1.1             CONFERENCE COMMITTEE REPORT ON H.F. NO. 2498 
  1.2                          A bill for an act 
  1.3             relating to the financing and operation of government 
  1.4             in this state; providing a sales tax rebate; providing 
  1.5             property tax reform; making changes to income, 
  1.6             franchise, sales and use, property, motor vehicle 
  1.7             sales, motor vehicle registration, mortgage registry, 
  1.8             deed, motor fuels, cigarette and tobacco, liquor, 
  1.9             insurance premiums, lawful gambling, minerals, estate, 
  1.10            and special taxes; changing and allowing tax credits, 
  1.11            subtractions, and exemptions, including an income tax 
  1.12            subtraction for capital gains; providing a biomedical 
  1.13            innovation initiative; conforming with changes in 
  1.14            federal income tax provisions; providing for 
  1.15            allocation and apportionment of income; imposing a 
  1.16            state general tax levy on certain property; providing 
  1.17            a property tax homestead credit; imposing general levy 
  1.18            limits; providing for property tax levy reverse 
  1.19            referenda; changing property tax valuation, 
  1.20            assessment, levy, classification, homestead, credit, 
  1.21            aid, exemption, deferral, review, appeal, abatement, 
  1.22            and distribution provisions; abolishing certain 
  1.23            property tax levies for transit and establishing a 
  1.24            transit fund; providing and modifying certain aids to 
  1.25            local units of government; changing levy authority; 
  1.26            reducing certain utility taxes and requiring a 
  1.27            corresponding rate reduction; changing certain 
  1.28            provisions relating to biomass facilities; providing 
  1.29            for disposition of local lodging tax proceeds; 
  1.30            providing priorities for disposition of production tax 
  1.31            proceeds by the iron range resources and 
  1.32            rehabilitation board; providing for certain payments 
  1.33            in lieu of taxes; reducing rates on lawful gambling 
  1.34            taxes; reducing rates on solid waste management taxes; 
  1.35            providing for state takeover of certain costs of 
  1.36            district court administration and out-of-home 
  1.37            placement; providing for uniform sales and use tax 
  1.38            administration; providing for taxation and incentive 
  1.39            payments on forest lands; providing for electronic 
  1.40            filing and payment of taxes; changing procedures for 
  1.41            disposition of seized contraband; abolishing certain 
  1.42            health care provider taxes and health plan premium 
  1.43            taxes; providing for deposit of certain tobacco 
  1.44            settlement and cigarette tax proceeds to the health 
  1.45            care access fund; changing tax increment financing 
  2.1             provisions and authorizing certain grants, duration 
  2.2             extensions, and expenditures; requiring registration 
  2.3             of tax increment financing consultants; creating a 
  2.4             health care access fund reserve; reducing the tax on 
  2.5             life insurance premiums; increasing property tax 
  2.6             refunds and changing calculation of rent constituting 
  2.7             property taxes for purposes of property tax refunds; 
  2.8             reducing taconite production tax and occupation tax 
  2.9             rates; providing special authority to certain 
  2.10            political subdivisions; authorizing special taxing 
  2.11            districts; changing and clarifying tax administration, 
  2.12            collection, enforcement, interest, and penalty 
  2.13            provisions; changing revenue recapture provisions; 
  2.14            authorizing abatements and waivers of fees and certain 
  2.15            taxes in disaster areas; changing and imposing fees; 
  2.16            changing debt collection provisions for student loans; 
  2.17            providing certain duties and powers to the 
  2.18            commissioner of revenue; authorizing publication of 
  2.19            names of certain delinquent taxpayers; authorizing 
  2.20            border city allocations; changing provisions relating 
  2.21            to tax-forfeited lands and providing for tax-forfeited 
  2.22            lands transfers; defining terms; classifying data; 
  2.23            establishing a legislative commission; requiring 
  2.24            studies; imposing a criminal penalty; appropriating 
  2.25            money; amending Minnesota Statutes 2000, sections 
  2.26            16D.08, subdivision 2; 62J.041, subdivision 1; 
  2.27            62Q.095, subdivision 6; 69.021, subdivision 5; 84.922, 
  2.28            by adding a subdivision; 88.49, subdivisions 5, 9a; 
  2.29            88.491, subdivision 2; 97A.065, subdivision 2; 
  2.30            103D.905, subdivision 3; 115B.24, subdivision 2; 
  2.31            123B.55; 126C.01, subdivision 3; 126C.13, subdivision 
  2.32            4; 126C.17, by adding a subdivision; 144.3831, 
  2.33            subdivision 2; 168.013, subdivision 1a; 174.24, 
  2.34            subdivision 3b; 179A.101, subdivision 1; 179A.102, 
  2.35            subdivision 6; 179A.103, subdivision 1; 214.16, 
  2.36            subdivisions 2, 3; 216B.2424, subdivision 5; 239.101, 
  2.37            subdivision 3; 260.765, by adding a subdivision; 
  2.38            260.771, by adding a subdivision; 270.06; 270.07, 
  2.39            subdivision 3; 270.11, by adding a subdivision; 
  2.40            270.12, subdivision 2; 270.271, subdivisions 1, 3; 
  2.41            270.60, subdivision 4, by adding a subdivision; 
  2.42            270.70, subdivision 13; 270.73, subdivision 1; 
  2.43            270.771; 270.78; 270A.03, subdivisions 5, 7; 270A.11; 
  2.44            270B.01, subdivision 8; 270B.02, subdivisions 2, 3; 
  2.45            270B.03, subdivision 6; 270B.14, subdivision 1; 
  2.46            271.01, subdivision 5; 271.21, subdivision 2; 272.02, 
  2.47            subdivisions 9, 10, 22, by adding subdivisions; 
  2.48            273.061, subdivisions 1, 2, 8; 273.072, subdivision 1; 
  2.49            273.11, subdivisions 1a, 14, by adding subdivisions; 
  2.50            273.1104, subdivision 2; 273.111, subdivision 4; 
  2.51            273.121; 273.124, subdivisions 8, 13, 14; 273.13, 
  2.52            subdivisions 22, 23, 24, 25, 31; 273.1392; 273.1393; 
  2.53            273.1398, subdivisions 1a, 4a, by adding subdivisions; 
  2.54            274.01, subdivision 1; 274.13, subdivision 1; 275.02; 
  2.55            275.065, subdivisions 1, 3, 5a, 6, 8, by adding a 
  2.56            subdivision; 275.066; 275.07, subdivision 1; 275.16; 
  2.57            275.62, subdivision 1; 275.70, subdivision 5, by 
  2.58            adding subdivisions; 276.04, subdivision 2; 276.11, 
  2.59            subdivision 1; 276A.01, subdivision 3; 276A.06, 
  2.60            subdivision 3; 282.01, subdivisions 1a, 1b; 282.04, 
  2.61            subdivision 2; 287.035; 287.04; 287.08; 287.12; 
  2.62            287.13, by adding a subdivision; 287.20, subdivisions 
  2.63            2, 9; 287.21, subdivision 1; 287.28; 289A.02, 
  2.64            subdivision 7, by adding a subdivision; 289A.08, 
  2.65            subdivision 16; 289A.11, subdivision 1; 289A.12, 
  2.66            subdivision 3; 289A.18, subdivision 4; 289A.20, 
  2.67            subdivisions 1, 2, 4; 289A.26, subdivision 2a; 
  2.68            289A.31, subdivision 7; 289A.50, subdivisions 2, 2a; 
  2.69            289A.60, subdivisions 7, 21; 290.01, subdivisions 6b, 
  2.70            7, 19, 19b, 19c, 19d, 22, 29, 31, by adding a 
  2.71            subdivision; 290.014, subdivision 5; 290.05, 
  3.1             subdivision 1; 290.06, subdivisions 2c, 22; 290.067, 
  3.2             subdivisions 1, 2, 2b; 290.0671, subdivisions 1, 1a, 
  3.3             7; 290.0674, subdivisions 1, 2; 290.0675, subdivisions 
  3.4             1, 3; 290.068, subdivisions 1, 3, 4; 290.091, 
  3.5             subdivisions 2, 3; 290.0921, subdivisions 1, 2, 3, 6; 
  3.6             290.0922, subdivision 2; 290.093; 290.095, subdivision 
  3.7             2; 290.17, subdivisions 1, 4; 290.191, subdivisions 2, 
  3.8             3; 290.21, subdivision 4; 290.9725; 290A.03, 
  3.9             subdivisions 6, 11, 12, 13, 15; 290A.04, subdivisions 
  3.10            2, 2a, 4; 290A.15; 291.005, subdivision 1; 295.55, 
  3.11            subdivision 4; 296A.15, subdivisions 1, 7; 296A.16, 
  3.12            subdivision 2; 296A.21, subdivisions 1, 4; 296A.24, 
  3.13            subdivisions 1, 2; 297A.01, subdivision 3; 297A.07, 
  3.14            subdivision 3; 297A.25, subdivisions 3, 11, 28; 
  3.15            297A.61, subdivisions 2, 3, 4, 6, 7, 9, 10, 12, 14, 
  3.16            16, 17, 19, 22, 23, by adding subdivisions; 297A.62, 
  3.17            subdivision 3; 297A.64, subdivisions 3, 4; 297A.66, 
  3.18            subdivisions 1, 3; 297A.67, subdivisions 2, 8, 23, 24, 
  3.19            25, by adding subdivisions; 297A.68, subdivisions 2, 
  3.20            3, 5, 11, 13, 14, 18, 25, by adding subdivisions; 
  3.21            297A.69, subdivision 2; 297A.70, subdivisions 1, 2, 3, 
  3.22            4, 7, 8, 10, 13, 14; 297A.71, subdivisions 3, 6, by 
  3.23            adding subdivisions; 297A.72, subdivision 1; 297A.75; 
  3.24            297A.77, subdivision 1; 297A.80; 297A.82, subdivision 
  3.25            3, by adding a subdivision; 297A.89, subdivision 1; 
  3.26            297A.90, subdivision 1; 297A.91; 297A.92, subdivision 
  3.27            2; 297A.94; 297A.99, subdivisions 7, 9, 11; 297B.03; 
  3.28            297B.09, subdivision 1; 297E.02, subdivisions 1, 4, 6; 
  3.29            297E.16, subdivisions 1, 2; 297F.09, subdivision 7; 
  3.30            297F.10, subdivision 1; 297F.16, subdivision 4; 
  3.31            297F.20, subdivision 3; 297F.21, subdivisions 1, 2, 3; 
  3.32            297G.09, subdivision 6; 297G.15, subdivision 4; 
  3.33            297G.16, subdivisions 5, 7; 297G.20, subdivisions 3, 
  3.34            4; 297H.02, subdivision 2; 297H.03, subdivision 2; 
  3.35            297H.04, subdivision 2, by adding a subdivision; 
  3.36            297H.05; 297H.06, by adding a subdivision; 297H.13, by 
  3.37            adding a subdivision; 297I.05, by adding a 
  3.38            subdivision; 297I.15, by adding a subdivision; 
  3.39            297I.20; 297I.35, subdivision 2; 297I.40, subdivisions 
  3.40            1, 2, 7; 297I.85, subdivision 7; 298.01, subdivisions 
  3.41            3, 3a, 3b, 4, 4a, 4c; 298.22, subdivision 2, by adding 
  3.42            a subdivision; 298.225, subdivision 1; 298.24, 
  3.43            subdivision 1; 298.27; 298.28, subdivisions 6, 9a; 
  3.44            298.2961, subdivision 2; 298.75, subdivisions 1, 2, by 
  3.45            adding a subdivision; 299D.03, subdivision 5; 345.41; 
  3.46            345.42, by adding a subdivision; 349.19, subdivision 
  3.47            2a; 357.021, subdivision 1a; 461.12, by adding a 
  3.48            subdivision; 469.040, subdivision 5; 469.169, by 
  3.49            adding a subdivision; 469.1732, subdivision 1; 
  3.50            469.174, subdivisions 1, 3, 10, 10a, 12, 25; 469.175, 
  3.51            subdivisions 1, 3, 6, 6b, by adding a subdivision; 
  3.52            469.176, subdivisions 1b, 1c, 1e, 3, 4, 4g, by adding 
  3.53            a subdivision; 469.1763, subdivision 6; 469.177, 
  3.54            subdivisions 1, 11, by adding a subdivision; 469.1771, 
  3.55            subdivision 1; 469.178, by adding a subdivision; 
  3.56            469.1791, subdivisions 1, 3, 9; 469.1812, subdivision 
  3.57            2; 469.1813, subdivisions 4, 6; 469.190, subdivision 
  3.58            3; 469.202, subdivision 2; 473.388, subdivisions 4, 7; 
  3.59            473.446, subdivision 1, by adding a subdivision; 
  3.60            473.843, subdivision 3; 473F.08, subdivision 3; 
  3.61            473H.10, subdivision 3; 475.58, subdivision 1; 
  3.62            477A.011, subdivisions 35, 36; 477A.0121, by adding a 
  3.63            subdivision; 477A.0122, by adding a subdivision; 
  3.64            477A.013, subdivisions 1, 9; 477A.03, subdivision 2, 
  3.65            by adding a subdivision; 477A.12; 477A.14; 480.181, 
  3.66            subdivision 1; 487.33, subdivision 5; 574.34, 
  3.67            subdivision 1; Laws 1986, chapter 396, section 5; Laws 
  3.68            1997, chapter 231, article 10, section 25; Laws 1998, 
  3.69            chapter 389, article 16, section 35, subdivision 1; 
  3.70            Laws 1999, chapter 216, article 7, section 46, 
  3.71            subdivision 3; Laws 1999, chapter 243, article 4, 
  4.1             section 19; Laws 2000, chapter 490, article 8, section 
  4.2             17; Laws 2000, chapter 490, article 11, section 26; 
  4.3             proposing coding for new law in Minnesota Statutes, 
  4.4             chapters 3; 12; 16A; 62Q; 103B; 116J; 123B; 144F; 245; 
  4.5             256L; 270; 272; 273; 275; 290; 290A; 295; 296A; 297A; 
  4.6             469; 471; 473; 477A; 480; 484; proposing coding for 
  4.7             new law as Minnesota Statutes, chapters 126C; 216B; 
  4.8             290C; repealing Minnesota Statutes 2000, sections 
  4.9             13.4967, subdivision 3; 16A.1521; 16A.76; 62T.10; 
  4.10            126C.13, subdivisions 1, 2, 3; 144.1484, subdivision 
  4.11            2; 256L.02, subdivision 3; 270.31; 270.32; 270.33; 
  4.12            270.34; 270.35; 270.36; 270.37; 270.38; 270.39; 
  4.13            273.13, subdivision 24a; 273.1382; 273.1399; 275.078; 
  4.14            275.08, subdivision 1e; 289A.60, subdivision 15; 
  4.15            290.06, subdivisions 25, 26; 290.0673; 290.095, 
  4.16            subdivisions 1a, 7; 290.191, subdivision 4; 290.21, 
  4.17            subdivision 3; 290.23; 290.25; 290.31, subdivisions 2, 
  4.18            2a, 3, 4, 5, 19; 290.35; 290.9726, subdivision 7; 
  4.19            290A.04, subdivision 2j; 290A.18, subdivision 2; 
  4.20            295.50; 295.51; 295.52; 295.53; 295.54; 295.55; 
  4.21            295.56; 295.57; 295.58; 295.582; 295.59; 296A.16, 
  4.22            subdivision 6; 296A.24, subdivision 3; 297A.61, 
  4.23            subdivision 16; 297A.62, subdivision 2; 297A.64, 
  4.24            subdivision 1; 297A.68, subdivision 21; 297A.71, 
  4.25            subdivisions 2, 15, 16, 21; 297B.032; 297E.16, 
  4.26            subdivision 3; 297F.21, subdivision 4; 297G.20, 
  4.27            subdivision 5; 297I.05, subdivisions 5, 8; 297I.30, 
  4.28            subdivision 3; 298.01, subdivisions 3c, 3d, 4d, 4e; 
  4.29            469.1732, subdivision 2; 469.1734, subdivision 4; 
  4.30            469.1782, subdivision 1; 473.446, subdivision 8; Laws 
  4.31            1988, chapter 426, section 1; Laws 1988, chapter 702, 
  4.32            section 16; Laws 1992, chapter 511, article 2, section 
  4.33            52, as amended; Laws 1996, chapter 471, article 8, 
  4.34            section 45; Laws 1999, chapter 243, article 6, section 
  4.35            14; Laws 1999, chapter 243, article 6, section 15; 
  4.36            Laws 2000, chapter 490, article 6, section 17; 
  4.37            Minnesota Rules, parts 8120.0200; 8120.0500; 
  4.38            8120.0700; 8120.0900; 8120.1300; 8120.1600; 8120.2000; 
  4.39            8120.2100; 8120.2200; 8120.2300; 8120.2500; 8120.2700; 
  4.40            8120.2800; 8120.3000; 8120.3200; 8120.4300; 8120.4400; 
  4.41            8120.4500; 8120.4600; 8120.4900; 8120.5000; 8120.5100; 
  4.42            8120.5300. 
  4.43                                                 May 15, 2002
  4.44  The Honorable Steve Sviggum 
  4.45  Speaker of the House of Representatives
  4.47  The Honorable Don Samuelson 
  4.48  President of the Senate
  4.50     We, the undersigned conferees for H.F. No. 2498, report 
  4.51  that we have agreed upon the items in dispute and recommend as 
  4.52  follows: 
  4.53     
  4.54     That the Senate recede from its amendments and that H.F. 
  4.55  No. 2498 be further amended as follows: 
  4.56     Delete everything after the enacting clause and insert: 
  4.57                             "ARTICLE 1 
  4.58                     INCOME AND FRANCHISE TAXES
  4.59     Section 1.  Minnesota Statutes 2001 Supplement, section 
  5.1   290.01, subdivision 19d, is amended to read: 
  5.2      Subd. 19d.  [CORPORATIONS; MODIFICATIONS DECREASING FEDERAL 
  5.3   TAXABLE INCOME.] For corporations, there shall be subtracted 
  5.4   from federal taxable income after the increases provided in 
  5.5   subdivision 19c:  
  5.6      (1) the amount of foreign dividend gross-up added to gross 
  5.7   income for federal income tax purposes under section 78 of the 
  5.8   Internal Revenue Code; 
  5.9      (2) the amount of salary expense not allowed for federal 
  5.10  income tax purposes due to claiming the federal jobs credit 
  5.11  under section 51 of the Internal Revenue Code; 
  5.12     (3) any dividend (not including any distribution in 
  5.13  liquidation) paid within the taxable year by a national or state 
  5.14  bank to the United States, or to any instrumentality of the 
  5.15  United States exempt from federal income taxes, on the preferred 
  5.16  stock of the bank owned by the United States or the 
  5.17  instrumentality; 
  5.18     (4) amounts disallowed for intangible drilling costs due to 
  5.19  differences between this chapter and the Internal Revenue Code 
  5.20  in taxable years beginning before January 1, 1987, as follows: 
  5.21     (i) to the extent the disallowed costs are represented by 
  5.22  physical property, an amount equal to the allowance for 
  5.23  depreciation under Minnesota Statutes 1986, section 290.09, 
  5.24  subdivision 7, subject to the modifications contained in 
  5.25  subdivision 19e; and 
  5.26     (ii) to the extent the disallowed costs are not represented 
  5.27  by physical property, an amount equal to the allowance for cost 
  5.28  depletion under Minnesota Statutes 1986, section 290.09, 
  5.29  subdivision 8; 
  5.30     (5) the deduction for capital losses pursuant to sections 
  5.31  1211 and 1212 of the Internal Revenue Code, except that: 
  5.32     (i) for capital losses incurred in taxable years beginning 
  5.33  after December 31, 1986, capital loss carrybacks shall not be 
  5.34  allowed; 
  5.35     (ii) for capital losses incurred in taxable years beginning 
  5.36  after December 31, 1986, a capital loss carryover to each of the 
  6.1   15 taxable years succeeding the loss year shall be allowed; 
  6.2      (iii) for capital losses incurred in taxable years 
  6.3   beginning before January 1, 1987, a capital loss carryback to 
  6.4   each of the three taxable years preceding the loss year, subject 
  6.5   to the provisions of Minnesota Statutes 1986, section 290.16, 
  6.6   shall be allowed; and 
  6.7      (iv) for capital losses incurred in taxable years beginning 
  6.8   before January 1, 1987, a capital loss carryover to each of the 
  6.9   five taxable years succeeding the loss year to the extent such 
  6.10  loss was not used in a prior taxable year and subject to the 
  6.11  provisions of Minnesota Statutes 1986, section 290.16, shall be 
  6.12  allowed; 
  6.13     (6) an amount for interest and expenses relating to income 
  6.14  not taxable for federal income tax purposes, if (i) the income 
  6.15  is taxable under this chapter and (ii) the interest and expenses 
  6.16  were disallowed as deductions under the provisions of section 
  6.17  171(a)(2), 265 or 291 of the Internal Revenue Code in computing 
  6.18  federal taxable income; 
  6.19     (7) in the case of mines, oil and gas wells, other natural 
  6.20  deposits, and timber for which percentage depletion was 
  6.21  disallowed pursuant to subdivision 19c, clause (11), a 
  6.22  reasonable allowance for depletion based on actual cost.  In the 
  6.23  case of leases the deduction must be apportioned between the 
  6.24  lessor and lessee in accordance with rules prescribed by the 
  6.25  commissioner.  In the case of property held in trust, the 
  6.26  allowable deduction must be apportioned between the income 
  6.27  beneficiaries and the trustee in accordance with the pertinent 
  6.28  provisions of the trust, or if there is no provision in the 
  6.29  instrument, on the basis of the trust's income allocable to 
  6.30  each; 
  6.31     (8) for certified pollution control facilities placed in 
  6.32  service in a taxable year beginning before December 31, 1986, 
  6.33  and for which amortization deductions were elected under section 
  6.34  169 of the Internal Revenue Code of 1954, as amended through 
  6.35  December 31, 1985, an amount equal to the allowance for 
  6.36  depreciation under Minnesota Statutes 1986, section 290.09, 
  7.1   subdivision 7; 
  7.2      (9) amounts included in federal taxable income that are due 
  7.3   to refunds of income, excise, or franchise taxes based on net 
  7.4   income or related minimum taxes paid by the corporation to 
  7.5   Minnesota, another state, a political subdivision of another 
  7.6   state, the District of Columbia, or a foreign country or 
  7.7   possession of the United States to the extent that the taxes 
  7.8   were added to federal taxable income under section 290.01, 
  7.9   subdivision 19c, clause (1), in a prior taxable year; 
  7.10     (10) 80 percent of royalties, fees, or other like income 
  7.11  accrued or received from a foreign operating corporation or a 
  7.12  foreign corporation which is part of the same unitary business 
  7.13  as the receiving corporation; 
  7.14     (11) income or gains from the business of mining as defined 
  7.15  in section 290.05, subdivision 1, clause (a), that are not 
  7.16  subject to Minnesota franchise tax; 
  7.17     (12) the amount of handicap access expenditures in the 
  7.18  taxable year which are not allowed to be deducted or capitalized 
  7.19  under section 44(d)(7) of the Internal Revenue Code; 
  7.20     (13) the amount of qualified research expenses not allowed 
  7.21  for federal income tax purposes under section 280C(c) of the 
  7.22  Internal Revenue Code, but only to the extent that the amount 
  7.23  exceeds the amount of the credit allowed under section 290.068; 
  7.24     (14) the amount of salary expenses not allowed for federal 
  7.25  income tax purposes due to claiming the Indian employment credit 
  7.26  under section 45A(a) of the Internal Revenue Code; 
  7.27     (15) the amount of any refund of environmental taxes paid 
  7.28  under section 59A of the Internal Revenue Code; 
  7.29     (16) for taxable years beginning before January 1, 2008, 
  7.30  the amount of the federal small ethanol producer credit allowed 
  7.31  under section 40(a)(3) of the Internal Revenue Code which is 
  7.32  included in gross income under section 87 of the Internal 
  7.33  Revenue Code; and 
  7.34     (17) for a corporation whose foreign sales corporation, as 
  7.35  defined in section 922 of the Internal Revenue Code, constituted 
  7.36  a foreign operating corporation during the any taxable years 
  8.1   year ending during calendar year 1992 before January 1, 1995, 
  8.2   and a return was filed by August 15, 1996, claiming the 
  8.3   deduction under this subdivision for income received from the 
  8.4   foreign operating corporation, an amount equal to 1.23 
  8.5   multiplied by the amount of income excluded under section 114 of 
  8.6   the Internal Revenue Code, provided the income is not income of 
  8.7   a foreign operating company. 
  8.8      <h>[EFFECTIVE DATE.]</h> This section is effective for taxable 
  8.9   years beginning after December 31, 2000. 
  8.10     Sec. 2.  Minnesota Statutes 2000, section 290.081, is 
  8.11  amended to read: 
  8.12     290.081 [INCOME OF NONRESIDENTS, RECIPROCITY.] 
  8.13     (a) The compensation received for the performance of 
  8.14  personal or professional services within this state by an 
  8.15  individual whose residence, place of abode, and place 
  8.16  customarily returned to at least once a month is in another 
  8.17  state, shall be excluded from gross income to the extent such 
  8.18  compensation is subject to an income tax imposed by the state of 
  8.19  residence; provided that such state allows a similar exclusion 
  8.20  of compensation received by residents of Minnesota for services 
  8.21  performed therein. 
  8.22     (b) When it is deemed to be in the best interests of the 
  8.23  people of this state, the commissioner may determine that the 
  8.24  provisions of clause paragraph (a) shall not apply.  As long as 
  8.25  the provisions of clause paragraph (a) apply between Minnesota 
  8.26  and Wisconsin, the provisions of clause paragraph (a) shall 
  8.27  apply to any individual who is domiciled in Wisconsin.  
  8.28     (c) For the purposes of clause paragraph (a), whenever the 
  8.29  Wisconsin tax on Minnesota residents which would have been paid 
  8.30  Wisconsin without clause paragraph (a) exceeds the Minnesota tax 
  8.31  on Wisconsin residents which would have been paid Minnesota 
  8.32  without clause paragraph (a), or vice versa, then the state with 
  8.33  the net revenue loss resulting from clause paragraph (a) shall 
  8.34  receive from the other state the amount of such loss.  This 
  8.35  provision shall be effective for all years beginning after 
  8.36  December 31, 1972.  The data used for computing the loss to 
  9.1   either state shall be determined on or before September 30 of 
  9.2   the year following the close of the previous calendar year. 
  9.3      (d) Interest shall be is payable on all delinquent balances 
  9.4   amounts calculated under paragraph (c) relating to taxable years 
  9.5   beginning after December 31, 1977 December 31, 2000.  Interest 
  9.6   accrues from July 1 of the taxable year.  The commissioner of 
  9.7   revenue is authorized to enter into agreements with the state of 
  9.8   Wisconsin specifying the reciprocity payment due date, 
  9.9   conditions constituting delinquency, interest rates, and a 
  9.10  method for computing interest due on any delinquent amounts. 
  9.11     (e) If an agreement cannot be reached as to the amount of 
  9.12  the loss, the commissioner of revenue and the taxing official of 
  9.13  the state of Wisconsin shall each appoint a member of a board of 
  9.14  arbitration and these members shall appoint the third member of 
  9.15  the board.  The board shall select one of its members as chair.  
  9.16  Such board may administer oaths, take testimony, subpoena 
  9.17  witnesses, and require their attendance, require the production 
  9.18  of books, papers and documents, and hold hearings at such places 
  9.19  as are deemed necessary.  The board shall then make a 
  9.20  determination as to the amount to be paid the other state which 
  9.21  determination shall be final and conclusive. 
  9.22     (f) The commissioner may furnish copies of returns, 
  9.23  reports, or other information to the taxing official of the 
  9.24  state of Wisconsin, a member of the board of arbitration, or a 
  9.25  consultant under joint contract with the states of Minnesota and 
  9.26  Wisconsin for the purpose of making a determination as to the 
  9.27  amount to be paid the other state under the provisions of this 
  9.28  section.  Prior to the release of any information under the 
  9.29  provisions of this section, the person to whom the information 
  9.30  is to be released shall sign an agreement which provides that 
  9.31  the person will protect the confidentiality of the returns and 
  9.32  information revealed thereby to the extent that it is protected 
  9.33  under the laws of the state of Minnesota. 
  9.34     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
  9.35  following final enactment.  Income tax reciprocity under 
  9.36  Minnesota Statutes, section 290.081, with the state of Wisconsin 
 10.1   is terminated effective for taxable years beginning after 
 10.2   December 31, 2002, unless the state of Wisconsin agrees, in 
 10.3   writing, by October 1, 2002, that interest will be included in 
 10.4   payments as required by this section, calculated from the date 
 10.5   specified under this section at a rate at least equal to the 
 10.6   rate under Minnesota Statutes, section 270.75, and beginning 
 10.7   with the payment due in December 2002.  If income tax 
 10.8   reciprocity is terminated, the requirement under Minnesota 
 10.9   Statutes, section 136A.08, subdivision 3, that an income tax 
 10.10  reciprocity agreement be in effect as a condition for a higher 
 10.11  education reciprocity is suspended through the 2003-2004 school 
 10.12  year. 
 10.13     Sec. 3.  Minnesota Statutes 2001 Supplement, section 
 10.14  290.0921, subdivision 2, is amended to read: 
 10.15     Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
 10.16  the following terms have the meanings given them. 
 10.17     (b) "Alternative minimum taxable net income" is alternative 
 10.18  minimum taxable income, 
 10.19     (1) less the exemption amount, and 
 10.20     (2) apportioned or allocated to Minnesota under section 
 10.21  290.17, 290.191, or 290.20. 
 10.22     (c) The "exemption amount" is $40,000, reduced, but not 
 10.23  below zero, by 25 percent of the excess of alternative minimum 
 10.24  taxable income over $150,000. 
 10.25     (d) "Minnesota alternative minimum taxable income" is 
 10.26  alternative minimum taxable net income, less the deductions for 
 10.27  alternative tax net operating loss under subdivision 4; 
 10.28  charitable contributions under subdivision 5; and dividends 
 10.29  received under subdivision 6.  The sum of the deductions under 
 10.30  this paragraph may not exceed 90 percent of alternative minimum 
 10.31  taxable net income.  This limitation does not apply to: 
 10.32     (1) a deduction for dividends paid to or received from a 
 10.33  corporation which is subject to tax under section 290.36 and 
 10.34  which is a member of an affiliated group of corporations as 
 10.35  defined by the Internal Revenue Code; or 
 10.36     (2) a deduction for dividends received from a property and 
 11.1   casualty insurer as defined under section 60A.60, subdivision 8, 
 11.2   which is a member of an affiliated group of corporations as 
 11.3   defined by the Internal Revenue Code and either:  (i) the 
 11.4   dividend is eliminated in consolidation under Treasury 
 11.5   Regulation 1.1502-14(a), as amended through December 31, 1989; 
 11.6   or (ii) the dividend is deducted under an election under section 
 11.7   243(b) of the Internal Revenue Code. 
 11.8      <h>[EFFECTIVE DATE.]</h> This section is effective for tax years 
 11.9   beginning after December 31, 2002. 
 11.10     Sec. 4.  Minnesota Statutes 2001 Supplement, section 
 11.11  290.0921, subdivision 6, is amended to read: 
 11.12     Subd. 6.  [DIVIDENDS RECEIVED.] (a) A deduction is allowed 
 11.13  from alternative minimum taxable net income equal to the 
 11.14  deduction for dividends received under section 290.21, 
 11.15  subdivision 4, for purposes of calculating taxable income under 
 11.16  section 290.01, subdivision 29. 
 11.17     (b) The amount of the deduction must not exceed 90 percent 
 11.18  of alternative minimum taxable net income. 
 11.19     This limitation does not apply to: 
 11.20     (1) dividends paid to or received from a corporation which 
 11.21  is subject to tax under section 290.36 and which is a member of 
 11.22  an affiliated group of corporations as defined by the Internal 
 11.23  Revenue Code; or 
 11.24     (2) dividends received from a property and casualty insurer 
 11.25  as defined under section 60A.60, subdivision 8, which is a 
 11.26  member of an affiliated group of corporations as defined by the 
 11.27  Internal Revenue Code and either:  (i) the dividend is 
 11.28  eliminated in consolidation under Treasury Regulation 
 11.29  1.1502-14(a), as amended through December 31, 1989; or (ii) the 
 11.30  dividend is deducted under an election under section 243(b) of 
 11.31  the Internal Revenue Code.  
 11.32     <h>[EFFECTIVE DATE.]</h> This section is effective for tax years 
 11.33  beginning after December 31, 2002. 
 11.34     Sec. 5.  Minnesota Statutes 2000, section 290.191, 
 11.35  subdivision 4, is amended to read: 
 11.36     Subd. 4.  [APPORTIONMENT FORMULA FOR CERTAIN MAIL ORDER 
 12.1   BUSINESSES.] If the business of a corporation, partnership, or 
 12.2   proprietorship consists exclusively of the selling of tangible 
 12.3   personal property and services at retail, as defined in section 
 12.4   297A.61, subdivision 4, paragraph (a), in response to orders 
 12.5   received by United States mail, telephone, facsimile, or other 
 12.6   electronic media, and 99 percent of the taxpayer's property and 
 12.7   payroll is within Minnesota, then the taxpayer may apportion net 
 12.8   income to Minnesota based solely upon the percentage that the 
 12.9   sales made within this state in connection with its trade or 
 12.10  business during the tax period are of the total sales wherever 
 12.11  made in connection with the trade or business during the tax 
 12.12  period.  Property and payroll factors are disregarded.  In 
 12.13  determining eligibility for this subdivision:  
 12.14     (1) the sale not in the ordinary course of business of 
 12.15  tangible or intangible assets used in conducting business 
 12.16  activities must be disregarded; and 
 12.17     (2) property and payroll at a distribution center outside 
 12.18  of Minnesota are disregarded if the sole activity at the 
 12.19  distribution center is the filling of orders, and no 
 12.20  solicitation of orders occurs at the distribution center. 
 12.21     <h>[EFFECTIVE DATE.]</h> This section is effective for tax years 
 12.22  beginning after December 31, 2001. 
 12.23     Sec. 6.  Minnesota Statutes 2001 Supplement, section 
 12.24  290.21, subdivision 4, is amended to read: 
 12.25     Subd. 4.  (a)(1) Eighty percent of dividends received by a 
 12.26  corporation during the taxable year from another corporation, in 
 12.27  which the recipient owns 20 percent or more of the stock, by 
 12.28  vote and value, not including stock described in section 
 12.29  1504(a)(4) of the Internal Revenue Code when the corporate stock 
 12.30  with respect to which dividends are paid does not constitute the 
 12.31  stock in trade of the taxpayer or would not be included in the 
 12.32  inventory of the taxpayer, or does not constitute property held 
 12.33  by the taxpayer primarily for sale to customers in the ordinary 
 12.34  course of the taxpayer's trade or business, or when the trade or 
 12.35  business of the taxpayer does not consist principally of the 
 12.36  holding of the stocks and the collection of the income and gains 
 13.1   therefrom; and 
 13.2      (2)(i) the remaining 20 percent of dividends if the 
 13.3   dividends received are the stock in an affiliated company 
 13.4   transferred in an overall plan of reorganization and the 
 13.5   dividend is eliminated in consolidation under Treasury 
 13.6   Department Regulation 1.1502-14(a), as amended through December 
 13.7   31, 1989; or 
 13.8      (ii) the remaining 20 percent of dividends if the dividends 
 13.9   are received from a corporation which is subject to tax under 
 13.10  section 290.36 and which is a member of an affiliated group of 
 13.11  corporations as defined by the Internal Revenue Code and the 
 13.12  dividend is eliminated in consolidation under Treasury 
 13.13  Department Regulation 1.1502-14(a), as amended through December 
 13.14  31, 1989, or is deducted under an election under section 243(b) 
 13.15  of the Internal Revenue Code; or 
 13.16     (iii) the remaining 20 percent of the dividends if the 
 13.17  dividends are received from a property and casualty insurer as 
 13.18  defined under section 60A.60, subdivision 8, which is a member 
 13.19  of an affiliated group of corporations as defined by the 
 13.20  Internal Revenue Code and either:  (A) the dividend is 
 13.21  eliminated in consolidation under Treasury Regulation 
 13.22  1.1502-14(a), as amended through December 31, 1989; or (B) the 
 13.23  dividend is deducted under an election under section 243(b) of 
 13.24  the Internal Revenue Code. 
 13.25     (b) Seventy percent of dividends received by a corporation 
 13.26  during the taxable year from another corporation in which the 
 13.27  recipient owns less than 20 percent of the stock, by vote or 
 13.28  value, not including stock described in section 1504(a)(4) of 
 13.29  the Internal Revenue Code when the corporate stock with respect 
 13.30  to which dividends are paid does not constitute the stock in 
 13.31  trade of the taxpayer, or does not constitute property held by 
 13.32  the taxpayer primarily for sale to customers in the ordinary 
 13.33  course of the taxpayer's trade or business, or when the trade or 
 13.34  business of the taxpayer does not consist principally of the 
 13.35  holding of the stocks and the collection of income and gain 
 13.36  therefrom.  
 14.1      (c) The dividend deduction provided in this subdivision 
 14.2   shall be allowed only with respect to dividends that are 
 14.3   included in a corporation's Minnesota taxable net income for the 
 14.4   taxable year. 
 14.5      The dividend deduction provided in this subdivision does 
 14.6   not apply to a dividend from a corporation which, for the 
 14.7   taxable year of the corporation in which the distribution is 
 14.8   made or for the next preceding taxable year of the corporation, 
 14.9   is a corporation exempt from tax under section 501 of the 
 14.10  Internal Revenue Code. 
 14.11     The dividend deduction provided in this subdivision applies 
 14.12  to the amount of regulated investment company dividends only to 
 14.13  the extent determined under section 854(b) of the Internal 
 14.14  Revenue Code. 
 14.15     The dividend deduction provided in this subdivision shall 
 14.16  not be allowed with respect to any dividend for which a 
 14.17  deduction is not allowed under the provisions of section 246(c) 
 14.18  of the Internal Revenue Code. 
 14.19     (d) If dividends received by a corporation that does not 
 14.20  have nexus with Minnesota under the provisions of Public Law 
 14.21  Number 86-272 are included as income on the return of an 
 14.22  affiliated corporation permitted or required to file a combined 
 14.23  report under section 290.34, subdivision 2, then for purposes of 
 14.24  this subdivision the determination as to whether the trade or 
 14.25  business of the corporation consists principally of the holding 
 14.26  of stocks and the collection of income and gains therefrom shall 
 14.27  be made with reference to the trade or business of the 
 14.28  affiliated corporation having a nexus with Minnesota. 
 14.29     (e) The deduction provided by this subdivision does not 
 14.30  apply if the dividends are paid by a FSC as defined in section 
 14.31  922 of the Internal Revenue Code. 
 14.32     (f) If one or more of the members of the unitary group 
 14.33  whose income is included on the combined report received a 
 14.34  dividend, the deduction under this subdivision for each member 
 14.35  of the unitary business required to file a return under this 
 14.36  chapter is the product of:  (1) 100 percent of the dividends 
 15.1   received by members of the group; (2) the percentage allowed 
 15.2   pursuant to paragraph (a) or (b); and (3) the percentage of the 
 15.3   taxpayer's business income apportionable to this state for the 
 15.4   taxable year under section 290.191 or 290.20. 
 15.5      <h>[EFFECTIVE DATE.]</h> This section is effective for tax years 
 15.6   beginning after December 31, 2002. 
 15.7                              ARTICLE 2 
 15.8                            FEDERAL UPDATE 
 15.9      Section 1.  Minnesota Statutes 2001 Supplement, section 
 15.10  289A.02, subdivision 7, is amended to read: 
 15.11     Subd. 7.  [INTERNAL REVENUE CODE.] Unless specifically 
 15.12  defined otherwise, "Internal Revenue Code" means the Internal 
 15.13  Revenue Code of 1986, as amended through June 15, 2001 March 15, 
 15.14  2002. 
 15.15     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
 15.16  following final enactment. 
 15.17     Sec. 2.  Minnesota Statutes 2001 Supplement, section 
 15.18  289A.20, subdivision 2, is amended to read: 
 15.19     Subd. 2.  [WITHHOLDING FROM WAGES, ENTERTAINER WITHHOLDING, 
 15.20  WITHHOLDING FROM PAYMENTS TO OUT-OF-STATE CONTRACTORS, AND 
 15.21  WITHHOLDING BY PARTNERSHIPS AND SMALL BUSINESS CORPORATIONS.] 
 15.22  (a) A tax required to be deducted and withheld during the 
 15.23  quarterly period must be paid on or before the last day of the 
 15.24  month following the close of the quarterly period, unless an 
 15.25  earlier time for payment is provided.  A tax required to be 
 15.26  deducted and withheld from compensation of an entertainer and 
 15.27  from a payment to an out-of-state contractor must be paid on or 
 15.28  before the date the return for such tax must be filed under 
 15.29  section 289A.18, subdivision 2.  Taxes required to be deducted 
 15.30  and withheld by partnerships and S corporations must be paid on 
 15.31  or before the date the return must be filed under section 
 15.32  289A.18, subdivision 2. 
 15.33     (b) An employer who, during the previous quarter, withheld 
 15.34  more than $1,500 of tax under section 290.92, subdivision 2a or 
 15.35  3, or 290.923, subdivision 2, must deposit tax withheld under 
 15.36  those sections with the commissioner within the time allowed to 
 16.1   deposit the employer's federal withheld employment taxes under 
 16.2   Treasury Regulation Code of Federal Regulations, title 26, 
 16.3   section 31.6302-1, as amended through December 31, 2001, without 
 16.4   regard to the safe harbor or de minimis rules in subparagraph 
 16.5   (f) or the one-day rule in subsection (c), clause (3).  
 16.6   Taxpayers must submit a copy of their federal notice of deposit 
 16.7   status to the commissioner upon request by the commissioner. 
 16.8      (c) The commissioner may prescribe by rule other return 
 16.9   periods or deposit requirements.  In prescribing the reporting 
 16.10  period, the commissioner may classify payors according to the 
 16.11  amount of their tax liability and may adopt an appropriate 
 16.12  reporting period for the class that the commissioner judges to 
 16.13  be consistent with efficient tax collection.  In no event will 
 16.14  the duration of the reporting period be more than one year. 
 16.15     (d) If less than the correct amount of tax is paid to the 
 16.16  commissioner, proper adjustments with respect to both the tax 
 16.17  and the amount to be deducted must be made, without interest, in 
 16.18  the manner and at the times the commissioner prescribes.  If the 
 16.19  underpayment cannot be adjusted, the amount of the underpayment 
 16.20  will be assessed and collected in the manner and at the times 
 16.21  the commissioner prescribes. 
 16.22     (e) If the aggregate amount of the tax withheld during a 
 16.23  fiscal year ending June 30 under section 290.92, subdivision 2a 
 16.24  or 3, is equal to or exceeds the amounts established for 
 16.25  remitting federal withheld taxes pursuant to the regulations 
 16.26  promulgated under section 6302(h) of the Internal Revenue Code, 
 16.27  the employer must remit each required deposit for wages paid in 
 16.28  the subsequent calendar year by electronic means. 
 16.29     (f) A third-party bulk filer as defined in section 290.92, 
 16.30  subdivision 30, paragraph (a), clause (2), who remits 
 16.31  withholding deposits must remit all deposits by electronic means 
 16.32  as provided in paragraph (e), regardless of the aggregate amount 
 16.33  of tax withheld during a fiscal year for all of the employers.  
 16.34     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
 16.35  following final enactment. 
 16.36     Sec. 3.  Minnesota Statutes 2001 Supplement, section 
 17.1   290.01, subdivision 19, is amended to read: 
 17.2      Subd. 19.  [NET INCOME.] The term "net income" means the 
 17.3   federal taxable income, as defined in section 63 of the Internal 
 17.4   Revenue Code of 1986, as amended through the date named in this 
 17.5   subdivision, incorporating any elections made by the taxpayer in 
 17.6   accordance with the Internal Revenue Code in determining federal 
 17.7   taxable income for federal income tax purposes, and with the 
 17.8   modifications provided in subdivisions 19a to 19f. 
 17.9      In the case of a regulated investment company or a fund 
 17.10  thereof, as defined in section 851(a) or 851(g) of the Internal 
 17.11  Revenue Code, federal taxable income means investment company 
 17.12  taxable income as defined in section 852(b)(2) of the Internal 
 17.13  Revenue Code, except that:  
 17.14     (1) the exclusion of net capital gain provided in section 
 17.15  852(b)(2)(A) of the Internal Revenue Code does not apply; 
 17.16     (2) the deduction for dividends paid under section 
 17.17  852(b)(2)(D) of the Internal Revenue Code must be applied by 
 17.18  allowing a deduction for capital gain dividends and 
 17.19  exempt-interest dividends as defined in sections 852(b)(3)(C) 
 17.20  and 852(b)(5) of the Internal Revenue Code; and 
 17.21     (3) the deduction for dividends paid must also be applied 
 17.22  in the amount of any undistributed capital gains which the 
 17.23  regulated investment company elects to have treated as provided 
 17.24  in section 852(b)(3)(D) of the Internal Revenue Code.  
 17.25     The net income of a real estate investment trust as defined 
 17.26  and limited by section 856(a), (b), and (c) of the Internal 
 17.27  Revenue Code means the real estate investment trust taxable 
 17.28  income as defined in section 857(b)(2) of the Internal Revenue 
 17.29  Code.  
 17.30     The net income of a designated settlement fund as defined 
 17.31  in section 468B(d) of the Internal Revenue Code means the gross 
 17.32  income as defined in section 468B(b) of the Internal Revenue 
 17.33  Code. 
 17.34     The provisions of sections 1113(a), 1117, 1206(a), 1313(a), 
 17.35  1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612, 
 17.36  1616, 1617, 1704(l), and 1704(m) of the Small Business Job 
 18.1   Protection Act, Public Law Number 104-188, the provisions of 
 18.2   Public Law Number 104-117, the provisions of sections 313(a) and 
 18.3   (b)(1), 602(a), 913(b), 941, 961, 971, 1001(a) and (b), 1002, 
 18.4   1003, 1012, 1013, 1014, 1061, 1062, 1081, 1084(b), 1086, 1087, 
 18.5   1111(a), 1131(b) and (c), 1211(b), 1213, 1530(c)(2), 1601(f)(5) 
 18.6   and (h), and 1604(d)(1) of the Taxpayer Relief Act of 1997, 
 18.7   Public Law Number 105-34, the provisions of section 6010 of the 
 18.8   Internal Revenue Service Restructuring and Reform Act of 1998, 
 18.9   Public Law Number 105-206, the provisions of section 4003 of the 
 18.10  Omnibus Consolidated and Emergency Supplemental Appropriations 
 18.11  Act, 1999, Public Law Number 105-277, and the provisions of 
 18.12  section 318 of the Consolidated Appropriation Act of 2001, 
 18.13  Public Law Number 106-554, shall become effective at the time 
 18.14  they become effective for federal purposes. 
 18.15     The Internal Revenue Code of 1986, as amended through 
 18.16  December 31, 1996, shall be in effect for taxable years 
 18.17  beginning after December 31, 1996. 
 18.18     The provisions of sections 202(a) and (b), 221(a), 225, 
 18.19  312, 313, 913(a), 934, 962, 1004, 1005, 1052, 1063, 1084(a) and 
 18.20  (c), 1089, 1112, 1171, 1204, 1271(a) and (b), 1305(a), 1306, 
 18.21  1307, 1308, 1309, 1501(b), 1502(b), 1504(a), 1505, 1527, 1528, 
 18.22  1530, 1601(d), (e), (f), and (i) and 1602(a), (b), (c), and (e) 
 18.23  of the Taxpayer Relief Act of 1997, Public Law Number 105-34, 
 18.24  the provisions of sections 6004, 6005, 6012, 6013, 6015, 6016, 
 18.25  7002, and 7003 of the Internal Revenue Service Restructuring and 
 18.26  Reform Act of 1998, Public Law Number 105-206, the provisions of 
 18.27  section 3001 of the Omnibus Consolidated and Emergency 
 18.28  Supplemental Appropriations Act, 1999, Public Law Number 
 18.29  105-277, the provisions of section 3001 of the Miscellaneous 
 18.30  Trade and Technical Corrections Act of 1999, Public Law Number 
 18.31  106-36, and the provisions of section 316 of the Consolidated 
 18.32  Appropriation Act of 2001, Public Law Number 106-554, shall 
 18.33  become effective at the time they become effective for federal 
 18.34  purposes. 
 18.35     The Internal Revenue Code of 1986, as amended through 
 18.36  December 31, 1997, shall be in effect for taxable years 
 19.1   beginning after December 31, 1997. 
 19.2      The provisions of sections 5002, 6009, 6011, and 7001 of 
 19.3   the Internal Revenue Service Restructuring and Reform Act of 
 19.4   1998, Public Law Number 105-206, the provisions of section 9010 
 19.5   of the Transportation Equity Act for the 21st Century, Public 
 19.6   Law Number 105-178, the provisions of sections 1004, 4002, and 
 19.7   5301 of the Omnibus Consolidation and Emergency Supplemental 
 19.8   Appropriations Act, 1999, Public Law Number 105-277, the 
 19.9   provision of section 303 of the Ricky Ray Hemophilia Relief Fund 
 19.10  Act of 1998, Public Law Number 105-369, the provisions of 
 19.11  sections 532, 534, 536, 537, and 538 of the Ticket to Work and 
 19.12  Work Incentives Improvement Act of 1999, Public Law Number 
 19.13  106-170, the provisions of the Installment Tax Correction Act of 
 19.14  2000, Public Law Number 106-573, and the provisions of section 
 19.15  309 of the Consolidated Appropriation Act of 2001, Public Law 
 19.16  Number 106-554, shall become effective at the time they become 
 19.17  effective for federal purposes. 
 19.18     The Internal Revenue Code of 1986, as amended through 
 19.19  December 31, 1998, shall be in effect for taxable years 
 19.20  beginning after December 31, 1998.  
 19.21     The provisions of the FSC Repeal and Extraterritorial 
 19.22  Income Exclusion Act of 2000, Public Law Number 106-519, and the 
 19.23  provision of section 412 of the Job Creation and Worker 
 19.24  Assistance Act of 2002, Public Law Number 107-147, shall become 
 19.25  effective at the time it became effective for federal purposes. 
 19.26     The Internal Revenue Code of 1986, as amended through 
 19.27  December 31, 1999, shall be in effect for taxable years 
 19.28  beginning after December 31, 1999.  The provisions of sections 
 19.29  306 and 401 of the Consolidated Appropriation Act of 2001, 
 19.30  Public Law Number 106-554, and the provision of section 
 19.31  632(b)(2)(A) of the Economic Growth and Tax Relief 
 19.32  Reconciliation Act of 2001, Public Law Number 107-16, and 
 19.33  provisions of sections 101 and 402 of the Job Creation and 
 19.34  Worker Assistance Act of 2002, Public Law Number 107-147, shall 
 19.35  become effective at the same time it became effective for 
 19.36  federal purposes. 
 20.1      The Internal Revenue Code of 1986, as amended through 
 20.2   December 31, 2000, shall be in effect for taxable years 
 20.3   beginning after December 31, 2000.  The provisions of sections 
 20.4   659a and 671 of the Economic Growth and Tax Relief 
 20.5   Reconciliation Act of 2001, Public Law Number 107-16, the 
 20.6   provisions of sections 104, 105, and 111 of the Victims of 
 20.7   Terrorism Tax Relief Act of 2001, Public Law Number 107-134, and 
 20.8   the provisions of sections 201, 403, 413, and 606 of the Job 
 20.9   Creation and Worker Assistance Act of 2002, Public Law Number 
 20.10  107-147, shall become effective at the same time it became 
 20.11  effective for federal purposes. 
 20.12     The Internal Revenue Code of 1986, as amended through June 
 20.13  15, 2001 March 15, 2002, shall be in effect for taxable years 
 20.14  beginning after December 31, 2001. 
 20.15     The provisions of sections 101 and 102 of the Victims of 
 20.16  Terrorism Tax Relief Act of 2001, Public Law Number 107-134, 
 20.17  shall become effective at the same time it becomes effective for 
 20.18  federal purposes. 
 20.19     Except as otherwise provided, references to the Internal 
 20.20  Revenue Code in subdivisions 19a to 19g mean the code in effect 
 20.21  for purposes of determining net income for the applicable year. 
 20.22     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
 20.23  following final enactment. 
 20.24     Sec. 4.  Minnesota Statutes 2000, section 290.01, 
 20.25  subdivision 19a, is amended to read: 
 20.26     Subd. 19a.  [ADDITIONS TO FEDERAL TAXABLE INCOME.] For 
 20.27  individuals, estates, and trusts, there shall be added to 
 20.28  federal taxable income: 
 20.29     (1)(i) interest income on obligations of any state other 
 20.30  than Minnesota or a political or governmental subdivision, 
 20.31  municipality, or governmental agency or instrumentality of any 
 20.32  state other than Minnesota exempt from federal income taxes 
 20.33  under the Internal Revenue Code or any other federal statute, 
 20.34  and 
 20.35     (ii) exempt-interest dividends as defined in section 
 20.36  852(b)(5) of the Internal Revenue Code, except the portion of 
 21.1   the exempt-interest dividends derived from interest income on 
 21.2   obligations of the state of Minnesota or its political or 
 21.3   governmental subdivisions, municipalities, governmental agencies 
 21.4   or instrumentalities, but only if the portion of the 
 21.5   exempt-interest dividends from such Minnesota sources paid to 
 21.6   all shareholders represents 95 percent or more of the 
 21.7   exempt-interest dividends that are paid by the regulated 
 21.8   investment company as defined in section 851(a) of the Internal 
 21.9   Revenue Code, or the fund of the regulated investment company as 
 21.10  defined in section 851(g) of the Internal Revenue Code, making 
 21.11  the payment; and 
 21.12     (iii) for the purposes of items (i) and (ii), interest on 
 21.13  obligations of an Indian tribal government described in section 
 21.14  7871(c) of the Internal Revenue Code shall be treated as 
 21.15  interest income on obligations of the state in which the tribe 
 21.16  is located; 
 21.17     (2) the amount of income taxes paid or accrued within the 
 21.18  taxable year under this chapter and income taxes paid to any 
 21.19  other state or to any province or territory of Canada, to the 
 21.20  extent allowed as a deduction under section 63(d) of the 
 21.21  Internal Revenue Code, but the addition may not be more than the 
 21.22  amount by which the itemized deductions as allowed under section 
 21.23  63(d) of the Internal Revenue Code exceeds the amount of the 
 21.24  standard deduction as defined in section 63(c) of the Internal 
 21.25  Revenue Code.  For the purpose of this paragraph, the 
 21.26  disallowance of itemized deductions under section 68 of the 
 21.27  Internal Revenue Code of 1986, income tax is the last itemized 
 21.28  deduction disallowed; 
 21.29     (3) the capital gain amount of a lump sum distribution to 
 21.30  which the special tax under section 1122(h)(3)(B)(ii) of the Tax 
 21.31  Reform Act of 1986, Public Law Number 99-514, applies; 
 21.32     (4) the amount of income taxes paid or accrued within the 
 21.33  taxable year under this chapter and income taxes paid to any 
 21.34  other state or any province or territory of Canada, to the 
 21.35  extent allowed as a deduction in determining federal adjusted 
 21.36  gross income.  For the purpose of this paragraph, income taxes 
 22.1   do not include the taxes imposed by sections 290.0922, 
 22.2   subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729; 
 22.3      (5) the amount of expense, interest, or taxes disallowed 
 22.4   pursuant to section 290.10; and 
 22.5      (6) the amount of a partner's pro rata share of net income 
 22.6   which does not flow through to the partner because the 
 22.7   partnership elected to pay the tax on the income under section 
 22.8   6242(a)(2) of the Internal Revenue Code; and 
 22.9      (7) 80 percent of the depreciation deduction allowed under 
 22.10  section 168(k) of the Internal Revenue Code. 
 22.11     <h>[EFFECTIVE DATE.]</h> This section is effective for tax years 
 22.12  ending after September 10, 2001. 
