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 locationsinsideoutside the 3.46 United Statesand the District of Columbia, excluding the3.47commonwealth of Puerto Rico and possessions of the United3.48States,as determined under section 290.191 or 290.20, is2080 4.1 percent orlessgreater 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 31,20002003, 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 31,19992002, and before January 6.20 1,20012004. The rate applicable to any rate bracketmust not6.21be changedis 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." For20012004, the commissioner shall then 6.31 determine the percent change from the 12 months ending on August 6.32 31,19992002, to the 12 months ending on August 31,20002003, 6.33 and in each subsequent year, from the 12 months ending on August 6.34 31,19992002, 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 clause8.21(1) and not qualifying under clause (3), are not taxable under8.22this chapter if the following conditions are met:8.23(i) the recipient was not a resident of this state for any8.24part of the taxable year in which the wages were received; and8.25(ii) the wages are for work performed while the recipient8.26was 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 in20042006 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 in20042006 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 15of21.28the year preceding the year in which the state assumes the cost21.29of court administration in the judicial district as specified21.30under 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 fiscalyearyears. 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 subdivision2 or22.27section 273.166for 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 subdivision2 or22.34section 273.166for 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 this23.4amount must be increased or decreased by an amount equal to the23.5positive or negative difference between the amount of fee and23.6fine revenue certified under paragraph (b), clause (3), and the23.7actual amount of fee and fine revenue of the county for the23.8calendar year when certification takes place. 23.9(f) Payments to a county under subdivision 2 for calendar23.10year 2001 are permanently increased by an amount equal to 7.523.11percent of the county's share of transferred fines collected by23.12the district courts in the county during calendar year 1998, as23.13determined under paragraph (a). If the amount determined in23.14paragraph (a) exceeds the amount of aid a county is scheduled to23.15be paid under subdivision 2 in 2000, then the county shall not23.16receive an aid increase under this paragraph.23.17(g) Payments to a county under subdivision 2 or section23.18273.166, for the cost of mandated services, as defined in23.19section 480.183, subdivision 4, in the judicial district, must23.20be permanently reduced in 2002 by an amount equal to the cost to23.21the state for assumption of mandated court services as defined23.22in section 480.183, subdivision 4. The supreme court shall23.23determine the amount for each county and certify it to the23.24commissioner 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 receiveadditional homestead and agricultural23.33credittemporary 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 ofadditionalaid 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 subdivisions2,2b, 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 26.720022004 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 year26.20thereafter, the commissioner of finance shall deposit in an26.21education reserve account, which account is hereby established,26.22the increased amount of the state general levy received for26.23deposit in the general fund for that year over the amount of the26.24state general levy received for deposit in the general fund in26.25fiscal year 2003. The amounts in the education reserve account26.26do not lapse or cancel each year, but remain until appropriated26.27by 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 forelectric27.18generation attached machinery under class 3 andproperty 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)3.4623123.80691 times the pre-1940 housing 29.1 percentage; plus (2)2.093826 times the commercial industrial29.2percentage0.06574 times the city's net tax capacity per capita; 29.3 plus (3)6.8625527.18175 times the population decline 29.4 percentage; plus (4).00026 times the city population1731.45757 29.5 times the road accidents factor; plus (5)152.0141179.37738; 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)1.7959192.387 times the 29.11 pre-1940 housing percentage; plus (2)1.5621382.67591 times the 29.12 commercial industrial percentage; plus (3)4.1775683.16042 29.13 times the population decline percentage; plus (4)1.040131.206 29.14 times the transformed population; minus (5)107.47562.772. 29.15 (c) The city revenue need cannot be less than zero. 29.16 (d) For calendar year19982005 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 the19932003 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 year19942004 33.31 and subsequent years, the formula aid for a city is equal tothe33.32need increase percentage multiplied by the difference between33.33 (1) the city's revenue need multiplied by its population,and33.34 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. Theneed increase percentagetax effort rate must be the 34.1 same for all cities. 34.2Notwithstanding the prior sentence, in 1995 only, the need34.3increase percentage for a city shall be twice the need increase34.4percentage applicable to other cities if:34.5(1) the city, in 1992 or 1993, transferred an amount from34.6governmental funds to their sewer and water fund, and34.7(2) the amount transferred exceeded their net levy for34.8taxes payable in the year in which the transfer occurred.34.9 The applicableneed increase percentage or percentagestax 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 34.162002 and thereafter2004, 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 base80 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 in34.22calendar year 1995 and thereafter, except for 2002, shall not34.23exceed the percentage increase in the sum of the aid to all34.24cities under this section in the current calendar year compared34.25to the sum of the aid to all cities in the previous year. For34.26aids payable in 2002 only, the amount of the aid paid to a first34.27class city shall not exceed the sum of its aid amount for34.28calendar year 2001 under this section and its aid payment in34.29calendar year 2001 