HF 1597

1st Unofficial Engrossment - 83rd Legislature (2003 - 2004) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to financing and operation of state and local 
  1.3             government; making changes to income, franchise, sales 
  1.4             and use, property, motor vehicle sales, mortgage 
  1.5             registry, deed, cigarette and tobacco, liquor, 
  1.6             minerals, and special taxes; increasing certain tax 
  1.7             rates, changing and allowing tax credits, subtractions 
  1.8             and exemptions, adding requirements for foreign 
  1.9             operating corporations; increasing individual income 
  1.10            tax rates; apportioning income; modifying property tax 
  1.11            rates, class rates, and bases; modifying aids to local 
  1.12            units of government; prohibiting increases in certain 
  1.13            levies; providing an investment credit; providing tax 
  1.14            incentives for biotechnology and health sciences 
  1.15            industry and international economic development zones; 
  1.16            authorizing county economic development authorities; 
  1.17            authorizing Anoka county to grant certain powers to 
  1.18            its housing and redevelopment authority; funding the 
  1.19            cash flow and budget reserve accounts; modifying the 
  1.20            imposition of taxes on certain minerals and providing 
  1.21            for the distribution of the proceeds of taxes on 
  1.22            minerals; limiting agency contracts; distributing 
  1.23            payment of certain court fines; accelerating payments 
  1.24            for mortgage registry and deed tax; accelerating 
  1.25            payment of sales and excise taxes; changing interest 
  1.26            payment dates; providing a partial exemption from 
  1.27            motor vehicle sales tax for rechargeable powered 
  1.28            vehicles; authorizing actions by the mosquito control 
  1.29            district; changing definition of claimant agency for 
  1.30            purposes of revenue recapture act; providing for early 
  1.31            childhood, family, and kindergarten through grade 12 
  1.32            education, including general education, educational 
  1.33            excellence and other policy, special programs, 
  1.34            education reform, facilities and technology, fund 
  1.35            transfers, nutrition programs, libraries, family and 
  1.36            early childhood education, prevention, 
  1.37            self-sufficiency and lifelong learning, state 
  1.38            agencies, administrative amendment and repeal of 
  1.39            certain provisions, technical amendments, education 
  1.40            forecast adjustments; appropriating money; amending 
  1.41            Minnesota Statutes 2002, sections 12.21, subdivision 
  1.42            3; 16A.152, subdivisions 1, 1b, 2; 16C.03, by adding a 
  1.43            subdivision; 18B.07, subdivision 2; 62J.692, 
  1.44            subdivision 4, by adding a subdivision; 84A.51, 
  1.45            subdivision 4; 119A.52; 119A.53; 119B.011, subdivision 
  1.46            20; 120A.05, subdivision 9; 122A.21; 122A.41, 
  2.1             subdivision 2; 122A.413; 122A.414, by adding a 
  2.2             subdivision; 122A.415, subdivision 3; 122A.63, 
  2.3             subdivision 3; 123A.06, subdivision 3; 123A.18, 
  2.4             subdivision 2; 123A.73, subdivisions 3, 4, 5; 123B.02, 
  2.5             subdivision 1; 123B.51, subdivisions 3, 4; 123B.53, 
  2.6             subdivision 4; 123B.54; 123B.57, subdivisions 1, 4, 6; 
  2.7             123B.59, subdivisions 1, 2, 3, 5, by adding a 
  2.8             subdivision; 123B.63, subdivisions 1, 2, 3, 4; 
  2.9             123B.72, subdivision 3; 123B.75, subdivision 5; 
  2.10            123B.92, subdivisions 1, 3; 123B.93; 124D.03, 
  2.11            subdivision 12; 124D.081, by adding a subdivision; 
  2.12            124D.09, subdivisions 3, 9, 10, 16; 124D.10, 
  2.13            subdivisions 13, 23a; 124D.11, subdivisions 1, 2, 4, 
  2.14            6, 9; 124D.128, subdivision 2; 124D.135, subdivision 
  2.15            8; 124D.16, subdivision 6; 124D.19, subdivision 3; 
  2.16            124D.20, subdivision 5, by adding subdivisions; 
  2.17            124D.22, subdivision 3; 124D.454, subdivisions 1, 2, 
  2.18            3, 8, 10, by adding a subdivision; 124D.52, 
  2.19            subdivision 3; 124D.531, subdivisions 1, 4, 7, by 
  2.20            adding a subdivision; 124D.59, subdivision 2; 124D.65, 
  2.21            subdivision 5; 124D.86, subdivisions 1a, 3, 4, 5, 6; 
  2.22            124D.88, by adding a subdivision; 125A.05; 125A.12; 
  2.23            125A.21, subdivision 2; 126C.05, subdivision 16; 
  2.24            126C.10, subdivisions 4, 6, 28; 126C.15, subdivision 
  2.25            1; 126C.17, subdivisions 5, 7a, 9, 11; 126C.21, 
  2.26            subdivision 3; 126C.42, subdivision 1; 126C.457; 
  2.27            126C.48, subdivision 3; 126C.55, subdivision 5; 
  2.28            126C.63, subdivisions 5, 8; 126C.69, subdivisions 2, 
  2.29            9; 127A.05, subdivisions 1, 4; 127A.45, subdivisions 
  2.30            2, 3, 7a, 10, 12, 13, 14, 16; 127A.47, subdivisions 7, 
  2.31            8; 127A.49, subdivisions 2, 3; 128D.11, subdivision 8; 
  2.32            134.001, by adding a subdivision; 134.22; 134.32; 
  2.33            134.34, subdivision 4; 169.26, subdivision 3; 169.435; 
  2.34            169.449, subdivision 1; 169.4501, subdivisions 3, 4; 
  2.35            169.973, subdivision 1; 178.02, subdivision 1; 
  2.36            270.059; 270A.03, subdivision 2; 272.02, by adding a 
  2.37            subdivision; 273.13, subdivisions 24, 25; 273.134; 
  2.38            273.135, subdivisions 1, 2; 273.138, subdivision 6; 
  2.39            273.1384, subdivision 4; 273.1391, subdivision 2; 
  2.40            273.1398, subdivisions 4a, 4c, 6, 8; 275.025, 
  2.41            subdivisions 1, 2; 276A.06, by adding a subdivision; 
  2.42            287.12; 287.29, subdivision 1; 289A.20, subdivision 4; 
  2.43            289A.31, subdivision 7; 289A.56, subdivision 4; 
  2.44            289A.60, subdivision 15; 290.01, subdivisions 6b, 29; 
  2.45            290.05, subdivision 1; 290.06, subdivisions 2c, 2d, by 
  2.46            adding a subdivision; 290.0921, subdivision 3; 
  2.47            290.0922, subdivision 3; 290.17, subdivisions 2, 4; 
  2.48            290.191, subdivision 1, by adding a subdivision; 
  2.49            297A.68, subdivision 4, by adding subdivisions; 
  2.50            297A.71, by adding a subdivision; 297A.75, subdivision 
  2.51            4; 297B.03; 297F.05, subdivisions 1, 3, 4; 297F.08, 
  2.52            subdivision 7; 297F.09, subdivisions 1, 2, by adding a 
  2.53            subdivision; 297F.10, subdivision 1; 297G.09, by 
  2.54            adding a subdivision; 297H.06, subdivision 1; 298.001, 
  2.55            by adding a subdivision; 298.01, subdivisions 3, 3a; 
  2.56            298.015; 298.016, subdivisions 1, 2, 4; 298.018; 
  2.57            298.2211, subdivision 1; 298.225, subdivision 1; 
  2.58            298.24, subdivision 1; 298.28, subdivision 4; 298.292, 
  2.59            subdivision 2; 298.296, subdivision 4; 298.2961, by 
  2.60            adding a subdivision; 473.702; 473.703, subdivision 1; 
  2.61            473.704, subdivision 17; 473.705; 473.714, subdivision 
  2.62            1; 475.61, subdivisions 1, 3, 4; 477A.011, 
  2.63            subdivisions 20, 31, 34, by adding subdivisions; 
  2.64            477A.013, subdivisions 8, 9; 477A.03, subdivision 2; 
  2.65            611.27, subdivisions 13, 15; Laws 1965, chapter 705, 
  2.66            as amended; Laws 1978, chapter 464, section 1; Laws 
  2.67            2000, chapter 489, article 2, section 36, as amended; 
  2.68            Laws 2001, First Special Session chapter 5, article 
  2.69            12, section 95, as amended; proposing coding for new 
  2.70            law in Minnesota Statutes, chapters 122A; 123B; 125B; 
  2.71            126C; 127A; 134; 273; 290; 297F; 298; 469; 477A; 
  3.1             repealing Minnesota Statutes 2002, sections 37.13, 
  3.2             subdivision 2; 122A.414; 122A.415; 123A.73, 
  3.3             subdivisions 7, 10, 11; 123B.81, subdivision 6; 
  3.4             124D.11, subdivision 8; 124D.84, subdivision 2; 
  3.5             125A.023, subdivision 5; 125A.75, subdivision 8; 
  3.6             125B.11; 126C.01, subdivision 4; 126C.14; 126C.55, 
  3.7             subdivision 5; 127A.41, subdivision 6; 134.34, 
  3.8             subdivision 4; 273.138; 273.1398, subdivision 2; 
  3.9             273.166; 298.01, subdivisions 3c, 3d; 298.017; 298.24, 
  3.10            subdivision 3; 325E.112, subdivision 2a; 473.714, 
  3.11            subdivision 2; 477A.011, subdivisions 36, 37; 
  3.12            477A.0121, subdivisions 1, 2, 3, 4, 5, 6; 477A.0122, 
  3.13            subdivisions 1, 2, 3, 4, 5, 6; 477A.0123; 477A.03, 
  3.14            subdivision 4; 477A.06; 477A.065; 477A.07; Laws 2001, 
  3.15            First Special Session chapter 3, article 4, section 1; 
  3.16            Laws 2001, First Special Session chapter 3, article 4, 
  3.17            section 2; Laws 2001, First Special Session chapter 6, 
  3.18            article 2, section 52; Laws 2001, First Special 
  3.19            Session chapter 6, article 2, section 64; Laws 2001, 
  3.20            First Special Session chapter 6, article 2, section 
  3.21            70; Laws 2001, First Special Session chapter 6, 
  3.22            article 5, section 12, as amended; Minnesota Rules, 
  3.23            parts 3500.0600; 3520.0400; 3520.1400; 3520.3300; 
  3.24            3530.1500; 3530.2700; 3530.4400; 3530.4500; 3530.4700; 
  3.25            3550.0100. 
  3.26  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  3.27                             ARTICLE 1
  3.28           INDIVIDUAL INCOME AND CORPORATE FRANCHISE TAX
  3.29     Section 1.  [LEGISLATIVE INTENT FOR USE OF TAX PROCEEDS.] 
  3.30     The revenue raised by the tax increases in this article is 
  3.31  intended to be used to provide financial support for higher 
  3.32  education and help to reduce reductions in state and local 
  3.33  services. 
  3.34     Sec. 2.  Minnesota Statutes 2002, section 290.01, 
  3.35  subdivision 6b, is amended to read: 
  3.36     Subd. 6b.  [FOREIGN OPERATING CORPORATION.] The term 
  3.37  "foreign operating corporation," when applied to a corporation, 
  3.38  means a domestic corporation with the following characteristics: 
  3.39     (1) it is part of a unitary business at least one member of 
  3.40  which is taxable in this state; 
  3.41     (2) it is not a foreign sales corporation under section 922 
  3.42  of the Internal Revenue Code, as amended through December 31, 
  3.43  1999, for the taxable year; and 
  3.44     (3) either (i) the average of the percentages of its 
  3.45  property and payrolls assigned to locations inside outside the 
  3.46  United States and the District of Columbia, excluding the 
  3.47  commonwealth of Puerto Rico and possessions of the United 
  3.48  States, as determined under section 290.191 or 290.20, is 20 80 
  4.1   percent or less greater and it has at least $2,000,000 of 
  4.2   property and $1,000,000 of payroll as determined under section 
  4.3   290.191 or 290.20; or (ii) it has in effect a valid election 
  4.4   under section 936 of the Internal Revenue Code. 
  4.5      [EFFECTIVE DATE.] This section is effective for tax years 
  4.6   beginning after December 31, 2002. 
  4.7      Sec. 3.  Minnesota Statutes 2002, section 290.06, 
  4.8   subdivision 2c, is amended to read: 
  4.9      Subd. 2c.  [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 
  4.10  AND TRUSTS.] (a) The income taxes imposed by this chapter upon 
  4.11  married individuals filing joint returns and surviving spouses 
  4.12  as defined in section 2(a) of the Internal Revenue Code must be 
  4.13  computed by applying to their taxable net income the following 
  4.14  schedule of rates: 
  4.15     (1) On the first $25,680 $27,780, 5.35 percent; 
  4.16     (2) On all over $25,680 $27,780, but not 
  4.17  over $102,030 $110,390, 7.05 percent; 
  4.18     (3) On all over $102,030 $110,390, but not over $200,000, 
  4.19  7.85 percent; 
  4.20     (4) On all over $200,000, 9.4 percent for taxable years 
  4.21  beginning after December 31, 2002. 
  4.22     Married individuals filing separate returns, estates, and 
  4.23  trusts must compute their income tax by applying the above rates 
  4.24  to their taxable income, except that the income brackets will be 
  4.25  one-half of the above amounts.  
  4.26     (b) The income taxes imposed by this chapter upon unmarried 
  4.27  individuals must be computed by applying to taxable net income 
  4.28  the following schedule of rates: 
  4.29     (1) On the first $17,570 $19,010, 5.35 percent; 
  4.30     (2) On all over $17,570 $19,010, but not 
  4.31  over $57,710 $62,440, 7.05 percent; 
  4.32     (3) On all over $57,710 $62,440, but not over $113,120, 
  4.33  7.85 percent; 
  4.34     (4) On all over $113,120, 9.4 percent for taxable years 
  4.35  beginning after December 31, 2002. 
  4.36     (c) The income taxes imposed by this chapter upon unmarried 
  5.1   individuals qualifying as a head of household as defined in 
  5.2   section 2(b) of the Internal Revenue Code must be computed by 
  5.3   applying to taxable net income the following schedule of rates: 
  5.4      (1) On the first $21,630 $23,400, 5.35 percent; 
  5.5      (2) On all over $21,630 $23,400, but not 
  5.6   over $86,910 $94,030, 7.05 percent; 
  5.7      (3) On all over $86,910 $94,030, but not over $170,340, 
  5.8   7.85 percent; 
  5.9      (4) On all over $170,340, 9.4 percent for tax years 
  5.10  beginning after December 31, 2002. 
  5.11     (d) In lieu of a tax computed according to the rates set 
  5.12  forth in this subdivision, the tax of any individual taxpayer 
  5.13  whose taxable net income for the taxable year is less than an 
  5.14  amount determined by the commissioner must be computed in 
  5.15  accordance with tables prepared and issued by the commissioner 
  5.16  of revenue based on income brackets of not more than $100.  The 
  5.17  amount of tax for each bracket shall be computed at the rates 
  5.18  set forth in this subdivision, provided that the commissioner 
  5.19  may disregard a fractional part of a dollar unless it amounts to 
  5.20  50 cents or more, in which case it may be increased to $1. 
  5.21     (e) An individual who is not a Minnesota resident for the 
  5.22  entire year must compute the individual's Minnesota income tax 
  5.23  as provided in this subdivision.  After the application of the 
  5.24  nonrefundable credits provided in this chapter, the tax 
  5.25  liability must then be multiplied by a fraction in which:  
  5.26     (1) the numerator is the individual's Minnesota source 
  5.27  federal adjusted gross income as defined in section 62 of the 
  5.28  Internal Revenue Code and increased by the additions required 
  5.29  under section 290.01, subdivision 19a, clauses (1) and (6), and 
  5.30  reduced by the Minnesota assignable portion of the subtraction 
  5.31  for United States government interest under section 290.01, 
  5.32  subdivision 19b, clause (1), after applying the allocation and 
  5.33  assignability provisions of section 290.081, clause (a), or 
  5.34  290.17; and 
  5.35     (2) the denominator is the individual's federal adjusted 
  5.36  gross income as defined in section 62 of the Internal Revenue 
  6.1   Code of 1986, increased by the amounts specified in section 
  6.2   290.01, subdivision 19a, clauses (1) and (6), and reduced by the 
  6.3   amounts specified in section 290.01, subdivision 19b, clause (1).
  6.4      [EFFECTIVE DATE AND INSTRUCTIONS TO COMMISSIONER.] This 
  6.5   section is effective for taxable years beginning after December 
  6.6   31, 2002.  The commissioner must adjust the withholding tables 
  6.7   under section 290.92, subdivision 2a, clause (3), by July 1, 
  6.8   2003, to reflect the changes made in this section. 
  6.9      Sec. 4.  Minnesota Statutes 2002, section 290.06, 
  6.10  subdivision 2d, is amended to read: 
  6.11     Subd. 2d.  [INFLATION ADJUSTMENT OF BRACKETS.] (a) For 
  6.12  taxable years beginning after December 31, 2000 2003, the 
  6.13  minimum and maximum dollar amounts for each rate bracket for 
  6.14  which a tax is imposed in subdivision 2c shall be adjusted for 
  6.15  inflation by the percentage determined under paragraph (b).  For 
  6.16  the purpose of making the adjustment as provided in this 
  6.17  subdivision all of the rate brackets provided in subdivision 2c 
  6.18  shall be the rate brackets as they existed for taxable years 
  6.19  beginning after December 31, 1999 2002, and before January 
  6.20  1, 2001 2004.  The rate applicable to any rate bracket must not 
  6.21  be changed is the rate under subdivision 2c.  The dollar amounts 
  6.22  setting forth the tax shall be adjusted to reflect the changes 
  6.23  in the rate brackets.  The rate brackets as adjusted must be 
  6.24  rounded to the nearest $10 amount.  If the rate bracket ends in 
  6.25  $5, it must be rounded up to the nearest $10 amount.  
  6.26     (b) The commissioner shall adjust the rate brackets and by 
  6.27  the percentage determined pursuant to the provisions of section 
  6.28  1(f) of the Internal Revenue Code, except that in section 
  6.29  1(f)(3)(B) the word "1999" "2002" shall be substituted for the 
  6.30  word "1992."  For 2001 2004, the commissioner shall then 
  6.31  determine the percent change from the 12 months ending on August 
  6.32  31, 1999 2002, to the 12 months ending on August 31, 2000 2003, 
  6.33  and in each subsequent year, from the 12 months ending on August 
  6.34  31, 1999 2002, to the 12 months ending on August 31 of the year 
  6.35  preceding the taxable year.  The determination of the 
  6.36  commissioner pursuant to this subdivision shall not be 
  7.1   considered a "rule" and shall not be subject to the 
  7.2   Administrative Procedure Act contained in chapter 14.  
  7.3      No later than December 15 of each year, the commissioner 
  7.4   shall announce the specific percentage that will be used to 
  7.5   adjust the tax rate brackets. 
  7.6      [EFFECTIVE DATE.] This section is effective for taxable 
  7.7   years beginning after December 31, 2002. 
  7.8      Sec. 5.  Minnesota Statutes 2002, section 290.17, 
  7.9   subdivision 2, is amended to read: 
  7.10     Subd. 2.  [INCOME NOT DERIVED FROM CONDUCT OF A TRADE OR 
  7.11  BUSINESS.] The income of a taxpayer subject to the allocation 
  7.12  rules that is not derived from the conduct of a trade or 
  7.13  business must be assigned in accordance with paragraphs (a) to 
  7.14  (f):  
  7.15     (a)(1) Subject to paragraphs (a)(2), (a)(3), and (a)(4), 
  7.16  income from wages as defined in section 3401(a) and (f) of the 
  7.17  Internal Revenue Code is assigned to this state if, and to the 
  7.18  extent that, the work of the employee is performed within it; 
  7.19  all other income from such sources is treated as income from 
  7.20  sources without this state.  
  7.21     Severance pay shall be considered income from labor or 
  7.22  personal or professional services. 
  7.23     (2) In the case of an individual who is a nonresident of 
  7.24  Minnesota and who is an athlete or entertainer, income from 
  7.25  compensation for labor or personal services performed within 
  7.26  this state shall be determined in the following manner:  
  7.27     (i) The amount of income to be assigned to Minnesota for an 
  7.28  individual who is a nonresident salaried athletic team employee 
  7.29  shall be determined by using a fraction in which the denominator 
  7.30  contains the total number of days in which the individual is 
  7.31  under a duty to perform for the employer, and the numerator is 
  7.32  the total number of those days spent in Minnesota.  For purposes 
  7.33  of this paragraph, off-season training activities, unless 
  7.34  conducted at the team's facilities as part of a team imposed 
  7.35  program, are not included in the total number of duty days.  
  7.36  Bonuses earned as a result of play during the regular season or 
  8.1   for participation in championship, play-off, or all-star games 
  8.2   must be allocated under the formula.  Signing bonuses are not 
  8.3   subject to allocation under the formula if they are not 
  8.4   conditional on playing any games for the team, are payable 
  8.5   separately from any other compensation, and are nonrefundable; 
  8.6   and 
  8.7      (ii) The amount of income to be assigned to Minnesota for 
  8.8   an individual who is a nonresident, and who is an athlete or 
  8.9   entertainer not listed in clause (i), for that person's athletic 
  8.10  or entertainment performance in Minnesota shall be determined by 
  8.11  assigning to this state all income from performances or athletic 
  8.12  contests in this state.  
  8.13     (3) For purposes of this section, amounts received by a 
  8.14  nonresident as "retirement income" as defined in section (b)(1) 
  8.15  of the State Income Taxation of Pension Income Act, Public Law 
  8.16  Number 104-95, are not considered income derived from carrying 
  8.17  on a trade or business or from wages or other compensation for 
  8.18  work an employee performed in Minnesota, and are not taxable 
  8.19  under this chapter.  
  8.20     (4) Wages, otherwise assigned to this state under clause 
  8.21  (1) and not qualifying under clause (3), are not taxable under 
  8.22  this chapter if the following conditions are met: 
  8.23     (i) the recipient was not a resident of this state for any 
  8.24  part of the taxable year in which the wages were received; and 
  8.25     (ii) the wages are for work performed while the recipient 
  8.26  was a resident of this state. 
  8.27     (b) Income or gains from tangible property located in this 
  8.28  state that is not employed in the business of the recipient of 
  8.29  the income or gains must be assigned to this state. 
  8.30     (c) Income or gains from intangible personal property not 
  8.31  employed in the business of the recipient of the income or gains 
  8.32  must be assigned to this state if the recipient of the income or 
  8.33  gains is a resident of this state or is a resident trust or 
  8.34  estate.  
  8.35     Gain on the sale of a partnership interest is allocable to 
  8.36  this state in the ratio of the original cost of partnership 
  9.1   tangible property in this state to the original cost of 
  9.2   partnership tangible property everywhere, determined at the time 
  9.3   of the sale.  If more than 50 percent of the value of the 
  9.4   partnership's assets consists of intangibles, gain or loss from 
  9.5   the sale of the partnership interest is allocated to this state 
  9.6   in accordance with the sales factor of the partnership for its 
  9.7   first full tax period immediately preceding the tax period of 
  9.8   the partnership during which the partnership interest was sold. 
  9.9      Gain on the sale of goodwill or income from a covenant not 
  9.10  to compete that is connected with a business operating all or 
  9.11  partially in Minnesota is allocated to this state to the extent 
  9.12  that the income from the business in the year preceding the year 
  9.13  of sale was assignable to Minnesota under subdivision 3.  
  9.14     When an employer pays an employee for a covenant not to 
  9.15  compete, the income allocated to this state is in the ratio of 
  9.16  the employee's service in Minnesota in the calendar year 
  9.17  preceding leaving the employment of the employer over the total 
  9.18  services performed by the employee for the employer in that year.
  9.19     (d) Income from winnings on a bet made by an individual 
  9.20  while in Minnesota is assigned to this state.  In this 
  9.21  paragraph, "bet" has the meaning given in section 609.75, 
  9.22  subdivision 2, as limited by section 609.75, subdivision 3, 
  9.23  clauses (1), (2), and (3).  
  9.24     (e) All items of gross income not covered in paragraphs (a) 
  9.25  to (d) and not part of the taxpayer's income from a trade or 
  9.26  business shall be assigned to the taxpayer's domicile. 
  9.27     (f) For the purposes of this section, working as an 
  9.28  employee shall not be considered to be conducting a trade or 
  9.29  business. 
  9.30     [EFFECTIVE DATE.] This section is effective for tax years 
  9.31  beginning after December 31, 2002. 
  9.32     Sec. 6.  Minnesota Statutes 2002, section 290.17, 
  9.33  subdivision 4, is amended to read: 
  9.34     Subd. 4.  [UNITARY BUSINESS PRINCIPLE.] (a) If a trade or 
  9.35  business conducted wholly within this state or partly within and 
  9.36  partly without this state is part of a unitary business, the 
 10.1   entire income of the unitary business is subject to 
 10.2   apportionment pursuant to section 290.191.  Notwithstanding 
 10.3   subdivision 2, paragraph (c), none of the income of a unitary 
 10.4   business is considered to be derived from any particular source 
 10.5   and none may be allocated to a particular place except as 
 10.6   provided by the applicable apportionment formula.  The 
 10.7   provisions of this subdivision do not apply to business income 
 10.8   subject to subdivision 5, income of an insurance company, or 
 10.9   income of an investment company determined under section 290.36. 
 10.10     (b) The term "unitary business" means business activities 
 10.11  or operations which result in a flow of value between them.  The 
 10.12  term may be applied within a single legal entity or between 
 10.13  multiple entities and without regard to whether each entity is a 
 10.14  sole proprietorship, a corporation, a partnership or a trust.  
 10.15     (c) Unity is presumed whenever there is unity of ownership, 
 10.16  operation, and use, evidenced by centralized management or 
 10.17  executive force, centralized purchasing, advertising, 
 10.18  accounting, or other controlled interaction, but the absence of 
 10.19  these centralized activities will not necessarily evidence a 
 10.20  nonunitary business.  Unity is also presumed when business 
 10.21  activities or operations are of mutual benefit, dependent upon 
 10.22  or contributory to one another, either individually or as a 
 10.23  group. 
 10.24     (d) Where a business operation conducted in Minnesota is 
 10.25  owned by a business entity that carries on business activity 
 10.26  outside the state different in kind from that conducted within 
 10.27  this state, and the other business is conducted entirely outside 
 10.28  the state, it is presumed that the two business operations are 
 10.29  unitary in nature, interrelated, connected, and interdependent 
 10.30  unless it can be shown to the contrary.  
 10.31     (e) Unity of ownership is not deemed to exist when a 
 10.32  corporation is involved unless that corporation is a member of a 
 10.33  group of two or more business entities and more than 50 percent 
 10.34  of the voting stock of each member of the group is directly or 
 10.35  indirectly owned by a common owner or by common owners, either 
 10.36  corporate or noncorporate, or by one or more of the member 
 11.1   corporations of the group.  For this purpose, the term "voting 
 11.2   stock" shall include membership interests of mutual insurance 
 11.3   holding companies formed under section 60A.077.  
 11.4      (f) The net income and apportionment factors under section 
 11.5   290.191 or 290.20 of foreign corporations and other foreign 
 11.6   entities which are part of a unitary business shall not be 
 11.7   included in the net income or the apportionment factors of the 
 11.8   unitary business.  A foreign corporation or other foreign entity 
 11.9   which is required to file a return under this chapter shall file 
 11.10  on a separate return basis.  The net income and apportionment 
 11.11  factors under section 290.191 or 290.20 of foreign operating 
 11.12  corporations shall not be included in the net income or the 
 11.13  apportionment factors of the unitary business except as provided 
 11.14  in paragraph (g). 
 11.15     (g) The adjusted net income of a foreign operating 
 11.16  corporation shall be deemed to be paid as a dividend on the last 
 11.17  day of its taxable year to each shareholder thereof, in 
 11.18  proportion to each shareholder's ownership, with which such 
 11.19  corporation is engaged in a unitary business.  Such deemed 
 11.20  dividend shall be treated as a dividend under section 290.21, 
 11.21  subdivision 4.  The dividend received deduction shall not be 
 11.22  allowed on dividends, interest, royalties, or capital gains 
 11.23  received by the foreign operating corporation included in the 
 11.24  deemed dividend. 
 11.25     Dividends actually paid by a foreign operating corporation 
 11.26  to a corporate shareholder which is a member of the same unitary 
 11.27  business as the foreign operating corporation shall be 
 11.28  eliminated from the net income of the unitary business in 
 11.29  preparing a combined report for the unitary business.  The 
 11.30  adjusted net income of a foreign operating corporation shall be 
 11.31  its net income adjusted as follows: 
 11.32     (1) any taxes paid or accrued to a foreign country, the 
 11.33  commonwealth of Puerto Rico, or a United States possession or 
 11.34  political subdivision of any of the foregoing shall be a 
 11.35  deduction; and 
 11.36     (2) the subtraction from federal taxable income for 
 12.1   payments received from foreign corporations or foreign operating 
 12.2   corporations under section 290.01, subdivision 19d, clause (10), 
 12.3   shall not be allowed. 
 12.4      If a foreign operating corporation incurs a net loss, 
 12.5   neither income nor deduction from that corporation shall be 
 12.6   included in determining the net income of the unitary business. 
 12.7      (h) For purposes of determining the net income of a unitary 
 12.8   business and the factors to be used in the apportionment of net 
 12.9   income pursuant to section 290.191 or 290.20, there must be 
 12.10  included only the income and apportionment factors of domestic 
 12.11  corporations or other domestic entities other than foreign 
 12.12  operating corporations that are determined to be part of the 
 12.13  unitary business pursuant to this subdivision, notwithstanding 
 12.14  that foreign corporations or other foreign entities might be 
 12.15  included in the unitary business.  
 12.16     (i) Deductions for expenses, interest, or taxes otherwise 
 12.17  allowable under this chapter that are connected with or 
 12.18  allocable against dividends, deemed dividends described in 
 12.19  paragraph (g), or royalties, fees, or other like income 
 12.20  described in section 290.01, subdivision 19d, clause (10), shall 
 12.21  not be disallowed. 
 12.22     (j) Each corporation or other entity, except a sole 
 12.23  proprietorship, that is part of a unitary business must file 
 12.24  combined reports as the commissioner determines.  On the 
 12.25  reports, all intercompany transactions between entities included 
 12.26  pursuant to paragraph (h) must be eliminated and the entire net 
 12.27  income of the unitary business determined in accordance with 
 12.28  this subdivision is apportioned among the entities by using each 
 12.29  entity's Minnesota factors for apportionment purposes in the 
 12.30  numerators of the apportionment formula and the total factors 
 12.31  for apportionment purposes of all entities included pursuant to 
 12.32  paragraph (h) in the denominators of the apportionment formula. 
 12.33     (k) If a corporation has been divested from a unitary 
 12.34  business and is included in a combined report for a fractional 
 12.35  part of the common accounting period of the combined report:  
 12.36     (1) its income includable in the combined report is its 
 13.1   income incurred for that part of the year determined by 
 13.2   proration or separate accounting; and 
 13.3      (2) its sales, property, and payroll included in the 
 13.4   apportionment formula must be prorated or accounted for 
 13.5   separately. 
 13.6      [EFFECTIVE DATE.] This section is effective for tax years 
 13.7   beginning after December 31, 2002. 
 13.8                              ARTICLE 2
 13.9                             PROPERTY TAX
 13.10     Section 1.  Minnesota Statutes 2002, section 273.13, 
 13.11  subdivision 24, is amended to read: 
 13.12     Subd. 24.  [CLASS 3.] (a) Commercial and industrial 
 13.13  property and utility real and personal property is class 3a.  
 13.14     (1) Except as otherwise provided, each parcel of 
 13.15  commercial, industrial, or utility real property has a class 
 13.16  rate of 1.5 percent of the first tier of market value, and 2.0 
 13.17  percent of the remaining market value.  In the case of 
 13.18  contiguous parcels of property owned by the same person or 
 13.19  entity, only the value equal to the first-tier value of the 
 13.20  contiguous parcels qualifies for the reduced class rate, except 
 13.21  that contiguous parcels owned by the same person or entity shall 
 13.22  be eligible for the first-tier value class rate on each separate 
 13.23  business operated by the owner of the property, provided the 
 13.24  business is housed in a separate structure.  For the purposes of 
 13.25  this subdivision, the first tier means the first $150,000 of 
 13.26  market value.  Real property owned in fee by a utility for 
 13.27  transmission line right-of-way shall be classified at the class 
 13.28  rate for the higher tier.  
 13.29     For purposes of this subdivision, parcels are considered to 
 13.30  be contiguous even if they are separated from each other by a 
 13.31  road, street, waterway, or other similar intervening type of 
 13.32  property.  Connections between parcels that consist of power 
 13.33  lines or pipelines do not cause the parcels to be contiguous.  
 13.34  Property owners who have contiguous parcels of property that 
 13.35  constitute separate businesses that may qualify for the 
 13.36  first-tier class rate shall notify the assessor by July 1, for 
 14.1   treatment beginning in the following taxes payable year.  
 14.2      (2) All personal property that is:  (i) part of an electric 
 14.3   generation, transmission, or distribution system; or (ii) part 
 14.4   of a pipeline system transporting or distributing water, gas, 
 14.5   crude oil, or petroleum products; and (iii) not described in 
 14.6   clause (3), and all railroad operating property has a class rate 
 14.7   as provided under clause (1) for the first tier of market value 
 14.8   and the remaining market value.  In the case of multiple parcels 
 14.9   in one county that are owned by one person or entity, only one 
 14.10  first tier amount is eligible for the reduced rate.  
 14.11     (3) The entire market value of personal property that is:  
 14.12  (i) tools, implements, and machinery of an electric generation, 
 14.13  transmission, or distribution system; (ii) tools, implements, 
 14.14  and machinery of a pipeline system transporting or distributing 
 14.15  water, gas, crude oil, or petroleum products; or (iii) the mains 
 14.16  and pipes used in the distribution of steam or hot or chilled 
 14.17  water for heating or cooling buildings, has a class rate as 
 14.18  provided under clause (1) for the remaining market value in 
 14.19  excess of the first tier. 
 14.20     (4) For taxes payable in 2004 and 2005 only, the 
 14.21  two-percent rate in clause (1) shall be increased to 2.25 
 14.22  percent if the amount of the levy under section 275.025 is not 
 14.23  increased by a law enacted in 2003. 
 14.24     (b) Employment property defined in section 469.166, during 
 14.25  the period provided in section 469.170, shall constitute class 
 14.26  3b.  The class rates for class 3b property are determined under 
 14.27  paragraph (a). 
 14.28     Sec. 2.  Minnesota Statutes 2002, section 273.13, 
 14.29  subdivision 25, is amended to read: 
 14.30     Subd. 25.  [CLASS 4.] (a) Class 4a is residential real 
 14.31  estate containing four or more units and used or held for use by 
 14.32  the owner or by the tenants or lessees of the owner as a 
 14.33  residence for rental periods of 30 days or more.  Class 4a also 
 14.34  includes hospitals licensed under sections 144.50 to 144.56, 
 14.35  other than hospitals exempt under section 272.02, and contiguous 
 14.36  property used for hospital purposes, without regard to whether 
 15.1   the property has been platted or subdivided.  The market value 
 15.2   of class 4a property has a class rate of 1.8 percent for taxes 
 15.3   payable in 2002, 1.5 percent for taxes payable in 2003 to 2005, 
 15.4   and 1.25 percent for taxes payable in 2004 2006 and thereafter, 
 15.5   except that class 4a property consisting of a structure for 
 15.6   which construction commenced after June 30, 2001, has a class 
 15.7   rate of 1.25 percent of market value for taxes payable in 2003 
 15.8   and subsequent years. 
 15.9      (b) Class 4b includes: 
 15.10     (1) residential real estate containing less than four units 
 15.11  that does not qualify as class 4bb, other than seasonal 
 15.12  residential, and recreational; 
 15.13     (2) manufactured homes not classified under any other 
 15.14  provision; 
 15.15     (3) a dwelling, garage, and surrounding one acre of 
 15.16  property on a nonhomestead farm classified under subdivision 23, 
 15.17  paragraph (b) containing two or three units; 
 15.18     (4) unimproved property that is classified residential as 
 15.19  determined under subdivision 33.  
 15.20     The market value of class 4b property has a class rate of 
 15.21  1.5 percent for taxes payable in 2002, and 1.25 percent for 
 15.22  taxes payable in 2003 and thereafter. 
 15.23     (c) Class 4bb includes: 
 15.24     (1) nonhomestead residential real estate containing one 
 15.25  unit, other than seasonal residential, and recreational; and 
 15.26     (2) a single family dwelling, garage, and surrounding one 
 15.27  acre of property on a nonhomestead farm classified under 
 15.28  subdivision 23, paragraph (b). 
 15.29     Class 4bb property has the same class rates as class 1a 
 15.30  property under subdivision 22. 
 15.31     Property that has been classified as seasonal recreational 
 15.32  residential property at any time during which it has been owned 
 15.33  by the current owner or spouse of the current owner does not 
 15.34  qualify for class 4bb. 
 15.35     (d) Class 4c property includes: 
 15.36     (1) except as provided in subdivision 22, paragraph (c), 
 16.1   real property devoted to temporary and seasonal residential 
 16.2   occupancy for recreation purposes, including real property 
 16.3   devoted to temporary and seasonal residential occupancy for 
 16.4   recreation purposes and not devoted to commercial purposes for 
 16.5   more than 250 days in the year preceding the year of 
 16.6   assessment.  For purposes of this clause, property is devoted to 
 16.7   a commercial purpose on a specific day if any portion of the 
 16.8   property is used for residential occupancy, and a fee is charged 
 16.9   for residential occupancy.  In order for a property to be 
 16.10  classified as class 4c, seasonal recreational residential for 
 16.11  commercial purposes, at least 40 percent of the annual gross 
 16.12  lodging receipts related to the property must be from business 
 16.13  conducted during 90 consecutive days and either (i) at least 60 
 16.14  percent of all paid bookings by lodging guests during the year 
 16.15  must be for periods of at least two consecutive nights; or (ii) 
 16.16  at least 20 percent of the annual gross receipts must be from 
 16.17  charges for rental of fish houses, boats and motors, 
 16.18  snowmobiles, downhill or cross-country ski equipment, or charges 
 16.19  for marina services, launch services, and guide services, or the 
 16.20  sale of bait and fishing tackle.  For purposes of this 
 16.21  determination, a paid booking of five or more nights shall be 
 16.22  counted as two bookings.  Class 4c also includes commercial use 
 16.23  real property used exclusively for recreational purposes in 
 16.24  conjunction with class 4c property devoted to temporary and 
 16.25  seasonal residential occupancy for recreational purposes, up to 
 16.26  a total of two acres, provided the property is not devoted to 
 16.27  commercial recreational use for more than 250 days in the year 
 16.28  preceding the year of assessment and is located within two miles 
 16.29  of the class 4c property with which it is used.  Class 4c 
 16.30  property classified in this clause also includes the remainder 
 16.31  of class 1c resorts provided that the entire property including 
 16.32  that portion of the property classified as class 1c also meets 
 16.33  the requirements for class 4c under this clause; otherwise the 
 16.34  entire property is classified as class 3.  Owners of real 
 16.35  property devoted to temporary and seasonal residential occupancy 
 16.36  for recreation purposes and all or a portion of which was 
 17.1   devoted to commercial purposes for not more than 250 days in the 
 17.2   year preceding the year of assessment desiring classification as 
 17.3   class 1c or 4c, must submit a declaration to the assessor 
 17.4   designating the cabins or units occupied for 250 days or less in 
 17.5   the year preceding the year of assessment by January 15 of the 
 17.6   assessment year.  Those cabins or units and a proportionate 
 17.7   share of the land on which they are located will be designated 
 17.8   class 1c or 4c as otherwise provided.  The remainder of the 
 17.9   cabins or units and a proportionate share of the land on which 
 17.10  they are located will be designated as class 3a.  The owner of 
 17.11  property desiring designation as class 1c or 4c property must 
 17.12  provide guest registers or other records demonstrating that the 
 17.13  units for which class 1c or 4c designation is sought were not 
 17.14  occupied for more than 250 days in the year preceding the 
 17.15  assessment if so requested.  The portion of a property operated 
 17.16  as a (1) restaurant, (2) bar, (3) gift shop, and (4) other 
 17.17  nonresidential facility operated on a commercial basis not 
 17.18  directly related to temporary and seasonal residential occupancy 
 17.19  for recreation purposes shall not qualify for class 1c or 4c; 
 17.20     (2) qualified property used as a golf course if: 
 17.21     (i) it is open to the public on a daily fee basis.  It may 
 17.22  charge membership fees or dues, but a membership fee may not be 
 17.23  required in order to use the property for golfing, and its green 
 17.24  fees for golfing must be comparable to green fees typically 
 17.25  charged by municipal courses; and 
 17.26     (ii) it meets the requirements of section 273.112, 
 17.27  subdivision 3, paragraph (d). 
 17.28     A structure used as a clubhouse, restaurant, or place of 
 17.29  refreshment in conjunction with the golf course is classified as 
 17.30  class 3a property; 
 17.31     (3) real property up to a maximum of one acre of land owned 
 17.32  by a nonprofit community service oriented organization; provided 
 17.33  that the property is not used for a revenue-producing activity 
 17.34  for more than six days in the calendar year preceding the year 
 17.35  of assessment and the property is not used for residential 
 17.36  purposes on either a temporary or permanent basis.  For purposes 
 18.1   of this clause, a "nonprofit community service oriented 
 18.2   organization" means any corporation, society, association, 
 18.3   foundation, or institution organized and operated exclusively 
 18.4   for charitable, religious, fraternal, civic, or educational 
 18.5   purposes, and which is exempt from federal income taxation 
 18.6   pursuant to section 501(c)(3), (10), or (19) of the Internal 
 18.7   Revenue Code of 1986, as amended through December 31, 1990.  For 
 18.8   purposes of this clause, "revenue-producing activities" shall 
 18.9   include but not be limited to property or that portion of the 
 18.10  property that is used as an on-sale intoxicating liquor or 3.2 
 18.11  percent malt liquor establishment licensed under chapter 340A, a 
 18.12  restaurant open to the public, bowling alley, a retail store, 
 18.13  gambling conducted by organizations licensed under chapter 349, 
 18.14  an insurance business, or office or other space leased or rented 
 18.15  to a lessee who conducts a for-profit enterprise on the 
 18.16  premises.  Any portion of the property which is used for 
 18.17  revenue-producing activities for more than six days in the 
 18.18  calendar year preceding the year of assessment shall be assessed 
 18.19  as class 3a.  The use of the property for social events open 
 18.20  exclusively to members and their guests for periods of less than 
 18.21  24 hours, when an admission is not charged nor any revenues are 
 18.22  received by the organization shall not be considered a 
 18.23  revenue-producing activity; 
 18.24     (4) post-secondary student housing of not more than one 
 18.25  acre of land that is owned by a nonprofit corporation organized 
 18.26  under chapter 317A and is used exclusively by a student 
 18.27  cooperative, sorority, or fraternity for on-campus housing or 
 18.28  housing located within two miles of the border of a college 
 18.29  campus; 
 18.30     (5) manufactured home parks as defined in section 327.14, 
 18.31  subdivision 3; 
 18.32     (6) real property that is actively and exclusively devoted 
 18.33  to indoor fitness, health, social, recreational, and related 
 18.34  uses, is owned and operated by a not-for-profit corporation, and 
 18.35  is located within the metropolitan area as defined in section 
 18.36  473.121, subdivision 2; 
 19.1      (7) a leased or privately owned noncommercial aircraft 
 19.2   storage hangar not exempt under section 272.01, subdivision 2, 
 19.3   and the land on which it is located, provided that: 
 19.4      (i) the land is on an airport owned or operated by a city, 
 19.5   town, county, metropolitan airports commission, or group 
 19.6   thereof; and 
 19.7      (ii) the land lease, or any ordinance or signed agreement 
 19.8   restricting the use of the leased premise, prohibits commercial 
 19.9   activity performed at the hangar. 
 19.10     If a hangar classified under this clause is sold after June 
 19.11  30, 2000, a bill of sale must be filed by the new owner with the 
 19.12  assessor of the county where the property is located within 60 
 19.13  days of the sale; and 
 19.14     (8) residential real estate, a portion of which is used by 
 19.15  the owner for homestead purposes, and that is also a place of 
 19.16  lodging, if all of the following criteria are met: 
 19.17     (i) rooms are provided for rent to transient guests that 
 19.18  generally stay for periods of 14 or fewer days; 
 19.19     (ii) meals are provided to persons who rent rooms, the cost 
 19.20  of which is incorporated in the basic room rate; 
 19.21     (iii) meals are not provided to the general public except 
 19.22  for special events on fewer than seven days in the calendar year 
 19.23  preceding the year of the assessment; and 
 19.24     (iv) the owner is the operator of the property. 
 19.25  The market value subject to the 4c classification under this 
 19.26  clause is limited to five rental units.  Any rental units on the 
 19.27  property in excess of five, must be valued and assessed as class 
 19.28  3a.  The portion of the property used for purposes of a 
 19.29  homestead by the owner must be classified as class 1a property 
 19.30  under subdivision 22. 
 19.31     Class 4c property has a class rate of 1.5 percent of market 
 19.32  value, except that (i) each parcel of seasonal residential 
 19.33  recreational property not used for commercial purposes has the 
 19.34  same class rates as class 4bb property, (ii) manufactured home 
 19.35  parks assessed under clause (5) have the same class rate as 
 19.36  class 4b property, (iii) commercial-use seasonal residential 
 20.1   recreational property has a class rate of one percent for the 
 20.2   first $500,000 of market value, which includes any market value 
 20.3   receiving the one percent rate under subdivision 22, and 1.25 
 20.4   percent for the remaining market value, (iv) the market value of 
 20.5   property described in clause (4) has a class rate of one 
 20.6   percent, (v) the market value of property described in clauses 
 20.7   (2) and (6) has a class rate of 1.25 percent, and (vi) that 
 20.8   portion of the market value of property in clause (8) qualifying 
 20.9   for class 4c property has a class rate of 1.25 percent.  
 20.10     (e) Class 4d property is qualifying low-income rental 
 20.11  housing certified to the assessor by the housing finance agency 
 20.12  under sections 273.126 and 462A.071.  Class 4d includes land in 
 20.13  proportion to the total market value of the building that is 
 20.14  qualifying low-income rental housing.  For all properties 
 20.15  qualifying as class 4d, the market value determined by the 
 20.16  assessor must be based on the normal approach to value using 
 20.17  normal unrestricted rents. 
 20.18     Class 4d property has a class rate of 0.9 percent for taxes 
 20.19  payable in 2002, and one percent for taxes payable in 2003 to 
 20.20  2005 and 1.25 percent for taxes payable in 2004 2006 and 
 20.21  thereafter.  
 20.22     [EFFECTIVE DATE.] This section is effective for taxes 
 20.23  payable in 2004 and thereafter, but only if the amount of the 
 20.24  levy under section 275.025 is not increased by a law enacted in 
 20.25  2003. 
 20.26     Sec. 3.  Minnesota Statutes 2002, section 273.1384, 
 20.27  subdivision 4, is amended to read: 
 20.28     Subd. 4.  [PAYMENT.] (a) Except as provided in paragraph 
 20.29  (c), the commissioner of revenue shall reimburse each local 
 20.30  taxing jurisdiction, other than school districts, for the tax 
 20.31  reductions granted under this section in two equal installments 
 20.32  on October 31 and December 26 of the taxes payable year for 
 20.33  which the reductions are granted, including in each payment the 
 20.34  prior year adjustments certified on the abstracts for that taxes 
 20.35  payable year.  The reimbursements related to tax increments 
 20.36  shall be issued in one installment each year on December 26. 
 21.1      (b) The commissioner of revenue shall certify the total of 
 21.2   the tax reductions granted under this section for each taxes 
 21.3   payable year within each school district to the commissioner of 
 21.4   the department of children, families, and learning and the 
 21.5   commissioner of children, families, and learning shall pay the 
 21.6   reimbursement amounts to each school district as provided in 
 21.7   section 273.1392. 
 21.8      (c) For payments in 2004 only, the reimbursement to a city 
 21.9   under this section is the sum of: 
 21.10     (1) 80 percent of the amount of the reimbursement paid to 
 21.11  the city under this section in 2003; plus 
 21.12     (2) 20 percent of an amount determined by the commissioner 
 21.13  of revenue to be the city's proportionate share of the total 
 21.14  reimbursement that would have been paid to all cities in 2004 
 21.15  under paragraph (a) in the absence of this paragraph, minus 
 21.16  $20,000,000. 
 21.17     No city may receive a reimbursement under this paragraph 
 21.18  that exceeds the amount it would have received if the 
 21.19  reimbursements for 2004 had been computed under paragraph (a). 
 21.20     [EFFECTIVE DATE.] This section is effective for payments 
 21.21  made in 2004 and thereafter. 
 21.22     Sec. 4.  Minnesota Statutes 2002, section 273.1398, 
 21.23  subdivision 4a, is amended to read: 
 21.24     Subd. 4a.  [AID OFFSET FOR COURT COSTS.] (a) In calendar 
 21.25  years 2004, 2005, and 2006, the commissioner of revenue shall 
 21.26  pay the amounts determined in this subdivision to the eligible 
 21.27  counties on the dates specified in subdivision 6.  By July 15 of 
 21.28  the year preceding the year in which the state assumes the cost 
 21.29  of court administration in the judicial district as specified 
 21.30  under section 480.183, 2003, the supreme court shall determine 
 21.31  and certify to the commissioner of revenue for each county the 
 21.32  county's share of the costs to be assumed in the judicial 
 21.33  districts specified under section 480.183, subdivision 1, during 
 21.34  each of the succeeding fiscal year years. 
 21.35     (b) The amount certified in paragraph (a) shall be equal to 
 21.36  the following: 
 22.1      (1) 103 percent of the required court administration 
 22.2   expenditures as defined under section 480.183, subdivision 3, 
 22.3   for calendar year 2003, as determined under subdivision 4b, 
 22.4   paragraph (a); plus 
 22.5      (2) an adjustment for any cumulative percentage increase in 
 22.6   salary expenditures as defined under section 480.183, 
 22.7   subdivision 2, in excess of a maintenance of effort increase of 
 22.8   six percent; less 
 22.9      (3) an amount equal to the county's share of transferred 
 22.10  fines collected by the district courts in the county during the 
 22.11  calendar year preceding certification.  
 22.12     The court and the county may, if both parties agree, 
 22.13  negotiate and certify an amount higher than the amount 
 22.14  calculated under this paragraph. 
 22.15     (c) For purposes of this subdivision, the adjustment in 
 22.16  paragraph (b), clause (2), shall be equal to: 
 22.17     (1) the sum of the court administration expenditures as 
 22.18  defined under section 480.183, subdivision 3, required under 
 22.19  subdivision 4b, paragraph (a), plus the temporary aid payment 
 22.20  under subdivision 4c; multiplied by 
 22.21     (2) the difference between (i) the cumulative percentage 
 22.22  increase in actual and anticipated salary settlements for court 
 22.23  employees from July 1, 2001, until the date of the court 
 22.24  transfer and (ii) the percentage specified in subdivision 4b, 
 22.25  paragraph (a).  
 22.26     (d) Payments to a county under this subdivision 2 or 
 22.27  section 273.166 for the calendar year in which the state assumes 
 22.28  the cost of court administration as defined under section 
 22.29  480.183, subdivision 3, in the judicial district must be 
 22.30  permanently reduced by an amount equal to 75 percent of the net 
 22.31  cost to the state for assumption of district court costs as 
 22.32  certified in paragraph (a). 
 22.33     (e) Payments to a county under this subdivision 2 or 
 22.34  section 273.166 for the calendar year after the calendar year in 
 22.35  which the state assumes the cost of court administration as 
 22.36  defined under section 480.183, subdivision 3, in the judicial 
 23.1   district must be permanently reduced by an amount equal to 25 
 23.2   percent of the net cost to the state for assumption of district 
 23.3   court costs as certified in paragraph (a), provided that this 
 23.4   amount must be increased or decreased by an amount equal to the 
 23.5   positive or negative difference between the amount of fee and 
 23.6   fine revenue certified under paragraph (b), clause (3), and the 
 23.7   actual amount of fee and fine revenue of the county for the 
 23.8   calendar year when certification takes place. 
 23.9      (f) Payments to a county under subdivision 2 for calendar 
 23.10  year 2001 are permanently increased by an amount equal to 7.5 
 23.11  percent of the county's share of transferred fines collected by 
 23.12  the district courts in the county during calendar year 1998, as 
 23.13  determined under paragraph (a).  If the amount determined in 
 23.14  paragraph (a) exceeds the amount of aid a county is scheduled to 
 23.15  be paid under subdivision 2 in 2000, then the county shall not 
 23.16  receive an aid increase under this paragraph. 
 23.17     (g) Payments to a county under subdivision 2 or section 
 23.18  273.166, for the cost of mandated services, as defined in 
 23.19  section 480.183, subdivision 4, in the judicial district, must 
 23.20  be permanently reduced in 2002 by an amount equal to the cost to 
 23.21  the state for assumption of mandated court services as defined 
 23.22  in section 480.183, subdivision 4.  The supreme court shall 
 23.23  determine the amount for each county and certify it to the 
 23.24  commissioner of revenue by July 15, 2001. 
 23.25     [EFFECTIVE DATE.] This section is effective for aid payable 
 23.26  in 2004, 2005, and 2006. 
 23.27     Sec. 5.  Minnesota Statutes 2002, section 273.1398, 
 23.28  subdivision 4c, is amended to read: 
 23.29     Subd. 4c.  [TEMPORARY AID; COURT ADMINISTRATION COSTS.] For 
 23.30  calendar years 2004 and 2005, each county in a judicial district 
 23.31  that has not been transferred to the state by January 1 of that 
 23.32  year shall receive additional homestead and agricultural 
 23.33  credit temporary court administration cost aid.  This amount is 
 23.34  in addition to the amount calculated under subdivision 2 and 
 23.35  must not be included in the definition of homestead and 
 23.36  agricultural credit base under subdivision 1, paragraph (j).  
 24.1   The amount of additional aid is equal to the difference between 
 24.2   (1) the amount budgeted for court administration costs in 2001 
 24.3   as determined under subdivision 4b, paragraph (b), multiplied by 
 24.4   the maintenance of effort percent for the calendar year as 
 24.5   determined under subdivision 4b, paragraph (a), and (2) the 
 24.6   amount calculated under subdivision 4b, paragraph (a), for 
 24.7   calendar year 2003.  This additional aid must be used only to 
 24.8   fund court administration expenditures as defined in section 
 24.9   480.183, subdivision 3.  This amount must be added to the state 
 24.10  court's base budget in the year when the court in that judicial 
 24.11  district in which the county is located is transferred to the 
 24.12  state. 
 24.13     [EFFECTIVE DATE.] This section is effective for aid payable 
 24.14  in 2004 and 2005. 
 24.15     Sec. 6.  Minnesota Statutes 2002, section 273.1398, 
 24.16  subdivision 6, is amended to read: 
 24.17     Subd. 6.  [PAYMENT.] The commissioner shall certify the 
 24.18  aids provided in subdivisions 2, 2b, 3, and 5 before September 1 
 24.19  of the year preceding the distribution year to the county 
 24.20  auditor of the affected local government.  The aids provided in 
 24.21  subdivisions 2, 2b, 3, 4a, 4c, and 5 must be paid to local 
 24.22  governments other than school districts at the times provided in 
 24.23  section 477A.015 for payment of local government aid to taxing 
 24.24  jurisdictions, except that the first one-half payment of 
 24.25  disparity reduction aid provided in subdivision 3 must be paid 
 24.26  on or before August 31.  The disparity reduction credit provided 
 24.27  in subdivision 4 must be paid to taxing jurisdictions other than 
 24.28  school districts at the time provided in section 473H.10, 
 24.29  subdivision 3.  Aids and credit reimbursements to school 
 24.30  districts must be certified to the commissioner of children, 
 24.31  families, and learning and paid under section 273.1392.  In 
 24.32  2004, the aid provided in subdivision 2 shall constitute a 
 24.33  portion of program aid for counties and shall be paid as 
 24.34  provided in section 477A.0124.  Payment shall not be made to any 
 24.35  taxing jurisdiction that has ceased to levy a property tax.  
 24.36     [EFFECTIVE DATE.] This section is effective for aid payable 
 25.1   in 2004 and thereafter. 
 25.2      Sec. 7.  Minnesota Statutes 2002, section 273.1398, 
 25.3   subdivision 8, is amended to read: 
 25.4      Subd. 8.  [APPROPRIATION.] (a) An amount sufficient to pay 
 25.5   the aids and credits provided under this section for school 
 25.6   districts, intermediate school districts, or any group of school 
 25.7   districts levying as a single taxing entity, is annually 
 25.8   appropriated from the general fund to the commissioner of 
 25.9   children, families, and learning.  An amount sufficient to pay 
 25.10  the aids and credits provided under this section for counties, 
 25.11  cities, towns, and special taxing districts is annually 
 25.12  appropriated from the general fund to the commissioner of 
 25.13  revenue.  A jurisdiction's aid amount may be increased or 
 25.14  decreased based on any prior year adjustments for homestead 
 25.15  credit or other property tax credit or aid programs.  The total 
 25.16  appropriation for the aid provided in subdivision 4a is limited 
 25.17  to $15,700,000 for fiscal year 2005 and $3,300,000 for fiscal 
 25.18  year 2006.  The total appropriation for the aid provided in 
 25.19  subdivision 4c is limited to $2,800,000 for fiscal year 2005 and 
 25.20  $3,200,000 for fiscal year 2006. 
 25.21     (b) The commissioner of finance shall bill the commissioner 
 25.22  of revenue for the cost of preparation of local impact notes as 
 25.23  required by section 3.987 only to the extent to which those 
 25.24  costs exceed those costs incurred in fiscal year 1997 and for 
 25.25  any other new costs attributable to the local impact note 
 25.26  function required by section 3.987, not to exceed $100,000 in 
 25.27  fiscal years 1998 and 1999 and $200,000 in fiscal year 2000 and 
 25.28  thereafter. 
 25.29     The commissioner of revenue shall deduct the amount billed 
 25.30  under this paragraph from aid payments to be made to cities and 
 25.31  counties under subdivision 2 on a pro rata basis.  The amount 
 25.32  deducted under this paragraph is appropriated to the 
 25.33  commissioner of finance for the preparation of local impact 
 25.34  notes. 
 25.35     [EFFECTIVE DATE.] This section is effective for aid payable 
 25.36  in 2004 and thereafter. 
 26.1      Sec. 8.  Minnesota Statutes 2002, section 275.025, 
 26.2   subdivision 1, is amended to read: 
 26.3      Subdivision 1.  [LEVY AMOUNT.] The state general levy is 
 26.4   levied against commercial-industrial property and seasonal 
 26.5   recreational property, as defined in this section.  The state 
 26.6   general levy is $592,000,000 $695,881,000 for taxes payable in 
 26.7   2002 2004 by commercial-industrial property and $36,662,000 for 
 26.8   taxes payable in 2004 by seasonal recreational property.  For 
 26.9   taxes payable in subsequent years, the levy is increased each 
 26.10  year by multiplying the amount for the prior year by the sum of 
 26.11  one plus the rate of increase, if any, in the implicit price 
 26.12  deflator for government consumption expenditures and gross 
 26.13  investment for state and local governments prepared by the 
 26.14  Bureau of Economic Analysts of the United States Department of 
 26.15  Commerce for the 12-month period ending March 31 of the year 
 26.16  prior to the year the taxes are payable.  The tax under this 
 26.17  section is not treated as a local tax rate under section 469.177 
 26.18  and is not the levy of a governmental unit under chapters 276A 
 26.19  and 473F.  Beginning in fiscal year 2004, and in each year 
 26.20  thereafter, the commissioner of finance shall deposit in an 
 26.21  education reserve account, which account is hereby established, 
 26.22  the increased amount of the state general levy received for 
 26.23  deposit in the general fund for that year over the amount of the 
 26.24  state general levy received for deposit in the general fund in 
 26.25  fiscal year 2003.  The amounts in the education reserve account 
 26.26  do not lapse or cancel each year, but remain until appropriated 
 26.27  by law for education aid or higher education funding. 
 26.28     The commissioner shall increase or decrease the preliminary 
 26.29  or final rate for a year as necessary to account for errors and 
 26.30  tax base changes that affected a preliminary or final rate for 
 26.31  either of the two preceding years.  Adjustments are allowed to 
 26.32  the extent that the necessary information is available to the 
 26.33  commissioner at the time the rates for a year must be certified, 
 26.34  and for the following reasons: 
 26.35     (1) an erroneous report of taxable value by a local 
 26.36  official; 
 27.1      (2) an erroneous calculation by the commissioner; and 
 27.2      (3) an increase or decrease in taxable value for 
 27.3   commercial-industrial or seasonal residential recreational 
 27.4   property reported on the abstracts of tax lists submitted under 
 27.5   section 275.29 that was not reported on the abstracts of 
 27.6   assessment submitted under section 270.11, subdivision 2, for 
 27.7   the same year. 
 27.8   The commissioner may, but need not, make adjustments if the 
 27.9   total difference in the tax levied for the year would be less 
 27.10  than $100,000. 
 27.11     [EFFECTIVE DATE.] This section is effective June 30, 2003. 
 27.12     Sec. 9.  Minnesota Statutes 2002, section 275.025, 
 27.13  subdivision 2, is amended to read: 
 27.14     Subd. 2.  [COMMERCIAL-INDUSTRIAL TAX CAPACITY.] For the 
 27.15  purposes of this section, "commercial-industrial tax capacity" 
 27.16  means the tax capacity of all taxable property classified as 
 27.17  class 3 or class 5(1) under section 273.13, except for electric 
 27.18  generation attached machinery under class 3 and property 
 27.19  described in section 473.625.  County commercial-industrial tax 
 27.20  capacity amounts are not adjusted for the captured net tax 
 27.21  capacity of a tax increment financing district under section 
 27.22  469.177, subdivision 2, the net tax capacity of transmission 
 27.23  lines deducted from a local government's total net tax capacity 
 27.24  under section 273.425, or fiscal disparities contribution and 
 27.25  distribution net tax capacities under chapter 276A or 473F. 
 27.26     [EFFECTIVE DATE.] This section is effective for taxes 
 27.27  levied in 2003, payable in 2004, and thereafter. 
 27.28     Sec. 10.  Minnesota Statutes 2002, section 477A.011, 
 27.29  subdivision 20, is amended to read: 
 27.30     Subd. 20.  [CITY NET TAX CAPACITY.] "City net tax capacity" 
 27.31  means (1) the net tax capacity computed using the net tax 
 27.32  capacity rates in section 273.13 for taxes payable in the year 
 27.33  of the aid distribution, without regard to any class rate 
 27.34  changes required under sections 1 and 2 of this article, and the 
 27.35  market values for taxes payable in the year prior to the aid 
 27.36  distribution plus (2) a city's fiscal disparities distribution 
 28.1   tax capacity under section 276A.06, subdivision 2, paragraph 
 28.2   (b), or 473F.08, subdivision 2, paragraph (b), for taxes payable 
 28.3   in the year prior to that for which aids are being calculated.  
 28.4   The market value utilized in computing city net tax capacity 
 28.5   shall be reduced by the sum of (1) a city's market value of 
 28.6   commercial industrial property as defined in section 276A.01, 
 28.7   subdivision 3, or 473F.02, subdivision 3, multiplied by the 
 28.8   ratio determined pursuant to section 276A.06, subdivision 2, 
 28.9   paragraph (a), or 473F.08, subdivision 2, paragraph (a), (2) the 
 28.10  market value of the captured value of tax increment financing 
 28.11  districts as defined in section 469.177, subdivision 2, and (3) 
 28.12  the market value of transmission lines deducted from a city's 
 28.13  total net tax capacity under section 273.425.  The city net tax 
 28.14  capacity will be computed using equalized market values.  
 28.15     [EFFECTIVE DATE.] This section is effective for taxes 
 28.16  payable in 2004 and thereafter, but only if the amount of the 
 28.17  levy under section 275.025 is not increased by a law enacted in 
 28.18  2003. 
 28.19     Sec. 11.  Minnesota Statutes 2002, section 477A.011, 
 28.20  subdivision 31, is amended to read: 
 28.21     Subd. 31.  [POPULATION DECLINE PERCENTAGE.] (a) "Population 
 28.22  decline percentage" for a city with a population less than 2,500 
 28.23  is the percent decline in a city's population for the last ten 
 28.24  years, based on the most recently available population estimate 
 28.25  from the state demographer or a federal census.  A city's 
 28.26  population decline percentage cannot be less than zero. 
 28.27     (b) Population decline percentage for a city with a 
 28.28  population of 2,500 or greater is the percent decline in a 
 28.29  city's population from its highest federal census population 
 28.30  reported since 1959 to the most recently available population 
 28.31  estimate from the state demographer or a federal census. 
 28.32     Sec. 12.  Minnesota Statutes 2002, section 477A.011, 
 28.33  subdivision 34, is amended to read: 
 28.34     Subd. 34.  [CITY REVENUE NEED.] (a) For a city with a 
 28.35  population equal to or greater than 2,500, "city revenue need" 
 28.36  is the sum of (1) 3.462312 3.80691 times the pre-1940 housing 
 29.1   percentage; plus (2) 2.093826 times the commercial industrial 
 29.2   percentage 0.06574 times the city's net tax capacity per capita; 
 29.3   plus (3) 6.862552 7.18175 times the population decline 
 29.4   percentage; plus (4) .00026 times the city population 1731.45757 
 29.5   times the road accidents factor; plus (5) 152.0141 179.37738; 
 29.6   plus (6) 1.88814 times the rental housing unit percentage; minus 
 29.7   (7) the metropolitan area factor; minus (8) 0.01791 times the 
 29.8   population density. 
 29.9      (b) For a city with a population less than 2,500, "city 
 29.10  revenue need" is the sum of (1) 1.795919 2.387 times the 
 29.11  pre-1940 housing percentage; plus (2) 1.562138 2.67591 times the 
 29.12  commercial industrial percentage; plus (3) 4.177568 3.16042 
 29.13  times the population decline percentage; plus (4) 1.04013 1.206 
 29.14  times the transformed population; minus (5) 107.475 62.772. 
 29.15     (c) The city revenue need cannot be less than zero. 
 29.16     (d) For calendar year 1998 2005 and subsequent years, the 
 29.17  city revenue need for a city, as determined in paragraphs (a) to 
 29.18  (c), is multiplied by the ratio of the annual implicit price 
 29.19  deflator for government consumption expenditures and gross 
 29.20  investment for state and local governments as prepared by the 
 29.21  United States Department of Commerce, for the most recently 
 29.22  available year to the 1993 2003 implicit price deflator for 
 29.23  state and local government purchases. 
 29.24     [EFFECTIVE DATE.] This section is effective for aid payable 
 29.25  in 2004 and thereafter, except as provided in paragraph (d). 
 29.26     Sec. 13.  Minnesota Statutes 2002, section 477A.011, is 
 29.27  amended by adding a subdivision to read: 
 29.28     Subd. 38.  [RENTAL HOUSING UNIT PERCENTAGE.] "Rental 
 29.29  housing unit percentage" means the percentage of the total 
 29.30  number of occupied housing units in the jurisdiction that are 
 29.31  rental units, as determined according to the most recent 
 29.32  available federal decennial census. 
 29.33     [EFFECTIVE DATE.] This section is effective for aid payable 
 29.34  in 2004 and thereafter. 
 29.35     Sec. 14.  Minnesota Statutes 2002, section 477A.011, is 
 29.36  amended by adding a subdivision to read: 
 30.1      Subd. 39.  [ROAD ACCIDENTS FACTOR.] "Road accidents factor" 
 30.2   means the average annual number of vehicular accidents occurring 
 30.3   on public roads, streets, and alleys in the jurisdiction as 
 30.4   reported to the commissioner of revenue by the commissioner of 
 30.5   public safety by July 1 of the aid calculation year using the 
 30.6   most recent three-year period for which the commissioner of 
 30.7   public safety has complete information, divided by the 
 30.8   jurisdiction's population. 
 30.9      [EFFECTIVE DATE.] This section is effective for aid payable 
 30.10  in 2004 and thereafter. 
 30.11     Sec. 15.  Minnesota Statutes 2002, section 477A.011, is 
 30.12  amended by adding a subdivision to read: 
 30.13     Subd. 40.  [METROPOLITAN AREA FACTOR.] "Metropolitan area 
 30.14  factor" means 41.07350 for cities located in the metropolitan 
 30.15  area. 
 30.16     [EFFECTIVE DATE.] This section is effective for aid payable 
 30.17  in 2004 and thereafter. 
 30.18     Sec. 16.  Minnesota Statutes 2002, section 477A.011, is 
 30.19  amended by adding a subdivision to read: 
 30.20     Subd. 41.  [POPULATION DENSITY.] "Population density" means 
 30.21  the population of the jurisdiction according to the most 
 30.22  recently available federal decennial census divided by the land 
 30.23  area measured in square miles of the jurisdiction. 
 30.24     Sec. 17.  [477A.0124] [COUNTY AID.] 
 30.25     Subdivision 1.  [CALENDAR YEAR 2004.] In 2004, each county 
 30.26  shall receive program aid in an amount equal to the sum of: 
 30.27     (1) the amount of county attached machinery aid computed 
 30.28  for the county for payment in 2003 under section 273.138 prior 
 30.29  to any reduction under laws enacted in 2003; 
 30.30     (2) the amount of county homestead and agricultural credit 
 30.31  aid computed for the county for payment in 2003 under section 
 30.32  273.1398, subdivision 2, prior to any reduction under laws 
 30.33  enacted in 2003, plus a fiscal disparity adjustment under 
 30.34  section 273.1398, subdivision 1, for aid payable in 2004, minus 
 30.35  the aid to be paid to the county in 2004 under section 273.1398, 
 30.36  subdivisions 4a and 4c; 
 31.1      (3) the amount of county manufactured home homestead and 
 31.2   agricultural credit aid computed for the county for payment in 
 31.3   2003 under section 273.166 prior to any reduction under laws 
 31.4   enacted in 2003; 
 31.5      (4) the amount of county criminal justice aid computed for 
 31.6   the county for payment in 2003 under section 477A.0121 prior to 
 31.7   any reduction under laws enacted in 2003; and 
 31.8      (5) the amount of county family preservation aid computed 
 31.9   for the county for payment in 2003 under section 477A.0122 prior 
 31.10  to any reduction under laws enacted in 2003. 
 31.11     Subd. 2.  [CALENDAR YEAR 2005 AND THEREAFTER.] (a) [COUNTY 
 31.12  AGE-ADJUSTED AID.] In 2005 and each year thereafter, each county 
 31.13  shall receive age-adjusted per capita aid.  The commissioner of 
 31.14  revenue shall determine a percentage for each county equal to 
 31.15  the percentage of the county's population that is over the age 
 31.16  of 65.  That percentage must be divided by the percentage of the 
 31.17  state's population that is over the age of 65.  The result is an 
 31.18  index for each county.  No county index shall be greater than 
 31.19  1.8 or less than 0.80.  The commissioner shall multiply each 
 31.20  county's index by each county's population.  The county's aid 
 31.21  amount is that proportion of the amount appropriated for payment 
 31.22  in the year that the county's index times its population is of 
 31.23  the statewide total of the county indexes times the county 
 31.24  populations.  All computations must be based on age and 
 31.25  population data provided by the state demographer as of July 1 
 31.26  in the aid computation year. 
