1.1                          A bill for an act 
  1.2             relating to taxation; providing a personal income tax 
  1.3             exemption and an exemption or credit for dependents; 
  1.4             providing a single factor corporate franchise tax 
  1.5             apportionment formula; repealing nonprofit health plan 
  1.6             premium tax, MinnesotaCare provider taxes, and 
  1.7             hospital medical assistance taxes; allocating tobacco 
  1.8             settlement proceeds to a subsidized health insurance 
  1.9             account; repealing the health care access fund; 
  1.10            exempting sales to political subdivisions of a state; 
  1.11            appropriating money; amending Minnesota Statutes 2000, 
  1.12            sections 62J.041, subdivision 1; 62Q.095, subdivision 
  1.13            6; 144.1494, subdivision 1; 144.1495, subdivision 2; 
  1.14            144.1496, subdivision 1; 214.16, subdivisions 2 and 3; 
  1.15            256L.02, subdivisions 3 and 4; 270B.01, subdivision 8; 
  1.16            270B.14, subdivision 1; 290.01, subdivision 19b; 
  1.17            290.191, subdivisions 2 and 3; 297A.70, subdivisions 
  1.18            1, 2, and 3; 297A.991, subdivision 2; and 297I.15, by 
  1.19            adding a subdivision; proposing coding for new law in 
  1.20            Minnesota Statutes, chapters 16A; and 290; repealing 
  1.21            Minnesota Statutes 2000, sections 13.4967, subdivision 
  1.22            3; 16A.724; 16A.76; 62T.10; 144.1484, subdivision 2; 
  1.23            256.9657, subdivision 2; 256B.19, subdivision 1b; 
  1.24            290.191, subdivisions 4, 10, 11, and 12; 295.50; 
  1.25            295.51; 295.52; 295.53; 295.54; 295.55; 295.56; 
  1.26            295.57; 295.58; 295.581; 295.582; 295.59; and 297I.05, 
  1.27            subdivision 5. 
  1.28  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.29     Section 1.  [16A.78] [MINNESOTACARE SUBSIDIZED HEALTH 
  1.30  INSURANCE ACCOUNT.] 
  1.31     (a) A MinnesotaCare subsidized health insurance account is 
  1.32  established in the general fund. 
  1.33     (b) The commissioner shall credit to the account the 
  1.34  tobacco settlement payments received by the state each December 
  1.35  beginning with the annual payment due December 31, 2001, under 
  1.36  the terms of the consent judgment entered in the case of State 
  2.1   v. Philip Morris Inc., No. C1-94-8565 (Minnesota District Court, 
  2.2   Second Judicial District). 
  2.3      (c) Money in the account is available for and may only be 
  2.4   spent for expenditures associated with the MinnesotaCare program.
  2.5      (d) The balance in the account does not cancel and remains 
  2.6   in the account until appropriated by law for the purposes 
  2.7   described in this section.  
  2.8      (e) Notwithstanding section 11A.20, investment earnings on 
  2.9   the account are credited to the account.  
  2.10     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2001. 
  2.11     Sec. 2.  Minnesota Statutes 2000, section 62J.041, 
  2.12  subdivision 1, is amended to read: 
  2.13     Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
  2.14  section, the following definitions apply. 
  2.15     (b) "Health plan company" has the definition provided in 
  2.16  section 62Q.01. 
  2.17     (c) "Total expenditures" means incurred claims or 
  2.18  expenditures on health care services, administrative expenses, 
  2.19  charitable contributions, and all other payments made by health 
  2.20  plan companies out of premium revenues. 
  2.21     (d) "Net expenditures" means total expenditures minus 
  2.22  exempted taxes and assessments and payments or allocations made 
  2.23  to establish or maintain reserves.  
  2.24     (e) "Exempted taxes and assessments" means direct payments 
  2.25  for taxes to government agencies, contributions to the Minnesota 
  2.26  comprehensive health association, the medical assistance 
  2.27  provider's surcharge under section 256.9657, the MinnesotaCare 
  2.28  provider tax under Minnesota Statutes 2000, section 295.52, 
  2.29  assessments by the health coverage reinsurance association, 
  2.30  assessments by the Minnesota life and health insurance guaranty 
  2.31  association, assessments by the Minnesota risk adjustment 
  2.32  association, and any new assessments imposed by federal or state 
  2.33  law. 
  2.34     (f) "Consumer cost-sharing or subscriber liability" means 
  2.35  enrollee coinsurance, copayment, deductible payments, and 
  2.36  amounts in excess of benefit plan maximums.  
  3.1      Sec. 3.  Minnesota Statutes 2000, section 62Q.095, 
  3.2   subdivision 6, is amended to read: 
  3.3      Subd. 6.  [EXEMPTION.] A health plan company, to the extent 
  3.4   that it operates as a staff model health plan company as defined 
  3.5   in section 295.50, subdivision 12b, by employing allied 
  3.6   independent health care providers to deliver health care 
  3.7   services to enrollees, is exempt from this section.  For 
  3.8   purposes of this subdivision, "staff model health plan company" 
  3.9   means a health plan company as defined in section 62Q.01, 
  3.10  subdivision 4, that employs one or more types of health care 
  3.11  provider to deliver health care services to the health plan 
  3.12  company's enrollees. 
