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HF 2323

4th Engrossment - 86th Legislature (2009 - 2010) Posted on 02/09/2010 02:03am

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - 4th Engrossment

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A bill for an act
relating to the financing of state and local government; making changes to
income, sales and use, liquor, gross receipts, and other tax-related provisions;
providing a surtax on certain interest income; modifying capital equipment
exemption; providing an investment tax credit; creating tax compliance
initiative; creating a property tax recognition shift; adjusting the education aid
payment schedule; appropriating money; amending Minnesota Statutes 2008,
sections 123B.54, as amended; 123B.75, subdivision 5, by adding a subdivision;
126C.48, subdivision 7; 127A.441; 127A.45, subdivisions 2, 3, 13, by adding
a subdivision; 290.06, subdivisions 2c, 2d, by adding a subdivision; 295.75,
subdivision 2; 297A.68, subdivision 5; 297A.75, subdivisions 1, as amended,
2, as amended, 3; 297G.03, subdivision 1; 297G.04; Laws 2009, chapter 96,
article 1, section 24, subdivisions 2, 4, 5, 6, 7; article 2, section 67, subdivisions
2, 3, 4, 7, 9; article 3, section 21, subdivisions 2, 4, 5; article 4, section 12,
subdivisions 2, 3, 4, 6; article 5, section 13, subdivisions 6, 7, 9; article 6, section
11, subdivisions 2, 3, 4, 8, 9, 12; proposing coding for new law in Minnesota
Statutes, chapters 116J; 290.

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

ARTICLE 1

EDUCATION SHIFTS

Section 1.

Minnesota Statutes 2008, section 123B.54, as amended by Laws 2009,
chapter 96, article 4, section 1, is amended to read:


123B.54 DEBT SERVICE APPROPRIATION.

(a) $9,109,000 in fiscal year 2009, deleted text begin$7,948,000deleted text endnew text begin $6,608,000 new text end in fiscal year 2010,
deleted text begin $9,275,000deleted text endnew text begin $9,012,000 new text end in fiscal year 2011, deleted text begin$9,574,000deleted text endnew text begin $9,547,000 new text end in fiscal year 2012,
and deleted text begin$8,904,000deleted text endnew text begin $9,033,000 new text end in fiscal year 2013 and later are appropriated from the general
fund to the commissioner of education for payment of debt service equalization aid
under section 123B.53.

(b) The appropriations in paragraph (a) must be reduced by the amount of any
money specifically appropriated for the same purpose in any year from any state fund.

Sec. 2.

Minnesota Statutes 2008, section 123B.75, is amended by adding a subdivision
to read:


new text begin Subd. 1a. new text end

new text begin Definition. new text end

new text begin For the purpose of this section, "school district tax settlement
revenue" means the current, delinquent, and manufactured home property tax receipts
collected by the county and distributed to the school district.
new text end

Sec. 3.

Minnesota Statutes 2008, section 123B.75, subdivision 5, is amended to read:


Subd. 5.

Levy recognition.

(a) deleted text begin"School district tax settlement revenue" means the
current, delinquent, and manufactured home property tax receipts collected by the county
and distributed to the school district.
deleted text end

deleted text begin (b) For fiscal year 2004 and later years,deleted text end In June of deleted text begineach yeardeleted text endnew text begin 2009new text end, the school district
must recognize as revenue, in the fund for which the levy was made, the lesser of:

(1) the sum of May, June, and July school district tax settlement revenue received in
that calendar year, plus general education aid according to section 126C.13, subdivision
4
, received in July and August of that calendar year; or

(2) the sum of:

(i) 31 percent of the referendum levy certified according to section 126C.17, in
calendar year 2000; and

(ii) the entire amount of the levy certified in the prior calendar year according to
section 124D.86, subdivision 4, for school districts receiving revenue under sections
124D.86, subdivision 3, clauses (1), (2), and (3); 126C.41, subdivisions 1, 2, and 3,
paragraphs (b), (c), and (d); 126C.43, subdivision 2; 126C.457; and 126C.48, subdivision
6
.

new text begin (b) For fiscal year 2010 and later years, in June of each year, the school district must
recognize as revenue, in the fund for which the levy was made, the lesser of:
new text end

new text begin (1) the sum of May, June, and July school district tax settlement revenue received in
that calendar year, plus general education aid according to section 126C.13, subdivision
4, received in July and August of that calendar year; or
new text end

new text begin (2) the sum of:
new text end

new text begin (i) the greater of 49.1 percent of the referendum levy certified according to section
126C.17 in the prior calendar year, or 31 percent of the referendum levy certified
according to section 126C.17 in calendar year 2000; plus
new text end

new text begin (ii) the entire amount of the levy certified in the prior calendar year according to
section 124D.86, subdivision 4, for school districts receiving revenue under sections
124D.86, subdivision 3, clauses (1), (2), and (3); 126C.41, subdivisions 1, 2, and 3,
paragraphs (b), (c), and (d); 126C.43, subdivision 2; 126C.457; and 126C.48, subdivision
6; plus
new text end

new text begin (iii) 49.1 percent of the amount of the levy certified in the prior calendar year for the
school district's general and community service funds, plus or minus auditor's adjustments,
not including the levy portions that are assumed by the state, that remains after subtracting
the referendum levy certified according to section 126C.17 and the amount recognized
according to item (ii).
new text end

Sec. 4.

Minnesota Statutes 2008, section 126C.48, subdivision 7, is amended to read:


Subd. 7.

Reporting.

For each tax settlement, the county auditor shall report to each
school district by fund, the district tax settlement revenue defined in section 123B.75,
subdivision deleted text begin5deleted text end
deleted text begin, paragraph (a)deleted text endnew text begin 1anew text end, on the form specified in section 276.10. The county auditor
shall send to the district a copy of the spread levy report specified in section 275.124.

Sec. 5.

Minnesota Statutes 2008, section 127A.441, is amended to read:


127A.441 AID REDUCTION; LEVY REVENUE RECOGNITION CHANGE.

Each year, the state aids payable to any school district for that fiscal year that are
recognized as revenue in the school district's general and community service funds shall
be adjusted by an amount equal to (1) the amount the district recognized as revenue for the
prior fiscal year pursuant to section 123B.75, subdivision 5, paragraph new text begin(a) or new text end(b), minus (2)
the amount the district recognized as revenue for the current fiscal year pursuant to section
123B.75, subdivision 5, paragraph new text begin(a) or new text end(b). For purposes of making the aid adjustments
under this section, the amount the district recognizes as revenue for either the prior fiscal
year or the current fiscal year pursuant to section 123B.75, subdivision 5, paragraph (b),
shall not include any amount levied pursuant to section 124D.86, subdivision 4, for school
districts receiving revenue under sections 124D.86, subdivision 3, clauses (1), (2), and (3);
126C.41, subdivisions 1, 2, and 3, paragraphs (b), (c), and (d); 126C.43, subdivision 2;
126C.457; and 126C.48, subdivision 6. Payment from the permanent school fund shall not
be adjusted pursuant to this section. The school district shall be notified of the amount of
the adjustment made to each payment pursuant to this section.

Sec. 6.

Minnesota Statutes 2008, section 127A.45, subdivision 2, is amended to read:


Subd. 2.

Definitions.

(a) deleted text beginThe termdeleted text end "Other district receipts" means payments by
county treasurers pursuant to section 276.10, apportionments from the school endowment
fund pursuant to section 127A.33, apportionments by the county auditor pursuant to
section 127A.34, subdivision 2, and payments to school districts by the commissioner of
revenue pursuant to chapter 298.

(b) deleted text beginThe termdeleted text end "Cumulative amount guaranteed" means the product of

(1) the cumulative disbursement percentage shown in subdivision 3; times

(2) the sum of

(i) the current year aid payment percentage of the estimated aid and credit
entitlements paid according to subdivision 13; plus

(ii) 100 percent of the entitlements paid according to subdivisions 11 and 12; plus

(iii) the other district receipts.

(c) deleted text beginThe termdeleted text end "Payment date" means the date on which state payments to districts
are made by the electronic funds transfer method. If a payment date falls on a Saturday,
a Sunday, or a weekday which is a legal holiday, the payment shall be made on the
immediately preceding business day. The commissioner may make payments on dates
other than those listed in subdivision 3, but only for portions of payments from any
preceding payment dates which could not be processed by the electronic funds transfer
method due to documented extenuating circumstances.

(d) The current year aid payment percentage equals deleted text begin90deleted text endnew text begin 73new text end.

Sec. 7.

Minnesota Statutes 2008, section 127A.45, subdivision 3, is amended to read:


Subd. 3.

Payment dates and percentages.

