HF 1998

as introduced - 81st Legislature (1999 - 2000) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to taxes; individual; sales; property; motor 
  1.3             vehicle registration; reducing the tax rates; 
  1.4             increasing the dependent care income credit; providing 
  1.5             a marriage penalty subtraction and credit; increasing 
  1.6             the alternative minimum tax exemption; providing a 
  1.7             home care credit; increasing the valuation limit for 
  1.8             the first tier of residential homestead property and 
  1.9             agricultural homestead property; increasing the 
  1.10            education homestead credit rate; providing for deposit 
  1.11            of the motor vehicle sales tax in the highway user 
  1.12            trust fund; proposing a constitutional amendment 
  1.13            requiring dedication of one-half of motor vehicle 
  1.14            sales tax to the highway user trust fund; transferring 
  1.15            money from the general fund to the highway user trust 
  1.16            fund; appropriating money; amending Minnesota Statutes 
  1.17            1998, sections 16A.152, subdivision 2; 168.013, 
  1.18            subdivision 1a; 273.13, subdivisions 22 and 23; 
  1.19            273.1382, subdivision 1; 273.1398, subdivision 1a; 
  1.20            290.01, subdivision 19b; 290.06, subdivisions 2c and 
  1.21            2d; 290.067, subdivisions 2 and 2b; 290.091, 
  1.22            subdivisions 1, 2, 3, and 6; 290A.03, subdivisions 11 
  1.23            and 13; 297A.02, subdivision 1, and by adding a 
  1.24            subdivision; and 297B.09, subdivision 1; proposing 
  1.25            coding for new law in Minnesota Statutes, chapters 
  1.26            174; and 290; repealing Minnesota Statutes 1998, 
  1.27            section 273.1382, subdivision 1a. 
  1.28  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.29                             ARTICLE 1
  1.30                       INDIVIDUAL INCOME TAX
  1.31     Section 1.  Minnesota Statutes 1998, section 290.01, 
  1.32  subdivision 19b, is amended to read: 
  1.33     Subd. 19b.  [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 
  1.34  individuals, estates, and trusts, there shall be subtracted from 
  1.35  federal taxable income: 
  1.36     (1) interest income on obligations of any authority, 
  2.1   commission, or instrumentality of the United States to the 
  2.2   extent includable in taxable income for federal income tax 
  2.3   purposes but exempt from state income tax under the laws of the 
  2.4   United States; 
  2.5      (2) if included in federal taxable income, the amount of 
  2.6   any overpayment of income tax to Minnesota or to any other 
  2.7   state, for any previous taxable year, whether the amount is 
  2.8   received as a refund or as a credit to another taxable year's 
  2.9   income tax liability; 
  2.10     (3) the amount paid to others, less the credit allowed 
  2.11  under section 290.0674, not to exceed $1,625 for each dependent 
  2.12  in grades kindergarten to 6 and $2,500 for each dependent in 
  2.13  grades 7 to 12, for tuition, textbooks, and transportation of 
  2.14  each dependent in attending an elementary or secondary school 
  2.15  situated in Minnesota, North Dakota, South Dakota, Iowa, or 
  2.16  Wisconsin, wherein a resident of this state may legally fulfill 
  2.17  the state's compulsory attendance laws, which is not operated 
  2.18  for profit, and which adheres to the provisions of the Civil 
  2.19  Rights Act of 1964 and chapter 363.  For the purposes of this 
  2.20  clause, "tuition" includes fees or tuition as defined in section 
  2.21  290.0674, subdivision 1, clause (1).  As used in this clause, 
  2.22  "textbooks" includes books and other instructional materials and 
  2.23  equipment used in elementary and secondary schools in teaching 
  2.24  only those subjects legally and commonly taught in public 
  2.25  elementary and secondary schools in this state.  Equipment 
  2.26  expenses qualifying for deduction includes expenses as defined 
  2.27  and limited in section 290.0674, subdivision 1, clause (3).  
  2.28  "Textbooks" does not include instructional books and materials 
  2.29  used in the teaching of religious tenets, doctrines, or worship, 
  2.30  the purpose of which is to instill such tenets, doctrines, or 
  2.31  worship, nor does it include books or materials for, or 
  2.32  transportation to, extracurricular activities including sporting 
  2.33  events, musical or dramatic events, speech activities, driver's 
  2.34  education, or similar programs; 
  2.35     (4) to the extent included in federal taxable income, 
  2.36  distributions from a qualified governmental pension plan, an 
  3.1   individual retirement account, simplified employee pension, or 
  3.2   qualified plan covering a self-employed person that represent a 
  3.3   return of contributions that were included in Minnesota gross 
  3.4   income in the taxable year for which the contributions were made 
  3.5   but were deducted or were not included in the computation of 
  3.6   federal adjusted gross income.  The distribution shall be 
  3.7   allocated first to return of contributions until the 
  3.8   contributions included in Minnesota gross income have been 
  3.9   exhausted.  This subtraction applies only to contributions made 
  3.10  in a taxable year prior to 1985; 
  3.11     (5) income as provided under section 290.0802; 
  3.12     (6) the amount of unrecovered accelerated cost recovery 
  3.13  system deductions allowed under subdivision 19g; 
  3.14     (7) to the extent included in federal adjusted gross 
  3.15  income, income realized on disposition of property exempt from 
  3.16  tax under section 290.491; 
  3.17     (8) to the extent not deducted in determining federal 
  3.18  taxable income, the amount paid for health insurance of 
  3.19  self-employed individuals as determined under section 162(l) of 
  3.20  the Internal Revenue Code, except that the 25 percent limit does 
  3.21  not apply.  If the taxpayer deducted insurance payments under 
  3.22  section 213 of the Internal Revenue Code of 1986, the 
  3.23  subtraction under this clause must be reduced by the lesser of: 
  3.24     (i) the total itemized deductions allowed under section 
  3.25  63(d) of the Internal Revenue Code, less state, local, and 
  3.26  foreign income taxes deductible under section 164 of the 
  3.27  Internal Revenue Code and the standard deduction under section 
  3.28  63(c) of the Internal Revenue Code; or 
  3.29     (ii) the lesser of (A) the amount of insurance qualifying 
  3.30  as "medical care" under section 213(d) of the Internal Revenue 
  3.31  Code to the extent not deducted under section 162(1) of the 
  3.32  Internal Revenue Code or excluded from income or (B) the total 
  3.33  amount deductible for medical care under section 213(a); 
  3.34     (9) the exemption amount allowed under Laws 1995, chapter 
  3.35  255, article 3, section 2, subdivision 3; 
  3.36     (10) to the extent included in federal taxable income, 
  4.1   postservice benefits for youth community service under section 
  4.2   124D.42 for volunteer service under United States Code, title 
  4.3   42, section 5011(d), as amended; 
  4.4      (11) to the extent not subtracted under clause (1), the 
  4.5   amount of income or gain included in federal taxable income 
  4.6   under section 1366 of the Internal Revenue Code flowing from a 
  4.7   corporation that has a valid election in effect for the taxable 
  4.8   year under section 1362 of the Internal Revenue Code which is 
  4.9   not allowed to be an "S" corporation under section 290.9725; 
  4.10     (12) in the year stock of a corporation that had made a 
  4.11  valid election under section 1362 of the Internal Revenue Code 
  4.12  but was not an "S" corporation under section 290.9725 is sold or 
  4.13  disposed of in a transaction taxable under the Internal Revenue 
  4.14  Code, the amount of difference between the Minnesota basis of 
  4.15  the stock under subdivision 19f, paragraph (m), and the federal 
  4.16  basis if the Minnesota basis is higher than the shareholder's 
  4.17  federal basis; and 
  4.18     (13) an amount equal to an individual's, trust's, or 
  4.19  estate's net federal income tax liability for the tax year that 
  4.20  is attributable to items of income, expense, gain, loss, or 
  4.21  credits federally flowing to the taxpayer in the tax year from a 
  4.22  corporation, having a valid election in effect for federal tax 
  4.23  purposes under section 1362 of the Internal Revenue Code but not 
  4.24  treated as an "S" corporation for state tax purposes under 
  4.25  section 290.9725; and 
  4.26     (14) for married joint filers, an amount equal to (but not 
  4.27  less than zero): 
  4.28     (i) the basic standard deduction for unmarried individuals 
  4.29  under section 63(c)(2)(C) of the Internal Revenue Code for the 
  4.30  taxable year multiplied by two, minus 
  4.31     (ii) the basic standard deduction for a married joint 
  4.32  return under section 63(c)(2)(A) for the taxable year, minus 
  4.33     (iii) the greater of (A) the amount of itemized deductions 
  4.34  allowed for the taxable year under sections 63(d) and 68 of the 
  4.35  Internal Revenue Code, less the deduction under section 
  4.36  164(a)(3) of the Internal Revenue Code for state income taxes 
  5.1   and the basic standard deduction under section 63(c)(2)(A) or 
  5.2   (B) zero. 