under section 273.1398, subdivision 2, by34.30more than 2.5 percent.34.31(c) For aids payable in all years except 2002, the total34.32aid for any city, except a first class city, shall not exceed34.33the sum of (1) ten percent of the city's net levy for the year34.34prior to the aid distribution plus (2) its total aid in the34.35previous year. For aids payable in 2002 only, the total aid for34.36any city, except a first class city, shall not exceed the sum of35.1(1) 40 percent of the city's net levy for taxes payable in the35.2year prior to the aid distribution plus (2) 40 percent of its35.3total aid in the previous year under section 273.1398,35.4subdivision 2, plus (3) its total aid in the previous year under35.5this sectionIn 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 are35.20limited to $20,265,000 in 1996. Aid payments to counties under35.21section 477A.0121 are limited to $27,571,625 in 1997. For aid35.22payable in 1998 and thereafter, the total aids paid under35.23section 477A.0121 are the amounts certified to be paid in the35.24previous year, adjusted for inflation as provided under35.25subdivision 3.35.26(c)(i) For aids payable in 1998 and thereafter, the total35.27aids paid to counties under section 477A.0122 are the amounts35.28certified to be paid in the previous year, adjusted for35.29inflation as provided under subdivision 3.35.30(ii) Aid payments to counties under section 477A.0122 in35.312000 are further increased by an additional $20,000,000 in 2000.35.32(d) Aid payments to cities in 2002 under section 477A.013,35.33subdivision 9, are limited to the amounts certified to be paid35.34in the previous year, adjusted for inflation as provided in35.35subdivision 3, and increased by $140,000,000. For aids payable35.36in 2003, the total aids paid under section 477A.013, subdivision36.19, are the amounts certified to be paid in the previous year,36.2adjusted for inflation as provided under subdivision 3.For 36.3 aids payable in 2004,the total aids paid under section36.4477A.013, subdivision 9, are the amounts certified to be paid in36.5the previous year, adjusted for inflation as provided under36.6subdivision 3, and increased by the amount certified to be paid36.7in 2003 under section 477A.06. For aids payable in 2005 and36.8thereafter,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 under36.14subdivision 4 is not included when calculating the appropriation36.15limits under this paragraph.36.16(e) Reimbursements made to counties under section 477A.012336.17in calendar year 2005 and thereafter are limited to an amount36.18equal to the maximum allowed appropriation under this section in36.19the previous year, multiplied by a percent to be established by36.20law. If no percent is established by law, the appropriation is36.21limited to the total amount appropriated for this purpose in the36.22previous 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 undersection50.2762J.694, subdivision 2a, paragraph (b)subdivision 10, plus five 50.28 percent interest to the University of Minnesota board of regents 50.29 for thecosts of the academic health center as specified under50.30section 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 remit75100 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 for75100 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 and6252.12 100 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 of62100 percent of 52.17 the preceding May's liability or62100 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,2474 mills on each such cigarette; and 52.31 (2) on cigarettes weighing more than three pounds per 52.32 thousand,48148 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 of3560 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 of3560 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 distributorat a discount of53.231.0 percent from the face amount of the stamps for the first53.24$1,500,000 of such stamps purchased in any fiscal year; and at a53.25discount of 0.6 percent on the remainder of such stamps53.26purchased 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,54.34less 1.5 percent of the liability as compensation to reimburse54.35the distributor for expenses incurred in the administration of54.36this 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 byone mill3.875 mills of the tax 56.8 on cigarettes weighing not more than three pounds a thousand and 56.9two7.75 mills of the tax on cigarettes weighing more than three 56.10 pounds a thousand must be credited to theMinnesota future56.11resources fundacademic 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;and56.15 (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, subdivision59.915, 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; 60.31and60.32 (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 462.711sections 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 andsectionsections 88.21 273.135 and 273.1391, "municipality" means any city, however 88.22 organized, or town,andwhich 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 districton January 2, 2000, which contains a88.36municipalitywhich meets the following qualifications: 89.1 (1) it is amunicipalityschool 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 amunicipalityschool 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. 89.11For purposes of this paragraph, a "tax relief area" does89.12not include a school district whose boundaries are more than 2089.13miles from a taconite mine or plant or in which the assessed89.14valuation of unmined iron ore on May 1, 1941, was less than 4089.15percent of the assessed valuation of all real property.89.16(b) For purposes of section 273.1391, subdivision 2,89.17paragraph (c), and chapter 298, "tax relief area" means the89.18geographic area contained within the boundaries of a school89.19district which contains a municipality that meets the following89.20qualifications:89.21(1) it is a municipality in which the assessed valuation of89.22unmined iron ore on May 1, 1941, was not less than 40 percent of89.23the assessed valuation of all real property; or89.24(2) it is a municipality in which, on January 1, 1977, or89.25the applicable assessment date, there is a taconite89.26concentrating plant or where taconite is mined or quarried or89.27where there is located an electric generating plant which89.28qualifies 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 atax relief90.19areamunicipality as defined under section 273.134, paragraph 90.20 (a),that is within the boundaries of a municipality which meets90.21the 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 