 31.27     (b) [COUNTY HOUSEHOLD SUPPORT AID.] In 2005 and each year 
 31.28  thereafter, each county shall receive household support aid as 
 31.29  computed by the commissioner of revenue.  Each county's aid 
 31.30  amount is that proportion of the amount appropriated for payment 
 31.31  in the year that the average number of households in the county 
 31.32  receiving food stamps is of the average number of households in 
 31.33  the state receiving food stamps.  All averages must be an annual 
 31.34  average based on the three most recent years of data certified 
 31.35  to the commissioner of revenue by the commissioner of human 
 31.36  services on or before July 1 of the aid computation year. 
 32.1      (c) [COUNTY CORRECTIONS AID.] In 2005 and each year 
 32.2   thereafter, each county shall receive corrections aid as 
 32.3   computed by the commissioner of revenue.  Each county's aid 
 32.4   amount is that proportion of the amount appropriated for payment 
 32.5   in the year that the number of Part 1 crimes in the county is of 
 32.6   the total number of Part 1 crimes in the state.  The number of 
 32.7   Part 1 crimes in each county and in the state must be annual 
 32.8   averages based on the three most recent years of data certified 
 32.9   to the commissioner of revenue by the commissioner of public 
 32.10  safety on or before July 1 of the aid computation year. 
 32.11     (d) [COUNTY TAX BASE EQUALIZATION AID.] In 2005 and each 
 32.12  year thereafter, each county shall receive tax base equalization 
 32.13  aid as computed by the commissioner of revenue.  The 
 32.14  commissioner shall multiply a uniform statewide rate times each 
 32.15  county's adjusted net tax capacity.  That amount must be 
 32.16  subtracted from the product of $185 times the county's 
 32.17  population to arrive at each county's tax base equalization aid 
 32.18  formula amount.  Counties with a population over 500,000 receive 
 32.19  30 percent of the formula amount.  Counties with a population 
 32.20  under 10,000 receive three times the formula amount.  All other 
 32.21  counties receive the formula amount.  The commissioner shall 
 32.22  compute the uniform rate to no more than four significant digits 
 32.23  so that each county receives at least $250 in tax base 
 32.24  equalization aid each year.  The necessary population data is 
 32.25  that provided to the commissioner by the state demographer as of 
 32.26  July 1 in the aid computation year. 
 32.27     Subd. 3.  [PAYMENT.] The amount of county program aid 
 32.28  payable to a county in a calendar year shall be paid by the 
 32.29  commissioner of revenue in equal installments on the dates 
 32.30  specified in section 477A.015. 
 32.31     Subd. 4.  [APPROPRIATIONS.] (a) In fiscal year 2005, the 
 32.32  amount necessary to make the payments provided for in 
 32.33  subdivision 1 is appropriated from the general fund to the 
 32.34  commissioner of revenue.  In fiscal year 2006 and thereafter, 
 32.35  $40,000,000 is annually appropriated from the general fund to 
 32.36  the commissioner of revenue to make the age-adjusted per capita 
 33.1   county aid payments provided in subdivision 2, paragraph (a).  
 33.2   In fiscal year 2006 and thereafter, $40,000,000 is annually 
 33.3   appropriated from the general fund to the commissioner of 
 33.4   revenue to make the household support aid payments provided in 
 33.5   subdivision 2, paragraph (b).  In fiscal year 2006 and 
 33.6   thereafter, $20,000,000 is annually appropriated from the 
 33.7   general fund to the commissioner of revenue to make the 
 33.8   correction aid payments provided in subdivision 2, paragraph 
 33.9   (c).  In fiscal year 2006 and thereafter, $105,000,000 is 
 33.10  annually appropriated from the general fund to the commissioner 
 33.11  of revenue to make the tax base equalization aid payments 
 33.12  provided in subdivision 2, paragraph (d). 
 33.13     (b) Each calendar year, $500,000 of the total appropriation 
 33.14  for this section shall be retained by the commissioner of 
 33.15  revenue to make reimbursements to the commissioner of finance 
 33.16  for payments made under section 611.27.  The reimbursements 
 33.17  shall be to defray the additional costs associated with 
 33.18  court-ordered counsel under section 611.27.  Any retained 
 33.19  amounts not used for reimbursement in a year shall be included 
 33.20  in the next distribution of county program aid that is certified 
 33.21  to the county auditors for the purpose of property tax reduction 
 33.22  for the next taxes payable year. 
 33.23     Subd. 5.  [NOTICE TO COUNTY.] The commissioner of revenue 
 33.24  shall notify each county of its aid under this section by 
 33.25  September 1 of the year preceding the aid distribution year. 
 33.26     [EFFECTIVE DATE.] This section is effective the day 
 33.27  following final enactment. 
 33.28     Sec. 18.  Minnesota Statutes 2002, section 477A.013, 
 33.29  subdivision 8, is amended to read: 
 33.30     Subd. 8.  [CITY FORMULA AID.] In calendar year 1994 2004 
 33.31  and subsequent years, the formula aid for a city is equal to the 
 33.32  need increase percentage multiplied by the difference between 
 33.33  (1) the city's revenue need multiplied by its population, and 
 33.34  minus (2) the city's net tax capacity multiplied by the tax 
 33.35  effort rate.  No city may have a formula aid amount less than 
 33.36  zero.  The need increase percentage tax effort rate must be the 
 34.1   same for all cities.  
 34.2      Notwithstanding the prior sentence, in 1995 only, the need 
 34.3   increase percentage for a city shall be twice the need increase 
 34.4   percentage applicable to other cities if:  
 34.5      (1) the city, in 1992 or 1993, transferred an amount from 
 34.6   governmental funds to their sewer and water fund, and 
 34.7      (2) the amount transferred exceeded their net levy for 
 34.8   taxes payable in the year in which the transfer occurred. 
 34.9      The applicable need increase percentage or percentages tax 
 34.10  effort rate must be calculated by the department of revenue so 
 34.11  that the total of the aid under subdivision 9 equals the total 
 34.12  amount available for aid under section 477A.03.  
 34.13     Sec. 19.  Minnesota Statutes 2002, section 477A.013, 
 34.14  subdivision 9, is amended to read: 
 34.15     Subd. 9.  [CITY AID DISTRIBUTION.] (a) In calendar year 
 34.16  2002 and thereafter 2004, each city shall receive an aid 
 34.17  distribution equal to the sum of (1) 20 percent of the city 
 34.18  formula aid under subdivision 8, and (2) its city aid base 80 
 34.19  percent of the aid it received in calendar year 2003 under this 
 34.20  chapter after any reductions enacted in 2003. 
 34.21     (b) The percentage increase for a first class city in 
 34.22  calendar year 1995 and thereafter, except for 2002, shall not 
 34.23  exceed the percentage increase in the sum of the aid to all 
 34.24  cities under this section in the current calendar year compared 
 34.25  to the sum of the aid to all cities in the previous year.  For 
 34.26  aids payable in 2002 only, the amount of the aid paid to a first 
 34.27  class city shall not exceed the sum of its aid amount for 
 34.28  calendar year 2001 under this section and its aid payment in 
 34.29  calendar year 2001 under section 273.1398, subdivision 2, by 
 34.30  more than 2.5 percent. 
 34.31     (c) For aids payable in all years except 2002, the total 
 34.32  aid for any city, except a first class city, shall not exceed 
 34.33  the sum of (1) ten percent of the city's net levy for the year 
 34.34  prior to the aid distribution plus (2) its total aid in the 
 34.35  previous year.  For aids payable in 2002 only, the total aid for 
 34.36  any city, except a first class city, shall not exceed the sum of 
 35.1   (1) 40 percent of the city's net levy for taxes payable in the 
 35.2   year prior to the aid distribution plus (2) 40 percent of its 
 35.3   total aid in the previous year under section 273.1398, 
 35.4   subdivision 2, plus (3) its total aid in the previous year under 
 35.5   this section In calendar year 2005, each city shall receive an 
 35.6   aid distribution equal to the sum of (1) 60 percent of the city 
 35.7   formula aid under subdivision 8, and (2) 40 percent of the aid 
 35.8   it received in calendar year 2003. 
 35.9      (c) In calendar year 2006, each city shall receive the 
 35.10  formula aid determined for it under subdivision 8. 
 35.11     [EFFECTIVE DATE.] This section is effective for aid payable 
 35.12  in 2004 and thereafter. 
 35.13     Sec. 20.  Minnesota Statutes 2002, section 477A.03, 
 35.14  subdivision 2, is amended to read: 
 35.15     Subd. 2.  [ANNUAL APPROPRIATION.] (a) A sum sufficient to 
 35.16  discharge the duties imposed by sections 477A.011 to 477A.014 is 
 35.17  annually appropriated from the general fund to the commissioner 
 35.18  of revenue.  
 35.19     (b) Aid payments to counties under section 477A.0121 are 
 35.20  limited to $20,265,000 in 1996.  Aid payments to counties under 
 35.21  section 477A.0121 are limited to $27,571,625 in 1997.  For aid 
 35.22  payable in 1998 and thereafter, the total aids paid under 
 35.23  section 477A.0121 are the amounts certified to be paid in the 
 35.24  previous year, adjusted for inflation as provided under 
 35.25  subdivision 3. 
 35.26     (c)(i) For aids payable in 1998 and thereafter, the total 
 35.27  aids paid to counties under section 477A.0122 are the amounts 
 35.28  certified to be paid in the previous year, adjusted for 
 35.29  inflation as provided under subdivision 3. 
 35.30     (ii) Aid payments to counties under section 477A.0122 in 
 35.31  2000 are further increased by an additional $20,000,000 in 2000. 
 35.32     (d) Aid payments to cities in 2002 under section 477A.013, 
 35.33  subdivision 9, are limited to the amounts certified to be paid 
 35.34  in the previous year, adjusted for inflation as provided in 
 35.35  subdivision 3, and increased by $140,000,000.  For aids payable 
 35.36  in 2003, the total aids paid under section 477A.013, subdivision 
 36.1   9, are the amounts certified to be paid in the previous year, 
 36.2   adjusted for inflation as provided under subdivision 3.  For 
 36.3   aids payable in 2004, the total aids paid under section 
 36.4   477A.013, subdivision 9, are the amounts certified to be paid in 
 36.5   the previous year, adjusted for inflation as provided under 
 36.6   subdivision 3, and increased by the amount certified to be paid 
 36.7   in 2003 under section 477A.06.  For aids payable in 2005 and 
 36.8   thereafter, the total aids paid under section 477A.013, 
 36.9   subdivision 9, are limited to $490,000,000.  For aids payable in 
 36.10  2005 and thereafter, the total aids paid under section 477A.013, 
 36.11  subdivision 9, are the amounts certified to be paid in the 
 36.12  previous year, adjusted for inflation as provided under 
 36.13  subdivision 3.  The additional amount authorized under 
 36.14  subdivision 4 is not included when calculating the appropriation 
 36.15  limits under this paragraph. 
 36.16     (e) Reimbursements made to counties under section 477A.0123 
 36.17  in calendar year 2005 and thereafter are limited to an amount 
 36.18  equal to the maximum allowed appropriation under this section in 
 36.19  the previous year, multiplied by a percent to be established by 
 36.20  law.  If no percent is established by law, the appropriation is 
 36.21  limited to the total amount appropriated for this purpose in the 
 36.22  previous year. 
 36.23     [EFFECTIVE DATE.] This section is effective for aid payable 
 36.24  in 2004 and thereafter. 
 36.25     Sec. 21.  Minnesota Statutes 2002, section 611.27, 
 36.26  subdivision 13, is amended to read: 
 36.27     Subd. 13.  [PUBLIC DEFENSE SERVICES; CORRECTIONAL FACILITY 
 36.28  INMATES.] All billings for services rendered and ordered under 
 36.29  subdivision 7 shall require the approval of the chief district 
 36.30  public defender before being forwarded on a monthly basis to the 
 36.31  state public defender.  In cases where adequate representation 
 36.32  cannot be provided by the district public defender and where 
 36.33  counsel has been appointed under a court order, the state public 
 36.34  defender shall forward to the commissioner of finance all 
 36.35  billings for services rendered under the court order.  The 
 36.36  commissioner shall pay for services from county criminal justice 
 37.1   aid retained by the commissioner of revenue for that purpose 
 37.2   under section 477A.0121, subdivision 4, or from county program 
 37.3   aid retained by the commissioner of revenue for that purpose 
 37.4   under section 477A.0124, subdivision 1, clause (4), or 
 37.5   subdivision 4, paragraph (b). 
 37.6      The costs of appointed counsel and associated services in 
 37.7   cases arising from new criminal charges brought against indigent 
 37.8   inmates who are incarcerated in a Minnesota state correctional 
 37.9   facility are the responsibility of the state board of public 
 37.10  defense.  In such cases the state public defender may follow the 
 37.11  procedures outlined in this section for obtaining court-ordered 
 37.12  counsel. 
 37.13     [EFFECTIVE DATE.] This section is effective for payments in 
 37.14  2004 and subsequent years. 
 37.15     Sec. 22.  Minnesota Statutes 2002, section 611.27, 
 37.16  subdivision 15, is amended to read: 
 37.17     Subd. 15.  [COSTS OF TRANSCRIPTS.] In appeal cases and 
 37.18  postconviction cases where the state public defender's office 
 37.19  does not have sufficient funds to pay for transcripts and other 
 37.20  necessary expenses because it has spent or committed all of the 
 37.21  transcript funds in its annual budget, the state public defender 
 37.22  may forward to the commissioner of finance all billings for 
 37.23  transcripts and other necessary expenses.  The commissioner 
 37.24  shall pay for these transcripts and other necessary expenses 
 37.25  from county criminal justice aid retained by the commissioner of 
 37.26  revenue under section 477A.0121, subdivision 4, or from county 
 37.27  program aid retained by the commissioner of revenue for that 
 37.28  purpose under section 477A.0124, subdivision 1, clause (4), or 
 37.29  subdivision 4, paragraph (b). 
 37.30     [EFFECTIVE DATE.] This section is effective for payments in 
 37.31  2004 and subsequent years. 
 37.32     Sec. 23.  [DEFINITIONS.] 
 37.33     (a) For purposes of this article, the following terms have 
 37.34  the meanings given them in this section. 
 37.35     (b) The 2003 "levy plus aid revenue base" for a city is the 
 37.36  sum of that city's certified property tax levy for taxes payable 
 38.1   in 2003, as reported to the commissioner of revenue under 
 38.2   Minnesota Statutes, section 275.74, plus the sum of the amounts 
 38.3   the city was certified to receive in 2003 as: 
 38.4      (1) local government aid under Minnesota Statutes, section 
 38.5   477A.013; 
 38.6      (2) existing low-income housing aid under Minnesota 
 38.7   Statutes, section 477A.06; 
 38.8      (3) new construction low-income housing aid under Minnesota 
 38.9   Statutes, section 477A.065; 
 38.10     (4) taconite aids under Minnesota Statutes, sections 298.28 
 38.11  and 298.282, including any aid which was required to be placed 
 38.12  in a special fund for expenditure in the next succeeding year; 
 38.13  and 
 38.14     (5) transit property tax replacement aid under Minnesota 
 38.15  Statutes, section 174.242. 
 38.16     (c) The 2003 and 2004 "levy plus aid revenue base" for a 
 38.17  county is the sum of that county's certified property tax levy 
 38.18  for taxes payable in 2003, as reported to the commissioner of 
 38.19  revenue under Minnesota Statutes, section 275.74, plus the sum 
 38.20  of the amounts the county was certified to receive in the 
 38.21  designated calendar year as: 
 38.22     (1) homestead and agricultural credit aid under Minnesota 
 38.23  Statutes, section 273.1398, subdivision 2, not including any 
 38.24  amount attributable to the tax base differential under Minnesota 
 38.25  Statutes, sections 273.1398, subdivision 1a, and 273.166; 
 38.26     (2) criminal justice aid under Minnesota Statutes, section 
 38.27  477A.0121; 
 38.28     (3) family preservation aid under Minnesota Statutes, 
 38.29  section 477A.0122; 
 38.30     (4) taconite aids under Minnesota Statutes, sections 298.28 
 38.31  and 298.282, including any aid which was required to be placed 
 38.32  in a special fund for expenditure in the next succeeding year; 
 38.33     (5) transit property tax replacement aid under Minnesota 
 38.34  Statutes, section 174.242; and 
 38.35     (6) county program aid under Minnesota Statutes, section 
 38.36  477A.0124. 
 39.1      (d) "Total revenues" for a city or county for a particular 
 39.2   year are the total revenues amount for that city or county, as 
 39.3   reported by the state auditor for the same year, or for the most 
 39.4   recent preceding year for which the state auditor has reported, 
 39.5   excluding grants between political subdivisions and amounts 
 39.6   borrowed by the city or county but including net transfers from 
 39.7   an enterprise fund. 
 39.8      [EFFECTIVE DATE.] This section is effective the day 
 39.9   following final enactment. 
 39.10     Sec. 24.  [2003 CITY AID REDUCTIONS.] 
 39.11     (a) The commissioner of revenue shall compute an aid 
 39.12  reduction amount for each city for 2003 equal to 9.3 percent of 
 39.13  the city's levy plus aid revenue base for 2003. 
 39.14     The reduction amount is limited to 3.5 percent of the 
 39.15  city's total revenues for 2003 if a city has a population under 
 39.16  1,000 or if the city has a three-year levy plus aid revenue base 
 39.17  increase average of less than two percent.  For all other 
 39.18  cities, the reduction amount is limited to five percent of the 
 39.19  city's total revenues for 2003. 
 39.20     The reduction is further limited to the sum of the city's 
 39.21  payable 2003 distribution pursuant to Minnesota Statutes, 
 39.22  section 477A.013, and related sections, and the city's payable 
 39.23  2003 reimbursement under Minnesota Statutes, section 273.1384. 
 39.24     (b) The amount of the reduction computed under paragraph 
 39.25  (a) for each city is reduced by ten percent before it is applied 
 39.26  to the city's payments under paragraph (c). 
 39.27     (c) The reduction is applied first to the city's 
 39.28  distribution pursuant to Minnesota Statutes, section 477A.013, 
 39.29  and then if necessary to the city's reimbursements pursuant to 
 39.30  Minnesota Statutes, section 273.1384. 
 39.31     (d) To the extent that sufficient information is available 
 39.32  on each successive payment date within the year, the 
 39.33  commissioner of revenue shall pay any remaining 2003 
 39.34  distribution or reimbursement amount reduced under this section 
 39.35  in equal installments on the payment dates provided in law. 
 39.36     [EFFECTIVE DATE.] This section is effective the day 
 40.1   following final enactment. 
 40.2      Sec. 25.  [2003 COUNTY AID REDUCTIONS.] 
 40.3      The commissioner of revenue shall compute an aid reduction 
 40.4   amount for each county for 2003 equal to 3.2 percent of the 
 40.5   county's levy plus aid revenue base for 2003. 
 40.6      The reduction amount is limited to 1.5 percent of the 
 40.7   county's total revenues for 2003 if a county has a three-year 
 40.8   levy plus aid revenue base increase average of less than two 
 40.9   percent.  For all other counties, the reduction amount is 
 40.10  limited to two percent of the county's total revenues for 2003. 
 40.11     The reduction is further limited to the sum of the county's 
 40.12  payable 2003 distributions pursuant to Minnesota Statutes, 
 40.13  sections 273.138; 273.1384; 273.1398, subdivision 2; 273.166; 
 40.14  477A.0121; and 477A.0122. 
 40.15     The aid reduction is applied first to reduce the county's 
 40.16  2003 distribution pursuant to Minnesota Statutes, section 
 40.17  273.138, then to reduce, in this sequence, the aid payable in 
 40.18  2003 under Minnesota Statutes, sections 273.1398, subdivision 2; 
 40.19  273.166; 477A.0121; and 477A.0122.  Then, if necessary, the 
 40.20  county's reimbursements pursuant to Minnesota Statutes, section 
 40.21  273.1384, are to be reduced. 
 40.22     To the extent that sufficient information is available on 
 40.23  each successive payment date within the year, the commissioner 
 40.24  of revenue shall pay any remaining 2003 distribution or 
 40.25  reimbursement amount reduced under this section in equal 
 40.26  installments on the payment dates provided in law. 
 40.27     [EFFECTIVE DATE.] This section is effective the day 
 40.28  following final enactment. 
 40.29     Sec. 26.  [TOWNSHIP AID REDUCTIONS.] 
 40.30     The commissioner or revenue shall compute an aid reduction 
 40.31  amount for each township for 2003 equal to two percent of the 
 40.32  town's certified levy for taxes payable in 2003. 
 40.33     The reduction is limited to the amount of the town's 
 40.34  payable 2003 reimbursement pursuant to Minnesota Statutes, 
 40.35  section 273.1384.  
 40.36     To the extent that sufficient information is available on 
 41.1   each successive payment date within the year, the commissioner 
 41.2   of revenue shall pay any remaining 2003 reimbursement amount for 
 41.3   the town in equal installments on the payment dates provided in 
 41.4   law. 
 41.5      [EFFECTIVE DATE.] This section is effective the day 
 41.6   following final enactment. 
 41.7      Sec. 27.  [2003 SPECIAL TAXING DISTRICT AID REDUCTIONS.] 
 41.8      The commissioner of revenue shall compute an aid reduction 
 41.9   amount for each special taxing district for 2003 equal to 1.5 
 41.10  percent of the district's certified levy for taxes payable in 
 41.11  2003. 
 41.12     The reduction is limited to the amount of the district's 
 41.13  payable 2003 reimbursement pursuant to Minnesota Statutes, 
 41.14  section 237.1384. 
 41.15     To the extent that sufficient information is available on 
 41.16  each successive payment date within the year, the commissioner 
 41.17  of revenue shall pay any remaining 2003 reimbursement amount for 
 41.18  the district in equal installments on the payment dates provided 
 41.19  in law. 
 41.20     [EFFECTIVE DATE.] This section is effective the day 
 41.21  following final enactment. 
 41.22     Sec. 28.  [2004 COUNTY AID REDUCTIONS.] 
 41.23     The commissioner of revenue shall compute an aid reduction 
 41.24  amount for 2004 for each county as provided in this section. 
 41.25     The commissioner of revenue shall compute an aid reduction 
 41.26  amount for each county for 2004 equal to six percent of the 
 41.27  county's levy plus aid revenue base for 2004. 
 41.28     The reduction amount is limited to 2.5 percent of the 
 41.29  county's total revenues for 2004 if a county has a three-year 
 41.30  levy plus aid revenue base increase average of less than two 
 41.31  percent.  For all other counties, the reduction amount is 
 41.32  limited to three percent of the county's total revenues for 2004.
 41.33     The reduction is further limited to the sum of the county's 
 41.34  payable 2004 distributions under Minnesota Statutes, sections 
 41.35  273.1384 and 477A.0124. 
 41.36     The aid reduction is applied first to the county's 
 42.1   distributions pursuant to Minnesota Statutes, section 477A.0124, 
 42.2   and then, if necessary, to reduce the county's reimbursements 
 42.3   pursuant to Minnesota Statutes, section 273.1384. 
 42.4      To the extent that sufficient information is available on 
 42.5   each payment date in 2004, the commissioner of revenue shall pay 
 42.6   any remaining 2004 distribution or reimbursement amount reduced 
 42.7   under this section in equal installments on the payment dates 
 42.8   provided in law. 
 42.9      [EFFECTIVE DATE.] This section is effective the day 
 42.10  following final enactment. 
 42.11     Sec. 29.  [2004 TOWNSHIP AID REDUCTIONS.] 
 42.12     The commissioner of revenue shall compute an aid reduction 
 42.13  amount for each township for 2004 equal to three percent of the 
 42.14  town's certified levy for taxes payable in 2003.  
 42.15     The reduction is limited to the amount of the town's 
 42.16  payable 2004 reimbursement pursuant to Minnesota Statutes, 
 42.17  section 273.1384. 
 42.18     To the extent that sufficient information is available on 
 42.19  each successive payment date within the year, the commissioner 
 42.20  of revenue shall pay any remaining 2004 reimbursement amount for 
 42.21  the town in equal installments on the payment dates provided in 
 42.22  law. 
 42.23     [EFFECTIVE DATE.] This section is effective the day 
 42.24  following final enactment. 
 42.25     Sec. 30.  [2004 SPECIAL TAXING DISTRICT AID REDUCTIONS.] 
 42.26     The commissioner of revenue shall compute an aid reduction 
 42.27  amount for each special taxing district for 2004 equal to two 
 42.28  percent of the district's certified levy for taxes payable in 
 42.29  2003.  
 42.30     The reduction is limited to the amount of the district's 
 42.31  payable 2004 reimbursement pursuant to Minnesota Statutes, 
 42.32  section 273.1384. 
 42.33     To the extent that sufficient information is available on 
 42.34  each successive payment date within the year, the commissioner 
 42.35  of revenue shall pay any remaining 2004 reimbursement amount for 
 42.36  the district in equal installments on the payment dates provided 
 43.1   in law. 
 43.2      [EFFECTIVE DATE.] This section is effective the day 
 43.3   following final enactment. 
 43.4      Sec. 31.  [REPEALER.] 
 43.5      Minnesota Statutes 2002, sections 477A.0121, subdivision 1; 
 43.6   and 477A.0122, subdivision 1, are repealed. 
 43.7      [EFFECTIVE DATE.] This section is effective for aid payable 
 43.8   in 2003 and thereafter. 
 43.9      Sec. 32.  [REPEALER.] 
 43.10     Minnesota Statutes 2002, sections 273.138; 273.1398, 
 43.11  subdivision 2; 273.166; 477A.011, subdivisions 36 and 37; 
 43.12  477A.0121, subdivisions 2, 3, 4, 5, and 6; 477A.0122, 
 43.13  subdivisions 2, 3, 4, 5, and 6; 477A.0123; 477A.03, subdivision 
 43.14  4; 477A.06; 477A.065; and 477A.07, are repealed. 
 43.15     [EFFECTIVE DATE.] This section is effective for aid payable 
 43.16  in 2004 and thereafter. 
 43.17                             ARTICLE 3
 43.18                        PROPERTY TAX FREEZE
 43.19     Section 1.  [CITATION.] 
 43.20     This article may be cited as the "State/Local Fiscal 
 43.21  Relations: Truth in Taxation Act." 
 43.22     Sec. 2.  [STATEMENT OF PURPOSE.] 
 43.23     The legislature finds that the state of Minnesota is 
 43.24  presently experiencing a substantial budget deficit and that 
 43.25  reductions in state spending may result in increased burdens on 
 43.26  school districts, counties, cities, and other units of local 
 43.27  government.  In order to recognize the implications of 
 43.28  addressing the state budget deficit without increasing tax 
 43.29  rates, and to maintain stability in state and local fiscal 
 43.30  relations, the purpose of this article is to avoid property tax 
 43.31  rate increases and to illuminate the impact of reductions in 
 43.32  revenue to school districts, counties, cities, and other units 
 43.33  of local government. 
 43.34     Sec. 3.  [BENEFIT RATIO FOR RURAL SERVICE DISTRICTS.] 
 43.35     Notwithstanding Minnesota Statutes, section 272.67, 
 43.36  subdivision 6, the benefit ratio used for apportioning levies to 
 44.1   a rural service district for taxes payable in 2004 and 2005 
 44.2   shall not be greater than that in effect for taxes payable in 
 44.3   2003. 
 44.4      Sec. 4.  [PROHIBITION AGAINST INCURRING NEW DEBT.] 
 44.5      (a) After May 31, 2003, no municipality as defined in 
 44.6   Minnesota Statutes, section 475.51, or any special taxing 
 44.7   district as defined under Minnesota Statutes, section 275.066, 
 44.8   may sell obligations, certificates of indebtedness, or capital 
 44.9   notes under Minnesota Statutes, section 412.301, chapter 475, or 
 44.10  any other law authorizing obligations, certificates of 
 44.11  indebtedness, capital notes, or other debt instruments or enter 
 44.12  into installment purchase contracts or lease purchase agreements 
 44.13  under Minnesota Statutes, section 465.71, or any other law 
 44.14  authorizing installment purchase contracts or lease purchase 
 44.15  agreements if issuing those debt instruments or entering into 
 44.16  those contracts would require a levy first becoming payable in 
 44.17  2004 or 2005.  This restriction does not apply to: 
 44.18     (1) refunding bonds sold to refund bonds originally sold 
 44.19  before June 1, 2003; 
 44.20     (2) obligations for which the amount of the levy first 
 44.21  becoming due in 2004 would not exceed the amount by which the 
 44.22  municipality's total debt service levy for taxes payable in 2004 
 44.23  prior to issuance of those obligations is less than the 
 44.24  municipality's total debt service levy for taxes payable in 
 44.25  2003; or 
 44.26     (3) obligations with respect to which the municipality 
 44.27  makes a finding at the time of the issuance of the obligations 
 44.28  that no levy will be required for taxes payable in 2004 or 2005 
 44.29  to pay the debt service on the obligations because sufficient 
 44.30  funds are available from nonproperty tax sources to pay the debt 
 44.31  service. 
 44.32     As used in clauses (2) and (3), "obligations" includes 
 44.33  certificates of indebtedness, capital notes, or other debt 
 44.34  instruments or installment purchase contracts or lease purchase 
 44.35  agreements. 
 44.36     (b) For purposes of this section, bonds will be deemed to 
 45.1   have been sold before June 1, 2003, if: 
 45.2      (1) an agreement has been entered into between the 
 45.3   municipality and a purchaser or underwriter for the sale of the 
 45.4   bonds by that date; 
 45.5      (2) the issuing municipality is a party to a contract or 
 45.6   letter of understanding entered into before June 1, 2003, with 
 45.7   the federal government or the state government that requires the 
 45.8   municipality to pay for a project, and the project will be 
 45.9   funded with the proceeds of the bonds; or 
 45.10     (3) the proceeds of the bonds will be used to fund a 
 45.11  project or acquisition with respect to which the municipality 
 45.12  has entered into a contract with a builder or supplier before 
 45.13  June 1, 2003.  
 45.14     Sec. 5.  [LEVY LIMITATION FOR TAXES PAYABLE IN 2004 AND 
 45.15  2005.] 
 45.16     Subdivision 1.  [2004 AND 2005 PROPOSED LEVY.] 
 45.17  Notwithstanding any other law to the contrary, for purposes of 
 45.18  the certification required by Minnesota Statutes, section 
 45.19  275.065, subdivision 1, in 2003 and 2004, no taxing authority 
 45.20  shall certify to the county auditor a proposed property tax levy 
 45.21  or, in the case of a township, a final property tax levy, 
 45.22  greater than the levy certified to the county auditor pursuant 
 45.23  to Minnesota Statutes, section 275.07, subdivision 1, in the 
 45.24  prior year, except as provided in this section. 
 45.25     Subd. 2.  [2004 AND 2005 FINAL LEVY.] Notwithstanding any 
 45.26  other law to the contrary, for purposes of the certification 
 45.27  required by Minnesota Statutes, section 275.07, subdivision 1, 
 45.28  in 2003 and 2004, no taxing authority shall certify to the 
 45.29  county auditor a property tax levy greater than the amount 
 45.30  certified to the county auditor pursuant to Minnesota Statutes, 
 45.31  section 275.07, subdivision 1, in the prior year, except as 
 45.32  provided in this section. 
 45.33     Subd. 3.  [DEBT SERVICE EXCEPTION.] If a payable 2004 or 
 45.34  2005 levy for debt service on obligations, certificates of 
 45.35  indebtedness, capital notes, or other debt instruments sold 
 45.36  prior to June 1, 2003, or to make payments on installment 
 46.1   purchase contracts or lease purchase agreements entered into 
 46.2   prior to June 1, 2003, exceeds the levy a taxing authority 
 46.3   certified pursuant to Minnesota Statutes, section 275.07, 
 46.4   subdivision 1, for taxes payable in 2003 for the same purpose, 
 46.5   the excess may be levied notwithstanding the limitations of 
 46.6   subdivisions 1 and 2. 
 46.7      Subd. 4.  [ANNEXATION EXCEPTION.] The city tax rate for 
 46.8   taxes payable in 2004 or 2005 on any property annexed under 
 46.9   Minnesota Statutes, chapter 414, may not be increased over the 
 46.10  city or township tax rate in effect on the property in 2003, 
 46.11  notwithstanding any law, municipal board order, or ordinance to 
 46.12  the contrary.  The limit on the annexing city's levy under 
 46.13  subdivisions 1 and 2 may be increased in excess of that limit by 
 46.14  an amount equal to the net tax capacity of the property annexed 
 46.15  times the city or township tax rate in effect on that property 
 46.16  for taxes payable in 2003.  The levy limit of the city or 
 46.17  township from which the property was annexed shall be reduced by 
 46.18  the same amount. 
 46.19     Subd. 5.  [EXCEPTION DUE TO SUBSTANTIAL AID REDUCTION.] A 
 46.20  city that will receive, in calendar year 2004 or 2005, a 
 46.21  reduction in the total amount of local government aid under 
 46.22  Minnesota Statutes, section 477A.013, plus market value credit 
 46.23  reimbursement under Minnesota Statutes, section 273.1384, that 
 46.24  exceeds 20 percent of the sum of the amounts it would have 
 46.25  received under Minnesota Statutes 2002, sections 273.1384 and 
 46.26  477A.013, in 2003 prior to any reductions enacted by the 
 46.27  legislature in 2003, may add to its levy otherwise authorized 
 46.28  under this article, the amount by which the reduction exceeds 20 
 46.29  percent of the 2003 amount. 
 46.30     Subd. 6.  [SCHOOL DISTRICT STATUTORY OPERATING DEBT 
 46.31  EXCEPTION.] A school district that is in statutory operating 
 46.32  debt under Minnesota Statutes, section 123B.81, and has an 
 46.33  approved plan under Minnesota Statutes, section 123B.83 that 
 46.34  includes an increase to its referendum allowance under Minnesota 
 46.35  Statutes, section 126C.17, is exempt from the levy freeze on 
 46.36  referenda according to this section. 
 47.1      Sec. 6.  [FREEZE ON LOCAL MATCH REQUIREMENTS.] 
 47.2      Notwithstanding any other law to the contrary, the local 
 47.3   funding or local match required from any city, town, or county 
 47.4   for any state grant or program shall not be increased for 
 47.5   calendar year 2004 or 2005 above the dollar amount of the local 
 47.6   funding or local match required for the same grant or program in 
 47.7   2003, regardless of the level of state funding provided.  Any 
 47.8   local match or local funding requirement that first becomes 
 47.9   effective after December 31, 2003, for new or changed state 
 47.10  grants or programs shall not be effective until calendar year 
 47.11  2006.  Nothing in this section shall affect the eligibility of a 
 47.12  city, town, or county for the receipt of state grants or program 
 47.13  funds in 2004 or 2005 or reduce the amount of state funding a 
 47.14  city, town, or county would otherwise receive in 2004 or 2005 if 
 47.15  the local match requirements of the state grant or program were 
 47.16  met in 2003. 
 47.17     Sec. 7.  [SUSPENSION OF SALARY AND BUDGET APPEAL 
 47.18  AUTHORIZATION.] 
 47.19     After May 8, 2003, no county sheriff may exercise the 
 47.20  authority granted under Minnesota Statutes, section 387.20, 
 47.21  subdivision 7, and no county attorney may exercise the authority 
 47.22  granted under Minnesota Statutes, section 388.18, subdivision 6, 
 47.23  to the extent that the salary or budget increase sought in the 
 47.24  appeal would result in an increase in county expenditures in 
 47.25  calendar year 2004 or 2005. 
 47.26     Sec. 8.  [SUSPENSION OF PUBLICATION AND HEARING 
 47.27  REQUIREMENTS.] 
 47.28     A local taxing authority is not required to comply with the 
 47.29  public advertisement notice of Minnesota Statutes, section 
 47.30  275.065, subdivision 5a, or the public hearing requirement of 
 47.31  Minnesota Statutes, section 275.065, subdivision 6, with respect 
 47.32  to taxes levied in 2003 and 2004, payable in 2004 and 2005, only.
 47.33     Sec. 9.  [FISCAL DISPARITIES FREEZE.] 
 47.34     Notwithstanding Minnesota Statutes, section 276A.06, 
 47.35  subdivision 2, paragraph (a), or 473F.08, subdivision 2, 
 47.36  paragraph (a), the amount to be deducted from a governmental 
 48.1   unit's net tax capacity for taxes payable in 2004 and 2005 under 
 48.2   that clause must equal the amount deducted for taxes payable in 
 48.3   2003.  Notwithstanding Minnesota Statutes, section 276A.06, 
 48.4   subdivision 2, paragraph (b), or 473F.08, subdivision 2, 
 48.5   paragraph (b), the amount to be added to a governmental unit's 
 48.6   net tax capacity for taxes payable in 2004 and 2005 under that 
 48.7   clause must equal the same amount added for taxes payable in 
 48.8   2003.  Notwithstanding Minnesota Statutes, section 276A.06, 
 48.9   subdivision 3, or 473F.08, subdivision 3, the areawide portion 
 48.10  of the levy for each governmental unit must be determined using 
 48.11  the local tax rate for the 2001 levy year.  Notwithstanding 
 48.12  Minnesota Statutes, section 276A.06, subdivision 7, or 473F.08, 
 48.13  subdivision 6, the portion of commercial-industrial property 
 48.14  within a municipality subject to the areawide tax rate shall be 
 48.15  computed using the amount determined under Minnesota Statutes, 
 48.16  sections 276A.04 and 276A.05, or 473F.06 and 473F.07, for taxes 
 48.17  payable in 2003. 
 48.18     Sec. 10.  [TAX RATE FREEZE; REDUCTION OF LEVY.] 
 48.19     If in the course of determining local tax rates for taxes 
 48.20  payable in 2004 or 2005 after reductions for disparity reduction 
 48.21  aid under Minnesota Statutes, section 275.08, subdivisions 1c 
 48.22  and 1d, the county auditor finds the local tax rate exceeds that 
 48.23  in effect for taxes payable in 2003, the county auditor shall 
 48.24  reduce the local government's levy so that the local tax rate 
 48.25  does not exceed that in effect for taxes payable in 2003, 
 48.26  adjusted as provided in section 5. 
 48.27     Sec. 11.  [PENSION LIABILITIES.] 
 48.28     Notwithstanding any other law or charter provision to the 
 48.29  contrary, no levy for taxes payable in 2004 or 2005 for a local 
 48.30  police and fire relief association for the purpose of amortizing 
 48.31  an unfunded pension liability may exceed the levy for that 
 48.32  purpose for taxes payable in 2003. 
 48.33     Sec. 12.  [DUTIES OF TOWNSHIP BOARD OF SUPERVISORS.] 
 48.34     Notwithstanding Minnesota Statutes, section 365.10, in 2003 
 48.35  the township board of supervisors shall adjust the levy and in 
 48.36  2004 the township board of supervisors may adjust the 
 49.1   expenditures of a township below the level authorized by the 
 49.2   electors to adjust for any reduction in the previously 
 49.3   authorized levy of the township pursuant to section 5. 
 49.4      Sec. 13.  [SAVINGS CLAUSE.] 
 49.5      Notwithstanding any provision in this article, nothing in 
 49.6   this act constitutes an impairment of any obligations, 
 49.7   certificates of indebtedness, capital notes, or other debt 
 49.8   instruments, including installment purchase contracts or lease 
 49.9   purchase agreements, issued before the date of final enactment 
 49.10  of this act, by a municipality as defined in Minnesota Statutes, 
 49.11  section 469.174, subdivision 6, a school district, or a special 
 49.12  taxing district as defined in Minnesota Statutes, section 
 49.13  275.066. 
 49.14                             ARTICLE 4
 49.15                      TOBACCO AND EXCISE TAXES
 49.16     Section 1.  [LEGISLATIVE INTENT FOR USE OF TAX PROCEEDS.] 
 49.17     The revenue raised by the tax increases in this article is 
 49.18  intended to be used to meet the cost of providing medical 
 49.19  coverage for pregnant women, newborns, individuals, and families 
 49.20  without access to health care, and to provide other services to 
 49.21  persons in need, as well as for the purposes described in 
 49.22  section 13. 
 49.23     Sec. 2.  Minnesota Statutes 2002, section 62J.692, 
 49.24  subdivision 4, is amended to read: 
 49.25     Subd. 4.  [DISTRIBUTION OF FUNDS.] (a) The commissioner 
 49.26  shall annually distribute medical education funds to all 
 49.27  qualifying applicants based on the following criteria:  
 49.28     (1) total medical education funds available for 
 49.29  distribution; 
 49.30     (2) total number of eligible trainee FTEs in each clinical 
 49.31  medical education program; and 
 49.32     (3) the statewide average cost per trainee as determined by 
 49.33  the application information provided in the first year of the 
 49.34  biennium, by type of trainee, in each clinical medical education 
 49.35  program.  
 49.36     (b) Funds distributed shall not be used to displace current 
 50.1   funding appropriations from federal or state sources.  
 50.2      (c) Funds shall be distributed to the sponsoring 
 50.3   institutions indicating the amount to be distributed to each of 
 50.4   the sponsor's clinical medical education programs based on the 
 50.5   criteria in this subdivision and in accordance with the 
 50.6   commissioner's approval letter.  Each clinical medical education 
 50.7   program must distribute funds to the training sites as specified 
 50.8   in the commissioner's approval letter.  Sponsoring institutions, 
 50.9   which are accredited through an organization recognized by the 
 50.10  department of education or the Centers for Medicare and Medicaid 
 50.11  Services, may contract directly with training sites to provide 
 50.12  clinical training.  To ensure the quality of clinical training, 
 50.13  those accredited sponsoring institutions must: 
 50.14     (1) develop contracts specifying the terms, expectations, 
 50.15  and outcomes of the clinical training conducted at sites; and 
 50.16     (2) take necessary action if the contract requirements are 
 50.17  not met.  Action may include the withholding of payments under 
 50.18  this section or the removal of students from the site.  
 50.19     (d) Any funds not distributed in accordance with the 
 50.20  commissioner's approval letter must be returned to the medical 
 50.21  education and research fund within 30 days of receiving notice 
 50.22  from the commissioner.  The commissioner shall distribute 
 50.23  returned funds to the appropriate training sites in accordance 
 50.24  with the commissioner's approval letter. 
 50.25     (e) The commissioner shall distribute by June 30 of each 
 50.26  year an amount equal to the funds transferred under section 
 50.27  62J.694, subdivision 2a, paragraph (b) subdivision 10, plus five 
 50.28  percent interest to the University of Minnesota board of regents 
 50.29  for the costs of the academic health center as specified under 
 50.30  section 62J.694, subdivision 2a, paragraph (a) instructional 
 50.31  costs of health professional programs at the academic health 
 50.32  center and for interdisciplinary academic initiatives within the 
 50.33  academic health center. 
 50.34     (f) A maximum of $150,000 of the funds dedicated to the 
 50.35  commissioner under section 297F.10, subdivision 1, paragraph 
 50.36  (b), clause (2), may be used by the commissioner for 
 51.1   administrative expenses associated with implementing this 
 51.2   section. 
 51.3      Sec. 3.  Minnesota Statutes 2002, section 62J.692, is 
 51.4   amended by adding a subdivision to read: 
 51.5      Subd. 10.  [TRANSFERS FROM UNIVERSITY OF MINNESOTA.] Of the 
 51.6   funds dedicated to the academic health center under section 
 51.7   297F.10, subdivision 1, paragraph (b), clause (1), $4,850,000 
 51.8   shall be transferred annually to the commissioner of health no 
 51.9   later than April 15 of each year for distribution under 
 51.10  subdivision 4, paragraph (e).  
 51.11     Sec. 4.  Minnesota Statutes 2002, section 289A.20, 
 51.12  subdivision 4, is amended to read: 
 51.13     Subd. 4.  [SALES AND USE TAX.] (a) The taxes imposed by 
 51.14  chapter 297A are due and payable to the commissioner monthly on 
 51.15  or before the 20th day of the month following the month in which 
 51.16  the taxable event occurred, or following another reporting 
 51.17  period as the commissioner prescribes or as allowed under 
 51.18  section 289A.18, subdivision 4, paragraph (f), except that use 
 51.19  taxes due on an annual use tax return as provided under section 
 51.20  289A.11, subdivision 1, are payable by April 15 following the 
 51.21  close of the calendar year. 
 51.22     (b) For a fiscal year ending before July 1, 2002, A vendor 
 51.23  having a liability of $120,000 or more during a fiscal year 
 51.24  ending June 30 must remit the June liability for the next year 
 51.25  in the following manner: 
 51.26     (1) Two business days before June 30 of the year, the 
 51.27  vendor must remit 75 100 percent of the estimated June liability 
 51.28  to the commissioner.  
 51.29     (2) On or before August 20 of the year, the vendor must pay 
 51.30  any additional amount of tax not remitted in June. 
 51.31     (c) A vendor having a liability of $120,000 or more during 
 51.32  a fiscal year ending June 30 must remit all liabilities on 
 51.33  returns due for periods beginning in the subsequent calendar 
 51.34  year by electronic means on or before the 20th day of the month 
 51.35  following the month in which the taxable event occurred, or on 
 51.36  or before the 20th day of the month following the month in which 
 52.1   the sale is reported under section 289A.18, subdivision 4, 
 52.2   except for 75 100 percent of the estimated June liability, which 
 52.3   is due two business days before June 30.  The remaining amount 
 52.4   of the June liability is due on August 20.  
 52.5      [EFFECTIVE DATE.] This section is effective for payments 
 52.6   made after December 31, 2003. 
 52.7      Sec. 5.  Minnesota Statutes 2002, section 289A.60, 
 52.8   subdivision 15, is amended to read: 
 52.9      Subd. 15.  [ACCELERATED PAYMENT OF JUNE SALES TAX 
 52.10  LIABILITY; PENALTY FOR UNDERPAYMENT.] If a vendor is required by 
 52.11  law to submit an estimation of June sales tax liabilities and 62 
 52.12  100 percent payment by a certain date, the vendor shall pay a 
 52.13  penalty equal to ten percent of the amount of actual June 
 52.14  liability required to be paid in June less the amount remitted 
 52.15  in June.  The penalty must not be imposed, however, if the 
 52.16  amount remitted in June equals the lesser of 62 100 percent of 
 52.17  the preceding May's liability or 62 100 percent of the average 
 52.18  monthly liability for the previous calendar year. 
 52.19     [EFFECTIVE DATE.] This section is effective for payments 
 52.20  made after December 31, 2003. 
 52.21     Sec. 6.  Minnesota Statutes 2002, section 297F.05, 
 52.22  subdivision 1, is amended to read: 
 52.23     Subdivision 1.  [RATES; CIGARETTES.] A tax is imposed upon 
 52.24  the sale of cigarettes in this state, upon having cigarettes in 
 52.25  possession in this state with intent to sell, upon any person 
 52.26  engaged in business as a distributor, and upon the use or 
 52.27  storage by consumers, at the following rates, subject to the 
 52.28  discount provided in this chapter: 
 52.29     (1) on cigarettes weighing not more than three pounds per 
 52.30  thousand, 24 74 mills on each such cigarette; and 
 52.31     (2) on cigarettes weighing more than three pounds per 
 52.32  thousand, 48 148 mills on each such cigarette. 
 52.33     [EFFECTIVE DATE.] This section is effective July 1, 2003. 
 52.34     Sec. 7.  Minnesota Statutes 2002, section 297F.05, 
 52.35  subdivision 3, is amended to read: 
 52.36     Subd. 3.  [RATES; TOBACCO PRODUCTS.] A tax is imposed upon 
 53.1   all tobacco products in this state and upon any person engaged 
 53.2   in business as a distributor, at the rate of 35 60 percent of 
 53.3   the wholesale sales price of the tobacco products.  The tax is 
 53.4   imposed at the time the distributor: 
 53.5      (1) brings, or causes to be brought, into this state from 
 53.6   outside the state tobacco products for sale; 
 53.7      (2) makes, manufactures, or fabricates tobacco products in 
 53.8   this state for sale in this state; or 
 53.9      (3) ships or transports tobacco products to retailers in 
 53.10  this state, to be sold by those retailers. 
 53.11     [EFFECTIVE DATE.] This section is effective July 1, 2003. 
 53.12     Sec. 8.  Minnesota Statutes 2002, section 297F.05, 
 53.13  subdivision 4, is amended to read: 
 53.14     Subd. 4.  [USE TAX; TOBACCO PRODUCTS.] A tax is imposed 
 53.15  upon the use or storage by consumers of tobacco products in this 
 53.16  state, and upon such consumers, at the rate of 35 60 percent of 
 53.17  the cost to the consumer of the tobacco products. 
 53.18     [EFFECTIVE DATE.] This section is effective July 1, 2003. 
 53.19     Sec. 9.  Minnesota Statutes 2002, section 297F.08, 
 53.20  subdivision 7, is amended to read: 
 53.21     Subd. 7.  [PRICE OF STAMPS.] The commissioner shall sell 
 53.22  stamps to any person licensed as a distributor at a discount of 
 53.23  1.0 percent from the face amount of the stamps for the first 
 53.24  $1,500,000 of such stamps purchased in any fiscal year; and at a 
 53.25  discount of 0.6 percent on the remainder of such stamps 
 53.26  purchased in any fiscal year.  The commissioner shall not sell 
 53.27  stamps to any other person.  The commissioner may prescribe the 
 53.28  method of shipment of the stamps to the distributor as well as 
 53.29  the quantities of stamps purchased. 
 53.30     [EFFECTIVE DATE.] This section is effective July 1, 2003. 
 53.31     Sec. 10.  Minnesota Statutes 2002, section 297F.09, 
 53.32  subdivision 1, is amended to read: 
 53.33     Subdivision 1.  [MONTHLY RETURN; CIGARETTE DISTRIBUTOR.] On 
 53.34  or before the 18th day of each calendar month, a distributor 
 53.35  with a place of business in this state shall file a return with 
 53.36  the commissioner showing the quantity of cigarettes manufactured 
 54.1   or brought in from outside the state or purchased during the 
 54.2   preceding calendar month and the quantity of cigarettes sold or 
 54.3   otherwise disposed of in this state and outside this state 
 54.4   during that month.  A licensed distributor outside this state 
 54.5   shall in like manner file a return showing the quantity of 
 54.6   cigarettes shipped or transported into this state during the 
 54.7   preceding calendar month.  Returns must be made in the form and 
 54.8   manner prescribed by the commissioner and must contain any other 
 54.9   information required by the commissioner.  The return must be 
 54.10  accompanied by a remittance for the full unpaid tax liability 
 54.11  shown by it.  The return for the May liability and 100 percent 
 54.12  of the estimated June liability is due on the date payment of 
 54.13  the tax is due. 
 54.14     [EFFECTIVE DATE.] This section is effective July 1, 2003. 
 54.15     Sec. 11.  Minnesota Statutes 2002, section 297F.09, 
 54.16  subdivision 2, is amended to read: 
 54.17     Subd. 2.  [MONTHLY RETURN; TOBACCO PRODUCTS DISTRIBUTOR.] 
 54.18  On or before the 18th day of each calendar month, a distributor 
 54.19  with a place of business in this state shall file a return with 
 54.20  the commissioner showing the quantity and wholesale sales price 
 54.21  of each tobacco product: 
 54.22     (1) brought, or caused to be brought, into this state for 
 54.23  sale; and 
 54.24     (2) made, manufactured, or fabricated in this state for 
 54.25  sale in this state, during the preceding calendar month.  
 54.26  Every licensed distributor outside this state shall in like 
 54.27  manner file a return showing the quantity and wholesale sales 
 54.28  price of each tobacco product shipped or transported to 
 54.29  retailers in this state to be sold by those retailers, during 
 54.30  the preceding calendar month.  Returns must be made in the form 
 54.31  and manner prescribed by the commissioner and must contain any 
 54.32  other information required by the commissioner.  The return must 
 54.33  be accompanied by a remittance for the full tax liability shown, 
 54.34  less 1.5 percent of the liability as compensation to reimburse 
 54.35  the distributor for expenses incurred in the administration of 
 54.36  this chapter.  The return for the May liability and 100 percent 
 55.1   of the estimated June liability is due on the date payment of 
 55.2   the tax is due. 
 55.3      [EFFECTIVE DATE.] This section is effective July 1, 2003. 
 55.4      Sec. 12.  Minnesota Statutes 2002, section 297F.09, is 
 55.5   amended by adding a subdivision to read: 
 55.6      Subd. 10.  [ACCELERATED TAX PAYMENT; CIGARETTE OR TOBACCO 
 55.7   PRODUCTS DISTRIBUTOR.] A cigarette or tobacco products 
 55.8   distributor having a liability of $120,000 or more during a 
 55.9   fiscal year ending June 30, shall remit the June liability for 
 55.10  the next year in the following manner:  
 55.11     (a) Two business days before June 30 of the year, the 
 55.12  distributor shall remit the actual May liability and 100 percent 
 55.13  of the estimated June liability to the commissioner and file the 
 55.14  return in the form and manner prescribed by the commissioner. 
 55.15     (b) On or before August 18 of the year, the distributor 
 55.16  shall submit a return showing the actual June liability and pay 
 55.17  any additional amount of tax not remitted in June.  A penalty is 
 55.18  imposed equal to ten percent of the amount of June liability 
 55.19  required to be paid in June, less the amount remitted in June.  
 55.20  However, the penalty is not imposed if the amount remitted in 
 55.21  June equals the lesser of:  
 55.22     (1) 100 percent of the actual June liability; or 
 55.23     (2) 100 percent of the preceding May's liability. 
 55.24     [EFFECTIVE DATE.] This section is effective for taxpayers 
 55.25  having a liability of $120,000 or more during the fiscal year 
 55.26  ending June 30, 2003, and each fiscal year thereafter, and for 
 55.27  accelerated payments becoming due in 2004 and thereafter. 
 55.28     Sec. 13.  Minnesota Statutes 2002, section 297F.10, 
 55.29  subdivision 1, is amended to read: 
 55.30     Subdivision 1.  [TAX AND USE TAX ON CIGARETTES.] Revenue 
 55.31  received from cigarette taxes, as well as related penalties, 
 55.32  interest, license fees, and miscellaneous sources of revenue 
 55.33  shall be deposited by the commissioner in the state treasury and 
 55.34  credited as follows: 
 55.35     (a) first to the general obligation special tax bond debt 
 55.36  service account in each fiscal year the amount required to 
 56.1   increase the balance on hand in the account on each December 1 
 56.2   to an amount equal to the full amount of principal and interest 
 56.3   to come due on all outstanding bonds whose debt service is 
 56.4   payable primarily from the proceeds of the tax to and including 
 56.5   the second following July 1; and 
 56.6      (b) after the requirements of paragraph (a) have been met: 
 56.7      (1) the revenue produced by one mill 3.875 mills of the tax 
 56.8   on cigarettes weighing not more than three pounds a thousand and 
 56.9   two 7.75 mills of the tax on cigarettes weighing more than three 
 56.10  pounds a thousand must be credited to the Minnesota future 
 56.11  resources fund academic health center special revenue fund 
 56.12  hereby created and is annually appropriated to the board of 
 56.13  regents at the University of Minnesota for academic health 
 56.14  center funding at the University of Minnesota; and 
 56.15     (2) the revenue produced by 1.4 mills of the tax on 
 56.16  cigarettes weighing not more than three pounds a thousand and 
 56.17  2.8 mills of the tax on cigarettes weighing more than three 
 56.18  pounds a thousand must be credited to the medical education and 
 56.19  research costs special revenue fund hereby created and is 
 56.20  annually appropriated to the commissioner of health for 
 56.21  distribution under section 62J.692, subdivision 4; 
 56.22     (3) the revenue produced by 2.12 mills of the tax on 
 56.23  cigarettes weighing not more than three pounds a thousand and 
 56.24  4.24 mills of the tax on cigarettes weighing more than three 
 56.25  pounds a thousand must be credited to the tobacco use prevention 
 56.26  special revenue fund hereby created and is annually appropriated 
 56.27  to the commissioner of health for statewide tobacco use 
 56.28  prevention grants under section 144.396, subdivision 5; and 
 56.29     (4) the balance of the revenues derived from taxes, 
 56.30  penalties, and interest (under this chapter) and from license 
 56.31  fees and miscellaneous sources of revenue shall be credited to 
 56.32  the general fund. 
 56.33     [EFFECTIVE DATE.] This section is effective for all 
 56.34  revenues received after June 30, 2003. 
 56.35     Sec. 14.  [297F.24] [FEE IN LIEU OF SETTLEMENT.] 
 56.36     Subdivision 1.  [FEE IMPOSED.] (a) A fee is imposed upon 
 57.1   the sale of nonsettlement cigarettes in this state, upon having 
 57.2   nonsettlement cigarettes in possession in this state with intent 
 57.3   to sell, upon any person engaged in business as a distributor, 
 57.4   and upon the use or storage by consumers of nonsettlement 
 57.5   cigarettes.  The fee equals a rate of 1.75 cents per cigarette. 
 57.6      (b) The purpose of this fee is to: 
 57.7      (1) ensure that manufacturers of nonsettlement cigarettes 
 57.8   pay fees to the state that are comparable to costs attributable 
 57.9   to the use of the cigarettes; 
 57.10     (2) prevent manufacturers of nonsettlement cigarettes from 
 57.11  undermining the state's policy of discouraging underage smoking 
 57.12  by offering nonsettlement cigarettes at prices substantially 
 57.13  below the cigarettes of other manufacturers; and 
 57.14     (3) fund such other purposes as the legislature determines 
 57.15  appropriate. 
 57.16     Subd. 2.  [NONSETTLEMENT CIGARETTES.] For purposes of this 
 57.17  section, a "nonsettlement cigarette" means a cigarette 
 57.18  manufactured by a person other than a manufacturer that: 
 57.19     (1) is making annual payments to the state of Minnesota 
 57.20  under a settlement of the lawsuit styled as State v. Philip 
 57.21  Morris Inc., No. C1-94-8565 (Minnesota District Court, Second 
 57.22  Judicial District), if the style of cigarettes is included in 
 57.23  computation of the payments under the agreement; or 
 57.24     (2) has voluntarily entered into an agreement with the 
 57.25  state of Minnesota, approved by the attorney general, agreeing 
 57.26  to terms similar to those contained in the settlement agreement 
 57.27  identified in clause (1), including making annual payments to 
 57.28  the state, with respect to its national sales of the style of 
 57.29  cigarettes, equal to at least 75 percent of the payments that 
 57.30  would apply if the manufacturer was one of the four original 
 57.31  parties to the settlement agreement required to make annual 
 57.32  payments to the state. 
 57.33     Subd. 3.  [COLLECTION AND ADMINISTRATION.] The commissioner 
 57.34  shall administer the fee under this section in the same manner 
 57.35  as the excise tax imposed under section 297F.05 and all of the 
 57.36  provisions of this chapter apply as if the fee were a tax 
 58.1   imposed under section 297F.05.  The commissioner shall deposit 
 58.2   the proceeds of the fee in the general fund. 
 58.3      [EFFECTIVE DATE.] This section is effective for sales of 
 58.4   nonsettlement cigarettes made after June 30, 2003. 
 58.5      Sec. 15.  Minnesota Statutes 2002, section 297G.09, is 
 58.6   amended by adding a subdivision to read: 
 58.7      Subd. 9.  [ACCELERATED TAX PAYMENT; PENALTY.] A person 
 58.8   liable for tax under this chapter having a liability of $120,000 
 58.9   or more during a fiscal year ending June 30, shall remit the 
 58.10  June liability for the next year in the following manner:  
 58.11     (a) Two business days before June 30 of the year, the 
 58.12  taxpayer shall remit the actual May liability and 100 percent of 
 58.13  the estimated June liability to the commissioner and file the 
 58.14  return in the form and manner prescribed by the commissioner. 
 58.15     (b) On or before August 18 of the year, the taxpayer shall 
 58.16  submit a return showing the actual June liability and pay any 
 58.17  additional amount of tax not remitted in June.  A penalty is 
 58.18  imposed equal to ten percent of the amount of June liability 
 58.19  required to be paid in June less the amount remitted in June.  
 58.20  However, the penalty is not imposed if the amount remitted in 
 58.21  June equals the lesser of:  
 58.22     (1) 100 percent of the actual June liability; or 
 58.23     (2) 100 percent of the preceding May liability. 
 58.24     [EFFECTIVE DATE.] This section is effective for taxpayers 
 58.25  having a liability of $120,000 or more during the fiscal year 
 58.26  ending June 30, 2003, and each fiscal year thereafter, and for 
 58.27  accelerated payments becoming due in 2004 and thereafter. 
 58.28     Sec. 16.  Laws 2001, First Special Session chapter 5, 
 58.29  article 12, section 95, as amended by Laws 2002, chapter 377, 
 58.30  article 3, section 24, is amended to read: 
 58.31     Sec. 95.  [REPEALER.] 
 58.32     (a) Minnesota Statutes 2000, sections 297A.61, subdivision 
 58.33  16; 297A.68, subdivision 21; and 297A.71, subdivision 2, are 
 58.34  repealed effective for sales and purchases occurring after June 
 58.35  30, 2001, except that the repeal of section 297A.61, subdivision 
 58.36  16, paragraph (d), is effective for sales and purchases 
 59.1   occurring after July 31, 2001. 
 59.2      (b) Minnesota Statutes 2000, sections 297A.62, subdivision 
 59.3   2, and 297A.64, subdivision 1, are repealed effective for sales 
 59.4   and purchases made after December 31, 2005. 
 59.5      (c) Minnesota Statutes 2000, section 297A.71, subdivision 
 59.6   15, is repealed effective for sales and purchases made after 
 59.7   June 30, 2002. 
 59.8      (d) Minnesota Statutes 2000, section 289A.60, subdivision 
 59.9   15, is repealed effective for liabilities after January 1, 2004. 
 59.10     (e) Minnesota Statutes 2000, section 297A.71, subdivision 
 59.11  16, is repealed effective for sales and purchases occurring 
 59.12  after December 31, 2002. 
 59.13     Sec. 17.  [FLOOR STOCKS TAX.] 
 59.14     Subdivision 1.  [CIGARETTES.] (a) A floor stocks tax is 
 59.15  imposed on every person engaged in business in this state as a 
 59.16  distributor, retailer, subjobber, vendor, manufacturer, or 
 59.17  manufacturer's representative of cigarettes, on the stamped 
 59.18  cigarettes and unaffixed stamps in the person's possession or 
 59.19  under the person's control at 12:01 a.m. on July 1, 2003.  The 
 59.20  tax is imposed at the following rates, subject to the discounts 
 59.21  in Minnesota Statutes, section 297F.08, subdivision 7: 
 59.22     (1) on cigarettes weighing not more than three pounds per 
 59.23  thousand, 50 mills on each cigarette; and 
 59.24     (2) on cigarettes weighing more than three pounds per 
 59.25  thousand, 100 mills on each cigarette. 
 59.26     (b) Each distributor, by July 8, 2003, shall file a report 
 59.27  with the commissioner of revenue, in the form the commissioner 
 59.28  prescribes, showing the stamped cigarettes and unaffixed stamps 
 59.29  on hand at 12:01 a.m. on July 1, 2003, and the amount of tax due 
 59.30  on the cigarettes and unaffixed stamps.  The tax imposed by this 
 59.31  section is due and payable by August 1, 2003, and after that 
 59.32  date bears interest as provided in Minnesota Statutes, section 
 59.33  270.75.  Each retailer, subjobber, vendor, manufacturer, or 
 59.34  manufacturer's representative shall file a return with the 
 59.35  commissioner, in the form the commissioner prescribes, showing 
 59.36  the cigarettes on hand at 12:01 a.m. on July 1, 2003, and pay 
 60.1   the tax due on them by August 1, 2003.  Tax not paid by the due 
 60.2   date bears interest as provided in Minnesota Statutes, section 
 60.3   270.75. 
 60.4      Subd. 2.  [TOBACCO PRODUCTS.] A floor stocks tax is imposed 
 60.5   on every person engaged in business in this state as a 
 60.6   distributor of tobacco products, at the rate of 25 percent of 
 60.7   the wholesale sales price of each tobacco product in the 
 60.8   person's possession or under the person's control at 12:01 a.m. 
 60.9   on July 1, 2003, and the amount of tax due on them.  The tax 
 60.10  imposed by this section, less the discount provided in Minnesota 
 60.11  Statutes, section 297F.09, subdivision 2, is due and payable by 
 60.12  August 1, 2003, and thereafter bears interest as provided in 
 60.13  Minnesota Statutes, section 270.75. 
 60.14     Subd. 3.  [AUDIT AND ENFORCEMENT.] The tax imposed by this 
 60.15  section is subject to the audit, assessment, and collection 
 60.16  provisions applicable to the taxes imposed under Minnesota 
 60.17  Statutes, chapter 297F.  The commissioner of revenue shall 
 60.18  deposit the revenue from the tax imposed under this section in 
 60.19  the health care access fund in the state treasury. 
 60.20     [EFFECTIVE DATE.] This section is effective July 1, 2003. 
 60.21                             ARTICLE 5
 60.22                        ECONOMIC DEVELOPMENT
 60.23     Section 1.  Minnesota Statutes 2002, section 290.01, 
 60.24  subdivision 29, is amended to read: 
 60.25     Subd. 29.  [TAXABLE INCOME.] The term "taxable income" 
 60.26  means:  
 60.27     (1) for individuals, estates, and trusts, the same as 
 60.28  taxable net income; 
 60.29     (2) for corporations, the taxable net income less 
 60.30     (i) the net operating loss deduction under section 290.095; 
 60.31  and 
 60.32     (ii) the dividends received deduction under section 290.21, 
 60.33  subdivision 4; and 
 60.34     (iii) the exemption for operating in a biotechnology and 
 60.35  health sciences industry zone under section 469.316. 
 60.36     [EFFECTIVE DATE.] This section is effective for taxable 
 61.1   years beginning after December 31, 2005. 
 61.2      Sec. 2.  Minnesota Statutes 2002, section 290.06, is 
 61.3   amended by adding a subdivision to read: 
 61.4      Subd. 29.  [REGIONAL INVESTMENT CREDIT.] (a) A credit is 
 61.5   allowed against the tax imposed by this chapter for investment 
 61.6   in a qualifying regional angel investment network fund.  The 
 61.7   credit equals 25 percent of the taxpayer's investment made in 
 61.8   the fund for the taxable year, but not to exceed the lesser of: 
 61.9      (1) the liability for tax under this chapter, including the 
 61.10  applicable alternative minimum tax; or 
 61.11     (2) the amount of the certificate under paragraph (c) 
 61.12  provided to the taxpayer by the fund. 
 61.13     (b) For purposes of this subdivision, a regional angel 
 61.14  investment network fund means a pool investment fund that: 
 61.15     (1) is organized as a limited liability company and 
 61.16  consists of members who are accredited investors within the 
 61.17  meaning of Regulation D of the Securities and Exchange 
 61.18  Commission, Code of Federal Regulations, title 17, section 
 61.19  230.501(a); and 
 61.20     (2) primarily makes equity investments in emerging and 
 61.21  expanding small businesses as defined by the Small Business 
 61.22  Administration, or cooperative associations as defined in 
 61.23  chapter 308B, that are located in local communities in Minnesota 
 61.24  outside of the metropolitan area as defined in section 473.121, 
 61.25  subdivision 2, and does not make investments in residential real 
 61.26  estate. 
 61.27     (c) Regional angel investment network funds may apply to 
 61.28  the commissioner of trade and economic development for 
 61.29  certification as a qualifying regional angel investment network 
 61.30  fund.  The application must be in the form and made under 
 61.31  procedures specified by the commissioner of trade and economic 
 61.32  development.  The commissioner of trade and economic development 
 61.33  may certify up to ten qualifying funds and provide certificates 
 61.34  entitling investors in the funds to credits under this 
 61.35  subdivision of up to $250,000 for each fund.  The commissioner 
 61.36  of trade and economic development must not issue a total amount 
 62.1   of certificates for all funds of more than $2,500,000.  In 
 62.2   awarding certificates under this paragraph, the commissioner of 
 62.3   trade and economic development shall generally award them to 
 62.4   qualified applicants in the order in which the applications are 
 62.5   received, but shall also seek to certify funds that are broadly 
 62.6   dispersed across the entire state outside of the metropolitan 
 62.7   area, as defined in section 473.121, subdivision 2. 
 62.8      (d) The commissioner of revenue may require a taxpayer to 
 62.9   provide a copy of the credit certificate under paragraph (c) to 
 62.10  verify the taxpayer's entitlement to a credit under this 
 62.11  subdivision. 
 62.12     (e) If the amount of the credit under this subdivision for 
 62.13  any taxable year exceeds the limitation under paragraph (a), 
 62.14  clause (1), the excess is a credit carryover to each of the 15 
 62.15  succeeding taxable years.  The entire amount of the excess 
 62.16  unused credit for the taxable year must be carried first to the 
 62.17  earliest of the taxable years to which the credit may be carried 
 62.18  and then to each successive year to which the credit may be 
 62.19  carried.  The amount of the unused credit which may be added 
 62.20  under this paragraph may not exceed the taxpayer's liability for 
 62.21  tax less the credit for the taxable year. 
 62.22     [EFFECTIVE DATE.] This section is effective the day 
 62.23  following final enactment and for taxable years beginning after 
 62.24  December 31, 2002.  It applies to investments made after the 
 62.25  fund has been certified by the commissioner of trade and 
 62.26  economic development under this section. 
 62.27     Sec. 3.  [290.0681] [INTERNATIONAL ECONOMIC DEVELOPMENT 
 62.28  ZONE CREDIT.] 
 62.29     A person is allowed a credit against the taxes imposed 
 62.30  under this chapter in an amount equal to 50 percent of the 
 62.31  amount of qualifying investment.  A qualifying investment is an 
 62.32  amount invested in a regional distribution center, as developed 
 62.33  pursuant to section 469.322.  Unused portions of the credit may 
 62.34  be carried over for five years. 
 62.35     Sec. 4.  [290.0682] [JOBS CREDIT.] 
 62.36     Subdivision 1.  [CREDIT ALLOWED.] A qualified business as 
 63.1   defined in section 469.320 is allowed a credit against the taxes 
 63.2   imposed under this chapter.  The credit equals seven percent of 
 63.3   the wages or salaries in excess of $30,000 but less than $70,000 
 63.4   paid to each zone employee. 
 63.5      Subd. 2.  [REFUNDABLE.] If the amount of the credit exceeds 
 63.6   the liability for tax under chapter 290, the commissioner of 
 63.7   revenue shall refund the excess to the qualified business. 
 63.8      Subd. 3.  [APPROPRIATION.] An amount sufficient to pay the 
 63.9   refunds authorized by this section is appropriated to the 
 63.10  commissioner of revenue from the general fund. 
 63.11     [EFFECTIVE DATE.] This section is effective for taxable 
 63.12  years beginning after December 31, 2005. 