 22.13     Sec. 5.  Minnesota Statutes 2001 Supplement, section 
 22.14  290.01, subdivision 19b, is amended to read: 
 22.15     Subd. 19b.  [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 
 22.16  individuals, estates, and trusts, there shall be subtracted from 
 22.17  federal taxable income: 
 22.18     (1) interest income on obligations of any authority, 
 22.19  commission, or instrumentality of the United States to the 
 22.20  extent includable in taxable income for federal income tax 
 22.21  purposes but exempt from state income tax under the laws of the 
 22.22  United States; 
 22.23     (2) if included in federal taxable income, the amount of 
 22.24  any overpayment of income tax to Minnesota or to any other 
 22.25  state, for any previous taxable year, whether the amount is 
 22.26  received as a refund or as a credit to another taxable year's 
 22.27  income tax liability; 
 22.28     (3) the amount paid to others, less the amount used to 
 22.29  claim the credit allowed under section 290.0674, not to exceed 
 22.30  $1,625 for each qualifying child in grades kindergarten to 6 and 
 22.31  $2,500 for each qualifying child in grades 7 to 12, for tuition, 
 22.32  textbooks, and transportation of each qualifying child in 
 22.33  attending an elementary or secondary school situated in 
 22.34  Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, 
 22.35  wherein a resident of this state may legally fulfill the state's 
 22.36  compulsory attendance laws, which is not operated for profit, 
 23.1   and which adheres to the provisions of the Civil Rights Act of 
 23.2   1964 and chapter 363.  For the purposes of this clause, 
 23.3   "tuition" includes fees or tuition as defined in section 
 23.4   290.0674, subdivision 1, clause (1).  As used in this clause, 
 23.5   "textbooks" includes books and other instructional materials and 
 23.6   equipment purchased or leased for use in elementary and 
 23.7   secondary schools in teaching only those subjects legally and 
 23.8   commonly taught in public elementary and secondary schools in 
 23.9   this state.  Equipment expenses qualifying for deduction 
 23.10  includes expenses as defined and limited in section 290.0674, 
 23.11  subdivision 1, clause (3).  "Textbooks" does not include 
 23.12  instructional books and materials used in the teaching of 
 23.13  religious tenets, doctrines, or worship, the purpose of which is 
 23.14  to instill such tenets, doctrines, or worship, nor does it 
 23.15  include books or materials for, or transportation to, 
 23.16  extracurricular activities including sporting events, musical or 
 23.17  dramatic events, speech activities, driver's education, or 
 23.18  similar programs.  For purposes of the subtraction provided by 
 23.19  this clause, "qualifying child" has the meaning given in section 
 23.20  32(c)(3) of the Internal Revenue Code; 
 23.21     (4) contributions made in taxable years beginning after 
 23.22  December 31, 1981, and before January 1, 1985, to a qualified 
 23.23  governmental pension plan, an individual retirement account, 
 23.24  simplified employee pension, or qualified plan covering a 
 23.25  self-employed person that were included in Minnesota gross 
 23.26  income in the taxable year for which the contributions were made 
 23.27  but were deducted or were not included in the computation of 
 23.28  federal adjusted gross income, less any amount allowed to be 
 23.29  subtracted as a distribution under this subdivision or a 
 23.30  predecessor provision in taxable years that began before January 
 23.31  1, 2000.  This subtraction applies only for taxable years 
 23.32  beginning after December 31, 1999, and before January 1, 2001.  
 23.33  If an individual's subtraction under this clause exceeds the 
 23.34  individual's taxable income, the excess may be carried forward 
 23.35  to taxable years beginning after December 31, 2000, and before 
 23.36  January 1, 2002; 
 24.1      (5) income as provided under section 290.0802; 
 24.2      (6) (5) to the extent included in federal adjusted gross 
 24.3   income, income realized on disposition of property exempt from 
 24.4   tax under section 290.491; 
 24.5      (7) (6) to the extent not deducted in determining federal 
 24.6   taxable income or used to claim the long-term care insurance 
 24.7   credit under section 290.0672, the amount paid for health 
 24.8   insurance of self-employed individuals as determined under 
 24.9   section 162(l) of the Internal Revenue Code, except that the 
 24.10  percent limit does not apply.  If the individual deducted 
 24.11  insurance payments under section 213 of the Internal Revenue 
 24.12  Code of 1986, the subtraction under this clause must be reduced 
 24.13  by the lesser of: 
 24.14     (i) the total itemized deductions allowed under section 
 24.15  63(d) of the Internal Revenue Code, less state, local, and 
 24.16  foreign income taxes deductible under section 164 of the 
 24.17  Internal Revenue Code and the standard deduction under section 
 24.18  63(c) of the Internal Revenue Code; or 
 24.19     (ii) the lesser of (A) the amount of insurance qualifying 
 24.20  as "medical care" under section 213(d) of the Internal Revenue 
 24.21  Code to the extent not deducted under section 162(1) of the 
 24.22  Internal Revenue Code or excluded from income or (B) the total 
 24.23  amount deductible for medical care under section 213(a); 
 24.24     (8) (7) the exemption amount allowed under Laws 1995, 
 24.25  chapter 255, article 3, section 2, subdivision 3; 
 24.26     (9) (8) to the extent included in federal taxable income, 
 24.27  postservice benefits for youth community service under section 
 24.28  124D.42 for volunteer service under United States Code, title 
 24.29  42, sections 12601 to 12604; 
 24.30     (10) (9) to the extent not deducted in determining federal 
 24.31  taxable income by an individual who does not itemize deductions 
 24.32  for federal income tax purposes for the taxable year, an amount 
 24.33  equal to 50 percent of the excess of charitable contributions 
 24.34  allowable as a deduction for the taxable year under section 
 24.35  170(a) of the Internal Revenue Code over $500; 
 24.36     (11) (10) for taxable years beginning before January 1, 
 25.1   2008, the amount of the federal small ethanol producer credit 
 25.2   allowed under section 40(a)(3) of the Internal Revenue Code 
 25.3   which is included in gross income under section 87 of the 
 25.4   Internal Revenue Code; and 
 25.5      (12) (11) for individuals who are allowed a federal foreign 
 25.6   tax credit for taxes that do not qualify for a credit under 
 25.7   section 290.06, subdivision 22, an amount equal to the carryover 
 25.8   of subnational foreign taxes for the taxable year, but not to 
 25.9   exceed the total subnational foreign taxes reported in claiming 
 25.10  the foreign tax credit.  For purposes of this clause, "federal 
 25.11  foreign tax credit" means the credit allowed under section 27 of 
 25.12  the Internal Revenue Code, and "carryover of subnational foreign 
 25.13  taxes" equals the carryover allowed under section 904(c) of the 
 25.14  Internal Revenue Code minus national level foreign taxes to the 
 25.15  extent they exceed the federal foreign tax credit; and 
 25.16     (12) in each of the five tax years immediately following 
 25.17  the tax year in which an addition is required under subdivision 
 25.18  19a, clause (7), an amount equal to one-fifth of the delayed 
 25.19  depreciation.  For purposes of this clause, "delayed 
 25.20  depreciation" means the amount of the addition made by the 
 25.21  taxpayer under subdivision 19a, clause (7), minus the positive 
 25.22  value of any net operating loss under section 172 of the 
 25.23  Internal Revenue Code generated for the tax year of the 
 25.24  addition.  The resulting delayed depreciation cannot be less 
 25.25  than zero. 
 25.26     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
 25.27  following final enactment, except that clause (12) is effective 
 25.28  for tax years ending after September 10, 2001. 
 25.29     Sec. 6.  Minnesota Statutes 2001 Supplement, section 
 25.30  290.01, subdivision 19c, is amended to read: 
 25.31     Subd. 19c.  [CORPORATIONS; ADDITIONS TO FEDERAL TAXABLE 
 25.32  INCOME.] For corporations, there shall be added to federal 
 25.33  taxable income: 
 25.34     (1) the amount of any deduction taken for federal income 
 25.35  tax purposes for income, excise, or franchise taxes based on net 
 25.36  income or related minimum taxes, including but not limited to 
 26.1   the tax imposed under section 290.0922, paid by the corporation 
 26.2   to Minnesota, another state, a political subdivision of another 
 26.3   state, the District of Columbia, or any foreign country or 
 26.4   possession of the United States; 
 26.5      (2) interest not subject to federal tax upon obligations 
 26.6   of:  the United States, its possessions, its agencies, or its 
 26.7   instrumentalities; the state of Minnesota or any other state, 
 26.8   any of its political or governmental subdivisions, any of its 
 26.9   municipalities, or any of its governmental agencies or 
 26.10  instrumentalities; the District of Columbia; or Indian tribal 
 26.11  governments; 
 26.12     (3) exempt-interest dividends received as defined in 
 26.13  section 852(b)(5) of the Internal Revenue Code; 
 26.14     (4) the amount of any net operating loss deduction taken 
 26.15  for federal income tax purposes under section 172 or 832(c)(10) 
 26.16  of the Internal Revenue Code or operations loss deduction under 
 26.17  section 810 of the Internal Revenue Code; 
 26.18     (5) the amount of any special deductions taken for federal 
 26.19  income tax purposes under sections 241 to 247 of the Internal 
 26.20  Revenue Code; 
 26.21     (6) losses from the business of mining, as defined in 
 26.22  section 290.05, subdivision 1, clause (a), that are not subject 
 26.23  to Minnesota income tax; 
 26.24     (7) the amount of any capital losses deducted for federal 
 26.25  income tax purposes under sections 1211 and 1212 of the Internal 
 26.26  Revenue Code; 
 26.27     (8) the exempt foreign trade income of a foreign sales 
 26.28  corporation under sections 921(a) and 291 of the Internal 
 26.29  Revenue Code; 
 26.30     (9) the amount of percentage depletion deducted under 
 26.31  sections 611 through 614 and 291 of the Internal Revenue Code; 
 26.32     (10) for certified pollution control facilities placed in 
 26.33  service in a taxable year beginning before December 31, 1986, 
 26.34  and for which amortization deductions were elected under section 
 26.35  169 of the Internal Revenue Code of 1954, as amended through 
 26.36  December 31, 1985, the amount of the amortization deduction 
 27.1   allowed in computing federal taxable income for those 
 27.2   facilities; 
 27.3      (11) the amount of any deemed dividend from a foreign 
 27.4   operating corporation determined pursuant to section 290.17, 
 27.5   subdivision 4, paragraph (g); 
 27.6      (12) the amount of any environmental tax paid under section 
 27.7   59(a) of the Internal Revenue Code; 
 27.8      (13) the amount of a partner's pro rata share of net income 
 27.9   which does not flow through to the partner because the 
 27.10  partnership elected to pay the tax on the income under section 
 27.11  6242(a)(2) of the Internal Revenue Code; and 
 27.12     (14) the amount of net income excluded under section 114 of 
 27.13  the Internal Revenue Code; 
 27.14     (15) any increase in subpart F income, as defined in 
 27.15  section 952(a) of the Internal Revenue Code, for the taxable 
 27.16  year when subpart F income is calculated without regard to the 
 27.17  provisions of section 614 of Public Law Number 107-147; and 
 27.18     (16) 80 percent of the depreciation deduction allowed under 
 27.19  section 168(k) of the Internal Revenue Code. 
 27.20     <h>[EFFECTIVE DATE.]</h> This section is effective for tax years 
 27.21  ending after September 10, 2001. 
 27.22     Sec. 7.  Minnesota Statutes 2001 Supplement, section 
 27.23  290.01, subdivision 19d, is amended to read: 
 27.24     Subd. 19d.  [CORPORATIONS; MODIFICATIONS DECREASING FEDERAL 
 27.25  TAXABLE INCOME.] For corporations, there shall be subtracted 
 27.26  from federal taxable income after the increases provided in 
 27.27  subdivision 19c:  
 27.28     (1) the amount of foreign dividend gross-up added to gross 
 27.29  income for federal income tax purposes under section 78 of the 
 27.30  Internal Revenue Code; 
 27.31     (2) the amount of salary expense not allowed for federal 
 27.32  income tax purposes due to claiming the federal jobs credit 
 27.33  under section 51 of the Internal Revenue Code; 
 27.34     (3) any dividend (not including any distribution in 
 27.35  liquidation) paid within the taxable year by a national or state 
 27.36  bank to the United States, or to any instrumentality of the 
 28.1   United States exempt from federal income taxes, on the preferred 
 28.2   stock of the bank owned by the United States or the 
 28.3   instrumentality; 
 28.4      (4) amounts disallowed for intangible drilling costs due to 
 28.5   differences between this chapter and the Internal Revenue Code 
 28.6   in taxable years beginning before January 1, 1987, as follows: 
 28.7      (i) to the extent the disallowed costs are represented by 
 28.8   physical property, an amount equal to the allowance for 
 28.9   depreciation under Minnesota Statutes 1986, section 290.09, 
 28.10  subdivision 7, subject to the modifications contained in 
 28.11  subdivision 19e; and 
 28.12     (ii) to the extent the disallowed costs are not represented 
 28.13  by physical property, an amount equal to the allowance for cost 
 28.14  depletion under Minnesota Statutes 1986, section 290.09, 
 28.15  subdivision 8; 
 28.16     (5) the deduction for capital losses pursuant to sections 
 28.17  1211 and 1212 of the Internal Revenue Code, except that: 
 28.18     (i) for capital losses incurred in taxable years beginning 
 28.19  after December 31, 1986, capital loss carrybacks shall not be 
 28.20  allowed; 
 28.21     (ii) for capital losses incurred in taxable years beginning 
 28.22  after December 31, 1986, a capital loss carryover to each of the 
 28.23  15 taxable years succeeding the loss year shall be allowed; 
 28.24     (iii) for capital losses incurred in taxable years 
 28.25  beginning before January 1, 1987, a capital loss carryback to 
 28.26  each of the three taxable years preceding the loss year, subject 
 28.27  to the provisions of Minnesota Statutes 1986, section 290.16, 
 28.28  shall be allowed; and 
 28.29     (iv) for capital losses incurred in taxable years beginning 
 28.30  before January 1, 1987, a capital loss carryover to each of the 
 28.31  five taxable years succeeding the loss year to the extent such 
 28.32  loss was not used in a prior taxable year and subject to the 
 28.33  provisions of Minnesota Statutes 1986, section 290.16, shall be 
 28.34  allowed; 
 28.35     (6) an amount for interest and expenses relating to income 
 28.36  not taxable for federal income tax purposes, if (i) the income 
 29.1   is taxable under this chapter and (ii) the interest and expenses 
 29.2   were disallowed as deductions under the provisions of section 
 29.3   171(a)(2), 265 or 291 of the Internal Revenue Code in computing 
 29.4   federal taxable income; 
 29.5      (7) in the case of mines, oil and gas wells, other natural 
 29.6   deposits, and timber for which percentage depletion was 
 29.7   disallowed pursuant to subdivision 19c, clause (11), a 
 29.8   reasonable allowance for depletion based on actual cost.  In the 
 29.9   case of leases the deduction must be apportioned between the 
 29.10  lessor and lessee in accordance with rules prescribed by the 
 29.11  commissioner.  In the case of property held in trust, the 
 29.12  allowable deduction must be apportioned between the income 
 29.13  beneficiaries and the trustee in accordance with the pertinent 
 29.14  provisions of the trust, or if there is no provision in the 
 29.15  instrument, on the basis of the trust's income allocable to 
 29.16  each; 
 29.17     (8) for certified pollution control facilities placed in 
 29.18  service in a taxable year beginning before December 31, 1986, 
 29.19  and for which amortization deductions were elected under section 
 29.20  169 of the Internal Revenue Code of 1954, as amended through 
 29.21  December 31, 1985, an amount equal to the allowance for 
 29.22  depreciation under Minnesota Statutes 1986, section 290.09, 
 29.23  subdivision 7; 
 29.24     (9) amounts included in federal taxable income that are due 
 29.25  to refunds of income, excise, or franchise taxes based on net 
 29.26  income or related minimum taxes paid by the corporation to 
 29.27  Minnesota, another state, a political subdivision of another 
 29.28  state, the District of Columbia, or a foreign country or 
 29.29  possession of the United States to the extent that the taxes 
 29.30  were added to federal taxable income under section 290.01, 
 29.31  subdivision 19c, clause (1), in a prior taxable year; 
 29.32     (10) 80 percent of royalties, fees, or other like income 
 29.33  accrued or received from a foreign operating corporation or a 
 29.34  foreign corporation which is part of the same unitary business 
 29.35  as the receiving corporation; 
 29.36     (11) income or gains from the business of mining as defined 
 30.1   in section 290.05, subdivision 1, clause (a), that are not 
 30.2   subject to Minnesota franchise tax; 
 30.3      (12) the amount of handicap access expenditures in the 
 30.4   taxable year which are not allowed to be deducted or capitalized 
 30.5   under section 44(d)(7) of the Internal Revenue Code; 
 30.6      (13) the amount of qualified research expenses not allowed 
 30.7   for federal income tax purposes under section 280C(c) of the 
 30.8   Internal Revenue Code, but only to the extent that the amount 
 30.9   exceeds the amount of the credit allowed under section 290.068; 
 30.10     (14) the amount of salary expenses not allowed for federal 
 30.11  income tax purposes due to claiming the Indian employment credit 
 30.12  under section 45A(a) of the Internal Revenue Code; 
 30.13     (15) the amount of any refund of environmental taxes paid 
 30.14  under section 59A of the Internal Revenue Code; 
 30.15     (16) for taxable years beginning before January 1, 2008, 
 30.16  the amount of the federal small ethanol producer credit allowed 
 30.17  under section 40(a)(3) of the Internal Revenue Code which is 
 30.18  included in gross income under section 87 of the Internal 
 30.19  Revenue Code; and 
 30.20     (17) for a corporation whose foreign sales corporation, as 
 30.21  defined in section 922 of the Internal Revenue Code, constituted 
 30.22  a foreign operating corporation during the taxable years ending 
 30.23  during calendar year 1992 and a return was filed by August 15, 
 30.24  1996, claiming the deduction under this subdivision for income 
 30.25  received from the foreign operating corporation, an amount equal 
 30.26  to 1.23 multiplied by the amount of income excluded under 
 30.27  section 114 of the Internal Revenue Code, provided the income is 
 30.28  not income of a foreign operating company; 
 30.29     (18) any decrease in subpart F income, as defined in 
 30.30  section 952(a) of the Internal Revenue Code, for the taxable 
 30.31  year when subpart F income is calculated without regard to the 
 30.32  provisions of section 614 of Public Law Number 107-147; and 
 30.33     (19) in each of the five tax years immediately following 
 30.34  the tax year in which an addition is required under subdivision 
 30.35  19c, clause (16), an amount equal to one-fifth of the delayed 
 30.36  depreciation.  For purposes of this clause, "delayed 
 31.1   depreciation" means the amount of the addition made by the 
 31.2   taxpayer under subdivision 19c, clause (16).  The resulting 
 31.3   delayed depreciation cannot be less than zero. 
 31.4      <h>[EFFECTIVE DATE.]</h> This section is effective for tax years 
 31.5   ending after September 10, 2001. 
 31.6      Sec. 8.  Minnesota Statutes 2001 Supplement, section 
 31.7   290.01, subdivision 31, is amended to read: 
 31.8      Subd. 31.  [INTERNAL REVENUE CODE.] Unless specifically 
 31.9   defined otherwise, "Internal Revenue Code" means the Internal 
 31.10  Revenue Code of 1986, as amended through June 15, 2001 March 15, 
 31.11  2002. 
 31.12     <h>[EFFECTIVE DATE.]</h> This section is effective at the same 
 31.13  time and in the same manner as the federal changes made by the 
 31.14  Victims of Terrorism Tax Relief Act of 2001, Public Law Number 
 31.15  107-134, and by the Job Creation and Worker Assistance Act of 
 31.16  2002, Public Law Number 107-147, become effective. 
 31.17     Sec. 9.  Minnesota Statutes 2000, section 290.067, 
 31.18  subdivision 1, is amended to read: 
 31.19     Subdivision 1.  [AMOUNT OF CREDIT.] (a) A taxpayer may take 
 31.20  as a credit against the tax due from the taxpayer and a spouse, 
 31.21  if any, under this chapter an amount equal to the dependent care 
 31.22  credit for which the taxpayer is eligible pursuant to the 
 31.23  provisions of section 21 of the Internal Revenue Code subject to 
 31.24  the limitations provided in subdivision 2 except that in 
 31.25  determining whether the child qualified as a dependent, income 
 31.26  received as a Minnesota family investment program grant or 
 31.27  allowance to or on behalf of the child must not be taken into 
 31.28  account in determining whether the child received more than half 
 31.29  of the child's support from the taxpayer, and the provisions of 
 31.30  section 32(b)(1)(D) of the Internal Revenue Code do not apply. 
 31.31     (b) If a child who has not attained the age of six years at 
 31.32  the close of the taxable year is cared for at a licensed family 
 31.33  day care home operated by the child's parent, the taxpayer is 
 31.34  deemed to have paid employment-related expenses.  If the child 
 31.35  is 16 months old or younger at the close of the taxable year, 
 31.36  the amount of expenses deemed to have been paid equals the 
 32.1   maximum limit for one qualified individual under section 21(c) 
 32.2   and (d) of the Internal Revenue Code.  If the child is older 
 32.3   than 16 months of age but has not attained the age of six years 
 32.4   at the close of the taxable year, the amount of expenses deemed 
 32.5   to have been paid equals the amount the licensee would charge 
 32.6   for the care of a child of the same age for the same number of 
 32.7   hours of care.  
 32.8      (c) If a married couple: 
 32.9      (1) has a child who has not attained the age of one year at 
 32.10  the close of the taxable year; 
 32.11     (2) files a joint tax return for the taxable year; and 
 32.12     (3) does not participate in a dependent care assistance 
 32.13  program as defined in section 129 of the Internal Revenue Code, 
 32.14  in lieu of the actual employment related expenses paid for that 
 32.15  child under paragraph (a) or the deemed amount under paragraph 
 32.16  (b), the lesser of (i) the combined earned income of the couple 
 32.17  or (ii) $2,400 the amount of the maximum limit for one qualified 
 32.18  individual under section 21(c) and (d) of the Internal Revenue 
 32.19  Code will be deemed to be the employment related expense paid 
 32.20  for that child.  The earned income limitation of section 21(d) 
 32.21  of the Internal Revenue Code shall not apply to this deemed 
 32.22  amount.  These deemed amounts apply regardless of whether any 
 32.23  employment-related expenses have been paid.  
 32.24     (d) If the taxpayer is not required and does not file a 
 32.25  federal individual income tax return for the tax year, no credit 
 32.26  is allowed for any amount paid to any person unless: 
 32.27     (1) the name, address, and taxpayer identification number 
 32.28  of the person are included on the return claiming the credit; or 
 32.29     (2) if the person is an organization described in section 
 32.30  501(c)(3) of the Internal Revenue Code and exempt from tax under 
 32.31  section 501(a) of the Internal Revenue Code, the name and 
 32.32  address of the person are included on the return claiming the 
 32.33  credit.  
 32.34  In the case of a failure to provide the information required 
 32.35  under the preceding sentence, the preceding sentence does not 
 32.36  apply if it is shown that the taxpayer exercised due diligence 
 33.1   in attempting to provide the information required. 
 33.2      In the case of a nonresident, part-year resident, or a 
 33.3   person who has earned income not subject to tax under this 
 33.4   chapter, the credit determined under section 21 of the Internal 
 33.5   Revenue Code must be allocated based on the ratio by which the 
 33.6   earned income of the claimant and the claimant's spouse from 
 33.7   Minnesota sources bears to the total earned income of the 
 33.8   claimant and the claimant's spouse. 
 33.9      <h>[EFFECTIVE DATE.]</h> This section is effective for tax years 
 33.10  beginning after December 31, 2002. 
 33.11     Sec. 10.  Minnesota Statutes 2001 Supplement, section 
 33.12  290.091, subdivision 2, is amended to read: 
 33.13     Subd. 2.  [DEFINITIONS.] For purposes of the tax imposed by 
 33.14  this section, the following terms have the meanings given: 
 33.15     (a) "Alternative minimum taxable income" means the sum of 
 33.16  the following for the taxable year: 
 33.17     (1) the taxpayer's federal alternative minimum taxable 
 33.18  income as defined in section 55(b)(2) of the Internal Revenue 
 33.19  Code; 
 33.20     (2) the taxpayer's itemized deductions allowed in computing 
 33.21  federal alternative minimum taxable income, but excluding: 
 33.22     (i) the Minnesota charitable contribution deduction; 
 33.23     (ii) the medical expense deduction; 
 33.24     (iii) the casualty, theft, and disaster loss deduction; and 
 33.25     (iv) the impairment-related work expenses of a disabled 
 33.26  person; and 
 33.27     (v) holocaust victims' settlement payments to the extent 
 33.28  allowed under section 290.01, subdivision 19b; 
 33.29     (3) for depletion allowances computed under section 613A(c) 
 33.30  of the Internal Revenue Code, with respect to each property (as 
 33.31  defined in section 614 of the Internal Revenue Code), to the 
 33.32  extent not included in federal alternative minimum taxable 
 33.33  income, the excess of the deduction for depletion allowable 
 33.34  under section 611 of the Internal Revenue Code for the taxable 
 33.35  year over the adjusted basis of the property at the end of the 
 33.36  taxable year (determined without regard to the depletion 
 34.1   deduction for the taxable year); 
 34.2      (4) to the extent not included in federal alternative 
 34.3   minimum taxable income, the amount of the tax preference for 
 34.4   intangible drilling cost under section 57(a)(2) of the Internal 
 34.5   Revenue Code determined without regard to subparagraph (E); and 
 34.6      (5) to the extent not included in federal alternative 
 34.7   minimum taxable income, the amount of interest income as 
 34.8   provided by section 290.01, subdivision 19a, clause (1); and 
 34.9      (6) the amount of addition required by section 290.01, 
 34.10  subdivision 19a, clause (7); 
 34.11     less the sum of the amounts determined under the following: 
 34.12     (1) interest income as defined in section 290.01, 
 34.13  subdivision 19b, clause (1); 
 34.14     (2) an overpayment of state income tax as provided by 
 34.15  section 290.01, subdivision 19b, clause (2), to the extent 
 34.16  included in federal alternative minimum taxable income; 
 34.17     (3) the amount of investment interest paid or accrued 
 34.18  within the taxable year on indebtedness to the extent that the 
 34.19  amount does not exceed net investment income, as defined in 
 34.20  section 163(d)(4) of the Internal Revenue Code.  Interest does 
 34.21  not include amounts deducted in computing federal adjusted gross 
 34.22  income; and 
 34.23     (4) amounts subtracted from federal taxable income as 
 34.24  provided by section 290.01, subdivision 19b, clause (4) (12). 
 34.25     In the case of an estate or trust, alternative minimum 
 34.26  taxable income must be computed as provided in section 59(c) of 
 34.27  the Internal Revenue Code. 
 34.28     (b) "Investment interest" means investment interest as 
 34.29  defined in section 163(d)(3) of the Internal Revenue Code. 
 34.30     (c) "Tentative minimum tax" equals 6.4 percent of 
 34.31  alternative minimum taxable income after subtracting the 
 34.32  exemption amount determined under subdivision 3. 
 34.33     (d) "Regular tax" means the tax that would be imposed under 
 34.34  this chapter (without regard to this section and section 
 34.35  290.032), reduced by the sum of the nonrefundable credits 
 34.36  allowed under this chapter.  
 35.1      (e) "Net minimum tax" means the minimum tax imposed by this 
 35.2   section. 
 35.3      (f) "Minnesota charitable contribution deduction" means a 
 35.4   charitable contribution deduction under section 170 of the 
 35.5   Internal Revenue Code to or for the use of an entity described 
 35.6   in Minnesota Statutes 2000, section 290.21, subdivision 3, 
 35.7   clauses (a) to (e).  When the federal deduction for charitable 
 35.8   contributions is limited under section 170(b) of the Internal 
 35.9   Revenue Code, the allowable contributions in the year of 
 35.10  contribution are deemed to be first contributions to entities 
 35.11  described in Minnesota Statutes 2000, section 290.21, 
 35.12  subdivision 3, clauses (a) to (e). 
 35.13     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
 35.14  following final enactment, except that clause (6) is effective 
 35.15  for tax years ending after September 10, 2001. 
 35.16     Sec. 11.  Minnesota Statutes 2001 Supplement, section 
 35.17  290.0921, subdivision 3, is amended to read: 
 35.18     Subd. 3.  [ALTERNATIVE MINIMUM TAXABLE INCOME.] 
 35.19  "Alternative minimum taxable income" is Minnesota net income as 
 35.20  defined in section 290.01, subdivision 19, and includes the 
 35.21  adjustments and tax preference items in sections 56, 57, 58, and 
 35.22  59(d), (e), (f), and (h) of the Internal Revenue Code.  If a 
 35.23  corporation files a separate company Minnesota tax return, the 
 35.24  minimum tax must be computed on a separate company basis.  If a 
 35.25  corporation is part of a tax group filing a unitary return, the 
 35.26  minimum tax must be computed on a unitary basis.  The following 
 35.27  adjustments must be made. 
 35.28     (1) For purposes of the depreciation adjustments under 
 35.29  section 56(a)(1) and 56(g)(4)(A) of the Internal Revenue Code, 
 35.30  the basis for depreciable property placed in service in a 
 35.31  taxable year beginning before January 1, 1990, is the adjusted 
 35.32  basis for federal income tax purposes, including any 
 35.33  modification made in a taxable year under section 290.01, 
 35.34  subdivision 19e, or Minnesota Statutes 1986, section 290.09, 
 35.35  subdivision 7, paragraph (c). 
 35.36     For taxable years beginning after December 31, 2000, the 
 36.1   amount of any remaining modification made under section 290.01, 
 36.2   subdivision 19e, or Minnesota Statutes 1986, section 290.09, 
 36.3   subdivision 7, paragraph (c), not previously deducted is a 
 36.4   depreciation allowance in the first taxable year after December 
 36.5   31, 2000. 
 36.6      (2) The portion of the depreciation deduction allowed for 
 36.7   federal income tax purposes under section 168(k) of the Internal 
 36.8   Revenue Code that is required as an addition under section 
 36.9   290.01, subdivision 19c, clause (16), is disallowed in 
 36.10  determining alternative minimum taxable income. 
 36.11     (3) The subtraction for depreciation allowed under section 
 36.12  290.01, subdivision 19d, clause (19), is allowed as a 
 36.13  depreciation deduction in determining alternative minimum 
 36.14  taxable income. 
 36.15     (4) The alternative tax net operating loss deduction under 
 36.16  sections 56(a)(4) and 56(d) of the Internal Revenue Code does 
 36.17  not apply. 
 36.18     (3) (5) The special rule for certain dividends under 
 36.19  section 56(g)(4)(C)(ii) of the Internal Revenue Code does not 
 36.20  apply. 
 36.21     (4) (6) The special rule for dividends from section 936 
 36.22  companies under section 56(g)(4)(C)(iii) does not apply. 
 36.23     (5) (7) The tax preference for depletion under section 
 36.24  57(a)(1) of the Internal Revenue Code does not apply. 
 36.25     (6) (8) The tax preference for intangible drilling costs 
 36.26  under section 57(a)(2) of the Internal Revenue Code must be 
 36.27  calculated without regard to subparagraph (E) and the 
 36.28  subtraction under section 290.01, subdivision 19d, clause (4). 
 36.29     (7) (9) The tax preference for tax exempt interest under 
 36.30  section 57(a)(5) of the Internal Revenue Code does not apply.  
 36.31     (8) (10) The tax preference for charitable contributions of 
 36.32  appreciated property under section 57(a)(6) of the Internal 
 36.33  Revenue Code does not apply. 
 36.34     (9) (11) For purposes of calculating the tax preference for 
 36.35  accelerated depreciation or amortization on certain property 
 36.36  placed in service before January 1, 1987, under section 57(a)(7) 
 37.1   of the Internal Revenue Code, the deduction allowable for the 
 37.2   taxable year is the deduction allowed under section 290.01, 
 37.3   subdivision 19e. 
 37.4      For taxable years beginning after December 31, 2000, the 
 37.5   amount of any remaining modification made under section 290.01, 
 37.6   subdivision 19e, not previously deducted is a depreciation or 
 37.7   amortization allowance in the first taxable year after December 
 37.8   31, 2000 2004. 
 37.9      (10) (12) For purposes of calculating the adjustment for 
 37.10  adjusted current earnings in section 56(g) of the Internal 
 37.11  Revenue Code, the term "alternative minimum taxable income" as 
 37.12  it is used in section 56(g) of the Internal Revenue Code, means 
 37.13  alternative minimum taxable income as defined in this 
 37.14  subdivision, determined without regard to the adjustment for 
 37.15  adjusted current earnings in section 56(g) of the Internal 
 37.16  Revenue Code. 
 37.17     (11) (13) For purposes of determining the amount of 
 37.18  adjusted current earnings under section 56(g)(3) of the Internal 
 37.19  Revenue Code, no adjustment shall be made under section 56(g)(4) 
 37.20  of the Internal Revenue Code with respect to (i) the amount of 
 37.21  foreign dividend gross-up subtracted as provided in section 
 37.22  290.01, subdivision 19d, clause (1), (ii) the amount of refunds 
 37.23  of income, excise, or franchise taxes subtracted as provided in 
 37.24  section 290.01, subdivision 19d, clause (10), or (iii) the 
 37.25  amount of royalties, fees or other like income subtracted as 
 37.26  provided in section 290.01, subdivision 19d, clause (11). 
 37.27     Items of tax preference must not be reduced below zero as a 
 37.28  result of the modifications in this subdivision. 
 37.29     <h>[EFFECTIVE DATE.]</h> This section is effective for tax years 
 37.30  ending after September 10, 2001. 
 37.31     Sec. 12.  Minnesota Statutes 2001 Supplement, section 
 37.32  290A.03, subdivision 15, is amended to read: 
 37.33     Subd. 15.  [INTERNAL REVENUE CODE.] "Internal Revenue Code" 
 37.34  means the Internal Revenue Code of 1986, as amended through June 
 37.35  15, 2001 March 15, 2002. 
 37.36     <h>[EFFECTIVE DATE.]</h> This section is effective at the same 
 38.1   time and manner as the changes to federal adjusted gross income 
 38.2   made by the Victims of Terrorism Tax Relief Act of 2001, Public 
 38.3   Law Number 107-134, and by the Job Creation and Worker 
 38.4   Assistance Act of 2002, Public Law Number 107-147, become 
 38.5   effective. 
 38.6                              ARTICLE 3
 38.7                         SALES AND USE TAXES
 38.8      Section 1.  Minnesota Statutes 2000, section 270.60, 
 38.9   subdivision 4, is amended to read: 
 38.10     Subd. 4.  [PAYMENTS TO COUNTIES.] (a) The commissioner 
 38.11  shall pay to a county in which an Indian gaming casino is 
 38.12  located ten percent of the state share of all taxes generated 
 38.13  from activities on reservations and collected under a tax 
 38.14  agreement under this section with the tribal government for the 
 38.15  reservation located in the county.  If the tribe has casinos 
 38.16  located in more than one county, the payment must be divided 
 38.17  equally among the counties in which the casinos are located. 
 38.18     (b) A county is a qualified county under this subdivision 
 38.19  if one of the following conditions is met: 
 38.20     (1) the county's per capita income is less than 80 percent 
 38.21  of the state per capita personal income, based on the most 
 38.22  recent estimates made by the United States Bureau of Economic 
 38.23  Analysis; or 
 38.24     (2) 30 percent or more of the total market value of real 
 38.25  property in the county is exempt from ad valorem taxation. 
 38.26     (c) The commissioner shall make the payments required under 
 38.27  this subdivision by February 28 of the year following the year 
 38.28  the taxes are collected. 
 38.29     (d) (c) An amount sufficient to make the payments 
 38.30  authorized by this subdivision, not to exceed $1,100,000 in any 
 38.31  fiscal year, is annually appropriated from the general fund to 
 38.32  the commissioner.  If the authorized payments exceed the amount 
 38.33  of the appropriation, the commissioner shall first 
 38.34  proportionately reduce the payments to counties other than 
 38.35  qualified counties so that the total amount equals the 
 38.36  appropriation.  If the authorized payments to qualified counties 
 39.1   also exceed the amount of the appropriation, the commissioner 
 39.2   shall then proportionately reduce the rate so that the total 
 39.3   amount to be paid to qualified counties equals the appropriation.
 39.4      <h>[EFFECTIVE DATE.]</h> This section is effective for payments 
 39.5   made after December 31, 2002. 
 39.6      Sec. 2.  Minnesota Statutes 2001 Supplement, section 
 39.7   289A.20, subdivision 4, is amended to read: 
 39.8      Subd. 4.  [SALES AND USE TAX.] (a) The taxes imposed by 
 39.9   chapter 297A are due and payable to the commissioner monthly on 
 39.10  or before the 20th day of the month following the month in which 
 39.11  the taxable event occurred, or following another reporting 
 39.12  period as the commissioner prescribes or as allowed under 
 39.13  section 289A.18, subdivision 4, paragraph (f), except that use 
 39.14  taxes due on an annual use tax return as provided under section 
 39.15  289A.11, subdivision 1, are payable by April 15 following the 
 39.16  close of the calendar year. 
 39.17     (b) For a fiscal year ending before July 1, 2002, a vendor 
 39.18  having a liability of $120,000 or more during a fiscal year 
 39.19  ending June 30 must remit the June liability for the next year 
 39.20  in the following manner: 
 39.21     (1) Two business days before June 30 of the year, the 
 39.22  vendor must remit 62 75 percent of the estimated June liability 
 39.23  to the commissioner.  
 39.24     (2) On or before August 20 of the year, the vendor must pay 
 39.25  any additional amount of tax not remitted in June. 
 39.26     (c) A vendor having a liability of $120,000 or more during 
 39.27  a fiscal year ending June 30 must remit all liabilities on 
 39.28  returns due for periods beginning in the subsequent calendar 
 39.29  year by electronic means on or before the 20th day of the month 
 39.30  following the month in which the taxable event occurred, or on 
 39.31  or before the 20th day of the month following the month in which 
 39.32  the sale is reported under section 289A.18, subdivision 4, 
 39.33  except for 62 75 percent of the estimated June liability, which 
 39.34  is due two business days before June 30.  The remaining amount 
 39.35  of the June liability is due on August 20.  
 39.36     <h>[EFFECTIVE DATE.]</h> This section is effective for June 2002 
 40.1   and June 2003 tax liabilities. 
 40.2      Sec. 3.  Minnesota Statutes 2001 Supplement, section 
 40.3   297A.61, subdivision 3, is amended to read: 
 40.4      Subd. 3.  [SALE AND PURCHASE.] (a) "Sale" and "purchase" 
 40.5   include, but are not limited to, each of the transactions listed 
 40.6   in this subdivision. 
 40.7      (b) Sale and purchase include: 
 40.8      (1) any transfer of title or possession, or both, of 
 40.9   tangible personal property, whether absolutely or conditionally, 
 40.10  for a consideration in money or by exchange or barter; and 
 40.11     (2) the leasing of or the granting of a license to use or 
 40.12  consume, for a consideration in money or by exchange or barter, 
 40.13  tangible personal property, other than a manufactured home used 
 40.14  for residential purposes for a continuous period of 30 days or 
 40.15  more. 
 40.16     (c) Sale and purchase include the production, fabrication, 
 40.17  printing, or processing of tangible personal property for a 
 40.18  consideration for consumers who furnish either directly or 
 40.19  indirectly the materials used in the production, fabrication, 
 40.20  printing, or processing. 
 40.21     (d) Sale and purchase include the preparing for a 
 40.22  consideration of food.  Notwithstanding section 297A.67, 
 40.23  subdivision 2, taxable food includes, but is not limited to, the 
 40.24  following: 
 40.25     (1) prepared food sold by the retailer; 
 40.26     (2) soft drinks; 
 40.27     (3) candy; and 
 40.28     (4) all food sold through vending machines. 
 40.29     (e) A sale and a purchase includes the furnishing for a 
 40.30  consideration of electricity, gas, water, or steam for use or 
 40.31  consumption within this state. 
 40.32     (f) A sale and a purchase includes the transfer for a 
 40.33  consideration of computer software.  
 40.34     (g) A sale and a purchase includes the furnishing for a 
 40.35  consideration of the following services: 
 40.36     (1) the privilege of admission to places of amusement, 
 41.1   recreational areas, or athletic events, and the making available 
 41.2   of amusement devices, tanning facilities, reducing salons, steam 
 41.3   baths, turkish baths, health clubs, and spas or athletic 
 41.4   facilities; 
 41.5      (2) lodging and related services by a hotel, rooming house, 
 41.6   resort, campground, motel, or trailer camp and the granting of 
 41.7   any similar license to use real property other than the renting 
 41.8   or leasing of it for a continuous period of 30 days or more; 
 41.9      (3) parking services, whether on a contractual, hourly, or 
 41.10  other periodic basis, except for parking at a meter; 
 41.11     (4) the granting of membership in a club, association, or 
 41.12  other organization if: 
 41.13     (i) the club, association, or other organization makes 
 41.14  available for the use of its members sports and athletic 
 41.15  facilities, without regard to whether a separate charge is 
 41.16  assessed for use of the facilities; and 
 41.17     (ii) use of the sports and athletic facility is not made 
 41.18  available to the general public on the same basis as it is made 
 41.19  available to members.  
 41.20  Granting of membership means both one-time initiation fees and 
 41.21  periodic membership dues.  Sports and athletic facilities 
 41.22  include golf courses; tennis, racquetball, handball, and squash 
 41.23  courts; basketball and volleyball facilities; running tracks; 
 41.24  exercise equipment; swimming pools; and other similar athletic 
 41.25  or sports facilities; and 
 41.26     (5) delivery of aggregate materials and concrete block; and 
 41.27     (6) services as provided in this clause: 
 41.28     (i) laundry and dry cleaning services including cleaning, 
 41.29  pressing, repairing, altering, and storing clothes, linen 
 41.30  services and supply, cleaning and blocking hats, and carpet, 
 41.31  drapery, upholstery, and industrial cleaning.  Laundry and dry 
 41.32  cleaning services do not include services provided by coin 
 41.33  operated facilities operated by the customer; 
 41.34     (ii) motor vehicle washing, waxing, and cleaning services, 
 41.35  including services provided by coin operated facilities operated 
 41.36  by the customer, and rustproofing, undercoating, and towing of 
 42.1   motor vehicles; 
 42.2      (iii) building and residential cleaning, maintenance, and 
 42.3   disinfecting and exterminating services; 
 42.4      (iv) detective, security, burglar, fire alarm, and armored 
 42.5   car services; but not including services performed within the 
 42.6   jurisdiction they serve by off-duty licensed peace officers as 
 42.7   defined in section 626.84, subdivision 1, or services provided 
 42.8   by a nonprofit organization for monitoring and electronic 
 42.9   surveillance of persons placed on in-home detention pursuant to 
 42.10  court order or under the direction of the Minnesota department 
 42.11  of corrections; 
 42.12     (v) pet grooming services; 
 42.13     (vi) lawn care, fertilizing, mowing, spraying and sprigging 
 42.14  services; garden planting and maintenance; tree, bush, and shrub 
 42.15  pruning, bracing, spraying, and surgery; indoor plant care; 
 42.16  tree, bush, shrub, and stump removal; and tree trimming for 
 42.17  public utility lines.  Services performed under a construction 
 42.18  contract for the installation of shrubbery, plants, sod, trees, 
 42.19  bushes, and similar items are not taxable; 
 42.20     (vii) massages, except when provided by a licensed health 
 42.21  care facility or professional or upon written referral from a 
 42.22  licensed health care facility or professional for treatment of 
 42.23  illness, injury, or disease; and 
 42.24     (viii) the furnishing of lodging, board, and care services 
 42.25  for animals in kennels and other similar arrangements, but 
 42.26  excluding veterinary and horse boarding services. 
 42.27     In applying the provisions of this chapter, the terms 
 42.28  "tangible personal property" and "sales at retail" include 
 42.29  taxable services and the provision of taxable services, unless 
 42.30  specifically provided otherwise.  Services performed by an 
 42.31  employee for an employer are not taxable.  Services performed by 
 42.32  a partnership or association for another partnership or 
 42.33  association are not taxable if one of the entities owns or 
 42.34  controls more than 80 percent of the voting power of the equity 
 42.35  interest in the other entity.  Services performed between 
 42.36  members of an affiliated group of corporations are not taxable.  
 43.1   For purposes of this section, "affiliated group of corporations" 
 43.2   includes those entities that would be classified as members of 
 43.3   an affiliated group under United States Code, title 26, section 
 43.4   1504, and that are eligible to file a consolidated tax return 
 43.5   for federal income tax purposes. 
 43.6      (h) A sale and a purchase includes the furnishing for a 
 43.7   consideration of tangible personal property or taxable services 
 43.8   by the United States or any of its agencies or 
 43.9   instrumentalities, or the state of Minnesota, its agencies, 
 43.10  instrumentalities, or political subdivisions. 
 43.11     (i) A sale and a purchase includes the furnishing for a 
 43.12  consideration of telecommunications services, including cable 
 43.13  television services and direct satellite services.  
 43.14  Telecommunications services are taxed to the extent allowed 
 43.15  under federal law if those services: 
 43.16     (1) either (i) originate and terminate in this state; or 
 43.17  (ii) originate in this state and terminate outside the state and 
 43.18  the service is charged to a telephone number customer located in 
 43.19  this state or to the account of any transmission instrument in 
 43.20  this state; or (iii) originate outside this state and terminate 
 43.21  in this state and the service is charged to a telephone number 
 43.22  customer located in this state or to the account of any 
 43.23  transmission instrument in this state; or 
 43.24     (2) are rendered by providing a private communications 
 43.25  service for which the customer has one or more locations within 
 43.26  Minnesota connected to the service and the service is charged to 
 43.27  a telephone number customer located in this state or to the 
 43.28  account of any transmission instrument in this state. 
 43.29     All charges for mobile telecommunications services, as 
 43.30  defined in United States Code, title 4, section 124, are deemed 
 43.31  to be provided by the customer's home service provider and 
 43.32  sourced to the customer's place of primary use and are subject 
 43.33  to tax based upon the customer's place of primary use in 
 43.34  accordance with the Mobile Telecommunications Sourcing Act, 
 43.35  United States Code, title 4, sections 116 to 126.  All other 
 43.36  definitions and provisions of the Mobile Telecommunications 
 44.1   Sourcing Act as provided in United States Code, title 4, are 
 44.2   hereby adopted. 
 44.3      (j) A sale and a purchase includes the furnishing for a 
 44.4   consideration of installation if the installation charges would 
 44.5   be subject to the sales tax if the installation were provided by 
 44.6   the seller of the item being installed. 
 44.7      <h>[EFFECTIVE DATE.]</h> This section is effective for sales made 
 44.8   after June 30, 2002. 
 44.9      Sec. 4.  Minnesota Statutes 2001 Supplement, section 
 44.10  297A.61, subdivision 31, is amended to read: 
 44.11     Subd. 31.  [PREPARED FOOD.] "Prepared food" means (i) food 
 44.12  that meets either of the following conditions: 
 44.13     (1) the food is sold with eating utensils provided by the 
 44.14  seller, including plates, knives, forks, spoons, glasses, cups, 
 44.15  napkins, or straws; or 
 44.16     (2) the food is sold in a heated state or heated by the 
 44.17  seller; (ii) or two or more food ingredients are mixed or 
 44.18  combined by the seller for sale as a single item; or (iii) food 
 44.19  sold with eating utensils provided by the seller, including 
 44.20  plates, knives, forks, spoons, glasses, cups, napkins, or 
 44.21  straws.  Prepared food does not include, except for: 
 44.22     (i) bakery items, including, but not limited to, bread, 
 44.23  rolls, buns, biscuits, bagels, croissants, pastries, donuts, 
 44.24  danish, cakes, tortes, pies, tarts, muffins, bars, cookies, 
 44.25  tortillas; 
 44.26     (ii) ready-to-eat meat and seafood in an unheated state 
 44.27  sold by weight; 
 44.28     (iii) eggs, fish, meat, poultry, and foods containing these 
 44.29  raw animal foods requiring cooking by the consumer as 
 44.30  recommended by the Food and Drug Administration in chapter 3, 
 44.31  part 401.11 of its food code so as to prevent food borne 
 44.32  illnesses; or 
 44.33     (iv) food that is only sliced, repackaged, or pasteurized 
 44.34  by the seller. 
 44.35     <h>[EFFECTIVE DATE.]</h> With the exception of clause (2), item 
 44.36  (ii), this section is effective for sales and purchases made 
 45.1   after June 30, 2002.  Clause (2), item (ii), is effective for 
 45.2   sales and purchases made after June 30, 2002, and before January 
 45.3   1, 2006. 
 45.4      Sec. 5.  Minnesota Statutes 2001 Supplement, section 
 45.5   297A.66, subdivision 1, is amended to read: 
 45.6      Subdivision 1.  [DEFINITIONS.] (a) To the extent allowed by 
 45.7   the United States Constitution and the laws of the United 
 45.8   States, "retailer maintaining a place of business in this 
 45.9   state," or a similar term, means a retailer: 
 45.10     (1) having or maintaining within this state, directly or by 
 45.11  a subsidiary or an affiliate, an office, place of distribution, 
 45.12  sales or sample room or place, warehouse, or other place of 
 45.13  business; or 
 45.14     (2) having a representative, including, but not limited to, 
 45.15  an affiliate agent, salesperson, canvasser, or solicitor 
 45.16  operating in this state under the authority of the retailer or 
 45.17  its subsidiary, for any purpose, including the repairing, 
 45.18  selling, delivering, installing, or soliciting of orders for the 
 45.19  retailer's goods or services, or the leasing of tangible 
 45.20  personal property located in this state, whether the place of 
 45.21  business or agent, representative, affiliate, salesperson, 
 45.22  canvasser, or solicitor is located in the state permanently or 
 45.23  temporarily, or whether or not the retailer or, subsidiary, or 
 45.24  affiliate is authorized to do business in this state. 
 45.25     (b) "Destination of a sale" means the location to which the 
 45.26  retailer makes delivery of the property sold, or causes the 
 45.27  property to be delivered, to the purchaser of the property, or 
 45.28  to the agent or designee of the purchaser.  The delivery may be 
 45.29  made by any means, including the United States Postal Service or 
 45.30  a for-hire carrier. 
 45.31     <h>[EFFECTIVE DATE.]</h> (a) This section is effective the day 
 45.32  following final enactment and is intended to confirm the 
 45.33  original intent of the legislature in enacting Minnesota 
 45.34  Statutes, section 297A.66, and its predecessor provisions. 
 45.35     (b) A retailer may elect that the provisions of this 
 45.36  section apply only to sales it made after August 31, 2002, by 
 46.1   notifying the commissioner and by applying for a permit under 
 46.2   Minnesota Statutes, section 297A.84, by August 15, 2002, to 
 46.3   collect the tax imposed under Minnesota Statutes, chapter 297A.  
 46.4   A retailer qualifies under this paragraph only if it: 
 46.5      (1) did not maintain an office, place of distribution, 
 46.6   sales or sample room or place, warehouse, or other place of 
 46.7   business in Minnesota except through an affiliate or did not 
 46.8   have a representative, agent, salesperson, canvasser, or 
 46.9   solicitor in Minnesota except through an affiliate; and 
 46.10     (2) has not registered to collect tax under Minnesota 
 46.11  Statutes, chapter 297A, as of the date of enactment of this 
 46.12  section. 
 46.13     Sec. 6.  Minnesota Statutes 2000, section 297A.66, is 
 46.14  amended by adding a subdivision to read: 
 46.15     Subd. 4.  [AFFILIATED ENTITIES.] (a) An entity is an 
 46.16  "affiliate" of the retailer for purposes of subdivision 1, 
 46.17  paragraph (a), if: 
 46.18     (1) the entity uses its facilities or employees in this 
 46.19  state to advertise, promote, or facilitate the establishment or 
 46.20  maintenance of a market for sales of items by the retailer to 
 46.21  purchasers in this state or for the provision of services to the 
 46.22  retailer's purchasers in this state, such as accepting returns 
 46.23  of purchases for the retailer, providing assistance in resolving 
 46.24  customer complaints of the retailer, or providing other 
 46.25  services; and 
 46.26     (2) the retailer and the entity are related parties. 
 46.27     (b) Two entities are related parties under this section if 
 46.28  one of the entities meets at least one of the following tests 
 46.29  with respect to the other entity: 
 46.30     (1) one or both entities is a corporation, and one entity 
 46.31  and any party related to that entity in a manner that would 
 46.32  require an attribution of stock from the corporation to the 
 46.33  party or from the party to the corporation under the attribution 
 46.34  rules of section 318 of the Internal Revenue Code owns directly, 
 46.35  indirectly, beneficially, or constructively at least 50 percent 
 46.36  of the value of the corporation's outstanding stock; 
 47.1      (2) one or both entities is a partnership, estate, or trust 
 47.2   and any partner or beneficiary, and the partnership, estate, or 
 47.3   trust and its partners or beneficiaries own directly, 
 47.4   indirectly, beneficially, or constructively, in the aggregate, 
 47.5   at least 50 percent of the profits, capital, stock, or value of 
 47.6   the other entity or both entities; or 
 47.7      (3) an individual stockholder and the members of the 
 47.8   stockholder's family (as defined in section 318 of the Internal 
 47.9   Revenue Code) owns directly, indirectly, beneficially, or 
 47.10  constructively, in the aggregate, at least 50 percent of the 
 47.11  value of both entities' outstanding stock. 
 47.12     (c) An entity is an affiliate under the provisions of this 
 47.13  subdivision if the requirements of paragraphs (a) and (b) are 
 47.14  met during any part of the 12-month period ending on the first 
 47.15  day of the month before the month in which the sale was made. 
 47.16     <h>[EFFECTIVE DATE.]</h> (a) This section is effective the day 
 47.17  following final enactment and is intended to confirm the 
 47.18  original intent of the legislature in enacting Minnesota 
 47.19  Statutes, section 297A.66, and its predecessor provisions. 
 47.20     (b) A retailer may elect that the provisions of this 
 47.21  section apply only to sales it made after August 31, 2002, by 
 47.22  notifying the commissioner and by applying for a permit under 
 47.23  Minnesota Statutes, section 297A.84, by August 15, 2002, to 
 47.24  collect the tax imposed under Minnesota Statutes, chapter 297A. 
 47.25  A retailer qualifies under this paragraph only if it: 
 47.26     (1) did not maintain an office, place of distribution, 
 47.27  sales or sample room or place, warehouse, or other place of 
 47.28  business in Minnesota except through an affiliate or did not 
 47.29  have a representative, agent, salesperson, canvasser, or 
 47.30  solicitor in Minnesota except through an affiliate; and 
 47.31     (2) has not registered to collect tax under Minnesota 
 47.32  Statutes, chapter 297A, as of the date of enactment of this 
 47.33  section. 
 47.34     Sec. 7.  Minnesota Statutes 2000, section 297A.67, 
 47.35  subdivision 5, is amended to read: 
 47.36     Subd. 5.  [EXEMPT MEALS AT SCHOOLS.] Meals and lunches 
 48.1   served at public and private elementary, middle, or secondary 
 48.2   schools, universities, or colleges as defined in section 120A.05 
 48.3   are exempt.  Meals and lunches served to students at a college, 
 48.4   university, or private career school under a board contract are 
 48.5   exempt.  For purposes of this subdivision, "meals and lunches" 
 48.6   does not include sales from vending machines. 
 48.7      <h>[EFFECTIVE DATE.]</h> This section is effective for sales and 
 48.8   purchases made after June 30, 2002.  However, for vending 
 48.9   machine contracts entered into by a school, as defined in 
 48.10  section 120A.05, prior to May 30, 2002, food sales from vending 
 48.11  machines continue to be exempt under this subdivision for one 
 48.12  year after the effective date of the contract. 
 48.13     Sec. 8.  Minnesota Statutes 2000, section 297A.67, is 
 48.14  amended by adding a subdivision to read: 
 48.15     Subd. 13a.  [INSTRUCTIONAL MATERIALS.] Instructional 
 48.16  materials, other than textbooks, that are prescribed for use in 
 48.17  conjunction with a course of study in a post-secondary school, 
 48.18  college, university, or private career school to students who 
 48.19  are regularly enrolled at such institutions are exempt.  For 
 48.20  purposes of this subdivision, "instructional materials" means 
 48.21  materials required to be used directly in the completion of the 
 48.22  course of study, including, but not limited to, interactive CDs, 
 48.23  tapes, and computer software. 
 48.24     Instructional materials do not include general reference 
 48.25  works or other items incidental to the instructional process 
 48.26  such as pens, pencils, paper, folders, or computers.  For 
 48.27  purposes of this subdivision, "school" and "private career 
 48.28  school" have the meanings given in subdivision 13. 
 48.29     <h>[EFFECTIVE DATE.]</h> This section is effective for sales after 
 48.30  June 30, 2003. 
 48.31     Sec. 9.  Minnesota Statutes 2001 Supplement, section 
 48.32  297A.67, subdivision 25, is amended to read: 
 48.33     Subd. 25.  [MAINTENANCE OF CEMETERY GROUNDS.] Lawn care and 
 48.34  related services used in the maintenance of cemetery grounds are 
 48.35  exempt.  For purposes of this subdivision, "lawn care and 
 48.36  related services" means the services listed in section 297A.61, 
 49.1   subdivision 3, paragraph (g), clause (5) (6), item (vi), and 
 49.2   "cemetery" means a cemetery for human burial. 
 49.3      Sec. 10.  Minnesota Statutes 2001 Supplement, section 
 49.4   297A.67, subdivision 29, is amended to read: 
 49.5      Subd. 29.  [ENERGY EFFICIENT PRODUCTS.] (a) A residential 
 49.6   lighting fixture or a compact fluorescent bulb is exempt if it 
 49.7   has an energy star label. 
 49.8      (b) The following products are exempt if they have an 
 49.9   energyguide label that indicates that the product meets or 
 49.10  exceeds the standards listed below: 
 49.11     (1) an electric heat pump hot water heater with an energy 
 49.12  factor of at least 1.9; 
 49.13     (2) a natural gas water heater with an energy factor of at 
 49.14  least 0.62; and 
 49.15     (3) a propane gas or fuel oil water heater with an energy 
 49.16  factor of at least 0.62; 
 49.17     (4) a natural gas furnace with an annual fuel utilization 
 49.18  efficiency greater than 92 percent; and 
 49.19     (5) a propane gas or fuel oil furnace with an annual fuel 
 49.20  utilization efficiency greater than 92 percent. 