aqualifyingmunicipality 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 aqualifyingmunicipality 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 atax relieftaconite 92.2 assistance area under section273.134, 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 miningor, 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,or93.32 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 totwofour percent of the net proceeds from mining in 99.17 Minnesota. The tax applies to allmineral and energy resources99.18 ores, metals, and minerals minedor, 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 allowedin99.27section 298.017for purposes of determining taxable income under 99.28 section 298.01. No other credits or deductions shall apply to 99.29 this taxexcept 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 Whenaan 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 allmetalores, metals, ormineral100.3productsminerals 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.] Whenaan ore, metal, or 100.10 mineralproductis 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 mineralproducts" means all 100.24 thosemineral and energy resourcesores, 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. [WITHINTACONITEPRECIOUS 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 mineralsand energy101.9resourcesmined or extracted within thetaconiteprecious 101.10 minerals tax relief areadefined in section 273.134, paragraph101.11(b),shall be allocated as follows: 101.12 (1) five percent to the city or town within which the ores, 101.13 metals, or mineralsor energy resourcesare mined or extracted; 101.14 (2) ten percent to the taconite municipal aid account to be 101.15 distributedas provided in section 298.282to 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 mineralsor energy resourcesare mined or 101.20 extracted; 101.21 (4)2030 percent toa group of school districts comprised101.22of those school districts wherein the mineral or energy resource101.23was mined or extracted or in which there is a qualifying101.24municipality as defined by section 273.134, paragraph (b), in101.25direct proportion to school district indexes as follows: for101.26each school district, its pupil units determined under section101.27126C.05 for the prior school year shall be multiplied by the101.28ratio of the average adjusted net tax capacity per pupil unit101.29for school districts receiving aid under this clause as101.30calculated pursuant to chapters 122A, 126C, and 127A for the101.31school year ending prior to distribution to the adjusted net tax101.32capacity per pupil unit of the district. Each district shall101.33receive that portion of the distribution which its index bears101.34to the sum of the indices for all school districts that receive101.35the distributionsthe 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 mineralsor energy resourcesare mined or extracted; 102.4 (6)20 percent to St. Louis county acting as the counties'102.5fiscal agent to be distributed as provided in sections 273.134102.6to 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 thenortheast MinnesotaDouglas 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. [OUTSIDETACONITEPRECIOUS 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 mineralsand energy resourcesmined 102.18 or extracted outside of thetaconiteprecious minerals tax 102.19 relief areadefined 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 3to, 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, 2002,105.26and 2003through 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 in20042006 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 districtsinwhich 108.1the taconite was mined or quarried or the concentrate108.2producedqualify 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 distributionfrom a fund that receives a distribution108.33in 1998of 21.3 cents per ton.On July 15 of 1999, and each108.34year thereafter, the increase over the amount established for108.35the prior year shall be determined according to the increase in108.36the implicit price deflator as provided in section 298.24,109.1subdivision 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 thenortheast MinnesotaDouglas 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 foradditionalgrants, 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 usedfor the grantsas 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 thecapital outlaygeneral 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 as114.2revenue, in the fund for which the levy was made, the lesser of:114.3(1) the sum of May, June, and July school district tax114.4settlement revenue received in that calendar year plus general114.5education aid according to section 126C.13, subdivision 4,114.6received in July and August of that calendar year; or114.7(2) the sum of:114.8(i) 31 percent of the referendum levy certified in the114.9prior calendar year according to section 126C.17, subdivision 9;114.10plus114.11(ii) the entire amount of the levy certified in the prior114.12calendar year according to sections 124D.86, subdivision 4, for114.13school districts receiving revenue under 124D.86, subdivision 3,114.14clauses (1), (2), and (3); 126C.41, subdivisions 1, 2, and 3,114.15paragraphs (4), (5), and (6); 126C.43, subdivision 2; and114.16126C.48, subdivision 6.114.17(c) For fiscal year 2002 and later years,In June ofeach114.18year2003, 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,8380 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),8380 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 section116.32126C.05, permits identification of membership attributable to116.33pupils participating in the program. The record system and116.34identification must ensure that the program will not have the116.35effect of increasing the total number of pupil units116.36attributable to an individual pupil as a result of a learning117.1year program. The record system must include the date the pupil117.2originally enrolled in a learning year program, the pupil's117.3grade level, the date of each grade promotion, the average daily117.4membership generated in each grade level, the number of credits117.5or 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 117.16accounts separate from all other district accountsa 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 pupilin 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 grades34 through 12scoreswho 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 school118.25district's limited English proficiency programs revenue for118.26fiscal year 2000 equals the state total