  5.3      Sec. 2.  Minnesota Statutes 1998, section 290.06, 
  5.4   subdivision 2c, is amended to read: 
  5.5      Subd. 2c.  [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 
  5.6   AND TRUSTS.] (a) The income taxes imposed by this chapter upon 
  5.7   married individuals filing joint returns and surviving spouses 
  5.8   as defined in section 2(a) of the Internal Revenue Code must be 
  5.9   computed by applying to their taxable net income the following 
  5.10  schedule of rates: 
  5.11     (1) On the first $19,910 $25,220, 6 5.4 percent; 
  5.12     (2) On all over $19,910 $25,220, but not 
  5.13  over $79,120 $100,200, 8 percent; 
  5.14     (3) On all over $79,120 $100,200, 8.5 percent. 
  5.15     Married individuals filing separate returns, estates, and 
  5.16  trusts must compute their income tax by applying the above rates 
  5.17  to their taxable income, except that the income brackets will be 
  5.18  one-half of the above amounts.  
  5.19     (b) The income taxes imposed by this chapter upon unmarried 
  5.20  individuals must be computed by applying to taxable net income 
  5.21  the following schedule of rates: 
  5.22     (1) On the first $13,620 $17,250, 6 5.4 percent; 
  5.23     (2) On all over $13,620 $17,250, but not 
  5.24  over $44,750 $56,680, 8 percent; 
  5.25     (3) On all over $44,750 $56,680, 8.5 percent. 
  5.26     (c) The income taxes imposed by this chapter upon unmarried 
  5.27  individuals qualifying as a head of household as defined in 
  5.28  section 2(b) of the Internal Revenue Code must be computed by 
  5.29  applying to taxable net income the following schedule of rates: 
  5.30     (1) On the first $16,770 $21,240, 6 5.4 percent; 
  5.31     (2) On all over $16,770 $21,240, but not 
  5.32  over $67,390 $85,350, 8 percent; 
  5.33     (3) On all over $67,390 $85,350, 8.5 percent. 
  5.34     (d) In lieu of a tax computed according to the rates set 
  5.35  forth in this subdivision, the tax of any individual taxpayer 
  5.36  whose taxable net income for the taxable year is less than an 
  6.1   amount determined by the commissioner must be computed in 
  6.2   accordance with tables prepared and issued by the commissioner 
  6.3   of revenue based on income brackets of not more than $100.  The 
  6.4   amount of tax for each bracket shall be computed at the rates 
  6.5   set forth in this subdivision, provided that the commissioner 
  6.6   may disregard a fractional part of a dollar unless it amounts to 
  6.7   50 cents or more, in which case it may be increased to $1. 
  6.8      (e) An individual who is not a Minnesota resident for the 
  6.9   entire year must compute the individual's Minnesota income tax 
  6.10  as provided in this subdivision.  After the application of the 
  6.11  nonrefundable credits provided in this chapter, the tax 
  6.12  liability must then be multiplied by a fraction in which:  
  6.13     (1) the numerator is the individual's Minnesota source 
  6.14  federal adjusted gross income as defined in section 62 of the 
  6.15  Internal Revenue Code disregarding income or loss flowing from a 
  6.16  corporation having a valid election for the taxable year under 
  6.17  section 1362 of the Internal Revenue Code but which is not an 
  6.18  "S" corporation under section 290.9725 and increased by the 
  6.19  additions required under section 290.01, subdivision 19a, 
  6.20  clauses (1) and (9), after applying the allocation and 
  6.21  assignability provisions of section 290.081, clause (a), or 
  6.22  290.17; and 
  6.23     (2) the denominator is the individual's federal adjusted 
  6.24  gross income as defined in section 62 of the Internal Revenue 
  6.25  Code of 1986, increased by the amounts specified in section 
  6.26  290.01, subdivision 19a, clauses (1), (5), (6), (7), and (9), 
  6.27  and reduced by the amounts specified in section 290.01, 
  6.28  subdivision 19b, clauses (1), (11), and (12). 
  6.29     Sec. 3.  Minnesota Statutes 1998, section 290.06, 
  6.30  subdivision 2d, is amended to read: 
  6.31     Subd. 2d.  [INFLATION ADJUSTMENT OF BRACKETS.] (a) For 
  6.32  taxable years beginning after December 31, 1991 1999, the 
  6.33  minimum and maximum dollar amounts for each rate bracket for 
  6.34  which a tax is imposed in subdivision 2c shall be adjusted for 
  6.35  inflation by the percentage determined under paragraph (b).  For 
  6.36  the purpose of making the adjustment as provided in this 
  7.1   subdivision all of the rate brackets provided in subdivision 2c 
  7.2   shall be the rate brackets as they existed for taxable years 
  7.3   beginning after December 31, 1990 1998, and before January 
  7.4   1, 1992 2000.  The rate applicable to any rate bracket must not 
  7.5   be changed.  The dollar amounts setting forth the tax shall be 
  7.6   adjusted to reflect the changes in the rate brackets.  The rate 
  7.7   brackets as adjusted must be rounded to the nearest $10 amount.  
  7.8   If the rate bracket ends in $5, it must be rounded up to the 
  7.9   nearest $10 amount.  
  7.10     (b) The commissioner shall adjust the rate brackets and by 
  7.11  the percentage determined pursuant to the provisions of section 
  7.12  1(f) of the Internal Revenue Code, except that in section 
  7.13  1(f)(3)(B) the word "1990 1998" shall be substituted for the 
  7.14  word "1987 1992."  For 1991 2000, the commissioner shall then 
  7.15  determine the percent change from the 12 months ending on August 
  7.16  31, 1990 1998, to the 12 months ending on August 31, 1991 1999, 
  7.17  and in each subsequent year, from the 12 months ending on August 
  7.18  31, 1990 1998, to the 12 months ending on August 31 of the year 
  7.19  preceding the taxable year.  The determination of the 
  7.20  commissioner pursuant to this subdivision shall not be 
  7.21  considered a "rule" and shall not be subject to the 
  7.22  Administrative Procedure Act contained in chapter 14.  
  7.23     No later than December 15 of each year, the commissioner 
  7.24  shall announce the specific percentage that will be used to 
  7.25  adjust the tax rate brackets. 
  7.26     Sec. 4.  Minnesota Statutes 1998, section 290.067, 
  7.27  subdivision 2, is amended to read: 
  7.28     Subd. 2.  [LIMITATIONS.] The credit for expenses incurred 
  7.29  for the care of each dependent shall not exceed $720 in any 
  7.30  taxable year, and the total credit for all dependents of a 
  7.31  claimant shall not exceed $1,440 in a taxable year.  The maximum 
  7.32  total credit shall be is reduced according to the amount of the 
  7.33  income of the claimant and a spouse, if any, as follows:  
  7.34     (1) for married couples filing joint returns with income up 
  7.35  to $13,350 $35,460, $720 maximum for one dependent, $1,440 for 
  7.36  all dependents; and for claimants with income over 
  8.1   $13,350 $35,460, the maximum credit for one dependent shall be 
  8.2   is reduced by $18 for every $350 of additional income, $36 for 
  8.3   all dependents; or 
  8.4      (2) for all other claimants with income up to $17,730, $720 
  8.5   maximum for one dependent, $1,440 for all dependents and for 
  8.6   claimants with income over $17,730, the maximum credit for one 
  8.7   dependent is reduced by $18 for every $350 of additional income, 
  8.8   $36 for all dependents. 
  8.9      The commissioner shall construct and make available to 
  8.10  taxpayers tables showing the amount of the credit at various 
  8.11  levels of income and expenses.  The tables shall follow the 
  8.12  schedule contained in this subdivision, except that the 
  8.13  commissioner may graduate the transitions between expenses and 
  8.14  income brackets.  
  8.15     Sec. 5.  Minnesota Statutes 1998, section 290.067, 
  8.16  subdivision 2b, is amended to read: 
  8.17     Subd. 2b.  [INFLATION ADJUSTMENT.] The dollar amount of the 
  8.18  income threshold thresholds at which the maximum credit begins 
  8.19  to be reduced under subdivision 2 must be adjusted for 
  8.20  inflation.  The commissioner shall adjust the threshold amount 
  8.21  amounts by the percentage determined under section 290.06, 
  8.22  subdivision 2d, for the taxable year. 