 49.21     (c) A photovoltaic device is exempt.  For purposes of this 
 49.22  subdivision, "photovoltaic device" means a solid-state 
 49.23  electrical device, such as a solar module, that converts light 
 49.24  directly into direct current electricity of voltage-current 
 49.25  characteristics that are a function of the characteristics of 
 49.26  the light source and the materials in and design of the device.  
 49.27  A "solar module" is a photovoltaic device that produces a 
 49.28  specified power output under defined test conditions, usually 
 49.29  composed of groups of solar cells connected in series, in 
 49.30  parallel, or in series-parallel combinations. 
 49.31     (d) For purposes of this subdivision, "energy star label" 
 49.32  means the label granted to certain products that meet United 
 49.33  States Environmental Protection Agency and United States 
 49.34  Department of Energy criteria for energy efficiency.  For 
 49.35  purposes of this subdivision, "energyguide label" means the 
 49.36  label that the United States Federal Trade Commissioner requires 
 50.1   manufacturers to apply to certain appliances under United States 
 50.2   Code, title 16, part 305. 
 50.3      <h>[EFFECTIVE DATE.]</h> This section is effective for sales and 
 50.4   purchases made on or after the day following final enactment and 
 50.5   before August 1, 2005. 
 50.6      Sec. 11.  Minnesota Statutes 2001 Supplement, section 
 50.7   297A.68, subdivision 3, is amended to read: 
 50.8      Subd. 3.  [MATERIALS USED IN PROVIDING CERTAIN TAXABLE 
 50.9   SERVICES.] (a) Materials stored, used, or consumed in providing 
 50.10  a taxable service listed in section 297A.61, subdivision 3, 
 50.11  paragraph (g), clause (5) (6), intended to be sold ultimately at 
 50.12  retail are exempt. 
 50.13     (b) This exemption includes, but is not limited to: 
 50.14     (1) chemicals, lubricants, packaging materials, seeds, 
 50.15  trees, fertilizers, and herbicides, if these items are used or 
 50.16  consumed in providing the taxable service; 
 50.17     (2) chemicals used to treat waste generated as a result of 
 50.18  providing the taxable service; 
 50.19     (3) accessory tools, equipment, and other items that are 
 50.20  separate detachable units used in providing the service and that 
 50.21  have an ordinary useful life of less than 12 months; and 
 50.22     (4) fuel, electricity, gas, and steam used or consumed in 
 50.23  the production process, except that electricity, gas, or steam 
 50.24  used for space heating, cooling, or lighting is exempt if (i) it 
 50.25  is in excess of average climate control or lighting, and (ii) it 
 50.26  is necessary to produce that particular service. 
 50.27     (c) This exemption does not include machinery, equipment, 
 50.28  implements, tools, accessories, appliances, contrivances, 
 50.29  furniture, and fixtures used in providing the taxable service. 
 50.30     Sec. 12.  Minnesota Statutes 2001 Supplement, section 
 50.31  297A.70, subdivision 10, is amended to read: 
 50.32     Subd. 10.  [NONPROFIT TICKETS OR ADMISSIONS.] (a) Tickets 
 50.33  or admissions to an event are exempt if all the gross receipts 
 50.34  are recorded as such, in accordance with generally accepted 
 50.35  accounting principles, on the books of one or more organizations 
 50.36  that provide an opportunity for citizens of the state to 
 51.1   participate in the creation, performance, or appreciation of the 
 51.2   arts, and provided that each organization is either:  
 51.3      (1) an organization described in section 501(c)(3) of the 
 51.4   Internal Revenue Code in which voluntary contributions make up 
 51.5   at least the following percent of the organization's annual 
 51.6   revenue in its most recently completed 12-month fiscal year, or 
 51.7   in the current year if the organization has not completed a 
 51.8   12-month fiscal year: 
 51.9      (i) for sales made after July 31, 2001, and before July 1, 
 51.10  2002, for the organization's fiscal year completed in calendar 
 51.11  year 2000, three percent; 
 51.12     (ii) for sales made on or after July 1, 2002, and on or 
 51.13  before June 30, 2003, for the organization's fiscal year 
 51.14  completed in calendar year 2001, three percent; 
 51.15     (iii) for sales made on or after July 1, 2003, and on or 
 51.16  before June 30, 2004, for the organization's fiscal year 
 51.17  completed in calendar year 2002, four percent; and 
 51.18     (iv) for sales made in each 12-month period, beginning on 
 51.19  July 1, 2004, and each subsequent year, for the organization's 
 51.20  fiscal year completed in the preceding calendar year, five 
 51.21  percent; or 
 51.22     (2) a municipal board that promotes cultural and arts 
 51.23  activities; or 
 51.24     (3) the University of Minnesota, provided that the event is 
 51.25  held at a university-owned facility.  
 51.26  The exemption only applies if the entire proceeds, after 
 51.27  reasonable expenses, are used solely to provide opportunities 
 51.28  for citizens of the state to participate in the creation, 
 51.29  performance, or appreciation of the arts. 
 51.30     (b) Tickets or admissions to the premises of the Minnesota 
 51.31  zoological garden are exempt, provided that the exemption under 
 51.32  this paragraph does not apply to tickets or admissions to 
 51.33  performances or events held on the premises unless the 
 51.34  performance or event is sponsored and conducted exclusively by 
 51.35  the Minnesota zoological board or employees of the Minnesota 
 51.36  zoological garden. 
 52.1      <h>[EFFECTIVE DATE.]</h> This section is effective for tickets and 
 52.2   admissions to events held after July 31, 2001, but does not 
 52.3   apply to events for which sales of tickets or admissions were 
 52.4   made prior to August 1, 2001. 
 52.5      Sec. 13.  Minnesota Statutes 2001 Supplement, section 
 52.6   297A.71, subdivision 23, is amended to read: 
 52.7      Subd. 23.  [CONSTRUCTION MATERIALS FOR QUALIFIED LOW-INCOME 
 52.8   HOUSING PROJECTS.] (a) Purchases of materials and supplies used 
 52.9   or consumed in and equipment incorporated into the construction, 
 52.10  improvement, or expansion of qualified low-income housing 
 52.11  projects are exempt from the tax imposed under this chapter if 
 52.12  the owner of the qualified low-income housing project is: 
 52.13     (1) the public housing agency or housing and redevelopment 
 52.14  authority of a political subdivision; 
 52.15     (2) an entity exercising the powers of a housing and 
 52.16  redevelopment authority within a political subdivision; 
 52.17     (3) a limited partnership in which the sole general partner 
 52.18  is an authority under clause (1) or an entity under clause (2); 
 52.19  or 
 52.20     (4) a nonprofit corporation subject to the provisions of 
 52.21  chapter 317A, and qualifying under section 501(c)(3) or 
 52.22  501(c)(4) of the Internal Revenue Code of 1986, as amended; or 
 52.23     (5) an owner entity, as defined in Code of Federal 
 52.24  Regulations, title 24, part 941.604, for a qualified low-income 
 52.25  housing project described in paragraph (b), clause (5). 
 52.26     This exemption applies regardless of whether the purchases 
 52.27  are made by the owner of the facility or a contractor.  
 52.28     (b) For purposes of this exemption, "qualified low-income 
 52.29  housing project" means: 
 52.30     (1) a housing or mixed use project in which at least 20 
 52.31  percent of the residential units are qualifying low-income 
 52.32  rental housing units as defined in section 273.126; 
 52.33     (2) a federally assisted low-income housing project 
 52.34  financed by a mortgage insured or held by the United States 
 52.35  Department of Housing and Urban Development under United States 
 52.36  Code, title 12, section 1701s, 1715l(d)(3), 1715l(d)(4), or 
 53.1   1715z-1; United States Code, title 42, section 1437f; the Native 
 53.2   American Housing Assistance and Self-Determination Act, United 
 53.3   States Code, title 25, section 4101 et seq.; or any similar 
 53.4   successor federal low-income housing program; 
 53.5      (3) a qualified low-income housing project as defined in 
 53.6   United States Code, title 26, section 42(g), meeting all of the 
 53.7   requirements for a low-income housing credit under section 42 of 
 53.8   the Internal Revenue Code regardless of whether the project 
 53.9   actually applies for or receives a low-income housing credit; or 
 53.10     (4) a project that will be operated in compliance with 
 53.11  Internal Revenue Service revenue procedure 96-32; or 
 53.12     (5) a housing or mixed use project in which all or a 
 53.13  portion of the residential units are subject to the requirements 
 53.14  of section 5 of the United States Housing Act of 1937. 
 53.15     (c) For a project, a portion of which is not used for 
 53.16  low-income housing units, the amount of purchases that are 
 53.17  exempt under this subdivision must be determined by multiplying 
 53.18  the total purchases, as specified in paragraph (a), by the ratio 
 53.19  of: 
 53.20     (1) the total gross square footage of units subject to the 
 53.21  income limits under section 273.126, the financing for the 
 53.22  project, the federal low-income housing tax credit, revenue 
 53.23  procedure 96-32, or section 5 of the United States Housing Act 
 53.24  of 1937, as applicable to the project; and 
 53.25     (2) the total gross square footage of all units in the 
 53.26  project. 
 53.27     (d) The tax must be imposed and collected as if the rate 
 53.28  under section 297A.62, subdivision 1, applied, and then refunded 
 53.29  in the manner provided in section 297A.75. 
 53.30     <h>[EFFECTIVE DATE.]</h> Paragraph (a), clause (5), and paragraph 
 53.31  (b), clause (5), are effective retroactive for sales and 
 53.32  purchases made after July 31, 2001.  For sales and purchases 
 53.33  made after July 31, 2001, and before July 1, 2002, an owner 
 53.34  entity under this section must apply to the commissioner of 
 53.35  revenue for a refund of the tax paid on the exempt amount as 
 53.36  determined under this section.  The rest of the section is 
 54.1   effective for sales made after June 30, 2002. 
 54.2      Sec. 14.  Minnesota Statutes 2000, section 297A.71, is 
 54.3   amended by adding a subdivision to read: 
 54.4      Subd. 28.  [CONSTRUCTION MATERIALS AND EQUIPMENT; 
 54.5   REPLACEMENT AGRICULTURAL PROCESSING FACILITY.] Materials and 
 54.6   supplies used or consumed in, and machinery and equipment 
 54.7   incorporated into, the construction of a meat-packing or 
 54.8   meat-processing facility are exempt if: 
 54.9      (1) the cost of the project exceeds $75,000,000; and 
 54.10     (2) the facility replaces a facility that was destroyed by 
 54.11  fire. 
 54.12     <h>[EFFECTIVE DATE.]</h> This section is effective for sales and 
 54.13  purchases made after March 31, 2002, and before January 1, 2005. 
 54.14     Sec. 15.  Minnesota Statutes 2000, section 297A.71, is 
 54.15  amended by adding a subdivision to read: 
 54.16     Subd. 29.  [HYDROELECTRIC GENERATING FACILITY.] Materials 
 54.17  and supplies used or consumed in the construction of a 
 54.18  hydroelectric generating facility that meets the requirements of 
 54.19  this subdivision are exempt.  To qualify for the exemption under 
 54.20  this subdivision, a hydroelectric generating facility must: 
 54.21     (1) utilize two turbine generators at a dam site existing 
 54.22  on March 31, 1994; 
 54.23     (2) be located on publicly owned land and within 2,500 feet 
 54.24  of a 13.8 kilovolt distribution circuit; and 
 54.25     (3) be eligible to receive a renewable energy production 
 54.26  incentive payment under section 216C.41. 
 54.27     <h>[EFFECTIVE DATE.]</h> This section is effective for sales made 
 54.28  after August 31, 2002, and on or before December 31, 2003. 
 54.29     Sec. 16.  Minnesota Statutes 2000, section 297A.71, is 
 54.30  amended by adding a subdivision to read: 
 54.31     Subd. 30.  [NONPROFIT ARTS ORGANIZATION.] Materials, 
 54.32  equipment, and supplies incorporated into the construction or 
 54.33  renovation of a state bond financed facility funded in 2002 
 54.34  which is owned or operated by a nonprofit arts organization are 
 54.35  exempt. 
 54.36     <h>[EFFECTIVE DATE.]</h> This section is effective for sales and 
 55.1   purchases made the day after final enactment and before July 1, 
 55.2   2007. 
 55.3      Sec. 17.  Minnesota Statutes 2001 Supplement, section 
 55.4   297A.75, is amended to read: 
 55.5      297A.75 [REFUND; APPROPRIATION.] 
 55.6      Subdivision 1.  [TAX COLLECTED.] The tax on the gross 
 55.7   receipts from the sale of the following exempt items must be 
 55.8   imposed and collected as if the sale were taxable and the rate 
 55.9   under section 297A.62, subdivision 1, applied.  The exempt items 
 55.10  include: 
 55.11     (1) capital equipment exempt under section 297A.68, 
 55.12  subdivision 5; 
 55.13     (2) building materials for an agricultural processing 
 55.14  facility exempt under section 297A.71, subdivision 13; 
 55.15     (3) building materials for mineral production facilities 
 55.16  exempt under section 297A.71, subdivision 14; 
 55.17     (4) building materials for correctional facilities under 
 55.18  section 297A.71, subdivision 3; 
 55.19     (5) building materials used in a residence for disabled 
 55.20  veterans exempt under section 297A.71, subdivision 11; 
 55.21     (6) chair lifts, ramps, elevators, and associated building 
 55.22  materials exempt under section 297A.71, subdivision 12; 
 55.23     (7) building materials for the Long Lake Conservation 
 55.24  Center exempt under section 297A.71, subdivision 17; and 
 55.25     (8) materials, supplies, fixtures, furnishings, and 
 55.26  equipment for a county law enforcement and family service center 
 55.27  under section 297A.71, subdivision 26; and 
 55.28     (9) materials and supplies for qualified low-income housing 
 55.29  under section 297A.71, subdivision 23. 
 55.30     Subd. 2.  [REFUND; ELIGIBLE PERSONS.] Upon application on 
 55.31  forms prescribed by the commissioner, a refund equal to the tax 
 55.32  paid on the gross receipts of the exempt items must be paid to 
 55.33  the applicant.  Only the following persons may apply for the 
 55.34  refund: 
 55.35     (1) for subdivision 1, clauses (1) to (3), the applicant 
 55.36  must be the purchaser; 
 56.1      (2) for subdivision 1, clauses (4), (7), and (8), the 
 56.2   applicant must be the governmental subdivision; 
 56.3      (3) for subdivision 1, clause (5), the applicant must be 
 56.4   the recipient of the benefits provided in United States Code, 
 56.5   title 38, chapter 21; and 
 56.6      (4) for subdivision 1, clause (6), the applicant must be 
 56.7   the owner of the homestead property; and 
 56.8      (5) for subdivision 1, clause (9), the owner of the 
 56.9   qualified low-income housing project. 
 56.10     Subd. 3.  [APPLICATION.] (a) The application must include 
 56.11  sufficient information to permit the commissioner to verify the 
 56.12  tax paid.  If the tax was paid by a contractor, subcontractor, 
 56.13  or builder, under subdivision 1, clause (4), (5), (6), 
 56.14  (7), or (8), or (9), the contractor, subcontractor, or builder 
 56.15  must furnish to the refund applicant a statement including the 
 56.16  cost of the exempt items and the taxes paid on the items unless 
 56.17  otherwise specifically provided by this subdivision.  The 
 56.18  provisions of sections 289A.40 and 289A.50 apply to refunds 
 56.19  under this section. 
 56.20     (b) An applicant may not file more than two applications 
 56.21  per calendar year for refunds for taxes paid on capital 
 56.22  equipment exempt under section 297A.68, subdivision 5.  
 56.23     Subd. 4.  [INTEREST.] Interest must be paid on the refund 
 56.24  at the rate in section 270.76 from the date the refund claim is 
 56.25  filed for taxes paid under subdivision 1, clauses (1) to (3), 
 56.26  and (5), and from 60 days after the date the refund claim is 
 56.27  filed with the commissioner for claims filed under subdivision 
 56.28  1, clauses (4), (6), (7), and (8), and (9). 
 56.29     Subd. 5.  [APPROPRIATION.] The amount required to make the 
 56.30  refunds is annually appropriated to the commissioner. 
 56.31     <h>[EFFECTIVE DATE.]</h> This section is effective for sales made 
 56.32  after June 30, 2002. 
 56.33     Sec. 18.  Minnesota Statutes 2000, section 297A.96, is 
 56.34  amended to read: 
 56.35     297A.96 [LOCAL ADMISSIONS AND AMUSEMENT TAXES; EXEMPTION 
 56.36  FOR ARTS ORGANIZATIONS.] 
 57.1      If an event is sponsored by a nonprofit arts organization, 
 57.2   then Amounts charged for admission to the an event or to the 
 57.3   organization's premises described in section 297A.70, 
 57.4   subdivision 10, paragraph (a), are not subject to a tax imposed 
 57.5   by a local unit of government or imposed on sales taking place 
 57.6   in a single named local unit of government on sales of 
 57.7   admissions or amusements, under a law other than a general sales 
 57.8   tax law. 
 57.9      <h>[EFFECTIVE DATE.]</h> This section is effective for tickets and 
 57.10  admissions to events held after July 31, 2001, but does not 
 57.11  apply to events for which sales of tickets or admissions were 
 57.12  made prior to August 1, 2001. 
 57.13     Sec. 19.  Minnesota Statutes 2001 Supplement, section 
 57.14  297A.995, subdivision 4, is amended to read: 
 57.15     Subd. 4.  [AUTHORITY TO ENTER AGREEMENT.] The commissioner 
 57.16  of revenue is authorized and directed to enter into the 
 57.17  agreement with one or more states to simplify and modernize 
 57.18  sales and use tax administration in order to substantially 
 57.19  reduce the burden of tax compliance for all sellers and for all 
 57.20  types of commerce.  In furtherance of the agreement, the 
 57.21  commissioner is authorized to act jointly with other states that 
 57.22  are members of the agreement to establish standards for 
 57.23  certification of a certified service provider and certified 
 57.24  automated system and establish performance standards for 
 57.25  multistate sellers. 
 57.26     The commissioner of revenue is further directed to 
 57.27  negotiate the agreement with the express intention of ensuring 
 57.28  uniform sales and use taxation as applied to like-kind 
 57.29  transactions.  
 57.30     The commissioner is further authorized to take other 
 57.31  actions reasonably required to implement the provisions set 
 57.32  forth in this article.  Other actions authorized by this section 
 57.33  include, but are not limited to, the adoption of rules and 
 57.34  regulations and the joint procurement, with other member states, 
 57.35  of goods and services in furtherance of the cooperative 
 57.36  agreement. 
 58.1      The commissioner or the commissioner's designee is 
 58.2   following officials are authorized to represent this state 
 58.3   before the other states that are signatories to the agreement: 
 58.4      (1) the commissioner or the commissioner's designee; 
 58.5      (2) the chair of the house committee with jurisdiction over 
 58.6   taxes or the house chair's designee; and 
 58.7      (3) the chair of the senate committee with jurisdiction 
 58.8   over taxes or the senate chair's designee. 
 58.9      <h>[EFFECTIVE DATE.]</h> This section is effective the day 
 58.10  following final enactment. 
 58.11     Sec. 20.  Laws 1990, chapter 604, article 6, section 9, 
 58.12  subdivision 1, as amended by Laws 1991, chapter 291, article 8, 
 58.13  section 25, is amended to read:  
 58.14     Subdivision 1.  [AUTHORIZATION.] Notwithstanding Minnesota 
 58.15  Statutes, section 469.190, 477A.016, or other law, in addition 
 58.16  to the tax authorized in Laws 1986, chapter 391, section 4, the 
 58.17  governing body of the city of Bloomington may impose a tax of up 
 58.18  to one two percent on the gross receipts from the furnishing for 
 58.19  consideration of lodging at a hotel, motel, rooming house, 
 58.20  tourist court, or resort, other than the renting or leasing of 
 58.21  it for a continuous period of 30 days or more, located in the 
 58.22  city.  The city may agree with the commissioner of revenue that 
 58.23  a tax imposed under this section shall be collected by the 
 58.24  commissioner together with the tax imposed by Minnesota 
 58.25  Statutes, chapter 297A, and subject to the same interest, 
 58.26  penalties, and other rules and that its proceeds, less the cost 
 58.27  of collection, shall be remitted to the city.  The proceeds of 
 58.28  the tax must be used by the Bloomington convention bureau only 
 58.29  to market and promote the city as a tourist or convention 
 58.30  center.  If the duties of the convention bureau as they existed 
 58.31  on January 1, 1991, are assigned to another agency, the tax 
 58.32  shall cease.  
 58.33     <h>[EFFECTIVE DATE; LOCAL APPROVAL.]</h> This section takes effect 
 58.34  the day after the governing body of the city of Bloomington 
 58.35  complies with Minnesota Statutes, section 645.021, subdivision 3.
 58.36     Sec. 21.  Laws 1998, chapter 389, article 8, section 37, 
 59.1   subdivision 2, is amended to read: 
 59.2      Subd. 2.  [APPOINTMENT OF MEMBERS.] The citizen review 
 59.3   panel must consist of 17 members, each of whom represents one of 
 59.4   the district councils consists of three residents from each of 
 59.5   the seven city council wards, for a total of 21 members.  The 
 59.6   mayor must appoint the members, and the appointments are subject 
 59.7   to confirmation by a majority vote of the city council.  Members 
 59.8   serve for a term of four years.  Elected officials and employees 
 59.9   of the city are ineligible to serve as members of the panel. 
 59.10     <h>[EFFECTIVE DATE.]</h> This section is effective upon approval 
 59.11  by the governing body of the city of St. Paul and compliance 
 59.12  with Minnesota Statutes, section 645.021. 
 59.13     Sec. 22.  Laws 2001, First Special Session chapter 5, 
 59.14  article 12, section 11, the effective date, is amended to read: 
 59.15     <h>[EFFECTIVE DATE.]</h> This section is effective January 1, 
 59.16  2002, however, for contracts entered into before January 1, 
 59.17  2002, the sale price for aggregate materials and concrete block 
 59.18  does not include delivery charges until January 1, 2005. 
 59.19     Sec. 23.  Laws 2001, First Special Session chapter 5, 
 59.20  article 12, section 82, the effective date, is amended to read: 
 59.21     <h>[EFFECTIVE DATE.]</h> This section is effective January 1, 2003 
 59.22  for sales and purchases made after December 31, 2005. 
 59.23     Sec. 24.  Laws 2001, First Special Session chapter 5, 
 59.24  article 12, section 95, is amended to read: 
 59.25     Sec. 95.  [REPEALER.] 
 59.26     (a) Minnesota Statutes 2000, sections 297A.61, subdivision 
 59.27  16; 297A.68, subdivision 21; and 297A.71, subdivisions 
 59.28  subdivision 2 and 16, are repealed effective for sales and 
 59.29  purchases occurring after June 30, 2001, except that the repeal 
 59.30  of section 297A.61, subdivision 16, paragraph (d), is effective 
 59.31  for sales and purchases occurring after July 31, 2001. 
 59.32     (b) Minnesota Statutes 2000, sections 297A.62, subdivision 
 59.33  2, and 297A.64, subdivision 1, are repealed effective for sales 
 59.34  and purchases made after December 31, 2005. 
 59.35     (c) Minnesota Statutes 2000, section 297A.71, subdivision 
 59.36  15, is repealed effective for sales and purchases made after 
 60.1   June 30, 2002. 
 60.2      (d) Minnesota Statutes 2000, section 289A.60, subdivision 
 60.3   15, is repealed effective for liabilities after January 1, 
 60.4   2003 2004. 
 60.5      (e) Minnesota Statutes 2000, section 297A.71, subdivision 
 60.6   16, is repealed effective for sales and purchases occuring after 
 60.7   December 31, 2002. 
 60.8      <h>[EFFECTIVE DATE.]</h> Paragraph (d) is effective the day after 
 60.9   final enactment.  Paragraphs (a) and (e) are effective for sales 
 60.10  and purchases made on or after June 30, 2001, for projects begun 
 60.11  prior to June 30, 2001. 
 60.12     Sec. 25.  [ROCHESTER LODGING TAX.] 
 60.13     Subdivision 1.  [AUTHORIZATION.] Notwithstanding Minnesota 
 60.14  Statutes, section 469.190 or 477A.016, or any other law, the 
 60.15  city of Rochester may impose an additional tax of one percent on 
 60.16  the gross receipts from the furnishing for consideration of 
 60.17  lodging at a hotel, motel, rooming house, tourist court, or 
 60.18  resort, other than the renting or leasing of it for a continuous 
 60.19  period of 30 days or more. 
 60.20     Subd. 2.  [DISPOSITION OF PROCEEDS.] The gross proceeds 
 60.21  from any tax imposed under subdivision 1 must be used by the 
 60.22  city to fund a local convention or tourism bureau for the 
 60.23  purpose of marketing and promoting the city as a tourist or 
 60.24  convention center.  
 60.25     <h>[EFFECTIVE DATE.]</h> This section is effective for lodging 
 60.26  furnished on or after July 1, 2002. 
 60.27     Sec. 26.  [REPEALER.] 
 60.28     Minnesota Statutes 2000, section 297A.68, subdivision 26, 
 60.29  is repealed effective for sales and purchases made after June 
 60.30  30, 2002. 
 60.31                             ARTICLE 4 
 60.32                           PROPERTY TAXES 
 60.33     Section 1.  Minnesota Statutes 2000, section 168A.05, is 
 60.34  amended by adding a subdivision to read: 
 60.35     Subd. 1a.  [MANUFACTURED HOMES; PROPERTY TAXES MUST BE 
 60.36  PAID.] In the case of a manufactured home as defined in section 
 61.1   327.31, subdivision 6, the department shall not issue a 
 61.2   certificate of title unless the application under section 
 61.3   168A.04 is accompanied with a statement from the county auditor 
 61.4   or county treasurer where the manufactured home is presently 
 61.5   located, stating that all personal property taxes levied on the 
 61.6   unit that are due from the current owner at the time of transfer 
 61.7   for which the application applies, have been paid. 
 61.8      <h>[EFFECTIVE DATE.]</h> This section is effective for 
 61.9   certificates of title issued by the department on or after July 
 61.10  1, 2002. 
 61.11     Sec. 2.  Minnesota Statutes 2000, section 168A.05, is 
 61.12  amended by adding a subdivision to read: 
 61.13     Subd. 1b.  [EXEMPTION.] The provisions of subdivision 1a 
 61.14  shall not apply to:  (i) a manufactured home which is sold or 
 61.15  otherwise disposed of pursuant to section 504B.271 by the owner 
 61.16  of a manufactured home park as defined in section 327.14, 
 61.17  subdivision 3, or (ii) a manufactured home which is sold 
 61.18  pursuant to section 504B.265 by the owner of a manufactured home 
 61.19  park. 
 61.20     <h>[EFFECTIVE DATE.]</h> This section is effective for 
 61.21  certificates of title issued by the department on or after July 
 61.22  1, 2002. 
 61.23     Sec. 3.  Minnesota Statutes 2001 Supplement, section 
 61.24  216B.1646, is amended to read: 
 61.25     216B.1646 [RATE REDUCTION; PROPERTY TAX REDUCTION.] 
 61.26     (a) The commission shall, by any method the commission 
 61.27  finds appropriate, reduce the amounts rates each electric 
 61.28  utility subject to rate regulation by the commission charges its 
 61.29  customers to reflect, on an ongoing basis, the amount by which 
 61.30  each utility's property tax on the personal property of its 
 61.31  electric generation, transmission, or distribution system from 
 61.32  taxes payable in 2001 to taxes payable in 2002 is reduced.  The 
 61.33  commission must ensure that, to the extent feasible, each dollar 
 61.34  of personal property tax reduction allocated to Minnesota 
 61.35  consumers retroactive to January 1, 2002, results in a dollar of 
 61.36  savings to the utility's customers.  A utility may voluntarily 
 62.1   pass on any additional property tax savings in the same manner 
 62.2   as approved by the commission under this paragraph. 
 62.3      (b) By April 10, 2002, each utility shall submit a filing 
 62.4   to the commission containing: 
 62.5      (1) certified information regarding the utility's property 
 62.6   tax savings allocated to Minnesota retail customers; and 
 62.7      (2) a proposed method of passing these savings on to 
 62.8   Minnesota retail customers. 
 62.9      The utility shall provide the information in clause (1) to 
 62.10  the commissioner of revenue at the same time.  The commissioner 
 62.11  shall notify the commission within 30 days as to the accuracy of 
 62.12  the property tax data submitted by the utility. 
 62.13     (c)  For purposes of this section, "personal property" 
 62.14  means tools, implements, and machinery of the generating plant.  
 62.15  It does not apply to transformers, transmission lines, 
 62.16  distribution lines, or any other tools, implements, and 
 62.17  machinery that are part of an electric substation, wherever 
 62.18  located. 
 62.19     <h>[EFFECTIVE DATE.]</h> This section is effective retroactive to 
 62.20  July 1, 2001. 
 62.21     Sec. 4.  Minnesota Statutes 2001 Supplement, section 
 62.22  271.01, subdivision 5, is amended to read: 
 62.23     Subd. 5.  [JURISDICTION.] The tax court shall have 
 62.24  statewide jurisdiction.  Except for an appeal to the supreme 
 62.25  court or any other appeal allowed under this subdivision, the 
 62.26  tax court shall be the sole, exclusive, and final authority for 
 62.27  the hearing and determination of all questions of law and fact 
 62.28  arising under the tax laws of the state, as defined in this 
 62.29  subdivision, in those cases that have been appealed to the tax 
 62.30  court and in any case that has been transferred by the district 
 62.31  court to the tax court.  The tax court shall have no 
 62.32  jurisdiction in any case that does not arise under the tax laws 
 62.33  of the state or in any criminal case or in any case determining 
 62.34  or granting title to real property or in any case that is under 
 62.35  the probate jurisdiction of the district court.  The small 
 62.36  claims division of the tax court shall have no jurisdiction in 
 63.1   any case dealing with property valuation or assessment for 
 63.2   property tax purposes until the taxpayer has appealed the 
 63.3   valuation or assessment to the county board of equalization, and 
 63.4   in those towns and cities which have not transferred their 
 63.5   duties to the county, the town or city board of equalization, 
 63.6   except for:  (i) those taxpayers whose original assessments are 
 63.7   determined by the commissioner of revenue; (ii) those taxpayers 
 63.8   appealing a denial of a current year application for the 
 63.9   homestead classification for their property and the denial was 
 63.10  not reflected on a valuation notice issued in the year; and 
 63.11  (iii) any case dealing with property valuation, assessment, or 
 63.12  taxation for property tax purposes and meeting the 
 63.13  jurisdictional requirements of section 271.21, subdivision 2, 
 63.14  paragraph (c) only as provided in section 271.21, subdivision 2. 
 63.15  The tax court shall have no jurisdiction in any case involving 
 63.16  an order of the state board of equalization unless a taxpayer 
 63.17  contests the valuation of property.  Laws governing taxes, aids, 
 63.18  and related matters administered by the commissioner of revenue, 
 63.19  laws dealing with property valuation, assessment or taxation of 
 63.20  property for property tax purposes, and any other laws that 
 63.21  contain provisions authorizing review of taxes, aids, and 
 63.22  related matters by the tax court shall be considered tax laws of 
 63.23  this state subject to the jurisdiction of the tax court.  This 
 63.24  subdivision shall not be construed to prevent an appeal, as 
 63.25  provided by law, to an administrative agency, board of 
 63.26  equalization, review under section 274.13, subdivision 1c, or to 
 63.27  the commissioner of revenue.  Wherever used in this chapter, the 
 63.28  term commissioner shall mean the commissioner of revenue, unless 
 63.29  otherwise specified. 
 63.30     <h>[EFFECTIVE DATE.]</h> This section is effective for petitions 
 63.31  filed pertaining to the 2002 assessment, and thereafter. 
 63.32     Sec. 5.  Minnesota Statutes 2001 Supplement, section 
 63.33  271.21, subdivision 2, is amended to read: 
 63.34     Subd. 2.  [JURISDICTION.] At the election of the taxpayer, 
 63.35  the small claims division shall have jurisdiction only in the 
 63.36  following matters: 
 64.1      (a) cases involving valuation, assessment, or taxation of 
 64.2   real or personal property, if the taxpayer has satisfied the 
 64.3   requirements of section 271.01, subdivision 5, and:  
 64.4      (i) the issue is a denial of a current year application for 
 64.5   the homestead classification for the taxpayer's property and the 
 64.6   denial was not reflected on a valuation notice issued in the 
 64.7   year; or 
 64.8      (ii) in the case of nonhomestead property, only one parcel 
 64.9   is included in the petition, the entire parcel is classified as 
 64.10  homestead class 1a or 1b under section 273.13 and the parcel 
 64.11  contains no more than one dwelling unit; 
 64.12     (iii) the entire property is classified as agricultural 
 64.13  homestead class 2a or 1b under section 273.13; or 
 64.14     (iv) the assessor's estimated market value of the property 
 64.15  included in the petition is less than $100,000 $300,000; or 
 64.16     (b) any other case concerning the tax laws as defined in 
 64.17  section 271.01, subdivision 5, not involving valuation, 
 64.18  assessment, or taxation of real and personal property in which 
 64.19  the amount in controversy does not exceed $5,000, including 
 64.20  penalty and interest; or. 
 64.21     (c) cases involving valuation, assessment, or taxation of 
 64.22  real or personal property if: 
 64.23     (i) the issue is a denial of a current year application for 
 64.24  the homestead classification for the taxpayer's property; 
 64.25     (ii) only one parcel is included in the petition, the 
 64.26  entire parcel is classified as homestead 1a or 1b pursuant to 
 64.27  section 273.13, and the parcel contains no more than one 
 64.28  dwelling unit; or 
 64.29     (iii) the assessor's estimated market value of the property 
 64.30  included in the petition is less than $300,000. 
 64.31     <h>[EFFECTIVE DATE.]</h> This section is effective for petitions 
 64.32  filed pertaining to the 2002 assessment, and thereafter. 
 64.33     Sec. 6.  Minnesota Statutes 2001 Supplement, section 
 64.34  272.02, subdivision 22, is amended to read: 
 64.35     Subd. 22.  [WIND ENERGY CONVERSION SYSTEMS.] (a) Small 
 64.36  scale wind energy conversion systems installed after January 1, 
 65.1   1991, and used as an electric power source are exempt. 
 65.2      "Small scale wind energy conversion systems" are wind 
 65.3   energy conversion systems, as defined in section 216C.06, 
 65.4   subdivision 12, including the foundation or support pad, which 
 65.5   (i) are used as an electric power source; (ii) are located 
 65.6   within one county and owned by the same owner; and (iii) produce 
 65.7   two megawatts or less of electricity as measured by nameplate 
 65.8   ratings. 
 65.9      (b) Medium scale wind energy conversion systems installed 
 65.10  after January 1, 1991, are treated as follows:  (i) the 
 65.11  foundation and support pad are taxable; (ii) the associated 
 65.12  supporting and protective structures are exempt for the first 
 65.13  five assessment years after they have been constructed, and 
 65.14  thereafter, 30 percent of the market value of the associated 
 65.15  supporting and protective structures are taxable; and (iii) the 
 65.16  turbines, blades, transformers, and its related equipment, are 
 65.17  exempt.  "Medium scale wind energy conversion systems" are wind 
 65.18  energy conversion systems as defined in section 216C.06, 
 65.19  subdivision 12, including the foundation or support pad, which:  
 65.20  (i) are used as an electric power source; (ii) are located 
 65.21  within one county and owned by the same owner; and (iii) produce 
 65.22  more than two but equal to or less than 12 megawatts of energy 
 65.23  as measured by nameplate ratings. 
 65.24     (c) Large scale wind energy conversion systems installed 
 65.25  after January 1, 1991, are treated as follows:  25 percent of 
 65.26  the market value of all property is taxable, including (i) the 
 65.27  foundation and support pad; (ii) the associated supporting and 
 65.28  protective structures; and (iii) the turbines, blades, 
 65.29  transformers, and its related equipment.  "Large scale wind 
 65.30  energy conversion systems" are wind energy conversion systems as 
 65.31  defined in section 216C.06, subdivision 12, including the 
 65.32  foundation or support pad, which (i) are used as an electric 
 65.33  power source; and (ii) produce more than 12 megawatts of energy 
 65.34  as measured by nameplate ratings. 
 65.35     (d) The total size of a wind energy conversion system under 
 65.36  this subdivision shall be determined according to this paragraph.
 66.1   Unless the systems are interconnected with different 
 66.2   distribution systems, the nameplate capacity of one wind energy 
 66.3   conversion system shall be combined with the nameplate capacity 
 66.4   of any other wind energy conversion system that is: 
 66.5      (1) located within five miles of the wind energy conversion 
 66.6   system; 
 66.7      (2) constructed within the same calendar year as the wind 
 66.8   energy conversion system; and 
 66.9      (3) under common ownership.  
 66.10     In the case of a dispute, the commissioner of commerce 
 66.11  shall determine the total size of the system, and shall draw all 
 66.12  reasonable inferences in favor of combining the systems. 
 66.13     (e) In making a determination under paragraph (d), the 
 66.14  commissioner of commerce may determine that two wind energy 
 66.15  conversion systems are under common ownership when the 
 66.16  underlying ownership structure contains similar persons or 
 66.17  entities, even if the ownership shares differ between the two 
 66.18  systems.  Wind energy conversion systems are not under common 
 66.19  ownership solely because the same person or entity provided 
 66.20  equity financing for the systems.  All real and personal 
 66.21  property of a wind energy conversion system as defined in 
 66.22  section 272.029, subdivision 2, is exempt from property tax 
 66.23  except that the land on which the property is located remains 
 66.24  taxable. 
 66.25     <h>[EFFECTIVE DATE.]</h> This section is effective for taxes 
 66.26  payable in 2003 and thereafter. 
 66.27     Sec. 7.  Minnesota Statutes 2000, section 272.02, is 
 66.28  amended by adding a subdivision to read: 
 66.29     Subd. 51.  [ELECTRIC GENERATION FACILITY; PERSONAL 
 66.30  PROPERTY.] Notwithstanding subdivision 9, clause (a), attached 
 66.31  machinery and other personal property which is part of a 
 66.32  combined cycle natural gas turbine electric generation facility 
 66.33  of between 43 and 46 megawatts of installed capacity and that 
 66.34  meets the requirements of this subdivision is exempt.  At the 
 66.35  time of construction, the facility must: 
 66.36     (1) utilize a combined cycle gas turbine generator fueled 
 67.1   by natural gas; 
 67.2      (2) be connected to an existing 115-kilovolt high-voltage 
 67.3   electric transmission line that is within one mile of the 
 67.4   facility; 
 67.5      (3) be located on an underground natural gas storage 
 67.6   aquifer; 
 67.7      (4) be designed as an intermediate load facility; and 
 67.8      (5) have received, by resolution, the approval from the 
 67.9   governing body of the county for the exemption of personal 
 67.10  property under this subdivision. 
 67.11     Construction of the facility must be commenced after 
 67.12  January 1, 2002, and before January 1, 2004.  Property eligible 
 67.13  for this exemption does not include electric transmission lines 
 67.14  and interconnections or gas pipelines and interconnections 
 67.15  appurtenant to the property or the facility. 
 67.16     <h>[EFFECTIVE DATE.]</h> This section is effective for assessment 
 67.17  year 2002 and thereafter. 
 67.18     Sec. 8.  Minnesota Statutes 2000, section 272.02, is 
 67.19  amended by adding a subdivision to read: 
 67.20     Subd. 52.  [ELECTRIC GENERATION FACILITY; PERSONAL 
 67.21  PROPERTY.] Notwithstanding subdivision 9, clause (a), attached 
 67.22  machinery and other personal property which is part of a 
 67.23  simple-cycle combustion-turbine electric generation facility of 
 67.24  more than 40 megawatts and less than 50 megawatts of installed 
 67.25  capacity and that meets the requirements of this subdivision is 
 67.26  exempt.  At the time of construction, the facility must: 
 67.27     (1) utilize natural gas as a primary fuel; 
 67.28     (2) be located within two miles of parallel existing 
 67.29  36-inch natural gas pipelines and an existing 115-kilovolt 
 67.30  high-voltage electric transmission line; 
 67.31     (3) be designed to provide peaking, emergency backup, or 
 67.32  contingency services; and 
 67.33     (4) satisfy a resource deficiency identified in an approved 
 67.34  integrated resource plan filed under section 216B.2422. 
 67.35     Construction of the facility must be commenced after 
 67.36  January 1, 2001, and before January 1, 2005.  Property eligible 
 68.1   for this exemption does not include electric transmission lines 
 68.2   and interconnections or gas pipelines and interconnections 
 68.3   appurtenant to the property or the facility. 
 68.4      <h>[EFFECTIVE DATE.]</h> This section is effective for assessment 
 68.5   year 2002 and thereafter. 
 68.6      Sec. 9.  Minnesota Statutes 2000, section 272.02, is 
 68.7   amended by adding a subdivision to read: 
 68.8      Subd. 53.  [ELECTRIC GENERATION FACILITY; PERSONAL 
 68.9   PROPERTY.] Notwithstanding subdivision 9, clause (a), attached 
 68.10  machinery and other personal property which is part of a 3.2 
 68.11  megawatt run-of-the-river hydroelectric generation facility and 
 68.12  that meets the requirements of this subdivision is exempt.  At 
 68.13  the time of construction, the facility must: 
 68.14     (1) utilize two turbine generators at a dam site existing 
 68.15  on March 31, 1994; 
 68.16     (2) be located on publicly owned land and within 1,500 feet 
 68.17  of a 13.8 kilovolt distribution substation; and 
 68.18     (3) be eligible to receive a renewable energy production 
 68.19  incentive payment under section 216C.41. 
 68.20     Construction of the facility must be commenced after 
 68.21  January 1, 2002, and before January 1, 2004.  Property eligible 
 68.22  for this exemption does not include electric transmission lines 
 68.23  and interconnections or gas pipelines and interconnections 
 68.24  appurtenant to the property or the facility. 
 68.25     <h>[EFFECTIVE DATE.]</h> This section is effective for assessment 
 68.26  year 2002 and thereafter. 
 68.27     Sec. 10.  Minnesota Statutes 2000, section 272.02, is 
 68.28  amended by adding a subdivision to read: 
 68.29     Subd. 54.  [SMALL BIOMASS ELECTRIC GENERATION FACILITY; 
 68.30  PERSONAL PROPERTY.] Notwithstanding subdivision 9, clause (a), 
 68.31  attached machinery and other personal property which is part of 
 68.32  an electrical generating facility that meets the requirements of 
 68.33  this subdivision is exempt.  At the time of construction the 
 68.34  facility must: 
 68.35     (1) have a generation capacity of less than 25 megawatts; 
 68.36     (2) provide process heating needs in addition to electrical 
 69.1   generation; and 
 69.2      (3) utilize agricultural by-products from the malting 
 69.3   process and other biomass fuels as its primary fuel source.  
 69.4      Construction of the facility must be commenced after 
 69.5   January 1, 2002, and before January 1, 2006.  Property eligible 
 69.6   for this exemption does not include electric transmission lines 
 69.7   and interconnections or gas pipelines and interconnections 
 69.8   appurtenant to the property or facility. 
 69.9      <h>[EFFECTIVE DATE.]</h> This section is effective for assessment 
 69.10  year 2003 and thereafter. 
 69.11     Sec. 11.  Minnesota Statutes 2000, section 272.02, is 
 69.12  amended by adding a subdivision to read: 
 69.13     Subd. 55.  [ELECTRIC GENERATION FACILITY; PERSONAL 
 69.14  PROPERTY.] Notwithstanding subdivision 9, clause (a), attached 
 69.15  machinery and other personal property which is part of an 
 69.16  electric generating facility that meets the requirements of this 
 69.17  subdivision is exempt.  At the time of construction, the 
 69.18  facility must be sited on an energy park that (i) is located on 
 69.19  an active mining site, or on a former mining or industrial site 
 69.20  where mining or industrial operations have terminated, (ii) is 
 69.21  within a tax relief area as defined in section 273.134, (iii) 
 69.22  has on-site access to existing railroad infrastructure, (iv) has 
 69.23  direct rail access to a Great Lakes port, (v) has sufficient 
 69.24  private water resources on site, and (vi) is designed to host at 
 69.25  least 500 megawatts of electrical generation.  
 69.26     Construction of the first 250 megawatts of the facility 
 69.27  must be commenced after January 1, 2002, and before January 1, 
 69.28  2005.  Construction of up to an additional 750 megawatts of 
 69.29  generation must be commenced before January 1, 2010.  Property 
 69.30  eligible for this exemption does not include electric 
 69.31  transmission lines and interconnections or gas pipelines and 
 69.32  interconnections appurtenant to the property or the facility. 
 69.33     <h>[EFFECTIVE DATE.]</h> This section is effective for assessment 
 69.34  year 2003 and thereafter. 
 69.35     Sec. 12.  Minnesota Statutes 2001 Supplement, section 
 69.36  272.028, is amended to read: 
 70.1      272.028 [PAYMENT IN LIEU OF PERSONAL PROPERTY PRODUCTION 
 70.2   TAX; WIND GENERATION FACILITIES.] 
 70.3      A developer of a new or existing medium or large scale wind 
 70.4   energy conversion system, as defined under section 272.02, 
 70.5   subdivision 22, paragraphs (b) and (c), 272.029, subdivision 2, 
 70.6   may negotiate with the city or town and the county where the 
 70.7   wind energy conversion system is located to establish a payment 
 70.8   in lieu of tax on personal property used to generate electric 
 70.9   power the wind energy production tax imposed under section 
 70.10  272.029.  The in lieu payment is to provide fees or compensation 
 70.11  to the host jurisdictions to maintain public infrastructure and 
 70.12  services.  A host jurisdiction includes a city or town and the 
 70.13  county in which a facility is located.  The payment in lieu of 
 70.14  personal property the wind energy production tax may be based on 
 70.15  production capacity, historical production, or other factors 
 70.16  agreed upon by the parties.  The payment in lieu of tax 
 70.17  agreement must be signed by the parties and filed with the 
 70.18  commissioner of revenue and the county recorder.  Upon execution 
 70.19  and filing of the agreement, the personal property to which the 
 70.20  in lieu payment applies shall be deemed exempt from tax under 
 70.21  section 272.02, subdivision 22, paragraphs (b) and (c).  This 
 70.22  Exemption from the tax under section 272.029 shall be 
 70.23  effective for the assessment year in which the in lieu payment 
 70.24  is agreed upon and shall remain exempt for the same duration as 
 70.25  the in lieu payments under this section are in effect. 
 70.26     Sec. 13.  [272.029] [WIND ENERGY PRODUCTION TAX.] 
 70.27     Subdivision 1.  [PRODUCTION TAX.] A tax is imposed on the 
 70.28  production of electricity from a wind energy conversion system 
 70.29  installed after January 1, 1991, and used as an electric power 
 70.30  source. 
 70.31     Subd. 2.  [DEFINITIONS.] (a) For the purposes of this 
 70.32  section, the term: 
 70.33     (1) "wind energy conversion system" has the meaning given 
 70.34  it in section 216C.06, subdivision 12; 
 70.35     (2) "large scale wind energy conversion system" means a 
 70.36  wind energy conversion system of more than 12 megawatts, as 
 71.1   measured by the nameplate capacity of the system or as combined 
 71.2   with other systems as provided in paragraph (b); 
 71.3      (3) "medium scale wind energy conversion system" means a 
 71.4   wind energy conversion system of over two and not more than 12 
 71.5   megawatts, as measured by the nameplate capacity of the system 
 71.6   or as combined with other systems as provided in paragraph (b); 
 71.7   and 
 71.8      (4) "small scale wind energy conversion system" means a 
 71.9   wind energy conversion system of two megawatts and under, as 
 71.10  measured by the nameplate capacity of the system or as combined 
 71.11  with other systems as provided in paragraph (b). 
 71.12     (b) For systems installed and contracted for after January 
 71.13  1, 2002, the total size of a wind energy conversion system under 
 71.14  this subdivision shall be determined according to this paragraph.
 71.15  Unless the systems are interconnected with different 
 71.16  distribution systems, the nameplate capacity of one wind energy 
 71.17  conversion system shall be combined with the nameplate capacity 
 71.18  of any other wind energy conversion system that is: 
 71.19     (1) located within five miles of the wind energy conversion 
 71.20  system; 
 71.21     (2) constructed within the same calendar year as the wind 
 71.22  energy conversion system; and 
 71.23     (3) under common ownership.  
 71.24     In the case of a dispute, the commissioner of commerce 
 71.25  shall determine the total size of the system, and shall draw all 
 71.26  reasonable inferences in favor of combining the systems. 
 71.27     (c) In making a determination under paragraph (b), the 
 71.28  commissioner of commerce may determine that two wind energy 
 71.29  conversion systems are under common ownership when the 
 71.30  underlying ownership structure contains similar persons or 
 71.31  entities, even if the ownership shares differ between the two 
 71.32  systems.  Wind energy conversion systems are not under common 
 71.33  ownership solely because the same person or entity provided 
 71.34  equity financing for the systems. 
 71.35     Subd. 3.  [RATE OF TAX.] (a) The owner of a wind energy 
 71.36  conversion system shall pay a tax based on the following 
 72.1   schedule: 
 72.2      (1) for a large scale wind energy conversion system, .12 
 72.3   cents per kilowatt-hour of electricity produced by the system; 
 72.4      (2) for a medium scale wind energy conversion system, .036 
 72.5   cents per kilowatt-hour of electricity produced by the system; 
 72.6   and 
 72.7      (3) for a small scale wind energy conversion system of two 
 72.8   megawatts or less, but greater than .25 megawatts capacity, .012 
 72.9   cents per kilowatt-hour of electricity produced by the system. 
 72.10     (b) Small scale wind energy conversion systems with the 
 72.11  capacity of .25 megawatts or less, and small scale wind energy 
 72.12  conversion systems with a capacity of two megawatts or less that 
 72.13  are owned by a political subdivision, are exempt from the wind 
 72.14  energy production tax. 
 72.15     Subd. 4.  [REPORTS.] (a) An owner of a wind energy 
 72.16  conversion system subject to tax under subdivision 3 shall file 
 72.17  a report with the commissioner of revenue annually on or before 
 72.18  March 1 detailing the amount of electricity in kilowatt-hours 
 72.19  that was produced by the wind energy conversion system for the 
 72.20  previous calendar year.  The commissioner shall prescribe the 
 72.21  form of the report.  The report must contain the information 
 72.22  required by the commissioner to determine the tax due to each 
 72.23  county under this section for the current year.  If an owner of 
 72.24  a wind energy conversion system subject to taxation under this 
 72.25  section fails to file the report by the due date, the 
 72.26  commissioner of revenue shall determine the tax based upon the 
 72.27  nameplate capacity of the system multiplied by a capacity factor 
 72.28  of 40 percent. 
 72.29     (b) On or before March 31, the commissioner of revenue 
 72.30  shall notify the owner of the wind energy conversion systems of 
 72.31  the tax due to each county for the current year and shall 
 72.32  certify to the county auditor of each county in which the 
 72.33  systems are located the tax due from each owner for the current 
 72.34  year. 
 72.35     Subd. 5.  [PAYMENT OF TAX; COLLECTION.] The amount of 
 72.36  production tax determined under subdivision 4 must be paid to 
 73.1   the county treasurer at the time and in the manner provided for 
 73.2   payment of property taxes under section 277.01, subdivision 3, 
 73.3   and, if unpaid, is subject to the same enforcement, collection, 
 73.4   and interest and penalties as delinquent personal property 
 73.5   taxes.  Except to the extent inconsistent with this section, the 
 73.6   provisions of sections 277.01 to 277.24 and 278.01 to 278.13 
 73.7   apply to the taxes imposed under this section, and for purposes 
 73.8   of those provisions, the taxes imposed under this section are 
 73.9   considered personal property taxes. 
 73.10     Subd. 6.  [DISTRIBUTION OF REVENUES.] Revenues from the 
 73.11  taxes imposed under subdivision 5 must be part of the settlement 
 73.12  between the county treasurer and the county auditor under 
 73.13  section 276.09.  The revenue must be distributed by the county 
 73.14  auditor or the county treasurer to all taxing jurisdictions in 
 73.15  which the wind energy conversion system is located, in the same 
 73.16  proportion that each of the taxing jurisdiction's current year's 
 73.17  net tax capacity based tax rate is to the current year's total 
 73.18  net tax capacity based rate. 
 73.19     <h>[EFFECTIVE DATE.]</h> This section is effective for all energy 
 73.20  produced by wind energy conversion systems after December 31, 
 73.21  2002. 
 73.22     Sec. 14.  Minnesota Statutes 2001 Supplement, section 
 73.23  273.124, subdivision 11, is amended to read: 
 73.24     Subd. 11.  [LIMITATION ON HOMESTEAD REDUCTIONS 
 73.25  TREATMENT.] (a) For taxes payable in 2003 through 2005 only, if 
 73.26  the assessor has classified a property as both homestead and 
 73.27  nonhomestead, the greater of: 
 73.28     (1) the value attributable to the portion of the property 
 73.29  used as a homestead; or 
 73.30     (2) the homestead value amount determined under paragraph 
 73.31  (b), is entitled to assessment as a homestead under section 
 73.32  273.13, subdivision 22 or 23. 
 73.33     (b) For taxes payable in 2003 only, the homestead value 
 73.34  amount is $60,000.  For taxes payable in 2004 only, the 
 73.35  homestead value amount is $45,000.  For taxes payable in 2005 
 73.36  only, the homestead value amount is $30,000. 
 74.1      (c) If the assessor has classified a property as both 
 74.2   homestead and nonhomestead, the reductions in tax provided under 
 74.3   sections 273.135 and 273.1391 apply to the value of both the 
 74.4   homestead and the nonhomestead portions of the property. 
 74.5      Sec. 15.  Minnesota Statutes 2000, section 273.125, 
 74.6   subdivision 3, is amended to read: 
 74.7      Subd. 3.  [TAX STATEMENTS; PENALTIES; COLLECTIONS.] Not 
 74.8   later than July 15 in the year of assessment the county 
 74.9   treasurer shall mail to the taxpayer a statement of tax due on a 
 74.10  manufactured home.  The taxes are due on the last day of August, 
 74.11  or 20 days after the postmark date on the envelope containing 
 74.12  the property tax statement, whichever is later, except that if 
 74.13  the tax exceeds $50, one-half of the amount due may be paid on 
 74.14  August 31, or 20 days after the postmark date on the envelope 
 74.15  containing the property tax statement, whichever is later, and 
 74.16  the remainder on November 15.  Taxes remaining unpaid after the 
 74.17  due date are delinquent, and a penalty of eight percent must be 
 74.18  assessed and collected as part of the unpaid taxes.  The tax 
 74.19  statement must contain a sentence notifying the taxpayer that 
 74.20  the title to the manufactured home cannot be transferred unless 
 74.21  the property taxes are paid. 
 74.22     <h>[EFFECTIVE DATE.]</h> This section is effective for tax 
 74.23  statements issued in 2003 and thereafter. 
 74.24     Sec. 16.  Minnesota Statutes 2001 Supplement, section 
 74.25  273.13, subdivision 22, is amended to read: 
 74.26     Subd. 22.  [CLASS 1.] (a) Except as provided in subdivision 
 74.27  23 and in paragraphs (b) and (c), real estate which is 
 74.28  residential and used for homestead purposes is class 1a.  In the 
 74.29  case of a duplex or triplex in which one of the units is used 
 74.30  for homestead purposes, the entire property is deemed to be used 
 74.31  for homestead purposes.  The market value of class 1a property 
 74.32  must be determined based upon the value of the house, garage, 
 74.33  and land.  
 74.34     The first $500,000 of market value of class 1a property has 
 74.35  a net class rate of one percent of its market value; and the 
 74.36  market value of class 1a property that exceeds $500,000 has a 
 75.1   class rate of 1.25 percent of its market value. 
 75.2      (b) Class 1b property includes homestead real estate or 
 75.3   homestead manufactured homes used for the purposes of a 
 75.4   homestead by 
 75.5      (1) any blind person, or the blind person and the blind 
 75.6   person's spouse; or 
 75.7      (2) any person, hereinafter referred to as "veteran," who: 
 75.8      (i) served in the active military or naval service of the 
 75.9   United States; and 
 75.10     (ii) is entitled to compensation under the laws and 
 75.11  regulations of the United States for permanent and total 
 75.12  service-connected disability due to the loss, or loss of use, by 
 75.13  reason of amputation, ankylosis, progressive muscular 
 75.14  dystrophies, or paralysis, of both lower extremities, such as to 
 75.15  preclude motion without the aid of braces, crutches, canes, or a 
 75.16  wheelchair; and 
 75.17     (iii) has acquired a special housing unit with special 
 75.18  fixtures or movable facilities made necessary by the nature of 
 75.19  the veteran's disability, or the surviving spouse of the 
 75.20  deceased veteran for as long as the surviving spouse retains the 
 75.21  special housing unit as a homestead; or 
 75.22     (3) any person who: 
 75.23     (i) is permanently and totally disabled and 
 75.24     (ii) receives 90 percent or more of total household income, 
 75.25  as defined in section 290A.03, subdivision 5, from 
 75.26     (A) aid from any state as a result of that disability; or 
 75.27     (B) supplemental security income for the disabled; or 
 75.28     (C) workers' compensation based on a finding of total and 
 75.29  permanent disability; or 
 75.30     (D) social security disability, including the amount of a 
 75.31  disability insurance benefit which is converted to an old age 
 75.32  insurance benefit and any subsequent cost of living increases; 
 75.33  or 
 75.34     (E) aid under the federal Railroad Retirement Act of 1937, 
 75.35  United States Code Annotated, title 45, section 228b(a)5; or 
 75.36     (F) a pension from any local government retirement fund 
 76.1   located in the state of Minnesota as a result of that 
 76.2   disability; or 
 76.3      (G) pension, annuity, or other income paid as a result of 
 76.4   that disability from a private pension or disability plan, 
 76.5   including employer, employee, union, and insurance plans and 
 76.6      (iii) has household income as defined in section 290A.03, 
 76.7   subdivision 5, of $50,000 or less; or 
 76.8      (4) any person who is permanently and totally disabled and 
 76.9   whose household income as defined in section 290A.03, 
 76.10  subdivision 5, is 275 percent or less of the federal poverty 
 76.11  level. 