(a) deleted text beginFor fiscal year 2004 and later,deleted text end The
commissioner shall pay to a district on the dates indicated an amount computed as follows:
the cumulative amount guaranteed minus the sum of deleted text begin(a)deleted text end new text begin(1) new text endthe district's other district
receipts through the current payment, and deleted text begin(b)deleted text end new text begin(2) new text endthe aid and credit payments through the
immediately preceding payment. For purposes of this computation, the payment dates and
the cumulative disbursement percentages are as follows:

Payment date
Percentage
Payment 1
July 15:
5.5
Payment 2
July 30:
8.0
Payment 3
August 15:
17.5
Payment 4
August 30:
20.0
Payment 5
September 15:
22.5
Payment 6
September 30:
25.0
Payment 7
October 15:
27.0
Payment 8
October 30:
30.0
Payment 9
November 15:
32.5
Payment 10
November 30:
36.5
Payment 11
December 15:
42.0
Payment 12
December 30:
45.0
Payment 13
January 15:
50.0
Payment 14
January 30:
54.0
Payment 15
February 15:
58.0
Payment 16
February 28:
63.0
Payment 17
March 15:
68.0
Payment 18
March 30:
74.0
Payment 19
April 15:
78.0
Payment 20
April 30:
85.0
Payment 21
May 15:
90.0
Payment 22
May 30:
95.0
Payment 23
June 20:
100.0

(b) deleted text beginIn addition to the amounts paid under paragraph (a), for fiscal year 2004, the
commissioner shall pay to a district on the dates indicated an amount computed as follows:
deleted text end

deleted text begin Payment 3
deleted text end
deleted text begin August 15: the final adjustment for the prior fiscal year for the state paid
property tax credits established in section 273.1392
deleted text end
deleted text begin Payment 4
deleted text end
deleted text begin August 30: one-third of the final adjustment for the prior fiscal year for
all aid entitlements except state paid property tax credits
deleted text end
deleted text begin Payment 6
deleted text end
deleted text begin September 30: one-third of the final adjustment for the prior fiscal year
for all aid entitlements except state paid property tax credits
deleted text end
deleted text begin Payment 8
deleted text end
deleted text begin October 30: one-third of the final adjustment for the prior fiscal year for
all aid entitlements except state paid property tax credits
deleted text end

deleted text begin (c)deleted text end In addition to the amounts paid under paragraph (a), deleted text beginfor fiscal year 2005 and
later,
deleted text end the commissioner shall pay to a district on the dates indicated an amount computed
as follows:

Payment 3
August 15: the final adjustment for the prior fiscal year for the state paid
property tax credits established in section 273.1392
Payment 4
August 30: 30 percent of the final adjustment for the prior fiscal year for
all aid entitlements except state paid property tax credits
Payment 6
September 30: 40 percent of the final adjustment for the prior fiscal year
for all aid entitlements except state paid property tax credits
Payment 8
October 30: 30 percent of the final adjustment for the prior fiscal year
for all aid entitlements except state paid property tax credits

Sec. 8.

Minnesota Statutes 2008, section 127A.45, is amended by adding a subdivision
to read:


new text begin Subd. 7b. new text end

new text begin Advance final payment. new text end

new text begin (a) Notwithstanding subdivisions 3 and 7,
a school district or charter school exceeding its expenditure limitations under section
123B.83 as of June 30 of the prior fiscal year may receive a portion of its final payment
for the current fiscal year on June 20, if requested by the district or charter school. The
amount paid under this subdivision must not exceed the lesser of:
new text end

new text begin (1) the difference between 90 percent and the current year payment percentage in
subdivision 2, paragraph (d), in the current fiscal year times the sum of the district or
charter school's general education aid plus the aid adjustment in section 127A.50 for
the current fiscal year; or
new text end

new text begin (2) the amount by which the district's or charter school's net negative unreserved
general fund balance as of June 30 of the prior fiscal year exceeds 2.5 percent of the
district or charter school's expenditures for that fiscal year.
new text end

new text begin (b) The state total advance final payment under this subdivision for any year must
not exceed $7,500,000. If the amount request exceeds $7,500,000, the advance final
payment for each eligible district must be reduced proportionately.
new text end

Sec. 9.

Minnesota Statutes 2008, section 127A.45, subdivision 13, is amended to read:


Subd. 13.

Aid payment percentage.

Except as provided in subdivisions 11, 12, 12a,
and 14, each fiscal year, all education aids and credits in this chapter and chapters 120A,
120B, 121A, 122A, 123A, 123B, 124D, 125A, 125B, 126C, 134, and section 273.1392,
shall be paid at the current year aid payment percentage of the estimated entitlement during
the fiscal year of the entitlement. deleted text beginFor the purposes of this subdivision, a district's estimated
entitlement for special education excess cost aid under section 125A.79 for fiscal year
2005 equals 70 percent of the district's entitlement for the second prior fiscal year.
deleted text end For the
purposes of this subdivision, a district's estimated entitlement for special education excess
cost aid under section 125A.79 for fiscal year 2006 and later equals 74.0 percent of the
district's entitlement for the current fiscal year. The final adjustment payment, according
to subdivision 9, must be the amount of the actual entitlement, after adjustment for actual
data, minus the payments made during the fiscal year of the entitlement.

ARTICLE 2

EDUCATION APPROPRIATION ADJUSTMENTS

Section 1.

Laws 2009, chapter 96, article 1, section 24, subdivision 2, is amended to
read:


Subd. 2.

General education aid.

For general education aid under Minnesota
Statutes, section 126C.13, subdivision 4:

$
deleted text begin 5,195,504,000
deleted text end new text begin 3,752,648,000
new text end
.....
2010
$
deleted text begin 5,626,994,000
deleted text end new text begin 5,503,377,000
new text end
.....
2011

The 2010 appropriation includes $555,864,000 for 2009 and deleted text begin$4,639,640,000deleted text endnew text begin
$3,196,784,000
new text end for 2010.

The 2011 appropriation includes deleted text begin$500,976,000deleted text endnew text begin $1,943,838,000 new text end for 2010 and
deleted text begin $5,126,018,000deleted text end new text begin $3,559,539,000 new text endfor 2011.

Sec. 2.

Laws 2009, chapter 96, article 1, section 24, subdivision 4, is amended to read:


Subd. 4.

Abatement revenue.

For abatement aid under Minnesota Statutes, section
127A.49:

$
deleted text begin 1,175,000
deleted text end new text begin 980,000
new text end
.....
2010
$
deleted text begin 1,034,000
deleted text end new text begin 1,056,000
new text end
.....
2011

The 2010 appropriation includes $140,000 for 2009 and deleted text begin$1,035,000deleted text endnew text begin $840,000 new text end for
2010.

The 2011 appropriation includes deleted text begin$115,000deleted text endnew text begin $310,000 new text end for 2010 and deleted text begin$919,000deleted text endnew text begin
$746,000
new text end for 2011.

Sec. 3.

Laws 2009, chapter 96, article 1, section 24, subdivision 5, is amended to read:


Subd. 5.

Consolidation transition.

For districts consolidating under Minnesota
Statutes, section 123A.485:

$
deleted text begin 854,000 deleted text end new text begin 693,000
new text end
.....
2010
$
deleted text begin 927,000 deleted text end new text begin 931,000
new text end
.....
2011

The 2010 appropriation includes $0 for 2009 and deleted text begin$854,000deleted text endnew text begin $693,000 new text end for 2010.

The 2011 appropriation includes deleted text begin$94,000deleted text endnew text begin $255,000new text end for 2010 and deleted text begin$833,000deleted text endnew text begin $676,000
new text end for 2011.

Sec. 4.

Laws 2009, chapter 96, article 1, section 24, subdivision 6, is amended to read:


Subd. 6.

Nonpublic pupil education aid.

For nonpublic pupil education aid under
Minnesota Statutes, sections 123B.40 to 123B.43 and 123B.87:

$
deleted text begin 17,250,000
deleted text end new text begin 14,303,000
new text end
.....
2010
$
deleted text begin 17,889,000
deleted text end new text begin 17,785,000
new text end
.....
2011

The 2010 appropriation includes $1,647,000 for 2009 and deleted text begin$15,603,000deleted text endnew text begin $12,656,000
new text end for 2010.

The 2011 appropriation includes deleted text begin$1,733,000deleted text endnew text begin $4,680,000 new text end for 2010 and deleted text begin$16,156,000deleted text endnew text begin
$13,105,000
new text end for 2011.

Sec. 5.

Laws 2009, chapter 96, article 1, section 24, subdivision 7, is amended to read:


Subd. 7.

Nonpublic pupil transportation.

For nonpublic pupil transportation aid
under Minnesota Statutes, section 123B.92, subdivision 9:

$
deleted text begin 22,159,000
deleted text end new text begin 18,366,000
new text end
.....
2010
$
deleted text begin 22,712,000
deleted text end new text begin 22,636,000
new text end
.....
2011

The 2010 appropriation includes $2,077,000 for 2009 and deleted text begin$20,082,000deleted text endnew text begin $16,289,000
new text end for 2010.

The 2011 appropriation includes deleted text begin$2,231,000deleted text endnew text begin $6,024,000 new text end for 2010 and deleted text begin$20,481,000deleted text endnew text begin
$16,612,000
new text end for 2011.

Sec. 6.

Laws 2009, chapter 96, article 2, section 67, subdivision 2, is amended to read:


Subd. 2.