  8.23     Sec. 6.  [290.0675] [MARRIAGE PENALTY CREDIT.] 
  8.24     Subdivision 1.  [CREDIT ALLOWED.] (a) A married couple 
  8.25  filing a joint return is allowed a credit against the tax 
  8.26  imposed under section 290.06.  The credit equals the difference 
  8.27  between: 
  8.28     (1) the tax imposed on the married couple's taxable income 
  8.29  under section 290.06, subdivision 2c, paragraph (a); and 
  8.30     (2) the sum of the (i) tax imposed under section 290.06, 
  8.31  subdivision 2c, paragraph (b), on a single person with taxable 
  8.32  income equal to the married couple's taxable income multiplied 
  8.33  by the ratio of the first spouse's wages to the married couple's 
  8.34  total wages, and (ii) the tax imposed under section 290.06, 
  8.35  subdivision 2c, paragraph (b), on a single person with taxable 
  8.36  income equal to the married couple's taxable income multiplied 
  9.1   by the ratio of the second spouse's wages to the married 
  9.2   couple's total wages. 
  9.3      (b) In no case is the credit less than zero. 
  9.4      Subd. 2.  [WAGES.] For purposes of this section, "wages" 
  9.5   means (1) wages as defined in section 290.92, subdivision 1, and 
  9.6   (2) self-employment income as defined in section 1402(b) of the 
  9.7   Internal Revenue Code. 
  9.8      Subd. 3.  [NONRESIDENTS AND PART-YEAR RESIDENTS.] For a 
  9.9   nonresident or part-year resident, the credit must be allocated 
  9.10  based on the percentage calculated under section 290.06, 
  9.11  subdivision 2c, paragraph (e). 
  9.12     Subd. 4.  [TABLES.] The commissioner shall construct and 
  9.13  make available to taxpayers a table or tables showing the 
  9.14  credits at various income levels for the two spouses.  The table 
  9.15  must follow the formula provided in this section, except the 
  9.16  commissioner may use averages to facilitate ease in claiming the 
  9.17  credits.  The commissioner may require taxpayers to use the 
  9.18  tables in claiming the credit.  
  9.19     Sec. 7.  Minnesota Statutes 1998, section 290.091, 
  9.20  subdivision 1, is amended to read: 
  9.21     Subdivision 1.  [IMPOSITION OF TAX.] In addition to all 
  9.22  other taxes imposed by this chapter a tax is imposed on 
  9.23  individuals, estates, and trusts equal to the excess (if any) of 
  9.24     (a) an amount equal to seven 6.8 percent of alternative 
  9.25  minimum taxable income after subtracting the exemption amount, 
  9.26  over 
  9.27     (b) the regular tax for the taxable year. 
  9.28     Sec. 8.  Minnesota Statutes 1998, section 290.091, 
  9.29  subdivision 2, is amended to read: 
  9.30     Subd. 2.  [DEFINITIONS.] For purposes of the tax imposed by 
  9.31  this section, the following terms have the meanings given: 
  9.32     (a) "Alternative minimum taxable income" means the sum of 
  9.33  the following for the taxable year: 
  9.34     (1) the taxpayer's federal alternative minimum taxable 
  9.35  income as defined in section 55(b)(2) of the Internal Revenue 
  9.36  Code; 
 10.1      (2) the taxpayer's itemized deductions allowed in computing 
 10.2   federal alternative minimum taxable income, but excluding: 
 10.3      (i) the Minnesota charitable contribution deduction; 
 10.4      (ii) the medical expense deduction; 
 10.5      (iii) the casualty, theft, and disaster loss deduction; and 
 10.6      (iv) the impairment-related work expenses of a disabled 
 10.7   person; 
 10.8      (3) for depletion allowances computed under section 613A(c) 
 10.9   of the Internal Revenue Code, with respect to each property (as 
 10.10  defined in section 614 of the Internal Revenue Code), to the 
 10.11  extent not included in federal alternative minimum taxable 
 10.12  income, the excess of the deduction for depletion allowable 
 10.13  under section 611 of the Internal Revenue Code for the taxable 
 10.14  year over the adjusted basis of the property at the end of the 
 10.15  taxable year (determined without regard to the depletion 
 10.16  deduction for the taxable year); 
 10.17     (4) to the extent not included in federal alternative 
 10.18  minimum taxable income, the amount of the tax preference for 
 10.19  intangible drilling cost under section 57(a)(2) of the Internal 
 10.20  Revenue Code determined without regard to subparagraph (E); 
 10.21     (5) to the extent not included in federal alternative 
 10.22  minimum taxable income, the amount of interest income as 
 10.23  provided by section 290.01, subdivision 19a, clause (1); 
 10.24     (6) amounts added to federal taxable income as provided by 
 10.25  section 290.01, subdivision 19a, clauses (5), (6), and (7); 
 10.26     less the sum of the amounts determined under the following 
 10.27  clauses (1) to (4): 
 10.28     (1) interest income as defined in section 290.01, 
 10.29  subdivision 19b, clause (1); 
 10.30     (2) an overpayment of state income tax as provided by 
 10.31  section 290.01, subdivision 19b, clause (2), to the extent 
 10.32  included in federal alternative minimum taxable income; 
 10.33     (3) the amount of investment interest paid or accrued 
 10.34  within the taxable year on indebtedness to the extent that the 
 10.35  amount does not exceed net investment income, as defined in 
 10.36  section 163(d)(4) of the Internal Revenue Code.  Interest does 
 11.1   not include amounts deducted in computing federal adjusted gross 
 11.2   income; and 
 11.3      (4) amounts subtracted from federal taxable income as 
 11.4   provided by section 290.01, subdivision 19b, clauses (11) and 
 11.5   (12). 
 11.6      In the case of an estate or trust, alternative minimum 
 11.7   taxable income must be computed as provided in section 59(c) of 
 11.8   the Internal Revenue Code. 
 11.9      (b) "Investment interest" means investment interest as 
 11.10  defined in section 163(d)(3) of the Internal Revenue Code. 
 11.11     (c) "Tentative minimum tax" equals seven 6.8 percent of 
 11.12  alternative minimum taxable income after subtracting the 
 11.13  exemption amount determined under subdivision 3. 
 11.14     (d) "Regular tax" means the tax that would be imposed under 
 11.15  this chapter (without regard to this section and section 
 11.16  290.032), reduced by the sum of the nonrefundable credits 
 11.17  allowed under this chapter.  
 11.18     (e) "Net minimum tax" means the minimum tax imposed by this 
 11.19  section. 
 11.20     (f) "Minnesota charitable contribution deduction" means a 
 11.21  charitable contribution deduction under section 170 of the 
 11.22  Internal Revenue Code to or for the use of an entity described 
 11.23  in section 290.21, subdivision 3, clauses (a) to (e).  When the 
 11.24  federal deduction for charitable contributions is limited under 
 11.25  section 170(b) of the Internal Revenue Code, the allowable 
 11.26  contributions in the year of contribution are deemed to be first 
 11.27  contributions to entities described in section 290.21, 
 11.28  subdivision 3, clauses (a) to (e). 
 11.29     Sec. 9.  Minnesota Statutes 1998, section 290.091, 
 11.30  subdivision 3, is amended to read: 
 11.31     Subd. 3.  [EXEMPTION AMOUNT.] (a) For purposes of computing 
 11.32  the alternative minimum tax, the initial exemption amount is the 
 11.33  exemption determined under section 55(d) of the Internal Revenue 
 11.34  Code, as amended through December 31, 1992, except that 
 11.35  alternative minimum taxable income as determined under this 
 11.36  section must be substituted in the computation of the phase out 
 12.1   under section 55(d)(3) equals the following amounts: 
 12.2      (1) for an individual filing a joint return or a surviving 
 12.3   spouse, $80,000; or 
 12.4      (2) for all other returns, one-half the amount determined 
 12.5   under clause (1). 
 12.6      (b) The exemption amount is determined by reducing the 
 12.7   initial exemption amount, as determined under paragraph (a), by 
 12.8   25 percent of the amount of alternative minimum taxable income 
 12.9   of the taxpayer that exceeds: 
 12.10     (1) for an individual filing a joint return or a surviving 
 12.11  spouse, $225,000; or 
 12.12     (2) for all other returns, one-half of the amount 
 12.13  determined under clause (1). 