  3.13     Sec. 4.  Minnesota Statutes 2000, section 144.1494, 
  3.14  subdivision 1, is amended to read: 
  3.15     Subdivision 1.  [CREATION OF ACCOUNT.] A rural physician 
  3.16  education account is established in the health care 
  3.17  access general fund.  The commissioner shall use money from the 
  3.18  account to establish a loan forgiveness program for medical 
  3.19  residents agreeing to practice in designated rural areas, as 
  3.20  defined by the commissioner.  Appropriations made to this 
  3.21  account do not cancel and are available until expended, except 
  3.22  that at the end of each biennium the commissioner shall cancel 
  3.23  to the health care access fund any remaining unobligated balance 
  3.24  in this account. 
  3.25     Sec. 5.  Minnesota Statutes 2000, section 144.1495, 
  3.26  subdivision 2, is amended to read: 
  3.27     Subd. 2.  [CREATION OF ACCOUNT.] A midlevel practitioner 
  3.28  education account is established in the health care 
  3.29  access general fund.  The commissioner shall use money from the 
  3.30  account to establish a loan forgiveness program for midlevel 
  3.31  practitioners agreeing to practice in designated rural areas.  
  3.32     Sec. 6.  Minnesota Statutes 2000, section 144.1496, 
  3.33  subdivision 1, is amended to read: 
  3.34     Subdivision 1.  [CREATION OF THE ACCOUNT.] An education 
  3.35  account in the health care access general fund is established 
  3.36  for a loan forgiveness program for nurses who agree to practice 
  4.1   nursing in a nursing home or intermediate care facility for 
  4.2   persons with mental retardation or related conditions.  The 
  4.3   account consists of money appropriated by the legislature and 
  4.4   repayments and penalties collected under subdivision 4.  Money 
  4.5   from the account must be used for a loan forgiveness program.  
  4.6      Sec. 7.  Minnesota Statutes 2000, section 214.16, 
  4.7   subdivision 2, is amended to read: 
  4.8      Subd. 2.  [BOARD COOPERATION REQUIRED.] The board shall 
  4.9   assist the commissioner of health in data collection activities 
  4.10  required under Laws 1992, chapter 549, article 7, and shall 
  4.11  assist the commissioner of revenue in activities related to 
  4.12  collection of the health care provider tax required under Laws 
  4.13  1992, chapter 549, article 9.  Upon the request of the 
  4.14  commissioner or the commissioner of revenue, the board shall 
  4.15  make available names and addresses of current licensees and 
  4.16  provide other information or assistance as needed. 
  4.17     Sec. 8.  Minnesota Statutes 2000, section 214.16, 
  4.18  subdivision 3, is amended to read: 
  4.19     Subd. 3.  [GROUNDS FOR DISCIPLINARY ACTION.] The board 
  4.20  shall take disciplinary action, which may include license 
  4.21  revocation, against a regulated person for: 
  4.22     (1) intentional failure to provide the commissioner of 
  4.23  health with the data required under chapter 62J; 
  4.24     (2) intentional failure to provide the commissioner of 
  4.25  revenue with data on gross revenue and other information 
  4.26  required for the commissioner to implement sections 295.50 to 
  4.27  295.58; 
  4.28     (3) intentional failure to pay the health care provider tax 
  4.29  required under section 295.52; and 
  4.30     (4) (2) entering into a contract or arrangement that is 
  4.31  prohibited under sections 62J.70 to 62J.73.  
  4.32     Sec. 9.  Minnesota Statutes 2000, section 256L.02, 
  4.33  subdivision 3, is amended to read: 
  4.34     Subd. 3.  [FINANCIAL MANAGEMENT.] (a) The commissioner 
  4.35  shall manage spending for the MinnesotaCare program in a manner 
  4.36  that maintains a minimum reserve in accordance with section 
  5.1   16A.76.  As part of each state revenue and expenditure forecast, 
  5.2   the commissioner must make an assessment of the expected 
  5.3   expenditures for the services covered services under the 
  5.4   MinnesotaCare program for the remainder of the current biennium 
  5.5   and for the following biennium.  The estimated expenditure, 
  5.6   including the reserve requirements described in section 16A.76, 
  5.7   shall be compared to an estimate of the revenues that will be 
  5.8   available in the health care access fund.  Based on this 
  5.9   comparison, and After consulting with the chairs of the house 
  5.10  ways and means committee and the senate finance committee, and 
  5.11  the legislative commission on health care access, the 
  5.12  commissioner shall, as necessary, make the adjustments specified 
  5.13  in paragraph (b) to ensure that expenditures remain within the 
  5.14  limits of the available revenues for the remainder of the 
  5.15  current biennium and for the following biennium appropriations.  
