefrom, and upon
the concentrate so produced, a tax of deleted text begin $2.56 deleted text end new text begin $2.60 new text end per gross ton of merchantable iron ore
concentrate produced therefrom. The tax is also imposed upon other iron-bearing material.

(b) deleted text begin For concentrates produced in 2014 and subsequent years, the tax rate shall be
equal to the preceding year's tax rate plus an amount equal to the preceding year's tax rate
multiplied by the percentage increase in the implicit price deflator from the fourth quarter
of the second preceding year to the fourth quarter of the preceding year. "Implicit price
deflator" means the implicit price deflator for the gross domestic product prepared by the
Bureau of Economic Analysis of the United States Department of Commerce.
deleted text end

deleted text begin (c) deleted text end An additional tax is imposed equal to three cents per gross ton of merchantable
iron ore concentrate for each one percent that the iron content of the product exceeds 72
percent, when dried at 212 degrees Fahrenheit.

deleted text begin (d) deleted text end new text begin (c) new text end The tax on taconite and iron sulphides shall be imposed on the average of the
production for the current year and the previous two years. The rate of the tax imposed
will be the current year's tax rate. This clause shall not apply in the case of the closing
of a taconite facility if the property taxes on the facility would be higher if this clause
and section 298.25 were not applicable. The tax on other iron-bearing material shall be
imposed on the current year production.

deleted text begin (e) If the tax or any part of the tax imposed by this subdivision is held to be
unconstitutional, a tax of $2.56 per gross ton of merchantable iron ore concentrate
produced shall be imposed.
deleted text end

deleted text begin (f) deleted text end new text begin (d) new text end Consistent with the intent of this subdivision to impose a tax based upon the
weight of merchantable iron ore concentrate, the commissioner of revenue may indirectly
determine the weight of merchantable iron ore concentrate included in fluxed pellets by
subtracting the weight of the limestone, dolomite, or olivine derivatives or other basic
flux additives included in the pellets from the weight of the pellets. For purposes of this
paragraph, "fluxed pellets" are pellets produced in a process in which limestone, dolomite,
olivine, or other basic flux additives are combined with merchantable iron ore concentrate.
No subtraction from the weight of the pellets shall be allowed for binders, mineral and
chemical additives other than basic flux additives, or moisture.

deleted text begin (g) deleted text end new text begin (e) new text end (1) Notwithstanding any other provision of this subdivision, for the first two
years of a plant's commercial production of direct reduced ore from ore mined in this state,
no tax is imposed under this section. As used in this paragraph, "commercial production" is
production of more than 50,000 tons of direct reduced ore in the current year or in any prior
year, "noncommercial production" is production of 50,000 tons or less of direct reduced ore
in any year, and "direct reduced ore" is ore that results in a product that has an iron content
of at least 75 percent. For the third year of a plant's commercial production of direct
reduced ore, the rate to be applied to direct reduced ore is 25 percent of the rate otherwise
determined under this subdivision. For the fourth commercial production year, the rate is
50 percent of the rate otherwise determined under this subdivision; for the fifth commercial
production year, the rate is 75 percent of the rate otherwise determined under this
subdivision; and for all subsequent commercial production years, the full rate is imposed.

(2) Subject to clause (1), production of direct reduced ore in this state is subject to
the tax imposed by this section, but if that production is not produced by a producer of
taconite, iron sulfides, or other iron-bearing material, the production of taconite, iron
sulfides, or other iron-bearing material, that is consumed in the production of direct
reduced iron in this state is not subject to the tax imposed by this section on taconite,
iron sulfides, or other iron-bearing material.

(3) Notwithstanding any other provision of this subdivision, no tax is imposed
on direct reduced ore under this section during the facility's noncommercial production
of direct reduced ore. The taconite or iron sulphides consumed in the noncommercial
production of direct reduced ore is subject to the tax imposed by this section on taconite
and iron sulphides. Three-year average production of direct reduced ore does not
include production of direct reduced ore in any noncommercial year. Three-year average
production for a direct reduced ore facility that has noncommercial production is the
average of the commercial production of direct reduced ore for the current year and the
previous two commercial years.