 12.14     Sec. 10.  Minnesota Statutes 1998, section 290.091, 
 12.15  subdivision 6, is amended to read: 
 12.16     Subd. 6.  [CREDIT FOR PRIOR YEARS' LIABILITY.] (a) A credit 
 12.17  is allowed against the tax imposed by this chapter on 
 12.18  individuals, trusts, and estates equal to the minimum tax credit 
 12.19  for the taxable year.  The minimum tax credit equals the 
 12.20  adjusted net minimum tax for taxable years beginning after 
 12.21  December 31, 1988, reduced by the minimum tax credits allowed in 
 12.22  a prior taxable year.  The credit may not exceed the excess (if 
 12.23  any) for the taxable year of 
 12.24     (1) the regular tax, over 
 12.25     (2) the greater of (i) the tentative alternative minimum 
 12.26  tax, or (ii) zero. 
 12.27     (b) The adjusted net minimum tax for a taxable year equals 
 12.28  the lesser of the net minimum tax or the excess (if any) of 
 12.29     (1) the tentative minimum tax, over 
 12.30     (2) seven 6.8 percent of the sum of 
 12.31     (i) adjusted gross income as defined in section 62 of the 
 12.32  Internal Revenue Code, 
 12.33     (ii) interest income as defined in section 290.01, 
 12.34  subdivision 19a, clause (1), 
 12.35     (iii) the amount added to federal taxable income as 
 12.36  provided by section 290.01, subdivision 19a, clauses (5), (6), 
 13.1   and (7), 
 13.2      (iv) interest on specified private activity bonds, as 
 13.3   defined in section 57(a)(5) of the Internal Revenue Code, to the 
 13.4   extent not included under clause (ii), 
 13.5      (v) depletion as defined in section 57(a)(1), determined 
 13.6   without regard to the last sentence of paragraph (1), of the 
 13.7   Internal Revenue Code, less 
 13.8      (vi) the deductions allowed in computing alternative 
 13.9   minimum taxable income provided in subdivision 2, paragraph (a), 
 13.10  clause (2) of the first series of clauses and clauses (1), (2), 
 13.11  (3), and (4) of the second series of clauses, and 
 13.12     (vii) the exemption amount determined under subdivision 3. 
 13.13     In the case of an individual who is not a Minnesota 
 13.14  resident for the entire year, adjusted net minimum tax must be 
 13.15  multiplied by the fraction defined in section 290.06, 
 13.16  subdivision 2c, paragraph (e).  In the case of a trust or 
 13.17  estate, adjusted net minimum tax must be multiplied by the 
 13.18  fraction defined under subdivision 4, paragraph (b). 
 13.19     Sec. 11.  [EFFECTIVE DATE.] 
 13.20     Sections 1 to 10 are effective for taxable years beginning 
 13.21  after December 31, 1998. 
 13.22                             ARTICLE 2
 13.23                            PROPERTY TAX
 13.24     Section 1.  Minnesota Statutes 1998, section 273.13, 
 13.25  subdivision 22, is amended to read: 
 13.26     Subd. 22.  [CLASS 1.] (a) Except as provided in subdivision 
 13.27  23, real estate which is residential and used for homestead 
 13.28  purposes is class 1.  The market value of class 1a property must 
 13.29  be determined based upon the value of the house, garage, and 
 13.30  land.  
 13.31     The first $75,000 $115,000 of market value of class 1a 
 13.32  property has a net class rate of one percent of its market 
 13.33  value; and the market value of class 1a property that 
 13.34  exceeds $75,000 $115,000 has a class rate of 1.7 percent of its 
 13.35  market value.  
 13.36     (b) Class 1b property includes homestead real estate or 
 14.1   homestead manufactured homes used for the purposes of a 
 14.2   homestead by 
 14.3      (1) any blind person, or the blind person and the blind 
 14.4   person's spouse; or 
 14.5      (2) any person, hereinafter referred to as "veteran," who: 
 14.6      (i) served in the active military or naval service of the 
 14.7   United States; and 
 14.8      (ii) is entitled to compensation under the laws and 
 14.9   regulations of the United States for permanent and total 
 14.10  service-connected disability due to the loss, or loss of use, by 
 14.11  reason of amputation, ankylosis, progressive muscular 
 14.12  dystrophies, or paralysis, of both lower extremities, such as to 
 14.13  preclude motion without the aid of braces, crutches, canes, or a 
 14.14  wheelchair; and 
 14.15     (iii) has acquired a special housing unit with special 
 14.16  fixtures or movable facilities made necessary by the nature of 
 14.17  the veteran's disability, or the surviving spouse of the 
 14.18  deceased veteran for as long as the surviving spouse retains the 
 14.19  special housing unit as a homestead; or 
 14.20     (3) any person who: 
 14.21     (i) is permanently and totally disabled and 
 14.22     (ii) receives 90 percent or more of total income from 
 14.23     (A) aid from any state as a result of that disability; or 
 14.24     (B) supplemental security income for the disabled; or 
 14.25     (C) workers' compensation based on a finding of total and 
 14.26  permanent disability; or 
 14.27     (D) social security disability, including the amount of a 
 14.28  disability insurance benefit which is converted to an old age 
 14.29  insurance benefit and any subsequent cost of living increases; 
 14.30  or 
 14.31     (E) aid under the federal Railroad Retirement Act of 1937, 
 14.32  United States Code Annotated, title 45, section 228b(a)5; or 
 14.33     (F) a pension from any local government retirement fund 
 14.34  located in the state of Minnesota as a result of that 
 14.35  disability; or 
 14.36     (G) pension, annuity, or other income paid as a result of 
 15.1   that disability from a private pension or disability plan, 
 15.2   including employer, employee, union, and insurance plans and 
 15.3      (iii) has household income as defined in section 290A.03, 
 15.4   subdivision 5, of $50,000 or less; or 
 15.5      (4) any person who is permanently and totally disabled and 
 15.6   whose household income as defined in section 290A.03, 
 15.7   subdivision 5, is 275 percent or less of the federal poverty 
 15.8   level. 
 15.9      Property is classified and assessed under clause (4) only 
 15.10  if the government agency or income-providing source certifies, 
 15.11  upon the request of the homestead occupant, that the homestead 
 15.12  occupant satisfies the disability requirements of this paragraph.
 15.13     Property is classified and assessed pursuant to clause (1) 
 15.14  only if the commissioner of economic security certifies to the 
 15.15  assessor that the homestead occupant satisfies the requirements 
 15.16  of this paragraph.  
 15.17     Permanently and totally disabled for the purpose of this 
 15.18  subdivision means a condition which is permanent in nature and 
 15.19  totally incapacitates the person from working at an occupation 
 15.20  which brings the person an income.  The first $32,000 market 
 15.21  value of class 1b property has a net class rate of .45 percent 
 15.22  of its market value.  The remaining market value of class 1b 
 15.23  property has a net class rate using the rates for class 1 or 
 15.24  class 2a property, whichever is appropriate, of similar market 
 15.25  value.  
 15.26     (c) Class 1c property is commercial use real property that 
 15.27  abuts a lakeshore line and is devoted to temporary and seasonal 
 15.28  residential occupancy for recreational purposes but not devoted 
 15.29  to commercial purposes for more than 250 days in the year 
 15.30  preceding the year of assessment, and that includes a portion 
 15.31  used as a homestead by the owner, which includes a dwelling 
 15.32  occupied as a homestead by a shareholder of a corporation that 
 15.33  owns the resort or a partner in a partnership that owns the 
 15.34  resort, even if the title to the homestead is held by the 
 15.35  corporation or partnership.  For purposes of this clause, 
 15.36  property is devoted to a commercial purpose on a specific day if 
 16.1   any portion of the property, excluding the portion used 
 16.2   exclusively as a homestead, is used for residential occupancy 
 16.3   and a fee is charged for residential occupancy.  Class 1c 
 16.4   property has a class rate of one percent of total market value 
 16.5   with the following limitation:  the area of the property must 
 16.6   not exceed 100 feet of lakeshore footage for each cabin or 
 16.7   campsite located on the property up to a total of 800 feet and 
 16.8   500 feet in depth, measured away from the lakeshore.  If any 
 16.9   portion of the class 1c resort property is classified as class 
 16.10  4c under subdivision 25, the entire property must meet the 
 16.11  requirements of subdivision 25, paragraph (d), clause (1), to 
 16.12  qualify for class 1c treatment under this paragraph. 