 76.12     Property is classified and assessed under clause (4) only 
 76.13  if the government agency or income-providing source certifies, 
 76.14  upon the request of the homestead occupant, that the homestead 
 76.15  occupant satisfies the disability requirements of this paragraph.
 76.16     Property is classified and assessed pursuant to clause (1) 
 76.17  only if the commissioner of economic security certifies to the 
 76.18  assessor that the homestead occupant satisfies the requirements 
 76.19  of this paragraph.  
 76.20     Permanently and totally disabled for the purpose of this 
 76.21  subdivision means a condition which is permanent in nature and 
 76.22  totally incapacitates the person from working at an occupation 
 76.23  which brings the person an income.  The first $32,000 market 
 76.24  value of class 1b property has a net class rate of .45 percent 
 76.25  of its market value.  The remaining market value of class 1b 
 76.26  property has a class rate using the rates for class 1a or class 
 76.27  2a property, whichever is appropriate, of similar market value.  
 76.28     (c) Class 1c property is commercial use real property that 
 76.29  abuts a lakeshore line and is devoted to temporary and seasonal 
 76.30  residential occupancy for recreational purposes but not devoted 
 76.31  to commercial purposes for more than 250 days in the year 
 76.32  preceding the year of assessment, and that includes a portion 
 76.33  used as a homestead by the owner, which includes a dwelling 
 76.34  occupied as a homestead by a shareholder of a corporation that 
 76.35  owns the resort or a partner in a partnership that owns the 
 76.36  resort, even if the title to the homestead is held by the 
 77.1   corporation or partnership.  For purposes of this clause, 
 77.2   property is devoted to a commercial purpose on a specific day if 
 77.3   any portion of the property, excluding the portion used 
 77.4   exclusively as a homestead, is used for residential occupancy 
 77.5   and a fee is charged for residential occupancy.  The first 
 77.6   $500,000 of market value of class 1c property has a class rate 
 77.7   of one percent, and the remaining market value of class 1c 
 77.8   property has a class rate of one percent, with the following 
 77.9   limitation:  the area of the property must not exceed 100 feet 
 77.10  of lakeshore footage for each cabin or campsite located on the 
 77.11  property up to a total of 800 feet and 500 feet in depth, 
 77.12  measured away from the lakeshore.  If any portion of the class 
 77.13  1c resort property is classified as class 4c under subdivision 
 77.14  25, the entire property must meet the requirements of 
 77.15  subdivision 25, paragraph (d), clause (1), to qualify for class 
 77.16  1c treatment under this paragraph. 
 77.17     (d) Class 1d property includes structures that meet all of 
 77.18  the following criteria: 
 77.19     (1) the structure is located on property that is classified 
 77.20  as agricultural property under section 273.13, subdivision 23; 
 77.21     (2) the structure is occupied exclusively by seasonal farm 
 77.22  workers during the time when they work on that farm, and the 
 77.23  occupants are not charged rent for the privilege of occupying 
 77.24  the property, provided that use of the structure for storage of 
 77.25  farm equipment and produce does not disqualify the property from 
 77.26  classification under this paragraph; 
 77.27     (3) the structure meets all applicable health and safety 
 77.28  requirements for the appropriate season; and 
 77.29     (4) the structure is not salable as residential property 
 77.30  because it does not comply with local ordinances relating to 
 77.31  location in relation to streets or roads. 
 77.32     The market value of class 1d property has the same class 
 77.33  rates as class 1a property under paragraph (a). 
 77.34     <h>[EFFECTIVE DATE.]</h> This section is effective for taxes 
 77.35  payable in 2003 and subsequent years. 
 77.36     Sec. 17.  Minnesota Statutes 2001 Supplement, section 
 78.1   273.13, subdivision 25, is amended to read: 
 78.2      Subd. 25.  [CLASS 4.] (a) Class 4a is residential real 
 78.3   estate containing four or more units and used or held for use by 
 78.4   the owner or by the tenants or lessees of the owner as a 
 78.5   residence for rental periods of 30 days or more.  Class 4a also 
 78.6   includes hospitals licensed under sections 144.50 to 144.56, 
 78.7   other than hospitals exempt under section 272.02, and contiguous 
 78.8   property used for hospital purposes, without regard to whether 
 78.9   the property has been platted or subdivided.  The market value 
 78.10  of class 4a property has a class rate of 1.8 percent for taxes 
 78.11  payable in 2002, 1.5 percent for taxes payable in 2003, and 1.25 
 78.12  percent for taxes payable in 2004 and thereafter, except that 
 78.13  class 4a property consisting of a structure for which 
 78.14  construction commenced after June 30, 2001, has a class rate of 
 78.15  1.25 percent of market value for taxes payable in 2003 and 
 78.16  subsequent years. 
 78.17     (b) Class 4b includes: 
 78.18     (1) residential real estate containing less than four units 
 78.19  that does not qualify as class 4bb, other than seasonal 
 78.20  residential, and recreational; 
 78.21     (2) manufactured homes not classified under any other 
 78.22  provision; 
 78.23     (3) a dwelling, garage, and surrounding one acre of 
 78.24  property on a nonhomestead farm classified under subdivision 23, 
 78.25  paragraph (b) containing two or three units; 
 78.26     (4) unimproved property that is classified residential as 
 78.27  determined under subdivision 33.  
 78.28     The market value of class 4b property has a class rate of 
 78.29  1.5 percent for taxes payable in 2002, and 1.25 percent for 
 78.30  taxes payable in 2003 and thereafter. 
 78.31     (c) Class 4bb includes: 
 78.32     (1) nonhomestead residential real estate containing one 
 78.33  unit, other than seasonal residential, and recreational; and 
 78.34     (2) a single family dwelling, garage, and surrounding one 
 78.35  acre of property on a nonhomestead farm classified under 
 78.36  subdivision 23, paragraph (b). 
 79.1      Class 4bb property has the same class rates as class 1a 
 79.2   property under subdivision 22. 
 79.3      Property that has been classified as seasonal recreational 
 79.4   residential property at any time during which it has been owned 
 79.5   by the current owner or spouse of the current owner does not 
 79.6   qualify for class 4bb. 
 79.7      (d) Class 4c property includes: 
 79.8      (1) except as provided in subdivision 22, paragraph (c), 
 79.9   real property devoted to temporary and seasonal residential 
 79.10  occupancy for recreation purposes, including real property 
 79.11  devoted to temporary and seasonal residential occupancy for 
 79.12  recreation purposes and not devoted to commercial purposes for 
 79.13  more than 250 days in the year preceding the year of 
 79.14  assessment.  For purposes of this clause, property is devoted to 
 79.15  a commercial purpose on a specific day if any portion of the 
 79.16  property is used for residential occupancy, and a fee is charged 
 79.17  for residential occupancy.  In order for a property to be 
 79.18  classified as class 4c, seasonal recreational residential for 
 79.19  commercial purposes, at least 40 percent of the annual gross 
 79.20  lodging receipts related to the property must be from business 
 79.21  conducted during 90 consecutive days and either (i) at least 60 
 79.22  percent of all paid bookings by lodging guests during the year 
 79.23  must be for periods of at least two consecutive nights; or (ii) 
 79.24  at least 20 percent of the annual gross receipts must be from 
 79.25  charges for rental of fish houses, boats and motors, 
 79.26  snowmobiles, downhill or cross-country ski equipment, or charges 
 79.27  for marina services, launch services, and guide services, or the 
 79.28  sale of bait and fishing tackle.  For purposes of this 
 79.29  determination, a paid booking of five or more nights shall be 
 79.30  counted as two bookings.  Class 4c also includes commercial use 
 79.31  real property used exclusively for recreational purposes in 
 79.32  conjunction with class 4c property devoted to temporary and 
 79.33  seasonal residential occupancy for recreational purposes, up to 
 79.34  a total of two acres, provided the property is not devoted to 
 79.35  commercial recreational use for more than 250 days in the year 
 79.36  preceding the year of assessment and is located within two miles 
 80.1   of the class 4c property with which it is used.  Class 4c 
 80.2   property classified in this clause also includes the remainder 
 80.3   of class 1c resorts provided that the entire property including 
 80.4   that portion of the property classified as class 1c also meets 
 80.5   the requirements for class 4c under this clause; otherwise the 
 80.6   entire property is classified as class 3.  Owners of real 
 80.7   property devoted to temporary and seasonal residential occupancy 
 80.8   for recreation purposes and all or a portion of which was 
 80.9   devoted to commercial purposes for not more than 250 days in the 
 80.10  year preceding the year of assessment desiring classification as 
 80.11  class 1c or 4c, must submit a declaration to the assessor 
 80.12  designating the cabins or units occupied for 250 days or less in 
 80.13  the year preceding the year of assessment by January 15 of the 
 80.14  assessment year.  Those cabins or units and a proportionate 
 80.15  share of the land on which they are located will be designated 
 80.16  class 1c or 4c as otherwise provided.  The remainder of the 
 80.17  cabins or units and a proportionate share of the land on which 
 80.18  they are located will be designated as class 3a.  The owner of 
 80.19  property desiring designation as class 1c or 4c property must 
 80.20  provide guest registers or other records demonstrating that the 
 80.21  units for which class 1c or 4c designation is sought were not 
 80.22  occupied for more than 250 days in the year preceding the 
 80.23  assessment if so requested.  The portion of a property operated 
 80.24  as a (1) restaurant, (2) bar, (3) gift shop, and (4) other 
 80.25  nonresidential facility operated on a commercial basis not 
 80.26  directly related to temporary and seasonal residential occupancy 
 80.27  for recreation purposes shall not qualify for class 1c or 4c; 
 80.28     (2) qualified property used as a golf course if: 
 80.29     (i) it is open to the public on a daily fee basis.  It may 
 80.30  charge membership fees or dues, but a membership fee may not be 
 80.31  required in order to use the property for golfing, and its green 
 80.32  fees for golfing must be comparable to green fees typically 
 80.33  charged by municipal courses; and 
 80.34     (ii) it meets the requirements of section 273.112, 
 80.35  subdivision 3, paragraph (d). 
 80.36     A structure used as a clubhouse, restaurant, or place of 
 81.1   refreshment in conjunction with the golf course is classified as 
 81.2   class 3a property; 
 81.3      (3) real property up to a maximum of one acre of land owned 
 81.4   by a nonprofit community service oriented organization; provided 
 81.5   that the property is not used for a revenue-producing activity 
 81.6   for more than six days in the calendar year preceding the year 
 81.7   of assessment and the property is not used for residential 
 81.8   purposes on either a temporary or permanent basis.  For purposes 
 81.9   of this clause, a "nonprofit community service oriented 
 81.10  organization" means any corporation, society, association, 
 81.11  foundation, or institution organized and operated exclusively 
 81.12  for charitable, religious, fraternal, civic, or educational 
 81.13  purposes, and which is exempt from federal income taxation 
 81.14  pursuant to section 501(c)(3), (10), or (19) of the Internal 
 81.15  Revenue Code of 1986, as amended through December 31, 1990.  For 
 81.16  purposes of this clause, "revenue-producing activities" shall 
 81.17  include but not be limited to property or that portion of the 
 81.18  property that is used as an on-sale intoxicating liquor or 3.2 
 81.19  percent malt liquor establishment licensed under chapter 340A, a 
 81.20  restaurant open to the public, bowling alley, a retail store, 
 81.21  gambling conducted by organizations licensed under chapter 349, 
 81.22  an insurance business, or office or other space leased or rented 
 81.23  to a lessee who conducts a for-profit enterprise on the 
 81.24  premises.  Any portion of the property which is used for 
 81.25  revenue-producing activities for more than six days in the 
 81.26  calendar year preceding the year of assessment shall be assessed 
 81.27  as class 3a.  The use of the property for social events open 
 81.28  exclusively to members and their guests for periods of less than 
 81.29  24 hours, when an admission is not charged nor any revenues are 
 81.30  received by the organization shall not be considered a 
 81.31  revenue-producing activity; 
 81.32     (4) post-secondary student housing of not more than one 
 81.33  acre of land that is owned by a nonprofit corporation organized 
 81.34  under chapter 317A and is used exclusively by a student 
 81.35  cooperative, sorority, or fraternity for on-campus housing or 
 81.36  housing located within two miles of the border of a college 
 82.1   campus; 
 82.2      (5) manufactured home parks as defined in section 327.14, 
 82.3   subdivision 3; 
 82.4      (6) real property that is actively and exclusively devoted 
 82.5   to indoor fitness, health, social, recreational, and related 
 82.6   uses, is owned and operated by a not-for-profit corporation, and 
 82.7   is located within the metropolitan area as defined in section 
 82.8   473.121, subdivision 2; and 
 82.9      (7) a leased or privately owned noncommercial aircraft 
 82.10  storage hangar not exempt under section 272.01, subdivision 2, 
 82.11  and the land on which it is located, provided that: 
 82.12     (i) the land is on an airport owned or operated by a city, 
 82.13  town, county, metropolitan airports commission, or group 
 82.14  thereof; and 
 82.15     (ii) the land lease, or any ordinance or signed agreement 
 82.16  restricting the use of the leased premise, prohibits commercial 
 82.17  activity performed at the hangar. 
 82.18     If a hangar classified under this clause is sold after June 
 82.19  30, 2000, a bill of sale must be filed by the new owner with the 
 82.20  assessor of the county where the property is located within 60 
 82.21  days of the sale; and 
 82.22     (8) residential real estate, a portion of which is used by 
 82.23  the owner for homestead purposes, and that is also a place of 
 82.24  lodging, if all of the following criteria are met: 
 82.25     (i) rooms are provided for rent to transient guests that 
 82.26  generally stay for periods of 14 or fewer days; 
 82.27     (ii) meals are provided to persons who rent rooms, the cost 
 82.28  of which is incorporated in the basic room rate; 
 82.29     (iii) meals are not provided to the general public except 
 82.30  for special events on fewer than seven days in the calendar year 
 82.31  preceding the year of the assessment; and 
 82.32     (iv) the owner is the operator of the property. 
 82.33  The market value subject to the 4c classification under this 
 82.34  clause is limited to five rental units.  Any rental units on the 
 82.35  property in excess of five, must be valued and assessed as class 
 82.36  3a.  The portion of the property used for purposes of a 
 83.1   homestead by the owner must be classified as class 1a property 
 83.2   under subdivision 22. 
 83.3      Class 4c property has a class rate of 1.5 percent of market 
 83.4   value, except that (i) each parcel of seasonal residential 
 83.5   recreational property not used for commercial purposes has the 
 83.6   same class rates as class 4bb property, (ii) manufactured home 
 83.7   parks assessed under clause (5) have the same class rate as 
 83.8   class 4b property, (iii) commercial-use seasonal residential 
 83.9   recreational property has a class rate of one percent for the 
 83.10  first $500,000 of market value, which includes any market value 
 83.11  receiving the one percent rate under subdivision 22, and 1.25 
 83.12  percent for the remaining market value, (iv) the market value of 
 83.13  property described in clause (4) has a class rate of one 
 83.14  percent, and (v) the market value of property described in 
 83.15  clauses (2) and (6) has a class rate of 1.25 percent, and (vi) 
 83.16  that portion of the market value of property in clause (8) 
 83.17  qualifying for class 4c property has a class rate of 1.25 
 83.18  percent.  
 83.19     (e) Class 4d property is qualifying low-income rental 
 83.20  housing certified to the assessor by the housing finance agency 
 83.21  under sections 273.126 and 462A.071.  Class 4d includes land in 
 83.22  proportion to the total market value of the building that is 
 83.23  qualifying low-income rental housing.  For all properties 
 83.24  qualifying as class 4d, the market value determined by the 
 83.25  assessor must be based on the normal approach to value using 
 83.26  normal unrestricted rents. 
 83.27     Class 4d property has a class rate of 0.9 percent for taxes 
 83.28  payable in 2002, and one percent for taxes payable in 2003 and 
 83.29  1.25 percent for taxes payable in 2004 and thereafter.  
 83.30     <h>[EFFECTIVE DATE.]</h> This section is effective for assessment 
 83.31  year 2002 and thereafter, for taxes payable in 2003 and 
 83.32  thereafter. 
 83.33     Sec. 18.  Minnesota Statutes 2001 Supplement, section 
 83.34  273.1384, subdivision 1, is amended to read: 
 83.35     Subdivision 1.  [RESIDENTIAL HOMESTEAD MARKET VALUE 
 83.36  CREDIT.] Each county auditor shall determine a homestead credit 
 84.1   for each class 1a, 1b, 1c, and 2a homestead property within the 
 84.2   county equal to 0.4 percent of the market value of the 
 84.3   property.  The amount of homestead credit for a homestead may 
 84.4   not exceed $304 and is reduced by .09 percent of the market 
 84.5   value in excess of $76,000.  In the case of an agricultural or 
 84.6   resort homestead, only the market value of the house, garage, 
 84.7   and immediately surrounding one acre of land is eligible in 
 84.8   determining the property's homestead credit.  In the case of a 
 84.9   property which is classified as part homestead and part 
 84.10  nonhomestead, the credit shall apply only to the homestead 
 84.11  portion of the property. 
 84.12     <h>[EFFECTIVE DATE.]</h> This section is effective for taxes 
 84.13  payable in 2003 and subsequent years. 
 84.14     Sec. 19.  Minnesota Statutes 2001 Supplement, section 
 84.15  273.1384, subdivision 2, is amended to read: 
 84.16     Subd. 2.  [AGRICULTURAL HOMESTEAD MARKET VALUE CREDIT.] 
 84.17  Property classified as class 2a agricultural homestead is 
 84.18  eligible for an agricultural credit.  The credit is equal to 0.2 
 84.19  0.3 percent of the first $115,000 of the property's market 
 84.20  value.  The credit under this subdivision is limited 
 84.21  to $230 $345 for each homestead.  The credit is reduced by .05 
 84.22  percent of the market value in excess of $115,000, subject to a 
 84.23  maximum reduction of $115.  
 84.24     <h>[EFFECTIVE DATE.]</h> This section is effective for taxes 
 84.25  payable in 2003 and thereafter. 
 84.26     Sec. 20.  Minnesota Statutes 2000, section 273.1398, 
 84.27  subdivision 1a, is amended to read: 
 84.28     Subd. 1a.  [TAX BASE DIFFERENTIAL.] (a) For aids payable in 
 84.29  2000 2003, the tax base differential is: 
 84.30     (1) 0.45 percent of the assessment year 1998 taxable market 
 84.31  value of class 2a agricultural homestead property, excluding the 
 84.32  house, garage, and surrounding one acre of land, between 
 84.33  $115,000 and $600,000 and over 320 acres, minus the value over 
 84.34  $600,000 that is less than 320 acres 31 percent of the 
 84.35  assessment year 2000 net tax capacity of public utility property 
 84.36  reported by the county on the 2000 abstract of assessment as 
 85.1   public utility land and buildings valued up to $150,000; plus 
 85.2      (2) 0.5 percent of the assessment year 1998 taxable market 
 85.3   value of noncommercial seasonal recreational residential 
 85.4   property over $75,000 in value 34 percent of the assessment year 
 85.5   2000 net tax capacity of public utility property reported by the 
 85.6   county on the 2000 abstract of assessment as public utility land 
 85.7   and buildings valued over $150,000; plus 
 85.8      (3) for purposes of computing the fiscal disparity 
 85.9   adjustment only, 0.2 percent of the assessment year 1998 taxable 
 85.10  market value of class 3 commercial-industrial property over 
 85.11  $150,000 34 percent of the assessment year 2000 net tax capacity 
 85.12  of public utility property reported by the county on the 2000 
 85.13  abstract of assessment as public utility machinery, systems of 
 85.14  electric utilities-transmission, systems of electric 
 85.15  utilities-distribution, and systems of gas utilities. 
 85.16     (b) For the purposes of the distribution of homestead and 
 85.17  agricultural credit aid for aids payable in 2000, the 
 85.18  commissioner of revenue shall use the best information available 
 85.19  as of June 30, 1999, to make an estimate of the value described 
 85.20  in paragraph (a), clause (1).  The commissioner shall adjust the 
 85.21  distribution of homestead and agricultural credit aid for aids 
 85.22  payable in 2001 and subsequent years if new information 
 85.23  regarding the value described in paragraph (a), clause (1), 
 85.24  becomes available after June 30, 1999 Notwithstanding the 
 85.25  computation in paragraph (a), the tax base differential shall be 
 85.26  zero in all counties in which the sum of the net tax capacities 
 85.27  of properties described in paragraph (a) does not exceed 40 
 85.28  percent of the total assessment year 2000 net tax capacity of 
 85.29  the county. 
 85.30     Sec. 21.  Minnesota Statutes 2000, section 273.1398, 
 85.31  subdivision 2, is amended to read: 
 85.32     Subd. 2.  [HOMESTEAD AND AGRICULTURAL CREDIT AID.] (a) 
 85.33  Homestead and agricultural credit aid for each unique taxing 
 85.34  jurisdiction equals the product of (1) the homestead and 
 85.35  agricultural credit aid base, and (2) the growth adjustment 
 85.36  factor, plus the net tax capacity adjustment and the fiscal 
 86.1   disparity adjustment.  
 86.2      (b) For the purposes of determining the net tax capacity 
 86.3   adjustment for aids payable in 2003, the "current local tax 
 86.4   rate" and the "previous net tax capacity" as defined under 
 86.5   subdivision 1 shall be determined using tax capacities and tax 
 86.6   rates in effect for taxes payable in 2001. 
 86.7      Sec. 22.  Minnesota Statutes 2001 Supplement, section 
 86.8   275.065, subdivision 3, is amended to read: 
 86.9      Subd. 3.  [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The 
 86.10  county auditor shall prepare and the county treasurer shall 
 86.11  deliver after November 10 and on or before November 24 each 
 86.12  year, by first class mail to each taxpayer at the address listed 
 86.13  on the county's current year's assessment roll, a notice of 
 86.14  proposed property taxes.  
 86.15     (b) The commissioner of revenue shall prescribe the form of 
 86.16  the notice. 
 86.17     (c) The notice must inform taxpayers that it contains the 
 86.18  amount of property taxes each taxing authority proposes to 
 86.19  collect for taxes payable the following year.  In the case of a 
 86.20  town, or in the case of the state determined portion of the 
 86.21  school district levy general tax, the final tax amount will be 
 86.22  its proposed tax.  In the case of taxing authorities required to 
 86.23  hold a public meeting under subdivision 6, the notice must 
 86.24  clearly state that each taxing authority, including regional 
 86.25  library districts established under section 134.201, and 
 86.26  including the metropolitan taxing districts as defined in 
 86.27  paragraph (i), but excluding all other special taxing districts 
 86.28  and towns, will hold a public meeting to receive public 
 86.29  testimony on the proposed budget and proposed or final property 
 86.30  tax levy, or, in case of a school district, on the current 
 86.31  budget and proposed property tax levy.  It must clearly state 
 86.32  the time and place of each taxing authority's meeting, a 
 86.33  telephone number for the taxing authority that taxpayers may 
 86.34  call if they have questions related to the notice, and an 
 86.35  address where comments will be received by mail.  
 86.36     (d) The notice must state for each parcel: 
 87.1      (1) the market value of the property as determined under 
 87.2   section 273.11, and used for computing property taxes payable in 
 87.3   the following year and for taxes payable in the current year as 
 87.4   each appears in the records of the county assessor on November 1 
 87.5   of the current year; and, in the case of residential property, 
 87.6   whether the property is classified as homestead or 
 87.7   nonhomestead.  The notice must clearly inform taxpayers of the 
 87.8   years to which the market values apply and that the values are 
 87.9   final values; 
 87.10     (2) the items listed below, shown separately by county, 
 87.11  city or town, and state determined school general tax, net of 
 87.12  the education residential and agricultural homestead credit 
 87.13  under section 273.1382 273.1384, voter approved school levy, 
 87.14  other local school levy, and the sum of the special taxing 
 87.15  districts, and as a total of all taxing authorities:  
 87.16     (i) the actual tax for taxes payable in the current year; 
 87.17     (ii) the tax change due to spending factors, defined as the 
 87.18  proposed tax minus the constant spending tax amount; 
 87.19     (iii) the tax change due to other factors, defined as the 
 87.20  constant spending tax amount minus the actual current year tax; 
 87.21  and 
 87.22     (iv) the proposed tax amount. 
 87.23     If the county levy under clause (2) includes an amount for 
 87.24  a lake improvement district as defined under sections 103B.501 
 87.25  to 103B.581, the amount attributable for that purpose must be 
 87.26  separately stated from the remaining county levy amount.  
 87.27     In the case of a town or the state determined school 
 87.28  general tax, the final tax shall also be its proposed tax unless 
 87.29  the town changes its levy at a special town meeting under 
 87.30  section 365.52.  If a school district has certified under 
 87.31  section 126C.17, subdivision 9, that a referendum will be held 
 87.32  in the school district at the November general election, the 
 87.33  county auditor must note next to the school district's proposed 
 87.34  amount that a referendum is pending and that, if approved by the 
 87.35  voters, the tax amount may be higher than shown on the notice.  
 87.36  In the case of the city of Minneapolis, the levy for the 
 88.1   Minneapolis library board and the levy for Minneapolis park and 
 88.2   recreation shall be listed separately from the remaining amount 
 88.3   of the city's levy.  In the case of a parcel where tax increment 
 88.4   or the fiscal disparities areawide tax under chapter 276A or 
 88.5   473F applies, the proposed tax levy on the captured value or the 
 88.6   proposed tax levy on the tax capacity subject to the areawide 
 88.7   tax must each be stated separately and not included in the sum 
 88.8   of the special taxing districts; and 
 88.9      (3) the increase or decrease between the total taxes 
 88.10  payable in the current year and the total proposed taxes, 
 88.11  expressed as a percentage. 
 88.12     For purposes of this section, the amount of the tax on 
 88.13  homesteads qualifying under the senior citizens' property tax 
 88.14  deferral program under chapter 290B is the total amount of 
 88.15  property tax before subtraction of the deferred property tax 
 88.16  amount. 
 88.17     (e) The notice must clearly state that the proposed or 
 88.18  final taxes do not include the following: 
 88.19     (1) special assessments; 
 88.20     (2) levies approved by the voters after the date the 
 88.21  proposed taxes are certified, including bond referenda, school 
 88.22  district levy referenda, and levy limit increase referenda; 
 88.23     (3) amounts necessary to pay cleanup or other costs due to 
 88.24  a natural disaster occurring after the date the proposed taxes 
 88.25  are certified; 
 88.26     (4) amounts necessary to pay tort judgments against the 
 88.27  taxing authority that become final after the date the proposed 
 88.28  taxes are certified; and 
 88.29     (5) the contamination tax imposed on properties which 
 88.30  received market value reductions for contamination. 
 88.31     (f) Except as provided in subdivision 7, failure of the 
 88.32  county auditor to prepare or the county treasurer to deliver the 
 88.33  notice as required in this section does not invalidate the 
 88.34  proposed or final tax levy or the taxes payable pursuant to the 
 88.35  tax levy. 
 88.36     (g) If the notice the taxpayer receives under this section 
 89.1   lists the property as nonhomestead, and satisfactory 
 89.2   documentation is provided to the county assessor by the 
 89.3   applicable deadline, and the property qualifies for the 
 89.4   homestead classification in that assessment year, the assessor 
 89.5   shall reclassify the property to homestead for taxes payable in 
 89.6   the following year. 
 89.7      (h) In the case of class 4 residential property used as a 
 89.8   residence for lease or rental periods of 30 days or more, the 
 89.9   taxpayer must either: 
 89.10     (1) mail or deliver a copy of the notice of proposed 
 89.11  property taxes to each tenant, renter, or lessee; or 
 89.12     (2) post a copy of the notice in a conspicuous place on the 
 89.13  premises of the property.  
 89.14     The notice must be mailed or posted by the taxpayer by 
 89.15  November 27 or within three days of receipt of the notice, 
 89.16  whichever is later.  A taxpayer may notify the county treasurer 
 89.17  of the address of the taxpayer, agent, caretaker, or manager of 
 89.18  the premises to which the notice must be mailed in order to 
 89.19  fulfill the requirements of this paragraph. 
 89.20     (i) For purposes of this subdivision, subdivisions 5a and 
 89.21  6, "metropolitan special taxing districts" means the following 
 89.22  taxing districts in the seven-county metropolitan area that levy 
 89.23  a property tax for any of the specified purposes listed below: 
 89.24     (1) metropolitan council under section 473.132, 473.167, 
 89.25  473.249, 473.325, 473.446, 473.521, 473.547, or 473.834; 
 89.26     (2) metropolitan airports commission under section 473.667, 
 89.27  473.671, or 473.672; and 
 89.28     (3) metropolitan mosquito control commission under section 
 89.29  473.711. 
 89.30     For purposes of this section, any levies made by the 
 89.31  regional rail authorities in the county of Anoka, Carver, 
 89.32  Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 
 89.33  398A shall be included with the appropriate county's levy and 
 89.34  shall be discussed at that county's public hearing. 
 89.35     (j) If a statutory or home rule charter city or a town has 
 89.36  exercised the local levy option provided by section 473.388, 
 90.1   subdivision 7, it may include in the notice of its proposed 
 90.2   taxes the amount of its proposed taxes attributable to its 
 90.3   exercise of the option.  In the first year of the city or town's 
 90.4   exercise of this option, the statement shall include an estimate 
 90.5   of the reduction of the metropolitan council's tax on the parcel 
 90.6   due to exercise of that option.  The metropolitan council's levy 
 90.7   shall be adjusted accordingly. 
 90.8      <h>[EFFECTIVE DATE.]</h> This section is effective for notices of 
 90.9   proposed property taxes prepared in 2002, for taxes payable in 
 90.10  2003, and thereafter.  
 90.11     Sec. 23.  Minnesota Statutes 2001 Supplement, section 
 90.12  276.04, subdivision 2, is amended to read: 
 90.13     Subd. 2.  [CONTENTS OF TAX STATEMENTS.] (a) The treasurer 
 90.14  shall provide for the printing of the tax statements.  The 
 90.15  commissioner of revenue shall prescribe the form of the property 
 90.16  tax statement and its contents.  The statement must contain a 
 90.17  tabulated statement of the dollar amount due to each taxing 
 90.18  authority and the amount of the state tax from the parcel of 
 90.19  real property for which a particular tax statement is prepared.  
 90.20  The dollar amounts attributable to the county, the state tax, 
 90.21  the voter approved school tax, the other local school tax, the 
 90.22  township or municipality, and the total of the metropolitan 
 90.23  special taxing districts as defined in section 275.065, 
 90.24  subdivision 3, paragraph (i), must be separately stated.  The 
 90.25  amounts due all other special taxing districts, if any, may be 
 90.26  aggregated.  If the county levy under this paragraph includes an 
 90.27  amount for a lake improvement district as defined under sections 
 90.28  103B.501 to 103B.581, the amount attributable for that purpose 
 90.29  must be separately stated from the remaining county levy 
 90.30  amount.  The amount of the tax on homesteads qualifying under 
 90.31  the senior citizens' property tax deferral program under chapter 
 90.32  290B is the total amount of property tax before subtraction of 
 90.33  the deferred property tax amount.  The amount of the tax on 
 90.34  contamination value imposed under sections 270.91 to 270.98, if 
 90.35  any, must also be separately stated.  The dollar amounts, 
 90.36  including the dollar amount of any special assessments, may be 
 91.1   rounded to the nearest even whole dollar.  For purposes of this 
 91.2   section whole odd-numbered dollars may be adjusted to the next 
 91.3   higher even-numbered dollar.  The amount of market value 
 91.4   excluded under section 273.11, subdivision 16, if any, must also 
 91.5   be listed on the tax statement. 
 91.6      (b) The property tax statements for manufactured homes and 
 91.7   sectional structures taxed as personal property shall contain 
 91.8   the same information that is required on the tax statements for 
 91.9   real property.  
 91.10     (c) Real and personal property tax statements must contain 
 91.11  the following information in the order given in this paragraph.  
 91.12  The information must contain the current year tax information in 
 91.13  the right column with the corresponding information for the 
 91.14  previous year in a column on the left: 
 91.15     (1) the property's estimated market value under section 
 91.16  273.11, subdivision 1; 
 91.17     (2) the property's taxable market value after reductions 
 91.18  under section 273.11, subdivisions 1a and 16; 
 91.19     (3) the property's gross tax, calculated by adding the 
 91.20  property's total property tax to the sum of the aids enumerated 
 91.21  in clause (4); 
 91.22     (4) a total of the following aids: 
 91.23     (i) education aids payable under chapters 122A, 123A, 123B, 
 91.24  124D, 125A, 126C, and 127A; 
 91.25     (ii) local government aids for cities, towns, and counties 
 91.26  under chapter 477A; 
 91.27     (iii) disparity reduction aid under section 273.1398; and 
 91.28     (iv) homestead and agricultural credit aid under section 
 91.29  273.1398; 
 91.30     (5) for homestead residential and agricultural properties, 
 91.31  the credits under section 273.1384; 
 91.32     (6) any credits received under sections 273.119; 273.123; 
 91.33  273.135; 273.1391; 273.1398, subdivision 4; 469.171; and 
 91.34  473H.10, except that the amount of credit received under section 
 91.35  273.135 must be separately stated and identified as "taconite 
 91.36  tax relief"; and 
 92.1      (7) the net tax payable in the manner required in paragraph 
 92.2   (a). 
 92.3      (d) If the county uses envelopes for mailing property tax 
 92.4   statements and if the county agrees, a taxing district may 
 92.5   include a notice with the property tax statement notifying 
 92.6   taxpayers when the taxing district will begin its budget 
 92.7   deliberations for the current year, and encouraging taxpayers to 
 92.8   attend the hearings.  If the county allows notices to be 
 92.9   included in the envelope containing the property tax statement, 
 92.10  and if more than one taxing district relative to a given 
 92.11  property decides to include a notice with the tax statement, the 
 92.12  county treasurer or auditor must coordinate the process and may 
 92.13  combine the information on a single announcement.  
 92.14     The commissioner of revenue shall certify to the county 
 92.15  auditor the actual or estimated aids enumerated in clause (4) 
 92.16  that local governments will receive in the following year.  The 
 92.17  commissioner must certify this amount by January 1 of each year. 
 92.18     <h>[EFFECTIVE DATE.]</h> This section is effective for property 
 92.19  tax statements prepared in 2003 and thereafter. 
 92.20     Sec. 24.  Laws 1998, chapter 389, article 3, section 42, is 
 92.21  amended to read: 
 92.22     Sec. 42.  [TRANSFER OF PROPERTY; PAYMENT OF DEFERRED 
 92.23  TAXES.] 
 92.24     Subdivision 1.  [ADDITIONAL TAX.] The assessor shall make a 
 92.25  separate determination of the market value and net tax capacity 
 92.26  of a property qualifying under section 38 as if sections 39 and 
 92.27  40 did not apply.  The tax based upon the appropriate local tax 
 92.28  rate applicable to such property in the taxing district shall be 
 92.29  recorded on the property assessment records. 
 92.30     Subd. 2.  [RECAPTURE.] (a) Property or any portion thereof 
 92.31  qualifying under section 38 is subject to additional taxes if: 
 92.32     (1) ownership of the property is transferred to anyone 
 92.33  other than the spouse or child of the current owner, or; 
 92.34     (2) the current owner or the spouse or child of the current 
 92.35  owner has not conveyed or entered into a contract before July 1, 
 92.36  2002 2007, to convey the property to a nonprofit foundation or 
 93.1   corporation created to own and operate operating the property as 
 93.2   an art park providing the services included in section 38, 
 93.3   clauses (2) to (5); or 
 93.4      (3) the nonprofit foundation or corporation to which the 
 93.5   property was transferred ceases to provide the services included 
 93.6   in section 38, clauses (2) to (5), earlier than ten years 
 93.7   following the effective date of the conveyance or of the 
 93.8   execution of the contract to convey. 
 93.9      (b) The additional taxes are imposed at the earlier of (1) 
 93.10  the year following transfer of ownership to anyone other than 
 93.11  the spouse or child of the current owner or a nonprofit 
 93.12  foundation or corporation created to own and operate operating 
 93.13  the property as an art park, or (2) for taxes payable in 2003 
 93.14  2008, or in the event the nonprofit foundation or corporation to 
 93.15  which the property was conveyed ceases to provide the required 
 93.16  services within ten years after the conveyance, for taxes 
 93.17  payable in the year following the year when it ceased to do so.  
 93.18  The additional taxes are equal to the difference between the 
 93.19  taxes determined under sections 39 and 40 and the amount 
 93.20  determined under subdivision 1 for all years that the property 
 93.21  qualified under section 38.  The additional taxes must be 
 93.22  extended against the property on the tax list for the current 
 93.23  year; provided, however, that no interest or penalties may be 
 93.24  levied on the additional taxes if timely paid. 
 93.25     Subd. 3.  [CURRENT OWNER.] For purposes of this section, 
 93.26  "current owner" means the owner of property qualifying under 
 93.27  section 38 on the date of final enactment of this act or that 
 93.28  owner's spouse or child.  
 93.29     Subd. 4.  [NONPROFIT FOUNDATION OR CORPORATION.] For 
 93.30  purposes of this act, "nonprofit foundation or corporation" 
 93.31  means a nonprofit entity created to own and operate as defined 
 93.32  under section 501(c)(3) of the Internal Revenue Code that is 
 93.33  operating the property as an art park providing the services 
 93.34  included in section 38, clauses (2) to (5). 
 93.35     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
 93.36  following final enactment. 
 94.1      Sec. 25.  [COOK COUNTY; EXPENDITURE OF ROAD AND BRIDGE 
 94.2   LEVY.] 
 94.3      Notwithstanding Minnesota Statutes, section 163.06, 
 94.4   subdivisions 4 and 5, the county board of Cook county, by 
 94.5   resolution, may expend the proceeds of the levy under Minnesota 
 94.6   Statutes, section 163.06, in any organized or unorganized 
 94.7   township or portion thereof in the county. 
 94.8      <h>[EFFECTIVE DATE.]</h> This section is effective the day after 
 94.9   the governing body of Cook county and its chief clerical officer 
 94.10  timely complete their compliance with Minnesota Statutes, 
 94.11  section 645.021, subdivisions 2 and 3. 
 94.12     Sec. 26.  [REPEALER.] 
 94.13     Laws 2001, First Special Session chapter 5, article 3, 
 94.14  section 88, is repealed effective July 1, 2002. 
 94.15                             ARTICLE 5
 94.16                   EDUCATION LEVIES AND REVENUES
 94.17     Section 1.  Minnesota Statutes 2001 Supplement, section 
 94.18  124D.86, subdivision 3, is amended to read: 
 94.19     Subd. 3.  [INTEGRATION REVENUE.] Integration revenue equals 
 94.20  the following amounts: 
 94.21     (1) for independent school district No. 709, Duluth, $207 
 94.22  times the adjusted pupil units for the school year; 
 94.23     (2) for independent school district No. 625, St. Paul, and 
 94.24  for special school district No. 1, Minneapolis, $446 times the 
 94.25  adjusted pupil units for the school year; 
 94.26     (3) for special school district No. 1, Minneapolis, the sum 
 94.27  of $446 times the adjusted pupil units for the school year and 
 94.28  an additional $35 times the adjusted pupil units for the school 
 94.29  year that is provided entirely through a local levy; 
 94.30     (4) for a district not listed in clause (1) or, (2), or 
 94.31  (3), that must implement a plan under Minnesota Rules, parts 
 94.32  3535.0100 to 3535.0180, where the district's enrollment of 
 94.33  protected students, as defined under Minnesota Rules, part 
 94.34  3535.0110, exceeds 15 percent, the lesser of (i) the actual cost 
 94.35  of implementing the plan during the fiscal year minus the aid 
 94.36  received under subdivision 6, or (ii) $130 times the adjusted 
 95.1   pupil units for the school year; 
 95.2      (4) (5) for a district not listed in clause (1), (2), 
 95.3   or (3), or (4), that is required to implement a plan according 
 95.4   to the requirements of Minnesota Rules, parts 3535.0100 to 
 95.5   3535.0180, the lesser of 
 95.6      (i) the actual cost of implementing the plan during the 
 95.7   fiscal year minus the aid received under subdivision 6, or 
 95.8      (ii) $93 times the adjusted pupil units for the school year.
 95.9      Any money received by districts in clauses (1) to (3) (4) 
 95.10  which exceeds the amount received in fiscal year 2000 shall be 
 95.11  subject to the budget requirements in subdivision 1a; and 
 95.12     (5) (6) for a member district of a multidistrict 
 95.13  integration collaborative that files a plan with the 
 95.14  commissioner, but is not contiguous to a racially isolated 
 95.15  district, integration revenue equals the amount defined in 
 95.16  clause (4) (5). 
 95.17     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
 95.18  following final enactment for revenue for fiscal year 2003. 
 95.19     Sec. 2.  Minnesota Statutes 2001 Supplement, section 
 95.20  126C.40, subdivision 1, is amended to read: 
 95.21     Subdivision 1.  [TO LEASE BUILDING OR LAND.] (a) When a an 
 95.22  independent or a special school district or a group of 
 95.23  independent or special school districts finds it economically 
 95.24  advantageous to rent or lease a building or land for any 
 95.25  instructional purposes or for school storage or furniture 
 95.26  repair, and it determines that the operating capital revenue 
 95.27  authorized under section 126C.10, subdivision 13, is 
 95.28  insufficient for this purpose, it may apply to the commissioner 
 95.29  for permission to make an additional capital expenditure levy 
 95.30  for this purpose.  An application for permission to levy under 
 95.31  this subdivision must contain financial justification for the 
 95.32  proposed levy, the terms and conditions of the proposed lease, 
 95.33  and a description of the space to be leased and its proposed use.
 95.34     (b) The criteria for approval of applications to levy under 
 95.35  this subdivision must include:  the reasonableness of the price, 
 95.36  the appropriateness of the space to the proposed activity, the 
 96.1   feasibility of transporting pupils to the leased building or 
 96.2   land, conformity of the lease to the laws and rules of the state 
 96.3   of Minnesota, and the appropriateness of the proposed lease to 
 96.4   the space needs and the financial condition of the district.  
 96.5   The commissioner must not authorize a levy under this 
 96.6   subdivision in an amount greater than the cost to the district 
 96.7   of renting or leasing a building or land for approved purposes.  
 96.8   The proceeds of this levy must not be used for custodial or 
 96.9   other maintenance services.  A district may not levy under this 
 96.10  subdivision for the purpose of leasing or renting a 
 96.11  district-owned building or site to itself. 
 96.12     (c) For agreements finalized after July 1, 1997, a district 
 96.13  may not levy under this subdivision for the purpose of leasing:  
 96.14  (1) a newly constructed building used primarily for regular 
 96.15  kindergarten, elementary, or secondary instruction; or (2) a 
 96.16  newly constructed building addition or additions used primarily 
 96.17  for regular kindergarten, elementary, or secondary instruction 
 96.18  that contains more than 20 percent of the square footage of the 
 96.19  previously existing building. 
 96.20     (d) Notwithstanding paragraph (b), a district may levy 
 96.21  under this subdivision for the purpose of leasing or renting a 
 96.22  district-owned building or site to itself only if the amount is 
 96.23  needed by the district to make payments required by a lease 
 96.24  purchase agreement, installment purchase agreement, or other 
 96.25  deferred payments agreement authorized by law, and the levy 
 96.26  meets the requirements of paragraph (c).  A levy authorized for 
 96.27  a district by the commissioner under this paragraph may be in 
 96.28  the amount needed by the district to make payments required by a 
 96.29  lease purchase agreement, installment purchase agreement, or 
 96.30  other deferred payments agreement authorized by law, provided 
 96.31  that any agreement include a provision giving the school 
 96.32  districts the right to terminate the agreement annually without 
 96.33  penalty. 
 96.34     (e) The total levy under this subdivision for a district 
 96.35  for any year must not exceed $100 times the resident pupil units 
 96.36  for the fiscal year to which the levy is attributable. 
 97.1      (f) For agreements for which a review and comment have been 
 97.2   submitted to the department of children, families, and learning 
 97.3   after April 1, 1998, the term "instructional purpose" as used in 
 97.4   this subdivision excludes expenditures on stadiums. 
 97.5      (g) The commissioner of children, families, and learning 
 97.6   may authorize a school district to exceed the limit in paragraph 
 97.7   (e) if the school district petitions the commissioner for 
 97.8   approval.  The commissioner shall grant approval to a school 
 97.9   district to exceed the limit in paragraph (e) for not more than 
 97.10  five years if the district meets the following criteria: 
 97.11     (1) the school district has been experiencing pupil 
 97.12  enrollment growth in the preceding five years; 
 97.13     (2) the purpose of the increased levy is in the long-term 
 97.14  public interest; 
 97.15     (3) the purpose of the increased levy promotes colocation 
 97.16  of government services; and 
 97.17     (4) the purpose of the increased levy is in the long-term 
 97.18  interest of the district by avoiding over construction of school 
 97.19  facilities. 
 97.20     (h) A school district that is a member of an intermediate 
 97.21  school district may include in its authority under this section 
 97.22  the costs associated with leases of administrative and classroom 
 97.23  space for intermediate school district programs.  This authority 
 97.24  must not exceed $25 times the adjusted marginal cost pupil units 
 97.25  of the member districts.  This authority is in addition to any 
 97.26  other authority authorized under this section. 
 97.27     (i) In addition to the allowable capital levies in 
 97.28  paragraph (a), a district that is a member of the "Technology 
 97.29  and Information Education Systems" data processing joint board, 
 97.30  that finds it economically advantageous to enter into a lease 
 97.31  purchase agreement for a building for a group of school 
 97.32  districts or special school districts for staff development 
 97.33  purposes, may levy for its portion of lease costs attributed to 
 97.34  the district within the total levy limit in paragraph (e). 
 97.35     <h>[EFFECTIVE DATE.]</h> This section is effective for taxes 
 97.36  payable in 2003. 
 98.1      Sec. 3.  Minnesota Statutes 2001 Supplement, section 
 98.2   126C.43, subdivision 3, is amended to read: 
 98.3      Subd. 3.  [TAX LEVY FOR JUDGMENT.] A district may levy the 
 98.4   amounts necessary to pay judgments against the district under 
 98.5   section 123B.25 that became final after the date the district 
 98.6   certified its proposed levy in the previous year.  With the 
 98.7   approval of the commissioner, a district may spread this levy 
 98.8   over a period not to exceed three years.  Upon approval through 
 98.9   the adoption of a resolution by each of an intermediate 
 98.10  district's member school district boards, a member school 
 98.11  district may include its proportionate share of the costs of a 
 98.12  judgment against an intermediate school district that became 
 98.13  final under section 123B.25 after the date that the earliest 
 98.14  member school district certified its proposed levy in the 
 98.15  previous year.  With the approval of the commissioner, an 
 98.16  intermediate school district member school district may spread 
 98.17  this levy over a period not to exceed three years. 
 98.18     <h>[EFFECTIVE DATE.]</h> This section is effective for taxes 
 98.19  payable in 2003. 
 98.20     Sec. 4.  Minnesota Statutes 2000, section 126C.44, is 
 98.21  amended to read: 
 98.22     126C.44 [CRIME-RELATED COSTS SAFE SCHOOLS LEVY.] 
 98.23     Each district may make a levy on all taxable property 
 98.24  located within the district for the purposes specified in this 
 98.25  section.  The maximum amount which may be levied for all costs 
 98.26  under this section shall be equal to $11 $30 multiplied by the 
 98.27  district's adjusted marginal cost pupil units for the school 
 98.28  year.  The proceeds of the levy must be used for directly 
 98.29  funding the following purposes or for reimbursing the cities and 
 98.30  counties who contract with the district for the following 
 98.31  purposes:  (1) to pay the costs incurred for the salaries, 
 98.32  benefits, and transportation costs of peace officers and 
 98.33  sheriffs for liaison in services in the district's schools; (2) 
 98.34  to pay the costs for a drug abuse prevention program as defined 
 98.35  in section 609.101, subdivision 3, paragraph (e), in the 
 98.36  elementary schools; (3) to pay the costs for a gang resistance 
 99.1   education training curriculum in the district's schools; (4) to 
 99.2   pay the costs for security in the district's schools and on 
 99.3   school property; or (5) to pay the costs for other crime 
 99.4   prevention, drug abuse, student and staff safety, and violence 
 99.5   prevention measures taken by the school district.  The district 
 99.6   must initially attempt to contract for services to be provided 
 99.7   by peace officers or sheriffs with the police department of each 
 99.8   city or the sheriff's department of the county within the 
 99.9   district containing the school receiving the services.  If a 
 99.10  local police department or a county sheriff's department does 
 99.11  not wish to provide the necessary services, the district may 
 99.12  contract for these services with any other police or sheriff's 
 99.13  department located entirely or partially within the school 
 99.14  district's boundaries.  The levy authorized under this section 
 99.15  is not included in determining the school district's levy 
 99.16  limitations. 
 99.17     <h>[EFFECTIVE DATE.]</h> This section is effective for taxes 
 99.18  payable in 2003. 
 99.19     Sec. 5.  Laws 2001, First Special Session chapter 6, 
 99.20  article 1, section 53, is amended to read: 
 99.21     Sec. 53.  [REFERENDUM CONVERSION ADJUSTMENT FOR INTEREST 
 99.22  EARNED.] 
 99.23     (a) The commissioner of children, families, and learning 
 99.24  shall calculate the change in estimated net interest earnings 
 99.25  for each district attributable to the repeal of the general 
 99.26  education levy as provided in this section. 
 99.27     (b) The interest calculations must assume an annual 
 99.28  interest rate of five percent, and must be based on the amount 
 99.29  by which the district's cumulative net general education levy 
 99.30  receipts for taxes payable in 2000, based on the assumptions 
 99.31  specified in Minnesota Statutes, section 127A.45, subdivision 8, 
 99.32  exceeds the cumulative amount that would have been guaranteed 
 99.33  for each payment in fiscal year 2001, as defined in Minnesota 
 99.34  Statutes, section 127A.45, subdivisions 2 and 3, calculated 
 99.35  using data as of the June 20, 2001, payment, and assuming that 
 99.36  the repeal of the general education levy was effective for 
100.1   fiscal year 2001.  The commissioner shall divide the interest 
100.2   revenue in fiscal year 2001 by the number of resident marginal 
100.3   cost pupil units in fiscal year 2001.  The interest calculations 
100.4   must assume an annual interest rate of five percent, and must be 
100.5   based on the difference between (1) the district's estimated aid 
100.6   payments and levy receipts for fiscal year 2003, based upon the 
100.7   payment schedule specified in Minnesota Statutes, section 
100.8   127A.45, and (2) the amount that the district's estimated aid 
100.9   payments and levy receipts for fiscal year 2003 would have been 
100.10  had the general education levy for fiscal year 2003 been set at 
100.11  the amount of the district's general education levy for taxes 
100.12  payable in 2001.  For the purposes of this section, the general 
100.13  education levy must not include the education homestead credit 
100.14  or the education agricultural credit. 
100.15     (c) The amount calculated in paragraph (a) may be converted 
100.16  to an additional referendum allowance according to Minnesota 
100.17  Statutes, section 126C.17, subdivision 11.  The amount 
100.18  calculated in paragraph (b), less any interest conversion 
100.19  revenue calculated for the district under Laws 2001, First 
100.20  Special Session chapter 6, article 1, section 53, is added to 
100.21  the district's levy limitation for taxes payable in 2003 through 
100.22  2006. 
100.23     (d) Any additional referendum allowance as a result of a 
100.24  conversion under paragraph (b) shall be included in the 
100.25  referendum conversion allowance used to determine the referendum 
100.26  allowance limit under Minnesota Statutes, section 126C.17, 
100.27  subdivision 2.  If the state total levy under paragraph (c) 
100.28  exceeds $3,000,000, the commissioner shall reduce the levy 
100.29  authority proportionately for each eligible district such that 
100.30  the state total levy equals $3,000,000. 
100.31     (e) The commissioner must calculate an adjustment for taxes 
100.32  payable in 2002 for each school district as though this section 
100.33  were in effect for that tax year. 
100.34     <h>[EFFECTIVE DATE.]</h> This section is effective for revenue for 
100.35  taxes payable in 2003 and later. 
100.36     Sec. 6.  Laws 2001, First Special Session chapter 6, 
101.1   article 4, section 25, is amended to read: 
101.2      Sec. 25.  [INTERACTIVE WEB-BASED AND INDEPENDENT STUDY 
101.3   PROGRAMS.] 
101.4      Subdivision 1.  [PUPIL REVENUE.] (a) General education 
101.5   revenue for an eligible pupil in an approved interactive 
101.6   Web-based program offered by a school district or a charter 
101.7   school, or an approved alternative program that has an 
101.8   independent study component offered by a charter school, under 
101.9   the supervision of a teacher with a Minnesota license, must be 
101.10  paid for each hour of completed coursework needed for grade 
101.11  progression, credit, or alignment with state graduation 
101.12  standards.  For purposes of this section, an eligible pupil is a 
101.13  public school pupil concurrently enrolled in the district or 
101.14  charter school or concurrently enrolled in another district or 
101.15  charter school and participating in the program by agreement 
101.16  with the district or charter school of enrollment.  The course 
101.17  of study must be approved by the commissioner of children, 
101.18  families, and learning for alignment with the state graduation 
101.19  standards and compliance with Minnesota Statutes, chapter 125A.  
101.20  An alternative program that has an independent study component 
101.21  must also meet the requirements of Minnesota Statutes, section 
101.22  126C.05, subdivision 15, paragraph (b), clauses (i) and (iv).  
101.23  Average daily membership for a pupil shall equal the number of 
101.24  hours of coursework completed divided by the number of hours 
101.25  required for a full-time student in the district or charter 
101.26  school.  Pupils enrolled in the program must not be counted as 
101.27  more than 1.0 pupil in average daily membership.  A school 
101.28  district or charter school is not required to provide a pupil 
101.29  enrolled in the program with access to a computer or to the 
101.30  Internet. 
101.31     (b) Notwithstanding paragraph (a), pupils enrolled in a 
101.32  Web-based public alternative program approved by the 
101.33  commissioner before June 1, 2001, are not required to be 
101.34  concurrently enrolled in the district and may be counted as more 
101.35  than 1.0 pupil in average daily membership under Minnesota 
101.36  Statutes, section 126C.05, subdivision 15. 
102.1      (c) Notwithstanding paragraph (a), pupils enrolled in a 
102.2   charter school with a Web-based program, approved by the 
102.3   commissioner before June 1, 2001, are not required to be 
102.4   concurrently enrolled in the charter school. 
102.5      (d) Notwithstanding paragraph (a), pupils enrolled in a 
102.6   charter school with an alternative program that has an 
102.7   independent study component, approved by the commissioner for 
102.8   fiscal year 2001, may be counted as more than 1.0 pupil in 
102.9   average daily membership under Minnesota Statutes, section 
102.10  126C.05, subdivision 15, paragraph (b), clause (iii). 
102.11     Subd. 2.  [REIMBURSEMENT.] Notwithstanding Minnesota 
102.12  Statutes, section 126C.19, subdivision 4, for fiscal year years 
102.13  2002 and 2003 only, the commissioner shall establish a process 
102.14  for providing additional revenue to school districts or charter 
102.15  schools for: 
102.16     (1) an eligible pupil in an approved interactive Web-based 
102.17  program under subdivision 1, paragraph (a), that may be counted 
102.18  as more than 1.0 pupil in average daily membership; or 
102.19     (2) a nonpublic pupil in an approved interactive Web-based 
102.20  program in a public school under subdivision 1, paragraph (a).  
102.21  The commissioner may award additional general education revenue 
102.22  to school districts and charter schools up to the amount 
102.23  appropriated for this section.  The amount of additional revenue 
102.24  awarded to a school district under this section shall be based 
102.25  on additional pupils in average daily membership that are 
102.26  generated according to this subdivision with the prior approval 
102.27  from the commissioner.  The commissioner shall establish a 
102.28  process to prioritize the awards under this subdivision based on 
102.29  the estimated number of students the school district or charter 
102.30  school expects to serve under this section. 
102.31     <h>[EFFECTIVE DATE.]</h> This section is effective for revenue for 
102.32  fiscal year 2003 only. 