  5.16  The commissioner shall not hire additional staff using 
  5.17  appropriations from the health care access general fund until 
  5.18  the commissioner of finance makes a determination that the 
  5.19  adjustments implemented under paragraph (b) are sufficient to 
  5.20  allow MinnesotaCare expenditures to remain within the limits of 
  5.21  available revenues for the remainder of the current biennium and 
  5.22  for the following biennium appropriations. 
  5.23     (b) The adjustments the commissioner shall use must be 
  5.24  implemented in this order:  first, stop enrollment of single 
  5.25  adults and households without children; second, upon 45 days' 
  5.26  notice, stop coverage of single adults and households without 
  5.27  children already enrolled in the MinnesotaCare program; third, 
  5.28  upon 90 days' notice, decrease the premium subsidy amounts by 
  5.29  ten percent for families with gross annual income above 200 
  5.30  percent of the federal poverty guidelines; fourth, upon 90 days' 
  5.31  notice, decrease the premium subsidy amounts by ten percent for 
  5.32  families with gross annual income at or below 200 percent; and 
  5.33  fifth, require applicants to be uninsured for at least six 
  5.34  months prior to eligibility in the MinnesotaCare program.  If 
  5.35  these measures are insufficient to limit the expenditures to the 
  5.36  estimated amount of revenue available appropriations, the 
  6.1   commissioner shall further limit enrollment or decrease premium 
  6.2   subsidies. 
  6.3      Sec. 10.  Minnesota Statutes 2000, section 256L.02, 
  6.4   subdivision 4, is amended to read: 
  6.5      Subd. 4.  [FUNDING FOR PREGNANT WOMEN AND CHILDREN UNDER 
  6.6   AGE TWO.] For fiscal years beginning on or after July 1, 1999, 
  6.7   the state cost of health care services provided to MinnesotaCare 
  6.8   enrollees who are pregnant women or children under age two shall 
  6.9   be paid out of the general fund rather than the health care 
  6.10  access fund.  If the commissioner of finance decides to pay for 
  6.11  these costs using a source other than the general fund, the 
  6.12  commissioner shall include the change as a budget initiative in 
  6.13  the biennial or supplemental budget, and shall not change the 
  6.14  funding source through a forecast modification. 
  6.15     Sec. 11.  Minnesota Statutes 2000, section 270B.01, 
  6.16  subdivision 8, is amended to read: 
  6.17     Subd. 8.  [MINNESOTA TAX LAWS.] For purposes of this 
  6.18  chapter only, unless expressly stated otherwise, "Minnesota tax 
  6.19  laws" means the taxes, refunds, and fees administered by or paid 
  6.20  to the commissioner under chapters 115B (except taxes imposed 
  6.21  under sections 115B.21 to 115B.24), 289A (except taxes imposed 
  6.22  under sections 298.01, 298.015, and 298.24), 290, 290A, 291, 
  6.23  297A, and 297H and sections 295.50 to 295.59, or any similar 
  6.24  Indian tribal tax administered by the commissioner pursuant to 
  6.25  any tax agreement between the state and the Indian tribal 
  6.26  government, and includes any laws for the assessment, 
  6.27  collection, and enforcement of those taxes, refunds, and fees. 
  6.28     Sec. 12.  Minnesota Statutes 2000, section 270B.14, 
  6.29  subdivision 1, is amended to read: 
  6.30     Subdivision 1.  [DISCLOSURE TO COMMISSIONER OF HUMAN 
  6.31  SERVICES.] (a) On the request of the commissioner of human 
  6.32  services, the commissioner shall disclose return information 
  6.33  regarding taxes imposed by chapter 290, and claims for refunds 
  6.34  under chapter 290A, to the extent provided in paragraph (b) and 
  6.35  for the purposes set forth in paragraph (c). 
  6.36     (b) Data that may be disclosed are limited to data relating 
  7.1   to the identity, whereabouts, employment, income, and property 
  7.2   of a person owing or alleged to be owing an obligation of child 
  7.3   support. 
  7.4      (c) The commissioner of human services may request data 
  7.5   only for the purposes of carrying out the child support 
  7.6   enforcement program and to assist in the location of parents who 
  7.7   have, or appear to have, deserted their children.  Data received 
  7.8   may be used only as set forth in section 256.978. 
  7.9      (d) The commissioner shall provide the records and 
  7.10  information necessary to administer the supplemental housing 
  7.11  allowance to the commissioner of human services.  
  7.12     (e) At the request of the commissioner of human services, 
  7.13  the commissioner of revenue shall electronically match the 
  7.14  social security numbers and names of participants in the 
  7.15  telephone assistance plan operated under sections 237.69 to 
  7.16  237.711, with those of property tax refund filers, and determine 
  7.17  whether each participant's household income is within the 
  7.18  eligibility standards for the telephone assistance plan. 