 16.13     (d) Class 1d property includes structures that meet all of 
 16.14  the following criteria: 
 16.15     (1) the structure is located on property that is classified 
 16.16  as agricultural property under section 273.13, subdivision 23; 
 16.17     (2) the structure is occupied exclusively by seasonal farm 
 16.18  workers during the time when they work on that farm, and the 
 16.19  occupants are not charged rent for the privilege of occupying 
 16.20  the property, provided that use of the structure for storage of 
 16.21  farm equipment and produce does not disqualify the property from 
 16.22  classification under this paragraph; 
 16.23     (3) the structure meets all applicable health and safety 
 16.24  requirements for the appropriate season; and 
 16.25     (4) the structure is not salable as residential property 
 16.26  because it does not comply with local ordinances relating to 
 16.27  location in relation to streets or roads. 
 16.28     The market value of class 1d property has the same class 
 16.29  rates as class 1a property under paragraph (a). 
 16.30     Sec. 2.  Minnesota Statutes 1998, section 273.13, 
 16.31  subdivision 23, is amended to read: 
 16.32     Subd. 23.  [CLASS 2.] (a) Class 2a property is agricultural 
 16.33  land including any improvements that is homesteaded.  The market 
 16.34  value of the house and garage and immediately surrounding one 
 16.35  acre of land has the same class rates as class 1a property under 
 16.36  subdivision 22.  The value of the remaining land including 
 17.1   improvements up to $115,000 $135,000 has a net class rate of 
 17.2   0.35 percent of market value.  The remaining value of class 2a 
 17.3   property over $115,000 $135,000 of market value that does not 
 17.4   exceed 320 acres has a net class rate of 0.8 percent of market 
 17.5   value.  The remaining property over $115,000 $135,000 market 
 17.6   value in excess of 320 acres has a class rate of 1.25 percent of 
 17.7   market value. 
 17.8      (b) Class 2b property is (1) real estate, rural in 
 17.9   character and used exclusively for growing trees for timber, 
 17.10  lumber, and wood and wood products; (2) real estate that is not 
 17.11  improved with a structure and is used exclusively for growing 
 17.12  trees for timber, lumber, and wood and wood products, if the 
 17.13  owner has participated or is participating in a cost-sharing 
 17.14  program for afforestation, reforestation, or timber stand 
 17.15  improvement on that particular property, administered or 
 17.16  coordinated by the commissioner of natural resources; (3) real 
 17.17  estate that is nonhomestead agricultural land; or (4) a landing 
 17.18  area or public access area of a privately owned public use 
 17.19  airport.  Class 2b property has a net class rate of 1.25 percent 
 17.20  of market value. 
 17.21     (c) Agricultural land as used in this section means 
 17.22  contiguous acreage of ten acres or more, used during the 
 17.23  preceding year for agricultural purposes.  "Agricultural 
 17.24  purposes" as used in this section means the raising or 
 17.25  cultivation of agricultural products or enrollment in the 
 17.26  Reinvest in Minnesota program under sections 103F.501 to 
 17.27  103F.535 or the federal Conservation Reserve Program as 
 17.28  contained in Public Law Number 99-198.  Contiguous acreage on 
 17.29  the same parcel, or contiguous acreage on an immediately 
 17.30  adjacent parcel under the same ownership, may also qualify as 
 17.31  agricultural land, but only if it is pasture, timber, waste, 
 17.32  unusable wild land, or land included in state or federal farm 
 17.33  programs.  Agricultural classification for property shall be 
 17.34  determined excluding the house, garage, and immediately 
 17.35  surrounding one acre of land, and shall not be based upon the 
 17.36  market value of any residential structures on the parcel or 
 18.1   contiguous parcels under the same ownership. 
 18.2      (d) Real estate, excluding the house, garage, and 
 18.3   immediately surrounding one acre of land, of less than ten acres 
 18.4   which is exclusively and intensively used for raising or 
 18.5   cultivating agricultural products, shall be considered as 
 18.6   agricultural land.  
 18.7      Land shall be classified as agricultural even if all or a 
 18.8   portion of the agricultural use of that property is the leasing 
 18.9   to, or use by another person for agricultural purposes. 
 18.10     Classification under this subdivision is not determinative 
 18.11  for qualifying under section 273.111. 
 18.12     The property classification under this section supersedes, 
 18.13  for property tax purposes only, any locally administered 
 18.14  agricultural policies or land use restrictions that define 
 18.15  minimum or maximum farm acreage. 
 18.16     (e) The term "agricultural products" as used in this 
 18.17  subdivision includes production for sale of:  
 18.18     (1) livestock, dairy animals, dairy products, poultry and 
 18.19  poultry products, fur-bearing animals, horticultural and nursery 
 18.20  stock described in sections 18.44 to 18.61, fruit of all kinds, 
 18.21  vegetables, forage, grains, bees, and apiary products by the 
 18.22  owner; 
 18.23     (2) fish bred for sale and consumption if the fish breeding 
 18.24  occurs on land zoned for agricultural use; 
 18.25     (3) the commercial boarding of horses if the boarding is 
 18.26  done in conjunction with raising or cultivating agricultural 
 18.27  products as defined in clause (1); 
 18.28     (4) property which is owned and operated by nonprofit 
 18.29  organizations used for equestrian activities, excluding racing; 
 18.30  and 
 18.31     (5) game birds and waterfowl bred and raised for use on a 
 18.32  shooting preserve licensed under section 97A.115.  
 18.33     (f) If a parcel used for agricultural purposes is also used 
 18.34  for commercial or industrial purposes, including but not limited 
 18.35  to:  
 18.36     (1) wholesale and retail sales; 
 19.1      (2) processing of raw agricultural products or other goods; 
 19.2      (3) warehousing or storage of processed goods; and 
 19.3      (4) office facilities for the support of the activities 
 19.4   enumerated in clauses (1), (2), and (3), 
 19.5   the assessor shall classify the part of the parcel used for 
 19.6   agricultural purposes as class 1b, 2a, or 2b, whichever is 
 19.7   appropriate, and the remainder in the class appropriate to its 
 19.8   use.  The grading, sorting, and packaging of raw agricultural 
 19.9   products for first sale is considered an agricultural purpose.  
 19.10  A greenhouse or other building where horticultural or nursery 
 19.11  products are grown that is also used for the conduct of retail 
 19.12  sales must be classified as agricultural if it is primarily used 
 19.13  for the growing of horticultural or nursery products from seed, 
 19.14  cuttings, or roots and occasionally as a showroom for the retail 
 19.15  sale of those products.  Use of a greenhouse or building only 
 19.16  for the display of already grown horticultural or nursery 
 19.17  products does not qualify as an agricultural purpose.  
 19.18     The assessor shall determine and list separately on the 
 19.19  records the market value of the homestead dwelling and the one 
 19.20  acre of land on which that dwelling is located.  If any farm 
 19.21  buildings or structures are located on this homesteaded acre of 
 19.22  land, their market value shall not be included in this separate 
 19.23  determination.  
 19.24     (g) To qualify for classification under paragraph (b), 
 19.25  clause (4), a privately owned public use airport must be 
 19.26  licensed as a public airport under section 360.018.  For 
 19.27  purposes of paragraph (b), clause (4), "landing area" means that 
 19.28  part of a privately owned public use airport properly cleared, 
 19.29  regularly maintained, and made available to the public for use 
 19.30  by aircraft and includes runways, taxiways, aprons, and sites 
 19.31  upon which are situated landing or navigational aids.  A landing 
 19.32  area also includes land underlying both the primary surface and 
 19.33  the approach surfaces that comply with all of the following:  
 19.34     (i) the land is properly cleared and regularly maintained 
 19.35  for the primary purposes of the landing, taking off, and taxiing 
 19.36  of aircraft; but that portion of the land that contains 
 20.1   facilities for servicing, repair, or maintenance of aircraft is 
 20.2   not included as a landing area; 
 20.3      (ii) the land is part of the airport property; and 
 20.4      (iii) the land is not used for commercial or residential 
 20.5   purposes. 
 20.6   The land contained in a landing area under paragraph (b), clause 
 20.7   (4), must be described and certified by the commissioner of 
 20.8   transportation.  The certification is effective until it is 
 20.9   modified, or until the airport or landing area no longer meets 
 20.10  the requirements of paragraph (b), clause (4).  For purposes of 
 20.11  paragraph (b), clause (4), "public access area" means property 
 20.12  used as an aircraft parking ramp, apron, or storage hangar, or 
 20.13  an arrival and departure building in connection with the airport.