Charter school building lease aid.

For building lease aid under Minnesota
Statutes, section 124D.11, subdivision 4:

$
deleted text begin 40,453,000
deleted text end new text begin 33,512,000
new text end
.....
2010
$
deleted text begin 44,775,000
deleted text end new text begin 44,030,000
new text end
.....
2011

The 2010 appropriation includes $3,704,000 for 2009 and deleted text begin$36,749,000deleted text endnew text begin $29,808,000
new text end for 2010.

The 2011 appropriation includes deleted text begin$4,083,000deleted text endnew text begin $11,024,000 new text end for 2010 and deleted text begin$40,692,000deleted text endnew text begin
$33,006,000
new text end for 2011.

Sec. 7.

Laws 2009, chapter 96, article 2, section 67, subdivision 3, is amended to read:


Subd. 3.

Charter school startup aid.

For charter school startup cost aid under
Minnesota Statutes, section 124D.11:

$
deleted text begin 1,488,000
deleted text end new text begin 1,245,000
new text end
.....
2010
$
deleted text begin 1,064,000
deleted text end new text begin 1,133,000
new text end
.....
2011

The 2010 appropriation includes $202,000 for 2009 and deleted text begin$1,286,000deleted text endnew text begin $1,043,000new text end
for 2010.

The 2011 appropriation includes deleted text begin$142,000deleted text endnew text begin $385,000 new text end for 2010 and deleted text begin$922,000deleted text endnew text begin
$748,000
new text end for 2011.

Sec. 8.

Laws 2009, chapter 96, article 2, section 67, subdivision 4, is amended to read:


Subd. 4.

Integration aid.

For integration aid under Minnesota Statutes, section
124D.86, subdivision 5:

$
deleted text begin 65,358,000
deleted text end new text begin 54,167,000
new text end
.....
2010
$
deleted text begin 65,484,000
deleted text end new text begin 65,549,000
new text end
.....
2011

The 2010 appropriation includes $6,110,000 for 2009 and deleted text begin$59,248,000deleted text endnew text begin $48,057,000new text end
for 2010.

The 2011 appropriation includes deleted text begin$6,583,000deleted text endnew text begin $17,774,000 new text end for 2010 and deleted text begin$58,901,000deleted text endnew text begin
$47,775,000
new text end for 2011.

Sec. 9.

Laws 2009, chapter 96, article 2, section 67, subdivision 7, is amended to read:


Subd. 7.

Success for the future.

For American Indian success for the future grants
under Minnesota Statutes, section 124D.81:

$
deleted text begin 2,137,000
deleted text end new text begin 1,774,000
new text end
.....
2010
$
2,137,000
.....
2011

The 2010 appropriation includes $213,000 for 2009 and deleted text begin$1,924,000deleted text endnew text begin $1,561,000 new text end for
2010.

The 2011 appropriation includes deleted text begin$213,000deleted text endnew text begin $576,000 new text end for 2010 and deleted text begin$1,924,000deleted text endnew text begin
$1,561,000
new text end for 2011.

Sec. 10.

Laws 2009, chapter 96, article 2, section 67, subdivision 9, is amended to read:


Subd. 9.

Tribal contract schools.

For tribal contract school aid under Minnesota
Statutes, section 124D.83:

$
deleted text begin 2,030,000
deleted text end new text begin 1,683,000
new text end
.....
2010
$
deleted text begin 2,211,000
deleted text end new text begin 2,179,000
new text end
.....
2011

The 2010 appropriation includes $191,000 for 2009 and deleted text begin$1,839,000deleted text endnew text begin $1,492,000 new text end for
2010.

The 2011 appropriation includes deleted text begin$204,000deleted text endnew text begin $551,000 new text end for 2010 and deleted text begin$2,007,000deleted text endnew text begin
$1,628,000
new text end for 2011.

Sec. 11.

Laws 2009, chapter 96, article 3, section 21, subdivision 2, is amended to read:


Subd. 2.

Special education; regular.

For special education aid under Minnesota
Statutes, section 125A.75:

$
deleted text begin 734,071,000
deleted text end new text begin 609,003,000
new text end
.....
2010
$
deleted text begin 781,497,000
deleted text end new text begin 772,845,000
new text end
.....
2011

The 2010 appropriation includes $71,947,000 for 2009 and deleted text begin$662,124,000deleted text endnew text begin
$537,056,000
new text end for 2010.

The 2011 appropriation includes deleted text begin$73,569,000deleted text endnew text begin $198,637,000 new text end for 2010 and
deleted text begin $707,928,000deleted text endnew text begin $574,208,000 new text end for 2011.

Sec. 12.

Laws 2009, chapter 96, article 3, section 21, subdivision 4, is amended to read:


Subd. 4.

Travel for home-based services.

For aid for teacher travel for home-based
services under Minnesota Statutes, section 125A.75, subdivision 1:

$
deleted text begin 258,000 deleted text end new text begin 214,000
new text end
.....
2010
$
deleted text begin 282,000 deleted text end new text begin 278,000
new text end
.....
2011

The 2010 appropriation includes $24,000 for 2009 and deleted text begin$234,000deleted text endnew text begin $190,000new text end for 2010.

The 2011 appropriation includes deleted text begin$26,000deleted text end new text begin $70,000 new text endfor 2010 and deleted text begin$256,000deleted text end new text begin $208,000
new text endfor 2011.

Sec. 13.

Laws 2009, chapter 96, article 3, section 21, subdivision 5, is amended to read:


Subd. 5.

Special education; excess costs.

For excess cost aid under Minnesota
Statutes, section 125A.79, subdivision 7:

$
deleted text begin 110,871,000
deleted text end new text begin 96,926,000
new text end
.....
2010
$
deleted text begin 110,877,000
deleted text end new text begin 110,871,000
new text end
.....
2011

The 2010 appropriation includes $37,046,000 for 2009 and deleted text begin$73,825,000deleted text endnew text begin $59,880,000
new text end for 2010.

The 2011 appropriation includes deleted text begin$37,022,000deleted text endnew text begin $50,967,000 new text end for 2010 and deleted text begin$73,855,000deleted text endnew text begin
$59,904,000
new text end for 2011.

Sec. 14.

Laws 2009, chapter 96, article 4, section 12, subdivision 2, is amended to read:


Subd. 2.

Health and safety revenue.

For health and safety aid according to
Minnesota Statutes, section 123B.57, subdivision 5:

$
deleted text begin 161,000 deleted text end new text begin 132,000
new text end
.....
2010
$
deleted text begin 160,000 deleted text end new text begin 162,000
new text end
.....
2011

The 2010 appropriation includes $10,000 for 2009 and deleted text begin$151,000deleted text endnew text begin $122,000 new text end for 2010.

The 2011 appropriation includes deleted text begin$16,000deleted text endnew text begin $45,000 new text end for 2010 and deleted text begin$144,000deleted text endnew text begin $117,000
new text end for 2011.

Sec. 15.

Laws 2009, chapter 96, article 4, section 12, subdivision 3, is amended to read:


Subd. 3.

Debt service equalization.

For debt service aid according to Minnesota
Statutes, section 123B.53, subdivision 6:

$
deleted text begin 7,948,000
deleted text end new text begin 6,608,000
new text end
.....
2010
$
deleted text begin 9,275,000
deleted text end new text begin 9,012,000
new text end
.....
2011

The 2010 appropriation includes $851,000 for 2009 and deleted text begin$7,097,000deleted text endnew text begin $5,757,000 new text end for
2010.

The 2011 appropriation includes deleted text begin$788,000deleted text endnew text begin $2,128,000 new text end for 2010 and deleted text begin$8,487,000deleted text endnew text begin
$6,884,000
new text end for 2011.

Sec. 16.

Laws 2009, chapter 96, article 4, section 12, subdivision 4, is amended to read:


Subd. 4.

Alternative facilities bonding aid.

For alternative facilities bonding aid,
according to Minnesota Statutes, section 123B.59, subdivision 1:

$
deleted text begin 19,287,000
deleted text end new text begin 16,008,000
new text end
.....
2010
$
19,287,000
.....
2011

The 2010 appropriation includes $1,928,000 for 2009 and deleted text begin$17,359,000deleted text endnew text begin $14,080,000
new text end for 2010.

The 2011 appropriation includes deleted text begin$1,928,000deleted text endnew text begin $5,207,000new text end for 2010 and deleted text begin$17,359,000deleted text endnew text begin
$14,080,000
new text end for 2011.

Sec. 17.

Laws 2009, chapter 96, article 4, section 12, subdivision 6, is amended to read:


Subd. 6.

Deferred maintenance aid.

For deferred maintenance aid, according to
Minnesota Statutes, section 123B.591, subdivision 4:

$
deleted text begin 2,302,000
deleted text end new text begin 1,916,000
new text end
.....
2010
$
deleted text begin 2,073,000
deleted text end new text begin 2,110,000
new text end
.....
2011

The 2010 appropriation includes $260,000 for 2009 and deleted text begin$2,042,000deleted text endnew text begin $1,656,000 new text end for
2010.