(4) This paragraph applies only to plants for which all environmental permits have
been obtained and construction has begun before July 1, 2008.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taconite production occurring
after December 30, 2014.
new text end

Sec. 2.

Minnesota Statutes 2014, section 298.28, subdivision 3, is amended to read:

Subd. 3.

Cities; towns.

(a) 12.5 cents per taxable ton, less any amount distributed
under subdivision 8, and paragraph (b), must be allocated to the taconite municipal aid
account to be distributed as provided in section 298.282.

(b) An amount must be allocated to towns or cities that is annually certified by
the county auditor of a county containing a taconite tax relief area as defined in section
273.134, paragraph (b), within which there is (1) an organized township if, as of January
2, 1982, more than 75 percent of the assessed valuation of the township consists of iron
ore or (2) a city if, as of January 2, 1980, more than 75 percent of the assessed valuation
of the city consists of iron ore.

(c) The amount allocated under paragraph (b) will be the portion of a township's or
city's certified levy equal to the proportion of (1) the difference between 50 percent of
January 2, 1982, assessed value in the case of a township and 50 percent of the January 2,
1980, assessed value in the case of a city and its current assessed value to (2) the sum of
its current assessed value plus the difference determined in (1), provided that the amount
distributed shall not exceed $55 per capita in the case of a township or $75 per capita in
the case of a city. For purposes of this limitation, population will be determined according
to the 1980 decennial census conducted by the United States Bureau of the Census. If the
current assessed value of the township exceeds 50 percent of the township's January 2,
1982, assessed value, or if the current assessed value of the city exceeds 50 percent of the
city's January 2, 1980, assessed value, this paragraph shall not apply. For purposes of this
paragraph, "assessed value," when used in reference to years other than 1980 or 1982,
means the appropriate net tax capacities multiplied by 10.2.

(d) In addition to other distributions under this subdivision, three cents per taxable
ton for distributions in 2009 must be allocated for distribution to towns that are entirely
located within the taconite tax relief area defined in section 273.134, paragraph (b). For
distribution in 2010 through 2014 deleted text begin and for distribution in 2018 and subsequent years deleted text end , the
three-cent amount must be annually increased in the same proportion as the increase
in the implicit price deflator as provided in section 298.24, subdivision 1. The amount
available under this paragraph will be distributed to eligible towns on a per capita basis,
provided that no town may receive more than $50,000 in any year under this paragraph.
Any amount of the distribution that exceeds the $50,000 limitation for a town under this
paragraph must be redistributed on a per capita basis among the other eligible towns, to
whose distributions do not exceed $50,000.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taconite production occurring
after December 30, 2014.
new text end

Sec. 3.

Minnesota Statutes 2014, section 298.28, subdivision 7, is amended to read:

Subd. 7.

Iron Range Resources and Rehabilitation Board.

For the 1998
distribution, 6.5 cents per taxable ton shall be paid to the Iron Range Resources and
Rehabilitation Board for the purposes of section 298.22. That amount shall be increased
for distribution years 1999 through 2014 deleted text begin and for distribution in 2018 and subsequent
years deleted text end in the same proportion as the increase in the implicit price deflator as provided in
section 298.24, subdivision 1. The amount distributed pursuant to this subdivision shall
be expended within or for the benefit of the taconite assistance area defined in section
273.1341. No part of the fund provided in this subdivision may be used to provide loans
for the operation of private business unless the loan is approved by the governor.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taconite production occurring
after December 30, 2014.
new text end

Sec. 4.

Minnesota Statutes 2014, section 298.28, subdivision 7a, is amended to read:

Subd. 7a.

Iron Range school consolidation and cooperatively operated school
account.