  7.19     (f) The commissioner may provide records and information 
  7.20  collected under Minnesota Statutes 2000, sections 295.50 to 
  7.21  295.59, to the commissioner of human services for purposes of 
  7.22  the Medicaid Voluntary Contribution and Provider-Specific Tax 
  7.23  Amendments of 1991, Public Law Number 102-234.  Upon the written 
  7.24  agreement by the United States Department of Health and Human 
  7.25  Services to maintain the confidentiality of the data, the 
  7.26  commissioner may provide records and information collected under 
  7.27  Minnesota Statutes 2000, sections 295.50 to 295.59, to the 
  7.28  Health Care Financing Administration section of the United 
  7.29  States Department of Health and Human Services for purposes of 
  7.30  meeting federal reporting requirements.  
  7.31     (g) The commissioner may provide records and information to 
  7.32  the commissioner of human services as necessary to administer 
  7.33  the early refund of refundable tax credits. 
  7.34     (h) The commissioner may disclose information to the 
  7.35  commissioner of human services necessary to verify income for 
  7.36  eligibility and premium payment under the MinnesotaCare program, 
  8.1   under section 256L.05, subdivision 2. 
  8.2      (i) The commissioner may disclose information to the 
  8.3   commissioner of human services necessary to verify whether 
  8.4   applicants or recipients for the Minnesota family investment 
  8.5   program, general assistance, food stamps, and Minnesota 
  8.6   supplemental aid program have claimed refundable tax credits 
  8.7   under chapter 290 and the property tax refund under chapter 
  8.8   290A, and the amounts of the credits. 
  8.9      Sec. 13.  Minnesota Statutes 2000, section 290.01, 
  8.10  subdivision 19b, is amended to read: 
  8.11     Subd. 19b.  [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 
  8.12  individuals, estates, and trusts, there shall be subtracted from 
  8.13  federal taxable income: 
  8.14     (1) interest income on obligations of any authority, 
  8.15  commission, or instrumentality of the United States to the 
  8.16  extent includable in taxable income for federal income tax 
  8.17  purposes but exempt from state income tax under the laws of the 
  8.18  United States; 
  8.19     (2) if included in federal taxable income, the amount of 
  8.20  any overpayment of income tax to Minnesota or to any other 
  8.21  state, for any previous taxable year, whether the amount is 
  8.22  received as a refund or as a credit to another taxable year's 
  8.23  income tax liability; 
  8.24     (3) the amount paid to others, less the credit allowed 
  8.25  under section 290.0674, not to exceed $1,625 for each qualifying 
  8.26  child in grades kindergarten to 6 and $2,500 for each qualifying 
  8.27  child in grades 7 to 12, for tuition, textbooks, and 
  8.28  transportation of each qualifying child in attending an 
  8.29  elementary or secondary school situated in Minnesota, North 
  8.30  Dakota, South Dakota, Iowa, or Wisconsin, wherein a resident of 
  8.31  this state may legally fulfill the state's compulsory attendance 
  8.32  laws, which is not operated for profit, and which adheres to the 
  8.33  provisions of the Civil Rights Act of 1964 and chapter 363.  For 
  8.34  the purposes of this clause, "tuition" includes fees or tuition 
  8.35  as defined in section 290.0674, subdivision 1, clause (1).  As 
  8.36  used in this clause, "textbooks" includes books and other 
  9.1   instructional materials and equipment used in elementary and 
  9.2   secondary schools in teaching only those subjects legally and 
  9.3   commonly taught in public elementary and secondary schools in 
  9.4   this state.  Equipment expenses qualifying for deduction 
  9.5   includes expenses as defined and limited in section 290.0674, 
  9.6   subdivision 1, clause (3).  "Textbooks" does not include 
  9.7   instructional books and materials used in the teaching of 
  9.8   religious tenets, doctrines, or worship, the purpose of which is 
  9.9   to instill such tenets, doctrines, or worship, nor does it 
  9.10  include books or materials for, or transportation to, 
  9.11  extracurricular activities including sporting events, musical or 
  9.12  dramatic events, speech activities, driver's education, or 
  9.13  similar programs.  For purposes of the subtraction provided by 
  9.14  this clause, "qualifying child" has the meaning given in section 
  9.15  32(c)(3) of the Internal Revenue Code; 
  9.16     (4) contributions made in taxable years beginning after 
  9.17  December 31, 1981, and before January 1, 1985, to a qualified 
  9.18  governmental pension plan, an individual retirement account, 
  9.19  simplified employee pension, or qualified plan covering a 
  9.20  self-employed person that were included in Minnesota gross 
  9.21  income in the taxable year for which the contributions were made 
  9.22  but were deducted or were not included in the computation of 
  9.23  federal adjusted gross income, less any amount allowed to be 
  9.24  subtracted as a distribution under this subdivision or a 
  9.25  predecessor provision in taxable years that began before January 
  9.26  1, 2000.  This subtraction applies only for taxable years 
  9.27  beginning after December 31, 1999, and before January 1, 2001.  