The 2011 appropriation includes deleted text begin$226,000deleted text endnew text begin $612,000 new text end for 2010 and deleted text begin$1,847,000deleted text endnew text begin
$1,498,000
new text end for 2011.

Sec. 18.

Laws 2009, chapter 96, article 5, section 13, subdivision 6, is amended to read:


Subd. 6.

Basic system support.

For basic system support grants under Minnesota
Statutes, section 134.355:

$
deleted text begin 13,570,000
deleted text end new text begin 11,264,000
new text end
.....
2010
$
13,570,000
.....
2011

The 2010 appropriation includes $1,357,000 for 2009 and deleted text begin$12,213,000deleted text endnew text begin $9,907,000
new text end for 2010.

The 2011 appropriation includes deleted text begin$1,357,000deleted text endnew text begin $3,663,000 new text end for 2010 and deleted text begin$12,213,000deleted text endnew text begin
$9,907,000
new text end for 2011.

Sec. 19.

Laws 2009, chapter 96, article 5, section 13, subdivision 7, is amended to read:


Subd. 7.

Multicounty, multitype library systems.

For grants under Minnesota
Statutes, sections 134.353 and 134.354, to multicounty, multitype library systems:

$
deleted text begin 1,300,000
deleted text end new text begin 1,079,000
new text end
.....
2010
$
1,300,000
.....
2011

The 2010 appropriation includes $130,000 for 2009 and deleted text begin$1,170,000deleted text endnew text begin $949,000new text end for
2010.

The 2011 appropriation includes deleted text begin$130,000deleted text endnew text begin $351,000new text end for 2010 and deleted text begin$1,170,000deleted text endnew text begin
$949,000
new text end for 2011.

Sec. 20.

Laws 2009, chapter 96, article 5, section 13, subdivision 9, is amended to read:


Subd. 9.

Regional library telecommunications aid.

For regional library
telecommunications aid under Minnesota Statutes, section 134.355:

$
deleted text begin 2,300,000
deleted text end new text begin 1,909,000
new text end
.....
2010
$
2,300,000
.....
2011

The 2010 appropriation includes $230,000 for 2009 and deleted text begin$2,070,000deleted text endnew text begin $1,679,000new text end
for 2010.

The 2011 appropriation includes deleted text begin$230,000deleted text endnew text begin $621,000 new text end for 2010 and deleted text begin$2,070,000deleted text endnew text begin
$1,679,000
new text end for 2011.

Sec. 21.

Laws 2009, chapter 96, article 6, section 11, subdivision 2, is amended to read:


Subd. 2.

School readiness.

For revenue for school readiness programs under
Minnesota Statutes, sections 124D.15 and 124D.16:

$
deleted text begin 10,095,000
deleted text end new text begin 8,379,000
new text end
.....
2010
$
10,095,000
.....
2011

The 2010 appropriation includes $1,009,000 for 2009 and deleted text begin$9,086,000deleted text endnew text begin $7,370,000
new text end for 2010.

The 2011 appropriation includes deleted text begin$1,009,000deleted text endnew text begin $2,725,000 new text end for 2010 and deleted text begin$9,086,000deleted text endnew text begin
$7,370,000
new text end for 2011.

Sec. 22.

Laws 2009, chapter 96, article 6, section 11, subdivision 3, is amended to read:


Subd. 3.

Early childhood family education aid.

For early childhood family
education aid under Minnesota Statutes, section 124D.135:

$
deleted text begin 22,955,000
deleted text end new text begin 19,189,000
new text end
.....
2010
$
deleted text begin 22,547,000
deleted text end new text begin 22,473,000
new text end
.....
2011

The 2010 appropriation includes $3,020,000 for 2009 and deleted text begin$19,935,000deleted text endnew text begin $16,169,000
new text end for 2010.

The 2011 appropriation includes deleted text begin$2,214,000deleted text endnew text begin $5,980,000new text end for 2010 and deleted text begin$20,333,000deleted text endnew text begin
$16,493,000
new text end for 2011.

Sec. 23.

Laws 2009, chapter 96, article 6, section 11, subdivision 4, is amended to read:


Subd. 4.

Health and developmental screening aid.

For health and developmental
screening aid under Minnesota Statutes, sections 121A.17 and 121A.19:

$
deleted text begin 3,694,000
deleted text end new text begin 3,066,000
new text end
.....
2010
$
deleted text begin 3,800,000
deleted text end new text begin 3,780,000
new text end
.....
2011

The 2010 appropriation includes $367,000 for 2009 and deleted text begin$3,327,000deleted text endnew text begin $2,699,000 new text end for
2010.

The 2011 appropriation includes deleted text begin$369,000deleted text endnew text begin $997,000 new text end for 2010 and deleted text begin$3,431,000deleted text endnew text begin
$2,783,000
new text end for 2011.

Sec. 24.

Laws 2009, chapter 96, article 6, section 11, subdivision 8, is amended to read:


Subd. 8.

Community education aid.

For community education aid under
Minnesota Statutes, section 124D.20:

$
deleted text begin 585,000 deleted text end new text begin 488,000
new text end
.....
2010
$
deleted text begin 467,000 deleted text end new text begin 486,000
new text end
.....
2011

The 2010 appropriation includes $73,000 for 2009 and deleted text begin$512,000deleted text endnew text begin $415,000 new text end for 2010.

The 2011 appropriation included deleted text begin$56,000deleted text endnew text begin $153,000 new text end for 2010 and deleted text begin$411,000deleted text endnew text begin $333,000
new text end for 2011.

Sec. 25.

Laws 2009, chapter 96, article 6, section 11, subdivision 9, is amended to read:


Subd. 9.

Adults with disabilities program aid.

For adults with disabilities
programs under Minnesota Statutes, section 124D.56:

$
deleted text begin 710,000 deleted text end new text begin 590,000
new text end
.....
2010
$
710,000
.....
2011

The 2010 appropriation includes $71,000 for 2009 and deleted text begin$639,000deleted text endnew text begin $519,000 new text end for 2010.

The 2011 appropriation includes deleted text begin$71,000deleted text endnew text begin $191,000 new text end for 2010 and deleted text begin$639,000deleted text endnew text begin $519,000
new text end for 2011.

Sec. 26.

Laws 2009, chapter 96, article 6, section 11, subdivision 12, is amended to
read:


Subd. 12.

Adult basic education aid.

For adult basic education aid under
Minnesota Statutes, section 124D.531:

$
deleted text begin 42,975,000
deleted text end new text begin 35,648,000
new text end
.....
2010
$
deleted text begin 44,258,000
deleted text end new text begin 44,039,000
new text end
.....
2011

The 2010 appropriation includes $4,187,000 for 2009 and deleted text begin$38,788,000deleted text endnew text begin $31,461,000
new text end for 2010.

The 2011 appropriation includes deleted text begin$4,309,000deleted text endnew text begin $11,636,000 new text end for 2010 and deleted text begin$39,949,000deleted text endnew text begin
$32,403,000
new text end for 2011.

ARTICLE 3

PERMANENT REVENUE

Section 1.

new text begin [116J.8737] INVESTMENT TAX CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For the purposes of this section, the following terms
have the meanings given.
new text end

new text begin (b) "Qualified new business venture" means a business that satisfies all of the
following conditions:
new text end

new text begin (1) the business has its headquarters in Minnesota;
new text end

new text begin (2) at least 51 percent of the business's employees are employed in Minnesota, and
51 percent of the business's total payroll is paid or incurred in the state;
new text end

new text begin (3) the business is engaged in, or is committed to engage in:
new text end

new text begin (i) using advanced technology to add value to a product, process, or service in a
qualified high-technology field or qualified biotechnology or medical device field;
new text end

new text begin (ii) conducting research in and development of a product, process, or service in a
qualified high-technology field or qualified biotechnology or medical device field;
new text end

new text begin (iii) developing a new product, process, or service in a qualified high-technology
field or qualified biotechnology or medical device field; or
new text end

new text begin (iv) qualified green manufacturing;
new text end

new text begin (4) the business is not engaged in real estate development, insurance, banking,
lending, lobbying, political consulting, information technology consulting, wholesale or
retail trade, leisure, hospitality, transportation, construction, ethanol production from
corn, or professional services provided by attorneys, accountants, business consultants,
physicians, or health care consultants;
new text end

new text begin (5) the business has fewer than 25 employees, and, if the business has more than
five employees, the business must pay its employees annual wages of at least 175 percent
of the federal poverty guideline for the year for a family of four, and must pay any
remaining employees annual wages of at least 110 percent of the federal poverty guideline
for a family of four;
new text end

new text begin (6) the business has not been in operation for more than ten consecutive years;
new text end

new text begin (7) the business has not received more than $1,000,000 in investments that have
qualified for and received tax credits under this section;
new text end

new text begin (8) the business has less than $2,000,000 in annual gross sales receipts for the
previous year;
new text end

new text begin (9) the business is not a subsidiary or an affiliate of a business that employs more
than 100 employees or has gross sales receipts for the previous year of more than
$2,000,000, computed by aggregating all of the employees and gross sales receipts of the
business entities affiliated with the business; and
new text end