 20.14     Sec. 3.  Minnesota Statutes 1998, section 273.1382, 
 20.15  subdivision 1, is amended to read: 
 20.16     Subdivision 1.  [EDUCATION HOMESTEAD CREDIT.] Each year, 
 20.17  the respective county auditors shall determine the initial tax 
 20.18  rate for each school district for the general education levy 
 20.19  certified under section 126C.13, subdivision 2 or 3.  That rate 
 20.20  plus the school district's education homestead credit tax rate 
 20.21  adjustment under section 275.08, subdivision 1e, shall be the 
 20.22  general education homestead credit local tax rate for the 
 20.23  district.  The auditor shall then determine a general education 
 20.24  homestead credit for each homestead within the county equal to 
 20.25  68 percent for taxes payable in 1999 and 69 73 percent for taxes 
 20.26  payable in 2000 and thereafter of the general education 
 20.27  homestead credit local tax rate times the net tax capacity of 
 20.28  the homestead for the taxes payable year.  The amount of general 
 20.29  education homestead credit for a homestead may not exceed $320 
 20.30  for taxes payable in 1999 and $335 for taxes payable in 2000 and 
 20.31  thereafter.  In the case of an agricultural homestead, only the 
 20.32  net tax capacity of the house, garage, and surrounding one acre 
 20.33  of land shall be used in determining the property's education 
 20.34  homestead credit. 
 20.35     Sec. 4.  Minnesota Statutes 1998, section 273.1398, 
 20.36  subdivision 1a, is amended to read: 
 21.1      Subd. 1a.  [TAX BASE DIFFERENTIAL.] (a) For aids payable in 
 21.2   2000, the tax base differential is (i) the following percentages 
 21.3   of the assessment year 1998 taxable market value of class 2a 
 21.4   agricultural homestead property consisting of agricultural land 
 21.5   and buildings between $115,000 in value and $135,000 in value, 
 21.6   excluding the value of the house, garage, and surrounding one 
 21.7   acre of land:  0.45 percent of the value in the first 320 acres, 
 21.8   and 0.9 percent of the value over 320 acres, plus, (ii) 0.7 
 21.9   percent of the assessment year 1998 taxable market value of 
 21.10  class 1a or 2a residential homestead property between $75,000 in 
 21.11  value and $115,000 in value; in the case of class 2a property, 
 21.12  only the value of the house, garage, and surrounding one acre of 
 21.13  land is included under this clause, plus (iii) for purposes of 
 21.14  computing the fiscal disparity adjustment only, the tax base 
 21.15  differential is 0.2 percent of the assessment year 1998 taxable 
 21.16  market value of class 3 commercial-industrial property over 
 21.17  $150,000. 
 21.18     (b) For the purposes of the distribution of homestead and 
 21.19  agricultural credit aid for aids payable in 2000, the 
 21.20  commissioner of revenue shall use the best information available 
 21.21  as of June 30, 1999, to make an estimate of the value described 
 21.22  in paragraph (a), clause (i).  The commissioner shall adjust the 
 21.23  distribution of homestead and agricultural credit aid for aids 
 21.24  payable in 2001 and subsequent years if new information 
 21.25  regarding the value described in paragraph (a), clause (i), 
 21.26  becomes available after June 30, 1999. 
 21.27     Sec. 5.  Minnesota Statutes 1998, section 290A.03, 
 21.28  subdivision 11, is amended to read: 
 21.29     Subd. 11.  [RENT CONSTITUTING PROPERTY TAXES.] "Rent 
 21.30  constituting property taxes" means 19 20 percent of the gross 
 21.31  rent actually paid in cash, or its equivalent, or the portion of 
 21.32  rent paid in lieu of property taxes, in any calendar year by a 
 21.33  claimant for the right of occupancy of the claimant's Minnesota 
 21.34  homestead in the calendar year, and which rent constitutes the 
 21.35  basis, in the succeeding calendar year of a claim for relief 
 21.36  under this chapter by the claimant.  
 22.1      Sec. 6.  Minnesota Statutes 1998, section 290A.03, 
 22.2   subdivision 13, is amended to read: 
 22.3      Subd. 13.  [PROPERTY TAXES PAYABLE.] "Property taxes 
 22.4   payable" means the property tax exclusive of special 
 22.5   assessments, penalties, and interest payable on a claimant's 
 22.6   homestead after deductions made under sections 273.135, 
 22.7   273.1382, 273.1391, 273.42, subdivision 2, and any other state 
 22.8   paid property tax credits in any calendar year.  In the case of 
 22.9   a claimant who makes ground lease payments, "property taxes 
 22.10  payable" includes the amount of the payments directly 
 22.11  attributable to the property taxes assessed against the parcel 
 22.12  on which the house is located.  No apportionment or reduction of 
 22.13  the "property taxes payable" shall be required for the use of a 
 22.14  portion of the claimant's homestead for a business purpose if 
 22.15  the claimant does not deduct any business depreciation expenses 
 22.16  for the use of a portion of the homestead in the determination 
 22.17  of federal adjusted gross income.  For homesteads which are 
 22.18  manufactured homes as defined in section 273.125, subdivision 8, 
 22.19  and for homesteads which are park trailers taxed as manufactured 
 22.20  homes under section 168.012, subdivision 9, "property taxes 
 22.21  payable" shall also include 19 20 percent of the gross rent paid 
 22.22  in the preceding year for the site on which the homestead is 
 22.23  located.  When a homestead is owned by two or more persons as 
 22.24  joint tenants or tenants in common, such tenants shall determine 
 22.25  between them which tenant may claim the property taxes payable 
 22.26  on the homestead.  If they are unable to agree, the matter shall 
 22.27  be referred to the commissioner of revenue whose decision shall 
 22.28  be final.  Property taxes are considered payable in the year 
 22.29  prescribed by law for payment of the taxes. 
 22.30     In the case of a claim relating to "property taxes 
 22.31  payable," the claimant must have owned and occupied the 
 22.32  homestead on January 2 of the year in which the tax is payable 
 22.33  and (i) the property must have been classified as homestead 
 22.34  property pursuant to section 273.124, on or before December 15 
 22.35  of the assessment year to which the "property taxes payable" 
 22.36  relate; or (ii) the claimant must provide documentation from the 
 23.1   local assessor that application for homestead classification has 
 23.2   been made on or before December 15 of the year in which the 
 23.3   "property taxes payable" were payable and that the assessor has 
 23.4   approved the application. 
 23.5      Sec. 7.  [REPEALER.] 
 23.6      Minnesota Statutes 1998, section 273.1382, subdivision 1a, 
 23.7   is repealed. 
 23.8      Sec. 8.  [GENERAL EDUCATION LEVY REDUCTION.] 
 23.9      In addition to any amount appropriated by other law, 
 23.10  $61,200,000 in fiscal year 2000 and $68,000,000 in fiscal year 
 23.11  2001 and subsequent years is appropriated from the general fund 
 23.12  to the commissioner of children, families, and learning to fund 
 23.13  a reduction in the statewide general education property tax levy 
 23.14  of $68,000,000 per year. 
 23.15     Sec. 9.  [EFFECTIVE DATE.] 
 23.16     Sections 1 to 4, 7, and 8 are effective for taxes payable 
 23.17  in 2000 and subsequent years.  Sections 5 and 6 are effective 
 23.18  for refunds filed in 2000 and subsequent years. 
 23.19                             ARTICLE 3
 23.20                             SALES TAX
 23.21     Section 1.  Minnesota Statutes 1998, section 16A.152, 
 23.22  subdivision 2, is amended to read: 
 23.23     Subd. 2.  [ADDITIONAL REVENUES; PRIORITY.] If on the basis 
 23.24  of a forecast of general fund revenues and expenditures after 
 23.25  November 1 in an odd-numbered year, the commissioner of finance 
 23.26  determines that there will be a positive unrestricted budgetary 
 23.27  general fund balance at the close of the biennium, the 
 23.28  commissioner of finance must allocate money as follows: 
 23.29     (1) first, to the budget reserve until the total amount in 
 23.30  the account equals $622,000,000; then 
 23.31     (2) 60 percent to the property tax reform account 
 23.32  established in section 16A.1521; and 
 23.33     (3) 40 percent is the remainder as an unrestricted balance 
 23.34  in the general fund. 
 23.35     The amounts necessary to meet the requirements of this 
 23.36  section are appropriated from the general fund within two weeks 
 24.1   after the forecast is released. 
 24.2      Sec. 2.  Minnesota Statutes 1998, section 297A.02, 
 24.3   subdivision 1, is amended to read: 
 24.4      Subdivision 1.  [GENERALLY.] Except as otherwise provided 
 24.5   in this chapter, there is imposed an excise tax of 6.5 equal to 
 24.6   the difference between six percent and the sum of all percent 
 24.7   reductions calculated under subdivision 1a, of the gross 
 24.8   receipts from sales at retail made by any person in this state. 