limited English118.27proficiency programs revenue, minus the amount determined under118.28paragraph (b), times the ratio of the district's adjusted118.29limited English proficiency programs base revenue to the state118.30total adjusted limited English proficiency programs base revenue.118.31(b) Notwithstanding paragraph (a), if the limited English118.32proficiency programs base revenue for a district equals zero,118.33the limited English proficiency programs revenue equals the sum118.34of the following amounts, computed using current year data:118.35(1) 68 percent of the salary of one full-time equivalent118.36teacher for each 40 pupils of limited English proficiency119.1enrolled, or 68 percent of the salary of one-half of a full-time119.2teacher in a district with 20 or fewer pupils of limited English119.3proficiency enrolled; and119.4(2) for supplies and equipment purchased or rented for use119.5in the instruction of pupils of limited English proficiency an119.6amount equal to 47 percent of the sum actually spent by the119.7district but not to exceed an average of $47 in any one school119.8year for each pupil of limited English proficiency receiving119.9instruction.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 byJanuaryDecember 15 ofthe followingthat 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 2002,120.1a school district's basic skills revenue equals the sum of:120.2(1) compensatory revenue under subdivision 3; plus120.3(2) limited English proficiency revenue according to120.4section 124D.65, subdivision 5; plus120.5(3) $190 times the limited English proficiency pupil units120.6according to section 126C.05, subdivision 17; plus120.7(4) $22.50 times the number of adjusted marginal cost pupil120.8units 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 planor has122.20received an extension from the department to file a planto 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)8380 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 fiscal124.24year 2003, the commissioner shall pay to a district on the dates124.25indicated an amount computed as follows: the cumulative amount124.26guaranteed minus the sum of (a) the district's other district124.27receipts through the current payment, and (b) the aid and credit124.28payments through the immediately preceding payment. For124.29purposes of this computation, the payment dates and the124.30cumulative disbursement percentages are as follows:124.31Payment datePercentage124.32Payment 1July 15:5.1124.33Payment 2July 30:7.7124.34Payment 3August 15:16.9124.35Payment 4August 30:19.3124.36Payment 5September 15:21.8125.1Payment 6September 30:24.3125.2Payment 7October 15:26.3125.3Payment 8October 30:28.3125.4Payment 9November 15:32.8125.5Payment 10November 30:39.1125.6Payment 11December 15:42.4125.7Payment 12December 30:45.6125.8Payment 13January 15:50.5125.9Payment 14January 30:55.0125.10Payment 15February 15:60.2125.11Payment 16February 28:65.0125.12Payment 17March 15:69.7125.13Payment 18March 30:74.3125.14Payment 19April 15:78.3125.15Payment 20April 30:84.2125.16Payment 21May 15:88.7125.17Payment 22May 30:93.3125.18Payment 23June 20:100.0125.19(b) In addition to the amounts paid under paragraph (a),125.20for fiscal year 2003, the commissioner shall pay to a district125.21on the dates indicated an amount computed as follows:125.22Payment 3August 15: the final adjustment for the125.23prior fiscal year for the state paid125.24property tax credits established in125.25section 273.1392125.26Payment 7October 15: one-half of the final adjustment125.27for the prior fiscal year for all aid125.28entitlements except state paid property125.29tax credits125.30Payment 8October 30: one-half of the final adjustment125.31for the prior fiscal year for all aid125.32entitlements except state paid property125.33tax credits125.34(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 15:5.15.5 126.8 Payment 2 July 30:7.78.0 126.9 Payment 3 August 15:16.917.5 126.10 Payment 4 August 30:19.320.0 126.11 Payment 5 September 15:21.822.5 126.12 Payment 6 September 30:24.325.0 126.13 Payment 7 October 15:26.327.0 126.14 Payment 8 October 30:28.330.0 126.15 Payment 9 November 15:30.332.5 126.16 Payment 10 November 30:35.036.5 126.17 Payment 11 December 15:40.042.0 126.18 Payment 12 December 30:43.045.0 126.19 Payment 13 January 15:48.050.0 126.20 Payment 14 January 30:52.054.0 126.21 Payment 15 February 15:56.058.0 126.22 Payment 16 February 28:61.063.0 126.23 Payment 17 March 15:66.068.0 126.24 Payment 18 March 30:72.074.0 126.25 Payment 19 April 15:76.078.0 126.26 Payment 20 April 30:83.085.0 126.27 Payment 21 May 15:88.090.0 126.28 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 2004and 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 at8380 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 at8380 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 to8380 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 3,8380 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 a1720 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 producebetweenfiveand sixpercent 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 shallreport the131.23amount of the excess to the county auditor and the auditor shall131.24 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 YEARS20042006 TO20082010 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 YEAR20042006.] For fiscal year 132.3020042006 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 year20042006. 132.34 Subd. 3. [FISCAL YEAR20052007.] For fiscal year 132.3520052007 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 year20052007. 133.3 Subd. 4. [FISCAL YEAR20062008.] For fiscal year 133.420062008 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 year20062008. 133.8 Subd. 5. [FISCAL YEAR20072009.] For fiscal year 133.920072009 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 year20072009. 133.13 Subd. 6. [FISCAL YEAR20082010.] For fiscal year 133.1420082010 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 year20082010. 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 foranyfiscal year 2004 and later shall 139.28 not exceed the lesser of (a)9080 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 school140.15may apply for a grant to receive the aid portion of integration140.16revenue under section 124D.86, subdivision 3, for enrolled140.17students who are residents of a district that is eligible for140.18integration revenue. The commissioner shall determine grant140.19recipients and may adopt application guidelines. The grants140.20must be competitively determined and must demonstrate that140.21enrolling pupils in the charter school contributes to140.22desegregation or integration purposes as determined by the140.23commissioner. If the charter school has elected not to provide140.24transportation under section 124D.10, subdivision 16, the aid140.25shall be reduced by the amount per pupil unit specified for the140.26district where the charter school is located under section140.27123B.