 63.13     Sec. 5.  Minnesota Statutes 2002, section 290.0921, 
 63.14  subdivision 3, is amended to read: 
 63.15     Subd. 3.  [ALTERNATIVE MINIMUM TAXABLE INCOME.] 
 63.16  "Alternative minimum taxable income" is Minnesota net income as 
 63.17  defined in section 290.01, subdivision 19, and includes the 
 63.18  adjustments and tax preference items in sections 56, 57, 58, and 
 63.19  59(d), (e), (f), and (h) of the Internal Revenue Code.  If a 
 63.20  corporation files a separate company Minnesota tax return, the 
 63.21  minimum tax must be computed on a separate company basis.  If a 
 63.22  corporation is part of a tax group filing a unitary return, the 
 63.23  minimum tax must be computed on a unitary basis.  The following 
 63.24  adjustments must be made. 
 63.25     (1) For purposes of the depreciation adjustments under 
 63.26  section 56(a)(1) and 56(g)(4)(A) of the Internal Revenue Code, 
 63.27  the basis for depreciable property placed in service in a 
 63.28  taxable year beginning before January 1, 1990, is the adjusted 
 63.29  basis for federal income tax purposes, including any 
 63.30  modification made in a taxable year under section 290.01, 
 63.31  subdivision 19e, or Minnesota Statutes 1986, section 290.09, 
 63.32  subdivision 7, paragraph (c). 
 63.33     For taxable years beginning after December 31, 2000, the 
 63.34  amount of any remaining modification made under section 290.01, 
 63.35  subdivision 19e, or Minnesota Statutes 1986, section 290.09, 
 63.36  subdivision 7, paragraph (c), not previously deducted is a 
 64.1   depreciation allowance in the first taxable year after December 
 64.2   31, 2000. 
 64.3      (2) The portion of the depreciation deduction allowed for 
 64.4   federal income tax purposes under section 168(k) of the Internal 
 64.5   Revenue Code that is required as an addition under section 
 64.6   290.01, subdivision 19c, clause (16), is disallowed in 
 64.7   determining alternative minimum taxable income. 
 64.8      (3) The subtraction for depreciation allowed under section 
 64.9   290.01, subdivision 19d, clause (19), is allowed as a 
 64.10  depreciation deduction in determining alternative minimum 
 64.11  taxable income. 
 64.12     (4) The alternative tax net operating loss deduction under 
 64.13  sections 56(a)(4) and 56(d) of the Internal Revenue Code does 
 64.14  not apply. 
 64.15     (5) The special rule for certain dividends under section 
 64.16  56(g)(4)(C)(ii) of the Internal Revenue Code does not apply. 
 64.17     (6) The special rule for dividends from section 936 
 64.18  companies under section 56(g)(4)(C)(iii) does not apply. 
 64.19     (7) The tax preference for depletion under section 57(a)(1) 
 64.20  of the Internal Revenue Code does not apply. 
 64.21     (8) The tax preference for intangible drilling costs under 
 64.22  section 57(a)(2) of the Internal Revenue Code must be calculated 
 64.23  without regard to subparagraph (E) and the subtraction under 
 64.24  section 290.01, subdivision 19d, clause (4). 
 64.25     (9) The tax preference for tax exempt interest under 
 64.26  section 57(a)(5) of the Internal Revenue Code does not apply.  
 64.27     (10) The tax preference for charitable contributions of 
 64.28  appreciated property under section 57(a)(6) of the Internal 
 64.29  Revenue Code does not apply. 
 64.30     (11) For purposes of calculating the tax preference for 
 64.31  accelerated depreciation or amortization on certain property 
 64.32  placed in service before January 1, 1987, under section 57(a)(7) 
 64.33  of the Internal Revenue Code, the deduction allowable for the 
 64.34  taxable year is the deduction allowed under section 290.01, 
 64.35  subdivision 19e. 
 64.36     For taxable years beginning after December 31, 2000, the 
 65.1   amount of any remaining modification made under section 290.01, 
 65.2   subdivision 19e, not previously deducted is a depreciation or 
 65.3   amortization allowance in the first taxable year after December 
 65.4   31, 2004. 
 65.5      (12) For purposes of calculating the adjustment for 
 65.6   adjusted current earnings in section 56(g) of the Internal 
 65.7   Revenue Code, the term "alternative minimum taxable income" as 
 65.8   it is used in section 56(g) of the Internal Revenue Code, means 
 65.9   alternative minimum taxable income as defined in this 
 65.10  subdivision, determined without regard to the adjustment for 
 65.11  adjusted current earnings in section 56(g) of the Internal 
 65.12  Revenue Code. 
 65.13     (13) For purposes of determining the amount of adjusted 
 65.14  current earnings under section 56(g)(3) of the Internal Revenue 
 65.15  Code, no adjustment shall be made under section 56(g)(4) of the 
 65.16  Internal Revenue Code with respect to (i) the amount of foreign 
 65.17  dividend gross-up subtracted as provided in section 290.01, 
 65.18  subdivision 19d, clause (1), (ii) the amount of refunds of 
 65.19  income, excise, or franchise taxes subtracted as provided in 
 65.20  section 290.01, subdivision 19d, clause (10), or (iii) the 
 65.21  amount of royalties, fees or other like income subtracted as 
 65.22  provided in section 290.01, subdivision 19d, clause (11). 
 65.23     (14) Alternative minimum taxable income excludes the income 
 65.24  from operating in a biotechnology and health sciences industry 
 65.25  zone as provided under section 469.316. 
 65.26     Items of tax preference must not be reduced below zero as a 
 65.27  result of the modifications in this subdivision. 
 65.28     [EFFECTIVE DATE.] This section is effective for taxable 
 65.29  years beginning after December 31, 2005. 
 65.30     Sec. 6.  Minnesota Statutes 2002, section 290.0922, 
 65.31  subdivision 3, is amended to read: 
 65.32     Subd. 3.  [DEFINITIONS.] (a) "Minnesota sales or receipts" 
 65.33  means the total sales apportioned to Minnesota pursuant to 
 65.34  section 290.191, subdivision 5, the total receipts attributed to 
 65.35  Minnesota pursuant to section 290.191, subdivisions 6 to 8, 
 65.36  and/or the total sales or receipts apportioned or attributed to 
 66.1   Minnesota pursuant to any other apportionment formula applicable 
 66.2   to the taxpayer. 
 66.3      (b) "Minnesota property" means total Minnesota tangible 
 66.4   property as provided in section 290.191, subdivisions 9 to 11, 
 66.5   and any other tangible property located in Minnesota, but does 
 66.6   not include property of a qualified business located in a 
 66.7   biotechnology and health sciences industry zone designated under 
 66.8   section 469.314.  Intangible property shall not be included in 
 66.9   Minnesota property for purposes of this section.  Taxpayers who 
 66.10  do not utilize tangible property to apportion income shall 
 66.11  nevertheless include Minnesota property for purposes of this 
 66.12  section.  On a return for a short taxable year, the amount of 
 66.13  Minnesota property owned, as determined under section 290.191, 
 66.14  shall be included in Minnesota property based on a fraction in 
 66.15  which the numerator is the number of days in the short taxable 
 66.16  year and the denominator is 365.  
 66.17     (c) "Minnesota payrolls"  means total Minnesota payrolls as 
 66.18  provided in section 290.191, subdivision 12, but does not 
 66.19  include biotechnology and health sciences industry zone payrolls 
 66.20  under section 469.310, subdivision 8.  Taxpayers who do not 
 66.21  utilize payrolls to apportion income shall nevertheless include 
 66.22  Minnesota payrolls for purposes of this section. 
 66.23     [EFFECTIVE DATE.] This section is effective for taxable 
 66.24  years beginning after December 31, 2005. 
 66.25     Sec. 7.  Minnesota Statutes 2002, section 290.191, is 
 66.26  amended by adding a subdivision to read: 
 66.27     Subd. 4a.  [APPORTIONMENT FORMULA FOR CERTAIN QUALIFIED 
 66.28  BUSINESSES.] (a) If the business of a corporation, partnership, 
 66.29  or proprietorship is a qualified business under section 469.320 
 66.30  and has operations only within the international economic 
 66.31  development zone, then the taxpayer may apportion net income to 
 66.32  Minnesota based solely upon the percentage that the sales made 
 66.33  within this state in connection with its trade or business 
 66.34  during the tax period are of the total sales wherever made in 
 66.35  connection with the trade or business during the tax period.  
 66.36  Property and payroll factors are disregarded. 
 67.1      (b) If the taxpayer has operations both within the 
 67.2   international economic development zone and outside of the 
 67.3   international economic development zone, income will be 
 67.4   apportioned to Minnesota under the formula in subdivision 2, 
 67.5   except that only the Minnesota sales of the facility or 
 67.6   facilities located in the international economic development 
 67.7   zone will be included in the taxpayer's factors.  Property and 
 67.8   payroll factors of the facility or facilities located in the 
 67.9   international economic development zone are disregarded. 
 67.10     [EFFECTIVE DATE.] This section is effective for tax years 
 67.11  beginning after December 31, 2005. 
 67.12     Sec. 8.  Minnesota Statutes 2002, section 297A.68, is 
 67.13  amended by adding a subdivision to read: 
 67.14     Subd. 37.  [INTERNATIONAL ECONOMIC DEVELOPMENT ZONES.] (a) 
 67.15  Purchases of tangible personal property or taxable services by a 
 67.16  qualified business, as defined in section 469.320, are exempt if 
 67.17  the property or services are used or consumed in an 
 67.18  international economic development zone designated under section 
 67.19  469.321. 
 67.20     (b) Purchase and use of construction materials and supplies 
 67.21  for construction of improvements to real property in an 
 67.22  international economic development zone designated under section 
 67.23  469.321 are exempt if the improvements after completion of 
 67.24  construction are used as a regional distribution center as 
 67.25  defined in section 469.322 or in the conduct of a qualified 
 67.26  business as defined in section 469.320.  This exemption applies 
 67.27  regardless of whether the purchases are made by the business or 
 67.28  a contractor. 
 67.29     (c) The exemptions under this subdivision apply to a local 
 67.30  sales and use tax regardless of whether the local sales and use 
 67.31  tax is imposed on the sales taxable under this chapter. 
 67.32     (d) This subdivision applies to sales made during the 
 67.33  duration of the designation of the zone. 
 67.34     [EFFECTIVE DATE.] This section is effective for sales made 
 67.35  on or after January 1, 2006. 
 67.36     Sec. 9.  Minnesota Statutes 2002, section 297A.68, is 
 68.1   amended by adding a subdivision to read: 
 68.2      Subd. 38.  [BIOTECHNOLOGY AND HEALTH SCIENCES INDUSTRY 
 68.3   ZONE.] (a) Purchases of tangible personal property or taxable 
 68.4   services by a qualified business, as defined in section 469.310, 
 68.5   are exempt if the property or services are primarily used or 
 68.6   consumed in a biotechnology and health sciences industry zone 
 68.7   designated under section 469.314. 
 68.8      (b) Purchase and use of construction materials and supplies 
 68.9   for construction of improvements to real property in a 
 68.10  biotechnology and health sciences industry zone are exempt if 
 68.11  the improvements after completion of construction are to be used 
 68.12  in the conduct of a qualified business, as defined in section 
 68.13  469.310.  This exemption applies regardless of whether the 
 68.14  purchases are made by the business or a contractor. 
 68.15     (c) The exemptions under this subdivision apply to a local 
 68.16  sales and use tax regardless of whether the local sales tax is 
 68.17  imposed on the sales taxable as defined under this chapter. 
 68.18     (d) This subdivision applies to sales made during the 
 68.19  duration of the designation of the zone. 
 68.20     [EFFECTIVE DATE.] This section is effective for sales made 
 68.21  on or after January 1, 2006. 
 68.22     Sec. 10.  [469.1083] [COUNTY ECONOMIC DEVELOPMENT 
 68.23  AUTHORITY; METROPOLITAN AREA.] 
 68.24     Subdivision 1.  [ECONOMIC DEVELOPMENT POWERS AND DUTIES.] A 
 68.25  county located in the metropolitan area may, by resolution of 
 68.26  the county board, grant an existing county housing and 
 68.27  redevelopment authority any of the powers and duties of an 
 68.28  economic development authority under sections 469.090 to 
 68.29  469.093, 469.095 to 469.106, 469.108, and 469.1081.  For the 
 68.30  purposes of this section, a county community development 
 68.31  authority is a county housing and redevelopment authority that 
 68.32  has been granted economic development authority powers and 
 68.33  duties.  In applying sections 469.090 to 469.093, 469.095 to 
 68.34  469.106, 469.108, and 469.1081 to a county community development 
 68.35  authority, the county is considered to be the city and the 
 68.36  county board is considered to be the city council. 
 69.1      Subd. 2.  [RELATION TO LOCAL AUTHORITIES.] Nothing in this 
 69.2   section shall alter or impair the powers or duties of a city, a 
 69.3   municipal housing and redevelopment authority, or a municipal 
 69.4   economic development authority. 
 69.5      Subd. 3.  [LOCAL APPROVAL.] If an economic development 
 69.6   project is constructed in the county under this section and the 
 69.7   project is within the boundaries of a home rule charter or 
 69.8   statutory city, the location of the project must be approved by 
 69.9   the governing body of the city. 
 69.10     [EFFECTIVE DATE.] This section is effective the day 
 69.11  following final enactment and applies in the counties of Anoka, 
 69.12  Hennepin, Ramsey, and Washington. 
 69.13     Sec. 11.  [469.1736] [GREATER MINNESOTA REGIONAL CENTER 
 69.14  ECONOMIC DEVELOPMENT INFRASTRUCTURE AND INITIATIVE AID.] 
 69.15     Subdivision 1.  [AUTHORIZATION.] In addition to aids paid 
 69.16  under other law, beginning in calendar year 2004, aid must be 
 69.17  paid annually under this section by the commissioner of revenue 
 69.18  to a city which is located outside of the seven-county 
 69.19  metropolitan area, is not a city of the first class, and has a 
 69.20  population of 5,000 or more.  The amount of the aid is:  (i) the 
 69.21  total population of the city, as determined by the United States 
 69.22  Bureau of the Census, in the 2000 census, (ii) minus 5,000, 
 69.23  (iii) times 60, provided that the total amount of the aid paid 
 69.24  under this section in any year may not exceed $28,825,380, and 
 69.25  the aid payable to each city must be reduced proportionately by 
 69.26  the commissioner of revenue so that the sum of all aids under 
 69.27  this section may not exceed that amount. 
 69.28     Subd. 2.  [APPROPRIATIONS.] The amount required to pay the 
 69.29  aids under this section and section 469.1737 is appropriated 
 69.30  annually from the general fund to the commissioner of revenue.  
 69.31  The appropriation to pay the aid under this section is limited 
 69.32  to $28,825,380 in any year. 
 69.33     Sec. 12.  [469.1737] [REGIONAL BRIDGE ECONOMIC RECOVERY 
 69.34  AID.] 
 69.35     (a) In addition to aids paid under other law, beginning in 
 69.36  calendar year 2004, through calendar year 2011, $150,000 must be 
 70.1   paid annually by the commissioner of revenue to a city if: 
 70.2      (1) the city had a population of at least 3,000 but no more 
 70.3   than 4,000 in 1999; 
 70.4      (2) its home county is located within the seven-county 
 70.5   metropolitan area; 
 70.6      (3) its pre-1940 housing percentage is less than 15 
 70.7   percent; and 
 70.8      (4) its city net tax capacity per capita for taxes payable 
 70.9   in 2000 is less than $900 per capita. 
 70.10     (b) In addition to aids paid under other law, beginning in 
 70.11  calendar year 2004, through calendar year 2008, $450,000 must be 
 70.12  paid annually to a city if: 
 70.13     (1) the city had a population in 1996 of at least 50,000; 
 70.14     (2) its population had increased by at least 40 percent in 
 70.15  the ten-year period ending in 1996; and 
 70.16     (3) its city's net tax capacity for aids payable in 1998 is 
 70.17  less than $700 per capita. 
 70.18     Sec. 13.  [469.310] [DEFINITIONS.] 
 70.19     Subdivision 1.  [SCOPE.] For purposes of sections 469.310 
 70.20  to 469.318, the following terms have the meanings given. 
 70.21     Subd. 2.  [APPLICANT.] "Applicant" means a local government 
 70.22  unit or units applying for designation of an area as a 
 70.23  biotechnology and health sciences industry zone or a joint 
 70.24  powers board, established under section 471.59, acting on behalf 
 70.25  of two or more local government units. 
 70.26     Subd. 3.  [BIOTECHNOLOGY AND HEALTH SCIENCES INDUSTRY 
 70.27  FACILITY.] "Biotechnology and health sciences industry facility" 
 70.28  means one or more facilities or operations involved in:  (1) 
 70.29  researching, developing, and/or manufacturing a biotechnology 
 70.30  product or service or a biotechnology-related health sciences 
 70.31  product or service; or (2) promoting, supplying, or servicing a 
 70.32  facility or operation involved in clause (1). 
 70.33     Subd. 4.  [COMMISSIONER.] "Commissioner" means the 
 70.34  commissioner of trade and economic development. 
 70.35     Subd. 5.  [DEVELOPMENT PLAN.] "Development plan" means a 
 70.36  plan meeting the requirements of section 469.311. 
 71.1      Subd. 6.  [BIOTECHNOLOGY AND HEALTH SCIENCES INDUSTRY ZONE 
 71.2   OR ZONE.] "Biotechnology and health sciences industry zone" or 
 71.3   "zone" means a zone designated by the commissioner under section 
 71.4   469.314. 
 71.5      Subd. 7.  [BIOTECHNOLOGY AND HEALTH SCIENCES INDUSTRY ZONE 
 71.6   PERCENTAGE OR ZONE PERCENTAGE.] "Biotechnology and health 
 71.7   sciences industry zone percentage" or "zone percentage" means 
 71.8   the following fraction reduced to a percentage: 
 71.9      (1) the numerator of the fraction is: 
 71.10     (i) the ratio of the taxpayer's property factor under 
 71.11  section 290.191 located in the zone for the taxable year over 
 71.12  the property factor numerator determined under section 290.191, 
 71.13  plus 
 71.14     (ii) the ratio of the taxpayer's biotechnology and health 
 71.15  sciences industry zone payroll factor under subdivision 8 over 
 71.16  the payroll factor numerator determined under section 290.191; 
 71.17  and 
 71.18     (2) the denominator of the fraction is two. 
 71.19     When calculating the zone percentage for a business that is 
 71.20  part of a unitary business as defined under section 290.17, 
 71.21  subdivision 4, the denominator of the payroll and property 
 71.22  factors is the Minnesota payroll and property of the unitary 
 71.23  business as reported on the combined report under section 
 71.24  290.17, subdivision 4, paragraph (j). 
 71.25     Subd. 8.  [BIOTECHNOLOGY AND HEALTH SCIENCES INDUSTRY ZONE 
 71.26  PAYROLL FACTOR.] "Biotechnology and health sciences industry 
 71.27  zone payroll factor" or "biotechnology and health sciences 
 71.28  industry zone payroll" is that portion of the payroll factor 
 71.29  under section 290.191 that represents: 
 71.30     (1) wages or salaries paid to an individual for services 
 71.31  performed for a qualified business in a biotechnology and health 
 71.32  sciences industry zone; or 
 71.33     (2) wages or salaries paid to individuals working from 
 71.34  offices of a qualified business within a biotechnology and 
 71.35  health sciences industry zone if their employment requires them 
 71.36  to work outside the zone and the work is incidental to the work 
 72.1   performed by the individual within the zone. 
 72.2      Subd. 9.  [LOCAL GOVERNMENT UNIT.] "Local government unit" 
 72.3   means a statutory or home rule charter city, county, town, or 
 72.4   school district. 
 72.5      Subd. 10.  [PERSON.] "Person" includes an individual, 
 72.6   corporation, partnership, limited liability company, 
 72.7   association, or any other entity. 
 72.8      Subd. 11.  [QUALIFIED BUSINESS.] (a) "Qualified business" 
 72.9   means a person carrying on a trade or business at a 
 72.10  biotechnology and health sciences industry facility located 
 72.11  within a biotechnology and health sciences industry zone. 
 72.12     (b) A person that relocates a biotechnology and health 
 72.13  sciences industry facility from outside a biotechnology and 
 72.14  health sciences industry zone into a zone is not a qualified 
 72.15  business, unless the business: 
 72.16     (1)(i) increases full-time employment in the first full 
 72.17  year of operation within the biotechnology and health sciences 
 72.18  industry zone by at least 20 percent measured relative to the 
 72.19  operations that were relocated; or 
 72.20     (ii) makes a capital investment in the property located 
 72.21  within a zone equivalent to ten percent of the gross revenues of 
 72.22  operation that were relocated in the immediately preceding 
 72.23  taxable year; and 
 72.24     (2) enters a binding written agreement with the 
 72.25  commissioner that: 
 72.26     (i) pledges the business will meet the requirements of 
 72.27  clause (1); 
 72.28     (ii) provides for repayment of all tax benefits enumerated 
 72.29  under section 469.315 to the business under the procedures in 
 72.30  section 469.318, if the requirements of clause (1) are not met; 
 72.31  and 
 72.32     (iii) contains any other terms the commissioner determines 
 72.33  appropriate. 
 72.34     Subd. 12.  [RELOCATES.] (a) "Relocates" means that the 
 72.35  trade or business: 
 72.36     (1) ceases one or more operations or functions at another 
 73.1   location in Minnesota and begins performing substantially the 
 73.2   same operations or functions at a location in a biotechnology 
 73.3   and health sciences industry zone; or 
 73.4      (2) reduces employment at another location in Minnesota 
 73.5   during a period starting one year before and ending one year 
 73.6   after it begins operations in a biotechnology and health 
 73.7   sciences industry zone and its employees in the biotechnology 
 73.8   and health sciences industry zone are engaged in the same line 
 73.9   of business as the employees at the location where it reduced 
 73.10  employment. 
 73.11     (b) "Relocate" does not include an expansion by a business 
 73.12  that establishes a new facility that does not replace or 
 73.13  supplant an existing operation or employment, in whole or in 
 73.14  part. 
 73.15     [EFFECTIVE DATE.] This section is effective the day 
 73.16  following final enactment. 
 73.17     Sec. 14.  [469.311] [DEVELOPMENT PLAN.] 
 73.18     (a) An applicant for designation of a biotechnology and 
 73.19  health sciences industry zone must adopt a written development 
 73.20  plan for the zone before submitting the application to the 
 73.21  commissioner. 
 73.22     (b) The development plan must contain, at least, the 
 73.23  following: 
 73.24     (1) a map of the proposed zone that indicates the 
 73.25  geographic boundaries of the zone, the total area, and present 
 73.26  use and conditions generally of the land and structures within 
 73.27  those boundaries; 
 73.28     (2) evidence of community support and commitment from local 
 73.29  government, local workforce investment boards, school districts, 
 73.30  and other education institutions, business groups, and the 
 73.31  public; 
 73.32     (3) a description of the methods proposed to increase 
 73.33  economic opportunity and expansion, facilitate infrastructure 
 73.34  improvement, reduce the local regulatory burden, and identify 
 73.35  job-training opportunities; 
 73.36     (4) current social, economic, and demographic 
 74.1   characteristics of the proposed zone and anticipated 
 74.2   improvements in education, health, human services, and 
 74.3   employment if the zone is created; 
 74.4      (5) a description of anticipated activity in the zone and 
 74.5   each subzone, including, but not limited to, industrial use and 
 74.6   industrial site reuse; and 
 74.7      (6) any other information required by the commissioner. 
 74.8      [EFFECTIVE DATE.] This section is effective the day 
 74.9   following final enactment. 
 74.10     Sec. 15.  [469.312] [BIOTECHNOLOGY AND HEALTH SCIENCES 
 74.11  INDUSTRY ZONE; LIMITATIONS.] 
 74.12     Subdivision 1.  [MAXIMUM SIZE.] A biotechnology and health 
 74.13  sciences industry zone may not exceed 5,000 acres.  
 74.14     Subd. 2.  [SUBZONES.] The area of a biotechnology and 
 74.15  health sciences industry zone may consist of one or more 
 74.16  noncontiguous areas or subzones. 
 74.17     Subd. 3.  [DURATION LIMIT.] The maximum duration of a zone 
 74.18  is 12 years.  The applicant may request a shorter duration.  The 
 74.19  commissioner may specify a shorter duration, regardless of the 
 74.20  requested duration. 
 74.21     [EFFECTIVE DATE.] This section is effective the day 
 74.22  following final enactment. 
 74.23     Sec. 16.  [469.313] [APPLICATION FOR DESIGNATION.] 
 74.24     Subdivision 1.  [WHO MAY APPLY.] One or more local 
 74.25  government units, or a joint powers board under section 471.59, 
 74.26  acting on behalf of two or more units, may apply for designation 
 74.27  of an area as a biotechnology and health sciences industry 
 74.28  zone.  All or part of the area proposed for designation as a 
 74.29  zone must be located within the boundaries of each of the 
 74.30  governmental units.  A local government unit may not submit or 
 74.31  have submitted on its behalf more than one application for 
 74.32  designation of a biotechnology and health sciences industry zone.
 74.33     Subd. 2.  [APPLICATION CONTENT.] The application must 
 74.34  include: 
 74.35     (1) a development plan meeting the requirements of section 
 74.36  469.311; 
 75.1      (2) the proposed duration of the zone, not to exceed 12 
 75.2   years; 
 75.3      (3) a resolution or ordinance adopted by each of the cities 
 75.4   or towns and the counties in which the zone is located, agreeing 
 75.5   to provide all of the local tax exemptions provided under 
 75.6   section 469.315; and 
 75.7      (4) supporting evidence to allow the commissioner to 
 75.8   evaluate the application under the criteria in section 469.314. 
 75.9      [EFFECTIVE DATE.] This section is effective the day 
 75.10  following final enactment. 
 75.11     Sec. 17.  [469.314] [DESIGNATION OF BIOTECHNOLOGY AND 
 75.12  HEALTH SCIENCES INDUSTRY ZONE.] 
 75.13     Subdivision 1.  [COMMISSIONER TO DESIGNATE.] (a) The 
 75.14  commissioner, in consultation with the commissioner of revenue 
 75.15  and the director of the office of strategic and long-range 
 75.16  planning, shall designate not more than one biotechnology and 
 75.17  health sciences industry zone.  Priority must be given to 
 75.18  applicants with a development plan that links a higher 
 75.19  education/research institution with a biotechnology and health 
 75.20  sciences industry facility. 
 75.21     (b) The commissioner may, upon designation of a zone, 
 75.22  modify the development plan, including the boundaries of the 
 75.23  zone or subzones, if in the commissioner's opinion a modified 
 75.24  plan would better meet the objectives of the biotechnology and 
 75.25  health sciences industry zone program.  The commissioner shall 
 75.26  notify the applicant of the modification and provide a statement 
 75.27  of the reasons for the modifications. 
 75.28     Subd. 2.  [NEED INDICATORS.] (a) In evaluating applications 
 75.29  to determine the need for designation of a biotechnology and 
 75.30  health sciences industry zone, the commissioner shall consider 
 75.31  the following factors as indicators of need: 
 75.32     (1) the extent to which land in proximity to a significant 
 75.33  scientific research institution could be developed as a higher 
 75.34  and better use for biotechnology and health sciences industry 
 75.35  facilities; 
 75.36     (2) the amount of property in or near the zone that is 
 76.1   deteriorated or underutilized; and 
 76.2      (3) the extent to which property in the area would remain 
 76.3   underdeveloped or nonperforming due to physical characteristics. 
 76.4      (b) The commissioner may require applicants to provide data 
 76.5   to demonstrate how the area meets one or more of the indicators 
 76.6   of need. 
 76.7      Subd. 3.  [SUCCESS INDICATORS.] In determining the 
 76.8   likelihood of success of a proposed zone, the commissioner shall 
 76.9   consider: 
 76.10     (1) applicants that show a viable link between a higher 
 76.11  education/research institution, the biotechnology and/or medical 
 76.12  devices business sectors, and one or more units of local 
 76.13  government with a development plan; 
 76.14     (2) the extent to which the area has substantial real 
 76.15  property with adequate infrastructure and energy to support new 
 76.16  or expanded development; 
 76.17     (3) the strength and viability of the proposed development 
 76.18  goals, objectives, and strategies in the development plan; 
 76.19     (4) whether the development plan is creative and innovative 
 76.20  in comparison to other applications; 
 76.21     (5) local public and private commitment to development of a 
 76.22  biotechnology and health sciences industry facility or 
 76.23  facilities in the proposed zone and the potential cooperation of 
 76.24  surrounding communities; 
 76.25     (6) existing resources available to the proposed zone; 
 76.26     (7) how the designation of the zone would relate to other 
 76.27  economic and community development projects and to regional 
 76.28  initiatives or programs; 
 76.29     (8) how the regulatory burden will be eased for 
 76.30  biotechnology and health sciences industry facilities located in 
 76.31  the proposed zone; 
 76.32     (9) proposals to establish and link job creation and job 
 76.33  training in the biotechnology and health sciences industry with 
 76.34  research/educational institutions; and 
 76.35     (10) the extent to which the development is directed at 
 76.36  encouraging, and that designation of the zone is likely to 
 77.1   result in, the creation of high-paying jobs. 
 77.2      Subd. 4.  [DESIGNATION SCHEDULE.] (a) The schedule in 
 77.3   paragraphs (b) to (e) applies to the designation of the 
 77.4   biotechnology and health sciences industry zone. 
 77.5      (b) The commissioner shall publish the form for 
 77.6   applications and any procedural, form, or content requirements 
 77.7   for applications by no later than August 1, 2003.  The 
 77.8   commissioner may publish these requirements on the Internet, in 
 77.9   the State Register, or by any other means the commissioner 
 77.10  determines appropriate to disseminate the information to 
 77.11  potential applicants for designation. 
 77.12     (c) Applications must be submitted by October 15, 2003. 
 77.13     (d) The commissioner shall designate the zones by no later 
 77.14  than December 31, 2003. 
 77.15     (e) The designation of the zones takes effect January 1, 
 77.16  2004. 
 77.17     [EFFECTIVE DATE.] This section is effective the day 
 77.18  following final enactment. 
 77.19     Sec. 18.  [469.315] [TAX INCENTIVES AVAILABLE IN ZONES.] 
 77.20     Qualified businesses that operate in a biotechnology and 
 77.21  health sciences industry zone and property of a qualified 
 77.22  business located in a biotechnology and health sciences industry 
 77.23  zone qualify for: 
 77.24     (1) exemption from corporate franchise taxes as provided 
 77.25  under section 469.316; and 
 77.26     (2) exemption from the state sales and use tax and any 
 77.27  local sales and use taxes on qualifying purchases as provided in 
 77.28  section 297A.68, subdivision 37. 
 77.29     [EFFECTIVE DATE.] This section is effective the day 
 77.30  following final enactment. 
 77.31     Sec. 19.  [469.316] [CORPORATE FRANCHISE TAX EXEMPTION.] 
 77.32     (a) A qualified business is exempt from taxation under 
 77.33  section 290.02, the alternative minimum tax under section 
 77.34  290.0921, and the minimum fee under section 290.0922, on the 
 77.35  portion of its income attributable to operations of a qualified 
 77.36  business within the biotechnology and health sciences industry 
 78.1   zone.  This exemption is determined as follows: 
 78.2      (1) for purposes of the tax imposed under section 290.02, 
 78.3   by multiplying its taxable net income by its zone percentage and 
 78.4   subtracting the result in determining taxable income; 
 78.5      (2) for purposes of the alternative minimum tax under 
 78.6   section 290.0921, by multiplying its alternative minimum taxable 
 78.7   income by its zone percentage and reducing alternative minimum 
 78.8   taxable income by this amount; and 
 78.9      (3) for purposes of the minimum fee under section 290.0922, 
 78.10  by excluding property and payroll in the zone from the 
 78.11  computations of the fee. 
 78.12     (b) No subtraction is allowed under this section in excess 
 78.13  of 20 percent of the sum of the corporation's biotechnology and 
 78.14  health sciences industry zone payroll and the adjusted basis of 
 78.15  the property at the time that the property is first used in the 
 78.16  biotechnology and health sciences industry zone by the 
 78.17  corporation. 
 78.18     [EFFECTIVE DATE.] This section is effective for taxable 
 78.19  years beginning after December 31, 2006. 
 78.20     Sec. 20.  [469.317] [REPAYMENT OF TAX BENEFITS.] 
 78.21     Subdivision 1.  [REPAYMENT OBLIGATION.] A business must 
 78.22  repay the amount of the tax reduction received during the two 
 78.23  years immediately before it ceased to operate in the zone, if 
 78.24  the business: 
 78.25     (1) received tax reductions authorized by section 469.315; 
 78.26     (2) relocated into a biotechnology and health sciences 
 78.27  industry zone after designation of the zone; and 
 78.28     (3) ceased to operate its facility located within the 
 78.29  biotechnology and health sciences industry zone or otherwise 
 78.30  ceases to be or is not a qualified business. 
 78.31     Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
 78.32  the following terms have the meanings given. 
 78.33     (b) "Business" means any person who received tax benefits 
 78.34  enumerated in section 469.315. 
 78.35     (c) "Commissioner" means the commissioner of revenue. 
 78.36     Subd. 3.  [DISPOSITION OR REPAYMENT.] The repayment must be 
 79.1   paid to the state to the extent it represents a state tax 
 79.2   reduction.  Any amount repaid to the state must be deposited in 
 79.3   the general fund.  Any repayment of local sales taxes must be 
 79.4   repaid to the city or county imposing the local sales tax. 
 79.5      Subd. 4.  [REPAYMENT PROCEDURES.] (a) For the repayment of 
 79.6   taxes imposed under chapter 290 or 297A or local taxes collected 
 79.7   pursuant to section 297A.99, a business must file an amended 
 79.8   return with the commissioner of revenue and pay any taxes 
 79.9   required to be repaid within 30 days after ceasing to do 
 79.10  business in the zone.  The amount required to be repaid is 
 79.11  determined by calculating the tax for the period or periods for 
 79.12  which repayment is required without regard to the exemptions and 
 79.13  credits allowed under section 469.315. 
 79.14     (b) The provisions of chapters 270 and 289A relating to the 
 79.15  commissioner's authority to audit, assess, and collect the tax 
 79.16  and to hear appeals are applicable to the repayment required 
 79.17  under paragraphs (a) and (b).  The commissioner may impose civil 
 79.18  penalties as provided in chapter 289A, and the additional tax 
 79.19  and penalties are subject to interest at the rate provided in 
 79.20  section 270.75, from 30 days after ceasing to do business in the 
 79.21  biotechnology and health sciences industry zone until the date 
 79.22  the tax is paid. 
 79.23     (c) For determining the tax required to be repaid, a tax 
 79.24  reduction is deemed to have been received on the date that the 
 79.25  tax would have been due if the taxpayer had not been entitled to 
 79.26  the exemption. 
 79.27     (d) The commissioner may assess the repayment of taxes 
 79.28  under paragraph (d) any time within two years after the business 
 79.29  ceases to operate in the biotechnology and health sciences 
 79.30  industry zone, or within any period of limitations for the 
 79.31  assessment of tax under section 289A.38, whichever period is 
 79.32  later. 
 79.33     Subd. 5.  [WAIVER AUTHORITY.] The commissioner may waive 
 79.34  all or part of a repayment, if the commissioner, in consultation 
 79.35  with the commissioner of trade and economic development and 
 79.36  appropriate officials from the local government units in which 
 80.1   the business is located, determines that requiring repayment of 
 80.2   the tax is not in the best interest of the state or the local 
 80.3   government units and the business ceased operating as a result 
 80.4   of circumstances beyond its control including, but not limited 
 80.5   to: 
 80.6      (1) a natural disaster; 
 80.7      (2) unforeseen industry trends; or 
 80.8      (3) loss of a major supplier or customer. 
 80.9      [EFFECTIVE DATE.] This section is effective the day 
 80.10  following final enactment. 
 80.11     Sec. 21.  [469.318] [ZONE PERFORMANCE; REMEDIES.] 
 80.12     Subdivision 1.  [REPORTING REQUIREMENT.] An applicant 
 80.13  receiving designation of a biotechnology and health sciences 
 80.14  industry zone under section 469.314 must annually report to the 
 80.15  commissioner on its progress in meeting the zone performance 
 80.16  goals under the development plan for the zone. 
 80.17     Subd. 2.  [PROCEDURES.] For reports required by subdivision 
 80.18  1, the commissioner may prescribe: 
 80.19     (1) the required time or times by which the reports must be 
 80.20  filed; 
 80.21     (2) the form of the report; and 
 80.22     (3) the information required to be included in the report. 
 80.23     Subd. 3.  [REMEDIES.] If the commissioner determines, based 
 80.24  on a report filed under subdivision 1 or other available 
 80.25  information, that a zone or subzone is failing to meet its 
 80.26  performance goals, the commissioner may take any actions the 
 80.27  commissioner determines appropriate, including modification of 
 80.28  the boundaries of the zone or a subzone or termination of the 
 80.29  zone or a subzone.  Before taking any action, the commissioner 
 80.30  shall consult with the applicant and the affected local 
 80.31  government units, including notifying them of the proposed 
 80.32  actions to be taken.  The commissioner shall publish any order 
 80.33  modifying a zone in the State Register and on the Internet.  The 
 80.34  applicant may appeal the commissioner's order under the 
 80.35  contested case procedures of chapter 14. 
 80.36     Subd. 4.  [EXISTING BUSINESSES.] An action to remove area 
 81.1   from a zone or to terminate a zone under this section does not 
 81.2   apply to: 
 81.3      (1) sales tax on purchases made before the first day of the 
 81.4   next calendar month beginning at least 30 days after publication 
 81.5   of the commissioner's order; and 
 81.6      (2) corporate franchise tax attributable to a facility that 
 81.7   was in operation before the publication of the commissioner's 
 81.8   order. 
 81.9      Sec. 22.  [469.320] [DEFINITIONS.] 
 81.10     Subdivision 1.  [SCOPE.] For purposes of sections 469.320 
 81.11  to 469.325, the following terms have the meanings given. 
 81.12     Subd. 2.  [FOREIGN TRADE ZONE.] "Foreign trade zone" means 
 81.13  a foreign trade zone designated pursuant to United States Code, 
 81.14  title 19, section 81a, for the right to use the powers provided 
 81.15  in United States Code, title 19, sections 81a to 81u, or a 
 81.16  subzone authorized by the foreign trade zone. 
 81.17     Subd. 3.  [FOREIGN TRADE ZONE AUTHORITY.] "Foreign trade 
 81.18  zone authority" means the greater metropolitan foreign trade 
 81.19  zone commission, a joint powers authority created by the county 
 81.20  of Hennepin, the cities of Minneapolis and Bloomington, and the 
 81.21  metropolitan airports commission, under the authority of 
 81.22  sections 469.059 and 469.101. 
 81.23     Subd. 4.  [INTERNATIONAL ECONOMIC DEVELOPMENT ZONE.] An 
 81.24  "international economic development zone" or "zone" is a zone so 
 81.25  designated pursuant to section 469.321. 
 81.26     Subd. 5.  [PERSON.] "Person" includes an individual, 
 81.27  corporation, partnership, limited liability company, 
 81.28  association, or any other entity. 
 81.29     Subd. 6.  [QUALIFIED BUSINESS.] (a) "Qualified business" 
 81.30  means a person carrying on a trade or business at a place of 
 81.31  business located within an international economic development 
 81.32  zone and is: 
 81.33     (1) engaged in international export or import of goods; and 
 81.34     (2) certified by the foreign trade zone authority as a 
 81.35  trade or business that furthers the purpose of developing 
 81.36  international distribution capacity and capability. 
 82.1      (b) A person that relocates a trade or business from within 
 82.2   Minnesota but outside an international economic development zone 
 82.3   into an international economic development zone is not a 
 82.4   qualified business, unless the business: 
 82.5      (1)(i) increases full-time employment in the first full 
 82.6   year of operation within the international economic development 
 82.7   zone by at least 20 percent measured relative to the operations 
 82.8   that were relocated; or 
 82.9      (ii) makes a capital investment in the property located 
 82.10  within a zone equal to at least ten percent of the gross 
 82.11  revenues of the operations that were relocated in the 
 82.12  immediately proceeding taxable year; and 
 82.13     (2) enters a binding written agreement with the foreign 
 82.14  trade zone authority that: 
 82.15     (i) pledges that the business will meet the requirements of 
 82.16  clause (1); 
 82.17     (ii) provides for repayment of all tax benefits enumerated 
 82.18  under section 469.324 to the business under the procedures in 
 82.19  section 469.325, if the requirements of clause (1) are not met; 
 82.20  and 
 82.21     (iii) contains any other terms the foreign trade zone 
 82.22  authority determines appropriate. 
 82.23     Subd. 7.  [REGIONAL DISTRIBUTION CENTER.] A "regional 
 82.24  distribution center" is a distribution center developed within a 
 82.25  foreign trade zone.  The regional distribution center must have 
 82.26  as its primary purpose to facilitate gathering of freight for 
 82.27  the purpose of centralizing the functions necessary for the 
 82.28  shipment of freight in international commerce, including, but 
 82.29  not limited to, security and customs functions. 
 82.30     Subd. 8.  [RELOCATE.] (a) "Relocate" means that a trade or 
 82.31  business: 
 82.32     (1) ceases one or more operations or functions at another 
 82.33  location in an international economic development zone; or 
 82.34     (2) reduces employment at another location in Minnesota 
 82.35  during a period starting one year before and ending one year 
 82.36  after it begins operations in an international economic 
 83.1   development zone and its employees in the international economic 
 83.2   development zone are engaged in the same line of business as the 
 83.3   employees at the location where it reduced employment. 
 83.4      (b) "Relocate" does not include an expansion by a business 
 83.5   that establishes a new facility that does not replace or 
 83.6   supplant an existing operation or employment, in whole or in 
 83.7   part. 
 83.8      [EFFECTIVE DATE.] This section is effective the day 
 83.9   following final enactment. 
 83.10     Sec. 23.  [469.321] [DESIGNATION OF INTERNATIONAL ECONOMIC 
 83.11  DEVELOPMENT ZONE.] 
 83.12     (a) An area designated as a foreign trade zone may be 
 83.13  designated by the foreign trade zone authority as an 
 83.14  international economic development zone if, within the zone a 
 83.15  regional distribution center has been established and is located 
 83.16  contiguous to a parcel of land also within the foreign trade 
 83.17  zone, not less than 500 acres and not to exceed 1,000 acres in 
 83.18  size. 
 83.19     (b) In making the designation, the foreign trade zone 
 83.20  authority shall consider access to major transportation routes, 
 83.21  adequacy of the size of the site, access to airport facilities, 
 83.22  and access to other infrastructure and financial incentives. 
 83.23     [EFFECTIVE DATE.] This section is effective the day 
 83.24  following final enactment. 
 83.25     Sec. 24.  [469.322] [DEVELOPMENT OF REGIONAL DISTRIBUTION 
 83.26  CENTER.] 
 83.27     The foreign trade zone authority will be responsible for 
 83.28  creating a development plan for the regional distribution 
 83.29  center.  The regional distribution center must be developed with 
 83.30  the purpose of expanding, on a regional basis, international 
 83.31  distribution capacity and capability.  The foreign trade zone 
 83.32  authority shall consult with municipalities that have indicated 
 83.33  to the authority an interest in locating the international 
 83.34  economic development zone within their boundaries and a 
 83.35  willingness to establish a tax increment financing district 
 83.36  coterminous with the boundaries of the zone, as well as 
 84.1   interested businesses, potential financiers, and appropriate 
 84.2   state and federal agencies. 
 84.3      [EFFECTIVE DATE.] This section is effective the day 
 84.4   following final enactment. 
 84.5      Sec. 25.  [469.323] [DURATION.] 
 84.6      The maximum duration of an international economic 
 84.7   development zone is 12 years. 
 84.8      [EFFECTIVE DATE.] This section is effective the day 
 84.9   following final enactment. 
 84.10     Sec. 26.  [469.324] [TAX INCENTIVES AVAILABLE IN 
 84.11  INTERNATIONAL ECONOMIC DEVELOPMENT ZONE.] 
 84.12     Qualified businesses that operate in an international 
 84.13  economic development zone, individuals who invest in a regional 
 84.14  distribution center or qualified businesses that operate in an 
 84.15  international economic development zone, and property located in 
 84.16  an international economic development zone qualify for: 
 84.17     (1) a credit against income taxes imposed under chapter 290 
 84.18  for qualifying investment in a regional distribution center as 
 84.19  provided in section 290.0681; 
 84.20     (2) special apportionment of business income taxes as 
 84.21  provided in section 290.191, subdivision 4a; 
 84.22     (3) exemption from the state sales and use tax and any 
 84.23  local sales and use taxes on qualifying purchases as provided in 
 84.24  section 297A.68, subdivision 37; 
 84.25     (4) the jobs credit allowed under section 290.0682; and 
 84.26     (5) tax increment financing as provided in chapter 469. 
 84.27     Sec. 27.  [469.325] [REPAYMENT OF TAX BENEFITS.] 
 84.28     Subdivision 1.  [REPAYMENT OBLIGATION.] A person must repay 
 84.29  the amount of the tax reduction received under section 469.324, 
 84.30  clauses (1) to (4), during the two years immediately before it 
 84.31  ceased to operate in the zone, if the person ceased to operate 
 84.32  its facility located within the zone or otherwise ceases to be 
 84.33  or is not a qualified business. 
 84.34     Subd. 2.  [DISPOSITION OF REPAYMENT.] The repayment must be 
 84.35  paid to the state to the extent it represents a state tax 
 84.36  reduction.  Any repayment of local sales or use taxes must be 
 85.1   repaid to the jurisdiction imposing the local sales or use tax. 
 85.2      Subd. 3.  [REPAYMENT PROCEDURES.] (a) For the repayment of 
 85.3   taxes imposed under chapter 290 or 297A or local taxes collected 
 85.4   pursuant to section 297A.99, a person must file an amended 
 85.5   return with the commissioner of revenue and pay any taxes 
 85.6   required to be repaid within 30 days after ceasing to be a 
 85.7   qualified business.  The amount required to be repaid is 
 85.8   determined by calculating the tax for the period for which 
 85.9   repayment is required without regard to the tax reductions 
 85.10  allowed under section 469.324. 
 85.11     (b) The provisions of chapter 289A relating to the 
 85.12  commissioner of revenue's authority to audit, assess, and 
 85.13  collect the tax and to hear appeals are applicable to the 
 85.14  repayment required under paragraph (a).  The commissioner may 
 85.15  impose civil penalties as provided in chapter 289A, and the 
 85.16  additional tax and penalties are subject to interest at the rate 
 85.17  provided in section 270.75, from 30 days after ceasing to do 
 85.18  business in the zone until the date the tax is paid. 
 85.19     (c) For determining the tax required to be repaid, a tax 
 85.20  reduction is deemed to have been received on the date that the 
 85.21  tax would have been due if the person had not been entitled to 
 85.22  the tax reduction. 
 85.23     (d) The commissioner of revenue may assess the repayment of 
 85.24  taxes under paragraph (b) anytime within two years after the 
 85.25  person ceases to be a qualified business, or within any period 
 85.26  of limitations for the assessment of tax under section 289A.38, 
 85.27  whichever is later. 
 85.28     Subd. 4.  [WAIVER AUTHORITY.] The commissioner may waive 
 85.29  all or part of a repayment, if the commissioner of revenue, in 
 85.30  consultation with the foreign trade zone authority and 
 85.31  appropriate officials from the state and local government units, 
 85.32  determines that requiring repayment of the tax is not in the 
 85.33  best interest of the state or local government and the business 
 85.34  ceased operating as a result of circumstances beyond its 
 85.35  control, including, but not limited to: 
 85.36     (1) a natural disaster; 
 86.1      (2) unforeseen industry trends; or 
 86.2      (3) loss of a major supplier or customer. 
 86.3      [EFFECTIVE DATE.] This section is effective the day 
 86.4   following final enactment. 
 86.5      Sec. 28.  Laws 1978, chapter 464, section 1, is amended to 
 86.6   read: 
 86.7      Section 1.  [ANOKA COUNTY; HOUSING AND REDEVELOPMENT.] 
 86.8      Subdivision 1.  There is created in the county of Anoka a 
 86.9   public body corporate and politic, to be known as the Anoka 
 86.10  county housing and redevelopment authority, having all of the 
 86.11  powers and duties of a housing and redevelopment authority under 
 86.12  the provisions of the municipal housing and redevelopment act, 
 86.13  Minnesota Statutes, Section 462.411 to 462.711 sections 469.001 
 86.14  to 469.047.  For the purposes of applying the provisions of the 
 86.15  municipal housing and redevelopment act to Anoka county, the 
 86.16  county has all of the powers and duties of a municipality, the 
 86.17  county board has all of the powers and duties of a governing 
 86.18  body, the chairman of the county board has all of the powers and 
 86.19  duties of a mayor, and the area of operation includes the area 
 86.20  within the territorial boundaries of the county. 
 86.21     Subd. 2.  This section shall not limit or restrict any 
 86.22  existing housing and redevelopment authority or prevent a 
 86.23  municipality from creating an authority.  The county shall not 
 86.24  exercise jurisdiction in any municipality where a municipal 
 86.25  housing and redevelopment authority is established.  If a 
 86.26  municipal housing and redevelopment authority requests the Anoka 
 86.27  county housing and redevelopment authority to handle the housing 
 86.28  duties of the municipal authority, the Anoka county housing and 
 86.29  redevelopment authority shall act and have exclusive 
 86.30  jurisdiction for housing in the municipality.  A transfer of 
 86.31  duties relating to housing shall not transfer any duties 
 86.32  relating to redevelopment. 
 86.33     Subd. 3.  [TAXING DISTRICT.] The taxing district of the 
 86.34  Anoka county housing and redevelopment authority shall include 
 86.35  all cities and towns within Anoka county, except that a city may 
 86.36  limit its participation as provided in this subdivision.  The 
 87.1   Anoka county board shall notify all cities and towns located 
 87.2   within Anoka county if it adopts a resolution granting economic 
 87.3   development authority powers to the Anoka county housing and 
 87.4   redevelopment authority under Minnesota Statutes, section 
 87.5   469.1083, subdivision 1.  Within 12 months following the Anoka 
 87.6   county board's adoption of the resolution, a city may adopt a 
 87.7   resolution requesting limited participation.  Such limited 
 87.8   participation shall be effective only if each of the following 
 87.9   criteria are met: 
 87.10     (1) the city has created a housing and redevelopment 
 87.11  authority prior to December 13, 1994; 
 87.12     (2) the city has not transferred jurisdiction for housing 
 87.13  to the Anoka county housing and redevelopment authority under 
 87.14  subdivision 2; and 
 87.15     (3) the Anoka county housing and redevelopment authority 
 87.16  levy within the city is not pledged for the repayment of bonds 
 87.17  or other forms of indebtedness. 
 87.18     The levy of the Anoka county housing and redevelopment 
 87.19  authority within a city with limited participation must not 
 87.20  exceed 40 percent of the maximum levy allowed by law.  The Anoka 
 87.21  county housing and redevelopment authority shall not undertake a 
 87.22  housing project, a housing development project, a redevelopment 
 87.23  project, or an economic development project within the 
 87.24  boundaries of a city with limited participation.  A city with 
 87.25  limited participation may, at any time, adopt a resolution 
 87.26  revoking its limited participation status. 
 87.27     [EFFECTIVE DATE.] This section is effective the day after 
 87.28  the governing body of Anoka county and its chief clerical 
 87.29  officer timely complete their compliance with Minnesota 
 87.30  Statutes, section 645.021, subdivisions 2 and 3. 
 87.31                             ARTICLE 6 
 87.32                          MINERAL TAXATION
 87.33     Section 1.  Minnesota Statutes 2002, section 272.02, is 
 87.34  amended by adding a subdivision to read: 
 87.35     Subd. 56.  [PROPERTY USED IN THE BUSINESS OF MINING SUBJECT 
 87.36  TO THE NET PROCEEDS TAX.] The following property used in the 
 88.1   business of mining subject to the net proceeds tax under section 
 88.2   298.015 is exempt: 
 88.3      (1) deposits of ores, metals, and minerals and the lands in 
 88.4   which they are contained; 
 88.5      (2) all real and personal property used in a process that 
 88.6   includes both mining and producing or refining ores, minerals, 
 88.7   or metals, including lands occupied by or used in connection 
 88.8   with the mining or production facilities; and 
 88.9      (3) concentrate or direct reduced ore. 
 88.10  This exemption applies for taxes payable in each year that a 
 88.11  person subject to the tax under section 298.015 uses the 
 88.12  property for mining and producing or refining ores, metals, or 
 88.13  minerals. 
 88.14     [EFFECTIVE DATE.] This section is effective for taxes 
 88.15  payable in 2004 and thereafter. 
 88.16     Sec. 2.  Minnesota Statutes 2002, section 273.134, is 
 88.17  amended to read: 
 88.18     273.134 [TACONITE AND IRON ORE AREAS; TAX RELIEF AREA; 
 88.19  DEFINITIONS.] 
 88.20     (a) For purposes of this section and section sections 
 88.21  273.135 and 273.1391, "municipality" means any city, however 
 88.22  organized, or town, and which meets the following qualifications:
 88.23     (1) it is a municipality in which the assessed valuation of 
 88.24  unmined iron ore on May 1, 1941, was not less than 40 percent of 
 88.25  the assessed valuation of all real property; or 
 88.26     (2) it is a municipality in which, on January 1, 1977, or 
 88.27  the applicable assessment date, there is a taconite 
 88.28  concentrating plant or where taconite is mined or quarried or 
 88.29  where there is located an electric generating plant which 
 88.30  qualifies as a taconite facility. 
 88.31     "The applicable assessment date" is the date as of which 
 88.32  property is listed and assessed for the tax in question. 
 88.33     (b) For the purposes of section 273.135, "tax relief area" 
 88.34  means the geographic area contained within the boundaries of a 
 88.35  school district on January 2, 2000, which contains a 
 88.36  municipality which meets the following qualifications: 
 89.1      (1) it is a municipality school district in which the 
 89.2   assessed valuation of unmined iron ore on May 1, 1941, was not 
 89.3   less than 40 percent of the assessed valuation of all real 
 89.4   property and whose boundaries are within 20 miles of a taconite 
 89.5   mine or plant; or 
 89.6      (2) it is a municipality school district in which, on 
 89.7   January 1, 1977 or the applicable assessment date, there is a 
 89.8   taconite concentrating plant or where taconite is mined or 
 89.9   quarried or where there is located an electric generating plant 
 89.10  which qualifies as a taconite facility. 
 89.11     For purposes of this paragraph, a "tax relief area" does 
 89.12  not include a school district whose boundaries are more than 20 
 89.13  miles from a taconite mine or plant or in which the assessed 
 89.14  valuation of unmined iron ore on May 1, 1941, was less than 40 
 89.15  percent of the assessed valuation of all real property. 
 89.16     (b) For purposes of section 273.1391, subdivision 2, 
 89.17  paragraph (c), and chapter 298, "tax relief area" means the 
 89.18  geographic area contained within the boundaries of a school 
 89.19  district which contains a municipality that meets the following 
 89.20  qualifications: 
 89.21     (1) it is a municipality in which the assessed valuation of 
 89.22  unmined iron ore on May 1, 1941, was not less than 40 percent of 
 89.23  the assessed valuation of all real property; or 
 89.24     (2) it is a municipality in which, on January 1, 1977, or 
 89.25  the applicable assessment date, there is a taconite 
 89.26  concentrating plant or where taconite is mined or quarried or 
 89.27  where there is located an electric generating plant which 
 89.28  qualifies as a taconite facility. 
 89.29     [EFFECTIVE DATE.] This section is effective for taxes 
 89.30  payable in 2004 and thereafter. 
 89.31     Sec. 3.  [273.1341] [TACONITE ASSISTANCE AREA.] 
 89.32     A "taconite assistance area" means the geographic area that 
 89.33  falls within the boundaries of a school district that contains a 
 89.34  municipality in which the assessed valuation of unmined iron ore 
 89.35  on May 1, 1941, was not less than 40 percent of the assessed 
 89.36  valuation of all real property. 
 90.1      [EFFECTIVE DATE.] This section is effective for taxes 
 90.2   payable in 2004 and thereafter. 
 90.3      Sec. 4.  Minnesota Statutes 2002, section 273.135, 
 90.4   subdivision 1, is amended to read: 
 90.5      Subdivision 1.  The property tax to be paid in respect to 
 90.6   property taxable within a tax relief area as defined in section 
 90.7   273.134, paragraph (a) (b), on homestead property, as otherwise 
 90.8   determined by law and regardless of the market value of the 
 90.9   property, for all purposes shall be reduced in the amount 
 90.10  prescribed by subdivision 2, subject to the limitations 
 90.11  contained therein. 
 90.12     [EFFECTIVE DATE.] This section is effective for taxes 
 90.13  payable in 2004 and thereafter. 
 90.14     Sec. 5.  Minnesota Statutes 2002, section 273.135, 
 90.15  subdivision 2, is amended to read: 
 90.16     Subd. 2.  The amount of the reduction authorized by 
 90.17  subdivision 1 shall be: 
 90.18     (a) In the case of property located within a tax relief 
 90.19  area municipality as defined under section 273.134, paragraph 
 90.20  (a), that is within the boundaries of a municipality which meets 
 90.21  the qualifications prescribed in section 273.134, paragraph (a), 
 90.22  66 percent of the tax, provided that the reduction shall not 
 90.23  exceed the maximum amounts specified in paragraph (c).  
 90.24     (b) In the case of property located within the boundaries 
 90.25  of a school district which qualifies as a tax relief area under 
 90.26  section 273.134, paragraph (a) (b), but which is outside the 
 90.27  boundaries of a municipality which meets the qualifications 
 90.28  prescribed in section 273.134, paragraph (a), 57 percent of the 
 90.29  tax, provided that the reduction shall not exceed the maximum 
 90.30  amounts specified in paragraph (c).  
 90.31     (c) The maximum reduction of the tax is $315.10 on property 
 90.32  described in paragraph (a) and $289.80 on property described in 
 90.33  paragraph (b). 
 90.34     [EFFECTIVE DATE.] This section is effective for taxes 
 90.35  payable in 2004 and thereafter. 
 90.36     Sec. 6.  Minnesota Statutes 2002, section 273.1391, 
 91.1   subdivision 2, is amended to read: 
 91.2      Subd. 2.  The amount of the reduction authorized by 
 91.3   subdivision 1 shall be: 
 91.4      (a) In the case of property located within a school 
 91.5   district which does not meet the qualifications of section 
 91.6   273.134, paragraph (b), as a tax relief area, but which is 
 91.7   located in a county with a population of less than 100,000 in 
 91.8   which taconite is mined or quarried and wherein a school 
 91.9   district is located which does meet the qualifications of a tax 
 91.10  relief area, and provided that at least 90 percent of the area 
 91.11  of the school district which does not meet the qualifications of 
 91.12  section 273.134, paragraph (b), lies within such county, 57 
 91.13  percent of the tax on qualified property located in the school 
 91.14  district that does not meet the qualifications of section 
 91.15  273.134, paragraph (b), provided that the amount of said 
 91.16  reduction shall not exceed the maximum amounts specified in 
 91.17  paragraph (d).  The reduction provided by this paragraph shall 
 91.18  only be applicable to property located within the boundaries of 
 91.19  the county described therein.  
 91.20     (b) In the case of property located within a school 
 91.21  district which does not meet the qualifications of section 
 91.22  273.134, paragraph (b), as a tax relief area, but which is 
 91.23  located in a school district in a county containing a city of 
 91.24  the first class and a qualifying municipality as defined in 
 91.25  section 273.134, paragraph (a), but not in a school district 
 91.26  containing a city of the first class or adjacent to a school 
 91.27  district containing a city of the first class unless the school 
 91.28  district so adjacent contains a qualifying municipality as 
 91.29  defined in section 273.134, paragraph (a), 57 percent of the 
 91.30  tax, but not to exceed the maximums specified in paragraph (d). 
 91.31     (c) In the case of property located within the boundaries 
 91.32  of a municipality that meets the qualifications in section 
 91.33  273.134, paragraph (b) (a), but not the qualifications of a tax 
 91.34  relief area in section 273.134, paragraph (a) (b), 66 percent of 
 91.35  the tax, provided that the reduction shall not exceed $315.10.  
 91.36  In the case of property located within the boundaries of a 
 92.1   school district which qualifies as a tax relief taconite 
 92.2   assistance area under section 273.134, paragraph (b) 273.1341, 
 92.3   but does not qualify as a tax relief area under section 273.134, 
 92.4   paragraph (a) (b), but which is outside the boundaries of a 
 92.5   municipality which meets the qualifications of the preceding 
 92.6   sentence, 57 percent of the tax, provided that the reduction 
 92.7   shall not exceed the maximum amounts specified in paragraph (d). 
 92.8      (d) Except as otherwise provided in this section, the 
 92.9   maximum reduction of the tax is $289.80.  
 92.10     [EFFECTIVE DATE.] This section is effective for taxes 
 92.11  payable in 2004 and thereafter.  
 92.12     Sec. 7.  Minnesota Statutes 2002, section 276A.06, is 
 92.13  amended by adding a subdivision to read: 
 92.14     Subd. 3a.  [DISTRIBUTION TO IRRRB.] The areawide levy of 
 92.15  each governmental unit calculated in subdivision 3, paragraph 
 92.16  (a), must be reduced in an amount equal to 50 percent multiplied 
 92.17  by the proportion of the areawide levy of each governmental unit 
 92.18  to the total areawide levy of all governmental units. 
 92.19     The administrative auditor shall pay one-half of the amount 
 92.20  to the iron range resources and rehabilitation board on or 
 92.21  before June 15 and the remaining one-half of the amount on or 
 92.22  before November 15.  The money may be used for any of the 
 92.23  purposes for which expenditures may be made from the Douglas J. 
 92.24  Johnson economic protection trust fund or the taconite 
 92.25  environmental fund. 
 92.26     Sec. 8.  Minnesota Statutes 2002, section 290.05, 
 92.27  subdivision 1, is amended to read: 
 92.28     Subdivision 1.  [EXEMPT ENTITIES.] The following 
 92.29  corporations, individuals, estates, trusts, and organizations 
 92.30  shall be exempted from taxation under this chapter, provided 
 92.31  that every such person or corporation claiming exemption under 
 92.32  this chapter, in whole or in part, must establish to the 
 92.33  satisfaction of the commissioner the taxable status of any 
 92.34  income or activity: 
 92.35     (a) corporations, individuals, estates, and trusts engaged 
 92.36  in the business of mining or producing iron ore and mining, 
 93.1   producing, or refining other ores, metals, and minerals, the 
 93.2   mining or, production, or refining of which is subject to the 
 93.4   occupation tax imposed by section 298.01; but if any such 
 93.5   corporation, individual, estate, or trust engages in any other 
 93.6   business or activity or has income from any property not used in 
 93.7   such business it shall be subject to this tax computed on the 
 93.8   net income from such property or such other business or 
 93.9   activity.  Royalty shall not be considered as income from the 
 93.10  business of mining or producing iron ore within the meaning of 
 93.11  this section; 
 93.12     (b) the United States of America, the state of Minnesota or 
 93.13  any political subdivision of either agencies or 
 93.14  instrumentalities, whether engaged in the discharge of 
 93.15  governmental or proprietary functions; and 
 93.16     (c) any insurance company. 
 93.17     [EFFECTIVE DATE.] This section is effective for taxable 
 93.18  years beginning after December 31, 2002. 
 93.19     Sec. 9.  Minnesota Statutes 2002, section 290.17, 
 93.20  subdivision 4, is amended to read: 
 93.21     Subd. 4.  [UNITARY BUSINESS PRINCIPLE.] (a) If a trade or 
 93.22  business conducted wholly within this state or partly within and 
 93.23  partly without this state is part of a unitary business, the 
 93.24  entire income of the unitary business is subject to 
 93.25  apportionment pursuant to section 290.191.  Notwithstanding 
 93.26  subdivision 2, paragraph (c), none of the income of a unitary 
 93.27  business is considered to be derived from any particular source 
 93.28  and none may be allocated to a particular place except as 
 93.29  provided by the applicable apportionment formula.  The 
 93.30  provisions of this subdivision do not apply to business income 
 93.31  subject to subdivision 5, income of an insurance company, or 
 93.32  income of an investment company determined under section 290.36, 
 93.33  or income of a mine or mineral processing facility subject to 
 93.34  tax under section 298.01. 
 93.35     (b) The term "unitary business" means business activities 
 93.36  or operations which result in a flow of value between them.  The 
 93.37  term may be applied within a single legal entity or between 
 94.1   multiple entities and without regard to whether each entity is a 
 94.2   sole proprietorship, a corporation, a partnership or a trust.  
 94.3      (c) Unity is presumed whenever there is unity of ownership, 
 94.4   operation, and use, evidenced by centralized management or 
 94.5   executive force, centralized purchasing, advertising, 
 94.6   accounting, or other controlled interaction, but the absence of 
 94.7   these centralized activities will not necessarily evidence a 
 94.8   nonunitary business.  Unity is also presumed when business 
 94.9   activities or operations are of mutual benefit, dependent upon 
 94.10  or contributory to one another, either individually or as a 
 94.11  group. 
 94.12     (d) Where a business operation conducted in Minnesota is 
 94.13  owned by a business entity that carries on business activity 
 94.14  outside the state different in kind from that conducted within 
 94.15  this state, and the other business is conducted entirely outside 
 94.16  the state, it is presumed that the two business operations are 
 94.17  unitary in nature, interrelated, connected, and interdependent 
 94.18  unless it can be shown to the contrary.  
 94.19     (e) Unity of ownership is not deemed to exist when a 
 94.20  corporation is involved unless that corporation is a member of a 
 94.21  group of two or more business entities and more than 50 percent 
 94.22  of the voting stock of each member of the group is directly or 
 94.23  indirectly owned by a common owner or by common owners, either 
 94.24  corporate or noncorporate, or by one or more of the member 
 94.25  corporations of the group.  For this purpose, the term "voting 
 94.26  stock" shall include membership interests of mutual insurance 
 94.27  holding companies formed under section 60A.077.  
 94.28     (f) The net income and apportionment factors under section 
 94.29  290.191 or 290.20 of foreign corporations and other foreign 
 94.30  entities which are part of a unitary business shall not be 
 94.31  included in the net income or the apportionment factors of the 
 94.32  unitary business.  A foreign corporation or other foreign entity 
 94.33  which is required to file a return under this chapter shall file 
 94.34  on a separate return basis.  The net income and apportionment 
 94.35  factors under section 290.191 or 290.20 of foreign operating 
 94.36  corporations shall not be included in the net income or the 
 95.1   apportionment factors of the unitary business except as provided 
 95.2   in paragraph (g). 
 95.3      (g) The adjusted net income of a foreign operating 
 95.4   corporation shall be deemed to be paid as a dividend on the last 
 95.5   day of its taxable year to each shareholder thereof, in 
 95.6   proportion to each shareholder's ownership, with which such 
 95.7   corporation is engaged in a unitary business.  Such deemed 
 95.8   dividend shall be treated as a dividend under section 290.21, 
 95.9   subdivision 4. 
 95.10     Dividends actually paid by a foreign operating corporation 
 95.11  to a corporate shareholder which is a member of the same unitary 
 95.12  business as the foreign operating corporation shall be 
 95.13  eliminated from the net income of the unitary business in 
 95.14  preparing a combined report for the unitary business.  The 
 95.15  adjusted net income of a foreign operating corporation shall be 
 95.16  its net income adjusted as follows: 
 95.17     (1) any taxes paid or accrued to a foreign country, the 
 95.18  commonwealth of Puerto Rico, or a United States possession or 
 95.19  political subdivision of any of the foregoing shall be a 
 95.20  deduction; and 
 95.21     (2) the subtraction from federal taxable income for 
 95.22  payments received from foreign corporations or foreign operating 
 95.23  corporations under section 290.01, subdivision 19d, clause (10), 
 95.24  shall not be allowed. 
 95.25     If a foreign operating corporation incurs a net loss, 
 95.26  neither income nor deduction from that corporation shall be 
 95.27  included in determining the net income of the unitary business. 
 95.28     (h) For purposes of determining the net income of a unitary 
 95.29  business and the factors to be used in the apportionment of net 
 95.30  income pursuant to section 290.191 or 290.20, there must be 
 95.31  included only the income and apportionment factors of domestic 
 95.32  corporations or other domestic entities other than foreign 
 95.33  operating corporations that are determined to be part of the 
 95.34  unitary business pursuant to this subdivision, notwithstanding 
 95.35  that foreign corporations or other foreign entities might be 
 95.36  included in the unitary business.  
 96.1      (i) Deductions for expenses, interest, or taxes otherwise 
 96.2   allowable under this chapter that are connected with or 
 96.3   allocable against dividends, deemed dividends described in 
 96.4   paragraph (g), or royalties, fees, or other like income 
 96.5   described in section 290.01, subdivision 19d, clause (10), shall 
 96.6   not be disallowed. 
 96.7      (j) Each corporation or other entity, except a sole 
 96.8   proprietorship, that is part of a unitary business must file 
 96.9   combined reports as the commissioner determines.  On the 
 96.10  reports, all intercompany transactions between entities included 
 96.11  pursuant to paragraph (h) must be eliminated and the entire net 
 96.12  income of the unitary business determined in accordance with 
 96.13  this subdivision is apportioned among the entities by using each 
 96.14  entity's Minnesota factors for apportionment purposes in the 
 96.15  numerators of the apportionment formula and the total factors 
 96.16  for apportionment purposes of all entities included pursuant to 
 96.17  paragraph (h) in the denominators of the apportionment formula. 
 96.18     (k) If a corporation has been divested from a unitary 
 96.19  business and is included in a combined report for a fractional 
 96.20  part of the common accounting period of the combined report:  
 96.21     (1) its income includable in the combined report is its 
 96.22  income incurred for that part of the year determined by 
 96.23  proration or separate accounting; and 
 96.24     (2) its sales, property, and payroll included in the 
 96.25  apportionment formula must be prorated or accounted for 
 96.26  separately. 
 96.27     [EFFECTIVE DATE.] This section is effective for taxable 
 96.28  years beginning after December 31, 2002. 
 96.29     Sec. 10.  Minnesota Statutes 2002, section 290.191, 
 96.30  subdivision 1, is amended to read: 
 96.31     Subdivision 1.  [GENERAL RULE.] (a) Except as otherwise 
 96.32  provided in section 290.17, subdivision 5, the net income from a 
 96.33  trade or business carried on partly within and partly without 
 96.34  this state must be apportioned to this state as provided in this 
 96.35  section.  To the extent that an entity is exempt from taxation 
 96.36  under this chapter as provided in section 290.05, the 
 97.1   apportionment factors associated with the entity's exempt 
 97.2   activities are excluded from the apportionment formula under 
 97.3   this section. 
 97.4      (b) For purposes of this section, "state" means a state of 
 97.5   the United States, the District of Columbia, the commonwealth of 
 97.6   Puerto Rico, or any territory or possession of the United States 
 97.7   or any foreign country. 
 97.8      [EFFECTIVE DATE.] This section is effective for taxable 
 97.9   years beginning after December 31, 2002. 