102.33     Sec. 7.  Laws 2001, First Special Session chapter 6, 
102.34  article 4, section 27, subdivision 9, is amended to read: 
102.35     Subd. 9.  [REIMBURSEMENT FOR WEB-BASED AND INDEPENDENT 
102.36  STUDY COURSES.] For grants to school districts and charter 
103.1   schools for additional pupils taking on-line courses according 
103.2   to section 25: 
103.3        $100,000     .....     2002 
103.4      This appropriation is available until June 30, 2003. 
103.5      Sec. 8.  [DISABLED ACCESS LEVY AUTHORITY; WESTBROOK-WALNUT 
103.6   GROVE.] 
103.7      Notwithstanding the time limit in Minnesota Statutes, 
103.8   section 123B.58, subdivision 3, independent school district No. 
103.9   2898, Westbrook-Walnut Grove, may levy its remaining disabled 
103.10  access levy authority over five or fewer years. 
103.11     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
103.12  following final enactment. 
103.13     Sec. 9.  [DISABLED ACCESS LEVY AUTHORITY; PINE CITY.] 
103.14     Notwithstanding the time limits in Minnesota Statutes, 
103.15  section 123B.58, subdivision 3, independent school district No. 
103.16  578, Pine City, may levy its remaining disabled access levy 
103.17  authority over five or fewer years.  
103.18     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
103.19  following final enactment. 
103.20                             ARTICLE 6
103.21                          AIDS AND LEVIES
103.22     Section 1.  Minnesota Statutes 2000, section 69.77, is 
103.23  amended by adding a subdivision to read: 
103.24     Subd. 12.  [APPLICATION OF OTHER LAWS TO CONTRIBUTION 
103.25  RATE.] In the absence of any specific provision to the contrary, 
103.26  no general or special law previously enacted may be construed as 
103.27  reducing the levy amount or rate of contribution to a police or 
103.28  firefighters relief association to which subdivision 1a applies, 
103.29  by a municipality or member of the association, which is 
103.30  required as a condition for the use of public funds or the levy 
103.31  of taxes for the support of the association.  Each association, 
103.32  the municipality in which it is organized, and the officers of 
103.33  each, are authorized to do all things required by this section 
103.34  as a condition for the use of public funds or the levy of taxes 
103.35  for the support of the association. 
103.36     Sec. 2.  [126C.445] [TREE GROWTH REPLACEMENT REVENUE.] 
104.1      For taxes payable in 2003 and later, a school district may 
104.2   levy an amount not to exceed its miscellaneous revenue for tree 
104.3   growth revenue for taxes payable in 2001.  
104.4      <h>[EFFECTIVE DATE.]</h> This section is effective beginning with 
104.5   taxes levied in 2002, payable in 2003.  
104.6      Sec. 3.  Minnesota Statutes 2000, section 273.1398, 
104.7   subdivision 3, is amended to read: 
104.8      Subd. 3.  [DISPARITY REDUCTION AID.] (a) For taxes payable 
104.9   in 1995, 2003 and subsequent years, the amount of disparity aid 
104.10  certified for each taxing district within each unique taxing 
104.11  jurisdiction for taxes payable in the prior year shall be 
104.12  multiplied by the ratio of (1) the jurisdiction's tax capacity 
104.13  using the class rates for taxes payable in the year for which 
104.14  aid is being computed, to (2) its tax capacity using the class 
104.15  rates for taxes payable in the year prior to that for which aid 
104.16  is being computed, both based upon market values for taxes 
104.17  payable in the year prior to that for which aid is being 
104.18  computed.  For the purposes of this aid determination, disparity 
104.19  reduction aid certified for taxes payable in the prior year for 
104.20  a taxing entity other than a town or school district is deemed 
104.21  to be county government disparity reduction aid.  For taxes 
104.22  payable in 1992 and subsequent years, The amount of disparity 
104.23  aid certified to each taxing jurisdiction shall be reduced by 
104.24  any reductions required in the current year or permanent 
104.25  reductions required in previous years under section 477A.0132. 
104.26     (b) For aid payable in 2003, in each unique taxing 
104.27  jurisdiction where the total tax rate for taxes payable in 2002 
104.28  exceeds 135 percent of taxable net tax capacity, an amount shall 
104.29  be permanently added to the unique taxing jurisdiction's aid 
104.30  amount under paragraph (a) equal to the lesser of:  (i) the 
104.31  amount, if any, by which 87 percent of the aid certified for 
104.32  2001 exceeds the amount certified for 2002, or (ii) the amount 
104.33  that would be necessary to reduce the total payable 2002 tax 
104.34  rate for the unique taxing jurisdiction to 135 percent of 
104.35  taxable net tax capacity.  The amount determined under this 
104.36  paragraph must be added before the class rate adjustment 
105.1   described in paragraph (a). 
105.2      <h>[EFFECTIVE DATE.]</h> This section is effective for aids 
105.3   payable in 2003 and subsequent years. 
105.4      Sec. 4.  Minnesota Statutes 2001 Supplement, section 
105.5   273.1398, subdivision 4d, is amended to read: 
105.6      Subd. 4d.  [AID OFFSET FOR OUT-OF-HOME PLACEMENT COSTS.] 
105.7   For aid payable in 2003 2004, each county's aid under 
105.8   subdivision 2 shall be permanently reduced by an amount equal to 
105.9   the county's 2003 2004 reimbursement for nonfederal expenditures 
105.10  for out-of-home placements, as provided in section 245.775, 
105.11  provided that payments will be made under section 477A.0123 in 
105.12  calendar year 2003 2004.  The counties shall provide all 
105.13  information requested by the commissioner of human services 
105.14  necessary to allow the commissioner to certify the previous 
105.15  three years' average nonfederal costs to the commissioner of 
105.16  revenue by July 15, 2003 2004.  The aid reduction under this 
105.17  subdivision must be made prior to not exceed the difference 
105.18  between (1) the amount of aid calculated for the county for 
105.19  calendar year 2004 under subdivision 2, including any addition 
105.20  under section 477A.07, and (2) the amount of any aid reductions 
105.21  for the state takeover of courts contained in Laws 2001, First 
105.22  Special Session chapter 5, article 5. 
105.23     <h>[EFFECTIVE DATE.]</h> This section is effective for aids 
105.24  payable in 2004.  
105.25     Sec. 5.  Minnesota Statutes 2001 Supplement, section 
105.26  275.70, subdivision 5, is amended to read: 
105.27     Subd. 5.  [SPECIAL LEVIES.] "Special levies" means those 
105.28  portions of ad valorem taxes levied by a local governmental unit 
105.29  for the following purposes or in the following manner: 
105.30     (1) to pay the costs of the principal and interest on 
105.31  bonded indebtedness or to reimburse for the amount of liquor 
105.32  store revenues used to pay the principal and interest due on 
105.33  municipal liquor store bonds in the year preceding the year for 
105.34  which the levy limit is calculated; 
105.35     (2) to pay the costs of principal and interest on 
105.36  certificates of indebtedness issued for any corporate purpose 
106.1   except for the following: 
106.2      (i) tax anticipation or aid anticipation certificates of 
106.3   indebtedness; 
106.4      (ii) certificates of indebtedness issued under sections 
106.5   298.28 and 298.282; 
106.6      (iii) certificates of indebtedness used to fund current 
106.7   expenses or to pay the costs of extraordinary expenditures that 
106.8   result from a public emergency; or 
106.9      (iv) certificates of indebtedness used to fund an 
106.10  insufficiency in tax receipts or an insufficiency in other 
106.11  revenue sources; 
106.12     (3) to provide for the bonded indebtedness portion of 
106.13  payments made to another political subdivision of the state of 
106.14  Minnesota; 
106.15     (4) to fund payments made to the Minnesota state armory 
106.16  building commission under section 193.145, subdivision 2, to 
106.17  retire the principal and interest on armory construction bonds; 
106.18     (5) property taxes approved by voters which are levied 
106.19  against the referendum market value as provided under section 
106.20  275.61; 
106.21     (6) to fund matching requirements needed to qualify for 
106.22  federal or state grants or programs to the extent that either 
106.23  (i) the matching requirement exceeds the matching requirement in 
106.24  calendar year 2001, or (ii) it is a new matching requirement 
106.25  that didn't exist prior to 2002; 
106.26     (7) to pay the expenses reasonably and necessarily incurred 
106.27  in preparing for or repairing the effects of natural disaster 
106.28  including the occurrence or threat of widespread or severe 
106.29  damage, injury, or loss of life or property resulting from 
106.30  natural causes, in accordance with standards formulated by the 
106.31  emergency services division of the state department of public 
106.32  safety, as allowed by the commissioner of revenue under section 
106.33  275.74, paragraph (b); 
106.34     (8) pay amounts required to correct an error in the levy 
106.35  certified to the county auditor by a city or county in a levy 
106.36  year, but only to the extent that when added to the preceding 
107.1   year's levy it is not in excess of an applicable statutory, 
107.2   special law or charter limitation, or the limitation imposed on 
107.3   the governmental subdivision by sections 275.70 to 275.74 in the 
107.4   preceding levy year; 
107.5      (9) to pay an abatement under section 469.1815; 
107.6      (10) to pay any costs attributable to increases in the 
107.7   employer contribution rates under chapter 353 that are effective 
107.8   after June 30, 2001; 
107.9      (11) to pay the operating or maintenance costs of a county 
107.10  jail as authorized in section 641.01 or 641.262, or of a 
107.11  correctional facility as defined in section 241.021, subdivision 
107.12  1, paragraph (5), to the extent that the county can demonstrate 
107.13  to the commissioner of revenue that the amount has been included 
107.14  in the county budget as a direct result of a rule, minimum 
107.15  requirement, minimum standard, or directive of the department of 
107.16  corrections, or to pay the operating or maintenance costs of a 
107.17  regional jail as authorized in section 641.262.  For purposes of 
107.18  this clause, a district court order is not a rule, minimum 
107.19  requirement, minimum standard, or directive of the department of 
107.20  corrections.  If the county utilizes this special levy, any 
107.21  amount levied by the county in the previous levy year for the 
107.22  purposes specified under this clause and included in the 
107.23  county's previous year's levy limitation computed under section 
107.24  275.71, shall be deducted from the levy limit base under section 
107.25  275.71, subdivision 2, when determining the county's current 
107.26  year levy limitation.  The county shall provide the necessary 
107.27  information to the commissioner of revenue for making this 
107.28  determination; 
107.29     (12) to pay for operation of a lake improvement district, 
107.30  as authorized under section 103B.555.  If the county utilizes 
107.31  this special levy, any amount levied by the county in the 
107.32  previous levy year for the purposes specified under this clause 
107.33  and included in the county's previous year's levy limitation 
107.34  computed under section 275.71 shall be deducted from the levy 
107.35  limit base under section 275.71, subdivision 2, when determining 
107.36  the county's current year levy limitation.  The county shall 
108.1   provide the necessary information to the commissioner of revenue 
108.2   for making this determination; 
108.3      (13) to repay a state or federal loan used to fund the 
108.4   direct or indirect required spending by the local government due 
108.5   to a state or federal transportation project or other state or 
108.6   federal capital project.  This authority may only be used if the 
108.7   project is not a local government initiative; 
108.8      (14) for counties only, to pay the costs reasonably 
108.9   expected to be incurred in 2002 related to the redistricting of 
108.10  election districts and establishment of election precincts under 
108.11  sections 204B.135 and 204B.14, the notice required by section 
108.12  204B.14, subdivision 4, and the reassignment of voters in the 
108.13  statewide registration system, not to exceed $1 per capita, 
108.14  provided that the county shall distribute a portion of the 
108.15  amount levied under this clause equal to 25 cents times the 
108.16  population of the city to all cities in the county with a 
108.17  population of 30,000 or more; and 
108.18     (15) to pay for court administration costs as required 
108.19  under section 273.1398, subdivision 4b, less the county's share 
108.20  of transferred fines and fees collected by the district courts 
108.21  in the county for calendar year 2001; however, for taxes levied 
108.22  to pay for these costs in the year in which the court financing 
108.23  is transferred to the state, the amount under this section is 
108.24  limited to one-third of the aid reduction under section 
108.25  273.1398, subdivision 4a; and 
108.26     (16) to fund a police or firefighters relief association as 
108.27  required under section 69.77 to the extent that the required 
108.28  amount exceeds the amount levied for this purpose in 2001. 
108.29     <h>[EFFECTIVE DATE.]</h> This section is effective for taxes 
108.30  levied beginning in 2002. 
108.31     Sec. 6.  Minnesota Statutes 2001 Supplement, section 
108.32  275.71, subdivision 2, is amended to read: 
108.33     Subd. 2.  [LEVY LIMIT BASE.] (a) The levy limit base for a 
108.34  local governmental unit for taxes levied in 2001 is equal to the 
108.35  greater of: 
108.36     (1) the sum of its adjusted levy limit base for taxes 
109.1   levied in 1999 plus the amount it levied in 1999 under Minnesota 
109.2   Statutes 1999 Supplement, section 275.70, subdivision 5, clauses 
109.3   (8) and (13), multiplied by: 
109.4      (i) one plus the percentage growth in the implicit price 
109.5   deflator for the 12-month period ending March 30, 2000; 
109.6      (ii) one plus a percentage equal to the annual percentage 
109.7   increase in the estimated number of households, if any, for the 
109.8   most recent 12-month period that was available on July 1, 2000; 
109.9   and 
109.10     (iii) one plus a percentage equal to 50 percent of the 
109.11  percentage increase in the taxable market value of the 
109.12  jurisdiction due to new construction of class 3 property, as 
109.13  defined in section 273.13, subdivision 24, except for 
109.14  state-assessed utility and railroad operating property, for the 
109.15  most recent year for which data was available as of July 1, 
109.16  2000; or 
109.17     (2) an amount equal to: 
109.18     (i) the sum of the amount it levied in 2000 plus the amount 
109.19  of aids it was certified to receive in calendar year 2001 under 
109.20  sections 273.1398, 298.282, 477A.011 to 477A.03, prior to any 
109.21  aid reductions under section 273.1399, subdivision 5, 477A.06, 
109.22  and 477A.065; less 
109.23     (ii) the amount it levied in 2000 that would qualify as 
109.24  special levies under section 275.70, subdivision 6, for taxes 
109.25  levied in 2001.  The local governmental unit shall provide the 
109.26  commissioner of revenue with sufficient information to make this 
109.27  calculation. 
109.28     (b) If the governmental unit was not subject to levy limits 
109.29  for taxes levied in 1999, its levy limit base for taxes levied 
109.30  in 2001 is equal to the amount calculated under paragraph (a), 
109.31  clause (2). 
109.32     (c) The levy limit base for a local governmental unit for 
109.33  taxes levied in 2002 is equal to its adjusted levy limit base in 
109.34  the previous year, plus the amount of tree growth tax it 
109.35  received in calendar year 2001 under sections 270.31 to 270.39, 
109.36  and plus, in the case of a city, the amount it was certified to 
110.1   receive in calendar year 2001 under section 273.166, subject to 
110.2   any adjustments under section 275.72. 
110.3      <h>[EFFECTIVE DATE.]</h> This section is effective for taxes 
110.4   levied in 2002, payable in 2003. 
110.5      Sec. 7.  Minnesota Statutes 2001 Supplement, section 
110.6   275.71, subdivision 3, is amended to read: 
110.7      Subd. 3.  [ADJUSTMENTS FOR STATE TAKEOVERS.] (a) The levy 
110.8   limit base for each local unit of government shall be adjusted 
110.9   to reflect the assumption by the state of financing for certain 
110.10  government functions as indicated in this subdivision. 
110.11     (b) For a county in a judicial district for which financing 
110.12  has not been transferred to the state by January 1, 2001, the 
110.13  levy limit base for 2001 is permanently reduced by the amount of 
110.14  the county's 2001 budget for court administration costs, as 
110.15  certified under section 273.1398, subdivision 4b, paragraph (b), 
110.16  net of the county's share of transferred fines and fees 
110.17  collected by the district courts in the county for the same 
110.18  budget period. 
110.19     (c) For a governmental unit which levied a tax in 2000 
110.20  under section 473.388, subdivision 7, the levy limit base for 
110.21  2001 is permanently reduced by an amount equal to the sum of the 
110.22  governmental unit's taxes payable 2001 nondebt transit services 
110.23  levy plus the portion of its 2001 homestead and agricultural 
110.24  credit aid under section 273.1398, subdivision 2, attributable 
110.25  to nondebt transit services. 
110.26     (d) For counties in a judicial district in which the state 
110.27  assumed financing of mandated services costs as defined in 
110.28  section 480.181, subdivision 4, on July 1, 2001, the levy limit 
110.29  base for taxes levied in 2001 is permanently reduced by an 
110.30  amount equal to one-half of the aid reduction under section 
110.31  273.1398, subdivision 4a, paragraph (g). 
110.32     <h>[EFFECTIVE DATE.]</h> This section is effective retroactively 
110.33  for taxes payable in 2002 and 2003. 
110.34     Sec. 8.  Minnesota Statutes 2001 Supplement, section 
110.35  275.71, subdivision 6, is amended to read: 
110.36     Subd. 6.  [LEVIES IN EXCESS OF LEVY LIMITS.] (a) If the 
111.1   levy made by a city or county exceeds the levy limit provided in 
111.2   sections 275.70 to 275.74, except when the excess levy is due to 
111.3   the rounding of the rate in accordance with section 275.28, the 
111.4   county auditor shall only extend the amount of taxes permitted 
111.5   under sections 275.70 to 275.74, as provided for in section 
111.6   275.16. 
111.7      (b) For taxes levied in 2002, payable in 2003 only, if an 
111.8   error was made in calculating the levy limit adjustment related 
111.9   to a special levy for jails authorized under section 275.70, 
111.10  subdivision 5, clause (11), in the previous year, the following 
111.11  adjustments must be made: 
111.12     (1) the county's levy limit base for taxes levied in 2002 
111.13  must be based on the corrected adjusted levy limit base for 
111.14  taxes levied in 2001; and 
111.15     (2) the county's final levy limit for taxes levied in 2002, 
111.16  payable in 2003, must also be temporarily reduced by an amount 
111.17  equal to the amount of county levy spread in the previous year 
111.18  in excess of the total recalculated levy limit plus authorized 
111.19  special levies for taxes levied in 2001, payable in 2002. 
111.20     (c) The commissioner of revenue shall inform counties 
111.21  affected by paragraph (b) of the levy error and levy adjustments 
111.22  required under this provision by June 15, 2002.  The county may 
111.23  provide additional information to the commissioner indicating 
111.24  why these adjustments may be in error by July 15, 2002.  The 
111.25  commissioner shall certify the final levy adjustment to the 
111.26  affected counties by August 1, 2002.  The levy reduction imposed 
111.27  under paragraph (b), clause (2), may be spread over a period not 
111.28  to exceed three years, upon agreement between the county and the 
111.29  commissioner. 
111.30     <h>[EFFECTIVE DATE.]</h> This section is effective for taxes 
111.31  levied in 2002, payable in 2003 only. 
111.32     Sec. 9.  Minnesota Statutes 2001 Supplement, section 
111.33  477A.011, subdivision 36, is amended to read: 
111.34     Subd. 36.  [CITY AID BASE.] (a) Except as otherwise 
111.35  provided in paragraphs (b) to (o) this subdivision, "city aid 
111.36  base" means, for each city, the sum of the local government aid 
112.1   and equalization aid it was originally certified to receive in 
112.2   calendar year 1993 under Minnesota Statutes 1992, section 
112.3   477A.013, subdivisions 3 and 5, and the amount of disparity 
112.4   reduction aid it received in calendar year 1993 under Minnesota 
112.5   Statutes 1992, section 273.1398, subdivision 3. 
112.6      (b) For aids payable in 1996 and thereafter, a city that in 
112.7   1992 or 1993 transferred an amount from governmental funds to 
112.8   its sewer and water fund, which amount exceeded its net levy for 
112.9   taxes payable in the year in which the transfer occurred, has a 
112.10  "city aid base" equal to the sum of (i) its city aid base, as 
112.11  calculated under paragraph (a), and (ii) one-half of the 
112.12  difference between its city aid distribution under section 
112.13  477A.013, subdivision 9, for aids payable in 1995 and its city 
112.14  aid base for aids payable in 1995. 
112.15     (c) The city aid base for any city with a population less 
112.16  than 500 is increased by $40,000 for aids payable in calendar 
112.17  year 1995 and thereafter, and the maximum amount of total aid it 
112.18  may receive under section 477A.013, subdivision 9, paragraph 
112.19  (c), is also increased by $40,000 for aids payable in calendar 
112.20  year 1995 only, provided that: 
112.21     (i) the average total tax capacity rate for taxes payable 
112.22  in 1995 exceeds 200 percent; 
112.23     (ii) the city portion of the tax capacity rate exceeds 100 
112.24  percent; and 
112.25     (iii) its city aid base is less than $60 per capita. 
112.26     (d) The city aid base for a city is increased by $20,000 in 
112.27  1998 and thereafter and the maximum amount of total aid it may 
112.28  receive under section 477A.013, subdivision 9, paragraph (c), is 
112.29  also increased by $20,000 in calendar year 1998 only, provided 
112.30  that: 
112.31     (i) the city has a population in 1994 of 2,500 or more; 
112.32     (ii) the city is located in a county, outside of the 
112.33  metropolitan area, which contains a city of the first class; 
112.34     (iii) the city's net tax capacity used in calculating its 
112.35  1996 aid under section 477A.013 is less than $400 per capita; 
112.36  and 
113.1      (iv) at least four percent of the total net tax capacity, 
113.2   for taxes payable in 1996, of property located in the city is 
113.3   classified as railroad property. 
113.4      (e) The city aid base for a city is increased by $200,000 
113.5   in 1999 and thereafter and the maximum amount of total aid it 
113.6   may receive under section 477A.013, subdivision 9, paragraph 
113.7   (c), is also increased by $200,000 in calendar year 1999 only, 
113.8   provided that: 
113.9      (i) the city was incorporated as a statutory city after 
113.10  December 1, 1993; 
113.11     (ii) its city aid base does not exceed $5,600; and 
113.12     (iii) the city had a population in 1996 of 5,000 or more. 
113.13     (f) The city aid base for a city is increased by $450,000 
113.14  in 1999 to 2008 and the maximum amount of total aid it may 
113.15  receive under section 477A.013, subdivision 9, paragraph (c), is 
113.16  also increased by $450,000 in calendar year 1999 only, provided 
113.17  that: 
113.18     (i) the city had a population in 1996 of at least 50,000; 
113.19     (ii) its population had increased by at least 40 percent in 
113.20  the ten-year period ending in 1996; and 
113.21     (iii) its city's net tax capacity for aids payable in 1998 
113.22  is less than $700 per capita. 
113.23     (g) Beginning in 2002 2004, the city aid base for a city is 
113.24  equal to the sum of its city aid base in 2001 2003 and the 
113.25  amount of additional aid it was certified to receive under 
113.26  section 477A.06 in 2001 2003.  For 2002 2004 only, the maximum 
113.27  amount of total aid a city may receive under section 477A.013, 
113.28  subdivision 9, paragraph (c), is also increased by the amount it 
113.29  was certified to receive under section 477A.06 in 2001 2003. 
113.30     (h) The city aid base for a city is increased by $150,000 
113.31  for aids payable in 2000 and thereafter, and the maximum amount 
113.32  of total aid it may receive under section 477A.013, subdivision 
113.33  9, paragraph (c), is also increased by $150,000 in calendar year 
113.34  2000 only, provided that: 
113.35     (1) the city has a population that is greater than 1,000 
113.36  and less than 2,500; 
114.1      (2) its commercial and industrial percentage for aids 
114.2   payable in 1999 is greater than 45 percent; and 
114.3      (3) the total market value of all commercial and industrial 
114.4   property in the city for assessment year 1999 is at least 15 
114.5   percent less than the total market value of all commercial and 
114.6   industrial property in the city for assessment year 1998. 
114.7      (i) The city aid base for a city is increased by $200,000 
114.8   in 2000 and thereafter, and the maximum amount of total aid it 
114.9   may receive under section 477A.013, subdivision 9, paragraph 
114.10  (c), is also increased by $200,000 in calendar year 2000 only, 
114.11  provided that: 
114.12     (1) the city had a population in 1997 of 2,500 or more; 
114.13     (2) the net tax capacity of the city used in calculating 
114.14  its 1999 aid under section 477A.013 is less than $650 per 
114.15  capita; 
114.16     (3) the pre-1940 housing percentage of the city used in 
114.17  calculating 1999 aid under section 477A.013 is greater than 12 
114.18  percent; 
114.19     (4) the 1999 local government aid of the city under section 
114.20  477A.013 is less than 20 percent of the amount that the formula 
114.21  aid of the city would have been if the need increase percentage 
114.22  was 100 percent; and 
114.23     (5) the city aid base of the city used in calculating aid 
114.24  under section 477A.013 is less than $7 per capita. 
114.25     (j) The city aid base for a city is increased by $225,000 
114.26  in calendar years 2000 to 2002 and the maximum amount of total 
114.27  aid it may receive under section 477A.013, subdivision 9, 
114.28  paragraph (c), is also increased by $225,000 in calendar year 
114.29  2000 only, provided that: 
114.30     (1) the city had a population of at least 5,000; 
114.31     (2) its population had increased by at least 50 percent in 
114.32  the ten-year period ending in 1997; 
114.33     (3) the city is located outside of the Minneapolis-St. Paul 
114.34  metropolitan statistical area as defined by the United States 
114.35  Bureau of the Census; and 
114.36     (4) the city received less than $30 per capita in aid under 
115.1   section 477A.013, subdivision 9, for aids payable in 1999. 
115.2      (k) The city aid base for a city is increased by $102,000 
115.3   in 2000 and thereafter, and the maximum amount of total aid it 
115.4   may receive under section 477A.013, subdivision 9, paragraph 
115.5   (c), is also increased by $102,000 in calendar year 2000 only, 
115.6   provided that: 
115.7      (1) the city has a population in 1997 of 2,000 or more; 
115.8      (2) the net tax capacity of the city used in calculating 
115.9   its 1999 aid under section 477A.013 is less than $455 per 
115.10  capita; 
115.11     (3) the net levy of the city used in calculating 1999 aid 
115.12  under section 477A.013 is greater than $195 per capita; and 
115.13     (4) the 1999 local government aid of the city under section 
115.14  477A.013 is less than 38 percent of the amount that the formula 
115.15  aid of the city would have been if the need increase percentage 
115.16  was 100 percent. 
115.17     (l) The city aid base for a city is increased by $32,000 in 
115.18  2001 and thereafter, and the maximum amount of total aid it may 
115.19  receive under section 477A.013, subdivision 9, paragraph (c), is 
115.20  also increased by $32,000 in calendar year 2001 only, provided 
115.21  that: 
115.22     (1) the city has a population in 1998 that is greater than 
115.23  200 but less than 500; 
115.24     (2) the city's revenue need used in calculating aids 
115.25  payable in 2000 was greater than $200 per capita; 
115.26     (3) the city net tax capacity for the city used in 
115.27  calculating aids available in 2000 was equal to or less than 
115.28  $200 per capita; 
115.29     (4) the city aid base of the city used in calculating aid 
115.30  under section 477A.013 is less than $65 per capita; and 
115.31     (5) the city's formula aid for aids payable in 2000 was 
115.32  greater than zero. 
115.33     (m) The city aid base for a city is increased by $7,200 in 
115.34  2001 and thereafter, and the maximum amount of total aid it may 
115.35  receive under section 477A.013, subdivision 9, paragraph (c), is 
115.36  also increased by $7,200 in calendar year 2001 only, provided 
116.1   that: 
116.2      (1) the city had a population in 1998 that is greater than 
116.3   200 but less than 500; 
116.4      (2) the city's commercial industrial percentage used in 
116.5   calculating aids payable in 2000 was less than ten percent; 
116.6      (3) more than 25 percent of the city's population was 60 
116.7   years old or older according to the 1990 census; 
116.8      (4) the city aid base of the city used in calculating aid 
116.9   under section 477A.013 is less than $15 per capita; and 
116.10     (5) the city's formula aid for aids payable in 2000 was 
116.11  greater than zero. 
116.12     (n) The city aid base for a city is increased by $45,000 in 
116.13  2001 and thereafter and by an additional $50,000 in calendar 
116.14  years 2002 to 2011, and the maximum amount of total aid it may 
116.15  receive under section 477A.013, subdivision 9, paragraph (c), is 
116.16  also increased by $45,000 in calendar year 2001 only, and by 
116.17  $50,000 in calendar year 2002 only, provided that: 
116.18     (1) the net tax capacity of the city used in calculating 
116.19  its 2000 aid under section 477A.013 is less than $810 per 
116.20  capita; 
116.21     (2) the population of the city declined more than two 
116.22  percent between 1988 and 1998; 
116.23     (3) the net levy of the city used in calculating 2000 aid 
116.24  under section 477A.013 is greater than $240 per capita; and 
116.25     (4) the city received less than $36 per capita in aid under 
116.26  section 477A.013, subdivision 9, for aids payable in 2000. 
116.27     (o) The city aid base for a city with a population of 
116.28  10,000 or more which is located outside of the seven-county 
116.29  metropolitan area is increased in 2002 and thereafter, and the 
116.30  maximum amount of total aid it may receive under section 
116.31  477A.013, subdivision 9, paragraph (b) or (c), is also increased 
116.32  in calendar year 2002 only, by an amount equal to the lesser of: 
116.33     (1)(i) the total population of the city, as determined by 
116.34  the United States Bureau of the Census, in the 2000 census, (ii) 
116.35  minus 5,000, (iii) times 60; or 
116.36     (2) $2,500,000. 
117.1      (p) The city aid base is increased by $50,000 in 2002 and 
117.2   thereafter, and the maximum amount of total aid it may receive 
117.3   under section 477A.013, subdivision 9, paragraph (c), is also 
117.4   increased by $50,000 in calendar year 2002 only, provided that: 
117.5      (1) the city is located in the seven-county metropolitan 
117.6   area; 
117.7      (2) its population in 2000 is between 10,000 and 20,000; 
117.8   and 
117.9      (3) its commercial industrial percentage, as calculated for 
117.10  city aid payable in 2001, was greater than 25 percent. 
117.11     (q) The city aid base for a city is increased by $150,000 
117.12  in calendar years 2002 to 2011 and the maximum amount of total 
117.13  aid it may receive under section 477A.013, subdivision 9, 
117.14  paragraph (c), is also increased by $150,000 in calendar year 
117.15  2002 only, provided that: 
117.16     (1) the city had a population of at least 3,000 but no more 
117.17  than 4,000 in 1999; 
117.18     (2) its home county is located within the seven-county 
117.19  metropolitan area; 
117.20     (3) its pre-1940 housing percentage is less than 15 
117.21  percent; and 
117.22     (4) its city net tax capacity per capita for taxes payable 
117.23  in 2000 is less than $900 per capita. 
117.24     (r) The city aid base for a city is increased by $200,000 
117.25  beginning in calendar year 2003 and the maximum amount of total 
117.26  aid it may receive under section 477A.013, subdivision 9, 
117.27  paragraph (c), is also increased by $200,000 in calendar year 
117.28  2003 only, provided that the city qualified for an increase in 
117.29  homestead and agricultural credit aid under Laws 1995, chapter 
117.30  264, article 8, section 18. 
117.31     <h>[EFFECTIVE DATE.]</h> This section is effective for aid payable 
117.32  in 2002 and thereafter, except that paragraph (r) is effective 
117.33  beginning with aid payable in 2003. 
117.34     Sec. 10.  Minnesota Statutes 2001 Supplement, section 
117.35  477A.0123, is amended to read: 
117.36     477A.0123 [REIMBURSEMENT OF COUNTY FOR CERTAIN OUT-OF-HOME 
118.1   PLACEMENT.] 
118.2      Subdivision 1.  [AID PAYMENTS.] (a) In calendar year 2003 
118.3   2004 and thereafter, the commissioner of revenue shall reimburse 
118.4   each county for a portion of the nonfederal share of the cost of 
118.5   out-of-home placement provided the commissioner of human 
118.6   services, in consultation with the commissioner of corrections, 
118.7   certifies to the commissioner of revenue that accurate data is 
118.8   available to make the aid determination under this section.  The 
118.9   amount of reimbursement is a percent of the county's average 
118.10  nonfederal share of the cost for out-of-home placement for the 
118.11  most recent three calendar years for which data is available.  
118.12  The commissioner shall pay the aid under the schedule used for 
118.13  local government aid payments under section 477A.015. 
118.14     (b) For aids payable in calendar year 2003 2004, the 
118.15  percent of reimbursement in paragraph (a) shall be equal to the 
118.16  maximum percentage possible, up to 30 percent, that does not 
118.17  cause the payment to any county in the seven county metropolitan 
118.18  area to exceed the difference between (1) the amount of aid it 
118.19  is scheduled to receive calculated for the county in calendar 
118.20  year 2003 2004 under section 273.1398, prior to the offset under 
118.21  section 273.1398, subdivision 4d, and any aid offset under 
118.22  section 273.1398, subdivision 4a, that is scheduled to occur 
118.23  after July 1, 2003 subdivision 2, including any addition 
118.24  determined under section 477A.07, and (2) the amount of any aid 
118.25  reductions for the state takeover of courts contained in Laws 
118.26  2001, First Special Session chapter 5, article 5.  For aids 
118.27  payable in 2004 2005 and thereafter, the percent of 
118.28  reimbursement under paragraph (a) shall be equal to the percent 
118.29  of reimbursement determined for calendar year 2003 2004, 
118.30  adjusted so that the total payments under this section do not 
118.31  exceed the appropriation under section 477A.03, subdivision 2, 
118.32  paragraph (e). 
118.33     (c) For purposes of this section, "out-of-home placement" 
118.34  means the placement of a child in a child caring institution or 
118.35  shelter licensed under Minnesota Rules, parts 9545.0905 to 
118.36  9545.1125, in a group home licensed under Minnesota Rules, parts 
119.1   9545.1400 to 9545.1480, in family foster care or group family 
119.2   foster care licensed under Minnesota Rules, parts 9545.0010 to 
119.3   9545.0260, or a correctional facility pursuant to a court order 
119.4   under which a county social services agency or a county 
119.5   correctional agency has been assigned responsibility for the 
119.6   placement. 
119.7      Subd. 2.  [DETERMINATION OF NONFEDERAL SHARE OF COSTS.] (a) 
119.8   By January 1, 2002, each county shall report the following 
119.9   information to the commissioners of human services and 
119.10  corrections, the separate amounts paid out of its social service 
119.11  agency budget and its corrections budget for out-of-home 
119.12  placement in calendar years 1998, 1999, and 2000, along with the 
119.13  number of case days associated with the expenditures from each 
119.14  budget.  By March 15, 2002, the commissioner of human services, 
119.15  in consultation with the commissioner of corrections, shall 
119.16  certify to the commissioner of revenue and to the legislative 
119.17  committees responsible for local government aids and out-of-home 
119.18  placement funding, whether the data reported under this 
119.19  subdivision accurately reflects total expenditures by counties 
119.20  for out-of-home placement costs. 
119.21     (b) By January 1 of calendar year 2004 2003 and thereafter, 
119.22  each county shall report to the commissioners of human services 
119.23  and corrections the separate amounts paid out of its social 
119.24  service agency budget and its corrections budget for out-of-home 
119.25  placement in the calendar years year two years before the 
119.26  current calendar year along with the number of case days 
119.27  associated with the expenditures from each budget. 
119.28     (c) Until either the commissioner of human services or 
119.29  corrections develops another mechanism for collecting and 
119.30  verifying data on out-of-home placements, and the legislature 
119.31  authorizes the use of that data, the data collected under this 
119.32  subdivision shall be used to calculate payments under 
119.33  subdivision 1.  The commissioner of human services shall certify 
119.34  the information to the commissioner of revenue by July 1 of the 
119.35  year prior to the aid payment. 
119.36     Sec. 11.  Minnesota Statutes 2001 Supplement, section 
120.1   477A.03, subdivision 2, is amended to read: 
120.2      Subd. 2.  [ANNUAL APPROPRIATION.] (a) A sum sufficient to 
120.3   discharge the duties imposed by sections 477A.011 to 477A.014 is 
120.4   annually appropriated from the general fund to the commissioner 
120.5   of revenue.  
120.6      (b) Aid payments to counties under section 477A.0121 are 
120.7   limited to $20,265,000 in 1996.  Aid payments to counties under 
120.8   section 477A.0121 are limited to $27,571,625 in 1997.  For aid 
120.9   payable in 1998 and thereafter, the total aids paid under 
120.10  section 477A.0121 are the amounts certified to be paid in the 
120.11  previous year, adjusted for inflation as provided under 
120.12  subdivision 3. 
120.13     (c)(i) For aids payable in 1998 and thereafter, the total 
120.14  aids paid to counties under section 477A.0122 are the amounts 
120.15  certified to be paid in the previous year, adjusted for 
120.16  inflation as provided under subdivision 3. 
120.17     (ii) Aid payments to counties under section 477A.0122 in 
120.18  2000 are further increased by an additional $20,000,000 in 2000. 
120.19     (d) Aid payments to cities in 2002 under section 477A.013, 
120.20  subdivision 9, are limited to the amounts certified to be paid 
120.21  in the previous year, adjusted for inflation as provided in 
120.22  subdivision 3, and increased by $140,000,000.  For aids payable 
120.23  in 2003, the total aids paid under section 477A.013, subdivision 
120.24  9, are the amounts certified to be paid in the previous year, 
120.25  adjusted for inflation as provided under subdivision 3.  For 
120.26  aids payable in 2004, the total aids paid under section 
120.27  477A.013, subdivision 9, are the amounts certified to be paid in 
120.28  the previous year, adjusted for inflation as provided under 
120.29  subdivision 3, and increased by the amount certified to be paid 
120.30  in 2003 under section 477A.06.  For aids payable in 2005 and 
120.31  thereafter, the total aids paid under section 477A.013, 
120.32  subdivision 9, are the amounts certified to be paid in the 
120.33  previous year, adjusted for inflation as provided under 
120.34  subdivision 3.  The additional amount authorized under 
120.35  subdivision 4 is not included when calculating the appropriation 
120.36  limits under this paragraph. 
121.1      (e) Reimbursements made to counties under section 477A.0123 
121.2   in calendar year 2004 2005 and thereafter are limited to an 
121.3   amount equal to the maximum allowed appropriation under this 
121.4   section in the previous year, multiplied by a percent to be 
121.5   established by law.  If no percent is established by law, the 
121.6   appropriation is limited to the total amount appropriated for 
121.7   this purpose in the previous year. 
121.8      <h>[EFFECTIVE DATE.]</h> This section is effective beginning with 
121.9   aids payable in 2004.  
121.10     Sec. 12.  Minnesota Statutes 2001 Supplement, section 
121.11  477A.07, subdivision 2, is amended to read: 
121.12     Subd. 2.  [COUNTY AID.] Each county's aid amount for 2003 
121.13  determined under subdivision 1 must be permanently added to the 
121.14  county's 2003 homestead and agricultural credit aid base 
121.15  determined under section 273.1398 for aid payable, subdivision 
121.16  2, and paid in 2003 as part of the county's homestead and 
121.17  agricultural credit aid.  It then becomes a permanent part of 
121.18  the county's homestead and agricultural credit aid base for aid 
121.19  payable in 2004.  Each county's aid amount for 2004 determined 
121.20  under subdivision 1 must be permanently added to the county's 
121.21  2004 homestead and agricultural credit aid base for aid payable 
121.22  determined under section 273.1398, subdivision 2, and paid in 
121.23  2004 as part of the county's homestead and agricultural credit 
121.24  aid.  It then becomes a permanent part of the county's homestead 
121.25  and agricultural credit aid base for aid payable in 2005. 
121.26     <h>[EFFECTIVE DATE.]</h> This section is effective beginning with 
121.27  aids payable in 2003. 
121.28                             ARTICLE 7 
121.29                        ECONOMIC DEVELOPMENT 
121.30     Section 1.  Minnesota Statutes 2000, section 272.0212, 
121.31  subdivision 4, is amended to read: 
121.32     Subd. 4.  [DEFINITIONS.] (a) For purposes of this section, 
121.33  the following terms have the meanings given. 
121.34     (b) "Qualified property" means class 3 and class 1, 3, 4, 
121.35  and 5 property as defined in section 273.13 that is located in a 
121.36  zone and is newly constructed after the zone was designated, 
122.1   including the land that contains the improvements. 
122.2      (c) "Zone" means a border city development zone designated 
122.3   under the provisions of section 469.1731. 
122.4      <h>[EFFECTIVE DATE.]</h> This section is effective beginning for 
122.5   assessment year 2003. 
122.6      Sec. 2.  Minnesota Statutes 2001 Supplement, section 
122.7   469.1734, subdivision 6, is amended to read: 
122.8      Subd. 6.  [SALES TAX EXEMPTION; EQUIPMENT; CONSTRUCTION 
122.9   MATERIALS.] (a) The gross receipts from the sale of machinery 
122.10  and equipment and repair parts are exempt from taxation under 
122.11  chapter 297A, if the machinery and equipment: 
122.12     (1) are used in connection with a trade or business; 
122.13     (2) are placed in service in a city that is authorized to 
122.14  designate a zone under section 469.1731, regardless of whether 
122.15  the machinery and equipment are used in a zone; and 
122.16     (3) have a useful life of 12 months or more. 
122.17     (b) The gross receipts from the sale of construction 
122.18  materials are exempt, if they are used to construct: 
122.19     (1) a facility for use in a trade or business located in a 
122.20  city that is authorized to designate a zone under section 
122.21  469.1731, regardless of whether the facility is located in a 
122.22  zone; or 
122.23     (2) housing that is located in a zone.  
122.24  The exemptions under this paragraph apply regardless of whether 
122.25  the purchase is made by the owner, the user, or a contractor. 
122.26     (c) A purchaser may claim an exemption under this 
122.27  subdivision for tax on the purchases up to, but not exceeding: 
122.28     (1) the amount of the tax credit certificates received from 
122.29  the city, less 
122.30     (2) any tax credit certificates used under the provisions 
122.31  of subdivisions 4 and 5, and section 469.1732, subdivision 2. 
122.32     (d) The tax on sales of items exempted under this 
122.33  subdivision shall be imposed and collected as if the applicable 
122.34  rate under section 297A.62 applied.  Upon application by the 
122.35  purchaser, on forms prescribed by the commissioner, a refund 
122.36  equal to the tax paid shall be paid to the purchaser.  The 
123.1   application must include sufficient information to permit the 
123.2   commissioner to verify the sales tax paid and the eligibility of 
123.3   the claimant to receive the credit.  No more than two 
123.4   applications for refunds may be filed under this subdivision in 
123.5   a calendar year.  The provisions of section 289A.40 apply to the 
123.6   refunds payable under this subdivision.  There is annually 
123.7   appropriated to the commissioner of revenue the amount required 
123.8   to make the refunds, which must be deducted from the amount of 
123.9   the city's allocation under section 469.169, subdivision 12, 
123.10  that remains available and its limitation under section 469.1735.
123.11  The amount to be refunded shall bear interest at the rate in 
123.12  section 270.76 from the date the refund claim is filed with the 
123.13  commissioner. 
123.14     <h>[EFFECTIVE DATE.]</h> This section is effective for sales made 
123.15  after June 30, 2002. 
123.16     Sec. 3.  Minnesota Statutes 2001 Supplement, section 
123.17  469.1763, subdivision 6, is amended to read: 
123.18     Subd. 6.  [POOLING PERMITTED FOR DEFICITS.] (a) This 
123.19  subdivision applies only to districts for which the request for 
123.20  certification was made before August 1, 2001, and without regard 
123.21  to whether the request for certification was made prior to 
123.22  August 1, 1979. 
123.23     (b) The municipality for the district may transfer 
123.24  available increments from another tax increment financing 
123.25  district located in the municipality, if the transfer is 
123.26  necessary to eliminate a deficit in the district to which the 
123.27  increments are transferred.  A deficit in the district for 
123.28  purposes of this subdivision means the lesser of the following 
123.29  two amounts: 
123.30     (1)(i) the amount due during the calendar year to pay 
123.31  preexisting obligations of the district; minus 
123.32     (ii) the total increments to be collected from properties 
123.33  located within the district that are available for the calendar 
123.34  year; plus 
123.35     (iii) total increments from properties located in other 
123.36  districts in the municipality that are available to be used to 
124.1   meet the district's obligations under this section, excluding 
124.2   this subdivision, or other provisions of law (but excluding a 
124.3   special tax under section 469.1791 and the grant program under 
124.4   Laws 1997, chapter 231, article 1, section 19, or Laws 2001, 
124.5   First Special Session chapter 5); or 
124.6      (2) the reduction in increments collected from properties 
124.7   located in the district for the calendar year as a result of the 
124.8   changes in class rates in Laws 1997, chapter 231, article 1; 
124.9   Laws 1998, chapter 389, article 2; and Laws 1999, chapter 243, 
124.10  and Laws 2001, First Special Session chapter 5, or the 
124.11  elimination of the general education tax levy under Laws 2001, 
124.12  First Special Session chapter 5. 
124.13     (c) A preexisting obligation means: 
124.14     (1) bonds issued and sold before August 1, 2001, or bonds 
124.15  issued pursuant to a binding contract requiring the issuance of 
124.16  bonds entered into before July 1, 2001, and bonds issued to 
124.17  refund such bonds or to reimburse expenditures made in 
124.18  conjunction with a signed contractual agreement entered into 
124.19  before August 1, 2001, to the extent that the bonds are secured 
124.20  by a pledge of increments from the tax increment financing 
124.21  district; and 
124.22     (2) binding contracts entered into before August 1, 2001, 
124.23  to the extent that the contracts require payments secured by a 
124.24  pledge of increments from the tax increment financing district. 
124.25     (d) The municipality may require a development authority, 
124.26  other than a seaway port authority, to transfer available 
124.27  increments for any of its tax increment financing districts in 
124.28  the municipality to make up an insufficiency in another district 
124.29  in the municipality, regardless of whether the district was 
124.30  established by the development authority or another development 
124.31  authority.  This authority applies notwithstanding any law to 
124.32  the contrary, but applies only to a development authority that: 
124.33     (1) was established by the municipality; or 
124.34     (2) the governing body of which is appointed, in whole or 
124.35  part, by the municipality or an officer of the municipality or 
124.36  which consists, in whole or part, of members of the governing 
125.1   body of the municipality.  The municipality may use this 
125.2   authority only after it has first used all available increments 
125.3   of the receiving development authority to eliminate the 
125.4   insufficiency and exercised any permitted action under section 
125.5   469.1792, subdivision 3, for preexisting districts of the 
125.6   receiving development authority to eliminate the insufficiency. 
125.7      (e) The authority under this subdivision to spend tax 
125.8   increments outside of the area of the district from which the 
125.9   tax increments were collected: 
125.10     (1) may only be exercised after obtaining approval of the 
125.11  use of the increments, in writing, by the commissioner of 
125.12  revenue; 
125.13     (2) is an exception to the restrictions under section 
125.14  469.176, subdivision 4i, and the other provisions of this 
125.15  section, and the percentage restrictions under subdivision 2 
125.16  must be calculated after deducting increments spent under this 
125.17  subdivision from the total increments for the district; and 
125.18     (3) applies notwithstanding the provisions of the Tax 
125.19  Increment Financing Act in effect for districts for which the 
125.20  request for certification was made before June 30, 1982, or any 
125.21  other law to the contrary. 
125.22     (f) If a preexisting obligation requires the development 
125.23  authority to pay an amount that is limited to the increment from 
125.24  the district or a specific development within the district and 
125.25  if the obligation requires paying a higher amount to the extent 
125.26  that increments are available, the municipality may determine 
125.27  that the amount due under the preexisting obligation equals the 
125.28  higher amount and may authorize the transfer of increments under 
125.29  this subdivision to pay up to the higher amount.  The existence 
125.30  of a guarantee of obligations by the individual or entity that 
125.31  would receive the payment under this paragraph is disregarded in 
125.32  the determination of eligibility to pool under this 
125.33  subdivision.  The authority to transfer increments under this 
125.34  paragraph may only be used to the extent that the payment of all 
125.35  other preexisting obligations in the municipality due during the 
125.36  calendar year have been satisfied. 
126.1      <h>[EFFECTIVE DATE.]</h> This section is effective for increments 
126.2   payable in 2002 and thereafter. 
126.3      Sec. 4.  Minnesota Statutes 2001 Supplement, section 
126.4   469.1792, subdivision 1, is amended to read: 
126.5      Subdivision 1.  [SCOPE.] This section applies only to an 
126.6   authority with a preexisting district for which: 
126.7      (1)(i) the increments from the district were insufficient 
126.8   to pay preexisting obligations as a result of the class rate 
126.9   changes or the elimination of the state-determined general 
126.10  education property tax levy under this act, or both; or 
126.11     (ii) (2)(i) the development authority has a binding 
126.12  contract with a person requiring the authority to pay to the 
126.13  person an amount that may not exceed the increment from the 
126.14  district or a specific development within the district and as a 
126.15  result of the reduction in increment because of the class rate 
126.16  changes or the elimination of the state-determined general 
126.17  education property tax levy under this act, or both,; and 
126.18     (ii) the authority is unable to pay the full amount under 
126.19  the contract from the pledged increments or other increments 
126.20  from the district that would have been due if the class rate 
126.21  changes or elimination of the state-determined general education 
126.22  property tax levy or both had not been made under Laws 2001, 
126.23  First Special Session chapter 5; and 
126.24     (2) the municipality exercised its full authority to pool 
126.25  under section 469.1763, subdivision 6, and the transfer of 
126.26  increments did not eliminate the insufficiency under clause (1), 
126.27  item (i), or the inability to pay the full amount under clause 
126.28  (1), item (ii). 
126.29     <h>[EFFECTIVE DATE.]</h> This section is effective for actions 
126.30  taken and resolutions approved after June 30, 2002. 
126.31     Sec. 5.  Minnesota Statutes 2000, section 469.1813, is 
126.32  amended by adding a subdivision to read: 
126.33     Subd. 6b.  [EXTENDED DURATION LIMIT.] (a) Notwithstanding 
126.34  the provisions of subdivision 6, a political subdivision may 
126.35  grant an abatement for a period of up to 20 years, if the 
126.36  abatement is for a qualified business. 
127.1      (b) To be a qualified business for purposes of this 
127.2   subdivision, at least 50 percent of the payroll of the 
127.3   operations of the business that qualify for the abatement must 
127.4   be for employees engaged in one of the following lines of 
127.5   business or any combination of them: 
127.6      (1) manufacturing; 
127.7      (2) agricultural processing; 
127.8      (3) mining; 
127.9      (4) research and development; 
127.10     (5) warehousing; or 
127.11     (6) qualified high technology. 
127.12     (c)(1) "Manufacturing" means the material staging and 
127.13  production of tangible personal property by procedures commonly 
127.14  regarded as manufacturing, processing, fabrication, or 
127.15  assembling which changes some existing material into new shapes, 
127.16  new qualities, or new combinations. 
127.17     (2) "Mining" has the meaning given in section 613(c) of the 
127.18  Internal Revenue Code of 1986. 
127.19     (3) "Agricultural processing" means transforming, 
127.20  packaging, sorting, or grading livestock or livestock products, 
127.21  agricultural commodities, or plants or plant products into goods 
127.22  that are used for intermediate or final consumption including 
127.23  goods for nonfood use. 
127.24     (4) "Research and development" means qualified research as 
127.25  defined in section 41(d) of the Internal Revenue Code of 1986. 
127.26     (5) "Qualified high technology" means one or more of the 
127.27  following activities: 
127.28     (i) advanced computing, which is any technology used in the 
127.29  design and development of any of the following: 
127.30     (A) computer hardware and software; 
127.31     (B) data communications; and 
127.32     (C) information technologies; 
127.33     (ii) advanced materials, which are materials with 
127.34  engineered properties created through the development of 
127.35  specialized process and synthesis technology; 
127.36     (iii) biotechnology, which is any technology that uses 
128.1   living organisms, cells, macromolecules, microorganisms, or 
128.2   substances from living organisms to make or modify a product, 
128.3   improve plants or animals, or develop microorganisms for useful 
128.4   purposes; 
128.5      (iv) electronic device technology, which is any technology 
128.6   that involves microelectronics, semiconductors, electronic 
128.7   equipment, and instrumentation, radio frequency, microwave, and 
128.8   millimeter electronics, and optical and optic-electrical 
128.9   devices, or data and digital communications and imaging devices; 
128.10     (v) engineering or laboratory testing related to the 
128.11  development of a product; 
128.12     (vi) technology that assists in the assessment or 
128.13  prevention of threats or damage to human health or the 
128.14  environment, including, but not limited to, environmental 
128.15  cleanup technology, pollution prevention technology, or 
128.16  development of alternative energy sources; 
128.17     (vii) medical device technology, which is any technology 
128.18  that involves medical equipment or products other than a 
128.19  pharmaceutical product that has therapeutic or diagnostic value 
128.20  and is regulated; or 
128.21     (viii) advanced vehicles technology which is any technology 
128.22  that involves electric vehicles, hybrid vehicles, or alternative 
128.23  fuel vehicles, or components used in the construction of 
128.24  electric vehicles, hybrid vehicles, or alternative fuel 
128.25  vehicles.  An electric vehicle is a road vehicle that draws 
128.26  propulsion energy only from an on-board source of electrical 
128.27  energy.  A hybrid vehicle is a road vehicle that can draw 
128.28  propulsion energy from both a consumable fuel and a rechargeable 
128.29  energy storage system.  
128.30     (d) The authority to grant new abatements under this 
128.31  subdivision expires on July 1, 2004.  
128.32     Sec. 6.  Laws 1995, chapter 264, article 5, section 45, 
128.33  subdivision 1, as amended by Laws 1996, chapter 471, article 7, 
128.34  section 22, and Laws 1997, chapter 231, article 10, section 13, 
128.35  is amended to read: 
128.36     Subdivision 1.  [CREATION OF PROJECTS.] (a) An authority 
129.1   may create a housing replacement project under sections 44 to 
129.2   47, as provided in this section. 
129.3      (b) For the cities of Crystal, Fridley, Richfield, and 
129.4   Columbia Heights, the authority may designate up to 50 parcels 
129.5   in the city to be included in a housing replacement district.  
129.6   No more than ten parcels may be included in year one of the 
129.7   district, with up to ten additional parcels added to the 
129.8   district in each of the following nine years.  For the cities of 
129.9   Minneapolis, St. Paul, and Duluth, each authority may designate 
129.10  up to 100 not more than 200 parcels in the city to be included 
129.11  in a housing replacement district over the life of the 
129.12  district.  The only parcels that may be included in a district 
129.13  are (1) vacant sites, (2) parcels containing vacant houses, or 
129.14  (3) parcels containing houses that are structurally substandard, 
129.15  as defined in Minnesota Statutes, section 469.174, subdivision 
129.16  10.  
129.17     (c) The city in which the authority is located must pay at 
129.18  least 25 percent of the housing replacement project costs from 
129.19  its general fund, a property tax levy, or other unrestricted 
129.20  money, not including tax increments. 
129.21     (d) The housing replacement district plan must have as its 
129.22  sole object the acquisition of parcels for the purpose of 
129.23  preparing the site to be sold for market rate housing.  As used 
129.24  in this section, "market rate housing" means housing that has a 
129.25  market value that does not exceed 150 percent of the average 
129.26  market value of single-family housing in that municipality. 
129.27     Sec. 7.  [CITY OF ALBERT LEA; TAX INCREMENT FINANCING 
129.28  DISTRICT.] 
129.29     Subdivision 1.  [AUTHORIZATION.] The governing body of the 
129.30  city of Albert Lea may create a redevelopment tax increment 
129.31  financing district as provided in this section.  The city or its 
129.32  port authority may be the "authority" for the purposes of 
129.33  Minnesota Statutes, sections 469.174 to 469.179. 
129.34     Subd. 2.  [DEFINITIONS.] (a) For the purposes of this 
129.35  section, the terms defined in this subdivision have the meanings 
129.36  given them. 
130.1      (b) "Redevelopment parcel" means the property in the city 
130.2   of Albert Lea bounded by Main Street, Garfield Avenue, Front 
130.3   Street, the Union Pacific railway line, and Albert Lea lake. 
130.4      (c) "Reconstruction parcel" means the property in the city 
130.5   of Albert Lea described as lot 1, block 5, Habben First Addition.
130.6      Subd. 3.  [SPECIAL RULES.] (a) The district established 
130.7   under this section is subject to the provisions of Minnesota 
130.8   Statutes, sections 469.174 to 469.179, except as provided in 
130.9   this subdivision. 
130.10     (b) The district may consist of the redevelopment parcel 
130.11  and the reconstruction parcel. 
130.12     (c) Minnesota Statutes, section 469.174, subdivision 10, 
130.13  paragraph (f), does not apply to the district, and if the city 
130.14  finds that the redevelopment parcel meets the criteria described 
130.15  in Minnesota Statutes, section 469.174, subdivision 10, 
130.16  paragraph (a), clause (1), then both the redevelopment parcel 
130.17  and the reconstruction parcel and the district as a whole are 
130.18  considered to meet those criteria. 
130.19     (d) Expenditures for activities, as defined in Minnesota 
130.20  Statutes, section 469.1763, subdivision 1, paragraph (b), 
130.21  anywhere within the district are considered costs of correcting 
130.22  conditions that allow designation of redevelopment districts 
130.23  within the meaning of Minnesota Statutes, section 469.176, 
130.24  subdivision 4j. 