  9.28  If an individual's subtraction under this clause exceeds the 
  9.29  individual's taxable income, the excess may be carried forward 
  9.30  to taxable years beginning after December 31, 2000, and before 
  9.31  January 1, 2002; 
  9.32     (5) income as provided under section 290.0802; 
  9.33     (6) the amount of unrecovered accelerated cost recovery 
  9.34  system deductions allowed under subdivision 19g; 
  9.35     (7) to the extent included in federal adjusted gross 
  9.36  income, income realized on disposition of property exempt from 
 10.1   tax under section 290.491; 
 10.2      (8) to the extent not deducted in determining federal 
 10.3   taxable income or used to claim the long-term care insurance 
 10.4   credit under section 290.0672, the amount paid for health 
 10.5   insurance of self-employed individuals as determined under 
 10.6   section 162(l) of the Internal Revenue Code, except that the 
 10.7   percent limit does not apply.  If the individual deducted 
 10.8   insurance payments under section 213 of the Internal Revenue 
 10.9   Code of 1986, the subtraction under this clause must be reduced 
 10.10  by the lesser of: 
 10.11     (i) the total itemized deductions allowed under section 
 10.12  63(d) of the Internal Revenue Code, less state, local, and 
 10.13  foreign income taxes deductible under section 164 of the 
 10.14  Internal Revenue Code and the standard deduction under section 
 10.15  63(c) of the Internal Revenue Code; or 
 10.16     (ii) the lesser of (A) the amount of insurance qualifying 
 10.17  as "medical care" under section 213(d) of the Internal Revenue 
 10.18  Code to the extent not deducted under section 162(1) of the 
 10.19  Internal Revenue Code or excluded from income or (B) the total 
 10.20  amount deductible for medical care under section 213(a); 
 10.21     (9) the exemption amount allowed under Laws 1995, chapter 
 10.22  255, article 3, section 2, subdivision 3; 
 10.23     (10) to the extent included in federal taxable income, 
 10.24  postservice benefits for youth community service under section 
 10.25  124D.42 for volunteer service under United States Code, title 
 10.26  42, sections 12601 to 12604; 
 10.27     (11) to the extent not deducted in determining federal 
 10.28  taxable income by an individual who does not itemize deductions 
 10.29  for federal income tax purposes for the taxable year, an amount 
 10.30  equal to 50 percent of the excess of charitable contributions 
 10.31  allowable as a deduction for the taxable year under section 
 10.32  170(a) of the Internal Revenue Code over $500; 
 10.33     (12) to the extent included in federal taxable income, 
 10.34  holocaust victims' settlement payments for any injury incurred 
 10.35  as a result of the holocaust, if received by an individual who 
 10.36  was persecuted for racial or religious reasons by Nazi Germany 
 11.1   or any other Axis regime or an heir of such a person; and 
 11.2      (13) for taxable years beginning before January 1, 2008, 
 11.3   the amount of the federal small ethanol producer credit allowed 
 11.4   under section 40(a)(3) of the Internal Revenue Code which is 
 11.5   included in gross income under section 87 of the Internal 
 11.6   Revenue Code.; and 
 11.7      (14) an amount equal to $1,200 for each of the taxpayer's 
 11.8   personal exemptions, as defined in section 151 of the Internal 
 11.9   Revenue Code, and allowed on the taxpayer's federal tax return 
 11.10  for the tax year without regard to the phase-out under section 
 11.11  151(d)(3) of the Internal Revenue Code.  For taxable years 
 11.12  beginning after December 31, 2001, the commissioner shall adjust 
 11.13  the subtraction amount by the percentage determined under 
 11.14  section 290.06, subdivision 2d, for the taxable year; and 
 11.15     (15) an amount equal to $1,200 for each of the taxpayer's 
 11.16  dependent exemptions, as defined in section 152 of the Internal 
 11.17  Revenue Code, and allowed on the taxpayer's federal tax return 
 11.18  for the tax year without regard to the phase-out under section 
 11.19  151(d)(3) of the Internal Revenue Code.  For taxable years 
 11.20  beginning after December 31, 2001, the commissioner shall adjust 
 11.21  the subtraction amount by the percentage determined under 
 11.22  section 290.06, subdivision 2d, for the taxable year.  The 
 11.23  subtraction in this clause is not allowed to taxpayers who claim 
 11.24  the credit in section 290.0676. 
 11.25     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
 11.26  years beginning after December 31, 2000. 
 11.27     Sec. 14.  [290.0676] [CHILD TAX CREDIT.] 
 11.28     Subdivision 1.  [CREDIT ALLOWED.] An individual is allowed 
 11.29  a credit against the tax imposed by this chapter equal to $66 
 11.30  for each dependent exemption as defined in section 152 of the 
 11.31  Internal Revenue Code, and allowed on the taxpayer's federal tax 
 11.32  return for the tax year.  The credit is not allowed to an 
 11.33  individual who claims the subtraction in section 290.01, 
 11.34  subdivision 19b, clause (15). 