 97.10     Sec. 11.  Minnesota Statutes 2002, section 297A.68, 
 97.11  subdivision 4, is amended to read: 
 97.12     Subd. 4.  [TACONITE, OTHER ORES, METALS, OR MINERALS; 
 97.13  PRODUCTION MATERIALS.] Mill liners, grinding rods, and grinding 
 97.14  balls that are substantially consumed in the production of 
 97.15  taconite or other ores, metals, or minerals are exempt when sold 
 97.16  to or stored, used, or consumed by persons taxed under the 
 97.17  in-lieu provisions of chapter 298.  
 97.18     [EFFECTIVE DATE.] This section is effective for sales and 
 97.19  purchases made after June 30, 2005. 
 97.20     Sec. 12.  Minnesota Statutes 2002, section 297A.71, is 
 97.21  amended by adding a subdivision to read: 
 97.22     Subd. 32.  [CONSTRUCTION MATERIALS AND EQUIPMENT; 
 97.23  NONFERROUS METALS AND MINERALS FACILITY.] Materials and supplies 
 97.24  used or consumed in, and equipment incorporated into, the 
 97.25  improvement or construction of an existing taconite ore 
 97.26  processing facility to extract and refine nonferrous ores, 
 97.27  metals, and minerals, including the construction or improvement 
 97.28  of a hydrometallurgical processing facility, are exempt.  This 
 97.29  exemption includes any delivery or installation charges relating 
 97.30  to materials, supplies, and equipment exempt under this section. 
 97.31     [EFFECTIVE DATE.] This section is effective for sales and 
 97.32  purchases made after June 30, 2005, and before July 1, 2012. 
 97.33     Sec. 13.  Minnesota Statutes 2002, section 298.001, is 
 97.34  amended by adding a subdivision to read: 
 97.35     Subd. 9.  [PRECIOUS MINERALS TAX RELIEF AREA.] The 
 97.36  "precious minerals tax relief area" means the area of the 
 98.1   following independent school districts: 
 98.2      (1) No. 166, Cook County; 
 98.3      (2) No. 316, Coleraine; 
 98.4      (3) No. 318, Grand Rapids; 
 98.5      (4) No. 319, Nashwauk-Keewatin; 
 98.6      (5) No. 381, Lake Superior; 
 98.7      (6) No. 695, Chisholm; 
 98.8      (7) No. 696, Ely; 
 98.9      (8) No. 701, Hibbing; 
 98.10     (9) No. 706, Virginia; 
 98.11     (10) No. 712, Mountain Iron-Buhl; 
 98.12     (11) No. 2711, Mesabi East; 
 98.13     (12) No. 2142, St. Louis County; and 
 98.14     (13) No. 2154, Eveleth-Gilbert. 
 98.15     Sec. 14.  Minnesota Statutes 2002, section 298.01, 
 98.16  subdivision 3, is amended to read: 
 98.17     Subd. 3.  [OCCUPATION TAX; OTHER ORES.] Every person 
 98.18  engaged in the business of mining, refining, or producing ores, 
 98.19  metals, or minerals in this state, except iron ore or taconite 
 98.20  concentrates, shall pay an occupation tax to the state of 
 98.21  Minnesota as provided in this subdivision.  For purposes of this 
 98.22  subdivision, mining includes the application of 
 98.23  hydrometallurgical processes.  The tax is determined in the same 
 98.24  manner as the tax imposed by section 290.02, except that 
 98.25  sections 290.05, subdivision 1, clause (a), 290.0921, and 
 98.26  290.17, subdivision 4, do not apply and the rate of taxation is 
 98.27  1.8 percent.  Except as provided in section 290.05, subdivision 
 98.28  1, paragraph (a), the tax is in addition to all other taxes. 
 98.29     [EFFECTIVE DATE.] This section is effective for taxable 
 98.30  years beginning after December 31, 2002. 
 98.31     Sec. 15.  Minnesota Statutes 2002, section 298.01, 
 98.32  subdivision 3a, is amended to read: 
 98.33     Subd. 3a.  [GROSS INCOME.] (a) For purposes of determining 
 98.34  a person's taxable income under subdivision 3, gross income is 
 98.35  determined by the amount of gross proceeds from mining in this 
 98.36  state under section 298.016 and includes any gain or loss 
 99.1   recognized from the sale or disposition of assets used in the 
 99.2   business in this state. 
 99.3      (b) In applying section 290.191, subdivision 5, transfers 
 99.4   of ores, metals, or minerals that are subject to this chapter 
 99.5   are deemed to be sales outside this state if the ores, metals, 
 99.6   or minerals are transported out of this state after the ores 
 99.7   have been converted to a commercially marketable quality. 
 99.8      [EFFECTIVE DATE.] This section is effective for taxable 
 99.9   years beginning after December 31, 2002. 
 99.10     Sec. 16.  Minnesota Statutes 2002, section 298.015, is 
 99.11  amended to read: 
 99.12     298.015 [NET PROCEEDS TAX ON MINING.] 
 99.13     Subdivision 1.  [TAX IMPOSED.] A person engaged in the 
 99.14  business of mining shall pay to the state of Minnesota for 
 99.15  distribution as provided in section 298.018 a net proceeds tax 
 99.16  equal to two four percent of the net proceeds from mining in 
 99.17  Minnesota.  The tax applies to all mineral and energy resources 
 99.18  ores, metals, and minerals mined or, extracted, or produced 
 99.19  within the state of Minnesota except for sand, silica sand, 
 99.20  gravel, building stone, crushed rock, limestone, granite, 
 99.21  dimension granite, dimension stone, horticultural peat, clay, 
 99.22  soil, iron ore, and taconite concentrates.  The tax is in 
 99.23  addition to all other taxes provided for by law.  
 99.24     Subd. 2.  [NET PROCEEDS.] For purposes of this section, the 
 99.25  term "net proceeds" means the gross proceeds from mining, as 
 99.26  defined in section 298.016, less the same deductions allowed in 
 99.27  section 298.017 for purposes of determining taxable income under 
 99.28  section 298.01.  No other credits or deductions shall apply to 
 99.29  this tax except for those provided in section 298.017.  
 99.30     [EFFECTIVE DATE.] This section is effective for taxes 
 99.31  payable in 2004 and thereafter. 
 99.32     Sec. 17.  Minnesota Statutes 2002, section 298.016, 
 99.33  subdivision 1, is amended to read: 
 99.34     Subdivision 1.  [COMPUTATION; ARM'S-LENGTH TRANSACTIONS.] 
 99.35  When a an ore, metal or mineral product is sold by the producer 
 99.36  in an arm's-length transaction, the gross proceeds are equal to 
100.1   the proceeds from the sale of the product.  This subdivision 
100.2   applies to sales realized on all metal ores, metals, or mineral 
100.3   products minerals produced from mining, including reduction, 
100.4   beneficiation, refining, or any treatment used by a producer to 
100.5   obtain a metal or mineral product which is commercially 
100.6   marketable.  
100.7      Sec. 18.  Minnesota Statutes 2002, section 298.016, 
100.8   subdivision 2, is amended to read: 
100.9      Subd. 2.  [OTHER TRANSACTIONS.] When a an ore, metal, or 
100.10  mineral product is used by the producer or disposed of in a 
100.11  non-arm's-length transaction, the gross proceeds must be 
100.12  determined using the alternative computation in subdivision 3.  
100.13  Transactions subject to this subdivision include, but are not 
100.14  limited to, shipments to a wholly owned smelter, transactions 
100.15  with associated or affiliated companies, and any other 
100.16  transactions which are not at arm's length. 
100.17     Sec. 19.  Minnesota Statutes 2002, section 298.016, 
100.18  subdivision 4, is amended to read: 
100.19     Subd. 4.  [DEFINITIONS.] For the purposes of sections 
100.20  298.015 and 298.017, the terms defined in this subdivision have 
100.21  the meaning given them unless the context clearly indicates 
100.22  otherwise.  
100.23     (a) "Ore, metal, or mineral products" means all 
100.24  those mineral and energy resources ores, metals, and minerals 
100.25  subject to the tax provided in section 298.015. 
100.26     (b) "Exploration" means activities designed and engaged in 
100.27  to ascertain the existence, location, extent, or quality of any 
100.28  deposit of metal or mineral products prior to the development of 
100.29  a mining site.  
100.30     (c) "Development" means activities designed and engaged in 
100.31  to prepare or develop a potential mining site for mining after 
100.32  the existence of metal or mineral products in commercially 
100.33  marketable quantities has been disclosed including, but not 
100.34  limited to, the clearing of forestation, the building of roads, 
100.35  removal of overburden, or the sinking of shafts.  
100.36     (d) "Research" means activities designed and engaged in to 
101.1   create new or improved methods of mining, producing, processing, 
101.2   beneficiating, smelting, or refining metal or mineral products.  
101.3      Sec. 20.  Minnesota Statutes 2002, section 298.018, is 
101.4   amended to read: 
101.5      298.018 [DISTRIBUTION OF PROCEEDS.] 
101.6      Subdivision 1.  [WITHIN TACONITE PRECIOUS MINERALS TAX 
101.7   RELIEF AREA.] The proceeds of the tax paid under sections 
101.8   298.015 to 298.017 on ores, metals, and minerals and energy 
101.9   resources mined or extracted within the taconite precious 
101.10  minerals tax relief area defined in section 273.134, paragraph 
101.11  (b), shall be allocated as follows: 
101.12     (1) five percent to the city or town within which the ores, 
101.13  metals, or minerals or energy resources are mined or extracted; 
101.14     (2) ten percent to the taconite municipal aid account to be 
101.15  distributed as provided in section 298.282 to qualifying 
101.16  municipalities, as defined in section 298.282 and located in the 
101.17  precious mineral tax relief area; 
101.18     (3) ten percent to the school district within which the 
101.19  ores, metals, or minerals or energy resources are mined or 
101.20  extracted; 
101.21     (4) 20 30 percent to a group of school districts comprised 
101.22  of those school districts wherein the mineral or energy resource 
101.23  was mined or extracted or in which there is a qualifying 
101.24  municipality as defined by section 273.134, paragraph (b), in 
101.25  direct proportion to school district indexes as follows:  for 
101.26  each school district, its pupil units determined under section 
101.27  126C.05 for the prior school year shall be multiplied by the 
101.28  ratio of the average adjusted net tax capacity per pupil unit 
101.29  for school districts receiving aid under this clause as 
101.30  calculated pursuant to chapters 122A, 126C, and 127A for the 
101.31  school year ending prior to distribution to the adjusted net tax 
101.32  capacity per pupil unit of the district.  Each district shall 
101.33  receive that portion of the distribution which its index bears 
101.34  to the sum of the indices for all school districts that receive 
101.35  the distributions the state general fund to represent the 
101.36  portion of the tax that is in lieu of the state general tax 
102.1   under section 275.025; 
102.2      (5) 20 percent to the county within which the ores, metals, 
102.3   or minerals or energy resources are mined or extracted; 
102.4      (6) 20 percent to St. Louis county acting as the counties' 
102.5   fiscal agent to be distributed as provided in sections 273.134 
102.6   to 273.136; 
102.7      (7) five percent to the iron range resources and 
102.8   rehabilitation board for the purposes of section 298.22; 
102.9      (8) five (7) ten percent to the northeast Minnesota Douglas 
102.10  J. Johnson economic protection trust fund; and 
102.11     (9) five (8) ten percent to the taconite environmental 
102.12  protection fund. 
102.13     The proceeds of the tax shall be distributed on July 15 
102.14  each year.  
102.15     Subd. 2.  [OUTSIDE TACONITE PRECIOUS MINERALS TAX RELIEF 
102.16  AREA.] The proceeds of the tax paid under sections 298.015 to 
102.17  298.017 on ores, metals, or minerals and energy resources mined 
102.18  or extracted outside of the taconite precious minerals tax 
102.19  relief area defined in section 273.134, paragraph (b), shall be 
102.20  deposited in the general fund. 
102.21     Subd. 3.  [SEGREGATION OF FUNDS.] The proceeds of the tax 
102.22  allocated under subdivision 1, clauses (2), (6), (7), and (8), 
102.23  including any investment earnings on them, must be segregated 
102.24  and separately accounted for in the respective funds or accounts 
102.25  to which they are allocated.  These amounts must only be 
102.26  distributed to municipalities within the precious minerals tax 
102.27  relief area or used for projects located in the precious 
102.28  minerals tax relief area. 
102.29     [EFFECTIVE DATE.] This section is effective for 
102.30  distribution of net proceeds tax revenues made after July 1, 
102.31  2003. 
102.32     Sec. 21.  [298.021] [ROYALTY TAX.] 
102.33     In addition to any other taxes imposed by law, a tax is 
102.34  imposed on a royalty, as defined in section 290.923, subdivision 
102.35  1, paid on ore, other than iron ore, taconite, iron sulphides, 
102.36  or semitaconite.  The tax equals 12 percent of the amount of the 
103.1   royalty paid.  The person paying the royalty shall withhold the 
103.2   tax from the payment and remit the payment to the commissioner 
103.3   at the times and under the procedures provided under section 
103.4   290.923.  The commissioner shall deposit proceeds in the general 
103.5   fund and allocate the proceeds as provided under section 
103.6   298.018, subdivision 1. 
103.7      [EFFECTIVE DATE.] This section is effective for royalties 
103.8   paid after June 30, 2003. 
103.9      Sec. 22.  Minnesota Statutes 2002, section 298.2211, 
103.10  subdivision 1, is amended to read: 
103.11     Subdivision 1.  [PURPOSE; GRANT OF AUTHORITY.] In order to 
103.12  accomplish the legislative purposes specified in sections 
103.13  469.142 to 469.165 and chapter 462C, within tax relief areas as 
103.14  defined in section 273.134, the commissioner of iron range 
103.15  resources and rehabilitation may exercise the following powers:  
103.16  (1) all powers conferred upon a rural development financing 
103.17  authority under sections 469.142 to 469.149; (2) all powers 
103.18  conferred upon a city under chapter 462C; (3) all powers 
103.19  conferred upon a municipality or a redevelopment agency under 
103.20  sections 469.152 to 469.165; (4) all powers provided by sections 
103.21  469.142 to 469.151 to further any of the purposes and objectives 
103.22  of chapter 462C and sections 469.152 to 469.165; and (5) apply 
103.23  for, borrow, receive, and expend grant and loan money made 
103.24  available from federal sources and from federally funded 
103.25  programs; and (6) all powers conferred upon a municipality or an 
103.26  authority under sections 469.174 to 469.177, 469.178, except 
103.27  subdivision 2 thereof, and 469.179, subject to compliance with 
103.28  the provisions of section 469.175, subdivisions 1, 2, and 3; 
103.29  provided that any tax increments derived by the commissioner 
103.30  from the exercise of this authority may be used only to finance 
103.31  or pay premiums or fees for insurance, letters of credit, or 
103.32  other contracts guaranteeing the payment when due of net rentals 
103.33  under a project lease or the payment of principal and interest 
103.34  due on or repurchase of bonds issued to finance a project or 
103.35  program, to accumulate and maintain reserves securing the 
103.36  payment when due on bonds issued to finance a project or 
104.1   program, or to provide an interest rate reduction program 
104.2   pursuant to section 469.012, subdivision 7.  Tax increments and 
104.3   earnings thereon remaining in any bond reserve account after 
104.4   payment or discharge of any bonds secured thereby shall be used 
104.5   within one year thereafter in furtherance of this section or 
104.6   returned to the county auditor of the county in which the tax 
104.7   increment financing district is located.  If returned to the 
104.8   county auditor, the county auditor shall immediately allocate 
104.9   the amount among all government units which would have shared 
104.10  therein had the amount been received as part of the other ad 
104.11  valorem taxes on property in the district most recently paid, in 
104.12  the same proportions as other taxes were distributed, and shall 
104.13  immediately distribute it to the government units in accordance 
104.14  with the allocation. 
104.15     [EFFECTIVE DATE.] This section is effective the day 
104.16  following final enactment. 
104.17     Sec. 23.  Minnesota Statutes 2002, section 298.225, 
104.18  subdivision 1, is amended to read: 
104.19     Subdivision 1.  (a) The distribution of the taconite 
104.20  production tax as provided in section 298.28, subdivisions 3 to, 
104.21  4, 5, 6, paragraph (b), 7, and 8, shall equal the lesser of the 
104.22  following amounts:  
104.23     (1) the amount distributed pursuant to this section and 
104.24  section 298.28, with respect to 1983 production if the 
104.25  production for the year prior to the distribution year is no 
104.26  less than 42,000,000 taxable tons.  If the production is less 
104.27  than 42,000,000 taxable tons, the amount of the distributions 
104.28  shall be reduced proportionately at the rate of two percent for 
104.29  each 1,000,000 tons, or part of 1,000,000 tons by which the 
104.30  production is less than 42,000,000 tons; or 
104.31     (2)(i) for the distributions made pursuant to section 
104.32  298.28, subdivisions 4, paragraphs (b) and (c), and 6, paragraph 
104.33  (c), 31.2 percent of the amount distributed pursuant to this 
104.34  section and section 298.28, with respect to 1983 production; 
104.35     (ii) for the distributions made pursuant to section 298.28, 
104.36  subdivision 5, paragraphs (b) and (d), 75 percent of the amount 
105.1   distributed pursuant to this section and section 298.28, with 
105.2   respect to 1983 production.  
105.3      (b) The distribution of the taconite production tax as 
105.4   provided in section 298.28, subdivision 2, shall equal the 
105.5   following amount: 
105.6      (1) if the production for the year prior to the 
105.7   distribution year is at least 42,000,000 taxable tons, the 
105.8   amount distributed pursuant to this section and section 298.28 
105.9   with respect to 1999 production; or 
105.10     (2) if the production for the year prior to the 
105.11  distribution year is less than 42,000,000 taxable tons, the 
105.12  amount distributed pursuant to this section and section 298.28 
105.13  with respect to 1999 production, reduced proportionately at the 
105.14  rate of two percent for each 1,000,000 tons or part of 1,000,000 
105.15  tons by which the production is less than 42,000,000 tons. 
105.16     (c) The distribution of the production tax as provided in 
105.17  section 298.28, subdivision 11, paragraphs (b) and (d), shall be 
105.18  distributed as provided in paragraph (a) of this subdivision 
105.19  except that the base year amount shall be that amount received 
105.20  with respect to 2002 production. 
105.21     [EFFECTIVE DATE.] This section is effective for 
105.22  distributions in 2004 and thereafter.  
105.23     Sec. 24.  Minnesota Statutes 2002, section 298.24, 
105.24  subdivision 1, is amended to read: 
105.25     Subdivision 1.  (a) For concentrate produced in 2001, 2002, 
105.26  and 2003 through 2005, there is imposed upon taconite and iron 
105.27  sulphides, and upon the mining and quarrying thereof, and upon 
105.28  the production of iron ore concentrate therefrom, and upon the 
105.29  concentrate so produced, a tax of $2.103 per gross ton of 
105.30  merchantable iron ore concentrate produced therefrom.  
105.31     (b) For concentrates produced in 2004 2006 and subsequent 
105.32  years, the tax rate shall be equal to the preceding year's tax 
105.33  rate plus an amount equal to the preceding year's tax rate 
105.34  multiplied by the percentage increase in the implicit price 
105.35  deflator from the fourth quarter of the second preceding year to 
105.36  the fourth quarter of the preceding year.  "Implicit price 
106.1   deflator" means the implicit price deflator for the gross 
106.2   domestic product prepared by the bureau of economic analysis of 
106.3   the United States Department of Commerce.  
106.4      (c) On concentrates produced in 1997 and thereafter, an 
106.5   additional tax is imposed equal to three cents per gross ton of 
106.6   merchantable iron ore concentrate for each one percent that the 
106.7   iron content of the product exceeds 72 percent, when dried at 
106.8   212 degrees Fahrenheit. 
106.9      (d) The tax shall be imposed on the average of the 
106.10  production for the current year and the previous two years.  The 
106.11  rate of the tax imposed will be the current year's tax rate.  
106.12  This clause shall not apply in the case of the closing of a 
106.13  taconite facility if the property taxes on the facility would be 
106.14  higher if this clause and section 298.25 were not applicable.  
106.15     (e) If the tax or any part of the tax imposed by this 
106.16  subdivision is held to be unconstitutional, a tax of $2.103 per 
106.17  gross ton of merchantable iron ore concentrate produced shall be 
106.18  imposed.  
106.19     (f) Consistent with the intent of this subdivision to 
106.20  impose a tax based upon the weight of merchantable iron ore 
106.21  concentrate, the commissioner of revenue may indirectly 
106.22  determine the weight of merchantable iron ore concentrate 
106.23  included in fluxed pellets by subtracting the weight of the 
106.24  limestone, dolomite, or olivine derivatives or other basic flux 
106.25  additives included in the pellets from the weight of the 
106.26  pellets.  For purposes of this paragraph, "fluxed pellets" are 
106.27  pellets produced in a process in which limestone, dolomite, 
106.28  olivine, or other basic flux additives are combined with 
106.29  merchantable iron ore concentrate.  No subtraction from the 
106.30  weight of the pellets shall be allowed for binders, mineral and 
106.31  chemical additives other than basic flux additives, or moisture. 
106.32     (g)(1) Notwithstanding any other provision of this 
106.33  subdivision, for the first two years of a plant's commercial 
106.34  production of direct reduced ore, no tax is imposed under this 
106.35  section.  As used in this paragraph, "commercial production" is 
106.36  production of more than 50,000 tons of direct reduced ore per 
107.1   year, and "direct reduced ore" is ore that results in a product 
107.2   that has an iron content of at least 75 percent.  For the third 
107.3   year of a plant's production of direct reduced ore, the rate to 
107.4   be applied to direct reduced ore is 25 percent of the rate 
107.5   otherwise determined under this subdivision.  For the fourth 
107.6   such production year, the rate is 50 percent of the rate 
107.7   otherwise determined under this subdivision; for the fifth such 
107.8   production year, the rate is 75 percent of the rate otherwise 
107.9   determined under this subdivision; and for all subsequent 
107.10  production years, the full rate is imposed. 
107.11     (2) Subject to clause (1), production of direct reduced ore 
107.12  in this state is subject to the tax imposed by this section, but 
107.13  if that production is not produced by a producer of taconite or 
107.14  iron sulfides, the production of taconite or iron sulfides 
107.15  consumed in the production of direct reduced iron in this state 
107.16  is not subject to the tax imposed by this section on taconite or 
107.17  iron sulfides. 
107.18     (3) Notwithstanding any other provision of this 
107.19  subdivision, no tax is imposed under this section for the first 
107.20  two years of noncommercial production of direct reduced ore. 
107.21     Sec. 25.  Minnesota Statutes 2002, section 298.28, 
107.22  subdivision 4, is amended to read: 
107.23     Subd. 4.  [SCHOOL DISTRICTS.] (a) 17.15 cents per taxable 
107.24  ton plus the increase provided in paragraph (d) must be 
107.25  allocated to qualifying school districts to be distributed, 
107.26  based upon the certification of the commissioner of revenue, 
107.27  under paragraphs (b) and (c), except as otherwise provided in 
107.28  paragraph (f). 
107.29     (b) 3.43 cents per taxable ton must be distributed to the 
107.30  school districts in which the lands from which taconite was 
107.31  mined or quarried were located or within which the concentrate 
107.32  was produced.  The distribution must be based on the 
107.33  apportionment formula prescribed in subdivision 2. 
107.34     (c)(i) 13.72 cents per taxable ton, less any amount 
107.35  distributed under paragraph (e), shall be distributed to a group 
107.36  of school districts comprised of those school districts in which 
108.1   the taconite was mined or quarried or the concentrate 
108.2   produced qualify as a tax relief area under section 273.134, 
108.3   paragraph (b), or in which there is a qualifying municipality as 
108.4   defined by section 273.134, paragraph (b) (a), in direct 
108.5   proportion to school district indexes as follows:  for each 
108.6   school district, its pupil units determined under section 
108.7   126C.05 for the prior school year shall be multiplied by the 
108.8   ratio of the average adjusted net tax capacity per pupil unit 
108.9   for school districts receiving aid under this clause as 
108.10  calculated pursuant to chapters 122A, 126C, and 127A for the 
108.11  school year ending prior to distribution to the adjusted net tax 
108.12  capacity per pupil unit of the district.  Each district shall 
108.13  receive that portion of the distribution which its index bears 
108.14  to the sum of the indices for all school districts that receive 
108.15  the distributions.  
108.16     (ii) Notwithstanding clause (i), each school district that 
108.17  receives a distribution under sections 298.018; 298.23 to 
108.18  298.28, exclusive of any amount received under this clause; 
108.19  298.34 to 298.39; 298.391 to 298.396; 298.405; or any law 
108.20  imposing a tax on severed mineral values after reduction for any 
108.21  portion distributed to cities and towns under section 126C.48, 
108.22  subdivision 8, paragraph (5), that is less than the amount of 
108.23  its levy reduction under section 126C.48, subdivision 8, for the 
108.24  second year prior to the year of the distribution shall receive 
108.25  a distribution equal to the difference; the amount necessary to 
108.26  make this payment shall be derived from proportionate reductions 
108.27  in the initial distribution to other school districts under 
108.28  clause (i).  
108.29     (d) Any school district described in paragraph (c) where a 
108.30  levy increase pursuant to section 126C.17, subdivision 9, was 
108.31  authorized by referendum for taxes payable in 2001, shall 
108.32  receive a distribution from a fund that receives a distribution 
108.33  in 1998 of 21.3 cents per ton.  On July 15 of 1999, and each 
108.34  year thereafter, the increase over the amount established for 
108.35  the prior year shall be determined according to the increase in 
108.36  the implicit price deflator as provided in section 298.24, 
109.1   subdivision 1.  Each district shall receive $175 times the pupil 
109.2   units identified in section 126C.05, subdivision 1, enrolled in 
109.3   the second previous year or the 1983-1984 school year, whichever 
109.4   is greater, less the product of 1.8 percent times the district's 
109.5   taxable net tax capacity in the second previous year. 
109.6      If the total amount provided by paragraph (d) is 
109.7   insufficient to make the payments herein required then the 
109.8   entitlement of $175 per pupil unit shall be reduced uniformly so 
109.9   as not to exceed the funds available.  Any amounts received by a 
109.10  qualifying school district in any fiscal year pursuant to 
109.11  paragraph (d) shall not be applied to reduce general education 
109.12  aid which the district receives pursuant to section 126C.13 or 
109.13  the permissible levies of the district.  Any amount remaining 
109.14  after the payments provided in this paragraph shall be paid to 
109.15  the commissioner of iron range resources and rehabilitation who 
109.16  shall deposit the same in the taconite environmental protection 
109.17  fund and the northeast Minnesota economic protection trust fund 
109.18  as provided in subdivision 11. 
109.19     Each district receiving money according to this paragraph 
109.20  shall reserve $25 times the number of pupil units in the 
109.21  district.  It may use the money for early childhood programs or 
109.22  for outcome-based learning programs that enhance the academic 
109.23  quality of the district's curriculum.  The outcome-based 
109.24  learning programs must be approved by the commissioner of 
109.25  children, families, and learning. 
109.26     (e) There shall be distributed to any school district the 
109.27  amount which the school district was entitled to receive under 
109.28  section 298.32 in 1975. 
109.29     (f) Effective for the distribution in 2003 only, five 
109.30  percent of the distributions to school districts under 
109.31  paragraphs (b), (c), and (e); subdivision 6, paragraph (c); 
109.32  subdivision 11; and section 298.225, shall be distributed to the 
109.33  general fund.  The remainder less any portion distributed to 
109.34  cities and towns under section 126C.48, subdivision 8, paragraph 
109.35  (5), shall be distributed to the northeast Minnesota economic 
109.36  protection trust fund created in section 298.292.  Fifty percent 
110.1   of the amount distributed to the northeast Minnesota Douglas J. 
110.2   Johnson economic protection trust fund shall be made available 
110.3   for expenditure under section 298.293 as governed by section 
110.4   298.296.  Effective in 2003 only, 100 percent of the 
110.5   distributions to school districts under section 477A.15 less any 
110.6   portion distributed to cities and towns under section 126C.48, 
110.7   subdivision 8, paragraph (5), shall be distributed to the 
110.8   general fund. 
110.9      [EFFECTIVE DATE.] This section is effective for 
110.10  distributions in 2004 and thereafter.  
110.11     Sec. 26.  Minnesota Statutes 2002, section 298.292, 
110.12  subdivision 2, is amended to read: 
110.13     Subd. 2.  [USE OF MONEY.] Money in the northeast Minnesota 
110.14  economic protection trust fund may be used for the following 
110.15  purposes:  
110.16     (1) to provide loans, loan guarantees, interest buy-downs 
110.17  and other forms of participation with private sources of 
110.18  financing, but a loan to a private enterprise shall be for a 
110.19  principal amount not to exceed one-half of the cost of the 
110.20  project for which financing is sought, and the rate of interest 
110.21  on a loan to a private enterprise shall be no less than the 
110.22  lesser of eight percent or an interest rate three percentage 
110.23  points less than a full faith and credit obligation of the 
110.24  United States government of comparable maturity, at the time 
110.25  that the loan is approved; 
110.26     (2) to fund reserve accounts established to secure the 
110.27  payment when due of the principal of and interest on bonds 
110.28  issued pursuant to section 298.2211; 
110.29     (3) to pay in periodic payments or in a lump sum payment 
110.30  any or all of the interest on bonds issued pursuant to chapter 
110.31  474 for the purpose of constructing, converting, or retrofitting 
110.32  heating facilities in connection with district heating systems 
110.33  or systems utilizing alternative energy sources; and 
110.34     (4) to invest in a venture capital fund or enterprise that 
110.35  will provide capital to other entities that are engaging in, or 
110.36  that will engage in, projects or programs that have the purposes 
111.1   set forth in subdivision 1.  No investments may be made in a 
111.2   venture capital fund or enterprise unless at least two other 
111.3   unrelated investors make investments of at least $500,000 in the 
111.4   venture capital fund or enterprise, and the investment by the 
111.5   northeast Minnesota economic protection trust fund may not 
111.6   exceed the amount of the largest investment by an unrelated 
111.7   investor in the venture capital fund or enterprise.  For 
111.8   purposes of this subdivision, an "unrelated investor" is a 
111.9   person or entity that is not related to the entity in which the 
111.10  investment is made or to any individual who owns more than 40 
111.11  percent of the value of the entity, in any of the following 
111.12  relationships:  spouse, parent, child, sibling, employee, or 
111.13  owner of an interest in the entity that exceeds ten percent of 
111.14  the value of all interests in it.  For purposes of determining 
111.15  the limitations under this clause, the amount of investments 
111.16  made by an investor other than the northeast Minnesota economic 
111.17  protection trust fund is the sum of all investments made in the 
111.18  venture capital fund or enterprise during the period beginning 
111.19  one year before the date of the investment by the northeast 
111.20  Minnesota economic protection trust fund.  
111.21     Money from the trust fund shall be expended only in or for 
111.22  the benefit of the tax relief area defined in section 273.134, 
111.23  paragraph (b). 
111.24     [EFFECTIVE DATE.] This section is effective for loans 
111.25  executed on or after the day following final enactment. 
111.26     Sec. 27.  Minnesota Statutes 2002, section 298.296, 
111.27  subdivision 4, is amended to read: 
111.28     Subd. 4.  [TEMPORARY LOAN AUTHORITY.] (a) The board may 
111.29  recommend that up to $7,500,000 from the corpus of the trust may 
111.30  be used for loans, loan guarantees, grants, or equity 
111.31  investments as provided in this subdivision.  The money would be 
111.32  available for loans for construction and equipping of facilities 
111.33  constituting (1) a value added iron products plant, which may be 
111.34  either a new plant or a facility incorporated into an existing 
111.35  plant that produces iron upgraded to a minimum of 75 percent 
111.36  iron content or any iron alloy with a total minimum metallic 
112.1   content of 90 percent; or (2) a new mine or minerals processing 
112.2   plant for any mineral subject to the net proceeds tax imposed 
112.3   under section 298.015.  A loan or loan guarantee under this 
112.4   paragraph may not exceed $5,000,000 for any facility.  
112.5      (b) Additionally, the board must reserve the first 
112.6   $2,000,000 of the net interest, dividends, and earnings arising 
112.7   from the investment of the trust after June 30, 1996, to be used 
112.8   for additional grants, loans, loan guarantees, or equity 
112.9   investments for the purposes set forth in paragraph (a).  This 
112.10  amount must be reserved until it is used for the grants as 
112.11  described in this subdivision. 
112.12     (c) Additionally, the board may recommend that up to 
112.13  $5,500,000 from the corpus of the trust may be used for 
112.14  additional grants, loans, loan guarantees, or equity investments 
112.15  for the purposes set forth in paragraph (a). 
112.16     (d) The board may require that it receive an equity 
112.17  percentage in any project to which it contributes under this 
112.18  section. 
112.19     [EFFECTIVE DATE.] This section is effective the day 
112.20  following final enactment. 
112.21     Sec. 28.  Minnesota Statutes 2002, section 298.2961, is 
112.22  amended by adding a subdivision to read: 
112.23     Subd. 3.  [REDISTRIBUTION.] (a) If a taconite production 
112.24  facility is sold after operations at the facility had ceased, 
112.25  any money remaining in the taconite environmental fund for the 
112.26  former producer may be released to the purchaser of the facility 
112.27  on the terms otherwise applicable to the former producer under 
112.28  this section. 
112.29     (b) Any portion of the taconite environmental fund that is 
112.30  not released by the commissioner within two years of its deposit 
112.31  in the taconite environmental fund shall be divided between the 
112.32  taconite environmental protection fund created in section 
112.33  298.223 and the Douglas J. Johnson economic protection trust 
112.34  fund created in section 298.292 for placement in their 
112.35  respective special accounts.  Two-thirds of the unreleased funds 
112.36  must be distributed to the taconite environmental protection 
113.1   fund and one-third to the Douglas J. Johnson economic protection 
113.2   trust fund. 
113.3      [EFFECTIVE DATE.] This section is effective the day 
113.4   following final enactment. 
113.5      Sec. 29.  [REPEALER.] 
113.6      (a) Minnesota Statutes 2002, section 298.01, subdivisions 
113.7   3c and 3d, are repealed effective for taxable years beginning 
113.8   after December 31, 2002. 
113.9      (b) Minnesota Statutes 2002, section 298.017, is repealed 
113.10  effective for taxes payable in 2004 and thereafter. 
113.11     (c) Minnesota Statutes 2002, section 298.24, subdivision 3, 
113.12  is repealed effective the day following final enactment. 
113.13                             ARTICLE 7 
113.14                         GENERAL EDUCATION 
113.15     Section 1.  Minnesota Statutes 2002, section 84A.51, 
113.16  subdivision 4, is amended to read: 
113.17     Subd. 4.  [COUNTY'S USE OF FUNDS.] The funds received by 
113.18  each county must be apportioned by the county auditor as follows:
113.19     (1) 30 percent to a county development fund, which is 
113.20  created, to be spent under the direction of the county board for 
113.21  the rehabilitation and development of the portion of the county 
113.22  within the conservation area; 
113.23     (2) 40 percent to the capital outlay general fund of the 
113.24  school district from which derived; 
113.25     (3) 20 percent to the county revenue fund; and 
113.26     (4) ten percent to the township road and bridge fund of the 
113.27  township from which derived. 
113.28     If the proceeds are derived from an unorganized township 
113.29  with no levy for road and bridge purposes, the township portion 
113.30  must be credited to the county revenue fund. 
113.31     Sec. 2.  Minnesota Statutes 2002, section 123B.75, 
113.32  subdivision 5, is amended to read: 
113.33     Subd. 5.  [LEVY RECOGNITION.] (a) "School district tax 
113.34  settlement revenue" means the current, delinquent, and 
113.35  manufactured home property tax receipts collected by the county 
113.36  and distributed to the school district. 
114.1      (b) In June of 2001, the school district must recognize as 
114.2   revenue, in the fund for which the levy was made, the lesser of: 
114.3      (1) the sum of May, June, and July school district tax 
114.4   settlement revenue received in that calendar year plus general 
114.5   education aid according to section 126C.13, subdivision 4, 
114.6   received in July and August of that calendar year; or 
114.7      (2) the sum of: 
114.8      (i) 31 percent of the referendum levy certified in the 
114.9   prior calendar year according to section 126C.17, subdivision 9; 
114.10  plus 
114.11     (ii) the entire amount of the levy certified in the prior 
114.12  calendar year according to sections 124D.86, subdivision 4, for 
114.13  school districts receiving revenue under 124D.86, subdivision 3, 
114.14  clauses (1), (2), and (3); 126C.41, subdivisions 1, 2, and 3, 
114.15  paragraphs (4), (5), and (6); 126C.43, subdivision 2; and 
114.16  126C.48, subdivision 6.  
114.17     (c) For fiscal year 2002 and later years, In June of each 
114.18  year 2003, the school district must recognize as revenue, in the 
114.19  fund for which the levy was made, the lesser of: 
114.20     (1) the sum of May, June, and July school district tax 
114.21  settlement revenue received in that calendar year, plus general 
114.22  education aid according to section 126C.13, subdivision 4, 
114.23  received in July and August of that calendar year; or 
114.24     (2) the sum of: 
114.25     (i) 31 percent of the referendum levy certified according 
114.26  to section 126C.17, in calendar year 2000; plus 
114.27     (ii) the entire amount of the levy certified in the prior 
114.28  calendar year according to section 124D.86, subdivision 4, for 
114.29  school districts receiving revenue under sections 124D.86, 
114.30  subdivision 3, clauses (1), (2), and (3); 126C.41, subdivisions 
114.31  1, 2, and 3, paragraphs (4) (b), (5) (c), and (6) (d); 
114.32  126C.43, subdivision 2; 126C.457; and 126C.48, subdivision 6. 
114.33     (c) For fiscal year 2004 and later years, in June of each 
114.34  year, the school district must recognize as revenue, in the fund 
114.35  for which the levy was made, the lesser of: 
114.36     (1) the sum of May, June, and July school district tax 
115.1   settlement revenue received in that calendar year, plus general 
115.2   education aid according to section 126C.13, subdivision 4, 
115.3   received in July and August of that calendar year; or 
115.4      (2) the sum of: 
115.5      (i) the greater of 50 percent of the referendum levy 
115.6   certified according to section 126C.17, in the prior calendar 
115.7   year or 31 percent of the referendum levy certified according to 
115.8   section 126C.17, in calendar year 2000; plus 
115.9      (ii) the entire amount of the levy certified in the prior 
115.10  calendar year according to section 124D.86, subdivision 4, for 
115.11  school districts receiving revenue under sections 124D.86, 
115.12  subdivision 3, clauses (1), (2), and (3); 126C.41, subdivisions 
115.13  1, 2, and 3, paragraphs (b), (c), and (d); 126C.43, subdivision 
115.14  2; 126C.457; and 126C.48, subdivision 6; plus 
115.15     (iii) 50 percent of the amount of the levy certified in the 
115.16  prior calendar year for the school district's general and 
115.17  community service funds, plus or minus auditor's adjustments, 
115.18  not including levy portions that are assumed by the state, that 
115.19  remains after subtracting the referendum levy certified 
115.20  according to section 126C.17 and the amount recognized according 
115.21  to clause (ii). 
115.22     Sec. 3.  Minnesota Statutes 2002, section 124D.11, 
115.23  subdivision 9, is amended to read: 
115.24     Subd. 9.  [PAYMENT OF AIDS TO CHARTER SCHOOLS.] (a) 
115.25  Notwithstanding section 127A.45, subdivision 3, aid payments for 
115.26  the current fiscal year to a charter school not in its first 
115.27  year of operation shall be of an equal amount on each of the 23 
115.28  payment dates.  A charter school in its first year of operation 
115.29  shall receive, on its first payment date, ten percent of its 
115.30  cumulative amount guaranteed for the year and 22 payments of an 
115.31  equal amount thereafter the sum of which shall be 90 percent of 
115.32  the cumulative amount guaranteed. 
115.33     (b) Notwithstanding paragraph (a), for a charter school 
115.34  ceasing operation prior to the end of a school year, 83 80 
115.35  percent of the amount due for the school year may be paid to the 
115.36  school after audit of prior fiscal year and current fiscal year 
116.1   pupil counts. 
116.2      (c) Notwithstanding section 127A.45, subdivision 3, and 
116.3   paragraph (a), 83 80 percent of the start-up cost aid under 
116.4   subdivision 8 shall be paid within 45 days after the first day 
116.5   of student attendance for that school year. 
116.6      (d) In order to receive state aid payments under this 
116.7   subdivision, a charter school in its first three years of 
116.8   operation must submit a quarterly report to the department of 
116.9   children, families, and learning.  The report must list each 
116.10  student by grade, show the student's start and end dates, if 
116.11  any, with the charter school, and for any student participating 
116.12  in a learning year program, the report must list the hours and 
116.13  times of learning year activities.  The report must be submitted 
116.14  not more than two weeks after the end of the calendar quarter to 
116.15  the department.  The department must develop a Web-based 
116.16  reporting form for charter schools to use when submitting 
116.17  enrollment reports.  A charter school in its fourth and 
116.18  subsequent year of operation must submit enrollment information 
116.19  to the department in the form and manner requested by the 
116.20  department. 
116.21     [EFFECTIVE DATE.] This section is effective for revenue for 
116.22  fiscal year 2004. 
116.23     Sec. 4.  Minnesota Statutes 2002, section 124D.128, 
116.24  subdivision 2, is amended to read: 
116.25     Subd. 2.  [COMMISSIONER DESIGNATION.] (a) An area learning 
116.26  center designated by the state must be a site.  To be 
116.27  designated, a district or center must demonstrate to the 
116.28  commissioner that it will: 
116.29     (1) provide a program of instruction that permits pupils to 
116.30  receive instruction throughout the entire year; and. 
116.31     (2) maintain a record system that, for purposes of section 
116.32  126C.05, permits identification of membership attributable to 
116.33  pupils participating in the program.  The record system and 
116.34  identification must ensure that the program will not have the 
116.35  effect of increasing the total number of pupil units 
116.36  attributable to an individual pupil as a result of a learning 
117.1   year program.  The record system must include the date the pupil 
117.2   originally enrolled in a learning year program, the pupil's 
117.3   grade level, the date of each grade promotion, the average daily 
117.4   membership generated in each grade level, the number of credits 
117.5   or standards earned, and the number needed to graduate. 
117.6      (b) A student who has not completed a school district's 
117.7   graduation requirements may continue to enroll in courses the 
117.8   student must complete in order to graduate until the student 
117.9   satisfies the district's graduation requirements or the student 
117.10  is 21 years old, whichever comes first. 
117.11     Sec. 5.  Minnesota Statutes 2002, section 124D.52, 
117.12  subdivision 3, is amended to read: 
117.13     Subd. 3.  [ACCOUNTS; REVENUE; AID.] (a) Each district, 
117.14  group of districts, or private nonprofit organization providing 
117.15  adult basic education programs must establish and maintain 
117.16  accounts separate from all other district accounts a reserve 
117.17  account within the community service fund for the receipt and 
117.18  disbursement of all funds related to these programs.  All 
117.19  revenue received pursuant to this section must be utilized 
117.20  solely for the purposes of adult basic education programs.  
117.21  State aid must not equal more than 100 percent of the 
117.22  unreimbursed expenses of providing these programs, excluding 
117.23  in-kind costs.  
117.24     (b) Notwithstanding section 123A.26 or any other law to the 
117.25  contrary, an adult basic education consortium providing an 
117.26  approved adult basic education program may be its own fiscal 
117.27  agent and is eligible to receive state-aid payments directly 
117.28  from the commissioner. 
117.29     Sec. 6.  Minnesota Statutes 2002, section 124D.59, 
117.30  subdivision 2, is amended to read: 
117.31     Subd. 2.  [PUPIL OF LIMITED ENGLISH PROFICIENCY.] 
117.32  (a) "Pupil of limited English proficiency" means a pupil in 
117.33  kindergarten through grade 12 who meets the following 
117.34  requirements: 
117.35     (1) the pupil in kindergarten through grade 12, as declared 
117.36  by a parent or guardian first learned a language other than 
118.1   English, comes from a home where the language usually spoken is 
118.2   other than English, or usually speaks a language other than 
118.3   English; and 
118.4      (2) for a pupil in kindergarten through grade 2, the pupil 
118.5   is determined by developmentally appropriate measures, which 
118.6   might include observations, teacher judgment, parent 
118.7   recommendations, or developmentally appropriate assessment 
118.8   instruments, to lack the necessary English skills to participate 
118.9   fully in classes taught in English; or. 
118.10     (3) the (b) Notwithstanding paragraph (a), a pupil in 
118.11  grades 3 4 through 12 scores who was enrolled in a Minnesota 
118.12  public school on the dates during the previous school year when 
118.13  a commissioner provided assessment that measures the pupil's 
118.14  emerging academic English was administered, shall not be counted 
118.15  as a pupil of limited English proficiency in calculating limited 
118.16  English proficiency pupil units under section 126C.05, 
118.17  subdivision 17, and shall not generate state limited English 
118.18  proficiency aid under section 124D.65, subdivision 5, unless the 
118.19  pupil scored below the state cutoff score on an assessment 
118.20  measuring emerging academic English provided by the commissioner 
118.21  during the previous school year. 
118.22     Sec. 7.  Minnesota Statutes 2002, section 124D.65, 
118.23  subdivision 5, is amended to read: 
118.24     Subd. 5.  [SCHOOL DISTRICT LEP REVENUE.] (a) A school 
118.25  district's limited English proficiency programs revenue for 
118.26  fiscal year 2000 equals the state total limited English 
118.27  proficiency programs revenue, minus the amount determined under 
118.28  paragraph (b), times the ratio of the district's adjusted 
118.29  limited English proficiency programs base revenue to the state 
118.30  total adjusted limited English proficiency programs base revenue.
118.31     (b) Notwithstanding paragraph (a), if the limited English 
118.32  proficiency programs base revenue for a district equals zero, 
118.33  the limited English proficiency programs revenue equals the sum 
118.34  of the following amounts, computed using current year data: 
118.35     (1) 68 percent of the salary of one full-time equivalent 
118.36  teacher for each 40 pupils of limited English proficiency 
119.1   enrolled, or 68 percent of the salary of one-half of a full-time 
119.2   teacher in a district with 20 or fewer pupils of limited English 
119.3   proficiency enrolled; and 
119.4      (2) for supplies and equipment purchased or rented for use 
119.5   in the instruction of pupils of limited English proficiency an 
119.6   amount equal to 47 percent of the sum actually spent by the 
119.7   district but not to exceed an average of $47 in any one school 
119.8   year for each pupil of limited English proficiency receiving 
119.9   instruction. 
119.10     (c) A district's limited English proficiency programs 
119.11  revenue for fiscal year 2001 and later equals the product of 
119.12  $584 times the greater of 20 or the number of adjusted marginal 
119.13  cost pupils of limited English proficiency enrolled in the 
119.14  district during the current fiscal year. 
119.15     (d) (b) A pupil ceases to generate state limited English 
119.16  proficiency aid in the school year following the school year in 
119.17  which the pupil attains the state cutoff score on a 
119.18  commissioner-provided assessment that measures the pupil's 
119.19  emerging academic English. 
119.20     Sec. 8.  Minnesota Statutes 2002, section 126C.05, 
119.21  subdivision 16, is amended to read: 
119.22     Subd. 16.  [FREE AND REDUCED PRICED LUNCHES.] The 
119.23  commissioner shall determine the number of children eligible to 
119.24  receive either a free or reduced priced lunch on October 1 each 
119.25  year.  Children enrolled in a building on October 1 and 
119.26  determined to be eligible to receive free or reduced price lunch 
119.27  by January December 15 of the following that year shall be 
119.28  counted as eligible on October 1 for purposes of subdivision 3.  
119.29  The commissioner may use federal definitions for these purposes 
119.30  and may adjust these definitions as appropriate.  The 
119.31  commissioner may adopt reporting guidelines to assure accuracy 
119.32  of data counts and eligibility.  Districts shall use any 
119.33  guidelines adopted by the commissioner. 
119.34     Sec. 9.  Minnesota Statutes 2002, section 126C.10, 
119.35  subdivision 4, is amended to read: 
119.36     Subd. 4.  [BASIC SKILLS REVENUE.] (a) For fiscal year 2002, 
120.1   a school district's basic skills revenue equals the sum of: 
120.2      (1) compensatory revenue under subdivision 3; plus 
120.3      (2) limited English proficiency revenue according to 
120.4   section 124D.65, subdivision 5; plus 
120.5      (3) $190 times the limited English proficiency pupil units 
120.6   according to section 126C.05, subdivision 17; plus 
120.7      (4) $22.50 times the number of adjusted marginal cost pupil 
120.8   units in kindergarten to grade 8. 
120.9      (b) For fiscal year 2003 and later, a school district's 
120.10  basic skills revenue equals the sum of: 
120.11     (1) compensatory revenue under subdivision 3; plus 
120.12     (2) limited English proficiency revenue under section 
120.13  124D.65, subdivision 5; plus 
120.14     (3) $190 times the limited English proficiency pupil units 
120.15  under section 126C.05, subdivision 17. 
120.16     Sec. 10.  Minnesota Statutes 2002, section 126C.17, 
120.17  subdivision 5, is amended to read: 
120.18     Subd. 5.  [REFERENDUM EQUALIZATION REVENUE.] (a) For fiscal 
120.19  year 2003 and later, a district's referendum equalization 
120.20  revenue equals the sum of the first tier referendum equalization 
120.21  revenue and the second tier referendum equalization revenue. 
120.22     (b) A district's first tier referendum equalization revenue 
120.23  equals the district's first tier referendum equalization 
120.24  allowance times the district's resident marginal cost pupil 
120.25  units for that year.  
120.26     (c) For fiscal years 2003 and 2004, a district's first tier 
120.27  referendum equalization allowance equals the lesser of the 
120.28  district's referendum allowance under subdivision 1 or 
120.29  $126.  For fiscal year 2005 and later, a district's first tier 
120.30  referendum equalization allowance equals the lesser of the 
120.31  district's referendum allowance under subdivision 1 or $133.  
120.32     (d) A district's second tier referendum equalization 
120.33  revenue equals the district's second tier referendum 
120.34  equalization allowance times the district's resident marginal 
120.35  cost pupil units for that year. 
120.36     (e) A district's second tier referendum equalization 
121.1   allowance equals the lesser of the district's referendum 
121.2   allowance under subdivision 1 or 18.2 percent of the formula 
121.3   allowance, minus the district's first tier referendum 
121.4   equalization allowance. 
121.5      (f) Notwithstanding paragraph (e), the second tier 
121.6   referendum allowance for a district qualifying for secondary 
121.7   sparsity revenue under section 126C.10, subdivision 7, or 
121.8   elementary sparsity revenue under section 126C.10, subdivision 
121.9   8, equals the district's referendum allowance under subdivision 
121.10  1 minus the district's first tier referendum equalization 
121.11  allowance. 
121.12     Sec. 11.  Minnesota Statutes 2002, section 126C.17, 
121.13  subdivision 7a, is amended to read: 
121.14     Subd. 7a.  [REFERENDUM TAX BASE REPLACEMENT AID.] For each 
121.15  school district that had a referendum allowance for fiscal year 
121.16  2002 exceeding $415, for each separately authorized referendum 
121.17  levy, the commissioner of revenue, in consultation with the 
121.18  commissioner of children, families, and learning, shall certify 
121.19  the amount of the referendum levy in taxes payable year 2001 
121.20  attributable to the portion of the referendum allowance 
121.21  exceeding $415 levied against property classified as class 2, 
121.22  noncommercial 4c(1), or 4c(4), under section 273.13, excluding 
121.23  the portion of the tax paid by the portion of class 2a property 
121.24  consisting of the house, garage, and surrounding one acre of 
121.25  land.  The resulting amount must be used to reduce the 
121.26  district's referendum levy amount otherwise determined, and must 
121.27  be paid to the district each year that the referendum authority 
121.28  remains in effect, is renewed, or new referendum authority is 
121.29  approved.  The aid payable under this subdivision must be 
121.30  subtracted from the district's referendum equalization aid under 
121.31  subdivision 7.  The referendum equalization aid after the 
121.32  subtraction must not be less than zero. 
121.33     For the purposes of this subdivision, the referendum levy 
121.34  with the latest year of expiration is assumed to be at the 
121.35  highest level of equalization, and the referendum levy with the 
121.36  earliest year of expiration is assumed to be at the lowest level 
122.1   of equalization. 
122.2      [EFFECTIVE DATE.] This section is effective retroactive 
122.3   from July 1, 2002, and is effective for revenue for fiscal year 
122.4   2005. 
122.5      Sec. 12.  Minnesota Statutes 2002, section 126C.17, 
122.6   subdivision 11, is amended to read: 
122.7      Subd. 11.  [REFERENDUM DATE.] (a) Except for a referendum 
122.8   held under paragraph (b), any referendum under this section held 
122.9   on a day other than the first Tuesday after the first Monday in 
122.10  November must be conducted by mail in accordance with section 
122.11  204B.46.  Notwithstanding subdivision 9, paragraph (b), to the 
122.12  contrary, in the case of a referendum conducted by mail under 
122.13  this paragraph, the notice required by subdivision 9, paragraph 
122.14  (b), must be prepared and delivered by first-class mail at least 
122.15  20 days before the referendum. 
122.16     (b) In addition to the referenda allowed in subdivision 9, 
122.17  clause (a), the commissioner may grant authority to a district 
122.18  to hold a referendum on a different day if the district is in 
122.19  statutory operating debt and has an approved plan or has 
122.20  received an extension from the department to file a plan to 
122.21  eliminate the statutory operating debt.  
122.22     (c) The commissioner must approve, deny, or modify each 
122.23  district's request for a referendum levy on a different day 
122.24  within 60 days of receiving the request from a district. 
122.25     Sec. 13.  [126C.37] [LOW PROPERTY WEALTH EQUITY AID.] 
122.26     Subdivision 1.  [ELIGIBILITY.] A school district is 
122.27  eligible to receive low property wealth equity aid in fiscal 
122.28  years 2005, 2006, and 2007 if it: 
122.29     (1) has greater than 11,000 adjusted marginal cost pupil 
122.30  units in fiscal year 2005; 
122.31     (2) has a referendum market value divided by its adjusted 
122.32  marginal cost pupil units that is less than $500,000 in fiscal 
122.33  year 2005; and 
122.34     (3) is eligible for equity revenue under section 126C.10, 
122.35  subdivision 24, in fiscal year 2005. 
122.36     Subd. 2.  [AID.] For fiscal years 2005, 2006, and 2007, an 
123.1   eligible school district's low property wealth equity aid is 
123.2   equal to $43 multiplied times its adjusted marginal cost pupil 
123.3   units for that year. 
123.4      Subd. 3.  [EXPIRATION.] This section expires on December 
123.5   31, 2007. 
123.6      Sec. 14.  [127A.441] [AID REDUCTION; LEVY REVENUE 
123.7   RECOGNITION CHANGE.] 
123.8      Each year, the state aids payable to any school district 
123.9   for that fiscal year that are recognized as revenue in the 
123.10  school district's general and community service funds shall be 
123.11  adjusted by an amount equal to (1) the amount the district 
123.12  recognized as revenue for the prior fiscal year pursuant to 
123.13  section 123B.75, subdivision 5, paragraph (b) or (c), minus (2) 
123.14  the amount the district recognized as revenue for the current 
123.15  fiscal year pursuant to section 123B.75, subdivision 5, 
123.16  paragraph (c).  For purposes of making the aid adjustments under 
123.17  this section, the amount the district recognizes as revenue for 
123.18  either the prior fiscal year or the current fiscal year pursuant 
123.19  to section 123B.75, subdivision 5, paragraph (b) or (c), shall 
123.20  not include any amount levied pursuant to section 124D.86, 
123.21  subdivision 4, for school districts receiving revenue under 
123.22  sections 124D.86, subdivision 3, clauses (1), (2), and (3); 
123.23  126C.41, subdivisions 1, 2, and 3, paragraphs (b), (c), and (d); 
123.24  126C.43, subdivision 2; 126C.457; and 126C.48, subdivision 6.  
123.25  Payment from the permanent school fund shall not be adjusted 
123.26  pursuant to this section.  The school district shall be notified 
123.27  of the amount of the adjustment made to each payment pursuant to 
123.28  this section. 
123.29     Sec. 15.  Minnesota Statutes 2002, section 127A.45, 
123.30  subdivision 2, is amended to read: 
123.31     Subd. 2.  [DEFINITIONS.] (a) The term "other district 
123.32  receipts" means payments by county treasurers pursuant to 
123.33  section 276.10, apportionments from the school endowment fund 
123.34  pursuant to section 127A.33, apportionments by the county 
123.35  auditor pursuant to section 127A.34, subdivision 2, and payments 
123.36  to school districts by the commissioner of revenue pursuant to 
124.1   chapter 298.  
124.2      (b) The term "cumulative amount guaranteed" means the 
124.3   product of 
124.4      (1) the cumulative disbursement percentage shown in 
124.5   subdivision 3; times 
124.6      (2) the sum of 
124.7      (i) 83 80 percent of the estimated aid and credit 
124.8   entitlements paid according to subdivision 13; plus 
124.9      (ii) 100 percent of the entitlements paid according to 
124.10  subdivisions 11 and 12; plus 
124.11     (iii) the other district receipts.  
124.12     (c) The term "payment date" means the date on which state 
124.13  payments to districts are made by the electronic funds transfer 
124.14  method.  If a payment date falls on a Saturday, a Sunday, or a 
124.15  weekday which is a legal holiday, the payment shall be made on 
124.16  the immediately preceding business day.  The commissioner may 
124.17  make payments on dates other than those listed in subdivision 3, 
124.18  but only for portions of payments from any preceding payment 
124.19  dates which could not be processed by the electronic funds 
124.20  transfer method due to documented extenuating circumstances.  
124.21     Sec. 16.  Minnesota Statutes 2002, section 127A.45, 
124.22  subdivision 3, is amended to read: 
124.23     Subd. 3.  [PAYMENT DATES AND PERCENTAGES.] (a) For fiscal 
124.24  year 2003, the commissioner shall pay to a district on the dates 
124.25  indicated an amount computed as follows:  the cumulative amount 
124.26  guaranteed minus the sum of (a) the district's other district 
124.27  receipts through the current payment, and (b) the aid and credit 
124.28  payments through the immediately preceding payment.  For 
124.29  purposes of this computation, the payment dates and the 
124.30  cumulative disbursement percentages are as follows:  
124.31                           Payment date               Percentage 
124.32  Payment 1    July 15:                                         5.1
124.33  Payment 2    July 30:                                         7.7
124.34  Payment 3    August 15:                                      16.9
124.35  Payment 4    August 30:                                      19.3
124.36  Payment 5    September 15:                                   21.8
125.1   Payment 6    September 30:                                   24.3
125.2   Payment 7    October 15:                                     26.3
125.3   Payment 8    October 30:                                     28.3
125.4   Payment 9    November 15:                                    32.8
125.5   Payment 10   November 30:                                    39.1
125.6   Payment 11   December 15:                                    42.4
125.7   Payment 12   December 30:                                    45.6
125.8   Payment 13   January 15:                                     50.5
125.9   Payment 14   January 30:                                     55.0
125.10  Payment 15   February 15:                                    60.2
125.11  Payment 16   February 28:                                    65.0
125.12  Payment 17   March 15:                                       69.7
125.13  Payment 18   March 30:                                       74.3
125.14  Payment 19   April 15:                                       78.3
125.15  Payment 20   April 30:                                       84.2
125.16  Payment 21   May 15:                                         88.7
125.17  Payment 22   May 30:                                         93.3
125.18  Payment 23   June 20:                                       100.0
125.19     (b) In addition to the amounts paid under paragraph (a), 
125.20  for fiscal year 2003, the commissioner shall pay to a district 
125.21  on the dates indicated an amount computed as follows: 
125.22  Payment 3    August 15:  the final adjustment for the
125.23               prior fiscal year for the state paid
125.24               property tax credits established in
125.25               section 273.1392
125.26  Payment 7    October 15:  one-half of the final adjustment
125.27               for the prior fiscal year for all aid
125.28               entitlements except state paid property
125.29               tax credits 
125.30  Payment 8    October 30:  one-half of the final adjustment
125.31               for the prior fiscal year for all aid
125.32               entitlements except state paid property
125.33               tax credits 
125.34     (c) For fiscal year 2004 and later, the commissioner shall 
125.35  pay to a district on the dates indicated an amount computed as 
125.36  follows:  the cumulative amount guaranteed minus the sum of (a) 
126.1   the district's other district receipts through the current 
126.2   payment, and (b) the aid and credit payments through the 
126.3   immediately preceding payment.  For purposes of this 
126.4   computation, the payment dates and the cumulative disbursement 
126.5   percentages are as follows: 
126.6              Payment date                      Percentage 
126.7   Payment 1    July 15:                                    5.1 5.5
126.8   Payment 2    July 30:                                    7.7 8.0
126.9   Payment 3    August 15:                                 16.9 17.5
126.10  Payment 4    August 30:                                 19.3 20.0
126.11  Payment 5    September 15:                              21.8 22.5
126.12  Payment 6    September 30:                              24.3 25.0
126.13  Payment 7    October 15:                                26.3 27.0
126.14  Payment 8    October 30:                                28.3 30.0
126.15  Payment 9    November 15:                               30.3 32.5
126.16  Payment 10   November 30:                               35.0 36.5
126.17  Payment 11   December 15:                               40.0 42.0
126.18  Payment 12   December 30:                               43.0 45.0
126.19  Payment 13   January 15:                                48.0 50.0
126.20  Payment 14   January 30:                                52.0 54.0
126.21  Payment 15   February 15:                               56.0 58.0
126.22  Payment 16   February 28:                               61.0 63.0
126.23  Payment 17   March 15:                                  66.0 68.0
126.24  Payment 18   March 30:                                  72.0 74.0
126.25  Payment 19   April 15:                                  76.0 78.0
126.26  Payment 20   April 30:                                  83.0 85.0
126.27  Payment 21   May 15:                                    88.0 90.0
126.28  Payment 22   May 30:                                    95.0
126.29  Payment 23   June 20:                                  100.0
126.30     (d) (b) In addition to the amounts paid under paragraph 
126.31  (c) (a), for fiscal year 2004 and later, the commissioner shall 
126.32  pay to a district on the dates indicated an amount computed as 
126.33  follows: 
126.34  Payment 3    August 15:  the final adjustment for the
126.35               prior fiscal year for the state paid
126.36               property tax credits established in 
127.1                section 273.1392 
127.2   Payment 4    August 30:  one-third of the final adjustment
127.3                for the prior fiscal year for all aid
127.4                entitlements except state paid property
127.5                tax credits 
127.6   Payment 6    September 30:  one-third of the final adjustment
127.7                for the prior fiscal year for all aid
127.8                entitlements except state paid property
127.9                tax credits
127.10  Payment 8    October 30:  one-third of the final adjustment
127.11               for the prior fiscal year for all aid
127.12               entitlements except state paid property
127.13               tax credits
127.14     (c) In addition to the amounts paid under paragraph (a), 
127.15  for fiscal year 2005 and later, the commissioner shall pay to a 
127.16  district on the dates indicated an amount computed as follows: 
127.17  Payment 3    August 15:  the final adjustment for the
127.18               prior fiscal year for the state paid
127.19               property tax credits established in
127.20               section 273.1392
127.21  Payment 4    August 30:  30 percent of the final adjustment
127.22               for the prior fiscal year for all aid
127.23               entitlements except state paid property
127.24               tax credits
127.25  Payment 6    September 30:  40 percent of the final adjustment
127.26               for the prior fiscal year for all aid
127.27               entitlements except state paid property
127.28               tax credits
127.29  Payment 8    October 30:  30 percent of the final adjustment
127.30               for the prior fiscal year for all aid
127.31               entitlements except state paid property
127.32               tax credits
127.33     Sec. 17.  Minnesota Statutes 2002, section 127A.45, 
127.34  subdivision 7a, is amended to read: 
127.35     Subd. 7a.  [ADVANCE FINAL PAYMENT.] (a) Notwithstanding 
127.36  subdivisions 3 and 7, a school district or a charter school 
128.1   exceeding its expenditure limitations under section 123B.83 as 
128.2   of June 30 of the prior fiscal year may receive a portion of its 
128.3   final payment for the current fiscal year on June 20, if 
128.4   requested by the district.  The amount paid under this 
128.5   subdivision must not exceed the lesser of: 
128.6      (1) seven percent of the district or charter school's 
128.7   general education aid for the current fiscal year; or 
128.8      (2) the amount by which the district or charter school's 
128.9   net negative unreserved general fund balance as of June 30 of 
128.10  the prior fiscal year exceeds 2.5 percent of the district or 
128.11  charter school's expenditures for that fiscal year. 
128.12     (b) The state total advance final payment under this 
128.13  subdivision for any year must not exceed $17,500,000 $12,000,000.
128.14  If the amount requested exceeds $17,500,000 $12,000,000, the 
128.15  advance final payment for each eligible district must be reduced 
128.16  proportionately. 
128.17     Sec. 18.  Minnesota Statutes 2002, section 127A.45, 
128.18  subdivision 10, is amended to read: 
128.19     Subd. 10.  [PAYMENTS TO SCHOOL NONOPERATING FUNDS.] Each 
128.20  fiscal year state general fund payments for a district 
128.21  nonoperating fund must be made at 83 80 percent of the estimated 
128.22  entitlement during the fiscal year of the entitlement.  This 
128.23  amount shall be paid in 12 equal monthly installments.  The 
128.24  amount of the actual entitlement, after adjustment for actual 
128.25  data, minus the payments made during the fiscal year of the 
128.26  entitlement must be paid prior to October 31 of the following 
128.27  school year.  The commissioner may make advance payments of debt 
128.28  service equalization aid or homestead and agricultural credit 
128.29  aid for a district's debt service fund earlier than would occur 
128.30  under the preceding schedule if the district submits evidence 
128.31  showing a serious cash flow problem in the fund.  The 
128.32  commissioner may make earlier payments during the year and, if 
128.33  necessary, increase the percent of the entitlement paid to 
128.34  reduce the cash flow problem. 
128.35     Sec. 19.  Minnesota Statutes 2002, section 127A.45, 
128.36  subdivision 13, is amended to read: 
129.1      Subd. 13.  [AID PAYMENT PERCENTAGE.] Except as provided in 
129.2   subdivisions 11, 12, 12a, and 14, each fiscal year, all 
129.3   education aids and credits in this chapter and chapters 120A, 
129.4   120B, 121A, 122A, 123A, 123B, 124D, 125A, 125B, 126C, 134, and 
129.5   section 273.1392, shall be paid at 83 80 percent of the 
129.6   estimated entitlement during the fiscal year of the 
129.7   entitlement.  For the purposes of this subdivision, a district's 
129.8   estimated entitlement for special education excess cost aid 
129.9   under section 125A.79 equals 70 percent of the district's 
129.10  entitlement for the second prior fiscal year.  The final 
129.11  adjustment payment, according to subdivision 9, must be the 
129.12  amount of the actual entitlement, after adjustment for actual 
129.13  data, minus the payments made during the fiscal year of the 
129.14  entitlement. 
129.15     Sec. 20.  Minnesota Statutes 2002, section 127A.45, 
129.16  subdivision 14, is amended to read: 
129.17     Subd. 14.  [NONPUBLIC AIDS.] The state shall pay aid 
129.18  according to sections 123B.40 to 123B.48 for pupils attending 
129.19  nonpublic schools as follows: 
129.20     (1) an advance payment by November 30 equal to 83 80 
129.21  percent of the estimated entitlement for the current fiscal 
129.22  year; and 
129.23     (2) a final payment by October 31 of the following fiscal 
129.24  year, adjusted for actual data.  
129.25     If a payment advance to meet cash flow needs is requested 
129.26  by a district and approved by the commissioner, the state shall 
129.27  pay nonpublic pupil transportation aid according to section 
129.28  123B.92 by October 31. 
129.29     Sec. 21.  Minnesota Statutes 2002, section 127A.45, 
129.30  subdivision 16, is amended to read: 
129.31     Subd. 16.  [PAYMENTS TO THIRD PARTIES.] Notwithstanding 
129.32  subdivision 3, 83 80 percent of the amounts under section 
129.33  123A.26, subdivision 3, shall be paid in equal installments on 
129.34  August 30, December 30, and March 30, with a 17 20 percent final 
129.35  adjustment payment on October 30 of the next fiscal year. 
129.36     Sec. 22.  Minnesota Statutes 2002, section 475.61, 
130.1   subdivision 1, is amended to read: 
130.2      Subdivision 1.  [DEBT SERVICE RESOLUTION.] The governing 
130.3   body of any municipality issuing general obligations shall, 
130.4   prior to delivery of the obligations, levy by resolution a 
130.5   direct general ad valorem tax upon all taxable property in the 
130.6   municipality to be spread upon the tax rolls for each year of 
130.7   the term of the obligations.  The tax levies for all years for 
130.8   municipalities other than school districts shall be specified 
130.9   and such that if collected in full they, together with estimated 
130.10  collections of special assessments and other revenues pledged 
130.11  for the payment of said obligations, will produce at least five 
130.12  percent in excess of the amount needed to meet when due the 
130.13  principal and interest payments on the obligations.  The tax 
130.14  levies for school districts shall be specified and such that if 
130.15  collected in full they, together with estimated collection of 
130.16  other revenues pledged for the payment of the obligations, will 
130.17  produce between five and six percent in excess of the amount 
130.18  needed to meet when due the principal and interest payments on 
130.19  the obligations, rounded up to the nearest dollar; except that, 
130.20  with the permission of the commissioner of children, families, 
130.21  and learning, a school board may specify a tax levy in a higher 
130.22  amount if necessary either to meet an anticipated tax 
130.23  delinquency or for cash flow needs to meet the required payments 
130.24  from the debt redemption fund.  Such resolution shall 
130.25  irrevocably appropriate the taxes so levied and any special 
130.26  assessments or other revenues so pledged to the municipality's 
130.27  debt service fund or a special debt service fund or account 
130.28  created for the payment of one or more issues of obligations.  
130.29  The governing body may, in its discretion, at any time after the 
130.30  obligations have been authorized, adopt a resolution levying 
130.31  only a portion of such taxes, to be filed, assessed, extended, 
130.32  collected, and remitted as hereinafter provided, and the amount 
130.33  or amounts therein levied shall be credited against the tax 
130.34  required to be levied prior to delivery of the obligations. 
130.35     Sec. 23.  Minnesota Statutes 2002, section 475.61, 
130.36  subdivision 3, is amended to read: 
131.1      Subd. 3.  [IRREVOCABILITY.] (a) Tax levies so made and 
131.2   filed shall be irrevocable, except as provided in this 
131.3   subdivision. 
131.4      (b) For purposes of this subdivision, "excess debt 
131.5   redemption fund balance" means the greater of zero or the 
131.6   balance in the district's debt redemption fund as of June 30 of 
131.7   the fiscal year ending in the year before the year the levy is 
131.8   certified, minus any debt redemption fund balance attributable 
131.9   to refunding of existing bonds, minus the amount of the levy 
131.10  reduction for the current year and the prior year under 
131.11  paragraphs (e) and (f), minus five percent of the district's 
131.12  required debt service levy for the next year. 
131.13     (c) By July 15 each year, a district shall report to the 
131.14  commissioner of children, families, and learning the amount of 
131.15  the districts' debt redemption fund balance as of June 30 of the 
131.16  prior year attributable to refunding of existing bonds.  