130.25     (e) For the purposes of Minnesota Statutes, section 
130.26  469.1763, subdivision 3, expenditures on the redevelopment 
130.27  parcel are considered to have been expended on an activity 
130.28  within the district if a qualifying action occurs within ten 
130.29  years after certification of the district. 
130.30     <h>[EFFECTIVE DATE.]</h> This section is effective upon local 
130.31  approval in compliance with the requirements of Minnesota 
130.32  Statutes, section 645.021. 
130.33     Sec. 8.  [RUSHFORD TAX INCREMENT FINANCING EXTENSION.] 
130.34     The governing body of the city of Rushford may elect to 
130.35  extend the duration of its downtown redevelopment tax increment 
130.36  financing district by up to two additional years. 
131.1      <h>[EFFECTIVE DATE.]</h> This section is effective upon compliance 
131.2   with the requirements of Minnesota Statutes, sections 469.1782, 
131.3   subdivision 2; and 645.021. 
131.4      Sec. 9.  [CITY OF MINNEAPOLIS TAX INCREMENT DISTRICT; 
131.5   DURATION EXTENSION.] 
131.6      (a) Upon approval of the city council of the city of 
131.7   Minneapolis, the Minneapolis community development agency may, 
131.8   notwithstanding Minnesota Statutes, section 469.176, subdivision 
131.9   1b, extend the duration of the east Hennepin and University tax 
131.10  increment district for a period of up to seven years, or until 
131.11  all amounts payable to the developers and to the agency to 
131.12  reimburse the agency's provision of $1,100,000 of city of 
131.13  Minneapolis HOME funds to assist low-income housing are repaid, 
131.14  whichever is shorter.  
131.15     (b) The amount of additional increment which may be paid to 
131.16  the district as a result of this section may not exceed: 
131.17     (1) the increment that would have been collected if the 
131.18  class rate changes and elimination of the state-determined 
131.19  general education property tax levy had not been made under Laws 
131.20  2001, First Special Session chapter 5, for the term of the 
131.21  district under general law and if the provisions of section 4 
131.22  did not apply, less 
131.23     (2) the actual increments collected for the term of the 
131.24  district under general law. 
131.25     (c) Notwithstanding any law to the contrary, effective upon 
131.26  approval of this section, no increments may be spent on 
131.27  activities located outside of the area of the district, other 
131.28  than to pay administrative expenses.  
131.29     (d) This section is effective upon compliance with the 
131.30  requirements of Minnesota Statutes, sections 469.1782, 
131.31  subdivision 2, and 645.021.  
131.32     Sec. 10.  [CITY OF MINNEAPOLIS TAX INCREMENT DISTRICT; 
131.33  DURATION EXTENSION.] 
131.34     (a) Upon approval of the city council of the city of 
131.35  Minneapolis, the Minneapolis community development agency may, 
131.36  with respect to the southeast Minneapolis industrial area 
132.1   redevelopment area phase 4 tax increment financing district, 
132.2   notwithstanding Minnesota Statutes, section 469.176, subdivision 
132.3   1b, extend the duration of the district for a period of up to 
132.4   six years. 
132.5      (b) The amount of additional increment which may be paid to 
132.6   the district as a result of this section may not exceed:  
132.7      (1) the increment that would have been collected if the 
132.8   class rate changes and elimination of the state-determined 
132.9   general education property tax levy had not been made under Laws 
132.10  2001, First Special Session chapter 5, for the term of the 
132.11  district under general law and if the provisions of section 4 
132.12  did not apply, less 
132.13     (2) the actual increments collected for the term of the 
132.14  district under general law. 
132.15     (c) Notwithstanding any law to the contrary, effective upon 
132.16  approval of this section, no increments may be spent on 
132.17  activities located outside of the area of the district, other 
132.18  than to pay administrative expenses.  
132.19     (d) Upon payment in full of the Minneapolis community 
132.20  development agency amended and restated tax increment revenue 
132.21  note, in the original face amount of $1,000,000, issued December 
132.22  4, 1997, the district terminates and the authority granted under 
132.23  this section terminates.  
132.24     (e) This section is effective upon compliance with the 
132.25  requirements of Minnesota Statutes, sections 469.1782, 
132.26  subdivision 2, and 645.021.  
132.27     Sec. 11.  [GRANT TO WASHBURN-CROSBY PROJECT.] 
132.28     Notwithstanding the requirements of Minnesota Statutes, 
132.29  section 469.1794, the commissioner of revenue shall pay a 
132.30  one-time grant of $2,600,000 to the Minneapolis community 
132.31  development agency for the Washburn-Crosby Mill City Museum 
132.32  project of the historical society as described in Laws 2001, 
132.33  First Special Session chapter 5, article 15, section 39.  The 
132.34  grant must be disbursed on July 1, 2002.  $2,600,000 is 
132.35  appropriated from the general fund to the commissioner of 
132.36  revenue to make the grant under this section. 
133.1      Sec. 12.  [DAKOTA COUNTY TAX INCREMENT DISTRICT EXTENSION.] 
133.2      (a) The governing body of Dakota county may elect to extend 
133.3   the duration of its C.D.A. South Robert Street redevelopment tax 
133.4   increment financing district number 4 by up to five additional 
133.5   years. 
133.6      (b) The amount of additional increment which may be paid to 
133.7   the district as a result of this section may not exceed: 
133.8      (1) the increment that would have been collected if the 
133.9   class rate changes and elimination of the state-determined 
133.10  general education property tax levy had not been made under Laws 
133.11  2001, First Special Session chapter 5, for the term of the 
133.12  district under general law and if the provisions of section 4 
133.13  did not apply, less 
133.14     (2) the actual increments collected for the term of the 
133.15  district under general law.  
133.16     <h>[EFFECTIVE DATE.]</h> This section is effective upon compliance 
133.17  with Minnesota Statutes, sections 469.1782, subdivision 2, and 
133.18  645.021. 
133.19     Sec. 13.  [REPEALER.] 
133.20     Minnesota Statutes 2001 Supplement, section 469.176, 
133.21  subdivision 1h, is repealed. 
133.22     <h>[EFFECTIVE DATE.]</h> This section is effective retroactive to 
133.23  July 1, 2001, and any early decertification of a tax increment 
133.24  financing district made after July 1, 2001, is ratified. 
133.25                             ARTICLE 8 
133.26                           MINERALS TAXES 
133.27     Section 1.  Minnesota Statutes 2001 Supplement, section 
133.28  126C.21, subdivision 4, is amended to read: 
133.29     Subd. 4.  [TACONITE DEDUCTIONS.] (1) Notwithstanding any 
133.30  provisions of any other law to the contrary, the adjusted net 
133.31  tax capacity used in calculating general education aid may 
133.32  include only that property that is currently taxable in the 
133.33  district.  
133.34     (2) For districts that received payments under sections 
133.35  298.018; 298.225; 298.28; 298.34 to 298.39; 298.391 to 298.396; 
133.36  and 298.405, or any law imposing a tax upon severed mineral 
134.1   values; or recognized revenue under section 477A.15; the general 
134.2   education aid must be reduced in the final adjustment payment by 
134.3   the difference between the dollar amount of the payments 
134.4   received pursuant to those sections, or revenue recognized under 
134.5   section 477A.15 in the fiscal year to which the final adjustment 
134.6   is attributable and the amount that was calculated, pursuant to 
134.7   section 126C.48, subdivision 8, as a reduction of the levy 
134.8   attributable to the fiscal year to which the final adjustment is 
134.9   attributable.  If the final adjustment of a district's general 
134.10  education aid for a fiscal year is a negative amount because of 
134.11  this clause, the next fiscal year's general education aid to 
134.12  that district must be reduced by this negative amount in the 
134.13  following manner:  there must be withheld from each scheduled 
134.14  general education aid payment due the district in such fiscal 
134.15  year, 15 percent of the total negative amount, until the total 
134.16  negative amount has been withheld.  The amount reduced from 
134.17  general education aid pursuant to this clause must be recognized 
134.18  as revenue in the fiscal year to which the final adjustment 
134.19  payment is attributable. 
134.20     Sec. 2.  Minnesota Statutes 2001 Supplement, section 
134.21  126C.48, subdivision 8, is amended to read: 
134.22     Subd. 8.  [TACONITE PAYMENT AND OTHER REDUCTIONS.] (1) 
134.23  Reductions in levies pursuant to sections 126C.48, subdivision 
134.24  1, and 273.138, must be made prior to the reductions in clause 
134.25  (2). 
134.26     (2) Notwithstanding any other law to the contrary, 
134.27  districts which received payments pursuant to sections 298.018; 
134.28  298.225; 298.28, except an amount distributed under section 
134.29  298.28, subdivision 4, paragraph (c), clause (ii); 298.34 to 
134.30  298.39; 298.391 to 298.396; 298.405; and any law imposing a tax 
134.31  upon severed mineral values; or recognized revenue under section 
134.32  477A.15 must not include a portion of these aids in their 
134.33  permissible levies pursuant to those sections, but instead must 
134.34  reduce the permissible levies authorized by this chapter and 
134.35  chapters 120B, 122A, 123A, 123B, 124A, 124D, 125A, and 127A by 
134.36  the greater of the following: 
135.1      (a) an amount equal to 50 percent of the total dollar 
135.2   amount of the payments received pursuant to those sections or 
135.3   revenue recognized under section 477A.15 in the previous fiscal 
135.4   year; or 
135.5      (b) an amount equal to the total dollar amount of the 
135.6   payments received pursuant to those sections or revenue 
135.7   recognized under section 477A.15 in the previous fiscal year 
135.8   less the product of the same dollar amount of payments or 
135.9   revenue times five percent. 
135.10     For levy year 2002 only, 77 percent of the amounts 
135.11  distributed under section 298.225 and 298.28, and 100 percent of 
135.12  the amounts distributed under sections 298.018; 298.34 to 
135.13  298.39; 298.391 to 298.396; 298.405; and any law imposing a tax 
135.14  upon severed mineral values, or recognized revenue under section 
135.15  477A.15, shall be used for purposes of the calculations under 
135.16  this paragraph.  For levy year 2003 only, the levy reductions 
135.17  under this subdivision must be calculated as if section 298.28, 
135.18  subdivision 4, paragraph (f), did not apply for the 2003 
135.19  distribution. 
135.20     (3) The amount of any increased levy authorized by 
135.21  referendum pursuant to section 126C.17, subdivision 9, voter 
135.22  approved referendum, facilities down payment, and debt levies 
135.23  shall not be reduced pursuant to by more than 50 percent under 
135.24  this subdivision.  The amount of any levy authorized by section 
135.25  126C.43, to make payments for bonds issued and for interest 
135.26  thereon, shall not be reduced pursuant to this subdivision.  In 
135.27  administering this paragraph, the commissioner shall first 
135.28  reduce the nonvoter approved levies of a district; then, if any 
135.29  payments, severed mineral value tax revenue or recognized 
135.30  revenue under paragraph (2) remains, the commissioner shall 
135.31  reduce any voter approved referendum levies authorized under 
135.32  section 126C.17; then, if any payments, severed mineral value 
135.33  tax revenue or recognized revenue under paragraph (2) remains, 
135.34  the commissioner shall reduce any voter approved facilities down 
135.35  payment levies authorized under section 123B.63 and then, if any 
135.36  payments, severed mineral value tax revenue or recognized 
136.1   revenue under paragraph (2) remains, the commissioner shall 
136.2   reduce any voter approved debt levies.  
136.3      (4) Before computing the reduction pursuant to this 
136.4   subdivision of the health and safety levy authorized by sections 
136.5   123B.57 and 126C.40, subdivision 5, the commissioner shall 
136.6   ascertain from each affected school district the amount it 
136.7   proposes to levy under each section or subdivision.  The 
136.8   reduction shall be computed on the basis of the amount so 
136.9   ascertained. 
136.10     (5) Notwithstanding any law to the contrary, any amounts 
136.11  received by districts in any fiscal year pursuant to sections 
136.12  298.018; 298.34 to 298.39; 298.391 to 298.396; 298.405; or any 
136.13  law imposing a tax on severed mineral values; and not deducted 
136.14  from general education aid pursuant to section 126C.21, 
136.15  subdivision 4, clause (2), and not applied to reduce levies 
136.16  pursuant to this subdivision shall be paid by the district to 
136.17  the St. Louis county auditor in the following amount by March 15 
136.18  of each year, the amount required to be subtracted from the 
136.19  previous fiscal year's general education aid pursuant to section 
136.20  126C.21, subdivision 4, which is in excess of the general 
136.21  education aid earned for that fiscal year.  The county auditor 
136.22  shall deposit any amounts received pursuant to this clause in 
136.23  the St. Louis county treasury for purposes of paying the 
136.24  taconite homestead credit as provided in section 273.135. To the 
136.25  extent the levy reduction calculated under paragraph (2) exceeds 
136.26  the limitation in paragraph (3), an amount equal to the excess 
136.27  must be distributed from the school district's distribution 
136.28  under sections 298.225, 298.28, and 477A.15 in the following 
136.29  year to the cities and townships within the school district in 
136.30  the proportion that their taxable net tax capacity within the 
136.31  school district bears to the taxable net tax capacity of the 
136.32  school district for property taxes payable in the year prior to 
136.33  distribution.  No city or township shall receive a distribution 
136.34  greater than its levy for taxes payable in the year prior to 
136.35  distribution.  The commissioner of revenue shall certify the 
136.36  distributions of cities and towns under this paragraph to the 
137.1   county auditor by September 30 of the year preceding 
137.2   distribution.  The county auditor shall reduce the proposed and 
137.3   final levies of cities and towns receiving distributions by the 
137.4   amount of their distribution.  Distributions to the cities and 
137.5   towns shall be made at the times provided under section 298.27. 
137.6      Sec. 3.  Minnesota Statutes 2001 Supplement, section 
137.7   298.01, subdivision 3b, is amended to read: 
137.8      Subd. 3b.  [DEDUCTIONS.] (a) For purposes of determining 
137.9   taxable income under subdivision 3, the deductions from gross 
137.10  income include only those expenses necessary to convert raw ores 
137.11  to marketable quality.  Such expenses include costs associated 
137.12  with refinement but do not include expenses such as 
137.13  transportation, stockpiling, marketing, or marine insurance that 
137.14  are incurred after marketable ores are produced, unless the 
137.15  expenses are included in gross income. 
137.16     (b) The provisions of section 290.01, subdivisions 19c, 
137.17  clauses (6) and (10) (9), and 19d, clauses (7) and (11), are not 
137.18  used to determine taxable income. 
137.19     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
137.20  following final enactment. 
137.21     Sec. 4.  Minnesota Statutes 2001 Supplement, section 
137.22  298.01, subdivision 4c, is amended to read: 
137.23     Subd. 4c.  [SPECIAL DEDUCTIONS; NET OPERATING LOSS.] (a) 
137.24  For purposes of determining taxable income under subdivision 
137.25  4, the following modifications are allowed: 
137.26     (1) the provisions of section 290.01, subdivisions 19c, 
137.27  clauses (6) and (10) (9), and 19d, clauses (7) and (11), are not 
137.28  used to determine taxable income; and. 
137.29     (2) for assets placed in service before January 1, 1990, 
137.30  the deduction for depreciation will be the same amount allowed 
137.31  under chapter 290, except that after an asset has been fully 
137.32  depreciated for federal income tax purposes any remaining 
137.33  depreciable basis is allowed as a deduction using the 
137.34  straight-line method over the following number of years: 
137.35     (i) three-year property, one year; 
137.36     (ii) five- and seven-year property, two years; 
138.1      (iii) ten-year property, five years; and 
138.2      (iv) all other property, seven years. 
138.3      No deduction is allowed if an asset is fully depreciated 
138.4   for occupation tax purposes before January 1990. 
138.5      (b) For purposes of determining the deduction allowed under 
138.6   paragraph (a), clause (2), the remaining depreciable basis of 
138.7   property placed in service before January 1, 1990, is calculated 
138.8   as follows: 
138.9      (1) the adjusted basis of the property on December 31, 
138.10  1989, which was used to calculate the hypothetical corporate 
138.11  franchise tax under Minnesota Statutes 1988, section 298.40, 
138.12  including salvage value; less 
138.13     (2) deductions for depreciation allowed under section 
138.14  290.01, subdivision 19e. 
138.15     (c) The basis for determining gain or loss on sale or 
138.16  disposition of assets placed in service before January 1, 1990, 
138.17  is the basis determined under paragraph (b), less the deductions 
138.18  allowed under paragraph (a), clause (2). 
138.19     (d) (b) The amount of net operating loss incurred in a 
138.20  taxable year beginning before January 1, 1990, that may be 
138.21  carried over to a taxable year beginning after December 31, 
138.22  1989, is the amount of net operating loss carryover determined 
138.23  in the calculation of the hypothetical corporate franchise tax 
138.24  under Minnesota Statutes 1988, sections 298.40 and 298.402. 
138.25     <h>[EFFECTIVE DATE.]</h> This section is effective for taxes 
138.26  payable May 1, 2002, and thereafter. 
138.27     Sec. 5.  Minnesota Statutes 2001 Supplement, section 
138.28  298.225, subdivision 1, is amended to read: 
138.29     Subdivision 1.  (a) The distribution of the taconite 
138.30  production tax as provided in section 298.28, subdivisions 3 to 
138.31  5, 6, paragraph (b), 7, and 8, shall equal the lesser of the 
138.32  following amounts:  
138.33     (1) the amount distributed pursuant to this section and 
138.34  section 298.28, with respect to 1983 production if the 
138.35  production for the year prior to the distribution year is no 
138.36  less than 42,000,000 taxable tons.  If the production is less 
139.1   than 42,000,000 taxable tons, the amount of the distributions 
139.2   shall be reduced proportionately at the rate of two percent for 
139.3   each 1,000,000 tons, or part of 1,000,000 tons by which the 
139.4   production is less than 42,000,000 tons; or 
139.5      (2)(i) for the distributions made pursuant to section 
139.6   298.28, subdivisions 4, paragraphs (b) and (c), and 6, paragraph 
139.7   (c), 40.5 31.2 percent of the amount distributed pursuant to 
139.8   this section and section 298.28, with respect to 1983 
139.9   production; 
139.10     (ii) for the distributions made pursuant to section 298.28, 
139.11  subdivision 5, paragraphs (b) and (d), 75 percent of the amount 
139.12  distributed pursuant to this section and section 298.28, with 
139.13  respect to 1983 production.  
139.14     (b) The distribution of the taconite production tax as 
139.15  provided in section 298.28, subdivision 2, shall equal the 
139.16  following amount: 
139.17     (1) if the production for the year prior to the 
139.18  distribution year is at least 42,000,000 taxable tons, the 
139.19  amount distributed pursuant to this section and section 298.28 
139.20  with respect to 1999 production; or 
139.21     (2) if the production for the year prior to the 
139.22  distribution year is less than 42,000,000 taxable tons, the 
139.23  amount distributed pursuant to this section and section 298.28 
139.24  with respect to 1999 production, reduced proportionately at the 
139.25  rate of two percent for each 1,000,000 tons or part of 1,000,000 
139.26  tons by which the production is less than 42,000,000 tons. 
139.27     Sec. 6.  Minnesota Statutes 2000, section 298.27, is 
139.28  amended to read: 
139.29     298.27 [COLLECTION AND PAYMENT OF TAX.] 
139.30     The taxes provided by section 298.24 shall be paid directly 
139.31  to each eligible county and the iron range resources and 
139.32  rehabilitation board.  The commissioner of revenue shall notify 
139.33  each producer of the amount to be paid each recipient prior to 
139.34  February 15.  Every person subject to taxes imposed by section 
139.35  298.24 shall file a correct report covering the preceding year.  
139.36  The report must contain the information required by the 
140.1   commissioner.  The report shall be filed by each producer on or 
140.2   before February 1.  A remittance equal to 50 percent of the 
140.3   total tax required to be paid hereunder in 2003 and 100 percent 
140.4   of the total tax required to be paid hereunder in 2004 and 
140.5   thereafter shall be paid on or before February 24.  A remittance 
140.6   equal to the remaining total tax required to be paid hereunder 
140.7   in 2003 shall be paid on or before August 24.  On or before 
140.8   February 25, and in 2003, August 25, the county auditor shall 
140.9   make distribution of the payment payments previously received by 
140.10  the county in the manner provided by section 298.28.  Reports 
140.11  shall be made and hearings held upon the determination of the 
140.12  tax in accordance with procedures established by the 
140.13  commissioner of revenue.  The commissioner of revenue shall have 
140.14  authority to make reasonable rules as to the form and manner of 
140.15  filing reports necessary for the determination of the tax 
140.16  hereunder, and by such rules may require the production of such 
140.17  information as may be reasonably necessary or convenient for the 
140.18  determination and apportionment of the tax.  All the provisions 
140.19  of the occupation tax law with reference to the assessment and 
140.20  determination of the occupation tax, including all provisions 
140.21  for appeals from or review of the orders of the commissioner of 
140.22  revenue relative thereto, but not including provisions for 
140.23  refunds, are applicable to the taxes imposed by section 298.24 
140.24  except in so far as inconsistent herewith.  If any person 
140.25  subject to section 298.24 shall fail to make the report provided 
140.26  for in this section at the time and in the manner herein 
140.27  provided, the commissioner of revenue shall in such case, upon 
140.28  information possessed or obtained, ascertain the kind and amount 
140.29  of ore mined or produced and thereon find and determine the 
140.30  amount of the tax due from such person.  There shall be added to 
140.31  the amount of tax due a penalty for failure to report on or 
140.32  before February 1, which penalty shall equal ten percent of the 
140.33  tax imposed and be treated as a part thereof. 
140.34     If any person responsible for making a tax payment at the 
140.35  time and in the manner herein provided fails to do so, there 
140.36  shall be imposed a penalty equal to ten percent of the amount so 
141.1   due, which penalty shall be treated as part of the tax due. 
141.2      In the case of any underpayment of the tax payment required 
141.3   herein, there may be added and be treated as part of the tax due 
141.4   a penalty equal to ten percent of the amount so underpaid. 
141.5      A person having a liability of $120,000 or more during a 
141.6   calendar year must remit all liabilities by means of a funds 
141.7   transfer as defined in section 336.4A-104, paragraph (a).  The 
141.8   funds transfer payment date, as defined in section 336.4A-401, 
141.9   must be on or before the date the tax is due.  If the date the 
141.10  tax is due is not a funds transfer business day, as defined in 
141.11  section 336.4A-105, paragraph (a), clause (4), the payment date 
141.12  must be on or before the funds transfer business day next 
141.13  following the date the tax is due. 
141.14     <h>[EFFECTIVE DATE.]</h> Except as otherwise provided, this 
141.15  section is effective for years beginning after December 31, 2001.
141.16     Sec. 7.  Minnesota Statutes 2001 Supplement, section 
141.17  298.28, subdivision 4, is amended to read: 
141.18     Subd. 4.  [SCHOOL DISTRICTS.] (a) 22.28 17.15 cents per 
141.19  taxable ton plus the increase provided in paragraph (d) must be 
141.20  allocated to qualifying school districts to be distributed, 
141.21  based upon the certification of the commissioner of revenue, 
141.22  under paragraphs (b) and (c), except as otherwise provided in 
141.23  paragraph (f). 
141.24     (b) 4.46 3.43 cents per taxable ton must be distributed to 
141.25  the school districts in which the lands from which taconite was 
141.26  mined or quarried were located or within which the concentrate 
141.27  was produced.  The distribution must be based on the 
141.28  apportionment formula prescribed in subdivision 2. 
141.29     (c)(i) 17.82 13.72 cents per taxable ton, less any amount 
141.30  distributed under paragraph (e), shall be distributed to a group 
141.31  of school districts comprised of those school districts in which 
141.32  the taconite was mined or quarried or the concentrate produced 
141.33  or in which there is a qualifying municipality as defined by 
141.34  section 273.134, paragraph (b), in direct proportion to school 
141.35  district indexes as follows:  for each school district, its 
141.36  pupil units determined under section 126C.05 for the prior 
142.1   school year shall be multiplied by the ratio of the average 
142.2   adjusted net tax capacity per pupil unit for school districts 
142.3   receiving aid under this clause as calculated pursuant to 
142.4   chapters 122A, 126C, and 127A for the school year ending prior 
142.5   to distribution to the adjusted net tax capacity per pupil unit 
142.6   of the district.  Each district shall receive that portion of 
142.7   the distribution which its index bears to the sum of the indices 
142.8   for all school districts that receive the distributions.  
142.9      (ii) Notwithstanding clause (i), each school district that 
142.10  receives a distribution under sections 298.018; 298.23 to 
142.11  298.28, exclusive of any amount received under this clause; 
142.12  298.34 to 298.39; 298.391 to 298.396; 298.405; or any law 
142.13  imposing a tax on severed mineral values after reduction for any 
142.14  portion distributed to cities and towns under section 126C.48, 
142.15  subdivision 8, paragraph (5), that is less than the amount of 
142.16  its levy reduction under section 126C.48, subdivision 8, for the 
142.17  second year prior to the year of the distribution shall receive 
142.18  a distribution equal to the difference; the amount necessary to 
142.19  make this payment shall be derived from proportionate reductions 
142.20  in the initial distribution to other school districts under 
142.21  clause (i).  
142.22     (d) Any school district described in paragraph (c) where a 
142.23  levy increase pursuant to section 126C.17, subdivision 9, was 
142.24  authorized by referendum for taxes payable in 2001, shall 
142.25  receive a distribution from a fund that receives a distribution 
142.26  in 1998 of 21.3 cents per ton.  On July 15 of 1999, and each 
142.27  year thereafter, the increase over the amount established for 
142.28  the prior year shall be determined according to the increase in 
142.29  the implicit price deflator as provided in section 298.24, 
142.30  subdivision 1.  Each district shall receive $175 times the pupil 
142.31  units identified in section 126C.05, subdivision 1, enrolled in 
142.32  the second previous year or the 1983-1984 school year, whichever 
142.33  is greater, less the product of 1.8 percent times the district's 
142.34  taxable net tax capacity in the second previous year. 
142.35     If the total amount provided by paragraph (d) is 
142.36  insufficient to make the payments herein required then the 
143.1   entitlement of $175 per pupil unit shall be reduced uniformly so 
143.2   as not to exceed the funds available.  Any amounts received by a 
143.3   qualifying school district in any fiscal year pursuant to 
143.4   paragraph (d) shall not be applied to reduce general education 
143.5   aid which the district receives pursuant to section 126C.13 or 
143.6   the permissible levies of the district.  Any amount remaining 
143.7   after the payments provided in this paragraph shall be paid to 
143.8   the commissioner of iron range resources and rehabilitation who 
143.9   shall deposit the same in the taconite environmental protection 
143.10  fund and the northeast Minnesota economic protection trust fund 
143.11  as provided in subdivision 11. 
143.12     Each district receiving money according to this paragraph 
143.13  shall reserve $25 times the number of pupil units in the 
143.14  district.  It may use the money for early childhood programs or 
143.15  for outcome-based learning programs that enhance the academic 
143.16  quality of the district's curriculum.  The outcome-based 
143.17  learning programs must be approved by the commissioner of 
143.18  children, families, and learning. 
143.19     (e) There shall be distributed to any school district the 
143.20  amount which the school district was entitled to receive under 
143.21  section 298.32 in 1975. 
143.22     (f) Effective with for the distribution in 2003 and 
143.23  thereafter only, five percent of the distributions to school 
143.24  districts under paragraphs (b), (c), and (e); subdivision 6, 
143.25  paragraph (c); subdivision 11; and section 477A.15 298.225, 
143.26  shall be distributed to the general fund.  The remainder less 
143.27  any portion distributed to cities and towns under section 
143.28  126C.48, subdivision 8, paragraph (5), shall be distributed to 
143.29  the cities and townships within each school district in the 
143.30  proportion that their taxable net tax capacity within the school 
143.31  district bears to the taxable net tax capacity of the school 
143.32  district for property taxes payable in the year prior to 
143.33  distribution.  No city or township shall receive a distribution 
143.34  greater than its levy for taxes payable in the year prior to 
143.35  distribution northeast Minnesota economic protection trust fund 
143.36  created in section 298.292.  Fifty percent of the amount 
144.1   distributed to the northeast Minnesota economic protection trust 
144.2   fund shall be made available for expenditure under section 
144.3   298.293 as governed by section 298.296.  Effective in 2003 only, 
144.4   100 percent of the distributions to school districts under 
144.5   section 477A.15 less any portion distributed to cities and towns 
144.6   under section 126C.48, subdivision 8, paragraph (5), shall be 
144.7   distributed to the general fund. 
144.8      Sec. 8.  Minnesota Statutes 2000, section 298.28, 
144.9   subdivision 5, is amended to read: 
144.10     Subd. 5.  [COUNTIES.] (a) 16.5 26.05 cents per taxable ton 
144.11  is allocated to counties to be distributed, based upon 
144.12  certification by the commissioner of revenue, under paragraphs 
144.13  (b) to (d). 
144.14     (b) 13 20.525 cents per taxable ton shall be distributed to 
144.15  the county in which the taconite is mined or quarried or in 
144.16  which the concentrate is produced, less any amount which is to 
144.17  be distributed pursuant to paragraph (c).  The apportionment 
144.18  formula prescribed in subdivision 2 is the basis for the 
144.19  distribution. 
144.20     (c) If an electric power plant owned by and providing the 
144.21  primary source of power for a taxpayer mining and concentrating 
144.22  taconite is located in a county other than the county in which 
144.23  the mining and the concentrating processes are conducted, one 
144.24  cent per taxable ton of the tax distributed to the counties 
144.25  pursuant to paragraph (b) and imposed on and collected from such 
144.26  taxpayer shall be paid to the county in which the power plant is 
144.27  located. 
144.28     (d) 3.5 5.525 cents per taxable ton shall be paid to the 
144.29  county from which the taconite was mined, quarried or 
144.30  concentrated to be deposited in the county road and bridge 
144.31  fund.  If the mining, quarrying and concentrating, or separate 
144.32  steps in any of those processes are carried on in more than one 
144.33  county, the commissioner shall follow the apportionment formula 
144.34  prescribed in subdivision 2. 
144.35     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
144.36  following final enactment. 
145.1      Sec. 9.  Minnesota Statutes 2001 Supplement, section 
145.2   298.28, subdivision 6, is amended to read: 
145.3      Subd. 6.  [PROPERTY TAX RELIEF.] (a) In 2002 and 
145.4   thereafter, 35.9 33.9 cents per taxable ton, less any amount 
145.5   required to be distributed under paragraphs (b) and (c), and 
145.6   less any amount required to be deducted under paragraph (d), 
145.7   must be allocated to St. Louis county acting as the counties' 
145.8   fiscal agent, to be distributed as provided in sections 273.134 
145.9   to 273.136. 
145.10     (b) If an electric power plant owned by and providing the 
145.11  primary source of power for a taxpayer mining and concentrating 
145.12  taconite is located in a county other than the county in which 
145.13  the mining and the concentrating processes are conducted, .1875 
145.14  cent per taxable ton of the tax imposed and collected from such 
145.15  taxpayer shall be paid to the county. 
145.16     (c) If an electric power plant owned by and providing the 
145.17  primary source of power for a taxpayer mining and concentrating 
145.18  taconite is located in a school district other than a school 
145.19  district in which the mining and concentrating processes are 
145.20  conducted, .7282 .4541 cent per taxable ton of the tax imposed 
145.21  and collected from the taxpayer shall be paid to the school 
145.22  district. 
145.23     (d) Two cents per taxable ton must be deducted from the 
145.24  amount allocated to the St. Louis county auditor under paragraph 
145.25  (a). 
145.26     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
145.27  following final enactment. 
145.28     Sec. 10.  Minnesota Statutes 2001 Supplement, section 
145.29  298.28, subdivision 9a, is amended to read: 
145.30     Subd. 9a.  [TACONITE ECONOMIC DEVELOPMENT FUND.] (a) 30.1 
145.31  cents per ton for distributions in 2002 and thereafter must be 
145.32  paid to the taconite economic development fund.  No distribution 
145.33  shall be made under this paragraph in 2004 or any subsequent 
145.34  year in which total industry production falls below 30 million 
145.35  tons.  Distribution shall only be made to a taconite producer's 
145.36  fund under section 298.227 if the producer timely pays its tax 
146.1   under section 298.24 by the dates provided under section 298.27, 
146.2   or pursuant to the due dates provided by an administrative 
146.3   agreement with the commissioner. 
146.4      (b) An amount equal to 50 percent of the tax under section 
146.5   298.24 for concentrate sold in the form of pellet chips and 
146.6   fines not exceeding 5/16 inch in size and not including crushed 
146.7   pellets shall be paid to the taconite economic development 
146.8   fund.  The amount paid shall not exceed $700,000 annually for 
146.9   all companies.  If the initial amount to be paid to the fund 
146.10  exceeds this amount, each company's payment shall be prorated so 
146.11  the total does not exceed $700,000. 
146.12     Sec. 11.  Minnesota Statutes 2000, section 298.28, 
146.13  subdivision 9b, is amended to read: 
146.14     Subd. 9b.  [TACONITE ENVIRONMENTAL FUND.] Five cents per 
146.15  ton for distributions in 1999, 2000, 2001, and 2002, and 2003 
146.16  must be paid to the taconite environmental fund for use under 
146.17  section 298.2961.  No distribution may be made under this 
146.18  paragraph in any year in which total industry production falls 
146.19  below 30,000,000 tons. 
146.20     Sec. 12.  Minnesota Statutes 2001 Supplement, section 
146.21  298.28, subdivision 10, is amended to read: 
146.22     Subd. 10.  [INCREASE.] Beginning with distributions in 
146.23  2000, the amount determined under subdivision 9 shall be 
146.24  increased in the same proportion as the increase in the implicit 
146.25  price deflator as provided in section 298.24, subdivision 1.  
146.26  Beginning with distributions in 2003, the amount determined 
146.27  under subdivision 6, paragraph (a), shall be increased in the 
146.28  same proportion as the increase in the implicit price deflator 
146.29  as provided in section 298.24, subdivision 1.  
146.30     The distributions per ton determined under subdivisions 5, 
146.31  paragraphs (b) and (d), and 6, paragraph (b), for distribution 
146.32  in 1988 and subsequent years shall be the distribution per ton 
146.33  determined for distribution in 1987.  The distribution per ton 
146.34  under subdivision 6, paragraph (c), for distribution in 2000 and 
146.35  subsequent years shall be 81 percent of the distribution per ton 
146.36  determined for distribution in 1987. 
147.1      <h>[EFFECTIVE DATE.]</h> This section is effective the day 
147.2   following final enactment. 
147.3      Sec. 13.  Minnesota Statutes 2000, section 298.28, 
147.4   subdivision 11, is amended to read: 
147.5      Subd. 11.  [REMAINDER.] (a) The proceeds of the tax imposed 
147.6   by section 298.24 which remain after the distributions and 
147.7   payments in subdivisions 2 to 10a, as certified by the 
147.8   commissioner of revenue, and paragraphs (b), (c), and (d), and 
147.9   (e) have been made, together with interest earned on all money 
147.10  distributed under this section prior to distribution, shall be 
147.11  divided between the taconite environmental protection fund 
147.12  created in section 298.223 and the northeast Minnesota economic 
147.13  protection trust fund created in section 298.292 as follows:  
147.14  Two-thirds to the taconite environmental protection fund and 
147.15  one-third to the northeast Minnesota economic protection trust 
147.16  fund.  The proceeds shall be placed in the respective special 
147.17  accounts. 
147.18     (b) There shall be distributed to each city, town, and 
147.19  county the amount that it received under section 294.26 in 
147.20  calendar year 1977; provided, however, that the amount 
147.21  distributed in 1981 to the unorganized territory number 2 of 
147.22  Lake county and the town of Beaver Bay based on the 
147.23  between-terminal trackage of Erie Mining Company will be 
147.24  distributed in 1982 and subsequent years to the unorganized 
147.25  territory number 2 of Lake county and the towns of Beaver Bay 
147.26  and Stony River based on the miles of track of Erie Mining 
147.27  Company in each taxing district. 
147.28     (c) There shall be distributed to the iron range resources 
147.29  and rehabilitation board the amounts it received in 1977 under 
147.30  section 298.22.  The amount distributed under this paragraph 
147.31  shall be expended within or for the benefit of the tax relief 
147.32  area defined in section 273.134. 
147.33     (d) There shall be distributed to each school district 81 
147.34  62 percent of the amount that it received under section 294.26 
147.35  in calendar year 1977. 
147.36     (e) In 2003 only, $100,000 must be distributed to a 
148.1   township located in a taconite tax relief area as defined in 
148.2   section 273.134, paragraph (a), that received $119,259 of 
148.3   homestead and agricultural credit aid and $182,014 in local 
148.4   government aid in 2001. 
148.5      Sec. 14.  Minnesota Statutes 2000, section 298.291, is 
148.6   amended to read: 
148.7      298.291 [CITATION.] 
148.8      Sections 298.291 to 298.294 shall be known as the 
148.9   "Northeast Minnesota Douglas J. Johnson Economic Protection 
148.10  Trust Fund Act.  
148.11     Sec. 15.  Minnesota Statutes 2001 Supplement, section 
148.12  298.296, subdivision 2, is amended to read: 
148.13     Subd. 2.  [EXPENDITURE OF FUNDS.] (a) Before January 1, 
148.14  2003 2028, funds may be expended on projects and for 
148.15  administration of the trust fund only from the net interest, 
148.16  earnings, and dividends arising from the investment of the trust 
148.17  at any time, including net interest, earnings, and dividends 
148.18  that have arisen prior to July 13, 1982, plus $10,000,000 made 
148.19  available for use in fiscal year 1983, except that any amount 
148.20  required to be paid out of the trust fund to provide the 
148.21  property tax relief specified in Laws 1977, chapter 423, article 
148.22  X, section 4, and to make school bond payments and payments to 
148.23  recipients of taconite production tax proceeds pursuant to 
148.24  section 298.225, may be taken from the corpus of the trust.  
148.25     (b) Additionally, upon recommendation by the board, up to 
148.26  $13,000,000 from the corpus of the trust may be made available 
148.27  for use as provided in subdivision 4, and up to $10,000,000 from 
148.28  the corpus of the trust may be made available for use as 
148.29  provided in section 298.2961.  
148.30     (c) On and after January 1, 2003, Funds may be expended on 
148.31  projects and for administration from any assets of the 
148.32  trust. Additionally, an amount equal to 20 percent of the value 
148.33  of the corpus of the trust on the date of enactment of this act, 
148.34  not including the funds authorized in paragraph (b), plus the 
148.35  amounts made available under sections 7 and 17, may be expended 
148.36  on projects.  Funds may be expended for projects under this 
149.1   paragraph only if the project: 
149.2      (1) is for the purposes established under section 298.292, 
149.3   subdivision 1, clause (1) or (2); and 
149.4      (2) is approved by the board upon an affirmative vote of at 
149.5   least ten of its members. 
149.6   No money made available under this paragraph or paragraph (d) 
149.7   can be used for administrative or operating expenses of the iron 
149.8   range resources and rehabilitation board or expenses relating to 
149.9   any facilities owned or operated by the board on the effective 
149.10  date of this act. 
149.11     (d) Upon recommendation by a unanimous vote of all members 
149.12  of the board, amounts in addition to those authorized under 
149.13  paragraphs (a), (b), and (c) may be expended on projects 
149.14  described in section 298.292, subdivision 1. 
149.15     (e) Annual administrative costs, not including detailed 
149.16  engineering expenses for the projects, shall not exceed five 
149.17  percent of the net interest, dividends, and earnings arising 
149.18  from the trust in the preceding fiscal year.  
149.19     (f) Principal and interest received in repayment of loans 
149.20  made pursuant to this section, and earnings on other investments 
149.21  made under section 298.292, subdivision 2, clause (4), shall be 
149.22  deposited in the state treasury and credited to the trust.  
149.23  These receipts are appropriated to the board for the purposes of 
149.24  sections 298.291 to 298.298. 
149.25     <h>[EFFECTIVE DATE.]</h> This section is effective January 1, 2003.
149.26     Sec. 16.  Minnesota Statutes 2000, section 477A.15, is 
149.27  amended to read: 
149.28     477A.15 [TACONITE AID REIMBURSEMENT.] 
149.29     Any school district in which is located property which had 
149.30  been entitled to a reduction of tax pursuant to Minnesota 
149.31  Statutes 1978, section 273.135, subdivision 2, clause (c), shall 
149.32  receive in 1981 and subsequent years an amount equal to the 
149.33  amount it received in 1980 pursuant to Minnesota Statutes 1978, 
149.34  section 298.28, subdivision 1, clause (3)(b).  Payments shall be 
149.35  made pursuant to this section and section 126C.48, subdivision 
149.36  8, paragraph (5), by the commissioner of revenue to the taxing 
150.1   jurisdictions on the date in each calendar year when the first 
150.2   installment is paid under section 477A.015. 
150.3      <h>[EFFECTIVE DATE.]</h> This section is effective for payments in 
150.4   2003 and subsequent years. 
150.5      Sec. 17.  [ADDITIONAL DISTRIBUTION.] 
150.6      The difference between the distribution to school districts 
150.7   under Minnesota Statutes, sections 298.225 and 298.28, as 
150.8   amended by this act, and the amount the districts would have 
150.9   received under Minnesota Statutes 2000, sections 298.225 and 
150.10  298.28 for distributions in 2004 only, shall be added to the 
150.11  sums available for expenditure under Minnesota Statutes, section 
150.12  298.293, as governed by Minnesota Statutes, section 298.296. 
150.13     Sec. 18.  [INSTRUCTION TO THE REVISOR.] 
150.14     In the next edition of Minnesota Statutes, the revisor of 
150.15  statutes shall change the phrase "Northeast Minnesota Economic 
150.16  Protection Trust Fund Act" to "Douglas J. Johnson Economic 
150.17  Protection Trust Fund Act" wherever it appears in Minnesota 
150.18  Statutes. 
150.19                             ARTICLE 9 
150.20              DEPARTMENT OF REVENUE POLICY PROVISIONS
150.21     Section 1.  Minnesota Statutes 2000, section 270.063, 
150.22  subdivision 4, is amended to read: 
150.23     Subd. 4.  [FEDERAL TAX REFUND OFFSET FEES; TIME LIMIT FOR 
150.24  SUBMITTING CLAIMS FOR OFFSET.] For fees charged by the 
150.25  department of the treasury of the United States for the offset 
150.26  of federal tax refunds that are deducted from the refund amounts 
150.27  remitted to the commissioner, the unpaid debts of the taxpayers 
150.28  whose refunds are being offset to satisfy the debts are reduced 
150.29  only by the actual amount of the refund payments received by the 
150.30  commissioner.  Notwithstanding any other provision of law to the 
150.31  contrary, a claim for the offset of a federal tax refund must be 
150.32  submitted to the department of the treasury of the United States 
150.33  within ten years after the date of the assessment of the tax 
150.34  owed by the taxpayer whose refund is to be offset to satisfy the 
150.35  debt. 
150.36     <h>[EFFECTIVE DATE.]</h> This section is effective for claims for 
151.1   offset that were submitted before and are pending on the date of 
151.2   final enactment, and for claims submitted on or after the day 
151.3   following final enactment. 
151.4      Sec. 2.  Minnesota Statutes 2001 Supplement, section 
151.5   270.691, subdivision 8, is amended to read: 
151.6      Subd. 8.  [EXPIRATION DATE.] The program authorized under 
151.7   this section terminates on June 30, 2002 2003. 
151.8      <h>[EFFECTIVE DATE.]</h> This section is effective the day 
151.9   following final enactment. 
151.10     Sec. 3.  Minnesota Statutes 2000, section 273.125, 
151.11  subdivision 4, is amended to read: 
151.12     Subd. 4.  [PETITIONS OF GRIEVANCE.] A person who claims 
151.13  that the person's manufactured home has been unfairly or 
151.14  unequally assessed, or that the property has been assessed at a 
151.15  valuation greater than its real or actual value, or that the tax 
151.16  levied against it is illegal, in whole or in part, or has been 
151.17  paid, or that the property is exempt from the tax so levied, may 
151.18  have the validity of the claim, defense, or objection determined 
151.19  in court.  The determination must be made by the district court 
151.20  of the county in which the tax is levied or by the tax court.  A 
151.21  person can request the determination by filing a petition for it 
151.22  in the office of the court administrator of the district court 
151.23  on or before September October 1 of the year in which the tax 
151.24  becomes payable.  A petition for determination under this 
151.25  section may be transferred by the district court to the tax 
151.26  court. 
151.27     <h>[EFFECTIVE DATE.]</h> This section is effective for taxes 
151.28  payable in 2003 and thereafter. 
151.29     Sec. 4.  Minnesota Statutes 2000, section 278.01, 
151.30  subdivision 1, is amended to read: 
151.31     Subdivision 1.  [DETERMINATION OF VALIDITY.] (a) Any person 
151.32  having personal property, or any estate, right, title, or 
151.33  interest in or lien upon any parcel of land, who claims that 
151.34  such property has been partially, unfairly, or unequally 
151.35  assessed in comparison with other property in the (1) city, or 
151.36  (2) county, or (3) in the case of a county containing a city of 
152.1   the first class, the portion of the county excluding the first 
152.2   class city, or that the parcel has been assessed at a valuation 
152.3   greater than its real or actual value, or that the tax levied 
152.4   against the same is illegal, in whole or in part, or has been 
152.5   paid, or that the property is exempt from the tax so levied, may 
152.6   have the validity of the claim, defense, or objection determined 
152.7   by the district court of the county in which the tax is levied 
152.8   or by the tax court by serving one copy of a petition for such 
152.9   determination upon the county auditor, one copy on the county 
152.10  attorney, one copy on the county treasurer, and three copies on 
152.11  the county assessor.  The county assessor shall immediately 
152.12  forward one copy of the petition to the appropriate governmental 
152.13  authority in a home rule charter or statutory city or town in 
152.14  which the property is located if that city or town employs its 
152.15  own certified assessor.  A copy of the petition shall also be 
152.16  forwarded by the assessor to the school board of the school 
152.17  district in which the property is located. 
152.18     (b) In counties where the office of county treasurer has 
152.19  been combined with the office of county auditor, the county may 
152.20  elect to require the petitioner to serve the number of copies as 
152.21  determined by the county.  The county assessor shall immediately 
152.22  forward one copy of the petition to the appropriate governmental 
152.23  authority in a home rule charter or statutory city or town in 
152.24  which the property is located if that city or town employs its 
152.25  own certified assessor.  A list of petitioned properties, 
152.26  including the name of the petitioner, the identification number 
152.27  of the property, and the estimated market value, shall be sent 
152.28  on or before the first day of July by the county 
152.29  auditor/treasurer to the school board of the school district in 
152.30  which the property is located. 
152.31     (c) For all counties, the petitioner must file the copies 
152.32  with proof of service, in the office of the court administrator 
152.33  of the district court on or before March 31 April 30 of the year 
152.34  in which the tax becomes payable.  A petition for determination 
152.35  under this section may be transferred by the district court to 
152.36  the tax court.  An appeal may also be taken to the tax court 
153.1   under chapter 271 at any time following receipt of the valuation 
153.2   notice required by section 273.121 but prior to April May 1 of 
153.3   the year in which the taxes are payable. 
153.4      <h>[EFFECTIVE DATE.]</h> This section is effective for taxes 
153.5   payable in 2003 and thereafter. 
153.6      Sec. 5.  Minnesota Statutes 2000, section 279.01, 
153.7   subdivision 3, is amended to read: 
153.8      Subd. 3.  [AGRICULTURAL PROPERTY.] In the case of class 1b 
153.9   agricultural homestead, class 2a agricultural homestead 
153.10  property, and class 2b(3) agricultural nonhomestead property, no 
153.11  penalties shall attach to the second one-half property tax 
153.12  payment as provided in this section if paid by November 15.  
153.13  Thereafter for class 1b agricultural homestead and class 2a 
153.14  homestead property, on November 16 following, a penalty of six 
153.15  percent shall accrue and be charged on all such unpaid taxes and 
153.16  on December 1 following, an additional two percent shall be 
153.17  charged on all such unpaid taxes.  Thereafter for class 2b(3) 
153.18  agricultural nonhomestead property, on November 16 following, a 
153.19  penalty of eight percent shall accrue and be charged on all such 
153.20  unpaid taxes and on December 1 following, an additional four 
153.21  percent shall be charged on all such unpaid taxes. 
153.22     If the owner of class 1b agricultural homestead, class 2a, 
153.23  or class 2b(3) agricultural property receives a consolidated 
153.24  property tax statement that shows only an aggregate of the taxes 
153.25  and special assessments due on that property and on other 
153.26  property not classified as class 1b agricultural homestead, 
153.27  class 2a, or class 2b(3) agricultural property, the aggregate 
153.28  tax and special assessments shown due on the property by the 
153.29  consolidated statement will be due on November 15 provided that 
153.30  at least 50 percent of the property's market value is classified 
153.31  class 1b agricultural, class 2a, or class 2b(3) agricultural. 
153.32     <h>[EFFECTIVE DATE.]</h> This section is effective for taxes 
153.33  payable in 2003 and thereafter. 
153.34     Sec. 6.  Minnesota Statutes 2000, section 289A.19, 
153.35  subdivision 1, is amended to read: 
153.36     Subdivision 1.  [FIDUCIARY INCOME, ENTERTAINMENT TAX, AND 
154.1   INFORMATION RETURNS.] When, in the commissioner's judgment, good 
154.2   cause exists, the commissioner may extend the time for filing 
154.3   entertainment tax returns for not more than six months.  If an 
154.4   extension to file the federal fiduciary income tax return or 
154.5   information return has been granted under section 6081 of the 
154.6   Internal Revenue Code, the time for filing the state return is 
154.7   extended for that period.  The commissioner may require the 
154.8   taxpayer to file a tentative return when the regularly required 
154.9   return is due, and to pay a tax on the basis of the tentative 
154.10  return at the times required for the payment of taxes on the 
154.11  basis of the regularly required return from the taxpayer.  The 
154.12  commissioner shall grant an automatic extension of six months to 
154.13  file a partnership, "S" corporation, or fiduciary income tax 
154.14  return if all of the taxes imposed on the entity for the year by 
154.15  chapter 290 and section 289A.08, subdivision 7, have been paid 
154.16  by the date prescribed by section 289A.18, subdivision 1. 
154.17     <h>[EFFECTIVE DATE.]</h> This section is effective for returns due 
154.18  after December 31, 2002. 
154.19     Sec. 7.  Minnesota Statutes 2000, section 295.53, 
154.20  subdivision 1, is amended to read: 
154.21     Subdivision 1.  [EXEMPTIONS.] (a) The following payments 
154.22  are excluded from the gross revenues subject to the hospital, 
154.23  surgical center, or health care provider taxes under sections 
154.24  295.50 to 295.57: 
154.25     (1) payments received for services provided under the 
154.26  Medicare program, including payments received from the 
154.27  government, and organizations governed by sections 1833 and 1876 
154.28  of title XVIII of the federal Social Security Act, United States 
154.29  Code, title 42, section 1395, and enrollee deductibles, 
154.30  coinsurance, and copayments, whether paid by the Medicare 
154.31  enrollee or by a Medicare supplemental coverage as defined in 
154.32  section 62A.011, subdivision 3, clause (10).  Payments for 
154.33  services not covered by Medicare are taxable; 
154.34     (2) medical assistance payments including payments received 
154.35  directly from the government or from a prepaid plan; 
154.36     (3) payments received for home health care services; 
155.1      (4) payments received from hospitals or surgical centers 
155.2   for goods and services on which liability for tax is imposed 
155.3   under section 295.52 or the source of funds for the payment is 
155.4   exempt under clause (1), (2), (7), (8), (10), (13), or (20); 
155.5      (5) payments received from health care providers for goods 
155.6   and services on which liability for tax is imposed under this 
155.7   chapter or the source of funds for the payment is exempt under 
155.8   clause (1), (2), (7), (8), (10), (13), or (20); 
155.9      (6) amounts paid for legend drugs, other than nutritional 
155.10  products, to a wholesale drug distributor who is subject to tax 
155.11  under section 295.52, subdivision 3, reduced by reimbursements 
155.12  received for legend drugs under clauses (1), (2), (7), and 
155.13  (8) otherwise exempt under chapter 295; 
155.14     (7) payments received under the general assistance medical 
155.15  care program including payments received directly from the 
155.16  government or from a prepaid plan; 
155.17     (8) payments received for providing services under the 
155.18  MinnesotaCare program including payments received directly from 
155.19  the government or from a prepaid plan and enrollee deductibles, 
155.20  coinsurance, and copayments.  For purposes of this clause, 
155.21  coinsurance means the portion of payment that the enrollee is 
155.22  required to pay for the covered service; 
155.23     (9) payments received by a health care provider or the 
155.24  wholly owned subsidiary of a health care provider for care 
155.25  provided outside Minnesota; 
155.26     (10) payments received from the chemical dependency fund 
155.27  under chapter 254B; 
155.28     (11) payments received in the nature of charitable 
155.29  donations that are not designated for providing patient services 
155.30  to a specific individual or group; 
155.31     (12) payments received for providing patient services 
155.32  incurred through a formal program of health care research 
155.33  conducted in conformity with federal regulations governing 
155.34  research on human subjects.  Payments received from patients or 
155.35  from other persons paying on behalf of the patients are subject 
155.36  to tax; 
156.1      (13) payments received from any governmental agency for 
156.2   services benefiting the public, not including payments made by 
156.3   the government in its capacity as an employer or insurer; 
156.4      (14) payments received for services provided by community 
156.5   residential mental health facilities licensed under Minnesota 
156.6   Rules, parts 9520.0500 to 9520.0690, community support programs 
156.7   and family community support programs approved under Minnesota 
156.8   Rules, parts 9535.1700 to 9535.1760, and community mental health 
156.9   centers as defined in section 245.62, subdivision 2; 
156.10     (15) government payments received by a regional treatment 
156.11  center; 
156.12     (16) payments received for hospice care services; 
156.13     (17) payments received by a health care provider for 
156.14  hearing aids and related equipment or prescription eyewear 
156.15  delivered outside of Minnesota; 
156.16     (18) payments received by an educational institution from 
156.17  student tuition, student activity fees, health care service 
156.18  fees, government appropriations, donations, or grants.  Fee for 
156.19  service payments and payments for extended coverage are taxable; 
156.20     (19) payments received for services provided by:  assisted 
156.21  living programs and congregate housing programs; and 
156.22     (20) payments received under the federal Employees Health 
156.23  Benefits Act, United States Code, title 5, section 8909(f), as 
156.24  amended by the Omnibus Reconciliation Act of 1990. 
156.25     (b) Payments received by wholesale drug distributors for 
156.26  legend drugs sold directly to veterinarians or veterinary bulk 
156.27  purchasing organizations are excluded from the gross revenues 
156.28  subject to the wholesale drug distributor tax under sections 
156.29  295.50 to 295.59. 
156.30     <h>[EFFECTIVE DATE.]</h> This section is effective for payments 
156.31  received after December 31, 2001. 
156.32     Sec. 8.  Minnesota Statutes 2000, section 295.57, is 
156.33  amended by adding a subdivision to read: 
156.34     Subd. 5.  [EXEMPTION FOR AMOUNTS PAID FOR LEGEND DRUGS.] If 
156.35  a hospital or health care provider cannot determine the actual 
156.36  cost or reimbursement of legend drugs under the exemption 
157.1   provided in section 295.53, subdivision 1, paragraph (a), clause 
157.2   (6), the following method must be used: 
157.3      A hospital or health care provider must determine the 
157.4   amount paid for legend drugs used during the month or quarter 
157.5   and multiply that amount by a ratio, the numerator of which is 
157.6   the total amount received for taxable patient services, and the 
157.7   denominator of which is the total amount received for all 
157.8   patient services, including amounts exempt under section 295.53, 
157.9   subdivision 1.  The result represents the allowable exemption 
157.10  for the monthly or quarterly cost of drugs. 
157.11     <h>[EFFECTIVE DATE.]</h> This section is effective for payments 
157.12  received on or after July 1, 2002. 
157.13     Sec. 9.  Minnesota Statutes 2001 Supplement, section 
157.14  295.60, subdivision 2, is amended to read: 
157.15     Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
157.16  the following terms have the meanings given. 
157.17     (b) "Commissioner" means the commissioner of revenue. 
157.18     (c) "Furrier" means a retailer that sells clothing made of 
157.19  fur. 
157.20     (d) "Clothing made of fur" means articles of clothing made 
157.21  of fur on the hide or pelt, and articles of clothing of which 
157.22  such fur is the component material of chief value, but only if 
157.23  such value is more than three times the value of the next most 
157.24  valuable material.  
157.25     (e) "Retail sale" has the meaning given in section 297A.61, 
157.26  subdivision 4. 
157.27     (f) "Delivered outside of Minnesota" means fur clothing 
157.28  which the furrier delivers to a common carrier for delivery 
157.29  outside Minnesota, places in the United States mail or parcel 
157.30  post directed to the purchaser outside Minnesota, or delivers to 
157.31  the purchaser outside Minnesota by means of the seller's own 
157.32  delivery vehicles, and which is not returned to a point within 
157.33  Minnesota, except in the course of interstate commerce. 
157.34     <h>[EFFECTIVE DATE.]</h> This section is effective January 1, 2002.