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 fundtransitioncareer 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 1995.141.7Base year for later fiscal yearsmeans 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" means60 percent for fiscal141.18year 1996, 70 percent for fiscal year 1997, 80 percent for141.19fiscal year 1998, 90 percent for fiscal year 1999, and100 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) Thetransition141.30program-disabledtransition-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 nationalvocationalcareer 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 percent143.34for fiscal year 2006and 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 percent144.6for fiscal year 2006and 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 in20032004 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 foralternative teacher compensationprincipled pay practices 154.1 aid undersections 122A.414 and 122A.415section 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;and154.20 (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 plan154.23must 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.The154.36process 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 fiscal158.36year 2003, $40,075,000$33,477,000 in fiscal year2004,2006 159.1 and$39,774,000$30,048,000 in fiscalyears 2005year 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 safety160.11hazards,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 and160.19industryMinnesota 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-YEARFACILITY PLAN.] (a) A district 162.10 qualifyingdistrictunder 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 theplanplans; 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, upon162.36approval of its board and the commissioner,may issue general 163.1 obligation bonds under this section to financeapproved163.2 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 board163.32approval,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 Thecommissioner of children, families, and learningboard 181.8 shall designate an officer or employee of thedepartment of181.9children, families, and learningboard 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 aidsuchgovernmental units in the formulation 181.14 ofsuchagreements; makesuchrecommendations 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.] Thedepartmentboard 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.] 181.27ItThe 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.]ItThe 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 andthe181.35Spanish-speakingpeople 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.]ItThe 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.]ItThe 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.]ItThe 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)Thecommissionerboard 182.18 shallpromulgateadopt rules consistent with sections 134.32 to 182.19 134.35 governing: 182.20 (1) applications forthesegrants under this section; and 182.21 (2)computation formulas for determining the amounts of182.22establishment grants and regional library basic system support182.23grants; and182.24(3)eligibility criteria for grants. 182.25(b) To the extent allowed under federal law, a construction182.26grant applicant, in addition to the points received under182.27Minnesota Rules, part 3530.2632, shall receive an additional182.28five points if the construction grant is for a project combining182.29public library services and school district library services at182.30a 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 commissionerof children, families, and learning186.2 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 eachprojectfederally 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 must186.14be funded at a per child rate equal to its contracted, federally186.15funded base level for program accounts 20, 22, and 25 at the186.16start of the fiscal year.In allocating funds under this 186.17 paragraph, the commissionerof children, families, and learning186.18 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 year19932002.The commissioner may provide additional186.21funding to grantees for start-up costs incurred by grantees due186.22to 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, and186.25the number of low-income children that must be served with the186.26allocation. Each grantee mustnotify thepresent a work plan to 186.27 the commissioneroffor 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 may187.5be used to provide grants to local Head Start agencies to187.6provide funds for innovative programs designed either to target187.7Head Start resources to particular at-risk groups of children or187.8to provide services in addition to those currently allowable187.9under federal Head Start regulations. The commissioner must187.10award funds for innovative programs under this paragraph on a187.11competitive 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 commissionerof children, families, and187.16learningshall comply with federal regulations governing the 187.17 federal Head Start program, except forinnovative programs187.18funded 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, and187.21except that when. If a state statute orregulationrule 187.22 conflicts with a federal statute or regulation, the state 187.23 statute orregulationrule 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 of25188.2percent of the prior year annual revenuethe 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 thepriorcurrent year under subdivision 188.10 4 to the district's revenue for thepriorcurrent year under 188.11 subdivision 1. The levy reduction equals the excess reserve 188.12 amount minus the aid reduction.The commissioner must188.13reallocate aid and levy reduced under this subdivision to other188.14eligible early childhood family education programs in proportion188.15to each district's revenue for the prior year under subdivision188.161.