 11.35     For a nonresident or part-year resident, the credit 
 11.36  determined under this section must be allocated based on the 
 12.1   percentage calculated under section 290.06, subdivision 2c, 
 12.2   paragraph (e). 
 12.3      For taxable years beginning after December 31, 2001, the 
 12.4   commissioner shall adjust the credit amount by the percentage 
 12.5   determined under section 290.06, subdivision 2d, for the taxable 
 12.6   year. 
 12.7      Subd. 2.  [CREDIT REFUNDABLE.] If the amount of credit 
 12.8   which the claimant is eligible to receive under this section 
 12.9   exceeds the claimant's tax liability under this chapter, the 
 12.10  commissioner shall refund the excess to the claimant. 
 12.11     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
 12.12  years beginning after December 31, 2000. 
 12.13     Sec. 15.  Minnesota Statutes 2000, section 290.191, 
 12.14  subdivision 2, is amended to read: 
 12.15     Subd. 2.  [APPORTIONMENT FORMULA OF GENERAL APPLICATION.] 
 12.16  Except for those trades or businesses required to use a 
 12.17  different formula under subdivision 3 or section 290.35 or 
 12.18  290.36, and for those trades or businesses that receive 
 12.19  permission to use some other method under section 290.20 or 
 12.20  under subdivision 4, a trade or business required to apportion 
 12.21  its net income must apportion its income to this state on the 
 12.22  basis of the percentage obtained by taking the sum of:  
 12.23     (1) 75 percent of the percentage which the sales made 
 12.24  within this state in connection with the trade or business 
 12.25  during the tax period are of the total sales wherever made in 
 12.26  connection with the trade or business during the tax period;. 
 12.27     (2) 12.5 percent of the percentage which the total tangible 
 12.28  property used by the taxpayer in this state in connection with 
 12.29  the trade or business during the tax period is of the total 
 12.30  tangible property, wherever located, used by the taxpayer in 
 12.31  connection with the trade or business during the tax period; and 
 12.32     (3) 12.5 percent of the percentage which the taxpayer's 
 12.33  total payrolls paid or incurred in this state or paid in respect 
 12.34  to labor performed in this state in connection with the trade or 
 12.35  business during the tax period are of the taxpayer's total 
 12.36  payrolls paid or incurred in connection with the trade or 
 13.1   business during the tax period.  
 13.2      <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
 13.3   years beginning after December 31, 2001. 
 13.4      Sec. 16.  Minnesota Statutes 2000, section 290.191, 
 13.5   subdivision 3, is amended to read: 
 13.6      Subd. 3.  [APPORTIONMENT FORMULA FOR FINANCIAL 
 13.7   INSTITUTIONS.] Except for an investment company required to 
 13.8   apportion its income under section 290.36, a financial 
 13.9   institution that is required to apportion its net income must 
 13.10  apportion its net income to this state on the basis of the 
 13.11  percentage obtained by taking the sum of:  
 13.12     (1) 75 percent of the percentage which the receipts from 
 13.13  within this state in connection with the trade or business 
 13.14  during the tax period are of the total receipts in connection 
 13.15  with the trade or business during the tax period, from wherever 
 13.16  derived;. 
 13.17     (2) 12.5 percent of the percentage which the sum of the 
 13.18  total tangible property used by the taxpayer in this state and 
 13.19  the intangible property owned by the taxpayer and attributed to 
 13.20  this state in connection with the trade or business during the 
 13.21  tax period is of the sum of the total tangible property, 
 13.22  wherever located, used by the taxpayer and the intangible 
 13.23  property owned by the taxpayer and attributed to all states in 
 13.24  connection with the trade or business during the tax period; and 
 13.25     (3) 12.5 percent of the percentage which the taxpayer's 
 13.26  total payrolls paid or incurred in this state or paid in respect 
 13.27  to labor performed in this state in connection with the trade or 
 13.28  business during the tax period are of the taxpayer's total 
 13.29  payrolls paid or incurred in connection with the trade or 
 13.30  business during the tax period. 
 13.31     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
 13.32  years beginning after December 31, 2001. 
 13.33     Sec. 17.  Minnesota Statutes 2000, section 297A.70, 
 13.34  subdivision 1, is amended to read: 
 13.35     Subdivision 1.  [SCOPE.] (a) The gross receipts from sales 
 13.36  of items to or by, and storage, distribution, use, or 
 14.1   consumption of items by the organizations listed in this section 
 14.2   are specifically exempted from the taxes imposed by this chapter.
 14.3      (b) Notwithstanding any law to the contrary enacted before 
 14.4   1992, only sales to governments and political subdivisions 
 14.5   listed in this section are exempt from the taxes imposed by this 
 14.6   chapter.  
 14.7      (c) "Sales" includes purchases under an installment 
 14.8   contract or lease purchase agreement under section 465.71. 
 14.9      <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
 14.10  purchases after June 30, 2001. 