157.35     Sec. 10.  Minnesota Statutes 2001 Supplement, section 
157.36  295.60, is amended by adding a subdivision to read: 
158.1      Subd. 2a.  [EXEMPTIONS.] Payments received by a furrier for 
158.2   clothing made of fur delivered outside of Minnesota are exempt 
158.3   from gross revenues subject to the fur clothing tax. 
158.4      <h>[EFFECTIVE DATE.]</h> This section is effective for payments 
158.5   received on or after January 1, 2002. 
158.6      Sec. 11.  Minnesota Statutes 2001 Supplement, section 
158.7   297A.61, subdivision 26, is amended to read: 
158.8      Subd. 26.  [PRIVATE COMMUNICATION SERVICE.] "Private 
158.9   communication service" means a communication telecommunication 
158.10  service furnished to a subscriber which that entitles the 
158.11  subscriber customer to:  
158.12     (1) exclusive or priority use of any a communication 
158.13  channel or group of channels; 
158.14     (2) the use of an intercommunication system for the 
158.15  subscriber's stations, or regardless of whether the channel, 
158.16  group of channels, or intercommunication system may be connected 
158.17  through switching; 
158.18     (3) the between or among termination points, regardless of 
158.19  the manner in which the channel or channels are connected, and 
158.20  includes switching capacity, extension lines and, stations, 
158.21  or and any other associated services that are provided in 
158.22  connection with, and are necessary or unique to the use of, the 
158.23  use of the channel or channels or systems described in clause 
158.24  (1); or 
158.25     (4) any combination of tunneling, encryption, 
158.26  authentication, and access control technologies and services 
158.27  used to carry traffic over the Internet, a managed Internet 
158.28  provider network or provider's backbone. 
158.29     <h>[EFFECTIVE DATE.]</h> This section is effective retroactively 
158.30  for sales and purchases occurring after July 31, 2001. 
158.31     Sec. 12.  Minnesota Statutes 2000, section 297A.68, is 
158.32  amended by adding a subdivision to read: 
158.33     Subd. 37.  [DELIVERY OR DISTRIBUTION CHARGES; PRINTED 
158.34  MATERIALS.] Charges for the delivery or distribution of printed 
158.35  materials, including individual account information, are exempt 
158.36  if (1) the charges are separately stated, (2) the delivery or 
159.1   distribution is to a mass audience or to a mailing list provided 
159.2   at the direction of the customer, and (3) the cost of the 
159.3   materials is not billed directly to the recipients. 
159.4      <h>[EFFECTIVE DATE.]</h> This section is effective retroactive to 
159.5   delivery charges on sales and purchases made after December 31, 
159.6   2001, and before January 1, 2006. 
159.7      Sec. 13.  Minnesota Statutes 2000, section 297G.07, 
159.8   subdivision 1, is amended to read: 
159.9      Subdivision 1.  [EXEMPTIONS.] The following are not subject 
159.10  to the excise tax: 
159.11     (1) Sales by a manufacturer, brewer, or wholesaler for 
159.12  shipment outside the state in interstate commerce. 
159.13     (2) Alcoholic beverages sold or transferred between 
159.14  Minnesota wholesalers. 
159.15     (3) Sales to common carriers engaged in interstate 
159.16  transportation of passengers, except as provided in this chapter.
159.17     (4) Malt beverages served by a brewery for on-premise 
159.18  consumption at no charge, or distributed to brewery employees 
159.19  for on-premise consumption under a labor contract. 
159.20     (5) Shipments of wine to Minnesota residents under section 
159.21  340A.417. 
159.22     (6) Fruit juices naturally fermented or beer naturally 
159.23  brewed in the home for family use. 
159.24     (7) Sales of wine for sacramental purposes under section 
159.25  340A.316. 
159.26     (8) Alcoholic beverages sold to authorized manufacturers of 
159.27  food products or pharmaceutical firms.  The alcoholic beverage 
159.28  must be used exclusively in the manufacture of food products or 
159.29  medicines.  For purposes of this clause, "manufacturer" means a 
159.30  person who manufactures food products intended for sale to 
159.31  wholesalers or retailers for ultimate sale to the consumer. 
159.32     (9) Liqueur-filled candy. 
159.33     (10) Sales to a federal agency, that the state of Minnesota 
159.34  is prohibited from taxing under the constitution or laws of the 
159.35  United States or under the constitution of Minnesota. 
159.36     (11) Sales to Indian tribes as defined in section 297G.08. 
160.1      (12) Shipments of intoxicating liquor from foreign 
160.2   countries to diplomatic personnel of foreign countries assigned 
160.3   to service in this state. 
160.4      <h>[EFFECTIVE DATE.]</h> This section is effective the day 
160.5   following final enactment. 
160.6      Sec. 14.  Minnesota Statutes 2001 Supplement, section 
160.7   469.1763, subdivision 6, is amended to read: 
160.8      Subd. 6.  [POOLING PERMITTED FOR DEFICITS.] (a) This 
160.9   subdivision applies only to districts for which the request for 
160.10  certification was made before August 1, 2001, and without regard 
160.11  to whether the request for certification was made prior to 
160.12  August 1, 1979. 
160.13     (b) The municipality for the district may transfer 
160.14  available increments from another tax increment financing 
160.15  district located in the municipality, if the transfer is 
160.16  necessary to eliminate a deficit in the district to which the 
160.17  increments are transferred.  A deficit in the district for 
160.18  purposes of this subdivision means the lesser of the following 
160.19  two amounts: 
160.20     (1)(i) the amount due during the calendar year to pay 
160.21  preexisting obligations of the district; minus 
160.22     (ii) the total increments collected or to be collected from 
160.23  properties located within the district that are available for 
160.24  the calendar year including amounts collected in prior years 
160.25  that are currently available; plus 
160.26     (iii) total increments from properties located in other 
160.27  districts in the municipality including amounts collected in 
160.28  prior years that are available to be used to meet the district's 
160.29  obligations under this section, excluding this subdivision, or 
160.30  other provisions of law (but excluding a special tax under 
160.31  section 469.1791 and the grant program under Laws 1997, chapter 
160.32  231, article 1, section 19, or Laws 2001, First Special Session 
160.33  chapter 5); or 
160.34     (2) the reduction in increments collected from properties 
160.35  located in the district for the calendar year as a result of the 
160.36  changes in class rates in Laws 1997, chapter 231, article 1; 
161.1   Laws 1998, chapter 389, article 2; and Laws 1999, chapter 243, 
161.2   and Laws 2001, First Special Session chapter 5, or the 
161.3   elimination of the general education tax levy under Laws 2001, 
161.4   First Special Session chapter 5. 
161.5      (c) A preexisting obligation means: 
161.6      (1) bonds issued and sold before August 1, 2001, or bonds 
161.7   issued pursuant to a binding contract requiring the issuance of 
161.8   bonds entered into before July 1, 2001, and bonds issued to 
161.9   refund such bonds or to reimburse expenditures made in 
161.10  conjunction with a signed contractual agreement entered into 
161.11  before August 1, 2001, to the extent that the bonds are secured 
161.12  by a pledge of increments from the tax increment financing 
161.13  district; and 
161.14     (2) binding contracts entered into before August 1, 2001, 
161.15  to the extent that the contracts require payments secured by a 
161.16  pledge of increments from the tax increment financing district. 
161.17     (d) The municipality may require a development authority, 
161.18  other than a seaway port authority, to transfer available 
161.19  increments including amounts collected in prior years that are 
161.20  currently available for any of its tax increment financing 
161.21  districts in the municipality to make up an insufficiency in 
161.22  another district in the municipality, regardless of whether the 
161.23  district was established by the development authority or another 
161.24  development authority.  This authority applies notwithstanding 
161.25  any law to the contrary, but applies only to a development 
161.26  authority that: 
161.27     (1) was established by the municipality; or 
161.28     (2) the governing body of which is appointed, in whole or 
161.29  part, by the municipality or an officer of the municipality or 
161.30  which consists, in whole or part, of members of the governing 
161.31  body of the municipality.  The municipality may use this 
161.32  authority only after it has first used all available increments 
161.33  of the receiving development authority to eliminate the 
161.34  insufficiency and exercised any permitted action under section 
161.35  469.1792, subdivision 3, for preexisting districts of the 
161.36  receiving development authority to eliminate the insufficiency. 
162.1      (e) The authority under this subdivision to spend tax 
162.2   increments outside of the area of the district from which the 
162.3   tax increments were collected: 
162.4      (1) may only be exercised after obtaining approval of the 
162.5   use of the increments, in writing, by the commissioner of 
162.6   revenue; 
162.7      (2) is an exception to the restrictions under section 
162.8   469.176, subdivision 4i, and the other provisions of this 
162.9   section, and the percentage restrictions under subdivision 2 
162.10  must be calculated after deducting increments spent under this 
162.11  subdivision from the total increments for the district; and 
162.12     (3) applies notwithstanding the provisions of the Tax 
162.13  Increment Financing Act in effect for districts for which the 
162.14  request for certification was made before June 30, 1982, or any 
162.15  other law to the contrary. 
162.16     (f) If a preexisting obligation requires the development 
162.17  authority to pay an amount that is limited to the increment from 
162.18  the district or a specific development within the district and 
162.19  if the obligation requires paying a higher amount to the extent 
162.20  that increments are available, the municipality may determine 
162.21  that the amount due under the preexisting obligation equals the 
162.22  higher amount and may authorize the transfer of increments under 
162.23  this subdivision to pay up to the higher amount.  The authority 
162.24  to transfer increments under this paragraph may only be used to 
162.25  the extent that the payment of all other preexisting obligations 
162.26  in the municipality due during the calendar year have been 
162.27  satisfied. 
162.28     <h>[EFFECTIVE DATE.]</h> This section is effective retroactively 
162.29  to January 2, 2002, and thereafter. 
162.30                             ARTICLE 10 
162.31             DEPARTMENT OF REVENUE TECHNICAL PROVISIONS
162.32     Section 1.  Minnesota Statutes 2001 Supplement, section 
162.33  69.021, subdivision 5, is amended to read: 
162.34     Subd. 5.  [CALCULATION OF STATE AID.] (a) The amount of 
162.35  fire state aid available for apportionment, before the addition 
162.36  of the minimum fire state aid allocation amount under 
163.1   subdivision 7, is equal to 107 percent of the amount of premium 
163.2   taxes paid to the state upon the fire, lightning, sprinkler 
163.3   leakage, and extended coverage premiums reported to the 
163.4   commissioner by insurers on the Minnesota Firetown Premium 
163.5   Report.  This amount shall be reduced by the amount required to 
163.6   pay the state auditor's costs and expenses of the audits or 
163.7   exams of the firefighters relief associations. 
163.8      The total amount for apportionment in respect to fire state 
163.9   aid must not be less than two percent of the premiums reported 
163.10  to the commissioner by insurers on the Minnesota Firetown 
163.11  Premium Report after subtracting the following amounts: 
163.12     (1) the amount required to pay the state auditor's costs 
163.13  and expenses of the audits or exams of the firefighters relief 
163.14  associations; and 
163.15     (2) one percent of the premiums reported by town and 
163.16  farmers' mutual insurance companies and mutual property and 
163.17  casualty companies with total assets of $5,000,000 or less.  
163.18     (b) The total amount for apportionment as police state aid 
163.19  is equal to 104 percent of the amount of premium taxes paid to 
163.20  the state on the premiums reported to the commissioner by 
163.21  insurers on the Minnesota Aid to Police Premium Report, plus the 
163.22  payment amounts received under section 297I.05, subdivision 8, 
163.23  since the last aid apportionment, and reduced by the amount 
163.24  required to pay the costs and expenses of the state auditor for 
163.25  audits or exams of police relief associations.  The total amount 
163.26  for apportionment in respect to the police state aid program 
163.27  must not be less than two percent of the amount of premiums 
163.28  reported to the commissioner by insurers on the Minnesota Aid to 
163.29  Police Premium Report after subtracting the amount required to 
163.30  pay the state auditor's cost and expenses of the audits or exams 
163.31  of the police relief associations.  
163.32     (c) The commissioner shall calculate the percentage of 
163.33  increase or decrease reflected in the apportionment over or 
163.34  under the previous year's available state aid using the same 
163.35  premiums as a basis for comparison. 
163.36     (d) The amount for apportionment in respect to peace 
164.1   officer state aid under paragraph (b) must be further reduced by 
164.2   $1,779,000 in fiscal year 1999, $2,077,000 in fiscal year 2000, 
164.3   and $2,404,000 in fiscal year 2001.  These reductions in this 
164.4   paragraph cancel to the general fund. 
164.5      (e) In addition to the amount for apportionment of police 
164.6   state aid under paragraph (b) is annually increased by an amount 
164.7   equal to the revenues under the tax on automobile risk 
164.8   self-insurance under Minnesota Statutes 2000, section 297I.05, 
164.9   subdivision 8, that were collected in fiscal year 2001, each 
164.10  year $100,000 shall be apportioned for police state aid.  An 
164.11  amount sufficient to pay this increase is annually appropriated 
164.12  from the general fund. 
164.13     <h>[EFFECTIVE DATE.]</h> This section is effective beginning with 
164.14  fiscal year 2003. 
164.15     Sec. 2.  Minnesota Statutes 2001 Supplement, section 
164.16  126C.17, subdivision 7a, is amended to read: 
164.17     Subd. 7a.  [REFERENDUM TAX BASE REPLACEMENT AID.] For each 
164.18  school district that had a referendum allowance for fiscal year 
164.19  2002 exceeding $415, for each separately authorized referendum 
164.20  levy, the commissioner of revenue, in consultation with the 
164.21  commissioner of children, families, and learning, shall certify 
164.22  the amount of the referendum levy in taxes payable year 2001 
164.23  attributable to the portion of the referendum allowance 
164.24  exceeding $415 levied against property classified as class 2, 
164.25  noncommercial 4c(1), or 4c(4), under section 273.13, excluding 
164.26  the portion of the tax paid by the portion of class 2a property 
164.27  consisting of the house, garage, and surrounding one acre of 
164.28  land.  The resulting amount must be used to reduce the 
164.29  district's referendum levy amount otherwise determined, and must 
164.30  be paid to the district each year that the referendum authority 
164.31  remains in effect.  The aid payable under this subdivision must 
164.32  be subtracted from the district's referendum equalization aid 
164.33  under subdivision 7.  The referendum equalization aid after the 
164.34  subtraction must not be less than zero. 
164.35     For the purposes of this subdivision, the referendum levy 
164.36  with the latest year of expiration is assumed to be at the 
165.1   highest level of equalization, and the referendum levy with the 
165.2   earliest year of expiration is assumed to be at the lowest level 
165.3   of equalization. 
165.4      <h>[EFFECTIVE DATE.]</h> This section is effective for taxes 
165.5   payable in 2002 and thereafter. 
165.6      Sec. 3.  Minnesota Statutes 2001 Supplement, section 
165.7   270.69, subdivision 2, is amended to read: 
165.8      Subd. 2.  [FILING OF LIENS NECESSARY FOR ENFORCEABILITY 
165.9   AGAINST CERTAIN PERSONS; METHODS OF FILING; FEES.] (a) The lien 
165.10  imposed by subdivision 1 is not enforceable against any 
165.11  purchaser, mortgagee, pledgee, holder of a Uniform Commercial 
165.12  Code security interest, mechanic's lienor, or judgment lien 
165.13  creditor whose interest has been duly perfected or is a 
165.14  conveyance or interest entitled to protection against judgments 
165.15  and attachments under section 507.34 or under any other 
165.16  applicable provisions of state law, until a notice of lien has 
165.17  been filed by the commissioner of revenue in the office of the 
165.18  county recorder of the county in which real property is 
165.19  situated, or in the case of personal property belonging to an 
165.20  individual who is not a resident of this state or to a 
165.21  corporation, partnership, or other organization, in the office 
165.22  of the secretary of state, or in the case of personal property 
165.23  belonging to a resident individual, in the office of the county 
165.24  recorder of the county of residence of the individual. 
165.25     (b)(1) Notices of liens, and lien releases, transcriptions, 
165.26  and renewals, in a form prescribed by the commissioner of 
165.27  revenue, may be filed with the county recorder or the secretary 
165.28  of state by mail, personal delivery, or by electronic 
165.29  transmission by the commissioner or a delegate into the 
165.30  computerized filing system of the secretary of state.  The 
165.31  secretary of state shall transmit the notice electronically to 
165.32  the office of the county recorder, if that is the place of 
165.33  filing, in the county or counties shown on the computer entry.  
165.34  The filing officer, whether the county recorder or the secretary 
165.35  of state, shall endorse and index a printout of the notice in 
165.36  the same manner as if the notice had been mailed or delivered.  
166.1      (2) County recorders and the secretary of state shall enter 
166.2   information relative to lien notices, transcriptions, renewals, 
166.3   and releases filed in their offices into the central database of 
166.4   the secretary of state.  For notices filed electronically with 
166.5   the county recorders, the date and time of receipt of the notice 
166.6   and county recorder's file number, and for notices filed 
166.7   electronically with the secretary of state, the secretary of 
166.8   state's recording information, must be entered by the filing 
166.9   officer into the central database before the close of the 
166.10  working day following the day of the original data entry by the 
166.11  department of revenue.  
166.12     The filing and indexing of all notices must be in 
166.13  accordance with the filing and indexing of notices of federal 
166.14  liens, certificates of release, and refiled notices under 
166.15  section 272.483.  
166.16     (c) Notwithstanding any other law to the contrary, the 
166.17  department of revenue is exempt from payment of fees when a 
166.18  lien, lien renewal, or lien transcription is offered for 
166.19  recording.  The recording fees must be paid along with the 
166.20  release fee at the end of the month in which the release of lien 
166.21  is recorded, after receipt of a monthly statement from a county 
166.22  recorder or the secretary of state.  The department of revenue 
166.23  shall add the recording fees to the delinquent tax liability of 
166.24  the taxpayer.  Notwithstanding any other law to the contrary, 
166.25  the fee for filing or recording a notice of lien, or lien 
166.26  release, transcription, or renewal is $15.  
166.27     (d) There is appropriated to the commissioner of revenue an 
166.28  amount representing the cost of payment of recording fees to the 
166.29  county recorders and the secretary of state.  The commissioner 
166.30  shall keep a separate accounting of the costs and of payments 
166.31  for recording fees remitted by taxpayers, and make the records 
166.32  available to the legislature upon request.  
166.33     <h>[EFFECTIVE DATE.]</h> As to the protection of interests in 
166.34  property of third parties, this section is effective for liens 
166.35  of record and enforceable as of the day following final 
166.36  enactment, and for liens filed thereafter.  As to the place of 
167.1   filing of liens against personal property, this section is 
167.2   effective for liens filed on or after the day following final 
167.3   enactment. 
167.4      Sec. 4.  Minnesota Statutes 2000, section 272.02, 
167.5   subdivision 15, is amended to read: 
167.6      Subd. 15.  [PROPERTY USED TO GENERATE HYDROELECTRIC OR 
167.7   HYDROMECHANICAL POWER.] To the extent provided by section 295.44 
167.8   Notwithstanding the provisions of subdivision 39, and sections 
167.9   272.01, subdivision 2, and 273.19, subdivision 1, real and 
167.10  personal property used or to be used primarily for the 
167.11  production of hydroelectric or hydromechanical power on a site 
167.12  owned by the federal government, the state, or a local 
167.13  governmental unit which is and developed and operated pursuant 
167.14  to the provisions of section 103G.535 is exempt from property 
167.15  tax for all years during which the site is developed and 
167.16  operated under the terms of a lease or agreement authorized by 
167.17  section 103G.535. 
167.18     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
167.19  following final enactment. 
167.20     Sec. 5.  Minnesota Statutes 2001 Supplement, section 
167.21  273.121, is amended to read: 
167.22     273.121 [VALUATION OF REAL PROPERTY, NOTICE.] 
167.23     Any county assessor or city assessor having the powers of a 
167.24  county assessor, valuing or classifying taxable real property 
167.25  shall in each year notify those persons whose property is to be 
167.26  included on the assessment roll that year if the person's 
167.27  address is known to the assessor, otherwise the occupant of the 
167.28  property.  The notice shall be in writing and shall be sent by 
167.29  ordinary mail at least ten days before the meeting of the local 
167.30  board of appeal and equalization under section 274.01 or the 
167.31  review process established under section 274.13, subdivision 
167.32  1c.  It shall contain:  (1) the market value for the current and 
167.33  prior assessment, (2) the limited market value under section 
167.34  273.11, subdivision 1a, for the current and prior assessment, (3)
167.35  the qualifying amount of any improvements under section 273.11, 
167.36  subdivision 16, for the current assessment, (4) the market value 
168.1   subject to taxation after subtracting the amount of any 
168.2   qualifying improvements for the current assessment, (5) the 
168.3   classification of the property for the current and prior 
168.4   assessment, (6) a note that if the property is homestead and at 
168.5   least 35 45 years old, improvements made to the property may be 
168.6   eligible for a valuation exclusion under section 273.11, 
168.7   subdivision 16, (7) the assessor's office address, and (8) the 
168.8   dates, places, and times set for the meetings of the local board 
168.9   of appeal and equalization, the review process established under 
168.10  section 274.13, subdivision 1c, and the county board of appeal 
168.11  and equalization.  The commissioner of revenue shall specify the 
168.12  form of the notice.  The assessor shall attach to the assessment 
168.13  roll a statement that the notices required by this section have 
168.14  been mailed.  Any assessor who is not provided sufficient funds 
168.15  from the assessor's governing body to provide such notices, may 
168.16  make application to the commissioner of revenue to finance such 
168.17  notices.  The commissioner of revenue shall conduct an 
168.18  investigation and, if satisfied that the assessor does not have 
168.19  the necessary funds, issue a certification to the commissioner 
168.20  of finance of the amount necessary to provide such notices.  The 
168.21  commissioner of finance shall issue a warrant for such amount 
168.22  and shall deduct such amount from any state payment to such 
168.23  county or municipality.  The necessary funds to make such 
168.24  payments are hereby appropriated.  Failure to receive the notice 
168.25  shall in no way affect the validity of the assessment, the 
168.26  resulting tax, the procedures of any board of review or 
168.27  equalization, or the enforcement of delinquent taxes by 
168.28  statutory means. 
168.29     <h>[EFFECTIVE DATE.]</h> This section is effective for notices 
168.30  required to be mailed in 2002 and thereafter. 
168.31     Sec. 6.  Minnesota Statutes 2001 Supplement, section 
168.32  273.13, subdivision 24, is amended to read: 
168.33     Subd. 24.  [CLASS 3.] (a) Commercial and industrial 
168.34  property and utility real and personal property is class 3a.  
168.35     (1) Except as otherwise provided, each parcel of 
168.36  commercial, industrial, or utility real property has a class 
169.1   rate of 1.5 percent of the first tier of market value, and 2.0 
169.2   percent of the remaining market value.  In the case of 
169.3   contiguous parcels of property owned by the same person or 
169.4   entity, only the value equal to the first-tier value of the 
169.5   contiguous parcels qualifies for the reduced class rate, except 
169.6   that contiguous parcels owned by the same person or entity shall 
169.7   be eligible for the first-tier value class rate on each separate 
169.8   business operated by the owner of the property, provided the 
169.9   business is housed in a separate structure.  For the purposes of 
169.10  this subdivision, the first tier means the first $150,000 of 
169.11  market value.  Real property owned in fee by a utility for 
169.12  transmission line right-of-way shall be classified at the class 
169.13  rate for the higher tier.  
169.14     For purposes of this subdivision, parcels are considered to 
169.15  be contiguous even if they are separated from each other by a 
169.16  road, street, waterway, or other similar intervening type of 
169.17  property.  Connections between parcels that consist of power 
169.18  lines or pipelines do not cause the parcels to be contiguous.  
169.19  Property owners who have contiguous parcels of property that 
169.20  constitute separate businesses that may qualify for the 
169.21  first-tier class rate shall notify the assessor by July 1, for 
169.22  treatment beginning in the following taxes payable year.  
169.23     (2) All railroad operating property and All personal 
169.24  property that is:  (i) part of an electric generation, 
169.25  transmission, or distribution system; or (ii) part of a pipeline 
169.26  system transporting or distributing water, gas, crude oil, or 
169.27  petroleum products; and (iii) not described in clause (3), and 
169.28  all railroad operating property has a class rate as provided 
169.29  under clause (1) for the first tier of market value and the 
169.30  remaining market value.  In the case of multiple parcels in one 
169.31  county that are owned by one person or entity, only one first 
169.32  tier amount is eligible for the reduced rate.  
169.33     (3) The entire market value of personal property that is:  
169.34  (i) tools, implements, and machinery of an electric generation, 
169.35  transmission, or distribution system; (ii) tools, implements, 
169.36  and machinery of a pipeline system transporting or distributing 
170.1   water, gas, crude oil, or petroleum products; or (iii) the mains 
170.2   and pipes used in the distribution of steam or hot or chilled 
170.3   water for heating or cooling buildings, has a class rate as 
170.4   provided under clause (1) for the remaining market value in 
170.5   excess of the first tier. 
170.6      (b) Employment property defined in section 469.166, during 
170.7   the period provided in section 469.170, shall constitute class 
170.8   3b.  The class rates for class 3b property are determined under 
170.9   paragraph (a). 
170.10     <h>[EFFECTIVE DATE.]</h> This section is effective for taxes 
170.11  payable in 2002 and thereafter. 
170.12     Sec. 7.  Minnesota Statutes 2001 Supplement, section 
170.13  273.1392, is amended to read: 
170.14     273.1392 [PAYMENT; SCHOOL DISTRICTS.] 
170.15     The amounts of conservation tax credits under section 
170.16  273.119; disaster or emergency reimbursement under section 
170.17  273.123; attached machinery aid under section 273.138; homestead 
170.18  and agricultural credits under section 273.1384; aids and 
170.19  credits under section 273.1398; wetlands reimbursement under 
170.20  section 275.295; enterprise zone property credit payments under 
170.21  section 469.171; and metropolitan agricultural preserve 
170.22  reduction under section 473H.10 for school districts, shall be 
170.23  certified to the department of children, families, and learning 
170.24  by the department of revenue.  The amounts so certified shall be 
170.25  paid according to section 127A.45, subdivisions 9 and 13. 
170.26     <h>[EFFECTIVE DATE.]</h> This section is effective for aids and 
170.27  credits payable in 2002 and thereafter. 
170.28     Sec. 8.  Minnesota Statutes 2001 Supplement, section 
170.29  273.1398, subdivision 4c, is amended to read: 
170.30     Subd. 4c.  [TEMPORARY AID; COURT ADMINISTRATION COSTS.] For 
170.31  calendar years 2004 and 2005, each county in a judicial district 
170.32  that has not been transferred to the state by January 1 of that 
170.33  year shall receive additional homestead and agricultural credit 
170.34  aid.  This amount is in addition to the amount calculated under 
170.35  subdivision 2 and must not be included in the definition of 
170.36  homestead and agricultural credit base under subdivision 1, 
171.1   paragraph (j).  The amount of additional aid is equal to the 
171.2   difference between (1) the amount budgeted for court 
171.3   administration costs in 2001 as determined under subdivision 4b, 
171.4   paragraph (c) (b), multiplied by the maintenance of effort 
171.5   percent for the calendar year as determined under subdivision 
171.6   4b, paragraph (d) (a), and (2) the amount calculated under 
171.7   subdivision 4b, paragraph (a), for calendar year 2003.  This 
171.8   additional aid must be used only to fund court administration 
171.9   expenditures as defined in section 480.183, subdivision 3.  This 
171.10  amount must be added to the state court's base budget in the 
171.11  year when the court in that judicial district in which the 
171.12  county is located is transferred to the state. 
171.13     <h>[EFFECTIVE DATE.]</h> This section is effective retroactively 
171.14  to July 1, 2001, and thereafter. 
171.15     Sec. 9.  Minnesota Statutes 2001 Supplement, section 
171.16  275.74, subdivision 2, is amended to read: 
171.17     Subd. 2.  [AUTHORIZATION FOR SPECIAL LEVIES.] A local 
171.18  governmental unit may request authorization to levy for 
171.19  unreimbursed costs for other natural disasters under section 
171.20  275.70, subdivision 5, clause (6) (7).  The local governmental 
171.21  unit shall submit a request to levy under section 275.70, 
171.22  subdivision 5, clause (6) (7), to the commissioner of revenue by 
171.23  September 30 of the levy year and the request must include 
171.24  information documenting the estimated unreimbursed costs.  The 
171.25  commissioner of revenue may grant levy authority, up to the 
171.26  amount requested based on the documentation submitted.  All 
171.27  decisions of the commissioner are final. 
171.28     <h>[EFFECTIVE DATE.]</h> This section is effective for taxes 
171.29  payable in 2002 and 2003. 
171.30     Sec. 10.  Minnesota Statutes 2001 Supplement, section 
171.31  289A.60, subdivision 2, is amended to read: 
171.32     Subd. 2.  [PENALTY FOR FAILURE TO MAKE AND FILE RETURN.] If 
171.33  a taxpayer fails to make and file a tax return within the time 
171.34  prescribed, including an extension, or fails to file an 
171.35  individual income tax return within six months after the due 
171.36  date, a penalty of five percent of the amount of tax not paid by 
172.1   the end of that period is added to the tax.  
172.2      <h>[EFFECTIVE DATE.]</h> This section is effective the day 
172.3   following final enactment. 
172.4      Sec. 11.  Minnesota Statutes 2000, section 290.067, 
172.5   subdivision 2a, is amended to read: 
172.6      Subd. 2a.  [INCOME.] (a) For purposes of this section, 
172.7   "income" means the sum of the following: 
172.8      (1) federal adjusted gross income as defined in section 62 
172.9   of the Internal Revenue Code; and 
172.10     (2) the sum of the following amounts to the extent not 
172.11  included in clause (1): 
172.12     (i) all nontaxable income; 
172.13     (ii) the amount of a passive activity loss that is not 
172.14  disallowed as a result of section 469, paragraph (i) or (m) of 
172.15  the Internal Revenue Code and the amount of passive activity 
172.16  loss carryover allowed under section 469(b) of the Internal 
172.17  Revenue Code; 
172.18     (iii) an amount equal to the total of any discharge of 
172.19  qualified farm indebtedness of a solvent individual excluded 
172.20  from gross income under section 108(g) of the Internal Revenue 
172.21  Code; 
172.22     (iv) cash public assistance and relief; 
172.23     (v) any pension or annuity (including railroad retirement 
172.24  benefits, all payments received under the federal Social 
172.25  Security Act, supplemental security income, and veterans 
172.26  benefits), which was not exclusively funded by the claimant or 
172.27  spouse, or which was funded exclusively by the claimant or 
172.28  spouse and which funding payments were excluded from federal 
172.29  adjusted gross income in the years when the payments were made; 
172.30     (vi) interest received from the federal or a state 
172.31  government or any instrumentality or political subdivision 
172.32  thereof; 
172.33     (vii) workers' compensation; 
172.34     (viii) nontaxable strike benefits; 
172.35     (ix) the gross amounts of payments received in the nature 
172.36  of disability income or sick pay as a result of accident, 
173.1   sickness, or other disability, whether funded through insurance 
173.2   or otherwise; 
173.3      (x) a lump sum distribution under section 402(e)(3) of the 
173.4   Internal Revenue Code; 
173.5      (xi) contributions made by the claimant to an individual 
173.6   retirement account, including a qualified voluntary employee 
173.7   contribution; simplified employee pension plan; self-employed 
173.8   retirement plan; cash or deferred arrangement plan under section 
173.9   401(k) of the Internal Revenue Code; or deferred compensation 
173.10  plan under section 457 of the Internal Revenue Code; and 
173.11     (xii) nontaxable scholarship or fellowship grants. 
173.12     In the case of an individual who files an income tax return 
173.13  on a fiscal year basis, the term "federal adjusted gross income" 
173.14  means federal adjusted gross income reflected in the fiscal year 
173.15  ending in the next calendar year.  Federal adjusted gross income 
173.16  may not be reduced by the amount of a net operating loss 
173.17  carryback or carryforward or a capital loss carryback or 
173.18  carryforward allowed for the year. 
173.19     (b) "Income" does not include: 
173.20     (1) amounts excluded pursuant to the Internal Revenue Code, 
173.21  sections 101(a) and 102; 
173.22     (2) amounts of any pension or annuity that were exclusively 
173.23  funded by the claimant or spouse if the funding payments were 
173.24  not excluded from federal adjusted gross income in the years 
173.25  when the payments were made; 
173.26     (3) surplus food or other relief in kind supplied by a 
173.27  governmental agency; 
173.28     (4) relief granted under chapter 290A; and 
173.29     (5) child support payments received under a temporary or 
173.30  final decree of dissolution or legal separation; and 
173.31     (6) restitution payments received by eligible individuals 
173.32  and excludable interest as defined in section 803 of the 
173.33  Economic Growth and Tax Relief Reconciliation Act of 2001, 
173.34  Public Law Number 107-16. 
173.35     <h>[EFFECTIVE DATE.]</h> This section is effective for tax years 
173.36  beginning after December 31, 2000. 
174.1      Sec. 12.  Minnesota Statutes 2001 Supplement, section 
174.2   290.0675, subdivision 1, is amended to read: 
174.3      Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
174.4   section the following terms have the meanings given. 
174.5      (b) "Earned income" means the sum of the following, to the 
174.6   extent included in Minnesota taxable income: 
174.7      (1) earned income as defined in section 32(c)(2) of the 
174.8   Internal Revenue Code; 
174.9      (2) income received from a retirement pension, 
174.10  profit-sharing, stock bonus, or annuity plan; and 
174.11     (3) social security benefits as defined in section 86(d)(1) 
174.12  of the Internal Revenue Code. 
174.13     (c) "Taxable income" means net income as defined in section 
174.14  290.01, subdivision 19. 
174.15     (d) "Earned income of lesser-earning spouse" means the 
174.16  earned income of the spouse with the lesser amount of earned 
174.17  income as defined in paragraph (b) for the taxable year minus 
174.18  the sum of (i) the amount for one exemption under section 151(d) 
174.19  of the Internal Revenue Code and (ii) one-half the amount of the 
174.20  standard deduction under section 63(c)(2)(A) and (4) of the 
174.21  Internal Revenue Code.  
174.22     <h>[EFFECTIVE DATE.]</h> This section is effective for tax years 
174.23  beginning after December 31, 2000. 
174.24     Sec. 13.  Minnesota Statutes 2001 Supplement, section 
174.25  290.0675, subdivision 3, is amended to read: 
174.26     Subd. 3.  [CREDIT AMOUNT.] The credit amount is the 
174.27  difference between the tax on the couple's joint Minnesota 
174.28  taxable income under the rates in section 290.06, subdivision 
174.29  2c, paragraph (a), and the sum of the tax under the rates of 
174.30  section 290.06, subdivision 2c, paragraph (b), on the earned 
174.31  income of the lesser-earning spouse, and the tax under the rates 
174.32  of section 290.06, subdivision 2c, paragraph (b), on the 
174.33  couple's joint Minnesota taxable income, minus the earned income 
174.34  of the lesser-earning spouse. 
174.35     For taxable years beginning after December 31, 2001, The 
174.36  commissioner of revenue shall prepare and make available to 
175.1   taxpayers a comprehensive table showing the credit under this 
175.2   section at brackets of earnings of the lesser-earning spouse and 
175.3   joint taxable income.  The brackets of earnings shall not be 
175.4   more than $2,000. 
175.5      For taxable years beginning after December 31, 2002, the 
175.6   commissioner shall update the table as necessary to provide a 
175.7   credit that reflects the relationship between the marginal tax 
175.8   rates imposed under section 290.06, subdivision 2c. 
175.9      <h>[EFFECTIVE DATE.]</h> This section is effective for tax years 
175.10  beginning after December 31, 2000. 
175.11     Sec. 14.  Minnesota Statutes 2001 Supplement, section 
175.12  290.0921, subdivision 2, is amended to read: 
175.13     Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
175.14  the following terms have the meanings given them. 
175.15     (b) "Alternative minimum taxable net income" is alternative 
175.16  minimum taxable income, 
175.17     (1) less the exemption amount, and 
175.18     (2) apportioned or allocated to Minnesota under section 
175.19  290.17, 290.191, or 290.20. 
175.20     (c) The "exemption amount" is $40,000, reduced, but not 
175.21  below zero, by 25 percent of the excess of alternative minimum 
175.22  taxable income over $150,000. 
175.23     (d) "Minnesota alternative minimum taxable income" is 
175.24  alternative minimum taxable net income, less the deductions for 
175.25  alternative tax net operating loss under subdivision 4; 
175.26  charitable contributions under subdivision 5; and dividends 
175.27  received under subdivision 6.  The sum of the deductions under 
175.28  this paragraph may not exceed 90 percent of alternative minimum 
175.29  taxable net income.  This limitation does not apply to a 
175.30  deduction for dividends paid to or received from a corporation 
175.31  which is subject to tax under section 290.36 and which is a 
175.32  member of an affiliated group of corporations as defined by the 
175.33  Internal Revenue Code. 
175.34     <h>[EFFECTIVE DATE.]</h> This section is effective for taxable 
175.35  years beginning after December 31, 2001. 
175.36     Sec. 15.  Minnesota Statutes 2000, section 290.17, 
176.1   subdivision 2, is amended to read: 
176.2      Subd. 2.  [INCOME NOT DERIVED FROM CONDUCT OF A TRADE OR 
176.3   BUSINESS.] The income of a taxpayer subject to the allocation 
176.4   rules that is not derived from the conduct of a trade or 
176.5   business must be assigned in accordance with paragraphs (a) to 
176.6   (f):  
176.7      (a)(1) Subject to paragraphs (a)(2), (a)(3), and (a)(4), 
176.8   income from wages as defined in section 3401(a) and (f) of the 
176.9   Internal Revenue Code is assigned to this state if, and to the 
176.10  extent that, the work of the employee is performed within it; 
176.11  all other income from such sources is treated as income from 
176.12  sources without this state.  
176.13     Severance pay shall be considered income from labor or 
176.14  personal or professional services. 
176.15     (2) In the case of an individual who is a nonresident of 
176.16  Minnesota and who is an athlete or entertainer, income from 
176.17  compensation for labor or personal services performed within 
176.18  this state shall be determined in the following manner:  
176.19     (i) The amount of income to be assigned to Minnesota for an 
176.20  individual who is a nonresident salaried athletic team employee 
176.21  shall be determined by using a fraction in which the denominator 
176.22  contains the total number of days in which the individual is 
176.23  under a duty to perform for the employer, and the numerator is 
176.24  the total number of those days spent in Minnesota.  For purposes 
176.25  of this paragraph, off-season training activities, unless 
176.26  conducted at the team's facilities as part of a team imposed 
176.27  program, are not included in the total number of duty days.  
176.28  Bonuses earned as a result of play during the regular season or 
176.29  for participation in championship, play-off, or all-star games 
176.30  must be allocated under the formula.  Signing bonuses are not 
176.31  subject to allocation under the formula if they are not 
176.32  conditional on playing any games for the team, are payable 
176.33  separately from any other compensation, and are nonrefundable; 
176.34  and 
176.35     (ii) The amount of income to be assigned to Minnesota for 
176.36  an individual who is a nonresident, and who is an athlete or 
177.1   entertainer not listed in clause (i), for that person's athletic 
177.2   or entertainment performance in Minnesota shall be determined by 
177.3   assigning to this state all income from performances or athletic 
177.4   contests in this state.  
177.5      (3) For purposes of this section, amounts received by a 
177.6   nonresident as "retirement income" as defined in section (b)(1) 
177.7   of the State Income Taxation of Pension Income Act, Public Law 
177.8   Number 104-95, are not considered income derived from carrying 
177.9   on a trade or business or from wages or other compensation for 
177.10  work an employee performed in Minnesota, and are not taxable 
177.11  under this chapter.  
177.12     (4) Wages, otherwise assigned to this state under clause 
177.13  (1) and not qualifying under clause (3), are not taxable under 
177.14  this chapter if the following conditions are met: 
177.15     (i) the recipient was not a resident of this state for any 
177.16  part of the taxable year in which the wages were received; and 
177.17     (ii) the wages are for work performed while the recipient 
177.18  was a resident of this state. 
177.19     (b) Income or gains from tangible property located in this 
177.20  state that is not employed in the business of the recipient of 
177.21  the income or gains must be assigned to this state. 
177.22     (c) Income or gains from intangible personal property not 
177.23  employed in the business of the recipient of the income or gains 
177.24  must be assigned to this state if the recipient of the income or 
177.25  gains is a resident of this state or is a resident trust or 
177.26  estate.  
177.27     Gain on the sale of a partnership interest is allocable to 
177.28  this state in the ratio of the original cost of partnership 
177.29  tangible property in this state to the original cost of 
177.30  partnership tangible property everywhere, determined at the time 
177.31  of the sale.  If more than 50 percent of the value of the 
177.32  partnership's assets consists of intangibles, gain or loss from 
177.33  the sale of the partnership interest is allocated to this state 
177.34  in accordance with the sales factor of the partnership for its 
177.35  first full tax period immediately preceding the tax period of 
177.36  the partnership during which the partnership interest was sold. 
178.1      Gain on the sale of goodwill or income from a covenant not 
178.2   to compete that is connected with a business operating all or 
178.3   partially in Minnesota is allocated to this state to the extent 
178.4   that the income from the business in the year preceding the year 
178.5   of sale was assignable to Minnesota under subdivision 3.  
178.6      When an employer pays an employee for a covenant not to 
178.7   compete, the income allocated to this state is in the ratio of 
178.8   the employee's service in Minnesota in the calendar year 
178.9   preceding leaving the employment of the employer over the total 
178.10  services performed by the employee for the employer in that year.
178.11     (d) Income from winnings on Minnesota pari-mutuel betting 
178.12  tickets, the Minnesota state lottery, and lawful gambling as 
178.13  defined in section 349.12, subdivision 24, conducted within the 
178.14  boundaries of the state of Minnesota shall be assigned to this 
178.15  state a bet made by an individual while in Minnesota is assigned 
178.16  to this state.  In this paragraph, "bet" has the meaning given 
178.17  in section 609.75, subdivision 2, as limited by section 609.75, 
178.18  subdivision 3, clauses (1), (2), and (3).  
178.19     (e) All items of gross income not covered in paragraphs (a) 
178.20  to (d) and not part of the taxpayer's income from a trade or 
178.21  business shall be assigned to the taxpayer's domicile. 
178.22     (f) For the purposes of this section, working as an 
178.23  employee shall not be considered to be conducting a trade or 
178.24  business. 
178.25     <h>[EFFECTIVE DATE.]</h> This section is effective for tax years 
178.26  beginning after December 31, 2001. 
178.27     Sec. 16.  Minnesota Statutes 2000, section 290.17, 
178.28  subdivision 3, is amended to read: 
178.29     Subd. 3.  [TRADE OR BUSINESS INCOME; GENERAL RULE.] All 
178.30  income of a trade or business is subject to apportionment except 
178.31  nonbusiness income.  Income derived from carrying on a trade or 
178.32  business must be assigned to this state if the trade or business 
178.33  is conducted wholly within this state, assigned outside this 
178.34  state if conducted wholly without this state and apportioned 
178.35  between this state and other states and countries under this 
178.36  subdivision if conducted partly within and partly without this 
179.1   state.  For purposes of determining whether a trade or business 
179.2   is carried on exclusively within or without this state:  
179.3      (a) A trade or business physically located exclusively 
179.4   within this state is nevertheless carried on partly within and 
179.5   partly without this state if any of the principles set forth in 
179.6   section 290.191 for the allocation of sales or receipts within 
179.7   or without this state when applied to the taxpayer's situation 
179.8   result in the allocation of any sales or receipts without this 
179.9   state.  
179.10     (b) A trade or business physically located exclusively 
179.11  without this state is nevertheless carried on partly within and 
179.12  partly without this state if any of the principles set forth in 
179.13  section 290.191 for the allocation of sales or receipts within 
179.14  or without this state when applied to the taxpayer's situation 
179.15  result in the allocation of any sales or receipts without within 
179.16  this state.  The jurisdiction to tax such a business under this 
179.17  chapter must be determined in accordance with sections 290.014 
179.18  and 290.015. 
179.19     <h>[EFFECTIVE DATE.]</h> This section is effective for tax years 
179.20  beginning after December 31, 2001. 
179.21     Sec. 17.  Minnesota Statutes 2000, section 290A.03, 
179.22  subdivision 3, is amended to read: 
179.23     Subd. 3.  [INCOME.] (1) "Income" means the sum of the 
179.24  following:  
179.25     (a) federal adjusted gross income as defined in the 
179.26  Internal Revenue Code; and 
179.27     (b) the sum of the following amounts to the extent not 
179.28  included in clause (a):  
179.29     (i) all nontaxable income; 
179.30     (ii) the amount of a passive activity loss that is not 
179.31  disallowed as a result of section 469, paragraph (i) or (m) of 
179.32  the Internal Revenue Code and the amount of passive activity 
179.33  loss carryover allowed under section 469(b) of the Internal 
179.34  Revenue Code; 
179.35     (iii) an amount equal to the total of any discharge of 
179.36  qualified farm indebtedness of a solvent individual excluded 
180.1   from gross income under section 108(g) of the Internal Revenue 
180.2   Code; 
180.3      (iv) cash public assistance and relief; 
180.4      (v) any pension or annuity (including railroad retirement 
180.5   benefits, all payments received under the federal Social 
180.6   Security Act, supplemental security income, and veterans 
180.7   benefits), which was not exclusively funded by the claimant or 
180.8   spouse, or which was funded exclusively by the claimant or 
180.9   spouse and which funding payments were excluded from federal 
180.10  adjusted gross income in the years when the payments were made; 
180.11     (vi) interest received from the federal or a state 
180.12  government or any instrumentality or political subdivision 
180.13  thereof; 
180.14     (vii) workers' compensation; 
180.15     (viii) nontaxable strike benefits; 
180.16     (ix) the gross amounts of payments received in the nature 
180.17  of disability income or sick pay as a result of accident, 
180.18  sickness, or other disability, whether funded through insurance 
180.19  or otherwise; 
180.20     (x) a lump sum distribution under section 402(e)(3) of the 
180.21  Internal Revenue Code; 
180.22     (xi) contributions made by the claimant to an individual 
180.23  retirement account, including a qualified voluntary employee 
180.24  contribution; simplified employee pension plan; self-employed 
180.25  retirement plan; cash or deferred arrangement plan under section 
180.26  401(k) of the Internal Revenue Code; or deferred compensation 
180.27  plan under section 457 of the Internal Revenue Code; and 
180.28     (xii) nontaxable scholarship or fellowship grants.  
180.29     In the case of an individual who files an income tax return 
180.30  on a fiscal year basis, the term "federal adjusted gross income" 
180.31  shall mean federal adjusted gross income reflected in the fiscal 
180.32  year ending in the calendar year.  Federal adjusted gross income 
180.33  shall not be reduced by the amount of a net operating loss 
180.34  carryback or carryforward or a capital loss carryback or 
180.35  carryforward allowed for the year.  
180.36     (2) "Income" does not include:  
181.1      (a) amounts excluded pursuant to the Internal Revenue Code, 
181.2   sections 101(a) and 102; 
181.3      (b) amounts of any pension or annuity which was exclusively 
181.4   funded by the claimant or spouse and which funding payments were 
181.5   not excluded from federal adjusted gross income in the years 
181.6   when the payments were made; 
181.7      (c) surplus food or other relief in kind supplied by a 
181.8   governmental agency; 
181.9      (d) relief granted under this chapter; 
181.10     (e) child support payments received under a temporary or 
181.11  final decree of dissolution or legal separation; or 
181.12     (f) holocaust settlement payments as defined in section 
181.13  290.01, subdivision 32 restitution payments received by eligible 
181.14  individuals and excludable interest as defined in section 803 of 
181.15  the Economic Growth and Tax Relief Reconciliation Act of 2001, 
181.16  Public Law Number 107-16.  
181.17     (3) The sum of the following amounts may be subtracted from 
181.18  income:  
181.19     (a) for the claimant's first dependent, the exemption 
181.20  amount multiplied by 1.4; 
181.21     (b) for the claimant's second dependent, the exemption 
181.22  amount multiplied by 1.3; 
181.23     (c) for the claimant's third dependent, the exemption 
181.24  amount multiplied by 1.2; 
181.25     (d) for the claimant's fourth dependent, the exemption 
181.26  amount multiplied by 1.1; 
181.27     (e) for the claimant's fifth dependent, the exemption 
181.28  amount; and 
181.29     (f) if the claimant or claimant's spouse was disabled or 
181.30  attained the age of 65 on or before December 31 of the year for 
181.31  which the taxes were levied or rent paid, the exemption amount.  
181.32     For purposes of this subdivision, the "exemption amount" 
181.33  means the exemption amount under section 151(d) of the Internal 
181.34  Revenue Code for the taxable year for which the income is 
181.35  reported.  
181.36     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
182.1   following final enactment. 
182.2      Sec. 18.  Minnesota Statutes 2001 Supplement, section 
182.3   290A.04, subdivision 2h, is amended to read: 
182.4      Subd. 2h.  [ADDITIONAL REFUND.] (a) Beginning with gross 
182.5   property taxes payable in 2003, If the gross property taxes 
182.6   payable on a homestead increase more than 12 percent over the 
182.7   property taxes payable in the prior year on the same property 
182.8   that is owned and occupied by the same owner on January 2 of 
182.9   both years, and the amount of that increase is $100 or more, a 
182.10  claimant who is a homeowner shall be allowed an additional 
182.11  refund equal to 60 percent of the amount of the increase over 
182.12  the greater of 12 percent of the prior year's property taxes 
182.13  payable or $100.  This subdivision shall not apply to any 
182.14  increase in the gross property taxes payable attributable to 
182.15  improvements made to the homestead after the assessment date for 
182.16  the prior year's taxes.  This subdivision shall not apply to any 
182.17  increase in the gross property taxes payable attributable to the 
182.18  termination of valuation exclusions under section 273.11, 
182.19  subdivision 16. 
182.20     The maximum refund allowed under this subdivision is $1,000.
182.21     (b) For purposes of this subdivision "gross property taxes 
182.22  payable" means property taxes payable determined without regard 
182.23  to the refund allowed under this subdivision. 
182.24     (c) In addition to the other proofs required by this 
182.25  chapter, each claimant under this subdivision shall file with 
182.26  the property tax refund return a copy of the property tax 
182.27  statement for taxes payable in the preceding year or other 
182.28  documents required by the commissioner. 
182.29     (d) Upon request, the appropriate county official shall 
182.30  make available the names and addresses of the property taxpayers 
182.31  who may be eligible for the additional property tax refund under 
182.32  this section.  The information shall be provided on a magnetic 
182.33  computer disk.  The county may recover its costs by charging the 
182.34  person requesting the information the reasonable cost for 
182.35  preparing the data.  The information may not be used for any 
182.36  purpose other than for notifying the homeowner of potential 
183.1   eligibility and assisting the homeowner, without charge, in 
183.2   preparing a refund claim. 
183.3      <h>[EFFECTIVE DATE.]</h> This section is effective beginning with 
183.4   refunds based on gross property taxes payable in 2002. 
183.5      Sec. 19.  Minnesota Statutes 2001 Supplement, section 
183.6   295.60, is amended by adding a subdivision to read: 
183.7      Subd. 1a.  [USE TAX; CREDIT FOR TAXES PAID.] (a) A person 
183.8   that receives fur clothing for use or storage in Minnesota, 
183.9   other than from a furrier that paid the tax under subdivision 1, 
183.10  is subject to tax at the rate imposed under subdivision 1.  
183.11  Liability for the tax is incurred when the person has possession 
183.12  of the fur clothing in Minnesota.  The tax must be remitted to 
183.13  the commissioner in the manner prescribed by subdivision 3. 
183.14     (b) A person that has paid taxes to another jurisdiction on 
183.15  the same transaction and is subject to tax under this section is 
183.16  entitled to a credit for the tax legally due and paid to another 
183.17  jurisdiction to the extent of the lesser of (1) the tax actually 
183.18  paid to the other jurisdiction, or (2) the amount of tax imposed 
183.19  by Minnesota on the transaction subject to tax in the other 
183.20  jurisdiction. 
183.21     <h>[EFFECTIVE DATE.]</h> This section is effective for fur 
183.22  clothing purchased and brought into Minnesota on or after 
183.23  January 1, 2002. 
183.24     Sec. 20.  Minnesota Statutes 2001 Supplement, section 
183.25  295.60, is amended by adding a subdivision to read: 
183.26     Subd. 1b.  [TAX COLLECTION REQUIRED.] A furrier with nexus 
183.27  in Minnesota, who is not subject to tax under subdivision 1, is 
183.28  required to collect the tax imposed under subdivision 1a from 
183.29  the purchaser of the clothing made from fur and give the 
183.30  purchaser a receipt for the tax paid.  The tax collected must be 
183.31  remitted to the commissioner in the manner prescribed by 
183.32  subdivision 3. 
183.33     <h>[EFFECTIVE DATE.]</h> This section is effective for fur 
183.34  clothing purchased and brought into Minnesota on or after 
183.35  January 1, 2002. 
183.36     Sec. 21.  Minnesota Statutes 2001 Supplement, section 
184.1   295.60, is amended by adding a subdivision to read: 
184.2      Subd. 1c.  [TAXES PAID TO ANOTHER JURISDICTION; CREDIT.] A 
184.3   furrier that has paid taxes to another jurisdiction measured by 
184.4   gross revenue and is subject to tax under this section on the 
184.5   same gross revenues is entitled to a credit for the tax legally 
184.6   due and paid to another jurisdiction to the extent of the lesser 
184.7   of (1) the tax actually paid to the other jurisdiction, or (2) 
184.8   the amount of tax imposed by Minnesota on the gross revenues 
184.9   subject to tax in the other taxing jurisdictions. 
184.10     <h>[EFFECTIVE DATE.]</h> This section is effective for gross 
184.11  revenues received on or after January 1, 2002. 
184.12     Sec. 22.  Minnesota Statutes 2001 Supplement, section 
184.13  295.60, subdivision 7, is amended to read: 
184.14     Subd. 7.  [APPLICATION OF OTHER CHAPTERS.] Unless 
184.15  specifically provided otherwise by this section, the 
184.16  enforcement, interest, and penalty provisions under chapter 294, 
184.17  appeal provisions in sections 289A.43 and 289A.65, criminal 
184.18  penalties in section 289A.63, and refunds provisions in section 
184.19  289A.50 chapter 289A, civil penalty provisions applicable to 
184.20  withholding and sales taxes under section 289A.60, and 
184.21  collection and rulemaking provisions under chapter 270, apply to 
184.22  a liability for the taxes imposed under this section. 
184.23     <h>[EFFECTIVE DATE.]</h> This section is effective January 1, 2002.
184.24     Sec. 23.  Minnesota Statutes 2000, section 296A.18, 
184.25  subdivision 8, is amended to read: 
184.26     Subd. 8.  [AVIATION FUEL TAX STATE AIRPORTS FUND.] The 
184.27  revenues derived from the excise taxes on aviation gasoline and 
184.28  on special fuel received, sold, stored, or withdrawn from 
184.29  storage as substitutes for aviation gasoline, shall be paid into 
184.30  the state treasury and credited to the aviation fuel tax state 
184.31  airports fund.  There is hereby appropriated such sums as are 
184.32  needed to carry out the provisions of this subdivision. 
184.33     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
184.34  following final enactment. 
184.35     Sec. 24.  Minnesota Statutes 2001 Supplement, section 
184.36  297A.70, subdivision 3, is amended to read: 
185.1      Subd. 3.  [SALES OF CERTAIN GOODS AND SERVICES TO 
185.2   GOVERNMENT.] (a) The following sales to or use by the specified 
185.3   governments and political subdivisions of the state are exempt: 
185.4      (1) repair and replacement parts for emergency rescue 
185.5   vehicles, fire trucks, and fire apparatus to a political 
185.6   subdivision; 
185.7      (2) machinery and equipment, except for motor vehicles, 
185.8   used directly for mixed municipal solid waste management 
185.9   services at a solid waste disposal facility as defined in 
185.10  section 115A.03, subdivision 10; 
185.11     (3) chore and homemaking services to a political 
185.12  subdivision of the state to be provided to elderly or disabled 
185.13  individuals; 
185.14     (4) telephone services to the department of administration 
185.15  that are used to provide telecommunications services through the 
185.16  intertechnologies revolving fund; 
185.17     (5) firefighter personal protective equipment as defined in 
185.18  paragraph (b), if purchased or authorized by and for the use of 
185.19  an organized fire department, fire protection district, or fire 
185.20  company regularly charged with the responsibility of providing 
185.21  fire protection to the state or a political subdivision; 
185.22     (6) bullet-resistant body armor that provides the wearer 
185.23  with ballistic and trauma protection, if purchased by a law 
185.24  enforcement agency of the state or a political subdivision of 
185.25  the state, or a licensed peace officer, as defined in section 
185.26  626.84, subdivision 1; 
185.27     (7) motor vehicles purchased or leased by political 
185.28  subdivisions of the state if the vehicles are exempt from 
185.29  registration under section 168.012, subdivision 1, paragraph 
185.30  (b), exempt from taxation under section 473.448, or exempt from 
185.31  the motor vehicle sales tax under section 297B.03, clause (12); 
185.32     (8) equipment designed to process, dewater, and recycle 
185.33  biosolids for wastewater treatment facilities of political 
185.34  subdivisions, and materials incidental to installation of that 
185.35  equipment; and materials used to construct buildings to house 
185.36  the equipment, if the materials are purchased after June 30, 
186.1   1998, and before July 1, 2001; and 
186.2      (9) sales to a town of gravel and of machinery, equipment, 
186.3   and accessories, except motor vehicles, used exclusively for 
186.4   road and bridge maintenance, and leases by a town of motor 
186.5   vehicles exempt from tax under section 297B.03, clause (10). 