131.17     (d) By August 15 each year, the commissioner shall 
131.18  determine the excess debt redemption fund balance for each 
131.19  school district, and shall certify the amount of the excess 
131.20  balance to the school district superintendent.  
131.21     (e) In each year when a district has an excess debt 
131.22  redemption fund balance, the commissioner shall report the 
131.23  amount of the excess to the county auditor and the auditor shall 
131.24  reduce the tax levy otherwise to be included in the rolls next 
131.25  prepared by the amount certified.  
131.26     (f) The school board may, with the approval of the 
131.27  commissioner, retain all or part of the excess balance if it is 
131.28  necessary to ensure the prompt and full payment of its 
131.29  obligations and any call premium on its obligations, will be 
131.30  used for redemption of its obligations in accordance with their 
131.31  terms, or to level out the debt service tax rate, excluding the 
131.32  debt excess adjustment, for its obligations over the next two 
131.33  years.  A school district requesting authority to retain all or 
131.34  part of the excess balance shall provide written documentation 
131.35  to the commissioner describing the rationale for its request by 
131.36  September 15 including the issuance of new obligations within 
132.1   the next year or the refunding of existing obligations.  A 
132.2   school district that retains an excess may request to transfer 
132.3   the excess to its operating capital account in the general fund 
132.4   under section 123B.80.  The school board may, with the approval 
132.5   of the commissioner, specify a tax levy in a higher amount if 
132.6   necessary because of anticipated tax delinquency or for cash 
132.7   flow needs to meet the required payments from the debt 
132.8   redemption fund.  
132.9      (g) If the governing body, including the governing body of 
132.10  a school district, in any year makes an irrevocable 
132.11  appropriation to the debt service fund of money actually on hand 
132.12  or if there is on hand any excess amount in the debt service 
132.13  fund, the recording officer may certify to the county auditor 
132.14  the fact and amount thereof and the auditor shall reduce by the 
132.15  amount so certified the amount otherwise to be included in the 
132.16  rolls next thereafter prepared. 
132.17     Sec. 24.  Laws 2000, chapter 489, article 2, section 36, as 
132.18  amended by Laws 2001, First Special Session chapter 6, article 
132.19  1, section 44, is amended to read: 
132.20     Sec. 36.  [FISCAL YEARS 2004 2006 TO 2008 2010 AIRPORT 
132.21  RUNWAY IMPACT PUPIL UNIT AID; RICHFIELD.] 
132.22     Subdivision 1.  [AIRPORT IMPACT ZONE PUPIL UNITS, 
132.23  DEFINITION.] For the purposes of this section, "airport impact 
132.24  zone pupil units" means the number of pupil units, according to 
132.25  Minnesota Statutes 1999 Supplement, section 126C.05, subdivision 
132.26  1, in school year 1998-1999 that were attributable to the 
132.27  airport impact zone, as defined in Laws 1999, chapter 243, 
132.28  article 16, section 35, subdivision 1. 
132.29     Subd. 2.  [FISCAL YEAR 2004 2006.] For fiscal year 
132.30  2004 2006 only, independent school district No. 280, Richfield, 
132.31  is eligible for declining pupil unit aid equal to the product of 
132.32  70 percent of the airport impact zone pupil units times the 
132.33  general education formula allowance for fiscal year 2004 2006. 
132.34     Subd. 3.  [FISCAL YEAR 2005 2007.] For fiscal year 
132.35  2005 2007 only, independent school district No. 280, Richfield, 
132.36  is eligible for declining pupil unit aid equal to the product of 
133.1   70 percent of the airport impact zone pupil units times the 
133.2   general education formula allowance for fiscal year 2005 2007. 
133.3      Subd. 4.  [FISCAL YEAR 2006 2008.] For fiscal year 
133.4   2006 2008 only, independent school district No. 280, Richfield, 
133.5   is eligible for declining pupil unit aid equal to the product of 
133.6   52.5 percent of the airport impact zone pupil units times the 
133.7   general education formula allowance for fiscal year 2006 2008. 
133.8      Subd. 5.  [FISCAL YEAR 2007 2009.] For fiscal year 
133.9   2007 2009 only, independent school district No. 280, Richfield, 
133.10  is eligible for declining pupil unit aid equal to the product of 
133.11  35 percent of the airport impact zone pupil units times the 
133.12  general education formula allowance for fiscal year 2007 2009. 
133.13     Subd. 6.  [FISCAL YEAR 2008 2010.] For fiscal year 
133.14  2008 2010 only, independent school district No. 280, Richfield, 
133.15  is eligible for declining pupil unit aid equal to the product of 
133.16  17.5 percent of the airport impact zone pupil units times the 
133.17  general education formula allowance for fiscal year 2008 2010. 
133.18     Sec. 25.  [STAFF DEVELOPMENT RESERVED REVENUE; FISCAL YEARS 
133.19  2004 AND 2005.] 
133.20     Notwithstanding Minnesota Statutes, section 122A.61, 
133.21  subdivision 1, for fiscal years 2004 and 2005 only, a school 
133.22  district must reserve an amount equal to at least one percent of 
133.23  the basic revenue under Minnesota Statutes, section 126C.10, 
133.24  subdivision 2.  A district may waive this requirement by a 
133.25  majority vote of the licensed teachers in the district and a 
133.26  majority vote of the school board.  A district in statutory 
133.27  operating debt is exempt from this requirement. 
133.28     Sec. 26.  [LEASE RATE; COOK COUNTY.] 
133.29     (a) Notwithstanding Minnesota Statutes, section 92.46, and 
133.30  Minnesota Rules, chapter 6122, in 2003, the lease rate for lands 
133.31  leased under Minnesota Statutes, section 92.46, that are located 
133.32  in Section 16, Township 62 North, Range 4 East, Cook county, 
133.33  shall be two percent of the appraised value of the land as 
133.34  determined by the commissioner of natural resources at the fifth 
133.35  anniversary of the lease. 
133.36     (b) In 2004 and every year thereafter, the amount payable 
134.1   shall be adjusted for inflation and shall be increased to an 
134.2   amount equal to:  (1) the amount before the inflation adjustment 
134.3   multiplied by (2) one plus the percentage increase in the 
134.4   implicit price deflator for government consumption expenditures 
134.5   and gross investment for state and local governments prepared by 
134.6   the Bureau of Economic Analysis of the United States Department 
134.7   of Commerce for the last month of the third quarter of the 
134.8   calendar year prior to the year for which the rent is paid. 
134.9      Sec. 27.  [RECOMMENDATIONS FROM THE KINDERGARTEN THROUGH 
134.10  GRADE 12 EDUCATION TASK FORCE ON SCHOOL FINANCE REFORM.] 
134.11     The commissioner of children, families, and learning must 
134.12  include the following as part of the recommendations of the 
134.13  kindergarten through grade 12 education task force on school 
134.14  finance reform for fiscal years 2006 and later: 
134.15     (1) proposed changes in school district reporting 
134.16  requirements that would require districts to report timely and 
134.17  accurate financial data for the preceding fiscal year to the 
134.18  state and to the public at least 30 days before district 
134.19  referendum elections are held; 
134.20     (2) the fiscal and policy implications for school districts 
134.21  if all district referendum elections were required to be held on 
134.22  the first Tuesday following the first Monday in November; 
134.23     (3) proposed changes for allowing districts that provide 
134.24  transportation services to resident pupils attending a charter 
134.25  school outside of the pupils' district attendance areas to bill 
134.26  the pupils' charter school for transportation costs that exceed 
134.27  the pupils' transportation aid under Minnesota Statutes, section 
134.28  124D.11, subdivision 2; 
134.29     (4) proposed changes for reimbursing resident school 
134.30  districts for excess special education costs billed back by 
134.31  charter schools and school districts serving open enrolled 
134.32  special education students; 
134.33     (5) proposed changes in the alternative facilities and levy 
134.34  program or another program to provide a financing mechanism for 
134.35  school districts to address facility maintenance issues where 
134.36  the renovation or maintenance costs of a facility exceed the 
135.1   cost of facility replacement, such as the unsafe microbe growth 
135.2   infestation at Forest elementary school in independent school 
135.3   district No. 281, Robbinsdale; and 
135.4      (6) proposed changes in the referendum revenue program to 
135.5   allow contracted alternative programs to receive referendum 
135.6   revenue, as well as changes to other revenue programs to ensure 
135.7   that contracted alternative programs have equitable funding, 
135.8   with particular emphasis on uncommon schools that serve students 
135.9   who have been assessed chemically dependent and who have 
135.10  completed a licensed treatment program for chemical dependency. 
135.11     Sec. 28.  [APPROPRIATIONS.] 
135.12     Subdivision 1.  [DEPARTMENT OF CHILDREN, FAMILIES, AND 
135.13  LEARNING.] The sums indicated in this section are appropriated 
135.14  from the general fund to the department of children, families, 
135.15  and learning for the fiscal years designated.  
135.16     Subd. 2.  [GENERAL EDUCATION AID.] (a) For general 
135.17  education aid under Minnesota Statutes, section 126C.13, 
135.18  subdivision 4: 
135.19      $4,763,102,000  .....     2004
135.20      $5,129,361,000  .....     2005
135.21     The 2004 appropriation includes $857,432,000 for 2003 and 
135.22  $3,905,670,000 for 2004. 
135.23     The 2005 appropriation includes $1,012,428,000 for 2004 and 
135.24  $4,116,933,000 for 2005.  
135.25     (b) Of the appropriation for fiscal year 2005, $40,478,000 
135.26  is from the education reserve account in the general fund 
135.27  provided under Minnesota Statutes, section 275.025, subdivision 
135.28  1. 
135.29     Subd. 3.  [REFERENDUM TAX BASE REPLACEMENT AID.] For 
135.30  referendum tax base replacement aid under Minnesota Statutes, 
135.31  section 126C.17, subdivision 7a: 
135.32       $7,841,000     .....     2004 
135.33       $8,543,000     .....     2005 
135.34     The 2004 appropriation includes $1,419,000 for 2003 and 
135.35  $6,422,000 for 2004.  
135.36     The 2005 appropriation includes $1,605,000 for 2004 and 
136.1   $6,938,000 for 2005. 
136.2      Subd. 4.  [ENROLLMENT OPTIONS TRANSPORTATION.] For 
136.3   transportation of pupils attending postsecondary institutions 
136.4   under Minnesota Statutes, section 124D.09, or for transportation 
136.5   of pupils attending nonresident districts under Minnesota 
136.6   Statutes, section 124D.03: 
136.7        $50,000        .....     2004
136.8        $55,000        .....     2005
136.9      Subd. 5.  [ABATEMENT REVENUE.] For abatement aid under 
136.10  Minnesota Statutes, section 127A.49:  
136.11       $2,680,000     .....     2004 
136.12       $2,937,000     .....     2005 
136.13     The 2004 appropriation includes $472,000 for 2003 and 
136.14  $2,208,000 for 2004.  
136.15     The 2005 appropriation includes $551,000 for 2004 and 
136.16  $2,386,000 for 2005.  
136.17     Subd. 6.  [CONSOLIDATION TRANSITION.] For districts 
136.18  consolidating under Minnesota Statutes, section 123A.485: 
136.19       $207,000        .....     2004 
136.20       $607,000        .....     2005 
136.21     The 2004 appropriation includes $35,000 for 2003 and 
136.22  $172,000 for 2004. 
136.23     The 2005 appropriation includes $42,000 for 2004 and 
136.24  $565,000 for 2005. 
136.25     Subd. 7.  [TORNADO IMPACT; YELLOW MEDICINE EAST.] For a 
136.26  grant to independent school district No. 2190, Yellow Medicine 
136.27  East, for tornado impact declining enrollment aid: 
136.28       $78,000         .....     2004
136.29       $39,000         .....     2005
136.30     Subd. 8.  [DECLINING PUPIL AID; ALBERT LEA.] For declining 
136.31  pupil aid to independent school district No. 241, Albert Lea: 
136.32       $225,000        .....     2004
136.33       $150,000        .....     2005
136.34     Subd. 9.  [DECLINING PUPIL AID; MESABI EAST.] For declining 
136.35  pupil aid to independent school district No. 2711, Mesabi East: 
136.36       $150,000        .....     2004
137.1        $100,000        .....     2005
137.2      Subd. 10.  [DECLINING PUPIL AID; ROSEAU.] For declining 
137.3   pupil aid to independent school district No. 682, Roseau: 
137.4        $30,000         .....     2004
137.5        $20,000         .....     2005
137.6      Subd. 11.  [NONPUBLIC PUPIL AID.] For nonpublic pupil 
137.7   education aid under Minnesota Statutes, sections 123B.87 and 
137.8   123B.40 to 123B.43: 
137.9        $15,044,000    .....     2004 
137.10       $15,699,000    .....     2005 
137.11     The 2004 appropriation includes $2,715,000 for 2003 and 
137.12  $12,329,000 for 2004. 
137.13     The 2005 appropriation includes $3,082,000 for 2004 and 
137.14  $12,617,000 for 2005. 
137.15     Subd. 12.  [NONPUBLIC PUPIL TRANSPORTATION.] For nonpublic 
137.16  pupil transportation aid under Minnesota Statutes, section 
137.17  123B.92, subdivision 9: 
137.18       $23,210,000     .....     2004 
137.19       $22,416,000     .....     2005 
137.20     The 2004 appropriation includes $3,990,000 for 2003 and 
137.21  $19,220,000 for 2004. 
137.22     The 2005 appropriation includes $4,805,000 for 2004 and 
137.23  $17,611,000 for 2005. 
137.24     Subd. 13.  [ONE-ROOM SCHOOLHOUSE.] For a grant to 
137.25  independent school district No. 690, Warroad, to operate the 
137.26  Angle Inlet school: 
137.27       $50,000     .....     2004
137.28       $50,000     .....     2005
137.29     The budget base for this item for fiscal year 2006 and each 
137.30  year thereafter is $50,000. 
137.31     Subd. 14.  [UNCOMMON SCHOOLS.] For grants to private 
137.32  contracted alternative uncommon schools that are located in 
137.33  independent school district No. 273, Edina, and independent 
137.34  school district No. 622, North St. Paul-Maplewood, and serve 
137.35  students who have been assessed chemically dependent and who 
137.36  have completed a licensed treatment program for chemical 
138.1   dependency: 
138.2        $50,000     .....     2004
138.3        $50,000     .....     2005
138.4      The budget base for this item for fiscal year 2006 and each 
138.5   year thereafter is $50,000. 
138.6      Subd. 15.  [LOW PROPERTY WEALTH EQUITY AID.] For low 
138.7   property wealth equity aid under Minnesota Statutes, section 
138.8   126C.37: 
138.9        $9,991,000  .....     2005
138.10                             ARTICLE 8 
138.11              EDUCATIONAL EXCELLENCE AND OTHER POLICY 
138.12     Section 1.  Minnesota Statutes 2002, section 122A.414, is 
138.13  amended by adding a subdivision to read: 
138.14     Subd. 3.  [REPORT.] Participating districts and school 
138.15  sites must report on the implementation and effectiveness of the 
138.16  alternative teacher compensation plan, particularly addressing 
138.17  each requirement under section 122A.44, subdivision 2, and make 
138.18  recommendations biannually by January 1 to their school boards.  
138.19  The school boards shall transmit a summary of the findings and 
138.20  recommendations of their district to the commissioner. 
138.21     Sec. 2.  Minnesota Statutes 2002, section 122A.415, 
138.22  subdivision 3, is amended to read: 
138.23     Subd. 3.  [AID TIMING.] (a) Districts or sites with 
138.24  approved applications must receive alternative compensation aid 
138.25  for each school year that the district or site participates in 
138.26  the program as described in this subdivision.  Districts or 
138.27  sites with applications received by the commissioner before June 
138.28  1 of the first year of a two-year contract shall receive 
138.29  compensation aid for both years of the contract.  Districts or 
138.30  sites with applications received by the commissioner after June 
138.31  1 of the first year of a two-year contract shall receive 
138.32  compensation aid only for the second year of the contract.  The 
138.33  commissioner must approve initial applications for school 
138.34  districts qualifying under subdivision 1, paragraph (b), clause 
138.35  (1), by January 15 of each year.  If any money remains, the 
138.36  commissioner must approve aid amounts for school districts 
139.1   qualifying under subdivision 1, paragraph (b), clause (2), by 
139.2   February 15 of each year.  
139.3      (b) The commissioner shall select applicants that qualify 
139.4   for this program, notify school districts and school sites about 
139.5   the program, develop and disseminate application materials, and 
139.6   carry out other activities needed to implement this section.  
139.7      Sec. 3.  Minnesota Statutes 2002, section 124D.11, 
139.8   subdivision 4, is amended to read: 
139.9      Subd. 4.  [BUILDING LEASE AID.] When a charter school finds 
139.10  it economically advantageous to rent or lease a building or land 
139.11  for any instructional purposes and it determines that the total 
139.12  operating capital revenue under section 126C.10, subdivision 13, 
139.13  is insufficient for this purpose, it may apply to the 
139.14  commissioner for building lease aid for this purpose.  The 
139.15  commissioner must review and either approve or deny a lease aid 
139.16  application using the following criteria: 
139.17     (1) the reasonableness of the price based on current market 
139.18  values; 
139.19     (2) the extent to which the lease conforms to applicable 
139.20  state laws and rules; and 
139.21     (3) the appropriateness of the proposed lease in the 
139.22  context of the space needs and financial circumstances of the 
139.23  charter school. 
139.24  A charter school must not use the building lease aid it receives 
139.25  for custodial, maintenance service, utility, or other operating 
139.26  costs.  The amount of building lease aid per pupil unit served 
139.27  for a charter school for any fiscal year 2004 and later shall 
139.28  not exceed the lesser of (a) 90 80 percent of the approved cost 
139.29  or (b) the product of the pupil units served for the current 
139.30  school year times $1,500 $1,200. 
139.31     [EFFECTIVE DATE.] This section is effective for new and 
139.32  existing charter schools for revenue for fiscal year 2004 and 
139.33  later. 
139.34     Sec. 4.  Minnesota Statutes 2002, section 124D.11, 
139.35  subdivision 6, is amended to read: 
139.36     Subd. 6.  [OTHER AID, GRANTS, REVENUE.] (a) A charter 
140.1   school is eligible to receive other aids, grants, and revenue 
140.2   according to chapters 120A to 129C, as though it were a district.
140.3      (b) Notwithstanding paragraph (a), a charter school may not 
140.4   receive aid, a grant, or revenue if a levy is required to obtain 
140.5   the money, except as otherwise provided in this section.  
140.6      (c) Federal aid received by the state must be paid to the 
140.7   school, if it qualifies for the aid as though it were a school 
140.8   district. 
140.9      (d) A charter school may receive money from any source for 
140.10  capital facilities needs.  In the year-end report to the 
140.11  commissioner of children, families, and learning, the charter 
140.12  school shall report the total amount of funds received from 
140.13  grants and other outside sources. 
140.14     (e) Notwithstanding paragraph (a) or (b), a charter school 
140.15  may apply for a grant to receive the aid portion of integration 
140.16  revenue under section 124D.86, subdivision 3, for enrolled 
140.17  students who are residents of a district that is eligible for 
140.18  integration revenue.  The commissioner shall determine grant 
140.19  recipients and may adopt application guidelines.  The grants 
140.20  must be competitively determined and must demonstrate that 
140.21  enrolling pupils in the charter school contributes to 
140.22  desegregation or integration purposes as determined by the 
140.23  commissioner.  If the charter school has elected not to provide 
140.24  transportation under section 124D.10, subdivision 16, the aid 
140.25  shall be reduced by the amount per pupil unit specified for the 
140.26  district where the charter school is located under section 
140.27  123B.92, subdivision 8. 
140.28     [EFFECTIVE DATE.] This section is effective for revenue for 
140.29  fiscal year 2004. 
140.30     Sec. 5.  Minnesota Statutes 2002, section 124D.454, 
140.31  subdivision 1, is amended to read: 
140.32     Subdivision 1.  [PURPOSE.] The purpose of this section is 
140.33  to provide a method to fund transition career and technical 
140.34  education programs for children with a disability that are 
140.35  components of the learner's transition plan.  As used in this 
140.36  section, the term "children with a disability" shall have the 
141.1   meaning ascribed to it in section 125A.02. 
141.2      Sec. 6.  Minnesota Statutes 2002, section 124D.454, 
141.3   subdivision 2, is amended to read: 
141.4      Subd. 2.  [DEFINITIONS.] For the purposes of this section, 
141.5   the definitions in this subdivision apply. 
141.6      (a) "Base year" for fiscal year 1996 means fiscal year 1995.
141.7   Base year for later fiscal years means the second fiscal year 
141.8   preceding the fiscal year for which aid will be paid. 
141.9      (b) "Basic revenue" has the meaning given it in section 
141.10  126C.10, subdivision 2.  For the purposes of computing basic 
141.11  revenue pursuant to this section, each child with a disability 
141.12  shall be counted as prescribed in section 126C.05, subdivision 1.
141.13     (c) "Average daily membership" has the meaning given it in 
141.14  section 126C.05. 
141.15     (d) "Program growth factor" means 1.00 for fiscal year 1998 
141.16  and later. 
141.17     (e) "Aid percentage factor" means 60 percent for fiscal 
141.18  year 1996, 70 percent for fiscal year 1997, 80 percent for 
141.19  fiscal year 1998, 90 percent for fiscal year 1999, and 100 
141.20  percent for fiscal year 2000 and later. 
141.21     (f) "Essential personnel" means a licensed teacher, 
141.22  licensed support services staff person, paraprofessional 
141.23  providing direct services to students, or licensed personnel 
141.24  under subdivision 12, paragraph (c).  This definition is not 
141.25  intended to change or modify the definition of essential 
141.26  employee in chapter 179A. 
141.27     Sec. 7.  Minnesota Statutes 2002, section 124D.454, 
141.28  subdivision 3, is amended to read: 
141.29     Subd. 3.  [BASE REVENUE.] (a) The transition 
141.30  program-disabled transition-disabled program base revenue equals 
141.31  the sum of the following amounts computed using base year data: 
141.32     (1) 68 percent of the salary of each essential licensed 
141.33  person or approved paraprofessional who provides direct 
141.34  instructional services to students employed during that fiscal 
141.35  year for services rendered in that district's transition program 
141.36  for children with a disability; 
142.1      (2) 47 percent of the costs of necessary equipment for 
142.2   transition programs for children with a disability; 
142.3      (3) 47 percent of the costs of necessary travel between 
142.4   instructional sites by transition program teachers of children 
142.5   with a disability but not including travel to and from local, 
142.6   regional, district, state, or national vocational career and 
142.7   technical student organization meetings; 
142.8      (4) 47 percent of the costs of necessary supplies for 
142.9   transition programs for children with a disability but not to 
142.10  exceed an average of $47 in any one school year for each child 
142.11  with a disability receiving these services; 
142.12     (5) for transition programs for children with disabilities 
142.13  provided by a contract approved by the commissioner with public, 
142.14  private, or voluntary agencies other than a Minnesota school 
142.15  district or cooperative center, in place of programs provided by 
142.16  the district, 52 percent of the difference between the amount of 
142.17  the contract and the basic revenue of the district for that 
142.18  pupil for the fraction of the school day the pupil receives 
142.19  services under the contract; 
142.20     (6) for transition programs for children with disabilities 
142.21  provided by a contract approved by the commissioner with public, 
142.22  private, or voluntary agencies other than a Minnesota school 
142.23  district or cooperative center, that are supplementary to a full 
142.24  educational program provided by the school district, 52 percent 
142.25  of the amount of the contract; and 
142.26     (7) for a contract approved by the commissioner with 
142.27  another Minnesota school district or cooperative center for 
142.28  vocational evaluation services for children with a disability 
142.29  for children that are not yet enrolled in grade 12, 52 percent 
142.30  of the amount of the contract. 
142.31     (b) If requested by a school district for transition 
142.32  programs during the base year for less than the full school 
142.33  year, the commissioner may adjust the base revenue to reflect 
142.34  the expenditures that would have occurred during the base year 
142.35  had the program been operated for the full year. 
142.36     Sec. 8.  Minnesota Statutes 2002, section 124D.454, is 
143.1   amended by adding a subdivision to read: 
143.2      Subd. 12.  [COMPLIANCE WITH RULES.] (a) Aid must be paid 
143.3   under this section only for services rendered or for costs 
143.4   incurred in career and technical education programs approved by 
143.5   the commissioner and operated in accordance with rules 
143.6   promulgated by the commissioner.  This aid shall be paid only 
143.7   for services rendered and for costs incurred by essential, 
143.8   licensed personnel who meet the requirements for licensure 
143.9   pursuant to the rules of the Minnesota board of teaching or 
143.10  paraprofessionals approved by the division of lifework 
143.11  development in the department of children, families, and 
143.12  learning. 
143.13     (b) Notwithstanding section 127A.42, the commissioner may 
143.14  modify or withdraw the program or aid approval and withhold aid 
143.15  under this section without proceeding under section 127A.42 at 
143.16  any time.  To do so, the commissioner must determine that the 
143.17  program does not comply with the rules of the department of 
143.18  children, families, and learning or that any facts concerning 
143.19  the program or its budget differ from the facts in the 
143.20  district's approved application. 
143.21     (c) For the purposes of paragraph (a), "licensed personnel" 
143.22  means persons holding a valid career and technical license 
143.23  issued by the commissioner.  If an average of five or fewer 
143.24  secondary full-time equivalent students are enrolled per teacher 
143.25  in an approved postsecondary program at intermediate district 
143.26  No. 287, 916, or 917, licensed personnel means persons holding a 
143.27  valid vocational license issued by the commissioner or the board 
143.28  of trustees of the Minnesota state colleges and universities. 
143.29     Sec. 9.  Minnesota Statutes 2002, section 124D.86, 
143.30  subdivision 4, is amended to read: 
143.31     Subd. 4.  [INTEGRATION LEVY.] A district may levy an amount 
143.32  equal to 37 percent for fiscal year 2003, 22 percent for fiscal 
143.33  year 2004, and 29 percent for fiscal year 2005, and 22 percent 
143.34  for fiscal year 2006 and thereafter of the district's 
143.35  integration revenue as defined in subdivision 3. 
143.36     [EFFECTIVE DATE.] This section is effective July 1, 2003. 
144.1      Sec. 10.  Minnesota Statutes 2002, section 124D.86, 
144.2   subdivision 5, is amended to read: 
144.3      Subd. 5.  [INTEGRATION AID.] A district's integration aid 
144.4   equals 63 percent for fiscal year 2003, 78 percent for fiscal 
144.5   year 2004, and 71 percent for fiscal year 2005, and 78 percent 
144.6   for fiscal year 2006 and thereafter of the district's 
144.7   integration revenue as defined in subdivision 3. 
144.8      Sec. 11.  Minnesota Statutes 2002, section 124D.88, is 
144.9   amended by adding a subdivision to read: 
144.10     Subd. 5.  [SPECIAL EDUCATION FUNDING.] Notwithstanding 
144.11  section 125A.75, subdivision 7, or 125A.76, subdivision 7, upon 
144.12  approval of each school board that is a member of a joint powers 
144.13  agreement operating a metropolitan magnet school, the magnet 
144.14  school is eligible for direct receipt of special education aid 
144.15  paid to the metropolitan magnet school according to section 
144.16  125A.76 as though it were a school district.  The metropolitan 
144.17  magnet school may charge tuition to the district of residence as 
144.18  provided in section 125A.11. 
144.19     [EFFECTIVE DATE.] This section is effective for revenue for 
144.20  fiscal year 2005. 
144.21     Sec. 12.  Minnesota Statutes 2002, section 126C.457, is 
144.22  amended to read: 
144.23     126C.457 [CAREER AND TECHNICAL LEVY.] 
144.24     For taxes payable in 2003 2004 and 2005 only, a school 
144.25  district may levy an amount equal to the greater of (1) $10,000, 
144.26  or (2) the district's fiscal year 2001 entitlement for career 
144.27  and technical aid under section 124D.453.  The district must 
144.28  recognize the full amount of this levy as revenue for the fiscal 
144.29  year in which it is certified.  Revenue received under this 
144.30  section must be reserved and used only for career and technical 
144.31  programs.  
144.32     Sec. 13.  [CAREER AND TECHNICAL PROGRAM.] 
144.33     The commissioner of children, families, and learning must 
144.34  include a career and technical education program plan as part of 
144.35  the recommendations of the kindergarten through grade 12 task 
144.36  force on school finance reform for fiscal years 2006 and later.  
145.1   The proposal may include levy amounts equal or greater to the 
145.2   taxes payable 2005 levy amounts. 
145.3      Sec. 14.  [TRIAL TRANSPORTATION FEE.] 
145.4      Subdivision 1.  [TOTAL FEE.] For fiscal years 2004 and 2005 
145.5   only, school districts may elect to charge transportation fees 
145.6   under this section to pay a portion of the cost of regular and 
145.7   excess transportation of pupils to and from school.  A school 
145.8   district that elects to charge transportation fees under this 
145.9   section is not eligible to charge transportation fees under 
145.10  Minnesota Statutes, section 123B.36, subdivision 1, clause 
145.11  (11).  Fees charged under this section may not exceed the total 
145.12  district fees that the district charged in fiscal year 2003 for 
145.13  transportation under Minnesota Statutes, section 123B.36, 
145.14  subdivision 1, clause (11), plus the district's total trial 
145.15  transportation fee, determined according to subdivision 2. 
145.16     Subd. 2.  [FEE CALCULATION.] A school district's trial 
145.17  transportation fee for any school year may not exceed the 
145.18  greater of: 
145.19     (1) zero; or 
145.20     (2) the product of the district's adjusted marginal cost 
145.21  pupil units for the second previous school year times the lesser 
145.22  of: 
145.23     (i) the sum of the district's regular and excess 
145.24  transportation costs per adjusted marginal cost pupil unit for 
145.25  the second previous school year, minus the general education 
145.26  formula allowance for that school year times .0485; or 
145.27     (ii) the general education formula allowance for the second 
145.28  previous school year times .0485. 
145.29     Subd. 3.  [GUIDELINES.] If a board charges fees for 
145.30  transportation of pupils under this section, it must establish 
145.31  guidelines for those fees to ensure that no pupil is denied 
145.32  transportation solely because of inability to pay.  Any 
145.33  transportation fees required must be applied equally to public 
145.34  and nonpublic students transported within the district.  The 
145.35  board may require fees for students transported to charter 
145.36  schools or to alternative attendance programs. 
146.1      Subd. 4.  [TWO-MILE LIMIT MORATORIUM.] The total eligible 
146.2   fee revenue established under this section may be allocated 
146.3   among all students transported by the district at the discretion 
146.4   of the school board, notwithstanding Minnesota Statutes, section 
146.5   123B.37, subdivision 1, clause (10). 
146.6      Sec. 15.  [APPROPRIATIONS.] 
146.7      Subdivision 1.  [DEPARTMENT OF CHILDREN, FAMILIES, AND 
146.8   LEARNING.] The sums indicated in this section are appropriated 
146.9   from the general fund to the department of children, families, 
146.10  and learning for the fiscal years designated. 
146.11     Subd. 2.  [CHARTER SCHOOL BUILDING LEASE AID.] (a) For 
146.12  building lease aid under Minnesota Statutes, section 124D.11, 
146.13  subdivision 4: 
146.14       $15,527,000    .....     2004 
146.15       $19,029,000    .....     2005 
146.16     The 2004 appropriation includes $2,524,000 for 2003 and 
146.17  $13,003,000 for 2004. 
146.18     The 2005 appropriation includes $3,250,000 for 2004 and 
146.19  $15,779,000 for 2005.  
146.20     (b) If the appropriation amount attributable to either year 
146.21  is insufficient, the aid for that year shall be prorated among 
146.22  eligible schools so as not to exceed the total authorized 
146.23  appropriation for that year. 
146.24     (c) The base amount for fiscal year 2006 is $20,742,000, 
146.25  and the base amount for fiscal year 2007 is $22,000,000. 
146.26     Subd. 3.  [CHARTER SCHOOL START-UP AID.] (a) For charter 
146.27  school start-up cost aid under Minnesota Statutes, section 
146.28  124D.11: 
146.29       $1,651,000     .....     2004 
146.30       $1,265,000     .....     2005 
146.31     The 2004 appropriation includes $220,000 for 2003 and 
146.32  $1,431,000 for 2004.  
146.33     The 2005 appropriation includes $357,000 for 2004 and 
146.34  $908,000 for 2005. 
146.35     (b) For fiscal year 2005 only, notwithstanding Minnesota 
146.36  Statutes, section 124D.11, subdivision 8, the commissioner shall 
147.1   allocate start-up aid only to eligible charter schools that are 
147.2   in their second year of operation. 
147.3      Subd. 4.  [CHARTER SCHOOL INTEGRATION GRANTS.] For grants 
147.4   to charter schools to promote integration and desegregation 
147.5   under Minnesota Statutes, section 124D.11, subdivision 6, 
147.6   paragraph (e): 
147.7        $48,000        .....     2004 
147.8        $50,000        .....     2005
147.9      The 2004 appropriation includes $8,000 for 2003 and $40,000 
147.10  for 2004. 
147.11     The 2005 appropriation includes $10,000 for 2004 and 
147.12  $40,000 for 2005. 
147.13     Subd. 5.  [INTEGRATION AID.] For integration aid under 
147.14  Minnesota Statutes, section 124D.86, subdivision 5: 
147.15       $59,656,000    .....     2004 
147.16       $59,146,000    .....     2005 
147.17     The 2004 appropriation includes $8,428,000 for 2003 and 
147.18  $51,228,000 for 2004. 
147.19     The 2005 appropriation includes $12,806,000 for 2004 and 
147.20  $46,340,000 for 2005.  
147.21     Subd. 6.  [MAGNET SCHOOL GRANTS.] For magnet school and 
147.22  program grants: 
147.23       $750,000       .....     2004 
147.24       $750,000       .....     2005 
147.25     These amounts may be used for magnet school programs under 
147.26  Minnesota Statutes, section 124D.88.  $90,000 in fiscal year 
147.27  2004 is to extend a grant from fiscal year 2003 to the Ely 
147.28  magnet school in independent school district No. 696, Ely. 
147.29     Subd. 7.  [MAGNET SCHOOL START-UP AID.] For magnet school 
147.30  start-up aid under Minnesota Statutes, section 124D.88: 
147.31       $ 37,000       .....     2004 
147.32       $454,000       .....     2005 
147.33     The 2004 appropriation includes $37,000 for 2003 and $0 for 
147.34  2004.  
147.35     The 2005 appropriation includes $0 for 2004 and $454,000 
147.36  for 2005. 
148.1      Subd. 8.  [INTERDISTRICT DESEGREGATION OR INTEGRATION 
148.2   TRANSPORTATION GRANTS.] For interdistrict desegregation or 
148.3   integration transportation grants under Minnesota Statutes, 
148.4   section 124D.87: 
148.5        $5,796,000     .....     2004 
148.6        $8,401,000     .....     2005
148.7      Subd. 9.  [SUCCESS FOR THE FUTURE.] For American Indian 
148.8   success for the future grants under Minnesota Statutes, section 
148.9   124D.81: 
148.10       $2,073,000     .....     2004
148.11       $2,137,000     .....     2005
148.12     The 2004 appropriation includes $363,000 for 2003 and 
148.13  $1,710,000 for 2004. 
148.14     The 2005 appropriation includes $427,000 for 2004 and 
148.15  $1,710,000 for 2005. 
148.16     Subd. 10.  [AMERICAN INDIAN SCHOLARSHIPS.] For American 
148.17  Indian scholarships under Minnesota Statutes, section 124D.84: 
148.18       $1,875,000     .....     2004 
148.19       $1,875,000     .....     2005 
148.20     Subd. 11.  [AMERICAN INDIAN TEACHER PREPARATION 
148.21  GRANTS.] For joint grants to assist American Indian people to 
148.22  become teachers under Minnesota Statutes, section 122A.63: 
148.23       $190,000       .....     2004 
148.24       $190,000       .....     2005 
148.25     Subd. 12.  [TRIBAL CONTRACT SCHOOLS.] For tribal contract 
148.26  school aid under Minnesota Statutes, section 124D.83: 
148.27       $2,135,000     .....     2004
148.28       $2,336,000     .....     2005
148.29     The 2004 appropriation includes $285,000 for 2003 and 
148.30  $1,850,000 for 2004. 
148.31     The 2005 appropriation includes $462,000 for 2004 and 
148.32  $1,874,000 for 2005. 
148.33     Subd. 13.  [EARLY CHILDHOOD PROGRAMS AT TRIBAL 
148.34  SCHOOLS.] For early childhood family education programs at 
148.35  tribal contract schools under Minnesota Statutes, section 
148.36  124D.83, subdivision 4: 
149.1        $68,000        .....     2004 
149.2        $68,000        .....     2005 
149.3      Subd. 14.  [STATEWIDE TESTING SUPPORT.] For supporting 
149.4   implementation of the graduation standards: 
149.5        $6,500,000     .....     2004 
149.6        $6,500,000     .....     2005 
149.7      Subd. 15.  [BEST PRACTICES SEMINARS.] For best practices 
149.8   graduation rule seminars and other professional development 
149.9   capacity building activities that assure proficiency in teaching 
149.10  and implementation of graduation rule standards: 
149.11       $2,180,000     .....     2004
149.12       $2,180,000     .....     2005
149.13     $250,000 each year is for the Minnesota learning resource 
149.14  center. 
149.15     Subd. 16.  [EXAMINATION FEES; TEACHER TRAINING AND SUPPORT 
149.16  PROGRAMS.] (a) For students' advanced placement and 
149.17  international baccalaureate examination fees under Minnesota 
149.18  Statutes 2000, section 120B.13, subdivision 3, and the training 
149.19  and related costs for teachers and other interested educators 
149.20  under Minnesota Statutes 2000, section 120B.13, subdivision 1: 
149.21       $450,000       .....     2002 
149.22       $450,000       .....     2003   
149.23     (b) $110,000 each year is for examination fees for pupils 
149.24  of low-income families in public and nonpublic schools.  The 
149.25  commissioner shall pay all examination fees for all students of 
149.26  low-income families under Minnesota Statutes, section 120B.13, 
149.27  subdivision 3.  If this amount is insufficient, a portion of the 
149.28  funds under paragraph (c) must be used for this purpose. 
149.29     (c) Notwithstanding Minnesota Statutes, section 120B.13, 
149.30  subdivision 1, $340,000 each year is for teachers to attend 
149.31  subject matter summer training programs and follow-up support 
149.32  workshops approved by the advanced placement or international 
149.33  baccalaureate programs.  The advanced placement program shall 
149.34  receive 75 percent of this amount each year, and the 
149.35  international baccalaureate program shall receive 25 percent of 
149.36  this amount each year.  The amount of the subsidy for each 
150.1   teacher attending an advanced placement or international 
150.2   baccalaureate summer training program or workshop shall be the 
150.3   same.  The commissioner shall determine the payment process and 
150.4   the amount of the subsidy. 
150.5      Subd. 17.  [FIRST GRADE PREPAREDNESS.] For first grade 
150.6   preparedness grants under Minnesota Statutes, section 124D.081: 
150.7        $7,250,000     .....     2004 
150.8        $7,250,000     .....     2005
150.9      Subd. 18.  [YOUTHWORKS PROGRAM.] For funding youthworks 
150.10  programs under Minnesota Statutes, sections 124D.37 to 124D.45: 
150.11       $1,788,000     .....     2004 
150.12       $1,788,000     .....     2005 
150.13     A grantee organization may provide health and child care 
150.14  coverage to the dependents of each participant enrolled in a 
150.15  full-time youth works program to the extent such coverage is not 
150.16  otherwise available. 
150.17     Subd. 19.  [STUDENT ORGANIZATIONS.] For student 
150.18  organizations: 
150.19       $625,000       .....     2004
150.20       $625,000       .....     2005
150.21     Each student organization shall receive its fiscal year 
150.22  2004 and 2005 appropriations using the allocation model that was 
150.23  in effect for fiscal year 2002. 
150.24     Subd. 20.  [APPROPRIATION; REGIONAL TRAINING SITES FOR 
150.25  HIV/STI EDUCATION.] For regional training sites for HIV/STI 
150.26  education in schools established under Laws 1997, First Special 
150.27  Session chapter 4, article 6, section 18: 
150.28       $250,000       .....     2004
150.29       $250,000       .....     2005 
150.30     This amount must be used to support five regional sites 
150.31  that may or may not include the existing sites. 
150.32     Subd. 21.  [COLLABORATIVE URBAN EDUCATOR RECRUITMENT AND 
150.33  TRAINING PROGRAMS.] For grants to collaborative urban educator 
150.34  recruitment and training programs: 
150.35       $975,000       .....     2004
150.36       $975,000       .....     2005
151.1      $375,000 each year is for the Southeast Asian teacher 
151.2   program at Concordia University, St. Paul; $300,000 each year is 
151.3   for the collaborative urban educator program at the University 
151.4   of St. Thomas; and $300,000 each year is for the center for 
151.5   excellence in urban teaching at Hamline University.  Grant 
151.6   recipients must collaborate with urban and nonurban school 
151.7   districts. 
151.8      Any balance in the first year does not cancel but is 
151.9   available in the second year. 
151.10     Subd. 22.  [INTEGRATION PROGRAMS.] For minority fellowship 
151.11  grants under Laws 1994, chapter 647, article 8, section 29; 
151.12  minority teacher incentives under Minnesota Statutes, section 
151.13  122A.65; teachers of color program grants under Minnesota 
151.14  Statutes, section 122A.64; and cultural exchange grants under 
151.15  Minnesota Statutes, section 124D.89: 
151.16       $1,000,000     .....     2004
151.17       $1,000,000     .....     2005
151.18     Subd. 23.  [READING COMPETENCY GRANTS.] For reading 
151.19  competency grants under Minnesota Statutes, section 120B.12: 
151.20       $100,000       .....     2004
151.21       $100,000       .....     2005
151.22     Sec. 16.  [REPEALER.] 
151.23     (a) Laws 2001, First Special Session chapter 6, article 2, 
151.24  sections 64 and 70, are repealed. 
151.25     (b) Minnesota Statutes 2002, section 124D.11, subdivision 
151.26  8, is repealed. 
151.27     [EFFECTIVE DATE.] Paragraph (b) is effective for revenue 
151.28  for fiscal year 2006 and later. 
151.29                             ARTICLE 9 
151.30                          SPECIAL PROGRAMS 
151.31     Section 1.  Minnesota Statutes 2002, section 124D.081, is 
151.32  amended by adding a subdivision to read: 
151.33     Subd. 9.  [RESERVE ACCOUNT.] First grade preparedness 
151.34  revenue must be placed in a reserve account within the general 
151.35  fund and may only be used for first grade preparedness programs 
151.36  at qualifying school sites. 
152.1      Sec. 2.  [APPROPRIATIONS.] 
152.2      Subdivision 1.  [DEPARTMENT OF CHILDREN, FAMILIES, AND 
152.3   LEARNING.] The sums indicated in this section are appropriated 
152.4   from the general fund to the department of children, families, 
152.5   and learning for the fiscal years designated. 
152.6      Subd. 2.  [SPECIAL EDUCATION; REGULAR.] For special 
152.7   education aid under Minnesota Statutes, section 125A.75: 
152.8         534,618,000   .....     2004 
152.9         574,184,000   .....     2005 
152.10     The 2004 appropriation includes $90,577,000 for 2003 and 
152.11  $444,041,000 for 2004. 
152.12     The 2005 appropriation includes $111,010,000 for 2004 and 
152.13  $463,174,000 for 2005. 
152.14     Subd. 3.  [AID FOR CHILDREN WITH DISABILITIES.] For aid 
152.15  under Minnesota Statutes, section 125A.75, subdivision 3, for 
152.16  children with disabilities placed in residential facilities 
152.17  within the district boundaries for whom no district of residence 
152.18  can be determined: 
152.19       $2,177,000     .....     2004 
152.20       $2,244,000     .....     2005 
152.21     If the appropriation for either year is insufficient, the 
152.22  appropriation for the other year is available.  
152.23     Subd. 4.  [TRAVEL FOR HOME-BASED SERVICES.] For aid for 
152.24  teacher travel for home-based services under Minnesota Statutes, 
152.25  section 125A.75, subdivision 1: 
152.26       $220,000       .....     2004 
152.27       $261,000       .....     2005 
152.28     The 2004 appropriation includes $34,000 for 2003 and 
152.29  $186,000 for 2004. 
152.30     The 2005 appropriation includes $46,000 for 2004 and 
152.31  $215,000 for 2005. 
152.32     Subd. 5.  [SPECIAL EDUCATION; EXCESS COSTS.] For excess 
152.33  cost aid under Minnesota Statutes, section 125A.79, subdivision 
152.34  7: 
152.35       $92,605,000    .....     2004 
152.36       $94,827,000    .....     2005 
153.1      The 2004 appropriation includes $41,754,000 for 2003 and 
153.2   $50,851,000 for 2004. 
153.3      The 2005 appropriation includes $43,058,000 for 2004 and 
153.4   $51,769,000 for 2005.  
153.5      Subd. 6.  [TRANSITION FOR DISABLED STUDENTS.] For aid for 
153.6   transition programs for children with disabilities under 
153.7   Minnesota Statutes, section 124D.454: 
153.8        $8,625,000     .....     2004 
153.9        $8,867,000     .....     2005 
153.10     The 2004 appropriation includes $1,516,000 for 2003 and 
153.11  $7,109,000 for 2004.  
153.12     The 2005 appropriation includes $1,777,000 for 2004 and 
153.13  $7,090,000 for 2005.  
153.14     Subd. 7.  [COURT-PLACED SPECIAL EDUCATION REVENUE.] For 
153.15  reimbursing serving school districts for unreimbursed eligible 
153.16  expenditures attributable to children placed in the serving 
153.17  school district by court action under Minnesota Statutes, 
153.18  section 125A.79, subdivision 4: 
153.19       $152,000       .....     2004 
153.20       $160,000       .....     2005 
153.21     Subd. 8.  [OUT-OF-STATE TUITION SPECIAL EDUCATION.] For 
153.22  special education out-of-state tuition according to Minnesota 
153.23  Statutes, section 125A.79, subdivision 8: 
153.24       $250,000       .....     2004 
153.25       $250,000       .....     2005 
153.26     Sec. 3.  [REPEALER.] 
153.27     Minnesota Statutes 2002, section 125A.75, subdivision 8, is 
153.28  repealed. 
153.29                             ARTICLE 10 
153.30    EDUCATION REFORM; FACILITIES AND TECHNOLOGY; FUND TRANSFERS 
153.31     Section 1.  Minnesota Statutes 2002, section 122A.413, is 
153.32  amended to read: 
153.33     122A.413 [EDUCATIONAL IMPROVEMENT PLAN.] 
153.34     Subdivision 1.  [QUALIFYING PLAN.] A district may develop 
153.35  an educational improvement plan for the purpose of qualifying 
153.36  for alternative teacher compensation principled pay practices 
154.1   aid under sections 122A.414 and 122A.415 section 122A.4142.  The 
154.2   plan must include measures for improving school district, school 
154.3   site, teacher, and individual student performance.  
154.4      Subd. 2.  [PLAN COMPONENTS.] The educational improvement 
154.5   plan must be approved by the school board and have at least 
154.6   these elements: 
154.7      (1) assessment and evaluation tools to measure student 
154.8   performance and progress; 
154.9      (2) performance goals and benchmarks for improvement; 
154.10     (3) measures of student attendance and completion rates; 
154.11     (4) a rigorous professional development system, consistent 
154.12  with section 122A.60, that is aligned with educational 
154.13  improvement, designed to achieve teaching quality improvement, 
154.14  and consistent with clearly defined research-based standards; 
154.15     (5) measures of student, family, and community involvement 
154.16  and satisfaction; 
154.17     (6) a data system about students and their academic 
154.18  progress that provides parents and the public with 
154.19  understandable information; and 
154.20     (7) a teacher induction and mentoring program for 
154.21  probationary teachers that provides continuous learning and 
154.22  sustained teacher support.  The process for developing the plan 
154.23  must involve district teachers; and 
154.24     (8) substantial teacher participation in developing the 
154.25  plan, including teachers selected by the exclusive 
154.26  representative of the teachers. 
154.27     Subd. 3.  [SCHOOL SITE ACCOUNTABILITY.] A district that 
154.28  develops a plan under subdivisions 1 and 2 must ensure that each 
154.29  school site develops a board-approved educational improvement 
154.30  plan that is aligned with the district educational improvement 
154.31  plan under subdivision 2 and developed with teacher 
154.32  participation consistent with subdivision 2, clause (8).  While 
154.33  a site plan must be consistent with the district educational 
154.34  improvement plan, it may establish performance goals and 
154.35  benchmarks that meet or exceed those of the district.  The 
154.36  process for developing the plan must involve site teachers.  
155.1      [EFFECTIVE DATE.] This section is effective for fiscal year 
155.2   2005 and thereafter. 
155.3      Sec. 2.  [122A.4142] [PRINCIPLED PAY PRACTICES FOR 
155.4   TEACHERS.] 
155.5      Subdivision 1.  [PRINCIPLED PAY PRACTICES SYSTEM.] A school 
155.6   district and the exclusive representative of the teachers may 
155.7   adopt, by agreement, principled pay practices under subdivision 
155.8   2 to provide incentives to attract and retain high-quality 
155.9   teachers, encourage high-quality teachers to accept difficult 
155.10  assignments, encourage teachers to improve their knowledge and 
155.11  skills, and support teachers' roles in improving students' 
155.12  educational achievement. 
155.13     Subd. 2.  [ELIGIBILITY FOR PRINCIPLED PAY PRACTICES 
155.14  AID.] To be eligible for principled pay practices aid, a school 
155.15  district must submit to the department: 
155.16     (a) A districtwide or site-based educational improvement 
155.17  plan as described in section 122A.413. 
155.18     (b) An executed collective bargaining agreement that 
155.19  contains at least the following elements: 
155.20     (1) a description of the conditions or actions necessary 
155.21  for career advancement and additional compensation; 
155.22     (2) compensation provisions that base at least 60 percent 
155.23  of any increase in compensation on performance and not on years 
155.24  of service or the attainment of additional education or 
155.25  training; 
155.26     (3) career advancement options for teachers retaining 
155.27  primary roles in student instruction and for other members of 
155.28  the bargaining unit; 
155.29     (4) incentives for teachers' continuous improvement in 
155.30  content knowledge, pedagogy, and use of best practices; 
155.31     (5) an objective evaluation program, including classroom or 
155.32  performance observation, that is aligned with the district's or 
155.33  site's educational improvement plan, and is a component of 
155.34  determining performance; 
155.35     (6) provisions preventing any teacher's compensation from 
155.36  being reduced as a result of implementing principled pay 
156.1   practices; 
156.2      (7) provisions enabling any teacher in the district if the 
156.3   principled pay practices are applied districtwide, or at a site, 
156.4   if the practices apply only to a site, to participate in the 
156.5   principled pay practices without limitations by quota or other 
156.6   restrictions; 
156.7      (8) provisions encouraging collaboration among teachers 
156.8   rather than competition; and 
156.9      (9) provisions for participation by all teachers in a 
156.10  district, all teachers at a site, or at least 25 percent of the 
156.11  teachers in a district. 
156.12     (c) An agreement may contain different compensation 
156.13  provisions for separate classifications of employees. 
156.14     Subd. 3.  [COMMISSIONER APPROVAL.] (a) Before concluding a 
156.15  collective bargaining agreement, a district may submit a 
156.16  proposed agreement and educational improvement plan for review, 
156.17  comment, and preliminary approval by the commissioner.  If the 
156.18  plan and agreement are executed in the same form as 
156.19  preliminarily approved by the commissioner, the plan and 
156.20  agreement must be approved without further review. 
156.21     (b) The application to the commissioner must contain a 
156.22  formally adopted collective bargaining agreement, memorandum of 
156.23  understanding, or other binding agreement that implements 
156.24  principled pay practices consistent with this section. 
156.25     (c) The commissioner's approval must be based on the 
156.26  requirements established in subdivision 2.  If the commissioner 
156.27  does not approve an application, the notice to the school 
156.28  district must provide details regarding the commissioner's 
156.29  reason for rejecting the application.  
156.30     (d) A school district that intends to apply for principled 
156.31  pay practices aid for the first time must notify the 
156.32  commissioner in writing by November 1 prior to the academic year 
156.33  for which they intend to seek aid.  The commissioner must 
156.34  approve initial applications for school districts qualifying 
156.35  under subdivision 4, paragraph (b), clause (1), by January 15 of 
156.36  each year. 
157.1      Subd. 4.  [AID AMOUNT.] (a) A school district that meets 
157.2   the conditions of this section, as approved by the commissioner, 
157.3   is eligible for principled pay practices aid.  
157.4      (b) Principled pay practices aid for a qualifying school 
157.5   district, site, or portion of a district or school site is as 
157.6   follows: 
157.7      (1) for a school district in which the school board and the 
157.8   exclusive representative of the teachers agree to place all 
157.9   teachers in the district or at the site in the principled pay 
157.10  practices system, aid equals $80 times the district's or the 
157.11  site's number of pupils enrolled on October 1 of the previous 
157.12  fiscal year; or 
157.13     (2) for a district in which the school board and the 
157.14  exclusive representative of the teachers agree that at least 25 
157.15  percent of the district's licensed teachers will be paid under 
157.16  the principled pay practices system, aid equals $80 times the 
157.17  percentage of participating teachers times the district's number 
157.18  of pupils enrolled as of October 1 of the previous fiscal year.  
157.19     Subd. 5.  [PERCENTAGE OF TEACHERS.] For purposes of 
157.20  subdivision 4, the percentage of teachers participating in the 
157.21  principled pay practices system equals the ratio of the number 
157.22  of licensed teachers who are working at least 60 percent of a 
157.23  full-time teacher's hours and agree to participate in the 
157.24  principled pay practices system to the total number of licensed 
157.25  teachers who are working at least 60 percent of a full-time 
157.26  teacher's hours.  
157.27     Subd. 6.  [AID TIMING.] Districts or sites with approved 
157.28  applications must receive principled pay practices aid for each 
157.29  school year that the district or site participates in the 
157.30  program.  
157.31     [EFFECTIVE DATE.] This section is effective for fiscal year 
157.32  2005 and thereafter. 
157.33     Sec. 3.  [122A.4143] [CLOSED CONTRACT.] 
157.34     A district and the exclusive representative of the teachers 
157.35  may agree jointly to reopen a collective bargaining agreement in 
157.36  order to enter into a principled pay practices system consistent 
158.1   with section 122A.4142 and an educational improvement plan under 
158.2   section 122A.413. 
158.3      Sec. 4.  [122A.4144] [DISTRICTS RECEIVING ALTERNATIVE 
158.4   TEACHER COMPENSATION AID.] 
158.5      Districts that qualified for alternative teacher 
158.6   compensation aid under section 122A.415 shall be eligible for 
158.7   principled pay practices aid provided that they retain the 
158.8   system previously approved by the commissioner through June 30, 
158.9   2005.  These districts must not receive an aid reduction, based 
158.10  on the available appropriation, until fiscal year 2006.  In 
158.11  order to receive aid after June 30, 2005, these districts must 
158.12  submit an application to the commissioner under section 
158.13  122A.4142. 
158.14     Sec. 5.  Minnesota Statutes 2002, section 123B.53, 
158.15  subdivision 4, is amended to read: 
158.16     Subd. 4.  [DEBT SERVICE EQUALIZATION REVENUE.] (a) The debt 
158.17  service equalization revenue of a district equals the sum of the 
158.18  first tier debt service equalization revenue and the second tier 
158.19  debt service equalization revenue. 
158.20     (b) The first tier debt service equalization revenue of a 
158.21  district equals the greater of zero or the eligible debt service 
158.22  revenue minus the amount raised by a levy of 15 percent times 
158.23  the adjusted net tax capacity of the district minus the second 
158.24  tier debt service equalization revenue of the district. 
158.25     (c) The second tier debt service equalization revenue of a 
158.26  district equals the greater of zero or the eligible debt service 
158.27  revenue, excluding alternative facilities levies under section 
158.28  123B.59, subdivision 5, minus the amount raised by a levy of 25 
158.29  percent times the adjusted net tax capacity of the district. 
158.30     [EFFECTIVE DATE.] This section is effective for revenue for 
158.31  fiscal year 2005. 
158.32     Sec. 6.  Minnesota Statutes 2002, section 123B.54, is 
158.33  amended to read: 
158.34     123B.54 [DEBT SERVICE APPROPRIATION.] 
158.35     (a) $25,987,000 in fiscal year 2002, $29,941,000 in fiscal 
158.36  year 2003, $40,075,000 $33,477,000 in fiscal year 2004, 2006 
159.1   and $39,774,000 $30,048,000 in fiscal years 2005 year 2007 and 
159.2   later are appropriated from the general fund to the commissioner 
159.3   of children, families, and learning for payment of debt service 
159.4   equalization aid under section 123B.53.  
159.5      (b) The appropriations in paragraph (a) must be reduced by 
159.6   the amount of any money specifically appropriated for the same 
159.7   purpose in any year from any state fund. 
159.8      Sec. 7.  Minnesota Statutes 2002, section 123B.57, 
159.9   subdivision 1, is amended to read: 
159.10     Subdivision 1.  [HEALTH AND SAFETY PROGRAM.] (a) To receive 
159.11  health and safety revenue for any fiscal year a district must 
159.12  submit to the commissioner an application for aid and levy by 
159.13  the date determined by the commissioner.  The application may be 
159.14  for hazardous substance removal, fire and life safety code 
159.15  repairs, labor and industry regulated facility and equipment 
159.16  violations, and health, safety, and environmental management, 
159.17  including indoor air quality management.  The application must 
159.18  include a health and safety program adopted by the school 
159.19  district board.  The program must include the estimated cost, 
159.20  per building, of the program by fiscal year.  Upon approval 
159.21  through the adoption of a resolution by each of an intermediate 
159.22  district's member school district boards and the approval of the 
159.23  department of children, families, and learning, a school 
159.24  district may include its proportionate share of the costs of 
159.25  health and safety projects for an intermediate district in its 
159.26  application. 
159.27     (b) Health and safety projects with an estimated cost of 
159.28  $500,000 or more per site, approved after February 1, 2003, are 
159.29  not eligible for health and safety revenue.  Health and safety 
159.30  projects with an estimated cost of $500,000 or more per site, 
159.31  approved after February 1, 2003, that meet all other 
159.32  requirements for health and safety funding, are eligible for 
159.33  alternative facilities bonding and levy revenue according to 
159.34  section 123B.59.  A school board shall not separate portions of 
159.35  a single project into components to qualify for health and 
159.36  safety revenue, and shall not combine unrelated projects into a 
160.1   single project to qualify for alternative facilities bonding and 
160.2   levy revenue. 
160.3      [EFFECTIVE DATE.] This section is effective the day 
160.4   following final enactment and applies to projects approved after 
160.5   February 1, 2003, for taxes payable in 2004 and later. 
160.6      Sec. 8.  Minnesota Statutes 2002, section 123B.57, 
160.7   subdivision 6, is amended to read: 
160.8      Subd. 6.  [USES OF HEALTH AND SAFETY REVENUE.] (a) Health 
160.9   and safety revenue may be used only for approved expenditures 
160.10  necessary to correct fire and life safety hazards, life safety 
160.11  hazards, or for the removal or encapsulation of asbestos from 
160.12  school buildings or property owned or being acquired by the 
160.13  district, asbestos-related repairs, cleanup and disposal of 
160.14  polychlorinated biphenyls found in school buildings or property 
160.15  owned or being acquired by the district, or the cleanup, 
160.16  removal, disposal, and repairs related to storing heating fuel 
160.17  or transportation fuels such as alcohol, gasoline, fuel oil, and 
160.18  special fuel, as defined in section 296A.01, labor and 
160.19  industry Minnesota occupational safety and health administration 
160.20  regulated facility and equipment hazards, indoor air quality 
160.21  mold abatement, upgrades or replacement of mechanical 
160.22  ventilation systems to meet American Society of Heating, 
160.23  Refrigerating and Air Conditioning Engineers standards and state 
160.24  mechanical code, department of health food code and swimming 
160.25  pool hazards excluding depth correction, and health, safety, and 
160.26  environmental management.  Health and safety revenue must not be 
160.27  used to finance a lease purchase agreement, installment purchase 
160.28  agreement, or other deferred payments agreement.  Health and 
160.29  safety revenue must not be used for the construction of new 
160.30  facilities or the purchase of portable classrooms, for interest 
160.31  or other financing expenses, or for energy efficiency projects 
160.32  under section 123B.65.  The revenue may not be used for a 
160.33  building or property or part of a building or property used for 
160.34  post-secondary instruction or administration or for a purpose 
160.35  unrelated to elementary and secondary education. 
160.36     (b) Notwithstanding paragraph (a), health and safety 
161.1   revenue must not be used for replacement of building materials 
161.2   or facilities including roof, walls, windows, internal fixtures 
161.3   and flooring, nonhealth and safety costs associated with 
161.4   demolition of facilities, structural repair or replacement of 
161.5   facilities due to unsafe conditions, violence prevention and 
161.6   facility security, ergonomics, building and heating, ventilating 
161.7   and air conditioning supplies, maintenance, cleaning, testing, 
161.8   and calibration activities.  All assessments, investigations, 
161.9   inventories, and support equipment not leading to the 
161.10  engineering or construction of a project shall be included in 
161.11  the health, safety, and environmental management costs in 
161.12  subdivision 8, paragraph (a). 
161.13     [EFFECTIVE DATE.] This section is effective the day 
161.14  following final enactment and applies to projects approved after 
161.15  February 1, 2003, for taxes payable in 2004 and later. 
161.16     Sec. 9.  Minnesota Statutes 2002, section 123B.59, 
161.17  subdivision 1, is amended to read: 
161.18     Subdivision 1.  [TO QUALIFY.] (a) An independent or special 
161.19  school district qualifies to participate in the alternative 
161.20  facilities bonding and levy program if the district has: 
161.21     (1) more than 66 students per grade; 
161.22     (2) over 1,850,000 square feet of space and the average age 
161.23  of building space is 15 years or older or over 1,500,000 square 
161.24  feet and the average age of building space is 35 years or older; 
161.25     (3) insufficient funds from projected health and safety 
161.26  revenue and capital facilities revenue to meet the requirements 
161.27  for deferred maintenance, to make accessibility improvements, or 
161.28  to make fire, safety, or health repairs; and 
161.29     (4) a ten-year facility plan approved by the commissioner 
161.30  according to subdivision 2. 
161.31     (b) An independent or special school district not eligible 
161.32  to participate in the alternative facilities bonding and levy 
161.33  program under paragraph (a) qualifies for limited participation 
161.34  in the program if the district has: 
161.35     (1) one or more health and safety projects with an 
161.36  estimated cost of $500,000 or more per site that would qualify 
162.1   for health and safety revenue except for the project size 
162.2   limitation in section 123B.57, subdivision 1, paragraph (b); and 
162.3      (2) insufficient funds from capital facilities revenue to 
162.4   fund those projects. 
162.5      [EFFECTIVE DATE.] This section is effective for revenue for 
162.6   fiscal year 2005. 
162.7      Sec. 10.  Minnesota Statutes 2002, section 123B.59, 
162.8   subdivision 2, is amended to read: 
162.9      Subd. 2.  [TEN-YEAR FACILITY PLAN.] (a) A district 
162.10  qualifying district under subdivision 1, paragraph (a), must 
162.11  have a ten-year facility plan approved by the commissioner that 
162.12  includes an inventory of projects and costs that would be 
162.13  eligible for: 
162.14     (1) health and safety revenue, without restriction as to 
162.15  project size; 
162.16     (2) disabled access levy; and 
162.17     (3) deferred capital expenditures and maintenance projects 
162.18  necessary to prevent further erosion of facilities. 
162.19     (b) A district qualifying under subdivision 1, paragraph 
162.20  (b), must have a five-year plan approved by the commissioner 
162.21  that includes an inventory of projects and costs for health and 
162.22  safety projects with an estimated cost of $500,000 or more per 
162.23  site that would qualify for health and safety revenue except for 
162.24  the project size limitation in section 123B.57, subdivision 1, 
162.25  paragraph (b). 
162.26     (c) The school district must: 
162.27     (1) annually update the plan plans; 
162.28     (2) biennially submit a facility maintenance plan; and 
162.29     (3) indicate whether the district will issue bonds to 
162.30  finance the plan or levy for the costs. 
162.31     [EFFECTIVE DATE.] This section is effective for revenue for 
162.32  fiscal year 2005. 
162.33     Sec. 11.  Minnesota Statutes 2002, section 123B.59, 
162.34  subdivision 3, is amended to read: 
162.35     Subd. 3.  [BOND AUTHORIZATION.] (a) A school district, upon 
162.36  approval of its board and the commissioner, may issue general 
163.1   obligation bonds under this section to finance approved 
163.2   facilities plans approved by its board and the commissioner.  
163.3   Chapter 475, except sections 475.58 and 475.59, must be complied 
163.4   with.  The district may levy under subdivision 5 for the debt 
163.5   service revenue.  The authority to issue bonds under this 
163.6   section is in addition to any bonding authority authorized by 
163.7   this chapter, or other law.  The amount of bonding authority 
163.8   authorized under this section must be disregarded in calculating 
163.9   the bonding or net debt limits of this chapter, or any other law 
163.10  other than section 475.53, subdivision 4. 
163.11     (b) Before a district issues bonds under this subdivision, 
163.12  it must publish notice of the intended projects, the amount of 
163.13  the bond issue, and the total amount of district indebtedness. 
163.14     [EFFECTIVE DATE.] This section is effective the day 
163.15  following final enactment and applies to bonds issued after 
163.16  April 15, 2003, for taxes payable in 2004 and later. 
163.17     Sec. 12.  Minnesota Statutes 2002, section 123B.59, is 
163.18  amended by adding a subdivision to read: 
163.19     Subd. 3a.  [LEVY AUTHORIZATION.] (a) A school district may 
163.20  levy under this section to finance the portion of facilities 
163.21  plans approved by its board and the commissioner that are not 
163.22  financed through bond issues according to subdivision 3. 
163.23     (b) Before a district levies under this subdivision, it 
163.24  must publish notice of the intended projects, including the 
163.25  total estimated project cost. 
163.26     [EFFECTIVE DATE.] This section is effective the day 
163.27  following final enactment and applies to levies for taxes 
163.28  payable in 2004 and later. 
163.29     Sec. 13.  Minnesota Statutes 2002, section 123B.59, 
163.30  subdivision 5, is amended to read: 
163.31     Subd. 5.  [LEVY AUTHORIZED.] A district, after local board 
163.32  approval, may levy for costs related to an approved facility 
163.33  plan as follows:  
163.34     (a) if the district has indicated to the commissioner that 
163.35  bonds will be issued, the district may levy for the principal 
163.36  and interest payments on outstanding bonds issued according to 
164.1   subdivision 3 after reduction for any alternative facilities aid 
164.2   receivable under subdivision 6; or 
164.3      (b) if the district has indicated to the commissioner that 
164.4   the plan will be funded through levy, the district may levy 
164.5   according to the schedule approved in the plan after reduction 
164.6   for any alternative facilities aid receivable under subdivision 
164.7   6. 
164.8      [EFFECTIVE DATE.] This section is effective for taxes 
164.9   payable in 2004. 
164.10     Sec. 14.  [123B.595] [DEFERRED MAINTENANCE REVENUE.] 
164.11     Subdivision 1.  [ELIGIBILITY.] Any school district that is 
164.12  not eligible for the alternative facilities bonding and levy 
164.13  program under section 123B.59, subdivision 1, paragraph (a), is 
164.14  eligible to receive deferred maintenance revenue.  Revenue 
164.15  received under this section must be used for deferred 
164.16  maintenance, to make accessibility improvements, or to make 
164.17  fire, safety, or health repairs. 
164.18     Subd. 2.  [REVENUE FORMULA.] An eligible school district's 
164.19  deferred maintenance revenue is equal to its adjusted marginal 
164.20  cost pupil units multiplied times the deferred maintenance 
164.21  allowance. 
164.22     Subd. 3.  [DEFERRED MAINTENANCE ALLOWANCE.] For fiscal year 
164.23  2005, the deferred maintenance allowance is $40.  For fiscal 
164.24  years 2006, 2007, and 2008, the deferred maintenance allowance 
164.25  is $26. 
164.26     Subd. 4.  [CONDITIONAL LEVY AUTHORIZATION.] An eligible 
164.27  school district, under subdivision 1, is authorized to levy 
164.28  against its adjusted net tax capacity an amount equal to the 
164.29  revenue authorized under subdivision 2, if state aid is not 
164.30  appropriated for this program.  The levy authority granted to 
164.31  school districts in this subdivision shall be reduced in equal 
164.32  proportion to the amount of state aid appropriated to districts 
164.33  for the same purpose. 
164.34     Subd. 5.  [EXPIRATION.] This section expires on December 
164.35  31, 2007. 
164.36     [EFFECTIVE DATE.] This section is effective for fiscal 
165.1   years 2005, 2006, 2007, and 2008. 
165.2      Sec. 15.  [125B.22] [EDUCATION TELECOMMUNICATIONS FUND.] 
165.3      Subdivision 1.  [FUND ESTABLISHED.] An education 
165.4   telecommunications fund is established as an account in the 
165.5   state treasury.  Earnings, such as interest, dividends, and any 
165.6   other earnings arising from fund assets, must be credited to the 
165.7   account. 
165.8      Subd. 2.  [ACCESS FEE.] A surcharge of 25 cents per month 
165.9   will be added to end-user bills by communications providers for 
165.10  each customer wireline or wireless access line for voice or data 
165.11  telecommunications services. 
165.12     Fees imposed under this subdivision shall be collected in a 
165.13  manner identical to other fees collected under section 403.11, 
165.14  subdivision 1, but shall appear on customers' bill statements 
165.15  separately from the fees collected for the 911 emergency 
165.16  telecommunications service fee.  Revenue, including the interest 
165.17  and penalties, derived from the fee imposed under this 
165.18  subdivision shall be deposited in the education 
165.19  telecommunications fund account. 
165.20     Subd. 3.  [LEARNING NETWORK.] Commencing in fiscal year 
165.21  2004, the account shall fund the kindergarten through grade 12 
165.22  schools and public library portions of the learning network of 
165.23  Minnesota formerly funded through the department of children, 
165.24  families, and learning.  Eligible expenditures shall include 
165.25  telecommunication access fees, wide-area network maintenance and 
165.26  support costs, nonrecurring installation costs, and other costs 
165.27  as defined by the Minnesota education telecommunications council.
165.28     Subd. 4.  [MINNESOTA EDUCATION TELECOMMUNICATIONS COUNCIL 
165.29  (METC).] The Minnesota education telecommunications council 
165.30  (METC) has oversight responsibility for the operation of the 
165.31  network, and must develop a funding plan consistent with the 
165.32  regional distribution method recommended by the 2002 permanent 
165.33  funding report.  The METC must also establish standards for 
165.34  interoperability and minimum bandwidth. 
165.35     Subd. 5.  [E-RATES.] All kindergarten through grade 12 
165.36  schools and public libraries receiving telecommunications funds 
166.1   from the state of Minnesota must apply for e-rate discounts 
166.2   through the appropriate region or cluster.  Regions and clusters 
166.3   denied e-rate discounts will be fully funded through the 
166.4   education telecommunications fund account.  Funds approved 
166.5   through the e-rate appeals process are deposited to the account. 