The following amounts must be allocated to the Iron Range Resources and
Rehabilitation Board to be deposited in the Iron Range school consolidation and
cooperatively operated school account that is hereby created:

(1)(i) for distributions in 2015 through 2023, ten cents per taxable ton of the tax
imposed under section 298.24; and (ii) for distributions beginning in 2024, five cents per
taxable ton of the tax imposed under section 298.24;

(2) the amount as determined under section 298.17, paragraph (b), clause (3); new text begin and
new text end

deleted text begin (3)(i) for distributions in 2015, an amount equal to two-thirds of the increased tax
proceeds attributable to the increase in the implicit price deflator as provided in section
298.24, subdivision 1, with the remaining one-third to be distributed to the Douglas J.
Johnson economic protection trust fund;
deleted text end

deleted text begin (ii) for distributions in 2016, an amount equal to two-thirds of the sum of the
increased tax proceeds attributable to the increase in the implicit price deflator as provided
in section 298.24, subdivision 1, for distribution years 2015 and 2016, with the remaining
one-third to be distributed to the Douglas J. Johnson economic protection trust fund; and
deleted text end

deleted text begin (iii) for distributions in 2017, an amount equal to two-thirds of the sum of the
increased tax proceeds attributable to the increase in the implicit price deflator as provided
in section 298.24, subdivision 1, for distribution years 2015, 2016, and 2017, with the
remaining one-third to be distributed to the Douglas J. Johnson economic protection
trust fund; and
deleted text end

deleted text begin (4) deleted text end new text begin (3) new text end any other amount as provided by law.

Expenditures from this account shall be made only to provide disbursements to
assist school districts with the payment of bonds that were issued for qualified school
projects, or for any other school disbursement as approved by the Iron Range Resources
and Rehabilitation Board. For purposes of this section, "qualified school projects" means
school projects within the taconite assistance area as defined in section 273.1341, that were
(1) approved, by referendum, after April 3, 2006; and (2) approved by the commissioner
of education pursuant to section 123B.71.

Beginning in fiscal year 2019, the disbursement to school districts for payments for
bonds issued under section 123A.482, subdivision 9, must be increased each year to
offset any reduction in debt service equalization aid that the school district qualifies for in
that year, under section 123B.53, subdivision 6, compared with the amount the school
district qualified for in fiscal year 2018.

No expenditure under this section shall be made unless approved by seven members
of the Iron Range Resources and Rehabilitation Board.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taconite production occurring
after December 30, 2014.
new text end

Sec. 5.

Minnesota Statutes 2014, section 298.28, is amended by adding a subdivision
to read:

new text begin Subd. 16. new text end

new text begin Suspension of certain distributions. new text end

new text begin (a) The distribution or payment of
the proceeds of the taxes imposed by section 298.24 to the Douglas J. Johnson economic
protection trust fund under subdivisions 9 and 11 must not be made until the conditions in
paragraph (b) are satisfied.
new text end

new text begin (b) The conditions of this paragraph are satisfied only if both of the following occur:
new text end

new text begin (1) the Iron Range Resources and Rehabilitation Board rescinds its adoption of
Resolution No. 15-016, approving expenditures of up to $100,000,000 of the corpus of
the Douglas J. Johnson economic protection trust fund. Rescission may be adopted by
the board by a simple majority vote. The board and commissioner must also refrain from
adopting an equivalent or similar resolution or policy transferring or authorizing the
transfer of money in the Douglas J. Johnson economic protection trust fund to a nonprofit
corporation established by the commissioner to implement undefined or nonspecific future
projects; and
new text end

new text begin (2) the commissioner of Iron Range resources and rehabilitation does not enter into
a contract authorized by or to implement Resolution No. 15-016. If the commissioner
has entered into such a contract with the Range Trust, a nonprofit corporation created
by the commissioner, the commissioner must rescind, cancel, or otherwise void that
contract. If any money has been paid or transferred to the Range Trust under a contract,
the unexpended amounts held by the Range Trust, or any successor entity, must be repaid
to the Douglas J. Johnson economic protection trust fund.
new text end

new text begin (c) Pending satisfaction of the requirements of paragraph (b), the amount of any
distributions suspended under paragraph (a) must be placed in a special account in the
state treasury to provide property tax relief to properties located in the taconite assistance
area that do not qualify for credits under section 273.135 or 273.1391, or to provide
additional amounts under section 298.227.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end