186.6      (b) For purposes of this subdivision, "firefighters 
186.7   personal protective equipment" means helmets, including face 
186.8   shields, chin straps, and neck liners; bunker coats and pants, 
186.9   including pant suspenders; boots; gloves; head covers or hoods; 
186.10  wildfire jackets; protective coveralls; goggles; self-contained 
186.11  breathing apparatus; canister filter masks; personal alert 
186.12  safety systems; spanner belts; optical or thermal imaging search 
186.13  devices; and all safety equipment required by the Occupational 
186.14  Safety and Health Administration. 
186.15     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
186.16  following final enactment. 
186.17     Sec. 25.  Minnesota Statutes 2000, section 297I.05, 
186.18  subdivision 11, is amended to read: 
186.19     Subd. 11.  [RETALIATORY PROVISIONS.] (a) If any other state 
186.20  or country imposes any taxes, fines, deposits, penalties, 
186.21  licenses, or fees upon any insurance companies of this state and 
186.22  their agents doing business in another state or country that are 
186.23  in addition to or in excess of those imposed by the laws of this 
186.24  state upon foreign insurance companies and their agents doing 
186.25  business in this state, the same taxes, fines, deposits, 
186.26  penalties, licenses, and fees are imposed upon every similar 
186.27  insurance company of that state or country and their agents 
186.28  doing or applying to do business in this state. 
186.29     (b) If any conditions precedent to the right to do business 
186.30  in any other state or country are imposed by the laws of that 
186.31  state or country, beyond those imposed upon foreign companies by 
186.32  the laws of this state, the same conditions precedent are 
186.33  imposed upon every similar insurance company of that state or 
186.34  country and their agents doing or applying to do business in 
186.35  that state. 
186.36     (c) For purposes of this subdivision, "taxes, fines, 
187.1   deposits, penalties, licenses, or fees" means an amount of money 
187.2   that is deposited in the general revenue fund of the state or 
187.3   other similar fund in another state or country and is not 
187.4   dedicated to a special purpose or use or money deposited in the 
187.5   general revenue fund of the state or other similar fund in 
187.6   another state or country and appropriated to the commissioner of 
187.7   commerce or insurance for the operation of the department of 
187.8   commerce or other similar agency with jurisdiction over 
187.9   insurance.  Taxes, fines, deposits, penalties, licenses, or fees 
187.10  do not include: 
187.11     (1) special purpose obligations or assessments imposed in 
187.12  connection with particular kinds of insurance, including but not 
187.13  limited to assessments imposed in connection with residual 
187.14  market mechanisms; or 
187.15     (2) assessments made by the insurance guaranty association, 
187.16  life and health guarantee association, or similar association. 
187.17     (d) This subdivision applies to taxes imposed under 
187.18  subdivisions 1, 3, 4, 6, and 12, paragraph (a), clauses (1) and 
187.19  (3) (2). 
187.20     (e) This subdivision does not apply to insurance companies 
187.21  organized or domiciled in a state or country, the laws of which 
187.22  do not impose retaliatory taxes, fines, deposits, penalties, 
187.23  licenses, or fees or which grant, on a reciprocal basis, 
187.24  exemptions from retaliatory taxes, fines, deposits, penalties, 
187.25  licenses, or fees to insurance companies domiciled in this state.
187.26     <h>[EFFECTIVE DATE.]</h> This section is effective retroactively 
187.27  to tax years beginning on or after January 1, 2001. 
187.28     Sec. 26.  Minnesota Statutes 2000, section 477A.011, 
187.29  subdivision 20, is amended to read: 
187.30     Subd. 20.  [CITY NET TAX CAPACITY.] "City net tax capacity" 
187.31  means (1) the net tax capacity computed using the net tax 
187.32  capacity rates in section 273.13 for taxes payable in the year 
187.33  of the aid distribution, and the market values for taxes payable 
187.34  in the year prior to the aid distribution plus (2) a city's 
187.35  fiscal disparities distribution tax capacity under section 
187.36  276A.06, subdivision 2, paragraph (b), or 473F.08, subdivision 
188.1   2, paragraph (b), for taxes payable in the year prior to that 
188.2   for which aids are being calculated.  The market value utilized 
188.3   in computing city net tax capacity shall be reduced by the sum 
188.4   of (1) a city's market value of commercial industrial property 
188.5   as defined in section 276A.01, subdivision 3, or 473F.02, 
188.6   subdivision 3, multiplied by the ratio determined pursuant to 
188.7   section 276A.06, subdivision 2, paragraph (a), or 473F.08, 
188.8   subdivision 2, paragraph (a), (2) the market value of the 
188.9   captured value of tax increment financing districts as defined 
188.10  in section 469.177, subdivision 2, and (3) the market value of 
188.11  transmission lines deducted from a city's total net tax capacity 
188.12  under section 273.425.  The city net tax capacity will be 
188.13  computed using equalized market values.  
188.14     <h>[EFFECTIVE DATE.]</h> This section is effective for aid payable 
188.15  in 2002 and thereafter. 
188.16     Sec. 27.  Minnesota Statutes 2001 Supplement, section 
188.17  477A.013, subdivision 9, is amended to read: 
188.18     Subd. 9.  [CITY AID DISTRIBUTION.] (a) In calendar year 
188.19  2002 and thereafter, each city shall receive an aid distribution 
188.20  equal to the sum of (1) the city formula aid under subdivision 
188.21  8, and (2) its city aid base. 
188.22     (b) The percentage increase for a first class city in 
188.23  calendar year 1995 and thereafter, except for 2002, shall not 
188.24  exceed the percentage increase in the sum of the aid to all 
188.25  cities under this section in the current calendar year compared 
188.26  to the sum of the aid to all cities in the previous year.  For 
188.27  aids payable in 2002 only, the amount of the aid paid to a first 
188.28  class city shall not exceed the sum of its aid amount for 
188.29  calendar year 2001 under this section and its aid payment in 
188.30  calendar year 2001 under section 273.1398, subdivision 2, by 
188.31  more than 2.5 percent. 
188.32     (c) For aids payable in all years except 2002, the total 
188.33  aid for any city, except a first class city, shall not exceed 
188.34  the sum of (1) ten percent of the city's net levy for the year 
188.35  prior to the aid distribution plus (2) its total aid in the 
188.36  previous year before any increases or decreases under sections 
189.1   16A.711, subdivision 5, and 477A.0132.  For aids payable in 2002 
189.2   only, the total aid for any city, except a first class city, 
189.3   shall not exceed 40 percent of the sum of (1) 40 percent of the 
189.4   city's net levy for taxes payable in the year prior to the aid 
189.5   distribution plus (2) 40 percent of its total aid in the 
189.6   previous year under section 273.1398, subdivision 2, before any 
189.7   increases or decreases under sections 16A.711, subdivision 5, 
189.8   and 477A.0132 plus (3) its total aid in the previous year under 
189.9   this section. 
189.10     <h>[EFFECTIVE DATE.]</h> This section is effective for aid payable 
189.11  in 2002 and thereafter. 
189.12     Sec. 28.  Minnesota Statutes 2001 Supplement, section 
189.13  477A.07, subdivision 1, is amended to read: 
189.14     Subdivision 1.  [AID AMOUNT.] (a) For aid payable in 2003, 
189.15  each county and city is eligible for aid equal to the amount by 
189.16  which (i) 0.3 percent of the assessment year 2001 taxable market 
189.17  value of class 4a property, plus 0.25 percent of the assessment 
189.18  year 2001 market value of class 4b property, as defined in 
189.19  section 273.13, subdivision 25, multiplied by the jurisdiction's 
189.20  average tax rate for taxes payable in 2002, exceeds (ii) 0.4 
189.21  percent of the jurisdiction's total taxable net tax capacity for 
189.22  taxes payable in 2002, multiplied by the jurisdiction's average 
189.23  tax rate for taxes payable in 2002. 
189.24     (b) For aid payable in 2004, each county and city is 
189.25  eligible for aid equal to the amount by which (i) 0.25 percent 
189.26  of the assessment year 2002 taxable market value of class 4a 
189.27  property, as defined in section 273.13, subdivision 
189.28  25, multiplied by the jurisdiction's average tax rate for taxes 
189.29  payable in 2003, exceeds (ii) 0.4 percent of the jurisdiction's 
189.30  total taxable net tax capacity for taxes payable in 2003, 
189.31  multiplied by the jurisdiction's average tax rate for taxes 
189.32  payable in 2003. 
189.33     <h>[EFFECTIVE DATE.]</h> This section is effective for aid payable 
189.34  in 2003 and thereafter. 
189.35     Sec. 29.  Minnesota Statutes 2001 Supplement, section 
189.36  477A.07, subdivision 3, is amended to read: 
190.1      Subd. 3.  [CITY AID.] Each city's 2003 aid amount 
190.2   determined under subdivision 1 must be permanently added to its 
190.3   city aid base under section 477A.011, subdivision 36, and the 
190.4   maximum amount of total aid it may receive under section 
190.5   477A.013, subdivision 9, paragraph (b) or (c), is increased by 
190.6   the same amount for aid payable in 2003.  Each city's 2004 aid 
190.7   amount determined under subdivision 1 must be permanently added 
190.8   to its city aid base under section 477A.011, subdivision 36, and 
190.9   the maximum amount of total aid it may receive under section 
190.10  477A.013, subdivision 9, paragraph (b) or _(c), is increased by 
190.11  the same amount for aid payable in 2004. 
190.12     <h>[EFFECTIVE DATE.]</h> This section is effective for aids 
190.13  payable in calendar years 2003 and 2004. 
190.14     Sec. 30.  Laws 1993, chapter 375, article 5, section 42, is 
190.15  amended to read: 
190.16     Sec. 42. [REPORT TO LEGISLATURE.] 
190.17     By February March 1 of each year, the commissioner of 
190.18  revenue shall make a report to the legislature on the use of 
190.19  limited market value under section 273.13, subdivision 1a, and 
190.20  the valuation exclusion under section 273.13, subdivision 16.  
190.21  For the limited market value provision, the report shall include 
190.22  the total value excluded from taxation by type of property for 
190.23  each city and town.  For the valuation exclusion provision, the 
190.24  report shall include the total market value excluded from 
190.25  taxation for each city and town, as well as a breakdown of the 
190.26  excluded improvement amounts by age and value of the property 
190.27  being improved and the amount of the qualifying improvement.  
190.28  The county assessors shall provide the information necessary for 
190.29  the commissioner to compile the report in a manner prescribed by 
190.30  the commissioner. 
190.31     Sec. 31.  Laws 2001, First Special Session chapter 5, 
190.32  article 9, section 3, the effective date, is amended to read: 
190.33     <h>[EFFECTIVE DATE.]</h> This section is effective for tax years 
190.34  beginning after December 31, 2001, except that the amendment 
190.35  to clause clauses (3) is and (12) are effective for tax years 
190.36  beginning after December 31, 2000. 
191.1      Sec. 32.  [REPEALER.] 
191.2      (a) Minnesota Statutes 2000, sections 272.02, subdivision 
191.3   40; 290.01, subdivisions 19g and 32; and 295.44, are repealed 
191.4   effective the day following final enactment. 
191.5      (b) Minnesota Statutes 2000, section 290.0921, subdivision 
191.6   5, is repealed effective for taxable years beginning after 
191.7   December 31, 2001. 
191.8      (c) Minnesota Rules, parts 8130.1400; 8130.2100; 8130.2350; 
191.9   8130.2600; 8130.3000; 8130.3850; and 8130.5000, are repealed 
191.10  effective the day following final enactment. 
191.11                             ARTICLE 11 
191.12                             LOCAL LAWS 
191.13     Section 1.  [CITY OF MOORHEAD; TAX LEVY AUTHORIZED.] 
191.14     (a) Each year the city of Moorhead may impose a tax on all 
191.15  class 3a and class 3b property located in the city in an amount 
191.16  which the city determines is equal to the reduction in revenues 
191.17  from increment from all tax increment financing districts in the 
191.18  city resulting from the class rate changes and the elimination 
191.19  of the state-determined general education property levy under 
191.20  Laws 2001, First Special Session chapter 5.  The proceeds of 
191.21  this tax may only be used to pay preexisting obligations as 
191.22  defined in Minnesota Statutes, section 469.1763, subdivision 6, 
191.23  whether general obligations or payable wholly from tax 
191.24  increments.  The tax must be levied and collected in the same 
191.25  manner and as part of the property tax levied by the city and is 
191.26  subject to the same administrative, penalty, and enforcement 
191.27  provisions.  A tax imposed under this section is a special levy 
191.28  and is not subject to levy limitations under Minnesota Statutes, 
191.29  section 275.71. 
191.30     (b) This section expires December 31, 2005. 
191.31     <h>[EFFECTIVE DATE.]</h> This section is effective upon approval 
191.32  by and compliance with Minnesota Statutes, section 645.021, 
191.33  subdivision 3, by the governing body of the city of Moorhead. 
191.34     Sec. 2.  [ST. CLOUD AREA CITIES; TAXES AUTHORIZED.] 
191.35     Subdivision 1.  [SALES AND USE TAX.] (a) Notwithstanding 
191.36  Minnesota Statutes, section 477A.016, or any other provision of 
192.1   law, ordinance, or city charter, the following cities may, by 
192.2   ordinance, impose a sales and use tax of one-half of one percent 
192.3   for the purposes specified in subdivision 2: 
192.4      (1) the city of St. Cloud, pursuant to the approval of the 
192.5   city voters at the general election held on November 7, 2000; 
192.6      (2) the city of Sartell, pursuant to the approval of the 
192.7   city voters at an election held in November 1999; and 
192.8      (3) each of the cities of Sauk Rapids, Waite Park, St. 
192.9   Joseph, and St. Augusta, pursuant to the approval of the voters 
192.10  of that city at the next general election following the date of 
192.11  final enactment of this act, as provided for in subdivision 3. 
192.12     (b) The provisions of Minnesota Statutes, section 297A.99, 
192.13  govern the imposition, administration, collection, and 
192.14  enforcement of the taxes authorized under this subdivision. 
192.15     (c) The tax in Sartell must be used for the purposes listed 
192.16  in subdivision 2, notwithstanding other purposes listed in the 
192.17  referendum, and are not subject to the requirements of Minnesota 
192.18  Statutes, section 297A.99, subdivision 3.  
192.19     Subd. 2.  [USE OF REVENUES.] (a) Revenues received from the 
192.20  taxes authorized under subdivision 1 must be used for the cost 
192.21  of collecting and administering the taxes and to pay all or part 
192.22  of the capital or administrative costs of the acquisition, 
192.23  construction, and improvement of the main runway improvements to 
192.24  the St. Cloud Regional Airport, as provided for in the city of 
192.25  St. Cloud capital improvement program 2000 to 2005, adopted by 
192.26  the St. Cloud planning commission on July 14, 1999.  Authorized 
192.27  expenses include, but are not limited to, acquiring property, 
192.28  paying construction expenses related to the development of these 
192.29  facilities, and securing and paying debt service on bonds or 
192.30  other obligations issued to finance construction or improvement 
192.31  of the authorized facility. 
192.32     (b) If revenues collected from the taxes imposed under 
192.33  subdivision 1 are greater than the amount needed to meet 
192.34  obligations under paragraph (a) in any year, the surplus may be 
192.35  returned to the cities in a manner agreed upon by the 
192.36  participating cities under this section, to be used by the 
193.1   cities for projects of regional significance, limited to:  the 
193.2   acquisition and improvement of park land and open space; the 
193.3   purchase, renovation, and construction of public buildings and 
193.4   land primarily used for the arts, libraries, and community 
193.5   centers; major roadway improvements; and for debt service on 
193.6   bonds issued for these purposes.  Authorized expenses include, 
193.7   but are not limited to, acquiring property, paying construction 
193.8   expenses related to the development of these facilities, and 
193.9   securing and paying debt service on bonds or other obligations 
193.10  issued to finance construction or improvement of the authorized 
193.11  facility.  The distribution of surplus revenues raised by the 
193.12  tax must be determined by an applicable joint powers agreement. 
193.13  The revenues returned to each city may only be used to fund 
193.14  projects that have been approved by voters at the referendum 
193.15  authorizing the tax. 
193.16     (c) Pursuant to the approval of the St. Cloud voters at the 
193.17  general election held on November 7, 2000, the surplus returned 
193.18  to St. Cloud under paragraph (b) must be used for the following 
193.19  projects: 
193.20     (1) intersection improvements to the 25th Avenue and trunk 
193.21  highway No. 23, I-94 interchange at county road 75, 10th Street 
193.22  South improvements, the West Metro corridor improvements, and 
193.23  other regionally significant road projects; and 
193.24     (2) park and nature land purchase, trail development, and 
193.25  improvements and expansions of existing regional park 
193.26  facilities, as provided for in the city of St. Cloud capital 
193.27  improvement program 2000 to 2005, adopted by the St. Cloud 
193.28  planning commission on July 14, 1999. 
193.29     (d) Pursuant to approval of the Sartell voters at the 
193.30  election held in November 1999, the surplus returned to the city 
193.31  of Sartell under paragraph (b) must be used to fund 
193.32  construction, expansion, and improvements to a community center 
193.33  and for park land acquisition and improvement. 
193.34     Subd. 3.  [SEPARATE REFERENDA REQUIRED.] Notwithstanding 
193.35  Minnesota Statutes, section 297A.99, subdivision 3, each city 
193.36  listed in subdivision 1, clause (3), shall have a separate vote 
194.1   on each project that it proposes to fund with the surplus tax 
194.2   revenues it receives under subdivision 2, paragraph (b).  For 
194.3   these cities, the cost of each project to be funded by the taxes 
194.4   authorized in subdivision 1 must be listed.  Revenue may be used 
194.5   to repay debt for a project that the city has already funded if 
194.6   the project meets one of the authorized uses listed in 
194.7   subdivision 2, paragraph (b), and the referenda states the 
194.8   maximum amount of debt that will be repaid from the revenue.  
194.9   The referendum must state that approval of using the tax 
194.10  authorized in subdivision 1 for any project shall also indicate 
194.11  approval to share the revenues collected from the tax with the 
194.12  other cities in the area which have also passed a sales tax.  
194.13  The sharing must be done in a manner agreed upon by all affected 
194.14  cities under a joint powers agreement. 
194.15     Subd. 4.  [IMPOSITION AND TERMINATION OF TAX.] The tax 
194.16  authorized by each city under subdivision 1 shall be imposed 
194.17  beginning January 1, 2003, and shall expire December 31, 2005. 
194.18     <h>[EFFECTIVE DATE.]</h> This section is effective July 1, 2002, 
194.19  with respect to any city listed in subdivision 1, upon 
194.20  compliance of the governing body of that city with Minnesota 
194.21  Statutes, section 645.021, subdivision 3. 
194.22                             ARTICLE 12 
194.23                           MISCELLANEOUS 
194.24     Section 1.  Minnesota Statutes 2000, section 16A.152, is 
194.25  amended by adding a subdivision to read:  
194.26     Subd. 1b.  [BUDGET RESERVE INCREASE.] On June 30, 2003, the 
194.27  commissioner of finance shall transfer $3,900,000 to the budget 
194.28  reserve account in the general fund.  On June 30, 2004, the 
194.29  commissioner of finance shall transfer $12,300,000 to the budget 
194.30  reserve account in the general fund.  On June 30, 2005, the 
194.31  commissioner of finance shall transfer $12,000,000 to the budget 
194.32  reserve account in the general fund.  The amounts necessary for 
194.33  this purpose are appropriated from the general fund. 
194.34     Sec. 2.  Minnesota Statutes 2000, section 40A.151, 
194.35  subdivision 1, is amended to read: 
194.36     Subdivision 1.  [ESTABLISHMENT.] The Minnesota conservation 
195.1   fund is established as an account in the state treasury.  Money 
195.2   from counties under section 40A.152 must be deposited in the 
195.3   state treasury and credited one-half to the Minnesota 
195.4   conservation fund account and one-half to the general fund. 
195.5      <h>[EFFECTIVE DATE.]</h> This section is effective for money from 
195.6   counties deposited in the state treasury after June 30, 2002. 
195.7      Sec. 3.  Minnesota Statutes 2000, section 40A.152, 
195.8   subdivision 1, is amended to read: 
195.9      Subdivision 1.  [FEE.] A county that is a metropolitan 
195.10  county under section 473.121, subdivision 4, has allowed 
195.11  exclusive agricultural zones to be created under this chapter, 
195.12  or has elected to become an agricultural land preservation pilot 
195.13  county, shall impose an additional fee of $5 per transaction on 
195.14  the recording or registration of a mortgage subject to the tax 
195.15  under section 287.05 and an additional $5 on the recording or 
195.16  registration of a deed subject to the tax under section 287.21.  
195.17  One-half of the fee must be deposited in a special conservation 
195.18  account to be created in the county general revenue fund and 
195.19  one-half must be transferred to the commissioner of revenue for 
195.20  deposit in the state treasury and credited to the Minnesota 
195.21  conservation fund pursuant to section 40A.151, subdivision 1. 
195.22     <h>[EFFECTIVE DATE.]</h> This section is effective July 1, 2002, 
195.23  and thereafter. 
195.24     Sec. 4.  Minnesota Statutes 2000, section 40A.152, 
195.25  subdivision 3, is amended to read: 
195.26     Subd. 3.  [TRANSFER TO STATE FUND.] Money in the county 
195.27  conservation account that is not encumbered by the county within 
195.28  one year of deposit in the account must be transferred to the 
195.29  commissioner of revenue for deposit in the Minnesota 
195.30  conservation fund state treasury pursuant to section 40A.151, 
195.31  subdivision 1. 
195.32     Sec. 5.  Minnesota Statutes 2000, section 270B.01, 
195.33  subdivision 8, is amended to read: 
195.34     Subd. 8.  [MINNESOTA TAX LAWS.] For purposes of this 
195.35  chapter only, unless expressly stated otherwise, "Minnesota tax 
195.36  laws" means the taxes, refunds, and fees administered by or paid 
196.1   to the commissioner under chapters 115B (except taxes imposed 
196.2   under sections 115B.21 to 115B.24), 289A (except taxes imposed 
196.3   under sections 298.01, 298.015, and 298.24), 290, 290A, 
196.4   291, 295, 297A, and 297H and sections 295.50 to 295.59, or any 
196.5   similar Indian tribal tax administered by the commissioner 
196.6   pursuant to any tax agreement between the state and the Indian 
196.7   tribal government, and includes any laws for the assessment, 
196.8   collection, and enforcement of those taxes, refunds, and fees. 
196.9      <h>[EFFECTIVE DATE.]</h> This section is effective the day 
196.10  following final enactment. 
196.11     Sec. 6.  Minnesota Statutes 2001 Supplement, section 
196.12  270B.02, subdivision 3, is amended to read: 
196.13     Subd. 3.  [CONFIDENTIAL DATA ON INDIVIDUALS; PROTECTED 
196.14  NONPUBLIC DATA.] (a) Except as provided in paragraph (b), the 
196.15  name or existence of an informer, informer letters, and other 
196.16  data, in whatever form, given to the department of revenue by a 
196.17  person, other than the data subject, who informs that a specific 
196.18  taxpayer person is not or may not be in compliance with tax 
196.19  laws, or nontax laws administered by the department of revenue, 
196.20  including laws other than those relating to property taxes not 
196.21  listed in section 270B.01, subdivision 8, are confidential data 
196.22  on individuals or protected nonpublic data as defined in section 
196.23  13.02, subdivisions 3 and 13. 
196.24     (b) Data under paragraph (a) may be disclosed with the 
196.25  consent of the informer or upon a written finding by a court 
196.26  that the information provided by the informer was false and that 
196.27  there is evidence that the information was provided in bad 
196.28  faith.  This subdivision does not alter disclosure 
196.29  responsibilities or obligations under the rules of criminal 
196.30  procedure. 
196.31     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
196.32  following final enactment. 
196.33     Sec. 7.  Minnesota Statutes 2000, section 270B.02, 
196.34  subdivision 4, is amended to read: 
196.35     Subd. 4.  [PUBLIC DATA.] Information required to be filed 
196.36  by exempt individuals, corporations, organizations, estates, and 
197.1   trusts under section 290.05, subdivisions 1 and 4, or that 
197.2   relates to exempt status under section 290.05, subdivision 2, is 
197.3   public data on individuals or public data not on individuals, as 
197.4   defined in section 13.02, subdivisions 14 and 15.  The 
197.5   commissioner may publish a list of organizations exempt from 
197.6   taxation under section 290.05, except that the name or address 
197.7   of any contributor to any organization that is or was exempt, or 
197.8   that has applied for tax exempt status, or any other information 
197.9   that could not be disclosed under section 6104 of the Internal 
197.10  Revenue Code of 1986, as amended through December 31, 1988, is 
197.11  classified as private data on individuals or nonpublic data as 
197.12  defined in section 13.02, subdivisions 9 and 12. 
197.13     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
197.14  following final enactment. 
197.15     Sec. 8.  Minnesota Statutes 2001 Supplement, section 
197.16  270B.08, subdivision 2, is amended to read: 
197.17     Subd. 2.  [REVOCATION.] When a taxpayer's sales tax permit 
197.18  has been revoked under section 297A.86, the commissioner may 
197.19  disclose data identifying the holder of the revoked permit and, 
197.20  stating the basis for the revocation, and stating whether the 
197.21  permit has been reinstated. 
197.22     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
197.23  following final enactment. 
197.24     Sec. 9.  Minnesota Statutes 2000, section 270B.14, 
197.25  subdivision 8, is amended to read: 
197.26     Subd. 8.  [EXCHANGE BETWEEN DEPARTMENTS OF LABOR AND 
197.27  INDUSTRY AND REVENUE.] The departments of labor and industry and 
197.28  revenue may exchange information as follows:  
197.29     (1) data used in determining whether a business is an 
197.30  employer or a contracting agent; 
197.31     (2) taxpayer identity information relating to employers and 
197.32  employees for purposes of supporting tax administration and 
197.33  chapter chapters 176, 177, and 181; and 
197.34     (3) data to the extent provided in and for the purpose set 
197.35  out in section 176.181, subdivision 8. 
197.36     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
198.1   following final enactment. 
198.2      Sec. 10.  Minnesota Statutes 2000, section 289A.10, 
198.3   subdivision 1, is amended to read: 
198.4      Subdivision 1.  [RETURN REQUIRED.] In the case of a 
198.5   decedent who has an interest in property with a situs in 
198.6   Minnesota, the personal representative must submit a Minnesota 
198.7   estate tax return to the commissioner, on a form prescribed by 
198.8   the commissioner, in instances in which a federal estate tax 
198.9   return is required to be filed if the federal gross estate 
198.10  exceeds $700,000 for estates of decedents dying after December 
198.11  31, 2001, and before January 1, 2004; $850,000 for estates of 
198.12  decedents dying after December 31, 2003, and before January 1, 
198.13  2005; $950,000 for estates of decedents dying after December 31, 
198.14  2004, and before January 1, 2006; and $1,000,000 for estates of 
198.15  decedents dying after December 31, 2005. 
198.16     The return must contain a computation of the Minnesota 
198.17  estate tax due.  The return must be signed by the personal 
198.18  representative. 
198.19     <h>[EFFECTIVE DATE.]</h> This section is effective for estates of 
198.20  decedents dying after December 31, 2001. 
198.21     Sec. 11.  Minnesota Statutes 2001 Supplement, section 
198.22  291.005, subdivision 1, is amended to read: 
198.23     Subdivision 1.  Unless the context otherwise clearly 
198.24  requires, the following terms used in this chapter shall have 
198.25  the following meanings: 
198.26     (1) "Federal gross estate" means the gross estate of a 
198.27  decedent as valued and otherwise determined for federal estate 
198.28  tax purposes by federal taxing authorities pursuant to the 
198.29  provisions of the Internal Revenue Code. 
198.30     (2) "Minnesota gross estate" means the federal gross estate 
198.31  of a decedent after (a) excluding therefrom any property 
198.32  included therein which has its situs outside Minnesota and 
198.33  pensions exempt from tax under this chapter pursuant to section 
198.34  352.15, subdivision 1; 353.15, subdivision 1; 354.10, 
198.35  subdivision 1; 354B.30; or 354C.165, and (b) including therein 
198.36  any property omitted from the federal gross estate which is 
199.1   includable therein, has its situs in Minnesota, and was not 
199.2   disclosed to federal taxing authorities.  
199.3      (3) "Personal representative" means the executor, 
199.4   administrator or other person appointed by the court to 
199.5   administer and dispose of the property of the decedent.  If 
199.6   there is no executor, administrator or other person appointed, 
199.7   qualified, and acting within this state, then any person in 
199.8   actual or constructive possession of any property having a situs 
199.9   in this state which is included in the federal gross estate of 
199.10  the decedent shall be deemed to be a personal representative to 
199.11  the extent of the property and the Minnesota estate tax due with 
199.12  respect to the property. 
199.13     (4) "Resident decedent" means an individual whose domicile 
199.14  at the time of death was in Minnesota. 
199.15     (5) "Nonresident decedent" means an individual whose 
199.16  domicile at the time of death was not in Minnesota. 
199.17     (6) "Situs of property" means, with respect to real 
199.18  property, the state or country in which it is located; with 
199.19  respect to tangible personal property, the state or country in 
199.20  which it was normally kept or located at the time of the 
199.21  decedent's death; and with respect to intangible personal 
199.22  property, the state or country in which the decedent was 
199.23  domiciled at death. 
199.24     (7) "Commissioner" means the commissioner of revenue or any 
199.25  person to whom the commissioner has delegated functions under 
199.26  this chapter. 
199.27     (8) "Internal Revenue Code" means the United States 
199.28  Internal Revenue Code of 1986, as amended through December 31, 
199.29  2000. 
199.30     <h>[EFFECTIVE DATE.]</h> This section is effective for estates of 
199.31  decedents dying after December 31, 2001. 
199.32     Sec. 12.  Minnesota Statutes 2000, section 291.03, 
199.33  subdivision 1, is amended to read: 
199.34     Subdivision 1.  [TAX AMOUNT.] The tax imposed shall be an 
199.35  amount equal to the proportion of the maximum credit 
199.36  allowable computed under section 2011 of the Internal Revenue 
200.1   Code for state death taxes as the Minnesota gross estate bears 
200.2   to the value of the federal gross estate.  For a resident 
200.3   decedent, the tax shall be the maximum credit allowable computed 
200.4   under section 2011 of the Internal Revenue Code reduced by the 
200.5   amount of the death tax paid the other state and credited 
200.6   against the federal estate tax if this results in a larger 
200.7   amount of tax than the proportionate amount of the credit.  The 
200.8   tax determined under this paragraph shall not be greater than 
200.9   the maximum credit allowable under section 2011 of the Internal 
200.10  Revenue Code federal estate tax computed under section 2001 of 
200.11  the Internal Revenue Code after the allowance of the federal 
200.12  credits allowed under sections 2010, 2012, 2013, and 2015 of the 
200.13  Internal Revenue Code of 1986, as amended through December 31, 
200.14  2000.  
200.15     <h>[EFFECTIVE DATE.]</h> This section is effective for estates of 
200.16  decedents dying after December 31, 2001. 
200.17     Sec. 13.  Minnesota Statutes 2000, section 297H.06, 
200.18  subdivision 2, is amended to read: 
200.19     Subd. 2.  [MATERIALS.] The tax is not imposed upon charges 
200.20  to generators of mixed municipal solid waste or upon the volume 
200.21  of non-mixed-municipal solid waste for waste management services 
200.22  to manage the following materials: 
200.23     (1) mixed municipal solid waste and non-mixed-municipal 
200.24  solid waste generated outside of Minnesota; 
200.25     (2) recyclable materials that are separated for recycling 
200.26  by the generator, collected separately from other waste, and 
200.27  recycled, to the extent the price of the service for handling 
200.28  recyclable material is separately itemized; 
200.29     (3) recyclable non-mixed-municipal solid waste that is 
200.30  separated for recycling by the generator, collected separately 
200.31  from other waste, delivered to a waste facility for the purpose 
200.32  of recycling, and recycled; 
200.33     (4) industrial waste, when it is transported to a facility 
200.34  owned and operated by the same person that generated it; 
200.35     (5) mixed municipal solid waste from a recycling facility 
200.36  that separates or processes recyclable materials and reduces the 
201.1   volume of the waste by at least 85 percent, provided that the 
201.2   exempted waste is managed separately from other waste; 
201.3      (6) recyclable materials that are separated from mixed 
201.4   municipal solid waste by the generator, collected and delivered 
201.5   to a waste facility that recycles at least 85 percent of its 
201.6   waste, and are collected with mixed municipal solid waste that 
201.7   is segregated in leakproof bags, provided that the mixed 
201.8   municipal solid waste does not exceed five percent of the total 
201.9   weight of the materials delivered to the facility and is 
201.10  ultimately delivered to a waste facility identified as a 
201.11  preferred waste management facility in county solid waste plans 
201.12  under section 115A.46; 
201.13     (7) through December 31, 2002, source-separated compostable 
201.14  waste, if the waste is delivered to a facility exempted as 
201.15  described in this clause.  To initially qualify for an 
201.16  exemption, a facility must apply for an exemption in its 
201.17  application for a new or amended solid waste permit to the 
201.18  pollution control agency.  The first time a facility applies to 
201.19  the agency it must certify in its application that it will 
201.20  comply with the criteria in items (i) to (v) and the 
201.21  commissioner of the agency shall so certify to the commissioner 
201.22  of revenue who must grant the exemption.  For each subsequent 
201.23  calendar year, by October 1 of the preceding year, the facility 
201.24  must apply to the agency for certification to renew its 
201.25  exemption for the following year.  The application must be filed 
201.26  according to the procedures of, and contain the information 
201.27  required by, the agency.  The commissioner of revenue shall 
201.28  grant the exemption if the commissioner of the pollution control 
201.29  agency finds and certifies to the commissioner of revenue that 
201.30  based on an evaluation of the composition of incoming waste and 
201.31  residuals and the quality and use of the product: 
201.32     (i) generators separate materials at the source; 
201.33     (ii) the separation is performed in a manner appropriate to 
201.34  the technology specific to the facility that: 
201.35     (A) maximizes the quality of the product; 
201.36     (B) minimizes the toxicity and quantity of residuals; and 
202.1      (C) provides an opportunity for significant improvement in 
202.2   the environmental efficiency of the operation; 
202.3      (iii) the operator of the facility educates generators, in 
202.4   coordination with each county using the facility, about 
202.5   separating the waste to maximize the quality of the waste stream 
202.6   for technology specific to the facility; 
202.7      (iv) process residuals do not exceed 15 percent of the 
202.8   weight of the total material delivered to the facility; and 
202.9      (v) the final product is accepted for use; 
202.10     (8) waste and waste by-products for which the tax has been 
202.11  paid; and 
202.12     (9) daily cover for landfills that has been approved in 
202.13  writing by the Minnesota pollution control agency. 
202.14     Sec. 14.  Minnesota Statutes 2001 Supplement, section 
202.15  349.12, subdivision 25, is amended to read: 
202.16     Subd. 25.  [LAWFUL PURPOSE.] (a) "Lawful purpose" means one 
202.17  or more of the following:  
202.18     (1) any expenditure by or contribution to a 501(c)(3) or 
202.19  festival organization, as defined in subdivision 15a, provided 
202.20  that the organization and expenditure or contribution are in 
202.21  conformity with standards prescribed by the board under section 
202.22  349.154, which standards must apply to both types of 
202.23  organizations in the same manner and to the same extent; 
202.24     (2) a contribution to an individual or family suffering 
202.25  from poverty, homelessness, or physical or mental disability, 
202.26  which is used to relieve the effects of that poverty, 
202.27  homelessness, or disability; 
202.28     (3) a contribution to an individual for treatment for 
202.29  delayed posttraumatic stress syndrome or a contribution to a 
202.30  program recognized by the Minnesota department of human services 
202.31  for the education, prevention, or treatment of compulsive 
202.32  gambling; 
202.33     (4) a contribution to or expenditure on a public or private 
202.34  nonprofit educational institution registered with or accredited 
202.35  by this state or any other state; 
202.36     (5) a contribution to a scholarship fund for defraying the 
203.1   cost of education to individuals where the funds are awarded 
203.2   through an open and fair selection process; 
203.3      (6) activities by an organization or a government entity 
203.4   which recognize humanitarian or military service to the United 
203.5   States, the state of Minnesota, or a community, subject to rules 
203.6   of the board, provided that the rules must not include mileage 
203.7   reimbursements in the computation of the per occasion 
203.8   reimbursement limit and must impose no aggregate annual limit on 
203.9   the amount of reasonable and necessary expenditures made to 
203.10  support: 
203.11     (i) members of a military marching or color guard unit for 
203.12  activities conducted within the state; 
203.13     (ii) members of an organization solely for services 
203.14  performed by the members at funeral services; or 
203.15     (iii) members of military marching, color guard, or honor 
203.16  guard units may be reimbursed for participating in color guard, 
203.17  honor guard, or marching unit events within the state or states 
203.18  contiguous to Minnesota at a per participant rate of up to $35 
203.19  per occasion; 
203.20     (7) recreational, community, and athletic facilities and 
203.21  activities intended primarily for persons under age 21, provided 
203.22  that such facilities and activities do not discriminate on the 
203.23  basis of gender and the organization complies with section 
203.24  349.154; 
203.25     (8) payment of local taxes authorized under this chapter, 
203.26  taxes imposed by the United States on receipts from lawful 
203.27  gambling, the taxes imposed by section 297E.02, subdivisions 1, 
203.28  4, 5, and 6, and the tax imposed on unrelated business income by 
203.29  section 290.05, subdivision 3; 
203.30     (9) payment of real estate taxes and assessments on 
203.31  permitted gambling premises wholly owned by the licensed 
203.32  organization paying the taxes, or wholly leased by a licensed 
203.33  veterans organization under a national charter organized under 
203.34  section 501(c)(19) of the Internal Revenue Code, not to exceed: 
203.35     (i) for premises used for bingo, the amount that an 
203.36  organization may expend under board rules on rent for bingo; and 
204.1      (ii) $35,000 per year for premises used for other forms of 
204.2   lawful gambling; 
204.3      (10) a contribution to the United States, this state or any 
204.4   of its political subdivisions, or any agency or instrumentality 
204.5   thereof other than a direct contribution to a law enforcement or 
204.6   prosecutorial agency; 
204.7      (11) a contribution to or expenditure by a nonprofit 
204.8   organization which is a church or body of communicants gathered 
204.9   in common membership for mutual support and edification in 
204.10  piety, worship, or religious observances; 
204.11     (12) payment of the reasonable costs of an audit required 
204.12  in section 297E.06, subdivision 4, provided the annual audit is 
204.13  filed in a timely manner with the department of revenue; 
204.14     (13) a contribution to or expenditure on a wildlife 
204.15  management project that benefits the public at-large, provided 
204.16  that the state agency with authority over that wildlife 
204.17  management project approves the project before the contribution 
204.18  or expenditure is made; 
204.19     (14) expenditures, approved by the commissioner of natural 
204.20  resources, by an organization for grooming and maintaining 
204.21  snowmobile trails and all-terrain vehicle trails that are (1) 
204.22  grant-in-aid trails established under section 85.019, or (2) 
204.23  other trails open to public use, including purchase or lease of 
204.24  equipment for this purpose; or 
204.25     (15) conducting nutritional programs, food shelves, and 
204.26  congregate dining programs primarily for persons who are age 62 
204.27  or older or disabled; or 
204.28     (16) a contribution to a community arts organization, or an 
204.29  expenditure to sponsor arts programs in the community, including 
204.30  but not limited to visual, literary, performing, or musical arts.
204.31     (b) Notwithstanding paragraph (a), "lawful purpose" does 
204.32  not include: 
204.33     (1) any expenditure made or incurred for the purpose of 
204.34  influencing the nomination or election of a candidate for public 
204.35  office or for the purpose of promoting or defeating a ballot 
204.36  question; 
205.1      (2) any activity intended to influence an election or a 
205.2   governmental decision-making process; 
205.3      (3) the erection, acquisition, improvement, expansion, 
205.4   repair, or maintenance of real property or capital assets owned 
205.5   or leased by an organization, unless the board has first 
205.6   specifically authorized the expenditures after finding that (i) 
205.7   the real property or capital assets will be used exclusively for 
205.8   one or more of the purposes in paragraph (a); (ii) with respect 
205.9   to expenditures for repair or maintenance only, that the 
205.10  property is or will be used extensively as a meeting place or 
205.11  event location by other nonprofit organizations or community or 
205.12  service groups and that no rental fee is charged for the use; 
205.13  (iii) with respect to expenditures, including a mortgage payment 
205.14  or other debt service payment, for erection or acquisition only, 
205.15  that the erection or acquisition is necessary to replace with a 
205.16  comparable building, a building owned by the organization and 
205.17  destroyed or made uninhabitable by fire or natural disaster, 
205.18  provided that the expenditure may be only for that part of the 
205.19  replacement cost not reimbursed by insurance; (iv) with respect 
205.20  to expenditures, including a mortgage payment or other debt 
205.21  service payment, for erection or acquisition only, that the 
205.22  erection or acquisition is necessary to replace with a 
205.23  comparable building a building owned by the organization that 
205.24  was acquired from the organization by eminent domain or sold by 
205.25  the organization to a purchaser that the organization reasonably 
205.26  believed would otherwise have acquired the building by eminent 
205.27  domain, provided that the expenditure may be only for that part 
205.28  of the replacement cost that exceeds the compensation received 
205.29  by the organization for the building being replaced; or (v) with 
205.30  respect to an expenditure to bring an existing building into 
205.31  compliance with the Americans with Disabilities Act under item 
205.32  (ii), an organization has the option to apply the amount of the 
205.33  board-approved expenditure to the erection or acquisition of a 
205.34  replacement building that is in compliance with the Americans 
205.35  with Disabilities Act; 
205.36     (4) an expenditure by an organization which is a 
206.1   contribution to a parent organization, foundation, or affiliate 
206.2   of the contributing organization, if the parent organization, 
206.3   foundation, or affiliate has provided to the contributing 
206.4   organization within one year of the contribution any money, 
206.5   grants, property, or other thing of value; 
206.6      (5) a contribution by a licensed organization to another 
206.7   licensed organization unless the board has specifically 
206.8   authorized the contribution.  The board must authorize such a 
206.9   contribution when requested to do so by the contributing 
206.10  organization unless it makes an affirmative finding that the 
206.11  contribution will not be used by the recipient organization for 
206.12  one or more of the purposes in paragraph (a); or 
206.13     (6) a contribution to a statutory or home rule charter 
206.14  city, county, or town by a licensed organization with the 
206.15  knowledge that the governmental unit intends to use the 
206.16  contribution for a pension or retirement fund. 
206.17     <h>[EFFECTIVE DATE.]</h> This section is effective the day 
206.18  following final enactment. 
206.19     Sec. 15. Laws 2001, First Special Session chapter 6, 
206.20  article 5, section 12, is amended to read: 
206.21     Sec. 12.  [SCHOOL DISTRICT FORMULA ADJUSTMENTS.] 
206.22     Subdivision 1.  [TAX RATE ADJUSTMENT.] The commissioner of 
206.23  children, families, and learning must adjust each tax rate 
206.24  established under Minnesota Statutes, chapters 120A to 127A, by 
206.25  multiplying the rate by the ratio of the statewide net tax 
206.26  capacity as calculated using the class rates in effect for 
206.27  assessment year 2000 to the statewide total net tax capacity as 
206.28  calculated using the class rates in effect for assessment year 
206.29  2001, in both cases using taxable market values for assessment 
206.30  year 2000. 
206.31     Subd. 2.  [EQUALIZING FACTORS.] The commissioner of 
206.32  children, families, and learning must adjust each equalizing 
206.33  factor based upon adjusted net tax capacity per actual pupil 
206.34  unit established under Minnesota Statutes, chapters 120A to 
206.35  127A, by multiplying the equalizing factor by the ratio of the 
206.36  statewide net tax capacity as calculated using the class rates 
207.1   in effect for assessment year 2001 to the statewide total net 
207.2   tax capacity as calculated using the class rates in effect for 
207.3   assessment year 2000, in both cases using taxable market values 
207.4   for assessment year 2000. 
207.5      Subd. 3.  [DEBT SERVICE TAX RATES AND EQUALIZING FACTORS.] 
207.6   The provisions in subdivisions 1 and 2 do not apply to the 
207.7   equalizing factors and tax rates of the debt service 
207.8   equalization aid program under Minnesota Statutes, section 
207.9   123B.53. 
207.10     Subd. 4.  [SCHOOL DISTRICT BONDS.] The commissioner of 
207.11  children, families, and learning must adjust the net debt limit 
207.12  percentage for special school district No. 1, Minneapolis, based 
207.13  upon net tax capacity established under Minnesota Statutes, 
207.14  section 128D.11, subdivision 8, by multiplying the net debt 
207.15  limit percentage by the ratio of the district's net tax capacity 
207.16  as calculated using the class rates in effect for assessment 
207.17  year 2000 to the district's total net tax capacity as calculated 
207.18  using the class rates in effect for assessment year 2001, in 
207.19  both cases using taxable market values for assessment year 2000. 
207.20     <h>[EFFECTIVE DATE.]</h> This section is effective retroactively 
207.21  for bonds issued after July 1, 2001. 
207.22     Sec. 16.  [CITY OF THIEF RIVER FALLS; NONPROFIT 
207.23  CORPORATION.] 
207.24     Subdivision 1.  [NONPROFIT CORPORATION MAY BE ESTABLISHED.] 
207.25  The city of Thief River Falls may incorporate or authorize the 
207.26  incorporation of a nonprofit corporation to operate a community 
207.27  or regional center in the city.  
207.28     Subd. 2.  [BOARD OF DIRECTORS.] The corporation must be 
207.29  governed by a board of five directors.  The directors must be 
207.30  named by the Thief River Falls city council.  No more than three 
207.31  of the directors may be persons currently serving on the Thief 
207.32  River Falls city council.  Board members must not be compensated 
207.33  for their services but may be reimbursed for reasonable expenses 
207.34  incurred in connection with their duties as board members.  
207.35     Subd. 3.  [ARTICLES AND BYLAWS.] The entity must be 
207.36  incorporated under Minnesota Statutes, chapter 317A, and 
208.1   otherwise must comply with Minnesota Statutes, chapter 317A, 
208.2   except to the extent Minnesota Statutes, chapter 317A, is 
208.3   inconsistent with this section.  
208.4      Subd. 4.  [EMPLOYEES.] Persons employed by the nonprofit 
208.5   corporation are not public employees and must not participate in 
208.6   retirement, deferred compensation, insurance, or other plans 
208.7   that apply to public employees generally.  
208.8      Subd. 5.  [STATUTORY COMPLIANCE.] The nonprofit corporation 
208.9   must comply with Minnesota Statutes, section 465.719, 
208.10  subdivisions 9, 10, 11, 12, 13, and 14. 
208.11     Sec. 17.  [APPROPRIATION.] 
208.12     (a) $585,000 in fiscal year 2002 and $7,015,000 in fiscal 
208.13  year 2003 are appropriated to the commissioner of revenue from 
208.14  the general fund for tax compliance activities, including 
208.15  identification and collection of tax liabilities from 
208.16  individuals and businesses that currently do not pay all taxes 
208.17  owed, and audit and collection activity in the income tax, sales 
208.18  tax, lawful gambling, insurance, and corporate areas.  The base 
208.19  funding for these activities in fiscal years 2004 and 2005 is 
208.20  increased by $4,750,000 each year. 
208.21     (b) The commissioner must include these tax compliance 
208.22  activities in the report required by Laws 2001, First Special 
208.23  Session chapter 10, article 1, section 16, subdivision 2, 
208.24  paragraph (c). 
208.25     (c) Laws 2002, chapter 220, article 10, section 38, does 
208.26  not apply to the positions necessary to carry out the compliance 
208.27  activities identified in this section. 
208.28     (d) If the legislative auditor determines that: 
208.29     (1) actual revenue collections generated from tax 
208.30  compliance activities funded by Laws 2001, First Special Session 
208.31  chapter 10, article 1, section 16, subdivision 2, paragraphs (a) 
208.32  and (b), will not generate at least $52,000,000 in additional 
208.33  general fund revenue for the biennium ending June 30, 2003; or 
208.34     (2) actual revenue collections generated from new tax 
208.35  compliance activities funded by the appropriation in this 
208.36  section will not generate at least $7,600,000 in additional 
209.1   general fund revenue for the biennium ending June 30, 2003; 
209.2   then the commissioner of finance must cancel from the budget 
209.3   reserve account to the general fund the difference between the 
209.4   $52,000,000 or the $7,600,000 and the actual additional general 
209.5   fund revenue.  The legislative auditor's determination under 
209.6   this paragraph must be made in the February 1, 2003, report to 
209.7   the legislature required by Laws 2001, First Special Session 
209.8   chapter 10, article 1, section 16. 
209.9      <h>[EFFECTIVE DATE.]</h> This section is effective the day 
209.10  following final enactment. 
209.11     Sec. 18.  [REPEALER.] 
209.12     Minnesota Statutes 2000, section 291.03, subdivision 2, is 
209.13  repealed effective for estates of decedents dying after December 
209.14  31, 2001." 
209.15     Delete the title and insert: 
209.16                         "A bill for an act 
209.17            relating to financing and operation of state and local 
209.18            government; modifying provisions relating to income, 
209.19            franchise, sales and use, property, MinnesotaCare, 
209.20            gross receipts, liquor, insurance, solid waste 
209.21            management, estate, minerals, and other taxes, 
209.22            property tax refunds, tax liens, and tax 
209.23            administration; imposing a wind energy production tax; 
209.24            modifying property tax and other state aids and 
209.25            credits; changing education aids and levies; modifying 
209.26            tax court jurisdiction; authorizing local units of 
209.27            government to levy, impose, or abate taxes, issue 
209.28            debt, and exercise other powers; extending and 
209.29            authorizing certain expenditures from the northeast 
209.30            Minnesota economic protection trust fund; modifying 
209.31            levy limits; providing powers to and imposing duties 
209.32            on the commissioner of revenue and other officials; 
209.33            clarifying utility rate reduction provisions mandated 
209.34            by property tax reductions; modifying tax increment 
209.35            financing and other economic development provisions; 
209.36            providing a time limit for offset of federal tax 
209.37            refunds; changing lawful purpose for purposes of 
209.38            lawful gambling; providing for data privacy and 
209.39            exchange of data; modifying certain debt limits; 
209.40            repealing an annexation provision; making technical 
209.41            corrections; providing for the transfer of funds; 
209.42            providing for a budget reserve; appropriating money; 
209.43            amending Minnesota Statutes 2000, sections 16A.152, by 
209.44            adding a subdivision; 40A.151, subdivision 1; 40A.152, 
209.45            subdivisions 1, 3; 69.77, by adding a subdivision; 
209.46            126C.44; 168A.05, by adding subdivisions; 270.063, 
209.47            subdivision 4; 270.60, subdivision 4; 270B.01, 
209.48            subdivision 8; 270B.02, subdivision 4; 270B.14, 
209.49            subdivision 8; 272.02, subdivision 15, by adding 
209.50            subdivisions; 272.0212, subdivision 4; 273.125, 
209.51            subdivisions 3, 4; 273.1398, subdivisions 1a, 2, 3; 
209.52            278.01, subdivision 1; 279.01, subdivision 3; 289A.10, 
209.53            subdivision 1; 289A.19, subdivision 1; 290.01, 
209.54            subdivision 19a; 290.067, subdivisions 1, 2a; 290.081; 
209.55            290.17, subdivisions 2, 3; 290.191, subdivision 4; 
210.1             290A.03, subdivision 3; 291.03, subdivision 1; 295.53, 
210.2             subdivision 1; 295.57, by adding a subdivision; 
210.3             296A.18, subdivision 8; 297A.66, by adding a 
210.4             subdivision; 297A.67, subdivision 5, by adding a 
210.5             subdivision; 297A.68, by adding a subdivision; 
210.6             297A.71, by adding subdivisions; 297A.96; 297G.07, 
210.7             subdivision 1; 297H.06, subdivision 2; 297I.05, 
210.8             subdivision 11; 298.27; 298.28, subdivisions 5, 9b, 
210.9             11; 298.291; 469.1813, by adding a subdivision; 
210.10            477A.011, subdivision 20; 477A.15; Minnesota Statutes 
210.11            2001 Supplement, sections 69.021, subdivision 5; 
210.12            124D.86, subdivision 3; 126C.17, subdivision 7a; 
210.13            126C.21, subdivision 4; 126C.40, subdivision 1; 
210.14            126C.43, subdivision 3; 126C.48, subdivision 8; 
210.15            216B.1646; 270.69, subdivision 2; 270.691, subdivision 
210.16            8; 270B.02, subdivision 3; 270B.08, subdivision 2; 
210.17            271.01, subdivision 5; 271.21, subdivision 2; 272.02, 
210.18            subdivision 22; 272.028; 273.121; 273.124, subdivision 
210.19            11; 273.13, subdivisions 22, 24, 25; 273.1384, 
210.20            subdivisions 1, 2; 273.1392; 273.1398, subdivisions 
210.21            4c, 4d; 275.065, subdivision 3; 275.70, subdivision 5; 
210.22            275.71, subdivisions 2, 3, 6; 275.74, subdivision 2; 
210.23            276.04, subdivision 2; 289A.02, subdivision 7; 
210.24            289A.20, subdivisions 2, 4; 289A.60, subdivision 2; 
210.25            290.01, subdivisions 19, 19b, 19c, 19d, 31; 290.0675, 
210.26            subdivisions 1, 3; 290.091, subdivision 2; 290.0921, 
210.27            subdivisions 2, 3, 6; 290.21, subdivision 4; 290A.03, 
210.28            subdivision 15; 290A.04, subdivision 2h; 291.005, 
210.29            subdivision 1; 295.60, subdivisions 2, 7, by adding 
210.30            subdivisions; 297A.61, subdivisions 3, 26, 31; 
210.31            297A.66, subdivision 1; 297A.67, subdivisions 25, 29; 
210.32            297A.68, subdivision 3; 297A.70, subdivisions 3, 10; 
210.33            297A.71, subdivision 23; 297A.75; 297A.995, 
210.34            subdivision 4; 298.01, subdivisions 3b, 4c; 298.225, 
210.35            subdivision 1; 298.28, subdivisions 4, 6, 9a, 10; 
210.36            298.296, subdivision 2; 349.12, subdivision 25; 
210.37            469.1734, subdivision 6; 469.1763, subdivision 6; 
210.38            469.1792, subdivision 1; 477A.011, subdivision 36; 
210.39            477A.0123; 477A.013, subdivision 9; 477A.03, 
210.40            subdivision 2; 477A.07, subdivisions 1, 2, 3; Laws 
210.41            1990, chapter 604, article 6, section 9, subdivision 
210.42            1, as amended; Laws 1993, chapter 375, article 5, 
210.43            section 42; Laws 1995, chapter 264, article 5, section 
210.44            45, subdivision 1, as amended; Laws 1998, chapter 389, 
210.45            article 3, section 42; Laws 1998, chapter 389, article 
210.46            8, section 37, subdivision 2; Laws 2001, First Special 
210.47            Session chapter 5, article 9, section 3; Laws 2001, 
210.48            First Special Session chapter 5, article 12, sections 
210.49            11, 82, 95; Laws 2001, First Special Session chapter 
210.50            6, article 1, section 53; Laws 2001, First Special 
210.51            Session chapter 6, article 4, sections 25, 27, 
210.52            subdivision 9; Laws 2001, First Special Session 
210.53            chapter 6, article 5, section 12; proposing coding for 
210.54            new law in Minnesota Statutes, chapters 126C; 272; 
210.55            repealing Minnesota Statutes 2000, sections 272.02, 
210.56            subdivision 40; 290.01, subdivisions 19g, 32; 
210.57            290.0921, subdivision 5; 291.03, subdivision 2; 
210.58            295.44; 297A.68, subdivision 26; Minnesota Statutes 
210.59            2001 Supplement, sections 469.176, subdivision 1h; 
210.60            Laws 2001, First Special Session chapter 5, article 3, 
210.61            section 88; Minnesota Rules, parts 8130.1400; 
210.62            8130.2100; 8130.2350; 8130.2600; 8130.3000; 8130.3850; 
210.63            8130.5000." 
211.1      We request adoption of this report and repassage of the 
211.2   bill. 
211.5      House Conferees: 
211.8   .........................     .........................
211.9   Ron Abrams                    Dan McElroy 
211.12  .........................     .........................
211.13  Bob Milbert                   Roxann Daggett 
211.16  ......................... 
211.17  Ann Lenczewski 
211.22     Senate Conferees: 
211.25  .........................     .........................
211.26  Lawrence J. Pogemiller        Douglas J. Johnson 
211.29  .........................     .........................
211.30  Linda Berglin                 Dick Day  
211.33  ......................... 
211.34  Leonard R. Price