 24.9      Sec. 3.  Minnesota Statutes 1998, section 297A.02, is 
 24.10  amended by adding a subdivision to read: 
 24.11     Subd. 1a.  [GENERAL SALES TAX RATE REDUCTION.] If, on the 
 24.12  basis of a forecast of general fund revenues and expenditures in 
 24.13  November of an even-numbered year or February of an odd-numbered 
 24.14  year, the commissioner of finance projects that there will be a 
 24.15  positive unrestricted budgetary general fund balance at the 
 24.16  close of the biennium that exceeds one-half of one percent of 
 24.17  total general fund biennial revenues, the general sales tax rate 
 24.18  must be permanently reduced by a percentage, calculated by the 
 24.19  commissioner of finance, that would reduce projected sales tax 
 24.20  and motor vehicle sales tax revenues in the following biennium 
 24.21  by an amount equal to the amount of the projected unrestricted 
 24.22  general fund balance for the current biennium.  The reduction 
 24.23  percentage must be calculated to the nearest one-tenth of one 
 24.24  percent, with the projected revenue reduction in the next 
 24.25  biennium not to exceed the projected unrestricted general fund 
 24.26  balance for the current biennium.  The reduction is effective 
 24.27  for purchases made beginning on the first day of the next state 
 24.28  fiscal year. 
 24.29     Sec. 4.  [EFFECTIVE DATE.] 
 24.30     Sections 1 and 2 are effective for sales tax rate based on 
 24.31  forecasts beginning with the November 2003 forecast, except the 
 24.32  reduction in the rate to six percent in section 2 is effective 
 24.33  for sales made after June 30, 2001. 
 24.34                             ARTICLE 4
 24.35                      TRANSPORTATION FINANCING
 24.36     Section 1.  Minnesota Statutes 1998, section 168.013, 
 25.1   subdivision 1a, is amended to read: 
 25.2      Subd. 1a.  [PASSENGER AUTOMOBILE; HEARSE.] (a) On passenger 
 25.3   automobiles as defined in section 168.011, subdivision 7, and 
 25.4   hearses, except as otherwise provided, the tax shall be $10 plus 
 25.5   an additional tax equal to 1.25 percent of the base value.  
 25.6      (b) Subject to the classification provisions herein, "base 
 25.7   value" means the manufacturer's suggested retail price of the 
 25.8   vehicle including destination charge using list price 
 25.9   information published by the manufacturer or determined by the 
 25.10  registrar if no suggested retail price exists, and shall not 
 25.11  include the cost of each accessory or item of optional equipment 
 25.12  separately added to the vehicle and the suggested retail price. 
 25.13     (c) If the manufacturer's list price information contains a 
 25.14  single vehicle identification number followed by various 
 25.15  descriptions and suggested retail prices, the registrar shall 
 25.16  select from those listings only the lowest price for determining 
 25.17  base value. 
 25.18     (d) If unable to determine the base value because the 
 25.19  vehicle is specially constructed, or for any other reason, the 
 25.20  registrar may establish such value upon the cost price to the 
 25.21  purchaser or owner as evidenced by a certificate of cost but not 
 25.22  including Minnesota sales or use tax or any local sales or other 
 25.23  local tax. 
 25.24     (e) The registrar shall classify every vehicle in its 
 25.25  proper base value class as follows: 
 25.26                        FROM                   TO
 25.27                        $  0                $199.99
 25.28                         200                 399.99
 25.29  and thereafter a series of classes successively set in brackets 
 25.30  having a spread of $200 consisting of such number of classes as 
 25.31  will permit classification of all vehicles. 
 25.32     (f) The base value for purposes of this section shall be 
 25.33  the middle point between the extremes of its class. 
 25.34     (g) The registrar shall establish the base value, when new, 
 25.35  of every passenger automobile and hearse registered prior to the 
 25.36  effective date of Extra Session Laws 1971, chapter 31, using 
 26.1   list price information published by the manufacturer or any 
 26.2   nationally recognized firm or association compiling such data 
 26.3   for the automotive industry.  If unable to ascertain the base 
 26.4   value of any registered vehicle in the foregoing manner, the 
 26.5   registrar may use any other available source or method.  The tax 
 26.6   on all previously registered vehicles shall be computed upon the 
 26.7   base value thus determined taking into account the depreciation 
 26.8   provisions of paragraph (h). 
 26.9      (h) Except as provided in paragraph (i), the annual 
 26.10  additional tax computed upon the base value as provided herein, 
 26.11  during the first and second years of vehicle life shall be 
 26.12  computed upon 100 percent of the base value; for the third and 
 26.13  fourth years, 90 percent of such value; for the fifth and sixth 
 26.14  years, 75 percent of such value; for the seventh year, 60 
 26.15  percent of such value; for the eighth year, 40 percent of such 
 26.16  value; for the ninth year, 30 percent of such value; for the 
 26.17  tenth year, ten percent of such value; for the 11th and each 
 26.18  succeeding year, the sum of $25.  
 26.19     In no event shall the annual additional tax be less than 
 26.20  $25.  
 26.21     (i) The annual additional tax under paragraph (h) on a 
 26.22  motor vehicle on which the first annual tax was paid before 
 26.23  January 1, 1990, must not exceed the tax that was paid on that 
 26.24  vehicle the year before. 
 26.25     (j) For registration of passenger automobiles in the first 
 26.26  year of vehicle life, the annual additional tax shall not exceed 
 26.27  $190.  For registration of passenger automobiles in the second 
 26.28  through tenth year of vehicle life, the annual additional tax 
 26.29  shall not exceed $65. 
 26.30     Sec. 2.  [174.45] [MINNESOTA TRANSPORTATION TRUST FUND.] 
 26.31     Subdivision 1.  [FUND CREATED.] The Minnesota 
 26.32  transportation trust fund is created in the state treasury.  The 
 26.33  fund consists of money allocated to the fund under section 
 26.34  297B.09 and all other money appropriated or credited to the fund 
 26.35  by law.  A county transportation account and a municipal 
 26.36  transportation account are created as accounts within the fund. 
 27.1      Subd. 2.  [TRANSPORTATION ACCOUNTS.] (a) On the tenth day 
 27.2   of each month the commissioner of finance shall, from money in 
 27.3   the Minnesota transportation trust fund, credit to their 
 27.4   respective accounts the following percentages of total revenue 
 27.5   that the commissioner determines would have been received in the 
 27.6   previous month from taxes and fees imposed under chapter 168 if 
 27.7   the rates of taxation under section 168.013, subdivision 1a, 
 27.8   that were in effect on June 30, 1999, were still in effect 
 27.9   during that month: 
 27.10     (1) to the county transportation account, 27.55 percent; 
 27.11     (2) to the municipal transportation account, 8.55 percent; 
 27.12     (3) to the town road account established in section 
 27.13  162.081, 1.53 percent; 
 27.14     (4) to the town bridge account established in section 
 27.15  161.082, subdivision 2a, 0.8 percent; and 
 27.16     (5) to the flexible account established in section 161.081, 
 27.17  subdivision 3, 2.68 percent. 
 27.18     (b) In making the determination under paragraph (a), the 
 27.19  commissioner of revenue shall: 
 27.20     (1) use registration year 1999 as a base year for making 
 27.21  assumptions concerning revenue from motor vehicle license taxes; 
 27.22     (2) assume annual increases of three percent in revenue 
 27.23  from motor vehicle license taxes; and 
 27.24     (3) assume deductions from motor vehicle license tax 
 27.25  revenue for refunds, collection costs, state indirect costs, 
 27.26  reimbursements to other funds, and transfers to a contingent 
 27.27  account. 
 27.28     (c) Money in the county and municipal transportation 
 27.29  accounts is appropriated to the commissioner. 
 27.30     Subd. 3.  [COUNTY TRANSPORTATION ACCOUNT ALLOCATIONS.] At 
 27.31  the same time the commissioner makes apportionments under 
 27.32  section 162.06, the commissioner shall distribute amounts in the 
 27.33  county transportation account to each county so that each county 
 27.34  receives the same percentage of money to be distributed as its 
 27.35  percentage for that year of county state-aid highway fund 
 27.36  allocations.  A county may spend money received under this 
 28.1   subdivision to match federal funds available to the county for 
 28.2   highway and transit purposes, and for any other highway or 
 28.3   transit purpose. 