166.6      Subd. 6.  [FISCAL AGENT.] The department of children, 
166.7   families, and learning is the fiscal agent for funding programs 
166.8   under this section and is not authorized to, nor responsible 
166.9   for, the management or operation of those programs. 
166.10     Subd. 7.  [ADMINISTRATION.] Not more than $200,000 each 
166.11  fiscal year may be expended from the account for paying the 
166.12  expenses of the department of children, families, and learning 
166.13  in administering this section. 
166.14     Subd. 8.  [APPROPRIATION.] Money in the account is 
166.15  appropriated to the commissioner of children, families, and 
166.16  learning for the purposes of this section.  Money in the account 
166.17  is carried forward. 
166.18     Subd. 9.  [EXPIRATION.] This section expires June 30, 2009. 
166.19     Sec. 16.  [125B.25] [ON-LINE LEARNING COURSES.] 
166.20     Subdivision 1.  [DEFINITIONS.] For the purposes of this 
166.21  section, the terms defined in this subdivision have the meanings 
166.22  given them. 
166.23     (a) "Student" means a public school or charter school 
166.24  student enrolled for one or more courses in any of kindergarten 
166.25  through grade 12. 
166.26     (b) "Enrolled district" means a school district or charter 
166.27  school in which the student taking the on-line course is 
166.28  enrolled. 
166.29     (c) "Serving district" means a school district, a charter 
166.30  school, or two or more school districts organized under a joint 
166.31  powers agreement, offering an on-line course that is accessible 
166.32  by students outside of the regular school day or from a location 
166.33  other than a public school building. 
166.34     (d) "Private school student" means a student enrolled in a 
166.35  nonpublic school as defined in section 123B.41, subdivision 9, 
166.36  excluding a homeschooled student. 
167.1      Subd. 2.  [STUDENT ELIGIBILITY.] (a) Public and private 
167.2   school students shall be enrolled full time in a Minnesota 
167.3   school.  Private school students in any of kindergarten through 
167.4   grade 12 may enroll in an on-line course offered at a public 
167.5   school and are eligible for certificates of authorization under 
167.6   subdivision 7.  
167.7      (b) Students who are age 17 or younger must have written 
167.8   permission from a parent or guardian in order to be enrolled in 
167.9   an on-line course. 
167.10     (c) Students shall notify their enrolled district at least 
167.11  30 days prior to taking an on-line course offered by a serving 
167.12  district. 
167.13     (d) A student's enrollment in an on-line course in a 
167.14  serving district shall not affect their ability to participate 
167.15  in extracurricular activities in their enrolled district. 
167.16     (e) Homeschooled students may take an on-line course at a 
167.17  Minnesota school with a financial agreement between the school 
167.18  and the parents or guardian of the homeschooled student. 
167.19     (f) A student with a disability may enroll in an on-line 
167.20  course if the student's individual education plan determines 
167.21  that the on-line course is a proper type of instruction for the 
167.22  student. 
167.23     Subd. 3.  [ENROLLED DISTRICT RESPONSIBILITY.] (a) An 
167.24  enrolled school district is not required to provide a student 
167.25  taking an on-line course in a serving district with access to a 
167.26  computer or to the Internet.  The enrolled district must provide 
167.27  equal access to school computer equipment for students taking 
167.28  on-line courses as it does for other students attending public 
167.29  schools in the district. 
167.30     (b) An enrolled school district may not prohibit a student 
167.31  from taking an on-line course in a serving district. 
167.32     (c) The enrolled district must determine the graduation 
167.33  requirements for a student taking an on-line course and must 
167.34  continue to provide other nonacademic services for the student.  
167.35  If a student successfully completes an on-line course that meets 
167.36  or exceeds a graduation standard or grade progression 
168.1   requirement at the enrolled district, that standard or 
168.2   requirement shall be considered met.  The enrolled district must 
168.3   use the same criteria for accepting on-line credits or courses 
168.4   as it does for accepting credits or courses for transfer 
168.5   students under section 124D.03, subdivision 9. 
168.6      (d) The enrolled district may reduce a student's teacher 
168.7   contact time in proportion to the number of on-line courses the 
168.8   student takes from another district or charter school. 
168.9      (e) The enrolled district may establish a maximum number of 
168.10  on-line courses that a student may take within one school year.  
168.11  The maximum number of courses under this paragraph may not be 
168.12  less than ten courses for a single student within one school 
168.13  year.  A student may exceed this limit if a student has reached 
168.14  an agreement with a serving district to pay for the course by 
168.15  other means. 
168.16     (f) The enrolled district must not adjust their average 
168.17  daily membership for students taking on-line courses in other 
168.18  school districts. 
168.19     (g) The enrolled district must not count excess contact 
168.20  time under section 126C.05, subdivision 5, for a student that is 
168.21  attending a learning year program under section 124D.128 or an 
168.22  area learning center under sections 123A.05 to 123A.09 and is 
168.23  taking an on-line course in other school districts. 
168.24     (h) The enrolled district may offer an on-line course to a 
168.25  resident homeschooled student who is eligible for on-line course 
168.26  revenue under subdivision 5 if an equivalent course is available 
168.27  at the public school site. 
168.28     (i) A district or charter school may provide instruction or 
168.29  courses using on-line or other distance learning methods to 
168.30  students enrolled in the district or charter school.  Such 
168.31  instruction or courses offered solely to enrolled students is 
168.32  not subject to the reporting requirements to the department 
168.33  under subdivision 4, paragraph (g), and the department review 
168.34  criteria under subdivision 8.  Instruction and courses offered 
168.35  to enrolled students under this paragraph must be designed and 
168.36  delivered by a teacher with a Minnesota license and not by a 
169.1   parent or other surrogate not so licensed.  The instruction may 
169.2   assemble curriculum elements developed by persons other than a 
169.3   teacher with a Minnesota license. 
169.4      Subd. 4.  [SERVING DISTRICT RESPONSIBILITY.] (a) The 
169.5   instruction for on-line courses at a serving district must be 
169.6   designed and delivered by a teacher with a Minnesota license and 
169.7   not by a parent or other surrogate not so licensed.  The 
169.8   instruction may assemble curriculum elements developed by 
169.9   persons other than a teacher with a Minnesota license.  Unless a 
169.10  waiver is granted by the commissioner of children, families, and 
169.11  learning, the serving district must not exceed a ratio of 40 
169.12  students for each instructor for each on-line course. 
169.13     (b) The serving district must offer to students who show an 
169.14  economic need technical assistance in acquiring computer 
169.15  equipment and on-line access through the Minnesota education 
169.16  credit under section 290.0674 so that students may access their 
169.17  on-line course from home. 
169.18     (c) The serving district may limit enrollment to their 
169.19  on-line courses and may set up other prerequisite restrictions. 
169.20     (d) The serving district may offer other supplemental 
169.21  on-line courses that are not eligible for reimbursement under 
169.22  this section. 
169.23     (e) The serving district must not adjust their average 
169.24  daily membership for students taking on-line courses at the 
169.25  district. 
169.26     (f) The serving district must be approved by the department 
169.27  under subdivision 8 to offer on-line courses under this section. 
169.28     (g) The serving district must file a copy of its on-line 
169.29  coursework with the department. 
169.30     Subd. 5.  [ON-LINE COURSE REVENUE.] A student enrolled in 
169.31  an on-line course shall generate average daily membership and 
169.32  on-line course revenue according to this subdivision. 
169.33     (a) A public school student who (1) was enrolled in a 
169.34  Minnesota public school for the school year before the school 
169.35  year in which the student first enrolled in an on-line course, 
169.36  and (2) continues to be enrolled in a Minnesota public school, 
170.1   shall generate average daily membership according to section 
170.2   126C.05 for courses taken in a regular classroom and for on-line 
170.3   courses.  Students under this paragraph shall not generate 
170.4   on-line course revenue or general education adjustments under 
170.5   this subdivision for on-line courses taken from the enrolled 
170.6   district. 
170.7      (b) A public school student who (1) was not enrolled in a 
170.8   Minnesota public school for the school year before the school 
170.9   year in which the student first enrolled in an on-line course, 
170.10  (2) enrolls in a Minnesota public school, and (3) enrolls in an 
170.11  on-line course, shall generate average daily membership 
170.12  according to section 126C.05 for courses taken in a regular 
170.13  classroom setting and shall generate on-line course revenue for 
170.14  the serving district according to paragraph (f). 
170.15     (c) A private school student enrolled in an on-line course 
170.16  shall generate on-line course revenue according to paragraph (f).
170.17     (d) A homeschooled student enrolled in an on-line course 
170.18  offered by the student's district of residence under subdivision 
170.19  3, paragraph (h), shall generate on-line course revenue 
170.20  according to paragraph (f), and shall not generate shared time 
170.21  aid under section 126C.19. 
170.22     (e) For a student under paragraph (a) taking an on-line 
170.23  course offered by a serving district other than the enrolled 
170.24  district, the general education aid for the serving district 
170.25  must be increased by the amount computed in this paragraph, and 
170.26  the general education aid for the enrolled district must be 
170.27  reduced by the same amount: 
170.28     (1) for each quarter course successfully completed, the 
170.29  general education aid adjustment equals the product of the 
170.30  student grade level weighting under section 126C.05, subdivision 
170.31  1, times the formula allowance, times .06; or 
170.32     (2) for each semester course successfully completed, the 
170.33  general education aid adjustment equals the product of the 
170.34  student grade level weighting under section 126C.05, subdivision 
170.35  1, times the formula allowance, times .09. 
170.36     (f) For a student under paragraph (b), (c), or (d) who has 
171.1   received a certificate of authorization under subdivision 7, the 
171.2   on-line course revenue equals: 
171.3      (1) for each quarter course successfully completed, an 
171.4   amount equal to the product of the student grade level weighting 
171.5   under section 126C.05, subdivision 1, times the formula 
171.6   allowance, times .06; or 
171.7      (2) for each semester course successfully completed, an 
171.8   amount equal to the product of the student grade level weighting 
171.9   under section 126C.05, subdivision 1, times the formula 
171.10  allowance, times .09. 
171.11     (g) No on-line course revenue or general education 
171.12  adjustments shall be generated under this subdivision for 
171.13  on-line courses that are not successfully completed. 
171.14     Subd. 6.  [DEPARTMENT PAYMENT PROCESS.] (a) The department 
171.15  must pay the serving district the amount of on-line course 
171.16  revenue and adjust the general education aid for the serving 
171.17  district and the enrolled district as provided in subdivision 5 
171.18  within 45 days upon notification from the serving district that 
171.19  the student has successfully completed a course.  The enrolled 
171.20  district may challenge the validity of the course to the 
171.21  department within the first 30 days of this period. 
171.22     (b) The serving district may bill the enrolled district for 
171.23  a greater amount than determined in subdivision 5 upon agreement 
171.24  between the enrolled district and the serving district. 
171.25     (c) Enrolled and serving districts shall not adjust their 
171.26  average daily membership for aid paid or received under this 
171.27  section. 
171.28     (d) The department must not pay state aid to a serving 
171.29  district or reduce state aid to an enrolled district if the 
171.30  student has successfully completed or is currently enrolled in 
171.31  more than ten courses in a single school year. 
171.32     Subd. 7.  [CERTIFICATES OF AUTHORIZATION FOR ON-LINE COURSE 
171.33  REVENUE.] (a) In a form and manner determined by the 
171.34  commissioner, the commissioner may issue certificates of 
171.35  authorization to students enrolled in a Minnesota public school 
171.36  under subdivision 5, paragraph (b), a Minnesota private school 
172.1   under subdivision 5, paragraph (c), or a Minnesota home school 
172.2   under subdivision 5, paragraph (d), in any of kindergarten 
172.3   through grade 12 who are applying for an on-line course at a 
172.4   serving school district.  The certificate authorizes the student 
172.5   to enroll in an on-line course and allows the serving school 
172.6   district to seek a revenue reimbursement for the course. 
172.7      (b) Each certificate of authorization is equal to the 
172.8   amount calculated under subdivision 5, paragraph (f), based on 
172.9   the student's grade level and whether the course is a quarter 
172.10  course or a semester course.  The commissioner shall limit the 
172.11  number of certificates issued to the number that can be fully 
172.12  funded within the appropriation for this program. 
172.13     (c) In order to receive revenue under this subdivision, the 
172.14  serving district must submit to the department for reimbursement 
172.15  certificates issued under paragraph (a) for each course 
172.16  successfully completed by a student. 
172.17     (d) Nothing in this subdivision shall interfere with a 
172.18  private school student's participation in the shared time 
172.19  program under section 126C.19. 
172.20     Subd. 8.  [DEPARTMENT OF CHILDREN, FAMILIES, AND 
172.21  LEARNING.] (a) The department must establish procedures for 
172.22  reviewing and certifying serving districts that are offering 
172.23  on-line courses that are rigorous, aligned with state graduation 
172.24  standards, and are contributing to grade progression in a single 
172.25  subject.  The serving districts must demonstrate that on-line 
172.26  courses have equivalent standards or instruction, curriculum 
172.27  development, and assessment requirements as other courses 
172.28  offered at the public school site.  The serving district must 
172.29  also demonstrate expectations for teacher contact time through 
172.30  actual contact time or other student-to-teacher communication.  
172.31  Once the district is approved under this paragraph, all of its 
172.32  on-line course offerings shall be eligible for payment under 
172.33  this section unless a course is successfully challenged by an 
172.34  enrolled district or the department under paragraph (b). 
172.35     (b) The department must review challenges from an enrolled 
172.36  district on the validity of a course offered at a serving 
173.1   district based on the procedures for certifying districts under 
173.2   paragraph (a).  The department may initiate its own review on 
173.3   the validity of a course offered at a serving district. 
173.4      (c) The department may collect a fee not to exceed $250 for 
173.5   certifying serving districts or $50 per course for reviewing a 
173.6   challenge from an enrolled district. 
173.7      (d) The department must develop, publish, and maintain a 
173.8   list of approved serving districts and on-line courses that have 
173.9   been reviewed and certified by the department. 
173.10     Sec. 17.  [EVALUATION; MINIMUM STUDENT CONTACT TIME FOR 
173.11  ON-LINE COURSES.] 
173.12     The office of education accountability at the University of 
173.13  Minnesota must conduct a study on the amount of in-person 
173.14  student contact time, if any, that should be considered a 
173.15  minimum requirement for students taking on-line courses.  The 
173.16  office of education accountability must report its findings to 
173.17  the legislature by February 1, 2004. 
173.18     Sec. 18.  [STATEWIDE ASSESSMENTS; ON-LINE LEARNING.] 
173.19     The commissioner of children, families, and learning must 
173.20  establish statewide testing recommendations aligned with state 
173.21  and federal accountability requirements for students who are 
173.22  enrolled in on-line courses. 
173.23     Sec. 19.  [BONDS; MOUNDS VIEW.] 
173.24     Notwithstanding Minnesota Statutes, section 123B.59, 
173.25  subdivision 3, independent school district No. 621, Mounds View, 
173.26  may issue bonds according to Minnesota Statutes 2002, section 
173.27  123B.59, subdivision 3, for projects approved by the 
173.28  commissioner before February 1, 2003. 
173.29     [EFFECTIVE DATE.] This section is effective the day 
173.30  following final enactment. 
173.31     Sec. 20.  [DISABLED ACCESS LEVY AUTHORITY; SOUTHLAND.] 
173.32     Notwithstanding the time limits in Minnesota Statutes, 
173.33  section 123B.58, subdivision 3, independent school district No. 
173.34  500, Southland, may levy up to $66,000 of its remaining disabled 
173.35  access levy authority over five or fewer years.  
173.36     [EFFECTIVE DATE.] This section is effective the day 
174.1   following final enactment. 
174.2      Sec. 21.  [LEVY; ELGIN-MILLVILLE.] 
174.3      Subdivision 1.  [LEVY.] For taxes payable in 2004 only, 
174.4   independent school district No. 806, Elgin-Millville, may levy 
174.5   an amount up to $8,000 for handicapped access and fire safety 
174.6   improvements to school buildings.  
174.7      Subd. 2.  [LEVY LIMITATION.] The sum of the levy in 
174.8   subdivision 1 and other levies under Minnesota Statutes, section 
174.9   123B.58, must not exceed $300,000.  
174.10     [EFFECTIVE DATE.] This section is effective for revenue for 
174.11  fiscal year 2005 and thereafter. 
174.12     Sec. 22.  [GARAGE LEASE LEVY; SARTELL.] 
174.13     For taxes payable in 2004, 2005, and 2006, independent 
174.14  school district No. 740, Sartell, may levy up to $107,000 each 
174.15  year for the purpose of leasing a school bus storage facility.  
174.16  The department of children, families, and learning shall include 
174.17  this levy in the calculation of eligible building lease levy 
174.18  under Minnesota Statutes, section 126C.40, subdivision 1.  This 
174.19  levy shall not allow the district to exceed the $100 per 
174.20  resident marginal cost pupil unit cap in that section.  The 
174.21  district is eligible to make this levy only if it sells its 
174.22  current school bus storage site to the city of Sartell and the 
174.23  district may not use this levy as part of a lease purchase 
174.24  agreement to replace its current school bus storage facility.  
174.25     Sec. 23.  [PROPERTY SALE; ST. FRANCIS SCHOOL DISTRICT.] 
174.26     Notwithstanding Minnesota Statutes, section 123B.51, 
174.27  subdivision 6, or any other law to the contrary, independent 
174.28  school district No. 15, St. Francis, may deposit the proceeds 
174.29  from the sale of land that was purchased with funds obtained 
174.30  according to Laws 1992, chapter 558, section 7, subdivision 7, 
174.31  in the district's general fund reserved for operating capital 
174.32  account.  The district may only use the proceeds of the sale for 
174.33  projects designed to create or improve safe walking routes for 
174.34  the students of independent school district No. 15, St. Francis. 
174.35     [EFFECTIVE DATE.] This section is effective the day 
174.36  following final enactment. 
175.1      Sec. 24.  [FUND TRANSFERS.] 
175.2      Subdivision 1.  [CHISHOLM.] Notwithstanding Minnesota 
175.3   Statutes, section 123B.79 or 123B.80, on June 30, 2003, 
175.4   independent school district No. 695, Chisholm, may permanently 
175.5   transfer up to $500,000 from its reserved operating capital 
175.6   account in its general fund to the undesignated general fund 
175.7   balance. 
175.8      Subd. 2.  [SWANVILLE.] Notwithstanding Minnesota Statutes, 
175.9   sections 123B.79, 123B.80, and 475.61, subdivision 4, 
175.10  independent school district No. 486, Swanville, on June 30, 
175.11  2003, may permanently transfer up to $61,000 from its debt 
175.12  redemption fund to its capital account in its general fund 
175.13  without making an aid or levy reduction. 
175.14     Subd. 3.  [WESTONKA.] Notwithstanding Minnesota Statutes, 
175.15  sections 123B.79, 123B.80, and 475.61, subdivision 4, 
175.16  independent school district No. 277, Westonka, on June 30, 2003, 
175.17  may permanently transfer the lesser of $170,000 or the actual 
175.18  fund balance from its debt redemption fund to its general fund 
175.19  without making a levy reduction. 
175.20     [EFFECTIVE DATE.] This section is effective the day 
175.21  following final enactment. 
175.22     Sec. 25.  [HEALTH AND SAFETY EXCEPTION, ULEN-HITTERDAL.] 
175.23     Notwithstanding Minnesota Statutes, section 123B.57, 
175.24  independent school district No. 914, Ulen-Hitterdal, may submit 
175.25  to the commissioner of children, families, and learning an 
175.26  application that the demolition of a portion of the Ulen high 
175.27  school building be included in its health and safety revenue for 
175.28  fiscal year 2005.  The department of children, families, and 
175.29  learning shall consider the district's application for health 
175.30  and safety revenue based on the eligibility criteria under 
175.31  Minnesota Statutes 2002, section 123B.57. 
175.32     [EFFECTIVE DATE.] This section is effective the day 
175.33  following final enactment. 
175.34     Sec. 26.  [APPROPRIATIONS.] 
175.35     Subdivision 1.  [DEPARTMENT OF CHILDREN, FAMILIES, AND 
175.36  LEARNING.] The sums indicated in this section are appropriated 
176.1   from the general fund to the department of children, families, 
176.2   and learning for the fiscal years designated.  
176.3      Subd. 2.  [HEALTH AND SAFETY REVENUE.] For health and 
176.4   safety aid under Minnesota Statutes, section 123B.57, 
176.5   subdivision 5: 
176.6        $7,839,000     .....     2004 
176.7        $5,923,000     .....     2005 
176.8      The 2004 appropriation includes $1,516,000 for 2003 and 
176.9   $6,323,000 for 2004. 
176.10     The 2005 appropriation includes $1,580,000 for 2004 and 
176.11  $4,343,000 for 2005. 
176.12     Subd. 3.  [DEBT SERVICE EQUALIZATION.] For debt service aid 
176.13  under Minnesota Statutes, section 123B.53, subdivision 6: 
176.14       $35,598,000    .....     2004 
176.15       $37,834,000    .....     2005 
176.16     The 2004 appropriation includes $5,586,000 for 2003 and 
176.17  $30,012,000 for 2004. 
176.18     The 2005 appropriation includes $7,503,000 for 2004 and 
176.19  $30,331,000 for 2005. 
176.20     Subd. 4.  [ALTERNATIVE FACILITIES BONDING AID.] For 
176.21  alternative facilities bonding aid under Minnesota Statutes, 
176.22  section 123B.59, subdivision 1: 
176.23       $18,708,000    .....     2004 
176.24       $19,287,000    .....     2005 
176.25     The 2004 appropriation includes $3,278,000 for 2003 and 
176.26  $15,430,000 for 2004. 
176.27     The 2005 appropriation includes $3,857,000 for 2004 and 
176.28  $15,430,000 for 2005. 
176.29     Subd. 5.  [PRINCIPLED PAY PRACTICES AID.] For principled 
176.30  pay practices aid under Minnesota Statutes, section 122A.4142: 
176.31       $ 3,700,000    .....     2004
176.32       $42,300,000    .....     2005 
176.33     The 2004 appropriation is for districts receiving 
176.34  alternative teacher compensation aid in 2003.  
176.35     If the appropriation is insufficient to pay the aid amount 
176.36  to all qualifying districts, the commissioner must prorate the 
177.1   aid among the districts participating in the principled pay 
177.2   practices program. 
177.3      The base amount for this program shall be $29,500,000 in 
177.4   each fiscal year 2006 and 2007. 
177.5      Subd. 6.  [ON-LINE COURSE REVENUE.] (a) For on-line course 
177.6   revenue under Minnesota Statutes, section 125B.25, subdivision 7:
177.7        $1,080,000    .....     2004 
177.8        $1,100,000    .....     2005 
177.9      (b) $1,000,000 each year is for on-line learning revenue 
177.10  for certificates of authorization issued by the commissioner 
177.11  under Minnesota Statutes, section 125B.25.  The remaining amount 
177.12  is for additional general education aid due to additional 
177.13  average daily membership generated by students enrolling in 
177.14  on-line courses. 
177.15     (c) Notwithstanding Minnesota Statutes, section 125B.25, 
177.16  subdivisions 6 and 7, the commissioner shall issue certificates 
177.17  of authorization in fiscal year 2004 and later for students who 
177.18  were enrolled in an on-line program in independent school 
177.19  district No. 294, Houston, during the 2002-2003 school year and 
177.20  are enrolled in an on-line program at the district for the 
177.21  2003-2004 school year. 
177.22     Subd. 7.  [DEFERRED MAINTENANCE REVENUE.] For deferred 
177.23  maintenance revenue under Minnesota Statutes, section 123B.595: 
177.24       $23,553,000   .....     2005
177.25     Sec. 27.  [REPEALER.] 
177.26     Minnesota Statutes 2002, sections 122A.414 and 122A.415, 
177.27  are repealed. 
177.28     [EFFECTIVE DATE.] This section is effective for fiscal year 
177.29  2005 and thereafter. 
177.30                             ARTICLE 11 
177.31                         NUTRITION PROGRAMS 
177.32     Section 1.  [APPROPRIATIONS.] 
177.33     Subdivision 1.  [DEPARTMENT OF CHILDREN, FAMILIES AND 
177.34  LEARNING.] The sums indicated in this section are appropriated 
177.35  from the general fund to the department of children, families, 
177.36  and learning for the fiscal years designated. 
178.1      Subd. 2.  [SCHOOL LUNCH.] (a) For school lunch aid 
178.2   according to Minnesota Statutes, section 124D.111, and Code of 
178.3   Federal Regulations, title 7, section 210.17:  
178.4        $8,600,000     .....     2004 
178.5        $8,750,000     .....     2005 
178.6      Subd. 3.  [SCHOOL BREAKFAST.] For school breakfast aid 
178.7   under Minnesota Statutes, section 124D.115: 
178.8        $820,000       .....     2004 
178.9        $870,000       .....     2005 
178.10     Subd. 4.  [FAST BREAK TO LEARNING BREAKFAST.] For fast 
178.11  break to learning breakfast under Minnesota Statutes, section 
178.12  124D.1156: 
178.13       $5,635,000     .....     2004 
178.14       $5,435,000     .....     2005 
178.15     The 2004 appropriation includes $747,000 for 2003 and 
178.16  $4,888,000 for 2004.  
178.17     The 2005 appropriation includes $0 for 2004 and $5,435,000 
178.18  for 2005. 
178.19     Subd. 5.  [SUMMER SCHOOL SERVICE REPLACEMENT AID.] For 
178.20  summer food service replacement aid under Minnesota Statutes, 
178.21  section 124D.119: 
178.22       $150,000       .....     2004 
178.23       $150,000       .....     2005 
178.24                             ARTICLE 12 
178.25                             LIBRARIES 
178.26     Section 1.  Minnesota Statutes 2002, section 134.001, is 
178.27  amended by adding a subdivision to read: 
178.28     Subd. 9.  [BOARD.] "Board" means the Minnesota state 
178.29  library board. 
178.30     [EFFECTIVE DATE.] This section is effective October 1, 2003.
178.31     Sec. 2.  [134.085] [MINNESOTA STATE LIBRARY BOARD.] 
178.32     Subdivision 1.  [ESTABLISHMENT; MEMBERSHIP.] The Minnesota 
178.33  state library board is established and shall consist of 11 
178.34  members to be appointed by the governor with the advice and 
178.35  consent of the senate.  One member shall be appointed from each 
178.36  of the congressional districts and the remaining members shall 
179.1   be appointed at large.  Persons appointed to the board shall 
179.2   have demonstrated experience or interest in library service.  No 
179.3   more than four of the members shall during their terms of office 
179.4   be employed in school media, library, or information services.  
179.5   The board members shall annually select from their membership a 
179.6   chair and other officers as they deem necessary. 
179.7      Subd. 2.  [TERMS; COMPENSATION; REMOVAL; VACANCIES.] (a) 
179.8   The membership terms, compensation, removal of members, and 
179.9   filling of vacancies shall be as provided in section 15.0575, 
179.10  except for the initial members whose terms shall be as provided 
179.11  in paragraph (b). 
179.12     (b) Three of the initial board members, including one 
179.13  at-large board member, shall be appointed, by lot, to terms that 
179.14  expire the first Monday in January in each of the years 2004, 
179.15  2006, and 2007.  The remaining two members shall be appointed, 
179.16  by lot, to terms that expire the first Monday in January 2005. 
179.17     Subd. 3.  [MEETINGS.] The board must meet regularly at the 
179.18  times and places as determined by the board.  Meetings must be 
179.19  called by the chair or at the written request of any eight 
179.20  members. 
179.21     Subd. 4.  [STATE LIBRARIAN; STAFF.] A state librarian shall 
179.22  be selected by a majority of the board and shall serve at the 
179.23  pleasure of the board.  The state librarian must hold an 
179.24  American Library Association accredited master of library 
179.25  science degree.  The state librarian shall serve as the state 
179.26  agent to apply for, receive, and disburse federal funds made 
179.27  available to the state in furtherance of libraries.  The state 
179.28  librarian is the chief administrative officer of the board and 
179.29  is responsible for performing the executive duties of the board 
179.30  as provided in this section.  The state librarian shall not be a 
179.31  member of the board.  All other employees of the board are 
179.32  selected by the state librarian and shall be in the classified 
179.33  civil service of the state. 
179.34     Subd. 5.  [POWERS AND DUTIES.] The board has the powers and 
179.35  duties necessary to: 
179.36     (1) be the leading voice and advocate for public, 
180.1   kindergarten through grade 12 school, academic, government, and 
180.2   special libraries in the state; 
180.3      (2) advise the governor, the legislature, state, regional 
180.4   and local agencies, school boards, and other elected officials 
180.5   on library-related issues; 
180.6      (3) prepare statewide plans for library and information 
180.7   services, coordinated with regional plans, that identify and 
180.8   address trends in library and information services, including, 
180.9   but not limited to, use of technology; 
180.10     (4) facilitate partnerships between libraries and other 
180.11  state agencies that result in statewide and regional initiatives 
180.12  and programs, such as MnLINK and MINITEX; 
180.13     (5) work cooperatively with all state agencies and library 
180.14  organizations and agencies, such as the Minnesota library 
180.15  association, Minnesota educational media organization, Minnesota 
180.16  education telecommunications council, higher education services 
180.17  office, and capitol area library consortium; 
180.18     (6) support the provision of library service for every 
180.19  citizen; 
180.20     (7) give advice, instruction, and technical assistance 
180.21  pertaining to the organization, maintenance, or administration 
180.22  of libraries to the board, managers, and staff of any regional 
180.23  public or multitype system, public library, school library media 
180.24  center, postsecondary educational institution library, state 
180.25  agency library, or any governmental unit, nonprofit 
180.26  organization, or private entity maintaining a library; 
180.27     (8) administer all state funding for regional public and 
180.28  multitype library systems; 
180.29     (9) assist, to the extent possible, in the establishment 
180.30  and organization of library service in areas where none exists 
180.31  and aid in improving previously established libraries; 
180.32     (10) collect statistics on the receipts, expenditures, 
180.33  services, and use of the regional library systems, the public 
180.34  libraries of the state, and any library receiving state or 
180.35  federal grant funds, including, but not limited to, statistics 
180.36  on all activities under sections 134.31 to 134.35; and 
181.1      (11) operate the Minnesota library for the blind and 
181.2   physically handicapped. 
181.3      [EFFECTIVE DATE.] This section is effective October 1, 2003.
181.4      Sec. 3.  Minnesota Statutes 2002, section 134.22, is 
181.5   amended to read: 
181.6      134.22 [COMPACT ADMINISTRATOR.] 
181.7      The commissioner of children, families, and learning board 
181.8   shall designate an officer or employee of the department of 
181.9   children, families, and learning board as compact 
181.10  administrator.  The compact administrator shall receive copies 
181.11  of all agreements entered into by the state or its political 
181.12  subdivisions and other states or political subdivisions; consult 
181.13  with, advise, and aid such governmental units in the formulation 
181.14  of such agreements; make such recommendations to the governor, 
181.15  legislature, and governmental agencies and units as the 
181.16  administrator deems desirable to effectuate the purposes of this 
181.17  compact; and consult and cooperate with the compact 
181.18  administrators of other party states. 
181.19     [EFFECTIVE DATE.] This section is effective October 1, 2003.
181.20     Sec. 4.  Minnesota Statutes 2002, section 134.32, is 
181.21  amended to read: 
181.22     134.32 [GRANT AUTHORIZATION; TYPES OF GRANTS.] 
181.23     Subdivision 1.  [PROVISION OF GRANTS.] The department board 
181.24  shall provide the grants specified in this section from any 
181.25  available state, federal, or other funds. 
181.26     Subd. 3.  [REGIONAL LIBRARY BASIC SYSTEM SUPPORT GRANTS.] 
181.27  It The board shall provide regional library basic system support 
181.28  grants to regional public library systems which meet the 
181.29  requirements of section 134.34, to assist those systems in 
181.30  providing basic system services. 
181.31     Subd. 4.  [SPECIAL PROJECT GRANTS.] It The board may 
181.32  provide special project grants to assist innovative and 
181.33  experimental library programs including, but not limited to, 
181.34  special services for American Indians and the 
181.35  Spanish-speaking people who do not speak English, delivery of 
181.36  library materials to homebound persons, other extensions of 
182.1   library services to persons without access to libraries and 
182.2   projects to strengthen and improve library services. 
182.3      Subd. 5.  [INTERLIBRARY EXCHANGE GRANTS.] It The board may 
182.4   provide grants for interlibrary exchange of books, periodicals, 
182.5   resource material, reference information and the expenses 
182.6   incident to the sharing of library resources and materials, 
182.7   including planning, development and operating grants to 
182.8   multicounty, multitype library systems.  
182.9      Subd. 6.  [LIBRARY SERVICE GRANTS.] It The board may 
182.10  provide grants for the improvement of library services at 
182.11  welfare and corrections institutions and for library service for 
182.12  the blind and physically handicapped. 
182.13     Subd. 7.  [CONSTRUCTION OR REMODELING GRANTS.] It The board 
182.14  may provide grants for construction or remodeling of library 
182.15  facilities from any state and federal funds specifically 
182.16  appropriated for this purpose. 
182.17     Subd. 8.  [RULEMAKING.] (a) The commissioner board 
182.18  shall promulgate adopt rules consistent with sections 134.32 to 
182.19  134.35 governing: 
182.20     (1) applications for these grants under this section; and 
182.21     (2) computation formulas for determining the amounts of 
182.22  establishment grants and regional library basic system support 
182.23  grants; and 
182.24     (3) eligibility criteria for grants. 
182.25     (b) To the extent allowed under federal law, a construction 
182.26  grant applicant, in addition to the points received under 
182.27  Minnesota Rules, part 3530.2632, shall receive an additional 
182.28  five points if the construction grant is for a project combining 
182.29  public library services and school district library services at 
182.30  a single location. 
182.31     [EFFECTIVE DATE.] This section is effective October 1, 2003.
182.32     Sec. 5.  Minnesota Statutes 2002, section 134.34, 
182.33  subdivision 4, is amended to read: 
182.34     Subd. 4.  [LIMITATION.] A regional library basic system 
182.35  support grant shall not be made to a regional public library 
182.36  system for a participating city or county which decreases the 
183.1   dollar amount provided for support for operating purposes of 
183.2   public library service below 90 percent of the amount provided 
183.3   by it for the second preceding year.  This subdivision shall not 
183.4   apply to participating cities or counties where the adjusted net 
183.5   tax capacity of that city or county has decreased, if the dollar 
183.6   amount of the reduction in support is not greater than the 
183.7   dollar amount by which support would be decreased if the 
183.8   reduction in support were made in direct proportion to the 
183.9   decrease in adjusted net tax capacity. 
183.10     [EFFECTIVE DATE.] This section is effective for grants 
183.11  distributed in 2004 and 2005 only. 
183.12     Sec. 6.  [TRANSFER.] 
183.13     Subdivision 1.  [POWERS AND DUTIES.] On October 1, 2003, 
183.14  the powers, duties, and responsibilities of the department of 
183.15  children, families and learning with respect to public libraries 
183.16  as defined in Minnesota Statutes, section 134.001, subdivision 
183.17  2, but notwithstanding Minnesota Statutes, section 134.001, 
183.18  subdivision 2, including the Minnesota library for the blind and 
183.19  physically handicapped, and public library services as defined 
183.20  in Minnesota Statutes, section 134.001, subdivision 3, and 
183.21  notwithstanding Minnesota Statutes, section 134.001, subdivision 
183.22  2, including the Minnesota library for the blind and physically 
183.23  handicapped, and library development, are transferred to the 
183.24  Minnesota state library board under Minnesota Statutes, section 
183.25  15.039, subdivisions 1 to 6. 
183.26     Subd. 2.  [SUPPLIES AND EQUIPMENT.] All supplies, 
183.27  equipment, files, and materials used by the department of 
183.28  children, families and learning to carry out its powers, duties, 
183.29  and responsibilities in respect to public libraries, services, 
183.30  development, and the Minnesota library for the blind and 
183.31  physically handicapped, are transferred to the board. 
183.32     Subd. 3.  [POSITIONS AND PERSONNEL.] Positions in the 
183.33  department of children, families, and learning with respect to 
183.34  libraries under this section are transferred under Minnesota 
183.35  Statutes, section 15.039, subdivision 7, except that the board 
183.36  shall determine the incumbents to be transferred. 
184.1      [EFFECTIVE DATE.] This section is effective the day 
184.2   following final enactment. 
184.3      Sec. 7.  [TRANSITION.] 
184.4      By October 1, the department of children, families and 
184.5   learning shall facilitate the transition of its powers, duties, 
184.6   and responsibilities in respect to libraries under section 5 as 
184.7   follows: 
184.8      (1) initiate the state board appointment process in 
184.9   consultation with the governor and set the date and place for 
184.10  the first meeting of the Minnesota state library board; 
184.11     (2) provide assistance as requested by the Minnesota state 
184.12  library board to recruit the state librarian and Minnesota state 
184.13  library board staff; 
184.14     (3) continue administering any powers, duties, and 
184.15  responsibilities in respect to libraries until the transfer to 
184.16  the Minnesota state library board is complete; and 
184.17     (4) provide other assistance as requested by the governor 
184.18  and Minnesota state library board. 
184.19     [EFFECTIVE DATE.] This section is effective the day 
184.20  following final enactment. 
184.21     Sec. 8.  [APPROPRIATIONS.] 
184.22     Subdivision 1.  [DEPARTMENT OF CHILDREN, FAMILIES AND 
184.23  LEARNING.] The sums indicated in this section are appropriated 
184.24  from the general fund to the department of children, families 
184.25  and learning for the fiscal years designated.  
184.26     Subd. 2.  [BASIC SUPPORT.] For basic support grants 
184.27  according to Minnesota Statutes, sections 134.32 to 134.35: 
184.28       $9,272,000     .....     2004 
184.29       $9,770,000     .....     2005 
184.30     The 2004 appropriation includes $1,456,000 for 2003 and 
184.31  $7,816,000 for 2004. 
184.32     The 2005 appropriation includes $1,954,000 for 2004 and 
184.33  $7,816,000 for 2005. 
184.34     Subd. 3.  [MULTICOUNTY, MULTITYPE LIBRARY SYSTEMS.] For 
184.35  grants according to Minnesota Statutes, sections 134.353 and 
184.36  134.354, to multicounty, multitype library systems: 
185.1        $876,000       .....     2004 
185.2        $903,000       .....     2005 
185.3      The 2004 appropriation includes $153,000 for 2003 and 
185.4   $723,000 for 2004. 
185.5      The 2005 appropriation includes $180,000 for 2004 and 
185.6   $723,000 for 2005. 
185.7      Subd. 4.  [ELECTRONIC LIBRARY FOR MINNESOTA.] For statewide 
185.8   licenses to on-line databases selected in cooperation with the 
185.9   higher education services office for school media centers, 
185.10  public libraries, state government agency libraries, and public 
185.11  or private college or university libraries: 
185.12        $400,000     .....     2004 
185.13        $400,000     .....     2005 
185.14     Any balance in the first year does not cancel but is 
185.15  available in the second year. 
185.16     Sec. 9.  [REVISOR INSTRUCTION.] 
185.17     In the next edition of Minnesota Statutes and Minnesota 
185.18  Rules, the revisor shall make the following terminology changes: 
185.19     (1) all library references involving the commissioner of 
185.20  children, families, and learning or department of children, 
185.21  families, and learning shall be rewritten to give all relevant 
185.22  responsibilities or authorities to the Minnesota state library 
185.23  board or state librarian; and 
185.24     (2) all references to library programs being transferred 
185.25  from the department of children, families and learning to 
185.26  reflect that those programs are under the jurisdiction of the 
185.27  Minnesota state library board. 
185.28     [EFFECTIVE DATE.] This section is effective October 1, 2003.
185.29     Sec. 10.  [REPEALER.] 
185.30     The changes made to Minnesota Statutes, section 134.34, 
185.31  subdivision 4, in section 5, are repealed July 1, 2005. 
185.32                             ARTICLE 13 
185.33                FAMILY AND EARLY CHILDHOOD EDUCATION 
185.34     Section 1.  Minnesota Statutes 2002, section 119A.52, is 
185.35  amended to read: 
185.36     119A.52 [DISTRIBUTION OF APPROPRIATION.] 
186.1      (a) The commissioner of children, families, and learning 
186.2   must distribute money appropriated for that purpose to Head 
186.3   Start program grantees to expand services and to serve 
186.4   additional low-income children, age birth to five, and pregnant 
186.5   women.  Money must be allocated to each project federally 
186.6   designated Head Start grantee in existence on the effective date 
186.7   of Laws 1989, chapter 282.  Migrant and Indian reservation 
186.8   grantees must be initially allocated money based on the 
186.9   grantees' share of federal funds.  The remaining money must be 
186.10  initially allocated to the remaining local agencies based 
186.11  equally on the agencies' share of federal funds and on the 
186.12  proportion of eligible children in the agencies' service area 
186.13  who are not currently being served.  A Head Start grantee must 
186.14  be funded at a per child rate equal to its contracted, federally 
186.15  funded base level for program accounts 20, 22, and 25 at the 
186.16  start of the fiscal year.  In allocating funds under this 
186.17  paragraph, the commissioner of children, families, and learning 
186.18  must assure that each Head Start grantee is allocated no less 
186.19  funding in any fiscal year than was allocated to that grantee in 
186.20  fiscal year 1993 2002.  The commissioner may provide additional 
186.21  funding to grantees for start-up costs incurred by grantees due 
186.22  to the increased number of children to be served.  Before paying 
186.23  money to the grantees, the commissioner must notify each grantee 
186.24  of its initial allocation, and how the money must be used, and 
186.25  the number of low-income children that must be served with the 
186.26  allocation.  Each grantee must notify the present a work plan to 
186.27  the commissioner of for approval.  The work plan must include 
186.28  the estimated number of low-income children and families it will 
186.29  be able to serve, a description of the program design, and a 
186.30  plan for coordinating services to maximize assistance for child 
186.31  care costs available to families under chapter 119B.  Grantees 
186.32  may use up to ten percent of the funds appropriated annually for 
186.33  innovative initiatives designed either to target Head Start 
186.34  resources to particular at-risk groups of children or to provide 
186.35  services in addition to those currently allowable under federal 
186.36  Head Start regulations.  For any grantee that cannot utilize its 
187.1   full allocation, the commissioner must reduce the allocation 
187.2   proportionately.  Money available after the initial allocations 
187.3   are reduced must be redistributed to eligible grantees. 
187.4      (b) Up to 11 percent of the funds appropriated annually may 
187.5   be used to provide grants to local Head Start agencies to 
187.6   provide funds for innovative programs designed either to target 
187.7   Head Start resources to particular at-risk groups of children or 
187.8   to provide services in addition to those currently allowable 
187.9   under federal Head Start regulations.  The commissioner must 
187.10  award funds for innovative programs under this paragraph on a 
187.11  competitive basis. 
187.12     Sec. 2.  Minnesota Statutes 2002, section 119A.53, is 
187.13  amended to read: 
187.14     119A.53 [FEDERAL REQUIREMENTS.] 
187.15     Grantees and the commissioner of children, families, and 
187.16  learning shall comply with federal regulations governing the 
187.17  federal Head Start program, except for innovative programs 
187.18  funded under section 119A.52, paragraph (b) funding for 
187.19  innovative initiatives under section 119A.52, which may be used 
187.20  to operate differently than federal Head Start regulations, and 
187.21  except that when.  If a state statute or regulation rule 
187.22  conflicts with a federal statute or regulation, the state 
187.23  statute or regulation rule prevails. 
187.24     Sec. 3.  Minnesota Statutes 2002, section 124D.135, 
187.25  subdivision 8, is amended to read: 
187.26     Subd. 8.  [RESERVE ACCOUNT LIMIT.] (a) Under this section, 
187.27  the average balance, during the most recent three-year period in 
187.28  a district's early childhood family education reserve account on 
187.29  June 30 of each year, adjusted for any prior reductions under 
187.30  this subdivision, must not be greater than 25 percent of the sum 
187.31  of the district's maximum early childhood family education 
187.32  annual revenue under subdivision 1, excluding adjustments under 
187.33  this subdivision, plus any fees, grants, or other revenue 
187.34  received by the district for early childhood family education 
187.35  programs for the prior year. 
187.36     (b) If a district's adjusted average early childhood family 
188.1   education reserve over the three-year period is in excess of 25 
188.2   percent of the prior year annual revenue the limit under 
188.3   paragraph (a), the district's early childhood family education 
188.4   state aid and levy authority for the current school year must be 
188.5   reduced by the lesser of the current year revenue under 
188.6   subdivision 1 or the excess reserve amount.  The aid reduction 
188.7   equals the product of the lesser of the excess reserve amount or 
188.8   the current year revenue under subdivision 1 times the ratio of 
188.9   the district's aid for the prior current year under subdivision 
188.10  4 to the district's revenue for the prior current year under 
188.11  subdivision 1.  The levy reduction equals the excess reserve 
188.12  amount minus the aid reduction.  The commissioner must 
188.13  reallocate aid and levy reduced under this subdivision to other 
188.14  eligible early childhood family education programs in proportion 
188.15  to each district's revenue for the prior year under subdivision 
188.16  1.  For purposes of this paragraph, if a district does not levy 
188.17  the entire amount permitted under subdivision 3, the revenue 
188.18  under subdivision 1 must be reduced in proportion to the actual 
188.19  amount levied.  
188.20     (b) (c) Notwithstanding paragraph (a), for fiscal year 
188.21  2003, the excess reserve amount shall be computed using the 
188.22  balance in a district's early childhood family education reserve 
188.23  account on June 30, 2002.  For fiscal year 2004, the excess 
188.24  reserve amount shall be computed using the adjusted average 
188.25  balance in a district's early childhood family education reserve 
188.26  account on June 30, 2002, and June 30, 2003. 
188.27     [EFFECTIVE DATE.] This section is effective for revenue for 
188.28  fiscal year 2003. 
188.29     Sec. 4.  Minnesota Statutes 2002, section 124D.16, 
188.30  subdivision 6, is amended to read: 
188.31     Subd. 6.  [RESERVE ACCOUNT LIMIT.] (a) Under this section, 
188.32  the average balance, during the most recent three-year period, 
188.33  in a district's school readiness reserve account on June 30 of 
188.34  each year, adjusted for any prior reductions under this 
188.35  subdivision, must not be greater than 25 percent of the 
188.36  district's school readiness annual revenue for the prior year, 
189.1   excluding adjustments under this subdivision.  
189.2      (b) If a district's adjusted average school readiness 
189.3   reserve over the three-year period is in excess of 25 percent of 
189.4   the prior year annual revenue the limit under paragraph (a), the 
189.5   district's current year school readiness state aid must be 
189.6   reduced by the lesser of the excess reserve amount or the 
189.7   current year aid.  The commissioner must reallocate aid reduced 
189.8   under this subdivision to other eligible school readiness 
189.9   programs in proportion to each district's aid for the prior year 
189.10  under subdivision 2.  
189.11     (b) (c) Notwithstanding paragraph (a), for fiscal year 
189.12  2003, the excess reserve amount shall be computed using the 
189.13  balance in a district's school readiness reserve account on June 
189.14  30, 2002.  For fiscal year 2004, the excess reserve amount shall 
189.15  be computed using the adjusted average balance in a district's 
189.16  school readiness reserve account on June 30, 2002, and June 30, 
189.17  2003. 
189.18     [EFFECTIVE DATE.] This section is effective for revenue for 
189.19  fiscal year 2003. 
189.20     Sec. 5.  [APPROPRIATIONS.] 
189.21     Subdivision 1.  [DEPARTMENT OF CHILDREN, FAMILIES AND 
189.22  LEARNING.] The sums indicated in this section are appropriated 
189.23  from the general fund to the department of children, families 
189.24  and learning for the fiscal years designated.  
189.25     Subd. 2.  [SCHOOL READINESS.] For revenue for school 
189.26  readiness programs under Minnesota Statutes, sections 124D.15 
189.27  and 124D.16: 
189.28       $ 9,698,000    .....     2004
189.29       $10,298,000    .....     2005
189.30     The 2004 appropriation includes $1,767,000 for 2003 and 
189.31  $7,931,000 for 2004. 
189.32     The 2005 appropriation includes $1,982,000 for 2004 and 
189.33  $8,316,000 for 2005.  
189.34     Subd. 3.  [EARLY CHILDHOOD FAMILY EDUCATION AID.] For early 
189.35  childhood family education aid under Minnesota Statutes, section 
189.36  124D.135: 
190.1        $19,832,000    .....     2004 
190.2        $21,545,000    .....     2005 
190.3      The 2004 appropriation includes $3,396,000 for 2003 and 
190.4   $16,436,000 for 2004.  
190.5      The 2005 appropriation includes $4,109,000 for 2004 and 
190.6   $17,436,000 for 2005.  
190.7      Subd. 4.  [HEALTH AND DEVELOPMENTAL SCREENING AID.] For 
190.8   health and developmental screening aid under Minnesota Statutes, 
190.9   sections 121A.17 and 121A.19: 
190.10       $2,581,000     .....     2004 
190.11       $2,661,000     .....     2005 
190.12     The 2004 appropriation includes $452,000 for 2003 and 
190.13  $2,129,000 for 2004.  
190.14     The 2005 appropriation includes $532,000 for 2004 and 
190.15  $2,129,000 for 2005.  
190.16     Subd. 5.  [HEAD START PROGRAM.] For Head Start programs 
190.17  under Minnesota Statutes, section 119A.52: 
190.18       $18,375,000    .....     2004
190.19       $18,375,000    .....     2005
190.20     Subd. 6.  [WAY TO GROW.] For the way to grow program under 
190.21  Minnesota Statutes, section 124D.17: 
190.22       $475,000       .....     2004
190.23       $475,000       .....     2005
190.24                             ARTICLE 14 
190.25                             PREVENTION 
190.26     Section 1.  Minnesota Statutes 2002, section 124D.20, is 
190.27  amended by adding a subdivision to read: 
190.28     Subd. 11.  [RESERVE ACCOUNT LIMIT.] (a) Under this section, 
190.29  the sum of the average balances during the most recent 
190.30  three-year period in a district's community education reserve 
190.31  account and unreserved/undesignated community service fund 
190.32  account on June 30 of each year, adjusted for any prior 
190.33  reductions under this subdivision, must not be greater than 25 
190.34  percent of the sum of the district's maximum total community 
190.35  education revenue under subdivision 1, excluding adjustments 
190.36  under this subdivision, plus the district's additional community 
191.1   education levy under section 124D.21, plus any fees, grants, or 
191.2   other revenue received by the district for community education 
191.3   programs for the prior year.  For purposes of this paragraph, 
191.4   "community education programs" means programs according to 
191.5   subdivisions 8, paragraph (a), and 9, and section 124D.19, 
191.6   subdivision 12, excluding early childhood family education 
191.7   programs under section 124D.13, school readiness programs under 
191.8   sections 124D.15 and 124D.17, and adult basic education programs 
191.9   under section 124D.52. 
191.10     (b) If the sum of the average balances during the most 
191.11  recent three-year period in a district's community education 
191.12  reserve account and unreserved/undesignated community service 
191.13  fund account on June 30 of each year, adjusted for any prior 
191.14  reductions under this subdivision, is in excess of the limit 
191.15  under paragraph (a), the district's community education state 
191.16  aid and levy authority for the current school year must be 
191.17  reduced by the lesser of the current year revenue under 
191.18  subdivision 1 or the excess reserve amount.  The aid reduction 
191.19  equals the product of the lesser of the excess reserve amount or 
191.20  the current year revenue under subdivision 1 times the ratio of 
191.21  the district's aid for the current year under subdivision 7 to 
191.22  the district's revenue for the current year under subdivision 
191.23  1.  The levy reduction equals the excess reserve amount minus 
191.24  the aid reduction.  For purposes of this paragraph, if a 
191.25  district does not levy the entire amount permitted under 
191.26  subdivision 5 or 6, the revenue under subdivision 1 must be 
191.27  reduced in proportion to the actual amount levied. 
191.28     (c) Notwithstanding paragraph (a), for fiscal year 2003, 
191.29  the excess reserve amount shall be computed using the balances 
191.30  in a district's community education reserve account and 
191.31  unreserved/undesignated community service fund account on June 
191.32  30, 2002.  For fiscal year 2004, the excess reserve amount shall 
191.33  be computed using the adjusted average balances in a district's 
191.34  community education reserve account and unreserved/undesignated 
191.35  community service fund account on June 30, 2002, and June 30, 
191.36  2003. 
192.1      [EFFECTIVE DATE.] This section is effective for revenue for 
192.2   fiscal year 2003. 
192.3      Sec. 2.  Minnesota Statutes 2002, section 124D.20, is 
192.4   amended by adding a subdivision to read: 
192.5      Subd. 12.  [WAIVER.] (a) If a district anticipates that the 
192.6   reserve account may exceed the 25 percent limit established 
192.7   under subdivision 11 because of extenuating circumstances, prior 
192.8   approval to exceed the limit must be obtained in writing from 
192.9   the commissioner. 
192.10     (b) Notwithstanding paragraph (a), for fiscal year 2003, a 
192.11  district may submit a waiver request within 30 days of the date 
192.12  of final enactment. 
192.13     [EFFECTIVE DATE.] This section is effective the day 
192.14  following final enactment for revenue for fiscal year 2003. 
192.15     Sec. 3.  [APPROPRIATIONS.] 
192.16     Subdivision 1.  [DEPARTMENT OF CHILDREN, FAMILIES, AND 
192.17  LEARNING.] The sums indicated in this section are appropriated 
192.18  from the general fund to the department of children, families, 
192.19  and learning for the fiscal years designated. 
192.20     Subd. 2.  [COMMUNITY EDUCATION AID.] For community 
192.21  education aid under Minnesota Statutes, section 124D.20: 
192.22       $5,865,000     .....     2004 
192.23       $4,309,000     .....     2005 
192.24     The 2004 appropriation includes $1,326,000 for 2003 and 
192.25  $4,539,000 for 2004.  
192.26     The 2005 appropriation includes $1,134,000 for 2004 and 
192.27  $3,175,000 for 2005.  
192.28     Subd. 3.  [ADULTS WITH DISABILITIES PROGRAM AID.] For 
192.29  adults with disabilities programs under Minnesota Statutes, 
192.30  section 124D.56: 
192.31       $688,000       .....     2004 
192.32       $710,000       .....     2005 
192.33     The 2004 appropriation includes $120,000 for 2003 and 
192.34  $568,000 for 2004.  
192.35     The 2005 appropriation includes $142,000 for 2004 and 
192.36  $568,000 for 2005. 
193.1      Subd. 4.  [HEARING-IMPAIRED ADULTS.] For programs for 
193.2   hearing-impaired adults under Minnesota Statutes, section 
193.3   124D.57: 
193.4        $70,000        .....     2004
193.5        $70,000        .....     2005
193.6      Subd. 5.  [VIOLENCE PREVENTION EDUCATION GRANTS.] For 
193.7   violence prevention education grants under Minnesota Statutes, 
193.8   section 120B.23: 
193.9        $1,406,000     .....     2004
193.10       $1,450,000     .....     2005
193.11     The 2004 appropriation includes $246,000 for 2003 and 
193.12  $1,160,000 for 2004. 
193.13     The 2005 appropriation includes $290,000 for 2004 and 
193.14  $1,160,000 for 2005. 
193.15     Subd. 6.  [SCHOOL-AGE CARE REVENUE.] For extended day aid 
193.16  under Minnesota Statutes, section 124D.22: 
193.17       $41,000        .....     2004 
193.18       $21,000        .....     2005
193.19     The 2004 appropriation includes $14,000 for 2003 and 
193.20  $27,000 for 2004. 
193.21     The 2005 appropriation includes $6,000 for 2004 and $15,000 
193.22  for 2005. 
193.23     Subd. 7.  [AFTER-SCHOOL ENRICHMENT GRANTS.] For 
193.24  after-school enrichment grants under Minnesota Statutes, section 
193.25  124D.221: 
193.26       $4,150,000    .....     2004
193.27       $4,150,000    .....     2005
193.28     Any balance in the first year does not cancel but is 
193.29  available in the second year. 
193.30                             ARTICLE 15 
193.31               SELF-SUFFICIENCY AND LIFELONG LEARNING 
193.32     Section 1.  Minnesota Statutes 2002, section 124D.531, 
193.33  subdivision 1, is amended to read: 
193.34     Subdivision 1.  [STATE TOTAL ADULT BASIC EDUCATION AID.] 
193.35  (a) The state total adult basic education aid for fiscal year 
193.36  2001 2003 equals $30,157,000 $35,175,000.  The state total adult 
194.1   basic education aid for later years equals: 
194.2      (1) the state total adult basic education aid for the 
194.3   preceding fiscal year; times 
194.4      (2) the lesser of: 
194.5      (i) 1.08 the state total adult basic education aid growth 
194.6   factor as determined in paragraph (c), or 
194.7      (ii) the greater of 1.00 or the ratio of the state total 
194.8   contact hours in the first prior program year to the state total 
194.9   contact hours in the second prior program year.  Beginning in 
194.10  fiscal year 2002, two percent of the state total adult basic 
194.11  education aid must be set aside for adult basic education 
194.12  supplemental service grants under section 124D.522.  
194.13     (b) The state total adult basic education aid, excluding 
194.14  basic population aid, equals the difference between the amount 
194.15  computed in paragraph (a), and the state total basic population 
194.16  aid under subdivision 2. 
194.17     (c) The state total adult basic education aid growth factor 
194.18  is 1.03 for fiscal year 2004, 1.02 for fiscal year 2005, and 
194.19  1.06 for fiscal year 2006 and later. 
194.20     Sec. 2.  Minnesota Statutes 2002, section 124D.531, is 
194.21  amended by adding a subdivision to read: 
194.22     Subd. 3a.  [AID ADJUSTMENT.] (a) Notwithstanding 
194.23  subdivisions 2 and 3, the aid computed for each adult basic 
194.24  education program must be adjusted as provided in this 
194.25  subdivision. 
194.26     (b) For a program with at least as many contact hours in 
194.27  the first prior program year as in the second prior program 
194.28  year, the aid under subdivision 3, clause (2), must be increased 
194.29  by the greater of zero or the difference between 95 percent of 
194.30  the aid the program received under subdivision 3, clause (2), as 
194.31  adjusted by this subdivision for the previous fiscal year and 
194.32  the aid computed under subdivision 3, clause (2), for the 
194.33  current fiscal year. 
194.34     (c) For a program with fewer contact hours in the first 
194.35  prior program year than in the second prior program year, the 
194.36  aid under subdivision 3, clause (2), must be increased by the 
195.1   greater of zero or the difference between the product of (i) the 
195.2   ratio of the contact hours in the first prior program year to 
195.3   the contact hours in the second prior program year times (ii) 95 
195.4   percent of the aid the program received under subdivision 3, 
195.5   clause (2), as adjusted by this subdivision for the previous 
195.6   fiscal year and the aid computed under subdivision 3, clause 
195.7   (2), for the current fiscal year. 
195.8      (d) The aid for each program under subdivisions 2 and 3, as 
195.9   adjusted under paragraphs (b) and (c), must be prorated to fully 
195.10  offset the increases under paragraphs (b) and (c). 
195.11     Sec. 3.  Minnesota Statutes 2002, section 124D.531, 
195.12  subdivision 4, is amended to read: 
195.13     Subd. 4.  [ADULT BASIC EDUCATION PROGRAM AID LIMIT.] (a) 
195.14  Notwithstanding subdivisions 2 and, 3, and 3a, the total adult 
195.15  basic education aid for a program per prior year contact hour 
195.16  must not exceed four times the rate per prior year contact hour 
195.17  computed under subdivision 3, clause (2). 
195.18     (b) For fiscal year 2002 2004 and later, the aid for a 
195.19  program under subdivision 3, clause (2), adjusted for changes in 
195.20  program membership, must not exceed the aid for that program 
195.21  under subdivision 3, clause (2), for the first preceding fiscal 
195.22  year by more than the greater of 17 the percentage increase in 
195.23  state total adult basic education aid for the current fiscal 
195.24  year under subdivision 1 plus 6 percent or $20,000 $15,000. 
195.25     (c) Adult basic education aid is payable to a program for 
195.26  unreimbursed costs. 
195.27     Sec. 4.  Minnesota Statutes 2002, section 124D.531, 
195.28  subdivision 7, is amended to read: 
195.29     Subd. 7.  [PROGRAM AUDITS.] Programs that receive aid under 
195.30  this section must maintain records that support the aid 
195.31  payments.  The commissioner may audit these records upon 
195.32  request.  The commissioner must establish procedures for 
195.33  conducting fiscal audits of adult basic education programs 
195.34  according to the schedule in this subdivision.  In calendar year 
195.35  2003, the commissioner must audit one-half of approved adult 
195.36  basic education programs that received aid for fiscal year 2002, 
196.1   and in calendar year 2004, the commissioner must audit the 
196.2   remaining unaudited programs for aid received in fiscal year 
196.3   2003.  Beginning with fiscal year 2005, the commissioner must, 
196.4   at a minimum, audit each adult basic education program once 
196.5   every five years.  The commissioner must establish procedures to 
196.6   reconcile any discrepancies between aid payments based on 
196.7   information reported to the commissioner and aid estimates based 
196.8   on a program audit. 
196.9      Sec. 5.  [APPROPRIATIONS.] 
196.10     Subdivision 1.  [DEPARTMENT OF CHILDREN, FAMILIES, AND 
196.11  LEARNING.] The sums indicated in this section are appropriated 
196.12  from the general fund to the department of children, families, 
196.13  and learning for the fiscal years designated. 
196.14     Subd. 2.  [ADULT BASIC EDUCATION AID.] For adult basic 
196.15  education aid under Minnesota Statutes, section 124D.531: 
196.16       $34,627,000    .....     2004 
196.17       $36,550,000    .....     2005 
196.18     The 2004 appropriation includes $5,905,000 for 2003 and 
196.19  $28,722,000 for 2004.  
196.20     The 2005 appropriation includes $7,180,000 for 2004 and 
196.21  $29,370,000 for 2005.  
196.22     Subd. 3.  [ADULT GRADUATION AID.] For adult graduation aid 
196.23  under Minnesota Statutes, section 124D.54: 
196.24       $2,451,000     .....     2004
196.25       $2,773,000     .....     2005 
196.26     The 2004 appropriation includes $396,000 for 2003 and 
196.27  $2,055,000 for 2004.  
196.28     The 2005 appropriation includes $513,000 for 2004 and 
196.29  $2,260,000 for 2005. 
196.30     Subd. 4.  [GED TESTS.] For payment of 60 percent of the 
196.31  costs of GED tests under Laws 1993, chapter 224, article 4, 
196.32  section 44, subdivision 10: 
196.33       $125,000       .....     2004
196.34       $125,000       .....     2005
196.35     Subd. 5.  [LEAD ABATEMENT.] For lead abatement under 
196.36  Minnesota Statutes, section 119A.46: 
197.1        $100,000       .....     2004
197.2        $100,000       .....     2005
197.3      Any balance in the first year does not cancel but is 
197.4   available in the second year. 
197.5                              ARTICLE 16 
197.6                            STATE AGENCIES 
197.7      Section 1.  Minnesota Statutes 2002, section 122A.21, is 
197.8   amended to read: 
197.9      122A.21 [TEACHERS' AND ADMINISTRATORS' LICENSES; FEES.] 
197.10     Each application for the issuance, renewal, or extension of 
197.11  a license to teach must be accompanied by a processing fee in an 
197.12  amount set by the board of teaching by rule of $57.  Each 
197.13  application for issuing, renewing, or extending the license of a 
197.14  school administrator or supervisor must be accompanied by a 
197.15  processing fee in the amount set by the board of teaching.  The 
197.16  processing fee for a teacher's license and for the licenses of 
197.17  supervisory personnel must be paid to the executive secretary of 
197.18  the appropriate board.  The executive secretary of the board 
197.19  shall deposit the fees with the state treasurer, as provided by 
197.20  law, and report each month to the commissioner of finance the 
197.21  amount of fees collected.  The fees as set by the board are 
197.22  nonrefundable for applicants not qualifying for a license.  
197.23  However, a fee must be refunded by the state treasurer in any 
197.24  case in which the applicant already holds a valid unexpired 
197.25  license.  The board may waive or reduce fees for applicants who 
197.26  apply at the same time for more than one license. 
197.27     Sec. 2.  Minnesota Statutes 2002, section 127A.05, 
197.28  subdivision 1, is amended to read: 
197.29     Subdivision 1.  [APPOINTMENT AND DUTIES.] The department 
197.30  shall be under the administrative control of the commissioner of 
197.31  children, families, and learning which office is established.  
197.32  The governor shall appoint the commissioner under the provisions 
197.33  of section 15.06.  
197.34     The commissioner shall be a person who possesses 
197.35  educational attainment and breadth of experience in the 
197.36  administration of public education and of the finances 
198.1   pertaining thereto commensurate with the spirit and intent of 
198.2   this code.  Notwithstanding any other law to the contrary, the 
198.3   commissioner may appoint two deputy commissioners who shall 
198.4   serve in the unclassified service.  The commissioner shall also 
198.5   appoint other employees as may be necessary for the organization 
198.6   of the department.  The commissioner shall perform such duties 
198.7   as the law and rules may provide and be held responsible for the 
198.8   efficient administration and discipline of the department.  The 
198.9   commissioner is charged with the execution of powers and duties 
198.10  to promote public education in the state and to safeguard the 
198.11  finances pertaining thereto. 
198.12     [EFFECTIVE DATE.] This section is effective the day 
198.13  following final enactment. 
198.14     Sec. 3.  [FINANCIAL ANALYSIS; CONTRACTS.] 
198.15     (a) The legislative audit commission is requested to 
198.16  consider a program evaluation on the following issues: 
198.17     (1) the total amount of projected additional costs 
198.18  associated with the No Child Left Behind Act of 2001 compliance 
198.19  for the state and local school districts during the fiscal year 
198.20  2004 and fiscal year 2005 biennium; 
198.21     (2) the amount of new federal funds that are reasonably 
198.22  expected to be provided to the state and local school districts 
198.23  during the fiscal year 2004 and fiscal year 2005 biennium for 
198.24  the costs identified in clause (1); and 
198.25     (3) the financial consequences to the state and each 
198.26  individual school district of noncompliance with the No Child 
198.27  Left Behind Act of 2001. 
198.28     (b) The proposed consolidated state plan to be submitted by 
198.29  May 1, 2003, or any other contract or agreement under the 
198.30  provisions of the No Child Left Behind Act of 2001, shall 
198.31  include a notification that any commitment by the department of 
198.32  children, families, and learning to the federal Department of 
198.33  Education on implementing the No Child Left Behind Act of 2001 
198.34  shall expire on June 1, 2004, unless legislation affirming the 
198.35  implementation of the act is enacted before that date.  If the 
198.36  consolidated state plan, or any other contract or agreement, 
199.1   does not include the notification, the plan or any other 
199.2   contract or agreement shall be revoked. 
199.3      [EFFECTIVE DATE.] This section is effective the day 
199.4   following final enactment and applies to existing agency 
199.5   contracts or agreements. 
199.6      Sec. 4.  [APPROPRIATIONS.] 
199.7      Subdivision 1.  [DEPARTMENT OF CHILDREN, FAMILIES AND 
199.8   LEARNING.] Unless otherwise indicated, the sums indicated in 
199.9   this section are appropriated from the general fund to the 
199.10  department of children, families and learning for the fiscal 
199.11  years designated. 
199.12     Subd. 2.  [DEPARTMENT.] (a) For the department of children, 
199.13  families and learning: 
199.14       $22,122,000    .....     2004 
199.15       $21,957,000    .....     2005 
199.16     Any balance in the first year does not cancel but is 
199.17  available in the second year. 
199.18     (b) The base amount for fiscal year 2006 and later is 
199.19  $21,510,000. 
199.20     (c) $260,000 each year is for the Minnesota Children's 
199.21  Museum. 
199.22     (d) $41,000 each year is for the Minnesota Academy of 
199.23  Science.  
199.24     (e) $621,000 each year is for the board of teaching. 
199.25     (f) $165,000 each year is for the board of school 
199.26  administrators. 
199.27     (g) $2,547,000 each year is for the division of program 
199.28  finance. 
199.29     (h) $1,741,000 in 2004 and $1,701,000 in 2005 is for 
199.30  implementation of new academic standards.  The base amount for 
199.31  the implementation of new academic standards for fiscal year 
199.32  2006 and later is $1,501,000. 
199.33     (i) $259,000 in 2004 and $173,000 in 2005 is for the state 
199.34  library board.  The base amount for the state library board for 
199.35  fiscal year 2006 and later is $173,000. 
199.36     (j) $39,000 in 2004 only is for the department name change. 
200.1      (k) None of the amounts appropriated in this subdivision 
200.2   shall be used to pay for salaries or benefits of employees 
200.3   assigned to the office of the governor. 
200.4      Sec. 5.  [APPROPRIATIONS; MINNESOTA STATE ACADEMIES.] 
200.5      The sums indicated in this section are appropriated from 
200.6   the general fund to the Minnesota state academies for the deaf 
200.7   and the blind for the fiscal years designated:  
200.8        $10,417,000    .....     2004 
200.9        $10,418,000    .....     2005 
200.10     Any balance in the first year does not cancel but is 
200.11  available in the second year. 
200.12     The base amount for fiscal year 2006 and later is 
200.13  $10,966,000. 
200.14     Sec. 6.  [APPROPRIATIONS; PERPICH CENTER FOR ARTS 
200.15  EDUCATION.] 
200.16     The sums indicated in this section are appropriated from 
200.17  the general fund to the Perpich center for arts education for 
200.18  the fiscal years designated: 
200.19        $6,864,000    .....     2004 
200.20        $6,864,000    .....     2005 
200.21     Any balance in the first year does not cancel but is 
200.22  available in the second year. 
200.23     The base amount for fiscal year 2006 and later shall be 
200.24  $7,816,000. 