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 of25 percent of189.4the prior year annual revenuethe 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 reduced189.8under this subdivision to other eligible school readiness189.9programs in proportion to each district's aid for the prior year189.10under 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 193.3620012003 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)1.08the 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 2and, 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 year20022004 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 of17the 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 195.34according to the schedule in this subdivision. In calendar year195.352003, the commissioner must audit one-half of approved adult195.36basic education programs that received aid for fiscal year 2002,196.1and in calendar year 2004, the commissioner must audit the196.2remaining unaudited programs for aid received in fiscal year196.32003. Beginning with fiscal year 2005, the commissioner must,196.4at a minimum, audit each adult basic education program once196.5every 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 feein an197.12amount set by the board of teaching by ruleof $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, the198.3commissioner may appoint two deputy commissioners who shall198.4serve in the unclassified service.The commissioner shallalso198.5 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 closedwithout 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. 203.16The commissioner of children, families, and learning shall203.17not close a school or deny any state aids to a district for its203.18elementary schools because of enrollment limitations classified203.19in 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 theMinnesotaAmerican Indian 203.24scholarshipeducation 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 receive203.30instruction for more than or less than the daily number of hours203.31required by the rules of the commissioner of children, families,203.32and learning. However, a pupil must receive instruction each203.33year for at least the total number of instructional hours203.34required 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 or204.8less than the daily number of hours required by the rules of the204.9commissioner of children, families, and learning. However, the204.10pupil must receive instruction each year for at least the total204.11number 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: 204.30If the referendum revenue previously approved in the204.31preexisting district is authorized as a tax rate, the referendum204.32revenue in the enlarged district is the tax rate times the net204.33tax capacity of the enlarged district. If referendum revenue204.34previously approved in the preexisting district is authorized as204.35revenue 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 is205.3authorized both as a tax rate and as revenue per resident pupil205.4unit, the referendum revenue in the enlarged district shall be205.5the sum of both plus any referendum revenue in the preexisting205.6district 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 thenet tax capacity raterevenue 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 revenue205.29authorizations for each of the component districts were limited205.30to 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 of205.34any component district is not limited to a specified number of205.35years, the referendum revenue authorization for the newly205.36created district shall not be limited to a specified number of206.1years.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 revenue206.18authorizations for each of the component districts were limited206.19to 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 of206.23any component district is not limited to a specified number of206.24years, the referendum revenue authorization for the newly206.25created district shall not be limited to a specified number of206.26years.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. [LEASEROOMS OR BUILDINGSREAL PROPERTY.] When 206.32 necessary, the board may leaserooms or buildingsreal 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 organizationa schoolhouse207.2 real property that is not needed for school purposes, or part of 207.3a schoolhousethe property that is not needed for school 207.4 purposes if the board determines that leasing part ofa207.5schoolhousethe property does not interfere with the educational 207.6 programs taking placein the rest of the buildingon 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 capitalexpenditure207.19fundaccount. All net proceeds of the lease in districts 207.20 without outstanding bonds shall be deposited in the operating 207.21 capitalexpenditure fundaccount of the district. 207.22 (c) The board may make capital improvements, including207.23fixtures, to a schoolhouse or a portion thereofto the real 207.24 property, not exceeding in cost the replacement value of 207.25 theschoolhouseproperty, to facilitate its rental, and the 207.26 lease ofanthe improvedschoolhouseproperty, 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 capitalexpenditure fundaccount 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 ADOWN PAYMENTCAPITAL PROJECT 208.12 REFERENDUM ACCOUNT.] A district may create adown payment208.13 capital project referendum account as a separate account in 208.14 its general fund or its building construction fund. All 208.15 proceeds from thedown paymentcapital project levy must be 208.16 deposited in the capitalexpenditure fund and transferred to208.17this accountproject 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 thedown paymentcapital 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 thedown payment208.26 capital project referendum account must be usedas a down208.27paymentfor thefuturecosts 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 PAYMENTCAPITAL 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 fundsfor a down paymentfor 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 thedown paymentcapital 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 thedown paymentcapital 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 thedown paymentcapital 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 thedown paymentcapital 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. [EXCESSBUILDING CONSTRUCTION FUNDLEVY 210.9 PROCEEDS.] Any funds remaining in thedown paymentcapital 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; 211.22and211.23 (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 participationon 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 subdivision45, 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 subdivision1413 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 the216.7transition 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 transportation216.27transition allowance for the district in which the charter216.28school 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 thecommissionerMinnesota 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.74311.0017 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 insection218.10124D.453,subdivision612. 