 28.4      Subd. 4.  [MUNICIPAL TRANSPORTATION ACCOUNT.] At the same 
 28.5   time the commissioner makes apportionments under section 162.12, 
 28.6   the commissioner shall distribute money in the municipal 
 28.7   transportation account to each city eligible to receive an 
 28.8   allocation from the municipal state-aid street fund so that each 
 28.9   city receives the same percentage of money to be distributed as 
 28.10  its percentage for that year of municipal state-aid street fund 
 28.11  allocations.  A city may spend money received under this 
 28.12  subdivision to match federal funds available to the city for 
 28.13  highway and transit purposes, and for any other highway or 
 28.14  transit purpose. 
 28.15     Subd. 5.  [APPROPRIATIONS.] Not later than January 1 of 
 28.16  each odd-numbered year, the commissioner shall submit to the 
 28.17  legislature a list of recommended appropriations from the 
 28.18  anticipated balance in the fund for the next biennium after 
 28.19  amounts have been credited under subdivisions 2 and 3.  The list 
 28.20  must be based on the most recent state transportation plan and 
 28.21  statewide transportation improvement program, and on the goals 
 28.22  established under section 174.01, subdivision 2.  The 
 28.23  recommendations must provide for allocating funds to the 
 28.24  commissioner, local road authorities, and other government and 
 28.25  private entities those amounts that the commissioner determines 
 28.26  are necessary to match available federal funds not matched under 
 28.27  subdivision 2 or 3, to the extent that the anticipated balance 
 28.28  in the fund permits, for (1) highway construction, 
 28.29  reconstruction, improvement, and maintenance, (2) acquisition of 
 28.30  public transit vehicles, (3) public transit capital 
 28.31  improvements, (4) transportation enhancements, and (5) other 
 28.32  transportation expenditures that are required to be included in 
 28.33  a statewide transportation improvement program in order to be 
 28.34  eligible for federal participation. 
 28.35     Subd. 6.  [ALLOCATION OF BALANCE.] Any money remaining in 
 28.36  the Minnesota transportation trust fund at the end of a fiscal 
 29.1   year after amounts have been credited under subdivision 2 and 
 29.2   appropriations made under subdivision 4 must be credited 62 
 29.3   percent to the trunk highway fund, 29 percent to the county 
 29.4   state-aid highway fund, and nine percent to the municipal 
 29.5   state-aid street fund. 
 29.6      Sec. 3.  Minnesota Statutes 1998, section 297B.09, 
 29.7   subdivision 1, is amended to read: 
 29.8      Subdivision 1.  [GENERAL FUND SHARE.] (a) Money collected 
 29.9   and received under this chapter must be deposited in the state 
 29.10  treasury and credited to the general fund.  The amounts 
 29.11  collected and received shall be credited as provided in this 
 29.12  subdivision, and transferred from the general fund on July 15 
 29.13  and February 15 of each fiscal year.  The commissioner of 
 29.14  finance must make each transfer based upon the actual receipts 
 29.15  of the preceding six calendar months and include the interest 
 29.16  earned during that six-month period.  The commissioner of 
 29.17  finance may establish a quarterly or other schedule providing 
 29.18  for more frequent payments to the transit assistance fund if the 
 29.19  commissioner determines it is necessary or desirable to provide 
 29.20  for the cash flow needs of the recipients of money from the 
 29.21  transit assistance fund.  
 29.22     (b) Twenty-five percent of the money collected and received 
 29.23  under this chapter after June 30, 1990, and before July 1, 1991, 
 29.24  must be transferred to the highway user tax distribution fund 
 29.25  and the transit assistance fund for apportionment as follows:  
 29.26  75 percent must be transferred to the highway user tax 
 29.27  distribution fund for apportionment in the same manner and for 
 29.28  the same purposes as other money in that fund, and the remaining 
 29.29  25 percent of the money must be transferred to the transit 
 29.30  assistance fund to be appropriated to the commissioner of 
 29.31  transportation for transit assistance within the state and to 
 29.32  the metropolitan council.  
 29.33     (c) The distributions under this subdivision to the highway 
 29.34  user tax distribution fund until June 30, 1991, and to the trunk 
 29.35  highway fund thereafter, must be reduced by the amount necessary 
 29.36  to fund the appropriation under section 41A.09, subdivision 1.  
 30.1   For the fiscal years ending June 30, 1988, and June 30, 1989, 
 30.2   the commissioner of finance, before making the transfers 
 30.3   required on July 15 and January 15 of each year, shall estimate 
 30.4   the amount required to fund the appropriation under section 
 30.5   41A.09, subdivision 1, for the six-month period for which the 
 30.6   transfer is being made.  The commissioner shall then reduce the 
 30.7   amount transferred to the highway user tax distribution fund by 
 30.8   the amount of that estimate.  The commissioner shall reduce the 
 30.9   estimate for any six-month period by the amount by which the 
 30.10  estimate for the previous six-month period exceeded the amount 
 30.11  needed to fund the appropriation under section 41A.09, 
 30.12  subdivision 1, for that previous six-month period.  If at any 
 30.13  time during a six-month period in those fiscal years the amount 
 30.14  of reduction in the transfer to the highway user tax 
 30.15  distribution fund is insufficient to fund the appropriation 
 30.16  under section 41A.09, subdivision 1, for that period, the 
 30.17  commissioner shall transfer to the general fund from the highway 
 30.18  user tax distribution fund an additional amount sufficient to 
 30.19  fund the appropriation for that period, but the additional 
 30.20  amount so transferred to the general fund in a six-month period 
 30.21  may not exceed the amount transferred to the highway user tax 
 30.22  distribution fund for that six-month period as follows: 
 30.23     (1) 40 percent to the general fund; and 
 30.24     (2) 60 percent to the Minnesota transportation trust fund. 
 30.25     Sec. 4.  [CONSTITUTIONAL AMENDMENT PROPOSED.] 
 30.26     An amendment is proposed to the Minnesota Constitution, 
 30.27  article XIV.  If the amendment is adopted, article XIV will be 
 30.28  amended by adding a section to read: 
 30.29     Sec. 12.  [MINNESOTA TRANSPORTATION TRUST FUND.] A 
 30.30  Minnesota transportation trust fund is created to be used 
 30.31  exclusively for highway and transit projects as defined by law.  
 30.32  The commissioner of the department of transportation or its 
 30.33  successor agency shall recommend to the legislature 
 30.34  appropriations from the fund for highway and transit purposes 
 30.35  for each legislative budget period.  Three-fifths of the 
 30.36  proceeds from a tax levied by the state on the purchase price of 
 31.1   new and used motor vehicles must be allocated by law to the fund.
 31.2      Sec. 5.  [SUBMISSION TO VOTERS.] 
 31.3      The constitutional amendment proposed in section 4 must be 
 31.4   submitted to the people at the 2000 general election.  The 
 31.5   question submitted must be: 
 31.6      "Shall the Minnesota Constitution be amended to create a 
 31.7   Minnesota transportation trust fund for highways and transit, 
 31.8   and to require that 60 percent of the proceeds from a state 
 31.9   sales tax on new and used motor vehicles be deposited in the 
 31.10  fund? 
 31.11                                     Yes .......
 31.12                                     No ........"
 31.13     Sec. 6.  [APPROPRIATION.] 
 31.14     (a) The commissioner of finance shall transfer $107,000,000 
 31.15  from the general fund to the highway user tax distribution 
 31.16  fund.  This transfer must be made in equal installments on 
 31.17  January 1, 2000, and the first day of each month thereafter in 
 31.18  fiscal year 2000. 
 31.19     (b) The commissioner of finance shall transfer $220,000,000 
 31.20  from the general fund to the highway user tax distribution 
 31.21  fund.  This transfer must be made in equal installments on July 
 31.22  1, 2000, and the first day of each month thereafter in fiscal 
 31.23  year 2001. 
 31.24     Sec. 7.  [EFFECTIVE DATE.] 
 31.25     (a) Section 1 is effective November 1, 1999, for 
 31.26  registration year 2000 and subsequent years.  Section 3 is 
 31.27  effective July 1, 2001.  Section 6 is effective January 1, 2000. 
 31.28     (b) Notwithstanding paragraph (a), if the constitutional 
 31.29  amendment proposed in section 4 is not adopted at the 2000 
 31.30  general election: 
 31.31     (1) section 1 is repealed November 15, 2000, and the tax 
 31.32  rates in Minnesota Statutes, section 168.013, subdivision 1a, 
 31.33  revert to the rates in effect on June 30, 1999; and 
 31.34     (2) section 3 shall not take effect.