200.25                             ARTICLE 17 
200.26               ADMINISTRATIVE AMENDMENT AND REPEAL OF 
200.27                         CERTAIN PROVISIONS 
200.28     Section 1.  Minnesota Statutes 2002, section 12.21, 
200.29  subdivision 3, is amended to read: 
200.30     Subd. 3.  [SPECIFIC AUTHORITY.] In performing duties under 
200.31  this chapter and to effect its policy and purpose, the governor 
200.32  may: 
200.33     (1) make, amend, and rescind the necessary orders and rules 
200.34  to carry out the provisions of this chapter and section 216C.15 
200.35  within the limits of the authority conferred by this section, 
200.36  with due consideration of the plans of the federal government 
201.1   and without complying with sections 14.001 to 14.69, but no 
201.2   order or rule has the effect of law except as provided by 
201.3   section 12.32; 
201.4      (2) ensure that a comprehensive emergency operations plan 
201.5   and emergency management program for this state are developed 
201.6   and maintained, and are integrated into and coordinated with the 
201.7   emergency plans of the federal government and of other states to 
201.8   the fullest possible extent; 
201.9      (3) in accordance with the emergency operations plan and 
201.10  the emergency management program of this state, procure 
201.11  supplies, equipment, and facilities; institute training programs 
201.12  and public information programs; and take all other preparatory 
201.13  steps, including the partial or full activation of emergency 
201.14  management organizations in advance of actual disaster to ensure 
201.15  the furnishing of adequately trained and equipped forces of 
201.16  emergency management personnel in time of need; 
201.17     (4) make studies and surveys of the industries, resources, 
201.18  and facilities in this state as may be necessary to ascertain 
201.19  the capabilities of the state for emergency management and to 
201.20  plan for the most efficient emergency use of those industries, 
201.21  resources, and facilities; 
201.22     (5) on behalf of this state, enter into mutual aid 
201.23  arrangements or cooperative agreements with other states, tribal 
201.24  authorities, and Canadian provinces, and coordinate mutual aid 
201.25  plans between political subdivisions of this state; 
201.26     (6) delegate administrative authority vested in the 
201.27  governor under this chapter, except the power to make rules, and 
201.28  provide for the subdelegation of that authority; 
201.29     (7) cooperate with the president and the heads of the armed 
201.30  forces, the emergency management agency of the United States and 
201.31  other appropriate federal officers and agencies, and with the 
201.32  officers and agencies of other states in matters pertaining to 
201.33  the emergency management of the state and nation, including the 
201.34  direction or control of: 
201.35     (i) emergency preparedness drills and exercises; 
201.36     (ii) warnings and signals for drills or actual emergencies 
202.1   and the mechanical devices to be used in connection with them; 
202.2      (iii) shutting off water mains, gas mains, electric power 
202.3   connections and the suspension of all other utility services; 
202.4      (iv) the conduct of persons in the state, including 
202.5   entrance or exit from any stricken or threatened public place, 
202.6   occupancy of facilities, and the movement and cessation of 
202.7   movement of pedestrians, vehicular traffic, and all forms of 
202.8   private and public transportation during, prior, and subsequent 
202.9   to drills or actual emergencies; 
202.10     (v) public meetings or gatherings; and 
202.11     (vi) the evacuation, reception, and sheltering of persons; 
202.12     (8) contribute to a political subdivision, within the 
202.13  limits of the appropriation for that purpose, not more than 25 
202.14  percent of the cost of acquiring organizational equipment that 
202.15  meets standards established by the governor; 
202.16     (9) formulate and execute, with the approval of the 
202.17  executive council, plans and rules for the control of traffic in 
202.18  order to provide for the rapid and safe movement over public 
202.19  highways and streets of troops, vehicles of a military nature, 
202.20  and materials for national defense and war or for use in any war 
202.21  industry, for the conservation of critical materials, or for 
202.22  emergency management purposes; coordinate the activities of the 
202.23  departments or agencies of the state and its political 
202.24  subdivisions concerned directly or indirectly with public 
202.25  highways and streets, in a manner that will best effectuate 
202.26  those plans; 
202.27     (10) alter or adjust by executive order, without complying 
202.28  with sections 14.01 to 14.69, the working hours, work days and 
202.29  work week of, and annual and sick leave provisions and payroll 
202.30  laws regarding all state employees in the executive branch as 
202.31  the governor deems necessary to minimize the impact of the 
202.32  disaster or emergency, conforming the alterations or adjustments 
202.33  to existing state laws, rules, and collective bargaining 
202.34  agreements to the extent practicable; 
202.35     (11) authorize the commissioner of children, families, and 
202.36  learning to alter school schedules, curtail school activities, 
203.1   or order schools closed without affecting state aid to schools, 
203.2   as defined in section 120A.05, subdivisions 9, 11, 13, and 17, 
203.3   and including charter schools under section 124D.10, and 
203.4   elementary schools enrolling prekindergarten pupils in district 
203.5   programs; and 
203.6      (12) transfer the direction, personnel, or functions of 
203.7   state agencies to perform or facilitate response and recovery 
203.8   programs. 
203.9      Sec. 2.  Minnesota Statutes 2002, section 120A.05, 
203.10  subdivision 9, is amended to read: 
203.11     Subd. 9.  [ELEMENTARY SCHOOL.] "Elementary school" means 
203.12  any school with building, equipment, courses of study, class 
203.13  schedules, enrollment of pupils ordinarily in prekindergarten 
203.14  through grade 6 or any portion thereof, and staff meeting the 
203.15  standards established by the commissioner. 
203.16     The commissioner of children, families, and learning shall 
203.17  not close a school or deny any state aids to a district for its 
203.18  elementary schools because of enrollment limitations classified 
203.19  in accordance with the provisions of this subdivision. 
203.20     Sec. 3.  Minnesota Statutes 2002, section 122A.63, 
203.21  subdivision 3, is amended to read: 
203.22     Subd. 3.  [REVIEW AND COMMENT.] The commissioner must 
203.23  submit the joint application to the Minnesota American Indian 
203.24  scholarship education committee for review and comment. 
203.25     Sec. 4.  Minnesota Statutes 2002, section 123A.06, 
203.26  subdivision 3, is amended to read: 
203.27     Subd. 3.  [HOURS OF INSTRUCTION EXEMPTION.] Notwithstanding 
203.28  any law to the contrary, the center programs must be available 
203.29  throughout the entire year.  Pupils in a center may receive 
203.30  instruction for more than or less than the daily number of hours 
203.31  required by the rules of the commissioner of children, families, 
203.32  and learning.  However, a pupil must receive instruction each 
203.33  year for at least the total number of instructional hours 
203.34  required by statutes and rules.  A center may petition the state 
203.35  board under Minnesota Rules, part 3500.1000, for exemption from 
203.36  other rules.  
204.1      Sec. 5.  Minnesota Statutes 2002, section 123A.18, 
204.2   subdivision 2, is amended to read: 
204.3      Subd. 2.  [EXTENDED YEAR INSTRUCTION.] The agreement may 
204.4   provide opportunities for pupils to receive instruction 
204.5   throughout the entire year and for teachers to coordinate 
204.6   educational opportunities and provide instruction throughout the 
204.7   entire year.  Pupils may receive instruction for more than or 
204.8   less than the daily number of hours required by the rules of the 
204.9   commissioner of children, families, and learning.  However, the 
204.10  pupil must receive instruction each year for at least the total 
204.11  number of instructional hours required by statutes and rules.  A 
204.12  teacher who is employed for the extended year may develop, in 
204.13  consultation with pupils and parents, individual educational 
204.14  programs for not more than 125 pupils.  
204.15     Sec. 6.  Minnesota Statutes 2002, section 123A.73, 
204.16  subdivision 3, is amended to read: 
204.17     Subd. 3.  [VOLUNTARY DISSOLUTION; REFERENDUM REVENUE.] As 
204.18  of the effective date of the voluntary dissolution of a district 
204.19  and its attachment to one or more existing districts pursuant to 
204.20  section 123A.46, the authorization for all referendum revenues 
204.21  previously approved by the voters of all affected districts for 
204.22  those districts pursuant to section 126C.17, subdivision 9, or 
204.23  its predecessor provision, is canceled.  However, if all of the 
204.24  territory of any independent district is included in the 
204.25  enlarged district, and if the adjusted net tax capacity of 
204.26  taxable property in that territory comprises 90 percent or more 
204.27  of the adjusted net tax capacity of all taxable property in an 
204.28  enlarged district, the enlarged district's referendum revenue 
204.29  shall be determined as follows: 
204.30     If the referendum revenue previously approved in the 
204.31  preexisting district is authorized as a tax rate, the referendum 
204.32  revenue in the enlarged district is the tax rate times the net 
204.33  tax capacity of the enlarged district.  If referendum revenue 
204.34  previously approved in the preexisting district is authorized as 
204.35  revenue per resident pupil unit, The referendum revenue shall be 
204.36  the revenue per resident marginal cost pupil unit times the 
205.1   number of resident marginal cost pupil units in the enlarged 
205.2   district.  If referendum revenue in the preexisting district is 
205.3   authorized both as a tax rate and as revenue per resident pupil 
205.4   unit, the referendum revenue in the enlarged district shall be 
205.5   the sum of both plus any referendum revenue in the preexisting 
205.6   district authorized as a dollar amount.  Any new referendum 
205.7   revenue shall be authorized only after approval is granted by 
205.8   the voters of the entire enlarged district in an election 
205.9   pursuant to section 126C.17, subdivision 9. 
205.10     Sec. 7.  Minnesota Statutes 2002, section 123A.73, 
205.11  subdivision 4, is amended to read: 
205.12     Subd. 4.  [CONSOLIDATION; MAXIMUM AUTHORIZED REFERENDUM 
205.13  REVENUES.] As of the effective date of a consolidation pursuant 
205.14  to section 123A.48, if the plan for consolidation so provides, 
205.15  or if the plan for consolidation makes no provision concerning 
205.16  referendum revenues, the authorization for all referendum 
205.17  revenues previously approved by the voters of all affected 
205.18  districts for those districts pursuant to section 126C.17, 
205.19  subdivision 9, or its predecessor provision shall be 
205.20  recalculated as provided in this subdivision.  The referendum 
205.21  revenue authorization for the newly created district shall be 
205.22  the net tax capacity rate revenue per resident marginal cost 
205.23  pupil unit that would raise an amount equal to the combined 
205.24  dollar amount of the referendum revenues authorized by each of 
205.25  the component districts for the year preceding the 
205.26  consolidation, unless the referendum revenue authorization of 
205.27  the newly created district is subsequently modified pursuant to 
205.28  section 126C.17, subdivision 9.  If the referendum revenue 
205.29  authorizations for each of the component districts were limited 
205.30  to a specified number of years, The referendum revenue 
205.31  authorization for the newly created district shall continue for 
205.32  a period of time equal to the longest period authorized for any 
205.33  component district.  If the referendum revenue authorization of 
205.34  any component district is not limited to a specified number of 
205.35  years, the referendum revenue authorization for the newly 
205.36  created district shall not be limited to a specified number of 
206.1   years.  
206.2      Sec. 8.  Minnesota Statutes 2002, section 123A.73, 
206.3   subdivision 5, is amended to read: 
206.4      Subd. 5.  [ALTERNATIVE METHOD.] As of the effective date of 
206.5   a consolidation pursuant to section 123A.48, if the plan for 
206.6   consolidation so provides, the authorization for all referendum 
206.7   revenues previously approved by the voters of all affected 
206.8   districts for those districts pursuant to section 126C.17, 
206.9   subdivision 9, or its predecessor provision shall be combined as 
206.10  provided in this subdivision.  The referendum revenue 
206.11  authorization for the newly created district may be any 
206.12  allowance per resident marginal cost pupil unit provided in the 
206.13  plan for consolidation, but may not exceed the allowance per 
206.14  resident marginal cost pupil unit that would raise an amount 
206.15  equal to the combined dollar amount of the referendum revenues 
206.16  authorized by each of the component districts for the year 
206.17  preceding the consolidation.  If the referendum revenue 
206.18  authorizations for each of the component districts were limited 
206.19  to a specified number of years, The referendum revenue 
206.20  authorization for the newly created district shall continue for 
206.21  a period of time equal to the longest period authorized for any 
206.22  component district.  If the referendum revenue authorization of 
206.23  any component district is not limited to a specified number of 
206.24  years, the referendum revenue authorization for the newly 
206.25  created district shall not be limited to a specified number of 
206.26  years.  The referendum revenue authorization for the newly 
206.27  created district may be modified pursuant to section 126C.17, 
206.28  subdivision 9. 
206.29     Sec. 9.  Minnesota Statutes 2002, section 123B.51, 
206.30  subdivision 3, is amended to read: 
206.31     Subd. 3.  [LEASE ROOMS OR BUILDINGS REAL PROPERTY.] When 
206.32  necessary, the board may lease rooms or buildings real property 
206.33  for school purposes. 
206.34     Sec. 10.  Minnesota Statutes 2002, section 123B.51, 
206.35  subdivision 4, is amended to read: 
206.36     Subd. 4.  [LEASE FOR NONSCHOOL PURPOSE.] (a) The board may 
207.1   lease to any person, business, or organization a schoolhouse 
207.2   real property that is not needed for school purposes, or part of 
207.3   a schoolhouse the property that is not needed for school 
207.4   purposes if the board determines that leasing part of a 
207.5   schoolhouse the property does not interfere with the educational 
207.6   programs taking place in the rest of the building on the 
207.7   property.  The board may charge and collect reasonable 
207.8   consideration for the lease and may determine the terms and 
207.9   conditions of the lease. 
207.10     (b) In districts with outstanding bonds, the net proceeds 
207.11  of the lease must be first deposited in the debt retirement fund 
207.12  of the district in an amount sufficient to meet when due that 
207.13  percentage of the principal and interest payments for 
207.14  outstanding bonds that is ascribable to the payment of expenses 
207.15  necessary and incidental to the construction or purchase of the 
207.16  particular building or property that is leased.  Any remaining 
207.17  net proceeds in these districts may be deposited in either the 
207.18  debt redemption fund or operating capital expenditure 
207.19  fund account.  All net proceeds of the lease in districts 
207.20  without outstanding bonds shall be deposited in the operating 
207.21  capital expenditure fund account of the district. 
207.22     (c) The board may make capital improvements, including 
207.23  fixtures, to a schoolhouse or a portion thereof to the real 
207.24  property, not exceeding in cost the replacement value of 
207.25  the schoolhouse property, to facilitate its rental, and the 
207.26  lease of an the improved schoolhouse property, or part of it, 
207.27  shall provide for rentals which will recover the cost of the 
207.28  improvements over the initial term of the lease.  
207.29  Notwithstanding paragraph (b), the portion of the rentals 
207.30  representing the cost of the improvements shall be deposited in 
207.31  the operating capital expenditure fund account of the district 
207.32  and the balance of the rentals shall be used as provided in 
207.33  paragraph (b).  
207.34     Sec. 11.  Minnesota Statutes 2002, section 123B.57, 
207.35  subdivision 4, is amended to read: 
207.36     Subd. 4.  [HEALTH AND SAFETY LEVY.] To receive health and 
208.1   safety revenue, a district may levy an amount equal to the 
208.2   district's health and safety revenue as defined in subdivision 3 
208.3   multiplied by the lesser of one, or the ratio of the quotient 
208.4   derived by dividing the adjusted net tax capacity of the 
208.5   district for the year preceding the year the levy is certified 
208.6   by the adjusted marginal cost pupil units in the district for 
208.7   the school year to which the levy is attributable, 
208.8   to $3,956 $2,935. 
208.9      Sec. 12.  Minnesota Statutes 2002, section 123B.63, 
208.10  subdivision 1, is amended to read: 
208.11     Subdivision 1.  [CREATION OF A DOWN PAYMENT CAPITAL PROJECT 
208.12  REFERENDUM ACCOUNT.] A district may create a down payment 
208.13  capital project referendum account as a separate account in 
208.14  its general fund or its building construction fund.  All 
208.15  proceeds from the down payment capital project levy must be 
208.16  deposited in the capital expenditure fund and transferred to 
208.17  this account project referendum account in its general fund.  
208.18  The portion of the proceeds to be used for building construction 
208.19  must be transferred to the capital project referendum account in 
208.20  its building construction fund.  Interest income attributable to 
208.21  the down payment capital project referendum account must be 
208.22  credited to the account. 
208.23     Sec. 13.  Minnesota Statutes 2002, section 123B.63, 
208.24  subdivision 2, is amended to read: 
208.25     Subd. 2.  [USES OF THE ACCOUNT.] Money in the down payment 
208.26  capital project referendum account must be used as a down 
208.27  payment for the future costs of acquisition and betterment for a 
208.28  project that has been reviewed under section 123B.71 and has 
208.29  been approved according to subdivision 3. 
208.30     Sec. 14.  Minnesota Statutes 2002, section 123B.63, 
208.31  subdivision 3, is amended to read: 
208.32     Subd. 3.  [FACILITIES DOWN PAYMENT CAPITAL PROJECT LEVY 
208.33  REFERENDUM.] A district may levy the local tax rate approved by 
208.34  a majority of the electors voting on the question to provide 
208.35  funds for a down payment for an approved project.  The election 
208.36  must take place no more than five years before the estimated 
209.1   date of commencement of the project.  The referendum must be 
209.2   held on a date set by the board.  A referendum for a project not 
209.3   receiving a positive review and comment by the commissioner 
209.4   under section 123B.71 must be approved by at least 60 percent of 
209.5   the voters at the election.  The referendum may be called by the 
209.6   school board and may be held: 
209.7      (1) separately, before an election for the issuance of 
209.8   obligations for the project under chapter 475; or 
209.9      (2) in conjunction with an election for the issuance of 
209.10  obligations for the project under chapter 475; or 
209.11     (3) notwithstanding section 475.59, as a conjunctive 
209.12  question authorizing both the down payment capital project levy 
209.13  and the issuance of obligations for the project under chapter 
209.14  475.  Any obligations authorized for a project may be issued 
209.15  within five years of the date of the election. 
209.16     The ballot must provide a general description of the 
209.17  proposed project, state the estimated total cost of the project, 
209.18  state whether the project has received a positive or negative 
209.19  review and comment from the commissioner, state the maximum 
209.20  amount of the down payment capital project levy as a percentage 
209.21  of net tax capacity, state the amount that will be raised by 
209.22  that local tax rate in the first year it is to be levied, and 
209.23  state the maximum number of years that the levy authorization 
209.24  will apply. 
209.25     The ballot must contain a textual portion with the 
209.26  information required in this section and a question stating 
209.27  substantially the following: 
209.28     "Shall the down payment capital project levy proposed by 
209.29  the board of .......... School District No. .......... be 
209.30  approved?" 
209.31     If approved, the amount provided by the approved local tax 
209.32  rate applied to the net tax capacity for the year preceding the 
209.33  year the levy is certified may be certified for the number of 
209.34  years approved. 
209.35     In the event a conjunctive question proposes to authorize 
209.36  both the down payment capital project levy and the issuance of 
210.1   obligations for the project, appropriate language authorizing 
210.2   the issuance of obligations must also be included in the 
210.3   question.  
210.4      The district must notify the commissioner of the results of 
210.5   the referendum. 
210.6      Sec. 15.  Minnesota Statutes 2002, section 123B.63, 
210.7   subdivision 4, is amended to read: 
210.8      Subd. 4.  [EXCESS BUILDING CONSTRUCTION FUND LEVY 
210.9   PROCEEDS.] Any funds remaining in the down payment capital 
210.10  project referendum account that are not applied to the payment 
210.11  of the costs of the approved project before its final completion 
210.12  must be transferred to the district's debt redemption fund.  
210.13     Sec. 16.  Minnesota Statutes 2002, section 123B.92, 
210.14  subdivision 1, is amended to read: 
210.15     Subdivision 1.  [DEFINITIONS.] For purposes of this section 
210.16  and section 125A.76, the terms defined in this subdivision have 
210.17  the meanings given to them. 
210.18     (a) "Actual expenditure per pupil transported in the 
210.19  regular and excess transportation categories" means the quotient 
210.20  obtained by dividing: 
210.21     (1) the sum of: 
210.22     (i) all expenditures for transportation in the regular 
210.23  category, as defined in paragraph (b), clause (1), and the 
210.24  excess category, as defined in paragraph (b), clause (2), plus 
210.25     (ii) an amount equal to one year's depreciation on the 
210.26  district's school bus fleet and mobile units computed on a 
210.27  straight line basis at the rate of 15 percent per year for 
210.28  districts operating a program under section 124D.128 for grades 
210.29  1 to 12 for all students in the district and 12-1/2 percent per 
210.30  year for other districts of the cost of the fleet, plus 
210.31     (iii) an amount equal to one year's depreciation on the 
210.32  district's type three school buses, as defined in section 
210.33  169.01, subdivision 6, clause (5), which must be used a majority 
210.34  of the time for pupil transportation purposes, computed on a 
210.35  straight line basis at the rate of 20 percent per year of the 
210.36  cost of the type three school buses by: 
211.1      (2) the number of pupils eligible for transportation in the 
211.2   regular category, as defined in paragraph (b), clause (1), and 
211.3   the excess category, as defined in paragraph (b), clause (2).  
211.4      (b) "Transportation category" means a category of 
211.5   transportation service provided to pupils as follows:  
211.6      (1) Regular transportation is:  
211.7      (i) transportation to and from school during the regular 
211.8   school year for resident elementary pupils residing one mile or 
211.9   more from the public or nonpublic school they attend, and 
211.10  resident secondary pupils residing two miles or more from the 
211.11  public or nonpublic school they attend, excluding desegregation 
211.12  transportation and noon kindergarten transportation; but with 
211.13  respect to transportation of pupils to and from nonpublic 
211.14  schools, only to the extent permitted by sections 123B.84 to 
211.15  123B.87; 
211.16     (ii) transportation of resident pupils to and from language 
211.17  immersion programs; 
211.18     (iii) transportation of a pupil who is a custodial parent 
211.19  and that pupil's child between the pupil's home and the child 
211.20  care provider and between the provider and the school, if the 
211.21  home and provider are within the attendance area of the school; 
211.22  and 
211.23     (iv) transportation to and from or board and lodging in 
211.24  another district, of resident pupils of a district without a 
211.25  secondary school; and 
211.26     (v) transportation to and from school during the regular 
211.27  school year required under subdivision 3 for nonresident 
211.28  elementary pupils when the distance from the attendance area 
211.29  border to the public school is one mile or more, and for 
211.30  nonresident secondary pupils when the distance from the 
211.31  attendance area border to the public school is two miles or 
211.32  more, excluding desegregation transportation and noon 
211.33  kindergarten transportation. 
211.34     For the purposes of this paragraph, a district may 
211.35  designate a licensed day care facility, respite care facility, 
211.36  the residence of a relative, or the residence of a person chosen 
212.1   by the pupil's parent or guardian as the home of a pupil for 
212.2   part or all of the day, if requested by the pupil's parent or 
212.3   guardian, and if that facility or residence is within the 
212.4   attendance area of the school the pupil attends. 
212.5      (2) Excess transportation is: 
212.6      (i) transportation to and from school during the regular 
212.7   school year for resident secondary pupils residing at least one 
212.8   mile but less than two miles from the public or nonpublic school 
212.9   they attend, and transportation to and from school for resident 
212.10  pupils residing less than one mile from school who are 
212.11  transported because of extraordinary traffic, drug, or crime 
212.12  hazards; and 
212.13     (ii) transportation to and from school during the regular 
212.14  school year required under subdivision 3 for nonresident 
212.15  secondary pupils when the distance from the attendance area 
212.16  border to the school is at least one mile but less than two 
212.17  miles from the public school they attend, and for nonresident 
212.18  pupils when the distance from the attendance area border to the 
212.19  school is less than one mile from the school and who are 
212.20  transported because of extraordinary traffic, drug, or crime 
212.21  hazards. 
212.22     (3) Desegregation transportation is transportation within 
212.23  and outside of the district during the regular school year of 
212.24  pupils to and from schools located outside their normal 
212.25  attendance areas under a plan for desegregation mandated by the 
212.26  commissioner or under court order.  
212.27     (4) "Transportation services for pupils with disabilities" 
212.28  is: 
212.29     (i) transportation of pupils with disabilities who cannot 
212.30  be transported on a regular school bus between home or a respite 
212.31  care facility and school; 
212.32     (ii) necessary transportation of pupils with disabilities 
212.33  from home or from school to other buildings, including centers 
212.34  such as developmental achievement centers, hospitals, and 
212.35  treatment centers where special instruction or services required 
212.36  by sections 125A.03 to 125A.24, 125A.26 to 125A.48, and 125A.65 
213.1   are provided, within or outside the district where services are 
213.2   provided; 
213.3      (iii) necessary transportation for resident pupils with 
213.4   disabilities required by sections 125A.12, and 125A.26 to 
213.5   125A.48; 
213.6      (iv) board and lodging for pupils with disabilities in a 
213.7   district maintaining special classes; 
213.8      (v) transportation from one educational facility to another 
213.9   within the district for resident pupils enrolled on a 
213.10  shared-time basis in educational programs, and necessary 
213.11  transportation required by sections 125A.18, and 125A.26 to 
213.12  125A.48, for resident pupils with disabilities who are provided 
213.13  special instruction and services on a shared-time basis; 
213.14     (vi) transportation for resident pupils with disabilities 
213.15  to and from board and lodging facilities when the pupil is 
213.16  boarded and lodged for educational purposes; and 
213.17     (vii) services described in clauses (i) to (vi), when 
213.18  provided for pupils with disabilities in conjunction with a 
213.19  summer instructional program that relates to the pupil's 
213.20  individual education plan or in conjunction with a learning year 
213.21  program established under section 124D.128. 
213.22     (5) "Nonpublic nonregular transportation" is: 
213.23     (i) transportation from one educational facility to another 
213.24  within the district for resident pupils enrolled on a 
213.25  shared-time basis in educational programs, excluding 
213.26  transportation for nonpublic pupils with disabilities under 
213.27  clause (4); 
213.28     (ii) transportation within district boundaries between a 
213.29  nonpublic school and a public school or a neutral site for 
213.30  nonpublic school pupils who are provided pupil support services 
213.31  pursuant to section 123B.44; and 
213.32     (iii) late transportation home from school or between 
213.33  schools within a district for nonpublic school pupils involved 
213.34  in after-school activities. 
213.35     (c) "Mobile unit" means a vehicle or trailer designed to 
213.36  provide facilities for educational programs and services, 
214.1   including diagnostic testing, guidance and counseling services, 
214.2   and health services.  A mobile unit located off nonpublic school 
214.3   premises is a neutral site as defined in section 123B.41, 
214.4   subdivision 13. 
214.5      Sec. 17.  Minnesota Statutes 2002, section 123B.92, 
214.6   subdivision 3, is amended to read: 
214.7      Subd. 3.  [ALTERNATIVE ATTENDANCE PROGRAMS.] A district 
214.8   that enrolls nonresident pupils in programs under sections 
214.9   124D.03, 124D.06, 124D.07, 124D.08, 123A.05 to 123A.08, and 
214.10  124D.68, must provide authorized transportation to the pupil 
214.11  within the attendance area for the school that the pupil attends 
214.12  at the same level of service that is provided to resident pupils 
214.13  within the attendance area.  The resident district need not 
214.14  provide or pay for transportation between the pupil's residence 
214.15  and the district's border. 
214.16     Sec. 18.  Minnesota Statutes 2002, section 124D.09, 
214.17  subdivision 9, is amended to read: 
214.18     Subd. 9.  [ENROLLMENT PRIORITY.] A post-secondary 
214.19  institution shall give priority to its post-secondary students 
214.20  when enrolling 11th and 12th grade pupils in its courses.  A 
214.21  post-secondary institution may provide information about its 
214.22  programs to a secondary school or to a pupil or parent, but it 
214.23  may not advertise or otherwise recruit or solicit the 
214.24  participation on financial grounds, of secondary pupils to 
214.25  enroll in its programs on financial grounds.  An institution 
214.26  must not enroll secondary pupils, for post-secondary enrollment 
214.27  options purposes, in remedial, developmental, or other courses 
214.28  that are not college level.  Once a pupil has been enrolled in a 
214.29  post-secondary course under this section, the pupil shall not be 
214.30  displaced by another student.  
214.31     Sec. 19.  Minnesota Statutes 2002, section 124D.09, 
214.32  subdivision 10, is amended to read: 
214.33     Subd. 10.  [COURSES ACCORDING TO AGREEMENTS.] An eligible 
214.34  pupil, according to subdivision 4 5, may enroll in a 
214.35  nonsectarian course taught by a secondary teacher or a 
214.36  post-secondary faculty member and offered at a secondary school, 
215.1   or another location, according to an agreement between a public 
215.2   school board and the governing body of an eligible public 
215.3   post-secondary system or an eligible private post-secondary 
215.4   institution, as defined in subdivision 3.  All provisions of 
215.5   this section shall apply to a pupil, public school board, 
215.6   district, and the governing body of a post-secondary 
215.7   institution, except as otherwise provided.  
215.8      Sec. 20.  Minnesota Statutes 2002, section 124D.09, 
215.9   subdivision 16, is amended to read: 
215.10     Subd. 16.  [FINANCIAL ARRANGEMENTS FOR COURSES PROVIDED 
215.11  ACCORDING TO AGREEMENTS.] (a) The agreement between a board and 
215.12  the governing body of a public post-secondary system or private 
215.13  post-secondary institution shall set forth the payment amounts 
215.14  and arrangements, if any, from the board to the post-secondary 
215.15  institution.  No payments shall be made by the department 
215.16  according to subdivision 14 13 or 15.  For the purpose of 
215.17  computing state aids for a district, a pupil enrolled according 
215.18  to subdivision 10 shall be counted in the average daily 
215.19  membership of the district as though the pupil were enrolled in 
215.20  a secondary course that is not offered in connection with an 
215.21  agreement.  Nothing in this subdivision shall be construed to 
215.22  prohibit a public post-secondary system or private 
215.23  post-secondary institution from receiving additional state 
215.24  funding that may be available under any other law.  
215.25     (b) If a course is provided under subdivision 10, offered 
215.26  at a secondary school, and taught by a secondary teacher, the 
215.27  post-secondary system or institution must not require a payment 
215.28  from the school board that exceeds the cost to the 
215.29  post-secondary institution that is directly attributable to 
215.30  providing that course.  
215.31     Sec. 21.  Minnesota Statutes 2002, section 124D.11, 
215.32  subdivision 1, is amended to read: 
215.33     Subdivision 1.  [GENERAL EDUCATION REVENUE.] (a) General 
215.34  education revenue must be paid to a charter school as though it 
215.35  were a district.  The general education revenue for each 
215.36  adjusted marginal cost pupil unit is the state average general 
216.1   education revenue per pupil unit, plus the referendum 
216.2   equalization aid allowance in the pupil's district of residence, 
216.3   minus an amount equal to the product of the formula allowance 
216.4   according to section 126C.10, subdivision 2, times .0485, 
216.5   calculated without basic skills revenue, and transportation 
216.6   sparsity revenue, and the transportation portion of the 
216.7   transition revenue adjustment, plus basic skills revenue as 
216.8   though the school were a school district. 
216.9      (b) Notwithstanding paragraph (a), for charter schools in 
216.10  the first year of operation, general education revenue shall be 
216.11  computed using the number of adjusted pupil units in the current 
216.12  fiscal year.  
216.13     Sec. 22.  Minnesota Statutes 2002, section 124D.11, 
216.14  subdivision 2, is amended to read: 
216.15     Subd. 2.  [TRANSPORTATION REVENUE.] Transportation revenue 
216.16  must be paid to a charter school that provides transportation 
216.17  services according to section 124D.10, subdivision 16, according 
216.18  to this subdivision.  Transportation aid shall equal 
216.19  transportation revenue.  
216.20     In addition to the revenue under subdivision 1, a charter 
216.21  school providing transportation services must receive general 
216.22  education aid for each pupil unit equal to the sum of an amount 
216.23  equal to the product of the formula allowance according to 
216.24  section 126C.10, subdivision 2, times .0485, plus the 
216.25  transportation sparsity allowance for the school district in 
216.26  which the charter school is located, plus the transportation 
216.27  transition allowance for the district in which the charter 
216.28  school is located.  
216.29     Sec. 23.  Minnesota Statutes 2002, section 124D.19, 
216.30  subdivision 3, is amended to read: 
216.31     Subd. 3.  [COMMUNITY EDUCATION DIRECTOR.] (a) Except as 
216.32  provided under paragraphs (b) and (c), each board shall employ a 
216.33  licensed community education director.  The board shall submit 
216.34  the name of the person who is serving as director of community 
216.35  education under this section on the district's annual community 
216.36  education report to the commissioner. 
217.1      (b) A board may apply to the commissioner Minnesota board 
217.2   of school administrators under Minnesota Rules, part 3512.3500, 
217.3   subpart 9, for authority to use an individual who is not 
217.4   licensed as a community education director. 
217.5      (c) A board of a district with a total population of 2,000 
217.6   or less may identify an employee who holds a valid Minnesota 
217.7   principal or superintendent license under Minnesota Rules, 
217.8   chapter 3512, to serve as director of community education.  To 
217.9   be eligible for an exception under this paragraph, the board 
217.10  shall certify in writing to the commissioner that the district 
217.11  has not placed a licensed director of community education on 
217.12  unrequested leave. 
217.13     Sec. 24.  Minnesota Statutes 2002, section 124D.20, 
217.14  subdivision 5, is amended to read: 
217.15     Subd. 5.  [TOTAL COMMUNITY EDUCATION LEVY.] To obtain total 
217.16  community education revenue, a district operating a youth 
217.17  after-school enrichment program under section 124D.19, 
217.18  subdivision 12, may levy the amount raised by a maximum tax rate 
217.19  of .7431 1.0017 percent times the adjusted net tax capacity of 
217.20  the district.  To obtain total community education revenue, a 
217.21  district not operating a youth after-school enrichment program 
217.22  may levy the amount raised by a maximum tax rate of .4795 .6463 
217.23  percent times the adjusted net tax capacity of the district.  If 
217.24  the amount of the total community education levy would exceed 
217.25  the total community education revenue, the total community 
217.26  education levy shall be determined according to subdivision 6. 
217.27     Sec. 25.  Minnesota Statutes 2002, section 124D.22, 
217.28  subdivision 3, is amended to read: 
217.29     Subd. 3.  [SCHOOL-AGE CARE LEVY.] To obtain school-age care 
217.30  revenue, a school district may levy an amount equal to the 
217.31  district's school-age care revenue as defined in subdivision 2 
217.32  multiplied by the lesser of one, or the ratio of the quotient 
217.33  derived by dividing the adjusted net tax capacity of the 
217.34  district for the year before the year the levy is certified by 
217.35  the resident pupil units in the district for the school year to 
217.36  which the levy is attributable, to $3,280 $2,433.  
218.1      Sec. 26.  Minnesota Statutes 2002, section 124D.454, 
218.2   subdivision 8, is amended to read: 
218.3      Subd. 8.  [USE OF AID.] The aid provided under this section 
218.4   shall be paid only for services rendered or for the costs which 
218.5   are incurred according to this section for transition programs 
218.6   for children with a disability which are approved by the 
218.7   commissioner of children, families, and learning and operated in 
218.8   accordance with rules promulgated by the commissioner.  These 
218.9   rules shall be subject to the restrictions provided in section 
218.10  124D.453, subdivision 6 12.  The procedure for application for 
218.11  approval of these programs shall be as provided in section 
218.12  125A.75, subdivisions 4 and 6, and the application review 
218.13  process shall be conducted by the office division of lifework 
218.14  development federal programs in the department. 
218.15     Sec. 27.  Minnesota Statutes 2002, section 124D.86, 
218.16  subdivision 1a, is amended to read: 
218.17     Subd. 1a.  [BUDGET APPROVAL PROCESS.] Each year before a 
218.18  district receives any revenue under subdivision 3, clause (4), 
218.19  (5), or (6), the district must submit to the department of 
218.20  children, families, and learning, for its review and approval a 
218.21  budget detailing the costs of the desegregation/integration plan 
218.22  filed under Minnesota Rules, parts 3535.0100 to 3535.0180.  
218.23  Notwithstanding chapter 14, the department may develop criteria 
218.24  for budget approval.  The department shall consult with the 
218.25  desegregation advisory board in developing these criteria.  The 
218.26  criteria developed by the department should address, at a 
218.27  minimum, the following: 
218.28     (1) budget items cannot be approved unless they are part of 
218.29  any overall desegregation plan approved by the district for 
218.30  isolated sites or by the multidistrict collaboration council and 
218.31  participation individual members; 
218.32     (2) the budget must indicate how revenue expenditures will 
218.33  be used specifically to support increased opportunities for 
218.34  interracial contact; 
218.35     (3) components of the budget to be considered by the 
218.36  department, including staffing, curriculum, transportation, 
219.1   facilities, materials, and equipment and reasonable planning 
219.2   costs, as determined by the department; and 
219.3      (4) if plans are proposed to enhance existing programs, the 
219.4   total budget being appropriated to the program must be included, 
219.5   indicating what part is to be funded using integration revenue 
219.6   and what part is to be funded using other revenues.  
219.7      [EFFECTIVE DATE.] This section is effective for revenue for 
219.8   fiscal year 2003 and later. 
219.9      Sec. 28.  Minnesota Statutes 2002, section 124D.86, 
219.10  subdivision 3, is amended to read: 
219.11     Subd. 3.  [INTEGRATION REVENUE.] Integration revenue equals 
219.12  the following amounts: 
219.13     (1) for independent school district No. 709, Duluth, $207 
219.14  times the adjusted pupil units for the school year; 
219.15     (2) for independent school district No. 625, St. Paul, $446 
219.16  times the adjusted pupil units for the school year; 
219.17     (3) for special school district No. 1, Minneapolis, the sum 
219.18  of $446 times the adjusted pupil units for the school year and 
219.19  an additional $35 times the adjusted pupil units for the school 
219.20  year that is provided entirely through a local levy; 
219.21     (4) for a district not listed in clause (1), (2), or (3), 
219.22  that must implement a plan under Minnesota Rules, parts 
219.23  3535.0100 to 3535.0180, where the district's enrollment of 
219.24  protected students, as defined under Minnesota Rules, part 
219.25  3535.0110, exceeds 15 percent, the lesser of (i) the actual cost 
219.26  of implementing the plan during the fiscal year minus the aid 
219.27  received under subdivision 6, or (ii) $130 times the adjusted 
219.28  pupil units for the school year; 
219.29     (5) for a district not listed in clause (1), (2), (3), or 
219.30  (4), that is required to implement a plan according to the 
219.31  requirements of Minnesota Rules, parts 3535.0100 to 3535.0180, 
219.32  the lesser of 
219.33     (i) the actual cost of implementing the plan during the 
219.34  fiscal year minus the aid received under subdivision 6, or 
219.35     (ii) $93 times the adjusted pupil units for the school year.
219.36     Any money received by districts in clauses (1) to (4) (3) 
220.1   which exceeds the amount received in fiscal year 2000 shall be 
220.2   subject to the budget requirements in subdivision 1a; and 
220.3      (6) for a member district of a multidistrict integration 
220.4   collaborative that files a plan with the commissioner, but is 
220.5   not contiguous to a racially isolated district, integration 
220.6   revenue equals the amount defined in clause (5). 
220.7      [EFFECTIVE DATE.] This section is effective for fiscal year 
220.8   2003 and later. 
220.9      Sec. 29.  Minnesota Statutes 2002, section 124D.86, 
220.10  subdivision 6, is amended to read: 
220.11     Subd. 6.  [ALTERNATIVE ATTENDANCE PROGRAMS.] (a) The 
220.12  integration aid under subdivision 5 must be adjusted for each 
220.13  pupil residing in a district eligible for integration revenue 
220.14  under subdivision 3, clause (1), (2), or (3), and attending a 
220.15  nonresident district under sections 123A.05 to 123A.08, 124D.03, 
220.16  124D.06, 124D.07, and 124D.08, that is not eligible for 
220.17  integration revenue under subdivision 3, clause (1), (2), or 
220.18  (3), and has implemented a plan under Minnesota Rules, parts 
220.19  3535.0100 to 3535.0180, if the enrollment of the pupil in the 
220.20  nonresident district contributes to desegregation or integration 
220.21  purposes.  The adjustments must be made according to this 
220.22  subdivision.  
220.23     (b) Aid paid to a district serving nonresidents must be 
220.24  increased by an amount equal to the revenue per pupil unit of 
220.25  the resident district under subdivision 3, clause 
220.26  (1), or (2), or (3), minus the revenue attributable to the pupil 
220.27  in the nonresident district under subdivision 3, clause (4), 
220.28  (5), or (6), for the time the pupil is enrolled in the 
220.29  nonresident district.  
220.30     [EFFECTIVE DATE.] This section is effective for fiscal year 
220.31  2003 and later. 
220.32     Sec. 30.  Minnesota Statutes 2002, section 125A.21, 
220.33  subdivision 2, is amended to read: 
220.34     Subd. 2.  [THIRD PARTY REIMBURSEMENT.] (a) Beginning July 
220.35  1, 2000, districts shall seek reimbursement from insurers and 
220.36  similar third parties for the cost of services provided by the 
221.1   district whenever the services provided by the district are 
221.2   otherwise covered by the child's health coverage.  Districts 
221.3   shall request, but may not require, the child's family to 
221.4   provide information about the child's health coverage when a 
221.5   child with a disability begins to receive services from the 
221.6   district of a type that may be reimbursable, and shall request, 
221.7   but may not require, updated information after that as needed.  
221.8      (b) For children enrolled in medical assistance under 
221.9   chapter 256B or MinnesotaCare under chapter 256L who have no 
221.10  other health coverage, a district shall provide an initial 
221.11  written notice to the enrolled child's parent or legal 
221.12  representative of its intent to seek reimbursement from medical 
221.13  assistance or MinnesotaCare for the individual education plan 
221.14  health-related services provided by the district. 
221.15     (c) The district shall give the parent or legal 
221.16  representative annual written notice of: 
221.17     (1) the district's intent to seek reimbursement from 
221.18  medical assistance or MinnesotaCare for individual education 
221.19  plan health-related services provided by the district; 
221.20     (2) the right of the parent or legal representative to 
221.21  request a copy of all records concerning individual education 
221.22  plan health-related services disclosed by the district to any 
221.23  third party; and 
221.24     (3) the right of the parent or legal representative to 
221.25  withdraw consent for disclosure of a child's records at any time 
221.26  without consequence. 
221.27  The written notice shall be provided as part of the written 
221.28  notice required by Code of Federal Regulations, title 34, 
221.29  section 300.503 300.504. 
221.30     (d) In order to access the private health care coverage of 
221.31  a child who is covered by private health care coverage in whole 
221.32  or in part, a district must: 
221.33     (1) obtain annual written informed consent from the parent 
221.34  or legal representative, in compliance with subdivision 5; and 
221.35     (2) inform the parent or legal representative that a 
221.36  refusal to permit the district or state Medicaid agency to 
222.1   access their private health care coverage does not relieve the 
222.2   district of its responsibility to provide all services necessary 
222.3   to provide free and appropriate public education at no cost to 
222.4   the parent or legal representative. 
222.5      (e) If the commissioner of human services obtains federal 
222.6   approval to exempt covered individual education plan 
222.7   health-related services from the requirement that private health 
222.8   care coverage refuse payment before medical assistance may be 
222.9   billed, paragraphs (b), (c), and (d) shall also apply to 
222.10  students with a combination of private health care coverage and 
222.11  health care coverage through medical assistance or MinnesotaCare.
222.12     (f) In the event that Congress or any federal agency or the 
222.13  Minnesota legislature or any state agency establishes lifetime 
222.14  limits, limits for any health care services, cost-sharing 
222.15  provisions, or otherwise provides that individual education plan 
222.16  health-related services impact benefits for persons enrolled in 
222.17  medical assistance or MinnesotaCare, the amendments to this 
222.18  subdivision adopted in 2002 are repealed on the effective date 
222.19  of any federal or state law or regulation that imposes the 
222.20  limits.  In that event, districts must obtain informed consent 
222.21  consistent with this subdivision as it existed prior to the 2002 
222.22  amendments and subdivision 5, before seeking reimbursement for 
222.23  children enrolled in medical assistance under chapter 256B or 
222.24  MinnesotaCare under chapter 256L who have no other health care 
222.25  coverage. 
222.26     Sec. 31.  Minnesota Statutes 2002, section 126C.10, 
222.27  subdivision 6, is amended to read: 
222.28     Subd. 6.  [DEFINITIONS.] The definitions in this 
222.29  subdivision apply only to subdivisions 7 and 8.  
222.30     (a) "High school" means a secondary school that has pupils 
222.31  enrolled in at least the 10th, 11th, and 12th grades.  If there 
222.32  is no secondary school in the district that has pupils enrolled 
222.33  in at least the 10th, 11th, and 12th grades, and the school is 
222.34  at least 19 miles from the next nearest school, the commissioner 
222.35  must designate one school in the district as a high school for 
222.36  the purposes of this section. 
223.1      (b) "Secondary average daily membership" means, for a 
223.2   district that has only one high school, the average daily 
223.3   membership of pupils served in grades 7 through 12.  For a 
223.4   district that has more than one high school, "secondary average 
223.5   daily membership" for each high school means the product of the 
223.6   average daily membership of pupils served in grades 7 through 12 
223.7   in the high school, times the ratio of six to the number of 
223.8   grades in the high school. 
223.9      (c) "Attendance area" means the total surface area of the 
223.10  district, in square miles, divided by the number of high schools 
223.11  in the district.  For a district that does not operate a high 
223.12  school and is less than 19 miles from the nearest operating high 
223.13  school, the attendance area equals zero. 
223.14     (d) "Isolation index" for a high school means the square 
223.15  root of 55 percent of the attendance area plus the distance in 
223.16  miles, according to the usually traveled routes, between the 
223.17  high school and the nearest high school.  For a district in 
223.18  which there is located land defined in section 84A.01, 84A.20, 
223.19  or 84A.31, the distance in miles is the sum of: 
223.20     (1) the square root of one-half of the attendance area; and 
223.21     (2) the distance from the border of the district to the 
223.22  nearest high school. 
223.23     (e) "Qualifying high school" means a high school that has 
223.24  an isolation index greater than 23 and that has secondary 
223.25  average daily membership of less than 400.  
223.26     (f) "Qualifying elementary school" means an elementary 
223.27  school that is located 19 miles or more from the nearest 
223.28  elementary school or from the nearest elementary school within 
223.29  the district and, in either case, has an elementary average 
223.30  daily membership of an average of 20 or fewer per grade. 
223.31     (g) "Elementary average daily membership" means, for a 
223.32  district that has only one elementary school, the average daily 
223.33  membership of pupils served in kindergarten through grade 6.  
223.34  For a district that has more than one elementary school, 
223.35  "average daily membership" for each school means the average 
223.36  daily membership of pupils served in kindergarten through grade 
224.1   6 multiplied by the ratio of seven to the number of grades in 
224.2   the elementary school.  
224.3      Sec. 32.  Minnesota Statutes 2002, section 126C.15, 
224.4   subdivision 1, is amended to read: 
224.5      Subdivision 1.  [USE OF THE REVENUE.] The basic skills 
224.6   revenue under section 126C.10, subdivision 4, and the portion of 
224.7   the transition revenue adjustment under section 126C.10, 
224.8   subdivision 20, attributable to the compensatory transition 
224.9   allowance under section 126C.10, subdivision 19, paragraph (b), 
224.10  must be reserved and used to meet the educational needs of 
224.11  pupils who enroll under-prepared to learn and whose progress 
224.12  toward meeting state or local content or performance standards 
224.13  is below the level that is appropriate for learners of their 
224.14  age.  Any of the following may be provided to meet these 
224.15  learners' needs: 
224.16     (1) direct instructional services under the assurance of 
224.17  mastery program according to section 124D.66; 
224.18     (2) remedial instruction in reading, language arts, 
224.19  mathematics, other content areas, or study skills to improve the 
224.20  achievement level of these learners; 
224.21     (3) additional teachers and teacher aides to provide more 
224.22  individualized instruction to these learners through individual 
224.23  tutoring, lower instructor-to-learner ratios, or team teaching; 
224.24     (4) a longer school day or week during the regular school 
224.25  year or through a summer program that may be offered directly by 
224.26  the site or under a performance-based contract with a 
224.27  community-based organization; 
224.28     (5) comprehensive and ongoing staff development consistent 
224.29  with district and site plans according to section 122A.60, for 
224.30  teachers, teacher aides, principals, and other personnel to 
224.31  improve their ability to identify the needs of these learners 
224.32  and provide appropriate remediation, intervention, 
224.33  accommodations, or modifications; 
224.34     (6) instructional materials and technology appropriate for 
224.35  meeting the individual needs of these learners; 
224.36     (7) programs to reduce truancy, encourage completion of 
225.1   high school, enhance self-concept, provide health services, 
225.2   provide nutrition services, provide a safe and secure learning 
225.3   environment, provide coordination for pupils receiving services 
225.4   from other governmental agencies, provide psychological services 
225.5   to determine the level of social, emotional, cognitive, and 
225.6   intellectual development, and provide counseling services, 
225.7   guidance services, and social work services; 
225.8      (8) bilingual programs, bicultural programs, and programs 
225.9   for learners of limited English proficiency; 
225.10     (9) all day kindergarten; 
225.11     (10) extended school day and extended school year programs; 
225.12  and 
225.13     (11) substantial parent involvement in developing and 
225.14  implementing remedial education or intervention plans for a 
225.15  learner, including learning contracts between the school, the 
225.16  learner, and the parent that establish achievement goals and 
225.17  responsibilities of the learner and the learner's parent or 
225.18  guardian. 
225.19     Sec. 33.  Minnesota Statutes 2002, section 126C.17, 
225.20  subdivision 9, is amended to read: 
225.21     Subd. 9.  [REFERENDUM REVENUE.] (a) The revenue authorized 
225.22  by section 126C.10, subdivision 1, may be increased in the 
225.23  amount approved by the voters of the district at a referendum 
225.24  called for the purpose.  The referendum may be called by the 
225.25  board or shall be called by the board upon written petition of 
225.26  qualified voters of the district.  The referendum must be 
225.27  conducted one or two calendar years before the increased levy 
225.28  authority, if approved, first becomes payable.  Only one 
225.29  election to approve an increase may be held in a calendar year.  
225.30  Unless the referendum is conducted by mail under paragraph (g), 
225.31  the referendum must be held on the first Tuesday after the first 
225.32  Monday in November.  The ballot must state the maximum amount of 
225.33  the increased revenue per resident marginal cost pupil unit, the 
225.34  estimated referendum tax rate as a percentage of referendum 
225.35  market value in the first year it is to be levied, and that the 
225.36  revenue must be used to finance school operations.  The ballot 
226.1   may state a schedule, determined by the board, of increased 
226.2   revenue per resident marginal cost pupil unit that differs from 
226.3   year to year over the number of years for which the increased 
226.4   revenue is authorized.  If the ballot contains a schedule 
226.5   showing different amounts, it must also indicate the estimated 
226.6   referendum tax rate as a percent of referendum market value for 
226.7   the amount specified for the first year and for the maximum 
226.8   amount specified in the schedule.  The ballot may state that 
226.9   existing referendum levy authority is expiring.  In this case, 
226.10  the ballot may also compare the proposed levy authority to the 
226.11  existing expiring levy authority, and express the proposed 
226.12  increase as the amount, if any, over the expiring referendum 
226.13  levy authority.  The ballot must designate the specific number 
226.14  of years, not to exceed ten, for which the referendum 
226.15  authorization applies.  The notice required under section 275.60 
226.16  may be modified to read, in cases of renewing existing levies: 
226.17     "BY VOTING "YES" ON THIS BALLOT QUESTION, YOU MAY BE VOTING 
226.18     FOR A PROPERTY TAX INCREASE." 
226.19     The ballot may contain a textual portion with the 
226.20  information required in this subdivision and a question stating 
226.21  substantially the following:  
226.22     "Shall the increase in the revenue proposed by (petition 
226.23  to) the board of ........., School District No. .., be approved?"
226.24     If approved, an amount equal to the approved revenue per 
226.25  resident marginal cost pupil unit times the resident marginal 
226.26  cost pupil units for the school year beginning in the year after 
226.27  the levy is certified shall be authorized for certification for 
226.28  the number of years approved, if applicable, or until revoked or 
226.29  reduced by the voters of the district at a subsequent referendum.
226.30     (b) The board must prepare and deliver by first class mail 
226.31  at least 15 days but no more than 30 days before the day of the 
226.32  referendum to each taxpayer a notice of the referendum and the 
226.33  proposed revenue increase.  The board need not mail more than 
226.34  one notice to any taxpayer.  For the purpose of giving mailed 
226.35  notice under this subdivision, owners must be those shown to be 
226.36  owners on the records of the county auditor or, in any county 
227.1   where tax statements are mailed by the county treasurer, on the 
227.2   records of the county treasurer.  Every property owner whose 
227.3   name does not appear on the records of the county auditor or the 
227.4   county treasurer is deemed to have waived this mailed notice 
227.5   unless the owner has requested in writing that the county 
227.6   auditor or county treasurer, as the case may be, include the 
227.7   name on the records for this purpose.  The notice must project 
227.8   the anticipated amount of tax increase in annual dollars and 
227.9   annual percentage for typical residential homesteads, 
227.10  agricultural homesteads, apartments, and commercial-industrial 
227.11  property within the school district. 
227.12     The notice for a referendum may state that an existing 
227.13  referendum levy is expiring and project the anticipated amount 
227.14  of increase over the existing referendum levy in the first year, 
227.15  if any, in annual dollars and annual percentage for typical 
227.16  residential homesteads, agricultural homesteads, apartments, and 
227.17  commercial-industrial property within the district. 
227.18     The notice must include the following statement:  "Passage 
227.19  of this referendum will result in an increase in your property 
227.20  taxes."  However, in cases of renewing existing levies, the 
227.21  notice may include the following statement:  "Passage of this 
227.22  referendum may result in an increase in your property taxes." 
227.23     (c) A referendum on the question of revoking or reducing 
227.24  the increased revenue amount authorized pursuant to paragraph 
227.25  (a) may be called by the board and shall be called by the board 
227.26  upon the written petition of qualified voters of the district.  
227.27  A referendum to revoke or reduce the levy revenue amount must be 
227.28  based upon the dollar amount, local tax rate, or state the 
227.29  amount per resident marginal cost pupil unit, that was stated to 
227.30  be the basis for the initial authorization by which the 
227.31  authority is to be reduced.  Revenue authority approved by the 
227.32  voters of the district pursuant to paragraph (a) must 
227.33  be received available to the school district at least once 
227.34  before it is subject to a referendum on its revocation or 
227.35  reduction for subsequent years.  Only one revocation or 
227.36  reduction referendum may be held to revoke or reduce referendum 
228.1   revenue for any specific year and for years thereafter. 
228.2      (d) A petition authorized by paragraph (a) or (c) is 
228.3   effective if signed by a number of qualified voters in excess of 
228.4   15 percent of the registered voters of the district on the day 
228.5   the petition is filed with the board.  A referendum invoked by 
228.6   petition must be held on the date specified in paragraph (a). 
228.7      (e) The approval of 50 percent plus one of those voting on 
228.8   the question is required to pass a referendum authorized by this 
228.9   subdivision. 
228.10     (f) At least 15 days before the day of the referendum, the 
228.11  district must submit a copy of the notice required under 
228.12  paragraph (b) to the commissioner and to the county auditor of 
228.13  each county in which the district is located.  Within 15 days 
228.14  after the results of the referendum have been certified by the 
228.15  board, or in the case of a recount, the certification of the 
228.16  results of the recount by the canvassing board, the district 
228.17  must notify the commissioner of the results of the referendum. 
228.18     Sec. 34.  Minnesota Statutes 2002, section 126C.21, 
228.19  subdivision 3, is amended to read: 
228.20     Subd. 3.  [COUNTY APPORTIONMENT DEDUCTION.] Each year the 
228.21  amount of money apportioned to a district for that year pursuant 
228.22  to section 127A.34, subdivision 2, excluding any district where 
228.23  the general education levy is determined according to section 
228.24  126C.13, subdivision 3, must be deducted from the general 
228.25  education aid earned by that district for the same year or from 
228.26  aid earned from other state sources.  
228.27     Sec. 35.  Minnesota Statutes 2002, section 126C.42, 
228.28  subdivision 1, is amended to read: 
228.29     Subdivision 1.  [1977 STATUTORY OPERATING DEBT.] (a) In 
228.30  each year in which so required by this subdivision, a district 
228.31  must make an additional levy to eliminate its statutory 
228.32  operating debt, determined as of June 30, 1977, and certified 
228.33  and adjusted by the commissioner.  This levy shall not be made 
228.34  in more than 30 successive years and each year before it is 
228.35  made, it must be approved by the commissioner and the approval 
228.36  shall specify its amount.  This levy shall be an amount which is 
229.1   equal to the amount raised by a levy of a net tax rate of 1.98 
229.2   2.67 percent times the adjusted net tax capacity of the district 
229.3   for the preceding year for taxes payable in 2000 2002 and 
229.4   thereafter; provided that in the last year in which the district 
229.5   is required to make this levy, it must levy an amount not to 
229.6   exceed the amount raised by a levy of a net tax rate of 1.98 
229.7   2.67 percent times the adjusted net tax capacity of the district 
229.8   for the preceding year for taxes payable in 2000 2002 and 
229.9   thereafter.  When the sum of the cumulative levies made pursuant 
229.10  to this subdivision and transfers made according to section 
229.11  123B.79, subdivision 6, equals an amount equal to the statutory 
229.12  operating debt of the district, the levy shall be discontinued. 
229.13     (b) The district must establish a special account in the 
229.14  general fund which shall be designated "appropriated fund 
229.15  balance reserve account for purposes of reducing statutory 
229.16  operating debt" on its books and records.  This account shall 
229.17  reflect the levy authorized pursuant to this subdivision.  The 
229.18  proceeds of this levy must be used only for cash flow 
229.19  requirements and must not be used to supplement district 
229.20  revenues or income for the purposes of increasing the district's 
229.21  expenditures or budgets. 
229.22     (c) Any district which is required to levy pursuant to this 
229.23  subdivision must certify the maximum levy allowable under 
229.24  section 126C.13, subdivision 2, in that same year. 
229.25     (d) Each district shall make permanent fund balance 
229.26  transfers so that the total statutory operating debt of the 
229.27  district is reflected in the general fund as of June 30, 1977. 
229.28     Sec. 36.  Minnesota Statutes 2002, section 126C.48, 
229.29  subdivision 3, is amended to read: 
229.30     Subd. 3.  [ADJUSTMENTS.] If any district levy is found to 
229.31  be excessive as a result of a decision of the tax court or a 
229.32  redetermination by the commissioner of revenue under section 
229.33  127A.48, subdivisions 7 to 16, or for any other reason, the 
229.34  amount of the excess shall be deducted from the levy certified 
229.35  in the next year for the same purpose.  If no levy is certified 
229.36  in the next year for the same purpose or if the amount certified 
230.1   is less than the amount of the excess, the excess must be 
230.2   deducted from that levy and the general fund levy certified 
230.3   pursuant to section 126C.13, subdivision 2 chapters 122A, 123A, 
230.4   123B, 124D, and 126C.  If the amount of any aid would have been 
230.5   increased in a prior year as a result of a decision of the tax 
230.6   court or a redetermination by the commissioner of revenue, the 
230.7   amount of the increase shall be added to the amount of current 
230.8   aid for the same purposes. 
230.9      Sec. 37.  Minnesota Statutes 2002, section 126C.63, 
230.10  subdivision 5, is amended to read: 
230.11     Subd. 5.  [LEVY.] "Levy" means a district's net debt 
230.12  service levy after the reduction of debt service equalization 
230.13  aid under section 123B.53, subdivision 6.  For taxes payable in 
230.14  1994 2003 and later, each district's maximum effort debt service 
230.15  levy for purposes of subdivision 8, must be reduced by an equal 
230.16  number of percentage points if the commissioner of finance 
230.17  determines that the levy reduction will not result in 
230.18  a statewide property tax payment from the general fund in the 
230.19  state treasury according to section 16A.641, as would be 
230.20  required under Minnesota Statutes 1992, section 124.46 126C.72, 
230.21  subdivision 3.  A district's levy that is adjusted under this 
230.22  section must not be reduced below 22.3 30.1 percent of the 
230.23  district's adjusted net tax capacity. 
230.24     Sec. 38.  Minnesota Statutes 2002, section 126C.63, 
230.25  subdivision 8, is amended to read: 
230.26     Subd. 8.  [MAXIMUM EFFORT DEBT SERVICE LEVY.] (a) "Maximum 
230.27  effort debt service levy" means the lesser of: 
230.28     (1) a levy in whichever of the following amounts is 
230.29  applicable: 
230.30     (a) (i) in any district receiving a debt service loan for a 
230.31  debt service levy payable in 2002 and thereafter, or granted a 
230.32  capital loan after January 1, 2001 2002, a levy in total dollar 
230.33  amount computed at a rate of 30 40 percent of adjusted net tax 
230.34  capacity for taxes payable in 2002 and thereafter; 
230.35     (b) (ii) in any district receiving a debt service loan for 
230.36  a debt service levy payable in 1991 and thereafter 2001 or 
231.1   earlier, or granted a capital loan after before January 1 
231.2   2, 1990 2001, a levy in a total dollar amount computed at a rate 
231.3   of 24 32 percent of adjusted net tax capacity for taxes payable 
231.4   in 1991 2002 and thereafter; 
231.5      (c) in any district granted a debt service loan after July 
231.6   31, 1981, or granted a capital loan which is approved after July 
231.7   31, 1981, a levy in a total dollar amount computed as a tax rate 
231.8   of 21.92 percent on the adjusted net tax capacity for taxes 
231.9   payable in 1991 and thereafter; or 
231.10     (2) a levy in any district for which a capital loan was 
231.11  approved prior to August 1, 1981, a levy in a total dollar 
231.12  amount equal to the sum of the amount of the required debt 
231.13  service levy and an amount which when levied annually will in 
231.14  the opinion of the commissioner be sufficient to retire the 
231.15  remaining interest and principal on any outstanding loans from 
231.16  the state within 30 years of the original date when the capital 
231.17  loan was granted.  
231.18     (b) The board in any district affected by the provisions of 
231.19  paragraph (a), clause (2), may elect instead to determine the 
231.20  amount of its levy according to the provisions of paragraph (a), 
231.21  clause (1).  If a district's capital loan is not paid within 30 
231.22  years because it elects to determine the amount of its levy 
231.23  according to the provisions of paragraph (a), clause (2), the 
231.24  liability of the district for the amount of the difference 
231.25  between the amount it levied under paragraph (a), clause (2), 
231.26  and the amount it would have levied under paragraph (a), clause 
231.27  (1), and for interest on the amount of that difference, must not 
231.28  be satisfied and discharged pursuant to Minnesota Statutes 1988, 
231.29  or an earlier edition of Minnesota Statutes if applicable, 
231.30  section 124.43, subdivision 4. 
231.31     Sec. 39.  Minnesota Statutes 2002, section 126C.69, 
231.32  subdivision 2, is amended to read: 
231.33     Subd. 2.  [CAPITAL LOANS ELIGIBILITY.] Beginning July 1, 
231.34  1999, a district is not eligible for a capital loan unless the 
231.35  district's estimated net debt tax rate as computed by the 
231.36  commissioner after debt service equalization aid would be more 
232.1   than 30 40 percent of adjusted net tax capacity.  The estimate 
232.2   must assume a 20-year maturity schedule for new debt. 
232.3      Sec. 40.  Minnesota Statutes 2002, section 126C.69, 
232.4   subdivision 9, is amended to read: 
232.5      Subd. 9.  [LOAN AMOUNT LIMITS.] (a) A loan must not be 
232.6   recommended for approval for a district exceeding an amount 
232.7   computed as follows: 
232.8      (1) the amount requested by the district under subdivision 
232.9   6; 
232.10     (2) plus the aggregate principal amount of general 
232.11  obligation bonds of the district outstanding on June 30 of the 
232.12  year following the year the application was received, not 
232.13  exceeding the limitation on net debt of the district in section 
232.14  475.53, subdivision 4, or 450 607 percent of its adjusted net 
232.15  tax capacity as most recently determined, whichever is less; 
232.16     (3) less the maximum net debt permissible for the district 
232.17  on December 1 of the year the application is received, under the 
232.18  limitation in section 475.53, subdivision 4, or 450 607 percent 
232.19  of its adjusted net tax capacity as most recently determined, 
232.20  whichever is less; 
232.21     (4) less any amount by which the amount voted exceeds the 
232.22  total cost of the facilities for which the loan is granted.  
232.23     (b) The loan may be approved in an amount computed as 
232.24  provided in paragraph (a), clauses (1) to (3), subject to later 
232.25  reduction according to paragraph (a), clause (4). 
232.26     Sec. 41.  Minnesota Statutes 2002, section 127A.47, 
232.27  subdivision 7, is amended to read: 
232.28     Subd. 7.  [ALTERNATIVE ATTENDANCE PROGRAMS.] The general 
232.29  education aid for districts must be adjusted for each pupil 
232.30  attending a nonresident district under sections 123A.05 to 
232.31  123A.08, 124D.03, 124D.06, 124D.07, 124D.08, and 124D.68.  The 
232.32  adjustments must be made according to this subdivision. 
232.33     (a) General education aid paid to a resident district must 
232.34  be reduced by an amount equal to the referendum equalization aid 
232.35  attributable to the pupil in the resident district. 
232.36     (b) General education aid paid to a district serving a 
233.1   pupil in programs listed in this subdivision must be increased 
233.2   by an amount equal to the referendum equalization aid 
233.3   attributable to the pupil in the nonresident district.  
233.4      (c) If the amount of the reduction to be made from the 
233.5   general education aid of the resident district is greater than 
233.6   the amount of general education aid otherwise due the district, 
233.7   the excess reduction must be made from other state aids due the 
233.8   district. 
233.9      (d) The district of residence must pay tuition to a 
233.10  district or an area learning center, operated according to 
233.11  paragraph (e), providing special instruction and services to a 
233.12  pupil with a disability, as defined in section 125A.02, or a 
233.13  pupil, as defined in section 125A.51, who is enrolled in a 
233.14  program listed in this subdivision.  The tuition must be equal 
233.15  to (1) the actual cost of providing special instruction and 
233.16  services to the pupil, including a proportionate amount for debt 
233.17  service and for capital expenditure facilities and equipment, 
233.18  and debt service but not including any amount for 
233.19  transportation, minus (2) the amount of general education 
233.20  revenue and special education aid but not including any amount 
233.21  for transportation, attributable to that pupil, that is received 
233.22  by the district providing special instruction and services. 
233.23     (e) An area learning center operated by a service 
233.24  cooperative, intermediate district, education district, or a 
233.25  joint powers cooperative may elect through the action of the 
233.26  constituent boards to charge the resident district tuition for 
233.27  pupils rather than to calculate general education aid 
233.28  adjustments under paragraph (a), (b), or (c).  The tuition must 
233.29  be equal to the greater of the average general education revenue 
233.30  per pupil unit attributable to the pupil, or the actual cost of 
233.31  providing the instruction, excluding transportation costs, if 
233.32  the pupil meets the requirements of section 125A.02 or 
233.33  125A.51 have the general education revenue paid to a fiscal 
233.34  agent school district.  Except as provided in paragraph (d), the 
233.35  district of residence must pay tuition equal to at least 90 
233.36  percent of the district average general education revenue per 
234.1   pupil unit minus an amount equal to the product of the formula 
234.2   allowance according to section 126C.10, subdivision 2, times 
234.3   .0485, calculated without basic skills revenue and 
234.4   transportation sparsity revenue, times the number of pupil units 
234.5   for pupils attending the area learning center, plus the amount 
234.6   of compensatory revenue generated by pupils attending the area 
234.7   learning center. 
234.8      Sec. 42.  Minnesota Statutes 2002, section 127A.47, 
234.9   subdivision 8, is amended to read: 
234.10     Subd. 8.  [CHARTER SCHOOLS.] (a) The general education aid 
234.11  for districts must be adjusted for each pupil attending a 
234.12  charter school under section 124D.10.  The adjustments must be 
234.13  made according to this subdivision. 
234.14     (b) General education aid paid to a district in which a 
234.15  charter school not providing transportation according to section 
234.16  124D.10, subdivision 16, is located must be increased by an 
234.17  amount equal to the product of:  (1) the sum of an amount equal 
234.18  to the product of the formula allowance according to section 
234.19  126C.10, subdivision 2, times .0485, plus the transportation 
234.20  sparsity allowance for the district, plus the transportation 
234.21  transition allowance for the district; times (2) the pupil units 
234.22  attributable to the pupil.  
234.23     Sec. 43.  Minnesota Statutes 2002, section 127A.49, 
234.24  subdivision 2, is amended to read: 
234.25     Subd. 2.  [ABATEMENTS.] Whenever by virtue of chapter 278, 
234.26  sections 270.07, 375.192, or otherwise, the net tax capacity of 
234.27  any district for any taxable year is changed after the taxes for 
234.28  that year have been spread by the county auditor and the local 
234.29  tax rate as determined by the county auditor based upon the 
234.30  original net tax capacity is applied upon the changed net tax 
234.31  capacities, the county auditor shall, prior to February 1 of 
234.32  each year, certify to the commissioner of children, families, 
234.33  and learning the amount of any resulting net revenue loss that 
234.34  accrued to the district during the preceding year.  Each year, 
234.35  the commissioner shall pay an abatement adjustment to the 
234.36  district in an amount calculated according to the provisions of 
235.1   this subdivision.  This amount shall be deducted from the amount 
235.2   of the levy authorized by section 126C.46.  The amount of the 
235.3   abatement adjustment must be the product of:  
235.4      (1) the net revenue loss as certified by the county 
235.5   auditor, times 
235.6      (2) the ratio of:  
235.7      (i) the sum of the amounts of the district's certified levy 
235.8   in the preceding year according to the following:  
235.9      (A) section 126C.13 if the district received general 
235.10  education aid according to that section for the second preceding 
235.11  year; 
235.12     (B) section 123B.57, if the district received health and 
235.13  safety aid according to that section for the second preceding 
235.14  year; 
235.15     (C) sections (B) section 124D.20, 124D.21, and 124D.56, if 
235.16  the district received aid for community education programs 
235.17  according to any of those sections that section for the second 
235.18  preceding year; 
235.19     (D) (C) section 124D.135, subdivision 3, if the district 
235.20  received early childhood family education aid according to 
235.21  section 124D.135 for the second preceding year; and 
235.22     (E) (D) section 126C.17, subdivision 6, if the district 
235.23  received referendum equalization aid according to that section 
235.24  for the second preceding year; to 
235.25     (ii) the total amount of the district's certified levy in 
235.26  the preceding December, plus or minus auditor's adjustments. 
235.27     Sec. 44.  Minnesota Statutes 2002, section 127A.49, 
235.28  subdivision 3, is amended to read: 
235.29     Subd. 3.  [EXCESS TAX INCREMENT.] (a) If a return of excess 
235.30  tax increment is made to a district pursuant to section 469.176, 
235.31  subdivision 2, or upon decertification of a tax increment 
235.32  district, the school district's aid and levy limitations must be 
235.33  adjusted for the fiscal year in which the excess tax increment 
235.34  is paid under the provisions of this subdivision. 
235.35     (b) An amount must be subtracted from the district's aid 
235.36  for the current fiscal year equal to the product of: 
236.1      (1) the amount of the payment of excess tax increment to 
236.2   the district, times 
236.3      (2) the ratio of: 
236.4      (i) the sum of the amounts of the district's certified levy 
236.5   for the fiscal year in which the excess tax increment is paid 
236.6   according to the following: 
236.7      (A) section 126C.13, if the district received general 
236.8   education aid according to that section for the second preceding 
236.9   year; 
236.10     (B) section 123B.57, if the district received health and 
236.11  safety aid according to that section for the second preceding 
236.12  year; 
236.13     (C) sections (B) section 124D.20, 124D.21, and 124D.56, if 
236.14  the district received aid for community education programs 
236.15  according to any of those sections that section for the second 
236.16  preceding year; 
236.17     (D) (C) section 124D.135, subdivision 3, if the district 
236.18  received early childhood family education aid according to 
236.19  section 124D.135 for the second preceding year; and 
236.20     (E) (D) section 126C.17, subdivision 6, if the district 
236.21  received referendum equalization aid according to that section 
236.22  for the second preceding year; to 
236.23     (ii) the total amount of the district's certified levy for 
236.24  the fiscal year, plus or minus auditor's adjustments. 