 14.11     Sec. 18.  Minnesota Statutes 2000, section 297A.70, 
 14.12  subdivision 2, is amended to read: 
 14.13     Subd. 2.  [SALES TO GOVERNMENT.] (a) All sales, except 
 14.14  those listed in paragraph (b), to the following governments and 
 14.15  political subdivisions, or to the listed agencies or 
 14.16  instrumentalities of governments and political subdivisions, are 
 14.17  exempt: 
 14.18     (1) the United States and its agencies and 
 14.19  instrumentalities; 
 14.20     (2) school districts, the University of Minnesota, state 
 14.21  universities, community colleges, technical colleges, state 
 14.22  academies, and the Perpich Minnesota center for arts education, 
 14.23  and an instrumentality of a political subdivision that is 
 14.24  accredited as an optional/special function school by the North 
 14.25  Central Association of Colleges and Schools; 
 14.26     (3) hospitals and nursing homes owned and operated by 
 14.27  political subdivisions of the state political subdivisions of a 
 14.28  state and their agencies and instrumentalities; and 
 14.29     (4) other states or political subdivisions of other states, 
 14.30  if the sale would be exempt from taxation if it occurred in that 
 14.31  state; and 
 14.32     (5) sales to public libraries, public library systems, 
 14.33  multicounty, multitype library systems as defined in section 
 14.34  134.001, county law libraries under chapter 134A, state agency 
 14.35  libraries, the state library under section 480.09, and the 
 14.36  legislative reference library.  
 15.1      (b) This exemption does not apply to the sales of the 
 15.2   following products and services: 
 15.3      (1) building, construction, or reconstruction materials 
 15.4   purchased by a contractor or a subcontractor as a part of a 
 15.5   lump-sum contract or similar type of contract with a guaranteed 
 15.6   maximum price covering both labor and materials for use in the 
 15.7   construction, alteration, or repair of a building or facility; 
 15.8      (2) construction materials purchased by tax exempt entities 
 15.9   or their contractors to be used in constructing buildings or 
 15.10  facilities which will not be used principally by the tax exempt 
 15.11  entities; 
 15.12     (3) the leasing of a motor vehicle as defined in section 
 15.13  297B.01, subdivision 5, except for:  (i) leases entered into by 
 15.14  the United States or its agencies or instrumentalities or (ii) 
 15.15  leases entered into by a political subdivision of motor vehicles 
 15.16  exempt from tax under chapter 297B; or 
 15.17     (4) meals and lodging as defined under section 297A.61, 
 15.18  subdivisions 3, paragraph (d), and 16, paragraph (c), except for 
 15.19  meals and lodging purchased directly by the United States or its 
 15.20  agencies or instrumentalities. 
 15.21     (c) As used in this subdivision, "school districts" means 
 15.22  public school entities and districts of every kind and nature 
 15.23  organized under the laws of the state of Minnesota, and any 
 15.24  instrumentality of a school district, as defined in section 
 15.25  471.59. 
 15.26     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
 15.27  purchases after June 30, 2001. 
 15.28     Sec. 19.  Minnesota Statutes 2000, section 297A.70, 
 15.29  subdivision 3, is amended to read: 
 15.30     Subd. 3.  [SALES OF CERTAIN GOODS AND SERVICES TO 
 15.31  GOVERNMENT.] (a) The following sales to or use by the specified 
 15.32  persons, governments, and political subdivisions of the state 
 15.33  are exempt: 
 15.34     (1) supplies and equipment used to provide medical care in 
 15.35  the operation of an ambulance service owned and operated by a 
 15.36  political subdivision of the state; 
 16.1      (2) repair and replacement parts for emergency rescue 
 16.2   vehicles, fire trucks, and fire apparatus to a political 
 16.3   subdivision; 
 16.4      (3) machinery and equipment, except for motor vehicles, 
 16.5   used directly for mixed municipal solid waste management 
 16.6   services at a solid waste disposal facility as defined in 
 16.7   section 115A.03, subdivision 10; 
 16.8      (4) chore and homemaking services to a political 
 16.9   subdivision of the state to be provided to elderly or disabled 
 16.10  individuals; 
 16.11     (5) telephone services to the department of administration 
 16.12  that are used to provide telecommunications services through the 
 16.13  intertechnologies revolving fund; 
 16.14     (6) (2) firefighter personal protective equipment as 
 16.15  defined in paragraph (b), if purchased or authorized by and for 
 16.16  the use of an organized fire department, fire protection 
 16.17  district, or fire company regularly charged with the 
 16.18  responsibility of providing fire protection to the state or a 
 16.19  political subdivision; 
 16.20     (7) (3) bullet-resistant body armor that provides the 
 16.21  wearer with ballistic and trauma protection, if purchased by a 
 16.22  law enforcement agency of the state or a political subdivision 
 16.23  of the state, or a licensed peace officer, as defined in section 
 16.24  626.84, subdivision 1; and 
 16.25     (8) (4) motor vehicles purchased or leased by political 
 16.26  subdivisions of the state if the vehicles are exempt from 
 16.27  registration under section 168.012, subdivision 1, paragraph 
 16.28  (b), or exempt from taxation under section 473.448; 
 16.29     (9) equipment designed to process, dewater, and recycle 
 16.30  biosolids for wastewater treatment facilities of political 
 16.31  subdivisions, and materials incidental to installation of that 
 16.32  equipment; and materials used to construct buildings to house 
 16.33  the equipment, if the materials are purchased after June 30, 
 16.34  1998, and before July 1, 2001; and 
 16.35     (10) sales to a town of gravel and of machinery, equipment, 
 16.36  and accessories, except motor vehicles, used exclusively for 
 17.1   road and bridge maintenance, and leases by a town of motor 
 17.2   vehicles exempt from tax under section 297B.03, clause (10). 