new text begin (10) the business has not previously received private equity investments of more
than $2,000,000.
new text end

new text begin (c) "Qualified high-technology field" includes, but is not limited to, aerospace,
agricultural processing, alternative energy, environmental engineering, food technology,
cellulosic ethanol, information technology, materials science technology, nanotechnology,
and telecommunications, but excludes a business qualifying under the definitions in
paragraphs (h) and (i).
new text end

new text begin (d) "Qualified biotechnology or medical device field" means the business of
manufacturing, processing, assembling, researching, or developing biotechnology or
medical device products, including biotechnology and device products used in agriculture.
new text end

new text begin (e) "Qualified green manufacturing" means a business whose primary business
activity is production of products, processes, methods, technologies, or services intended
to do one or more of the following:
new text end

new text begin (1) increase the use of energy from renewable sources, as defined in section
216B.1691;
new text end

new text begin (2) increase the energy efficiency of the electric utility infrastructure system or to
increase energy conservation related to electricity use, as provided in sections 216B.2401
and 216B.241;
new text end

new text begin (3) reduce greenhouse gas emissions, as defined in section 216H.01, subdivision
2, or to mitigate greenhouse gas emissions through, but not limited to, carbon capture,
storage, or sequestration;
new text end

new text begin (4) monitor, protect, restore, and preserve the quality of surface waters; and
new text end

new text begin (5) expand use of biofuels, including expanding the feasibility or reducing the cost
of producing biofuels or the types of equipment, machinery, and vehicles that can use
biofuels.
new text end

new text begin (f) "Qualified taxpayer" means:
new text end

new text begin (1) an accredited investor, within the meaning of Regulation D of the Securities and
Exchange Commission, Code of Federal Regulations, title 17, section 230.501(a), whether
part of a pass-through entity or not, who:
new text end

new text begin (i) does not own, control, or hold power to vote 20 percent or more of the outstanding
securities of the qualified new business venture in which the eligible investment is
proposed; or
new text end

new text begin (ii) does not receive more than 50 percent of the gross annual income from the
qualified new business venture in which the eligible investment is proposed; and
new text end

new text begin (2) a member of the immediate family of a taxpayer disqualified by this subdivision
is not eligible for a credit under this section. For purposes of this subdivision, "immediate
family" means the taxpayer's spouse, parent, sibling, or child, or the spouse of any person
listed in this paragraph.
new text end

new text begin Subd. 2. new text end

new text begin Credit allowed, holding period, limitations, and carryover. new text end

new text begin (a) A
qualified taxpayer is allowed a credit against the tax imposed under chapter 290 for
investments made in a qualified new business venture. The credit equals 25 percent of the
qualified taxpayer's investment in the business, but not to exceed the lesser of:
new text end

new text begin (1) the liability for tax under chapter 290, including the applicable alternative
minimum tax, but excluding the minimum fee under section 290.0922; and
new text end

new text begin (2) the amount of the certificate provided to the qualified taxpayer under subdivision
3, paragraph (c).
new text end

new text begin (b) No taxpayer may receive more than $50,000 in provisional credits under this
section in any one year.
new text end

new text begin (c) A qualified taxpayer must claim the credit in the fourth tax year after which the
investment in the qualified new business venture was made. The credit is allowed only
for investments made in a qualified new business venture that remains invested for at
least four years and that are made after the qualified taxpayer has been certified by the
commissioner under subdivision 3.
new text end

new text begin (d) The four-year investment holding period required by paragraph (c) does not
apply if:
new text end

new text begin (1) the investment by the qualified taxpayer becomes worthless before the end of
the four-year period; or
new text end

new text begin (2) the qualified new business venture is sold before the end of the four-year period.
new text end

new text begin (e) If the amount of the credit under this subdivision for any taxable year exceeds
the limitations under paragraph (a), the excess is a credit carryover to each of the ten
succeeding taxable years. The entire amount of the excess unused credit for the taxable
year must be carried first to the earliest of the taxable years to which the credit may be
carried. The amount of the unused credit that may be added under this paragraph may not
exceed the taxpayer's liability for tax less the credit for the taxable year.
new text end

new text begin Subd. 3. new text end

new text begin Certification of qualified taxpayers. new text end

new text begin (a) Qualified taxpayers may apply
to the commissioner of employment and economic development for certification. The
application must be in the form and be made under the procedures specified by the
commissioner, accompanied by an application fee of $250. Fees are appropriated to the
commissioner for personnel and administrative expenses related to administering the
program.
new text end

new text begin (b) The commissioner shall provide provisional credit certificates to qualified
taxpayers, upon a showing by the qualified taxpayer of investments of at least $12,500
in qualified new business ventures. The commissioner may not issue more than $50,000
in provisional credit certificates per qualified taxpayer per year. In awarding provisional
certificates under this paragraph, the commissioner must award them to taxpayers in the
order in which the applications are received. The commissioner may not issue a total of
more than $10,000,000 per year in provisional credit certificates to qualified taxpayers in
fiscal years 2010, 2011, 2012, and 2013.
new text end

new text begin (c) The commissioner shall provide a final credit certificate to the qualified taxpayer
upon a showing by the taxpayer that the holding requirements of subdivision 2, paragraph
(c), have been met, that the qualified new business venture continues to satisfy the
conditions of subdivision 1, paragraph (b), clauses (1) to (4), and (5) related to annual
wage standards, and that the taxpayer is otherwise eligible for the credit.
new text end

new text begin Subd. 4. new text end

new text begin Rulemaking. new text end

new text begin The commissioner's actions in establishing procedures and
requirements and in making determinations and certifications to administer this section are
not a rule for purposes of chapter 14, are not subject to the Administrative Procedures Act
contained in chapter 14, and are not subject to section 14.386.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2009, for taxable years
beginning after December 31, 2008, and only applies to investments made after the
qualified taxpayer has been certified by the commissioner of employment and economic
development.
new text end

Sec. 2.

Minnesota Statutes 2008, section 290.06, subdivision 2c, is amended to read:


Subd. 2c.

Schedules of rates for individuals, estates, and trusts.

(a) The income
taxes imposed by this chapter upon married individuals filing joint returns and surviving
spouses as defined in section 2(a) of the Internal Revenue Code must be computed by
applying to their taxable net income the following schedule of rates:

(1) on the first deleted text begin$25,680deleted text endnew text begin $33,220new text end, 5.35 percent;

(2) on all over deleted text begin$25,680deleted text endnew text begin $33,220new text end, but not over deleted text begin$102,030deleted text endnew text begin $131,970new text end, 7.05 percent;

(3) on all over deleted text begin$102,030deleted text endnew text begin $131,970new text end, new text beginbut not over $250,000, new text end7.85 percentdeleted text begin.deleted text endnew text begin; and
new text end

new text begin (4) on all over $250,000, nine percent.
new text end

Married individuals filing separate returns, estates, and trusts must compute their
income tax by applying the above rates to their taxable income, except that the income
brackets will be one-half of the above amounts.

(b) The income taxes imposed by this chapter upon unmarried individuals must be
computed by applying to taxable net income the following schedule of rates:

(1) on the first deleted text begin$17,570deleted text endnew text begin $22,730new text end, 5.35 percent;

(2) on all over deleted text begin$17,570deleted text endnew text begin $22,730new text end, but not over deleted text begin$57,710deleted text endnew text begin $74,650new text end, 7.05 percent;

(3) on all over deleted text begin$57,710deleted text endnew text begin $74,650new text end, new text beginbut not over $141,250, new text end7.85 percentdeleted text begin.deleted text endnew text begin; and
new text end

new text begin (4) on all over $141,250, nine percent.
new text end

(c) The income taxes imposed by this chapter upon unmarried individuals qualifying
as a head of household as defined in section 2(b) of the Internal Revenue Code must be
computed by applying to taxable net income the following schedule of rates:

(1) on the first deleted text begin$21,630deleted text endnew text begin $27,980new text end, 5.35 percent;

(2) on all over deleted text begin$21,630deleted text endnew text begin $27,980new text end, but not over deleted text begin$86,910deleted text endnew text begin $112,420new text end, 7.05 percent;

(3) on all over deleted text begin$86,910deleted text endnew text begin $112,420new text end,new text begin but not over $212,500,new text end 7.85 percentdeleted text begin.deleted text endnew text begin; and
new text end

new text begin (4) on all over $212,500, nine percent.
new text end

(d) In lieu of a tax computed according to the rates set forth in this subdivision, the
tax of any individual taxpayer whose taxable net income for the taxable year is less than
an amount determined by the commissioner must be computed in accordance with tables
prepared and issued by the commissioner of revenue based on income brackets of not
more than $100. The amount of tax for each bracket shall be computed at the rates set
forth in this subdivision, provided that the commissioner may disregard a fractional part of
a dollar unless it amounts to 50 cents or more, in which case it may be increased to $1.