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 theofficedivision oflifework218.14developmentfederal 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 section300.503300.504. 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 there222.32is no secondary school in the district that has pupils enrolled222.33in at least the 10th, 11th, and 12th grades, and the school is222.34at least 19 miles from the next nearest school, the commissioner222.35must designate one school in the district as a high school for222.36the 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 of224.7the transition revenue adjustment under section 126C.10,224.8subdivision 20, attributable to the compensatory transition224.9allowance 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 thelevyrevenue amount mustbe227.28based upon the dollar amount, local tax rate, orstate the 227.29 amount per resident marginal cost pupil unit, that was stated to227.30be the basis for the initial authorizationby 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 bereceivedavailable 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 where228.23the general education levy is determined according to section228.24126C.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 of1.98229.2 2.67 percent times the adjusted net tax capacity of the district 229.3 for the preceding year for taxes payable in20002002 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 of1.98229.7 2.67 percent times the adjusted net tax capacity of the district 229.8 for the preceding year for taxes payable in20002002 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 this229.23subdivision must certify the maximum levy allowable under229.24section 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 tosection 126C.13, subdivision 2chapters 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 230.1419942003 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 astatewide property taxpayment from the general fund in the 230.19 state treasury according to section 16A.641, as would be 230.20 required under Minnesota Statutes1992, section124.46126C.72, 230.21 subdivision 3. A district's levy that is adjusted under this 230.22 section must not be reduced below22.330.1 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 1,20012002, a levy in total dollar 230.33 amount computed at a rate of3040 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 in1991 and thereafter2001 or 231.1 earlier, or granted a capital loanafterbefore January1231.2 2,19902001, a levy in a total dollar amount computed at a rate 231.3 of2432 percent of adjusted net tax capacity for taxes payable 231.4 in19912002 and thereafter; 231.5(c) in any district granted a debt service loan after July231.631, 1981, or granted a capital loan which is approved after July231.731, 1981, a levy in a total dollar amount computed as a tax rate231.8of 21.92 percent on the adjusted net tax capacity for taxes231.9payable 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 than3040 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, or450607 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, or450607 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 tocalculate general education aid233.28adjustments under paragraph (a), (b), or (c). The tuition must233.29be equal to the greater of the average general education revenue233.30per pupil unit attributable to the pupil, or the actual cost of233.31providing the instruction, excluding transportation costs, if233.32the pupil meets the requirements of section 125A.02 or233.33125A.51have 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 transportation234.21transition 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 general235.10education aid according to that section for the second preceding235.11year;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 toany of those sectionsthat 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 general236.8education aid according to that section for the second preceding236.9year;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 toany of those sectionsthat 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 of102144 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 bythe commissioner of children, families, and learning237.12andthe commissioner of public safety must include instruction 237.13 on railroad-highway grade crossing safety. Thecommissioner of237.14children, families, and learning and thecommissioner 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 thecommissioner of children, families, and237.31learning andstate 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. Theassistant commissionerdirector of 238.13 children, families, and learning responsible forvocational238.14 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 tosection 126C.13chapters 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 foroutcome-based learningprograms that enhance the academic 240.27 quality of the district's curriculum.The outcome-based240.28learning programs must be approved by the commissioner of240.29children, 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 generaleducation241.25 fund levy authorized pursuant tosection 126C.13chapters 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 generaleducationfund 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 toa gross tax capacity rate of .17 percent242.15for taxes payable in 1990 ora net tax capacity rate of.21.34 242.16 percent for taxes payable in19912002 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 MFIPor families243.32participating in work first under chapter 256K who meet the243.33requirements 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 subdivision2a or3, 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 subdivision2a3. Evaluation by the peer review committee 244.15 charged with evaluating probationary teachers under subdivision 244.162a3 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, subdivision109, 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,and245.26with the approval of the school bus safety advisory committee245.27 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 section124D.07 or124D.