 17.3      (b) For purposes of this subdivision, "firefighters 
 17.4   personal protective equipment" means helmets, including face 
 17.5   shields, chin straps, and neck liners; bunker coats and pants, 
 17.6   including pant suspenders; boots; gloves; head covers or hoods; 
 17.7   wildfire jackets; protective coveralls; goggles; self-contained 
 17.8   breathing apparatus; canister filter masks; personal alert 
 17.9   safety systems; spanner belts; optical or thermal imaging search 
 17.10  devices; and all safety equipment required by the Occupational 
 17.11  Safety and Health Administration. 
 17.12     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
 17.13  purchases after June 30, 2001. 
 17.14     Sec. 20.  Minnesota Statutes 2000, section 297A.991, 
 17.15  subdivision 2, is amended to read: 
 17.16     Subd. 2.  [COMMISSIONER OF FINANCE TO REPORT.] In reporting 
 17.17  the sales tax and sales tax on motor vehicles collections to the 
 17.18  United States Department of Commerce, the commissioner of 
 17.19  finance shall exclude the estimated amount from the sales and 
 17.20  motor vehicle collections.  Sales tax and Sales tax on motor 
 17.21  vehicles revenues received from political subdivisions must be 
 17.22  reported as intergovernmental grants or similar 
 17.23  intergovernmental revenue.  The amount of the sales tax and 
 17.24  sales tax on motor vehicles paid by state agencies must be 
 17.25  reported as reduced state expenditures. 
 17.26     <b>[EFFECTIVE DATE.]</b> This section is effective for sales and 
 17.27  purchases after June 30, 2001. 
 17.28     Sec. 21.  Minnesota Statutes 2000, section 297I.15, is 
 17.29  amended by adding a subdivision to read: 
 17.30     Subd. 11.  [HEALTH MAINTENANCE ORGANIZATIONS; NONPROFIT 
 17.31  HEALTH SERVICE PLAN CORPORATIONS; COMMUNITY INTEGRATED SERVICE 
 17.32  NETWORKS.] Premiums paid to health maintenance organizations, 
 17.33  nonprofit health service plan corporations, and community 
 17.34  integrated service networks are exempt from the taxes imposed 
 17.35  under this chapter. 
 17.36     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 
 18.1   2002, and applies to tax years beginning on or after that date. 
 18.2      Sec. 22.  [TRANSFER.] 
 18.3      The commissioner of finance shall transfer money in the 
 18.4   health care access fund as of July 1, 2001, to the MinnesotaCare 
 18.5   subsidized health insurance account in the general fund. 
 18.6      Sec. 23.  [APPROPRIATION.] 
 18.7      $54,476,000 is appropriated from the general fund to the 
 18.8   commissioner of human services for the fiscal year beginning 
 18.9   July 1, 2001, for medical assistance costs.  This appropriation 
 18.10  shall become part of base level funding and shall be increased 
 18.11  each year by the change in the Consumer Price Index-All Items 
 18.12  (United States city average)(CPI-U) forecasted by Data 
 18.13  Resources, Inc. using the indices as forecasted in the first 
 18.14  quarter of each calendar year for the subsequent fiscal year. 
 18.15     Sec. 24.  [REPEALER.] 
 18.16     (a) Minnesota Statutes 2000, sections 13.4967, subdivision 
 18.17  3; 16A.724; 16A.76; 62T.10; 144.1484, subdivision 2; 256.9657, 
 18.18  subdivision 2; 256B.19, subdivision 1b; 295.50; 295.51; 295.52; 
 18.19  295.53; 295.54; 295.55; 295.56; 295.57; 295.58; 295.581; 
 18.20  295.582; and 295.59, are repealed.  
 18.21     (b) Minnesota Statutes 2000, sections 290.191, subdivisions 
 18.22  4, 10, 11, and 12; and 297I.05, subdivision 5, are repealed. 
 18.23     <b>[EFFECTIVE DATE.]</b> This section, paragraph (a), is effective 
 18.24  July 1, 2001.  This section, paragraph (b), is effective for 
 18.25  taxable years beginning after December 31, 2001.