(e) An individual who is not a Minnesota resident for the entire year must compute
the individual's Minnesota income tax as provided in this subdivision. After the
application of the nonrefundable credits provided in this chapter, the tax liability must
then be multiplied by a fraction in which:

(1) the numerator is the individual's Minnesota source federal adjusted gross income
as defined in section 62 of the Internal Revenue Code and increased by the additions
required under section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), (9), (12), and
(13) and reduced by the Minnesota assignable portion of the subtraction for United States
government interest under section 290.01, subdivision 19b, clause (1), and the subtractions
under section 290.01, subdivision 19b, clauses (9), (10), (14), (15), and (16), after applying
the allocation and assignability provisions of section 290.081, clause (a), or 290.17; and

(2) the denominator is the individual's federal adjusted gross income as defined in
section 62 of the Internal Revenue Code of 1986, increased by the amounts specified in
section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), (9), (12), and (13) and
reduced by the amounts specified in section 290.01, subdivision 19b, clauses (1), (9),
(10), (14), (15), and (16).

new text begin (f) For taxable years beginning after December 31, 2013, the maximum tax rate
under this subdivision is 7.85 percent, if the commissioner of finance estimates in the
February 2013 economic forecast that the unrestricted general fund balance at the end of
fiscal year 2013 equals or exceeds $500,000,000.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2008.
new text end

Sec. 3.

Minnesota Statutes 2008, section 290.06, subdivision 2d, is amended to read:


Subd. 2d.

Inflation adjustment of brackets.

(a) For taxable years beginning after
December 31, deleted text begin2000deleted text endnew text begin 2009new text end, the minimum and maximum dollar amounts for each rate
bracket for which a tax is imposed in subdivision 2c shall be adjusted for inflation by the
percentage determined under paragraph (b). For the purpose of making the adjustment as
provided in this subdivision all of the rate brackets provided in subdivision 2c shall be the
rate brackets as they existed for taxable years beginning after December 31, deleted text begin1999deleted text endnew text begin 2008new text end,
and before January 1, deleted text begin2001deleted text endnew text begin 2010new text end. The rate applicable to any rate bracket must not be
changed. The dollar amounts setting forth the tax shall be adjusted to reflect the changes
in the rate brackets. The rate brackets as adjusted must be rounded to the nearest $10
amount. If the rate bracket ends in $5, it must be rounded up to the nearest $10 amount.

(b) The commissioner shall adjust the rate brackets and by the percentage determined
pursuant to the provisions of section 1(f) of the Internal Revenue Code, except thatnew text begin:
new text end

new text begin (1) in section 1(f)(2)(A) the words "increasing or decreasing" shall be substituted
for the word "increasing";
new text end

new text begin (2) in section 1(f)(3)(A) the words "differs from" shall be substituted for the word
"exceeds"; and
new text end

new text begin (3) new text endin section 1(f)(3)(B) the word deleted text begin"1999"deleted text endnew text begin "2008"new text end shall be substituted for the word
"1992." For deleted text begin2001deleted text endnew text begin 2010new text end, the commissioner shall then determine the percent change from
the 12 months ending on August 31, deleted text begin1999deleted text endnew text begin 2008new text end, to the 12 months ending on August 31,
deleted text begin 2000deleted text endnew text begin 2009new text end, and in each subsequent year, from the 12 months ending on August 31, deleted text begin1999deleted text endnew text begin
2008
new text end, to the 12 months ending on August 31 of the year preceding the taxable year. The
determination of the commissioner pursuant to this subdivision shall not be considered a
"rule" and shall not be subject to the Administrative Procedure Act contained in chapter 14.

No later than December 15 of each year, the commissioner shall announce the
specific percentage that will be used to adjust the tax rate brackets.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2008.
new text end

Sec. 4.

Minnesota Statutes 2008, section 290.06, is amended by adding a subdivision
to read:


new text begin Subd. 36. new text end

new text begin Investment tax credit. new text end

new text begin A taxpayer is allowed a credit as determined
under section 116J.8737 against the tax imposed by this chapter. Notwithstanding the
certification eligibility issued by the commissioner of the Department of Employment
and Economic Development under section 116J.8737, the commissioner may utilize
any audit and examination powers under chapters 270C or 289A to the extent necessary
to verify that the taxpayer is eligible for the credit and to assess for the amount of any
improperly claimed credit.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2009, for taxable years
beginning after December 31, 2008, and only applies to investments made after the
qualified taxpayer has been certified by the commissioner of employment and economic
development.
new text end

Sec. 5.

new text begin [290.094] SURTAX ON CERTAIN INTEREST INCOME.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) Unless the language or context clearly indicates that
a different meaning is intended, for the purposes of this section, the following terms
have the meanings given them.
new text end

new text begin (b) "Annual percentage rate" has the meaning given the term in Code of Federal
Regulations, title 12, parts 226.14 and 226.22, related to open-end and closed-end credit.
new text end

new text begin (c) "Borrower" means a debtor under a loan or a purchaser of debt under a credit
sale contract.
new text end

new text begin (d) "Cardholder" means a person to whom a credit card is issued or who has agreed
with the financial institution to pay obligations arising from the issuance to or use of the
card by another person.
new text end

new text begin (e) "Consumer loan" means a loan made by a financial institution in which:
new text end

new text begin (1) the debtor is a person other than an organization;
new text end

new text begin (2) the debt is incurred primarily for a personal, family, or household purpose; and
new text end

new text begin (3) the debt is payable in installments or a finance charge is made.
new text end

new text begin (f) "Credit" means the right granted by a financial institution to a borrower to defer
payment of a debt, to incur debt and defer its payment, or to purchase property or services
and defer payment.
new text end

new text begin (g) "Credit card" means a card or device issued under an arrangement under
which a financial institution gives to a cardholder the privilege of obtaining credit from
the financial institution or other person in purchasing or leasing property or services,
obtaining loans, or otherwise. A transaction is "pursuant to a credit card" only if credit is
obtained according to the terms of the arrangement by transmitting information contained
on the card or device orally, in writing, by mechanical or electronic methods, or in any
other manner. A transaction is not "pursuant to a credit card" if the card or device is
used solely in that transaction to:
new text end

new text begin (1) identify the cardholder or evidence the cardholder's creditworthiness and credit is
not obtained according to the terms of the arrangement;
new text end

new text begin (2) obtain a guarantee of payment from the cardholder's deposit account, whether or
not the payment results in a credit extension to the cardholder by the financial institution; or
new text end

new text begin (3) effect an immediate transfer of funds from the cardholder's deposit account by
electronic or other means, whether or not the transfer results in a credit extension to
the cardholder by the financial institution.
new text end

new text begin (h) "Credit sale contract" means a contract evidencing a credit sale. "Credit sale"
means a sale of goods or services, or an interest in land, in which:
new text end

new text begin (1) credit is granted by a seller who regularly engages as a seller in credit transactions
of the same kind; and
new text end

new text begin (2) the debt is payable in installments or a finance charge is made.
new text end

new text begin (i) "Financial institution" means a state or federally chartered bank, a state or
federally chartered bank and trust, a trust company with banking powers, a state or
federally chartered savings association, an industrial loan and thrift company organized
under chapter 53, a regulated lender organized under chapter 56, or an operating subsidiary
of any such institution.
new text end

new text begin (j) "Loan" means:
new text end

new text begin (1) the creation of debt by the financial institution's payment of money to the
borrower or a third person for the account of the borrower;
new text end

new text begin (2) the creation of debt pursuant to a credit card in any manner, including a cash
advance or the financial institution's honoring a draft or similar order for the payment of
money drawn or accepted by the borrower, paying or agreeing to pay the borrower's
obligation, or purchasing or otherwise acquiring the borrower's obligation from the
obligee or the borrower's assignee;
new text end

new text begin (3) the creation of debt by a cash advance to a borrower pursuant to an overdraft
line of credit arrangement;
new text end

new text begin (4) the creation of debt by a credit to an account with the financial institution upon
which the borrower is entitled to draw immediately;
new text end

new text begin (5) the forbearance of debt arising from a loan; and
new text end

new text begin (6) the creation of debt pursuant to open-end credit.
new text end

new text begin Loan does not include the forbearance of debt arising from a sale or lease, a credit
sale contract, or an overdraft from a person's deposit account with a financial institution
which is not pursuant to a written agreement to pay overdrafts with the right to defer
repayment thereof.
new text end

new text begin (k) "Organization" means a corporation, government, government subdivision or
agency, trust, estate, partnership, joint venture, cooperative, limited liability company,
limited liability partnership, or association.
new text end

new text begin (l) "Person" means a natural person or an organization.
new text end

new text begin (m) "Principal" means the total of:
new text end

new text begin (1) the amount paid to, received by, or paid or repayable for the account of, the
borrower; and
new text end

new text begin (2) to the extent that payment is deferred:
new text end

new text begin (i) the amount actually paid or to be paid by the financial institution for additional
charges permitted under this section; and
new text end

new text begin (ii) prepaid finance charges.
new text end

new text begin Subd. 2. new text end

new text begin Scope. new text end

new text begin (a) Any person or organization conducting a trade or business
in this state who is subject to the truth in lending requirements under Code of Federal
Regulations, title 12, part 226 (Federal Regulation Z), and who charges interest on the
credit issued shall be subject to a surtax on each transaction as prescribed by this chapter.
Transactions include any open-end and closed-end credit transactions subject to Federal
Regulation Z such as loans, consumer loans, credit sale contracts, extensions of credit, and
credit issued pursuant to a credit card. A transferee or assignee of a transaction subject to
the surtax under this section is also subject to the tax under this section.
new text end

new text begin (b) The tax shall be determined for each transaction subject to the requirements of
this section that occurs during the calendar year.
new text end

new text begin Subd. 3. new text end

new text begin Surtax rate. new text end

new text begin The surtax shall be imposed at the rate of 30 percent on any
income attributable to interest collected from the portion of an annual percentage rate
that exceeds 15 percent on transactions subject to Code of Federal Regulations, title 12,
part 226 (Federal Regulation Z).
new text end

new text begin Subd. 4. new text end

new text begin Collection and administration. new text end

new text begin The tax imposed by this section shall
be paid annually to the commissioner of revenue and is subject to the same collection,
enforcement, and penalty provisions as other taxes imposed by this chapter.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2008.
new text end

Sec. 6.