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 section120A.22, subdivision 5120A.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 248.16124.11124D.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 section124D.453 or125A.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 thissubdivisionsection, 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 subdivision2324, 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 schedule250.31in 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 14.05,251.16subdivision 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 section124D.85251.32 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 oversee252.7school transportation safety, the commissioner of public safety252.8shall establish a school bus safety advisory committee according252.9to 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; and252.27(5) providing information requested by the school bus252.28safety 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,252.32in 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.When253.11appropriate, the school bus safety advisory committee shall253.12recommend to the education committees of the legislature253.13modifications to the standards upon which the school bus253.14inspection 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.The253.27school bus safety advisory committee shall annually review all253.28variances that are granted under this subdivision and consider253.29whether to recommend modifications to the Minnesota school bus253.30equipment 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 operationsconducted before June 30, 2003, in compliance with256.11paragraph (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 area257.27of the district is the metropolitan area excluding the part of257.28Carver county west of the west line of township 116N, range 24W,257.29township 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 membertwo 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 ofdisease bearing mosquito258.31encephalitis outbreaksmosquito 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, approval259.5may, if the commissioner of natural resources considers it259.6necessary, be denied, modified, or revoked by the commissioner259.7of natural resources at any time upon written notice to the259.8commission.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.] 259.12No contractContracts for the purchase of materials, 259.13 supplies, and equipmentcosting more than $5,000 shall be made259.14 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 commission259.34by an affirmative vote of five-sixths of the voting power of the259.35commission shall declare that an emergency exists requiring the259.36immediate purchase of materials or supplies at a cost in excess260.1of $5,000 but not to exceed $10,000 in amount, or in making260.2emergency repairs, it shall not be necessary to advertise for260.3bids, but such material, equipment, and supplies may be260.4purchased in the open market at the lowest price available260.5without securing formal competitive bids. An emergency as used260.6in this section shall be an unforeseen circumstance or condition260.7which 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 in260.14subdivision 2,Each commissioner, including the officers of the 260.15 commissionshall, may be reimbursed for actual and necessary 260.16 expenses incurred in the performance of duties.The chair shall260.17be paid a per diem for attending meetings, monthly, executive,260.18and special, and each commissioner shall be paid a per diem for260.19attending meetings, monthly, executive, and special, which per260.20diem shall be established by the commission. A commissioner who260.21receives a per diem from the commissioner's county shall not be260.22paid a per diem for the same day by the commission for attending260.23meetings of the commission.The annual budget of the commission 260.24 shall provide as a separate account anticipated expenditures for 260.25per 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 finance261.20shall restrict part or all of the balance before reserves in the261.21general fund as may be necessary to fund the cash flow account,261.22up to $350,000,000.261.23(b) TheAmountsrestricted are transferred toin the cash 261.24 flow accountandshall 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.] OnJune 30July 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 finance261.34shall transfer $12,300,000 to the budget reserve account in the261.35general fund. On June 30, 2005, the commissioner of finance261.36shall transfer $12,000,000 to the budget reserve account in the262.1general 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 tothe262.10budget reserve until the total amount in the account equals262.11$653,000,000the 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 ora municipalan 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 tickets266.22to the premises of or events sponsored by the state agricultural266.23society and conducted on the state fairgrounds during the period266.24of the annual state fair may be retained by the state266.25agricultural society if the funds are used and matched as266.26required 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 undersectionsections 297A.75, subdivision 266.34 1,clauses (1), (2), (3), and (5), interest is computed from the266.35date the refund claim is filed with the commissioner. For266.36refunds payable under sectionand 289A.50, subdivision 2a, 267.1 interest is computed fromthe 20th day of the month following267.2the month of the invoice date for the purchase which is the267.3subject of the refund, if the refund claim includes a detailed267.4schedule of purchases made during each of the periods in the267.5claim. If the refund claim submitted does not contain a267.6schedule reflecting purchases made in each period, interest is267.7computed from the date the claim was filed90 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 fromthe date the refund claim is267.15filed for taxes paid under subdivision 1, clauses (1) to (3),267.16and (5), and from 60 days after the date the refund claim is267.17filed with the commissioner for claims filed under subdivision267.181, 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 on269.34a property tax statement as a county charge for solid waste269.35management service or as a surcharge, fee, or charge established269.36pursuant to section 400.08, subdivision 3, or section 473.811,270.1subdivision 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.