236.25     (c) An amount must be subtracted from the school district's 
236.26  levy limitation for the next levy certified equal to the 
236.27  difference between: 
236.28     (1) the amount of the distribution of excess increment; and 
236.29     (2) the amount subtracted from aid pursuant to clause (a). 
236.30     If the aid and levy reductions required by this subdivision 
236.31  cannot be made to the aid for the fiscal year specified or to 
236.32  the levy specified, the reductions must be made from aid for 
236.33  subsequent fiscal years, and from subsequent levies.  The school 
236.34  district must use the payment of excess tax increment to replace 
236.35  the aid and levy revenue reduced under this subdivision. 
236.36     (d) This subdivision applies only to the total amount of 
237.1   excess increments received by a district for a calendar year 
237.2   that exceeds $25,000. 
237.3      Sec. 45.  Minnesota Statutes 2002, section 128D.11, 
237.4   subdivision 8, is amended to read: 
237.5      Subd. 8.  [NET DEBT LIMIT.] The school district shall not 
237.6   be subject to a net debt in excess of 102 144 percent of the net 
237.7   tax capacity of all taxable property therein. 
237.8      Sec. 46.  Minnesota Statutes 2002, section 169.26, 
237.9   subdivision 3, is amended to read: 
237.10     Subd. 3.  [DRIVER TRAINING.] All driver education courses 
237.11  approved by the commissioner of children, families, and learning 
237.12  and the commissioner of public safety must include instruction 
237.13  on railroad-highway grade crossing safety.  The commissioner of 
237.14  children, families, and learning and the commissioner of public 
237.15  safety shall by rule establish minimum standards of course 
237.16  content relating to operation of vehicles at railroad-highway 
237.17  grade crossings.  
237.18     Sec. 47.  Minnesota Statutes 2002, section 169.973, 
237.19  subdivision 1, is amended to read: 
237.20     Subdivision 1.  [COMMISSIONER'S AUTHORITY; RULES; 
237.21  CURRICULUM.] The commissioner of public safety shall supervise 
237.22  the administration and conduct of driver improvement clinics and 
237.23  youth-oriented driver improvement clinics.  The commissioner of 
237.24  public safety shall promulgate rules setting forth standards for 
237.25  the curriculum and mode of instruction of driver improvement 
237.26  clinics and youth-oriented driver improvement clinics and such 
237.27  other matters as the commissioner of public safety considers 
237.28  necessary for the proper administration of such clinics.  In the 
237.29  preparation of such standards the commissioner of public safety 
237.30  shall consult with the commissioner of children, families, and 
237.31  learning and state associations of judges.  A driver improvement 
237.32  clinic established under sections 169.971 to 169.973 and 171.20, 
237.33  subdivision 3, shall conform to the standards promulgated by the 
237.34  commissioner of public safety.  The course of study at a driver 
237.35  improvement clinic and youth-oriented driver improvement clinic 
237.36  may not exceed a cumulative total of nine hours with no single 
238.1   class session lasting more than three hours.  The course of 
238.2   study at a driver improvement clinic and youth-oriented driver 
238.3   improvement clinic shall include instruction in railroad 
238.4   crossing safety. 
238.5      Sec. 48.  Minnesota Statutes 2002, section 178.02, 
238.6   subdivision 1, is amended to read: 
238.7      Subdivision 1.  [MEMBERS.] The commissioner of labor and 
238.8   industry, hereinafter called the commissioner, shall appoint an 
238.9   apprenticeship advisory council, hereinafter referred to as the 
238.10  council, composed of three representatives each from employer 
238.11  and employee organizations, and two representatives of the 
238.12  general public.  The assistant commissioner director of 
238.13  children, families, and learning responsible for vocational 
238.14  career and technical education or designee shall be an ex 
238.15  officio member of the council and shall serve in an advisory 
238.16  capacity only.  
238.17     Sec. 49.  Minnesota Statutes 2002, section 273.138, 
238.18  subdivision 6, is amended to read: 
238.19     Subd. 6.  The amount of aid calculated for a school 
238.20  district pursuant to subdivision 3, clauses (2), (3), (4), and 
238.21  (5) shall be deducted from the school district's general fund 
238.22  levy limitation established pursuant to section 126C.13 chapters 
238.23  122A, 123A, 123B, 124D, and 126C in determining the amount of 
238.24  taxes the school district may levy for general and special 
238.25  purposes. 
238.26     Sec. 50.  Minnesota Statutes 2002, section 298.28, 
238.27  subdivision 4, is amended to read: 
238.28     Subd. 4.  [SCHOOL DISTRICTS.] (a) 17.15 cents per taxable 
238.29  ton plus the increase provided in paragraph (d) must be 
238.30  allocated to qualifying school districts to be distributed, 
238.31  based upon the certification of the commissioner of revenue, 
238.32  under paragraphs (b) and (c), except as otherwise provided in 
238.33  paragraph (f). 
238.34     (b) 3.43 cents per taxable ton must be distributed to the 
238.35  school districts in which the lands from which taconite was 
238.36  mined or quarried were located or within which the concentrate 
239.1   was produced.  The distribution must be based on the 
239.2   apportionment formula prescribed in subdivision 2. 
239.3      (c)(i) 13.72 cents per taxable ton, less any amount 
239.4   distributed under paragraph (e), shall be distributed to a group 
239.5   of school districts comprised of those school districts in which 
239.6   the taconite was mined or quarried or the concentrate produced 
239.7   or in which there is a qualifying municipality as defined by 
239.8   section 273.134, paragraph (b), in direct proportion to school 
239.9   district indexes as follows:  for each school district, its 
239.10  pupil units determined under section 126C.05 for the prior 
239.11  school year shall be multiplied by the ratio of the average 
239.12  adjusted net tax capacity per pupil unit for school districts 
239.13  receiving aid under this clause as calculated pursuant to 
239.14  chapters 122A, 126C, and 127A for the school year ending prior 
239.15  to distribution to the adjusted net tax capacity per pupil unit 
239.16  of the district.  Each district shall receive that portion of 
239.17  the distribution which its index bears to the sum of the indices 
239.18  for all school districts that receive the distributions.  
239.19     (ii) Notwithstanding clause (i), each school district that 
239.20  receives a distribution under sections 298.018; 298.23 to 
239.21  298.28, exclusive of any amount received under this clause; 
239.22  298.34 to 298.39; 298.391 to 298.396; 298.405; or any law 
239.23  imposing a tax on severed mineral values after reduction for any 
239.24  portion distributed to cities and towns under section 126C.48, 
239.25  subdivision 8, paragraph (5), that is less than the amount of 
239.26  its levy reduction under section 126C.48, subdivision 8, for the 
239.27  second year prior to the year of the distribution shall receive 
239.28  a distribution equal to the difference; the amount necessary to 
239.29  make this payment shall be derived from proportionate reductions 
239.30  in the initial distribution to other school districts under 
239.31  clause (i).  
239.32     (d) Any school district described in paragraph (c) where a 
239.33  levy increase pursuant to section 126C.17, subdivision 9, was 
239.34  authorized by referendum for taxes payable in 2001, shall 
239.35  receive a distribution from a fund that receives a distribution 
239.36  in 1998 of 21.3 cents per ton.  On July 15 of 1999, and each 
240.1   year thereafter, the increase over the amount established for 
240.2   the prior year shall be determined according to the increase in 
240.3   the implicit price deflator as provided in section 298.24, 
240.4   subdivision 1.  Each district shall receive $175 times the pupil 
240.5   units identified in section 126C.05, subdivision 1, enrolled in 
240.6   the second previous year or the 1983-1984 school year, whichever 
240.7   is greater, less the product of 1.8 percent times the district's 
240.8   taxable net tax capacity in the second previous year. 
240.9      If the total amount provided by paragraph (d) is 
240.10  insufficient to make the payments herein required then the 
240.11  entitlement of $175 per pupil unit shall be reduced uniformly so 
240.12  as not to exceed the funds available.  Any amounts received by a 
240.13  qualifying school district in any fiscal year pursuant to 
240.14  paragraph (d) shall not be applied to reduce general education 
240.15  aid which the district receives pursuant to section 126C.13 or 
240.16  the permissible levies of the district.  Any amount remaining 
240.17  after the payments provided in this paragraph shall be paid to 
240.18  the commissioner of iron range resources and rehabilitation who 
240.19  shall deposit the same in the taconite environmental protection 
240.20  fund and the northeast Minnesota economic protection trust fund 
240.21  as provided in subdivision 11. 
240.22     Each district receiving money according to this paragraph 
240.23  shall reserve the lesser of the amount received under this 
240.24  paragraph or $25 times the number of pupil units served in the 
240.25  district.  It may use the money for early childhood programs or 
240.26  for outcome-based learning programs that enhance the academic 
240.27  quality of the district's curriculum.  The outcome-based 
240.28  learning programs must be approved by the commissioner of 
240.29  children, families, and learning. 
240.30     (e) There shall be distributed to any school district the 
240.31  amount which the school district was entitled to receive under 
240.32  section 298.32 in 1975. 
240.33     (f) Effective for the distribution in 2003 only, five 
240.34  percent of the distributions to school districts under 
240.35  paragraphs (b), (c), and (e); subdivision 6, paragraph (c); 
240.36  subdivision 11; and section 298.225, shall be distributed to the 
241.1   general fund.  The remainder less any portion distributed to 
241.2   cities and towns under section 126C.48, subdivision 8, paragraph 
241.3   (5), shall be distributed to the northeast Minnesota economic 
241.4   protection trust fund created in section 298.292.  Fifty percent 
241.5   of the amount distributed to the northeast Minnesota economic 
241.6   protection trust fund shall be made available for expenditure 
241.7   under section 298.293 as governed by section 298.296.  Effective 
241.8   in 2003 only, 100 percent of the distributions to school 
241.9   districts under section 477A.15 less any portion distributed to 
241.10  cities and towns under section 126C.48, subdivision 8, paragraph 
241.11  (5), shall be distributed to the general fund. 
241.12     Sec. 51.  Minnesota Statutes 2002, section 475.61, 
241.13  subdivision 4, is amended to read: 
241.14     Subd. 4.  [SURPLUS FUNDS.] (a) All such taxes shall be 
241.15  collected and remitted to the municipality by the county 
241.16  treasurer as other taxes are collected and remitted, and shall 
241.17  be used only for payment of the obligations on account of which 
241.18  levied or to repay advances from other funds used for such 
241.19  payments, except that any surplus remaining in the debt service 
241.20  fund when the obligations and interest thereon are paid may be 
241.21  appropriated to any other general purpose by the municipality.  
241.22  However, the amount of any surplus remaining in the debt service 
241.23  fund of a school district when the obligations and interest 
241.24  thereon are paid shall be used to reduce the general education 
241.25  fund levy authorized pursuant to section 126C.13 chapters 122A, 
241.26  123A, 123B, 124D, and 126C and the state aids authorized 
241.27  pursuant to chapters 122A, 123A, 123B, 124D, 125A, 126C, and 
241.28  127A. 
241.29     (b) The reduction to state aids equals the lesser of (1) 
241.30  the amount of the surplus times the ratio of the district's debt 
241.31  service equalization aid to the district's debt service 
241.32  equalization revenue for the last year that the district 
241.33  qualified for debt service equalization aid; or (2) the 
241.34  district's cumulative amount of debt service equalization aid.  
241.35     (c) The reduction to the general education fund levy equals 
241.36  the total amount of the surplus minus the reduction to state 
242.1   aids. 
242.2      Sec. 52.  Laws 1965, chapter 705, as amended by Laws 1975, 
242.3   chapter 261, section 4; Laws 1980, chapter 609, article 6, 
242.4   section 37; and Laws 1989, chapter 329, article 13, section 18, 
242.5   is amended to read: 
242.6      Sec. 6.  [ST. PAUL SEVERANCE LEVY.] The school board of 
242.7   independent school district No. 625, St. Paul, for the purpose 
242.8   of providing moneys for the payment of its severance pay 
242.9   obligations under a plan approved by resolution of the district, 
242.10  in addition to all other powers possessed by the school district 
242.11  and in addition to and in excess of any existing limitation upon 
242.12  the amount it is otherwise authorized by law to levy as taxes, 
242.13  is authorized to levy taxes annually not exceeding in any one 
242.14  year an amount equal to a gross tax capacity rate of .17 percent 
242.15  for taxes payable in 1990 or a net tax capacity rate of .21 .34 
242.16  percent for taxes payable in 1991 2002 and thereafter upon all 
242.17  taxable property within the school district which taxes as 
242.18  levied shall be spread upon the tax rolls, and all corrections 
242.19  thereof shall be held by the school district, and allocated 
242.20  therefor to be disbursed and expended by the school district in 
242.21  payment of any public school severance pay obligations and for 
242.22  no other purpose.  Disbursements and expenditures previously 
242.23  authorized on behalf of the school district for payment of 
242.24  severance pay obligations shall not be deemed to constitute any 
242.25  part of the cost of the operation and maintenance of the school 
242.26  district within the meaning of any statutory limitation of any 
242.27  school district expenditures.  
242.28     The amount of such severance pay allowable or to become 
242.29  payable in respect of any such employment or to any such 
242.30  employee shall not exceed the amount permitted by Minnesota 
242.31  Statutes, Section 465.72.  
242.32     [EFFECTIVE DATE.] This section is effective retroactively 
242.33  for taxes payable in 2002 and thereafter. 
242.34     Sec. 53.  [REVISOR INSTRUCTION.] 
242.35     (a) In the next and subsequent editions of Minnesota 
242.36  Statutes, the revisor shall change all references to the 
243.1   "commissioner of children, families, and learning" to the 
243.2   "commissioner of public safety" in Minnesota Statutes, sections 
243.3   123B.88, subdivision 9; 168.102; 169.441, subdivision 5; and 
243.4   171.321, subdivision 4, paragraph (c); and "Part H" to "Part C" 
243.5   in Minnesota Statutes, sections 125A.27, subdivisions 7 and 8; 
243.6   125A.32; 125A.35; 125A.37; 125A.39; 125A.44; and 125A.45. 
243.7      (b) In the next and subsequent editions of Minnesota 
243.8   Statutes, the revisor shall codify section 52 as Minnesota 
243.9   Statutes, section 126C.41, subdivision 5. 
243.10     Sec. 54.  [REPEALER.] 
243.11     (a) Minnesota Statutes 2002, sections 123A.73, subdivisions 
243.12  7, 10, and 11; 123B.81, subdivision 6; 125A.023, subdivision 5; 
243.13  125B.11; and 126C.01, subdivision 4, are repealed.  
243.14     (b) Minnesota Statutes 2002, section 126C.14, is repealed 
243.15  effective for revenue for fiscal year 2003. 
243.16     (c) Laws 2001, First Special Session chapter 6, article 5, 
243.17  section 12, as amended by Laws 2002, chapter 377, article 12, 
243.18  section 15, is repealed. 
243.19     (d) Minnesota Rules, parts 3500.0600; 3520.0400; 3520.1400; 
243.20  3520.3300; 3530.1500; 3530.2700; 3530.4400; 3530.4500; 
243.21  3530.4700; and 3550.0100, are repealed. 
243.22                             ARTICLE 18 
243.23                        TECHNICAL AMENDMENTS 
243.24     Section 1.  Minnesota Statutes 2002, section 119B.011, 
243.25  subdivision 20, is amended to read: 
243.26     Subd. 20.  [TRANSITION YEAR FAMILIES.] "Transition year 
243.27  families" means families who have received MFIP assistance, or 
243.28  who were eligible to receive MFIP assistance after choosing to 
243.29  discontinue receipt of the cash portion of MFIP assistance under 
243.30  section 256J.31, subdivision 12, for at least three of the last 
243.31  six months before losing eligibility for MFIP or families 
243.32  participating in work first under chapter 256K who meet the 
243.33  requirements of section 256K.07.  Transition year child care may 
243.34  be used to support employment or job search.  Transition year 
243.35  child care is not available to families who have been 
243.36  disqualified from MFIP due to fraud.  
244.1      Sec. 2.  Minnesota Statutes 2002, section 122A.41, 
244.2   subdivision 2, is amended to read: 
244.3      Subd. 2.  [PROBATIONARY PERIOD; DISCHARGE OR DEMOTION.] All 
244.4   teachers in the public schools in cities of the first class 
244.5   during the first three years of consecutive employment shall be 
244.6   deemed to be in a probationary period of employment during which 
244.7   period any annual contract with any teacher may, or may not, be 
244.8   renewed as the school board, after consulting with the peer 
244.9   review committee charged with evaluating the probationary 
244.10  teachers under subdivision 2a or 3, shall see fit.  The school 
244.11  site management team or the school board if there is no school 
244.12  site management team, shall adopt a plan for a written 
244.13  evaluation of teachers during the probationary period according 
244.14  to subdivision 2a 3.  Evaluation by the peer review committee 
244.15  charged with evaluating probationary teachers under subdivision 
244.16  2a 3 shall occur at least three times each year for a teacher 
244.17  performing services on 120 or more school days, at least two 
244.18  times each year for a teacher performing services on 60 to 119 
244.19  school days, and at least one time each year for a teacher 
244.20  performing services on fewer than 60 school days.  Days devoted 
244.21  to parent-teacher conferences, teachers' workshops, and other 
244.22  staff development opportunities and days on which a teacher is 
244.23  absent from school shall not be included in determining the 
244.24  number of school days on which a teacher performs services.  The 
244.25  school board may, during such probationary period, discharge or 
244.26  demote a teacher for any of the causes as specified in this 
244.27  code.  A written statement of the cause of such discharge or 
244.28  demotion shall be given to the teacher by the school board at 
244.29  least 30 days before such removal or demotion shall become 
244.30  effective, and the teacher so notified shall have no right of 
244.31  appeal therefrom. 
244.32     Sec. 3.  Minnesota Statutes 2002, section 123B.02, 
244.33  subdivision 1, is amended to read: 
244.34     Subdivision 1.  [BOARD AUTHORITY.] The board must have the 
244.35  general charge of the business of the district, the school 
244.36  houses, and of the interests of the schools thereof.  The 
245.1   board's authority to govern, manage, and control the district; 
245.2   to carry out its duties and responsibilities; and to conduct the 
245.3   business of the district includes implied powers in addition to 
245.4   any specific powers granted by the legislature.  
245.5      Sec. 4.  Minnesota Statutes 2002, section 123B.72, 
245.6   subdivision 3, is amended to read: 
245.7      Subd. 3.  [CERTIFICATION.] Prior to occupying or 
245.8   reoccupying a school facility affected by this section, a school 
245.9   board or its designee shall submit a document prepared by a 
245.10  system inspector to the building official or to the 
245.11  commissioner, verifying that the facility's heating, 
245.12  ventilation, and air conditioning system has been installed and 
245.13  operates according to design specifications and code, according 
245.14  to section 123B.71, subdivision 10 9, clause (3) (11).  A 
245.15  systems inspector shall also verify that the facility's design 
245.16  will provide the ability for monitoring of outdoor airflow and 
245.17  total airflow of ventilation systems in new school facilities 
245.18  and that any heating, ventilation, or air conditioning system 
245.19  that is installed or modified for a project subject to this 
245.20  section must provide a filtration system with a current ASHRAE 
245.21  standard. 
245.22     Sec. 5.  Minnesota Statutes 2002, section 123B.93, is 
245.23  amended to read: 
245.24     123B.93 [ADVERTISING ON SCHOOL BUSES.] 
245.25     (a) The commissioner, through a competitive process, and 
245.26  with the approval of the school bus safety advisory committee 
245.27  may contract with advertisers regarding advertising on school 
245.28  buses.  At a minimum, the contract must prohibit advertising and 
245.29  advertising images that: 
245.30     (1) solicit the sale of, or promote the use of, alcoholic 
245.31  beverages and tobacco products; 
245.32     (2) are discriminatory in nature or content; 
245.33     (3) imply or declare an endorsement of the product or 
245.34  service by the school district; 
245.35     (4) contain obscene material; 
245.36     (5) are false, misleading, or deceptive; or 
246.1      (6) relate to an illegal activity or antisocial behavior. 
246.2      (b) Advertisement must meet the following conditions: 
246.3      (1) the advertising attached to the school bus does not 
246.4   interfere with bus identification under section 169.441; and 
246.5      (2) the bus with attached advertising meets the school bus 
246.6   equipment standards under sections 169.4501 to 169.4504. 
246.7      (c) All buses operated by school districts may be attached 
246.8   with advertisements under the state contract.  All school 
246.9   district contracts shall include a provision for advertisement.  
246.10  Each school district shall be reimbursed by the advertiser for 
246.11  all costs incurred by the district and its contractors for 
246.12  supporting the advertising program, including, but not limited 
246.13  to, retrofitting buses, storing advertising, attaching 
246.14  advertising to the bus, and related maintenance. 
246.15     (d) The commissioner shall hold harmless and indemnify each 
246.16  district for all liabilities arising from the advertising 
246.17  program.  Each district must tender defense of all such claims 
246.18  to the commissioner within five days of receipt. 
246.19     (e) All revenue from the contract shall be deposited in the 
246.20  general fund. 
246.21     Sec. 6.  Minnesota Statutes 2002, section 124D.03, 
246.22  subdivision 12, is amended to read: 
246.23     Subd. 12.  [TERMINATION OF ENROLLMENT.] A district may 
246.24  terminate the enrollment of a nonresident student enrolled under 
246.25  this section or section 124D.07 or 124D.08 at the end of a 
246.26  school year if the student meets the definition of a habitual 
246.27  truant under section 260C.007, subdivision 19, the student has 
246.28  been provided appropriate services under chapter 260A, and the 
246.29  student's case has been referred to juvenile court.  A district 
246.30  may also terminate the enrollment of a nonresident student over 
246.31  the age of 16 enrolled under this section if the student is 
246.32  absent without lawful excuse for one or more periods on 15 
246.33  school days and has not lawfully withdrawn from school under 
246.34  section 120A.22, subdivision 8. 
246.35     Sec. 7.  Minnesota Statutes 2002, section 124D.09, 
246.36  subdivision 3, is amended to read: 
247.1      Subd. 3.  [DEFINITIONS.] For purposes of this section, the 
247.2   following terms have the meanings given to them. 
247.3      (a) "Eligible institution" means a Minnesota public 
247.4   post-secondary institution, a private, nonprofit two-year trade 
247.5   and technical school granting associate degrees, an 
247.6   opportunities industrialization center accredited by the North 
247.7   Central Association of Colleges and Schools, or a private, 
247.8   residential, two-year or four-year, liberal arts, 
247.9   degree-granting college or university located in Minnesota.  
247.10  "Course" means a course or program.  
247.11     (b) "Course" means a course or program.  
247.12     Sec. 8.  Minnesota Statutes 2002, section 124D.10, 
247.13  subdivision 13, is amended to read: 
247.14     Subd. 13.  [LENGTH OF SCHOOL YEAR.] A charter school must 
247.15  provide instruction each year for at least the number of days 
247.16  required by section 120A.22, subdivision 5 120A.41.  It may 
247.17  provide instruction throughout the year according to sections 
247.18  124D.12 to 124D.127 or 124D.128.  
247.19     Sec. 9.  Minnesota Statutes 2002, section 124D.10, 
247.20  subdivision 23a, is amended to read: 
247.21     Subd. 23a.  [RELATED PARTY LEASE COSTS.] (a) A charter 
247.22  school is prohibited from entering a lease of real property with 
247.23  a related party as defined in this subdivision, unless the 
247.24  lessor is a nonprofit corporation under chapter 317A or a 
247.25  cooperative under chapter 308A, and the lease cost is reasonable 
247.26  under section 124D.11, subdivision 4, clause (1). 
247.27     (b) For purposes of this subdivision: 
247.28     (1) A "related party" is an affiliate or close relative of 
247.29  the other party in question, an affiliate of a close relative, 
247.30  or a close relative of an affiliate.  
247.31     (2) "Affiliate" means a person that directly, or indirectly 
247.32  through one or more intermediaries, controls, or is controlled 
247.33  by, or is under common control with, another person. 
247.34     (3) "Close relative" means an individual whose relationship 
247.35  by blood, marriage, or adoption to another individual is no more 
247.36  remote than first cousin. 
248.1      (4) "Person" means an individual or entity of any kind. 
248.2      (5) "Control" includes the terms "controlling," "controlled 
248.3   by," and "under common control with" and means the possession, 
248.4   direct or indirect, of the power to direct or cause the 
248.5   direction of the management, operations, or policies of a 
248.6   person, whether through the ownership of voting securities, by 
248.7   contract, or otherwise. 
248.8      (c) A lease of real property to be used for a charter 
248.9   school, not excluded in paragraph (b), must contain the 
248.10  following statement:  "This lease is subject to Minnesota 
248.11  Statutes, section 124D.10, subdivision 23a." 
248.12     (d) If a charter school enters into as lessee a lease with 
248.13  a related party and the charter school subsequently closes, the 
248.14  commissioner has the right to recover from the lessor any lease 
248.15  payments in excess of those that are reasonable under section 
248.16  124.11 124D.11, subdivision 4, clause (1). 
248.17     Sec. 10.  Minnesota Statutes 2002, section 124D.454, 
248.18  subdivision 10, is amended to read: 
248.19     Subd. 10.  [EXCLUSION.] A district shall not receive aid 
248.20  pursuant to section 124D.453 or 125A.76 for salaries, supplies, 
248.21  travel or equipment for which the district receives aid pursuant 
248.22  to this section. 
248.23     Sec. 11.  Minnesota Statutes 2002, section 125A.05, is 
248.24  amended to read: 
248.25     125A.05 [METHOD OF SPECIAL INSTRUCTION.] 
248.26     (a) As defined in this subdivision section, to the extent 
248.27  required by federal law as of July 1, 1999, special instruction 
248.28  and services for children with a disability must be based on the 
248.29  assessment and individual education plan.  The instruction and 
248.30  services may be provided by one or more of the following methods:
248.31     (1) in connection with attending regular elementary and 
248.32  secondary school classes; 
248.33     (2) establishment of special classes; 
248.34     (3) at the home or bedside of the child; 
248.35     (4) in other districts; 
248.36     (5) instruction and services by special education 
249.1   cooperative centers established under this section, or in 
249.2   another member district of the cooperative center to which the 
249.3   resident district of the child with a disability belongs; 
249.4      (6) in a state residential school or a school department of 
249.5   a state institution approved by the commissioner; 
249.6      (7) in other states; 
249.7      (8) by contracting with public, private or voluntary 
249.8   agencies; 
249.9      (9) for children under age five and their families, 
249.10  programs and services established through collaborative efforts 
249.11  with other agencies; 
249.12     (10) for children under age five and their families, 
249.13  programs in which children with a disability are served with 
249.14  children without a disability; and 
249.15     (11) any other method approved by the commissioner. 
249.16     (b) Preference shall be given to providing special 
249.17  instruction and services to children under age three and their 
249.18  families in the residence of the child with the parent or 
249.19  primary caregiver, or both, present. 
249.20     (c) The primary responsibility for the education of a child 
249.21  with a disability must remain with the district of the child's 
249.22  residence regardless of which method of providing special 
249.23  instruction and services is used.  If a district other than a 
249.24  child's district of residence provides special instruction and 
249.25  services to the child, then the district providing the special 
249.26  instruction and services must notify the child's district of 
249.27  residence before the child's individual education plan is 
249.28  developed and must provide the district of residence an 
249.29  opportunity to participate in the plan's development.  The 
249.30  district of residence must inform the parents of the child about 
249.31  the methods of instruction that are available. 
249.32     Sec. 12.  Minnesota Statutes 2002, section 125A.12, is 
249.33  amended to read: 
249.34     125A.12 [ATTENDANCE IN ANOTHER DISTRICT.] 
249.35     No resident of a district who is eligible for special 
249.36  instruction and services pursuant to this section may be denied 
250.1   provision of this instruction and service because of attending a 
250.2   public school in another district pursuant to section 123B.88, 
250.3   subdivision 5, if the attendance is not subject to section 
250.4   124D.06, 124D.07, or 124D.08.  If the pupil attends a public 
250.5   school located in a contiguous district and the district of 
250.6   attendance does not provide special instruction and services, 
250.7   the district of residence must provide necessary transportation 
250.8   for the pupil between the boundary of the district of residence 
250.9   and the educational facility where special instruction and 
250.10  services are provided within the district of residence.  The 
250.11  district of residence may provide necessary transportation for 
250.12  the pupil between its boundary and the school attended in the 
250.13  contiguous district, but must not pay the cost of transportation 
250.14  provided outside the boundary of the district of residence.  
250.15     Sec. 13.  Minnesota Statutes 2002, section 126C.10, 
250.16  subdivision 28, is amended to read: 
250.17     Subd. 28.  [EQUITY REGION.] For the purposes of computing 
250.18  equity revenue under subdivision 23 24, a district whose 
250.19  administrative offices on July 1, 1999, is located in Anoka, 
250.20  Carver, Dakota, Hennepin, Ramsey, Scott, or Washington county is 
250.21  part of the metro equity region.  Districts whose administrative 
250.22  offices on July 1, 1999, are not located in Anoka, Carver, 
250.23  Dakota, Hennepin, Ramsey, Scott, or Washington county are part 
250.24  of the rural equity region. 
250.25     Sec. 14.  Minnesota Statutes 2002, section 126C.55, 
250.26  subdivision 5, is amended to read: 
250.27     Subd. 5.  [AID REDUCTION FOR REPAYMENT.] Except as provided 
250.28  in this subdivision, the state must reduce the state aid payable 
250.29  to the district under this chapter and chapters 120B, 122A, 
250.30  123A, 123B, 124D, 125A, 127A, and 273, according to the schedule 
250.31  in section 127A.44, subdivision 2, by the amount paid by the 
250.32  state under this section on behalf of the district, plus the 
250.33  interest due on it, and the amount reduced must revert from the 
250.34  appropriate account to the state general fund.  Payments from 
250.35  the school endowment fund or any federal aid payments shall not 
250.36  be reduced.  If, after review of the financial situation of the 
251.1   district, the commissioner advises the commissioner of finance 
251.2   that a total reduction of the aids would cause an undue hardship 
251.3   on or an undue disruption of the educational program of the 
251.4   district, the commissioner, with the approval of the 
251.5   commissioner of finance, may establish a different schedule for 
251.6   reduction of those aids to repay the state.  The amount of aids 
251.7   to be reduced are decreased by any amounts repaid to the state 
251.8   by the school district from other revenue sources. 
251.9      Sec. 15.  Minnesota Statutes 2002, section 127A.05, 
251.10  subdivision 4, is amended to read: 
251.11     Subd. 4.  [ADMINISTRATIVE RULES.] The commissioner may 
251.12  adopt new rules or amend any existing rules only under specific 
251.13  authority and consistent with the requirements of chapter 14.  
251.14  The commissioner may repeal any existing rules adopted by the 
251.15  commissioner.  Notwithstanding the provisions of section 14.05, 
251.16  subdivision 4, The commissioner may grant a variance to rules 
251.17  adopted by the commissioner upon application by a school 
251.18  district for purposes of implementing experimental programs in 
251.19  learning or school management.  This subdivision shall not 
251.20  prohibit the commissioner from making technical changes or 
251.21  corrections to rules adopted by the commissioner. 
251.22     Sec. 16.  Minnesota Statutes 2002, section 127A.45, 
251.23  subdivision 12, is amended to read: 
251.24     Subd. 12.  [PAYMENT PERCENTAGE FOR CERTAIN AIDS.] (a) One 
251.25  hundred percent of the aid for the current fiscal year must be 
251.26  paid for the following aids:  reimbursement for enrollment 
251.27  options transportation, according to sections 124D.03, 
251.28  subdivision 8, 124D.09, subdivision 22, and 124D.10; school 
251.29  lunch aid, according to section 124D.111; hearing impaired 
251.30  support services aid, according to section 124D.57; and Indian 
251.31  post-secondary preparation grants according to section 124D.85 
251.32  124D.80. 
251.33     (b) One hundred percent of the aid for the current fiscal 
251.34  year, based on enrollment in the previous year, must be paid for 
251.35  the first grade preparedness program according to section 
251.36  124D.081. 
252.1      Sec. 17.  Minnesota Statutes 2002, section 169.435, is 
252.2   amended to read: 
252.3      169.435 [STATE SCHOOL BUS SAFETY ADMINISTRATION.] 
252.4      Subdivision 1.  [RESPONSIBILITY; DEPARTMENT OF PUBLIC 
252.5   SAFETY.] The department of public safety has the primary 
252.6   responsibility for school transportation safety.  To oversee 
252.7   school transportation safety, the commissioner of public safety 
252.8   shall establish a school bus safety advisory committee according 
252.9   to subdivision 2.  The commissioner or the commissioner's 
252.10  designee shall serve as state director of pupil transportation 
252.11  according to subdivision 3. 
252.12     Subd. 3.  [PUPIL TRANSPORTATION SAFETY DIRECTOR.] (a) The 
252.13  commissioner of public safety or the commissioner's designee 
252.14  shall serve as pupil transportation safety director. 
252.15     (b) The duties of the pupil transportation safety director 
252.16  shall include: 
252.17     (1) overseeing all department activities related to school 
252.18  bus safety; 
252.19     (2) assisting in the development, interpretation, and 
252.20  implementation of laws and policies relating to school bus 
252.21  safety; 
252.22     (3) supervising preparation of the school bus inspection 
252.23  manual; and 
252.24     (4) in conjunction with the department of children, 
252.25  families, and learning, assisting school districts in developing 
252.26  and implementing comprehensive transportation policies; and 
252.27     (5) providing information requested by the school bus 
252.28  safety advisory committee. 
252.29     Sec. 18.  Minnesota Statutes 2002, section 169.449, 
252.30  subdivision 1, is amended to read: 
252.31     Subdivision 1.  [RULES.] The commissioner of public safety, 
252.32  in consultation with the school bus safety advisory committee, 
252.33  shall adopt rules governing the operation of school buses used 
252.34  for transportation of school children, when owned or operated by 
252.35  a school or privately owned and operated under a contract with a 
252.36  school, and these rules must be made a part of that contract by 
253.1   reference.  Each school, its officers and employees, and each 
253.2   person employed under the contract is subject to these rules. 
253.3      Sec. 19.  Minnesota Statutes 2002, section 169.4501, 
253.4   subdivision 3, is amended to read: 
253.5      Subd. 3.  [INSPECTION MANUAL.] The department of public 
253.6   safety shall develop a school bus inspection manual based on the 
253.7   national standards adopted in subdivision 1 and Minnesota 
253.8   standards adopted in sections 169.4502 to 169.4504.  The 
253.9   Minnesota state patrol shall use the manual as the basis for 
253.10  inspecting buses as provided in section 169.451.  When 
253.11  appropriate, the school bus safety advisory committee shall 
253.12  recommend to the education committees of the legislature 
253.13  modifications to the standards upon which the school bus 
253.14  inspection manual is based.  The department of public safety has 
253.15  no rulemaking authority to alter the standards upon which school 
253.16  buses are inspected. 
253.17     Sec. 20.  Minnesota Statutes 2002, section 169.4501, 
253.18  subdivision 4, is amended to read: 
253.19     Subd. 4.  [VARIANCE.] The commissioner of public safety may 
253.20  grant a variance to any of the school bus standards to 
253.21  accommodate testing of new equipment related to school buses.  A 
253.22  variance from the standards must be for the sole purpose of 
253.23  testing and evaluating new equipment for increased safety, 
253.24  efficiency, and economy of pupil transportation.  The variance 
253.25  expires 18 months from the date on which it is granted unless 
253.26  the commissioner specifies an earlier expiration date.  The 
253.27  school bus safety advisory committee shall annually review all 
253.28  variances that are granted under this subdivision and consider 
253.29  whether to recommend modifications to the Minnesota school bus 
253.30  equipment standards based on the variances. 
253.31     Sec. 21.  [REPEALER.] 
253.32     (a) Minnesota Statutes 2002, sections 124D.84, subdivision 
253.33  2; 126C.55, subdivision 5; and 127A.41, subdivision 6, are 
253.34  repealed. 
253.35     (b) Laws 2001, First Special Session chapter 3, article 4, 
253.36  sections 1 and 2; and Laws 2001, First Special Session chapter 
254.1   6, article 2, section 52, are repealed. 
254.2                              ARTICLE 19 
254.3                 E-12 EDUCATION FORECAST ADJUSTMENTS 
254.4   Section 1.  [DEPARTMENT OF CHILDREN, FAMILIES, AND LEARNING.] 
254.5      The dollar amounts shown are added to or, if shown in 
254.6   parentheses, are subtracted from the appropriations in Laws 
254.7   2001, First Special Session chapter 6, as amended by Laws 2002, 
254.8   chapter 220, and Laws 2002, chapter 374, or other law, and are 
254.9   appropriated from the general fund to the department of 
254.10  children, families, and learning for the purposes specified in 
254.11  this article, to be available for the fiscal year indicated for 
254.12  each purpose.  The figure "2003" used in this article means that 
254.13  the appropriation or appropriations listed are available for the 
254.14  fiscal year ending June 30, 2003. 
254.15                                                         2003 
254.16  APPROPRIATION ADJUSTMENTS                         $   8,742,000 
254.17                                             APPROPRIATION CHANGE
254.18  Sec. 2.  APPROPRIATIONS; EARLY CHILDHOOD
254.19  AND FAMILY EDUCATION 
254.20  Subdivision 1.  Early Childhood Family 
254.21  Education Aid                                          (520,000)
254.22  Subd. 2.  MFIP Child Care                             6,817,000 
254.23  Subd. 3.  Community Education Aid                       219,000 
254.24  Subd. 4.  Adult Graduation Aid                         (149,000) 
254.25  Sec. 3.  K-12 EDUCATION APPROPRIATION
254.26  ADJUSTMENTS 
254.27  Subdivision 1.  Referendum Tax 
254.28  Base Replacement Aid                                    (98,000) 
254.29  Subd. 2.  General and Supplemental 
254.30  Education Aid                                         8,791,000 
254.31  This change includes ($7,420,000) for 
254.32  2002 and $16,211,000 for 2003. 
254.33  Subd. 3.  Transportation Aid for 
254.34  Enrollment Options                                      (35,000) 
254.35  Subd. 4.  Nonpublic Pupil Aid                           437,000 
254.36  Subd. 5.  Nonpublic Pupil Transportation               (679,000) 
254.37  Subd. 6.  Consolidation Transition Aid                    5,000 
254.38  Subd. 7.  Charter School Building 
254.39  Lease Aid                                              (544,000) 
254.40  Subd. 8.  Charter School Startup Grants                (181,000) 
255.1   Subd. 9.  Charter School Integration Aid                 (5,000) 
255.2   This reduction is for 2002. 
255.3   Subd. 10.  Integration Aid                           (2,866,000) 
255.4   Subd. 11.  Magnet School Startup Aid                    (96,000) 
255.5   Subd. 12.  Interdistrict Desegregation 
255.6   or Integration Transportation Grants                    169,000 
255.7   Subd. 13.  Tribal Contract Schools                     (612,000) 
255.8   Subd. 14.  Special Education Aid                     (1,630,000) 
255.9   Subd. 15.  Aid for Children with a 
255.10  Disability                                             (289,000) 
255.11  Subd. 16.  Travel for Home-Based 
255.12  Services                                                 48,000  
255.13  Subd. 17.  Special Education Excess 
255.14  Cost Aid                                               (491,000) 
255.15  Subd. 18.  Litigation Costs for 
255.16  Special Education                                       (40,000)
255.17  Subd. 19.  Court-Placed Special 
255.18  Education Revenue                                      (203,000) 
255.19  Subd. 20.  Transition Programs; 
255.20  Students With Disabilities                              (26,000) 
255.21  Subd. 21.  Health and Safety Aid                       (480,000)
255.22  Subd. 22.  Debt Service Aid                              19,000 
255.23  Subd. 23.  School Breakfast                             100,000 
255.24  Subd. 24.  Fast Break to Learning                     1,081,000 
255.25     Sec. 4.  [EFFECTIVE DATE.] 
255.26     Sections 1 to 3 are effective the day following final 
255.27  enactment. 
255.28                             ARTICLE 20
255.29                     MOSQUITO CONTROL DISTRICT
255.30     Section 1.  Minnesota Statutes 2002, section 18B.07, 
255.31  subdivision 2, is amended to read: 
255.32     Subd. 2.  [PROHIBITED PESTICIDE USE.] (a) A person may not 
255.33  use, store, handle, distribute, or dispose of a pesticide, 
255.34  rinsate, pesticide container, or pesticide application equipment 
255.35  in a manner: 
255.36     (1) that is inconsistent with a label or labeling as 
255.37  defined by FIFRA; 
255.38     (2) that endangers humans, damages agricultural products, 
255.39  food, livestock, fish, or wildlife; or 
256.1      (3) that will cause unreasonable adverse effects on the 
256.2   environment.  
256.3      (b) A person may not direct a pesticide onto property 
256.4   beyond the boundaries of the target site.  A person may not 
256.5   apply a pesticide resulting in damage to adjacent property. 
256.6      (c) A person may not directly apply a pesticide on a human 
256.7   by overspray or target site spray, except when: 
256.8      (1) the pesticide is intended for use on a human; 
256.9      (2) the pesticide application is for mosquito control 
256.10  operations conducted before June 30, 2003, in compliance with 
256.11  paragraph (d), clauses (1) and (2); 
256.12     (3) the pesticide application is for control of gypsy moth, 
256.13  forest tent caterpillar, or other pest species, as determined by 
256.14  the commissioner, and the pesticide used is a biological agent; 
256.15  or 
256.16     (4) the pesticide application is for a public health risk, 
256.17  as determined by the commissioner of health, and the 
256.18  commissioner of health, in consultation with the commissioner of 
256.19  agriculture, determines that the application is warranted based 
256.20  on the commissioner's balancing of the public health risk with 
256.21  the risk that the pesticide application poses to the health of 
256.22  the general population, with special attention to the health of 
256.23  children. 
256.24     (d) For pesticide applications under paragraph (c), clause 
256.25  (2), the following conditions apply: 
256.26     (1) no practicable and effective alternative method of 
256.27  control exists; 
256.28     (2) the pesticide is among the least toxic available for 
256.29  control of the target pest; and 
256.30     (3) notification of residents in the area to be treated is 
256.31  provided at least 24 hours before application by direct 
256.32  notification and through posting daily on the metropolitan 
256.33  mosquito control Web site those areas to be treated by adult 
256.34  mosquito control techniques during the next calendar day and by 
256.35  sending a broadcast e-mail to those persons who request 
256.36  notification of metropolitan mosquito control district control 
257.1   activities.  For control operations related to human disease 
257.2   outbreaks, notice under this paragraph may be given less than 24 
257.3   hours in advance. 
257.4      (e) For pesticide applications under paragraph (c), clauses 
257.5   (3) and (4), the following conditions apply: 
257.6      (1) no practicable and effective alternative method of 
257.7   control exists; 
257.8      (2) the pesticide is among the least toxic available for 
257.9   control of the target pest; and 
257.10     (3) notification of residents in the area to be treated is 
257.11  provided by direct notification and through publication in a 
257.12  newspaper of general circulation within the affected area. 
257.13     (e) (f) For purposes of this subdivision, "direct 
257.14  notification" may include mailings, public meetings, posted 
257.15  placards, neighborhood newsletters, or other means of contact 
257.16  designed to reach as many residents as possible. 
257.17     (f) (g) A person may not apply a pesticide in a manner so 
257.18  as to expose a worker in an immediately adjacent, open field. 
257.19     Sec. 2.  Minnesota Statutes 2002, section 473.702, is 
257.20  amended to read: 
257.21     473.702 [ESTABLISHMENT OF DISTRICT; PURPOSE; AREA; 
257.22  GOVERNING BODY.] 
257.23     A metropolitan mosquito control district is created to 
257.24  control mosquitoes, disease vectoring ticks, and black gnats 
257.25  (Simuliidae) in the metropolitan area.  The area of the district 
257.26  is the metropolitan area defined in section 473.121.  The area 
257.27  of the district is the metropolitan area excluding the part of 
257.28  Carver county west of the west line of township 116N, range 24W, 
257.29  township 115N, range 24W, and township 114N, range 24W.  The 
257.30  metropolitan mosquito control commission is created as the 
257.31  governing body of the district, composed and exercising the 
257.32  powers as prescribed in sections 473.701 to 473.716. 
257.33     Sec. 3.  Minnesota Statutes 2002, section 473.703, 
257.34  subdivision 1, is amended to read: 
257.35     Subdivision 1.  [METRO COUNTY COMMISSIONERS.] The district 
257.36  shall be operated by a commission which shall consist of three 
258.1   members from Anoka county, one member two members from Carver 
258.2   county, three members from Dakota county, three members from 
258.3   Hennepin county, three members from Ramsey county, two members 
258.4   from Scott county, and two members from Washington county.  
258.5   Commissioners shall be members of the board of county 
258.6   commissioners of their respective counties, and shall be 
258.7   appointed by their respective boards of county commissioners.  
258.8      Sec. 4.  Minnesota Statutes 2002, section 473.704, 
258.9   subdivision 17, is amended to read: 
258.10     Subd. 17.  [ENTRY TO PROPERTY.] (a) Members of the 
258.11  commission, its officers, and employees, while on the business 
258.12  of the commission, may enter upon any property within or outside 
258.13  the district at reasonable times to determine the need for 
258.14  control programs.  They may take all necessary and proper steps 
258.15  for the control programs on property within the district as the 
258.16  director of the commission may designate.  Subject to the 
258.17  paramount control of the county and state authorities, 
258.18  commission members and officers and employees of the commission 
258.19  may enter upon any property and clean up any stagnant pool of 
258.20  water, the shores of lakes and streams, and other breeding 
258.21  places for mosquitoes within the district.  The commission may 
258.22  apply insecticides approved by the director to any area within 
258.23  or outside the district that is found to be a breeding place for 
258.24  mosquitoes.  The commission shall give reasonable notification 
258.25  to the governing body of the local unit of government prior to 
258.26  applying insecticides outside of the district on land located 
258.27  within the jurisdiction of the local unit of government.  The 
258.28  commission shall not enter upon private property if the owner 
258.29  objects except to monitor for disease-bearing mosquitoes, ticks, 
258.30  or black gnats or for control of disease bearing mosquito 
258.31  encephalitis outbreaks mosquito species capable of carrying a 
258.32  human disease in the local area of a human disease outbreak 
258.33  regardless of whether there has been an occurrence of the 
258.34  disease in a human being. 
258.35     (b) The commissioner of natural resources must approve 
258.36  mosquito control plans or make modifications as the commissioner 
259.1   of natural resources deems necessary for the protection of 
259.2   public water, wild animals, and natural resources before control 
259.3   operations are started on state lands administered by the 
259.4   commissioner of natural resources.  Until July 1, 2002, approval 
259.5   may, if the commissioner of natural resources considers it 
259.6   necessary, be denied, modified, or revoked by the commissioner 
259.7   of natural resources at any time upon written notice to the 
259.8   commission. 
259.9      Sec. 5.  Minnesota Statutes 2002, section 473.705, is 
259.10  amended to read: 
259.11     473.705 [CONTRACTS FOR MATERIALS, SUPPLIES AND EQUIPMENT.] 
259.12     No contract Contracts for the purchase of materials, 
259.13  supplies, and equipment costing more than $5,000 shall be made 
259.14  must comply with and be governed by the Minnesota uniform 
259.15  municipal contracting law, section 471.345.  A sealed bid 
259.16  solicitation must not be done by the commission without 
259.17  publishing the notice once in the official newspaper of each of 
259.18  the counties in the district that bids or proposals will be 
259.19  received.  The notice shall be published at least ten days 
259.20  before bids are opened.  Such notice shall state the nature of 
259.21  the work or purchase and the terms and conditions upon which the 
259.22  contract is to be awarded, naming therein a time and place where 
259.23  such bids will be received, opened, and read publicly.  After 
259.24  such bids have been duly received, opened, read publicly, and 
259.25  recorded, the commission shall award such contract to the lowest 
259.26  responsible bidder or it may reject all bids.  Each contract 
259.27  shall be duly executed in writing and the party to whom the 
259.28  contract is awarded may be required to give sufficient bond to 
259.29  the commission for the faithful performance of the contract.  If 
259.30  no satisfactory bid is received the commission may readvertise.  
259.31  The commission shall have the right to set qualifications and 
259.32  specifications and to require bids to meet such qualifications 
259.33  and specifications before bids are accepted.  If the commission 
259.34  by an affirmative vote of five-sixths of the voting power of the 
259.35  commission shall declare that an emergency exists requiring the 
259.36  immediate purchase of materials or supplies at a cost in excess 
260.1   of $5,000 but not to exceed $10,000 in amount, or in making 
260.2   emergency repairs, it shall not be necessary to advertise for 
260.3   bids, but such material, equipment, and supplies may be 
260.4   purchased in the open market at the lowest price available 
260.5   without securing formal competitive bids.  An emergency as used 
260.6   in this section shall be an unforeseen circumstance or condition 
260.7   which results in placing life or property in jeopardy.  All 
260.8   contracts involving employment of labor shall stipulate terms 
260.9   thereof and such conditions as the commission deems reasonable 
260.10  as to hours and wages.  
260.11     Sec. 6.  Minnesota Statutes 2002, section 473.714, 
260.12  subdivision 1, is amended to read: 
260.13     Subdivision 1.  [COMPENSATION.] Except as provided in 
260.14  subdivision 2, Each commissioner, including the officers of the 
260.15  commission shall, may be reimbursed for actual and necessary 
260.16  expenses incurred in the performance of duties.  The chair shall 
260.17  be paid a per diem for attending meetings, monthly, executive, 
260.18  and special, and each commissioner shall be paid a per diem for 
260.19  attending meetings, monthly, executive, and special, which per 
260.20  diem shall be established by the commission.  A commissioner who 
260.21  receives a per diem from the commissioner's county shall not be 
260.22  paid a per diem for the same day by the commission for attending 
260.23  meetings of the commission.  The annual budget of the commission 
260.24  shall provide as a separate account anticipated expenditures for 
260.25  per diem, travel and associated expenses for the chair and 
260.26  members, and compensation or reimbursement shall be made to the 
260.27  chair or members only when budgeted.  No commissioner may be 
260.28  paid a per diem. 
260.29     Sec. 7.  [TRANSITIONAL AUTHORITY.] 
260.30     The metropolitan mosquito control district and the Carver 
260.31  county board of commissioners may enter into an agreement for 
260.32  the district to provide its services to the part of Carver 
260.33  county added to the district by this article until the proceeds 
260.34  of the levy from that part of Carver county are available for 
260.35  those services.  During this period the services may be provided 
260.36  on the terms and for fees that are mutually agreed to by the 
261.1   parties. 
261.2      Sec. 8.  [TEMPORARY MOSQUITO CONTROL AID.] 
261.3      In each of 2004 and 2005, $2,000,000 is appropriated from 
261.4   the general fund to the metropolitan mosquito control commission 
261.5   to be used for the purposes of Minnesota Statutes, sections 
261.6   473.701 to 473.716. 
261.7      Sec. 9.  [REPEALER.] 
261.8      Minnesota Statutes 2002, section 473.714, subdivision 2, is 
261.9   repealed. 
261.10     Sec. 10.  [EFFECTIVE DATE.] 
261.11     Sections 1 to 9 are effective the day following final 
261.12  enactment. 
261.13                             ARTICLE 21
261.14                           MISCELLANEOUS
261.15     Section 1.  Minnesota Statutes 2002, section 16A.152, 
261.16  subdivision 1, is amended to read: 
261.17     Subdivision 1.  [CASH FLOW ACCOUNT ESTABLISHED.] (a) A cash 
261.18  flow account is created in the general fund in the state 
261.19  treasury.  Beginning July 1, 2003, the commissioner of finance 
261.20  shall restrict part or all of the balance before reserves in the 
261.21  general fund as may be necessary to fund the cash flow account, 
261.22  up to $350,000,000. 
261.23     (b) The Amounts restricted are transferred to in the cash 
261.24  flow account and shall remain in the account until drawn down 
261.25  and used to meet cash flow deficiencies resulting from uneven 
261.26  distribution of revenue collections and required expenditures 
261.27  during a fiscal year. 
261.28     Sec. 2.  Minnesota Statutes 2002, section 16A.152, 
261.29  subdivision 1b, is amended to read: 
261.30     Subd. 1b.  [BUDGET RESERVE INCREASE.] On June 30 July 1, 
261.31  2003, the commissioner of finance shall transfer 
261.32  $3,900,000 $285,000,000 to the budget reserve account in the 
261.33  general fund.  On June 30, 2004, the commissioner of finance 
261.34  shall transfer $12,300,000 to the budget reserve account in the 
261.35  general fund.  On June 30, 2005, the commissioner of finance 
261.36  shall transfer $12,000,000 to the budget reserve account in the 
262.1   general fund.  The amounts necessary for this purpose are 
262.2   appropriated from the general fund. 
262.3      Sec. 3.  Minnesota Statutes 2002, section 16A.152, 
262.4   subdivision 2, is amended to read: 
262.5      Subd. 2.  [ADDITIONAL REVENUES; PRIORITY.] If on the basis 
262.6   of a forecast of general fund revenues and expenditures, the 
262.7   commissioner of finance determines that there will be a positive 
262.8   unrestricted budgetary general fund balance at the close of the 
262.9   biennium, the commissioner of finance must allocate money to the 
262.10  budget reserve until the total amount in the account equals 
262.11  $653,000,000 the following accounts and purposes in priority 
262.12  order: 
262.13     (1) the budget reserve account established in subdivision 
262.14  1b until that account reaches $530,000,000; 
262.15     (2) the cash flow account established in subdivision 1 
262.16  until that account reaches $350,000,000; and 
262.17     (3) the tobacco use prevention and local public health 
262.18  endowment fund established in section 144.395 until that fund 
262.19  reaches five percent of the forecasted expenditures in the 
262.20  odd-numbered fiscal year of the most recently enacted biennial 
262.21  budget. 
262.22     The amounts necessary to meet the requirements of this 
262.23  section are appropriated from the general fund within two weeks 
262.24  after the forecast is released. 
262.25     Sec. 4.  Minnesota Statutes 2002, section 16C.03, is 
262.26  amended by adding a subdivision to read: 
262.27     Subd. 17.  [INELIGIBLE VENDORS.] (a) No agency may enter 
262.28  into or renew any contract with a corporation or its subsidiary 
262.29  or other affiliate if the corporation has reincorporated in a 
262.30  tax haven country and the United States is the principal market 
262.31  for the public trading of the corporation's stock.  The 
262.32  commissioner shall require each vendor submitting a bid or 
262.33  contract or otherwise entering into a contract with an agency to 
262.34  certify that the vendor is not ineligible under this 
262.35  subdivision.  Any person who submits a false certification under 
262.36  this subdivision is subject to the penalties of perjury in 
263.1   section 609.48. 
263.2      (b) For the purposes of this subdivision, "tax haven 
263.3   country" means any of the following:  Barbados, Bermuda, British 
263.4   Virgin Islands, Cayman Islands, Commonwealth of the Bahamas, 
263.5   Cyprus, Gibraltar, Isle of Man, the Principality of 
263.6   Liechtenstein, the Principality of Monaco, the Republic of the 
263.7   Seychelles, and any other country that has no corporate income 
263.8   tax or has an effective tax rate of less than ten percent on 
263.9   income that does not arise in or is not derived from that 
263.10  country.  A tax haven country does not include any country that 
263.11  is a signatory to a treaty that would contravene this provision. 
263.12     (c) The commissioner may waive paragraph (a) when the 
263.13  commissioner has made a written finding that the contract is 
263.14  necessary to meet a compelling public interest.  A "compelling 
263.15  public interest" includes, but is not limited to, ensuring the 
263.16  provision of essential services and ensuring the public health 
263.17  and safety. 
263.18     Sec. 5.  Minnesota Statutes 2002, section 270.059, is 
263.19  amended to read: 
263.20     270.059 [REVENUE DEPARTMENT SERVICE AND RECOVERY SPECIAL 
263.21  REVENUE FUND.] 
263.22     A revenue department service and recovery special revenue 
263.23  fund is created for the purpose of recovering the costs of 
263.24  furnishing public government data and related services or 
263.25  products, as well as recovering costs associated with collecting 
263.26  local taxes on sales.  All money collected under this section is 
263.27  deposited in the revenue department service and recovery special 
263.28  revenue fund.  Money in the fund is appropriated to the 
263.29  commissioner of revenue to reimburse the department of revenue 
263.30  for the costs incurred in administering the tax law or providing 
263.31  the data, service, or product.  Any monies paid to the 
263.32  department as a criminal fine for a tax law violation that are 
263.33  designated by the court to fund tax law enforcement are 
263.34  appropriated to this fund. 
263.35     [EFFECTIVE DATE.] This section is effective the day 
263.36  following final enactment. 
264.1      Sec. 6.  Minnesota Statutes 2002, section 270A.03, 
264.2   subdivision 2, is amended to read: 
264.3      Subd. 2.  [CLAIMANT AGENCY.] "Claimant agency" means any 
264.4   state agency, as defined by section 14.02, subdivision 2, the 
264.5   regents of the University of Minnesota, any district court of 
264.6   the state, any county, any statutory or home rule charter city 
264.7   presenting a claim for a municipal hospital or a public library 
264.8   or a municipal an ambulance service licensed under chapter 144E, 
264.9   a hospital district, a private nonprofit hospital that leases 
264.10  its building from the county in which it is located, any public 
264.11  agency responsible for child support enforcement, any public 
264.12  agency responsible for the collection of court-ordered 
264.13  restitution, and any public agency established by general or 
264.14  special law that is responsible for the administration of a 
264.15  low-income housing program. 
264.16     Sec. 7.  Minnesota Statutes 2002, section 287.12, is 
264.17  amended to read: 
264.18     287.12 [TAXES, HOW APPORTIONED.] 
264.19     (a) All taxes paid to the county treasurer under the 
264.20  provisions of sections 287.01 to 287.12 must be apportioned, 97 
264.21  percent to the general fund of the state, and three percent to 
264.22  the county revenue fund. 
264.23     (b) On or before the 20th day of each month the county 
264.24  treasurer shall determine and pay to the commissioner of revenue 
264.25  for deposit in the state treasury and credit to the general fund 
264.26  the state's portion of the receipts from the mortgage registry 
264.27  tax during the preceding month subject to the electronic payment 
264.28  requirements of section 270.771.  The county treasurer shall 
264.29  provide any related reports requested by the commissioner of 
264.30  revenue. 
264.31     (c) Counties must remit the state's portion of the June 
264.32  receipts collected through June 25 and the estimated state's 
264.33  portion of the receipts to be collected during the remainder of 
264.34  the month to the commissioner of revenue two business days 
264.35  before June 30 of each year.  The remaining amount of the June 
264.36  receipts is due on August 20. 
265.1      [EFFECTIVE DATE.] This section is effective January 1, 2004.
265.2      Sec. 8.  Minnesota Statutes 2002, section 287.29, 
265.3   subdivision 1, is amended to read: 
265.4      Subdivision 1.  [APPOINTMENT AND PAYMENT OF TAX PROCEEDS.] 
265.5   (a) The proceeds of the taxes levied and collected under 
265.6   sections 287.21 to 287.39 must be apportioned, 97 percent to the 
265.7   general fund of the state, and three percent to the county 
265.8   revenue fund. 
265.9      (b) On or before the 20th day of each month, the county 
265.10  treasurer shall determine and pay to the commissioner of revenue 
265.11  for deposit in the state treasury and credit to the general fund 
265.12  the state's portion of the receipts for deed tax from the 
265.13  preceding month subject to the electronic transfer requirements 
265.14  of section 270.771.  The county treasurer shall provide any 
265.15  related reports requested by the commissioner of revenue. 
265.16     (c) Counties must remit the state's portion of the June 
265.17  receipts collected through June 25 and the estimated state's 
265.18  portion of the receipts to be collected during the remainder of 
265.19  the month to the commissioner of revenue two business days 
265.20  before June 30 of each year.  The remaining amount of the June 
265.21  receipts is due on August 20. 
265.22     [EFFECTIVE DATE.] This section is effective January 1, 2004.
265.23     Sec. 9.  Minnesota Statutes 2002, section 289A.31, 
265.24  subdivision 7, is amended to read: 
265.25     Subd. 7.  [SALES AND USE TAX.] (a) The sales and use tax 
265.26  required to be collected by the retailer under chapter 297A 
265.27  constitutes a debt owed by the retailer to Minnesota, and the 
265.28  sums collected must be held as a special fund in trust for the 
265.29  state of Minnesota. 
265.30     A retailer who does not maintain a place of business within 
265.31  this state as defined by section 297A.66, subdivision 1, shall 
265.32  not be indebted to Minnesota for amounts of tax that it was 
265.33  required to collect but did not collect unless the retailer knew 
265.34  or had been advised by the commissioner of its obligation to 
265.35  collect the tax.  
265.36     (b) The use tax required to be paid by a purchaser is a 
266.1   debt owed by the purchaser to Minnesota. 
266.2      (c) The tax imposed by chapter 297A, and interest and 
266.3   penalties, is a personal debt of the individual required to file 
266.4   a return from the time the liability arises, irrespective of 
266.5   when the time for payment of that liability occurs.  The debt 
266.6   is, in the case of the executor or administrator of the estate 
266.7   of a decedent and in the case of a fiduciary, that of the 
266.8   individual in an official or fiduciary capacity unless the 
266.9   individual has voluntarily distributed the assets held in that 
266.10  capacity without reserving sufficient assets to pay the tax, 
266.11  interest, and penalties, in which case the individual is 
266.12  personally liable for the deficiency. 
266.13     (d) Liability for payment of sales and use taxes includes 
266.14  any responsible person or entity described in the personal 
266.15  liability provisions of section 270.101. 
266.16     (e) Any amounts collected, even if erroneously or illegally 
266.17  collected, from a purchaser under a representation that they are 
266.18  taxes imposed under chapter 297A are state funds from the time 
266.19  of collection and must be reported on a return filed with the 
266.20  commissioner.  
266.21     (f) The tax imposed under chapter 297A on sales of tickets 
266.22  to the premises of or events sponsored by the state agricultural 
266.23  society and conducted on the state fairgrounds during the period 
266.24  of the annual state fair may be retained by the state 
266.25  agricultural society if the funds are used and matched as 
266.26  required under section 37.13, subdivision 2. 
266.27     [EFFECTIVE DATE.] This section is effective for sales taxes 
266.28  collected on sales occurring after June 30, 2003. 
266.29     Sec. 10.  Minnesota Statutes 2002, section 289A.56, 
266.30  subdivision 4, is amended to read: 
266.31     Subd. 4.  [CAPITAL EQUIPMENT AND CERTAIN BUILDING MATERIALS 
266.32  REFUNDS; REFUNDS TO PURCHASERS.] Notwithstanding subdivision 3, 
266.33  for refunds payable under section sections 297A.75, subdivision 
266.34  1, clauses (1), (2), (3), and (5), interest is computed from the 
266.35  date the refund claim is filed with the commissioner.  For 
266.36  refunds payable under section and 289A.50, subdivision 2a, 
267.1   interest is computed from the 20th day of the month following 
267.2   the month of the invoice date for the purchase which is the 
267.3   subject of the refund, if the refund claim includes a detailed 
267.4   schedule of purchases made during each of the periods in the 
267.5   claim.  If the refund claim submitted does not contain a 
267.6   schedule reflecting purchases made in each period, interest is 
267.7   computed from the date the claim was filed 90 days after the 
267.8   refund claim is filed with the commissioner. 
267.9      [EFFECTIVE DATE.] This section is effective for refund 
267.10  claims filed on or after April 1, 2003. 
267.11     Sec. 11.  Minnesota Statutes 2002, section 297A.75, 
267.12  subdivision 4, is amended to read: 
267.13     Subd. 4.  [INTEREST.] Interest must be paid on the refund 
267.14  at the rate in section 270.76 from the date the refund claim is 
267.15  filed for taxes paid under subdivision 1, clauses (1) to (3), 
267.16  and (5), and from 60 days after the date the refund claim is 
267.17  filed with the commissioner for claims filed under subdivision 
267.18  1, clauses (4), (6), (7), (8), and (9) 90 days after the refund 
267.19  claim is filed with the commissioner for taxes paid under 
267.20  subdivision 1. 
267.21     [EFFECTIVE DATE.] This section is effective for refund 
267.22  claims filed on or after April 1, 2003. 
267.23     Sec. 12.  Minnesota Statutes 2002, section 297B.03, is 
267.24  amended to read: 
267.25     297B.03 [EXEMPTIONS.] 
267.26     There is specifically exempted from the provisions of this 
267.27  chapter and from computation of the amount of tax imposed by it 
267.28  the following:  
267.29     (1) purchase or use, including use under a lease purchase 
267.30  agreement or installment sales contract made pursuant to section 
267.31  465.71, of any motor vehicle by the United States and its 
267.32  agencies and instrumentalities and by any person described in 
267.33  and subject to the conditions provided in section 297A.67, 
267.34  subdivision 11; 
267.35     (2) purchase or use of any motor vehicle by any person who 
267.36  was a resident of another state or country at the time of the 
268.1   purchase and who subsequently becomes a resident of Minnesota, 
268.2   provided the purchase occurred more than 60 days prior to the 
268.3   date such person began residing in the state of Minnesota and 
268.4   the motor vehicle was registered in the person's name in the 
268.5   other state or country; 
268.6      (3) purchase or use of any motor vehicle by any person 
268.7   making a valid election to be taxed under the provisions of 
268.8   section 297A.90; 
268.9      (4) purchase or use of any motor vehicle previously 
268.10  registered in the state of Minnesota when such transfer 
268.11  constitutes a transfer within the meaning of section 118, 331, 
268.12  332, 336, 337, 338, 351, 355, 368, 721, 731, 1031, 1033, or 
268.13  1563(a) of the Internal Revenue Code of 1986, as amended through 
268.14  December 31, 1999; 
268.15     (5) purchase or use of any vehicle owned by a resident of 
268.16  another state and leased to a Minnesota based private or for 
268.17  hire carrier for regular use in the transportation of persons or 
268.18  property in interstate commerce provided the vehicle is titled 
268.19  in the state of the owner or secured party, and that state does 
268.20  not impose a sales tax or sales tax on motor vehicles used in 
268.21  interstate commerce; 
268.22     (6) purchase or use of a motor vehicle by a private 
268.23  nonprofit or public educational institution for use as an 
268.24  instructional aid in automotive training programs operated by 
268.25  the institution.  "Automotive training programs" includes motor 
268.26  vehicle body and mechanical repair courses but does not include 
268.27  driver education programs; 
268.28     (7) purchase of a motor vehicle for use as an ambulance by 
268.29  an ambulance service licensed under section 144E.10; 
268.30     (8) purchase of a motor vehicle by or for a public library, 
268.31  as defined in section 134.001, subdivision 2, as a bookmobile or 
268.32  library delivery vehicle; 
268.33     (9) purchase of a ready-mixed concrete truck; 
268.34     (10) purchase or use of a motor vehicle by a town for use 
268.35  exclusively for road maintenance, including snowplows and dump 
268.36  trucks, but not including automobiles, vans, or pickup trucks; 
269.1      (11) purchase or use of a motor vehicle by a corporation, 
269.2   society, association, foundation, or institution organized and 
269.3   operated exclusively for charitable, religious, or educational 
269.4   purposes, except a public school, university, or library, but 
269.5   only if the vehicle is: 
269.6      (i) a truck, as defined in section 168.011, a bus, as 
269.7   defined in section 168.011, or a passenger automobile, as 
269.8   defined in section 168.011, if the automobile is designed and 
269.9   used for carrying more than nine persons including the driver; 
269.10  and 
269.11     (ii) intended to be used primarily to transport tangible 
269.12  personal property or individuals, other than employees, to whom 
269.13  the organization provides service in performing its charitable, 
269.14  religious, or educational purpose; 
269.15     (12) purchase of a motor vehicle for use by a transit 
269.16  provider exclusively to provide transit service is exempt if the 
269.17  transit provider is either (i) receiving financial assistance or 
269.18  reimbursement under section 174.24 or 473.384, or (ii) operating 
269.19  under section 174.29, 473.388, or 473.405; and 
269.20     (13) the first $7,700 of value of a purchase or use after 
269.21  June 30, 2003, and before July 1, 2007, by the state or a 
269.22  political subdivision, of a motor vehicle that draws its 
269.23  propulsion energy from a rechargeable energy storage system and 
269.24  either unleaded gasoline, diesel fuel, or an alternative fuel or 
269.25  a mixture of two or more fuels.  
269.26     [EFFECTIVE DATE.] This section is effective for sales and 
269.27  purchases occurring on or after July 1, 2003. 
269.28     Sec. 13.  Minnesota Statutes 2002, section 297H.06, 
269.29  subdivision 1, is amended to read: 
269.30     Subdivision 1.  [CERTAIN SURCHARGES OR FEES.] The amount of 
269.31  a surcharge, fee, or charge established pursuant to section 
269.32  115A.919, 115A.921, 115A.923, 400.08, 473.811, or 473.843 is 
269.33  exempt from the solid waste management tax.  The amount shown on 
269.34  a property tax statement as a county charge for solid waste 
269.35  management service or as a surcharge, fee, or charge established 
269.36  pursuant to section 400.08, subdivision 3, or section 473.811, 
270.1   subdivision 3a, is exempt from the solid waste management tax.  
270.2   The exemption does not apply to the tax imposed on market price 
270.3   under section 297H.02, subdivision 1, paragraphs (b) and (c), or 
270.4   section 297H.03, subdivision 1, paragraphs (b) and (c). 
270.5      [EFFECTIVE DATE.] This section is effective April 1, 2003.  
270.6      Sec. 14.  [REVENUES FROM LATER BAR CLOSING.] 
270.7      Each year, $11,000,000, the amount of sales tax revenues 
270.8   estimated to be attributable to the extension of bar closing 
270.9   times under legislation enacted in 2003, must be added to the 
270.10  amount otherwise appropriated for payment of local government 
270.11  aid under Minnesota Statutes, chapter 477A, to be directed to 
270.12  public safety. 
270.13     Sec. 15.  [APPROPRIATION; REVENUE DEPARTMENT.] 
270.14     $645,000 in fiscal year 2004 and $1,252,000 in fiscal year 
270.15  2005 is appropriated to the commissioner of revenue from the 
270.16  general fund for additional activities to identify and collect 
270.17  tax liabilities from individuals and businesses that currently 
270.18  do not pay all taxes owed.  This initiative is expected to 
270.19  result in new general fund revenue of $7,000,000 for the 
270.20  biennium ending June 30, 2005.  This initiative is a supplement 
270.21  to and part of the initiative funded in a bill as S.F. No. 1524 
270.22  and is subject to the reporting requirements in that bill, if it 
270.23  is enacted into law.  This is a permanent appropriation to be 
270.24  added to the budget base. 
270.25     Sec. 16.  [REPEALER.] 
270.26     (a) Minnesota Statutes 2002, section 37.13, subdivision 2, 
270.27  is repealed effective July 1, 2003, but the repealer does not 
270.28  apply to sales taxes retained on sales occurring before July 1, 
270.29  2003. 
270.30     (b) Minnesota Statutes 2002, section 325E.112, subdivision 
270.31  2a, is repealed effective July 1, 2003.