Minnesota Statutes 2008, section 297A.68, subdivision 5, is amended to read:


Subd. 5.

Capital equipment.

(a) Capital equipment is exempt. deleted text beginThe tax must be
imposed and collected as if the rate under section 297A.62, subdivision 1, applied, and
then refunded in the manner provided in section 297A.75.
deleted text end

"Capital equipment" means machinery and equipment purchased or leased, and used
in this state by the purchaser or lessee primarily for manufacturing, fabricating, mining,
or refining tangible personal property to be sold ultimately at retail if the machinery and
equipment are essential to the integrated production process of manufacturing, fabricating,
mining, or refining. Capital equipment also includes machinery and equipment
used primarily to electronically transmit results retrieved by a customer of an online
computerized data retrieval system.

(b) Capital equipment includes, but is not limited to:

(1) machinery and equipment used to operate, control, or regulate the production
equipment;

(2) machinery and equipment used for research and development, design, quality
control, and testing activities;

(3) environmental control devices that are used to maintain conditions such as
temperature, humidity, light, or air pressure when those conditions are essential to and are
part of the production process;

(4) materials and supplies used to construct and install machinery or equipment;

(5) repair and replacement parts, including accessories, whether purchased as spare
parts, repair parts, or as upgrades or modifications to machinery or equipment;

(6) materials used for foundations that support machinery or equipment;

(7) materials used to construct and install special purpose buildings used in the
production process;

(8) ready-mixed concrete equipment in which the ready-mixed concrete is mixed
as part of the delivery process regardless if mounted on a chassis, repair parts for
ready-mixed concrete trucks, and leases of ready-mixed concrete trucks; and

(9) machinery or equipment used for research, development, design, or production
of computer software.

(c) Capital equipment does not include the following:

(1) motor vehicles taxed under chapter 297B;

(2) machinery or equipment used to receive or store raw materials;

(3) building materials, except for materials included in paragraph (b), clauses (6)
and (7);

(4) machinery or equipment used for nonproduction purposes, including, but not
limited to, the following: plant security, fire prevention, first aid, and hospital stations;
support operations or administration; pollution control; and plant cleaning, disposal of
scrap and waste, plant communications, space heating, cooling, lighting, or safety;

(5) farm machinery and aquaculture production equipment as defined by section
297A.61, subdivisions 12 and 13;

(6) machinery or equipment purchased and installed by a contractor as part of an
improvement to real property;

(7) machinery and equipment used by restaurants in the furnishing, preparing, or
serving of prepared foods as defined in section 297A.61, subdivision 31;

(8) machinery and equipment used to furnish the services listed in section 297A.61,
subdivision 3
, paragraph (g), clause (6), items (i) to (vi) and (viii);

(9) machinery or equipment used in the transportation, transmission, or distribution
of petroleum, liquefied gas, natural gas, water, or steam, in, by, or through pipes, lines,
tanks, mains, or other means of transporting those products. This clause does not apply to
machinery or equipment used to blend petroleum or biodiesel fuel as defined in section
239.77; or

(10) any other item that is not essential to the integrated process of manufacturing,
fabricating, mining, or refining.

(d) For purposes of this subdivision:

(1) "Equipment" means independent devices or tools separate from machinery but
essential to an integrated production process, including computers and computer software,
used in operating, controlling, or regulating machinery and equipment; and any subunit or
assembly comprising a component of any machinery or accessory or attachment parts of
machinery, such as tools, dies, jigs, patterns, and molds.

(2) "Fabricating" means to make, build, create, produce, or assemble components or
property to work in a new or different manner.

(3) "Integrated production process" means a process or series of operations through
which tangible personal property is manufactured, fabricated, mined, or refined. For
purposes of this clause, (i) manufacturing begins with the removal of raw materials
from inventory and ends when the last process prior to loading for shipment has been
completed; (ii) fabricating begins with the removal from storage or inventory of the
property to be assembled, processed, altered, or modified and ends with the creation
or production of the new or changed product; (iii) mining begins with the removal of
overburden from the site of the ores, minerals, stone, peat deposit, or surface materials and
ends when the last process before stockpiling is completed; and (iv) refining begins with
the removal from inventory or storage of a natural resource and ends with the conversion
of the item to its completed form.

(4) "Machinery" means mechanical, electronic, or electrical devices, including
computers and computer software, that are purchased or constructed to be used for the
activities set forth in paragraph (a), beginning with the removal of raw materials from
inventory through completion of the product, including packaging of the product.

(5) "Machinery and equipment used for pollution control" means machinery and
equipment used solely to eliminate, prevent, or reduce pollution resulting from an activity
described in paragraph (a).

(6) "Manufacturing" means an operation or series of operations where raw materials
are changed in form, composition, or condition by machinery and equipment and which
results in the production of a new article of tangible personal property. For purposes of
this subdivision, "manufacturing" includes the generation of electricity or steam to be
sold at retail.

(7) "Mining" means the extraction of minerals, ores, stone, or peat.

(8) "Online data retrieval system" means a system whose cumulation of information
is equally available and accessible to all its customers.

(9) "Primarily" means machinery and equipment used 50 percent or more of the time
in an activity described in paragraph (a).

(10) "Refining" means the process of converting a natural resource to an intermediate
or finished product, including the treatment of water to be sold at retail.

(11) This subdivision does not apply to telecommunications equipment as
provided in subdivision 35, and does not apply to wire, cable, fiber, poles, or conduit
for telecommunications services.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases after
December 31, 2009.
new text end

Sec. 7.

Minnesota Statutes 2008, section 297A.75, subdivision 1, as amended by Laws
2009, chapter 88, article 4, section 7, is amended to read:


Subdivision 1.

Tax collected.

The tax on the gross receipts from the sale of the
following exempt items must be imposed and collected as if the sale were taxable and the
rate under section 297A.62, subdivision 1, applied. The exempt items include:

(1) deleted text begincapital equipment exempt under section 297A.68, subdivision 5;
deleted text end

deleted text begin (2)deleted text end building materials for an agricultural processing facility exempt under section
297A.71, subdivision 13;

deleted text begin (3)deleted text endnew text begin (2)new text end building materials for mineral production facilities exempt under section
297A.71, subdivision 14;

deleted text begin (4)deleted text endnew text begin (3)new text end building materials for correctional facilities under section 297A.71,
subdivision 3
;

deleted text begin (5)deleted text endnew text begin (4)new text end building materials used in a residence for disabled veterans exempt under
section 297A.71, subdivision 11;

deleted text begin (6)deleted text endnew text begin (5)new text end elevators and building materials exempt under section 297A.71, subdivision
12
;

deleted text begin (7)deleted text endnew text begin (6)new text end building materials for the Long Lake Conservation Center exempt under
section 297A.71, subdivision 17;

deleted text begin (8)deleted text end new text begin(7)new text endmaterials and supplies for qualified low-income housing under section
297A.71, subdivision 23;

deleted text begin (9)deleted text endnew text begin (8)new text end materials, supplies, and equipment for municipal electric utility facilities
under section 297A.71, subdivision 35;

deleted text begin (10)deleted text endnew text begin (9)new text end equipment and materials used for the generation, transmission, and
distribution of electrical energy and an aerial camera package exempt under section
297A.68, subdivision 37;

deleted text begin (11)deleted text endnew text begin (10)new text end tangible personal property and taxable services and construction materials,
supplies, and equipment exempt under section 297A.68, subdivision 41;

deleted text begin (12)deleted text endnew text begin (11)new text end commuter rail vehicle and repair parts under section 297A.70, subdivision
3, clause (11);

deleted text begin (13)deleted text endnew text begin (12)new text end materials, supplies, and equipment for construction or improvement of
projects and facilities under section 297A.71, subdivision 40; and

deleted text begin (14)deleted text endnew text begin (13)new text end materials, supplies, and equipment for construction or improvement of a
meat processing facility exempt under section 297A.71, subdivision 41.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases after
December 31, 2009.
new text end

Sec. 8.

Minnesota Statutes 2008, section 297A.75, subdivision 2, as amended by Laws
2009, chapter 88, article 4, section 8, is amended to read:


Subd. 2.

Refund; eligible persons.

Upon application on forms prescribed by the
commissioner, a refund equal to the tax paid on the gross receipts of the exempt items
must be paid to the applicant. Only the following persons may apply for the refund:

(1) for subdivision 1, clauses (1) deleted text beginto (3)deleted text endnew text begin and (2)new text end, the applicant must be the purchaser;

(2) for subdivision 1, clauses deleted text begin(4)deleted text endnew text begin (3)new text end and deleted text begin(7)deleted text endnew text begin (6)new text end, the applicant must be the
governmental subdivision;

(3) for subdivision 1, clause deleted text begin(5)deleted text endnew text begin (4)new text end, the applicant must be the recipient of the
benefits provided in United States Code, title 38, chapter 21;

(4) for subdivision 1, clause deleted text begin(6)deleted text endnew text begin (5)new text end, the applicant must be the owner of the
homestead property;

(5) for subdivision 1, clause deleted text begin(8)deleted text endnew text begin (7)new text end, the owner of the qualified low-income housing
project;

(6) for subdivision 1, clause deleted text begin(9)deleted text endnew text begin (8)new text end, the applicant must be a municipal electric utility
or a joint venture of municipal electric utilities;

(7) for subdivision 1, clauses new text begin(9), new text end(10), deleted text begin(11),deleted text end and deleted text begin(14)deleted text endnew text begin (13)new text end, the owner of the
qualifying business; and

(8) for subdivision 1, clauses new text begin(11) and new text end(12) deleted text beginand (13)deleted text end, the applicant must be the
governmental entity that owns or contracts for the project or facility.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
December 31, 2009.
new text end

Sec. 9.

Minnesota Statutes 2008, section 297A.75, subdivision 3, is amended to read:


Subd. 3.

Application.

(a) The application must include sufficient information
to permit the commissioner to verify the tax paid. If the tax was paid by a contractor,
subcontractor, or builder, under subdivision 1, clause new text begin(3), new text end(4), (5), (6), (7), (8), (9), (10),
(11), (12),new text begin ornew text end (13), deleted text beginor (14),deleted text end the contractor, subcontractor, or builder must furnish to the
refund applicant a statement including the cost of the exempt items and the taxes paid on
the items unless otherwise specifically provided by this subdivision. The provisions of
sections 289A.40 and 289A.50 apply to refunds under this section.

deleted text begin (b) An applicant may not file more than two applications per calendar year for
refunds for taxes paid on capital equipment exempt under section 297A.68, subdivision 5.
deleted text end

deleted text begin (c)deleted text endnew text begin (b)new text end Total refunds for purchases of items in section 297A.71, subdivision 40,
must not exceed $5,000,000 in fiscal years 2010 and 2011. Applications for refunds for
purchases of items in sections 297A.70, subdivision 3, paragraph (a), clause (11), and
297A.71, subdivision 40, must not be filed until after June 30, 2009.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases made after
December 31, 2009.
new text end

Sec. 10.

Minnesota Statutes 2008, section 295.75, subdivision 2, is amended to read:


Subd. 2.

Gross receipts tax imposed.

A tax is imposed on each liquor retailer equal
to deleted text begin2.5deleted text endnew text begin fivenew text end percent of gross receipts from retail sales in Minnesota of liquor.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for gross receipts received after
June 30, 2009.
new text end

Sec. 11.

Minnesota Statutes 2008, section 297G.03, subdivision 1, is amended to read:


Subdivision 1.

General rate; distilled spirits and wine.

The following excise tax is
imposed on all distilled spirits and wine manufactured, imported, sold, or possessed in
this state:

Standard
Metric
(a) Distilled spirits, liqueurs,
cordials, and specialties regardless
of alcohol content (excluding ethyl
alcohol)
$
deleted text begin5.03deleted text endnew text begin9.31new text end per
gallon
$
deleted text begin1.33deleted text end new text begin2.46
new text endper liter
(b) Wine containing 14 percent
or less alcohol by volume (except
cider as defined in section 297G.01,
subdivision 3a)
$
deleted text begin.30deleted text endnew text begin.81new text end per
gallon
$
deleted text begin.08deleted text endnew text begin.22new text end per
liter
(c) Wine containing more than
14 percent but not more than 21
percent alcohol by volume
$
deleted text begin.95deleted text endnew text begin1.46new text end per
gallon
$
deleted text begin.25deleted text endnew text begin.39new text end per
liter
(d) Wine containing more than
21 percent but not more than 24
percent alcohol by volume
$
deleted text begin1.82deleted text endnew text begin2.33new text end per
gallon
$
deleted text begin.48deleted text endnew text begin.62new text end per
liter
(e) Wine containing more than 24
percent alcohol by volume
$
deleted text begin3.52deleted text endnew text begin4.03new text end per
gallon
$
deleted text begin .93deleted text endnew text begin1.07new text end
per liter
(f) Natural and artificial sparkling
wines containing alcohol
$
deleted text begin1.82deleted text endnew text begin2.33new text end per
gallon
$
deleted text begin .48deleted text endnew text begin.62new text end per
liter
(g) Cider as defined in section
297G.01, subdivision 3a
$
deleted text begin.15deleted text endnew text begin.66new text end per
gallon
$
deleted text begin .04deleted text endnew text begin.18new text end per
liter
(h) Low alcohol dairy cocktails
$
.08 per gallon
$
.02 per liter

In computing the tax on a package of distilled spirits or wine, a proportional tax at a
like rate on all fractional parts of a gallon or liter must be paid, except that the tax on a
fractional part of a gallon less than 1/16 of a gallon is the same as for 1/16 of a gallon.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2009.
new text end

Sec. 12.

Minnesota Statutes 2008, section 297G.04, is amended to read:


297G.04 FERMENTED MALT BEVERAGES; RATE OF TAX.

Subdivision 1.

Tax imposed.

The following excise tax is imposed on all fermented
malt beverages that are imported, directly or indirectly sold, or possessed in this state:

(1) on fermented malt beverages containing not more than 3.2 percent alcohol by
weight, deleted text begin$2.40deleted text endnew text begin $10.67new text end per 31-gallon barrel; and

(2) on fermented malt beverages containing more than 3.2 percent alcohol by
weight, deleted text begin$4.60deleted text endnew text begin $12.87new text end per 31-gallon barrel.

For fractions of a 31-gallon barrel, the tax rate is calculated proportionally.

Subd. 2.

Tax credit.

A qualified brewer producing fermented malt beverages is
entitled to a tax credit of deleted text begin$4.60deleted text endnew text begin $12.87new text end per barrel on 25,000 barrels sold in any fiscal year
beginning July 1, regardless of the alcohol content of the product. Qualified brewers may
take the credit on the 18th day of each month, but the total credit allowed may not exceed
in any fiscal year the lesser of:

(1) the liability for tax; or

(2) deleted text begin$115,000deleted text endnew text begin $322,200new text end.

For purposes of this subdivision, a "qualified brewer" means a brewer, whether
or not located in this state, manufacturing less than 100,000 barrels of fermented malt
beverages in the calendar year immediately preceding the calendar year for which the
credit under this subdivision is claimed. In determining the number of barrels, all brands
or labels of a brewer must be combined. All facilities for the manufacture of fermented
malt beverages owned or controlled by the same person, corporation, or other entity
must be treated as a single brewer.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2009.
new text end

Sec. 13. new text beginAPPROPRIATIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Tax compliance. new text end

new text begin (a) $1,194,300 the first year and $2,350,200 the
second year are appropriated from the general fund to the commissioner of revenue for
additional activities to identify and collect tax liabilities from individuals and businesses
that currently do not pay all taxes owed. This initiative is expected to result in new general
fund revenues of $7,948,700 for the biennium ending June 30, 2011.
new text end

new text begin (b) The department must report to the chairs of the house of representatives Ways
and Means and senate Finance Committees by March 1, 2010, and January 15, 2011,
on the following performance indicators:
new text end

new text begin (1) the number of corporations noncompliant with the corporate tax system each
year and the percentage and dollar amounts of valid tax liabilities collected;
new text end

new text begin (2) the number of businesses noncompliant with the sales and use tax system and the
percentage and dollar amount of the valid tax liabilities collected; and
new text end

new text begin (3) the number of individual noncompliant cases resolved and the percentage and
dollar amounts of valid tax liabilities collected.
new text end

new text begin Subd. 2. new text end

new text begin Debt collection management. new text end

new text begin $364,800 the first year and $750,700 the
second year are appropriated from the general fund to the commissioner of revenue for
additional activities to identify and collect tax liabilities from individuals and businesses
that currently do not pay all taxes owed. This initiative is expected to result in new general
fund revenues of $10,691,300 for the biennium ending June 30, 2011.
new text end